Seres Therapeutics, Inc. (NASDAQ:MCRB) is a commercial-stage microbiome therapeutics company focused on developing and commercializing a novel class of biological drugs designed to treat disease by modulating the microbiome to restore health. The company's first approved product, VOWST, was launched in the United States in June 2023 to prevent the recurrence of Clostridioides difficile infection (CDI) in adults following antibacterial treatment for recurrent CDI. While the initial launch of VOWST showed promising early uptake, the company and its partner Nestlé Health Science have identified opportunities to refine the execution of the commercialization strategy to drive further acceleration of demand.

In addition to the commercialization of VOWST, Seres is advancing its pipeline of microbiome therapeutic candidates, with a focus on the Phase 1b study of SER-155 in patients undergoing allogeneic hematopoietic stem cell transplantation (allo-HSCT). The company recently completed enrollment in the placebo-controlled Cohort 2 of the SER-155 study, and data readout is anticipated in late Q3 2024. Seres believes the SER-155 program has the potential to address serious infections and related complications in medically vulnerable patient populations, including those with chronic liver disease, cancer neutropenia, and solid organ transplants.

For the full year 2023, Seres reported annual revenue of $126.3 million and a net loss of $113.7 million. The company's annual operating cash flow was -$117.4 million, and its annual free cash flow was -$125.3 million. These financial results reflect the company's investments in the commercialization of VOWST and the advancement of its pipeline, including the SER-155 program.

In the first quarter of 2024, Seres reported quarterly revenue of $0.0 million and a net loss of $40.1 million. The company's quarterly operating cash flow was -$35.2 million, and its quarterly free cash flow was -$35.3 million. These quarterly results were impacted by the company's continued investments in the VOWST launch and the SER-155 clinical development.

Business Overview

Seres Therapeutics is a pioneer in the field of microbiome therapeutics, leveraging its proprietary platform to develop novel biological drugs designed to treat disease by modulating the microbiome. The company's lead product, VOWST, is the first and only orally administered microbiome therapeutic approved by the FDA. VOWST is indicated to prevent the recurrence of CDI in adults following antibacterial treatment for recurrent CDI.

The company's pipeline also includes SER-155, a microbiome therapeutic candidate being evaluated in a Phase 1b study for the prevention of gastrointestinal-derived infections, resulting bloodstream infections, and graft-versus-host disease in patients undergoing allo-HSCT. Seres believes that the SER-155 program has the potential to address serious infections and related complications in a broad range of medically vulnerable patient populations.

Seres has built a differentiated microbiome therapeutics platform that incorporates high-resolution analysis of human clinical data, preclinical screening using customized disease models, and a proprietary strain library spanning a broad biological and functional breadth. This platform enables the company to identify specific microbes, microbial genes, and microbial metabolites associated with disease, and to design therapeutic consortia of bacteria with targeted pharmacological properties.

Risks and Challenges

Seres faces several risks, including the ability to successfully commercialize VOWST and drive continued growth, the timely completion and positive results of the SER-155 Phase 1b study, the company's ability to secure additional funding to support its operations and pipeline development, and the inherent risks associated with the development and commercialization of novel microbiome therapeutic candidates.

The company has not provided specific financial guidance for 2024. However, management has stated that the company's current cash resources, along with potential additional financing options, are expected to support operations through obtaining the SER-155 Cohort 2 data readout and into the fourth quarter of 2024.

Financials

Seres reported annual revenue of $126.3 million and a net loss of $113.7 million for the full year 2023. The company's annual operating cash flow was -$117.4 million, and its annual free cash flow was -$125.3 million. These financial results reflect the company's investments in the commercialization of VOWST and the advancement of its pipeline, including the SER-155 program.

In the first quarter of 2024, Seres reported quarterly revenue of $0.0 million and a net loss of $40.1 million. The company's quarterly operating cash flow was -$35.2 million, and its quarterly free cash flow was -$35.3 million. These quarterly results were impacted by the company's continued investments in the VOWST launch and the SER-155 clinical development.

Seres' financial position as of March 31, 2024, included $111.2 million in cash and cash equivalents. The company's current cash resources, along with potential additional financing options, are expected to support operations through obtaining the SER-155 Cohort 2 data readout and into the fourth quarter of 2024.

Liquidity

As of March 31, 2024, Seres had $111.2 million in cash and cash equivalents. The company's current cash resources, along with potential additional financing options, are expected to support operations through obtaining the SER-155 Cohort 2 data readout and into the fourth quarter of 2024.

Seres has identified conditions and events that raise substantial doubt about the company's ability to continue as a going concern. The company's ability to continue as a going concern is dependent upon its ability to obtain additional financing or engage in other strategic transactions to fund its operations. Seres is actively evaluating various options to strengthen its balance sheet and support the continued development of its pipeline, including the potential for non-dilutive capital.

VOWST Commercialization

VOWST, Seres' first approved product, was launched in the United States in June 2023 to prevent the recurrence of CDI in adults following antibacterial treatment for recurrent CDI. While the initial launch of VOWST showed promising early uptake, the company and its partner Nestlé Health Science have identified opportunities to refine the execution of the commercialization strategy to drive further acceleration of demand.

In the first quarter of 2024, VOWST net sales were $10.1 million, reflecting an estimated gross-to-net reduction of approximately 15%. Seres' share of the VOWST collaboration loss for the quarter was $7.1 million. The company and Nestlé are focused on expanding the reach of the VOWST sales team, enhancing the patient enrollment process, and increasing payer coverage to drive continued growth.

SER-155 Clinical Development

Seres is advancing its pipeline of microbiome therapeutic candidates, with a focus on the Phase 1b study of SER-155 in patients undergoing allo-HSCT. SER-155 is a consortium of 16 cultivated bacterial strains designed to prevent gastrointestinal-derived infections, resulting bloodstream infections, and graft-versus-host disease in this patient population.

The company recently completed enrollment in the placebo-controlled Cohort 2 of the SER-155 study, and data readout is anticipated in late Q3 2024. Seres believes the SER-155 program has the potential to address serious infections and related complications in a broad range of medically vulnerable patient populations, including those with chronic liver disease, cancer neutropenia, and solid organ transplants.

Intellectual Property and Regulatory Exclusivity

Seres has an extensive patent portfolio related to the development and manufacture of microbiome therapeutics, including both company-owned patents and applications, as well as licensed intellectual property. The company's intellectual property rights related to VOWST extend through 2034, and its rights related to SER-155 extend through 2041.

In addition, VOWST has been granted a 12-year period of exclusivity in the United States, and new molecular entities generally receive eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization in the European Union.

Conclusion

Seres Therapeutics is at a pivotal stage, with the commercial launch of its first approved product, VOWST, and the advancement of its promising microbiome therapeutic pipeline, led by the SER-155 program. While the company has faced some challenges in the early stages of the VOWST launch, it is working closely with its partner Nestlé to refine the commercialization strategy and drive further acceleration of demand.

The upcoming data readout for the SER-155 Phase 1b study represents a significant potential value driver for the company, as the program aims to address serious infections and related complications in medically vulnerable patient populations. Seres' proprietary microbiome therapeutics platform and extensive intellectual property portfolio provide a strong foundation for the company's continued innovation and growth.

As Seres navigates the commercialization of VOWST and advances its pipeline, the company will need to secure additional funding to support its operations and development efforts. The company is actively evaluating various financing options to strengthen its balance sheet and position the business for long-term success.

Overall, Seres Therapeutics is at a critical juncture, with the potential to capitalize on the commercial opportunity of VOWST and the promising clinical development of its microbiome therapeutic pipeline. The company's ability to execute on its strategic priorities and secure the necessary resources will be key to its future success.