The negative study results from Seres is a setback for companies trying to harness the power of bacteria to treat diseases. Clostridium difficile, or c. diff, can cause life-threatening diarrhea and is an acute health risk for patients in hospitals.
Seres shares opened Friday trading down 76% to $8.52.
Seres' CEO Roger Pomerantz netted almost $700,000 from the sale of company stock on Wednesday before the negative study results were announced caused the share price to plunge. Two other Seres executives also sold company stock on the same day.
All the insider stock sales were done under pre-programmed trading plans, and were therefore legal, but the timing and fairness of the sales will surely anger shareholders not fortunate enough to avoid steep losses.
The company's lead drug SER-109 consists of bacteria spores designed to treat patients with recurrent c. diff infection. However, in the phase II study, the SER-109 barely beat a placebo. Forty-four percent of patients treated with SER-109 had a recurrence of c. diff after eight weeks compared to 53% of placebo patients. The difference was not statistically significant.
"These are unexpected clinical results in view of the positive data in our prior investigator-sponsored Phase 1b trial, as well as in a wide range of supporting clinical and preclinical data," said Seres CEO Pomerantz, in a statement.
The company intends to look more closely at the data from the study before deciding next steps for SER-109's clinical development, he added.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.