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10-Q
SERES THERAPEUTICS, INC. filed this Form 10-Q on 11/08/2018
Entire Document
 

General and Administrative Expenses

 

 

 

Nine Months Ended

September 30,

 

 

 

 

 

 

 

2018

 

 

2017

 

 

Change

 

 

 

(in thousands)

 

Personnel related (including stock-based compensation)

 

$

12,379

 

 

$

12,814

 

 

$

(435

)

Professional fees

 

 

5,713

 

 

 

6,372

 

 

 

(659

)

Facility-related and other

 

 

6,971

 

 

 

6,065

 

 

 

906

 

Total general and administrative expenses

 

$

25,063

 

 

$

25,251

 

 

$

(188

)

 

General and administrative expenses were $25.1 million for the nine months ended September 30, 2018, compared to $25.3 million for the nine months ended September 30, 2017. The decrease of $0.2 million was primarily due to the following:

 

a decrease in personnel related costs of $0.4 million primarily related to stock compensation expense;

 

a decrease in professional fees of $0.7 million due to a decrease in legal expenses; and

 

an increase in facility-related and other costs of $0.3 million primarily due to an increase in IT-related expenses of $1.5 million offset by a decrease in office supply expense of $0.5 million.

Other Income (Expense), Net

Other income (expense), net for the nine months ended September 30, 2018 and 2017 was $1.0 million and $1.2 million, respectively, and is primarily due to interest income from investing activities.

 

Liquidity and Capital Resources

Since our inception, we have generated revenue only from collaborations and have incurred recurring net losses. We anticipate that we will continue to incur losses for at least the next several years. Our research and development and general and administrative expenses may continue to increase and, as a result, we will need additional capital to fund our operations, which we may obtain from additional financings, public offerings, research funding, additional collaborations, contract and grant revenue or other sources.

In January 2016, we entered into the License Agreement with NHS, for the development and commercialization of certain of our product candidates in development for the treatment and management of CDI and IBD, including UC and Crohn’s disease. In exchange for the license, NHS agreed to pay us an upfront cash payment of $120.0 million, which we received in February 2016. NHS has also agreed to pay us tiered royalties, at percentages ranging from the high single digits to high teens, of net sales of NHS Collaboration Products in the Licensed Territory. We are eligible to receive up to $285.0 million in development milestone payments, $375.0 million in regulatory payments and up to an aggregate of $1.1 billion for the achievement of certain commercial milestones related to the sales of NHS Collaboration Products. The full potential value of the up-front payment and milestone payments payable by NHS is over $1.9 billion, assuming all products receive regulatory approval and are successfully commercialized. In September 2016, we received a $10.0 million milestone payment associated with the initiation of the Phase 1b clinical study for SER-262 in CDI. In June 2017, we initiated a Phase 3 clinical study of SER-109 (ECOSPOR III) in patients with multiply recurrent CDI. In July 2017, we recorded revenue of $20.0 million based on the achievement of this milestone under the License Agreement.

For the development of NHS Collaboration Products for IBD under a global development plan, we agreed to pay the costs of clinical trials of such products up to and including Phase 2 clinical trials, and 67% of the costs for Phase 3 and other clinical trials of such products, with NHS bearing the remaining 33% of such costs. Under the terms of the License Agreement, we are entitled to receive a $20,000 milestone payment from NHS following initiation of a SER-287 Phase 2 study and a $20,000 milestone payment from NHS following the initiation of a SER-287 Phase 3 study. On November 1, 2018 we entered into a letter agreement, or the Letter Agreement, with NHS which modified the License Agreement to address the current clinical plans for SER-287. We have designed the SER-287 Phase 2b study as a potentially pivotal trial and are awaiting feedback from the FDA on this study design. Through the Letter Agreement, we agreed that following initiation of the SER-287 Phase 2b study, we will receive $40,000 in milestone payments from NHS. The Letter Agreement also provides scenarios under which NHS’ reimbursement to the Company for certain Phase 3 development costs would be reduced or delayed depending on the outcomes of the SER-287 Phase 2b study. For other clinical development of NHS Collaboration Products for IBD, we agreed to pay the costs of such activities to support approval in the United States and Canada, and NHS agreed to bear the cost of such activities to support approval of NHS Collaboration Products in the Licensed Territory.

 

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