Strong capital base and cash runway extended
into the first quarter of 2025, with PureTech level cash and cash
equivalents of $443.4 million as of March 31, 20211 ($349.4 million
as of December 31, 20202) and consolidated cash and cash
equivalents of $486.5 million as of March 31, 20213 ($403.9 million
as of December 31, 20204)
Advancement of Wholly Owned Pipeline with four
clinical trial initiations and one successful readout, with three
clinical trials ongoing
Significant milestones across PureTech’s
Founded Entities including one FDA Clearance for Marketing, two
European Marketing Authorizations, initiation of a Phase 3 program,
$247.8 million raised in 20205 and $473.2 million raised in the
2021 post-period6
Further validation of PureTech’s model through
monetization of partial stakes in Founded Entities that generated
$350.6 million in 2020 and an additional $118 million in the 2021
post-period
Listing on Nasdaq Global Market broadens access
to US investors
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, 2020 as well as its cash balance as of
the first quarter ended March 31, 2021. The following information
represents select highlights from the full report, which will be
filed as an Exhibit to Form 20-F with the United States Securities
and Exchange Commission 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/20210414005917/en/
PureTech announces Annual Results for
year ended December 31, 2020. Company to host a webcast and
conference call at 9:00am EDT on April 15, 2021. (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 15, 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: 440629
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:
“2020 was a year like no other. For our team at PureTech, it was
defined both by transformational progress and tremendous
resilience, as we realized significant financial, clinical and
regulatory milestones while navigating the challenges of a global
pandemic. I am immensely proud of our team’s dedication to our
mission: develop groundbreaking medicines for serious diseases for
which patients currently have few options.
“We now have 26 therapeutics and therapeutic candidates being
advanced through our Wholly Owned Pipeline or our Founded Entities.
This includes two therapeutics that have received FDA clearance and
European marketing authorization - Gelesis’ Plenity® and Akili’s
EndeavorRxTM – both of which were initially conceived of and
advanced by the PureTech team to address urgent medical needs for
patients. We expect a broader U.S. launch for both therapeutics
this year.
“We made notable progress in the advancement of our Wholly Owned
Pipeline this year, initiating four clinical trials and reporting
the successful completion of one clinical trial. We are currently
evaluating two candidates – LYT-100 and LYT-200 – across three
different indications where there is serious need. I am also
pleased to have expanded our Wholly Owned Pipeline with the
nomination of a new therapeutic candidate, LYT-300 (oral
allopregnanolone), which we expect to enter a clinical trial by the
end of 2021.
“Additionally, we continued to solidify our financial position
by generating $350.6 million in 2020 and an additional $118 million
in the February 2021 post-period via the monetization of partial
stakes in Founded Entities. We also successfully completed a
listing of American Depository Shares on the Nasdaq Global Market
in November 2020, which enables us to broaden access to an
international investor base as we maintained our premium listing on
the London Stock Exchange and our membership in the FTSE 250.
“We are well-positioned for an exciting year ahead, which we
expect will include multiple value drivers across our Wholly Owned
Programs and our Founded Entities, including at least ten expected
clinical trial initiations and nine expected readouts.
“I would like to thank our shareholders for their vision and
continued support over the last year. Above all, I would like to
thank the patients and clinicians working alongside us in our
clinical trials. We are grateful for your support, humbled by your
trust and inspired by your courage. You make possible the medical
advances of the future.”
Continued advancement and growth of Wholly Owned
Programs7
Our team, network and expertise in the BIG Axis has enabled the
rapid advancement and growth of our Wholly Owned Programs. Focused
on the lymphatic system and related immunological disorders, our
Wholly Owned Pipeline currently consists of LYT-100, a
clinical-stage therapeutic candidate we are pursuing for
inflammatory and fibrotic conditions and disorders of lymphatic
flow, LYT-200, a clinical therapeutic candidate targeting a
foundational immunosuppressive protein, galectin-9, we are
developing for the potential treatment of a range of cancer
indications, LYT-210, a preclinical therapeutic candidate targeting
immunomodulatory gamma delta-1 T cells we are developing for a
range of cancer indications and autoimmune disorders and LYT-300, a
preclinical therapeutic candidate we are developing for a range of
neurological and neuropsychological conditions. Our Wholly Owned
Programs also include three discovery platforms: Glyph™ – our
synthetic lymphatic targeting chemistry platform – and Orasome™ –
our oral biotherapeutics platform – both of which leverage
absorption of dietary lipids to traffic therapeutics via the
lymphatic system, and our meningeal lymphatics discovery research
program for treating neurodegenerative and neuroinflammatory
diseases. Key developments included the following:
Program Highlights
LYT-100
- In November 2020, we announced the completion of a Phase 1
randomized, double-blind multiple ascending dose and food effect
study of LYT-100, which was initiated in March 2020. The study
demonstrated favorable proof-of-concept for LYT-100’s tolerability
and pharmacokinetic, or PK, profile.
- In December 2020, we announced the initiation of a global,
randomized, double-blind, placebo-controlled Phase 2 trial to
evaluate the efficacy, safety and tolerability of LYT-100 in adults
with Long COVID respiratory complications and related sequelae.
Topline results are expected in the second half of 2021.
- In December 2020, we announced the initiation of a Phase 2a
proof-of-concept study of LYT-100 in patients with breast
cancer-related, upper limb secondary lymphedema. Topline results
are expected in the first half of 2022.
- We are planning registration-enabling studies of LYT-100 for
the treatment of idiopathic pulmonary fibrosis, or IPF, and
potentially other progressive fibrosing interstitial lung diseases,
or PF-ILDs, and we expect to provide additional guidance later this
year.
LYT-200
- In December 2020, we announced the initiation of our Phase 1
clinical trial to evaluate LYT-200 as a potential treatment for
metastatic solid tumors, with topline results anticipated in the
fourth quarter of 2021. The primary objective of the Phase 1
portion of the adaptive Phase 1/2 trial is to assess the safety and
tolerability of escalating doses of LYT-200 in order to identify a
dose to carry forward into the Phase 2 portion of the trial. The
Phase 1 portion will also assess the PK and pharmacodynamic, or PD,
profiles of LYT-200. Pending favorable topline results, we intend
to initiate the Phase 2 expansion cohort portion of the trial,
which is designed to evaluate LYT-200 either alone and/or in
combination with chemotherapy and anti-PD-1 therapy for the
treatment of multiple solid tumor types, including pancreatic
cancer and cholangiocarcinoma, or CCA.
- In June 2020, we presented a scientific poster for LYT-200 at
the American Association for Cancer Research, or AACR, 2020 Virtual
Annual Meeting. New preclinical results were presented that
established galectin-9 as a novel target for cancer
immunotherapy.
LYT-300 and the Glyph™ Technology Platform
- We are advancing our Glyph technology platform, which is
designed to employ the body’s natural lipid absorption and
transport process to orally administer drugs via the lymphatic
system. We have successfully extended the platform to encompass
more than 20 molecules as well as a range of novel linker
chemistries that have demonstrated promising lymphatic targeting in
preclinical studies. Our most advanced Glyph candidate, LYT-300, is
an oral form of allopregnanolone, an FDA-approved drug, which is a
natural neurosteroid that we believe may be applicable to a range
of neurological conditions. We expect to initiate a clinical trial
with LYT-300 by the end of 2021.
- In the February 2021 post-period, preclinical proof-of-concept
for our Glyph technology was published in the Journal of Controlled
Release. The results demonstrate the ability of this platform to
directly target gut lymphatics with an orally dosed small molecule
immunomodulator.
Orasome™ Technology Platform
- We progressed our Orasome technology platform, which utilizes
multiple vesicle components, including those isolated from milk.
Our Orasome vesicles are being designed to transport macromolecular
medicines to selected mucosal cell types of the intestinal tract.
In 2021, we expect preclinical proof-of-concept data and anticipate
additional preclinical results from a non-human primate
proof-of-concept study. This work could lay the foundation for
investigational new drug, or IND, application enabling clinical
studies for one or more additional therapeutic candidates to be
included in our Wholly Owned Pipeline.
Corporate Highlights
- On November 16, 2020, we commenced trading of American
Depository Shares, or ADSs, on the Nasdaq Global Market under the
ticker symbol “PRTC” (the “U.S. Listing”). In addition to the U.S.
Listing, we maintain our premium listing on the Official List of
the UK Financial Conduct Authority and trading on the main market
of the London Stock Exchange. Our ticker symbol in the UK is also
PRTC, and we are a member of the FTSE250 index.
- In October 2020, we announced the appointment of biotech
entrepreneur Kiran Mazumdar-Shaw to our board of directors. Ms.
Shaw brings extensive experience in biotherapeutics, strategic
leadership, financial and business development and a dedication to
improving patients’ lives to our board of industry leaders.
- In the January 2021 post-period, we announced that George
Farmer, Ph.D., was appointed as Chief Financial Officer. Dr. Farmer
is responsible for all aspects of our finances, including capital
markets strategy and execution, strategic and financial planning
and financial reporting.
Financial Highlights
- In 2020, we sold shares in our Founded Entities for cash
consideration of $350.6 million, while in the February 2021
post-period we sold an additional one million shares in Karuna
Therapeutics, Inc. for cash consideration of $118 million.
- PureTech level cash and cash equivalents were $443.4 million as
of March 31, 20211 and $349.4 million as of December 31, 20202. We
extended our cash runway guidance by one year 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
$486.5 million as of March 31, 20213 and $403.9 million as of
December 31, 20204.
- PureTech’s Founded Entities raised $247.8 million in 20205 and
an additional $473.2 million in the 2021 post-period6, almost all
of which came from third parties.
Significant regulatory, clinical and financial momentum
across PureTech’s Founded Entities8
PureTech’s Founded Entities have made significant progress
advancing 22 therapeutics and therapeutic candidates, of which two
have been cleared for marketing by the U.S. Food and Drug
Administration and granted marketing authorization in the European
Economic Area and 13 are clinical stage. Key developments included
the following:
Founded Entities in which PureTech has a
controlling interest or the right to receive royalties, in order of
development stage:
- Gelesis, Inc. (PureTech ownership: 19.3%; We also have a right
to royalty payments as a percentage of net sales)
- In June 2020, Gelesis received approval to market Plenity®9
with a Conformité Européenne, or CE, Mark as a class III medical
device indicated for weight loss in overweight and obese adults
with a Body Mass Index, or BMI, of 25-40 kg/m2, when used in
conjunction with diet and exercise. In addition to its U.S. FDA
clearance, Gelesis is now able to market Plenity® throughout the
European Economic Area and in other countries that recognize the CE
Mark. Gelesis plans to bring Plenity to the U.S. first, where it
has been available to a limited extent since the second half of
2019 through an early experience program and since 2020 via a beta
launch while the company ramps up its commercial operations and
inventory for a broader launch in the second half of 2021. In just
one month of limited promotion and marketing investment during the
limited launch, Gelesis acquired more new patients on Plenity, than
any other branded prescription in the weight loss market. Gelesis
also plans to seek FDA input on the requirements for expanding the
Plenity label for treating adolescents.
- In June 2020, Gelesis announced a partnership with China
Medical System Holdings Ltd., or CMS, for the commercialization of
Plenity in China. Through the terms of the deal, CMS provided $35
million upfront in a combination of licensing fees and equity
investment, with the potential for an additional $388 million in
future milestone payments as well as royalties.
- In the second half of 2020, Gelesis initiated a Phase 3 study
of GS500 in functional constipation.
- In November 2020, Gelesis’ collaborator Alessandra Silvestri,
Ph.D., of the Laboratory of Mucosal Immunology and Microbiota at
Humanitas Research Hospital, presented a poster on the therapeutic
benefits of Gel-B (GS300) at The Liver Meeting, the American
Association for the Study of Liver Diseases, or AASLD, annual
conference. The data demonstrated that, in a preclinical model, the
proprietary therapeutic candidate reversed the damage to the
intestines induced by a high fat diet and Gelesis believes that
therapies exploiting the gut liver axis may offer a unique
treatment option for metabolic liver disorders.
- Also in November 2020, Gelesis presented three posters at
ObesityWeek 2020, the annual congress of The Obesity Society.
Presentations included new data that showed that prediabetes and
impaired beta cell function were associated with a dysfunctional
gut barrier, a potential precursor to metabolic diseases; an
additional analysis of Gelesis’ pivotal GLOW study suggested
fasting plasma glucose levels and insulin resistance could be
strong predictors of weight loss with Plenity; and a new in vitro
beverage interaction study that demonstrated Plenity’s hydrogel
maintained its properties in the presence of alcoholic or acidic
drinks.
- In September 2020, Gelesis delivered one oral presentation and
two poster presentations showcasing notable efficacy data for
Plenity® at the European and International Congress on Obesity, or
ECO-ICO 2020.
- In March 2020, Gelesis was named to Fast Company’s list of the
World’s Most Innovative Companies for 2020.
- Karuna Therapeutics, Inc. (PureTech ownership: 8.2%; We also
have a right to royalty payments as a percentage of net sales)
- In June 2020, Karuna announced next steps in the EMERGENT
program, the clinical program evaluating KarXT for the treatment of
adults with schizophrenia, following the completion of a successful
End-of-Phase 2 meeting with the FDA.
- In December 2020, Karuna announced the initiation of the Phase
3 EMERGENT-2 trial, the first of two Phase 3 five-week inpatient
trials evaluating the efficacy and safety of KarXT for the
treatment of acute psychosis in adults with schizophrenia.
- In May 2020, Karuna presented data from EMERGENT-1, the Phase 2
clinical trial evaluating KarXT for the treatment of acute
psychosis in patients with schizophrenia, at the American Society
of Clinical Psychopharmacology, or ASCP, 2020 Annual Meeting. The
poster and oral presentation detailed new and previously reported
efficacy and safety data from the Phase 2 clinical trial.
- In the first quarter of the 2021 post-period, Karuna announced
the initiation of the Phase 3 EMERGENT-4 trial, a 52-week,
outpatient, open-label long-term safety and tolerability extension
trial of EMERGENT-2 and EMERGENT-3.
- In the February 2021 post-period, 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, or NEJM.
- Follica, Incorporated (PureTech ownership: 78.2%; We also have
a right to royalty payments as a percentage of net sales)
- In June 2020, Follica announced the completion of a successful
End-of-Phase 2 meeting with the FDA for its lead program to treat
male androgenetic alopecia, which supports the progression into
Phase 3 development. The initiation of a Phase 3 registration
program in male androgenetic alopecia is expected in 2021.
- In December 2020, Follica announced the publication of a pilot
study evaluating scalp skin disruption to promote hair growth in
female pattern hair loss, or FPHL, in International Journal of
Women’s Dermatology. The pilot study, led by Maryanne M. Senna,
M.D., an Assistant Professor of Dermatology at Harvard Medical
School, demonstrated the treatment promoted hair growth over a
four-month course of treatment.
- In the January 2021 post-period, Follica announced the
appointment of two leaders in aesthetic medicine and dermatology to
its Board of Directors. Tom Wiggans, former CEO 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 CEO of Cynosure,
joined as an Independent Director with over 30 years of experience
in the medical device industry.
- Vedanta Biosciences, Inc. (PureTech ownership: 49.5%)
- In June 2020, Vedanta announced topline Phase 1 clinical data
in healthy volunteers, which showed that VE202, Vedanta’s
orally-administered live biotherapeutic product, or LBP, candidate
for inflammatory bowel disease, or IBD, was generally
well-tolerated at all doses studied and demonstrated durable and
dose-dependent colonization. The trial was conducted by Janssen
Research & Development, LLC, and a more complete study dataset
and analyses will be submitted to a peer-reviewed journal. Vedanta
expects to advance VE202 into a Phase 2 study for IBD in 2021.
Vedanta has regained full rights to the program and will owe
Janssen single-digit royalty payments on net sales of a
commercialized product.
- In the January 2021 post-period, Vedanta announced a $25
million investment from Pfizer as part of the Pfizer Breakthrough
Growth Initiative. The proceeds will fund the Phase 2 study of
VE202 in IBD. Vedanta will retain control of all its programs and
has granted Pfizer a right of first negotiation on VE202.
- In October 2020, additional data from a Phase 1 clinical study
of VE202 in healthy volunteers was presented by Janssen Research
& Development, LLC, at United European Gastroenterology, or
UEG, Week 2020. The new UEG Week data presentation focused on the
kinetics and durability of colonization from an 11-strain
consortium of VE202 under various dosing and pre-treatment
regimens.
- Vedanta has also continued to progress its three ongoing
clinical trials of VE303, VE416 and VE800. In 2021, Vedanta
anticipates topline results from a Phase 2 trial of VE303 in
high-risk Clostridioides difficile infection, or CDI and a
first-in-patient clinical trial of VE800 in combination with
Bristol- Myers Squibb’s checkpoint inhibitor Opdivo® (nivolumab) in
patients with select types of advanced or metastatic cancer.
Topline results from a Phase 1/2 trial of VE416 for food allergy
are expected in 2022.
- In June 2020, Vedanta strengthened its balance sheet with an
additional $12 million in new equity and R&D collaboration
funds, bringing its total Series C round to $71.1 million.
- In September 2020, Vedanta announced it has been awarded
funding of $7.4 million, with the potential for up to an additional
$69.5 million, from the Biomedical Advanced Research and
Development Authority, or BARDA, to advance clinical development of
VE303 for high-risk CDI. Vedanta is the first-ever recipient of a
BARDA award in the microbiome field.
- Sonde Health, Inc. (PureTech ownership: 44.6%)
- In July 2020, Sonde launched Sonde One for Respiratory, a new
voice-enabled health detection and monitoring app, to potentially
help employers improve employee safety, meet government mandates
and satisfy their own administrative needs as they reopen office
doors in a COVID-19 environment.
- In August 2020, Sonde acquired NeuroLex Labs, a leading
voice-enabled survey and data acquisition platform. The transaction
did not involve any financial participation from PureTech.
- In November 2020, Sonde announced the launch of a new Developer
Portal that provides organizations with access to Sonde’s advanced
vocal biomarker-based health check technology. As part of the
launch, Sonde has introduced a new self-serve application
programming interface, or API, and documentation to allow
developers to quickly, easily, and autonomously integrate Sonde’s
voice-enabled respiratory symptoms checker into their own iOS and
Android mobile applications.
- Sonde has collected over one million voice samples from over
80,000 subjects as a part of the ongoing validation of its
platform, and it has also initiated research and development to
expand its proprietary technology into Alzheimer’s disease, or AD,
respiratory and cardiovascular disease, as well as other health and
wellness conditions, including mental health.
- Alivio Therapeutics, Inc. (PureTech ownership: 78.0%)
- Alivio continued to advance its targeted disease
immunomodulation platform for the potential treatment of chronic
and acute inflammatory disorders. Alivio expects an IND filing for
ALV-107 for interstitial cystitis or bladder pain syndrome, or
IC/BPS, in 2021 and an IND for ALV-304 in IBD in 2023. Alivio is
also evaluating the potential application of its proprietary
platform to enable the oral administration of biologics in
additional indications.
- In October 2020, Alivio announced a $3.3 million U.S.
Department of Defense, or DoD, Technology/Therapeutic Development
Award to advance its therapeutic candidate, ALV-304, for the
treatment of IBD. The funds will support Alivio’s preclinical
research and development activities to potentially enable the IND
filing.
- Entrega, Inc. (PureTech ownership: 72.9%)
- 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 Lilly therapeutic candidates. In 2020, the
partnership was extended into 2021.
Founded Entities in which PureTech has an
equity interest, in order of development stage:
- Akili Interactive Labs, Inc. (PureTech ownership: 33.7%)
- In June 2020, Akili received clearance from the FDA to market
EndeavorRx™10 (AKL-T01) as a prescription treatment for improving
attention function in children with attention-deficit/hyperactivity
disorder, or ADHD. Delivered through a captivating video game
experience, EndeavorRx is 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. Akili plans to take a scaled approach
to the commercial launch of EndeavorRx in 2021. The FDA clearance
followed the April 2020 announcement that ENDEAVOR™ would be
available for use for a limited time by children with ADHD and
their families in response to new guidance from the FDA recognizing
the need for access to certain low-risk clinically-validated
digital health devices for psychiatric conditions, including ADHD,
during the COVID-19 pandemic.
- Also in June 2020, Akili announced that it had received
approval to market EndeavorRx in Europe. Akili received a CE Mark
certification for EndeavorRx as a prescription-only digital
therapeutic intended for the treatment of attention and inhibitory
control deficits in pediatric patients with ADHD. The CE Mark
approval enables the future marketing of EndeavorRx in European
Economic Area member countries. With a near-term focus on launching
the EndeavorRx prescription treatment in the U.S. first, Akili is
exploring expansion opportunities in Europe as part of its global
strategy.
- In the April 2021 post-period, Akili announced collaborations
with Weill Cornell Medicine, NewYork-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 brain 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.
- In January 2020, Akili announced that its STARS Adjunct trial
achieved its primary endpoint evaluating the effects of EndeavorRx
in children with ADHD when used with and without stimulant
medication. The study achieved its predefined primary efficacy
outcome, demonstrating a statistically significant improvement in
the ADHD Impairment Rating Scale, or IRS, from baseline after one
month of treatment (p<0.001) in both children taking stimulant
medications and in those not taking stimulants.
- In February 2020, The Lancet Digital Health journal published
the results from Akili’s STARS-ADHD pivotal trial of AKL-T01.
- In October 2020, Akili announced multiple data presentations on
EndeavorRx, including results from the STARS Adjunct trial, a
multi-site open-label study designed to evaluate the impact of
EndeavorRx on impairments in daily life in children with ADHD and
inform prescribing practices. Also presented were analyses across
four clinical trials of EndeavorRx, evaluating the impact of
treatment on children’s attention function compared to normative
ranges. The data were presented for the first time at the American
Academy of Child and Adolescent Psychiatry, or AACAP, 2020 Virtual
Annual Meeting.
- In the March 2021 post-period, Nature Digital Medicine
published the full results from the STARS Adjunct trial.
- Vor Biopharma Inc. (PureTech ownership: 8.6%)
- In the January 2021 post-period, Vor announced that the FDA had
accepted the company’s IND application for VOR33. Vor plans to
enroll the first patient in a Phase 1/2a clinical trial for VOR33
in the second quarter of 2021 and expects initial human engraftment
and protection data from this trial to be reported in late 2021 or
in the first half of 2022.
- In the February 2021 post-period, Vor 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
from the offering were approximately $203.4 million, before
deducting the underwriting discounts and commissions and other
offering expenses payable by Vor.
- In July 2020, Vor announced a $110 million Series B financing
to advance VOR33 into clinical trials, deepen its portfolio and
accelerate the validation of additional targets for its scientific
platform.
- In November 2020, Vor announced an exclusive licensing
agreement with the National Cancer Institute, or NCI, part of the
National Institutes of Health, or NIH, for intellectual property
related to a clinical-stage anti-CD33 chimeric antigen receptor T
cell, or CAR-T, therapy candidate, VCAR33. VCAR33 is currently
being evaluated in a multi-site Phase 1/2 clinical trial in young
adults and pediatric patients with relapsed or refractory acute
myeloid leukemia, or AML, and Vor expects initial monotherapy
clinical proof-of-concept data in 2022, depending on investigator’s
timing of data release.
- In January 2020, Vor held a pre-IND meeting with the FDA to
gather feedback to assemble the data package for a potential IND
filing.
PureTech Health today released its Annual Report for the year
ended December 31, 2020. 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,
2020; and
- Notice of 2021 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 May
27, 2021 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 light of COVID-19, it will not be
possible for the Directors to travel to the United Kingdom. The
Company has therefore decided to hold the AGM in the United States
where most of the Directors are resident.
The Company’s preference had been to welcome shareholders in
person to the 2021 AGM, particularly given the constraints faced in
2020 due to the COVID-19 pandemic. However, at present, in light of
the limits on international travel and the public health guidance
issued in the UK and the US and in order to protect the wellbeing
of PureTech’s people and shareholders, the Company is proposing to
hold the AGM as a closed meeting with the minimum attendance
required to form a quorum. Accordingly, shareholders will not be
permitted to attend the AGM in person but can be represented by the
Chair of the meeting acting as their proxy.
The Company continues to closely monitor the evolving situation
in respect of COVID-19 and its forthcoming 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 Tuesday May
25, 2021. 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. 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 26 products and product
candidates, including two that have received FDA clearance and
European marketing authorization. All of the underlying programs
and platforms that resulted in this pipeline of product candidates
were initially identified or discovered and then advanced by the
PureTech team through key validation points based on the Company's
unique insights into the biology of the brain, immune and gut, or
BIG, systems and the interface between those systems, referred to
as the BIG Axis.
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, including statements that relate to the
company's future prospects, developments, and strategies. The
forward-looking statements are based on current expectations and
are subject to known and unknown risks and uncertainties that could
cause actual results, performance and achievements to differ
materially from current expectations, including, but not limited
to, our expectations regarding the potential therapeutic benefits
of our product candidates and those of our Founded Entities, our
expectations regarding 2021 milestones and timing, including with
respect to clinical trial initiations and expected data readouts,
our ability to broaden access to an international investor base,
our cash runway and financial position as well as those risks and
uncertainties described in the risk factors included in the
regulatory filings for PureTech Health plc (including the risk
factors in our 2020 Annual Report and Accounts). 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,
neither the company nor any other party intends 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 March 31, 2021. The
measure includes cash outflows and inflows for the first quarter of
2021, particularly the sale of 1,000,000 common shares of Karuna
for aggregate proceeds of $118.0 million on February 9, 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 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 December 31, 2020.
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 March 31, 2021. The
measure includes cash outflows and inflows for the first quarter of
2021, particularly the sale of 1,000,000 common shares of Karuna
for aggregate proceeds of $118.0 million on February 9, 2021.
- 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,
2020.
- 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 such as those with Boehringer
Ingelheim, Imbrium Therapeutics L.P., Shionogi & Co., Ltd. or
Eli Lilly. Funding figure does not include Vor’s gross proceeds of
$203.4 million from its February 2021 post-period IPO or Karuna’s
gross proceeds of $269.8 million from its February 2021 post-period
follow-on offering.
- Funding figure includes Vor’s gross proceeds of $203.4 million
from its February 2021 post-period IPO and Karuna’s gross proceeds
of $269.8 million from its February 2021 post-period follow-on
offering.
- References in this report to “Wholly Owned Programs” refer to
the Company’s four therapeutic candidates (LYT-100, LYT-200,
LYT-210 and LYT-300), three discovery platforms and potential
future therapeutic candidates and discovery platforms that the
Company may develop or obtain. References to “Wholly Owned
Pipeline” refer to LYT-100, LYT-200, LYT-210 and LYT-300.
- Relevant ownership interests for Founded Entities were
calculated on a diluted basis (as opposed to a voting basis) as of
December 31, 2020, including outstanding shares, options and
warrants, but excluding unallocated shares authorized to be issued
pursuant to equity incentive plans. Karuna ownership is calculated
on an outstanding voting share basis as of March 4, 2021. Vor
ownership is calculated on an outstanding voting share basis as of
February 9, 2021.
- Important Safety Information: 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 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. EndeavorRx is available by
prescription only. It is not intended to be used as a stand-alone
therapeutic and is not a substitution for a child’s
medication.
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 69 to 71 and in the Additional Information section
from pages 191 to 227, 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,
2020 and 2019 and for the years ended December 31, 2020, 2019 and
2018 have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards (IFRSs)
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the EU. 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 we have 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 accounted for at fair value, does not take into
consideration contribution from milestones that occurred after
December 31, 2020, the value of our consolidated Founded Entities
(Vedanta, Follica, Sonde, Akili, Alivio, and Entrega), our Wholly
Owned Programs, or our cash.
Business Background and Results Overview
The business background is discussed from pages 1 to 59, 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
Founded Entities’ therapeutics candidates, which may never occur.
Our Founded Entities, Gelesis, Inc., or Gelesis, and Akili
Interactive Labs, Inc., or Akili in which we lost control in 2019
and 2018, respectively, have products cleared for sale, but we and
our Controlled Founded Entities have not generated any revenue from
product sales.
We have deconsolidated a number of our Founded Entities during
the past three fiscal years including Akili, in 2018 and, Vor
Biopharma Inc., or Vor, Karuna Therapeutics, Inc., or Karuna and
Gelesis Inc., or Gelesis, during 2019. We expect this trend to
continue into the foreseeable future as our Controlled Founded
Entities raise additional funding. 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 to our preclinical and clinical programs within
our Wholly Owned Programs and Controlled Founded Entities. In
addition, having completed our U.S. listing in November 2020, we
expect 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 clinical
studies for LYT-100, LYT-200, LYT-210 and LYT-300, and as we
continue to progress our GlyphTM and OrasomeTM technology platforms
as well as our meningeal lymphatics discovery 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 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 to
support our continuing operations and pursue our growth strategy.
Until such time as we can generate significant revenue from product
sales, if ever, we expect to finance our operations through a
combination of public or private equity or debt financings or other
sources, which may include monetization of certain of our interests
in our Founded Entities and collaborations with third parties. 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 fail to raise capital or enter into such agreements as,
and when needed, we may have to significantly 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
Consolidated Cash Reserves
Measure type: Core performance
Definition: Cash and cash
equivalents, and Short-term investments 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)
Why we use it: Consolidated Cash
Reserves is a measure that provides valuable additional information
with respect to cash reserves available to fund the Wholly Owned
Programs and Founded Entities
PureTech Level Cash Reserves
Measure type: Core performance
Definition: Cash and cash
equivalents, and Short-term investments 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)
Why we use it: PureTech Level Cash
Reserves is a measure that provides valuable additional information
with respect to cash reserves available to fund the Wholly Owned
Programs and make certain investments in Founded Entities
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 (Please refer to Note 1 to our consolidated financial
statements for further information with respect to our wholly-owned
subsidiaries)
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
Consolidated Cash Reserves as of March 31,
2021
Measure type: Core performance
Definition: Cash and cash
equivalents, and Short-term investments held at PureTech Health plc
and consolidated subsidiaries as of March 31, 2021
Why we use it: The measure includes
cash outflows and inflows for the first quarter of 2021,
particularly the sale of 1,000,000 common shares of Karuna for
aggregate proceeds of $118.0 million on February 9, 2021. Further,
the measure allows for a more current representation of the
Consolidated Cash Reserves (see above in table) as of the date of
signing of our Consolidated Financial Statements
PureTech Level Cash Reserves as of March
31, 2021
Measure type: Core performance
Definition: Cash and cash
equivalents, and Short-term investments held at PureTech Health plc
and only wholly-owned subsidiaries as of March 31, 2021
Why we use it: The measure includes
cash outflows and inflows for the first quarter of 2021,
particularly the sale of 1,000,000 common shares of Karuna for
aggregate proceeds of $118.0 million on February 9, 2021. Further,
the measure allows for a more current representation of the
PureTech Level Cash Reserves (see above in table) as of the date of
signing of our Consolidated Financial Statements
PureTech Level Cash and Cash Equivalents
as of March 31, 2021
Measure type: Core performance
Definition: Cash and cash
equivalents held at PureTech Health plc and only wholly-owned
subsidiaries as of March 31, 2021
Why we use it: The measure includes
cash outflows and inflows for the first quarter of 2021,
particularly the sale of 1,000,000 common shares of Karuna for
aggregate proceeds of $118.0 million on February 9, 2021. Further,
the measure allows for a more current representation of the
PureTech Level Cash and Cash Equivalents (see above in table) as of
the date of signing of our Consolidated Financial Statements
COVID-19
In December 2019, illnesses associated with COVID-19 were
reported and the virus has since caused widespread and significant
disruption to daily life and economies across geographies. The
World Health Organization has classified the outbreak as a
pandemic. Our business, operations and financial condition and
results have not been significantly impacted during the year ended
December 31, 2020 as a result of the COVID-19 pandemic. In response
to 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
have made certain assumptions regarding the pandemic for purposes
of our operational planning and financial projections, including
assumptions regarding the duration and severity of the pandemic and
the global macroeconomic impact of the pandemic. Despite careful
tracking and planning, however, we are unable to accurately predict
the extent of the impact of the pandemic on our business,
operations, and financial condition and results in future periods
due to the uncertainty of future developments. We are focused on
all aspects of our business and are implementing measures aimed at
mitigating issues where possible including by using digital
technology to assist operations for our R&D and enabling
functions.
Recent Developments (subsequent to December 31, 2020)
On January 8, 2021, PureTech participated in the second closing
of Vor’s Series B Preferred Share financing. For consideration of
$0.5 million, PureTech received 961,538 shares.
On February 9, 2021, Vor closed its initial public offering of
9,828,017 shares at a price to the public of $18.00 per share.
Subsequent to the closing, PureTech held 3,207,200.00 shares of Vor
common stock, representing 8.6% of Vor common stock.
On February 9, 2021, PureTech Health sold 1,000,000 common
shares of Karuna for aggregate proceeds of $118.0 million.
Following the sale PureTech holds 2,406,564 shares of Karuna common
stock, representing 8.2% of Karuna common stock.
As of March 31, 2021, we had consolidated cash and cash
equivalents of $486.5 million and PureTech Level cash and cash
equivalents of $443.4 million.
Financial Highlights
As of:
(in thousands)
March 31, 2021
December 31, 2020
December 31, 2019
Cash and cash equivalents
486,469
403,881
132,360
Short-term investments
—
—
30,088
Consolidated Cash Reserves
486,469
403,881
162,448
Less: Cash and cash equivalents held at
non-wholly owned subsidiaries
(43,072
)
(54,473
)
(41,840
)
PureTech Level Cash Reserves
443,397
349,407
120,608
Less: Short-term investments
—
—
(30,088
)
PureTech Level Cash and Cash
Equivalents
$
443,397
$
349,407
$
90,520
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 quarterly 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 four
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.
Internal
The Internal segment is advancing Wholly Owned Programs designed
to harness key immunological, fibrotic and lymphatic system
mechanisms. These novel classes of immunomodulatory drugs are
designed to treat serious diseases, including lung dysfunction,
immuno-oncology, lymphatic, neurological and neuropsychological
disorders. 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, 2020, this segment included PureTech LYT, Inc.
(formerly Ariya Therapeutics Inc.) and PureTech LYT 100, 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, 2020, this segment included Alivio Therapeutics,
Inc., 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 segment
The Parent Company and Other segment 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. This segment 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, 2020, 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, 2020:
Internal Segment
PureTech LYT
100.0
%
PureTech LYT-100, Inc.
100.0
%
Controlled Founded Entities
Alivio Therapeutics, Inc.
91.9
%
Entrega, Inc.
83.1
%
Follica, Incorporated
85.4
%
Sonde Health, Inc.
51.8
%
Vedanta Biosciences, Inc.
59.3
%
Non-Controlled Founded Entities
Akili Interactive Labs, Inc.
41.9
%
Gelesis, Inc.
25.1
%
Karuna Therapeutics, Inc.
12.7
%
Vor Biopharma Inc.
16.4
%
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 revenue from product sales
and we do not expect to generate any 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 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.
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 and continue
to progress our GlyphTM and OrasomeTM technology platforms as well
as our meningeal lymphatics discovery research program and other
potential therapeutic candidates 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 U.S.
Food and Drug Administration, or FDA, the European Medicines
Agency, or 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, ResTORbio (until its sale in 2020) and certain
insignificant investments. Our ownership in Akili and Vor is in
preferred shares. 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. 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 blockage
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
in connection with our ability to exert significant influence over
an investment in a Non-Controlled Founded Entity. As of December
31, 2020, only our investment in Gelesis meets the scope of equity
method accounting. For the years ended December 31, 2019 and
December 31, 2018, we recognized gains on loss of significant
influence in Karuna and resTORbio, respectively.
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.
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, 2020, 2019
and 2018 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)
2020
2019
2018
Change (2019 to 2020)
Change (2018 to 2019)
Contract revenue
$
8,341
$
8,688
$
16,371
$
(347
)
$
(7,683
)
Grant revenue
3,427
1,119
4,377
2,308
(3,258
)
Total revenue
11,768
9,807
20,748
1,961
(10,941
)
Operating expenses:
General and administrative expenses
(49,440
)
(59,358
)
(47,365
)
9,918
(11,993
)
Research and development expenses
(81,859
)
(85,848
)
(77,402
)
3,988
(8,445
)
Operating income/(loss)
(119,531
)
(135,399
)
(104,019
)
15,868
(31,380
)
Other income/(expense):
Gain/(loss) on deconsolidation
—
264,409
41,730
(264,409
)
222,679
Gain/(loss) on investments held at fair
value
232,674
(37,863
)
(34,615
)
270,537
(3,248
)
Loss realized on sale of investment
(54,976
)
—
—
(54,976
)
—
Loss on impairment of intangible asset
—
—
(30
)
—
30
Gain/(loss) on disposal of assets
(30
)
(82
)
4,060
52
(4,142
)
Gain on loss of significant influence
—
445,582
10,287
(445,582
)
435,295
Other income/(expenses)
1,065
121
(278
)
944
399
Other income/(loss)
178,732
672,167
21,154
(493,434
)
651,013
Net finance income/(costs)
(6,115
)
(46,147
)
25,917
40,032
(72,065
)
Share of net gain/(loss) of associates
accounted for using the equity method
(34,117
)
30,791
(11,490
)
(64,908
)
42,281
Impairment of investment in associate
—
(42,938
)
—
42,938
(42,938
)
Income/(loss) before income
taxes
18,969
478,474
(68,438
)
(459,504
)
546,911
Taxation
(14,401
)
(112,409
)
(2,221
)
98,008
(110,188
)
Net income/(loss) including
non-controlling interest
4,568
366,065
(70,659
)
(361,497
)
436,724
Net (loss)/income attributable to the
Company
$
5,985
$
421,144
$
(43,654
)
$
(415,159
)
$
464,798
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
$
3,560
$
6,064
$
(2,503
)
Controlled Founded Entities
2,726
2,487
239
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
$
32
$
15
$
17
Controlled Founded Entities
3,395
1,104
2,291
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 $2.5 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
$
(41,583
)
$
(25,977
)
$
15,607
Controlled Founded Entities
(40,043
)
(42,780
)
(2,737
)
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 $2.7 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 $15.6 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
$
(2,112
)
$
(2,385
)
$
(273
)
Controlled Founded Entities
(15,061
)
(14,436
)
625
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.
Comparison of the Years Ended December 31, 2019 and
2018
Total Revenue
Year Ended December 31,
(in thousands)
2019
2018
Change
Contract Revenue:
Internal Segment
$
6,064
$
2,110
$
3,954
Controlled Founded Entities
2,487
14,233
(11,745
)
Non-Controlled Founded Entities
—
—
—
Parent Company and other
137
29
108
Total Contract Revenue
$
8,688
$
16,371
$
(7,683
)
Grant Revenue:
Internal Segment
$
15
$
86
$
(71
)
Controlled Founded Entities
1,104
4,271
(3,167
)
Non-Controlled Founded Entities
—
20
(20
)
Parent Company and other
—
—
—
Total Grant Revenue
$
1,119
$
4,377
$
(3,258
)
Total Revenue
$
9,807
$
20,748
$
(10,941
)
Our total revenue was $9.8 million for the year ended December
31, 2019, a decrease of $10.9 million, or 52.7 percent compared to
the year ended December 31, 2018. The decline was attributable to
decreases of $11.7 million in contract revenue and $3.2 million in
grant revenue in the Controlled Founded Entities segment for the
year ended December 31, 2019, which was driven primarily by
Vedanta's contract revenue earned under its milestone-based JBI
collaboration agreement and grant revenue earned pursuant to its
CARB-X agreement during 2018. The decline in Controlled Founded
Entities segment's contract and grant revenues, was partially
offset by a $4.0 million increase in contract revenue in the
Internal segment, which was driven by increases in contract revenue
earned under the Orasome collaboration and license agreement with
Roche and the Lymphatic Targeting platform collaboration and
license agreement with Boehringer Ingelheim entered into in July
2019 for the year ended December 31, 2019.
Research and Development Expenses
Year Ended December 31,
(in thousands)
2019
2018
Change
Research and Development Expenses:
Internal Segment
$
(25,977
)
$
(8,929
)
$
17,047
Controlled Founded Entities
(42,780
)
(36,930
)
5,850
Non-Controlled Founded Entities
(15,555
)
(29,851
)
(14,296
)
Parent Company and other
(1,536
)
(1,692
)
(156
)
Total Research and Development
Expenses:
$
(85,848
)
$
(77,402
)
$
8,446
Our research and development expenses were $85.8 million for the
year ended December 31, 2019, an increase of $8.4 million, or 10.9
percent compared to the year ended December 31, 2018. The change
was attributable to increases of $17.0 million in the Internal
segment for the year ended December 31, 2019. In 2019, we continued
to shift our focus towards the Internal segment, investing in
research and development activities to advance a Wholly Owned
Pipeline of therapeutic candidates designed to harness key
immunological, fibrotic and lymphatic system mechanisms. During the
year ended December 31, 2019, we progressed LYT-100 towards first
patient dosing in its Phase 1 multiple ascending dose and food
effect study, which began in 2020, and prepared for the initiation
of a Phase 1 clinical study of LYT-200 in solid tumors, which also
began in 2020. Research and development expenses in the Controlled
Founded Entities segment also increased $5.9 million as Vedanta
progressed its candidates VE202, VE303, VE416 and VE800 to
meaningful milestones. The increases were partially offset by a
decline of $14.3 million in the Non-Controlled Founded Entities
segment owing to the deconsolidation of Akili during the year ended
December 31, 2018 and the deconsolidation of Vor, Karuna and
Gelesis during the year ended December 31, 2019.
General and Administrative Expenses
Year Ended December 31,
(in thousands)
2019
2018
Change
General and Administrative Expenses:
Internal Segment
$
(2,385
)
$
(1,498
)
$
887
Controlled Founded Entities
(14,436
)
(10,212
)
4,224
Non-Controlled Founded Entities
(10,439
)
(16,385
)
(5,946
)
Parent Company and other
(32,098
)
(19,270
)
12,828
Total General and Administrative
Expenses
$
(59,358
)
$
(47,365
)
$
11,993
Our general and administrative expenses were $59.4 million for
the year ended December 31, 2019, an increase of $12.0 million, or
25.3 percent compared to the year ended December 31, 2018. The
change was attributable to increases of $12.8 million in the Parent
segment for year ended December 31, 2019, which was primarily
driven by increased professional fees incurred in the exploration
of an ADR listing and increased non-cash depreciation and
amortization expenses incurred in the implementation of IFRS 16
Leases and the lease we entered into during the year ended December
31, 2019 for our new headquarters. Controlled Founded Entities
segment's general and administrative expenses also increased by
$4.2 million. The increases in the Internal and Controlled Founded
Entities segments' general and administrative were offset by the
deconsolidation of Akili during the year ended December 31, 2018
and the deconsolidation of Vor, Karuna and Gelesis during the year
ended December 31, 2019
Total Other Income/(Loss)
Total other income was $672.2 million for the year ended
December 31, 2019, an increase of $651.0 million, as compared to
the year ended December 31, 2018. The growth was attributable to an
increase of $435.3 million in gain on loss of significant influence
for the year ended December 31, 2019. For the year ended December
31, 2019 we recognized a gain on loss of significant influence of
$445.6 million with respect to Karuna, while for the year ended
December 31, 2018 we recognized a gain on loss of significant
influence of $10.3 million with respect to resTORbio. The growth
was further attributable to an increase of $222.7 million in gain
on deconsolidation as we recognized a gain of $264.4 million for
the deconsolidation of Vor, Karuna and Gelesis during the year
ended December 31, 2019, as compared to a gain of $41.7 million for
the deconsolidation of Akili during the year ended December 31,
2018. The gains were partially offset by a decline of $4.1 million
in income related to asset disposals and an increase in fair value
accounting losses of $3.2 million on certain investments held at
fair value for the year ended December 31, 2019.
Net Finance Income (Costs)
Net finance costs were $46.1 million for the year ended December
31, 2019, an increase of $72.1 million in costs, or 278.1 percent
as compared to the year ended December 31, 2018. The change was
primarily attributable to a $70.5 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, 2019.
Share of Net Gain/(Loss) in Associates Accounted for Using
the Equity Method, and Impairment of Investment in
Associate
The share of net income in associates was $30.8 million for the
year ended December 31, 2019, an increase of $42.3 million, or
368.0 percent as compared to a net loss for the year ended December
31, 2018. The change in associate income was attributable to the
deconsolidation of Karuna and Gelesis and subsequent equity method
accounting from the date of deconsolidation to December 31, 2019.
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 $112.4 million for the year ended
December 31, 2019, an increase of $110.2 million, or 4961.2 percent
as compared to the year ended December 31, 2018. The growth 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) adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the EU. The Consolidated Financial Statements also
comply fully with IFRSs 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 management, 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
Income Taxes
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 amounts 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 enacted tax rates in
effect for the year in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities for a change in tax rates is recognized in
income in the period that includes the enactment date. Net deferred
tax assets are not recorded if we do not assess their realization
as probable. Judgement is required to determine if realization of
such deferred tax assets is probable.
Share-based Payments
Share-based payments includes stock options, restricted stock
units (“RSUs”) as well as service, market and performance-based RSU
awards in which the expense is recognized based on the grant date
fair value of these awards.
In accordance with IFRS 2, “Share-based Payments,” the fair
value of the share option awards is estimated on the grant date
using the Black-Scholes option-valuation model which requires the
input of certain assumptions, including the expected life of the
share-based award, share price volatility, dividend yield and
interest rate. The volatility is based on our historical data for
the purposes of the Black-Scholes option-valuation model. Expected
life is based on the median expected term. Volatility is calculated
by taking the weighted-average of the historical volatilities of
our shares. We have not declared dividends and we do not plan to
pay any dividends in the future. The risk-free interest rate for
periods in the expected life of the option is based on the U.S.
Treasury constant maturities in effect at the time of the
grant.
The fair value of the market and performance-based awards is
based on the Monte Carlo simulation analysis utilizing a Geometric
Brownian Motion process with 100,000 simulations to value those
shares. The model considers share price volatility, risk-free rate
and other covariance of comparable public companies and other
market data to predict distribution of relative share
performance.
We recognize the estimated fair value of service, market and
performance-based awards as share-based compensation expense over
the vesting period based upon the determination of whether it is
probable that the performance targets will be achieved. We assess
the probability of achieving the performance targets at each
reporting period. Cumulative adjustments, if any, are recorded to
reflect subsequent changes in the estimated outcome of
performance-related conditions. For share-based payment awards with
market conditions, the grant date fair value is measured to reflect
such conditions and there is no true-up for differences between
expected and actual outcomes.
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 generated by wholly-owned and Controlled-Founded
Entity therapeutic candidates;
- the revenue 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, 2020, we had consolidated cash and cash
equivalents of $403.9 million. As of December 31, 2020, we had
PureTech Level cash and cash equivalents of $349.4 million.
Cash Flows
The following table summarizes our cash flows for each of the
periods presented:
Years Ended December 31,
(in thousands)
2020
2019
2018
Net cash used in operating activities
$
(131,827
)
$
(98,156
)
$
(72,796
)
Net cash provided by/(used in) investing
activities
364,478
63,659
(39,645
)
Net cash provided by/(used in) financing
activities
38,869
49,910
156,887
Effect of exchange rates on cash and cash
equivalents
—
(104
)
(44
)
Net increase in cash and cash
equivalents
$
271,520
$
15,309
$
44,402
Operating Activities
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.
Net cash used in operating activities was $98.2 million for the
year ended December 31, 2019, as compared to $72.8 million for the
year ended December 31, 2018. The increase in outflows was
primarily due to our increased operating loss that resulted from
increased research and development activities. In 2019, our income
resulted from increased non-cash gains, that had no impact on the
cash used in operating activities.
Investing Activities
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.
Net cash provided by investing activities was $63.7 million for
the year ended December 31, 2019, as compared to net cash used in
investing activities of $39.6 million for the year ended December
31, 2018. Cash provided by the maturity of short-term investments
of $174.0 million was offset by the purchase of short-term
investments of $69.5 million as well as the purchase of fixed
assets totaling $12.1 million and the purchase of intangible assets
totaling $0.4 million. The inflow was further offset by our
investment in Gelesis convertible promissory notes totaling $6.5
million and Gelesis Series 3 Growth preferred shares and Karuna
Series B preferred shares totaling $16.0 million. The inflow was
further offset by the derecognition of cash totaling $16.0 million
held by Vor, Karuna and Gelesis upon deconsolidation.
Financing Activities
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.
Net cash provided by financing activities was $49.9 million for
the year ended December 31, 2019, as compared to net inflows of
$156.9 million for the year ended December 31, 2018. The net inflow
was primarily attributable to aggregate proceeds of the issuance of
$51.0 million received from the Vedanta Series C and C-2, Gelesis
Series 2 Growth and Sonde Series A-2 preferred share financings.
Further inflows of $1.6 million were attributable to the proceeds
from the issuance of convertible notes by Karuna. The inflows were
partially offset by payment of our lease liability totaling $1.7
million and $1.3 million in withholding payroll tax payments
related to the vesting of 2016 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, 2020 will be sufficient to fund our operations and
capital expenditure requirements into the first quarter of 2024 and
following the sale of 1,000,000 common shares of Karuna for
aggregate proceeds of $118.0 million on February 9, 2021, we have
sufficient funding to extend operations over a four year period
into the first quarter of 2025. We expect to incur substantial
additional expenditures in the near term to support our ongoing
activities. Additionally, we expect to incur additional costs as a
result of operating as a U.S. public company. We expect to continue
to incur net losses for the foreseeable future. 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. 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 FDA, 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 in the future, and we may
need additional funds to meet operational needs and capital
requirements associated with such operating plans.
Until such time, if ever, as we can generate substantial product
revenue, we expect to finance our operations through a combination
of equity financings, debt financings, collaborations with other
companies or other strategic transactions. We do not currently have
any committed external source of funds. To the extent that we raise
additional capital through the sale of equity or convertible debt
securities, your ownership interest will be diluted, and the terms
of these securities may include liquidation or other preferences
that adversely affect your rights as a common stockholder. Debt
financing and preferred equity financing, if available, may involve
agreements that include covenants limiting or restricting our
ability to take specific actions, such as incurring additional
debt, making acquisitions or capital expenditures or declaring
dividends. If we raise additional funds through collaborations,
strategic alliances or marketing, distribution or licensing
arrangements with third parties, we may have to relinquish valuable
rights to our technologies, future revenue streams, research
programs or therapeutic candidates or grant licenses on terms that
may not be favorable to us. If we are unable to raise additional
funds through equity or debt financings or other arrangements when
needed, we may be required to delay, limit, reduce or terminate our
research, therapeutic development or future commercialization
efforts or grant rights to develop and market therapeutic
candidates that we would otherwise prefer to develop and market
ourselves.
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 committed sources of
capital. Because of the numerous risks and uncertainties associated
with the development and commercialization of our wholly-owned
therapeutic candidates, we are unable to estimate the amounts of
increased capital outlays and operating expenditures associated
with our current and anticipated therapeutic development
programs.
Financial Position
Summary Financial Position
As of December 31,
(in thousands)
2020
2019
Change
Investments held at fair value
530,161
714,905
(184,744
)
Other non-current assets
45,484
57,428
(11,943
)
Non-current assets
575,645
772,333
(196,687
)
Short-term investments
—
30,088
(30,088
)
Cash and cash equivalents
403,881
132,360
271,521
Other current assets
10,468
6,397
4,071
Current assets
414,348
168,845
245,504
Total assets
989,994
941,178
48,816
Lease Liability
32,088
34,914
(2,827
)
Deferred tax liability
108,626
115,445
(6,820
)
Other non-current liabilities
14,818
1,219
13,598
Non-current liabilities
155,531
151,579
3,952
Trade and other payables
20,566
19,750
817
Notes payable
26,455
1,455
25,000
Warrant liability
8,206
7,997
209
Preferred shares
118,972
100,989
17,983
Other current liabilities
6,724
9,011
(2,287
)
Total current liabilities
180,924
139,201
41,722
Total liabilities
336,455
290,780
45,674
Net assets
653,539
650,397
3,142
Total equity
653,539
650,398
3,141
Investments Held at Fair Value
Investments held at fair value decreased $184.7 million to
$530.2 million as of December 31, 2020. Investments held at fair
value consists primarily of our common share investment in Karuna
and our preferred share investments in Akili, Gelesis and Vor. See
Notes 5 and 6 to our consolidated financial statements included
elsewhere in this annual report. Fair value of investments
accounted for at fair value, does not take into consideration
contribution from milestones that occurred after December 31, 2020,
the value of our consolidated Founded Entities (Vedanta, Follica,
Sonde, Akili, Alivio, and Entrega), our Wholly Owned Programs, or
our cash.
Cash and Cash Equivalents, and Short-term Investments
Consolidated cash, cash equivalents and short-term investments
increased $241.4 million to $403.9 million as of December 31, 2020,
while we had PureTech Level cash and cash equivalents of $349.4
million. The increase reflected primarily the disposals of Karuna
common shares during the year ended December 31, 2020. On January
22, 2020, PureTech sold 2,100,000 shares of Karuna common shares
for aggregate proceeds of $200.9 million. On May 26, 2020, PureTech
sold an additional 555,500 Karuna common shares for aggregate
proceeds of $45.0 million. On August 26, 2020, PureTech sold
1,333,333 common shares of Karuna for aggregate proceeds of $101.6
million. The inflows from the disposals were primarily offset by
our operating loss of $119.5 million for the year ended December
31, 2020.
Non-Current Liabilities
Non-current liabilities increased $4.0 million to $155.5 million
as of December 31, 2020. The increase reflected the execution by
Vedanta of a $15.0 million long-term loan and security agreement
with Oxford Finance LLC which was partially offset by declines of
$2.8 million and $6.8 million in our long-term lease and deferred
tax liabilities, respectively as of December 31, 2020.
Trade and Other Payables
Trade and other payables decreased $0.8 million to $20.6 million
as of December 31, 2020. The decline reflected primarily the timing
of payments as of December 31, 2020.
Notes Payable
Notes payable increased $25.0 million to $26.5 million as of
December 31, 2020. The increase reflected the issuance by Vedanta
of a $25.0 million convertible promissory note to a third party
investor.
Preferred Shares
Preferred share liability increased $18.0 million to $119.0
million as of December 31, 2020. The increase reflected the
issuance by Sonde of Series A-2 preferred shares for aggregate
proceeds of $4.8 million and the issuance by Vedanta of Series C-2
preferred shares for aggregate proceeds of $9.0 million. The
increases also reflected Finance costs of $4.2 million owing to the
change in fair value of preferred shares during the year ended
December 31, 2020.
Quantitative and Qualitative Disclosures about Financial
Risks
Interest Rate Sensitivity
As of December 31, 2020, we had consolidated cash and cash
equivalents of $403.9 million, while we had PureTech Level cash and
cash equivalents of $349.4 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 $0.5 million, $0.0 million and $0.2 million for the
years ended December 31, 2020, December 31, 2019, and December 31,
2018, 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 $530.2 million as of December 31, 2020 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, 2020, 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, 2020, we held 3,406,564 common shares of
Karuna. The fair value of our investment in the common stock of
Karuna was $346.1 million.
The investment in Karuna is 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 as of
December 31, 2020 would have been a loss of approximately $34.6
million recognized as a component of Other income (expense) in our
Consolidated Statements of Comprehensive Income/(Loss).
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, cash equivalents and short-term investments 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. Our exposure to credit losses is low, however,
due to the credit quality of our larger collaborative partners such
as Boehringer Ingelheim and Eli Lilly.
JOBS Act Exemptions and Foreign Private Issuer Status
We qualify as an “emerging growth company” as defined in the
U.S. Jumpstart Our Business Startups Act of 2012. An emerging
growth company may take advantage of specified reduced reporting
and other requirements that are otherwise applicable generally to
public companies. This includes an exemption from the auditor
attestation requirement in the assessment of our internal control
over financial reporting pursuant to the Sarbanes-Oxley Act of
2002. We may take advantage of this exemption for up to five years
or such earlier time that we are no longer an emerging growth
company. We will cease to be an emerging growth company if we have
more than $1.07 billion in total annual gross revenue, have more
than $700.0 million in market value of our ordinary shares held by
non-affiliates or issue more than $1.0 billion of non-convertible
debt over a three-year period. We may choose to take advantage of
some but not all of these provisions that allow for reduced
reporting and other requirements.
We are considering whether we will take advantage of the
extended transition period provided under Section 7(a)(2)(B) of the
Securities Act of 1933, as amended, for complying with new or
revised accounting standards. Since IFRS makes no distinction
between public and private companies for purposes of compliance
with new or revised accounting standards, the requirements for our
compliance as a private company and as a public company are the
same.
Owing to our U.S. listing, we will 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. Even after we
no longer qualify as an emerging growth company, 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 2020 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/20210414005917/en/
Investors Allison Mead Talbot +1 617 651 3156
amt@puretechhealth.com
EU media Ben Atwell, Rob Winder +44 (0) 20 3727 1000
ben.atwell@FTIconsulting.com
U.S. media Stephanie Simon +1 617 581 9333
stephanie@tenbridgecommunications.com
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