If you’re an investor anticipating the potential $100 million-plus IPO of microbiome company Seres Therapeutics, your wait should be over before the weekend comes. If you’re a patient with a terrible bacterial infection in your gut anticipating Seres’ lead product, you’ll probably have to wait at least a couple more years.
But that doesn’t mean you have to wait for a treatment. OpenBiome of Medford, MA, is already treating about 150 people a week for antibiotic-resistant Clostridium difficile infection, a nasty bug that is raising red flags around the world and kills as many as 29,000 people every year in the U.S. alone.
But OpenBiome is no hard-charging, venture-backed startup. It’s a nonprofit stool bank, a repository of public poop that its officials—although there’s little “official” in the demeanor of the young researchers and doctors from the U.S., Canada, and the U.K. who run it—say has two missions: to bring low-cost treatment to C. difficile patients who desperately need it, and to contribute to the fast-growing body of research on the human microbiome.
The microbiome, for those unfamiliar, is the collection of trillions of bacteria and other microbes on and in every human body. Its role in human health is a subject of intense research, and early returns already show a tight connection to a healthy gastrointestinal microbiome population and the ability to ward off things like C. diff, which takes over—sometimes with deadly effects—when the host’s regular microbial balance is thrown off by too many antibiotics, chemotherapy, or other disruption.
Startups such as Second Genome of South San Francisco, CA, and Vedanta Biosciences of Boston, MA (partnered with Johnson & Johnson) are testing ways to re-balance the microbiome in people with immune-related gut disorders. Research into the microbiome’s role in diabetes, obesity, heart disease, and other conditions is also well underway.
But Seres hopes to have the first FDA-sanctioned, rigorously developed microbiome product: a secret mix of bacterial spores derived from samples of human feces that, when swallowed, bloom into a healthy community in the gut and leave no room for C. difficile. Its early clinical data were excellent, with 26 of 30 people whose infection wasn’t responding to antibiotics showing no recurrence of the debilitating diarrhea that C. diff causes. Just recently the FDA gave Seres’ lead product SER-109 a “breakthrough” designation, which ensures a speedier review for the treatment than it would have otherwise.
Venture backers have been generous, too, with more than $130 million poured into the company—about half of it from international food giant Nestle.
But its Phase 3 plans, which the company said late last year would start in 2015, have been pushed back. Its regulatory documents now say a Phase 3 trial would likely begin in 2016. (An 87-person Phase 2 trial is currently underway.) That could put FDA approval roughly two years away, although the breakthrough designation might speed things up if all goes well.
Meanwhile, OpenBiome, fueled by charitable donations, has spent a fraction of what Seres has raised to build safety checks into its collection and distribution system. The treatment it provides—fecal microbial transplantation, or FMT—also relies on charitable donations: the poop of healthy volunteers, which OpenBiome minimally processes, stores in freezers (pictured), and ships to more than 300 hospitals and clinics around the country to give to people with infected guts.
Chief medical officer Zain Kassam says with OpenBiome’s stringent standards—30 tests from blood and stool, a waist measurement, body mass index, and a face to face interview—only three of 100 potential donors are allowed to, well, donate. “We have to be extremely conservative,” says Kassam.
The weight-related measurements, for example, are to rule out the speculative possibility that obesity and other metabolic problems could be passed from donor to recipient. (An oft-cited study showed the microbiome of obese people caused skinny mice to gain weight.)
OpenBiome’s typical donor, then, lives in the Boston area and is young and skinny, with a mean age of 26 and body mass index of 23.3. “It’s often people who really like going to the gym,” says the nonprofit’s executive director James Burgess—which, he acknowledges with a laugh, can influence one’s thoughts when seeing a fit person jogging down the street.
OpenBiome has already sent out about 4,500 treatments—sorted into different doses for administration either through a nasal tube or a colonoscopy—to hospitals, clinics, and other practitioners of FMT.
According to this map, there’s probably a clinic in your state. OpenBiome’s volume is growing 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.