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10-K
SERES THERAPEUTICS, INC. filed this Form 10-K on 03/06/2019
Entire Document
 

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. The Letter Agreement also provides scenarios under which NHS’ reimbursement to us 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.

With respect to development of NHS Collaboration Products for CDI under a global development plan, we agreed to pay all costs of Phase 2 clinical trials for SER-109 and for Phase 3 clinical trials for SER-109. We agreed to bear all costs of conducting any Phase 1 or Phase 2 clinical trials under a global development plan for NHS Collaboration Products other than SER-109 for CDI. We agreed to pay 67% and NHS agreed to pay 33% of other costs of Phase 3 clinical trials conducted for NHS Collaboration Products other than SER-109 for CDI under a global development plan. For other clinical development of NHS Collaboration Products for CDI, we agreed to pay costs of such development 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.

As of December 31, 2018, we had cash and cash equivalents totaling $85.8 million and an accumulated deficit of $389.4 million.  Based on our current plans and forecasted expenses, we believe that our existing cash and cash equivalents as of December 31, 2018, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2019. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.  These factors raise substantial doubt about our ability to continue as a going concern.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented:

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

 

 

(in thousands)

 

Cash provided by (used in) operating activities

 

$

(62,854

)

 

$

(75,523

)

 

$

43,921

 

Cash provided by (used in) investing activities

 

$

112,318

 

 

 

55,702

 

 

 

(65,592

)

Cash provided by financing activities

 

$

268

 

 

 

83

 

 

 

2,138

 

Net decrease in cash and cash equivalents and restricted cash

 

$

49,732

 

 

$

(19,738

)

 

$

(19,533

)

 

Operating Activities

 

During the year ended December 31, 2018, operating activities used $62.9 million of cash, primarily due to a net loss of $98.9 million and partially offset by cash provided by changes in our operating assets and liabilities of $11.8 million and non-cash charges of $24.3 million. Net cash provided by changes in our operating assets and liabilities during the year ended December 31, 2018 consisted of a $13.5 million increase in deferred revenue, a $0.8 million increase in accrued expenses and other liabilities, offset in part by a $2.1 million decrease in prepaid expenses and other current assets. The increase in deferred revenue is due to the receipt of the $40 million milestone payments under the License Agreement offset by recognition of collaboration revenue during the year. The increase in accrued expenses was due to the timing of payments.

During the year ended December 31, 2017, operating activities used $75.5 million of cash, primarily due to a net loss of $89.4 million and cash used from changes in our operating assets and liabilities of $10.6 million, partially offset by non-cash charges of $24.4 million. Net cash used by changes in our operating assets and liabilities during the year ended December 31, 2017 consisted of a $0.9 million decrease in accounts payable and a $11.9 million decrease in deferred revenue, offset in part by a $2.2 million increase in accrued expenses and other liabilities. The decrease in our accounts payable and increase in accrued expenses were due to the timing of payments, an increase in payroll related costs, and an increase in amounts accrued for clinical trial expenses. The decrease in deferred revenue was due to the recognition of revenue related to the $120.0 million upfront payment under the License Agreement over the estimated performance period of 10 years.

During the year ended December 31, 2016, operating activities provided $43.9 million of cash, primarily due to the upfront cash payment of $120.0 million and a milestone payment of $10.0 million received in connection with the License Agreement, and cash provided by changes in our operating assets and liabilities of $6.0 million.  This increase was partially offset by a net loss of $91.6 million, less non-cash charges of $20.7 million. Net cash provided by changes in our operating assets and liabilities during the year ended December 31, 2016 consisted of a $3.6 million increase in accounts payable and a $5.0 million increase in accrued expenses and other current liabilities, offset in part by $2.6 million increase in prepaid expenses and other current assets. The increases in our accounts payable and accrued expenses were due to the timing of payments, an increase in payroll related costs, and an increase in amounts accrued for clinical trial and contracted manufacturing expenses. The increase in prepaid expenses and other current assets was due primarily to prepayments made for clinical trial activities.

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