Puretech Health(PRTC) - 2022 Q4 - Annual Report

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].