Finch Therapeutics: Microbiome Patent Portfolio Heads to 363 Sale After $25M Verdict Stalls

Finch Therapeutics Group, Inc. filed chapter 11 petitions on March 22, 2026, in the U.S. Bankruptcy Court for the District of Delaware (Case No. 26-10409), seeking to sell its microbiome therapeutics patent portfolio and contingent litigation proceeds through a section 363 sale. The four-debtor filing follows the January 2023 discontinuation of the company's lead drug candidate CP101 and a reduction in workforce from more than 150 employees to one. As of the petition date, Finch holds approximately $3.5 million in cash, carries no funded debt, and is not seeking debtor-in-possession financing.

The company's remaining assets consist of over 160 U.S. and foreign patents covering donor-derived and donor-independent microbiome therapeutics, a proprietary microbial strain library, and the right to proceeds from a $25 million jury verdict against Ferring Pharmaceuticals and Rebiotix for patent infringement — a verdict that remains unresolved more than 18 months after the August 2024 trial. Rock Creek Advisors, LLC has been retained as investment banker, and the Bankruptcy Court entered a bid procedures order on April 22, 2026 setting a stalking horse deadline of May 7, 2026, a bid deadline of May 28, 2026, and an auction on June 2, 2026 before Judge Laurie Selber Silverstein.

Debtor(s)	Finch Therapeutics Group, Inc. (4 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	26-10409
Judge	Hon. Laurie Selber Silverstein
Petition Date	March 22, 2026
Estimated Assets	$1 million–$10 million
Estimated Liabilities	$1 million–$10 million
Sale Path	Section 363 sale of patents, strain library, and Ferring litigation proceeds
Auction Date	June 2, 2026

From Microbiome Pioneer to Non-Operating Shell

Finch Therapeutics, Inc. was founded in 2014 by Mark Smith, PhD, along with colleagues from MIT and OpenBiome, to develop microbiome therapeutics that restore microbial balance in the human gut. In September 2017, the company merged with Crestovo Holdings, LLC, combining Finch's commercial-scale manufacturing platform with Crestovo's intellectual property and late-stage drug candidate CP101. The merger created the parent entity Finch Therapeutics Group, Inc.

CP101 was an orally administered microbiome therapeutic designed to treat recurrent Clostridioides difficile infection, a condition responsible for more than 400,000 infections annually in the United States. The drug carried FDA Breakthrough Therapy and Fast Track designations and produced positive Phase 2 results — the PRISM3 trial showed a 74.5% sustained clinical cure rate versus 61.5% for placebo. Finch went public in March 2021, pricing 7.5 million shares at $17 per share and raising approximately $127.5 million in gross IPO proceeds. The stock traded on the Nasdaq Global Select Market under the ticker FNCH.

In August 2022, Takeda Pharmaceutical terminated its collaboration with Finch on FIN-524 and FIN-525 for inflammatory bowel disease — a partnership that had been worth up to $350 million in milestones and had yielded approximately $44 million before termination. The loss triggered a 37% workforce reduction. Five months later, on January 24, 2023, Finch announced it would discontinue the Phase 3 PRISM4 trial of CP101, citing inability to secure capital, slower-than-anticipated enrollment, competitive harm from unauthorized use of its intellectual property, and broader sector-wide headwinds. The decision triggered a 95% workforce cut — from more than 150 full-time employees to one. Meanwhile, competitors reached the market first: Ferring's Rebyota received FDA approval as the first microbiota-based live biotherapeutic for recurrent CDI, and Seres Therapeutics' VOWST became the first orally administered FMT product approved.

On February 16, 2024, Nasdaq informed Finch that its common stock would be delisted. The stock moved to OTC markets. The company reported a net loss of $114.6 million in 2022 and $74.75 million in 2023, with revenue falling to $107,000 in 2023 — down 87.57% from $861,000 the prior year. According to the First Day Declaration, Finch has never generated positive cash flow at any point in its corporate history. By the petition date, CEO Matthew P. Blischak — appointed in May 2023 — was the sole remaining full-time employee, with Stephen McCall added as an independent director in fall 2025 to help oversee restructuring options.

Ferring Patent Verdict and the Kirkland Attorney's Lien

The debtors' principal contingent asset is a jury verdict from the patent infringement case Ferring Pharmaceuticals Inc. et al. v. Finch Therapeutics Group, Inc. et al., Case No. 21-1694-JLH (D. Del.). Ferring filed the original complaint on December 1, 2021, seeking a declaratory judgment that its Rebyota product did not infringe Finch's patents. Finch and the University of Minnesota counterclaimed, asserting infringement of three fecal-transplant patents — two owned by Finch directly and one exclusively licensed from the University of Minnesota.

After a five-day trial, the jury returned a verdict on August 9, 2024, finding that Ferring intentionally infringed all three patents and awarding $25 million in damages plus $815,061 in compensatory royalties for commercial sales through the trial date. Both sides filed post-trial motions — Ferring sought judgment as a matter of law, while Finch and the University of Minnesota requested enhanced damages, supplemental damages, ongoing royalty payments, and pre- and post-judgment interest. Briefing was completed by the end of 2024, but the District Court has not ruled.

The First Day Declaration states that more than 18 months after the verdict, the debtors have received zero proceeds from the patent litigation, and that the inability to monetize the verdict pending post-trial motions and any appeal is the principal reason for the chapter 11 filing. The litigation rights, including any future proceeds, are among the assets being marketed for sale.

Kirkland & Ellis LLP previously served as litigation counsel to the "Litigation Debtors" — Finch Therapeutics Group, Finch Therapeutics, Inc., and Finch Therapeutics Holdings — in the Ferring action. On May 1, 2026, Kirkland filed a limited objection to the debtors' assumption notice, formally noticing an attorney's lien against any judgment, settlement, or other recovery from the Ferring matter and asserting a $23,036.00 cure claim for non-litigation matters.

Hood Park Lease Rejection and Stub Rent Dispute

The debtors' largest unsecured creditor is Hood Park, LLC, owed $2,757,541.92 as landlord. On August 3, 2021, Finch signed a 10-year lease for approximately 61,139 square feet of office space at 100 Hood Park Drive in the Charlestown neighborhood of Boston, scheduled to expire December 31, 2031. Fixed rent for the full term totaled approximately $51.6 million, with initial annual base rent of approximately $4.5 million plus taxes, operating expenses, and utilities. Finch never occupied or used the space.

To reduce costs, the company entered subleases with Galy Co. for approximately one-third of the premises (July 2022) and Genetix Biotherapeutics, Inc. (f/k/a Bluebird Bio, Inc.) for the remainder (October 2022). Both subleases expired by their terms before the petition date — Galy vacated in October 2025 and Genetix in December 2025. Finch stopped paying rent in October 2025. Hood Park delivered a default notice on November 10, 2025 but had not taken further action as of the filing date.

The debtors filed a lease rejection motion on the petition date, seeking to reject the Hood Park lease effective immediately and abandon any remaining personal property at the premises. The motion estimated that rejection would save the estate "hundreds of thousands of dollars per month" in rent, taxes, utilities, and insurance, none of which were necessary for any ongoing business.

Hood Park did not contest rejection itself but filed a limited objection to the requested nunc pro tunc effective date, asserting administrative-expense claims of not less than $718,195.52 for stub rent (March 22–31, 2026) and full April rent. The landlord cited Third Circuit and Delaware case law requiring court approval as a condition precedent to rejection, and noted that subtenants and broker activity continued at the premises post-petition, including a delayed laboratory decommissioning that was not completed until April 7, 2026.

In a reply in support of rejection, the debtors moved their requested effective date forward to March 31, 2026 after learning that Genetix did not vacate by the petition date, but disputed Hood Park's claim to April rent. The debtors argued that JLL's marketing activity at the premises in April was unauthorized and pre-petition work product, and that the late delivery of a decommissioning report should not trigger an additional rent obligation. The debtors asked the court to defer adjudication of the precise administrative-expense quantum until Hood Park files a formal administrative-expense application. The lease dispute is the principal contested matter in the cases to date.

Section 363 Sale Process and June 2 Auction

Rock Creek Advisors, LLC was retained in the weeks before the petition date as financial advisor and sales agent. The debtors filed a sale and bidding procedures motion on the second day of the cases seeking authority to market and sell substantially all of their assets. The Bankruptcy Court entered the bid procedures order on April 22, 2026 setting a stalking horse deadline of May 7, 2026, a contract objection deadline of May 11, 2026, a bid deadline of May 28, 2026, an auction date of June 2, 2026, and an adequate assurance objection deadline of June 5, 2026. The order does not designate a stalking horse and instead authorizes the debtors to designate a stalking horse purchaser by the Stalking Horse Deadline and to propose customary bid protections subject to a separate objection process. The auction is scheduled to be held at the offices of Chipman Brown Cicero & Cole, LLP in Wilmington, with the debtors retaining authority to relocate to a virtual or alternative venue. Bidders must execute a confidentiality agreement and certify the absence of collusion as conditions to qualification. A formal Notice of Sale of Assets was served on April 30, 2026.

The assets being marketed include three categories. First, the intellectual property portfolio: over 160 U.S. and foreign patents and pending applications covering both donor-derived and donor-independent microbiome therapeutics. Nearly 100 patents are directly owned by Finch, with the remainder exclusively licensed from academic institutions including the University of Minnesota. The patents span applications in ulcerative colitis, Crohn's disease, autism spectrum disorder, and CDI treatment. Second, the contingent litigation proceeds from the Ferring patent verdict, including potential enhanced damages, supplemental damages, ongoing royalties, and pre- and post-judgment interest. Third, a proprietary strain library of microbial strains isolated by the company, together with associated research data.

The debtors hold approximately $3.5 million in cash on hand and plan to fund the chapter 11 cases entirely from that unencumbered balance. In January 2023, Finch paid off all outstanding obligations under its $16.2 million Loan and Security Agreement with Hercules Capital, Inc., dated May 11, 2022. The company carries no funded debt and has no lines of credit, which is why the debtors did not pursue debtor-in-possession financing or contested cash collateral relief. The debtors evaluated an out-of-court transaction but determined it was not feasible because it would require shareholder approval that their limited liquidity could not support.

$299 Million NOL and Section 382 Equity Transfer Procedures

A central premise of the sale process is preservation of the debtors' substantial federal and state tax attributes. According to the debtors' Section 382 notice procedures motion, Finch held approximately $299.0 million in federal net operating loss carryovers and $16.3 million in state NOL carryovers as of December 31, 2024, together with approximately $6.7 million in federal tax credit carryforwards and $2.0 million in state credit carryforwards as of December 31, 2023.

Tax Attribute	Approximate Amount	As of
Federal NOL carryovers	$299.0 million	December 31, 2024
State NOL carryovers	$16.3 million	December 31, 2024
Federal tax credit carryforwards	$6.7 million	December 31, 2023
State tax credit carryforwards	$2.0 million	December 31, 2023

Although Finch is unlikely to use these attributes itself, they could be valuable to a purchaser able to consummate an acquisition that does not trigger an Internal Revenue Code Section 382 ownership change. To protect that optionality, the Section 382 motion defines a "Substantial Equityholder" as any person or entity that holds at least 72,259 shares of FTG common stock — approximately 4.5% of the 1,605,763 shares outstanding — and requires advance notice of any proposed transfer that would create a new Substantial Equityholder, increase the holdings of an existing one above specified thresholds, or generate a worthless stock deduction. The procedures permit the debtors to object and the court to invalidate transfers that would jeopardize the tax attributes. The Bankruptcy Court entered a final order approving the equity transfer procedures on May 1, 2026.

Professional Retentions and Bar Date Procedures

The debtors filed first day motions to consolidate the four debtor entities, retain a claims agent, and continue ordinary cash management. The Bankruptcy Court entered a joint administration order on March 26, 2026 consolidating the cases under Case No. 26-10409, an order approving Omni Agent Solutions as claims and noticing agent, and an interim cash management order the same day. A final cash management order followed on April 20, 2026.

On April 20, 2026, the Bankruptcy Court entered orders authorizing retention of Ropes & Gray LLP as lead bankruptcy counsel, Chipman Brown Cicero & Cole, LLP as Delaware co-counsel and auction host, Rock Creek Advisors, LLC as financial advisor and sales agent, and Omni Agent Solutions as administrative agent in addition to its claims-agent role. The court also entered an interim compensation procedures order and an order authorizing ordinary course professionals. The Section 341 meeting of creditors was held and concluded on April 23, 2026.

Rock Creek's compensation structure is set out in its retention application: a $30,000 monthly fee plus a transaction success fee equal to 4% of transaction value up to $15 million and 8% of transaction value above $15 million, with prior monthly fees credited against the success fee. Hourly rates for advisory services run from $200 to $695. Ropes & Gray's retention application was approved on the same April 20 omnibus, with Gregg M. Galardi and Cristine Pirro Schwarzman as lead partners; Robert A. Weber and Aaron J. Bach lead the Chipman Brown engagement.

The debtors filed a bar date motion on May 4, 2026 seeking a general bar date 25 days after service of the bar date notice, a governmental bar date of September 18, 2026 (180 days from the petition date), a rejection damages bar date keyed to entry of any rejection order, and a supplemental bar date for amended schedules. The motion designates Omni Agent Solutions as the filing agent and authorizes electronic filing through the Finch Therapeutics case page on the Omni portal. The bar date motion is scheduled for hearing on June 10, 2026, with objections due May 18, 2026.

Key Timeline

The events below are reconstructed from the First Day Declaration, the bid procedures motion, and the Hood Park lease rejection motion.

Frequently Asked Questions

What happened to Finch Therapeutics?

Finch Therapeutics filed chapter 11 on March 22, 2026 in Delaware after discontinuing its lead drug candidate CP101 in January 2023 and winding down operations to a single employee. The filing seeks to sell the company's patent portfolio, contingent Ferring litigation proceeds, and microbial strain library through a section 363 sale, with an auction scheduled for June 2, 2026.

What assets does Finch Therapeutics have?

The primary assets are over 160 microbiome therapeutics patents, a contingent right to proceeds from a $25 million jury verdict against Ferring Pharmaceuticals (plus potential enhanced damages and royalties), and a proprietary microbial strain library. The company holds approximately $3.5 million in cash, carries no funded debt, and reports approximately $299 million in federal NOL carryforwards.

Who is the claims agent for Finch Therapeutics?

Omni Agent Solutions serves as the claims and noticing agent and was also approved as administrative agent on April 20, 2026. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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