Hello and welcome to the Seres Therapeutics Q3 2018 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. As a reminder, this conference is being recorded. And now I would like to introduce your host for today's call, Dr. Carlo Tanzi, Vice President, Investor Relations and Corporate Communications. Sir, you may begin.

Thank you and good morning. A press release with the company's third quarter 2018 financial results and a business update became available at 7 a.m. 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 our development plans, the ability of ECOSPOR III to support SER-109 approval, the promise and potential impact of any of our microbiome therapeutics or clinical trial data, our plans to initiate clinical studies for SER-287 and SER-401, the timing and results of any clinical studies and the sufficiency of cash to fund operations. Actual results may differ materially. Additionally, these statements are subject to certain risks and uncertainties, which are discussed under the Risk Factors section of our 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 Dr. Roger Pomerantz, Seres' President, CEO and Chairman; and Eric Shaff, Chief Operating and Financial Officer. Dr. David Cook, our Chief Scientific Officer, is attending the Society of Immunotherapy for Cancer Conference and will also be on the line and available for Q&A. With that, I'll pass the call to Roger.

Thanks, Carlo, and thank you all for joining us. Seres is working to develop new microbiome-based therapeutics for serious human diseases where dysbiosis of the gastrointestinal microbiome has a central role. We are using consortia of live bacteria as therapeutic development candidates; an entirely novel treatment modality that we believe holds great promise. Since Seres was first launched in 2012, the company has been a pioneer in this emerging area. And during this time, our understanding of the potential for microbiome therapeutics has quickly advanced. As the field has progressed, our R&D focus has also evolved to follow the most promising science and data. In particular, clinical and preclinical data from our own programs as well as external findings had demonstrated the potential for microbiome therapeutics to impact the immunology and the adjacent field of immuno-oncology. Based on our view of this significant medical potential for our approach in these areas, we will be deepening our strategic focus in these important areas. As an important part of this strategy, we are very pleased to have recently hired Dr. Kevin Horgan as Executive Vice President and Chief Medical Officer. Over a three decade academic and industry career, Kevin has contributed to the development and approval of multiple therapeutics across immunology and oncology indications. He contributed to the development and approval of several leading products for inflammatory bowel disease, including Remicade, Stelara and Simponi. Most recently, Kevin was Vice President of Clinical Development at AstraZeneca where he led the development of combination immuno-oncology programs. Now let's review the progress with our pipeline programs beginning with our SER-109 ECOSPOR III Phase III program. ECOSPOR III is a randomized placebo-controlled study designed to enroll approximately 320 patients. Study enrollment is ongoing with approximately 100 clinical sites open across the U.S. and Canada. Several factors…

Thanks, Roger, and good morning, everyone. Seres reported a net loss of $21.9 million for the third quarter of 2018 as compared to a net loss of $6.9 million for the same period in 2017. The third quarter net loss was driven primarily by clinical and development expenses, personnel expenses and ongoing development of the company's microbiome therapeutics platform. The third quarter net loss figure was inclusive of $9.1 million in recognized revenue, primarily associated with the company's collaboration with Nestlé Health Science. Research and development expenses for the third quarter were $23.7 million as compared to $22.2 million for the same period in 2017. The R&D expenses were primarily related to Seres' microbiome therapeutics platform, the clinical developments of SER-109, SER-262 and SER-287 as well as the company's preclinical programs. General and administrative expenses for the third quarter were $7.6 million as compared to $8.1 million for the same period in the prior year. G&A expenses were primarily due to headcounts, professional fees and facilities costs. The decrease in cash, cash equivalents and investments balance during the quarter was $23.2 million. We ended the third quarter with approximately $72.9 million in cash, cash equivalents and investments. Based on an agreement to modify the company's collaboration with Nestlé Health Science, Seres expects to receive $40 million in milestone payments in connection with the SER-287 Phase IIb study. Because of the expectation that the SER-287 Phase IIb study could potentially serve as a pivotal trial, in our discussions with Nestlé, we agreed that following the SER-287 Phase IIb study initiation, Seres would receive $40 million in contractual payments corresponding to both the Phase II and the Phase III milestones. Current resources that do not include the $40 million milestone payments that the company expects to receive following the initiation of the SER-287 Phase IIb study are expected to fund the company into the second quarter of 2019. Beyond the expected SER-287 milestone payments, we continue to evaluate various options to strengthen the balance sheet and extend the company's operating runway. Our objective is to ensure that the company has sufficient capital to reach meaningful value inflection points. We have been and will continue to be deliberate in our capital allocation process. And as Roger mentioned, we are making decisions to accelerate the timing of clinical data readouts. During the last several months, we have had discussions with several companies interested in microbiome therapeutics for various imitations. We will evaluate any potential collaboration based on the opportunity to accelerate the development of our therapeutic candidates and the opportunity to create value for Seres' shareholders. I'll now pass the call back over to Roger.

Thanks, Eric. I want to thank you for your continued interest in Seres, and we look forward to keeping you updated on our progress. Operator, let's open the line for questions.

[Operator Instructions]. Our first question comes from the line of Terence Flynn with Goldman Sachs.

This is Holly on for Terence. Just one on SER-401. Just wondering what the gating factors are to starting that trial? And if we could potentially see initial data next year? And what you're going to be looking for with regard to that data?

Yes. So remember, we're working with two collaborators. We think some of the best in the business with them, the Anderson and the Parker Institute. With Seres, we consider this sort of a dream team. And answering the question of whether microbiome therapeutics can make meaningful changes in these desperately ill patients on checkpoint inhibitors. So we're working as rapidly but as safely as possible in getting this to patients. It's -- the centers that we're working with are highly excited with this approach. As you know, there's a lot of data both in our hands and beforehand that the microbiome clearly has a role here. We're -- we feel that with this team and moving deliberately, we'll be able to answer this question. And we look forward to doing that.

Our next question comes from the line of John Newman with Canaccord.

This is David for John. We just have two questions. One, what do you expect the primary endpoint will be for SER-287 for Phase II? And also, can you describe the pretreatment with oral vancomycin in terms of number of doses and dose level?

Sure. Thanks for the questions on this important trial. First of all, as I said, the primary endpoint is clinical remission. In 2016, for the first time in a long time, the FDA had new guidance. You can no longer use response. Only remission will be accepted as a primary endpoint allowing registration. We did that in the Ib because we knew that was coming. We will have that in the IIb that we're planning on starting in the near future. When you think about vancomycin, it's actually oral vanco which get -- does not get into the bloodstream. It's located totally in the G.I. tract. It's given orally for six days. There's no -- almost no AEs associated with this. And we found that the vancomycin, whether it is in 109, 287 and 262, the first synthetic, is critical in allowing the proper level and kinetics of engraftment. We think that the data here is pretty just positive at this point because we've seen it now in three different diseases and three different drugs. So we will use it that way, and that's what we used in the Ib where we saw the best data high-dose 287 but first with the oral vanco for six days.

Got it.

Hope that helps.

[Operator Instructions]. I'm showing no further questions at this time. I'd like to turn the call back over to the company for closing remarks.

Sure. Thanks. This is Roger. Thank you for your continued interest in the microbiome, everyone, and in Seres Therapeutics. I will look forward to continuing to keep you updated on our progress and I will now end today's call. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.