Seres (MCRB) Stock: Here’s What You Need To Know

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Seres Therapeutics (NASDAQ:MCRB)

On Friday, Seres Therapeutics stock plummeted by 70% after the company reported that it had failed mid-stage trial in patients with Clostridium difficile infection or C. diff. The company has a big pipeline, but the problem is that the study that failed was the lead drug candidate. Thus, the reason why the stock cratered by 70%. This biotech company has a pipeline full of candidates that use bacteria to treat diseases.

In the case of C. diff, it causes the patient to experience an extreme cases of diarrhea. The reason for this is because these bad bacteria grow out of control in the gut, and this leads to toxins being released on the stomach lining. Thus, patients with mild symptoms experience diarrhea and some abdominal pain. Now that is the case for patients who only have a mild form of the disease. On the other hand, those with a more advanced C. diff can experience life threatening symptoms. Such a life threatening problem would be when the bad bacteria is able to create a hole in the intestines. If this is not treated immediately, then it can be fatal.

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This phase 2 study enrolled 89 patients with recurring C. diff. The trial was done a double-blind, placebo controlled trial for a 24-week study. The clinical trial was testing for safety and efficacy. About 59 patients in the study were given treatment with Sere’s drug SER-109 and the other 30 patients received a placebo compound instead. The results of this mid-stage trial were early in nature, but was adequate enough to decipher whether or not the drug performed better than its placebo counterpart. The reason for this is because the results were released with only 8 weeks worth of data.

Around 44% of the patients in the SER-109 group had a recurrence of C.diff during the eight weeks of treatment, while 53% of placebo patients had a recurrence of C. diff in the same time frame. This means that the trial was not statistically significant. In other words, Seres Therapeutics can’t move on to the next phase of clinical testing. With no phase 3 trial on the horizon, Seres is now left with a pipeline full of early clinical candidates. Although, the company indicates that it will look at the results more closely, before deciding the next course of action for this program.

Unfortunately, things don’t look good for the SER-109 drug in the C. diff indication. It would be more prudent for Seres to move on to other parts of the pipeline, which may yield better results. It would be a waste of time and money for the company to try to advance this compound into a phase 3 clinical trial. Given that this trial failed to produce substantial results, then the rest of the pipeline carries a lot more risk.

The two other drug candidates known as SER-262 and SER-287 and both use closely similar bacteria strains. With greater risk in mind, investors should be cautious when entering Seres as an investment option. With the failure of the phase 2 trial analysts have really shifted their price targets for Seres around. One example is an analysts from Goldman Sachs, by the name of Terence Flynn, who lowered this price target of Seres after the release of the bad clinical data.

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Terence Flynn lowered his price target of Seres from $30 per share down to $9 per share. Along with the trial failure, Flynn pointed to lowering the price target because of no guidance given. As noted before, Seres stated that it is waiting to analyze data before deciding whether or not it should continue with SER-109. That leaves both investors and analysts in a tough spot, because nobody knows what’s going to happen next. Hopefully, the other programs in Sere’s pipeline can help redeem shareholder value, otherwise shareholders will be stuck with losses.

[Image Courtesy of Pixabay]

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