Finch Therapeutics - Chapter 11 Case Summary

Business Description

Finch Therapeutics Group, Inc. ("FTG"), together with its affiliated Debtors — Finch Therapeutics, Inc. ("FTI"), Finch Therapeutics Holdings LLC ("Holdings"), and Finch Research and Development LLC ("FRD") — (collectively, "Finch" or the "Company"), was an early pioneer in the field of microbiome therapeutics, founded in 2014 to develop technology to restore microbiomes in the human body and directly address the underlying causes of diseases driven by microbiome imbalances.

• The Company's intellectual property portfolio includes over 160 U.S. and foreign patents and pending patent applications either owned by or exclusively licensed to Finch, encompassing both donor-derived and donor-independent microbiome therapeutics across a range of potential utilizations. These patents target diseases linked to microbiome imbalances, including ulcerative colitis, Crohn's disease, and autism spectrum disorder.

As of the Petition Date, the Debtors are non-operating entities with a single remaining full-time employee. The Company has no consistent revenue sources and has never generated positive cash flow.

• The Debtors' primary assets are: (a) its intellectual property portfolio; (b) its library of existing research; and (c) a contingent right to proceeds from a more than $25.0 million jury verdict entered in the Debtors' favor in August 2024 against Ferring Pharmaceuticals Inc. and Rebiotix Inc., which remains subject to post-trial motions and potential appeals.

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Corporate History

FTI was founded in 2014 — originally as Finch Scientific, Inc. — to harness the genomic revolution and machine learning to pioneer microbiome therapeutics. In September 2017, FTI merged with Crestovo Holdings, LLC ("Crestovo"), combining both entities' respective microbiome platforms and giving rise to FTG, with FTI and Crestovo becoming wholly owned subsidiaries of FTG. In November 2020, Crestovo was renamed Holdings.

Organizational Structure

• As of the Petition Date, FTG is the sole stockholder of FTI and the sole member of Holdings, which is itself the sole member of FRD. FTG is owned by its shareholders.

Public Market History

• FTG's common stock traded on the Nasdaq Global Select Market ("Nasdaq GSM") under the ticker symbol "FNCH" while the Company was actively researching and developing products.
• On February 16, 2024, Finch received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC informing it that FTG's common stock would be delisted from the Nasdaq GSM. Following the delisting, FTG's common stock began trading on over-the-counter markets operated by OTC Markets Group Inc.

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Operations Overview

Finch was created to harness the potential of microbiome therapeutics to address diseases caused by microbiome imbalances. The human microbiome — consisting of trillions of microbes living symbiotically in and on every human — is fundamentally intertwined with immune and metabolic functions, neurological function, and reproductive health. Disruption to the gut microbiome, where more than 70% of the body's immune cells are located, is associated with diseases that have dramatically increased in prevalence in developed countries over the past century, including immune disorders, infections, neurological conditions, and cancer.

Therapeutic Approach and Product Candidates

The Company's research centered on fecal microbiota transplantation ("FMT") between a healthy donor and a recipient to restore a balanced gut microbiome. The FMT process can restore balance by introducing thousands of beneficial microorganisms, restore the metabolism of bile acids that inhibit unhealthy bacterial growth, and stabilize an individual's microbial ecosystem.

• Microbiome therapeutics developed by Finch included:
  • FIN-524, designed for the prevention, diagnosis, theragnosis, or treatment of diseases in humans, including ulcerative colitis;
  • FIN-525, for the treatment of Crohn's disease;
  • FIN-211, an investigational microbiome candidate designed to address the gastrointestinal and behavioral symptoms of autism spectrum disorder; and
  • CP101, an orally administered complete microbiome therapeutic for the treatment of recurrent CDI infections. CDI remains one of the most common healthcare-associated infections, with more than 400,000 infections annually in the U.S. alone.
• The Company completed two successful clinical trials for CP101, advancing development to the Phase III trial stage — the final stage before a company can request FDA approval to market a new drug — before the program was discontinued in January 2023.

Intellectual Property Portfolio

Following the discontinuation of CP101 development, Finch shifted its focus to realizing the value of its intellectual property and other assets through licensing its technology to collaboration partners, enforcing its patent rights against infringing parties, and generating additional data on selected product candidates through academic collaborations.

• Finch's intellectual property portfolio includes over 160 U.S. and foreign patents and pending patent applications either owned by or exclusively licensed to Finch, with nearly 100 patents directly owned by Finch and the remainder exclusively licensed from strategic partners, including academic institutions.
• The patents owned by or licensed to Finch have broad applicability across the microbiome field, and many originate from patent families that embody pioneering work in microbiome therapeutics.

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Prepetition Obligations

As of the Petition Date, the Debtors carry no funded indebtedness. The Company's prepetition obligations consist primarily of a burdensome commercial lease for space the Company has never used.

Funded Debt

• In January 2023, Finch paid off all outstanding principal, accrued and unpaid interest, fees, costs, and expenses totaling $16.2 million in the aggregate under its Loan and Security Agreement, dated May 11, 2022, with Hercules Capital, Inc. All obligations under the agreement have been satisfied, and the Company has no other funded indebtedness as of the Petition Date.
• As of the Petition Date, the Debtors have approximately $3.5 million of cash on hand, have no lines of credit, and are not seeking debtor-in-possession financing.

Lease Obligations

• On August 3, 2021, FTI, as tenant, entered into a lease (the "Lease") with Hood Park, LLC ("Hood Park"), as landlord, for approximately 61,139 square feet of office space in the Charlestown neighborhood of Boston, Massachusetts.
  • The Lease has an initial 10-year term expiring December 31, 2031. Fixed rent for the full term totals approximately $51.6 million, with an initial annual base rent of approximately $4.5 million, plus additional rent obligations for taxes, operating expenses, and utilities.
  • To reduce costs, Finch entered into subleases with Galy Co. ("Galy") covering approximately one-third of the Leased Premises (effective July 15, 2022) and with Genetix Biotherapeutics, Inc. (f/k/a Bluebird Bio, Inc.) ("Genetix") covering the remaining portion (effective October 31, 2022). Both subleases expired by their terms prior to the Petition Date, with Galy ceasing operations at the Leased Premises in or around October 2025 and Genetix in or around December 2025.
  • The Debtors stopped paying rent in October 2025. Hood Park issued a notice of default on November 10, 2025 but has not taken further action. Notably, Finch has not used the Leased Premises to conduct any business, research, development, or other operations since entering into the Lease.

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Events Leading to Bankruptcy

Discontinuation of CP101 and Operational Wind-Down

In January 2023, Finch announced its decision to discontinue its Phase III trial of CP101 — an investigational, orally administered microbiome candidate for the treatment of recurrent Clostridioides difficile infection ("CDI") — and to pivot toward realizing the value of its intellectual property portfolio through licensing partnerships and patent enforcement.

• Multiple factors drove this decision, including the Company's inability to secure additional capital or partnerships to fund the program through key milestones, slower-than-anticipated trial enrollment, the harmful impact of ongoing unauthorized use of Finch's intellectual property, and broader sector-wide trends.
• Following the discontinuation, Finch wound down its development efforts, terminated vendor contracts, and reduced its headcount from more than 150 full-time employees to a single remaining full-time employee.

Unresolved Patent Litigation

On December 1, 2021, Ferring Pharmaceuticals Inc. and Rebiotix Inc. (together, "Ferring") filed a complaint against the Debtors in the U.S. District Court for the District of Delaware (Case No. 21-1694-JLH (D. Del.)) (the "Patent Litigation"), seeking a declaratory judgment of non-infringement and invalidity with respect to certain U.S. patents. The Debtors, together with the Regents of the University of Minnesota ("UMN"), filed multiple answers and counterclaims alleging infringement of patent rights — including U.S. patents owned by UMN and exclusively licensed to the Debtors — relating to fecal microbiota transplant technology and related methods.

• For several years, the Debtors dedicated significant financial and management resources to the Patent Litigation. On August 9, 2024, following a five-day trial, a jury rendered a verdict in favor of Finch and UMN, finding that Ferring infringed all three patents at issue and awarding Finch and UMN $25.0 million in damages and $815,060 in compensatory royalties for commercial sales of a microbiome-based therapy marketed by Ferring through the date of trial.
• Following the verdict, both parties filed post-trial motions: Ferring sought judgment as a matter of law, while the Debtors and UMN requested enhanced damages, supplemental damages, ongoing royalty payments, and pre- and post-judgment interest. Briefing was completed by year-end 2024, but the District Court has not yet issued any ruling.
• More than 18 months after the jury verdict, the Debtors have received no proceeds from the Patent Litigation. With limited cash reserves and the prospect of additional appeals following any ruling, the Debtors determined they could no longer afford to await the District Court's decision.

Burdensome Lease and Deteriorating Liquidity

Although Finch originally entered the Hood Park Lease in August 2021 for office and laboratory space, it never used the Leased Premises for any purpose. While the Subleases with Galy and Genetix temporarily offset rent obligations, both expired prior to the Petition Date, restoring the full burden of the Lease to the Debtors. With no consistent revenue stream, mounting operating costs, and no Patent Litigation proceeds in sight due to ongoing post-trial motion practice, the Company's financial position continued to deteriorate.

• The Debtors stopped paying rent in October 2025, and Hood Park issued a notice of default on November 10, 2025.
• In the fall of 2025, Finch engaged Ropes & Gray LLP ("Ropes") for restructuring and go-forward advice, and FTG appointed Stephen McCall as an independent director to oversee the Company's efforts. Finch also commenced negotiations with Hood Park to seek a consensual early termination of the Lease, but the parties were unable to reach agreement.

Path to Chapter 11 and Sale Process

Having evaluated its restructuring options, the Debtors determined that an out-of-court transaction — which would require shareholder approval — was not feasible given the Company's limited liquidity. The Debtors concluded that a Chapter 11 sale process under section 363 of the Bankruptcy Code, filed in the U.S. Bankruptcy Court for the District of Delaware, represented the most efficient and value-maximizing path for all stakeholders.

• The assets to be marketed through the sale process include: (a) the intellectual property portfolio comprising over 160 issued patents and pending patent applications owned by or exclusively licensed to Finch, covering both donor-derived and donor-independent microbiome therapeutics, together with any proceeds from patent enforcement actions including the Patent Litigation; and (b) a proprietary strain library of microbial strains isolated by the Company, together with associated research data.
• In the weeks leading up to the Petition Date, Finch engaged Rock Creek Advisors, LLC ("Rock Creek") as sales agent to market and sell the Debtors' assets. Rock Creek, which has substantial experience in marketing intellectual property rights for life sciences and litigation rights, has been compiling diligence for a virtual data room, preparing marketing materials, and actively seeking stalking horse bids to serve as a floor price for other potential bidders.
• In February 2026, Finch engaged Chipman Brown Cicero & Cole, LLP ("Chipman") as co-counsel alongside Ropes to assist in navigating the chapter 11 cases. The Debtors are not seeking DIP financing and intend to fund the process using approximately $3.5 million of cash on hand.