PureTech Health PLC Sponsored ADR (PRTC) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.T ...

Financial Data and Key Metrics Changes - The company ended the half year with cash, cash equivalents, and short-term investments of just under $320 million, compared to over $366 million at the end of 2024 [50][51] - Operating expenses for the first half of 2025 were just under $50 million, down from $66.7 million in the same period last year, reflecting a reduction in R&D and G&A costs [51][52] - The company has maintained a self-funding model, allowing it to avoid shareholder dilution and providing operational runway well into 2028 [17][50] Business Line Data and Key Metrics Changes - The company is focusing on three core founded entities: Seaport Therapeutics, Gallup Oncology, and Solea Therapeutics, which are expected to deliver significant financial upside and new treatments for patients [11][12] - Seaport Therapeutics has raised over $325 million from top-tier life science investors, maintaining a 35.1% equity interest in the company [22][23] - Gallup Oncology's lead program, LYT200, has received multiple FDA designations, including Fast Track and Orphan Drug Designation for AML, indicating strong clinical progress [44] Market Data and Key Metrics Changes - The company is looking to strengthen its engagement with UK capital markets through a renewed focus on its LSE listing, aiming to deliver value for its UK shareholder base [7][8] - The potential market opportunity for new treatments in idiopathic pulmonary fibrosis (IPF) is significant, with combined peak sales of existing medications reaching over $5 billion annually [30] Company Strategy and Development Direction - The company is prioritizing three strategic pillars: developing new treatments for patients, strengthening engagement with UK capital markets, and maintaining a disciplined capital allocation approach [6][8] - The hub and spoke model allows the company to allocate modest capital to early-stage assets and discontinue those that do not show promise, while investing significantly in areas with high potential [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical data for dupafenidone, which has shown unprecedented efficacy in treating IPF, and is preparing for a Phase III trial initiation in 2026 [39][41] - The company is actively seeking external funding for its spun-out entities to reduce R&D costs on its balance sheet and extend its cash runway [59][60] Other Important Information - The company has a healthy balance sheet with just under $320 million in cash, allowing it to fund operations without external capital for several years [17][50] - Management has indicated that they are continually reviewing new opportunities for innovation and potential assets for development [73] Q&A Session Summary Question: Can you provide insight into the operating costs for the first half of 2025? - The majority of the R&D spend is attributed to Solea and Gallup, with expectations for further reductions in R&D overhead as these entities spin out [56][57] Question: What is the timeline for partnering discussions regarding Solea? - The company is confident in the trial design for dupafenidone and is actively working on financing packages while awaiting FDA engagement [61][63] Question: What are the key variables for the FDA regarding the Phase III trial design for LYT100? - The briefing book for the Phase III trial design has been submitted to the FDA, with a meeting expected in September to discuss the trial design [70][71] Question: Is there potential for business development to expand the pipeline? - The company is continually looking at new opportunities for innovation and has several assets under internal review [73] Question: What is the focus of partnering discussions for Gallup Oncology? - Current partnering discussions are primarily focused on liquid tumors, particularly AML, but the company remains open to all discussions [81]

Financial Data and Key Metrics Changes - The company ended the half year with cash, cash equivalents, and short-term investments of just under $320 million, compared to over $366 million at the end of 2024, indicating a decrease in cash reserves [54][19] - Operating expenses for the first half of 2025 were just under $50 million, down from $66.7 million in the same period last year, reflecting a reduction in costs as a result of the spin-out of Seaport [55][56] Business Line Data and Key Metrics Changes - The company is focusing on three core founded entities: Seaport Therapeutics, Gallup Oncology, and Silea Therapeutics, which are expected to deliver significant financial upside and new treatments for patients [12][13] - Seaport Therapeutics has raised over $325 million since its founding in April 2024, indicating strong investor interest and validation of its business model [25][24] Market Data and Key Metrics Changes - The company has a healthy balance sheet with operational runway extending well into 2028, allowing it to avoid dilution of shareholders [19] - The potential value from Cabenci, a drug developed internally, is projected to be around $300 million over time based on third-party analyst forecasts [18][20] Company Strategy and Development Direction - The company is prioritizing three strategic pillars: developing new treatments for patients, strengthening engagement with UK capital markets, and maintaining a disciplined capital allocation approach [6][8] - The hub and spoke model allows the company to allocate modest capital to early-stage assets and discontinue those that do not show promise, while investing significantly in areas with high potential [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical progress of their lead program, dupafenadone, and its potential to address high unmet medical needs [5][6] - The company is actively seeking external funding for its founded entities to reduce R&D costs on its balance sheet, which will enhance cash runway and shareholder value [62][63] Other Important Information - The company is committed to maintaining its primary listing in London due to its attractiveness for portfolio businesses and the support from UK shareholders [87][89] - Management is open to exploring various financing structures for its founded entities, including equity contributions from external parties [80][81] Q&A Session Summary Question: What proportion of the operating costs is attributed to Solaya and Gallup? - The majority of R&D spend is attributed to Solaya and Gallup, with expectations for further reductions in R&D overhead as these entities spin out [60][61] Question: What are the key variables for FDA discussions regarding phase three trial design for LYT100? - The briefing book for the Phase 3 trial design has been submitted to the FDA, with a meeting expected in September to discuss trial design questions [72][73] Question: When should investors expect disclosure of pipeline activities beyond LYT100 and LYT200? - The company is continually reviewing new opportunities for innovation and will disclose promising assets when they are ready [75][76] Question: Is there a preference for the format of partnering for Solaya? - The company typically expects equity contributions from external parties as the default method for funding, but is open to other capital structures [79][80] Question: Is interest in partnering discussions focused more on liquid or solid tumors for Gallup? - Current partnering discussions are primarily focused on liquid tumors, particularly AML, but the company remains open to all discussions [82][83]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F | (Mark One) | | | --- | --- | | ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | OR | | ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | For the fiscal year ended December 31, 2024 | | | OR | | ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | For the transition period from to ...

Executive Summary & Company Highlights PureTech Health achieved significant clinical, regulatory, and financial milestones in 2024, securing FDA approval and maintaining a strong balance sheet [Overview of 2024 Achievements](index=1&type=section&id=Overview%20of%202024%20Achievements) PureTech Health achieved significant clinical, regulatory, and financial milestones in 2024, including positive Phase 2b results for LYT-100, FDA approval of Cobenfy™, and rapid growth of Seaport Therapeutics, maintaining a robust balance sheet into at least 2027 - PureTech's innovation engine drove meaningful clinical, regulatory, and financial milestones in **2024**[2](index=2&type=chunk) - Key achievements include positive Phase 2b results for wholly-owned **deupirfenidone (LYT-100)** in IPF and compelling Phase 1b data for wholly-owned **LYT-200** in AML and solid tumors[2](index=2&type=chunk) - FDA approval of PureTech-invented **Cobenfy™** for schizophrenia and rapid growth of Founded Entity **Seaport Therapeutics**, which raised over **$325 million**, were also significant[2](index=2&type=chunk) Cash, Cash Equivalents, and Short-Term Investments | Metric | As of Dec 31, 2024 | As of Mar 31, 2025 | | :------------------------------------------------ | :------------------- | :------------------- | | PureTech level cash, cash equivalents, and short-term investments | $366.8 million | $339.1 million | | Consolidated cash, cash equivalents, and short-term investments | $367.3 million | $339.5 million | - The company has an operational runway into at least **2027**[2](index=2&type=chunk)[26](index=26&type=chunk) [Webcast and Conference Call Information](index=1&type=section&id=Webcast%20and%20Conference%20Call%20Information) PureTech Health plc will host a webcast and conference call on April 30, 2025, at 9:00 am EDT / 2:00 pm BST to discuss its annual results - A webcast and conference call will be held on **April 30, 2025**, at **9:00 am EDT / 2:00 pm BST** to discuss the results[4](index=4&type=chunk) - Live webcast and presentation slides are available on PureTech's investor relations website under 'Events and Presentations'[4](index=4&type=chunk) - Dial-in numbers for the UK and US, along with a global access code (**018948**), are provided for phone participation[4](index=4&type=chunk) Operational Highlights PureTech's wholly-owned programs and Founded Entities achieved significant clinical, regulatory, and financial milestones in 2024 and early 2025 [Wholly-Owned Programs](index=2&type=section&id=Wholly-Owned%20Programs) PureTech's wholly-owned programs, deupirfenidone (LYT-100) and LYT-200, demonstrated significant clinical progress in 2024 and early 2025 - PureTech's wholly-owned programs, **deupirfenidone (LYT-100)** and **LYT-200**, delivered significant clinical and regulatory milestones[10](index=10&type=chunk) [Deupirfenidone (LYT-100)](index=2&type=section&id=Deupirfenidone%20(LYT-100)) Deupirfenidone (LYT-100) achieved positive Phase 2b results in IPF, showing potential to stabilize lung function, with plans for a Phase 3 trial by year-end 2025 - Positive topline results from the **ELEVATE IPF Phase 2b clinical trial** were announced in **December 2024**, meeting primary and key secondary endpoints[10](index=10&type=chunk) - The higher dose (**825 mg TID**) demonstrated the potential to stabilize lung function over **26 weeks**, with an effect size **50% greater** than pirfenidone[10](index=10&type=chunk) - Preliminary data from the ongoing open label extension (OLE) study indicate sustained slowing of lung function decline through **52 weeks**[10](index=10&type=chunk) - PureTech plans to meet with the FDA before the end of **Q3 2025** to discuss Phase 2b results and aims to initiate a Phase 3 trial by the end of **2025**[10](index=10&type=chunk) [Gallop Oncology (LYT-200)](index=3&type=section&id=Gallop%20Oncology%20(LYT-200)) LYT-200, advanced by Gallop Oncology, showed promising clinical activity and a favorable safety profile in AML/MDS and head and neck cancers, receiving FDA Fast Track and Orphan Drug designations - **LYT-200 (anti-galectin-9 mAb)** is being advanced for hematological malignancies (AML, MDS) and solid tumors (head and neck cancers)[16](index=16&type=chunk) - In an ongoing Phase 1b trial for relapsed/refractory AML and MDS, **LYT-200** showed a favorable safety profile and promising clinical efficacy, including complete and partial responses[16](index=16&type=chunk) - The Phase 1b trial for solid tumors (head and neck cancers) was completed, demonstrating a favorable safety profile, disease control, and initial efficacy signals, including a complete response lasting over **two years**[16](index=16&type=chunk) - **LYT-200** received FDA **Fast Track designation** for AML (**January 2025**) and recurrent/metastatic head and neck cancer (**March 2024**), and **Orphan Drug designation** for AML (**February 2024**)[16](index=16&type=chunk) [Founded Entities](index=3&type=section&id=Founded%20Entities) PureTech's Founded Entities achieved significant milestones, including FDA approval of Cobenfy™ for schizophrenia, triggering $29 million in milestone payments and future royalties - PureTech's Founded Entities continued to advance their programs, securing regulatory approvals, significant financings, and clinical progress[5](index=5&type=chunk) [Karuna Therapeutics (Cobenfy™)](index=3&type=section&id=Karuna%20Therapeutics%20(Cobenfy%E2%84%A2)) Cobenfy™ (formerly KarXT) received FDA approval in September 2024 for schizophrenia, triggering $29 million in milestone payments and future royalties - **Cobenfy™ (formerly KarXT)** received FDA approval in **September 2024** for the treatment of schizophrenia in adults[13](index=13&type=chunk) - The FDA approval triggered **$29 million** in milestone payments to PureTech[13](index=13&type=chunk) - PureTech is entitled to potential future milestone payments and approximately **2% royalties** on net annual sales over **$2 billion**[13](index=13&type=chunk) [Seaport Therapeutics](index=3&type=section&id=Seaport%20Therapeutics) Seaport Therapeutics launched with a $100 million Series A financing, followed by a $226 million Series B, totaling $326 million raised since April 2024 - PureTech launched **Seaport Therapeutics** with a **$100 million** oversubscribed Series A financing[14](index=14&type=chunk) - This was followed by a **$226 million** oversubscribed Series B financing, bringing the total capital raised by Seaport to **$326 million** since **April 2024**[14](index=14&type=chunk) - Seaport is advancing novel neuropsychiatric medicines powered by the **Glyph platform**[14](index=14&type=chunk) [Vedanta Biosciences](index=3&type=section&id=Vedanta%20Biosciences) Vedanta Biosciences initiated a pivotal Phase 3 study for VE303 and anticipates Phase 2b results for VE202 in 2025 - Vedanta enrolled the first patient in the pivotal **Phase 3 RESTORATiVE303 study** of **VE303** for the prevention of recurrent *C. difficile* infection (rCDI) in **May 2024**[17](index=17&type=chunk) - Additional results from the **VE303 Phase 2 CONSORTIUM clinical trial** were published in *Nature Medicine* in **January 2025**[17](index=17&type=chunk) - Vedanta anticipates topline results from its **Phase 2b clinical trial** of **VE202** in ulcerative colitis in **2025**[17](index=17&type=chunk) [Vor Biopharma](index=3&type=section&id=Vor%20Biopharma) Vor Biopharma continued clinical progress with trem-cel and VCAR33ALLO, receiving Fast Track and Orphan Drug designations - Vor continued to progress its **Phase 1/2 VBP101 study** of **trem-cel** in AML and MDS, showing durable engraftment and shielding from Mylotarg toxicity[15](index=15&type=chunk) - Vor received supportive feedback from the FDA regarding a registrational clinical trial design for **trem-cel**[15](index=15&type=chunk) - In **2024**, Vor dosed the first patient in **VBP301**, a **Phase 1/2 study** of **VCAR33ALLO** (CAR-T cell therapy) in relapsed/refractory AML, which received **Fast Track** and **Orphan Drug designations**[18](index=18&type=chunk) Company Information This section provides an overview of PureTech Health, its forward-looking statements, and contact information [About PureTech Health](index=4&type=section&id=About%20PureTech%20Health) PureTech Health is a clinical-stage biotherapeutics company focused on developing new classes of medicine for devastating diseases, leveraging a hub-and-spoke R&D model - PureTech is a clinical-stage biotherapeutics company dedicated to developing new medicines for devastating diseases[26](index=26&type=chunk) - Its R&D engine has developed **29 therapeutic candidates**, with **three** having received FDA approval[27](index=27&type=chunk) - Programs are advanced both internally and through Founded Entities, utilizing a **hub-and-spoke model**[26](index=26&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20

Financial Data and Key Metrics Changes - PureTech's cash position at the end of 2023 was $326 million, a decrease from $339.5 million at the end of 2022 [34] - On a consolidated basis, cash, cash equivalents, and short-term investments were $327.1 million at the end of 2023, down from $350.1 million at the end of 2022 [35] - The company reported a 2023 operating loss of $146.2 million, improved from a loss of $197.8 million in 2022, primarily due to decreased R&D expenses [53] - Consolidated net loss for 2023 was $66.6 million, compared to a net loss of $37.1 million in 2022 [54] Business Line Data and Key Metrics Changes - The company has generated 29 new therapeutics and therapeutic candidates to date, with a focus on advancing candidates through a hub-and-spoke R&D model [12] - Karuna's acquisition by BMS for $14 billion exemplifies the company's ability to create value through its Founded Entities [13] Market Data and Key Metrics Changes - Revenues in 2023 were $3.3 million, a significant decrease from $15.6 million in 2022, driven by fluctuations in collaboration payments and grants [39] Company Strategy and Development Direction - The company employs a hub-and-spoke R&D model to efficiently progress promising new medicines while generating capital through Founded Entities [7][9] - A $100 million tender offer is proposed to return capital to shareholders, alongside a completed $50 million share buyback program [15][17] - The company aims to maintain a cash runway of at least three years to support internal programs and Founded Entities [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial position and commitment to delivering shareholder value despite adverse macroeconomic factors [15][55] - The company anticipates multiple clinical milestones across internal and Founded Entity programs in 2024 [33] Other Important Information - The company has retained 61.5% ownership in Seaport Therapeutics after a $100 million oversubscribed Series A financing [14] - The company is focused on maintaining ownership positions in Founded Entities while supporting their capital raises [47] Q&A Session Summary Question: What is the hurdle for LYT-200 data this year for external investment? - Management indicated that the decision for external investment will depend on the data outcomes from the ongoing trials [37][38] Question: How will the company think about capital returns moving forward? - Management emphasized a commitment to returning capital to shareholders while maintaining operational flexibility and a healthy balance sheet [42][43] Question: What is the focus for new program ideas? - The company will continue to focus on therapeutics with high unmet patient needs and strong underlying data to support new program development [49][51]

Financial Performance and Position - As of December 31, 2023, the company had never generated revenue from its therapeutic candidates within its Internal Programs[16] - The company has not generated operational profits and may never achieve profitability[16] - The company considers its working capital to be sufficient for its present requirements[205] - There are no known trends or uncertainties that are likely to materially affect the company's net revenue, income, profitability, liquidity, or capital resources from January 1, 2023, to the present[207] - The preferred shares issued by subsidiaries are classified as liabilities and are redeemable only upon liquidation events, which are unpredictable[203] - The company has no off-balance sheet arrangements that are likely to have a material effect on its financial condition or results of operations[204] - The financial statements consolidate the company's subsidiaries and include interests in associates and investments held at fair value[197] - The company is required to make royalty payments in connection with the sale of products developed under various license and collaboration agreements, contingent upon successful sales[202] - The company has incorporated various financial reviews and key performance indicators in its annual report for 2023[198] - The company's financial statements are prepared in accordance with IFRS, reflecting its financial position as of December 31, 2023[196] Funding and Development Challenges - The company may require substantial additional funding to achieve its business goals, which could delay or limit therapeutic development efforts[16] - The therapeutic candidates within the company's Internal Programs and most of its Founded Entities' candidates are in preclinical or clinical development, which is a lengthy and expensive process[16] - The marketing approval and certification process for therapeutic candidates is expensive, time-consuming, and uncertain, potentially hindering commercialization efforts[16] - The company relies on third parties for conducting clinical trials and research, which may not perform satisfactorily and could affect timelines[16] - The COVID-19 pandemic and future global health crises may materially and adversely affect the company's business operations[17] Competition and Market Landscape - The company faces significant competition in the biotechnology and pharmaceutical industries, with the potential for competitors to achieve regulatory approval before it does[33] - The Glyph technology platform currently has no direct competitors but may face future competition from new therapies[41] Regulatory and Approval Processes - The regulatory approval process in the U.S. requires substantial time and financial resources, including the submission of an IND before clinical trials can begin[42] - The FDA aims to review applications for original biologics or new-molecular-entity drugs within ten months, or six months for priority reviews[54] - The clinical investigation of a drug is divided into three phases, with Phase 3 trials providing statistically significant evidence of clinical efficacy[56] - The FDA may condition approval of an NDA or BLA on the sponsor's agreement to conduct additional clinical studies post-approval[49] - The FDA requires inspections of manufacturing facilities before approving an NDA or BLA to ensure compliance with cGMP requirements[57] - An approval letter from the FDA allows for commercial marketing of the product, while a Complete Response letter outlines deficiencies in the application[58] - The FDA may impose a Risk Evaluation and Mitigation Strategy (REMS) to manage serious risks associated with a product post-approval[59] - Combination products are regulated based on their primary mode of action, with the FDA assigning a lead center for review[60] - The FDA offers expedited programs like fast track and breakthrough therapy designations to accelerate the review process for qualifying product candidates[61] - Priority review designation aims for FDA action on marketing applications within six months for new-molecular-entity NDAs and original BLAs[64] - Accelerated approval may be granted if a product candidate shows effects on a surrogate endpoint likely to predict clinical benefit[65] - Orphan drug designation can provide exclusivity for seven years if the product is the first approved for a rare disease[70] - Post-approval, products are subject to ongoing FDA regulation, including record-keeping and reporting of adverse experiences[72] - The FDA may withdraw approval if compliance with regulatory requirements is not maintained after the product reaches the market[74] - The Hatch-Waxman Act allows for five years of non-patent data exclusivity for new drugs containing new chemical entities not previously approved by the FDA[79] - An ANDA or 505(b)(2) NDA cannot be approved until all listed patents have expired, unless a Paragraph IV certification is provided[77] - The BPCIA establishes a 12-year exclusivity period for reference products, during which biosimilars cannot be approved[81] - Pediatric exclusivity can add six months to existing exclusivity periods and patent terms if a pediatric study is completed[82] - The FDA's 510(k) clearance process typically takes three to twelve months for medical devices to demonstrate substantial equivalence to predicate devices[90] - Class III devices require a more rigorous PMA approval process if deemed not substantially equivalent to a predicate device[91] - The DEA regulates controlled substances, requiring annual registration for facilities handling these substances[84] - The FDA may impose civil penalties or refuse to renew registrations for non-compliance with controlled substance regulations[86] - The Hatch-Waxman Act provides three years of non-patent exclusivity for new formulations if new clinical studies were essential for approval[79] - The FDA's 510(k) clearance is necessary for any significant modifications to a device that could affect its safety or effectiveness[92] - The PMA process requires manufacturers to demonstrate device safety and effectiveness, supported by extensive data from pre-clinical studies and human clinical trials[94] - The FDA has 180 days to complete its review of a PMA application, although actual review times can extend to several years[94] - Manufacturers may be required to conduct post-approval surveillance to ensure ongoing safety and effectiveness of the device[95] - Changes to an approved device that affect safety or effectiveness require submission of a PMA supplement, which may not need as extensive clinical data[96] - The de novo classification process allows manufacturers to request down-classification of devices automatically classified as Class III, streamlining the approval process for low-to-moderate risk devices[97] - The FDA must classify a de novo request within 120 days, but this process can take longer in practice[98] - Clinical trials for medical devices must comply with FDA regulations, including obtaining IDE approval for significant risk devices[99] - Post-market regulations require compliance with QSR, including maintaining device master files and undergoing FDA inspections[102] - The FDA issued a final rule to amend the QSR, expected to take effect on February 2, 2026, aligning with ISO 13485:2016 standards[103] - The approval process for foreign markets varies significantly and may involve additional testing beyond FDA requirements[106] - The company must obtain separate regulatory approvals to market its product candidates in the EU, with a maximum evaluation timeframe of 210 days for a Marketing Authorization Application (MAA) under the centralized procedure[115] - Innovative medicinal products receive eight years of data exclusivity and an additional two years of market exclusivity upon MA, potentially extending to 11 years if new therapeutic indications are authorized[119] - Orphan medicinal products are entitled to ten years of market exclusivity for the approved indication, which can be extended by two years if a Pediatric Investigation Plan is complied with[122] - The company is required to establish and maintain a pharmacovigilance system and appoint a qualified person for pharmacovigilance (QPPV) to oversee safety profiles and emerging safety concerns[129] - All new MAAs must include a risk management plan (RMP) detailing the risk management system and measures to minimize associated risks[130] - The advertising and promotion of medicinal products must comply with EU directives, prohibiting off-label promotion and direct-to-consumer advertising of prescription medicines[131] - Payments made to physicians in certain EU member states must be publicly disclosed, and agreements often require prior notification and approval[133] - Non-compliance with EU and member state laws may result in administrative, civil, or criminal penalties, including delays or refusals to authorize clinical trials or grant MA[134] - The EU regulates drug-device combination products separately, requiring compliance with both medicinal product and medical device regulations[136] - The EMA evaluates the quality, safety, and efficacy of MAAs submitted through the centralized procedure, including the safety and performance of the medical device[137] - The EU Medical Devices Regulation became effective on May 26, 2021, establishing a uniform regulatory framework across the EU for medical devices[144] - Manufacturers must comply with new requirements under the EU Medical Devices Regulation, including registration in the Eudamed system and assigning unique identifiers to devices[146] - The IVDR fully applies since May 26, 2022, introducing a modernized framework for in vitro diagnostic medical devices[152] - Companion diagnostics now require a conformity assessment by a notified body, with a scientific opinion from the EMA if the medicinal product is authorized through the centralized procedure[155] - The UK Government's Windsor Agreement will take effect on January 1, 2025, transferring regulatory authority for Northern Ireland to the MHRA[156] - The UK regulatory framework for clinical trials is derived from existing EU legislation, with ongoing consultations to streamline approvals and enhance transparency[158] - Manufacturers must report serious incidents and Field Safety Corrective Actions to EU authorities under the reinforced vigilance system[147] - Compliance with ISO 13485:2016 is viewed as a practical way to satisfy essential requirements for medical devices[141] - The EU Medical Devices Directive has been replaced by the EU Medical Devices Regulation, which is directly applicable in member states[144] - Regulatory authorities in the EU have broad powers to enforce compliance, including inspections and penalties for non-compliance[149] - The MHRA has introduced a 150-day assessment and a rolling review procedure to prioritize access to new medicines for patients[159] - All existing EU marketing authorizations (MAs) for centrally authorized products were automatically converted to UK MAs effective January 1, 2021[159] - Medical devices must be registered with the MHRA, and manufacturers outside the UK must appoint a UK responsible person since January 1, 2022[161] - The UK Government has confirmed that core elements of the new medical device regulatory regime are likely to apply from July 2025[162] - CE marked medical devices can be placed on the GB market until the sooner of certificate expiry or June 30, 2028[169] - The UKCA mark will be required for products without existing CE certification from July 2025 to be sold in Great Britain[162] - The Northern Ireland Protocol requires devices marketed in Northern Ireland to follow EU rules, necessitating a CE mark or a 'UKNI' mark[163] Pricing and Reimbursement - Coverage and reimbursement for medical products depend significantly on third-party payors, with no uniform policy existing in the U.S.[175] - The company may need to conduct expensive pharmacoeconomic studies to demonstrate medical necessity and cost-effectiveness for product approval, which could impact sales and financial condition[176] - In the EU, drug pricing must be approved before marketing, with member states controlling reimbursement levels and requiring clinical trials for cost-effectiveness comparisons[177] - The Inflation Reduction Act of 2022 requires manufacturers to negotiate drug prices with Medicare starting in 2026 and imposes penalties for price increases that exceed inflation[183] - The Right to Try Act allows certain patients to access investigational drugs without FDA permission, but manufacturers must submit annual usage summaries to the FDA[185] - Health Technology Assessment (HTA) in the EU significantly influences pricing and reimbursement decisions, with negative assessments potentially undermining reimbursement prospects[188] - The company faces challenges in ensuring adequate payment for products due to government-controlled pricing in many countries, which may delay commercialization[187] - Legislative changes in the U.S. have included reductions in Medicare payments, which will remain in effect through 2032 unless further action is taken[182] - Increased scrutiny over drug pricing has led to state and federal legislation aimed at enhancing transparency and controlling pharmaceutical pricing[184] Human Resources and Management - The company’s future success depends on its ability to retain key personnel and attract qualified talent[17] - The board of directors consists of 6 members, with 2 females and 4 males, reflecting a diverse leadership structure[212] Operational Structure - The company operates as a foreign private issuer, exempting it from certain U.S. regulatory requirements applicable to domestic public companies[190] - The company has not disclosed any significant new strategies or market expansions in the current report[207]

Financial Position - As of December 31, 2023, the company had cash and cash equivalents of $191.1 million and short-term investments of $136.1 million, totaling $326.0 million in PureTech Level cash[174]. - The company believes existing financial assets will be sufficient to fund operations and capital expenditures into at least 2027[183]. - The company has no committed sources of capital beyond existing financial assets, indicating potential future funding needs[186]. - Cash and cash equivalents of $191.1 million and short-term investments of $136.1 million were reported, with a total of $326.0 million in PureTech Level cash[194]. Cash Flow - Net cash used in operating activities decreased to $105.9 million in 2023 from $178.8 million in 2022, a reduction of $72.9 million attributed to lower operating losses[177]. - Net cash provided by investing activities increased to $69.0 million in 2023, compared to a net cash outflow of $107.2 million in 2022, resulting in a $176.2 million improvement[179]. - Net cash provided by financing activities was $78.1 million in 2023, an increase of $108.0 million from a net cash outflow of $29.8 million in 2022, primarily due to a $100.0 million upfront payment from Royalty Pharma[181]. - The company reported a net increase in cash and cash equivalents of $41.2 million for the year ended December 31, 2023, compared to a decrease of $315.8 million in 2022[176]. - The company’s cash flow fluctuations are influenced by various factors, including operating losses and investment activities[174]. Investments - Investments held at fair value increased by $65.9 million to $317.8 million as of December 31, 2023, primarily due to a $73.5 million increase in the value of Karuna shares[189]. - The fair value of investments in common shares of Karuna, Vor, and Akili was $280.7 million, $6.0 million, and $6.1 million, respectively, as of December 31, 2023[199]. - A 10.0 percent adverse change in the market price of Karuna, Vor, and Akili common shares would result in a loss of $29.3 million[200]. Liabilities - Non-current liabilities increased by $126.2 million to $184.4 million, driven by a $100.0 million non-refundable initial payment from Royalty Pharma[191]. - Trade and other payables decreased by $10.7 million to $44.1 million, reflecting the deconsolidation of Vedanta[192]. - Preferred share liability decreased by $27.2 million, primarily due to a $24.6 million decrease from the deconsolidation of Vedanta[193]. Future Outlook - The company expects to incur substantial additional expenditures to support ongoing and future activities, anticipating continued net operating losses for the foreseeable future[184]. - The company does not expect significant effects on operating results or cash flows from changes in market interest rates due to the conservative nature of its investment portfolio[194]. - The company maintains a low exposure to credit risk due to a limited number of counterparties and high credit quality of these counterparties[203].

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) PureTech Health made significant clinical and financial progress in H1 2023, advancing its pipeline and strengthening its capital position [Half-Year Highlights](index=1&type=section&id=1.1%20Half-Year%20Highlights) PureTech Health achieved significant clinical and financial milestones in H1 2023, strengthening its pipeline and capital position Operational Highlights PureTech advanced its wholly-owned pipeline and Founded Entities, achieving significant clinical and regulatory milestones - Progressed Phase 2b dose-ranging trial of LYT-100 in idiopathic pulmonary fibrosis (IPF) - Initiated Phase 2a proof-of-concept trial for LYT-300 (oral allopregnanolone) for anxiety and depression, and received up to **$11.4 million** from the U.S. Department of Defense for LYT-300 in Fragile X-associated Tremor/Ataxia Syndrome (FXTAS)[12](index=12&type=chunk) - Initiated Phase 1b trial of LYT-200 (anti-galectin-9 mAb) in combination with tislelizumab for urothelial and head and neck cancers, and progressed single-agent Phase 1b trial for acute myeloid leukemia (AML)[12](index=12&type=chunk) - Karuna Therapeutics is on track to file KarXT for FDA approval in schizophrenia in Q3 2023, with a planned launch in H2 2024[12](index=12&type=chunk) - Akili released EndeavorOTC™ for adults with ADHD without a prescription and submitted data to the FDA to expand EndeavorRx® label to adolescents[12](index=12&type=chunk) - Gelesis filed a 510(k) application with the FDA to make Plenity® available without a prescription and has generated over **$40 million** in revenue since launch[12](index=12&type=chunk) - Vedanta Biosciences received Fast Track designation for VE303 for recurrent Clostridioides difficile infection (rCDI) and raised **$106.5 million**[12](index=12&type=chunk) Financial Highlights PureTech maintained strong cash position with **$350.5 million**, reduced operating expenses, and secured a **$500 million** KarXT royalty agreement Cash and Cash Equivalents (YoY) | Metric | June 30, 2023 | December 31, 2022 | Change | | :----- | :------------ | :---------------- | :----- | | Consolidated Cash and cash equivalents | $350.5 million | $350.1 million | +$0.4 million | | PureTech Level Cash and cash equivalents | $348.5 million | $339.5 million | +$9.0 million | Operating Expenses (YoY) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :----- | :----------------------------- | :----------------------------- | :----- | | Operating expenses | $79.3 million | $108.2 million | -$28.9 million | - PureTech and Royalty Pharma entered into a KarXT Royalty Agreement for up to **$500 million**, including **$100 million** upfront cash[12](index=12&type=chunk) - PureTech's Wholly Owned Pipeline has three clinical-stage therapeutic candidates across four clinical trials and four additional preclinical CNS programs[2](index=2&type=chunk) - Advancements across Founded Entities include Karuna's third positive registrational trial for KarXT, Akili's commercial release of EndeavorOTC™, Gelesis' application for non-prescription Plenity®, positive results from Vor's leukemia trial, and Vedanta's **$106.5 million** financing[2](index=2&type=chunk) - PureTech plans a more robust capital return strategy, leveraging cash from Founded Entities, and exploring new Founded Entities, asset sales, or partnerships for Wholly Owned Programs[2](index=2&type=chunk) Consolidated Cash and Cash Equivalents | Metric | June 30, 2023 | December 31, 2022 | | :----- | :------------ | :---------------- | | Consolidated Cash and cash equivalents | $350.5 million | $350.1 million | | Operational Runway | Into Q1 2026 | N/A | [Key Wholly Owned & Founded Entity Programs](index=2&type=section&id=1.2%20Key%20Wholly%20Owned%20%26%20Founded%20Entity%20Programs) PureTech maintains a diverse pipeline of wholly-owned candidates and a portfolio of Founded Entities addressing significant medical needs Wholly Owned Candidates | Candidate | Ownership | Indication | | :-------- | :-------- | :--------- | | LYT-100 (deupirfenidone) | 100% | Conditions involving inflammation and fibrosis, including idiopathic pulmonary fibrosis | | LYT-200 (anti-galectin-9 mAb) | 100% | Metastatic/locally advanced solid tumors, including urothelial and head and neck cancers, and hematological malignancies, such as acute myeloid leukemia | | LYT-300 (oral allopregnanolone) | 100% | A range of neurological and neuropsychological conditions, including anxiety, mood disorders and Fragile X-associated Tremor/Ataxia Syndrome | | LYT-310 (oral cannabidiol) | 100% | Epilepsies and other neurological conditions | Founded Entities Overview | Founded Entity | Ownership | Overview | | :------------- | :-------- | :------- | | Karuna | 2.8% Equity plus milestone payments, 20% sublicense revenue, royalties, and up to $500M from agreement with Royalty Pharma | Advancing transformative medicines for people living with psychiatric and neurological conditions | | Akili | 14.6% Equity | Pioneering the development of cognitive treatments through game-changing technologies | | Gelesis | 22.8% Equity plus Royalties | Advancing a novel category of treatments for weight management and gut related chronic diseases | | Vedanta | 41.0% Equity | Pioneering a new category of oral therapies based on defined bacterial consortia | | Vor Bio | 4.0% Equity | Engineering hematopoietic stem cells to enable targeted therapies for patients with blood cancers | | Sonde | 35.2% Equity | A voice-based artificial intelligence platform to detect changes in health | | Entrega | 73.8% Equity | Engineering hydrogels to enable the oral administration of peptide therapeutics (e.g., GLP-1 agonists) | [About PureTech Health](index=6&type=section&id=1.3%20About%20PureTech%20Health) PureTech Health is a clinical-stage biotherapeutics company with a high success rate, developing 27 therapeutics through internal R&D and Founded Entities - PureTech's R&D engine has developed 27 therapeutics and candidates, with two FDA-cleared (Plenity® and EndeavorRx®) and KarXT expected to be filed soon[17](index=17&type=chunk) - The company's clinical success rate is **six times greater** than the industry average[3](index=3&type=chunk)[25](index=25&type=chunk) [Key Upcoming Milestones](index=6&type=section&id=1.4%20Key%20Upcoming%20Milestones) PureTech and its Founded Entities anticipate several significant clinical, regulatory, and commercial milestones over the next 12-24 months - Wholly Owned Pipeline milestones include topline Phase 2b results for LYT-100 in IPF (2024), Phase 2a proof-of-concept results for LYT-300 (end of 2023), and initiation of a Phase 1 trial for LYT-310 (Q4 2023)[18](index=18&type=chunk) - Founded Entities milestones include Karuna's FDA filing for KarXT in schizophrenia (Q3 2023) and initiation of ADEPT-2 Phase 3 trial (H2 2023)[18](index=18&type=chunk) - Akili expects to submit data for EndeavorOTC™ marketing authorization (H2 2023) and Gelesis anticipates FDA decision on non-prescription Plenity® (Q1 2024)[18](index=18&type=chunk) - Vedanta plans to initiate a Phase 3 trial for VE303 in rCDI (Q4 2023) and expects topline data from VE416 Phase 1/2 trial (2023)[18](index=18&type=chunk) [Interim Management Report](index=8&type=section&id=Interim%20Management%20Report) This report details PureTech's strategic business model, significant advancements in its wholly-owned and Founded Entity programs, and operational highlights [Introduction & Business Model](index=8&type=section&id=2.1%20Introduction%20%26%20Business%20Model) PureTech's business model focuses on identifying unmet needs, de-risking programs, and generating non-dilutive capital through its high-success R&D engine - PureTech's R&D engine has generated 27 therapeutics and candidates, with two FDA-cleared and KarXT expected to be filed soon[23](index=23&type=chunk) - The company's distinctive approach to drug development involves identifying unmet needs, applying proprietary technologies to overcome limitations, and efficient de-risking through 'killer' experiments and disciplined R&D[23](index=23&type=chunk)[25](index=25&type=chunk) - PureTech has generated nearly **$800 million** from Founded Entity equity and royalty monetization events, without needing to raise funds from capital markets in almost six years[25](index=25&type=chunk) - The KarXT program, with an initial allocation of **$18.5 million**, has yielded an almost **50x return** on investment, including a **$100 million upfront** payment from Royalty Pharma and potential additional payments up to **$400 million**[26](index=26&type=chunk) [Notable Developments - Wholly Owned Programs](index=10&type=section&id=2.2%20Notable%20Developments%20-%20Wholly%20Owned%20Programs) PureTech's wholly-owned pipeline, leveraging validated efficacy, saw significant progress across LYT-100, LYT-300, LYT-310, and LYT-200 programs LYT-100 (deupirfenidone) LYT-100 is in Phase 2b for IPF, aiming for improved tolerability and potential U.S. registration, with exploration for other fibrotic conditions - LYT-100 is in Phase 2b for idiopathic pulmonary fibrosis (IPF), with topline results expected in 2024. It aims to improve tolerability and potentially efficacy over pirfenidone, addressing the high discontinuation rate of current treatments[30](index=30&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - The development program is streamlined, using endpoints that have supported past approvals, with Phase 2b and a subsequent Phase 3 trial potentially serving as the basis for U.S. registration[33](index=33&type=chunk) - LYT-100 is also being explored for progressive fibrosing interstitial lung diseases, other fibrotic conditions, and as a medical countermeasure under the FDA Animal Rule, potentially qualifying for a priority review voucher[34](index=34&type=chunk) LYT-300 (oral allopregnanolone) LYT-300, an oral allopregnanolone prodrug, entered Phase 2a for anxiety and received DoD funding for FXTAS - LYT-300, an oral prodrug of allopregnanolone developed using the Glyph™ platform, is being advanced for anxiety disorders and depression, aiming to unlock allopregnanolone's therapeutic potential in a convenient oral form[35](index=35&type=chunk)[37](index=37&type=chunk) - A Phase 2a proof-of-concept trial in healthy volunteers for anxiety was initiated in June, with results expected by the end of 2023[37](index=37&type=chunk) - PureTech received up to **$11.4 million** from the U.S. Department of Defense to advance LYT-300 for Fragile X-associated Tremor/Ataxia Syndrome (FXTAS), supporting a planned Phase 2 trial[12](index=12&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) LYT-310 (oral cannabidiol) LYT-310, an oral CBD candidate, is being developed for epilepsies with a Phase 1 trial expected in Q4 2023 - LYT-310, an oral cannabidiol (CBD) candidate from the Glyph™ platform, is being developed for epilepsies and other neurological indications, aiming to overcome limitations of existing CBD products like large volume formulations and GI side effects[40](index=40&type=chunk) - A Phase 1 clinical trial for LYT-310 is expected to be initiated in Q4 2023[18](index=18&type=chunk)[40](index=40&type=chunk) LYT-200 (anti-galectin-9 mAb) LYT-200, an anti-galectin-9 mAb, advanced in Phase 1b trials for solid tumors and AML, with results expected in 2023-2024 - LYT-200, an anti-galectin-9 monoclonal antibody, is being developed for metastatic/locally advanced solid tumors (urothelial and head and neck cancers) and hematological malignancies (acute myeloid leukemia)[42](index=42&type=chunk) - A Phase 1b trial of LYT-200 in combination with tislelizumab for solid tumors was initiated in H1 2023 (topline results expected 2024), and initial results from a single-agent Phase 1b trial for AML are anticipated by end of 2023[12](index=12&type=chunk)[18](index=18&type=chunk)[42](index=42&type=chunk) Glyph™ Technology Platform & Preclinical Programs PureTech's Glyph™ platform generated additional preclinical CNS programs, with plans for pipeline expansion - PureTech has generated multiple additional preclinical programs from its Glyph™ platform, focused on central nervous system (CNS) indications, with plans to share more about pipeline expansion[12](index=12&type=chunk)[41](index=41&type=chunk) - Wholly Owned Programs focus on leveraging validated efficacy to rapidly advance therapeutics with proven profiles, preserving pharmacology while maximizing unrealized potential[29](index=29&type=chunk) [Notable Developments - Founded Entities](index=14&type=section&id=2.3%20Notable%20Developments%20-%20Founded%20Entities) PureTech's Founded Entities achieved significant commercial and clinical momentum, advancing key programs and securing financing Karuna Therapeutics Karuna reported positive Phase 3 results for KarXT in schizophrenia, with FDA filing planned for Q3 2023 and a H2 2024 launch - Karuna announced positive topline results from the Phase 3 EMERGENT-3 trial for KarXT in schizophrenia, meeting its primary endpoint with a statistically significant reduction in PANSS total score[44](index=44&type=chunk) - Karuna plans to file KarXT for FDA approval in schizophrenia in Q3 2023, with a launch anticipated in H2 2024 if approved. They also expect to initiate a second Phase 3 trial (ADEPT-2) for psychosis in Alzheimer's disease in H2 2023[12](index=12&type=chunk)[18](index=18&type=chunk)[44](index=44&type=chunk) Akili, Inc. Akili released EndeavorOTC™ for adults with ADHD without prescription and submitted data for EndeavorRx® label expansion to adolescents - Akili shared positive topline results from STARS-ADHD-Adolescents and STARS-ADHD-Adult clinical trials for EndeavorRx® and EndeavorOTC™ respectively, demonstrating improvements in attention[12](index=12&type=chunk)[45](index=45&type=chunk)[48](index=48&type=chunk) - EndeavorOTC™, a video game treatment for adults with ADHD, was released without a prescription in June 2023. Akili expects to submit adult clinical trial data to the FDA for marketing authorization for EndeavorOTC to be available without a prescription in H2 2023[12](index=12&type=chunk)[18](index=18&type=chunk)[48](index=48&type=chunk) Gelesis Holdings, Inc. Gelesis filed for non-prescription Plenity® and entered a merger agreement with PureTech, having generated over **$40 million** in revenue - Gelesis' weight management product, Plenity®, has helped over 200,000 people and generated more than **$40 million** in revenue since launch[12](index=12&type=chunk)[49](index=49&type=chunk) - Gelesis filed a 510(k) application with the FDA to make Plenity® available without a prescription, anticipating a decision by Q1 2024, which could double its addressable market[18](index=18&type=chunk)[49](index=49&type=chunk) - PureTech entered into an Agreement and Plan of Merger to acquire all outstanding stock of Gelesis and take the company private, contingent on shareholder approval and other closing conditions[18](index=18&type=chunk)[50](index=50&type=chunk) Vedanta Biosciences Vedanta received Fast Track designation for VE303, raised **$106.5 million**, and plans a Phase 3 trial for rCDI - Vedanta received Fast Track designation for VE303, its Phase 3 ready therapeutic candidate for preventing recurrent Clostridioides difficile infection (rCDI)[12](index=12&type=chunk)[51](index=51&type=chunk) - Vedanta raised **$106.5 million** in financing to advance its pipeline of oral therapies based on defined bacterial consortia[12](index=12&type=chunk)[51](index=51&type=chunk) - Vedanta plans to initiate a Phase 3 clinical trial of VE303 in Q4 2023 and expects topline data from VE416 Phase 1/2 trial for food allergy in 2023[18](index=18&type=chunk) Vor Biopharma Inc. Vor Bio announced successful trem-cel engraftment in AML patients and secured a gene-edited HSC license - Vor Bio announced successful primary engraftment of trem-cel (VOR33) in five AML patients[12](index=12&type=chunk)[52](index=52&type=chunk) - The FDA cleared Vor's Investigational New Drug application for a Phase 1/2 clinical trial of VCAR334Llo[12](index=12&type=chunk)[52](index=52&type=chunk) - Vor secured a worldwide non-exclusive license from Editas Medicine for ex-vivo Cas9 gene-edited HSC therapies for blood cancers[52](index=52&type=chunk) Sonde Health Sonde continues developing its voice-based AI platform for detecting health changes linked to various conditions - Sonde continues to develop its voice-based artificial intelligence platform for detecting health changes linked to conditions like depression, anxiety, and respiratory disease[53](index=53&type=chunk) Entrega Entrega is advancing its hydrogel-based platform for oral administration of biologics, including GLP-1 agonists, to enhance absorption - Entrega is advancing its hydrogel-based platform for oral administration of biologics, vaccines, and other drugs, particularly peptide therapeutics like GLP-1 agonists, to enhance absorption and reduce variability[54](index=54&type=chunk) - Founded Entities demonstrated significant commercial and clinical momentum in H1 2023[43](index=43&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) This section outlines PureTech's financial reporting framework, performance metrics, and detailed results of operations, cash flow, and funding requirements [Reporting Framework & Basis of Consolidation](index=20&type=section&id=3.1%20Reporting%20Framework%20%26%20Basis%20of%20Consolidation) PureTech's financial statements adhere to IAS 34, consolidating subsidiaries and accounting for associates, with deconsolidation impacting reporting - Financial statements are prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting[60](index=60&type=chunk) - Founded Entities are classified as subsidiaries (controlled), associates (significant influence), or investments held at fair value (neither control nor significant influence)[61](index=61&type=chunk) - Deconsolidation of a Founded Entity results in derecognition of its assets/liabilities, recording the retained investment at fair value, and recognizing any gain or loss in the Consolidated Statements of Comprehensive Income/(Loss)[67](index=67&type=chunk) [Business Background and Results Overview](index=22&type=section&id=3.2%20Business%20Background%20and%20Results%20Overview) PureTech's profitability depends on successful commercialization, with funding from Founded Entity monetization and anticipated increases in R&D expenses - Profitability depends on successful development and commercialization of wholly-owned or Controlled Founded Entities' therapeutic candidates[66](index=66&type=chunk) - Significant cash was generated from the sale of shares in public Founded Entities and the sale of an interest in Karuna future royalties[66](index=66&type=chunk) - Operating expenses are anticipated to increase due to advancing late-stage clinical programs (LYT-100, LYT-200, LYT-300), progressing new candidates (LYT-310), and expanding technology platforms[67](index=67&type=chunk) - Future operations will be financed through monetization of Founded Entity interests, collaborations, or other sources, as substantial additional funding may be required[71](index=71&type=chunk) [Measuring Performance (APMs)](index=24&type=section&id=3.3%20Measuring%20Performance%20(APMs)) PureTech uses IFRS and non-IFRS APMs to provide complementary information for understanding its financial performance and position - Core performance measures are non-IFRS Alternative Performance Measures (APMs) used to provide complementary information for understanding financial performance and position[74](index=74&type=chunk) Key Alternative Performance Measures (APMs) | Measure Type | Definition | Why it's used | | :----------- | :--------- | :------------ | | PureTech Level Cash, cash equivalents and short-term investments | Cash and cash equivalents, and Short-term investments held at PureTech Health plc and its wholly-owned subsidiaries. | Provides valuable additional information with respect to cash, cash equivalents and short-term investments available to fund the Wholly Owned Programs and make certain investments in Founded Entities. | | PureTech Level Cash and Cash Equivalents | Cash and Cash Equivalents held at PureTech Health plc and its wholly-owned subsidiaries. | 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. | [Results of Operations (Six Months Ended June 30, 2023 vs 2022)](index=26&type=section&id=3.4%20Results%20of%20Operations%20(Six%20Months%20Ended%20June%2030%2C%202023%20vs%202022)) PureTech's H1 2023 financial performance saw decreased revenue and operating expenses, with a net loss influenced by other income gains Total Revenue Total revenue decreased to **$3.15 million**, primarily due to lower grant revenue from deconsolidated entities Total Revenue (YoY) | Revenue Type (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :----- | | Contract Revenue | $750 | $1,141 | $(391) | | Grant Revenue | $2,400 | $5,890 | $(3,490) | | **Total Revenue** | **$3,150** | **$7,030** | **$(3,880)** | | *Decrease in Grant Revenue (Non-Controlled Founded Entities)* | N/A | N/A | Primarily due to partial-period reporting by Vedanta due to deconsolidation. | Research and Development Expenses R&D expenses decreased by **$31.43 million** to **$53.15 million**, driven by project prioritization and Vedanta's deconsolidation Research and Development Expenses (YoY) | Segment (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :--------------------- | :----------------------------- | :----------------------------- | :----- | | Internal Segment | $(46,941) | $(62,499) | $(15,557) | | Non-Controlled Founded Entities | $(5,380) | $(20,432) | $(15,052) | | **Total R&D Expenses** | **$(53,146)** | **$(84,579)** | **$(31,432)** | | *Percentage Change* | N/A | N/A | -37.2% | - Decrease in R&D expenses was primarily due to prioritization of projects in the Internal Segment and reduced contract manufacturing expenses, as well as partial period reporting by Vedanta due to its deconsolidation[90](index=90&type=chunk)[92](index=92&type=chunk) General and Administrative Expenses G&A expenses increased by **$2.52 million** to **$26.17 million**, due to higher employee compensation and consulting fees, partially offset by the deconsolidation of Vedanta General and Administrative Expenses (YoY) | Segment (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :--------------------- | :----------------------------- | :----------------------------- | :----- | | Parent Company and other | $(15,716) | $(10,580) | $5,136 | | Internal Segment | $(7,405) | $(4,156) | $3,249 | | Non-Controlled Founded Entities | $(2,942) | $(8,055) | $(5,113) | | **Total G&A Expenses** | **$(26,166)** | **$(23,644)** | **$2,522** | | *Percentage Change* | N/A | N/A | +10.7% | - Increase in G&A expenses was driven by higher employee compensation (**$4.1M**, including **$2.0M** in stock-based compensation) and consulting fees (**$3.9M**) in the Parent Company and Internal Segment, partially offset by the deconsolidation of Vedanta[93](index=93&type=chunk) Total Other Income (Loss) Total other income significantly increased to **$62.43 million**, primarily from gains on investments held at fair value and Vedanta's deconsolidation Total Other Income (Loss) (YoY) | Metric (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Total Other Income (Loss) | $62,426 | $(24,126) | $86,552 | | Gain/(loss) on investments held at fair value | $7,818 | $(59,019) | $66,837 | | Gain on deconsolidation of subsidiary | $61,787 | $27,251 | $34,536 | | Gain/(loss) on investments in notes from associates | $(6,045) | $0 | $(6,045) | | Other income/(expenses) | $(1,134) | $7,642 | $(8,776) | - The significant increase in other income was primarily due to a gain from investments held at fair value (mainly Karuna holdings) and a gain from the deconsolidation of Vedanta[94](index=94&type=chunk) Finance Income (Costs) Net finance income decreased to **$5.32 million**, mainly due to lower fair value gains on preferred shares and new non-cash interest expense Net Finance Income (Costs) (YoY) | Metric (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Net finance income/(costs) | $5,316 | $56,320 | $(51,004) | | Net change in fair value of subsidiaries' financial instrument liabilities | $2,650 | $57,651 | $(55,001) | | Non-cash interest expense related to sale of future royalties | $(3,726) | $0 | $(3,726) | | Interest income from financial assets | $7,731 | $630 | $7,101 | - The decrease in net finance income was mainly due to a lower gain from changes in fair value of subsidiaries' financial instrument liabilities (Vedanta preferred shares in 2022) and the introduction of non-cash interest expense related to the sale of future royalties[95](index=95&type=chunk)[97](index=97&type=chunk) Share of Net Income/(Loss) of Associates & Gain on Dilution Net loss from associates decreased by **$10.0 million**, primarily due to reduced Gelesis losses, with no prior year dilution gain Share of Net Income/(Loss) of Associates (YoY) | Metric (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Share of net income/(loss) of associates | $(5,324) | $(15,322) | $9,998 | | Gain on dilution of ownership interest in associate | $0 | $28,363 | $(28,363) | - The decrease in net loss from associates was primarily due to reduced losses from Gelesis. The prior year included a **$28.4 million** gain on dilution of ownership interest in Gelesis due to its merger with CapStar[98](index=98&type=chunk) Taxation Income tax expense increased to **$11.81 million**, driven by tax on royalty sales and lower pre-tax loss, partially offset by non-taxable deconsolidation gain Taxation (YoY) | Metric (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Income tax expense/(benefit) | $(11,807) | $32,485 | $(44,291) | | Effective tax rate | -85.9% | 58.1% | N/A | - The increase in income tax expense was mainly due to tax in respect of the sale of future royalties to Royalty Pharma and a lower pre-tax loss in the consolidated US group, partially offset by the non-taxable gain on Vedanta deconsolidation[99](index=99&type=chunk)[281](index=281&type=chunk) Condensed Consolidated Statements of Comprehensive Income/(Loss) Summary | Metric (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change (2022 to 2023) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Total revenue | $3,150 | $7,030 | $(3,880) | | Operating expenses | $(79,312) | $(108,223) | $28,911 | | Operating income/(loss) | $(76,163) | $(101,192) | $25,030 | | Other income/(loss) | $62,426 | $(24,126) | $86,552 | | Net finance income/(costs) | $5,316 | $56,320 | $(51,004) | | Income/(loss) before income taxes | $(13,744) | $(55,957) | $42,213 | | Taxation | $(11,807) | $32,485 | $(44,291) | | Net income/(loss) including non-controlling interest | $(25,551) | $(23,472) | $(2,079) | | Net income/(loss) for the period attributable to the Owners of the Company | $(25,004) | $(28,344) | $3,340 | [Critical Accounting Policies and Significant Judgments and Estimates](index=32&type=section&id=3.5%20Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) PureTech's financial statements, prepared under UK-adopted IFRS, involve management judgments and estimates, with a new policy for future royalties liability - Financial statements are prepared in accordance with UK-adopted International Financial Reporting Standards (IFRS), requiring judgments, estimates, and assumptions[100](index=100&type=chunk) - Estimates and assumptions are reviewed on an ongoing basis, with revisions recognized in the affected periods[101](index=101&type=chunk) - No significant changes to critical accounting policies since the 2022 Annual Report, except for the accounting policy for the sale of future royalties liability[102](index=102&type=chunk) [Cash Flow and Liquidity](index=32&type=section&id=3.6%20Cash%20Flow%20and%20Liquidity) PureTech's cash flows fluctuate with development expenses and financing, with **$350.5 million** in cash and increased investing and financing activities Operating Activities Net cash used in operating activities decreased by **$22.1 million** to **$65.1 million**, due to lower operating loss and Vedanta's deconsolidation - Net cash used in operating activities decreased by **$22.1 million** to **$65.1 million**, primarily due to a lower operating loss from decreased R&D in the Internal Segment and Vedanta's deconsolidation[107](index=107&type=chunk) Investing Activities Net cash provided by investing activities increased by **$180.8 million** to **$173.9 million**, mainly from short-term investment maturities - Net cash provided by investing activities increased by **$180.8 million** to **$173.9 million**, mainly driven by **$202.5 million** from the maturity of short-term investments, partially offset by a **$15.4 million** investment in notes from associates[108](index=108&type=chunk) Financing Activities Net cash provided by financing activities increased by **$97.6 million** to **$91.9 million**, primarily from the sale of future Karuna royalties - Net cash provided by financing activities increased by **$97.6 million** to **$91.9 million**, primarily due to **$100.0 million** received from the sale of future Karuna royalties, partially offset by a **$3.0 million** increase in treasury shares repurchased[109](index=109&type=chunk) - Cash flows are influenced by expenses for wholly-owned and Controlled Founded Entity therapeutic candidates, revenue from licensing/royalties, and financing/investing activities[103](index=103&type=chunk) Cash and Cash Equivalents | Metric | June 30, 2023 | December 31, 2022 | | :----- | :------------ | :---------------- | | Consolidated Cash and cash equivalents | $350.5 million | $350.1 million | | PureTech Level cash and cash equivalents | $348.5 million | $339.5 million | Summary of Cash Flows (YoY) | Cash Flow Type (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :---------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash used in operating activities | $(65,133) | $(87,249) | $22,115 | | Net cash provided by (used in) investing activities | $173,885 | $(6,884) | $180,770 | | Net cash provided by (used in) financing activities | $91,897 | $(5,665) | $97,562 | | Net increase (decrease) in cash and cash equivalents | $200,649 | $(99,798) | $300,447 | [Funding Requirements](index=34&type=section&id=3.7%20Funding%20Requirements) PureTech's existing assets fund operations into Q1 2026, but substantial additional funding is needed for advancing candidates, relying on monetization or collaborations - Existing financial assets at June 30, 2023, are expected to fund operations and capital expenditure requirements into Q1 2026[110](index=110&type=chunk) - Substantial additional expenditures are expected in the near term to support ongoing activities, including clinical trials and commercialization of wholly-owned therapeutic candidates[110](index=110&type=chunk) - Future capital requirements depend on factors such as costs and timing of clinical trials, regulatory reviews, commercialization activities, intellectual property costs, and competitive landscape[110](index=110&type=chunk)[115](index=115&type=chunk) - Funding will rely on monetization of Founded Entity interests, collaborations, or other sources, as the company has no committed sources of capital beyond existing financial assets[113](index=113&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=36&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents PureTech's unaudited condensed consolidated financial statements, including income, financial position, equity changes, and cash flows [Condensed Consolidated Statements of Comprehensive Income/(Loss)](index=36&type=section&id=4.1%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%2F(Loss)) PureTech reported a net loss of **$25.55 million**, with total revenue of **$3.15 million** and operating expenses of **$79.31 million** Condensed Consolidated Statements of Comprehensive Income/(Loss) | Metric ($000s) | 2023 | 2022 | | :-------------- | :--- | :--- | | Contract revenue | 750 | 1,141 | | Grant revenue | 2,400 | 5,890 | | **Total revenue** | **3,150** | **7,030** | | General and administrative expenses | (26,166) | (23,644) | | Research and development expenses | (53,146) | (84,579) | | **Operating income/(loss)** | **(76,163)** | **(101,192)** | | Gain on deconsolidation of subsidiary | 61,787 | 27,251 | | Gain/(loss) on investments held at fair value | 7,818 | (59,019) | | Gain/(loss) on investments in notes from associates | (6,045) | - | | Other income/(expense) | (1,134) | 7,642 | | **Other income/(expense)** | **62,426** | **(24,126)** | | **Net finance income/(costs)** | **5,316** | **56,320** | | Share of net loss of associates accounted for using the equity method | (5,324) | (15,322) | | Gain on dilution of ownership interest in associate | - | 28,363 | | **Income/(loss) before taxes** | **(13,744)** | **(55,957)** | | Taxation | (11,807) | 32,485 | | **Income/(Loss) for the period** | **(25,551)** | **(23,472)** | | **Total comprehensive income/(loss) for the period** | **(25,458)** | **(24,008)** | | Owners of the Company | (25,004) | (28,344) | | Non-controlling interests | (546) | 4,872 | | Basic earnings/(loss) per share | (0.09) | (0.10) | | Diluted earnings/(loss) per share | (0.09) | (0.10) | [Condensed Consolidated Statements of Financial Position](index=38&type=section&id=4.2%20Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Total assets were **$693.55 million**, with cash and cash equivalents at **$350.52 million**, and total equity at **$508.89 million** Condensed Consolidated Statements of Financial Position | Metric ($000s) | June 30, 2023 | December 31, 2022 | | :-------------- | :------------ | :---------------- | | **Assets** | | | | Investments held at fair value | 281,288 | 251,892 | | Cash and cash equivalents | 350,515 | 149,866 | | Short-term investments | - | 200,229 | | **Total assets** | **693,552** | **702,647** | | **Equity and liabilities** | | | | Equity attributable to the owners of the Company | 513,669 | 542,220 | | Non-controlling interests | (4,778) | 5,369 | | **Total equity** | **508,891** | **547,589** | | Sale of future royalties liability | 103,726 | - | | Deferred tax liability | 9,084 | 19,645 | | Lease liability, non-current | 19,996 | 24,155 | | Total non-current liabilities | 135,395 | 58,172 | | Total current liabilities | 49,265 | 96,885 | | **Total liabilities** | **184,661** | **155,057** | | **Total equity and liabilities** | **693,552** | **702,647** | [Condensed Consolidated Statements of Changes in Equity](index=40&type=section&id=4.3%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased by **$38.69 million** to **$508.89 million**, primarily due to net loss and deconsolidation impacts Condensed Consolidated Statements of Changes in Equity | Metric ($000s) | Balance January 1, 2023 | Net income/(loss) | Deconsolidation of Subsidiary | Purchase of Treasury stock | Balance June 30, 2023 | | :-------------- | :---------------------- | :---------------- | :-------------------------- | :----------------------- | :-------------------- | | Share Capital | 5,455 | - | - | - | 5,461 | | Share premium | 289,624 | - | - | - | 290,262 | | Treasury stock | (26,492) | - | - | (7,276) | (33,105) | | Merger reserve | 138,506 | - | - | - | 138,506 | | Translation reserve | 89 | 92 | - | - | 182 | | Other reserve | (14,478) | - | - | - | (12,149) | | Retained earnings | 149,516 | (25,004) | - | - | 124,512 | | **Equity attributable to the owners of the Company** | **542,220** | **(25,004)** | **1** | **(7,276)** | **513,669** | | Non-controlling interests | 5,369 | (546) | (9,085) | - | (4,778) | | **Total equity** | **547,589** | **(25,551)** | **(9,085)** | **(7,276)** | **508,891** | [Condensed Consolidated Statements of Cash Flows](index=42&type=section&id=4.4%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by **$200.65 million**, driven by positive shifts in operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | Metric ($000s) | 2023 | 2022 | | :-------------- | :--- | :--- | | Net cash used in operating activities | (65,133) | (87,249) | | Net cash provided by (used in) investing activities | 173,885 | (6,884) | | Net cash provided by (used in) financing activities | 91,897 | (5,665) | | **Net increase (decrease) in cash and cash equivalents** | **200,649** | **(99,798)** | | Cash and cash equivalents at beginning of year | 149,866 | 465,708 | | **Cash and cash equivalents at end of period** | **350,515** | **365,910** | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=44&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes on PureTech's accounting policies, segment information, financial instruments, and other financial disclosures [General Information & Basis of Accounting](index=44&type=section&id=5.1%20General%20Information%20%26%20Basis%20of%20Accounting) PureTech Health plc, a UK biotherapeutics company, prepares interim financials under IAS 34, adopting a going concern basis - PureTech Health plc is a UK-incorporated biotherapeutics company, with its interim financial statements prepared in accordance with IAS 34[129](index=129&type=chunk)[132](index=132&type=chunk) - The accounting policies are consistent with the 2022 Annual Report, except for the new policy regarding the sale of future royalties liability[131](index=131&type=chunk)[138](index=138&type=chunk) - The Group maintains sufficient liquidity headroom and has adopted the going concern basis of accounting, with cash and cash equivalents of **$350.5 million** as of June 30, 2023[136](index=136&type=chunk) - The sale of future royalties liability is accounted for as a financial liability, with interest recognized using the effective interest rate over the life of the royalty stream[139](index=139&type=chunk) [Segment Information](index=46&type=section&id=5.2%20Segment%20Information) PureTech's operating segments are based on internal reporting, with Vedanta Biosciences transferred to non-controlled entities - Operating segments are based on financial information provided to Directors for resource allocation and performance assessment[81](index=81&type=chunk) - Vedanta Biosciences was transferred to the Non-Controlled Founded Entities segment on March 1, 2023, due to deconsolidation, and prior year financial information was restated[82](index=82&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk) - The Non-Controlled Founded Entities segment includes entities where PureTech no longer holds majority voting control or the right to elect a majority of Board members[83](index=83&type=chunk) Segment Operating Income/(Loss) (Six Months Ended June 30, 2023) | Segment | Operating income/(loss) ($000s) | | :------ | :------------------------------ | | Internal | (53,673) | | Controlled Founded Entities | 51 | | Non-Controlled Founded Entities | (6,595) | | Parent Company & Other | (15,945) | | **Consolidated** | **(76,163)** | [Investments Held at Fair Value](index=50&type=section&id=5.3%20Investments%20Held%20at%20Fair%20Value) PureTech's fair value investments, including Karuna holdings, are re-measured with changes recorded through profit and loss - Investments held at fair value include unlisted and listed securities, re-measured at each reporting date with changes recorded through profit and loss[152](index=152&type=chunk) - Vedanta was deconsolidated on March 1, 2023, and its retained investment in convertible preferred shares (**$20.5 million**) is now accounted for at fair value, resulting in a **$61.8 million** gain on deconsolidation[153](index=153&type=chunk)[155](index=155&type=chunk) - For the six months ended June 30, 2023, PureTech recognized a **$7.8 million** gain on investments held at fair value, primarily attributed to its holdings in Karuna[94](index=94&type=chunk)[152](index=152&type=chunk)[164](index=164&type=chunk) Investments Held at Fair Value Activity ($000s) | Activity | Amount | | :------- | :----- | | Balance as of December 31, 2022 and January 1, 2023 | 251,892 | | Investment in Vedanta Preferred shares - Vedanta deconsolidation | 20,456 | | Investment in Gelesis warrants | 1,121 | | Gain - change in fair value through profit and loss | 7,818 | | **Balance as of June 30, 2023** | **281,288** | [Investments in Associates](index=52&type=section&id=5.4%20Investments%20in%20Associates) PureTech accounts for Gelesis and Sonde using the equity method and plans to acquire Gelesis - PureTech owns **22.8%** of Gelesis common stock and accounts for it under the equity method, recording **$3.8 million** in equity method losses for the six months ended June 30, 2023[166](index=166&type=chunk)[170](index=170&type=chunk) - PureTech entered into a Merger Agreement to acquire all outstanding stock of Gelesis and take the company private, with consideration up to **$5.1 million**[172](index=172&type=chunk)[176](index=176&type=chunk) - As of June 30, 2023, PureTech concluded it does not have substantive rights to control Gelesis, despite holding warrants, as the exercise price of February Warrants was at a significant premium and May Warrants' potential voting rights were impacted by the Merger Agreement[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Following Sonde's deconsolidation on May 25, 2022, its A-1 shares are accounted for under the equity method, with **$1.5 million** in equity method losses recorded for the six months ended June 30, 2023[178](index=178&type=chunk) [Investment in Notes from Associates](index=54&type=section&id=5.5%20Investment%20in%20Notes%20from%20Associates) PureTech recorded a **$6.0 million** loss from fair value changes in notes from associates - Investments in notes from associates are measured at fair value, with changes recorded in the profit and loss statement[180](index=180&type=chunk)[192](index=192&type=chunk)[194](index=194&type=chunk) - PureTech recorded a **$6.0 million** loss from changes in the fair value of notes from associates for the six months ended June 30, 2023[94](index=94&type=chunk)[197](index=197&type=chunk) - This includes a **$4.4 million** loss on an unsecured promissory note from Gelesis and a **$1.6 million** loss on senior secured convertible promissory notes from Gelesis[180](index=180&type=chunk)[192](index=192&type=chunk) - PureTech invested **$5.0 million** in Vedanta's convertible debt, recognizing a **$0.1 million** loss on its fair value[193](index=193&type=chunk)[194](index=194&type=chunk) Investment in Notes from Associates Activity ($000s) | Activity | Amount | | :------- | :----- | | Balance as of December 31, 2022 and January 1, 2023 | 16,501 | | Investment In Gelesis Notes | 9,229 | | Investment in Vedanta convertible debt | 5,000 | | Changes in the fair value of the notes | (6,045) | | **Balance as of June 30, 2023** | **24,686** | [Share-based Payments](index=58&type=section&id=5.6%20Share-based%20Payments) PureTech's share-based payment expense decreased to **$1.26 million**, with RSU liability awards adjusted to fair value Share-based Payment Expense (YoY) | Expense Type ($000s) | 2023 | 2022 | | :------------------- | :--- | :--- | | General and administrative | 1,121 | 516 | | Research and development | 135 | 3,037 | | **Total** | **1,256** | **3,552** | - RSUs granted to executives are treated as liability awards, adjusted to fair value at each reporting date, with changes recorded as stock-based compensation expense[204](index=204&type=chunk) - The company recognized **$0.2 million** income from restricted stock units in 2023 (vs. **$2.9 million** income in 2022), primarily due to a reduction in the value of the company's share price[212](index=212&type=chunk) - During the six months ended June 30, 2023, PureTech granted **3,576,937** service, market, and performance-based RSUs and **569,125** stock option awards[202](index=202&type=chunk)[213](index=213&type=chunk) [Finance Cost, net](index=60&type=section&id=5.7%20Finance%20Cost%2C%20net) Net finance income significantly decreased to **$5.32 million** due to lower fair value gains and new non-cash interest expense Finance Income and Costs (YoY) | Metric ($000s) | 2023 | 2022 | | :-------------- | :--- | :--- | | Interest income from financial assets | 7,731 | 630 | | Total finance income | 7,731 | 630 | | Total finance cost - contractual | (1,338) | (1,961) | | Gain/(loss) from change in fair value of warrant liability | 33 | 3,002 | | Gain/(loss) from change in fair value of preferred shares | 2,617 | 55,152 | | Gain/(loss) from change in fair value of convertible debt | - | (502) | | Total finance income/(costs) - fair value accounting | 2,650 | 57,651 | | Total Finance costs - non cash interest expense related to sale of future royalties | (3,726) | - | | **Finance income/(costs), net** | **5,316** | **56,320** | [Earnings/(Loss) per Share](index=62&type=section&id=5.8%20Earnings%2F(Loss)%20per%20Share) PureTech reported a basic and diluted loss per share of **$0.09**, with all potential securities considered anti-dilutive Earnings/(Loss) per Share (YoY) | Metric | 2023 | 2022 | | :----- | :--- | :--- | | Income/(loss) attributable to the owners of the Company | ($25,004) | ($28,344) | | Weighted average ordinary shares for basic earnings per ordinary share | 278,254,381 | 287,754,262 | | Basic earnings/(loss) per ordinary share | ($0.09) | ($0.10) | | Diluted earnings/(loss) per ordinary share | ($0.09) | ($0.10) | - All outstanding potential securities were considered anti-dilutive due to the net loss incurred, and thus excluded from the diluted EPS calculation[218](index=218&type=chunk) [Equity](index=62&type=section&id=5.9%20Equity) PureTech had **276.67 million** common shares outstanding and is executing a **$50.0 million** share repurchase program - As of June 30, 2023, PureTech had **276,672,829** common shares outstanding[220](index=220&type=chunk) - The company's issued share capital was **289,468,159** shares, including **12,795,330** shares repurchased under the program and held in treasury[223](index=223&type=chunk) - PureTech is executing a **$50.0 million** share repurchase program, with the second tranche currently underway, and all repurchased shares are held in treasury[221](index=221&type=chunk)[222](index=222&type=chunk) [Subsidiary Preferred Shares](index=62&type=section&id=5.10%20Subsidiary%20Preferred%20Shares) Subsidiary preferred shares, classified as liabilities, decreased to **$0.17 million** due to Vedanta's deconsolidation - Subsidiary preferred shares are classified as liabilities and measured at fair value through profit and loss due to redemption and conversion features[225](index=225&type=chunk) Subsidiary Preferred Share Balance ($000s) | Metric | 2023 | 2022 | | :----- | :--- | :--- | | Entrega | 169 | 169 | | Follica | - | 350 | | Vedanta Biosciences | - | 26,820 | | **Total subsidiary preferred share balance** | **169** | **27,339** | - The decrease in preferred share balance was primarily due to the deconsolidation of Vedanta Biosciences (**$24.55 million**)[229](index=229&type=chunk) Minimum Liquidation Preference ($000s) | Subsidiary | 2023 | 2022 | | :--------- | :--- | :--- | | Entrega | 2,216 | 2,216 | | Follica | 6,405 | 6,405 | | Vedanta Biosciences | - | 149,568 | | **Total minimum liquidation preference** | **8,621** | **158,189** | [Sale of Future Royalties Liability](index=64&type=section&id=5.11%20Sale%20of%20Future%20Royalties%20Liability) PureTech sold KarXT royalty rights for **$100.0 million** upfront, accounted for as a financial liability - PureTech sold Royalty Pharma the right to receive KarXT royalty payments for an initial **$100.0 million** and up to **$400.0 million** in additional milestone payments[231](index=231&type=chunk) - This transaction is accounted for as a financial liability, with the **$100.0 million** liability accreted as interest expense over the life of the Royalty agreement[232](index=232&type=chunk)[233](index=233&type=chunk) - PureTech retains rights under the original license agreement and will recognize royalties as revenue, while the liability balance will be effectively repaid as royalty payments are made to Royalty Pharma[232](index=232&type=chunk)[234](index=234&type=chunk) Sale of Future Royalties Liability Activity ($000s) | Activity | Amount | | :------- | :----- | | Balance as of January 1, 2023 | 0 | | Amounts received at closing | 100,000 | | Non cash interest expense recognized | 3,726 | | **Balance as of June 30, 2023** | **103,726** | [Financial Instruments](index=66&type=section&id=5.12%20Financial%20Instruments) PureTech's financial instruments are measured at fair value using a hierarchy, with Level 3 inputs for unlisted entities - Financial instruments are measured at fair value, with changes reflected through profit and loss, using valuation methods like market backsolve, PWERM, and discounted cash flow[237](index=237&type=chunk)[238](index=238&type=chunk) - Fair value hierarchy categorizes inputs as Level 1 (quoted market prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[238](index=238&type=chunk) - Karuna, Vor, and Akili are valued using Level 1 quoted common share prices, while Vedanta, Sonde, Gelesis warrants, and Akili earn-out shares are valued using Level 3 unobservable inputs[241](index=241&type=chunk)[242](index=242&type=chunk) - For the six months ended June 30, 2023, PureTech recorded a **$3.8 million** loss from changes in fair value of Level 3 investments held at fair value and a **$6.0 million** loss from changes in fair value of notes from associates[242](index=242&type=chunk)[248](index=248&type=chunk) Fair Value Measurement and Classification (June 30, 2023, $000s) | Category | Carrying Amount (Financial Assets) | Level 1 | Level 2 | Level 3 | Total Fair Value | | :------- | :------------------------------- | :------ | :------ | :------ | :--------------- | | Money Markets | 308,046 | 308,046 | - | - | 308,046 | | Investment in notes from associates | 24,686 | - | - | 24,686 | 24,686 | | Investments held at fair value | 281,288 | 250,948 | - | 30,339 | 281,288 | | **Total financial assets** | **614,019** | **558,994** | **-** | **55,025** | **614,019** | | Subsidiary preferred shares | - | - | - | 169 | 169 | | Share based liability awards | - | 3,850 | - | 874 | 4,724 | | **Total financial liabilities** | **-** | **3,850** | **-** | **1,042** | **4,893** | [Non-Controlling Interest](index=72&type=section&id=5.13%20Non-Controlling%20Interest) Non-controlling interests decreased to a negative **$4.78 million**, primarily due to Vedanta's deconsolidation Changes in Non-Controlling Interest ($000s) | Metric | Balance at December 31, 2022 and January 1, 2023 | Share of comprehensive income (loss) | Deconsolidation of subsidiaries | Balance at June 30, 2023 | | :----- | :----------------------------------------------- | :--------------------------------- | :-------------------------- | :----------------------- | | Total | 5,369 | (546) | (9,085) | (4,778) | - The decrease in non-controlling interest was primarily due to the deconsolidation of Vedanta Biosciences on March 1, 2023[254](index=254&type=chunk)[255](index=255&type=chunk) - Controlled Founded Entities with non-controlling interests include Follica Incorporated (**19.9%**) and Entrega Inc. (**11.7%**)[256](index=256&type=chunk) [Trade and Other Payables](index=72&type=section&id=5.14%20Trade%20and%20Other%20Payables) Total trade and other payables significantly decreased to **$31.34 million**, driven by reductions in trade payables and accrued expenses Trade and Other Payables ($000s) | Metric | June 30, 2023 | December 31, 2022 | | :----- | :------------ | :---------------- | | Trade payables | 8,725 | 26,504 | | Accrued expenses | 20,387 | 24,518 | | Liability settled share based awards | 2,135 | 1,805 | | Other | 92 | 1,957 | | **Total trade and other payables** | **31,339** | **54,783** | [Sub-Leases](index=74&type=section&id=5.15%20Sub-Leases) PureTech executed a two-year operating sublease agreement with Allonia LLC for office space - PureTech executed an operating sublease agreement with Allonia LLC for approximately **11,000 square feet** of office space[260](index=260&type=chunk) - The sublease has a **two-year term** from May 17, 2023, with an option for an additional year, and an annual lease fee of **$1.1 million**[260](index=260&type=chunk)[261](index=261&type=chunk) [Commitments and Contingencies](index=74&type=section&id=5.16%20Commitments%20and%20Contingencies) PureTech has contingent payments for licensing agreements and non-cancellable commitments for research - PureTech has contingent payments for licensing agreements based on developmental and sales milestones, with reasonably possible developmental milestones amounting to approximately **$7.4 million** as of June 30, 2023[262](index=262&type=chunk) - Non-cancellable commitments for sponsored research and contract manufacturing/research organizations totaled approximately **$12.7 million** as of June 30, 2023[263](index=263&type=chunk) - The company is involved in various legal proceedings but does not expect their resolution to have a material adverse effect on its financial position or results of operations[264](index=264&type=chunk) [Related Parties Transactions](index=74&type=section&id=5.17%20Related%20Parties%20Transactions) PureTech engages in related party transactions, including a sublease with Gelesis, and discloses key management personnel compensation - PureTech has a sublease receivable from Gelesis, a related party, amounting to **$377 thousand** as of June 30, 2023[265](index=265&type=chunk) - Key management personnel compensation totaled **$1.75 million** for the six months ended June 30, 2023, including short-term employee benefits and share-based payment income due to RSU value decrease[268](index=268&type=chunk)[270](index=270&type=chunk) - Directors and senior managers hold **23,377,627 ordinary shares** and **11.8% voting rights** of PureTech as of June 30, 2023, excluding options and certain RSU awards[276](index=276&type=chunk) Directors' and Senior Managers' Shareholdings (June 30, 2023) | Business Name (Share Class) | Number of shares held | Number of options held | Number of RSUs held | Ownership Interest | | :-------------------------- | :-------------------- | :------------------- | :------------------ | :----------------- | | Gelesis (Common) (Ms Daphne Zohar) | 465,121 | 3,303,306 | 1,349,697 | 1.37% | | Entrega (Common) (Dr Robert Langer) | 250,000 | 82,500 | - | 4.09% | | Enlight (Class B Common) (Dr Raju Kucherlapati) | - | 30,000 | - | 3.00% | | Akili (Common) (Dr John LaMattina) | 56,554 | - | - | 0.07% | | Karuna (Common) (Dr Bharatt Chowrira) | 5,000 | - | - | 0.01% | [Taxation](index=78&type=section&id=5.18%20Taxation) PureTech recorded an **$11.81 million** income tax expense, a shift from a prior year benefit Tax Provision (YoY) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :----------------------------- | :----------------------------- | | Consolidated tax provision | $11.8 million expense | $32.5 million benefit | | Effective tax rate | -85.9% | 58.1% | - The increase in tax expense was primarily attributable to tax in respect of the sale of future royalties to Royalty Pharma and a lower pre-tax loss in the consolidated US group, partially offset by the non-taxable gain on Vedanta deconsolidation[281](index=281&type=chunk) [Subsequent Events](index=78&type=section&id=5.19%20Subsequent%20Events) No recordable or disclosable subsequent events were identified between June 30, 2023, and the report's issuance date - No recordable or disclosable subsequent events were identified between June 30, 2023, and the issuance date of August 29, 2023[282](index=282&type=chunk) [Additional Information](index=1&type=section&id=Additional%20Information) This section includes important cautionary notes regarding forward-looking statements and contact information for PureTech Health [Cautionary Note Regarding Forward-Looking Statements](index=8&type=section&id=6.1%20Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The press release contains forward-looking statements regarding plans, future prospects, objectives, developments, strategies, expectations, clinical trial progress, regulatory approvals, and cash runway[21](index=21&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and important factors that could cause actual results to differ materially, including significant operating losses, need for additional funding, lengthy and expensive drug development, potential difficulties in patient enrollment, safety risks, and reliance on third parties[21](index=21&type=chunk) [Contact Information & Webcast Details](index=1&type=section&id=6.2%20Contact%20Information%20%26%20Webcast%20Details) PureTech Health hosted a webcast for half-yearly results, with contact information available for public and investor relations - PureTech Health hosted a webcast and conference call on August 29, 2023, at 9:00am EDT / 2:00pm BST to discuss the half-yearly results[2](index=2&type=chunk)[5](index=5&type=chunk) - A live webcast and presentation slides were available on the investors section of PureTech's website, with a replay also available[5](index=5&type=chunk)[6](index=6&type=chunk) Contact Information | Department | Contact | Email/Phone | | :--------- | :------ | :---------- | | Public Relations (EU media) | Ben Atwell, Rob Winder | +44 (0) 20 3727 1000, ben.atwell@FTIconsulting.com | | Public Relations (U.S. media) | Nichole Sarkis | +1 774 278 8273, nichole@tenbridgecommunications.com | | Investor Relations | IR@puretechhealth.com | N/A |

Industry Overview - The biotechnology and pharmaceutical industries are characterized by intense competition and rapid technological advancements, with a strong emphasis on intellectual property and proprietary products[31]. - The company faces competition from various sources, including major pharmaceutical companies and biotechnology firms, for its product candidates[32]. Product Development and Pipeline - The company has a pipeline that builds on validated biology of known therapeutics, applying unique inventive steps to improve clinical pharmacology, which provides a competitive advantage[31]. - The company is aware of one current drug product candidate targeting galectin-9, expected to enter clinical development in the second half of 2023[34]. - In the field of idiopathic pulmonary fibrosis (IPF), there are two approved drugs with unfavorable tolerability profiles, indicating a sustained unmet need for novel therapies[33]. - In the field of GABAA positive allosteric modulators, there are three approved drugs, with additional candidates in various stages of development[35]. Regulatory Environment - Regulatory processes for drug approval require substantial time and financial resources, including compliance with FDA regulations and conducting extensive clinical trials[39][40]. - The company’s clinical trials must adhere to Good Clinical Practice (GCP) and require approval from independent review boards before initiation[42][43]. - The FDA may condition approval of a new drug application on the sponsor's agreement to conduct additional studies post-approval, known as Phase 4 clinical studies[45]. - The FDA aims to review original biologics or new-molecular-entity drugs within ten months after filing, or six months for priority review applications[51]. - The FDA may refuse to file any NDA or BLA deemed incomplete, requiring resubmission with additional information[51]. Drug Designations and Exclusivity - A product candidate can receive breakthrough therapy designation if preliminary evidence indicates substantial improvement over existing therapies[59]. - Fast track designation allows for more frequent interactions with the review team and may qualify for priority review[57]. - Orphan drug designation is granted for drugs intended to treat rare diseases affecting fewer than 200,000 individuals in the U.S.[65]. - Products with orphan drug designation receive seven years of exclusivity upon first FDA approval for the designated condition[66]. Post-Market Regulations - The FDA may require post-market studies to monitor a product's safety and effectiveness after commercialization[55]. - The FDA requires ongoing compliance with regulations for approved drugs, including record-keeping and reporting of adverse experiences[69]. - Non-compliance with FDA regulations may lead to severe consequences, including product withdrawal and civil penalties[70]. - The FDA enforces strict marketing and promotional regulations, prohibiting off-label promotion of biologics[71]. Medical Device Regulations - Medical devices are classified into three classes based on risk, with Class III devices requiring premarket approval[83]. - Most Class II devices require a 510(k) premarket notification for commercial distribution[84]. - The FDA's 510(k) clearance process typically takes between 3 to 12 months, but may extend longer depending on the need for additional information[85]. - If a device is deemed "not substantially equivalent," it is classified as Class III, requiring more rigorous PMA approval[86]. - The PMA process requires extensive data, including pre-clinical and human clinical trial results, and can take up to several years for FDA review[88]. International Regulations - Approval by one regulatory authority does not guarantee approval by others, as requirements vary significantly across countries[101]. - The Clinical Trials Regulation (CTR) introduces a centralized process for clinical trial applications, allowing a single submission for multi-center trials, streamlining the approval process across EU member states[106]. - Innovative medicinal products in the EU receive eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization (MA), totaling a potential ten years[113]. - The EMA requires a risk management plan (RMP) to be included in all new MAAs, detailing the risk management system and measures to minimize associated risks[123]. Financial Overview - The company considers its working capital sufficient for its present requirements[201]. - The company has no off-balance sheet arrangements that are likely to have a material effect on its financial condition or results of operations[200]. - The company does not have a present obligation to make milestone payments related to its license agreements as of December 31, 2022[198]. - The company’s financial statements comply fully with IFRSs as issued by the IASB[191]. Shareholder Information - The company has a total of 278,461,805 ordinary shares outstanding as of March 31, 2023, with Invesco Asset Management Limited holding 23.3% of the shares[213][215]. - The company has significant shareholders, including Lansdowne Partners Limited with 8.8% and Baillie Gifford & Co with 8.1% of shares[215]. - Invesco Asset Management Limited holds 64,945,474 shares beneficially[1]. - Lansdowne Partners Limited holds 24,528,171 shares beneficially[2]. - Baillie Gifford & Co. holds 22,521,433 shares beneficially[3]. - M&G Investment Management, LTD holds 11,761,956 shares beneficially[4]. - Vanguard Group, Inc. holds 11,256,029 shares beneficially[5]. - Patient Capital Management, Inc. holds 9,806,500 shares beneficially[6]. - Recordati S.p.A. holds 9,554,140 shares beneficially[7]. - The Zohar Family Trusts and Zohar LLC collectively hold 12,564,189 shares[8]. - Langer Family 2020 Trust and Dr. Langer collectively hold 2,955,324 shares[9].