Seres Inks Nestlé As Potential $2B Partner; Key Microbiome Data Soon

Xconomy Boston — 

[Updated, 1/11/16. Corrected, 1/20/16. See below.] Microbiome company Seres Therapeutics (NASDAQ: MCRB) has inked a deal with one of its top investors, Nestlé Health Science, that effectively turns the division of the Swiss food and nutrition giant into Seres’s main partner outside North America.

The deal, which calls for Nestlé to pay Seres $120 million immediately, gives Nestlé rights to Seres’s four programs to treat C. difficile infection and inflammatory bowel disease, which includes ulcerative colitis and Crohn’s disease, outside of the U.S. and Canada. If all the products come to fruition—an unlikely scenario in the biotech business—Seres could earn nearly $2 billion from the arrangement. Nestlé will also pay a third of Phase 3 development costs for three of the programs, if they make it that far.

Seres shares were down 52 cents, or 1.73%, in mid-day trading.

Before Seres’s IPO last year, it raised more than $130 million in private capital, about half from Nestlé, which like other groups with food, nutrition, and medical interests, has been diving into microbiome research and potential products.

The microbiome is the collection of trillions of bacteria and other microorganisms 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 between a healthy gastrointestinal microbiome population and the ability to ward off things like the C. difficile bacteria, which takes over—sometimes with deadly effect—when the host’s regular microbial balance is thrown off by too many antibiotics, chemotherapy, or other disruption.

Treating C. diff, as it’s known, is the most straightforward of all potential microbiome-based treatments. The idea has been legitimized by the practice of fecal microbial transplant—giving a sick person the poop from a healthy person—which some doctors have been doing for years. A landmark 2013 paper in the New England Journal of Medicine showed that FMT has been remarkably effective over the years.

Seres is refining that approach with its lead product, SER-109. It uses a mix of spores from a range of undisclosed bacteria, meant to restore a healthy microbial balance. In a Phase 1/2 trial, SER-109 cured the recurrent C. diff infection in 29 of 30 patients.

The treatment, the most advanced product in Seres’s pipeline, is now in Phase 2 clinical trials and is meant for adults whose infection has not responded to conventional antibiotic treatments. The FDA gave the experimental product “breakthrough” and orphan drug designations last summer, which could speed up the agency’s review of SER-109 and give the product a longer patent life if it comes to market. The company hopes the current trial results are enough to convince regulators to approve the treatment.

The trial is scheduled to wrap up in mid-2016. SER-109 uses spores of bacteria derived from the feces of healthy individuals, but farther down the Seres pipeline is another C. diff treatment that synthesizes the treatment. Seres also aims to treat C. diff before patients receive antibiotics. The firm also aims to start testing a treatment for inflammatory bowel disease this year. Both C. diff and IBD will be covered under the Nestlé deal.

While Seres has been conducting its clinical trials, a nonprofit group, OpenBiome, has expanded its low-cost C. diff treatment via its “stool bank,” which accepts and screens donations of feces to distribute to doctors practicing fecal transplant. I wrote about the organization last summer.

[This paragraph updated 1/11/16 with information from OpenBiome and corrected 1/20/16. A previous version incorrectly described the patient group eligible for OpenBiome’s capsule. The capsule is only available for people who have failed to respond to antibiotic treatments.] The group says 460 hospitals so far have joined its clinical network, and it has shipped treatments for more than 9,200 patients. OpenBiome recently began making its transplant product available in capsule form, much easier to administer than through a nasal tube or an enema.  In a clinical validation study last year, testing patients who had been treated unsuccessfully with two or more rounds of antibiotics, the capsules provided 70 percent efficacy in patients after the first dose. Among those who required a second dose, 80 percent were cured, giving the entire population a 94 percent cure rate, according to executive director James Burgess. OpenBiome charges $535 per treatment.