IPO Report: Seres Therapeutics (MCRB)

Francis Gaskins |

Seres Therapeutics (MCRB) is a microbiome therapeutics platform company developing a novel class of biological drugs, which MCRB refers to as Ecobiotic microbiome therapeutics. The company is based in Cambridge, MA.

Twelve other companies are scheduled for the week of June 22.  The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Goldman Sachs, BofA Merrill Lynch
Co-managers: Leerink Partners, Canaccord Genuity

End of lockup (180 days): Tuesday, December 22, 2015
End of 25-day quiet period: Monday, July 20, 2015

MCRB scheduled a $100 million IPO with a market capitalization of $582 million at a price range midpoint of $16 for Friday, June 26, 2015 on Nasdaq.

MCRB IPO Summary

MCRB is a microbiome therapeutics platform company developing a novel class of biological drugs, which MCRB refers to as Ecobiotic microbiome therapeutics.

The human microbiome is an ecology of microorganisms, including bacteria, fungi and viruses, that, when unhealthy, or dysbiotic, can leave the body more susceptible to infections, metabolic disorders, allergies, autoimmune disease, inflammation and other conditions.

MCRB Valuation

Glossary

Accumulated deficit (mm)

.

.

-$38

     

Per share dilution

.

.

-$10.71

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Seres Therapeutics (MCRB)

$587

no rev

-18.4

3.0

3.0

17%

             

MCRB Conclusion

Neutral plus

In phase 1b/2 97% of patients achieved a clinical cure

Granted Breakthrough Therapy designation

Could be first in field drug approved by FDA

No collaborators

Shareholder affiliates may purchase $19mm, 19%

MCRB Business

MCRB is a microbiome therapeutics platform company developing a novel class of biological drugs, which MCRB refers to as Ecobiotic microbiome therapeutics.

The human microbiome is an ecology of microorganisms, including bacteria, fungi and viruses, that, when unhealthy, or dysbiotic, can leave the body more susceptible to infections, metabolic disorders, allergies, autoimmune disease, inflammation and other conditions.

MCRB’s drugs are designed to restore health by repairing the function of a dysbiotic microbiome. MCRB is initially focused on implementing its microbiome therapeutics platform to develop Ecobiotic microbiome therapeutics that treat dysbiosis in the colonic microbiome, one of the most diverse microbiomes in the human body.

Could be first in field drug approved by FDA

SER-109, MCRB’s lead product candidate is designed to prevent further recurrences of Clostridium difficile infection, or CDI, a debilitating infection of the colon and, if approved by the U.S. Food and Drug Administration, or FDA, could be a first-in-field drug.

In MCRB’s Phase 1b/2 clinical study of SER-109 in recurrent CDI patients, 97% of patients achieved a clinical cure, which MCRB defined as the absence of CDI requiring antibiotic treatment during the eight-week period after SER-109 dosing.

Granted Breakthrough Therapy designation

SER-109 has been granted Breakthrough Therapy designation by the FDA. Breakthrough Therapy designation is intended to expedite the development and review of drugs or biologics that treat serious or life-threatening diseases or conditions and that preliminary clinical evidence indicates may be a substantial improvement over existing therapies.

MCRB initiated a Phase 2 clinical study of SER-109 for recurrent CDI and dosed the first patient in May 2015. MCRB expects study results in the middle of 2016.

Human microbiome

The human microbiome is one of the richest and most diverse ecosystems on earth, with a population of more than 100 trillion microorganisms that live in intestines, mouth, skin and elsewhere in the body.

Among the microbiomes in the human body, the colonic microbiome is one of the most diverse microbial communities.

In a healthy, symbiotic state the colonic microbiome plays an important role in human health, helping the body digest food, resist pathogens, regulate the metabolic systems and synthesize essential nutrients and vitamins.

owever, the colonic microbiome may change in composition for a variety of reasons, including in response to long-term or high-dose antibiotics and following gastrointestinal infection.

These changes in composition result in the loss of key microbes, resulting in a state of dysbiosis. Dysbiosis of the colonic microbiome is associated with a wide range of disease and infections, such as gastrointestinal infection and inflammatory and metabolic diseases.

Intellectual property

Their patent portfolio includes patent applications in the early stages of prosecution and three issued patents.

For its pending applications, MCRB anticipates determining, in advance of the applicable deadlines, whether to pursue these applications and if so will pursue them in the United States and selected ex-U.S. jurisdictions.

Substantive patent prosecution before the USPTO was begun in four applications from two patent families, and three of these have issued as patents. MCRB believes that issued claims will provide protection for SER-109, SER-262, SER-287 and SER-155.

MCRB’s patent estate leverages both offensive and defensive strategies.

As of May 31, 2015, MCRB owned a total of nine patent application families that include Patent Cooperation Treaty, or PCT, applications and/or U.S. patent applications, and some of these families are described briefly below.

MCRB also owns two additional patent application families that include only U.S. provisional applications that will not themselves be examined and for which the deadline to file PCT applications and/or U.S. non-provisional applications has not yet expired.

The pending patent applications as of May 31, 2015 in six of the patent application families in MCRB’s portfolio are described briefly below. MCRB expects to pursue additional applications in these families over time.

Competition

MCRB is aware of a number of large pharmaceutical and biotechnology companies, including Merck, Shire, Sanofi, Pfizer and Novartis, as well as smaller, early-stage companies, that are pursuing the development of products, including microbiome therapeutics, for the prevention of CDI and other disease indications MCRB is targeting.

Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to MCRB’s approach, and others may be based on entirely different approaches.

For example, FMT is a procedure that has resulted in high cure rates for recurrent CDI and MCRB’s competitors and physicians may continue to seek to standardize and implement this procedure.

Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

5% shareholders pre-IPO

Entities affiliated with Flagship Ventures Funds 54.7%

Nestlé Health Science US Holdings, Inc.             18.3%

Entities affiliated with Fidelity Management & Research Company           8.1%

Enso Ventures 2 Limited            5.9%

                                                                                                                                   

Roger J. Pomerantz, M.D.         2.1%

Noubar B. Afeyan, Ph.D.           54.7%

Dividends

No dividends are planned.

Use of proceeds

MCRB expects to receive $90 million from its IPO and use it for the following:

$25 million to advance the clinical development of SER-109 for the prevention of further recurrences of CDI in patients suffering from recurrent CDI, which MCRB expects will be sufficient to complete its Phase 2 clinical study that it initiated in May 2015;

$40 million to advance the development of MCRB’s other product candidates, SER-262, SER-287 and SER-155, which MCRB expects will be sufficient to complete pre-clinical studies and, if supported, file an investigational new drug application, for one or more of these product candidates; and

the remainder, if any, to fund current and future research and development activities and for working capital and other general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
MCRB Seres Therapeutics Inc. 10.32 0.38 3.82 173,949

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