PureTech's Q2 2025 Earnings Call: Contradictions Emerge in R&D Spending, Cash Burn, and Phase III Trial Design for LYT-100

The above is the analysis of the conflicting points in this earnings call

Guidance:

• Cash runway well into 2028; could extend via external funding of Celea and Gallop.
• Expect continued reduction in R&D and G&A as spinouts progress.
• End-of-Phase II meeting for deupirfenidone expected late Sep 2025; Phase III start targeted 1H 2026.
• Additional ELEVATE data to be presented at ERS in September.
• Gallop LYT-200: AML top-line efficacy expected Q4 2025; additional efficacy/OS 1H 2026.
• Seeking external financing for Celea and Gallop; PureTech may contribute capital; details post-close.
• Plan to appoint up to two new non-exec directors with UK capital markets expertise.
• Seaport funded (> $325M) to advance programs.

Business Commentary:

* Financial Performance and Capital Allocation: - PureTech Health reported a cash position of just under $320 million at the end of the first half of 2025. - The company implemented strategies to reduce its cash burn year-on-year, with operating expenses falling from $66.7 million in the first half of 2024 to just under $50 million in the first half of 2025. - This reduction was due to the spinout of Seaport Therapeutics, which moved costs off PureTech's balance sheet.

• Portfolio and Strategic Focus:
• PureTech highlighted three core founded entities: Celea Therapeutics, Gallop Oncology, and Seaport Therapeutics, considering them key to delivering significant financial rewards.
• The company is focused on leveraging external capital to fund these entities, aiming to shift the future R&D and cost off its balance sheet.

• This approach is part of PureTech's hub-and-spoke model, which aims to reduce risk while allowing for significant potential upside.

• Pipeline and Milestones:

• Celea Therapeutics, focusing on IPF treatment, presented promising data from its ELEVATE study, showing potential for lung function stabilization.
• Gallop Oncology's LYT-200 program demonstrated efficacy in trials for AML and solid tumors, with top-line efficacy results expected in Q4 2025.

• These milestones are crucial for regulatory discussions and advancing clinical development plans.

• Shareholder Engagement and Strategy:

• PureTech engaged with shareholders to better understand their views and expectations, leading to the presentation of its core components of value differently.
• The company is strengthening its engagement with U.K. capital markets by appointing new nonexecutive directors and focusing on its LSE listing.
• This strategy aims to reward and respect long-term shareholders while attracting new investment opportunities.

Sentiment Analysis:

• “We ended the half year with cash… just under $320 million… [and] operational runway well into 2028.” “Operating expenses… just under $50 million… vs $66.7 million [in the] same period last year.” Celea’s ELEVATE showed “50% greater treatment effect” vs pirfenidone and 52-week decline of 32.8 ml “comparable to healthy older adults.” Gallop expects LYT-200 AML top-line efficacy in Q4 2025. Seaport raised >$325M with top-tier investors and PureTech retains 35.1% plus tiered royalties.

Q&A:

• Question from Miles Dixon (Peel Hunt): What portion of the $49M H1’25 operating costs relates to Celea and Gallop R&D?
  Response: Most R&D spend is for Celea and Gallop; costs should fall further as both spin out and secure external funding.

• Question from Miles Dixon (Peel Hunt): Would financing/partnering extend your cash runway?
  Response: Yes—external funding shifts R&D off PureTech’s books, extending runway; PureTech may contribute capital, with clarity post-close.

• Question from Miles Dixon (Peel Hunt): For Celea, is Phase III design contingent on partner input and what’s the timing?
  Response: They’re confident in the design; FDA end-of-Phase II meeting is late September, a key gating item for funders; financing work is ongoing.

• Question from Miles Dixon (Peel Hunt): Why are Cobenfy economics lumpy in early years?
  Response: Lumpiness comes from milestone payments layered on the 2% royalty above $2B; details are confidential.

• Question from Heidi Danielle Jacobson (Leerink Partners): What are the key FDA topics for LYT-100 Phase III design?
  Response: Standard Phase III topics under 505(b)(2); briefing book submitted; meeting expected late September; design details to follow FDA alignment.

• Question from Heidi Danielle Jacobson (Leerink Partners): When will you disclose pipeline beyond LYT-100/LYT-200, and is BD still active?
  Response: They’re vetting early assets via quick ‘killer experiments’ and will disclose when de-risked; business development remains active.

• Question from Miles Dixon (Peel Hunt): Preferred partnering/financing structure for Celea?
  Response: Default is a VC-led equity spinout optimized for lowest cost of capital, but they remain open to alternative structures.

• Question from Miles Dixon (Peel Hunt): Is Gallop partnering interest focused on liquid or solid tumors?
  Response: Focus is on AML (liquid) partnering, while remaining open to broader discussions.