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On Eve of Seres IPO, A Rival Nonprofit Microbiome Treatment Expands

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about 10 percent a month, but even with an upcoming expansion—down the street to a larger space, also near the campus of Tufts University—there will be far more refractory C. diff patients than OpenBiome can reach. Cofounder and research director Mark Smith says the goal by end of year is to treat 10 percent of all recurrent cases and perhaps even change “the epidemiology of the disease.” If people are getting treatment closer to home, the thinking goes, they’re not only getting cured but avoiding long travel to do it—making less likely the chance of passing along their infections.

With roughly 500,000 new cases in the U.S. each year, and about 20 percent of them likely to fail treatment, there are 100,000 potential recipients at any one time. Even if the OpenBiome model spreads to other stool banks, as Smith would like to see (a pilot program is underway in Ireland), Seres should have plenty of customers if SER-109 is approved in a couple years.

It’s also possible that the regulatory safe harbor that OpenBiome’s FMT enjoys currently will disappear. In FDA-speak, it’s called “enforcement discretion.” Even with a strong body of evidence from decades of under-the-radar use, FMT isn’t technically approved to treat C. diff—or anything else for that matter. But under pressure from doctors and patients with no other options, the FDA has allowed the practice for C. diff until further notice. (No one knows when that further notice will come.)

Both Seres and OpenBiome downplay the idea of competition. OpenBiome’s Kassam cites blood banks: Despite their widespread presence, blood-substitute products like erythropoetin became multi-billion-dollar franchises. “We can co-exist, and [for-profit companies] can make money,” Kassam says.

In its prospectus, Seres brushes off FMT’s competitive threat. Seres warns that the procedure could transmit pathogens from donor to recipient, would be hard to industrialize, and isn’t approved by the FDA. (Seres doesn’t mention OpenBiome or its screening rigor specifically, however, nor does it mention that OpenBiome charges only $635 per treatment—or less if the practitioners buy in bulk to reduce shipping and handling.)

Seres is banking that safe, industrialized, and “characterized”—knowing exactly what’s in the product on a consistent basis—bacteria that can be swallowed in a capsule will win the day over a cruder FMT offering. (That said, OpenBiome is also developing FMT in capsules, which should be available to all its clinical partners this fall, says cofounder Smith.)

But Seres’ regulatory documents also acknowledge that SER-109, like any biologically derived therapeutic, will be tricky to characterize: “Further, given that our SER-109 product candidate is a complex composition with some variation from lot-to-lot and that, likewise, third-party compositions may have similar complexity and variability, it is possible that a patent claim may provide coverage for some but not all lots of a product candidate or third-party product.”

That warning to investors is in the context of protecting intellectual property, but it is equally valid as a warning about the vagaries of making biological products. Just ask Genzyme, which was plagued with contamination of manufacturing facilities before its acquisition by Sanofi in 2011.

Seres is also looking beyond SER-109. Due to reach clinical trials next year is a C. diff treatment that would be given along with antibiotics and wouldn’t require donated feces. Other programs have also yet to reach the clinic.

The biotech’s IPO would be a fast route to a potential exit for its investors, even by the standards of the current open window. Flagship Ventures of Cambridge, MA, seeded and developed the young company; its Series A stock was issued only three years ago. Flagship remains its largest shareholder, with roughly 55 percent ownership before the IPO. Nestle is next, with 18 percent, followed by Fidelity (8 percent) and Enso Ventures (6 percent).

Seres is looking to sell 7.2 million shares at $17 each.

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