PureTech Health plc

Hello everyone, and thank you for joining the PureTech Health 2025 Half Year Earnings webcast. My name is Sammy and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue. I'd now like to hand over to your host, Alison Talbot, Senior Vice President of Communications to begin. Please go ahead, Alison.

Thank you, everyone, for joining us for PureTech's 2025 Half-Year Results Webcast. Our half-year report was made available this morning and filed with the FEC. You can find the materials on the Investors page at puretechhealth.com. I'm joined today by members of our Senior Management Team, Robert Lyne, Interim Chief Executive Officer, Eric Alenko, Co-Founder and President, Chip Sherwood, General Counsel, and Michael Inbar, Chief Accounting Officer. We're also pleased to welcome Dr. Sven Deslas, and Luver Greenwood, who are leading our newest founded entities, Thalia Therapeutics and Gallup Oncology. Before we begin, 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 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 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.peertechhealth.com and in our SEC filing. With that, I'll turn the call over to Rob, our Interim Chief Executive Officer.

Thank you very much, Alison, and thank you, everybody, for joining today. We appreciate you taking the time. For those of you who are new to PureTech, just as a bit of a quick introduction, we are a Boston-based LSE-listed biotherapeutics company with a hub-and-spoke model developing new medicines for patients. We entered 2025 with significant momentum in terms of our clinical progress, and also this continued through the first half of the year as we continued to release further data from our lead program, Gupafenadone LYT100, which we'll talk about more later in this presentation. We see this clinical progress as underscoring the strength of our portfolio and also demonstrating the effectiveness of our business model. In the presentation today, I'm going to be outlining the priorities that we have for the remainder of the year, how we're positioned to deliver long-term value for both patients, but also how we're going to be delivering value for our shareholders. So here we're setting out on this slide three key strategic pillars that we are prioritizing and focusing on as we move the business forward. At the core of our business is developing new treatments for patients. This is still absolutely the fundamental part of what we do as a business. We're looking at moving these programs forward with operational discipline, but also patient-centered urgency. And that reflects the fact that we look to treat new diseases with new treatments where there's very high end need. We're also looking as we go forward to strengthen our engagement with UK capital markets. And this we're going to be doing through a renewed focus on our LSE listings. We're very grateful to our UK shareholder base who've been with us in many cases since the IPO, and we want to ensure that we're continuing to work to deliver for those shareholders. As part of this, we're announcing today that we're going to be appointing up to two new non-executive directors to the board going forward, and we will be looking to ensure that there is UK capital markets expertise in those appointments so that we can strengthen the board in that way. The third pillar that we're focusing on as we look at strategic execution going forward is our disciplined capital allocation approach. This is a big advantage of the model that we have through the hub and spoke development of assets. What this means in practice is that we can take assets at an early stage, deploy modest amounts of capital, perform killer experiments to see whether really we think that there is a potential drug there or not, and discontinue early if we don't see promising results. What it also allows us to do is to develop and deploy significant capital into areas where we think there is the potential for a new exciting treatment that will have a big impact for patients, but also deliver significant financial rewards for PureTech. This is best exemplified by Carina Therapeutics, which many of you will be familiar with, where we allocated only $18.5 million of capital spend to bring that program forward. It was spun out into a separate entity and later floated on NASDAQ, raised significant external capital there. and successfully took its asset CarXT through to approval, which is now being marketed as Cabenzi for the treatment of schizophrenia. And that was a significant patient success for patients, but also a significant financial success So that is the disciplined capital allocation approach that we look for as we operate our model, and we're looking to repeat that pattern with our latest founded entities. We'll be talking about the three key founded entities in this presentation, Seaport Therapeutics, Gallup Oncology, and our most recent founded entity of Thalia Therapeutics. On this slide now, we've got an opportunity to look at our current portfolio and value for shareholders. As many will be aware, we've had some management changes at PureTech in the recent weeks. I was asked by the board to step into the role of interim CEO. We also had an interim chair appointment following the departure of our previous chair. One opportunity this gave us was for Sharon Barbalui, the interim chair, and myself to meet with a number of shareholders. listen to our shareholders, understand their views on PureTech and what they wanted to see from us in terms of helping both existing shareholders but also prospective shareholders understand what we see as the really hugely exciting programs of value within PureTech. So to try and address this, we are taking the opportunity today to present our core components of value slightly differently from how we have done in the past. We really see that at the moment we have three core founded entities, which we think have the potential to deliver a very significant upside financially to PureTech and our shareholders, but also to deliver really exciting new treatments for patients. So those three founded entities that we are now considering core are set out here, Solea Therapeutics, Gallup Oncology and Seaport Therapeutics. These are all founded entities which began as programs within PureTech, where we either developed the assets ourselves or in-licensed them and worked on them, de-risked them, took them through clinical trials ourselves, and then reached a point where, depending on the maturity of the asset, we decided it was right to spin them out. So, Seaport Therapeutics, that was spun out last year. We have often had many questions on Seaport about the post-money valuation of that business. We still own just over 35% of the equity in Seaport Therapeutics. We also have tiered royalties on the drug products within that company because they were developed within PureTech originally. In terms of the valuation of Seaport, we have a valuation in our account, which is available publicly, but we have been asked in the past about the Series B valuation, and so we thought it would be helpful today to confirm that there was a $733 million post-money valuation on Seaport at the Series B, so a fairly recent financing, which was led by absolutely top-tier, validated venture capital investors. We also have two of our newest founded entities here, Gallup Oncology and Solaire Therapeutics, which are also now being formed into separate businesses such that they can also attract external funding as they move their programs forward. This is the example of our hub and spoke model in action, where we are seeking to leverage external capital to continue those assets whilst retaining significant economics. Each of these founded entities is 100% owned by PureTech at the moment. We are seeking external capital there. That will enable us to shift the future R&D and cost of those programs off the balance sheet of PureTech into these separate entities, such that they can leverage external capital to take those programs forward. I'm delighted that we're being joined by the leaders of those two programs, Sven Dittles and Luba Greenwood, who are going to be presenting later on. There are some other legacy assets which we won't be focusing on so much today. We feel that while those assets have been doing important work and they have the potential for significant upside, we don't necessarily at the moment feel that they are making material contributions to the value of the business. And therefore, we feel it is more helpful for shareholders if we focus on the three that we've set out there. So as well as those core components of value from the founded entities, we also have royalty and master income relating to Cabenzi. Again, this is a great advantage of our model, which is that because the drug was developed internally at PureTech, we have these non-dilutive economics which continue to return value into PureTech, despite the fact that the asset was spun out into a separate entity and then actually acquired delivering an equity return to us. So we have 2% on royalties of Cabenzi sales above $2 billion annually. And then also we're entitled to certain regulatory and commercial milestones on Cabenzi. We've been listening to shareholders very carefully about their feedback on the Cabenzi economics. We have repeatedly been asked whether we can give some indications around potential value by reference to third party analyst forecasts. We'll be talking about that today. And we've taken the opportunity to to do some indicative modeling around what those economics could look like against consensus analyst forecasts. And it's coming out as a value of around $300 million over time. And we'll talk a little bit more about that later on. And then finally, a key element because of the huge success we've had in terms of generating value historically, We are in the fortunate position of having a very healthy balance sheet. We still have just under $320 million of cash at the PureTech level. We haven't had to raise money for many years. We've become a self-funding business, which has meant we haven't had to dilute our shareholders. And we're in the position of having operational runway well into 2028. And obviously, that can extend further as standard entities spin out and reduce the R&D and cash burn on the PureTech hub. So, here we have a slide which sets out the potential forecast for the economics around cadency. So, as I mentioned in the prior slide, We've been listening very carefully to our shareholders around how we can help be as transparent as possible about the potential value that we see within PureTech. And one comment we have repeatedly is a request to give some more clarity around the potential value of these future economics around Kabemsi. We do have commercial confidentiality around some of these payments. What we thought would be helpful would be to give the current analyst forecasts for Coventry sales. We get these from independent bank analysts that cover Bristol-Miles Squibb, the large farmer which bought Karuna. There's a number of very high quality independent analysts who are giving forecasts of what the Coventry sales are likely to look like up to 2033, which is when our royalty period ends. What we've set out here is the range of the low to high and taken a simple average of those forecasts and then modelled out what that would look like, both in terms of the 2% royalty above 2 billion annual sales, but also milestones that would be triggered. This is not our internal value of the economics here, but we thought it would be helpful to provide a third-party view neutrally based upon these consensus-based forecasts from the analysts. We think that there is real significant upside from here. It's worth noting that these forecasts are very often based in some cases just around the existing approval for schizophrenia. And there is a pivotal trial readout coming up at the end of the year in Alzheimer's psychosis. And if that is positive, then that has the potential to significantly increase potential sales, particularly in the later period. We hope that this is something that shareholders will find helpful in seeing this indicative projection as they look at the significant value that we see within PureTech. So we're turning now to Seaport Therapeutics. This is the first of the three core founded entities that we wanted to talk about today. We see this as another successful example of the discipline innovation model that we've adopted and which has produced Seaport Therapeutics. So this is a clinical stage by a pharmaceutical company, and it's focused on advancing novel neuropsychiatric medicines. Similar to the setup you'll have seen in Karuna, we've maintained actually meaningful economic interest in Seaport through the equity position. As you see, we're a very significant shareholder at 35.1%, but we also have rights to tiered royalties, milestone sub-license payments around the drugs that Seaport is advancing. We see that as a key advantage of the PureTech model. Seaport was founded in April 2024. Since then, it's raised over $325 million But crucially for us, this money has been raised from top tier life science investors. So this includes the likes of Arch, Third Rock, Sofinova, General Atlantic, T. Rowe Price and others. That we see is an important validation of Seaport. And it was great to see that so many really high quality investors were as excited about the opportunity here as we were. Another key validation point here is that CPORT is led by a really high quality seasoned leadership team. And crucially, that has actually a track record of success in neuropsychiatric drug development and in bringing those new medicines to patients. So, you know, the key individuals here at Seaport, Daphne Zohar, who many shareholders will know, so former CEO of PureTech. She moved into the founder CEO role at Seaport last year. She has been joined by Dr. Steve Paul. He's another founder of Seaport. He was the former CEO and CFO at Karuna, which was spun out of PureTech and developed Keventsy. Steve Paul is a former president of the Lady Research Labs, and he, in his career, has been involved in developing many, many important neuropsychiatric medicines, including big blockbuster drugs, which some of you may be familiar with, such as Cymbalta, Zyprexa, and Prozac. So we see this as a crucial part of the value in Steve Paul and also as a great indicator of the potential for huge success with this business. Looking at what Seaport is actually doing at the moment. So they've got a robust pipeline of three novel medicines, which are being progressed. All of these programs that you see here have the potential to become first in class treatments. Crucially, as part of the PureTech model that we've seen with other founded entities, such as Karuna, they're built on mechanisms where we've already seen demonstrated clinical efficacy. But they were held back by an issue that CPORT is now addressing using the proprietary Glyph platform. The Glyph platform was initially advanced at PureTech. It's really quite an elegant solution. And what it does is it allows one to cloak drugs in such a way that the body recognizes them as dietary fats. Now, the advantage of doing this is that one can substantially reduce the side effects, often including liver stress, which enable drugs that would otherwise only be delivered via infusion to be taken orally. And this can have a significant impact on the attractiveness of these drugs. This is an area of very high interest for both pharma companies and investors, many of whom are on the hunt for what could be the next obesity-like opportunity in medicine, given the potential market opportunity here. So we are really excited by Seaport Therapeutics and are looking forward to keeping you updated on their progress as they move forward. So we now turn to the second of the three core founding entities that we're discussing today. This is Solair Therapeutics. This has been launched in recent weeks under the leadership of Sven Dietlert. I'm very pleased now to introduce Sven, who is going to talk more about Solair.