UPDATE: Goldman Sachs Downgrades Seres Therapeutics (MCRB) to Sell
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Goldman Sachs analyst Chris Shibutani downgraded Seres Therapeutics (NASDAQ: MCRB) from Neutral to Sell with a price target of $7.00 (from $24.00).
The analyst comments "We are downgrading our rating on MCRB shares from Neutral to Sell, and lowering our PT from $24 to $7, which represents -12% downside versus +19% upside for our coverage universe. Disappointing top line results for Seres Therapeutics' SER-287 Phase 2b ECO-RESET study prompts us to remove projections for this asset from our model. SER-287 failed to demonstrate any evidence of efficacy over placebo in inducing remission in patients with mild-to-moderately active ulcerative colitis (UC), across the range of primary (3-component modified Mayo score of 10.3% and 10.6% for the two treatment arms, vs. 11.6% for the placebo) or secondary endpoints (no meaningful differences observed across the three study arms for endoscopic improvement, endoscopic remission or symptomatic remission) - and coupled with the absence at this time of microbiome and drug activity data that could point to evident and potentially remediable explanations for this negative outcome - we have limited visibility on any further path for SER-287 (the open label and maintenance phases are being discontinued) and reduces our confidence in prospects for SER-301 (next-generation asset aimed, also aimed at UC). Further these results are likely to have a dampening effect on investor sentiment for the potential of microbiome based therapeutics (and microbiome-based drug discovery platforms) to succeed beyond the realm of C. Diff infection over the near- to intermediate-term. While we are confident in the outlook for SER-109 (rCDI indication) to continue advancing through key upcoming milestones, we see positive progress with this asset as reflected in expectations. The relative paucity of events beyond those for SER-109, which could present meaningful catalysts for shares over the balance of the year, prompts us to move to the sidelines and downgrade shares to Sell, seeing more attractive opportunities elsewhere in our coverage universe."
Shares of Seres Therapeutics closed at $7.95 yesterday.
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