Strong capital base with PureTech level cash
and cash equivalents of $418.9 million1 and consolidated cash and
cash equivalents of $465.7 million2 as of December 31, 2021
Rapidly progressing pipeline of 27 therapeutics
and therapeutic candidates, across Wholly Owned and Founded Entity
programs, with 11 clinical trials initiated and 6 clinical trial
readouts in 2021
Founded Entities continuing to mature and
generate value for PureTech, with three now publicly traded and a
fourth soon expected to go public
Reviewing capital allocation strategy to drive
additional value to shareholders with potential returns of capital
through various mechanisms
Company to host a webcast and conference call
today at 9:00am EDT / 2:00pm BST
PureTech Health plc (Nasdaq: PRTC, LSE: PRTC) ("PureTech" or the
"Company"), a clinical-stage biotherapeutics company dedicated to
discovering, developing and commercializing highly differentiated
medicines for devastating diseases, today announced its results for
the year ended December 31, 2021 as well as its cash balance as of
the first quarter ended March 31, 2022. The following information
represents select highlights from the full UK annual report and
accounts, except as noted herein, a portion of which will be filed
as an exhibit to PureTech’s Annual Report on Form 20-F for the year
ended December 31, 2021 to be filed with the United States
Securities and Exchange Commission (the “SEC”) and is also
available at
https://investors.puretechhealth.com/financials-filings/reports.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20220425005597/en/
PureTech announces Annual Results for
year ended December 31, 2021. Company to host a webcast and
conference call at 9:00am EDT on April 26, 2022. (Graphic: Business
Wire)
Webcast and conference call details
Members of the PureTech Management Team will host a conference
call at 9:00am EDT / 2:00pm BST today, April 26, to discuss these
results. A live webcast and presentation slides will be available
on the investors section of PureTech’s website under the Events and
Presentations tab. To join by phone, please dial:
United Kingdom: 0800 640 6441 United Kingdom
(Local): 020 3936 2999 United States: 1 855 9796 654
United States (Local): 1 646 664 1960 All other
locations: +44 20 3936 2999 Access code: 942895
For those unable to listen to the call live, a replay will be
available on the PureTech website.
Commenting on the annual results, Daphne Zohar, Founder and
Chief Executive Officer of PureTech said:
“I’m very proud of what our team has achieved in 2021. The
collaboration and commitment to discovering and developing highly
differentiated medicines for devastating diseases where novel
treatment options are greatly needed, has resulted in another year
full of important accomplishments for PureTech.
“Across our Wholly Owned and Founded Entity programs, we now
have 27 therapeutics and therapeutic candidates advancing towards
clinical, regulatory and commercial milestones. Twenty of these sit
within our Founded Entities where we already have two products that
have been cleared for marketing by the United States Food and Drug
Administration (the “FDA”) and granted marketing authorization in
the European Economic Area – Gelesis' Plenity®3 and Akili's
EndeavorRx®4. Thirteen of these therapeutic candidates are clinical
stage and we look forward to multiple data readouts in the coming
year, including data from Karuna’s Phase 3 EMERGENT-2 trial
expected in mid-2022 as well data from Vor Bio’s Phase 1/2a
clinical trial of VOR33, which is expected in the second half of
2022.
“The other seven therapeutic candidates are being developed
within our rapidly advancing and growing Wholly Owned Pipeline,
which is curated around our focus on immunological, fibrotic and
lymphatic system disorders and builds upon pharmacology that has
been validated in humans where our key innovations enable potential
unlocking of the broad potential of these therapies. Across our
Wholly Owned Programs, we generated significant fundamental value
and achieved a number of clinical and business milestones towards
our mission of developing transformational medicines for millions
of people who have long struggled to find effective treatments. In
2021 alone, we initiated five clinical studies, with four readouts
thus far and one that is ongoing.
“Importantly, we are in the fortunate position to be growing our
business that is generating non-dilutive capital and we do not
currently have to look at public equity markets to raise capital.
As such, we have a strong financial position that will allow us to
build on the momentum of 2021 and deliver on value driving
milestones. In 2021, our consolidated business ended the year with
a capital base of $465.7 million, helped by generating non-dilutive
cash from the Founded Entities, whilst maintaining significant
equity positions, royalty streams and milestones that position us
to capture future value. Furthermore, our self-sustaining Founded
Entities are set to continue an exciting period of strategic
execution, having collectively raised an aggregate of $1.9 billion
in recent years, 94% of which came from outside parties.
“Based on the strong foundation we have built to support
PureTech’s future growth, our Board and senior leadership team have
been considering various approaches to drive additional value for
our shareholders, including reviewing a capital allocation strategy
that balances investment in the continued growth of our business
with potential returns of capital to shareholders. As we evaluate
our capital allocation strategy, we intend to engage with
shareholders to understand preferences and market perspectives with
respect to certain potential near term activities related to the
implementation of this strategy.
“We look to the coming months and years with excitement and
optimism as we continue to create significant value from innovative
science and develop therapeutics that we sincerely believe have the
potential to significantly improve treatment outcomes for patients
all over the world.”
Continued advancement and growth of our Wholly Owned
Programs5
Our team, network and insights and expertise in immunology and
therapeutic development have enabled the rapid advancement and
growth of our Wholly Owned Programs. Focused on immunological,
fibrotic and lymphatic system disorders, our Wholly Owned Pipeline
builds upon validated biologic pathways and proven pharmacology,
and currently consists of seven therapeutic candidates, including
LYT-100 (deupirfenidone), a clinical therapeutic candidate that we
are pursuing for the potential treatment of a range of conditions
involving inflammation and fibrosis and disorders of lymphatic
flow, LYT-200, a clinical immuno-oncology fully human monoclonal
antibody candidate targeting a foundational immunosuppressive
protein, galectin-9, that we are developing for the potential
treatment of difficult‑to‑treat solid tumors, LYT-210, a
preclinical immuno-oncology therapeutic candidate targeting
immunomodulatory gamma delta-1 T cells that we are developing for a
range of cancer indications, LYT‑300 (oral allopregnanolone), a
clinical therapeutic candidate that we are developing for a range
of neurological and neuropsychological conditions, which was
generated from our Glyph™ lymphatic targeting platform, and three
therapeutic candidates generated from Alivio™, our technology
platform that enables targeting of therapeutics locally to the
sites of inflammation while minimizing systemic exposure, for the
potential treatment of a range of chronic and acute inflammatory
disorders: LYT-510 (oral immunosuppressant molecule), in
development for the potential treatment of inflammatory bowel
disease (IBD) and chronic pouchitis, LYT-500 (oral combination of
two therapeutic agents), in development for IBD, and
LYT-503/IMB-150, which is being advanced as a partnered program as
a potential non-opioid treatment for interstitial cystitis or
bladder pain syndrome (IC/BPS). In addition to these programs, we
are advancing Orasome™ and other Technology Platforms for the oral
administration of therapeutics. Finally, we are pursuing our
meningeal lymphatics research program to develop potential
treatments for neurodegenerative and neuroinflammatory diseases. In
addition to programs originating from these innovative platforms to
fuel our pipeline, we also continually identify external
clinical-stage programs that are highly differentiated and
complementary to the immuno‑modulation focus of our Wholly Owned
Pipeline. Key developments and progress include the following:
Program Highlights
LYT-100
- In the January 2022 post-period, we were pleased to announce
results from a randomized, double-blind crossover study in healthy
older adults demonstrating that approximately 50% fewer subjects
treated with LYT-100 experienced gastrointestinal (GI)-related
adverse events (AE) compared to subjects treated with pirfenidone
(17.4% vs. 34.0%). Based on these results, additional data
generated from our robust LYT-100 clinical program and recent
regulatory feedback, we intend to advance LYT-100 into late-stage
clinical development for the treatment of idiopathic pulmonary
fibrosis (IPF), beginning with a dose-ranging study evaluating six
months of treatment with LYT-100 with topline results expected by
the end of 2023.
- In 2021, we progressed two Phase 2 clinical trials of LYT-100
including 1) a global, randomized, double-blind, placebo-controlled
Phase 2 trial to evaluate the efficacy, safety and tolerability of
LYT-100-COV in adults with Long COVID6 respiratory complications
and related sequelae and 2) a Phase 2a proof-of-concept study of
LYT-100-LYMPH in patients with breast cancer-related, upper limb
secondary lymphedema. Topline results from the LYT-100-COV trial
are expected in the first half of 2022, and topline results from
the LYT-100-LYMPH trial are expected in 2022.
- In 2021, we also initiated a three-month, open-label extension
of the LYT-100-COV Phase 2 trial in adults with Long COVID
respiratory complications and related sequelae who completed the
first portion of the trial. The primary endpoint of the extension
trial will measure change in distance walked on the six-minute walk
test (6MWT), with secondary endpoints to assess the longer-term
safety and tolerability of LYT-100- COV up to 182 days of
treatment.
- In 2021, we initiated additional clinical studies to further
evaluate the pharmacokinetic (PK), dosing and tolerability of
LYT-100 in healthy volunteers and healthy older adults to inform
the clinical development of LYT-100 across multiple indications.
Results from these studies demonstrated that LYT-100 was
well-tolerated at 824mg TID dosing with low rates of GI AEs that
were comparable to placebo. These results will further inform our
dose-ranging study design in treatment-naïve IPF patients.
- In 2021, we formed a Clinical Advisory Board for IPF and other
progressive fibrosing interstitial lung diseases (PF-ILDs). These
physicians and researchers with deep expertise in the clinical
development of novel therapies in PF-ILDs include Bill Bradford,
M.D., Ph.D., biopharma advisor with broad expertise in drug
development; Vincent Cottin, M.D., Professor of Respiratory
Medicine at Université Claude Bernard Lyon and Coordinator of the
National Coordinating Reference Center for Rare Pulmonary Diseases
at Louis Pradel Hospital, Hospices Civils de Lyon, Lyon, France;
Kevin Flaherty, M.D., Professor at the University of Michigan
specializing in IPF and other ILDs; Toby Maher, M.D., Ph.D.,
Professor of Clinical Medicine and Director of Interstitial Lung
Disease at Keck School of Medicine of the University of Southern
California; Paul Noble, M.D., Chair of the Department of Medicine
at Cedars-Sinai Medical Center and a noted researcher in lung
inflammation and fibrosis; and Marlies Wijsenbeek, M.D., Ph.D.,
pulmonary physician at the Erasmus Medical Center.
- In August 2021, we presented the results of the Phase 1
multiple ascending dose and food effect study of LYT-100 at the
virtual European Respiratory Society (ERS) International Congress.
The results from the study were subsequently published in the
journal Clinical Pharmacology in Drug Development in November
2021.
LYT-200
- In 2021, we progressed the first stage of an adaptive Phase 1/2
clinical trial evaluating LYT-200 (anti-galectin-9 fully human
monoclonal antibody) as a single agent for the potential treatment
of difficult-to-treat solid tumors. In November 2021, we presented
a scientific poster describing the trial at the Society for
Immunotherapy of Cancer (SITC) 36th annual meeting. Topline results
from the Phase 1 portion of the study are expected in the first
half of 2022. Pending these results, we intend to initiate the
Phase 2 expansion cohort portion of the trial, which is designed to
evaluate LYT-200 both as a single agent and/or in combination with
BeiGene’s tislelizumab, an anti-PD-1 monoclonal antibody, or
chemotherapy. The Phase 2 portion of the study is currently planned
to enroll patients with a range of solid tumor types, including
pancreatic cancer and other GI solid tumors. Under the terms of the
clinical trial and supply agreement we entered into with an
affiliate of BeiGene, Ltd. in July 2021, we will maintain control
of the LYT-200 program, including global R&D and commercial
rights, and BeiGene has agreed to supply tislelizumab for use in
combination with LYT-200 for the planned Phase 2 study
cohorts.
- In November 2021, the FDA granted orphan drug designation to
LYT-200 for the treatment of pancreatic cancer. The FDA grants
orphan drug designation to novel drug and biologic products for the
treatment, diagnosis or prevention of conditions affecting fewer
than 200,000 persons in the U.S. Orphan drug designation qualifies
PureTech for incentives under the Orphan Drug Act, including tax
credits for some clinical trials and eligibility for seven years of
market exclusivity in the U.S. if the drug is approved, in addition
to our broad intellectual property coverage which can extend the
exclusivity into 2038.
LYT-210
- In April 2021, we presented a scientific poster detailing
promising preclinical results for LYT-210 (anti-gamma-delta-1 fully
human monoclonal antibody) at the 2021 American Association for
Cancer Research (AACR) Annual Virtual Meeting. The research
demonstrated that LYT-210 is both highly specific and highly
potent, rapidly inducing cell death of immunomodulatory gamma
delta-1 cells, while sparing other T cells, such as cytotoxic gamma
delta T cells, that play important roles in a healthy immune
response.
LYT-300
- In December 2021, we initiated a Phase 1 clinical study of
LYT-300 (oral allopregnanolone), the first therapeutic candidate
generated from our Glyph platform, for the potential treatment of
neurological and neuropsychological conditions. Results from the
study are expected in the second half of 2022 and will be used to
inform the design of possible future studies evaluating LYT-300 in
indications that could include depression, anxiety, sleep
disorders, fragile X tremor-associated syndrome, essential tremor
and epileptic disorders, among others.
Alivio Technology Platform
- In June 2021, we announced the acquisition of the remaining 22%
of outstanding shares in our Founded Entity, Alivio Therapeutics
(“Alivio”). Alivio’s therapeutic candidates, in development for
inflammatory disorders including IBD, have been integrated into our
Wholly Owned Pipeline, and the underlying Alivio technology
platform has been added to our lymphatic and inflammation
platforms.
- The Alivio technology platform has generated three therapeutic
candidates:
- In the 2022 post-period, we nominated a new therapeutic
candidate, LYT-510, to our pipeline. LYT-510 is an
orally-administered therapeutic candidate for the potential
treatment of IBD and chronic pouchitis, which is a rare orphan
disease. We intend to file for regulatory approval to initiate
first-in-human studies at year end 2022 and initiate a clinical
study evaluating LYT-510 as a single agent for the potential
treatment of IBD and chronic pouchitis in early 2023.
- LYT-500 is an orally administered combination of therapeutic
agents in development for IBD. We expect preclinical
proof-of-concept data for LYT-500 in the first half of 2022.
- LYT-503/ IMB-150 is a non-opioid pain candidate being developed
as a partnered program for the potential treatment of IC/BPS. An
Investigational New Drug (“IND”) application is expected to be
filed for LYT-503/IMB-150 in 2022.
Glyph Technology Platform
- In September 2021, preclinical proof-of-concept research
supporting the Glyph technology platform, which showed for the
first time that restoring normal function of the mesenteric
lymphatics may reverse insulin resistance and modify
obesity-associated metabolic disease, was published in Nature
Metabolism. Preclinical proof-of-concept work published in the
Journal of Controlled Release in February 2021 also supported the
platform’s ability to directly target the lymphatic system.
Orasome and Other Technology Platforms for Oral
Administration of Therapeutics
- In 2021, we also progressed versatile and programmable oral
biotherapeutics approaches, such as our Orasome platform, which is
a novel programmable and scalable approach for the oral
administration of nucleic acids and other biologics. We established
preclinical proof-of-concept supporting the platform’s potential to
achieve therapeutic levels of proteins in circulation following the
oral administration of therapeutic protein expression systems. We
expect to generate additional preclinical data, with Orasomes and
other technologies, in 2022.
Meningeal Lymphatics Research Program
- In April 2021, preclinical work supporting our meningeal
lymphatics research program was published in Nature. The research
suggests that restoring lymphatic flow in the brain, either alone
or in combination with passive immunotherapies such as antibodies
directed at amyloid beta, has the potential to address a range of
neurodegenerative diseases including Alzheimer’s and Parkinson’s
diseases and the associated neuroinflammation. The work also
uncovered a link between dysfunctional meningeal lymphatics and
damaging microglia activation in Alzheimer’s disease, which
potentially impairs the efficacy of passive immunotherapies such as
amyloid-beta-targeting antibodies. This suggests another route by
which restoring healthy drainage patterns could improve clinical
outcomes.
Corporate Highlights
- In 2021, we continued to build our clinical development team by
bringing together seasoned experts focused on tackling diseases
with significant unmet medical needs. Julie Krop, M.D., was
appointed as Chief Medical Officer. Dr. Krop oversees all clinical
development, regulatory, CMC and medical affairs for advancing our
Wholly Owned Pipeline. Other additions to our team included Paul
Ford, M.D., Ph.D., SVP of Clinical Development who is primarily
overseeing the overall LYT-100 development program, including for
IPF.
- In the March 2022 post-period, we appointed Sharon Barber‑Lui
to our board of directors as a non‑executive director and as a
member of the Audit Committee. She previously led U.S. Oncology
Portfolio Strategy, Operations and Business Analytics at Merck
& Co. Inc. Ms. Barber-Lui brings extensive experience in
finance, operations, portfolio management and commercialization to
our board of industry, business, and academic leaders.
- In 2021, we remained deeply committed to making progress in our
Environmental, Social and Governance (ESG) program. The second
edition of our ESG report has been published as part of the annual
report and a new ESG webpage has been launched which can be
accessed at investors.puretechhealth.com.
Capital Allocation Strategy
- Based on the strong foundation we have built to support
PureTech’s future growth, our Board and senior leadership team have
been considering various approaches to drive additional value for
our shareholders, including reviewing a capital allocation strategy
that balances investment in the continued growth of our business
with potential returns of capital to shareholders. Our strategy
includes the maintenance of a minimum of three years of cash on
hand to fund the continued development and expansion of our Wholly
Owned Pipeline and strategic investment in our Founded Entities.
Our cash runway is expected into the first quarter of 2025.
- In the future, when appropriate to do so, we will also aim to
return a portion of the proceeds we may generate from either (1)
the monetization of equity interests in our Founded Entities, (2)
the receipt of potential royalty and sublicense income, and/or (3)
other sources of proceeds such as strategic partnerships, to
shareholders through various mechanisms, including share buybacks
or special dividends.
- We may augment this approach should opportunities arise to use
available funds for strategic growth opportunities, such as
in-licensing of therapeutic candidates or intellectual property,
asset purchases, or strategic M&A, to the extent such
opportunities are aligned with our long-term strategic vision.
- As we evaluate our capital allocation strategy, we intend to
engage with shareholders to understand preferences and market
perspectives with respect to certain potential near-term activities
related to the implementation of this capital allocation strategy.
Any plan to return capital to shareholders will be subject to
market and industry conditions at the time, the approval of our
Board of Directors, restrictions under the law and other corporate
considerations.
Financial Highlights
- In 2021, PureTech sold 1,750,000 shares of Karuna common stock
for cash consideration of approximately $218 million in two
separate transactions in February and November.
- PureTech Level Cash and Cash Equivalents were $418.9 million as
of December 31, 20211. We reiterated our cash runway guidance into
the first quarter of 2025.
- Consolidated cash and cash equivalents, which includes cash
held at the PureTech level and at Controlled Founded Entities, were
$465.7 million as of December 31, 20212.
- PureTech’s Founded Entities raised $731.9 million in 20217 and
approximately an additional $105 million in the 2022 post-period,
almost all of which came from third parties.
- PureTech Level Cash and Cash Equivalents were $377.9 million,
based on consolidated cash and cash equivalents of $413.2 million
as of March 31, 20228, with spend largely attributed to the
successful progression of Wholly Owned Programs into more advanced
stages of development.
PureTech’s Founded Entities matured over the year, with
significant clinical and financial momentum9
PureTech’s Founded Entities have made significant progress
advancing 20 therapeutics and therapeutic candidates, of which two
have been cleared for marketing by the FDA and granted marketing
authorization in the European Economic Area and 13 are clinical
stage. Key developments included the following:
- Karuna Therapeutics, Inc. (PureTech ownership as of February
15, 2022: 5.6%; We also are eligible to receive payments under our
license agreement, including sublicense payments and royalties on
net sales)
- In November 2021, Karuna announced further updates to the
EMERGENT program’s four ongoing Phase 3 trials, including that
topline data from EMERGENT-2, a five-week inpatient trial
evaluating the efficacy and safety of KarXT compared to placebo in
246 adults with schizophrenia in the U.S., are expected in
mid-2022. EMERGENT-3, a five-week inpatient trial evaluating the
efficacy and safety of KarXT compared to placebo in 246 adults with
schizophrenia in the U.S. and Ukraine, is underway. EMERGENT-4, a
52-week outpatient, open-label extension trial evaluating the
long-term safety and tolerability of KarXT in 350 adults with
schizophrenia who completed EMERGENT-2 or EMERGENT-3, and
EMERGENT-5, a 52-week outpatient, open-label trial evaluating the
long-term safety and tolerability of KarXT in adults with
schizophrenia who were not enrolled in EMERGENT-2 or EMERGENT-3,
are also underway.
- In 2021, Karuna initiated the Phase 3 ARISE trial evaluating
the safety and efficacy of KarXT compared to placebo as an
adjunctive treatment in adults with schizophrenia who experience an
inadequate response to current standard of care.
- In June 2021, Karuna announced data from its completed Phase 1b
trial evaluating the safety and tolerability of KarXT in healthy
elderly volunteers, which followed a preliminary analysis of data
from the first two cohorts in the trial announced earlier this
year. The results suggest that KarXT can be administered to elderly
volunteers at doses which achieve xanomeline blood levels similar
to those reported in the Phase 2 EMERGENT-1 trial in adults with
schizophrenia while maintaining a favorable tolerability profile.
Data from the trial also suggest that a lower dose ratio of
trospium to xanomeline, compared to the ratios used in Phase 1
trials in healthy adult volunteers and in the Phase 2 EMERGENT-1
trial evaluating KarXT in adults with schizophrenia, was better
tolerated by healthy elderly volunteers.
- In November 2021, Karuna announced the evaluation of KarXT for
the treatment of dementia-related psychosis (DRP) will initially
focus on psychosis in Alzheimer’s disease, the most common subtype
of DRP. The initial focus on the Alzheimer’s disease dementia
subtype reflects various strategic development, regulatory and
commercial considerations, and Karuna remains interested in
exploring KarXT in other dementia subtypes in future development
programs. Karuna plans to initiate a Phase 3 program in
mid-2022.
- In late 2021, Karuna initiated a Phase 1 trial of an advanced
formulation of KarXT as it continued to advance its earlier
pipeline of muscarinic receptor targeted programs and novel
formulations of KarXT. Karuna is also advancing its artificial
intelligence-based target agnostic discovery program for treating
psychiatric and neurological conditions.
- In November 2021, Karuna announced its entry into an exclusive
license agreement with Zai Lab for the development, manufacturing
and commercialization of KarXT in Greater China, including mainland
China, Hong Kong, Macau and Taiwan. Under the terms of the
agreement, Karuna received a $35.0 million upfront payment and is
eligible to receive certain development and regulatory milestone
and sales milestone payments, as well as royalties based on annual
net sales of KarXT in Greater China.
- In February 2021, Karuna announced that results from the
EMERGENT-1 Phase 2 clinical trial evaluating KarXT for the
treatment of schizophrenia were published in the New England
Journal of Medicine (NEJM).
- In March 2021, Karuna completed a follow-on public offering of
its common stock, from which it received net proceeds of $270.0
million.
- In 2021, PureTech sold 1,750,000 shares of Karuna common stock
for cash consideration of approximately $218 million in two
separate transactions in February and November.
- Akili Interactive Labs, Inc. (PureTech ownership as of December
31, 2021: 22.3%)
- In the January 2022 post-period, Akili entered into a
definitive agreement to become publicly traded via a merger with
Social Capital Suvretta Holdings Corp. I (“SCS”) (Nasdaq: DNAA), a
special purpose acquisition company. The transaction is expected to
close in mid-2022, after which Akili will be listed on the Nasdaq
stock market under the new ticker symbol “AKLI”. The transaction
implies a post-money equity value of the combined company of up to
approximately $1 billion and is expected to deliver up to $412
million in gross cash proceeds to Akili, including the contribution
of up to $250 million of cash held in SCS’s trust account and $162
million from PIPE investors at $10 per share.
- In May 2021, Akili announced the closing of a $160 million
combined equity and debt financing. With the completion of the
oversubscribed Series D financing, the funding is expected to
accelerate commercialization of EndeavorRx®4, enable expansion of
core technologies to treat acute and chronic cognitive disorders
and drive further research and development of potential new digital
therapeutics.
- In March 2021, the full data from a multi-site open-label study
(the STARS Adjunct study) evaluating the impact of EndeavorRx
(AKL-T01) on symptoms and functional impairments in children with
attention-deficit/hyperactivity disorder (ADHD) was published in
Nature Digital Medicine. Statistically significant improvement was
demonstrated in all predetermined endpoints of the study, which
included parent and clinician ratings of children’s ADHD symptoms
and related impairments in daily life.
- In the February 2022 post-period, Akili announced the
publication of full data in the medical journal PLOS ONE from a
single arm, unblinded study conducted by Dr. Elysa Marco at Cortica
Healthcare and Drs. Joaquin Anguera and Courtney Gallen at the
University of California, San Francisco. The study measured
electroencephalography (EEG) data alongside behavioral and clinical
metrics of attention in children with ADHD using AKL-T01
(EndeavorRx). Data from the study show that EndeavorRx treatment
resulted in increased brain activity related to attention function,
as measured by EEG, which correlated with improvements in objective
behavioral measures of attention.
- In September 2021, Akili announced topline results of a Phase 2
study of SDT-001 (Japanese version of AKL-T01), a digital
therapeutic designed to improve measures of attention in children
diagnosed with attention-deficit/hyperactivity disorder (ADHD). The
study, conducted by Akili partner Shionogi & Co., Ltd., was
designed to evaluate the feasibility, safety and efficacy of the
digital therapeutic in children with ADHD and to inform the design
of a potential pivotal study. Results showed the treatment was
well-received by patients and demonstrated improvements in ADHD
inattention symptoms consistent with those seen across previous
studies of AKL-T01.
- In the March 2022 post-period, Akili announced it had been
named to Fast Company’s prestigious list of the World’s Most
Innovative Companies for 2022. This list honors businesses that are
making the biggest impacts on their industries and culture as a
whole and thriving in today’s ever-changing world.
- In July 2021, Akili introduced new gaming features and
functionalities to its EndeavorRx treatment. Akili is releasing
these new gameplay features as it expands its pre-launch activities
to bring EndeavorRx to families and healthcare professionals.
- In April 2021, Akili announced collaborations with Weill
Cornell Medicine, New York-Presbyterian Hospital and Vanderbilt
University Medical Center to evaluate Akili digital therapeutic
AKL-T01 as a treatment for patients with cognitive dysfunction
following COVID-19 (also known as “COVID fog”). Under each
collaboration, Akili will work with research teams at each
institution to conduct two separate randomized, controlled clinical
studies evaluating AKL-T01’s ability to target and improve
cognitive functioning in COVID-19 survivors who have exhibited a
deficit in cognition. Akili expects data from the studies in COVID
fog in the second half of 2022.
- In August 2021, Akili and Australian digital health company
TALi® (ASX:TD1), completed an agreement for Akili to license TALi’s
technology designed to address early childhood attention
impairments. The companies plan to work together to execute
clinical trials of the TALi technology in pediatric ADHD in the
U.S. and pursue FDA regulatory clearance. Under the terms of the
agreement, Akili will lead potential U.S. commercialization and
roll-out.
- In the March 2022 post-period, Akili appointed Jon David as
Chief Product Officer. A 20-year veteran of the games industry, Mr.
David joins Akili to develop and execute the strategic vision of
Akili’s future product pipeline after serving as Vice President and
General Manager at Glu Mobile, acquired in 2021 by Electronic Arts,
where he led the development of both new IP and hit franchises
including Covet Fashion and Diner Dash Adventures. Mr. David also
guided the success of fan-favorite franchises and the launches of
hit titles including Plants vs. Zombies 2 and Plants vs. Zombies
Garden Warfare.
- Gelesis Holdings, Inc. (PureTech ownership as of March 31,
2022: 23.5%; We also are eligible to receive payments under our
license agreement, including sublicense payments and royalties on
net sales)
- In December 2021, Gelesis announced that Plenity® is now
broadly available across the U.S. to adults who meet the
prescription criteria.
- In the January 2022 post-period, Gelesis announced the
completion of its business combination with Capstar Special Purpose
Acquisition Corp. (NYSE: CPSR) (“Capstar”). Gelesis Holdings, Inc.
began trading on the New York Stock Exchange under the ticker
symbol “GLS” on January 14, 2022.
- In January 2022 post-period, Gelesis launched the “Who Said?”
marketing campaign across the U.S., which challenges many long-held
cultural and societal assumptions around weight loss. Plenity’s
multichannel campaign encompasses TV, digital, social and Out of
Home (OOH) to grow awareness of Plenity’s novel approach to weight
management.
- In the March 2022 post-period, Gelesis announced preliminary
results from its broad awareness media campaign, noting that within
the first three weeks, the company saw a 3-fold increase in web
traffic and 3.5-fold increase in the number of individuals seeking
a new prescription compared to previous months when supply was
limited.
- In November 2021, Gelesis’ first commercial-scale manufacturing
line was completed and validated, and the company announced that it
had received a $30 million fully paid pre-order, in addition to the
$10 million pre-order received in January 2021, for its first
commercial product for weight management, Plenity, from Ro, a
leading U.S. direct-to-patient healthcare company.
- In late 2021, both primary endpoints were achieved in the
Gelesis LIGHT-UP study of GS200 in adults with overweight or
obesity who also have prediabetes or type 2 diabetes.
- In November 2021, Gelesis announced a publication in Nature’s
Scientific Reports describing the genesis of the underlying
technology and engineering process for Gelesis’ non-systemic
superabsorbent hydrogels. These new materials were designed to
replicate compositional and mechanical properties of raw
vegetables, and the paper describes their therapeutic approach for
weight management as well as possible future solutions for other
gut-related conditions.
- In May 2021, Gelesis presented a scientific poster at the
American Association of Clinical Endocrinology (AACE) 2021 Annual
Virtual Meeting. The post-hoc analysis showed that treatment for
weight management with Plenity decreased a marker for liver
fibrosis (the NAFLD fibrosis score) compared to placebo.
- In the January 2022 post-period, Gelesis appointed Inogen
Co-Founder and former CFO, Ali Bauerlein, to its Board of Directors
and Audit Committee. Ms. Bauerlein brings success in scaling to
$300M+ revenue in a direct-to-consumer business model and public
company execution as Gelesis plans to scale Plenity to meet growing
consumer demand.
- Vor Bio Inc. (PureTech ownership as of March 4, 2022: 8.6%)
- In February 2021, Vor Bio announced the pricing of its initial
public offering of common stock on the Nasdaq Global Market under
the symbol “VOR”. The aggregate gross proceeds to Vor Bio from the
offering were approximately $203.4 million, before deducting the
underwriting discounts and commissions and other offering expenses
payable by Vor Bio.
- In the March 2022 post-period, Vor Bio announced VCAR33 is now
made up of two programs with different cell sources. The VCAR33
programs are chimeric antigen receptor T (CAR-T) cell therapy
candidates designed to target CD33, a clinically-validated target
for AML. VCAR33AUTO uses autologous cells from each patient, and is
being studied in an ongoing Phase 1/2 clinical trial sponsored by
the National Marrow Donor Program (NMDP) in young adult and
pediatric patients with relapsed/refractory AML in a
bridge-to-transplant study. VCAR33ALLO uses allogeneic healthy
donor-derived cells. Vor Bio also announced it plans to collect
initial data on VOR33 from the VBP101 clinical trial and initial
clinical data from the VCAR33ALLO program prior to IND submission
for the Treatment System following ongoing discussions with the FDA
and alongside improved scientific understanding of the differences
in T-cell sources.
- In September 2021, the FDA granted Fast Track designation to
VOR33, Vor Bio’s lead engineered hematopoietic stem cell (eHSC)
therapeutic candidate for the treatment of acute myeloid leukemia
(AML).
- Vor Bio initiated VBP101,a Phase 1/2a clinical trial of VOR33
for AML patients who currently have limited treatment options and
expects to report VOR33’s initial clinical data in the first half
of 2022.
- In November 2021, Vor Bio announced its first multi-targeted
treatment system comprising VOR33-CLL1 multiplex-edited eHSC
therapy and VCAR33-CLL1 multi-specific CAR-T therapy. Vor Bio
continues to make progress on editing multiple antigens with its
eHSC platform.
- In June 2021, Vor Bio announced the build-out of an in-house
clinical manufacturing facility in Cambridge, Massachusetts in the
same premises as Vor Bio’s current headquarters, to support
flexible manufacturing for the company’s eHSC and CAR-T product
candidate pipeline for patients with blood cancers. Vor Bio
anticipates that the facility will be operational in 2022.
- In July 2021, Vor Bio announced the formation of a
collaboration with Janssen Biotech, Inc. (Janssen), one of the
Janssen Pharmaceutical Companies of Johnson & Johnson. The
agreement was facilitated by Johnson & Johnson Innovation.
Under the terms of the collaboration, Vor Bio will investigate the
combination of these two technologies into a treatment solution,
pairing Vor Bio’s “invisible” eHSC transplant platform with one of
Janssen’s bi-specific antibodies in development for AML. The
collaboration agreement provides that each company retains all
rights and ownership to their respective programs and
platforms.
- In June 2021, Vor Bio entered into a multi-year strategic
collaboration and license agreement with Abound Bio to research
both single- and multi-targeted CAR-T treatments to be used in
combination with Vor Bio’s eHSC platform, with the goal of
generating novel treatment systems for patients fighting AML and
other devastating forms of blood cancer.
- In January 2021, Vor Bio announced that the FDA had accepted
the company’s IND application for VOR33. In May 2021, Vor Bio
announced that it received the Canadian clinical trial application
clearance for VOR33 from Health Canada.
- In June 2021, Vor Bio announced the appointment of Matthew R.
Patterson as Chairman of its Board of Directors. Mr. Patterson
brings nearly 30 years of senior leadership experience in the
research, development and commercialization of innovative
therapeutics, most recently at Audentes Therapeutics, Inc., which
he co-founded and led as the company’s Chief Executive Officer from
its inception in 2012 through its acquisition by Astellas Pharma
Inc. in January 2020.
- Vedanta Biosciences, Inc. (PureTech ownership as of December
31, 2021: 41.4%)
- In October 2021, Vedanta announced that its Phase 2 clinical
trial of VE303, an orally administered investigational live
biotherapeutic product (LBP) in development for the prevention of
recurrent C. difficile infection (CDI) in high-risk patients, met
its primary endpoint of preventing disease recurrence through Week
8. VE303 achieved a 31.7% absolute risk reduction in rate of
recurrence when compared with placebo, representing a greater than
80% reduction in the odds of a recurrence. This is believed to be
the most advanced clinical trial of an investigational drug based
on a rationally defined bacterial consortium, a microbiome-based
therapeutic approach that delivers orally administered candidates
of precisely known composition that can be manufactured with
pharmaceutical-grade consistency. Based on the Phase 2 data, the
Biomedical Advanced Research and Development Authority (BARDA)
exercised its first contract option for additional funding of $23.8
million, pursuant to its existing 2020 contract with Vedanta, to
support a planned Phase 3 clinical trial of VE303.
- In January 2021, Vedanta announced a $25 million investment
from Pfizer, as part of the Pfizer Breakthrough Growth Initiative.
Vedanta will retain control of all of its programs and has granted
Pfizer a right of first negotiation on VE202, Vedanta’s 16-strain
defined bacterial consortium candidate. As part of the investment,
Michael Vincent, M.D., Ph.D., Senior Vice President and Chief
Scientific Officer, Inflammation & Immunology Research Unit at
Pfizer, joined Vedanta’s Scientific Advisory Board.
- In late 2021, Vedanta also completed the build-out of its Phase
3 and commercial launch CGMP manufacturing facility for supply of
VE303.
- In June 2021, Vedanta presented additional results from a Phase
1 study in healthy volunteers of VE202, Vedanta’s 16-strain defined
bacterial consortium candidate for IBD, at the International Human
Microbiome Consortium Congress 2021 (IHMC). The data summarized the
long-term safety and colonization dynamics of the 16-strain version
of VE202 in 31 healthy volunteers. Vedanta plans to initiate a
Phase 2 clinical trial of VE202 in mild to moderate ulcerative
colitis patients.
- In 2021, Vedanta’s ongoing Phase 1/2 clinical trial of VE416
for food allergy continued to progress.
- In July 2021, Vedanta announced results from the Phase 1 study
evaluating the safety and initial clinical activity of VE800, an
immuno-oncology therapeutic candidate, in combination with Bristol
Myers Squibb’s Opdivo® (nivolumab) in 54 patients across select
types of advanced or metastatic cancers. VE800 demonstrated an
acceptable safety and tolerability profile, though the observed
response rates did not meet the prespecified criteria to advance
into the next stage of the study. Vedanta is analyzing blood, stool
and tumor samples from patients in whom response or disease control
was observed in order to profile patient subtypes that might
benefit from microbiome manipulation. Vedanta plans to present the
results at a future medical conference and will continue work to
identify cancer settings and patient populations that might benefit
from microbiome manipulation with its defined bacterial
consortia.
- In July 2021, Vedanta closed a $68 million financing, which
included the $25 million investment from Pfizer as part of the
Pfizer Breakthrough Growth Initiative announced in January 2021.
Vedanta plans to use the proceeds to advance its pipeline of
defined bacterial consortia, including progressing VE303 into a
Phase 3 clinical trial in patients at high risk for recurrent CDI,
initiating a Phase 2 clinical trial of VE202 in mild to moderate
ulcerative colitis and continuing to advance programs in additional
indications.
- In February 2021, Vedanta appointed Mark Mullikin as Chief
Financial Officer. Mr. Mullikin brings 25 years of experience
raising and deploying capital for life sciences companies, and most
recently held leadership roles in finance and investor relations at
publicly-traded companies such as Editas Medicine and
Novartis.
- In October 2021, Vedanta announced the appointment of Simona
Levi, Ph.D., J.D., as Chief Legal Officer and Corporate Secretary.
Dr. Levi brings over 25 years of U.S. and international legal
experience with private and public companies across the life
sciences industry focusing on complex transactions, intellectual
property law and litigation as well as corporate governance.
- Follica, Incorporated (PureTech ownership as of December 31,
2021: 76.0%. We also are eligible to receive payments under our
license agreement, including sublicense payments and royalties on
net sales)
- In January 2021, Follica announced the appointment of two
leaders in aesthetic medicine and dermatology to its Board of
Directors. Tom Wiggans, former Chief Executive Officer of Dermira,
joined as Executive Chairman with over 30 years of experience
leading biopharmaceutical companies from the start-up stage to
global commercialization, and Michael Davin, former Chief Executive
Officer of Cynosure, joined as an Independent Director with over 30
years of experience in the medical device industry.
- Preparations are underway for the registration clinical program
in male androgenetic alopecia and initiation is anticipated in
2022.
- Sonde Health, Inc. (PureTech ownership: 44.6%)
- In October 2021, Sonde launched Sonde Mental Fitness, a
voice-enabled mental health detection and monitoring technology
that uses a brief voice sample to evaluate mental well-being. Sonde
Mental Fitness is currently available through its API platform for
integration into third-party apps. It’s also available as a
standalone app for iOS and Android, mobile devices to serve as a
proof-of-concept for health systems, employers and wellness
services interested in testing out the API’s capabilities.
- In the January 2022 post-period, Sonde announced the signing of
a multi-year strategic partnership with GN Group to research and
develop commercial vocal biomarkers for mild cognitive impairment.
The research will serve as the backbone for new voice-based tools
to help at-risk individuals gain timely and accurate health
insights using GN Group’s device technologies and, ultimately, to
enable early detection and management of life-threatening diseases
for the millions of people living with hearing loss.
- In July 2021, Sonde announced a strategic collaboration with
leading chipmaker Qualcomm Technologies, Inc. (Qualcomm) to embed
Sonde’s vocal biomarker technology into its flagship and high-tier
Qualcomm® Snapdragon™ 888 and 778G 5G Mobile Platforms to help
bring native, machine learning-driven vocal biomarker capabilities
to mobile and IoT devices globally. The optimization has the
potential to unlock several native health screening and monitoring
applications on up to the hundreds of millions of mobile devices
that use these Snapdragon mobile platforms.
- Entrega, Inc. (PureTech ownership as of December 31, 2021:
74.3%)
- Entrega continued to advance its platform for the oral
administration of biologics, vaccines and other drugs that are
otherwise not efficiently absorbed when taken orally. As part of
its collaboration with Eli Lilly, Entrega has continued to
investigate the application of its peptide administration
technology to certain Eli Lilly therapeutic candidates. The
partnership has been extended into 2022.
- Entrega has also continued advancement of its ENT-100 platform
for the oral administration of biologics, vaccines and other drugs
that are otherwise not efficiently absorbed when taken orally.
PureTech Health today released its Annual Report for the year
ended December 31, 2021. In compliance with the Financial Conduct
Authority’s Listing Rule 9.6.3, the following documents have today
been submitted to the National Storage Mechanism and will shortly
be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
- Annual Report and Accounts for the year ended December 31,
2021; and
- Notice of 2022 Annual General Meeting.
Printed copies of these documents together with the Form of
Proxy will be posted to shareholders. Copies are also available
electronically on the Investor Relations section of the Company's
website at
https://investors.puretechhealth.com/financials-filings/reports.
PureTech’s 2021 Annual General Meeting (AGM) will be held on
June 15, 2022 at 11:00am EDT / 4:00pm BST at PureTech’s
headquarters, which is located at 6 Tide Street, Boston,
Massachusetts, United States. Please note that in order to protect
the health and wellbeing of our people and our shareholders we
continue to monitor developments relating to COVID-19 and, in light
of increased circulation of new variants in different regions and
potentially disruptive travel limitations, the Company has decided
to hold the AGM in the United States where most of the Directors
are resident.
While the Company’s preference had been to welcome shareholders
in person to the 2022 AGM in the United Kingdom, we considered the
conditions at hand and are proposing to hold the AGM at our Boston
office in the United States. Shareholders are strongly encouraged
to submit a proxy vote in advance of the meeting and to appoint the
Chair of the meeting to act as their proxy. If a shareholder wishes
to attend the meeting person, we ask that the shareholder notify
the Company by email to ir@puretechhealth.com to assist us in
planning and implementing arrangements for this year’s AGM. The
health and welfare of the Company's shareholders, as well as its
employees and partners, is the number one priority.
The Company appreciates that a number of its shareholders are
not resident or located in the United States and asks shareholders
to participate in the AGM by submitting any questions in advance
and voting via proxy rather than attending in person. As such, any
specific questions on the business of the AGM and resolutions can
be submitted ahead of meeting by e-mail to ir@puretechhealth.com
(marked for the attention of Dr. Bharatt Chowrira).
Shareholders are encouraged to complete and return their votes
by proxy, and to do so no later than 4:00 pm (BST) on June 13,
2022. This will appoint the chair of the meeting as proxy and will
ensure that votes will be counted even though attendance at the
meeting is restricted and you are unable to attend in person.
Details of how to appoint a proxy are set out in the notice of
AGM.
PureTech will keep shareholders updated of any changes it may
decide to make to the current plans for the AGM. Please visit the
Company’s website at www.puretechhealth.com for the most up to date
information.
About PureTech Health
PureTech is a clinical-stage biotherapeutics company dedicated
to discovering, developing and commercializing highly
differentiated medicines for devastating diseases, including
inflammatory, fibrotic and immunological conditions, intractable
cancers, lymphatic and gastrointestinal diseases and neurological
and neuropsychological disorders, among others. The Company has
created a broad and deep pipeline through the expertise of its
experienced research and development team and its extensive network
of scientists, clinicians and industry leaders.
This pipeline, which is being advanced both internally and
through PureTech's Founded Entities, is comprised of 27
therapeutics and therapeutic candidates, including two that have
received both U.S. FDA clearance and European marketing
authorization, as of the date of PureTech's most recently filed
Annual Report and corresponding Form 6-K. All of the underlying
programs and platforms that resulted in this pipeline of
therapeutic candidates were initially identified or discovered and
then advanced by the PureTech team through key validation points
based on unique insights in immunology and drug development.
For more information, visit www.puretechhealth.com or connect
with us on Twitter @puretechh.
Cautionary Note Regarding Forward-Looking Statements
This press release contains statements that are or may be
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements contained
in this press release that do not relate to matters of historical
fact should be considered forward-looking statements, including
without limitation those statements that relate to expectations
regarding PureTech’s future prospects, development plans and
strategies, the progress and timing of clinical trials and data
readouts, the timing of potential IND applications, the sufficiency
of cash and cash equivalents and expected cash runway, and
PureTech’s potential implementation of a capital deployment
strategy and plans to return capital to shareholders.. The
forward-looking statements are based on current expectations and
are subject to known and unknown risks, uncertainties and other
important factors that could cause actual results, performance and
achievements to differ materially from current expectations,
including, but not limited to, the following: our history of
incurring significant operating losses since our inception; our
need for additional funding to achieve our business goals, which
may not be available and which may force us to delay, limit or
terminate certain of our therapeutic development efforts; our
limited information about and limited control or influence over our
Non-Controlled Founded Entities; the lengthy and expensive process
of preclinical and clinical drug development, which has an
uncertain outcome and potential for substantial delays; potential
difficulties with enrolling patients in clinical trials, which
could delay our clinical development activities; side effects,
adverse events or other safety risks which could be associated with
our therapeutic candidates and delay or halt their clinical
development; our ability to obtain regulatory approval for and
commercialize our therapeutic candidates; our ability to realize
the benefits of our collaborations, licenses and other
arrangements; our ability to maintain and protect our intellectual
property rights; our reliance on third parties, including clinical
research organizations, clinical investigators and manufacturers;
our vulnerability to natural disasters, global economic factors,
geo-political actions and unexpected events, including health
epidemics or pandemics like the COVID-19 pandemic, and conflicts
such as the Russia-Ukraine conflict; and the those important
factors described under the caption "Risk Factors" in our Annual
Report on Form 20-F for the year ended December 31, 2021 filed with
the SEC and in our other regulatory filings. These forward-looking
statements are based on assumptions regarding the present and
future business strategies of the Company and the environment in
which it will operate in the future. Each forward-looking statement
speaks only as at the date of this press release. Except as
required by law and regulatory requirements, we disclaim any
obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or
otherwise.
Notes
- Cash and cash equivalents held at PureTech Health plc and only
wholly-owned subsidiaries (please refer to Note 1 to our
consolidated financial statements for further information with
respect to our wholly-owned subsidiaries) as of Dec 31, 2021. This
represents a non-IFRS number. For a reconciliation of this number
to IFRS, please see below under the heading "Financial
Review.”
- Cash and cash equivalents held at PureTech Health plc and
consolidated subsidiaries (please refer to Note 1 to our
consolidated financial statements for further information with
respect to our consolidated subsidiaries) as of December 31,
2021.
- Important Safety Information about Plenity®: Patients who are
pregnant or are allergic to cellulose, citric acid, sodium stearyl
fumarate, gelatin, or titanium dioxide should not take Plenity. To
avoid impact on the absorption of medications: For all medications
that should be taken with food, take them after starting a meal.
For all medications that should be taken without food (on an empty
stomach), continue taking on an empty stomach or as recommended by
your physician. The overall incidence of side effects with Plenity
was no different than placebo. The most common side effects were
diarrhea, distended abdomen, infrequent bowel movements, and
flatulence. Contact a doctor right away if problems occur. If you
have a severe allergic reaction, severe stomach pain, or severe
diarrhea, stop using Plenity until you can speak to your doctor. Rx
Only. For the safe and proper use of Plenity or more information,
talk to a healthcare professional, read the Patient Instructions
for Use, or call 1-844-PLENITY.
- EndeavorRx® is a digital therapeutic indicated to improve
attention function as measured by computer-based testing in
children ages 8-12 years old with primarily inattentive or
combined-type ADHD, who have a demonstrated attention issue.
Patients who engage with EndeavorRx demonstrate improvements in a
digitally assessed measure, Test of Variables of Attention (TOVA®)
of sustained and selective attention and may not display benefits
in typical behavioral symptoms, such as hyperactivity. EndeavorRx
should be considered for use as part of a therapeutic program that
may include clinician-directed therapy, medication, and/or
educational programs, which further address symptoms of the
disorder. There were no serious adverse events; 9.3% of subjects
experienced side effects, including frustration, headache,
dizziness, emotional reaction, nausea or aggression. EndeavorRx is
only available to your patients through a prescription, and is not
intended as a stand-alone therapeutic or a substitute for your
patient’s medication.
- References in this report to “Wholly Owned Programs” refer to
the Company’s seven therapeutic candidates (LYT-100, LYT-200,
LYT-210, LYT-300, LYT-510, LYT-500 and LYT- 503/IMB-150), four
lymphatic and inflammation platforms and potential future
therapeutic candidates and platforms that the Company may develop
or obtain. References to “Wholly Owned Pipeline” refer to LYT-100,
LYT-200, LYT-210, LYT-300, LYT-510, LYT-500 and LYT-503/IMB-150. On
July 23, 2021, Imbrium Therapeutics exercised its option to license
LYT-503/IMB-150 pursuant to which it is responsible for all future
development activities and funding for LYT-503/IMB-150.
- Long COVID is a term being used to describe the emerging and
persistent complications following the resolution of COVID-19
infection, also known as post-acute COVID-19 syndrome (PACS).
- Funding figure includes private equity financings, loans and
promissory notes, public offerings or grant awards. Funding figure
excludes future milestone considerations received in conjunction
with partnerships and collaborations. Funding figure does not
include Gelesis’ gross proceeds of $105.0 million from its January
2022 post-period SPAC merger.
- Cash and cash equivalents held at PureTech Health plc and only
wholly-owned subsidiaries as of March 31, 2022. The measure
includes cash outflows and inflows for the first quarter of 2022.
This represents a non-IFRS number. For a reconciliation of this
number to IFRS, please see below under the heading "Financial
Review.”
- While PureTech maintains ownership of equity interests in its
Founded Entities, the Company does not, in all cases, maintain
control over these entities (by virtue of (i) majority voting
control and (ii) the right to elect representation to the entities’
board of directors) or direct the management and development
efforts for these entities. Consequently, not all such entities are
consolidated in the financial statements. Where PureTech maintains
control, the entity is referred to as a Controlled Founded Entity
in this report and is consolidated in the financial statements.
Where PureTech does not maintain control, the entity is referred to
as a Non-Controlled Founded Entity in this report and is not
consolidated in the financial statements. As of December 31, 2021,
Controlled Founded Entities include Follica Incorporated, Vedanta
Biosciences, Inc., Sonde Health, Inc. and Entrega, Inc., and
Non-Controlled Founded Entities include Gelesis Holdings, Inc.,
Karuna Therapeutics, Inc., Akili Interactive Labs, Inc., Vor Bio
Inc.
Financial Review
Reporting Framework
You should read the following discussion and analysis together
with our Consolidated Financial Statements, including the notes
thereto, set forth elsewhere in this report. Some of the
information contained in this discussion and analysis or set forth
elsewhere in this report, including information with respect to our
plans and strategy for our business and financing our business,
includes forward-looking statements that involve risks and
uncertainties. As a result of many factors, including the risks set
forth on pages 90 to 93 and in the Additional Information section
from pages 217 to 252, our actual results could differ materially
from the results described in or implied by these forward-looking
statements.
Our audited Consolidated Financial Statements as of December 31,
2021 and 2020, and for the years ended December 31, 2021, 2020 and
2019, have been prepared in accordance with UK-adopted
International Financial Reporting Standards (IFRS). The
Consolidated Financial Statements also comply fully with IFRSs as
issued by the International Accounting Standards Board (IASB).
The following discussion contains references to the Consolidated
Financial Statements of PureTech Health plc, or the Company, and
its consolidated subsidiaries, together the Group. These financial
statements consolidate the Company’s subsidiaries and include the
Company’s interest in associates and investments held at fair
value. Subsidiaries are those entities over which the Company
maintains control. Associates are those entities in which the
Company does not have control for financial accounting purposes but
maintains significant influence over financial and operating
policies. Where the Company has neither control nor significant
influence for financial accounting purposes, we recognize our
holding in such entity as an investment at fair value. For purposes
of our Consolidated Financial Statements, each of our Founded
Entities are considered to be either a “subsidiary", an “associate”
or an "investment held at fair value" depending on whether PureTech
Health plc controls or maintains significant influence over the
financial and operating policies of the respective entity at the
respective period end date. For additional information regarding
the accounting treatment of these entities, see Note 1 to our
Consolidated Financial Statements included in this report. For
additional information regarding our operating structure, see
“—Basis of Presentation and Consolidation” below. Fair value of
Investments held at fair value, does not take into consideration
contribution from milestones that occurred after December 31, 2021,
the value of our interests in our consolidated Founded Entities
(Vedanta, Follica, Sonde, and Entrega), our Wholly Owned Programs,
or our cash.
Business Background and Results Overview
The business background is discussed from pages 1 to 72, which
describe in detail the business development of our Wholly Owned
Programs and Founded Entities.
Our ability to generate product revenue sufficient to achieve
profitability will depend heavily on the successful development and
eventual commercialization of one or more of our wholly-owned or
Controlled Founded Entities’ therapeutics candidates, which may or
may not occur. Our Founded Entities, Gelesis, Inc. ("Gelesis"), and
Akili Interactive Labs, Inc. ("Akili"), which we have not
controlled since 2019 and 2018, respectively, have products cleared
for sale, but our Wholly Owned Programs and our Controlled Founded
Entities have not yet generated any meaningful revenue from product
sales.
We deconsolidated a number of our Founded Entities, specifically
Karuna Therapeutics, Inc. ("Karuna"), Vor Biopharma Inc. ("Vor"),
and Gelesis during 2019. We expect this trend to continue into the
foreseeable future as our Controlled Founded Entities raise
additional funding that reduces our ownership interest. Any
deconsolidation affects our financials in the following manner:
- our ownership interest does not provide us with a controlling
financial interest;
- we no longer control the Founded Entity's assets and
liabilities and as a result we derecognize the assets, liabilities
and non-controlling interests related to the Founded Entity from
our Consolidated Statements of Financial Position;
- we record our non-controlling financial interest in the Founded
Entity at fair value; and
- the resulting amount of any gain or loss is recognized in our
Consolidated Statements of Comprehensive Income/(Loss).
We anticipate our expenses to continue to increase
proportionally in connection with our ongoing development
activities related mostly due to the advancement into late-stage
studies of the clinical programs within our Wholly Owned Pipeline
and Controlled Founded Entities. In addition, having completed our
U.S. listing in November 2020, we have, and will continue, to incur
additional costs associated with operating as a public company in
the U.S. We also expect that our expenses and capital requirements
will increase substantially in the near to mid-term as we:
- continue our research and development efforts;
- seek regulatory approvals for any therapeutic candidates that
successfully complete clinical trials;
- add clinical, scientific, operational financial and management
information systems and personnel, including personnel to support
our therapeutic development and potential future commercialization
claims; and
- operate as a U.S. public company.
In addition, our internal research and development spend will
increase in the foreseeable future as we may initiate additional
clinical studies for LYT-100, LYT-200 and LYT-300, and advance
LYT-210, LYT-510 and LYT-500 into the clinic and continue to
progress our GlyphTM, OrasomeTM and AlivioTM technology platforms
as well as our meningeal lymphatics research program.
In addition, with respect to our Founded Entities’ programs, we
anticipate that we will continue to fund a small portion of
development costs by strategically participating in such companies’
financings when it is in the best interests of our shareholders.
The form of any such participation may include investment in public
or private financings, collaboration and partnership arrangements
and licensing arrangements, among others. Our management and
strategic decision makers consider the future funding needs of our
Founded Entities and evaluate the needs and opportunities for
returns with respect to each of these Founded Entities routinely
and on a case-by-case basis.
As a result, we may need substantial additional funding in the
future, following the assessment period described above, to support
our continuing operations and pursue our growth strategy until such
time as we can generate sufficient revenue from product sales to
support our operations, if ever. Until such time we expect to
finance our operations through a combination of monetization of our
interests in our Founded Entities, collaborations with third
parties and also potentially from public or private equity or debt
financings or other sources. We may be unable to raise additional
funds or enter into such other agreements or arrangements when
needed on favorable terms, or at all. If we are unable to raise
capital or enter into such agreements as, and when needed, we may
have to delay, scale back or discontinue the development and
commercialization of one or more of our wholly-owned therapeutic
candidates.
Measuring Performance
The Financial Review discusses our operating and financial
performance, our cash flows and liquidity as well as our financial
position and our resources. The results for each year are compared
primarily with the results of the preceding year.
Reported Performance
Reported performance considers all factors that have affected
the results of our business, as reflected in our Consolidated
Financial Statements.
Core Performance
Core performance measures are alternative performance measures
(APM) which are adjusted and non-IFRS measures. These measures
cannot be derived directly from our Consolidated Financial
Statements. We believe that these non-IFRS performance measures,
when provided in combination with reported performance, will
provide investors, analysts and other stakeholders with helpful
complementary information to better understand our financial
performance and our financial position from period to period. The
measures are also used by management for planning and reporting
purposes. The measures are not substitutable for IFRS results and
should not be considered superior to results presented in
accordance with IFRS.
Cash flow and liquidity
PureTech Level Cash and Cash
Equivalents
Measure type: Core performance.
Definition: Cash and cash
equivalents held at PureTech Health plc and only wholly-owned
subsidiaries as noted (PureTech LYT, PureTech LYT-100, PureTech
Management, Inc., PureTech Health LLC, and other inactive entities
in which we have no current operations. During the year ended
December 31, 2021, the Company acquired the non controlling
interest in Alivio Therapeutics, Inc. and since then Alivio
Therapeutics, Inc. is wholly owned by the Company and the related
cash and cash equivalents are included in the PureTech Level Cash
and Cash Equivalents as of December 31, 2021. The cash and cash
equivalents of Alivio Therapeutics, Inc. were not included in the
PureTech Level Cash and Cash Equivalents as of December 31, 2020 as
during that period, the subsidiary was not wholly owned by the
Company.
Why we use it: PureTech Level Cash
and Cash Equivalents is a measure that provides valuable additional
information with respect to cash and cash equivalents available to
fund the Wholly Owned Programs and make certain investments in
Founded Entities.
The Company no longer presents in the reported periods
Consolidated Cash Reserves or PureTech Level Cash Reserves as the
Company does not have short-term investments in addition to its
cash and cash equivalents in all reported periods.
COVID-19
In March 2020, the World Health Organization declared the
COVID-19 outbreak a pandemic. The pandemic has since caused
widespread and significant disruption to daily life and the global
economy as governments have taken actions, including the issuance
of stay-at-home orders and social distancing guidelines, and
businesses have adjusted their activities. While our business,
operations and financial condition and results have not been
significantly impacted in 2020 or 2021, as a result of the COVID-19
pandemic, we have taken swift action to ensure the safety of our
employees and other stakeholders. We continue to monitor the latest
developments regarding the COVID-19 pandemic on our business,
operations, and financial condition and results and cannot predict
the impact, including as a result of variations of the virus, that
the pandemic may have on our business, operations, and financial
condition and results.
Recent Developments (subsequent to December 31, 2021)
On January 13, 2022 Gelesis completed its business combination
with Capstar Special Purpose Acquisition Corp ("Capstar"). As part
of the business combination all shares held in Gelesis, common and
preferred, were exchanged for common shares of the merged entity.
In addition, PureTech invested $15.0 million in the class A common
shares of Capstar as part of the PIPE transaction that took place
immediately prior to the closing of the business combination and an
additional approximately $5.0 million, as part of the Backstop
agreement signed with Capstar on December 30, 2021. Pursuant to the
business combination, Gelesis became a wholly-owned subsidiary of
Capstar and Capstar changed its name to Gelesis Holdings, Inc.,
which began trading on the New York Stock Exchange under the ticker
symbol "GLS" on January 14, 2022. Following the closing of the
business combination, PureTech holds 16,727,582 shares of Gelesis
Holdings Inc. common stock, which is equal to approximately 23.2%
of Gelesis Holdings Inc's outstanding common shares.
On January 26, 2022 Akili Interactive and Social Capital
Suvretta Holdings Corp a special purpose acquisition company
announced they had entered into a definitive business combination
agreement. Upon completion of the transaction, the combined
company’s securities are expected to be traded on the Nasdaq Stock
Market under the ticker symbol "AKLI". The transaction is expected
to close in mid-2022. As part of this transaction the Akili
Interactive shares held by the Company will be exchanged for the
combined company's securities and the Company's interest in the
combined public entity is expected to decrease from its current
voting interest in Akili of 26.4%.
Financial Highlights
Following is the reconciliation of the amounts appearing in our
Statement of Financial Position to the Alternative Performance
Measure described above:
As of:
(in thousands)
March 31, 2022*
December 31, 2021
December 31, 2020
Consolidated Cash and cash
equivalents
413,217
465,708
403,881
Less: Cash and cash equivalents held at
non-wholly owned subsidiaries
(35,303
)
(46,856
)
(54,473
)
PureTech Level Cash and Cash
Equivalents
$
377,914
$
418,851
$
349,407
* Information as of March 31,
2022 is not included in PureTech Health plc’s Annual Report and
Accounts 2021 and is included here for quantitative reconciliation
purposes
Basis of Presentation and Consolidation
Our Consolidated Financial Information consolidates the
financial information of PureTech Health plc, as well as its
subsidiaries, and includes our interest in associates and
investments held at fair value, and is reported in four operating
segments as described below.
Basis for Segmentation
Our Directors are our strategic decision-makers. Our operating
segments are based on the financial information provided to our
Directors periodically for the purposes of allocating resources and
assessing performance. We have determined that each Founded Entity
is representative of a single operating segment as our Directors
monitor the financial results at this level. When identifying the
reportable segments we have determined that it is appropriate to
aggregate multiple operating segments into a single reportable
segment given the high level of operational and financial
similarities across the entities. We have identified multiple
reportable segments which are outlined below. Substantially all of
our revenue and profit generating activities are generated within
the United States and, accordingly, no geographical disclosures are
provided.
There was no change to reportable segments in 2021, except the
change in the composition of the segments with respect to Alivio,
as explained below.
During the year ended December 31, 2021, the Company acquired
the non controlling interest in Alivio and since then Alivio is
wholly owned by the Company and is managed within the Internal
segment. The Company has revised in this report the prior period
segment financial information to conform to the presentation as of
and for the period ending December 31, 2021. This change in
segments reflects how the Company’s Board of Directors reviews the
Group’s results, allocates resources and assesses performance of
the Group at this time.
Following is the description of our reportable segments:
Internal
The Internal segment is advancing Wholly Owned Programs, which
is focused on immunological, fibrotic and lymphatic system
disorders and builds upon validated biologic pathways and proven
pharmacology. The Internal segment is comprised of the technologies
that are wholly owned and will be advanced through either PureTech
Health funding or non-dilutive sources of financing in the
near-term. The operational management of the Internal segment is
conducted by the PureTech Health team, which is responsible for the
strategy, business development, and research and development. As of
December 31, 2021, this segment included PureTech LYT, Inc.
(formerly Ariya Therapeutics Inc.), PureTech LYT-100, Inc and
Alivio Therapeutics, Inc.
Controlled Founded Entities
The Controlled Founded Entities segment is comprised of our
subsidiaries that are currently consolidated operational
subsidiaries that either have, or have plans to hire, independent
management teams and have previously raised, or are currently in
the process of raising, third-party dilutive capital. These
subsidiaries have active research and development programs and
either have entered into or plan to seek a strategic partnership
with an equity or debt investment partner, who will provide
additional industry knowledge and access to networks, as well as
additional funding to continue the pursued growth of the company.
As of December 31, 2021, this segment included Entrega, Inc.,
Follica, Incorporated, Sonde Health, Inc. and Vedanta Biosciences,
Inc.
Non-Controlled Founded Entities
The Non-Controlled Founded Entities segment is comprised of the
entities in respect of which PureTech Health (i) no longer holds
majority voting control as a shareholder and (ii) no longer has the
right to elect a majority of the members of the entity's Board of
Directors. Upon deconsolidation of an entity the segment disclosure
is restated to reflect the change on a retrospective basis, as this
constitutes a change in the composition of its reportable segments.
The Non-Controlled Founded Entities segment included Akili
Interactive Labs, Inc. (“Akili”), Vor Biopharma, Inc. (“Vor”),
Karuna Therapeutics, Inc. (“Karuna”), and Gelesis, Inc.
(“Gelesis”).
The Non-Controlled Founded Entities segment incorporates the
operational results of the aforementioned entities to the date of
deconsolidation. Following the date of deconsolidation, we account
for our investment in each entity at the parent level, and
therefore the results associated with investment activity following
the date of deconsolidation is included in the Parent Company and
Other segment (the “Parent Company and Other segment”).
Parent Company and Other
Parent Company and Other includes activities that are not
directly attributable to the operating segments, such as the
activities of the Parent, corporate support functions and certain
research and development support functions that are not directly
attributable to a strategic business segment as well as the
elimination of intercompany transactions. Parent Company and Other
also captures the accounting for our holdings in entities for which
control has been lost, which is inclusive of the following items:
gain on deconsolidation, gain or loss on investments held at fair
value, gain on loss of significant influence, and the share of net
loss of associates accounted for using the equity method. As of
December 31, 2021, this segment included PureTech Health plc,
PureTech Health LLC, PureTech Management, Inc., PureTech Securities
Corp., and PureTech Securities II Corp. as well as certain other
dormant, inactive and shell entities.
The table below summarizes the entities that comprised each of
our segments as of December 31, 2021:
Internal Segment
PureTech LYT
100.0 %
PureTech LYT-100, Inc.
100.0 %
Alivio Therapeutics, Inc.
100.0 %
Controlled Founded Entities
Entrega, Inc.
77.3 %
Follica, Incorporated
85.4 %
Sonde Health, Inc.
51.8 %
Vedanta Biosciences, Inc.
48.6 %
Non-Controlled Founded Entities
Akili Interactive Labs, Inc.
26.7 %
Gelesis, Inc.
24.5 %
Karuna Therapeutics, Inc.
5.6 %
Vor Biopharma Inc.
8.6 %
Parent Segment1
Puretech Health plc
100.0 %
PureTech Health LLC
100.0 %
PureTech Securities Corporation
100.0 %
PureTech Securities II Corporation
100.0 %
PureTech Management, Inc.
100.0 %
1 Includes dormant, inactive and shell entities that are not
listed here.
Components of Our Results of Operations
Revenue
To date, we have not generated any meaningful revenue from
product sales and we do not expect to generate any meaningful
revenue from product sales for the near term future. We derive our
revenue from the following:
Contract revenue
We generate revenue primarily from licenses, services and
collaboration agreements, including amounts that are recognized
related to upfront payments, milestone payments, royalties and
amounts due to us for research and development services. In the
future, revenue may include additional milestone payments and
royalties on any net product sales under our collaborations. We
expect that any revenue we generate will fluctuate from period to
period as a result of the timing and amount of license, research
and development services and milestone and other payments.
Grant Revenue
Grant revenue is derived from grant awards we receive from
governmental agencies and non-profit organizations for certain
qualified research and development expenses. We recognize grants
from governmental agencies as grant income in the Consolidated
Statement of Comprehensive Income/(Loss), gross of the expenditures
that were related to obtaining the grant, when there is reasonable
assurance that we will comply with the conditions within the grant
agreement and there is reasonable assurance that payments under the
grants will be received. We evaluate the conditions of each grant
as of each reporting date to ensure that we have reasonable
assurance of meeting the conditions of each grant arrangement and
it is expected that the grant payment will be received as a result
of meeting the necessary conditions.
For proceeds from sale of our investments held at fair value,
please see our Consolidated Cash flow Statements, Net cash provided
by investing activities.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs
incurred for our research activities, including our discovery
efforts, and the development of our wholly-owned and our Controlled
Founded Entities’ therapeutic candidates, which include:
- employee-related expenses, including salaries, related benefits
and equity-based compensation;
- expenses incurred in connection with the preclinical and
clinical development of our wholly-owned and our Founded Entities’
therapeutic candidates, including our agreements with contract
research organizations, or CROs;
- expenses incurred under agreements with consultants who
supplement our internal capabilities;
- the cost of lab supplies and acquiring, developing and
manufacturing preclinical study materials and clinical trial
materials;
- costs related to compliance with regulatory requirements;
and
- facilities, depreciation and other expenses, which include
direct and allocated expenses for rent and maintenance of
facilities, insurance and other operating costs.
We expense all research costs in the periods in which they are
incurred and development costs are capitalized only if certain
criteria are met. For the periods presented, we have not
capitalized any development costs since we have not met the
necessary criteria required for capitalization. Costs for certain
development activities are recognized based on an evaluation of the
progress to completion of specific tasks using information and data
provided to us by our vendors and third-party service
providers.
Research and development activities are central to our business
model. Therapeutic candidates in later stages of clinical
development generally have higher development costs than those in
earlier stages of clinical development, primarily due to the
increased size and duration of later-stage clinical trials. We
expect that our research and development expenses will continue to
increase for the foreseeable future in connection with our planned
preclinical and clinical development activities in the near term
and in the future. The successful development of our wholly-owned
and our Founded Entities’ therapeutic candidates is highly
uncertain. As such, at this time, we cannot reasonably estimate or
know the nature, timing and estimated costs of the efforts that
will be necessary to complete the remainder of the development of
these therapeutic candidates. We are also unable to predict when,
if ever, material net cash inflows will commence from our
wholly-owned or our Founded Entities’ therapeutic candidates. This
is due to the numerous risks and uncertainties associated with
developing therapeutics, including the uncertainty of:
- progressing research and development of our Wholly Owned
Pipeline, including LYT-100, LYT-200, LYT-210, LYT-300, LYT-510,
LYT-500 and continue to progress our GlyphTM, OrasomeTM and
AlivioTM technology platforms as well as our meningeal lymphatics
research program and other potential therapeutic candidates based
on previous human efficacy and clinically validated biology within
our Wholly Owned Programs;
- establishing an appropriate safety profile with investigational
new drug application enabling studies to advance our preclinical
programs into clinical development;
- the success of our Founded Entities and their need for
additional capital;
- identifying new therapeutic candidates to add to our Wholly
Owned Pipeline;
- successful enrollment in, and the initiation and completion of,
clinical trials;
- the timing, receipt and terms of any marketing approvals from
applicable regulatory authorities;
- commercializing our wholly-owned and our Founded Entities’
therapeutic candidates, if approved, whether alone or in
collaboration with others;
- establishing commercial manufacturing capabilities or making
arrangements with third-party manufacturers;
- addressing any competing technological and market developments,
as well as any changes in governmental regulations;
- negotiating favorable terms in any collaboration, licensing or
other arrangements into which we may enter and performing our
obligations under such arrangements;
- maintaining, protecting and expanding our portfolio of
intellectual property rights, including patents, trade secrets and
know-how, as well as obtaining and maintaining regulatory
exclusivity for our wholly-owned and our Founded Entities’
therapeutic candidates;
- continued acceptable safety profile of our therapeutics, if
any, following approval; and
- attracting, hiring and retaining qualified personnel.
A change in the outcome of any of these variables with respect
to the development of a therapeutic candidate could mean a
significant change in the costs and timing associated with the
development of that therapeutic candidate. For example, the FDA,
the EMA, or another comparable foreign regulatory authority may
require us to conduct clinical trials beyond those that we
anticipate will be required for the completion of clinical
development of a therapeutic candidate, or we may experience
significant trial delays due to patient enrollment or other
reasons, in which case we would be required to expend significant
additional financial resources and time on the completion of
clinical development. In addition, we may obtain unexpected results
from our clinical trials and we may elect to discontinue, delay or
modify clinical trials of some therapeutic candidates or focus on
others. Identifying potential therapeutic candidates and conducting
preclinical testing and clinical trials is a time-consuming,
expensive and uncertain process that takes years to complete, and
we may never generate the necessary data or results required to
obtain marketing approval and achieve product sales. In addition,
our wholly-owned and our Founded Entities’ therapeutic candidates,
if approved, may not achieve commercial success.
General and Administrative Expenses
General and administrative expenses consist primarily of
salaries and other related costs, including stock-based
compensation, for personnel in our executive, finance, corporate
and business development and administrative functions. General and
administrative expenses also include professional fees for legal,
patent, accounting, auditing, tax and consulting services, travel
expenses and facility-related expenses, which include direct
depreciation costs and allocated expenses for rent and maintenance
of facilities and other operating costs.
We expect that our general and administrative expenses will
increase in the future as we increase our general and
administrative headcount to support our continued research and
development and potential commercialization of our portfolio of
therapeutic candidates. We also expect to incur increased expenses
associated with being a public company in the United States,
including costs of accounting, audit, information systems, legal,
regulatory and tax compliance services, director and officer
insurance costs and investor and public relations costs.
Total Other Income/(Loss)
Gain on Deconsolidation
Upon losing control of a subsidiary, the assets and liabilities
are derecognized along with any related non-controlling interest
(“NCI”). Any interest retained in the former subsidiary is measured
at fair value when control is lost. Any resulting gain or loss is
recognized as profit or loss in the Consolidated Statements of
Comprehensive Income/(Loss).
Gain/(Loss) on Investments Held at Fair Value
Investments held at fair value include both unlisted and listed
securities held by us, which include investments in Akili, Gelesis,
Karuna, Vor and certain insignificant investments. Our ownership in
Akili is in preferred shares. Our ownership in Vor was in preferred
shares until February 2021 at which time the preferred shares were
converted into common shares as part of Vor Initial Public
Offering. Preferred shares form part of our ownership in Gelesis
and such preferred shares investment is accounted for as
Investments Held at Fair value while the investment in common stock
is accounted for under the equity method. When the investment in
common stock is reduced to zero by equity method losses, subsequent
equity method losses are applied to the preferred share investment,
which is considered to be a Long-term Interest. Our ownership in
Karuna was in preferred shares until its IPO in June 2019 when such
shares were converted into common shares. When Karuna's preferred
shares converted into common shares, our equity interest in Karuna
investment was removed from Investments Held at Fair Value and
accounted for under the equity method as we still retained
significant influence in Karuna at such time. On December 2, 2019
we lost significant influence in Karuna and, beginning on that
date, we accounted for our investment in Karuna in accordance with
IFRS 9 as an Investment Held at Fair Value. We account for
investments in preferred shares of our associates in accordance
with IFRS 9 as Investments Held at Fair Value when the preferred
shares do not provide access to returns underlying ownership
interests.
Loss Realized on Investments Held at Fair Value
Loss realized on investments held at fair value relates to
realized differences in the per share disposal price of a listed
security as compared to the per share exchange quoted price at the
time of disposal. The difference is attributable to a block sale
discount, attributable to a variety of market factors, primarily
the number of shares being transacted was significantly larger than
the daily trading volume of a given security.
Gain on Loss of Significant Influence
Gain on loss of significant influence relates to the assessment
related to the loss of our ability to exert significant influence
over an investment in a Non-Controlled Founded Entity that is
accounted for under the equity method. For the year ended December
31, 2019, we recognized gain on loss of significant influence in
Karuna.
Other Income (Expense)
Other income (expense) consists primarily of gains and losses
related to the sale of an asset and certain investments as well as
sub-lease income.
Finance Costs/Income
Finance costs consist of loan interest expense and the changes
in the fair value of certain liabilities associated with financing
transactions, mainly preferred share liabilities in respect of
preferred shares issued by our non wholly owned subsidiaries to
third parties. Finance income consists of interest income on funds
invested in money market funds and U.S. treasuries.
Share of Net Gain (Loss) of Associates Accounted for Using
the Equity Method, and Impairment of Investment in
Associate
Associates are accounted for using the equity method (equity
accounted investees) and are initially recognized at cost, or if
recognized upon deconsolidation they are initially recorded at fair
value at the date of deconsolidation. The consolidated financial
statements include our share of the total comprehensive income and
equity movements of equity accounted investees, from the date that
significant influence commences until the date that significant
influence ceases. When the share of losses exceeds the net
investment in the investee, including the investment in preferred
shares that are considered Long-term Interests, the carrying amount
is reduced to nil and recognition of further losses is discontinued
except to the extent that we have incurred legal or constructive
obligations or made payments on behalf of an investee.
We compare the recoverable amount of the investment to its
carrying amount on a go-forward basis and determine the need for
impairment. We recorded an impairment in the common stock
investment in Gelesis in the year ended December 31, 2019.
Income Tax
We must make certain estimates and judgments in determining
income tax expense for financial statement purposes. The amount of
taxes currently payable or refundable is accrued, and deferred tax
assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial
statement carrying amount of existing assets and liabilities and
their respective tax bases. Deferred tax assets are also recognized
for realizable loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using substantively enacted tax
rates in effect for the year in which those temporary differences
are expected to be recovered or settled. Net deferred tax assets
are not recorded if we do not assess their realization as probable.
The effect on deferred tax assets and liabilities of a change in
income tax rates is recognized in our financial statements in the
period that includes the substantive enactment date.
Results of Operations
The following table, which has been derived from our audited
financial statements for the years ended December 31, 2021, 2020
and 2019, included herein, summarizes our results of operations for
the periods indicated, together with the changes in those items in
dollars:
Year Ended December 31,
(in thousands)
2021
2020
2019
Change (2020 to 2021)
Change (2019 to 2020)
Contract revenue
$
9,979
$
8,341
$
8,688
$
1,638
$
(347
)
Grant revenue
7,409
3,427
1,119
3,982
2,308
Total revenue
17,388
11,768
9,807
5,621
1,961
Operating expenses:
General and administrative expenses
(57,199
)
(49,440
)
(59,358
)
(7,760
)
9,918
Research and development expenses
(110,471
)
(81,859
)
(85,848
)
(28,612
)
3,988
Operating income/(loss)
(150,282
)
(119,531
)
(135,399
)
(30,751
)
15,868
Other income/(expense):
Gain/(loss) on deconsolidation
—
—
264,409
—
(264,409
)
Gain/(loss) on investments held at fair
value
179,316
232,674
(37,863
)
(53,358
)
270,537
Loss realized on sale of investment
(20,925
)
(54,976
)
—
34,051
(54,976
)
Gain/(loss) on disposal of assets
—
—
—
—
—
Gain on loss of significant influence
—
—
445,582
—
(445,582
)
Other income/(expenses)
1,592
1,035
39
557
996
Other income/(loss)
159,983
178,732
672,167
(18,749
)
(493,434
)
Net finance income/(costs)
5,050
(6,115
)
(46,147
)
11,164
40,032
Share of net gain/(loss) of associates
accounted for using the equity method
(73,703
)
(34,117
)
30,791
(39,587
)
(64,908
)
Impairment of investment in associate
—
—
(42,938
)
—
42,938
Income/(loss) before income
taxes
(58,953
)
18,969
478,474
(77,922
)
(459,504
)
Taxation
(3,756
)
(14,401
)
(112,409
)
10,645
98,008
Net income/(loss) including
non-controlling interest
(62,709
)
4,568
366,065
(67,277
)
(361,497
)
Net (loss)/income attributable to the
Company
$
(60,558
)
$
5,985
$
421,144
$
(66,543
)
$
(415,159
)
Comparison of the Years Ended December 31, 2021 and 2020
Total Revenue
Year Ended December 31,
(in thousands)
2021
2020
Change
Contract Revenue:
Internal Segment
$
8,129
$
5,297
$
2,833
Controlled Founded Entities
1,615
990
625
Non-Controlled Founded Entities
—
—
—
Parent Company and other
235
2,054
(1,819
)
Total Contract Revenue
$
9,979
$
8,341
$
1,638
Grant Revenue:
Internal Segment
$
1,253
$
1,563
$
(310
)
Controlled Founded Entities
6,156
1,864
4,292
Non-Controlled Founded Entities
—
—
—
Parent Company and other
—
—
—
Total Grant Revenue
$
7,409
$
3,427
$
3,982
Total Revenue
$
17,388
$
11,768
$
5,621
Our total revenue was $17.4 million for the year ended December
31, 2021, an increase of $5.6 million, or 47.8 percent compared to
the year ended December 31, 2020. The increase was primarily
attributable to an increase of $2.8 million in contract revenue in
the Internal segment, which was primarily driven by a $6.5 million
increase in revenue due to payment from Imbrium Therapeutics, Inc.
following the exercise of the option to acquire an exclusive
license for the Initial Product Candidate. The increase was
partially offset by a decrease in contract revenue of $3.7 million
recognized under IFRS 15 due to the completion of development
activities related to revenues associated with multiple
collaborations in the year ended December 31, 2021. The increase
was also driven by an increase of $4.3 million in grant revenue in
the Controlled Founded Entities segment for the year ended December
31, 2021, which was driven primarily by Vedanta's grant revenue
earned pursuant to its CARB-X and BARDA agreements. The
aforementioned increases were partially offset by the a
non-recurrent milestone payment of $2.0 million received from
Karuna (and included in Parent Company and Other) in the year ended
December 31, 2020.
Research and Development
Expenses
Year Ended December 31,
(in thousands)
2021
2020
Change
Research and Development Expenses:
Internal Segment
$
(65,444
)
$
(45,346
)
$
20,098
Controlled Founded Entities
(43,783
)
(36,279
)
7,504
Non-Controlled Founded Entities
—
—
—
Parent Company and other
(1,244
)
(234
)
1,010
Total Research and Development
Expenses:
$
(110,471
)
$
(81,859
)
$
28,612
Our research and development expenses were $110.5 million for
the year ended December 31, 2021, an increase of $28.6 million, or
35.0 percent compared to the year ended December 31, 2020. The
change was primarily attributable to an increase of $20.1 million
in research and development expenses incurred by the Internal
segment due to the advancement of programs in clinical testing.
This was primarily driven by an increase in clinical trial and
clinical research organization expenditures of $14.0 million, an
increase in research and development related consulting and
professional fees of $2.5 million and an increase in research and
development related salaries and stock compensation of $2.6
million. We progressed our ongoing clinical trials of LYT-100 and
LYT- 200 in multiple indications and initiated clinical trials with
respect to LYT 300, as well as advanced pre-clinical studies and
research related to multiple candidates and research platforms. The
increase was further attributable to an increase of $7.5 million in
research and development expenses incurred by the Controlled
Founded Entities segment, primarily attributable to Vedanta as they
progressed their therapeutic candidates VE202, VE303, VE416 and
VE800 towards meaningful milestones.
General and Administrative
Expenses
Year Ended December 31,
(in thousands)
2021
2020
Change
General and Administrative Expenses:
Internal Segment
$
(8,673
)
$
(3,482
)
$
5,191
Controlled Founded Entities
(20,729
)
(13,691
)
7,038
Non-Controlled Founded Entities
—
—
—
Parent Company and other
(27,797
)
(32,267
)
(4,470
)
Total General and Administrative
Expenses
$
(57,199
)
$
(49,440
)
$
7,760
Our general and administrative expenses were $57.2 million for
the year ended December 31, 2021, an increase of $7.8 million, or
15.7 percent compared to the year ended December 31, 2020. The
increase was primarily attributable to an increase of $7.0 million
in the Controlled Founded Entities segment, which was primarily
driven by non-cash increases of $2.9 million in stock based
compensation expense, $1.4 million increase in payroll-related
costs due to increased personnel, an increase in professional fees
of $1.1 million, and an increase in legal fees of $0.9 million. The
increase was further attributable to an increase of $5.2 million in
the Internal segment, which was primarily driven by an increase in
the management fee charged by the Parent company of $6.2 million
which was partially offset by a decrease in depreciation expense of
$0.5 million for the year ended December 31, 2021. The decrease in
the Parent Company and other of $4.5 million was primarily
attributable to the allocation of management fee charged to other
segments of $7.0 million which was partially offset by an increase
in professional and recruiting fees of $0.9 million and an increase
in business insurance of $1.7 million for the year ended December
31, 2021.
Total Other Income (Loss)
Total other income was $160.0 million for the year ended
December 31, 2021, a decrease of $18.7 million, compared to the
year ended December 31, 2020. The decline in other income was
primarily attributable to a decrease in gains from investments held
at fair value of $53.4 million, primarily driven by the change in
the fair value of the investment in Karuna. These gains from
investments held at fair value were partially offset by losses
realized on sale of certain investments held at fair value, as a
result of the block sale discount included in the sale. The losses
realized on sale of certain investments held at fair value for the
year ended December 31, 2021 decreased $34.1 million compared to
the year ended December 31, 2020.
Net Finance Income (Costs)
Net finance Income was $5.0 million for the year ended December
31, 2021, a change of $11.2 million, compared to net finance cost
of $6.1 million for the year ended December 31, 2020. The change
was primarily attributable to a $14.0 million change leading to
increased income in respect of the change in the fair value of our
preferred shares, warrant and convertible note liabilities held by
third parties, partially offset by a $1.8 million increase in
contractual finance costs, mainly in our controlled founded entity,
Vedanta, and a $1.0 million decline in interest income from
financial assets for the year ended December 31, 2021.
Share of Net Gain (Loss) in Associates Accounted for Using
the Equity Method
For the year ended December 31, 2021, the share in net loss of
associates reported under the equity method was $73.7 million as
compared to the share of net loss of $34.1 million for the year
ended December 31, 2020. The change was primarily attributable to
an increase in Gelesis losses reported under IFRS for the year
ended December 31, 2021 as compared to the losses reported for the
year ended December 31, 2020, due to an increase in the fair value
of Gelesis financial instrument liabilities that are accounted for
at Fair Value Through Profit and Loss (FVTPL).
Taxation
Income tax expense was $3.8 million for the year ended December
31, 2021, as compared to income tax expense of $14.4 million for
the year ended December 31, 2020. The decrease in income tax
expense was primarily attributable to the decrease in profit before
tax in entities in the U.S. Federal and Massachusetts consolidated
return groups of the Company. For information on the change in the
tax rate, see Note 25 in the consolidated financial statements.
Comparison of the Years Ended December 31, 2020 and
2019
Total Revenue
Year Ended December 31,
(in thousands)
2020
2019
Change
Contract Revenue:
Internal Segment
$
5,297
$
7,077
$
(1,780
)
Controlled Founded Entities
990
1,474
(484
)
Non-Controlled Founded Entities
—
—
—
Parent Company and other
2,054
137
1,917
Total Contract Revenue
$
8,341
$
8,688
$
(347
)
Grant Revenue:
Internal Segment
$
1,563
$
928
$
635
Controlled Founded Entities
1,864
191
1,673
Non-Controlled Founded Entities
—
—
—
Parent Company and other
—
—
—
Total Grant Revenue
$
3,427
$
1,119
$
2,308
Total Revenue
$
11,768
$
9,807
$
1,961
Our total revenue was $11.8 million for the year ended December
31, 2020, an increase of $2.0 million, or 20.0 percent compared to
the year ended December 31, 2019. The increase was primarily
attributable to an increase of $2.3 million in grant revenue in the
Controlled Founded Entities segment for the year ended December 31,
2020, which was driven primarily by Vedanta's grant revenue earned
pursuant to its CARB-X and BARDA agreements. The increase was
further attributable to an increase of $1.9 million in contract
revenue in the Parent segment for the year ended December 31, 2020,
which was primarily driven by a $2.0 million milestone payment
received from Karuna for initiation of its KarXT Phase 3 clinical
study pursuant to the Exclusive Patent License Agreement between
PureTech and Karuna. The increases were partially offset by a
decline of $1.8 million in contract revenue in the Internal
segment, which was primarily drive by the Orasome collaboration and
license agreement with Roche, which concluded during the year ended
December 31, 2020.
Research and Development
Expenses
Year Ended December 31,
(in thousands)
2020
2019
Change
Research and Development Expenses:
Internal Segment
$
(45,346
)
$
(28,874
)
$
16,472
Controlled Founded Entities
(36,279
)
(39,883
)
(3,603
)
Non-Controlled Founded Entities
—
(15,555
)
(15,555
)
Parent Company and other
(234
)
(1,536
)
(1,302
)
Total Research and Development
Expenses:
$
(81,859
)
$
(85,848
)
$
(3,988
)
Our research and development expenses were $81.9 million for the
year ended December 31, 2020, a decline of $4.0 million, or 4.6
percent compared to the year ended December 31, 2019. The change
was attributable to a decline of $15.6 million in the
Non-Controlled Founded Entities segment owing to the
deconsolidation of Vor, Karuna and Gelesis during year ended
December 31, 2019. The decline was further attributable to declines
of $3.6 million in the Controlled Founded Entities segment and $1.3
million in the Parent segment for the year ended December 31, 2020.
The declines were partially offset by an increase of $16.5 million
in research and development expenses incurred by the Internal
segment for the year ended December 31, 2020. In 2020 we progressed
our wholly-owned therapeutic candidates to key milestones. We
completed a Phase 1 multiple ascending dose and food effect study
for LYT-100. We also initiated a Phase 2a proof-of-concept study of
LYT-100 in patients with breast cancer-related, upper limb
secondary lymphedema as well as initiated a Phase 2 trial of
LYT-100 in Long COVID respiratory complications and related
sequelae, which is also known as post-acute COVID-19 syndrome
(PACS). Finally, we initiated a Phase 1 clinical trial of LYT-200
for the potential treatment of metastatic solid tumors that are
difficult to treat and have poor survival rates.
General and Administrative
Expenses
Year Ended December 31,
(in thousands)
2020
2019
Change
General and Administrative Expenses:
Internal Segment
$
(3,482
)
$
(3,252
)
$
230
Controlled Founded Entities
(13,691
)
(13,569
)
122
Non-Controlled Founded Entities
—
(10,439
)
(10,439
)
Parent Company and other
(32,267
)
(32,098
)
168
Total General and Administrative
Expenses
$
(49,440
)
$
(59,358
)
$
(9,918
)
Our general and administrative expenses were $49.4 million for
the year ended December 31, 2020, a decrease of $9.9 million, or
16.7 percent compared to the year ended December 31, 2019. The
decrease was primarily attributable to a decline of $10.4 million
in the Non-Controlled Founded Entities segment, owing to the
deconsolidation of Vor, Karuna and Gelesis during the year ended
December 31, 2019.
Total Other Income (Loss)
Total other income was $178.7 million for the year ended
December 31, 2020 a decrease of $493.4 million, compared to the
year ended December 31, 2019. We recognized a gain on loss of
significant influence of $445.6 million with respect to Karuna for
the year ended December 31, 2019. No loss of significant influence
of associates occurred during the year ended December 31, 2020. The
decline was further attributable to a decline of $264.4 million in
gain on deconsolidation as no deconsolidation of subsidiaries
occurred during the year ended December 31, 2020, as compared to a
gain of $264.4 million recognized for the deconsolidation of Vor,
Karuna and Gelesis during the year ended December 31, 2019. The
decline was further attributable to a loss of $55.0 million
realized on the sale of certain investments held at fair value
during year ended December 31, 2020. The declines were partially
offset by an increase of $270.5 million on gain on investments held
at fair value for the year ended December 31, 2020, which was
primarily driven by Karuna.
Net Finance Income (Costs)
Net finance costs were $6.1 million for the year ended December
31, 2020, a decline of $40.0 million, or 86.7 percent compared to
net finance costs of $46.1 million for the year ended December 31,
2019. The change was primarily attributable to a $42.1 million
decline in the change in the fair value of our preferred shares,
warrant and convertible note liabilities held by third parties for
the year ended December 31, 2020.
Share of Net Gain (Loss) in Associates Accounted for Using
the Equity Method, and Impairment of Investment in
Associate
The share of net loss in associates was $34.1 million for the
year ended December 31, 2020, a decrease of $64.9 million, or 210.8
percent as compared to net gain of $30.8 million for the year ended
December 31, 2019. The change in share of net gain/(loss) in
associates was primarily attributable to the financial results of
Gelesis for the year ended December 31, 2020. Additionally, we
allocated a share of our net loss in Gelesis for the year ended
December 31, 2020, totaling $23.0 million, to our long-term
interest in Gelesis as of December 31, 2020. We recorded equity
method income of $37.1 million with respect to Gelesis, which was
partially offset by our share of net loss in Karuna of $6.3 million
for the year ended December 31, 2019. Additionally, we recorded an
impairment charge of $42.9 million for the year ended December 31,
2019, related to our investment in common shares held in Gelesis.
See Note 6 to our consolidated financial statements included
elsewhere in this annual report.
Taxation
Income tax expense was $14.4 million for the year ended December
31, 2020, a decline of $98.0 million, or 87.2 percent as compared
to the year ended December 31, 2019. The decline in income tax
expense was primarily attributable to the gains realized on the
loss of significant influence on Karuna for the year ended December
31, 2019 and the gains recognized on deconsolidation of Vor, Karuna
and Gelesis during the year ended December 31, 2019.
Critical Accounting Policies and Significant Judgments and
Estimates
Our management’s discussion and analysis of our financial
condition and results of operations is based on our financial
statements, which we have prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and International Financial Reporting Standards
(IFRSs) as adopted for use in the UK. The Consolidated Financial
Statements also comply fully with IFRS as issued by the
International Accounting Standards Board (IASB). In the preparation
of these financial statements, we are required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates under different
assumptions or conditions.
Our estimates and assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that
period or in the period of the revisions and future periods if the
revision affects both current and future periods.
While our significant accounting policies are described in more
detail in the notes to our consolidated financial statements
appearing at the end of this report, we believe the following
accounting policies to be most critical to the judgments and
estimates used in the preparation of our financial statements. See
Note 1 to our consolidated financial statements for a further
detailed description of our significant accounting policies.
Financial instruments
We account for our financial instruments according to IFRS 9. As
such, when issuing preferred shares in our subsidiaries we
determine the classification of financial instruments in terms of
liability or equity. Such determination involves significant
judgement. These judgements include an assessment of whether the
financial instruments include any embedded derivative features,
whether they include contractual obligations upon us to deliver
cash or other financial assets or to exchange financial assets or
financial liabilities with another party at any point in the future
prior to liquidation, and whether that obligation will be settled
by exchanging a fixed amount of cash or other financial assets for
a fixed number of the Group's equity instruments.
In accordance with IFRS 9 we carry certain investments in equity
securities at fair value as well as our subsidiary preferred share,
convertible notes and warrant liabilities, all through profit and
loss (FVTPL). Valuation of the aforementioned financial instruments
(assets and liabilities) includes making significant estimates,
specifically determining the appropriate valuation methodology and
making certain estimates of the future earnings potential of the
subsidiary businesses, appropriate discount rate and earnings
multiple to be applied, marketability and other industry and
company specific risk factors.
Consolidation:
The consolidated financial statements include the financial
statements of the Company and the entities it controls. Based on
the applicable accounting rules, the Company controls an investee
when it is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those
returns through its power over the investee. Therefore an
assessment is required to determine whether the Company has (i)
power over the investee; (ii) exposure, or rights, to variable
returns from its involvement with the investee; and (iii) the
ability to use its power over the investee to affect the amount of
the investor’s returns. Judgement is required to perform such
assessment and it requires that the Company considers, among
others, activities that most significantly affect the returns of
the investee, its voting shares, representation on the board,
rights to appoint board members and management, shareholders
agreements, de facto power, investee dependence on the Company and
other contributing factors.
Investment in Associates
When we do not control an investee but maintain significant
influence over the financial and operating policies of the investee
the investee is an associate. Significant influence is presumed to
exist when we hold 20 percent or more of the voting power of an
entity, unless it can be clearly demonstrated that this is not the
case. We evaluate if we maintain significant influence over
associates by assessing if we have the power to participate in the
financial and operating policy decisions of the associate.
Associates are accounted for using the equity method (equity
accounted investees) and are initially recognized at cost, or if
recognized upon deconsolidation they are initially recorded at fair
value at the date of deconsolidation. The consolidated financial
statements include our share of the total comprehensive income and
equity movements of equity accounted investees, from the date that
significant influence commences until the date that significant
influence ceases. When our share of losses exceeds the net
investment in an equity accounted investee, including preferred
share investments that are considered to be Long-Term Interests,
the carrying amount is reduced to zero and recognition of further
losses is discontinued except to the extent that we have incurred
legal or constructive obligations or made payments on behalf of an
investee. To the extent we hold interests in associates that are
not providing access to returns underlying ownership interests, the
instrument held by PureTech is accounted for in accordance with
IFRS 9.
Judgement is required in order to determine whether we have
significant influence over financial and operating policies of
investees. This judgement includes, among others, an assessment
whether we have representation on the Board of Directors of the
investee, whether we participate in the policy making processes of
the investee, whether there is any interchange of managerial
personnel, whether there is any essential technical information
provided to the investee and if there are any transactions between
us and the investee.
Judgement is also required to determine which instruments we
hold in the investee form part of the investment in the associate,
which is accounted for under IAS 28 and scoped out of IFRS 9, and
which instruments are separate financial instruments that fall
under the scope of IFRS 9. This judgement includes an assessment of
the characteristics of the financial instrument of the investee
held by us and whether such financial instrument provides access to
returns underlying an ownership interest.
Where the company has other investments in an equity accounted
investee that are not accounted for under IAS 28, judgement is
required in determining if such investments constitute Long-Term
Interests for the purposes of IAS 28 (please refer to Notes 5 and
6). This determination is based on the individual facts and
circumstances and characteristics of each investment, but is
driven, among other factors, by the intention and likelihood to
settle the instrument through redemption or repayment in the
foreseeable future, and whether or not the investment is likely to
be converted to common stock or other equity instruments
Recent Accounting Pronouncements
For information on recent accounting pronouncements, see our
consolidated financial statements and the related notes found
elsewhere in this report.
Cash Flow and Liquidity
Our cash flows may fluctuate and are difficult to forecast and
will depend on many factors, including:
- the expenses incurred in the development of wholly-owned and
Controlled Founded Entity therapeutic candidates;
- the revenue, if any, generated by wholly-owned and
Controlled-Founded Entity therapeutic candidates;
- the revenue, if any, generated from licensing and royalty
agreement with Founded Entities;
- the financing requirements of the Internal segment,
Controlled-Founded Entities segment and Parent segment; and
- the investment activities in the Internal, Controlled-Founded
Entities, and Non-Controlled Founded Entities and Parent
segments.
As of December 31, 2021, we had consolidated cash and cash
equivalents of $465.7 million. As of December 31, 2021, we had
PureTech Level cash and cash equivalents of $418.9 million (for a
definition of PureTech Level cash and cash equivalents, see
paragraph "Cash flow and cash equivalents" earlier in this
Financial review).
Cash Flows
The following table summarizes our cash flows for each of the
periods presented:
Year Ended December 31,
(in thousands)
2021
2020
2019
Net cash used in operating activities
$
(158,274
)
$
(131,827
)
$
(98,156
)
Net cash provided by investing
activities
197,375
364,478
63,659
Net cash provided by financing
activities
22,727
38,869
49,910
Effect of exchange rates on cash and cash
equivalents
—
—
(104
)
Net increase in cash and cash
equivalents
$
61,827
$
271,520
$
15,309
Operating Activities
Net cash used in operating activities was $158.3 million for the
year ended December 31, 2021, as compared to $131.8 million for the
year ended December 31, 2020. The increase in outflows is primarily
attributable to our higher operating loss and higher income taxes
paid of $7.0 million, and to a lesser extent the timing of receipts
and payments in the normal course of business.
Net cash used in operating activities was $131.8 million for the
year ended December 31, 2020, as compared to $98.2 million for the
year ended December 31, 2019. The increase in outflows was
primarily attributable to estimated income taxes of $20.7 million
paid for our disposals of Karuna common shares during the year
ended December 31, 2020. The increase was further attributable to a
decrease of $4.5 million in payments received with respect to
contract revenue for the year ended December 31, 2020. We received
a $2.0 million milestone payment from Karuna for initiation of its
KarXT Phase 3 clinical study pursuant to the Exclusive Patent
License Agreement between PureTech and Karuna during the year ended
December 31, 2020. We received $3.5 million from Imbrium
Therapeutics LP for the execution of a Research Collaboration
Option and License Agreement and $3.0 million from Boehringer
Ingelheim for the execution of a Collaboration and License
Agreement during the year ended December 31, 2019. The increase in
outflows was further attributable to reduced interest income and
the timing of payments in the normal course of business for the
year ended December 31, 2020.
Investing Activities
Net cash provided by investing activities was $197.4 million for
the year ended December 31, 2021, as compared to inflows of $364.5
million for the year ended December 31, 2020, resulting in a
decrease of $167.1 million in net cash provided by investing
activities. The decrease in the net cash provided by investing
activities was primarily attributed to the decrease in proceeds
from the sale of investments held at fair value of $132.5 million
(proceeds from such sales were $218.1 million for the year ended
December 31, 2021 vs. $350.6 million for the year ended December
30, 2020) and the fact that for the year ended December 31, 2020
the Company had proceeds of $30.1 million from maturity of short
term investments while for the year ended December 31, 2021, there
were no such cash inflows.
Net cash provided by investing activities was $364.5 million for
the year ended December 31, 2020, as compared to inflows of $63.7
million for the year ended December 31, 2019. The inflow was
primarily attributable to the sale of Karuna and resTORbio common
shares for aggregate proceeds of $350.6 million during the year
ended December 31, 2020. The inflow was further attributable to
cash provided by the maturity of short-term investments totaling
$30.1 million. The inflows were offset by purchases of Gelesis and
Vor preferred shares totaling $11.1 million and the purchase of
fixed assets totaling $5.2 million.
Financing Activities
Net cash provided by financing activities was $22.7 million for
the year ended December 31, 2021, as compared to $38.9 million for
the year ended December 31, 2020, resulting in a decrease of $16.1
million in the net cash provided by financing activities. The
decrease in the net cash provided by financing activities was
primarily attributable to the decrease in proceeds from issuance of
convertible notes in subsidiaries of $22.8 million and the fact
that for the year ended December 31, 2020 the Company had proceeds
from the issuance of a long term loan of $14.7 million, while for
the year ended December 31, 2021, there was no such cash inflow.
Such decreases were partially offset by an increase in proceeds
from issuance of preferred shares in subsidiaries of $23.9
million
Net cash provided by financing activities was $38.9 million for
the year ended December 31, 2020, as compared to $49.9 million for
the year ended December 31, 2019. The net inflow was primarily
attributable to the issuances by Vedanta of a $25.0 million
convertible promissory note and a long-term loan with net proceeds
of $14.7 million. The inflow was further attributable to $13.8
million received from the Vedanta Series C-2 and Sonde Series A-2
preferred share financings. The inflows were partially offset by
the $12.9 million settlement of 2017 RSU awards granted to certain
executives.
Funding Requirements
We have incurred operating losses since inception. Based on our
current plans, we believe our existing cash and cash equivalents at
December 31, 2021, will be sufficient to fund our operations and
capital expenditure requirements into the first quarter of 2025. We
expect to incur substantial additional expenditures in the near
term to support our ongoing activities. We anticipate to continue
to incur net operating losses for the foreseeable future as is
typical for pre-revenue biotechnology companies. Our ability to
fund our therapeutic development and clinical operations as well as
commercialization of our wholly-owned therapeutic candidates, will
depend on the amount and timing of cash received from planned
financings and potential business development activities. Our
future capital requirements will depend on many factors,
including:
- the costs, timing and outcomes of clinical trials and
regulatory reviews associated with our wholly-owned therapeutic
candidates;
- the costs of commercialization activities, including product
marketing, sales and distribution;
- the costs of preparing, filing and prosecuting patent
applications and maintaining, enforcing and defending intellectual
property-related claims;
- the emergence of competing technologies and products and other
adverse marketing developments;
- the effect on our therapeutic and product development
activities of actions taken by the U.S. Food and Drug
Administration (“FDA”), the European Medicines Agency (“EMA”) or
other regulatory authorities;
- our degree of success in commercializing our wholly-owned
therapeutic candidates, if and when approved; and
- the number and types of future therapeutics we develop and
commercialize.
A change in the outcome of any of these or other variables with
respect to the development of any of our wholly-owned therapeutic
candidates could significantly change the costs and timing
associated with the development of that therapeutic candidate.
Further, our operating plans may change, and we may need
additional funds to meet operational needs and capital requirements
for clinical trials and other research and development activities.
We currently have no credit facility or other committed sources of
capital. Because of the numerous risks and uncertainties associated
with the development and commercialization of our wholly-owned
therapeutic candidates, we have only a general estimate of the
amounts of increased capital outlays and operating expenditures
associated with our current and anticipated therapeutic development
programs and these may change in the future.
Financial Position
Summary Financial Position
As of December 31,
(in thousands)
2021
2020
Change
Investments held at fair value (*)
397,179
530,161
(132,982
)
Other non-current assets
47,018
45,484
1,534
Non-current assets
444,197
575,645
(131,448
)
Cash and cash equivalents
465,708
403,881
61,827
Other current assets
36,101
10,468
25,634
Current assets
501,809
414,348
87,461
Total assets
946,006
989,994
(43,988
)
Lease Liability
29,040
32,088
(3,048
)
Deferred tax liability
89,765
108,626
(18,861
)
Other non-current liabilities
16,921
14,818
2,103
Non-current liabilities
135,725
155,531
(19,806
)
Trade and other payables
35,760
20,566
15,194
Notes payable
3,916
26,455
(22,539
)
Warrant liability
6,787
8,206
(1,419
)
Preferred shares
174,017
118,972
55,045
Other current liabilities
5,654
6,724
(1,069
)
Current liabilities
226,135
180,924
45,211
Total liabilities
361,859
336,455
25,405
Net assets
584,147
653,539
(69,392
)
Total equity
584,147
653,539
(69,392
)
(*) Fair value of investments accounted for at fair value, does
not take into consideration contribution from milestones that
occurred after December 31, 2021, the value of our consolidated
Founded Entities (Vedanta, Follica, Sonde, Alivio, and Entrega),
our Wholly Owned Programs, or our cash.
Investments Held at Fair Value
Investments held at fair value decreased $133.0 million to
$397.2 million as of December 31, 2021. Investments held at fair
value consists primarily of our common share investment in Karuna
and Vor (from February 2021) and our preferred share investments in
Akili, Gelesis and Vor (until February 2021). See Note 5 to our
consolidated financial statements included elsewhere in this annual
report for details regarding the change in investments held at fair
value.
Cash and Cash Equivalents
Consolidated cash, cash equivalents increased $61.8 million to
$465.7 million as of December 31, 2021, while we had PureTech Level
cash and cash equivalents of $418.9 million. The increase reflected
primarily the disposals of Karuna common shares during the year
ended December 31, 2021. On February 9, 2021, PureTech sold
1,000,000 shares of Karuna common shares for aggregate proceeds of
$118.0 million. On November 9, 2021, PureTech sold an additional
750,000 Karuna common shares for aggregate proceeds of 100.1
million. The inflows from the disposals were primarily offset by
our operating loss of $150.3 million for the year ended December
31, 2021.
Non-Current Liabilities
Non-current liabilities decreased $19.8 million to $135.7
million as of December 31, 2021. The decrease was driven by
declines of $3.0 million and $18.9 million in our long-term lease
and deferred tax liabilities, respectively as of December 31,
2021.
Trade and Other Payables
Trade and other payables increased $15.2 million to $35.8
million as of December 31, 2021. The increase reflected primarily
the timing of payments as of December 31, 2021.
Notes Payable
Notes payable decreased $22.5 million to $3.9 million as of
December 31, 2021. The decrease reflected the conversion of the
Vedanta $25.0 million convertible promissory note to a third party
investor during the execution of the Series D financing round. This
decrease was partially offset by a $2.2 million note issuance by
Sonde.
Preferred Shares
Preferred share liability increased $55.0 million to $174.0
million as of December 31, 2021. The increase reflected the
issuance by Vedanta of Series D preferred shares and the conversion
of Vedanta notes into Series D preferred shares, increasing the
liability by $63.4 million. This increases was partially offset by
a decrease in fair value of the preferred share liability by $8.4
million during the year ended December 31, 2021.
Quantitative and Qualitative Disclosures about Financial
Risks
Interest Rate Sensitivity
As of December 31, 2021, we had consolidated cash and cash
equivalents of $465.7 million, while we had PureTech Level cash and
cash equivalents of $418.9 million. Our exposure to interest rate
sensitivity is impacted by changes in the underlying U.K. and U.S.
bank interest rates. We have not entered into investments for
trading or speculative purposes. Due to the conservative nature of
our investment portfolio, which is predicated on capital
preservation and investments in short duration, high-quality U.S.
Treasury Bills and U.S. debt obligations and related money market
accounts we do not believe change in interest rates would have a
material effect on the fair market value of our portfolio, and
therefore we do not expect our operating results or cash flows to
be significantly affected by changes in market interest rates.
Foreign Currency Exchange Risk
We maintain our consolidated financial statements in our
functional currency, which is the U.S. dollar. Monetary assets and
liabilities denominated in currencies other than the functional
currency are translated into the functional currency at rates of
exchange prevailing at the balance sheet dates. Non-monetary assets
and liabilities denominated in foreign currencies are translated
into the functional currency at the exchange rates prevailing at
the date of the transaction. Exchange gains or losses arising from
foreign currency transactions are included in the determination of
net income (loss) for the respective periods. Such foreign currency
gains or losses were not material for all reported periods.
We recorded foreign currency losses in respect of foreign
operations of $0.0 million, $0.5 million and $0.0 million for the
years ended December 31, 2021, December 31, 2020, and December 31,
2019, respectively, which are included in Other comprehensive
income/(loss) in the Consolidated Statements of Comprehensive
Income/(Loss).
We do not currently engage in currency hedging activities in
order to reduce our currency exposure, but we may begin to do so in
the future. Instruments that may be used to hedge future risks
include foreign currency forward and swap contracts. These
instruments may be used to selectively manage risks, but there can
be no assurance that we will be fully protected against material
foreign currency fluctuations.
Controlled Founded Entity Investments
We maintain investments in certain Controlled Founded Entities.
Our investments in Controlled Founded Entities are eliminated as
intercompany transactions upon financial consolidation. We are
however exposed to a preferred share liability owing to the terms
of existing preferred shares and the ownership of Controlled
Founded Entities preferred shares by third parties. The liability
of preferred shares is maintained at fair value through the profit
and loss. Our strong cash position, budgeting and forecasting
processes, as well as decision making and risk mitigation framework
enable us to robustly monitor and support the business activities
of the Controlled Founded Entities to ensure no exposure to credit
losses and ultimately dissolution or liquidation. Accordingly, we
view exposure to third party preferred share liability as low.
Please refer to Note 16 to our consolidated financial statements
for further information regarding our exposure to Controlled
Founded Entity Investments.
Non-Controlled Founded Entity Investments
We maintain certain investments in Non-Controlled Founded
Entities which are deemed either as investments and accounted for
as investments held at fair value or associates and accounted for
under the equity method (please refer to Note 1 to our consolidated
financial statements). Our exposure to investments held at fair
value was $397.2 million as of December 31, 2021, and we may or may
not be able to realize the value in the future. Accordingly, we
view the risk as high. Our exposure to investments in associates in
limited to the carrying amount of the investment. We are not
exposed to further contractual obligations or contingent
liabilities beyond the value of initial investment. As of December
31, 2021, Gelesis was the only associate. The carrying amount of
the investment in Gelesis as an associate was zero. Accordingly, we
do not view this as a risk. Please refer to Notes 5, 6 and 16 to
our consolidated financial statements for further information
regarding our exposure to Non-Controlled Founded Entity
Investments.
Equity Price Risk
As of December 31, 2021, we held 1,656,564 common shares of
Karuna and 3,207,200 common shares of Vor. The fair value of our
investment in the common shares of Karuna was $217.0 million and
common shares of Vor was $37.3 million.
The investments in Karuna and Vor are exposed to fluctuations in
the market price of these common shares. The effect of a 10.0
percent adverse change in the market price of Karuna common shares
and Vor common shares as of December 31, 2021, would have been a
loss of approximately $21.7 million and $3.7 million, respectively,
recognized as a component of Other income (expense) in our
Consolidated Statements of Comprehensive Income/(Loss).
Subsequent to December 31, 2021 our investment in Gelesis was
converted into shares of common stock of Gelesis (after the
combination with Capstar), which are publicly traded on the New
York Stock Exchange.
Liquidity Risk
We do not believe we will encounter difficulty in meeting the
obligations associated with our financial liabilities that are
settled by delivering cash or another financial asset. While we
believe our cash and cash equivalents do not contain excessive
risk, we cannot provide absolute assurance that in the future our
investments will not be subject to adverse changes or decline in
value based on market conditions.
Credit Risk
We maintain an investment portfolio in accordance with our
investment policy. The primary objectives of our investment policy
are to preserve principal, maintain proper liquidity and to meet
operating needs. Although our investments are subject to credit
risk, our investment policy specifies credit quality standards for
our investments and limits the amount of credit exposure from any
single issue, issuer or type of investment. Also, due to the
conservative nature of our investments and relatively short
duration, interest rate risk is mitigated. We do not own derivative
financial instruments. Accordingly, we do not believe that there is
any material market risk exposure with respect to derivative or
other financial instruments.
Credit risk is also the risk of financial loss if a customer or
counterparty to a financial instrument fails to meet its
contractual obligations. We assess the credit quality of customers
on an ongoing basis, taking into account its financial position,
past experience and other factors. The credit quality of financial
assets that are neither past due nor impaired can be assessed by
reference to credit ratings (if available) or to historical
information about counterparty default rates. We are also
potentially subject to concentrations of credit risk in accounts
receivable. Concentrations of credit risk with respect to
receivables is owed to the limited number of companies comprising
our customer base. However, our exposure to credit losses is
currently de minimis due to the credit quality of our receivables,
which are primarily from the US government and large funds with
respect to grants.
Foreign Private Issuer Status
Owing to our U.S. listing, we report under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, as a
non-U.S. company with foreign private issuer status. As long as we
qualify as a foreign private issuer under the Exchange Act, we will
be exempt from certain provisions of the Exchange Act that are
applicable to U.S. domestic public companies, including:
- the sections of the Exchange Act regulating the solicitation of
proxies, consents or authorizations in respect of a security
registered under the Exchange Act;
- sections of the Exchange Act requiring insiders to file public
reports of their stock ownership and trading activities and
liability for insiders who profit from trades made in a short
period of time;
- the rules under the Exchange Act requiring the filing with the
SEC of quarterly reports on Form 10-Q containing unaudited
financial and other specified information, or current reports on
Form 8-K, upon the occurrence of specified significant events;
and
- Regulation FD, which regulates selective disclosures of
material information by issuers.
The following information, which is required in connection with
the Company as a company incorporated under the United Kingdom’s
Companies Act 2006 and having its ordinary shares admitted to
premium listing on the Official List of the United Kingdom’s
Financial Conduct Authority and having its shares admitted to
trading on the London Stock Exchange in the United Kingdom, has
been omitted from this release and can be found on the News section
of our website: Strategic Report, UK Risk Management, Brexit
Statement and the audited Consolidated Financial Statements and
Notes thereto. Such information is also included in our 2021 Annual
Report and Accounts which is included as an exhibit to the Form
20-F that will be filed today with the United States Securities and
Exchange Commission.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220425005597/en/
PureTech Public Relations
publicrelations@puretechhealth.com Investor Relations
IR@puretechhealth.com EU Media Ben Atwell, Rob Winder +44
(0) 20 3727 1000 ben.atwell@FTIconsulting.com U.S. Media
Nichole Sarkis +1 774 278 8273
nichole@tenbridgecommunications.com
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