Seres Therapeutics(US:MCRB)2025-05-07 14:00PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) Presents Seres Therapeutics' unaudited condensed consolidated financial statements, including the VOWST business sale and going concern assessment Condensed Consolidated Balance Sheets Cash and cash equivalents increased to $58.8 million by March 31, 2025, improving total stockholders' equity to $50.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $58,849 | $30,793 | | Total current assets | $66,078 | $38,674 | | Total assets | $164,182 | $139,810 | | Liabilities & Equity | | | | Total current liabilities | $31,323 | $41,222 | | Total liabilities | $113,717 | $126,026 | | Total stockholders' equity | $50,465 | $13,784 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Net income from continuing operations reached $32.7 million in Q1 2025, driven by a $52.2 million gain on VOWST sale Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development expenses | $11,821 | $19,494 | | General and administrative expenses | $11,888 | $14,944 | | Total operating expenses | $27,236 | $34,438 | | Gain on sale of VOWST Business | $52,181 | $— | | Net income (loss) from continuing operations | $32,682 | $(32,903) | | Net income (loss) per share - basic | $3.76 | $(5.49) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $26.9 million in Q1 2025, a significant improvement from $35.2 million cash used in Q1 2024 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $26,910 | $(35,236) | | Net cash used in investing activities | $(34) | $(62) | | Net cash provided by financing activities | $1,180 | $18,762 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $28,056 | $(16,536) | Notes to Condensed Consolidated Financial Statements Notes detail the VOWST business sale, a $50 million installment, a 1-for-20 reverse stock split, and going concern doubt - The company completed the sale of its VOWST microbiome therapeutic business to Nestlé on September 30, 2024, accounted for as a discontinued operation3565 - The company received a $50 million cash installment on January 15, 2025, with a final $25 million due July 1, 2025, contingent on TSA compliance3568 - Management concluded substantial doubt exists about the company's ability to continue as a going concern, requiring additional funding for ongoing operations5152 - On April 21, 2025, the company effected a 1-for-20 reverse stock split of its common stock, with all share and per-share amounts retroactively adjusted5780 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic shift to SER-155 after the VOWST sale, analyzing Q1 2025 financial results and liquidity, noting going concern doubt - Following the VOWST sale, the company focuses on developing SER-155 to prevent bacterial bloodstream infections in allo-HSCT patients110 - The FDA granted Breakthrough Therapy designation to SER-155 in December 2024, providing feedback for a planned Phase 2 study111146 - The company actively seeks a partner to provide financial resources and capabilities for the SER-155 program111113 - Management concluded substantial doubt exists about the company's ability to continue as a going concern, anticipating additional funding needed in Q1 2026120193205 Results of Operations Total operating expenses decreased by $7.2 million in Q1 2025, with significant other income from the VOWST sale gain Research and Development Expenses Breakdown (in thousands) | Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Live biotherapeutics platform | $5,123 | $9,164 | $(4,041) | | SER-155 | $577 | $2,400 | $(1,823) | | Personnel-related | $6,118 | $7,845 | $(1,727) | | Total R&D Expenses | $11,821 | $19,494 | $(7,673) | General and Administrative Expenses Breakdown (in thousands) | Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Personnel related | $4,173 | $6,641 | $(2,468) | | Professional fees | $3,180 | $2,628 | $552 | | Facility-related and other | $4,535 | $5,675 | $(1,140) | | Total G&A Expenses | $11,888 | $14,944 | $(3,056) | - Manufacturing services expenses of $3.5 million were recorded in Q1 2025 for services performed for Nestlé under the TSA for VOWST manufacturing181 - Other income, net, increased to $59.9 million in Q1 2025, primarily due to the $50.0 million Nestlé installment and $6.3 million TSA reimbursement income182 Liquidity and Capital Resources As of March 31, 2025, the company had $58.8 million in cash, but projects additional funding is needed by Q1 2026, raising going concern doubt - As of March 31, 2025, the company had cash and cash equivalents of $58.8 million and an accumulated deficit of $945.4 million192 - The company received a $50 million installment in January 2025 and expects a final $25 million payment on July 1, 2025, from the VOWST sale, contingent on TSA compliance187 - Based on current plans, the company anticipates requiring additional funding in Q1 2026, raising substantial doubt about its ability to continue as a going concern193205 Cash Flow Summary (in thousands) | Period | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $26,910 | $(35,236) | | Cash provided by financing activities | $1,180 | $18,762 | Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures regarding interest rates and inflation since the December 31, 2024 Annual Report - No material changes occurred in the company's market risk exposures for interest rates and inflation during Q1 2025207 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control - The principal executive and financial officers concluded the company's disclosure controls and procedures were effective as of March 31, 2025209 - No material changes occurred in the company's internal control over financial reporting during Q1 2025210 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reports no material legal proceedings during the period - The company reports no legal proceedings to disclose for the period212 Item 1A. Risk Factors Outlines significant risks, including urgent funding needs, substantial doubt about going concern, and challenges in clinical development and IP Risks Related to Financial Position and Capital Needs The company faces critical financial risks, requiring additional funding by Q1 2026, raising substantial doubt about going concern - The company will need additional funding to advance product candidates, including the planned SER-155 Phase 2 study, or risk program delays215 - Conditions raise substantial doubt about the company's ability to continue as a going concern, with funding required in Q1 2026221 - The company incurred significant losses since inception, with a net loss of $125.8 million in FY2024 and an accumulated deficit of $945.4 million as of March 31, 2025224 - Future installment and milestone payments from the VOWST sale are subject to risks, including TSA compliance and sales targets, and may not be fully realized230231 Risks Related to Discovery, Development, and Regulatory Approval Product candidates based on novel live biotherapeutics face lengthy, expensive, and uncertain clinical development and regulatory approval processes - The company's product candidates, based on novel live biotherapeutics, may face longer FDA review processes due to lack of evaluation experience242 - Clinical drug development is a risky, lengthy, and expensive process with uncertain outcomes, where early positive results do not guarantee later-stage success243 - The Breakthrough Therapy designation for SER-155 does not guarantee faster development, review, or increased likelihood of approval270271 - Disruptions at the FDA and other government agencies, such as funding shortages or health crises, could hinder timely product review and approval280 Risks Related to Dependence on Third Parties and Manufacturing Seres relies heavily on third parties for clinical trials and manufacturing, introducing risks of non-performance, delays, and limited commercial-scale experience - The company relies on third parties like CROs to conduct clinical trials, and their unsatisfactory performance could delay or jeopardize development programs283285 - Reliance on third-party manufacturers increases risks of insufficient quantities, unacceptable costs, or quality issues, impairing development and commercialization287 - The company has limited experience in commercial-scale manufacturing and cannot guarantee regulatory compliance or viable cost291 Risks Related to Intellectual Property Success depends on obtaining and maintaining patent protection and trade secrets, facing risks of uncertain patentability, challenges, and infringement - The company's ability to protect proprietary technology through patents is uncertain, and issued patents may not prevent competitors from designing around them343347 - Changes in U.S. patent law and Supreme Court rulings on patent eligibility for natural products increase uncertainty and could diminish patent value357360 - The company faces risk of third-party legal proceedings alleging intellectual property infringement, which could be costly and materially adverse to the business364 - Protecting trade secrets and know-how is critical, but confidentiality agreements may be breached, and misappropriation claims are difficult to enforce355 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - None reported444 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported445 Item 4. Mine Safety Disclosures This item is not applicable to the company - None reported446 Item 5. Other Information The company reports no other material information required to be disclosed - None reported447 Item 6. Exhibits This section lists exhibits filed with the quarterly report, including corporate documents and officer certifications - Key exhibits filed include the 2025 Incentive Award Plan and certifications by the CEO and CFO449