Seres Therapeutics(MCRB) - 2020 Q1 - Quarterly Report

Financial Performance - Total revenue for Q1 2020 was $8,189,000, an increase of 11.8% compared to $7,321,000 in Q1 2019[18] - Net loss for Q1 2020 was $19,881,000, a decrease of 18.9% from a net loss of $24,333,000 in Q1 2019[18] - Cash used in operating activities for Q1 2020 was $24,251,000, a decrease from $32,393,000 in Q1 2019[23] - The net loss for the three months ended March 31, 2020, was $19.9 million, with an accumulated deficit of $479.5 million as of the same date[101] - The net loss for the three months ended March 31, 2020, was $19.9 million, an improvement of $4.5 million compared to a net loss of $24.3 million in the same period in 2019[135] Assets and Liabilities - Cash and cash equivalents at the end of Q1 2020 were $54,857,000, down from $65,126,000 at the end of 2019[16] - Total assets decreased to $110,619,000 as of March 31, 2020, from $132,440,000 as of December 31, 2019[16] - Total liabilities were $172,268,000 as of March 31, 2020, compared to $180,764,000 at the end of 2019[16] - The company had a total stockholders' deficit of $61,649,000 as of March 31, 2020, compared to $48,324,000 at the end of 2019[20] - As of March 31, 2020, the total fair value of the company's assets measured at fair value was $41,669 million, a decrease from $64,343 million as of December 31, 2019[43] Research and Development - Research and development expenses for Q1 2020 were $21,743,000, slightly down from $22,887,000 in Q1 2019[18] - The Company is developing SER-109 to prevent further recurrences of Clostridioides difficile infection, which could be a first-in-field oral microbiome drug if approved[30] - SER-287 is being developed to treat ulcerative colitis, with additional candidates targeting various diseases linked to the microbiome[30] - The Company is subject to risks common in the biotechnology industry, including the need for significant additional research and development efforts[27] - The company has an extensive patent portfolio with 21 active patent application families and 13 issued U.S. patents, covering microbiome therapeutics[116] Capital and Funding - The Company plans to mitigate financial risks by raising additional capital through equity or debt financings and reducing cash expenditures[31] - The Company may finance its cash needs through public or private equity offerings, debt financings, and collaborations, but there is no assurance of obtaining funding on acceptable terms[32] - The company has a loan and security agreement with Hercules, allowing for a total of $50 million in tranches, with the first tranche of $25 million already received[152] - The company anticipates continuing to incur losses for at least the next several years, necessitating additional capital to fund operations[143] - The company may need to raise substantial additional funding to continue operations and complete product development, with potential delays or reductions in programs if capital is not raised[187] Collaboration and Revenue - The Company received an upfront cash payment of $120,000,000 from NHS under the collaboration agreement, with potential milestone payments totaling up to $1,125,000,000[68] - Collaboration revenue recognized for the three months ended March 31, 2020, was $5,462,000, compared to $6,615,000 for the same period in 2019[72] - Under the Research Agreement with AstraZeneca, the Company recognized collaboration revenue of $1,988,000 for the three months ended March 31, 2020, up from $260,000 in the same period of 2019[82] - The Company received $40,000,000 in milestone payments from NHS following the initiation of the SER-287 Phase 2b study in December 2018[69] - The company has not generated any revenues from product sales to date, relying primarily on collaboration agreements for revenue[119] Clinical Trials and Development - As of March 30, 2020, 182 out of 188 intended subjects were enrolled in the ECOSPOR III study for SER-109, which aims to reduce recurrences of Clostridioides difficile infection[103] - SER-287 is currently approximately 60% enrolled in a Phase 2b clinical trial targeting 201 patients with mild-to-moderate ulcerative colitis[105] - The company has completed Phase 1b and Phase 2 clinical studies of SER-109 and reported top-line data for SER-287 and SER-262, but has not yet completed any Phase 3 clinical studies[192] - The company initiated a Phase 3 clinical study of SER-109 in June 2017, but enrollment was halted at 182 patients due to the COVID-19 pandemic, which could severely impact ongoing clinical trials[202] - The ongoing Phase 3 trial of SER-109 may require additional trials to generate sufficient safety and efficacy data for FDA approval, increasing development costs[206] Risks and Concerns - The Company has significant doubts about its ability to continue as a going concern due to its accumulated deficit and history of losses[31] - The company faces substantial doubt about its ability to continue as a going concern due to recurring losses and negative cash flows from operations[181] - The company’s product candidates are based on microbiome therapeutics, an unproven approach, and there is uncertainty regarding their effectiveness and regulatory approval[197] - The company faces risks related to the supply of biological materials necessary for its product candidates, which could adversely affect development and commercialization efforts[198] - Regulatory approvals are essential for commercialization, and delays or failures in obtaining these approvals could materially impair revenue generation[211] Operational Changes - The COVID-19 pandemic has led to modifications in business practices, including a work-from-home policy and restrictions on nonessential travel[101] - The company reduced its headcount by approximately 30 percent as part of its restructuring efforts to focus on clinical-stage therapeutic candidates[50] - The company anticipates significant increases in expenses related to ongoing clinical development activities and research and development efforts[163] - The company expects to incur significant commercialization expenses related to product manufacturing, marketing, sales, and distribution if any of its product candidates receive regulatory approval[187] - The company has completed enrollment for the SER-109 Phase 3 study despite challenges from unapproved treatments, but further enrollment was halted due to the COVID-19 pandemic[205]