Will The Rally Continue In Seres Therapeutics (MCRB) Stock After A Stellar 77% Surge In A Month?
The stock price of Seres Therapeutics (NASDAQ:MCRB), a small late stage clinical biotechnology company with a market cap of around $1 billion, is up a whopping 77% in a month, while it is up 17% over the last week. There were multiple positive developments that supported the stock price growth for Seres. Firstly, toward the end of October, the company announced positive data from a late stage clinical study for SER-109, an investigational oral microbiome therapeutic for recurrent C. difficile infection (CDI). The data showed that SER-109 resulted in a 27% absolute reduction of recurrence of CDI compared to placebo at eight weeks post-treatment, implying a relative risk reduction of 68%. [1]
Secondly, in early November, the company announced a collaboration with Swiss pharmaceutical company – Bacthera – for the commercial manufacturing of SER-109. [2] Note that SER-109 peak sales are expected to be around $900 million. For perspective, Seres’ revenues were just $33 million in 2020.
Thirdly, the company announced strong Q3 results with sales of $127 million and earnings of $0.72 per share, significantly beating the consensus estimate of $28 million and a loss per share of $0.05, respectively. The company entered into agreement with Nestlé Health Science to jointly commercialize SER-109 in the U.S. and Canada. This deal was announced in July, and as per the terms, Seres received an upfront license payment of $175 million, and it is eligible for an additional $125 million upon the U.S. FDA approval of SER-109 and another $10 million upon regulatory approval in Canada. It must be noted that the company does not have any marketable product yet, and its revenues are primarily derived from collaboration and grants. As such, there is not much to look at in the current revenues, and the focus should be on its pipeline. That said, multiple collaborations does infuse confidence in investors, and it is also important to note that the company is sitting on net cash balance of $322 million.
Lastly, earlier this week the company announced enrollment of the first patient for its early study of SER-155, an oral investigational cultivated microbiome therapeutic to reduce the incidence of gastrointestinal bacterial infections, bacteremia, and graft-versus-host disease (GvHD). It is being tested to help fight infections in adult patients undergoing hematopoietic stem cell transplantation (HSCT).
Overall, one after the other positive development for Seres over the last month or so has resulted in a gradual rise of 77%. But now that MCRB stock has seen such a large rise in a month, will it continue its upward trajectory, or is a fall imminent? Now, it may appear to be a rare event for a stock to go up 77% in a month, but not for MCRB. In fact, there have been 20 instances in the last six years when MCRB stock saw a trailing 21-day rise of 77% or more. And, 19 of those instances resulted in MCRB stock rising over the subsequent one-month period. This historical pattern reflects 19 out of 20, or more than 90% chance of a rise in MCRB stock over the coming month. See our analysis on Seres Therapeutics Stock Chances of Rise for more details.
So, if this follows historical patterns, MCRB stock is likely to see higher levels. That said, investors should also keep note of the risks, given that none of the company’s treatment has yet secured any regulatory approval.
Wondering how Seres Therapeutics’ peers stack up? Check out Seres Therapeutics Stock Comparison With Peers to see how MCRB stock compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.
Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last six years data
- After moving 17.3% or more over a five-day period, the stock rose in the next five days on 43% of the occasions.
- After moving 37.8% or more over a ten-day period, the stock rose in the next ten days on 37% of the occasions
- After moving 77.0% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 95% of the occasions.
This pattern suggests that MCRB stock may fall over the next five to ten days, but see higher levels over the next one month.
Seres Therapeutics (MCRB) Stock Return (Recent) Comparison With Peers
- Five-Day Return: MCRB highest at 17.3%; ENDP lowest at -8.2%
- Ten-Day Return: MCRB highest at 37.8%; ENDP lowest at -16.4%
- Twenty-One Days Return: MCRB highest at 77.0%; CNCT lowest at -13.1%
While MCRB stock may see higher levels, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Johnson & Johnson vs. Regeneron Pharmaceuticals.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.
| Returns | Dec 2021 MTD [1] |
2021 YTD [1] |
2017-21 Total [2] |
| MCRB Return | 77% | -56% | 9% |
| S&P 500 Return | -1% | 22% | 104% |
| Trefis MS Portfolio Return | -4% | 45% | 294% |
[1] Month-to-date and year-to-date as of 12/1/2021
[2] Cumulative total returns since 2017
- Seres Therapeutics Press Release, Oct 26, 2021 [↩]
- Seres Therapeutics Press Release, Nov 10, 2021 [↩]