Seres Therapeutics(US:MCRB)2025-08-06 14:00PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, detailing the company's financial position, operational results, and the impact of the VOWST business sale and reverse stock split Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $45,379 | $30,793 | | Total current assets | $48,685 | $38,674 | | Total assets | $143,800 | $139,810 | | Total current liabilities | $30,940 | $41,222 | | Total liabilities | $110,850 | $126,026 | | Total stockholders' equity | $32,950 | $13,784 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $12,939 | $15,806 | $24,760 | $35,300 | | General and administrative expenses | $10,253 | $13,065 | $22,141 | $28,009 | | Loss from operations | ($24,881) | ($28,871) | ($52,117) | ($63,309) | | Gain on sale of VOWST Business | $185 | $— | $52,366 | $— | | Net income (loss) from continuing operations | ($19,855) | ($26,196) | $12,827 | ($59,099) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $13,621 | ($75,047) | | Net cash (used in) provided by investing activities | ($215) | $1,240 | | Net cash provided by financing activities | $1,180 | $18,762 | - The company has identified conditions that raise substantial doubt about its ability to continue as a going concern, as it will require additional funding to support ongoing operations and meet obligations174851 - As of June 30, 2025, the company had an accumulated deficit of $965.3 million and cash and cash equivalents of $45.4 million174851 - On September 30, 2024, the company completed the sale of its VOWST business to Société des Produits Nestlé S.A. (SPN)355565 - The VOWST transaction is classified as a discontinued operation, and its historical results are reported separately355565 - 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 adjusted in the financial statements5779 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic shift post-VOWST sale, focusing on SER-155 development, while addressing financial condition, including going concern doubts and operational results driven by cost controls and the VOWST sale gain Overview and Strategy Following the VOWST sale, the company is now a clinical-stage entity focused on advancing SER-155, which has shown positive Phase 1b results and received FDA Breakthrough Therapy designation, but requires additional capital for further development - The company's lead candidate is SER-155, an investigational oral live biotherapeutic designed to prevent bacterial bloodstream infections (BSIs) in patients undergoing allogeneic hematopoietic stem cell transplantation (allo-HSCT)111140 - In a Phase 1b study, SER-155 demonstrated a 77% relative risk reduction in bacterial BSIs compared to placebo and was granted Breakthrough Therapy designation by the FDA in December 2024112141147 - The company requires additional capital to begin the planned SER-155 Phase 2 study and is in active discussions with multiple parties for partnerships, out-licensing, mergers, or other transactions to secure resources113114152 - On September 30, 2024, the company completed the VOWST business sale to Société des Produits Nestlé S.A. (SPN), a subsidiary of Nestlé126127 Results of Operations Operating expenses decreased due to lower R&D and G&A costs, while net income for the first half of 2025 was driven by a significant gain from the VOWST business sale and increased other income from Nestlé reimbursements Comparison of Operating Results (in thousands) | Period | Metric | Q2 2025 | Q2 2024 | Change | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Expenses | | | | | | | | | | Research & Development | $12,939 | $15,806 | ($2,867) | $24,760 | $35,300 | ($10,540) | | | General & Administrative | $10,253 | $13,065 | ($2,812) | $22,141 | $28,009 | ($5,868) | | | Manufacturing Services | $1,689 | $— | $1,689 | $5,216 | $— | $5,216 | | Other Income | | | | | | | | | | Gain on sale of VOWST Business | $185 | $— | $185 | $52,366 | $— | $52,366 | | | Other income, net | $5,026 | $2,675 | $2,351 | $64,944 | $4,210 | $60,734 | | Net Income (Loss) | from continuing operations | ($19,855) | ($26,196) | $6,341 | $12,827 | ($59,099) | $71,926 | - The decrease in R&D expenses was primarily due to lower clinical trial costs as the SER-155 Phase 1b study has largely been completed, and reduced personnel-related costs from lower headcount185189197 - The decrease in G&A expenses was mainly due to lower personnel-related costs (salaries, benefits, stock-based compensation) and facility costs following the reduction in headcount184190198 - The increase in Other Income was primarily driven by a $50.0 million installment payment from Nestlé related to the VOWST sale and $9.8 million in reimbursement income for services performed under the TSA187193 Liquidity and Capital Resources The company held $45.4 million in cash as of June 30, 2025, but faces substantial doubt about its going concern ability, requiring additional funding beyond Q1 2026 despite cash inflows from the VOWST sale and ATM equity offerings - The company had cash and cash equivalents of $45.4 million as of June 30, 2025124203 - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern, as it anticipates requiring additional funding in the first quarter of 2026124204218 - During the six months ended June 30, 2025, net cash provided by operating activities was $13.6 million, a significant improvement from the $75.0 million used in the same period of 2024, primarily due to proceeds from the VOWST sale207208 - The company raised approximately $1.0 million in net proceeds from its "at the market" (ATM) equity offering program during the first six months of 2025202211 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk disclosures since the last Annual Report, with primary risks stemming from changes in interest rates and inflation - There have been no material changes to the company's market risk disclosures since the year ended December 31, 2024220 - The company is exposed to market risk from changes in interest rates and inflation220 Item 4. Controls and Procedures Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level222 - No change in internal control over financial reporting occurred during the three months ended June 30, 2025, that has materially affected, or is reasonably likely to materially affect, internal controls223 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reports no legal proceedings during the period - None225 Item 1A. Risk Factors This section details significant risks, including the need for additional funding and going concern doubts, uncertainties in clinical development, reliance on third parties, intense competition, intellectual property challenges, and post-VOWST sale operational risks - The company will need additional funding to advance its product candidates and has identified conditions that raise substantial doubt about its ability to continue as a going concern, anticipating it will require funding in Q1 2026228231234 - The company is a clinical-stage entity with a history of significant losses ($965.3 million accumulated deficit as of June 30, 2025) and may never achieve or maintain profitability235 - The company's product candidates are based on live biotherapeutics, a novel approach with significant development, regulatory, and manufacturing risks251253256 - The company relies on third parties for conducting clinical trials and manufacturing, which increases risks related to performance, compliance, and supply chain disruptions296300 - The company faces substantial competition from major pharmaceutical and biotechnology companies with greater resources, and its products may fail to gain market acceptance or secure adequate reimbursement307313319 - The company's success is highly dependent on its ability to obtain and defend its intellectual property, facing risks of patent challenges, infringement claims from third parties (such as an ongoing lawsuit from Vedanta Biosciences), and changes in patent law363383 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds for the period - None467 Item 5. Other Information This section discloses changes to the Board of Directors, including the resignation of Paul R. Biondi and the appointment of Robert L. Rosiello, and confirms no Rule 10b5-1 trading arrangement changes - Paul R. Biondi resigned from the Board of Directors, effective August 5, 2025470 - Robert L. Rosiello was appointed to the Board as a Class III director and to the Compensation and Talent Committee, effective August 5, 2025471 - No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025475 Item 6. Exhibits This item lists all exhibits filed with the Quarterly Report on Form 10-Q, including executive letter agreements and required Sarbanes-Oxley Act certifications - The report includes a list of exhibits, such as the company's certificate of incorporation, bylaws, and various certifications477 - Filed new letter agreements with Eric Shaff, Marella Thorell, and Thomas DesRosier, dated July 21, 2025477