PURETECH HEALTH PLC – ANNUAL REPORT AND ACCOUNTS 2021pt_cover_22_30.indd 1pt_cover_22_30.indd 105/04/2022 09:5405/04/2022 09:54 Overview
Highlights of the Year
Components of Value
Letter from the Chair
Strategic report
Letter from the Chief Executive Offi cer
Letter from the Chief Scientifi c Offi cer, Chief Medical
Offi cer and Chief Innovation and Strategy Offi cer
How PureTech is Building Value for Investors
PureTech’s Wholly Owned Programs
PureTech’s Founded Entities
ESG report
Our Approach to ESG and Sustainable Business
Governance
Risk Management
Viability
Key Performance Indicators
Financial Review
Chair’s Overview
Board of Directors
Management Team
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The Board
Directors’ Report
Report of the Nomination Committee
Report of the Audit Committee
Directors’ Remuneration Report
Directors’ Remuneration Policy
Annual Report on Remuneration
Financial statements
Independent Auditor’s Report to the Members of PureTech Health plc
Consolidated Statements of Comprehensive Income/(Loss)
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
PureTech Health plc Statement of Financial Position
PureTech Health plc Statements of Cash Flows
PureTech Health plc Statements of Changes in Equity
Notes to the Financial Statements
Additional information
History and Development of the Company
Risk Factor Annex
Directors, Secretary and Advisors to PureTech Health plc
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PureTech Health
Giving Life to Science
PureTech Health plc (“PureTech Health”, “PureTech” or “the Company”) is a clinical-stage biotherapeutics
company dedicated to discovering, developing and commercializing highly differentiated medicines
for devastating diseases, including inflammatory, fibrotic and immunological conditions, intractable
cancers, lymphatic and gastrointestinal diseases and neurological and neuropsychological disorders,
among others. We discover and develop new therapies for serious diseases where limited or no treatment
options currently exist for patients. The common theme underlying all of our programs has been to start
with a tremendous patient need. In many cases, these programs are identified based on some previous
human efficacy and clinically validated biology, which has enabled us to advance therapeutic candidates
with substantially de-risked profiles and robust development rationales, resulting in differentiated
treatment candidates for patients that improve on key challenges of existing therapeutics, such as
poor safety, tolerability, oral bioavailability or dosing. We do this often by building upon underlying
mechanisms from well-established science that have been validated in clinical testing, while applying
unique innovative insight or technology that generates new medicines that can unleash the full potential
of the therapeutic. We have created a broad and deep pipeline through the expertise of our experienced
research and development team and our extensive network of scientists, clinicians and industry leaders.
Our pipeline, which is being advanced both internally and through our Founded Entities1, is comprised of
27 therapeutics and therapeutic candidates, including two that have received both U.S. Food and Drug
Administration (FDA) clearance and European marketing authorization. All of the underlying programs and
platforms that resulted in this pipeline of therapeutic candidates were initially identified or discovered and
then advanced by our team through key validation points based on unique insights in immunology and
drug development.
PureTech is led by a proven and seasoned management team of industry leaders with significant
experience in discovering and developing important new medicines, delivering them to market and
maximizing shareholder value.
Headquarters
Boston, MA
Nasdaq
PRTC
LSE
PRTC
1 Our Founded Entities are comprised of our Controlled Founded Entities and our Non-Controlled Founded Entities. References in this report to our “Controlled Founded
Entities” refer to Follica, Incorporated, Vedanta Biosciences, Inc., Sonde Health, Inc. and Entrega, Inc. References in this report to our “Non-Controlled Founded Entities” refer
to Gelesis Holdings, Inc., Akili Interactive Labs, Inc., Karuna Therapeutics, Inc. and Vor Bio Inc., and, for all periods prior to December 18, 2019, resTORbio, Inc. We formed
each of our Founded Entities and have been involved in development efforts in varying degrees. In the case of each of our Controlled Founded Entities, we continue to
maintain majority voting control. With respect to our Non-Controlled Founded Entities, we may benefit from appreciation in our minority equity investment as a shareholder of
such companies.
PureTech Health plc Annual report and accounts 2021 1
Overview Highlights of the Year – 2021
PureTech Level Cash and Cash
Equivalents as of Year End
Consolidated Cash and Cash
Equivalents as of Year End
Amount of funding secured
for Founded Entities
$418.9m2
$465.7m2
Includes cash held at the PureTech level
and at Controlled Founded Entities (Follica,
Entrega, Vedanta, and Sonde)
$731.9m3,4
$709.3m (96.9%) came from third parties
2020: $349.4m
2019: $120.6m
2018: $177.7m
2017: $126.7m
2020: $403.9m
2019: $162.4m
2018: $250.9m
2017: $188.7m
2020: $247.8m
2019: $666.8m
2018: $274.0m
2017: $102.9m
Wholly Owned Programs
Our team, network and insights and expertise in immunology and therapeutic development have enabled
the rapid advancement and growth of our Wholly Owned Programs5. Focused on immunological, fibrotic
and lymphatic system disorders, our Wholly Owned Pipeline builds upon validated biologic pathways
and proven pharmacology, and currently consists of seven therapeutic candidates, including LYT-100
(deupirfenidone), a clinical therapeutic candidate that we are pursuing for the potential treatment of
a range of conditions involving inflammation and fibrosis and disorders of lymphatic flow, LYT-200,
a clinical immuno-oncology fully human monoclonal antibody candidate targeting a foundational
immunosuppressive protein, galectin-9, that we are developing for the potential treatment of
difficult-to-treat solid tumors, LYT-210, a preclinical immuno-oncology therapeutic candidate targeting
immunomodulatory gamma delta-1 T cells that we are developing for a range of cancer indications,
LYT-300 (oral allopregnanolone), a clinical therapeutic candidate that we are developing for a range
of neurological and neuropsychological conditions, which was generated from our Glyph™ lymphatic
targeting platform, and three therapeutic candidates generated from Alivio™, our technology platform
that enables targeting of therapeutics locally to the sites of inflammation while minimizing systemic
exposure, for the potential treatment of a range of chronic and acute inflammatory disorders: LYT-510
(oral immunosuppressant molecule), in development for the potential treatment of inflammatory bowel
disease (IBD) and chronic pouchitis, LYT-500 (oral combination of two therapeutic agents), in development
for the potential treatment of mucosal barrier damage in people with IBD, and LYT-503/IMB-150, which is a
partnered program being advanced as a potential non-opioid treatment for interstitial cystitis or bladder
pain syndrome (IC/BPS). In addition to these programs, we are advancing Orasome™ and other
Technology Platforms for the oral administration of therapeutics. Finally, we are pursuing our
meningeal lymphatics research program to develop potential treatments for neurodegenerative
and neuroinflammatory diseases. In addition to programs originating from these innovative platforms
to fuel our pipeline, we also continually identify external clinical-stage programs that are highly
differentiated and complementary to the immuno-modulation focus of our Wholly Owned Pipeline.
2 For more information in relation to the PureTech Level Cash and Cash Equivalents and Consolidated Cash and Cash Equivalents measures used in this Annual Report, please
see pages 97 and 98 of the Financial Review. At prior comparative periods from 2016 to 2019, balances included cash, cash equivalents and short-term investments. For more
information in relation to the PureTech Level Cash Reserves and Consolidated Cash Reserves measures, please also see pages 97 and 98 of the Financial Review.
3 Funding figure includes private equity financings, loans and promissory notes, public offerings or grant awards. Funding figure excludes future milestone considerations
received in conjunction with partnerships and collaborations. Funding figure does not include Gelesis’ gross proceeds of approximately $105.0 million from its January 2022
post-period SPAC merger.
4 Number represents figure for the relevant fiscal year only and is not cumulative.
5 References in this report to “Wholly Owned Programs” refer to the Company’s seven therapeutic candidates (LYT-100, LYT-200, LYT-210, LYT-300, LYT-510, LYT-500 and LYT-
503/IMB-150), four lymphatic and inflammation platforms and potential future therapeutic candidates and platforms that the Company may develop or obtain. References to
“Wholly Owned Pipeline” refer to LYT-100, LYT-200, LYT-210, LYT-300, LYT-510, LYT-500 and LYT-503/IMB-150. On July 23, 2021, Imbrium Therapeutics exercised its option to
license LYT-503/IMB-150 pursuant to which it is responsible for all future development activities and funding for LYT-503/IMB-150.
2 PureTech Health plc Annual report and accounts 2021
Overview Highlights of the Year — continued
Clinical trial initiations4,6
Clinical trial readouts4,7
11
2020: 6
2019: 6
6
2020: 5
2019: 5
Key developments and progress across PureTech’s Wholly Owned Programs include:
• In the January 2022 post-period, we were pleased to
announce results from a randomized, double-blind
crossover study in healthy older adults demonstrating that
approximately 50% fewer subjects treated with LYT-100
(deupirfenidone) experienced gastrointestinal (GI)-related
adverse events (AE) compared to subjects treated with
pirfenidone (17.4% vs. 34.0%). Based on these results,
discussions with our Clinical Advisory Board that includes
many of the world’s leading experts in idiopathic pulmonary
fibrosis (IPF) clinical development, additional data generated
from our robust LYT-100 clinical program as well as recent
regulatory feedback, we intend to advance LYT-100 into
late-stage clinical development for the treatment of IPF,
beginning with a dose-ranging study evaluating six months
of treatment with LYT-100 with topline results expected by
the end of 2023.
• In 2021, we progressed two Phase 2 clinical trials of LYT-100
including 1) a global, randomized, double-blind, placebo-
controlled Phase 2 trial to evaluate the efficacy, safety and
tolerability of LYT-100-COV in adults with Long COVID8
respiratory complications and related sequelae and 2) a Phase
2a proof-of-concept study of LYT-100-LYMPH in patients with
breast cancer-related, upper limb secondary lymphedema.
Topline results from the LYT-100-COV trial are expected in the
first half of 2022, and topline results from the LYT-100-LYMPH
trial are expected in 2022.
• In 2021, we also initiated a three-month, open-label extension
of the LYT-100-COV Phase 2 trial in adults with Long COVID
respiratory complications and related sequelae who
completed the first portion of the trial. The primary endpoint
of the extension trial will measure change in distance walked
on the six-minute walk test (6MWT), with secondary endpoints
to assess the longer-term safety and tolerability of LYT-100-
COV up to 182 days of treatment.
• In 2021, we initiated additional clinical studies to further
evaluate the pharmacokinetic (PK), dosing and tolerability
of LYT-100 in healthy volunteers and healthy older adults
to inform the clinical development of LYT-100 across
multiple indications. Results from these studies demonstrated
that LYT-100 was well-tolerated at 824mg TID dosing with low
rates of GI AEs that were comparable to placebo. These results
will further inform our dose-ranging study design in treatment-
naïve IPF patients.
• In 2021, we continued to build our clinical development team
by bringing together seasoned experts focused on tackling
diseases with significant unmet medical needs. Julie Krop,
M.D., was appointed as Chief Medical Officer. Dr. Krop
oversees all clinical development, regulatory, CMC and
medical affairs for advancing our Wholly Owned Pipeline.
Other additions to our team included Paul Ford, M.D., Ph.D.,
SVP of Clinical Development who is primarily overseeing
the overall LYT-100 development program, including for IPF.
We also formed a Clinical Advisory Board for IPF and other
progressive fibrosing interstitial lung diseases (PF-ILDs).
These physicians and researchers with deep expertise in
the clinical development of novel therapies in PF-ILDs
include Bill Bradford, M.D., Ph.D., biopharma advisor with
broad expertise in drug development; Vincent Cottin, M.D.,
Professor of Respiratory Medicine at Université Claude
Bernard Lyon and Coordinator of the National Coordinating
Reference Center for Rare Pulmonary Diseases at Louis
Pradel Hospital, Hospices Civils de Lyon, Lyon, France;
Kevin Flaherty, M.D., Professor at the University of Michigan
specializing in IPF and other ILDs; Toby Maher, M.D., Ph.D.,
Professor of Clinical Medicine and Director of Interstitial
Lung Disease at Keck School of Medicine of the University
of Southern California; Paul Noble, M.D., Chair of the
Department of Medicine at Cedars-Sinai Medical Center
and a noted researcher in lung inflammation and fibrosis;
and Marlies Wijsenbeek, M.D., Ph.D., pulmonary physician
at the Erasmus Medical Center.
• In the March 2022 post-period, we appointed
Sharon Barber-Lui to our board of directors as a
non-executive director and as a member of the Audit
Committee. She previously led U.S. Oncology Portfolio
Strategy, Operations and Business Analytics at Merck & Co.
Inc. Ms. Barber-Lui brings extensive experience in finance,
operations, portfolio management and commercialization
to our board of industry, business and academic leaders.
6 PureTech initiated five clinical trials, Karuna initiated four clinical trials, Vor Bio initiated one clinical trial and Akili initiated one clinical trial in 2021.
7 PureTech (two), Karuna (one), Gelesis (one), and Vedanta (two) reported clinical results from across their pipelines in 2021.
8 Long COVID is a term being used to describe the emerging and persistent complications following the resolution of COVID-19 infection, also known as post-acute COVID-19
syndrome (PACS).
PureTech Health plc Annual report and accounts 2021 3
Overview Highlights of the Year — continued
• In August 2021, we presented the results of the Phase 1
• In June 2021, we announced the acquisition of the remaining
22% of outstanding shares in our Founded Entity, Alivio
Therapeutics (‘Alivio’). Alivio’s therapeutic candidates, in
development for inflammatory disorders including IBD, have
been integrated into our Wholly Owned Pipeline, and the
underlying Alivio technology platform has been added to our
lymphatic and inflammation platforms. The Alivio technology
platform has generated three therapeutic candidates,
including LYT-510, an orally-administered therapeutic
candidate for the potential treatment of IBD and chronic
pouchitis, LYT-500, an oral therapeutic candidate that we are
developing for the potential treatment of mucosal barrier
damage in people with IBD, and LYT-503/IMB-150 for the
potential treatment of IC/BPS (being developed as a
partnered program). We expect preclinical proof-of-concept
data for LYT-500 in the first half of 2022. We intend to file for
regulatory approval to initiate first-in-human studies at year
end 2022 and initiate a clinical study evaluating LYT-510 as
a single agent for the potential treatment of IBD and chronic
pouchitis in early 2023. An IND application for LYT-503/
IMB-150 is expected to be filed in 2022.
• In September 2021, preclinical proof-of-concept research
supporting the Glyph technology platform, which showed
for the first time that restoring normal function of the
mesenteric lymphatics may reverse insulin resistance and
modify obesity-associated metabolic disease, was published
in Nature Metabolism. Preclinical proof-of-concept work
published in the Journal of Controlled Release in February
2021 also supported the platform’s ability to directly target
the lymphatic system.
• In April 2021, preclinical work supporting our meningeal
lymphatics research program was published in Nature. The
research suggests that restoring lymphatic flow in the brain,
either alone or in combination with passive immunotherapies
such as antibodies directed at amyloid beta, has the potential
to address a range of neurodegenerative diseases, including
Alzheimer’s and Parkinson’s diseases and the associated
neuroinflammation. The work also uncovered a link between
dysfunctional meningeal lymphatics and damaging microglia
activation in Alzheimer’s disease, which potentially impairs
the efficacy of passive immunotherapies such as amyloid-
beta-targeting antibodies. This suggests another route by
which restoring healthy drainage patterns could improve
clinical outcomes.
• In 2021, we also progressed versatile and programmable oral
biotherapeutics approaches, such as our Orasome platform,
which is a novel programmable and scalable approach for
the oral administration of nucleic acids and other biologics.
We established preclinical proof-of-concept supporting the
platform’s potential to achieve therapeutic levels of proteins
in circulation following the oral administration of therapeutic
protein expression systems. We expect to generate additional
preclinical data, with Orasomes and other technologies,
in 2022.
multiple ascending dose and food effect study of LYT-100 at
the virtual European Respiratory Society (ERS) International
Congress. The results from the study were subsequently
published in the journal Clinical Pharmacology in Drug
Development in November 2021.
• In 2021, we progressed the first stage of an adaptive Phase 1/2
clinical trial evaluating LYT-200 (anti-galectin-9 fully human
monoclonal antibody) as a single agent for the potential
treatment of difficult-to-treat solid tumors. In November 2021,
we presented a scientific poster describing the trial at the
Society for Immunotherapy of Cancer (SITC) 36th annual
meeting. Topline results from the Phase 1 portion of the
study are expected in the first half of 2022. Pending these
results, we intend to initiate the Phase 2 expansion cohort
portion of the trial, which is designed to evaluate LYT-200
both as a single agent and/or in combination with BeiGene’s
tislelizumab, an anti-PD-1 monoclonal antibody, or
chemotherapy. The Phase 2 portion of the study is currently
planned to enroll patients with a range of solid tumor types,
including pancreatic cancer and other GI solid tumors.
Under the terms of the clinical trial and supply agreement
we entered into with an affiliate of BeiGene, Ltd. in July 2021,
we will maintain control of the LYT-200 program, including
global R&D and commercial rights, and BeiGene has agreed
to supply tislelizumab for use in combination with LYT-200
for the planned Phase 2 study cohorts.
• In November 2021, the FDA granted orphan drug designation
to LYT-200 for the treatment of pancreatic cancer. The FDA
grants orphan drug designation to novel drug and biologic
products for the treatment, diagnosis or prevention of
conditions affecting fewer than 200,000 persons in the
U.S. Orphan drug designation qualifies PureTech for
incentives under the Orphan Drug Act, including tax
credits for some clinical trials and eligibility for seven years
of market exclusivity in the U.S. if the drug is approved,
in addition to our broad intellectual property coverage
which can extend the exclusivity into 2038.
• In April 2021, we presented a scientific poster detailing
additional promising preclinical results for LYT-210 (anti-
gamma-delta-1 fully human monoclonal antibody) at the 2021
American Association for Cancer Research (AACR) Annual
Virtual Meeting. The research demonstrated that LYT-210 is
both highly specific and highly potent, rapidly inducing cell
death of immunomodulatory gamma delta-1 (γδ1) T cells,
while sparing other T cells, such as cytotoxic gamma delta T
cells, that play important roles in a healthy immune response.
• In December 2021, we initiated a Phase 1 clinical study of
LYT-300 (oral allopregnanolone), the first therapeutic
candidate generated from our Glyph platform, for the
potential treatment of neurological and neuropsychological
conditions. The Phase 1 study of LYT-300 involves multiple
parts, including the evaluation of a single ascending dose,
multiple ascending doses and the effect of food in healthy
volunteers. Safety, tolerability and PK will be assessed.
Given the GABA A receptor modulating activity of
allopregnanolone, the study will also explore the impact
of LYT-300 on beta-EEG, a marker of GABA A target
engagement, thus potentially providing early insights into
the mechanistic effects of LYT-300. Results from the study are
expected in the second half of 2022 and will be used to inform
the design of possible future studies evaluating LYT-300 in
indications that could include depression, anxiety, sleep
disorders, fragile X tremor-associated syndrome, essential
tremor and epileptic disorders, among others.
4 PureTech Health plc Annual report and accounts 2021
Overview Highlights of the Year — continued
Founded Entities9
PureTech’s Founded Entities have made significant progress advancing 20 therapeutics and therapeutic candidates,
of which two have been cleared for marketing by the FDA and granted marketing authorization in the European
Economic Area and 13 are clinical stage. Key developments included the following:
Karuna Therapeutics, Inc. (PureTech ownership: 5.6%; We also
are eligible to receive payments under our license agreement,
including sublicense payments and royalties on net sales)
• In November 2021, Karuna announced further updates to the
EMERGENT program’s four ongoing Phase 3 trials, including
that topline data from EMERGENT-2, a five-week inpatient
trial evaluating the efficacy and safety of KarXT compared to
placebo in 246 adults with schizophrenia in the U.S., are
expected in mid-2022. EMERGENT-3, a five-week inpatient
trial evaluating the efficacy and safety of KarXT compared to
placebo in 246 adults with schizophrenia in the U.S. and
Ukraine, is underway. EMERGENT-4, a 52-week outpatient,
open-label extension trial evaluating the long-term safety and
tolerability of KarXT in 350 adults with schizophrenia who
completed EMERGENT-2 or EMERGENT-3, and EMERGENT-5,
a 52-week outpatient, open-label trial evaluating the
long-term safety and tolerability of KarXT in adults with
schizophrenia who were not enrolled in EMERGENT-2 or
EMERGENT-3, are also underway.
• In 2021, Karuna initiated the Phase 3 ARISE trial evaluating
the safety and efficacy of KarXT compared to placebo as
an adjunctive treatment in adults with schizophrenia who
experience an inadequate response to current standard
of care.
• In June 2021, Karuna announced data from its completed
Phase 1b trial evaluating the safety and tolerability of KarXT
in healthy elderly volunteers, which followed a preliminary
analysis of data from the first two cohorts in the trial
announced earlier this year. The results suggest that KarXT
can be administered to elderly volunteers at doses which
achieve xanomeline blood levels similar to those reported in
the Phase 2 EMERGENT-1 trial in adults with schizophrenia
while maintaining a favorable tolerability profile. Data from
the trial also suggest that a lower dose ratio of trospium to
xanomeline, compared to the ratios used in Phase 1 trials in
healthy adult volunteers and in the Phase 2 EMERGENT-1 trial
evaluating KarXT in adults with schizophrenia, was better
tolerated by healthy elderly volunteers.
• In November 2021, Karuna announced the evaluation of KarXT
for the treatment of dementia-related psychosis (DRP) will
initially focus on psychosis in Alzheimer’s disease, the most
common subtype of DRP. The initial focus on the Alzheimer’s
disease dementia subtype reflects various strategic
development, regulatory and commercial considerations,
and Karuna remains interested in exploring KarXT in other
dementia subtypes in future development programs.
Karuna plans to initiate a Phase 3 program in mid-2022.
• In late 2021, Karuna initiated a Phase 1 trial of an advanced
formulation of KarXT as it continued to advance its earlier
pipeline of muscarinic receptor targeted programs and novel
formulations of KarXT. Karuna is also advancing its artificial
intelligence-based target agnostic discovery program for
treating psychiatric and neurological conditions.
• In November 2021, Karuna announced its entry into an
exclusive license agreement with Zai Lab for the
development, manufacturing and commercialization of KarXT
in Greater China, including mainland China, Hong Kong,
Macau and Taiwan. Under the terms of the agreement, Karuna
received a $35.0 million upfront payment and is eligible to
receive certain development and regulatory milestone and
sales milestone payments, as well as royalties based on annual
net sales of KarXT in Greater China.
• In February 2021, Karuna announced that results from the
EMERGENT-1 Phase 2 clinical trial evaluating KarXT for
the treatment of schizophrenia were published in the
New England Journal of Medicine (NEJM).
• In March 2021, Karuna completed a follow-on public offering
of its common stock, from which it received net proceeds of
$270.0 million.
• In 2021, PureTech sold 1,750,000 shares of Karuna common
stock for a cash consideration of approximately $218 million
in two separate transactions in February and November.
9 While PureTech maintains ownership of equity interests in its Founded Entities, the Company does not, in all cases, maintain control over these entities (by virtue of (i) majority
voting control and (ii) the right to elect representation to the entities’ board of directors) or direct the management and development efforts for these entities. Consequently,
not all such entities are consolidated in the financial statements. Where PureTech maintains control, the entity is referred to as a Controlled Founded Entity in this report and
is consolidated in the financial statements. Where PureTech does not maintain control, the entity is referred to as a Non-Controlled Founded Entity in this report and is not
consolidated in the financial statements. As of December 31, 2021, Controlled Founded Entities include Follica Incorporated, Vedanta Biosciences, Inc., Sonde Health, Inc. and
Entrega, Inc., and Non-Controlled Founded Entities include Gelesis Holdings, Inc., Karuna Therapeutics, Inc., Akili Interactive Labs, Inc., Vor Bio Inc.
PureTech Health plc Annual report and accounts 2021 5
Overview Highlights of the Year — continued
Akili Interactive Labs, Inc. (PureTech ownership: 22.3%)
• In the March 2022 post-period, Akili announced it had been
• In the January 2022 post-period, Akili entered into a definitive
agreement to become publicly traded via a merger with Social
Capital Suvretta Holdings Corp. I (“SCS”) (Nasdaq: DNAA),
a special purpose acquisition company. The transaction is
expected to close in mid-2022, after which Akili will be listed
on the Nasdaq stock market under the new ticker symbol
“AKLI”. The transaction implies a post-money equity value of
the combined company of up to approximately $1 billion and
is expected to deliver up to $412 million in gross cash
proceeds to Akili, including the contribution of up to
$250 million of cash held in SCS’s trust account and
$162 million from PIPE investors at $10 per share.
• In May 2021, Akili announced the closing of a $160 million
combined equity and debt financing. With the completion
of the oversubscribed Series D financing, the funding is
expected to accelerate commercialization of EndeavorRx®10,
enable expansion of core technologies to treat acute and
chronic cognitive disorders and drive further research and
development of potential new digital therapeutics.
• In March 2021, the full data from a multi-site open-label
study (the STARS Adjunct study) evaluating the impact of
EndeavorRx (AKL-T01) on symptoms and functional
impairments in children with attention-deficit/hyperactivity
disorder (ADHD) was published in Nature Digital Medicine.
Statistically significant improvement was demonstrated in all
predetermined endpoints of the study, which included parent
and clinician ratings of children’s ADHD symptoms and
related impairments in daily life.
• In the February 2022 post-period, Akili announced the
named to Fast Company’s prestigious list of the World’s Most
Innovative Companies for 2022. This list honors businesses
that are making the biggest impacts on their industries and
culture as a whole and thriving in today’s ever-changing world.
• In July 2021, Akili introduced new gaming features and
functionalities to its EndeavorRx treatment. Akili is
releasing these new gameplay features as it expands its
pre-launch activities to bring EndeavorRx to families and
healthcare professionals.
• In April 2021, Akili announced collaborations with Weill
Cornell Medicine, New York-Presbyterian Hospital and
Vanderbilt University Medical Center to evaluate Akili digital
therapeutic AKL-T01 as a treatment for patients with cognitive
dysfunction following COVID-19 (also known as “COVID fog”).
Under each collaboration, Akili will work with research teams
at each institution to conduct two separate randomized,
controlled clinical studies evaluating AKL-T01’s ability to
target and improve cognitive functioning in COVID-19
survivors who have exhibited a deficit in cognition. Akili
expects data from the studies in COVID fog in the second
half of 2022.
• In August 2021, Akili and Australian digital health company
TALi® (ASX:TD1), completed an agreement for Akili to license
TALi’s technology designed to address early childhood
attention impairments. The companies plan to work together
to execute clinical trials of the TALi technology in pediatric
ADHD in the U.S. and pursue FDA regulatory clearance.
Under the terms of the agreement, Akili will lead potential
U.S. commercialization and roll-out.
publication of full data in the medical journal PLOS ONE from
a single arm, unblinded study conducted by Dr. Elysa Marco
at Cortica Healthcare and Drs. Joaquin Anguera and
Courtney Gallen at the University of California, San Francisco.
The study measured electroencephalography (EEG) data
alongside behavioral and clinical metrics of attention in
children with ADHD using AKL-T01 (EndeavorRx). Data from
the study show that EndeavorRx treatment resulted in
increased brain activity related to attention function, as
measured by EEG, which correlated with improvements in
objective behavioral measures of attention.
• In the March 2022 post-period, Akili appointed Jon David
as Chief Product Officer. A 20-year veteran of the games
industry, Mr. David joins Akili to develop and execute
the strategic vision of Akili’s future product pipeline after
serving as Vice President and General Manager at Glu
Mobile, acquired in 2021 by Electronic Arts, where he led
the development of both new IP and hit franchises including
Covet Fashion and Diner Dash Adventures. Mr. David also
guided the success of fan-favorite franchises and the launches
of hit titles including Plants vs. Zombies 2 and Plants vs.
Zombies Garden Warfare.
• In September 2021, Akili announced topline results of a Phase
2 study of SDT-001 (Japanese version of AKL-T01), a digital
therapeutic designed to improve measures of attention in
children diagnosed with attention-deficit/hyperactivity
disorder (ADHD). The study, conducted by Akili partner
Shionogi & Co., Ltd., was designed to evaluate the feasibility,
safety and efficacy of the digital therapeutic in children with
ADHD and to inform the design of a potential pivotal study.
Results showed the treatment was well-received by patients
and demonstrated improvements in ADHD inattention
symptoms consistent with those seen across previous
studies of AKL-T01.
10 EndeavorRx® is a digital therapeutic indicated to improve attention function as measured by computer-based testing in children ages 8-12 years old with primarily inattentive
or combined-type ADHD, who have a demonstrated attention issue. Patients who engage with EndeavorRx demonstrate improvements in a digitally assessed measure, Test
of Variables of Attention (TOVA®) of sustained and selective attention and may not display benefits in typical behavioral symptoms, such as hyperactivity. EndeavorRx should
be considered for use as part of a therapeutic program that may include clinician-directed therapy, medication, and/or educational programs, which further address symptoms
of the disorder. There were no serious adverse events; 9.3% of subjects experienced side effects, including frustration, headache, dizziness, emotional reaction, nausea or
aggression. EndeavorRx is only available to your patients through a prescription, and is not intended as a stand-alone therapeutic or a substitute for your patient’s medication.
6 PureTech Health plc Annual report and accounts 2021
Overview Highlights of the Year — continued
Gelesis Holdings, Inc. (PureTech ownership: 23.5%; We also
are eligible to receive payments under our license agreement,
including sublicense payments and royalties on net sales)
received in January 2021, for its first commercial product for
weight management, Plenity, from Ro, a leading U.S. direct-
to-patient healthcare company.
• In December 2021, Gelesis announced that Plenity®11 is now
broadly available across the U.S. to adults who meet the
prescription criteria.
• In late 2021, both primary endpoints were achieved in the
Gelesis LIGHT-UP study of GS200 in adults with overweight
or obesity who also have prediabetes or type 2 diabetes.
• In the January 2022 post-period, Gelesis announced the
• In November 2021, Gelesis announced a publication in
completion of its business combination with Capstar Special
Purpose Acquisition Corp. (NYSE: CPSR) (“Capstar”). Gelesis
Holdings, Inc. began trading on the New York Stock Exchange
under the ticker symbol “GLS” on January 14, 2022.
• In January 2022 post-period, Gelesis launched the “Who
Said?” marketing campaign across the U.S., which challenges
many long-held cultural and societal assumptions around
weight loss. Plenity’s multichannel campaign encompasses
TV, digital, social and Out of Home (OOH) to grow awareness
of Plenity’s novel approach to weight management.
• In the March 2022 post-period, Gelesis announced
preliminary results from its broad awareness media campaign,
noting that within the first three weeks, the company saw
a 3-fold increase in web traffic and 3.5-fold increase in the
number of individuals seeking a new prescription compared
to previous months when supply was limited.
• In November 2021, Gelesis’ first commercial-scale
manufacturing line was completed and validated, and
the company announced that it had received a $30 million
fully paid pre-order, in addition to the $10 million pre-order
Nature’s Scientific Reports describing the genesis of the
underlying technology and engineering process for Gelesis’
non-systemic superabsorbent hydrogels. These new materials
were designed to replicate compositional and mechanical
properties of raw vegetables, and the paper describes their
therapeutic approach for weight management as well as
possible future solutions for other gut-related conditions.
• In May 2021, Gelesis presented a scientific poster at the
American Association of Clinical Endocrinology (AACE) 2021
Annual Virtual Meeting. The post-hoc analysis showed that
treatment for weight management with Plenity decreased
a marker for liver fibrosis (the NAFLD fibrosis score) compared
to placebo.
• In the January 2022 post-period, Gelesis appointed Inogen
Co-Founder and former CFO, Ali Bauerlein, to its Board of
Directors and Audit Committee. Ms. Bauerlein brings success
in scaling to $300M+ revenue in a direct-to-consumer
business model and public company execution as Gelesis
plans to scale Plenity to meet growing consumer demand.
Vor Bio Inc. (PureTech ownership: 8.6%)
• In February 2021, Vor Bio announced the pricing of its
initial public offering of common stock on the Nasdaq
Global Market under the symbol “VOR”. The aggregate
gross proceeds to Vor Bio from the offering were
approximately $203.4 million, before deducting the
underwriting discounts and commissions and other
offering expenses payable by Vor Bio.
• In the March 2022 post-period, Vor Bio announced VCAR33
is now made up of two programs with different cell sources.
The VCAR33 programs are chimeric antigen receptor
T (CAR-T) cell therapy candidates designed to target CD33,
a clinically-validated target for AML. VCAR33AUTO uses
autologous cells from each patient, and is being studied in
an ongoing Phase 1/2 clinical trial sponsored by the National
Marrow Donor Program (NMDP) in young adult and pediatric
patients with relapsed/refractory AML in a bridge-to-
transplant study. VCAR33ALLO uses allogeneic healthy
donor-derived cells. Vor Bio also announced it plans to collect
initial data on VOR33 from the VBP101 clinical trial and initial
clinical data from the VCAR33ALLO program prior to IND
submission for the Treatment System following ongoing
discussions with the FDA and alongside improved scientific
understanding of the differences in T-cell sources.
• In September 2021, the FDA granted Fast Track designation
to VOR33, Vor Bio’s lead engineered hematopoietic stem
cell (eHSC) therapeutic candidate for the treatment of acute
myeloid leukemia (AML).
• Vor Bio initiated VBP101, a Phase 1/2a clinical trial of VOR33
for AML patients who currently have limited treatment options
and expects to report VOR33’s initial clinical data in the
second half of 2022.
• In November 2021, Vor Bio announced its first multi-targeted
treatment system comprising VOR33-CLL1 multiplex-edited
eHSC therapy and VCAR33-CLL1 multi-specific CAR-T therapy.
Vor Bio continues to make progress on editing multiple
antigens with its eHSC platform.
• In June 2021, Vor Bio announced the build-out of an in-house
clinical manufacturing facility in Cambridge, Massachusetts in
the same premises as Vor Bio’s current headquarters, to
support flexible manufacturing for the company’s eHSC and
CAR-T product candidate pipeline for patients with blood
cancers. Vor Bio anticipates that the facility will be operational
in 2022.
• In July 2021, Vor Bio announced the formation of
a collaboration with Janssen Biotech, Inc. (Janssen), one of the
Janssen Pharmaceutical Companies of Johnson & Johnson.
11 Important Safety Information about Plenity®: Patients who are pregnant or are allergic to cellulose, citric acid, sodium stearyl fumarate, gelatin, or titanium dioxide should not
take Plenity. To avoid impact on the absorption of medications: For all medications that should be taken with food, take them after starting a meal. For all medications that
should be taken without food (on an empty stomach), continue taking on an empty stomach or as recommended by your physician. The overall incidence of side effects with
Plenity was no different than placebo. The most common side effects were diarrhea, distended abdomen, infrequent bowel movements, and flatulence. Contact a doctor right
away if problems occur. If you have a severe allergic reaction, severe stomach pain, or severe diarrhea, stop using Plenity until you can speak to your doctor. Rx Only. For the
safe and proper use of Plenity or more information, talk to a healthcare professional, read the Patient Instructions for Use, or call 1-844-PLENITY.
PureTech Health plc Annual report and accounts 2021 7
Overview Highlights of the Year — continued
The agreement was facilitated by Johnson & Johnson
Innovation. Under the terms of the collaboration, Vor Bio will
investigate the combination of these two technologies into
a treatment solution, pairing Vor Bio’s “invisible” eHSC
transplant platform with one of Janssen’s bi-specific
antibodies in development for AML. The collaboration
agreement provides that each company retains all rights
and ownership to their respective programs and platforms.
• In June 2021, Vor Bio entered into a multi-year strategic
collaboration and license agreement with Abound Bio to
research both single- and multi-targeted CAR-T treatments
to be used in combination with Vor Bio’s eHSC platform, with
the goal of generating novel treatment systems for patients
fighting AML and other devastating forms of blood cancer.
• In January 2021, Vor Bio announced that the FDA had
accepted the company’s IND application for VOR33. In May
2021, Vor Bio announced that it received the Canadian clinical
trial application clearance for VOR33 from Health Canada.
• In June 2021, Vor Bio announced the appointment of
Matthew R. Patterson as Chairman of its Board of Directors.
Mr. Patterson brings nearly 30 years of senior leadership
experience in the research, development and
commercialization of innovative therapeutics, most recently
at Audentes Therapeutics, Inc., which he co-founded and led
as the company’s Chief Executive Officer from its inception
in 2012 through its acquisition by Astellas Pharma Inc. in
January 2020.
Vedanta Biosciences, Inc. (PureTech ownership: 41.4%)
• In 2021, Vedanta’s ongoing Phase 1/2 clinical trial of VE416 for
• In October 2021, Vedanta announced that its Phase 2 clinical
food allergy continued to progress.
trial of VE303, an orally administered investigational live
biotherapeutic product (LBP) in development for the
prevention of recurrent C. difficile infection (CDI) in high-risk
patients, met its primary endpoint of preventing disease
recurrence through Week 8. VE303 achieved a 31.7% absolute
risk reduction in rate of recurrence when compared with
placebo, representing a greater than 80% reduction in
the odds of a recurrence. This is believed to be the most
advanced clinical trial of an investigational drug based on
a rationally defined bacterial consortium, a microbiome-
based therapeutic approach that delivers orally administered
candidates of precisely known composition that can be
manufactured with pharmaceutical-grade consistency.
Based on the Phase 2 data, the Biomedical Advanced
Research and Development Authority (BARDA) exercised its
first contract option for additional funding of $23.8 million,
pursuant to its existing 2020 contract with Vedanta, to
support a planned Phase 3 clinical trial of VE303.
• In January 2021, Vedanta announced a $25 million investment
from Pfizer, as part of the Pfizer Breakthrough Growth
Initiative. Vedanta will retain control of all of its programs
and has granted Pfizer a right of first negotiation on VE202,
Vedanta’s 16-strain defined bacterial consortium candidate.
As part of the investment, Michael Vincent, M.D., Ph.D.,
Senior Vice President and Chief Scientific Officer,
Inflammation & Immunology Research Unit at Pfizer,
joined Vedanta’s Scientific Advisory Board.
• In late 2021, Vedanta also completed the build-out of its
Phase 3 and commercial launch CGMP manufacturing facility
for supply of VE303.
• In June 2021, Vedanta presented additional results from
a Phase 1 study in healthy volunteers of VE202, Vedanta’s
16-strain defined bacterial consortium candidate for IBD,
at the International Human Microbiome Consortium Congress
2021 (IHMC). The data summarized the long-term safety
and colonization dynamics of the 16-strain version of VE202
in 31 healthy volunteers. Vedanta plans to initiate a Phase 2
clinical trial of VE202 in mild to moderate ulcerative
colitis patients.
• In July 2021, Vedanta announced results from the Phase 1
study evaluating the safety and initial clinical activity of
VE800, and immuno-oncology therapeutic candidate, in
combination with Bristol Myers Squibb’s Opdivo® (nivolumab)
in 54 patients across select types of advanced or metastatic
cancers. VE800 demonstrated an acceptable safety and
tolerability profile, though the observed response rates
did not meet the prespecified criteria to advance into the
next stage of the study. Vedanta is analyzing blood, stool
and tumor samples from patients in whom response or
disease control was observed in order to profile patient
subtypes that might benefit from microbiome manipulation.
Vedanta plans to present the results at a future medical
conference and will continue work to identify cancer settings
and patient populations that might benefit from microbiome
manipulation with its defined bacterial consortia.
• In July 2021, Vedanta closed a $68 million financing, which
included the $25 million investment from Pfizer as part of the
Pfizer Breakthrough Growth Initiative announced in January
2021. Vedanta plans to use the proceeds to advance its
pipeline of defined bacterial consortia, including progressing
VE303 into a Phase 3 clinical trial in patients at high risk for
recurrent CDI, initiating a Phase 2 clinical trial of VE202 in mild
to moderate ulcerative colitis and continuing to advance
programs in additional indications.
• In February 2021, Vedanta appointed Mark Mullikin as
Chief Financial Officer. Mr. Mullikin brings 25 years of
experience raising and deploying capital for life sciences
companies, and most recently held leadership roles in finance
and investor relations at publicly-traded companies such as
Editas Medicine and Novartis.
• In October 2021, Vedanta announced the appointment of
Simona Levi, Ph.D., J.D., as Chief Legal Officer and Corporate
Secretary. Dr. Levi brings over 25 years of U.S. and
international legal experience with private and public
companies across the life sciences industry focusing on
complex transactions, intellectual property law and litigation
as well as corporate governance.
8 PureTech Health plc Annual report and accounts 2021
Overview Highlights of the Year — continued
Follica, Incorporated (PureTech ownership: 76.0%. We also are
eligible to receive payments under our license agreement,
including sublicense payments and royalties on net sales)
• In January 2021, Follica announced the appointment of two
leaders in aesthetic medicine and dermatology to its Board
of Directors. Tom Wiggans, former Chief Executive Officer
of Dermira, joined as Executive Chairman with over 30 years
of experience leading biopharmaceutical companies from
the start-up stage to global commercialization, and
Michael Davin, former Chief Executive Officer of Cynosure,
joined as an Independent Director with over 30 years of
experience in the medical device industry.
• Preparations are underway for the registration clinical
program in male androgenetic alopecia and initiation is
anticipated in 2022.
Sonde Health, Inc. (PureTech ownership: 44.6%)
• In October 2021, Sonde launched Sonde Mental Fitness,
a voice-enabled mental health detection and monitoring
technology that uses a brief voice sample to evaluate mental
well-being. Sonde Mental Fitness is currently available
through its API platform for integration into third-party apps.
It’s also available as a standalone app for iOS and Android,
mobile devices to serve as a proof-of-concept for health
systems, employers and wellness services interested in
testing out the API’s capabilities.
• In the January 2022 post-period, Sonde announced the
signing of a multi-year strategic partnership with GN Group to
research and develop commercial vocal biomarkers for mild
cognitive impairment. The research will serve as the backbone
for new voice-based tools to help at-risk individuals gain
timely and accurate health insights using GN Group’s device
technologies and, ultimately, to enable early detection and
management of life-threatening diseases for the millions of
people living with hearing loss.
• In July 2021, Sonde announced a strategic collaboration with
leading chipmaker Qualcomm Technologies, Inc. (Qualcomm)
to embed Sonde’s vocal biomarker technology into its
flagship and high-tier Qualcomm® Snapdragon™ 888 and
778G 5G Mobile Platforms to help bring native, machine
learning-driven vocal biomarker capabilities to mobile and IoT
devices globally. The optimization has the potential to unlock
several native health screening and monitoring applications
on up to the hundreds of millions of mobile devices that use
these Snapdragon mobile platforms.
Entrega, Inc. (PureTech ownership: 74.3%)
• Entrega has also continued advancement of its ENT-100
• Entrega continued to advance its platform for the oral
administration of biologics, vaccines and other drugs that are
otherwise not efficiently absorbed when taken orally. As part
of its collaboration with Eli Lilly, Entrega has continued to
investigate the application of its peptide administration
technology to certain Eli Lilly therapeutic candidates.
The partnership has been extended into 2022.
platform for the oral administration of biologics, vaccines and
other drugs that are otherwise not efficiently absorbed when
taken orally.
PureTech Health plc Annual report and accounts 2021 9
Overview Components of Value
Wholly Owned Pipeline
Our programs1
Indication
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
LYT-100-ILD
Deupirfenidone
LYT-100-COV
Deupirfenidone
Idiopathic pulmonary fibrosis (IPF)
Long COVID2 respiratory
complications and
related sequelae
LYT-100-LYMPH
Deupirfenidone
Lymphatic flow disorders,
including lymphedema
LYT-200
Anti-Galectin-9 mAb
Solid tumors
LYT-210
Anti-Delta-1 mAb
Solid tumors
LYT-300
Oral Allopregnanolone
Neurological and
neuropsychological conditions
LYT-510
Oral Immunosuppressant
Inflammatory bowel disease (IBD)/
Chronic pouchitis
LYT-500
Oral IL-22 +
Immunosuppressant
LYT-503/IMB-150
(Partnered program)
Non-opioid
Inflammatory bowel disease (IBD)
Interstitial cystitis/bladder
pain syndrome (IC/BPS)
Phase completed
Phase in progress
Registration-enabling studies to begin in 1H2022
Lymphatic and Inflammation Platforms
Glyph™ Technology Platform (Lymphatic Targeting)
Orasome™ and Other Technology Platforms (Oral Biotherapeutics)
Alivio™ Technology Platform (Inflammation Targeting)
Meningeal Lymphatics Research Program
Cash at PureTech Level
$418.9m
PureTech Level Cash and Cash Equivalents as of December 31, 20213
1 The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our wholly-owned therapeutic candidates are safe and
effective. No regulatory agency has made any such determination that our wholly-owned therapeutic candidates are safe or effective for use by the general public for any
indication.
2 Long COVID is a term being used to describe the emerging and persistent complications following the resolution of COVID-19 infection, also known as post-acute COVID-19
syndrome (PACS).
3 For more information in relation to the PureTech Level Cash and Cash Equivalents and Consolidated Cash and Cash Equivalents measures used in this Annual Report, please
see pages 97 and 98 of the Financial Review.
10 PureTech Health plc Annual report and accounts 2021
Overview Components of Value — continued
Founded Entities4
Advancing transformative medicines
for people living with psychiatric
and neurological conditions
Pioneering the development of
cognitive treatments through
game-changing technologies
Advancing a novel category of
treatments for weight management
and gut related chronic diseases
Interest5
5.6% Equity plus Royalties, Milestone
Payments & Sublicense Revenues
Stage of Development
Phase 3
Nasdaq
KRTX
Interest5
22.3% Equity
Stage of Development
Commercial
Interest5
23.5% Equity plus Royalties
Stage of Development
Commercial
NYSE
GLS
Engineering hematopoietic
stem cell therapies combined
with targeted therapies
Pioneering a new category
of oral therapies based on
defined bacterial consortia
Building a regenerative biology platform
for androgenetic alopecia, epithelial
aging and other medical indications
Interest5
8.6% Equity
Interest5
41.4% Equity
Stage of Development
Phase 1/2a
Stage of Development
Phase 3 Ready
Interest5
76.0% Equity plus Royalties
Stage of Development
Phase 3 Ready
Nasdaq
VOR
Developing a voice-based
technology platform to detect
changes of health conditions
Engineering hydrogels
to enable the oral administration
of biologics
Interest5
44.6% Equity
Stage of Development
Commercial Release
Interest5
74.3% Equity
Stage of Development
Preclinical
4 This figure represents the stage of development for each Founded Entity’s most advanced therapeutic candidate. For additional information, please see footnote no. 9 on
page 5.
5 Relevant ownership interests for Founded Entities contained in this strategic report (pages 2-72) were calculated on a partially diluted basis (as opposed to a voting basis)
as of December 31, 2021, including outstanding shares, options and warrants, but excluding unallocated shares authorized to be issued pursuant to equity incentive plans.
Vor Bio, Karuna and Gelesis ownerships were calculated on a beneficial ownership basis in accordance with SEC rules as of March 4, 2022 and February 15, 2022 and
March 31, 2022, respectively.
PureTech Health plc Annual report and accounts 2021 11
Overview Letter from the Chair
“In my experience, very few companies come anywhere close to
PureTech’s realization of a truly innovative business and development
model that has established a foundation for long-term growth.”
This de-risked strategy of leveraging
validated biology is employed across
several of our Wholly Owned Pipeline
candidates. It is enhanced by our novel
research platform technologies, each of
which can be applied to known
therapeutic entities, with clinical
validation, to generate novel candidates
that not only help grow our Wholly
Owned Pipeline organically but have the
potential to change the treatment
paradigm for a range of serious diseases
and generate significant value for the
patients and our shareholders.
To complement our innovative R&D
engine, our Founded Entities are also
maturing well, with three of them now
publicly traded and a fourth one soon
expected to go public, and they
continue to generate value for PureTech
through their ongoing, independent
activity. In 2021, for example, we
monetized a portion of our equity in one
of our Founded Entities, Karuna
Therapeutics, resulting in approximately
$218 million being added to PureTech’s
balance sheet and bringing the total to
approximately $565 million generated to
date while still maintaining a significant
equity stake as one of the largest
shareholders and the right to receive
royalties and sublicense revenues from
the KarXT programs. Our Founded
Entities are a source of value to us
through potential M&A transactions,
equity stakes, royalties and milestone
payments as they continue to deliver
on their promise. Monetization of our
stakes in the Founded Entities has
provided us with important resources
to advance our Wholly Owned Pipeline.
Collectively, our eight Founded Entities
are now advancing 20 therapeutics and
therapeutic candidates, of which two
have been cleared for marketing
by the FDA and granted marketing
authorization in the European Economic
Area, and 13 are clinical stage.
The Founded Entities continued to
mature over the year, with Akili and
Gelesis making major strides towards
full commercial launches for their
groundbreaking products as well as
entering the public equity markets.
Vor Bio also entered the clinic and
completed its initial public offering
on Nasdaq.
Christopher Viehbacher,
Chair of the Board of Directors
The past year has been a highly dynamic
one for the biotech industry. With
vaccines and therapies against
COVID-19 taking center stage in the
public consciousness, investment in life
sciences companies soared and then
public companies faced headwinds. The
pace of incredible innovation across
a wide range of therapeutic modalities
and diseases accelerated. The
fundamental opportunity we have to
bring transformative medicines to
people in need has never been larger or
more achievable. Research tools grow
more powerful at an accelerating pace,
and we are steadily building the
evidence base for many innovative
platforms with the potential to fill
pipelines of breakthrough medicines
in the years to come.
PureTech represents the most
compelling elements of the
biotherapeutics industry in a single
company. We leverage world-leading
expertise in immunology and the brain,
immune and gastrointestinal systems to
address serious debilitating diseases.
We prioritize harnessing validated
biology to advance differentiated
therapeutic candidates with well-
managed risk profiles and robust
development rationales from day one.
The result is a unique pharmaceutical
pioneer with a strong track record of
innovation and clinical success, an
exciting, diversified pipeline of
innovative therapeutic candidates and
programs, a strong balance sheet and
a clear vision for bringing breakthrough
new medicines to the patients.
We are moving steadily towards our
vision of a fully integrated
biotherapeutics company, creating value
organically from internally-driven growth
while also sourcing programs that
complement our strategy and expertise
to build a truly differentiated portfolio of
high-value new medicines. In my
experience, very few companies come
anywhere close to PureTech’s realization
of a truly innovative business and
development model that has delivered
such a sustainable foundation for
long-term growth.
Across our Wholly Owned Pipeline,
all our work is united by a mission to
deliver highly differentiated medicines
for devastating diseases where there are
currently limited or no options available
for patients. That internal pipeline now
includes seven therapeutic candidates.
We advanced three of these through the
clinic in 2021, most notably in two Phase
2 trials of LYT-100, a Phase 1/2 trial of
LYT-200 and a Phase 1 study of LYT-300.
As a highly versatile therapeutic
candidate built on substantial validated
biology and clinical data, PureTech’s
lead therapeutic candidate, LYT-100
(deupirfenidone), is rapidly building
a compelling expanded clinical profile
to address a range of serious fibrotic
and inflammatory diseases. Study data
announced in late 2021 and the early
2022 post-period have helped paint
a picture of a therapeutic with
substantially enhanced tolerability
relative to pirfenidone, a drug already
approved for IPF, a chronic orphan
condition that causes progressive
scarring of the lungs and has a median
survival of 3-5 years.
12 PureTech Health plc Annual report and accounts 2021
Overview Letter from the Chair — continued
In the January 2022 post-period, Gelesis
became public, raising capital to fuel its
commercialization strategy for Plenity®1
as a truly novel approach for overweight
and obesity. Akili also announced its
entry into a definitive agreement to
become publicly traded via a merger
with Social Capital Suvretta. The
transaction is expected to close in
mid-2022, after which Akili will be listed
on the Nasdaq stock market under the
new ticker symbol “AKLI”.
Diversifying the ways we can create
value for shareholders adds stability to
our anticipated growth trajectory and –
as we have seen – feeds value back into
the core enterprise centered on the
Wholly Owned Programs. Those
programs have substantial potential
opportunities in major markets, while the
risk profile of the portfolio is offset by
our equity holdings, royalties and other
payments from our Founded Entities.
The resulting balance of opportunity
and risk is rare in the biotherapeutics
industry, and we are justifiably proud
of the model.
Overall, PureTech delivered substantial
growth across the Founded Entities and
Wholly Owned Pipeline in 2021.
Sustaining this momentum over such an
extensive range of projects does not
happen without a significant unified
effort, and I congratulate the hard work
and dedication of the PureTech team
and its broader network. It is deeply
rewarding to work with such a seasoned
Board of Directors and management
team who translate the Board’s guidance
into operational excellence and strong
partnerships. The grounding focus of
our shared passion for helping people
with devastating diseases is palpable
in our work, and I am convinced it is
integral to PureTech’s culture
and success.
Thank you to all of our shareholders for
continuing to support our work for
patients. After another year of PureTech
evolving into an exemplar for a truly
innovative pharmaceutical enterprise,
I am humbled by the opportunity to be
part of the team’s journey and I look
forward to continued success in 2022.
Christopher Viehbacher
Chair
April 25, 2022
PureTech’s R&D Engine Has Delivered Results2
27 new therapeutics and
therapeutic candidates
16 clinical stage candidates
2 taken from inception to FDA
and EU regulatory clearances
60%
40%
20%
0%
Track Record of Clinical Success3
Probability of Transition Success
from Ph1 to Regulatory Filing
45%
8%
Industry average4
PureTech5
1 Please see footnote 11 on page 7 for Important Safety Information about Plenity®.
2 PureTech has established the underlying programs and platforms that have resulted in therapeutics and therapeutic candidates that are being advanced within our Wholly
Owned Programs or by our Founded Entities. The numbers on this graphic reflects status of those therapeutics and therapeutic candidates as of the date of PureTech’s most
recently filed Annual Report on Form 20-F.
3 The cumulative percentages are calculated by multiplying the individual phase percentages listed in the following footnotes 4 & 5.
4 Industry average data measures the probability of clinical trial success of therapeutics by calculating the number of programs progressing to the next phase vs. the number
progressing and suspended (Phase 1=52%, Phase 2=29%, Phase 3=58%). BIO, PharmaIntelligence, QLS (2021) Clinical Development Success Rates 2011 – 2020. This study did
not include therapeutics regulated as devices.
5 The aggregate percentages include all therapeutic candidates advanced through at least Phase 1 by PureTech or its Founded Entities from 2009 onward, using the
aforementioned calculation method based on the following individual phase percentages, Phase 1 (n = 6/8; 75%), Phase 2 (n = 10/11; 91%), Phase 3 (n = 2/3; 67%); Phase 2
and Phase 3 percentages include some therapeutic candidates where Phase 1 trials were not conducted by PureTech or its Founded Entities (i) due to the requirements of the
medical device regulatory pathway or (ii) because a prior Phase 1 trial was conducted by a third party.
PureTech Health plc Annual report and accounts 2021 13
Overview Letter from the Chief Executive Officer
“PureTech is in an enviable position as we build on the momentum of our
accomplishments in 2021. Our balance sheet, Founded Entities equity and
royalty stakes, and Wholly Owned Programs put us in a stronger position than
ever to build value in the current environment and deliver on our mission of
bringing breakthrough medicines to patients.”
As our balance sheet and track record
strengthened, we decided to maintain
a group of Wholly Owned Programs to
capture more of the value from our core
capabilities of identifying and inventing
novel medicines and taking them
through proof-of-concept. The Wholly
Owned Programs and our core areas of
expertise around brain, immune and
gastrointestinal systems, with
a particular focus on immunological
disorders, are the hub of our R&D
model. In addition, we have consistently
demonstrated our ability to harness
validated biology and add important
innovative steps that enable new
medicines to advance. We have been
building a differentiated, integrated
biopharmaceutical company that
develops its own wholly-owned
therapeutics as well as benefits from the
successes of the now-independent
Founded Entities. This gives PureTech
a diverse foundation for sustainable
growth with a well-managed risk profile.
PureTech’s history of building on
validated biology has been woven into
our strategic framework from our early
days. For example, our Founded Entity
Karuna’s core technology improved
upon a clinical compound by addressing
tolerability issues and opening up
new possibilities in an area of major
need where therapeutic innovation has
languished – schizophrenia and other
serious psychiatric and neurological
conditions. This is very similar to our
approach to our Wholly Owned
Program, LYT-100, in the way of its
de-risked clinical profile with a new
chemical entity. LYT-100 maintains the
pharmacology of pirfenidone with
a differentiated PK profile, enabling an
improved tolerability profile. We were
excited when LYT-100 demonstrated
a comparable total exposure to
pirfenidone based on PK modeling from
prior studies, while improving on the
GI-related AEs, as announced in the
January 2022 post-period.
Each of our programs is highly
innovative and has the potential to
change the treatment paradigm for
a number of serious diseases. In the
same vein as Karuna and LYT-100,
LYT-300 from our Glyph™ platform,
LYT-510 and LYT-500 from our Alivio™
platform, and Orasome™ programs
are reasonably de-risked given they are
based on validated biology and
pharmacology. We believe that focusing
on validated biology therefore offers us
an important strategic advantage and
confidence as we invest in these
programs. I am beyond excited about
the progress of our Wholly Owned
Programs, especially those that are now
in human studies. Our other public
Founded Entities, Gelesis and Vor Bio,
also harnessed validated biology
to create new opportunities for
millions of patients as a result
of our foundational input.
We are building our Wholly Owned
Pipeline based on candidates that
emerge from three potentially
disruptive technology platforms as
well as from thematic sourcing of
programs externally.
Our proprietary technology platforms
in lymphatics and inflammation are
powerful tools for further enabling
this strategy. Across our Alivio, Glyph
and Orasome and other oral delivery
technologies, we have a versatile
toolkit for rapidly articulating entirely
new target product profiles based on
validated biology and pharmacology.
An example is LYT-300, an oral
allopregnanolone candidate
emerging from the Glyph platform.
Allopregnanolone is a natural
neurosteroid that is approved to treat
postpartum depression but is generally
poorly orally bioavailable and has to be
administered as a 60-hour intravenous
infusion. Although efficacious, the
intravenous formulation has limited
its application. Applying our Glyph
technology, we have developed an
oral form of natural allopregnanolone
(LYT-300) that we are currently evaluating
in a first-in-human clinical study.
Similarly, we have several molecules
with clinically validated biology and
pharmacology that we are evaluating
Daphne Zohar,
Founder and Chief Executive Officer
Towards our goal of building value and
delivering on our mission of bringing
breakthrough medicines to patients,
we continue to deliver on the growing
value from the hub-and-spoke R&D
model that PureTech pioneered for
therapeutic development. For years,
we developed in-house expertise and
a global network of world-class
advisors that informed the creation
of our Founded Entities (the spokes).
The success of several of our Founded
Entities as they became independent
and are advancing innovative new
medicines validated our R&D model and
established a strong track record
which enables self-sustaining growth,
as evidenced by their raising $1.9 billion
in aggregate over the last few years.
In addition, these Founded Entities
are a source of capital to PureTech.
To date, we have been able to
generate over $560 million in non-
dilutive cash while still maintaining
strong equity positions. We anticipate
further value to us from these entities
through events such as M&A
transactions or public listings with
subsequent value accretion in addition
to royalty and milestone payments from
commercialized products such as KarXT
or Plenity and product candidates in
development. We are also structured to
potentially receive sublicense revenues
from pharma partnerships entered into
with certain Founded Entities.
14 PureTech Health plc Annual report and accounts 2021
Strategic report Letter from the Chief Executive Officer — continued
Milestones achieved in 2021
$418.9m PureTech Level
Cash and Cash Equivalents
as of December 31, 20211
Proven track record of
value creation, credibility
and transparency
Vedanta
announced the
closing of $68M
Series D
Gelesis announced
SPAC merger with
Capstar Special
Purpose
Acquisition Corp.
Vor Bio announced
its collaboration
with Janssen
Biotech to develop
eHSC with a
bi-specific antibody
therapy for AML
Sonde announced
collaboration with
Qualcomm
Technologies for
vocal biomarker
technology
PureTech
announced clinical
trial and supply
agreement with
BeiGene to
evaluate LYT-200
and tislelizumab
in solid tumors
Akili announced
completion of
Shionogi Phase 2
study of SDT-001
in Japan
PureTech’s Glyph
technology
platform published
in Nature
Metabolism
Vor Bio announced
FDA granted fast
track designation
for VOR33
Gelesis received
$30M Plenity®
order from Ro
PureTech’s LYT-100
Phase 1 results
published in the
journal Clinical
Pharmacology in
Drug Development
PureTech received
orphan drug
designation for
LYT-200
PureTech
generated
approximately
$100M from
Founded Entity
equity sale3
Karuna announced
collaboration with
Zai Lab for KarXT
development,
manufacturing, and
commercialization
of KarXT in Greater
China
Gelesis’
foundational
biomimetic
platform published
in Scientific Reports
Akili’s
EndeavorRx®
clinical study in
pediatric ADHD
published in Nature
Digital Medicine
Karuna closed
$270.0M follow-on
public offering
Akili announced
the closing of
$160M Series D
PureTech formed
Clinical Advisory
Board for IPF and
other PF-ILDs
March
April
May
June
July
September
November
August
October
December
Akili announced
collaboration with
Weill Cornell
& Vanderbilt to
evaluate AKL-T01
for COVID fog
PureTech’s
meningeal
lymphatics
research program
published in Nature
PureTech acquired
remaining interest
in Founded Entity,
Alivio Therapeutics
PureTech
appointed Dr. Julie
Krop as Chief
Medical Officer
Akili announced
strategic licensing
agreement with TALi
Karuna completed
Phase 1b trial of
KarXT in healthy
volunteers
Vedanta
announced
presentation of new
data from Phase 1
study of VE202 for
treatment of IBD
Sonde launched
Sonde Mental
Fitness
Gelesis’ Plenity®
became broadly
available in the US
Vedanta
announced topline
Phase 2 data for
VE303 and exercise
of $23.8M option
by BARDA
PureTech
announced
Phase 1 initiation
of LYT-300
Vor Bio announced
FDA clearance of
IND application
for VOR33
January
February
PureTech
generated
approximately
$118M from
Founded Entity
equity sale2
Vor Bio completed
$203.4M IPO
Karuna’s Phase 2
EMERGENT-1 trial
of KarXT in
schizophrenia
published in NEJM
PureTech’s Glyph
preclinical POC
study published in
Journal of
Controlled Release
1 For more information in relation to the PureTech Level Cash and Cash Equivalents and Consolidated Cash and Cash Equivalents measures used in this Annual Report, please
see pages 97 and 98 of the Financial Review.
2 Approximately $118 million in proceeds from the February 10, 2021 sale of 1 million Karuna common shares.
3 Approximately $100 million in proceeds from the November 9, 2021 sale of 750,000 Karuna common shares.
PureTech Health plc Annual report and accounts 2021 15
Strategic report Letter from the Chief Executive Officer — continued
utilizing our Glyph, Alivio and Orasome
and other oral delivery technologies to
breathe new life into these molecules
with a highly differentiated profile. We
plan to advance one or more of these
into clinical development under the
Wholly Owned Pipeline.
In addition to the innovation engine of
our platforms, we continually identify
and seek access to external clinical-
stage programs that are highly
differentiated and complementary to
the immune modulation focus of our
Wholly Owned Pipeline.
Looking ahead, we believe our strategy
and in-house capabilities strongly
position us to build on the value through
advancing innovative, differentiated
medicines for patients.
The core of our business is advancing
innovative medicines, and we believe
2022 will deliver significant growth on
that front, with our internal pipeline
expecting multiple clinical milestones,
new registration-enabling studies,
new programs and deepened
platform validation.
In addition to research and
development excellence, we are
executing on a broader strategy to
build shareholder value. This includes
continuing to strengthen our balance
sheet, implementing steps to address
the disconnect we believe exists
between our valuation and true value
and supporting our Founded Entities
in their growth and creation. We
have also been considering various
approaches to drive additional value
for our shareholders, including through
the implementation of a capital
deployment strategy that balances
investment in the continued growth
of our business with potential returns
of capital to shareholders.
Portfolio review
Across the key areas of pipeline
development and clinical execution,
PureTech continued to deliver.
Highlights from the past year include:
Wholly Owned Pipeline
In 2021, our team was proud to
welcome Dr. Julie Krop as Chief Medical
Officer, who brings deep expertise in
regulatory affairs, CMC and clinical
development (both as a leader and as
a board-certified physician) to oversee
the significantly expanded Wholly
Owned Pipeline.
• LYT-100: In the January 2022 post-
period, we were excited to share
a successful readout from a Phase 1
trial enrolling a healthy older adult
population which demonstrated that
50% fewer subjects experienced
GI-related AEs compared to those
treated with the FDA-approved drug
pirfenidone for IPF. We intend to
advance a late-stage clinical program
in IPF that will leverage a streamlined
505(b)(2) development path, with
topline results from the dose-ranging
study expected by the end of 2023.
LYT-100 is a selectively deuterated
form of pirfenidone that maintains the
pharmacology of pirfenidone
but has a highly differentiated PK
profile that has translated into
favorable tolerability, as
demonstrated by data from multiple
human clinical studies. We have
assembled a stellar clinical advisory
board of advisors for IPF and related
lung disorders to help us advance
LYT-100 into registration-enabling
studies, and have appointed
pulmonary drug development
veteran, Paul Ford, M.D., Ph.D.,
as SVP of Clinical Development to
provide additional internal expertise.
LYT-100 is also being evaluated in
a Phase 2 trial in Long COVID with
results expected in the first half
of 2022, and a Phase 2a trial in
lymphedema with topline results
expected in 2022. We are evaluating
a range of additional fibrotic
conditions for LYT-100, such as
radiation induced fibrosis,
myocardial fibrosis and other
organ system fibrosis.
• LYT-200/210: LYT-200 is currently
being evaluated as a single agent in
the first stage of an adaptive Phase
1/2 trial and we expect to report
topline results in the first half of 2022
from this study. Complementing this
activity, we entered into a clinical trial
and supply agreement with BeiGene
to evaluate LYT-200 with BeiGene’s
tislelizumab, an anti-PD-1 immune
checkpoint inhibitor, in patients with
difficult-to-treat solid tumors. On the
regulatory front, the FDA granted
LYT-200 orphan drug designation for
pancreatic cancer, which qualifies
PureTech for incentives under the
Orphan Drug Act, including tax
credits for some clinical trials and
eligibility for seven years of market
exclusivity in the U.S. if the drug is
approved. We believe the targeting of
a foundational immunosuppressive
protein, galectin-9, gives LYT-200 the
potential to treat a range of cancers.
This year we also presented new
research at the American Association
for Cancer Research (AACR) Annual
Meeting demonstrating that our other
fully human monoclonal antibody
candidate for cancer, LYT-210, which is
both highly specific and highly potent,
rapidly inducing cell death of
immunomodulatory gamma delta-1
T cells while sparing other T cells that
play important roles in a healthy
immune response.
• LYT-300: We initiated a first-in-human
clinical trial of LYT-300, oral
allopregnanolone, to evaluate its
safety, tolerability and PK profile, as
well as its impact on beta-EEG,
a marker of GABAA target
engagement, potentially providing
early insights into its mechanism. We
also presented preclinical proof-of-
concept data at the American College
of Neuropsychopharmacology (ACNP)
Annual Meeting showing that
systemic exposure of natural
allopregnanolone was achieved
after oral administration of LYT-300 in
multiple preclinical models. Results
from the Phase 1 trial are expected in
the second half of 2022 and will be
used to inform the design of possible
future studies evaluating LYT-300 in
indications that could include
depression, anxiety, sleep disorders,
fragile X tremor-associated syndrome,
essential tremor and epileptic
disorders, among others.
16 PureTech Health plc Annual report and accounts 2021
Strategic report Letter from the Chief Executive Officer — continued
• On top of the progress of LYT-300
(developed using the Glyph platform),
preclinical proof-of-concept work was
published in Nature Metabolism and
the Journal of Controlled Release
supporting the Glyph technology
platform’s ability to employ the body’s
natural lipid absorption and transport
process to send oral drugs into
the lymphatic system.
• LYT-510: LYT-510 is an oral
inflammation-targeting formulation
of tacrolimus, a potent
immunosuppressant drug, in
development to treat IBD and chronic
pouchitis. In multiple preclinical IBD
models, LYT-510 showed significant
improvements in several efficacy
endpoints compared to untreated
controls. Furthermore, the
inflammation-targeting properties
were shown to result in very low
systemic blood levels compared to
the current immunosuppressant
formulations, which minimizes the
potential for systemic side effects.
We intend to file for regulatory
approval to initiate first-in-human
studies at year end 2022 and initiate
a clinical study evaluating LYT-510
as a single agent for the potential
treatment of IBD and chronic
pouchitis in early 2023.
• LYT-500: We identified this candidate
as a potential therapy for IBD and
progressed preclinical evaluation.
LYT-500 uses the Alivio platform to
combine two active agents (IL-22 and
an immunosuppressant drug) into
a single therapeutic candidate for
IBD that is designed to enhance the
treatment of inflamed tissues while
having the potential to minimally
impact the rest of the body. Proof-of-
concept data are expected in the first
half of 2022. In addition to the
progress of LYT-510 and LYT-500
(developed using the Alivio platform),
we are evaluating other potential
therapeutic candidates leveraging
Alivio to selectively restore immune
homeostasis at inflamed sites in the
body, while minimalizing impact on
the rest of the immune system.
• LYT-503/IMB-150: This non-opioid
pain candidate being developed as
a partnered program for the potential
treatment of IC/BPS is expected to be
filed for an IND application in 2022.
• Orasome platform and other
technologies for oral administration
of biologics: We have established
preclinical proof-of-concept
supporting the platform’s potential to
achieve therapeutic levels of proteins
in circulation following oral
administration of therapeutic protein
expression systems. We intend to
generate additional preclinical data in
2022 exploring the potential of
Orasomes and other technologies,
for a wide array of novel therapeutic
protein-based applications.
• Meningeal lymphatics research
program: We published preclinical
research in Nature supporting
the hypothesis that restoring
lymphatic flow in the brain has
the potential to address a range of
neurodegenerative diseases, such as
Alzheimer’s and Parkinson’s diseases
and associated neuroinflammation.
Founded Entities
• Karuna Therapeutics (Nasdaq:
KRTX): Announced that all four Phase
3 trials in their EMERGENT program,
evaluating KarXT for the treatment of
psychosis in adults with schizophrenia,
are enrolling. They also initiated their
Phase 3 ARISE trial of KarXT for the
treatment of schizophrenia in adults
who experience an inadequate
response to current standard of care.
Additional clinical milestones
include data from Karuna’s completed
Phase 1b trial of KarXT in healthy
elderly volunteers, which Karuna
intends to support a Phase 3 program
evaluating KarXT for the treatment of
psychosis in Alzheimer’s disease,
initiating in mid-2022. Earlier in 2021,
results from the Phase 2 EMERGENT-1
trial evaluating KarXT for the
treatment of schizophrenia were
published in NEJM. Finally, Karuna
announced entry into an exclusive
license agreement with Zai Lab for the
development, manufacturing and
commercialization of KarXT in Greater
China, including mainland China,
Hong Kong, Macau and Taiwan.
Karuna received a $35.0 million
upfront payment and is eligible to
receive certain development and
regulatory milestone and sales
milestone payments, as well as
royalties based on annual net sales of
KarXT in Greater China.
• Akili: Delivered strong progress on
multiple fronts, including taking a step
towards becoming a publicly-traded
company. In the January 2022
post-period, Akili entered into
a definitive agreement to become
publicly traded via a merger with
Social Capital Suvretta Holdings Corp.
I (Nasdaq: DNAA), a special purpose
acquisition company. With a fully
committed PIPE of $162 million,
transaction is expected to close in
mid-2022, after which Akili will be
listed on the Nasdaq stock market
under the new ticker symbol “AKLI”.
Akili previously completed a $160
million financing, a new licensing
agreement with Australian digital
health company, TALi®, and the
launch of new gaming features and
functionalities for its FDA and
European marketing-authorized video
game treatment, EndeavorRx®,
designed for children with attention
deficit hyperactivity disorder (ADHD).
Additionally, Akili initiated pilot
studies of AKL-T01 for COVID brain
fog in collaboration with Weill Cornell
Medicine, New York Presbyterian
Hospital and Vanderbilt University
Medical Center. Akili also published
data in Nature Digital Medicine from
their STARS Adjunct study of
EndeavorRx and announced positive
results from Japanese partner
Shionogi’s Phase 2 ADHD study
of SDT-001.
PureTech Health plc Annual report and accounts 2021 17
Strategic report We are well-positioned for a new stage
of PureTech’s development. In the year
ahead, our anticipated catalysts
continue to grow in scope and maturity,
with two commercial entities – Gelesis
and Akili – aiming to build launch
momentum in addition to a wide range
of clinical readouts and clinical pipeline
expansion across the broader portfolio.
As always, I am proud of the breadth of
activity and momentum PureTech
sustains across our deep pipeline &
portfolio, and am very grateful for the
continued efforts, passion and counsel
of our team, our R&D Committee and
broader advisory network, as well as our
Board and investors. Thank you to all. I
am encouraged by the entrepreneurial
spirit that is infused in our work and the
mission that unites us in striving to bring
powerful new medicines to patients.
To the patients and physicians taking
part in our clinical trials: Thank you for
your sacrifices and your trust in us as we
work towards dramatically improving
treatment for the conditions that impact
your lives and the lives of many others.
Advancing medicine is a shared project
and we are privileged to partner with
you in shaping its future.
Daphne Zohar
Founder, Chief Executive Officer and Director
April 25, 2022
Letter from the Chief Executive Officer — continued
• Gelesis (NYSE: GLS): Made broad
• Follica: Appointed two leaders
in aesthetic medicine and
dermatology to its Board of Directors.
Tom Wiggans, former Chief Executive
Officer of Dermira, joined as Executive
Chairman with over 30 years of
experience leading biopharmaceutical
companies from the start-up stage to
global commercialization, and
Michael Davin, former Chief Executive
Officer of Cynosure, joined as an
Independent Director with over
30 years of experience in the
medical device industry.
• Sonde: Launched Sonde Mental
Fitness, a voice-enabled mental
health detection and monitoring
technology that uses a brief voice
journal entry to evaluate mental
well-being, expanding Sonde beyond
respiratory health. This news followed
Sonde’s collaboration announcement
with leading chipmaker, Qualcomm
Technologies, to embed Sonde’s vocal
biomarker technology on the flagship
and high-tier Qualcomm®
Snapdragon™ mobile platforms.
This is intended to help bring native,
machine learning-driven vocal
biomarker capabilities to mobile
and IoT devices globally.
• Entrega: Entrega’s platform for the
oral administration of biologics has
continued development including via
a partnership with Eli Lilly regarding
certain Lilly therapeutic candidates.
commercialization-focused progress
in the U.S. toward the launch of
Plenity®, an FDA-cleared weight
management approach, for adults
meeting prescription criteria. In the
January 2022 post-period, Gelesis
debuted as a public company
following a business combination with
Capstar Special Purpose Acquisition
Corp., raising approximately $105
million in gross proceeds to support
Plenity’s launch. Also in the January
2022 post-period, Gelesis launched
the “Who Said?” multichannel
marketing campaign across the U.S.,
which challenges many long-held
cultural and societal assumptions
around weight loss. Other
achievements include completing and
validating its first commercial-scale
manufacturing line, the successful
LIGHT-UP study of GS200 in adults
who are overweight or obese who
also have prediabetes or type 2
diabetes and receipt of $40 million
fully paid pre-orders for Plenity® from
leading U.S. direct-to-patient
healthcare company Ro. Finally,
leading nutrition authority, Joy Bauer,
MS, RDN, CDN, was appointed Chief
Nutrition Officer of Plenity.
• Vor Bio (Nasdaq: VOR): Initiated
VBP101, a Phase 1/2a clinical trial for
VOR33, its eHSC therapy candidate
for acute myeloid leukemia, an
indication for which FDA granted Fast
Track designation. Vor Bio also
completed its initial public offering on
Nasdaq under the ticker symbol
“VOR”, with gross proceeds of over
$200 million. Additionally, Vor Bio
entered into a collaboration with
Janssen Biotech to investigate the
combination of Vor Bio’s “invisible”
eHSC transplant platform with one of
Janssen’s bi-specific antibodies in
development for AML.
• Vedanta Biosciences: Successfully
completed its most advanced clinical
study to date, achieving its primary
endpoint in a Phase 2 clinical trial
of VE303 for the prevention of
recurrent CDI in high-risk patients.
This triggered the exercise of
a $23.8 million option by program
partner, the U.S. Biomedical
Advanced Research and Development
Authority (BARDA), to support
a Phase 3 clinical trial of VE303.
Vedanta also completed a $68 million
financing, including a $25 million
investment from Pfizer as part of the
Pfizer Breakthrough Growth Initiative.
18 PureTech Health plc Annual report and accounts 2021
Strategic report Letter from the Chief Scientific Officer,
Chief Medical Officer and
Chief Innovation and Strategy Officer
“A year of advances in every aspect of PureTech R&D.”
Joseph Bolen, Ph.D.,
Chief Scientific Officer
Julie Krop, M.D.,
Chief Medical Officer
Eric Elenko, Ph.D.,
Chief Innovation and Strategy Officer
2021 was a year of growth for PureTech’s
internal R&D as we significantly
expanded our clinical activity across our
Wholly Owned Pipeline while also
delivering substantial research advances
for our platform technologies. Our R&D
strategy continues to support our
overarching corporate focus on building
a differentiated, integrated
biopharmaceutical company focused on
developing new therapies for
underserved and often devastating
diseases with limited or no options
available for patients. Our unique
innovative research engine is
designed to produce new medicines
that can be rapidly advanced into
the clinic with our experienced fully
integrated clinical, regulatory and
manufacturing expertise.
Our research process begins by
identifying therapeutic products
for serious diseases that have
a well-established human efficacy,
but their usage is significantly limited by
challenges, such as poor safety,
tolerability, oral bioavailability or dosing.
Second, we apply our innovative
research and development expertise
and proprietary platform technologies,
to these products to generate a novel
therapeutic candidate that addresses
one or more of the key underlying
limitations and potentially unlock the full
therapeutic effectiveness of the therapy.
The essential ingredient in our program
selection is typically oriented around
providing key benefits to the patients,
such as substantially improving the
tolerability profile of existing therapies
that had previously demonstrated robust
efficacy or through targeting of existing
therapies to certain cells, such as the
immune cells and sites of disease,
such as inflammation, in order to
improve efficacy while reducing
systemic side effects.
This strategy has helped us provide
a solid foundation for PureTech’s
long-term growth. In addition to
the success of our Founded Entity
programs, we’ve also made tremendous
strides with our Wholly Owned Pipeline,
which is built on three potentially
disruptive technology platforms in
addition to external programs
thematically identified to align with our
immune modulation focus. We currently
have seven therapeutic candidates in
our Wholly Owned Pipeline including
one that is being advanced as a
partnered program. In 2021, we
advanced three clinical-stage wholly-
owned therapeutic candidates that have
the potential to treat a range of
indications including serious lung
conditions, solid tumors lymphatic flow
disorders and neurological indications.
Additionally, we saw continued
validation of our lymphatic and
inflammation-focused technology
platforms, including the advancement of
a therapeutic candidate from one of
these platforms into human studies and
the achievement of preclinical proof-of-
concept from another. The highlights of
our extensive progress across the
portfolio are summarized below:
Multi-pronged progress for LYT-100
across a range of indications
LYT-100 (deupirfenidone) is our most
advanced wholly-owned therapeutic
candidate. It is a selectively deuterated
form of pirfenidone, a drug that is
approved for treating IPF, a serious
and progressive lung disease.
Based on prior work with pirfenidone,
a substantial amount of preclinical and
clinical data support LYT-100’s broader
potential in inflammatory and fibrotic
conditions. These include lung disease
(IPF and other respiratory conditions),
and disorders of lymphatic flow, such
as lymphedema. We are also exploring
the potential evaluation of LYT-100 in
radiation induced fibrosis, myocardial
fibrosis and other organ system fibrosis.
Due to LYT-100’s broad potential across
a range of fibrotic and inflammatory
diseases, we expect LYT-100 to have
a “pipeline within a product”
opportunity which enables rapid clinical
development in multiple indications,
and so our clinical development strategy
has focused on a comprehensive
analysis of the potential applicability of
PureTech Health plc Annual report and accounts 2021 19
Strategic report Letter from the Chief Scientific Officer, Chief Medical Officer and Chief Innovation and Strategy Officer — continued
LYT-100 development plan overview
LYT-100-ILD
LYT-100-COV
LYT-100-LYMPH
Initiating registration-enabling
studies in IPF in 1H 2022
Topline results expected from
Phase 2 in Long COVID1 in 1H 2022
Topline results expected
from Phase 2a POC in
lymphedema in 2022
(cid:45)(cid:82)(cid:379)(cid:69)(cid:81)(cid:81)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)
(cid:56)(cid:43)(cid:42)(cid:17)(cid:1028)
(cid:56)(cid:50)(cid:42)(cid:17)(cid:1027)
(cid:45)(cid:48)(cid:17)(cid:26)
(cid:40)(cid:23)(cid:39)
(cid:48)(cid:61)(cid:56)(cid:17)(cid:21)(cid:20)(cid:20)
(cid:50) (cid:51)
(cid:50)(cid:83)(cid:86)(cid:81)(cid:69)(cid:80)(cid:4)
(cid:80)(cid:89)(cid:82)(cid:75)
(cid:22)
(cid:21)
(cid:39)(cid:51)(cid:58)(cid:45)(cid:40)(cid:17)(cid:21)(cid:29)
(cid:45)(cid:82)(cid:74)(cid:73)(cid:71)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
(cid:71)(cid:93)(cid:88)(cid:83)(cid:79)(cid:77)(cid:82)(cid:73)(cid:4)(cid:86)(cid:73)(cid:80)(cid:73)(cid:69)(cid:87)(cid:73)
(cid:56)(cid:43)(cid:42)(cid:17)(cid:1115)
(cid:56)(cid:50)(cid:42)(cid:17)(cid:1114)
(cid:45)(cid:48)(cid:17)(cid:26)
(cid:42)(cid:77)(cid:70)(cid:86)(cid:83)(cid:87)(cid:77)(cid:87)
(cid:42)(cid:77)(cid:70)(cid:86)(cid:83)(cid:70)(cid:80)(cid:69)(cid:87)(cid:88)
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LYT-100 in areas of greatest unmet
medical need that map against its
known validated biological effects.
Although pirfenidone is one of the
standard of care medicines for IPF and
has demonstrated efficacy against this
progressive, fatal disease, its usage
has been greatly limited by the drug’s
severe tolerability issues – especially
with regards to GI side-effects.
Approximately half of the IPF patients
that start therapy with pirfenidone either
discontinue therapy, reduce their dose
or switch to other therapies, all of
which lead to suboptimal disease
management. These issues pushed
our team to establish a goal: To
demonstrate a favorable tolerability
profile of LYT-100 that could improve
compliance and potentially lead to
improved disease outcomes.
LYT-100’s deuterium modification
improves the metabolic stability of
the molecule and enables its
administration at a dosage that can
achieve the same level of drug exposure
as pirfenidone, but with a lower maximal
drug concentration (Cmax). High Cmax
is often associated with AEs, therefore
by reducing the Cmax while maintaining
the comparable exposure to
pirfenidone, LYT-100 has the potential to
allow the patient to stay on the therapy
longer to potentially achieve an optimal
therapeutic outcome.
To date, our clinical studies strongly
support a substantial tolerability
advantage of LYT-100 over pirfenidone.
Our study enrolling healthy older adults
showed an approximate 50% reduction
in the number of healthy older adults
treated with LYT-100 that experienced
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GI-related AEs relative to those treated
with pirfenidone. Additionally, our
multiple ascending dose study and our
healthy older adults crossover study
demonstrated that LYT-100 was well-
tolerated at all doses studied and that
all treatment-related AEs were mild and
transient. Results of the Phase 1 multiple
ascending dose and food effect study
were presented at the virtual European
Respiratory Society International
Congress and published in the
journal Clinical Pharmacology in
Drug Development.
We attribute this improved
tolerability to LYT-100’s substantially
differentiated PK properties that reduce
AEs while preserving exposure and
pharmacology. These results are
extremely encouraging, and we are
advancing LYT-100 into further
clinical development for IPF.
Last year, we initiated a LYT-100 Phase 2
clinical study focused on patients who
suffer from Long COVID respiratory
complications. Since then, the pandemic
has affected more than 500 million
people around the world. Over 40% of
hospitalized COVID-19 patients have
lasting dyspnea and up to 33% of severe
COVID-19 patients develop lung
fibrosis. In the last 12 months, we’ve
progressed the Phase 2 clinical trial of
LYT-100 in patients who suffer from Long
COVID respiratory complications and
related sequelae, and we anticipate
topline results in the first half of 2022.
We’ve also progressed LYT-100 in
a Phase 2a proof-of-concept trial in
patients with breast cancer-related,
upper limb, secondary lymphedema.
There are no approved treatments for
lymphedema and we believe leveraging
our unique insights into the lymphatic
system and immunology can provide
a role for deupirfenidone to make an
impact for patients living with severe
unmet medical need with this condition.
Our preclinical work supports this
hypothesis. In fact, in those studies,
LYT-100 showed greater anti-fibrotic
and anti-inflammatory activity when
compared to pirfenidone. Results
from the Phase 2a study are anticipated
in 2022.
Anti-cancer programs: LYT-200
targeting galectin-9 and LYT-210
targeting gamma delta-1 T cells
Our anti-cancer programs target
emerging, foundational
immunosuppressive mechanisms to
pursue a differentiated approach to
cancer types that currently do not have
adequate effective treatments. We
see potential for PureTech as a leader
against these targets, with both our fully
human monoclonal antibody candidates
having potential both as single agents
and in combination with existing
therapies such as checkpoint inhibitors
and chemotherapeutics.
We are developing LYT-200 for solid
tumors with currently poor survival rates.
In 2021, the FDA granted LYT-200
orphan drug designation for the
treatment of pancreatic cancer, which
qualifies PureTech for incentives under
the Orphan Drug Act, including tax
credits for some clinical trials and
eligibility for seven years of market
exclusivity in the U.S. if the drug is
approved, in addition to our broad
intellectual property coverage which
can extend the exclusivity into 2038.
1 Long COVID is a term being used to describe the emerging and persistent complications following the resolution of COVID-19 infection, also known as post-acute COVID-19
syndrome (PACS).
20 PureTech Health plc Annual report and accounts 2021
Strategic report Letter from the Chief Scientific Officer, Chief Medical Officer and Chief Innovation and Strategy Officer — continued
The ongoing Phase 1 portion of its
adaptive Phase 1/2 study in solid tumors
continues to progress, with a maximum
tolerated dose not yet reached, and
is expected to read out in the first
half of 2022.
In 2021 we also began a clinical
relationship with BeiGene to evaluate
LYT-200 together with tislelizumab, an
anti-PD-1 immune checkpoint inhibitor,
in patients with solid tumors. LYT-200
is being evaluated as a single agent in
the first phase of the adaptive Phase 1/2
study, which, pending the results, is then
designed to investigate LYT-200 in
combination with tislelizumab. While we
believe that LYT-200 has the potential to
have activity on its own, its mechanism
for targeting immunosuppression may
also lead to increased efficacy when
combined with other cancer
immunotherapies, such as checkpoint
inhibitors or chemotherapeutic drugs,
depending on the cancer.
For LYT-210, we presented promising
preclinical data at the eminent American
Association for Cancer Research (AACR)
Annual Meeting. That research
demonstrated that LYT-210 is both very
specific and exceptionally potent,
rapidly inducing cell death of
immunomodulatory gamma delta-1 T
cells, while sparing other T cells, such as
cytotoxic gamma delta T cells, that play
important roles in a healthy immune
response. Gamma delta T cells are an
increasingly well recognized approach
for tackling difficult-to-treat cancers.
LYT-300: Harnessing
lymphatic targeting through
our Glyph™ platform
We were thrilled to initiate first-in-
human clinical studies of LYT-300
(oral allopregnanolone) in December
2021. LYT-300 is the first candidate from
the Glyph technology platform to enter
the clinic, leveraging the platform’s
ability to enable direct delivery of an
oral drug to the lymphatic system.
Given the research supporting the
broad potential neurological and
neuropsychological effects of
allopregnanolone, LYT-300 is
being evaluated for the potential
treatment of a variety of conditions.
The Phase 1 study evaluates multiple
aspects of safety, tolerability and PK,
and topline results are expected in
the second half of 2022.
In early 2021, we presented
preclinical proof-of-concept data for
LYT-300 at the American College of
Neuropsychopharmacology (ACNP)
Annual Meeting.
As we advance LYT-300, we see
its maturing data set as also being
supportive of our Glyph technology
platform. The Glyph technology enables
us to generate novel prodrugs by
reversibly linking small molecule drugs
to dietary fat molecules. This linkage is
designed to enable the transport of the
small molecules directly into systemic
circulation via the lymphatic system
following oral administration, thereby
bypassing first-pass liver metabolism.
We believe our Glyph platform could
similarly enhance the potential of natural
biologically active molecules or existing
therapies that had previously
demonstrated robust efficacy but
could not be administered orally, by
unlocking oral administration including
natural neurosteroids or immune
modulators that could directly target the
mesenteric lymph nodes. Furthermore,
preclinical proof-of-concept studies were
published in the Journal of Controlled
Release and Nature Metabolism that
support the Glyph platform’s ability to
directly target the lymphatic system.
LYT-510, LYT-500, LYT-503/IMB-150:
The integration of Alivio™
In 2021, we completed the acquisition of
Alivio Therapeutics and the integration
of its targeted anti-inflammatory
platform technology and candidates into
our Wholly Owned Pipeline. LYT-510, in
development for the treatment of IBD
and chronic pouchitis, is an oral
inflammation-targeting formulation of
tacrolimus. Tacrolimus is a potent
immunosuppressant drug approved for
certain indications, however its approval
for IBD and chronic pouchitis has been
hampered by systemic toxicities, narrow
therapeutic window of activity and
opportunistic infections that can arise
from systemic immunosuppression.
There is clinical data demonstrating that
tacrolimus is effective in addressing IBD
indications, but AEs have held it back.
We believe that LYT-510 can overcome
these clinical challenges with targeted
drug delivery to the intestines, with
the potential to be the first tacrolimus
treatment approved for IBD in the U.S.
We intend to file for regulatory approval
to initiate first-in-human studies at year
end 2022 and initiate a clinical study
evaluating LYT-510 as a single agent for
the potential treatment of IBD and
chronic pouchitis in early 2023. LYT-500,
an oral therapeutic candidate in
development for the potential treatment
of mucosal barrier damage in people
with IBD, includes two orally dosed
active agents (IL-22 and an
immunosuppressant drug) designed to
selectively act at inflamed intestinal
tissues while reducing their impact on
normal tissue. We expect preclinical
proof-of-concept data for LYT-500
in the first half of 2022. We believe
the targeted activation and oral
formulation offered by Alivio offers
a path to unlocking the full therapeutic
potential of tacrolimus and other
anti-inflammatory drugs in a way
that matches the chronic, variable
expression of autoimmune diseases.
PureTech Health plc Annual report and accounts 2021 21
Strategic report Letter from the Chief Scientific Officer, Chief Medical Officer and Chief Innovation and Strategy Officer — continued
The Alivio integration also
includes the addition of therapeutic
candidate, LYT-503/IMB-150, to
our Wholly Owned Pipeline. It is
being developed as a partnered
program as a potential non-opioid
treatment for interstitial cystitis or
bladder pain syndrome (IC/BPS).
An IND application is expected to
be filed for LYT-503/IMB-150 in 2022.
Progressing the Orasome™
platform and other oral delivery
technologies, and Meningeal
Lymphatics Research Program
In addition to Glyph and Alivio, we are
also making strides with the oral
administration of biologics, such as the
Orasome platform, and meningeal
lymphatics research program. Each of
these possesses a huge breadth of
potential applications that could offer
our pipeline many developmental
options as they mature.
In 2021, the Orasome platform achieved
preclinical proof-of-concept of its core
concept: This technology is designed to
promote following oral administration
of an expression system, intestinal tract
cells to produce virtually any type of
therapeutic protein, including
monoclonal antibodies, “on command”
with transport to the circulatory system.
We recently demonstrated in
a preclinical model that administration
of Orasomes carrying an expression
system for a therapeutic protein, to the
GI tract of a rodent led to therapeutic
protein detection in systemic circulation.
This is a big idea – if we are
successful, a patient could swallow
a pill and have the body make its
own therapeutic protein. We intend
to generate additional preclinical data
for Orasome and other technologies
in 2022.
For our meningeal lymphatics research
program, we and our collaborators
published notable preclinical work
in Nature suggesting that restoring
lymphatic flow in the brain has the
potential to address a range of
neurodegenerative diseases, such as
Alzheimer’s and Parkinson’s diseases
and associated neuroinflammation.
The research also uncovered a link
between dysfunctional meningeal
lymphatics and damaging microglia
activation in Alzheimer’s disease,
suggesting another route by which
restoring healthy (lymphatic) drainage
could improve clinical outcomes.
(cid:51)(cid:86)(cid:69)(cid:87)(cid:83)(cid:81)(cid:73)(cid:4)(cid:39)(cid:83)(cid:82)(cid:87)(cid:88)(cid:86)(cid:89)(cid:71)(cid:88)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)(cid:83)(cid:86)(cid:69)(cid:80)(cid:4)(cid:69)(cid:72)(cid:81)(cid:77)(cid:82)(cid:77)(cid:87)(cid:88)(cid:86)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:83)(cid:74)(cid:4)(cid:56)(cid:76)(cid:73)(cid:86)(cid:69)(cid:84)(cid:73)(cid:89)(cid:88)(cid:77)(cid:71)(cid:4)(cid:52)(cid:86)(cid:83)(cid:88)(cid:73)(cid:77)(cid:82)(cid:87)
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We are very proud of our work to
advance our Wholly Owned Programs in
2021. Our focus on unmet medical
needs in devastating diseases is
a clear guiding principle that we believe
brings out the best of our team and
collaborators – we extend our warmest
thanks to both for their efforts and
counsel. We are in a transformative
phase for PureTech and look forward to
sharing our progress with you soon.
Dr. Joseph Bolen
Chief Scientific Officer
Dr. Julie Krop
Chief Medical Officer
Dr. Eric Elenko
Chief Innovation and Strategy Officer
April 25, 2022
PureTech advantages:
strategy, people and passion
With many teams in the industry
advancing single platform technologies,
internally we are energized by the
opportunity to be advancing a portfolio
of programs across multiple promising
approaches. They are built on leading
research from our scientific collaborators
and provide important innovative
approaches that leverage validated
biology and pharmacology to reduce
technology and development risk.
This is a key part of our R&D strategy,
and we believe we realize synergies
from their parallel internal development
that potentially enable new medicines
to advance.
Our approach gives PureTech multiple
opportunities for success and we’re
proud of our track record, having now
generated 27 therapeutics and
therapeutic candidates, of which 16 are
clinical stage and two have gone from
inception through successful FDA and
EU regulatory clearances for marketing.
To reach this point, we have
collaborated with the world’s leading
domain experts on disease-specific
discovery themes, particularly to
leverage our expertise in immunology.
All of our Wholly Owned Programs
are building upon validated biologic
pathways and proven pharmacology
of known therapeutics while applying
important innovation that enable new
medicines to advance. We have
proven our ability to utilize cross-
disciplinary research and discovery
efforts across multiple indications
and potential therapeutic area thanks
to a team of esteemed collaborators
and co-inventors.
22 PureTech Health plc Annual report and accounts 2021
Strategic report How PureTech is building value for investors
“In light of the strong foundation we have built for PureTech’s future growth,
the Board and senior leadership team are considering various approaches
to drive additional value to our shareholders. We are reviewing a capital
allocation strategy that will see us prioritize funding the continued
development and expansion of our Wholly Owned Pipeline and strategic
investment in our Founded Entities in accordance with our strategic plan
while we will also look to return certain proceeds we may receive in the future
to shareholders through various distribution mechanisms, including share
buybacks or special dividends.”
We are a clinical-stage biotherapeutics company dedicated to discovering, developing and commercializing highly
differentiated medicines for devastating diseases where limited or no treatment options currently exist for patients. We do
this by building upon underlying mechanisms from well-established science that have been validated in clinical testing, while
applying innovative insight or technology that generates new medicines that can unleash the full potential of the therapeutic.
All the activity within our Wholly Owned Pipeline and the foundational activities at our Founded Entities were initiated by our
experienced research and development team and our extensive network of scientists, clinicians and industry leaders. We are
led by a proven and seasoned management team with significant experience in discovering and developing important new
medicines, delivering them to market and maximizing shareholder value. Collectively, the members of our management team
have overseen research and development of therapeutics supporting 26 regulatory approvals and have served in the C-suite
of companies acquired for more than $14 billion in the aggregate.
Our model leverages collaboration with the world’s leading experts in specific diseases, bringing together cross-disciplinary
perspectives on new treatment opportunities. We combine these insights with our research and development expertise and
proprietary platform technologies to generate novel therapeutic candidates that often are aimed at addressing key limitations
with existing treatments that have limited their broad application or adoption. In addition to building on validated biology and
clinical pharmacology, we further de-risk programs with key experiments at an early stage to validate the underlying value
proposition. This model has enabled our consistent early access to scientific breakthroughs before their peer-reviewed
publication and gives us an edge in advancing innovative and substantially differentiated treatment approaches for a range of
indications including inflammatory, fibrotic and immunological conditions, intractable cancers, lymphatic and gastrointestinal
diseases and neurological and neuropsychological disorders, among others.
Across the entire portfolio, we established the underlying programs and platforms that have resulted in 27 therapeutics and
therapeutic candidates that are being advanced within our Wholly Owned Programs or by our Founded Entities. Of these
therapeutics and therapeutic candidates, 16 are clinical-stage and two have been cleared for marketing by the FDA and
granted marketing authorization in the European Economic Area, or EEA, and in other countries that recognize the CE Mark.
Our publicly-listed Founded Entities, Karuna, Vor and Gelesis, are advancing seven of these therapeutic candidates, including
two that are currently in Phase 3/Pivotal studies, as well as one FDA-cleared therapeutic. Our privately-held Founded Entities,
Akili, Vedanta, Follica, Sonde and Entrega, are advancing 13 other therapeutic candidates, including two that are expected
to enter a Phase 3 study. Finally, we are advancing seven therapeutic candidates within our Wholly Owned Pipeline, including
one therapeutic candidate that is being as a partnered program, with two Phase 2 and two Phase 1 clinical trials underway.
We and our Founded Entities have relationships with several pharmaceutical companies or their investment arms to advance
some of the programs and platforms underlying these therapeutics and therapeutic candidates.
This diverse portfolio is a natural result of the innovative R&D model we pioneered for therapeutic development. It adds
stability to our anticipated growth trajectory and feeds value back into the core enterprise centered on the Wholly Owned
Programs. The basis for our high growth strategy is to build a differentiated, integrated biopharmaceutical company that
develops its own therapeutics while also benefiting from the successes of the now-independent Founded Entities. This
provides PureTech with a strong foundation for sustainable growth with a well-managed risk profile that helps drive new
opportunities for patients as well as shareholder value.
PureTech Health plc Annual report and accounts 2021 23
Strategic report How PureTech is building value for investors — continued
Components of our Value
The table to the right depicts the four components of our value: (1) our Wholly Owned Programs, (2) Founded Entities, (3) our
available cash, cash equivalents and short-term investments at the PureTech level and (4) our return of capital to shareholders.
We hold majority voting control of or otherwise retain significant influence over our Controlled Founded Entities and
continue to play a role in the development of their therapeutic candidates through representation on their boards of directors.
Our board designees represent a majority of the members of the board of directors of Follica and Vedanta and a minority of
the members of the board of directors of Sonde and Entrega. With respect to our Non-Controlled Founded Entities, we do
not hold majority equity ownership and are not responsible for the development or commercialization of their therapeutic
candidates and therapeutics. Our Non-Controlled Founded Entities have independent management teams, and we do not
control the day-to-day development of their respective therapeutic candidates.
1
2
3
4
Our Wholly Owned Programs. We are focused on the advancement of our Wholly Owned Programs and delivering
value to our shareholders by driving our Wholly Owned Programs to key clinical and commercial milestones, while
continuing cutting-edge research and development efforts to discover and advance new therapeutic candidates.
The table to the right includes a summary of our Wholly Owned Programs and their development status.
Our Founded Entities1. The table to the right summarizes the therapeutic candidates being developed by our Founded
Entities in order of our equity value. We established the underlying programs and platforms that have resulted in the
therapeutic candidates noted in the table, each of which targets indications related to one or more of the brain, immune
and gastrointestinal systems, and advanced them through key validation points. In certain cases, our interest in the
therapeutic candidates of these entities is limited to the potential appreciation of our equity interest in these entities.
In other cases, we have an equity interest in these entities and the right to receive royalty payments on product sales
and/or sublicense revenues. Any value we realize from these therapeutic candidates will be through the potential growth
and realization of equity and royalty stakes, including sublicense payments from pharma partnerships entered into with
certain Founded Entities.
Cash and Cash Equivalents. We had PureTech Level Cash and Cash Equivalents of $418.9 million as of December 31, 20212.
Our Return of Capital to Shareholders. In light of the strong foundation we have built for PureTech’s future growth,
the Board and senior leadership team are considering various approaches to drive additional value to our shareholders.
We are reviewing a capital allocation strategy that will see us prioritize funding the continued development and
expansion of our Wholly Owned Pipeline and strategic investment in our Founded Entities in accordance with our
strategic plan while we will also look to return certain proceeds we may receive in the future to shareholders
through various distribution mechanisms, including share buybacks or special dividends.
1 While PureTech maintains ownership of equity interests in its Founded Entities, the Company does not, in all cases, maintain control over these entities (by virtue of (i) majority
voting control and (ii) the right to elect representation to the entities’ boards of directors) or direct the management and development efforts for these entities. Consequently,
not all such entities are consolidated in the Company’s financial statements.
2 For more information in relation to the PureTech Level Cash and Cash Equivalents and Consolidated Cash and Cash Equivalents measures used in this Annual Report, please
see pages 97 and 98 of the Financial Review.
3 The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our wholly-owned therapeutic candidates are safe and
effective. No regulatory agency has made any such determination that our wholly-owned therapeutic candidates are safe or effective for use by the general public for any
indication. On July 23, 2021, Imbrium Therapeutics exercised its option to license LYT-503/IMB-150 pursuant to which it is responsible for all future development activities and
funding for LYT-503/IMB-150.
4 Long COVID is a term being used to describe the emerging and persistent complications following the resolution of COVID-19 infection, also known as post-acute COVID-19
syndrome (PACS).
5 Relevant ownership interests and references to equity ownership for Founded Entities contained in this strategic report (pages 2-72) were calculated on a partially diluted basis
(as opposed to a voting basis) as of December 31, 2021, including outstanding shares, options and warrants, but excluding unallocated shares authorized to be issued pursuant
to equity incentive plans. Vor, Karuna and Gelesis ownerships were calculated on a beneficial ownership basis in accordance with SEC rules as of March 4, 2022 and February
15, 2022 and March 31, 2022, respectively.
6 With the exception of Plenity® and EndeavorRx®, candidates are investigational and have not been cleared by the FDA for use in the U.S.
7 PureTech has a right to royalty payments, including sublicense payments, as a percentage of net sales.
8 Please see footnote 10 on page 6 for EndeavorRx® indication and overview.
9 These therapeutic candidates are regulated as devices and their development has been approximately equated to phases of clinical development.
10 Please see footnote 11 on page 7 for Important Safety Information about Plenity®.
24 PureTech Health plc Annual report and accounts 2021
Strategic report How PureTech is building value for investors — continued
1
Wholly Owned Programs
Our Programs3
LYT-100-ILD
Deupirfenidone
LYT-100-COV
Deupirfenidone
LYT-100-LYMPH
Deupirfenidone
LYT-200
Anti-Galectin-9 mAb
LYT-210
Anti-Delta-1 mAb
LYT-300
Oral Allopregnanolone
LYT-510
Oral Immunosuppressant
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
IPF
Long COVID4 respiratory complications and related sequelae
Lymphatic flow disorders, including lymphedema
Solid tumors
Solid tumors
Neurological and neuropsychological conditions
IBD/chronic pouchitis
LYT-500
Oral IL-22 + Immunosuppressant
IBD
LYT-503/IMB-150
(Partnered program)
Non-opioid
IC/BPS
Registration-enabling studies to begin in 1H2022
Phase in progress
Phase completed
Lymphatic and Inflammation Platforms
Glyph™ Technology Platform (Lymphatic Targeting)
Orasome™ and Other Technology Platforms (Oral Biotherapeutics)
Alivio™ Technology Platform (Inflammation Targeting)
Meningeal Lymphatics Research Program
2
Founded Entities
Founded Entity
PureTech
Ownership5
Therapeutic
Candidate6
Indication
Stage of Development
Royalties7
5.6%
KarXT
P
Schizophrenia
Alzheimer’s disease psychosis
Phase 3
Phase 3 Ready
Royalties
22.3%
23.5%
8.6%
41.4%
Akili is pioneering the development of cognitive treatments through game-changing technologies.
EndeavorRx®8 (formerly known as AKL-T01) is the first FDA cleared and CE marked video game treatment.
In the U.S., EndeavorRx is indicated to improve attention function as measured by computer-based
testing in children ages 8-12 years old with primarily inattentive or combined-type ADHD, who have
a demonstrated attention issue.
D
Plenity®9,10
Plenity®
for adolescents9 D
GS2009
D
GS3009
D
GS5009
D
VOR33 (CD33)
B
VCAR33
VE303
VE202
VE416
VE800
VE707
B
B
B
B
B
B
Weight management
Commercial
Adolescent weight management
Weight management in T2D/prediabetes
NASH/NAFLD
Functional constipation
Pending Discussion with FDA
Clinical Trial Complete
Clinical
Pivotal
Royalties
Acute myeloid leukemia
Myelodysplastic syndromes,
myeloproliferative neoplasms
Bridge-to-transplant AML
C. difficile
IBD
Food allergy
Solid tumors
Gram-negative infections
Phase 1/2a
Preclinical
Phase 1/2
Phase 3 Ready
Phase 2 Ready
Phase 1/2
Phase 1
Preclinical
N/A
N/A
76.0%
FOL-004
P/D
Androgenetic alopecia
Phase 3 Ready
Royalties
44.6%
Sonde One
for Respiratory9
Sonde
Mental Fitness9
74.3%
ENT-100
D
D
B
Respiratory risk detection and
monitoring app
Monitoring vocal features linked to
depression, anxiety, and cognition
Commercial Release
Commercial Release
Oral delivery of biologics,
vaccines and other drugs
Preclinical
N/A
N/A
The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
3
4
PureTech Level Cash and Cash Equivalents as of December 31, 2021: $418.9m2
Our Return of Capital to Shareholders
PureTech Health plc Annual report and accounts 2021 25
Strategic report
How PureTech is building value for investors — continued
Key Pipeline Components and Expected Milestones Through 2022
Through 2022, we anticipate many significant potential milestones across our Wholly Owned Programs and Founded
Entities, including at least 10 clinical readouts, at least five clinical trial initiations and the full commercial rollout of
two therapeutics. Of these, five clinical readouts and one clinical trial initiation are anticipated within our Wholly
Owned Pipeline. Additionally, we expect the continued progress of discovery and preclinical programs, as well as the
potential for additional strategic partnerships and transactions and the growth of value through our equity and
royalty holdings in our Founded Entities. Our Wholly Owned Programs and certain of our Founded Entities’ programs
that contribute to our value are as follows:
Our Wholly Owned Programs Focused on Immunological, Fibrotic and Lymphatic System Disorders:
LYT-100, Our Lead Clinical-Stage Therapeutic Candidate Targeting a Range of Conditions Involving Inflammation and
Fibrosis and Disorders of Lymphatic Flow: We are advancing our clinical-stage therapeutic candidate LYT-100 (deupirfenidone)
for the potential treatment of conditions involving inflammation and fibrosis, including lung disease (IPF and Long COVID11
respiratory complications and related sequelae) and disorders of lymphatic flow, such as lymphedema. We are also exploring
the potential evaluation of LYT-100 in other inflammatory and fibrotic conditions such as radiation induced fibrosis, myocardial
fibrosis and other organ system fibrosis based on the strength of existing clinical data around the use of pirfenidone in these
indications. In the January 2022 post-period, we announced results from a randomized, double-blind crossover study in healthy
older adults demonstrating that approximately 50% fewer subjects treated with LYT-100 experienced GI-related AEs compared
to subjects treated with pirfenidone (17.4% vs. 34.0%). Based on these results, additional data generated from our robust
LYT-100 clinical program and recent regulatory feedback, we intend to advance LYT-100 into late-stage clinical development for
the treatment of IPF, streamlining the program by capitalizing on efficiencies of the 505(b)(2) regulatory pathway. The dose-
ranging study, which is anticipated to begin in the first half of 2022, will enroll approximately 250 treatment-naïve patients to
evaluate LYT-100 efficacy relative to placebo. The trial will also compare the relative tolerability and efficacy between LYT-100
and pirfenidone. Topline results from this study are expected by the end of 2023. We believe the results of this study, together
with a Phase 3 study, could serve as the basis for registration in the U.S. Additionally, two Phase 2 clinical trials of LYT-100
progressed in 2021: 1) A Phase 2 trial of LYT-100-COV in adults with Long COVID respiratory complications and related sequelae.
Topline results from this trial are expected in the first half of 2022. 2) A Phase 2a proof-of-concept study of LYT-100-LYMPH in
patients with breast cancer-related, upper limb secondary lymphedema. Topline results from this trial are expected in 2022. In
2021, we initiated a three-month, open-label extension of the LYT-100-COV Phase 2 trial in adults with Long COVID respiratory
complications and related sequelae who completed the first portion of the trial. The primary endpoint of the extension trial will
measure change in distance walked on the 6MWT, with secondary endpoints to assess the longer-term safety and tolerability of
LYT-100-COV through up to 182 days of treatment. We also initiated additional Phase 1 clinical trials in 2021 to further evaluate
the PK, dosing and tolerability of LYT-100 in healthy volunteers and healthy older adults to inform the clinical development of
LYT-100 across multiple indications. Results from these studies demonstrated that LYT-100 was well-tolerated at 824mg TID
dosing with low rates of GI AEs that were comparable to placebo. These results will further inform our dose-ranging study
design in treatment-naïve IPF patients. In April 2021, we announced the formation of a Clinical Advisory Board for IPF and other
PF-ILDs. In August 2021, we presented the results of the Phase 1 multiple ascending dose and food effect study of LYT-100 at
the virtual European Respiratory Society (ERS) International Congress. The results from the study were subsequently published
in the journal Clinical Pharmacology in Drug Development in November 2021.
LYT-200 and LYT-210, Two Immuno-Oncology (IO) Therapeutic Candidates Harnessing Key Immune Cell Trafficking and
Programming Mechanisms: The lymphatic system plays a crucial role in programming immune cells for precise functions and
trafficking them to specific tissues. By modulating immune cell trafficking and programming, we are developing therapeutic
candidates for the potential treatment of cancer and other immunological disorders. We are advancing LYT-200, targeting
a foundational immunosuppressive protein, galectin-9, for the potential treatment of difficult-to-treat solid tumors including
pancreatic ductal adenocarcinoma (PDAC), colorectal cancer (CRC) and cholangiocarcinoma (CCA), and LYT-210, targeting
immunomodulatory gamma delta-1 T cells for a range of cancer indications. LYT-200 is being evaluated as a single agent in the
first stage of an adaptive Phase 1/2 clinical trial. The primary objective of the Phase 1 portion of the trial is to assess the safety
and tolerability of escalating doses of LYT-200 to identify a dose to carry forward into the Phase 2 portion of the trial. The Phase
1 portion will also assess the PK and pharmacodynamic (PD) profiles of LYT-200. Topline results from the Phase 1 portion of the
study are anticipated in the first half of 2022. Pending these results, we intend to initiate the Phase 2 expansion cohort portion of
the trial, which is designed to evaluate LYT-200 both as a single agent and in combination with chemotherapy or BeiGene’s
tislelizumab, an anti-PD-1 mAb for which we and an affiliate of BeiGene, Ltd. entered into a clinical trial and supply agreement in
July 2021. Under the terms of the agreement, we will maintain control of the LYT-200 program, including global R&D and
commercial rights, and BeiGene has agreed to supply tislelizumab for use in combination with LYT-200 for the planned Phase 2
study cohorts. In November 2021, the FDA granted orphan drug designation to LYT-200 for the treatment of pancreatic cancer.
The FDA grants orphan drug designation to novel drug and biologic products for the treatment, diagnosis or prevention of
conditions affecting fewer than 200,000 persons in the U.S. Orphan Drug designation qualifies PureTech for incentives under the
Orphan Drug Act, including tax credits for some clinical trials and eligibility for seven years of market exclusivity in the U.S. if the
drug is approved, in addition to our broad intellectual property coverage which can extend the exclusivity into 2038. In April
2021, we presented a scientific poster detailing additional promising preclinical results for LYT-210 at the 2021 American
Association for Cancer Research (AACR) Annual Virtual Meeting. The research demonstrated that LYT-210 is both highly specific
11 Long COVID is a term being used to describe the emerging and persistent complications following the resolution of COVID-19 infection, also known as post-acute COVID-19
syndrome (PACS).
26 PureTech Health plc Annual report and accounts 2021
Strategic report How PureTech is building value for investors — continued
and highly potent, rapidly inducing cell death of immunomodulatory gamma delta-1 T cells, while sparing other T cells that play
important roles in a healthy immune response. We expect to complete additional biomarker studies for LYT-210 in 2022.
LYT-300, Preclinical Therapeutic Candidate Developed Using our Glyph Technology Platform, Targeting Neurological and
Neuropsychological Conditions: Using our Glyph platform, which harnesses the natural trafficking of dietary lipids via the
lymphatics, we are advancing LYT-300, an oral form of allopregnanolone, for the potential treatment for a range of neurological
and neuropsychological conditions. Allopregnanolone is a natural neurosteroid that is a positive allosteric modulator of
γ-aminobutyric-acid type A (GABAA) receptors, which are known to play a key biological role in depression, epilepsy and other
neurological and neuropsychological conditions. In December 2021, we initiated a Phase 1 clinical study of LYT-300, which is
designed to characterize the safety, tolerability and PK of orally administered LYT-300 in healthy volunteers. Results are expected
in the second half of 2022 and will be used to inform the design of possible future studies evaluating LYT-300 in indications that
could include depression, anxiety, sleep disorders, fragile X tremor-associated syndrome, essential tremor and epileptic
disorders, among others. Also in December 2021, we presented preclinical proof-of-concept data at the 60th American College
of Neuropsychopharmacology (ACNP) Annual Meeting supporting the clinical advancement of LYT-300. The data presented at
ACNP showed that systemic exposure of natural allopregnanolone was achieved after oral administration of LYT-300 in multiple
preclinical models of increasing complexity. In contrast, systemic levels of allopregnanolone were not observed following oral
administration of natural unmodified allopregnanolone. These results demonstrate the potential of the Glyph technology
platform to enhance the systemic absorption of natural bioactive molecules and other small molecules with poor oral
bioavailability. We are also advancing our Glyph technology platform, which is designed to employ the lymphatic system’s
natural lipid absorption and transport process and has led to the nomination of a new therapeutic candidate, LYT-300, for
continued expansion of our Wholly Owned Pipeline. We have successfully extended the platform to encompass more than 20
molecules as well as a range of novel linker chemistries that have demonstrated promising lymphatic targeting in preclinical
studies. In 2021, preclinical proof-of-concept work was published in Nature Metabolism and the Journal of Controlled Release
supporting the Glyph technology platform’s ability to directly target the lymphatic system.
LYT-510, LYT-500 and LYT-503/IMB-150, our Therapeutic Candidates Developed Using our Alivio Technology Platform for
Inflammatory Disorders: In June 2021, we announced the acquisition of the remaining 22% of shares outstanding in our Founded
Entity, Alivio Therapeutics (Alivio). The underlying Alivio technology platform, which is designed to enable oral and locally targeted
immunomodulation for the potential treatment of a range of chronic and acute inflammatory disorders, has been added to our
lymphatic and inflammation programs. Alivio’s therapeutic candidates, in development for inflammatory disorders including IBD,
have also been integrated into our Wholly Owned Pipeline. The first of these candidates is LYT-510, an oral inflammation-targeting
formulation of tacrolimus, a potent immunosuppressant drug, in development to treat IBD and chronic pouchitis. In multiple
preclinical IBD models, LYT-510 showed significant improvements in several efficacy endpoints compared to untreated controls.
Furthermore, the inflammation-targeting properties were shown to result in very low systemic blood levels compared to the current
immunosuppressant formulations, which minimizes the potential for systemic side effects. We intend to file for regulatory approval
to initiate first-in-human studies at year end 2022 and initiate a clinical study evaluating LYT-510 as a single agent for the potential
treatment of IBD and chronic pouchitis in early 2023. In addition, LYT-500 is an orally-administered therapeutic candidate in
development for the treatment of IBD that contains a unique combination of IL-22 and an approved potent anti-inflammatory drug
and is designed to address the key underlying causes of IBD pathogenesis and progression, such as mucosal barrier disruption that
are currently not adequately treated by the standard of care medicines. We expect preclinical proof-of-concept data for LYT-500 in
the first half of 2022. LYT-503/IMB-150 is a therapeutic candidate being advanced as a partnered program for the potential
treatment of IC/BPS, a chronic inflammatory condition of the bladder that lacks an effective treatment option. The LYT-503/IMB-150
therapeutic candidate is designed to selectively treat inflamed tissues along the bladder wall while minimizing the potential for
drug-related side effects in healthy parts of the body. An IND application is expected to be filed for LYT-503/IMB-150 in 2022.
In addition to our Glyph and Alivio lymphatic and inflammation platforms, our Wholly Owned Programs include
Orasome and other oral biotherapeutics platforms enabling the body to produce its own therapeutic protein in the
gastrointestinal tract and enter the systemic circulation via the lymphatic system – and a meningeal lymphatics
research program to develop potential treatments for neurodegenerative and neuroinflammatory diseases.
Orasome and Other Technology Platforms for Oral Administration of Therapeutics: We are developing versatile and
programmable oral biotherapeutics approaches, such as our Orasome technology, to promote following oral administration of
an expression system, intestinal tract cells, to produce virtually any type of therapeutic protein, including monoclonal
antibodies, “on command” with transport to the circulatory system. We recently demonstrated in a preclinical model that
administration of Orasomes carrying an expression system for a therapeutic protein to the GI tract of a rodent led to therapeutic
protein detection in systemic circulation. In 2021, we established preclinical proof-of-concept supporting the potential of the
Orasome technology platform to achieve production of therapeutic proteins in the gut of an animal following simulated oral
administration of expression systems and transport of these proteins from the gut into systemic circulation. Proof-of-concept
was observed with multiple formulations which are being further optimized to achieve a range of expression profiles for
therapeutic proteins. We expect to generate additional data in 2022, with Orasomes and other technologies, across a range of
preclinical models and therapeutic proteins. We expect to generate data to demonstrate that oral administration of Orasomes,
carrying an expression system for a desired therapeutic protein, can achieve therapeutic levels of the protein in multiple species
of preclinical models with achievement of safe repeat-dose administration. Using the Orasome technology platform, it may be
possible for a patient to take an oral drug product that will permit their own GI tract cells to make virtually any type of protein.
This approach also has the potential to provide a more convenient and significantly less expensive means to administer
biological medicines. This work could lay the foundation for IND-enabling clinical studies for one or more additional
therapeutic candidates to be included in our Wholly Owned Pipeline. In addition to Orasomes, we are also exploring the
use of other approaches, such as certain exosomes isolated from milk as well as synthetic novel polymers and vesicles for
delivering biotherapeutics.
PureTech Health plc Annual report and accounts 2021 27
Strategic report How PureTech is building value for investors — continued
Our Meningeal Lymphatics Research Program: We continued to advance our meningeal lymphatics research program, which
harnesses the meningeal lymphatics to potentially treat a range of neurodegenerative and neuroinflammatory conditions. In
April 2021, we announced the publication of preclinical research in Nature, suggesting that restoring lymphatic flow in the brain,
either alone or in combination with passive immunotherapies such as antibodies directed at amyloid-beta, has the potential to
address a range of neurodegenerative diseases, such as Alzheimer’s and Parkinson’s diseases, which potentially impairs the
efficacy of passive immunotherapies such as amyloid-beta-targeting antibodies. The work also uncovered a link between
dysfunctional meningeal lymphatics and damaging microglia activation in Alzheimer’s disease, suggesting another route by
which restoring healthy drainage patterns could improve clinical outcomes.
Founded Entities
Karuna
Karuna Therapeutics, Inc., or Karuna, which is developing its
novel therapies with the potential to deliver transformative
medicines for people living with psychiatric and neurological
conditions, made progress towards developing KarXT
(xanomeline-trospium), an oral, investigational M1/M4-
preferring muscarinic acetylcholine receptor agonist in
development for the treatment of psychiatric and neurological
conditions, including schizophrenia and psychosis in
Alzheimer’s disease (AD). KarXT is designed to unlock the
therapeutic potential of xanomeline, which demonstrated
significant benefits in reducing symptoms of psychosis in
Phase 2 studies in schizophrenia and AD, while ameliorating
side effects seen in earlier studies. In August 2021, Karuna
announced that all four Phase 3 trials in the EMERGENT
program, the clinical program evaluating KarXT for the
treatment of psychosis in adults with schizophrenia, are
enrolling. In November 2021, Karuna announced that topline
data from EMERGENT-2, a five-week inpatient trial evaluating
the efficacy and safety of KarXT compared to placebo in 246
adults with schizophrenia in the U.S., are expected in mid-
2022. EMERGENT-3, a five-week inpatient trial evaluating the
efficacy and safety of KarXT compared to placebo in 246
adults with schizophrenia in the U.S. and Ukraine, is underway.
EMERGENT-4, a 52-week outpatient, open-label extension
trial evaluating the long-term safety and tolerability of KarXT
in 350 adults with schizophrenia who completed EMERGENT-2
or EMERGENT-3, and EMERGENT-5, a 52-week outpatient,
open-label trial evaluating the long-term safety and
tolerability of KarXT in adults with schizophrenia who were not
enrolled in EMERGENT-2 or EMERGENT-3, are also underway.
Enrollment for this trial began in the second quarter of 2021.
Karuna plans to increase the number of sites in the U.S. and
Puerto Rico, and allow for up to 600 patients in the trial. In
June 2021, Karuna announced data from its completed Phase
1b trial evaluating the safety and tolerability of KarXT in
healthy elderly volunteers, which followed a preliminary
analysis of data from the first two cohorts in the trial
announced earlier in 2021. The results suggest that KarXT can
be administered to elderly volunteers at doses which achieve
xanomeline blood levels similar to those reported in the Phase
2 EMERGENT-1 trial in adults with schizophrenia while
maintaining a favorable tolerability profile. Data from the trial
also suggest that a lower dose ratio of trospium to
xanomeline, compared to the ratios used in Phase 1 trials in
healthy adult volunteers and in the Phase 2 EMERGENT-1 trial
evaluating KarXT in adults with schizophrenia, was better
tolerated by healthy elderly volunteers. Based on results from
the Phase 1b trial in healthy elderly volunteers, Karuna plans
to initiate a Phase 3 program evaluating KarXT for the
treatment of psychosis in AD in mid-2022, with details
available in the first half of 2022. In November 2021, Karuna
announced the evaluation of KarXT for the treatment of
dementia-related psychosis (DRP) will initially focus on
psychosis in AD, the most common subtype of DRP. The initial
focus on the AD dementia subtype reflects various strategic
development, regulatory and commercial considerations, and
Karuna remains interested in exploring KarXT in other
dementia subtypes in future development programs. In
November 2021, Karuna initiated the Phase 3, six-week, 1:1
randomized, double-blind, placebo-controlled ARISE trial
evaluating KarXT for the treatment of schizophrenia in
approximately 400 adults who experience an inadequate
response to current standard of care. Participants in this trial
will continue their currently prescribed atypical antipsychotic
therapy at the same dose or regimen schedule as prior to
entry in the study, and will receive a flexible dose of KarXT or
placebo based on tolerability and clinical response as
determined by a clinician. In late 2021, Karuna initiated
a Phase 1 trial of an advanced formulation of KarXT as it
continued to advance its earlier pipeline of muscarinic
receptor targeted programs and novel formulations of KarXT.
Karuna is also advancing its artificial intelligence-based target
agnostic discovery program for treating psychiatric and
neurological conditions. Karuna also continues to advance its
earlier pipeline of muscarinic receptor targeted programs and
novel formulations of KarXT, including its artificial intelligence-
based target agnostic discovery program for treating
psychiatric and neurological conditions. Additionally, in
November 2021, Karuna and Zai Lab (Shanghai) Co., Ltd. (Zai)
announced their entry into an exclusive license agreement for
the development, manufacturing, and commercialization of
KarXT in Greater China, including mainland China, Hong
Kong, Macau and Taiwan. Under the terms of the agreement,
Karuna received a $35.0 million upfront payment and is
eligible to receive certain development and regulatory
milestone and sales milestone payments, as well as royalties
based on annual net sales of KarXT in Greater China. Zai Lab
will fund substantially all development, regulatory and
commercialization activities in Greater China. In February
2021, Karuna announced that results from the Phase 2
EMERGENT-1 trial evaluating KarXT for the treatment of
schizophrenia were published in NEJM. In March 2021, Karuna
completed a follow-on public offering of its common stock,
from which it received net proceeds of $270.0 million. In 2021,
we sold 1,750,000 shares of Karuna common stock for cash
consideration of approximately $218 million in two separate
transactions in February and November. We intend to use the
proceeds from the transaction to further expand and advance
its clinical-stage Wholly Owned Pipeline. We are eligible to
receive certain sublicense payments and royalties on sales of
any commercialized product covered by the license
agreement between us and Karuna pursuant to the terms of
such license agreement. Our interest in Karuna also includes
our equity ownership of 5.6% at February 15, 2022.
28 PureTech Health plc Annual report and accounts 2021
Strategic report How PureTech is building value for investors — continued
Akili
Akili Interactive Labs, Inc., or Akili, has made progress in
advancing its digital diagnostics, treatments and monitors for
cognitive impairments across disease and disorders. In the
January 2022 post-period, Akili entered into a definitive
agreement to become publicly traded via a merger with Social
Capital Suvretta Holdings Corp. I (Nasdaq: DNAA), a special
purpose acquisition company. The transaction is expected to
close in mid-2022, after which Akili will be listed on the
Nasdaq stock market under the new ticker symbol “AKLI”.
The transaction implies a post-money equity value of the
combined company of up to approximately $1 billion and is
expected to deliver up to $412 million in gross cash proceeds
to Akili, including the contribution of up to $250 million of
cash held in SCS’s trust account and $162 million from PIPE
investors at $10 per share. In May 2021, Akili closed on the
$160 million combined equity and debt financing, which is
expected to accelerate commercialization of EndeavorRx®12. In
March 2021, the full data from a multi-site open-label study
(the STARS Adjunct study) evaluating the impact of
EndeavorRx (AKL-T01) on symptoms and functional
impairments in children with attention-deficit/hyperactivity
disorder (ADHD) was published in Nature Digital Medicine. In
the February 2022 post-period, Akili announced the
publication of full data in the medical journal PLOS ONE from
a single arm, unblinded study conducted by Dr. Elysa Marco at
Cortica Healthcare and Drs. Joaquin Anguera and Courtney
Gallen at the University of California, San Francisco. The study
measured electroencephalography (EEG) data alongside
behavioral and clinical metrics of attention in children with
ADHD using AKL-T01 (EndeavorRx). Data from the study show
that EndeavorRx treatment resulted in increased brain activity
related to attention function, as measured by EEG, which
correlated with improvements in objective behavioral
measures of attention. In September 2021, Akili announced
topline results from Shionogi’s Phase 2 study of SDT-001
(Japanese version of AKL-T01) that showed treatment was
well-received by patients and demonstrated improvements in
attention-deficit/hyperactivity disorder (ADHD) inattention
symptoms consistent with those seen across previous studies
of AKL-T01. In July 2021, Akili introduced new gaming features
and functionalities to its EndeavorRx treatment. Akili is
releasing these new gameplay features as it expands its
pre-launch activities to bring EndeavorRx to families and
healthcare professionals. In April 2021, Akili announced
collaborations with Weill Cornell Medicine, New York-
Presbyterian Hospital and Vanderbilt University Medical
Center to initiate pilot studies of Akili digital therapeutic
AKL-T01 as a treatment for patients with cognitive dysfunction
following COVID-19 (also known as “COVID fog”). In August
2021, Akili and Australian digital health company TALi
(ASX:TD1), completed an agreement for Akili to license TALi’s
technology designed to address early childhood attention
impairments. Our interest in Akili is limited to our equity
ownership of 22.3% at December 31, 2021.
Gelesis
Gelesis Holdings, Inc., or Gelesis, has continued to advance its
novel category of treatments for weight management and gut
related chronic diseases. In December 2021, Gelesis
announced its lead product, Plenity13 (formerly known as
Gelesis100), is now broadly available in the U.S. to adults who
meet the prescription criteria. In the January 2022 post-period,
Gelesis announced the completion of its business
combination with Capstar Special Purpose Acquisition Corp.
(NYSE: CPSR) (“Capstar”). Gelesis Holdings, Inc. began
trading on the New York Stock Exchange under the ticker
symbol “GLS” on January 14, 2022. In the January 2022
post-period, Gelesis launched the “Who Said?” marketing
campaign across the U.S., which challenges many long-held
cultural and societal assumptions around weight loss. Plenity’s
multichannel campaign encompasses TV, digital, social and
Out of Home (OOH) to grow awareness of Plenity’s novel
approach to weight management. In the March 2022 post-
period, Gelesis announced preliminary results from its broad
awareness media campaign, noting that within the first three
weeks, Gelesis saw a 3-fold increase in web traffic and 3.5-fold
increase in the number of individuals seeking a new
prescription compared to previous months when supply was
limited. In November 2021, Gelesis announced that it had
received a $30 million fully paid pre-order, in addition to the
$10 million pre-order received in January 2021, for Plenity from
Ro, a leading U.S. direct-to-patient healthcare company.
Plenity was initially made available through a beta launch in
2020, and demand quickly outpaced supply while Gelesis
worked to construct a larger manufacturing facility. Gelesis’
first commercial-scale manufacturing line at the facility was
also completed and validated in November 2021. In late 2021,
Gelesis completed a preliminary analysis of the LIGHT-UP
12 Please see footnote 10 on page 6 for EndeavorRx® indication and overview.
13 Please see footnote 11 on page 7 for Important Safety Information about Plenity®.
study, a multicenter, randomized, double-blind, placebo-
controlled, investigational study that enrolled 254 subjects
with overweight or obesity who also have prediabetes or type
2 diabetes, and that analysis remains underway. The study was
designed to assess the change in body weight in adults after
six months of treatment with a new oral superabsorbent
hydrogel (GS200) or placebo. The study met both of its
primary endpoints: the proportion of participants who
achieved at least 5% body weight loss (defined as
“Responders”) and the change in body weight as compared
to placebo after six months of therapy. The LIGHT-UP study
was conducted at 36 clinical sites in Europe and North
America with 208 subjects who completed the 6-month study.
In November 2021, Gelesis announced a publication
in Nature’s Scientific Reports describing the genesis of the
underlying technology and engineering process for Gelesis’
non-systemic superabsorbent hydrogels. These new materials
were designed to replicate compositional and mechanical
properties of raw vegetables, and the paper describes their
therapeutic approach for weight management as well as
possible future solutions for other gut-related conditions. In
May 2021, Gelesis presented a scientific poster at the
American Association of Clinical Endocrinology (AACE) 2021
Annual Virtual Meeting. The post-hoc analysis showed that
treatment for weight management with Plenity decreased
a marker for liver fibrosis (the NAFLD fibrosis score) compared
to placebo. We are eligible to receive certain payments from
Gelesis under our license agreement, including sublicense
payments and royalties on any sales of Plenity. Our interest
in Gelesis also includes our equity ownership of 23.5% at
March 31, 2022.
PureTech Health plc Annual report and accounts 2021 29
Strategic report How PureTech is building value for investors — continued
Vor
Vor Bio, Inc. or Vor, a clinical-stage cell and genome
engineering company that aims to change the standard of
care for patients with blood cancers by engineering
hematopoietic stem cells (HSC) to enable targeted therapies
post-transplant, continued to engineer eHSC therapies
combined with targeted therapies for the treatment of cancer
in 2021. In February 2021, Vor Bio completed its initial public
offering of common stock on the Nasdaq Global Market under
the symbol “VOR”. The aggregate gross proceeds to Vor Bio
from the offering were approximately $203.4 million, before
deducting the underwriting discounts and commissions and
other offering expenses payable by Vor Bio. In the March 2022
post-period, Vor Bio announced VCAR33 is now made up of
two programs with different cell sources. The VCAR33
programs are chimeric antigen receptor T (CAR-T) cell therapy
candidates designed to target CD33, a clinically-validated
target for AML. VCAR33AUTO uses autologous cells from each
patient, and is being studied in an ongoing Phase 1/2 clinical
trial sponsored by the National Marrow Donor Program
(NMDP) in young adult and pediatric patients with relapsed/
refractory AML in a bridge-to-transplant study. Data from this
study are expected in 2022. VCAR33ALLO uses allogeneic
healthy donor-derived cells. Vor Bio plans to submit an IND
application in the first half of 2023 to support a Phase 1/2
clinical trial of VCAR33ALLO for patients with relapsed/refractory
AML. Additionally, Vor Bio announced in the March 2022
post-period its plans to collect initial data on VOR33 from the
VBP101 clinical trial and initial clinical data from the
VCAR33ALLO program prior to IND submission for the
Treatment System following ongoing discussions with the FDA
and alongside improved scientific understanding of the
differences in T-cell sources. Vor Bio plans to share initial
clinical data from the VBP101 trial of VOR33 for patients with
AML in the second half of 2022. In September 2021, the FDA
granted Fast Track designation to VOR33 for the treatment of
Vedanta
acute myeloid leukemia (AML). Vor Bio initiated VBP101,
a Phase 1/2a clinical trial of VOR33 for AML patients who
currently have limited treatment options and expects to report
VOR33’s initial clinical data in the second half of 2022. Vor Bio
also expects to submit an IND filing with the FDA for the
VOR33/VCAR33 Treatment System in the second half of 2022.
In November 2021, Vor Bio announced its first multi-targeted
Treatment System comprising VOR33-CLL1 multiplex-edited
eHSC therapy and VCAR33-CLL1 multi-specific CAR-T therapy
and it continues to make progress on editing multiple
antigens with its eHSC platform. Vor Bio plans to share
preclinical data on its VOR33-CLL1 + VCAR33-CLL1 Treatment
System approach at upcoming scientific meetings in 2022. Vor
Bio expects initial monotherapy clinical proof-of-concept data
for VCAR33 in 2022, depending on investigator’s timing of
data release. In June 2021, Vor Bio announced the build-out of
an in-house clinical manufacturing facility in Cambridge,
Massachusetts in the same premises as Vor Bio’s current
headquarters, to support flexible manufacturing for the
company’s eHSC and CAR-T product candidate pipeline for
patients with blood cancers. Vor Bio anticipates that the
facility will be operational in 2022. In July 2021, Vor Bio formed
a collaboration with Janssen Biotech, Inc. (Janssen), one of the
Janssen Pharmaceutical Companies of Johnson & Johnson to
investigate the combination of Vor Bio’s “invisible” eHSC
transplant platform with one of Janssen’s bi-specific
antibodies in development for AML. In June 2021, Vor Bio
entered into a multi-year strategic collaboration and
license agreement with Abound Bio to research both single-
and multi-targeted CAR-T treatments to be used
in combination with Vor Bio’s eHSC platform, with the goal of
generating novel treatment systems for patients fighting AML
and other devastating forms of blood cancer. Our interest in
Vor Bio is limited to our equity ownership of 8.6% at March 4,
2022.
Vedanta Biosciences, Inc., or Vedanta, progressed the
development of a potential new category of oral therapies
based on defined consortia of bacteria is isolated from the
human microbiome and grown from pure clonal cell banks. In
October 2021, Vedanta announced that it achieved the
primary endpoint in a Phase 2 clinical trial of VE303, an orally
administered investigational live biotherapeutic product (LBP)
in development for the prevention of recurrent C. difficile
infection (CDI) in high-risk patients. Based on the Phase 2
data, the Biomedical Advanced Research and Development
Authority (BARDA) exercised its first contract option for
additional funding of $23.8 million, pursuant to its existing
2020 contract with Vedanta, to support a planned Phase 3
clinical trial of VE303. In July 2021, Vedanta closed a $68
million financing, which included a $25 million investment from
Pfizer as part of the Pfizer Breakthrough Growth Initiative.
Vedanta plans to use the proceeds to advance its pipeline of
defined bacterial consortia, including progressing VE303 into
a Phase 3 clinical trial in patients at high risk for recurrent CDI,
initiating a Phase 2 clinical trial of VE202 in mild to moderate
ulcerative colitis. In late 2021, Vedanta completed the
build-out of its Phase 3 and commercial launch CGMP
manufacturing facility for supply of VE303. In June 2021,
Vedanta presented additional results from a Phase 1 study in
healthy volunteers of VE202 for IBD at the 2021 International
Human Microbiome Consortium Congress (IHMC). In July
2021, Vedanta announced results from the Phase 1 study
evaluating the safety and initial clinical activity of VE800,
an immuno-oncology therapeutic candidate,
in combination with Bristol Myers Squibb’s Opdivo®
(nivolumab) in 54 patients across select types of advanced
or metastatic cancers. Vedanta plans to present the results
at a future medical conference and will continue work to
identify cancer settings and patient populations
that might benefit from microbiome manipulation with its
defined bacterial consortia. Our interest in Vedanta
is limited to our equity ownership of 41.4% at
December 31, 2021.
30 PureTech Health plc Annual report and accounts 2021
Strategic report How PureTech is building value for investors — continued
Follica
Follica, Incorporated, or Follica, continued to advance its
regenerative platform designed to treat androgenetic
alopecia, epithelial aging and other related conditions.
In January 2021, Follica announced the appointment of two
leaders in aesthetic medicine and dermatology to its Board of
Directors. Follica continued to advance its regenerative
biology platform, including preparing for a registration clinical
program in male androgenetic alopecia, which is expected to
be initiated in 2022. Follica also has proprietary amplification
compounds in development and ongoing discovery efforts to
expand its pipeline. We are eligible to receive certain
payments from Follica under our license agreement, including
sublicense payments and royalties on any sales of certain
potential products by Follica. Our interest in Follica also
includes our equity ownership of 76.0% at December 31, 2021.
Sonde
Sonde Health, Inc. or Sonde, continued the development of
its proprietary voice-based technology platform designed to
detect changes of health conditions – like mental fitness and
respiratory disease – from changes in voice, leveraging over
one million voice samples from 80,000+ individuals. In
October 2021, Sonde launched Sonde Mental Fitness,
a voice-enabled mental health detection and monitoring
technology that uses a brief voice sample to evaluate mental
well-being. Sonde Mental Fitness is available as an application
programming interface for health systems, employers and
wellness services. Sonde One, its health screening app, helps
large organizations to execute a daily population screening
regimen that can help reduce the spread of COVID-19,
comply with government mandates and return to work safely.
In the January 2022 post-period, Sonde announced the
signing of a multi-year strategic partnership with GN Group to
research and develop commercial vocal biomarkers for mild
cognitive impairment. The research will serve as the backbone
for new voice-based tools to help at-risk individuals gain
timely and accurate health insights using GN Group’s device
technologies and, ultimately, to enable early detection and
management of life-threatening diseases for the millions of
people living with hearing loss. In July 2021, Sonde
announced a strategic collaboration with leading chipmaker,
Qualcomm, to embed Sonde’s vocal biomarker technology on
the flagship and high-tier Qualcomm® Snapdragon™ 888 and
778G 5G Mobile Platforms to help bring native, machine
learning-driven vocal biomarker capabilities to mobile and IoT
devices globally. Sonde plans to launch key pilot programs in
the employer wellness, health system and provider space in
2022. Our interest in Sonde is limited to our equity ownership
of 44.6% at December 31, 2021.
Entrega
Entrega, Inc. or Entrega, advanced its platform for the oral
administration of biologics, vaccines and other drugs that are
otherwise not efficiently absorbed when taken orally. As part
of its collaboration with Eli Lilly, Entrega has continued to
investigate the application of its peptide administration
technology to certain Eli Lilly therapeutic candidates. The
partnership has been extended into 2022. Entrega has also
continued advancement of its ENT-100 platform for the oral
administration of biologics, vaccines and other drugs that are
otherwise not efficiently absorbed when taken orally.
Our interest in Entrega is limited to our equity ownership
of 74.3% at December 31, 2021.
PureTech Health plc Annual report and accounts 2021 31
Strategic report How PureTech is building value for investors — continued
Our Mission: Developing Breakthrough Medicines for Underserved and Serious Diseases
The programs within our Wholly Owned Programs and at our Founded Entities were initiated in close collaboration with leading
academic and clinical experts. We discover, develop and aim to commercialize new therapies for underserved and often
devastating diseases where limited or no treatment options currently exist for patients. We do this by building upon validated
biology of known therapeutics while applying unique innovative steps that improve pharmacologic profiles.
Unlocking the Potential of Validated Biology
The common theme underlying all of our programs has been to start with a tremendous patient need. In many cases, these
programs are identified based on signals of human efficacy and clinically validated biology, which has enabled us to advance
therapeutic candidates with significantly de-risked profiles and robust development rationales, resulting in differentiated
potential treatments for patients.
For example, the key innovation behind our Founded Entity, Karuna, was built around two validated drugs: xanomeline, a novel
muscarinic agonist, and trospium, an approved muscarinic antagonist. We were able to ameliorate the GI tolerability issues of
xanomeline by pairing it with a gut-restricted muscarinic antagonist to develop a novel formulation that enabled a new
approach for the potential treatment of schizophrenia and other serious psychiatric and neurological conditions, an area of
major unmet need. KarXT now represents a potential first-in-class and best-in-class therapy for schizophrenia.
We have continued to harness the power of this approach to develop new medicines by applying our innovation and
technology that can unleash the full potential of a therapeutic that was previously held back from their full potential by
key challenges, such as poor safety, tolerability, oral bioavailability or dosing.
LYT-100
Pirfenidone has been proven effective against fibrosis and inflammation, but significant tolerability issues negatively affect
patient compliance and often result in suboptimal disease management. To tackle this problem, we are developing
a proprietary clinical-stage therapeutic candidate, LYT-100 (selectively deuterated form of pirfenidone) that maintains the
pharmacology of pirfenidone but has a highly differentiated PK profile that has translated into favorable tolerability, as
demonstrated by data from multiple human clinical studies.
LYT-300/Glyph™ Technology Platform
Allopregnanolone is a natural neurosteroid with well-established biology that has demonstrated efficacy for the treatment of
epilepsy, depression and other neurological indications. However, it is not orally bioavailable and is commercially formulated to
be administered as a cumbersome 60-hour IV infusion. We have applied our innovative Glyph technology to generate LYT-300,
which is an orally bioavailable prodrug of natural allopregnanolone. Our Glyph technology platform is based on the natural
process of dietary lipid transport in the body. We use the Glyph technology to design prodrugs of natural bioactive molecules,
such as allopregnanolone, for oral administration of drugs, that are transported via the lymphatic system and bypass first-pass
liver metabolism. LYT-300 has been shown in preclinical models to enable allopregnanolone to be bioavailable.
LYT-510, LYT-500/Alivio™ Technology Platform
Our Alivio technology platform is designed to target biologics and other drugs to sites of inflammation in a localized manner
while limiting their systemic exposure, which offers the potential to significantly improve both the safety and efficacy profile of
the therapy. We are developing LYT-510 as an oral inflammation-targeting formulation of tacrolimus, a potent
immunosuppressant drug, to treat IBD and chronic pouchitis. Tacrolimus is approved for certain indications, however its
approval for IBD and chronic pouchitis has been hampered by systemic toxicities, narrow therapeutic window of activity and
opportunistic infections that can arise from systemic immunosuppression. There is clinical data demonstrating that tacrolimus is
effective in addressing IBD indications, but AEs have held it back. We believe that LYT-510 can overcome these clinical
challenges with targeted drug delivery to the intestines, with the potential to be the first tacrolimus treatment approved for IBD
in the U.S. In multiple preclinical IBD models, LYT-510 showed significant improvements in several efficacy endpoints compared
to untreated controls. Furthermore, the inflammation-targeting properties were shown to result in very low systemic blood levels
compared to the current immunosuppressant formulations, which minimizes the potential for systemic side effects. LYT-500 is an
oral therapeutic candidate that we are developing for the potential treatment of mucosal barrier damage in people with IBD.
We believe the targeted activation and oral formulation offered by Alivio offers a path to unlocking the full therapeutic potential
of anti-inflammatory drugs in a way that matches the chronic, variable expression of autoimmune diseases.
Orasome™ and Other Technology Platforms for Oral Administration of Therapeutics
Validated biology has shown that intestinal cells can be engineered to produce clinically validated therapeutic proteins, such as
EPO, GLP-1 and mAbs. Therapeutic proteins and nucleic acid therapeutics (e.g. mRNA) are primarily administered by injection.
Using the Orasome technology platform, it may be possible for a patient to take an oral drug product that will permit their own
gastrointestinal tract cells to make virtually any type of therapeutic protein. This approach also has the potential to provide
a more convenient and significantly less expensive means to administer biological medicines. In addition to Orasomes, we are
also exploring the use of other approaches, such as certain exosomes isolated from milk as well as synthetic novel polymers and
vesicles for delivering biotherapeutics.
32 PureTech Health plc Annual report and accounts 2021
Strategic report How PureTech is building value for investors — continued
Our Model
We employ the following process to identify and develop therapeutic candidates:
• Step 1: A Collaborative Discovery Process Leveraging Validated Biology and our Scientific Network: We collaborate
with the world’s leading domain experts on a disease-specific discovery theme through our core areas of expertise around
brain, immune and gastrointestinal systems, with a particular focus on immunological disorders. Our Wholly Owned Programs
are built around this expertise and we prioritize programs that have the potential to reduce early development risk based on
preliminary signals of activity in humans and promising tolerability profiles. We have proven our ability to efficiently leverage
our cross-disciplinary research and discovery efforts across multiple indications and potential therapeutic areas. Our program
collaborators and co-inventors across our Wholly Owned Programs and Founded Entities’ programs include leading academic
minds; recipients of major awards such as the Nobel Prize, the U.S. National Medal of Science, the Charles Stark Draper Prize
and the Priestley Medal; members of prestigious institutions such as the Howard Hughes Medical Institute, all three of the
National Academies and world-renowned academic institutions such as Harvard, MIT, Yale, Columbia, Johns Hopkins, Imperial
College of London and Cornell, among others; and former senior executives and board members at some of the world’s
largest pharmaceutical companies.
• Step 2: A Disciplined Approach to Program Advancement: We employ a rigorous and disciplined approach to research
and development. The breadth and depth of our Wholly Owned Programs and our Founded Entities’ programs allow us to
quickly pivot resources to the more promising therapeutic opportunities, strategically reallocate capital across programs and
terminate Wholly Owned Programs we choose not to pursue without adversely impacting the development of other
programs. Through our internal resources and with our extensive expert network and collaboration partners, we repeat key
academic work and conduct focused experiments both internally and externally to rapidly advance those that we believe hold
the greatest promise and deprioritize less attractive programs. Collectively, these activities decrease the risk of any individual
program event negatively impacting our Wholly Owned Programs and enable us to preserve capital for the programs across
our Wholly Owned Programs and Founded Entities that we believe have the greatest opportunity for value creation in
alignment with our shareholders.
• Step 3: A Capital Efficient Approach to Driving Clinical Development and Value Creation: Our management team
has successfully driven these therapeutic candidates from early-stage research and development, through POC and into
clinical trials and has supported dedicated teams at our Non-Controlled Founded Entities through pivotal trials and FDA
clearance. We have financed our development efforts through strategic collaborations, pharmaceutical partnerships, non-
dilutive funding mechanisms, including through the sale of our Founded Entities’ equity and through grants, and public and
private equity financings. We leverage shared resources, institutional knowledge and infrastructure between our earlier stage
Founded Entities and development efforts within our Wholly Owned Programs to advance our programs efficiently prior to
POC. This approach has enabled the discovery and development of 27 therapeutics and therapeutic candidates to date,
including two that have been cleared for marketing by the FDA and granted marketing authorization in the EEA, between
our Wholly Owned Programs and our Founded Entities, in which we retain equity ownership ranging from 5.6% to 76.0%.
We had PureTech Level Cash and Cash Equivalents of $418.9 million as of December 31, 202114. From January 1, 2017 to
December 31, 2021, our Founded Entities strengthened their collective balance sheets by attracting $1.9 billion in
investments and non-dilutive funding, including $1.8 billion from third parties. As part of our disciplined capital management,
we have been able to generate $578.0 million in non-dilutive funding, as of December 31, 2021, through the sales of portions
of Founded Entity shares.
Our Strategy
Driving development of potential new medicines and accretion of value via three paths
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(cid:59)(cid:76)(cid:83)(cid:80)(cid:80)(cid:93)(cid:17)(cid:51)(cid:91)(cid:82)(cid:73)(cid:72)(cid:4)(cid:40)(cid:77)(cid:87)(cid:71)(cid:83)(cid:90)(cid:73)(cid:86)(cid:93)(cid:4)(cid:52)(cid:80)(cid:69)(cid:88)(cid:74)(cid:83)(cid:86)(cid:81)(cid:87)
14 For more information in relation to the PureTech Level Cash and Cash Equivalents and Consolidated Cash and Cash Equivalents measures used in this Annual Report, please
see pages 97 and 98 of the Financial Review.
15 On July 23, 2021, Imbrium Therapeutics exercised its option to license LYT-503/IMB-150 pursuant to which it is responsible for all future development activities and funding for
LYT-503/IMB-150.
PureTech Health plc Annual report and accounts 2021 33
Strategic report How PureTech is building value for investors — continued
Our goal is to identify, invent, develop and commercialize innovative new categories of therapeutics that are derived from our
deep understanding of the brain, immune, and gastrointestinal systems, with a particular focus on immunological disorders, to
address significant unmet medical needs. To achieve this goal, key components of our strategy include:
• Advancing Wholly Owned Programs through development and commercialization, including pipeline expansion:
− Progressing LYT-100, LYT-200, LYT-210, LYT-300, LYT-510, LYT-500, and LYT-503/IMB-15015 through clinical studies.
− Harnessing our proprietary drug discovery and development capabilities to drive pipeline maturation and expansion: We
are pioneering the development of therapeutic candidates by leveraging our unique insights into the lymphatic system and
immunology and drug development. Our Wholly Owned Programs currently comprise seven proprietary therapeutic
candidates and three innovative technology platforms. We intend to leverage our proprietary lymphatic and inflammation
technology platforms, as well as our extensive network with world-leading scientists in immunology and lymphatics and
major pharmaceutical companies, to generate and acquire additional novel therapeutic candidates. To do so, we will rely
on the track record of our team, which has been instrumental in the generation of 27 therapeutics and therapeutic
candidates to date between our Wholly Owned Programs and our Founded Entities, including two that have been cleared
for marketing by the FDA and granted marketing authorization in the EEA, as well as our established internal identification
and prioritization approach. In many cases, these programs are identified based on signals of human efficacy and clinically
validated biology, which has enabled us to advance candidates with significantly de-risked profiles and robust development
rationales. We will continue to take advantage of our differentiated model to manage the risk of any single program and
quickly redeploy resources towards performing assets.
− Maximizing the impact of our Wholly Owned Programs by expanding development across multiple indications: We aim to
focus our development efforts on therapeutic candidates that have the potential to treat multiple diseases and plan to
develop them in additional indications where warranted. For example, we believe that our lead therapeutic candidate
LYT-100 has the potential to treat multiple inflammatory and fibrotic indications that affect the lung, heart and other organ
systems. We are initially developing our other therapeutic candidates, LYT-200 and LYT-210, for the treatment of difficult-to-
treat solid tumors, which will likely include PDAC, CRC and CCA. We are advancing LYT-300, an oral lipid prodrug version of
allopregnanolone generated from our Glyph platform, for the potential treatment of a range of neurological and
neuropsychological conditions. Lastly, we are developing LYT-510 for the potential treatment of IBD and chronic pouchitis,
LYT-500, an oral combination therapy, for the potential treatment of IBD, and advancing LYT-503/IMB-150 as a partnered
program for the potential treatment of IC/BPS. Each therapeutic candidate was generated from our Alivio technology
platform.
• Deriving value from equity growth of our Founded Entities: Going forward, our Founded Entities may participate in private
and public financings, enter into partnerships and collaborations, partner with equity investors, pharmaceutical and
biotechnology companies and government and non-governmental organizations and generate revenues from sales of
products. We hold equity ownership in our Founded Entities and benefit from their growth and catalysts such as M&A
transactions, IPOs and royalties from sales. We also intend to strategically monetize our equity holdings in our Founded
Entities over time after significant value inflection has occurred, generating non-dilutive financing. For example, PureTech
generated cash proceeds of approximately $218 million in 2021 from the sales of equity in our Founded Entities.
• Advancing discovery platforms by partnering non-core applications via non-dilutive funding sources, including partnerships
and grants, to enable retention of value: As we further develop our Wholly Owned Programs through key value inflection
points, we may opportunistically enter into strategic partnerships when we believe that such partnerships could add value to
the development or potential commercialization of our wholly-owned therapeutic candidates. We will also continue to pursue
government grant funding and discovery partnerships that allow us to maintain most of the value of our platforms while
offsetting operational costs.
We believe this combination of development of our Wholly Owned Programs, Founded Entity advancement and non-dilutive
partnerships and funding provides us with a unique and multi-pronged engine fueling potential future growth and a diverse
portfolio of differentiated treatment opportunities for patients.
By Order of the Board
Daphne Zohar
Founder, Chief Executive Officer and Director
April 25, 2022
34 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Wholly Owned Programs
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
Our programs
Therapeutic
Candidate1
LYT-100-ILD
Deupirfenidone
LYT-100-COV
Deupirfenidone
LYT-100-LYMPH
Deupirfenidone
LYT-200
Anti-Galectin-9 mAb
LYT-210
Anti-Delta-1 mAb
Indication
IPF
Long COVID2 respiratory complications
and related sequelae
Lymphatic flow disorders,
including lymphedema
Solid tumors
Solid tumors
LYT-300
Oral Allopregnanolone
Neurological and
neuropsychological conditions
LYT-510
Oral Immunosuppressant
IBD/chronic pouchitis
LYT-500
Oral IL-22 +
Immunosuppressant
LYT-503/IMB-150
(Partnered program)
Non-opioid
IBD
IC/BPS
Phase completed
Phase in progress
Registration-enabling studies to begin in 1H2022
Our Head of Research, Anne Burkhardt, and her team works to advance our Wholly Owned Programs in our headquarters.
1 The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our wholly-owned therapeutic candidates are safe
and effective. No regulatory agency has made any such determination that our wholly-owned therapeutic candidates are safe or effective for use by the general public for any
indication.
2 Long COVID is a term being used to describe the emerging and persistent complications following the resolution of COVID-19 infection, also known as post-acute COVID-19
syndrome (PACS).
PureTech Health plc Annual report and accounts 2021 35
Strategic report PureTech’s Wholly Owned Programs — continued
LYT-100
Therapeutic
Candidate1
PureTech Ownership
Indication
Stage of Development
LYT-100
Wholly-owned
Idiopathic pulmonary fibrosis (IPF)
Long COVID2 respiratory complications and related sequelae
Lymphatic flow disorders, including lymphedema
Exploring potential opportunities in other inflammatory
and fibrotic conditions, such as radiation induced fibrosis,
myocardial fibrosis, and other organ system fibrosis
Registration-enabling studies planned
Phase 2
Phase 2
Clinical studies being planned
• Our lead wholly-owned therapeutic candidate, LYT-100 (deupirfenidone), is being advanced for the potential treatment of conditions involving
inflammation and fibrosis, including lung disease (IPF and Long COVID respiratory complications and related sequelae) and disorders of lymphatic flow,
such as lymphedema. We are also exploring the potential evaluation of LYT-100 in other inflammatory and fibrotic conditions, such as radiation induced
fibrosis, myocardial fibrosis and other organ system fibrosis based on the strength of existing clinical data around the use of pirfenidone in these
indications. LYT-100 is a selectively deuterated form of pirfenidone that is designed to retain the potent and clinically validated anti-fibrotic and
anti-inflammatory activity of pirfenidone, but with a highly differentiated PK profile that has translated into favorable tolerability, as supported by data
from multiple human clinical studies. To date, LYT-100 has been studied in more than 400 subjects and demonstrated a favorable safety profile as part of
our ongoing development work and indication prioritization.
Key Points of
Innovation &
Differentiation
• Pirfenidone (Esbriet®3) slows the progression of IPF and has been approved for the treatment of IPF in the U.S. and other countries.
IPF is a chronic orphan condition that causes progressive scarring of the lungs. Median overall survival of IPF patients is 3-5 years.
Pirfenidone is one of the two standard of care treatments for IPF, with nintedanib (OFEV®3) being the other drug. Despite its proven
efficacy, there are serious limitations to pirfenidone’s clinical use primarily due to severe GI-related tolerability issues, which have
significantly curtailed its effectiveness in patients with IPF4. The other standard of care treatment for IPF, nintedanib, has similar
GI-related tolerability issues and limitations that have limited its broad usage. Although the combined sales of these two standard of
care IPF drugs are over $3B, only about 25% of IPF patients are currently being treated with either of these drugs5. The vast majority
of IPF patients are not currently on any approved therapies, primarily due to tolerability issues associated with these drugs. In a large
post-marketing analysis of 10,996 patients diagnosed with IPF, only 13.2% received treatment with pirfenidone during a five-year
follow-up period6. Additionally, real-world experience with pirfenidone in the IPF treatment setting highlights significant problems
with treatment compliance, resulting in approximately half of the patients that start therapy either discontinuing therapy, dose-
reducing or switching to other therapies, all of which lead to suboptimal disease management. We are developing LYT-100-ILD to
offer an improved tolerability profile compared to current standard of care drugs, which may enable better patient compliance and
potentially lead to improved disease outcomes. Pirfenidone has also shown activity in investigational clinical studies in patients with
unclassifiable interstitial lung disease (uILD), radiation induced fibrosis, myocardial fibrosis and other organ system fibrosis and has
demonstrated activity in a preclinical model of lymphedema and radiation-induced fibrosis.
Pirfenidone: Clinically Validated Anti-Fibrotic and Anti-Inflammatory
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(cid:52)(cid:80)(cid:69)(cid:71)(cid:73)(cid:70)(cid:83)
(cid:12)(cid:82)(cid:33)(cid:21)(cid:22)(cid:26)(cid:13)
(cid:347)(cid:4) (cid:40)(cid:73)(cid:87)(cid:84)(cid:77)(cid:88)(cid:73)(cid:4)(cid:72)(cid:86)(cid:69)(cid:91)(cid:70)(cid:69)(cid:71)(cid:79)(cid:87)(cid:16)(cid:4)(cid:84)(cid:77)(cid:86)(cid:74)(cid:73)(cid:82)(cid:77)(cid:72)(cid:83)(cid:82)(cid:73)(cid:4)
(cid:87)(cid:69)(cid:80)(cid:73)(cid:87)(cid:4)(cid:34)(cid:8)(cid:21)(cid:38)(cid:4)(cid:19)(cid:4)(cid:93)(cid:73)(cid:69)(cid:86)
1 We have an active IND on file with the FDA for LYT-100. The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our
wholly-owned therapeutic candidates are safe and effective. No regulatory agency has made any such determination that LYT-100 is safe or effective for use by the general
public for any indication.
2 Long COVID is a term being used to describe the emerging and persistent complications following the resolution of COVID-19 infection, also known as post-acute COVID-19
syndrome (PACS).
3 Esbriet®, OFEV® and AUSTEDO® are trademarks of Genentech, Boehringer Ingelheim Pharmaceuticals and Auspex Pharmaceuticals, Inc., respectively, and are not owned by or
affiliated with PureTech Health. LYT-100 is an investigational drug not approved by any regulatory authority.
4 Rubino C. M., Bhavnani S. M., Ambrose P. G., Forrest A., Loutit J. S. Effect of food and antacids on the pharmacokinetics of pirfenidone in older healthy adults. Pulmonary
Pharmacology & Therapeutics. 2009 Aug;22(4):279-285. DOI: 10.1016/j.pupt.2009.03.003.
5 Based on 2021 ESBRIET® and OFEV® total WW sales of $3.7B; Ofev sales are inclusive of SSc-ILD, PF-ILD and IPF indications.
6 Dempsey TM, Payne S, Sangaralingham L, Yao X, Shah ND, Limper AH. Adoption of the Anti-Fibrotic Medications Pirfenidone and Nintedanib for Patients with Idiopathic
Pulmonary Fibrosis. Ann Am Thorac Soc. 2021 Jan 19. doi: 10.1513/AnnalsATS.202007-901OC. Epub ahead of print. PMID: 33465323.
7 Noble, P. W., Albera, C., Bradford, W. Z., Costabel, U., du Bois, R. M., Fagan, E. A., Fishman, R. S., Glaspole, I., Glassberg, M. K., Lancaster, L., Lederer, D. J., Leff, J. A.,
Nathan, S. D., Pereira, C. A., Swigris, J. J., Valeyre, D., & King, T. E., Jr (2016). Pirfenidone for idiopathic pulmonary fibrosis: analysis of pooled data from three multinational
phase 3 trials. The European Respiratory Journal, 47(1), 243–253. https://doi.org/10.1183/13993003.00026-2015.
8 ERS 2019: http://bit.ly/2lJ9WCC
9 Saad, M. I., Mcleod, L., Hodges, C., Vlahos, R., Rose-John, S., Ruwanpura, S., & Jenkins, B. J. (2021). ADAM17 Deficiency Protects against Pulmonary Emphysema. American
Journal of Respiratory Cell and Molecular Biology, 64(2), 183-195. doi:10.1165/rcmb.2020-0214oc.
10 Cottin, V., Koschel, D., Günther, A., Albera, C., Azuma, A., Sköld, C. M., Tomassetti, S., Hormel, P., Stauffer, J. L., Strombom, I., Kirchgaessler, K. U., Maher, T. M. (2018). Long-
term safety of pirfenidone: Results of the prospective, observational PASSPORT study. ERJ Open Research, 4(4), 00084-2018. doi:10.1183/23120541.00084-2018.
36 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Wholly Owned Programs — continued
Key Points of
Innovation &
Differentiation
(continued)
• LYT-100 is a selectively deuterated form of pirfenidone that is designed to retain the potent and clinically-validated anti-fibrotic
and anti-inflammatory activity of pirfenidone with a highly differentiated PK profile that has translated into favorable tolerability,
as demonstrated by data from multiple human clinical studies.
• As recently demonstrated in a crossover study comparing LYT-100 to pirfenidone in healthy older adults, lower maximal LYT-100
drug concentration (Cmax) with exposure that is bioequivalent to pirfenidone was achieved. This is supportive of the observed
improved tolerability.
• A PK profile of LYT-100 that is substantially better tolerated than pirfenidone while maintaining comparable efficacy has the potential
to allow the patients to stay on the drug longer. As a result, we believe LYT-100-ILD has the potential to replace pirfenidone as
standard of care and to become a backbone therapy in the treatment for IPF.
Pirfenidone
LYT-100
H3C
D3C
H3C
D3C
N
O
✔ Clinically validated efficacy
O
✗ Associated with GI AEs
✗ Higher exposure limited by tolerability
N
N
O
N
O
✔ Differentiated PK profile while retaining
pharmacology
✔ Substantially improved AE profile
✔ Potential to enhance exposure that could
improve efficacy, MTD not determined
Program
Discovery
Process by the
PureTech Team
• LYT-100 (deupirfenidone) was originally developed by Auspex Pharmaceuticals, Inc. (Auspex, now a wholly owned subsidiary of Teva
Pharmaceuticals), a company that pioneered the deuteration technology and successfully developed deutetrabenazine (Austedo®),
becoming the first and only deuterated drug that has received FDA approval3. We selected and acquired LYT-100 (from Teva
Pharmaceuticals) in July 2019 based on insights into the lymphatic system gained internally and via unpublished findings through
our network of collaborators, coupled with the relationships of our team members and their insights into the program while in
development at Auspex. We believe that the commercial success of the first and only deuterated drug, Austedo, based on
a comparable efficacy to tetrabenazine but a highly differentiated, favorable safety and tolerability profile, could potentially serve
as a good precedence for LYT-100.
Patient Need &
Market Potential
Fibrosis and Inflammation-Related Lung Diseases
LYT-100: Tackling Inflammatory & Fibrotic Diseases
LYT-100-ILD
LYT-100-COV
LYT-100-LYMPH
~130K in the US with IPF11
Over 500M people have been
infected by COVID-1912
~1M in the US with
lymphedema15
(cid:45)(cid:82)(cid:379)(cid:69)(cid:81)(cid:81)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)
(cid:56)(cid:43)(cid:42)(cid:17)(cid:1028)
(cid:56)(cid:50)(cid:42)(cid:17)(cid:1027)
(cid:45)(cid:48)(cid:17)(cid:26)
(cid:40)(cid:23)(cid:39)
(cid:48)(cid:61)(cid:56)(cid:17)(cid:21)(cid:20)(cid:20)
(cid:50) (cid:51)
(cid:50)(cid:83)(cid:86)(cid:81)(cid:69)(cid:80)(cid:4)
(cid:80)(cid:89)(cid:82)(cid:75)
(cid:22)
(cid:21)
(cid:39)(cid:51)(cid:58)(cid:45)(cid:40)(cid:17)(cid:21)(cid:29)
(cid:45)(cid:82)(cid:74)(cid:73)(cid:71)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
(cid:71)(cid:93)(cid:88)(cid:83)(cid:79)(cid:77)(cid:82)(cid:73)(cid:4)(cid:86)(cid:73)(cid:80)(cid:73)(cid:69)(cid:87)(cid:73)
(cid:56)(cid:43)(cid:42)(cid:17)(cid:1115)
(cid:56)(cid:50)(cid:42)(cid:17)(cid:1114)
(cid:45)(cid:48)(cid:17)(cid:26)
(cid:42)(cid:77)(cid:70)(cid:86)(cid:83)(cid:87)(cid:77)(cid:87)
(cid:42)(cid:77)(cid:70)(cid:86)(cid:83)(cid:70)(cid:80)(cid:69)(cid:87)(cid:88)
(cid:39)(cid:83)(cid:80)(cid:80)(cid:69)(cid:75)(cid:73)(cid:82)
• Progressive fibrotic diseases leading to
• Up to 1/3 of severe COVID-19 patients
(cid:42)(cid:77)(cid:70)(cid:86)(cid:83)(cid:87)(cid:77)(cid:87)(cid:14)
(cid:14)(cid:42)(cid:77)(cid:70)(cid:86)(cid:83)(cid:87)(cid:77)(cid:87)(cid:4)(cid:80)(cid:73)(cid:69)(cid:72)(cid:87)(cid:4)(cid:88)(cid:83)(cid:4)(cid:71)(cid:76)(cid:86)(cid:83)(cid:82)(cid:77)(cid:71)(cid:4)(cid:80)(cid:89)(cid:82)(cid:75)(cid:4)(cid:87)(cid:71)(cid:69)(cid:86)(cid:86)(cid:77)(cid:82)(cid:75)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
(cid:86)(cid:73)(cid:87)(cid:84)(cid:77)(cid:86)(cid:69)(cid:88)(cid:83)(cid:86)(cid:93)(cid:4)(cid:72)(cid:93)(cid:87)(cid:74)(cid:89)(cid:82)(cid:71)(cid:88)(cid:77)(cid:83)(cid:82)(cid:16)(cid:4)(cid:84)(cid:73)(cid:86)(cid:87)(cid:77)(cid:87)(cid:88)(cid:77)(cid:82)(cid:75)(cid:4)(cid:84)(cid:83)(cid:87)(cid:88)(cid:17)(cid:72)(cid:77)(cid:87)(cid:71)(cid:76)(cid:69)(cid:86)(cid:75)(cid:73)(cid:18)
fatal lung dysfunction. Current standards
of care for IPF associated with significant
tolerability issues
• Initiating registration-enabling studies
in 1H 2022
develop lung fibrosis13
• Up to 54% of hospitalized COVID-19
patients develop lasting dyspnea14
• Lymphatic damage initiates vicious cycle
of inflammation & fibrosis which further
impairs fluid flow & tissue regeneration16,17
• Topline results from Phase 2a POC
• Topline results from Phase 2 expected
expected in 2022
in 1H 2022
• Fibrosis and inflammation are a common mechanism across several lung diseases. These are acute diseases with high mortality or that
lead to long-term fibrosis; chronic diseases linked to a specific cause, like a virus or autoimmune disease; and diseases like IPF, where
the causes are unclear but have been postulated to include viruses, genetic factors and a variety of environmental exposures. For the
majority of these lung conditions, there are few approved treatments that address the underlying inflammation and fibrosis affecting
the lungs. Many of these diseases are progressive, and there is a clear unmet need to halt the inflammation and progressive fibrosis in
order to preserve lung function.
11 Martinez, F. J., Collard, H. R., Pardo, A., Raghu, G., Richeldi, L., Selman, M., Swigris, J. J., Taniguchi, H., Wells, A. U. (2017). Idiopathic pulmonary fibrosis. Nature Reviews
Disease Primers, 3(17074). doi:https://doi.org/10.1038/nrdp.2017.74.
12 COVID-19 map. Johns Hopkins Coronavirus Resource Center. (2021). https://coronavirus.jhu.edu/map.html.
13 Han, X., Fan, Y., Alwalid, O., Li, N., Jia, X., Yuan, M., Li, Y., Cao, Y., Gu, J., Wu, H., & Shi, H. (2021). Six-month Follow-up Chest CT Findings after Severe COVID-19 Pneumonia.
Radiology, 299(1), E177–E186. https://doi.org/10.1148/radiol.2021203153.
14 Lerum, T. V., Aaløkken, T. M., Brønstad, E., Aarli, B., Ikdahl, E., Lund, K., Durheim, M. T., Rodriguez, J. R., Meltzer, C., Tonby, K., Stavem, K., Skjønsberg, O. H., Ashraf, H., &
Einvik, G. (2021). Dyspnoea, lung function and CT findings 3 months after hospital admission for COVID-19. The European respiratory journal, 57(4), 2003448. https://doi.
org/10.1183/13993003.03448-2020.
15 Lymphedema. Vascular Cures. (2017). https://vascularcures.org/lymphedema/.
16 Gousopoulos, E., Proulx, S. T., Bachmann, S. B., Scholl, J., Dionyssiou, D., Demiri, E., Halin, C., Dieterich, L.C., Detmar, M. (2016). Regulatory T cell transfer ameliorates
lymphedema and promotes lymphatic vessel function. JCI Insight, 1(16). doi:10.1172/jci.insight.89081.
17 Avraham, T., Daluvoy, S., Zampell, J., Yan, A., Haviv, Y. S., Rockson, S. G., & Mehrara, B. J. (2010). Blockade of transforming growth factor-beta1 accelerates lymphatic
regeneration during wound repair. The American journal of pathology, 177(6), 3202–3214. https://doi.org/10.2353/ajpath.2010.100594.
PureTech Health plc Annual report and accounts 2021 37
Strategic report
PureTech’s Wholly Owned Programs — continued
Patient Need &
Market Potential
(continued)
• IPF
− There are approximately 130,000 people living with IPF in the U.S. IPF is a progressive condition characterized by irreversible
scarring of the lungs that worsens over time, making it difficult to breathe. The prognosis of IPF is poor, with the median survival
after diagnosis generally estimated at two to five years.
− Even in IPF, for which pirfenidone is approved, there remains a need for more tolerable treatment options. Despite the limitations of
this therapy, pirfenidone sales peaked above $1 billion each year from 2018 to 2021.
LYT-100-ILD: Independent Research Shows Profile Attractive to Surveyed Pulmonologists18
Pulmonologists would prescribe LYT-100 to ~44% of their new IPF patients (even without enhanced efficacy compared to SOC)
(cid:21)(cid:20)(cid:20)(cid:9)
(cid:87)
(cid:88)
(cid:82)
(cid:73)
(cid:77)
(cid:88)
(cid:69)
(cid:52)
(cid:42)
(cid:52)
(cid:4)
(cid:45)
(cid:4)
(cid:9)
(cid:28)(cid:20)(cid:9)
(cid:26)(cid:20)(cid:9)
(cid:24)(cid:20)(cid:9)
(cid:22)(cid:20)(cid:9)
(cid:20)(cid:9)
(cid:98)(cid:23)(cid:29)(cid:9)(cid:4)(cid:41)(cid:87)(cid:70)(cid:86)(cid:77)(cid:73)(cid:88)(cid:113)(cid:23)
(cid:4)(cid:12)(cid:84)(cid:77)(cid:86)(cid:74)(cid:73)(cid:82)(cid:77)(cid:72)(cid:83)(cid:82)(cid:73)(cid:13)
(cid:98)(cid:24)(cid:24)(cid:9)
(cid:4)(cid:12)(cid:48)(cid:61)(cid:56)(cid:17)(cid:21)(cid:20)(cid:20)(cid:13)
(cid:98)(cid:25)(cid:25)(cid:9)
(cid:4)(cid:51)(cid:42)(cid:41)(cid:58)(cid:113)
(cid:98)(cid:21)(cid:25)(cid:9)(cid:4)(cid:41)(cid:87)(cid:70)(cid:86)(cid:77)(cid:73)(cid:88)(cid:113)
(cid:4)(cid:12)(cid:84)(cid:77)(cid:86)(cid:74)(cid:73)(cid:82)(cid:77)(cid:72)(cid:83)(cid:82)(cid:73)(cid:13)
(cid:98)(cid:23)(cid:27)(cid:9)
(cid:4)(cid:51)(cid:42)(cid:41)(cid:58)(cid:113)
(cid:45)(cid:4)(cid:91)(cid:83)(cid:89)(cid:80)(cid:72)(cid:4)(cid:84)(cid:86)(cid:73)(cid:87)(cid:71)(cid:86)(cid:77)(cid:70)(cid:73)(cid:4)(cid:48)(cid:61)(cid:56)(cid:17)(cid:21)(cid:20)(cid:20)(cid:4)(cid:70)(cid:73)(cid:71)(cid:69)(cid:89)(cid:87)(cid:73)(cid:348)
(cid:342)(cid:55)(cid:69)(cid:81)(cid:73)(cid:4)(cid:73)(cid:74)(cid:378)(cid:71)(cid:69)(cid:71)(cid:93)(cid:16)(cid:4)(cid:70)(cid:89)(cid:88)(cid:4)(cid:81)(cid:69)(cid:86)(cid:79)(cid:73)(cid:72)(cid:80)(cid:93)(cid:4)(cid:80)(cid:73)(cid:87)(cid:87)(cid:4)
(cid:37)(cid:41)(cid:87)(cid:4)(cid:88)(cid:76)(cid:69)(cid:82)(cid:4)(cid:83)(cid:82)(cid:73)(cid:4)(cid:83)(cid:74)(cid:4)(cid:81)(cid:93)(cid:4)(cid:81)(cid:83)(cid:87)(cid:88)(cid:4)(cid:74)(cid:86)(cid:73)(cid:85)(cid:89)(cid:73)(cid:82)(cid:88)(cid:80)(cid:93)(cid:4)
(cid:89)(cid:87)(cid:73)(cid:72)(cid:4)(cid:88)(cid:76)(cid:73)(cid:86)(cid:69)(cid:84)(cid:77)(cid:73)(cid:87)(cid:343)
(cid:342)(cid:45)(cid:88)(cid:4)(cid:378)(cid:80)(cid:80)(cid:87)(cid:4)(cid:69)(cid:4)(cid:82)(cid:73)(cid:73)(cid:72)(cid:4)(cid:77)(cid:82)(cid:4)(cid:45)(cid:52)(cid:42)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:69)(cid:4)
(cid:81)(cid:73)(cid:72)(cid:77)(cid:71)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:70)(cid:73)(cid:88)(cid:88)(cid:73)(cid:86)(cid:4)(cid:88)(cid:83)(cid:80)(cid:73)(cid:86)(cid:69)(cid:70)(cid:77)(cid:80)(cid:77)(cid:88)(cid:93)(cid:343)
(cid:98)(cid:26)(cid:9)
(cid:98)(cid:23)(cid:9)
(cid:39)(cid:89)(cid:86)(cid:86)(cid:73)(cid:82)(cid:88)(cid:4)(cid:49)(cid:69)(cid:86)(cid:79)(cid:73)(cid:88)(cid:25)
(cid:12)(cid:8)(cid:23)(cid:38)(cid:15)(cid:13)
(cid:55)(cid:89)(cid:86)(cid:90)(cid:73)(cid:93)(cid:4)(cid:54)(cid:73)(cid:87)(cid:89)(cid:80)(cid:88)(cid:87)
(cid:12)(cid:55)(cid:69)(cid:74)(cid:73)(cid:88)(cid:93)(cid:19)(cid:56)(cid:83)(cid:80)(cid:73)(cid:86)(cid:69)(cid:70)(cid:77)(cid:80)(cid:77)(cid:88)(cid:93)(cid:4)(cid:38)(cid:73)(cid:82)(cid:73)(cid:74)(cid:77)(cid:88)(cid:13)
(cid:55)(cid:73)(cid:80)(cid:73)(cid:71)(cid:88)(cid:4)(cid:85)(cid:89)(cid:83)(cid:88)(cid:73)(cid:87)(cid:4)(cid:74)(cid:86)(cid:83)(cid:81)(cid:4)(cid:87)(cid:89)(cid:86)(cid:90)(cid:73)(cid:93)
Certain results from this survey are depicted in the graphic above (right panel). Data from this survey are consistent with findings of independent publications
that point to significant tolerability issues, particularly GI-based AEs, as the greatest limitations of the current standard of care in IPF.
• In the 2022 post-period, we engaged an independent third-party market research firm to conduct a survey of 100 pulmonologists who
actively treat patients with IPF, to assess the potential commercial opportunity for LYT-100-ILD in IPF. In this survey, pulmonologists
highlighted an unmet need for treatments with improved tolerability profiles. When physicians were asked the primary reasons
patients discontinue or dose reduce current standard of care for IPF, 80-90% highlighted GI AEs as a main cause. Pulmonologists in
this survey were also presented with a hypothetical profile18 of LYT-100-ILD, labeled “Product X”, that indicated an improved
tolerability profile with comparable efficacy relative to standard of care in IPF. Based on this profile, physicians indicated they would
prescribe Product X to nearly 44% of their new IPF patients. Furthermore, nearly 80% of physicians indicated they would prescribe
Product X more than pirfenidone. Based on this survey, LYT-100 is expected to have a significant impact on the IPF market based on
its improved tolerability profile and similar efficacy compared to standard of care, which is consistent with findings from the prior
market research.
• Long COVID (PACS) Respiratory Complications and Related Sequelae
− The COVID-19 pandemic has affected over 500 million people around the world. There is increasing data around the longer-term
complications of COVID-19, referred to as Long COVID (PACS) including data regarding respiratory issues that persist following
recovery. Survivors of the virus can have persistent shortness of breath and develop progressive lung fibrosis that could potentially
last for years.
− Post-acute injuries are hypothesized to be due to a cascade of inflammation and fibrosis that begins during the acute phase of
COVID-19 and continues after the infection resolves. Up to one-third of severe COVID-19 patients develop lung fibrosis post
symptom onset. Over 40% of hospitalized COVID-19 patients have lasting dyspnea and up to 33% of severe COVID-19 patients
develop lung fibrosis.
− COVID-19 post-acute injuries appear to mimic respiratory complications of other viral pneumonias like Severe Acute Respiratory
Syndrome (SARS) and Middle East Respiratory Syndrome (MERS). Up to one-third of SARS and MERS survivors had abnormal
pulmonary testing and lung imaging findings that persisted for years.
• Lymphedema
− Lymphedema is a chronic, disfiguring and painful condition that afflicts millions of people globally and is characterized by severe
swelling in parts of the body, typically the arms or legs, due to the build-up of lymph fluid and inflammation, fibrosis and adipose
deposition. By conservative estimates, lymphedema afflicts approximately one million people in the U.S., including approximately
500,000 breast cancer survivors. Secondary lymphedema is the most prevalent form of lymphedema. Secondary lymphedema can
develop after surgery, infection, or trauma, and is frequently caused by cancer or cancer treatments such as radiation and
chemotherapy, that cause damage to or mandate the removal of lymph nodes.
− The current standard of care for lymphedema is symptom management, primarily with compression and physical therapy to control
swelling. These approaches are cumbersome, uncomfortable and do not address the progression of the underlying disease. Even
with management, many patients will progress from mild-to-moderate lymphedema to more severe forms. No approved drugs exist
to treat the underlying causes of lymphedema. We believe the lack of treatments for lymphedema represents a major unmet
medical need.
18 100 pulmonologists were surveyed, no pricing information/assumptions was shared. Research completed in the April 2022 post-period based on the latest target product
profile and findings were consistent with our prior market research.
38 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Wholly Owned Programs — continued
Milestones
Achieved &
Development
Status
• In the January 2022 post-period, we announced results from a randomized, double-blind crossover study in healthy older adults
demonstrating that approximately 50% fewer subjects treated with LYT-100 (deupirfenidone) experienced GI-related AEs compared to
subjects treated with pirfenidone (17.4% vs. 34.0%).
− The double-blind, randomized, crossover study evaluated the tolerability of LYT-100 550 mg TID versus pirfenidone 801 mg TID in 49
older healthy adults aged 60-79, an age group that is representative of the IPF patient population. The dose of LYT-100 used in this
study was selected based on PK and modeling data from prior studies, which together suggest that 550 mg TID results in similar
drug exposure levels achieved with 801 mg TID of pirfenidone. The study results demonstrated that 38% fewer subjects treated with
LYT-100 experienced any AE compared with those treated with pirfenidone (30.4% vs. 48.9%). Additionally, approximately 50% fewer
subjects experienced GI-related AEs with LYT-100 compared with pirfenidone (17.4% vs. 34.0%), most notably nausea (15.2% with
LYT-100 vs. 29.8% with pirfenidone), which is the most common AE associated with pirfenidone. No serious AEs were reported in the
study, and there was one AE-related discontinuation in each arm. Though not powered to show statistical significance, this study
provides evidence that LYT-100 has the potential to offer an important tolerability advantage over pirfenidone and will help to
inform our development plans with this therapeutic candidate in IPF.
LYT-100: Data to Date Demonstrate Tolerability Advantage Over Pirfenidone
LYT-100 demonstrates lower Cmax with same AUC compared to pirfenidone
Healthy Older Adult Crossover Study (N=4919)
Clinical data demonstrate favorable tolerability
TEAE
LYT-100 550mg
TID n (%)
Pirfenidone
801mg TID n (%)
Gastrointestinal
– Nausea
– Vomiting
– Abdominal Pain/
Distension
Nervous System
– Headache
– Dizziness
– Somnolence
8 (17.4%)
7 (15.2%)
2 (4.3%)
1 (2.2%)
8 (17.4%)
6 (13.0%)
1 (2.2%)
1 (2.2%)
16 (34.0%)
14 (29.8%)
3 (6.4%)
3 (6.4%)
15 (31.9%)
9 (19.1%)
7 (14.9%)
2 (4.3%)
Multiple Ascending Dose Study20
Well-tolerated at all doses studied21 without dose titration
All treatment-related AEs were mild & transient
Healthy Older Adult Crossover Study
Achieved ~50% reduction in healthy older adults
experiencing GI-related AEs compared to pirfenidone
TEAE = treatment emergent adverse event
Discontinuations for AEs: 1 during pirfenidone administration, 1 during LYT-100 administration
• In the January 2022 post-period, we announced Paul Ford, M.D., Ph.D., joined PureTech as SVP of Clinical Development to oversee
the LYT-100 development program in IPF. Dr. Ford is an experienced clinical pulmonologist with more than 20 years of research and
development expertise dedicated to IPF and other respiratory conditions. He has built and advanced programs from early-to
late-stage development at companies including Novartis, Galapagos and Galecto, and he has been instrumental in the enrollment
of nearly 1,500 patients with IPF across several clinical studies.
• In November 2020, we announced the completion of a Phase 1 randomized, double-blind multiple ascending dose (MAD) and food
effect study, which was designed to evaluate the safety, tolerability and PK profile of LYT-100 in healthy volunteers. The study
demonstrated favorable proof-of-concept for the tolerability and PK profile of LYT-100. In August 2021, we presented the results of
the study at the virtual European Respiratory Society (ERS) International Congress. In November 2021, the full study was published
in Clinical Pharmacology in Drug Development.
− All AEs that were possibly or probably related to LYT-100 were mild and transient and there were no discontinuations. No serious
AEs or dose-limiting toxicities were observed in the study. The maximum tolerated dose was not determined after dosing up to
1,000 mg twice per day.
− The food effect portion of the study evaluated two common PK measures that are used to determine the optimal dose of
a therapeutic candidate – area under the curve (AUC) and Cmax. Under fed conditions, the AUC of LYT-100 was reduced by about
19%, which is comparable to the AUC reduction of 16% seen with pirfenidone as stated in the Esbriet® U.S. Prescribing Information.
The Cmax reduction observed with LYT-100 was 23%, while the Cmax reduction seen with pirfenidone was 49% as stated in the
Esbriet® (pirfenidone) U.S. Prescribing Information.
• In 2021, we initiated additional Phase 1 clinical trials to further evaluate the PK, dosing and tolerability of LYT-100 in healthy volunteers
and healthy older adults to inform the clinical development of LYT-100 across multiple indications. Results from these studies
demonstrated that LYT-100 was well-tolerated at 824mg TID dosing with low rates of GI AEs that were comparable to placebo.
These results will further inform our dose-ranging study design in treatment-naïve IPF patients.
• In April 2021, we announced the formation of a Clinical Advisory Board for IPF and other PF-ILDs. These physicians and researchers
with deep expertise in the clinical development of novel therapies in PF-ILDs include Bill Bradford, M.D., Ph.D., biopharma advisor
with broad expertise in drug development; Vincent Cottin, M.D., Professor of Respiratory Medicine at Université Claude Bernard Lyon
and Coordinator of the National Coordinating Reference Center for Rare Pulmonary Diseases at Louis Pradel Hospital, Hospices Civils
de Lyon, Lyon, France; Kevin Flaherty, M.D., Professor at the University of Michigan specializing in IPF and other ILDs; Toby Maher,
M.D., Ph.D., Professor of Clinical Medicine and Director of Interstitial Lung Disease at Keck School of Medicine of the University of
Southern California; Paul Noble, M.D., Chair of the Department of Medicine at Cedars-Sinai Medical Center and a noted researcher
in lung inflammation and fibrosis; and Marlies Wijsenbeek, M.D., Ph.D., pulmonary physician at the Erasmus Medical Center.
• Long COVID (PACS) respiratory complications and related sequelae
− In December 2020, we announced the initiation of a global, randomized, double-blind, placebo-controlled Phase 2 trial to evaluate
the efficacy, safety and tolerability of LYT-100-COV in adults with Long COVID respiratory complications and related sequelae.
− In 2021, we initiated the open-label extension of the LYT-100-COV Phase 2 trial in patients who completed the first portion of the
trial. The primary endpoint of the extension trial will measure change in distance walked on the 6MWT, with secondary endpoints
to assess the longer-term safety and tolerability of LYT-100 up to 182 days of treatment.
− In preclinical rodent studies, LYT-100 was observed to suppress levels of IL-6 and TNF-alpha induced by lipopolysaccharide
administration, which we believe reinforces the potential of LYT-100 to reduce the acute inflammation and cytokine release that has
been associated with SARS-CoV-2 infection. Anti-fibrotic activity was also observed with LYT-100 in preclinical studies. Lung fibrosis
has also been observed in some patients following the acute phase of COVID-19. For more information on our clinical trial, visit
ClinicalTrials.gov.
19 44 completed study (5 early terminated: 2 for AEs, 3 for non-medical reasons).
20 Chen, M.C., Korth, C.C., Harnett, M.D., Elenko, E. and Lickliter, J.D. (2022), A Randomized Phase 1 Evaluation of Deupirfenidone, a Novel Deuterium-Containing Drug
Candidate for Interstitial Lung Disease and Other Inflammatory and Fibrotic Diseases. Clinical Pharmacology in Drug Development. https://doi.org/10.1002/cpdd.1040.
21 LYT-100 was administered in doses of 100 mg, 250 mg, 500 mg, 750 mg and 1000 mg BID over five days.
PureTech Health plc Annual report and accounts 2021 39
Strategic report PureTech’s Wholly Owned Programs — continued
Milestones
Achieved &
Development
Status
(continued)
• Lymphedema
− In December 2020, we announced the initiation of a Phase 2a proof-of-concept study of LYT-100-LYMPH in patients with breast
cancer-related, upper limb secondary lymphedema. The primary endpoint of the study is safety and tolerability of LYT-100-LYMPH.
Secondary endpoints include outcome measures relevant to lymphedema, including relative limb volume, bioimpedance
spectroscopy (a measure of extracellular fluid change), tonometry (a measure of fibrosis) and serum levels of inflammatory and
fibrotic biomarkers. The study will also examine patient reported outcomes using validated self-report instruments specific to
upper-arm lymphedema. The study is not adequately powered to evaluate drug effect versus placebo with statistical significance,
but we believe the totality of the data will be suitable to inform the design of future clinical protocols. For more information on
our clinical trial, visit ClinicalTrials.gov.
− In preclinical studies, LYT-100 showed greater anti-fibrotic and anti-inflammatory activity compared to pirfenidone. Additionally,
LYT-100 was tested by one of our academic collaborators in a preclinical model of lymphedema which showed that LYT-100
halted progression of lymphedema and reduced the overall volume of the affected area. These results still need to be confirmed
in clinical trials.
Expected
Milestones
• We plan to initiate a Phase 2 dose-ranging trial of LYT-100 in patients with IPF in the first half of 2022 with topline results expected by
the end of 2023. We also plan to pursue a streamlined development program for LYT-100 in IPF, capitalizing on efficiencies of the
505(b)(2) pathway. Pending positive clinical and regulatory feedback, the program will advance into a Phase 3 study. We believe the
results of the Phase 2 study, together with a Phase 3 study, could serve as the basis for registration in the U.S.
• Topline results from the Phase 2 trial of LYT-100-COV in adults with Long COVID respiratory complications and related sequelae are
anticipated in the first half of 2022.
Intellectual
Property
• We expect topline results from the Phase 2a proof-of-concept study of LYT-100-LYMPH in patients with breast cancer-related, upper
limb secondary lymphedema in 2022.
• As of December 31, 2021, the LYT-100 patent portfolio includes 31 active patents acquired, and one issued patent and one patent
application licensed from Auspex. These patents and application provide broad coverage of compositions of matter, formulations and
methods of use for deuterated pirfenidone, including the LYT-100 deupirfenidone compound, comprising six issued U.S. patents
which are expected to expire in 2028 (without patent term extensions, which could extend the exclusivity to 2033), one U.S. patent
which is expected to expire in 2035 and 25 patents issued in 23 foreign jurisdictions, without taking into account any possible patent
term extension or regulatory exclusivities. We have also filed additional patent applications on deupirfenidone, including 13 pending
U.S. patent applications, three international PCT applications and 13 foreign applications directed to the use of deuterated
pirfenidone, including LYT-100, for the treatment of a range of conditions involving inflammation and fibrosis, including lung disease
(IPF and Long COVID respiratory complications and related sequelae) and disorders of lymphatic flow, such as lymphedema. We
expect that any issued patents claiming priority to these applications will expire in 2039 through 2042, exclusive of possible patent
term adjustments or extensions or other exclusivities.
LYT-100 Program
Therapeutic
Candidate1
Indication
LYT-100-ILD
Deupirfenidone
IPF
LYT-100-COV
Deupirfenidone
Long COVID2 respiratory
complications and related sequelae
LYT-100-LYMPH
Deupirfenidone
Lymphatic flow disorders,
including lymphedema
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
Phase completed
Phase in progress
Registration-enabling studies to begin in 1H2022
40 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Wholly Owned Programs — continued
LYT-200
Therapeutic
Candidate1
PureTech Ownership
Indication
LYT-200
Wholly-owned
Solid tumors
Stage of Development
Phase 1
• LYT-200 is a fully human IgG4 monoclonal antibody, or mAb, designed to inhibit the activity of galectin-9, a key molecule expressed by tumors and
immune cells and shown to suppress the immune system from recognizing and destroying cancer cells. We are developing LYT-200 for difficult-to-treat
cancer indications, including pancreatic ductal adenocarcinoma (PDAC), colorectal cancer (CRC) and cholangiocarcinoma (CCA).
Key Points of
Innovation &
Differentiation
• Immune checkpoint inhibitors, including therapies that target programmed cell death protein 1, or PD-1, programmed death ligand
1, or PDL-1, and cytotoxic T-lymphocyte-associated antigen 4, or CTLA-4, have been developed to counteract multiple mechanisms of
immune evasion by a number of different tumor types. Recent reports suggest that marketed drugs against these targets had sales
exceeding $28 billion in 20202. Unfortunately, a large proportion of patients, especially those with immunologically silent tumors such
as PDAC, CCA and some types of CRC respond sub-optimally to such agents.
• Galectin-9 promotes and facilitates multiple immunosuppressive pathways by, for example, expanding regulatory T cells, shifting
macrophages from the M1 to M2 phenotype, and inducing apoptosis of activated CD4+ and CD8+ T cells. High expression of
galectin-9 is evident in tumors and in cancer patients’ blood and correlates with poor survival outcomes and aggressive disease in
multiple solid tumor types. We are advancing LYT-200 to inhibit the multiple effects of galectin-9 and thereby potentially removing
a key immunosuppressive barrier that would enable the immune system to attack and destroy the tumor.
Galectin-9 is a ligand for PD-1 regulating T cell death and immune responses in PD-1/PDL-1 expressing tumors
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• A 2021 study published in Nature Communications proposed that the molecular mechanism by which PD-1 and galectin-9 interact to
shield tumors from the immune system demonstrates for the first time that galectin-9 is a ligand for PD-1 and emphasizes its
importance as a promising target for immunotherapy3. The work revealed that PD-1 physically interacts with galectin-9 and TIM-3 to
attenuate galectin-9/TIM-3-induced T cell apoptosis and maintain effector T cells in the tumor microenvironment in an exhausted
functional state. It also showed that interferons significantly upregulate galectin-9 expression and secretion in both immune and
cancer cells. Overall, the work provided further evidence that galectin-9 acts as a key regulator of the immune response to tumors and
supports its importance as a potential target for cancer treatment.
• Under normal physiological conditions, galectin-9 is expressed at low levels, which supports the potential safety of LYT-200 in clinical
settings. Lack of toxicity/tolerability issues to date in our good laboratory practice (GLP) studies with LYT-200 – even at extremely high
doses, such as 300 mg/kg in non-human primates (~100 mg/kg human equivalent dose) – further supports this view.
• We are not aware of any other clinical development program targeting galectin-9 as a therapeutic target, and thus, we believe that
LYT-200 may represent the most advanced clinical program against this target. None of the other human galectins have been
documented to play such a global role as galectin-9 in immunosuppression in the context of cancer. We also believe that LYT-200 has
the potential to be used as a single agent and safely in combination with checkpoint inhibitors and other chemotherapeutics,
depending on the cancer.
Program
Discovery
Process by the
PureTech Team
Patient Need &
Market Potential
• In order to identify approaches with the potential to provide significant therapeutic benefit to cancer patients, we undertook a global,
proactive search to identify therapeutic targets that mediate multiple mechanisms of immunosuppression. Through our extensive
network of advisors and collaborators, we identified a foundational immunosuppressive mechanism involving galectin-9, the
therapeutic target of LYT-200, which was the basis of certain intellectual property that we licensed from New York University prior to
publication in Nature Medicine5.
• In the U.S., there are approximately 62,210 new pancreatic cancer patients, of which 52% present with metastatic disease,
approximately 151,030 new CRC patients, of which 22% present with metastatic disease, and approximately 8,000 new CCA patients,
of which 50% present with metastatic disease, in each case, per year. Unfortunately, a large proportion of patients, especially those
with immunologically silent tumors such as PDAC, CCA and some types of CRC respond sub-optimally to immune checkpoint
inhibitors, representing a significant patient population that has yet to receive benefit from any immuno-therapy agents.
Milestones
Achieved &
Development
Status
• In November 2021, the FDA granted orphan drug designation to LYT-200 for the treatment of pancreatic cancer. The FDA grants
orphan drug designation to novel drug and biologic products for the treatment, diagnosis or prevention of conditions affecting fewer
than 200,000 persons in the U.S. Orphan drug designation qualifies PureTech for incentives under the Orphan Drug Act, including tax
credits for some clinical trials and eligibility for seven years of market exclusivity in the U.S. if the drug is approved, in addition to our
broad intellectual property coverage which can extend the exclusivity into 2038.
1 We have an active IND on file with the FDA for LYT-200. The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our
wholly-owned therapeutic candidates are safe and effective. No regulatory agency has made any such determination that LYT-200 is safe or effective for use by the general
public for any indication.
2 GlobalData Sales and Forecast Database (2021).
3 Yang, Riyao, et al. “Galectin-9 Interacts with PD-1 and TIM-3 to Regulate T Cell Death and Is a Target for Cancer Immunotherapy.” Nature Communications, 5 Feb. 2021,
www.nature.com/articles/s41467-021-21099-2 (preclinical data).
4 Limagne, E., Richard, C., Thibaudin, M., Fumet, J. D., Truntzer, C., Lagrange, A., Favier, L., Coudert, B., & Ghiringhelli, F. (2019). Tim-3/galectin-9 pathway and mMDSC
control primary and secondary resistances to PD-1 blockade in lung cancer patients. Oncoimmunology, 8(4), e1564505. https://doi.org/10.1080/2162402X.2018.1564505.
(preclinical data).
5 Daley, D., Mani, V., Mohan, N. et al. Dectin 1 activation on macrophages by galectin 9 promotes pancreatic carcinoma and peritumoral immune tolerance. Nat Med 23, 556 –
567 (2017). https://doi.org/10.1038/nm.4314.
PureTech Health plc Annual report and accounts 2021 41
Strategic report PureTech’s Wholly Owned Programs — continued
Milestones
Achieved &
Development
Status
(continued)
− In November 2021, we announced that a poster presentation describing the adaptive Phase 1/2 trial of LYT-200 for the potential
treatment of difficult-to-treat solid tumors was given at the Society for Immunotherapy of Cancer (SITC) 36th Annual Meeting.
− In July 2021, we announced a clinical trial and supply agreement with an affiliate of BeiGene, Ltd. to evaluate BeiGene’s tislelizumab,
an anti-PD-1 monoclonal antibody, in combination with LYT-200. Under the terms of the agreement, we will maintain control of the
LYT-200 program, including global R&D and commercial rights. BeiGene has agreed to supply tislelizumab for use in combination
with LYT-200 for the planned Phase 2 study cohorts.
− In 2021, we progressed our adaptive Phase 1/2 clinical trial to evaluate LYT-200 as a potential treatment for metastatic solid tumors.
The primary objective of the Phase 1 portion of the trial is to assess the safety and tolerability of escalating doses of LYT-200 in order
to identify a dose to carry forward into the Phase 2 portion of the trial. The Phase 1 trial will also assess LYT-200’s PK and PD profiles.
Pending these results, we intend to initiate the Phase 2 expansion cohort portion of the trial, which is designed to evaluate LYT-200
either alone and/or in combination with BeiGene’s tislelizumab or chemotherapy and anti-PD-1 therapy for the treatment of multiple
solid tumor types, including pancreatic cancer and CCA. For more information on our clinical trial, visit ClinicalTrials.gov.
• Preclinical results
− LYT-200 has been observed to have high specificity for its primary target galectin-9: This was established using a protein array that
assessed binding of LYT-200 to more than 5,000 cell bound and secreted human proteins.
− LYT-200 blocks the galectin-9-CD206 interaction: LYT-200 is able to block functional activity of galectin-9, including its interactions
with a specific binding partner/receptor, e.g., CD206. This was established using an ELISA assay demonstrating a galectin-9/CD206
interaction, which could be inhibited by the addition of LYT-200.
− LYT-200 protects MOLM-13 T cells from galectin-9-mediated apoptosis: LYT-200 has also been observed to protect T cells from
apoptosis mediated by galectin-9. For example, galectin-9 was shown to significantly increase apoptotic death of MOLM-13 cells.
Treatment with LYT-200 in the presence of galectin-9 significantly reduced the percentage of T cells undergoing apoptosis in a dose
dependent manner.
− LYT-200 exceeded anti-PD-1 activity in the B16F10 melanoma model, a gold standard for measuring checkpoint inhibitor efficacy: To
further characterize the potential of LYT-200 as a single agent, we created a mouse isotype of LYT-200 (mIgG1-200). mIgG1 200
(LYT-200 designed for mouse in vivo models) reduced mean tumor weights by approximately 50% while an anti-PD-1 antibody
reduced mean tumor weights by approximately 22%, which is what is typically seen in the model. We also observed that when an
anti-PD-1 antibody was used in combination with mIgG1-200, the number of tumor-infiltrating cytotoxic T cells detected in tumors
approximately doubled. These data demonstrate efficacy of mIgG1-200, both as a single agent and in combination with
a checkpoint inhibitor.
− LYT-200 inhibited tumor growth, induced T cell activation and
increased survival in the orthotopic pancreatic cancer KPC
model where anti-PD1 agents are ineffective: The orthotopic
KPC mouse model is commonly used as a preclinical model
for evaluating PDAC biology and therapeutic agent efficacy.
Anti-PD-1 checkpoint inhibitors have previously proven
ineffective in this syngeneic model. Single agent activity of
mIgG1-200 was observed in the KPC mouse pancreatic cancer
model as illustrated in the figure below. We have evaluated
the combination of mIgG1 200 with the standard of care for
pancreatic cancer, (e.g., chemotherapy: gemcitabine/
nab-paclitaxel). We observed a clear survival improvement
with mIgG1 200, both as a single agent and in combination
with clinical standard of care chemotherapy.
− LYT-200 activates T cells in cultured patient-derived organoid
tumors, or PDOTs: One of the major challenges in oncology
research is the translation from mouse models to humans,
particularly in the case of immuno-oncology. To address this
concern, we explored LYT-200 activity in cultured PDOTs that
mimic human tumor composition within the context of
a tumor microenvironment. The aim of treating PDOTs was to
assess the ability of LYT-200 to induce T cell activation, which
may predict how LYT-200 would behave in humans. LYT-200
potently and reproducibly activated T cells in 56% of the
samples tested (n=23).
Examples of in vitro T cell activation with LYT-2006
LYT-200 mouse mAb activity in orthotopic pancreatic cancer
KPC model
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(cid:82)(cid:4)(cid:33)(cid:4)(cid:21)(cid:20)(cid:19)(cid:69)(cid:86)(cid:81)(cid:4)(cid:4)(cid:4)(cid:4)(cid:4)(cid:4)(cid:4)(cid:4)(cid:52)(cid:4)(cid:32)(cid:4)(cid:20)(cid:18)(cid:20)(cid:21)
Colorectal cancer liver metastasis
Cholangiocarcinoma
Pancreatic adenocarcinoma
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(cid:22)(cid:20)
(cid:21)(cid:20)
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(cid:39)(cid:83)(cid:82)(cid:88)(cid:86)(cid:83)(cid:80)
(cid:48)(cid:61)(cid:56)(cid:17)(cid:22)(cid:20)(cid:20)
(cid:39)(cid:83)(cid:82)(cid:88)(cid:86)(cid:83)(cid:80)
(cid:48)(cid:61)(cid:56)(cid:17)(cid:22)(cid:20)(cid:20)
(cid:39)(cid:83)(cid:82)(cid:88)(cid:86)(cid:83)(cid:80)
(cid:48)(cid:61)(cid:56)(cid:17)(cid:22)(cid:20)(cid:20)
(cid:39)(cid:83)(cid:82)(cid:88)(cid:86)(cid:83)(cid:80)
(cid:48)(cid:61)(cid:56)(cid:17)(cid:22)(cid:20)(cid:20)
− GLP toxicology studies were carried out in Sprague Dawley rats and cynomolgus monkeys. No safety pharmacology findings that
were attributed to LYT-200 at doses as high as 300 mg/kg/week were observed with repeat dose exposure.
6 Analyzed n = 23 tumor samples; Success defined as: >20% upregulation of at last two out of three T cell activation markers; Success achieved in 56% of tumors with majority
showing >2 fold activation; Representative data from individual tumors per annotated tumor type are shown.
42 PureTech Health plc Annual report and accounts 2021
Strategic report
PureTech’s Wholly Owned Programs — continued
Expected
milestones
Intellectual
property
• LYT-200 is currently being evaluated as a single agent in the first stage of an adaptive Phase 1/2 clinical trial. Pending these results, we
intend to initiate the Phase 2 expansion cohort portion of the trial, which is designed to evaluate LYT-200 both as a single agent and in
combination with chemotherapy or BeiGene’s tislelizumab, an anti-PD-1 mAb. We expect to report topline results from the Phase 1
portion in the first half of 2022.
• We have broad intellectual property coverage for these antibody-based immunotherapy technologies, including exclusive rights to six
families of patent filings that are exclusively licensed from or co-owned with New York University which cover antibodies that target
galectin-9, including LYT-200, methods of using these antibodies and related immuno-oncology technologies. In addition, the
intellectual property portfolio includes three families of PureTech-owned patent applications covering the use of anti-galectin-9
antibodies in the diagnosis and treatment of solid tumors.
• As of December 31, 2021, there are nine families of intellectual property within this patent portfolio covering compositions of matter
for antibodies targeting galectin-9, including LYT-200, and methods of use for the treatment of solid tumors, such as pancreatic
cancer, CRC, melanoma, gastric cancer, breast cancer and various other cancers. This intellectual property comprises two issued U.S.
patents which are expected to expire in 2038, 10 pending U.S. patent applications, which if issued, are expected to expire 2037-2042
(exclusive of possible patent term adjustments or extensions or other exclusivities), four international PCT applications, twenty-four
pending foreign applications and five issued patents in foreign jurisdictions.
LYT-200 Program
Therapeutic
Candidate1
Indication
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
LYT-200
Anti-Galectin-9 mAb
Solid tumors
Phase completed
Phase in progress
PureTech Health plc Annual report and accounts 2021 43
Strategic report PureTech’s Wholly Owned Programs — continued
LYT-210
Therapeutic
Candidate1
PureTech Ownership
Indication
LYT-210
Wholly-owned
Solid tumors
Stage of Development
Preclinical
• LYT-210 is a preclinical therapeutic candidate designed to target immunomodulatory gamma delta-1 T cells, and is being developed for a range of cancer
indications.
Key Points of
Innovation &
Differentiation
• Immune checkpoint inhibitors, including therapies that target PD-1, PDL-1 and cytotoxic T-lymphocyte-associated antigen 4, or
CTLA-4, have been developed to counteract multiple mechanisms of immune evasion by a number of different tumor types. Recent
reports suggest that marketed drugs against these targets had sales exceeding $28 billion in 20202. Unfortunately, a large proportion
of patients, especially those with immunologically silent tumors such as PDAC, CCA and some types of CRC, respond sub-optimally
to such agents.
Monoclonal antibody aimed at immunosuppressive gamma delta-1 T cells
(cid:56)(cid:89)(cid:81)(cid:83)(cid:86)(cid:4)(cid:84)(cid:86)(cid:83)(cid:75)(cid:86)(cid:73)(cid:87)(cid:87)(cid:77)(cid:83)(cid:82)
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(cid:39)(cid:76)(cid:73)(cid:81)(cid:83)(cid:69)(cid:88)(cid:88)(cid:86)(cid:69)(cid:71)(cid:88)(cid:4)(cid:49)(cid:40)(cid:55)(cid:39)(cid:87)(cid:16)(cid:4)
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LYT-210 gamma delta-1 mAb
Image adapted from CellPress: REVIEW: gamma
delta T cells: Unexpected Regulators of Cancer
Development and Progression.
Key
DC = dendritic cell
TAM = tumor associated macrophage
MDSC = myeloid derived suppressor cell
IL17 = interleukin 17
αβ = alpha beta
γδ = gamma delta
γδ1 = gamma delta-1
γδ1 T17 = gamma delta interleukin 17
producing cells
γδ1 Treg = gamma delta-1 T regulatory cell
γδ2 = gamma delta-2
FoxP3 = forkhead box P3
SPM = small peritoneal macrophages
MSDC = myeloid derived suppressor cells
TGF-β = transforming growth factor beta
B = B cells
NK = natural killer cells
CD8+ = cluster of differentiation 8
CD4+ = cluster of differentiation 4
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(cid:69)(cid:71)(cid:88)(cid:77)(cid:83)(cid:82)
(cid:1116)(cid:1117)(cid:21) (cid:56)
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(cid:1116)(cid:1117)(cid:21)(cid:4)(cid:56)(cid:86)(cid:73)(cid:75)
(cid:52)(cid:73)(cid:86)(cid:77)(cid:84)(cid:76)(cid:73)(cid:86)(cid:69)(cid:80)(cid:4)(cid:76)(cid:83)(cid:81)(cid:77)(cid:82)(cid:75)(cid:4)
(cid:69)(cid:82)(cid:72)(cid:4)(cid:69)(cid:71)(cid:88)(cid:77)(cid:90)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)
(cid:44)(cid:73)(cid:80)(cid:84)(cid:4)(cid:69)(cid:82)(cid:88)(cid:77)(cid:70)(cid:83)(cid:72)(cid:93)(cid:4)
(cid:84)(cid:86)(cid:83)(cid:72)(cid:89)(cid:71)(cid:88)(cid:77)(cid:83)(cid:82)
(cid:1116)(cid:1117) (cid:22)
(cid:55)(cid:52)(cid:49)
(cid:49)(cid:55)(cid:40)(cid:39) (cid:50)(cid:73)(cid:89)(cid:88)(cid:86)(cid:83)(cid:84)(cid:76)(cid:77)(cid:80)
(cid:45)(cid:48)(cid:17)(cid:21)(cid:27)(cid:37)
(cid:1114)(cid:1115) (cid:56)
(cid:40)(cid:39)
(cid:56)(cid:43)(cid:42)(cid:17)(cid:1028)
(cid:40)(cid:73)(cid:90)(cid:73)(cid:80)(cid:83)(cid:84)(cid:73)(cid:72)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:89)(cid:87)(cid:73)(cid:72)(cid:4)
(cid:74)(cid:83)(cid:86)(cid:4)(cid:69)(cid:72)(cid:83)(cid:84)(cid:88)(cid:77)(cid:90)(cid:73)(cid:4)(cid:56)(cid:4)(cid:71)(cid:73)(cid:80)(cid:80)(cid:4)
(cid:88)(cid:86)(cid:69)(cid:82)(cid:87)(cid:74)(cid:73)(cid:86)(cid:4)(cid:77)(cid:82)(cid:4)(cid:71)(cid:69)(cid:82)(cid:71)(cid:73)(cid:86)(cid:4)(cid:84)(cid:69)(cid:88)(cid:77)(cid:73)(cid:82)(cid:88)(cid:87)
(cid:37)(cid:40)(cid:39)(cid:39)(cid:16)(cid:4)
(cid:71)(cid:93)(cid:88)(cid:83)(cid:88)(cid:83)(cid:92)(cid:77)(cid:71)(cid:77)(cid:88)(cid:93)(cid:4)
(cid:37)(cid:82)(cid:75)(cid:77)(cid:83)(cid:17)
(cid:75)(cid:73)(cid:82)(cid:73)(cid:87)(cid:77)(cid:87)
(cid:43)(cid:86)(cid:83)(cid:91)(cid:88)(cid:76)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
(cid:84)(cid:86)(cid:83)(cid:80)(cid:77)(cid:74)(cid:73)(cid:86)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)
(cid:49)(cid:73)(cid:88)(cid:69)(cid:87)(cid:88)(cid:69)(cid:87)(cid:77)(cid:87)
(cid:37)(cid:82)(cid:75)(cid:77)(cid:83)(cid:17)
(cid:75)(cid:73)(cid:82)(cid:73)(cid:87)(cid:77)(cid:87)
(cid:45)(cid:81)(cid:81)(cid:89)(cid:82)(cid:73)(cid:4)
(cid:73)(cid:87)(cid:71)(cid:69)(cid:84)(cid:73)
(cid:45)(cid:81)(cid:81)(cid:89)(cid:82)(cid:73)(cid:4)
(cid:73)(cid:87)(cid:71)(cid:69)(cid:84)(cid:73)
(cid:1116)(cid:1117)(cid:21)
(cid:41)(cid:84)(cid:77)(cid:72)(cid:73)(cid:86)(cid:81)(cid:77)(cid:87)
(cid:1116)(cid:1117)(cid:21)
(cid:48)(cid:77)(cid:90)(cid:73)(cid:86)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
(cid:87)(cid:84)(cid:80)(cid:73)(cid:73)(cid:82)
(cid:1116)(cid:1117)(cid:21)
(cid:40)(cid:39)
(cid:1114)(cid:1115) (cid:56)
(cid:38)
(cid:50)(cid:47)
(cid:57)(cid:88)(cid:73)(cid:86)(cid:77)(cid:82)(cid:73)(cid:16)(cid:4)
(cid:90)(cid:69)(cid:75)(cid:77)(cid:82)(cid:69)(cid:80)(cid:16)(cid:4)
(cid:88)(cid:83)(cid:82)(cid:75)(cid:89)(cid:73)(cid:4)
(cid:69)(cid:82)(cid:72)(cid:4)(cid:80)(cid:89)(cid:82)(cid:75)(cid:4)
(cid:73)(cid:84)(cid:77)(cid:88)(cid:76)(cid:73)(cid:80)(cid:77)(cid:69)
• Gamma delta-1 T cells execute potent immunosuppressive function via multiple mechanisms, as illustrated on the left side of
the figure above (LYT-210 gamma delta-1 mAb), which facilitates cancer progression. We have designed LYT-210 to eliminate gamma
delta-1 T cells, and thereby potentially relieve immunosuppression, which we believe could enable immune mediated cancer attack.
• We believe that gamma delta-1 T cells represent an important new IO target because they:
− Activate multiple immunosuppressive pathways in the tumor microenvironment, or TME;
− Have expression correlated with poor outcomes for multiple solid tumor types; and
− Target immunosuppressive gamma delta T cells in vivo, which improved survival and reactivated cytotoxic T cells in the TME in the
KPC orthotopic pancreatic cancer mouse model where approved checkpoint inhibitors are ineffective.
• We are targeting immunosuppressive, tumorigenic gamma delta-1 T cells for depletion, rather than administering cytotoxic gamma
delta-2 T cells as a cell therapy, which is a complementary gamma delta T cell modality.
Program
Discovery
Process by the
PureTech Team
• In order to identify approaches with the potential to provide significant therapeutic benefit to cancer patients, we undertook a global,
proactive search to discover important new scientific insights and technologies that could address the challenge of multiple
mechanisms of immunosuppression in current therapeutics. As a result of this search, and through our extensive network of advisors
and collaborators, we identified a foundational immunosuppressive mechanism involving immunosuppressive gamma delta-1 T cells,
which was the basis of LYT-210.
1 The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our wholly-owned therapeutic candidates are safe and
effective. No regulatory agency has made any such determination that LYT-210 is safe or effective for use by the general public for any indication.
2 GlobalData Sales and Forecast Database, 2020 sales data pulled 1/24/2022.
44 PureTech Health plc Annual report and accounts 2021
Strategic report
PureTech’s Wholly Owned Programs — continued
Patient Need &
Market Potential
• In the U.S., there are approximately 62,210 new pancreatic cancer patients, of which 52% present with metastatic disease,
approximately 151,030 new CRC patients, of which 22% present with metastatic disease, and approximately 8,000 new CCA patients,
of which 50% present with metastatic disease, in each case, per year. Unfortunately, a large proportion of patients, especially those
with immunologically silent tumors such as PDAC, CCA and some types of CRC respond sub-optimally to immune checkpoint
inhibitors, representing a significant patient population that has yet to receive benefit from any immuno-therapy agents.
Milestones
Achieved &
Development
Status
• In April 2021, we presented new research at the American Association for Cancer Research (AACR) Annual Meeting demonstrating
that LYT-210 is both highly specific and highly potent, rapidly inducing cell death of immunomodulatory gamma delta-1 T cells, while
sparing other T cells, such as cytotoxic gamma delta T cells, that play important roles in a healthy immune response. The research was
conducted using both patient blood and cancer tissue.
• Antibodies against gamma delta-1 T cells reactivated immunosuppressed T cells in the TME in PDOTs: To better assess the potential
activity of the anti-delta-1 antibody, we employed PDOTs from primary and metastatic tumors spanning various solid tumor types
such as pancreatic, CRC, CCA, hepatocellular cancer and neuroendocrine tumors of the gastrointestinal (GI) tract in order to assess
the prevalence of tumor-infiltrating gamma delta-1 T cells and the capacity of the antibodies to restore tumor-infiltrating immune cell
effector activity. We observed positive responses in approximately 60% of the PDOTs we analyzed, representing 19 patients, which
showed that direct treatment of PDOTs with LYT-210 resulted in robust reactivation of effector T cells.
• The figure below illustrates representative data from CRC patients, from a collection of 19 human tumor organoid samples where we
ran this experiment.
Examples of in vitro T cell activation with antibodies against gamma delta-1 T cells
Colorectal
cancer
Colorectal cancer
liver metastasis
(cid:12)
(cid:1027)
(cid:12)
(cid:42)
(cid:1027)
(cid:50)
(cid:42)
(cid:50)
(cid:56)
(cid:56)
(cid:9)
(cid:9)
(cid:4)
(cid:4)
(cid:12)
(cid:1027)
(cid:12)
(cid:42)
(cid:1027)
(cid:50)
(cid:42)
(cid:50)
(cid:56)
(cid:56)
(cid:9)
(cid:9)
(cid:4)
(cid:4)
(cid:13)
(cid:87)
(cid:80)
(cid:13)
(cid:80)
(cid:87)
(cid:73)
(cid:80)
(cid:80)
(cid:71)
(cid:73)
(cid:4)
(cid:56)
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(cid:4)
(cid:4)
(cid:56)
(cid:15)
(cid:4)
(cid:28)
(cid:15)
(cid:40)
(cid:28)
(cid:39)
(cid:40)
(cid:39)
(cid:12)
(cid:12)
(cid:13)
(cid:87)
(cid:80)
(cid:13)
(cid:80)
(cid:87)
(cid:73)
(cid:80)
(cid:80)
(cid:71)
(cid:73)
(cid:4)
(cid:56)
(cid:71)
(cid:4)
(cid:4)
(cid:56)
(cid:15)
(cid:4)
(cid:28)
(cid:15)
(cid:40)
(cid:28)
(cid:39)
(cid:40)
(cid:39)
(cid:12)
(cid:12)
(cid:21)(cid:25)
(cid:21)(cid:25)
(cid:27)(cid:18)(cid:25)
(cid:27)(cid:18)(cid:25)
(cid:20)
(cid:20)
(cid:22)(cid:25)
(cid:22)(cid:25)
(cid:21)(cid:22)(cid:18)(cid:25)
(cid:21)(cid:22)(cid:18)(cid:25)
(cid:20)
(cid:20)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
(cid:37)(cid:82)(cid:88)(cid:77)(cid:17)(cid:52)(cid:40)(cid:21)
(cid:37)(cid:82)(cid:88)(cid:77)(cid:17)(cid:52)(cid:40)(cid:21)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
(cid:12)
(cid:1029)
(cid:12)
(cid:50)
(cid:1029)
(cid:50)
(cid:42)
(cid:42)
(cid:9)
(cid:9)
(cid:45)
(cid:4)
(cid:45)
(cid:4)
(cid:12)
(cid:1029)
(cid:12)
(cid:50)
(cid:1029)
(cid:50)
(cid:42)
(cid:42)
(cid:9)
(cid:9)
(cid:45)
(cid:4)
(cid:45)
(cid:4)
(cid:13)
(cid:87)
(cid:80)
(cid:13)
(cid:80)
(cid:87)
(cid:73)
(cid:80)
(cid:80)
(cid:71)
(cid:73)
(cid:4)
(cid:56)
(cid:71)
(cid:4)
(cid:4)
(cid:56)
(cid:15)
(cid:4)
(cid:28)
(cid:15)
(cid:40)
(cid:28)
(cid:39)
(cid:40)
(cid:39)
(cid:12)
(cid:12)
(cid:13)
(cid:87)
(cid:80)
(cid:13)
(cid:80)
(cid:87)
(cid:73)
(cid:80)
(cid:80)
(cid:71)
(cid:73)
(cid:4)
(cid:56)
(cid:71)
(cid:4)
(cid:4)
(cid:56)
(cid:15)
(cid:4)
(cid:28)
(cid:15)
(cid:40)
(cid:28)
(cid:39)
(cid:40)
(cid:39)
(cid:12)
(cid:12)
(cid:21)(cid:25)
(cid:21)(cid:25)
(cid:27)(cid:18)(cid:25)
(cid:27)(cid:18)(cid:25)
(cid:20)
(cid:20)
(cid:23)(cid:20)
(cid:23)(cid:20)
(cid:21)(cid:25)
(cid:21)(cid:25)
(cid:20)
(cid:20)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:45)(cid:87)(cid:83)(cid:88)(cid:93)(cid:84)(cid:73)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
(cid:37)(cid:82)(cid:88)(cid:77)(cid:17)(cid:52)(cid:40)(cid:21)
(cid:37)(cid:82)(cid:88)(cid:77)(cid:17)(cid:52)(cid:40)(cid:21)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
(cid:40)(cid:73)(cid:80)(cid:88)(cid:69)(cid:21)(cid:4)(cid:45)(cid:75)(cid:43)(cid:21)
• Absence of gamma delta T cells greatly increased survival
in a pancreatic cancer mouse model: In order to assess the
relevance of gamma delta T cells in the development and
progression of pancreatic cancer, we assessed the survival
of immunocompetent mice which have gamma delta T cells
(wild type) in a KPC mouse pancreatic model. Mice were
treated with an antibody, UC3-10A6, which functionally blocks
immunosuppressive mouse gamma delta T cells. As shown in
the figure below, when mice harboring pancreatic tumors are
treated with an antibody against immunosuppressive gamma
delta T cells, survival was greatly increased, as represented by
the navy curve.
• Mucosa-infiltrating pathogenic gamma delta-1 T cells
may contribute to autoimmune diseases: Intraepithelial
lymphocytes expressing gamma delta-1 T cells are tissue-
resident T cells that play a key role in homeostasis of the
intestinal epithelium. It has been recently observed that
chronic inflammation can permanently reconfigure the tissue-
resident T cell compartment resulting in the repopulation of
the GI mucosa with pathogenic and cytotoxic gamma delta-1
T cells. Establishment of pathogenic gamma delta-1 T cells
along the GI tract tilts the gut environment towards a chronic
inflammatory state, contributing to the pathophysiology of
GI tract and inflammatory diseases, such as refractory
celiac disease.
Pancreatic cancer mouse survival with gamma delta T cell
depletion and blockage
(cid:80)
(cid:69)
(cid:90)
(cid:77)
(cid:90)
(cid:86)
(cid:89)
(cid:87)
(cid:4)
(cid:73)
(cid:90)
(cid:77)
(cid:88)
(cid:69)
(cid:80)
(cid:89)
(cid:81)
(cid:89)
(cid:39)
(cid:21)(cid:18)(cid:20)
(cid:20)(cid:18)(cid:28)
(cid:20)(cid:18)(cid:26)
(cid:20)(cid:18)(cid:24)
(cid:20)(cid:18)(cid:22)
(cid:20)(cid:18)(cid:20)
(cid:24)
(cid:25)
(cid:39)(cid:83)(cid:82)(cid:88)(cid:86)(cid:83)(cid:80)
(cid:57)(cid:39)(cid:23)(cid:17)(cid:21)(cid:20)(cid:37)(cid:70)(cid:4)(cid:81)(cid:37)(cid:70)(cid:23)
(cid:26)
(cid:59)(cid:73)(cid:73)(cid:79)(cid:87)
(cid:27)
(cid:28)
(cid:82)(cid:4)(cid:33)(cid:4)(cid:21)(cid:20)(cid:19)(cid:69)(cid:86)(cid:81)
(cid:52)(cid:4)(cid:33)(cid:4)(cid:20)(cid:18)(cid:20)(cid:20)(cid:29)
Expected
Milestones
Intellectual
property
• We expect to complete additional biomarker studies for LYT-210 in 2022.
• We have broad intellectual property coverage for these antibody-based immunotherapy technologies, including exclusive rights to
two patent families that are exclusively licensed from or co-owned with New York University which cover antibodies that target
immunosuppressive agents and mechanisms and methods of use for use related immuno-oncology technologies and antibodies
directed to pro-inflammatory gamma delta T cells for use in the treatment of inflammatory conditions, such as autoimmune disorders.
• As of December 31, 2021, there are two families covering compositions of matter and methods of use for antibodies targeting gamma
delta-1 T cells, including LYT-210, which are directed to the use of these antibodies for the treatment of cancer. This intellectual
property in total comprises one granted U.S. patent, two pending U.S. patent applications and eight foreign patent applications.
Any patents issuing from pending applications with respect to LYT-210 are expected to expire in between 2037 and 2041, of which
expiration dates are exclusive of possible patent term adjustments or extensions or other periods of exclusivity.
LYT-210 Program
Therapeutic
Candidate1
LYT-210
Anti-Delta-1 mAb
Indication
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
Solid tumors
Phase completed
Phase in progress
3 Tool antibody that blocks mouse immunosuppressive gamma delta T cells.
PureTech Health plc Annual report and accounts 2021 45
Strategic report PureTech’s Wholly Owned Programs — continued
LYT-300
Therapeutic
Candidate1
PureTech Ownership
Indication
Stage of Development
LYT-300
Wholly-owned
Neurological and neuropsychological conditions
Phase 1
• Using our Glyph platform, which harnesses the natural trafficking of dietary lipids via the lymphatics, we have developed LYT-300, an oral lipid prodrug
version of allopregnanolone. By trafficking LYT-300 via the lymphatics, we are able to overcome first-pass metabolism by the liver and achieve significant
oral bioavailability of natural allopregnanolone in preclinical models. In 2021, we initiated a Phase 1 clinical study of LYT-300 in healthy volunteers as part
of our ongoing strategy for developing this agent as a potential treatment for neurological and neuropsychological conditions with significant unmet
need, such as depression, anxiety, sleep disorders, fragile X tremor-associated syndrome, essential tremor and epileptic disorders, among others.
Key Points of
Innovation &
Differentiation
• Allopregnanolone, a positive allosteric modulator of GABAA receptors, has therapeutic potential across a wide range of
neurological conditions like depression, epilepsy and other neurological and neuropsychological conditions, but has poor oral
bioavailability as a result of first-pass liver metabolism.
• An intravenous formulation of allopregnanolone is approved by the FDA as a 60-hour infusion for the treatment of post-partum
depression, though the method of administration has limitations.
Program
Discovery
Process by the
PureTech Team
Patient Need &
Market Potential
• To overcome the poor oral bioavailability of allopregnanolone, medicinal chemistry approaches have been applied to synthesize
orally bioavailable analogs. Several of these modified allopregnanolone analogs have demonstrated varying degrees of clinical
activity across different indications. The variable clinical activity of these compounds may be due to the possibility that chemical
modifications are interfering with optimal GABAA receptor engagement and consequently their on-target mode of action. Hence,
these chemically distinct analogs of allopregnanolone may not have the same pharmacologic effects as the natural unmodified
allopregnanolone.
• Using our proprietary Glyph technology, which is designed for lymphatic targeting and to avoid first-pass metabolism, we have
developed LYT-300, an oral prodrug of the endogenous, natural neurosteroid, allopregnanolone.
• Results from preclinical studies conducted thus far have demonstrated that LYT-300 is orally bioavailable and that relevant
concentrations may be achievable in human plasma. One example of the data we have generated in non-human primates is shown
below.
• LYT-300 is the most advanced therapeutic candidate developed from our synthetic lymphatic-targeting chemistry platform
called Glyph, which employs the body’s natural lipid absorption and transport process to orally administer drugs via the lymphatic
system.
• Allopregnanolone and related endogenous neurosteroids have been recognized for their potential to treat a range of neurological
and neuropsychological conditions including depression, anxiety, sleep disorders, fragile X tremor-associated syndrome, essential
tremor and epileptic disorders, among others. The major hurdles associated with the translation of these compounds have been:
− The inability to create oral formulations of these neurosteroids; and
− The inability to chronically administer compounds to patients
• An injectable formulation of allopregnanolone, which was approved by the FDA as a 60-hour infusion to treat postpartum depression,
speaks to the challenges that limit the scope of clinical translation with this class of compounds.
• Oral formulations of allopregnanolone and other neurosteroids could potentially have significant advantages for the potential
treatment of a range of neurological and neuropsychological conditions.
LYT-300: Oral Allopregnanolone for Neurological and Neuropsychological Conditions
The graph below depicts the dose-normalized plasma levels of free allopregnanolone after a single oral drug administration
(equivalent to 2.8 mg/kg allopregnanolone) to non-human primates that were fed a standardized diet prior to dosing:
LYT-300 Development
Rationale
• Designed to avoid
first-pass metabolism
by trafficking via the
lymphatic system
• Oral bioavailability
observed in canine
and non-human primate
PK studies
• Results from Phase 1
clinical study expected
in 2H 2022
Brexanalone for IV injection
marketed as Zulresso®2
Allopregnanolone
(cid:34)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)
(cid:21)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)
(cid:21)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3) (cid:21)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)
(cid:21)(cid:34)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)
(cid:21)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)
LYT-300 Systemic Exposure
Non-Human Primate
(cid:51)(cid:86)(cid:69)(cid:80)(cid:4)(cid:69)(cid:72)(cid:81)(cid:77)(cid:82)(cid:77)(cid:87)(cid:88)(cid:86)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)
(cid:50)(cid:37)(cid:56)(cid:57)(cid:54)(cid:37)(cid:48)(cid:4)(cid:37)(cid:48)(cid:48)(cid:51)(cid:4)(cid:12)(cid:82)(cid:33)(cid:26)(cid:13)
(cid:48)(cid:61)(cid:56)(cid:17)(cid:23)(cid:20)(cid:20)(cid:4)(cid:12)(cid:82)(cid:33)(cid:25)(cid:13)
Required
60-hr IV
infusion limits
usage
(cid:80)
(cid:69)
(cid:81)
(cid:87)
(cid:69)
(cid:84)
(cid:72)
(cid:73)
(cid:94)
(cid:77)
(cid:80)
(cid:4)
(cid:69)
(cid:81)
(cid:86)
(cid:83)
(cid:82)
(cid:73)
(cid:87)
(cid:83)
(cid:40)
(cid:4)
(cid:13)
(cid:48)
(cid:19)
(cid:80)
(cid:83)
(cid:81)
(cid:82)
(cid:12)
(cid:4)
(cid:51)
(cid:48)
(cid:48)
(cid:37)
(cid:73)
(cid:73)
(cid:86)
(cid:74)
(cid:4)
(cid:74)
(cid:4)
(cid:4)
(cid:83)
(cid:82)
(cid:83)
(cid:77)
(cid:88)
(cid:69)
(cid:86)
(cid:88)
(cid:82)
(cid:73)
(cid:71)
(cid:82)
(cid:83)
(cid:71)
(cid:21)(cid:25)(cid:20)
(cid:21)(cid:22)(cid:25)
(cid:21)(cid:20)(cid:20)
(cid:27)(cid:25)
(cid:25)(cid:20)
(cid:22)(cid:25)
(cid:20)
(cid:20)
(cid:21)(cid:20)
(cid:56)(cid:77)(cid:81)(cid:73)(cid:4)(cid:12)(cid:76)(cid:13)
(cid:22)(cid:20)
Oral administration
1 The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our wholly-owned therapeutic candidates are safe and
effective. No regulatory agency has made any such determination that LYT-300 is safe or effective for use by the general public for any indication.
2 Zulresso® is a trademark of Sage Therapeutics and is not owned by or affiliated with PureTech Health. LYT-300 is an investigational drug not approved by any
regulatory authority.
46 PureTech Health plc Annual report and accounts 2021
Strategic report
PureTech’s Wholly Owned Programs — continued
Milestones
Achieved &
Development
Status
Expected
Milestones
Intellectual
Property
• In December 2021, we initiated a Phase 1 clinical study of LYT-300 in healthy volunteers as part of our ongoing strategy to develop this
agent as potential treatment for neurological and neuropsychological conditions, including depression, anxiety, sleep disorders,
fragile X tremor-associated syndrome, essential tremor and epileptic disorders, among others. The Phase 1 study of LYT-300 involves
multiple parts, including the evaluation of a single ascending dose, multiple ascending doses and the effect of food on oral
absorption of the prodrug. Safety, tolerability and PK will be assessed. Given the GABAA receptor modulating activity of
allopregnanolone, the study will also explore the impact of LYT-300 on beta-EEG, a marker of GABAA target engagement, thus
potentially providing early insights into the mechanistic effects of LYT-300.
• In December 2021, we presented preclinical proof-of-concept data at the 60th American College of Neuropsychopharmacology
(ACNP) Annual Meeting that support the clinical advancement of LYT-300 for the potential treatment of neurological and
neuropsychological conditions. The data presented at ACNP showed that systemic exposure of natural allopregnanolone was
achieved after oral administration of LYT-300 in multiple preclinical models of increasing complexity. In contrast, systemic levels of
allopregnanolone were not observed following oral administration of natural unmodified allopregnanolone. These results
demonstrate the potential of the Glyph technology platform to enhance the systemic absorption of natural bioactive molecules and
other small molecules with poor oral bioavailability.
• Oral bioavailability of LYT-300 has been confirmed in small and large animal PK studies. Results support the potential utility of this
prodrug approach for oral administration of natural allopregnanolone and other small molecule therapeutics with intrinsic liabilities
related to hepatic first-pass metabolism.
• Results from the Phase 1 clinical study of LYT-300 are expected in the second half of 2022 and will be used to inform the design
of possible future studies evaluating LYT-300 in indications that could include depression, anxiety, sleep disorders, fragile X
tremor-associated syndrome, essential tremor and epileptic disorders, among others.
• Within the extensive Glyph intellectual property portfolio, which covers a wide range of novel linker chemistries, LYT-300 is specifically
covered by four patent families comprising one international PCT application, seven foreign patent applications, and six U.S. patent
applications as of December 31, 2021, two of which families are co-owned with Monash University and two of which are PureTech
owned. Any patents to issue from these patent applications are expected to expire in 2039 or 2042, exclusive of possible patent term
adjustments or extensions or other forms of exclusivity.
LYT-300 Program
Therapeutic
Candidate1
Indication
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
LYT-300
Oral Allopregnanolone
Neurological and
neuropsychological conditions
Phase completed
Phase in progress
PureTech Health plc Annual report and accounts 2021 47
Strategic report PureTech’s Wholly Owned Programs — continued
LYT-510, LYT-500
Therapeutic
Candidate1
LYT-510
LYT-500
PureTech Ownership
Indication
Stage of Development
Wholly-owned
Wholly-owned
Inflammatory bowel disease and chronic pouchitis
Inflammatory bowel disease
Preclinical
Preclinical
• LYT-510 is our lead candidate generated from our Alivio™ technology platform and is an oral inflammation-targeting formulation of tacrolimus, a potent
immunosuppressant drug, in development to treat inflammatory bowel disease (IBD) and chronic pouchitis. While tacrolimus is FDA-approved for certain
indications, it has been evaluated in several clinical studies as a potential treatment for IBD, where it has demonstrated strong efficacy with high response
and remission rates. However, despite the compelling efficacy, IBD patients are at risk for significant side effects due to systemic exposure, which has
prevented tacrolimus’ advancement for these indications. We believe that our oral formulation that targets tacrolimus to inflamed tissue, with minimal
systemic exposure to healthy tissues, can overcome these limitations to potentially provide a safe and effective oral treatment for IBD patients. More
broadly, this approach offers a path to unlocking the full therapeutic potential of multiple immunosuppressant and anti-inflammatory drugs that have well
established clinical efficacy in a way that matches the chronic, variable expression of autoimmune diseases.
• LYT-500 is an oral combination therapy in development for IBD. Using our Alivio technology platform, we have combined two active agents into a single
therapeutic candidate designed to enhance the local treatment and healing of inflamed tissues, while minimizing systemic exposure of these agents.
Inflammation-Targeting Immunomodulation Platform
(cid:39)(cid:83)(cid:82)(cid:90)(cid:73)(cid:82)(cid:88)(cid:77)(cid:83)(cid:82)(cid:69)(cid:80)(cid:4)(cid:56)(cid:86)(cid:73)(cid:69)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)
(cid:55)(cid:93)(cid:87)(cid:88)(cid:73)(cid:81)(cid:77)(cid:71)(cid:4)(cid:72)(cid:86)(cid:89)(cid:75)(cid:4)(cid:73)(cid:92)(cid:84)(cid:83)(cid:87)(cid:89)(cid:86)(cid:73)(cid:4)
(cid:69)(cid:82)(cid:72)(cid:4)(cid:87)(cid:77)(cid:72)(cid:73)(cid:4)(cid:73)(cid:74)(cid:74)(cid:73)(cid:71)(cid:88)(cid:87)
(cid:45)(cid:82)(cid:88)(cid:73)(cid:87)(cid:88)(cid:77)(cid:82)(cid:69)(cid:80)(cid:4)(cid:48)(cid:89)(cid:81)(cid:73)(cid:82)
(cid:44)(cid:73)(cid:69)(cid:80)(cid:88)(cid:76)(cid:93)
(cid:45)(cid:82)(cid:88)(cid:73)(cid:87)(cid:88)(cid:77)(cid:82)(cid:69)(cid:80)(cid:4)
(cid:56)(cid:77)(cid:87)(cid:87)(cid:89)(cid:73)
(cid:45)(cid:82)(cid:74)(cid:80)(cid:69)(cid:81)(cid:73)(cid:72)
(cid:45)(cid:82)(cid:88)(cid:73)(cid:87)(cid:88)(cid:77)(cid:82)(cid:69)(cid:80)(cid:4)(cid:56)(cid:77)(cid:87)(cid:87)(cid:89)(cid:73)
(cid:37)(cid:80)(cid:77)(cid:90)(cid:77)(cid:83)(cid:4)(cid:56)(cid:86)(cid:73)(cid:69)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)
(cid:48)(cid:83)(cid:71)(cid:69)(cid:80)(cid:4)(cid:72)(cid:77)(cid:87)(cid:73)(cid:69)(cid:87)(cid:73)(cid:17)(cid:87)(cid:84)(cid:73)(cid:71)(cid:77)(cid:378)(cid:71)(cid:4)(cid:88)(cid:86)(cid:73)(cid:69)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)(cid:4)
(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:81)(cid:77)(cid:82)(cid:77)(cid:81)(cid:69)(cid:80)(cid:4)(cid:87)(cid:93)(cid:87)(cid:88)(cid:73)(cid:81)(cid:77)(cid:71)(cid:4)(cid:69)(cid:71)(cid:88)(cid:77)(cid:90)(cid:77)(cid:88)(cid:93)
(cid:39)(cid:83)(cid:82)(cid:90)(cid:73)(cid:82)(cid:88)(cid:77)(cid:83)(cid:82)(cid:69)(cid:80)(cid:4)(cid:72)(cid:86)(cid:89)(cid:75)(cid:4)(cid:74)(cid:83)(cid:86)(cid:81)(cid:89)(cid:80)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)(cid:4)(cid:80)(cid:73)(cid:69)(cid:72)(cid:4)(cid:88)(cid:83)(cid:4)(cid:76)(cid:77)(cid:75)(cid:76)(cid:4)
(cid:72)(cid:86)(cid:89)(cid:75)(cid:4)(cid:73)(cid:92)(cid:84)(cid:83)(cid:87)(cid:89)(cid:86)(cid:73)(cid:4)(cid:77)(cid:82)(cid:4)(cid:82)(cid:83)(cid:82)(cid:17)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)(cid:88)(cid:77)(cid:87)(cid:87)(cid:89)(cid:73)(cid:87)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
(cid:89)(cid:80)(cid:88)(cid:77)(cid:81)(cid:69)(cid:88)(cid:73)(cid:80)(cid:93)(cid:4)(cid:88)(cid:76)(cid:86)(cid:83)(cid:89)(cid:75)(cid:76)(cid:83)(cid:89)(cid:88)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:70)(cid:83)(cid:72)(cid:93)
(cid:40)(cid:86)(cid:89)(cid:75)(cid:17)(cid:80)(cid:83)(cid:69)(cid:72)(cid:73)(cid:72)(cid:4)(cid:69)(cid:87)(cid:71)(cid:83)(cid:86)(cid:70)(cid:93)(cid:80)(cid:4)(cid:84)(cid:69)(cid:80)(cid:81)(cid:77)(cid:88)(cid:69)(cid:88)(cid:73)(cid:4)(cid:12)(cid:37)(cid:52)(cid:13)(cid:4)(cid:81)(cid:77)(cid:71)(cid:86)(cid:83)(cid:84)(cid:69)(cid:86)(cid:88)(cid:77)(cid:71)(cid:80)(cid:73)(cid:87)(cid:4)
(cid:77)(cid:82)(cid:71)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:4)(cid:72)(cid:86)(cid:89)(cid:75)(cid:4)(cid:73)(cid:92)(cid:84)(cid:83)(cid:87)(cid:89)(cid:86)(cid:73)(cid:4)(cid:88)(cid:83)(cid:4)(cid:72)(cid:77)(cid:87)(cid:73)(cid:69)(cid:87)(cid:73)(cid:72)(cid:4)(cid:88)(cid:77)(cid:87)(cid:87)(cid:89)(cid:73)(cid:4)(cid:91)(cid:76)(cid:77)(cid:80)(cid:73)(cid:4)
(cid:81)(cid:77)(cid:82)(cid:77)(cid:81)(cid:77)(cid:94)(cid:77)(cid:82)(cid:75)(cid:4)(cid:73)(cid:92)(cid:84)(cid:83)(cid:87)(cid:89)(cid:86)(cid:73)(cid:4)(cid:88)(cid:83)(cid:4)(cid:82)(cid:83)(cid:82)(cid:17)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)(cid:88)(cid:77)(cid:87)(cid:87)(cid:89)(cid:73)(cid:87)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
(cid:88)(cid:76)(cid:86)(cid:83)(cid:89)(cid:75)(cid:76)(cid:83)(cid:89)(cid:88)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:70)(cid:83)(cid:72)(cid:93)
Key Points of
Innovation &
Differentiation
• Using our Alivio technology platform, a biologic agent and/or small molecule drug can be administered in an oral dosage form that
offers the potential to selectively act at the inflamed tissues locally to maximize efficacy, while minimizing toxicity by reducing
systemic exposure of the drugs.
• LYT-510 is an oral inflammation-targeting formulation of tacrolimus in development to treat IBD and chronic pouchitis. Tacrolimus is
a potent immunosuppressant drug that is FDA approved for prophylaxis of organ rejection in patients receiving allogeneic kidney,
liver or heart transplants and topically for the treatment of atopic dermatitis. Clinical studies have demonstrated that tacrolimus can
be an effective agent to induce remission in IBD patients following a short-term treatment regimen. However, the current tacrolimus
products have found limited use because of a narrow therapeutic window, which has the potential to cause various systemic side
effects including hypertension, paresthesia, neuropathy, renal impairment, and opportunistic infections. We believe that LYT-510 can
overcome these clinical challenges by targeting tacrolimus to inflamed intestinal tissue and minimizing systemic exposure. With this
enhanced PK profile, we believe that LYT-510 has the potential to be the first tacrolimus treatment approved for IBD in the U.S.
• LYT-500 is an oral therapeutic candidate in development for the potential treatment of mucosal barrier damage in people with IBD.
It contains a unique combination of IL-22 and an immunosuppressant drug, which is designed to address the two key underlying
causes of IBD pathogenesis and progression, namely mucosal barrier disruption and inflammation. Unlike many therapies in
development for IBD, LYT-500 is designed with a dual mechanism of action to provide both mucosal repair and targeted resolution
of tissue inflammation, which are critical for optimal disease management.
• A key challenge faced in developing new drugs for the treatment of autoimmune and inflammatory disease is that attractive drug
targets are frequently expressed in both diseased and normal tissue. Consequently, we are interested in identifying ways to address
autoimmune disease in a more targeted manner. We have been inspired by the key observation that pathologic inflammation driven
by dysfunctional immune signaling frequently manifests at specific sites in tissues and organs. However, the current treatments and
therapeutic approaches act broadly to suppress the immune system throughout the body. This mismatch substantially limits the
potential targets that can be pursued due to narrow therapeutic windows. Moreover, combining therapies to address multiple aspects
of the autoimmune diseases is quite challenging due to both distinct and overlapping drug toxicity profiles. Working with leading
scientists, we identified and in-licensed a technology platform in May 2016 that was created by Jeffrey Karp, Ph.D., Professor of
Medicine at Harvard Medical School and Brigham and Women’s Hospital, and Robert Langer, Sc.D., David H Koch Institute Professor
at MIT. As demonstrated in multiple publications, our Alivio technology platform can be used to develop therapeutic candidates that
selectively target inflamed tissues and release drugs in proportion to the severity of inflammation.
Program
Discovery
Process by the
PureTech Team
Patient Need &
Market Potential
• IBD is estimated to affect approximately 3.9 million people in the U.S.2, with monoclonal antibody therapies being the preferred
treatment option for patients with moderate-to-severe disease. However, these therapies must be provided through multiple
injections over time and are associated with several limitations including a lack of efficacy for some patients, dose-limiting AEs, loss
of efficacy over time via anti-drug antibody development and the potential for opportunistic infections or malignancies.
• We believe that an ideal solution for treating IBD and chronic pouchitis would be an oral drug therapy that targets multiple
mechanisms of disease pathogenesis while minimizing the potential for systemic side effects. We believe LYT-510 and LYT-500,
developed from our Alivio technology platform, can potentially fulfill this goal.
1 The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our wholly-owned therapeutic candidates are safe and
effective. No regulatory agency has made any such determination that LYT-510 or LYT-500 are safe or effective for use by the general public for any indication.
2 Inflammatory Bowel Disease (IBD) in the United States. (2021, November 09). https://www.cdc.gov/ibd/data-statistics.htm
48 PureTech Health plc Annual report and accounts 2021
Strategic report
PureTech’s Wholly Owned Programs — continued
Milestones
Achieved &
Development
Status
• In multiple preclinical IBD models, LYT-510 showed significant improvements in several efficacy endpoints compared to untreated
controls. Furthermore, the inflammation-targeting properties were shown to result in very low systemic blood levels compared to the
current immunosuppressant formulations, which minimizes the potential for systemic side effects.
• In 2020, the U.S. Department of Defense (DOD) Technology/Therapeutic Development awarded $3.3 million to support the
advancement of LYT-510 into the clinic.
• Progress in the preclinical development of LYT-500 is demonstrated by the following achievements:
− We have developed an inflammation-targeting IL-22 composition with analytical data to support high IL-22 loading, high
encapsulation efficiency, preservation of biologic activity, enzyme-mediated drug release and stability in simulated intestinal
fluids. In addition, we have a comparable data set for an inflammation-targeting composition that combines IL-22 with an
immunosuppressant drug.
− We have completed initial preclinical evaluation of an inflammation-targeting IL-22 composition in a preclinical IBD model, where
we demonstrated improvement in multiple endpoints related to mucosal healing.
− We have demonstrated efficacy of the inflammation-targeting drug combination in a rodent IBD model, with improvements
observed across several endpoints related to mucosal healing and inflammation.
− We have developed oral dosage forms to enable preclinical testing of the inflammation-targeting IL-22 alone and in combination
with an immunosuppressant drug and have initiated animal studies to evaluate their efficacy.
Expected
Milestones
Intellectual
Property
• We intend to file for regulatory approval to initiate first-in-human studies at year end 2022 and initiate a clinical study evaluating
LYT-510 as a single agent for the potential treatment of IBD and chronic pouchitis in early 2023.
• We expect preclinical proof-of-concept data for LYT-500 in the first half of 2022.
• The intellectual property portfolio supporting LYT-510 and LYT-500 consists of coverage around both the broader inflammation-
targeting platform and the specific drug combination candidate. Platform intellectual property is supported by one patent family that
has been exclusively licensed from the Brigham and Women’s Hospital, which includes seven issued patents to date and five pending
applications within and outside the U.S. In addition, intellectual property specific to the LYT-510 and LYT-500 candidates includes two
patent families which are owned by Alivio that consist of 13 patent applications within and outside the U.S.
LYT-510 and LYT-500 Programs
Therapeutic
Candidate1
Indication
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
LYT-510
Oral Immunosuppressant
IBD/Chronic pouchitis
LYT-500
Oral IL-22 +
Immunosuppressant
IBD
Phase completed
Phase in progress
PureTech Health plc Annual report and accounts 2021 49
Strategic report PureTech’s Wholly Owned Programs — continued
LYT-503/IMB-150
Therapeutic
Candidate1
LYT-503/IMB-150
(Partnered program)
PureTech Ownership
Indication
Stage of Development
Wholly-owned (licensed)
Interstitial cystitis/bladder pain syndrome
Preclinical
• LYT-503/IMB-150 is being advanced through a collaboration with Imbrium Therapeutics for the potential treatment of IC/BPS. LYT-503/IMB-150
was developed using our Alivio technology platform, which involves selectively restoring immune homeostasis at inflamed sites in the body
while reducing their impact on the rest of the body’s immune system. This long sought-after approach has the potential to broadly enable new
medicines to treat a range of chronic and acute inflammatory disorders, including drugs whose use has been limited due to issues of systemic
toxicity or problematic PK profiles.
Key Points of
Innovation &
Differentiation
Program
Discovery
Process by the
PureTech Team
• To achieve our vision of selective immunomodulation, we are advancing our proprietary Alivio technology platform centered on
a class of self-assembling therapies that selectively bind to inflamed tissue. The platform allows for the development of
inflammation-targeting therapeutic candidates using a wide array of active pharmaceutical ingredients, or APIs, including small
molecules, biologics and nucleic acids. Using this technology, LYT-503/IMB-150 is designed to provide local therapy at the inflamed
lesions along the bladder surface of IC/BPS patients while minimizing the potential for related systemic toxicities.
• A key challenge in new drug development for autoimmune and inflammatory disease is that attractive drug targets are frequently
expressed in both diseased and normal tissue. Consequently, we were interested in identifying ways to address autoimmune disease
in a targeted manner such that healthy cells and tissues are not impacted by the drug. We were inspired by the key observation that
pathologic inflammation frequently manifests at specific sites in tissues and organs and is driven by dysfunctional immune signaling.
However, traditional approaches act broadly to suppress the immune system throughout the body affecting both the disease and
healthy tissues. The current approaches therefore substantially limit the potential targets that can be pursued due to narrow
therapeutic windows. Working with leading scientists, we identified and in-licensed a technology platform in May 2016 that was
created by Jeffrey Karp, Ph.D., Professor of Medicine at Harvard Medical School and Brigham and Women’s Hospital, and Robert
Langer, Sc.D., David H Koch Institute Professor at MIT. As demonstrated in multiple publications, our Alivio technology platform can
be used to develop therapeutic candidates that selectively target inflamed tissues and release drugs in proportion to the severity of
inflammation.
Patient Need &
Market Potential
• IC/BPS is a chronic bladder condition that consists of discomfort or pain in the bladder or surrounding pelvic region and is often
associated with frequent urination. It is estimated to affect four million to 12 million people in the U.S. Current treatments fail to
control pain in many patients.
Milestones
Achieved &
Development
Status
Expected
Milestones
Intellectual
Property
• In December 2018, we entered into an option and license agreement with Imbrium Therapeutics to advance LYT-503/IMB-150 through
clinical development and potential commercialization as a treatment for IC/BPS.
• In August 2021, we announced that Imbrium Therapeutics had exercised its license option to develop LYT-503/IMB-150. PureTech
received an option exercise payment of $6.5 million and is eligible to receive up to $53 million in additional development milestone
payments for this program and royalties on potential product sales.
• Imbrium is planning to file an IND application for LYT-503/IMB-150 in 2022.
• The intellectual property portfolio supporting LYT-503/IMB-150 consists of coverage around both the Alivio technology platform and
the drug candidate. Platform intellectual property is supported by one patent family, which has been exclusively licensed from the
Brigham and Women’s Hospital and includes seven issued patents and two pending applications within and outside the U.S.
Intellectual property specific to the LYT-503/IMB-150 candidate. In addition, the LYT-503/IMB-150 IP includes one patent family which
is owned by Alivio that consists of two issued patents and five applications within and outside the U.S.
LYT-503/IMB-150 Program
Therapeutic
Candidate1
LYT-503/IMB-150
(Partnered program)
Non-opioid
Indication
Discovery
Preclinical
Phase 1
Phase 2
Phase 3
Interstitial cystitis/bladder pain
syndrome (IC/BPS)
Phase completed
Phase in progress
1 The FDA and corresponding regulatory authorities will ultimately review our clinical results and determine whether our wholly-owned therapeutic candidates are safe and
effective. No regulatory agency has made any such determination that LYT-503/IMB-150 is safe or effective for use by the general public for any indication. On July 23, 2021,
Imbrium Therapeutics exercised its option to license LYT-503/IMB-150 pursuant to which it is responsible for all future development activities and funding for LYT-503/IMB-150.
50 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Wholly Owned Programs — continued
Glyph™: Lymphatic Targeting Chemistry Platform
Therapeutic Candidate
PureTech Ownership
Description
Glyph Technology
Platform
Wholly-owned
Lymphatic-targeting chemistry platform leveraging the body’s natural lipid absorption and
transport process to orally administer drugs via the lymphatic system
• We are advancing a synthetic lymphatic-targeting chemistry platform called Glyph, which is designed to employ the lymphatic system’s natural lipid
absorption and transport process and has led to the nomination of LYT-300 for continued expansion of our Wholly Owned Pipeline. Consumed nutrients
and most orally administered pharmaceuticals are initially absorbed by the small intestine mucosa, distributed to the liver by the portal vein before
entering systemic circulation. Importantly, many consumed dietary lipids, particularly triglycerides, enter systemic circulation by an alternate route.
Triglycerides, which are composed of three fatty acid chains tethered to a 3-carbon glycerol molecule, are absorbed by small intestine mucosal
enterocytes where they are incorporated into large lipid-protein complexes (chylomicrons) and released into the submucosa. Chylomicrons are too large
to enter blood vessels and are instead taken up by submucosal lymphatic vessels. Once in the lymphatic vessels, they are transported to mesenteric
lymph nodes associated with the GI tract where they pass into larger lymphatic vessels connected to the thoracic duct, then merge with systemic
circulation as illustrated in the figure below on the right. This is in contrast to conventional systemic circulation via the gut and liver as shown in the figure
below on the left.
Glyph: A synthetic lymphatic-targeting chemistry platform
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• Our proprietary Glyph technology platform takes advantage of the fact that one of the triglyceride-associated fatty acids remains bound to dietary lipids
during intestinal absorption, chylomicron conversion, lymphatic vessel uptake and eventual transport into the circulatory system. Using a modular set of
proprietary chemical entities, small molecule pharmaceutical compounds can be attached to triglycerides where, following oral administration, the small
molecule is directed into the mesenteric lymphatic system and on to systemic circulation. The process of drug release from the triglyceride is governed by
self-cleaving chemical structures, with different release-timing features, that tether the small molecule to the module connected to the triglyceride. The
figure below is a representation of the proprietary chemistry for the design of our lymphatic targeting technology. The active pharmaceutical ingredient
(API) is meant to indicate an example of a pharmaceutical small molecule that is attached to the triglyceride group (Glyceride in the figure on the next
page) using proprietary linker chemistry (linker in the figure on the next page) to create a prodrug of the API. The prodrug also includes a proprietary
self-immolative or cleaving chemistry (SI in the figure on the next page) that can be tuned to release the API in its intact original form.
Key Points of
Innovation &
Differentiation
Program
Discovery
Process by the
PureTech Team
• We believe this platform provides the following capabilities:
− Targeting the mesenteric lymphatics: This lymphatic targeting technology has important features that offer potential advantages in
the creation of orally-administered medicines, especially those that need to reach immune system drug targets present in the GI
tract mucosa and submucosa, such as intestine-associated immune cells, or in the mesenteric lymphatic vasculature, such as
circulating immune cells, and mesenteric lymph nodes, such as lymph node stromal cells, antigen-presenting cells and lymph
node-associated immune cells.
− Enabling and enhancing oral bioavailability by bypassing first-pass metabolism: We believe this technology could provide a broadly
applicable modular means to potentially enable oral administration of a range of bio-active natural molecules, such as
neurosteroids, cannabinoids, and a large number of parenterally administered drugs, that are otherwise not orally bioavailable. This
technology also has the potential to significantly enhance the bioavailability of orally-administered drugs that suffer from substantial
first-pass hepatic metabolism, especially those utilized in combination therapies, that act as modulators (inducers and/or inhibitors)
of drug-metabolizing systems in the liver.
• We sought out different approaches that could selectively traffic therapeutic molecules through the lymphatic system to target
immune cells in the lymph nodes. Based on insights gained internally and via unpublished findings through our network of
collaborators, we became aware of certain technology being developed at Monash University that had the potential to selectively
target the lymphatic system. We obtained an exclusive license to this technology and the related intellectual property from Monash
University. We have since further developed the platform and have generated our own intellectual property associated with the Glyph
technology platform.
• We have developed an oral lipid prodrug of natural allopregnanolone, LYT-300, which is our first therapeutic candidate derived from
our Glyph platform designed to treat a range of neurological and neuropsychological conditions such as depression, anxiety, sleep
disorders, fragile X tremor-associated syndrome, essential tremor and epileptic disorders, among others.
PureTech Health plc Annual report and accounts 2021 51
Strategic report PureTech’s Wholly Owned Programs — continued
Milestones
Achieved &
Development
Status
Intellectual
property
• In September 2021, preclinical proof-of-concept research was published in Nature Metabolism, which provides further support for the
therapeutic potential of our Glyph technology platform1. The study showed for the first time that restoring normal function of the
mesenteric lymphatics may reverse insulin resistance and modify obesity-associated metabolic disease. The study also found that
inhibition of COX-2 and VEGF-C signaling within the mesenteric lymphatics resulted in a repatterning of the lymphatic vasculature,
which in turn led to reduced branching and significantly less leakage of lymphatic fluids rich in lipids and pro-inflammatory mediators.
Targeted inhibition of COX-2 function with a celecoxib prodrug developed using our lymphatic targeting Glyph technology platform
led to a normalization of multiple biomarkers, including VEGF-C concentrations specifically within mesenteric lymph and surrounding
adipose tissue, and to levels observed in control animals that were not fed a high-fat diet. This correlated with reduced lymphatic
vessel branching and leakage as well as restoration of glycemic control, and weight gain was blocked in the animals fed a high-fat
diet. In fact, targeted administration of the celecoxib Glyph prodrug led to a 10-fold greater uptake of celecoxib in mesenteric lymph
and more effective restoration of lymphatic function and glycemic control compared to the administration of unmodified celecoxib,
which is commercially available.
• In February 2021, preclinical proof-of-concept for our Glyph technology platform was published in the Journal of Controlled Release2.
The additional results highlighted in the publication support the ability of the platform to target administration of drugs such as
mycophenolic acid (MPA), an immunosuppressant, into lymph and directly into gut-draining mesenteric lymph nodes (MLNs). As a key
nexus of immune cell trafficking, MLNs play major roles in the pathophysiology of a range of conditions including inflammatory and
autoimmune diseases, cancer and metabolic diseases. As published, oral administration of a Glyph-based prodrug of MPA (Glyph-
MPA) resulted in a >80-fold increase in uptake of total MPA into the lymphatic system and a >20-fold increase in MPA concentrations
in MLNs relative to what was achieved with oral dosing of free MPA. Furthermore, MPA administered orally as Glyph-MPA was
significantly more potent than free MPA in inhibiting T cell proliferation in mice challenged with antigen. Plasma levels were similar
with Glyph-MPA and MPA, indicating low potential for the emergence of new systemic side effects. Additionally, a prodrug of
a fluorescent tracer was shown to rapidly accumulate in MLNs following administration. Together, these findings provide further
support of the potential of our Glyph technology for oral administration of small molecule drugs directly to the lymphatic system,
including drugs with immunomodulatory properties.
• In the April 2022 post-period, preclinical proof-of-concept research was published in Frontiers in Pharmacology, which demonstrated
our Glyph platform can enhance the oral bioavailability of buprenorphine, a clinically-validated opioid replacement therapy, further
expanding the range of clinically-validated drug classes shown to be amendable to the Glyph technology.
• We have successfully extended our lymphatic targeting platform to encompass more than 20 molecules as well as a range of novel
linker chemistries that have demonstrated promising lymphatic targeting in preclinical studies. We expect to select therapeutic
candidates from this and ongoing discovery work.
• We believe the Glyph technology platform could provide a broadly applicable modular means to potentially enable oral
administration of a range of bio-active natural molecules, such as neurosteroids, cannabinoids and a large number of parenterally
administered drugs that are otherwise not orally bioavailable, or such as orally-administered drugs that suffer from substantial
first-pass hepatic metabolism or those drugs, especially those utilized in drug combination therapies, that act as modulators (inducers
and/or inhibitors) of drug-metabolizing systems in the liver. To demonstrate the utility of our Glyph lipid prodrug platform, we chose
a natural bio-active neurosteroid allopregnanolone as the subject of our inquiry, which has resulted in the LYT-300 program. However,
we believe that this benefit has the potential to be widely applied to nearly any natural molecules or therapeutic compatible with the
synthetic approach which suffers from hepatic first-pass metabolism as has been evaluated by us and our collaborators.
• We have broad intellectual property coverage for our proprietary Glyph technology platform, which includes exclusively licensed and
co-owned patent applications, as well as company-owned patent applications. These patent applications cover compositions of
matter, methods of use and methods of treatment encompassing specific chemical modifications, including a wide range of novel
linker chemistries, as well as various classes of lymphatic targeting therapeutics, which include prodrugs for a large number of APIs,
for use in the treatment of a wide range of diseases and disorders. The most advanced of these is LYT-300, which is an oral form of
FDA-approved allopregnanolone, a natural neurosteroid, that we believe may be applicable to a range of neurological conditions.
• As of December 31, 2021, our Glyph technology platform intellectual property portfolio consists of 17 patent families comprising 19
U.S. patent applications, 20 foreign patent applications and three foreign patents. Of these, company-owned intellectual property
consists of nine U.S. patent applications in nine patent families. We exclusively licensed and co-own a patent portfolio of eight patent
families comprising 33 U.S. and foreign patent applications and three foreign patents from Monash University. Any patents to issue
from the in-licensed patent applications are expected to expire in 2035-2036 and any issued patents from the co-owned and
company-owned patent applications are expected to expire in 2038-2042, exclusive of possible patent term adjustments or
extensions or other forms of exclusivity.
Schematic representation of our lymphatic targeting prodrug technology
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1 Cao, E., Watt, M.J., Nowell, C.J. et al. Mesenteric lymphatic dysfunction promotes insulin resistance and represents a potential treatment target in obesity. Nat Metab 3,
1175–1188 (2021). https://doi.org/10.1038/s42255-021-00457-w
2 Kochappan, R., Cao, E., Han, S., Hu, L., Quach, T., Senyschyn, D., Ferreira, V. I., Lee, G., Leong, N., Sharma, G., Lim, S. F., Nowell, C. J., Chen, Z., von Andrian, U. H., Bonner,
D., Mintern, J. D., Simpson, J. S., Trevaskis, N. L., Porter, C. J. H. (2021). Targeted delivery of mycophenolic acid to the mesenteric lymph node using a triglyceride mimetic
prodrug approach enhances gut-specific immunomodulation in mice. Journal of Controlled Release, 332, 636–651. https://doi.org/10.1016/j.jconrel.2021.02.008
52 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Wholly Owned Programs — continued
Orasome™ and Other Technology Platforms for
Oral Administration of Therapeutics
Therapeutic Candidate
PureTech Ownership
Description
Orasome Technology
Platform
Wholly-owned
Programmable and scalable approach for oral administration of nucleic acids
and other biologics
• We are developing versatile and programmable oral biotherapeutics approaches, such as Orasome technology, to potentially enable the oral
administration of macromolecule therapeutic payloads, including antisense oligonucleotides, short interfering RNA, mRNA, modular expression vector
systems, peptides and nanoparticles that are otherwise administered exclusively by injection.
• Our Orasome technology platform was inspired by the in vivo trafficking of ubiquitous, naturally occurring extracellular vesicles, which are often referred
to as exosomes or ectosomes, and we have engineered them for transport through the GI tract. We believe human cell-isolated exosomes/ectosomes
have promise as vehicles for systemic drug administration due to their observed tolerability over synthetic polymer-based administration technologies.
However, the fragile nature of exosomes/ectosomes from human cells limits their usage for oral administration and the type of post-isolation
manipulations that can be applied in order to optimize such vesicles for exogenous drug cargo loading and storage.
• Our Orasome technology platform, for example, utilizes both synthetic and naturally occurring components isolated from multiple sources to yield
glycocalyx-stabilized vesicles (GVs). We have engineered and formulated these vesicles to remain stable following oral consumption and transit through
the upper GI tract. Orasome GVs are readily amenable to manufacturing at scale and at relatively low cost based on the accessibility of the various
components and simplicity of assembly.
Orasome Technology
The figure below depicts one of the approaches we are exploring for the administration of oral biotherapeutics:
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(cid:56)(cid:76)(cid:73)(cid:86)(cid:69)(cid:84)(cid:73)(cid:89)(cid:88)(cid:77)(cid:71)(cid:4)(cid:52)(cid:86)(cid:83)(cid:88)(cid:73)(cid:77)(cid:82)(cid:4)(cid:73)(cid:82)(cid:88)(cid:73)(cid:86)(cid:87)(cid:4)
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• Our Orasome GVs are being engineered to transport macromolecular medicines to selected mucosal cell types of the intestinal tract where the
therapeutics act either directly in the GI tract, transit through the mucosa to the underlying lymphatic vascular network or, in the case of cargos that yield
mRNAs, enable the body to produce its own therapeutic proteins and peptides, such as antibodies within mucosal cells that are secreted into the mucosal
lymphatic vascular network for subsequent systemic distribution. Using our Orasome technology platform, we believe it may be possible for a patient to
take an oral drug product that will permit their own GI tract cells to make virtually any type of therapeutic protein. We believe this approach also has the
potential to provide a more convenient and significantly less expensive means to administer biological medicines.
• In addition to Orasomes, we are also exploring the use of other approaches, such as certain exosomes isolated from milk as well as synthetic novel
polymers and vesicles for delivering biotherapeutics.
PureTech Health plc Annual report and accounts 2021 53
Strategic report PureTech’s Wholly Owned Programs — continued
Key Points of
Innovation &
Differentiation
• Our proprietary oral administration technology, such as our Orasome technology platform, has the potential to transform the
treatment paradigm for diseases such as rheumatoid arthritis, diabetes, other autoimmune diseases and cancer for which the
standard of care often requires intravenous infusion or subcutaneous injection of monoclonal antibodies (e.g., anti-PD-1, anti-tumor
necrosis factor) or therapeutic proteins/peptides (e.g., glucagon-like peptide-1, insulin, granulocyte colony-stimulating factor GCSF,
Factor VIII and IX, cytokines and erythropoietin), among others.
PureTech is well-positioned to unleash the potential of oral biotherapeutics
Limitations of protein-based therapeutics
Intravenous or subcutaneous administration
(infusion reactions, barrier for repeat dosing)
Lengthy scale-up timeline
Limitations of mRNA-based therapeutics and vaccines
Intravenous, intramuscular or subcutaneous
administration (infusion reactions, co-medications
needed for dosing, very limited repeat dose options)
Formulation-based immune and cellular toxicities
(protein synthesis by liver hepatocytes)
High dose requirement for protein production
Potential advantages of the Orasome™
technology platform:
Orally administered (flexible repeat dosing)
Body manufactures the therapeutic proteins
Very low immune and cell toxicity (protein synthesis in
GI tract)
Low dose requirement for protein production
Program
Discovery
Process by the
PureTech Team
Milestones
Achieved and
Development
Status
Expected
Milestones
Intellectual
Property
• We sought out different approaches to enable the oral administration of macromolecule therapeutic payloads that are otherwise
administered exclusively by injection. We have independently developed our Orasome technology platform and have generated data
and intellectual property supporting oral administration of macromolecule therapeutic payloads. We are also developing other oral
administration technologies and intellectual property.
• In 2021, we established preclinical proof-of-concept supporting the potential of the Orasome technology platform to
achieve production of therapeutic proteins in the gut of an animal following simulated oral administration of expression systems and
transport of these proteins from the gut into systemic circulation. Proof-of-concept was observed with multiple formulations involving
Orasome technology which are being further optimized to achieve a range of expression profiles for therapeutic proteins.
• We expect to generate additional data in 2022, with Orasomes and other technologies, across a range of preclinical models and
therapeutic proteins. We expect to generate data to demonstrate that oral administration of Orasomes, carrying an expression
system for a desired therapeutic protein, can achieve therapeutic levels of the protein in multiple species of preclinical models with
achievement of safe repeat-dose administration.
• This work could lay the foundation for IND-enabling clinical studies for one or more additional therapeutic candidates to be included
in our Wholly Owned Pipeline. We intend to leverage our proprietary technology platforms, such as orasomes, as well as our
extensive network with major pharmaceutical companies and world-leading scientists, to generate additional novel therapeutic
candidates.
• We have broad intellectual property coverage for our Orasome technology platform. Our Orasome technology platform intellectual
property portfolio covers compositions of matter, methods of use and methods of treatment spanning various platform-based
technologies, as well as various broad classes of Orasome-formulated therapeutics, which include nucleic acid-based therapeutics
(such as messenger RNA, short interfering RNA and antisense oligonucleotide-based approaches), small molecules, biologics (such as
peptides, proteins and antibodies), expression systems for biologics and other therapeutics for use in the treatment of a wide range
of diseases and disorders, including various immunological disorders, such as cancers and inflammatory diseases.
• As of December 31, 2021, PureTech’s Orasome technology platform patent portfolio consists of four U.S. and nine foreign patent
applications and one pending international PCT application in five patent families. Any patents to issue from these patent
applications are expected to expire in 2037 through 2041, exclusive of possible patent term adjustments or extensions or other forms
of exclusivity.
• With regards to milk exosomes, we exclusively licensed a patent portfolio consisting of two patent families from 3P Biotechnologies,
Inc., based on certain milk exosome technology originating from the University of Louisville. We also exclusively licensed a patent
portfolio consisting of two patent families from NuTech Ventures, based on certain milk extracellular vesicle technology originating
from the University of Nebraska.
54 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Wholly Owned Programs — continued
Alivio™ Technology Platform
Therapeutic Candidate
PureTech Ownership
Description
Alivio Technology Platform Wholly-owned
Pioneering inflammation-targeted disease immunomodulation
• Using our Alivio technology platform, we are pioneering inflammation-targeted disease immunomodulation, which involves selectively restoring immune
homeostasis at inflamed sites in the body, while having the potential for minimal impact on the rest of the body’s healthy tissues, as a novel strategy to
more effectively treat a range of chronic and acute inflammatory disorders. This long sought-after approach has the potential to broadly enable new
medicines to treat a range of chronic and acute inflammatory disorders, including drugs that were previously limited by issues of systemic toxicity or
undesirable PK.
Inflammation-Targeting Immunomodulation Platform
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(cid:81)(cid:77)(cid:82)(cid:77)(cid:81)(cid:77)(cid:94)(cid:77)(cid:82)(cid:75)(cid:4)(cid:73)(cid:92)(cid:84)(cid:83)(cid:87)(cid:89)(cid:86)(cid:73)(cid:4)(cid:88)(cid:83)(cid:4)(cid:82)(cid:83)(cid:82)(cid:17)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)(cid:88)(cid:77)(cid:87)(cid:87)(cid:89)(cid:73)(cid:87)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)
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Key Points of
Innovation &
Differentiation
Program
Discovery
Process by the
PureTech Team
• To achieve our vision of selective immunomodulation, we are advancing our Alivio technology platform centered on a class of
self-assembling therapies that selectively bind to inflamed tissue. The platform allows for the development of inflammation-targeting
therapeutic candidates using a wide array of active pharmaceutical ingredients (APIs) including small molecules, biologics and nucleic
acids. Using this technology, we can design therapeutic candidates that have the potential to treat autoimmune diseases locally at the
site of inflammation while avoiding systemic toxicities.
• A key challenge in new drug development for autoimmune and inflammatory disease is that attractive drug targets are frequently
expressed in both diseased and normal tissue. Consequently, we were interested in identifying ways to address autoimmune disease
in a targeted manner such that healthy cells and tissues are not impacted by the drug. We were inspired by the key observation that
pathologic inflammation frequently manifests at specific sites in tissues and organs and is driven by dysfunctional immune signaling.
Traditional approaches act broadly to suppress the immune system throughout the body affecting both the disease and healthy
tissues. The current approaches therefore substantially limit the potential targets that can be pursued and frequently result in narrow
therapeutic windows. Working with leading scientists, we identified and in-licensed a technology platform in May 2016 that was
created by Jeffrey Karp, Ph.D., Professor of Medicine at Harvard Medical School and Brigham and Women’s Hospital, and Robert
Langer, Sc.D., David H Koch Institute Professor at MIT. As demonstrated in multiple publications, our Alivio technology platform can
be used to develop therapeutic candidates that selectively release drugs at inflamed sites of targeted tissues and spares healthy
tissues.
Patient Need &
Market Potential
• Preclinical results suggest our Alivio technology platform could be applied to diseases such as IBD, inflammatory arthritis, organ
transplantation and IC/BPS. These diseases collectively impact tens of millions of patients in the U.S. alone and have limited
treatment options. IC/BPS is a chronic bladder condition that consists of discomfort or pain in the bladder or surrounding pelvic
region and is often associated with frequent urination. It is estimated to affect four million to 12 million people in the U.S. Current
treatments fail to control pain in many patients. IBD is estimated to affect approximately 3.9 million people in the U.S.
Milestones
Achieved &
Development
Status
• In August 2021, we announced that Imbrium exercised a license option under the companies’ research and development
collaboration agreement to develop LYT-503/IMB-150. In connection with the option exercise, we received an upfront payment of
$6.5 million and are eligible to receive up to $53 million in additional development milestone payments for this program as well as
royalties on product sales.
• Using our Alivio technology platform, we are developing LYT-510, an oral inflammation-targeting formulation of tacrolimus, a potent
immunosuppressant drug, to treat IBD and chronic pouchitis, LYT-500, an oral combination therapy for the treatment of IBD, and
LYT-503/IMB-150, our therapeutic candidate being advanced in collaboration with Imbrium Therapeutics for the potential treatment
of IC/BPS.
Expected
Milestones
• We intend to file for regulatory approval to initiate first-in-human studies at year end 2022 and initiate a clinical study evaluating
LYT-510 as a single agent for the potential treatment of IBD and chronic pouchitis in early 2023.
• We expect preclinical proof-of-concept data for LYT-500 in the first half of 2022.
• Imbrium is planning to file an IND application for LYT-503/IMB-150 in 2022.
• We are evaluating other potential therapeutic candidates leveraging Alivio technology platform for Wholly Owned
Pipeline expansion.
Intellectual
Property
• Intellectual property portfolio covering the Alivio inflammation-targeting technology platform consists of six patent families.
Collectively, across these patent families, there are 18 issued patents within and outside the U.S. with claims covering inflammation-
targeting compositions, methods of making and methods of using as drug products. Within these families, there are a total of eight
patent applications pending in the U.S. and foreign countries. All patents and patent applications covering the platform technologies
have been obtained from the Brigham and Women’s Hospital under an exclusive licensing agreement in all territories.
PureTech Health plc Annual report and accounts 2021 55
Strategic report PureTech’s Wholly Owned Programs — continued
Meningeal Lymphatics Research Program
Therapeutic Candidate
PureTech Ownership
Description
Meningeal Lymphatics
Research Program
Wholly-owned
Harnessing meningeal lymphatics to potentially treat a range of neurodegenerative and
neuroinflammatory conditions
• The lymphatic system is an important part of the immune system, GI
system and central nervous system, or CNS. Loss of lymphatic flow can play
a critical role in diseases of these systems. The recent discovery of
meningeal lymphatics in the brain, an area once thought to have immune
privilege, has shed new light on neurodegenerative diseases and lymphatic
vessel aging.
Key Points of
Innovation &
Differentiation
• Among the macromolecules that are drained via the
lymphatics are pathogenic macromolecules such as
amyloid-beta (Aβ) and tau, which are both associated
with Alzheimer’s disease, or AD, pathology, as well as
alpha-synuclein, which is associated with Parkinson’s
disease. Blocking the lymphatic flow increases levels of
these molecules in the brain. In animal models of AD,
AD-associated tauopathies and Parkinson’s disease,
blockage of meningeal lymphatic flow significantly
exacerbated disease progression and severity whereas
improving flow through aged meningeal lymphatics
improved cognitive function in these animal models.
With aging, the lymphatic vessels that drain the brain
become dysfunctional and no longer drain as efficiently.
The “lymphedematous characteristics” of meningeal
lymphatic vessels in aged animals might be leading to
inefficient clearance of pathologic macromolecules and
potentially increased risk for neurodegenerative
diseases. Therefore, restoration of lymphatic flow may
be a novel class of therapies for neurodegeneration
associated with poor lymphatic drainage.
Program
Discovery
Process by the
PureTech Team
• One of our academic collaborators discovered a functional lymphatic system in the meninges of the brain that forms the basis of our
meningeal lymphatics research program. These meningeal lymphatics have been described as the “brain drain,” a route through
which macromolecules are flushed from the brain in cerebrospinal fluid. We believe that augmenting meningeal lymphatic vasculature
function may potentially improve outcomes for a range of neurodegenerative and neuroinflammatory conditions that are not currently
effectively treated.
CNS lymphatics: Harnessing an overlooked immune and metabolite transport network
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(cid:49)(cid:73)(cid:82)(cid:77)(cid:82)(cid:75)(cid:73)(cid:69)(cid:80)(cid:4)(cid:80)(cid:93)(cid:81)(cid:84)(cid:76)(cid:69)(cid:88)(cid:77)(cid:71)(cid:87)(cid:4)(cid:69)(cid:86)(cid:73)(cid:4)
(cid:79)(cid:73)(cid:93)(cid:4)(cid:76)(cid:77)(cid:75)(cid:76)(cid:91)(cid:69)(cid:93)(cid:87)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)(cid:88)(cid:86)(cid:69)(cid:82)(cid:87)(cid:84)(cid:83)(cid:86)(cid:88)(cid:4)
(cid:83)(cid:74)(cid:4)(cid:81)(cid:73)(cid:88)(cid:69)(cid:70)(cid:83)(cid:80)(cid:77)(cid:88)(cid:73)(cid:87)(cid:4)(cid:337)(cid:4)(cid:37)(cid:1028)
(cid:45)(cid:82)(cid:77)(cid:88)(cid:77)(cid:69)(cid:80)(cid:4)(cid:37)(cid:1028)(cid:4)(cid:74)(cid:77)(cid:82)(cid:72)(cid:77)(cid:82)(cid:75)(cid:87)(cid:4)(cid:76)(cid:69)(cid:90)(cid:73)(cid:4)(cid:70)(cid:73)(cid:73)(cid:82)(cid:4)
(cid:90)(cid:69)(cid:80)(cid:77)(cid:72)(cid:69)(cid:88)(cid:73)(cid:72)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:73)(cid:92)(cid:88)(cid:73)(cid:82)(cid:72)(cid:73)(cid:72)(cid:4)(cid:88)(cid:83)(cid:4)(cid:71)(cid:80)(cid:73)(cid:69)(cid:86)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4)
(cid:83)(cid:74)(cid:4)(cid:56)(cid:69)(cid:89)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:1027)(cid:17)(cid:87)(cid:93)(cid:82)(cid:89)(cid:71)(cid:80)(cid:73)(cid:77)(cid:82)(cid:4)(cid:70)(cid:93)(cid:4)
(cid:77)(cid:82)(cid:72)(cid:73)(cid:84)(cid:73)(cid:82)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)(cid:86)(cid:73)(cid:87)(cid:73)(cid:69)(cid:86)(cid:71)(cid:76)(cid:4)(cid:75)(cid:86)(cid:83)(cid:89)(cid:84)(cid:87)
Milestones
Achieved &
Development
Status
Intellectual
Property
• In April 2021, we announced the publication of preclinical research in Nature, suggesting that restoring lymphatic flow in the brain,
either alone or in combination with passive immunotherapies such as antibodies directed at amyloid-beta, has the potential to address
a range of neurodegenerative diseases, such as Alzheimer’s and Parkinson’s diseases, which potentially impairs the efficacy of passive
immunotherapies such as amyloid-beta-targeting antibodies. The work also uncovered a link between dysfunctional meningeal
lymphatics and damaging microglia activation in Alzheimer’s disease, suggesting another route by which restoring healthy drainage
patterns could improve clinical outcomes.
• We have broad intellectual property coverage around our meningeal lymphatics discovery research program, which includes
exclusively licensed patent applications covering compositions of matter, methods of use and methods of treatment encompassing its
platform-based brain lymphatic technologies, including the identification of macromolecular targets, as well as various classes of brain
lymphatic targeting therapeutics for use in the treatment of a wide range of neurodegenerative and neuroinflammatory conditions, as
well as various neuropathies and cancers.
• As of December 31, 2021, our meningeal lymphatics discovery research program patent portfolio consists of four patent families
comprising six patent applications in U.S. and foreign countries, and two international PCT applications exclusively licensed from the
University of Virginia Licensing & Ventures Group. Any patents to issue from the in-licensed patent applications are expected to expire
in 2037 through 2041, exclusive of possible patent term adjustments or extensions or other forms of exclusivity.
56 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities
Founded Entities
Founded Entity
PureTech
Ownership1
Therapeutic
Candidate2
Indication
Stage of Development
Royalties3
5.6%
KarXT
P
Schizophrenia
Alzheimer’s disease psychosis
Phase 3
Phase 3 Ready
Royalties
22.3%
23.5%
8.6%
41.4%
Akili is pioneering the development of game-changing technologies to usher in a new era of congitive
medicine. EndeavorRx®4 (formerly known as AKL-T01) is the first FDA cleared and CE marked video game
treatment. In the U.S., EndeavorRx is indicated to improve attention function as measured by computer-
based testing in children ages 8-12 years old with primarily inattentive or combined-type ADHD, who
have a demonstrated attention issue.
D
Plenity®5,6
Plenity®
for adolescents5 D
GS2005
D
GS3005
D
GS5005
D
VOR33 (CD33)
B
VCAR33
VE303
VE202
VE416
VE800
VE707
B
B
B
B
B
B
Weight management
Commercial
Adolescent weight management
Weight management in T2D/prediabetes
NASH/NAFLD
Functional constipation
Pending Discussion with FDA7
Clinical Trial Complete
Clinical
Pivotal
Royalties
Acute myeloid leukemia
Myelodysplastic syndromes,
myeloproliferative neoplasms
Bridge-to-transplant AML
C. difficile
IBD
Food allergy
Solid tumors
Gram-negative infections
Phase 1/2a
Preclinical
Phase 1/2
Phase 3 Ready
Phase 2 Ready
Phase 1/2
Phase 1
Preclinical
N/A
N/A
76.0%
FOL-004
P/D
Androgenetic alopecia
Phase 3 Ready
Royalties
44.6%
Sonde One
for Respiratory5
Sonde
Mental Fitness5
74.3%
ENT-100
D
D
B
Respiratory risk detection and
monitoring app
Monitoring vocal features linked to
depression, anxiety, and cognition
Commercial Release
Commercial Release
Oral delivery of biologics,
vaccines and other drugs
Preclinical
N/A
N/A
The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
1 Relevant ownership interests and references to equity ownership for Founded Entities contained in this strategic report (pages 2-72) were calculated on a diluted basis (as
opposed to a voting basis) as of December 31, 2021, including outstanding shares, options and warrants, but excluding unallocated shares authorized to be issued pursuant to
equity incentive plans. Vor Bio, Karuna and Gelesis ownerships were calculated on a beneficial ownership basis in accordance with SEC rules as of March 4, 2022 and February
15, 2022 and March 31, 2022, respectively.
2 With the exception of Plenity and EndeavorRx, candidates are investigational and have not been cleared by the FDA for use in the U.S.
3 PureTech Health has a right to royalty payments as a percentage of net sales.
4 Please see footnote 10 on page 6 for EndeavorRx® indication and overview.
5 These therapeutic candidates are regulated as devices and their development has been approximately equated to phases of clinical development.
6 Please see footnote 11 on page 7 for Important Safety Information about Plenity®.
7 Contingent on FDA review of the research plan.
PureTech Health plc Annual report and accounts 2021 57
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity PureTech Ownership1
Therapeutic Candidate2,3
Indication
Stage of Development
Karuna4
5.6%
KarXT4
P
P
Schizophrenia
Alzheimer’s disease psychosis
Phase 3
Phase 3 Ready
• Karuna is developing novel therapies with the potential to deliver transformative medicines for people living with psychiatric and neurological conditions,
including schizophrenia and dementia-related psychosis.
• KarXT (xanomeline-trospium) is an oral, investigational M1/M4-preferring muscarinic acetylcholine receptor agonist in development for the treatment of
psychiatric and neurological conditions, including schizophrenia and psychosis in Alzheimer’s disease (AD). KarXT combines xanomeline, a muscarinic
receptor agonist, and trospium chloride, an FDA approved and well-established muscarinic receptor antagonist that has been shown not to measurably
cross the blood-brain barrier. KarXT is designed to unlock the therapeutic potential of xanomeline, which demonstrated significant benefits in reducing
symptoms of psychosis in Phase 2 studies in schizophrenia and AD, while ameliorating side effects seen in earlier studies. KarXT preferentially stimulates
muscarinic receptors in the central nervous system implicated in these conditions, as opposed to current antipsychotic medicines, which bind to the D2
dopamine receptor. KarXT has the potential to usher in a new class of treatment for schizophrenia and dementia-related psychosis based on its
differentiated mechanism of action.
• Xanomeline was previously evaluated by Eli Lilly and Company, or Eli Lilly, in randomized, double-blind, placebo-controlled trials in schizophrenia and
AD. In the double-blind, placebo-controlled trial in AD, xanomeline demonstrated dose-dependent reductions in symptoms of psychosis and related
behaviors, including hallucinations, delusions and agitation, as compared to patients on placebo, as measured by the Alzheimer’s Disease Assessment
Scale-Cognitive Subscale and the Clinician Interview-Based Impression of Change.
• Xanomeline is a muscarinic agonist that has demonstrated potential therapeutic benefit in schizophrenia and AD, yet its tolerability has been limited by
side effects arising from muscarinic receptor stimulation in peripheral tissues, leading to nausea, vomiting, diarrhea and increased salivation and sweating,
collectively referred to as cholinergic adverse events, or ChAEs, which led Eli Lilly to discontinue the clinical development of xanomeline. By pairing
xanomeline with trospium chloride, Karuna believes KarXT could potentially maintain the therapeutic benefit of xanomeline while ameliorating its ChAEs.
Program
discovery
process by the
PureTech team
• We were interested in developing a new approach to treat schizophrenia that was effective but did not have the debilitating side
effects of the current class of antipsychotics, realizing that any potential new approaches could have wider applicability. We engaged
with a group of leading schizophrenia experts who were most excited about muscarinic agonists, pointing to the data generated by
Eli Lilly with xanomeline, which was not advanced at that time due to tolerability issues. We invented and broadly filed patents to
cover the concept of combining a muscarinic receptor agonist with a peripherally acting antagonist, and we in-licensed xanomeline
from Eli Lilly in May 2012. Andrew Miller, Ph.D., one of the core team members who was involved in running this program at PureTech,
became Karuna’s Chief Operating Officer, and we built a team of leading drug developers and neuroscientists around him, including
Steven Paul, M.D., an expert in CNS drug discovery and development and now Karuna’s Chief Executive Officer. Karuna completed an
initial public offering on the Nasdaq Global Market in July 2019.
• Dr. Paul was formerly Executive Vice President for Science and Technology and President of the Lilly Research Laboratories at Eli Lilly
and was involved in the original xanomeline work at Eli Lilly. Dr. Paul was also a Co-Founder of Sage Therapeutics and Voyager
Therapeutics, where he served as Chief Executive Officer, as well as the former Scientific Director of the National Institute of
Mental Health.
Patient need
and market
application
• Psychosis is a prominent and debilitating symptom that occurs in many neuropsychiatric disorders, including schizophrenia, dementia,
bipolar disorder, major depressive disorder and inflammatory neurological diseases, such as multiple sclerosis, or MS. Despite its
prevalence, there are no existing medicines that sufficiently and safely treat psychosis or cognitive impairments in people with
schizophrenia.
• There are approximately 2.7 million adults living with schizophrenia in the U.S., of which approximately 40% are diagnosed with the
disease, with around 1.2 million experiencing symptoms of psychosis. Antipsychotics are the mainstay therapy; however, drugs
currently in use all rely on the same fundamental mechanism of action and, despite widespread use, the prognosis for patients
remains poor. People with schizophrenia have an estimated life loss of nearly 30 years compared to the general population and often
struggle to maintain employment, live independently or maintain meaningful interpersonal relationships.
• Schizophrenia is a complex psychiatric syndrome, defined by three major sets of symptoms: positive symptoms, also known as
psychosis, negative symptoms and cognitive symptoms. Current antipsychotics only address psychosis, also known as positive
symptoms, such as hallucinations and delusions, but despite treatment patients often experience residual positive symptoms
throughout their lives. There are no approved treatments for the negative symptoms, such as apathy, reduced social drive and loss of
motivation, or cognitive symptoms, such as changes in working memory and attention. Current approved antipsychotics treat positive
symptoms and are not indicated to treat negative or cognitive symptoms of schizophrenia. Despite treatment, current antipsychotics
have modest efficacy, with many patients failing to adequately respond to treatment, and are associated with burdensome side
effects, such as sedation, extrapyramidal side effects such as motor rigidity, tremors and slurred speech and significant weight gain
resulting in the complications of diabetes, hyperlipidemia, hypertension and cardiovascular disease. Up to 74% of patients cycle
through multiple medicines within 18 months, with many failing to find an effective and/or tolerable therapy.
• An estimated 8 million people are living with dementia in the U.S., with AD as the leading cause of dementia, consisting of 60-80% of
all cases. Symptoms of psychosis may present those living with dementia, including 30-50% of individuals with AD, amounting to ~3.2
million adults with AD psychosis in the U.S. Symptoms become more prevalent with increased disease severity.
• There is an unmet need for new treatments in schizophrenia that could address the positive, negative and cognitive symptoms, and
are not associated with common problematic side effects associated with current dopamine-blocking therapies. There are currently
no approved treatments for psychosis in Alzheimer’s disease.
Milestones
achieved and
development
status
• In November 2021, Karuna announced updates to its pipeline of novel drug candidates for the treatment of various psychiatric and
neurological conditions. The clinical pipeline is led by KarXT, which is currently being evaluated in late-stage clinical trials as
a potential treatment for schizophrenia and psychosis in AD.
− KarXT for the treatment of psychosis in adults with schizophrenia. Karuna announced that all four Phase 3 trials in the
EMERGENT program are enrolling. The program includes EMERGENT-2, a five-week inpatient trial evaluating the efficacy and safety
of KarXT compared to placebo in 246 adults with schizophrenia in the U.S., EMERGENT-3, a five-week inpatient trial evaluating the
efficacy and safety of KarXT compared to placebo in 246 adults with schizophrenia in the U.S. and Ukraine, EMERGENT-4, a 52-week
outpatient, open-label extension trial evaluating the long-term safety and tolerability of KarXT in 350 adults with schizophrenia who
completed EMERGENT-2 or EMERGENT-3, and EMERGENT-5, a 52-week outpatient, open-label trial evaluating the long-term
safety and tolerability of KarXT in adults with schizophrenia who were not enrolled in EMERGENT-2 or EMERGENT-3. Karuna plans
to increase the number of sites in the U.S. and Puerto Rico and allow for up to 600 patients in the trial.
1 As of March 4, 2022, PureTech’s percentage ownership of Karuna was approximately 5.6% on an outstanding voting share basis. We have a right to royalty payments as
a percentage of net sales from Karuna of any commercialized product covered by the granted license pursuant to a license agreement between us and Karuna.
2 The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
3 Therapeutic candidates are investigational and have not been cleared by the FDA for use in the U.S.
4 Karuna has an active IND on file with the FDA for KarXT. Karuna also has ongoing discovery efforts to expand its pipeline. We do not control the clinical or regulatory
development of Karuna’s product candidates. We do not have any board designees on Karuna’s board of directors, and we are not responsible for the development or
commercialization of its therapeutic candidate. We have an interest in Karuna’s therapeutic candidates through our equity interest as well as our right to royalty payments as
a percentage of net sales of any commercialized product covered by the granted license pursuant to a license agreement between us and Karuna. Karuna is well-protected
with a robust intellectual property portfolio. The disclosure above is qualified in its entirety by reference to Karuna’s public filings with the SEC. Karuna was incorporated in
July 2009.
58 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Milestones
achieved and
development
status
(continued)
− KarXT for the treatment of schizophrenia in adults who experience an inadequate response to current standard of care.
Karuna initiated the Phase 3 ARISE trial evaluating the safety and efficacy of KarXT compared to placebo as an adjunctive treatment
for schizophrenia in adults who experience an inadequate response to current standard of care in November 2021. Participants in
this trial will continue their currently prescribed atypical antipsychotic therapy at the same dose or regimen schedule as prior to
entry in the study, and will receive a flexible dose of KarXT or placebo based on tolerability and clinical response as determined by
a clinician.
− KarXT for the treatment of psychosis in AD. The evaluation of KarXT for the treatment of dementia-related psychosis (DRP) will
initially focus on psychosis in AD, the most common subtype of DRP. The initial focus on the AD dementia subtype reflects various
strategic development, regulatory and commercial considerations, and Karuna remains interested in exploring KarXT in other
dementia subtypes in future development programs.
− Discovery and early-stage pipeline. Karuna continues to advance its earlier pipeline of muscarinic receptor-targeted programs and
novel formulations of KarXT, including the initiation of a Phase 1 trial of an advanced formulation of KarXT in late 2021, as well as its
artificial intelligence-based target agnostic discovery program for treating psychiatric and neurological conditions.
• In June 2021, Karuna announced data from its completed Phase 1b trial evaluating the safety and tolerability of KarXT in healthy
elderly volunteers, which followed a preliminary analysis of data from the first two cohorts in the trial announced earlier in 2021. The
results suggest that KarXT can be administered to elderly volunteers at doses that achieve xanomeline blood levels similar to those
reported in the Phase 2 EMERGENT-1 trial in adults with schizophrenia while maintaining a favorable tolerability profile. Data from the
trial also suggest that a lower dose ratio of trospium to xanomeline, compared to the ratios used in Phase 1 trials in healthy adult
volunteers and in the Phase 2 EMERGENT-1 trial evaluating KarXT in adults with schizophrenia, was better tolerated by healthy elderly
volunteers. The treatment-related adverse events (AEs) were similar to those observed in prior trials of KarXT, and a majority (>80%)
were rated mild in severity. One serious AE of urinary retention was reported in Cohort 1. Karuna believes the report of urinary
retention was related to a higher dose of trospium used in Cohort 1 compared to doses used in Cohorts 2 and 3, where urinary
retention was not observed. No serious or severe AEs were observed in Cohorts 2 and 3. Consistent with prior trials of KarXT, blood
pressure in healthy elderly volunteers receiving KarXT was similar to placebo, and no syncopal events were observed. Heart rate
increases observed in the trial were also consistent with prior trials of KarXT.
• In November 2021, Karuna and Zai Lab (Shanghai) Co., Ltd. (Zai) announced their entry into an exclusive license agreement for the
development, manufacturing and commercialization of KarXT in Greater China, including mainland China, Hong Kong, Macau and
Taiwan. Under the terms of the agreement, Karuna received a $35.0 million upfront payment and is eligible to receive certain
development and regulatory milestone and sales milestone payments, as well as royalties based on annual net sales of KarXT in
Greater China. Zai Lab will fund substantially all development, regulatory and commercialization activities in Greater China. PureTech
is also eligible to receive certain sublicense payments and royalties on sales of any commercialized product covered by the license
agreement between us and Karuna pursuant to the terms of such license agreement.
• In February 2021, Karuna announced that results from the Phase 2 EMERGENT-1 trial evaluating KarXT for the treatment of
schizophrenia were published in the New England Journal of Medicine (NEJM).
• In March 2021, Karuna completed a follow-on public offering of its common stock, from which it received net proceeds of
$270.0 million.
• In November 2021, Karuna appointed Charmaine Lykins as Chief Commercial Officer. Ms. Lykins has over 25 years of psychiatry and
neuroscience-focused pharmaceutical launch experience across multiple organizations recognized as leaders in developing and
commercializing medicines for central nervous system disorders.
Expected
milestones
• Topline data from the Phase 3 EMERGENT-2 trial is expected in mid-2022.
• Karuna plans to initiate a Phase 3 program evaluating KarXT for the treatment of psychosis in elderly patients with Alzheimer’s disease
Discovery/
Preclinical
Phase 1
Phase 2
Phase 3
Upcoming Milestone
EMERGENT-2
Phase 3 topline data readout
mid-2022
Phase 2 ready
Phase 3 initiation mid-2022
in mid-2022.
Karuna’s pipeline
Therapeutic
Candidate5
Indication
KarXT
Schizophrenia – psychosis
Schizophrenia – psychosis
in adults with an inadequate
response to standard of care6
Schizophrenia – negative and
cognitive symptoms7
Alzheimer’s disease psychosis
KAR-201
Undisclosed – muscarinic-
targeted pain candidate
KAR-301
Undisclosed – muscarinic-
targeted pain candidate
KAR-401
Undisclosed – muscarinic-
targeted pain candidate
KAR-501
Undisclosed – target-
agnostic drug candidate8
5 Therapeutic candidates are investigational and have not been cleared by the FDA for use in the U.S.
6 Trial to evaluate KarXT when added to standard of care.
7 Planning stage.
8 In collaboration with PsychoGenics; Note – pipeline supplied by Karuna Therapeutics. Shading of bars does not conform to key used for other Founded Entity pipelines within
this document.
PureTech Health plc Annual report and accounts 2021 59
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity
PureTech
Ownership1
Therapeutic Candidate2
Indication
Stage of Development
Akili
22.3%
EndeavorRx®3 (AKL-T01)4
Cognitive dysfunction in depression
Cognitive dysfunction in multiple sclerosis
Attention in autism spectrum disorder
Post-COVID cognitive dysfunction
Post-ICU cognitive dysfunction
Cancer-related cognitive impairment
D5
D
D
D
D
D
D
Attention-deficit/hyperactivity
disorder (ADHD)
Major depressive disorder
Multiple sclerosis
Autism spectrum disorder
Acute cognitive dysfunction
Acute cognitive dysfunction
Acute cognitive dysfunction
Commercial
Proof-of-concept completed
Proof-of-concept completed
Proof-of-concept completed
Early scientific and
clinical research
Early scientific and
clinical research
Early scientific and
clinical research
• Akili is pioneering the development of game-changing technologies to usher in a new era of cognitive medicine. Focused on delivering cutting-edge
digital diagnostics, treatments and monitors for cognitive impairments across disease and disorders, Akili is combining scientific and clinical rigor with the
ingenuity of the technology and entertainment industries and challenging the status quo of medicine. Akili’s treatments are designed to directly activate
the networks in the brain responsible for cognitive function and have been rigorously tested in extensive clinical studies, including prospective
randomized, controlled trials. Driven by Akili’s belief that effective medicine can also be fun and engaging, Akili’s products are delivered through
captivating action video game experiences.
• Akili’s EndeavorRx® treatment has been granted clearance by the FDA for marketing as a prescription treatment and has received a CE Mark certification
in Europe as a prescription-only digital therapeutic. It is based on a patented technology that is designed to deploy sensory and motor stimuli that target
and activate the neurological systems known to play a key role in certain cognitive functions, including attentional control. Akili’s approach aims to
improve cognitive impairment and related symptoms through improving neural processing at the functional neurological level. The treatment is delivered
through an immersive video game, resulting in non-invasive, patient-friendly medicine that can be used at home.
• By combining high-quality neurological and clinical science and consumer-grade entertainment, Akili is seeking to produce a new type of medical
product that can potentially offer safe, effective, scalable and personalized treatments for patients across a range of neuropsychiatric conditions and allow
patients to experience medicine in a new way.
• Akili is leveraging new digital platforms for its digital therapeutic products to enable launch in a variety of models. The company is offering Akili Assist®,
integrated components that enable streamlined patient service, data processing and distribution functions in its initial product launch to allow flexibility,
learning and iteration as it continues to invest in the delivery of digital therapeutic solutions to the market.
Program
discovery
process by the
PureTech team
Patient need
and market
application
• We were interested in identifying novel approaches to measure and improve cognition in a safe and non-invasive manner. We
engaged with leading neuroscientists and clinicians who had been studying the effects of video games on cognition and the
underlying neural processes accessible by sensory stimulation, and we identified and in-licensed from the University of California, San
Francisco, or UCSF, the intellectual property invented by Dr. Adam Gazzaley, M.D., Ph.D., Professor of Neurology, Psychiatry and
Physiology at UCSF and the inventor of the SSME platform technology, in October 2013 before his work was published as a cover
story in the journal Nature. We then collaborated with Dr. Gazzaley to translate the underlying academic device into a medical
intervention, including overseeing the initial product development and design and the implementation of the initial POC studies. We
helped to build development and commercial teams and raise funds. One of the core PureTech team members who helped lead the
identification and platform development is now the Chief Executive Officer of Akili.
• Akili’s FDA-cleared product, EndeavorRx, is based on a patented platform technology exclusively licensed from UCSF. The proprietary
platform targets cognitive interference processing while also adapting difficulty automatically in real-time, allowing individuals of
wide-ranging ability levels to interact with the product in their homes without the need for physician calibration or additional
hardware. Dr. Gazzaley currently serves as the Chief Scientific Advisor and a board member of Akili. Daphne Bavelier, Ph.D., Associate
Professor in the Department of Brain and Cognitive Sciences at the University of Rochester and at the University of Geneva, is
a co-founding scientific advisor.
• Cognitive dysfunction is a key feature of many neuropsychiatric disorders, including ADHD, ASD, MS, major depressive disorder, or
MDD, mild cognitive impairment, or MCI, traumatic brain injury, or TBI, and AD. The treatment of the cognitive dysfunction
associated with these conditions is only partially served, or not served at all, by currently available medications or by in-person
behavioral therapy. There are approximately 6.4 million pediatric ADHD patients in the U.S. and this market – and other markets
where Akili’s cognitive dysfunction targeting products may address the cognitive dysfunction associated with neuropsychiatric
disorders – represent significant potential opportunities for the company.
• Evidence is mounting on long-term neurological and cognitive symptoms that can persist in some COVID-19 patients after initial
diagnosis, even after the virus is no longer detected in the body. A study published in Neuropsychopharmacology led by Drs.
Abhishek Jaywant and Faith Gunning at Weill Cornell Medicine and New York-Presbyterian found that difficulties in attention,
multitasking and processing speed were common in hospitalized patients recovering from COVID-196. Of the patients in their study,
81% exhibited some degree of cognitive impairment6. Recent research also shows these cognitive impairments may persist
post-hospitalization and commonly occur in “post-COVID long haulers” or “Long COVID” patients. These impairments can have
a significant impact on survivors’ daily functioning and quality of life, impacting the ability of most COVID-19 long haulers to work for
six months or more according to a recent study7.
Milestones
achieved and
development
status
• In the January 2022 post-period, Akili entered into a definitive agreement to become publicly traded via a merger with Social Capital
Suvretta Holdings Corp. I (“SCS”) (Nasdaq: DNAA), a special purpose acquisition company. The transaction is expected to close in
mid-2022, after which Akili will be listed on the Nasdaq stock market under the new ticker symbol “AKLI”. The transaction implies
a post-money equity value of the combined company of up to approximately $1 billion and is expected to deliver up to $412 million
in gross cash proceeds to Akili, including the contribution of up to $250 million of cash held in SCS’s trust account and approximately
$162 million from PIPE investors at $10 per share.
1 As of December 31, 2021, PureTech’s percentage ownership of Akili was approximately 22.3% on a diluted basis. This calculation includes outstanding shares, options, and
warrants, but excludes unallocated shares authorized to be issued pursuant to equity incentive plans.
2 These therapeutic candidates are regulated as devices and their development has been approximately equated to phases of clinical development. With the exception of
EndeavorRx, candidates are investigational and have not been cleared by the FDA for use in the U.S.
3 EndeavorRx® is a digital therapeutic indicated to improve attention function as measured by computer-based testing in children ages 8-12 years old with primarily inattentive
or combined-type ADHD, who have a demonstrated attention issue. Patients who engage with EndeavorRx demonstrate improvements in a digitally assessed measure, Test
of Variables of Attention (TOVA®) of sustained and selective attention and may not display benefits in typical behavioral symptoms, such as hyperactivity. EndeavorRx should
be considered for use as part of a therapeutic program that may include clinician-directed therapy, medication, and/or educational programs, which further address symptoms
of the disorder. There were no serious adverse events; 9.3% of subjects experienced side effects, including frustration, headache, dizziness, emotional reaction, nausea or
aggression. EndeavorRx is only available to your patients through a prescription, and is not intended as a stand-alone therapeutic or a substitute for your patient’s medication.
4 Multiple IRBs have determined AKL-T01 to be a non-significant risk device. Akili has obtained IRB approval independently or in collaboration with independent clinical research
institutions for all past and ongoing human data collection for clinical research in the United States. We do not control the clinical or regulatory development of Akili’s product
candidates. We do not have a direct interest in Akili’s therapeutic or therapeutic candidates. Our interest in Akili’s therapeutic and therapeutic candidates is limited to our
equity interest in Akili and any potential appreciation in the value of such equity interest, and we do not control the clinical or regulatory development of Akili’s therapeutic
candidates. Akili is well-protected with a robust intellectual property portfolio. Akili was incorporated in February 2012.
5 The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
6 Jaywant et al. Neuropsychopharmacol. (2021).
7 David et al. Preprint. (2020).
60 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Milestones
achieved and
development
status
(continued)
Expected
milestones
Akili’s pipeline
• In May 2021, Akili announced the closing of a $160 million combined equity and debt financing. With the completion of the
oversubscribed Series D financing, the funding is expected to accelerate commercialization of EndeavorRx, enable expansion of core
technologies to treat acute and chronic cognitive disorders and drive further research and development of potential new digital
therapeutics.
• In March 2021, the full data from a multi-site open-label study (the STARS Adjunct study) evaluating the impact of EndeavorRx
(AKL-T01) on symptoms and functional impairments in children with ADHD was published in Nature Digital Medicine. Statistically
significant improvement was demonstrated in all predetermined endpoints of the study, which included parent and clinician ratings of
children’s ADHD symptoms related impairments in daily life.
• In the February 2022 post-period, Akili announced the publication of full data in the medical journal PLOS ONE from a single
arm, unblinded study conducted by Dr. Elysa Marco at Cortica Healthcare and Drs. Joaquin Anguera and Courtney Gallen at
the University of California, San Francisco. Data from the study show that EndeavorRx treatment resulted in increased brain activity
related to attention function, as measured by electroencephalography (EEG), which correlated with improvements in objective
behavioral measures of attention.
• In September 2021, Akili announced topline results of a Phase 2 study of SDT-001 (Japanese version of AKL-T01). The study,
conducted by Akili partner Shionogi, was designed to evaluate the feasibility, safety and efficacy of the digital therapeutic in children
with ADHD and to inform the design of a potential pivotal study. To enable this clinical trial, Akili localized its AKL-T01 technology for
use in the Japanese market, which included adapting for language and culture and establishing infrastructure in Japan to support the
product. Results showed the treatment was well-received by patients and demonstrated improvements in ADHD inattention
symptoms consistent with those seen across previous studies of AKL-T01.
• In July 2021, Akili introduced new gaming features and functionalities to its EndeavorRx treatment. Akili is releasing these new
gameplay features as it expands its pre-launch activities to bring EndeavorRx to families and healthcare professionals.
• In April 2021, Akili announced collaborations with Weill Cornell Medicine, New York-Presbyterian Hospital and Vanderbilt University
Medical Center to evaluate Akili digital therapeutic AKL-T01 as a treatment for patients with cognitive dysfunction following
COVID-19 (also known as “COVID fog”). Under each collaboration, Akili will work with research teams at each institution to conduct
two separate randomized, controlled clinical studies evaluating AKL-T01’s ability to target and improve cognitive functioning in
COVID-19 survivors who have exhibited a deficit in cognition.
• In August 2021, Akili and Australian digital health company TALi® (ASX: TD1), completed an agreement for Akili to license TALi’s
technology designed to address early childhood attention impairments. The companies plan to work together to execute clinical
trials of the TALi technology in pediatric ADHD in the U.S. and pursue FDA regulatory clearance. Under the terms of the agreement,
Akili will lead potential U.S. commercialization and roll-out.
• In the March 2022 post-period, Akili appointed Jon David as Chief Product Officer. A 20-year veteran of the games industry, David
joins Akili to develop and execute the strategic vision of Akili’s future product pipeline after serving as Vice President and General
Manager at Glu Mobile, acquired in 2021 by Electronic Arts, where he led the development of both new IP and hit franchises
including Covet Fashion and Diner Dash Adventures.
• Akili’s transaction with SCS is expected to close in mid-2022, after which Akili will be listed on the Nasdaq stock market under the new
ticker symbol “AKLI”.
• Akili expects to expand its pre-launch activities to bring EndeavorRx to families and healthcare professionals.
• Akili expects data from its pilot studies in COVID fog in the second half of 2022.
Commercial Path
Research
POC
Pivotal
Commercial
Pediatric ADHD
8-12 y/o (U.S.)
Pediatric ADHD (EU)
SSME
Pediatric ADHD
6-17 y/o (Japan)
Pediatric ADHD
13-17 y/o (U.S.)
Adult ADHD
18+ y/o (U.S.)
TALi
Early childhood ADHD
3-8 y/o (U.S.)
Attention in autism
spectrum disorder (ASD) (U.S.)
Cognitive dysfunction in
multiple sclerosis (MS) (U.S.)
SSME
Cognitive dysfunction in
depression (MDD) (U.S.)
Acute cognitive dysfunction
(COVID, Post-ICU, CRCI) (U.S.)
Cognitive monitoring:
screening and assessments
Phase completed
Research: Early scientific and clinical research for the technology POC: Proof of Concept Pivotal: Pivotal study
Commercial: Product available for commercialization
PureTech Health plc Annual report and accounts 2021 61
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity PureTech Ownership1
Therapeutic Candidate2,3
Indication
Gelesis4
23.5%
Plenity®5
Plenity® for adolescents
GS200
GS300
GS500
D
D
D
D
D
Weight management
Adolescent weight management
Weight management in type 2
diabetes (T2D)/prediabetes
Non-alcoholic steatohepatitis/
non-alcoholic fatty liver disease
(NASH/NAFLD)
Functional constipation
Stage of Development
Commercial
Pending Discussion with FDA6
Clinical Trial Complete
Clinical
Pivotal
• Gelesis is developing a novel category of therapies for obesity and GI-related chronic diseases. In April 2019, Gelesis received clearance from the FDA for
its first product, Plenity (Gelesis100), an aid for weight management in adults with excess weight or obesity, a BMI of 25-40 kg/m2, when used in
conjunction with diet and exercise. In June 2020, Gelesis received a CE Mark for Plenity as a class III medical device indicated for weight loss adults with
a BMI of 25-40 kg/m2, when used in conjunction with diet and exercise, which allows Gelesis to market Plenity throughout the European Economic Area
and in other countries that recognize the CE Mark.
• Given challenges associated with pharmacological and invasive surgical treatments for obesity, Gelesis designed an approach with an oral, non-invasive,
non-systemic mechanism of action and a highly favorable safety and efficacy profile. Gelesis’ therapeutic candidates work in the GI tract and pass through
the body without being absorbed. Their superabsorbent hydrogels mimic some of the properties of raw vegetables. They are conveniently administered
in capsules and act locally in the stomach and intestines, helping people feel satisfied with smaller portions so they can eat less and lose weight, while still
enjoying foods they love as part of a reduced-calorie diet. Because Gelesis’ technology acts mechanically and is not systemically absorbed, the
therapeutic candidates are treated as devices for regulatory approval purposes.
Program
discovery
process by the
PureTech team
• We were interested in creating an effective and safe therapy for obesity
given the tremendous need, significant health implications and failure of
prior approaches to effectively engage and serve the breadth of the
population affected. We consulted with leading obesity experts to
brainstorm the characteristics of an ideal approach, which we decided was
an orally administered mechanically acting device that’s expected to have
a favorable safety and tolerability profile, and we then conducted
a worldwide search for compelling technologies meeting these criteria.
We identified and in-licensed the core intellectual property from one of
our academic collaborators in October 2008, and we subsequently
co-invented additional intellectual property around a novel class of
biocompatible, superabsorbent hydrogels. One of the core PureTech team
members involved in the initial identification and development process
subsequently assumed the role of Chief Executive Officer of Gelesis, and
successfully attracted financing and built a strong development and
commercial leadership team.
Patient need
and market
application
• The Gelesis advisory team is comprised of leading experts in obesity and its related comorbidities, clinical research and development
and advanced biomaterials, including Caroline Apovian, M.D., Professor of Medicine and Pediatrics, Boston University School of
Medicine and Co-Director, Center for Weight Management and Wellness, Endocrinology, Diabetes and Hypertension, Brigham and
Women’s Hospital; Louis J Aronne, M.D., FACP, Director of the Comprehensive Weight Control Program at Weill Cornell Medicine;
Arne Astrup, M.D., Head of Department of Nutrition, Exercise and Sports at University of Copenhagen; Ken Fujioka, M.D., Director of
the Nutrition and Metabolic Research Center and the Center for Weight Management at the Scripps Clinic; James Hill, Ph.D.,
Chairman, Department of Nutrition Sciences, Director, Nutrition Obesity Research Center, University of Alabama; Professor of
Medicine and Pediatrics, University of Colorado; Scott Kahan, M.D., MPH, Director of the National Center for Weight and Wellness;
Lee M Kaplan, M.D., Ph.D., Director of the Obesity, Metabolism and Nutrition Institute at Massachusetts General Hospital; Bennett
Shapiro, M.D., Co-Founder and Non-Executive Director at PureTech and former Executive Vice President of Research for Merck; and
Angelo Tremblay, Ph.D., Professor at Laval University.
• Excess weight is growing rapidly in prevalence worldwide, with approximately 70% of American adults struggling with overweight and
obesity. Globally, there are more than 1.9 billion adults 18 years of age or older who have overweight and 600 million who have
obesity. In addition to the adult population, the pediatric population is also suffering from an obesity epidemic. According to the
CDC, by 2016, obesity in the U.S. has more than tripled in children and adolescents since the 1970s. In 2017-2018, more than one-third
of children and adolescents had excess weight or obesity. According to a study by WHO, in 2016, over 340 million children and
adolescents aged 5-19 had excess weight or obesity. Obesity-related conditions, such as heart disease, stroke, type 2 diabetes,
NASH/NAFLD and certain types of cancer, are some of the leading causes of preventable death. Functional constipation and NASH/
NAFLD affect approximately 30 million and 80 to 100 million individuals, respectively, in the U.S. Type 2 diabetes and prediabetes
affect approximately 32 million and 88 million individuals, respectively, in the U.S.
• Current treatments for patients with overweight and obesity begin with lifestyle modification, such as diet and exercise. When healthy
eating and physical activity fail to produce the desired results, physicians may consider pharmaceutical therapies, device implantation
or surgical treatments, such as gastric bypass and gastric banding (for patients with more severe obesity). These approaches are
associated with significant safety concerns, lifestyle impact, complexity of use, high cost and compliance issues that have limited their
adoption.
• Plenity, indicated for adults with a BMI of 25-40 kg/m2 when used in conjunction with diet and exercise, thus giving it the broadest
label of any prescription weight management approach, has an important market segment for this product which is adults with BMI
<35 kg/m² (approximately 130 million adults in the U.S.). The consumer expectations of weight loss within this group and the desire
for a strong safety profile provide a particularly differentiated opportunity for Plenity.
1 As of March 31, 2022, PureTech’s beneficial ownership of Gelesis was approximately 23.5%. PureTech is eligible to receive additional earnout shares in accordance with the
terms of the business combination agreement. PureTech is also eligible to receive certain payments from Gelesis under its license agreement, including sublicense payments
and royalties on sales of certain products, including Plenity.
2 The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
3 These therapeutic candidates are regulated as devices and their development has been approximately equated to phases of clinical development. With the exception of
Plenity, therapeutic candidates are investigational and have not been cleared by regulatory authorities for use in any jurisdiction.
4 Gelesis’ completed and ongoing studies have been approved by the applicable reviewing Institutional Review Boards, or IRBs, as nonsignificant risk device studies. Gelesis also
has ongoing discovery efforts to expand its pipeline. Our board designees represent a minority of the members of the board of directors of Gelesis, and we do not control the
clinical or regulatory development or commercialization of Gelesis’ therapeutics and therapeutic candidates. We have an interest in Gelesis’ therapeutic candidates through
our minority equity investment as well as our right to royalty payments as a percentage of net sales pursuant to a license agreement between us and Gelesis. Gelesis is well
protected with a robust intellectual property portfolio. Gelesis was incorporated in February 2006.
5 Important Safety Information about Plenity®: Patients who are pregnant or are allergic to cellulose, citric acid, sodium stearyl fumarate, gelatin, or titanium dioxide should not
take Plenity. To avoid impact on the absorption of medications: For all medications that should be taken with food, take them after starting a meal. For all medications that
should be taken without food (on an empty stomach), continue taking on an empty stomach or as recommended by your physician. The overall incidence of side effects with
Plenity was no different than placebo. The most common side effects were diarrhea, distended abdomen, infrequent bowel movements, and flatulence. Contact a doctor right
away if problems occur. If you have a severe allergic reaction, severe stomach pain, or severe diarrhea, stop using Plenity until you can speak to your doctor. Rx Only. For the
safe and proper use of Plenity or more information, talk to a healthcare professional, read the Patient Instructions for Use, or call 1-844-PLENITY.
6 Contingent on FDA review of the research plan.
62 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Milestones
achieved and
development
status
• In December 2021, Gelesis announced that Plenity is now
broadly available across the U.S. to adults who meet the
prescription criteria.
• In the January 2022 post-period, Gelesis announced the
completion of its business combination with Capstar Special
Purpose Acquisition Corp. (NYSE: CPSR) (“Capstar”) to become
Gelesis Holdings, Inc. The company began trading on the
New York Stock Exchange under the ticker symbol “GLS”
on January 14, 2022.
• In the January 2022 post-period, Gelesis launched the “Who
Said?” marketing campaign across the U.S., which challenges
many long-held cultural and societal assumptions around weight
loss. Plenity’s multichannel campaign encompasses TV, digital,
social and Out of Home (OOH) to grow awareness of Plenity’s
novel approach to weight management.
• In the March 2022 post-period, Gelesis announced preliminary results from its broad awareness media campaign, noting that within
the first three weeks, Gelesis saw a 3-fold increase in web traffic and 3.5-fold increase in the number of individuals seeking a new
prescription compared to previous months when supply was limited.
• In November 2021, Gelesis’ first commercial-scale manufacturing line was completed and validated, and the company received a $30
million fully paid pre-order, in addition to the $10 million pre-order received in January 2021, for Plenity from its partner Ro, a leading
U.S. direct-to-patient healthcare company.
• In late 2021, Gelesis completed a preliminary analysis of the LIGHT-UP study, a multicenter, randomized, double-blind, placebo-
controlled, investigational study that enrolled 254 subjects with overweight or obesity who also have prediabetes or type 2 diabetes,
and that analysis remains underway. The study was designed to assess the change in body weight in adults after six months of
treatment with a new oral superabsorbent hydrogel (GS200) or placebo. The study met both of its primary endpoints: the proportion
of participants who achieved at least 5% body weight loss (defined as “Responders”) and the change in body weight as compared to
placebo after six months of therapy. The LIGHT-UP study was conducted at 36 clinical sites in Europe and North America with 208
subjects who completed the 6-month study.
• In November 2021, Gelesis announced a publication in Nature’s Scientific Reports describing the genesis of the underlying
technology and engineering process for Gelesis’ non-systemic superabsorbent hydrogels. The paper describes their therapeutic
approach for weight management as well as possible future solutions for other gut-related conditions.
• In May 2021, Gelesis presented a scientific poster at the American Association of Clinical Endocrinology (AACE) 2021 Annual Virtual
Meeting. The post-hoc analysis showed that treatment for weight management with Plenity decreased a marker for liver fibrosis (the
NAFLD fibrosis score) compared to placebo.
• In the January 2022 post-period, Gelesis announced the appointment of Inogen Co-Founder and Former CFO, Ali Bauerlein, to its
Board of Directors and Audit Committee. Ms. Bauerlein brings success in scaling to $300M+ revenue in direct-to-consumer business
model and public company execution as Gelesis plans to scale Plenity to meet growing consumer demand.
• In April 2021, Gelesis announced the appointment of marketing executive Jane Wildman to its Board of Directors. Ms. Wildman has
extensive experience as a board member, President and Chief Marketing Officer across Fortune-25, mid-sized and start-up
companies, including over 25 years at Procter & Gamble.
• In December 2021, Gelesis announced the appointment of leading health and nutrition authority Joy Bauer, MS, RDWN, CDN
as Chief Nutrition Officer of Plenity.
Gelesis’ pipeline
Product
Research Focus
Preclinical
Clinical
Pivotal
Clearance
Weight Management in Patients
with Excess Weight and Obesity
Completed
FLOW completed
GLOW completed
FDA Cleared
& EU CE Mark
Plenity® for
adolescents*
Weight Management in
Adolescent Patients with
Excess Weight and Obesity
GS200*
Weight Management and Glycemic
Control in Patients with Type 2
Diabetes and Pre-diabetes
LIGHT-UP Complete,
Primary Endpoints
Achieved
GS300*
NAFLD/NASH
Ongoing
GS500*
Functional Constipation
(formerly classified as CIC)
Pilot Clinical Study
Completed
* Products are investigational and have not been cleared by the FDA for use in the U.S.
PureTech Health plc Annual report and accounts 2021 63
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity PureTech Ownership1
Therapeutic Candidate2,3
Indication
Stage of Development
Vor Bio4
8.6%
VOR33
(CD33)
VCAR335
B
B
Acute myeloid leukemia
Myelodysplastic syndromes,
myeloproliferative neoplasms
Bridge-to-transplant AML
Phase 1/2a
Preclinical
Phase 1/2
• Vor Bio is a clinical-stage cell and genome engineering company that aims to change the standard of care for patients with blood cancers by engineering
hematopoietic stem cells (HSC) to enable targeted therapies post-transplant. The only way for many of these patients to achieve durable remission or
a cure is through hematopoietic stem cell transplant, or HSCT. Despite this, approximately 40% of AML patients relapse within two years of their
transplant and face an extremely poor prognosis, with a two-year survival rate of less than 20%. Though targeted therapies are an effective treatment for
many patients in transplant settings who relapse, these therapies are limited by toxicities resulting from the expression of the surface targets on healthy
cells, including these new transplanted cells, which is referred to as on-target toxicity.
Changing the traditional tumor target paradigm
(cid:56)(cid:86)(cid:69)(cid:72)(cid:77)(cid:88)(cid:77)(cid:83)(cid:82)(cid:69)(cid:80)(cid:4)(cid:84)(cid:69)(cid:86)(cid:69)(cid:72)(cid:77)(cid:75)(cid:81)
Vor treatment approach
(cid:51)(cid:82)(cid:17)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)(cid:88)(cid:83)(cid:92)(cid:77)(cid:71)(cid:77)(cid:88)(cid:93)
(cid:39)(cid:69)(cid:82)(cid:71)(cid:73)(cid:86)(cid:4)
(cid:71)(cid:73)(cid:80)(cid:80)(cid:4)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)
(cid:73)(cid:92)(cid:84)(cid:86)(cid:73)(cid:87)(cid:87)(cid:77)(cid:83)(cid:82)
(cid:44)(cid:73)(cid:69)(cid:80)(cid:88)(cid:76)(cid:93)(cid:4)
(cid:71)(cid:73)(cid:80)(cid:80)(cid:4)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)
(cid:73)(cid:92)(cid:84)(cid:86)(cid:73)(cid:87)(cid:87)(cid:77)(cid:83)(cid:82)
(cid:58)(cid:83)(cid:86)(cid:4)(cid:84)(cid:69)(cid:86)(cid:69)(cid:72)(cid:77)(cid:75)(cid:81)
(cid:39)(cid:69)(cid:82)(cid:71)(cid:73)(cid:86)(cid:4)
(cid:71)(cid:73)(cid:80)(cid:80)(cid:4)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)
(cid:73)(cid:92)(cid:84)(cid:86)(cid:73)(cid:87)(cid:87)(cid:77)(cid:83)(cid:82)
(cid:44)(cid:73)(cid:69)(cid:80)(cid:88)(cid:76)(cid:93)(cid:4)
(cid:71)(cid:73)(cid:80)(cid:80)(cid:4)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)
(cid:73)(cid:92)(cid:84)(cid:86)(cid:73)(cid:87)(cid:87)(cid:77)(cid:83)(cid:82)
HSCs matched
from healthy
donor
Genome
engineering
removes surface
targets (eg: CD33,
CD123, CLL-1)
Patient receiving
Vor eHSC
transplant
Engineered patient
with engrafted
Vor eHSCs
Companion
therapeutics
Treatment-resistant marrow
unlocking the potential of
companion therapeutics
• Vor Bio’s proprietary platform leverages its expertise in HSC biology and genome engineering to remove surface targets expressed by cancer cells by
genetically modifying HSCs. By removing these targets, Vor Bio makes these HSCs and their progeny treatment-resistant to targeted therapies and enables
these treatments to selectively destroy cancerous cells while sparing healthy cells. As a result, Vor Bio’s engineered HSCs (eHSC) are designed to limit the
on-target toxicities associated with these targeted therapies, or companion therapeutics, thereby enhancing their utility and broadening their applicability.
• Vor Bio’s platform and expertise allow it to advance its goal of replacing standard HSC transplants with next-generation, treatment-resistant eHSCs that
unlock the potential of highly potent targeted therapies.
Program
discovery
process by the
PureTech team
• We were interested in approaches to treat hematological malignancies that currently have poor response rates or poor adverse event
profiles despite recent advances in cell therapies and targeted therapies. We engaged leading hematological cancer specialists and
we became aware of work from the laboratory of Vor Bio Scientific Board Chair, Siddhartha Mukherjee, M.D., Ph.D., Assistant Professor
of Medicine at Columbia University and Pulitzer Prize-winning author of The Emperor of All Maladies: A Biography of Cancer.
Dr. Mukherjee pioneered the idea of genetically engineering stem cells to eliminate a particular target such that healthy stem cells
and progeny cells would be spared from targeted cancer therapy. We worked with Dr. Mukherjee on this intellectual property,
which Vor Bio exclusively in-licensed from Columbia in April 2016, and on advancing this concept through critical POC experiments.
With our support, Vor Bio secured additional intellectual property rights (both in-licensed from Columbia and owned by Vor Bio),
assembled an excellent research team and completed a round of fundraising.
Patient need
and market
application
• The prognosis for relapsed and refractory blood-borne malignancies is very poor and can be measured in a few months, depending
on patient-specific risk factors. There are an estimated 42,500 new diagnoses of AML each year in the U.S., Europe and Japan. The
two-year survival rate for patients with AML who relapse post-transplant is less than 20%, but there are significant differences in
prognosis depending on several factors, including the age of the patient at diagnosis.
Milestones
achieved and
development
status
• Targeted therapies, such as CAR-T cells and bispecific antibodies, antibody-drug conjugates and conventional mAbs, have shown
clinical activity, particularly in patients with certain hematologic malignancies expressing B cell markers. However, these targeted
therapies frequently target both cancer and normal cells, causing substantial toxicities and limiting their potential. There is a need for
new strategies that can enable selectively targeting cancer cells with limited impact on a patient’s normal cells.
• In February 2021, Vor Bio announced the pricing of its initial public offering of common stock on the Nasdaq Global Market
under the symbol “VOR”. The aggregate gross proceeds to Vor Bio from the offering were approximately $203.4 million,
before deducting the underwriting discounts and commissions and other offering expenses payable by Vor Bio.
• In the March 2022 post-period, Vor Bio announced VCAR33 is now made up of two programs with different cell sources.
The VCAR33 programs are chimeric antigen receptor T (CAR-T) cell therapy candidates designed to target CD33, a clinically-
validated target for AML.
− VCAR33AUTO uses autologous cells from each patient, and is being studied in an ongoing Phase 1/2 clinical trial sponsored by
the National Marrow Donor Program (NMDP) in young adult and pediatric patients with relapsed/refractory AML in a bridge-to-
transplant study.
− VCAR33ALLO uses allogeneic healthy donor-derived cells. There has been an increasing appreciation for the value of cell phenotype
in CAR-T approaches, and HLA-matched healthy donor cells are a potentially superior cell phenotype with improved persistence
and in vivo expansion capability.
1 As of March 4, 2022, PureTech’s ownership percentage of Vor Bio was approximately 8.6% on an outstanding voting share basis. This calculation includes outstanding shares,
options, and warrants, but excludes unallocated shares authorized to be issued pursuant to equity incentive plans.
2 The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
3 Therapeutic candidates are investigational and have not been cleared by regulatory authorities for use in any jurisdiction.
4 Vor Bio has an active IND on file with the FDA for VOR33 and an active IND is on file for VCAR33. PureTech does not have a direct interest in Vor Bio’s therapeutic candidates
or its proprietary platform. PureTech’s interest in Vor Bio’s therapeutic candidates and proprietary platforms is limited to its non-controlling equity interest in Vor Bio and any
potential appreciation in the value of such equity interest and PureTech does not control the clinical or regulatory development of Vor Bio’s therapeutic candidates. Vor Bio is
well-protected with a robust intellectual property portfolio. Vor Bio was incorporated in December 2015.
5 The VCAR33 construct is being studied in a Phase 1/2 clinical trial sponsored by the National Marrow Donor Program (“NMDP”), and the timing of data release is dependent
on the investigators conducting the trial.
64 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Milestones
achieved and
development
status
(continued)
Expected
milestones
• In the March 2022 post-period, Vor Bio announced it plans to collect initial data on VOR33 from the VBP101 clinical trial and initial
clinical data from the VCAR33ALLO program prior to IND submission for the Treatment System following ongoing discussions with the
FDA and alongside improved scientific understanding of the differences in T-cell sources. The combination of VOR33 followed by
treatment with VCAR33ALLO in the post-transplant setting may transform patient outcomes and offer the potential for cures for patients
that have limited treatment options. The VOR33 + VCAR33 Treatment System utilizes the same healthy donor allogeneic cell source
for both VOR33 and VCAR33ALLO. Vor Bio believes this approach will be a superior development pathway for this novel-novel
treatment combination.
• In September 2021, Vor Bio announced that the FDA granted Fast Track designation to VOR33 for the treatment of AML, allowing for
potential facilitated development and expedited review process.
• In September 2021, Vor Bio announced it is actively enrolling VBP101, a Phase 1/2a clinical trial for AML patients who currently have
limited treatment options. Vor Bio intends to investigate the VOR33/VCAR33 Treatment System, entailing VOR33 eHSC therapy
followed by VCAR33 as a companion therapeutic, initially for transplant-eligible patients suffering from AML. Vor Bio believes VCAR33
could be a potent anticancer therapy that, when combined with VOR33, could help obviate severe on-target myeloablative toxicities
and unlock the efficacy potential of VCAR33.
• In November 2021, Vor Bio announced its first multi-targeted Treatment System comprising VOR33-CLL1 multiplex-edited eHSC
therapy and VCAR33-CLL1 multi-specific CAR-T therapy. Vor continues to make progress on editing multiple antigens with its eHSC
platform. Vor Bio’s research demonstrates that multiplex genome editing of allogeneic hematopoietic stem cells may represent
another existing strategy to efficiently and safely edit multiple genes in blood stem cells, allowing the potential use of multi-targeted
blood cancer therapies.
• In June 2021, Vor Bio announced the build-out of an in-house clinical manufacturing facility in Cambridge, Massachusetts in the same
premises as Vor Bio’s current headquarters, to support flexible manufacturing for the company’s eHSC and CAR-T product candidate
pipeline for patients with blood cancers. Vor Bio anticipates that the facility will be operational in 2022.
• In July 2021, Vor Bio announced the formation of a collaboration with Janssen Biotech, Inc., one of the Janssen Pharmaceutical
Companies of Johnson & Johnson, to develop eHSC transplants combined with bi-specific antibody therapy for AML. The agreement
was facilitated by Johnson & Johnson Innovation. Under the terms of the collaboration, Vor Bio will investigate the combination of
these two technologies into a treatment solution, pairing Vor’s “invisible” eHSC transplant platform with one of Janssen’s bi-specific
antibodies in development for AML. The collaboration agreement provides that each company retains all rights and ownership to
their respective programs and platforms.
• In June 2021, Vor Bio entered into a multi-year strategic collaboration and license agreement with Abound Bio to research both
single-and-multi-targeted CAR-T treatments to be used in combination with Vor’s eHSC platform, with the goal of generating novel
treatment systems for patients fighting AML and other devastating forms of blood cancer.
• In January 2021, Vor Bio announced that the FDA had accepted the company’s IND application for VOR33. In May 2021, Vor Bio
announced that it received the Canadian clinical trial application clearance for VOR33 from Health Canada.
• Leveraging its proprietary platform, Vor Bio is exploring additional surface targets such as CD123, EMR2 and CD5, including multiplex
genome engineering approaches where multiple surface targets are removed. Additionally, Vor Bio is conducting ongoing discovery
efforts in commonly transplanted hematologic malignancies. PureTech does not control the clinical or regulatory development of
Vor Bio’s therapeutic candidates.
• In June 2021, Vor Bio announced the appointment of Matthew R. Patterson as Chairman of its Board of Directors. Mr. Patterson brings
nearly 30 years of senior leadership experience in the research, development and commercialization of innovative therapeutics, most
recently at Audentes Therapeutics, Inc., which he co-founded and led as the company’s Chief Executive Officer from its inception in
2012 through its acquisition by Astellas Pharma Inc. in January 2020.
• Vor Bio expects to report initial clinical data from VBP101, a Phase 1/2a clinical trial for VOR33 for patients with AML, in the second
half of 2022.
• Data from the ongoing Phase 1/2 NMDP-sponsored clinical trial evaluating VCAR33AUTO in young adult and pediatric patients with
relapsed/refractory AML in a bridge-to-transplant study are expected in 2022, depending on investigator’s timing of data release.5
• Vor Bio plans to submit an IND application in the first half of 2023 to support a Phase 1/2 clinical trial of VCAR33ALLO for patients with
relapsed/refractory AML.
• Vor Bio anticipates its in-house clinical manufacturing facility in Cambridge, MA will be operational in 2022.
• Vor Bio plans to collect initial data on VOR33 from the VBP101 clinical trial and initial clinical data from the VCAR33ALLO program prior
to IND submission for the VOR33 + VCAR33 Treatment System.
• Vor Bio plans to share preclinical data on its VOR33-CLL1 + VCAR33-CLL1 Treatment System approach at upcoming scientific
meetings in 2022.
• Leveraging its proprietary platform, Vor is exploring additional surface targets such as CD123, EMR2 and CD5 including multiplex
genome engineering approaches where multiple surface targets are removed.
• Vor Bio is conducting ongoing discovery efforts in commonly transplanted hematologic malignancies.
Vor Bio’s pipeline
Therapeutic Candidate
Indication
VOR33 (CD33)
Acute myeloid leukemia
Myelodysplastic syndromes,
myeloproliferative neoplasms
VCAR33
Bridge-to-transplant AML
VOR33/VCAR33
(Treatment System)
Acute myeloid leukemia
VOR33-CLL1 + VCAR33-
CLL1 (Treatment System)
Acute myeloid leukemia
Phase in progress
Phase completed
Discovery/
Preclinical
Phase 1
Phase 2
Phase 3 Upcoming Milestone
Phase 1/2a topline data
readout 2H 2022
Phase 1 data readout 2022
IND filing 2H 2022 following
initial VOR33 and NMDR
clinical data6
PureTech Health plc Annual report and accounts 2021 65
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity PureTech Ownership1
Therapeutic Candidate2,3
Indication
Stage of Development
Vedanta4
41.4%
VE303
VE202
VE416
VE800
VE707
B
B
B
B
B
C. difficile
Inflammatory bowel disease
Food allergy
Solid tumors
Gram-negative infections
Phase 3 Ready
Phase 2 Ready
Phase 1/2
Phase 1
Preclinical
• Vedanta is developing a new category of oral therapies based on defined consortia of bacteria isolated from the human microbiome and grown from pure
clonal banks. The human microbiome is increasingly implicated in various immune-mediated diseases. Vedanta is a leader in the field with capabilities
and deep expertise to discover, develop and manufacture live bacteria drugs. These include what is believed to be a leading intellectual property
position with the largest collection of human microbiome-associated bacterial strains, a suite of proprietary assays to select pharmacologically potent
strains, vast proprietary datasets from human interventional studies and facilities for current good manufacturing practice, or CGMP, compliant
manufacturing of rationally defined bacterial consortia in powder form. All of this work has helped move the microbiome field beyond correlation to
causation, and beyond fecal transplants or fractions to defined, characterized biologic drugs.
Rationally defined bacterial consortia
Program
discovery
process by the
PureTech team
Patient need
and market
potential
(cid:55)(cid:56)(cid:41)(cid:52)(cid:4)(cid:21)
(cid:55)(cid:56)(cid:41)(cid:52)(cid:4)(cid:22)
(cid:55)(cid:56)(cid:41)(cid:52)(cid:4)(cid:23)
(cid:51)(cid:86)(cid:69)(cid:80)(cid:4)(cid:69)(cid:72)(cid:81)(cid:77)(cid:82)(cid:77)(cid:87)(cid:88)(cid:86)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)
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(cid:39)(cid:83)(cid:80)(cid:83)(cid:82)(cid:77)(cid:94)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)
(cid:83)(cid:74)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:77)(cid:82)(cid:88)(cid:73)(cid:87)(cid:88)(cid:77)(cid:82)(cid:73)
(cid:56)(cid:76)(cid:73)(cid:4)(cid:69)(cid:71)(cid:88)(cid:77)(cid:90)(cid:73)(cid:4)(cid:77)(cid:82)(cid:75)(cid:86)(cid:73)(cid:72)(cid:77)(cid:73)(cid:82)(cid:88)(cid:87)(cid:4)(cid:88)(cid:86)(cid:69)(cid:90)(cid:73)(cid:80)(cid:4)(cid:72)(cid:83)(cid:91)(cid:82)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)
(cid:43)(cid:45)(cid:4)(cid:88)(cid:86)(cid:69)(cid:71)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:71)(cid:83)(cid:80)(cid:83)(cid:82)(cid:77)(cid:94)(cid:73)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:77)(cid:82)(cid:88)(cid:73)(cid:87)(cid:88)(cid:77)(cid:82)(cid:73)(cid:18)(cid:4)
(cid:56)(cid:76)(cid:73)(cid:93)(cid:4)(cid:87)(cid:76)(cid:77)(cid:74)(cid:88)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:75)(cid:89)(cid:88)(cid:4)(cid:81)(cid:77)(cid:71)(cid:86)(cid:83)(cid:70)(cid:77)(cid:83)(cid:88)(cid:69)(cid:4)(cid:71)(cid:83)(cid:81)(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:84)(cid:86)(cid:83)(cid:90)(cid:77)(cid:72)(cid:73)(cid:4)
(cid:71)(cid:83)(cid:80)(cid:83)(cid:82)(cid:77)(cid:94)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:86)(cid:73)(cid:87)(cid:77)(cid:87)(cid:88)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4)(cid:69)(cid:75)(cid:69)(cid:77)(cid:82)(cid:87)(cid:88)(cid:4)(cid:75)(cid:89)(cid:88)(cid:4)(cid:84)(cid:69)(cid:88)(cid:76)(cid:83)(cid:75)(cid:73)(cid:82)(cid:87)(cid:18)
(cid:55)(cid:88)(cid:77)(cid:81)(cid:89)(cid:80)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:83)(cid:74)(cid:4)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:73)(cid:72)(cid:4)
(cid:77)(cid:81)(cid:81)(cid:89)(cid:82)(cid:73)(cid:4)(cid:86)(cid:73)(cid:87)(cid:84)(cid:83)(cid:82)(cid:87)(cid:73)(cid:87)
(cid:56)(cid:76)(cid:73)(cid:93)(cid:4)(cid:73)(cid:80)(cid:77)(cid:71)(cid:77)(cid:88)(cid:4)(cid:69)(cid:4)(cid:86)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)(cid:83)(cid:74)(cid:4)(cid:77)(cid:81)(cid:81)(cid:89)(cid:82)(cid:73)(cid:4)
(cid:86)(cid:73)(cid:87)(cid:84)(cid:83)(cid:82)(cid:87)(cid:73)(cid:87)(cid:4)(cid:337)(cid:4)(cid:77)(cid:81)(cid:81)(cid:89)(cid:82)(cid:83)(cid:86)(cid:73)(cid:75)(cid:89)(cid:80)(cid:69)(cid:88)(cid:83)(cid:86)(cid:93)(cid:4)
(cid:69)(cid:82)(cid:72)(cid:4)(cid:77)(cid:81)(cid:81)(cid:89)(cid:82)(cid:83)(cid:84)(cid:83)(cid:88)(cid:73)(cid:82)(cid:88)(cid:77)(cid:69)(cid:88)(cid:77)(cid:82)(cid:75)(cid:18)
• We were interested in translating the crosstalk between the immune system and commensal microbes that live in our bodies
into therapeutics to modulate a range of immunological processes. We engaged with leading world-renowned experts in
immunology, including Dr. Ruslan Medzhitov, Professor of Immunobiology at Yale; Dr. Alexander Rudensky, a tri-institutional Professor
at the Memorial Sloan-Kettering Institute, the Rockefeller University, and Cornell University; Dr. Dan Littman, Professor of Molecular
Immunology at NYU; Dr. Brett Finlay, Professor at the University of British Columbia; and Dr. Kenya Honda, Professor at the School of
Medicine, Keio University. Drs. Honda and Rudensky demonstrated the role of the microbiota in inducing regulatory T cells and
uncovered some of the molecular mediators, known as short-chain fatty acids.
• We identified and in-licensed intellectual property from Dr. Honda when he was at Tokyo University in November 2011, before his
seminal work was published in the journals Science and Nature. Based on Dr. Honda’s work, we pioneered the concept of defined
consortia of microbes to modulate the immune system or treat bacterial infections. We played a critical role in the initial product
development, initial experiments and planning of key clinical studies, business development and fundraising, and a core PureTech
team member who helped lead the identification and platform development is now the Chief Executive Officer of Vedanta.
• Clostridioides difficile infection (CDI): The Centers for Disease Control and Prevention considers CDI one of the most urgent bacterial
threats. C. difficile infections account for approximately 12,800 deaths each year in the U.S. alone and there are approximately 500,000
cases annually, of which approximately 100,000 patients experience recurrence. Existing interventions include antibiotics such as
vancomycin, fidaxomicin, or metronidazole, which have the undesirable side effect of damaging the gut microbiome and leaving
patients vulnerable to re-infection. An alternative intervention, fecal microbiota transplantation (FMT), is an experimental procedure
that is exceedingly difficult to standardize and scale and is fraught with potential safety issues.
• Inflammatory Bowel Disease (IBD): Ulcerative colitis and Crohn’s disease, the most common types of IBD, affect about one million
adults in the U.S. and about seven million globally and the prevalence of IBD is expected to continue to grow. Many of the existing
interventions are limited by toxicities and systemic immune suppression.
• Allergies: Food allergies are a growing U.S. public health concern and have an estimated annual economic cost near $25 billion.
Peanut allergies specifically affect an estimated 4.6 million adults in the U.S. Current treatment options primarily center around
allergen avoidance. Desensitization regimens in development have limited efficacy, are risky, require treatment for life and may not be
cost-effective. Vedanta’s therapeutic candidate, VE416, is being developed to safely induce permanent tolerance to food allergens
including peanuts.
• Immuno-Oncology: Despite profound survival improvements in some patients, immune checkpoint inhibitors targeting PD-1, PDL-1
and CTLA-4 are only effective in 20-30% of patients. Common tumor types for which checkpoint inhibitors are utilized include lung,
bladder, skin and renal cancers. Vedanta’s immuno-oncology therapeutic candidate, VE800, is designed to act in combination with
approved checkpoint inhibitors and potentially other immunotherapies to safely improve their efficacy.
• The Microbiome Field: Moving Beyond FMTs and Fractions
− Unlike FMTs, which require the use of donors and are untargeted, inherently variable procedures, Vedanta’s approach is based on
bacterial consortia therapeutics, which are defined drug compositions produced from clonally isolated bacteria that can trigger
targeted immune responses.
− Unlike single-strain probiotics, defined consortia can robustly shift the composition of the gut microbiota and provide colonization
resistance against a range of intestinal infectious pathogens.
− Vedanta’s novel therapeutic candidates are administered as a lyophilized powder in a capsule dosage form, designed to have
specific effects on the immune system, including restoring the balance of the microbiome in the gut to treat immune and infectious
diseases and immunopotentiating responses to treat cancer.
1 As of December 31, 2021, PureTech’s percentage ownership of Vedanta Biosciences was approximately 41.4% on a diluted basis. This calculation includes outstanding shares,
options, and warrants, but excludes unallocated shares authorized to be issued pursuant to equity incentive plans.
2 The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
3 Therapeutic candidates are investigational and have not been cleared by regulatory authorities for use in any jurisdiction.
4 Active INDs or the foreign regulatory equivalent are on file for VE202, VE303, VE416 and VE800. Our board designees represent a majority of the members of the board of
directors of Vedanta, but Vedanta has its own independent management team. Our role in the development of Vedanta’s therapeutic candidates is through our representation
on its board of directors and our role as a substantial shareholder. Vedanta intellectual property portfolio is believed to provide a dominant position for the development and
commercialization of microbiome medicines based on defined consortia of gut bacteria. Vedanta was incorporated in December 2010.
5 Nearly 100,000 isolates obtained from >275 healthy donors from 4 continents, >3,000 WGS, extensively phenotyped.
66 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Milestones
achieved and
development
status
• In October 2021, Vedanta announced that its Phase 2 clinical trial of VE303, an orally administered investigational live biotherapeutic
product (LBP) in development for the prevention of recurrent CDI in high-risk patients, met its primary endpoint of preventing disease
recurrence through Week 8. VE303 achieved a 31.7% absolute risk reduction in rate of recurrence when compared with placebo,
representing a greater than 80% reduction in the odds of a recurrence. This is believed to be the most advanced clinical trial of an
investigational drug based on a rationally defined bacterial consortium, a microbiome-based therapeutic approach that delivers
orally administered candidates of precisely known composition that can be manufactured with pharmaceutical-grade consistency.
Based on the Phase 2 data, the Biomedical Advanced Research and Development Authority (BARDA) exercised its first contract
option for additional funding of $23.8 million, pursuant to its existing 2020 contract with Vedanta, to support a planned Phase 3
clinical trial of VE303.
• In January 2021, Vedanta announced a $25 million investment from Pfizer, as part of the Pfizer Breakthrough Growth Initiative. Vedanta
will retain control of all of its programs and has granted Pfizer a right of first negotiation on VE202. As part of the investment, Michael
Vincent, M.D., Ph.D., Senior Vice President and Chief Scientific Officer, Inflammation & Immunology Research Unit at Pfizer, joined
Vedanta’s Scientific Advisory Board.
• In July 2021, Vedanta closed a $68 million financing, which included the $25 million investment from Pfizer announced in January 2021.
• In late 2021, Vedanta completed the build-out of its Phase 3 and commercial launch CGMP manufacturing facility for supply of VE303.
• A Phase 1/2, investigator-sponsored clinical study exploring use of VE416 in combination with an oral peanut immunotherapy is
underway at Massachusetts General Hospital. VE416 consists of seven bacterial strains of the Clostridia class, which were selected
based on their ability to induce immune tolerance in the gut.
• A new Phase 2 investigator-sponsored trial evaluating VE303 in patients with hepatic encephalopathy (HE) was initiated by the
University of Michigan Hospitals-Michigan Medicine. This randomized, double-blind, placebo-controlled trial is planned to enroll up
to 18 adult patients with a confirmed diagnosis of cirrhosis and history of at least one episode of overt HE.
• In July 2021, Vedanta announced results from the Phase 1 study evaluating the safety and initial clinical activity of VE800, and
immuno-oncology therapeutic candidate, in combination with Bristol Myers Squibb’s Opdivo® (nivolumab) in 54 patients across select
types of advanced or metastatic cancers. VE800 demonstrated an acceptable safety and tolerability profile, although the observed
response rates did not meet the prespecified criteria to expand into the next stage of the study. Vedanta is analyzing blood, stool,
and tumor samples from patients in whom response or disease control was observed in order to profile patient subtypes that might
benefit from microbiome manipulation. Vedanta plans to present the results at a future medical conference and will continue work to
identify cancer settings and patient populations that might benefit from microbiome manipulation with its defined bacterial consortia.
• In February 2021, Vedanta announced the appointment of Mark Mullikin as Chief Financial Officer. Mr. Mullikin brings 25 years of
experience raising and deploying capital for life sciences companies, and most recently held leadership roles in finance and investor
relations at publicly traded Editas Medicine and Novartis.
• In October 2021, Vedanta announced the appointment of Simona Levi as Chief Legal Officer and Corporate Secretary. Dr. Levi brings
over 25 years of U.S. and international legal experience with private and public companies across the life sciences industry, focusing
on complex transactions, intellectual property law and litigation and corporate governance.
• Vedanta also has ongoing discovery efforts to expand its pipeline, including VE707. VE707 is Vedanta’s preclinical discovery program
for the prevention of infection and recurrence of colonization with several multidrug-resistant organisms, including carbapenem-
resistant Enterobacteriaceae and extended-spectrum beta lactamase producers, which are leading causes of the most common
hospital-acquired infections.
Expected
milestones
• Vedanta plans to initiate a Phase 3 clinical trial of VE303 in patients at high risk for recurrent CDI.
• Vedanta plans to initiate a Phase 2 trial of VE202 in patients with mild to moderate ulcerative colitis.
From correlation to causation: field-leading platform for development of microbiome drugs
1
2
3
4
5
6
Interrogate human
interventional data to
generate hypothesis on
which bacteria correlate
with clinical response
Establish microbiome
role in driving
physiological response
in vivo, identify key taxa
responsible
Screen what is
believed to be the
world’s largest
microbiome library5
in proprietary assays
to select strains with
desired pharmacology
Assemble, optimize
customized consortia
using computational
tools, co-culture
systems and animal
model testing
Manufacture
CGMP-grade drug
supplies at in-house,
state-of-the-art facility
Test defined consortia
in humans to establish
engraftment, safety
and efficacy
Correlation
Role of bacterial strains in disease pathology
Causation
Vedanta’s pipeline
Therapeutic
Candidate3
Indication
VE303
C. difficile
Funding MOA
Discovery/
Preclinical
CMC
Phase 1
Phase 2
Phase 3
VE202
Inflammatory bowel disease
VE800
Solid tumors
in combination with nivolumab (Opdivo)
CD8+
VE707
Gram-negative infections
Investigator
Sponsored
Trials
VE303
Hepatic Encephalopathy
VE416
Food Allergy
in combination with oral immunotherapy
Phase in progress
Phase completed
PureTech Health plc Annual report and accounts 2021 67
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity PureTech Ownership1
Therapeutic Candidate2
Indication
Stage of Development
Follica3
76.0%
FOL-004
P/D4
Androgenetic alopecia
Phase 3 Ready
• Follica is developing a regenerative biology platform designed to treat androgenetic alopecia, epithelial aging and other related indications. Follica’s
approach is based on generating the “embryonic window” in adults via a series of skin disruptions, stimulating stem cells causing new hair follicles to
grow. We believe that Follica’s technology is the first observed to create new follicles of hair, followed by the application of specific compounds to
enhance the effort.
Program
discovery
process by the
PureTech team
Patient need
and market
potential
• We were interested in conditions of aging and focused on hair follicles given their importance in regulating human hair and skin
rejuvenation across many medical conditions. We engaged leading dermatologists and hair follicle experts and identified and
in-licensed intellectual property from George Cotsarelis, M.D., the Chair of the Department of Dermatology at the University of
Pennsylvania, on hair follicle neogenesis, or HFN, prior to its publication in the journal Nature. We translated the academic work into
an in-office procedure after testing a number of modalities for initiating HFN, identified and co-invented intellectual property around
modalities and drug compounds to enhance the newly formed hair follicles and helped conduct multiple POC studies to prioritize
HFN inducing modalities and prioritize potential drug compounds.
• Follica’s core technology and patent suite has been developed in collaboration with leading researchers, building on the work of
Dr. Cotsarelis. Follica’s other key scientific advisors include Richard Rox Anderson, M.D., Chairman of the Wellman Center for
Photomedicine at the Massachusetts General Hospital, Ken Washenik, M.D., Ph.D., Medical Director of Bosley and the Executive Vice
President of Scientific and Medical Development of the Aderans Research Institute.
• Androgenetic alopecia represents the most common form of hair loss in men and women, with an estimated 90 million people who
are eligible for treatment in the U.S alone. Additionally, the market is estimated to be over $1 billion in the U.S. and $3.5 billion
globally. Only two drugs, both of which have demonstrated a 12% increase of non-vellus hair count over baseline for their primary
endpoints, are currently approved for the treatment of androgenetic alopecia. The most effective current approach for the treatment
of hair loss is hair transplant surgery, comprising a range of invasive, expensive procedures for a subset of patients who have enough
donor hair to be eligible. As a result, Follica believes that there is significant unmet need for safe, effective, non-surgical treatments
which grow new hair. Follica’s regenerative biology platform has potential applications beyond hair growth to other aging-related
conditions and wound healing, such as facial skin rejuvenation.
Milestones
achieved and
development
status
• In January 2021, Follica announced the appointment of two leaders in aesthetic medicine and dermatology to its Board of Directors.
Tom Wiggans, former Chief Executive Officer of Dermira, joined as Executive Chairman with over 30 years of experience leading
biopharmaceutical companies from the start-up stage to global commercialization, and Michael Davin, former Chief Executive Officer
of Cynosure, joined as an Independent Director with over 30 years of experience in the medical device industry.
• In 2021, Follica continued to advance its regenerative biology platform, including preparing for a registration clinical program in male
androgenetic alopecia.
• In the three previously conducted clinical studies of patients with androgenetic alopecia, Follica demonstrated hair follicle neogenesis
via biopsy following skin disruption and hair growth through target area hair count. One of these studies demonstrated that skin
disruption alone generates not only new hair follicles but also terminal (visible, thick) hairs. Follica has been optimizing its device and
conducting tests in androgenetic alopecia and other medical indications and is further developing and testing compounds that
enhance the newly formed follicles and hairs.
• In December 2019, Follica announced topline results from the safety and efficacy optimization study of its lead candidate to treat
hair loss in male androgenetic alopecia. The study was designed to select the optimal treatment regimen using Follica’s proprietary
device in combination with a topical drug and successfully met its primary endpoint. The selected treatment regimen demonstrated
a statistically significant 44% improvement of non-vellus (visible) hair count after three months of treatment compared to baseline
(p < 0.001, n = 19). Across all three treatment arms, the overall improvement of non-vellus hair count after three months of treatment
was 29% compared to baseline (p < 0.001, n = 48), reflecting a clinical benefit across the entire study population and a substantially
improved outcome seen with the optimal treatment regimen. Additionally, a prespecified analysis comparing the 44% change in
non-vellus hair count to a 12% historical benchmark set by approved pharmaceutical products established statistical significance
(p = 0.005).
Sample patient outcome from FOL-004 data
Screening
Day 85
Note: Results depicted in the images are above the average demonstrated in the optimization trial.
1 As of December 31, 2021, PureTech’s percentage ownership of Follica was approximately 76.0% on an outstanding voting share basis. We have a right to royalty payments as a
percentage of net sales from Follica.
2 Therapeutic candidates are investigational and have not been cleared by the FDA for use in the U.S.
3 Follica has an active IND on file with the FDA for FOL-004. Our board designees represent a majority of the members of the board of directors of Follica, but Follica has its own
independent management team. In January 2021, Tom Wiggans joined as Executive Chairman and Michael Davin joined as an independent member of the Board of Directors.
Mr. Wiggans has over 30 years of experience and most recently co-founded and served as Chairman and Chief Executive Officer of Dermira. Mr. Davin also has over 30 years of
experience, including 14 years as Chief Executive Officer at Cynosure. PureTech’s role in the development of Follica’s therapeutic candidates is through our representation on
its board of directors and our role as a majority shareholder. Follica is well-protected with a robust intellectual property portfolio. Follica was incorporated in July 2005.
4 The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
68 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Milestones
achieved and
development
status
(continued)
− The study was an endpoint-blinded, randomized, controlled
study designed to establish therapeutic parameters for
Follica’s proprietary HFN device in combination with a topical
on-market drug. The study involved a less than five-minute
in-office experimental scalp procedure using the HFN and
evaluated the optimal frequency and number of treatments
across three arms. The study consisted of 48 men aged 18 to
40 who had moderate grades of androgenetic alopecia as
determined by the Hamilton Norwood III-IV scale. The
regimen was well tolerated across all treatment arms with no
reported SAEs. No AEs were related to device treatment.
A single non-severe event (headache) was determined to be
related to use of the drug and is in line with minor side effects
seen from treatment with the approved drug alone.
Proprietary in-office
treatment combines
targeted scalp
micro-disruption
device with
a topical on-market
drug to create and
grow new hairs
• Follica has studied the potential for its proprietary device approach to address other regenerative conditions, including female
pattern hair loss and facial skin rejuvenation.
Expected
milestones
• Follica plans to initiate a registration clinical program in male androgenetic alopecia in 2022.
• Follica also has proprietary amplification compounds in development and ongoing discovery efforts to expand its pipeline.
Follica’s approach
Existing drugs
Hair transplant
Follica approach
(Device plus drug)
Thicken and maintain remaining hair
Moves remaining hair
Designed to grow new hair and thicken existing hair
Investigational device and new drug. Limited by United States law to investigational use.
Follica’s pipeline
Therapeutic
Candidate3
Indication
FOL-004
Androgenetic alopecia
Discovery/Preclinical
Phase 1
Phase 2
Phase 3
Phase in progress
Phase completed
PureTech Health plc Annual report and accounts 2021 69
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity PureTech Ownership1
Therapeutic Candidate2,3
Indication
Sonde4
44.6%
Sonde One
for Respiratory
Sonde Mental Fitness
D
D
Respiratory risk detection
and monitoring app
Monitoring vocal features linked to
depression, anxiety, and cognition
Stage of Development
Commercial Release
Commercial Release
• Sonde is developing a voice-based technology platform that detects voice changes linked to health conditions – like depression and respiratory disease
– from changes in voice. Using advanced audio signal processing and machine learning, Sonde senses and analyzes subtle vocal changes due to changes
in a person’s physiology to provide early health detection and monitoring for depression and respiratory conditions. We believe Sonde’s Vocal Biomarker
program has demonstrated the potential to screen and monitor for disease using information obtained from an individual’s voice on commonly owned
devices, such as smartphones and smart speakers, and it has the potential to fundamentally change the way mental and physical health is screened
and monitored.
Program
discovery
process by the
PureTech team
Patient need
and market
potential
• We were interested in new ways to detect and quantify disease in a low- to no-burden manner that could allow for more proactive
and potentially effective interventions. We selected vocal features as a leading source of health data for this purpose, particularly
given the evolving technology landscape where voice interactions with devices are rapidly increasing and identified and in-licensed
proprietary technology from Thomas Quatieri, Ph.D., at MIT’s Lincoln Laboratory in May 2016. Pursuant to an exclusive license
agreement with Dr. Quatieri, we paid an upfront fee and are obligated to pay annual license maintenance fees, both of which we
deem immaterial. Pursuant to the agreement, we are also obligated to pay MIT a low single-digit running royalty of net sales of any
commercialized product covered by the agreement and a mid-double-digit running royalty of net sales of any commercialized
product of a party that we sublicense. MIT is also eligible to receive milestone payments upon the achievement of specified
development, regulatory and commercial milestones. We developed additional, novel intellectual property around this concept and
helped advance the technology from an academic concept to a commercially focused technology. A core PureTech team member
who played a critical role in founding Sonde is currently the Chief Operating Officer.
• The lag between onset of disease and accurate diagnosis and beginning of treatment can be measured in years for many high-
burden health conditions, including depression, multiple sclerosis, Parkinson’s disease and respiratory diseases, to name just a few.
In the U.S., 42% of adults report experiencing symptoms of anxiety or depression, which represents a four-fold increase from 2019,
yet less than 10% of people with a mental health condition receive effective treatment. Studies have shown that health conditions
including depression, stress, anxiety, sleepiness/fatigue and certain respiratory conditions can impact vocal features such as
smoothness, control, liveliness, energy range and clarity. Near-continuous health information, powered by Sonde’s technology,
has the potential to improve screening, monitoring and timeliness of treatment of high-cost conditions, broadly improving
outcomes and care efficiency.
• Development of effective therapies for central nervous system diseases and disorders is hampered by the high cost and inherent
variability of these diseases and the reference diagnostic measures used to characterize them. Objective digital tools that can
augment, and perhaps one day replace, the current clinical endpoints with novel measures that can be quantified with more
meaningful accuracy and less burden can improve patient enrollment and drug development for a range of important conditions.
Milestones
achieved and
development
status
• In October 2021, Sonde announced the launch of Sonde Mental Fitness, a voice-enabled mental health detection and
monitoring technology that uses a brief voice sample to evaluate mental well-being. Sonde Mental Fitness is currently available
through its API platform for integration into third-party apps. It’s also available as a standalone app for iOS and Android,
mobile devices to serve as a proof-of-concept for health systems, employers and wellness services interested in testing out
the API’s capabilities.
• In the January 2022 post-period, Sonde announced the signing
of a multi-year strategic partnership with GN Group to research
and develop commercial vocal biomarkers for mild cognitive
impairment. The research will serve as the backbone for new
voice-based tools to help at-risk individuals gain timely and
accurate health insights using GN Group’s device technologies
and, ultimately, to enable early detection and management of
life-threatening diseases for the millions of people living with
hearing loss.
• In July 2021, Sonde announced its strategic collaboration with
leading chipmaker Qualcomm Technologies, Inc. to embed
Sonde’s vocal biomarker technology into its flagship and
high-tier Qualcomm® Snapdragon™ 888 and 778G 5G
Mobile Platforms to help bring native, machine learning-driven
vocal biomarker capabilities to mobile devices globally.
The optimization has the potential to unlock several native
health screening and monitoring applications on up to the
hundreds of millions of mobile devices that use these
Snapdragon mobile platforms.
• Mental fitness health
checks and tracking from
30 seconds of voice on
a smartphone
• Mental fitness scores
based on vocal
smoothness, control,
liveliness, energy, clarity
and crispness
• Voice journaling
transcribed into text
automatically
• Recommended mental
health content and tips
• Sonde has collected over one million voice samples from over 80,000 subjects as a part of the ongoing validation of its platform, and
it has also initiated research and development to expand its proprietary technology into mental fitness, respiratory disease, and other
health, wellness and safety use cases. Sonde has ongoing collaborative partnerships with leading institutions including Montefiore,
UCSD, Brigham and Women’s Hospital, Albert Einstein College of Medicine, Yale University, Partners Massachusetts General Hospital
and multiple other ex-U.S. hospitals, clinics and academic medicine centers.
1 As of December 31, 2021, PureTech’s percentage ownership of Sonde was approximately 44.6% on a diluted basis. This calculation includes outstanding shares, options, and
warrants, but excludes unallocated shares authorized to be issued pursuant to equity incentive plans.
2 The letters next to the therapeutic candidates denote whether the therapeutic candidate is a pharmaceutical product (P), biologic (B) or device (D).
3 These therapeutic candidates are regulated as devices and their development has been approximately equated to phases of clinical development. Candidates are
investigational and have not been cleared by the FDA for use in the U.S.
4 Sonde has obtained Institutional Review Board (IRB) approval independently or in collaboration with partner institutions that covers all past and ongoing human data collection
for research in the U.S. and abroad. We have two board designees on the board of directors of Sonde, but Sonde has its own independent management team. Our role in the
development of Sonde’s therapeutic candidates is through our representation on its board of directors and our role as a majority shareholder. Sonde is well-protected with
a robust intellectual property portfolio. Sonde was incorporated in February 2015.
70 PureTech Health plc Annual report and accounts 2021
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
The vocal biomarker platform for health and wellness, population health, corporate wellness, telehealth
and remote monitoring services
1
2
3
4
Capture seconds of speech on your
app via Sonde’s API
Sonde analyzes voice samples and
provides score
Outline tasks/resources for your
users to maintain their health
Sonde’s health tracker provides
trending data
Expected
milestones
• Sonde plans to launch key pilot programs in the employer wellness, health system and provider space in 2022.
Sonde’s pipeline
Therapeutic Candidate3
Health Condition
In Development
Product and
Clinical Validation
Commercial Release
Sonde App
Sonde API
Platform
Sonde Mental Fitness
Monitoring vocal features linked to
depression, anxiety, and cognition
Sonde One for Respiratory
Respiratory detection and
monitoring app
Respiratory API
Respiratory detection and
monitoring
Mental Fitness API
Monitoring vocal features linked to
depression, anxiety, and cognition
Phase in progress
Phase completed
PureTech Health plc Annual report and accounts 2021 71
Strategic report PureTech’s Founded Entities — continued
Founded Entities in Order of Approximate Value of PureTech’s Holdings
Founded Entity PureTech Ownership1
Description2
Stage of Development
Entrega
74.3%
Engineering hydrogels to enable the oral administration
of biologics
Preclinical
• Entrega is focused on the oral administration of biologics, vaccines and
other drugs that are otherwise not efficiently absorbed when taken orally.
The vast majority of biologic drugs, including peptides, proteins and
other macromolecules are currently administered by injection, which
can present challenges for healthcare administration and compliance
with treatment regimes. Entrega believes oral administration thus
represents an ideal administration approach for this increasingly large
class of therapies reshaping many areas of medicine, including the
treatment of diabetes.
• Entrega’s technology platform is an innovative approach to oral
administration which uses a proprietary, customizable hydrogel dosage
form to control local fluid microenvironments in the GI tract in an effort
to both enhance absorption and reduce the variability of drug exposure.
Program
discovery
process by the
PureTech team
• We were interested in enabling the oral administration of biologics, which has been a long-standing problem in drug development.
We engaged with leading experts in drug administration, including Robert Langer, Sc.D., and screened over 100 technologies and the
initial platform was licensed from Samir Mitragotri, Ph.D., when he was Professor of Chemical Engineering at UC Santa Barbara
(currently Hiller Professor of Bioengineering and Hansjorg Wyss Professor of Biologically Inspired Engineering at Harvard University).
We later enhanced this platform with intellectual property developed by our team.
• Other scientific and business advisors include Colin Gardner, Ph.D., former Chief Scientific Officer of Transform Pharmaceuticals,
former Senior Vice President of Research and Site Head at Johnson & Johnson and formerly Vice President of Pharmaceutical R&D at
Merck & Co., Inc., or Merck, Rodney Pearlman, Ph.D., formerly Chief Executive Officer of Nuon Therapeutics, President and Chief
Executive Officer of Saegis Pharmaceuticals and Director of Pharmaceutical R&D at Genentech, Robert Armstrong, Ph.D., Co-Founder
and Chief Executive Officer of Boston Pharmaceuticals and Mr. Howie Rosen, former President of ALZA.
Milestones
achieved and
development
status
• Entrega continued to advance its platform for the oral administration of biologics, vaccines and other drugs that are otherwise not
efficiently absorbed when taken orally. As part of its collaboration with Eli Lilly, Entrega has continued to investigate the application of
its peptide administration technology to certain Eli Lilly therapeutic candidates. The partnership has been extended into 2022.
• Entrega has also continued advancement of its ENT-100 platform for the oral administration of biologics, vaccines and other drugs
that are otherwise not efficiently absorbed when taken orally.
• Entrega has ongoing discovery efforts to expand its pipeline.
Expected
milestones
1 As of December 31, 2021, PureTech’s percentage ownership of Entrega was approximately 74.3% on a diluted basis. This calculation includes outstanding shares, options, and
warrants, but excludes unallocated shares authorized to be issued pursuant to equity incentive plans.
2 The management team of Entrega consists of PureTech employees, and a majority of the board of directors are PureTech designees. These PureTech employees actively
manage the day-to-day business activities of Entrega and together with the board of directors of Entrega, which is controlled by PureTech, direct the strategy and decision
making in connection with the clinical and regulatory development of Entrega’s therapeutic candidates. As a result, we exert substantial control over the clinical and regulatory
development of Entrega’s therapeutic candidates. Additionally, Entrega’s lab and office space is shared with our lab and office space. Entrega is well-protected with a robust
intellectual property portfolio. Entrega was incorporated in December 2010.
72 PureTech Health plc Annual report and accounts 2021
Strategic report ESG Report
For PureTech, Environmental, Social and Governance (ESG) means building and maintaining a sustainable business so that
we can deliver on our mission to discover, develop and aim to commercialize new therapies for devasting diseases where
limited or no treatment options currently exist for patients. It is the hard work and commitment of our internal and external
stakeholders that makes the achievement of our mission possible. PureTech recognizes the importance of good governance
in delivering ESG outcomes and, accordingly, chartered our ESG Committee chaired by a non-Executive Director, Kiran
Mazumdar-Shaw, in 2020 to guide our approach and serve as an internal champion for key initiatives.
In this second edition of our ESG reporting, we are providing increased disclosure as we build a strong and sustainable
organization. To that end, we have undertaken peer benchmarking, analyzed the Sustainability Accounting Standards Board
(SASB) standard for the biotech and pharmaceutical sector in light of our own activities, and engaged in extensive
stakeholder discussion to review ESG best practices for PureTech. We also aligned with the United Nations Sustainable
Development Goals (SDGs) to inform our general sustainability framework. This work has validated our overall approach,
including with respect to how we report on ESG externally.
What’s New
• We have aligned our 2021 reporting with the SASB standard for the biotech and pharmaceutical sector, focusing our
disclosure on those topics that are most material to our business as a clinical-stage biopharmaceutical company.
(See pages 85-87 for SASB Index)
• We have also increased our level of reporting and transparency as we build a strong and sustainable organization.
This includes PureTech’s first reporting aligned to the Taskforce on Climate-related Financial Disclosure (TCFD) framework.
(See pages 87-89 for TCFD disclosure)
• We have aligned our ESG framework with the appropriate UN SDGs.
(See page 74 for SDG alignment)
• We discuss governance topics related to sustainability in the governance section of this report and cross-reference
within this section where relevant. (See pages 90-146 for Governance section)
Our Approach
Our ESG framework is built around three focus areas, Patients, People and Planet, to help us deliver on our mission, strategy
and purpose to advance innovative and differentiated medicines for patients in need.
PATIENTS
PureTech is committed to
improving the treatment of
devastating diseases where limited
or no treatment options currently exist
for patients. We achieve this through the
safe and ethical discovery, development
and commercialization of highly
differentiated medicines.
PEOPLE
PureTech’s talented
and committed employees
are central to our success.
We seek to support them
in their development
and to provide equitable
opportunities to new
and diverse talent.
PLANET
As a clinical-stage
biopharmaceutical company,
our environmental footprint
remains small, however we
take steps to measure and
manage our impact
responsibly.
Our Process
As we continue to grow our business, it is imperative that our ESG report also reflects that growth and is underpinned by our core
values. In order to achieve this, we have established a process to identify and address key environmental, social and governance
issues that are important to our stakeholders and are relevant to and have a strategic impact on our business. This process is led
by the ESG Committee established in 2020, which plays a crucial role in setting our ESG and sustainability priorities.
Process overview
Step 1
Engage an external ESG
consultant for counsel
Step 2
Identify relevant and
current ESG trend
and topics
Step 3
Evaluate the
significance of findings
from step 2 to our
business operation
and strategy
Step 4
Prioritize issues
and assess the
reporting framework
Step 5
Integrate findings in
business operation and
strategy
Step 6
Report progress within
ESG section of the
Annual Report
PureTech Health plc Annual report and accounts 2021 73
ESG ESG Report — continued
2021 Highlights
This ESG Report contains disclosure of ESG metrics and activities that are relevant to PureTech’s business strategy and were
evaluated by PureTech’s ESG committee. The information in this section builds off of our inaugural 2020 ESG reporting as we
continue to develop appropriate benchmarks for our future targets and strategies that will be used to track PureTech’s
performance across key areas over time.
This ESG disclosure generally includes data from the PureTech level only; however, in accordance with UK rules contained in
the Companies Act covering the reporting of energy and emissions data, PureTech reports emissions data on a consolidated
basis for the Group (as defined in Note 1 to the financial statements).
Unless otherwise noted, this submission covers our sustainability and ESG approach for the period January 1, 2021 through
December 31, 2021.
Patients
People
G
S
E
in development, of which
27 therapeutic and therapeutic candidates
16
2 taken from inception to FDA
and EU regulatory clearances
are in clinical stage, and
101of
FTSE 250 companies to have
a woman CEO1
Ranked top
14 th
44%
50%
$38K
FTSE 250 company by FTSE Women
Leaders Review for surpassing Board
and leadership gender balance target 1
gender diversity on the Board level 2
cultural diversity on the Board level 3
committed to charitable contributions
and social causes 4
Planet
85%
less energy consumed at the Boston
HQ compared to The 2030
Challenge baseline5
84%
fewer GHG emissions generated
at the Boston HQ compared to
The 2030 Challenge baseline
1 Source: FTSE Women Leaders Review, 2021.
2 Board composition at March 24, 2022.
3 Board composition at December 31, 2021.
4 In 2021 and through January 2022 post-period, PureTech made charitable contributions to Life Sciences Cares, The Greater Boston Food Bank (GBFB), Lymphatic Education
& Research Network (LE&RN), Langer Prize for Innovation & Entrepreneurial Excellence Fellowship, and Fred Hutchinson Cancer Research Center.
5 The 2030 Challenge is a carbon-neutral target issued by the Architecture 2030 in 2006 recommending all new buildings, developments and major renovations to meet
a fossil fuel, GHG-emitting, energy consumption performance standard of 70% below the regional (or country) average/median for any specific building type. Boston HQ
building data is assessed as a laboratory type building and the data is generated by AppFolio Property Manager, prepared for Related Beal. The current data available is as
of December 31, 2020.
74 PureTech Health plc Annual report and accounts 2021
ESG Report — continued
Patients
Our commitment to making the world a better place by
creating and advancing innovative new medicines
PureTech is a clinical-stage biotherapeutics company
dedicated to discovering, developing and commercializing
highly differentiated medicines for devastating diseases
where limited or no treatment options currently exist for
patients. These include inflammatory, fibrotic and
immunological conditions, intractable cancers, lymphatic
and gastrointestinal diseases and neurological and
neuropsychological disorders, among others. It is our
unyielding commitment to this mission that we continue to
advance our therapeutic candidates in order to deliver
innovative and differentiated medicines for patients in need
(see pages 35-56 for our Wholly Owned Program overview).
Our research process begins by identifying new medicines
where the underlying mechanism is de-risked by validated
biology. We then apply our deep development expertise,
proprietary platform technologies, and strategic
collaborations to solve key challenges in efforts to
unlock the value of each asset. Finally, we advance highly
innovative and validated programs that have the potential
to change the treatment paradigm for a number of serious
diseases into therapeutic candidates.
This product innovation framework has generated 27
therapeutics and therapeutic candidates, of which 16
are clinical stage and 2 have gone from inception at
PureTech through successful FDA and EU regulatory
clearances for marketing.
responsible for ensuring that PureTech follows, 1) applicable
bioethical principles, and 2) U.S. and applicable international
regulatory requirements and standards. In 2021, there were
no FDA sponsored inspections related to clinical trial
management and pharmacovigilance that resulted in
PureTech receiving Voluntary Action Indicated (VAI) and
Official Action Indicated (OAI) from FDA.
Drug safety
None of the therapeutic candidates from within PureTech’s
Wholly Owned Pipeline are currently on the market. In 2021,
PureTech received no FDA warning letters, no products were
delayed due to a lack of regulatory approval and no product
recalls took place.
Equitable pricing, affordability and access
As we progress the therapeutic candidates from within
PureTech’s Wholly Owned Pipeline toward the market, we
are committed to pursuing equitable pricing, affordability
and access when those therapeutic candidates get to
market, if we are successful in achieving the regulatory
approvals or clearances required to launch them. We will
routinely conduct comprehensive market research as we
advance our therapeutic candidates. We recognize that
equitable access to medicines is key to solving many public
health issues and will continue to consider factors around
equitable access to medicines as we advance our
therapeutic candidates.
Safety of clinical trial participants
Animal testing
Animal research plays an essential and currently
irreplaceable role in the advancement of healthcare.
PureTech conducts animal testing only when necessary to
advance the development of therapeutics and is required by
regulatory authorities such as the FDA, before human testing
of new medicines can take place. Most of our studies
involving animals are conducted at external qualified and
certified vendors.
We follow the guidelines set out under the USDA Animal
Welfare Act and are committed to the humane and ethical
treatment of animals: thoughtful use of animals will minimize
the number used while producing quality data and providing
the greatest benefit to humans. Before using laboratory
animals in research, alternatives must be considered.
We apply the 3 Rs standard:
REPLACE
REDUCE
REFINE
The safety of participants who enroll in our clinical trials is an
extremely high priority. When sponsoring an IND
application, we recognize our responsibility both to clinical
trial participants and to regulatory agencies. We have
detailed protocols in place including Standard Operating
Procedure for Adverse Event Reporting, and our employees
who are engaged with clinical trials – either as clinical staff or
their designee – are responsible for conducting such trials in
compliance with good clinical practice.
PureTech is committed to ensuring that all of its clinical trials
follow the standards of the International Conference on
Harmonisation (ICH) Good Clinical Practice guidelines and
the World Medical Association Declaration of Helsinki on the
Ethical Principles for Medical Research Involving Human
Subjects. The Company applies these standards to all trials
conducted by or on its behalf. So that the trials meet these
standards, PureTech seeks approval for clinical trials of
investigative medicines from independent ethics
committees and local regulatory authorities.
To confirm that a patient is aware of risks involved in a clinical
trial, we ensure that every patient has voluntarily committed
to the trial and has provided informed consent of their
willingness to participate. Informed consent requirements
are set out in the PureTech Clinical Research Policy.
PureTech relies on the use of human biological specimens in
the development of its innovative therapies, and its Human
Biological Specimens Policy specifies that collecting,
obtaining, storing and using human biological samples
requires informed consent, and that PureTech treat both
donors and specimens with respect. PureTech’s Chief
Medical Officer and Chief Scientific Officer are jointly
PureTech Health plc Annual report and accounts 2021 75
ESGUse alternative methods where this is possibleUse the minimumnumber of animalsMinimize pain,suffering and distress, and improve the welfare of the animals used ESG Report — continued
People
Our employees are an indispensable asset in driving our
mission forward, to deliver medical innovations to patients
and create a long-term value for shareholders. We recognize
that employee satisfaction is a pillar to our success and
hence we have zero-tolerance for behavior and actions that
may disrupt the collaborative culture. We instead aim to
foster engaging and respectful community.
PureTech is proud of its record of attracting and retaining
high-quality talent. We aim to create a workplace that
enables high achieving people to be successful while also
fostering a collegiate atmosphere. Our employees are
predominately located near our headquarters in Boston, MA
with three individuals based in London.
As of December 31, 2021, we have total of 95 employees of
which 54 employees work in R&D roles while 41 are engaged
in general and administrative functions. None of our
employees are subject to a collective bargaining agreement
or represented by a trade or labor union. We consider our
relationship with our employees to be excellent.
In 2021, PureTech conducted its first employee engagement
survey to assess current levels of satisfaction and identify
how the company can better support employees going
forward. The results of the employee survey showed that
PureTech performs highly when it comes to encouraging
teamwork. The company culture builds agile teams that
collaborate cross functionally and remain resilient and
committed to the company vision. A high level of trust in
management was reported, and PureTech’s employees see
themselves as purposeful, goal driven and passionate about
working to contribute to the company’s success.
Employee survey yielded high participation and high
satisfaction rates6:
3.9
3.8
3.5
My manager and I have a trusting
and respectful relationship
I work hard with dedication and tenacity and
do whatever it takes to overcome obstacles
I work in an environment where my mistakes
are considered an opportunity for me to learn
3.9
Teamwork is encouraged on my team
As a response to findings that indicated employees would
appreciate higher levels of information sharing internally,
we implemented increased communication from senior
leadership, utilizing a range of internal communications
approaches. These include:
Lunch and learn initiatives
Regular town halls lead by the CEO with
open Q&A session
Email updates
Intranet updates
Group conference calls
Employee recruitment
Our Wholly Owned Programs are advancing quickly and the
PureTech team is growing rapidly to deliver on our mission
to discover, develop and aim to commercialize new therapies
for devastating disease where limited or no treatment options
currently exist for patients. Our Wholly Owned Programs have
enabled us to create new positions and attract new talent, as is
evident from the new hires in 2021. Aligned with this, we have
also moved away from positions that have historically supported
the creation of new Founded Entities.
PureTech employees as at December 31, 2021
Total number of employees
Employee growth
Employee turnover7
Internal promotions
95
48%
25%
17%
Partnerships and sustainable recruiting
As part of our development of a sustainable and diverse
talent pipeline, we source our talent through our
outstanding network of world leading scientists and local
top tier universities at the heart of the world’s biotech hub
in Boston, as well as through partnerships with local
university cooperative education programs. Co-op programs
provide students with opportunities to alternate periods of
academic study with several months of full-time employment
related to their academic majors and interests.
Undergraduate co-op students can join PureTech for six
month paid internships in our Research department,
adding to our talent acquisition pipeline.
6 Based on 1-5 rating scale
7 As compared to ~45% in the healthcare industry at large, with PureTech’s turnover rate further impacted by the continuing shift of business focus to our Wholly
Owned Programs
76 PureTech Health plc Annual report and accounts 2021
ESG ESG Report — continued
We also seek to attract new talent through participating
in annual life science career fairs targeted at graduate MS/PhD
students and is committed to developing the next generation
of life science professionals that will carry on our mission.
Additionally, we partner with Project Onramp, which
facilitates internships for Massachusetts undergraduate
students from under-resourced, under-represented group
and/or who are first-generation college students, by
bringing on paid summer interns in business operations.
Diversity and inclusion
We are committed to a policy of non-discrimination and
equal opportunity for all employees and qualified applicants
without regard to race, color, religion, gender and gender
identity, pregnancy, sexual orientation, national origin,
ancestry, age, physical or mental disability, genetic
information, veteran status, military service, application for
military service or any other status protected by law.
Women employees and women managers as at
December 31, 2021
Women employees
Women managers
45%
33%
We strongly believe that diverse board and senior
management team generates better performance,
retains exceptional talent, and enhances shareholder value.
This unwavering commitment has resulted in a top-down
approach to secure diversity and inclusion at PureTech
(as seen on page 74).
Employee development and retention
We uphold the value of human capital development at
PureTech, encouraging managers and employees to discuss
job performance and goals on an informal, day-to-day basis
alongside formal performance evaluations conducted
annually. Regular one-on-ones between employees and
supervisors are highly encouraged and facilitate alignment
between management and employee expectations and goals.
Employees are able to enter and track their personal
development goals on an online portal, which gives
visibility to managers to see their team’s efforts and progress.
This portal is utilized across all departments and is part of
PureTech’s commitment to supporting employees in their
growth and development.
We support the continued development of our employees
by providing funding for in person and online programs on
a case-by-case basis in areas relevant to their work. Some
of the other development trainings include:
HR training
• A mandatory training at onboarding to understand
PureTech practices and policies
• Special training based on job function; e.g.
employees who perform GxP work are assigned
matrices by the Quality Assurance department
• Employee bias training to understand bias at
workplace provided by Yamartino Group
• A mandatory annual anti-harassment training
provided to all employees by an outside law firm
Health and safety and first aid training
• A mandatory annual safety training provided to all
employees in accordance with the Occupational
Safety and Health Administration (OSHA)
• An optional first aid training, provided to all
employees by Safety Trainers
In 2021, PureTech became a Mass
Bio Open Letter 2.0 signatory,
advocating for equity and inclusivity
in the healthcare industry. This aims to
increase representation of Black, Brown,
and Indigenous People of Color (BIPOC)
within Massachusetts’ life sciences sector.
IT training
• A mandatory annual training, provided to all
employees by Risk Management Solutions (RMS)
• A mandatory cybersecurity training provided to
all employees, followed by assigned training
Pay equity
We are committed to equitable pay. While we do not
currently report on the gender pay gap as we are out of
scope of the UK’s Equality and Human Rights Commission
regulation due to the size of our company, we are committed
to workplace transparency and equality as seen in our
various human capital programs supporting career
development, workplace equity, and diversity and inclusion.
This mission is reflected strongly on our board and at
management level as seen on page 74.
PureTech supports the continued development of our
employees by providing in person and online trainings in
areas relevant to their work. Support for educational
programs is available to all employees and considered on
a case-by-case basis.
8 Board composition at March 24, 2022.
9 Board composition at December 31, 2021.
PureTech Health plc Annual report and accounts 2021 77
ESG ESG Report — continued
Employee benefits
The physical, financial, social and emotional health of our employees is a priority at PureTech. As a result, we provide a range
of benefits for employees. Following a US model since this is where the majority of our employees are based, we offer the
following perks and benefits:
Premium health plan with an
option to choose from PPO
or HMO plan
Health Reimbursement
Account (HRA)
Pre-tax parking and transit
benefits
Dental plan
Vision plan
Benefits continuation
(COBRA)
Paid parental leave
(Up to 12 weeks)
Short-term disability plan
Nursing room
Long-term disability plan
401(k) retirement plan with 3%
non-elective contribution by
the company
Gym membership in addition
to an onsite gym facility
Entertainment discounts
Employee led Social
Committee
Employee led Cultural
Committee
Life insurance
Performance share plan
Onsite free snacks & drinks
Medical FSA
1-on-1 financial coaching
Flexibility to work from home
Dependent Care FSA
Technology reimbursement
program
In 2021, some benefits were adjusted in response to the changing nature of work due to COVID-19, for example, gym
membership reimbursement eligibility was extended to virtual fitness programs.
PureTech has a performance share plan in place under which the majority of employees are granted stock options upon
joining the organization and periodically, to ensure appropriate market-based compensation and incentive alignment with
the goals of the organization and its shareholders.
Employee health and safety
Employee engagement
The COVID-19 global pandemic that changed the world in
2020 has shifted the way we operate. It is our unyielding
commitment to keeping each other and the community safe
that has allowed us to implement a COVID-19 action plan
and policy. The COVID-19 policy was swiftly drafted and
implemented in response to the pandemic, outlining general
and special safety procedures based on employee roles,
compliance requirements, travel restrictions, exposure
responses, and other operational protocols. Additionally,
onsite COVID-19 testing requirements were implemented to
keep employees, their families, and our community safe.
During 2021, PureTech took steps to evolve its hybrid
working model in response to the COVID-19 pandemic,
to allow scientists to work onsite safely with minimized risk.
To ease the transition to a hybrid model, an online desk
booking system was introduced, enabling employees to
plan their return to the office flexibly. Other remote
operation initiatives included continued utilization of SaaS
products to enable employee collaboration,
communications and workflow management with minimum
disruption.
We are committed to maintaining and expanding a positive
and interconnected company culture. To foster employee
engagement and collaboration, the following initiatives were
launched in 2021:
Employee intranet
• To provide access to internal and external resources
• To provide online staff directory, spotlighting
employee birthdays and work anniversaries
• To serve as a centralized portal for human
resources documents
Formation of employee-led Cultural Committee
• To create programs that celebrate diversity, promote
equity, and encourage respect for one another
Formation of employee-led Social Committee
• To organize social events to foster a sense of community
amongst one another
78 PureTech Health plc Annual report and accounts 2021
ESG ESG Report — continued
Community engagement
As a member of the world’s top biotech hub in Boston, we are committed to giving back to our community. In 2021 and in
January 2021 post-period, we contributed to the following charitable initiatives:
Life Sciences Cares
Life Science Cares is a non-profit organization with a mission
to leverage the intellectual, financial, and human capital of the
life sciences industry in efforts to reduce the effects of
poverty in Boston, Philadelphia, San Diego and the Bay Area.
The Greater Boston
Food Bank (GBFB)
GBFB is the largest hunger-relief organization in New England
committed to increasing our food distribution by providing
three meals a day to every person in need in Eastern
Massachusetts while supporting healthy lives and healthy
communities. GBFB is a member of Feeding America, the
nation’s largest hunger-relief organization.
Lymphatic Education &
Research Network
(LE&RN)
LE&RN is committed to educating the public about lymphatic
disease and the need for treatment and research. LE&RN
hosts symposiums several times a year in which patients,
family members, and the medical community are provided
with the opportunity to hear from experts in the field.
Langer Prize for
Innovation &
Entrepreneurial
Excellence Fellowship
Sponsored by the Langer Prize Endowment, the fellowship will
award unrestricted grants of up to $100,000 to assist
researchers particularly those working in chemical and
biological engineering in pursuing “blue-sky” ideas that may
lead to important technical and commercial innovations.
Fred Hutchinson
Cancer Research
Center
Fred Hutchinson Cancer Research Center is dedicated to the
elimination of cancer and related diseases as causes of human
suffering and death.
PureTech Health plc Annual report and accounts 2021 79
ESG ESG Report — continued
Planet
PureTech is committed to managing the environmental impact of its operations, the majority of which relate to business
functions at our various locations, business travel and employee commuting.
Streamlined Energy & Carbon Reporting
The section below includes our second year of reporting under the Streamlined Energy & Carbon Reporting requirements.
The reporting period is the same as the Group’s financial year, January 1, 2021 to December 31, 2021. We observed a slight
increase in energy and emissions in 2021 as a result of easing COVID-19 related operation restrictions compared to 2020.
Organization Boundary and Scope of Emissions
We have reported on all the emission sources required under the Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2018. These sources fall within the Group’s consolidated financial statement.
An operational control approach has been used in order to define our organizational boundary. This is the basis for
determining the Scope 1, 2 and 3 emissions for which the Group is responsible.
The emissions sources that constitute our boundary for the year to 31st December 2021 are:
• Scope 1: natural gas combustion within boilers and carbon dioxide used in our laboratories;
• Scope 2: purchased electricity for our own use; and
• Scope 3: business travel, employee commuting and third-party deliveries.
Methodology
For the Group’s reporting, the Group has employed the services of a specialist adviser, Verco, to quantify and verify the
Greenhouse Gas (GHG) emissions associated with the Group’s operations.
The following methodology was applied by Verco in the preparation and presentation of this data:
• The Greenhouse Gas Protocol published by the World Business Council for Sustainable Development and the World
Resources Institute (the “WBCSD/WRI GHG Protocol”);
• Application of appropriate emission factors to the Group’s activities to calculate GHG emissions;
• Scope 2 reporting methods – application of location-based and market-based emission factors for electricity supplies;
• Inclusion of all the applicable Kyoto gases, expressed in carbon dioxide equivalents, or CO2e;
• Presentation of gross emissions as the Group does not purchase carbon credits (or equivalents); and
• Some data for third-party deliverables was not in a usable format and has therefore not been included.
Absolute Emissions
The total Scope 1, 2 and 3 GHG emissions from the Group’s operations in the year ending December 31, 2021 were:
• 463.8 tonnes of CO2 equivalent (tCO2e) using a ‘location-based’ emission factor methodology for Scope 2 emissions; and
• 464.4 tonnes of CO2 equivalent (tCO2e) using a ‘market-based’ emission factor methodology for Scope 2 emissions.
Total Energy Use
The total energy use for the Group for FY2021 was 679,127 kWh.
Electricity/fuel
Mileage
Electricity (kWh)
Gas(kWh)
Petrol(kWh)
Total Energy Use (kWh)
519,694
505,075
85,577
133,430
73,856
513
679,127
639,018
2021
2020
Intensity Ratio
As well as reporting the absolute emissions, the Group’s GHG emissions are reported below on the metrics of tonnes of CO2
equivalent per employee and tonnes of CO2 equivalent per m2 of occupied space. These are the most appropriate metrics
given the majority of emissions result from the operation of the Group’s offices and the day-to-day activities of the
employees. All of the intensity ratios have been calculated using Scope 1 and Scope 2 emissions only.
The intensity based on floor area is 0.02 tCO2e per m2 for both the location-based method and the market-based method.
The employee number metric is 0.64 tCO2e per FTE using the location-based method and the market-based method.
80 PureTech Health plc Annual report and accounts 2021
ESG ESG Report — continued
Target and Baselines
Given the comparatively low GHG impact of the Group’s operations, the Group’s objective is to maintain or reduce its GHG
emissions per employee and per square metre of occupied space each year and will report each year whether it has been
successful in this regard.
There was an increase in total emissions from the previous year due to an increase in Scope 3 emissions. Scope 1 & Scope 2
emissions did reduce in FY2021. This was due to the lower emissions factors used to calculate the electricity and gas
emissions, despite the reduction in use of both.
The employee intensity ratio decreased from 1.05 tCO2e/employee to 0.64 tCO2e/employee for both location-based and
market-based methods. This was due to an increase in emissions and an increase in the number of employees.
There was no change to the floor area intensity ratio.
Key figures
GHG emissions
Scope 110
Scope 211
Scope 212
Subtotal (location-based)
Subtotal (market-based)
Scope 313
Total GHG emissions (Location-based)
Total GHG emissions (Market-based)
Efficiency actions undertaken
2021
Tonnes CO2e
tCO2e/FTE
employee
tCO2e/sq.
metre
Tonnes CO2e
17.7
116.4
116.9
134.1
134.6
329.6
463.8
464.3
0.08
0.56
0.56
0.64
0.64
–
–
–
0.002
0.02
0.02
0.02
0.02
–
–
–
25.9
120.9
120.9
146.7
146.8
232.7
379.4
379.5
2020
tCO2e/FTE
employee
0.18
0.86
0.86
1.05
1.05
–
–
–
tCO2e/sq.
metre
0.004
0.02
0.02
0.02
0.02
–
–
–
The Group did not undertake any energy efficiency actions during this financial year.
Understanding the Indirect Environmental Impacts of our Business Activities
The Group’s day-to-day operational activities have a limited impact on the environment. We do, however, recognize that the
more significant impact occurs indirectly, through the investment decisions we make and the operation of the companies we
choose to invest in. The Group therefore considers it important to establish and invest in businesses that comply with
existing applicable environmental, ethical and social legislation. It is also important that these businesses can demonstrate
that an appropriate strategy is in place to meet future applicable legislative and regulatory requirements and that these
businesses can operate to specific industry standards, striving for best practice.
Resource management
In 2021, PureTech engaged Veolia Environment for its hazardous medical waste management. Veolia designs and provides
game-changing solutions that are both useful and practical for water, waste and energy management, its Voluntary
Protection Programs (‘VPP’) are rated by OSHA and all staff are HAZWOPER certified. In addition to providing waste
management service, Veolia provides PureTech’s annual waste data. Data from Veolia shows that PureTech produced 8,371lbs
(3,797kg) of biologically and chemically hazardous waste in the course of its research in 2021. The majority of this waste is
disposed of through conversion to energy or for fuels blending. Only around 309lbs (140kg) of all waste is sent to landfill or
incinerated. Full details of waste generated and treatment methods are shown in the tables below.
PureTech hazardous waste emissions 2021 and 2020 (weight in lbs)
2021
2020
Hazardous
1,061.0
834.0
Non-
Hazardous
Regulated
Medical Waste
649.0
115.0
6,661.0
5,966.0
Total
8,371.0
6,915.0
10 Scope 1 being emissions from the Group’s combustion of fuel and operation of facilities.
11 Scope 2 being emissions from electricity (from location-based calculations), heat, steam and cooling purchased for the Group’s own use.
12 Scope 2 being emissions from electricity (from market-based calculations), heat, steam and cooling purchased for the Group’s own use.
13 Scope 3 being all indirect emissions (not in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
PureTech Health plc Annual report and accounts 2021 81
ESG ESG Report — continued
PureTech hazardous waste treatment methods 2021 and 2020 (weight in lbs)
Fuel
Blending
858.0
666.0
Incineration
Treatment/
Stabilization
Waste to
energy
78.0
48.0
133.0
160.0
5,775.0
5,567.0
2021
2020
Landfill
231.0
75.0
Recycle
1,296.0
400.0
Total
8,371.0
6,915.0
The increase in waste volume was driven by two major reasons – 1) lab operations were significantly limited in 2020 due
to the onset of the global pandemic, and 2) our clinical trial activities increased significantly in 2021 due to the advancing
pipeline, with nine ongoing clinical studies within the PureTech’s Wholly Owned Pipeline at December 31, 2021, compared
to the four clinical studies ongoing as at December 31, 2020.
PureTech will continue to monitor these output levels as part of a commitment to keep hazardous waste to a minimum.
PureTech’s energy-efficient headquarters
PureTech’s headquarters at Innovation Square, 6 Tide Street in Boston, is a brownfield redevelopment offering many
environmental benefits.
(cid:37)(cid:72)(cid:81)(cid:77)(cid:82)
(cid:48)(cid:69)(cid:70)
Innovation Square consolidates PureTech’s laboratory and administrative functions in one building,
reducing the need for employees to drive between multiple locations.
The building includes features to further reduce use of motor vehicles, including top-rated (6 out
of 6) access to public transport, and storage facilities for 22 bicycles (twice the amount required by
LEED for the building’s size) with shower and changing facilities.
Drivers of electric vehicles (EVs) have access to four charging points in the on-site parking area.
Employees are also encouraged to take public transportation to work through a travel subsidy,
while an office shuttle bus runs to and from the major Boston train stations.
The building14 is certified LEED Silver. The fit-out incorporates a range of elements to encourage efficient resource
use including:
A roof featuring reflective materials to reduce the building’s heat island effect.
Water use reduction of up to 39% through features such as low-flow toilets.
Water-efficient landscaping using hardy and drought tolerant plants to reduce irrigation
by 50% over a midsummer baseline case.
Design and model expected to use 35% less energy than the LEED baseline across heating,
cooling, lighting, hot water production and other operational functions.
Designed to generate 47% fewer greenhouse gas (GHG) emissions than the AIA 2030
Challenge baseline, equivalent to an annual reduction of 2,500 metric tonnes of CO2e.
Use of low-emitting flooring, paints and sealants in the construction in compliance with
the US SCAQMD Rule #1168 to reduce VOC emissions.
No chlorofluoro-carbon-based refrigerants (CFCs) were used in building heating, ventilation,
air conditioning and refrigeration systems.
PureTech’s kitchen area is stocked with reusable utensils, plates, cups and glasses to minimize the
use of disposable items. Every conference room has recycling bins for paper and other waste, as
do all kitchens.
14 All data in this paragraph is taken from the Article 37 Green Building Report and LEED checklist developed by WSP for the building’s landlords, Related Beal.
82 PureTech Health plc Annual report and accounts 2021
ESG ESG Report — continued
Governance
PureTech’s overall governance framework is described in detail
in pages 90-146 of this report in compliance with the UK
Corporate Governance Code. Additional information relevant
to our consideration of ESG matters is provided here.
Governance of ESG
PureTech’s ESG committee, chaired by non-executive director
Kiran Mazumdar-Shaw, is charged to manage, review and
advance ESG issues within the business and drive enhanced
reporting through the ESG report each year. The Board,
through the ESG committee as led by the committee’s Chair
and another member of our Board, welcomes active
engagement with, and will continue to solicit feedback from,
shareholders – and other stakeholders – on matters relating to
ESG and corporate stewardship. The ESG committee is
supported by at least one management member and
a dedicated internal working group.
Business ethics
PureTech strives to maintain the highest level of general
business ethics, and to uphold its reputation for integrity
and excellence, and maintain the trust of the public and its
shareholders, which requires careful observance of the spirit,
letter and intent of all applicable laws and regulations, as well
as a scrupulous regard for the highest standards of conduct and
personal integrity. Therefore, it is important that everyone who
works at or for PureTech understands and abides by PureTech’s
Code of Business Conduct and Ethics (the “Code”) which is set
out for all staff in the employee handbook.
Board diversity
2021 PureTech Board and Executive Committee
composition
44%
50%
gender diversity on the Board level 15
cultural diversity on the Board level 16
The 2021 FTSE Women Leaders Review reported that only
10 companies within the FTSE 250 had women CEOs.
PureTech’s Founder and CEO, Daphne Zohar, is a successful
entrepreneur who assembled a leading team to implement
her vision for the Company. Ms. Zohar has been a key
participant in fundraising, business development and
establishing the underlying programs and platforms that
has resulted in PureTech’s Wholly Owned Programs and
pipelines of PureTech’s Founded Entities.
In 2019, we had already achieved the Parker Review’s
“One by 2021” minimum recommendation that FTSE 350
companies have at least one Board member from an ethnic
minority background by 2021.
In 2021, we met FTSE Women Leaders Review’s increased
gender diversity target recommending FTSE 350 companies
to achieve a minimum of 40% women on Boards and in
Leadership teams by the end of 2025.
15 Board composition at March 24, 2022.
16 Board composition at December 31, 2021.
Anti-bribery and corruption
PureTech takes a zero-tolerance approach to bribery and
corruption and implements and enforces effective systems
to counter bribery. PureTech is bound by the laws of the UK,
including the Bribery Act 2010, and has implemented
policies and procedures based on such laws. In addition,
PureTech has a whistleblowing policy under which staff are
encouraged to report to the CEO any alleged wrongdoing,
breach of legal obligation or improper conduct by or on the
part of the Group or any officers, Directors, employees,
consultants or advisors of the Group. PureTech’s Audit
Committee is satisfied that the policy has been designed to
encourage staff to report suspected wrongdoing as soon as
possible, to provide staff with guidance on how to raise
those concerns and to assure staff that they should be able
to raise genuine concerns without fear of reprisals, even if
such concern turns out to be mistaken. PureTech has not
been involved in any legal proceedings or suffered monetary
losses as a result of legal proceedings related to corruption
and bribery to date.
Code of ethics governing interactions with health
care professionals
PureTech maintains a policy to ensure that interactions and
business relationships with health care professionals (HCPs)
are conducted in accordance with applicable regulations
and ethical standards. This policy provides, among other
things, that (a) HCPs will be selected solely on the basis of
their qualifications and (b) payments will be made at fair
market value taking into account purchasing history or
volume or prospective ability to drive sales. The policy
provides the roadmap for engagement of HCPs and
regulates interactions between PureTech and HCPs.
Grievance reporting and escalation
PureTech’s employee handbook clearly states that PureTech
prohibits all forms of harassment and offensive conduct,
including sexual harassment and any other form of
harassment based on protected characteristics, and that we
are committed to providing a workplace free of harassment
and offensive conduct. The handbook clearly defines and
provides examples of the prohibited behavior and strongly
encourages employees to report offensive conduct in the
workplace to either their supervisor or Human Resources.
All PureTech employees are required to complete
a mandatory harassment training with the goal for PureTech
to provide an overview of the law and PureTech policies, help
employees recognize and stop problem behavior, cultivate
a respectful environment where civil conduct is the norm,
and enable employees to understand the mechanisms for
reporting and responding to inappropriate conduct.
The responsibility to investigate grievances has been
assigned to company President, Bharatt Chowrira.
Additionally, PureTech provides access to the company’s
external legal representative and an anonymous helpline to
aid the reporting process. There is an opportunity to further
develop grievance procedures established in 2021 as we
look forward into 2022.
PureTech Health plc Annual report and accounts 2021 83
ESG ESG Report — continued
Data privacy and security
In circumstances where we are required to collect personal
data from patients (or other groups such as employees or
customers), PureTech maintains and protects this data by
collecting only what is needed and storing it in a way that
protects it from intentional or accidental disclosure. We will
only make disclosures when we have consent or are required
to do so by appropriate legal or regulatory authorities.
Human rights and modern slavery
The Modern Slavery Act 2015 requires organizations
conducting business in the UK with worldwide revenues of
at least £36 million are required to publish a transparency
statement describing the steps they have taken in the last
financial year to ensure their business and supply chains are
free from modern slavery and human trafficking. PureTech is
exempt from this as we do not meet the revenue threshold.
However, we are reviewing, identifying and implementing
improvements across our policies as we continue to grow
our business. We are strengthening our supplier policies in
2022 with the goal to implement a supplier code of conduct
by December 31, 2022.
Supply chain management
PureTech is a clinical stage company and therefore does
not have a supply chain at this stage. Amongst the Tier I
suppliers who provide materials for our clinical development,
50% participate in Rx-360 International Pharmaceutical
Supply Chain Consortium equivalent audit programs.
Our Supplier Audit Policy outlines the guidelines on
conducting supplier audits to verify a supplier’s compliance
to regulatory requirements and the supplier’s internal
documentation, so that the supplied goods and services are
produced and provided per PureTech specifications are
consistently achieved.
Our Commitment to ESG
PureTech takes pride in its commitment to the community that it consists of (its people), the community it serves (its patients)
and the community that it participates within (the world at large). Our team is committed to further our mission of delivering
therapeutics where there is unmet need, and we believe this can only be achieved through building a sustainable business.
We believe that the environmental, social and governance initiatives we have undertaken set us on the path towards
a brighter future and reporting our ESG metrics helps to orient PureTech along that path.
84 PureTech Health plc Annual report and accounts 2021
ESG ESG Report — continued
Appendix
We are aligning our efforts and reporting to recognize the following ESG standards where appropriate:
• The Sustainability Accounting Standards Board (SASB)
• Task Force on Climate-Related Financial Disclosures (TCFD)
SASB Index
The Sustainability Accounting Standards Board (SASB) is an independent, standards-setting US organization that aims to
increase consistency in environmental, social and governance (ESG) reporting by sector and has been developed in
conjunction with investors. PureTech has chosen to report this first disclosure in 2021 through the lens of the voluntary SASB
framework for our industry, biotechnology and pharmaceuticals. We believe that this will provide transparency to investors
and other stakeholders. We provide a rationale in instances where SASB recommendations are not applicable to our
business model given that stage of the company. We are continually improving our data collection and coordination across
our operations in support of our commitment to strengthen our reporting processes and disclosures in the coming years.
Topic
Accounting Metric
Category
Unit of
measure
SASB
Code
Disclosure Location/
Rationale For Omission
Discussion, by world region, of management
process for ensuring quality and patient safety
during clinical trials
Discussion
and Analysis
–
HC-BP-
210a.1
Page 75 – Safety of clinical trial
participants
Safety of
Clinical Trial
Participants
Number of FDA Sponsor Inspections related
to clinical trial management and
pharmacovigilance that resulted in: (1)
Voluntary Action Indicated (VAI) and (2) Official
Action Indicated (OAI)
Quantitative
Number
HC-BP-
210a.2
Page 75 – Safety of clinical trial
participants
Total amount of monetary losses as a result of
legal proceedings associated with clinical trials
in developing countries
Quantitative
Reporting
currency
HC-BP-
210a.3
N/A
There has not been any
legal proceedings
Access to
Medicines
Description of actions and initiatives to
promote access to health care products for
priority diseases and in priority countries as
defined by the Access to Medicine Index
Discussion
and Analysis
n/a
HC-BP-
240a.1
List of products on the WHO List of
Prequalified Medicinal Products as part of its
Prequalification of Medicines Program (PQP)
Discussion
and Analysis
n/a
HC-BP-
240a.2
Number of settlements of Abbreviated New
Drug Application (ANDA) litigation that
involved payments and/or provisions to delay
bringing an authorized generic product to
market for a defined time period
Quantitative
Number
HC-BP-
240b.1
Affordability
& Pricing
Percentage change in: (1) average list price
and (2) average net price across U.S. product
portfolio compared to previous year
Quantitative
Percentage (%)
HC-BP-
240b.2
Percentage change in: (1) list price and (2) net
price of product with largest increase
compared to previous year
Quantitative
Percentage (%)
HC-BP-
240b.3
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
PureTech Health plc Annual report and accounts 2021 85
ESG ESG Report — continued
Topic
Accounting Metric
Category
Unit of
measure
List of products listed in the Food and Drug
Administration’s (FDA) MedWatch Safety
Alerts for Human Medical Products database
Discussion
and Analysis
n/a
Number of fatalities associated with products
as reported in the FDA Adverse Event
Reporting System
Quantitative
Number
Number of recalls issued;
total units recalled
Quantitative
Number
Drug Safety
SASB
Code
HC-BP-
250a.1
HC-BP-
250a.2
HC-BP-
250a.3
Total amount of product accepted for
takeback, reuse, or disposal
Quantitative
Metric tons (t)
HC-BP-
250a.4
Number of FDA enforcement actions taken in
response to violations of current Good
Manufacturing Practices (CGMP), by type
Quantitative
Number
HC-BP-
250a.5
Description of methods and technologies
used to maintain traceability of products
throughout the supply chain
and prevent counterfeiting
Discussion
and Analysis
n/a
HC-BP-
260a.1
Counterfeit
Drugs
Discussion of process for alerting customers
and business partners of potential or known
risks associated with counterfeit products
Discussion
and Analysis
n/a
HC-BP-
260a.2
Number of actions that led to raids, seizure,
arrests, and/or filing of criminal charges
related to counterfeit products
Quantitative
Number
HC-BP-
260a.3
Total amount of monetary losses as a result of
legal proceedings associated with false
marketing claims
Quantitative
Reporting
currency
HC-BP-
270a.1
Ethical
Marketing
Description of code of ethics governing
promotion of off-label use of products
Discussion
and Analysis
n/a
HC-BP-
270a.2
Disclosure Location/
Rationale For Omission
Page 75 – Overview
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
N/A
PureTech is a clinical stage
biopharmaceutical company
and has no products on the
market from within our Wholly
Owned Pipeline
Employee
Recruitment,
Development
& Retention
Discussion of talent recruitment and retention
efforts for scientists and research and
development personnel
(1) Voluntary and (2) involuntary turnover rate
for: (a) executives/senior managers, (b)
midlevel managers, (c) professionals, and (d)
all others
Discussion
and Analysis
n/a
HC-BP-
330a.1
Pages 76-78 – Employee
recruitment
Quantitative
Rate
HC-BP-
330a.2
Page 76 – Employee recruitment
86 PureTech Health plc Annual report and accounts 2021
ESG ESG Report — continued
Topic
Accounting Metric
Category
Unit of
measure
SASB
Code
Disclosure Location/
Rationale For Omission
Supply Chain
Management
Business
ethics
Percentage of (1) entity’s facilities and (2) Tier I
suppliers’ facilities participating in the Rx-360
International Pharmaceutical Supply Chain
Consortium audit program or equivalent
third-party audit programs for integrity of
supply chain and ingredients
Total amount of monetary losses as a result of
legal proceedings associated with corruption
and bribery
Quantitative
Rate
HC-BP-
430a.1
Page 84 – Supply chain
management
Quantitative
Reporting
currency
HC-BP-
510a.1
Page 83 – Anti-bribery and
corruption; whistleblowing
Description of code of ethics governing
interactions with health care professionals
Discussion
and Analysis
n/a
HC-BP-
510a.2
Page 83 – Code of ethics
governing interactions with
health care professionals
TCFD Disclosure
The Task Force on Climate-related Financial Disclosures (TCFD) was created in 2015 by the UK Financial Stability Board (FSB)
to develop consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing
information to stakeholders. Here we provide our 2021 disclosure in accordance with the TCFD framework.
Overview
PureTech recognizes that the social and environmental sustainability of our operating model and the ability to manage the
potential impacts of climate change on our business and strategic plans are among the factors that are integral to the
long-term success of our business. This section provides PureTech’s first report aligned to the TCFD guidelines, which are
based on the recommendations set out by the UK Financial Stability Board to address any potential climate and sustainability
related impacts that are identified as relevant to our business through the implementation of forward strategic thinking and
action plans. While our day-to-day impact on the environment and the environment’s day-to-day impact on us is limited as a
result of the current scale of our operations and phase of our business, we recognize the importance of mitigating long-term
risks for the benefit of society and our business, especially as our business grows over the coming years. PureTech is
committed to managing the climate impact of our operations, the majority of which currently relate to business functions at
our various locations, business travel and commuting. Informed by key thought leaders on this emerging reporting
requirement, this section describes our process and actions as of December 31, 2021.
Governance
As discussed elsewhere in our Annual Report and Accounts, PureTech’s Board of Directors is charged with formal risk
identification and with implementing appropriate procedures and strategies for risk mitigation and management, including
through quarterly discussions of the key risks facing PureTech. The Board utilizes its risk management framework to help
guide PureTech’s overall strategy, major plans of action, corporate policies and business plans and objectives, which are
then implemented by PureTech’s management team with Board oversight and advice. See pages 117-120 in the 2021 Annual
Report and Accounts for further details related to the Board roles and responsibilities and pages 90-93 related to the
Board’s risk management framework and processes.
Board of
Directors
Nomination
Committee
Audit
Committee
Remuneration
Committee
ESG Committee; Sustainability Oversight
Management Team
R&D Function
Operations Function
Day-to-day Sustainability Oversight
Business Foundation
Business Strategy
Our Mission
Shareholder Value Creation
We discover, develop and aim to commercialize new therapies for devastating diseases where(cid:31)
limited or no treatment options(cid:31)currently exist for patients
PureTech Health plc Annual report and accounts 2021 87
ESG ESG Report — continued
In 2020, PureTech’s Board of Directors formed an ESG Committee, chaired by Non-Executive Director, Kiran Mazumdar-
Shaw. Ms. Mazumdar-Shaw has extensive expertise on climate-related risk management as seen from her role as the ESG
committee chair at Infosys and Syngene. Additionally, Biocon, which Ms. Mazumdar-Shaw is the founder and Executive
Chairperson of has most recently been added to DJSI Emerging Market index for its ESG practices. The role of the ESG
committee is to manage, review and advance ESG issues within the business, a role that includes assessing and overseeing
climate-related risks and opportunities, as well as considering how such risks and opportunities can inform operational and
strategic planning for the organization as applicable. The ESG Committee also includes one member of our executive
management team and a dedicated working group of internal cross-functional resources, and it is supported by several third
party experts. Through this framework, the ESG Committee formally reports on its activities to the full PureTech Board on a
regular basis at scheduled meetings. The progress of the Company’s ESG initiatives are reported on an annual basis in the
Company’s Annual Report and Accounts. See pages 73-84 for the 2021 ESG Report.
Strategy
PureTech has undertaken analyses to identify climate-related risks with the potential to have a strategic impact on our
business. PureTech is a clinical stage biopharmaceutical company with currently no drugs on the market. Given the nature of
our mission and the scope and scale of our current and near-term future operations, PureTech has determined that we do not
face any physical and transition risks in the next 12-24 months. We will continue our broad-based risk assessment and we
have identified the following specific climate-related risk areas and potential associated financial impacts that we intend to
monitor over time as part of our risk management process (for short, medium and long-term risk):
• Transitional and Market: Increased operating costs due to the introduction of carbon pricing/taxation schemes or other
supply-chain cost increases
• Physical and Market: Supply chain or operational disruption or increased operational costs due to increased severity of
extreme weather events or long-term changes to weather patterns
• Transitional and Reputational: Potential impacts to reputation if PureTech falls short of stakeholder expectations
• Transitional and Legal and Reputational: Increased costs of compliance with new regulations associated with climate-
related reporting obligations
In the short-term, we intend to implement formal business continuity plans in the next 12 months to ensure our physical
operations and supply chains are mitigating risks and potential impacts of business interruptions. As we look into the future,
we will continue to monitor climate-related risks and opportunities that impacts our operations and will also consider
performing scenario analysis to assess transition and physical risk when the state of operations is sufficiently advanced to
render such analysis meaningful for ~5 year long-term strategic planning.
Similar to our assessment of risks, we have not identified any specific material opportunities with the potential to impact our
business model. However, we will continue our analysis over time, especially in the following areas (for short, medium and
long-term opportunities):
• Market: Reducing operating costs through energy-efficient improvements
• Transitional and Reputational: Opportunities with respect to being early-adopter of enhanced disclosure measures or
lower-carbon technologies
Risk Management
As previously noted, we discuss our overall risk management processes elsewhere in our ARA (please see the section
captioned “Risk Management” on pages 90-93), which processes are inclusive of our assessment of climate-related risks.
While climate-related risks have not been identified as a principal risk for PureTech at this time, we intend to continue to
monitor PureTech’s climate-related risk profile based on changing external and internal circumstances. Risks are formally
identified by the Board and appropriate processes are put in place to monitor and mitigate them on an ongoing basis.
PureTech is committed to the introduction of climate risk tools and processes to identify and manage climate related risks as
well as control those risks by 2025. In addition, our ESG committee, with the assistance of third-party advisors, has
specifically considered climate-related risks on at least an annual basis or more often as the need arises. All findings have
been reported and will continue to be reported to the Board.
As part of climate-related monitoring, PureTech employs external services to audit and report on climate-related metrics,
including the following assessments more fully discussed in our 2021 ESG Report on pages 80-82:
• Streamlined Energy and Carbon Reporting (SECR) prepared by Verco
• Green Building Report and LEED Checklist prepared by WSP in conjunction with the landlord for our headquarters facility,
Related Beal
• Hazardous Waste Report prepared by Veolia Environnement S.A.
88 PureTech Health plc Annual report and accounts 2021
ESG ESG Report — continued
These findings inform the ESG Committee’s climate risk analysis to help identify, and if relevant mitigate, any physical and
transition risks considered that may be considered material to the Company. The ESG Committee reports these findings to
the Board periodically, and annually at minimum, to enable an understanding of our current situation and to provide data
points for the Board to consider as it assesses risks and considers mitigation and/or other strategies. In addition, all
employees of PureTech are encouraged to provide suggestions in terms of how to address areas of risk, including climate-
related risk, through routine full-company town hall meetings and frequent interactions with leadership in smaller teams.
Metrics and Targets
PureTech employs the services of a specialist adviser, Verco, to quantify and verify the GHG emissions associated with our
operations and reports on all of the emission sources required under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2018.
An operational control approach is used in order to define our organizational boundary. This is the basis for determining
the Scope 1, 2 and 3 emissions. The emissions sources that constitute our boundary are:
• Scope 1: natural gas combustion within boilers and carbon dioxide used in our laboratories;
• Scope 2: purchased electricity for our own use; and
• Scope 3: business travel, employee commuting and third-party deliveries.
Other environmental-related measures PureTech reports on may be found in our 2021 ESG Report on pages 73-84, which
report is not incorporated by reference to this Annual Report. PureTech will consider whether additional metrics may be
developed and added over time.
Given (a) the nature of our industry, business operations and therapeutic mission, (b) the fact that PureTech is a clinical
stage company with no current supply chain emissions, and (c) that we have not identified any material climate-related risks
to our business, PureTech has not set any emissions-related targets, such as a net-zero supply chain, for the Company or
incorporated targets into our goals or remuneration policies. We will introduce climate-related targets when the state of
operations is sufficiently advanced, such as entering a commercial stage, to render such analysis meaningful.
Next steps
PureTech remains committed to being a good corporate citizen, including managing the impact of our operations with
respect to climate as well as environmental matters more generally. As our therapeutic pipeline advances to a commercial
stage in the future, we intend to (1) enhance climate-related risks and opportunities management, (2) identify and address
areas of improvement year by year, and (3) set greenhouse gas emissions targets and measure performance annually,
including as compared to past performance.
PureTech Health plc Annual report and accounts 2021 89
ESG Risk management
The execution of the Group’s strategy is subject to a number of risks and uncertainties. As a clinical-stage biotherapeutics
company, the Group operates in an inherently high-risk environment. The overall aim of the Group’s risk management effort is
to achieve an effective balancing of risk and reward, although ultimately no strategy can provide an assurance against loss.
Risks are formally identified by the Board and appropriate processes are put in place to monitor and mitigate them on an
ongoing basis. If more than one event occurs, it is possible that the overall effect of such events would compound the possible
effect on the Group. The principal risks that the Board has identified as the key business risks facing the Group are set out
in the table below along with the consequences and mitigation of each risk. These risks are only a high-level summary of the
principal risks affecting our business; any number of these or other risks could have a material adverse effect on the Group or
its financial condition, development, results of operations, subsidiary companies and/or future prospects. Further information
on the risks facing the Group can be found on pages 217 to 251, which also includes a description of circumstances under
which principal and other risks and uncertainties might arise in the course of our business and their potential impact.
Risk
Impact*
Management Plans/Actions
1 Risks related to science and technology failure
The science and technology being developed or
commercialized by some of our businesses may fail
and/or our businesses may not be able to develop
their intellectual property into commercially viable
therapeutics or technologies.
There is also a risk that certain of the businesses may
fail or not succeed as anticipated, resulting in
significant decline of our value.
The failure of any of our businesses could
decrease our value. A failure of one of the
major businesses could also impact the
perception of PureTech as a developer of
high value technologies and possibly make
additional fundraising at PureTech or any
Founded Entity more difficult.
A critical failure of a clinical trial may result in
termination of the program and a significant
decrease in our value. Significant delays in a
clinical trial to support the appropriate
regulatory approvals could impact the
amount of capital required for the business
to become fully sustainable on a
cash flow basis.
2 Risks related to clinical trial failure
Clinical trials and other tests to assess the
commercial viability of a therapeutic candidate are
typically expensive, complex and time-consuming,
and have uncertain outcomes.
Conditions in which clinical trials are conducted
differ, and results achieved in one set of conditions
could be different from the results achieved in
different conditions or with different subject
populations. If our therapeutic candidates fail to
achieve successful outcomes in their respective
clinical trials, the therapeutics will not receive
regulatory approval and in such event cannot be
commercialized. In addition, if we fail to complete or
experience delays in completing clinical tests for any
of our therapeutic candidates, we may not be able to
obtain regulatory approval or commercialize our
therapeutic candidates on a timely basis, or at all.
Before making any decision to develop any
technology, extensive due diligence is
carried out that covers all the major business
risks, including technological feasibility,
market size, strategy, adoption and
intellectual property protection.
A capital efficient approach is pursued such
that some level of proof of concept has to be
achieved before substantial capital is
committed and thereafter allocated. Capital
deployment is generally tranched so as to
fund programs only to their next value
milestone. Members of our Board serve on
the board of directors of several of the
businesses so as to continue to guide each
business’s strategy and to oversee proper
execution thereof. We use our extensive
network of advisors to ensure that each
business has appropriate domain expertise
as it develops and executes on its strategy
and the R&D Committee of our Board
reviews each program at each stage of
development and advises our Board on
further actions. Additionally, we have a
diversified model with numerous assets such
that the failure of any one of our businesses
would not result in a failure of all of
our businesses.
We have a diversified model such that any
one clinical trial outcome would not
significantly impact our ability to operate as
a going concern. We have dedicated internal
resources to establish and monitor each of
the clinical programs in order to try to
maximise successful outcomes. We also
engage outside experts to help design
clinical programs to help provide valuable
information and mitigate the risk of failure.
Significant scientific due diligence and
preclinical experiments are done prior to a
clinical trial to attempt to assess the odds of
the success of the trial. In the event of the
outsourcing of these trials, care and
attention are given to assure the quality of
the vendors used to perform the work.
* When assessing potential impact of a given risk, we looked at the potential effects on our research and development activities, financial health and overall business operations.
90 PureTech Health plc Annual report and accounts 2021
Governance
Risk management — continued
Risk
Impact*
Management Plans/Actions
The failure of one of our therapeutics to
obtain any required regulatory approval, or
conditions imposed in connection with any
such approval, may result in a significant
decrease in our value.
We manage our regulatory risk by employing
highly experienced clinical managers and
regulatory affairs professionals who, where
appropriate, will commission advice from
external advisors and consult with the
regulatory authorities on the design of our
preclinical and clinical programs. These
experts ensure that high-quality protocols
and other documentation are submitted
during the regulatory process, and that
well-reputed contract research organizations
with global capabilities are retained to
manage the trials. We also engage with
experts, including on our R&D Committee,
to help design clinical trials to help provide
valuable information and maximize the
likelihood of regulatory approval.
Additionally, we have a diversified model
with numerous assets such that the failure
to receive regulatory approval or subsequent
regulatory difficulties with respect to any one
therapeutic would not adversely impact all
of our therapeutics and businesses.
Adverse reactions or unacceptable side
effects may result in a smaller market for our
therapeutics, or even cause the therapeutics
to fail to meet regulatory requirements
necessary for sale of the therapeutic. This,
as well as any claims for injury or harm
resulting from our therapeutics, may result
in a significant decrease in our value.
We design our therapeutics with safety as a
top priority and conduct extensive preclinical
and clinical trials which test for and identify
any adverse side effects. Despite these steps
and precautions, we cannot fully avoid the
possibility of unforeseen side effects. To
mitigate the risk further we have insurance in
place to cover product liability claims which
may arise during the conduct of clinical trials.
The failure to obtain reimbursement from
third party payers, as well as competition
from other therapeutics, could significantly
decrease the amount of revenue we may
receive from therapeutic sales for certain
therapeutics. This may result in a significant
decrease in our value.
We engage reimbursement experts to
conduct pricing and reimbursement
studies for our therapeutics to ensure that
a viable path to reimbursement, or direct
user payment, is available. We also closely
monitor the competitive landscape for all
of our therapeutics and adapt our business
plans accordingly. Not all therapeutics
that we are developing will rely on
reimbursement. Also, while we cannot
control outcomes, we try to design studies
to generate data that will help support
potential reimbursement.
3 Risks related to regulatory approval
The pharmaceutical industry is highly regulated.
Regulatory authorities across the world enforce a
range of laws and regulations which govern the
testing, approval, manufacturing, labelling and
marketing of pharmaceutical therapeutics. Stringent
standards are imposed which relate to the quality,
safety and efficacy of these therapeutics. These
requirements are a major determinant of whether it
is commercially feasible to develop a drug substance
or medical device given the time, expertise, and
expense which must be invested.
We may not obtain regulatory approval for our
therapeutics. Moreover, approval in one territory
offers no guarantee that regulatory approval will be
obtained in any other territory. Even if therapeutics
are approved, subsequent regulatory difficulties may
arise, or the conditions relating to the approval may
be more onerous or restrictive than we expect.
4 Risks related to therapeutic safety
There is a risk of adverse reactions with all drugs and
medical devices. If any of our therapeutics are found
to cause adverse reactions or unacceptable side
effects, then therapeutic development may be
delayed, additional expenses may be incurred if
further studies are required, and, in extreme
circumstances, it may prove necessary to suspend or
terminate development. This may occur even after
regulatory approval has been obtained, in which
case additional trials may be required, the approval
may be suspended or withdrawn or additional safety
warnings may have to be included on the label.
Adverse events or unforeseen side effects may also
potentially lead to product liability claims being
raised against us as the developer of the
therapeutics and sponsor of the relevant clinical
trials. These risks are also applicable to our Founded
Entities and any trials they conduct or therapeutic
candidates they develop.
5 Risks related to therapeutic profitability
We may not be able to sell our therapeutics
profitably if reimbursement from third-party payers
such as private health insurers and government
health authorities is restricted or not available
because, for example, it proves difficult to build a
sufficiently strong economic case based on the
burden of illness and population impact.
Third-party payers are increasingly attempting to
curtail healthcare costs by challenging the prices
that are charged for pharmaceutical therapeutics
and denying or limiting coverage and the level of
reimbursement. Moreover, even if the therapeutics
can be sold profitably, they may not be accepted by
patients and the medical community.
Alternatively, our competitors – many of whom have
considerably greater financial and human resources
– may develop safer or more effective therapeutics
or be able to compete more effectively in the
markets targeted by us. New companies may enter
these markets and novel therapeutics and
technologies may become available which are more
commercially successful than those being developed
by us. These risks are also applicable to our Founded
Entities and could result in a decrease in their value.
PureTech Health plc Annual report and accounts 2021 91
Governance
Risk management — continued
Risk
Impact*
Management Plans/Actions
6 Risks related to intellectual
property protection
We may not be able to obtain patent protection
for some of our therapeutics or maintain the
secrecy of its trade secrets and know-how. If we
are unsuccessful in doing so, others may market
competitive therapeutics at significantly lower
prices. Alternatively, we may be sued for
infringement of third-party patent rights. If these
actions are successful, then we would have to pay
substantial damages and potentially remove our
therapeutics from the market. We license certain
intellectual property rights from third parties. If we
fail to comply with our obligations under these
agreements, it may enable the other party to
terminate the agreement. This could impair our
freedom to operate and potentially lead to third
parties preventing us from selling certain of our
therapeutics.
7 Risks related to enterprise profitability
We expect to continue to incur substantial
expenditure in further research and development
activities. There is no guarantee that we will become
operationally profitable, and, even if we do so, we
may be unable to sustain operational profitability.
8 Risks related to hiring and
retaining qualified employees
We operate in complex and specialized business
domains and require highly qualified and
experienced management to implement our
strategy successfully. We and many of our
businesses are located in the United States which
is a highly competitive employment market.
Moreover, the rapid development which is
envisaged by us may place unsupportable
demands on our current managers and employees,
particularly if we cannot attract sufficient new
employees. There is also the risk that we may
lose key personnel.
The failure to obtain patent protection and
maintain the secrecy of key information may
significantly decrease the amount of
revenue we may receive from therapeutic
sales. Any infringement litigation against us
may result in the payment of substantial
damages by us and result in a significant
decrease in our value.
We spend significant resources in the
prosecution of our patent applications and
maintenance of our patents, and we have an
in-house patent counsel and patent group to
help with these activities. We also work with
experienced external attorneys and law firms
to help with the protection, maintenance and
enforcement of our patents. Third party
patent filings are monitored to ensure the
Group continues to have freedom to
operate. Confidential information (both our
own and information belonging to third
parties) is protected through use of
confidential disclosure agreements with third
parties, and suitable provisions relating to
confidentiality and intellectual property exist
in our employment and advisory contracts.
Licenses are monitored for compliance
with their terms.
The strategic aim of the business is to
generate profits for our shareholders
through the commercialization of
technologies through therapeutic sales,
strategic partnerships and sales of
businesses. The timing and size of these
potential inflows are uncertain. Should
revenues from our activities not be
achieved, or in the event that they are
achieved but at values significantly less than
the amount of capital invested, then it would
be difficult to sustain our business.
We retain significant cash in order to support
funding of our Founded Entities and our
Wholly Owned Pipeline. We have close
relationships with a wide group of investors
and strategic partners to ensure we can
continue to access the capital markets and
additional monetization and funding for our
businesses. Additionally, our Founded
Entities are able to raise money directly from
third party investors and strategic partners.
The failure to attract highly effective
personnel or the loss of key personnel
would have an adverse impact on our ability
to continue to grow and may negatively
affect our competitive advantage.
The Board annually seeks external expertise
to assess the competitiveness of the
compensation packages of its senior
management. Senior management
continually monitors and assesses
compensation levels to ensure we remain
competitive in the employment market. We
maintain an extensive recruiting network
through our Board members, advisors and
scientific community involvement. We also
employ an executive as a full-time in-house
recruiter. Additionally, we are proactive in
our retention efforts and include incentive-
based compensation in the form of equity
awards and annual bonuses, as well as a
competitive benefits package. We have a
number of employee engagement efforts to
strengthen our PureTech community.
92 PureTech Health plc Annual report and accounts 2021
Governance
Risk management — continued
Risk
Impact*
Management Plans/Actions
9 Risks related to business, economic
or public health disruptions
Business, economic or geopolitical disruptions or
global health concerns could seriously harm our
development efforts and increase our costs
and expenses.
To date, we have seen limited impact on our
research and development activities and the
operation of our company more generally,
but we will continuously monitor the
COVID-19 pandemic and the invasion of
Ukraine and their impact on our business
going forward. It is possible that we may see
further impact as the situation continues to
develop. With respect to the COVID-19
pandemic, we have continued to be
proactive in limiting the number of staff on
site, requiring that all on-site employees test
twice a week and providing personal
protective equipment to our staff.
Broad-based business, economic or
geopolitical disruptions could adversely
affect our ongoing or planned research and
development activities. For example, the
COVID-19 global pandemic resulted in
extended shutdowns of certain businesses
around the world. More recently, the Russian
invasion of Ukraine has created significant
economic disruption as a result of sanctions
by the International community and the
almost complete shutdown of the Ukrainian
economy and business, including
healthcare, in Ukraine. Global health
concerns, such as COVID-19, or geopolitical
events, like the invasion of Ukraine, could
also result in social, economic, and labor
instability in the countries in which we or the
third parties with whom we engage operate.
We cannot presently predict the scope and
severity of any potential business shutdowns
or disruptions, but if we or any of the third
parties with whom we engage, including the
suppliers, clinical trial sites, regulators and
other third parties with whom we conduct
business, were to experience shutdowns or
other business disruptions, our ability to
conduct our business in the manner and on
the timelines presently planned could be
materially and negatively impacted. It is also
possible that global health concerns or
geopolitical events such as these one could
disproportionately impact the hospitals and
clinical sites in which we conduct any of our
current and/or future clinical trials, which
could have a material adverse effect on our
business and our results of operation and
financial impact.
Brexit
The United Kingdom withdrew from the European Union on January 31, 2020 (Brexit) and the transition period for such
withdrawal ended on December 31, 2020. Although the Board has considered the potential impact of Brexit as part of its risk
management, given that we principally operate in the United States and hold substantially all assets in U.S. dollars, we do not
believe there have been or will be any material financial effect on our business, or any significant operational issues which have
arisen or could arise, as a result of Brexit.
PureTech Health plc Annual report and accounts 2021 93
Governance
The Directors note that our ownership
stakes in the Controlled Founded
Entities and Non-Controlled Founded
Entities are expected to be illiquid
in nature, with the exception of our
ownership stakes in Karuna and
Vor, which are both publicly traded
on Nasdaq as well as Gelesis which
recently listed on the New York Stock
Exchange on January 14, 2022. See
Recent Developments below regarding
our Founded Entity Akili potential
merger. While we anticipate holding
these ownership stakes through the
achievement of significant milestones
or other events, we will continue to
be diligent in exploring monetization
opportunities after key value accretion
has occurred similar to the execution of
the sale of 1,000,000 common shares
of Karuna for aggregate proceeds of
$118.0 million on February 9, 2021, and
the sale of 750,000 common shares of
Karuna for an aggregate proceeds of
$100.1 million on November 9, 2021.
We also expect that certain of these
Founded Entities may not be successful
and this could result in a loss of the
amounts previously invested. However,
even in this scenario, our liquidity
is expected to remain sufficient to
achieve the remaining milestone events
and fund infrastructure costs.
The Directors have concluded, based
on our strong financial position and
readily available cash reserves, that we
are highly likely to be able to fund our
infrastructure requirements, advance
multiple clinical trials within our Wholly
Owned Pipeline, including trials in more
advanced stages, and contribute the
amounts considered necessary for the
Controlled Founded Entities and Non-
Controlled Founded Entities to reach
significant development milestones
over the period of the assessment.
Therefore, there is a reasonable
expectation that we have adequate
resources and will continue to operate
and meet our obligations over the
period of the assessment.
Viability
PureTech Health plc
Viability Statement
In accordance with the UK Corporate
Governance Code (Governance
Code) published in July 2018, the
Directors have assessed the prospects
of the Company, and with respect
to the December 31, 2021, financial
position, we have sufficient available
funding to extend operations into the
first quarter of 2025. This period is
deemed appropriate having assessed
the financial health as of December
31, 2021. Further, we expect our
Wholly Owned Programs (or “Internal
segment”) to significantly progress
during this period and for key
Controlled Founded Entities and Non-
Controlled Founded Entities to reach
significant development milestones
over the period of the assessment.
We anticipate our funding to be used to
advance our Wholly Owned Programs,
to continue research and development
efforts, to discover and progress new
therapeutic candidates and to fund
the Company’s head office costs into
the first quarter of 2025. We have
also reserved capital to support our
Founded Entities, should they require
it, to reach significant development
milestones over the period of the
assessment in conjunction with our
external partners. It should be noted
that the majority of funding has been
allocated to the advancement of the
Wholly Owned Programs.
The Directors confirm that they have
a reasonable expectation that we will
continue to operate and meet our
obligations as they fall due over the
period of the assessment. In making
this statement the Directors carried out
a robust assessment of the principal
risks, including those that would
threaten our business model, future
performance, solvency or liquidity.
This assessment was made in
consideration of our strong financial
position, current strategy and
management of principal risks. The
following facts support the Directors’
view of the viability:
• We have significant influence over
the spending and strategic direction
of our Wholly Owned Programs and
Controlled Founded Entities.
• Our business model is structured
so that we are not reliant on the
successful outcomes of any one
therapeutic or technology within
the Wholly Owned Programs, or any
Controlled Founded Entity or Non-
Controlled Founded Entity.
In addition, the fact that the Wholly
Owned Programs, Controlled Founded
Entities and Non-Controlled Founded
Entities (with the exception of Gelesis
and Akili) are currently in the research
and development stage means that
these therapeutics, technologies and
entities are not reliant on cash inflows
from product sales or services during
the period of this assessment. This
also means that we are not highly
susceptible to conditions in one or
more market sectors in this time frame.
Although engaging with collaboration
partners is highly valuable from a
validation and, in some cases, funding
perspective, we are not solely reliant
on cash flows from such sources over
the period of assessment.
Our consolidated cash and cash
equivalents as of December 31, 2021,
was $465.7 million. Our PureTech
Level cash and cash equivalents as of
December 31, 2021, was $418.9 million.
Our PureTech Level cash and cash
equivalents position is highly liquid and
is forecasted to support infrastructure
costs, Wholly Owned Program research
and development activities and the
appropriate funding of key Controlled
Founded Entities and Non-Controlled
Founded Entities, in order to reach
significant developmental milestones
over the period of the assessment.
The Board reviews the near-term
liquidity and regularly considers
funding plans of our Wholly Owned
Programs, Controlled Founded Entities
and Non-Controlled Founded Entities
in our assessment of long-term cash
flow projections.
While the review has considered all of
the principal risks identified, the Board
is focused on the pathway to regulatory
approval of each therapeutic candidate
being developed within our Wholly
Owned Pipeline as well as those of our
Founded Entities. Further, the Board
has considered milestone and royalty
funding based on existing collaboration
and partnership arrangements, and
the ability of the Wholly Owned
Program, and each Controlled Founded
Entity and Non-Controlled Founded
Entity to enter into new collaboration
agreements, all of which could be
expected to generate cash in-flows but
were not included in the assessment.
Additionally, given that spending
and investment decisions are largely
discretionary, there is management
control on reducing discretionary
spending if unforeseen liquidity
risks arise.
94 PureTech Health plc Annual report and accounts 2021
Governance Key Performance Indicators – 2021
The key performance indicators (KPIs) below measure our performance against our strategy. As PureTech’s strategy has
evolved, new KPIs have replaced older metrics that are no longer representative of our progress.
Amount of funding secured
for Founded Entities1,2
$731.9m
$709.3m (96.9%) came from third parties
2020: $247.8m
2019: $666.8m
2018: $274.0m
2017: $102.9m
Number of programs created
for pipeline expansion2
2
2020: 3
2019: 1
2018: 1
2017: 1
Progress
Karuna, Akili, Gelesis, Vor, Vedanta and Sonde all raised
funds in the form of financings and non dilutive grants
in 2021, including $709.3 million by third party financial
and strategic investors.
Progress
In 2021, we expanded our Wholly Owned Pipeline with the
acquisition of our Founded Entity, Alivio, and the integration
of Alivio’s therapeutic candidates, LYT-500 and LYT-503/
IMB-150, into the Wholly Owned Pipeline. LYT-503/IMB-150 is
being advanced in collaboration with Imbrium Therapeutics,
which is responsible for all future development activities and
funding for LYT-503/IMB-150.
Proceeds generated from sales
of Founded Entity equity2
Number of Wholly Owned Programs
advanced through clinical phases2
$218.1m
2020: $350.6 million
2019: $9.3 million
1
2020: 3
2019: 0
Progress
A key component of our strategy is to derive value from the
equity growth of our Founded Entities. In 2021, we generated
cash proceeds of approximately $218 million from the sales
of equity in our Founded Entities, which we intend to use to
fund our operations and growth and to further expand and
advance our clinical-stage Wholly Owned Pipeline, while still
maintaining significant equity ownership.
Progress
We advanced one of our Wholly Owned Programs,
LYT-300, into the clinic in 2021. We initiated a Phase 1
clinical study of LYT-300 in healthy volunteers to evaluate
the drug as a potential treatment of neurological and
neuropsychological conditions with significant unmet
need, such as depression, anxiety, sleep disorders, fragile
X tremor-associated syndrome, essential tremor and
epileptic disorders, among others.
Number of clinical trial initiations2
Number of clinical readouts2
11
2020: 6
2019: 6
6
2020: 5
2019: 5
Progress
PureTech initiated five clinical trials, Karuna initiated four
clinical trials, Vor initiated one clinical trial and Akili initiated
one clinical trial in 2021.
Progress
PureTech (two), Karuna (one), Gelesis (one), and Vedanta (two)
reported clinical results from across their pipelines in 2021.
1 Funding figure includes private equity financings, loans and promissory notes, public offerings or grant awards. Funding figure excludes future milestone considerations
received in conjunction with partnerships and collaborations. Funding figure does not include Gelesis’ gross proceeds of $105.0 million from its January 2022 post-period
SPAC merger.
2 Number represents figure for the relevant fiscal year only and is not cumulative.
PureTech Health plc Annual report and accounts 2021 95
Governance Financial Review
Reporting Framework
You should read the following
discussion and analysis together
with our Consolidated Financial
Statements, including the notes
thereto, set forth elsewhere in this
report. Some of the information
contained in this discussion and analysis
or set forth elsewhere in this report,
including information with respect to
our plans and strategy for our business
and financing our business, includes
forward-looking statements that involve
risks and uncertainties. As a result of
many factors, including the risks set
forth on pages 90 to 93 and in the
Additional Information section from
pages 217 to 251, our actual results
could differ materially from the results
described in or implied by these
forward-looking statements.
Our audited Consolidated Financial
Statements as of December 31,
2021 and 2020, and for the years
ended December 31, 2021, 2020
and 2019, have been prepared
in accordance with UK-adopted
International Financial Reporting
Standards (IFRS). The Consolidated
Financial Statements also comply fully
with IFRSs as issued by the International
Accounting Standards Board (IASB).
The following discussion contains
references to the Consolidated
Financial Statements of PureTech
Health plc, or the Company, and its
consolidated subsidiaries, together
the Group. These financial statements
consolidate the Company’s subsidiaries
and include the Company’s interest in
associates and investments held at fair
value. Subsidiaries are those entities
over which the Company maintains
control. Associates are those entities
in which the Company does not
have control for financial accounting
purposes but maintains significant
influence over financial and operating
policies. Where the Company has
neither control nor significant influence
for financial accounting purposes,
we recognize our holding in such
entity as an investment at fair value.
For purposes of our Consolidated
Financial Statements, each of our
Founded Entities are considered to be
either a “subsidiary”, an “associate”
or an “investment held at fair value”
depending on whether PureTech
Health plc controls or maintains
significant influence over the financial
and operating policies of the respective
entity at the respective period end
date. For additional information
regarding the accounting treatment
of these entities, see Note 1 to our
Consolidated Financial Statements
included in this report. For additional
information regarding our operating
structure, see “—Basis of Presentation
and Consolidation” below. Fair value
of Investments held at fair value, does
not take into consideration contribution
from milestones that occurred after
December 31, 2021, the value of our
interests in our consolidated Founded
Entities (Vedanta, Follica, Sonde, and
Entrega), our Wholly Owned Programs,
or our cash.
Business Background and
Results Overview
The business background is discussed
from pages 1 to 72, which describe
in detail the business development
of our Wholly Owned Programs and
Founded Entities.
Our ability to generate product
revenue sufficient to achieve
profitability will depend heavily on the
successful development and eventual
commercialization of one or more
of our wholly-owned or Controlled
Founded Entities’ therapeutics
candidates, which may or may not
occur. Our Founded Entities, Gelesis,
Inc. (“Gelesis”), and Akili Interactive
Labs, Inc. (“Akili”), which we have
not controlled since 2019 and 2018,
respectively, have products cleared for
sale, but our Wholly Owned Programs
and our Controlled Founded Entities
have not yet generated any meaningful
revenue from product sales.
We deconsolidated a number of our
Founded Entities, specifically Karuna
Therapeutics, Inc. (“Karuna”), Vor
Biopharma Inc. (“Vor”), and Gelesis
during 2019. We expect this trend
to continue into the foreseeable
future as our Controlled Founded
Entities raise additional funding that
reduces our ownership interest. Any
deconsolidation affects our financials in
the following manner:
• our ownership interest does not
provide us with a controlling
financial interest;
• we no longer control the Founded
Entity's assets and liabilities and
as a result we derecognize the
assets, liabilities and non-controlling
interests related to the Founded
Entity from our Consolidated
Statements of Financial Position;
• we record our non-controlling
financial interest in the Founded
Entity at fair value; and
• the resulting amount of any
gain or loss is recognized in our
Consolidated Statements of
Comprehensive Income/(Loss).
We anticipate our expenses to continue
to increase proportionally in connection
with our ongoing development
activities related mostly due to the
advancement into late-stage studies
of the clinical programs within our
Wholly Owned Pipeline and Controlled
Founded Entities. In addition, having
completed our U.S. listing in November
2020, we have, and will continue, to
incur additional costs associated with
operating as a public company in the
U.S. We also expect that our expenses
and capital requirements will increase
substantially in the near to mid-term
as we:
• continue our research and
development efforts;
• seek regulatory approvals for
any therapeutic candidates that
successfully complete clinical trials;
• add clinical, scientific, operational
financial and management
information systems and personnel,
including personnel to support
our therapeutic development and
potential future commercialization
claims; and
• operate as a U.S. public company.
In addition, our internal research and
development spend will increase in the
foreseeable future as we may initiate
additional clinical studies for LYT-100,
LYT-200 and LYT-300, and advance LYT-
210, LYT-510 and LYT-500 into the clinic
and continue to progress our GlyphTM,
OrasomeTM and AlivioTM technology
platforms as well as our meningeal
lymphatics research program.
In addition, with respect to our
Founded Entities’ programs, we
anticipate that we will continue to fund
a small portion of development costs
96 PureTech Health plc Annual report and accounts 2021
Governance Financial Review — continued
by strategically participating in such
companies’ financings when it is in
the best interests of our shareholders.
The form of any such participation
may include investment in public or
private financings, collaboration and
partnership arrangements and licensing
arrangements, among others. Our
management and strategic decision
makers consider the future funding
needs of our Founded Entities and
evaluate the needs and opportunities
for returns with respect to each of these
Founded Entities routinely and on a
case-by-case basis.
of our interests in our Founded Entities,
collaborations with third parties and
also potentially from public or private
equity or debt financings or other
sources. We may be unable to raise
additional funds or enter into such
other agreements or arrangements
when needed on favorable terms, or
at all. If we are unable to raise capital
or enter into such agreements as,
and when needed, we may have to
delay, scale back or discontinue the
development and commercialization
of one or more of our wholly-owned
therapeutic candidates.
As a result, we may need substantial
additional funding in the future,
following the assessment period
described above, to support our
continuing operations and pursue
our growth strategy until such time
as we can generate sufficient revenue
from product sales to support our
operations, if ever. Until such time
we expect to finance our operations
through a combination of monetization
Measuring Performance
The Financial Review discusses our
operating and financial performance,
our cash flows and liquidity as well as
our financial position and our resources.
The results for each year are compared
primarily with the results of the
preceding year.
Reported Performance
Reported performance considers all
factors that have affected the results
of our business, as reflected in our
Consolidated Financial Statements.
Core Performance
Core performance measures are
alternative performance measures
(APM) which are adjusted and non-IFRS
measures. These measures cannot be
derived directly from our Consolidated
Financial Statements. We believe that
these non-IFRS performance measures,
when provided in combination
with reported performance, will
provide investors, analysts and
other stakeholders with helpful
complementary information to better
understand our financial performance
and our financial position from period to
period. The measures are also used by
management for planning and reporting
purposes. The measures are not
substitutable for IFRS results and should
not be considered superior to results
presented in accordance with IFRS.
Cash flow and liquidity
PureTech Level Cash
and Cash Equivalents
Measure type: Core performance.
Definition: Cash and cash equivalents held at PureTech Health plc and only wholly-owned
subsidiaries as noted (PureTech LYT, PureTech LYT-100, PureTech Management, Inc., PureTech Health
LLC,and other inactive entities in which we have no current operations. During the year ended
December 31, 2021, the Company acquired the non controlling interest in Alivio Therapeutics, Inc.
and since then Alivio Therapeutics, Inc. is wholly owned by the Company and the related cash and
cash equivalents are included in the PureTech Level Cash and Cash Equivalents as of December 31,
2021. The cash and cash equivalents of Alivio Therapeutics, Inc. were not included in the PureTech
Level Cash and Cash Equivalents as of December 31, 2020 as during that period, the subsidiary was
not wholly owned by the Company.
Why we use it: PureTech Level Cash and Cash Equivalents is a measure that provides valuable
additional information with respect to cash and cash equivalents available to fund the Wholly Owned
Programs and make certain investments in Founded Entities.
The Company no longer presents in the reported periods Consolidated Cash Reserves or PureTech Level Cash Reserves as
the Company does not have short-term investments in addition to its cash and cash equivalents in all reported periods.
PureTech Health plc Annual report and accounts 2021 97
Governance Financial Review — continued
COVID-19
In March 2020, the World Health
Organization declared the COVID-19
outbreak a pandemic. The pandemic
has since caused widespread and
significant disruption to daily life and
the global economy as governments
have taken actions, including the
issuance of stay-at-home orders
and social distancing guidelines,
and businesses have adjusted
their activities. While our business,
operations and financial condition
and results have not been significantly
impacted in 2020 or 2021, as a result
of the COVID-19 pandemic, we have
taken swift action to ensure the
safety of our employees and other
stakeholders. We continue to monitor
the latest developments regarding the
COVID-19 pandemic on our business,
operations, and financial condition and
results and cannot predict the impact,
including as a result of variations of the
virus, that the pandemic may have on
our business, operations, and financial
condition and results.
Financial Highlights
Recent Developments (subsequent to
December 31, 2021)
On January 13, 2022 Gelesis completed
its business combination with Capstar
Special Purpose Acquisition Corp
(“Capstar”). As part of the business
combination all shares held in
Gelesis, common and preferred, were
exchanged for common shares of the
merged entity. In addition, PureTech
invested $15.0 million in the class A
common shares of Capstar as part of
the PIPE transaction that took place
immediately prior to the closing of
the business combination and an
additional approximately $5.0 million,
as part of the Backstop agreement
signed with Capstar on December
30, 2021. Pursuant to the business
combination, Gelesis became a wholly-
owned subsidiary of Capstar and
Capstar changed its name to Gelesis
Holdings, Inc., which began trading
on the New York Stock Exchange
under the ticker symbol “GLS” on
January 14, 2022. Following the closing
of the business combination, PureTech
holds 16,727,582 shares of Gelesis
Holdings Inc. common stock, which
is equal to approximately 23.2% of
Gelesis Holdings Inc's outstanding
common shares.
On January 26, 2022 Akili Interactive
and Social Capital Suvretta Holdings
Corp a special purpose acquisition
company announced they had entered
into a definitive business combination
agreement. Upon completion of the
transaction, the combined company’s
securities are expected to be traded
on the Nasdaq Stock Market under
the ticker symbol “AKLI”. The
transaction is expected to close in
mid-2022. As part of this transaction
the Akili Interactive shares held by the
Company will be exchanged for the
combined company's securities and the
Company's interest in the combined
public entity is expected to decrease
from its current voting interest in Akili
of 26.4%.
Following is the reconciliation of the amounts appearing in our Statement of Financial Position to the Alternative Performance
Measure described above:
(in thousands)
Consolidated Cash and cash equivalents
Less: Cash and cash equivalents held at non-wholly owned subsidiaries
PureTech Level Cash and Cash Equivalents
As of:
December 31,
2021
December 31,
2020
465,708
(46,856)
403,881
(54,473)
$418,851
$349,407
Basis of Presentation and
Consolidation
Our Consolidated Financial Information
consolidates the financial information
of PureTech Health plc, as well as its
subsidiaries, and includes our interest in
associates and investments held at fair
value, and is reported in four operating
segments as described below.
Basis for Segmentation
Our Directors are our strategic
decision-makers. Our operating
segments are based on the financial
information provided to our Directors
periodically for the purposes of
allocating resources and assessing
performance. We have determined that
each Founded Entity is representative
of a single operating segment as
our Directors monitor the financial
results at this level. When identifying
the reportable segments we have
determined that it is appropriate
to aggregate multiple operating
segments into a single reportable
segment given the high level of
operational and financial similarities
across the entities. We have identified
multiple reportable segments which are
outlined below. Substantially all of our
revenue and profit generating activities
are generated within the United States
and, accordingly, no geographical
disclosures are provided.
There was no change to reportable
segments in 2021, except the change in
the composition of the segments with
respect to Alivio, as explained below.
During the year ended December
31, 2021, the Company acquired the
non controlling interest in Alivio and
since then Alivio is wholly owned by
the Company and is managed within
the Internal segment. The Company
has revised in this report the prior
period segment financial information to
conform to the presentation as of and
for the period ending December 31,
2021. This change in segments reflects
how the Company’s Board of Directors
reviews the Group’s results, allocates
resources and assesses performance of
the Group at this time.
98 PureTech Health plc Annual report and accounts 2021
Governance Financial Review — continued
Following is the description of our
reportable segments:
Internal
The Internal segment is advancing
Wholly Owned Programs, which is
focused on immunological, fibrotic
and lymphatic system disorders
and builds upon validated biologic
pathways and proven pharmacology.
The Internal segment is comprised of
the technologies that are wholly owned
and will be advanced through either
PureTech Health funding or non-dilutive
sources of financing in the near-term.
The operational management of the
Internal segment is conducted by
the PureTech Health team, which is
responsible for the strategy, business
development, and research and
development. As of December 31,
2021, this segment included PureTech
LYT, Inc. (formerly Ariya Therapeutics
Inc.), PureTech LYT-100, Inc and Alivio
Therapeutics, Inc.
Controlled Founded Entities
The Controlled Founded Entities
segment is comprised of our
subsidiaries that are currently
consolidated operational subsidiaries
that either have, or have plans to hire,
independent management teams and
have previously raised, or are currently
in the process of raising, third-party
dilutive capital. These subsidiaries
have active research and development
programs and either have entered into
or plan to seek a strategic partnership
with an equity or debt investment
partner, who will provide additional
industry knowledge and access to
networks, as well as additional funding
to continue the pursued growth of the
company. As of December 31, 2021,
this segment included Entrega, Inc.,
Follica, Incorporated, Sonde Health,
Inc. and Vedanta Biosciences, Inc.
Non-Controlled Founded Entities
The Non-Controlled Founded Entities
segment is comprised of the entities
in respect of which PureTech Health
(i) no longer holds majority voting
control as a shareholder and (ii) no
longer has the right to elect a majority
of the members of the entity's Board
of Directors. Upon deconsolidation
of an entity the segment disclosure
is restated to reflect the change on a
retrospective basis, as this constitutes
a change in the composition of its
reportable segments. The Non-
Controlled Founded Entities segment
included Akili Interactive Labs, Inc.
(“Akili”), Vor Biopharma, Inc. (“Vor”),
Karuna Therapeutics, Inc. (“Karuna”),
and Gelesis, Inc. (“Gelesis”).
The Non-Controlled Founded Entities
segment incorporates the operational
results of the aforementioned entities
to the date of deconsolidation.
Following the date of deconsolidation,
we account for our investment in
each entity at the parent level, and
therefore the results associated with
investment activity following the date
of deconsolidation is included in the
Parent Company and Other segment
(the “Parent Company and Other
segment”).
Parent Company and Other
Parent Company and Other includes
activities that are not directly
attributable to the operating segments,
such as the activities of the Parent,
corporate support functions and
certain research and development
support functions that are not directly
attributable to a strategic business
segment as well as the elimination
of intercompany transactions. Parent
Company and Other also captures the
accounting for our holdings in entities
for which control has been lost, which
is inclusive of the following items: gain
on deconsolidation, gain or loss on
investments held at fair value, gain
on loss of significant influence, and
the share of net loss of associates
accounted for using the equity method.
As of December 31, 2021, this segment
included PureTech Health plc, PureTech
Health LLC, PureTech Management,
Inc., PureTech Securities Corp., and
PureTech Securities II Corp. as well as
certain other dormant, inactive and
shell entities.
The table below summarizes the entities that comprised each of our segments as of December 31, 2021:
Internal Segment
PureTech LYT
PureTech LYT-100, Inc.
Alivio Therapeutics, Inc.
Controlled Founded Entities
Entrega, Inc.
Follica, Incorporated
Sonde Health, Inc.
Vedanta Biosciences, Inc.
Non-Controlled Founded Entities
Akili Interactive Labs, Inc.
Gelesis, Inc.
Karuna Therapeutics, Inc.
Vor Biopharma Inc.
Parent Segment1
Puretech Health plc
PureTech Health LLC
PureTech Securities Corporation
PureTech Securities II Corporation
PureTech Management, Inc.
1
Includes dormant, inactive and shell entities that are not listed here.
100.0%
100.0%
100.0%
77.3%
85.4%
51.8%
48.6%
26.7%
24.5%
5.6%
8.6%
100.0%
100.0%
100.0%
100.0%
100.0%
PureTech Health plc Annual report and accounts 2021 99
Governance Financial Review — continued
Components of Our Results
of Operations
Revenue
To date, we have not generated any
meaningful revenue from product sales
and we do not expect to generate any
meaningful revenue from product sales
for the near term future. We derive our
revenue from the following:
Contract revenue
We generate revenue primarily from
licenses, services and collaboration
agreements, including amounts that
are recognized related to upfront
payments, milestone payments,
royalties and amounts due to us for
research and development services.
In the future, revenue may include
additional milestone payments and
royalties on any net product sales under
our collaborations. We expect that
any revenue we generate will fluctuate
from period to period as a result of
the timing and amount of license,
research and development services
and milestone and other payments.
Grant Revenue
Grant revenue is derived from grant
awards we receive from governmental
agencies and non-profit organizations
for certain qualified research and
development expenses. We recognize
grants from governmental agencies
as grant income in the Consolidated
Statement of Comprehensive Income/
(Loss), gross of the expenditures that
were related to obtaining the grant,
when there is reasonable assurance
that we will comply with the conditions
within the grant agreement and
there is reasonable assurance that
payments under the grants will be
received. We evaluate the conditions
of each grant as of each reporting date
to ensure that we have reasonable
assurance of meeting the conditions
of each grant arrangement and it is
expected that the grant payment will
be received as a result of meeting the
necessary conditions.
For proceeds from sale of our
investments held at fair value, please
see our Consolidated Cash flow
Statements, Net cash provided by
investing activities.
Operating Expenses
Research and Development Expenses
Research and development expenses
consist primarily of costs incurred
for our research activities, including
our discovery efforts, and the
development of our wholly-owned
and our Controlled Founded Entities’
therapeutic candidates, which include:
• employee-related expenses,
including salaries, related benefits
and equity-based compensation;
• expenses incurred in connection
with the preclinical and clinical
development of our wholly-
owned and our Founded Entities’
therapeutic candidates, including our
agreements with contract research
organizations, or CROs;
• expenses incurred under agreements
with consultants who supplement our
internal capabilities;
• the cost of lab supplies and
acquiring, developing and
manufacturing preclinical study
materials and clinical trial materials;
• costs related to compliance with
regulatory requirements; and
• facilities, depreciation and other
expenses, which include direct and
allocated expenses for rent and
maintenance of facilities, insurance
and other operating costs.
We expense all research costs in the
periods in which they are incurred and
development costs are capitalized
only if certain criteria are met. For
the periods presented, we have not
capitalized any development costs
since we have not met the necessary
criteria required for capitalization.
Costs for certain development activities
are recognized based on an evaluation
of the progress to completion of
specific tasks using information and
data provided to us by our vendors and
third-party service providers.
Research and development activities
are central to our business model.
Therapeutic candidates in later stages
of clinical development generally
have higher development costs than
those in earlier stages of clinical
development, primarily due to the
increased size and duration of later-
stage clinical trials. We expect that our
research and development expenses
will continue to increase for the
foreseeable future in connection with
our planned preclinical and clinical
development activities in the near
term and in the future. The successful
development of our wholly-owned
and our Founded Entities’ therapeutic
candidates is highly uncertain. As such,
at this time, we cannot reasonably
estimate or know the nature, timing
and estimated costs of the efforts
that will be necessary to complete
the remainder of the development
of these therapeutic candidates. We
are also unable to predict when, if
ever, material net cash inflows will
commence from our wholly-owned
or our Founded Entities’ therapeutic
candidates. This is due to the numerous
risks and uncertainties associated with
developing therapeutics, including the
uncertainty of:
• progressing research and
development of our Wholly Owned
Pipeline, including LYT-100, LYT-200,
LYT-210, LYT-300, LYT-510, LYT-
500 and continue to progress our
GlyphTM, OrasomeTM and AlivioTM
technology platforms as well as
our meningeal lymphatics research
program and other potential
therapeutic candidates based on
previous human efficacy and clinically
validated biology within our Wholly
Owned Programs;
• establishing an appropriate safety
profile with investigational new
drug application enabling studies
to advance our preclinical programs
into clinical development;
• the success of our Founded Entities
and their need for additional capital;
identifying new therapeutic
candidates to add to our Wholly
Owned Pipeline;
•
• successful enrollment in, and the
initiation and completion of, clinical
trials;
• the timing, receipt and terms of any
marketing approvals from applicable
regulatory authorities;
• commercializing our wholly-
owned and our Founded Entities’
therapeutic candidates, if approved,
whether alone or in collaboration
with others;
• establishing commercial
manufacturing capabilities or making
arrangements with third-party
manufacturers;
• addressing any competing
technological and market
developments, as well as any
changes in governmental
regulations;
• negotiating favorable terms in any
collaboration, licensing or other
arrangements into which we may
enter and performing our obligations
under such arrangements;
• maintaining, protecting and
expanding our portfolio of
intellectual property rights, including
patents, trade secrets and know-how,
as well as obtaining and maintaining
regulatory exclusivity for our wholly-
owned and our Founded Entities’
therapeutic candidates;
• continued acceptable safety profile
of our therapeutics, if any, following
approval; and
• attracting, hiring and retaining
qualified personnel.
A change in the outcome of any of
these variables with respect to the
development of a therapeutic candidate
100 PureTech Health plc Annual report and accounts 2021
Governance Financial Review — continued
could mean a significant change in
the costs and timing associated with
the development of that therapeutic
candidate. For example, the FDA, the
EMA, or another comparable foreign
regulatory authority may require us to
conduct clinical trials beyond those
that we anticipate will be required for
the completion of clinical development
of a therapeutic candidate, or we may
experience significant trial delays due
to patient enrollment or other reasons,
in which case we would be required to
expend significant additional financial
resources and time on the completion
of clinical development. In addition, we
may obtain unexpected results from
our clinical trials and we may elect to
discontinue, delay or modify clinical
trials of some therapeutic candidates
or focus on others. Identifying potential
therapeutic candidates and conducting
preclinical testing and clinical trials
is a time-consuming, expensive and
uncertain process that takes years to
complete, and we may never generate
the necessary data or results required to
obtain marketing approval and achieve
product sales. In addition, our wholly-
owned and our Founded Entities’
therapeutic candidates, if approved,
may not achieve commercial success.
General and Administrative Expenses
General and administrative expenses
consist primarily of salaries and
other related costs, including stock-
based compensation, for personnel
in our executive, finance, corporate
and business development and
administrative functions. General
and administrative expenses also
include professional fees for legal,
patent, accounting, auditing, tax and
consulting services, travel expenses
and facility-related expenses, which
include direct depreciation costs
and allocated expenses for rent and
maintenance of facilities and other
operating costs.
We expect that our general and
administrative expenses will increase
in the future as we increase our
general and administrative headcount
to support our continued research
and development and potential
commercialization of our portfolio of
therapeutic candidates. We also expect
to incur increased expenses associated
with being a public company in the
United States, including costs of
accounting, audit, information systems,
legal, regulatory and tax compliance
services, director and officer insurance
costs and investor and public
relations costs.
Total Other Income/(Loss)
Gain on Deconsolidation
Upon losing control of a subsidiary, the
assets and liabilities are derecognized
along with any related non-controlling
interest (“NCI”). Any interest retained in
the former subsidiary is measured at fair
value when control is lost. Any resulting
gain or loss is recognized as profit or
loss in the Consolidated Statements of
Comprehensive Income/(Loss).
Gain/(Loss) on Investments Held
at Fair Value
Investments held at fair value include
both unlisted and listed securities
held by us, which include investments
in Akili, Gelesis, Karuna, Vor and
certain insignificant investments. Our
ownership in Akili is in preferred shares.
Our ownership in Vor was in preferred
shares until February 2021 at which time
the preferred shares were converted
into common shares as part of Vor
Initial Public Offering. Preferred shares
form part of our ownership in Gelesis
and such preferred shares investment
is accounted for as Investments Held
at Fair value while the investment
in common stock is accounted for
under the equity method. When the
investment in common stock is reduced
to zero by equity method losses,
subsequent equity method losses
are applied to the preferred share
investment, which is considered to be
a Long-term Interest. Our ownership in
Karuna was in preferred shares until its
IPO in June 2019 when such shares were
converted into common shares. When
Karuna's preferred shares converted
into common shares, our equity interest
in Karuna investment was removed
from Investments Held at Fair Value and
accounted for under the equity method
as we still retained significant influence
in Karuna at such time. On December
2, 2019 we lost significant influence in
Karuna and, beginning on that date,
we accounted for our investment in
Karuna in accordance with IFRS 9 as
an Investment Held at Fair Value. We
account for investments in preferred
shares of our associates in accordance
with IFRS 9 as Investments Held at Fair
Value when the preferred shares do not
provide access to returns underlying
ownership interests.
Loss Realized on Investments
Held at Fair Value
Loss realized on investments held at fair
value relates to realized differences in
the per share disposal price of a listed
security as compared to the per share
exchange quoted price at the time of
disposal. The difference is attributable
to a block sale discount, attributable
to a variety of market factors, primarily
the number of shares being transacted
was significantly larger than the daily
trading volume of a given security.
Gain on Loss of Significant Influence
Gain on loss of significant influence
relates to the assessment related to the
loss of our ability to exert significant
influence over an investment in a
Non-Controlled Founded Entity that
is accounted for under the equity
method. For the year ended December
31, 2019, we recognized gain on loss of
significant influence in Karuna.
Other Income (Expense)
Other income (expense) consists
primarily of gains and losses related
to the sale of an asset and certain
investments as well as sub-lease income.
Finance Costs/Income
Finance costs consist of loan interest
expense and the changes in the fair
value of certain liabilities associated
with financing transactions, mainly
preferred share liabilities in respect
of preferred shares issued by our non
wholly owned subsidiaries to third
parties. Finance income consists of
interest income on funds invested in
money market funds and U.S. treasuries.
Share of Net Gain (Loss) of Associates
Accounted for Using the Equity
Method, and Impairment of Investment
in Associate
Associates are accounted for using
the equity method (equity accounted
investees) and are initially recognized
at cost, or if recognized upon
deconsolidation they are initially
recorded at fair value at the date of
deconsolidation. The consolidated
financial statements include our share
of the total comprehensive income and
equity movements of equity accounted
investees, from the date that significant
influence commences until the date
that significant influence ceases. When
the share of losses exceeds the net
investment in the investee, including
the investment in preferred shares that
are considered Long-term Interests,
the carrying amount is reduced to nil
and recognition of further losses is
discontinued except to the extent that
we have incurred legal or constructive
obligations or made payments on
behalf of an investee.
We compare the recoverable amount of
the investment to its carrying amount
on a go-forward basis and determine
the need for impairment. We recorded
an impairment in the common stock
investment in Gelesis in the year ended
December 31, 2019.
PureTech Health plc Annual report and accounts 2021 101
Governance Financial Review — continued
Income Tax
We must make certain estimates and judgments in determining income tax expense for financial statement purposes.
The amount of taxes currently payable or refundable is accrued, and deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amount of existing
assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for realizable loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using substantively enacted tax rates in effect for the year in
which those temporary differences are expected to be recovered or settled. Net deferred tax assets are not recorded if we
do not assess their realization as probable. The effect on deferred tax assets and liabilities of a change in income tax rates
is recognized in our financial statements in the period that includes the substantive enactment date.
Results of Operations
The following table, which has been derived from our audited financial statements for the years ended December 31, 2021,
2020 and 2019, included herein, summarizes our results of operations for the periods indicated, together with the changes
in those items in dollars:
(in thousands)
Contract revenue
Grant revenue
Total revenue
Operating expenses:
General and administrative expenses
Research and development expenses
Operating income/(loss)
Other income/(expense):
Gain/(loss) on deconsolidation
Gain/(loss) on investments held at fair value
Loss realized on sale of investment
Gain/(loss) on disposal of assets
Gain on loss of significant influence
Other income/(expenses)
Other income/(loss)
Net finance income/(costs)
Share of net gain/(loss) of associates accounted
for using the equity method
Impairment of investment in associate
Income/(loss) before income taxes
Taxation
Net income/(loss) including non-
controlling interest
Net (loss)/income attributable to the Company
Year Ended December 31,
2021
$9,979
7,409
17,388
2020
$8,341
3,427
11,768
(57,199)
(110,471)
(150,282)
(49,440)
(81,859)
(119,531)
—
179,316
(20,925)
—
—
1,592
159,983
5,050
(73,703)
—
(58,953)
(3,756)
—
232,674
(54,976)
—
—
1,035
178,732
(6,115)
(34,117)
—
18,969
(14,401)
2019
$8,688
1,119
9,807
(59,358)
(85,848)
(135,399)
264,409
(37,863)
—
—
445,582
39
672,167
(46,147)
30,791
(42,938)
478,474
(112,409)
Change
(2020 to 2021)
Change
(2019 to 2020)
$1,638
3,982
5,621
(7,760)
(28,612)
(30,751)
—
(53,358)
34,051
—
—
557
(18,749)
11,164
(39,587)
—
(77,922)
10,645
$(347)
2,308
1,961
9,918
3,988
15,868
(264,409)
270,537
(54,976)
—
(445,582)
996
(493,434)
40,032
(64,908)
42,938
(459,504)
98,008
(62,709)
$(60,558)
4,568
$5,985
366,065
$421,144
(67,277)
(361,497)
$(66,543)
$(415,159)
Comparison of the Years Ended December 31, 2021 and 2020
Total Revenue
(in thousands)
Contract Revenue:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total Contract Revenue
Grant Revenue:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total Grant Revenue
Total Revenue
Year Ended December 31,
2021
2020
Change
$8,129
1,615
—
235
$9,979
$1,253
6,156
—
—
$7,409
$17,388
$5,297
990
—
2,054
$8,341
$1,563
1,864
—
—
$3,427
$11,768
$2,833
625
—
(1,819)
$1,638
$(310)
4,292
—
—
$3,982
$5,621
Our total revenue was $17.4 million for the year ended December 31, 2021, an increase of $5.6 million, or 47.8 percent
compared to the year ended December 31, 2020. The increase was primarily attributable to an increase of $2.8 million
in contract revenue in the Internal segment, which was primarily driven by a $6.5 million increase in revenue due to payment
102 PureTech Health plc Annual report and accounts 2021
Governance
Financial Review — continued
from Imbrium Therapeutics, Inc. following the exercise of the option to acquire an exclusive license for the Initial Product
Candidate. The increase was partially offset by a decrease in contract revenue of $3.7 million recognized under IFRS 15
due to the completion of development activities related to revenues associated with multiple collaborations in the year
ended December 31, 2021. The increase was also driven by an increase of $4.3 million in grant revenue in the Controlled
Founded Entities segment for the year ended December 31, 2021, which was driven primarily by Vedanta's grant revenue
earned pursuant to its CARB-X and BARDA agreements. The aforementioned increases were partially offset by the a non-
recurrent milestone payment of $2.0 million received from Karuna (and included in Parent Company and Other) in the year
ended December 31, 2020.
Research and Development Expenses
(in thousands)
Research and Development Expenses:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total Research and Development Expenses:
Year Ended December 31,
2021
2020
Change
$(65,444)
(43,783)
—
(1,244)
$(110,471)
$(45,346)
(36,279)
—
(234)
$(81,859)
$20,098
7,504
—
1,010
$28,612
Our research and development expenses were $110.5 million for the year ended December 31, 2021, an increase of
$28.6 million, or 35.0 percent compared to the year ended December 31, 2020. The change was primarily attributable to an
increase of $20.1 million in research and development expenses incurred by the Internal segment due to the advancement
of programs in clinical testing. This was primarily driven by an increase in clinical trial and clinical research organization
expenditures of $14.0 million, an increase in research and development related consulting and professional fees of
$2.5 million and an increase in research and development related salaries and stock compensation of $2.6 million. We
progressed our ongoing clinical trials of LYT-100 and LYT- 200 in multiple indications and initiated clinical trials with respect
to LYT 300, as well as advanced pre-clinical studies and research related to multiple candidates and research platforms.
The increase was further attributable to an increase of $7.5 million in research and development expenses incurred by the
Controlled Founded Entities segment, primarily attributable to Vedanta as they progressed their therapeutic candidates
VE202, VE303, VE416 and VE800 towards meaningful milestones.
General and Administrative Expenses
(in thousands)
General and Administrative Expenses:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total General and Administrative Expenses
Year Ended December 31,
2021
2020
Change
$(8,673)
(20,729)
—
(27,797)
$(3,482)
(13,691)
—
(32,267)
$(57,199)
$(49,440)
$5,191
7,038
—
(4,470)
$7,760
Our general and administrative expenses were $57.2 million for the year ended December 31, 2021, an increase of
$7.8 million, or 15.7 percent compared to the year ended December 31, 2020. The increase was primarily attributable to
an increase of $7.0 million in the Controlled Founded Entities segment, which was primarily driven by non-cash increases
of $2.9 million in stock based compensation expense, $1.4 million increase in payroll-related costs due to increased
personnel, an increase in professional fees of $1.1 million, and an increase in legal fees of $0.9 million. The increase was
further attributable to an increase of $5.2 million in the Internal segment, which was primarily driven by an increase in the
management fee charged by the Parent company of $6.2 million which was partially offset by a decrease in depreciation
expense of $0.5 million for the year ended December 31, 2021. The decrease in the Parent Company and other of $4.5 million
was primarily attributable to the allocation of management fee charged to other segments of $7.0 million which was partially
offset by an increase in professional and recruiting fees of $0.9 million and an increase in business insurance of $1.7 million for
the year ended December 31, 2021.
Total Other Income (Loss)
Total other income was $160.0 million for the year ended December 31, 2021, a decrease of $18.7 million, compared to
the year ended December 31, 2020. The decline in other income was primarily attributable to a decrease in gains from
investments held at fair value of $53.4 million, primarily driven by the change in the fair value of the investment in Karuna.
These gains from investments held at fair value were partially offset by losses realized on sale of certain investments held at
fair value, as a result of the block sale discount included in the sale. The losses realized on sale of certain investments held at
fair value for the year ended December 31, 2021 decreased $34.1 million compared to the year ended December 31, 2020.
Net Finance Income (Costs)
Net finance Income was $5.0 million for the year ended December 31, 2021, a change of $11.2 million, compared to net
finance cost of $6.1 million for the year ended December 31, 2020. The change was primarily attributable to a $14.0 million
change leading to increased income in respect of the change in the fair value of our preferred shares, warrant and
convertible note liabilities held by third parties, partially offset by a $1.8 million increase in contractual finance costs, mainly
in our controlled founded entity, Vedanta, and a $1.0 million decline in interest income from financial assets for the year
ended December 31, 2021.
PureTech Health plc Annual report and accounts 2021 103
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Financial Review — continued
Share of Net Gain (Loss) in Associates Accounted for Using the Equity Method
For the year ended December 31, 2021, the share in net loss of associates reported under the equity method was
$73.7 million as compared to the share of net loss of $34.1 million for the year ended December 31, 2020. The change
was primarily attributable to an increase in Gelesis losses reported under IFRS for the year ended December 31, 2021
as compared to the losses reported for the year ended December 31, 2020, due to an increase in the fair value of
Gelesis financial instrument liabilities that are accounted for at Fair Value Through Profit and Loss (FVTPL).
Taxation
Income tax expense was $3.8 million for the year ended December 31, 2021, as compared to income tax expense of
$14.4 million for the year ended December 31, 2020. The decrease in income tax expense was primarily attributable to the
decrease in profit before tax in entities in the U.S. Federal and Massachusetts consolidated return groups of the Company.
For information on the change in the tax rate, see Note 25 in the consolidated financial statements.
Comparison of the Years Ended December 31, 2020 and 2019
Total Revenue
(in thousands)
Contract Revenue:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total Contract Revenue
Grant Revenue:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total Grant Revenue
Total Revenue
Year Ended December 31,
2020
2019
Change
$5,297
990
—
2,054
$8,341
$1,563
1,864
—
—
$3,427
$11,768
$7,077
1,474
—
137
$8,688
$928
191
—
—
$1,119
$9,807
$(1,780)
(484)
—
1,917
$(347)
$635
1,673
—
—
$2,308
$1,961
Our total revenue was $11.8 million for the year ended December 31, 2020, an increase of $2.0 million, or 20.0 percent
compared to the year ended December 31, 2019. The increase was primarily attributable to an increase of $2.3 million in grant
revenue in the Controlled Founded Entities segment for the year ended December 31, 2020, which was driven primarily by
Vedanta's grant revenue earned pursuant to its CARB-X and BARDA agreements. The increase was further attributable to an
increase of $1.9 million in contract revenue in the Parent segment for the year ended December 31, 2020, which was primarily
driven by a $2.0 million milestone payment received from Karuna for initiation of its KarXT Phase 3 clinical study pursuant to
the Exclusive Patent License Agreement between PureTech and Karuna. The increases were partially offset by a decline of
$1.8 million in contract revenue in the Internal segment, which was primarily drive by the Orasome collaboration and license
agreement with Roche, which concluded during the year ended December 31, 2020.
Research and Development Expenses
(in thousands)
Research and Development Expenses:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total Research and Development Expenses:
Year Ended December 31,
2020
2019
Change
$(45,346)
(36,279)
—
(234)
$(81,859)
$(28,874)
(39,883)
(15,555)
(1,536)
$(85,848)
$16,472
(3,603)
(15,555)
(1,302)
$(3,988)
Our research and development expenses were $81.9 million for the year ended December 31, 2020, a decline of $4.0 million,
or 4.6 percent compared to the year ended December 31, 2019. The change was attributable to a decline of $15.6 million
in the Non-Controlled Founded Entities segment owing to the deconsolidation of Vor, Karuna and Gelesis during year
ended December 31, 2019. The decline was further attributable to declines of $3.6 million in the Controlled Founded
Entities segment and $1.3 million in the Parent segment for the year ended December 31, 2020. The declines were partially
offset by an increase of $16.5 million in research and development expenses incurred by the Internal segment for the
year ended December 31, 2020. In 2020 we progressed our wholly-owned therapeutic candidates to key milestones.
We completed a Phase 1 multiple ascending dose and food effect study for LYT-100. We also initiated a Phase 2a proof-of-
concept study of LYT-100 in patients with breast cancer-related, upper limb secondary lymphedema as well as initiated a
Phase 2 trial of LYT-100 in Long COVID respiratory complications and related sequelae, which is also known as post-acute
COVID-19 syndrome (PACS). Finally, we initiated a Phase 1 clinical trial of LYT-200 for the potential treatment of metastatic
solid tumors that are difficult to treat and have poor survival rates.
104 PureTech Health plc Annual report and accounts 2021
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Financial Review — continued
General and Administrative Expenses
(in thousands)
General and Administrative Expenses:
Internal Segment
Controlled Founded Entities
Non-Controlled Founded Entities
Parent Company and other
Total General and Administrative Expenses
Year Ended December 31,
2020
2019
Change
$(3,482)
(13,691)
—
(32,267)
$(3,252)
(13,569)
(10,439)
(32,098)
$(49,440)
$(59,358)
$230
122
(10,439)
168
$(9,918)
Our general and administrative expenses were $49.4 million for the year ended December 31, 2020, a decrease of
$9.9 million, or 16.7 percent compared to the year ended December 31, 2019. The decrease was primarily attributable to a
decline of $10.4 million in the Non-Controlled Founded Entities segment, owing to the deconsolidation of Vor, Karuna and
Gelesis during the year ended December 31, 2019.
Total Other Income (Loss)
Total other income was $178.7 million
for the year ended December 31,
2020 a decrease of $493.4 million,
compared to the year ended December
31, 2019. We recognized a gain
on loss of significant influence of
$445.6 million with respect to Karuna
for the year ended December 31,
2019. No loss of significant influence
of associates occurred during the
year ended December 31, 2020. The
decline was further attributable to a
decline of $264.4 million in gain on
deconsolidation as no deconsolidation
of subsidiaries occurred during the
year ended December 31, 2020, as
compared to a gain of $264.4 million
recognized for the deconsolidation
of Vor, Karuna and Gelesis during the
year ended December 31, 2019. The
decline was further attributable to a
loss of $55.0 million realized on the sale
of certain investments held at fair value
during year ended December 31, 2020.
The declines were partially offset by an
increase of $270.5 million on gain on
investments held at fair value for the
year ended December 31, 2020, which
was primarily driven by Karuna.
Net Finance Income (Costs)
Net finance costs were $6.1 million
for the year ended December 31,
2020, a decline of $40.0 million,
or 86.7 percent compared to net
finance costs of $46.1 million for the
year ended December 31, 2019. The
change was primarily attributable to a
$42.1 million decline in the change in
the fair value of our preferred shares,
warrant and convertible note liabilities
held by third parties for the year
ended December 31, 2020.
Share of Net Gain (Loss) in Associates
Accounted for Using the Equity
Method, and Impairment of Investment
in Associate
The share of net loss in associates
was $34.1 million for the year
ended December 31, 2020, a decrease
of $64.9 million, or 210.8 percent as
compared to net gain of $30.8 million
for the year ended December 31, 2019.
The change in share of net gain/(loss)
in associates was primarily attributable
to the financial results of Gelesis for
the year ended December 31, 2020.
Additionally, we allocated a share of
our net loss in Gelesis for the year
ended December 31, 2020, totaling
$23.0 million, to our long-term interest
in Gelesis as of December 31, 2020.
We recorded equity method income
of $37.1 million with respect to Gelesis,
which was partially offset by our share
of net loss in Karuna of $6.3 million
for the year ended December 31,
2019. Additionally, we recorded an
impairment charge of $42.9 million for
the year ended December 31, 2019,
related to our investment in common
shares held in Gelesis. See Note 6 to
our consolidated financial statements
included elsewhere in this annual report.
Taxation
Income tax expense was $14.4 million
for the year ended December 31,
2020, a decline of $98.0 million, or
87.2 percent as compared to the
year ended December 31, 2019. The
decline in income tax expense was
primarily attributable to the gains
realized on the loss of significant
influence on Karuna for the year
ended December 31, 2019 and the
gains recognized on deconsolidation of
Vor, Karuna and Gelesis during the year
ended December 31, 2019.
Critical Accounting Policies and
Significant Judgments and Estimates
Our management’s discussion and
analysis of our financial condition
and results of operations is based on
our financial statements, which we
have prepared in accordance with
international accounting standards in
conformity with the requirements of the
Companies Act 2006 and International
Financial Reporting Standards (IFRSs)
as adopted for use in the UK. The
Consolidated Financial Statements also
comply fully with IFRS as issued by the
International Accounting Standards
Board (IASB). In the preparation of
these financial statements, we are
required to make judgments, estimates
and assumptions about the carrying
amounts of assets and liabilities
that are not readily apparent from
other sources. The estimates and
associated assumptions are based on
historical experience and other factors
that are considered to be relevant.
Actual results may differ from these
estimates under different assumptions
or conditions.
Our estimates and assumptions
are reviewed on an ongoing basis.
Revisions to accounting estimates
are recognized in the period in which
the estimate is revised if the revision
affects only that period or in the period
of the revisions and future periods if
the revision affects both current and
future periods.
While our significant accounting
policies are described in more detail
in the notes to our consolidated
financial statements appearing at
the end of this report, we believe the
following accounting policies to be
most critical to the judgments and
estimates used in the preparation of
our financial statements. See Note 1 to
our consolidated financial statements
for a further detailed description of our
significant accounting policies.
PureTech Health plc Annual report and accounts 2021 105
Governance
Financial Review — continued
Financial instruments
We account for our financial
instruments according to IFRS 9. As
such, when issuing preferred shares
in our subsidiaries we determine the
classification of financial instruments
in terms of liability or equity. Such
determination involves significant
judgement. These judgements include
an assessment of whether the financial
instruments include any embedded
derivative features, whether they
include contractual obligations upon
us to deliver cash or other financial
assets or to exchange financial assets
or financial liabilities with another
party at any point in the future prior to
liquidation, and whether that obligation
will be settled by exchanging a fixed
amount of cash or other financial assets
for a fixed number of the Group's
equity instruments.
In accordance with IFRS 9 we carry
certain investments in equity securities
at fair value as well as our subsidiary
preferred share, convertible notes and
warrant liabilities, all through profit
and loss (FVTPL). Valuation of the
aforementioned financial instruments
(assets and liabilities) includes making
significant estimates, specifically
determining the appropriate valuation
methodology and making certain
estimates of the future earnings
potential of the subsidiary businesses,
appropriate discount rate and earnings
multiple to be applied, marketability
and other industry and company
specific risk factors.
Consolidation:
The consolidated financial statements
include the financial statements of the
Company and the entities it controls.
Based on the applicable accounting
rules, the Company controls an investee
when it is exposed, or has rights, to
variable returns from its involvement
with the investee and has the ability
to affect those returns through its
power over the investee. Therefore an
assessment is required to determine
whether the Company has (i) power over
the investee; (ii) exposure, or rights, to
variable returns from its involvement
with the investee; and (iii) the ability to
use its power over the investee to affect
the amount of the investor’s returns.
Judgement is required to perform such
assessment and it requires that the
Company considers, among others,
activities that most significantly affect
the returns of the investee, its voting
shares, representation on the board,
rights to appoint board members
and management, shareholders
agreements, de facto power, investee
dependence on the Company and
other contributing factors.
Investment in Associates
When we do not control an investee but
maintain significant influence over the
financial and operating policies of the
investee the investee is an associate.
Significant influence is presumed to
exist when we hold 20 percent or
more of the voting power of an entity,
unless it can be clearly demonstrated
that this is not the case. We evaluate if
we maintain significant influence over
associates by assessing if we have the
power to participate in the financial
and operating policy decisions of
the associate.
Associates are accounted for using
the equity method (equity accounted
investees) and are initially recognized
at cost, or if recognized upon
deconsolidation they are initially
recorded at fair value at the date of
deconsolidation. The consolidated
financial statements include our share
of the total comprehensive income
and equity movements of equity
accounted investees, from the date
that significant influence commences
until the date that significant influence
ceases. When our share of losses
exceeds the net investment in an
equity accounted investee, including
preferred share investments that are
considered to be Long-Term Interests,
the carrying amount is reduced to zero
and recognition of further losses is
discontinued except to the extent that
we have incurred legal or constructive
obligations or made payments on
behalf of an investee. To the extent we
hold interests in associates that are not
providing access to returns underlying
ownership interests, the instrument
held by PureTech is accounted for in
accordance with IFRS 9.
Judgement is required in order to
determine whether we have significant
influence over financial and operating
policies of investees. This judgement
includes, among others, an assessment
whether we have representation on
the Board of Directors of the investee,
whether we participate in the policy
making processes of the investee,
whether there is any interchange of
managerial personnel, whether there
is any essential technical information
provided to the investee and if there
are any transactions between us and
the investee.
106 PureTech Health plc Annual report and accounts 2021
Judgement is also required to
determine which instruments we
hold in the investee form part of the
investment in the associate, which is
accounted for under IAS 28 and scoped
out of IFRS 9, and which instruments
are separate financial instruments that
fall under the scope of IFRS 9. This
judgement includes an assessment
of the characteristics of the financial
instrument of the investee held by us
and whether such financial instrument
provides access to returns underlying
an ownership interest.
Where the company has other
investments in an equity accounted
investee that are not accounted for
under IAS 28, judgement is required
in determining if such investments
constitute Long-Term Interests for
the purposes of IAS 28 (please refer
to Notes 5 and 6). This determination
is based on the individual facts and
circumstances and characteristics of
each investment, but is driven, among
other factors, by the intention and
likelihood to settle the instrument
through redemption or repayment in
the foreseeable future, and whether
or not the investment is likely to be
converted to common stock or other
equity instruments
Recent Accounting Pronouncements
For information on recent accounting
pronouncements, see our consolidated
financial statements and the related
notes found elsewhere in this report.
Cash Flow and Liquidity
Our cash flows may fluctuate and are
difficult to forecast and will depend on
many factors, including:
• the expenses incurred in the
development of wholly-owned
and Controlled Founded Entity
therapeutic candidates;
• the revenue, if any, generated by
wholly-owned and Controlled-
Founded Entity therapeutic
candidates;
• the revenue, if any, generated from
licensing and royalty agreement with
Founded Entities;
• the financing requirements of the
Internal segment, Controlled-
Founded Entities segment and
Parent segment; and
• the investment activities in the
Internal, Controlled-Founded Entities,
and Non-Controlled Founded Entities
and Parent segments.
Governance Financial Review — continued
As of December 31, 2021, we had consolidated cash and cash equivalents of $465.7 million. As of December 31, 2021, we had
PureTech Level cash and cash equivalents of $418.9 million (for a definition of PureTech Level cash and cash equivalents, see
paragraph “Cash flow and cash equivalents” earlier in this Financial review).
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
(in thousands)
Net cash used in operating activities
Net cash provided by investing activities
Net cash provided by financing activities
Effect of exchange rates on cash and cash equivalents
Net increase in cash and cash equivalents
Year Ended December 31,
2021
2020
2019
$(158,274)
197,375
22,727
—
$61,827
$(131,827)
364,478
38,869
—
$271,520
$(98,156)
63,659
49,910
(104)
$15,309
Operating Activities
Net cash used in operating activities
was $158.3 million for the year
ended December 31, 2021, as
compared to $131.8 million for the
year ended December 31, 2020.
The increase in outflows is primarily
attributable to our higher operating
loss and higher income taxes paid of
$7.0 million, and to a lesser extent the
timing of receipts and payments in the
normal course of business.
Net cash used in operating activities
was $131.8 million for the year
ended December 31, 2020, as
compared to $98.2 million for the
year ended December 31, 2019. The
increase in outflows was primarily
attributable to estimated income taxes
of $20.7 million paid for our disposals
of Karuna common shares during the
year ended December 31, 2020. The
increase was further attributable to a
decrease of $4.5 million in payments
received with respect to contract
revenue for the year ended December
31, 2020. We received a $2.0 million
milestone payment from Karuna for
initiation of its KarXT Phase 3 clinical
study pursuant to the Exclusive
Patent License Agreement between
PureTech and Karuna during the
year ended December 31, 2020. We
received $3.5 million from Imbrium
Therapeutics LP for the execution of
a Research Collaboration Option and
License Agreement and $3.0 million
from Boehringer Ingelheim for the
execution of a Collaboration and
License Agreement during the year
ended December 31, 2019. The
increase in outflows was further
attributable to reduced interest income
and the timing of payments in the
normal course of business for the year
ended December 31, 2020.
Investing Activities
Net cash provided by investing
activities was $197.4 million for the
year ended December 31, 2021,
as compared to inflows of $364.5
million for the year ended December
31, 2020, resulting in a decrease of
$167.1 million in net cash provided
by investing activities. The decrease
in the net cash provided by investing
activities was primarily attributed to
the decrease in proceeds from the
sale of investments held at fair value
of $132.5 million (proceeds from
such sales were $218.1 million for
the year ended December 31, 2021
vs. $350.6 million for the year ended
December 30, 2020) and the fact that
for the year ended December 31,
2020 the Company had proceeds of
$30.1 million from maturity of short
term investments while for the year
ended December 31, 2021, there were
no such cash inflows.
Net cash provided by investing
activities was $364.5 million for the
year ended December 31, 2020, as
compared to inflows of $63.7 million
for the year ended December 31, 2019.
The inflow was primarily attributable
to the sale of Karuna and resTORbio
common shares for aggregate
proceeds of $350.6 million during the
year ended December 31, 2020. The
inflow was further attributable to cash
provided by the maturity of short-term
investments totaling $30.1 million.
The inflows were offset by purchases
of Gelesis and Vor preferred shares
totaling $11.1 million and the purchase
of fixed assets totaling $5.2 million.
Financing Activities
Net cash provided by financing
activities was $22.7 million for the
year ended December 31, 2021, as
compared to $38.9 million for the
year ended December 31, 2020,
resulting in a decrease of $16.1 million
in the net cash provided by financing
activities. The decrease in the net
cash provided by financing activities
was primarily attributable to the
decrease in proceeds from issuance
of convertible notes in subsidiaries
of $22.8 million and the fact that for
the year ended December 31, 2020
the Company had proceeds from
the issuance of a long term loan
of $14.7 million, while for the year
ended December 31, 2021, there was
no such cash inflow. Such decreases
were partially offset by an increase in
proceeds from issuance of preferred
shares in subsidiaries of $23.9 million
Net cash provided by financing
activities was $38.9 million for the
year ended December 31, 2020, as
compared to $49.9 million for the year
ended December 31, 2019. The net
inflow was primarily attributable to the
issuances by Vedanta of a $25.0 million
convertible promissory note and a
long-term loan with net proceeds of
$14.7 million. The inflow was further
attributable to $13.8 million received
from the Vedanta Series C-2 and Sonde
Series A-2 preferred share financings.
The inflows were partially offset by the
$12.9 million settlement of 2017 RSU
awards granted to certain executives.
PureTech Health plc Annual report and accounts 2021 107
Governance
Financial Review — continued
Funding Requirements
We have incurred operating losses since inception. Based on our current plans, we believe our existing cash and cash
equivalents at December 31, 2021, will be sufficient to fund our operations and capital expenditure requirements
into the first quarter of 2025. We expect to incur substantial additional expenditures in the near term to support our
ongoing activities. We anticipate to continue to incur net operating losses for the foreseeable future as is typical for
pre-revenue biotechnology companies. Our ability to fund our therapeutic development and clinical operations as well
as commercialization of our wholly-owned therapeutic candidates, will depend on the amount and timing of cash received
from planned financings and potential business development activities. Our future capital requirements will depend on
many factors, including:
• the costs, timing and outcomes of clinical trials and regulatory reviews associated with our wholly-owned therapeutic
candidates;
• the costs of commercialization activities, including product marketing, sales and distribution;
• the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual
property-related claims;
• the emergence of competing technologies and products and other adverse marketing developments;
• the effect on our therapeutic and product development activities of actions taken by the U.S. Food and Drug Administration
(“FDA”), the European Medicines Agency (“EMA”) or other regulatory authorities;
• our degree of success in commercializing our wholly-owned therapeutic candidates, if and when approved; and
• the number and types of future therapeutics we develop and commercialize.
A change in the outcome of any of these or other variables with respect to the development of any of our wholly-
owned therapeutic candidates could significantly change the costs and timing associated with the development of that
therapeutic candidate.
Further, our operating plans may change, and we may need additional funds to meet operational needs and capital
requirements for clinical trials and other research and development activities. We currently have no credit facility or other
committed sources of capital. Because of the numerous risks and uncertainties associated with the development and
commercialization of our wholly-owned therapeutic candidates, we have only a general estimate of the amounts of increased
capital outlays and operating expenditures associated with our current and anticipated therapeutic development programs
and these may change in the future.
Financial Position
Summary Financial Position
(in thousands)
Investments held at fair value (*)
Other non-current assets
Non-current assets
Cash and cash equivalents
Other current assets
Current assets
Total assets
Lease Liability
Deferred tax liability
Other non-current liabilities
Non-current liabilities
Trade and other payables
Notes payable
Warrant liability
Preferred shares
Other current liabilities
Current liabilities
Total liabilities
Net assets
Total equity
As of December 31,
2020
Change
530,161
45,484
575,645
403,881
10,468
414,348
989,994
32,088
108,626
14,818
155,531
20,566
26,455
8,206
118,972
6,724
180,924
336,455
653,539
653,539
(132,982)
1,534
(131,448)
61,827
25,634
87,461
(43,988)
(3,048)
(18,861)
2,103
(19,806)
15,194
(22,539)
(1,419)
55,045
(1,069)
45,211
25,405
(69,392)
(69,392)
2021
397,179
47,018
444,197
465,708
36,101
501,809
946,006
29,040
89,765
16,921
135,725
35,760
3,916
6,787
174,017
5,654
226,135
361,859
584,147
584,147
(*) Fair value of investments accounted for at fair value, does not take into consideration contribution from milestones that occurred after December 31, 2021, the value of our
consolidated Founded Entities (Vedanta, Follica, Sonde, Alivio, and Entrega), our Wholly Owned Programs, or our cash.
108 PureTech Health plc Annual report and accounts 2021
Governance
Financial Review — continued
Investments Held at Fair Value
Investments held at fair value
decreased $133.0 million to
$397.2 million as of December 31,
2021. Investments held at fair value
consists primarily of our common share
investment in Karuna and Vor (from
February 2021) and our preferred share
investments in Akili, Gelesis and Vor
(until February 2021). See Note 5 to
our consolidated financial statements
included elsewhere in this annual report
for details regarding the change in
investments held at fair value.
Cash and Cash Equivalents
Consolidated cash, cash equivalents
increased $61.8 million to $465.7 million
as of December 31, 2021, while we
had PureTech Level cash and cash
equivalents of $418.9 million. The
increase reflected primarily the
disposals of Karuna common shares
during the year ended December
31, 2021. On February 9, 2021,
PureTech sold 1,000,000 shares of
Karuna common shares for aggregate
proceeds of $118.0 million. On
November 9, 2021, PureTech sold an
additional 750,000 Karuna common
shares for aggregate proceeds of
$100.1 million. The inflows from the
disposals were primarily offset by our
operating loss of $150.3 million for the
year ended December 31, 2021.
Non-Current Liabilities
Non-current liabilities decreased
$19.8 million to $135.7 million as of
December 31, 2021. The decrease was
driven by declines of $3.0 million and
$18.9 million in our long-term lease and
deferred tax liabilities, respectively as
of December 31, 2021.
Trade and Other Payables
Trade and other payables increased
$15.2 million to $35.8 million as of
December 31, 2021. The increase
reflected primarily the timing of
payments as of December 31, 2021.
Notes Payable
Notes payable decreased $22.5 million
to $3.9 million as of December 31, 2021.
The decrease reflected the conversion
of the Vedanta $25.0 million convertible
promissory note to a third party
investor during the execution of the
Series D financing round. This decrease
was partially offset by a $2.2 million
note issuance by Sonde.
Preferred Shares
Preferred share liability increased
$55.0 million to $174.0 million as of
December 31, 2021. The increase
reflected the issuance by Vedanta
of Series D preferred shares and the
conversion of Vedanta notes into Series
D preferred shares, increasing the
liability by $63.4 million. This increases
was partially offset by a decrease
in fair value of the preferred share
liability by $8.4 million during the year
ended December 31, 2021.
Quantitative and Qualitative
Disclosures about Financial Risks
Interest Rate Sensitivity
As of December 31, 2021, we
had consolidated cash and cash
equivalents of $465.7 million, while
we had PureTech Level cash and cash
equivalents of $418.9 million. Our
exposure to interest rate sensitivity is
impacted by changes in the underlying
U.K. and U.S. bank interest rates. We
have not entered into investments
for trading or speculative purposes.
Due to the conservative nature of
our investment portfolio, which is
predicated on capital preservation and
investments in short duration, high-
quality U.S. Treasury Bills and U.S. debt
obligations and related money market
accounts we do not believe change in
interest rates would have a material
effect on the fair market value of our
portfolio, and therefore we do not
expect our operating results or cash
flows to be significantly affected by
changes in market interest rates.
Foreign Currency Exchange Risk
We maintain our consolidated
financial statements in our functional
currency, which is the U.S. dollar.
Monetary assets and liabilities
denominated in currencies other than
the functional currency are translated
into the functional currency at rates
of exchange prevailing at the balance
sheet dates. Non-monetary assets
and liabilities denominated in foreign
currencies are translated into the
functional currency at the exchange
rates prevailing at the date of the
transaction. Exchange gains or
losses arising from foreign currency
transactions are included in the
determination of net income (loss) for
the respective periods. Such foreign
currency gains or losses were not
material for all reported periods.
We recorded foreign currency losses
in respect of foreign operations of
$0.0 million, $0.5 million and $0.0 million
for the years ended December 31, 2021,
December 31, 2020, and December 31,
2019, respectively, which are included
in Other comprehensive income/(loss)
in the Consolidated Statements of
Comprehensive Income/(Loss).
We do not currently engage in
currency hedging activities in order
to reduce our currency exposure,
but we may begin to do so in the
future. Instruments that may be used
to hedge future risks include foreign
currency forward and swap contracts.
These instruments may be used to
selectively manage risks, but there can
be no assurance that we will be fully
protected against material foreign
currency fluctuations.
Controlled Founded Entity Investments
We maintain investments in certain
Controlled Founded Entities.
Our investments in Controlled
Founded Entities are eliminated as
intercompany transactions upon
financial consolidation. We are
however exposed to a preferred share
liability owing to the terms of existing
preferred shares and the ownership of
Controlled Founded Entities preferred
shares by third parties. The liability
of preferred shares is maintained at
fair value through the profit and loss.
Our strong cash position, budgeting
and forecasting processes, as well as
decision making and risk mitigation
framework enable us to robustly
monitor and support the business
activities of the Controlled Founded
Entities to ensure no exposure to
credit losses and ultimately dissolution
or liquidation. Accordingly, we view
exposure to third party preferred
share liability as low. Please refer to
Note 16 to our consolidated financial
statements for further information
regarding our exposure to Controlled
Founded Entity Investments.
PureTech Health plc Annual report and accounts 2021 109
Governance Foreign Private Issuer Status
Owing to our U.S. listing, we report
under the Securities Exchange Act of
1934, as amended, or the Exchange
Act, as a non-U.S. company with foreign
private issuer status. As long as we
qualify as a foreign private issuer under
the Exchange Act, we will be exempt
from certain provisions of the Exchange
Act that are applicable to U.S. domestic
public companies, including:
• the sections of the Exchange Act
regulating the solicitation of proxies,
consents or authorizations in respect
of a security registered under the
Exchange Act;
• sections of the Exchange Act
requiring insiders to file public
reports of their stock ownership and
trading activities and liability for
insiders who profit from trades made
in a short period of time;
• the rules under the Exchange Act
requiring the filing with the SEC
of quarterly reports on Form 10-Q
containing unaudited financial
and other specified information,
or current reports on Form 8-K,
upon the occurrence of specified
significant events; and
• Regulation FD, which regulates
selective disclosures of material
information by issuers.
Financial Review — continued
Non-Controlled Founded
Entity Investments
We maintain certain investments in
Non-Controlled Founded Entities which
are deemed either as investments and
accounted for as investments held at
fair value or associates and accounted
for under the equity method (please
refer to Note 1 to our consolidated
financial statements). Our exposure
to investments held at fair value was
$397.2 million as of December 31,
2021, and we may or may not be
able to realize the value in the future.
Accordingly, we view the risk as
high. Our exposure to investments in
associates in limited to the carrying
amount of the investment. We are
not exposed to further contractual
obligations or contingent liabilities
beyond the value of initial investment.
As of December 31, 2021, Gelesis
was the only associate. The carrying
amount of the investment in Gelesis
as an associate was zero. Accordingly,
we do not view this as a risk. Please
refer to Notes 5, 6 and 16 to our
consolidated financial statements
for further information regarding our
exposure to Non-Controlled Founded
Entity Investments.
Equity Price Risk
As of December 31, 2021, we held
1,656,564 common shares of Karuna
and 3,207,200 common shares of
Vor. The fair value of our investment
in the common shares of Karuna was
$217.0 million and common shares of
Vor was $37.3 million.
The investments in Karuna and Vor are
exposed to fluctuations in the market
price of these common shares. The
effect of a 10.0 percent adverse change
in the market price of Karuna common
shares and Vor common shares as of
December 31, 2021, would have been
a loss of approximately $21.7 million
and $3.7 million, respectively,
recognized as a component of Other
income (expense) in our Consolidated
Statements of Comprehensive
Income/(Loss).
Subsequent to December 31, 2021 our
investment in Gelesis was converted
into shares of common stock of Gelesis
(after the combination with Capstar),
which are publicly traded on the New
York Stock Exchange.
Liquidity Risk
We do not believe we will encounter
difficulty in meeting the obligations
associated with our financial liabilities
that are settled by delivering cash
or another financial asset. While we
believe our cash and cash equivalents
do not contain excessive risk, we
cannot provide absolute assurance that
in the future our investments will not be
subject to adverse changes or decline
in value based on market conditions.
Credit Risk
We maintain an investment portfolio
in accordance with our investment
policy. The primary objectives of our
investment policy are to preserve
principal, maintain proper liquidity and
to meet operating needs. Although
our investments are subject to credit
risk, our investment policy specifies
credit quality standards for our
investments and limits the amount
of credit exposure from any single
issue, issuer or type of investment.
Also, due to the conservative nature
of our investments and relatively short
duration, interest rate risk is mitigated.
We do not own derivative financial
instruments. Accordingly, we do not
believe that there is any material market
risk exposure with respect to derivative
or other financial instruments.
Credit risk is also the risk of financial
loss if a customer or counterparty to
a financial instrument fails to meet its
contractual obligations. We assess
the credit quality of customers on an
ongoing basis, taking into account
its financial position, past experience
and other factors. The credit quality
of financial assets that are neither past
due nor impaired can be assessed by
reference to credit ratings (if available)
or to historical information about
counterparty default rates. We are also
potentially subject to concentrations
of credit risk in accounts receivable.
Concentrations of credit risk with
respect to receivables is owed to
the limited number of companies
comprising our customer base.
However, our exposure to credit losses
is currently de minimis due to the credit
quality of our receivables, which are
primarily from the US government and
large funds with respect to grants.
110 PureTech Health plc Annual report and accounts 2021
Governance Chair’s overview
“ We believe that good corporate
governance is essential for building
a successful and sustainable business.”
Dear Shareholder
I am pleased to introduce our Corporate Governance Report. This section sets out our governance framework and the work of
the Board and its committees.
As a Board, we are responsible for ensuring there is an effective governance framework in place. This includes setting
the Company’s strategic objectives, ensuring the right leadership and resources are in place to achieve these objectives,
monitoring performance, ensuring that sufficient internal controls and protections are in place and reporting to shareholders.
An effective governance framework is also designed to ensure accountability, fairness and transparency in the Company’s
relationships with all of its stakeholders, whether shareholders, employees, partners, the government or the wider patient
community. We believe that good corporate governance is essential for building a successful and sustainable business.
The Board is committed to the highest standards of corporate governance and undertakes to maintain a sound framework for
our control and management. In this report, we provide details of that framework.
The key constituents necessary to deliver a robust structure are in place and, accordingly, this report includes a description
of how the Company has applied the principles and provisions of the Governance Code and how it intends to apply those
principles in the future.
The Board looks forward to being able to discuss these matters with our shareholders in connection with our AGM or indeed
at any other time during the year.
Christopher Viehbacher
Chair
April 25, 2022
PureTech Health plc Annual report and accounts 2021 111
Governance Board of Directors
(alphabetically)*
PureTech Health is led by a seasoned and accomplished Board
of Directors and management team with extensive experience
in maximising shareholder value, discovering scientific
breakthroughs, and delivering therapeutics to market.
Sharon Barber-Lui
Independent Non-Executive Director
Sharon Barber-Lui has served as a member of our Board since March 2022. Ms. Barber-Lui has been the
Senior Vice President of Finance at EQRx since January 2022. Prior to joining EQRx, Ms. Barber-Lui worked
at Merck for over twenty years in roles of advancing responsibility, including most recently as the Head of
Portfolio Market Strategy, Operations and Business Analytics from 2019 through 2021 and Chief Financial
Officer from 2014 through 2018 for Merck’s U.S. oncology business. Prior to that Ms. Barber-Lui held a number
of other roles with Merck including Treasurer of U.S. Region, Head of U.S. Treasury Operations, and Head of
Legal Entity Integration and Global Treasury Services, among others. Ms. Barber-Lui began her career as an
accountant for KPMG LLP, and she received her bachelor’s degree as well as her M.B.A. from Lehigh University.
Ms. Barber-Lui is a member of the American Institute of Certified Public Accountants.
Raju Kucherlapati, Ph.D.
Independent Non-Executive Director, R&D Committee Member
Raju Kucherlapati, Ph.D., has served as a member of our Board since 2014. He has been the Paul C. Cabot
professor of Genetics and a professor of medicine at Harvard Medical School since 2001. Dr. Kucherlapati
currently serves on the board of directors of Gelesis, Inc. and KEW Inc. He was a founder and former board
member of Abgenix, Cell Genesys and Millennium Pharmaceuticals. He is a fellow of the American Association
for the Advancement of Science and a member of the National Academy of Medicine. Dr. Kucherlapati received
his Ph.D. from the University of Illinois. He trained at Yale and has held faculty positions at Princeton University,
University of Illinois College of Medicine and the Albert Einstein College of Medicine. He served on the
editorial board of the New England Journal of Medicine and was Editor in Chief of the journal Genomics. His
laboratory at Harvard Medical School is involved in cloning and characterization of human disease genes with
a focus on human syndromes with a significant cardiovascular involvement, use of genetic/genomic approaches
to understand the biology of cancer and the generation and characterization of genetically modified mouse
models for cancer and other human disorders.
John LaMattina, Ph.D.
Independent Non-Executive Director, R&D Committee Member
John LaMattina, Ph.D., has served as a member of our Board since 2009. Dr. LaMattina previously worked at
Pfizer in different roles from 1977 to 2007, including vice president of U.S. Discovery Operations in 1993, senior
vice president of worldwide discovery operations in 1998, senior vice president of worldwide development in
1999 and president of global research and development from 2003 to 2007. Dr. LaMattina serves on the board
of directors of Ligand Pharmaceuticals, Immunome Inc. and Vedanta. Dr. LaMattina previously served on the
board of Zafgen, Inc. until April 2020. He also serves on the Scientific Advisory Board of Frequency Therapeutics
and is a trustee associate of Boston College. During Dr. LaMattina’s leadership tenure, Pfizer discovered and/
or developed a number of important new medicines including Tarceva, Chantix, Zoloft, Selzentry and Lyrica,
along with a number of other medicines currently in late stage development for cancer, rheumatoid arthritis
and pain. He is the author of numerous scientific publications and U.S. patents. Dr. LaMattina received the
1998 Boston College Alumni Award of Excellence in Science and the 2004 American Diabetes Association
Award for Leadership and Commitment in the Fight Against Diabetes. He was awarded an Honorary Doctor of
Science degree from the University of New Hampshire in 2007. In 2010, he was the recipient of the American
Chemical Society’s Earle B. Barnes Award for Leadership in Chemical Research Management. He is the author
of “Devalued and Distrusted—Can the Pharmaceutical Industry Restore its Broken Image,” “Drug Truths:
Dispelling the Myths About Pharma R&D” and an author of the Drug Truths blog at Forbes.com. Dr. LaMattina
received a B.S. in Chemistry from Boston College and received a Ph.D. in Organic Chemistry from the University
of New Hampshire. He then moved on to Princeton University as a National Institutes of Health postdoctoral
fellow in the laboratory of professor E. C. Taylor.
112 PureTech Health plc Annual report and accounts 2021
* Biographies for executive directors, Daphne Zohar and Bharatt Chowrira, can be found on pages 115 to 116.
Governance Board of Directors — continued
Robert Langer, Sc.D.
Co-Founder and Non-Executive Director, R&D Committee Member
Robert S. Langer, Sc.D., has served as a member of our Board since our founding and is our co-founder.
Dr. Langer has served as the David H. Koch Institute professor at MIT since 2005. He served as a member of the
FDA’s science board from 1995 to 2002 and as its chairman from 1999 to 2002. Dr. Langer serves on the board
of directors of Seer Bio, Abpro Bio, Frequency Therapeutics, Entrega, Inc. and Moderna, Inc. Dr. Langer has
received over 220 major awards, including the 2006 U.S. National Medal of Science, the Charles Stark Draper
Prize in 2002 and the 2012 Priestley Medal. He is also the first engineer to ever receive the Gairdner Foundation
International Award. Dr. Langer has received the Dickson Prize for Science, Heinz Award, Harvey Prize, John Fritz
Award, General Motors Kettering Prize for Cancer Research, Dan David Prize in Materials Science, Breakthough
Prize in Life Sciences, National Medal of Science, National Medal of Technology and Innovation, Kyoto Prize,
Wolf Prize, Albany Medical Center Prize in Medicine and Biomedical Research and the Lemelson-MIT prize. In
2006, he was inducted into the National Inventors Hall of Fame. In January 2015, Dr. Langer was awarded the
2015 Queen Elizabeth Prize for Engineering. Dr. Langer received his bachelor’s degree in Chemical Engineering
from Cornell University and his Sc.D. in Chemical Engineering from MIT.
Kiran Mazumdar-Shaw
Independent Non-Executive Director
Kiran Mazumdar-Shaw has served as a member of our Board since September 2020. Ms. Mazumdar-Shaw has
been the executive chairperson of Biocon Limited, which she founded in 1978, since April 2020, and she served
as managing director of Biocon Limited from 1995 to 2020. Ms. Mazumdar-Shaw holds key positions in various
industry, educational, government and professional bodies globally. She has been elected as a full-term member
of the board of trustees of Massachusetts Institute of Technology. She has been elected as a member of the
prestigious U.S.-based National Academy of Engineering. She also serves as the lead independent member of
the board of Infosys Ltd, a director on the board of United Breweries Limited, and non-executive director on the
board of Narayana Health. Ms. Mazumdar-Shaw has received two of India’s highest civilian honors, the Padma
Shri in 1989 and the Padma Bhushan in 2005. She was also honored with the Order of Australia, Australia’s
highest civilian honor in January 2020. In 2016, she was conferred with the highest French distinction – Knight
of the Legion of Honour – and in 2014 received the Othmer Gold Medal in 2014 from the U.S.-based Chemical
Heritage Foundation for her pioneering efforts in biotechnology. Ms. Mazumdar-Shaw has been ranked as one
of the world’s top 20 inspirational leaders in the field of biopharmaceuticals by The Medicine Maker Power List
2020, and she was the winner of EY World Entrepreneur of the Year™ 2020 Award. She was the first woman
business leader from India to sign the Giving Pledge, an initiative of the Gates Foundation, committing to give
the majority of her wealth to philanthropic causes. She received a bachelor’s degree in science, Zoology Hons.,
from Bangalore University and a master’s degree in malting and brewing from Ballarat College, Melbourne
University. She has been awarded several honorary degrees from other universities globally.
Dame Marjorie Scardino
Senior Independent Director
Dame Marjorie Scardino has served as a member of our Board since 2015. She served for 28 years as the chief
executive officer of Pearson, a large education company that included The Economist, The Financial Times and
Penguin Books. She was on the board of the MacArthur Foundation for 12 years, five as chairman, and left in
2017. She was a member of the board of Twitter from 2013 to 2018 and International Airlines Group from 2014
to 2019. Dame Scardino has received a number of honorary degrees, and in 2003 was dubbed a dame of the
British Empire. She is also a member of the Royal Society of the Arts in the UK and the American Association
of Arts and Sciences.
Christopher Viehbacher
Chair
Chris Viehbacher has served as a member of our Board since 2015 and as chairman since September 2019. He
has been the managing partner of Gurnet Point Capital since October 2014. Immediately prior to joining Gurnet
Point Capital, Mr. Viehbacher served as the chief executive officer and member of the board of directors of
Sanofi from December 2008 to October 2014. From 1993 to 2008, Mr. Viehbacher worked at GlaxoSmithKline
in different roles, including ultimately President of its North American pharmaceutical division. Mr. Viehbacher
began his career with PricewaterhouseCoopers LLP and qualified as a chartered accountant. Mr. Viehbacher
currently serves on the board of directors of Vedanta Biosciences as chairman, BEFORE Brands, Crossover
Health, Boston Pharmaceuticals, Zikani and Gurnet Point Capital LLC. Mr. Viehbacher previously served on the
board of directors of Axcella Health Inc. and Corium International, Inc. Mr. Viehbacher also serves on the Board
of Trustees of Northeastern University and the Board of Fellows of Stanford Medical School. Mr. Viehbacher has
co-chaired the Chief Executive Officer Roundtable on Neglected Diseases with Bill Gates and formerly chaired
the chief executive officer Roundtable on Cancer. He was the chairman of the board of the Pharmaceutical
Research and Manufacturers of America as well as president of the European Federation of Pharmaceutical
Industries and Associations. At the World Economic Forum at Davos, Mr. Viehbacher was a chair of the Health
Governors and co-chaired an initiative to create a Global Charter for Healthy Living. He was also a member of
the International Business Council. Mr. Viehbacher has received the Pasteur Foundation Award for outstanding
commitment to safeguarding and improving health worldwide. He has also received France’s highest civilian
honor, the Légion d’honneur. Mr. Viehbacher received his bachelor’s degree in Commerce from Queen’s
University in Ontario, Canada in 1983.
PureTech Health plc Annual report and accounts 2021 113
Governance Board of Directors — continued
Dennis Ausiello, M.D.**
Board Advisor, R&D Committee Member
Dennis Ausiello, M.D., is a board advisor and member of the PureTech R&D Committee. He is the Jackson
Distinguished Professor of Clinical Medicine and was previously director, emeritus of the M.D./Ph.D. Program
at Harvard Medical School. Dr. Ausiello is chairman of medicine, emeritus and director of the Center for
Assessment Technology and Continuous Health (CATCH) at Massachusetts General Hospital (MGH). This center
is a partnership among MGH, MIT and Harvard University with a mission to develop real-time assessment
of human traits in wellness and disease. In partnership with industry, it is creating tools for measurements of
traditional and novel phenotypes. Understanding the need for partnerships between the academy and industry,
Dr. Ausiello served on the board of directors of Pfizer Pharmaceuticals, where he was their former lead director.
He currently serves as a member of the board of directors of Seres Health and Alnylam. Dr. Ausiello is also a
member of the board of directors of several non-public biotech companies and is a consultant to Verily (formerly
Google Life Sciences) and Pfizer Pharmaceuticals. Dr. Ausiello is a nationally recognized leader in academic
medicine who was elected to the National Academy of Medicine in 1999 and the American Academy of Arts
and Sciences in 2003. He has published numerous articles, book chapters and textbooks and has served as an
editor of Cecil’s Textbook of Medicine. Dr. Ausiello received his BA from Harvard College and an M.D. from the
University of Pennsylvania.
H. Robert Horvitz, Ph.D.**
Board Advisor, R&D Committee Chair
H. Robert Horvitz, Ph.D., is a board observer and Chair of the R&D Committee at PureTech. He received
the Nobel Prize in Physiology or Medicine and is the David H Koch Professor of Biology at Massachusetts
Institute of Technology, an investigator of the Howard Hughes Medical Institute, neurobiologist (Neurology) at
Massachusetts General Hospital, a member of the MIT McGovern Institute for Brain Research and the MIT Koch
Institute for Integrative Cancer Research. He is cofounder of multiple life science companies, including Epizyme
(EPZM), Mitobridge (acquired by Astellas) and Idun Pharmaceuticals (acquired by Pfizer) and was a member of
the Scientific Advisory Board of the Novartis Institutes for BioMedical Research.
Dr. Horvitz was a member of the board of trustees of the Massachusetts General Hospital. He also previously
served as Chairman of the Board of Trustees of the Society for Science and the Public and as President of
the Genetics Society of America. Dr. Horvitz is a member of the U.S. National Academy of Sciences, the U.S.
National Academy of Medicine and the American Philosophical Society and is a foreign member of the Royal
Society of London. He is a fellow of the American Academy of Arts and Sciences and of the American Academy
of Microbiology.
Dr. Horvitz received the U.S. National Academies of Science Award in Molecular Biology; the Charles A. Dana
Award for Pioneering Achievements in Health; the Ciba-Drew Award for Biomedical Science; the General
Motors Cancer Research Foundation Alfred P. Sloan, Jr. Prize; the Gairdner Foundation International Award;
the March of Dimes Prize in Developmental Biology; the Genetics Society of America Medal; the Bristol-Myers
Squibb Award for Distinguished Achievement in Neuroscience; the Wiley Prize in the Biomedical Sciences; the
Peter Gruber Foundation Genetics Prize; the American Cancer Society Medal of Honor; the Alfred G. Knudson
Award of the National Cancer Institute; and the UK Genetics Society Mendel Medal. He has received honorary
doctoral degrees from the University of Rome, Cambridge University, Pennsylvania State University and the
University of Miami.
Bennett Shapiro, M.D.**
Board Advisor, R&D Committee Member
Bennett Shapiro, M.D., is a PureTech co-founder, a board advisor, a member of PureTech’s R&D Committee.
He also served as member of the Board from the Company’s founding through June 2020. Dr. Shapiro was
previously Executive Vice President at Merck Research Laboratories of Merck & Co. where he initially led
Worldwide Basic Research and was responsible for all the basic and preclinical research activities at Merck.
He later led Worldwide Licensing and External Research and was responsible for Merck’s relationships with the
academic and industrial biomedical research community. His leadership resulted in the discovery, development
and registration of approximately 25 drugs and vaccines. Previously, he was professor and chairman of the
Department of Biochemistry at the University of Washington and is the author of over 120 papers on the
molecular regulation of cellular behavior. Following an internship in Medicine at the University of Pennsylvania
Hospital, he was a Research Associate at the NIH, then a Visiting Scientist at the Institut Pasteur in Paris and
returned to the NIH as Chief-Section on Cellular Differentiation in the Laboratory of Biochemistry prior to
joining the University of Washington. Dr. Shapiro has been a Guggenheim Fellow, a Fellow of the Japan Society
for the Promotion of Science and a Visiting Professor at the University of Nice. He currently serves as a member
of the board of directors of Vedanta Biosciences and VBL Therapeutics. Dr. Shapiro previously served as a
director of Celera Corporation, the Drugs for Neglected Diseases initiative and the Mind and Life Institute.
Dr. Shapiro received a B.S. in Chemistry from Dickinson College and his M.D. from Jefferson Medical College.
** Dr. Horvitz, Dr. Ausiello and Dr. Shapiro are not members of the PureTech Board. As a Board Observer, Dr. Horvitz attends the
majority of Board meetings. As Board Advisors, Dr. Ausiello and Dr. Shapiro attend select Board meetings. All three are also
members of PureTech’s R&D Committee, of which Dr. Horvitz is the Chair.
114 PureTech Health plc Annual report and accounts 2021
Governance Management team
(alphabetically)
Joseph Bolen, Ph.D.
Chief Scientific Officer
Joseph Bolen, Ph.D., first joined PureTech in October 2015 and has served as PureTech’s chief scientific officer
since October 2016. Prior to joining PureTech, Dr. Bolen oversaw all aspects of research and development, or
R&D, for Moderna, Inc. as president and chief scientific officer from July 2013 to October 2015. Previously, he
was chief scientific officer and global head of oncology research at Millennium: The Takeda Oncology Company.
Prior to joining Millennium in 1999, Dr. Bolen held senior positions at Hoechst Marion Roussel, Schering-Plough
and Bristol-Myers Squibb. Dr. Bolen began his career at the National Institutes of Health, where he contributed
to the discovery of a class of proteins known as tyrosine kinase oncogenes as key regulators of the immune
system. Dr. Bolen received a B.S. in Microbiology & Chemistry and a Ph.D. in Immunology from the University
of Nebraska and conducted his postdoctoral training in Molecular Virology at the Kansas State University
Cancer Center.
Bharatt Chowrira, Ph.D., J.D.
President and Chief Business, Legal and Operating Officer, Member of the Board of Directors
Bharatt Chowrira, Ph.D., J.D., has been our president and chief business, legal and operating officer since
January, 2022 and was our president and chief of business and strategy from March 2017 through December
2021. Dr. Chowrira has also served as a member of PureTech’s Board since February 1, 2021. Prior to joining
PureTech, Dr. Chowrira was the president of Synlogic, Inc., a biopharmaceutical company focused on
developing synthetic microbiome-based therapeutics, from September 2015 to February 2017, where he
oversaw and managed corporate and business development, alliance management, financial, human resources,
intellectual property and legal operations. Prior to that, Dr. Chowrira was the chief operating officer of Auspex
Pharmaceuticals, Inc. from October 2013 to July 2015, which was acquired by Teva Pharmaceuticals Ltd. in
the spring of 2015. Previously, he was president and chief executive officer of Addex Therapeutics Ltd., a
biotechnology company publicly-traded on the SIX Swiss Exchange, from August 2011 to July 2013. Prior to that
Dr. Chowrira held various leadership and management positions at Nektar Therapeutics (chief operating officer),
Merck & Co, or Merck (vice president), Sirna Therapeutics (general counsel; acquired by Merck) and Ribozyme
Pharmaceuticals (chief patent counsel). Dr. Chowrira is currently a member of the board of directors of Vedanta
Biosciences, Inc. and Akili Interactive Labs, Inc., and, he previously served on the board of directors of Karuna
Therapeutics, Inc. from August of 2017 to December 2019. Dr. Chowrira received a J.D. from the University
of Denver’s Sturm College of Law, a Ph.D. in Molecular Biology from the University of Vermont College of
Medicine, an M.S. in Molecular Biology from Illinois State University and a B.S. in Microbiology from the UAS,
Bangalore, India.
Eric Elenko, Ph.D.
Chief Innovation and Strategy Officer
Eric Elenko, Ph.D., has served as our chief innovation officer since June 2015 and held various other positions
at PureTech prior thereto. While at PureTech, Dr. Elenko has led the development of a number of programs,
including Akili Interactive Labs, Gelesis, Karuna Therapeutics and Sonde Health. Dr. Elenko serves on the board
of directors of Sonde. Prior to joining PureTech, Dr. Elenko was a consultant with McKinsey and Company from
February 2002 to September 2005, where he advised senior executives of both Fortune 500 and specialty
pharmaceutical companies on a range of issues such as product licensing, mergers and acquisitions, research
and development strategy and marketing. Dr. Elenko received a B.A. in Biology from Swarthmore College and
his Ph.D. in Biomedical Sciences from University of California, San Diego.
George Farmer, Ph.D.
Chief Financial Officer
George Farmer, Ph.D., has served as our chief financial officer since January 1, 2021. Dr. Farmer joined PureTech
from BMO Capital Markets, where he completed a 15-year career as a senior biotechnology equity analyst
providing in-depth sector research for institutional investor clients. Prior to this role, Dr. Farmer served as
chief executive officer of Cortice Biosciences, a privately held biotechnology company focused on the clinical
development of therapies for brain malignancies and neurodegenerative diseases. He also served as vice
president of corporate development at Synta Pharmaceuticals, a publicly traded company developing cancer
therapeutics. Dr. Farmer serves on the board of directors of Sonde Health, Inc. and Follica, Inc. Dr. Farmer was
a postdoctoral fellow at Sloan Kettering Cancer Center and University of California San Francisco after receiving
his Ph.D. in biological sciences from Columbia University and a BA from Dartmouth College.
PureTech Health plc Annual report and accounts 2021 115
Governance Management team — continued
Julie Krop, M.D.
Chief Medical Officer
Julie Krop, MD, is the chief medical officer at PureTech, where she is responsible for all clinical development,
regulatory, CMC, and medical affairs for PureTech’s clinical-stage Wholly Owned Pipeline. Prior to PureTech,
Dr. Krop served as Chief Medical Officer at Freeline Therapeutics, a clinical-stage gene therapy company.
She also previously served as Chief Medical Officer of AMAG Pharmaceuticals (acquired by Covis group for
$647 million), where she oversaw clinical development, regulatory affairs, clinical operations, medical affairs,
program management and pharmacovigilance. During her time at AMAG, Dr. Krop was responsible for the
oversight of three FDA approvals. Earlier in her career, she held leadership positions at Vertex Pharmaceuticals,
Stryker Regenerative Medicine, Peptimmune, Millennium Pharmaceuticals and Pfizer and also served on the
board of directors of Aquestive Bio, Inc. Dr. Krop received her M.D. from Brown University School of Medicine
and completed an internal medicine residency at Georgetown University Hospital. Additionally, she completed
fellowships in epidemiology, clinical trial design and endocrinology as a Robert Wood Johnson Foundation
Clinical Scholar at the Johns Hopkins School of Medicine.
Daphne Zohar
Founder and Chief Executive Officer, Member of the Board of Directors
Daphne Zohar is the founder of PureTech and has served as our chief executive officer and a member of
our board of directors since our formation and UK main market listing in 2015 and served as the founding
chief executive officer of a number of our Founded Entities. A successful entrepreneur, Ms. Zohar created
PureTech, assembling a leading team and scientific network to help implement her vision for the company,
and was a key participant in fundraising, business development and establishing the underlying programs
and platforms that have resulted in PureTech’s substantial pipeline which is comprised of 26 therapeutics
and therapeutic candidates to date, including two therapeutics that have been cleared by the U.S. Food and
Drug Administration for marketing and granted marketing authorization in the European Economic Area, or
EEA. Ms. Zohar has been recognized as a top leader and innovator in biotechnology by a number of sources,
including EY, BioWorld, MIT’s Technology Review, the Boston Globe, and Scientific American. Ms. Zohar serves
on the board of directors of Follica, Inc. Previously, Ms. Zohar has served on a number of private company
boards including Karuna Therapeutics, Inc. and served on the board of resTORbio, Inc. (now Adicet Bio, Inc.)
from December 2017-November 2018. Ms. Zohar received a B.S. from Northeastern University.
116 PureTech Health plc Annual report and accounts 2021
Governance The Board
Roles and responsibilities
of the Board
The Board is responsible to
shareholders for our overall
management as a whole. The main roles
of the Board are:
• creating value for shareholders;
• providing business and
scientific leadership;
• approving our strategic objectives;
• ensuring that the necessary financial
and human resources are in place to
meet strategic objectives;
• overseeing our system of risk
management; and
• setting the values and standards
for both our business conduct and
governance matters.
The Directors are also responsible
for ensuring that obligations to
shareholders and other stakeholders
are understood and met and that
communication with shareholders
is maintained. The responsibility of
the Directors is collective, taking
into account their respective roles
as Executive Directors and Non-
Executive Directors. All Directors
are equally accountable to the
Company’s shareholders for the proper
stewardship of its affairs and our
long-term success.
The Board reviews strategic issues on
a regular basis and exercises control
over our performance by agreeing on
budgetary and operational targets
and monitoring performance against
those targets. The Board has overall
responsibility for our system of internal
controls and risk management. Any
decisions made by the Board on
policies and strategy to be adopted
by us or changes to current policies
and strategy are made following
presentations by the Executive
Directors and other members of
management, and only after a detailed
process of review and challenge by
the Board. Once made, the Executive
Directors and other members of
management are fully empowered to
implement those decisions.
Except for a formal schedule of matters
which are reserved for decision and
approval by the Board, the Board has
delegated our day-to-day management
to the Chief Executive Officer who is
supported by other members of the
senior management team. The schedule
of matters reserved for Board decision
and approval are those significant to
us as a whole due to their strategic,
financial or reputational implications.
The Company’s schedule of matters
reserved for the Board includes the
following matters:
• approval and monitoring of our
strategic aims and objectives;
• approval of the annual operating
and capital expenditure budget;
• changes to our capital structure, the
issue of any of our securities and
material borrowings;
in supporting the Board in fulfilling
its responsibilities and ensuring that
we maintain the highest standards of
corporate governance. Each committee
has its own terms of reference which
set out the specific matters for
which delegated authority has been
given by the Board.
The terms of reference for each of the
committees are fully compliant with the
provisions of the Governance Code.
All of these are available on request
from the Company Secretary or within
the Investors section of our website at
www.puretechhealth.com.
• approval of the annual report
Board size and composition
and half-year results statement,
accounting policies and practices or
any matter having a material impact
on our future financial performance;
• ensuring a sound system of internal
control and risk management;
• approving Board appointments and
removals, and approving policies
relating to directors’ remuneration;
• strategic acquisitions;
• major disposals of our assets
or subsidiaries;
• approval of all circulars,
prospectuses and other documents
issued to shareholders governed by
the Financial Conduct Authority’s
(FCA) Listing Rules, Disclosure
Guidance and Transparency
Rules or the City Code on
Takeovers and Mergers;
• approval of terms of reference and
membership of Board committees;
• considering and, where appropriate,
approving directors’ conflicts
of interest; and
• approval, subject to shareholder
approval, of the appointment and
remuneration of the auditors.
The schedule of matters reserved to
the Board is available on request from
the Company Secretary or within the
Investors section of our website at
www.puretechhealth.com.
The Board delegates specific
responsibilities to certain committees
that assist the Board in carrying out
its functions and ensure independent
oversight of internal control and risk
management. The three principal Board
committees (Audit, Remuneration
and Nomination) play an essential role
As of December 31, 2021, there were
eight Directors on the Board: the
Non-Executive Chair, two Executive
Directors and five Non-Executive
Directors. The biographies of these
Directors are provided on pages 112
to 116. One of the Company’s former
Executive Directors, Mr. Stephen Muniz,
retired from the Board and as Chief
Operating Officer of the Company in
May 2021. Dr. Bharatt Chowrira was
appointed as an Executive Director in
February 2021. There were no other
changes to the composition of the
Board during 2021. On March 24, 2022,
Ms. Sharon Barber-Lui joined the Board
as a non-Executive Director.
The Company’s policy relating to
the terms of appointment and the
remuneration of both Executive and
Non-Executive Directors is detailed
in the Directors’ Remuneration Report
on pages 131 to 146.
The size and composition of the Board
is regularly reviewed by the Nomination
Committee to ensure there is an
appropriate and diverse mix of skills
and experience on the Board.
The Board may appoint any person
to serve as a Director, either to fill
a vacancy or as an addition to the
existing Board. Any Director so
appointed by the Board shall hold
office only until the following AGM and
then shall be eligible for election by the
shareholders. In accordance with the
Governance Code, all of the Directors
will be offering themselves for election
at the AGM to be held on June 15, 2022,
full details of which are set out in the
notice of meeting accompanying this
Annual Report.
PureTech Health plc Annual report and accounts 2021 117
Governance The Board — continued
Non-Executive Directors
The Company’s Non-Executive
Directors are Mr. Christopher
Viehbacher (Chair), Ms. Sharon
Barber-Lui, Dr. Raju Kucherlapati,
Dr. John LaMattina, Dr. Robert Langer,
Ms. Kiran Mazumdar-Shaw and
Dame Marjorie Scardino.
The Non-Executive Directors provide
us with a wide range of skills and
experience. Each Non-Executive
Director has significant senior level
experience as well as an extensive
network in each of their own fields, an
innovative mindset and independent
judgement on issues of strategy,
performance and risk, and is well
placed to constructively challenge
and scrutinize the performance of
management. In addition, certain of
our Non-Executive Directors also serve
as members of one or more boards
of directors of our Founded Entities
and are key drivers for our Wholly
Owned Pipeline.
Senior Independent Director
The Company’s Senior Independent
Director is Dame Marjorie Scardino.
A key responsibility of the Senior
Independent Director is to be available
to shareholders in the event that they
may feel it inappropriate to relay views
through the Chair or Chief Executive
Officer. In addition, the Senior
Independent Director serves as an
intermediary between the rest of the
Board and the Chair where necessary.
Further, the Senior Independent
Director will lead the Board in its
deliberations on any matters on which
the Chair is conflicted.
The roles of Chair and
Chief Executive Officer
The Company’s Chair is Mr. Christopher
Viehbacher. There is a clear division
of responsibilities between the Chair
and the Chief Executive Officer.
Mr. Viehbacher was appointed Chair in
September 2019.
The Chair is responsible for the
leadership and conduct of the
Board and for ensuring effective
communication with shareholders.
The Chair facilitates the full and
effective contribution of Non-Executive
Directors at Board and Committee
meetings, ensures that they are
kept well informed and ensures a
constructive relationship between the
Executive Directors and Non-Executive
Directors. The Chair also ensures that
Board support, indemnity and
insurance
The Company Secretary, Dr. Bharatt
Chowrira, is responsible to the Board
for ensuring Board procedures
are followed, applicable rules and
regulations are complied with and that
the Board is advised on governance
and relevant regulatory matters.
All Directors have access to the
impartial advice and services of the
Company Secretary.
There is also an agreed procedure
for Directors to take independent
professional advice at the Company’s
expense. In accordance with the
Company’s Articles of Association
and a contractual Deed of Indemnity,
the Directors have been granted an
indemnity issued by the Company
to the extent permitted by law in
respect of liabilities incurred to third
parties as a result of their office. The
indemnity would not provide any
coverage where a Director is proved to
have acted fraudulently or with wilful
misconduct. The Company has also
arranged appropriate insurance cover
in respect of legal action against its
Directors and officers.
Board meetings and decisions
The Board meets regularly during the
year, as well as on an ad hoc basis as
required by business need. The Board
had 4 scheduled meetings in 2021, and
details on attendance are set forth in
the table below:
Director
Christopher Viehbacher
Raju Kucherlapati
John LaMattina
Robert Langer
Kiran Mazumdar-Shaw
Dame Marjorie Scardino
Bharatt Chowrira
Stephen Muniz
Daphne Zohar
Number of
Board Meetings
Attended
4/4
4/4
4/4
4/4
4/4
4/4
4/4
1/1
4/4
While each director was able to attend
every meeting in 2021, in the event
of any unavoidable absence, the
impacted Director would review with
management the topics and materials
to be discussed at the meeting, and
provide appropriate feedback to be
conveyed at such meeting.
the Board committees carry out their
duties, including reporting back to
the Board either orally or in writing
following their meetings at the next
Board meeting.
The role of the Chief Executive Officer,
Ms. Daphne Zohar, is to lead the
execution of the Company’s strategy
and the executive management of
PureTech. She is responsible, among
other things, for the development
and implementation of strategy and
processes which enable us to meet
the requirements of shareholders,
for delivering the operating plans
and budgets for our businesses, for
monitoring business performance
against key performance indicators
(KPIs) and reporting on these to the
Board and for providing the appropriate
environment to recruit, engage, retain
and develop the high-quality personnel
needed to deliver our strategy.
Independence
The Governance Code requires that at
least 50 percent of the Board of a UK
premium listed company, excluding
the Chair, consists of Non-Executive
Directors determined by the Board
to be independent in character and
judgement and free from relationships
or circumstances which may affect, or
could appear to affect, the Directors’
judgement. The Board regards
Ms. Barber-Lui, Dr. Kucherlapati,
Dr. LaMattina, Ms. Mazumdar-Shaw
and Dame Marjorie Scardino as
Independent Non-Executive Directors
for the purposes of the Governance
Code. In reaching this determination,
the Board duly considered (i) their
directorships and links with other
Directors through their involvement
in other subsidiary companies; (ii)
their equity interests in PureTech and/
or the Founded Entities, including
equity grants of restricted stock units
made to Non-Executive Directors by
the Company under its Performance
Share Plan; and (iii) in respect of
Dr. LaMattina, the length of his tenure
as a Director of the Company. The
Board is satisfied that the judgement,
experience and challenging approach
adopted by each of these Directors
should ensure that they each make a
significant contribution to the work
of the Board and its committees.
Therefore, the Board has determined
that Ms. Barber-Lui, Dr. Kucherlapati,
Dr. LaMattina, Ms. Mazumdar-Shaw
and Dame Marjorie Scardino are of
independent character and judgement,
notwithstanding the circumstances
described at (i), (ii) and (iii) above.
118 PureTech Health plc Annual report and accounts 2021
Governance The Board — continued
The Board also acted by unanimous
written consent five times in 2021.
On occasion it was more expedient
for the board to approve matters,
especially administrative matters,
by unanimous written consent rather
than to convene a board meeting for
the purpose. However, Directors were
provided opportunity to discuss any
concerns they had with the written
resolution before its issue for signature.
members of the Company’s senior
management team, as well as the senior
management of the Founded Entities,
the opportunity to formally present
to the Board on new technology
development and business strategies.
However, since the onset of the
COVID-19 pandemic, for the safety
of the Board and the Company’s
employees, all board meetings have
been held by videoconference.
At each meeting of the Board, there
was a closed session held in which only
the Chair and the other Non-Executive
Directors participated.
The schedule of Board and Committee
meetings each year is, so far as is
possible, determined before the
commencement of that year and
all Directors or, if applicable, all
Committee members, are expected to
attend each meeting.
Supplementary meetings of the Board
and/or the Committees are held as
and when necessary. Each member of
the Board receives in advance of each
scheduled meeting detailed Board
packages, which include an agenda
based upon matters to be addressed
and appropriate presentation and
background materials. If a Director
is unable to attend a meeting due to
exceptional circumstances, he or she
will nonetheless receive the meeting
materials and discuss the materials with
the Chief Executive Officer.
The Chair, Chief Executive Officer
and senior management team work
together to ensure that the Directors
receive relevant information to enable
them to discharge their duties and that
such information is accurate, timely
and clear. This information includes
quarterly management accounts
containing analysis of performance
against budget as well as a summary
of the operational performance
of each of our businesses against
its goals. Additional information is
provided as appropriate for the topics
being addressed at the meeting. At
each meeting, the Board receives
presentations from the Chief Executive
Officer and, by invitation, other
members of senior management as
required. This ensures that all Directors
are in a position to monitor effectively
our overall performance, and to
contribute to the development and
implementation of its strategy.
The majority of Board meetings
are held at our offices in Boston,
Massachusetts, U.S., which gives
Certain Directors also serve on the
boards of directors of our Founded
Entities. These Founded Entity boards
of directors meet regularly during the
year, as well as on an ad hoc basis as
required by business need. This service
enables the Directors to have deep
understanding of the businesses and
contribute significantly to the strategy
and oversight of these businesses.
Directors’ conflicts of interest
Each Director has a statutory duty
under the Companies Act 2006 (the
CA 2006) to avoid a situation in which
he or she has or can have a direct or
indirect interest that conflicts or may
potentially conflict with the interests of
the Company. This duty is in addition
to the continuing duty that a director
owes to the Company to disclose to the
Board any transaction or arrangement
under consideration by the Company
in which he or she is interested. The
Company’s Articles of Association
permit the Board to authorize conflicts
or potential conflicts of interest. The
Board has established procedures for
managing and, where appropriate,
authorizing any such conflicts or
potential conflicts of interest. In
deciding whether to authorize any
conflict, the Directors must have regard
to their general duties under the CA
2006 and their overriding obligation
to act in a way they consider, in good
faith, will be most likely to promote the
Company’s success. In addition, the
Directors are able to impose limits or
conditions when giving authorization
to a conflict or potential conflict of
interest if they think this is appropriate.
The authorization of any conflict matter,
and the terms of any authorization, may
be reviewed by the Board at any time.
The Board believes that the procedures
established to deal with conflicts of
interest are operating effectively.
Induction, awareness
and development
In preparation for the Company’s initial
public offering (IPO), all Directors
received an induction briefing from
the Company’s legal advisors on their
duties and responsibilities as Directors
of a publicly quoted company. The
Directors also received presentations
from the Company’s corporate brokers
prior to the IPO. In addition, in order
to ensure that the Directors continue
to further their understanding of
the challenges facing our Founded
Entities and Wholly Owned Pipeline,
the Board periodically receives the
presentations and reports covering the
business and operations of each of our
Founded Entities as well as its Wholly
Owned Pipeline.
We have put in place a comprehensive
induction plan for any new Directors.
This program will be tailored to the
needs of each individual Director and
agreed with him or her so that he or
she can gain a better understanding
of us and our businesses. In addition,
the Company facilitates sessions as
appropriate with our advisers, as well
as appropriate governance specialists,
to ensure that any new Directors are
fully aware of, and understand, their
responsibilities and obligations of a
publicly quoted company and of the
governance framework within which
they must operate.
Board effectiveness and
performance evaluation
The Board periodically reviews its
effectiveness and performance. The
Board seeks the assistance of an
independent third-party provider
at least once every three years in its
evaluation in compliance with the
Governance Code, and will otherwise
carry out an internally facilitated
Board evaluation led by the Senior
Independent Director, assisted by
the Company Secretary, covering
the effectiveness of the Board as a
whole, its individual Directors and
its Committees.
In addition to the above, the Non-
Executive Directors, led by the Senior
Independent Director, will periodically
appraise the Chair’s performance,
following which the Senior Independent
Director will provide any feedback to
the Chair. The performance of each
of the Directors on the Board and the
performance of the committees of the
Board will be reviewed by the Chair as
deemed necessary. The performance
of Executive Directors will be reviewed
by the Board on an ongoing basis, as
deemed necessary, in the absence of
the Executive Director under review.
PureTech Health plc Annual report and accounts 2021 119
Governance The Board — continued
Committees of the Board
The Board has three principal
committees: the Nomination
Committee, the Audit Committee and
the Remuneration Committee. The
composition of the three principal
committees of the Board and the
attendance of the members throughout
the year is set out in the respective
committee reports contained in this
Annual Report. The terms of reference
of each committee are available on
request from the Company Secretary
and within the Investors section of our
website at www.puretechhealth.com.
Internal Control
The Board fully recognizes the
importance of the guidance
contained in the Guidance on Risk
Management, Internal Control and
Related Financial and Business
Reporting. Our internal controls were
in place during the whole of 2021,
with a material weakness related to
our risk assessment process over the
design and implementation of our
management review controls over the
valuation of financial instruments, the
completeness and accuracy of related
sensitivity disclosures, the valuation
of share based payment liabilities and
completeness and the accuracy of
the tax provision. We concluded that
a similar material weakness existed
in the prior financial period. During
the year ended December 31, 2021,
the Company took certain steps
in its remediation plan, including
(i) designing and documenting
management review controls to address
the level of aggregation and criteria
for investigation, and (ii) implementing
more robust procedures over the
documentation of the performance of
these management review controls.
The Company has made progress
toward remediation and will continue
to implement its remediation plan for
the ongoing material weaknesses in
internal control over financial reporting
described. The material weaknesses
will not be considered remediated
until the applicable controls operate
for a sufficient period of time and
management has concluded, through
testing, that the controls are operating
effectively. Additionally, in connection
with the audit of our consolidated
financial statements as of and for the
year ended December 31, 2020, one
of the identified material weaknesses
related to a lack of segregation of
duties with regard to uploading and
posting journal entries in our previous
ERP system. We deployed a new ERP
system that went live on January 1,
2021, and as of December 31, 2021, this
material weakness was remediated.
The Board is responsible for
establishing and monitoring internal
control systems and for reviewing the
effectiveness of these systems. The
Board views the effective operation of
a rigorous system of internal control
as critical to our success; however,
it recognizes that such systems are
designed to manage rather than
eliminate risk of failure and can
provide only reasonable and not
absolute assurance against material
misstatement or loss. The key elements
of our internal control system, all of
which have been in place during the
financial year and up to the date these
financial statements were approved,
are as follows:
Control environment and procedures
We have a clear organizational
structure with defined responsibilities
and accountabilities. It adopts the
highest values surrounding quality,
integrity and ethics, and these values
are communicated clearly throughout
the whole organization. Detailed
written policies and procedures
have been established covering key
operating and compliance risk areas.
These policies and procedures are
reviewed and the effectiveness of the
systems of internal control is assessed
periodically by the Board.
Identification and evaluation of risks
The Board actively identifies and
evaluates the risks inherent in the
business and ensures that appropriate
controls and procedures are in place
to manage these risks. The Board
obtains an update regarding our Wholly
Owned Pipeline and all Founded
Entities on a regular basis and reviews
our performance and the performance
of our Wholly Owned Pipeline and
Founded Entities on a quarterly basis.
However, the performance of business
units may be reviewed more frequently
if deemed appropriate.
The key risks and uncertainties we face,
as well as the relevant mitigations, are
set out on pages 90 to 93 and in the
Additional Information section from
pages 217 to 251.
Information and financial
reporting systems
We evaluate and manage significant
risks associated with the process for
preparing consolidated accounts by
having in place systems and internal
controls that ensure adequate
accounting records are maintained and
transactions are recorded accurately
and fairly to permit the preparation
of financial statements in accordance
with IFRS. The Board approves the
annual operating budgets and regularly
receives details of actual performance
measured against the budget.
Principal risks and uncertainties
Our operations and the implementation
of our objectives and strategy are
subject to a number of key risks
and uncertainties. Risks are formally
reviewed by the Board at least annually
and appropriate procedures are put
in place to monitor and, to the extent
possible, mitigate these risks.
A summary of the key risks affecting us
and the steps taken to manage these
risks is set out on pages 90 to 93 and in
the Additional Information section from
pages 217 to 251.
Political expenditure
It is the Board’s policy not to incur
political expenditure or otherwise
make cash contributions to political
parties and it has no intention of
changing that policy.
2022 Annual General Meeting
The Notice of the AGM, which will be
held at 11:00 am EDT (4:00 pm BST)
on June 15, 2022 at the Company’s
headquarters at 6 Tide Street in Boston,
Massachusetts, U.S. is enclosed with
this report. Details of the resolutions
and the explanatory notes thereto are
included with the Notice. To ensure
compliance with the Governance
Code, the Board proposes separate
resolutions for each issue and proxy
forms allow shareholders who are
unable to attend the AGM to vote for
or against or to withhold their vote
on each resolution. In addition, to
encourage shareholders to participate
in the AGM process, the Company
proposes to offer electronic proxy
voting through the Registrar’s
website and through the CREST
service. The results of all proxy voting
will be published on our website
after the AGM.
Our website at www.puretechhealth.com
is the primary source of information on
us. The website includes an overview of
our activities, details of our businesses,
and details of all of our recent
announcements.
120 PureTech Health plc Annual report and accounts 2021
Governance Relations with Stakeholders – Section 172 Statement
The Board recognizes its duties under Section 172 of the Companies Act 2006 and continuously has regard to how the
Company’s activities and decisions will impact investors, employees, those with whom it has a business relationship, the
community and environment and its reputation for high standards of business conduct. In weighing all of the relevant factors,
the Board, acting in good faith and fairly between members, makes decisions and takes actions that it considers will best
lead to the long- term success of the Company. In accordance with Section 172, it is the responsibility of the Board as a whole
to ensure that a satisfactory dialogue takes place and that the Board considers the potential impact on the Company’s key
stakeholders when making decisions.
The Board is committed to understanding and engaging with shareholders and other key stakeholder groups of the Company
in order to maximize value and promote long-term Company success in line with our strategic objectives, as well as to
promote and ensure fairness between our stakeholders. The Board believes that appropriate steps and considerations have
been taken during the year so that each Director has an understanding of the various key stakeholders of the Company.
The Board recognizes its responsibility to contemplate all such stakeholder needs and concerns as part of its discussions,
decision-making, and in the course of taking actions and will continue to make stakeholder engagement a top priority in
the coming years.
During the year, the Board assessed its current activities between the Board and its stakeholders, which demonstrated that
the Board actively engages with its stakeholders and takes their various objectives into consideration when making decisions.
Stakeholder
How we engage
Key matters identified
Further information
• Governance Section of
ARA (Pages 90 to 146)
• ESG Report (Pages 73
to 89)
• Karuna disposals
(Page 94)
• Remuneration Report
(Pages 131 to 146)
• Value for Investors
Section (Pages 23
to 34)
Investors
• Our shareholders are the owners and
investors in our business. We make
significant efforts to engage with
our shareholders and understand
their objectives. We engage with our
shareholders through a number of
mechanisms to ensure that shareholder
views are brought into the boardroom
and considered in our decision-making.
• The Board’s primary shareholder
contact is through the Chief Executive
Officer. The Chair, the Senior
Independent Director and other
Directors, as appropriate, make
themselves available for contact
with major shareholders and other
stakeholders in order to understand
their issues and concerns.
• Stakeholder engagement will often take
place by the Executive Directors and
senior management through investor
meetings and investor roadshows,
including participation at healthcare
conferences and participating in fireside
chats at those events, with the Board
receiving regular updates by way of
analysis reports on stakeholder views.
• Meetings were held throughout the
year with institutional shareholders.
Key shareholder publications
including the annual report, the
full year and half year results
announcements and press releases
and the information for investors are
available on the Company’s website:
www.puretechhealth.com.
• Our Board keeps its Strategy and
Business Model under regular review.
During the past year, the Board
has engaged to carefully consider
its strategy for future growth and
development, in particular devoting
attention to the future prospects
of its business model and its listing
venues and the risks and opportunities
this would give to the Company’s
stakeholders.
• The company carefully manages its
expenditure and anticipates future
capital needs through careful capital
management and capital allocation
to its Wholly Owned Programs and
clinical trials as well as opportunities to
secure financing from third parties, for
example the $110m Series D financing
for Akili in May 2021 and the $68m
Series D financing for Vedanta in July
2021. Our Board also carefully considers
opportunities for disposal of shares
held in its Founded Entities such as the
disposals of shares in Karuna raising
$118m in February 2021 and $100m in
November 2021.
• During 2021, the Board welcomed
Bharatt Chowrira to the Board as
an Executive Director and saw
the retirement of Steve Muniz as
an Executive Director. The Board
seeks to ensure appropriate board
structure suitable for a Company of
PureTech’s size.
• The Board recognizes the importance
of Diversity, Equity and Inclusion and is
delighted to be one of the few FTSE250
companies with a female CEO.
PureTech Health plc Annual report and accounts 2021 121
Governance Relations with Stakeholders – Section 172 Statement — continued
Stakeholder
How we engage
Key matters identified
Further information
Our People
• Our employees are crucial to the
success of our business and many key
decisions made by our Board have
an impact on them. It is important to
understand the employee perspective
and ensure that we maintain an
engaged workforce, as we believe that
this will lead to better business results.
We engage with our employees in
various ways to ensure that their voice
is heard in the management of our
business including:
– The conduct of regular Town
Hall Meetings, email briefings
to employees on key events as
well as communication through
the company intranet site and an
engagement survey
– The implementation of regular
appraisals and personal
development programs
• We are committed to supporting the
communities in which we operate and
the wider public. To that end, we have
developed various mechanisms for
engagement including:
– Internships/partnerships with local
universities and programs
– Charitable giving
– Building Certifications
– Therapeutic Focus
Community &
Environment
• ESG Report (Pages 73
to 89)
• Remuneration Report
(Pages 131 to 146)
• Strategic Report
(Pages 1 to 72)
• ESG Report (Pages 73
to 89)
• LYT-100 Long COVID
Study (Page 26)
• The Board recognizes the importance of
an incentivized and engaged workforce,
especially in the competitive greater
Boston area. The Board engages to
ensure the remuneration and benefit
packages are competitive.
• The Board aims to attract and retain
employees through an established
personal management and
development program, with a view to
development of the individual in an
inclusive environment where employees
from diverse backgrounds can thrive.
• We are proud to be a company
dedicated to discovering, developing
and commercializing highly
differentiated medicines for devastating
diseases where limited or no treatment
options currently exist for patients and
believe we have established a business
where our employees are proud to work.
• We are committed to improving our
practices to ensure our business
operates on a sustainable basis. In
particular we have created an ESG
committee chaired by one of our
Non-Executive Directors to guide our
sustainability initiatives. Our business
Is a low carbon emissions and we are
committed to delivering long term
environmental sustainability.
• We partner with local universities and
programs to offer paid internship and
externship programs, generally within
technical fields in our development
organization.
• The company engages with local
community and supports charitable
causes. In particular, in 2021 and
through the January 2022 post-
period, PureTech made charitable
contributions to Life Sciences Cares,
The Greater Boston Food Bank (GBFB),
Lymphatic Education & Research
Network (LE&RN), Langer Prize for
Innovation & Entrepreneurial Excellence
Fellowship, and Fred Hutchinson
Cancer Research Center.
Suppliers/
Business
Partners
• Our business model creates value
• We aim to build clear and reliable
through partnerships and relationships
with various key collaborators, and we
continually evaluate how to strengthen
relationships and arrangements with
these institutions and individuals. Our
engagement in 2021 included:
– Quality updates and quality audits
– Meetings with key surgeons to
understand/identify potential
indications and applications for
therapeutics
– Partnerships – Imbrium, BeiGene,
Eli Lilly
supply arrangements with our contract
manufacturers for clinical product
supply, in particular with an emphasis on
quality, especially in relation to a clinical
environment.
• We seek partnerships with other life
sciences organizations to secure non-
dilutive funding, access to development
opportunities, and access to materials
for our clinical trials.
• Value for Investors
(Pages 23 to 34)
• LYT-503/IMB-150
(Page 50)
• LYT-200 (Pages 41
to 43)
• Entrega (Page 72)
122 PureTech Health plc Annual report and accounts 2021
Governance Directors’ Report for the year ended December 31, 2021
The Directors present their report and
the audited consolidated financial
statements for the financial year ended
December 31, 2021.
Certain disclosure requirements for
inclusion in this report have been
incorporated by way of cross reference
to the Strategic Report, the Directors’
Remuneration Report and the ESG
Report which should be read in
conjunction with this report.
The Company was incorporated on
May 8, 2015 as a public company
limited by shares in the UK and has a
registered office situated at 8th Floor,
20 Farringdon Street, London, EC4A
4AB, United Kingdom. The Company
was admitted to the premium listing
segment of the Official List of the
UK Listing Authority and to trading
on the main market of the London
Stock Exchange on June 24, 2015.
The Company’s American Depository
Shares, each representing 10 ordinary
shares, began trading on the Nasdaq
Global Market on November 16, 2020.
Directors
The membership of the Board can
be found below, and biographical
details of the directors can be found
on pages 112 to 116 and are deemed to
be incorporated into this report.
Descriptions of the terms of the
directors’ service contracts are set
forth on page 137 and page 144
of this report.
All directors shall retire from
office and will offer themselves for
reappointment by the members at the
Company’s upcoming AGM.
Details of the interests of directors in
the share capital of the Company as of
December 31, 2021 are set out in the
Annual Report on Remuneration on
page 144 and Note 24 to the financial
statements, located on page 207. There
have been no changes in such interests
from December 31, 2021 to March 31,
2022, except as specifically set forth in
those sections.
Results and dividends
We generated a loss for the year ended
December 31, 2021 of $62.7 million
(2020: income of $4.5 million).
The Directors do not recommend the
payment of a dividend for the year
ended December 31, 2021 (2020: nil).
Share capital
As of December 31, 2021, the ordinary
issued share capital of the Company
stood at 287,796,585 shares of £0.01
each, including shares issuable
upon conversion of outstanding
ADSs. Details on share capital are
set out in Note 14 to the financial
statements, page 191.
The Company’s issued ordinary
share capital comprises a single
class of ordinary shares. Details on
movements in issued share capital can
be found in Note 14 to the financial
statements, page 191.
Rights of ordinary shares
All of the Company’s issued ordinary
shares are fully paid up and rank pari
passu in all respects and there are no
special rights with regard to control of
the Company. There are no restrictions
on the transfer of ordinary shares or on
the exercise of voting rights attached
to them, which are governed by the
Articles of Association and relevant UK
legislation. The Directors are not aware
of any agreements between holders of
the Company’s shares that may result in
restrictions on the transfer of securities
or in voting rights.
The shares in the Company issued to
former holders of Ariya Therapeutics
Inc. securities were subject to lock up
agreements with the Company and
were not tradable until such restrictions
lapsed on October 1, 2021.
Substantial shareholders
As of March 31, 2022, the Company had
been advised that the shareholders
listed on page 124 hold interests
of 3 percent or more in its ordinary
share capital (other than interests
of the Directors which are detailed
on page 144 of the Directors’
Remuneration Report). Other than as
shown, so far as the Company (and its
Directors) are aware, no other person
holds or is beneficially interested in a
disclosable interest in the Company.
Powers of the Directors
Subject to the Company’s Articles of
Association, UK legislation and any
directions given by special resolution,
the business of the Company is
managed by the Board of Directors.
Details of the matters reserved for the
Board can be found in the Corporate
Governance Report on page 117.
Articles of Association
The Articles of Association of the
Company can only be amended by
special resolution at a general meeting
of the shareholders. No amendments
are proposed at The 2022 AGM.
Ms. Sharon Barber-Lui was appointed to the Board as a Non-Executive Director on March 24, 2022.
The following have served as Directors of the Company during the 2021 financial year.
Name
Role
Age
(as of December 31, 2021)
Mr. Christopher Viehbacher Non-Executive Chair
Ms. Daphne Zohar
Dame Marjorie Scardino
Dr. Robert Langer
Dr. Raju Kucherlapati
Dr. John LaMattina
Ms. Kiran Mazumdar-Shaw
Dr. Bharatt Chowrira
Chief Executive Officer
Senior Independent Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
President; Chief Business, Legal and Operating Officer;
Company Secretary (appointed February 2021)
Chief Operating Officer (retired May 2021)
Mr. Stephen Muniz
61
51
74
73
78
71
68
56
51
PureTech Health plc Annual report and accounts 2021 123
Governance Directors’ Report for the year ended December 31, 2021 — continued
Directors’ liabilities
(Directors’ indemnities)
As at the date of this report, the
Company has granted qualifying
third party indemnities to each of
its Directors against any liability
that attaches to them in defending
proceedings brought against them, to
the extent permitted by the Companies
Act. In addition, Directors and officers
of the Company and its Founded
Entities have been and continue to
be covered by directors’ and officers’
liability insurance.
See further description of indemnity
and insurance on page 118.
Political donations
No political contributions/donations
for political purposes were made by
the Company or any of our affiliate
companies to any political party,
politician, elected official or candidate
for public office during the financial year
ended December 31, 2021 (2020: nil).
Significant agreements
There are no agreements between
the Company or any of our affiliate
companies and any of its employees
or any Director which provide for
compensation to be paid to an
employee or a Director for loss of
office as a consequence of a takeover
of the Company.
Compliance with the UK Corporate
Governance Code
The Directors are committed to a high
standard of corporate governance and
compliance with the best practice of
the UK Corporate Governance Code
(Governance Code) published in July
2018. The Governance Code is available
at the Financial Reporting Council
website at www.frc.org.uk.
The Directors consider that the
Company has, throughout the year
ended December 31, 2021, applied
the main principles and complied
with the provisions set out in the
Governance Code with the following
exception: contrary to provision 24
of the Governance Code, the Chair,
Mr. Christopher Viehbacher, was
also Chair of the Audit Committee
in 2021. The Board believes that
Mr. Viehbacher’s professional
background and experience, together
with his past participation on such
committee for the past five years,
made him a valuable member of
the Audit Committee and that his
membership was in the best interests
of the Company’s shareholders.
Mr. Viehbacher was appointed Chair
in September 2019. Immediately
following the publication of its Annual
Report and Accounts for the year
ended December 31, 2021, Ms. Sharon
Barber-Lui will become the Chair of the
Audit Committee, and Mr. Viehbacher
will step down as the Chair of the
Audit Committee but remain a
member thereof.
Further explanation as to how the
provisions set out in the Governance
Code have been applied by the
Company is provided in this Report, the
Report of the Nomination Committee
and the Report of the Audit Committee.
Financial instruments
The financial risk management and
internal control processes and policies,
and exposure to the risks associated
with financial instruments can be found
in Note 16 to the financial statements
and the Corporate Governance section
of the Annual Report on page 129.
Sustainable development and
environmental matters
Details of the Company’s policies and
performance, as well as disclosures
concerning GHG emissions, are
provided in the ESG Report on
pages 73 to 89.
Related party transactions
Details of related party transactions
can be found in Note 24 of the financial
statements on pages 206 to 207.
Issuances of equity by major
subsidiary undertaking
In April 2021 and November 2021,
Sonde issued convertible promissory
notes in the principal aggregate
amount of $4.3 million. PureTech
Health LLC participated and invested
$2.1 million in the notes.
In July 2021, Vedanta completed Its
Series D financing round In which
It Issued and sold an aggregate of
2,387,675 shares of preferred stock for
aggregate proceeds of approximately
$68 million, of which purchased 174,520
shares for an aggregate purchase price
of $5.0 million.
Future business developments
Information on the Company and its
Wholly Owned Pipeline and Founded
Entities’ future developments can
be found in the Strategic Report on
pages 35 to 72.
Risk and internal controls
The principal risks we face are set out
on pages 90 to 93 and in the Additional
Information section from pages
217 to 251. The Audit Committee’s
assessment of internal controls is laid
out on page 129.
Subsequent Events
Research and Development
Information on our research and
development activities can be found in
the Strategic Report on pages 35 to 72.
Going concern
As of December 31, 2021, the directors
had a reasonable expectation that we
had adequate resources to continue
in operational existence into the first
quarter of 2025.
Shareholder
Invesco Asset Management Limited
Baillie Gifford & Co
Lansdowne Partners International Limited
M&G Investment Management, LTD
Miller Value Partners
Recordati SA
%
22.51
10.28
8.66
4.20
3.66
3.32
* Represents an entity that is not a major subsidiary undertaking of the Company.
124 PureTech Health plc Annual report and accounts 2021
Governance Directors’ Report for the year ended December 31, 2021 — continued
Annual General Meeting
The Notice of the AGM, which will be held at 11:00 am EDT (4:00 pm BST) on June 15, 2022 at the Company’s headquarters
at 6 Tide Street in Boston, Massachusetts, U.S. is enclosed with this report. Details of the resolutions and the explanatory
notes thereto are included with the Notice. To ensure compliance with the Governance Code, the Board proposes separate
resolutions for each issue and proxy forms allow shareholders who are unable to attend the AGM to vote for or against or
to withhold their vote on each resolution. In addition, to encourage shareholders to participate in the AGM process, the
Company proposes to offer electronic proxy voting through the Registrar’s website and through the CREST service. The
results of all proxy voting will be published on our website after the AGM.
The Notice of the Meeting, together with an explanation of the items of business, will be contained in a circular to
shareholders to be dated April 26, 2022.
Pension schemes
Information on the Company’s 401K Plan can be found in the Annual Report on Remuneration on page 133.
Disclosure of information under Listing Rule 9.8.4R
For the purposes of LR 9.8.4R, the information required to be disclosed can be found in the sections of the Annual Report and
Financial Statements listed in the table below.
Listing Rule Requirement
Location in Annual Report
A statement of the amount of interest capitalized during the
period under review and details of any related tax relief.
Information required in relation to the publication of unaudited financial information.
Details of any long-term incentive schemes.
Details of any arrangements under which a Director has waived emoluments,
or agreed to waive any future emoluments, from the Company.
Details of any non-pre-emptive issues of equity for cash.
Details of any non-pre-emptive issues of equity for cash
by any unlisted major subsidiary undertaking.
Details of parent participation in a placing by a listed subsidiary.
Details of any contract of significance in which a Director is or was materially interested.
Details of any contract of significance between the Company (or
one of its subsidiaries) and a controlling shareholder.
Details of any provision of services by a controlling shareholder.
Details of waiver of dividends or future dividends by a shareholder.
Where a shareholder has agreed to waive dividends, details of such waiver, together
with those relating to dividends which are payable during the period under review.
N/A
N/A
Directors’ Remuneration Report,
page 131
N/A
N/A
Directors’ Report, page 124
N/A
N/A
N/A
N/A
N/A
N/A
Board statements in respect of relationship agreement with the controlling shareholder.
N/A
Whistleblowing, anti-bribery and corruption
We seek at all times to conduct our business with the highest standards of integrity and honesty. We also have an anti-bribery
and corruption policy which prohibits our employees from engaging in bribery or any other form of corruption. In addition, we
have a whistleblowing policy under which staff are encouraged to report to the Chief Executive Officer or the President, any
alleged wrongdoing, breach of a legal obligation or improper conduct by or on the part of us or any of our officers, Directors,
employees, consultants or advisors.
PureTech Health plc Annual report and accounts 2021 125
Governance Directors’ Report for the year ended December 31, 2021 — continued
Appointment of auditor
KPMG LLP, the external Auditor of
the Company, was appointed in
2015 and a resolution proposing its
reappointment will be proposed at the
forthcoming AGM.
Disclosure of information to auditor
The Directors who held office at the
date of approval of this Directors’
report confirm that:
• so far as the Director is aware, there
is no relevant audit information
of which the Company’s Auditor
is unaware; and
• the Director has taken all steps that
he/she ought to have taken as a
Director in order to make himself/
herself aware of any relevant audit
information and to establish that
the Company’s Auditor is aware of
that information.
This confirmation is given and
should be interpreted in accordance
with the provisions of Section 418
of the CA 2006.
Statement of Directors’
responsibilities in respect of
the Annual Report and the
financial statements
The directors are responsible for
preparing the Annual Report and the
Group and parent Company financial
statements in accordance with
applicable law and regulations.
Company law requires the directors to
prepare Group and parent Company
financial statements for each financial
year. Under that law they are required
to prepare the Group financial
statements in accordance with UK-
adopted international accounting
standards and applicable law and have
elected to prepare the parent Company
financial statements on the same
basis. In addition, the Group financial
statements are required under the UK
Disclosure Guidance and Transparency
Rules to be prepared in accordance
with the UK-adopted international
accounting standards.
Under company law the directors must
not approve the financial statements
unless they are satisfied that they
give a true and fair view of the state
of affairs of the Group and parent
Company and of the Group’s profit or
loss for that period. In preparing each
of the Group and parent Company
financial statements, the directors
are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and estimates that
are reasonable, relevant and reliable;
• state whether they have been
prepared in accordance with
the UK-adopted international
accounting standards;
• assess the Group and parent
Company’s ability to continue
as a going concern, disclosing,
as applicable, matters related to
going concern; and
• use the going concern basis of
accounting unless they either intend
to liquidate the Group or the parent
Company or to cease operations,
or have no realistic alternative
but to do so.
The directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the parent Company’s transactions and
disclose with reasonable accuracy at
any time the financial position of the
parent Company and enable them to
ensure that its financial statements
comply with the Companies Act 2006.
They are responsible for such internal
control as they determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud or
error, and have general responsibility
for taking such steps as are reasonably
open to them to safeguard the assets
of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations,
the directors are also responsible for
preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report
and Corporate Governance Statement
that complies with that law and
those regulations.
The directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the company’s website.
Legislation in the UK governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Responsibility statement of the
directors in respect of the annual
financial report
We confirm that to the best of
our knowledge:
• the financial statements, prepared in
accordance with the applicable set
of accounting standards, give a true
and fair view of the assets, liabilities,
financial position and profit or loss of
the company and the undertakings
included in the consolidation taken
as a whole; and
• the strategic report includes a
fair review of the development
and performance of the business
and the position of the issuer and
the undertakings included in the
consolidation taken as a whole,
together with a description of the
principal risks and uncertainties
that they face.
We consider the annual report and
accounts, taken as a whole, is fair,
balanced and understandable and
provides the information necessary
for shareholders to assess the Group’s
position and performance, business
model and strategy.
By Order of the Board
Daphne Zohar
Founder, Chief Executive Officer and Director
April 25, 2022
126 PureTech Health plc Annual report and accounts 2021
Governance
Diversity policy
Diversity within the Company’s
Board is essential in maximizing its
effectiveness, as it enriches debates,
business planning and problem-
solving. The Company approaches
diversity in its widest sense so as
to recruit the best talent available,
based on merit and assessed against
objective criteria of skills, knowledge,
independence and experience as
well as other criteria such as gender,
age and ethnicity. The Company will
adhere to a strategy of recruiting
individuals who meet these criteria as
it searches for additional independent
Non-Executive Directors to the Board,
as discussed below. The Committee’s
primary objective is to ensure that
the Company maintains the strongest
possible leadership.
Information regarding the Company’s
diversity efforts can be found in the
ESG Report on pages 73 to 89.
Board and Committee evaluation
Information regarding the evaluation
of the Board and its Committees can
be found on page 119.
Report of the Nomination Committee
Dame Marjorie
Scardino
Chair, Nomination
Committee
Committee responsibilities
The Nomination Committee
assists the Board in discharging
its responsibilities relating to the
composition and make-up of the Board
and any Committees of the Board.
It is also responsible for periodically
reviewing the Board’s structure and
identifying potential candidates to be
appointed as Directors or Committee
members as the need may arise. The
Nomination Committee is responsible
for evaluating the balance of skills,
knowledge and experience and the
size, structure and composition of the
Board and Committees of the Board,
retirements and appointments of
additional and replacement Directors
and Committee members, and makes
appropriate recommendations to the
Board on such matters. A full copy of
the Committee’s Terms of Reference is
available on request from the Company
Secretary and within the Investor’s
section on Company’s website at
www.puretechhealth.com.
Committee membership
The Nomination Committee consisted
of Dame Marjorie Scardino, who served
as the committee’s Chair, Dr. Robert
Langer, and Ms. Kiran Mazumdar-Shaw.
The biographies of the Nomination
Committee members can be found
on pages 112 to 113.
The Governance Code requires
that a majority of the members of
a nomination committee should be
independent Non-Executive Directors.
In making their determination for
the year 2021, the Board regarded
Dame Marjorie Scardino, Dr. Langer
and Ms. Mazumdar-Shaw as meeting
the independence criteria set out
in the Governance Code as it is
applied to their service on the
Nomination Committee. In reaching
this determination, the Board duly
considered (i) their directorships and
links with other Directors through
their involvement in other Founded
Entities; (ii) their equity interests in
PureTech Health and/or the Founded
Entities; and (iii) the circumstance that
Dr. Langer is a founding Director of
the Company. The Board also duly
considered the extent to which these
matters may impact their service on
the Nomination Committee. After
such consideration, the Board has
determined Dame Marjorie Scardino,
Dr. Langer and Ms. Mazumdar-Shaw
to be independent in character and
judgement and free from relationships
or circumstances which might affect,
or appear to affect, the Directors’
judgement in their service on the
Nomination Committee.
The Nomination Committee meets
as required to initiate the selection
process of, and make recommendations
to, the Board with regard to the
appointment of new Directors. During
2021, the Nomination Committee met
one time to review the structure, size
and composition of the Board in light
of the requirements of the Governance
Code. Dame Marjorie Scardino
and Dr. Langer participated in the
meeting. The Chief Executive Officer
and the President were invited to and
attended the meeting.
PureTech Health plc Annual report and accounts 2021 127
Governance Report of the Audit Committee
Mr. Christopher
Viehbacher
Chair, Audit
Committee
Committee responsibilities
The Audit Committee monitors the
integrity of our financial statements
and reviews all proposed annual and
half-yearly results announcements
to be made by us with consideration
being given to any significant financial
reporting judgements contained in
them. The Committee also advises
the Board on whether it believes the
annual report and accounts, taken
as a whole, are fair, balanced and
understandable and provide the
information necessary for shareholders
to assess the Company’s position
and performance, business model
and strategy. The Committee also
considers internal controls, compliance
with legal requirements, the FCA’s
Listing Rules, Disclosure Guidance and
Transparency Rules, and reviews any
recommendations from the Group’s
Auditor regarding improvements to
internal controls and the adequacy of
resources within our finance function. A
full copy of the Committee’s Terms of
Reference is available on request from
the Company Secretary and within the
Investor’s section on the Company’s
website at www.puretechhealth.com.
Committee membership
The Committee consisted of three
independent Non-Executive Directors,
Mr. Christopher Viehbacher, Dr. Raju
Kucherlapati and Dame Marjorie
Scardino, until Ms. Sharon Barber-
Lui joined the Committee upon her
appointment to the Board on March 24,
2022. Mr. Viehbacher served as Chair
of the Committee. Mr. Viehbacher has
experience as a Chartered Accountant
and has held numerous senior executive
positions in his career. The Board
has deemed this to be recent and
relevant financial experience, qualifying
him to be Chair of the Committee.
The biographies of the Committee
members can be found on pages 112
to 113. The Committee met four times
during the year, with Mr. Viehbacher,
Dr. Kucherlapati and Dame Marjorie
Scardino each attending all four
meetings. The Chief Financial Officer
and the external Auditor were invited to
and attended all of the meetings. The
Chief Executive Officer and President
also attended certain of the meetings.
When appropriate, the Committee met
with the Auditor without any members
of the executive management team
being present. Immediately following
the Company’s publication of Its
Annual Report and Accounts for the
year ended December 31, 2021, Ms.
Barber-Lui will become the Chair of the
Audit Committee, and Mr. Viehbacher
will step down as the Chair of the Audit
Committee but remain a member
thereof. Ms. Barber-Lui has accounting
experience, is currently the Senior Vice
President of Finance at EQRx, Inc., a
publicly-traded U.S. company (Nasdaq:
EQRX), and has held a number of
senior finance and executive leadership
positions In her career. The Board has
deemed this to be recent and relevant
financial experience qualifying her to be
Chair of the Committee.
Activities during the year
The activities undertaken by the
Committee were the normal recurring
items, the most important of which
are noted below.
Significant issues considered in
relation to the financial statements
The Committee considered, in
conjunction with management and
the external auditor, the significant
areas of estimation, judgement
and possible error in preparing the
financial statements and disclosures,
discussed how these were addressed
and approved the conclusions of this
work. The principal areas of focus in
this regard were:
Valuation of investments and
intercompany receivable balances
held by the Parent Company
The significant issue is the recoverability
of the investment by the Company,
due to its materiality in the context
of the total assets of the Company.
The carrying value of investments in
Founded Entities and intercompany
receivables is supported by our
underlying assets. The Committee was
satisfied with the conclusion reached.
Valuation of financial instruments;
investments in Gelesis and Akili
preferred share financial assets,
Vedanta and Follica preferred shares
financial liabilities and Follica and
Vedanta warrants financial liabilities
An area of material judgement in our
financial statements and, therefore,
audit risk relates to the valuation of
third party held preferred shares
classified as liabilities, convertible
loan notes and warrants measured
at fair value through profit/loss,
which at year end had a carrying
value totaling $183 million (2020 –
$152 million), as well as investments
held at fair value that do not have a
quoted active market price which at
year end had a carrying value totaling
$240 million (2020 – $207 million). We
considered the underlying economics
of the valuations of the Founded
Entities and the investees and sought
external expertise in determining
the appropriate valuation of the
liabilities and investments. These
valuations rely, in large part, on the
valuation of our programs and values
of recent transactions and determine
the amount of gain (loss) on the
financial instruments.
Classification of new preferred shares
and convertible loan notes including
identification and classification of any
embedded derivatives
As part of our strategy to finance the
Founded Entities, we issue financial
instruments commensurate with the
economics of each transaction. These
financial instruments can include
preferred shares, convertible notes,
warrants and loans payable. Often
these arrangements contain terms
that can make it difficult to determine
whether the financial instrument should
be classified as debt or equity on our
statement of financial position. We
considered the pertinent terms and
underlying economics of the financial
instruments and have appropriately
classified them as debt or equity. The
Committee believes that we considered
the pertinent terms and underlying
economics of each of the financial
instruments, as well as the advice of
external experts, and has appropriately
classified them as debt or equity.
128 PureTech Health plc Annual report and accounts 2021
Governance Report of the Audit Committee — continued
Regulatory compliance
Compliance
Internal audit
We do not maintain a separate internal
audit function. This is principally due
to our size, where close control over
operations is exercised by a small
number of executives. In assessing the
need for an internal audit function,
the Committee considered the risk
assessment performed by management
to identify key areas of assurance and
the whole system of internal financial
and operational controls. The Company
achieves internal assurance by
performing the risk assessment of the
key areas of assurance and maintaining
related key internal controls.
External audit
We have engaged KPMG LLP as our
Auditor since 2015. The current audit
partner is Robert Seale who has been
our audit partner since June 2019.
The effectiveness of the external audit
process is dependent on appropriate
risk identification. In October 2021, the
Committee discussed the Auditor’s
audit plan for 2021. This included a
summary of the proposed audit scope
and a summary of what the Auditor
considered to be the most significant
financial reporting risks facing us
together with the Auditor’s proposed
audit approach to these significant
risk areas. The main areas of audit
focus for the year were (a) the valuation
of investments and intercompany
receivable balances held by the Parent
Company, (b) Valuation of financial
instruments; investments in Gelesis and
Akili preferred share financial assets,
Vedanta and Follica preferred shares
financial liabilities and Follica and
Vedanta warrants financial liabilities and
(c) Classification of new preferred shares
and convertible loan notes including
identification and classification of any
embedded derivatives.
Ensuring compliance for FCA
regulated businesses also represents
an important control risk from the
perspective of the Committee. We
engage with outside counsel and other
advisors on a regular basis to ensure
compliance with legal requirements.
Review of Annual Report and
Accounts and Half-yearly Report
The Committee carried out a
thorough review of our 2021 Annual
Report and Accounts and our 2021
Half-yearly Report resulting in
the recommendation of both for
approval by the Board. In carrying
out its review, the Committee gave
particular consideration to whether
the Annual Report, taken as a whole,
was fair, balanced and understandable,
concluding that it was. It did this
primarily through consideration of the
reporting of our business model and
strategy, the competitive landscape in
which it operates, the significant risks
it faces, the progress made against its
strategic objectives and the progress
made by, and changes in fair value of,
its Founded Entities during the year.
Going concern
At least annually, the Committee
considers the going concern principle
on which the financial statements are
prepared. As a business which seeks
to fund the development of its Wholly
Owned Pipeline, as well as support
its Founded Entities with further
capital, the business model is currently
inherently cash consuming.
As of December 31, 2021, we had
sufficient cash reserves to extend
operations over a three-year period into
the first quarter of 2025.
Therefore, while an inability of the
Wholly Owned Pipeline and Founded
Entities to raise funds through equity
financings with outside investors,
strategic arrangements, licensing deals
or debt facilities may require us to
modify our level of capital deployment
into our Wholly Owned Pipeline and
Founded Entities or to more actively
seek to monetize one or more Founded
Entities, it would not threaten our
viability overall.
The Committee has had a role in
supporting our compliance with the
Governance Code, which applies to us
for the 2021 financial year. The Board
has included a statement regarding our
longer-term viability on page 94. The
Committee worked with management
and assessed that there is a robust
process in place to support the
statement made by the Board.
Similarly, the Committee worked with
management to ensure that the current
processes underpinning its oversight
of internal controls provide appropriate
support for the Board’s statement on
the effectiveness of risk management
and internal controls.
Risk and internal controls
The principal risks we face are set
out on pages 70 to 73 and in the
Additional Information section from
pages 217 to 251.
The Committee has directed that
management engage in a continuous
process to review internal controls
around financial reporting and
safeguarding of assets. Management
has engaged external advisors to
complete internal control testing on
behalf of management for the 2021
financial year and the results were
presented to the Committee. With the
exception of the material weakness
related to our risk assessment process
over the design and implementation of
our management review controls over
the valuation of financial instruments,
the completeness and accuracy of
related sensitivity disclosures, the
valuation of share based payment
liabilities and completeness and the
accuracy of the tax provision, the
Committee believes that we have
adequate controls and appropriate
plans to evolve the control structure in
anticipation of increased complexity of
the business model and operations.
We have a formal whistleblowing policy.
The Committee is satisfied that the
policy has been designed to encourage
staff to report suspected wrongdoing
as soon as possible, to provide staff
with guidance on how to raise those
concerns, and to ensure staff that
they should be able to raise genuine
concerns without fear of reprisals, even
if they turn out to be mistaken.
PureTech Health plc Annual report and accounts 2021 129
Governance Report of the Audit Committee — continued
Appointment and independence
The Committee advises the Board
on the appointment of the external
Auditor and on its remuneration
both for audit and non-audit work,
and discusses the nature, scope and
results of the audit with the external
Auditor. The Committee keeps under
review the cost-effectiveness and the
independence and objectivity of the
external Auditor. Controls in place to
ensure this include monitoring the
independence and effectiveness of
the audit, a policy on the engagement
of the external Auditor to supply
non-audit services, and a review of
the scope of the audit and fee and
performance of the external Auditor.
The Audit Committee ensures that at
least once every ten years the audit
services contract is put out to tender to
enable us to compare the quality and
effectiveness of the services provided
by the incumbent auditor with those of
other audit firms.
Non-audit work
The Committee approves all fees paid
to the Auditor for non-audit work.
Where appropriate, the Committee
sanctions the use of KPMG LLP for
non-audit services in accordance with
our non-audit services policy. During
2021 KPMG LLP did not provide any
non-audit related services. Therefore
the ratio of non-audit work to audit
work was nil, which the committee
is satisfied does not breach the
independence of KPMG LLP.
Christopher Viehbacher
Chair of Audit Committee
April 25, 2022
130 PureTech Health plc Annual report and accounts 2021
Governance Directors’ Remuneration Report for
the year ended December 31, 2021
Dr. John LaMattina
Chair,
Remuneration
Committee
The Directors’ Remuneration Report is
split into three sections, namely:
• This Annual Statement:
summarizing and explaining the
major decisions on Directors’
remuneration in the year;
• The Directors’ Remuneration Policy:
setting out the framework for
remuneration for our Directors in
2022 on pages 133 to 137; and
• The Annual Report on Remuneration:
setting out the implementation
of the Remuneration Policy in the
year ended December 31, 2021 on
pages 138 to 146.
The Company puts the Directors’
Remuneration Policy to a binding
vote of our shareholders every three
years (sooner if changes are required
to the Policy). The Annual Report on
Remuneration is subject to an annual
advisory vote of our shareholders.
The current Directors’ Remuneration
Policy was last approved at the 2021
AGM, and such approval is effective
until the 2024 AGM. The Annual Report
on Remuneration will be subject to
an advisory shareholder vote at the
forthcoming 2022 AGM.
Committee responsibilities
The Remuneration Committee’s
primary purpose is to assist
the Board in determining the
Company’s remuneration policies.
The Remuneration Committee has
the responsibility for setting the
remuneration policy for all Executive
Directors and the Chairman of the
Company, including pension rights
and compensation payments, and
in determining such policy must
take into account all factors which it
deems necessary including regulatory
requirements, with the objective of
attracting, retaining and motivating
executive management having
regard to views of shareholders and
stakeholders and the risk appetite
of the Company and alignment to
the Company’s long term goals and
strategic plan. The Remuneration
Committee also recommends and
monitors the level and structure of
remuneration for senior management.
The Remuneration Committee shall, in
consultation with the Chairman and/or
the Chief Executive Officer, determine
the total individual remuneration
package of each Executive Director,
including share awards. The
Remuneration Committee shall also
have regard to current information
for remuneration in other companies
of comparable scale and complexity
and can appoint remuneration
consultants to assist in such process.
The Remuneration Committee also has
responsibility to review the design of
all share incentive plans and determine
awards under such plans. A full copy of
the Remuneration Committee’s Terms
of Reference is available on request
from the Company Secretary and within
the Investors section of the Company’s
website at www.puretechhealth.com.
Committee membership
The Remuneration Committee consists
of Dr. Kucherlapati, Dr. LaMattina and
Ms. Mazumdar-Shaw, with Dr. LaMattina
serving as Chair of the Committee.
The biographies of the Committee
members can be found on pages 112
to 113. The Committee met three times
during the year, with each Committee
member in attendance for all of the
meetings. The Committee also acted
by unanimous written consent five times
during the year. The Chief Executive
Officer and the Chief Operating Officer
were invited to and attended all of the
meetings, with Mr. Muniz attending
each of the two meetings prior to his
retirement in May 2021. Dr. Chowrira
was invited to and attended the
Committee meeting occurring after
Mr. Muniz’s retirement. However, no
Executive Director was permitted to
participate in discussions or decisions
about his or her personal remuneration.
Our Remuneration Policy
The success of PureTech depends on
the motivation and retention of our
highly skilled workforce with significant
expertise across a range of science and
technology disciplines, as well as our
highly-experienced management team
and seasoned Directors. PureTech’s
Remuneration Policy is therefore an
important part of our business strategy.
Our guiding principle is to provide
market competitive remuneration
packages, including with respect to
cash compensation in the form of base
salary, annual bonuses and benefits
as well as share based compensation,
benchmarked against data generated
from our local markets to enable us to
put together and retain a top tier team.
The Directors’ Remuneration Policy
was approved by shareholders at
the 2021 AGM with 89.3% support.
Whilst the Committee was pleased
with the support received, as part
of the engagement process with
shareholders for determining the policy,
the Committee understood that some
shareholders had concerns with the
increase to quantum of the share based
awards. Share based remuneration is a
vital component of the remuneration
packages of both executives and the
Board of Directors and allows us to
compete for, attract and retain talent in
the U.S. market.
We remain committed to long-term
performance-based remuneration
delivered through our Performance
Share Plan (“PSP”) and believe that
our current remuneration policy
provides an appropriate framework
to incentivize and motivate our senior
management team with competitive
U.S. remuneration packages, while also
ensuring the structure of the PSP is
aligned to UK practice.
All tables within the Directors’
Remuneration Report are audited
under the International Standards
on Auditing (UK) (“ISAs (UK)”) unless
otherwise noted.
Objectives of the Remuneration
Policy for our CEO and Senior
Executives
In the construction of our senior
executive Remuneration Policy, the
Committee paid particular regard
to the market practice of U.S. peer
companies to ensure that packages
are competitive, recognizing the
predominantly U.S. market in which
we compete for talent. At the same
time, the structure of the packages
was designed to be in line with
the principles of the UK Corporate
Governance Code and best practice.
The key aims of the Remuneration
Policy and the Code principles to which
they relate are as follows:
• promote our long-term success
(Code principle: Proportionality);
• attract, retain and motivate high
caliber senior management and
focus them on the delivery of our
long-term strategic and business
objectives (Proportionality,
alignment to culture and risk);
• be simple and understandable,
both externally and internally
(Clarity, simplicity, predictability
and proportionality);
PureTech Health plc Annual report and accounts 2021 131
Governance Directors’ Remuneration Report — continued
• achieve consistency of approach
across senior management to the
extent appropriate and informed by
relevant market benchmarks (Clarity
and alignment to culture); and
• encourage widespread equity
ownership across the executive
team to ensure a long-term
focus and alignment of interest
with shareholders (Alignment to
culture, risk).
Performance and reward in 2021,
and our response to the
COVID-19 pandemic
One of our key business priorities
during 2021 continued to be the health
and well-being of our employees
in light of the ongoing COVID-19
pandemic. We were pleased with the
performance of our workforce under
conditions that continued to require the
development of new ways of working,
in many cases from home, and we have
supported our employees with several
initiatives based around their welfare.
These initiatives included extensive
health protocols for those required
to be onsite, flexible work from home
arrangements, required vaccinations
and a 100% company vaccination rate,
assistance with safe transportation
and a program to bring lunch into the
office for those onsite, among others.
As in 2020, we did not need to receive
any Government support in 2021
and furthermore our operational and
financial performance has not been
significantly impacted by the pandemic.
During 2021, PureTech delivered
exceptional execution and achievement
of key strategic and financial goals,
which has been reflected in the
annual bonus and PSP outcomes. The
Company delivered substantial growth
and generated momentum to support
future growth in the coming years as
our balance sheet, Founded Entities
equity and royalty stakes, and Wholly
Owned programs position PureTech
with the strength to build substantial
value for shareholders in the current
environment. This growth is due in
large part to (i) significant development
and advancement of our Wholly Owned
Pipeline and activities initiated or
progressed to potentially bring these
innovative therapies to market, (ii)
continued build out of our executive
leadership team and creation of a
world-class development organization
to support increased operational
activities, (iii) our Founded Entities
raising in excess of $731 million and
progressing their respective business,
and (iv) generation of $218.1 million
of non-dilutive cash income in 2021
from the sale of equity holdings in
Founded Entities. This increase in
value, together with management’s
operational performance at PureTech
and within the Wholly Owned Pipeline
and Founded Entities, resulted in the
Remuneration Committee approving
100% of the target performance goals.
In line with our standard approach, the
Committee then reviewed the overall
performance of the Company and the
individual Executive Directors before
determining the final bonus payout.
The Committee considered operational
performance, the overall growth of the
business during the year, the extent to
which the target performance goals
had in some cases been exceeded
and the individual contributions of the
Executive Directors. As a result of the
significant efforts of both Executive
Directors in managing the organization
in ways not captured by the
performance goals set at the beginning
of 2021, including taking on additional
responsibilities as they managed
the transition from the departure of
two long-tenured senior leaders with
minimal disruption to the business, the
Committee determined that a number
of additional critical objectives had
also been achieved and decided that a
bonus equal to 150% of target (or 75%
of base salary) was to be awarded to the
Executive Directors. The Committee
is of the view that this is appropriate in
recognizing the Executive Directors’
achievements in strengthening the
organization and its balance sheet
in 2021 and entirely in line with the
operational performance delivered
during the year and the overall growth
of the business. See highlights of 2021
on pages 1 to 9.
In relation to the PSP, PureTech’s
performance over the last three
financial years was very strong with an
increase in share price from 172 pence
to 292 pence from December 31, 2018
to December 31, 2021 representing an
average annual total shareholder return
during the period of approximately
23.8%, significantly above the maximum
target of 15% per annum set in the PSP
awards. This, along with our relative
total shareholder return performance
and strong strategic performance over
the three-year performance period,
resulted in the vesting of 95.8 percent
of the PSP awards granted to the
executive management team, including
the two Executive Directors, in 2019.
For the year ended December 31,
2021, the Committee believes the
Remuneration Policy operated as
intended and that remuneration
outcomes are appropriate, taking
into account remuneration outcomes
throughout the business, company
performance and the stakeholder
experience. As mentioned above, the
Committee determined that the final
payout under the annual bonus plan
for 2021 to the Executive Directors
should be increased from 100% of
target to 150% of target, reflective
of the achievements during the year,
and the individual contributions of the
Executive Directors. No discretion has
been exercised in relation to the PSP
vesting outcome.
The year ahead
For 2022, the following key decisions
have been made in relation to how the
Policy will be implemented:
• Base salaries for the Executive
Directors will be increased by
6 percent in line with the average
increase for the general workforce
taking into consideration a number
of factors, including the current
inflationary pressures in the
United States;
• The annual bonus target and
maximum will remain at 50 percent
and 100 percent of base salary,
respectively; and
• The grants of PSP awards in 2022
will be at levels of 500 percent of
base salary for the Chief Executive
Officer and 250 percent of salary for
the President. These grant levels are
lower than the maximum permitted
under the Directors’ Remuneration
Policy, and lower than the grant
levels in 2021. This takes into account
the current share price and the
resulting impact on the number of
shares underlying each award.
Closing comments
The Committee is comfortable that
the operation of the Policy for 2021
has demonstrated a robust link
between performance and reward.
The Committee believes the proposed
operation of the Policy for 2022 is
appropriate and takes into account the
wider stakeholder experience.
The Committee looks forward
to shareholders’ support for the
shareholder resolution for this Annual
Statement and the Annual Report
on Remuneration at the 2022 Annual
General Meeting.
132 PureTech Health plc Annual report and accounts 2021
Governance Directors’ Remuneration Policy
This part of the Directors’ Remuneration Report sets out the Remuneration Policy for the Executive Directors and has been
prepared in accordance with the provisions of the Companies Act 2006, The Large and Medium Sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2008 and the subsequent amendments, and the UK Listing Authority
Listing Rules. In addition, the report has been prepared on a “comply or explain” basis with regard to the UK Corporate
Governance Code 2018.
This Directors’ Remuneration Policy was approved by a binding shareholder vote at the Company’s AGM on May 27, 2021.
Unless the Company proposes changes to the policy, it will apply for a period of three years from that date. The approved
Remuneration Policy can be found in the Director’s Remuneration Report of our 2020 Annual Report and Accounts available in
the Investor Relations portion of our website at www.puretechhealth.com.
All tables within this Directors’ Remuneration Policy section are audited under the International Standards on Auditing (UK)
(“ISAs (UK)”) unless otherwise noted.
Decision making process for determination, review and implementation of Directors’ Remuneration Policy
The Committee reviews the Policy and its operation to ensure it continues to support and align to the business strategy and
appropriately reward the Executive Directors and takes into account relevant market practice, regulation and governance
developments, institutional investor views and the views of our shareholders. The Committee also has regard to the
remuneration arrangements, policies and practices of the workforce as a whole and takes this into account when reviewing
Executive Director pay.
The Policy is reviewed annually by the Committee. If changes are required, a new policy will be put forward to shareholder
vote prior to the normal triennial shareholder vote. The Committee consults with shareholders on remuneration proposals and
will consider the feedback in finalizing the Policy.
Operation of the Policy is considered annually for the year ahead, including metrics for incentives, weightings and targets. The
Committee reviews operation for the prior year and considers whether, in light of the strategy, changes are required for the
year ahead or if remuneration remains appropriate for the year ahead. Shareholders’ views may be sought depending on the
changes proposed.
Element
Base salary
How component
supports corporate
strategy
To recognize the
market value of
the employee
and the role.
Operation
Maximum
Normally reviewed annually.
Salaries are benchmarked
periodically primarily against biotech,
pharmaceutical and specialty finance
companies listed in the U.S. and UK.
The committee also considers UK-listed
general industry companies of similar
size to PureTech as a secondary point
of reference.
Performance targets and
recovery provisions
Not applicable.
Not applicable.
There is no prescribed
maximum base salary or
annual salary increase.
The Committee is guided by
the general increase for the
broader employee population
but may decide to award a
lower increase for Executive
Directors or indeed exceed
this to recognize, for example,
an increase in the scale,
scope or responsibility of the
role and/or to take account
relevant market movements.
Current salary levels are set
out in the Annual Report on
Remuneration.
Under the 401k Plan,
Company contributions are
capped at the lower of 3
percent of base salary or the
maximum permitted by the
U.S. IRS ($19,500 for 2021).
Pension
To provide a market
competitive level
of contribution to
pension.
The company operates a 401k Plan
for its U.S. Executive Directors. The
operation of the Plan is in line with the
operation for all other employees.
Benefits
To provide a market
competitive level
of benefits.
Includes: private medical and dental
cover, disability, life insurance.
Additional benefits may also be
provided in certain circumstances, such
as those provided to all employees.
Cost paid by the company.
Not applicable.
PureTech Health plc Annual report and accounts 2021 133
Governance Performance targets and
recovery provisions
Performance period:
Normally one year.
Payments are normally based on
a scorecard of strategic and/or
financial measures.
Up to 0 percent of salary payable
for threshold performance, 50
percent of base salary normally
payable for the achievement of
’target’ performance and 100
percent of base salary payable
for the achievement of stretch
performance.
Recovery and withholding
provisions are in place.
Performance period:
Normally three years.
Up to 25 percent of an award
vests at threshold performance
(0 percent vests below this),
increasing to 100 percent pro-
rata for maximum performance.
Normally at least half of any
award will be measured against
TSR targets with the remainder
measured against relevant financial
or strategic measures.
Recovery and withholding
provisions are in place.
600 percent of salary for the
Chief Executive Officer, 300
percent of base salary for the
other Executive Directors.
Participants may benefit from
the value of dividends paid
over the vesting period to
the extent that awards vest.
This benefit is delivered in
the form of cash or additional
shares at the time that
awards vest.
None.
None.
Minimum of 400 percent
of base salary for the Chief
Executive Officer and a
minimum of 200 percent
of base salary for the other
Executive Directors.
Lower of (i) 400 percent of
base salary for the Chief
Executive Officer and 200
percent of base salary for the
other Executive Directors and
(ii) the Executive Director’s
shareholding at the date that
notice is served.
Operation
Maximum
Based on performance during the
relevant financial year.
Up to 100 percent of
base salary.
Directors’ Remuneration Policy — continued
Element
Annual Bonus
Plan (ABP)
How component
supports corporate
strategy
To drive and reward
annual performance
of individuals, teams
and PureTech.
Long-term
incentives
To drive and reward
our sustained
performance and to
align the interests
with those of
shareholders.
Share
ownership/
Holding Period
Further aligns
executives with
investors, while
encouraging
employee share
ownership.
Paid in cash.
The Committee has discretion to
adjust payout levels if it considers the
formulaic outcome inappropriate taking
into account the underlying financial
performance of the Company, share
price performance, the investment
return to shareholders during the
year, and such other factors as it
considers appropriate.
The Company can make long-term
incentive awards with the following
features:
• performance shares.
• vesting is dependent on the
satisfaction of performance targets
and continued service.
• performance and vesting periods are
normally three years.
Awards granted from 2019 onwards
will be subject to a two-year post-
vesting holding period during which
vested shares cannot be sold other
than to settle tax. This post-vesting
period continues post-cessation of
employment.
The Committee also has the discretion
to adjust vesting levels of performance-
related awards to override formulaic
outcomes, taking into account similar
factors as apply in relation to annual
bonus awards, but by reference to the
performance period.
The Committee requires that Executive
Directors who participate in a long-
term incentive plan operated by the
Company retain half of the net shares
vesting under any long-term incentive
plan until a shareholding requirement
is met.
Post-cessation
holding period
Aligns executives
with investors and
promotes long-term
decision making
Executive Directors must hold shares for
two years after the date of termination
of their employment.
134 PureTech Health plc Annual report and accounts 2021
Governance Directors’ Remuneration Policy — continued
Element
Non-Executive
Directors
How component
supports corporate
strategy
To provide fee
levels and structure
reflecting time
commitments and
responsibilities of
each role, in line
with those provided
by similarly-sized
companies and
companies operating
in our sector.
Performance targets and
recovery provisions
None.
Operation
Maximum
Any remuneration provided
to a Non-Executive Director
will be in line with the limits
set out in the Articles of
Association.
Remuneration provided to Non-
Executive Directors is operated in
line with the terms set out in the
Articles of Association.
Cash fees, normally paid on a quarterly
basis, are comprised of the following
elements:
• Base fee.
• Additional fees.
Beginning in 2021, a portion of the
compensation to our Non-Executive
Directors was in the form of our
ordinary shares.
Additional remuneration is payable
for additional services to PureTech
such as the Chairship of a Committee
or membership on a Committee.
Additional remuneration is also payable
for services provided beyond those
services traditionally provided as a
director, and can be provided for a
material increase in time commitment.
Fees are reviewed annually and take
into account:
• the median level of fees for similar
positions in the market; and
• the time commitment each Non-
Executive Director makes to us.
Taxable benefits may be provided and
may be grossed up where appropriate.
Notes:
1 In the event that the Company elects any non-U.S. Executive Directors, the 401k Plan may not be an appropriate pension arrangement. In such cases an alternative pension
arrangement may be offered. Any such arrangement would not be higher than the pension rate operated for the majority of employees in that jurisdiction.
2 For those below Board level, a lower annual bonus opportunity and PSP award size may apply. In general, these differences arise from the development of remuneration
arrangements that are market competitive for the various categories of individuals, together with the fact that remuneration of the Executive Directors and senior executives
typically has a greater emphasis on performance-related pay.
3 The choice of the performance metrics for the annual bonus scheme reflects the Committee’s belief that incentive compensation should be appropriately challenging and
linked to the delivery of the Company’s strategy. Further information on the choice of performance measures and targets is set out in the Annual Report on Remuneration.
4 The performance conditions applicable to the PSP (see Annual Report on Remuneration) are selected by the Remuneration Committee on the basis that they reward
the delivery of long-term returns to shareholders and are consistent with the Company’s objective of delivering superior levels of long-term value to shareholders while
providing the Company with tools to successfully recruit and retain employees in the U.S.
5 For the avoidance of doubt, the Company reserves the right to honour any commitments entered into in the past with current or former Directors (such as the vesting/
exercise of share awards) notwithstanding that these may not be in line with this Remuneration Policy. Details of any payments to former Directors will be set out in the
Annual Report on Remuneration as they arise.
Recovery and withholding provisions
Recovery and withholding provisions (’’clawback and malus’’) may be operated at the discretion of the Remuneration
Committee in respect of awards granted under the Performance Share Plan and in certain circumstances under the Annual
Bonus Plan (including where there has been a material misstatement of accounts, or in the event of fraud, gross misconduct
or conduct having a materially detrimental effect on the Company’s reputation).
The issue giving rise to the recovery and withholding must be discovered within three years of vesting and there is flexibility
to recover overpayments by withholding future incentive payments and recovering the amount directly from the employee.
Discretions in the policy
To ensure the efficient administration of the variable incentive plans outlined above, the Committee will apply certain
operational discretions. These include the following:
• selecting the participants in the plans on an annual basis;
• determining the timing of grants of awards and/or payments;
• determining the quantum of awards and/or payments (within the limits set out in the Policy table above);
• reviewing performance against LTI performance metrics;
• determining the extent of vesting based on the assessment of performance;
• making the appropriate adjustments required in certain circumstances, for instance for changes in capital structure;
• deciding how to settle awards made under the plans, e.g. in cash, shares, nil-cost options or as otherwise permitted under
the plan rules;
• overriding formulaic outcomes of incentive plans if determined by the Committee not to be reflective of
company performance;
PureTech Health plc Annual report and accounts 2021 135
Governance Directors’ Remuneration Policy — continued
• determining “good leaver” status
for incentive plan purposes and
applying the appropriate treatment;
further details on the discretion
applicable in relation to leavers are
set out on page 137;
• undertaking the annual review of
weighting of performance measures
and setting targets for the annual
bonus plan and other incentive
schemes, where applicable, from
year to year; and
• discretion, in the event of a change
in control of the Company, to
determine that time pro-rating shall
not apply to outstanding awards.
If an event occurs which results in the
annual bonus plan or PSP performance
conditions and/or targets being
deemed no longer appropriate (e.g.
material acquisition or divestment),
the Committee will have the ability
to adjust appropriately the measures
and/or targets and alter weightings,
provided that the revised conditions are
not materially less challenging than the
original conditions.
Reward scenarios
The charts below show how the composition of 2022 remuneration for the Chief Executive Officer and the President varies
at different levels of performance under the Policy set out above, as a percentage of total remuneration opportunity and as
a total value.
Executive Director compensation (unaudited)
Chief Executive Officer
President
Minimum
Target
$705,652
Minimum
$564,152
100%
100%
$2,696,113
Target
$1,491,652
26%
12%
62%
38%
18%
44%
Maximum
$4,686,573
Maximum
$2,419,152
15%
14%
71%
23%
22%
55%
Maximum + 50% growth
$6,345,290
Maximum + 50% growth
$3,081,652
11%
11%
78%
18%
17%
65%
Fixed pay
ABP
PSP
Notes:
1 The minimum performance scenario comprises the fixed elements of remuneration only, including:
– Salary for FY2022 as set out in the Annual Report on Remuneration.
– Pension in line with policy and benefits as disclosed for FY2021 in the Annual Report on Remuneration.
2 The On-Target level of bonus is taken to be 50 percent of the maximum bonus opportunity (50 percent of salary), and the On-Target level of PSP vesting is assumed to be
50 percent of the face value of the PSP award (i.e. 250 percent of base salary for the CEO and 125 percent of base salary for the President). These values are included in
addition to the components/values of Minimum remuneration.
3 Maximum assumes full bonus pay-out (100 percent of base salary only) and the full face value of the proposed PSP awards (i.e. 500 percent of base salary for the CEO and
250 percent of base salary for the President), in addition to fixed components of Minimum remuneration.
4 No share price growth has been factored into the calculations of minimum, target and maximum compensation. An additional maximum scenario has been shown which
assumes 50% share price appreciation for the PSP during the performance period.
Approach to recruitment and promotions
The remuneration package for a
new Executive Director would be
set in accordance with the terms of
the Company’s prevailing approved
Remuneration Policy at the time of
appointment and take into account the
skills and experience of the individual,
the market rate for a candidate of that
experience and the importance of
securing the relevant individual.
Salary would be provided at such a
level as required to attract the most
appropriate candidate and may be set
initially at or above mid-market level.
Additionally, salary may be provided
at a below mid-market level on the
basis that it may progress towards the
mid-market level once expertise and
performance has been proven and
sustained. The annual bonus and long-
term incentive awards would be limited
in line with the policy. Depending on
the timing of the appointment, the
Committee may deem it appropriate
to set annual bonus performance
conditions for such appointee that are
different than those applicable to the
incumbent Executive Directors. A PSP
award can be made shortly following
an appointment.
In addition, the Committee may offer
additional cash and/or share-based
elements to replace deferred or
incentive pay forfeited by an executive
leaving a previous employer if required
in order to facilitate, in exceptional
circumstances, the recruitment of the
relevant individual. It would seek to
ensure, where possible, that these
awards would be consistent with
awards forfeited in terms of vesting
periods, expected value, performance
conditions and delivery mechanism.
136 PureTech Health plc Annual report and accounts 2021
Governance Directors’ Remuneration Policy — continued
For appointment of an Executive
Director who was employed by the
Company prior to the appointment,
any variable pay element awarded
in respect of the prior role may be
allowed to pay out according to its
terms. In addition, any other ongoing
remuneration obligations existing prior
to appointment may continue.
For any Executive Director
appointment, the Committee may
agree that the Company will meet
certain relocation and/or incidental
expenses as appropriate.
Service contracts
Executive Directors’ service contracts
do not provide for liquidated damages,
longer periods of notice on a change of
control of the Company or additional
compensation on an Executive
Director’s cessation of employment
with us, except as discussed below.
The Committee’s Policy is to offer
service contracts for Executive
Directors with notice periods of no
more than 12 months, and typically
between 60 to 180 days.
Service contracts provide for severance
pay following termination in the case
that employment is terminated by the
Company without ’cause’, or by the
employee for ’good reason’. In this case
severance pay as set out in the contract
is no greater than 12-months’ base
salary and is aligned to the duration of
any restrictive covenants placed on the
employee. Service contracts may also
provide for the continuation of benefits
but for no longer than a 12-month
period post termination.
Service contracts also provide for
the payment of international tax in
non-U.S. jurisdictions if applicable
to the Executive Director. They also
can provide for garden leave and, if
required by applicable law, the recovery
and withholding of incentive payments.
Service contracts are available
for inspection at the company’s
registered office.
Policy on termination of employment
The Policy on termination is that the
Company does not make payments
beyond its contractual obligations
and the commitments entered into as
part of any incentive plan operated by
the Company. In addition, Executive
Directors will be expected to mitigate
their loss. The Committee ensures
that there have been no unjustified
payments for failure.
An Executive Director may be eligible
for an annual bonus payment for the
final year in which that Director served
as an employee, provided that they
are deemed to be a ’good leaver’. If
so, any such annual bonus payment
will be subject to performance testing
and a pro-rata reduction will normally
be applied based on the time served
during the relevant financial year.
The default treatment for any share-
based entitlements under the PSP is
that any unvested outstanding awards
lapse on cessation of employment.
However, in certain prescribed
circumstances, or at the discretion of
the Remuneration Committee, ’good
leaver’ status can be applied. In these
circumstances, a participant’s awards
will vest subject to the satisfaction of
the relevant performance criteria and,
ordinarily, on a time pro-rated basis,
with the balance of the awards lapsing.
The two-year post vest holding period
will usually continue to apply. The
Committee has discretion to permit the
early vesting at the date of cessation
of employment, again based on
performance and ordinarily on a time
pro-rated basis.
In addition, the Company can pay for
any administrative expenses, legal
expenses or outplacement services
arising from the termination where
considered appropriate.
External appointments
The Board can allow Executive
Directors to accept appropriate outside
commercial Non-Executive Director
appointments provided that the duties
and time commitment required are
compatible with their duties and time
commitment as Executive Directors.
Non-Executive Directors
Non-Executive Directors are appointed
as a Non-Executive Director of the
Company by a letter of appointment.
These letters usually provide for a
notice period of one month from the
Company and the Non-Executive
Director prior to termination.
Consideration of shareholder views
The Committee will carefully consider
shareholder feedback received in
relation to the AGM each year. This
feedback, plus any additional feedback
received during any meetings from
time to time, is then considered
as part of the annual review of the
Remuneration Policy.
The Company will seek to engage
directly with major shareholders and
their representative bodies should
any material changes be proposed
to the Remuneration Policy or its
implementation. Details of votes
cast for and against the resolution to
approve the prior year’s remuneration
report and any matters discussed
with shareholders during the year will
be set out in the Annual Report on
Remuneration. The Company consulted
with shareholders in 2021, as referenced
on page 131, in relation to the proposed
changes to the Remuneration Policy
and we were pleased to receive support
from those consulted.
Consideration of our employment
conditions generally
To ensure a coherent cascade of the
Remuneration Policy throughout
the organization, no element of
remuneration is operated solely for
Executive Directors and all elements
of remuneration provided to the
Executive Directors are generally
operated for other employees,
including participation in stock-
based incentive plans. In addition,
the Committee considers the
general base salary increase for
the broader employee population
when determining the annual salary
increases for the Executive Directors.
The Remuneration Committee has
general responsibility for determining
pay for senior management as well as
Executive Directors. Employees (other
than senior executives) have not been
consulted in respect of the design of
our Remuneration Policy, although the
Committee will keep this under review.
PureTech Health plc Annual report and accounts 2021 137
Governance Annual Report on Remuneration
Implementation of the Remuneration Policy for the year ending December 31, 2022
All tables within the Annual Report on Remuneration are audited under the International Standards on Auditing (UK)
(“ISAs (UK)”) unless otherwise noted.
Base salary
The Committee reviewed the base salary levels for the Executive Directors in early 2022 and an increase of 6 percent was
awarded. This increase was in line with the increase for the general workforce, which was largely driven by cost of living
considerations in the US.
Daphne Zohar
Bharatt Chowrira
Chief Executive Officer
President, Chief Business, Legal and Operating Officer, Corporate
Secretary (“President”)
2021
Base salary
$625,931
$500,000
2022
Base salary
$663,487
$530,000
Pension
We will continue to contribute under the 401k Plan subject to the maximum set out in the Policy table.
Benefits
Benefits provided will continue to include private medical, disability and dental cover.
Annual bonus
For 2022, the operation of the annual bonus plan will be similar to that operated in 2021. The maximum annual bonus
will continue to be 100 percent of base salary for all Executive Directors. The 2022 annual bonus will be based on clinical
development milestones and internal program development, financial and strategic measures, and development of
new strategic and investor relationships. The performance metrics and targets will be disclosed in the FY2022 Annual
Report and Accounts.
Long-term incentives
Awards under the PSP will be made to the Executive Directors in 2022. The Chief Executive Officer will receive a PSP award
with a face value of 500 percent of base salary, and the President will receive an award with a face value of 250 percent of base
salary. These grant levels are lower than the maximum permitted under the Directors’ Remuneration Policy, and lower than
the grant levels in 2021. This takes into account the fall in the share price since the grant of the 2021 awards and the resulting
impact on the number of shares underlying each award.
The PSP awards will be subject to the performance conditions described below. As a clinical-stage therapeutics company, the
Company believes that TSR is an appropriate and objective measure of the Company’s performance. In addition, measuring
TSR on both an absolute and relative basis rewards our management team for absolute value creation for our shareholders
whilst also incentivizing outperformance of the market. To provide a balance to the TSR performance conditions that is more
directly based on Management’s long term strategic performance, TSR is complemented by measures linked to strategic
delivery. There will be a robust assessment of the achievement of the strategic targets over the three year period with full
disclosure in the Directors’ Remuneration Report following the end of the performance period.
Further detail of the performance conditions is set out below:
• 40 percent of the shares under award will vest based on the achievement of absolute TSR targets.
• 20 percent of the shares under award will vest based on the achievement of a relative TSR performance condition,
10 percent each against two benchmarks (explained below).
• 40 percent of the shares under award will vest based on the achievement of strategic targets.
138 PureTech Health plc Annual report and accounts 2021
Governance Annual Report on Remuneration — continued
The minimum performance target for the absolute TSR portion of the award will be TSR equal to 7 percent per annum,
whilst the maximum target will be TSR equal to 15 percent per annum. Relative TSR will be measured against the constituent
companies in the FTSE 250 Index (excluding Investment Trusts) and the MSCI Europe Health Care Index (for 10 percent of the
award, respectively). The minimum performance target will be achievement of TSR equal to the median company in the Index
and the maximum performance target will be achievement of upper quartile TSR performance. 25 percent of each element of
the TSR targets will vest for threshold performance. Strategic measures will be based on the achievement of milestones and
other qualitative measures of performance over the performance period. Strategic targets will be set at the outset based on
financial achievements, including monetization of Founded Entities, clinical development progress, product pipeline growth,
operational excellence and other shareholder value enhancing metrics in line with our strategic plan. Full disclosure of the
measures, weightings and strategic targets will be made retrospectively.
The Committee believes that this combination of measures is appropriate. TSR measures the success of our management
team in identifying and developing new therapeutics whilst strategic targets help incentivize our management team through
the stages which ultimately result in successful therapeutics.
Non-Executive Directors
Fees for our Board of Directors were reviewed for 2022 and remain unchanged from 2021.
Chair fee
Basic fee
Equity-based Component
Additional fees:
Chair of a committee
Membership of a committee
Membership of a subsidiary board
FY2021 and FY2022
$125,000
$75,000
$50,000
$10,000
$5,000
$0 to $10,000
As our Board of Directors consists of leading experts with the experience of successfully developing technologies and
bringing them to market, this gives rise to the possibility that the intellectual property we seek to acquire has been developed
by one of our Non-Executive Directors and/or that our Non-Executive Directors provide technical or otherwise specialized
advisory services to the Company above and beyond the services typically provided by a Non-Executive Director. In such
exceptional circumstances, our Remuneration Policy provides us with the flexibility to remunerate them with equity in the
relevant subsidiary company as we would any other inventor of the intellectual property or provider of technical advisory
services. This practice is in line with other companies in the life sciences sector. If the Company is unable to offer market-
competitive remuneration in these circumstances, it risks forfeiting opportunities to obtain intellectual property developed by
our Non-Executive Directors and/or foregoing valuable advisory services. The Company believes foregoing such intellectual
property and/or advisory services would not be in the long-term interest of our shareholders. Accordingly, subsidiary equity
grants may be made to Non-Executive Directors upon the occurrence of the exceptional circumstances set out above.
PureTech Health plc Annual report and accounts 2021 139
Governance Annual Report on Remuneration — continued
Remuneration for the year ended December 31, 2021
Single total figure of remuneration for each Director (audited)
The table below sets out remuneration paid in relation to the 2021 financial year with a comparative figure for the 2020
financial year. There were no exercises of share options by Executive Directors or Non-Executive Directors in either of the 2021
or 2020 financial years.
Basic Salary/
Fees
Year
Benefits1
Annual
Bonus Plan
Performance
Share Plan
(Vested)2
Pension
Other
payments3
Total
Remuneration
Total
Variable Total Fixed
2021 and 2020 Remuneration
Executive Directors
Daphne Zohar
2021
$625,931
$33,465
Bharatt Chowrira4
Stephen Muniz5
Non-Executive Directors
Raju Kucherlapati
John LaMattina
Robert Langer
Kiran Mazumdar-Shaw6
2020
2021
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Dame Marjorie Scardino 2021
2020
Christopher Viehbacher 2021
2020
$607,700
$31,069
$469,448 $2,693,882
$5,679,7007
$607,700
$8,700
— $3,831,426 $3,163,330
$668,096
$8,550
$260,122
$7,194,841
$6,287,400
$907,441
$500,000
$25,452
$375,000
$511,046
$8,700
— $1,420,198
$886,046
$534,152
$164,786
$11,396
—
— $8,700
— $184,882
— $184,882
$422,300
$28,919
$422,300
$1,901,1017
$8,550
$2,783,986
$2,323,401
$459,769
$145,0008
$105,000
$145,0008
$125,000
$145,0008
$125,000
$135,0008
$21,250
$140,0008
$90,000
$195,0008
$155,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$145,000
$105,000
$145,000
$125,000
$145,000
$125,000
$135,000
$21,250
$140,000
$90,000
$195,000
$155,000
$145,000
$105,000
$145,000
$125,000
$145,000
$125,000
$135,000
$21,250
$140,000
$90,000
$195,000
$155,000
TOTAL
TOTAL
2021 $2,195,717 $70,313 $844,448 $3,204,928 $26,100
— $6,341,506 $4,049,376 $2,292,130
2020 $1,651,250
$59,988 $1,030,000
$7,580,801
$17,100 $260,122 $10,600,077
$8,610,801 $1,988,460
Notes:
1 Benefits comprise the following elements: private medical, disability and dental cover and parking.
2 The shares underlying the vested 2019 Performance Share Plan awards will be issued after the finalisation of this report. As a result, the share price on the date of issuance
is not known at the date of this report and the figures shown above for the PSP awards have been valued using a share price of £3.236875, which was the average share price
during the last three months of 2021, and an exchange rate of GBP 1 : USD 1.34809697, which was the average exchange rate over the last three months of 2021.
3 Other payments represent a one-time reimbursement to Ms. Zohar for costs associated with converting certain of her ordinary shares into ADSs, as required by Nasdaq prior
to our listing on Nasdaq in November 2020.
4 Dr. Chowrira joined the Board in February 2021.
5 Mr. Muniz retired from the Board in May 2021.
6 Ms. Mazumdar-Shaw joined the Board in September 2020.
7 These amounts have been updated from those listed in the 2020 Annual Report and Accounts to reflect the actual values paid, which was not known at the date
of publication of the 2020 Annual Report and Accounts.
8 These amounts include grants of share based remuneration on July 21, 2021 in the form 11,190 time-vesting restricted stock units with a face value of $50,000.
Annual bonus outcome for 2021
For the 2021 annual bonus, targets were set for a balanced scorecard at the beginning of the year. The 2021 targets were
focused on (i) internal program development goals designed to incentivize the team to continue development of the
Company’s Wholly Owned Pipeline, generate valuable clinical data in support of the Company’s programs and create
innovative programs, (ii) strategic goals designed to incentivize the team to complete important deals and execute strategic
partnerships, (iii) monetization and investor related goals designed to incentivize the team to generate non-dilutive cash and
achieve enhanced analyst coverage of the Company’s stock to support shareholder value generation, and (iv) Controlled
Founded Entity program development goals designed to incentivize the team to take steps necessary to progress towards
the potential commercial launch of therapeutics at our Founded Entities. In addition, the Remuneration Committee took into
account other goals and other achievements by the management team in setting final achievement attainment and fixing
bonus payouts. The table below sets out the performance assessment and associated bonus outcomes:
140 PureTech Health plc Annual report and accounts 2021
Governance Annual Report on Remuneration — continued
Target Goals – Maximum 100 percent Achievement
Performance
Measures Category
Achievement
Internal Program
Development
Strategic Goals
The Internal Program Development Goals were 80% achieved in 2021. The management
team’s performance resulted in an achievement outcome of 40 percent out of a pre-
specified cap of 50 percent for this category of the goals. A description of performance in
2021 is set out below:
The Company’s LYT 100 Long COVID study was fully enrolled, multiple clinical studies to
demonstrate improved tolerability as compared to pirfenidone were completed, early-
stage data was generated for LYT 200, the first human dose of LYT 300 was administered,
proof of concept was achieved in rodents for the Orasome platform, and additional early-
stage work was completed on certain other programs.
The Strategic Goals were achieved in 2021. The management team’s performance
resulted in an achievement outcome of 20 percent which was equal to the pre-specified
cap of 20 percent for this category of the goals. A description of performance in 2021 is
set out below:
The Company completed the acquisition of Alivio Therapeutics that added LYT 500 to the
Company’s Wholly Owned Pipeline, Gelesis announced that It would go public via a SPAC
transaction (which closed In the January post-period), Akili progressed towards going
public via a SPAC transaction (which was announced In the January post-period), Vedanta
secured over $68 million in financing, and Karuna secured a partnership with Zai Lab with
$35 million in upfront licensing fees and future potential milestone payments.
Monetization
and Investor
Related Goals
The Monetization and Investor Related Goals were achieved in 2021. The management
team’s performance resulted in an achievement outcome of 20 percent which was equal
to the pre-specified cap of 20 percent for this category of the goals. A description of
performance in 2021 is set out below:
The Company had $218 million of cash income in 2021 from the sale of equity holdings,
and added a new analyst from a major investment bank.
Controlled
Founded
Entity Program
Development
The Controlled Entity Program Development Goals were achieved in 2021. The
management team’s performance resulted in an achievement outcome of 10 percent
which was equal to the cap of 10 percent for this category of the goals. A description
of performance in 2021 is set out below:
Vedanta’s phase 1 and 2 studies were completed with the phase 2 study for VE303
achieving its primary endpoint.
Percentage
of Target
Attained
40%
20%
20%
40%
Other
Achievements
Pre-Specified
Maximum Total
The management team evidenced further exceptional performance as described below:
10%
The Company recruited a seasoned chief medical officer and built a world-class
development organization, operated within the pre-set budget, managed operations
during the COVID-19 pandemic to execute all programs in accordance with the
operating plan and achieved all core objectives, observed strict COVID-related
protocols to minimize employee exposure and achieved a 100% vaccination rate among
its employees, and managed the transition associated with two long-tenured senior
executives with minimal disruption to the business.
100%
Accordingly, determined that the Company had achieved 100 percent of its target goals for 2021.
PureTech Health plc Annual report and accounts 2021 141
Governance Annual Report on Remuneration — continued
Each of the above target categories are subject to maximum percentage achievement limits capped at 100 percent of the
target bonus (i.e. 50 percent of salary). Payments beyond the target are determined by the Remuneration Committee taking
into account the extent target goals have been exceeded, the overall quality of underlying performance, value created for
shareholders and other relevant factors. In this case, the Company performed above the target maximum goals, including with
respect to the other achievements described above related to operational performance and contribution to overall growth
of the business during the year. The Committee also considered the additional responsibilities taken on by the Executive
Directors during the year following the departure of certain senior executives and the need to ensure an appropriate level
of continuity. In light of these achievements, the Committee determined that payouts at 150 percent of target (i.e. 75 percent
of salary) are appropriate for the Executive Directors as explained earlier in this report. The Committee believes that such
a bonus award is appropriate to reward and retain top management when such extraordinary performance is achieved.
Long-term incentive awards vesting in respect of the year (unaudited)
The 2019 PSP awards granted on December 20, 2019 were subject to three-year performance conditions covering the period
from January 1, 2019 to December 31, 2021. Following an assessment of the performance conditions, the Remuneration
Committee determined that the awards will vest at 95.8 percent of the maximum. Stephen Muniz’s shares lapsed following his
retirement in May 2021.
Scheme
Basis of award granted Shares awarded
Shares vested
Shares lapsed
Value of
vested awards1,2
Daphne Zohar
Bharatt Chowrira
PSP 2019
PSP 2019
400% of salary
100% of salary
644,668
122,924
617,350
117,715
27,318
5,209
$2,693,882
$511,046
1 Shares have been valued using a share price of £3.236875, which was the average share price during the last three months of 2021, and an exchange rate of
GBP 1 : USD 1.34809697, which was the average exchange rate over the last three months of 2021.
2 The value of the awards attributable to share price appreciation is $433,887 for Daphne Zohar and $80,115 for Bharatt Chowrira.
The outcome of the performance condition relating to these awards is set out below (unaudited):
Measure and weighting
Threshold
Maximum
Achievement
15% p.a.
Absolute TSR (50%)
Total return against FTSE Small Cap Index (12.5%)
At or above median Upper quartile
Total return against MSCI Euro Healthcare Index (12.5%) At or above median Upper quartile
Strategic measures (25%)
See description below
7% p.a.
23.8% p.a.
83rd percentile
63rd percentile
Vesting
(% of each
element)
100%
100%
66.4%
100%
The strategic measures over the three-year period were focused on (i) financial goals (59 percent), (ii) clinical development
goals (34 percent), and (iii) operational excellence (7 percent). The financial achievements resulting in satisfaction of 59
percent of the vesting of the strategic measures included obtaining $563 million for PureTech by monetizing certain
Founded Entity equity, the closing of initial public offerings of two Founded Entities and the announcement of two SPAC
transactions for Founded Entities, the execution of several partnership agreements which brought in non-dilutive funding,
the raising of more than $1.58 billion into the Company’s Founded Entities and the completion of PureTech’s listing on the
Nasdaq Global Market. The clinical development achievements resulting in satisfaction of 34 percent of the vesting of the
strategic measures included the successful completion of several Phase 1 clinical studies for LYT-100 and the completion of
enrollment In LYT-100 Long COVID phase 2 study, the advancement of other programs within our Wholly Owned Pipeline,
the successful completion of Phase 2 clinical studies for the KarXT program, the completion of a Phase 2 clinical study for the
VE303 program and the completion of Phase 1 clinical studies for the VE202 and VE416 programs, and successfully having
two programs cleared for marketing by the U.S. Food and Drug Administration. The operational excellence achievements
resulting in satisfaction of 7 percent of the vesting of the strategic measures include the operation of the Company’s programs
within projected timelines and budgets, successfully managing operations through the COVID-19 pandemic, building out
a world-class development organization, the in-licensing and creation of new programs, the issuance of certain intellectual
property, the advancement of certain pre-clinical programs, and the publication of validating data in top tier peer-reviewed
academic journals.
142 PureTech Health plc Annual report and accounts 2021
Governance Annual Report on Remuneration — continued
Long-term incentive awards granted during the year (audited)
The following long-term Incentive awards were granted to Executive Directors during 2021:
Scheme
Basis of award
granted
Shares awarded
(as conditional
award of shares)
Share price
at date of grant1
Face value
of award
Daphne Zohar
PSP 2021
Bharatt Chowrira
PSP 2021
600% of
salary
300% of
salary
683,652 282.33 pence
$2,430,800
335,687 326.83 pence
$1,500,000
1 The share price at the date of grant is based on the 3-day average closing price immediately prior to the grant of the award.
% of face
value vesting
at threshold
performance
20%
20%
Vesting
determined by
performance over
Three financial
years to
December 31,
2023
The PSP awards granted in 2021 are subject to (i) achievement of absolute TSR targets (40 percent of the awards),
(ii) achievement of TSR targets as compared to TSR performance of the constituent companies in the FTSE 250 Index
(excluding Investment Trusts) and the MSCI Europe Health Care Index (20 percent of the awards, 10 percent against each
benchmark) and (iii) achievement of targets based on strategic measures (40 percent of the awards), measured over the three
year period to December 31, 2023.
The minimum performance target for the absolute TSR portion of the award is TSR equal to 7 percent per annum, whilst the
maximum target is TSR equal to 15 percent per annum. The minimum performance target for the relative TSR portion of the
award is TSR equal to the median of the index, whilst the maximum target will be TSR equal to the upper quartile of the index.
Strategic measures are based on the achievement of project milestones and other qualitative measures of performance.
Strategic targets have been set based on financial achievements, including monetization of Founded Entities, clinical
development progress, product pipeline growth, operational excellence and other shareholder value enhancing metrics in
line with our strategic plan. The Committee believes that this combination of measures and the equal weighting on TSR and
strategic objectives is appropriate. TSR measures the success of our management team in identifying and developing new
therapeutics whilst strategic targets help incentivize our management team through the stages which ultimately result in
successful therapeutics.
Full disclosure of the strategic targets will be made retrospectively.
In addition, each Non-Executive Director was granted share based remuneration on July 21, 2021 in the form of 11,190 time-
vesting restricted stock units. The equity awards granted to our Non-Executive Directors vest in their entirety immediately
prior to Company’s 2022 AGM, provided that the Non-Executive Directors continue their service through such date. This share
based element is part of the annual fee for Non-Executive Directors and is not subject to performance (unaudited).
Non-Executive Directors
Raju Kucherlapati
John LaMattina
Robert Langer
Kiran Mazumdar-Shaw
Dame Marjorie Scardino
Christopher Viehbacher
Shares awarded
Face value of award1
Vesting date
11,190
11,190
11,190
11,190
11,190
11,190
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
June 15, 2022
June 15, 2022
June 15, 2022
June 15, 2022
June 15, 2022
June 15, 2022
Payments for Loss of Office (unaudited)
There were no payments for Loss of Office during 2021.
On March 18, 2021 the Company announced that Stephen Muniz would retire from the company and step down from the
board on May 17, 2021. He continued to be paid base salary, benefits and pension until May 17, 2021, at which point payments
ceased. There was no compensation payable for loss of office, no eligibility for 2021 bonus and all unvested PSP awards
lapsed. Vested PSP awards remain subject to any applicable holding period and the post-employment shareholding policy
applies, requiring a shareholding worth 200 percent of Mr. Muniz’s final base salary level to be retained for two years.
Payments to past Directors (unaudited)
No payments to past Directors were made during 2021.
Directors’ shareholdings (audited)
Executive Directors are required to maintain share ownership equal to a minimum of 400 percent of base salary for the Chief
Executive Officer (subject to approval of the new policy) and a minimum of 200 percent of base salary for the other Executive
Directors. The Chief Executive Officer and President both satisfy this requirement, and neither has disposed of any company
shares since the Company’s IPO. Post-employment shareholding requirements will apply.
PureTech Health plc Annual report and accounts 2021 143
Governance Annual Report on Remuneration — continued
The table below sets out current Directors’ shareholdings which are beneficially owned or subject to a performance condition
and interests of connected persons.
Total Share Awards not subject
to Service Conditions
Share awards subject
to performance conditions
Total
Director Shareholdings
Director
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Dec 31, 2021
Dec 31, 2020
Daphne Zohar1
Bharatt Chowrira5
Stephen Muniz8
Raju Kucherlapati
John LaMattina10
Robert Langer11
Kiran Mazumdar-Shaw
Dame Marjorie Scardino
Chris Viehbacher
12,197,3072
2,213,6896
3,096,5908
2,459,831
1,513,133
2,944,134
—
798,71012
1,045,64613
12,197,307
1,524,1203
— 1,158,9027
—
11,1909
11,1909
11,1909
11,1909
11,1909
11,1909
2,889,499
2,459,831
1,495,332
2,944,134
—
788,710
1,045,646
461,535
1,328,3204 13,721,427
— 3,372,591
3,096,5908
— 2,471,021
— 1,524,323
— 2,955,324
11,190
—
809,900
—
— 1,056,836
13,525,627
—
3,351,034
2,459,831
1,513,133
2,944,134
—
788,710
1,045,646
1 A portion of Ms. Zohar’s shareholding in the Company is indirect. As of December 31, 2020, an aggregate of 8,097,307 ordinary shares and 410,000 ADSs are held by
(i) the Zohar Family Trust I, a U.S.-established trust of which Ms. Zohar is a beneficiary and trustee, (ii) the Zohar Family Trust II, a U.S.-established trust of which Ms Zohar
is a beneficiary (in the event of her spouse’s death) and trustee, (iii) Zohar LLC, a U.S.-established limited liability company, and (iv) directly by Ms. Zohar. Ms. Zohar owns
or has a beneficial interest in 100 percent of the share capital of Zohar LLC.
2 ncludes 410,000 ADSs, which are convertible into 4,100,000 ordinary shares. Does not include 617, 350 shares which are issuable pursuant to the RSU award granted to
Ms. Zohar covering the financial years 2019, 2020 and 2021 which have vested but not yet been issued.
3 Includes the following RSUs, which are subject to performance conditions: 683,652 (2020) and 840,468 (2021). Does not include 617, 350 shares which are issuable pursuant
to the RSU award granted to Ms. Zohar covering the financial years 2019, 2020 and 2021 which have vested but not yet been issued.
4 Includes the following RSUs, which are subject to performance conditions: 644,668 (2019) and 683, 652 (2020).
5 Dr. Chowrira joined the board as an executive director in 2021.
6 Includes 826,189 shares of stock owned by Dr. Chowrira and 1,387,500 vested stock options, none of which have been exercised. Does not include 117,715 shares which
are issuable pursuant to the RSU award granted to Dr. Chowrira covering the financial years 2019, 2020 and 2021 which have vested but not yet been issued.
7 Includes the following RSUs, which are subject to performance conditions: 260,715 (2020) and 335, 687 (2021), as well as 562,500 unvested stock options. Does not
include 117,715 shares which are issuable pursuant to the RSU award granted to Dr. Chowrira covering the financial years 2019, 2020 and 2021 which have vested but not
yet been issued.
8 Mr. Muniz retired on May 17, 2021. The values set forth for Mr. Muniz with reference to 2021 reflect Mr. Muniz’s stock ownership immediately following his retirement, at which
point Mr. Muniz forfeited any share based awards which had not yet vested.
9 Includes RSUs, which are subject to performance conditions, that were granted in July 2021 and vest immediately prior to the 2022 Annual General Meeting.
10 A portion of Dr. LaMattina’s shareholding in the Company is indirect. As of December 31, 2021, an aggregate of 1,513,133 ordinary shares are held by (i) John L LaMattina
Revocable Trust, (ii) John L LaMattina 2020-2 GRAT, and (iii) LaMattina Charitable Trust.
11 A portion of Dr. Langer’s shareholding in the Company is indirect. As of December 31, 2021, an aggregate of 2,944,134 ordinary shares are held by (i) Langer Family 2020 Trust
and (ii) directly by Dr. Langer.
12 Includes 100 ADSs, which are convertible into 1,000 ordinary shares.
13 Includes 2,000 ADSs, which are convertible into 20,000 ordinary shares.
Directors’ service contracts (unaudited)
Detail of the service contracts of current Directors is set out below:
Executive Directors
Daphne Zohar
Bharatt Chowrira
Notice period
Contract date
180 days
60 days
June 18, 2015
March 1, 2017
Maximum potential
termination payment
12 months’ salary
12 months’ salary
Potential payment
on change of
control/liquidation
Nil
Nil
Contracts for the above Executive Directors will continue until terminated by notice either by the Company or the Executive
Director. Mr. Muniz terminated his service contract and his notice period ended on May 17, 2021.
Non-Executive Directors
Sharon Barber-Lui
Raju Kucherlapati
John LaMattina
Robert Langer
Kiran Mazumdar-Shaw
Marjorie Scardino
Christopher Viehbacher
Notice period
Contract date
Contract expiration date
30 days
30 days
30 days
30 days
30 days
30 days
30 days
March 24, 2022
March 24, 2025
June 5, 2021
June 5, 2021
June 5, 2021
September 28, 2020
June 5, 2021
June 5, 2021
June 5, 2024
June 5, 2024
June 5, 2024
September 28, 2023
June 5, 2024
June 5, 2024
The Company and the Non-Executive Directors listed above intend to enter into new contracts prior to their expiration.
TSR performance graph (unaudited)
The graph shows the Company’s performance, measured by total shareholder return (TSR), compared with the Nasdaq
Biotechnology Index and S&P600 Biotechnology Index since the Company’s IPO. The Committee considers these to be
relevant indices for TSR comparison as they are broad-based measures of the performance of the biotechnology industry.
144 PureTech Health plc Annual report and accounts 2021
Governance Annual Report on Remuneration — continued
Total shareholder return (unaudited)
Source: Datastream (Thomson Reuters)
(cid:13)
(cid:72)
(cid:73)
(cid:87)
(cid:69)
(cid:70)
(cid:73)
(cid:86)
(cid:12)
(cid:4)
(cid:13)
(cid:102)
(cid:12)
(cid:4)
(cid:73)
(cid:89)
(cid:80)
(cid:69)
(cid:58)
(cid:22)(cid:26)(cid:20)
(cid:22)(cid:24)(cid:20)
(cid:22)(cid:22)(cid:20)
(cid:22)(cid:20)(cid:20)
(cid:21)(cid:28)(cid:20)
(cid:21)(cid:26)(cid:20)
(cid:21)(cid:24)(cid:20)
(cid:21)(cid:22)(cid:20)
(cid:21)(cid:20)(cid:20)
(cid:28)(cid:20)
(cid:26)(cid:20)
(cid:24)(cid:20)
(cid:22)(cid:20)
(cid:20)
(cid:22)(cid:24)(cid:4)(cid:46)(cid:89)(cid:82)
(cid:22)(cid:20)(cid:21)(cid:25)
(cid:23)(cid:21)(cid:4)(cid:40)(cid:73)(cid:71)
(cid:22)(cid:20)(cid:21)(cid:25)
(cid:23)(cid:21)(cid:4)(cid:40)(cid:73)(cid:71)
(cid:22)(cid:20)(cid:21)(cid:26)
(cid:23)(cid:21)(cid:4)(cid:40)(cid:73)(cid:71)
(cid:22)(cid:20)(cid:21)(cid:27)
(cid:23)(cid:21)(cid:4)(cid:40)(cid:73)(cid:71)
(cid:22)(cid:20)(cid:21)(cid:28)
(cid:23)(cid:21)(cid:4)(cid:40)(cid:73)(cid:71)
(cid:22)(cid:20)(cid:21)(cid:29)
(cid:23)(cid:21)(cid:4)(cid:40)(cid:73)(cid:71)
(cid:22)(cid:20)(cid:22)(cid:20)
(cid:23)(cid:21)(cid:4)(cid:40)(cid:73)(cid:71)
(cid:22)(cid:20)(cid:22)(cid:21)
(cid:52)(cid:89)(cid:86)(cid:73)(cid:56)(cid:73)(cid:71)(cid:76)
(cid:50)(cid:37)(cid:55)(cid:40)(cid:37)(cid:53)(cid:4)(cid:38)(cid:77)(cid:83)(cid:88)(cid:73)(cid:71)(cid:76)(cid:82)(cid:83)(cid:80)(cid:83)(cid:75)(cid:93)
(cid:55)(cid:10)(cid:52)(cid:26)(cid:20)(cid:20)(cid:4)(cid:38)(cid:77)(cid:83)(cid:88)(cid:73)(cid:71)(cid:76)(cid:82)(cid:83)(cid:80)(cid:83)(cid:75)(cid:93)
This graph shows the value, by December 31, 2021, of £100 invested in PureTech on the date of Admission (June 24, 2015),
compared with the value of £100 invested in the Nasdaq Biotechnology and S&P600 Biotechnology indices on the same date.
The other points plotted are the values at intervening financial year-ends.
Chief Executive Officer’s Remuneration History (unaudited)
Single figure of total
remuneration
Annual bonus pay-out
against maximum
PSP Vesting against
maximum opportunity
Year
2015
2016
2017
2018
2019
2020
2021
Incumbent
Role
Daphne Zohar
Chief Executive Officer
Daphne Zohar
Chief Executive Officer
Daphne Zohar
Chief Executive Officer
Daphne Zohar
Chief Executive Officer
Daphne Zohar
Chief Executive Officer
Daphne Zohar
Chief Executive Officer
$955,599
$747,634
$821,898
$2,139,870
$5,783,682
$7,194,841
Daphne Zohar
Chief Executive Officer
$3,831,426
100%
38.75%
50%
65%
100%
100%
75%
n/a
n/a
n/a
50%
100%
100%
95.8%
Percentage change in remuneration of Directors and employees (unaudited)
The table below shows the change in the Directors’ remuneration from 2020 to 2021 and 2019 to 2020 compared to the
change in remuneration of all of our full-time employees who were employed throughout the same periods:
Daphne Zohar (CEO)
Bharatt Chowrira (President)2
Raju Kucherlapati
John LaMattina
Robert Langer
Kiran Mazumdar-Shaw3
Marjorie Scardino
Christopher Viehbacher
Employees4
2020 to 2021
2019 to 2020
Base salary1
Benefits
Annual bonus
Base Salary
Benefits
Annual Bonus
3%
N/A
38.1%
16%
16%
635%
55%
26%
9%
6%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
7%
(23%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1%
3%
N/A
11%
19%
13%
N/A
0%
45%
8%
0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
16%
3%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
14%
1 Base salary amounts for Non-Executive Directors in 2021 include grants of share based remuneration on July 21, 2021 in the form 11,190 time-vesting restricted stock units
with a face value of $50,000.
2 Joined the Board effective February 2021.
3 Joined the Board effective September 2020. As a result, the increase in base salary reflects a full year of service in 2021 as opposed to Ms. Mazumdar-Shaw’s more limited
tenure in 2020.
4 Does not include employees of Founded Entities.
PureTech Health plc Annual report and accounts 2021 145
Governance Annual Report on Remuneration — continued
Relative importance of spend on pay (unaudited)
The following table sets out the percentage change in overall spend on pay and distributions to shareholders in 2021
compared to 2020:
Staff costs1
Distributions to Shareholders
1 Excludes Founded Entities.
2021
2020
% change
$22,136,823 $18,225,744
—
—
21%
—
Details of the Remuneration Committee, advisors to the Committee and their fees
The Remuneration Committee consists of Dr. LaMattina, Ms. Mazumdar-Shaw and Dr. Kucherlapati, with Dr. LaMattina
serving as the Chair of the Committee. In 2021 the Committee received independent remuneration advice from Aon plc.
This independent advisor was appointed by and was accountable to the Committee and provided no other services to the
Company. The terms of engagement between the Committee and Aon are available from the Company Secretary on request.
The Remuneration Committee also received advice from Korn Ferry (UK) Limited, who was appointed by and is accountable
to the Committee but also provides certain other candidate placement services to the Company. The terms of engagement
between the Committee and Korn Ferry are available from the Company Secretary on request. The Committee also consults
with the Chief Executive Offi cer and President, and historically consulted with Mr. Muniz when he was an Executive Director
and our Chief Operating Offi cer. However, no Director is permitted to participate in discussions or decisions about their
personal remuneration. During the year, fees in respect of remuneration advice from Aon amounted to $28,490 and from Korn
Ferry £32,665. Each of Aon and Korn Ferry is a founder member of the Remuneration Consultants’ Group and complies with
its Code of Conduct which sets out guidelines to ensure that its advice is independent and free of undue infl uence.
Statement of voting at general meeting (unaudited)
The table below sets out the proxy results of the vote on our Remuneration Report at our 2021 AGM:
Resolutions
For
%
Against
%
Withheld
Total votes cast
To approve the Directors’
Remuneration Report
200,319,991
89.74%
22,895,826
10.26%
2,309,748
223,215,817
The table below sets out the proxy results of the vote on our Remuneration Policy at our 2020 AGM:
Resolutions
For
%
Against
%
Withheld
Total votes cast
To approve the Directors’
Remuneration Policy
2022 AGM
187,285,809
83.90%
35,930,008
16.10%
2,309,748
223,215,817
The Company’s AGM will be held at 11:00 am EDT (4:00 pm BST) on June 15, 2022 at the Company’s headquarters
at 6 Tide Street, Boston, Massachusetts. Information regarding the voting outcome will be disclosed in next year’s
Annual Report on Remuneration.
This report has been prepared by the Remuneration Committee and has been approved by the Board. It complies with
the CA 2006 and related regulations. This report will be put to shareholders for approval at the forthcoming AGM.
On behalf of the Board of Directors
e
c
n
a
n
r
e
v
o
G
Bharatt Chowrira
Company Secretary
April 25, 2022
146 PureTech Health plc Annual report and accounts 2021
Independent auditor’s report to the members
of PureTech Health plc
1
Our opinion is unmodified
Overview
We have audited the financial statements of PureTech Health
plc (“the Company”) for the year ended 31 December
2021 which comprise the Consolidated statements of
comprehensive Income/(Loss), Consolidated Statements of
Financial Position, Consolidated Statements of Changes in
Equity, Consolidated Statements of Cash Flows, Company
Statement of Financial Position, Company statements of
changes in Equity, Company statement of Cash Flows and the
related notes, including the accounting policies in note 1.
In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the parent Company’s affairs as
at 31 December 2021 and of the Group’s loss for the year
then ended;
• the Group financial statements have been properly
prepared in accordance UK-adopted international
accounting standards;
• the parent Company financial statements have been
properly prepared in accordance with UK-adopted
international accounting standards; and
Materiality: Group group
financial statements as
a whole
Coverage
Key audit matters
$4.00m (2020: $1.10m)
0.4% of total assets (2020: 0.8%
of total operating expenses)
100% (2019: 100%) of total
revenue, profit before
tax and total assets
vs 2020
Recurring
risks
Valuation of financial instruments;
investments in Gelesis and Akili preferred
share financial assets, Vedanta and
Follica preferred shares financial liabilities
and Follica and Vedanta warrants
financial liabilities*
Classification of new preferred shares
and convertible loan notes including
identification and classification of any
embedded derivatives
Valuation of investments and
intercompany receivable balances held
by the Parent Company
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
*
In 2020, a Key Audit Matter relating to the valuation of financial assets was
presented separately from the Key Audit Matter on the valuation of financial
liabilities. In 2021, both Key Audit Matters are presented as one given the risks
and our response are the same for both.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion. Our audit opinion
is consistent with our report to the audit committee.
We were first appointed as auditor by the directors on
7 September 2015. The period of total uninterrupted
engagement is for the seven financial years ended 31
December 2021. We have fulfilled our ethical responsibilities
under, and we remain independent of the Group in
accordance with, UK ethical requirements including the
FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard
were provided.
PureTech Health plc Annual report and accounts 2021 147
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
2
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit
significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as
required for public interest entities, our results from those procedures. These matters were addressed, and our results are
based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a
whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate
opinion on these matters.
Valuation of financial instruments;
investments in Gelesis and Akili
preferred share financial assets,
Vedanta and Follica preferred
shares financial liabilities and
Follica and Vedanta warrants
financial liabilities
The financial assets and liabilities
noted above is a portion of the
amounts disclosed below.
($397.2 million investments and
$180.8 million preferred shares
and warrant liabilities; 2020:
$530.2 million investments and
$127.2m preferred shares and
warrant liabilities).
Refer to page 128 (Audit
Committee Report), page 160
(accounting policy) and page 193
(financial disclosures).
The risk
Our response
Subjective valuation and Forecast-
based valuation:
The Group finances its operations partly
through preferred shares, convertible
notes or warrants which are classified as
level 3 financial instruments and carried
at fair value. The Group also holds
investments in subsidiaries through
preferred shares, which are classified as
level 3 financial instruments and carried at
fair value.
Determining the fair value of these
financial instruments involves a significant
level of estimation due to the assumptions
used, and internal and external factors
that may impact the assumptions.
The fair value of these financial
instruments can be estimated by using a
market approach, income approach or a
cost / asset approach.
Where the valuation is driven by an
income approach there is inherent
uncertainty involved in forecasting the
trading of such companies in arriving at
the enterprise value and the assumptions
that underpin the enterprise value. The
key assumptions include the discount
rate, and the probability of success which
mean that the valuations are sensitive to
changes in these assumptions.
There is significant estimation in
determining the enterprise value when
a market approach is taken and inputs
such as term to exit and probability of
exit scenarios.
Where a recent transaction or agreement
has been used as part of the market
approach there is judgement as to the
relevance of the transaction based on the
specific circumstances of that investment.
The effect of these matters is that, as part
of our risk assessment, we determined
that the valuation of financial assets and
liabilities has a high degree of estimation
uncertainty.
We performed the detailed tests below
rather than seeking to rely on any of the
group’s controls because our knowledge
of the design of these controls (see Audit
Committee Report page 129 for further
details) indicated that we would not be able
to obtain the required evidence to support
reliance on controls.
Our procedures included:
Our valuation expertise:
Our valuation specialists critically assessed
the enterprise value where derived from
a market approach in an IPO scenario
by comparing changes in the enterprise
value to changes in the market value of
comparable listed companies.
Our valuation specialists evaluated the
appropriateness of the discount rates when
an income approach is used, by comparing
the key inputs of the discount rates to
publicly available market data information
and assessing business changes in the
company in the current year.
Our scientific expertise
Our medical specialist challenged
management’s assessment on the overall
scientific validation and progress of each
relevant fair value estimate.
Assessing valuer’s credentials:
We used our valuation specialists to
assist us in assessing the expertise and
credentials of the group’s external valuation
specialists used in the corroboration of
management’s valuation.
Benchmarking assumptions:
Internal data such as strategic plans
and external data such as public
announcements are utilised for inputs such
as exit dates, exit scenarios and probability
of exit scenarios. Procedures performed
included, inspecting strategic plans and
public announcements and comparing
against previous year assumptions and
assessing if any changes were reasonable
in the context of recent developments
at the Company.
148 PureTech Health plc Annual report and accounts 2020
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
2
Key audit matters: our assessment of risks of material misstatement — continued
The risk
Our response
Where instruments were valued using
the price of a recent transaction or
agreement as an appropriate basis for the
measurement of fair value we inspected
agreements or correspondence to
corroborate the price and we evaluated
whether the transaction or event was on an
arm’s length by assessing whether the third
party investors were independent from the
Company.
Where an income approach was used
to derive the valuation, we evaluated
the reasonableness of the probability
of success used by comparing them to
publicly available industry data.
Assessing transparency:
We assessed the appropriateness, in
accordance with relevant accounting
standards, of the disclosures related to
estimation uncertainty.
Our results
We found the valuation of level 3 financial
instruments to be acceptable. (2020:
acceptable).
Classification of new preferred
shares and convertible loan
notes including identification and
classification of any embedded
derivatives
($63.4 million preferred shares
and $2.2m convertible notes;
2020: $25.0m convertible notes)
Refer to page 128 (Audit
Committee Report), page 160
(accounting policy) and page 191
and 198 (financial disclosures).
Accounting treatment
The Group finances its operations partly
through financial instruments and in the
current period entered into a convertible
loan note transaction and Vedanta issued
preferred shares.
We performed the tests below rather
than seeking to rely on any of the Group’s
controls because the nature of the balance
is such that we would expect to obtain audit
evidence primarily through the detailed
procedures described.
There is a significant level of judgement
in relation to assessing the terms of
the instruments to identify whether the
instruments meet the criterion to be
classified as debt or equity in the issuer.
There is also judgement in assessing the
terms of the contracts to determine if any
host instrument incudes any separable
embedded derivatives and whether
any separable embedded derivatives
should be classified as det or equity .
Due to these factors, for new convertible
notes and preferred shares issued by
subsidiaries in the year, this has been
determined to be a significant risk.
Our procedures included:
Accounting analysis:
We inspected the terms of the agreements
and features of the instruments and
assessed these against the requirements
of the accounting standards to identify
whether the financial instruments should be
classified as liability or equity; whether the
financial instruments contained embedded
derivatives; and whether any embedded
derivatives should be classified as equity
or liability.
Assessing transparency:
We have considered the adequacy of the
disclosure of the accounting treatment in
the financial statements and disclosure of
key judgements;
Our results
We found the classification of preferred
shares and convertible notes and the
identification and classification of any
embedded derivative within financial
instruments to be acceptable. (2020:
acceptable).
PureTech Health plc Annual report and accounts 2021 149
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
2
Key audit matters: our assessment of risks of material misstatement — continued
The risk
Our response
Valuation of investments and
intercompany receivable balances
held by the Parent Company
($446.0 million; 2020: $458.6m)
Refer to page 128 (Audit
Committee Report), page 214
(accounting policy) and page 214
(financial disclosures).
Low risk, high value
The carrying amount of the parent
Company’s investments in and
intercompany receivables from the
subsidiary companies represents 100%
(2020: 100%) of the Company’s total
assets. The recoverability of these
balances is not considered to contain
a high risk of significant misstatement
or be subject to significant judgement.
However, due to their materiality in the
context of the parent Company financial
statements, this is considered to be
the area which was the key focus of our
overall parent Company audit.
We performed the tests below rather
than seeking to rely on any of the Group’s
controls because the nature of the balance
is such that we would expect to obtain audit
evidence primarily through the detailed
procedures described.
Our procedures included:
Comparing valuations:
We compared the carrying amount of
the investment and the intercompany
receivables to the market capitalisation of
the Group, as PureTech Health LLC contains
all of the Group’s trading operations.
We compared the carrying amount of
the investment and the intercompany
receivables to the fair value of all the
financial instruments and investments
held by the group to assess for indicators
of impairment.
Our results
We found the recoverability of the
investments and intercompany receivable
balances held by the Parent Company to be
acceptable. (2020: acceptable).
150 PureTech Health plc Annual report and accounts 2020
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
3
Our application of materiality and an overview of the scope of our audit
Total operating expenses
$946m (2020: $131m of
total operating expenses)
Group Materiality
$4.00m (2020: $1.10m)
$4.00m
Whole financial
statements materiality
(2020: $1.10m)
$2.60m
Whole financial
statements performance
materiality (2020: $0.86m)
$2.80m
Range of materiality
at 3 components
($1.05m to $2.80m)
(2020: $0.39m to $0.82m)
$0.2m
Misstatements reported
to the audit committee
(2020: $0.06m)
Total operating expenses
Group materiality
Group revenue
Group profit before tax
6
94%
(2020: 100%)
100
94
Full scope for Group
audit purposes 2021
Full scope for Group
audit purposes 2020
Out of scope for group
audit purposes 2021
100%
(2020: 100%)
100
100
Group total assets
100%
(2020: 100%)
100
100
Materiality for the group financial statements as a whole was
set at $4.0m (2020:$1.1m), determined with reference to a
benchmark of total assets (2020: total operating expenses),
of which it represents 0.4% (2020: 0.8% of total operating
expenses). The benchmark changed to total assets from
total operating expenses as we assessed the users of the
financial statements would be more focussed on total assets
as a number of founded entities move into the next phase
of their life cycle with IPOs taking place or being planned.
This has resulted in realisation of the Group’s investments
and cash proceeds. Materiality for the parent company
financial statements as a whole was set at $2.5m (2020:
$0.39m), determined with reference to a benchmark of total
assets, of which it represents 0.6% (2020: 0.11%).The increase
in materiality in the parent company is due to the materiality
being capped in prior year by component materiality of
the Group.
In line with our audit methodology, our procedures on
individual account balances and disclosures were performed
to a lower threshold, performance materiality, so as to reduce
to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a
material amount across the financial statements as a whole.
Performance materiality was set at 65% (2020: 75%) of
materiality for the financial statements as a whole, which
equates to $2.6m (2020: $0.86m) for the group and $1.62m
(2020: $0.39m) for the parent company. We applied this
percentage in our determination of performance materiality
based on the level of identified misstatements and control
deficiencies during the prior period.
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding $0.2m,
in addition to other identified misstatements that warranted
reporting on qualitative grounds.
The scope of the audit work performed was fully substantive
as we did not rely upon the Group’s internal control over
financial reporting
Of the group’s 4 (2020: 4) reporting components, we
subjected 3 (2020: 4) to full scope audits for group purposes.
For the residual component, we performed analysis at an
aggregated Group level to re-examine our assessment that
there were no significant risks of material misstatement
with these.
The Group team instructed component auditors as to the
significant areas to be covered, including the relevant risks
detailed above and the information to be reported back.
The component materialities ranged from $1.05m to $2.8m,
having regard to the mix of size and risk profile of the Group
across the components. The work on 2 of the 3 components
(2020: 2 of the 4 components) was performed by component
auditors and the rest, including the audit of the parent
company, was performed by the Group team.
Meetings and telephone conferences were also held with the
component auditor to assess audit risk and strategy. At these
meetings, the findings reported to the Group team were
discussed in more detail, and any further work required by the
Group team was then performed by the component auditor.
PureTech Health plc Annual report and accounts 2021 151
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
4. Going concern
Our conclusions based on this work:
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Group or the Company or to cease their operations, and as
they have concluded that the Group’s and the Company’s
financial position means that this is realistic. They have also
concluded that there are no material uncertainties that could
have cast significant doubt over their ability to continue as a
going concern for at least a year from the date of approval of
the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the
general economic environment to identify the inherent risks
to its business model and analysed how those risks might
affect the Group’s and Company’s financial resources or
ability to continue operations over the going concern period.
The risks that we considered most likely to adversely affect
the Group’s and Company’s available financial resources over
this period were:
• Failure to raise future funding to finance the Group’s
strategic business model.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe,
but plausible downside scenarios that could arise from
these risks individually and collectively against the level of
available financial resources indicated by the Group’s financial
forecasts.
Our procedures also included:
• Critically assessing assumptions in alternative funding
scenarios and overlaying knowledge of the entity’ plans
based on approved budgets and our knowledge of the
entity and the sector in which it operates.
• We also compared past budgets to actual results to assess
the directors’ track record of budgeting accurately.
• We evaluated the achievability of the actions the directors
• we consider that the directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
• we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively,
may cast significant doubt on the Group’s or Company’s
ability to continue as a going concern for the going
concern period;
• we have nothing material to add or draw attention to
in relation to the directors’ statement in note 1 to the
financial statements on the use of the going concern basis
of accounting with no material uncertainties that may cast
significant doubt over the Group and Company’s use of
that basis for the going concern period, and we found the
going concern disclosure in note 1 to be acceptable; and
• the related statement under the Listing Rules set out
on page 94 is materially consistent with the financial
statements and our audit knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that
are inconsistent with judgements that were reasonable at
the time they were made, the above conclusions are not a
guarantee that the Group or the Company will continue in
operation.
5
Fraud and breaches of laws and regulations –
ability to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud
(“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. Our risk assessment
procedures included:
consider they would take to improve the position
should the risk of being unable to obtain future funding
materialise, which included liquidating balance sheet
assets and stopping additional investments in subsidiaries,
taking into account the extent to which the directors can
control the timing and outcome of these.
• Enquiring of directors, the audit committee and inspection
of policy documentation as to the Group’s high-level
policies and procedures to prevent and detect fraud,
including the Group’s channel for “whistleblowing”, as well
as whether they have knowledge of any actual, suspected
or alleged fraud.
• We considered whether the going concern disclosure in
• Reading Board, audit, remuneration and nomination
note 1 to the financial statements gives a full and accurate
description of the Directors’ assessment of going concern.
committee minutes.
• Considering remuneration incentive schemes and
performance targets for management and directors
We communicated identified fraud risks throughout
the audit team and remained alert to any indications of
fraud throughout the audit. This included communication
from the group to component audit teams of relevant
fraud risks identified at the Group level and request to
component audit teams to report to the Group audit team
any instances of fraud that could give rise to a material
misstatement at group.
152 PureTech Health plc Annual report and accounts 2020
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
5
Fraud and breaches of laws and regulations – ability to detect — continued
As required by auditing standards, and taking into account
possible pressures to meet investor expectations and
weaknesses in internal controls, we perform procedures
to address the risk of management override of controls, in
particular the risk that Group and component management
may be in a position to make inappropriate accounting entries
and the risk of bias in accounting estimates and judgements
such as the valuation of financial instruments. On this audit
we do not believe there is a fraud risk related to revenue
recognition because management have little incentive to
increase revenue on the basis that their remuneration is
not dependent on it and revenue would not demonstrate
progress of the business.
We also identified a fraud risk related to the valuation of
financial instruments; Gelesis and Akili preferred shares
financial assets, Vedanta and Follica preferred shares
financial liabilities and Follica and Vedanta warrants
financial liabilities in response to possible pressures to
meet investor expectations and the level of estimation
and judgement required.
Further detail in respect of the valuation of financial
instruments is set out in the key audit matter disclosures
in section 2 of this report.
We performed procedures including:
• Performing a walkthrough of the design and
implementation of journals controls.
•
Identifying journal entries to test for all full scope
components based on risk criteria and comparing the
identified entries to supporting documentation. These
included those with unusual descriptions, those posted
and approved by the same user, those posted to unusual
accounts in relation to cash and revenue, and material post
close entries.
• • Assessing whether the judgements made in making
accounting estimates are indicative of a potential bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our general commercial and sector
experience and through discussion with the directors (as
required by auditing standards) and discussed with the
directors the policies and procedures regarding compliance
with laws and regulations.
As the Group is regulated, our assessment of risks involved
gaining an understanding of the control environment
including the entity’s procedures for complying with
regulatory requirements.
We communicated identified laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit. This included
communication from the group to component audit teams
of relevant laws and regulations identified at the Group
level, and a request for component auditors to report to the
group team any instances of non-compliance with laws and
regulations that could give rise to a material misstatement at
a group level.
The potential effect of these laws and regulations on the
financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies legislation),
distributable profits legislation and taxation legislation and
we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in the
financial statements, for instance through the imposition of
fines or litigation. We identified the following areas as those
most likely to have such an effect: health and safety, anti-
bribery, employment law (including within the United States),
Food and Drug Administration and European Medicines
Agency regulations, 1940s Investment Act and the Securities
Exchange Commission regulations. Auditing standards limit
the required audit procedures to identify non-compliance
with these laws and regulations to enquiry of the directors
and inspection of regulatory and legal correspondence, if
any. Therefore, if a breach of operational regulations is not
disclosed to us or evident from relevant correspondence, an
audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our audit
in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk
of non-detection of fraud, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls. Our audit procedures are
designed to detect material misstatement. We are not
responsible for preventing non-compliance or fraud and
cannot be expected to detect non-compliance with all laws
and regulations.
PureTech Health plc Annual report and accounts 2021 153
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
6 We have nothing to report on the other information
in the Annual Report and accounts
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated
or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the
strategic report and the directors’ report;
•
•
in our opinion the information given in those reports
for the financial year is consistent with the financial
statements; and
in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
Disclosures of emerging and principal risks and
longer‑term viability
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and
the viability statement, and the financial statements and our
audit knowledge.
Based on those procedures, we have nothing material to add
or draw attention to in relation to:
• the directors’ confirmation within the Viability Statement
page 94 that they have carried out a robust assessment
of the emerging and principal risks facing the Group,
including those that would threaten its business model,
future performance, solvency and liquidity;
• the Principal Risks disclosures describing these risks and
how emerging risks are identified, and explaining how they
are being managed and mitigated; and
• the directors’ explanation in the Viability Statement of
how they have assessed the prospects of the Group, over
what period they have done so and why they considered
that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the
Group will be able to continue in operation and meet
its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set
out on page 94 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures
are materially consistent with the financial statements and our
audit knowledge.
Our work is limited to assessing these matters in the
context of only the knowledge acquired during our financial
statements audit. As we cannot predict all future events or
conditions and as subsequent events may result in outcomes
that are inconsistent with judgements that were reasonable at
the time they were made, the absence of anything to report
on these statements is not a guarantee as to the Group’s and
Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and the financial
statements and our audit knowledge.
Based on those procedures, we have concluded that each
of the following is materially consistent with the financial
statements and our audit knowledge:
• the directors’ statement that they consider that the
annual report and financial statements taken as a whole
is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the
Group’s position and performance, business model and
strategy;
• the section of the annual report describing the work of
the Audit Committee, including the significant issues that
the audit committee considered in relation to the financial
statements, and how these issues were addressed; and
• the section of the annual report that describes the review
of the effectiveness of the Group’s risk management and
internal control systems.
We are required to review the part of Corporate Governance
Statement relating to the Group’s compliance with the
provisions of the UK Corporate Governance Code specified
by the Listing Rules for our review. We have nothing to report
in this respect.
The impact of climate change on our audit
In planning our audit we performed a risk assessment to
consider the potential impacts of climate change on the
Group’s business and its financial statements and our
audit. This included making enquiries of management to
understand the extent of the potential impact of climate
change risk on the Group’s financial statements. Taking into
account the industries the Group invests in, there was no
significant impact on our key audit matters
We have also read the Group’s and the Parent Company’s
disclosure of climate related information in the front half
of the annual report as set out on pages 87 to 89 and
considered consistency with the financial statements and
our audit knowledge.
154 PureTech Health plc Annual report and accounts 2020
Financial statements Independent auditor’s report to the members of PureTech Health plc — continued
7 We have nothing to report on the other matters on
which we are required to report by exception
9
The purpose of our audit work and to whom we owe
our responsibilities
Under the Companies Act 2006, we are required to report to
you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
We have nothing to report in these respects.
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and the terms of our engagement by
the Company. Our audit work has been undertaken so that
we might state to the Company’s members those matters
we are required to state to them in an auditor’s report and
the further matters we are required to state to them in
accordance with the terms agreed with the Company, and
for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the Company and the Company’s members, as a body,
for our audit work, for this report, or for the opinions we
have formed.
Robert Seale (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
5 Canada Square
Canary Wharf
London
E14 5GL
25 April 2022
8
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
126, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a
true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error; assessing the Group and parent Company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend
to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an
audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material
if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
PureTech Health plc Annual report and accounts 2021 155
Financial statements
Consolidated Statements of Comprehensive Income/(Loss)
For the years ended December 31
Contract revenue
Grant revenue
Total revenue
Operating expenses:
General and administrative expenses
Research and development expenses
Operating income/(loss)
Other income/(expense):
Gain on deconsolidation
Gain/(loss) on investments held at fair value
Loss realized on sale of investments
Gain on loss of significant influence
Other income/(expense)
Other income/(expense)
Finance income/(costs):
Finance income
Finance costs – contractual
Finance income/(costs) – fair value accounting
Finance income/(costs) – subsidiary preferred shares
Net finance income/(costs)
Share of net income/(loss) of associates accounted for using the
equity method
Impairment of investment in associate
Income/(loss) before taxes
Taxation
Income/(Loss) for the year
Other comprehensive income/(loss):
Items that are or may be reclassified as profit or loss
Foreign currency translation differences
Total other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Income/(loss) attributable to:
Owners of the Company
Non-controlling interests
Comprehensive income/(loss) attributable to:
Owners of the Company
Non-controlling interests
Earnings/(loss) per share:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
The accompanying notes are an integral part of these financial statements.
Note
3
3
7
7
5
5
5
6
6, 21
9
9
9
9
6
6
25
18
18
10
10
2021
$000s
9,979
7,409
17,388
(57,199)
(110,471)
(150,282)
—
179,316
(20,925)
—
1,592
159,983
214
(4,771)
9,606
—
5,050
(73,703)
—
(58,953)
(3,756)
(62,709)
—
—
(62,709)
(60,558)
(2,151)
(62,709)
(60,558)
(2,151)
(62,709)
$
(0.21)
(0.21)
2020
$000s
8,341
3,427
11,768
(49,440)
(81,859)
(119,531)
—
232,674
(54,976)
—
1,035
178,732
1,183
(2,946)
(4,351)
—
(6,115)
(34,117)
—
18,969
(14,401)
4,568
469
469
5,037
5,985
(1,417)
4,568
6,454
(1,417)
5,037
$
0.02
0.02
2019
$000s
8,688
1,119
9,807
(59,358)
(85,848)
(135,399)
264,409
(37,863)
—
445,582
39
672,167
4,362
(2,576)
(46,475)
(1,458)
(46,147)
30,791
(42,938)
478,474
(112,409)
366,065
(10)
(10)
366,055
421,144
(55,079)
366,065
421,134
(55,079)
366,055
$
1.49
1.44
156 PureTech Health plc Annual report and accounts 2021
Financial statements
Consolidated Statements of Financial Position
As of December 31,
Assets
Non-current assets
Property and equipment, net
Right of use asset, net
Intangible assets, net
Investments held at fair value
Investments in associates
Lease receivable – long-term
Other non-current assets
Total non-current assets
Current assets
Trade and other receivables
Income tax receivable
Prepaid expenses
Lease receivable – short-term
Other financial assets
Short-term note from associate
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Merger reserve
Translation reserve
Other reserve
Retained earnings/(accumulated deficit)
Equity attributable to the owners of the Company
Non-controlling interests
Total equity
Non-current liabilities
Deferred tax liability
Lease liability, non-current
Long-term loan
Liability for share based awards
Total non-current liabilities
Current liabilities
Deferred revenue
Lease liability, current
Trade and other payables
Subsidiary:
Notes payable
Warrant liability
Preferred shares
Current portion of long-term loan
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Note
11
21
12
5, 16
6
21
22
25
21
13, 22
16
22
14
14
14
14
14
14
14, 18
25
21
20
8
3
21
19
16, 17
16
15, 16
20
2021
$000s
2020
$000s
26,771
17,166
987
397,179
—
1,285
810
444,197
3,174
4,514
10,755
415
2,124
15,120
465,708
501,809
946,006
5,444
289,303
138,506
469
(40,077)
199,871
593,515
(9,368)
584,147
89,765
29,040
14,261
2,659
135,725
65
3,950
35,817
3,916
6,787
174,017
857
726
226,135
361,859
946,006
22,777
20,098
899
530,161
—
1,700
11
575,645
2,558
—
5,405
381
2,124
—
403,881
414,348
989,994
5,417
288,978
138,506
469
(24,050)
260,429
669,748
(16,209)
653,539
108,626
32,088
14,818
—
155,531
1,472
3,261
21,826
26,455
8,206
118,972
—
732
180,924
336,455
989,994
Please refer to the accompanying Notes to the consolidated financial information. Registered number: 09582467.
The Consolidated Financial Statements were approved by the Board of Directors and authorized for issuance on April 25, 2022
and signed on its behalf by:
Daphne Zohar
Chief Executive Officer
April 25, 2022
The accompanying notes are an integral part of these financial statements.
PureTech Health plc Annual report and accounts 2021 157
Financial statements
Consolidated Statements of Changes in Equity
For the years ended December 31
Share Capital
Amount
$000s
Share
premium
$000s
Merger
reserve
$000s
Translation
reserve
$000s
5,375 278,385
—
—
—
—
138,506
—
—
Balance January 1, 2019
Net income/(loss)
Foreign currency exchange
Total comprehensive income/(loss)
for the year
Deconsolidation of subsidiary
Subsidiary note conversion and
changes in NCI ownership interest
Exercise of share-based awards
Purchase of subsidiary's
non-controlling interest
through issuance of shares
Revaluation of deferred tax assets
related to share-based awards
Equity settled share-based payments
Vesting of restricted stock units (RSU)
Other
Shares
282,493,867
—
—
—
—
—
237,090
—
—
—
5
—
—
—
499
2,126,338
28
9,078
—
—
513,324
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance December 31, 2019
285,370,619
5,408 287,962
138,506
Net income/(loss)
Foreign currency exchange
Total comprehensive income/(loss)
for the year
Exercise of share-based awards
Revaluation of deferred tax assets
related to share-based awards
Equity settled share-based awards
Settlement of restricted stock units
Other
—
—
—
514,406
—
—
—
—
—
—
—
9
—
—
—
—
—
—
—
1,016
—
—
—
—
—
—
—
—
—
—
—
—
Retained
earnings/
(accumulated
deficit)
$000s
(166,693)
421,144
—
Total Parent
equity
$000s
276,506
421,144
(10)
Non-
controlling
interests
$000s
(108,535)
(55,079)
—
Total
Equity
$000s
167,971
366,065
(10)
421,144
421,134
(55,079)
366,055
—
—
—
—
—
—
—
(7)
—
97,178
97,178
(20,631)
504
23,049
—
2,418
504
(24,039)
24,039
—
3,061
12,785
(1,280)
(2)
—
1,683
—
25
3,061
14,468
(1,280)
23
Other
reserve
$000s
20,923
—
—
—
—
(20,631)
—
(33,145)
3,061
12,785
(1,280)
5
(18,282)
254,444
668,037
(17,639)
650,398
—
—
—
—
(684)
7,805
(12,888)
—
5,985
—
5,985
—
—
—
—
—
5,985
469
6,454
1,025
(684)
7,805
(12,888)
—
(1,417)
—
(1,417)
11
—
2,822
—
13
4,568
469
5,037
1,036
(684)
10,627
(12,888)
13
10
—
(10)
(10)
—
—
—
—
—
—
—
—
—
—
469
469
—
—
—
—
—
As at December 31, 2020
285,885,025
5,417 288,978
138,506
469
(24,050)
260,429
669,748
(16,209)
653,539
Net income/(loss)
Foreign currency exchange
Total comprehensive income/(loss)
for the year
Exercise of share-based awards
Revaluation of deferred tax assets
related to share-based awards
Equity settled share-based awards
Settlement of restricted stock units
Reclassification of equity settled
awards to liability awards
Vesting of share-based awards and
net share exercise
Acquisition of subsidiary non-
controlling interest
NCI exercise of share-based awards in
subsidiaries
Distributions
—
—
—
1,911,560
—
—
—
—
—
—
—
—
—
—
—
27
—
—
—
—
—
—
—
—
—
—
—
326
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
615
7,109
(10,749)
(6,773)
(2,582)
(9,636)
5,988
—
(60,558)
—
(60,558)
—
(2,151)
—
(62,709)
—
(60,558)
(60,558)
(2,151)
(62,709)
—
—
—
—
—
—
—
—
—
352
—
352
615
7,109
(10,749)
(6,773)
(2,582)
—
6,252
—
—
—
615
13,361
(10,749)
(6,773)
(2,582)
(9,636)
8,668
(968)
5,988
—
(5,922)
(6)
66
(6)
Balance December 31, 2021
287,796,585
5,444 289,303
138,506
469
(40,077)
199,871
593,515
(9,368)
584,147
The accompanying notes are an integral part of these financial statements.
158 PureTech Health plc Annual report and accounts 2021
Financial statements Consolidated Statements of Cash Flows
For the years ended December 31
Cash flows from operating activities
Income/(loss)
Adjustments to reconcile net operating loss to net cash used in operating activities:
Non-cash items:
Depreciation and amortization
Impairment of investment in associate
Equity settled share-based payment expense
(Gain)/loss on investments held at fair value
Realized loss on sale of investments
Gain on deconsolidation
Gain on loss of significant influence
Loss on disposal of assets
Share of net (income)/loss of associates accounted for using the equity method
Fair value gain on derivative
Income taxes, net
Finance costs, net
Changes in operating assets and liabilities:
Accounts receivable
Other financial assets
Prepaid expenses and other current assets
Deferred revenues
Trade and other payables
Other liabilities
Other
Income taxes paid
Interest received
Interest paid
Net cash used in operating activities
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from sale of property and equipment
Purchases of intangible assets
Purchase of associate preferred shares held at fair value
Purchase of investments held at fair value
Sale of investments held at fair value
Receipt of payment of sublease
Purchase of short-term note from associate
Purchase of convertible note
Cash derecognized upon loss of control over subsidiary
Purchases of short-term investments
Proceeds from maturity of short-term investments
Net cash provided by investing activities
Cash flows from financing activities:
Receipt of PPP loan
Issuance of long term loan
Issuance of subsidiary preferred Shares
Proceeds from issuance of convertible notes in subsidiary
Payment of lease liability
Repayment of long-term debt
Distribution to Tal shareholders
Exercise of stock options
Settlement of RSU's
Vesting of restricted stock units and net share exercise
Issuance of shares to NCI in subsidiary
Issuance of warrants
Acquisition of a non-controlling Interest of a subsidiary
Other
Net cash provided by financing activities
Effect of exchange rates on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of non-cash investment and financing activities:
Purchase of non controlling interest in consideration for issuance of shares and options
Purchase of intangible asset and investment held at fair value in consideration for issuance of
warrant liability and assumption of other long and short-term liabilities
Purchase of property, plant and equipment against trade and other payables
Leasehold improvements purchased through lease incentives (deducted from Right of Use Asset)
Conversion of subsidiary convertible note into preferred share liabilities
Conversion of subsidiary convertible note into subsidiary common stock (NCI)
Supplemental disclosure of cash paid for income taxes:
Cash paid for income taxes
The accompanying notes are an integral part of these financial statements.
Note
2021
$000s
2020
$000s
2019
$000s
(62,709)
4,568
366,065
11, 12
6
8
5
5
5
11
6
6
25
9
22
13
3
19
20, 21
11
12
5, 6
5
5
21
16
6
22
22
20
15
17
21
15
11
11
17
7,287
—
13,950
(179,316)
20,925
—
—
53
73,703
(800)
3,756
(5,050)
(617)
—
(5,350)
(1,407)
8,338
—
(103)
(27,766)
214
(3,382)
6,645
—
10,718
(232,674)
54,976
—
—
66
34,117
—
14,402
6,114
(529)
—
(3,371)
(5,223)
605
(7)
—
(20,737)
1,155
(2,651)
(158,274)
(131,827)
(5,571)
30
(90)
—
(500)
218,125
381
(15,000)
—
—
—
—
197,375
—
—
37,610
2,215
(3,375)
—
—
352
(10,749)
(2,582)
66
—
(806)
(5)
22,727
—
61,827
403,881
465,708
—
—
1,841
1,010
25,797
—
(5,170)
—
(254)
(10,000)
(1,150)
350,586
350
—
—
—
—
30,116
364,478
68
14,720
13,750
25,000
(2,908)
—
—
1,036
(12,888)
—
—
92
—
—
38,869
—
271,520
132,360
403,881
—
—
—
—
—
—
6,665
42,938
14,468
37,863
—
(264,409)
(445,582)
140
(30,791)
—
112,077
46,229
747
(48)
(25)
186
11,166
3,002
—
—
3,648
(2,495)
(98,156)
(12,138)
—
(400)
(13,670)
(1,556)
9,294
191
—
(6,480)
(16,036)
(69,541)
173,995
63,659
—
—
51,048
1,606
(1,678)
(178)
(112)
504
—
(1,280)
—
—
—
—
49,910
(104)
15,309
117,051
132,360
9,106
15,894
—
10,680
4,894
2,418
27,766
20,737
176
PureTech Health plc Annual report and accounts 2021 159
Financial statements
Notes to the Condensed Consolidated Financial Statements
1. Accounting policies
Description of Business
PureTech Health plc (“PureTech,” the “Parent” or the “Company”) is a public company incorporated, domiciled and registered
in the United Kingdom (“UK”). The registered number is 09582467 and the registered address is 8th Floor, 20 Farringdon
Street, London EC4A 4AB, United Kingdom.
PureTech’s group financial statements consolidate those of the Company and its subsidiaries (together referred to as the
“Group”). The Parent company financial statements present financial information about the Company as a separate entity and
not about its Group.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these group financial statements.
Basis of Presentation
The consolidated financial statements of the Group are presented as of December 31, 2021 and 2020, and for the years
ended December 31, 2021, 2020 and 2019. The Group financial statements have been approved by the Directors on April 25,
2022, and are prepared in accordance with UK-adopted International Financial Reporting Standards (IFRSs). The Consolidated
Financial Statements also comply fully with IFRSs as issued by the International Accounting Standards Board (IASB). UK-
adopted IFRSs differs in certain respects from IFRS as issued by the IASB. However, the differences have no impact for the
periods presented.
For presentation of the Consolidated Statements of Comprehensive Income/(Loss), the Company uses a classification based
on the function of expenses, rather than based on their nature, as it is more representative of the format used for internal
reporting and management purposes and is consistent with international practice.
Certain amounts in the Consolidated Financial Statements and accompanying notes may not add due to rounding. All
percentages have been calculated using unrounded amounts.
Basis of Measurement
The consolidated financial statements are prepared on the historical cost basis except that the following assets and liabilities
are stated at their fair value: investments held at fair value, short-term note from associate and liabilities classified as fair value
through the profit or loss.
Use of Judgments and Estimates
In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that
affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis.
Significant estimation is applied in determining the following:
• Financial instruments valuations (Note 16): when estimating the fair value of subsidiary warrants, convertible notes and
subsidiary preferred shares carried at fair value through profit and loss (FVTPL) as well as investments held at fair value, at
initial recognition and upon subsequent measurement. This includes determining the appropriate valuation methodology
and making certain estimates of the future earnings potential of the subsidiary businesses, appropriate discount rate,
estimated time to exit, marketability and other industry and company specific risk factors. See Note 16 for the sensitivity
analysis for key estimates used in these valuations.
Significant judgement is also applied in determining the following:
• Subsidiary preferred shares liability classification (Note 15): when determining the classification of financial instruments
in terms of liability or equity. These judgements include an assessment of whether the financial instruments include any
embedded derivative features, whether they include contractual obligations of the Group to deliver cash or other financial
assets or to exchange financial assets or financial liabilities with another party, and whether that obligation will be settled by
the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
Further information about these critical judgements and estimates is included below under Financial Instruments.
• When the power to control the subsidiaries exists (please refer to Notes 5 and 6 and accounting policy below Subsidiaries).
This judgement includes an assessment of whether the Company has (i) power over the investee; (ii) exposure, or rights,
to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect
the amount of the investor’s returns. The Company considers among others its voting shares, shareholder agreements,
ability to appoint board members, representation on the board, rights to appoint management, de facto control, investee
dependence on the Company etc. If the power to control investees exists we consolidate the financial statements of such
investee in the consolidated financial statements of the Group. Upon issuance of new shares in a subsidiary and a resulting
change in any shareholders or governance agreements, the Group reassesses its ability to control the investee based on the
revised board composition and revised subsidiary governance and management structure. When such new circumstances
result in the Group losing its power to control the investee, the investee is deconsolidated.
160 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
• Whether the Company has significant influence over financial and operating policies of investees in order to determine if
the Company should account for its investment as an associate based on IAS 28 or based on IFRS 9, Financial Instruments
(please refer to Note 5). This judgement includes, among others, an assessment whether the Company has representation
on the Board of Directors of the investee, whether the Company participates in the policy making processes of the investee,
whether there is any interchange of managerial personnel, whether there is any essential technical information provided to
the investee and if there are any transactions between the Company and the investee.
• Upon determining that the Company does have significant influence over the financial and operating policies of an investee,
if the Company holds more than a single instrument issued by its equity-accounted investee, judgement is required to
determine whether the additional instrument forms part of the investment in the associate, which is accounted for under
IAS 28 and scoped out of IFRS 9, or it is a separate financial instrument that falls in the scope of IFRS 9 (please refer to
Notes 5 and 6). This judgement includes an assessment of the characteristics of the financial instrument of the investee
held by the Company and whether such financial instrument provides access to returns underlying an ownership interest.
• Where the company has other investments in an equity accounted investee that are not accounted for under IAS 28,
judgement is required in determining if such investments constitute Long-Term Interests for the purposes of IAS 28 (please
refer to Notes 5 and 6). This determination is based on the individual facts and circumstances and characteristics of each
investment, but is driven, among other factors, by the intention and likelihood to settle the instrument through redemption
or repayment in the foreseeable future, and whether or not the investment is likely to be converted to common stock or
other equity instruments (please also refer to accounting policy with regard to Investments in Associates below). When
considering the individual facts and circumstances of the Group’s investment in its associate's preferred stock in the manner
described above, including the long-term nature of such investment, the ability of the Group to convert its preferred stock
investment to an investment in common shares and the likelihood of such conversion, as well the fact that there is no
planned redemption or other settlement of the preferred stock by the investee in the foreseeable future, we concluded that
such investment is considered a Long Term Interest.
As of December 31, 2021, the Group had cash and cash equivalents of $465.7 million. Considering the Group’s and the
Company's financial position as of December 31, 2021, and its principal risks and opportunities, a going concern analysis has
been prepared for at least the twelve-month period from the date of signing the Consolidated Financial Statements ("the
going concern period") utilizing realistic scenarios and applying a severe but plausible downside scenario. Even under the
downside scenario, the analysis demonstrates the Group and the Company continue to maintain sufficient liquidity headroom
and continue to comply with all financial obligations. The Directors believe the Group and the Company is adequately
resourced to continue in operational existence for at least the twelve-month period from the date of signing the Consolidated
Financial Statements, irrespective of uncertainty regarding the duration and severity of the COVID-19 pandemic and the global
macroeconomic impact of the pandemic. Accordingly, the Directors considered it appropriate to adopt the going concern
basis of accounting in preparing the Consolidated Financial Statements and the PureTech Health plc Financial Statements.
Basis of consolidation
The consolidated financial information as of December 31, 2021 and 2020, and for each of the years ended December 31, 2021,
2020 and 2019, comprises an aggregation of financial information of the Company and the consolidated financial information
of PureTech Health LLC (“PureTech LLC”). Intra-group balances and transactions, and any unrealized income and expenses
arising from intra-group transactions, are eliminated.
Subsidiaries
As used in these financial statements, the term subsidiaries refers to entities that are controlled by the Group. Financial results
of subsidiaries of the Group as of December 31, 2021, are reported within the Internal segment, Controlled Founded Entities
segment or the Parent Company and Other section (please refer to Note 4). Under applicable accounting rules, the Group
controls an entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration
potential voting rights, board representation, shareholders' agreements, ability to appoint Directors and management, de
facto control and other related factors. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling
interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to
have a deficit balance.
A list of all current and former subsidiaries organized with respect to classification as of December 31, 2021, and the Group’s
total voting percentage, based on outstanding voting common and preferred shares as of December 31, 2021, 2020 and 2019,
is outlined below. All current subsidiaries are domiciled within the United States and conduct business activities solely within
the United States.
PureTech Health plc Annual report and accounts 2021 161
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
Subsidiary
Subsidiary operating companies
Alivio Therapeutics, Inc.1,2
Entrega, Inc. (indirectly held through Enlight)1,2
Follica, Incorporated1,2,5
PureTech LYT (formerly Ariya Therapeutics, Inc.)
PureTech LYT-100
PureTech Management, Inc.3
PureTech Health LLC3
Sonde Health, Inc.1,2
Vedanta Biosciences, Inc.1,2
Vedanta Biosciences Securities Corp. (indirectly held
through Vedanta)1,2
Deconsolidated former subsidiary
operating companies
Akili Interactive Labs, Inc.2
Gelesis, Inc.1,2,7,10
Karuna Therapeutics, Inc.1,2,8
Vor Biopharma Inc.1,2,9
Nontrading holding companies
Endra Holdings, LLC (held indirectly through Enlight)2
Ensof Holdings, LLC (held indirectly through Enlight)2
PureTech Securities Corp.2
PureTech Securities II Corp.2
Inactive subsidiaries
Appeering, Inc.2
Commense Inc.2,6
Enlight Biosciences, LLC2
Ensof Biosystems, Inc. (held indirectly through Enlight)1,2
Knode Inc. (indirectly held through Enlight)2
Libra Biosciences, Inc.2
Mandara Sciences, LLC2
Tal Medical, Inc.1,2
Voting percentage at December 31, through the holdings in
2021
2020
2019
Common
Preferred
Common
Preferred
Common
Preferred
—
—
28.7
—
—
100.0
100.0
—
—
100.0
77.3
56.7
100.0
100.0
—
—
51.8
48.6
—
—
28.7
—
—
100.0
100.0
—
—
91.9
83.1
56.7
100.0
100.0
—
—
51.8
59.3
—
—
28.7
—
—
100.0
100.0
—
—
91.9
83.1
56.7
100.0
100.0
—
—
64.1
61.8
—
48.6
—
59.3
—
61.8
—
4.8
5.6
8.6
86.0
86.0
100.0
100.0
—
—
86.0
57.7
—
—
98.3
—
26.7
19.7
—
—
—
—
—
—
100.0
99.1
—
28.3
86.0
100.0
—
100.0
—
4.9
12.6
—
86.0
86.0
100.0
100.0
—
—
86.0
57.7
—
—
98.3
—
41.9
20.2
—
16.4
—
—
—
—
100.0
99.1
—
28.3
86.0
100.0
—
100.0
—
5.7
28.4
—
86.0
86.0
100.0
—
—
—
86.0
57.7
—
—
98.3
—
41.9
20.2
—
47.5
—
—
—
—
100.0
99.1
—
28.3
86.0
100.0
—
100.0
1 The voting percentage is impacted by preferred shares that are classified as liabilities, which results in the ownership percentage not being the same as the ownership
percentage used in allocations to non-controlling interests disclosed in Note 18. The allocation of losses/profits to the noncontrolling interest is based on the holdings
of subordinated stock that provide ownership rights in the subsidiaries. The ownership of liability classified preferred shares are quantified in Note 15.
2 Registered address is Corporation Trust Center, 1209 Orange St., Wilmington, DE 19801, USA.
3 Registered address is 2711 Centerville Rd., Suite 400, Wilmington, DE 19808, USA.
4 The Company’s interests in its subsidiaries are predominantly in the form of preferred shares, which have a liquidation preference over the common stock, are
convertible into common stock at the holder’s discretion or upon certain liquidity events, are entitled to one vote per share on all matters submitted to shareholders
for a vote and entitled to receive dividends when and if declared. In the case of Enlight, Mandara and PureTech Health LLC, the holdings are membership interests in
an LLC. The holders of common stock are entitled to one vote per share on all matters submitted to shareholders for a vote and entitled to receive dividends when and
if declared.
5 On July 19, 2019, all of the outstanding notes, plus accrued interest, issued by Follica to PureTech converted into 15,216,214 shares of Series A-3 Preferred Shares and
12,777,287 shares of common share pursuant to a Series A-3 Note Conversion Agreement between Follica and the noteholders. Please refer to Note 16.
6 Commense turned inactive during 2019.
7 On July 1, 2019 PureTech lost control of Gelesis and Gelesis was deconsolidated from the Group’s financial statements, resulting in only the profits and losses generated
by Gelesis through the deconsolidation date being included in the Group’s Consolidated Statement of Comprehensive Income/(Loss). See Notes 5 and 6 for further
details about the accounting for the investments in Gelesis subsequent to deconsolidation.
8 On March 15, 2019, PureTech lost control of Karuna, Karuna was deconsolidated from the Group’s financial statements and is no longer considered a subsidiary. This
results in only the profits and losses generated by Karuna through the deconsolidation date being included in the Group’s Consolidated Statement of Comprehensive
Income/(Loss).. See Note 5 for further details about the accounting for the investment in Karuna subsequent to deconsolidation.
9 On February 12, 2019, PureTech lost control of Vor, Vor was deconsolidated from the Group’s financial statements and is no longer considered a subsidiary. This results in
only the profits and losses generated by Vor through the deconsolidation date being included in the Group’s Consolidated Statement of Comprehensive Income/(Loss).
See Note 5 for further details about the accounting for the investment in Vor subsequent to deconsolidation.
10 See note 26 regarding Gelesis business combination with Capstar Special Purpose Acquisition Corp after balance sheet date and the Group's ownership rights in the
new combined public entity.
Change in subsidiary ownership and loss of control
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Where the Group loses control of a subsidiary, the assets and liabilities are derecognized along with any related non-
controlling interest (“NCI”). Any interest retained in the former subsidiary is measured at fair value when control is lost.
Any resulting gain or loss is recognized as profit or loss in the Consolidated Statements of Comprehensive Income/(Loss).
162 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
Associates
As used in these financial statements, the term associates are those entities in which the Group has no control but maintains
significant influence over the financial and operating policies. Significant influence is presumed to exist when the Group holds
between 20 and 50 percent of the voting power of an entity, unless it can be clearly demonstrated that this is not the case. The
Group evaluates if it maintains significant influence over associates by assessing if the Group has lost the power to participate
in the financial and operating policy decisions of the associate.
Application of the equity method to associates
Associates are accounted for using the equity method (equity accounted investees) and are initially recognized at cost, or if
recognized upon deconsolidation they are initially recorded at fair value at the date of deconsolidation. The consolidated
financial statements include the Group’s share of the total comprehensive income and equity movements of equity accounted
investees, from the date that significant influence commences until the date that significant influence ceases.
To the extent the Group holds interests in associates that are not providing access to returns underlying ownership interests,
the instrument held by PureTech is accounted for in accordance with IFRS 9 as investments held at fair value.
When the Group’s share of losses exceeds its equity method investment in the investee, losses are applied against Long-Term
Interests, which are investments accounted for under IFRS 9. Investments are determined to be Long-Term Interests when they
are long-term in nature and in substance they form part of the Group's net investment in that associate. This determination is
impacted by many factors, among others, whether settlement by the investee through redemption or repayment is planned
or likely in the foreseeable future, whether the investment can be converted and/or is likely to be converted to common stock
or other equity instrument and other factors regarding the nature of the investment. Whilst this assessment is dependent on
many specific facts and circumstances of each investment, typically conversion features whereby the investment is likely to
convert to common stock or other equity instruments would point to the investment being a Long-Term Interest. Similarly,
where the investment is not planned or likely to be settled through redemption or repayment in the foreseeable future, this
would indicate that the investment is a Long-Term Interest. When the net investment in the associate, which includes the
Group’s investments in other long-term interests, is reduced to nil, recognition of further losses is discontinued except to the
extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.
The Group has also adopted the amendments to IAS 28 Investments in Associates that addresses the dual application of IAS
28 and IFRS 9 (see below) when equity method losses are applied against Long-Term Interests (LTI). The amendments provide
the annual sequence in which both standards are to be applied in such a case. The Group has applied the equity method
losses to the LTIs presented as part of Investments held at fair value subsequent to remeasuring such investments to their fair
value at balance sheet date.
Financial Instruments
Classification
The Group classifies its financial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
• Those to be measured at amortized cost.
The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains and losses will are recorded in profit or loss. For investments in debt instruments, this
will depend on the business model in which the investment is held. For investments in equity instruments that are not held for
trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for
the equity investment at FVOCI. As of balance sheet dates, none of the Company's financial assets are accounted for as FVOCI.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL,
transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets that
are carried at FVTPL are expensed.
Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at
amortized cost. The Group had no debt instruments carried at amortized cost as of balance sheet date. For trade receivables,
the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from
initial recognition of the receivables.
Financial Assets
The Group’s financial assets consist of cash and cash equivalents, trade and other receivables, investments in equity securities,
short-term note, other deposits and investments in associates’ preferred shares. The Group’s financial assets are classified into
the following categories: investments held at fair value, trade and other receivables, short-term investments (if applicable) and
cash and cash equivalents. The Group determines the classification of financial assets at initial recognition depending on the
purpose for which the financial assets were acquired.
PureTech Health plc Annual report and accounts 2021 163
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
Investments held at fair value are investments in equity instruments that are not held for trading. Such investments consist
of the Group's minority interest holdings where the Group has no significant influence or preferred share investments in the
Group's associates that are not providing access to returns underlying ownership interests. These financial assets are initially
measured at fair value and subsequently re-measured at fair value at each reporting date. The Company elects if the gain or
loss will be recognized in Other Comprehensive Income/(Loss) or through profit and loss on an instrument by instrument basis.
The Company has elected to record the changes in fair values for the financial assets falling under this category through profit
and loss. Please refer to Note 5.
Changes in the fair value of financial assets at FVTPL are recognized in other income/(expense) in the Consolidated Statements
of Comprehensive Income/(Loss) as applicable.
The short term note from an associate, since its contractual terms do not consist solely of cash flow payments of principal and
interest on the principal amount outstanding, is initially and subsequently measured at fair value, with changes in fair value
recognized through profit and loss.
Trade and other receivables are non-derivative financial assets with fixed and determinable payments that are not quoted on
active markets. These financial assets are carried at the amounts expected to be received less any expected lifetime losses.
Such losses are determined taking into account previous experience, credit rating and economic stability of counterparty and
economic conditions. When a trade receivable is determined to be uncollectible, it is written off against the available provision.
Trade and other receivables are included in current assets, unless maturities are greater than 12 months after the end of the
reporting period.
Financial Liabilities
The Group’s financial liabilities consist of trade and other payables, subsidiary notes payable, preferred shares, and warrant
liability. Warrant liabilities are initially recognized at fair value. After initial recognition, these financial liabilities are re-measured
at FVTPL using an appropriate valuation technique. Subsidiary notes payable without embedded derivatives are accounted for
at amortized cost.
The majority of the Group’s subsidiaries have preferred shares and notes payable with embedded derivatives, which are
classified as current liabilities. When the Group has preferred shares and notes with embedded derivatives that qualify for
bifurcation, the Group has elected to account for the entire instrument as FVTPL after determining under IFRS 9 that the
instrument qualifies to be accounted for under such FVTPL method.
The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.
Equity Instruments Issued by the Group
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions,
in accordance with IAS 32:
1. They include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions that are potentially unfavorable to the Group; and
2. Where the instrument will or may be settled in the Group’s own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Group’s own equity instruments or is a derivative that will be settled by the
Group exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the financial instrument is classified as a financial liability. Where the instrument so
classified takes the legal form of the Group’s own shares, the amounts presented in the Group's shareholders' equity`exclude
amounts in relation to those shares.
Changes in the fair value of liabilities at FVTPL are recognized in Net finance income (costs) in the Consolidated Statements of
Comprehensive Income/(Loss) as applicable.
IFRS 15, Revenue from Contracts with Customers
The standard establishes a five-step principle-based approach for revenue recognition and is based on the concept of
recognizing an amount that reflects the consideration for performance obligations only when they are satisfied and the control
of goods or services is transferred.
The majority of the Group’s contract revenue is generated from licenses and services, some of which are part of collaboration
arrangements.
Management reviewed contracts where the Group received consideration in order to determine whether or not they should be
accounted for in accordance with IFRS 15. To date, PureTech has entered into transactions that generate revenue and meet the
scope of either IFRS 15 or IAS 20 Accounting for Government Grants. Contract revenue is recognized at either a point-in-time
or over time, depending on the nature of the performance obligations.
164 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
The Group accounts for agreements that meet the definition of IFRS 15 by applying the following five step model:
•
•
Identify the contract(s) with a customer – A contract with a customer exists when (i) the Group enters into an enforceable
contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies
the payment terms related to those goods or services, (ii) the contract has commercial substance and, (iii) the Group
determines that collection of substantially all consideration for goods or services that are transferred is probable based on
the customer’s intent and ability to pay the promised consideration.
Identify the performance obligations in the contract – Performance obligations promised in a contract are identified based
on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the
customer can benefit from the good or service either on its own or together with other resources that are readily available
from third parties or from the Group, and are distinct in the context of the contract, whereby the transfer of the goods or
services is separately identifiable from other promises in the contract.
• Determine the transaction price – The transaction price is determined based on the consideration to which the Group will
be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes
variable consideration, the Group estimates the amount of variable consideration that should be included in the transaction
price utilizing either the expected value method or the most likely amount method depending on the nature of the variable
consideration. Variable consideration is included in the transaction price if, in the Group’s judgement, it is probable that a
significant future reversal of cumulative revenue under the contract will not occur.
• Allocate the transaction price to the performance obligations in the contract – If the contract contains a single performance
obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple
performance obligations require an allocation of the transaction price to each performance obligation based on a relative
standalone selling price basis.
• Recognize revenue when (or as) the Group satisfies a performance obligation – The Group satisfies performance obligations
either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related
performance obligation is satisfied by transferring a promised good or service to a customer.
Revenue generated from services agreements (typically where licenses and related services were combined into one
performance obligation) is determined to be recognized over time when it can be determined that the services meet one of
the following: (a) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the
entity performs; (b) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or
enhanced; or (c) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an
enforceable right to payment for performance completed to date.
It was determined that the Group has contracts that meet criteria (a), since the customer simultaneously receives and consumes
the benefits provided by the Company’s performance as the Company performs. Therefore revenue is recognized over time
using the input method based on costs incurred to date as compared to total contract costs. The Company believes that in
research and development service type agreements using costs incurred to date represents the most faithful depiction of the
entity’s performance towards complete satisfaction of a performance obligation.
Revenue from licenses that are not part of a combined performance obligation are recognized at a point in time due to the
licenses relating to intellectual property that has significant stand-alone functionality and as such represent a right to use the
entity's intellectual property as it exists at the point in time at which the license is granted.
Royalty income received in respect of licensing agreements is recognized as the related third party sales in the licensee occur.
Amounts that are receivable or have been received per contractual terms but have not been recognized as revenue since
performance has not yet occurred or has not yet been completed are recorded as deferred revenue. The Company classifies
as non-current deferred revenue amounts received for which performance is expected to occur beyond one year or one
operating cycle.
Grant Income
The Company recognizes grants from governmental agencies as grant income in the Consolidated Statement of
Comprehensive Income/(Loss), gross of the expenditures that were related to obtaining the grant, when there is reasonable
assurance that the Company will comply with the conditions within the grant agreement and there is reasonable assurance
that payments under the grants will be received. The Company evaluates the conditions of each grant as of each reporting
date to ensure that the Company has reasonable assurance of meeting the conditions of each grant arrangement and that it is
expected that the grant payment will be received as a result of meeting the necessary conditions.
The Company submits qualifying expenses for reimbursement after the Company has incurred the research and development
expense. The Company records an unbilled receivable upon incurring such expenses. In cases were grant income is received
prior to the expenses being incurred or recognized, the amounts received are deferred until the related expense is incurred
and/or recognized. Grant income is recognized in the Consolidated Statements of Comprehensive Income/(Loss) at the time in
which the Company recognizes the related reimbursable expense for which the grant is intended to compensate.
PureTech Health plc Annual report and accounts 2021 165
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
Functional and Presentation Currency
These consolidated financial statements are presented in United States dollars (“US dollars”). The functional currency of
virtually all members of the Group is the U.S. dollar. The assets and liabilities of a previously held subsidiary were translated
to U.S. dollars at the exchange rate prevailing on the balance sheet date and revenues and expenses were translated at the
average exchange rate for the period. Foreign exchange differences resulting from the translation were reported in Other
Comprehensive Income/(Loss).
Foreign Currency
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign
exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at
the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on remeasurement are recognized in the Consolidated Statement of Comprehensive Income/
(Loss). Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid instruments with original maturities of three months or less.
Share Capital
Ordinary shares are classified as equity. The Group is comprised of share capital, share premium, merger reserve, other
reserve, translation reserve, and accumulated deficit.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of the asset. Assets under construction represent
leasehold improvements and machinery and equipment to be used in operations or research and development activities.
When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major
components) of property and equipment. Depreciation is calculated using the straight-line method over the estimated useful
life of the related asset:
Laboratory and manufacturing equipment
Furniture and fixtures
Computer equipment and software
Leasehold improvements
2-8 years
7 years
1-5 years
5-10 years, or the remaining term of the lease, if shorter
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
Intangible Assets
Intangible assets, which include purchased patents and licenses with finite useful lives, are carried at historical cost less
accumulated amortization, if amortization has commenced. Intangible assets with finite lives are amortized from the time they
are available for use. Amortization is calculated using the straight-line method to allocate the costs of patents and licenses over
their estimated useful lives.
Research and development intangible assets, which are still under development and have accordingly not yet obtained
marketing approval, are presented as In-Process Research and Development (IPR&D). IPR&D is not amortized since it is not yet
available for its intended use, but it is evaluated for potential impairment on an annual basis or more frequently when facts and
circumstances warrant.
Impairment
Impairment of Non‑Financial Assets
The Group reviews the carrying amounts of its property and equipment and intangible assets at each reporting date to
determine whether there are indicators of impairment. If any such indicators of impairment exist, then an asset’s recoverable
amount is estimated. The recoverable amount is the higher of an asset’s fair value less cost of disposal and value in use.
The Company’s IPR&D intangible assets are not yet available for their intended use. As such, they are tested for impairment
at least annually.
166 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
An impairment loss is recognized when an asset’s carrying amount exceeds its recoverable amount. For the purposes of
impairment testing, assets are grouped at the lowest levels for which there are largely independent cash flows. If a non-
financial asset instrument is impaired, an impairment loss is recognized in the Consolidated Statements of Comprehensive
Income/(Loss).
The Company did not record any impairment of such assets during the reported periods.
Investments in associates are considered impaired if, and only if, objective evidence indicates that one or more events, which
occurred after the initial recognition, have had an impact on the future cash flows from the net investment and that impact
can be reliably estimated. If an impairment exists the Company measures an impairment by comparing the carrying value of
the net investment in the associate to its recoverable amount and recording any excess as an impairment loss. See Note 6 for
impairment recorded in respect of an investment in associate during the year ended December 31, 2019.
Employee Benefits
Short‑Term Employee Benefits
Short-term employee benefit obligations are measured on an undiscounted basis and expensed as the related service
is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive
obligation due to past service provided by the employee, and the obligation can be estimated reliably.
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution
plans are recognized as an employee benefit expense in the periods during which related services are rendered by employees.
Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Share‑based Payments
Share-based payment arrangements, in which the Group receives goods or services as consideration for its own equity
instruments, are accounted for as equity-settled share-based payment transactions (except certain restricted stock units –
see below) in accordance with IFRS 2, regardless of how the equity instruments are obtained by the Group. The grant date fair
value of employee share-based payment awards is recognized as an expense with a corresponding increase in equity over the
requisite service period related to the awards. The amount recognized as an expense is adjusted to reflect the actual number
of awards for which the related service and non-market performance conditions are expected to be met, such that the amount
ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards with market conditions, the grant date fair value
is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Certain restricted stock units are treated as liability settled awards starting in 2021. Such awards are remeasured at every
reporting date until settlement date and are recognized as compensation expense over the requisite service period.
Differences in remeasurement are recognized in profit and loss. The cumulative cost that will ultimately be recognized in
respect of these awards will equal to the amount at settlement.
The fair value of the awards is measured using option pricing models and other appropriate models, which take into account
the terms and conditions of the awards granted. See further details in Note 8.
Development Costs
Expenditures on research activities are recognized as incurred in the Consolidated Statements of Comprehensive Income/
(Loss). In accordance with IAS 38 development costs are capitalized only if the expenditure can be measured reliably,
the product or process is technically and commercially feasible, future economic benefits are probable, the Group can
demonstrate its ability to use or sell the intangible asset, the Group intends to and has sufficient resources to complete
development and to use or sell the asset, and it is able to measure reliably the expenditure attributable to the intangible
asset during its development. The point at which technical feasibility is determined to have been reached is, generally, when
regulatory approval has been received where applicable. Management determines that commercial viability has been reached
when a clear market and pricing point have been identified, which may coincide with achieving meaningful recurring sales.
Otherwise, the development expenditure is recognized as incurred in the Consolidated Statements of Comprehensive Income/
(Loss). As of balance sheet date the Group has not capitalized any development costs.
PureTech Health plc Annual report and accounts 2021 167
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
Provisions
A provision is recognized in the Consolidated Statements of Financial Position when the Group has a present legal or
constructive obligation due to a past event that can be reliably measured, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects risks specific to the liability.
Leases
The Group leases real estate (and some minor equipment) for use in operations. These leases generally have lease terms of
1 to 10 years. The Group includes options that are reasonably certain to be exercised as part of the determination of the lease
term. The group determines if an arrangement is a lease at inception of the contract in accordance with guidance detailed in
IFRS 16. ROU assets represent the Group’s right to use an underlying asset for the lease term and lease liabilities represent
our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized
at commencement date based on the present value of the lease payments over the lease term. As most of our leases do
not provide an implicit rate, we use the Group’s estimated incremental borrowing rate based on information available at
commencement date in determining the present value of future payments.
The Group’s operating leases are virtually all leases of real estate.
The Group has elected to account for lease payments as an expense on a straight-line basis over the life of the lease for:
• Leases with a term of 12 months or less and containing no purchase options; and
• Leases where the underlying asset has a value of less than $5,000.
The right-of-use asset is depreciated on a straight-line basis and the lease liability gives rise to an interest charge.
Further information regarding the subleases, right of use asset and lease liability can be found in Note 21.
Finance Income and Finance Costs
Finance income is comprised of income on funds invested in U.S. treasuries, income on money market funds and income on
a finance lease. Financing income is recognized as it is earned. Finance costs comprise mainly of loan, notes and lease liability
interest expenses and the changes in the fair value of financial liabilities carried at FVTPL (such changes can consist of finance
income when the fair value of such financial liabilities decreases).
Taxation
Tax on the profit or loss for the year comprises current and deferred income tax. In accordance with IAS 12, tax is recognized
in the Consolidated Statements of Comprehensive Income/(Loss) except to the extent that it relates to items recognized
directly in equity.
Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized due to temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognized for unused tax losses,
unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be
available against which they can be used. Deferred tax assets with respect to investments in associates are recognized only to
the extent that it is probable the temporary difference will reverse in the foreseeable future and taxable profit will be available
against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using
tax rates enacted or substantively enacted at the reporting date.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.
168 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
1.
Accounting policies — continued
Fair Value Measurements
The Group’s accounting policies require that certain financial assets and certain financial liabilities be measured at their
fair value.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques
as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.
The carrying amount of cash and cash equivalents, accounts receivable, restricted cash, deposits, accounts payable, accrued
expenses and other current liabilities in the Group’s Consolidated Statements of Financial Position approximates their fair value
because of the short maturities of these instruments.
Operating Segments
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker (“CODM”). The CODM reviews discrete financial information for the operating segments in order to assess
their performance and is responsible for making decisions about resources allocated to the segments. The CODM has been
identified as the Group’s Directors.
2. New Standards and Interpretations Not Yet Adopted
A number of new standards, interpretations, and amendments to existing standards are effective for annual periods
commencing on or after January 1, 2022 and have not been applied in preparing the consolidated financial information.
The Company’s assessment of the impact of these new standards and interpretations is set out below.
Effective January 1, 2023, the definition of accounting estimates has been amended as an amendment to IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors. The amendments clarify how companies should distinguish changes
in accounting policies from changes in accounting estimates. The distinction is important because changes in accounting
estimates are applied prospectively only to future transactions and future events, but changes in accounting policies are
generally also applied retrospectively to past transactions and other past events. This amendment is not expected to have
an impact on the Group’s financial statements.
Effective January 1, 2023, IAS 1 has been amended to clarify that liabilities are classified as either current or non-current,
depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the
entity or events after the reporting date. The Company does not expect this amendment will have a material impact on its
financial statements.
Effective January 1, 2023, IAS 12 is amended to narrow the scope of the initial recognition exemption (IRE) so that it does
not apply to transactions that give rise to equal and offsetting temporary differences. As a result, companies will need to
recognise a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease
and a decommissioning provision. The amendment is not expected to have an impact on the Group’s financial statements as
the Group has already recognized a deferred tax asset and deferred tax liability that arose on initial recognition of its leases
(the Group does not have decommissioning provisions).
None of the other new standards, interpretations, and amendments are applicable to the Company’s financial statements and
therefore will not have an impact on the Company.
PureTech Health plc Annual report and accounts 2021 169
Financial statements Notes to the Consolidated Financial Statements — continued
3. Revenue
Revenue recorded in the Consolidated Statement of Comprehensive Income/(Loss) consists of the following:
For the years ended December 31,
Contract revenue
Grant income
Total revenue
2021
$000s
9,979
7,409
17,388
2020
$000s
8,341
3,427
11,768
2019
$000s
8,688
1,119
9,807
All amounts recorded in contract revenue were generated in the United States. For the years ended December 31, 2021
and 2020 contract revenue includes royalties received from an associate in the amount of $231 thousand and $54 thousand,
respectively.
Primarily all of the Company’s contracts in the years ended December 31, 2021, 2020 and 2019 were determined to have a
single performance obligation which consists of a combined deliverable of license to intellectual property and research and
development services (not including the license acquired by Imbrium upon option exercise – see below). Therefore, for such
contracts, revenue is recognized over time based on the input method which the Company believes is a faithful depiction of
the transfer of goods and services. Progress is measured based on costs incurred to date as compared to total projected costs.
Payments for such contracts are primarily made up front at the inception of the contract (or upon achieving a milestone event)
and to a lesser extent payments are made periodically over the contract term.
During the year ended December 31, 2021, the company received a $6.5 million payment from Imbrium Therapeutics,
Inc. following the exercise of the option to acquire an exclusive license for the Initial Product Candidate, as defined in the
agreement. Since the license transferred was a functional license, revenue from the option exercise was recognized at a point
in time upon transfer of the license, which occurred during the year ended December 31, 2021.
During the year ended December 31, 2020, the Company received a $2.0 million milestone payment from Karuna
Therapeutics, Inc. following initiation of its KarXT Phase 3 clinical study pursuant to the Exclusive Patent License Agreement
between PureTech and Karuna. This milestone was recognized as revenue during the year ended December 31, 2020.
Disaggregated Revenue
The Group disaggregates contract revenue in a manner that depicts how the nature, amount, timing, and uncertainty
of revenue and cash flows are affected by economic factors. The Group disaggregates revenue based on contract
revenue or grant revenue, and further disaggregates contract revenue based on the transfer of control of the underlying
performance obligations.
Timing of contract revenue recognition
For the years ended December 31,
Transferred at a point in time – Licensing Income1
Transferred over time2
2021
$000s
6,809
3,171
9,979
2020
$000s
2,054
6,286
8,341
2019
$000s
—
8,688
8,688
1 2021 – Attributed to Internal segment ($6.5 million), Controlled Founded Entities segment ($74 thousand) and to Parent Company and Other ($235 thousand); 2020 –
Attributed to Parent Company and Other. See note 4, Segment information.
2 2021 – Attributed to Internal segment ($1,629 thousand) and Controlled Founded Entities segment ($1,541 thousand); 2020 – Attributed to Internal segment
($5,297 thousand), and Controlled Founded Entities segment ($990 thousand), 2019 – Attributed to Internal segment ($7,077 thousand), Controlled founded
entities segment ($1,474 thousand) and Parent Company and Other ($137 thousand). See Note 4, Segment Information.
170 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
3.
Revenue — continued
Customers over 10% of revenue
Customer A
Customer B
Customer C
Customer D
Customer E
2021
$000s
—
1,500
—
7,250
—
8,750
2020
$000s
1,518
896
2,043
1,736
2,000
8,193
2019
$000s
4,973
1,433
1,091
1,013
—
8,510
Accounts receivables represent rights to consideration in exchange for products or services that have been transferred by the
Group, when payment is unconditional and only the passage of time is required before payment is due. Accounts receivables
do not bear interest and are recorded at the invoiced amount. Accounts receivable are included within Trade and other
receivables on the Consolidated Statement of Financial Position.
Contract liabilities represent the Group’s obligation to transfer products or services to a customer for which consideration
has been received, or for which an amount of consideration is due from the customer. Contract liabilities are included within
deferred revenue on the Consolidated Statement of Financial Position.
Contract Balances
Accounts receivable
Deferred revenue – short term
2021
$000s
704
65
2020
$000s
711
1,472
During the year ended December 31, 2021, $1.4 million of revenue was recognized from deferred revenue outstanding at
December 31, 2020.
Remaining performance obligations represent the transaction price of unsatisfied or partially satisfied performance obligations
within contracts with an original expected contract term that is greater than one year and for which fulfillment of the contract
has started as of the end of the reporting period. The aggregate amount of transaction consideration allocated to remaining
performance obligations as of December 31, 2021, was nil.
PureTech Health plc Annual report and accounts 2021 171
Financial statements Notes to the Consolidated Financial Statements — continued
4.
Segment Information
Basis for Segmentation
The Directors are the Group’s strategic decision-makers. The Group’s operating segments are reported based on the financial
information provided to the Directors periodically for the purposes of allocating resources and assessing performance. The
Group has determined that each entity is representative of a single operating segment as the Directors monitor the financial
results at this level. When identifying the reportable segments the Group has determined that it is appropriate to aggregate
multiple operating segments into a single reportable segment given the high level of operational and financial similarities
across the entities.
The Group has identified multiple reportable segments as presented below. There was no change to reportable segments
in 2021, except the change in the composition of the segments with respect to Alivio, as explained below. Virtually all of the
revenue and profit generating activities of the Group are generated within the United States and accordingly, no geographical
disclosures are provided.
During the year ended December 31, 2021, the Company acquired the non-controlling interest in Alivio and since then Alivio
is wholly owned by the Company and is managed within the Internal segment. The Company has revised in these financial
statements the prior period financial information to conform to the presentation as of and for the period ending December 31,
2021. The change in segments reflects how the Company’s Board of Directors reviews the Group’s results, allocates resources
and assesses performance of the Group at this time.
Internal
The Internal segment (the “Internal segment”), is advancing Wholly Owned Programs which is focused on immunological,
fibrotic and lymphatic system disorders and builds upon validated biologic pathways and proven pharmacology. The Internal
segment is comprised of the technologies that are wholly owned and will be advanced through either PureTech Health funding
or non-dilutive sources of financing in the near-term. The operational management of the Internal segment is conducted
by the PureTech Health team, which is responsible for the strategy, business development, and research and development.
As of December 31, 2021, this segment included PureTech LYT (formerly Ariya Therapeutics), PureTech LYT-100 and Alivio
Therapeutics, Inc.
Controlled Founded Entities
The Controlled Founded Entity segment (the “Controlled Founded Entity segment”) is comprised of the Group’s subsidiaries
that are currently consolidated operational subsidiaries that either have, or have plans to hire, independent management
teams and currently have already raised third-party dilutive capital. These subsidiaries have active research and development
programs and either have entered into or plan to seek an equity or debt investment partner, who will provide additional
industry knowledge and access to networks, as well as additional funding to continue the pursued growth of the company. As of
December 31, 2021, this segment included Entrega Inc., Follica Incorporated, Sonde Health Inc., and Vedanta Biosciences, Inc.
Non-Controlled Founded Entities
The Non-Controlled Founded Entities segment (the “Non-Controlled Founded Entities segment”) is comprised of the entities in
respect of which PureTech Health (i) no longer holds majority voting control as a shareholder and no longer has the right to elect
a majority of the members of the subsidiaries’ Board of Directors. Upon deconsolidation of an entity the segment disclosure
is restated to reflect the change on a retrospective basis, as this constitutes a change in the composition of its reportable
segments. The Non-Controlled Founded Entities segment includes Vor Biopharma Inc. (“Vor”), Karuna Therapeutics, Inc.
(“Karuna”), and Gelesis Inc. (“Gelesis”), which were deconsolidated during the year ended December 31, 2019.
The Non-Controlled Founded Entities segment incorporates the operational results of the aforementioned entities to the
date of deconsolidation. Following the date of deconsolidation, the Company accounts for its investment in each entity at the
parent level, and therefore the results associated with investment activity following the date of deconsolidation is included in
the Parent Company and Other section.
Parent Company and Other
Parent Company and Other includes activities that are not directly attributable to the operating segments, such as the
activities of the Parent, corporate support functions and certain research and development support functions that are not
directly attributable to a strategic business segment as well as the elimination of intercompany transactions. Intercompany
transactions between segments consist primarily of management fees charged from the Parent Company to the other
segments. This section also captures the accounting for the Company’s holdings in entities for which control has been lost,
which is inclusive of the following items: gain on deconsolidation, gain or loss on investments held at fair value, gain on loss of
significant influence, and the share of net income/ (loss) of associates accounted for using the equity method. As of December
31, 2021, this segment included PureTech Health plc, PureTech Health LLC, PureTech Management, Inc., PureTech Securities
Corp. and PureTech Securities II Corp., as well as certain other dormant, inactive and shell entities.
172 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
4.
Segment Information — continued
Information About Reportable Segments:
Consolidated Statements of Comprehensive
Income/(Loss)
Contract revenue
Grant revenue
Total revenue
General and administrative expenses
Research and development expenses
Total operating expense
Other income/(expense):
Gain/(loss) on investments held at fair value
Loss realized on sale of investments
Gain/(loss) on disposal of assets
Other income/(expense)
Total other income/(expense)
Net finance income/(costs)
Share of net income/(loss) of associates accounted
for using the equity method
Income/(loss) before taxes
Income/(loss) before taxes pre IFRS 9 fair
value accounting, finance costs – subsidiary
preferred shares, share-based payment
expense, depreciation of tangible assets and
amortization of intangible assets
Finance income/(costs) – IFRS 9 fair
value accounting
Share-based payment expense
Depreciation of tangible assets
Amortization of ROU assets
Amortization of intangible assets
Taxation
Income/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) attributable to:
Owners of the Company
Non-controlling interests
Consolidated Statements of Financial Position:
Total assets
Total liabilities1
Net assets/(liabilities)
Internal
$000s
8,129
1,253
9,382
(8,673)
(65,444)
(74,118)
—
—
(1)
—
(1)
(16)
1,615
6,156
7,771
(20,729)
(43,783)
(64,512)
—
—
(51)
121
70
6,744
—
(64,753)
—
(49,927)
(60,368)
(50,583)
—
(3,066)
(1,319)
—
—
—
(64,753)
—
(64,753)
9,606
(6,256)
(1,518)
(1,174)
(2)
—
(49,927)
—
(49,927)
(64,657)
(96)
(47,857)
(2,069)
2021
Controlled
Founded
Entities
$000s
Non-Controlled
Founded
Entities
$000s
Parent
Company &
Other
$000s
Consolidated
$000s
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
235
—
235
(27,797)
(1,244)
(29,041)
179,316
(20,925)
—
1,523
159,914
(1,679)
9,979
7,409
17,388
(57,199)
(110,471)
(167,671)
179,316
(20,925)
(53)
1,645
159,983
5,050
(73,703)
55,727
(73,703)
(58,953)
63,628
(47,323)
—
(4,628)
(1,510)
(1,764)
—
(3,756)
51,971
—
51,971
51,956
15
9,606
(13,950)
(4,347)
(2,938)
(2)
(3,756)
(62,709)
—
(62,709)
(60,558)
(2,151)
December 31, 2021 $000s
125,726
228,789
(103,063)
66,274
228,857
(162,584)
—
—
—
754,007
(95,787)
849,794
946,006
361,859
584,147
1
Parent Company and Other Includes eliminations of intercompany liabilities between the Parent Company and the reportable segments in the amount of $233.3 million.
PureTech Health plc Annual report and accounts 2021 173
Financial statements Notes to the Consolidated Financial Statements — continued
4.
Segment Information — continued
Consolidated Statements of Comprehensive
Income/(Loss)
Contract revenue
Grant revenue
Total revenue
General and administrative expenses
Research and development expenses
Total Operating expenses
Other income/(expense):
Gain/(loss) on investments held at fair value
Loss realized on sale of investments
Gain/(loss) on disposal of assets
Other income/(expense)
Other income/(expense)
Net finance income/(costs)
Share of net income/(loss) of associate accounted
for using the equity method
Income/(loss) before taxes
(Loss)/income before taxes pre IFRS 9 fair
value accounting, finance costs – subsidiary
preferred shares, share-based payment expense,
depreciation of tangible assets and amortization of
intangible assets
Finance income/(costs) – subsidiary preferred shares
Finance income/(costs) – IFRS 9 fair
value accounting
Share-based payment expense
Depreciation of tangible assets
Amortization of ROU assets
Amortization of intangible assets
Taxation
Income/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) attributable to:
Owners of the Company
Non-controlling interests
Consolidated Statements of Financial Position:
Total assets
Total liabilities
Net (liabilities)/assets
Internal
$000s
5,297
1,563
6,860
(3,482)
(45,346)
(48,828)
—
—
(15)
—
(15)
19
990
1,864
2,853
(13,691)
(36,279)
(49,970)
—
—
(15)
100
85
(5,204)
—
(41,964)
—
(52,236)
(38,349)
—
—
(2,762)
(854)
—
—
—
(41,964)
—
(41,964)
(41,773)
(191)
(42,602)
—
(4,351)
(2,552)
(1,544)
(1,186)
(1)
(1)
(52,237)
—
(52,237)
(51,026)
(1,211)
2020
Controlled
Founded
Entities
$000s
Non-Controlled
Founded
Entities
$000s
Parent Company
&
Other
$000s
Consolidated
$000s
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,054
—
2,054
(32,267)
(234)
(32,500)
232,674
(54,976)
—
965
178,662
(930)
(34,117)
113,170
121,644
—
—
(5,405)
(1,547)
(1,523)
—
(14,400)
98,769
469
99,238
99,253
(15)
8,341
3,427
11,768
(49,440)
(81,859)
(131,299)
232,674
(54,976)
(30)
1,065
178,732
(6,115)
(34,117)
18,969
40,694
—
(4,351)
(10,718)
(3,945)
(2,709)
(1)
(14,401)
4,568
469
5,037
6,454
(1,417)
December 31, 2020 $000s
89,214
130,049
(40,835)
67,433
200,457
(133,023)
—
—
—
833,347
5,949
827,397
989,994
336,455
653,539
The proportion of net assets shown above that is attributable to non-controlling interest is disclosed in Note 18.
174 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
4.
Segment Information — continued
Consolidated Statements of Comprehensive Loss
Contract revenue
Grant revenue
Total revenue
General and administrative expenses
Research and development expenses
Total operating expense
Other income/(expense):
Gain on deconsolidation
Gain/(loss) on investments held at fair value
Gain/(loss) on disposal of assets
Gain on loss of significant influence
Other income/(expense)
Other income/(expense)
Net finance income/(costs)
Share of net income/(loss) of associate accounted
for using the equity method
Impairment of investment in associate
Income/(loss) before taxes
(Loss)/income before taxes pre IAS 39 fair
value accounting, finance costs – subsidiary
preferred shares, share-based payment expense,
depreciation of tangible assets and amortization of
intangible assets
Finance income/(costs) – subsidiary preferred shares
Finance income/(costs) – IFRS 9 fair
value accounting
Share-based payment expense
Depreciation of tangible assets
Amortization of ROU assets
Amortization of intangible assets
Taxation
Income/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) attributable to:
Owners of the Company
Non-controlling interests
2019
Controlled
Founded
Entities
$000s
Non-Controlled
Founded
Entities
$000s
Parent Company
&
Other
$000s
Consolidated
$000s
1,474
191
1,664
(13,569)
(39,883)
(53,451)
—
—
(39)
—
166
127
(16,947)
—
—
(68,608)
(47,188)
107
(17,294)
(1,664)
(1,517)
(1,060)
7
(134)
(68,741)
—
(68,741)
(55,258)
(13,483)
—
—
—
(10,439)
(15,555)
(25,994)
—
—
—
—
—
—
(30,141)
—
—
(56,135)
(21,873)
(1,564)
(28,737)
(3,543)
(207)
(83)
(128)
(162)
(56,297)
(10)
(56,307)
(32,353)
(23,953)
137
—
137
(32,098)
(1,536)
(33,634)
264,409
(37,863)
(60)
445,582
(45)
672,023
941
30,791
(42,938)
627,320
8,688
1,119
9,807
(59,358)
(85,848)
(145,206)
264,409
(37,863)
(82)
445,582
121
672,167
(46,147)
30,791
(42,938)
478,474
640,298
(1)
547,540
(1,458)
(444)
(9,242)
(1,114)
(2,177)
—
(112,113)
515,207
—
515,207
(46,475)
(14,468)
(3,228)
(3,320)
(117)
(112,409)
366,065
(10)
366,055
515,207
—
421,133
(55,079)
Internal
$000s
7,077
928
8,006
(3,252)
(28,874)
(32,126)
—
—
17
—
—
17
—
—
—
(24,104)
(23,698)
—
—
(19)
(390)
—
4
—
(24,104)
—
(24,104)
(6,461)
(17,643)
PureTech Health plc Annual report and accounts 2021 175
Financial statements Notes to the Consolidated Financial Statements — continued
5.
Investments held at fair value
Investments held at fair value include both unlisted and listed securities held by PureTech. These investments, which include
interests in Akili, Vor, Karuna, Gelesis (other than the investment in common shares which is accounted for under the equity
method), and other insignificant investments, are initially measured at fair value and are subsequently re-measured at fair value
at each reporting date with changes in the fair value recorded through profit and loss. Interests in these investments were
accounted for as shown below:
Investments held at fair value
Balance as of January 1, 2020
Sale of Karuna shares
Sale of resTORbio shares
Loss realised on sale of investments
Cash purchase of Gelesis preferred shares (please refer to Note 6)
Cash purchase of Vor preferred shares
Unrealized Loss – fair value through profit and loss
Balance as of January 1, 2021 before allocation of share in associate loss to long-term interest
Sale of Karuna shares
Loss realised on sale of investments (see below)
Cash purchase of Vor preferred shares
Unrealized gain – fair value through profit and loss
Balance as of December 31, 2021 before allocation of share in associate loss to long-term interest
Share of associate loss allocated to long-term interest (see Note 6)
Balance as of December 31, 2021 after allocation of share in associate loss to long-term interest1
$000's
714,905
(347,538)
(3,048)
(54,976)
10,000
1,150
232,674
553,167
(218,125)
(20,925)
500
179,271
493,888
(96,709)
397,179
1 Fair value of investments accounted for at fair value, does not take into consideration contribution from milestones that occurred after December 31, 2021, the value of
the Group's consolidated Founded Entities (Vedanta, Follica, Sonde and Entrega), the Internal segment, or cash and cash equivalents.
Vor
On February 12, 2019, Vor completed a Series A-2 Preferred Shares financing round with PureTech and several new third party
investors. The financing provided for the purchase of 62,819,866 shares of Vor Series A-2 Preferred Shares at the purchase
price of $0.40 per share.
As a result of the issuance of Series A-2 preferred shares to third-party investors, PureTech’s ownership percentage and
corresponding voting rights dropped from 79.5 percent to 47.5 percent, and PureTech simultaneously lost control on Vor’s
Board of Directors, both of which triggered a loss of control over the entity. As of February 12, 2019, Vor was deconsolidated
from the Group’s financial statements, resulting in only the profits and losses generated by Vor through the deconsolidation
date being included in the Consolidated Statement of Comprehensive Income/(Loss). While the Company no longer controlled
Vor, it was concluded that PureTech still had significant influence over Vor by virtue of its large, albeit minority, ownership
stake and its continued representation on Vor’s Board of Directors. During the year ended December 31, 2019, the Company
recognized a $6.4 million gain on the deconsolidation of Vor, which was recorded to the Gain on the deconsolidation of
subsidiary line item in the Consolidated Statement of Comprehensive Income/(Loss).
As PureTech did not hold common shares in Vor upon deconsolidation and the preferred shares it held did not have equity-
like features, PureTech had no basis to account for its investment in Vor under IAS 28. The preferred shares held by PureTech
fell under the guidance of IFRS 9 and were treated as a financial asset held at fair value with changes in fair value recorded in
the Consolidated Statement of Comprehensive Income/(Loss). The fair value of the preferred shares at deconsolidation was
$12.0 million.
On February 12, 2020, PureTech participated in the second closing of Vor’s Series A-2 Preferred Share financing. For
consideration of $0.7 million, PureTech received 1,625,000 A-2 shares. On June 30, 2020, PureTech participated in the
first closing of Vor’s Series B Preferred Share financing. For consideration of $0.5 million, PureTech received 961,538 shares.
Upon the conclusion of such Vor financings PureTech no longer had significant influence over Vor.
On January 8, 2021, PureTech participated in the second closing of Vor’s Series B Preferred Share financing. For consideration
of $0.5 million, PureTech received an additional 961,538 B Preferred shares.
On February 9, 2021, Vor closed its initial public offering (IPO) of 9,828,017 shares of its common stock at a price to the public
of $18.00 per share. Subsequent to the closing, PureTech held 3,207,200 shares of Vor common stock, representing 8.6 percent
of Vor common stock. Following its IPO, the valuation of Vor common stock is based on level 1 inputs in the fair value hierarchy.
See Note 16.
During the years ended December 31, 2021, 2020 and 2019, the Company recognized a gain of $3.9 million, a gain of
$19.1 million, and a gain of $0.6 million, respectively for the changes in the fair value of the investment that were recorded in
the line item Gain/(loss) on investments held at fair value within the Consolidated Statement of Comprehensive Income/(Loss).
Please refer to Note 16 for information regarding the valuation of these instruments.
176 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
5.
Investments held at fair value — continued
Gelesis
As of July 1, 2019, Gelesis was deconsolidated from the Group’s financial statements, resulting in only the profits and losses
generated by Gelesis through the deconsolidation date being included in the Group’s Consolidated Statement of Income/
(Loss). At the date of deconsolidation, PureTech recorded a $156.0 million gain on the deconsolidation of Gelesis, which
was recorded to the Gain on the deconsolidation of subsidiary line item in the Consolidated Statement of Income/(Loss).
The preferred shares and warrants held by PureTech fall under the guidance of IFRS 9 and are treated as financial assets held
at fair value, where changes to the fair value of the preferred shares and warrant are recorded through the Consolidated
Statement of Income/(Loss). The fair value of the preferred shares and warrants at deconsolidation was $49.2 million.
Please refer to Note 6 for information regarding the Company's investment in Gelesis as an associate.
On August 12, 2019, Gelesis issued a convertible promissory note to the Company in the amount of $2.0 million. On October 7,
2019, Gelesis issued an amended and restated convertible note (the “Gelesis Note”) to the Company in the principal amount
of up to $6.5 million. The Gelesis Note was payable in installments, with $2.0 million of the note drawn down upon execution of
the original note in August 2019 and an additional $3.3 million and $1.2 million drawn down on October 7, 2019 and November
5, 2019, respectively. The Gelesis Note was convertible upon the occurrence of Gelesis’ next qualified equity financing, or at
the demand of the Company at any date after December 31, 2019. The Gelesis Note fell under the guidance of IFRS 9 and
was treated as a financial asset held at fair with all movements to the value of the note recorded through the Consolidated
Statement of Income/(Loss).
On December 5, 2019, Gelesis closed its Series 3 Growth Preferred Stock financing, at which point all outstanding principal and
interest under the Gelesis Note converted into shares of Series 3 Growth Preferred Stock. In addition to the shares issued upon
conversion of the Gelesis Note, PureTech purchased $8.0 million of Series 3 Growth Preferred Stock in the December financing.
On April 1, 2020, PureTech participated in the 2nd closing of Gelesis’s Series 3 Growth Preferred Share financing. For
consideration of $10.0 million, PureTech received 579,038 Series 3 Growth shares.
During the years ended December 31, 2021, 2020 and 2019, the Company recognized a gain of $34.6 million, a gain of
$7.1 million and a loss of $18.7 million, respectively related to the change in the fair value of the preferred shares and
warrants that was recorded in the line item Gain/(loss) on investments held at fair value within the Consolidated Statement of
Comprehensive Income/(Loss). The loss recorded in 2019 was primarily as a result of the Gelesis Series 3 Growth financing,
which was executed with terms that resulted in a decrease in fair value across all other classes of preferred shares. Please
refer to Note 16 for information regarding the valuation of these instruments. Additionally, due to the equity method based
investment in Gelesis being reduced to zero, the Group allocated a portion of its share in the net loss in Gelesis in the years
ended December 31, 2021 and 2020, totaling $73.7 million and $23.0 million, respectively, to its preferred share and warrant
investments in Gelesis, which are considered to be long-term interests in Gelesis. As of December 31, 2021, the investment in
Gelesis preferred shares and warrants was entirely reduced to nil.
See Note 26 for subsequent event regarding the investment in Gelesis.
Karuna
2019
On March 15, 2019, Karuna completed the closing of a Series B Preferred Share financing with PureTech and several new third
party investors. The financing provided for the purchase of 5,285,102 shares of Karuna Series B Preferred Shares at a purchase
price of $15.14 per share.
As a result of the issuance of the preferred shares to third-party investors, PureTech’s ownership percentage and
corresponding voting rights related to Karuna dropped from 70.9 percent to 44.3 percent, and PureTech simultaneously
lost control over Karuna’s Board of Directors, both of which triggered a loss of control over the entity. As of March 15, 2019,
Karuna was deconsolidated from the Group’s financial statements, resulting in only the profits and losses generated by Karuna
through the deconsolidation date being included in the Group’s Consolidated Statement of Comprehensive Income/(Loss). At
the date of deconsolidation, PureTech recorded a $102.0 million gain on the deconsolidation of Karuna, which was recorded to
the Gain on the deconsolidation of subsidiary line item in the Consolidated Statement of Comprehensive Income/(Loss). While
the Company no longer controls Karuna, it was concluded that PureTech still had significant influence over Karuna by virtue of
its large, albeit minority, ownership stake and its continued representation on Karuna’s Board of Directors. As PureTech had
significant influence over Karuna, the entity was accounted for as an associate under IAS 28.
Upon the date of deconsolidation, PureTech held both preferred and common shares in Karuna and a warrant issued by Karuna
to PureTech. The preferred shares and warrant held by PureTech fell under the guidance of IFRS 9 and were treated as financial
assets held at fair value, and all movements to the value of preferred shares held by PureTech were recorded through the
Consolidated Statement of Comprehensive Income/(Loss), in accordance with IFRS 9. The fair value of the preferred shares and
warrant at deconsolidation was $72.4 million. Subsequent to deconsolidation, PureTech purchased an additional $5.0 million of
Karuna Series B Preferred shares.
Due to the immaterial investment in common shares and overwhelmingly large losses by Karuna, the common share
investment accounted for under the equity method was remeasured to nil immediately following both the deconsolidation and
the exercise of the warrant in the first half of 2019.
PureTech Health plc Annual report and accounts 2021 177
Financial statements Notes to the Consolidated Financial Statements — continued
5.
Investments held at fair value — continued
On June 28, 2019, Karuna priced its IPO. PureTech’s ownership percentage and corresponding voting rights related to Karuna
dropped from 44.3 percent percent to 31.6 percent; however, PureTech retained significant influence due to its continued
presence on the board and its large, albeit minority, equity stake in the company. Upon completion of the IPO, the Karuna
preferred shares held by PureTech converted to common shares. In light of PureTech’s common share holdings in Karuna
and corresponding voting rights, PureTech had re-established a basis to account for its investment in Karuna under IAS 28.
The preferred shares investment held at fair value was therefore reclassified to investment in associate upon completion
of the conversion. During the year ended December 31, 2019 and up to June 28, 2019, the Company recognized a gain of
$40.6 million that was recorded on the line item Gain on investments held at fair value within the Consolidated Statement
of Comprehensive Income/(Loss) related to the preferred shares that increased in value between the date of deconsolidation
and the date of Karuna’s IPO.
As of December 2, 2019 it was concluded that the Company no longer exerted significant influence over Karuna owing to
the resignation of the PureTech designee from Karuna’s Board of Directors, with PureTech retaining no ability to reappoint
representation. Furthermore, PureTech was not involved in any manner, or had any influence, on the management of Karuna,
or on any of its decision making processes and had no ability to do so. As such, PureTech lost the power to participate in
the financial and operating policy decisions of Karuna. As a result, Karuna was no longer deemed an Associate and did not
meet the scope of equity method accounting, resulting in the investment being accounted for as an investment held at fair
value. As of December 2, 2019 the Company's interest in Karuna was 28.4 percent. For the period of June 28, 2019 through
December 2, 2019, PureTech’s investment in Karuna was subject to equity method accounting. In accordance with IAS 28,
the Company’s investment was adjusted by the share of losses generated by Karuna (weighted average of 31.4 percent based
on common stock ownership interest), which resulted in a net loss of associates accounted for using the equity method of
$6.3 million during the year ended December 31, 2019.
Upon PureTech’s loss of significant influence, the investment in Karuna was reclassified to an investment held at fair value.
This change led PureTech to recognize a gain on loss of significant influence of $445.6 million that was recorded to the
Consolidated Statement of Comprehensive Income/(Loss) on the line item Gain on loss of significant influence during the
year ended December 31, 2019. The investment in Karuna after the recording of the gain on loss of significant influence was
$557.2 million, which was reclassified from Investments in associates to Investments held at fair value. Additionally, from
December 2, 2019 PureTech recorded a $0.7 million loss on the line item Gain/(loss) on investments held at fair value within
the Consolidated Statement of Comprehensive Income/(Loss) for the year ended December 31, 2019.
2020 and 2021
On January 22, 2020, PureTech sold 2,100,000 shares of Karuna common shares for aggregate proceeds of $200.9 million.
On May 26, 2020, PureTech sold an additional 555,500 Karuna common shares for aggregate proceeds of $45.0 million. On
August 26, 2020, PureTech sold 1,333,333 common shares of Karuna for aggregate proceeds of $101.6 million. As a result of
the sales, Puretech recorded a loss of $54.8 million attributable to blockage discount included in the sales price, to the line
item Loss Realized on Sale of Investment within the Consolidated Statement of Comprehensive Income/(Loss). See below for
gain recorded in respect of the change in fair value of the Karuna investment.
On February 9, 2021, the Group sold 1,000,000 common shares of Karuna for $118.0 million. Following the sale the Group
held 2,406,564 common shares of Karuna, which represented 8.2 percent of Karuna common stock at the time of sale.
On November 9, 2021, the group sold an additional 750,000 common shares of Karuna for $100.1 million. Following the
sale the group holds 1,656,564 common shares of Karuna, which represented 5.6 percent at time of sale. As a result of the
aforementioned sales, the Company recorded a loss of $20.9 million, attributable to blockage discount included in the sales
price, to the line item Loss Realised on Sale of Investment within the Consolidated Statement of Comprehensive Income/
(Loss) for the year ended December 31, 2021. See below for gain recorded in respect of the change in fair value of the
Karuna investment.
During the years ended December 31, 2021 and 2020, the Company recognized a gain of $110.0 million and a gain of
$191.2 million, respectively for the changes in the fair value of the Karuna investment that were recorded in the line item Gain/
(loss) on investments held at fair value within the Consolidated Statement of Comprehensive Income/(Loss). As of December
31, 2021, PureTech continued to hold Karuna common shares or 5.6 percent of total outstanding Karuna common shares.
Please refer to Note 16 for information regarding the valuation of these instruments.
Akili
As PureTech does not hold common shares in Akili and the preferred shares it holds do not have equity-like features, PureTech
has no basis to account for its investment in Akili under IAS 28. The preferred shares held by PureTech Health fall under the
guidance of IFRS 9 and are treated as a financial asset held at fair value and all movements to the value of the preferred shares
are recorded through the Consolidated Statements of Comprehensive Income/(Loss), in accordance with IFRS 9.
On May 25, 2021, Akili completed its Series D financing for gross proceeds of $110.0 million in which Akili issued 13,053,508
Series D preferred shares. The Group did not participate in this round of financing and as a result, the Group's interest in Akili
was reduced from 41.9 percent to 27.5 percent.
During the years ended December 31, 2021, 2020 and 2019, the Company recognized a gain of $32.2 million, a gain
of $14.4 million, and a gain of $11.5 million, respectively for the changes in the fair value of the investment in Akili that was
recorded on the line item Gain/(loss) on investments held at fair value within the Consolidated Statement of Comprehensive
Income/(Loss). Please refer to Note 16 for information regarding the valuation of these instruments.
178 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
5.
Investments held at fair value — continued
resTORbio
On November 15, 2019, resTORbio announced that top line data from the Protector 1 Phase 3 study evaluating the safety and
efficacy of RTB101 in preventing clinically symptomatic respiratory illness in adults age 65 and older, did not meet its primary
endpoint and the Company has stopped the development of RTB101 in this indication. As a result of ceasing the development
of RTB101, resTORbio’s share price witnessed a decline in price. In November and December 2019, PureTech Health sold
7,680,700 common shares of resTORbio for aggregate proceeds of $9.3 million. Immediately following the sale of common
shares, PureTech Health held 2,119,696 common shares, or 5.8 percent, of resTORbio. During the year ended December
31, 2019 PureTech recorded a loss of $71.9 million for the adjustment to fair value of its investment in resTORbio to the
Consolidated Statement of Comprehensive Income/(Loss) in the line item Gain/(loss) on investments held at fair value.
On April 30, 2020, PureTech sold its remaining 2,119,696 resTORbio common shares, for aggregate proceeds of $3.0 million.
As a result of the sale, the Company recorded a loss of $0.2 million attributable to blockage discount included in the sales
price, to the line item Loss realized on sale of investments within the Consolidated Statement of Comprehensive Income/(Loss).
Additionally, during the year ended December 31, 2020, the Company recognized a gain of $0.1 million that was recorded on
the line item Gain/(loss) on investments held at fair value within the Consolidated Statement of Comprehensive Income/(Loss).
Gain on deconsolidation
The following table summarizes the gain on deconsolidation recognized by the Company:
Year ended December 31,
Gain on deconsolidation of Vor
Gain on deconsolidation of Karuna
Gain on deconsolidation of Gelesis [Note 6]
Total gain on deconsolidation
6.
Investments in Associates
2021
$000s
—
—
—
—
2020
$000s
—
—
—
—
2019
$000s
6,357
102,038
156,014
264,409
Gelesis
Gelesis was founded by PureTech and raised funding through preferred shares financings as well as issuances of warrants and
loans. As of January 1, 2019, PureTech maintained control of Gelesis and Gelesis’s financial results were fully consolidated in the
Group’s consolidated financial statements.
On July 1, 2019, the Gelesis Board of Directors was restructured, resulting in two of the three PureTech representatives
resigning from the Board with PureTech retaining no ability to reappoint Directors to these board seats. As a result of this
restructuring, PureTech lost control over Gelesis’ Board of Directors, which triggered a loss of control over the entity. At the
deconsolidation date, PureTech held a 25.2 percent voting interest in Gelesis. As of July 1, 2019, Gelesis was deconsolidated
from the Group’s financial statements, resulting in only the profits and losses generated by Gelesis through the deconsolidation
date being included in the Group’s Consolidated Statement of Income/(Loss) and Other Comprehensive Income/(Loss). At the
date of deconsolidation, PureTech recorded a $156.0 million gain on the deconsolidation of Gelesis, which was recorded to the
Gain on the deconsolidation of subsidiary line item in the Consolidated Statement of Comprehensive Income/(Loss). While the
Company no longer controls Gelesis, it was concluded that PureTech still has significant influence over Gelesis by virtue of its
large, albeit minority, ownership stake and its continued representation on Gelesis’ Board of Directors and as such Gelesis is
accounted for as an associate under IAS 28, starting at the date of deconsolidation.
Upon the date of deconsolidation, PureTech held preferred shares and common shares of Gelesis and a warrant issued by
Gelesis to PureTech. PureTech’s investment in common shares of Gelesis is subject to equity method accounting with an initial
investment of $16.4 million. In accordance with IAS 28, PureTech’s investment was adjusted by the share of profits and losses
generated by Gelesis subsequent to the date of deconsolidation. See table below for the Group's share in the profits and
losses of Gelesis for the periods presented.
The preferred shares and warrant held by PureTech fall under the guidance of IFRS 9 and are treated as financial assets held
at fair value, where changes to the fair value of the preferred shares and warrant are recorded through the Consolidated
Statement of Income/(Loss) and Other Comprehensive Income/(Loss), in accordance with IFRS 9. The fair value of the
preferred shares and warrant at deconsolidation was $49.2 million. See Note 5 for changes in the fair value subsequent to
deconsolidation date.
PureTech Health plc Annual report and accounts 2021 179
Financial statements Notes to the Consolidated Financial Statements — continued
6.
Investments in Associates — continued
Impairment loss for the year ended December 31, 2019
Following the issuance of the Gelesis Series 3 Preferred Shares at a higher valuation than the previous round with some
favorable liquidation provisions primarily to PureTech and also to the other Series 3 preferred share investors, which resulted
in adjustments to the fair values of other preferred shares, warrant classes and Gelesis common stock, the Company assessed
the investment in common shares held in Gelesis for impairment. Management compared the recoverable amount of the
investment to its carrying amount as of December 31, 2019, which resulted in an impairment loss to the Investment in Gelesis.
The recoverable amount was estimated based on the fair value of the Gelesis common shares held by PureTech, which are
considered to be within Level 3 of the fair value hierarchy. The costs of disposal are immaterial for the calculation of Gelesis
investment’s recoverable amount. The total fair value of common shares was determined utilizing a hybrid valuation approach
with significant unobservable inputs within the PureTech valuation framework. The multi-scenario hybrid valuation approach
utilized the recent transaction method within an option pricing framework and an IPO scenario within a probability-weighted-
expected return framework to determine the value allocation for the common share class of Gelesis. The PWERM maintained
a 75.0 percent probability of occurrence while the OPM maintained a 25.0 percent probability of occurrence. The probability
weighted term to exit was 1.57 years. The discount rate utilized was 20.0 percent while the risk-free rate and volatility utilized
were 1.62 percent and 56.0 percent, respectively.
The impairment loss amounted to $42.9 million and was recorded to Impairment of investment in associate within the
Consolidated Statement of Comprehensive Income/(Loss) for the year ended December 31, 2019. As of December 31, 2019 the
investment in Gelesis was $10.6 million, which is equal to the fair value of the common shares held by PureTech.
Years ended December 31, 2020 and 2021
During the year ended December 31, 2021 and 2020, the Group recorded its share in the losses of Gelesis. In 2020 the Group's
investment in associates accounted for under the equity method was reduced to zero. Since the Group has investments in
Gelesis warrants and preferred shares that are deemed to be Long-term interests, the Company continued recognizing its
share in Gelesis losses while applying such losses to its preferred share and warrant investment in Gelesis accounted for as an
investment held at fair value. In 2021, the total investment in Gelesis, including the Long-term interests, was reduced to zero.
Since the Group did not incur legal or constructive obligations or made payments on behalf of Gelesis, the Group discontinued
recognizing equity method losses. As of December 31, 2021, unrecognized equity method losses amounted to $38.1 million,
which included $0.7 million of unrecognized other comprehensive loss.
During 2021, due to exercise of stock options into common shares in Gelesis the Group's equity interest in Gelesis was reduced
from 47.9 percent at December 31, 2020 to 42.0 percent as of December 31, 2021. The gain resulting from the issuance of
shares to third parties and the resulting reduction in the Group's share in the accumulated deficit of Gelesis under the equity
method was fully offset by the unrecognized equity method losses.
Karuna
For the period of June 28, 2019, through December 2, 2019, PureTech’s investment in Karuna was subject to equity method
accounting. In accordance with IAS 28, the Company’s investment was adjusted by the share of losses generated by Karuna
(weighted average of 31.4 percent based on common stock ownership interest), which resulted in a net loss of $6.3 million
during the year ended December 31, 2019, recorded in the line item Share of net income/(loss) of associates. Starting
December 2, 2019, due to the loss of significant influence in Karuna on such date, the Company is accounting for the
investment in Karuna as an investment held at fair value. See Note 5 for further detail on the Group's investment in Karuna.
The following table summarizes the activity related to the investment in associates balance for the years ended December 31,
2021, 2020 and 2019.
Investment in Associates
As of January 1, 2019
Reclassification of Karuna investment at initial public offering
Investment in Gelesis upon deconsolidation
Share of net loss of Karuna accounted for using the equity method
Share of net profit of Gelesis accounted for using the equity method
Impairment of investment in Gelesis
Reclassification of investment upon loss of significant influence
As of December 31, 2019 and January 1, 2020
Share of net loss in Gelesis
Share of other comprehensive income in Gelesis
Share of losses recorded against long term interests
As of December 31, 2020 and January 1, 2021
Share of net loss in Gelesis
Share of losses recorded against long term interests
As of December 31, 2021
180 PureTech Health plc Annual report and accounts 2021
$000's
—
118,006
16,444
(6,345)
37,136
(42,938)
(111,661)
10,642
(34,117)
469
23,006
—
(73,703)
73,703
—
Financial statements Notes to the Consolidated Financial Statements — continued
6.
Investments in Associates — continued
Summarized financial information
The following table summarizes the financial information of Gelesis as included in its own financial statements, adjusted for fair
value adjustments at deconsolidation and differences in accounting policies. The table also reconciles the summarized financial
information to the carrying amount of the Company’s interest in Gelesis. The information for the year ended December 31,
2019, includes the results of Gelesis only for the period July 1, 2019 to December 31, 2019, as Gelesis was consolidated prior to
this period.
As of and for the year ended December 31,
Percentage ownership interest
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non controlling interests and options issued to third parties
Net assets attributable to shareholders of Gelesis Inc.
Group's share of net assets
Goodwill
Impairment provision balance
Equity method losses recorded against Long-term Interests
Unrecognized equity method losses (*)
Investment in associate
Revenue
Income/(loss) from continuing operations (100%)
Total comprehensive income/(loss) (100%)
Group's share in net income (losses) – limited to net investment amount
Group's share of total comprehensive income (loss) – limited to net
investment amount
(*) Unrecognized equity method losses includes unrecognized other comprehensive loss of $0.7 million.
2021
$000s
42.0%
357,508
66,092
(120,786)
(537,432)
(14,216)
(248,834)
(104,527)
7,211
(37,495)
96,709
38,101
—
2021
$000s
11,185
(271,430)
(273,005)
(73,703)
2020
$000s
47.9%
372,184
92,875
(133,743)
(300,748)
(6,577)
23,989
11,481
8,216
(42,702)
23,006
—
—
2020
$000s
21,442
(71,157)
(70,178)
(34,117)
2019
$000s
—
74,573
74,573
37,136
(73,703)
(33,648)
37,136
See Note 26, for the completion of the business combination of Gelesis with Capstar Special Purpose Acquisition Corp
("Capstar") on January 13, 2022. The publicly traded company began trading on the New York Stock exchange under the ticker
symbol "GLS" on January 14, 2022.
On December 30, 2021, PureTech signed a Backstop agreement with Capstar according to which PureTech committed to
acquire Capstar class A common shares immediately prior to the closing of the business combination between Gelesis and
Capstar, in case subsequent to the redemptions of Capstar shares being completed, the Available Funds, as defined in the
agreement, are less than$15.0 million. Puretech committed to acquire two thirds of the necessary shares at $10 per share
so that the Available Funds increase to $15.0 million. According to the Backstop agreement, in case PureTech is required to
acquire any shares under the agreement, PureTech will receive an additional 1,322,500 class A common shares of Capstar
(immediately prior to the closing of the business combination) at no additional consideration.
The Company determined that such agreement meets the definition of a derivative under IFRS 9 and as such should be
recorded at fair value with changes in fair value recorded through profit and loss. For the year ended December 31, 2021 the
changes in fair value were de minimis. The derivative was initially recorded at fair value adjusted to defer the day 1 gain equal
to the difference between the fair value of $11.2 million and transaction price of zero on the effective date and as such was
initially recorded at zero. The deferred gain is amortized to Other income (expense) in the Consolidated Statement of Income
(loss) over the period from the effective date until settlement date. As such, the Group recognized $0.8 million income in 2021
for the portion of the deferred gain amortized in 2021.
On January 13, 2022, as part of the conclusion of the aforementioned Backstop agreement, the Group acquired 496,145
class A common shares of Capstar for $5.0 million and received an additional 1,322,500 common A shares of Capstar for no
additional consideration.
PureTech Health plc Annual report and accounts 2021 181
Financial statements Notes to the Consolidated Financial Statements — continued
7. Operating Expenses
Total operating expenses were as follows:
For the years ending December 31,
General and administrative
Research and development
Total operating expenses
2021
$000s
57,199
110,471
167,671
2020
$000s
49,440
81,859
131,299
2019
$000s
59,358
85,848
145,206
The average number of persons employed by the Group during the year, analyzed by category, was as follows:
For the years ending December 31,
General and administrative
Research and development
Total
The aggregate payroll costs of these persons were as follows:
For the years ending December 31,
General and administrative
Research and development
Total
Detailed operating expenses were as follows:
For the years ending December 31,
Salaries and wages
Healthcare benefits
Payroll taxes
Share-based payments
Total payroll costs
Other selling, general and administrative expenses
Other research and development expenses
Total other operating expenses
Total operating expenses
Auditor’s remuneration:
For the years ending December 31,
Audit of these financial statements
Audit of the financial statements of subsidiaries
Audit of the financial statements of associate**
Audit-related assurance services*
Non-audit related services
Total
2021
52
119
171
2021
$000s
26,438
28,950
55,388
2021
$000s
36,792
2,563
2,084
13,950
55,388
30,761
81,521
112,282
167,671
2021
$000s
1,183
312
571
1,868
—
3,934
2020
43
95
138
2020
$000s
22,943
20,674
43,616
2020
$000s
29,403
1,866
1,629
10,718
43,616
26,497
61,186
87,683
131,299
2020
$000s
1,145
291
350
490
173
2,449
2019
39
90
129
2019
$000s
24,468
20,682
45,150
2019
$000s
27,703
1,511
1,468
14,468
45,150
34,890
65,166
100,056
145,206
2019
$000s
870
290
—
163
778
2,101
2021 – $468.2 thousand represents prepaid expenses related to an expected initial public offering of a subsidiary.
*
** Audit fees of $500.0 thousand and $350.0 thousand in respect of financial statements of associates for the years ended December 31, 2021, and 2020, respectively, are
not included within the consolidated financial statements. Fees related to the audit of the financial statements of associates have been disclosed in respect of both 2021
and 2020 as these fees went towards supporting the audit opinion on the Group accounts. Such amounts were not previously disclosed in the 2020 financial statements.
Please refer to Note 8 for further disclosures related to share-based payments and Note 24 for management’s
remuneration disclosures.
8.
Share-based Payments
Share-based payments includes stock options, restricted stock units (“RSUs”) and performance-based RSUs in which the
expense is recognized based on the grant date fair value of these awards, except for performance based RSUs to executives
that are treated as liability awards where expense is recognized based on reporting date fair value up until settlement date.
Share-based Payment Expense
The Group share-based payment expense for the years ended December 31, 2021, 2020 and 2019, were comprised of charges
related to the PureTech Health plc incentive stock and stock option issuances and subsidiary stock plans.
The following table provides the classification of the Group’s consolidated share-based payment expense as reflected in the
Consolidated Statement of Income/(Loss):
Year ended December 31,
General and administrative
Research and development
Total
182 PureTech Health plc Annual report and accounts 2021
2021
$000s
9,310
4,640
13,950
2020
$000s
7,650
3,068
10,718
2019
$000s
10,677
3,791
14,468
Financial statements Notes to the Consolidated Financial Statements — continued
8.
Share-based Payments — continued
Ariya Stock Option Exchange- 2019
In conjunction with the acquisition of the remaining minority interests of PureTech LYT (previously named Ariya Therapeutics,
Inc.) on October 1, 2019 (Please refer to Note 18), PureTech Health exchanged subsidiary stock options previously granted to
the co-inventors, advisors and employees of PureTech LYT with stock options to purchase 2,147,965 of the Company's ordinary
shares under the PureTech Health Performance Share Plan. As this was an exchange of awards within the consolidated group,
whereby the Company's stock options were replacing Ariya's stock options, the exchange was accounted for as a modification
of the original award and the incremental fair value on the date of the replacement was amortized over the remaining vesting
period of the awards.
The Performance Share Plan
In June 2015, the Group adopted the Performance Stock Plan (“PSP”). Under the PSP and subsequent amendments, awards of
ordinary shares may be made to the Directors, senior managers and employees of, and other individuals providing services to
the Company and its subsidiaries up to a maximum authorized amount of 10.0 percent of the total ordinary shares outstanding.
The shares have various vesting terms over a period of service between two and four years, provided the recipient remains
continuously engaged as a service provider.
The share-based awards granted under the PSP are generally equity settled (see cash settlements below) and expire 10 years
from the grant date. As of December 31, 2021, the Company had issued share-based awards to purchase an aggregate of
21,756,187 shares under this plan.
RSUs
RSU activity for the years ended December 31, 2021, 2020 and 2019 is detailed as follows:
Outstanding (Non-vested) at January 1, 2019
RSUs Granted in Period
Vested
Forfeited
Outstanding (Non-vested) at December 31, 2019 and January 1, 2020
RSUs Granted in Period
Vested
Forfeited
Outstanding (Non-vested) at December 31, 2020 and January 1, 2021
RSUs Granted in Period
Vested
Forfeited
Outstanding (Non-vested) at December 31, 2021
(*) 2021 – for liability awards based on fair value at reporting date.
Number of
Shares/Units
6,598,783
1,775,569
(3,738,005)
—
4,636,347
1,759,011
(2,781,687)
(191,089)
3,422,582
2,195,133
(1,176,695)
(808,305)
3,632,715
Wtd Avg Grant
Date Fair Value
(GBP) (*)
1.29
2.95
1.10
—
2.08
1.80
1.54
2.37
2.46
2.15
2.93
2.25
1.91
Each RSU entitles the holder to one ordinary share on vesting and the RSU awards are generally based on a cliff vesting
schedule over a one to three-year requisite service period in which the Company recognizes compensation expense for the
RSUs. Following vesting, each recipient will be required to make a payment of one pence per ordinary share on settlement of
the RSUs. Vesting of the majority of the RSUs is subject to the satisfaction of performance and market conditions. The grant
date fair value of market condition awards that are treated as equity settled awards is measured to reflect such conditions and
there is no true-up for differences between expected and actual outcomes. For liability settled awards, see below.
The Company recognizes the estimated fair value of performance-based awards as share-based compensation expense
over the performance period based upon its determination of whether it is probable that the performance targets will be
achieved. The Company assesses the probability of achieving the performance targets at each reporting period. Cumulative
adjustments, if any, are recorded to reflect subsequent changes in the estimated outcome of performance-related conditions.
The fair value of the market and performance-based awards is based on the Monte Carlo simulation analysis utilizing a
Geometric Brownian Motion process with 100,000 simulations to value those shares. The model considers share price volatility,
risk-free rate and other covariance of comparable public companies and other market data to predict distribution of relative
share performance.
The performance and market conditions attached to the RSU awards are based on the achievement of total shareholder
return (“TSR”), based on the achievement of absolute TSR targets, and to a lesser extent based on TSR as compared to the
FTSE 250 Index, and the MSCI Europe Health Care Index. The remaining portion is based on the achievement of strategic
targets. The RSU award performance criteria have changed over time as the criteria is continually evaluated by the Group’s
Remuneration Committee.
PureTech Health plc Annual report and accounts 2021 183
Financial statements Notes to the Consolidated Financial Statements — continued
8.
Share-based Payments — continued
In 2017, the Company granted certain executives RSUs that vested based on the service, market and performance conditions,
as described above. The vesting of all RSUs was achieved by December 31, 2019 where all service, market and performance
conditions were met. The remuneration committee of PureTech's Board of Directors approved the achievement of the vesting
conditions as of December 31, 2019 and reached the decision during the year ended December 31, 2020 to cash settle the
2017 RSUs. The settlement value was determined based on the 3 day average closing price of the shares. The settlement value
was $12.5 million (which after deducting tax withheld on behalf of recipients amounted to $7.2 million). The settlement value
did not exceed the fair value at settlement date and as such the cash settlement was treated as an equity transaction in the
financial statements as of and for the year ended December 31, 2020, whereby the full repurchase cash settlement amount was
charged to equity in Other reserves.
Similarly in 2018, the Company granted certain executives RSUs that vested based on service, market and performance
conditions, as described above. The vesting of all RSUs was achieved by December 31, 2020 where all service, market and
performance conditions were met. In February 2021 the remuneration committee of PureTech's board of directors approved
the achievement of the vesting conditions as of December 31, 2020 and on May 28, 2021 reached the decision to cash settle
RSUs to certain employees while others were issued shares. The settlement value was determined based on the three day
average closing price of the shares. The settlement value was $10.7 million (which after deducting tax withheld on behalf of
recipients amounted to $6.4 million). The settlement value did not exceed the fair value at settlement date and as such the cash
settlement was treated as an equity transaction, whereby the full repurchase cash settlement amount was charged to equity in
Other reserves in the financial statements as of and for the year ended December 31, 2021.
Following the different cash settlements, the Company concluded that although the remaining RSUs are to be settled by shares
according to their respective agreements, and any cash settlement is at the Company's discretion, due to past practice of cash
settlement to multiple employees, some for multiple years, these RSUs to the company executives should be treated as liability
awards and as such adjusted to fair value at every reporting date with changes in fair value recorded in earnings as stock based
compensation expense.
Consequently, the Company reclassified $1.9 million from equity to other non-current liabilities and $4.8 million from equity to
other payables equal to the fair value of the awards at the date of reclassification. The Company treated the excess of the fair
value at the reclassification date over the grant date fair value of the RSUs (for the portion of the vesting period that has already
elapsed) in the amount of $2.9 million as an equity transaction. Therefore the full amount of the liability at reclassification
was recorded as a charge to equity. The changes in fair value of the liability from reclassification date to balance sheet date
or settlement date are recorded as stock-based compensation expense in the Consolidated Statement of Comprehensive
Income (loss).
The Company incurred share-based payment expenses for performance, market and service based RSUs of $1.5 million
(including $0.6 million expense in respect of RSU liability awards), $5.7 million and $2.2 million for the years ended December
31, 2021, 2020 and 2019, respectively. The decrease in the share based compensation expense in respect of the RSUs for the
year ended December 31, 2021, as compared to the year ended December 31, 2020 is due to reduction in the fair value of the
liability awards as compared to their value at the date the awards were reclassified from equity awards to liability awards, as
well as forfeitures of certain awards due to unexpected terminations of RSU holders.
As of December 31, 2021, the carrying amount of the RSU liability awards was $7.4 million ($4.7 million current; $2.7 million
non current), out of which $4.6 million related to awards that have met all their performance and market conditions.
Stock Options
Stock option activity for the years ended December 31, 2021, 2020 and 2019, is detailed as follows:
Outstanding at January 1, 2019
Granted
Exercised
Forfeited
Options Exercisable at December 31, 2019 and January 1, 2020
Outstanding at December 31, 2019 and January 1, 2020
Granted
Exercised
Forfeited
Options Exercisable at December 31, 2020 and January 1, 2021
Outstanding at December 31, 2020 and January 1, 2021
Granted
Exercised
Forfeited
Options Exercisable at December 31, 2021
Outstanding at December 31, 2021
184 PureTech Health plc Annual report and accounts 2021
Number of
Options
5,075,734
3,634,183
(237,090)
—
4,349,921
8,472,827
4,076,982
(514,410)
(1,119,313)
5,447,405
10,916,086
5,424,000
(2,238,187)
(687,781)
4,773,873
13,414,118
Wtd Average
Exercise Price
(GBP)
1.40
0.84
1.98
—
0.93
1.16
3.14
1.52
1.88
0.98
1.81
3.34
0.70
2.53
1.42
2.58
Wtd Average
of remaining
contractual
term (in years)
8.78
Wtd Average
Stock Price at
Exercise (GBP)
2.81
2.88
3.63
8.34
8.55
7.46
8.38
6.50
8.29
Financial statements Notes to the Consolidated Financial Statements — continued
8.
Share-based Payments — continued
The fair value of the stock options awarded by the Company was estimated at the grant date using the Black-Scholes option
valuation model, considering the terms and conditions upon which options were granted, with the following weighted-average
assumptions:
At December 31,
Expected volatility
Expected terms (in years)
Risk-free interest rate
Expected dividend yield
Grant date fair value
2021
41.05%
6.16
1.06%
—
$1.87
2020
41.25%
6.11
0.53%
—
$1.72
2019
35.68%
5.81
1.85%
—
$2.23
The Company incurred share-based payment expense for the stock options of $6.2 million, $2.1 million and $9.2 million for the
years ended December 31, 2021, 2020 and 2019, respectively. The increase in expense for the year ended December 31, 2021,
as compared to the year ended December 31, 2020, is due to the new grants granted in 2021. The significant decrease for the
year ended December 31, 2020, as compared to the year ended December 31, 2019, is largely attributable to the exchange
of the Ariya awards with the Company's stock options in the year ended December 31, 2019, which resulted in an additional
expense recorded in such year, as described above.
For shares outstanding as of December 31, 2021, the range of exercise prices is detailed as follow:
Range of Exercise Prices (GBP)
0.01
1.00 to 2.00
2.00 to 3.00
3.00 to 4.00
Total
Options
Outstanding
842,762
3,521,839
1,251,017
7,798,500
13,414,118
Wtd
Average
Exercise
Price (GBP)
Wtd Average
of remaining
contractual
term (in years)
—
1.42
2.47
3.39
2.58
7.76
5.81
8.35
9.46
8.29
Subsidiary Plans
Certain subsidiaries of the Group have adopted stock option plans. A summary of stock option activity by number of shares
in these subsidiaries is presented in the following table:
Alivio
Entrega
Follica
Sonde
Vedanta
Alivio
Entrega
Follica
Sonde
Vedanta
Outstanding as
of January 1,
2021
3,888,168
962,000
1,309,040
2,192,834
1,741,888
Outstanding as
of January 1,
2020
3,698,244
972,000
1,309,040
1,829,004
1,450,100
Granted During
the Year
Exercised
During the Year
Expired During
the Year
Forfeited
During the Year
Outstanding as
of December
31, 2021
197,398
—
1,383,080
—
451,532
(2,373,750)
(525,000)
—
—
(52,938)
(506,260)
(87,500)
(6,000)
(51,507)
(76,491)
—
(1,205,556)
349,500
—
— 2,686,120
2,049,004
1,991,637
(92,323)
(72,354)
Granted During
the Year
Exercised
During the Year
Expired During
the Year
Forfeited During
the Year
Outstanding as
of December 31,
2020
189,924
—
—
363,830
493,951
—
—
—
—
(813)
—
—
—
—
—
—
(10,000)
—
—
(201,350)
3,888,168
962,000
1,309,040
2,192,834
1,741,888
PureTech Health plc Annual report and accounts 2021 185
Financial statements Notes to the Consolidated Financial Statements — continued
8.
Share-based Payments — continued
Gelesis
Alivio
PureTech LYT
Commense
Entrega
Follica
Karuna
Sonde
Vedanta
Outstanding as
of January 1,
2019
3,681,732
2,393,750
2,180,000
540,416
914,000
1,229,452
1,949,927
22,500
1,373,750
Granted During
the Year
Exercised
During the Year
Expired During
the Year
Forfeited
During the Year
Outstanding as
of December 31,
2019
—
1,329,494
—
—
58,000
79,588
—
1,806,504
154,193
—
(3,125)
—
—
—
—
—
—
—
(3,571,346)¹
(110,386)
—
(21,875)
— (2,180,000)²
(540,416)
—
—
—
—
—
— (1,949,927)¹
—
—
—
(77,843)
—
3,698,244
—
—
972,000
1,309,040
—
1,829,004
1,450,100
1 These shares represent the options outstanding on the date of deconsolidation of Karuna and Gelesis.
2 These shares represent the options outstanding on the date of exchange to PureTech stock options.
The weighted-average exercise prices and remaining contractual life for the options outstanding as of December 31, 2021,
were as follows:
Outstanding at December 31, 2021
Alivio
Entrega
Follica
Sonde
Vedanta
Number of
options
—
349,500
2,686,120
2,049,004
1,991,637
Weighted-
average
exercise price
$
Weighted-
average
contractual life
outstanding
—
1.88
1.39
0.20
13.42
0
4.62
7.28
7.71
5.92
The weighted average exercise prices for the options granted for the years ended December 31, 2021, 2020 and 2019, were
as follows:
For the years ended December 31,
Alivio
Follica
Sonde
Vedanta
2021
$
—
1.86
—
19.69
2020
$
0.47
—
0.18
19.59
2019
$
0.49
0.03
0.20
19.13
The weighted average exercise prices for options forfeited during the year ended December 31, 2021, were as follows:
Forfeited during the year ended December 31, 2021
Alivio
Sonde
Vedanta
Number of
options
1,205,556
92,323
72,354
Weighted-
average
exercise price
$
0.48
0.18
19.36
The weighted average exercise prices for options exercised during the year ended December 31, 2021, were as follows:
Exercised during the year ended December 31, 2021
Alivio
Entrega
Vedanta
Number of
options
2,373,750
525,000
52,938
Weighted-
average
exercise price
$
0.03
0.03
0.96
186 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
8.
Share-based Payments — continued
The weighted average exercise prices for options exercisable as of December 31, 2021, were as follows:
Exercisable at December 31, 2021
Number of Options
Alivio
Entrega
Follica
Sonde
Vedanta
—
349,500
2,686,120
2,049,004
1,991,637
Weighted-average
exercise price
$
Exercise Price Range
$
—
1.88
1.01
0.20
9.64
—
0.03-2.36
0.03-1.86
0.13-0.20
0.02-19.94
Significant Subsidiary Plans
Vedanta 2010 Stock Incentive Plan
In 2010, the Board of Directors for Vedanta approved the 2010 Stock Incentive Plan (the “Vedanta Plan”). Through subsequent
amendments, as of December 31, 2021, it allowed for the issuance of 2,797,055 share-based compensation awards through
incentive share options, nonqualified share options, and restricted shares to employees, Directors, and nonemployees
providing services to Vedanta. At December 31, 2021, 747,270 shares remained available for issuance under the Vedanta Plan.
The options granted under Vedanta Plan are equity settled and expire 10 years from the grant date. Typically, the awards
vest in four years but vesting conditions can vary based on the discretion of Vedanta’s Board of Directors.
Options granted under the Vedanta Plan are exercisable at a price per share not less than the fair market value of the
underlying ordinary shares on the date of grant. The estimated fair value of options, including the effect of estimated
forfeitures, is recognized over the options’ vesting period.
The fair value of the stock option grants has been estimated at the date of grant using the Black-Scholes option pricing model
with the following range of assumptions:
Assumption/Input
Expected award life (in years)
Expected award price volatility
Risk free interest rate
Expected dividend yield
Grant date fair value
Share price at grant date
2021
2020
2019
6.00-7.11
88.05%-88.59%
0.96%-1.32%
—
$13.84-$16.23
$19.00-$21.35
6.00-10.00
89.24%-95.46%
0.32%-0.87%
—
$13.09-$16.54
$19.59
5.86-6.07
89.24%-95.46%
1.73%-1.88%
—
$14.12-$15.61
$18.71-$19.94
Vedanta incurred share-based compensation expense of $5.4 million, $2.4 million and $1.7 million for the years
ended December 31, 2021, 2020 and 2019, respectively.
Other Plans
The stock compensation expense under plans at other subsidiaries of the Group not including Vedanta amounted
to $0.84 million, $0.42 million and $0.01 million for the years ended December 31, 2021, 2020 and 2019, respectively.
9.
Finance Cost, net
The following table shows the breakdown of finance income and costs:
For the years ended December 31,
Finance income
Interest income from financial assets
Total finance income
Finance costs
Contractual interest expense on notes payable
Interest expense on other borrowings
Interest expense on lease liability
Gain/(loss) on foreign currency exchange
Total finance cost – contractual
Gain/(loss) from change in fair value of warrant liability
Gain/(loss) from change in fair value of preferred shares
Gain/(loss) from change in fair value of convertible debt
Total finance income/(costs) – fair value accounting
Total finance costs – subsidiary preferred shares
Total finance income/(costs)
Finance income/(costs), net
2021
$000s
214
214
(1,031)
(1,502)
(2,181)
(56)
(4,771)
1,419
8,362
(175)
9,606
—
9,606
5,050
2020
$000s
1,183
1,183
(96)
(496)
(2,354)
—
(2,946)
(117)
(4,234)
—
(4,351)
—
(4,351)
(6,115)
2019
$000s
4,362
4,362
(149)
—
(2,495)
68
(2,576)
(11,890)
(34,585)
—
(46,475)
(1,458)
(47,933)
(46,147)
PureTech Health plc Annual report and accounts 2021 187
Financial statements Notes to the Consolidated Financial Statements — continued
10. Earnings/(Loss) per Share
The basic and diluted loss per share has been calculated by dividing the income/(loss) for the period attributable to ordinary
shareholders by the weighted average number of ordinary shares outstanding during the years ended December 31, 2021,
2020 and 2019, respectively. During the year ended December 31, 2021 the Company incurred a net loss and therefore all
outstanding potential securities were considered anti-dilutive. The amount of potential securities that were excluded from
the calculation amounted to 6,553,905 shares.
Earnings/(Loss) Attributable to Owners of the Company:
2021
Basic
$000s
Diluted
$000s
2020
Basic
$000s
Diluted
$000s
2019
Basic
$000s
Diluted
$000s
Income/(loss) for the year,
attributable to the owners of the
Company
Income/(loss) attributable to
ordinary shareholders
(60,558)
(60,558)
5,985
5,985
421,144
421,144
(60,558)
(60,558)
5,985
5,985
421,144
421,144
Weighted-Average Number of Ordinary Shares:
2021
2020
2019
Basic
Diluted
Basic
Diluted
Basic
Diluted
Issued ordinary shares at January 1, 285,885,025 285,885,025
705,958
Effect of shares issued
Effect of dilutive shares (please
refer to Note 8)
Weighted average number
of ordinary shareholders at
December 31,
286,590,983 286,590,983
705,958
—
—
285,370,619
233,048
285,370,619
233,048
282,493,867
932,600
282,493,867
932,600
—
7,252,246
—
8,355,866
285,603,667
292,855,913
283,426,467
291,782,333
Earnings/(Loss) per Share:
Basic and diluted earnings/(loss)
per share
2021
Basic
$
Diluted
$
(0.21)
(0.21)
2020
Basic
$
0.02
Diluted
$
0.02
2019
Basic
$
1.49
Diluted
$
1.44
188 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
11. Property and Equipment
Cost
Balance as of January 1, 2020
Additions, net of transfers
Disposals
Reclassifications
Balance as of December 31, 2020
Additions, net of transfers
Disposals
Reclassifications
Balance as of December 31, 2021
Accumulated depreciation and
impairment loss
Balance as of January 1, 2020
Depreciation
Disposals
Balance as of December 31, 2020
Depreciation
Disposals
Balance as of December 31, 2021
Property and Equipment, net
Balance as of December 31, 2020
Balance as of December 31, 2021
Laboratory and
Manufacturing
Equipment
$000s
Furniture and
Fixtures
$000s
Computer
Equipment and
Software
$000s
Leasehold
Improvements
$000s
Construction
in process
$000s
7,385
1,536
(642)
141
8,420
1,424
(323)
2,211
11,733
1,452
—
—
—
1,452
—
—
—
1,452
1,508
51
(40)
—
1,519
92
(282)
—
1,329
17,656
399
—
—
18,054
183
—
248
18,485
646
3,347
—
(141)
3,852
6,723
—
(2,459)
8,116
Laboratory and
Manufacturing
Equipment
$000s
Furniture and
Fixtures
$000s
Computer
Equipment and
Software
$000s
Leasehold
Improvements
$000s
Construction
in process
$000s
(2,968)
(1,572)
576
(3,965)
(1,973)
251
(5,686)
(239)
(215)
—
(454)
(208)
—
(663)
(1,030)
(297)
40
(1,287)
(174)
271
(1,190)
(2,955)
(1,860)
—
(4,815)
(1,991)
—
(6,806)
—
—
—
—
—
—
—
Laboratory and
Manufacturing
Equipment
$000s
Furniture and
Fixtures
$000s
Computer
Equipment and
Software
$000s
Leasehold
Improvements
$000s
Construction
in process
$000s
4,456
6,047
998
790
232
139
13,239
11,679
3,852
8,116
Total
$000s
28,647
5,332
(682)
—
33,297
8,422
(605)
—
41,115
Total
$000s
(7,192)
(3,944)
616
(10,520)
(4,346)
522
(14,344)
Total
$000s
22,777
26,771
Depreciation of property and equipment is included in the General and administrative expenses and Research and development
expenses line items in the Consolidated Statements of Comprehensive Income/(Loss). The Company recorded depreciation
expense of $4.3 million, $3.9 million and $3.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
PureTech Health plc Annual report and accounts 2021 189
Financial statements Notes to the Consolidated Financial Statements — continued
12.
Intangible Assets
Intangible assets consist of licenses of intellectual property acquired by the Group through various agreements with third
parties and are recorded at the value of the consideration transferred. Information regarding the cost and accumulated
amortization of intangible assets is as follows:
Cost
Balance as of January 1, 2020
Additions
Balance as of December 31, 2020
Additions
Balance as of December 31, 2021
Accumulated amortization
Balance as of January 1, 2020
Amortization
Balance as of December 31, 2020
Amortization
Balance as of December 31, 2021
Intangible assets, net
Balance as of December 31, 2020
Balance as of December 31, 2021
Licenses
$000s
625
275
900
90
990
Licenses
$000s
—
(1)
(1)
(2)
(3)
Licenses
$000s
899
987
Substantially all the intangible asset licenses represent in-process-research-and-development assets since they are still
being developed and are not ready for their intended use. As such, these assets are not yet amortized but tested for
impairment annually.
The Company tested such assets for impairment as of balance sheet date and concluded that none were impaired.
Amortization expense was included in the Research and development expenses line item in the accompanying Consolidated
Statements of Comprehensive Income/(Loss). Amortization expense, recorded using the straight-line method, was
approximately $0.0 million, $0.0 million and $0.1 million for the years ended December 31, 2021 2020 and 2019, respectively.
13. Other Financial Assets
Other financial assets consist of restricted cash held, which represents amounts that are reserved as collateral against letters of
credit with a bank that are issued for the benefit of a landlord in lieu of a security deposit for office space leased by the Group.
Information regarding restricted cash was as follows:
As of December 31,
Restricted cash
Total other financial assets
2021
$000s
2,124
2,124
2020
$000s
2,124
2,124
190 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
14. Equity
Total equity for PureTech as of December 31, 2021, and 2020, was as follows:
Equity
Share capital, £0.01 par value, issued and paid 287,796,585 and 285,885,025 as of December 31,
2021 and 2020, respectively
Merger Reserve
Share premium
Translation reserve
Other reserves
Retained earnings/(accumulated deficit)
Equity attributable to owners of the Group
Non-controlling interests
Total equity
December 31,
2021
$000s
December 31,
2020
$000s
5,444
138,506
289,303
469
(40,077)
199,871
593,515
(9,368)
584,147
5,417
138,506
288,978
469
(24,050)
260,429
669,748
(16,209)
653,539
Changes in share capital and share premium relate primarily to incentive options exercises during the period.
Shareholders are entitled to vote on all matters submitted to shareholders for a vote. Each ordinary share is entitled to one
vote. Each ordinary share is entitled to receive dividends when and if declared by the Company’s Directors. The Company has
not declared any dividends in the past.
On June 18, 2015, the Company acquired the entire issued share capital of PureTech LLC in return for 159,648,387 Ordinary
Shares. This was accounted for as a common control transaction at cost. It was deemed that the share capital was issued in
line with movements in share capital as shown prior to the transaction taking place. In addition, the merger reserve records
amounts previously recorded as share premium.
Other reserves comprise the cumulative credit to share-based payment reserves corresponding to share-based payment
expenses recognized through Consolidated Statements of Comprehensive Income/(Loss), settlements of vested share based
payment awards as well as other additions that flow directly through equity such as the excess or deficit from changes in
ownership of subsidiaries while control is maintained by the Group.
15. Subsidiary Preferred Shares
Preferred shares issued by subsidiaries and affiliates often contain redemption and conversion features that are assessed under
IFRS 9 in conjunction with the host preferred share instrument. This balance represents subsidiary preferred shares issued to
third parties.
The subsidiary preferred shares are redeemable upon the occurrence of a contingent event, other than full liquidation of the
Company, that is not considered to be within the control of the Company. Therefore these subsidiary preferred shares are
classified as liabilities. These liabilities are measured at fair value through profit and loss. The preferred shares are convertible
into ordinary shares of the subsidiaries at the option of the holder and mandatorily convertible into ordinary shares upon a
subsidiary listing in a public market at a price above that specified in the subsidiary’s charter or upon the vote of the holders
of subsidiary preferred shares specified in the charter. Under certain scenarios the number of ordinary shares receivable on
conversion will change and therefore, the number of shares that will be issued is not fixed. As such the conversion feature is
considered to be an embedded derivative that normally would require bifurcation. However, since the preferred share liabilities
are measured at fair value through profit and loss, as mentioned above, no bifurcation is required.
The preferred shares are entitled to vote with holders of common shares on an as converted basis.
The Group recognized the preferred share balance upon the receipt of cash financing or upon the conversion of notes into
preferred shares at the amount received or carrying balance of any notes and derivatives converted into preferred shares.
The balance as of December 31, 2021 and 2020, represents the fair value of the instruments for all subsidiary preferred shares.
The following summarizes the subsidiary preferred share balance:
As of December 31,
Entrega
Follica
Sonde
Vedanta Biosciences
Total subsidiary preferred share balance
2021
$000s
669
11,191
13,362
148,796
174,017
2020
$000s
1,291
12,792
12,821
92,068
118,972
PureTech Health plc Annual report and accounts 2021 191
Financial statements Notes to the Consolidated Financial Statements — continued
15.
Subsidiary Preferred Shares — continued
As is customary, in the event of any voluntary or involuntary liquidation, dissolution or winding up of a subsidiary, the holders
of subsidiary preferred shares which are outstanding shall be entitled to be paid out of the assets of the subsidiary available
for distribution to shareholders and before any payment shall be made to holders of ordinary shares. A merger, acquisition,
sale of voting control or other transaction of a subsidiary in which the shareholders of the subsidiary immediately before the
transaction do not own a majority of the outstanding shares of the surviving company shall be deemed to be a liquidation
event. Additionally, a sale, lease, transfer or other disposition of all or substantially all of the assets of the subsidiary shall also
be deemed a liquidation event.
As of December 31, 2021 and 2020, the minimum liquidation preference reflects the amounts that would be payable to the
subsidiary preferred holders upon a liquidation event of the subsidiaries, which is as follows:
As of December 31,
Entrega
Follica
Sonde
Vedanta Biosciences
Total minimum liquidation preference
2021
$000s
2,216
6,405
12,000
149,568
170,189
2020
$000s
2,216
6,405
12,000
86,161
106,782
For the years ended December 31, 2021 and 2020, the Group recognized the following changes in the value of subsidiary
preferred shares:
Balance as of January 1, 2020
Issuance of new preferred shares
Increase in value of preferred shares measured at fair value
Balance as of January 1, 2021
Issuance of new preferred shares - financing cash flow
Conversion of convertible notes into preferred shares - non cash financing activity
decrease in value of preferred shares measured at fair value - finance costs (income)
Balance as December 31, 2021
$000s
100,989
13,750
4,234
118,972
37,610
25,797
(8,362)
174,017
2021
On July 21, 2021 Vedanta closed a Series D financing in which Vedanta issued 2,387,675 Preferred D shares for consideration
of $68.4 million. From such consideration of $68.4 million, $25.8 million was received from Pfizer through conversion of its
convertible note (see Note 17) and $5.0 million was received from PureTech in exchange for 174,520 Preferred D shares.
The amount received from PureTech was eliminated in the consolidated financial statements.
2020
In January 2020 and April 2020, Sonde Health issued and sold shares of Series A-2 preferred shares for aggregate proceeds
of $4.8 million, of which none was contributed by PureTech.
In April 2020 and July 2020, Vedanta issued and sold shares of Series C-2 preferred shares for aggregate proceeds of
$9.0 million, of which none was contributed by PureTech.
192 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
16. Financial Instruments
The Group’s financial instruments consist of financial liabilities, including preferred shares, convertible notes, warrants and
loans payable, as well as financial assets classified as assets held at fair value.
Fair Value Process
For financial instruments measured at fair value under IFRS 9 the change in the fair value is reflected through profit and
loss. Using the guidance in IFRS 13, the total business enterprise value and allocable equity of each entity being valued
was determined using a discounted cash flow income approach, replacement cost/asset approach, market/asset – PWERM
approach, or market backsolve approach through a recent arm’s length financing round. The approaches, in order of strongest
fair value evidence, are detailed as follows:
Valuation Method
Description
Market – Backsolve
Market/Asset –
PWERM
Income Based – DCF
Asset/Cost
The market backsolve approach benchmarks the original issue price (OIP) of the company’s latest
funding transaction as current value.
Under a PWERM, the company value is based upon the probability-weighted present value of
expected future investment returns, considering each of the possible future outcomes available to the
enterprise. An Asset approach may be included as an expected future outcome within the PWERM
method. Possible future outcomes can include IPO scenarios, potential SPAC transactions, merger and
acquisition transactions as well as other similar exit transactions of the investee.
The income approach is used to estimate fair value based on the income streams, such as cash flows
or earnings, that an asset or business can be expected to generate.
The asset/cost approach considers reproduction or replacement cost as an indicator of value.
As of December 31, 2021 and 2020, at each measurement date, the total fair value of preferred shares and warrants, including
embedded conversion rights that are not bifurcated, was determined using the following allocation methods: option pricing
model (“OPM”), Probability-Weighted Expected Return Method ("PWERM"), or Hybrid allocation framework. The methods are
detailed as follows:
Allocation Method
OPM
PWERM
Hybrid
Description
The OPM model treats preferred stock as call options on the enterprise’s equity value, with exercise
prices based on the liquidation preferences of the preferred stock.
Under a PWERM, share value is based upon the probability-weighted present value of expected future
investment returns, considering each of the possible future outcomes available to the enterprise, as
well as the rights of each share class.
The hybrid method (“HM”) is a combination of the PWERM and OPM. Under the hybrid method,
multiple liquidity scenarios are weighted based on the probability of the scenarios occurrence,
similar to the PWERM, while also utilizing the OPM to estimate the allocation of value in one or more
of the scenarios.
Valuation policies and procedures are regularly monitored by the Company’s finance group. Fair value measurements,
including those categorized within Level 3, are prepared and reviewed on their issuance date and then on an annual basis for
reasonableness and compliance with the fair value measurements guidance under IFRS. The Group measures fair values using
the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:
Fair Value
Hierarchy Level
Description
Level 1
Level 2
Level 3
Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Inputs that are unobservable. This category includes all instruments for which the valuation technique
includes inputs not based on observable data and the unobservable inputs have a significant effect on
the instrument’s valuation.
Whilst the Group considers the methodologies and assumptions adopted in fair value measurements as supportable,
reasonable and robust, because of the inherent uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market for the investment existed.
COVID-19 Consideration
At December 31, 2021, the Group assessed certain key assumptions within the valuation of its unquoted instruments and
considered the impact of the COVID-19 pandemic on all unobservable inputs (Level 3). The assumptions considered with
respect to COVID-19 included but were not limited to the following: exit scenarios and timing, discount rates, revenue
assumptions as well as volatilities. The Group views any impact of the COVID-19 pandemic on its unquoted instruments
as immaterial as of December 31, 2021.
PureTech Health plc Annual report and accounts 2021 193
Financial statements Notes to the Consolidated Financial Statements — continued
16.
Financial Instruments — continued
Subsidiary Preferred Shares Liability and Subsidiary Convertible Notes
The following table summarizes the changes in the Group’s subsidiary preferred shares and convertible note liabilities
measured at fair value, which were categorized as Level 3 in the fair value hierarchy:
Balance at January 1, 2019
Value at issuance
Conversion to preferred
Conversion to common
Deconsolidation
Change in fair value
Finance Costs
Other
Cash distribution
Balance at December 31, 2019 and January 1, 2020
Value at issuance
Change in fair value
Balance at December 31, 2020 and January 1, 2021
Value at issuance
Conversion to subsidiary preferred shares
Accrued interest – contractual
Change in fair value
Balance at December 31, 2021
Subsidiary
Preferred Shares
$000s
Subsidiary
Convertible
Notes
$000s
217,519
51,048
4,894
—
(207,346)
33,636
1,458
(112)
(108)
100,989
13,750
4,234
118,972
37,610
25,797
—
(8,362)
174,017
9,333
1,607
(4,894)
(2,418)
(5,017)
1,389
—
—
—
—
25,000
—
25,000
2,215
(25,797)
867
175
2,461
The change in fair value of preferred shares and convertible notes are recorded in Finance income/(costs) – fair value
accounting in the Consolidated Statements of Comprehensive Income/(Loss).
The table below sets out information about the significant unobservable inputs used at December 31, 2021, in the fair value
measurement of the Group’s material subsidiary preferred shares liabilities categorized as Level 3 in the fair value hierarchy:
Fair Value at December 31,
2021
Valuation Technique
Unobservable Inputs
Weighted Average
Sensitivity to Decrease in Input
148,796
11,860
13,362
Market/Asset – PWERM
& Hybrid allocation
Income – DCF & OPM
allocation
Market – Backsolve &
OPM allocation
0.93
Estimated time to exit
30.0%
Discount rate
95.0%
Volatility
2.94
Estimated time to exit
76.5%
Probability of Success
Discount rate
21.9%
Terminal value growth rate (1.3)%
57.1%
Volatility
2.00
Estimated time to exit
40.0%
Volatility
Fair value increase
Fair value decrease
Fair value increase
Fair value decrease
Fair value increase
Subsidiary Preferred Shares Sensitivity
The following summarizes the sensitivity from the assumptions made by the Company with respect to the significant
unobservable inputs which are categorized as Level 3 in the fair value hierarchy and used in the fair value measurement of the
Group’s subsidiary preferred shares liabilities (Please refer to Note 15):
Input
Subsidiary Preferred Share Liability
As of December 31, 2021
Subsidiary Enterprise Value
Time to Liquidity
Volatility
Discount Rate
194 PureTech Health plc Annual report and accounts 2021
Sensitivity Range
-2%
+2%
'-6 Months
'+6 Months
-10%
+10%
-5%
+5%
Financial Liability
Increase/(Decrease)
$000s
(3,041)
3,140
5,934
(6,838)
737
(682)
10,575
(6,068)
Financial statements Notes to the Consolidated Financial Statements — continued
16.
Financial Instruments — continued
Subsidiary Convertible Notes
Vedanta issued convertible promissory notes in December 2020 and Sonde issued convertible notes in April 2021 and
November 2021 (collectively the “Notes”). See Note 17 Subsidiary Notes payable for further details. The Notes contain one or
more embedded derivatives. The Company elected to account for these Notes as FVTPL liabilities, whereby the embedded
derivatives are not bifurcated but rather the Notes are recorded at fair value with changes in fair value recorded in the Finance
Income (Cost) line item in the Consolidated statement of comprehensive income (loss).
In July 2021 the entire convertible note issued by Vedanta was converted into Vedanta Series D preferred shares – see Note 15
for further details.
The aggregate fair value of the Sonde Notes was determined to be approximately $2.5 million at December 31, 2021. The
valuations of the Notes were each categorized as Level 3 in the fair value hierarchy. In estimating the fair value of these Notes,
a probability-weighted methodology was utilized, whereby the Notes’ expected returns under various Note-specific liquidity
scenarios were analyzed and weighted to arrive at a probability-adjusted fair value at December 31, 2021. The significant
unobservable input used at December 31, 2021, in the fair value measurement of Sonde’s convertible notes constituted the
estimated time to exit, which was 0.59 years.
Financial Assets Held at Fair Value
Karuna and Vor Valuation
Karuna (Nasdaq: KRTX) and Vor (Nasdaq: VOR) and additional immaterial investments are listed entities on an active exchange
and as such the fair value for the year ended December 31, 2021, was calculated utilizing the quoted common share price.
Please refer to Note 5 for further details.
Akili and Gelesis
In accordance with IFRS 9, the Company accounts for its preferred share investments in Akili and Gelesis as financial assets
held at fair value through the profit and loss. During the year ended December 31, 2021, the Company recorded its investment
in such preferred shares at fair value and recognized the change in fair value of such investments as a gain of $66.7 million that
was recorded to the Consolidated Statements of Comprehensive Income/(Loss) in the line item Gain/(loss) on investments held
at fair value.
The following table summarizes the changes in the Group’s investments held at fair value, which were categorized as Level 3
in the fair value hierarchy:
Balance at January 1, 2019
Deconsolidation of Vor
Deconsolidation of Karuna
Deconsolidation of Gelesis
Reclass of Karuna to Associate
Gain/(Loss) on changes in fair value
Issuance of note receivable
Conversion of note receivable
Balance at December 31, 2019 and January 1, 2020
Cash purchase of Gelesis preferred shares (please refer to Note 6)
Cash purchase of Vor preferred shares
Gain/(Loss) on changes in fair value
Balance at January 1, 2021 before allocation of associate loss to long-term interest
Cash purchase of Vor preferred shares
Reclassification of Vor from level 3 to level 1
Gain/(Loss) on changes in fair value
Balance as of December 31, 2021 before allocation of associate loss to long-term interest
Share of associate loss allocated to long-term interest (please refer to Note 5)
Balance as of December 31, 2021 after allocation of associate loss to long-term interest
$'000s
85,163
12,028
77,373
49,170
(118,006)
48,867
6,480
(6,630)
154,445
10,000
1,150
41,297
206,892
500
(33,365)
65,505
239,533
(96,709)
142,824
The change in fair value of investments held at fair value are recorded in Gain/(loss) on investments held at fair value in the
Consolidated Statements of Comprehensive Income/(Loss).
The table below sets out information about the significant unobservable inputs used at December 31, 2021, in the fair value
measurement of the Group’s material investments held at fair value categorized as Level 3 in the fair value hierarchy:
Fair Value at
December 31, 2021
238,231
Valuation Technique
Market – PWERM &
Hybrid allocation
Unobservable Inputs
Weighted Average
Sensitivity to Decrease in Input
Estimated time to exit (*)
Discount rate
Volatility
0.76
20.0%
62.0%
Fair value increase
PureTech Health plc Annual report and accounts 2021 195
Financial statements Notes to the Consolidated Financial Statements — continued
16.
Financial Instruments — continued
The following summarizes the sensitivity from the assumptions made by the Company with respect to the significant
unobservable inputs which are categorized as Level 3 in the fair value hierarchy and used in the fair value measurement of the
Group’s investments held at fair value (Please refer to Note 5):
Input
As of December 31, 2021
Investee Enterprise Value
Time to Liquidity (*)
Discount Rate
Investments Held at Fair Value
Sensitivity Range
-2%
+2%
'-6 Months
'+6 Months
-5%
+5%
Financial Asset Increase/
(Decrease)
$000s
(4,559)
4,652
11,828
(14,691)
3,842
(3,408)
(*) Gelesis investment in preferred shares was excluded from the sensitivity calculation with regard to the time to liquidity as changing the time to liquidity in the Gelesis
valuation would result in an unreasonable assumption leading to an unreasonable alternative value considering the circumstances on the financial reporting date.
Warrants
Warrants issued by subsidiaries within the Group are classified as liabilities, as they will be settled in a variable number
of preferred shares. The following table summarizes the changes in the Group’s subsidiary warrant liabilities, which were
categorized as Level 3 in the fair value hierarchy:
Balance at January 1, 2019
Warrant Issuance
Gelesis Deconsolidation
Change in fair value
Balance at December 31, 2019 and January 1, 2020
Warrant Issuance
Change in fair value
Balance at December 31, 2020 and January 1, 2021
Change in fair value - finance costs (income)
Balance at December 31, 2021
Subsidiary
Warrant Liability
$000s
13,012
4,706
(21,611)
11,890
7,997
92
117
8,206
(1,419)
6,787
The change in fair value of warrants are recorded in Finance income/(costs) – fair value accounting in the Consolidated
Statements of Comprehensive Income/(Loss).
In connection with various amendments to its 2010 Loan and Security Agreement, Follica issued Series A-1 preferred share
warrants at various dates in 2013 and 2014. Each of the warrants has an exercise price of $0.14 and a contractual term of ten
years from the date of issuance. In 2017, in conjunction with the issuance of convertible notes, the exercise price of the warrants
was adjusted to $0.07 per share.
In connection with the September 2, 2020 Oxford Finance LLC loan issuance, Vedanta also issued Oxford Finance LLC
12,886 Series C-2 preferred share warrants with an exercise price of $23.28 per share, expiring September 2030.
The $6.8 million warrant liability at December 31, 2021, was largely attributable to the outstanding Follica preferred share
warrants.
The table below sets out the weighted average of significant unobservable inputs used at December 31, 2021, with respect
to determining the fair value of the Group's warrants categorized as Level 3 in the fair value hierarchy:
Assumption/Input
Expected term
Expected volatility
Risk free interest rate
Expected dividend yield
Estimated fair value of the preferred share
Warrants
1.66
49.1%
0.7%
—%
$2.72
196 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
16.
Financial Instruments — continued
The following summarizes the sensitivity from the assumptions made by the Company with respect to the significant
unobservable inputs which are categorized as Level 3 in the fair value hierarchy and used in the fair value measurement of the
Group’s warrant liabilities:
Input
As at December 31, 2021
Discount Rate used in the calculation of estimated fair value of the preferred share
Warrant Liability
Sensitivity Range
-5%
+5%
Financial Liability
Increase/(Decrease)
$000s
8,390
(4,222)
Short-term Note from Associate
On December 7, 2021, Gelesis issued PureTech a $15.0 million note to be repaid the earlier of three business days after
the closing of the business combination of Gelesis with Capstar Special Acquisition Corp ("Capstar"), or 30 days following
the termination of such business combination. In the event of the business combination termination, the Company, who
represented the majority of the note holders, could have elected to convert the note at the next equity financing at a discount
of 25% from the financing price. The note bears interest at a rate of 10% per annum.
The note was repaid by Gelesis in January 2022 due to the closing of the business combination between Gelesis and Capstar
on January 13, 2022.
The Note is measured at fair value in accordance with IFRS 9 with changes in fair value recorded as profit or loss in the
Consolidated Statement of Comprehensive Income/(Loss). The fair value as of December 31, 2021, of $15.1 million approximated
the note's contractual amount and the change in fair value from issuance date to December 31, 2021, was not material.
Fair Value Measurement and Classification
The fair value of financial instruments by category at December 31, 2021 and 2020:
Carrying Amount
Fair Value
2021
Financial Assets
$000s
Financial
Liabilities
$000s
Level 1
$000s
Level 2
$000s
Level 3
$000s
Total
$000s
432,649
15,120
493,888
3,174
944,832
—
—
—
—
—
—
—
—
—
—
6,787
174,017
3,916
7,362
192,082
432,649
—
254,355
—
687,005
—
—
—
6,081
6,081
—
—
—
3,174
3,174
—
—
1,330
—
1,330
—
15,120
239,533
—
254,653
6,787
174,017
2,586
1,281
184,671
432,649
15,120
493,888
3,174
944,832
6,787
174,017
3,916
7,362
192,082
Financial assets:
Money Markets1
Short-term note from associate
Investments held at fair value2
Trade and other receivables3
Total financial assets
Financial liabilities:
Subsidiary warrant liability
Subsidiary preferred shares
Subsidiary notes payable
Share based liability awards
Total financial liabilities
Issued by a diverse group of corporations, largely consisting of financial institutions, virtually all of which are investment grade.
1
2 Balance prior to share of associate loss allocated to long-term interest (please refer to Note 5).
3 Outstanding receivables are owed primarily by government agencies, virtually all of which are investment grade.
Carrying Amount
Fair Value
Financial Assets
$000s
Financial
Liabilities
$000s
Level 1
$000s
Level 2
$000s
Level 3
$000s
Total
$000s
2020
394,143
553,167
2,558
949,867
—
—
—
—
—
—
—
—
8,206
118,972
26,455
153,633
394,143
346,275
—
740,417
—
—
—
—
—
—
2,558
2,558
—
—
1,330
1,330
—
206,892
—
206,892
8,206
118,972
25,125
152,303
394,143
553,167
2,558
949,867
8,206
118,972
26,455
153,633
Financial assets:
Money Markets1
Investments held at fair value2
Loans and receivables:
Trade and other receivables3
Total financial assets
Financial liabilities:
Subsidiary warrant liability
Subsidiary preferred shares
Subsidiary notes payable
Total financial liabilities
Issued by a diverse group of corporations, largely consisting of financial institutions, virtually all of which are investment grade.
1
2 Balance prior to share of associate loss allocated to long-term interest (please refer to Note 5).
3 Outstanding receivables are owed primarily by corporations and government agencies, virtually all of which are investment grade.
PureTech Health plc Annual report and accounts 2021 197
Financial statements Notes to the Consolidated Financial Statements — continued
17. Subsidiary Notes Payable
The subsidiary notes payable are comprised of loans and convertible notes. As of December 31, 2021 and 2020, the loan in
Follica and the financial instruments for Knode and Appeering did not contain embedded derivatives and therefore these
instruments continue to be held at amortized cost. The notes payable consist of the following:
As of December 31,
Loans
Convertible notes
Total subsidiary notes payable
2021
$000s
1,330
2,586
3,916
2020
$000s
1,330
25,125
26,455
Loans
In October 2010, Follica entered into a loan and security agreement with Lighthouse Capital Partners VI, L.P. The loan is
secured by Follica’s assets, including Follica’s intellectual property and bears interest at a rate of 12.0 percent. The outstanding
loan balance totaled approximately $1.3 million and $1.3 million as of December 31, 2021 and December 31, 2020. The accrued
interest on such loan balance is presented as Other current liabilities and totaled approximately $0.6 million and $0.5 million as
of December 31, 2021 and December 31, 2020, respectively. The increase in 2021 is attributed to interest expense for the year
ended December 31, 2021.
Convertible Notes
Convertible Notes outstanding were as follows:
January 1, 2020
Gross principal – issuance of notes
Change in fair value
December 31, 2020 and January 1, 2021
Gross principal – issuance of notes –
financing activity
Accrued interest on convertible notes –
finance costs
Conversion to subsidiary preferred shares
Change in fair value – finance costs
December 31, 2021
Vedanta
$000s
—
25,000
—
25,000
—
797
(25,797)
—
—
Knode
$000s
50
—
—
50
—
—
—
—
50
Appeering
$000s
75
—
—
75
—
—
—
—
75
Sonde
$000s
—
—
—
—
Total
$000s
125
25,000
—
25,125
2,215
2,215
70
—
175
2,461
867
(25,797)
175
2,586
On December 30, 2020, Vedanta issued a $25.0 million convertible promissory note to an investor. The note bore interest at an
annual rate of 6.0 percent and its maturity date was the first anniversary of the note. Prepayment of the note was not allowed
and there was no conversion discount feature on the note. The note was mandatorily convertible in a Qualified equity financing
and a Qualified Public Offering at the current price of the financing or offering, all as defined in the note purchase agreement.
In addition, the note allowed for optional conversion immediately prior to a Non Qualified public offering, Non Qualified
Equity financing, or a Corporate transaction and for a pay-out in the case of a change of control transaction. On July 19, 2021,
upon the occurrence of Vedanta's Series D preferred share issuance that was considered to be a Qualified Equity Financing,
the entire outstanding amount of the note, principal and interest, was converted into Series D preferred shares of Vedanta at
the current price of the financing. For further details, please see Note 15.
On April 6, 2021, and on November 24, 2021, Sonde issued unsecured convertible promissory notes to its existing
shareholders for a combined total of $4.3 million, of which $2.2 million were issued to third party shareholders (and $2.1 million
were issued to the Company and eliminated in consolidation). The notes bear interest at an annual rate of 6.0 percent and
mature on the second anniversary of the issuance. The notes mandatorily convert in a Qualified Financing, as defined in the
note purchase agreement, at a discount of 20.0 percent from the price per share in the Qualified Financing. In addition, the
notes allow for optional conversion concurrently with the closing of a Non-Qualified Equity Financing to the Non-Qualified
Equity Securities then issued and sold at a discount of 20.0 percent from the price per share in the Non Qualified Equity
Financing. In the event of no conversion or repayment of the notes prior to a Change in Control, the notes shall become
immediately due and payable prior to the closing of such Change in Control at three times the outstanding principal plus
accrued interest.
For the Vedanta and Sonde convertible notes, since these Notes contain embedded derivatives, the Notes were assessed
under IFRS 9 and the entire financial instruments were elected to be accounted for as FVTPL. The Vedanta convertible note
was settled through its conversion in July 2021. See above. See Note 16 for further details on the fair value of the Sonde notes.
198 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
18. Non-Controlling Interest
During the year ended December 31, 2021, the Company acquired the non-controlling interest in Alivio which resulted in Alivio
being transferred to the Internal segment. The Company has revised in the 2021 financial statements the prior period financial
information related to the segmentation of NCI, to conform to the presentation as of and for the year ending December 31,
2021. Please refer to Note 4 “Segment Information” for further details regarding reportable segments.
The following table summarizes the changes in the equity classified non-controlling ownership interest in subsidiaries by
reportable segment:
Balance at January 1, 2019 *
Share of comprehensive loss
Deconsolidation of subsidiary
Subsidiary note conversion and changes in NCI
ownership interest
Equity settled share-based payments
Acquisition of a subsidiary non controlling interest
Other
Balance at December 31, 2019 and January 1, 2020
Share of comprehensive loss
Equity settled share-based payments
Other
Balance at December 31, 2020 and January 1, 2021
Share of comprehensive income (loss)
NCI exercise of share-based awards in subsidiaries
– change in NCI interest
Equity settled share-based payments
Acquisition of a subsidiary non controlling interest
Other
Balance as of December 31, 2021
Internal
$000s
(15,102)
(17,643)
—
—
—
24,039
24
(8,682)
(191)
305
—
(8,567)
(96)
—
(4)
8,668
—
—
Controlled
Founded
Entities
$000s
Non-Controlled
Founded
Entities
$000s
Parent Company
& Other
$000s
(20,800)
(13,483)
—
23,049
1,683
—
—
(9,551)
(1,211)
2,517
30
(8,215)
(2,069)
(5,922)
6,256
—
—
(9,950)
(73,225)
(23,953)
97,178
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
592
—
—
—
—
—
1
593
(15)
—
(6)
574
15
—
—
—
(6)
583
Total
$000s
(108,535)
(55,079)
97,178
23,049
1,683
24,039
25
(17,639)
(1,417)
2,822
24
(16,209)
(2,151)
(5,922)
6,252
8,668
(6)
(9,368)
(*) Revised to reclassify Alivio into the Internal segment to comply with current period classification. See Note 4.
The following tables summarize the financial information related to the Group’s subsidiaries with material non-controlling
interests, aggregated for interests in similar entities, and before and after intra group eliminations.
For the year ended December 31
Statement of Comprehensive Loss
Total revenue
Income/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Statement of Financial Position
Total assets
Total liabilities
Net assets/(liabilities)
2021
Controlled
Founded
Entities
$000s
Non-Controlled
Founded
Entities
$000s
Intra-group
eliminations
$000s
Internal
$000s
—
—
—
—
—
—
—
7,771
(50,436)
—
(50,436)
66,279
228,856
(162,576)
—
—
—
—
—
—
—
Total
$000s
7,771
(49,644)
—
(49,644)
—
792
—
792
(161)
(10,755)
10,594
66,118
218,101
(151,982)
As of December 31, 2021, Controlled Founded Entities with non-controlling interests primarily include Follica Incorporated,
Sonde Health Inc., Entrega Inc. and Vedanta Biosciences, Inc. Ownership interests of the non-controlling interests in Follica
Incorporated, Entrega Inc., Sonde Health Inc., and Vedanta Biosciences, Inc are 19.9 percent, 11.7 percent, 6.2 percent and
3.7 percent, respectively. In addition, Non-controlling interests include the amounts recorded for subsidiary stock options,
with the vast majority comprising of Vedanta stock options.
PureTech Health plc Annual report and accounts 2021 199
Financial statements Notes to the Consolidated Financial Statements — continued
18. Non-Controlling Interest — continued
For the year ended December 31
Statement of Comprehensive Loss
Total revenue
Income/(loss) for the year
Total comprehensive income/(loss) for the year
Statement of Financial Position
Total assets
Total liabilities
Net assets/(liabilities)
Internal
$000s
3,267
(2,407)
(2,407)
1,297
12,086
(10,788)
2020
Controlled
Founded
Entities
$000s
Non-Controlled
Founded
Entities
$000s
Intra-group
eliminations
$000s
1,957
(53,535)
(53,535)
67,048
188,345
(121,296)
—
—
—
—
—
—
Total
$000s
5,224
(54,869)
(54,869)
—
1,073
1,073
(7)
(14,621)
14,615
68,339
185,809
(117,470)
As of December 31, 2020, Internal segment with non-controlling interests include Alivio, Controlled Founded Entities with
non-controlling interests primarily include, Follica Incorporated, Sonde Health Inc., and Vedanta Biosciences, Inc. Ownership
interests of the non-controlling interests in Alivio Therapeutics, Inc., Follica Incorporated, Sonde Health Inc., and Vedanta
Biosciences, Inc are 8.1 percent, 19.9 percent, 4.5 percent and 0.4 percent, respectively. In addition, Non-controlling interests
include the amounts recorded for subsidiary stock options, with the vast majority comprising of Vedanta stock options.
For the year ended December 31
Statement of Comprehensive Loss
Total revenue
Income/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
2019
Controlled
Founded
Entities
$000s
Non-Controlled
Founded
Entities
$000s
41
(23,871)
—
(23,871)
—
(47,905)
(10)
(47,915)
Internal
$000s
8,006
(26,668)
—
(26,668)
On July 19, 2019 PureTech and a third party investor converted their convertible debt in Follica to Follica Preferred shares
(presented as liabilities) and Follica common shares. The amount of convertible debt converted by the third party investor
into Follica common shares amounted to $2.4 million (see also Note 16). As a result of the conversion Follica NCI share (in
Follica common stock) was reduced from 68 percent to 19.9 percent, which resulted in a reduction in the NCI share in Follica’s
shareholders’ deficit of $19.9 million. The excess of the change in the book value of NCI ($19.9 million noted above) over the
contribution made by NCI ($2.4 million) amounted to $17.5 million and was recorded as a loss directly in shareholders’ equity.
During 2019 a subsidiary of the Company fully funded by the Company ceased its operations and became inactive. This
resulted in a change in the NCI share in the subsidiary deficit. As a result the Company recorded a loss directly in equity
of $3.1 million.
On October 1, 2019, PureTech acquired the remaining 10.0 percent of minority non-controlling interests of PureTech LYT, Inc.
(previously named Ariya Therapeutics, Inc.), increasing its ownership from 90.0 percent to 100.0 percent. In consideration for
the acquisition of minority interests, PureTech issued 2,126,338 shares of common shares. The fair value of the shares issued
in consideration for the minority non-controlling interest amounted to $9.1 million. The carrying amount of the non-controlling
interest at the acquisition was a $24.0 million deficit and the excess of the consideration paid over the book value of the non-
controlling interest of approximately $33.1 million was recorded directly in shareholders’ equity.
On June 11, 2021, PureTech acquired the remaining 17.1 percent of the minority non-controlling interests of Alivio (after
exercise of all in the money stock options) increasing its ownership to 100.0 percent of Alivio. The consideration for such non
controlling interests amounted to $1.2 million, to be paid in three equal installments, with the first installment of $0.4 million
paid at the effective date of the transaction and two additional installment to be paid upon the occurrence of certain
contingent events. The Group recorded a contingent consideration liability of $0.6 million at fair value for the two additional
installments, resulting in a total acquisition cost of $1.0 million. The excess of the consideration paid over the book value of the
non-controlling interest of approximately $9.6 million was recorded directly as a charge to shareholders’ equity. The second
installment of $0.4 million was paid in July 2021, upon the occurrence of the contingent event specified in the agreement.
The contingent consideration liability is adjusted to fair value at the end of each reporting period with changes in fair value
recorded in earnings. Changes in fair value of the aforementioned contingent consideration liability were not material.
On December 1, 2021, options holders in Entrega exercised options into shares of common stock, increasing the NCI interest
held from 0.2 percent to 11.7 percent. During 2021 option holders in Vedanta exercised options and increased the NCI interest
to 3.7 percent. The exercise of the options resulted in an increase in the NCI share in Entrega's and Vedanta's shareholder's
deficit of $5.9 million. The consideration paid by NCI ($0.1 million) together with the increase in NCI share in Entrega's and
Vedanta's shareholder deficit ( $5.9 million) amounted to $6.0 million and was recorded as a gain directly in shareholders' equity.
200 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
19. Trade and Other Payables
Information regarding Trade and other payables was as follows:
As of December 31,
Trade payables
Accrued expenses
Income tax payable
Liability settled share based awards
Other
Total trade and other payables
20. Long-term loan
2021
$000s
11,346
17,309
57
4,703
2,403
35,817
2020
$000s
8,871
9,090
1,260
—
2,606
21,826
In September 2020, Vedanta entered into a $15.0 million loan and security agreement with Oxford Finance LLC. The loan is
secured by Vedanta's assets, including equipment, inventory and intellectual property. The loan bears a floating interest rate
of 7.7 percent plus the greater of (i) 30 day U.S. Dollar LIBOR reported in the Wall Street Journal or (ii) 0.17 percent. The loan
matures September 2025 and requires interest only payments for the initial 24 months. The loan also carries a final fee upon full
repayment of 7.0 percent of the original principal, or $1.1 million. For loan consideration, Vedanta also issued Oxford Finance
LLC 12,886 Series C-2 preferred share warrants with an exercise price of $23.28 per share, expiring September 2030. The
outstanding loan balance totaled approximately $15.1 million as of December 31, 2021.
The following table summarizes long-term loan activity for the years ended December 31, 2021 and 2020:
Balance at January 1,
Net loan proceeds
Accrued interest
Interest paid
Other
Balance at December 31,
Long-term loan
2021
$000s
14,818
—
1,502
(1,201)
—
15,118
The following table summarizes Vedanta's future principal payments for the long-term loan as of December 31, 2021:
Balance Type
Principal
Balance of accreted premium net of unamortized
issuance costs
Total
2022
857
2023
5,143
2024
5,143
2025
3,857
The long-term loan is presented as follows in the Statement of Financial Position as of December 31, 2021 and 2020:
Current portion of Long-term loan
Long-term loan
Total Long-term loan
Long-term loan
2021
$000s
857
14,261
15,118
2020
$000s
—
14,720
496
(296)
(102)
14,818
Total
15,000
118
15,118
2020
$000s
—
14,818
14,818
PureTech Health plc Annual report and accounts 2021 201
Financial statements Notes to the Consolidated Financial Statements — continued
21. Leases
The activity related to the Group’s right of use asset and lease liability for the years ended December 31, 2021 and
2020 is as follows:
Balance at January 1,
Additions
Tenant improvement - lease incentive
Depreciation
Adjustments
Balance at December 31,
Balance at January 1,
Additions
Cash paid for rent - principal - financing cash flow
Cash paid for rent - interest
Interest expense
Adjustments
Balance at December 31,
Right of use asset, net
2021
$000s
20,098
739
(733)
(2,938)
—
17,166
Total lease liability
2021
$000s
35,348
1,016
(3,375)
(2,181)
2,181
—
32,990
2020
$000s
22,383
—
—
(2,699)
414
20,098
2020
$000s
37,843
—
(2,908)
(2,354)
2,354
414
35,348
Depreciation of the right-of-use assets, which virtually all consist of leased real estate, is included in the General
and administrative expenses and Research and development expenses line items in the Consolidated Statements of
Comprehensive Income/(Loss). The Company recorded depreciation expense of $2.9 million, $2.7 million and $3.2 million
for the years ended December 31, 2021, 2020 and 2019, respectively.
The following details the short-term and long-term portion of the lease liability as at December 31, 2021 and 2020:
Short-term Portion of Lease Liability
Long-term Portion of Lease Liability
Total Lease Liability
Total lease liability
2021
$000s
3,950
29,040
32,990
2020
$000s
3,261
32,088
35,348
The following table details the future maturities of the lease liability, showing the undiscounted lease payments to be paid after
the reporting date:
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Total undiscounted lease maturities
Interest
Total lease liability
2021
$000s
5,927
6,591
6,754
5,168
4,419
12,033
40,893
7,903
32,990
During the year ended December 31, 2019, PureTech entered into a lease agreement for certain premises consisting of
approximately 50,858 rentable square feet of space located at 6 Tide Street. The lease commenced on April 26, 2019
(“Commencement Date”) for an initial term consisting of ten years and three months and there is an option to extend for two
consecutive periods of five years each. The Company assessed at lease commencement date whether it is reasonably certain
to exercise the extension options and deemed such options not reasonably certain to be exercised. The Company will reassess
whether it is reasonably certain to exercise the options only if there is a significant event or significant changes in circumstances
within its control.
202 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
21.
Leases — continued
On June 26, 2019, PureTech executed a sublease agreement with Gelesis. The lease is for the approximately 9,446 rentable
square feet located on the sixth floor of the Company’s former offices at the 501 Boylston Street building. The sublessee
obtained possession of the premises on June 1, 2019 and the rent period term began on June 1, 2019 and expires on August
31, 2025. The sublease was determined to be a finance lease. As of December 31, 2021, the balances related to the sublease
were as follows:
Short-term Portion of Lease Receivable
Long-term Portion of Lease Receivable
Total Lease Receivable
Total lease
receivable
$000s
415
1,285
1,700
The following table details the future maturities of the lease receivable, showing the undiscounted lease payments to be
received after the reporting date:
Less than one year
One to two years
Two to three years
Three to four years
Total undiscounted lease receivable
Unearned Finance income
Net investment in the lease
2021
$000s
504
513
523
353
1,892
192
1,700
On August 6, 2019, PureTech executed a sublease agreement with Dewpoint Therapeutics, Inc. (“Dewpoint”). The sublease
was for approximately 11,852 rentable square feet located on the third floor of the 6 Tide Street building, where the Company’s
offices are currently located. Dewpoint obtained possession of the premises on September 1, 2019 with a rent period term that
began on September 1, 2019, and expired on August 31, 2021. The sublease was determined to be an operating lease.
Rental income recognized by the Company during the years ended December 31, 2021, 2020 and 2019, was $0.65 million,
$1.08 million and $0.4 million, respectively and is included in the Other income/(expense) line item in the Consolidated
Statements of Comprehensive Income/(Loss).
22. Capital and Financial Risk Management
Capital Risk Management
The Group's capital and financial risk management policy is to maintain a strong capital base so as to support its strategic
priorities, maintain investor, creditor and market confidence as well as sustain the future development of the business. The
Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital. To maintain or adjust the capital structure, the Group may issue new shares or incur new debt. The Group has some
external debt and no material externally imposed capital requirements. The Group’s share capital is clearly set out in Note 14.
Management continuously monitors the level of capital deployed and available for deployment in the Internal and Parent
segments as well as at Controlled Founded Entities. The Directors seek to maintain a balance between the higher returns that
might be possible with higher levels of deployed capital and the advantages and security afforded by a sound capital position.
The Group’s Directors have overall responsibility for establishment and oversight of the Group's capital and risk management
framework. The Group is exposed to certain risks through its normal course of operations. The Group’s main objective in
using financial instruments is to promote the development and commercialization of intellectual property through the raising
and investing of funds for this purpose. The Group’s policies in calculating the nature, amount and timing of investments are
determined by planned future investment activity. Due to the nature of activities and with the aim to maintain the investors’
funds as secure and protected, the Group’s policy is to hold any excess funds in highly liquid and readily available financial
instruments and maintain insignificant exposure to other financial risks.
COVID-19
In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The pandemic has since caused
widespread and significant disruption to daily life and the global economy as governments have taken actions, including
the issuance of stay-at-home orders and social distancing guidelines, and businesses have adjusted their activities. While
our business, operations and financial condition and results have not been significantly impacted in 2020 or 2021, as a result
of the COVID-19 pandemic, we have taken swift action to ensure the safety of our employees and other stakeholders. The
Group continues to monitor the latest developments regarding the COVID-19 pandemic on business, operations, and financial
condition and results, and has made certain assumptions regarding the pandemic for purposes of the Group's operational
planning and financial projections, including assumptions regarding the duration and severity of the pandemic and the
global macroeconomic impact of the pandemic. Despite careful tracking and planning, however, the Group is unable to
accurately predict the extent of the impact of the pandemic on the business, operations, and financial condition and results
in future periods due to the uncertainty of future developments. The Group is focused on all aspects of the business and is
implementing measures aimed at mitigating issues where possible.
PureTech Health plc Annual report and accounts 2021 203
Financial statements Notes to the Consolidated Financial Statements — continued
22.
Capital and Financial Risk Management — continued
Credit Risk
The Group has exposure to the following risks arising from financial instruments:
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. Financial instruments that potentially subject the Group to concentrations of credit risk consist
principally of cash and cash equivalents and trade and other receivables. The Group held the following balances (not including
the income tax receivable resulting from overpayment of income taxes, see Note 25):
As of December 31
Cash and cash equivalents
Trade and other receivables
Total
2021
$000s
465,708
3,174
468,882
2020
$000s
403,881
2,558
406,438
The Group invests its excess cash in U.S. Treasury Bills, U.S. debt obligations and money market accounts, which the Group
believes are of high credit quality. Further the Group's cash and cash equivalents and short-term investment are held at
diverse, investment-grade financial institutions.
The Group assesses the credit quality of customers on an ongoing basis. The credit quality of financial assets is assessed by
historical and recent payment history, counterparty financial position, reference to credit ratings (if available) or to historical
information about counterparty default rates. The Group does not have expected credit losses owing largely to a small number
of counterparties and the high credit quality of such counterparties (primarily the US government and large funds in respect of
grant income).
The aging of trade and other receivables that were not impaired at December 31 is as follows:
As of December 31
Not impaired
Total
2021
$000s
3,174
3,174
2020
$000s
2,558
2,558
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Group actively manages its risk of a funds shortage by closely
monitoring the maturity of its financial assets and liabilities and projected cash flows from operations, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Due to the nature of
these financial liabilities, the funds are available on demand to provide optimal financial flexibility.
The table below summarizes the maturity profile of the Group’s financial liabilities, including subsidiary preferred shares that
have customary liquidation preferences, as of December 31, 2021 and 2020, based on contractual undiscounted payments:
As of December 31
Long-term loan (non-current + current)
Subsidiary notes payable
Trade and other payables
Warrants2
Subsidiary preferred shares (Note 15)1
Total
As of December 31
Long-term loan
Subsidiary notes payable
Trade and other payables
Warrants2
Subsidiary preferred shares (Note 15)1
Total
2021
Carrying
Amount
$000s
Within Three
Months
$000s
Three to Twelve
Months
$000s
One to Five
Years
$000s
15,118
3,916
35,817
6,787
174,017
235,656
296
3,916
35,817
6,787
174,017
220,833
2,182
—
—
—
—
2,182
2020
16,274
—
—
—
—
16,274
Carrying
Amount
$000s
Within Three
Months
$000s
Three to Twelve
Months
$000s
One to Five
Years
$000s
14,818
26,455
21,826
8,206
118,972
190,278
296
1,455
21,826
8,206
118,972
150,756
905
25,000
—
—
—
25,905
18,780
—
—
—
—
18,780
Total
$000s (*)
18,752
3,916
35,817
6,787
174,017
239,290
Total
$000s (*)
19,981
26,455
21,826
8,206
118,972
195,441
1 Redeemable only upon a liquidation or Deemed liquidation event, as defined in the applicable shareholder documents.
2 Warrants issued by subsidiaries to third parties to purchase preferred shares.
(*) Does not include payments in respect of lease obligations. For the contractual future payments related to lease obligations, see Note 21.
204 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
22.
Capital and Financial Risk Management — continued
Interest Rate Sensitivity
As of December 31, 2021, the Group had cash and cash equivalents of $465.7 million. The Group's exposure to interest
rate sensitivity is impacted by changes in the underlying U.K. and U.S. bank interest rates. The Group has not entered into
investments for trading or speculative purposes. Due to the conservative nature of the Group's investment portfolio, which is
predicated on capital preservation and investments in short duration, high-quality U.S. Treasury Bills and U.S. debt obligations
and related money market accounts, a change in interest rates would not have a material effect on the fair market value of
the Group's portfolio, and therefore the Group does not expect operating results or cash flows to be significantly affected by
changes in market interest rates.
Controlled Founded Entity Investments
The Group maintains investments in certain Controlled Founded Entities. The Group’s investments in Controlled Founded
Entities are eliminated as intercompany transactions upon financial consolidation. The Group is however exposed to a
preferred share liability owing to the terms of existing preferred shares and the ownership of Controlled Founded Entities
preferred shares by third parties. As discussed in Note 15, certain of the Group’s subsidiaries have issued preferred shares that
include the right to receive a payment in the event of any voluntary or involuntary liquidation, dissolution or winding up of a
subsidiary, including in the event of "deemed liquidation" as defined in the incorporation documents of the entities, which shall
be paid out of the assets of the subsidiary available for distribution to shareholders and before any payment shall be made to
holders of ordinary shares. The liability of preferred shares is maintained at fair value through the profit and loss. The Group’s
strong cash position, budgeting and forecasting processes, as well as decision making and risk mitigation framework enable
the Group to robustly monitor and support the business activities of the Controlled Founded Entities to ensure no exposure
to dissolution or liquidation. Accordingly, the Group views exposure to 3rd party preferred share liability as low.
Non-Controlled Founded Entity Investments
The Group maintains certain investments in Non-Controlled Founded Entities which are deemed either as investments and
accounted for as investments held at fair value or associates and accounted for under the equity method (please refer to
Note 1). The Group's exposure to investments held at fair value is $397.2 million as of December 31, 2021, and the Group may
or may not be able to realize the value in the future. Accordingly, the Group views the risk as high. The Group’s exposure to
investments in associates is limited to the carrying amount of the investment in an Associate. The Group is not exposed to
further contractual obligations or contingent liabilities beyond the value of initial investment. As of December 31, 2021, Gelesis
was the only associate. The carrying amount of the investment in Gelesis as an associate was zero. Accordingly, the Group
does not view this as a risk. Please refer to Notes 5,6 and 16 for further information regarding the Group's exposure to Non-
Controlled Founded Entity Investments.
Equity Price Risk
As of December 31, 2021, the Group held 1,656,564 common shares of Karuna and 3,207,200 common shares of Vor. The fair
value of the Group's investment in the common stock of Karuna and Vor was $217.0 million and $37.3 million respectively.
The investments in Karuna and Vor are exposed to fluctuations in the market price of these common shares. The effect of a
10.0 percent adverse change in the market price of Karuna and Vor common shares as of December 31, 2021, would have been
a loss of approximately $21.7 million and $3.7 million respectively, recognized as a component of Other income (expense) in
the Consolidated Statements of Comprehensive Income/(Loss).
Foreign Exchange Risk
The Group maintains consolidated financial statements in the Group's functional currency, which is the U.S. dollar. Monetary
assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at
rates of exchange prevailing at the balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Exchange gains
or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective
periods. Such foreign currency gains or losses were not material for all reported periods. See Note 9.
The Group does not currently engage in currency hedging activities since its foreign currency risk is limited, but the Group may
begin to do so in the future if and when its foreign currency risk exposure changes. Instruments that may be used to hedge
future risks include foreign currency forward and swap contracts. These instruments may be used to selectively manage risks,
but there can be no assurance that the Group will be fully protected against material foreign currency fluctuations.
PureTech Health plc Annual report and accounts 2021 205
Financial statements Notes to the Consolidated Financial Statements — continued
23. Commitments and Contingencies
The Group is party to certain licensing agreements where the Group is licensing IP from third parties. In consideration for
such licenses the Group has made upfront payments and may be required to make additional contingent payments based
on developmental and sales milestones and/or royalty on future sales. As of December 31, 2021, these milestone events
have not yet occurred and therefore the Group does not have a present obligation to make the related payments in respect
of the licenses. Such milestones are dependent on events that are outside of the control of the Group and many of these
milestone events are remote of occurring. As of December 31, 2021, payments in respect of developmental milestones
that are dependent on events that are outside the control of the Group but are reasonably possible to occur amounted to
approximately $10.3 million. These milestone amounts represent an aggregate of multiple milestone payments depending
on different milestone events in multiple agreements. The probability that all such milestone events will occur in the aggregate
is remote. Payments made to license IP represent the acquisition cost of intangible assets. See Note 12.
The Group is party to certain sponsored research arrangements as well as arrangements with contract manufacturing and
contract research organizations, whereby the counterparty provides the Company with research and/or manufacturing
services. As of December 31, 2021, the noncancellable commitments in respect of such contracts amounted to approximately
$6.7 million.
24. Related Parties Transactions
Related Party Subleases and royalties
During 2019, PureTech executed sublease agreements with a related party, Gelesis. Please refer to Note 21 for further details
regarding the sublease.
The Group receives royalties from Gelesis on its product sales. Such royalties amounted to $231 thousand and
$54 thousand for the years ended December 31, 2021 and 2020, respectively and are presented in Contract revenue in the
Consolidated Statements of Comprehensive Income/(Loss).
Key Management Personnel Compensation
Key management includes executive directors and members of the executive management team of the Group (not
including compensation provided to independent directors). Full details for Directors’ remuneration can be found in the
Directors’ Remuneration Report. The key management personnel compensation of the Group was as follows for the years
ended December 31:
As of December 31
Short-term employee benefits
Share-based payments
Total
2021
$000s
4,666
4,045
8,711
2020
$000s
4,833
5,822
10,656
2019
$000s
5,543
2,774
8,317
Short-term employee benefits include salaries, health care and other non-cash benefits. Share-based payments are generally
subject to vesting terms over future periods.
For cash settlements of share based awards – see Note 8.
During the year ended December 31, 2021, the company incurred $782 thousand of general administrative expenses that was
paid to a related party.
Convertible Notes Issued to Directors
Certain members of the Group have invested in convertible notes issued by the Group’s subsidiaries. As of December 31,
2021, 2020 and 2019, the outstanding related party notes payable totaled $94 thousand, $89 thousand and $84 thousand
respectively, including principal and interest.
The notes issued to related parties bear interest rates, maturity dates, discounts and other contractual terms that are the same
as those issued to outside investors during the same issuances, as described in Note 17.
206 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
24.
Related Parties Transactions — continued
Directors’ and Senior Managers’ Shareholdings and Share Incentive Awards
The Directors and senior managers hold beneficial interests in shares in the following businesses and sourcing companies as at
December 31, 2021:
Directors:
Ms. Daphne Zohar²
Dr. Robert Langer
Dr. Raju Kucherlapati
Dr. John LaMattina3
Senior Managers:
Dr. Bharatt Chowrira
Dr. Joseph Bolen
Business Name (Share Class)
Gelesis (Common)
Entrega (Common)
Enlight (Class B Common)
Akili (Series A-2 Preferred)
Akili (Series C Preferred)
Gelesis (Common)3
Gelesis (Common)4
Gelesis (Series A-1 Preferred)3
Vedanta Biosciences (Common)
Karuna (Common)4
Vor (Common)
Number of
shares held as
of December
31, 2021
Number of
options held as
of December
31, 2021
Ownership
Interest¹
179,443
250,000
—
37,372
11,755
50,540
33,051
49,523
25,000
5,000
—
1,207,006
82,500
30,000
—
—
—
33,578
—
—
—
9,191
5.03%
4.09%
3.00%
0.80%
0.20%
0.18%
0.24%
0.18%
0.17%
0.02%
0.02%
1 Ownership interests as of December 31, 2021 are calculated on a diluted basis, including issued and outstanding shares, warrants and options (and written commitments
to issue options) but excluding unallocated shares authorized to be issued pursuant to equity incentive plans and any shares issuable upon conversion of outstanding
convertible promissory notes.
2 Common shares and options held by Yishai Zohar, who is the husband of Ms. Zohar. Ms. Zohar does not have any direct interest in the share capital of Gelesis. Ms. Zohar
recuses herself from any and all material decisions with regard to Gelesis.
3 Dr. John and Ms. Mary LaMattina hold 50,540 shares of common shares and 49,523 shares of Series A-1 preferred shares in Gelesis. Individually, Dr. LaMattina holds
33,051 shares of Gelesis and convertible notes issued by Appeering in the aggregate principal amount of $50,000.
4 Options to purchase the listed shares were granted in connection with the service on such founded entity’s Board of Directors and any value realized therefrom shall
be assigned to PureTech Health, LLC.
Directors and senior managers hold 24,676,165 ordinary shares and 8.6 percent voting rights of the Company as of December
31, 2021. This amount excludes options to purchase 4,750,000 ordinary shares. This amount also excludes 4,666,514 shares,
which are issuable based on the terms of performance based RSU awards granted to certain senior managers covering the
financial years 2021, 2020 and 2019, and 67,140 shares, which are issuable to directors immediately prior to the Company's
2022 Annual General Meeting of Stockholders based on the terms of the RSU awards granted to non-executive directors
in 2021. Such shares will be issued to such senior managers and non executive directors in future periods provided that
performance and/or service conditions are met and certain of the shares will be withheld for payment of customary
withholding taxes.
Short term Note from Associate
See Note 16 for details on the $15.0 million note issued by Gelesis to the Company. The Company recognized income of
$0.1 million with respect to interest and changes in fair value related to the short term note.
PureTech Health plc Annual report and accounts 2021 207
Financial statements Notes to the Consolidated Financial Statements — continued
25. Taxation
Tax on the profit or loss for the year comprises current and deferred income tax. Tax is recognized in the Consolidated
Statements of Comprehensive Income/(Loss) except to the extent that it relates to items recognized directly in equity.
For the years ended December 31, 2021, 2020 and 2019, the Group filed a consolidated U.S. federal income tax return
which included all subsidiaries in which the Company owned greater than 80 percent of the vote and value. For the years
ended December 31, 2021, 2020 and 2019, the Group filed certain consolidated state income tax returns which included
all subsidiaries in which the Company owned greater than 50 percent of the vote and value. The remaining subsidiaries file
separate U.S. tax returns.
Amounts recognized in Consolidated Statements of Comprehensive Income/(Loss):
As of December 31
Income/(loss) for the year
Income tax expense/(benefit)
Income/(loss) before taxes
Recognized income tax expense/(benefit):
As of December 31
Federal
Foreign
State
Total current income tax expense/(benefit)
Federal
Foreign
State
Total deferred income tax expense/(benefit)
Total income tax expense/(benefit), recognized
2021
$000s
(62,709)
3,756
(58,953)
2021
$000s
22,138
—
109
22,247
(15,416)
—
(3,075)
(18,491)
3,756
2020
$000s
4,568
14,401
18,969
2020
$000s
21,796
—
—
21,796
(7,349)
—
(46)
(7,395)
14,401
2019
$000s
366,065
112,409
478,474
2019
$000s
—
—
—
—
83,776
—
28,633
112,409
112,409
The tax expense was $3.8 million, $14.4 million and $112.4 million in 2021, 2020 and 2019 respectively. The decrease in
tax expense is primarily the result of the decrease in profit before tax in entities in the U.S. Federal and Massachusetts
consolidated return groups of the Company.
Reconciliation of Effective Tax Rate
The Group is primarily subject to taxation in the U.S. A reconciliation of the U.S. federal statutory tax rate to the effective tax
rate is as follows:
As of December 31
US federal statutory rate
Effects of state tax rate in U.S.
R&D and orphan drug tax credits
Non deductible share based
payment expenses
Finance income/(costs) – fair value
accounting
Loss with respect to associate
for which no deferred tax asset
is recognized
Transaction Costs
Interest Expense
Executive Compensation
Deconsolidation adjustments
Recognition of deferred tax assets
and tax benefits not previously
recognized
Current year losses for which no
deferred tax asset is recognized
Other
2021
$000s
(12,380)
(4,484)
(5,056)
%
21.00
7.61
8.58
555
(0.94)
(2,017)
3.42
11,542
309
217
746
—
(19.58)
(0.52)
(0.37)
(1.27)
0.00
2020
2019
$000s
3,984
1,844
(5,642)
327
919
—
361
(2,258)
827
—
%
21.00
9.72
(29.74)
1.73
4.84
—
1.91
(11.91)
4.36
—
$000s
97,183
22,111
(6,321)
433
3,725
—
—
1,030
—
(13,658)
%
21.00
4.78
(1.37)
0.09
0.80
—
—
0.22
—
(2.95)
(414)
0.70
—
—
(6,251)
(1.35)
14,375
363
3,756
(24.38)
(0.62)
(6.37)
13,948
91
14,401
73.53
0.48
75.92
14,514
(356)
112,409
3.14
(0.06)
24.29
The Company is also subject to taxation in the UK but to date no taxable income has been generated in the UK. Changes in
corporate tax rates can change both the current tax expense (benefit) as well as the deferred tax expense (benefit).
208 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Consolidated Financial Statements — continued
25.
Taxation — continued
Deferred Tax Assets and Liabilities
Deferred tax assets have been recognized in the U.S. jurisdiction in respect of the following items:
As of December 31
Operating tax losses
Tax credits
Share-based payments
Deferred revenue
Investment in Associates
Lease Liability
Other temporary differences
Deferred tax assets
Investments held at fair value
ROU asset
Fixed assets
Other temporary differences
Deferred tax liabilities
Deferred tax assets (liabilities), net
Deferred tax liabilities, net, recognized
Deferred tax assets, net, recognized
Deferred tax assets (liabilities), net, not recognized
2021
$000s
46,982
10,673
7,265
—
11,542
8,969
2,665
88,096
(96,804)
(4,667)
(3,547)
—
(105,018)
(16,922)
(89,765)
—
72,843
2020
$000s
39,901
10,805
5,429
358
—
9,657
2,078
68,228
(120,676)
(5,491)
(3,588)
(27)
(129,782)
(61,554)
(108,626)
—
47,072
We have recognized deferred tax assets related to entities in the U.S. Federal and Massachusetts consolidated return groups
due to future reversals of existing taxable temporary differences that will be sufficient to recover the net deferred tax assets.
Our unrecognized deferred tax assets of $72.8 million are primarily related to tax credit, loss carryforwards and deductible
temporary differences in subsidiaries outside the U.S. Federal and Massachusetts consolidated return groups. Such deferred
tax assets have not been recognized because it is not probable that future taxable profits will be available to support their
realizability. The unrecognized deferred tax assets, to a lesser extent, also relate to unrecognized deferred tax assets with
respect to an investment in an associate since the Group does not believe it is probable that such tax benefits will be realized
in the foreseeable future.
There was movement in deferred tax recognized, which impacted income tax expense by approximately $18.5 million benefit,
primarily related to changes in the value of investments. The Company sold a portion of its stock in Karuna during 2021 and
was able to partially offset its gains by using various attributes (i.e. net operating losses, research and development credits,
etc.) resulting in current tax expense of $22.2 million.
Unrecognized Deferred Tax Assets
Deferred tax assets have not been recognized in respect of the following carryforward losses, credits and temporary
differences, because it is not probable that future taxable profit will be available against which the Group can use the
benefits therefrom.
As of December 31
Deductible Temporary Difference
Tax Losses
Tax Credits
Total
2021
$000s
2020
$000s
Gross Amount
Tax Effected
Gross Amount
Tax Effected
59,925
215,425
9,636
284,986
16,224
46,982
9,636
72,843
7,997
169,731
9,120
186,848
1,679
36,273
9,120
47,072
Tax Losses and tax credits carryforwards
Tax losses and tax credits for which no deferred tax asset was recognized
As of December 31
Tax losses expiring:
Within 10 years
More than 10 years
Available Indefinitely
Total
Tax credits expiring:
Within 10 years
More than 10 years
Available indefinitely
Total
2021
$000s
2020
$000s
Gross Amount
Tax Effected
Gross Amount
Tax Effected
19,735
47,937
147,753
215,425
4
9,632
—
9,636
4,343
11,611
31,028
46,982
4
9,632
—
9,636
12,530
55,312
101,889
169,731
13
9,107
—
9,120
2,760
12,117
21,397
36,273
13
9,107
—
9,120
PureTech Health plc Annual report and accounts 2021 209
Financial statements Notes to the Consolidated Financial Statements — continued
25.
Taxation — continued
The Group had U.S. federal net operating losses carry forwards (“NOLs”) of approximately $215.4 million, $169.7 million and
$243.0 million as of December 31, 2021, 2020 and 2019, respectively, which are available to offset future taxable income. These
NOLs expire through 2037 with the exception of $147.8 million which is not subject to expiration. The Group had U.S. Federal
research and development tax credits of approximately $3.9 million, $3.9 million and $7.4 million as of December 31, 2021,
2020 and 2019, respectively, which are available to offset future taxes that expire at various dates through 2041. The Group
also had Federal Orphan Drug credits of approximately $5.7 million and $5.2 million as of December 31, 2021, and 2020, which
are available to offset future taxes that expire at various dates through 2041. A portion of these Federal NOLs and credits
can only be used to offset the profits from the Company’s subsidiaries who file separate Federal tax returns. These NOLs and
credits are subject to review and possible adjustment by the Internal Revenue Service.
The Group had Massachusetts net operating losses carry forwards (“NOLs”) of approximately $27.9 million, $67.4 million and
$273.0 million for the years ended December 31, 2021, 2020 and 2019, respectively, which are available to offset future taxable
income. These NOLs expire at various dates beginning in 2030. The Group had Massachusetts research and development
tax credits of approximately $1.3 million, $2.1 million and $1.6 million for the years ended December 31, 2021, 2020 and 2019,
respectively, which are available to offset future taxes and expire at various dates through 2036. These NOLs and credits are
subject to review and possible adjustment by the Massachusetts Department of Revenue.
Utilization of the NOLs and research and development credit carryforwards may be subject to a substantial annual limitation
under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously
or that could occur in the future. These ownership changes may limit the amount of NOL and research and development credit
carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company notes that
a 382 analysis was performed through December 31, 2021. The results of this analysis concluded that certain net operating
losses were subject to limitation under Section 382 of the Internal Revenue Code. None of the Company’s tax attributes which
are subject to a restrictive Section 382 limitation have been recognized in the financial statements.
Tax Balances
The current tax related balances are presented in the Statement of Financial Position as follows:
As of December 31
Income tax receivable - current
Trade and Other Payables
2021
$000s
4,514
(57)
2020
$000s
—
(1,260)
Uncertain Tax Positions
The Company has no uncertain tax positions as of December 31, 2021. U.S. corporations are routinely subject to audit by
federal and state tax authorities in the normal course of business.
26. Subsequent Events
The Company has evaluated subsequent events after December 31, 2021, the date of issuance of the Consolidated Financial
Statements, and has not identified any recordable or disclosable events not otherwise reported in these Consolidated Financial
Statements or notes thereto, except for the following:
On January 13, 2022 Gelesis completed its business combination with Capstar Special Purpose Acquisition Corp ("Capstar").
As part of the business combination all shares held in Gelesis, common and preferred, were exchanged for common
shares of the merged entity. In addition, the Group invested $15.0 million in the class A common shares of Capstar as part
of the PIPE transaction that took place immediately prior to the closing of the business combination and an additional
approximately $5.0 million, as part of the Backstop agreement signed with Capstar on December 30, 2021 (see Note 6).
Pursuant to the business combination, Gelesis became a wholly-owned subsidiary of Capstar and Capstar changed its name
to Gelesis Holdings, Inc., which began trading on the New York Stock exchange under the ticker symbol "GLS" on January
14, 2022. Following the closing of the business combination, the PIPE transaction and the settlement of the aforementioned
Backstop agreement with Capstar, PureTech holds 16,727,582 common shares of Gelesis Holdings Inc., which is equal to
approximately 23.2% of Gelesis Holdings Inc's outstanding common shares.
On January 26, 2022, Akili Interactive and Social Capital Suvretta Holdings Corp a special purpose acquisition company
announced they had entered into a definitive business combination agreement. Upon completion of the transaction, the
combined company’s securities are expected to be traded on the Nasdaq Stock Market under the ticker symbol "AKLI". The
transaction is expected to close in mid-2022. As part of this transaction the Akili Interactive shares held by the Company will
be exchanged for the combined company's securities and the Company's interest in the combined public entity is expected
to decrease from its current voting interest in Akili of 26.7%.
210 PureTech Health plc Annual report and accounts 2021
Financial statements PureTech Health plc Statement of Financial Position
For the years ended December 31
Assets
Non-current assets
Investment in subsidiary
Intercompany long-term receivable
Total non-current assets
Total current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Merger reserve
Other reserve
Accumulated deficit (Income/(loss) for the year $(3,401))
Total equity
Current liabilities
Trade and other payables
Intercompany payables
Total current liabilities
Total equity and liabilities
Note
2021
$000s
2020
$000s
2
3
4
4
4
4
4
5
148,086
297,909
445,995
—
445,995
5,444
289,304
138,506
7,730
(14,022)
426,961
1,856
17,179
19,034
445,995
161,082
297,556
458,638
—
458,638
5,417
288,978
138,506
20,725
(10,621)
443,005
621
15,012
15,633
458,638
Please refer to the accompanying Notes to the PureTech Health plc financial information. Registered number: 09582467.
The PureTech Health plc financial statements were approved by the Board of Directors and authorized for issuance on April 25,
2022 and signed on its behalf by:
Daphne Zohar
Chief Executive Officer
April 25, 2022
The accompanying Notes are an integral part of these financial statements.
PureTech Health plc Annual report and accounts 2021 211
Financial statements PureTech Health plc Statements of Cash Flows
For the years ended December 31
Cash flows from operating activities
Net loss
Adjustments to reconcile net operating loss to net cash used in operating activities:
Non-cash items:
Changes in operating assets and liabilities:
Intercompany payable
Accounts payable and accrued expenses
Net cash (used in) operating activities
Cash flows from investing activities:
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net cash provided by (used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of non-cash investment and financing activities:
Increase (Decrease) in investment against share-based awards
Exercise of share-based awards against intercompany receivable
The accompanying Notes are an integral part of these financial statements.
2021
$000s
2020
$000s
(3,401)
(2,739)
2,167
465
(770)
—
—
(770)
—
(770)
3,354
(614)
—
—
—
—
—
—
(12,995)
352
19,734
1,025
212 PureTech Health plc Annual report and accounts 2021
Financial statements PureTech Health plc Statements of Changes in Equity
For the years ended December 31
Balance January 1, 2020
Total comprehensive loss for
the period
Exercise of share-based awards
Settlement of restricted stock units
Equity settled share-based
payments
Vesting of restricted stock units
Net loss
Balance December 31, 2020
Total comprehensive loss for
the period
Exercise of share-based awards
Equity settled share-based awards
Settlement of restricted stock units
Vesting of share-based awards and
net share exercise
Reclassification of equity
settled awards to liability awards
in subsidiary
Net loss
Balance December 31, 2021
Shares
285,370,619
Amount
$000s
5,408
Share
Premium
$000s
287,962
Merger
Reserve
$000s
138,506
Other
Reserve
$000s
991
Accumulated
deficit
$000s
Total equity
$000s
(7,881) 424,986
514,406
—
9
—
1,016
—
—
—
—
(12,888)
—
1,025
(12,888)
—
—
—
—
—
285,885,025
—
—
—
5,417
—
—
—
288,978
—
—
—
138,506
33,902
(1,280)
—
20,725
—
—
(2,739)
33,902
(1,280)
(2,739)
(10,620) 443,005
1,911,560
—
—
—
27
—
—
—
326
—
—
—
—
—
—
—
—
7,109
(10,749)
(2,582)
—
—
—
—
352
7,109
(10,749)
(2,582)
—
—
287,796,585
—
—
5,444
—
—
289,303
—
—
138,506
(6,773)
—
7,730
—
(3,401)
(6,773)
(3,401)
(14,022) 426,961
The accompanying Notes are an integral part of these financial statements.
PureTech Health plc Annual report and accounts 2021 213
Financial statements Notes to the Financial Statements
1.
Accounting policies
2.
Investment in subsidiary
Basis of Preparation and Measurement
The financial statements of PureTech Health plc (the “Parent”)
are presented as of December 31, 2021 and 2020, and for the
years ended December 31, 2021 and 2020, and have been
prepared under the historical cost convention in accordance
with international accounting standards in conformity with the
requirements of UK-adopted International Financial Reporting
Standards (IFRSs). The financial statements of PureTech
Health plc also comply fully with IFRSs as issued by the
International Accounting Standards Board (IASB). A summary
of the significant accounting policies that have been applied
consistently throughout the year are set out below.
Functional and Presentation Currency
The functional currency of the Parent is United States
(“U.S.”) Dollars and the financial statements are presented
in U.S. Dollars.
Investments
Investments are stated at historic cost less any provision for
impairment in value and are held for long-term investment
purposes. Provisions are based upon an assessment of
events or changes in circumstances that indicate that an
impairment has occurred such as the performance and/or
prospects (including the financial prospects) of the investee
company being significantly below the expectations on which
the investment was based, a significant adverse change in
the markets in which the investee company operates or a
deterioration in general market conditions.
Impairment
If there is an indication that an asset might be impaired,
the Parent would perform an impairment review. An asset
is impaired if the recoverable amount, being the higher of
net realizable value and value in use, is less than its carrying
amount. Value in use is measured based on future discounted
cash flows attributable to the asset. In such cases, the
carrying value of the asset is reduced to recoverable amount
with a corresponding charge recognized in the profit and loss
account.
Financial Instruments
Currently the Parent does not enter into derivative financial
instruments. Financial assets and financial liabilities are
recognized and cease to be recognized on the basis of when
the related titles pass to or from the Parent Company.
Equity Settled Share Based Payments
Share based payment awards granted in subsidiaries to
employees and consultants to be settled in Parent's equity
instruments are accounted for as equity-settled share-based
payment transactions in accordance with IFRS 2. The grant
date fair value of employee share-based payment awards
granted in subsidiaries is recognized as an increase to the
investment with a corresponding increase in equity over
the requisite service period related to the awards. The fair
value is measured using an option pricing model, which
takes into account the terms and conditions of the options
granted. When the subsidiary settles the equity awards other
than by the Parent's equity the settlement is recorded as a
decrease in equity against a corresponding decrease to the
investment account.
Balance at May 8, 2015
Investment in PureTech LLC as a result of the
reverse acquisition
Increase due to equity settled share based
payments granted to employees and service
providers in subsidiaries
Balance at December 31, 2020
Decrease due to equity settled share based
payments granted to employees and service
providers in subsidiaries
Balance at December 31, 2021
$000s
—
141,348
19,734
161,082
(12,996)
148,086
PureTech consists of the Parent and its subsidiaries (together,
the “Group”). Investment in subsidiary represents the
Parent’s investment in PureTech LLC as a result of the reverse
acquisition of the Group’s financial statements immediately
prior to the Parent’s initial public offering (“IPO”) on the
London Stock Exchange in June 2015. PureTech LLC operates
in the U.S. as a US-focused scientifically driven research
and development company that conceptualizes, sources,
validates and commercializes unexpected and potentially
disruptive approaches to advance the needs of human health.
For a summary of the Parent’s indirect subsidiaries please
refer to Note 1 of the Consolidated Financial Statements of
PureTech Health plc.
In 2020, the Parent recognized a $19.7 million increase in
its investment in its operating subsidiary PureTech LLC
due to equity settled share based payments granted to
employees and service providers in subsidiaries. $24.8
million out of such amount related to amounts which should
have been recognized at December 31, 2019. The prior year
balance sheet has not been adjusted since the Directors
do not believe this item is qualitatively material to users of
the financial statements, it has no impact on distributable
reserves of the Parent and no impact on the Group
consolidated financial statements. The disclosure relating to
such share based payment awards is detailed in Note 8 of
the accompanying Consolidated Financial Statements. The
decrease in 2021 due to such equity settled share based
payments results from settlements and payments of these
equity awards by the subsidiaries, net of the expense related
to the grant of such equity settled share based awards.
3.
Intercompany receivables
The Parent has an accounts receivable balance from its
operating subsidiary PureTech LLC of $297.9 million as of
December 31, 2021 due to cash received from the IPO and
other share issuances.
As of December 31, 2021and 2020, the intercompany
receivable balance was classified as a long-term receivable
since the Parent does not expect to realize the receivable
within the next 12 months.
214 PureTech Health plc Annual report and accounts 2021
Financial statements Notes to the Financial Statements — continued
4.
Share capital and reserves
6.
Profit and loss account
As permitted by Section 408 of the Companies Act 2006,
the Parent’s profit and loss account has not been included in
these financial statements. The Parent’s loss for the year was
$3.4 million.
7.
Directors’ remuneration, employee information
and share-based payments
The remuneration of the executive Directors of the
Parent Company is disclosed in Note 24, Related Parties
Transactions, of the accompanying Consolidated Financial
Statements. Full details for Directors’ remuneration can be
found in the Directors’ Remuneration Report. Full detail of
the share-based payment charge and the related disclosures
can be found in Note 8, Share-based Payments, of the
accompanying Consolidated Financial Statements.
The Parent had no employees during 2021 or 2020.
PureTech plc was incorporated with the Companies House
under the Companies Act 2006 as a public company on
May 8, 2015.
On March 12, 2018, the Company raised approximately
$100.0 million, before issuance costs and other expenses,
by way of a Placing of 45,000,000 placing shares.
On June 24, 2015, the Company authorized 227,248,008 of
ordinary share capital at one pence apiece. These ordinary
shares were admitted to the premium listing segment of the
United Kingdom’s Listing Authority and traded on the Main
Market of the London Stock Exchange for listed securities. In
conjunction with the authorization of the ordinary shares, the
Parent completed an IPO on the London Stock Exchange, in
which it issued 67,599,621 ordinary shares at a public offering
price of 160 pence per ordinary share, in consideration
for$159.3 million, net of issuance costs of $11.8 million.
Additionally, the IPO included an over-allotment option
equivalent to 15 percent of the total number of new ordinary
shares. The stabilization manager provided notice to exercise
in full its over-allotment option on July 2, 2015. As a result, the
Parent issued 10,139,943 ordinary shares at the offer price of
160 pence per ordinary share, which resulted in net proceeds
of $24.2 million, net of issuance costs of $0.8 million.
During the years ended December 31, 2020 and 2021,
Other reserves increased (decreased) by $19.7 million and
$(13.0) million respectively due to equity settled share based
payments granted to employees and service providers in
subsidiaries. See Note 2 above.
5.
Intercompany payables
The Parent has a balance due to its operating subsidiary
PureTech LLC of $17.2 million as of December 31, 2021,
which is related to IPO costs and operating expenses. These
intercompany payables do not bear any interest and are
repayable upon demand.
PureTech Health plc Annual report and accounts 2021 215
Financial statements History and Development of the Company
We were incorporated and registered under the laws of England and Wales with the Registrar of Companies of England
and Wales, United Kingdom in May 2015 as “PureTech Health plc.” Our predecessor entity, PureTech Health LLC, or our
Predecessor Entity, commenced formal operations and began engaging in initial sourcing activities in 2004, raising its first
financing round greater than $5 million in the same year. The Predecessor Entity was acquired by PureTech Health plc on
June 18, 2015 in a reorganization completed in connection with our initial public offering on the London Stock Exchange.
The Predecessor Entity is now a wholly-owned subsidiary of PureTech Health plc. Our registered office is situated at 8th
Floor, 20 Farringdon Street, London EC4A 4AB, United Kingdom, and our telephone number is +(1) 617 482 2333. Our U.S.
operations are conducted by our wholly-owned subsidiary PureTech Health LLC, a Delaware limited liability company. Our
ordinary shares have traded on the main market of the London Stock Exchange since June 2015 and our ADSs have traded
on the Nasdaq Global Market since November 2020. Our agent for service of process in the United States is PureTech Health
LLC located at 6 Tide Street, Suite 400, Boston, Massachusetts 02210 where our corporate headquarters and laboratories are
located. Our website address is http://puretechhealth.com. The reference to our website is an inactive textual reference only
and information contained in, or that can be accessed through, our website or any other website cited in this annual report is
not part of hereof.
216 PureTech Health plc Annual report and accounts 2021
Additionasl information Risk Factor Annex
Our business faces significant risks. You should carefully consider all of the
information set forth in this Annual Report and Accounts, including the
following risk factors which we face and which are faced by our industry.
These risks are not listed in any particular order of priority and are intended
to supplement the risks identified elsewhere. Our business, financial
condition or results of operations could be materially and adversely
affected if any of these risks occurs.
This Annual Report and Accounts and our associated Annual Report on
Form 20-F also contain forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially and adversely from
those anticipated in these forward-looking statements as a result of certain
factors including the risks described below and elsewhere. All statements
contained in this Annual Report and Accounts and our associated Annual
Report on Form 20-F, other than statements of historical fact, including
statements regarding our strategy, future operations, future financial
position, future revenues, projected costs, prospects, plans and objectives
of management, are forward-looking statements. The words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,”
“project,” “target,” “potential,” “would,” “could,” “should,” “continue”
and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying
words. The forward-looking statements in this Annual Report and Accounts
and associated Annual Report on Form 20-F include, among other things,
statements about:
• our ability to realize value from our Founded Entities, which may be
impacted if we reduce our ownership to a minority interest or otherwise
cede control to other investors through contractual agreements
or otherwise;
• the success, cost and timing of our clinical development of our Wholly
Owned Programs, including the progress of, and results from, our
preclinical and clinical trials of LYT-100, LYT-200, LYT-210, LYT-300, LYT-500,
LYT-503 /IMB-150, LYT-510, or our therapeutics candidates, and our
discovery programs (Alivio, Glyph, Orasome and other technologies,
and our meningeal lymphatics discovery research program) and other
potential therapeutic candidates within our Wholly Owned Pipeline;
• our ability to obtain and maintain regulatory clearance, authorization,
or approval of the therapeutic candidates within our Wholly Owned
Pipeline or our Founded Entities, and any related restrictions, limitations
or warnings in the label of any of the therapeutic candidates, if cleared,
authorized, or approved;
• our ability to compete with companies currently marketing or engaged in
the development of treatments for indications within our Wholly Owned
Pipeline or those of our Founded Entities are designed to target;
• our plans to pursue research and development of other future
therapeutic candidates;
• the potential advantages of the therapeutic candidates within our Wholly
Owned Pipeline and the therapeutic candidates being developed by our
Founded Entities;
• the rate and degree of market acceptance and clinical utility of our
therapeutic candidates;
• the success of our collaborations and partnerships with third parties;
• our estimates regarding the potential market opportunity for the
therapeutic candidates within our Wholly Owned Pipeline and the
therapeutic candidates being developed by our Founded Entities;
• our sales, marketing and distribution capabilities and strategy;
• our ability to establish and maintain arrangements for manufacture
of the therapeutic candidates within our Wholly Owned Pipeline and
therapeutic candidates being developed by our Founded Entities;
• our intellectual property position;
• our expectations related to the use of capital;
• the effect of the COVID-19 pandemic, including mitigation efforts
and economic effects, on any of the foregoing or other aspects of our
business operations;
• our estimates regarding expenses, future revenues, capital requirements
and needs for additional financing;
• the impact of government laws and regulations; and
• our competitive position.
We may not actually achieve the plans, intentions or expectations disclosed
in our forward-looking statements, and you should not place undue
reliance on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in
the forward-looking statements we make. You should refer to the below
for a discussion of important factors that may cause our actual results to
differ materially from those expressed or implied by our forward-looking
statements. Our forward-looking statements do not reflect the potential
impact of any future acquisitions, mergers, dispositions, joint ventures or
investments we may make.
You should read this Annual Report and Accounts, our associated Annual
Report on Form 20-F and the documents that we have filed as exhibits
to the Annual Report on 20-F completely and with the understanding
that our actual future results may be materially different from what
we expect. We qualify all of our forward-looking statements by these
cautionary statements.
This Annual Report and Accounts and our associated Annual Report on
Form 20-F include statistical and other industry and market data that we
obtained from industry publications and research, surveys and studies
conducted by third parties. Industry publications and third-party research,
surveys and studies generally indicate that their information has been
obtained from sources believed to be reliable, although they do not
guarantee the accuracy or completeness of such information
Risks Related to our Financial Position and Need for Additional Capital
We are a clinical‑stage biopharmaceutical company and have incurred
significant operating losses since our inception. We may continue to incur
significant operating losses for the foreseeable future.
Investment in biotechnology therapeutic development, as well as
medical device development, is highly speculative because it entails
substantial upfront capital expenditures and significant risk that
any potential therapeutic candidate will be unable to demonstrate
effectiveness or an acceptable safety profile, gain regulatory approval
and become commercially viable. To date, only two of our Founded
Entities’ therapeutics, Gelesis, Inc.’s Plenity and Akili Interactive Labs, Inc.’s
EndeavorRx, have received marketing authorization from the U.S. Food and
Drug Administration, or the FDA, and marketing authorization granted in
the European Economic Area, or EEA, and in other countries that recognize
the CE Mark, or CE Mark market authorizations. All of the therapeutic
candidates in our Wholly Owned Pipeline and the majority of our Founded
Entities’ therapeutic candidates may require substantial additional
development time, including extensive clinical research, and resources
before we would be able to apply for or receive regulatory clearances or
approvals and begin generating revenue from therapeutic sales.
Since our inception, we have invested most of our resources in developing
our technology and therapeutic candidates, building our intellectual
property portfolio, developing our supply chain, conducting business
planning, raising capital and providing general and administrative support
for these operations, including with respect to our Founded Entities. We are
not operationally profitable and have incurred operating losses in each year
since our inception. Our operating losses for the years ended December 31,
2019, 2020 and 2021 were $135.4 million, $119.6 million, and $149.2 million,
respectively. We have no therapeutics developed in our Wholly Owned
Pipeline approved for commercial sale and have not generated any
revenues from therapeutic sales, and we and our Founded Entities have
financed operations solely through the sale of equity securities, revenue
from strategic alliances and government funding and, with respect to
certain of our Founded Entities, debt financings. We continue to incur
significant research and development, or R&D, and other expenses related
to ongoing operations and expect to incur losses for the foreseeable future.
We anticipate continued losses for the foreseeable future.
Due to risks and uncertainties associated with the development of drugs,
biologics and medical devices, we are unable to predict the timing
or amount of our expenses, or when we will be able to generate any
meaningful revenue or achieve or maintain profitability, if ever. In addition,
our expenses could increase beyond our current expectations if we are
required by the FDA, the European Medicines Agency, or the EMA, or
other comparable foreign regulatory authorities to perform preclinical
studies or clinical trials in addition to those that we currently anticipate, or
if there are any delays in any of our or our future collaborators’ clinical trials
or the development of our existing therapeutic candidates and any other
therapeutic candidates that we may identify. Even if our existing therapeutic
candidates or any future therapeutic candidates that we may identify are
approved for commercial sale, we anticipate incurring significant costs
associated with commercializing any approved therapeutic and ongoing
compliance efforts.
As of December 31, 2021, we had never generated revenue from the
therapeutic candidates within our Wholly Owned Pipeline, and we may
never be operationally profitable.
While Gelesis, Inc., or Gelesis, and Akili Interactive Labs, Inc., or Akili, have
received marketing authorization for Plenity and EndeavorRx, respectively,
from the FDA and CE Mark market authorizations, we may never be able to
develop or commercialize marketable therapeutics or achieve operational
profitability. Revenue from the sale of any therapeutic candidate for
which regulatory clearance, authorization or approval is obtained will be
dependent, in part, upon the size of the markets in the territories for which
we gain regulatory clearance, authorization or approval, the accepted
price for the therapeutic, the ability to obtain reimbursement at any price
and whether we own the commercial rights for that territory. Our growth
strategy depends on our ability to generate revenue. In addition, if the
PureTech Health plc Annual report and accounts 2021 217
Additional information number of addressable patients is not as anticipated, the indication or
intended use cleared, authorized or approved by regulatory authorities
is narrower than expected, or the reasonably accepted population for
treatment is narrowed by competition, physician choice or treatment
guidelines, we may not generate significant revenue from sales of such
therapeutics, even if cleared, authorized or approved. Even if we are able
to generate revenue from the sale of any cleared, authorized or approved
therapeutics, we may not become operationally profitable and may need
to obtain additional funding to continue operations. Even if we achieve
operational profitability in the future, we may not be able to sustain
profitability in subsequent periods.
If we are unable to achieve sustained profitability, it would depress the
value of our company and could impair our ability to raise capital, expand
our business, diversify our R&D pipeline, market the therapeutic candidates
within our Wholly Owned Pipeline, if cleared or approved, and pursue
or continue our operations. Our prior losses, combined with expected
future losses, have had and may continue to have an adverse effect on our
shareholders’ equity and working capital.
We may require substantial additional funding to achieve our business
goals. If we are unable to obtain this funding when needed and on
acceptable terms, we could be forced to delay, limit or terminate certain
of our therapeutic development efforts. Certain of our Founded Entities
will similarly require substantial additional funding to achieve their
business goals.
Across the entire portfolio, we established the underlying programs and
platforms that have resulted in 27 therapeutics and therapeutic candidates
that are being advanced within our Wholly Owned Programs or by our
Founded Entities. Of these therapeutics and therapeutic candidates, 16 are
clinical-stage and two have been authorized for marketing by the FDA and
granted CE Mark marketing authorizations. Developing biopharmaceutical
therapeutics is expensive and time-consuming, and with respect to the
therapeutic candidates within our Wholly Owned Pipeline, we expect
to require substantial additional capital to conduct research, preclinical
studies and clinical trials for our current and future programs, establish
pilot scale and commercial scale manufacturing processes and facilities,
seek regulatory approvals for the therapeutic candidates within our
Wholly Owned Pipeline and launch and commercialize any therapeutics
for which we receive regulatory approval, including building our own
commercial sales, marketing and distribution organization. With respect
to our Founded Entities’ programs, we anticipate that we will continue to
fund a small portion of development costs by strategically participating in
such companies’ financings when doing so would be in the interests of our
shareholders. The form of any such participation may include investment
in public or private financings, collaboration and partnership arrangements
and licensing arrangements, among others. Our management and strategic
decision makers have not made decisions regarding the future allocation
of certain of our resources among our Founded Entities, but evaluate the
needs and opportunities with respect to each of these Founded Entities
routinely and on a case-by-case basis. In connection with any collaboration
agreements relating to our Wholly Owned Programs, we are also
responsible for the payments to third parties of expenses that may include
milestone payments, license maintenance fees and royalties, including
in the case of certain of our agreements with academic institutions or
other companies from whom intellectual property rights underlying their
respective programs have been in-licensed or acquired. Because the
outcome of any preclinical or clinical development and regulatory approval
process is highly uncertain, we cannot reasonably estimate the actual
amounts necessary to successfully complete the development, regulatory
approval process and potential commercialization of our Wholly Owned
Programs and any future therapeutic candidates we may identify.
As of December 31, 2021, we had cash and cash equivalents of
$465.7 million at the PureTech Health plc level. However, our operating plan
may change as a result of many factors currently unknown to us, and we
may need to seek additional funds sooner than planned, through public or
private equity or debt financings, sales of assets or programs, other sources,
such as strategic collaborations or license and development agreements,
or a combination of these approaches. Even if we believe we have sufficient
funds for our current or future operating plans, we may opportunistically
seek additional capital if market conditions are favorable or if we have
specific strategic considerations. Our spending will vary based on new
and ongoing therapeutic development and corporate activities. Any such
additional fundraising efforts for us may divert our management from their
day-to-day activities, which may adversely affect our ability to develop and
commercialize therapeutic candidates that we may identify and pursue.
Moreover, such financing may result in dilution to shareholders, imposition
of debt covenants and repayment obligations, or other restrictions that may
affect our business.
Our future funding requirements, both short-term and long-term, will
depend on many factors, including, but not limited to:
218 PureTech Health plc Annual report and accounts 2021
• the time and cost necessary to complete ongoing, planned and future
unplanned clinical trials, including our ongoing clinical trials for certain of
our therapeutic candidates, and potential future clinical trials for certain
of our therapeutic candidates;
• the outcome, timing and cost of meeting regulatory requirements
established by the FDA, the EMA and other comparable foreign
regulatory authorities;
• the progress, timing, scope and costs of our preclinical studies, clinical
trials and other related activities for our ongoing and planned clinical
trials, and potential future clinical trials;
• the costs of obtaining clinical and commercial supplies of raw materials
and drug products for the therapeutic candidates within our Wholly
Owned Pipeline, as applicable, and any other therapeutic candidates we
may identify and develop;
• our ability to successfully identify and negotiate acceptable terms for
third-party supply and contract manufacturing agreements with contract
manufacturing organizations, or CMOs;
• the costs of commercialization activities for any of the therapeutic
candidates within our Wholly Owned Pipeline that receive marketing
approval, including the costs and timing of establishing therapeutic
sales, marketing, distribution and manufacturing capabilities, or entering
into strategic collaborations with third parties to leverage or access these
capabilities;
• the amount and timing of sales and other revenues from the therapeutic
candidates within our Wholly Owned Pipeline, if approved, including
the sales price and the availability of coverage and adequate third-party
reimbursement;
• the cash requirements of our Founded Entities and our ability and
willingness to provide them with financing;
• the cash requirements of any future acquisitions or discovery of
therapeutic candidates;
• the time and cost necessary to respond to technological and market
developments, including other therapeutics that may compete with one
or more of our Wholly Owned Programs;
• the costs of acquiring, licensing or investing in intellectual property
rights, therapeutics, therapeutic candidates and businesses;
• our ability to attract, hire and retain qualified personnel as we expand
R&D and establish a commercial infrastructure;
• the costs of maintaining, expanding and protecting our intellectual
property portfolio; and
• the costs of operating as a public company in the United Kingdom and
the United States and maintaining listings on both the London Stock
Exchange, or the LSE, and The Nasdaq Global Market, or Nasdaq.
We cannot be certain that additional funding will be available on
acceptable terms, or at all. If adequate funds are not available to us on
a timely basis, we may be required to delay, limit or terminate one or more
research or development programs or the potential commercialization of
any approved therapeutics or be unable to expand operations or otherwise
capitalize on business opportunities, as desired, which could materially
affect our business, prospects, financial condition and results of operations.
Raising additional capital may cause dilution to our existing shareholders,
restrict our operations or require us to relinquish rights to current
therapeutic candidates or to any future therapeutic candidates on
unfavorable terms.
We expect our expenses to increase in connection with our planned
operations. Unless and until we can generate a substantial amount of
revenue from the therapeutic candidates within our Wholly Owned Pipeline
or royalties and other monetization events related to our Founded Entities,
we expect to finance our future cash needs through a combination of public
and private equity offerings, debt financings, strategic partnerships, sales
of assets and alliances and licensing arrangements. We, and indirectly, our
shareholders, may bear the cost of issuing and servicing any such securities
and of entering into and maintaining any such strategic partnerships or
other arrangements. Because any decision by us to issue debt or equity
securities in the future will depend on market conditions and other factors
beyond our control, we cannot predict or estimate the amount, timing or
nature of any future financing transactions. To the extent that we or our
Founded Entities raise additional capital through the sale of equity or
convertible debt securities, your ownership interest will be diluted, and the
terms may include liquidation or other preferences that adversely affect
your rights as a shareholder. The incurrence of additional indebtedness
would result in increased fixed payment obligations and could involve
additional restrictive covenants, such as limitations on our ability to
incur additional debt, limitations on our ability to acquire, sell or license
intellectual property rights and other operating restrictions that could
adversely impact our ability to conduct our business. Additionally, any
future collaborations we enter into with third parties may provide capital in
the near term, but limit our potential cash flow and revenue in the future.
Risk Factor Annex — continuedAdditionasl information If we raise additional funds through strategic partnerships and alliances
and licensing arrangements with third parties, we may have to relinquish
valuable rights to our technologies or therapeutic candidates, or grant
licenses or other rights on unfavorable terms.
In addition, if any of our Founded Entities raises funds through the
issuance of equity securities, our shareholders’ indirect equity interest
in such Founded Entity could be substantially diminished. If any of our
Founded Entities raises additional funds through collaboration and
licensing arrangements, it may be necessary to relinquish some rights to
our technologies or these therapeutic candidates or grant licenses on terms
that are not favorable to us.
If we engage in acquisitions or strategic partnerships, this may increase
our capital requirements, dilute our shareholders, cause us to incur debt or
assume contingent liabilities and subject us to other risks.
We may engage in various acquisitions and strategic partnerships in the
future, including licensing or acquiring complementary therapeutics,
intellectual property rights, technologies or businesses. Any acquisition or
strategic partnership may entail numerous risks, including:
• increased operating expenses and cash requirements;
• the assumption of indebtedness or contingent liabilities;
• the issuance of our equity securities which would result in dilution to our
shareholders;
• assimilation of operations, intellectual property, therapeutics and
therapeutic candidates of an acquired company, including difficulties
associated with integrating new personnel;
• the diversion of our management’s attention from our existing
therapeutic programs and initiatives in pursuing such an acquisition or
strategic partnership;
• retention of key employees, the loss of key personnel and uncertainties
in our ability to maintain key business relationships;
• risks and uncertainties associated with the other party to such
a transaction, including the prospects of that party and their existing
therapeutics or therapeutic candidates and regulatory approvals; and
• our inability to generate revenue from acquired intellectual property,
technology and/or therapeutics sufficient to meet our objectives or even
to offset the associated transaction and maintenance costs.
In addition, if we undertake such a transaction, we may issue dilutive
securities, assume or incur debt obligations, incur large one-time expenses
and acquire intangible assets that could result in significant future
amortization expense.
Risks Related to Our Founded Entities
Our ability to realize value from our Founded Entities may be impacted
if we reduce our ownership or otherwise cede control to other investors
through contractual agreements or otherwise.
We do not have a majority interest in our Non-Controlled Founded Entities.
Our interests may be further reduced as such companies raise capital from
third-party investors. In addition, we may agree to contractual arrangements
for the funding of further developments by one or more of our Founded
Entities. As a result, with respect to our Non-Controlled Founded Entities,
we may not be able to exercise control over the affairs of such Founded
Entity, including that Founded Entity’s governance arrangements and
access to management and financial information. We are also party to
agreements with certain of our Founded Entities that contain provisions
which could force us to exit from that Founded Entity at a time and/
or price determined by other investor(s) (for example, by the exercise of
drag-along rights). If we were forced to exit out of a Founded Entity, this
could have a material adverse effect on our business, financial condition or
results of operations and prospects. In addition, if the affairs of one or more
Founded Entities in which we hold a minority stake were to be conducted in
a manner detrimental to our interests or intentions, our business, reputation
and prospects may be adversely affected.
As certain of our Founded Entities have completed equity financings, they
have entered into certain agreements with the investors participating
in such financings, including us. We are party to voting agreements
with Entrega, Inc., or Entrega, Sonde Health, Inc., or Sonde, Vedanta
Biosciences, Inc., or Vedanta, and Follica, Incorporated, or Follica; investors’
rights agreements with Akili, Follica, Vedanta, Entrega, Sonde and Vor
Biopharma Inc., or Vor, and stockholders’ agreements with Gelesis, Akili,
Follica, Vedanta, Entrega, and Sonde, pursuant to which we are subject to
certain restrictions on the transfer or sale of shares (e.g., pre-emptive rights
or drag-along, tag-along rights or lock up agreements), and we may not
be able freely to transfer our interest in such Founded Entities or procure
the sale of the entire issued share capital of such Founded Entities, similar
to other investors who are party to these agreements. In addition, many
of our Founded Entities have employee share plans which further dilute
our interest in such business. If the affairs of one or more of our Founded
Entities were to be conducted in a manner detrimental to our interests or
intentions or if we were unable to realize our interest in a Founded Entity or
suffer dilution of our shareholding, this could have a material adverse effect
on our business, financial condition or results of operation and prospects.
Our overall value may be dominated by a single or limited number of our
Founded Entities.
A large proportion of our overall value may at any time reside in a small
proportion of our Founded Entities. Accordingly, there is a risk that if one or
more of the intellectual property or commercial rights relevant to a valuable
business were impaired, this would have a material adverse impact on our
overall value. Furthermore, a large proportion of our overall revenue may at
any time be the subject of one, or a small number of, licensed technologies.
Should the relevant licenses be terminated or expire this would be likely to
have a material adverse effect on the revenue received by us. Any material
adverse impact on the value of the business of a Founded Entity could, in
the situations described above, or otherwise, have a material adverse effect
on our business, financial condition, trading performance and/or prospects.
We have limited information about and limited control or influence over
our Non‑Controlled Founded Entities.
While we maintain ownership of equity interests in our Non-Controlled
Founded Entities, we do not maintain voting control or direct management
and development efforts for these entities. Each of these entities are
independently managed, and we do not control the clinical and regulatory
development of these Non-Controlled Founded Entities’ therapeutic
candidates. Any failure by our Non-Controlled Founded Entities to adhere
to regulatory requirements, initiate preclinical studies and clinical trials
on schedule or to obtain clearances or approvals for their therapeutic
candidates could have an adverse effect on our business, financial
condition, results of operation and prospects. The information included
in this report about our Non-Controlled Founded Entities is based on (i)
our knowledge, which may in some cases be limited, (ii) information that is
publicly available, including the public filings of SEC reporting companies,
such as Karuna, Vor and Gelesis, and (iii) information provided to us by
our Non-Controlled Founded Entities. Where a date is provided, the
information included in this report about our Non-Controlled Founded
Entities is as of that date and you should not assume that it is accurate as of
any other date. As such, there may be developments at our Non-Controlled
Founded Entities of which we are unaware that could have an adverse effect
on our business, financial condition, results of operation and prospects.
Our Founded Entities are difficult to value given that many of their
therapeutic candidates are in the development stage.
Investments in early-stage companies, particularly privately held entities,
are inherently difficult to value since sales, cash flow and tangible asset
values are very limited, which makes the valuation highly dependent on
expectations of future development, and any future significant revenues
would only arise in the medium to longer terms and are uncertain. Equally,
investments in companies just commencing the commercial stage are
also difficult to value since sales, cash flow and tangible assets are limited,
they have only commenced initial receipts of revenues and valuations are
still dependent on expectations of future development. There can be no
guarantee that our valuation of our Founded Entities will be considered
to be correct in light of the early stage of development for many of these
entities and their future performance. As a result, we may not realize
the full value of our ownership in such Founded Entities which could
adversely affect our business and results of operations. For example, on
November 15, 2019, resTORbio, Inc., or resTORbio, announced that its
lead therapeutic candidate, RTB101, did not meet its primary endpoint
in its Phase 3 study and ceased further development leading to a decline
in resTORbio’s stock price from $9.27 to $1.09 and our sale of 7,680,700
common shares of resTORbio. As a result of the foregoing, we recognized
a total cash loss of approximately $10 million from our initial investment
through sale of shares.
Certain of our and our Founded Entities’ therapeutics and therapeutic
candidates represent novel therapeutic approaches and negative
perception of any therapeutic or therapeutic candidate that we or they
develop could adversely affect our ability to conduct our business, obtain
and maintain regulatory clearance, authorization or approvals or identify
alternate regulatory pathways to market for such therapeutic candidate.
Certain of our and our Founded Entities’ therapeutic candidates are
considered relatively new and novel therapeutic approaches. Our and
their success will depend upon physicians who specialize in the treatment
of diseases targeted by our and their therapeutic candidates, prescribing
potential treatments that involve the use of our and their therapeutic
candidates, if approved, in lieu of, or in addition to, existing treatments
with which they are more familiar and for which greater clinical data
may be available. Access will also depend on consumer acceptance and
adoption of therapeutics that are commercialized. In addition, responses
by the U.S., state or foreign governments to negative public perception
or ethical concerns may result in new legislation or regulations that could
limit our or our Founded Entities’ ability to develop or commercialize any
PureTech Health plc Annual report and accounts 2021 219
Risk Factor Annex — continuedAdditional information therapeutic candidates, obtain or maintain regulatory approval, identify
alternate regulatory pathways to market or otherwise achieve profitability.
More restrictive statutory regimes, government regulations or negative
public opinion would have an adverse effect on our business, financial
condition, results of operations and prospects and may delay or impair
the development and commercialization of our or our Founded Entities’
therapeutic candidates or demand for any therapeutics we or they
may develop.
For example, in the United States and the European Union, no therapeutics
to date have been approved specifically demonstrating an impact on
the microbiome as part of their therapeutic effect. Vedanta is developing
a pipeline of microbiome-derived modulators for immune and infectious
disease. Microbiome therapies may not be successfully developed or
commercialized or gain the acceptance of the public or the medical
community. Additionally, adverse events, or AEs, in non-investigational
new drug application, or IND, human clinical studies and clinical trials of
Vedanta’s therapeutic candidates or in clinical trials of other companies
developing similar therapeutics and the resulting publicity, similarly to the
AEs publicized with respect to Seres Therapeutics, Inc.’s SER-287 Phase
2 clinical trial, as well as any other AEs in the field of the microbiome,
could result in a decrease in demand for any therapeutic that Vedanta
may develop. Finally, the FDA, the EMA or other comparable foreign
regulatory authorities may lack experience in evaluating the safety and
efficacy of therapeutic candidates based on microbiome therapeutics,
which could result in a longer than expected regulatory review process,
increase expected development costs and delay or prevent potential
commercialization of therapeutic candidates.
Risks Related to the Clinical Development, Regulatory Review and
Approval of our and our Founded Entities’ Therapeutic Candidates
Risks Related to Clinical Development
The therapeutic candidates within our Wholly Owned Pipeline and most of
our Founded Entities’ therapeutic candidates are in preclinical or clinical
development, which is a lengthy and expensive process with uncertain
outcomes and the potential for substantial delays. We cannot give any
assurance that any of our and our Founded Entities’ therapeutic candidates
will receive regulatory clearance, authorization or approval, which is
necessary before they can be commercialized.
Before obtaining marketing clearance, authorization or approval from
regulatory authorities for the sale of our or our Founded Entities’
therapeutic candidates, we or our Founded Entities must conduct extensive
clinical trials to demonstrate the safety and efficacy, or with respect to
biologics, safety, purity and potency, of the therapeutic candidates in
humans. To date, we have focused substantially all of our efforts and
financial resources on identifying, acquiring, and developing therapeutic
candidates, including conducting lead optimization, preclinical studies
and clinical trials, and providing general and administrative support for
these operations. To date, only two of our Founded Entities’ therapeutic
candidates, Gelesis’ Plenity and Akili’s EndeavorRx, have received
marketing authorization from the FDA, and we cannot be certain that any
of our internal or our Founded Entities’ other therapeutic candidates will
receive regulatory clearance, authorization or approval, the timing of such
clearance, authorization or approval, if received, or that clinical trials will
progress as planned. Our or our Founded Entities’ inability to successfully
complete preclinical and clinical development could result in additional
costs to us and negatively impact our ability to generate revenue. Our
future success is dependent on our and our Founded Entities’ ability to
successfully develop, obtain regulatory clearance, authorization or approval
for, and then successfully commercialize therapeutic candidates. We and
our Founded Entities, with the exceptions of Gelesis and Akili, currently
have no drugs or biologics approved or devices cleared, authorized or
approved for sale and have not generated any revenue from sales of drugs,
biologics or devices. We cannot guarantee that we or our Founded Entities
will be able in the future to develop or successfully commercialize any of
our or their therapeutic candidates. Additionally, there is currently no FDA
approved live biological therapeutic using a defined cocktail of microbes,
which could result in regulatory complexity in Vedanta’s pipeline. There
is also no approved drug therapy for lymphedema, which will require
us to engage In further discussions with the FDA on requirements for
potential approval.
Other than Gelesis’ Plenity and Akili’s EndeavorRx, all of our Wholly
Owned Programs and our Founded Entities’ therapeutic candidates
require additional development; management of preclinical, clinical, and
manufacturing activities; and/or regulatory clearances, authorization or
approvals. In addition, we or our Founded Entities may need to obtain
adequate manufacturing supply; build a commercial organization;
commence marketing efforts; and obtain coverage and reimbursement
before we generate any significant revenue from commercial therapeutic
sales, if ever. Many of the therapeutic candidates in our Wholly Owned
Pipeline and our Founded Entities’ therapeutic candidates are in early-
stage research or translational phases of development, and the risk of
failure for these programs is high. We cannot be certain that any of the
220 PureTech Health plc Annual report and accounts 2021
therapeutic candidates in our Wholly Owned Pipeline or our Founded
Entities’ therapeutic candidates will be successful in clinical trials or
receive regulatory approval, authorization or clearance. Further, our Wholly
Owned Programs or our Founded Entities’ therapeutic candidates may
not receive regulatory clearance, authorization or approval even if we
believe they are successful in clinical trials. If we or our Founded Entities
do not receive regulatory clearance, authorization or approval for our or
their therapeutic candidates, we may not be able to continue operations,
which may result in dissolution, out-licensing the technology or pursuing an
alternative strategy.
Preclinical development is uncertain. Our preclinical programs may
experience delays or may never advance to clinical trials, which would
adversely affect our ability to obtain regulatory clearance, authorization
or approvals or commercialize these programs on a timely basis or at all,
which would have an adverse effect on our business.
Certain of our Wholly Owned Programs are in the preclinical stage, and
their risk of failure is high. Before we can commence clinical trials for
a therapeutic candidate, we must complete extensive preclinical testing
and studies that support our planned INDs, in the United States, or similar
applications in other jurisdictions. We cannot be certain of the timely
completion or outcome of our preclinical testing and studies and cannot
predict if the FDA or other regulatory authorities will accept our proposed
clinical programs or if the outcome of our preclinical testing and studies will
ultimately support the further development of our programs. As a result, we
cannot be sure that we will be able to submit INDs or similar applications
for our preclinical programs on the timelines we expect, if at all, and we
cannot be sure that submission of INDs or similar applications will result
in the FDA, the EMA or other regulatory authorities allowing clinical
trials to begin.
Clinical trials of our or our Founded Entities’ therapeutic candidates may
be delayed, and certain programs may never advance in the clinic or may
be more costly to conduct than we anticipate, any of which can affect our
ability to fund our company and would have a material adverse impact on
our platform or our business.
Clinical testing is expensive, time-consuming, and subject to uncertainty.
We cannot guarantee that any of our ongoing and planned clinical trials
will be conducted as planned or completed on schedule, if at all. Moreover,
even if these trials are initiated or conducted on a timely basis, issues may
arise that could result in the suspension or termination of such clinical trials.
A failure of one or more clinical trials can occur at any stage of testing, and
our clinical trials may not be successful. Events that may prevent successful
or timely initiation or completion of clinical trials include:
• inability to generate sufficient preclinical, toxicology, or other in vivo or in
vitro data to support the initiation or continuation of clinical trials;
• delays in confirming target engagement, patient selection or other
relevant biomarkers to be utilized in preclinical and clinical therapeutic
candidate development;
• delays in reaching a consensus with regulatory agencies as to the design
or implementation of our clinical studies;
• delays in reaching agreement on acceptable terms with prospective
contract research organizations, or CROs, and clinical trial sites, the
terms of which can be subject to extensive negotiation and may vary
significantly among different CROs and clinical trial sites;
• delays in identifying, recruiting and training suitable clinical investigators;
• delays in obtaining required Institutional Review Board, or IRB, approval
at each clinical trial site;
• imposition of a temporary or permanent clinical hold by regulatory
agencies for a number of reasons, including after review of an IND
or amendment, clinical trial application, or CTA, or amendment,
investigational device exemption, or IDE, or supplement, or equivalent
application or amendment; as a result of a new safety finding that
presents unreasonable risk to clinical trial participants; or a negative
finding from an inspection of our clinical trial operations or study sites;
• developments in trials for other therapeutic candidates with the same
targets or related modalities as our or our Founded Entities’ therapeutic
candidates conducted by competitors that raise regulatory or safety
concerns about risk to patients of the treatment, or if the FDA finds
that the investigational protocol or plan is clearly deficient to meet its
stated objectives;
• difficulties in securing access to materials for the comparator arm of
certain of our clinical trials;
• delays in identifying, recruiting and enrolling suitable patients to
participate in clinical trials, and delays caused by patients withdrawing
from clinical trials or failing to return for post-treatment follow-up;
• difficulties in finding a sufficient number of trial sites, or trial sites
deviating from trial protocol or dropping out of a trial;
• difficulty collaborating with patient groups and investigators;
Risk Factor Annex — continuedAdditionasl information • failure by CROs, other third parties, or us to adhere to clinical trial
requirements;
• failure by CROs, other third parties, or us to perform in accordance
with the FDA’s or any other regulatory authority’s current good
clinical practices, or GCP, requirements, or regulatory guidelines in
other countries;
• occurrence of AEs or undesirable side effects or other unexpected
characteristics associated with the therapeutic candidate that are viewed
to outweigh its potential benefits;
• changes in regulatory requirements and guidance that require amending
or submitting new clinical protocols;
• changes in the standard of care on which a clinical development plan
was based, which may require new or additional trials;
• the cost of clinical trials of any therapeutic candidates that we may
identify and pursue being greater than we anticipate;
• clinical trials of any therapeutic candidates that we may identify and
pursue producing negative or inconclusive results, which may result in
our deciding, or regulators requiring us, to conduct additional clinical
trials or abandon therapeutic development programs;
• transfer of manufacturing processes to larger-scale facilities operated by
a CMO, or by us, and delays or failures by our CMOs or us to make any
necessary changes to such manufacturing process;
• delays in manufacturing, testing, releasing, validating, or importing/
exporting sufficient stable quantities of therapeutic candidates that
we may identify for use in clinical trials or the inability to do any of the
foregoing; and
• factors we may not be able to control, such as current or potential
pandemics or other events that may limit patients, principal investigators
or staff or clinical site availability, result in clinical trial protocol
deviations, or impact supply of our or our Founded Entities’ therapeutic
candidates (e.g., the COVID-19 pandemic or the developing conflict
between Russia and Ukraine).
Any inability to successfully initiate or complete clinical trials could result
in additional costs to us or impair our ability to generate revenue. In
addition, if we make manufacturing or formulation changes to our Wholly
Owned Programs, we may be required to or we may elect to conduct
additional preclinical studies or clinical trials to bridge data obtained from
our modified therapeutic candidates to data obtained from preclinical
and clinical research conducted using earlier versions. Clinical trial delays
could also shorten any periods during which our therapeutics have
patent protection and may allow our competitors to bring therapeutics
to market before we do, which could impair our ability to successfully
commercialize therapeutic candidates and may harm our business and
results of operations.
We could also encounter delays if a clinical trial is suspended or terminated
by us, by the data safety monitoring board, or DSMB, or by the FDA, the
EMA or other comparable foreign regulatory authorities, or if the IRBs
of the institutions in which such trials are being conducted suspend or
terminate the participation of their clinical investigators and sites subject
to their review. Such authorities may suspend or terminate a clinical trial
due to a number of factors, including failure to conduct the clinical trial
in accordance with regulatory requirements or our clinical protocols,
inspection of the clinical trial operations or trial site by the FDA, the EMA or
other comparable foreign regulatory authorities resulting in the imposition
of a clinical hold, unforeseen safety issues or adverse side effects, failure
to demonstrate a benefit from using a therapeutic candidate, changes in
governmental regulations or administrative actions or lack of adequate
funding to continue the clinical trial.
Moreover, principal investigators for our clinical trials may serve as scientific
advisors or consultants to us from time to time and receive compensation
in connection with such services. Under certain circumstances, we may
be required to report some of these relationships to the FDA, the EMA
or comparable foreign regulatory authorities. The FDA, the EMA or
comparable foreign regulatory authority may conclude that a financial
relationship between us and a principal investigator has created a conflict
of interest or otherwise affected interpretation of the study. The FDA, the
EMA or comparable foreign regulatory authority may therefore question
the integrity of the data generated at the applicable clinical trial site and
the utility of the clinical trial itself may be jeopardized. This could result
in a delay in approval, or rejection, of our marketing applications by the
FDA, the EMA or comparable foreign regulatory authority, as the case
may be, and may ultimately lead to the denial of marketing approval of
one or more of our Wholly Owned Programs or our Founded Entities’
therapeutic candidates.
Delays in the initiation, conduct or completion of any clinical trial of the
therapeutic candidates within our Wholly Owned Pipeline will increase our
costs, slow down the therapeutic candidate development and approval
process and delay or potentially jeopardize our ability to commence
therapeutic sales and generate revenue. In addition, many of the factors
that cause, or lead to, a delay in the commencement or completion of
clinical trials may also ultimately lead to the denial of regulatory approval
of the therapeutic candidates within our Wholly Owned Pipeline or our
Founded Entities’ therapeutic candidates. In the event we identify any
additional therapeutic candidates to pursue, we cannot be sure that
submission of an IDE, IND, CTA, or equivalent application, as applicable,
will result in the FDA, the EMA or comparable foreign regulatory authority
allowing clinical trials to begin in a timely manner, if at all. Any of these
events could have a material adverse effect on our business, prospects,
financial condition and results of operations.
The results of early‑stage clinical trials and preclinical studies may not be
predictive of future results. Initial data in clinical trials may not be indicative
of results obtained when these trials are completed or in later stage trials.
The results of preclinical studies may not be predictive of the results of
clinical trials, and the results of any early-stage clinical trials we commence
may not be predictive of the results of the later-stage clinical trials. The
results of preclinical studies and clinical trials in one set of patients or
disease indications, or from preclinical studies or clinical trials that we did
not lead, may not be predictive of those obtained in another. In some
instances, there can be significant variability in safety or efficacy results
between different clinical trials of the same therapeutic candidate due
to numerous factors, including changes in trial procedures set forth in
protocols, differences in the size and type of the patient populations,
changes in and adherence to the dosing regimen and other clinical trial
protocols and the rate of dropout among clinical trial participants. In
addition, preclinical and clinical data are often susceptible to various
interpretations and analyses, and many companies that have believed
their therapeutic candidates performed satisfactorily in preclinical studies
and clinical trials have nonetheless failed to obtain marketing approval.
A number of companies in the pharmaceutical, biopharmaceutical and
biotechnology industries have suffered significant setbacks in clinical
development even after achieving promising results in earlier studies, and
any such setbacks in our clinical development could have a material adverse
effect on our business and operating results. Even if early-stage clinical
trials are successful, we may need to conduct additional clinical trials of
our Wholly Owned Programs in additional patient populations or under
different treatment conditions before we are able to seek approvals or
clearances from the FDA, the EMA or other comparable foreign regulatory
authorities to market and sell these therapeutic candidates. Our failure to
obtain marketing authorization for the therapeutic candidates within our
Wholly Owned Pipeline would substantially harm our business, prospects,
financial condition and results of operations.
If we encounter difficulties enrolling patients in clinical trials, our clinical
development activities could be delayed or otherwise adversely affected.
Identifying and qualifying trial participants to participate in clinical studies
is critical to our success. The timing of our clinical studies depends on the
speed at which we can recruit trial participants to participate in testing
the therapeutic candidates within our Wholly Owned Pipeline. Delays
in enrollment may result in increased costs or may affect the timing or
outcome of the planned clinical trials, which could prevent completion of
these trials and adversely affect our ability to advance the development
of the therapeutic candidates within our Wholly Owned Pipeline. If trial
participants are unwilling to participate in our studies because of negative
publicity from AEs in our trials or other trials of similar therapeutics, or
those related to specific therapeutic area, or for other reasons, including
competitive clinical studies for similar patient populations, the timeline for
recruiting trial participants, conducting studies, and obtaining regulatory
approval of potential therapeutics may be delayed. We also may face
delays as a result of unforeseen global circumstances, for example we
have experienced temporary delays in certain of our clinical development
activities, including enrolling participants in certain of our clinical trials, as
a result of the COVID-19 pandemic or the developing conflict between
Russia and Ukraine. Any delays could result in increased costs, delays in
advancing our therapeutic candidate development, delays in testing the
effectiveness of the therapeutic candidates within our Wholly Owned
Pipeline, or termination of the clinical studies altogether.
We may not be able to identify, recruit and enroll a sufficient number of trial
participants, or those with required or desired characteristics to achieve
diversity in a study, to complete our clinical studies in a timely manner.
Patient and subject enrollment is affected by factors including:
• the size and nature of a patient population;
• the patient eligibility criteria defined in the applicable clinical trial
protocols, which may limit the patient populations eligible for
clinical trials to a greater extent than competing clinical trials for the
same indication;
• the size of the study population required for analysis of the trial’s
primary endpoints;
• the severity of the disease under investigation;
• the proximity of patients to a trial site;
• the inclusion and exclusion criteria for the trial in question;
PureTech Health plc Annual report and accounts 2021 221
Risk Factor Annex — continuedAdditional information • the design of the trial protocol;
• the ability to recruit clinical trial investigators with the appropriate
competencies and experience;
• the availability and efficacy of approved medications or therapies for the
disease or condition under investigation;
• clinicians’ and patients’ perceptions as to the potential advantages and
side effects of the therapeutic candidate being studied in relation to
other available therapies and therapeutic candidates;
• the ability to obtain and maintain patient consents; and
• the risk that patients enrolled in clinical trials will not complete such
trials, for any reason.
Furthermore, our or our collaborators’ ability to successfully initiate, enroll
and conduct a clinical trial outside the United States is subject to numerous
additional risks, including:
• difficulty in establishing or managing relationships with CROs
and physicians;
• differing standards for the conduct of clinical trials;
• differing standards of care for patients with a particular disease;
• an inability to locate qualified local consultants, physicians and
partners; and
• the potential burden of complying with a variety of foreign laws, medical
standards and regulatory requirements, including the regulation of
pharmaceutical and biotechnology therapeutics and treatments.
If we have difficulty enrolling sufficient numbers of patients to conduct
clinical trials as planned, we may need to delay or terminate clinical trials,
either of which would have an adverse effect on our business.
Use of the therapeutic candidates within our Wholly Owned Pipeline or the
therapeutic candidates being developed by our Founded Entities could be
associated with side effects, AEs or other properties or safety risks, which
could delay or halt their clinical development, prevent their regulatory
clearance, authorization or approval, cause us to suspend or discontinue
clinical trials, abandon a therapeutic candidate, limit their commercial
potential, if cleared, authorized or approved, or result in other significant
negative consequences that could severely harm our business, prospects,
operating results and financial condition.
As is the case with pharmaceuticals generally, it is likely that there may be
side effects and AEs associated with our and our Founded Entities’ drug or
biologic therapeutic candidates’ use. Similarly, investigational devices may
also be subject to side effects and AEs. Results of our clinical trials or those
being conducted by Founded Entities could reveal a high and unacceptable
severity and prevalence of side effects or unexpected characteristics.
Undesirable side effects caused by these therapeutic candidates could
cause us, our Founded Entities or regulatory authorities to interrupt, delay
or halt clinical trials and could result in more restrictive labeling or the delay
or denial of regulatory clearance, authorization or approval by the FDA, the
EMA or other comparable foreign regulatory authorities. The side effects
related to the therapeutic candidate could affect patient recruitment or
the ability of enrolled patients to complete the trial or result in potential
product liability claims. Any of these occurrences may harm our business,
financial condition and prospects significantly.
Moreover, if therapeutic candidates within our Wholly Owned Pipeline
are associated with undesirable side effects in preclinical studies or
clinical trials or have characteristics that are unexpected, we may elect to
abandon their development or limit their development to more narrow
uses or subpopulations in which the undesirable side effects or other
characteristics are less prevalent, less severe or more acceptable from
a risk-benefit perspective, which may limit the commercial expectations
for the therapeutic candidate if approved. We may also be required to
modify or terminate our study plans based on findings in our preclinical
studies or clinical trials. Many therapeutic candidates that initially show
promise in early-stage testing may later be found to cause side effects that
prevent further development. As we work to advance existing therapeutic
candidates and to identify new therapeutic candidates, we cannot be
certain that later testing or trials of therapeutic candidates that initially
showed promise in early testing will not be found to cause similar or
different unacceptable side effects that prevent their further development.
It is possible that as we test the therapeutic candidates within our Wholly
Owned Pipeline in larger, longer and more extensive clinical trials, or as
the use of these therapeutic candidates becomes more widespread if they
receive regulatory clearance or approval, illnesses, injuries, discomforts
and other AEs that were observed in earlier trials, as well as conditions
that did not occur or went undetected in previous trials, will be reported
by subjects. If such side effects become known later in development or
upon approval, if any, such findings may harm our business, financial
condition and prospects significantly. Additionally, adverse developments
in clinical trials of pharmaceutical, biopharmaceutical or biotechnology
therapeutics conducted by others may cause the FDA or other regulatory
222 PureTech Health plc Annual report and accounts 2021
oversight bodies to suspend or terminate our clinical trials or to change the
requirements for approval of any of our Wholly Owned Programs.
In addition to side effects caused by the therapeutic candidate, the
administration process or related procedures also can cause adverse side
effects. If any such AEs occur, our clinical trials could be suspended or
terminated. If we are unable to demonstrate that any AEs were not caused
by therapeutic candidate, the FDA, the European Commission, the EMA,
or other regulatory authorities could order us to cease further development
of, or deny clearance or approval of, a therapeutic candidate for any or
all targeted indications. Even if we can demonstrate that all future serious
adverse events, or SAEs, are not therapeutic-related, such occurrences
could affect patient recruitment or the ability of enrolled patients to
complete the trial. Moreover, if we elect, or are required, to not initiate,
delay, suspend or terminate any future clinical trial of any of our Wholly
Owned Programs, the commercial prospects of such therapeutic candidates
may be harmed and our ability to generate therapeutic revenues from any
of these therapeutic candidates may be delayed or eliminated. Any of these
occurrences may harm our ability to develop other therapeutic candidates,
and may harm our business, financial condition and prospects significantly.
Additionally, if any of the therapeutic candidates within our Wholly
Owned Pipeline receives marketing authorization, the FDA could impose
contraindications or a boxed warning in the labeling of our therapeutic.
For any of our drug or biologic therapeutic candidates receiving marketing
authorization, the FDA could require us to adopt a risk evaluation and
mitigation strategy, or REMS, and could apply elements to assure safe
use to ensure that the benefits of the therapeutic outweigh its risks,
which may include, among other things, a Medication Guide outlining
the risks of the therapeutic for distribution to patients, a requirement that
clinicians or health care settings to become certified prior to prescribing
and to participate in additional REMS activities, such as training, patient
counseling, and monitoring, and a communication plan to health care
practitioners. Furthermore, if we or others later identify undesirable
side effects caused by the therapeutic candidates within our Wholly
Owned Pipeline once approved, several potentially significant negative
consequences could result, including:
• regulatory authorities may suspend or withdraw approvals of such
therapeutic candidate, or seek an injunction against its manufacture or
distribution;
• regulatory authorities may require additional warnings in the labeling,
including boxed warnings, or issue safety alerts, Dear Healthcare
Provider letters, press releases or other communications containing
warnings or other safety information about the therapeutic;
• we may be required by the FDA to implement a REMS for a marketed
drug or biologic;
• we may be required to change the way a therapeutic candidate is
administered or conduct additional clinical trials;
• we may be subject to fines, injunctions or the imposition of civil or
criminal penalties;
• we could be sued and held liable for harm caused to patients; and
• our reputation may suffer.
Any of these occurrences could prevent us from achieving or maintaining
market acceptance of the particular therapeutic candidate, if approved, and
may harm our business, financial condition and prospects significantly.
Risks Related to Regulatory Review and Approval
Our clinical trials may fail to demonstrate substantial evidence of the
safety and effectiveness of therapeutic candidates that we may identify
and pursue for their intended uses, which would prevent, delay or limit
the scope of regulatory clearance, authorization or approval and potential
commercialization.
Before obtaining regulatory approvals for the commercial sale of any of our
drug or biological therapeutic candidates, we must demonstrate through
lengthy, complex and expensive preclinical studies and clinical trials that
the applicable therapeutic candidate is both safe and effective for use in
each target indication, and in the case of our Wholly Owned Programs
and Founded Entities’ therapeutic candidates regulated as biological
therapeutics, that the therapeutic candidate is safe, pure and potent for use
in its targeted indication. Each therapeutic candidate must demonstrate
an adequate risk versus benefit profile in its intended patient population
and for its intended use. Similarly, before obtaining regulatory clearances,
authorization or approvals for the commercial sale of any of the device
therapeutic candidates of our Founded Entities, our Founded Entities
may be required to demonstrate through lengthy, complex and expensive
preclinical studies and clinical trials that the applicable therapeutic
candidate meets the regulatory standard of clearance, authorization or
approval—for example, substantial equivalence or a reasonable assurance
of safety or effectiveness, as applicable—for its intended use.
Clinical testing is expensive and can take many years to complete, and
its outcome is inherently uncertain. Failure can occur at any time during
the clinical development process. Most therapeutic candidates that
Risk Factor Annex — continuedAdditionasl information begin clinical trials are never approved by regulatory authorities for
commercialization. We may be unable to design and execute a clinical trial
to support marketing authorization.
We cannot be certain that our clinical trials will be successful. Additionally,
any safety concerns observed in any one of our clinical trials in our
targeted indications could limit the prospects for regulatory clearances,
authorization or approval of our therapeutic candidates in those and other
indications, which could have a material adverse effect on our business,
financial condition and results of operations. In addition, even if such
clinical trials are successfully completed, we cannot guarantee that the
FDA, the EMA or comparable foreign regulatory authorities will interpret
the results as we do, and more trials could be required before we submit
our therapeutic candidates for clearance or approval. For example, the
definition of clinical meaningfulness for outcome measures in lymphedema
has not been firmly established by the FDA, introducing risk in evaluating
and demonstrating the efficacy required to obtain FDA approval of
LYT-100. As another example, while there is guidance regarding clinical
meaningfulness for outcome measures in the context of acute COVID-19
treatments and potential vaccines, there is no such guidance for treatment
of complications that persist following the resolution of COVID-19. Even if
we believe that our and our Founded Entities’ clinical trials and preclinical
studies demonstrate the safety and efficacy of our and their therapeutic
candidates, only the FDA and other comparable regulatory agencies may
ultimately make such determination. No regulatory agency has made any
such determination that any of our Wholly Owned Programs or those of our
Founded Entities are safe or effective for use for any indication.
Additionally, we may utilize an “open-label” trial design for some of our
future clinical trials. An open-label trial is one where both the patient and
investigator know whether the patient is receiving the test article or either
an existing approved drug or placebo. Open-label trials are subject to
various limitations that may exaggerate any therapeutic effect as patients
in open-label studies are aware that they are receiving treatment. Open-
label trials may be subject to a “patient bias” where patients perceive their
symptoms to have improved merely due to their awareness of receiving
an experimental treatment. Patients selected for early clinical studies
often include the most severe sufferers and their symptoms may have
been bound to improve notwithstanding the new treatment. In addition,
open-label trials may be subject to an “investigator bias” where those
assessing and reviewing the physiological outcomes of the clinical trials
are aware of which patients have received treatment and may interpret the
information of the treated group more favorably given this knowledge.
The opportunity for bias in clinical trials as a result of open-label design
may not be adequately handled and may cause any of our trials that utilize
such design to fail or to be considered inadequate and additional trials
may be necessary to support future marketing applications. Moreover,
results acceptable to support approval in one jurisdiction may be deemed
inadequate by another regulatory authority to support regulatory
approval in that other jurisdiction. To the extent that the results of the
trials are not satisfactory to the FDA, the EMA or comparable foreign
regulatory authorities for support of a marketing application, we may
be required to expend significant resources, which may not be available
to us, to conduct additional trials in support of potential approval of
our Wholly Owned Programs. Even if regulatory approval is secured for
a therapeutic candidate, the terms of such approval may limit the scope
and use of the specific therapeutic candidate, which may also limit its
commercial potential.
Even if we complete the necessary preclinical studies and clinical trials, the
marketing approval process is expensive, time‑consuming and uncertain
and may prevent us from obtaining clearance, authorization or approvals
for the potential commercialization of therapeutic candidates.
Any therapeutic candidate we may develop and the activities associated
with their development and potential commercialization, including their
design, testing, manufacture, safety, efficacy, recordkeeping, labeling,
storage, approval, advertising, promotion, sale and distribution, are subject
to comprehensive regulation by the FDA, the EMA and other comparable
foreign regulatory authorities. Failure to obtain marketing authorization
for a therapeutic candidate will prevent us from commercializing the
therapeutic candidate in a given jurisdiction. For example, although
Gelesis and Akili have received marketing authorization for Plenity and
EndeavorRx, respectively, from the FDA, we and our Founded Entities
have not received clearance, authorization or approval to market any
of our or their other therapeutic candidates from regulatory authorities
in any jurisdiction and it is possible that none of the other therapeutic
candidates we and our Founded Entities may seek to develop in the future
will ever obtain regulatory clearance, authorization or approval. We have
no experience in filing and supporting the applications necessary to gain
marketing clearance, authorization or approval and expect to rely on third-
party CROs or regulatory consultants to assist us in this process. Securing
regulatory clearance, authorization or approval requires the submission of
extensive preclinical and clinical data and supporting information to the
various regulatory authorities for each therapeutic indication to establish
the therapeutic candidate’s safety, purity, efficacy and potency. Securing
regulatory clearance, authorization or approval also requires the submission
of information about the therapeutic manufacturing process to, and
inspection of manufacturing facilities by, the relevant regulatory authority.
Any therapeutic candidates we or our Founded Entities develop may
not be effective, may be only moderately effective, or may prove to have
undesirable or unintended side effects, toxicities or other characteristics
that may preclude our obtaining marketing clearance, authorization
or approval or prevent or limit commercial use, if cleared, authorized
or approved.
The process of obtaining marketing clearance, authorization or approval,
both in the United States and abroad, is expensive, may take many years if
additional clinical trials are required, if clearance, authorization or approval
is obtained at all, and can vary substantially based upon a variety of factors,
including the type, complexity and novelty of the therapeutic candidates
involved. Changes in marketing authorization policies during the
development period, changes in or the enactment of additional statutes or
regulations, or changes in regulatory review for each submitted therapeutic
application, may cause delays in the clearance, authorization, approval or
rejection of an application. The FDA and comparable authorities in other
countries have substantial discretion in the approval process and may
refuse to accept any application or may decide that our data are insufficient
for clearance, authorization or approval and require additional preclinical,
clinical or other studies. In addition, varying interpretations of the data
obtained from preclinical and clinical testing could delay, limit, or prevent
marketing approval of a therapeutic candidate. Any marketing approval we
ultimately obtain may be limited or subject to restrictions or post-market
commitments that render the cleared, authorized or approved therapeutic
not commercially viable.
If we experience delays in obtaining clearance, authorization or approval
or if we fail to obtain clearance, authorization or approval of any
therapeutic candidates we may develop, the commercial prospects for
those therapeutic candidates may be harmed, and our ability to generate
revenues will be materially impaired.
We have conducted, and may continue to conduct in the future, clinical
trials for therapeutic candidates outside the United States, and the FDA,
the EMA and comparable foreign regulatory authorities may not accept
data from such trials.
We have conducted clinical trials outside of the United States in the past,
and may in the future choose to conduct one or more clinical trials outside
the United States, including in Europe. For example, we have conducted
clinical trials in Australia and are conducting or may conduct clinical
trials in additional locations outside the United States, including without
limitation the U.K., Australia, Romania, Korea, Argentina, Poland and the
Philippines. The acceptance of study data from clinical trials conducted
outside the United States or another jurisdiction by the FDA, the EMA or
any comparable foreign regulatory authority may be subject to certain
conditions or may not be accepted at all. For example, in cases where data
from foreign clinical trials are intended to serve as the basis for approval
of a drug or biologic in the United States, the FDA will generally not
approve the application on the basis of foreign data alone unless (i) the
data are applicable to the U.S. population and U.S. medical practice; (ii) the
trials were performed by clinical investigators of recognized competence
and pursuant to GCP regulations; and (iii) if necessary, the FDA is able
to validate the data through an on-site inspection or other appropriate
means. In addition, even where the foreign study data are not intended
to serve as the sole basis for approval, the FDA will not accept the data
as support for an application for marketing approval unless the study is
well-designed and well-conducted in accordance with GCP requirements
and the FDA is able to validate the data from the study through an onsite
inspection if deemed necessary. Many foreign regulatory authorities have
similar approval requirements. In addition, such foreign trials would be
subject to the applicable local laws of the foreign jurisdictions where the
trials are conducted. There can be no assurance that the FDA, the EMA
or any comparable foreign regulatory authority will accept data from trials
conducted outside of the United States or the applicable jurisdiction. If
the FDA, the EMA or any comparable foreign regulatory authority does
not accept such data, it would result in the need for additional trials, which
would be costly and time-consuming and delay aspects of our business
plan, and which may result in therapeutic candidates that we may develop
not receiving approval, authorization or clearance for commercialization in
the applicable jurisdiction.
If we are unable to obtain regulatory clearance, authorization or approval
in one or more jurisdictions for any therapeutic candidates that we may
identify and develop, our business could be substantially harmed.
We cannot commercialize a therapeutic until the appropriate regulatory
authorities have reviewed and cleared, authorized or approved the
therapeutic candidate. Clearance, authorization or approval by the FDA,
the EMA and comparable foreign regulatory authorities is lengthy and
unpredictable, and depends upon numerous factors, including substantial
discretion of the regulatory authorities. Clearance, authorization or approval
PureTech Health plc Annual report and accounts 2021 223
Risk Factor Annex — continuedAdditional information policies, regulations, or the type and amount of preclinical or clinical data
necessary to gain clearance, authorization or approval may change during
the course of a therapeutic candidate’s development and may vary among
jurisdictions, which may cause delays in the clearance, authorization or
approval or the decision not to clear, authorize or approve an application.
Gelesis and Akili have obtained marketing authorization from the FDA for
Plenity and EndeavorRx, respectively, but we and our Founded Entities
have not obtained regulatory clearance, authorization or approval for any
other therapeutic candidates, and it is possible that our current therapeutic
candidates and any other therapeutic candidates which we and our
Founded Entities may seek to develop in the future will not ever obtain
regulatory clearance, authorization or approval. We cannot be certain that
any of our Wholly Owned Programs or our Founded Entities’ therapeutic
candidates will receive regulatory clearance, authorization or approval or
be successfully commercialized even if we or our Founded Entities receive
regulatory clearance, authorization or approval.
Obtaining marketing clearance, authorization or approval is an extensive,
lengthy, expensive and inherently uncertain process, and regulatory
authorities may delay, limit or deny clearance or clearance, authorization or
approval of the therapeutic candidates within our Wholly Owned Pipeline
or our Founded Entities’ therapeutic candidates for many reasons, including
but not limited to:
• the inability to demonstrate to the satisfaction of the FDA, the EMA or
comparable foreign regulatory authorities that the applicable therapeutic
candidate is safe and effective as a treatment for our targeted indications
or otherwise meets the applicable regulatory standards for clearance,
authorization or approval;
• the FDA, the EMA or comparable foreign regulatory authorities may
disagree with the design, endpoints or implementation of our or our
Founded Entities’ clinical trials;
• the population studied in the clinical program may not be sufficiently
broad or representative to assure safety or efficacy in the full population
for which we or our Founded Entities seek clearance, authorization
or approval;
• the FDA, the EMA or comparable foreign regulatory authorities may
require additional preclinical studies or clinical trials beyond those that
we or our Founded Entities currently anticipate;
• the FDA, the EMA or comparable foreign regulatory authorities may
disagree with our or our Founded Entities’ interpretation of data from
preclinical studies or clinical trials;
• the data collected from clinical trials of therapeutic candidates that we
may identify and pursue may not be sufficient to support the submission
of an NDA, biologics license application, or BLA, or other submission
for regulatory clearance, authorization or approval in the United States
or elsewhere;
• as applicable, we or our Founded Entities may be unable to demonstrate
to the FDA, the EMA or comparable foreign regulatory authorities that
a therapeutic candidate’s risk-benefit ratio for its proposed indication
is acceptable;
• the FDA, the EMA or comparable foreign regulatory authorities may
identify deficiencies in the manufacturing processes, test procedures and
specifications, or facilities of third-party manufacturers with which we or
our Founded Entities contract for clinical and commercial supplies; and
• the clearance, authorization or approval policies or regulations of the
FDA, the EMA or comparable foreign regulatory authorities may change
in a manner that renders the clinical trial design or data insufficient for
clearance or approval.
The lengthy approval process, as well as the unpredictability of the results
of clinical trials and evolving regulatory requirements, may result in our or
our Founded Entities’ failure to obtain regulatory clearance, authorization or
approval to market therapeutic candidates that we or our Founded Entities
may pursue in the United States or elsewhere, which would significantly
harm our or our Founded Entities’ business, prospects, financial condition
and results of operations.
Furthermore, clearance, authorization or approval by the FDA in the United
States, if obtained, does not ensure approval by regulatory authorities
in other countries or jurisdictions. In order to market any therapeutics
outside of the United States, we or our Founded Entities must establish
and comply with numerous and varying regulatory requirements of other
countries regarding safety and effectiveness. Clinical trials conducted
in one country may not be accepted by regulatory authorities in other
countries, and regulatory approval in one country does not mean that
regulatory approval will be obtained in any other country. Approval
processes vary among countries and can involve additional therapeutic
testing and validation and additional or different administrative review
periods from those in the United States, including additional preclinical
studies or clinical trials, as clinical trials conducted in one jurisdiction
may not be accepted by regulatory authorities in other jurisdictions. In
many jurisdictions outside the United States, a therapeutic candidate
224 PureTech Health plc Annual report and accounts 2021
must be approved for reimbursement before it can be approved for sale
in that jurisdiction. In some cases, the price that we intend to charge for
our therapeutics is also subject to approval. Seeking foreign regulatory
approval could result in difficulties and costs for us or our Founded Entities
and require additional preclinical studies or clinical trials which could be
costly and time-consuming. Regulatory requirements can vary widely from
country to country and could delay or prevent the introduction of our or our
Founded Entities’ therapeutics in those countries. The foreign regulatory
approval process involves all of the risks associated with FDA approval. We
do not have any therapeutic candidates approved for sale in international
markets, though two of our Founded Entities, Akili and Gelesis, do. If we
or our Founded Entities fail to comply with regulatory requirements in
international markets or to obtain and maintain required approvals, or if
regulatory approvals in international markets are delayed, our target market
will be reduced and our ability to realize the full market potential of our
therapeutics will be harmed.
Interim, “top‑line,” and preliminary data from our clinical trials that we
announce or publish from time to time may change as more patient data
become available or as additional analyses are conducted, and as the data
are subject to audit and verification procedures that could result in material
changes in the final data.
From time to time, we may publish interim, “top-line,” or preliminary data
from our clinical studies. Data from interim analyses of clinical trials that
we may complete are subject to the risk that one or more of the clinical
outcomes may materially change as patient enrollment continues and
more patient data become available. Preliminary or “top-line” data also
remain subject to audit and verification procedures that may result in the
final data being materially different from the preliminary data we previously
published. As a result, interim, “top-line.,” and preliminary data should
be viewed with caution until the final data are available. Material adverse
changes between preliminary, “top-line,” or interim data and final data
could significantly harm our business prospects.
Further, others, including regulatory agencies, may not accept or agree with
our assumptions, estimates, calculations, conclusions or analyses or may
interpret or weigh the importance of data differently, which could impact
the value of the particular program, the approvability or commercialization
of the particular therapeutic candidate or therapeutic and our company
in general. In addition, the information we choose to publicly disclose
regarding a particular study or clinical trial is based on what is typically
extensive information, and you or others may not agree with what we
determine is the material or otherwise appropriate information to include in
our disclosure. Any information we determine not to disclose may ultimately
be deemed significant by you or others with respect to future decisions,
conclusions, views, activities or otherwise regarding a particular therapeutic
candidate or our business.
The complexity of a combination therapeutic that includes a drug or
biologic and a medical device presents additional, unique development
and regulatory challenges, which may adversely impact our or our Founded
Entities’ development plans and our or our Founded Entities’ ability to
obtain regulatory clearance, authorization or approval of our Wholly
Owned Programs or our Founded Entities’ therapeutic candidates.
We or our Founded Entities, such as Follica, may decide to pursue
marketing authorization of a combination therapeutic. A combination
therapeutic may include, amongst other possibilities, any investigational
drug, device, or biologic packaged separately that according to its
proposed labeling is for use only with another individually specified
investigational drug, device, or biologic where both are required to achieve
the intended use, indication, or effect.
Developing and obtaining regulatory clearance, authorization or approval
for combination therapeutics pose unique challenges because they
involve components that are regulated by the FDA under different types
of regulatory requirements, and by different FDA centers. As a result,
such therapeutics raise regulatory, policy and review management
challenges. For example, because divisions from both FDA’s Center for
Drug Evaluation and Research or Center for Biologics Evaluation and
Research and FDA’s Center for Devices and Radiological Health must review
submissions concerning therapeutic candidates that are combination
therapeutics comprised of drug or biologics and devices, respectively,
the regulatory review and clearance, authorization or approval process
for these therapeutics may be lengthened. In addition, differences in
regulatory pathways for each component of a combination therapeutic
can impact the regulatory processes for all aspects of therapeutic
development and management, including clinical investigation, marketing
applications, manufacturing and quality control, adverse event reporting,
promotion and advertising, user fees and post-clearance, authorization or
approval modifications. Similarly, if applicable, the device components of
a combination therapeutic candidate will require any necessary clearances
or approvals or other marketing authorizations in other jurisdictions, which
may prove challenging to obtain.
Risk Factor Annex — continuedAdditionasl information Certain modifications to our Founded Entities’ device therapeutics may
require new 510(k) clearance or other marketing authorizations and
may require our Founded Entities to recall or cease marketing their
therapeutics.
procedures and standards applied to gene therapy therapeutics and cell
therapy therapeutics may be applied to any of our or our Founded Entities’
gene therapy or genome editing therapeutic candidates, but that remains
uncertain at this point.
Akili and Gelesis received de novo classification for EndeavorRx and
Plenity, respectively, from the FDA. Once a medical device is permitted
to be legally marketed in the United States pursuant to a 510(k) clearance,
de novo classification, or a premarket approval, or PMA, a manufacturer
may be required to notify the FDA of certain modifications to the device.
Manufacturers determine in the first instance whether a change to a medical
device requires a new premarket submission, but the FDA may review any
manufacturer’s decision. The FDA may not agree with our Founded Entities’
decisions regarding whether new clearances, authorizations or approvals
are necessary. They may make modifications or add additional features in
the future that they believe do not require a new 510(k) clearance, de novo
marketing authorization, or approval of a PMA or PMA amendments or
supplements. If the FDA disagrees with their determinations and requires
them to submit new 510(k) notifications, requests for de novo classification,
or PMAs (or PMA supplements or amendments) for modifications to
their previously cleared or authorized therapeutics for which they have
concluded that new clearances, authorization or approvals are unnecessary,
they may be required to cease marketing or to recall the modified
therapeutic until they obtain clearance, authorization or approval, and they
may be subject to significant regulatory fines or penalties.
The regulatory landscape that will apply to development of therapeutic
candidates by us or our Founded Entities or collaborators is rigorous,
complex, uncertain and subject to change, which could result in delays or
termination of development of such therapeutic candidates or unexpected
costs in obtaining regulatory approvals.
We or our Founded Entities or collaborators may develop therapeutic
candidates that use genome or cell editing technologies. Regulatory
requirements governing therapeutics created with genome editing
technology or involving gene therapy treatment have changed frequently
and will likely continue to change in the future. Approvals by one
regulatory agency may not be indicative of what any other regulatory
agency may require for approval, and there is substantial, and sometimes
uncoordinated, overlap in those responsible for regulation of gene therapy
therapeutics, cell therapy therapeutics and other therapeutics created
with genome editing technology. For example, the FDA established the
Office of Tissues and Advanced Therapies within its Center for Biologics
Evaluation and Research, or CBER, to consolidate the review of gene
therapy and related therapeutics, and the Cellular, Tissue and Gene
Therapies Advisory Committee to advise CBER on its review. These and
other regulatory review agencies, committees and advisory groups and
the requirements and guidelines they promulgate may lengthen the
regulatory review process, require us or our Founded Entities to perform
additional preclinical studies or clinical trials, increase our or our Founded
Entities’ development costs, lead to changes in regulatory positions and
interpretations, delay or prevent approval and commercialization of these
treatment candidates or lead to significant post-approval limitations or
restrictions.
Additionally, under the National Institutes of Health, or NIH, Guidelines
for Research Involving Recombinant Synthetic Nucleic Acid Molecules,
or NIH Guidelines, supervision of human gene transfer trials includes
evaluation and assessment by an institutional biosafety committee, or IBC,
a local institutional committee that reviews and oversees research utilizing
recombinant or synthetic nucleic acid molecules at that institution. The IBC
assesses the safety of the research and identifies any potential risk to public
health or the environment, and such review may result in some delay before
initiation of a clinical trial. While the NIH Guidelines are not mandatory
unless the research in question is being conducted at or sponsored by
institutions receiving NIH funding of recombinant or synthetic nucleic acid
molecule research, many companies and other institutions not otherwise
subject to the NIH Guidelines voluntarily follow them.
In the EEA, the EMA has a Committee for Advanced Therapies, or CAT,
that is responsible for assessing the quality, safety and efficacy of advanced
therapy medicinal therapeutics. Advanced-therapy medicinal therapeutics
include gene therapy medicines, somatic-cell therapy medicines and
tissue-engineered medicines. The role of the CAT is to prepare a draft
opinion on an application for marketing authorization for an advanced
therapy medicinal candidate that is submitted to the EMA. In the EEA, the
development and evaluation of a gene therapy medicinal therapeutic must
be considered in the context of the relevant EMA guidelines. The EMA
may issue new guidelines concerning the development and marketing
authorization for gene therapy medicinal therapeutics and require that
we or our Founded Entities comply with these new guidelines. Similarly
complex regulatory environments exist in other jurisdictions in which we
or our Founded Entities might consider seeking regulatory approvals
for our Wholly Owned Programs or our Founded Entities’ therapeutic
candidates, further complicating the regulatory landscape. As a result, the
Changes in applicable regulatory guidelines may lengthen the regulatory
review process for the therapeutic candidates within our Wholly Owned
Pipeline or our Founded Entities’ therapeutic candidates, require
additional studies or trials, increase development costs, lead to changes
in regulatory positions and interpretations, delay or prevent approval
and commercialization of such therapeutic candidates, or lead to
significant post-approval limitations or restrictions. Additionally, adverse
developments in clinical trials conducted by others of gene therapy
therapeutics or therapeutics created using genome editing technology,
or adverse public perception of the field of genome editing, may cause
the FDA, the EMA and other regulatory bodies to revise the requirements
for approval of any therapeutic candidates we or our Founded Entities
may develop or limit the use of therapeutics utilizing genome editing
technologies, either of which could materially harm our or our Founded
Entities’ business. Furthermore, regulatory action or private litigation
could result in expenses, delays or other impediments to our research
programs or the development or commercialization of current or future
therapeutic candidates.
As we advance therapeutic candidates alone or with collaborators, we
will be required to consult with these regulatory and advisory groups and
comply with all applicable guidelines, rules and regulations. If we fail to
do so, we or our collaborators may be required to delay or terminate
development of such therapeutic candidates. Delay or failure to obtain, or
unexpected costs in obtaining, the regulatory approval necessary to bring
a therapeutic candidate to market could decrease our ability to generate
sufficient therapeutic revenue to maintain our business.
We may not elect or be able to take advantage of any expedited
development or regulatory review and approval processes available to
drug therapeutic candidates granted breakthrough therapy or fast track
designation by the FDA.
We intend to evaluate and continue ongoing discussions with the FDA on
regulatory strategies that could enable us or our Founded Entities to take
advantage of expedited development pathways for certain of our Wholly
Owned Programs or our Founded Entities’ therapeutic candidates in the
future, although we cannot be certain that our Wholly Owned Programs or
our Founded Entities’ therapeutic candidates will qualify for any expedited
development pathways or that regulatory authorities will grant, or allow us
or our Founded Entities to maintain, the relevant qualifying designations.
Potential expedited development pathways that we could pursue include
breakthrough therapy and fast track designation.
Breakthrough therapy designation is intended to expedite the
development and review of drug and biologic therapeutic candidates that
are designed to treat serious or life-threatening diseases when preliminary
clinical evidence indicates that the drug or biologic may demonstrate
substantial improvement over existing therapies on one or more clinically
significant endpoints, such as substantial treatment effects observed early
in clinical development. The designation of a therapeutic candidate as
a breakthrough therapy provides potential benefits that include more
frequent meetings with FDA to discuss the development plan for the
therapeutic candidate and ensure collection of appropriate data needed
to support approval; more frequent written correspondence from FDA
about such things as the design of the proposed clinical trials and use of
biomarkers; intensive guidance on an efficient drug development program,
beginning as early as Phase 1; organizational commitment involving senior
managers; and eligibility for rolling review and priority review of an NDA or
BLA. Fast track designation is designed for therapeutic candidates intended
for the treatment of a serious or life-threatening disease or condition, where
preclinical or clinical data demonstrate the potential to address an unmet
medical need for this disease or condition. The sponsor of a fast track
therapeutic candidate has opportunities for more frequent interactions with
the FDA review team during product development and, once an NDA or
BLA is submitted, the application may be eligible for rolling review.
Even if we believe a particular therapeutic candidate is eligible for
breakthrough therapy or fast track designation, we cannot assure you that
the FDA would decide to grant it. Breakthrough therapy designation and
fast track designation do not change the standards for approval, and there
is no assurance that such designation or eligibility will result in expedited
review or approval. Thus, even if we or our Founded Entities do receive
breakthrough therapy or fast track designation, we or our Founded Entities
may not experience a faster development process, review or approval
compared to conventional FDA procedures. The FDA may withdraw
breakthrough therapy or fast track designation if it believes that the
therapeutic no longer meets the qualifying criteria. Our business may be
harmed if we are unable to avail ourselves of these or any other expedited
development and regulatory pathways.
PureTech Health plc Annual report and accounts 2021 225
Risk Factor Annex — continuedAdditional information We may not be able to obtain or maintain orphan drug designation or
exclusivity for our therapeutic candidates.
Regulatory authorities in some jurisdictions, including the United States,
may designate drugs for relatively small patient populations as orphan
drugs. Under the Orphan Drug Act, the FDA may designate a drug as an
orphan drug if it is intended to treat a rare disease or condition, which is
generally defined as a patient population of fewer than 200,000 individuals
in the United States, or if the disease or condition affects more than 200,000
individuals in the United States and there is no reasonable expectation that
the cost of developing the drug for the type of disease or condition will be
recovered from sales of the product in the United States.
Orphan drug designation entitles a party to financial incentives, such as tax
advantages and user fee waivers. Additionally, if a product that has orphan
designation subsequently receives the first FDA approval for the disease
or condition for which it has such designation, the product is entitled
to orphan drug exclusivity, which means that the FDA may not approve
any other applications to market the same drug for the same disease
or condition for seven years, except in certain circumstances, such as
a showing of clinical superiority (i.e., another product is safer, more effective
or makes a major contribution to patient care) over the product with
orphan exclusivity or where the manufacturer is unable to assure sufficient
product quantity. Competitors, however, may receive approval of different
products for the same disease or condition for which the orphan product
has exclusivity, or obtain approval for the same product but for a different
disease or condition than that for which the orphan product has exclusivity.
We have obtained orphan drug designation in the United States for LYT-200
for the treatment of pancreatic cancer, and we may also seek orphan drug
designation for other of our therapeutic candidates in the future. We may
not be the first to obtain regulatory approval of any therapeutic candidate
for its orphan-designated disease or condition and may therefore not
obtain orphan drug exclusivity. In addition, exclusive marketing rights in
the United States may be limited if we seek approval for an disease or
condition broader than the orphan-designated disease or condition or may
be lost if the FDA later determines that the request for orphan designation
was materially defective or if the manufacturer is unable to assure sufficient
quantities of the product to meet the needs of patients with the rare
disease or condition. Orphan drug designation does not ensure that we
will receive marketing exclusivity in a particular market, and we cannot
assure you that any future application for orphan drug designation with
respect to any other therapeutic candidate will be granted. Orphan drug
designation neither shortens the development time or regulatory review
time of a drug, nor gives the drug any advantage in the regulatory review or
approval process.
If we or our Founded Entities are unable to successfully validate, develop
and obtain regulatory clearance, authorization or approval for companion
diagnostic tests for any future drug candidates that require or would
commercially benefit from such tests, or experience significant delays in
doing so, we or our Founded Entities may not realize the full commercial
potential of these drug candidates.
In connection with the clinical development of the therapeutic candidates
within our Wholly Owned Pipeline or Founded Entities’ therapeutic
candidates for certain indications, we or our Founded Entities may work
with collaborators to develop or obtain access to in vitro companion
diagnostic tests to identify patient subsets within a disease category who
may derive selective and meaningful benefit from our drug candidates. For
example, we may elect to develop companion diagnostics for LYT-200 and
LYT-210. To be successful, we, our Founded Entities or our collaborators
will need to address a number of scientific, technical, regulatory and
logistical challenges. The FDA, the EMA and comparable foreign regulatory
authorities regulate in vitro companion diagnostics as medical devices and,
under that regulatory framework, will likely require the conduct of clinical
trials to demonstrate the safety and effectiveness of any diagnostics we or
our Founded Entities may develop, which we expect will require separate
regulatory clearance, authorization or approval prior to commercialization.
In addition, if safe and effective use of a therapeutic product depends on
an in vitro companion diagnostic, the FDA generally will require approval,
authorization or clearance of that diagnostic, known as a companion
diagnostic, before or at the same time that the FDA approves the
therapeutic product.
We or our Founded Entities may rely on third parties for the design,
development and manufacture of companion diagnostic tests for our
Wholly Owned Programs or our Founded Entities’ therapeutic candidates
that may require such tests. If we or our Founded Entities enter into
such collaborative agreements, we will be dependent on the sustained
cooperation and effort of our future collaborators in developing and
obtaining approval for these companion diagnostics. It may be necessary
to resolve issues such as selectivity/specificity, analytical validation,
reproducibility, or clinical validation of companion diagnostics during
the development and regulatory clearance, authorization or approval
processes. Moreover, even if data from preclinical studies and early clinical
trials appear to support development of a companion diagnostic for
226 PureTech Health plc Annual report and accounts 2021
a therapeutic candidate, data generated in later clinical trials may fail to
support the analytical and clinical validation of the companion diagnostic.
We, our Founded Entities and our future collaborators may encounter
difficulties in developing, obtaining regulatory clearance, authorization or
approval for, manufacturing and commercializing companion diagnostics
similar to those we face with respect to the therapeutic candidates within
our Wholly Owned Pipeline themselves, including issues with achieving
regulatory clearance, authorization or approval, production of sufficient
quantities at commercial scale and with appropriate quality standards, and
in gaining market acceptance. If we or our Founded Entities are unable
to successfully develop companion diagnostics for these therapeutic
candidates, or experience delays in doing so, the development of these
therapeutic candidates may be adversely affected, these therapeutic
candidates may not obtain marketing approval, and we may not realize the
full commercial potential of any of these therapeutic candidates that obtain
marketing approval. As a result, our business, results of operations and
financial condition could be materially harmed. In addition, a diagnostic
company with whom we or our Founded Entities contract may decide to
discontinue selling or manufacturing the companion diagnostic test that
we anticipate using in connection with development and commercialization
of our Wholly Owned Programs or our Founded Entities’ therapeutic
candidates or our relationship with such diagnostic company may otherwise
terminate. We or our Founded Entities may not be able to enter into
arrangements with another diagnostic company to obtain supplies of an
alternative diagnostic test for use in connection with the development and
commercialization of our Wholly Owned Programs or our Founded Entities’
therapeutic candidates or do so on commercially reasonable terms, which
could adversely affect and/or delay the development or commercialization
of our or our Founded Entities’ therapeutic candidates.
For any cleared, authorized or approved therapeutic, we or our Founded
Entities will be subject to ongoing regulatory obligations and continued
regulatory review, which may result in significant additional expense
and we or our Founded Entities may be subject to penalties if we or our
Founded Entities fail to comply with regulatory requirements or experience
unanticipated problems with the therapeutic candidates within our Wholly
Owned Pipeline or our Founded Entities’ therapeutic candidates.
Gelesis’ Plenity and Akili’s EndeavorRx are, and any of the therapeutic
candidates within our Wholly Owned Programs or our Founded Entities’
therapeutic candidates that are cleared, authorized or approved will be,
subject to ongoing regulatory requirements for manufacturing, labeling,
packaging, storage, advertising, promotion, sampling, record-keeping,
conduct of post-marketing studies, and submission of safety, efficacy
and other post-market information, including both federal and state
requirements in the United States and requirements of comparable foreign
regulatory authorities.
Manufacturers and manufacturers’ facilities are required to comply
with extensive requirements imposed by the FDA, the EMA and other
comparable foreign regulatory authorities, including ensuring that
quality control and manufacturing procedures conform to current good
manufacturing practices, or cGMP, regulations. As such, we and our CMOs
are subject to continual review and inspections to assess compliance
with cGMP and adherence to commitments made in any marketing
authorization, and any future 510(k), de novo classification, PMA, NDA,
BLA or marketing authorization application, or MAA, or equivalent
application. We and our CMOs are also subject to requirements pertaining
to the registration of our manufacturing facilities and the listing of our
and our Founded Entities’ therapeutics and therapeutic candidates with
the FDA; continued complaint, adverse event and malfunction reporting;
corrections and removals reporting; and labeling and promotional
requirements. Accordingly, we and others with whom we work must
continue to expend time, money, and effort in all areas of regulatory
compliance, including manufacturing, production and quality control.
Gelesis’ and Akili’s marketing authorizations for Plenity and EndeavorRx,
respectively, are and any regulatory clearances, authorization or approvals
that we may receive for the therapeutic candidates within our Wholly
Owned Pipeline or our Founded Entities’ therapeutic candidates will be,
subject to limitations on the cleared, authorized or approved indicated
uses for which the therapeutic may be marketed and promoted or to
the conditions of approval. Any regulatory clearances, authorizations or
approvals that we may receive for the therapeutic candidates within our
Wholly Owned Pipeline may contain requirements for potentially costly
post-marketing testing, such as Phase 4 clinical trials and surveillance to
monitor the safety and efficacy of a drug therapeutic. We are required to
report certain adverse reactions and production problems, if any, to the
FDA, the EMA and other comparable foreign regulatory authorities. Any
new legislation addressing drug or medical safety issues could result in
delays in therapeutic development or commercialization, or increased costs
to assure compliance.
The FDA and other agencies, including the U.S. Department of Justice,
and for certain therapeutics, the Federal Trade Commission, closely
regulate and monitor the marketing, labeling, advertising and promotion
of therapeutics to ensure that they are manufactured, marketed and
Risk Factor Annex — continuedAdditionasl information distributed only for the cleared, authorized or approved indications and
in accordance with the provisions of the cleared, authorized or approved
labeling. We are, and will be, required to comply with requirements
concerning advertising and promotion for the therapeutic candidates
within our Wholly Owned Pipeline, if cleared, authorized or approved.
For example, promotional communications with respect to prescription
drugs and medical devices are subject to a variety of legal and regulatory
restrictions and must be consistent with the information in the therapeutic’s
label or labeling. We may not promote our therapeutics for indications or
uses for which they do not have approval, authorization or clearance.
The holder of a cleared 510(k), de novo classification, or an approved NDA,
BLA, PMA, MAA or equivalent marketing authorization must submit new or
supplemental applications and obtain clearance, authorization or approval
for certain changes to the approved therapeutic, therapeutic labeling,
or manufacturing process. For example, any modification to Plenity or
EndeavorRx that could significantly affect its safety or effectiveness or that
would constitute a major change in its intended use could require a new
510(k) clearance, de novo classification or approval of PMA application.
Delays in obtaining required clearances or approvals would harm our ability
to introduce new or enhanced therapeutic in a timely manner, which in turn
would harm our or our Founded Entities’ future growth. Failure to submit
a new or supplemental application and to obtain approval for certain
changes prior to marketing the modified therapeutic may require a recall
or to stop selling or distributing the marketed therapeutic as modified, and
may lead to significant enforcement actions.
In the European Economic Area, or the EEA, any medical devices will need
to comply with the Essential Requirements set forth in the new Medical
Device Regulation (EU) 2017/745, which became fully applicable on May 26,
2021. Compliance with these requirements is a prerequisite to be able
to affix the CE mark to a therapeutic, without which a therapeutic cannot
be marketed or sold in the EEA. To demonstrate compliance with the
Essential Requirements and obtain the right to affix the CE mark, we or
our Founded Entities must undergo a conformity assessment procedure,
which varies according to the type of medical device and its classification.
The conformity assessment procedure requires the intervention of
a Notified Body (except for certain class I devices), which is an organization
designated by a competent authority of an EEA country to conduct
conformity assessments. The Notified Body issues a CE Certificate of
Conformity following successful completion of a conformity assessment
procedure and quality management system audit conducted in relation
to the medical device and its manufacturer and their conformity with the
Essential Requirements. This Certificate entitles the manufacturer to affix
the CE mark to its medical therapeutics after having prepared and signed
a related EC Declaration of Conformity. In June 2020, Gelesis received a CE
Mark for Plenity as a class III medical device indicated for weight loss in
overweight and obese adults with a Body Mass Index of 25-40 kg/m2, when
used in conjunction with diet and exercise. Also in June 2020, Akili received
a CE Mark for EndeavorRx as a prescription-only digital therapeutic
software intended for the treatment of attention and inhibitory control
deficits in paediatric patients with ADHD.
We or our Founded Entities could also be required to conduct post-
marketing clinical trials to verify the safety and efficacy of our or our
Founded Entities’ therapeutics in general or in specific patient subsets.
If original marketing approval of a drug or biologic was obtained via
an accelerated approval pathway, we or our Founded Entities could
be required to conduct a successful post-marketing clinical trial to
confirm clinical benefit for our or our Founded Entities’ therapeutics. An
unsuccessful post-marketing study or failure to complete such a study could
result in the withdrawal of marketing clearance, authorization or approval.
If a regulatory agency discovers previously unknown problems with
a therapeutic, such as AEs of unanticipated severity or frequency, or
problems with the facility where the therapeutic is manufactured, or
disagrees with the promotion, marketing or labeling of a therapeutic,
such regulatory agency may impose restrictions on that therapeutic or
us, including requiring withdrawal of the therapeutic from the market.
If we or our Founded Entities fail to comply with applicable regulatory
requirements, a regulatory agency or enforcement authority may, among
other things:
• issue warning letters that would result in adverse publicity;
• impose civil or criminal penalties;
• suspend or withdraw regulatory approvals;
• suspend any of our or our Founded Entities’ ongoing clinical trials;
• refuse to approve pending applications or supplements to approved
applications submitted by us or our Founded Entities;
• impose restrictions on our operations, including closing our
CMOs’ facilities;
• seize or detain therapeutics; or
• require a recall.
Any government investigation of alleged violations of law could require
us to expend significant time and resources in response, and could
generate negative publicity. Any failure to comply with ongoing regulatory
requirements may significantly and adversely affect our ability to
commercialize and generate revenue from our therapeutics. If regulatory
sanctions are applied or if regulatory clearance, authorization or approval
is withdrawn, the value of our company and our operating results will be
adversely affected.
The FDA’s and other regulatory authorities’ policies may change and
additional government regulations may be enacted that could prevent, limit
or delay regulatory clearance, authorization or approval of the therapeutic
candidates within our Wholly Owned Pipeline or our Founded Entities’
therapeutic candidates.
We also cannot predict the likelihood, nature or extent of government
regulation that may arise from future legislation or administrative action,
either in the United States or abroad. If these legislative or administrative
actions impose constraints on the FDA’s ability to engage in oversight
and implementation activities in the normal course, our business may be
negatively impacted.
The FDA and other regulatory agencies actively enforce the laws and
regulations prohibiting the promotion of off‑label uses.
If, for any of our Wholly Owned Programs that are cleared or approved,
we are found to have improperly promoted off-label uses of those
therapeutics, we may become subject to significant liability. The FDA
and other regulatory agencies strictly regulate the promotional claims
that may be made about prescription therapeutics, if cleared, authorized
or approved. In particular, while the FDA permits the dissemination of
truthful and non-misleading information about a cleared, authorized or
approved therapeutic, a manufacturer may not promote a therapeutic for
uses that are not cleared, authorized or approved by the FDA or such other
regulatory agencies as reflected in the therapeutic’s cleared, authorized or
approved labeling. If we are found to have promoted such off-label uses,
we may become subject to significant liability. The federal government
has levied large civil and criminal fines against companies for alleged
improper promotion of off-label use and has enjoined several companies
from engaging in off-label promotion. The FDA has also requested that
companies enter into consent decrees, corporate integrity agreements or
permanent injunctions under which specified promotional conduct must
be changed or curtailed. If we cannot successfully manage the promotion
of the therapeutic candidates within our Wholly Owned Pipeline, if cleared,
authorized or approved, we could become subject to significant liability,
which would materially adversely affect our business and financial condition.
Risks Related to Manufacturing our Therapeutic Candidates or Those of
our Founded Entities
Certain of the therapeutic candidates being developed by us or our
Founded Entities are novel, complex and difficult to manufacture.
We could experience manufacturing problems that result in delays in
our development or commercialization programs or otherwise harm
our business.
The manufacturing processes our CMOs use to produce our and our
Founded Entities’ therapeutic candidates are complex and in certain
cases novel. Several factors could cause production interruptions,
including inability to develop novel manufacturing processes, equipment
malfunctions, facility contamination, raw material shortages or
contamination, natural disasters, disruption in utility services, human error
or disruptions in the operations of our suppliers, including acquisition of the
supplier by a third party or declaration of bankruptcy. For example, Vedanta
has its own proprietary cGMP manufacturing facilities for certain therapeutic
candidates, including VE202, VE303, VE800 and VE416. Creating defined
consortia of live microbial therapeutics for these therapeutic candidates
is inherently complex, and therefore can be vulnerable to delays. The
expertise required to manufacture these therapeutic candidates is unique
to Vedanta, and as a result, it would be difficult and time consuming to
find an alternative CMO. In addition, manufacturing of clinical supply for
certain of our therapeutic candidates is dependent on third party CMOs,
and manufacturing such therapeutic candidates is inherently complex.
As another example, we are advancing LYT-100 for potential treatment of
complications that persist following the resolution of COVID-19 infection.
COVID-19 has been widespread, and any approved treatments related
to COVID-19 could face issues manufacturing sufficient quantities to
meet demand. Additionally, two vaccines for COVID-19 have received full
approval by the FDA and one other vaccine for COVID-19 was granted
Emergency Use Authorization by the FDA. The resultant demand for
vaccines and potential for manufacturing facilities and materials to be
commandeered under the Defense Production Act of 1950, or equivalent
foreign legislation, may make it more difficult to obtain materials or
manufacturing slots for the therapeutics needed for our and our Founded
Entities’ clinical trials or therapeutics which could lead to delays in these
trials or supply shortages of therapeutics.
PureTech Health plc Annual report and accounts 2021 227
Risk Factor Annex — continuedAdditional information Some of our and our Founded Entities’ therapeutic candidates include
biologics, some of which have physical and chemical properties that cannot
be fully characterized. As a result, assays of the finished product may not
be sufficient to ensure that the therapeutic candidate is consistent from
lot-to-lot or will perform in the intended manner. Accordingly, our CMOs
must employ multiple steps to control the manufacturing process to assure
that the process is reproducible and the therapeutic candidate is made
strictly and consistently in compliance with the process. Problems with the
manufacturing process, even minor deviations from the normal process,
could result in therapeutic defects or manufacturing failures that result in lot
failures, therapeutic recalls, product liability claims or insufficient inventory
to conduct clinical trials or supply commercial markets. We or our Founded
Entities may encounter problems achieving adequate quantities and quality
of clinical-grade materials that meet the FDA, the EMA or other applicable
standards or specifications with consistent and acceptable production
yields and costs.
In addition, the FDA, the EMA and other foreign regulatory authorities
may require us or our Founded Entities to submit samples of any lot of
any approved therapeutic together with the protocols showing the results
of applicable tests at any time. Under some circumstances, the FDA, the
EMA or other foreign regulatory authorities may require that we or our
Founded Entities not distribute a lot until the agency authorizes its release.
Slight deviations in the manufacturing process, including those affecting
quality attributes and stability, may result in unacceptable changes in
the therapeutic that could result in lot failures or therapeutic recalls. Lot
failures or therapeutic recalls could cause us or our Founded Entities to
delay therapeutic launches or clinical trials, which could be costly to us
and otherwise harm our business, financial condition, results of operations
and prospects.
Our CMOs also may encounter problems hiring and retaining the
experienced scientific, quality assurance, quality-control and manufacturing
personnel needed to operate our manufacturing processes, which could
result in delays in production or difficulties in maintaining compliance with
applicable regulatory requirements.
Any problems in our CMOs’ manufacturing process or facilities could result
in delays in planned clinical trials and increased costs, and could make
us a less attractive collaborator for potential partners, including larger
biotechnology companies and academic research institutions, which could
limit access to additional attractive development programs. Problems in
our manufacturing process could restrict our ability to meet potential future
market demand for therapeutics.
We do not currently have nor do we plan to acquire the infrastructure or
capability internally to manufacture our clinical drug supplies for use in the
conduct of our clinical trials, and we lack the resources and the capability
to manufacture the therapeutic candidates within our Wholly Owned
Pipeline on a clinical or commercial scale. Instead, we rely on our third-party
manufacturing partners for the production of the active pharmaceutical
ingredient, or API, and drug formulation. The facilities used by our third-
party manufacturers to manufacture our therapeutic candidates that we
may develop must be successfully inspected by the applicable regulatory
authorities, including the FDA, after we submit any NDA or BLA to the FDA.
We are currently completely dependent on our third-party manufacturers
for the production of certain of our therapeutic candidates in accordance
with cGMPs, which include, among other things, quality control, quality
assurance and the maintenance of records and documentation.
Although we have entered into agreements for the manufacture of clinical
supplies for such therapeutic candidates, our third-party manufacturers
may not perform as agreed, may be unable to comply with these cGMP
requirements and with FDA, state and foreign regulatory requirements or
may terminate its agreement with us. If any of our third-party manufacturers
cannot successfully manufacture material that conforms to our specifications
and the applicable regulatory authorities’ strict regulatory requirements,
pass regulatory inspection or maintain a compliance status acceptable to
the FDA or state or foreign regulatory authorities, our NDAs or BLAs will
not be approved. In addition, although we are ultimately responsible for
ensuring therapeutic quality, we have no direct day-to-day control over
our third-party manufacturers’ ability to maintain adequate quality control,
quality assurance and qualified personnel. If our third-party manufacturers
are unable to satisfy the regulatory requirements for the manufacture of our
therapeutics, if approved, or if our suppliers or third-party manufacturers
decide they no longer want to manufacture our therapeutics, we will need
to find alternative manufacturing facilities, which would be time-consuming
and significantly impact our ability to develop, obtain regulatory approval
for or market our therapeutics, if approved. If we are required to change
contract manufacturers for any reason, we will be required to show that
the new manufacturer maintains facilities and procedures that comply with
quality standards and with all applicable regulations. We will also need
to verify, such as through a manufacturing comparability study, that any
new manufacturing process or procedure will produce our therapeutic
candidate according to specifications previously submitted to the FDA or
another regulatory authority. We might be unable to identify manufacturers
for long-term clinical and commercial supply on acceptable terms or
228 PureTech Health plc Annual report and accounts 2021
at all. Manufacturers are subject to ongoing periodic announced and
unannounced inspection by the FDA and other governmental authorities to
ensure compliance with government regulations. As a result, our third-party
manufacturers may be subject to increased scrutiny.
If we were to experience an unexpected loss of supply for clinical
development or commercialization, we could experience delays in our
ongoing or planned clinical trials as our third-party manufacturers would
need to manufacture additional quantities of our clinical and commercial
supply and we may not be able to provide sufficient lead time to enable
our third-party manufacturers to schedule a manufacturing slot, or to
produce the necessary replacement quantities. This could result in delays
in progressing our clinical development activities and achieving regulatory
approval for our therapeutics, which could materially harm our business.
The manufacture of pharmaceutical therapeutics is complex and requires
significant expertise and capital investment, including the development
of advanced manufacturing techniques and process controls. We and our
contract manufacturers must comply with cGMP regulations and guidelines.
Manufacturers of pharmaceutical therapeutics often encounter difficulties
in production, particularly in scaling up and validating initial production.
These problems include difficulties with production costs and yields,
quality control, including stability of the product, quality assurance testing,
operator error, shortages of qualified personnel, as well as compliance
with strictly enforced federal, state and foreign regulations. Furthermore, if
microbial, viral or other contaminations are discovered in our therapeutics
or in the manufacturing facilities in which our therapeutics, if approved,
are made, such manufacturing facilities may need to be closed for an
extended period of time to investigate and remedy the contamination.
We cannot assure you that any stability or other issues relating to the
manufacture of any of our therapeutics will not occur in the future.
Additionally, our manufacturers may experience manufacturing difficulties
due to resource constraints or as a result of labor disputes or unstable
political environments. If our manufacturers were to encounter any of these
difficulties, or otherwise fail to comply with their contractual obligations,
our ability to provide any therapeutic candidates to patients in clinical trials
would be jeopardized. Any delay or interruption in the supply of clinical
trial supplies could delay the completion of clinical trials, increase the costs
associated with maintaining clinical trial programs and, depending upon
the period of delay, require us to commence new clinical trials at additional
expense or terminate clinical trials completely.
Any adverse developments affecting clinical or commercial manufacturing
of our therapeutics may result in shipment delays, inventory shortages,
lot failures, therapeutic withdrawals or recalls, or other interruptions in
the supply of our therapeutics or therapeutic candidates. We may also
have to take inventory write-offs and incur other charges and expenses
for therapeutics or therapeutic candidates that fail to meet specifications,
undertake costly remediation efforts or seek more costly manufacturing
alternatives. Accordingly, failures or difficulties faced at any level of our
supply chain could materially adversely affect our business and delay or
impede the development and commercialization of any of our therapeutics
or therapeutic candidates and could have a material adverse effect on our
business, prospects, financial condition and results of operations.
Our or our Founded Entities’ therapeutics must be manufactured in
accordance with federal, state and international regulations, and we or our
Founded Entities could be forced to recall our or our Founded Entities’
medical devices or terminate production if we or our Founded Entities fail
to comply with these regulations.
The methods used in, and the facilities used for, the manufacture of medical
device therapeutics of our Founded Entities, including Gelesis, Akili, Follica
and Sonde, must comply with the FDA’s cGMPs for medical devices, known
as Quality System Regulation, or QSR, which is a complex regulatory
scheme that covers the procedures and documentation of, among other
requirements, the design, testing, validation, verification, complaint
handling, production, process controls, quality assurance, labeling,
supplier evaluation, packaging, handling, storage, distribution, installation,
servicing and shipping of medical devices. Furthermore, we and our
Founded Entities are required to verify that our suppliers maintain facilities,
procedures and operations that comply with our quality standards and
applicable regulatory requirements. The FDA enforces the QSR through,
among other oversight methods, periodic announced or unannounced
inspections of medical device manufacturing facilities, which may include
the facilities of subcontractors, suppliers or CMOs. Our and our Founded
Entities’ therapeutics are also subject to similar state regulations and
various laws and regulations of foreign countries governing manufacturing.
Our or our Founded Entities’ third-party manufacturers may not take
the necessary steps to comply with applicable regulations or our or our
Founded Entities’ specifications, which could cause delays in the delivery
of our therapeutics. In addition, failure to comply with applicable FDA
requirements or later discovery of previously unknown problems with our or
our Founded Entities’ therapeutics or manufacturing processes could result
in, among other things: warning letters or untitled letters; civil penalties;
suspension or withdrawal of approvals or clearances; seizures or recalls of
Risk Factor Annex — continuedAdditionasl information our or our Founded Entities’ therapeutics; total or partial suspension of
production or distribution; administrative or judicially imposed sanctions;
the FDA’s refusal to grant pending or future clearances or approvals for our
or our Founded Entities’ therapeutics; clinical holds; refusal to permit the
import or export of our or our Founded Entities’ therapeutics; and criminal
prosecution of us or our employees. Any of these actions could significantly
and negatively impact supply of our or our Founded Entities’ therapeutics.
If any of these events occurs, our reputation could be harmed, we could be
exposed to product liability claims and we or our Founded Entities could
lose customers and suffer reduced revenue and increased costs.
Risks Related to Commercialization
If, in the future, we are unable to establish sales and marketing capabilities
or enter into agreements with third parties to sell and market any
therapeutic candidates we may develop, we may not be successful
in commercializing those therapeutic candidates if and when they
are approved.
We do not have a sales or marketing infrastructure or the capabilities for
sale, marketing, or distribution of pharmaceutical therapeutics. To achieve
commercial success for any approved therapeutic for which we retain
sales and marketing responsibilities, we must either develop a sales and
marketing organization or outsource these functions to third parties. In the
future, we may choose to build a focused sales, marketing, and commercial
support infrastructure to market and sell the therapeutic candidates within
our Wholly Owned Pipeline, if and when they are approved. We may
also elect to enter into collaborations or strategic partnerships with third
parties to engage in commercialization activities with respect to selected
therapeutic candidates, indications or geographic territories, including
territories outside the United States, although there is no guarantee we will
be able to enter into these arrangements even if the intent is to do so.
There are risks involved with both establishing our own commercial
capabilities and entering into arrangements with third parties to perform
these services. For example, recruiting and training a sales force or
reimbursement specialists is expensive and time consuming and could
delay any therapeutic launch. If the commercial launch of a therapeutic
candidate for which we recruit a sales force and establish marketing and
other commercialization capabilities is delayed or does not occur for
any reason, we would have prematurely or unnecessarily incurred these
commercialization expenses. This may be costly, and our investment would
be lost if we cannot retain or reposition commercialization personnel.
Factors that may inhibit our efforts to commercialize any approved
therapeutic on our own include:
• the inability to recruit and retain adequate numbers of effective sales,
marketing, reimbursement, customer service, medical affairs, and other
support personnel;
• the inability of sales personnel to obtain access to physicians or
persuade adequate numbers of physicians to prescribe any future
approved therapeutics;
• the inability of reimbursement professionals to negotiate arrangements
for formulary access, reimbursement, and other acceptance by payors;
• the inability to price therapeutics at a sufficient price point to ensure an
adequate and attractive level of profitability;
• restricted or closed distribution channels that make it difficult to
distribute our therapeutics to segments of the patient population;
• the lack of complementary therapeutics to be offered by sales personnel,
which may put us at a competitive disadvantage relative to companies
with more extensive therapeutic lines; and
• unforeseen costs and expenses associated with creating an independent
commercialization organization.
If we enter into arrangements with third parties to perform sales, marketing,
commercial support, and distribution services, our therapeutic revenue or
the profitability of therapeutic revenue may be lower than if we were to
market and sell any therapeutics we may develop internally. In addition,
we may not be successful in entering into arrangements with third parties
to commercialize the therapeutic candidates within our Wholly Owned
Pipeline or may be unable to do so on terms that are favorable to us or
them. We may have little control over such third parties, and any of them
may fail to devote the necessary resources and attention to sell and market
our therapeutics effectively or may expose us to legal and regulatory risk by
not adhering to regulatory requirements and restrictions governing the sale
and promotion of prescription drug therapeutics, including those restricting
off-label promotion. If we do not establish commercialization capabilities
successfully, either on our own or in collaboration with third parties, we will
not be successful in commercializing the therapeutic candidates within our
Wholly Owned Pipeline, if approved.
Even if any current or future therapeutic candidate of ours receives
regulatory clearance or approval, it may fail to achieve the degree of
market acceptance by physicians, patients, third‑party payors and others in
the medical community necessary for commercial success, in which case we
may not generate significant revenues or become profitable.
We have never commercialized a therapeutic, and even if any current
or future therapeutic candidate of ours is approved by the appropriate
regulatory authorities for marketing and sale, it may nonetheless fail to gain
sufficient market acceptance by physicians, patients, third-party payors
and others in the medical community. Physicians may be reluctant to take
their patients off their current medications and switch their treatment
regimen. Further, patients often acclimate to the treatment regime that
they are currently taking and do not want to switch unless their physicians
recommend switching therapeutics or they are required to switch due to
lack of coverage and adequate reimbursement. In addition, even if we are
able to demonstrate our Wholly Owned Programs’ safety and efficacy to
the FDA and other regulators, safety or efficacy concerns in the medical
community may hinder market acceptance.
Efforts to educate the medical community and third-party payors on the
benefits of the therapeutic candidates within our Wholly Owned Pipeline
may require significant resources, including management time and financial
resources, and may not be successful. The degree of market acceptance of
the therapeutic candidates within our Wholly Owned Pipeline, if approved
for commercial sale, will depend on a number of factors, including:
• the efficacy and safety of the therapeutic;
• the potential advantages of the therapeutic compared to
competitive therapies;
• the prevalence and severity of any side effects;
• whether the therapeutic is designated under physician treatment
guidelines as a first-, second- or third-line therapy;
• our ability, or the ability of any future collaborators, to offer the
therapeutic for sale at competitive prices;
• the therapeutic’s convenience and ease of administration compared to
alternative treatments;
• the willingness of the target patient population to try, and of physicians
to prescribe, the therapeutic;
• limitations or warnings, including distribution or use restrictions
contained in the therapeutic’s approved labelling;
• the strength of sales, marketing and distribution support;
• changes in the standard of care for the targeted indications for the
therapeutic; and
• availability and adequacy of coverage and reimbursement from
government payors, managed care plans and other third-party payors.
Sales of medical therapeutics also depend on the willingness of physicians
to prescribe the treatment, which is likely to be based on a determination
by these physicians that the therapeutics are safe, therapeutically effective
and cost effective. In addition, the inclusion or exclusion of therapeutics
from treatment guidelines established by various physician groups and
the viewpoints of influential physicians can affect the willingness of
other physicians to prescribe the treatment. We cannot predict whether
physicians, physicians’ organizations, hospitals, other healthcare providers,
government agencies or private insurers will determine that our therapeutic
is safe, therapeutically effective and cost effective as compared with
competing treatments. If any therapeutic candidates we develop do not
achieve an adequate level of acceptance, we may not generate significant
therapeutic revenue, and we may not become profitable.
Any failure by any current or future therapeutic candidate of ours that
obtains regulatory approval to achieve market acceptance or commercial
success would adversely affect our business prospects. In addition, any
negative perception of one of our Founded Entities or any therapeutic
candidates marketed or commercialized by them may adversely affect
our reputation in the marketplace or among industry participants and our
business prospects.
The insurance coverage and reimbursement status of newly‑approved
therapeutics is uncertain. The therapeutic candidates within our Wholly
Owned Pipeline may become subject to unfavorable pricing regulations,
third‑party coverage and reimbursement practices, or healthcare reform
initiatives, which would harm our business. Failure to obtain or maintain
coverage and adequate reimbursement for new or current therapeutics
could limit our ability to market those therapeutics and decrease our ability
to generate revenue.
The regulations that govern marketing approvals, pricing, coverage, and
reimbursement for new drugs and other medical therapeutics vary widely
from country to country. In the United States, healthcare reform legislation
may significantly change the approval requirements in ways that could
involve additional costs and cause delays in obtaining approvals. Some
countries require approval of the sale price of a therapeutic before it can
PureTech Health plc Annual report and accounts 2021 229
Risk Factor Annex — continuedAdditional information be marketed. In many countries, the pricing review period begins after
marketing or therapeutic licensing approval is granted. In some foreign
markets, pricing remains subject to continuing governmental control even
after initial approval is granted. As a result, we might obtain marketing
approval for a therapeutic in a particular country, but then be subject to
price regulations that delay our commercial launch of the therapeutic,
possibly for lengthy time periods, and negatively impact the revenue we are
able to generate from the sale of the therapeutic in that country. Adverse
pricing limitations may hinder our ability to recoup our investment in one
or more therapeutics or therapeutic candidates, even if any therapeutic
candidates we may develop obtain marketing approval.
Our ability to successfully commercialize our therapeutics and therapeutic
candidates also will depend in part on the extent to which coverage and
adequate reimbursement for these therapeutics and related treatments
will be available from government health administration authorities,
private health insurers, and other organizations. Government authorities
and third-party payors, such as private health insurers and health
maintenance organizations, decide which medications they will pay for
and establish reimbursement levels. The availability of coverage and
extent of reimbursement by governmental and private payors is essential
for most patients to be able to afford treatments such as gene therapy
therapeutics. Sales of these or other therapeutic candidates that we may
identify will depend substantially, both domestically and abroad, on the
extent to which the costs of the therapeutic candidates within our Wholly
Owned Pipeline will be paid by health maintenance, managed care,
pharmacy benefit and similar healthcare management organizations, or
reimbursed by government health administration authorities, private health
coverage insurers and other third-party payors. If coverage and adequate
reimbursement is not available, or is available only to limited levels, we may
not be able to successfully commercialize our therapeutics or therapeutic
candidates. Even if coverage is provided, the approved reimbursement
amount may not be high enough to allow us to establish or maintain
pricing sufficient to realize a sufficient return on our investment. A primary
trend in the U.S. healthcare industry and elsewhere is cost containment.
Government authorities and third-party payors have attempted to control
costs by limiting coverage and the amount of reimbursement for particular
medications. In many countries, the prices of medical therapeutics are
subject to varying price control mechanisms as part of national health
systems. In general, the prices of medicines under such systems are
substantially lower than in the United States. Other countries allow
companies to fix their own prices for medicines, but monitor and control
company profits. Additional foreign price controls or other changes in
pricing regulation could restrict the amount that we are able to charge for
the therapeutic candidates within our Wholly Owned Pipeline. Accordingly,
in markets outside the United States, the reimbursement for therapeutics
may be reduced compared with the United States and may be insufficient
to generate commercially reasonable revenues and profits.
There is also significant uncertainty related to the insurance coverage and
reimbursement of newly approved therapeutics and coverage may be
more limited than the purposes for which the medicine is approved by the
FDA or comparable foreign regulatory authorities. In the United States, the
principal decisions about reimbursement for new medicines are typically
made by the Centers for Medicare & Medicaid Services, or CMS, an agency
within the U.S. Department of Health and Human Services. CMS decides
whether and to what extent a new medicine will be covered and reimbursed
under Medicare and private payors tend to follow CMS to a substantial
degree. No uniform policy of coverage and reimbursement for therapeutics
exists among third-party payors and coverage and reimbursement levels
for therapeutics can differ significantly from payor to payor. As a result,
the coverage determination process is often a time consuming and costly
process that may require us to provide scientific and clinical support for
the use of our therapeutics to each payor separately, with no assurance
that coverage and adequate reimbursement will be applied consistently or
obtained in the first instance. It is difficult to predict what CMS will decide
with respect to reimbursement for fundamentally novel therapeutics such
as ours, as there is no body of established practices and precedents for
these new therapeutics. Reimbursement agencies in Europe may be more
conservative than CMS. For example, a number of cancer drugs have
been approved for reimbursement in the United States and have not been
approved for reimbursement in certain European countries. Moreover,
eligibility for reimbursement does not imply that any drug will be paid for in
all cases or at a rate that covers our costs, including research, development,
manufacture, sale, and distribution. Interim reimbursement levels for new
drugs, if applicable, may also not be sufficient to cover our costs and
may not be made permanent. Reimbursement rates may vary according
to the use of the drug and the clinical setting in which it is used, may be
based on reimbursement levels already set for lower cost drugs and may
be incorporated into existing payments for other services. Our inability
to promptly obtain coverage and profitable payment rates from both
government-funded and private payors for any approved therapeutics we
may develop could have a material adverse effect on our operating results,
our ability to raise capital needed to commercialize therapeutic candidates,
and our overall financial condition. As noted above, in the United States
230 PureTech Health plc Annual report and accounts 2021
we plan to have various programs to help patients afford our therapeutics,
including patient assistance programs and co-pay coupon programs for
eligible patients.
Net prices for drugs may be reduced by mandatory discounts or rebates
required by government healthcare programs or private payors and by
any future relaxation of laws that presently restrict imports of drugs from
countries where they may be sold at lower prices than in the United States.
Our inability to promptly obtain coverage and profitable reimbursement
rates third-party payors for any approved therapeutics that we develop
could have a material adverse effect on our operating results, our ability
to raise capital needed to commercialize therapeutics and our overall
financial condition.
Increasingly, third-party payors are requiring that pharmaceutical
companies provide them with predetermined discounts from list prices
and are challenging the prices charged for medical therapeutics. We
cannot be sure that reimbursement will be available for any therapeutic
candidate that we commercialize and, if reimbursement is available, the
level of reimbursement. Reimbursement may impact the demand for, or
the price of, any therapeutic or therapeutic candidate for which we obtain
marketing approval. In order to obtain reimbursement, physicians may
need to show that patients have superior treatment outcomes with our
therapeutics compared to standard of care drugs, including lower-priced
generic versions of standard of care drugs. We expect to experience pricing
pressures in connection with the sale of any of the therapeutic candidates
within our Wholly Owned Pipeline, due to the trend toward managed
healthcare, the increasing influence of health maintenance organizations
and additional legislative changes. The downward pressure on healthcare
costs in general, particularly prescription drugs and surgical procedures and
other treatments, has become very intense. As a result, increasingly high
barriers are being erected to the entry of new therapeutics. Additionally,
we may develop companion diagnostic tests for use with our Wholly
Owned Programs or our Founded Entities’ therapeutic candidates. We,
or our Founded Entities or our collaborators may be required to obtain
coverage and reimbursement for these tests separate and apart from the
coverage and reimbursement we seek for our Wholly Owned Programs
or our Founded Entities’ therapeutic candidates, once approved. Even if
we or our Founded Entities obtain regulatory approval or clearance for
such companion diagnostics, there is significant uncertainty regarding
our ability to obtain coverage and adequate reimbursement for the same
reasons applicable to our Wholly Owned Programs or our Founded Entities’
therapeutic candidates. Medicare reimbursement methodologies, whether
under Part A, Part B, or clinical laboratory fee schedule may be amended
from time to time, and we cannot predict what effect any change to these
methodologies would have on any therapeutic candidate or companion
diagnostic for which we receive approval.
We have no sales, distribution, or marketing capabilities, and may
invest significant financial and management resources to establish these
capabilities. If we are unable to establish such capabilities or enter into
agreements with third parties to market and sell our future therapeutics, if
approved, we may be unable to generate any revenues.
Given our stage of development, we have no sales, distribution, or
marketing capabilities. To successfully commercialize any therapeutics that
may result from our development programs, we will need to develop sales
and marketing capabilities in the United States, Europe, and other regions,
either on our own or with others. We may enter into strategic alliances
with other entities to utilize their mature marketing and distribution
capabilities, but we may be unable to enter into marketing agreements
on favorable terms, if at all. If our future strategic collaborators do not
commit sufficient resources to commercialize our future therapeutics, if
any, and we are unable to develop the necessary marketing capabilities
on our own, we may be unable to generate sufficient therapeutic revenue
to sustain our business. We will be competing with many companies that
currently have extensive and well-funded marketing and sales operations.
Without a significant internal team or the support of a third party to perform
marketing and sales functions, we may be unable to compete successfully
against these more established companies.
Risks Related to Compliance with Healthcare Laws
If we fail to comply with healthcare laws, we could face substantial
penalties and our business, operations and financial conditions could be
adversely affected.
Healthcare providers, physicians and third-party payors in the United
States and elsewhere play a primary role in the recommendation and
prescription of pharmaceutical therapeutics. Arrangements with healthcare
providers, third-party payors and customers can expose pharmaceutical
manufacturers to broadly applicable fraud and abuse and other healthcare
laws and regulations, including, without limitation, the federal Anti-Kickback
Statute and the federal False Claims Act, or the FCA, which may constrain
the business or financial arrangements and relationships through which
such companies sell, market and distribute pharmaceutical therapeutics.
In particular, the promotion, sales and marketing of healthcare items
Risk Factor Annex — continuedAdditionasl information and services, as well as certain business arrangements in the healthcare
industry, are subject to extensive laws designed to prevent fraud, kickbacks,
self-dealing and other abusive practices. These laws and regulations
may restrict or prohibit a wide range of ownership, pricing, discounting,
marketing and promotion, structuring and commission(s), certain customer
incentive programs and other business arrangements generally. Activities
subject to these laws also involve the improper use of information obtained
in the course of patient recruitment for clinical trials. The applicable federal
and state healthcare laws and regulations laws that may affect our ability to
operate include, but are not limited to:
• the federal Anti-Kickback Statute, which prohibits, among other things,
persons from knowingly and willfully soliciting, receiving, offering or
paying any remuneration (including any kickback, bribe, or rebate),
directly or indirectly, overtly or covertly, in cash or in kind, to induce, or
in return for, either the referral of an individual, or the purchase, lease,
order or recommendation of any good, facility, item or service for which
payment may be made, in whole or in part, under a federal healthcare
program, such as the Medicare and Medicaid programs. A person or
entity does not need to have actual knowledge of the statute or specific
intent to violate it in order to have committed a violation. Violations are
subject to civil and criminal fines and penalties for each violation, plus
up to three times the remuneration involved, imprisonment of up to ten
years, and exclusion from government healthcare programs. In addition,
the government may assert that a claim including items or services
resulting from a violation of the federal Anti-Kickback Statute constitutes
a false or fraudulent claim for purposes of the FCA. The Anti-Kickback
Statute has been interpreted to apply to arrangements between
pharmaceutical manufacturers, on the one hand, and prescribers,
purchasers and formulary managers, on the other. There are a number
of statutory exceptions and regulatory safe harbors protecting some
common activities from prosecution. On December 2, 2020, the Office of
Inspector General, or OIG, published further modifications to the federal
Anti-Kickback Statute. Under the final rules, OIG added safe harbor
protections under the Anti-Kickback Statute for certain coordinated
care and value-based arrangements among clinicians, providers, and
others. This rule (with exceptions) became effective January 19, 2021.
Implementation of this change and new safe harbors for point-of-sale
reductions in price for prescription pharmaceutical therapeutics and
pharmacy benefit manager service fees are currently under review by the
Biden administration and may be amended or repealed. We continue to
evaluate what effect, if any, the rule will have on our business
• federal civil and criminal false claims laws and civil monetary penalty
laws, including the False Claims Act, which impose criminal and civil
penalties, including through civil “qui tam” or “whistleblower” actions,
against individuals or entities for, among other things, knowingly
presenting, or causing to be presented, claims for payment or approval
from Medicare, Medicaid, or other federal health care programs that
are false or fraudulent; knowingly making or causing a false statement
material to a false or fraudulent claim or an obligation to pay money
to the federal government; or knowingly concealing or knowingly and
improperly avoiding or decreasing such an obligation. Manufacturers
can be held liable under the FCA even when they do not submit claims
directly to government payors if they are deemed to “cause” the
submission of false or fraudulent claims. The FCA also permits a private
individual acting as a “whistleblower” to bring actions on behalf of the
federal government alleging violations of the FCA and to share in any
monetary recovery. When an entity is determined to have violated the
federal civil False Claims Act, the government may impose civil fines
and penalties for each false claim, plus treble damages, and exclude
the entity from participation in Medicare, Medicaid and other federal
healthcare programs;
• the federal Health Insurance Portability and Accountability Act of 1996,
or HIPAA, which created additional federal criminal statutes that prohibit
knowingly and willfully executing, or attempting to execute, a scheme
to defraud any healthcare benefit program or obtain, by means of
false or fraudulent pretenses, representations, or promises, any of the
money or property owned by, or under the custody or control of, any
healthcare benefit program, regardless of the payor (e.g., public or
private) and knowingly and willfully falsifying, concealing or covering
up by any trick or device a material fact or making any materially false
statements in connection with the delivery of, or payment for, healthcare
benefits, items or services relating to healthcare matters. Similar to the
federal Anti-Kickback Statute, a person or entity can be found guilty of
violating HIPAA without actual knowledge of the statute or specific intent
to violate it;
• the federal civil monetary penalties laws, which impose civil fines
for, among other things, the offering or transfer or remuneration to
a Medicare or state healthcare program beneficiary if the person knows
or should know it is likely to influence the beneficiary’s selection of
a particular provider, practitioner, or supplier of services reimbursable by
Medicare or a state healthcare program, unless an exception applies;
• HIPAA, as amended by the Health Information Technology for Economic
and Clinical Health Act of 2009, or HITECH, and their respective
implementing regulations, which impose, among other things,
requirements on certain covered healthcare providers, health plans, and
healthcare clearinghouses as well as their respective business associates
that perform services for them that involve the use, or disclosure of,
individually identifiable health information, relating to the privacy,
security and transmission of individually identifiable health information
without appropriate authorization. HITECH also created new tiers of civil
monetary penalties, amended HIPAA to make civil and criminal penalties
directly applicable to business associates, and gave state attorneys
general new authority to file civil actions for damages or injunctions in
federal courts to enforce the federal HIPAA laws and seek attorneys’ fees
and costs associated with pursuing federal civil actions;
• the federal Physician Payments Sunshine Act, created under the ACA,
and its implementing regulations, which require manufacturers of drugs,
devices, biologicals and medical supplies for which payment is available
under Medicare, Medicaid or the Children’s Health Insurance Program
(with certain exceptions) to report annually to the U.S. Department of
Health and Human Services, or HHS, under the Open Payments Program,
information related to payments or other transfers of value made to
physicians (defined to include doctors, dentists, optometrists, podiatrists
and chiropractors), and teaching hospitals, as well as ownership and
investment interests held by physicians and their immediate family
members. Effective January 1, 2022, these reporting obligations will
extend to include transfers of value made to certain non-physician
providers such as physician assistants and nurse practitioners;
• federal consumer protection and unfair competition laws, which
broadly regulate marketplace activities and activities that potentially
harm consumers;
• federal price reporting laws, which require manufacturers to calculate
and report complex pricing metrics to government programs, where
such reported prices may be used in the calculation of reimbursement
and/or discounts on approved therapeutics; and
• analogous state and foreign laws and regulations, such as state and
foreign anti-kickback, false claims, consumer protection and unfair
competition laws which may apply to pharmaceutical business practices,
including but not limited to, research, distribution, sales and marketing
arrangements as well as submitting claims involving healthcare items
or services reimbursed by any third-party payer, including commercial
insurers; state laws that require pharmaceutical companies to comply
with the pharmaceutical industry’s voluntary compliance guidelines
and the relevant compliance guidance promulgated by the federal
government that otherwise restricts payments that may be made to
healthcare providers and other potential referral sources; state laws that
require drug manufacturers to file reports with states regarding pricing
and marketing information, such as the tracking and reporting of gifts,
compensations and other remuneration and items of value provided
to healthcare professionals and entities; state and local laws requiring
the registration of pharmaceutical sales representatives; and state and
foreign laws governing the privacy and security of health information in
certain circumstances, many of which differ from each other in significant
ways and are often not pre-empted by HIPAA, thus complicating
compliance efforts.
Because of the breadth of these laws and the narrowness of the statutory
exceptions and regulatory safe harbors available, it is possible that some
of our business activities, including compensation of physicians with stock
or stock options, could, despite efforts to comply, be subject to challenge
under one or more of such laws. Additionally, FDA or foreign regulators
may not agree that we have mitigated any risk of bias in our clinical trials
due to payments or equity interests provided to investigators or institutions
which could limit a regulator’s acceptance of those clinical trial data in
support of a marketing application. Moreover, efforts to ensure that our
business arrangements will comply with applicable healthcare laws may
involve substantial costs. It is possible that governmental and enforcement
authorities will conclude that our business practices may not comply with
current or future statutes, regulations or case law interpreting applicable
fraud and abuse or other healthcare laws and regulations. If any such
actions are instituted against us, and we are not successful in defending
ourselves or asserting our rights, those actions could have a significant
impact on our business, including the imposition of significant civil, criminal
and administrative penalties, damages, disgorgement, monetary fines,
exclusion from participation in Medicare, Medicaid and other federal
healthcare programs, integrity and oversight agreements to resolve
allegations of non-compliance, contractual damages, reputational harm,
diminished profits and future earnings, and curtailment or restructuring of
our operations, any of which could adversely affect our ability to operate
our business and our results of operations. In addition, the approval and
commercialization of any of the therapeutic candidates within our Wholly
Owned Pipeline outside the United States will also likely subject us to
foreign equivalents of the healthcare laws mentioned above, among other
foreign laws.
PureTech Health plc Annual report and accounts 2021 231
Risk Factor Annex — continuedAdditional information Failure to comply with health and data protection laws and regulations
could lead to government enforcement actions (which could include civil
or criminal penalties), private litigation, and/or adverse publicity and could
negatively affect our operating results and business.
We and any potential collaborators may be subject to federal, state, and
foreign data protection laws and regulations (i.e., laws and regulations that
address privacy and data security). In the United States, numerous federal
and state laws and regulations, including federal health information privacy
laws, state data breach notification laws, state health information privacy
laws, and federal and state consumer protection laws (e.g., Section 5 of the
Federal Trade Commission Act), that govern the collection, use, disclosure
and protection of health-related and other personal information could
apply to our operations or the operations of our collaborators. In addition,
we may obtain health information from third parties (including research
institutions from which we obtain clinical trial data) that are subject to
privacy and security requirements under HIPAA, as amended by HITECH.
Depending on the facts and circumstances, we could be subject to civil,
criminal, and administrative penalties if we knowingly obtain, use, or
disclose individually identifiable health information maintained by a HIPAA-
covered entity in a manner that is not authorized or permitted by HIPAA.
Compliance with U.S. and international data protection laws and
regulations, including the General Data Protection Regulation 2016/679,
or GDPR, in the European Union, could require us to take on more
onerous obligations in our contracts, restrict our ability to collect, use and
disclose data, or in some cases, impact our ability to operate in certain
jurisdictions. Failure to comply with these laws and regulations could result
in government enforcement actions (which could include civil, criminal
and administrative penalties), private litigation, and/or adverse publicity
and could negatively affect our operating results and business. Moreover,
clinical trial subjects, employees and other individuals about whom we
or our potential collaborators obtain personal information, as well as the
providers who share this information with us, may limit our ability to collect,
use and disclose the information. Claims that we have violated individuals’
privacy rights, failed to comply with data protection laws, or breached our
contractual obligations, even if we are not found liable, could be expensive
and time-consuming to defend and could result in adverse publicity that
could harm our business.
Healthcare legislative measures aimed at reducing healthcare costs may
have a material adverse effect on our business and results of operations.
The United States and many foreign jurisdictions have enacted or proposed
legislative and regulatory changes affecting the healthcare system that
could prevent or delay marketing approval of the therapeutic candidates
within our Wholly Owned Pipeline or our Founded Entities’ therapeutic
candidates or any future therapeutic candidates, restrict or regulate
post-approval activities and affect our or our Founded Entities’ ability to
profitably sell any therapeutic for which we or our Founded Entities obtain
marketing approval. Changes in regulations, statutes or the interpretation
of existing regulations could impact our or our Founded Entities’ business
in the future by requiring, for example: (i) changes to our manufacturing
arrangements; (ii) additions or modifications to therapeutic labeling; (iii)
the recall or discontinuation of our therapeutics; or (iv) additional record-
keeping requirements. If any such changes were to be imposed, they could
adversely affect the operation of our business.
In the United States, there have been and continue to be a number of
legislative initiatives and judicial challenges to contain healthcare costs.
For example, in March 2010, the Affordable Care Act, or the ACA, was
passed, which substantially changed the way healthcare is financed by
both governmental and private insurers, and significantly impacted the
U.S. pharmaceutical industry. The ACA, among other things, subjects
biological therapeutics to potential competition by lower-cost biosimilars,
addresses a new methodology by which rebates owed by manufacturers
under the Medicaid Drug Rebate Program are calculated for drugs that are
inhaled, infused, instilled, implanted or injected, increases the minimum
Medicaid rebates owed by manufacturers under the Medicaid Drug
Rebate Program and extends the rebate program to individuals enrolled in
Medicaid managed care organizations, establishes annual fees and taxes
on manufacturers of certain branded prescription drugs, and creates a new
Medicare Part D coverage gap discount program, in which manufacturers
must agree to offer 70 percent point-of-sale discounts off negotiated prices
of applicable brand drugs to eligible beneficiaries during their coverage
gap period, as a condition for the manufacturer’s outpatient drugs to be
covered under Medicare Part D.
Payment methodologies may be subject to changes in healthcare
legislation and regulatory challenges. For example, in order for a drug
therapeutic to receive federal reimbursement under the Medicaid or
Medicare Part B programs or to be sold directly to U.S. government
agencies, the manufacturer must extend discounts to entities eligible to
participate in the 340B drug pricing program. In December 2018, the CMS
published a final rule permitting further collections and payments to and
from certain ACA qualified health plans and health insurance issuers under
the ACA risk adjustment program in response to the outcome of the federal
232 PureTech Health plc Annual report and accounts 2021
district court litigation regarding the method CMS uses to determine this
risk adjustment. Since then, the ACA risk adjustment program payment
parameters have been updated annually.
Since the enactment of the ACA, there have been numerous judicial,
administrative, executive, and legislative challenges to certain aspects
of the ACA, and we expect there will be additional challenges and
amendments to the ACA in the future. The Tax Cuts and Jobs Act of 2017,
or the Tax Act, includes a provision that repealed effective January 1, 2019
the tax-based shared responsibility payment imposed by the ACA on
certain individuals who fail to maintain qualifying health coverage for all or
part of a year that is commonly referred to as the “individual mandate.” On
December 14, 2018, a U.S. District Court Judge in the Northern District of
Texas, or the Texas District Court Judge, ruled that the individual mandate
is a critical and inseverable feature of the ACA, and therefore, because it
was repealed as part of the Tax Act, the remaining provisions of the ACA
are invalid as well. The former Trump Administration and CMS have both
stated that the ruling will have no immediate effect, and on December 30,
2018 the Texas District Court Judge issued an order staying the judgment
pending appeal. On December 18, 2019, the U.S. Court of Appeals for
the 5th Circuit ruled that the individual mandate was unconstitutional but
remanded the case back to the District Court to determine whether the
remaining provisions of the ACA are invalid as well. On March 2, 2020, the
U.S. Supreme Court granted the petitions for writs of certiorari to review the
case, and held oral arguments on November 10, 2020. Pending a decision,
the ACA remains in effect, but it is unclear at this time what effect these
developments will have on the status of the ACA. We will continue to
evaluate the effect that the ACA and its possible repeal and replacement
has on our business.
Since January 2017, former President Trump signed various Executive
Orders designed to delay the implementation of certain provisions of
the ACA or otherwise circumvent some of the requirements for health
insurance mandated by the ACA. On October 13, 2017, former President
Trump signed an Executive Order terminating the cost-sharing subsidies
that reimburse insurers under the ACA. The former Trump administration
concluded that cost-sharing reduction, or CSR, payments to insurance
companies required under the ACA have not received necessary
appropriations from Congress and announced that it would discontinue
these payments immediately until those appropriations are made.
Several state Attorneys General filed suit to stop the administration from
terminating the subsidies, but their request for a restraining order was
denied by a federal judge in California on October 25, 2017. On August 14,
2020, the U.S. Court of Appeals for the Federal Circuit ruled in two separate
cases that the federal government is liable for the full amount of unpaid
CSRs for the years preceding and including 2017. For CSR claims made
by health insurance companies for years 2018 and later, further litigation
will be required to determine the amounts due, if any. Further, on June 14,
2018, U.S. Court of Appeals for the Federal Circuit ruled that the federal
government was not required to pay more than $12 billion in ACA risk
corridor payments to third-party payors who argued were owed to them.
This decision was appealed to the U.S. Supreme Court, which on April 27,
2020, reversed the U.S. Court of Appeals for the Federal Circuit’s decision
and remanded the case to the U.S. Court of Federal Claims, concluding
the government has an obligation to pay these risk corridor payments
under the relevant formula. The U.S. federal government has since started
sending third-party payors owed payments. It is not clear what effect these
rulings will have on our business, but we will continue to monitor any
developments.
Moreover, on January 22, 2018, former President Trump signed a continuing
resolution on appropriations for fiscal year 2018 that delayed the
implementation of certain ACA-mandated fees, including the so called
“Cadillac” tax on certain high cost employer-sponsored insurance plans,
the annual fee imposed on certain health insurance providers based on
market share, and the medical device excise tax on non-exempt medical
devices. However, on December 20, 2019, the U.S. President signed into
law the Further Consolidated Appropriations Act (H.R. 1865), which repeals
the Cadillac tax, the health insurance provider tax, and the medical device
excise tax. The Bipartisan Budget Act of 2018, also amended the ACA,
effective January 1, 2019, by increasing the point-of-sale discount that is
owed by pharmaceutical manufacturers who participate in Medicare Part
D and closing the coverage gap in most Medicare drug plans, commonly
referred to as the “donut hole.” In addition, CMS published a final rule on
April 25, 2019 that gave states greater flexibility, starting in 2020, in setting
benchmarks for insurers in the individual and small group marketplaces,
which may have the effect of relaxing the essential health benefits required
under the ACA for plans sold through such marketplaces.
In addition, other legislative changes have been proposed and adopted in
the United States since the ACA was enacted. In August 2011, the Budget
Control Act of 2011, among other things, resulted in aggregate reductions
of Medicare payments to providers of 2 percent per fiscal year, which went
into effect in 2013, and, due to subsequent legislative amendments, will
remain in effect through 2030 unless additional Congressional action is
taken. However, pursuant to the Coronavirus Aid, Relief and Economic
Risk Factor Annex — continuedAdditionasl information Security Act, or CARES Act, and due to subsequent legislation, these
Medicare sequester reductions were suspended from May 1, 2020 through
March 31, 2021 due to the COVID-19 pandemic. Proposed legislation, if
passed, would extend this suspension until the end of the pandemic. The
American Taxpayer Relief Act of 2012 further reduced Medicare payments
to several types of providers, including hospitals and cancer treatment
centers, and increased the statute of limitations period for the government
to recover overpayments to providers from three to five years.
There has been increasing legislative and enforcement interest in the
United States with respect to drug pricing practices. Specifically, there
have been several recent U.S. Congressional inquiries and proposed
federal and state legislation designed to, among other things, bring more
transparency to drug pricing, reduce the cost of prescription drugs under
Medicare, review the relationship between pricing and manufacturer patient
programs, and reform government program reimbursement methodologies
for drugs. At the federal level, the former Trump administration’s budget
for fiscal year 2021 includes a $135 billion allowance to support legislative
proposals seeking to reduce drug prices, increase competition, lower
out-of-pocket drug costs for patients, and increase patient access to
lower-cost generic and biosimilar drugs. On March 10, 2020, the former
Trump administration sent “principles” for drug pricing to Congress,
calling for legislation that would, among other things, cap Medicare Part
D beneficiary out-of-pocket pharmacy expenses, provide an option to
cap Medicare Part D beneficiary monthly out-of-pocket expenses, and
place limits on pharmaceutical price increases. Additionally, the former
Trump administration released a “Blueprint” to lower drug prices and
reduce out of pocket costs of drugs that contains additional proposals
to increase manufacturer competition, increase the negotiating power of
certain federal healthcare programs, incentivize manufacturers to lower the
list price of their therapeutics and reduce the out of pocket costs of drug
therapeutics paid by consumers. The U.S. Department of HHS has already
started the process of soliciting feedback on some of these measures and,
at the same time, is immediately implementing others under its existing
authority. For example, in May 2019, CMS issued a final rule to allow
Medicare Advantage Plans the option of using step therapy for Part B drugs
beginning January 1, 2020. This final rule codified CMS’s policy change
that was effective January 1, 2019. However, it is unclear whether the Biden
administration will challenge, reverse, revoke or otherwise modify these
executive and administrative actions.
In addition, on May 30, 2018, the Right to Try Act was signed into law.
The law, among other things, provides a federal framework for certain
patients to access certain investigational new drug therapeutics that have
completed a Phase 1 clinical trial and that are undergoing investigation
for FDA approval. Under certain circumstances, eligible patients can
seek treatment without enrolling in clinical trials and without obtaining
FDA permission under the FDA expanded access program. There is no
obligation for a drug manufacturer to make its drug therapeutics available
to eligible patients as a result of the Right to Try Act.
In 2020, former President Trump announced several executive orders
related to prescription drug pricing that seek to implement several of the
administration’s proposals. The FDA released a final rule on September
24, 2020, which went into effect on November 30, 2020, providing
guidance for states to build and submit importation plans for drugs from
Canada. Further, on November 20, 2020, CMS issued an Interim Final Rule
implementing the Most Favored Nation, or MFN, Model under which
Medicare Part B reimbursement rates will be calculated for certain drugs
and biologicals based on the lowest price drug manufacturers receive in
Organization for Economic Cooperation and Development countries with
a similar gross domestic product per capita. The MFN Model regulations
mandate participation by identified Part B providers and would have
applied to all U.S. states and territories for a seven-year period beginning
January 1, 2021, and ending December 31, 2027. However, in response to
a lawsuit filed by several industry groups, on December 28, the U.S. District
Court for the Northern District of California issued a nationwide preliminary
injunction enjoining government defendants from implementing the MFN
Rule pending completion of notice-and-comment procedures under the
Administrative Procedure Act. On January 13, 2021, in a separate lawsuit
brought by industry groups in the U.S. District of Maryland, the government
defendants entered a joint motion to stay litigation on the condition that
the government would not appeal the preliminary injunction granted
in the U.S. District Court for the Northern District of California and that
performance for any final regulation stemming from the MFN Interim
Final Rule shall not commence earlier than 60 days after publication of
that regulation in the Federal Register. Further, authorities in Canada
have passed rules designed to safeguard the Canadian drug supply from
shortages. If implemented, importation of drugs from Canada and the
MFN Model may materially and adversely affect the price we receive for
any of our therapeutic candidates. Additionally, on December 2, 2020,
HHS published a regulation removing safe harbor protection for price
reductions from pharmaceutical manufacturers to plan sponsors under
Part D, either directly or through pharmacy benefit managers, unless the
price reduction is required by law. The rule also creates a new safe harbor
for price reductions reflected at the point-of-sale, as well as a safe harbor
for certain fixed fee arrangements between pharmacy benefit managers
and manufacturers. Pursuant to an order entered by the U.S. District
Court for the District of Columbia, the portion of the rule eliminating
safe harbor protection for certain rebates related to the sale or purchase
of a pharmaceutical therapeutic from a manufacturer to a plan sponsor
under Medicare Part D has been delayed to January 1, 2023. Further,
implementation of this change and new safe harbors for point-of-sale
reductions in price for prescription pharmaceutical therapeutics and
pharmacy benefit manager service fees are currently under review by the
Biden administration and may be amended or repealed.
At the state level, legislatures have increasingly passed legislation and
implemented regulations designed to control pharmaceutical and
biological therapeutic pricing, including price or patient reimbursement
constraints, discounts, restrictions on certain therapeutic access and
marketing cost disclosure and transparency measures, and, in some
cases, designed to encourage importation from other countries and bulk
purchasing. In addition, regional healthcare authorities and individual
hospitals are increasingly using bidding procedures to determine what
pharmaceutical therapeutics and which suppliers will be included in their
prescription drug and other healthcare programs. Furthermore, there has
been increased interest by third-party payors and governmental authorities
in reference pricing systems and publication of discounts and list prices.
There have been, and likely will continue to be, legislative and regulatory
proposals at the foreign, federal and state levels directed at containing or
lowering the cost of healthcare. The implementation of cost containment
measures or other healthcare reforms may prevent us from being able to
generate revenue, attain profitability, or commercialize our therapeutic.
Such reforms could have an adverse effect on anticipated revenue from
therapeutic candidates that we may successfully develop and for which
we may obtain regulatory approval and may affect our overall financial
condition and ability to develop therapeutic candidates. We cannot predict
the initiatives that may be adopted in the future. The continuing efforts of
the government, insurance companies, managed care organizations and
other payors of healthcare services to contain or reduce costs of healthcare
and/or impose price controls may adversely affect:
• the demand for the therapeutic candidates within our Wholly Owned
Pipeline or our Founded Entities’ therapeutic candidates, if approved;
• our ability to receive or set a price that we believe is fair for our
therapeutics;
• our ability to generate revenue and achieve or maintain profitability;
• the amount of taxes that we are required to pay; and
• the availability of capital.
Other healthcare reform measures may be adopted in the future, and may
result in additional reductions in Medicare and other healthcare funding,
more rigorous coverage criteria, lower reimbursement, and new payment
methodologies. This could lower the price that we receive for any approved
therapeutic. Any denial in coverage or reduction in reimbursement from
Medicare or other government-funded programs may result in a similar
denial or reduction in payments from private payors, which may prevent
us from being able to generate sufficient revenue, attain profitability
or commercialize the therapeutic candidates within our Wholly Owned
Pipeline or our Founded Entities’ therapeutic candidates, if approved.
Litigation and legislative efforts to change or repeal the ACA are likely to
continue, with unpredictable and uncertain results.
Risks Related to Competition
We face significant competition in an environment of rapid technological
and scientific change, and there is a possibility that our competitors
may achieve regulatory approval before us or develop therapies that are
safer, more advanced or more effective than ours, which may negatively
impact our ability to successfully market or commercialize any therapeutic
candidates we may develop and ultimately harm our financial condition.
The development and commercialization of new drug therapeutics is highly
competitive. We may face competition with respect to any therapeutic
candidates that we seek to develop or commercialize in the future from
major pharmaceutical companies, specialty pharmaceutical companies, and
biotechnology companies worldwide. Potential competitors also include
academic institutions, government agencies, and other public and private
research organizations that conduct research, seek patent protection,
and establish collaborative arrangements for research, development,
manufacturing, and commercialization.
There are a number of major pharmaceutical and biotechnology companies
that are currently pursuing the development and commercialization of
potential medicines targeting similar treatment areas as we are. If any
of our competitors receive FDA approval before we do, the therapeutic
candidates within our Wholly Owned Pipeline would not be the first
PureTech Health plc Annual report and accounts 2021 233
Risk Factor Annex — continuedAdditional information treatment on the market, and our market share may be limited. In addition
to competition from other companies targeting our target indications, any
therapeutics we may develop may also face competition from other types
of therapies.
Many of our current or potential competitors, either alone or with their
strategic partners, have:
• greater financial, technical, and human resources than we have
at every stage of the discovery, development, manufacture, and
commercialization of therapeutics;
• more extensive resources for preclinical testing, conducting clinical trials,
obtaining regulatory approvals, and in manufacturing, marketing, and
selling drug therapeutics;
• therapeutics that have been approved or are in late stages of
development; and
• collaborative arrangements in our target markets with leading companies
and research institutions.
Mergers and acquisitions in the pharmaceutical and biotechnology
industries may result in even more resources being concentrated among
a smaller number of our competitors. Smaller or early-stage companies
may also prove to be significant competitors, particularly through
collaborative arrangements with large and established companies. These
competitors also compete with us in recruiting and retaining qualified
scientific and management personnel and establishing clinical trial sites and
patient registration for clinical trials, as well as in acquiring technologies
complementary to, or necessary for, our programs. Our commercial
opportunity could be reduced or eliminated if our competitors develop
and commercialize therapeutics that are safer, more effective, have fewer
or less severe side effects, are more convenient, or are less expensive than
any therapeutics that we may develop. Furthermore, currently approved
therapeutics could be discovered to have application for treatment of our
targeted disease indications or similar indications, which could give such
therapeutics significant regulatory and market timing advantages over the
therapeutic candidates within our Wholly Owned Pipeline. Our competitors
may also obtain FDA, EMA or other comparable foreign regulatory approval
for their therapeutics more rapidly than we may obtain approval for ours
and may obtain orphan therapeutic exclusivity from the FDA for indications
that we are targeting, which could result in our competitors establishing
a strong market position before we are able to enter the market.
Additionally, therapeutics or technologies developed by our competitors
may render our potential therapeutic candidates uneconomical or obsolete
and we may not be successful in marketing any therapeutic candidates we
may develop against competitors.
In addition, we could face litigation or other proceedings with respect to
the scope, ownership, validity and/or enforceability of our patents relating
to our competitors’ therapeutics and our competitors may allege that our
therapeutics infringe, misappropriate or otherwise violate their intellectual
property. The availability of our competitors’ therapeutics could limit the
demand, and the price we are able to charge, for any therapeutics that we
may develop and commercialize.
The therapeutic candidates within our Wholly Owned Pipeline or our
Founded Entities’ therapeutic candidates for which we or our Founded
Entities intend to seek approval as biologic therapeutics may face
competition sooner than anticipated.
If we or our Founded Entities are successful in achieving regulatory
approval to commercialize any biologic therapeutic candidate we or
our Founded Entities develop alone or with collaborators, it may face
competition from biosimilar therapeutics. In the United States, certain of
the therapeutic candidates within our Wholly Owned Pipeline and our
Founded Entities’ therapeutic candidates are regulated by the FDA as
biologic therapeutics subject to approval under the BLA pathway. The
Biologics Price Competition and Innovation Act of 2009, or BPCIA, created
an abbreviated pathway for the approval of biosimilar and interchangeable
biologic therapeutics following the approval of an original BLA. The
abbreviated regulatory pathway establishes legal authority for the FDA to
review and approve biosimilar biologics, including the possible designation
of a biosimilar as “interchangeable” based on its similarity to an existing
brand therapeutic. Under the BPCIA, an application for a biosimilar
therapeutic may not be submitted until four years following the date that
the reference therapeutic was first licensed by the FDA. In addition, the
approval of a biosimilar therapeutic may not be made effective by the FDA
until 12 years after the reference therapeutic was first licensed by the FDA.
During this 12-year period of exclusivity, another company may still market
a competing version of the reference therapeutic if the FDA approves
a full BLA for the competing therapeutic containing the sponsor’s own
preclinical data and data from adequate and well-controlled clinical trials to
demonstrate the safety, purity and potency of their therapeutic.
We believe that any of the therapeutic candidates within our Wholly Owned
Pipeline or our Founded Entities’ therapeutic candidates that are approved
as a biological therapeutic under a BLA should qualify for the 12-year
period of exclusivity. However, there is a risk that this exclusivity could be
234 PureTech Health plc Annual report and accounts 2021
shortened due to congressional action or otherwise, or that the FDA will
not consider such therapeutic candidates to be reference therapeutics
for competing therapeutics, potentially creating the opportunity for
generic competition sooner than anticipated. Other aspects of the
BPCIA, some of which may impact the BPCIA exclusivity provisions, have
also been the subject of recent litigation. Moreover, the extent to which
a biosimilar therapeutic, once approved, will be substituted for any one
of our, our Founded Entities’ or our collaborators’ reference therapeutics
in a way that is similar to traditional generic substitution for non-biologic
therapeutics is not yet clear, and will depend on a number of marketplace
and regulatory factors that are still developing. If competitors are able to
obtain marketing approval for biosimilars referencing any therapeutics that
we or our Founded Entities develop alone or with collaborators that may
be approved, such therapeutics may become subject to competition from
such biosimilars, with the attendant competitive pressure and potential
adverse consequences.
Risks Related to Reliance on Third Parties
We are currently party to and may seek to enter into additional
collaborations, licenses and other similar arrangements and may not be
successful in maintaining existing arrangements or entering into new ones,
and even if we are, we may not realize the benefits of such relationships.
We are currently parties to license and collaboration agreements with
a number of universities and pharmaceutical companies and expect to enter
into additional agreements as part of our business strategy. The success of
our current and any future collaboration arrangements will depend heavily
on the efforts and activities of our collaborators. Collaborations are subject
to numerous risks, which may include risks that:
• collaborators may have significant discretion in determining the efforts
and resources that they will apply to collaborations;
• collaborators may not pursue development and commercialization of the
therapeutic candidates within our Wholly Owned Pipeline or may elect
not to continue or renew development or commercialization programs
based on clinical trial results, changes in their strategic focus due to their
acquisition of competitive therapeutics or their internal development
of competitive therapeutics, availability of funding or other external
factors, such as a business combination that diverts resources or creates
competing priorities;
• collaborators may delay clinical trials, provide insufficient funding for
a clinical trial program, stop a clinical trial, abandon a therapeutic
candidate, repeat or conduct new clinical trials or require a new
formulation of a therapeutic candidate for clinical testing;
• collaborators could independently develop, or develop with third parties,
therapeutics that compete directly or indirectly with our therapeutics or
therapeutic candidates;
• a collaborator with marketing, manufacturing and distribution rights
to one or more therapeutics may not commit sufficient resources to or
otherwise not perform satisfactorily in carrying out these activities;
• we could grant exclusive rights to our collaborators that would prevent
us from collaborating with others;
• collaborators may not properly maintain or defend our intellectual
property rights or may use our intellectual property or proprietary
information in a way that gives rise to actual or threatened litigation that
could jeopardize or invalidate our intellectual property or proprietary
information or expose us to potential liability;
• disputes may arise between us and a collaborator that cause the delay
or termination of the research, development or commercialization of our
current or future therapeutic candidates or that results in costly litigation
or arbitration that diverts management attention and resources;
• collaborations may be terminated, which may result in a need for
additional capital to pursue further development or commercialization of
the applicable current or future therapeutic candidates;
• collaborators may own or co-own intellectual property covering
therapeutics that result from our collaboration with them, and in such
cases, we would not have the exclusive right to develop or commercialize
such intellectual property;
• disputes may arise with respect to the ownership of any intellectual
property developed pursuant to our collaborations; and
• a collaborator’s sales and marketing activities or other operations may
not be in compliance with applicable laws resulting in civil or criminal
proceedings.
Additionally, we may seek to enter into additional collaborations, joint
ventures, licenses and other similar arrangements for the development
or commercialization of the therapeutic candidates within our Wholly
Owned Pipeline, due to capital costs required to develop or commercialize
the therapeutic candidate or manufacturing constraints. We may not be
successful in our efforts to establish such collaborations for the therapeutic
candidates within our Wholly Owned Pipeline because our R&D pipeline
may be insufficient, the therapeutic candidates within our Wholly Owned
Risk Factor Annex — continuedAdditionasl information Pipeline may be deemed to be at too early of a stage of development for
collaborative effort or third parties may not view the therapeutic candidates
within our Wholly Owned Pipeline as having the requisite potential to
demonstrate safety and efficacy or significant commercial opportunity. In
addition, we face significant competition in seeking appropriate strategic
partners, and the negotiation process can be time consuming and complex.
Further, any future collaboration agreements may restrict us from entering
into additional agreements with potential collaborators. We cannot be
certain that, following a strategic transaction or license, we will achieve an
economic benefit that justifies such transaction.
Even if we are successful in our efforts to establish such collaborations,
the terms that we agree upon may not be favorable to us, and we may not
be able to maintain such collaborations if, for example, development or
approval of a therapeutic candidate is delayed, the safety of a therapeutic
candidate is questioned or sales of an approved therapeutic candidate are
unsatisfactory.
In addition, any potential future collaborations may be terminable by
our strategic partners, and we may not be able to adequately protect
our rights under these agreements. Furthermore, strategic partners may
negotiate for certain rights to control decisions regarding the development
and commercialization of the therapeutic candidates within our Wholly
Owned Pipeline, if approved, and may not conduct those activities in the
same manner as we do. Any termination of collaborations we enter into
in the future, or any delay in entering into collaborations related to the
therapeutic candidates within our Wholly Owned Pipeline, could delay the
development and commercialization of the therapeutic candidates within
our Wholly Owned Pipeline and reduce their competitiveness if they reach
the market, which could have a material adverse effect on our business,
financial condition and results of operations.
Collaborative relationships with third parties could cause us to expend
significant resources and give rise to substantial business risk with no
assurance of financial return.
We anticipate relying upon strategic collaborations for marketing and
commercializing our existing therapeutic candidates, and we may rely even
more on strategic collaborations for R&D of other therapeutic candidates
or discoveries. We may sell therapeutic offerings through strategic
partnerships with pharmaceutical and biotechnology companies. If we
are unable to establish or manage such strategic collaborations on terms
favorable to us in the future, our R&D efforts and potential to generate
revenue may be limited.
If we enter into R&D collaborations during the early phases of therapeutic
development, success will in part depend on the performance of research
collaborators. We will not directly control the amount or timing of resources
devoted by research collaborators to activities related to therapeutic
candidates. Research collaborators may not commit sufficient resources to
our R&D programs. If any research collaborator fails to commit sufficient
resources, the preclinical or clinical development programs related to the
collaboration could be delayed or terminated. Also, collaborators may
pursue existing or other development-stage therapeutics or alternative
technologies in preference to those being developed in collaboration
with us. Finally, if we fail to make required milestone or royalty payments
to collaborators or to observe other obligations in agreements with them,
the collaborators may have the right to terminate or stop performance of
those agreements.
Establishing strategic collaborations is difficult and time-consuming. Our
discussions with potential collaborators may not lead to the establishment
of collaborations on favorable terms, if at all. Potential collaborators
may reject collaborations based upon their assessment of our financial,
regulatory or intellectual property position. In addition, there have been
a significant number of recent business combinations among large
pharmaceutical companies that have resulted in a reduced number
of potential future collaborators. Even if we successfully establish new
collaborations, these relationships may never result in the successful
development or commercialization of therapeutic candidates or the
generation of sales revenue. To the extent that we enter into collaborative
arrangements, the related therapeutic revenues are likely to be lower than
if we directly marketed and sold therapeutics. Such collaborators may also
consider alternative therapeutic candidates or technologies for similar
indications that may be available to collaborate on and whether such
a collaboration could be more attractive than the one with us for any future
therapeutic candidate.
Management of our relationships with collaborators will require:
• significant time and effort from our management team;
• coordination of our marketing and R&D programs with the marketing
and R&D priorities of our collaborators; and
• effective allocation of our resources to multiple projects.
We rely on third parties to assist in conducting our clinical trials and some
aspects of our research and preclinical testing, and those third parties
may not perform satisfactorily, including failing to meet deadlines for the
completion of such trials, research, or testing.
We currently rely and expect to continue to rely on third parties, such as
CROs, clinical data management organizations, medical institutions, and
clinical investigators, to conduct some aspects of research and preclinical
testing and clinical trials. Any of these third parties may terminate their
engagements with us or be unable to fulfill their contractual obligations.
If any of our relationships with these third parties terminate, we may
not be able to enter into arrangements with alternative third parties on
commercially reasonable terms, or at all. If we need to enter into alternative
arrangements, it would delay therapeutic development activities.
Further, although our reliance on these third parties for clinical
development activities limits our control over these activities, we remain
responsible for ensuring that each of our trials is conducted in accordance
with the applicable protocol, legal and regulatory requirements and
scientific standards. For example, notwithstanding the obligations of
a CRO for a trial of one of the therapeutic candidates within our Wholly
Owned Pipeline, we remain responsible for ensuring that each of our
clinical trials is conducted in accordance with the general investigational
plan and protocols for the trial. Moreover, the FDA requires us to comply
with requirements, commonly referred to as GCPs, for conducting,
recording and reporting the results of clinical trials to assure that data and
reported results are credible and accurate and that the rights, integrity and
confidentiality of trial participants are protected. The FDA enforces these
GCPs through periodic inspections of trial sponsors, principal investigators,
clinical trial sites and IRBs. If we or our third-party contractors fail to comply
with applicable GCPs, the clinical data generated in our clinical trials may
be deemed unreliable and the FDA may require us to perform additional
clinical trials before approving the therapeutic candidates within our Wholly
Owned Pipeline, which would delay the regulatory approval process. We
cannot be certain that, upon inspection, the FDA will determine that any
of our clinical trials comply with GCPs. We are also required to register
certain clinical trials and post the results of completed clinical trials on
a government-sponsored database, ClinicalTrials.gov, within certain
timeframes. NIH and FDA recently signaled the government’s willingness
to begin enforcing those requirements against non-compliant clinical trial
sponsors. Failure to do so can result in fines, adverse publicity and civil and
criminal sanctions.
Furthermore, the third parties conducting clinical trials on our behalf are
not our employees, and except for remedies available to us under our
agreements with such contractors, we cannot control whether or not they
devote sufficient time, skill and resources to our ongoing development
programs. These contractors may also have relationships with other
commercial entities, including our competitors, for whom they may also
be conducting clinical trials or other drug or medical device development
activities, which could impede their ability to devote appropriate time to
our clinical programs. If these third parties, including clinical investigators,
do not successfully carry out their contractual duties, meet expected
deadlines or conduct our clinical trials in accordance with regulatory
requirements or our stated protocols, we may not be able to obtain, or
may be delayed in obtaining, regulatory approvals for the therapeutic
candidates within our Wholly Owned Pipeline. If that occurs, we will not be
able to, or may be delayed in our efforts to, successfully commercialize the
therapeutic candidates within our Wholly Owned Pipeline. In such an event,
our financial results and the commercial prospects for any therapeutic
candidates that we seek to develop could be harmed, our costs could
increase and our ability to generate revenues could be delayed, impaired
or foreclosed.
Our or our Founded Entities’ use of third parties to manufacture the
therapeutic candidates within our Wholly Owned Pipeline or our Founded
Entities’ therapeutic candidates and other therapeutic candidates that we
or our Founded Entities may develop for preclinical studies and clinical
trials may increase the risk that we or our Founded Entities will not have
sufficient quantities of our or our Founded Entities’ therapeutic candidates,
therapeutics, or necessary quantities of such materials on time or at an
acceptable cost.
With respect to certain of the therapeutic candidates within our Wholly
Owned Pipeline or our Founded Entities’ therapeutic candidates, we and
certain of our Founded Entities do not currently have, nor do we plan to
acquire, the infrastructure or capability internally to manufacture drug
supplies for our ongoing clinical trials or any future clinical trials that we or
our Founded Entities may conduct, and we and our Funded Entities lack
the resources to manufacture any therapeutic candidates on a commercial
scale. We rely, and expect to continue to rely, on third-party manufacturers
to produce our and certain of our Founded Entities’ therapeutic candidates
or other therapeutic candidates that we or our Founded Entities may
PureTech Health plc Annual report and accounts 2021 235
Risk Factor Annex — continuedAdditional information identify for clinical trials, as well as for commercial manufacture if any
therapeutic candidates receive marketing authorization. Although we and
our Founded Entities generally do not begin a clinical trial unless we or
our Founded Entities believe we have a sufficient supply of a therapeutic
candidate to complete the trial, any significant delay or discontinuity in
the supply of a therapeutic candidate, or the raw material components
thereof, for an ongoing clinical trial due to the need to replace a third-
party manufacturer could considerably delay the clinical development and
potential regulatory authorization of the therapeutic candidates within our
Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates,
which could harm our business and results of operations.
We or our Founded Entities may be unable to identify and appropriately
qualify third-party manufacturers or establish agreements with third-party
manufacturers or do so on acceptable terms. Even if we or our Founded
Entities are able to establish agreements with third-party manufacturers,
reliance on third-party manufacturers entails additional risks, including:
• reliance on the third party for sourcing of raw materials, components, and
such other goods as may be required for execution of its manufacturing
processes and the oversight by the third party of its suppliers;
• reliance on the third party for regulatory compliance and quality
assurance for the manufacturing activities each performs;
• the possible breach of the manufacturing agreement by the third party;
• the possible misappropriation of proprietary information, including trade
secrets and know-how; and
• the possible termination or non-renewal of the agreement by the
third party at a time that is costly or inconvenient for us or our
Founded Entities.
Furthermore, all of our CMOs are engaged with other companies to
supply and/or manufacture materials or therapeutics for such companies,
which exposes our manufacturers to regulatory risks for the production
of such materials and therapeutics. The facilities used by our contract
manufacturers to manufacture our drug, or medical device therapeutic
candidates are subject to review by the FDA pursuant to inspections that
will be conducted after we submit an NDA, BLA, PMA application or other
marketing application to the FDA. We do not control the manufacturing
process of, and are to some extent dependent on, our contract
manufacturing partners for compliance with the regulatory requirements,
known as cGMP requirements for manufacture of drug, biologic and
device therapeutics. If our contract manufacturers cannot successfully
manufacture material that conforms to our specifications and the strict
regulatory requirements of the FDA or others, we will not be able to secure
or maintain regulatory authorization for the therapeutic candidates within
our Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates
manufactured at these manufacturing facilities. In addition, we have no
control over the ability of our contract manufacturers to maintain adequate
quality control, quality assurance and qualified personnel. If the FDA, the
EMA or another comparable foreign regulatory agency does not approve
these facilities for the manufacture of the therapeutic candidates within our
Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates
or if any agency withdraws its approval in the future, we or our Founded
Entities may need to find alternative manufacturing facilities, which would
negatively impact our or our Founded Entities’ ability to develop, obtain
regulatory authorization for or market the therapeutic candidates within our
Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates, if
cleared or approved.
The therapeutic candidates within our Wholly Owned Pipeline or our
Founded Entities’ therapeutic candidates may compete with other
therapeutic candidates and marketed therapeutics for access to
manufacturing facilities. Any performance failure on the part of our or our
Founded Entities’ existing or future manufacturers could delay clinical
development, marketing approval or commercialization. Our and certain
of our Founded Entities’ current and anticipated future dependence
upon others for the manufacturing of the therapeutic candidates
within our Wholly Owned Pipeline or our Founded Entities’ therapeutic
candidates may adversely affect our future profit margins and our ability to
commercialize any therapeutic candidates that receive marketing clearance
or approval on a timely and competitive basis.
If the contract manufacturing facilities on which we and certain of our
Founded Entities’ rely do not continue to meet regulatory requirements
or are unable to meet our or our Founded Entities’ supply demands, our
business will be harmed.
All entities involved in the preparation of therapeutic candidates for
clinical trials or commercial sale, including our and certain of our Founded
Entities’ existing CMOs for the therapeutic candidates within our Wholly
Owned Pipeline or our Founded Entities’ therapeutic candidates, are
subject to extensive regulation. Components of a finished drug or biologic
therapeutic approved for commercial sale or used in late-stage clinical
trials must be manufactured in accordance with cGMP, or similar regulatory
requirements outside the United States. These regulations govern
manufacturing processes and procedures, including recordkeeping, and
the implementation and operation of quality systems to control and assure
the quality of investigational therapeutics and therapeutics approved for
sale. Similarly, medical devices must be manufactured in accordance with
QSR. Poor control of production processes can lead to the introduction
of contaminants or to inadvertent changes in the properties or stability of
Gelesis’ Plenity, Akili’s EndeavorRx, our Founded Entities’ other therapeutic
candidates or the therapeutic candidates within our Wholly Owned
Pipeline. Our or our Founded Entities’ failure, or the failure of third-party
manufacturers, to comply with applicable regulations could result in
sanctions being imposed on us or our Founded Entities, including clinical
holds, fines, injunctions, civil penalties, delays, suspension or withdrawal
of approvals, license revocation, suspension of production, seizures or
recalls of therapeutic candidates or marketed drugs or devices, operating
restrictions and criminal prosecutions, any of which could significantly
and adversely affect clinical or commercial supplies of the therapeutic
candidates within our Wholly Owned Pipeline or our Founded Entities’
therapeutic candidates.
We and/or our CMOs must supply all necessary documentation, as
applicable, in support of a marketing application, such as an NDA, BLA,
PMA or MAA, on a timely basis and must adhere to regulations enforced
by the FDA and other regulatory agencies through their facilities inspection
program. Some of our CMOs have never produced a commercially
approved pharmaceutical therapeutic and therefore have not obtained
the requisite regulatory authority approvals to do so. The facilities and
quality systems of some or all of our third-party contractors must pass
a pre-approval inspection for compliance with the applicable regulations
as a condition of regulatory approval of the therapeutic candidates
within our Wholly Owned Pipeline or our Founded Entities’ therapeutic
candidates or any of our other potential therapeutics. In addition, the
regulatory authorities may, at any time, audit or inspect a manufacturing
facility involved with the preparation of the therapeutic candidates
within our Wholly Owned Pipeline or our Founded Entities’ therapeutic
candidates or our other potential therapeutics or the associated quality
systems for compliance with the regulations applicable to the activities
being conducted. Although we oversee the CMOs, we cannot control
the manufacturing process of, and are completely dependent on, our
CMO partners for compliance with the regulatory requirements. If these
facilities do not pass a pre-approval plant inspection, regulatory approval
of the therapeutics may not be granted or may be substantially delayed
until any violations are corrected to the satisfaction of the regulatory
authority, if ever.
The regulatory authorities also may, at any time following clearance or
approval of a therapeutic for sale, audit the manufacturing facilities of our
third-party contractors. If any such inspection or audit identifies a failure
to comply with applicable regulations or if a violation of our therapeutic
specifications or applicable regulations occurs independent of such an
inspection or audit, we or the relevant regulatory authority may require
remedial measures that may be costly and/or time consuming for us
or a third party to implement, and that may include the temporary or
permanent suspension of a clinical study or commercial sales or the
temporary or permanent closure of a facility. Any such remedial measures
imposed upon us or third parties with whom we contract could materially
harm our business.
Additionally, if supply from one approved manufacturer is interrupted, an
alternative manufacturer would need to be qualified. For drug and biologic
therapeutics, as applicable, an NDA, BLA supplement or MAA variation, or
equivalent foreign regulatory filing, is also required, which could result in
further delay. Similarly, for medical devices, a new marketing application
or supplement may be required. The regulatory agencies may also require
additional studies if a new manufacturer is relied upon for commercial
production. Switching manufacturers may involve substantial costs and is
likely to result in a delay in our desired clinical and commercial timelines.
These factors could cause us or our Founded Entities to incur higher
costs and could cause the delay or termination of clinical trials, regulatory
submissions, required approvals, or commercialization of the therapeutic
candidates within our Wholly Owned Pipeline or our Founded Entities’
therapeutic candidates. Furthermore, if our or our Founded Entities’
suppliers fail to meet contractual requirements and we or our Founded
Entities are unable to secure one or more replacement suppliers capable of
production at a substantially equivalent cost, our or our Founded Entities’
clinical trials may be delayed or we or our Founded Entities could lose
potential revenue.
236 PureTech Health plc Annual report and accounts 2021
Risk Factor Annex — continuedAdditionasl information Risks Related to Our Intellectual Property
Risks Related to Our Intellectual Property Protection
If we or our Founded Entities are unable to obtain and maintain sufficient
intellectual property protection for our or our Founded Entities’ existing
therapeutic candidates or any other therapeutic candidates that we or
they may identify, or if the scope of the intellectual property protection
we or they currently have or obtain in the future is not sufficiently broad,
our competitors could develop and commercialize therapeutic candidates
similar or identical to ours, and our ability to successfully commercialize our
existing therapeutic candidates and any other therapeutic candidates that
we or they may pursue may be impaired.
As is the case with other pharmaceutical and biopharmaceutical companies,
our success depends in large part on our ability to obtain and maintain
protection of the intellectual property we may own solely and jointly
with others, particularly patents, in the United States and other countries
with respect to our Wholly Owned Programs or our Founded Entities’
therapeutic candidates and technology. We and our Founded Entities
seek to protect our proprietary position by filing patent applications in the
United States and abroad related to our and our Founded Entities’ existing
therapeutic candidates, our various proprietary technologies, and any other
therapeutic candidates or technologies that we or they may identify.
Obtaining, maintaining and enforcing pharmaceutical and
biopharmaceutical patents is costly, time consuming and complex, and
we may not be able to file or prosecute all necessary or desirable patent
applications, or maintain, enforce or license patents that may issue from
such patent applications, at a reasonable cost or in a timely manner. It is
also possible that we could fail to identify patentable aspects of our R&D
output before it is too late to obtain patent protection. Although we take
reasonable measures, we have systems in place to remind us of filing and
prosecution deadlines, and we employ outside firms and rely on outside
counsel to monitor patent deadlines, we may miss or fail to meet a patent
deadline, including in a foreign country, which could negatively impact our
patent rights and harm our competitive position, business, and prospects.
We may not have the right to control the preparation, filing and prosecution
of patent applications, or to maintain the rights to patents licensed to third
parties. Therefore, these patents and applications may not be prosecuted
and enforced in a manner consistent with the best interests of our business.
The patent position of biotechnology and pharmaceutical companies
generally is highly uncertain, involves complex legal, technological and
factual questions and has in recent years been the subject of much
litigation. The standards that the U.S. Patent and Trademark Office, or the
USPTO, and its foreign counterparts use to grant patents are not always
applied predictably or uniformly. In addition, the laws of foreign countries
may not protect our rights to the same extent as the laws of the United
States, or vice versa. There is no assurance that all potentially relevant
prior art relating to our patents and patent applications has been found,
which can prevent a patent from issuing from a pending application or
later invalidate or narrow the scope of an issued patent. For example,
publications of discoveries in the scientific literature often lag behind the
actual discoveries, and patent applications in the United States and other
jurisdictions are typically not published until 18 months after filing or, in
some cases, not at all. Therefore, we cannot know with certainty whether
we were the first to make the inventions claimed in our patents or pending
patent applications, or that we were the first to file for patent protection of
such inventions. As a result, the issuance, scope, validity, enforceability and
commercial value of our patent rights are highly uncertain. Our pending
and future patent applications may not result in patents being issued that
protect our Wholly Owned Programs or our Founded Entities’ therapeutic
candidates, in whole or in part, or which effectively prevent others from
commercializing competitive therapeutic candidates. Even if our patent
applications issue as patents, they may not issue in a form that will provide
us with any meaningful protection, prevent competitors from competing
with us or otherwise provide us with any competitive advantage. Our
competitors may be able to circumvent our patents by developing similar or
alternative therapeutic candidates in a non-infringing manner.
In addition, the issuance of a patent is not conclusive as to its inventorship,
scope, validity or enforceability, and our patents may be challenged in the
courts or patent offices in the United States and abroad. Such challenges
may result in loss of exclusivity or freedom to operate or in patent claims
being narrowed, invalidated or held unenforceable, in whole or in part,
which could limit our ability to stop others from using or commercializing
similar or identical therapeutic candidates to ours, or limit the duration
of the patent protection of our Wholly Owned Programs or our Founded
Entities’ therapeutic candidates. For example, we may be subject to
a third-party preissuance submission of prior art to the USPTO, or become
involved in opposition, derivation, reexamination, inter partes review,
post-grant review or interference proceedings challenging our owned or
licensed patent rights. An adverse determination in any such submission,
proceeding or litigation could reduce the scope of, or invalidate, our patent
rights, allow third parties to commercialize our Wholly Owned Programs
or our Founded Entities’ therapeutic candidates and compete directly
with us, without payment to us, or result in our inability to manufacture or
commercialize drugs without infringing third-party patent rights. In addition,
if the breadth or strength of protection provided by our patents and patent
applications is threatened, regardless of the outcome, it could dissuade
companies from collaborating with us to license, develop or commercialize
current or future therapeutic candidates.
Furthermore, our and our Founded Entities’ intellectual property rights
may be subject to a reservation of rights by one or more third parties.
We are party to a license agreement with New York University related to
certain intellectual property underlying our LYT-200 and LYT-210 therapeutic
candidates which is subject to certain rights of the government, including
march-in rights, to such intellectual property due to the fact that the
research was funded at least in part by the U.S. government. We are also
party to other license agreements for intellectual property underlying
certain of our therapeutic candidates and programs. Additionally, our
Founded Entities Akili, Follica, Vedanta, Sonde, Alivio and Vor, are party
to license agreements with academic institutions pursuant to which such
Founded Entities have in-licensed certain intellectual property underlying
various of their therapeutic candidates. While these license agreements are
exclusive, they contain provisions pursuant to which the government has
certain rights, including march-in rights, to such patents and technologies
due to the fact that the research was funded at least in part by the U.S.
government. When new technologies are developed with government
funding, the government generally obtains certain rights in any resulting
patents, including a non-exclusive license authorizing the government
to use the invention or to have others use the invention on its behalf.
These rights may permit the government to disclose our information to
third parties and to exercise march-in rights to use or allow third parties
to use our technology. The government can exercise its march-in rights if
it determines that action is necessary because we fail to achieve practical
application of the government-funded technology, because action is
necessary to alleviate health or safety needs, to meet requirements of
federal regulations, or to give preference to U.S. industry. In addition,
our rights in such inventions may be subject to certain requirements to
manufacture therapeutics embodying such inventions in the United States.
Any exercise by the government of such rights or by any third party of its
reserved rights could harm our competitive position, business, financial
condition, results of operations, and prospects.
If our or our Founded Entities’ trademarks and trade names are not
adequately protected, then we may not be able to build name recognition
in our markets of interest and our business may be adversely affected.
Our or our Founded Entities’ registered or unregistered trademarks or trade
names may be challenged, infringed, circumvented or declared generic or
determined to be infringing on other marks. We and our Founded Entities
may not be able to protect our rights to these trademarks and trade names,
which we need to build name recognition among potential collaborators or
customers in our markets of interest. At times, competitors may adopt trade
names or trademarks similar to ours, thereby impeding our ability to build
brand identity and possibly leading to market confusion. In addition, there
could be potential trade name or trademark infringement claims brought
by owners of other trademarks or trademarks that incorporate variations
of our registered or unregistered trademarks or trade names. Over the
long term, if we and our Founded Entities are unable to establish name
recognition based on our trademarks and trade names, then we may not
be able to compete effectively and our business may be adversely affected.
We and our Founded Entities may license our trademarks and trade names
to third parties, such as distributors. Though these license agreements may
provide guidelines for how our or our Founded Entities’ trademarks and
trade names may be used, a breach of these agreements or misuse of our
trademarks and tradenames by our licensees may jeopardize our rights in
or diminish the goodwill associated with our trademarks and trade names.
Our or our Founded Entities’ efforts to enforce or protect our proprietary
rights related to trademarks, trade names, trade secrets, domain names,
copyrights or other intellectual property may be ineffective and could result
in substantial costs and diversion of resources and could adversely affect
our competitive position, business, financial condition, results of operations
and prospects.
We may not be able to protect our intellectual property rights
throughout the world.
Filing, prosecuting and defending patents on the therapeutic candidates
within our Wholly Owned Pipeline or our Founded Entities’ therapeutic
candidates in all countries throughout the world would be prohibitively
expensive, and our intellectual property rights in some countries outside
the United States can be less extensive than those in the United States.
In addition, the laws of some foreign countries do not protect or enforce
intellectual property rights to the same extent as federal and state laws in
the United States. Consequently, we and our Founded Entities may not be
able to prevent third parties from practicing our inventions in all countries
PureTech Health plc Annual report and accounts 2021 237
Risk Factor Annex — continuedAdditional information outside the United States, or from selling or importing therapeutics made
using our inventions in and into the United States or other jurisdictions.
Competitors may use our and our Founded Entities’ technologies in
jurisdictions where we have not obtained patent protection to develop
their own therapeutics and may also export infringing therapeutics to
territories where we have patent protection, but enforcement is not as
strong as that in the United States. These therapeutics may compete
with our or our Founded Entities’ therapeutics and our patents or other
intellectual property rights may not be effective or sufficient to prevent
them from competing.
Many companies have encountered significant problems in protecting and
defending intellectual property rights in foreign jurisdictions. The legal
systems of certain countries, particularly certain developing countries, do
not favor the enforcement of patents, trade secrets, and other intellectual
property protection, particularly those relating to biotechnology and
pharmaceutical therapeutics, which could make it difficult for us to stop
the infringement of our or our Founded Entities’ patents or marketing of
competing therapeutics in violation of our proprietary rights generally.
Proceedings to enforce our or our Founded Entities’ patent rights in
foreign jurisdictions, whether or not successful, could result in substantial
costs and divert our efforts and attention from other aspects of our
business, could put our or our Founded Entities’ patents at risk of being
invalidated or interpreted narrowly and our patent applications at risk
of not issuing, and could provoke third parties to assert claims against
us or our Founded Entities. We may not prevail in any lawsuits that we
or our Founded Entities initiate and the damages or other remedies
awarded, if any, may not be commercially meaningful. Accordingly, our
efforts to enforce our intellectual property rights around the world may
be inadequate to obtain a significant commercial advantage from the
intellectual property that we develop or license.
In some jurisdictions including European Union countries, compulsory
licensing laws compel patent owners to grant licenses to third parties.
In addition, some countries limit the enforceability of patents against
government agencies or government contractors. In these countries, the
patent owner may have limited remedies, which could materially diminish
the value of such patent. If we, our Founded Entities or any of our licensors
are forced to grant a license to third parties under patents relevant to
our or our Founded Entities’ business, or if we, our Founded Entities or
our licensors are prevented from enforcing patent rights against third
parties, our competitive position may be substantially impaired in such
jurisdictions.
Our or our Founded Entities’ proprietary rights may not adequately
protect our technologies and therapeutic candidates, and do not
necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our or our Founded Entities’
intellectual property rights is uncertain because intellectual property rights
have limitations, and may not adequately protect our or our Founded
Entities’ business, or permit us to maintain our competitive advantage. The
following examples are illustrative:
• others may be able to make therapeutics that are the same as or similar
to the therapeutic candidates within our Wholly Owned Pipeline or our
Founded Entities’ therapeutic candidates but that are not covered by
the claims of the patents that we or our Founded Entities own or have
exclusively licensed;
• others, including inventors or developers of our or our Founded Entities’
owned or in-licensed patented technologies who may become involved
with competitors, may independently develop similar technologies that
function as alternatives or replacements for any of our or our Founded
Entities’ technologies without infringing our intellectual property rights;
• we, our Founded Entities or our licensors or our other collaboration
partners might not have been the first to conceive and reduce to
practice the inventions covered by the patents or patent applications
that we or our Founded Entities own or license or will own or license;
• we, our Founded Entities or our licensors or our other collaboration
partners might not have been the first to file patent applications
covering certain of the patents or patent applications that we
or they own or have obtained a license, or will own or will have
obtained a license;
• we, our Founded Entities or our licensors may fail to meet obligations
to the U.S. government with respect to in-licensed patents and patent
applications funded by U.S. government grants, leading to the loss of
patent rights;
• it is possible that our or our Founded Entities’ pending patent
applications will not result in issued patents;
• it is possible that there are prior public disclosures that could invalidate
our, our Founded Entities’ or our licensors’ patents;
• issued patents that we or our Founded Entities own or exclusively
license may not provide us with any competitive advantage, or may
be held invalid or unenforceable, as a result of legal challenges by
our competitors;
• our or our Founded Entities’ competitors might conduct R&D activities
in countries where we do not have patent rights, or in countries where
R&D safe harbor laws exist, and then use the information learned from
such activities to develop competitive therapeutics for sale in our major
commercial markets;
• ownership, validity or enforceability of our, our Founded Entities’ or our
licensors’ patents or patent applications may be challenged by third
parties; and
• the patents of third parties or pending or future applications of third
parties, if issued, may have an adverse effect on our business.
Risks Related to Our License Arrangements
The failure to maintain our licenses and realize their benefits may harm
our business.
We have acquired and in-licensed certain of our technologies from third
parties. We may in the future acquire, in-license or invest in additional
technology that we believe would be beneficial to our business. We are
subject to a number of risks associated with our acquisition, in-license or
investment in technology, including the following:
• diversion of financial and managerial resources from existing operations;
• successfully negotiating a proposed acquisition, in-license or
investment in a timely manner and at a price or on terms and conditions
favorable to us;
• successfully combining and integrating a potential acquisition into our
existing business to fully realize the benefits of such acquisition;
• the impact of regulatory reviews on a proposed acquisition, in-license or
investment; and
• the outcome of any legal proceedings that may be instituted with
respect to the proposed acquisition, in-license or investment.
If we fail to properly evaluate potential acquisitions, in-licenses,
investments or other transactions associated with the creation of new R&D
programs or the maintenance of existing ones, we might not achieve the
anticipated benefits of any such transaction, we might incur costs in excess
of what we anticipate, and management resources and attention might be
diverted from other necessary or valuable activities.
Our or our Founded Entities’ rights to develop and commercialize our
Wholly Owned Programs or our Founded Entities’ therapeutic candidates
are subject in part to the terms and conditions of licenses granted to
us and our Founded Entities by others, and the patent protection,
prosecution and enforcement for some of our Wholly Owned Programs or
our Founded Entities’ therapeutic candidates may be dependent on our
and our Founded Entities’ licensors.
We and our Founded Entities currently are reliant upon licenses of certain
intellectual property rights and proprietary technologies from third parties
that are important or necessary to the development of our and our
Founded Entities’ proprietary technologies, including technologies related
to our Wholly Owned Programs and our Founded Entities’ therapeutic
candidates. These licenses, and other licenses we and they may enter into
in the future, may not provide adequate rights to use such intellectual
property and proprietary technologies in all relevant fields of use or in
all territories in which we or our Founded Entities may wish to develop
or commercialize technology and therapeutic candidates in the future.
Licenses to additional third-party proprietary technology or intellectual
property rights that may be required for our or our Founded Entities’
development programs may not be available in the future or may not
be available on commercially reasonable terms. In that event, we or our
Founded Entities may be required to expend significant time and resources
to redesign our proprietary technology or therapeutic candidates or to
develop or license replacement technology, which may not be feasible on
a technical or commercial basis. If we and our Founded Entities are unable
to do so, we may not be able to develop and commercialize technology
and therapeutic candidates in fields of use and territories for which we
are not granted rights pursuant to such licenses, which could harm our
competitive position, business, financial condition, results of operations
and prospects significantly.
In some circumstances, we and our Founded Entities may not have
the right to control the preparation, filing and prosecution of patent
applications, or to maintain and enforce the patents, covering technology
that we or our Founded Entities license from third parties. In addition,
some of our or our Founded Entities’ agreements with our licensors
require us to obtain consent from the licensor before we can enforce
patent rights, and our licensor may withhold such consent or may not
provide it on a timely basis. Therefore, we cannot be certain that our
licensors or collaborators will prosecute, maintain, enforce and defend
238 PureTech Health plc Annual report and accounts 2021
Risk Factor Annex — continuedAdditionasl information such intellectual property rights in a manner consistent with the best
interests of our business, including by taking reasonable measures to
protect the confidentiality of know-how and trade secrets, or by paying
all applicable prosecution and maintenance fees related to intellectual
property registrations for any of our Wholly Owned Programs or our
Founded Entities’ therapeutic candidates and proprietary technologies.
We and our Founded Entities also cannot be certain that our licensors have
drafted or prosecuted the patents and patent applications licensed to us
in compliance with applicable laws and regulations, which may affect the
validity and enforceability of such patents or any patents that may issue
from such applications. This could cause us to lose rights in any applicable
intellectual property that we in-license, and as a result our ability to develop
and commercialize therapeutic candidates may be adversely affected and
we may be unable to prevent competitors from making, using and selling
competing therapeutics.
In addition, our or our Founded Entities’ licensors may own or control
intellectual property that has not been licensed to us and, as a result, we
may be subject to claims, regardless of their merit, that we are infringing
or otherwise violating the licensor’s rights. In addition, while we cannot
currently determine the amount of the royalty obligations we would be
required to pay on sales of future therapeutics, if any, the amounts may
be significant. The amount of our and our Founded Entities’ future royalty
obligations will depend on the technology and intellectual property we and
our Founded Entities use in therapeutic candidates that we successfully
develop and commercialize, if any. Therefore, even if we or our Founded
Entities successfully develop and commercialize therapeutic candidates,
we may be unable to achieve or maintain profitability. In addition, we or
our Founded Entities may seek to obtain additional licenses from our
licensors and, in connection with obtaining such licenses, we may agree to
amend our existing licenses in a manner that may be more favorable to the
licensors, including by agreeing to terms that could enable third parties
(potentially including our competitors) to receive licenses to a portion of the
intellectual property rights that are subject to our or our Founded Entities’
existing licenses. Any of these events could have a material adverse effect
on our or our Founded Entities’ competitive position, business, financial
conditions, results of operations, and prospects.
If we or our Founded Entities fail to comply with our obligations in the
agreements under which we license intellectual property rights from third
parties or these agreements are terminated or we or our Founded Entities
otherwise experience disruptions to our business relationships with our
licensors, we could lose intellectual property rights that are important to
our business.
We are party to various agreements that we depend on to develop our
Wholly Owned Programs or our Founded Entities’ therapeutic candidates
and various proprietary technologies, and our rights to use currently
licensed intellectual property, or intellectual property to be licensed
in the future, are or will be subject to the continuation of and our and
our Founded Entities’ compliance with the terms of these agreements.
For example, under certain of our and our Founded Entities’ license
agreements we and our Founded Entities are required to use commercially
reasonable efforts to develop and commercialize therapeutic candidates
covered by the licensed intellectual property rights, maintain the licensed
intellectual property rights, and achieve certain development milestones,
each of which could result in termination in the event we or our Founded
Entities fail to comply.
In spite of our efforts, our or our Founded Entities’ licensors might
conclude that we have materially breached our obligations under such
license agreements and might therefore terminate the license agreements,
thereby removing or limiting our or our Founded Entities’ ability to
develop and commercialize therapeutics and technology covered by these
license agreements.
Moreover, disputes may arise regarding intellectual property subject to
a licensing agreement, including:
• the scope of rights granted under the license agreement and other
interpretation-related issues;
• the extent to which our Wholly Owned Programs or our Founded
Entities’ therapeutic candidates, technology and processes infringe
on intellectual property of the licensor that is not subject to the
licensing agreement;
• the sublicensing of patent and other rights under our or our Founded
Entities’ collaborative development relationships;
• our and our Founded Entities’ diligence obligations under the license
agreement and what activities satisfy those diligence obligations;
• the inventorship and ownership of inventions and know-how resulting
from the joint creation or use of intellectual property by our and our
Founded Entities’ licensors and us and our Founded Entities and our
partners; and
• the priority of invention of patented technology.
In addition, certain provisions in our and our Founded Entities’ license
agreements may be susceptible to multiple interpretations. The resolution
of any contract interpretation disagreement that may arise could narrow
what we believe to be the scope of our rights to the relevant intellectual
property or technology, or increase what we believe to be our financial
or other obligations under the agreement, either of which could have
a material adverse effect on our or our Founded Entities’ business, financial
condition, results of operations and prospects. Moreover, if disputes over
intellectual property that we or our Founded Entities have licensed prevent
or impair our ability to maintain our current licensing arrangements on
commercially acceptable terms, we may be unable to successfully develop
and commercialize the affected therapeutic candidates, which could have
a material adverse effect on our competitive position, business, financial
conditions, results of operations and prospects.
Third‑party claims of intellectual property infringement may prevent or
delay our development and commercialization efforts.
Our commercial success depends in part on our avoiding infringement of
the patents and proprietary rights of third parties. However, our research,
development and commercialization activities may be subject to claims
that we infringe or otherwise violate patents or other intellectual property
rights owned or controlled by third parties. There is a substantial amount of
litigation, both within and outside the United States, involving patent and
other intellectual property rights in the biotechnology and pharmaceutical
industries, including patent infringement lawsuits, interferences, derivation,
oppositions, inter partes review and post-grant review before the USPTO,
and corresponding foreign patent offices. Numerous U.S. and foreign
issued patents and pending patent applications, which are owned by
third parties, exist in the fields in which we are pursuing development
candidates. Our competitors in both the United States and abroad, many
of which have substantially greater resources and have made substantial
investments in patent portfolios and competing technologies, may have
applied for or obtained or may in the future apply for or obtain, patents
that will prevent, limit or otherwise interfere with our ability to make, use
and sell, if approved, the therapeutic candidates within our Wholly Owned
Pipeline or our Founded Entities’ therapeutic candidates. In addition,
many companies in the biotechnology and pharmaceutical industries have
employed intellectual property litigation as a means to gain an advantage
over their competitors. As the biotechnology and pharmaceutical industries
expand and more patents are issued, and as we gain greater visibility and
market exposure as a public company, the risk increases that our existing
therapeutic candidates and any other therapeutic candidates that we or our
Founded Entities may identify may be subject to claims of infringement of
the patent rights of third parties.
There may be other third-party patents or patent applications with claims to
materials, formulations, methods of manufacture or methods for treatment
related to the use or manufacture of our or our Founded Entities’ existing
therapeutic candidates and any other therapeutic candidates that we
or they may identify. Because patent applications can take many years
to issue, there may be currently pending patent applications which may
later result in issued patents that our or our Founded Entities’ existing
therapeutic candidates and any other therapeutic candidates that we or
they may identify may infringe. In addition, third parties may obtain patents
in the future and claim that use of our or our Founded Entities’ technologies
infringes upon these patents. If any third-party patents were held by
a court of competent jurisdiction to cover the manufacturing process of
our or our Founded Entities’ existing therapeutic candidates and any
other therapeutic candidates that we or they may identify, any molecules
formed during the manufacturing process, or any final therapeutic itself,
the holders of any such patents may be able to block our ability to
commercialize such therapeutic candidate unless we obtained a license
under the applicable patents, or until such patents expire. Additionally,
pending patent applications that have been published can, subject to
certain limitations, be later amended in a manner that could cover our
Wholly Owned Programs or our Founded Entities’ therapeutic candidates.
Furthermore, the scope of a patent claim is determined by an interpretation
of the law, the written disclosure in a patent and the patent’s prosecution
history and can involve other factors such as expert opinion. Our analysis
of these issues, including interpreting the relevance or the scope of claims
in a patent or a pending application, determining applicability of such
claims to our proprietary technologies or therapeutic candidates, predicting
whether a third party’s pending patent application will issue with claims of
relevant scope, and determining the expiration date of any patent in the
United States or abroad that we consider relevant may be incorrect, which
may negatively impact our or our Founded Entities’ ability to develop and
market the therapeutic candidates within our Wholly Owned Pipeline or
our Founded Entities’ therapeutic candidates. We do not always conduct
independent reviews of pending patent applications of and patents issued
to third parties.
Similarly, if any third-party patents were held by a court of competent
jurisdiction to cover aspects of our or our Founded Entities’ formulations,
processes for manufacture or methods of use, including any combination
therapies, the holders of any such patents may be able to block our or
PureTech Health plc Annual report and accounts 2021 239
Risk Factor Annex — continuedAdditional information our Founded Entities’ ability to develop and commercialize the applicable
therapeutic candidate unless we obtained a license or until such patent
expires. In either case, such a license may not be available on commercially
reasonable terms or at all, or it may be non-exclusive, which could result in
our competitors gaining access to the same intellectual property.
Parties making claims against us or our Founded Entities may obtain
injunctive or other equitable relief, which could effectively block our ability
to further develop and commercialize our or our Founded Entities’ existing
therapeutic candidates and any other therapeutic candidates that we may
identify. Defense of these claims, regardless of their merit, would involve
substantial litigation expense and would be a substantial diversion of
management and employee resources from our business. In the event of
a successful claim of infringement against us or our Founded Entities, we
or our Founded Entities may have to pay substantial damages, including
treble damages and attorneys’ fees for willful infringement, pay royalties,
redesign our infringing therapeutics or obtain one or more licenses from
third parties, which may be impossible or require substantial time and
monetary expenditure.
Parties making claims against us or our Founded Entities may be able to
sustain the costs of complex patent litigation more effectively than we can
because they have substantially greater resources. Furthermore, because of
the substantial amount of discovery required in connection with intellectual
property litigation or administrative proceedings, there is a risk that some
of our confidential information could be compromised by disclosure. In
addition, any uncertainties resulting from the initiation and continuation
of any litigation could have material adverse effect on our ability to raise
additional funds or otherwise have a material adverse effect on our
business, results of operations, financial condition and prospects.
Risks Related to Our Patents
Patent terms may be inadequate to protect our competitive position on
therapeutic candidates for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees
are timely paid, the natural expiration of a patent is generally 20 years from
its earliest U.S. non-provisional or international patent application filing
date. Various extensions may be available, but the life of a patent, and the
protection it affords, is limited. Even if patents covering our Wholly Owned
Programs or our Founded Entities’ therapeutic candidates are obtained,
once the patent life has expired, we or our Founded Entities may be
open to competition from competitive therapeutics, including generics or
biosimilars. Given the amount of time required for the development, testing
and regulatory review of new therapeutic candidates, patents protecting
such candidates might expire before or shortly after such candidates
are commercialized. As a result, our or our Founded Entities’ owned and
licensed patent portfolio may not provide us with sufficient rights to exclude
others from commercializing therapeutics similar or identical to ours.
If we or our Founded Entities are not able to obtain patent term extension
or non‑patent exclusivity in the United States under the Hatch‑Waxman
Act and in foreign countries under similar legislation, thereby potentially
extending the marketing exclusivity term of the therapeutic candidates
within our Wholly Owned Pipeline or our Founded Entities’ therapeutic
candidates, our business may be materially harmed.
Depending upon the timing, duration and specifics of FDA marketing
approval of the therapeutic candidates within our Wholly Owned Pipeline
or our Founded Entities’ therapeutic candidates, one or more of the U.S.
patents covering each of such therapeutic candidates or the use thereof
may be eligible for up to five years of patent term extension under the
Hatch-Waxman Act. The Hatch-Waxman Act allows a maximum of one
patent to be extended per new drug application, or NDA, for an FDA
approved therapeutic as compensation for the patent term lost during the
FDA regulatory review process. A patent term extension cannot extend
the remaining term of a patent beyond a total of 14 years from the date of
therapeutic approval and only those claims covering such approved drug
therapeutic, a method for using it or a method for manufacturing it may be
extended. Patent term extension also may be available in certain foreign
countries upon regulatory approval of the therapeutic candidates within our
Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates.
Nevertheless, we or our Founded Entities may not be granted patent term
extension either in the United States or in any foreign country because
of, for example, failing to exercise due diligence during the testing phase
or regulatory review process, failing to apply within applicable deadlines,
failing to apply prior to expiration of relevant patents or otherwise failing to
satisfy applicable requirements. Moreover, the term of extension, as well as
the scope of patent protection during any such extension, afforded by the
governmental authority could be less than we request.
If we or our Founded Entities are unable to obtain patent term extension
or restoration, or the term of any such extension is less than our request,
the period during which we will have the right to exclusively market our
therapeutic may be shortened and our competitors may obtain approval
of competing therapeutics following our patent expiration sooner, and our
revenue could be reduced, possibly materially.
240 PureTech Health plc Annual report and accounts 2021
Further, for certain of our and our Founded Entities’ licensed patents, we
and our Founded Entities do not have the right to control prosecution,
including filing with the USPTO, a petition for patent term extension
under the Hatch-Waxman Act. Thus, if one of our or our Founded Entities’
licensed patents is eligible for patent term extension under the Hatch-
Waxman Act, we may not be able to control whether a petition to obtain
a patent term extension is filed with, or whether a patent term extension is
obtained from, the USPTO.
Also, there are detailed rules and requirements regarding the patents that
may be submitted to the FDA for listing in the Approved Drug Products
with Therapeutic Equivalence Evaluations, or the Orange Book. We or
our Founded Entities may be unable to obtain patents covering the
therapeutic candidates within our Wholly Owned Pipeline or our Founded
Entities’ therapeutic candidates that contain one or more claims that
satisfy the requirements for listing in the Orange Book. Even if we or our
Founded Entities submit a patent for listing in the Orange Book, the FDA
may decline to list the patent, or a manufacturer of generic drugs may
challenge the listing. If or when one of the therapeutic candidates within
our Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates
is approved and a patent covering that therapeutic candidate is not listed
in the Orange Book, a manufacturer of generic drugs would not have to
provide advance notice to us of any abbreviated new drug application, or
ANDA, filed with the FDA to obtain permission to sell a generic version of
such therapeutic candidate.
Issued patents covering our Wholly Owned Programs or our Founded
Entities’ therapeutic candidates could be found invalid or unenforceable if
challenged in courts or patent offices.
If we, our Founded Entities or one of our licensing partners initiated legal
proceedings against a third party to enforce a patent covering one or
more of our Wholly Owned Programs or our Founded Entities’ therapeutic
candidates, the defendant could counterclaim that the patent covering the
relevant therapeutic candidate is invalid and/or unenforceable. In patent
litigation in the United States, defendant counterclaims alleging invalidity
and/or unenforceability are commonplace. Grounds for a validity challenge
could be an alleged failure to meet any of several statutory requirements,
including subject matter eligibility, novelty, nonobviousness, written
description or enablement. Grounds for an unenforceability assertion could
be an allegation that someone connected with prosecution of the patent
withheld relevant information from the USPTO, or made a misleading
statement, during prosecution. Third parties may also raise similar claims
before administrative bodies in the United States or abroad, even outside
the context of litigation. Such mechanisms include re-examination, post
grant review, and equivalent proceedings in foreign jurisdictions (e.g.,
opposition proceedings). Such proceedings could result in revocation or
amendment to our or our Founded Entities’ patents in such a way that they
no longer cover our Wholly Owned Programs or our Founded Entities’
therapeutic candidates. The outcome following legal assertions of invalidity
and unenforceability is unpredictable. With respect to the validity question,
for example, we cannot be certain that there is no invalidating prior art,
of which we and the patent examiner were unaware during prosecution.
If a defendant were to prevail on a legal assertion of invalidity and/or
unenforceability, we would lose at least part, and perhaps all, of the patent
protection on our Wholly Owned Programs or our Founded Entities’
therapeutic candidates. Such a loss of patent protection could have
a material adverse impact on our business.
Changes in U.S. patent law could diminish the value of patents in general,
thereby impairing our and our Founded Entities’ ability to protect
our therapeutics.
Changes in either the patent laws or interpretation of the patent laws in
the United States could increase the uncertainties and costs surrounding
the prosecution of patent applications and the enforcement or defense of
issued patents. Assuming that other requirements for patentability are met,
prior to March 2013, in the United States, the first to invent the claimed
invention was entitled to a patent, while outside the United States, the
first to file a patent application was entitled to the patent. After March
2013, under the Leahy-Smith America Invents Act, or the America Invents
Act, enacted in September 2011, the United States transitioned to a first
inventor to file system in which, assuming that other requirements for
patentability are met, the first inventor to file a patent application will be
entitled to the patent on an invention regardless of whether a third party
was the first to invent the claimed invention. A third party that files a patent
application in the USPTO after March 2013, but before us could therefore
be awarded a patent covering an invention of ours even if we had made
the invention before it was made by such third party. This will require us
and our Founded Entities to be cognizant of the time from invention to
filing of a patent application and be diligent in filing patent applications,
but circumstances could prevent us from promptly filing patent applications
on our inventions. Since patent applications in the United States and
most other countries are confidential for a period of time after filing or
until issuance, we cannot be certain that we, our Founded Entities or our
licensors were the first to either (i) file any patent application related to our
Risk Factor Annex — continuedAdditionasl information Wholly Owned Programs or our Founded Entities’ therapeutic candidates
or (ii) invent any of the inventions claimed in our, our Founded Entities or
our licensor’s patents or patent applications.
The America Invents Act also includes a number of significant changes
that affect the way patent applications are prosecuted and also may
affect patent litigation. These include allowing third party submission
of prior art to the USPTO during patent prosecution and additional
procedures to attack the validity of a patent by USPTO administered
post-grant proceedings, including post-grant review, inter partes review,
and derivation proceedings. Because of a lower evidentiary standard in
USPTO proceedings compared to the evidentiary standard in U.S. federal
courts necessary to invalidate a patent claim, a third party could potentially
provide evidence in a USPTO proceeding sufficient for the USPTO to hold
a claim invalid even though the same evidence would be insufficient to
invalidate the claim if first presented in a district court action. Accordingly,
a third party may attempt to use the USPTO procedures to invalidate our
patent claims that would not have been invalidated if first challenged by the
third party as a defendant in a district court action. Therefore, the America
Invents Act and its implementation could increase the uncertainties and
costs surrounding the prosecution of our or our Founded Entities’ owned
or in-licensed patent applications and the enforcement or defense of our
or our Founded Entities’ owned or in-licensed issued patents, all of which
could have a material adverse effect on our competitive position, business,
financial condition, results of operations, and prospects.
In addition, the patent positions of companies in the development and
commercialization of pharmaceuticals are particularly uncertain. Recent
U.S. Supreme Court and Federal Circuit rulings have narrowed the scope
of patent protection available in certain circumstances and weakened the
rights of patent owners in certain situations. This combination of events
has created uncertainty with respect to the validity and enforceability of
patents, once obtained. Depending on future actions by the U.S. Congress,
the federal courts, and the USPTO, the laws and regulations governing
patents could change in unpredictable ways that could have a material
adverse effect on our existing patent portfolio and our ability to protect and
enforce our intellectual property in the future.
Obtaining and maintaining our patent protection depends on compliance
with various procedural, document submission, fee payment and other
requirements imposed by governmental patent agencies, and our patent
protection could be reduced or eliminated for non‑compliance with
these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other
governmental fees on patents and/or applications will be due to be paid
to the USPTO and various governmental patent agencies outside of the
United States in several stages over the lifetime of the patents and/or
applications. We and our Founded Entities have systems in place to remind
us to pay these fees, and we and our Founded Entities employ outside
firms and rely on outside counsel to pay these fees due to the USPTO
and non-U.S. patent agencies. However, we and our Founded Entities
cannot guarantee that our licensors have similar systems and procedures
in place to pay such fees. In addition, the USPTO and various non-U.S.
governmental patent agencies require compliance with a number of
procedural, documentary, fee payment and other similar provisions during
the patent application process. We employ reputable law firms and other
professionals to help us comply, and in many cases, an inadvertent lapse
can be cured by payment of a late fee or by other means in accordance
with the applicable rules. However, there are situations in which non-
compliance can result in abandonment or lapse of the patent or patent
application, resulting in partial or complete loss of patent rights in the
relevant jurisdiction. In such an event, our competitors might be able to
enter the market and this circumstance would have a material adverse effect
on our business.
Risks Related to Confidentiality
If we are unable to protect the confidentiality of our trade secrets, the value
of our technology could be materially adversely affected and our business
would be harmed.
We and our Founded Entities consider proprietary trade secrets,
confidential know-how and unpatented know-how to be important to
our business. We and our Founded Entities may rely on trade secrets and
confidential know-how to protect our technology, especially where patent
protection is believed by us to be of limited value. However, trade secrets
and confidential know-how are difficult to protect, and we have limited
control over the protection of trade secrets and confidential know-how used
by our licensors, collaborators and suppliers. Because we have relied in the
past on third parties to manufacture the therapeutic candidates within our
Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates,
because we may continue to do so in the future, and because we expect to
collaborate with third parties on the development of our current therapeutic
candidates and any future therapeutic candidates we develop, we may, at
times, share trade secrets with them. We also conduct joint R&D programs
that may require us to share trade secrets under the terms of our R&D
partnerships or similar agreements. Under such circumstances, trade secrets
and confidential know-how can be difficult to maintain as confidential.
We and our Founded Entities seek to protect our confidential proprietary
information, in part, by confidentiality agreements and invention
assignment agreements with our employees, consultants, scientific
advisors, contractors and collaborators. These agreements are designed
to protect our proprietary information. However, we cannot be certain
that such agreements have been entered into with all relevant parties,
and we cannot be certain that our and our Founded Entities’ trade secrets
and other confidential proprietary information will not be disclosed or
that competitors will not otherwise gain access to our trade secrets or
independently develop substantially equivalent information and techniques.
For example, any of these parties may breach the agreements and disclose
proprietary information, including trade secrets, and we may not be able to
obtain adequate remedies for such breaches. We and our Founded Entities
also seek to preserve the integrity and confidentiality of our confidential
proprietary information by maintaining physical security of our premises
and physical and electronic security of our information technology systems,
but it is possible that these security measures could be breached. If any of
our or our Founded Entities’ confidential proprietary information were to
be lawfully obtained or independently developed by a competitor, we or
our Founded Entities would have no right to prevent such competitor from
using that technology or information to compete with us, which could harm
our competitive position.
Unauthorized parties may also attempt to copy or reverse engineer certain
aspects of our or our Founded Entities’ therapeutics that we consider
proprietary. We or our Founded Entities may not be able to obtain
adequate remedies in the event of such unauthorized use. Enforcing a claim
that a party illegally disclosed or misappropriated a trade secret can be
difficult, expensive and time-consuming, and the outcome is unpredictable.
In addition, some courts inside and outside the United States are less
willing or unwilling to protect trade secrets. Trade secrets will also over time
be disseminated within the industry through independent development,
the publication of journal articles and the movement of personnel skilled
in the art from company to company or academic to industry scientific
positions. Though our or our Founded Entities’ agreements with third
parties typically restrict the ability of our advisors, employees, collaborators,
licensors, suppliers, third-party contractors and consultants to publish
data potentially relating to our trade secrets, our agreements may contain
certain limited publication rights. In addition, if any of our or our Founded
Entities’ trade secrets were to be lawfully obtained or independently
developed by a competitor, we would have no right to prevent such
competitor from using that technology or information to compete with
us, which could harm our competitive position. Despite employing the
contractual and other security precautions described above, the need to
share trade secrets increases the risk that such trade secrets become known
by our competitors, are inadvertently incorporated into the technology of
others, or are disclosed or used in violation of these agreements. If any of
these events occurs or if we otherwise lose protection for our trade secrets,
the value of such information may be greatly reduced and our competitive
position, business, financial condition, results of operations, and prospects
would be harmed.
We or our Founded Entities may be subject to claims that our employees,
consultants or independent contractors have wrongfully used or
disclosed confidential information of third parties or that our employees
have wrongfully used or disclosed alleged trade secrets of their
former employers.
As is common in the biotechnology and pharmaceutical industries, we and
our Founded Entities employ individuals who were previously employed at
universities or other biotechnology or pharmaceutical companies, including
our competitors or potential competitors. Although we and our Founded
Entities try to ensure that our employees, consultants and independent
contractors do not use the proprietary information or know-how of others
in their work for us, we or our Founded Entities may be subject to claims
that we or our employees, consultants or independent contractors have
inadvertently or otherwise used or disclosed intellectual property, including
trade secrets or other proprietary information, of any of our employee’s
former employer or other third parties. Litigation may be necessary to
defend against these claims. If we or our Founded Entities fail in defending
any such claims, in addition to paying monetary damages, we may lose
valuable intellectual property rights or personnel, which could adversely
impact our business. Even if we or our Founded Entities are successful in
defending against such claims, litigation could result in substantial costs
and be a distraction to management and other employees.
Risks Related to Challenges or Lawsuits Related to Intellectual Property
We may become involved in lawsuits to protect or enforce our or our
Founded Entities’ patents or other intellectual property, which could be
expensive, time consuming and unsuccessful.
Competitors may infringe our or our Founded Entities’ patents or other
intellectual property. Our and our Founded Entities’ ability to enforce our
PureTech Health plc Annual report and accounts 2021 241
Risk Factor Annex — continuedAdditional information patent or other intellectual property rights depends on our ability to detect
infringement. It may be difficult to detect infringers who do not advertise
the components or methods that are used in connection with their
therapeutics and services. Moreover, it may be difficult or impossible to
obtain evidence of infringement in a competitor’s or potential competitor’s
therapeutic or service. We may not prevail in any lawsuits that we initiate
and the damages or other remedies awarded if we were to prevail may
not be commercially meaningful. If we were to initiate legal proceedings
against a third party to enforce a patent covering one or more of our Wholly
Owned Programs or our Founded Entities’ therapeutic candidates, the
defendant could counterclaim that the patent covering our or our Founded
Entities’ therapeutic candidate is invalid and/or unenforceable. In patent
litigation in the United States, defendant counterclaims alleging invalidity
and/or unenforceability are commonplace. Grounds for a validity challenge
could be an alleged failure to meet any of several statutory requirements,
including subject matter eligibility, novelty, nonobviousness, written
description or enablement. Grounds for an unenforceability assertion could
be an allegation that someone connected with prosecution of the patent
withheld relevant information from the USPTO, or made a misleading
statement, during prosecution. The outcome following legal assertions of
invalidity and unenforceability is unpredictable. Interference or derivation
proceedings provoked by third parties or brought by us or declared by
the USPTO may be necessary to determine the priority of inventions with
respect to our or our Founded Entities’ patents or patent applications.
An unfavorable outcome could require us to cease using the related
technology or to attempt to license rights to it from the prevailing party.
Our business could be harmed if the prevailing party does not offer us
a license on commercially reasonable terms or at all, or if a non-exclusive
license is offered and our competitors gain access to the same technology.
Our defense of litigation or interference or derivation proceedings may
fail and, even if successful, may result in substantial costs and distract
our management and other employees. In addition, the uncertainties
associated with litigation could have a material adverse effect on our ability
to raise the funds necessary to continue clinical trials, continue research
programs, license necessary technology from third parties, or enter into
development partnerships that would help us bring therapeutic candidates
to market. Furthermore, because of the substantial amount of discovery
required in connection with intellectual property litigation, there is a risk
that some of our or our Founded Entities’ confidential information could
be compromised by disclosure during this type of litigation. There could
also be public announcements of the results of hearings, motions, or other
interim proceedings or developments. If securities analysts or investors
perceive these results to be negative, it could adversely impact the price of
our ADSs. Furthermore, any of the foregoing could have a material adverse
effect on our financial condition, results of operations, and prospects.
We and our Founded Entities may be subject to claims challenging the
inventorship of our patents and other intellectual property.
Our and our Founded Entities’ agreements with employees and our
personnel policies provide that any inventions conceived by an individual
in the course of rendering services to us shall be our exclusive property.
Although our policy is to have all such individuals complete these
agreements, we may not obtain these agreements in all circumstances, and
individuals with whom we have these agreements may not comply with their
terms. The assignment of intellectual property may not be automatic upon
the creation of an invention and despite such agreement, such inventions
may become assigned to third parties. In the event of unauthorized
use or disclosure of our trade secrets or proprietary information, these
agreements, even if obtained, may not provide meaningful protection,
particularly for our trade secrets or other confidential information.
We, our Founded Entities or our licensors may be subject to claims that
former employees, collaborators or other third parties have an interest
in our owned or in-licensed patents, trade secrets, or other intellectual
property as an inventor or co-inventor. For example, we, our Founded
Entities or our licensors may have inventorship disputes arising from
conflicting obligations of employees, consultants or others who are
involved in developing our Wholly Owned Programs or our Founded
Entities’ therapeutic candidates. Litigation may be necessary to defend
against these and other claims challenging inventorship of our, our
Founded Entities’ or our licensors’ ownership of our owned or in-licensed
patents, trade secrets or other intellectual property. If we, our Founded
Entities or our licensors fail in defending any such claims, in addition to
paying monetary damages, we may lose valuable intellectual property
rights, such as exclusive ownership of, or right to use, intellectual property
that is important to our Wholly Owned Programs or our Founded Entities’
therapeutic candidates. Even if we are successful in defending against such
claims, litigation could result in substantial costs and be a distraction to
management and other employees.
Any of the foregoing could have a material adverse effect on our
competitive position, business, financial condition, results of operations
and prospects.
Risks Related to the COVID-19 Pandemic
The COVID‑ 19 pandemic has impacted, and will likely continue to impact,
our business, including our clinical trials and preclinical studies, and may
materially and adversely affect our business in the future.
Public health crises such as pandemics or other global emergencies could
adversely impact our business. In response to the spread of COVID-19 and
governmental shelter-in-place orders, we encouraged our administrative
employees to work outside of our offices and allowed staff in our laboratory
facilities to operate under applicable government orders and protocols
designed to protect their health and safety. Many of these restrictions have
since been eased or lifted in a phased-in approach over time. However,
these government policies and directives are subject to change, including
that additional, more restrictive orders, proclamations and/or directives
may be issued in the future, as the effects and spread of the COVID-19
pandemic continue to evolve.
As a result of the COVID-19 outbreak or any future pandemics, we have
experienced, and may in the future experience, disruptions that severely
impact our business, clinical trials and preclinical studies, including:
• delays or difficulties in enrolling patients in our clinical trials;
• delays or difficulties in clinical site initiation, including difficulties in
recruiting clinical site investigators and clinical site staff;
• delays or disruptions in non-clinical experiments due to unforeseen
circumstances at contract research organizations, or CROs, and vendors
along their supply chain;
• increased rates of patients withdrawing from our clinical trials following
enrollment as a result of contracting COVID-19, being forced to
quarantine, or not accepting home health visits;
• diversion of healthcare resources away from the conduct of clinical trials,
including the diversion of hospitals serving as our clinical trial sites and
hospital staff supporting the conduct of our clinical trials;
• interruption of key clinical trial activities, such as clinical trial site data
monitoring, due to limitations on travel imposed or recommended by
federal or state governments, employers and others or interruption
of clinical trial subject visits and study procedures (particularly any
procedures that may be deemed non-essential), which may impact the
integrity of subject data and clinical study endpoints;
• interruption or delays in the operations of the FDA and comparable
foreign regulatory agencies, which may impact review and
approval timelines;
• interruption of, or delays in receiving, supplies of our therapeutic
candidates from our contract manufacturing organizations due to staffing
shortages, production slowdowns or stoppages and disruptions in
delivery systems; and
• limitations on employee resources that would otherwise be focused
on the conduct of our preclinical studies and clinical trials, including
because of sickness of employees or their families, the desire of
employees to avoid contact with large groups of people, an increased
reliance on working from home or mass transit disruptions.
These and other factors arising from the COVID-19 pandemic could worsen
in countries that are already afflicted with COVID-19, could continue to
spread to additional countries, or could return to countries where the
pandemic has been partially contained, each of which could further
adversely impact our ability to conduct clinical trials and our business
generally, and could have a material adverse impact on our operations and
financial condition and results.
In addition, the trading prices for biopharmaceutical companies have been
highly volatile as a result of the COVID-19 pandemic. As a result, if we
require any further capital we may face difficulties raising capital through
sales of our common stock or such sales may be on unfavorable terms.
The COVID-19 outbreak continues to rapidly evolve. The extent to which
the outbreak may impact our business, preclinical studies and clinical
trials will depend on future developments, which are highly uncertain and
cannot be predicted with confidence, such as the ultimate geographic
spread of the disease, the duration of the outbreak, travel restrictions
and actions to contain the outbreak or treat its impact, such as social
distancing and quarantines or lock-downs in the United States and other
countries, business closures or business disruptions and the effectiveness of
actions taken in the United States and other countries to contain and treat
the disease.
To the extent the COVID-19 pandemic adversely affects our business and
financial results, it may also have the effect of heightening many of the
other risks described in this “Risk Factors” section, such as those relating to
our clinical development operations, the supply chain for our ongoing and
planned clinical trials, and the availability of governmental and regulatory
authorities to conduct inspections of our clinical trial sites, review materials
submitted by us in support of our applications for regulatory approval and
grant approval for our therapeutic candidates.
242 PureTech Health plc Annual report and accounts 2021
Risk Factor Annex — continuedAdditionasl information We may not be successful in our efforts to develop LYT‑100 for the
treatment of Long COVID respiratory complications and related sequelae.
We have initiated and fully enrolled a global, randomized, double-blind,
placebo-controlled Phase 2 trial designed to evaluate the efficacy, safety
and tolerability of LYT-100 in adults with post-acute COVID-19 respiratory
complications. The primary endpoint is a standardized test of how
far a patient can walk in six minutes. Secondary endpoints, including
pharmacokinetics, inflammatory biomarkers, imaging, and patient-reported
outcomes will also be evaluated.
Given the rapidity of the onset of the COVID-19 pandemic, scientific and
medical research on the SARS-CoV-2 virus is ongoing and evolving. We
cannot be certain that the evidence that we believe suggests that LYT-100
may be beneficial to these patients will be established in a clinical trial.
The failure of LYT-100 to demonstrate safety and efficacy in these patients
could negatively impact the perception of us and LYT-100 by investors and
it is possible that unexpected safety issues could occur in these COVID-19
patients. Any such safety issues could affect our development plans for LYT-
100 in other indications.
Risks Related to Our Business and Industry
We attempt to distribute our scientific, execution and financing risks across
a variety of therapeutic areas, indications, programs and modalities that
relate to the brain, immune system and gastrointestinal system and the
interface between them. However, our assessment of, and approach to,
risk may not be comprehensive or effectively avoid delays or failures in one
or more of our programs. Failures in one or more of our programs could
adversely impact other programs and have a material adverse impact on
our business, results of operations and ability to fund our business.
We are dedicated to discovering, developing and commercializing highly
differentiated medicines for devastating diseases, including inflammatory,
fibrotic and immunological conditions, intractable cancers, lymphatic
and gastrointestinal diseases and neurological and neuropsychological
disorders, among others. Across the entire portfolio, we established the
underlying programs and platforms that have resulted in 27 therapeutics
and therapeutic candidates that are being advanced within our Wholly
Owned Programs or by our Founded Entities. Of these therapeutics and
therapeutic candidates, 16 are clinical-stage and two have been cleared for
marketing by the FDA and granted marketing authorization in the EEA and
in other countries that recognize the CE Mark. Our publicly-listed Founded
Entities, Karuna, Vor and Gelesis, are advancing seven of these therapeutic
candidates, including two that are currently in Phase 3/Pivotal studies,
as well as one FDA-authorized therapeutic. Our privately-held Founded
Entities, Akili, Vedanta, Follica, Sonde and Entrega, are advancing 13 other
therapeutic candidates, including two that are expected to enter a pivotal
study. Finally, we are advancing seven therapeutic candidates within our
Wholly Owned Pipeline, including one therapeutic candidate that is being
advanced in collaboration with a pharmaceutical company, with two Phase 2
and two Phase 1 clinical trials underway. We and our Founded Entities have
relationships with several pharmaceutical companies or their investment
arms to advance some of the programs and platforms underlying these
therapeutics and therapeutic candidates. As our and certain of our Founded
Entities’ therapeutic candidates progress through clinical development, we
or others may determine that certain of our risk allocation decisions were
incorrect or insufficient, that individual programs or our science in general
has technology or biology risks that were unknown or underappreciated, or
that we have allocated resources across our programs in such a way that did
not maximize potential value creation. All of these risks may relate to our
current and future programs sharing similar science and infrastructure, and
in the event material decisions in any of these areas turn out to have been
incorrect or under-optimized, we may experience a material adverse impact
on our business and ability to fund our operations.
Our business is highly dependent on the clinical advancement of our
programs and our success in identifying potential therapeutic candidates
across the brain, immune and gastrointestinal therapeutic areas. Delay or
failure to advance our programs could adversely impact our business.
We are developing new medicines based on the lymphatic system and
the brain, immune and gastrointestinal therapeutic areas. Over time,
our and our Founded Entities’ preclinical and clinical work led us to
identify potential synergies across target therapeutic indications in the
brain, immune and gastrointestinal areas, generating a broad portfolio
of therapeutic candidates across multiple programs. Even if a particular
program is successful in any phase of development, such program could
fail at a later phase of development, and other programs within the same
therapeutic area may still fail at any phase of development including at
phases where earlier programs in that therapeutic area were successful.
This may be a result of technical challenges unique to that program or
due to biology risk, which is unique to every program. As we progress
our programs through clinical development, there may be new technical
challenges that arise that cause an entire program or a group of programs
within an area of focus in the brain, immune and gastrointestinal therapeutic
areas to fail. While we aim to segregate risk across programs, and in certain
cases among our Founded Entities, there may be foreseen and unforeseen
risks across the therapeutic candidates within our Wholly Owned Pipeline
and programs being developed by our Founded Entities in whole or in part.
In addition, if any one or more of our clinical programs encounter safety,
tolerability, or efficacy problems, developmental delays, regulatory issues,
or other problems, our business could be significantly harmed.
Our future success depends on our ability to retain key employees,
directors, consultants and advisors and to attract, retain and motivate
qualified personnel.
Our ability to compete in the highly competitive biotechnology industry
depends upon our ability to attract and retain highly qualified managerial,
scientific and medical personnel. We are highly dependent on the
management, R&D, clinical, financial and business development expertise
of our executive officers, our directors, as well as the other members
of our scientific and clinical teams, including Daphne Zohar, our chief
executive officer, Bharatt Chowrira, our president and chief business,
legal and operating officer, George Farmer, our chief financial officer, Eric
Elenko, our chief innovation and strategy officer, Joseph Bolen, our chief
scientific officer, and Julie Krop, our chief medical officer. The loss of the
services of any of our executive officers and other key personnel, and our
inability to find suitable replacements could result in delays in therapeutic
development and our financial condition and results of operations could be
materially adversely affected.
Furthermore, each of our executive officers may terminate their
employment with us at any time. Recruiting and retaining qualified
scientific and clinical personnel and, if we progress the development of the
therapeutic candidates within our Wholly Owned Pipeline toward scaling up
for commercialization, sales and marketing personnel, will also be critical to
our success. The loss of the services of our executive officers or other key
employees could impede the achievement of research, development and
commercialization objectives and seriously harm our ability to successfully
implement our business strategy. Furthermore, replacing executive officers
and key employees may be difficult and may take an extended period of
time because of the limited number of individuals in our industry with the
breadth of skills and experience required to successfully develop, gain
regulatory approval for and commercialize the therapeutic candidates
within our Wholly Owned Pipeline. Competition to hire qualified personnel
in our industry is intense, and we may be unable to hire, train, retain or
motivate these key personnel on acceptable terms given the competition
among numerous pharmaceutical and biotechnology companies for similar
personnel. Furthermore, to the extent we hire personnel from competitors,
we may be subject to allegations that they have been improperly solicited
or that they have divulged proprietary or other confidential information, or
that their former employers own their research output. We also experience
competition for the hiring of scientific and clinical personnel from
universities and research institutions.
In addition, we rely on consultants and advisors, including scientific and
clinical advisors, to assist us in formulating our research and development
and commercialization strategy. Our consultants and advisors may be
employed by employers other than us and may have commitments under
consulting or advisory contracts with other entities that may limit their
availability to us. If we are unable to continue to attract and retain high
quality personnel, our ability to pursue our growth strategy will be limited.
We will need to expand our organization and we may experience
difficulties in managing this growth, which could disrupt our operations.
As we mature, we expect to expand our full-time employee base and to
hire more consultants and contractors. Our management may need to
divert a disproportionate amount of its attention away from our day-to-day
activities and devote a substantial amount of time toward managing these
growth activities. We may not be able to effectively manage the expansion
of our operations, which may result in weaknesses in our infrastructure,
operational mistakes, loss of business opportunities, loss of employees and
reduced productivity among remaining employees. Our expected growth
could require significant capital expenditures and may divert financial
resources from other projects, such as the development of additional
therapeutic candidates. If our management is unable to effectively manage
our growth, our expenses may increase more than expected, our ability to
generate and/or grow revenues could be reduced, and we may not be able
to implement our business strategy. Our future financial performance and
our ability to commercialize therapeutic candidates and compete effectively
will depend, in part, on our ability to effectively manage any future growth.
Because we are developing multiple programs and therapeutic candidates
and are pursuing a variety of target indications and treatment modalities,
we may expend our limited resources to pursue a particular therapeutic
candidate and fail to capitalize on development opportunities or
therapeutic candidates that may be more profitable or for which there is
a greater likelihood of success.
Because we have limited financial and personnel resources, we may
forgo or delay pursuit of opportunities with potential target indications
or therapeutic candidates that later prove to have greater commercial
PureTech Health plc Annual report and accounts 2021 243
Risk Factor Annex — continuedAdditional information potential than our current and planned development programs and
therapeutic candidates. Our resource allocation decisions may cause
us to fail to capitalize on viable commercial therapeutics or profitable
market opportunities. Our spending on current and future research and
development programs and other future therapeutic candidates for specific
indications may not yield any commercially viable future therapeutic
candidates. If we do not accurately evaluate the commercial potential or
target market for a particular therapeutic candidate, we may be required
to relinquish valuable rights to that therapeutic candidate through
collaboration, licensing or other royalty arrangements in cases in which it
would have been more advantageous for us to retain sole development and
commercialization rights to such future therapeutic candidates.
Additionally, we may pursue additional in-licenses or acquisitions of
development-stage assets or programs, which entails additional risk to
us. For example, in 2019 we acquired LYT-100, which is the most advanced
therapeutic candidate in our Wholly Owned Pipeline and to which we are
investing significant resources for its development. Identifying, selecting
and acquiring promising therapeutic candidates requires substantial
technical, financial and human resources expertise. Efforts to do so may
not result in the actual acquisition or license of a successful therapeutic
candidate, potentially resulting in a diversion of our management’s
time and the expenditure of our resources with no resulting benefit. For
example, if we are unable to identify programs that ultimately result in
approved therapeutics, we may spend material amounts of our capital and
other resources evaluating, acquiring and developing therapeutics that
ultimately do not provide a return on our investment.
Product liability lawsuits against us could cause us to incur substantial
liabilities and could limit commercialization of any therapeutic candidates
that we may develop.
We face an inherent risk of product liability exposure related to the testing
of therapeutic candidates in human clinical trials and will face an even
greater risk if we commercially sell any therapeutics that we may develop. If
we cannot successfully defend ourselves against claims that the therapeutic
candidates within our Wholly Owned Pipeline or medicines caused injuries,
we could incur substantial liabilities. Regardless of merit or eventual
outcome, liability claims may result in:
• decreased demand for any therapeutic candidates or medicines that we
may develop;
• injury to our reputation and significant negative media attention;
• withdrawal of clinical trial participants;
• significant costs to defend the related litigation;
• substantial monetary awards to trial participants or patients;
• loss of revenue; and
• the inability to commercialize the therapeutic candidates within our
Wholly Owned Pipeline.
Although we maintain product liability insurance, including coverage for
clinical trials that we sponsor, it may not be adequate to cover all liabilities
that we may incur. We anticipate that we will need to increase our insurance
coverage as we commence additional clinical trials and if we successfully
commercialize any therapeutic candidates. The market for insurance
coverage is increasingly expensive, and the costs of insurance coverage will
increase as our clinical programs increase in size. We may not be able to
maintain insurance coverage at a reasonable cost or in an amount adequate
to satisfy any liability that may arise.
The increasing use of social media platforms presents new risks
and challenges.
Social media is increasingly being used to communicate about our and
our Founded Entities’ clinical development programs and the diseases
our therapeutics are being developed to treat, and we intend to utilize
appropriate social media in connection with our commercialization efforts
following approval of the therapeutic candidates within our Wholly Owned
Pipeline. Social media practices in the biopharmaceutical industry continue
to evolve and regulations relating to such use are not always clear. This
evolution creates uncertainty and risk of noncompliance with regulations
applicable to our business. For example, patients may use social media
channels to comment on their experience in an ongoing blinded clinical
study or to report an alleged adverse event. When such disclosures occur,
there is a risk that we fail to monitor and comply with applicable adverse
event reporting obligations or we may not be able to defend our business
or the public’s legitimate interests in the face of the political and market
pressures generated by social media due to restrictions on what we may say
about the therapeutic candidates within our Wholly Owned Pipeline. There
is also a risk of inappropriate disclosure of sensitive information or negative
or inaccurate posts or comments about us on any social networking
website. If any of these events were to occur or we otherwise fail to comply
with applicable regulations, we could incur liability, face regulatory actions
or incur other harm to our business.
244 PureTech Health plc Annual report and accounts 2021
Our and our Founded Entities’ employees, independent contractors,
consultants, commercial partners and vendors may engage in misconduct
or other improper activities, including noncompliance with regulatory
standards and requirements.
We are exposed to the risk of fraud, misconduct or other illegal activity
by our employees, independent contractors, consultants, commercial
partners and vendors as well as the employees, independent contractors,
consultants, commercial partners and vendors of our Founded Entities.
Misconduct by these parties could include intentional, reckless and
negligent conduct that fails to: comply with the laws of the FDA and
comparable foreign regulatory authorities; provide true, complete and
accurate information to the FDA and comparable foreign regulatory
authorities; comply with manufacturing standards we have established;
comply with healthcare fraud and abuse laws in the United States and
similar foreign fraudulent misconduct laws; or report financial information
or data accurately or to disclose unauthorized activities. If we or our
Founded Entities obtain FDA approval of the therapeutic candidates
within our Wholly Owned Pipeline or our Founded Entities’ therapeutic
candidates and begin commercializing those therapeutics in the United
States, our potential exposure under such laws will increase significantly,
and our costs associated with compliance with such laws are also likely
to increase. In particular, research, sales, marketing, education and other
business arrangements in the healthcare industry are subject to extensive
laws designed to prevent fraud, kickbacks, self-dealing and other abusive
practices. These laws and regulations may restrict or prohibit a wide range
of pricing, discounting, educating, marketing and promotion, sales and
commission, certain customer incentive programs and other business
arrangements generally. Activities subject to these laws also involve the
improper use of information obtained in the course of patient recruitment
for clinical trials, which could result in regulatory sanctions and cause
serious harm to our reputation. It is not always possible to identify and deter
misconduct by employees and third parties, and the precautions we take to
detect and prevent this activity may not be effective in controlling unknown
or unmanaged risks or losses or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure to be
in compliance with such laws. If any such actions are instituted against us,
and we are not successful in defending ourselves or asserting our rights,
those actions could have a significant impact on our business, including the
imposition of significant fines or other sanctions.
Employee litigation and unfavorable publicity could negatively affect our
future business.
Our employees may, from time to time, bring lawsuits against us regarding
injury, creating a hostile work place, discrimination, wage and hour
disputes, sexual harassment, or other employment issues. In recent years,
there has been an increase in the number of discrimination and harassment
claims generally. Coupled with the expansion of social media platforms
and similar devices that allow individuals access to a broad audience, these
claims have had a significant negative impact on some businesses. Certain
companies that have faced employment- or harassment-related lawsuits
have had to terminate management or other key personnel, and have
suffered reputational harm that has negatively impacted their business.
If we were to face any employment-related claims, our business could be
negatively affected.
If we fail to comply with environmental, health and safety laws and
regulations, we could become subject to fines or penalties or incur costs
that could harm our business.
We are subject to numerous environmental, health and safety laws and
regulations, including those governing laboratory procedures and the
handling, use, storage, treatment and disposal of hazardous materials
and wastes. Our operations involve the use of hazardous and flammable
materials, including chemicals and biological materials. Our operations also
produce hazardous waste therapeutics. We generally contract with third
parties for the disposal of these materials and wastes. We cannot eliminate
the risk of contamination or injury from these materials. In the event of
contamination or injury resulting from our use of hazardous materials, we
could be held liable for any resulting damages, and any liability could
exceed our resources. We also could incur significant costs associated with
civil or criminal fines and penalties for failure to comply with such laws and
regulations.
Although we maintain workers’ compensation insurance to cover us
for costs and expenses we may incur due to injuries to our employees
resulting from the use of hazardous materials, this insurance may not
provide adequate coverage against potential liabilities. We do not maintain
insurance for environmental liability or toxic tort claims that may be
asserted against us in connection with our storage or disposal of biological,
hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with
current or future environmental, health and safety laws and regulations.
These current or future laws and regulations may impair our research,
Risk Factor Annex — continuedAdditionasl information development or therapeutic efforts. Our failure to comply with these
laws and regulations also may result in substantial fines, penalties or
other sanctions.
Cyber‑attacks or other failures in our telecommunications or information
technology systems, or those of our collaborators, contract research
organizations, third‑party logistics providers, distributors or other
contractors or consultants, could result in information theft, data corruption
and significant disruption of our business operations.
We, our collaborators, our CROs, third-party logistics providers, distributors
and other contractors and consultants utilize information technology, or IT,
systems and networks to process, transmit and store electronic information
in connection with our business activities. As use of digital technologies
has increased, cyber incidents, including third parties gaining access to
employee accounts using stolen or inferred credentials, computer malware,
viruses, spamming, phishing attacks or other means, and deliberate attacks
and attempts to gain unauthorized access to computer systems and
networks, have increased in frequency and sophistication. These threats
pose a risk to the security of our, our collaborators’, our CROs’, third-party
logistics providers’, distributors’ and other contractors’ and consultants’
systems and networks, and the confidentiality, availability and integrity of
our data. There can be no assurance that we will be successful in preventing
cyber-attacks or successfully mitigating their effects. Similarly, there can be
no assurance that our collaborators, CROs, third-party logistics providers,
distributors and other contractors and consultants will be successful in
protecting our clinical and other data that is stored on their systems.
Although to our knowledge we have not experienced any such material
system failure or material security breach to date, if such an event were to
occur and cause interruptions in our operations, it could result in a material
disruption of development programs and business operations.
Any cyber-attack, data breach or destruction or loss of data could result in
a violation of applicable U.S. and international privacy, data protection and
other laws, and subject us to litigation and governmental investigations
and proceedings by federal, state and local regulatory entities in the United
States and by international regulatory entities, resulting in exposure to
material civil and/or criminal liability. Further, our general liability insurance
and corporate risk program may not cover all potential claims to which we
are exposed and may not be adequate to indemnify us for all liability that
maybe imposed; and could have a material adverse effect on our business
and prospects. For example, the loss of clinical trial data from completed
or ongoing clinical trials for any of the therapeutic candidates within our
Wholly Owned Pipeline or our Founded Entities’ therapeutic candidates
could result in delays in our development and regulatory approval efforts
and significantly increase our costs to recover or reproduce the data. In
addition, we may suffer reputational harm or face litigation or adverse
regulatory action as a result of cyber-attacks or other data security breaches
and may incur significant additional expense to implement further data
protection measures.
Changes in funding for the FDA, the SEC and other government agencies
could hinder their ability to hire and retain key leadership and other
personnel, prevent new therapeutics and services from being developed
or commercialized in a timely manner or otherwise prevent those agencies
from performing normal functions on which the operation of our business
may rely, which could negatively impact our business.
The ability of the FDA to review and approve new therapeutics or take
action with respect to other regulatory matters can be affected by a variety
of factors, including government budget and funding levels, ability to hire
and retain key personnel and accept payment of user fees, and statutory,
regulatory, and policy changes. In addition, government funding of the
SEC and other government agencies on which our operations may rely,
including those that fund research and development activities is subject
to the political process, which is inherently fluid and unpredictable. The
priorities of the FDA may also influence the ability of the FDA to take action
on regulatory matters, for example the FDA’s budget and funding levels
and ability to hire and retain key personnel.
Disruptions at the FDA and other agencies may also slow the time
necessary for new drugs to be reviewed and/or approved, or for other
actions to be taken, by relevant government agencies, which would
adversely affect our business. For example, over the last several years,
the U.S. government has shut down several times and certain regulatory
agencies, such as the FDA and the SEC, have had to furlough critical
FDA, SEC and other government employees and stop critical activities. If
a prolonged government shutdown occurs, it could significantly impact the
ability of the FDA to timely review and process our regulatory submissions,
which could have a material adverse effect on our business. Similarly,
a prolonged government shutdown could prevent the timely review of
our patent applications by the USPTO, which could delay the issuance
of any U.S. patents to which we might otherwise be entitled. Further, in
our operations as a public company, future government shutdowns could
impact our ability to access the public markets and obtain necessary capital
in order to properly capitalize and continue our operations.
Separately, foreign and domestic inspections by the FDA were largely
on hold during the COVID-19 pandemic. Should the FDA determine
that an inspection is necessary for approval of a marketing application
and an inspection cannot be completed during the review cycle due
to restrictions on travel or for other reasons, the FDA has stated that it
generally intends to issue a complete response letter. Further, if there is
inadequate information to make a determination on the acceptability of
a facility, the FDA may defer action on the application until an inspection
can be completed. For example, in 2020, several companies announced
receipt of complete response letters due to the FDA’s inability to complete
required inspections for their applications. Regulatory authorities outside
the U.S. may adopt similar restrictions or other policy measures in response
to the COVID-19 pandemic or for other reasons and may experience
delays in their regulatory activities. If a prolonged government shutdown
or other disruption occurs, it could significantly impact the ability of the
FDA to timely review and process our regulatory submissions, which could
have a material adverse effect on our business. Future shutdowns or other
disruptions could also affect other government agencies such as the SEC,
which may also impact our business by delaying review of our public
filings, to the extent such review is necessary, and our ability to access the
public markets.
We or the third parties upon whom we depend may be adversely affected
by a natural disaster and our business continuity and disaster recovery
plans may not adequately protect us from a serious disaster.
Natural disasters could severely disrupt our operations, and have a material
adverse effect on our business, results of operations, financial condition and
prospects. If a natural disaster, power outage or other event occurred that
prevented us from using all or a significant portion of our headquarters,
that damaged critical infrastructure, such as the manufacturing facilities
of our third-party CMOs, or that otherwise disrupted operations, it may
be difficult or, in certain cases, impossible for us to continue our business
for a substantial period of time. The disaster recovery and business
continuity plans we have in place currently are limited and are unlikely to
prove adequate in the event of a serious disaster or similar event. We may
incur substantial expenses as a result of the limited nature of our disaster
recovery and business continuity plans, which, could have a material
adverse effect on our business, financial condition, results of operations
and prospects.
We will continue to incur increased costs as a result of operating as a U.S.‑
listed public company, and our management will be required to devote
substantial time to new compliance initiatives.
As a U.S. public company, and particularly now that we are no longer an
emerging growth company, we have incurred and will continue to incur
significant legal, accounting and other expenses that we did not incur as
a public company listed on the LSE. In addition, the Sarbanes-Oxley Act
of 2002, or the Sarbanes-Oxley Act, and rules subsequently implemented
by the SEC and Nasdaq have imposed various requirements on public
companies, including establishment and maintenance of effective
disclosure and financial controls and corporate governance practices.
Our management and other personnel will need to devote a substantial
amount of time to these compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will
make some activities more time-consuming and costly. For example, we
expect that these rules and regulations may make it more difficult and more
expensive for us to obtain director and officer liability insurance.
Pursuant to Section 404, we are required to furnish a report by our
management on our internal control over financial reporting, including an
attestation report on internal control over financial reporting issued by our
independent registered public accounting firm. To achieve compliance
with Section 404, we have and continue to be engaged in a process to
document and evaluate our internal control over financial reporting, which
is both costly and challenging. In this regard, we will need to continue
to dedicate internal resources, potentially engage outside consultants
and adopt a detailed work plan to assess and document the adequacy
of internal control over financial reporting, continue steps to improve
control processes as appropriate, validate through testing that controls are
functioning as documented and implement a continuous reporting and
improvement process for internal control over financial reporting. Despite
our efforts, there is a risk we will not be able to conclude that our internal
control over financial reporting is effective as required by Section 404. This
could result in an adverse reaction in the financial markets due to a loss of
confidence in the reliability of our financial statements.
Risks Related to Our International Operations
As a company based in the United Kingdom, we are subject to economic,
political, regulatory and other risks associated with international operations.
As a company based in the United Kingdom, our business is subject to
risks associated with being organized outside of the United States. While
the majority of our operations are in the United States and our functional
PureTech Health plc Annual report and accounts 2021 245
Risk Factor Annex — continuedAdditional information currency is the U.S. dollar, our future results could be harmed by a variety of
international factors, including:
• difficulties in staffing and managing foreign operations;
• complexities associated with managing multiple payor reimbursement
• economic weakness, including inflation, or political instability in particular
regimes, government payors, or patient self-pay systems;
non-U.S. economies and markets;
• differing and changing regulatory requirements;
• difficulties in compliance with different, complex and changing laws,
regulations and court systems of multiple jurisdictions and compliance
with a wide variety of foreign laws, treaties and regulations;
• changes in a specific country’s or region’s political or economic
environment, including, but not limited to, the implications of one or
more of the following occurring the decision of the United Kingdom:
• future activities subject to the terms of the Trade and Cooperation
Agreement between the United Kingdom and the European Union
effective May 1, 2021, which has not impacted our results to-date;
• a second referendum on Scottish independence from the United
Kingdom; and/or
• a snap general election; and
• negative consequences from changes in tax laws.
Unfavorable global economic conditions, including conditions resulting
from the COVID‑19 pandemic, could adversely affect our business,
financial condition or results of operations.
Our ability to invest in and expand our business and meet our financial
obligations, to attract and retain third-party contractors and collaboration
partners and to raise additional capital depends on our operating and
financial performance, which, in turn, is subject to numerous factors,
including the prevailing economic and political conditions and financial,
business and other factors beyond our control, such as the rate of
unemployment, the number of uninsured persons in the United States,
political influences and inflationary pressures. For example, an overall
decrease in or loss of insurance coverage among individuals in the United
States as a result of unemployment, underemployment or the repeal of
certain provisions of the ACA, may decrease the demand for healthcare
services and pharmaceuticals. If fewer patients are seeking medical care
because they do not have insurance coverage, we and our Founded
Entities may experience difficulties in any eventual commercialization of the
therapeutic candidates within our Wholly Owned Pipeline or our Founded
Entities’ therapeutic candidates and our business, results of operations,
financial condition and cash flows could be adversely affected.
In addition, our results of operations could be adversely affected by general
conditions in the global economy and in the global financial markets upon
which pharmaceutical and biopharmaceutical companies such as us are
dependent for sources of capital. In the past, global financial crises have
caused extreme volatility and disruptions in the capital and credit markets.
A severe or prolonged economic downturn could result in a variety of
risks to our business, including a reduced ability to raise additional capital
when needed on acceptable terms, if at all, and weakened demand for
the therapeutic candidates within our Wholly Owned Pipeline. A weak or
declining economy could also strain our suppliers, possibly resulting in
supply disruption. Any of the foregoing could harm our business and we
cannot anticipate all of the ways in which the current economic climate and
financial market conditions could adversely impact our business.
The COVID-19 pandemic has had, and will continue to have, an unfavorable
impact on global economic conditions, including a decrease in or loss of
insurance coverage among individuals in the United States, an increase in
unemployment, volatility in markets, and other negative impacts that have
arisen or will arise over the course of the COVID-19 pandemic.
Our international operations may expose us to business, regulatory,
political, operational, financial, pricing and reimbursement and economic
risks associated with doing business outside of the United States.
Our business strategy incorporates potential international expansion to
target patient populations outside the United States. If we or our Founded
Entities receive regulatory approval for and commercialize any of the
therapeutic candidates within our Wholly Owned Pipeline or our Founded
Entities’ therapeutic candidates in patient populations outside the United
States, we may hire sales representatives and conduct physician and patient
association outreach activities outside of the United States. Doing business
internationally involves a number of risks, including, but not limited to:
• multiple, conflicting, and changing laws and regulations such as privacy
regulations, tax laws, export and import restrictions, employment laws,
regulatory requirements, and other governmental approvals, permits,
and licenses;
• failure by us to obtain and maintain regulatory approvals for the use of
our therapeutics in various countries;
• additional potentially relevant third-party patent rights;
• complexities and difficulties in obtaining protection and enforcing our
intellectual property;
246 PureTech Health plc Annual report and accounts 2021
• limits in our ability to penetrate international markets;
• financial risks, such as longer payment cycles, difficulty collecting
accounts receivable, the impact of local and regional financial crises on
demand and payment for our therapeutics, and exposure to foreign
currency exchange rate fluctuations;
• natural disasters, political and economic instability, including wars, such
as the developing conflict between Russia and Ukraine, terrorism, and
political unrest, outbreak of disease, boycotts, curtailment of trade, and
other business restrictions;
• certain expenses including, among others, expenses for travel,
translation, and insurance; and
• regulatory and compliance risks that relate to maintaining accurate
information and control over sales and activities that may fall within
the purview of the U.S. Foreign Corrupt Practices Act of 1977, as
amended, or the FCPA, its books and records provisions, or its anti-
bribery provisions.
Any of these factors could significantly harm our potential international
expansion and operations and, consequently, our results of operations.
European data collection is governed by restrictive regulations governing
the use, processing and cross‑border transfer of personal information.
In the event we decide to conduct clinical trials or continue to enroll
subjects in our ongoing or future clinical trials in the European Union, we
may be subject to additional privacy restrictions. The collection and use of
personal health data in the European Union is governed by the provisions
of the General Data Protection Regulation (EU) 2016/679, or GDPR. This
directive imposes several requirements relating to the consent of the
individuals to whom the personal data relates, the information provided to
the individuals, notification of data processing obligations to the competent
national data protection authorities and the security and confidentiality
of the personal data. The GDPR also imposes strict rules on the transfer
of personal data out of the European Union to the United States. Failure
to comply with the requirements of the Data Protection Directive, which
governs the collection and use of personal health data in the European
Union, the GDPR, and the related national data protection laws of the
European Union Member States may result in fines and other administrative
penalties. The GDPR introduced new data protection requirements in the
European Union and substantial fines for breaches of the data protection
rules. The GDPR regulations may impose additional responsibility and
liability in relation to personal data that we process and we may be required
to put in place additional mechanisms ensuring compliance with these and/
or new data protection rules. This may be onerous and adversely affect our
business, financial condition, prospects and results of operations.
We are subject to the U.K. Bribery Act 2010, or the Bribery Act, the U.S.
Foreign Corrupt Practices Act of 1977 (as amended) (“FCPA”) and other
anti‑corruption laws, as well as export control laws, import and customs
laws, trade and economic sanctions laws and other laws governing
our operations.
Our operations are subject to anti-corruption laws, including the Bribery
Act, the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C.
§201, the U.S. Travel Act, and other anti-corruption laws that apply in
countries where we do business. These laws generally prohibit us and
our employees and intermediaries acting on our behalf from corruptly
authorizing, promising, offering, or providing, directly or indirectly, anything
else of value, to government officials or other persons to obtain or retain
business or gain some other business advantage. The Bribery Act also
prohibits: (i) “commercial” bribery of private parties, in addition to bribery
involving domestic or foreign officials; (ii) the acceptance of bribes, as well
as the giving of bribes, and (iii) “facilitation payments”, meaning generally
low level payments designed to secure or expedite routine governmental
actions or other conduct to which persons are already under obligations
to perform. The Bribery Act also creates an offence applicable corporate
entities for failure to prevent bribery by our employees, officers, directors
and other third parties acting on our behalf, to which the only defence is to
maintain “adequate procedures” designed to prevent such acts of bribery.
In the future, we and our strategic partners may operate in jurisdictions that
pose a heightened risk of potential Bribery Act or FCPA violations, and we
may participate in collaborations and relationships with third parties whose
conduct could potentially subject us to liability under the Bribery Act,
FCPA or other anti-corruption laws, even if we do not explicitly authorize
or have actual knowledge of such activities. In addition, we cannot predict
the nature, scope or effect of future regulatory requirements to which our
international operations might be subject or the manner in which existing
laws might be administered or interpreted.
We are also subject to other laws and regulations governing our
international operations, including regulations administered by the
Risk Factor Annex — continuedAdditionasl information governments of the United Kingdom and the United States, and authorities
in the European Union and its member states, including applicable
export control regulations, economic sanctions and embargoes on certain
countries, regions, and persons, import and customs requirements and
currency exchange regulations, collectively referred to as the Trade Control
laws. Compliance with Trade Control Laws regarding the import and export
of our products may create delays in the introduction of our products
in international markets, and, in some cases, prevent the export of our
products to some countries altogether.
There is no assurance that we will be completely effective in ensuring our
compliance with all applicable anti-corruption laws, including the Bribery
Act, the FCPA or other legal requirements, including Trade Control laws.
If we are not in compliance with the Bribery Act, the FCPA and other
anti-corruption laws or Trade Control laws, we may be subject to criminal
and civil penalties, disgorgement, debarment from debarment from
government contracts as well as other sanctions and remedial measures,
and may also result in collateral litigation. These consequences could have
an adverse impact on our business, financial condition, results of operations
and liquidity. Likewise, any investigation of any potential violations of the
Bribery Act, the FCPA, other anti-corruption laws or Trade Control laws
by United Kingdom, United States or other authorities could also have an
adverse impact on our reputation, our business, results of operations and
financial condition. In addition, responding to any enforcement action may
result in a significant diversion of management’s attention and resources
and significant defense costs and other professional fees.
The United Kingdom’s withdrawal from the European Union may have
a negative effect on global economic conditions, financial markets and our
business, which could reduce the price of our ADSs.
On June 23, 2016, the United Kingdom held a referendum in which
a majority of the eligible members of the electorate voted for the United
Kingdom to leave the European Union. The United Kingdom’s withdrawal
from the European Union is commonly referred to as Brexit. In October
2019, a withdrawal agreement, or the Withdrawal Agreement, setting
out the terms of the United Kingdom’s exit from the European Union,
and a political declaration on the framework for the future relationship
between the United Kingdom and European Union was agreed between
the UK and EU governments. Under the terms of the EU Withdrawal
Agreement, the United Kingdom withdrew from membership of the
European Union on 31 January 2020 and entered into a ’transition period’,
or the Transition Period, during which the majority of rights and obligations
associated with membership of the European Union continued to apply
to the United Kingdom; however, this expired on December 31, 2020. The
United Kingdom and the European Union have signed a EU-UK Trade and
Cooperation Agreement, which became provisionally applicable on January
1, 2021 and formally applicable effective May 1, 2021. This agreement
provides details on how some aspects of the United Kingdom and
European Union’s relationship will operate going forwards however there
are still many uncertainties.
These developments have had and may continue to have a significant
adverse effect on global economic conditions and the stability of global
financial markets, and could significantly reduce global market liquidity
and restrict the ability of key market participants to operate in certain
financial markets. In particular, it could also lead to a period of considerable
uncertainty in relation to the UK financial and banking markets. As a result
of this uncertainty, global financial markets could experience significant
volatility, which could adversely affect the market price of our ADSs. Asset
valuations, currency exchange rates and credit ratings may also be subject
to increased market volatility.
We may also face new regulatory costs and challenges that could have
an adverse effect on our operations. The United Kingdom will lose the
benefits of global trade agreements negotiated by the European Union
on behalf of its members, which may result in increased trade barriers
that could make our doing business in Europe more difficult. In addition,
currency exchange rates in the pound sterling and the euro with respect
to each other and the U.S. dollar have already been adversely affected
by Brexit. Furthermore, now that the Transition Period has expired, Great
Britain will no longer be covered by the centralized procedure for obtaining
EEA-wide marketing authorization from the EMA and a separate process
for authorization of drug therapeutics, including the therapeutic candidates
within our Wholly Owned Pipeline, will be required in Great Britain,
resulting in an authorization covering the United Kingdom or Great Britain
only. For a period of two years from January 1, 2021, the Medicines and
Healthcare products Regulatory Agency, or MHRA (the UK medicines and
medical devices regulator) may rely on a decision taken by the European
Commission on the approval of a new marketing authorization in the
centralized procedure, in order to more quickly grant a Great Britain
marketing authorization. A separate application will, however, still be
required. The MHRA has published a series of guidance notes on how the
process for authorization of medicines will now work, however exactly what
implications this will have in practice remain unclear.
Risks Related to Our Equity Securities and ADSs
The market price of our ADSs has been and will likely continue to be highly
volatile, and you could lose all or part of your investment.
The market price of our ADSs has been and will likely continue to be
volatile. The stock market in general, and the market for biopharmaceutical
companies in particular, has experienced extreme volatility that has often
been unrelated to the operating performance of particular companies. As
a result of this volatility, you may not be able to sell your ADSs at or above
the purchase price. The market price for our ADSs may be influenced by
many factors, including:
• adverse results or delays in our preclinical studies or clinical trials;
• reports of AEs or other negative results in clinical trials of third parties’
therapeutic candidates that target the therapeutic candidates within
our Wholly Owned Pipeline’s or our Founded Entities’ therapeutic
candidates’ target indications;
• an inability for us to obtain additional funding on reasonable
terms or at all;
• any delay in submitting an IND, BLA or NDA for the therapeutic
candidates within our Wholly Owned Pipeline or our Founded Entities’
therapeutic candidates and any adverse development or perceived
adverse development with respect to the FDA’s review of that
IND, BLA or NDA;
• failure to develop successfully and commercialize the therapeutic
candidates within our Wholly Owned Pipeline or our Founded Entities’
therapeutic candidates;
• announcements we make regarding our current therapeutic candidates,
acquisition of potential new therapeutic candidates and companies and/
or in-licensing;
• failure to maintain our or our Founded Entities’ existing license
arrangements or enter into new licensing and collaboration agreements;
• failure by us, our Founded Entities or our licensors to prosecute, maintain
or enforce our intellectual property rights;
• changes in laws or regulations applicable to future therapeutics;
• inability to obtain adequate clinical or commercial supply for the
therapeutic candidates within our Wholly Owned Pipeline or our
Founded Entities’ therapeutic candidates or the inability to do so at
acceptable prices;
• adverse regulatory decisions, including failure to reach agreement with
applicable regulatory authorities on the design or scope of our planned
clinical trials;
• failure to obtain and maintain regulatory exclusivity for the therapeutic
candidates within our Wholly Owned Pipeline or our Founded Entities’
therapeutic candidates;
• regulatory approval or commercialization of new therapeutics or other
methods of treating our target disease indications by our competitors;
• failure to meet or exceed financial projections we may provide to the
public or to the investment community;
• publication of research reports or comments by securities or
industry analysts;
• the perception of the pharmaceutical and biotechnology industries by
the public, legislatures, regulators and the investment community;
• announcements of significant acquisitions, strategic partnerships,
joint ventures or capital commitments by us, our Founded Entities our
strategic collaboration partners or our competitors;
• disputes or other developments relating to proprietary rights, including
patents, litigation matters and our or our Founded Entities’ ability to
obtain patent protection for our technologies;
• additions or departures of our key scientific or management personnel;
• significant lawsuits, including patent or shareholder litigation, against us;
• changes in the market valuations of similar companies;
• adverse developments relating to any of the above or additional factors
with respect to our Founded Entities;
• sales or potential sales of substantial amounts of our ADSs; and
• trading volume of our ADSs.
In addition, companies trading in the stock market in general, and Nasdaq,
in particular, have experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating
performance of these companies. Broad market and industry factors may
negatively affect the market price of our ADSs, regardless of our actual
operating performance. Since our ADSs were initially sold in November
2020 at a price of $33.00 per ADS, our ADS price has fluctuated significantly,
ranging from an intraday low of $21.95 to an intraday high of $63.95 for
the period beginning November 16, 2020, our first day of trading on The
Nasdaq Global Market, through March 31, 2022. If the market price of our
ADSs does not exceed the price at which you acquired them, you may not
PureTech Health plc Annual report and accounts 2021 247
Risk Factor Annex — continuedAdditional information realize any return on your investment in us and may lose some or all of
your investment.
If securities or industry analysts do not publish research or publish
inaccurate or unfavorable research about our business, our ADS price and
trading volume could decline.
The trading market for our ADSs and ordinary shares depends in part
on the research and reports that securities or industry analysts publish
about us or our business. If no or few securities or industry analysts cover
our company, the trading price for our ADSs and ordinary shares would
be negatively impacted. If one or more of the analysts who covers us
downgrades our equity securities or publishes incorrect or unfavorable
research about our business, the price of our ordinary shares and ADSs
would likely decline. If one or more of these analysts ceases coverage of
our company or fails to publish reports on us regularly, or downgrades our
securities, demand for our ordinary shares and ADSs could decrease, which
could cause the price of our ordinary shares and ADSs or their trading
volume to decline.
Future sales, or the possibility of future sales, of a substantial number of
our securities could adversely affect the price of the shares and dilute
shareholders.
Sales of a substantial number of our ADSs in the public market could occur
at any time, subject to certain restrictions described below. If our existing
shareholders sell, or indicate an intent to sell, substantial amounts of our
securities in the public market, the trading price of the ADSs could decline
significantly and could decline below the original purchase price. As of
March 31, 2022, we had 287,841,508 outstanding ordinary shares. Ordinary
shares subject to outstanding options under our equity incentive plans and
the ordinary shares reserved for future issuance under our equity incentive
plans will become eligible for sale in the public market in the future, subject
to certain legal and contractual limitations.
Holders of ADSs are not treated as holders of our ordinary shares.
If you purchase an ADS, you will become a holder of ADSs with underlying
ordinary shares in a company incorporated under English law. Holders
of ADSs are not treated as holders of our ordinary shares, unless they
withdraw the ordinary shares underlying their ADSs in accordance with the
deposit agreement and applicable laws and regulations. The depositary
is the holder of the ordinary shares underlying the ADSs. Holders of ADSs
therefore do not have any rights as holders of our ordinary shares, other
than the rights that they have pursuant to the deposit agreement. See
“Description of Securities Other Than Equity Securities” in our Annual
Report on Form 20-F.
Holders of ADSs may be subject to limitations on the transfer of their ADSs
and the withdrawal of the underlying ordinary shares.
ADSs are transferable on the books of the depositary. However, the
depositary may close its books at any time or from time to time when it
deems expedient in connection with the performance of its duties. The
depositary may refuse to deliver, transfer or register transfers of ADSs
generally when our books or the books of the depositary are closed, or
at any time if we or the depositary think it is advisable to do so because
of any requirement of law, government or governmental body, or
under any provision of the deposit agreement, or for any other reason,
subject to the right of ADS holders to cancel their ADSs and withdraw
the underlying ordinary shares. Temporary delays in the cancellation of
your ADSs and withdrawal of the underlying ordinary shares may arise
because the depositary has closed its transfer books or we have closed our
transfer books, the transfer of ordinary shares is blocked to permit voting
at a shareholders’ meeting or we are paying a dividend on our ordinary
shares. In addition, ADS holders may not be able to cancel their ADSs and
withdraw the underlying ordinary shares when they owe money for fees,
taxes and similar charges and when it is necessary to prohibit withdrawals
in order to comply with any laws or governmental regulations that apply to
ADSs or to the withdrawal of ordinary shares or other deposited securities.
See “Description of Securities Other Than Equity Securities” in our Annual
Report on Form 20-F.
ADS holders may not be entitled to a jury trial with respect to claims
arising under the deposit agreement, which could result in less favorable
outcomes to the plaintiff(s) in any such action.
The deposit agreement governing the ADSs representing our ordinary
shares provides that, to the fullest extent permitted by law, holders and
beneficial owners of ADSs irrevocably waive the right to a jury trial of any
claim they may have against us or the depositary arising out of or relating to
the ADSs or the deposit agreement.
If this jury trial waiver provision is not permitted by applicable law, an action
could proceed under the terms of the deposit agreement with a jury trial. If
we or the depositary opposed a jury trial demand based on the waiver, the
court would determine whether the waiver was enforceable based on the
facts and circumstances of that case in accordance with the applicable state
and federal law. To our knowledge, the enforceability of a contractual pre-
dispute jury trial waiver in connection with claims arising under the federal
securities laws has not been finally adjudicated by the U.S. Supreme Court.
However, we believe that a contractual pre-dispute jury trial waiver provision
is generally enforceable, including under the laws of the State of New York,
which govern the deposit agreement, by a federal or state court in the City
of New York, which has non-exclusive jurisdiction over matters arising under
the deposit agreement. In determining whether to enforce a contractual
pre-dispute jury trial waiver provision, courts will generally consider whether
a party knowingly, intelligently and voluntarily waived the right to a jury trial.
We believe that this is the case with respect to the deposit agreement and
the ADSs. It is advisable that you consult legal counsel regarding the jury
waiver provision before entering into the deposit agreement.
If you or any other holders or beneficial owners of ADSs bring a claim
against us or the depositary in connection with matters arising under the
deposit agreement or the ADSs, including claims under federal securities
laws, you or such other holder or beneficial owner may not be entitled to
a jury trial with respect to such claims, which may have the effect of limiting
and discouraging lawsuits against us and/or the depositary. If a lawsuit is
brought against us and/or the depositary under the deposit agreement, it
may be heard only by a judge or justice of the applicable trial court, which
would be conducted according to different civil procedures and may result
in different outcomes than a trial by jury would have had, including results
that could be less favorable to the plaintiff(s) in any such action, depending
on, among other things, the nature of the claims, the judge or justice
hearing such claims, and the venue of the hearing.
No condition, stipulation or provision of the deposit agreement or ADSs
serves as a waiver by any holder or beneficial owner of ADSs or by us or the
depositary of compliance with the U.S. federal securities laws and the rules
and regulations promulgated thereunder.
One of our principal shareholders has a significant holding in the company
which may give them influence in certain matters requiring approval by
shareholders, including approval of significant corporate transactions in
certain circumstances.
As of February 16, 2022, Invesco Asset Management Limited, or Invesco,
held approximately 22.5 percent of our ordinary shares. Accordingly,
Invesco may, as a practical matter, be able to influence certain matters
requiring approval by shareholders, including approval of significant
corporate transactions in certain circumstances. Such concentration of
ownership may also have the effect of delaying or preventing any future
proposed change in control of the Company. The trading price of the
ordinary shares could be adversely affected if potential new investors are
disinclined to invest in the Company because they perceive disadvantages
to a large shareholding being concentrated in the hands of a single
shareholder. The interests of Invesco and the investors that acquire ADSs
may not be aligned. Invesco may make acquisitions of, or investments in,
other businesses in the same sectors as us or our Founded Entities. These
businesses may be, or may become, competitors of us or our Founded
Entities. In addition, funds or other entities managed or advised by Invesco
may be in direct competition with us or our Founded Entities on potential
acquisitions of, or investments in, certain businesses. In addition, Invesco
holds equity interests in certain of our Founded Entities where they may
exert direct influence.
You will not have the same voting rights as the holders of our ordinary
shares and may not receive voting materials in time to be able to exercise
your right to vote.
Except as described in our Annual Report on Form 20-F and the deposit
agreement, holders of the ADSs will not be able to exercise voting rights
attaching to the ordinary shares represented by the ADSs. Under the terms
of the deposit agreement, holders of the ADSs may instruct the depositary
to vote the ordinary shares underlying their ADSs. Otherwise, holders of
ADSs will not be able to exercise their right to vote unless they withdraw
the ordinary shares underlying their ADSs to vote them in person or by
proxy in accordance with applicable laws and regulations and our Articles
of Association. Even so, ADS holders may not know about a meeting far
enough in advance to withdraw those ordinary shares. If we ask for the
instructions of holders of the ADSs, the depositary, upon timely notice from
us, will notify ADS holders of the upcoming vote and arrange to deliver
our voting materials to them. Upon our request, the depositary will mail to
holders a shareholder meeting notice that contains, among other things,
a statement as to the manner in which voting instructions may be given. We
cannot guarantee that ADS holders will receive the voting materials in time
to ensure that they can instruct the depositary to vote the ordinary shares
underlying their ADSs. A shareholder is only entitled to participate in, and
vote at, the meeting of shareholders, provided that it holds our ordinary
shares as of the record date set for such meeting and otherwise complies
with our Articles of Association. In addition, the depositary’s liability to
ADS holders for failing to execute voting instructions or for the manner
248 PureTech Health plc Annual report and accounts 2021
Risk Factor Annex — continuedAdditionasl information of executing voting instructions is limited by the deposit agreement. As
a result, holders of ADSs may not be able to exercise their right to give
voting instructions or to vote in person or by proxy and they may not have
any recourse against the depositary or us if their ordinary shares are not
voted as they have requested or if their shares cannot be voted.
You may not receive distributions on our ordinary shares represented by
the ADSs or any value for them if it is illegal or impractical to make them
available to holders of ADSs.
The depositary for the ADSs has agreed to pay to you any cash dividends
or other distributions it or the custodian receives on our ordinary shares
or other deposited securities after deducting its fees and expenses. You
will receive these distributions in proportion to the number of our ordinary
shares your ADSs represent. However, in accordance with the limitations
set forth in the deposit agreement, it may be unlawful or impractical to
make a distribution available to holders of ADSs. We have no obligation to
take any other action to permit distribution on the ADSs, ordinary shares,
rights or anything else to holders of the ADSs. This means that you may not
receive the distributions we make on our ordinary shares or any value from
them if it is unlawful or impractical to make them available to you. These
restrictions may have an adverse effect on the value of your ADSs.
Because we do not have immediate plans to pay any cash dividends on our
ADSs, capital appreciation, if any, may be your sole source of gains and
you may never receive a return on your investment.
Under current English law, a company’s accumulated realized profits must
exceed its accumulated realized losses (on a non-consolidated basis) before
dividends can be declared and paid. Therefore, we must have sufficient
distributable profits before declaring and paying a dividend. We have not
paid dividends in the past on our ordinary shares. We have not announced
any immediate plans to pay any cash dividends. As a result, capital
appreciation, if any, on our ADSs will be your sole source of gains for the
foreseeable future, and you would suffer a loss on your investment if you
were unable to sell your ADSs at or above the price that you initially paid
for them. Investors seeking cash dividends should not purchase our ADSs.
Risks Related to Our Corporate Status
We are no longer an “emerging growth company” and, as a result, are
subject to certain enhanced disclosure requirements.
Because the market value of our equity securities held by non-affiliates
exceeded $700.0 million as of June 30, 2021, among other things, we no
longer qualified as an emerging growth company as of December 31,
2021. As a result, we are subject to certain requirements that apply to other
public companies but did not previously apply to us due to our status as an
emerging growth company, such as the auditor attestation requirements
under Section 404 of the Sarbanes Oxley Act. Compliance with these
enhanced disclosure requirements will increase our costs and could
negatively affect our results of operations and financial condition.
We are not, and do not intend to become, regulated as an “investment
company” under the Investment Company Act of 1940, as amended, or
the 1940 Act and if we were deemed an “investment company” under the
1940 Act, applicable restrictions could make it impractical for us to continue
our business as contemplated and could have a material adverse effect on
our business.
The 1940 Act and the rules thereunder contain detailed parameters for the
organization and operation of investment companies. Among other things,
the 1940 Act and the rules thereunder limit or prohibit transactions with
affiliates, impose limitations on the issuance of debt and equity securities
and impose certain governance requirements. We have not been and do
not intend to become regulated as an investment company, and we intend
to conduct our activities so that we will not be deemed to be an investment
company under the 1940 Act. In order to ensure that we are not deemed
to be an investment company, we may be limited in the assets that we may
continue to own and, further, may need to dispose of or acquire certain
assets at such times or on such terms as may be less favorable to us than
in the absence of such requirement. If anything were to happen which
would cause us to be deemed to be an investment company under the
1940 Act (such as significant changes in the value of our Founded Entities
or a change in circumstance that results in a reclassification of our interests
in our Founded Entities for purposes of the 1940 Act), the requirements
imposed by the 1940 Act could make it impractical for us to continue our
business as currently conducted, which would materially adversely affect
our business, results of operations and financial condition. In addition, if
we were to become inadvertently subject to the 1940 Act, any violation of
the 1940 Act could subject us to material adverse consequences, including
potentially significant regulatory penalties and the possibility that certain of
our contracts could be deemed unenforceable.
As a foreign private issuer, we are exempt from a number of rules under the
U.S. securities laws and are permitted to file less information with the SEC
than a U.S. company. This may limit the information available to holders of
ADSs or our ordinary shares.
We are a “foreign private issuer,” as defined in the SEC’s rules and
regulations and, consequently, we are not subject to all of the disclosure
requirements applicable to public companies organized within the United
States. For example, we are exempt from certain rules under the Exchange
Act, that regulate disclosure obligations and procedural requirements
related to the solicitation of proxies, consents or authorizations applicable
to a security registered under the Exchange Act, including the U.S. proxy
rules under Section 14 of the Exchange Act. In addition, our officers and
directors are exempt from the reporting and “short-swing” profit recovery
provisions of Section 16 of the Exchange Act and related rules with respect
to their purchases and sales of our securities. Moreover, while we currently
make annual and semi-annual filings with respect to our listing on the LSE,
we will not be required to file periodic reports and financial statements with
the SEC as frequently or as promptly as U.S. domestic issuers and will not
be required to file quarterly reports on Form 10-Q or current reports on
Form 8-K under the Exchange Act. Accordingly, there will be less publicly
available information concerning our company than there would be if we
were not a foreign private issuer.
As a foreign private issuer, we are permitted to adopt certain home
country practices in relation to corporate governance matters that differ
significantly from Nasdaq corporate governance listing standards. These
practices may afford less protection to shareholders than they would enjoy
if we complied fully with corporate governance listing standards.
As a foreign private issuer listed on Nasdaq, we are subject to corporate
governance listing standards. However, rules permit a foreign private issuer
like us to follow the corporate governance practices of its home country.
Certain corporate governance practices in the United Kingdom, which
is our home country, may differ significantly from corporate governance
listing standards. For example, neither the corporate laws of the United
Kingdom nor our articles of association require a majority of our directors
to be independent and we could include non-independent directors
as members of our nomination and remuneration committee, though
a majority is required, and our independent directors would not necessarily
hold regularly scheduled meetings at which only independent directors are
present. Currently, we follow home country practice to the maximum extent
possible. Therefore, our shareholders may be afforded less protection than
they otherwise would have under corporate governance listing standards
applicable to U.S. domestic issuers. See “Governance” of this Annual
Report and Accounts and “Item 16G—Corporate Governance” of our
Annual Report on Form 20-F,
We may lose our foreign private issuer status in the future, which could
result in significant additional cost and expense.
While we currently qualify as a foreign private issuer, the determination of
foreign private issuer status is made annually on the last business day of an
issuer’s most recently completed second fiscal quarter and, accordingly, the
next determination will be made with respect to us on June 30, 2022.
In the future, we would lose our foreign private issuer status if we to fail
to meet the requirements necessary to maintain our foreign private issuer
status as of the relevant determination date. For example, if more than
50 percent of our securities are held by U.S. residents and more than 50
percent of the members of our executive committee or members of our
board of directors are residents or citizens of the United States, we could
lose our foreign private issuer status.
The regulatory and compliance costs to us under U.S. securities laws
as a U.S. domestic issuer may be significantly more than costs we incur
as a foreign private issuer. If we are not a foreign private issuer, we will
be required to file periodic reports and registration statements on U.S.
domestic issuer forms with the SEC, which are more detailed and extensive
in certain respects than the forms available to a foreign private issuer.
We would be required under current SEC rules to prepare our financial
statements in accordance with U.S. GAAP, rather than IFRS, and modify
certain of our policies to comply with corporate governance practices
associated with U.S. domestic issuers. Such conversion of our financial
statements to U.S. GAAP will involve significant time and cost. In addition,
we may lose our ability to rely upon exemptions from certain corporate
governance requirements on U.S. stock exchanges that are available to
foreign private issuers such as the ones described above and exemptions
from procedural requirements related to the solicitation of proxies.
PureTech Health plc Annual report and accounts 2021 249
Risk Factor Annex — continuedAdditional information Risks Related to Our Internal Controls
We have identified a material weakness in our internal control over
financial reporting in connection with the audit of our consolidated
financial statements in accordance with the standards of the PCAOB and
U.S. securities laws. If we fail to implement and maintain effective internal
control over financial reporting, we may be unable to accurately report our
results of operations, meet our reporting obligations or prevent fraud.
Section 404 of the Sarbanes-Oxley Act requires that our management
assess our internal control over financial reporting and that we include
a report of management on our internal control over financial reporting in
our annual reports on Form 20-F. As disclosed in more detail under Item
15 “Controls and Procedures” of this Report, we have concluded that our
internal control over financial reporting was ineffective as of December 31,
2021 due to a material weakness that was unremediated as of December
31, 2021 and is described in Item 15.
A material weakness is a deficiency, or combination of control deficiencies,
in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the annual or interim financial
statements will not be prevented or detected on a timely basis. The
material weakness relates to our risk assessment process over the design
and implementation of our management review controls over the valuation
of financial instruments, the completeness and accuracy of related
sensitivity disclosures, the valuation of share based payment liabilities and
completeness and the accuracy of the tax provision. There was insufficient
precision in and documentation of the performance of such review
controls resulting in controls not being designed in a way to sufficiently
address the level of aggregation and criteria for investigation. Additionally,
management did not completely identify the information used in the
control and did not design sufficient controls to address the relevance
and reliability of such information. We concluded that a similar material
weakness existed as of December 31, 2020, and this material weakness
continued to exist at December 31, 2021. We intend to take further steps
to implement our remediation plan, including the implementation of
more robust procedures to identify and document relevant risks at an
appropriately disaggregated level and more detailed management review
controls to mitigate such risks. While we expect to continue to implement
our remediation plan through 2022, we cannot be certain as to when
remediation will be fully completed. As with any internal control framework,
we cannot be certain that these efforts will be sufficient to remediate our
material weakness or prevent future material weaknesses or significant
deficiencies from occurring in the future. If we are unable to successfully
remediate our existing or any future material weaknesses in our internal
control over financial reporting, or if we identify any additional material
weaknesses, the accuracy and timing of our financial reporting may be
adversely affected.
Effective internal control over financial reporting is necessary for us to
provide reliable financial reports and, together with adequate disclosure
controls and procedures, are designed to prevent fraud. Any failure to
implement or maintain these controls, or difficulties encountered in their
implementation, could cause us to fail to meet our reporting obligations.
In addition, any testing by us or by our independent registered public
accounting firm may reveal additional deficiencies in our internal control
over financial reporting that are deemed to be material weaknesses or that
may require prospective or retroactive changes to our financial statements
or identify other areas for further attention or improvement.
If we fail to achieve and maintain effective internal control over financial
reporting, we could suffer material misstatements in our financial
statements and fail to meet our reporting obligations, which could cause
investors to lose confidence in our reported financial information. This
could in turn limit our access to capital markets or lead to a decline in the
trading price of our securities. We may also be required to restate our
financial statements from prior periods. Additionally, ineffective internal
control over financial reporting could expose us to increased risk of fraud
or misuse of corporate assets and subject us to potential delisting from the
stock exchange on which we list, regulatory investigations, litigation from
shareholders and civil or criminal sanctions, which could have a material
adverse effect on our business.
Our disclosure controls and procedures may not prevent or detect all errors
or acts of fraud.
We are subject to certain reporting requirements of the Exchange Act.
Our disclosure controls and procedures are designed to reasonably
assure that information required to be disclosed by us in reports we file
or submit under the Exchange Act is accumulated and communicated to
management, recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the SEC. We believe that
any disclosure controls and procedures or internal controls and procedures,
no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are
met. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because
250 PureTech Health plc Annual report and accounts 2021
of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people
or by an unauthorized override of the controls. Accordingly, because of
the inherent limitations in our control system, misstatements or insufficient
disclosures due to error or fraud may occur and not be detected.
Risks Related to Tax Matters
Comprehensive tax reform legislation could adversely affect our business
and financial condition.
The rules dealing with U.S. federal, state, and local income taxation are
constantly under review by persons involved in the legislative process
and by the Internal Revenue Service and the U.S. Treasury Department.
Changes to tax laws (which changes may have retroactive application) could
adversely affect us or holders of our common stock. In recent years, many
such changes have been made and changes are likely to continue to occur
in the future. For example, on December 22, 2017, the Tax Act was signed
into law and enacted many significant changes to U.S. tax laws. Future
guidance from the Internal Revenue Service and other tax authorities with
respect to the Tax Act may affect us, and certain aspects of the Tax Act
could be repealed or modified in future legislation. For example, on March
27, 2020, the “Coronavirus Aid, Relief, and Economic Security Act” or the
CARES Act was signed into law, which modified certain provisions of the
Tax Act and included certain changes in tax law intended to stimulate the
U.S. economy in light of the COVID-19 coronavirus outbreak, including
temporary beneficial changes to the treatment of net operating losses,
interest deductibility limitations and payroll tax matters. It is uncertain if and
to what extent various states will conform to the newly enacted federal tax
law. We will continue to examine the impact tax reform legislation may have
on our business.
We are treated as a U.S. domestic corporation for U.S. federal income
tax purposes.
We are treated as a U.S. domestic corporation for U.S. federal income tax
purposes under Section 7874(b) of the Internal Revenue Code of 1986, as
amended, or the Code. As a result, we are subject to U.S. income tax on
our worldwide income and any dividends paid by us to non-U.S. holders
(as defined in the discussion under “Taxation in the United States” in
our Annual Report on Form 20-F) will be subject to U.S. federal income
tax withholding at a 30 percent rate or such lower rate as provided in an
applicable treaty. Furthermore, PureTech Health plc is also resident for tax
purposes in the U.K. and subject to U.K. corporation tax on its worldwide
income and gains. Consequently, we may be liable for both U.S. and U.K.
income tax, which could have a material adverse effect on our financial
condition and results of operations.
This discussion of certain U.S. federal income tax risks is subject in its
entirety to the summaries set forth in “Certain United Kingdom Tax
Considerations” and “Taxation in the United States” in our Annual Report
on Form 20-F
Our ability to use our net operating losses to offset future taxable income
may be subject to certain limitations.
As of December 31, 2021, we had U.S. federal and state net operating
loss carryforwards, or NOLs, of approximately $215.3 million and 27.9
million respectively, due to prior period losses, which, subject to the
following discussion, are generally available to be carried forward to offset
our future taxable income, if any, until such NOLs are used or expire. In
general, under Section 382 of the Code, a corporation that undergoes an
“ownership change,” generally defined as a greater than 50 percentage
point change (by value) in its equity ownership by certain shareholders
over a three year period, is subject to limitations on its ability to utilize its
NOLs to offset future taxable income. Our existing NOLs may be subject
to limitations arising from previous ownership changes, and if we undergo
an ownership change, our ability to utilize NOLs could be further limited
by Section 382 of the Code. Future changes in our stock ownership, some
of which are outside of our control, could result in an ownership change
under Section 382 of the Code. Additionally, we may no longer be able to
utilize losses of our Founded Entities that have been deconsolidated or
that will deconsolidate in the future. Furthermore, our ability to utilize NOLs
of companies that we have acquired or may acquire in the future may be
subject to limitations. In addition, under the Tax Act, the amount of post
2017 NOLs that we are permitted to deduct in any taxable year is limited
to the lesser of our NOLs or 80 percent of our taxable income in such year
(subject to Section 382 of the Code), where taxable income is determined
without regard to the NOL deduction itself. Federal NOLs generated after
December 31, 2017 are not subject to expiration and generally may not be
carried back to prior taxable years, except that under the CARES Act, NOLs
generated in 2018, 2019 and 2020 may be carried back five taxable years
and these NOLs could fully offset prior year taxable income without the
80% taxable income limitation under the CARES Act.. There is also a risk
that due to regulatory changes, such as suspensions on the use of NOLs,
or other unforeseen reasons, our existing NOLs could be unavailable to
offset future income tax liabilities. In addition, changes under the Tax Act,
Risk Factor Annex — continuedAdditionasl information as amended by the CARES Act, includes changes to the U.S. federal tax
rates and the rules governing NOLs that may significantly impact our ability
to utilize our NOLs to offset taxable income in the future. For these reasons,
we may not be able to realize a tax benefit from the use of our NOLs.
We may be unable to use net operating loss and tax credit carryforwards
and certain built‑in losses to reduce future U.K. tax liabilities.
As a U.K. incorporated and tax resident entity, PureTech Health plc is
subject to U.K. corporate taxation on its tax-adjusted trading profits. Due
to the nature of our business, PureTech Health plc has generated losses
since inception and therefore we have not paid any U.K. corporation tax.
Subject to numerous utilization criteria and restrictions (including those
that limit the percentage of profits that can be reduced by carried forward
losses and those that can restrict the use of carried forward losses where
there is a change of ownership of more than half the ordinary shares of the
company and a major change in the nature, conduct or scale of the trade),
we expect these to be eligible for carry forward and utilization against
future U.K. operating profits.
Future changes to tax laws could materially adversely affect our company
and reduce net returns to our shareholders.
The tax treatment of the company is subject to changes in tax laws,
regulations and treaties, or the interpretation thereof, tax policy initiatives
and reforms under consideration and the practices of tax authorities
in jurisdictions in which we operate, as well as tax policy initiatives and
reforms related to the Organisation for Economic Co-Operation and
Development’s, or OECD, Base Erosion and Profit Shifting, or BEPS,
Project, the European Commission’s state aid investigations and other
initiatives. Such changes may include (but are not limited to) the taxation
of operating income, investment income, dividends received or (in the
specific context of withholding tax) dividends paid. We are unable to
predict what tax reform may be proposed or enacted in the future or what
effect such changes would have on our business, but such changes, to
the extent they are brought into tax legislation, regulations, policies or
practices, could affect our financial position and overall or effective tax
rates in the future in countries where we have operations, reduce post-tax
returns to our shareholders, and increase the complexity, burden and cost
of tax compliance.
Tax authorities may disagree with our positions and conclusions regarding
certain tax positions, resulting in unanticipated costs, taxes or non‑
realization of expected benefits.
A tax authority may disagree with tax positions that we have taken,
which could result in increased tax liabilities. For example, HM Revenue
& Customs, or HMRC, the Internal Revenue Service or another tax
authority could challenge our allocation of income by tax jurisdiction and
the amounts paid between certain of our Founded Entities pursuant to
our intercompany arrangements and transfer pricing policies, including
amounts paid with respect to our intellectual property development.
Similarly, a tax authority could assert that we are subject to tax in
a jurisdiction where we believe we have not established a taxable
connection, often referred to as a “permanent establishment” under
international tax treaties, and such an assertion, if successful, could increase
our expected tax liability in one or more jurisdictions. A tax authority may
take the position that material income tax liabilities, interest and penalties
are payable by us, in which case, we expect that we might contest such
assessment. Contesting such an assessment may be lengthy and costly and
if we were unsuccessful in disputing the assessment, the implications could
increase our anticipated effective tax rate, where applicable.
Shareholder protections found in provisions under the U.K. City Code
on Takeovers and Mergers, or the Takeover Code, will not apply if our
securities are no longer admitted to trading on a regulated market or
a multilateral trading facility in the United Kingdom or on any stock
exchange in the Channel Islands or the Isle of Man and our place
of management and control is considered to change to outside the
United Kingdom.
We are registered as a public limited company incorporated in England
and Wales and have our ordinary shares admitted to trading on a regulated
market in the United Kingdom (being the main market of the LSE).
Accordingly, we are currently subject to the Takeover Code and, as
a result, our shareholders are entitled to the benefit of certain takeover
offer protections provided under the Takeover Code. The Takeover Code
provides a framework within which takeovers of companies are regulated
and conducted. If, at the time of a takeover offer, we have de-listed from
the main market of the LSE (and do not maintain a listing of securities on
any other regulated market or a multilateral trading facility in the United
Kingdom or on any stock exchange in the Channel Islands or the Isle of
Man) and the Panel on Takeovers and Mergers determine that we do not
have our place of central management and control in the United Kingdom,
then the Takeover Code may not apply to us and our shareholders would
not be entitled to the benefit of the various protections that the Takeover
Code affords. In particular, we would not be subject to the rules regarding
mandatory takeover bids. The following is a brief summary of some of the
most important rules of the Takeover Code:
• when any person acquires, whether by a series of transactions over
a period of time or not, an interest in shares which (taken together with
shares already held by that person and an interest in shares held or
acquired by persons acting in concert with him or her) carry 30 percent
or more of the voting rights of a company that is subject to the Takeover
Code, that person is generally required to make a mandatory offer
to all the holders of any class of equity share capital or other class of
transferable securities carrying voting rights in that company to acquire
the balance of their interests in the company;
• when any person who, together with persons acting in concert with him
or her, is interested in shares representing not less than 30 percent but
does not hold more than 50 percent of the voting rights of a company
that is subject to the Takeover Code, and such person, or any person
acting in concert with him or her, acquires an additional interest in shares
which increases the percentage of shares carrying voting rights in which
he or she is interested, then such person is generally required to make
a mandatory offer to all the holders of any class of equity share capital
or other class of transferable securities carrying voting rights of that
company to acquire the balance of their interests in the company;
• a mandatory offer triggered in the circumstances described in the
two paragraphs above must be in cash (or be accompanied by a cash
alternative) and at not less than the highest price paid within the
preceding 12 months to acquire any interest in shares in the company
by the person required to make the offer or any person acting in concert
with him or her;
• in relation to a voluntary offer (i.e. any offer which is not a mandatory
offer), when interests in shares representing 10 percent or more of
the shares of a class have been acquired for cash by an offeror (i.e.,
a bidder) and any person acting in concert with it in the offer period
and the previous 12 months, the offer must be in cash or include a cash
alternative for all shareholders of that class at not less than the highest
price paid for any interest in shares of that class by the offeror and by
any person acting in concert with it in that period. Further, if an offeror
acquires for cash any interest in shares during the offer period, a cash
alternative must be made available at not less than the highest price
paid for any interest in the shares of that class;
• if the offeror acquires an interest in shares in an offeree company (i.e.,
a target) at a price higher than the value of the offer, the offer must be
increased to not less than the highest price paid for the interest in shares
so acquired;
• the offeree company must obtain competent advice as to whether the
terms of any offer are fair and reasonable and the substance of such
advice must be made known to all the shareholders, together with the
opinion of the board of directors of the offeree company;
• special or favorable deals for selected shareholders are not permitted,
except in certain circumstances where independent shareholder approval
is given and the arrangements are regarded as fair and reasonable in the
opinion of the financial adviser to the offeree;
• all shareholders must be given the same information;
• each document published in connection with an offer by or on behalf of
the offeror or offeree must state that the directors of the offeror or the
offeree, as the case may be, accept responsibility for the information
contained therein;
• profit forecasts, quantified financial benefits statements and asset
valuations must be made to specified standards and must be reported
on by professional advisers;
• misleading, inaccurate or unsubstantiated statements made in
documents or to the media must be publicly corrected immediately;
• actions during the course of an offer by the offeree company, which
might frustrate the offer are generally prohibited unless shareholders
approve these plans. Frustrating actions would include, for example,
lengthening the notice period for directors under their service contract
or agreeing to sell off material parts of the target group;
• stringent and detailed requirements are laid down for the disclosure
of dealings in relevant securities during an offer, including the prompt
disclosure of positions and dealing in relevant securities by the parties
to an offer and any person who is interested (directly or indirectly) in 1
percent or more of any class of relevant securities; and
• employees of both the offeror and the offeree company and the trustees
of the offeree company’s pension scheme must be informed about an
offer. In addition, the offeree company’s employee representatives and
pension scheme trustees have the right to have a separate opinion on
the effects of the offer on employment appended to the offeree board of
directors’ circular or published on a website.
PureTech Health plc Annual report and accounts 2021 251
Risk Factor Annex — continuedAdditional information Broker
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Solicitors
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Company information
Directors, Secretary and Advisors to PureTech
Company Registration Number
09582467
Registered Office
8th Floor
20 Farringdon Street
London EC4A 4AB
United Kingdom
Website
www.puretechhealth.com
Board of Directors
Mr. Christopher Viehbacher (Chair)
Ms. Daphne Zohar (Chief Executive Officer)
Dame Marjorie Scardino
(Senior Independent Non-Executive Director)
Dr. Robert Langer (Non-Executive Director)
Dr. Raju Kucherlapati
(Independent Non-Executive Director)
Dr. John LaMattina (Independent
Non-Executive Director)
Ms. Kiran Mazumdar-Shaw
(Independent Non-Executive Director)
Ms. Sharon Barber-Lui
(Independent Non-Executive Director)
Dr. Bharatt Chowrira
(President and Chief Business,
Legal & Operating Officer)
Company Secretary
Dr. Bharatt Chowrira
Media and Public Relations
FTI Consulting, Inc.
200 Aldersgate
Aldersgate Street
London EC1A 4HD
United Kingdom
Tel: +44 203 727 1000
Independent Auditor
KPMG LLP
15 Canada Square
London E14 5GL
United Kingdom
Tel: +44 207 311 1000
252 PureTech Health plc Annual report and accounts 2021
Additionasl information (cid:38)(cid:20)(cid:24)(cid:25)(cid:20)(cid:19)(cid:26)
(cid:38)(cid:20)(cid:24)(cid:25)(cid:20)(cid:19)(cid:26)
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PureTech Health
6 Tide Street
Suite 400
Boston
MA 02210
Tel: +1 617 482 2333
Email: info@puretechhealth.com