PureTech Health PLC (PRTC) 2021 Q2 法說會逐字稿

Greetings and welcome to the PureTech Health 2021 Half Year 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 now begin.

Thank you for joining us today for PureTech 2021 Half Year Results Webcast. The press release and report we issued earlier this morning, along with slides, can be found on the Investor Relations portion of our website at puretechhealth.com. Our half year report has also been filed with the SEC and is available on the SEC website. PureTech is a biotechnology company based in Boston, and we are dedicated to the development of novel therapeutics for the treatment of serious conditions with significant medical needs.

Today, I'm pleased to be joined by the senior team, including Daphne Zohar, Founder and Chief Executive Officer; Bharatt Chowrira, President and Chief of Business and Strategy; George Farmer, Chief Financial Officer; Eric Elenko, Chief Innovation Officer; and Joe Bolen, Chief Scientific Officer.

During today's call, we will be making certain forward-looking statements and ask that you refer to our half year report and our SEC filings for a complete discussion of potential risks and uncertainties associated with such statements. I also want to remind you that when we refer to certain non-IFRS measures in this presentation, a reconciliation of the IFRS to non-IFRS measures can be found on Slide 18 of this presentation, and it is also available in the appendix to our corporate deck, which is available on our Investor Relations website at investors.puretechhealth.com.

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

Thank you, Allison. Over the past several months, we have continued to advance our mission of rapidly advancing scientific breakthroughs to patients with devastating diseases who have limited or no treatment options. We are proud of our clinical track record and inspired to note that our work has led to 25 potential new medicines for devastating diseases, including 15 that are clinical stage and 2 that have secured FDA and European regulatory clearances by our Founded Entities.

Part of the unique approach that has enabled the success is a foundation of clinically validated biology while bringing new insights and intellectual property from PureTech and our collaborators, enabling us to leverage work from our industry where others have invested billions of dollars in R&D but where our insights enable a key step in development and where significant patient needs remain.

This slide summarizes the components that make up our value and outlines our rapidly advancing Wholly Owned Pipeline. We expect these programs to serve as key value drivers for PureTech going forward. Across the bottom half of the slide, you can see our Founded Entities, which bring continued validation, catalysts and significant value to us. You'll also see that we have a strong financial position with $409.7 million in cash and cash equivalents at the PureTech level as of June 30.

Our Founded Entities are also well positioned, having raised over $1.6 billion over the last few years. On the top of this slide, you will see the progress we've made across the Wholly Owned program so far in 2021. We initiated 3 additional Phase I clinical studies of LYT-100 to further build on our strong data package. We anticipate all 3 to read out later this year.

We are also planning our potential registration-enabling development plans in IPF and expect to provide additional guidance in the fourth quarter of 2021 following discussion with regulatory agencies. Results from the first portion of the Phase I/II LYT-200 study are also anticipated in the fourth quarter of 2021. If those results are favorable, we are well positioned to expand our clinical development of LYT-200, both as a single agent and also in combination with a well-studied anti-PD-1 agent that BeiGene is supplying to us at no cost. We also anticipate initiating a clinical trial of LYT-300, which came out of our Glyph lymphatic targeting platform by the end of this year.

Additionally, we recently announced that Imbrium Therapeutics has exercised a licensing option to LYT-503, a non-opioid therapeutic candidate being developed for interstitial cystitis or bladder pain syndrome, which resulted in a $6.5 million upfront payment to PureTech. We are also eligible to receive up to $53 million in additional development milestone payments for this program as well as royalties on product sales. This program is one of several coming from the Alivio platform. The rest of those programs and the underlying platform are all fully owned.

Across the bottom half of the slide, our Founded Entities have also achieved many financial milestones this year such as Vor's $203 million IPO; Karuna's $270 million underwritten public offering; and Gelesis' merger agreement with Capstar Special Purpose Acquisition Corp., which is expected to close in the fourth quarter of 2021. With the close of Gelesis, SPAC merger at its expected valuation, these 3 public founded entities will have a combined value of over $5.4 billion as of June 30.

In addition to our equity holdings across all of our Founded Entities, we are also due royalties on potential product sales from Gelesis, Karuna and Follica. Royalties due to us from each of these programs could be worth as much as or more than our equity in each program, respectively, depending on the extent of future product sales.

It's important to note that while we are very proud of the progress and successes of our publicly listed Founded Entities, we believe that there is significant underappreciated value in our clinical stage Wholly Owned Pipeline and also our privately held Founded Entities.

As demonstrated with our Founded Entities, our seasoned team at PureTech has the ability and track record to generate significant shareholder value. The team is bringing the same rigor and innovative insights into developing and advancing therapeutics in our Wholly Owned Pipeline, focusing on well-established and validated biology, and in many instances, clinically derisked mechanisms which we believe have the potential to transform the care of millions of people who have long struggled to find effective treatment. We expect our Wholly Owned Pipeline as well as the additional candidates generated from our drug discovery engine to further advance this mission.

Our Wholly Owned Pipeline currently consists of 6 therapeutic candidates, including LYT-100 or deupirfenidone, which is an advanced clinical studies, including for inflammatory and fibrotic conditions and disorders of lymphatic flow; LYT-200, which targets the foundational immunosuppressor, galectin-9, for the potential treatment of a range of cancer indications; LYT-210, which targets immunomodulatory gamma delta-1 T cells in development for a range of cancer indications; LYT-300, which is an oral version of allopregnanolone, developed through our Glyph platform in development for a range of neurological and neuropsychological conditions; LYT-500, an orally administered therapeutic candidate, developed through our Alivio platform, in development for inflammatory bowel disease; and LYT-503, potential non-opioid treatment for bladder pain syndrome that is currently being developed by Imbrium Therapeutics.

You'll note that we also have 4 distinct innovative lymphatic and inflammation platforms. We believe that these platforms will yield additional therapeutic candidates and/or partnership opportunities going forward. Our most advanced therapeutic candidate is LYT-100 and a selectively deuterated form of pirfenidone, which has a long IP life with composition of matter exclusivity up to 2033 and additional patent applications to potentially extend this through 2040. We think that LYT-100 has the potential for significant patient benefit in idiopathic pulmonary fibrosis and potentially other progressive fibrosing interstitial lung diseases, Long COVID and lymphedema.

As a reminder, LYT-100 retains the beneficial pharmacology of pirfenidone, 1 of 2 standard of care drugs approved for the treatment of idiopathic pulmonary fibrosis or IPF. LYT-100 is expected to be metabolized slower with less variability. Given these properties, we are evaluating whether GI-related tolerability issues that have historically been associated with pirfenidone can be mitigated with LYT-100. And we also believe LYT-100 has a range of other potential benefits to patients, such as less frequent dosing.

According to our clinical advisers as well as information gathered from peer reviewed publications and independent market research, GI tolerability issues with pirfenidone significantly affect treatment compliance in IPF patients and results in poor disease management. Accordingly, we believe that alternatives such as LYT-100 are desperately needed.

This year, we initiated 3 additional Phase I clinical trials of LYT-100 to explore further the pharmacokinetics, dosing and tolerability in healthy volunteers. One of these trials is an extension of the previously completed multiple ascending dose study of LYT-100 and is designed to determine the maximum tolerated dose of LYT-100 in healthy volunteers. Results from these trials are anticipated in the fourth quarter of 2021 and are expected to provide additional data to inform future clinical development of LYT-100 across multiple indications.

We also announced the formation of a Clinical Advisory Board for IPF and related lung disorders in May of this year. It's important to note that the advisory group includes the world's leaders in the clinical development of novel therapies in progressive fibrosing interstitial lung diseases, and we are really fortunate to be collaborating with them on the trial design and in implementation.

We also continue to enroll patients in 2 Phase II studies, evaluating LYT-100 for the potential treatment of respiratory complications associated with Long COVID and a proof-of-concept trial of breast cancer-related secondary lymphedema. We are finalizing the trial design that will potentially support registration of LYT-100 ILD for the treatment of IPF and other PF-ILDs. We intend to provide additional guidance in the fourth quarter of 2021 following discussion with regulatory agencies.

Following LYT-100 is LYT-200, our novel fully human monoclonal antibody targeting galectin-9. We are advancing LYT-200 to inhibit the multiple effects of galectin-9 to potentially remove a key immunosuppressive barrier that gets in the way of the immune system's ability to attack and destroy tumors. The Phase I safety tolerability dose escalation portion of a Phase I/II trial is expected to read out in the fourth quarter of this year. Pending the results from the Phase I portion of the study, we intend to evaluate LYT-200 further, both alone as a single agent and in combination with BeiGene agent or chemotherapy. BeiGene's agent is an anti-PD-1 immune checkpoint inhibitor, which we have access to through an agreement we announced earlier this year.

LYT-300 was developed through our Glyph lymphatic targeting platform and is an oral form of a natural neurosteroid called allopregnanolone. An IV version of allopregnanolone is approved by the FDA and marketed in the U.S. as brexanolone or Zulresso. Zulresso is administered as a 60-hour IV infusion, which has greatly limited its usage in postpartum depression disorder and would likely be a limitation for other indications. We believe that LYT-300 has the potential to overcome these challenges and may be applicable to treating a range of neurological and neuropsychological conditions. We plan to advance LYT-300 into a Phase I trial to assess PK and target engagement in healthy volunteers by the end of this year.

Our most recent addition to our Wholly Owned Pipeline, LYT-500, is derived from our Alivio technology platform, which we have fully integrated into our Wholly Owned programs. LYT-500 is an orally administered therapeutic candidate in development for the treatment of IBD. LYT-500 contains 2 active agents and is designed to promote mucosal healing and inflammation simultaneously by using the Alivio technology, which is designed to enable direct targeting of the drug to site of inflammation while potentially having minimal impact on healthy tissues.

Finally, I'm very pleased to call out a separate announcement made this month that Dr. Julie Krop will be joining the PureTech team as Chief Medical Officer to oversee the clinical development of our rapidly advancing clinical-stage Wholly Owned Pipeline. Julie has overseen the development of 8 therapeutics that advanced through Phase III development, including 3 FDA approvals, and she has extensive experience as a board-certified physician and leader in regulatory affairs.

I would now like to welcome George Farmer, PureTech's Chief Financial Officer, to the call so he can provide a recap of our 2021 half year results that were announced earlier this morning.

Thank you, Daphne. PureTech continues to be in a very strong financial position that is stronger than it has ever been. At the PureTech level, we ended the first half of 2021 with cash and cash equivalents of $409.7 million compared to our balance of $349.4 million at the end of 2020 and $120.6 million at the end of 2019. This increase in cash includes $118 million of proceeds from sales of our stake in a Founded Entity in February earlier this year, which has contributed to our expected cash runway guidance into the first quarter of 2025, which we confirm today. This guidance is based off of our conservative budget projections and does not include potential non-dilutive capital inflows from possible additional monetization of positions in our Founded Entities, future strategic partnerships, equity financing or grant funding.

On a consolidated basis, our cash and cash equivalents were $439.7 million at the end of the first half of 2021 compared with $403.9 million at the end of 2020 and $162.4 million at the end of 2019. Our revenues were mostly driven by payments from our pharma collaborations and are expected to continue to fluctuate from year-to-year. On a consolidated basis, our revenues in the first half of 2021 were $5.8 million, primarily driven by grant revenue, collaboration and license payment.

Our first half 2021 operating loss was $68.1 million compared to $52.8 million in the first half of 2020, largely driven by the rapid clinical advancement of our Wholly Owned programs. Our G&A and R&D expenditures increased approximately 20% and 26%, respectively. On a consolidated basis, we reported a net loss of $77.6 million for the first half of 2021 compared to net income of $123.7 million for the first half of 2020. It's important to note that this difference is driven by IFRS accounting rules and reflects a considerable gain on investments held at fair value in 2020 and increased equity method accounting-based losses in 2021. During the first 6 months of 2021, our Founded Entities raised an aggregate sum of $636.2 million, 99.8% of which came from third-party investors.

I would now like to provide an operational update related to our response to the COVID-19 pandemic and new waves of infection. For the safety of our employees and our community, we continue to have COVID safety protocols in place, including daily employee and visitor health screenings and twice per week mandatory on-site COVID testing. We have also put in place an infectious disease outbreak response plan to enable swift actions if needed.

I'd also like to highlight that we are increasing our efforts around environmental, social and governance initiatives. While we have embraced ESG efforts, we aim to report on things we are doing to benefit the environment and community as well as on our governance practices. ESG values are fully aligned with our approach to building a sustainable business so that we can deliver on our mission to treat patients with underserved diseases.

As a testament to our commitment to further building on this strong foundation, the Board established a stand-alone ESG Committee in 2020, chaired by our Non-Executive Director Kiran Mazumdar-Shaw, to manage review and advance ESG issues within the business and drive enhanced reporting through the ESG report each year. In accordance with this, we issued our very first ESG report, which can be found in our 2020 Annual Report and accounts available on our website at puretechhealth.com.

We're also proud to be 1 of only 9 companies in the FTSE 250 to have a woman CEO as well as a diverse Board and team of senior executives, including Dr. Julie Krop, who recently joined us as Chief Medical Officer. We have made great progress this year and have a lot to look forward to over the ensuing months and beyond. I will now turn the call back over to Daphne.

Thank you, George. In summary, as you look across our Wholly Owned Pipeline and our Founded Entities, we believe the remainder of 2021 is going to be exceedingly catalyst-rich which includes multiple value drivers across our Wholly Owned Pipeline and our Founded Entities, including at least 4 expected clinical study initiations and 7 expected clinical readouts.

I would like to thank the entire PureTech team on their continued hard work this year as we achieve more historic milestones as an organization. I would also like to extend my gratitude to our tremendous Board and R&D committee for their wise counsel and strategic oversight. We are fortunate to have a dedicated team and outstanding scientific collaborators who are committed to continue to develop highly differentiated medicine for patients who have long struggled to find effective treatments.

To our shareholders, thank you for your continued vision and the trust that you place in our team. And in particular, I'd like to thank the patients and clinicians that are participating in our clinical trials.

Lastly, let me close by saying that we are energized by the progress from the first half of the year, and we aim to continue this momentum across our Wholly Owned Pipeline and our Founded Entities as we collectively work to deliver highly differentiated medicines for patients and value for our shareholders. Thank you, everyone. We will now take questions.

(Operator Instructions) Our first question today comes from Amy Walker from Peel Hunt.

I have a few questions, please. The first is on the Phase II trials currently ongoing for LYT-100, could you give us a little insight into the progress of enrollment on both of those studies? I know you've commented that you expect the data in Long COVID to happen by the end of this year. But based on current enrollment progress, where sort of within 2022 do you currently expect the readout for lymphedema to land? And what are the trends you're seeing in enrollment, particularly on the lymphedema study, please? That's the first one. I'll ask a couple of follow-ups afterwards.

Thanks, Amy. It's good to hear from you. So we are progressing well on enrollment. I think that with the -- with all of these studies, we continue to track COVID epidemiology. So we were very pleased that we are where we are today. But I would say that we're going to continue to track it. And in the case of the Long COVID study, we're looking to have data towards the end of the year. In the case of lymphedema, I'd say, I think we've guided first half, but closer to the middle of the year in that first half.

And then just to follow up on that. I think from one of the earlier slides, I know the answer but I just wanted to confirm PureTech's view is that neither of those studies is likely to be fileable, that in both instances, there will need to be follow-up trials before filing with the FDA, is that correct?

That's definitely the case for the lymphedema study, and we can't really comment with regard to the Long COVID study since that's really an emerging indication. But once we see the data, we'll be in a better position to guide as to what we expect with regard to registration.

Got it. And then my last question is just around Gelesis and the $1.3 billion that was mentioned as a valuation attached to the merger announcement. I wondered, can you comment whether that valuation included any assumptions around the contribution from GS200 in type 2 diabetes, given we're expecting a readout from that in the second half? I just want to understand how much of that was baked in or discounted in that $1.3 billion.

That's a great question. We think that most of the valuation is resting on the Plenity product, which is gearing up for a broad launch now. It's just started their broad launch. So we don't think that there's a lot of value baked in for the additional products. So we believe there is significant value there. Thanks for pointing that out.

Our next question today comes from Tom Smith from SVB Leerink.

This is Mike on for Tom. I guess one from our end is what are we going to learn from the Phase I PK studies that were initiated earlier this year for LYT-100? And more specifically, can you discuss the additional dosing levels and regimens that you're exploring in these studies? Are you going to be testing higher doses or less frequent dosing? Any color there?

Thanks, Mike and to Tom as well, I understand he's traveling right at this moment. So I'm going to ask Eric Elenko to answer that question. Eric?

Absolutely. So the Phase I studies are indeed looking at exploring additional doses. So in our original MAD study, we didn't hit a maximum tolerant dose so we are extending that dosing. And then we have additional studies that really are in the category of really confirming information, dotting Is and crossing Ts, for instance, confirming confirmation of the dose to carry forward in future studies, which would be most similar to the approved dose of pirfenidone that's currently used.

Got it. That's very helpful. And then I guess just as one follow-up. In terms of LYT-100 in IPF, you cited regulatory agencies are going to help you shape the guidance in 4Q '21. Can you provide any additional color on whether or not the discussions have already been scheduled and when you expect those discussions to take place?

Yes. Thank you. Yes, those discussions have already been scheduled and that has definitely been taken into account as we say that we'll be able to provide more guidance later this year. So we are excited to be able to share more information about that as soon as we've completed those discussions.

Our next question today comes from Lucy Codrington from Jefferies.

Just a follow-up on the IPF trial design. I wonder if you can share what you anticipate to be or what have been any potential sticking points when designing the trial. And if possible, can you share what your kind of blue sky scenario would be in terms of the path to market for that product?

Thanks so much, Lucy. I don't know that we -- I mean I think we have our own blue sky scenarios, but I always hesitate about sharing something like that because we also have other scenarios that would be perfectly fine with us. So I will ask Eric to weigh in on whether he can provide more guidance on that question. Eric?

I think, Daphne, your answer is a very fair one. We have in mind various designs that we're contemplating for the trial. And as we have interactions, as we were discussing with regulatory authorities and we get data coming in, of course, just confirming certain details, for instance, from the Phase Is, we'll be able to guide more later this year.

One thing I'll add, Lucy, is that we're really fortunate that we're working with the PIs that basically ran all of the IPF and some of the related studies in progressive fibrosing interstitial lung diseases. So we have a lot of insights into what has been done before, what's actually sort of the standard practice right now and where are the places that one could improve with regard to, for example, potential enrollment and things like that. So we have some really good information here, and there's different parameters that we're going to explore together with regulatory agencies. I'm sorry that we can't provide more detail at this point.

Our next question comes from Edward A. Tenthoff. His question is, what can we expect from Orasome clinical data this year and development plans in 2022?

Can you just repeat, what can we expect from -- what was the word before clinical data?

Orasome.

Orasome. Okay, yes. Thank you so much. So I'm going to point that question over to Bharatt Chowrira.

Yes. So in terms of the Orasome, we continue to actually evaluate the platform. It's quite exciting. It's for the prospect of potentially administering biologics orally and have the body actually make the therapeutic proteins. And we have -- and I indicated that we should have some preclinical data later this year to kind of test the initial proof of concept, and we're on track for that with respect to the Orasome. We're also looking at administration of a number of different payloads, including messenger RNA and other expression systems that can be administered orally, which would be a major advancement in the administration of biologics orally.

Our next question comes from [Simon Tal] which is, please, can you point to any positives coming from the NASDAQ listing? Clearly, the share rating hasn't benefited as yet, but do you believe that U.S. investors are showing any extra interest and may become buyers?

Thanks so much. So we -- the NASDAQ listing, we did not do an offering together with that NASDAQ listing. So while -- what we've had happen is a lot more interest from U.S. investors, people beginning to take a lot more meetings, digging in, really learning about the Wholly Owned Pipeline. So we think that, that's been beneficial, and we think that, that will play out as we move forward and more investors become aware of our story. Thank you very much.

(Operator Instructions) We have no further questions.

I think we have questions.

We have one other question, which is from a follow-up from [Simon Tal] Please let me know if we'd like -- which is your largest shareholders' stake is clearly perceived as an overhang as it is held in the U.K. income funds, which are having large redemptions. Is the Board being proactive on this front and trying to move things on?

Yes. Thank you. The Board and the executive team is very aware. And we've been very focused on how to unlock the value. So as I think has been noted by a couple of these questions, there's a significant value disconnect between -- even if you're just to take our stake in our public Founded Entities, our cash and -- don't even account fully for the royalties that are due to us from the Founded Entities potentially if things go well, which could be worth more than the entire equity stake in those public Founded Entities. Our private Founded Entities and our advanced Wholly Owned Pipeline, there is really a value disconnect.

And I can assure you that our entire executive team and our Board of Directors is very well aware of this. And we are very committed to making sure that the full value of certain type and that what we've generated and what we will generate we'll pass along to our shareholders. So I can assure you that this is a huge priority for us. And what we're really excited about is that we've been able to execute and deliver on the results. So that's a great position to be in, strong cash and we are looking at all of these other dynamics as well. Sorry about my cat in the background.

We have no further questions today. And so that concludes today's conference call. Thank you so much for your time. You may now disconnect.