Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2024 Seres Therapeutics Incorporated Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Carlo Tanzi of Investor Relations. Please go ahead.

Thank you and good morning. Our press release with the company's fourth quarter and full year 2024 financial results and business updates became available at 7:00 a.m. Eastern Time this morning and can be found on the Investors & News section of the company's website. The company has also posted an updated corporate presentation to the website. I'd like to remind you that we'll be making forward-looking statements including statements about the timing and results of our clinical studies and data readouts, future product candidates, clinical development plans and commercial opportunities, interactions with regulatory agencies, receipt of future payments related to the VOWST sale, operating plans and our future cash runway, our ability to generate additional capital, our planned strategic focus, our efforts to secure partnership and anticipated timing of any of the foregoing and other statements, which are not historical facts. 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 with prepared remarks, I'm joined by Eric Shaff, Seres' President and CEO; Matthew Henn, CSO; Lisa von Moltke, CMO; Marella Thorell, CFO; and Terri Young, Chief Commercial and Strategy Officer. And with that, I'll pass the call over to Eric.

Thank you, Carlo, and good morning, everyone. This has been a productive period for Seres, highlighted by substantial progress advancing our lead program SER-155 as a novel biotherapeutic to prevent life threatening bloodstream infections, including those that can harbor antimicrobial resistance. We are developing SER-155 initially for allo-HSCT recipients who are at high risk of infection. Our excitement around SER-155 is based on the highly encouraging clinical results we reported late last year from a placebo-controlled Phase 1b study in patients undergoing allo-HSCT for the treatment of hematologic malignancies. This study showed a clinically meaningful 77% relative risk reduction in bloodstream infection rate for those patients administered SER-155. BSIs represent a frequent and serious complication and a growing risk to immune compromised patients undergoing HSCT, which can result in adverse impacts on patient outcomes. I would like to highlight the progress we have made since obtaining these initial clinical data over the past several months. Earlier this year, we released exploratory translational biomarker results from the completed SER-155 Phase 1b study. Matt will cover these data in more detail in a moment, but at a high level, the biomarker data reinforce the drug's mechanisms of action and are consistent with a significant BSI reduction and safety profile observed in the clinical study. The data indicate that BSI risk is reduced by promoting epithelial barrier integrity, which can decrease the likelihood of translocation of bacteria and the entry of pro-inflammatory molecules from the gastrointestinal tract into the bloodstream. Our data also suggests SER-155 is positively impacting systemic immune and inflammatory responses, which support the opportunity for our biotherapeutics to provide benefit to patients living with serious gut related inflammatory and immune diseases such as inflammatory bowel disease, ulcerative colitis and Crohn's disease. These remain large in underserved patient groups and the…

Thanks, Eric. As Eric shared, we have continued to receive constructive feedback from the FDA to clarify further development plans for SER-155 as part of a Type B breakthrough therapy designation engagement. By pursuing a deliberate and thoughtful dialogue with the agency, we believe that we ensure that we are moving the program forward in a manner that is aligned with the FDA. The FDA recommended that further development include a Phase 2 study to facilitate and refine the design of a registrational trial and dataset. In a next study, the agency indicated support for a reduction in bloodstream infections at 30 Days post-HSCT as the primary endpoint. Notably, in our prior Phase 1b study, this was the period in which all BSIs occurred. We are pleased with this outcome and expect to replicate many elements from our prior successful SER-155 Phase 1b study in our next protocol. In addition, the FDA confirmed their ongoing expectations for chemistry, manufacturing and control parameters. Based on the feedback obtained, our team continues to refine the design of the planned next study, which could be either a standalone Phase 2 study or a Phase 2 as part of a seamless Phase 2/3. In either case, we anticipate the study will include an adaptive design with a meaningful interim analysis when approximately half of the enrolled patients have reached the primary endpoint, informing the study path forward and potential indication expansion. We plan to submit a draft study protocol to the FDA during the second quarter with input expected from potential development partners and to seek further clarity on our proposed study design from the agency. Now before I pass the call to Matt to discuss our recent SER-155 exploratory biomarker results, I'd like to remind you of the clinical results we shared a…

Thank you, Lisa. Our lead program SER-155 is a live biotherapeutic product designed to decolonize specific GI pathogens, improve epithelial barrier integrity to prevent bacterial bloodstream infections, including those involving pathogens with antimicrobial resistance or AMR and to induce immune homeostasis in patients undergoing allo-HSCT. Our mechanistic goals were to reduce the likelihood of harmful bacteria and pro-inflammatory products moving from the gut into the bloodstream and also to reduce systemic inflammatory responses. The SER-155 Phase 1b study was designed to be a translationally rich study and included the analysis of various exploratory biomarkers selected to enable a deeper understanding of the mechanisms of action of SER-155, the drug's clinical pharmacology and how we may apply our novel drug modality towards the treatment of additional diseases. We recently presented biomarker results in a poster presentation at the Tandem Conference. Notably, the SER-155 Phase 1b placebo-controlled study exploratory biomarker data in allo-HSCT recipients reinforces the drug's mechanism of action and are consistent with clinical results showing a significant reduction in BSIs and the observed safety profile. Exploratory translational biomarker assessments included fecal albumin an and established biomarker of epithelial barrier integrity as well as systemic inflammatory biomarkers measured in plasma that included interferon gamma, TNF-alpha, IL-17 and IL-8. These assessments were evaluated during the HSCT peri-transplant period, which is the period from the end of the first treatment course of SER-155 through to neutrophil engraftment. Following SER-155 administration and in the peri-transplant period, SER-155 was associated with lower levels of fecal albumin and lower concentrations of certain plasma biomarkers of systemic inflammation, specifically interferon gamma, TNF-alpha, IL-17 and IL-8. More specifically, there was a statistically significant decrease in fecal albumin. The presence of fecal albumin in fecal matter, which is produced in the liver and normally circulates in the bloodstream indicates…

Thanks, Matt, and good morning, everyone. As we've discussed, bacterial bloodstream infections are a medically significant and life threatening complication experienced by multiple patient groups, including allogeneic and autologous stem cell transplant recipients, CAR T recipients, other cancer patients with neutropenia, individuals with chronic liver disease, solid organ transplant recipients as well as patients in the intensive care unit and long-term acute care facilities. Our analysis indicates that the commercial opportunity in allo-HSCT alone could be sizable and that there is considerable ability to extend this opportunity via indication expansion to some of these adjacent patient populations. To better characterize the opportunity in allo-HSCT, we recently completed multiple rounds of market research with US Healthcare Professionals or HCPs and payers. The results confirmed a high unmet need to prevent BSIs and a desire for better prophylactic options. The results were supportive of a strong value proposition and a robust commercial opportunity for SER-155. Both HCPs and payers indicated an awareness of the high clinical burden of BSI, driven by the frequency of occurrences and poor associated outcomes. Both groups cited a lack of efficacious prophylactic therapies and expressed significant ongoing concerns around the risk of BSIs, febrile neutropenia, sepsis and antibiotic-resistant infections in this already vulnerable patient population. Specific to SER-155, the proposed risk reductions of BSIs and related endpoints were seen as clinically meaningful and incited enthusiasm amongst respondents. US payers also shared their expectation that SER-155 would primarily be reimbursed via the outpatient pharmacy benefit given the timing and route of administration, which allows for dosing outside of the inpatient hospital setting. Notably, in our Phase 1b study, 100% of patients received their first dose of SER-155 outside of the hospital setting. The reimbursement pathway for SER-155 along with the very high incremental costs for patients who do experience BSI's post-transplant are indicators of strong pricing potential in the category. There are an estimated 9,300 allo-HSCT procedures conducted annually in the US. The European Society for Bone Marrow Transplant recently updated their incidence estimates for Europe, reporting approximately 20,000 procedures in 2023. With a higher number of reported procedures than the US and the presence of shared market dynamics with the US such as unmet need and a high cost of care for these patients. We also see a robust opportunity for SER-155 in Europe. To summarize, we are excited about the initial SER-155 opportunity to prevent infections in allo-HSCT patients. Beyond this anchor population, we have the opportunity to extend to medically relevant adjacencies across hematologic malignancies as well as to other areas outside of oncology. We believe that with this strategy SER-155 and our additional biotherapeutics could deliver multiple highly significant blockbuster opportunities. With that, I'll now pass the call to Marella.

Thanks, Terri, and good morning, everyone. First, I will briefly recap the terms of the VOWST sale transaction, which closed in September, and then share our quarterly and full year financial results. With the VOWST transaction, Seres received a payment of $155 million at closing, which represented consideration of $175 million less approximately $20 million related to the settlement of net payables to Nestle from Seres. Included in the upfront consideration was a $60 million prepaid milestone and $15 million related to an equity investment in Seres common stock by Nestle. A portion of these proceeds were used to retire our debt with Oaktree, and we are now debt free. Seres received the first installment payment of $50 million in January of 2025 and we are due to receive an additional $25 million less approximately $1.5 million in employment related payments in July of this year, provided we remain in material compliance with the terms of the transition services agreement, which we expect to do. Additionally, our operations are simpler, and our cash burn is lower following the transaction. The company's headcount is approximately 100 team members and we have fewer facilities having transferred certain leases to Nestle. Turning to the results. Seres reported a net loss from continuing operations of $15.7 million for the fourth quarter of 2024 as compared to a net loss from continuing operations of $34.7 million for the same period in 2023. We reported a net loss from continuing operations of $125.8 million for the full year 2024 as compared to a net loss from continuing operations of $190.1 million for 2023. The year-to-year reduction in net loss was due primarily to lower operating expenses of approximately $74 million and a $5.7 million gain on sale recognized in the fourth quarter of 2024 related to…

Thanks, Marella. We are excited about the progress we have made, especially in our efforts to further the development of SER-155. We have obtained confirmatory biomarker data that extend our understanding of this live biotherapeutic supporting the intended mechanisms of action in the clinical setting. The regulatory progress we have made is also notable. We are very pleased to have obtained breakthrough therapy designation as well as the constructive guidance obtained from FDA related to continued development. Our team looks forward to continued dialogue with the agency as we seek the most efficient and expeditious approach to advancing SER-155 forward. Before I close, I'd like to extend our appreciation to Lisa, who will be transitioning from Seres to another professional opportunity. Lisa has made significant contributions to Seres, including leading the clinical development and approval of VOWST, overseeing SER-155 in the allo-HSCT Phase 1b study and our planned next steps for the SER-155 program. Lisa has also built a strong clinical and regulatory team and the company is well positioned for ongoing interactions with FDA and preparation for the next SER-155 study activities. Moving forward, Kelly Brady, SVP, Clinical Development and Dr. Dennis Walling, SVP, Clinical Development and Ann Kurowski, SVP of Regulatory Affairs will lead the advancement of our SER-155 clinical plans and FDA interactions. Each of these individuals have decades of industry experience and key roles successfully developing FDA approved medicines. I look forward to working closely with Kelly, Dennis and Ann as we further the development of SER-155 and our additional biotherapeutic programs. While our immediate focus is on SER-155 and allo-HSCT, in the longer term, we believe that there are opportunities to broaden the target patient populations for this therapy into other medically vulnerable groups. We continue to engage in discussions with prospective partners and believe both SER-155 and our broader portfolio represent attractive collaboration opportunities. We look forward to updating you as we advance our priorities across SER-155 and allo-HSCT and the strategic goals we've outlined this morning. With that, we'll close our remarks. Operator, please open the call up for questions.

[Operator Instructions] Your first question comes from the line of Joseph Thome with TD Cowen. Please go ahead.

Hi, there. Good morning. Thank you for taking my question and best wishes to Lisa on her next step. Maybe just in terms of the feedback that you received from the FDA, it sounds like you got some feedback related to manufacturing and controls. I guess is there anything that you'll need to implicate or do in terms of changing manufacturing between the Phase 1 and the potential Phase 2, Phase 2/3? And then second, when you think about the types of patients that would be enrolled in the next study, would you consider making any changes versus what you saw in the Phase 1? It sounds like your event rate kind of coincided with that 30 Day post-HSCT. So it might be the right population, but are you anticipating making any changes? Thank you.

Hey, Joe. Good morning and thanks for the question. So let me start I might ask Lisa to comment on your second question and Chris to weigh in on the CMC side. But let's step back for a second. We don't get into the kind of play-by-play with the FDA, but let me offer a couple of thoughts in general. We had received comprehensive feedback from the FDA, including their suggestion that we consider the next study for 155 to be a Phase 2, right. And subsequently from that we had asked a set of clarifying questions. We have not heard answers to those questions yet. But let me be clear that our expectation then as now is that the next step for us is to submit the clinical protocol, right. And that will be the major next step in unlocking the next step in terms of clinical progress. Now we talked about both a standalone Phase 2 and an adaptive 2/3. If the next study is a standalone Phase 2, our assessment is that we know what we need to do in order to move forward with that. And if it is an adaptive 2/3, then by definition, there will be more work to do and more alignment with FDA that will be required both on the clinical side as well as to your question the CMC side. So we're in the process now of thinking about those relative tradeoffs and considering those. But maybe let me make one more comment before I pass it off. One is that we're moving, we're not waiting. We're doing those key critical path items to enable us to move forward in the next study, whether it's a standalone Phase 2 or a seamless 2/3. And the last thing I would just say is that, because we're in a partnership process, our expectation is that a partner will want to have a point of view on some of these questions. So that's what we think about. Maybe we can ask Lisa to answer your second part and then Chris if I missed something on the first part.

Yes. So with regard to the population, we think we have the right population. It's a broad population. In a bigger study, what you could see is us taking steps to make sure we can handle whatever variability. And there are multiple ways you can do that either upfront or through stratifying or through planned analyses. But we think we have the population.

Okay. Chris, any other comments on the first part?

Thanks, Eric. This is Chris McChalicher, Head of Manufacturing and Quality. To your questions about manufacturing, essentially, the feedback from the FDA was confirmatory that our plans moving forward allow us to start manufacturing today. We're already in our manufacturing campaign and have full confidence that we'll be able to supply the drug for either of the clinical options.

Perfect. Thank you very much.

Thanks for the question, Joe.

Your next question comes from the line of Tessa Romero with JPMorgan. Please go ahead.

Good morning, team. This is Caroline Pocher on for Tessa Romero with JPMorgan. Thanks for taking our questions. And also from us, best wishes to Lisa. So, in terms of questions, how has the recent FDA feedback and insight you have received thus far fallen relative to your expectations going into these interactions? And how would a Phase 2/3 differ from just a Phase 2 study? And why do you think that the FDA recommended the next study be a Phase 2?

Yes. Caroline, let me start, and maybe I'll ask Lisa to comment further. I'd start with just a reminder that we received breakthrough therapy designation at the end of last year. We were really pleased with that. To us that suggests a couple of things. One is that the FDA recognizes that this is an area of unmet need and that the evidence that was provided or the initial data that was provided in the Phase 1b was interesting to them and they see this as an interesting path forward. In terms of how the FDA guidance or the feedback fell relative to our expectations, we thought it was a constructive and robust and comprehensive set of comments for us. And we think that there's a great deal that we can learn from it and that we will take forward. In terms of Q3, I kind of outlined some of those pieces in the answer to the last question. I might ask Lisa to comment further, but there's a tradeoff in some sense of having certain items locked as part of a 2/3 seamless design. And perhaps on the other side of that, the benefit of, we would hope speed and reduce cost from not having a pause between a 2 and a 3, but maybe Lisa can comment further.

Yes. No, as Eric said, the main difference with a Phase 2/3 seamless is that the requirement to pre-specify and lock things in upfront. And that obviously can take more time and discussion with the agency to get that all settled. I think in any case, what the agency was asking for is more data. And I think the existing data set, which was impressive enough to get us breakthrough designation is still relatively small. And I think more data is something that would be helpful for us in designing the next study as well.

Okay, great. Thank you so much.

Thanks for the question Caroline.

Your next question comes from the line of Ted Tenthoff with Piper Sandler. Please go ahead.

Great. Thank you very much and congrats on the continued progress. My question really has to do with safety database. I know that that was part of the consideration with VOWST approval. And I was wondering whether you guys have started to discuss the size of the potential safety database, based on the prior experience with VOWST. Does that at all increase the agency's comfort with microbiome therapeutics or are they really looking at as one off? And obviously, there's differences in population and just size of population. But curious what the conversations have been around the safety database? Thanks.

Yes, Ted, good morning and thanks for the question. So I'm going to start and I might start with a little bit of a caution that we are very careful not to speak for the FDA. We can offer our thoughts as to what we think they're thinking, but it's really just our perspective. Obviously, you mentioned VOWST as a precedent and it's an important one. And in our experience with VOWST, it was clear that the FDA was looking for at least 300 patients in terms of exposure. How relevant that is or how much incremental comfort they've had on the modality. Let me ask Lisa for her opinion, but ultimately, I think it's the FDA that's going to speak most importantly.

Yes. Generally, the discussion on the safety database evolves as the safety profile evolves. And I think we know by guidance in our past life with VOWST that they have a sort of minimum threshold of 300. That's a nice number for them. But it really varies too with the population. It's not just the therapy. It's the population. And we ourselves have been really careful and cautious with this population. We're very pleased with what we've seen so far and we expect it to continue. But I think we'll have these conversations with the agency as we generate more data.

Makes a lot of sense. Thanks. And Lisa wishing you all the very best. It's been an absolute pleasure working with you.

Thank you.

Thanks for the questions, Ted.

Your next question comes from the line of John Newman with Canaccord Genuity. Please go ahead.

Hi, guys. Thanks for taking my question. And Lisa it's been a pleasure to work with you as well. A lot of great accomplishments at Seres and best of luck going forward. My question is, wondering if you could give us any sense on the potential size of the next study for 155. Let's just assume at this point, maybe you run a Phase 2. And also, in addition to the 30 Day bloodstream infection endpoint, what might be some of the other potential efficacy endpoints that you could look at? I'm curious if you might look at things like acute GvHD maybe with a little bit longer follow-up etcetera. Thanks.

Yes, John, maybe I'll start and then I'll ask Lisa to comment. If in fact we're looking at a standalone Phase 2, I think one of the real advantages of that is that, we think that there's an opportunity to get real data back reasonably quickly. And that's one of the reasons that we've designed an interim look that we think could provide meaningful data on both efficacy, safety and help inform how we move forward to a pivotal study. So whereas we haven't guided on numbers, we did say in our prepared remarks that we think we could potentially hit an interim lead within 12 months of starting a study, which is pretty tangible. But in terms of other endpoints that will be of interest, maybe Lisa can comment.

Sure. So in addition to the BSIs, we'll be looking at fever during neutropenia, antibiotic use, hospitalization, ICU utilization. We will absolutely follow GvHD rates just as part of our safety assessment. What we know from the field is that the rates are dropping pretty seriously and we saw single-digit low single-digit rates in our Phase 1 study. So it's probably these kinds of rates are not going to be something where we're going to be able to tease out any kind of efficacy benefit, but we will be able to chart that for safety.

And then John, I might just add, additional Lisa's comments around GvHD and the impact of PTCy. We also have potentially the opportunity to leverage an interim result to think about adjacencies from allo-HSCT. So we've talked in the past about other areas that we think 155 could potentially be helpful and where we think the mechanism could be effective. So there's a lot that we could have in a relatively short amount of time, based on our clinical experience in the first study as well as our expectations on enrollment rates in the next study.

Okay. Thank you.

Thanks for the question.

I will now turn the call back to management for closing remarks.

So thank you, operator, and thanks to all of you for joining us this morning. We appreciate the opportunity to update you on our progress. We hope that everyone has a great week and we will speak again soon. Thanks very much and have a good morning.

Ladies and gentlemen, that concludes today's call. Thank you and have a great day.