Executive Summary / Key Takeaways

• Seres Therapeutics has strategically pivoted following the sale of its first-approved product, VOWST, to Nestle Health Science (NSRGY), focusing its resources and expertise on a pipeline of wholly-owned cultivated live biotherapeutics.
• The lead program, SER-155, targeting the prevention of bacterial bloodstream infections (BSIs) in high-risk patients like those undergoing allo-HSCT, has shown promising Phase 1b data (77% relative risk reduction in BSIs vs. placebo) and received FDA Breakthrough Therapy designation.
• Recent FDA feedback supports a standalone Phase 2 study for SER-155 with BSI reduction at Day 30 as the primary endpoint, and the company plans to submit the protocol soon, anticipating interim results within 12 months of study initiation.
• Financially, the VOWST sale provided a significant capital infusion, extending the cash runway into Q1 2026, but the company has identified substantial doubt about its ability to continue as a going concern beyond this period without additional funding.
• Securing a strategic partnership for SER-155 is the critical near-term catalyst, essential for funding the planned Phase 2 study and realizing the broad potential of the pipeline in infection prevention and inflammatory diseases.

A New Chapter Unfolds: Seres Therapeutics' Focused Future

Seres Therapeutics, Inc. stands at a pivotal juncture, having successfully transitioned from a company centered around its first FDA-approved product, VOWST, to one sharply focused on advancing a pipeline of wholly-owned, cultivated live biotherapeutics. This strategic shift, solidified by the sale of the VOWST business to Nestle Health Science in September 2024, leverages over a decade of pioneering work in the microbiome field, including navigating novel manufacturing processes and regulatory pathways. The company's core mission remains steadfast: to improve patient outcomes in medically vulnerable populations, now primarily through its next-generation, rationally designed bacterial consortia.

At the heart of Seres' renewed strategy is its differentiated MbTx Platform. This reverse translational platform integrates high-resolution human clinical data analysis, preclinical screening using sophisticated models, and extensive microbiological capabilities with a diverse strain library. Unlike the donor-sourced process used for VOWST, the current pipeline candidates like SER-155 and SER-147 are manufactured from standard clonal cell banks via cultivation. This approach is designed to enable precise control over composition and scalable production. The platform's power lies in its ability to identify specific microbes and metabolites associated with disease or health and to design therapeutic consortia with targeted pharmacological properties, such as decolonizing gastrointestinal (GI) pathogens, improving GI epithelial barrier integrity, and inducing immune homeostasis.

In the competitive landscape, Seres operates within the burgeoning microbiome therapeutics space, alongside companies developing novel antibiotics and traditional GI therapies. While large pharmaceutical players like Takeda Pharmaceuticals (TAK) and AbbVie (ABBV) dominate broader GI markets with established biologics and small molecules, and companies like Summit Therapeutics (SMMT) are active in specific areas like CDI with antibiotic alternatives, Seres aims to carve out a distinct niche. Its cultivated live biotherapeutics represent a novel modality targeting the underlying biology of microbiome disruption, offering a non-immunosuppressive approach to infection prevention and immune modulation. This technological differentiation, particularly the ability to design and cultivate specific bacterial consortia with targeted functional profiles, forms a crucial competitive moat. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Seres' validated platform and early clinical successes suggest a potential to gain traction in areas with high unmet need where traditional approaches fall short.

SER-155: The Vanguard of the Pipeline

The immediate focus and primary value driver for Seres is SER-155, an investigational oral live biotherapeutic. SER-155 is specifically designed to prevent bacterial bloodstream infections (BSIs), including those harboring antimicrobial resistance (AMR), and other pathogen-associated negative clinical outcomes in medically vulnerable patients, initially focusing on those undergoing allogeneic hematopoietic stem cell transplantation (allo-HSCT). This patient population faces a significant risk of infection due to intensive conditioning regimens and antibiotic exposure, which disrupt the gut microbiome and compromise the epithelial barrier.

The potential of SER-155 was significantly underscored by the results from Cohort 2 of its placebo-controlled Phase 1b study. The data demonstrated a compelling 77% relative risk reduction in bacterial BSIs compared to placebo through day 100 post-HSCT. Furthermore, patients treated with SER-155 showed a significant reduction in systemic antibiotic exposure and a lower incidence of febrile neutropenia. These clinical outcomes were supported by exploratory translational biomarker data, which provided evidence for SER-155's intended mechanisms of action, including the promotion of intestinal epithelial barrier integrity (indicated by lower fecal albumin) and the reduction of systemic inflammatory responses (shown by lower concentrations of plasma biomarkers like IFN-y, TNF-α, IL-17, and IL-8).

Regulatory interactions have been constructive. In December 2024, the FDA granted Breakthrough Therapy designation to SER-155 for the reduction of BSIs in adults undergoing allo-HSCT, facilitating prioritized engagement. Based on recent FDA feedback, Seres is designing the next clinical evaluation as a standalone Phase 2 study targeting 248 participants. The FDA has indicated support for BSI reduction at Day 30 post-HSCT as the primary endpoint for this study. The planned Phase 2 study will incorporate an adaptive design with an interim data analysis when approximately half of the enrolled participants reach the primary endpoint timepoint. Management anticipates obtaining these interim clinical results within twelve months following study initiation, which is expected to inform the design of a subsequent Phase 3 study and potential development in adjacent patient populations. Full top-line data are projected approximately nine months after the interim analysis.

The commercial opportunity for SER-155 in allo-HSCT alone is substantial, with an estimated 9,300 procedures annually in the US and approximately 20,000 in Europe in 2023. Market research indicates a high unmet need for BSI prevention and strong support for SER-155's value proposition among healthcare professionals and payers. The high incremental costs associated with BSIs post-transplant further suggest strong pricing potential. Beyond allo-HSCT, Seres sees significant potential for SER-155 in other medically vulnerable populations, including auto-HSCT patients, cancer patients with neutropenia, CAR-T recipients, individuals with chronic liver disease, solid organ transplant recipients, and patients in ICU and long-term acute care facilities. This broad applicability, stemming from the drug's mechanism targeting common vulnerabilities in these patient groups, represents multiple potential blockbuster opportunities.

Expanding the Horizon: SER-147 and Beyond

While SER-155 is the near-term priority, Seres is also advancing other pipeline candidates, leveraging its platform and manufacturing capabilities. SER-147 is the next most advanced program, designed to prevent bacterial bloodstream and spontaneous bacterial peritonitis (SBP) infections in patients with metabolic disease, particularly chronic liver disease (CLD). CLD patients, especially those with decompensated cirrhosis, also experience significant microbiome disruption and immune dysfunction, increasing their susceptibility to serious infections. SER-147 is a distinct cultivated bacterial consortium optimized for the specific pathogens and environmental conditions found in the GI tract of CLD patients. The company is currently conducting IND-enabling activities for SER-147 and anticipates IND readiness in the second half of 2025.

The exploratory biomarker data from the SER-155 Phase 1b study, showing positive impacts on epithelial barrier integrity and systemic inflammation, also provide support for the potential of live biotherapeutics in inflammatory and immune diseases. Seres is exploring opportunities in inflammatory bowel disease (IBD), including ulcerative colitis and Crohn's disease, an area where gut epithelial barrier compromise is a core pathological component. Efforts in this area are supported by a partnership with the Crohn's and Colitis Foundation (CCF), focusing on identifying patient subpopulations and targets.

The strategic rationale for these pipeline programs is data-driven, prioritizing medically compromised patient populations with known microbiome disruption and high unmet needs. The company believes its cultivated approach allows for efficient development and the potential to demonstrate clinical proof of concept at a modest cost. This portfolio strategy, building on the foundation of the MbTx Platform and VOWST experience, positions Seres to address multiple large commercial opportunities beyond its initial focus.

Financial Realignment and the Path Forward

The sale of the VOWST business to Nestle Health Science was a transformative financial event for Seres. The transaction, completed in September 2024, provided an upfront cash payment of $155 million (net of certain settlements), which included a $60 million prepaid milestone and a $15 million equity investment by Nestle. This capital infusion allowed Seres to fully retire its senior secured debt facility with Oaktree Capital Management.

The company also received a $50 million installment payment in January 2025 and expects to receive a second installment payment of approximately $23.5 million net in July 2025, contingent on material compliance with the Transition Services Agreement (TSA).

The TSA, under which Seres provides manufacturing and administrative services for the VOWST business until December 31, 2025 (for manufacturing) and for specified durations for other services, contributes to the company's current financial picture. For the three months ended March 31, 2025, Seres reported net income from continuing operations of $32.682 million, a significant improvement from a net loss of $32.903 million in the same period of 2024. This shift was primarily driven by the recognition of the $50 million installment payment from Nestle and $6.309 million in TSA reimbursement income, included within other income, net ($59.918 million in Q1 2025 vs. $1.535 million in Q1 2024).

Operating expenses for continuing operations have decreased following the VOWST sale and associated restructuring. Research and development expenses were $11.821 million in Q1 2025, down from $19.494 million in Q1 2024, reflecting lower personnel costs, decreased platform investments, and reduced costs for the completed SER-155 Phase 1b study. General and administrative expenses also decreased to $11.888 million in Q1 2025 from $14.944 million in Q1 2024, primarily due to lower personnel and contractor expenses. Manufacturing services expenses, related to the TSA, were $3.527 million in Q1 2025.

As of March 31, 2025, Seres had cash and cash equivalents totaling $58.849 million. Based on this cash position, the expected receipt of the July 2025 installment payment, ongoing transaction-related obligations, and current operating plans, the company anticipates requiring additional funding in the first quarter of 2026. This financial outlook has led management to conclude that substantial doubt exists about the company's ability to continue as a going concern for 12 months from the date of the Q1 2025 financial statements filing (May 7, 2025).

The need for additional funding is the most critical factor influencing Seres' path forward. While the VOWST proceeds provide a runway into early 2026, funding the planned SER-155 Phase 2 study requires significant capital. Seres is actively seeking a strategic partner for SER-155, which management views as the "key long lead time item" for initiating the Phase 2 study. A partnership could provide the necessary financial resources and potentially other capabilities (e.g., global clinical trial expertise) to accelerate development and maximize the asset's value. The ability to secure such a partnership or other financing on acceptable terms is uncertain and is a primary risk factor.

Risks and Challenges Ahead

Despite the promising clinical data and strategic focus, Seres faces significant risks. The most immediate is the need for additional funding beyond the first quarter of 2026, which raises substantial doubt about the company's ability to continue as a going concern. The success of securing a partnership for SER-155 is not guaranteed and is crucial for funding the next clinical trial. Furthermore, the total amounts received from the VOWST transaction, including the July 2025 installment and future sales-based milestones, are subject to risks and uncertainties, including Nestle's commercial execution and Seres' compliance with TSA obligations.

Clinical development remains inherently risky, lengthy, and expensive. While the Phase 1b SER-155 data are encouraging, future trials, including the planned Phase 2, may not replicate these results or could reveal unforeseen safety issues. Delays in patient enrollment, challenges with manufacturing clinical supply, or unexpected feedback from regulatory authorities like the FDA could all impede progress. The regulatory pathway for novel live biotherapeutics, while informed by VOWST, still presents uncertainties.

Competition in the relevant therapeutic areas is substantial, with larger, more established companies possessing greater financial and commercial resources. Even if approved, SER-155 and other candidates may face challenges gaining market acceptance or obtaining favorable pricing and reimbursement. Protecting intellectual property in this emerging field is also complex and subject to challenges. Finally, as a smaller, less diversified company post-VOWST sale, Seres may be more susceptible to market volatility and operational challenges.

Conclusion

Seres Therapeutics has successfully navigated a significant strategic pivot, leveraging the value created with VOWST to fund a focused pipeline of wholly-owned, cultivated live biotherapeutics. The core investment thesis now centers on the potential of SER-155 to address the critical unmet need for preventing bacterial bloodstream infections in medically vulnerable populations, building on compelling Phase 1b data and Breakthrough Therapy designation. The company's differentiated platform and manufacturing capabilities provide a foundation for advancing this program and expanding into other promising areas like chronic liver disease and inflammatory diseases.

However, the path forward is critically dependent on securing a strategic partnership for SER-155 to fund the planned Phase 2 study and extend the cash runway beyond early 2026. The coming months will be crucial for advancing these partnership discussions and submitting the Phase 2 protocol to the FDA. While significant risks remain, particularly regarding funding and clinical execution, positive progress on the SER-155 partnership and the initiation of the Phase 2 study represent key milestones that could unlock substantial value and validate Seres' focused strategy in the next era of live biotherapeutics.