PureTech Health plc

Thank you for joining us today for PureTech's 2024 Financial Results Webcast. Our annual report will be made available later today, portions of which are also filed with our Form 20F. This information is available on the Investors page of our website at puretechhealth.com. PureTech is guided by a seasoned leadership team with a strong track record of translating scientific innovation into impactful medicines and long-term shareholder value. Today, I'm pleased to be joined by members of the senior team, including Bharat Charira, Chief Executive Officer, Eric Alenko, Co-Founder and President, Chip Sherwood, General Counsel, and Michael Inbar, Chief Accounting Officer. I would like to remind you that during today's call, we will 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 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 the 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.caretechhelp.com and in our SEC filings. I will now turn the call over to Bharat Sherira, CareTech's Chief Executive Officer.

Thank you, Alison. Welcome everyone and thank you for joining us today. 2024 was a defining year for PureTech, a year in which we delivered meaningful progress across our portfolio and achieved important value driving milestones. Underpinning our success is our R&D engine, which is translating scientific innovation into real world impact for patients. In 2024 and 2025 post-period, we announced unprecedented results from our successful Phase IIb trial of duprofenadone, our wholly-owned program for idiopathic pulmonary fibrosis, or IPF. The open-label extension portion of the Phase IIb study is ongoing, and based on pulmonary analysis, we continue to see strong, durable data. Our oncology program, LYT200, delivered strong clinical data from a Phase 1B trial in the AML, as well as positive results from the recently completed Phase 1B trial in solid tumors. Our co-founder and president, Dr. Eric Galenko, will walk us through both of these programs today. And finally, a standout achievement in 2024 was the FDA approval of COBINFI. which was invented at PureTech for the treatment of schizophrenia in adults, marking a long overdue advance for patients and a major validation of the scientific foundation we established at PureTech. We supported these achievements with strong financial execution. As of March 31st, we had approximately $339.1 million at the PureTech level. Our efficient and proven hub-and-spoke R&D model allows us to advance a broad portfolio without incurring dilution at the pure tech level. In 2024 alone, our founded entities raised $397.5 million, with over 88% coming from third-party investors. We also generated $327.4 million in proceeds from founded entity monetization events, including via our equity holdings and milestone payments, which enabled us to return $100 million to shareholders via a tender offer, all the while continuing to advance our wholly owned programs in parallel. Coming off of this strong momentum, we are at a key strategic inflection point. Today, we will share our strategic priorities for 2025, highlight our clinical momentum, and discuss how we are positioned to reshape treatment paradigms and deliver long-term value for the shareholders. Let us start with the foundation of our business. Our core mission is to give life to new classes of medicine that can transform lives of patients with devastating diseases. We are delivering on this mission through our innovative hub-and-spoke R&D model that is the engine behind our clinical and financial success and has enabled us to build a robust pipeline of high-value programs. This R&D model is guided by three core principles, validated efficacy, clear patient benefit, and efficient de-risked clinical development. We begin with drugs that can address significant unmet need and have already demonstrated some level of efficacy or clinical signals, but are held back by key limitations. We then apply Innovative science or technology are an approach to overcome these limitations, unlocking greater patient benefit and meaningful commercial potential. From there, we advance these programs through key de-risking milestones. If a program does not meet our predefined thresholds, we reallocate resources forward towards some more promising opportunities. This disciplined approach enables us to operate with exceptional capital efficiency and ensures that we are optimizing every stage of R&D lifecycle to truly bring impactful therapies to patients. This innovative R&D model has enabled us to build a robust and strategically structured portfolio of therapeutic programs, which generally fall into two categories. Some are wholly owned and continue to be developed internally at PureTech. Others are being advanced through our founded entities with external investments after being identified and de-risked by PureTech through key validation and value inflection points. These founded entities provide long-term, non-dilutive capital back to us through our retained equity ownership, as well as our right to certain milestones, royalties, and sub-license income. This model allows us to self-fund our operations and continue fueling our innovation engine. By protecting our balance sheet and minimizing dilution, our hub and spoke R&D model has enabled us to avoid raising capital through public markets for more than seven years, thereby protecting shareholder value. Our unique hub and spoke R&D model that we pioneered offers significant upside potential while shielding investors from downside risk. As shown on the left side of this slide, our balance sheet accounts for almost all of our current market capitalization, which means that nothing else in our portfolio that includes several important components of value are recognized by the market. This value disconnect ought to provide a compelling opportunity for new investors to get into the story. Let's now turn to the right side of the slide for a few examples of key components that make up our intrinsic value. Duprefenadone, our lead wholly-owned program, achieved a major value-validating milestone with the successful completion of the Phase IIb clinical trial in December 2024. The program has the potential to supplant the current standard of care treatments in IPF, treatments that despite limited patient uptake have reached multi-billion dollar annual sales. So this program alone presents a compelling value proposition. LYT 200, our wholly owned program, is a first-in-class monoclonal antibody being developed for the treatment of hematological malignancies and solid tumors. To date, the program has generated robust clinical data supporting its differentiated mechanism. Additionally, we also maintain equity stakes across five public and private founded entities, including our significant holding in Seaport Therapeutics, which raised over $325 billion across two oversubscribed financing rounds in 2024. Beyond the equity stakes, we're also entitled to additional economics across our founded entities, including up to $400 million in potential milestone payments related to Cobin fee sales from Royalty Pharma. 2% royalties on Cobin fee annual sales above $2 billion, and 3% to 5% royalties on certain seaport programs as the inventor. Despite this significant upside potential, our market valuation continues to reflect a heavy discount to intrinsic value, a disconnect we are committed to addressing in 2025. So delivering shareholder value remains our top priority for this year. Our core mission has always been and continues to be to advance life-saving new medicines to positively impact patients with devastating disease and to translate that into meaningful value for the shareholder. While 2024 was particularly defining year for us, it also punctuated more than a decade of scientific innovation, clinical advancement, and financial discipline that has yielded three FDA-approved products and multiple clinical successes. Despite this unparalleled track record, our market capitalization has not consistently reflected the intrinsic value of our business. Over time, we have taken a number of steps in light of this value disconnect to try and bridge the value divide, including share buybacks. We did a tender offer last year, a dual listing on NASDAQ, engaging in significant investor outreach and capital market activities, both in the US and outside the US, and making strategic refinements to our R&D model. We continue to believe there is an opportunity to better align our valuation with the underlying strength of our programs and track record of execution. This has, of course, been recognized by external parties, as highlighted by the cash offer that was recently made public for the business. The board carefully considers all such opportunities that arise to try and address the value disconnect and create value for our shareholders and will continue to do so. Looking ahead, we remain committed to maximizing shareholder return in a way that reflects the maturity of our business, the strength of our assets, and financial position and the opportunity that lay ahead. We will continue to thoughtfully evaluate opportunities to unlock value for our shareholders via a number of pathways. And we'll continue to assess these options, including any potential transactions across our business with a view to addressing the value disconnect in ways that are in the best interest of our shareholders. And we will maintain our focus on capital discipline and strategic execution. deploying resources towards our highest impact programs and preserving our strong balance sheet, particularly in the current macroeconomic environment. In 2025, this strategic focus will translate into several key actions that highlight our capital allocation across the business. One of those areas of capital allocation involve advancing our wholly-owned programs. Coming off the successful Phase IIb trial of duprofenadone in IPF, we are committed to advancing duprofenadone while maintaining capital efficiency. We intend to discuss these results with the FDA before the end of the third quarter of 2025 to align on a potential registration pathway. with the goal of initiating a phase three clinical trial by the end of this year. We anticipate providing further guidance later this year following the finalization of the trial design and the FDA interactions. While we don't intend to fully fund a Phase III trial on our own, based on historical data from other Phase III IPF studies, we also don't believe our current cash balance would be sufficient to fully fund such a study. We have therefore initiated discussions to explore a range of funding mechanisms, including a potential spin-out of the program into a new founded entity and accessing external equity financing. This would be similar to our approach we took with Corona and Seaport. We also look at project or royalty financing, and strategic partnerships are a combination of these three options to support the program's continued development. We will continue to fund the program in the interim to maintain developed momentum while we seek external funding. In parallel, we continue to support the development of LYT200 through our founded entity, Gallup Oncology. Topline results from the ongoing Phase 1b trial in AML and MDS are expected in Q3 2025 And the patients on the study can elect to remain on treatment given the potential life-saving nature of LYT200. We are pursuing third-party financing to support Gallup Oncology's next phase of growth and will continue to fund the program in the interim to maintain development momentum. We may also launch new founded entities or make additional investments into our existing founded entities when we believe it will preserve or enhance our ownership position and generate long-term value. Initial expenditures associated with any new innovation and sourcing activities would be relatively low. And finally, while our primary focus remains on scientific and operational execution, we recognize the importance of direct capital returns to the shareholders to help address the value disconnect to a certain extent. Therefore, the board may evaluate additional capital return opportunities in the future as part of our broad strategy to maximize shareholder value. Our ability to deliver long-term value is driven by six core components. Our strong balance sheet, our wholly owned programs, our equity stakes in our founded entities, future revenue stream from royalties and milestones, capital returns to shareholders, and most importantly, our exceptional team that's driving the innovation forward. Our capital-efficient R&D model has been tested and proven over the last decade, enabling us to protect our balance sheet while maintaining strategic flexibility in a volatile market environment. PureTech offers a compelling investment opportunity, especially given this significant value disconnect, where the diversified risk profile and the various components of value provide downside protection while the upside potential is really uncapped. I remain confident in our ability to continue building value through disciplined execution and strategic agility. With that, I'd like to now turn the call over to our co-founder and president, Dr. Eric Elenko, who will walk us through our key programs and recent clinical progress. Eric?

Thank you, Bharat. We're very excited about the progress across our portfolio. And today, I'll highlight our wholly owned programs and the value they represent for both patients and shareholders. Let's start with Duprevendone, which we're developing as a potential new treatment for IPF. For those less familiar, IPF is a rare, progressive, and fatal lung disease that affects more than 232,000 people in the US and the EU5 countries, with a median survival of just two to five years after diagnosis. Despite generating peak annual revenues in the billions of dollars, the current standard of care treatments only modestly slow lung function decline. Their effectiveness is limited by tolerability challenges at higher doses, which creates a tolerability ceiling, preventing patients from reaching dosing levels that could more meaningfully improve outcomes. This leads to suboptimal efficacy, reduced patient uptake, and lack of adherence. Importantly, in the U.S., only one in four people living with IPF has ever been treated with either FDA-approved therapeutic. There is an urgent need for better treatment options that can deliver meaningful disease management without compromising tolerability. Our Duprefendone program is deuterium-modified form of perfendone. a molecule that is strategically engineered to improve the stability of its bonds without changing the overall pharmacology. With this targeted change, Duprefendone retains the clinically validated efficacy of Profendone while offering a differentiated and more favorable tolerability profile. We believe Duprefendone has the potential to become standard of care in IPF. In our successful Phase IIb trial, from which top line results were shared in December, Duprefendone demonstrated the potential to stabilize lung function decline over at least 26 weeks without sacrificing tolerability. Importantly, the Duprefendone 825 milligrams three times a day, or TID arm, had an effect size compared to placebo that was 50% greater than that seen with Profendone. Additionally, preliminary pharmacokinetic results indicate that duprofenone 825 mg TID achieved about a 50% higher exposure than perfendone 801 mg TID, corresponding with the greater efficacy results demonstrated with duprofenone 825 mg TID. I'm also pleased to share for the first time today that as of March 14th, 2025, 140 patients have continued in the open-label extension, and 85 patients have received at least 52 weeks of treatment with duprofendone. Preliminary data from those receiving Duprefendone 825 mg CID indicate the significant slowing of lung function decline observed in Part A of the trial has been sustained through 52 weeks of treatment, supporting the durability of the treatment effect with this dose and its potential to stabilize lung function decline over time. Detailed OLE results will be presented in an upcoming scientific forum. These results are unprecedented, especially for a monotherapy. And to our knowledge, this is an achievement unmatched by any other investigational IPF therapeutic to date. Based on the strength of our data, Duprevendone has the potential to offer benefits to three patient segments. the subgroup of those currently on treatment, those who discontinued due to side effects, and those who never start treatment at all with currently available options. by demonstrating a meaningful improvement in lung function decline over six months and the potential for stabilization without compromising tolerability. Duprefendone has potential to become a next generation IPF treatment by pushing for levels of efficacy that have not been possible for the past 10 plus years and reach far more patients than today's therapies and to do so in a way that supports sustained disease management. We believe Duprevendone represents a sizable commercial opportunity with a total addressable market, or TAM, that continues to expand. The IPF market size was valued at approximately 5 billion in 2024. With increased disease awareness, early diagnosis, and the availability of new treatment options, the market is expected to grow to nearly 10 billion a year by 2033. With its highly differentiated efficacy and safety profile, duprofenone has blockbuster commercial potential in IPF, with additional upside in other interstitial lung diseases, or ILDs, such as progressive pulmonary fibrosis, or PPF, while significantly enhancing patient impact. There remains a clear need for better treatment options in IPF. And based on the data to date, we believe duprefendone has potential to become next generation standard of care. We'll present additional details from the phase two data at the American Thoracic Society International Conference this May. We also intend to discuss these results with the FDA before the end of the third quarter of 2025 to align on a potential registration pathway with the goal of initiating a phase three trial by the end of the year. We anticipate providing further guidance later this year, following the finalization of the trial design and FDA interactions. The next program I'll highlight today is LYT200, our wholly-owned oncology program being advanced by our founded entity, Gallup Oncology. We're taking a differentiated approach to cancer treatment by targeting the pro-tumor mechanisms of galactin-9 and acute myeloid leukemia, or AML, and high-risk myelodysplastic syndrome, or MDS, and head and neck cancers. The FDA has granted orphan and fast track designation for LYT200 and AML, as well as fast track designation in head and neck cancers, reinforcing the urgency and potential impact of this program. Both preclinical and human data underscored the importance of colectin-9 as a potent oncogenic driver and immunosuppressive protein, with LYT200 demonstrating direct cytotoxic anti-leukemic effects through multiple mechanisms, as well as anti-tumor activity. We're very encouraged by the clinical data we've generated to date across our LYT200 trials. On the left of this slide is new interim data from our ongoing Phase 1b trial in AML and high-risk MDS, evaluating LYT200 as a monotherapy in combination with venetoclax and hypomethylating agents. At a high level, LY2200 has shown a favorable tolerability profile across both arms and all dose levels with no dose-limiting toxicities, as well as evidence of clinical efficacy, hematological improvement, and sustained disease management. We last shared a detailed update on this trial at the American Society of Hematology annual meeting in December, noting that the combination arm had achieved two complete responses at that time. Today, I'm pleased to share that as of April 28th, we have seen four additional complete responses in this arm, bringing the total to six. I want to remind you that this trial is being conducted in a heavily pretreated relapsed refractory AML MDS population whose time progression tends to be less than one month and whose overall survival average is 1.7 to 2.4 months with standard of care therapy. We're very pleased with the data generated to date in this indication, which is in desperate need of innovation. And we look forward to sharing top line results from this trial in the third quarter of this year. On the right of the slide is something we're also sharing for the first time today. Top line data from the recently completed FACE1B trial in relapsed refractory solid tumors, including head and neck cancers. This study evaluated LYT200 both as a monotherapy and in combination with tizolizumab, and across all cohorts, LYT200 demonstrated a favorable safety profile, along with disease control and early signs of efficacy. Together, these data highlight the broad potential of LYT200 across both hematological malignancies and solid tumors. As we look ahead, we expect 2025 to be another catalyst-rich year across our wholly-owned and founded entity programs, including the phase three initiation of duprofenone IPF and phase one pre-redoubt of LYT200 and AML, to name a few. We are proud that our efficient and proven hub and spoke model has enabled us to maintain a strong financial position, even in a volatile market environment, as we remain steadfast in our mission to deliver life-changing medicines. With that, I'll turn it back to Bharat for a recap of our 2024 financial results and closing remarks.

Thanks, Eric. I'm pleased to report that PureTech's cash position remains strong, reflecting our business model, track record of clinical success, and commitment to financial discipline. At the PureTech level, we ended 2024 with cash, cash equivalents, and short-term investments of $366.8 million, compared to $326 million at the end of 2023. On a consolidated basis, our cash equivalents and short-term investments were $367.3 million at the end of 2024, compared to $327.1 million at the end of 2023. At the PureTech level, as of March 31, 2025, we held unaudited cash, cash equivalents, and short-term investments of $339.1 million. On a consolidated basis, our cash, cash equivalents, and short-term investments were $339.5 million. Based on our existing financial assets as of December 31st, 2024, we expect our operational runway into at least 2027. Our revenues are mostly driven by milestone-based payments and royalties from license agreements, as well as grants, and are expected to continue to fluctuate from year to year. On a consolidated basis, our revenue in 2024 was $4.8 million, compared to $3.3 million in 2023. We reported a lower 224 operating loss of $136.1 million compared to $146.2 million in 2023. This was largely due to a decrease in R&D expenses driven by the completion of duprofenadone phase 2B clinical trial, development of Glyph platform candidates now being advanced by our founded entity, Seaport Therapeutics, as well as deconsolidation of Seaport. The decrease in R&D expenses is partially offset by an increase in G&A expenses that was largely driven by non-cash stock-based compensation expenses for new stock awards granted to founders, directors, executives, and employees of Seaport Therapeutics in 2024 prior to its deconsolidation. On a consolidated basis, we reported a net income of $27.8 million for 2024 compared to a net loss of $66.6 million for 2023. This was largely due to a $151.8 million gain that was recognized upon the deconsolidation of seaport coupled with the decrease in operating loss driven by the decrease in R&D expenses mentioned earlier. I am pleased that our balance sheet remains strong. We are committed to maintaining financial discipline by allocating capital efficiently to high-impact programs while actively pursuing external funding opportunities. This measured approach allows us to protect our balance sheet and preserve strategic flexibility even in today's volatile market environment. In closing, I'd like to thank the patients, caregivers, advocates, clinicians, and partners. We are deeply grateful for the engagement, participation, and belief you have placed in us and our team. I would also like to extend a sincere thank you to every member of the PureTech team, including our board of directors and advisors for their invaluable contributions to our work and culture. What we have accomplished together is both rare and highly meaningful. Finally, I'd like to thank our shareholders for continuing to support our journey to bring new classes of medicines to patients in need. We value our recent and continued engagement and your feedback as we remain steadfast in our commitment to maximizing positive patient impact and value for shareholders. Your trust and support have been essential to our journey, especially over the past year as I stepped into the role of the CEO. I'm proud of the progress we have made, and we remain focused on advancing our science to improve the lives of the patients. Thank you.