Market Overview

Seres Therapeutics Reports First Quarter 2017 Financial Results and Provides Update on Operational Progress


Therapeutics Inc.
(NASDAQ:MCRB) today reported first quarter 2017
financial results and provided a progress update on multiple microbiome
clinical programs, including three clinical-stage therapeutic candidates
seeking to address serious human diseases.

"Seres is making strong progress throughout our broad pipeline of
microbiome therapeutics." said Roger J. Pomerantz, M.D., President, CEO
and Chairman of Seres. "Following positive feedback from the FDA, we are
working to rapidly initiate the SER-109 ECOSPOR III clinical study, and
we expect study start in mid-year. This trial could potentially serve as
the basis for the approval of SER-109, which may represent the first
approved microbiome therapeutic. In addition, we have advanced our Phase
1b study of SER-287 in patients with ulcerative colitis, as well as our
Phase 1b study of SER-262 in patients with primary C. difficile infection.
We look forward to a highly data rich period ahead, with readouts from
both the SER-287 and SER-262 studies expected in the second half of

Recent Highlights and Events

  • SER-109 ECOSPOR III clinical study planning following positive Type
    B meeting with FDA:
    Seres plans to initiate a new SER-109 clinical
    study (ECOSPOR III) in approximately 320 patients with multiply
    recurrent Clostridium difficile (C. difficile) infection. Study
    participants will be randomized 1:1 between SER-109 and placebo.
    Diagnosis of C. difficile infection for both study entry and
    for endpoint analysis will be confirmed by C. difficile
    cytotoxin assays. Patients in the SER-109 arm will receive a total
    SER-109 dose, administered over three days, approximately 10-fold
    higher than the dose used in the prior ECOSPOR study. ECOSPOR III will
    evaluate patients for 24 weeks and the primary endpoint will compare
    the C. difficile recurrence rate in subjects who receive
    SER-109 versus placebo at up to eight weeks after dosing. The FDA has
    agreed that this new trial may qualify as a pivotal study with
    achievement of a persuasive clinical effect and addressing FDA
    requirements, including clinical and statistical factors, an
    adequately sized safety database, and certain CMC parameters.

    ECOSPOR III study protocol has been finalized, and the protocol has
    already been cleared by several institutional review boards. Seres has
    completed substantial clinical site feasibility work and has selected
    the large majority of ECOSPOR III investigator sites. ECOSPOR III
    subjects will include C. difficile patients being treated as
    outpatients, as well as those treated as inpatients located in
    hospitals, rehabilitation facilities and long term care facilities.
    Seres plans to utilize over 100 clinical sites in both the U.S. and
    Canada. The company expects to initiate ECOSPOR III in mid 2017.
  • Medical meeting oral presentation: Michele Trucksis, M.D.,
    Ph.D., Executive Vice President and Chief Medical Officer, delivered
    an oral presentation: SERES-004: First placebo-controlled trial of
    an investigational oral microbiome drug (SER-109) to reduce recurrence
    Clostridium difficile infection at the 27th European
    Congress of Clinical Microbiology and Infectious Diseases (ECCMID)
    meeting in Vienna, Austria on April 22, 2017.
  • SER-287 Phase 1b study progress: Seres is advancing the SER-287
    Phase 1b clinical study in subjects with mild-to-moderate ulcerative
    colitis, failing first line therapies. SER-287 is a biologically
    sourced Ecobiotic® microbiome therapeutic candidate. Seres activated
    additional SER-287 Phase 1b study clinical sites and the study
    enrolled an increasing number of subjects. Study results continue to
    be expected in the second half of 2017.
  • SER-262 Phase 1b study progress: Seres is advancing the SER-262
    Phase 1b clinical study in patients with primary C. difficile
    infection. SER-262, an Ecobiotic®, rationally-designed, fermented
    microbiome therapeutic candidate, is the first synthetically-derived
    and designed microbiome therapeutic candidate to reach clinical-stage
    development. Additional SER-262 Phase 1b study subjects were enrolled.
    Top-line data for SER-262 continues to be expected in the second half
    of 2017.

Financial Results

Seres reported a net loss of $25.5 million for the first quarter of
2017, as compared to a net loss of $19.7 million for the same period in
2016. The increase in first quarter net loss was driven primarily by
continued growth in clinical and development expenses as well as
increased headcount, and ongoing development of the Company's microbiome
therapeutics platform. The first quarter net loss figure was inclusive
of $3.0 million in revenue recognized associated with the Company's
collaboration with Nestlé Health Science.

Research and development expenses for the first quarter were $20.1
million, as compared to $15.4 million for the same period in 2016. The
increase in research and development expense was primarily due to
expenses related to our microbiome therapeutics platform, the clinical
development of SER-109, SER-262 and SER-287, as well as the Company's
preclinical programs.

General and administrative expenses for the first quarter were $8.8
million, as compared to $7.2 million for the same period in the prior
year. The increase in general and administrative expense was primarily
due to increased headcount, an increase in professional fees, and
facility expansion to support overall growth.

The decrease in cash balance during the quarter was $27.8 million. Seres
ended the first quarter with approximately $202.2 million in cash, cash
equivalents and investments.

Conference Call Information

Seres' management will host a conference call today, May 4, 2017, at
8:00 a.m. ET. To access the conference call, please dial 844-277-9450
(domestic) or 336-525-7139 (international) and reference the conference
ID number 11167224. To join the live webcast please visit the "Investors
and Media" section of the Seres website at

About Seres Therapeutics

Seres Therapeutics, Inc. is a leading microbiome therapeutics platform
company developing a novel class of biological drugs that are designed
to treat disease by restoring the function of a dysbiotic microbiome,
where the natural state of bacterial diversity and function is
imbalanced. The Phase 2 study of Seres' program SER-109 has been
completed in multiply recurrent Clostridium difficile infection.
Seres' second clinical candidate, SER-287, is being evaluated in a Phase
1b study in patients with mild-to-moderate ulcerative colitis (UC).
Seres is also developing SER-262, the first ever synthetic microbiome
therapeutic candidate, in a Phase 1b study in patients with primary CDI.
For more information, please visit
Follow us on Twitter @SeresTx.

Forward-looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements contained in this press release that do not relate to matters
of historical fact should be considered forward-looking statements,
including without limitation statements regarding the timing, design,
and potential results of the ECOSPOR III study for SER-109, the
potential for the ECOSPOR III study to qualify as a pivotal study, the
timing and results of our clinical trials, and dysbiosis as an
underlying cause of disease.

These forward-looking statements are based on management's current
expectations. These statements are neither promises nor guarantees, but
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements,
including, but not limited to, the following: we have incurred
significant losses, are not currently profitable and may never become
profitable; our need for additional funding, which may not be available;
our limited operating history; the unpredictable nature of our early
stage development efforts for marketable drugs; the unproven approach to
therapeutic intervention of our microbiome therapeutics; the lengthy and
expensive process of clinical drug development, which has an uncertain
outcome; potential delays in enrollment of patients which could affect
the receipt of necessary regulatory approvals; potential delays in
regulatory approval, which would impact the ability to commercialize our
product candidates and affect our ability to generate revenue; any fast
track or Breakthrough Therapy designation may not lead to faster
development, regulatory approval or marketing approval; our possible
inability to receive orphan drug designation should we choose to seek
it; our reliance on third parties to conduct our clinical trials and the
potential for those third parties to not perform satisfactorily; our
reliance on third parties to manufacture our product candidates, which
may delay, prevent or impair our development and commercialization
efforts; our lack of experience in manufacturing our product candidates;
the potential failure of our product candidates to be accepted on the
market by the medical community; our lack of experience selling,
marketing and distributing products and our lack of internal capability
to do so; failure to compete successfully against other drug companies;
potential competition from biosimilars; failure to obtain marketing
approval internationally; post-marketing restrictions or withdrawal from
the market; anti-kickback, fraud, abuse, and other healthcare laws and
regulations exposing us to potential criminal sanctions; recently
enacted or future legislation; compliance with environmental, health,
and safety laws and regulations; protection of our proprietary
technology; protection of the confidentiality of our trade secrets;
changes in United States patent law; potential lawsuits for infringement
of third-party intellectual property; our patents being found invalid or
unenforceable; compliance with patent regulations; claims challenging
the inventorship or ownership of our patents and other intellectual
property; claims asserting that we or our employees misappropriated a
third-party's intellectual property or otherwise claiming ownership of
what we regard as our intellectual property; adequate protection of our
trademarks; ability to attract and retain key executives; managing our
growth could result in difficulties; risks associated with international
operations; potential system failures; the price of our common stock may
fluctuate substantially; our executive officers, directors, and
principal stockholders have the ability to control all matters submitted
to the stockholders; a significant portion of our total outstanding
shares are eligible to be sold into the market; unfavorable or lacking
analyst research or reports; and we are currently subject to securities
class action litigation. These and other important factors discussed
under the caption "Risk Factors" in our Annual Report on Form 10-K filed
with the Securities and Exchange Commission, or SEC, on March 16, 2017
and our other reports filed with the SEC, including the Quarterly Report
we intend to file later today, could cause actual results to differ
materially from those indicated by the forward-looking statements made
in this press release. Any such forward-looking statements represent
management's estimates as of the date of this press release. While we
may elect to update such forward-looking statements at some point in the
future, we disclaim any obligation to do so, even if subsequent events
cause our views to change. These forward-looking statements should not
be relied upon as representing our views as of any date subsequent to
the date of this press release.




(unaudited, in thousands, except share and per share data)

March 31, December 31,
2017   2016  
Current assets:
Cash and cash equivalents $ 41,899 $ 54,539
Investments 145,174 138,704
Prepaid expenses and other current assets   5,188     5,126  
Total current assets 192,261 198,369
Property and equipment, net 36,089 36,125
Long-term investments 15,099 36,752
Restricted cash   1,401     1,400  
Total assets $ 244,850   $ 272,646  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 5,636 7,587
Accrued expenses and other current liabilities 9,550 10,812
Deferred revenue - related party   12,058     12,058  
Total current liabilities 27,244 30,457
Lease incentive obligation, net of current portion 10,295 10,730
Deferred rent 2,117 2,072
Deferred revenue, net of current portion - related party   93,741     96,756  
Total liabilities   133,397     140,015  
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at
March 31, 2017 and December 31, 2016; no shares issued and
outstanding at March 31, 2017 and December 31, 2016
Common stock, $0.001 par value; 200,000,000 shares authorized at
March 31, 2017 and December 31, 2016; 40,386,878 and 40,355,753
shares issued and outstanding at March 31, 2017 and December 31,
2016, respectively
40 40
Additional paid-in capital 311,229 306,931
Accumulated other comprehensive income (151 ) (149 )
Accumulated deficit   (199,665 )   (174,191 )
Total stockholders' equity   111,453     132,631  
Total liabilities and stockholders' equity $ 244,850   $ 272,646  




(unaudited, in thousands, except share and per share data)

Three Months Ended March 31,
2017       2016  
Collaboration revenue - related party $ 3,015   $ 2,710  
Total revenue 3,015 2,710
Operating expenses:
Research and development expenses $ 20,143 15,416
General and administrative expenses   8,762     7,210  
Total operating expenses   28,905     22,626  
Loss from operations   (25,890 )   (19,916 )
Other income (expense):
Interest income 775 268
Other income (expense):   (359 )   (56 )
Total other income, net   416     212  
Net loss $ (25,474 ) $ (19,704 )
Net loss per share attributable to common stockholders, basic

and diluted

$ (0.63 ) $ (0.50 )
Weighted average common shares outstanding, basic and diluted   40,368,536     39,186,130  
Other comprehensive (loss) income:
Unrealized (loss) gain on investments, net of tax of $0   (2 )   78  
Total other comprehensive (loss) income   (2 )   78  
Comprehensive loss $ (25,476 ) $ (19,626 )

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