PureTech Health plc (PRTC) Earnings Call Transcript & Summary

Greetings, and welcome to the PureTech Health 2026 Half Year Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allison May Talbott, Senior Vice President of Communications. Thank you, Allison. You may begin. .

Thank you, and thank you, everyone, for joining us for PureTech 2026 half year results webcast. Our half report is available on the Investors page of our website at firesafhealth.com. I would like to remind you that during today's call, we will be making certain forward-looking statements. These statements are subject to various risks, uncertainties and assumptions that could cause our actual results to differ materially, and we ask that you refer to our half year report for a complete discussion of these items. We undertake no obligation to revise or update any forward-looking statements or information, except as required by law. I also want to remind you that we will be referring to certain non-IFRS measures in this presentation. the presentation of the non IF information presented in accordance with IFRS. For reconciliation of IFRS to non-IFRS measures that we will be referring to today can be found in the presentation and is also available on our Investor Relations website at investor.cree.com. I'm joined today by members of our management team: Robert Lyne, Chief Executive Officer; Eric Elenko, Co-Founder of PureTech and Acting Chief Executive Officer of Gala and Greg Dukat, Vice President of Research and Innovation. With that, I'll turn the call over to Rob.

Thank you, Allison. Welcome, everyone, and thank you for joining us today. We have made significant progress in 2026 and meaningfully executed against the refined strategy that we outlined last year. Today, I'll discuss that progress and how we are involved in the tech model to create value with greater capital efficiency and transfer play that value more directly to shareholders. Across the portfolio, C4 completed set IPO on NASDAQ, raising $260 million. [indiscernible] secured $180 million in external financing and initiated Phase III and Gallup received Fast Track designation validating the exciting potential of its treatment for rare blood cancer. We also continue to retain potential future economics from Coventry as part of our model and are advancing our innovation engine. We ended the first half of 2026 with PureTech level cash, cash equivalents and short-term investments of $220 million, and we continue to expect our operational run rate to extend at least through the end of 2028. Together, this progress demonstrates the significant value embedded across our portfolio and the strength of our hub and spoke model. For those newer to our story, PureTech is a Boston-based LSE-listed biotherapeutics company operating our hub-and-spoke model with a proven clinical and financial track record. As the center article is an innovation engine focused on areas where Cortex has a proven ability to create value, those opportunities around validated pharmacology. We generate and derisk these programs internally and then seek scale them through founded entities or our spot company backed by external capital. This approach also improves how we allocate capital. By bringing in external tax as a founded entity level, we can preserve our PureTech balance sheet while retaining long-term upside through equity, milestones and royalties. Historically, the timing of external financing has varied. Going forward, we intend to see external capital earlier in the development stage than we have done with our most recent founded entity for Celea Therapeutics. Importantly, because we develop programs internally, we clinically begin with full ownership of the asset and proprietary collector properties which allows us to retain meaningful equity even after dilution as well as the potential for nondilutive economics in the form of royalties and milestones, reflecting our role in creating these programs. The result is a model designed to generate attractive overall returns while limiting risk concentration. This model has produced 3 FDA-approved therapeutics, including event and has generated sufficient evergreen capital through opportunistic monetization of funded entities to advance our portfolio without the need for dilutive raises at a PureTech level. Slide 7 provides a snapshot of our portfolio and the distinct components of value we contain. Equity interest in our talented entities, royalty and milestone payments and our innovation engine, which is designed to generate future opportunities. Sale is our most recent spin out. This is a Phase III pulmonary company advancing deupirfenidone, which follows our model of validated pharmacology aiming to transform the treatment paradigm for IPF patients by taking FDA-approved pirfenidone and dramatically improving its efficacy through to Asia. Following the significant clinical and regulatory work from CFO, leasecured $180 million from leading health care investors and immediately initiated the global Phase III surpass OTS trial. This financing provides external validation of the program and delivered on our commitment to establish an independently to announce part for its continued development. Today, PureTech holds a 35.4% equity interest and retains meaningful long-term economics through royalties, milestones and sublicense income prices. Gallop Oncology is a Phase II-ready oncology company that is well positioned to attract external capital. We have successfully shepherded the company through the completion of its end of Phase I meeting with the FDA and secured fast-track designation in relapsed/refractory high-risk MDS. We currently own 100% of Gallup and intend to leverage external capital before initiating the Phase II STRIDE MDS trial. Seaport Therapeutics is a Phase II CNS company that we launched in 2024 having developed its platform at PureTech. Following its own subscribed private raises in 2024, Seaport Therapeutics led by Cutex and Dacia, successfully IPO-ed on NASDAQ in May, raising $250 million in gross pricing. This proprietary is platform is designed to unlock the therapeutic potential of clinically validated mechanisms by addressing limitations that have historically constrained them. We hold a 31.2% equity stake in Seaport valued at approximately $360 million as of September 18, 2026, and also retain royalty and milestones in this company. The fourth component is our remaining economic interest in Cobenfy an FDA-approved treatment for schizophrenia marketed by Bristol-Myers Squibb. PureTech invented using our approach of building on clinically validated pharmacology and house the program in our founded entity Karuna Therapeutics. Through Karuna's development and subsequent acquisition by Bristol-Myers Squibb, we have generated more than $1 billion from our collective Karuna and cement economics, and we retain potential Cobenfy related royalty and milestone payments which is a fundamental and differentiating element of the PureTech model. Matalanalytic consensus as of mid-August, we estimate approximately $50 million in potential future proceeds to PureTech from our remaining convene economic rights. Because this estimate is based on analyst consensus rather than our own forecast, it may change as consensus evolves. While the current estimates represent a material downgrade in potential economics from our last update of the full year, they also reinforced the value of our derisking transaction with Royalty Pharma in 2023, which delivered upfront cash of $100 million into PureTech and allowed us to realize significant value before Cobenfy reach commercial maturity while still retaining participation in future upside. We will continue to provide updates on our full and half year results on PureTech's economic outlook and safety sales based on evolving market consensus. Turning to cash flows. We do not factor any potential inflows in found entities into our runway assumption also any monetization events represent pulse. In line with our refinement strategy, we are increasingly committed to ensuring that shareholders participate more directly at the value across our portfolio is realigned. In practice, this means that we will prioritize maintaining an appropriate operational runway selectively deploying capital where we see compelling risk-adjusted opportunities across the portfolio and returning capital to shareholders. As of June 30, PureTech level cash, cash equivalents and short-term investments were $220 million, which continues to provide operational runway at least through the end I 2028. I will discuss financial updates in more detail later on. I would now like to welcome Eric Elenko, PureTech's Co-Founder and Gallant's acting CEO, to discuss the related development of our holocaust, Gallop Oncology.

Thank you, Rob. Gallop Oncology is our latest wholly owned founded entity and I'm excited about the first-in-class mutation agnostic approach we are advancing for patients with relapsed or refractory high-risk MDS. Our we candidate LYT-200 is a Phase II-ready monoclonal antibody targeting Golestani an oncogenic driver home immunosuppressor that plays a role in some of the most difficult to treat campers. OIT 200 has the dual mechanism of action. It is designed to directly kill cancer cells while also restoring antitumor immune function by addressing both tumor intrinsic and tumor-mediated pathways -- this approach is differentiated from existing therapies and has the potential to drive meaningful responses while maintaining a favorable safety profile. . High-risk MDS is the serious blood cancer associated with poor outcomes with patients typically surviving less than 2 years following diagnosis. Frontline treatment typically involves a hypomethylating agent for HMA. However, the vast majority of patients do not respond or eventually stop benefiting. Once disease relates or become refractory, survival is often limited to only a few months. Treatment options in the relapsed/refractory setting are extremely limited. Only one therapy has been approved specifically for relapsed/refractory high-risk MDS in the past 2 decades and it targets a mutation found only approximately 3% of patients. There is, therefore, a significant need for new treatment options that can benefit the broader patient population. Alive Phase Ib results established a compelling clinical foundation for YP and relapsed or refractory high-risk MDS. We completed the successful end of Phase I meeting with the FDA, which highlights the compelling clinical activity and consistent safety profile of LYT-200 in high-risk MDS patients who have relapse or become refractory to prior treatment with an HMA. The FDA meeting provided clarity on the Phase II STRIDE-MDS trial and Fast Track destination further strengthens causation as we seek external capital to support the next stage of development. STRIDe-MDS will be a randomized, double-blinded placebo concealed Phase II trial enrolling approximately 125 patients with relapsed or refractory high-risk MDS. Patients will be randomized 2:2:1 to receive LYT-200 at a dose of 12 milligrams per kilogram plus an HMA. LYT-200 is 7.5 milligrams per kilogram plus an HMA or placebo plus an HMA. The trial will assess the efficacy of LYT-200 based on the rate of complete and partial responses and support dose selection. The goal is to STRIDE-MDS to confirm the efficacy of LYT-200 that was previously observed in the Phase Ib study and the inclusion of 2 doses is intended to fulfill the dose selection requirement in accordance with FDA's project Optimus. The purpose of project optimists to ensure that the sponsor companies prioritize the optimal biological dose over the maximum on tolerated dose in oncology. We intend to initiate TriaMDS following the completion of external financing. The amount of capital will be target raising would support calls through the readout of the STRIDE-MDS trial. As Gallop reaches this important financing and development inflection point, I am pleased to have kicked on the role of Gallop acting CEO, as I will be dedicating significant time and focus to its advancement. At the same time, we will remain actively involved in taconite activities working closely with the team as we advance the next wave of opportunities. With that, I'd like to introduce Greg Sucat, Certex Vice asinineation and research. Greg and I had worked together at Cirtec for more than a decade, and he has been instrumental in refocusing our innovation engine around the areas where PureTech has historically demonstrate the greatest ability to create value. He has been leading our innovation efforts on an day basis, and I'm pleased to ask him walk through our innovation framework today.

Thank you, Eric. As Rob noted, our innovation strategy is now firmly centered on validated pharmacology. PureTech's greatest successes have come from identifying mechanisms or molecules that have already demonstrated meaningful activity in humans understanding the limitations that have prevented them from reaching their full potential and designing differentiated solutions to overcome those limitations. We call this framework, our life model, launching innovation from existing pharmacology. As shown on this slide, our life model begins with a focus on patients by identifying areas with significant unmet medical needs. We then identify mechanisms or molecules with demonstrated clinical efficacy that has been otherwise held back from reaching their full potential due to reasons unrelated to efficacy. Using this clinically validated framework, we design novel therapeutic concepts that are specifically intended to preserve efficacy while overcoming those limitations. We evaluate each solution using focused proof-of-concept experiment which are preclinical studies designed to determine if our therapeutic concepts need key predefined success criteria and overcome the previous limitation. We also require each opportunity to support the development of a strong intellectual property portfolio and offer a compelling proposition for physicians and payers with blockbuster potential. By building on pharmacology that has already been validated in humans, we believe that this approach can enable us to innovate with greater speed, lower technical risk and greater capital efficiency than traditional de novo drug discovery. Each year, we aim to advance at least 3 opportunities to the concept stage with the goal that we may form the foundation of future development candidate. We expect to share additional detail on our progress in the first half of 2027. The approach within our life framework emulate the same innovation principles that produce Karuna therapeutics and Seaport Therapeutics and Celea Therapeutics. Each began with a significant patient need and clinically validated pharmacology whose potential has been constrained by a specific limitation. The PureTech team then designed a novel solution to address that limitation, generated proprietary intellectual property and conducted focused proof-of-concept experimentation to substantially derisk the concept. These programs have generated compelling clinical data. And in the case of Cobenfy, ultimately led to FDA approval in a new medicine for patients suffering from facilitated mental illness. They provide for validation of the capabilities and approach we are now applying systematically to create Cirtec next wave in the long Virtu. I'm proud of the work we have underway, and I look forward to sharing more about our progress next year. With that, I'll hand the call back to Rob.

Thanks, Eric and Greg. The Workday has described represents 2 important sources of future value for PureTech and advancing Gastrus next inflection point and applying a focus capital-efficient approach to generate the next wave of opportunities for patients and shareholders. Turning to our financial highlights. PureTech remains in a strong financial position, supported by our business model and continued focus on capital discipline. At the PureTech level, we ended June 2026 with cash, cash equivalents and short-term investments of approximately $220 million compared to cash equivalents and short-term investments of $277.1 million at year-end 2025. On a consolidated basis, our cash, cash equivalents and short-term investments were $220.1 million at the end of June 2026 as compared to cash, cash equivalents and short-term investments of $277.3 million at year-end 2025. From this $220 million cash figure, I know that the balancing $17.5 million of the overall $30 million we contributed to Solero was completed just after the half year and therefore, the $17.5 million will come out of the $220 million cash figure I mentioned. In addition, going forward, we have reserved $70 million of future investment for the year, whilst not easily committed, we think it prudent to have this provision to allow strategic optionality to preserve and support our interest in this important company whilst reserving the flexibility to respond to specific deal terms and other opportunities to allocate capital within the PureTech model. On a consolidated basis, operating expenses were $55.9 million in the first 6 months of 2026 as compared to $49.8 million in the same period in 2025. The increase between these 2 periods reflects higher R&D spend in the first half of 2026 associated with the preparation of affiliate Phase III trial of acute. Importantly, the majority of OpEx in this first half is attributable to Celea and Gallop heavily skewed towards Celia. Our future expenses related to duchenne have now shifted to see Celea expects a significant reduction in overall operating expenses moving. Looking ahead, based on our existing financial assets as of June 30, 2026, we reiterate our operational runway at least through the end of 2028. This runway excludes any inflows from potential future monetization events and assumes full deployment of the additional $70 million that PureTech has reserved for potential future investments in Celea. To close, the progress made in 2026 so far demonstrates both the value embedded across our portfolio and the meaningful execution underway against our strategy. Celea has entered Phase III with the backing of leading external investors Seb has completed a successful IPO on NASDAQ. Gallop has achieved important clinical and regulatory milestones and is positioned for external financing and Phase II development. And our innovation team is applying our proven approach to innovation to generate the next wave of opportunities. At the same time, we are substantially reducing the capital required at the PureTech level and taking an increasingly disciplined approach to how we deploy future proceeds. We will prioritize maintaining an appropriate operational runway investing selectively where we see compelling risk-adjusted opportunities and looking to return capital to shareholders. With significant value embedded across our portfolio, our strong financial position and a repeatable innovation engine we believe PureTech is well positioned to create meaningful long-term value for patients and shareholders. With that, I'll turn the call back to the operator, and we will be pleased to take your questions.

[Operator Instructions] Our first question comes from Sean Conroy from Shore Capital.

Just a couple. I'll start on the planned design of Stride MDS. I appreciate there's clearly a benefit to the Celea mutation agnostic approach in this setting. But how is the FDA or are you planning to look at any specific biomarkers in this study, and then sort of second question, just thinking about sort of the next wave of programs that you've guided to -- that you've guided you will unveil next year. I mean how should we be thinking about that? I mean obviously, you said particularly validated targets, but in terms of disease areas and willingness to be...

Thanks, Sean. I'll ask Eric just to speak to the STRIDE-MD trial design as acting CEO, Gallop.

Sean, thanks so much for the question. And you're right that the approach here is a mutation agnostic one, and that really need is in this space. relapsed RAS pathway PNT. So what we do feel is although as you got the number of mutations across the number of patients we had, of course, that means any one mutation was only represented to a smaller extent, it does mean that the sampling and mutations was more representative of what we might see in a subsequent study. . And so that made us feel quite good about the approach. The FDA was found with a mutation agnostic approach and did not require any type of biomarker selection. And as of this time, we don't have plans for bioborker selection.

A bit on that. sir. And then, Sean, just on your other question, I believe, around in terms of our areas of focus for future innovation. I'll ask Greg to speak in a moment, very high level say are generally agnostic, but we do have a little bit of buyers, particularly in areas where we've had success before. But I'll just ask Greg to say a few words to that.

Yes. Thanks for the question, Sean. So far this year, we have multiple opportunities. We've identified that potentially fit our model. It includes opportunities based on validated pharmacology as you've noted. I mean they can point the base is for development of candidates in the future. These opportunities, as Rob mentioned, continue to expand in areas that have been historically successful for PureTech, and that includes a continued focus on small molecule-based therapeutics and also CNS is a therapeutic area for identifying additional indications. Specifically, within CNS, we had success with Cobenfy Seaport and looking at opportunities in neuropsychiatry and that's an area we're continuing to explore. As I said, as you also -- as you discussed, we do remain somewhat agnostic indication to an extent because we believe our model is broadly applicable and to bring impactful therapies to patients, software and disorders outside of CN and still have blockbuster potential. So we're happy to provide more details in 2027.

Our next question comes from Miles Dixon from Peel Hunt. Miles .

Thank you. Good morning. Hopefully, you can hear me. If I could just follow up on the STRIDE-MDS trap. I appreciate you're not guiding for a kind of cost window for that. But can you just help me understand what the time line for that trial might look like? Is it similar in format, at least for the time for TIBSOVO? And then secondly, Robert, I can ask the broader question on perhaps on Celea first. I mean, obviously, since that's now spun out, you guys have a smaller control holding of that. Now Seaport obviously is phenomenally successfully built out its programs and platform offering. Is there any plans at Celea to do a similar thing? Or is it a pure-play GF siness. Make sense? .

Thanks, Mark. I'll speak to the Celea question first, and then I'll hand over to Eric on Gallup. So yes, as you say, obviously, Seaport has really done great things in terms of building out their pipeline of programs. At the moment, Celia has properly stated, it has its single asset the IPF asset, which is obviously now in Phase III. I would note, of course, that is now a pivotal registrational trial. So to some extent, they have a different feature development there of that business, and they are -- now have line of sight through to area, which we hope obviously would be registrational. Today, there hasn't been any disclosures from Celea additional assets that they may or may not bring in or develop, but obviously, that is something that the company will consider as it matures. We have previously guided that obviously, we're pleased with the rate they did in the summer raising in our cash due to year-end, but it is in our tool that they will need to raise additional money in order to complete the Phase III. That may bring opportunities then to consider other programs that they may wish to advance, but as and when that's something they wish to do, Celea will make announcements for that and in the future. In terms of the Gallop program, I'll just hand over to Eric just to talk on that, please.

Thanks so much, Miles, for the question. So the Gallop trial will commence following receipt of external capital, so just also to make that part of any timing clear. The initial projections, which are on the more conservative side, so just want to get that caveat it this would be probably somewhat under 3 years to complete the study is currently contemplated. And again, those are using somewhat more conservative projections in terms of recruitment rates now. Of course, what's going to happen is the actual time line, it's at more around 30 months or 33 months will depend also ultimately on the number of sites that are selected as well as the ultimate recruiting rates that are observed in those sites. But as we think about the go forward, we like to think about things on a more conservative side.

Great. And perhaps I can just follow up on Gallop, specifically. You had a variety of formats. But how are you thinking about financing? Is that more partnership or syndication, strategic partnerships with pharma? And then lastly, Rob, if I can, on capital allocation, obviously, you've got a phenomenal amount of, let's call it, resources that dwarf the market cap. How are you thinking about capital allocation moving forward? .