Q2 2019 Earnings Call
For the second quarter 2019 series Therapeutics earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require operator's assistance. Today's conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference is being recorded.
What I can do show host for today's conference Mr. Carlo Tanzi, Vice President Investor Relations. Sir. Please go ahead.
Thank you and good morning, a press release with the company's second quarter 2019 financial results in a business update became available at seven am Eastern time. This morning, and can be found on the investors and media section of the company's website.
I'd like to remind you that we'll be making forward looking statements relating to the timing enrollment and results were clinical studies regulatory matters study designs, our development plans or potential competitive advantage is the promise and potential impact of any of our microbiome therapeutics or clinical trial data and the sufficiency of our cash and cash equivalents to fund operations actual results may differ materially. Additionally, these statements are subject to certain risks and uncertainties, which are discussed under the risk factor section or recent SEC filings any forward looking statements made on today's call represent our views as of today only we may update these statements in the future, but we disclaim any obligation to do so.
On today's call I'm joined by Eric shop, and serious President and CEO and Dr., Kevin, Oregon, Our Chief Medical Officer.
Dr., Matt and our Chief Scientific Officer is also joining by phone and available for the Q and a portion of the conference call.
And with that I'll pass the call to Eric.
Thanks, Carlo and good morning, everyone.
On our last quarterly conference call, we outlined a number of important changes that the company since I became CEO .
And we presented a more in depth review of the pipeline.
We will keep today's call shorter as we now have our strategy clearly defined.
Our mission is to develop microbiome based therapeutics for serious diseases.
This is a new treatment modality.
That we believe holds tremendous promise.
And we are focused on the execution of our prioritized programs.
These are.
Our fear to 87 phase Twob study in ulcerative colitis.
Our SER 109 phase three study in recurrent C diff infection.
Our work in immuno oncology.
Including our ongoing fear floral one phase one b study in metastatic melanoma.
As well as our collaboration with our partners at Astra Zeneca.
And finally.
Our preclinical next generation fermented microbiome therapeutic candidate fear for real one for ulcerative colitis.
[noise] supporting our R&D efforts, our series deep capabilities related to microbiome therapeutic drug discovery manufacturing and clinical development.
We believe that these capabilities provide series with important competitive advantages.
Related to the advancement of this novel treatment modality.
We expect 2020 to be an exciting and data rich year for series with important milestones, including our two late stage programs beginning with zero 109 study results in early 2020.
We expect data from our fear to 87 study in the third quarter of 2020.
And also from our Seer floral one metastatic melanoma study in the second half of 2020.
I will now turn the call over to Kevin to provide a more detailed review of our clinical programs.
Thank you Eric.
Before discussing our clinical development programs I would like to address the FDA safety alert related to fecal microbiota transplantation or FMTV issued in June .
This alert related to FMT and serious adverse reactions, including a patient death.
That resulted from the transmission of multi drug resistant organisms.
Importantly, this FDIC alert does not apply to series as our drug candidates are fundamentally different than the unapproved FMT used in medical practice.
Our drug candidates.
Comprised of highly purified consortia of sport based commences bacteria.
Our thing evaluators in controlled clinical studies.
Conducted under 90 with rigorous safety monitoring and reporting procedures.
Serious therapeutic candidates are manufactured under GMP conditions, and quality controlled using stringent standards to ensure product quality and consistency.
We have been in contact with our clinical sites to ensure that they fully understand the differences between FMT, another fecal bacterial preparation and serious drug candidates.
Now turning to our development programs I'll begin with tier 287.
Which is in a phase twob study in patients with mild to moderate active ulcerative colitis.
Fair to 87 is an orally administered donor derived living drug candidate comprised commensurate bacterial spores derived from the healthy human gastrointestinal tract.
Our objective with tier 287 is to develop a first in class microbiome therapeutic that modulates the microbiome as a trigger an amplifier of inflammation.
We believe this drug candidate has the potential to result in significant improvements in patient outcomes and may provide a novel non immunosuppressive treatment option for the serious diseases.
A prior completed tier 287 phase one b proof of concept study demonstrated a statistically significant difference in the clinical remission rate between patients treated with vancomycin.
Followed by daily Seer to 87 for eight weeks compared to the placebo group.
And that study, we observed a 40% remission rate with tier 287 versus zero percent with placebo.
Following those initial clinical results.
We obtained additional micro bio metabolite and transcriptome executive sets the provided mechanistic insights that help explain and support the observed clinical therapeutic activity.
Microbiome biomarkers identified as associated with treatment and clinical remission are consistent with recently published data from the human Microbiome project.
Importantly, the safety profile for series to 87 was highly favorable.
With no in pilots and adverse events seen in patients administered to 87 compared to placebo.
Supported by these compelling data. We subsequently initiated the ongoing SER 287 phase two b E coat reset study.
Based on written the FDA feedback we expect that this study could serve as one of two pivotal studies to support product registration.
More recently, we were also pleased to have obtained feedback from the European Medicines Agency Committee on human medicinal products CMP, who also indicated that eco refit could serve as one of two registrational studies to support European regulatory marketing application.
The third 27 Eco reset study is a randomized placebo controlled three arm induction trial that will enroll approximately 201 patients active mild to moderate adults lives.
Who have failed prior therapy.
In the first of three arms patients receive vancomycin pre treatment followed by 10 weeks at the same daily regimen used in the arm of the phase one b trial that showed the highest clinical remission rates.
In the second arm patients also receive vancomycin pre treatment followed by two weeks of the same surged 27 daily regimen as in the first arm.
Followed by eight weeks of a lower dose.
In the prior phase one b trial Engraftment absurd to 87 with seem to plateau. After two weeks as tier 287 administration.
So this arm evaluates a regimen based on our mechanistic learnings from that study.
In the third our patients receive only placebo for both pretreatment and during the treatment period.
We continue to execute enrollment to the study at over 90 sites across the us and Canada.
To help ensure that we stay on track with our enrollment projections, we recently engaged with W.C.G. three wire.
This is a well known clinical trial specialty services company that provides enrollment assistance clinical sites to accelerate enrollment.
We continue to expect top line data in the third quarter of 2020.
I'll now turn to the tier one of nine eco sport three phase three study.
So what im saying is designed to restore the health and diversity at the microbiome.
Resulting in pathogen resistance to reduce the rate of C. diff infection recurrence.
Eco sports free is a randomized placebo controlled study were all patients are treated with standard of care antibiotics to address the qualifying acute c. diff infection.
And subjects, then received either tier one of nine or placebo.
The primary endpoint compares to C. diff recurrence rate in subjects, who received tier one of nine versus placebo up to eight weeks after dosing.
As we have disclosed previously we have modified the eco sport three to reduce the study size to 198 patients to accelerate the timing to topline clinical readouts, while maintaining statistical power.
We continue to make steady progress with the study in the face of widespread continued use of FMT to treat c. diff infection.
And we expect to report topline answer would on that nine data in early 2020.
Moving to our tier four one program.
So your four one is an oral donor derived microbiome therapeutic candidate based on the bacterial signature is similar to that observed in the gastrointestinal microbiome of responders to checkpoint inhibitor immunotherapy.
In collaboration with the Parker Institute for cancer Immunotherapy and empty Anderson Cancer Center. We are currently enrolling a randomized placebo controlled C or for a one study.
This phase one B study will enroll 30 patients with metastatic melanoma.
With all patients receiving the problem up an FDA approved anti PD one therapy.
Patients are randomized two to one ratio to either three or four one or placebo.
The study will evaluate safety and also evaluate tumor biopsies and various clinical immunologic and Biomarkers of response.
We expect to obtain seer forward one phase one b study preliminary results in the second half of 2020.
We also continue to advance our preclinical development of tier three or one.
And next generation rationally designed fermented microbiome therapeutic candidate for the treatment of both Leidos.
The design of C or three or one incorporates insights on microbiome, biomarkers and micro microbial mediated functional pathways associated with clinical remission and endoscopic improvement from our CR to 87 phase one B study.
We expect to file an IND application and initiate clinical development for tier three or one in early 2020.
I'll now pass the call back to Eric.
Thanks, Kevin.
I'll provide a brief overview of our financials and I will note that additional data.
It's included in the press release, we issued this morning.
Serious reported a net loss of $10.8 million for the second quarter of 2019 as compared to a net loss of $27.8 million for the same period in 2018.
The second quarter net loss was driven primarily by clinical and development expenses.
Personnel expenses.
And ongoing development of the company's microbiome therapeutics platform.
The lower level of cash used in the second quarter relative to recent quarters was the result of cost cutting corporate changes.
And the focusing of our pipeline implemented earlier this year.
We remain sensitive to the deployment of corporate resources.
And we expect that the lower expense levels and heard this quarter will be a proxy for subsequent quarters, leading up to the clinical Readouts expected next year.
Furious ended the second quarter with approximately $102.2 million in cash and cash equivalents.
This cash balance includes 60.6 million in net proceeds obtained in a public equity offering completed in June .
As well as the receipt of the first of three 6.7 million annual installment payments due.
Under the terms of our collaboration with Astrazeneca.
Based on our current operating plan.
Cash resources are expected to fund operating expenses and capital expenditure requirements.
Excluding net cash flows from future business development activities.
Or potential incoming milestone payments.
Into the first quarter of 2021.
Importantly.
With our recent capital raise.
We now expect to have sufficient resources to reach the multiple significant value inflection events at this anticipated in the coming year.
Both new and existing investors participated in our public offering.
And we were pleased to have had the continued support of flagship pioneering.
Through a new investment fund.
We are very happy to have flex its continued engagement and as we announced this morning.
I am delighted to welcome Steven Berenson, managing director at flagship two series Board.
As I mentioned at the beginning of the call.
We are in a period now focused on clinical execution.
Our team is working extremely hard to enroll our SER 109.
Sure to 87.
And therefore, one studies as quickly as possible.
And we look forward to 2020 being an exciting year with multiple meaningful company milestones milestones expected, including our two late stage programs seer to seven.
To answer your 109.
The microbiome field has long sought definitive clinical data that could truly validated this emerging area of matters.
We believe that next year could be a landmark period for the microbiome.
As I conclude I'd like to voice, our appreciation to the patients involved in our clinical studies.
Our employees and our investors for your continued support.
Operator, let's open the line now for questions.
Thank you.
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Our first question comes from the line of Chris Giovanni.
Cowen Your line is open. Please go ahead.
Thanks, very much good morning, guys.
During the last quarter I think as you described the FDA had the safety alert.
Related to the problems that they saw with FMTV as Youre enrolling.
Patients into this year 109 echos for three trial, what are you observing out there and is there possibility that that observation of safety with S&P has helped you at all in terms of your ability to enroll and then related to that and still on 109 can you give us a sense for what your yield is like with selecting patients where appropriate for the study obviously at a given center. They may think that they have potential candidates.
Through the processes that you've gone through you've been more specific with your diagnostic tools looking specifically for the toxin roughly what's the kind of yields for maybe every 10 patients that gets proposed to be part of the trial end up being genuinely qualifying based upon your talks and assay. Thanks.
Good morning, Chris and thanks for the question I'm going to ask Kevin to comment on on both parts of your question I will say for the first part we do think that the the FMT event was significant for this space will be significant significant for the space I will caution you that.
It's still is fairly recent in time.
In terms of seeing the impact of it into into our accrual, but let me ask Kevin to speak on both the the first the window nine piece as well as the yield question.
Yes, Chris. So this is obviously something that we've been looking at closely and I think it's fair to say that we haven't been able to at this point to see any discernible.
Effect in terms of in terms of enrollments at this point, but it's.
It's.
As we reflected on that we think it's.
It's too early to to to make.
Conclusive to determination about that.
And then with regard to the second question.
What we're what we're.
I mean, the best kind of single data point that we have is that up the patients that undergo screening in the study approximately one third of those patients.
Turning out to be talk some negative and are therefore not eligible.
So.
So I think that's the that's the key message here is that that's really enhanced our confidence and our approach, but it's the right. It's the right approach to to get the patients who are most likely to benefit from our.
Novel intervention.
And is there anything that the FDA is doing in follow up to that.
Notification to the practicing community are you anticipating that perhaps there be any discussions any guideline changes what is the sequential eight to that.
News that came across a couple of months that yet.
I think that's a distinct possibility.
That remains to be seen I know that it has.
Amplified kind of the discussions within the within the FDA.
About how to approach this the overall landscape of this complicated situation.
Yeah, Chris I would just add to that.
Obviously, we don't speak for the FDA, but what we are doing is we are in contact with our clinical sites and we are in dialogue with them as it relates to the event.
And why we believe that if you are a patient if you're a.
A physician.
It makes sense to think about an approach like we're taking as opposed to some of the other approaches out there.
And then finally as far as you believe that current echos for Threeq could be a single trial that might enable.
Submission for and approval on the safety end of it do you have confirmation that the data that you'll be accumulating from that study should be sufficient in the FDA is I notice on the slide there is afraid and additional safety data.
Or do you feel like this study would be sufficient in and of itself in terms of at least the number of patients exposures that type of thing. Thank you.
Yeah, Chris I I think we went through this in some detail in our last earnings call I would say that we don't have anything new to report again, just just for for background. This is a breakthrough orphan designated program.
If we find ourselves with a positive clinical results.
We will be very happy to engage with the FDA to to to find that right path forward.
We think that there are a number of different avenues to fulfill a residual safety requirement. If one is required.
Open label exposure as a phase four commitment.
And potentially others so.
We don't have anything new to report on that end, but of course, we we will.
Look forward to concluding the study with with what we expect will be a positive results and go from there.
Great. Thanks for taking the comments and good luck with the continued progress. Thank you.
Thanks, Chris.
Thank you and our next question comes from the line of Chris Howerton with Jefferies. Your line is open. Please go ahead.
Hey, Good morning, guys. This is fade in for Chris Thanks for taking the questions here.
My first question is related to two tenants kind of related to the previous question just asked but in terms of.
The trial acting as a potential pivotal what what really what it really take for that to be designated as a pivotal by both the FDA and M&A is there a certain amount of clinical significance or statistical significance I would give you confidence that it can serve as a pivotal.
Thanks for the question. So let me ask Kevin to comment on.
On that on that element.
Yes, I'll echo what the FDA is kind of standard responses it will be a review issue.
As to as to the data so it will be the strength of the data.
And.
In.
Meeting the primary endpoint talking mostly and then the totality of the data that we were we were present and and I think in that context.
That's why we are feeling confident because of the data that we got from our albeit small ones. These study, but it was the totality of the data that we really feel is convincing what with the objective endpoints to centralized the decentralized and discussed blinded and to Scopic reads.
And the various.
Clinical endpoints.
Which aligned very elegantly with the microbiome data.
Metabolite data and the transcript will make data that we got so we think that.
The study will be positive and it will present, a really compelling data set to support being a pivotal study.
Great. Thank you.
So my next question is related to Threeo, one and the $10 million milestone payment that you are entitled to.
I was just curious as to what exactly would trigger that is that when it wouldn't R&D filing or the dosing of the first patient trigger that or something else, perhaps just some more color there would be very helpful.
Yes. This is this is Eric we've not provided that type of specificity in terms of the contract the language in the past and I think we will.
We will do that in the future.
Except to say that with the work that we're doing in with initiating clinical development for the program.
We expect to receive that $10 million, our partners and Nestle have been terrific partners for us, including their supported the company from a financial perspective, the milestones that they've provided to us in the past has provided a really important financing for our clinical progress and.
We are excited about our three went program and having to move forward with it.
Perfect.
Okay and my last question kind of a clarification question here.
I believe you said that the 102 million in cash that you had was that inclusive of the 60 million reais or not inclusive of the 6 million range.
It was inclusive of the $60 million.
Okay. So so then can you is there a way that you could put probably put a fence around.
Sort of the operating expenses going forward I mean at a 24 to 25 million run rate.
I mean, it's going to be lower like you said, but is there any way they can put a fence around what the opex could look like over the next couple of quarters, well I think say that if you look if you look at our Q2 numbers you are seeing a fairly significant decrease over our.
Q1 run rate and prior.
And what we said and what I said in my in my prepared remarks was that the Q2 run rate was.
Likely to be indicative more indicative of our run rate up to our clinical read outs in 2020 than what our historical.
Numbers suggest as you may remember we in February of this year announced a streamlining of our corporate costs and a focusing of our portfolio on our four highest priority programs and because those changes were made during or in the first quarter, you're really seeing the run rate effective those those changes being implemented in the second quarter and reflected in our second quarter numbers. So.
I think you're seeing if you did see the way the one part of the one time items are.
Our burn is more indicative of what you should expect going forward versus what you've seen in the past.
Gotcha. Thank you guys for the questions are taking the questions and good luck on the progress.
Thank you.
Thank you and I'm showing no further questions and I would like to turn the conference back over to the company for any further remarks.
Thanks, operator, and thank you for your continued interest in series Therapeutics.
And we look forward to keeping you appraised of our progress I will note that we will be attending the Canaccord conference Tomorrow. So we look forward to seeing many of you there have a great morning, and have a great week.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect everyone have a great day.