All right. Good morning, everyone. Thanks for joining us here at day 3 of the Leerink Partners Global Healthcare Conference. My name's Tom Smith. I'm one of the Senior Biotech Analysts here at Leerink, and it's my pleasure to welcome our next company to the stage, PureTech Health, and really happy to be joined today by CEO Robert Lyne and President Eric Elenko. Gentlemen, thanks for joining us. Robert, I think you have a couple slides and maybe I'll just throw it over to you for some introductory comments, and then we can go into some Q&A.
Fantastic. Thanks very much, Tom, and great to be here. As you said, Tom, we've just got a couple of slides, just intro for those who are new to PureTech Health and the story, just to take you through before we get into the discussion. PureTech Health is a hub-and-spoke biopharmaceutical business. We're a Boston-based business listed on the London Stock Exchange and Nasdaq, and we pioneered the hub-and-spoke model for drug development. What this means is we have a central innovation engine at PureTech, which looks at potential new drug assets that we can consider as to whether there's something there that we think we can advance through into important new treatments for patients.
We've been doing this for many years, and we have, we believe, a very enviable track record that we're proud of with approximately 80% of our clinical trials having met their primary endpoints. How do we achieve such a high clinical trial success rate? This is really by the differentiated approach we take to drug development. Our focus is on finding assets where there's been proven human pharmacology, that they've already been in human trials. Typically, the drug has been held back for some reason. Maybe it's never made it to market, or maybe it got put on the shelf, and we think that there's potential there.
We can see that we understand, we think how the drug is working in the human body, and we think we can modify that drug or in some other way create proprietary IP around a new way forward for that molecule to take it back into clinical trials and to advance it into patients, to produce differentiated treatments. This approach so far, the engine that we've been developing for many years at PureTech has produced 3 FDA approvals, most notably Cobenfy, which has been the first new approved treatment with a novel mechanism of action in schizophrenia for over 50 years.
That was developed at PureTech into one of our spokes, so one of the companies that we span out through the hub-and-spoke model, Karuna, which was acquired by BMS a couple of years ago for $14 billion, and we see that as a great example of the hub-and-spoke model in action, spinning these programs out, leveraging external capital to take them forward, getting these treatments approved and then prescribed to patients. As we look at what comprises PureTech Health today, we have these founded entities, 3 of them, Celea Therapeutics, Gallop Oncology, and Seaport Therapeutics. These are all spokes. These are all businesses that have been or are in the process of being spun out from PureTech Health. The most advanced in terms of its corporate structure here is Seaport Therapeutics. That was spun out a couple of years ago.
It's been through 2 rounds of external funding with top-tier investors. It's raised substantial amounts of capital, which has now left it with a post-money valuation of $733 million. Because this was a wholly owned business at PureTech, because we developed the drugs and the technology behind that platform within PureTech, that is now a company where we have a diluted equity position, but we're still the largest shareholder in that business with over a third of the company. We'll say, because we develop these drugs internally, we have milestones and royalties, so non-dilutive economics as well, which attach over that. Seaport Therapeutics, there are 2 clinical stage assets within there, phase I and phase II, but that is a company that is most advanced in terms of its corporate structure.
The most advanced in terms of its clinical progress is actually Celea Therapeutics, which we're in the process of spinning out. That has a... We had very encouraging phase 2b data on LYT-100 in for idiopathic pulmonary fibrosis. We'll be speaking, I expect, a little bit about that later. That is a really exciting program that we're in the process of spinning out at the moment. Then we also have Gallop Oncology, which is our oncology asset. Again, this is a program where we've been taking that all the way internally through phase 1. We're now looking to spin that out ahead of the phase 2. Comprising the rest of the business, we still have legacy economics around Cobenfy, so the great success we had there.
There's still milestones and royalties that come back into PureTech from future sales of the drug. In terms of our balance sheet at the half year last year, we had $320 million of PureTech level cash. We've been self-funding now for nearly 8 years and see no need to be raising capital at the PureTech level in the near future. Fully self-funded model, multiple spokes that we've managed to develop and, you know, some pretty exciting programs that hopefully we can speak about in the discussion. Just in terms of going forward, what are we looking at doing in terms of priorities of the business? As I mentioned, we're spinning out Celea, we're spinning out Gallop. We're guiding that we expect the Celea spin-out for IPF asset to be completed first half of this year.
That will enable trial initiation once we have the funds in place for that phase III trial. The Gallop spin-out, we're looking to complete that during the course of 2026, and we'll be updating people as we make progress there. Alongside these important progression of these founded entities, we also are continuing work on our innovation hub with an exciting pipeline of new assets and programs that we're developing internally, and we'll be looking to pull the covers off those as and when we get them to the right level of maturity. I hope that's been helpful as a little bit of an overview introduction for PureTech for those who are new to the story, and it'd be great, Tom, now to just move to questions you have.
Oh, that's great. Yeah. Thank you for the background and obviously very unique business model, but very impressive. You have the Cobenfy experience that's simply amazing, and we can touch on that in a little bit. I wanna start with Celea-
Mm-hmm
deupirfenidone in IPF, and you've generated phase II data in the ELEVATE trial. You've guided, you know, to kicking off the phase III later in the first half. Just talk about, I guess, how your design for the phase 3 compares to the phase 2 experience and what went into some of those design decisions. Yeah. Eric, do you wanna take that?
Yeah, absolutely. As you indicated, our phase 2 was ELEVATE in idiopathic pulmonary fibrosis or IPF, and that had 4 arms, placebo, pirfenidone, one of the approved therapies for treatment of IPF at 801 ml 3x a day, so the highest approved dose. 2 different doses of deupirfenidone, the drug that we're developing. That included the 550 ml 3x a day and 825. The goal there was to demonstrate the efficacy of deupirfenidone and also to show this dose dependency, so a differential between the 2 different doses of deupirfenidone. That trial was successful, meeting its primary endpoint, which was forced vital capacity, FVC, which is the gold standard measure in IPF.
That was a 26-week study with an open label extension that continued on. Based on what we saw, we are going forward with that 825 dose. We saw about a 50% greater effect size for that 825 dose of deupirfenidone versus pirfenidone. Bearing in mind that deupirfenidone is a deuterium-substituted form or deuterated form of pirfenidone. The phase 3 design builds on and really reflects the results from that phase 2. That'll be a 2-arm study comparing 825 ml of deupirfenidone to the highest commercially approved dose of pirfenidone, 801 ml 3x a day. That's gonna be a true head-to-head study looking at superiority, and again, gold standard measure of FVC as a primary endpoint.
The difference is, this will be a 52-week study instead of 26 weeks. We have confidence in that, really based on not only our original 26-week data in the phase 2, but also the open label extension data where we looked at, the results at one year and continued to see very good results for deupirfenidone. In fact, really, the FVC decline that we saw was really what you'd expect to be in the range of, physiology associated with someone for the age of the participants without IPF.
That's really impressive. The choice of a superiority design is interesting. I mean.
Yeah
I remember this being a debate before the phase 2 data.
Yeah
Read out.
Yeah
What would the regulatory path look like? Sounds like the phase 2 has given you quite a bit of confidence that you're gonna outperform pirfenidone in the phase 3. Maybe just elaborate on the rationale for why you picked superiority, and then maybe expand on that a little bit and talk about, like, bar for success.
Yeah, absolutely. We really see that head-to-head comparison having a number of advantages. It's one that I think will give a very clear data set for physicians. It'll also be one that gives a very clear data set from the perspective of market access and payers. Also, you know, we had met with the FDA and feel that that type of superiority study is one that will give the FDA a lot of clarity and confidence in terms of the ability of deupirfenidone to actually be an active and efficacious drug. Really across the spectrum of stakeholders, patients onwards, being able to actually demonstrate superiority, and this would be the first time anyone's ever done so, is gonna be extremely meaningful.
That was a key driver. A lot of it was exactly what you said, which is having confidence in that based on the phase 2 results. We're going into phase 3 with a very similar patient population. If you look at the open-label extension going out to 52 weeks, that data, you know, if it holds, and we actually have some room here, will in fact result, if it's reproducible, in a successful phase 3. The bar there that we're really looking at is superiority. This will be something where we're looking at a statistical difference, you know, p < 0.05, and that'll constitute success from a viewpoint of a primary endpoint.
When we think of pirfenidone and the side effect profile.
Yeah
like obvious hindrance, is there potential to tease out maybe some differences in the phase 3? Like, what should we be looking for out of the deupirfenidone program?
Yeah, it's a great point, and, you know, what happened with pirfenidone is pirfenidone was really limited in terms of how high it could dose up. Really the limitation there centered around GI AEs for the most part, and the primary one being nausea. If you look at the phase 2 ELEVATE study, we actually had the key GI AEs being ones that were actually favorable for, you know, and actually looked. You know, we thought ones that reflected ones that would be acceptable to patients and to physicians. Really key here is the adverse events and the efficacy go together.
Mm.
That's because what the deuterium substitution allows is the ability to have this greater overall exposure, but still have something that has accepted tolerability. That greater exposure is really what, you know, we think is one of the keys here that before ELEVATE it wasn't clear what would happen. You know, what happens if you actually push the exposure of the drug, and it was like, well, would you get a ceiling effect or do you not get a ceiling effect? And the answer was no, we actually seem to get greater efficacy. That and, of course, you know, one of the challenges more generally with the approved drugs is that people don't go on them, and then they just stop using them.
By having, you know, a drug, and again, we have to show this and demonstrate this in phase 3, that not only is one where you can have efficacy that, if it, you know, again is reproducible from phase 2, starts to reflect the physiology associated more with healthy aging in terms of lung function decline, but also within a certain boundary of acceptable adverse events that is gonna be an important driver in terms of uptake in the market.
That makes sense. Yeah, let's double-click on the market dynamics. I mean, this is a large patient population, underserved by current therapies for sure. I guess what you're looking to prove out here, superiority over one of those existing agents' standard of care. Like, how do you think looking across the landscape of other things that are in development, like, how do you think about where deupirfenidone fits in?
It is a great question, Tom, and this is something we do a lot of thinking around. I mean, as Eric was explaining, you know, the whole thesis behind deupirfenidone we think is quite differentiated to a lot of the other approaches that have been taken in IPF. You know, obviously it's been a challenging space for some time, but you know, we're greatly encouraged by actually the successes which we are now starting to see come through. You know, that's great for patients, it's great for the space. It's really encouraging when we can actually see phase 3 trials reproducing the phase 2 results. Now, in our case, because of the differentiated approach with the deuterated pirfenidone, we have a high degree of confidence in terms of the reproducibility in the phase 3. For us, we think that's somewhere where we feel pretty confident.
It's encouraging for the space more broadly to see that coming through. The other change we see where there's a differentiation is in this instance, you know, we're looking to essentially be able to replace the existing standard of care therapies, which are typically used as background and very often in combination. When we think about it from a commercial approach, you know, we've always been optimistic in the sense that we've always expected there to be other approved therapies on the market. You know, we see deupirfenidone as having the potential to become the standard of care. We also see a significant differentiation in terms of the potential efficacy profile that is being shown here.
If we can replicate in the phase 3 what we saw in ELEVATE in terms of the arresting of lung function decline to the decline we see in healthy older adults, we think that will be a real game changer in terms of the profile for patients. This is a hugely underserved patient population at the moment. Only roughly a quarter of patients ever even start on any of the existing antifibrotic treatments. We see the potential if we can have a very differentiated efficacy approach, which again, that's the signal we saw in ELEVATE, and if we can replicate that in the phase 3, we think there's potential for significant expansion of that population to have far larger numbers of IPF patients starting on deupirfenidone.
You know, that significant unmet need we have, we see that as actually space for multiple potential therapies and still with, you know, significant commercial attraction, but giving patients and physicians a much broader choice, whether it's mono, as we say, or we can see real avenues for deupirfenidone in combination therapy down the track as well.
Yeah, that makes a lot of sense to me. Can we just double-click on the combo aspect? Because it does, you know, it strikes me as, if this plays out the right way, you're essentially establishing yourself as foundational.
Yeah. Exactly.
Standard of care. I imagine that would you know, I think that's quite exciting potential, particularly for other pharma companies that may have exposure in IPF. I'm curious how you guys are thinking about business development, generating data in combination with other agents, and sort of maybe you can speak to perhaps the inbound interest around the program?
Yeah, I mean, you know, we've had a lot of excitement around the program. You know, the phase IIb data was showing something that we haven't seen in a trial of that nature before. You know, that's generated a lot of interest. You know, again, crucially because this is a deuterated form of pirfenidone, for other parties who are looking at combination with pirfenidone, for example, you know, you can see a pretty clear route to deupirfenidone supplanting in that instance. You know, what we've found is people can understand the combination appeal very easily because this isn't necessarily a complete novel mechanism of action because pirfenidone is well understood within the space and within combination therapy existing and, you know, many trials, you know, it's there as one of the background arms.
Because of that, we have found when we speak to partners, both investors, but also, you know, potential commercial partners, you know, that combination potential is well understood. You know, at the moment, the fundraising that we're currently undertaking is for the phase 3 design that Eric outlined. Obviously, you know, down the track there's a potential here, particularly if we start to generate the data, we hope to see that, you know, there could be, you know, other trials that could be run in combination either through us or through external parties, which could then even further broaden the appeal and the potential of deupirfenidone to help patients.
That makes sense. I wanna switch gears and talk about Gallop Oncology briefly, and maybe you could just level set us on the galectin-9 pathway mechanistically, like why does this make sense? Like why is this such an attractive target?
Yeah, absolutely. Gallop is centered around an asset called LYT 200, which is a fully human monoclonal antibody against galectin-9. That really has a therapeutic effect, particularly in the context of leukemias such as AML, high-risk MDS, through 2 different ways. I think this is something that really is specific to LYT 200. One is by blocking galectin-9, it actually has a cytotoxic effect on the leukemic cells. This is through apoptosis and DNA damage. The other is through relief of immunosuppression, which is brought about by those cancer cells. You know, if you look, what's interesting is drugs have typically tried to do one or the other, and here there's really a chance to do both, and that's potentially quite powerful.
You know, we have LYT-200 in a trial that we're just finishing up. We'll be announcing results, you know, as we said, first half of this year. That was in high-risk MDS as well as AML relapsed refractory patients. There we did both single agent LYT-200 in a dose-escalating fashion as well as combination with the relevant standard of care. In the case of AML, that was a hypomethylating agent plus venetoclax. It was also just in the case of high-risk MDS, it was just a hypomethylating agent, the HMA.
You know, these are patients, just to bear in mind, are relapsed refractory, meaning they would have gone whatever the relevant standard of care was, including, for many of the patients, they would have already received one of the 2 drugs that was being used in the combo. Yeah, we'll be announcing the results of that and are excited about LYT-200 and about galectin-9 as a target.
That's awesome. Yeah, it sounds like a wealth of data coming from this update. I guess, how are you sort of framing expectations around like what a good data set would look like with this update?
Yeah. Because it's a phase one study, like every phase one study, the primary endpoint, of course, is safety tolerability. Because these are in patients, we're gonna be looking for signals of efficacy. I think one thing we'll, of course, bear in mind is these are patients who are relapsed refractory, often who have had multiple lines of therapy. Unfortunately, because of the nature of these illnesses, overall survival is very short, oftentimes just months for these patients. We'll really be looking at 2 different measures. One is response rate as measured by the gold standards in these various illnesses, which includes, you know, composite complete response. We'll probably look at overall response rate, but, you know, composite complete response, we think is gonna be very meaningful.
You know, especially given, you know, the length of time patients who have been on drug. Of course, we'll also look at overall survival. You know, typically OS, sometimes you have to run much longer studies. You know, these are the type of gold standard endpoints that we'll be reporting out.
Yep, that makes sense. Wanna shift gears again, talk about Seaport and maybe just give a little bit of the background behind the platform technology that's being implemented there. I know that was a PureTech foundational sort of discovery around the technology. And then also talk about obviously you still have a substantial stake you alluded to in the introductory comments, like how you think about that stake downstream economics, like when you start to realize value from the Seaport.
Yeah. Great questions, Tom, because actually Seaport is a great example of the PureTech model in action in a couple ways. One is looking at the foundational technology behind the drugs that they're advancing there, and this is by the application of the Glyph platform, the Glyph technology to actually deliver these drugs through the lymphatic system. You're avoiding first pass metabolism through the liver.
This approach to delivering drugs, it enables us, again, in the PureTech fashion, to look at existing drugs that are on the market in certain spaces, these CNS assets, and go, "Okay, where do we think this technology could be helpful?" You know, where have there been challenges for whatever reason with existing therapies that we know work, that have been approved in jurisdictions, but because of the first pass metabolism through the liver, they're either not being dosed in the right way or there are limitations that are holding them back. With Seaport, we identified these programs. We said actually through the Glyph platform lymphatics, dosing of the drug into the body, we can avoid that first pass, and we can actually avoid some of the limitations that are holding these programs back. Again, with us, it's this de-risked approach.
You know, we know how these drugs operate in the body. We know that they've been approved for the indications in certain jurisdictions. We think through modifying the delivery, we can greatly improve their appeal both to patients and physicians, and also then look to get these drugs approved in markets where they aren't currently. It's very much the sort of PureTech discovery drug development model in action. Also from a financial perspective. This was a program that we spun out. We got to a certain stage, and we thought this is now mature enough that we think it will be attractive to investors, and we can now attract external capital. We don't have to be taking all balance sheet cash from PureTech. We can leverage external capital, retain our balance sheet cash for other programs and for our internal innovation.
As we say, it was spun out a couple of years ago. It's being led by Daphne Zohar. She's CEO now at Seaport. She was the founder CEO at PureTech, so she's known the program extremely well. Eric and I both on the board there at Seaport. As I say, we're the largest shareholder. We started out with 100% of the equity of the business when we spun it out, and then we've naturally been diluted down, and that's something we're very comfortable with. You know, from our perspective, these companies, you know, we don't need to be a dominating shareholder on the register. You know, we like to be. In this case, you know, we're the largest shareholder, which is what we'd expect at this stage of development for the business.
You know, there's also a great register that's been built around that company, really strong co-investors. that resets the business up well. They've now got a wide range of funders who can help take that business forward. We're not in the situation where we have to be the one writing the check every time in terms of, you know, providing developmental capital to move it forward. it's very well set up in that sense. also because we develop novel IP around these drug programs that they're advancing, we also then have these non-dilutive economics. we have these tiered royalties and milestones on future sales of the drugs.
You know, that is something that means we can still get that non-dilutive economic exposure to the success that we see in the future for Seaport without having to worry about the equity dilution in on its own. In terms of what that means for the model, at PureTech, you know, we then have a potential. There are multiple things we can do with those non-dilutive economics, with the royalties and milestones that you talked about. You know, in the past, and we had this with Karuna, we were able to actually transact on those and monetize those for a lump sum capital amount. You know, that gives us an interesting model. We can do various things with that, return to shareholders where we think that's appropriate, reinvest money in existing and new programs. Also we have no pressure to do that.
Because of our self-funding model, we don't need to monetize any of the existing or future royalty streams that we have. If that's something we choose to do, we can do that opportunistically if we think that the cost of capital makes sense. As an alternative, we have the potential to keep some or all of those income streams coming into PureTech, and down the line you can see a model where we're not only self-funding from the large equity returns we get, but we can actually be self-funding on an operating basis from the royalties and milestones that we earn from the drugs that we develop. For us, it gives us a lot of optionality in terms of how we think about funding the business and obviously a lot of potential for value creation back into PureTech.
Yeah. That makes sense. I mean, one of the things I've always appreciated about your business model is, this, I think like complete focus on innovation, potentially transformative across kinda like therapeutic area agnostic-
Yeah
Modality agnostic, really interrogating like what, you know, what can we advance that's gonna like transform the lives of patients. I think we've seen it pretty clearly with Karuna and Cobenfy. Like how, you know, how has this overall business strategy evolved over the last 12-24 months? Like, how do you think about sort of like the potential future innovation that is internally derived within PureTech?
Well, I think in terms of strategy, Eric can talk some of the future innovation, how we're thinking there. In terms of strategy, what we're really doing is doubling down on what's worked for us. Where we have the greatest success, and that's been in therapeutics, and it's been in looking at improving existing therapeutics that have already been in human trials. That's something where we've seen a great track record of success with Karuna. We're seeing it with Seaport. We're gonna see it with Celea. We're really following that thread through in terms of the sort of form we can see. Then Eric can speak to, you know, a lot of the exciting sort of innovation we're thinking in that sense going forward.
If you look at our focus going forward, it's gonna be around small molecules, you know, for lack of a better term, traditional biologics like antibodies. While we are gonna be therapeutic agnostic, there are clearly areas where we have much greater interest and focus. To give an example, CNS, which has historically been an area of high interest, where we've built up significant expertise, will be an area we're gonna look going forward. Based on our experience, of course, pulmonary, immunology. There are certain therapeutic areas that are of greater interest, but they will all revolve around this theme, as Rob said, of taking something with validated pharmacology. What does that mean?
It means we typically take a drug that's clinical, and then say, okay, how do we solve the problem that was holding back that drug? We actually take it from the clinic pre-clinically and then go do whatever experiments we think are required to be able to solve the fundamental problems associated with that drug and then drive it back again into the clinic. That's really a cycle that I think is unique to PureTech of the, you know, clinic to pre-clinic back to the clinic. That type of cycle of development is something that will really be the basis of PureTech innovation going forward.
With that kind of early to intermediate step of killer experiment.
Exactly
A go no-go.
Exactly.
Awesome. Well, we just did a little bit of a look back and an evolution and a kinda near term, what to expect. I guess if I ask you guys to kinda look into the crystal ball like 18-24 months from now, like how do you think PureTech has changed?
I think what we're looking at is really just refining where we've got the business to, which is making sure these founded entities, they're spun out, they're well-funded, they're able to advance the important work that they're doing on an independent basis. It's looking at bringing forward the next wave of programs. As Eric was indicating, you know, those are ones that for people who follow the PureTech story, particularly the last few years, you know, they won't be surprised about the approach we're taking. You know, they will be in different areas, and we see that as a real strength. You know, we are not biased to any particular area or any particular program, so we're very careful in terms of our capital allocation there of thinking, you know, where is that most beneficial to put that resource.
You know, that's what we think people will see. Next wave coming through, understanding the similar themes or patterns that we've had great success in the past and reproducing that both for patients and for our shareholders.
Great. Well, looking forward to tracking the progress here.