PureTech Health plc -- Half-Year Report

PureTech Health plc (Nasdaq: PRTC, LSE: PRTC) (“PureTech” or the “Company”) today announces its half-yearly results for the six months ended June 30, 2023. The following information will be filed on Form 6-K with the United States Securities and Exchange Commission (the “SEC”) and is also available at https://investors.puretechhealth.com/financials-filings/reports.

Commenting on PureTech’s half-yearly results, Daphne Zohar, Founder and Chief Executive Officer of PureTech, said:

“The first half of 2023 has been a strong period across both our Founded Entities and Wholly Owned Pipeline. We have achieved important clinical and financial milestones, while executing on our mission of giving life to new classes of medicine to change the lives of patients with devastating diseases. Our R&D engine has produced 27 new therapeutics and therapeutic candidates, with two taken from inception at PureTech to U.S. Food and Drug Administration (FDA) and European regulatory clearances and a third that is expected to be filed soon for FDA approval. We are proud that our track record of clinical success is six times greater than the industry average.²

“The maturation of our Wholly Owned Programs now gives us several pathways to realize their value as we determine the ideal path for each program’s advancement – this may be through internal development, the creation of new Founded Entities, asset sales, and/or partnering and royalty transactions – and we will be guided by the optimal route to generate value for our shareholders. We are proud that for nearly six years, including during a time that was extremely challenging to the biotech sector at large, we not only created important new medicines, but we also generated almost $800 million in cash without approaching the capital markets or diluting our shareholders. This has allowed us to focus on what we do best: recognize value in potential new medicines before anyone else sees it and unlock that value through focused experiments, relentlessly prioritizing and advancing programs with the highest probability of success.

“Our unique model and disciplined execution have provided a safe harbor through the stormy market challenges, and while we can navigate in any environment, we are also very well-positioned to benefit if the tides potentially turn in favor of the biotech sector.

“I am tremendously proud of the achievements across our Founded Entities and Wholly Owned Pipeline, and I am grateful to our skilled and dedicated team who continue to shepherd this important work forward. I look forward to another exciting period ahead and to sharing more about our progress in the coming months.”

Webcast and conference call details

Members of the PureTech management team will host a conference call at 9:00am EDT / 2:00pm BST today, August 29, 2023, to discuss these results. A live webcast and presentation slides will be available on the investors section of PureTech’s website under the Events and Presentations tab. To join by phone, please dial:

United Kingdom (Local): +44 20 4587 0498
United Kingdom (Toll-Free): +44 800 358 1035
USA (Local): +1 646 787 9445
USA (Toll-Free): +1 855 979 6654
Access Code: 957610

For those unable to listen to the call live, a replay will be available on the PureTech website.

Key Wholly Owned & Founded Entity Programs

Operational Highlights

Accelerated development of our Wholly Owned Programs⁷ driven by significant clinical and strategic progress

• Progressed Phase 2b dose-ranging trial of LYT-100 (deupirfenidone) in patients with idiopathic pulmonary fibrosis (IPF).
• Announced plans to advance LYT-300 (oral allopregnanolone) for the potential treatment of anxiety and depression, and initiated a Phase 2a proof-of-concept trial using a validated clinical model of anxiety in healthy volunteers.
• Awarded up to $11.4 million from the U.S. Department of Defense to advance LYT-300 for Fragile X-associated Tremor/ Ataxia Syndrome (FXTAS).
• Initiated a Phase 1b trial of LYT-200 (anti-galectin-9 mAb) in combination with tislelizumab in urothelial and head and neck cancers and progressed the ongoing Phase 1b trial evaluating LYT-200 as a single agent for the treatment of acute myeloid leukemia (AML).
• Created and advanced multiple preclinical programs for central nervous system (CNS) indications produced from our Glyph^TM technology platform.

Commercial and clinical momentum across Founded Entities⁸ demonstrates success of our R&D model

• PureTech and Royalty Pharma entered into a KarXT Royalty Agreement for consideration of up to $500 million with $100 million in cash up front and up to $400 million in additional payments contingent on the achievement of certain regulatory and commercial milestones.
• Karuna Therapeutics (Nasdaq: KRTX) (Karuna) announced that the company remains on track to file KarXT for FDA approval in schizophrenia in the third quarter of 2023, with a launch in the second half of 2024, if approved.
• Akili, Inc. (Nasdaq: AKLI) (Akili) shared positive topline results from the STARS-ADHD-Adult clinical trial evaluating the efficacy and safety of EndeavorRx®⁹ in adults with attention-deficit/hyperactivity disorder (ADHD). Akili subsequently released EndeavorOTC,¹⁰ a video game treatment to improve attention in adults 18 years and older with ADHD, available without a prescription. Akili also submitted data from the STARS-ADHD-Adolescents trial to the FDA to expand its current EndeavorRx label to include adolescents aged 13-17.
• Gelesis Holdings, Inc. (Gelesis) has helped over 200,000 people with their weight loss journeys and generated more than $40 million in revenue since launch. Gelesis and PureTech have entered into an Agreement and Plan of Merger, subject to agreed upon terms and conditions.
• Vor Biopharma Inc. (Nasdaq: VOR) (Vor Bio) announced successful primary engraftment of trem-cel (VOR33) in five AML patients. Vor also announced the FDA has cleared its Investigational New Drug application for a Phase 1/2 clinical trial of VCAR33^ALLO.
• Vedanta Biosciences (Vedanta) received Fast Track designation for VE303, its Phase 3 ready therapeutic candidate designed for the prevention of recurrent Clostridioides difficile infection (rCDI). Vedanta also raised $106.5 million to advance its pipeline.

Financial Highlights:

• Consolidated Cash and cash equivalents as of June 30, 2023, were 350.5 million¹ (December 31, 2022: Consolidated Cash, cash equivalents and Short-term investments of $350.1 million¹) and PureTech Level Cash and cash equivalents as of June 30, 2023, were $348.5 million^11,12 (December 31, 2022: PureTech Level Cash, cash equivalents and Short-term investments of $339.5 million¹¹)
• Operating expenses for the six months ended June 30, 2023, were $79.3 million (June 30, 2022: $108.2 million).

Key Upcoming Milestones (next 12 to 24 months)

Several significant milestones are anticipated over the next 12 to 24 months from both PureTech and our Founded Entities:

Wholly Owned Pipeline

• We expect topline results from the Phase 2b dose-ranging trial of LYT-100 in patients with IPF in 2024. We plan to pursue a streamlined development program for LYT-100 in IPF and are using the same endpoints that have supported past approvals. Pending positive clinical and regulatory feedback, we intend to advance the program into a Phase 3 trial. We believe the results of the Phase 2b trial, together with a Phase 3 trial, could serve as the basis for registration in the U.S. and other geographies.
• We expect results from the Phase 2a proof-of-concept trial of LYT-300 using a validated clinical model of anxiety in healthy volunteers by the end of 2023.
• We expect to initiate a Phase 1 trial of LYT-310 (oral cannabidiol) in Q4 2023.
• We expect initial results from a subset of patients from the Phase 1b trial of LYT-200 as a single agent for the treatment of AML by the end of 2023.
• Planning is underway for a Phase 2 trial of LYT-300 in FXTAS in collaboration with the University of California, Davis.

Founded Entities

• Karuna plans to file KarXT for FDA approval in schizophrenia in the third quarter of 2023, with a launch in the second half of 2024, if approved. Karuna also expects to initiate its second Phase 3 trial in psychosis in Alzheimer’s disease, ADEPT-2, in the second half of 2023.
• Akili expects to submit data to the FDA to pursue marketing authorization for EndeavorOTC to be made available without a prescription as a treatment for adults with ADHD in the second half of 2023. Akili also expects data in the second half of 2023 from Shionogi’s pivotal trial of SDT-001 in children aged 6-17 years old with ADHD in Japan.
• Gelesis filed an initial 510(k) application with the FDA to change the classification of Plenity¹³ from prescription-only to be available without a prescription. Gelesis anticipates the FDA’s decision on its 510(k) submission by the first quarter of 2024. PureTech has also entered into an Agreement and Plan of Merger to purchase all of the outstanding stock of Gelesis and take the company private. The closing of this transaction is contingent on, among other things, Gelesis receiving shareholder approval for the transaction and the satisfaction of various closing conditions.
• Vor Bio expects additional trem-cel engraftment and Mylotarg^TM hematologic protection data updates by year-end 2023.
• Vedanta plans to initiate a Phase 3 clinical trial of VE303 in patients at high risk for rCDI in Q4 2023 and expects topline data from the Phase 1/2 clinical trial of VE416, Vedanta’s therapeutic candidate for food allergy, in 2023, subject to investigator timelines.

About PureTech Health

PureTech is a clinical-stage biotherapeutics company dedicated to giving life to new classes of medicine to change the lives of patients with devastating diseases. The Company has created a broad and deep pipeline through its experienced research and development team and its extensive network of scientists, clinicians and industry leaders that is being advanced both internally and through its Founded Entities. PureTech's R&D engine has resulted in the development of 27 therapeutics and therapeutic candidates, including two (Plenity® and EndeavorRx®) that have received both U.S. FDA clearance and European marketing authorization and a third (KarXT) that is expected to be filed soon for FDA approval. A number of these programs are being advanced by PureTech or its Founded Entities in various indications and stages of clinical development, including registration enabling studies. All of the underlying programs and platforms that resulted in this pipeline of therapeutic candidates were initially identified or discovered and then advanced by the PureTech team through key validation points.

For more information, visit www.puretechhealth.com or connect with us on X (formerly Twitter) @puretechh.

Cautionary Note Regarding Forward-Looking Statements

This press release contains statements that are or may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation those related to our and our Founded Entities’ plans, future prospects, objectives, developments, strategies and expectations, the progress and timing of clinical trials and data readouts, the timing of potential Investigational New Drug (IND) and NDA submissions, the timing of regulatory approvals or clearances from the FDA, the sufficiency of cash and cash equivalents and expected cash runway, and the anticipated closing of the Gelesis transaction. The forward-looking statements are based on current expectations and are subject to known and unknown risks, uncertainties and other important factors that could cause actual results, performance and achievements to differ materially from current expectations, including, but not limited to, the following: our history of incurring significant operating losses since our inception; our need for additional funding to achieve our business goals, which may not be available and which may force us to delay, limit or terminate certain of our therapeutic development efforts; our limited information about and limited control or influence over our Non-Controlled Founded Entities; the lengthy and expensive process of preclinical and clinical drug development, which has an uncertain outcome and potential for substantial delays; potential difficulties with enrolling patients in clinical trials, which could delay our clinical development activities; side effects, adverse events or other safety risks which could be associated with our therapeutic candidates and delay or halt their clinical development; our ability to obtain regulatory approval for and commercialize our therapeutic candidates; our ability to realize the benefits of our collaborations, licenses and other arrangements; our ability to maintain and protect our intellectual property rights; our reliance on third parties, including clinical research organizations, clinical investigators and manufacturers; our vulnerability to natural disasters, global economic factors, geo-political actions and unexpected events; and those risks, uncertainties and other important factors described under the caption “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2022 filed with the SEC and in our other regulatory filings. These forward-looking statements are based on assumptions regarding the present and future business strategies of the Company and the environment in which it will operate in the future. Each forward-looking statement speaks only as at the date of this press release. Except as required by law and regulatory requirements, we disclaim any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Interim Management Report

Introduction

PureTech was founded with a mission to change the lives of patients with devastating diseases. Our R&D engine has been tremendously successful in pursuit of this goal, having generated 27 therapeutics and therapeutic candidates to date, including two (Plenity® and EndeavorRx®) that have received U.S. Food and Drug Administration (FDA) clearance and European Marketing Authorization and a third, KarXT, that is expected to be filed soon for FDA approval. We attribute our track record of productivity and clinical success to our distinctive approach to drug development, which is underpinned by three key pillars. First, we identify an area with unmet patient need. We then identify therapeutic approaches that often have validated human efficacy but have not reached their full potential due to key limitations, such as the route of administration or side effects. Our second pillar involves applying our proprietary insights and technologies to overcome these limitations, thereby unlocking a new medicine’s benefit for patients. Our third pillar is centered on efficient de-risking, which we achieve in two ways – by building on well-defined clinical and regulatory paths and conducting “killer” experiments early on. We believe in disciplined R&D, and we quickly shut down programs that don’t reach our pre-specified thresholds for advancement. This allows us to pivot resources towards the programs with the greatest likelihood of advancement and has resulted in our success rate, which is about six times higher than the industry average.²

We are a well-capitalized organization with a unique business model that helps fuel our Wholly Owned Programs as well as maximize shareholder returns. Our Founded Entities, which are akin to partnered programs, provide a significant source of non-dilutive capital. To date, we have generated nearly $800 million from Founded Entity equity and royalty monetization events, and we have not had to raise funds at the PureTech level from the capital markets in almost six years. We’re exceedingly proud of this model and the advancements our Founded Entities have made across a range of conditions, providing value to patients and shareholders alike.

KarXT is an excellent example of how our Founded Entities are able to generate value for our shareholders, and it is a hallmark of our capital efficient approach. We allocated $18.5 million to the program, and our return on investment has been almost 50x.¹⁴ This figure does not account for the $100 million upfront we received in connection with our March 2023 announcement that Royalty Pharma acquired an interest in our 3% royalty on KarXT that provides Royalty Pharma the full amount of royalties due to us up to $2 billion in annual net sales of KarXT. Beyond that, we are entitled to up to $400 million in additional payments associated with regulatory and commercial milestones. Importantly, once KarXT achieves $2 billion in annual sales, we will retain 67% of the royalty payments, and Royalty Pharma will continue to receive 33%. We also continue to retain 2.8% equity ownership in Karuna as well as milestone payments, and we are eligible to receive 20% of sublicense income.

The same successful strategy and proven team that generated our Founded Entities have also produced our Wholly Owned Programs. We intend to evaluate the strong progress of our Wholly Owned Programs and determine the ideal path for each program’s advancement – this may be through internal development, the creation of new Founded Entities, asset sales, and/or partnering and royalty transactions – and we will be guided by the optimal route to generate value for our shareholders. Having the flexibility to advance programs to an inflection point before determining the most expedient and cost-effective path forward is a hallmark of our model, and it allows us to continue to nominate new candidates for advancement without compromising ongoing development efforts.

As we realize that value and as we share program development costs with partners, we expect to be in a position to evaluate returning additional capital to our shareholders, beyond the current $50 million stock buyback program. We have many options available to us, and we are committed to maximizing shareholder returns while we also make a difference for patients. We will be engaging with our shareholders in the coming weeks for feedback, and the Board will also consider factors including market conditions and PureTech’s ongoing cash requirements as we explore the exciting paths forward.

Notable Developments

Wholly Owned Programs

In the first half of 2023 we have continued to strengthen and grow our Wholly Owned Programs, which are based on a strategy of leveraging validated efficacy to rapidly advance therapeutics with proven profiles. This approach is designed to preserve the pharmacology of efficacious drugs while maximizing their unrealized potential to meet significant patient needs.

Our most advanced clinical-stage therapeutic candidate, LYT-100 (deupirfenidone), is currently in development for idiopathic pulmonary fibrosis (IPF), which is a rare, progressive and fatal lung disease with a median survival of 2-5 years.¹⁵ Pirfenidone is one of only two drugs approved to treat IPF, and it has been shown to improve survival by approximately three years compared to supportive care alone.¹⁵ However, tolerability issues with both of the standard of care drugs result in patients discontinuing treatment or reducing their dose. As a result, nearly three out of every four people with IPF forego treatment with these otherwise efficacious medicines.¹⁶ LYT-100 is a deuterated form of pirfenidone and is designed to retain the beneficial pharmacology and clinically-validated efficacy of pirfenidone with a highly differentiated pharmacokinetic profile that has translated into favorable tolerability in multiple clinical studies and has the potential to keep patients on treatment longer to enable more optimal disease management. LYT-100 has also demonstrated that it can be safely dosed with a higher total drug exposure than the currently approved dose of pirfenidone, which could translate into improved efficacy over pirfenidone. With this profile, we believe LYT-100 has the potential both to supplant the current standard of care treatments and to serve a larger market of patients who are unable to tolerate current therapies.

The first of two potentially registration-enabling studies for LYT-100 is underway, with topline results from the Phase 2b trial expected in 2024. This is a global trial designed to evaluate the efficacy, tolerability, safety and dosing regimen of LYT-100 against placebo. The trial will also assess the relative efficacy of two doses of LYT-100, one with comparable exposure to the approved dose of pirfenidone and one with a higher level of exposure that has the potential for improved efficacy. This is part of a streamlined development program using the same endpoints that have supported past approvals. Pending positive clinical and regulatory feedback, we believe the results of the Phase 2b clinical trial, together with a Phase 3 clinical trial, could serve as the basis for registration in the U.S.

The unique profile of LYT-100 has the potential for therapeutic benefit in other indications beyond IPF. We are also exploring LYT-100 in progressive fibrosing interstitial lung diseases, a group of lung diseases closely related to IPF, as well as other fibrotic conditions where there is human data with pirfenidone suggestive of clinical benefit. We are also developing LYT-100 for medical countermeasures under the FDA Animal Rule, which allows for the approval of drugs based on well-controlled animal models when human efficacy studies are not feasible.¹⁷ PureTech may be eligible to receive a priority review voucher from the FDA for a medical countermeasure application upon approval.

We have also seen significant progress this year with our second clinical-stage therapeutic candidate, LYT-300 (oral allopregnanolone). LYT-300 is an oral prodrug of allopregnanolone, developed using our Glyph^TM technology platform, which harnesses the body’s natural lipid absorption and transport process to enable the oral administration of certain therapeutics that otherwise cannot be administered orally. Lower levels of allopregnanolone have been documented in patients with mood disorders, such as depression, and there is evidence that allopregnanolone has therapeutic potential in both anxiety and depression.¹⁸ An intravenous formulation of allopregnanolone is approved by the FDA as a 60-hour infusion for the treatment of postpartum depression (PPD), though the method of administration has significant challenges and has limited the scope of clinical use for allopregnanolone. To overcome this, medicinal chemistry approaches have been applied to synthesize orally bioavailable chemical analogs of allopregnanolone. These oral analogs may have different pharmacological effects than endogenous allopregnanolone and therefore may not capture its full therapeutic potential, though one of them was recently approved in PPD. We believe our Glyph platform should enable us to retain the potency of endogenous allopregnanolone in a more convenient oral form and potentially enable us to unlock the therapeutic potential of allopregnanolone across a range of neurological and neuropsychiatric conditions.

In our Phase 1 study, oral administration of LYT-300 achieved blood levels of allopregnanolone at or above those associated with therapeutic benefit in PPD and nine times greater than orally administered allopregnanolone, based on third-party published data.¹⁹ LYT-300 also demonstrated dose-dependent target engagement with GABA_A receptors, which are known to regulate mood and other neurological conditions.

In February, we announced our plans to advance LYT-300 for the potential treatment of anxiety disorders and depression, and in June, we initiated a Phase 2a proof-of-concept trial in healthy volunteers using a validated clinical model of anxiety, with results expected by the end of 2023. These results, alongside our Phase 1 data, will inform potential future development plans in additional indications, and we are in the process of prioritizing which additional indications to pursue with regard to mood disorders. In light of the two approved PPD treatments on the market, we believe that other depression-related indications have greater patient needs and will therefore be higher priority for us. Additionally, in the August 2023 post-period, we announced a grant of up to $11.4 million from the U.S. Department of Defense to advance LYT-300 for the treatment of Fragile X-associated Tremor/ Ataxia Syndrome (FXTAS), a devastating neurological condition. The funds will support a Phase 2 trial of LYT-300 in collaboration with the University of California, Davis.

Last year we announced another candidate developed from our Glyph platform, LYT-310 (oral cannabidiol [CBD]), which is being advanced for the potential treatment of epilepsies and other neurological indications. A CBD-based product has already received regulatory approval in the U.S. and Europe to treat seizures related to certain rare conditions, but it requires a large volume of a sesame oil-based formulation, which limits its use in broader applications and age groups. Side effects of this approved product can include nausea, stomach pain, sleepiness and mood changes, all of which impact a patient’s quality of life. This presents an opportunity for LYT-310 to expand the therapeutic application of CBD across a much wider range of age groups and indications, most notably given its oral dosing, streamlined manufacturing process and potential to reduce the gastrointestinal (GI) side effects and liver toxicity associated with the current CBD-based treatment. We expect to initiate a Phase 1 clinical trial of LYT-310 in the fourth quarter of 2023.

We have also generated multiple additional programs from our Glyph platform centered around validated efficacy in central nervous system indications. We look forward to sharing more about those programs and the potential expansion of our pipeline in due course.

Development of LYT-200 (anti-galectin-9 mAb) has also progressed in the first half. LYT-200 is being developed for the treatment of metastatic/locally advanced solid tumors, including urothelial and head and neck cancers, as well as for the treatment of hematological malignancies, such as acute myeloid leukemia (AML). It is a fully human IgG4 monoclonal antibody designed to inhibit the activity of galectin-9, an immunomodulatory molecule expressed by tumors and immune cells and shown to suppress the immune system from recognizing and destroying cancer cells. In the first half of 2023, we initiated a Phase 1b clinical trial of LYT-200 in combination with tislelizumab in urothelial and head and neck cancers, and topline results are expected in 2024. In late 2022, we also initiated a Phase 1b clinical trial to evaluate LYT-200 as a single agent for the treatment of AML, and we anticipate initial results from a subset of patients by the end of 2023.

Founded Entities

Our Founded Entities have had a productive 2023 so far, with significant commercial and clinical momentum.

Karuna made progress towards delivering transformative medicines for people living with psychiatric and neurological conditions, including schizophrenia and psychosis in Alzheimer’s disease. In March 2023, Karuna announced positive topline results from the Phase 3 EMERGENT-3 trial evaluating the efficacy, safety and tolerability of KarXT in adults with schizophrenia. The trial met its primary endpoint, with KarXT demonstrating a statistically significant and clinically meaningful 8.4-point reduction in Positive and Negative Syndrome Scale (PANSS) total score compared to placebo (-20.6 KarXT vs. -12.2 placebo; p<0.0001) at Week 5 (Cohen’s d effect size of 0.60). Consistent with prior trials, KarXT demonstrated an early and sustained statistically significant reduction of symptoms from Week 2 (p<0.05) through the end of the trial as assessed by PANSS total score. KarXT also demonstrated reductions in positive and negative symptoms of schizophrenia as measured by PANSS positive and PANSS negative Marder factor subscales. KarXT was generally well tolerated, with a side effect profile substantially consistent with previous trials of KarXT in schizophrenia. Karuna plans to file KarXT for FDA approval in schizophrenia in the third quarter of 2023, with a launch in the second half of 2024, if approved. Karuna also expects to initiate its second Phase 3 trial in psychosis in Alzheimer’s disease, ADEPT-2, in the second half of 2023.

Akili also made significant progress in the development of their cognitive treatments through game-changing technologies. In January 2023, Akili announced topline results from STARS-ADHD-Adolescents, its pivotal trial of EndeavorRx (AKL-T01) in adolescents aged 13-17 years old with attention-deficit/hyperactivity disorder (ADHD). The study showed robust improvements in attention and broader clinical outcomes, including attention improvements that were nearly three times as large as those seen in Akili’s pivotal trial that served as the basis for FDA authorization of EndeavorRx for children with ADHD aged 8-12 years old. In May 2023, Akili submitted data from this new trial to the FDA to expand its current EndeavorRx label to include adolescents.

Also in May 2023, Akili shared topline results of the STARS-ADHD-Adult clinical trial evaluating the efficacy and safety of EndeavorRx in adults with ADHD. The trial demonstrated statistically significant improvement in attention functioning after six weeks of treatment, achieving its predefined primary efficacy outcome. In June, Akili announced the release of EndeavorOTC^TM without a prescription for adults 18 years and older. Akili expects to submit its adult clinical trial data to the FDA to pursue marketing authorization for EndeavorOTC to be made available without a prescription as a treatment for adults with ADHD in the second half of 2023. Akili also expects data in the second half of 2023 from Shionogi’s pivotal trial of SDT-001 in children aged 6-17 years old with ADHD in Japan.

Gelesis’ product for weight management, Plenity, has helped over 200,000 people with their weight loss journeys and generated more than $40 million in revenue since launch. Earlier this year, the company announced that it had filed an initial 510(k) application with the FDA to change the classification of Plenity from prescription-only to be available without a prescription. Gelesis anticipates the FDA’s decision on its 510(k) submission by the first quarter of 2024. The company has stated that it believes this shift would double Plenity’s addressable market, should significantly reduce the company’s customer acquisition costs, and could open up new, broader partnership opportunities. While the obesity treatment landscape is rapidly evolving, there still remain major gaps for patients, providers and payers alike, including affordability, tolerability and rebound effect, that the company believes Plenity is well-positioned to uniquely address.

In June 2023, Gelesis presented data at the American Diabetes Association’s annual conference showing the real-world effectiveness of Plenity across 984 patients. Consistent with clinical studies, responders demonstrated clinically significant weight loss at 6 months. Also in June, PureTech and Gelesis entered into an Agreement and Plan of Merger to purchase all of the outstanding stock of Gelesis and take the company private. The closing of this transaction is contingent on, among other things, Gelesis receiving shareholder approval for the transaction and the satisfaction of various closing conditions.

Vedanta also progressed the development of a potential new category of oral therapies based on defined consortia of bacteria isolated from the human microbiome and grown from pure clonal cell banks. In April 2023, Vedanta announced a $106.5 million financing to advance its pipeline of defined bacterial consortia therapies. In May 2023, Vedanta announced the U.S. FDA granted Fast Track designation to VE303 for the prevention of recurrent Clostridioides difficile infection.

Vor has continued to progress the development of its novel platform for engineering Hematopoietic Stem Cell (HSCs) to enable targeted therapies post-transplant. In June 2023, Vor announced five patients transplanted with trem-cel (VOR33) achieved primary neutrophil engraftment and high levels of myeloid donor chimerism.In the August 2023 post-period, Vor announced that the FDA cleared its Investigational New Drug application for VCAR33^ALLO, a T-cell therapy derived from allogeneic healthy donors using a chimeric antigen receptor specifically binding to CD33. Also in the August 2023 post-period, Vor announced that the company has secured a worldwide non-exclusive license from Editas Medicine for ex-vivo Cas9 gene-edited HSC therapies for the treatment and/or prevention of hematological malignancies. The license provides access to key intellectual property for the continued development and potential commercialization of edited HSCs including trem-cel.

Sonde has continued to develop a voice-based artificial intelligence platform that detects changes in the sound of voice that are linked to health conditions – like depression, anxiety and respiratory disease – to provide health tracking and monitoring.

Entrega has continued to advance its platform for the oral administration of biologics, vaccines and other drugs that are otherwise not efficiently absorbed when taken orally. Entrega’s technology platform 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. Peptide therapeutics (e.g., the emerging GLP-1 agonist class) are ideally suited to benefit from Entrega’s approach.

Financial Review

Reporting Framework

You should read the following discussion and analysis together with our Condensed 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. You should read this discussion and analysis in conjunction with the risks identified in the “Risk Factor Annex" on pages 175 and 211 of our “Annual Report and Accounts 2022”, also included as Exhibit 15.1 to the Form 20-F for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on April 27, 2023. As a result of many factors, our actual results could differ materially from the results described in or implied by these forward-looking statements.

Our unaudited Condensed Consolidated Financial Statements as of June 30, 2023, and for the six months ended June 30, 2023 and 2022 have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting as adopted for use in the UK. The Condensed Consolidated Financial Statements also comply fully with IAS 34 as issued by the International Accounting Standards Board (IASB). This report should be read in conjunction with the Group’s 2022 Annual Reports and Accounts as of and for the year ended December 31, 2022.

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, by way of equity method, as well as 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, or when the investment in associates is not in instruments that would be considered equity for accounting purposes, we recognize our holdings in such entity as an investment at fair value with changes in fair value being recorded in the Condensed Consolidated Statements of Comprehensive Income/(Loss). 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, and depending on the form of the investment. For additional information regarding the accounting treatment of these entities, see Note 1 to our Consolidated Financial Statements as of and for the year ended December 31, 2022 included in our 2022 Annual Report and Accounts. For additional information regarding our operating structure, see “Basis of Presentation and Consolidation” below.

Business Background and Results Overview

The business background is discussed above in the Interim Management Report, which describes 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’ therapeutic 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 therapeutics cleared for sale, but our Wholly Owned Programs have not yet generated revenue from product sales, to date. However, we did generate significant cash from the sale of shares of our public Founded Entities and from the sale of an interest in Karuna future royalties.

We deconsolidated a number of our Founded Entities, specifically Vedanta Biosciences, Inc. ("Vedanta") in March 2023, Sonde Health Inc. ("Sonde") in May 2022, Karuna Therapeutics, Inc. ("Karuna"), Vor Biopharma Inc. ("Vor") and Gelesis in 2019, and Akili in 2018.

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 retained investment 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 to the advancement into late-stage studies of the clinical programs within our Wholly Owned Pipeline. We also expect that our expenses and capital requirements will increase 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; and
• add clinical, scientific, operational financial and management information systems and personnel, including personnel to support our therapeutic development and potential future commercialization claims.

More specifically, 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 progress additional therapeutic candidates into the clinic, such as LYT-310, as well as advance our technology platforms.

In addition, 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 we believe participation in such financings is in the best interests of our shareholders. The form of any such participation may include investment in public or private financings, collaboration, partnership arrangements, and/or 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.

As a result, we may need substantial additional funding in the future, following