Is Seres Therapeutics Stock A Buy?

Seres Therapeutics Inc (NASDAQ:MCRB) is a Cambridge, Massachusetts-based microbiome therapeutics company. Its research and treatment pipelines are focused on treating diseases by introducing live bacteria into our body’s microbiome.

Leveraging our gut’s microbiome is one of the buzziest treatments in the medical field, which begs the question is Seres Therapeutics stock a Buy?

Thanks to the coronavirus, we’re all now amateur viral infection experts. Even anti-maskers agree that wearing a mask is meant to filter your body’s own bacterial and viral cocktail from infecting others. This is how diseases are transmitted, but scientists at Seres believe it’s also the key to keeping us healthy.

Of course, the research is a long road, and its initial microbiome treatment failed to prove efficacy in its 2016 clinical trials. This sent the company’s stock price tumbling to the point the stock market dip was barely an issue. However, MCRB share price shot back up for over a 10x return on investment for anyone who was brave enough to believe in the company over the past two years.

Let’s dig into the company to see how it cleaned up its act and whether there’s still upside potential.

Seres Therapeutics Treats Microbiome Deficiencies 

Seres Therapeutics develops treatments for microbiome deficiencies that cause issues like Clostridium difficile infection (CDI), inflammatory bowel disease, and more. It also provides oral immunotherapies for a wider spectrum of diseases.

The company received Series A through D funding in the first half of the 2010s from the likes of Enso Ventures, the Mayo Clinic, Flagship Pioneering, and Nestle Health Science.

Our bodies are made of a network of cells, bacteria, protozoa, viruses, and fungi. Each of these microorganisms has different needs and functions that keep the body running as a system. Think or it like a car made up of different parts and fluids. On a microscopic level, disease happens when bad microorganisms enter our body and attack.

Flus, colds, and poisoning are all created by microbiome deficiencies. Our stomach is an especially active place, and issues in that ecosystem can create ulcers and other issues that can debilitate or even kill you. While the treatment may be effective, buying the stock is no slam dunk.

Is Seres Therapeutics Stock A Buy?

Although it took a hit in 2016, Seres Therapeutics is finally trading over its 2015 IPO price of $21.50 per share. Its market cap is between $2.5 billion and $3.0 billion, as it recovered from a 52-week low of $2.52 to reach a high of $38.50 before settling in.

The company’s stock price rose in November upon the announcement of its SER-301 ulcerative colitis treatment entering Phase 1b clinical trials. This oral treatment targets gastrointestinal inflammation and is meant to help clinical patients through remission. It happened at a time when the rest of the world was laser focused on the coronavirus vaccines.

Seres Therapeutics has over $298 million cash on hand, according to its most recent earnings report. This means it has a healthy runway to complete its trials while expanding its treatment funnel.

Ulcerative colitis affects around 700,000 people in the U.S., and this treatment could provide proof of concept that’s sure to fuel investor interest. Should it be successful, the company’s stock price is sure to rise, although the three-phase clinical trial process for the Food and Drug Administration is neither cheap nor quick.

And other pitfalls exist.

Risks of Buying Seres Therapeutics

While it’s nice to look at the positives, the fact is Seres Therapeutics hasn’t passed the clinical trials yet. In fact, it already failed in 2016 with its SER-109 treatment was unable to prove efficacy over the placebo in its Phase 2 trial.

The treatment took the microbiome of a healthy patient’s stool and placed it in an affected patient. The result should have been the creation of a healthier biome and quicker recovery, but that wasn’t what happened.

And after Phase 3, the company still has to complete its late-stage clinical trials with volunteers in the community. That’s going to be a tough ask amid the coronavirus outbreak and flu season. The company needs these vaccinations out and the stay-at-home orders lifted for people to return to normal healthcare routines.

That’s just the market conditions – it has competitors too.

Will Seres Therapeutics Competitors Swallow It Up?

Seres Therapeutics isn’t the only player in the microbiome game. And at $145 million of cash on the books, it wasn’t even the most well-funded. That title goes to Ginkgo Bioworks, which raised $719.1 million over the course of the 2010s and remains privately held. It’s partnered with Totient, and AI-driven drug discovery company, to turbo boost its research and development.

It also faces competition from Zymergen, Kaleido BioSciences, and Evolo Biosciences, all of which are located in the United States. And that’s just the local competition – there are companies around the world developing microbiome solutions for a variety of ailments.

Like we saw with antiviral companies during the coronavirus pandemic, if the disease becomes popular, those who are fastest to create a cure will win the day.

Is Seres Therapeutics Stock A Buy? The Bottom Line

Seres Therapeutics is a microbiome development company that uses microorganisms to treat a variety of illnesses. By focusing on our body’s natural composition, these treatments are at the forefront of medical science. However, nothing has yet been approved by the FDA over the course of the 2010s.

But that’s not stopping the company from raising money and pushing more treatments through clinical trials. It could potentially have an FDA-approved treatment by the end of 2021. It could also have another dud on its hands.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.