Seres Therapeutics Inc
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
MCRB$1.98-5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0000950170-24-055159
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-095821
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 196 previous paragraphs and 238 current paragraphs.
111 unchanged; 61 reworded; 53 added; 19 removed; 5 previous and 13 current paragraphs rearranged.
Tables are not compared: 5 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (53)
Current report
We launched VOWST in the United States with our collaborator, Nestlé Health Science, or Nestlé, in June 2023. On August 5, 2024, we entered into an Asset Purchase Agreement, or the Purchase Agreement, with Société des Produits Nestlé S.A., or SPN, a wholly-owned subsidiary of Nestlé S.A., pursuant to which we agreed, subject to the satisfaction or waiver of the conditions set forth therein, to sell our VOWST microbiome therapeutic business to SPN and its designated affiliates (collectively, “Nestlé Health Science”), or the Transaction. The completion of the Transaction, if consummated, or the Closing, is subject to the approval of the Transaction by our stockholders, and other customary conditions. See "VOWST" below.
Current report
On August 5, 2024, we entered into the Purchase Agreement with SPN, pursuant to which we agreed, subject to the satisfaction or waiver of the conditions set forth therein, to sell our VOWST microbiome therapeutic business, or the VOWST Business, including inventory and equipment, certain patents and patent applications, know-how, trade secrets, trademarks, domain names, marketing authorizations and related rights, documents, materials, business records and data and contracts that are used or held for use primarily in the development, commercialization and manufacturing of the microbiome product sold under the brand name VOWST as provided for in accordance with the terms of the Purchase Agreement, or the Product, to Nestlé Health Science, and Nestlé Health Science will assume certain liabilities from us, or the Transaction, As consideration for the Transaction, SPN has agreed to pay us, or the Transaction Consideration:
Current report
(i)
Current report
a cash payment, payable upon completion of the transaction, or the Closing, of $100 million, less approximately $17.9 million owed by us to an affiliate of SPN as of March 31, 2024 under the existing license agreement between us and the SPN affiliate, less approximately CHF2.0 million in satisfaction of fees due under an existing manufacturing agreement between us and Bacthera;
Current report
(ii)
Current report
cash installment payments of $50 million on January 15, 2025 and $25 million on July 1, 2025, or the Installment Payments, conditioned on our material compliance with obligations under the Transition Services Agreement (as described below) to be entered into at Closing between us and SPN;
Current report
(iii)
Current report
prepayment of the $60 million milestone payment tied to the achievement of worldwide annual net sales of the Product of $150 million, or the First Sales Milestone, payable in cash at Closing, or the Prepaid Milestone, which Prepaid Milestone will accrue interest at a fixed rate of 10% per annum until the First Sales Milestone is achieved and 5% per annum thereafter until the earlier of (x) the date on which the Prepaid Milestone, plus accrued interest thereon, has been repaid in full by set-off and (y) the last day of the Milestone Period (as defined below); and
Current report
(iv)
Current report
future milestone payments of (x) $125 million tied to the achievement of worldwide annual net sales of the Product of $400 million and (y) $150 million tied to the achievement of worldwide annual net sales of the Product of $750 million, during the period from Closing until December 31 of the calendar year in which the tenth anniversary of Closing occurs, or the Milestone Period, and together, the Future Milestone Payments and, together with the Prepaid Milestone, the Milestone Payments.
Current report
See Risk Factors— Risks Related to the Transaction and the Remaining Company— The amount of the Transaction Consideration we will receive in the Transaction is subject to various risks and uncertainties.
Current report
As they are earned, the Milestone Payments will be satisfied as follows: (1) first, by set-off against all accrued interest on the Prepaid Milestone until the amount of such accrued interest has been paid in full, (2) second, by set-off against the outstanding balance of the Prepaid Milestone until the Prepaid Milestone has been repaid in full and (3) thereafter, in cash. If any amount of the Prepaid Milestone (and any accrued interest thereon) remains outstanding as of following the last day of the Milestone Period (defined below), the balance thereof (together with any interest accrued thereon) will be forgiven and the right of set-off of SPN with respect thereto will be deemed forfeited. The Installment Payment due on July 1, 2025 will be reduced by an amount related to certain employment obligations assumed by SPN through the period prior to the Closing Date.
Current report
We and SPN will share 50/50 in the net profit or net loss achieved during the period from the date of Closing until December 31, 2025, or the Profit Sharing Period, with the net profit or net loss calculated as (i) the net sales of VOWST in the United States and Canada, plus (ii) other income received in connection with the grant of a license or sublicense with respect to VOWST in the United States and Canada as described in the Purchase Agreement, minus (iii) allowable expenses directly attributable or reasonably allocable to certain development activities, commercialization activities, medical affairs activities, manufacturing activities or other relevant activities, as described in the Purchase Agreement. During the Profit Sharing Period, we will reimburse SPN for (i) certain payments under the exclusive license agreement between us and Memorial Sloan Kettering Cancer Center, (ii) certain costs incurred in connection with an ongoing post-marketing safety study of VOWST and (iii) 80.1% of all rent and other costs due to the landlord under the lease for our Waltham facility.
Current report
At Closing, in exchange for a payment to be made by SPN to Bacthera AG, the Long Term Manufacturing Agreement, dated November 8, 2021 between the Company and Bacthera AG, or the Bacthera Manufacturing Agreement, will be terminated and each of Bacthera and Seres will release one another from any and losses, liabilities or other obligations arising thereunder with respect to the period ending as of the date of the Closing, including without limitation any milestone payments required to be paid to Bacthera thereunder.
Current report
The Closing is subject to the approval of the transaction by our stockholders and other customary conditions. As a condition to Closing, we and SPN will enter into a securities purchase agreement, or the Securities Purchase Agreement, pursuant to which SPN will agree to purchase 14,285,715 shares of our common stock, or the Shares, at Closing, at a purchase price per share of $1.05, for an aggregate purchase price of $15 million. Under the terms of the Securities Purchase Agreement, SPN will agree not to sell or transfer the Shares for a period of six months after Closing, subject to certain customary exceptions. We will agree to register the resale of the Shares by SPN within 90 days of Closing. In addition, under the terms of the Securities Purchase Agreement, for as long as SPN, together with its affiliates, beneficially owns at least 10% of our outstanding shares of common stock, we will agree to take such action within its control to include one individual designated by SPN in the slate of nominees recommended by our board of directors (or the applicable committee of the board of directors) to our stockholders for election to the board of directors at the applicable stockholder meeting. The Securities Purchase Agreement will contain customary representations and warranties and closing conditions.
Current report
As a condition to Closing, the parties intend to enter into a Transition Services Agreement, or the TSA, which will provide for services to be performed by us in order to facilitate a transition of the business associated with the VOWST Business to SPN and its affiliates. The scope of the transition services is expected to include the provision of certain manufacturing services and certain administrative functions related to the VOWST Business and operations, including the maintenance of certain manufacturing services and the related facility in which such services are currently conducted. We will provide the manufacturing services until December 31, 2025 and other services, until the later of the period specified in the schedule to the TSA for each service or June 30, 2026. SPN will agree to pay us for certain fixed costs, including a monthly fixed fee for preserved raw material suspension manufacturing, and will reimburse us for the costs of any transition services performed by us under the TSA. The know-how and other intellectual property generated in connection with the performance of the TSA will be owned by SPN with us having a non-exclusive license to such know-how and other intellectual property under the Cross-License Agreement. During the term of the TSA, upon SPN request, we will transfer the manufacturing services to a third party service provider designated by SPN. In the event of a material failure by us to maintain the manufacturing facility under the TSA, SPN will have step-in rights to negotiate to enter into a direct lease with the landlord of the manufacturing facility with respect to the portion of such facility used in connection with the VOWST Business or to cause such services to be performed, with any reasonable out-of-pocket costs and expenses incurred in connection therewith reimbursed by us.
Current report
As a condition to Closing, we intend to enter into a cross-license agreement with SPN under which, we will grant to SPN a perpetual, worldwide, non-exclusive, fully paid-up license under certain Seres patents that have been issued or will issue in the future and current know-how controlled by us that is not transferred to SPN pursuant to the Purchase Agreement. In the field of the treatment of CDI and rCDI and associated complications, or collectively, the CDI Field, the license to SPN under such Company patents and know-how would be exclusive to SPN for five years and co-exclusive between SPN and Seres following that five year period. The license from Seres to SPN is to issued Seres patents that currently or in the future cover the Product or improvements thereof and know-how that is used or reasonably useful in connection with the exploitation of the VOWST Business. See “Intellectual Property” below.
Current report
Concurrently with the execution of the Purchase Agreement, our directors and executive officers and certain stockholders affiliated with Flagship Pioneering, Inc. entered into support agreements with us and SPN, or the Support Agreements, pursuant to which, among other things and subject to the terms and conditions therein, such parties agreed, solely in their capacities as holders of shares of common stock, or collectively, the Subject Shares, to vote all Subject Shares beneficially owned by such parties at every meeting of our stockholders (including the special meeting to consider the transactions contemplated by the Purchase Agreement) (i) in favor of adopting and approving the Purchase Agreement and the transactions contemplated by the Purchase Agreement, (ii) against any proposal that would otherwise be reasonably be expected to adversely affect the transactions contemplated by the Purchase Agreement, (iii) against any Acquisition Proposal (as defined therein), and (iv) in favor of approving any proposal to adjourn or postpone the special meeting of stockholders to a later date, if there are not sufficient votes for the adoption of the Purchase Agreement on the date on which such meeting is held. In addition, each stockholder party to a Support Agreement provided an irrevocable proxy to SPN to vote such party’s Subject Shares in favor of adopting and approving the Purchase Agreement and the transactions contemplated by the Purchase Agreement.
Current report
As a condition to Closing, the parties intend to enter into assignment and assumption of lease agreements, or the Assignment and Assumption Agreements. Under the Assignment and Assumption Agreements, we will assign to SPN or its designated affiliates our rights in, to and under certain real property leases, and SPN or its designated affiliates will assume the liabilities related thereto.
Current report
As a condition to Closing, the parties intend to enter into an employee support agreement, or the Employee Support Agreement. Under the Employee Support Agreement, among other things and subject to the terms and conditions therein, certain of our employees related to the VOWST Business who accept employment with SPN or one of its designated affiliates will provide the services they provided to us prior to the Transaction to SPN, as well as other services as SPN may reasonably request, from Closing until the day prior to the beginning of SPN’s or its designated affiliate’s next pay period following the Closing. SPN will reimburse our out of pocket costs in connection with such employees’ services, including certain compensation and benefits paid or provided to such employees pursuant to the terms of the Employee Support Agreement.
Current report
Infection Risk Reduction
Current report
SER-155
Current report
Other pipeline programs, including SER-147
Current report
We are advancing the SER-147 program, an oral, live biotherapeutic product candidate, consisting of a consortium of cultivated bacteria in development for the prevention of gut-seeded infections and associated downstream blood stream infections in chronic liver disease, or CLD, and other diseases, and spontaneous bacterial peritonitis infections in patients with CLD. SER-147 was designed and optimized using our reverse translational therapeutics development platform. CLD is a progressive condition marked by deterioration of liver function and is reaching epidemic proportions affecting nearly 1.7 billion people worldwide, causing substantial health burden on afflicted countries (GBD 2017 Cirrhosis Collaborators, 2020, Clinical Liver Disease, 2021). In the advanced stages of CLD, known as decompensated cirrhosis, patients exhibit significant immune dysfunction, microbiome disruption, and increased contact with the healthcare system, all of which drive increased susceptibility to bacterial infections (Bajaj et al., 2021, Albillos et al., 2022).
Current report
Nasdaq Notice and Compliance
Current report
On July 26, 2024, we received a letter from Nasdaq that we had regained compliance with the Bid Price Requirement. The notification letter confirmed that, from July 12, 2024 to July 25, 2024, our minimum bid price had been $1.00 per share or higher and, accordingly, we had regained compliance with Nasdaq Listing Rule 5450(a)(1) and that the matter was now closed.
Current report
In connection with the Transaction and pursuant to the Purchase Agreement, we expect to transfer certain patents and trademarks affiliated with the VOWST Business to SPN at Closing. In addition, as a condition to Closing, we intend to enter into a cross-license agreement, or the Cross-License Agreement, with SPN. Under the Cross-License Agreement, we will grant to SPN a perpetual, worldwide, non-exclusive, fully paid-up license under certain Company patents that have been issued or will issue in the future and current know-how controlled by us that is not transferred to SPN pursuant to the Purchase Agreement. In the field of the treatment of CDI and recurrent CDI and associated complications, or collectively, the CDI Field, the license to SPN under such Company patents and know-how would be exclusive to SPN for five years and co-exclusive between SPN and the Company following that five year period. The license from the Company to SPN is to issued Company patents that currently or in the future cover the Product or improvements thereof and know-how that is used or reasonably useful in connection with the exploitation of the VOWST Business. We will also grant SPN an exclusive, perpetual, worldwide, fully paid-up license under issued Company patents that currently or in the future cover the Product or improvements thereof and know-how that is used or reasonably useful in connection with the exploitation of the Product to exploit SER-262 in the CDI Field. The license to SPN would be exclusive to SPN for five years after Closing and co-exclusive between SPN and us following that five year period. SPN will grant to us a perpetual, worldwide, non-exclusive license under the patents and know-how that are transferred to SPN pursuant to the Purchase Agreement or developed under the TSA, for the Company’s products for use outside of the CDI Field, and after five years from Closing for Company products containing designed, cultivated, bacterial consortia not manufactured using human stool (excluding SER-262) in the CDI Field. From and after Closing, certain license agreements between us, SPN, and/or their respective affiliates will terminate and be of no further force or effect, except as contemplated by the Purchase Agreement.
Current report
Research and development expenses were $17.9 million for the three months ended June 30, 2024 and $46.8 million for the three months ended June 30, 2023. The decrease of $28.9 million was primarily due to the following:
Current report
a decrease in personnel-related costs of $16.3 million primarily due to a decrease of $8.2 million in salaries, bonus, employee benefits expenses, and payroll taxes as a result of the restructuring plan implemented in 2023, a decrease of $5.0 million in stock-based compensation expense, which was primarily as a result of options and awards with performance conditions that were achieved during the three months ended June 30, 2023, and a decrease of $3.1 million resulting from the capitalization of labor costs into inventory following FDA approval of VOWST;
Current report
Comparison of Six Months Ended June 30, 2024 and 2023
Current report
Revenue
Current report
Research and development expenses were $39.6 million for the six months ended June 30, 2024 and $90.8 million for the six months ended June 30, 2023. The decrease of $51.2 million was primarily due to the following:
Current report
General and administrative expenses were $31.5 million for the six months ended June 30, 2024 compared to $50.5 million for the six months ended June 30, 2023. The decrease of $19.0 million was primarily due to the following:
Current report
Other expense, net for the six months ended June 30, 2024 and 2023 was $2.1 million and $3.6 million, respectively. The decrease in other expense, net was primarily due to an increase in interest income of $0.1 million and an increase in other income of $4.4 million primarily due to $2.0 million of foreign currency gains and $1.1 million of sublease income, partially offset by $0.3 million of loss on disposal of fixed assets. Additionally, during the six months ended June 30, 2023, we recognized $1.6 million of loss on extinguishment of the Hercules credit facility, which resulted in relatively higher other income during the six months ended June 30, 2024. This increase was partially offset by an increase in interest expense of $3.0 million as a result of higher interest rates and a higher borrowing base as compared to the same period in the prior year.
Current report
On August 5, 2024, we entered into the Purchase Agreement with SPN, pursuant to which we agreed, subject to the satisfaction or waiver of the conditions set forth therein, to sell our VOWST Business, including inventory and equipment, certain patents and patent applications, know-how, trade secrets, trademarks, domain names, marketing authorizations and related rights, documents, materials, business records and data and contracts that are used or held for use primarily in the development, commercialization and manufacturing of the Product to SPN and its designated affiliates, and SPN and its designated affiliates will assume certain liabilities from us. As consideration for the Transaction, SPN has agreed to pay us:
Current report
(i)
Current report
a cash payment, payable upon Closing, of $100 million, less approximately $17.9 million owed by us to an affiliate of SPN as of March 31, 2024 under the existing license agreement between us and the SPN affiliate, less approximately CHF2.0 million in satisfaction of fees due under an existing manufacturing agreement between us and Bacthera AG;
Current report
(ii)
Current report
cash installment payments of $50 million on January 15, 2025 and $25 million on July 1, 2025 (the "Installment Payments"), conditioned on our material compliance with obligations under the Transition Services Agreement (as described below) to be entered into at Closing between us and SPN;
Showing the first 40 of 53 passages. Open the source sections for the rest.
Removed paragraphs (19)
Previous report
Our highest priority is the commercialization of VOWST in the United States, the first orally administered microbiome therapeutic approved by the FDA. We launched VOWST in the United States with our collaborator, Nestlé Health Science, or Nestlé, in June 2023.
Previous report
Infection Protection and SER-155
Previous report
Nasdaq Notice
Previous report
If we do not regain compliance with the Bid Price Requirement by October 16, 2024, we may be eligible for an additional 180 calendar day compliance period. To qualify, we must submit an application to transfer the listing of the common stock to The Nasdaq Capital Market, which requires us to meet the continued listing requirement for the market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, other than the Bid Price Requirement. We would also need to pay an application fee to Nasdaq and to provide written notice of our intention to cure the deficiency during the additional compliance period. As part of its review process, Nasdaq will make a determination of whether it believes we will be able to cure this deficiency.
Previous report
If we do not regain compliance within the applicable compliance period(s), we expect that Nasdaq will provide written notification to us that the common stock will be subject to delisting. At that time, we may appeal the delisting determination to a Nasdaq Listing Qualifications Panel.
Previous report
We intend to monitor the closing bid price of our common stock and may, if appropriate, consider taking actions to regain compliance with the Bid Price Requirement, including, subject to approval of our board of directors and our stockholders, implementing a reverse stock split.
Previous report
Research and Development Expenses
Previous report
General and Administrative Expenses
Previous report
Other Expense, Net
Previous report
Research and Development Expenses
Previous report
Research and development expenses were $21.7 million for the three months ended March 31, 2024 and $44.0 million for the three months ended March 31, 2023. The decrease of $22.3 million was primarily due to the following:
Previous report
General and Administrative Expenses
Previous report
Other Expense, Net
Previous report
In October 2019, we entered into a loan and security agreement, or the Hercules Loan Agreement, with Hercules Capital, Inc., or Hercules, pursuant to which a term loan in an aggregate principal amount of up to $50.0 million, or the Original Credit Facility, was available to us in three tranches, subject to certain terms and conditions. We received the first tranche of $25.0 million upon signing the agreement on October 29, 2019, but did not borrow either of the second two tranches, which were available at different times upon Hercules’ approval until June 30, 2021.
Previous report
On April 16, 2020, we entered into an amendment to the Hercules Loan Agreement, or the First Amendment, permitting us to enter into a promissory note under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Stability Act. On April 17, 2020 we issued a Promissory Note to Bank of America, NA, or the Loan, pursuant to which we received loan proceeds of $2.9 million, however, based on updated guidance related to this program, we decided to repay the full amount of the Loan, and repaid the Loan on May 4, 2020.
Previous report
Effective as of February 24, 2022, we entered into a Second Amendment to the Original Credit Facility (as amended by the First Amendment), or the Hercules Credit Facility, pursuant to which term loans in an aggregate principal amount of up to $100.0 million became available to us in five tranches including the first tranche under the Original Credit Facility, subject to certain terms and conditions.
Previous report
The Hercules Credit Facility was secured by substantially all of our assets, other than our intellectual property. We agreed to not pledge or secure our intellectual property to others.
Previous report
The Hercules Credit Facility was repaid on the Oaktree Closing Date (as defined below). For a further description of the Hercules Credit Facility, see Note 9, Notes Payable, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Previous report
During the three months ended March 31, 2024, net cash used in investing activities was $0.1 million, consisting entirely of purchases of property and equipment.
Reworded paragraphs (61)
Previous wording
We are a commercial-stage microbiome therapeutics company focused on the development and commercialization of a novel class of biological drugs, which are designed to treat disease by modulating the microbiome to restore health by repairing the function of a disrupted microbiome to a non-disease state. Our first drug, VOWST, formerly called SER-109, was approved by the U.S. Food and Drug Administration, or FDA, on April 26, 2023, to prevent recurrence of Clostridioides difficile infection, or CDI, in patients 18 or older following antibacterial treatment for recurrent CDI. Our drug discovery and development pipeline includes other pre-clinical and clinical-stage assets. VOWST and our microbiome therapeutic candidates are consortia of bacteria designed to optimize specific, targeted pharmacological properties, and are formulated for oral delivery. We maintain a differentiated microbiome therapeutics drug discovery and development platform that includes good manufacturing practices, or GMP, manufacturing capabilities for this novel drug modality.
Current wording
We are a commercial-stage company focused on the development and commercialization of a novel class of biological drugs, which are designed to treat disease by modulating the microbiome to restore health by repairing the function of a disrupted microbiome to a non-disease state. Our first drug, VOWST, formerly called SER-109, was approved by the U.S. Food and Drug Administration, or FDA, on April 26, 2023, to prevent recurrence of Clostridioides difficile infection, or CDI, in patients 18 or older following antibacterial treatment for recurrent CDI. Our drug discovery and development pipeline includes other pre-clinical and clinical-stage assets. VOWST and our live biotherapeutic candidates are consortia of bacteria designed to optimize specific, targeted pharmacological properties, and are formulated for oral delivery. We maintain a differentiated live biotherapeutics drug discovery and development platform that includes good manufacturing practices, or GMP, manufacturing capabilities for this novel drug modality.
Previous wording
We are also designing microbiome therapeutics optimized to prevent the colonization and overgrowth of pathogens in the gastrointestinal tract and modulate host function to increase epithelium integrity and induce immune tolerance. We believe clinical and nonclinical data across our programs support the development of microbiome therapeutics to target the prevention and treatment of a broad swath of infections, and in inflammatory and immune diseases. We believe that the scientific and clinical data from our SER-109 program validate this novel therapeutic approach in the context of infection, which we refer to as Infection Protection. We believe the Infection Protection approach may be replicable across different bacterial pathogens to develop microbiome therapeutics with the potential to protect a range of medically compromised patients from infections, including pathogens that harbor antimicrobial resistance, or AMR.
Current wording
Following the Closing, we expect to focus on advancing SER-155 and our other wholly-owned cultivated live biotherapeutic candidates to improve patient outcomes for medically vulnerable patient populations with potential to address large commercial opportunities. We are designing live biotherapeutics optimized to prevent the colonization and overgrowth of pathogens in the gastrointestinal tract and modulate host function to increase epithelium integrity and to induce immune tolerance. We believe clinical and nonclinical data across our programs support the development of live biotherapeutics to target the prevention and treatment of a broad swath of infections, and in inflammatory and immune diseases. We believe that the scientific and clinical data from our SER-109 program validate this novel therapeutic approach in the context of infection. We believe this approach may be replicable across different bacterial pathogens to develop live biotherapeutics with the potential to protect a range of medically compromised patients from infections, including pathogens that harbor antimicrobial resistance, or AMR.
Previous wording
Study cohort 1, which included 13 participants, was designed to assess safety and drug pharmacology, including the engraftment of drug bacteria in the gastrointestinal tract. In May 2023, we announced the Phase 1b cohort 1 results, including gastrointestinal microbiome data from the first 100 days, which showed the successful engraftment of SER-155 bacterial strains in all nine subjects with evaluable microbiome samples, and a substantial reduction in the cumulative incidence of pathogen domination (a biomarker associated with the risk of serious enteric infections and resulting bloodstream infections, as well as GvHD) as compared to a reference cohort of patients in this patient population. The tolerability profile observed was favorable, with no serious adverse events attributed to SER-155 administration. Enrollment in study cohort 2, which includes 45 participants, is complete as of April 2024. Study cohort 2 incorporates a randomized, double-blinded placebo-controlled 1:1 design to further evaluate safety and engraftment as well as clinical outcomes, and data readout is anticipated late in the third quarter of 2024.
Current wording
Study cohort 1, which included 13 participants, was designed to assess safety and drug pharmacology, including the engraftment of drug bacteria in the gastrointestinal tract. In May 2023, we announced the Phase 1b cohort 1 results, including gastrointestinal microbiome data from the first 100 days, which showed the successful engraftment of SER-155 bacterial strains in all nine subjects with evaluable microbiome samples, and a substantial reduction in the cumulative incidence of pathogen domination (a biomarker associated with the risk of serious enteric infections and resulting bloodstream infections, as well as GvHD) as compared to a reference cohort of patients in this patient population. The tolerability profile observed was favorable, with no serious adverse events attributed to SER-155 administration. Enrollment in study cohort 2, which includes 45 participants, is complete as of April 2024. Study cohort 2 incorporates a randomized, double-blinded placebo-controlled 1:1 design to further evaluate safety and engraftment as well as clinical outcomes, and data readout is anticipated in September 2024.
Previous wording
We believe our pending clinical and drug pharmacology results, if positive, will validate the promise of microbiome therapeutics to prevent poor clinical outcomes associated with the overgrowth of pathogens in the GI tract of allo-HSCT patients. Additionally, we believe the SER-155 Phase 1b program will provide important insights into the safety profile of microbiome therapeutics in immunocompromised patients and additionally into mechanisms by which microbiome therapeutics can modulate host immune pathways. We intend to evaluate SER-155 and other microbiome therapeutic candidates in several other medically vulnerable patient populations at high risk of infections, including chronic liver disease, cancer neutropenia, and solid organ transplants.
Current wording
We believe our pending clinical and drug pharmacology results, if positive, will validate the promise of live biotherapeutics to prevent poor clinical outcomes associated with the overgrowth of pathogens in the GI tract of allo-HSCT patients. Additionally, we believe the SER-155 Phase 1b program will provide important insights into the safety profile of live biotherapeutics in immunocompromised patients and additionally into mechanisms by which live biotherapeutics can modulate host immune pathways. We intend to evaluate SER-155 and other live biotherapeutic candidates in several other medically vulnerable patient populations at high risk of infections, including chronic liver disease, cancer neutropenia, and solid organ transplants.
Previous wording
We have progressed additional preclinical stage programs to evaluate whether microbiome therapeutics may reduce the incidence of infection in indications such as chronic liver disease, cancer neutropenia, solid organ transplant, and antimicrobial resistant, or AMR, infections more broadly in high-risk settings such as intensive care units, or ICUs, and long term acute care facilities, or LTACs. Additional efforts in the early-stage portfolio are focused on the SER-301 program in inflammatory bowel disease, or IBD, and programmatic objectives that are supported through a partnership with the Crohn’s and Colitis Foundation, or CCF. These efforts aim to (i) confirm the functional phenotype and inflammatory state of patient subpopulations observed in our prior ulcerative colitis, or UC clinical trials, and (ii) prioritize inflammatory targets and evaluate the potential to utilize biomarker-based patient selection and stratification for future studies. In addition, we continue to leverage microbiome pharmacokinetic and pharmacodynamic data from across our clinical and preclinical portfolios, using our reverse translational microbiome therapeutic development platform to prioritize future drug targets and to identify opportunities for combination therapies across various indications, including inflammatory and immune diseases, cancer, and metabolic diseases.
Current wording
We have progressed additional preclinical stage programs to evaluate whether live biotherapeutics may reduce the incidence of infection in indications such as chronic liver disease, cancer neutropenia, solid organ transplant, and antimicrobial resistant, or AMR, infections more broadly in high-risk settings such as intensive care units, or ICUs, and long term acute care facilities, or LTACs. Additional efforts in the early-stage portfolio are focused on the SER-301 program in inflammatory bowel disease, or IBD, and programmatic objectives that are supported through a partnership with the Crohn’s and Colitis Foundation, or CCF. These efforts aim to (i) confirm the functional phenotype and inflammatory state of patient subpopulations observed in our prior ulcerative colitis, or UC clinical trials, and (ii) prioritize inflammatory targets and evaluate the potential to utilize biomarker-based patient selection and stratification for future studies. In addition, we continue to leverage microbiome pharmacokinetic and pharmacodynamic data from across our clinical and preclinical portfolios, using our reverse translational development platform to prioritize future drug targets and to identify opportunities for combination therapies across various indications, including inflammatory and immune diseases, cancer, and metabolic diseases.
Previous wording
We have built and deploy a reverse translational platform and knowledge base, which we call our MbTx Platform, for the discovery and development of microbiome therapeutics, and maintain extensive proprietary know-how that may be used to support future research and development efforts. This platform incorporates high-resolution analysis of human clinical data to identify microbiome biomarkers associated with disease and non-disease states; preclinical screening using human cell-based assays and in vitro/ex vivo and in vivo disease models customized for microbiome therapeutics; and microbiological capabilities and a strain library that spans broad biological and functional breadth. This platform and knowledge base enables identification of specific microbes, microbial genes, and microbial metabolites/peptides associated with disease and the design of therapeutic consortia of bacteria for specific pharmacological properties to restructure the gut microbiome and modulate functional pathways associated with disease. In addition, we own a valuable intellectual property estate related to the development and manufacture of microbiome therapeutics.
Current wording
We have built and deploy a reverse translational platform and knowledge base, which we call our MbTx Platform, for the discovery and development of live biotherapeutics, and maintain extensive proprietary know-how that may be used to support future research and development efforts. This platform incorporates high-resolution analysis of human clinical data to identify microbiome biomarkers associated with disease and non-disease states; preclinical screening using human cell-based assays and in vitro/ex vivo and in vivo disease models customized for live biotherapeutics; and microbiological capabilities and a strain library that spans broad biological and functional breadth. This platform and knowledge base enables identification of specific microbes, microbial genes, and microbial metabolites/peptides associated with disease and the design of therapeutic consortia of bacteria for specific pharmacological properties to restructure the gut microbiome and modulate functional pathways associated with disease. In addition, we own a valuable intellectual property estate related to the development and manufacture of live biotherapeutics.
Previous wording
Other than VOWST, our product candidates are still in preclinical development or early-stage discovery. Our ability to generate collaboration profit or product revenue sufficient to achieve profitability will depend heavily on the commercial success of VOWST, as well as the successful development and eventual commercialization of one or more of our product candidates. Since our inception, we have incurred significant operating losses. Our net loss was $40.1 million for the three months ended March 31, 2024. As of March 31, 2024, we had an accumulated deficit of $1,018.4 million.
Current wording
Other than VOWST, our product candidates are in early-stage clinical or preclinical development. Our ability to generate collaboration profit or product revenue sufficient to achieve profitability will depend heavily on the commercial success of VOWST, as well as the successful development and eventual commercialization of one or more of our product candidates. Since our inception, we have incurred significant operating losses. Our net loss was $73.0 million for the six months ended June 30, 2024. As of June 30, 2024, we had an accumulated deficit of $1,051.2 million.
Previous wording
While we plan to focus our investment on supporting commercialization of VOWST and on our SER-155 Phase 1b study in the near-term, our expenses may increase in connection with future activities. See “Risk Factors—Risks Related to Our Financial Position and Need for Additional Capital—We are a commercial-stage company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.”
Current wording
Until the completion of the Transaction, if consummated, we plan to focus our investment on supporting commercialization of VOWST and on our SER-155 Phase 1b study. Following the completion of the Transaction, if consummated, we plan to focus on completing our SER-155 Phase 1b study and advancing our other wholly-owned live biotherapeutic candidates, which may result in increased expenses in connection with these future activities. See “Risk Factors—Risks Related to Our Financial Position and Need for Additional Capital—We are a commercial-stage company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability” and “Risk Factors—Risks Related to the Transaction and the Remaining Company.”
Previous wording
As of March 31, 2024, we had cash and cash equivalents totaling $111.2 million. Based on our currently available cash resources and our planned level of operations and cash flows for the 12-month period subsequent to the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, under various scenarios, we have sufficient cash to support our operations into the fourth quarter of 2024 and we will require additional funding at that time. In accordance with applicable accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within 12 months after the date of the issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. In performing this analysis, we excluded certain elements of our operating plan that cannot be considered probable of occurring. Under the applicable accounting standards, the receipt of potential funding from future equity issuances cannot be considered probable, as these events are outside our control. Accordingly, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for 12 months from the date the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, are issued. See “Risk Factors— Risks Related to Our Financial Position and Need for Additional Capital —We have identified conditions and events that raise substantial doubt regarding our ability to continue as a going concern.”
Current wording
As of June 30, 2024, we had cash and cash equivalents totaling $71.2 million. Based on our currently available cash resources, our future operating plans, and the capital expected to be obtained from the Transaction, if consummated, and considering our ongoing obligations related to the Transaction, we anticipate being able to extend our cash runway into the fourth quarter of 2025, subject to material compliance with the TSA (as defined below), to be entered into at Closing between us and SPN. Absent the Transaction, our currently available cash resources will fund our operations into the fourth quarter of 2024. In accordance with applicable accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within 12 months after the date of the issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. In performing this analysis, we excluded certain elements of our operating plan that cannot be considered probable of occurring. Under the applicable accounting standards, the receipt of potential funding from the Transaction, which is subject to stockholder approval, and any future equity issuances cannot be considered probable, as these events are outside our control. Accordingly, management has concluded that substantial doubt exists about the our ability to continue as a going concern for 12 months from the date the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, are issued. See “Risk Factors— Risks Related to Our Financial Position and Need for Additional Capital —We have identified conditions and events that raise substantial doubt regarding our ability to continue as a going concern.”
Previous wording
We launched VOWST in the United States with our collaborator, Nestlé, in June 2023. Under the terms of the 2021 License Agreement, Nestlé is assuming the role of lead commercialization party. We received an upfront license payment of $175 million in July 2021 and an additional $125 million in May 2023 following FDA approval of VOWST. The agreement also includes sales target milestones which, if achieved, could total up to $225 million. We were responsible for development and pre-commercialization costs in the United States. Following first commercial sale of VOWST, which occurred on June 2, 2023, we are entitled to share equally in its commercial profits and losses.
Current wording
We launched VOWST in the United States with our collaborator, Nestlé Health Science, in June 2023. Under the terms of the 2021 License Agreement, Nestlé Health Science assumed the role of lead commercialization party. We received an upfront license payment of $175 million in July 2021 and an additional $125 million in May 2023 following FDA approval of VOWST. The agreement also includes sales target milestones which, if achieved, could total up to $225 million. We were responsible for development and pre-commercialization costs in the United States. Following first commercial sale of VOWST, which occurred on June 2, 2023, we are entitled to share equally in its commercial profits and losses.
Previous wording
During the quarter ended March 31, 2024, Nestlé reported 642 VOWST units sold and $10.1 million in net sales, reflecting an estimated gross-to-net reduction of 15%, primarily due to returns reserve, prompt payment discounts, statutory discounts and rebates, and commercial rebates. The total collaboration loss for the three months ended March 31, 2024 was $14.3 million. We record our 50% share of the collaboration loss, which includes commercial and medical affairs expenses incurred by us, on a net basis. Accordingly for the three months ended March 31, 2024, our share of the VOWST net loss was $7.1 million.
Current wording
During the quarter ended June 30, 2024, Nestlé Health Science reported $14.4 million in VOWST net sales. The total collaboration loss for the three months ended June 30, 2024 was $13.3 million. We record our 50% share of the collaboration loss, which includes commercial and medical affairs expenses incurred by us, on a net basis. Accordingly for the quarter ended June 30, 2024, our share of the VOWST net loss was $6.6 million.
Previous wording
As part of the commercialization of VOWST, we are closely monitoring the launch and focusing on a number of quantitative metrics. VOWST became commercially available in early June. Broad demand for VOWST has been observed across both recurrent patients and healthcare providers since June 2023 (metrics noted below are based on data provided by Nestlé through March 31, 2024):
Current wording
Until the completion of the Transaction, if consummated, we will continue to monitor the commercialization of VOWST. Broad demand for VOWST has been observed across both recurrent patients and healthcare providers since it became commercially available in June 2023 (metrics noted below are based on data provided by Nestlé through June 30, 2024):
Previous wording
In the first quarter of 2024, approximately 1,411 completed prescription enrollment forms were received for VOWST; of those, 1,083 resulted in new patient starts by March 31, 2024;
Current wording
In the second quarter of 2024, approximately 1,522 completed prescription enrollment forms were received for VOWST; of those, 1,169 resulted in new patient starts by June 30, 2024;
Previous wording
From launch through March 31, 2024, there were 4,239 completed prescription enrollment forms received for VOWST; of those 3,096 resulted in new patient starts by March 31, 2024
Current wording
From launch through June 30, 2024, there were 5,757 completed prescription enrollment forms received for VOWST; of those 4,265 resulted in new patient starts by June 30, 2024;
Previous wording
Prescription enrollment forms were submitted by approximately 1,939 unique healthcare providers since launch, including 609 in the first quarter, with approximately 65% of enrollments from gastroenterology and the remainder from other specialties; approximately 604 HCPs have prescribed VOWST to more than one patient; and
Current wording
Prescription enrollment forms were submitted by approximately 2,452 unique healthcare providers since launch, including 708 in the second quarter, with approximately 67% of enrollments from gastroenterology and the remainder from other specialties; approximately 864 HCPs have prescribed VOWST to more than one patient; and
Previous wording
We continue to support Nestlé in scaling their HCP education efforts, creating a positive customer experience with faster and higher conversion of enrollments to new patient starts, and continuing to establish payer coverage. Since the FDA approval of VOWST, Nestlé commercial customer facing field teams have been promoting VOWST and generating healthcare provider demand. Nestlé’s 170 field sales representatives promoting VOWST are divided into two teams, comprised of 150 gastroenterology representatives and 20 hospital/infectious disease representatives. Nestlé has recently identified opportunities to refine the execution of these teams in terms of focusing promotional messaging on early use of VOWST in the recurrent CDI cycle and increasing the number of HCPs that the sales teams engage. We expect these efforts to accelerate demand for VOWST.
Current wording
During the second quarter of 2024, Nestlé Health Science continued to scale its HCP education efforts. Since the FDA approval of VOWST, Nestlé Health Science commercial customer facing field teams have been promoting VOWST and generating healthcare provider demand. Nestlé Health Science’s 170 field sales representatives promoting VOWST are divided into two teams, comprised of 150 gastroenterology representatives and 20 hospital/infectious disease representatives. In the first quarter of 2024, Nestlé Health Science identified opportunities to refine the execution of these teams in terms of focusing promotional messaging on early use of VOWST in the recurrent CDI cycle and increasing the number of HCPs that the sales teams engage. We expect these efforts to accelerate demand for VOWST in the second half of 2024.
Previous wording
Nestlé’s payer field team continues to engage payers to build coverage, which would enable eligible patients to have access to VOWST as quickly and efficiently as possible. As of March 31, 2024, coverage policies were issued for VOWST across approximately 83% of commercial and 55% of Medicare Part D covered lives, according to data provided by Nestlé. The larger health plans and Pharmacy Benefit Managers, or PBMs, have issued policies for VOWST, and the remainder of smaller plans are extending the new-to-market block phase, enabling approval of VOWST as claims arise. Approximately 56% of the 1,083 first quarter new patient starts are being reimbursed through the patient's drug benefit.
Current wording
Nestlé Health Science’s payer field team continues to engage payers to build coverage, which would enable eligible patients to have access to VOWST as quickly and efficiently as possible. As of June 30, 2024, coverage policies were issued for VOWST across approximately 93% of commercial and 61% of Medicare Part D covered lives, according to data provided by Nestlé Health Science. The larger health plans and Pharmacy Benefit Managers, or PBMs, have issued policies for VOWST, and the remainder of smaller plans are extending the new-to-market block phase, enabling approval of VOWST as claims arise. Approximately 61% of the 1,169 second quarter new patient starts are being reimbursed through the patient's drug benefit.
Previous wording
We are investing in patient financial assistance to increase access to VOWST for patients with affordability challenges due to co-pays or other cost sharing requirements imposed on them by their insurer after the prescription has been approved. We believe that providing this type of patient access early on will contribute to a positive patient and provider experience, thus increasing demand over time. In terms of free drug utilization, in the first quarter of 2024, we saw approximately 44% of new patient starts dispensed via our free drug programs, mostly for Medicare patients. We expect utilization of these programs to drop when the benefit design changes contained in the Inflation Reduction Act, which address patient cost sharing requirements in Medicare Part D plans, go into effect in 2025.
Current wording
We are investing in patient financial assistance to increase access to VOWST for patients with affordability challenges due to co-pays or other cost sharing requirements imposed on them by their insurer after the prescription has been approved. We believe that providing this type of patient access early on will contribute to a positive patient and provider experience, thus increasing demand over time. In terms of free drug utilization, in the second quarter of 2024, we saw approximately 39% of new patient starts dispensed via our free drug programs, mostly for Medicare patients. We expect utilization of these programs to drop further when the benefit design changes contained in the Inflation Reduction Act, which address patient cost sharing requirements in Medicare Part D plans, go into effect in 2025.
Previous wording
We believe that the scientific and clinical data from our SER-109 program validate our novel approach of using microbiome therapeutics to decolonize pathogens, resulting in reduced rate of infections in medically compromised patients. Data from the SER-109 ECOSPOR III and ECOSPOR IV Phase 3 trial published in the New England Journal of Medicine (Feuerstadt et al., 2022) and Journal of the American Medical Association (Sims et al., 2023) suggest that microbiome therapeutics have the potential to restructure the gut microbiome and shift the gut metabolic landscape. Additional data show that SER-109 rapidly reduced the abundance of bacteria associated with common antibiotic resistance genes, or ARGs, and reduced ARG abundance in the gut (Straub et al., 2023). Collectively, we believe these data suggest the potential for microbiome therapeutics to prevent the colonization and overgrowth of pathogens that can establish in the gut and ultimately to reduce infections. We believe this Infection Protection approach may be replicable in protecting a range of medically compromised patients from infections seeded by the gut microbiome and resulting downstream clinical sequelae. We believe this approach may also enable us to reduce antimicrobial resistant infections, or AMR, which the World Health Organization declared as a top ten global public health threat facing humanity, and with estimates that yearly deaths may reach 10 million by 2050, putting mortality due to AMR on par with deaths due to cancer.
Current wording
We believe that the scientific and clinical data from our SER-109 program validate our novel approach of using live biotherapeutics to decolonize pathogens, resulting in reduced rate of infections in medically compromised patients. Data from the SER-109 ECOSPOR III and ECOSPOR IV Phase 3 trial published in the New England Journal of Medicine (Feuerstadt et al., 2022) and Journal of the American Medical Association (Sims et al., 2023) suggest that live biotherapeutics have the potential to restructure the gut microbiome and shift the gut metabolic landscape. Additional data show that SER-109 rapidly reduced the abundance of bacteria associated with common antibiotic resistance genes, or ARGs, and reduced ARG abundance in the gut (Straub et al., 2023). Collectively, we believe these data suggest the potential for live biotherapeutics to prevent the colonization and overgrowth of pathogens that can establish in the gut and ultimately to reduce infections. We believe reducing the risk of infection may be replicable in a range of medically compromised patients, protecting them from infections seeded by the gut microbiome and resulting downstream clinical sequelae. We believe this approach may also enable us to reduce antimicrobial resistant infections, or AMR, which the World Health Organization declared as a top ten global public health threat facing humanity, and with estimates that yearly deaths may reach 10 million by 2050, putting mortality due to AMR on par with deaths due to cancer.
Previous wording
We are evaluating SER-155, an oral microbiome therapeutics candidate consisting of a consortium of cultivated bacteria, in a Phase 1b study in allo-HSCT recipients in an effort to reduce incidences of gastrointestinal-derived infections, and resulting bloodstream infections and GvHD. SER-155 was designed using our reverse translational microbiome therapeutics development platform. The bacteria consortia is designed to optimize: (i) the prevention of the growth of various Enterococcaceae and Enterobacteriaceae species known to potentially dominate the GI and lead to downstream negative clinical outcomes in medically compromised patients and that can harbor antibacterial resistance, (ii) the production of multiple bacterial metabolites that can promote mucosal and epithelial barrier integrity with the goal of reducing the likelihood of harmful bacteria translocating from the gut to the bloodstream through a compromised epithelium, and (iii) the production of multiple bacterial metabolites that can modulate immune pathways to induce immune tolerance with a potential impact on GvHD. The rationale for this program is based in part on published clinical evidence from our collaborators at Memorial Sloan Kettering Cancer Center showing that allo-HSCT patients with decreased diversity of commensal microbes and pathogen domination in the gastrointestinal tract were significantly more likely to die due to infection and/or lethal GvHD (Peled et al., 2020). In December 2023, we received Fast Track Designation for SER-155 to reduce the risk of infection and GvHD in allo-HSCT patients.
Current wording
We are evaluating SER-155, an oral, live biotherapeutic product candidate, consisting of a consortium of cultivated bacteria, in a Phase 1b study in allo-HSCT recipients in an effort to reduce incidences of gastrointestinal-derived infections, and resulting bloodstream infections and GvHD. SER-155 was designed using our reverse translational development platform. The bacteria consortia is designed to optimize: (i) the prevention of the growth of various Enterococcaceae and Enterobacteriaceae species known to potentially dominate the GI and lead to downstream negative clinical outcomes in medically compromised patients and that can harbor antibacterial resistance, (ii) the production of multiple bacterial metabolites that can promote mucosal and epithelial barrier integrity with the goal of reducing the likelihood of harmful bacteria translocating from the gut to the bloodstream through a compromised epithelium, and (iii) the production of multiple bacterial metabolites that can modulate immune pathways to induce immune tolerance with a potential impact on GvHD. The rationale for this program is based in part on published clinical evidence from our collaborators at Memorial Sloan Kettering Cancer Center showing that allo-HSCT patients with decreased diversity of commensal microbes and pathogen domination in the gastrointestinal tract were significantly more likely to die due to infection and/or lethal GvHD (Peled et al., 2020). In December 2023, we received Fast Track Designation for SER-155 to reduce the risk of infection and GvHD in allo-HSCT patients.
Previous wording
In April 2024, we announced completion of enrollment in study cohort 2, which includes 45 participants. Study cohort 2 incorporates a randomized, double-blinded placebo-controlled design to further evaluate safety, engraftment, and incidence of gastrointestinal ESKAPE microbiome pathogen domination, as well as the incidence of enteric infections, enteric driven blood stream infections, and GvHD. Cohort 2 subjects are administered either SER-155 or placebo at a 1:1 ratio. The study is being conducted at a number of leading cancer centers across the U.S. The cohort 2 data readout is anticipated late in the third quarter of 2024.
Current wording
In April 2024, we announced completion of enrollment in study cohort 2, which includes 45 participants. Study cohort 2 incorporates a randomized, double-blinded placebo-controlled design to further evaluate safety, engraftment, and incidence of gastrointestinal ESKAPE microbiome pathogen domination, as well as the incidence of enteric infections, enteric driven blood stream infections, and GvHD. Cohort 2 subjects are administered either SER-155 or placebo at a 1:1 ratio. The study is being conducted at a number of leading cancer centers across the U.S. The cohort 2 data readout is anticipated in September 2024.
Previous wording
The letter has no immediate effect on the listing of our common stock, which continues to trade on The Nasdaq Global Select Market under the symbol “MCRB,” subject to our compliance with the other continued listing requirements of The Nasdaq Global Select Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided an initial compliance period of 180 calendar days from receipt of the letter, or until October 16, 2024, to regain compliance with the Bid Price Requirement. To regain compliance, the closing bid price for our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during the 180-day period prior to October 16, 2024.
Current wording
The letter had no immediate effect on the listing of our common stock, which continues to trade on The Nasdaq Global Select Market under the symbol “MCRB,” subject to our compliance with the other continued listing requirements of The Nasdaq Global Select Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial compliance period of 180 calendar days from receipt of the letter, or until October 16, 2024, to regain compliance with the Bid Price Requirement. To regain compliance, the closing bid price for our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during the 180-day period prior to October 16, 2024.
Previous wording
We have an extensive patent portfolio directed to rationally designed ecologies of spores and microbes. The portfolio includes both company-owned patents and applications, and those that we have rights to as licensee. For example, pursuant to an exclusive license to certain intellectual property from Memorial Sloan Kettering Cancer Center, with a patent term running until at least 2035, we are responsible for paying a 2.5% royalty on net sales of VOWST, minimum annual royalties, and milestone payments. The milestone payments are based on VOWST target sales milestones, the first being $1.0 million which was payable upon the first commercial sale of VOWST and paid in July 2023, the second being $2.5 million payable upon annual VOWST sales of $100.0 million, and the last being $10.0 million payable upon annual VOWST sales of $500.0 million. The patents and applications included in our portfolio cover both composition of matter and methods (e.g., method of treating). Our intellectual property rights related to VOWST extend through 2034, through 2041 for SER-155, and through 2040 for SER-301. We plan on continuing to broaden our patent portfolio. Currently, we have 21 active patent application families, which includes 20 nationalized applications and one at the PCT stage. To date, we have obtained 30 issued U.S. patents.
Current wording
We have an extensive patent portfolio directed to rationally designed ecologies of spores and microbes. The portfolio includes both company-owned patents and applications, and those that we have rights to as licensee. For example, pursuant to an exclusive license to certain intellectual property from Memorial Sloan Kettering Cancer Center, with a patent term running until at least 2035, we are responsible for paying a 2.5% royalty on net sales of VOWST, minimum annual royalties, and milestone payments. The milestone payments are based on VOWST target sales milestones, the first being $1.0 million which was payable upon the first commercial sale of VOWST and paid in July 2023, the second being $2.5 million payable upon annual VOWST sales of $100.0 million, and the last being $10.0 million payable upon annual VOWST sales of $500.0 million. The patents and applications included in our portfolio cover both composition of matter and methods (e.g., method of treating). Our intellectual property rights related to VOWST extend through 2034, through 2041 for SER-155, and through 2040 for SER-301. We plan on continuing to broaden our patent portfolio. Currently, we have 21 active patent application families, which includes 20 nationalized applications and one at the PCT stage. To date, we have obtained 31 issued U.S. patents and 1 allowed U.S. patent application.
Previous wording
Our primary focus of research and development since inception has been on our reverse translational microbiome therapeutics platform and the subsequent development of our product and product candidates. Our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs, such as fees paid to investigators, consultants, CROs in connection with our preclinical studies and clinical trials, lab supplies and consumables, and regulatory fees. We do not allocate employee-related costs and other indirect costs to specific research and development programs because these costs are deployed across multiple product programs under development.
Current wording
Our primary focus of research and development since inception has been on our reverse translational platform and the subsequent development of our product and product candidates. Our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs, such as fees paid to investigators, consultants, CROs in connection with our preclinical studies and clinical trials, lab supplies and consumables, and regulatory fees. We do not allocate employee-related costs and other indirect costs to specific research and development programs because these costs are deployed across multiple product programs under development.
Previous wording
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We anticipate an overall decrease in research and development expenses in 2024 as compared to the prior year, as we expect the Restructuring Plan (as defined in Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report) to significantly reduce research and development activities other than the completion of the SER-155 Phase 1b study. Research and development expenses may increase in the future as we initiate technology transfer activities with Bacthera and prepare for qualification of the Bacthera manufacturing facility, and if and as we resume development of any clinical or preclinical programs.
Current wording
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We anticipate an overall decrease in research and development expenses in 2024 as compared to the prior year, as the restructuring plan implemented in 2023 significantly reduced research and development activities other than the completion of the SER-155 Phase 1b study. Research and development expenses may increase in the future if and as we resume development of any clinical or preclinical programs using proceeds from the Transaction with Nestlé, if consummated.
Previous wording
We expect that our general and administrative expenses will decrease as compared to the prior year as the Restructuring Plan is expected to result in a reduction of personnel expenses due the workforce reduction and a reduction in external expenses including the elimination of non-essential expenses and consolidation of office space. General and administrative expenses may increase as we undertake efforts from time to time to raise additional capital. We may also continue to incur increased expenses associated with being a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing rules and the requirements of the Securities and Exchange Commission, director and officer insurance costs and investor and public relations costs.
Current wording
We expect that our general and administrative expenses will decrease as compared to the prior year as the restructuring plan resulted in lower personnel expenses due the workforce reduction and lower external expenses as a result of the elimination of non-essential expenses and consolidation of office space. We expect for these decreases to be partially offset by an increase in transaction costs, including legal, accounting, and tax-related services in relation to the anticipated Transaction with Nestlé. General and administrative expenses may increase in the future as we continue to incur increased expenses associated with being a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing rules and the requirements of the SEC, director and officer insurance costs and investor and public relations costs.
Previous wording
Since our inception in 2010, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or our earned research and development tax credits, due to our uncertainty of realizing a benefit from those items. We did not provide for any income taxes in the three months ended March 31, 2024 or 2023.
Current wording
Since our inception in 2010, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or our earned research and development tax credits, due to our uncertainty of realizing a benefit from those items. We did not provide for any income taxes in the three and six months ended June 30, 2024 or 2023.
Previous wording
Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates. The application of these policies necessarily involves judgments regarding future events. These estimates and judgments, in and of themselves, could materially impact the condensed consolidated financial statements and disclosures based on varying assumptions. The accounting policies discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024, or the Annual Report, are considered by management to be the most important to an understanding of the consolidated financial statements because of their significance to the portrayal of our financial condition and results of operations. There have been no material changes to that information disclosed in our Annual Report during the three months ended March 31, 2024, with the exception of those detailed in Note 2, Summary of Significant Accounting Policies, to the condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current wording
Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates. The application of these policies necessarily involves judgments regarding future events. These estimates and judgments, in and of themselves, could materially impact the condensed consolidated financial statements and disclosures based on varying assumptions. The accounting policies discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024, or the Annual Report, are considered by management to be the most important to an understanding of the consolidated financial statements because of their significance to the portrayal of our financial condition and results of operations. There have been no material changes to that information disclosed in our Annual Report during the three and six months ended June 30, 2024, with the exception of those detailed in Note 2, Summary of Significant Accounting Policies, to the condensed consolidated financial statements included elsewhere in this Quarterly Report.
Previous wording
Total revenue was $0.0 million and $(0.5) million for the three months ended March 31, 2024 and 2023, respectively. The change in revenue as compared to the prior period was primarily due to an increase in the estimate of total costs expected to be incurred to fulfill our obligations under the 2016 License Agreement with Nestlé, which resulted in a reversal of revenue for the three months ended March 31, 2023 based on our cost-to-cost methodology. In the current period, we did not recognize any revenue under the 2016 License Agreement, as we have significantly scaled back our research and development activities as part of the Restructuring Plan. For additional information, see Note 13, Revenue from Contracts with Customers, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current wording
Total revenue was $0 million and $126.5 million for the three months ended June 30, 2024 and 2023, respectively. The decrease in revenue as compared to the prior period was primarily due to the milestone payment we received from our collaborator Nestlé, upon FDA approval of VOWST in the second quarter of 2023. In the current period, we did not recognize any revenue under the 2016 License Agreement. For additional information, see Note 13, Revenue from Contracts with Customers, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Previous wording
a decrease of $8.5 million in expenses related to our VOWST program due to a decrease in facilities, lab supplies and consumables of $3.1 million and a decrease in contract manufacturing costs of $3.3 million, as we have capitalized manufacturing and overhead costs into inventory in conjunction with the commercialization of VOWST, a $1.5 million decrease in consulting expenses, and a $0.5 million decrease in clinical trials and analytical testing costs due to reduced clinical work with respect to VOWST as a result of commercialization;
Current wording
a decrease of $5.5 million in expenses related to our VOWST program due to a decrease in facilities, lab supplies and consumables of $1.8 million and a decrease in contract manufacturing costs of $0.8 million, as we have capitalized manufacturing and overhead costs into inventory in conjunction with the commercialization of VOWST, a $1.3 million decrease in consulting expenses, and a $1.7 million decrease in clinical trials and analytical testing costs due to reduced clinical work with respect to VOWST as a result of commercialization;
Previous wording
a decrease of $0.2 million in expenses related to our early stage programs due to the Restructuring Plan;
Current wording
a decrease of $0.5 million in expenses related to our early stage programs due to the restructuring plan.
Previous wording
General and administrative expenses were $15.5 million for three months ended March 31, 2024 compared to $22.5 million for the three months ended March 31, 2023. The decrease of $7.0 million was primarily due to the following:
Current wording
General and administrative expenses were $16.1 million for three months ended June 30, 2024 compared to $28.1 million for the three months ended June 30, 2023. The decrease of $12.0 million was primarily due to the following:
Previous wording
a decrease in personnel related costs of $1.9 million primarily due to a decrease in salaries, bonus, employee benefits expenses, and stock-based compensation expenses due to the Restructuring Plan that was implemented in 2023;
Current wording
a decrease in personnel related costs of $5.3 million primarily due to a decrease in salaries, bonus, employee benefits expenses, and stock-based compensation expenses due to the restructuring plan that was implemented in 2023;
Previous wording
a decrease in professional fees of $5.0 million primarily due to a decrease in professional services, consulting, and recruiting fees; and
Current wording
a decrease in professional fees of $6.6 million primarily due to a decrease in professional services, consulting, and recruiting fees; and
Previous wording
Collaboration (profit) loss sharing – related party resulted in $2.4 million of expense to us for the three months ended March 31, 2024, compared to $3.6 million of expense for the three months ended March 31, 2023. Beginning with the commercial launch of VOWST in June 2023, we record our share of the net profits and losses from the sales of VOWST, which are recorded by Nestlé and include gross sales net of discounts, rebates, allowances, and other applicable deductions, as collaboration (profit) loss sharing - related party. Our share of VOWST net profits and loss also includes commercial and medical affairs expenses incurred by us. For the three months ended March 31, 2024, our share of the VOWST net loss was $7.1 million. We also record as collaboration (profit) loss sharing - related party our net profit on the transfer of VOWST to Nestlé. For the three months ended March 31, 2024 these amounts were $4.7 million in net profit. For the three months ended March 31, 2023, collaboration (profit) loss sharing – related party was $3.6 million of net loss, which consisted of our share of pre-launch expenses.
Current wording
Collaboration (profit) loss sharing – related party resulted in $2.6 million of income to us for the three months ended June 30, 2024, compared to $2.1 million of expense for the three months ended June 30, 2023. Beginning with the commercial launch of VOWST in June 2023, we record our share of the net profits and losses from the sales of VOWST, which are recorded by Nestlé and include gross sales net of discounts, rebates, allowances, and other applicable deductions, as collaboration (profit) loss sharing - related party. Our share of VOWST net profit and loss also includes commercial and medical affairs expenses incurred by us. For the three months ended June 30, 2024 and 2023, our share of the VOWST net loss was $6.6 million and $2.1 million, respectively. We also record as collaboration (profit) loss sharing - related party our net profit on the transfer of VOWST to Nestlé. For the three months ended June 30, 2024 and 2023, these amounts were $9.2 million and $1.3 million, respectively, in net profit. For the three months ended June 30, 2023, collaboration (profit) loss sharing – related party also included $1.2 million of net loss related to pre-launch expenses.
Previous wording
Other expense, net for the three months ended March 31, 2024 and 2023 was $0.5 million and $0.6 million, respectively. The decrease in other expense, net was primarily due to an increase in interest income of $0.6 million and an increase in other income of $2.0 million due to foreign currency gains and $0.4 million due to the change in the fair value of the Additional Warrants. For more information, see Note 9, Notes Payable, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. This increase was partially offset by an increase in interest expense of $2.7 million as a result of higher interest rates and a higher borrowing base as compared to the same period in the prior year.
Current wording
Other expense, net for the three months ended June 30, 2024 and 2023 was $1.5 million and $3.0 million, respectively. The decrease in other expense, net was primarily due to an increase in other income of $2.2 million due to $0.7 million of sublease income recorded in the three months ended June 30, 2024 and the loss on extinguishment of the Hercules credit facility recorded in the three months ended June 30, 2023. For more information, see Note 9, Notes Payable, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. This increase was partially offset by a decrease in interest income of $0.5 million and an increase in interest expense of $0.3 million as a result of higher interest rates and a higher borrowing base as compared to the same period in the prior year.
Previous wording
a decrease in personnel-related costs of $11.0 million primarily due to a decrease of $5.6 million resulting from the capitalization of labor costs into inventory following FDA approval of VOWST and a decrease of $7.3 million in salaries, bonus, employee benefits expenses, and stock-based compensation expense as a result of the Restructuring Plan implemented in 2023, partially offset by an increase of $1.9 million in payroll taxes related to tax credits we received during the three months ended March 31, 2023;
Current wording
a decrease in personnel-related costs of $27.3 million primarily due to a decrease of $14.9 million in salaries, bonus, and employee benefits expenses as a result of the restructuring plan implemented in 2023, a decrease of $8.7 million resulting from the capitalization of labor costs into inventory following FDA approval of VOWST, and a decrease of $5.1 million in stock-based compensation expense, which was primarily as a result of options and awards with performance conditions that were achieved during the three months ended June 30, 2023, partially offset by an increase of $1.4 million in payroll taxes related to tax credits we received during the three months ended March 31, 2023;
Previous wording
a decrease of $3.6 million in expenses related to our microbiome therapeutics platform and research and development operations, primarily due to a decrease of $2.8 million related to the capitalization of costs that relate to VOWST manufacturing into inventory, a decrease in employee-related costs of $1.3 million primarily due to a reduction in the use of contractors following the implementation of the Restructuring Plan, a decrease in facilities-related costs of $0.9 million, a decrease in consulting expenses of $0.5 million, and a decrease of $0.8 million in clinical trial, analytical and other manufacturing costs, partially offset by $2.7 million of impairment charges related to our idled donor collection facility in Cambridge, Massachusetts;
Current wording
a decrease of $10.1 million in expenses related to our microbiome therapeutics platform and research and development operations, primarily due to a decrease of $7.8 million related to the capitalization of costs that relate to VOWST manufacturing into inventory, a decrease in employee-related costs of $2.4 million primarily due to a reduction in the use of contractors following the implementation of the restructuring plan, a decrease in consulting expenses of $1.7 million, and a decrease of $0.8 million in clinical trial, analytical and other manufacturing costs, partially offset by $2.7 million of impairment charges related to our idled donor collection facility in Cambridge, Massachusetts; and
Previous wording
an increase of $1.1 million in expenses related to our SER-155 program due to an increase in clinical trial costs.
Current wording
an increase of $1.0 million in expenses related to our SER-155 program primarily due to an increase in clinical trial costs as the Phase 1b trial advanced.
Previous wording
a decrease in facility-related and other costs of $0.1 million primarily related to information technology costs, laboratory and office rent expenses, license costs and office supplies.
Current wording
a decrease in facility-related and other costs of $0.2 million primarily related to information technology costs, laboratory and office rent expenses, license costs and office supplies.
Showing the first 40 of 61 pairs. Open the source sections for the rest.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
a decrease of $6.5 million in expenses related to our microbiome therapeutics platform and research and development operations, primarily due to a decrease of $4.3 million related to the capitalization of costs that relate to VOWST manufacturing into inventory, a decrease in employee-related costs of $1.2 million primarily due to a reduction in the use of contractors following the implementation of the restructuring plan, and a decrease in consulting expenses of $1.0 million; and
Current report — wording carried from elsewhere
a decrease in facility-related and other costs of $0.1 million primarily related to information technology costs.
Current report — wording carried from elsewhere
The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:
Current report — wording carried from elsewhere
Total revenue was $0 million and $126.0 million for the six months ended June 30, 2024 and 2023, respectively. The change in revenue as compared to the prior period was primarily due to the milestone payment received from our collaborator Nestlé, upon FDA approval of VOWST in the second quarter of 2023. In the current period, we did not recognize any revenue under the 2016 License Agreement with Nestlé. For additional information, see Note 13, Revenue from Contracts with Customers, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current report — wording carried from elsewhere
a decrease of $14.0 million in expenses related to our VOWST program due to a decrease in facilities, lab supplies and consumables of $4.9 million and a decrease in contract manufacturing costs of $4.1 million, as we have capitalized manufacturing and overhead costs into inventory in conjunction with the commercialization of VOWST, a $2.8 million decrease in consulting expenses, and a $2.2 million decrease in clinical trials and analytical testing costs due to reduced clinical work with respect to VOWST as a result of commercialization;
Current report — wording carried from elsewhere
a decrease of $0.7 million in expenses related to our early stage programs due to the restructuring plan;
Current report — wording carried from elsewhere
a decrease in personnel related costs of $7.2 million primarily due to a decrease in salaries, bonus, employee benefits expenses, and stock-based compensation expenses due to the restructuring plan that was implemented in 2023;
Current report — wording carried from elsewhere
a decrease in professional fees of $11.5 million primarily due to a decrease in professional services, consulting, and recruiting fees; and
Current report — wording carried from elsewhere
Collaboration (profit) loss sharing – related party resulted in $0.2 million of income to us for the six months ended June 30, 2024, compared to $5.7 million of expense for the six months ended June 30, 2023. Beginning with the commercial launch of VOWST in June 2023, we record our share of the net profits and losses from the sales of VOWST, which are recorded by Nestlé and include gross sales net of discounts, rebates, allowances, and other applicable deductions, as collaboration (profit) loss sharing - related party. Our share of VOWST net profits and loss also includes commercial and medical affairs expenses incurred by us. For the six months ended June 30, 2024 and 2023, our share of the VOWST net loss was $13.8 million and $2.1 million, respectively. We also record as collaboration (profit) loss sharing - related party our net profit on the transfer of VOWST to Nestlé. For the six months ended June 30, 2024 and 2023, these amounts were $13.9 million and $1.3 million, respectively, in net profit. For the six months ended June 30, 2023, collaboration (profit) loss sharing – related party also included $4.8 million of net loss related to pre-launch expenses.
Current report — wording carried from elsewhere
The components of the collaboration (profit) loss sharing - related party are as follows (in thousands):
Current report — wording carried from elsewhere
$10.0 million milestone payment associated with the initiation of the Phase 1b clinical study for SER-262 in CDI. In June 2017, we initiated a Phase 3 clinical study of VOWST (ECOSPOR III) in patients with multiply recurrent CDI. In July 2017, we received $20.0 million based on the achievement of this milestone under the 2016 License Agreement. In November 2018, we executed a letter agreement with Nestlé, or the Letter Agreement, modifying certain terms of the 2016 License Agreement. Under the Letter Agreement, Nestlé agreed to pay us the $20.0 million Phase 3 milestone payment upon commencement of the Phase 2b study for SER-287. In December 2018, we received $40.0 million in milestone payments in connection with the commencement of the Phase 2b study for SER-287. In August 2020, we received $10.0 million from Nestlé in connection with the initiation of the Phase 1b SER-301 study. To date, we have received $80.0 million in development milestones under the 2016 License Agreement with Nestlé.
Current report — wording carried from elsewhere
Licensed Territory and in accordance with a pre-launch plan, up to a specified cap. Since the first commercial sale of VOWST in June 2023, we are entitled to share equally in its commercial profits and losses.
Current report — wording carried from elsewhere
June 30, 2024 consisted of a decrease in operating lease liabilities of $2.3 million, and an increase in inventories of $23.4 million related to the capitalization of VOWST manufacturing costs during the period, an increase in collaboration receivable - related party of $9.9 million, partially offset by an increase in accrued expenses and other current and long-term liabilities of $5.8 million, a decrease in prepaid expenses and other current and other non-current assets of $2.5 million, an increase in deferred income - related party of $0.2 million, and an increase in accounts payable of $1.2 million.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Collaboration (Profit) Loss Sharing - related party
Previous report — wording carried elsewhere
Collaboration (Profit) Loss Sharing - related party
Previous report — wording carried elsewhere
Upon termination of the 2016 License Agreement, all licenses granted to Nestlé by us will terminate, and all rights in and to the 2016 Collaboration Products in the 2016 Licensed Territory will revert to us. If we commit a material breach of the 2016 License Agreement, Nestlé may elect not to terminate the 2016 License Agreement but instead apply specified adjustments to its payment obligations and other terms and conditions of the 2016 License Agreement.
Previous report — wording carried elsewhere
Loan and Security Agreement with Hercules
Previous report — wording carried elsewhere
Funding Date (as defined in the Oaktree Credit Agreement) over the calendar quarter immediately preceding it. The Tranche C Loan may be drawn until September 30, 2025, if VOWST net sales for the trailing 12 consecutive months are at least $120 million and at least 4.5% greater in each of the two calendar quarters prior to the Applicable Funding Date relative, in each case, to the calendar quarter immediately preceding it. The Oaktree Term Loan has a maturity date of April 27, 2029, or the Oaktree Maturity Date. Of the $110.0 million Tranche A Loan advanced by the Lenders at closing, approximately $53.4 million repaid the Company's existing credit facility with Hercules. After deducting other transaction expenses and fees, the Company received net proceeds of approximately $50.4 million.