PureTech Health PLC (PRTC) 2022 Q4 法說會逐字稿

Greetings and welcome to the PureTech Health 2022 Annual Report and Year End Financial Results Conference Call (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Allison Mead Talbot, Head of Communications. Thank you, Allison, you may begin your conference.

Thank you for joining us today for PureTech's 2022 annual results webcast. Our annual report was made available this morning portions of which will also be filed today with our Form 20-F. This information is available on the Investors portion of our website at puretechhealth.com.

PureTech is led by a proven and seasoned management team with significant experience in discovering and developing important new medicines, delivering them to market and maximizing shareholder value.

Today I'm pleased to be joined by the senior team, including today's presenters, Daphne Zohar, Founder and Chief Executive Officer and Bharatt Chowrira, President and Chief Business, Finance and Operating Officer. Following the presentation we will be joined by Eric Elenko, Chief Innovation and Strategy Officer and Julie Krop, Chief Medical Officer, who will all be available for questions.

I'd like to remind you that during today's call, we'll be making certain forward-looking statements. These statements are subject to various risks, uncertainties and assumptions that could cause our actual results to differ materially, and we ask that you refer to our annual report and our SEC filings for a complete discussion of these items. We undertake no obligation to revise or update any forward-looking statements or information except as required by law.

I also want to remind you that we will be referring to certain non-IFRS measures in this presentation. The presentation of this non-IFRS financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with IFRS.

A reconciliation of IFRS to non-IFRS measures that we will be referring to today can be found in this presentation and is also available on our Investor Relations website at investors.puretechhealth.com and in our SEC filings.

I will now turn the call over to Daphne Zohar, PureTech's Founder and Chief Executive Officer.

Welcome everyone and thank you for joining us today. Our mission at PureTech is to give life to new classes of medicine to change the lives of patients with devastating diseases and we've been successful in delivering on this mission. I'm extremely proud of the data highlighted here.

PureTech's R&D engine has generated 27 therapeutics and therapeutic candidates, 2 have gone from inception at PureTech through FDA clearance and a third KarXT is expected to be filed shortly for FDA approval. I'm proud of the team for helping us deliver an exceptionally productive 2022 that shape the next phase of PureTech's development.

We completed 5 clinical trials and there's much more on the horizon over the next 12 months as we anticipate at least 5 important milestones.

Let's direct our attention to the right side of the slide, where you can see that our clinical success rate is around 6x higher than the rest of the industry. This is due in no small part to our distinctive model that clearly increases our chances of success.

This model is underpinned by 3 key pillars, starting with our network of collaborators which you see across the top that enables us to recognize value before the rest of the world sees it.

For example, there have been around 30 papers published in major journals, including Science, Cell and Nature almost all of which published after we secured or filed the key intellectual property.

This brings us to our second pillar. Our innovative technologies and approaches. We're experts in applying these proprietary insights to medicines that have demonstrated efficacy, but that have previously been held back from reaching their full potential.

Our third pillar is centered on what we call killer experiments. We believe in disciplined R&D and we quickly shut down programs that don't reach our pre-specified thresholds for advancement. This allows us to pivot resources towards the programs with the highest probability of success. All of this is supported by our strong financial position and the breadth of our pipeline, which I will touch on in a moment.

Here is the real world evidence that our approach works? Start with Karuna's KarXT program which was invented by our team at PureTech's. If you're familiar with Karuna, an entity we founded that has read out 3 positive registration enabling trials for KarXT in schizophrenia, and has announced that it plans to file soon for approval with the FDA.

One of the components of KarXT xanomeline, was shown to be highly effective for the treatment of psychosis and other symptoms of schizophrenia. But it was sitting on a shelf at Eli Lilly due to GI tolerability issues that they and other pharma companies could not overcome with traditional chemistry approaches.

Our team at PureTech came up with the idea of coupling xanomeline, which enabled the efficacy in the CNS with another drug that reduced the tolerability issues in the rest of the body, conducted a key tolerability proof-of-concept experiment and Karuna then advanced it further. If approved, KarXT will be the first new mechanism for patients with schizophrenia in over 50 years.

Karuna is now a $7 billion company, and PureTech still holds equity interests, as well as rights to receive milestone payments as well as 20%, sublicense payments in most major geographies.

March of this year, we announced that Royalty Pharma acquired an interest in our royalty in KarXT for up to $500 million. We'll discuss some of the details of this later in our presentation. And we're delighted that this transaction provides us with further non-dilute of capital for our growing and rapidly advancing wholly-owned pipeline.

Taking a similar approach across our wholly-owned pipeline by developing novel treatments that build on past human efficacy data. 2 examples of this are LYT-100, a deuterated form of pirfenidone, and LYT-300 and oral form of allopregnanolone. Both pirfenidone and an IV form of allopregnanolone are FDA approved and efficacious, but they each have challenges that have held back their potential, such as significant tolerability issues or burdensome methods of administration.

In the case of LYT-100, it retains the activity of pirfenidone and by making it an important change to the molecule we cut the gastrointestinal side effects by half in a head to head study compared to pirfenidone. This profile may also allow higher dosing which could improve overall efficacy.

LYT-300 leverages our novel lift platform enabling oral administration of allopregnanolone, an efficacious drug for depression with a novel mechanism of action that was previously only available as a 60 hour IV infusion.

Here's a look at how we're building value across our wholly-owned pipeline. 2022 was our busiest year in the clinic yet. We completed 5 clinical studies, including demonstrating compelling safety and tolerability data for LYT-100. And proof of principle oral bioavailability and tolerability for LYT-300.

4 of our candidates are in the clinic, including one partnered program and this will enter the clinic toward the end of this year. Today we're going to focus on a few of these candidates.

Starting with LYT-100. LYT-100 is currently in the first of 2 potentially registration enabling trials in idiopathic pulmonary fibrosis. Before we dive deeper into our wholly-owned pipeline, I'd like to share a snapshot of the other components that make up our value.

These are founded entities, you can think of them like partnered programs. We co-invented and advance them through key milestones, and they are now providing value to us through equity, royalties, sublicense revenue and our milestone payments. These entities have raised nearly $3.7 billion over the last few years. And are bringing value back to us.

I'm also really proud of the fact that at PureTech, we've not had to raise additional capital in 5 years. This is due to both our model and our discipline financial stewardship.

Now let's turn to the next slide and take a deeper dive into our wholly-owned therapeutic candidates. Beginning with LYT-100, which is in development for idiopathic pulmonary fibrosis or IPF.

Those of you who are unfamiliar with IPF, it's a rare progressive and fatal lung disease where the median survival is 2 to 5 years. There are 2 FDA-approved treatments but they both cause significant side effects, which means patients cannot fully benefit from the drugs because they are unable to stay on treatment long enough or at the right dose. Because of this nearly 3 out of 4 patients in the U.S. living with IPF forego treatment with these otherwise efficacious medicines.

One of the standard of care treatment is called pirfenidone. Pirfenidone has been shown to improve survival in these patients by approximately 3 years. This is really meaningful for a disease that has a median survival of 2 to 5 years.

The side effect of pirfenidone cause most patients to discontinue or dose reduce, thereby limiting its effectiveness. LYT-100 is a deuterated form of pirfenidone that retains the anti-fibrotic and anti-inflammatory activity that is associated with the efficacy of pirfenidone.

As you look at pirfenidone, the structure on the left of this slide compared to the LYT-100 structure on the right, you will notice that we have made a simple substitution that improves the metabolic stability and PK profile of LYT-100, while maintaining its activity.

We have demonstrated that this key change significantly improves tolerability as demonstrated in a head to head study compared to pirfenidone or those results. You can see on the left of this slide that LYT-100 reduce the number of GI related side effects by 50% particularly nausea which is important because it affects patients quality of life and their ability to stay on the drug.

Context. Before we embarked on the study, we did what we always do. We spoke with the leading physicians in this field and we asked them what would be clinically meaningful. From those conversations we set a bar of a 25% to 30% reduction in GI related side effects. And what we achieved was nearly twice that. So we couldn't be more thrilled with these results.

Our next step is to confirm these results in later stage studies. So let's take a look now at our clinical trial design.

This slide details the first of 2 registration enabling studies for LYT-100 in IPF and we expect results from the study in 2024. This is a global study designed to evaluate the efficacy, tolerability, safety and dosing regimen of LYT-100 against placebo, and to assess the relative efficacy of LYT-100 compared to pirfenidone to help inform the study design for a second registration enabling study in Phase 3.

As you can see from this slide, we were not required to evaluate LYT-100 on top of either standard of care treatment in this trial, highlighting another key differentiator and the strength of this mechanism.

Importantly, we're investigating in a 2 doses of LYT-100 with the same exposure as the currently approved dose of pirfenidone, another with a higher total drug exposure to see if higher exposure results in improved efficacy.

Important to note that the unique profile of LYT-100 has a potential for therapeutic benefit and other indications which you can see on this slide.

On IPF we're also exploring LYT-100 and progressive fibrosing interstitial lung diseases, a group of lung diseases closely related to IPF and with a clear development path along with other fibrotic conditions where there's human data with pirfenidone suggestive of clinical benefit. Almost a second therapeutic candidate that will be discussed today.

LYT-300 is another example of how we take an existing efficacious therapy held back by factors that limit its commercial use and apply novel approaches to address those limitations and then unlock the full potential to therapeutic.

Mental health conditions such as depression and anxiety impact millions of people, yet current treatments have delayed onset of action, don't work well for many patients and have significant side effects. We're excited about the potential to help these patients with LYT-300.

LYT-300 is an oral prodrug of allopregnanolone that was developed using PureTech's Glyph technology platform. Allopregnanolone is a neurosteroid that is modulator of GABAA receptors.

Low levels of allopregnanolone have been documented in patients with depression and other mood disorders and treatment with allopregnanolone has been shown to be beneficial in depression.

For example, allopregnanolone levels are substantially elevated in pregnancy, and declined dramatically after delivery, playing an important role in postpartum depression.

Allopregnanolone is currently approved but has challenges and its administration has a 60 hour IV infusion. To overcome this, oral chemically modified analogues have been developed, but these have some drawbacks and may not capture the full therapeutic potential of natural allopregnanolone.

We believe our Glyph platform will enable us to harness the broad applicability of this natural neurosteroid through oral administration.

Being at the center column, you can see that we have demonstrated oral bioavailability and humans with LYT-300, that is 9 fold greater than what third parties have published with orally administered allopregnanolone. This builds on what we've previously demonstrated in preclinical work which you can see at the bottom of the slide.

The end of last year we announced results from our Phase 1 study in that study LYT-300 achieved blood levels of allopregnanolone at or above those shown to be associated with therapeutic effect. The study although -- also demonstrated a favorable safety profile and evidence of GABAA receptor target engagement and healthy volunteers confirming that the oral prodrug is metabolized into active allopregnanolone.

We expect to initiate 2 Phase IIa trials with LYT-300 this year. The first for anxiety which we'll read out this year, and the second in women with postpartum depression.

Glyph technology which is now yielded multiple new therapeutic candidates is designed to enable oral administration of certain drugs that previously could not be given orally, because the liver breaks them down before enough is absorbed into the body.

Technology capitalizes on the way the body naturally absorbs fats directly into the lymphatics. This approach has the potential to enable the drug to bypass the liver, thus maximizing the therapeutic potential of efficacious drugs whose widespread adoption has been limited by their lack of oral bioavailability.

Tech scientists have been advancing this platform which has been published in a number of scientific journals and forms. In addition to LYT-300, this platform has enabled a second therapeutic candidate LYT-310, which we'll discuss on the next slide.

LYT-310 is our oral CBD prodrug that we announced in 2022. CBD based product has received regulatory approval in the U.S. and Europe to treat seizures, resulting from certain rare conditions, but it requires a large volume of a sesame oil based formulation, which limits its use and broader applications and age groups.

Take a look at the right side of this slide, illustrating the potential for LYT-310 to improve the current standard of care. Most notably oral dosing and a streamlined manufacturing process could expand therapeutic application of CBD across a much wider range of age groups and indications.

It's important to note the need for new epilepsy treatments. Available therapies do not adequately serve patients and current standards of care come with side effects such as nausea, stomach pain, sleepiness and mood changes that impact patients quality of life.

One of LYT-310s other advantages is the potential to reduce GI tract side effects that are associated with the currently approved CBD based treatments by reducing GI and liver exposure.

Final, wholly-owned therapeutic candidate we will discuss today is LYT-200 which is in clinical development for the treatment of solid tumors and hematologic cancers.

Efficacious nontoxic immunotherapy combinations are desperately needed to treat solid tumors such as bladder cancer and head and neck cancers. Additionally, around 60,000 new cases of leukemia are diagnosed each year, including about 20,000 in AML.

Over half of AML patients either don't respond to initial treatment or experienced relapse or death. After responding to initial treatment, and over 87% do not survive 5 years after diagnosis. There is significant need for more effective therapies.

They're in a position to help these patients with devastating conditions or current standards of care have significant drawbacks.

On the right side of this slide, you can see a schematic demonstrating the foundational role galectin-9 plays in cancer both in solid tumors and hematological malignancies. Galectin-9 is secreted by many tumors to help protect them from immune destruction. Not only does galectin-9 regulate multiple cell types in the immune system, but it also binds to validated targets known to impact disease growth and progression such as PD1.

Additionally, high levels of galectin-9 correlate with poor prognosis in a number of cancers. For example, in AML galectin-9 levels increase with resistance to chemotherapy.

LYT-200 is a monoclonal antibody that blocks the activity of galectin-9. LYT-200 has demonstrated anti-tumor activity in multiple solid hematologic preclinical models further validating its importance as a target of interest.

This past December at ASH, we presented compelling data supporting a dual mechanism of action for LYT-200 and AML, direct cellular apoptosis or destruction and DNA damage, in addition to its role in immune reactivation.

The end of last year we completed the bi-monthly and weekly monotherapy dose escalation portion of our Phase 1 program in solid tumors. We recently began to enroll patients in cohorts designed to evaluate LYT-200 in combination with an anti PD1 and we expect to share those results in 2024.

Last year, we also initiated a Phase 1 trial of LYT-200, and patients with AML and look forward to sharing initial data from a subset of patients by the end of this year.

As we look out across this year, we anticipate at least 5 major milestones across the 4 wholly-owned therapeutic candidates we've discussed today. And the list of milestones is growing. Importantly, we have the necessary capital and discipline to advance our therapeutic development pipeline, all of which is focused on one thing and that is making a difference for patients with devastating diseases.

I would now like to invite for Bharatt Chowrira, our President and Chief Business, Finance and Operating Officer to provide a recap of our 2022 financial results that were announced earlier this morning.

Thank you, Daphne, I'm pleased to report that PureTech's cash position remains strong due to our unique business model, strong track record and commitment to financial discipline.

At the PureTech level, we ended 2022 with cash, cash equivalents and short term investments of $339.5 million compared to $418.9 million, at the end of 2021. On a consolidated basis, our cash, cash equivalents and short term investments were $350.1 million at the end of 2022 compared to $465.7 million at the end of 2021.

At the PureTech level, as of March 31, 2023, we have cash, cash equivalents and short term investments of $389.4 million. On a consolidated basis, our cash, cash equivalents and short term investments were $391.5 million. This figure does not include cash held at our Founded Entity, Vedant which we deconsolidated during the first quarter of 2023. Based on our existing financial assets, we expect to have operational runway into Q1, 2026.

Our revenues are mostly driven by upfront and milestone-based payments from collaborations, as well as grants and are expected to continue to fluctuate from year-to-year. On a consolidated basis, our revenues in 2022 were $15.6 million compared to $17.4 million in 2021.

We reported a 2022 operating loss of $197.8 million compared to $150.3 million in 2021. This was largely due to an increase in R&D expenses, driven by advancing clinical studies involving our wholly-owned pipeline programs.

On a consolidated basis, we reported a net loss of $37.1 million for 2022 compared to a net loss of $62.7 million for 2021. This is partly due to deferred tax benefit recorded in 2022, partially offset by an increase in operating loss driven by the above-mentioned increase in R&D expenses.

Our Founded Entities are akin to partner programs and continue to gain value for equity, royalties, sublicense revenue and our milestone payments as they mature. The success of this unique model generates nondilutive funding to support our own innovation engine without needing to raise capital from capital markets.

Karuna provides a great example of this. We had initially allocated $18.5 million to Karuna's KarXT program and have generated over 47x return on that capital. In fact, Karuna's progress has enabled us to generate $215.4 million in the last 8 months alone from a combination of the disposal of Karuna stock in August 2022 and the upfront cash portion of our deal with Royalty Pharma in 2023, which is post period.

I'd like to highlight the Royalty Pharma deal as it provides us with upfront nondilutive capital and a significant upside based on Karuna's future regulatory and commercial successes.

As part of the agreement, Royalty Pharma acquired an interest in our 3% royalty in Karuna's KarXT program and beyond the $100 million upfront that we have already received, we are entitled to up to $400 million in additional payments associated with regulatory and commercial milestones.

Importantly, once KarXT achieved $2 billion in annual sales, we will retain 67% of the royalty payments and Royalty Pharma will continue to receive 33%. We continue to retain 2.8% equity ownership in Karuna as well as milestone payments and are eligible to receive 20% of sub license income.

We are extremely proud of the way our model allows us to continue to fund our wholly-owned pipeline and operations, and this deal is an excellent example of our ability to proactively manage our financial position, while retaining uptime.

Next, I would like to switch to the progress we are making with our ESG program. We are really proud of our ESG progress. The third addition of our environmental, social and governance report was published this morning as part of the annual report and is available on our website.

PureTech's ESG framework is built on 3 strategic areas of focus to meet the needs of our stakeholders and to achieve a positive social impact. These are patients, people and planet. This year, we have enhanced our level of disclosure around all these 3 areas.

As of December 2022, PureTech received an ESG risk rating of 17.5% from Sustainalytics. Notably, PureTech ran in the top 3% of pharmaceutical companies that were ranked. This reflects our commitment and continuous effort to contribute to a sustainable future.

We're also recognized as a leader across FTSE 250 companies in a number of areas, including Board diversity, as well as Board and leadership gender balance. I'm proud of the progress we have made and that we continue to make in this area.

With that, I'll hand the call back to Daphne.

This was a very productive year at PureTech, and it laid the groundwork for a number of significant development and regulatory milestones expected over the course of 2023 and beyond.

We are in a position to move these new medicines forward in a speedy and efficient way and as a focused and well-capitalized organization well positioned to weather the current macroeconomic conditions our industry faces.

Importantly, we have the financial strength to advance our goal of bringing new, safe and effective medicines to patients. Our team has unwavering dedication and commitment to making a transformational impact for patients. I am energized by their passion.

I'd like to thank all of the patients and clinicians who are participating in our clinical trials. I am also grateful to our ever-widening network of shareholders, advisers and other stakeholders for your confidence in our team and vision.

Thank you for joining us today. And I'm now pleased to invite our Chief Innovation and Strategy Officer, Eric Elenko; and our Chief Medical Officer, Dr. Julie Krop, to join Bharatt and me the Q&A portion.

(Operator Instructions) And our first question today goes to Thomas Smith of SVB Securities.

Congrats on all the progress. Just a couple on LYT-100. I guess, for the Phase 2b study. I know you've previously talked about some enrollment headwinds and taking some actions to try to bolster enrollment.

Can you just comment on whether you've seen any change in the pace of enrollment over the last few months? And maybe elaborate on some of the steps you're taking to try to boost the enrollment rate there?

Hi, Tom. Yes, I will ask Julie Krop to answer that question. Go ahead, Julie.

Yes, so we announced, I think, late last year that the program has run into, I think, a little bit of headwinds in terms of enrollment, definitely increased competition in terms of other clinical trials. And I just want to emphasize that we don't think that competition will extend into any commercial competition because the product will be used in combination with other mechanisms of action. I think that will be the important advance for IPF.

But I think what we are doing, we're very focused on increasing the number of countries that we've gone to. We're focused on really trying to educate around the differentiation of our treatment. And we have some novel ways that we're trying to reach patients that are currently not on existing therapy.

So all these things, I think we're reassessing. We should be able to I think, in the near future, make an announcement with a more definitive time line. But right now, we're seeing generally 2024.

Okay. Understood. That's helpful. And then you laid out a few potential expansion indications for LYT-100 with PF-ILD and myocardial fibrosis and the radiation-induced fibrosis indication.

Just talk about how you're evaluating the opportunity between those 3? And how you think about timing for generating clinical data beyond IPF?

So we're going to -- first of all, we're prioritizing obviously, IPF, but PF-ILD has a very similar and a well-understood regulatory and clinical path. So that would be a natural follow-on indication.

And then some of the other indications that we're pursuing, for example, the radiation-induced fibrosis, we think our -- provides a near-term opportunity in terms of stockpiling potential voucher, as well based on the animal rule, which means that we could potentially get approval with preclinical data. So there's some opportunistic things that we're looking at in terms of the indications. But really, PF-ILD would be the next natural indication that we would be pursuing.

Got it. That makes sense. And then -- on the KarXT royalty deal, and congrats on this transaction, really great economics. Can you just give us a little bit more background on how this transaction came about? Was it a competitive process? And is this kind of the blueprint for how you think about monetizing maybe some of the other royalty streams?

Yes, absolutely. And I'll ask Bharatt to comment on that. It was competitive, and it was based on some inbounds. So Bharatt was able to manage that process for us. Bharatt, would you like to comment on it?

Yes, certainly. Tom, so when Karuna announced their first Phase 3 data with KarXT last year, regard a number of inbound interest from people who specialize in monetizing royalties. And at the time, we're not that keen to look into this. But then because of significant inbound interest, we wanted to evaluate what the market value would be for something like that.

And so we reached out a number of other firms as well who engage in this kind of a transaction. And we were pleased to receive a number of proposals and they were quite a broad range in terms of economics.

And -- but Royalty Pharma stood out for us. They were quite interested keen to not only use this as to build relationship, I think we can -- they have been known to specialize in this area of royalty monetization, but also more strategically, they engage in other forms of collaboration with companies. And so this seemed like a good way for us to build a relationship.

And also, they recognize the value of this intellectual property, and that's reflected in the upfront payment, as well as downstream milestone payments. So upfront was $100 million of then up to another $400 million in milestones.

As well as another important aspect was we didn't want to necessarily give up all of the rights to the Royalty. So initially, it's 100% of the 3% royalty that we are eligible to receive on KarXT commercialization. But once the sales hits $2 billion, those 2/3 of those royalties revert back to PureTech and Royalty Pharma will continue to receive a third going forward.

So that was a good kind of a structure for us that we don't -- when the product, we think, can be pretty in a large market opportunity that we would benefit from the upside in the future as well.

Then I'll just add, Tom, to your question about whether this is a kind of blueprint for us for additional royalties. I'd say absolutely for both our Founded Entities, but also we are often approached about the concept of what's called synthetic royalties or so the idea would be that you are able to fund the development of certain programs by giving up some royalties.

And that is something that we would consider at some point. Right now, we have a very strong cash position. So it's not kind of high priority for us, but it's another mechanism of less dilutive funding for our pipeline. So yes, it's a great relationship to build. And along with Royalty Pharma, we got to know a lot of the other players in this area.

Got it. That makes sense. And then sorry, if I could sneak in just one last one, I guess, on Gelesis. Can you just comment at all on the sort of the strategic rationale for potentially bringing this back as a wholly-owned entity? Like how do you think about, I guess, sort of the commercial progress and the opportunity for Plenity and how this fit into the broader PureTech structure? And then just how much investment do you think might be required if you do come to an agreement on this transaction?

Bharatt, would you like to take that one?

Yes, certainly. Look, I mean, we were incremental in founding Gelesis a number of years ago. And they got approval with a very broad label based on strong clinical data for waste management. And it's a well-established, safe and well-tolerated and very effective product for people who want to lose 5%, 10% of the body rate, and it's very effective.

So they went through a SPAC transaction, which didn't go quite well. As you know, a lot of these facts have fallen out of favor now but at the time, so Gelesis was not able to raise the amount of money required to launch the product.

And so they have generated significant sales to date about $30 million or so since the launch last year. And then we believe that this product needs to be made available to the patients.

And so Gelesis had decided that rather than go through a prescription-based model to actually then apply for an OTC label and they've applied for that in the U.S. It's already received an OTC designation in Europe. And so the idea would be for us that these low valuations to internalize Gelesis, we have made a proposal to the Gelesis board. And if we end up reaching terms with Gelesis board, we anticipate advancing Gelesis as a Founded Entity within PureTech, and we would bring in commercial partners and other co-investors.

We really believe in the value of this product. So particularly in the context of growing interest in the field of obesity and Plenity of differentiation in the areas of -- it's fairly affordable, well-tolerated, and we hope to play a significant part in enabling it to reach potentially millions of patients.

And with that said, our primary focus is our wholly owned pipeline, and therefore, we don't anticipate this being a significant budget item for us. So that's sort of how we are thinking about Gelesis and Plenity.

The next question goes to Edward Thomason of Liberum.

Can you hear me okay? So I just had a question on LYT-100, and I just picking up a slight change in the language that I think was new in December, and you repeated it again today.

On the registration-enabling trials for LYT-100, you're now pointing to 2 trials and is would necessary versus 1 previously. I just want to check, can you confirm that, that is the case and just discuss why the change in language?

And then if you can give the details what the implications that might be on time lines for approval, as well as the study design and aspects related to that second trial?

We did not -- as far as I know, we've been consistent in saying that we believe that it will require 2 registration-enabling studies. So I don't think that was a change in recently in the language.

In terms of its potential and its differentiation, if anything, we've become more confident and enthusiastic about its potential, particularly in light of the fact that we ran sort of this killer experiment and we saw a 50% reduction in the tolerability issue compared to pirfenidone. So we think it has a potential for huge differentiation on the tolerability.

In addition to that, we were able to dose at a higher exposure level than what is seen in the approved dose of pirfenidone. And therefore, we have the potential in this study to also explore a higher dose of potential higher efficacy. We'll see. We know that pirfenidone has a dose response, but they've never dosed it higher.

So if anything, I think we've become more enthusiastic, and I don't think we changed the guidance, but maybe we weren't -- I don't know with the past guidance, if there was something unclear about the fact that we believe that 2 registration-enabling studies will be required.

Okay. And then just on that second clinical study, what details can you give of when you think that could start the study design? And again, any implications for the timing of a successful regulatory approval?

Yes. We're not able yet to guide to that because it will be partially informed by the data from this current study. But what's very comforting is that we have a blueprint for approval of pirfenidone and OFEV as well. So pirfenidone (inaudible) OFEV is tentative.

And so we know what has been required for the other standard of care drugs in this field. And we hope to be able to provide guidance once we get the data from the study and have a chance to talk to FDA about it.

Okay. And then just another question also on LYT-100, and now its related to the second registration study. It was just on your comments about potential combinations for – IPF and I'm wondering, I was intrigued by them. What do you mean by that? Would that be with the current existing standard of care to pirfenidone and OFEV? Or would that be with potential novel assets that are coming through the pipeline?

Yes. So I'm going to ask Julie to touch on this in more depth. But I think what's really exciting about LYT-100 is we think it has the potential to replace the standard of care and be the new standard of care because of its new -- because of its tolerability advantages. That doesn't mean it couldn't be used also in stand-alone therapy.

But maybe Julie, you can talk a little bit about combination in this field and give some more insights.

Yes, absolutely. I think what we mean by that is in the future as more agents are approved, just like has happened in ulcerative colitis or in rheumatoid arthritis, the combination of different mechanisms of action, I think, will be really important in this field because none of these agents are curative. So combining different agents together will hopefully have a synergistic effect in terms of efficacy.

I think what's great about LYT-100 is, as a potential, as Daphne said, sort of backbone therapy because it's being studied as a single therapy as opposed to many of the agents right now that are being studied as add-on therapy.

It enables it to be given as first-line treatment, but also other agents could be added on in addition. So not necessarily for the registration study. But in the future, as we get more agents, I mean, having a tolerable therapy because if you start putting agents together with tolerability issues, it will be really hard for patients to stay on those drugs.

So the aim is to get a very tolerable backbone therapy, hopefully like LYT-100 and then add on additional agents on to that therapy, if that makes sense.

We have a webcast question from Edward Sham of Peel Hunt, asking questions on behalf of Miles Dixon. Question 1, given that the cash is clearly not constraining the Group, can you give some color on the pipeline of new opportunities that you might be considering? How has this changed over the last few years? And do you expect it to change moving forward?

Question 2, can you give some more detail on the remaining economics to PRTC for KarXT outside of the Royalty Pharma deal and how the $400 million remaining economics after upfront cash from Royalty Pharma is a portion to i.e., how much of approval ETC?

Great. So the -- the pipeline question, one of the things that we've been really excited about is the Glyph platform and how productive it [is] now shown proof of concept in humans in the capability of enabling oral administration or absorption of drugs that otherwise are not orally available.

So really excited about the Glyph platform, and I would just say that we have a wealth of opportunities coming out of that platform. And in addition to that, our ongoing efforts at innovation, which have been led by Eric Elenko since our founding, and he and his team invented many of the key programs in our Founded Entities and wholly-owned pipeline, including the KarXT program, which he is the co-inventor of.

So the pipeline opportunities are vast, and I'll see if Eric wants to comment on that in a moment. And then in terms of the remaining economics, there's split between regulatory and sales milestones. There are some near-term milestones. I don't think we broke that out so I just don't want to misspeak and to comment on the specifics of that.

So Eric, did you want to say anything more about our pipeline and sourcing opportunities?

Yes. Daphne, as you're saying, we're going to continue to innovate, and that will include both innovations that are driven by our internal platforms, particularly Glyph, where we see opportunities to continue the theme of validated pharmacology where there are drugs which has promised and have opportunity, but have been held back by some aspects for instant lack of world bioavailability or hepatotoxicity.

And then we will continue to look for opportunities that we can bring into PureTech and then typically do some sort of innovative spin on them, whether that's a new indication or funding a solution that has helped back the particular agent. So going forward, we anticipate continuing our efforts on the innovation front.

The next question goes to Ben Jackson of Jefferies.

Just on that a little bit further thinking about the in-licensing of assets, given that the internal capacity is already quite occupied with the current pipeline and the funding out of 3 years, is there anything further we can be thinking about with the business development side of things? Or how do you feel about the priority of kind of internally generated assets?

We feel like we have some really terrific opportunities with both internally generated assets and also things that we see externally that are at a big discount. But one of the things that we have done well and that we pride ourselves in doing is finding programs that have some real potential, but where the rest of the world doesn't recognize their potentially yet and then actually doing experiments or otherwise showing what that value is without a lot of investment.

So I think that there are opportunities for us to do that. And as our wholly-owned pipeline grows, we also believe and are seeing some real increased interest in the wholly-owned pipeline at PureTech.

So in the past, we get a lot of questions about our Founded Entities, but now we're seeing a lot more investor interest in our wholly-owned pipeline coming in from specialists. And I think as we mirror these important catalysts coming up over the next year, we expect that to be an increased focus.

In terms of our cash return policy, we have initiated and we're pretty well through a $50 million buyback program. And for us, that was really a way to demonstrate that we are focused on our shareholders, and we recognize that all of the value that we've generated has not yet been reflected in our current share price.

And so we think it's important that we find ways to return capital to our shareholders, and that's also a focus for us at PureTech.

I think we have time for more question.

We have a webcast question from Vishal Bhatia of Jo Hambro. As of March, your net cash is $389 million. That includes $100 million upfront payment from Royalty Pharma.

Secondly, noted, the $106 million incremental funding for Vedanta please could you provide some color with regards to the potential of this asset and how material this is for unlocking the potential of this business.

Finally, how was your net equity ownership of 40% impacted by this raise?

So we have - for the Vedanta financing, I think there's a few things to note there. First of all, it was a very large financing with some terrific new investors as well as existing investors participating in the current climate. I think that, that speaks to the strength of the data and the vision of Vedanta, and we do believe very much in that vision that we believe is also being validated by, for example, FDA actions like the approval of the Seres Therapeutic oral fecal microbiota treatment earlier this week, and we believe that Vedanta is highly differentiated in the field of microbiome therapeutics with its defined products, IP, manufacturing capabilities and other things.

So very excited about that potential, and we have not disclosed the specifics of the financing terms, but I can just say that it's convertible debt. And therefore, when it converts our ownership will be impacted.

And we did participate in that round. It is disclosed that we put about $5 million of the $106 million into that round. So as is typical for us, look a bit less than 5% of the round.

So I think we might have had a question from Benjamin Billiard program, but it was, I think, already answered by Bharatt. Were there other questions? I think we're almost out of time.

We have one more question, if you're happy to take it.

Sure.

We have another question from Vishal. Any comments with regards to the potential road map for Gelesis, given the public market harsh reaction and post flow of this business? Any color on the impact of morale internally and ability to retain talent will also be much appreciated.

Sure. So I think Bharatt already commented on this. But the public -- I think if you look at what a SPAC is and what these SPACs really did was there's a private financing and then there's a SPAC transaction. And what happened right around the time that Gelesis did a de-SPAC transaction was that the redemptions in stocks went from, I don't know what -- I think it was like less than 50% to close to 100%. And so therefore, when you have a SPAC transaction, which has a 90-plus percent redemption rate, you're essentially, in many ways, functioning like a private company. So there's not analyst coverage. It didn't really raise a lot of money. And that's a very tough situation to be in, especially with the current market environment.

So I think that's just a little bit of context on the SPAC market in general. And on the morale internally, I think for PureTech, we -- the morale is excellent. Obviously, for a company when they're having more difficulty fundraising that the morale can be impacted. But we have a very strong network here at PureTech and a very strong team in morale, and we hope to be able to support the process around Gelesis if that moves forward.

So I think that was -- and Benjamin you had a similar question, but are there any other questions that we should be addressing?

That's all the questions we have today.

Okay. Excellent. Well, I'd like to thank everybody for joining us today and of course, encourage our shareholders to contact us directly with any questions. And thank you so much for your time and attention today. Thank you so much.