The Latest Biotech Growth Market Might be Crap

Moving beyond the DIY practice of fecal transplant, biotech firms are capturing the power of the human microbiome for treatments ranging from irritable bowel syndrome to autism. Illustration by Nicolás Ortega

There’s gold in your gut—and startups are mining it with microbiome science. The biggest hurdle? Stool doesn’t scale.

In biotech, there’s a new kind of asset. Medical breakthroughs usually start out in a research lab, then are painstakingly evaluated in rounds of heavily regulated testing before arriving in the pharmacy or doctor’s office. Fecal transplants, an old DIY practice, exploded onto the medical scene around 10 years ago with the help of a more dubious source: word of mouth on the Internet — a place where most health advice truly belongs in the toilet.

The idea that anyone would want to insert someone else’s excrement in their own body is undeniably gross. But the practice spread for good reason. Fecal microbiota transplants (FMTs) delivered healthy bacteria that often cured recurrent Clostridium difficile, a very dangerous gut infection that defies antibiotics. Desperate patients suffering from these infections spread the gospel — trading advice, making instructional videos, the works. The method could be done with an at-home enema — no doctors involved — but increasingly, doctors were also paying attention. They began testing whether it really worked as well as it seemed to — and they began worrying about potential side effects, which could range from inadvertently passing along other infections, to weirder consequences such as inexplicable weight gain in people who received FMT from obese donors.

In 2012, MIT microbiology PhD student Mark Smith founded OpenBiome, the nation’s first poop bank. Although it was a nonprofit, it essentially became the Amazon of human waste by supplying raw fecal material in a much safer way. Donors, who are heavily vetted, stop by an OpenBiome office to do their business. Frozen, ready-to-use preparations get mailed topatients and scientists doing research. It has already sent out more than 30,000 shipments under a temporary FDA policy enacted in 2013 that allows doctors to use FMT to help certain C. diff patients.

OpenBiome is still making its shipments, but these days, Smith has a new plan: he’s aiming to profit from poop.

In 2017, Smith left to run Finch Therapeutics, a biotech company built from OpenBiome’s efforts. In all that stool, he expects there’s game-changing drugs that, one day, will be sold by your local pharmacist rather than mailed by a tiny nonprofit in Massachusetts. Carefully working out the legal structure to separate the new company from the nonprofit began in 2014 and took several years. Still in his early 30s, Smith has already executed a merger and raised $77 million to mine the trillions of wild bacteria that inhabit our guts.

In other words, Smith has plans to turn guano to gold, and he’s not alone.

Fecal frontiers

Today, more and more clinical studies suggest that FMTs, and the microorganisms they deliver, may be useful in a wide range of conditions beyond C. diff — even ones seemingly unrelated to the digestive system, like autism. And a tidal wave of basic research in both mice and humans has revealed that our gut microbes generally may play an important and largely overlooked role in our health.

“We think the microbiome is really fundamental to many aspects of who we are, how our immune systems function, how we regulate our metabolism and how we think and feel,” says Smith, who predicts “broad potential across a number of therapeutic areas.”

In all that stool, he expects there’s game-changing drugs that, one day, will be sold by your local pharmacist.

That’s why a growing number of biotech and pharmaceutical companies are tinkering with our natural microbiomes hoping to develop the next great drug. These companies take different approaches, but they divide into those using actual fecal material (or live microbes from it) and those working on more traditional drugs that would either alter the gut microbiome or mimic its effects on health. Rather than rely on artisanal human excrement, the live microbe companies also aim to develop mass-manufactured, easily popped pills, first for C. diff patients, but eventually for more complicated conditions, such as Crohn’s disease, allergies, obesity and even cancer.

In essence, as the science of the human microbiome catches up to the practice of FMT, it’s become clear that there’s the chance for big business and big medical gains.

Flagship Pioneering general partner David Berry, who has incubated and invested in several of these companies, thinks of the microbiome as a new organ. “It’s almost like if we uncovered the liver five or six years ago,” he says. “There’s so many different opportunities that we can pull out of this.”

Yet the microbiome is still a risky concept for biotech investors and entrepreneurs because it requires a new way of thinking about human biology, clinical trial design, drug manufacturing and more. That’s especially true because live microbes have never been used in a regulated medical treatment before. “While there’s interest, and yes, while there’s money moving into the field, I think people are at this point where they still don’t fully understand it,” Berry says.

The most straightforward drug development approach aims to closely replicate FMT by freeze drying processed human excrement and putting it in a pill that meets the FDA’s drug manufacturing standards.

The microbiome is still a risky concept for biotech investors and entrepreneurs because it requires a new way of thinking.

For example, Smith’s company — with about 150 employees, a pharmaceutical-grade manufacturing facility, and access to patient data — is now recruiting recurrent C. diff patients for a clinical trial of a pill that contains the whole microbial community found in human feces. The trial will test its efficacy against a placebo, and also include stool sample testing to ensure the treatment microbes actually colonize the patients’ intestine (something simpler probiotics bought at the supermarket generally don’t do).

“We have a lot of data now to suggest that it works, and that it works consistently, and that it is independent of the donor that you are using,” says Smith.

He hopes for better results than Seres Therapeutics, which faced a big disappointment in 2016. Its drug candidate for C. diff, a pill of mixed bacterial spores purified from donor samples, was statistically no better than a placebo in a Phase 2 clinical trial, a finding viewed by some investors as a major setback for the entire idea of using live microbes to tinker with our guts. The company’s stock price slumped, and has not yet recovered. That result, however, was also a boost for other emerging microbiome drug companies like Second Genome and Enterome that don’t actually use microbes themselves.

Seres chief scientific officer David Cook views the negative clinical result as part of the cycle of “ups and downs” that happen when you’re leading a field, he says.

In fact, he notes, the company is now testing the same treatment in a new, larger trial — albeit with two major tweaks. One, it is testing a higher dose that Cook believes will more quickly “repair” a patient’s microbiome with bacteria that crowd out the C. diffpathogen.It is also using a more accurate diagnosis method to ensure all patients in the trial really have an infection. If it can meet a high bar for effectiveness this time around, according to Cook, the FDA has said there could be sufficient evidence for approval. “We think those two changes can address the shortcomings,” he says.

A race with many winners

For the longer-term, many of the live microbe companies, including Seres and Finch, are also testing therapies that eliminate the need for human donors at all.

One big problem with stool is that it doesn’t scale well. FMTs delivered by an enema or colonoscopy are not exactly patient-friendly. No matter how well screened, FMTs carry some risks, such as transmitting undetected viruses or altering the microbiome in unexpected ways that could have unanticipated effects, such as changing the immune system. And the rainforest of microbial diversity in our guts can vary significantly from person to person, making donor fecal material a struggle for the FDA to regulate and for companies to manufacture into consistently effective treatments.

Rather than rely on artisanal human excrement, the live microbe companies also aim to develop mass-manufactured, easily popped pills.

For example, while Smith believes C. diff infections can be beat by any qualified donor’s sample, early evidence shows that helping inflammatory bowel disease (IBD) patients might require particular microbes that don’t live in every donor. To figure out which are important, Finch is “working backward” from the clinic, Smith says. Informed by its work with OpenBiome, the company is mining data from real-world fecal transplants to tease out the microbes that matter to get a desired effect on health. With this approach, it’s now working with Japan drug maker Takeda to test a designer “cocktail” drug for IBD. It contains human gut microbes hand-picked to treat IBD, isolated and cultivated in an oxygen-free vat — no actual human needed.

The company calls this a “rational” drug development approach, an industry jargon term used to mean that there is underlying biological rationale to discovering drugs, rather than another common practice of throwing everything against the wall to see what sticks. Yet by insisting we can be “rational” about the microbiome, the term’s use also betrays some insecurity about whether the life inside the gut really can be understood and tamed.

“We don’t have a great understanding of why FMT actually works, or why it works well,” says Daniel McDonald, scientific director of the American Gut Project, a research effort based at the University of California San Diego that is working to make sense of the variations in our individual microbiomes through crowdsourcing. “I certainly think there is a huge amount of potential to figure out: What are the minimal constituents of an FMT that allow somebody to recover? But there are also a lot of other variables at play,” he says, including age, geography, diet, and genetics.

For other companies, it’s the microbes isolated from poop that are the key drug development asset.

Bernat Olle, CEO of Vedanta Biosciences, likens his company’s method to the way big pharmaceutical companies have, for decades, collected obscure plants from around the world and analyzed them to create large libraries of natural product molecules. They typically screen these molecules using computers, petri dishes, and mouse models to find the most promising drug candidates.

“We’re doing the same, with the difference that our libraries are not made of molecules,” says Olle. Instead, they’re made up of microbes from the human gut. Vedanta built its gut microbe library — with more than 65,000 strains isolated so far, which Olle claims is the largest — by sampling stool from healthy people from all over the world: not only in the United States, but places like Japan, Mexico, and Papua New Guinea. With recent encouraging results for its cocktail of gut microbes given to C. diff patients, Vedanta is now preparing to launch its Phase 2 clinical study soon. Before 2018 is up, it also plans to start safety trials for two other therapies: one, a treatment forpeanut allergies and, with the drug company Janssen, another for IBD.

Of course, there are challenges for a field surrounded by high expectations and, as McDonald notes, some hype. Proving that microbial drugs can really improve the health of large and diverse groups of patients is foremost, but these companies must also scale up a new kind of drug manufacturing while simultaneously dealing with emerging regulations.

Is it a race? With so many companies developing similar treatments for C. diff as the first application of microbial drugs, yes, kind of.

“It is a race to be the first. However, I don’t think there is necessarily any loser because the patient will benefit,” says Courtney Jones, senior project manager for the Minnesota-based Rebiotix, another company working to treat C. diff patients with both pill and enema formulations of human stool. (Rebiotix was acquired in 2018 by a Swiss drug company.)

But more to the point, the race for a C. diff drug is likely to have multiple winners. One company’s success could make developing microbiome therapies for other diseases a slightly safer bet. “Usually when one company does very well, even if it is your competitor, it ends up helping the field,” Olle says.

Smith, who has watched the field develop, is amazed by how powerful the microbiome seems to be. He thinks the opportunity to someday help cancer patients is one of the biggest potential markets, as early studies have shown that microbes in the gut may help stimulate the body’s immune system response to tumors.

“When I was a kid, my aunt had a battle with cancer three times. I thought that’s the pinnacle of working in healthcare, if you can do something about cancer,” he says. “I never thought we’d be doing that in the microbiome [field].”

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