GENEVA - Shareholders of Seres Therapeutics Inc . (NASDAQ:MCRB) have raised concerns regarding the company's decision to reject a takeover bid from Nestlé S.A. and proceed with the sale of its VOWST business. Lucien Selce and MKT Capital Ltd., who collectively own 1.4 million shares of Seres, have requested that the company's board provide a detailed account of their engagement with Nestlé.
According to a media report by Betaville, Nestlé had proposed to acquire Seres in July 2024 for $6.00 to $6.50 per share, a significant premium over the stock's closing price of $0.83 on September 26, 2024. The Seres board, however, opted to sell the VOWST assets instead, a deal announced in June 2024.
The shareholders expressed their concern that the Nestlé offer, which would have been a more favorable deal for stockholders, was overlooked. Seres has been facing financial difficulties, and investor confidence seems to be waning, as reflected in the stock price drop following the VOWST sale agreement announcement on August 6, 2024. The stock, which closed at $1.28 on the day before the announcement, has not regained that level since.
The concerned shareholders have indicated that if the board does not address these issues promptly, they will consider legal action under U.S. federal securities laws, including potentially seeking to void the votes of the Special Meeting of Stockholders, citing misleading and incomplete information provided to investors.
The urgency of the situation is underscored by the impending closure of the VOWST sale to Nestlé on September 30, 2024. The shareholders are awaiting a response from the board to clarify the situation and justify their decision-making process.
This news is based on a press release statement by a concerned stockholder group.
In other recent news, Seres Therapeutics has received shareholder approval for the sale of its VOWST unit to Nestlé Health Science, a move expected to conclude by September 30, 2024. This strategic decision will transfer full ownership of the VOWST business, including the first FDA-approved orally administered microbiome therapeutic. The sale is part of an ongoing collaboration that began in July 2021, with Seres ensuring the continuity of the supply chain through a standard transition service agreement.
Seres Therapeutics has also reported positive data from its Phase 1b trial of SER-155, a treatment showing promise in reducing bloodstream infections in patients undergoing allogeneic Hematopoietic Stem Cell Transplantation. This positive data has led TD Cowen to maintain a Buy rating on the company's shares. Furthermore, Seres Therapeutics is preparing SER-147 for IND readiness by the second half of 2025, targeting metabolic diseases.
Despite a reported net loss of $32.9 million, the company's sale of VOWST assets to Nestle, amounting to $155 million, is expected to strengthen the company's financial position and extend its cash runway. The proceeds from the sale will be used to retire existing debt and further the development of Seres' live biotherapeutic product pipeline. These are the recent developments from Seres Therapeutics.
InvestingPro Insights
The recent developments at Seres Therapeutics Inc. (NASDAQ:MCRB) are further illuminated by data from InvestingPro. The company's market capitalization stands at a modest $140.24 million, reflecting the significant challenges it faces. This valuation aligns with the shareholders' concerns about the rejected takeover bid, which would have valued the company substantially higher.
InvestingPro data reveals that Seres is operating with a significant debt burden and is quickly burning through cash. These factors likely contributed to the board's decision to sell the VOWST assets, possibly as a means to improve the company's financial position. However, this strategy has not resonated well with the market, as evidenced by the stock's 26.37% decline over the past week.
Two key InvestingPro Tips shed light on the company's current situation. First, Seres suffers from weak gross profit margins, which is reflected in the alarming -25,214.44% gross profit margin for the last twelve months. This extreme negative margin underscores the company's financial struggles and may explain the board's reluctance to pursue a full takeover deal.
Secondly, analysts do not anticipate the company will be profitable this year. This outlook aligns with the reported operating income of -$157.87 million and the negative earnings per share of -$1.17 for the last twelve months.
These insights from InvestingPro provide context to the shareholders' concerns and the board's decisions. Investors seeking a more comprehensive analysis can access 11 additional InvestingPro Tips for Seres Therapeutics, offering a deeper understanding of the company's financial health and market position.
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