Seres, in debt, agrees to sell microbiome pill to Nestle

Seres Therapeutics is set to divest all rights to its microbiome pill, Vowst, to Nestlé Health Science as the company grapples with financial challenges. According to a nonbinding memorandum of understanding announced recently, the Swiss firm will acquire complete product and intellectual property rights to Vowst, which received U.S. approval in 2023 for preventing recurrent, hard-to-treat C. difficile infections. Seres anticipates the transaction will be finalized within 90 days.

While Seres did not disclose the specific financial details of the transaction, it did confirm that the deal includes upfront payments and capital infusions. The company plans to utilize the incoming funds to clear an existing debt facility with Oaktree Capital Management and extend its cash coverage until the fourth quarter of 2025.

The strategic sale will enable Seres to concentrate on advancing its other experimental microbiome therapies, such as SER-155, which are aimed at combating infections. Earlier this year, Seres announced the completion of patient enrollment for a Phase 1b trial of SER-155 in patients who had undergone allogeneic hematopoietic stem cell transplants.

Seres and Nestlé have had a collaborative relationship since 2016, when they first signed an agreement focused on the development and commercialization of four medicines. In 2021, Nestlé expanded its collaboration with Seres by acquiring additional commercialization rights to one of these drugs, SER-109, now known as Vowst.

Vowst is a pill created from human fecal matter that has been screened and purified. The pill aims to repopulate the gut with beneficial bacteria to fend off infections. It is notable for being the second microbiota therapy to receive Food and Drug Administration (FDA) approval and the first to be cleared for oral administration. Despite its clinical achievements, Seres has faced significant financial hurdles since the product's launch. The company reported a net loss of $40.1 million in the first quarter of this year and informed investors that its cash reserves would only sustain operations into the fourth quarter of the current year. This announcement came despite a restructuring effort in November, which included a workforce reduction of 41%.

As part of the transaction, Seres will enter into a service agreement with Nestlé to support the transition of Vowst. The company's revised cash runway guidance is contingent upon performance under this service agreement.

In summary, the sale of Vowst rights to Nestlé Health Science represents a crucial step for Seres Therapeutics to stabilize its financial situation and focus on its pipeline of experimental microbiome therapies. The transaction is seen as a strategic move to ensure the company can continue its clinical development activities while addressing its immediate financial challenges.

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