What happened

Shares of Seres Therapeutics Inc. (NASDAQ:MCRB) a clinical-stage biotech developing unique therapies that address dysfunctional microbiomes, are responding well to the announcement of a do-over granted by the Food and Drug Administration. The stock was up 35.2% as of 11:52 a.m. EDT during Thursday's session.

So what 

It's a well-known fact that physicians should do more with bacteria and other microbes than destroy them with antibiotics. Unfortunately, stepping into uncharted regulatory territory is an uphill climb in an already challenging industry. This is why investors were thrilled to hear that the FDA will allow another trial with its lead candidate, SER-109, for the treatment of patients with recurrent Clostridium difficile infections.

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Last summer, SER-109 failed to significantly reduce the rate of infection recurrence benefit versus placebo. The candidate is an ecosystem of bacterial spores intended to help revive patients' microbial flora to a more natural state following treatment with antibiotics. While this approach makes perfect sense in theory, a failure to prove its efficacy in practice decimated the stock.

Now what

After meeting with the FDA to discuss a path forward, the company intends to begin a new and improved phase 2 study with a lot more patients and a much higher dose of the experimental therapy. It also contends that the trial might be sufficient to support a new drug application if the trial is a success.

The rapid rise of antibiotic-resistant infections is one of the largest threats to public safety, and the medical community is clamoring for better solutions. If Seres can score with SER-109, the stock could produce huge gains in the long run. 

Seres also reported full-year financial results, which included a $91.6 million loss last year. At this rate, the $230 million in cash, cash equivalents, and investments on its books at the end of 2016 should be enough to keep the lights on through 2018. With a bit of luck, we'll know whether it has a winner on its hands before it needs to dilute shares to raise more capital.

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