Seres Therapeutics (MCRB) is a leading pioneer in microbiome therapeutics developing a novel class of biological drugs, explains small cap expert Tom Bishop, editor of BI Research.
The drugs are designed to treat disease by restoring the function of a disbiotic (dysfunctional) microbiome (the balance of healthy bacteria and other microorganisms that dwell in the gut and other places which ironically play a very important role in keeping a person healthy).
When the microbiome gets out of balance you can develop things like irritable bowel disease, colitis, Crohn’s or clostridium difficile.
Nestle Health Science is collaborating with Seres on this in exchange for the rights outside of North America via an upfront payment of $120 million with additional milestone payments of up to $1.9 billionpossible plus royalty payments on all future sales.
Seres is also collaborating with Memorial Sloane Kettering, the University of Pennsylvania and St. Joseph’s on other applications. Experts in the field at no less than Johnson & Johnson believe this science could also work (or help) with regard to diabetes, cancer and autoimmune diseases.
Seres’ Q4 call was fine and the shares had little reaction. The company had a cash burn of $21 million (recall it has no revenues yet). Moreover, the company said it has $150 million in cash and pushed out by another quarter to “through Q1 2019” the amount of time that would last.
Importantly this does not include a significant milestone payment due to the company when SER-287 (for ulcerative colitis) moves into the next phase clinical trial, expected by “mid-2018.”
The trial is expected to wrap primary enrollmentearly in 2019. With very encouraging results from Phase 2, this could be Seres’ first approved product, perhaps as soon as 2020.
Seres also reported some preliminary results for the ongoing SER-262 Phase 1b trial. And while the company found the results encouraging, a new trial seems to have popped up ahead of it in the pecking/priority order.
Late last year the company entered into a collaboration with MD Anderson and the Parker Institute for Cancer Immunotherapy to rapidly advance Seres’ immuno-oncology program, which involves Seres applying its expertise in the microbiome in hopes of improving the results that existing cancer drugs achieve. The stock is rated a buy.
