Seres Failure A Kick In The Gut To Microbiome Field

| About: Seres Therapeutics (MCRB)

The phase II failure of Seres Therapeutics’ (NASDAQ:MCRB) SER-109 in Clostridium difficile knocked nearly 70% off its share price and threw the rest of its pipeline into doubt. And it could also be bad news for other companies in the microbiome space – an area that has seen investors pile in on the promise of curing diseases from Crohn’s to cancer.

Eight microbiome players have raised a total of $477m since 2007 (see table). With the future of the sector now far from certain, these groups could find it harder to bring in funding, and investors might regret ploughing $50m into Vedanta Biosciences in the biggest microbiome round so far this year.

Seres has been a microbiome trailblazer, carrying out a $134m IPO – the ninth biggest of 2015 – while its contemporaries remain private. But it is now trading at close to cash, providing a cautionary tale for others in the sector that had been planning to follow suit.

Gut glut: microbiome groups and their VC hauls

Company

Year founded

Total funding raised

Seres Therapeutics

2013

$69m VC funding plus $134m IPO

C3 Jian

2005

$118m

Synlogic

2013

$74m

Second Genome

2010

$62m

Vedanta Biosciences

2010

$50m

Enterome Bioscience

2012

$40m

Evelo Biosciences

2015

$35m

Rebiotix

2011

$30m

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Seres, which counts Nestlé (OTCPK:NSRGY) among its backers, had hoped to replicate an impressive 87% response rate seen in a phase Ib study, but the phase II Ecospor trial failed to show a significant reduction in the relative risk of C difficile recurrence up to eight weeks after treatment with SER-109 versus placebo. Recurrence occurred in 44% and 53% of patients receiving the therapy and placebo respectively.

Notably, the phase Ib study did not include a placebo arm, which could be one reason for the discrepancy between the two trials. Indeed, the phase II study was the first ever placebo-controlled microbiome study, according to Seres’ chief executive Roger Pomerantz, speaking on a conference call to discuss the data.

“Still committed”

Mr Pomerantz said that the company remains committed to moving SER-109 forward and sees the latest setback as a bump in the road rather than an insurmountable obstacle. “We think this shows that the microbiome, like many new areas, does have complexities,” he added. “We feel we're the best company to figure out those complexities.”

Seres plans to analyze the trial data for potential biomarkers – looking at patients’ microbiome profiles before, during and after treatment – as well as continuing to monitor patients over 24 weeks. But Leerink analysts have cut the product’s probability of success from 80% to 33%.

And the setback could be bad news for the rest of the company’s pipeline if it means the microbiome is a dead end. The group has two drugs in phase I, SER-262 in primary C difficile and SER-287 in ulcerative colitis. These projects have a different formulation to SER-109.

The phase Ib trial of SER-287 is still on track to read out in 2017, Mr Pomerantz said. It includes a placebo arm, so could give another clue about whether microbiome-based therapies are still worth pursuing, or if they are yesterday’s news.

The outcome will be important not just for Seres – its competitors will also be watching with interest.

Trial

ID

Ecospor

NCT02437487

Phase Ib study of SER-287

NCT02618187

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