Seres Therapeutics (MCRB): How to Pick Yourself Up

Edward Kim  |

"And why do we fall, Bruce? So we can learn to pick ourselves up."

After Thomas Wayne rescues young Bruce Wayne from the bottom of the well, he imparts this lesson to his son: We can learn from our stumbles and transform them into something greater.

A year ago, Seres Therapeutics (Nasdaq: MCRB) suffered through the bane of every clinical-stage biotechnology company's existence - binary event risk - as its lead drug candidate failed to achieve statistical significant improvement versus placebo. SER-109 is Seres' candidate for the prevention of multiply recurrent Clostridium difficile infection (CDI), and the interim Phase 2 results the company disclosed last July showed that the primary efficacy endpoint of CDI recurrence up to 8 weeks after treatment was not achieved.

CDI is a bacterial infection that can cause a range of intestinal diseases from diarrhea to life-threatening colon inflammation.

Case study in crisis management

A poor clinical result like this can often mark the beginning of the end for many biotech companies, but Seres Therapeutics, led by CEO Roger Pomerantz, MD, has provided what amounts to a case study for his peers in clinical trial crisis management.

1. Admit the failure. Avoid the spin.

Companies frequently make the mistake of trying to spin a negative clinical result with a press release that conjures a silver lining while burying the lede. Seres showed that the best way to deal with this was with a clearly written release that even had "Primary efficacy endpoint was not achieved" as its subtitle. The stock got punished that day, losing 69% of its value while trading virtually all of its shares outstanding. MCRB found its floor over the next week, and the stock has held that floor over the past year.

2. Outline clear next steps.

In that press release, Dr. Pomerantz clearly stated next steps, while highlighting the critical need for effective treatment options for CDI. "Our priority is to complete a full review of the clinical results and microbiome data of the Phase 2 study... Based on this information and pending discussions with the FDA, we plan to make any necessary changes to our development plans for SER-109. C. difficile infection treatment options, including unregulated fecal microbial transplants, remain poor. The confounding placebo data obtained in this study further highlight the significant need for new, effective, FDA regulated therapeutic options for these patients. We will take our learnings from this study and continue in our pioneering efforts to develop meaningful new microbiome therapeutics for C. difficile infection and other serious diseases.”

3. Follow up with the market

Investors can be fickle and quickly move on to the next shiny fidget spinner. It's critical to keep the market informed of your progress, particularly after such a gut punch. Seres executed this very well and used a series of press releases to keep the market informed that the company was going to do a better job of diagnosing clinical patients and would increase the dosage of SER-109 by 10x.


Of course, none of this succeeds if the underlying science is without merit. The company clearly believes - and the FDA appears to be supporting the notion that - SER-109 is a viable approach to curing CDI.


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Former Amgen Chief Medical Officer joins Seres Board

Lastly, we note with interest that Seres announced the addition of Dr. Willard Dere to its Board of Directors this week. Dr. Dere was Amgen's (Nasdaq: AMGN) head of global development and chief medical officer and is currently Professor of Internal Medicine; B. Lue and Hope S. Bettilyon Presidential Endowed Chair in Internal Medicine for Diabetes Research, Executive Director of Personalized Health, and Co-Principal Investigator of the Center for Clinical and Translational Science at the University of Utah Health Sciences Center. “Seres is advancing a promising pipeline of microbiome product candidates using a highly differentiated scientific approach," said Dr. Dere. "I am eager to contribute to the company’s objective of bringing the first FDA approved microbiome products to individuals with serious diseases.”


The stock is now trading at a market cap of just $454 million, about 30% of where it was a year ago and recently joining the ranks of the Russell Microcap Index. We'll be keeping close watch on Seres Therapeutics to see if the market will reflect what we see as a well executed clinical crisis management turnaround.


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