The sizzling therapeutic space around the gut microbiome – "an organ they forgot to teach in medical school," Seres Therapeutics Inc. CEO Roger Pomerantz told BioWorld Today – gained a potential $1.9 billion vote of confidence from Nestlé Health Science SA in the form of $120 million up front plus more in development and sales milestones for the Cambridge, Mass.-based firm.

Involving "multiple different cells subsuming various functions that allow health and life," the gut microbiome is critical for pathogen resistance and immune system maturation and function, while controlling much of metabolism, Pomerantz said. "If that's not an organ, I don't know what is. The only difference is, you're dealing with bacteria, with prokaryotic cells instead of eukaryotic cells. It's like discovering the first organ since the 1880s." The human body has about 10 trillion cells, "so there's about 12 times as many bacteria as there are 'you' in you," he said.

Lutry, Switzerland-based Nestlé agreed to the pact for territories outside the U.S. and Canada involving candidates against Clostridium difficile infection (CDI) and inflammatory bowel disease (IBD), including ulcerative colitis and Crohn's. Seres keeps full rights in the U.S. – where regulators have granted the lead, phase II-stage compound SER-109 orphan-drug and breakthrough-therapy status in CDI – and Canada. The firm intends to build a commercial organization that will serve both territories.

Specifically, Seres grants Nestlé, of Lutry, Switzerland, commercial rights to SER-109 and SER-262 for CDI, and SER-287 and SER-301 for IBD. The deal brings tiered royalties that range from the high single-digits percentages up to the high teens for all products.

Seres is developing what the firm calls "Ecobiotic microbiome therapeutics," designed to treat disease by restoring the function of the dysbiotic microbiome. The firm runs biological data through a set of proprietary algorithms to cull out the underlying networks of various disease states, and then determines which combination of organisms can most effectively engage the microbiome in a given indication. Based on that selection, Ecobiotic candidates are assembled from pure, safe bacterial strains and validates them before advancing them to the clinic. SER-109 is described as a bacterial spore ecology consisting of an average of 50 species derived from healthy donors' fecal matter, designed to prevent further recurrences of CDI.

Gut-microbiome work has been on the march for about the past decade, with particular interest of late. In December, Seventure Partners added Novartis AG, of Basel, Switzerland, as an investor in a new closing of its Health for Life Capital fund, taking the total to €160 million (US$175 million). The fund, launched in 2013, is the first that is solely dedicated to investing in gut-microbiome-based ventures, with opportunities that span therapeutics, diagnostics and nutrition. (See BioWorld Today, Dec. 15, 2015.)

Perturbations in the gut flora have been found to influence many conditions, including cancer, diabetes, inflammatory bowel disease and other autoimmune disorders, allergy, obesity, autism and psychiatric conditions. Seres holds the lead position. "I don't want to sound like I'm bragging but it's not even close, at least not yet," Pomerantz said, adding that he couldn't comment on other companies' progress because "they don't show any data; they're just talk. I'm not being rude. I just don't know what to say."

Nestlé has also agreed to help Seres with clinical efforts, forking over 33 percent of expenses for potential global phase III studies with SER-287, SER-301 and SER-262. The potential value of the up-front payment, milestones and royalties payable by Nestlé totals more than $1.9 billion assuming that all products win regulatory approval and do well on the market. Seres expects to collect $30 million in milestone payments in 2016 associated with the planned start of a phase Ib study for SER-262 in primary CDI and the expected start of the phase III experiment with SER-109 in recurrent CDI.

Preclinical candidates in the Seres hopper include would-be drugs against infectious, inflammatory and metabolic diseases, including rare genetic diseases and immuno-oncology indications, the company said. Among metabolic diseases, the firm likes diabetes, obesity, and "we're especially interested in nonalcoholic steatohepatitis," Pomerantz said. "We think there's a lot we can do there."

Nestlé made equity investments in Seres in January and July 2015. The U.S. firm went public late last June, pricing a $133.7 million offering of about 7.4 million shares at $18 each. Seres saw its stock open 58 percent higher and end the first day of trading at $51.40, up 185.6 percent, though shares (NASDAQ:MCRB) have since settled, and ended Monday at $30.28, up 24 cents. (See BioWorld Today, May 29, 2015.)

Seres also said recently that it has appointed Wael Hashad as chief commercial officer, who brings more than 25 years of experience in big pharma, most recently withThousand Oaks, Calif.-based Amgen Inc. "We're not taking it easy," Pomerantz said. "We're not saying these drugs are going to sell themselves," but "if you show unprecedented data in a high unmet medical need and you've priced it well but responsibly," then Seres ought to be able to handle the task in regions where no marketing deals apply, he said.