PureTech Health H1 2026 Earnings Results & Report

PureTech Health EPS Results

• Actual EPS: N/A
• Consensus EPS: -$1.16
• Beat/Miss: N/A
• One Year Ago EPS: N/A

PureTech Health Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $24.80 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

PureTech Health (NASDAQ:PRTC) plc is a biotherapeutics company that develops medicines for complex diseases, including conditions affecting the immune system, the brain and the lymphatic system. The company combines internal research with a model that creates and supports subsidiary businesses focused on individual therapeutic programs.

PureTech’s pipeline includes investigational medicines such as LYT-100 (deupirfenidone), an oral small molecule being studied in diseases involving tissue inflammation and fibrosis, and LYT-200, an antibody-based therapy targeting galectin-9 for selected cancers and immune-related conditions. Its research platform also explores approaches designed to improve drug delivery to the brain and other difficult-to-reach tissues.

Founded in 2015, PureTech is headquartered in Boston, Massachusetts, with operations and corporate activities in the United Kingdom. The company develops its programs for potential use in international markets and has established and backed biotechnology ventures that have advanced medicines into clinical development. PureTech was founded by Daphne Zohar, who has served as its chief executive officer.

PureTech Health H1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Portfolio milestones advanced: Celea secured $180 million and entered Phase III, Seaport completed a $260 million Nasdaq IPO, and Gallop received FDA Fast Track designation for LYT-200 in relapsed/refractory high-risk MDS.
• Positive Sentiment: PureTech ended June with approximately $220 million in cash and short-term investments and reiterated an operational runway through at least the end of 2028, excluding potential portfolio monetization proceeds.
• Positive Sentiment: Following the Celea spinout, PureTech expects annual cash burn, including innovation spending and overhead, to fall to approximately $30 million–$40 million from roughly $90 million when late-stage programs were funded internally.
• Neutral Sentiment: Gallop plans to raise external capital before starting its approximately 125-patient Phase II STRIDE-MDS trial, targeted for completion in roughly 30–36 months; management said the trial is not being positioned as pivotal but could create meaningful commercial and financing optionality if successful.
• Negative Sentiment: Management reduced its estimate of potential future proceeds from its remaining Cobenfy economic rights to approximately $50 million, based on analyst consensus, a material decrease from its prior estimate.

Presentation

[Operator]

Greetings, and welcome to the PureTech Health 2026 Half Year Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's prepared remarks, there will be a question and answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allison Mead Talbot, Senior Vice President of Communications. Thank you, Allison. You may begin.

[Allison Mead Talbot, SVP of Communications at PureTech Health]

Thank you. Thank you everyone for joining us for PureTech's 2026 Half Year Results webcast. Our half-year report is available on the investors page of our website at puretechhealth.com. I would like to remind you that during today's call, we will be making certain forward-looking statements. These statements are subject to various risks, uncertainties, and assumptions that could cause our actual results to differ materially, and we ask that you refer to our half-year report for a complete discussion of these items. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. I also want to remind you that we will be referring to certain non-IFRS measures in this presentation. The presentation of this non-IFRS financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with IFRS.

[Allison Mead Talbot, SVP of Communications at PureTech Health]

A reconciliation of the IFRS to non-IFRS measures that we will be referring to today can be found in the presentation and is also available on our investor relations website at investors.puretechhealth.com. I am joined today by members of our management team. Robert Lyne, Chief Executive Officer, Eric Elenko, Co-founder of PureTech and acting Chief Executive Officer of Gallop Oncology, and Greg Zugates, Vice President of Research and Innovation. With that, I will turn the call over to Rob.

[Robert Lyne, CEO at PureTech Health]

Thank you, Allison. Welcome everyone, and thank you for joining us today. We have made significant progress in 2026 and meaningfully executed against the refined strategy that we outlined last year. Today, I will discuss that progress and how we are evolving the PureTech model to create value with greater capital efficiency and translate that value more directly to shareholders. Across the portfolio, Seaport completed a successful IPO on NASDAQ, raising $260 million. Celea secured $180 million in external financing and initiated its phase III, and Gallop received Fast Track designation, validating the exciting potential of its treatment for rare blood cancer. We also continue to retain potential future economics from Cobenfy as part of our model and are advancing our innovation engine.

[Robert Lyne, CEO at PureTech Health]

We entered the first half of 2026 with PureTech level cash equivalents, and short-term investments of $220 million, and we continue to expect our operational runway to extend at least through the end of 2028. Together, this progress demonstrates the significant value embedded across our portfolio and the strength of our hub-and-spoke model. For those newer to our story, PureTech is a Boston-based, LSE-listed biotherapeutics company operating a hub-and-spoke model with a proven clinical and financial track record. At the center of our model is an innovation engine focused on areas where PureTech has a proven ability to create value. Those opportunities grounded in validated pharmacology. We generate and de-risk these programs internally and then seek to scale them through founded entities or our spoke companies backed by external capital. This approach also improves how we allocate capital.

[Robert Lyne, CEO at PureTech Health]

By bringing in external capital at the founded entity level, we can preserve our PureTech balance sheet while retaining long-term upside through equity, milestones, and royalties. Historically, the timing of external financing has varied. Going forward, we intend to seek external capital earlier in the development stage than we have done with our most recent founded entity, Celea Therapeutics. Importantly, because we develop programs internally, we typically begin with full ownership of the assets and proprietary intellectual property, which allows us to retain meaningful equity even after dilution, as well as the potential for non-dilutive economics in the form of royalties and milestones, reflecting our role in creating these programs. The result is a model designed to generate attractive overall returns while limiting risk concentration.

[Robert Lyne, CEO at PureTech Health]

This model has produced three FDA-approved therapeutics, including Cobenfy, and has generated sufficient evergreen capital through opportunistic monetization of funded entities to advance our portfolio without the need for dilutive raises at the PureTech level. Slide seven provides a snapshot of our portfolio and the distinct components of value it contains. Equity interest in our funded entities, royalty and milestone payments, and our innovation engine, which is designed to generate future opportunities. Celea is our most recent spin-out. It is a phase III pulmonary company advancing deupirfenidone, which follows our model of validated pharmacology, aiming to transform the treatment paradigm for IPF patients by taking FDA-approved pirfenidone and dramatically improving its efficacy through deuteration. Following the significant clinical and regulatory work completed at PureTech, Celea secured $180 million from leading healthcare investors and immediately initiated the global phase III SURPASS-IPF trial.

[Robert Lyne, CEO at PureTech Health]

The financing provided external validation of the program and delivered on our commitment to establish an independently financed path for its continued development. Today, PureTech holds a 35.4% equity interest and retains meaningful long-term economics through royalties, milestones, and sub-license income rights. Gallop Oncology is a phase II ready oncology company that is well-positioned to attract external capital. We have successfully shepherded the company through the completion of its end of phase I meeting with the FDA and secured Fast Track designation in relapse refractory high-risk MDS. We currently own 100% of Gallop and intend to leverage external capital before initiating the phase II STRIDE-MDS trial. Seaport Therapeutics is a Phase II CNS company that we launched in 2024, having developed its platform at PureTech. Following its oversubscribed private raises in 2024, Seaport Therapeutics, led by PureTech founder Daphne Zohar, successfully IPO'd on Nasdaq in May, raising $260 million in gross proceeds.

[Robert Lyne, CEO at PureTech Health]

Its proprietary Glyph platform is designed to unlock the therapeutic potential of clinically validated mechanisms by addressing limitations that have historically constrained them. We hold a 31.2% equity stake in Seaport, valued at approximately $360 million as of September 18, 2026, and also retain royalty and milestones in this company. The fourth component is our remaining economic interest in Cobenfy, an FDA-approved treatment for schizophrenia marketed by Bristol Myers Squibb. PureTech invented Cobenfy using our approach of building on clinically validated pharmacology and housed the program in our founded entity, Karuna Therapeutics. Through Karuna's development and subsequent acquisition by Bristol Myers Squibb, we have generated more than $1 billion from our collective Karuna and Cobenfy economics. We retain potential Cobenfy-related royalty and milestone payments, which is a fundamental and differentiating element of the PureTech model.

[Robert Lyne, CEO at PureTech Health]

Based on analyst consensus, as of mid-August, we estimate approximately $50 million in potential future proceeds to PureTech from our remaining Cobenfy economic rights. Because this estimate is based on analyst consensus rather than our own forecast, it may change as consensus evolves. While the current estimates represent a material downgrade in potential economics from our last update at the full year, they also reinforce the value of our de-risking transaction with Royalty Pharma in 2023, which delivered upfront cash of $100 million into PureTech and allowed us to realize significant value before Cobenfy reached commercial maturity while still retaining participation in future upside. We will continue to provide updates on our full and half-year results on PureTech's economic outlook in Cobenfy sales based on evolving market consensus.

[Robert Lyne, CEO at PureTech Health]

Turning to cash flows, we do not factor any potential inflows from founded entities into our runway assumption, such that any monetization events represent pure upside. In line with our refined strategy, we are increasingly committed to ensuring that shareholders participate more directly as the value across our portfolio is realized. In practice, this means that we will prioritize maintaining an appropriate operational runway, selectively deploying capital where we see compelling risk-adjusted opportunities across the portfolio, and returning capital to shareholders. As of June 30th, PureTech level cash equivalents, and short-term investments was $220 million, which continues to provide operational runway at least through the end of 2028. I will discuss financial updates in more detail later on. I would now like to welcome Eric Elenko, PureTech's co-founder and Gallop's acting CEO, to discuss the latest developments of our wholly-owned founded entity, Gallop Oncology.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

Thank you, Rob. Gallop Oncology is our latest wholly-owned founded entity, and I'm excited about the first-in-class mutation-agnostic approach we are advancing for patients with relapsed or refractory high-risk MDS. Our lead candidate, LYT-200, is a phase II-ready monoclonal antibody targeting galectin-9, an oncogenic driver and potent immunosuppressor that plays a role in some of the most difficult to treat cancers. LYT-200 has a dual mechanism of action. It is designed to directly kill cancer cells while also restoring antitumor immune function. By addressing both tumor intrinsic and tumor-mediated pathways, this approach is differentiated from existing therapies and has the potential to drive meaningful responses while maintaining a favorable safety profile. High-risk MDS is a serious blood cancer associated with poor outcomes, with patients typically surviving less than two years following diagnosis. Frontline treatment typically involves a hypomethylating agent or a HMA.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

However, the vast majority of patients do not respond or eventually stop benefiting. Once disease relapses or becomes refractory, survival is often limited to only a few months. Treatment options in a relapse-refractory setting are extremely limited. Only one therapy has been approved specifically for relapse refractory high-risk MDS in the past two decades, and it targets a mutation found in only approximately 3% of patients. There is therefore a significant need for new treatment options that can benefit the broader patient population. Positive Phase I-B results established a compelling clinical foundation for LYT-200 in relapsed or refractory high-risk MDS. We completed a successful end-of-phase I meeting with the FDA, which highlighted the compelling clinical efficacy and consistent safety profile of LYT-200 in high-risk MDS patients who had relapsed or become refractory to prior treatment with an HMA.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

The FDA meeting provided clarity on the phase II STRIDE-MDS trial and Fast Track designation further strengthens Gallop's position as we seek external capital to support the next stage of development. STRIDE-MDS will be a randomized, double-blinded, placebo-controlled phase II trial enrolling approximately 125 patients with relapsed or refractory high-risk MDS. Patients will be randomized two to two to one to receive LYT-200 at a dose of 12 mg/kg plus an HMA, LYT-200 at 7.5 mg/kg plus an HMA, or placebo plus an HMA. The trial will assess the efficacy of LYT-200 based on the rate of complete and partial responses and support dose selection. The goals of STRIDE-MDS are to confirm the efficacy of LYT-200 that was previously observed in the phase I-B study, and the inclusion of two doses is intended to fulfill the dose selection requirement in accordance with FDA's Project Optimus.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

The purpose of Project Optimus is to ensure that the sponsor companies prioritize the optimal biological dose over the maximum tolerated dose in oncology. We intend to initiate STRIDE-MDS following the completion of external financing. The amount of capital we will be target raising would support Gallop through the readout of the STRIDE-MDS trial. As Gallop reaches this important financing and development inflection point, I am pleased to have taken on the role of Gallop's acting CEO, as I will be dedicating significant time and focus to its advancement. At the same time, I will remain actively involved in PureTech's innovation activities, working closely with the team as we advance the next wave of opportunities. With that, I'd like to introduce Greg Zugates, PureTech's Vice President of Innovation and Research.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

Greg and I have worked together at PureTech for more than a decade, and he has been instrumental in refocusing our innovation engine around the areas where PureTech has historically demonstrated the greatest ability to create value. He has been leading our innovation efforts on a day-to-day basis, and I'm pleased to have him walk through our innovation framework today.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

Thank you, Eric. As Rob noted, our innovation strategy is now firmly centered on validated pharmacology. PureTech's greatest successes have come from identifying mechanisms or molecules that have already demonstrated meaningful activity in humans, understanding the limitations that have prevented them from reaching their full potential, and designing differentiated solutions to overcome those limitations. We call this framework our LIFE model, launching innovation from existing pharmacology. As shown on this slide, our LIFE model begins with a focus on patients by identifying areas with significant unmet medical needs. We then identify mechanisms or molecules with demonstrated clinical efficacy that have been otherwise held back from reaching their full potential due to reasons unrelated to efficacy. Using this clinically validated framework, we design novel therapeutic concepts that are specifically intended to preserve efficacy while overcoming those limitations.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

We evaluate each solution using focused proof-of-concept experiments, which are preclinical studies designed to determine if our therapeutic concepts meet key predefined success criteria and overcome the previous limitations. We also require each opportunity to support the development of a strong intellectual property portfolio and offer a compelling proposition for physicians and payers with blockbuster potential. By building on pharmacology that has already been validated in humans, we believe that this approach can enable us to innovate with greater speed, lower technical risk, and greater capital efficiency than traditional de novo drug discovery. Each year, we aim to advance at least three opportunities to the concept stage, with the goal that these may form the foundation of future development candidates. We expect to share additional detail on our progress in the first half of 2027.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

The approach within our LIFE framework emulates the same innovation principles that produced Karuna Therapeutics and Cobenfy, Celea Therapeutics, and Celea Therapeutics. Each began with a significant patient need and clinically validated pharmacology whose potential had been constrained by a specific limitation. The PureTech team then designed a novel solution to address that limitation, generated proprietary intellectual property, and conducted focused proof-of-concept experimentation to substantially de-risk the concept. These programs have generated compelling clinical data and, in the case of Cobenfy, ultimately led to FDA approval in a new medicine for patients suffering from debilitating mental illness. They provide important validation of the capabilities and approach we are now applying systematically to create PureTech's next wave of opportunities. I am proud of the work we have underway, and I look forward to sharing more about our progress next year. With that, I will hand the call back to Rob.

[Robert Lyne, CEO at PureTech Health]

Thanks, Eric and Greg. The work they have described represents two important sources of future value for PureTech, advancing Gallop through its next inflection point and applying a focused, capital-efficient approach to generate the next wave of opportunities for patients and shareholders. Turning to our financial highlights, PureTech remains in a strong financial position, supported by our business model and continued focus on capital discipline. At the PureTech level, we ended June 2026 with cash equivalents, and short-term investments of approximately $220 million, compared to cash equivalents, and short-term investments of $277.1 million at year-end 2025. On a consolidated basis, our cash equivalents, and short-term investments were $220.1 million at the end of June 2026 as compared to cash equivalents and short-term investments of $277.3 million at year-end 2025.

[Robert Lyne, CEO at PureTech Health]

From this $220 million cash figure, I know that the balancing $17.5 million of the overall $30 million we contributed to Celea raise was completed just after the half year, and therefore this $17.5 million will come out of the $220 million cash figure I've mentioned. In addition, going forward, we have reserved $70 million for future investment into Celea. While not legally committed, we think it prudent to have this provision to allow strategic optionality to preserve and support our interest in this important company, whilst reserving the flexibility to respond to specific deal terms and other opportunities to allocate capital within the PureTech model. On a consolidated basis, OpEx were $55.9 million in the first six months of 2026, as compared to $49.8 million in the same period in 2025.

[Robert Lyne, CEO at PureTech Health]

The increase between these two periods reflects higher R&D spend in the first half of 2026, associated with the preparation for Celea's phase III trials of deupirfenidone. Importantly, the majority of OpEx in this first half is attributable to Celea and Gallop, heavily skewed towards Celea. As future expenses related to deupirfenidone have now shifted to Celea, PureTech expects a significant reduction in overall OpEx moving forward. Looking ahead, based on our existing financial assets as of June 30th, 2026, we reiterate our operational runway at least through the end of 2028. This runway excludes any inflows from potential future monetization events and assumes full deployment of the additional $70 million that PureTech has reserved for potential future investment in Celea. To close, the progress made in 2026 so far demonstrates both the value embedded across our portfolio and the meaningful execution underway against our strategy.

[Robert Lyne, CEO at PureTech Health]

Celea has entered phase III with the backing of leading external investors. Seaport has completed a successful IPO on NASDAQ. Gallop has achieved important clinical and regulatory milestones and is positioned for external financing and phase II development. Our innovation team is applying our proven approach to innovation to generate the next wave of opportunities. At the same time, we are substantially reducing the capital required at the PureTech level and taking an increasingly disciplined approach to how we deploy future proceeds. We will prioritize maintaining an appropriate operational runway, investing selectively where we see compelling risk-adjusted opportunities, and looking to return capital to shareholders. With significant value embedded across our portfolio, a strong financial position, and a repeatable innovation engine, we believe PureTech is well-positioned to create meaningful long-term value for patients and shareholders.

[Robert Lyne, CEO at PureTech Health]

With that, I'll turn the call back to the operator, and we would be pleased to take your questions.

[Operator]

Thank you. We will now begin today's Q&A session. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask a question, please ensure your device is unmuted locally. Our first question comes from Sean Conroy from Shore Capital. Go ahead, Sean. Your line is now open.

[Sean Conroy, Analyst at Shore Capital]

Hi there. Thanks for taking my question, just a couple. I will start on the plan design of STRIDE-MDS. I appreciate there is clearly a benefit to pursuing a mutation-agnostic approach in this setting. Has the FDA or are you planning to look at any specific biomarkers in this study? My second question, just thinking about the next wave of programs that you have guided you will unveil next year. How should we be thinking about that? Obviously, you have said clinically validated targets, but in terms of disease areas and willingness to be. Thanks.

[Robert Lyne, CEO at PureTech Health]

Thanks, Sean. I'll ask Eric just to speak to the STRIDE-MDS trial design as acting CEO of Gallop.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

Hi, Sean. Thanks so much for the question. You are right that the approach here is a mutation-agnostic one, that really need is in this space. KRAS pathway, BCOR, PTPN11. What we do feel is, although as you sprout the number of mutations across the number of patients we had, of course, that means any one mutation was only represented to a smaller extent. It does mean that the sampling and mutations were representative of what we might see in a subsequent study. That made us feel quite good about the approach. The FDA was fine with a mutation-agnostic approach and did not require any type of biomarker selection. As of this time, we do not have plans for biomarkers.

[Sean Conroy, Analyst at Shore Capital]

Perfect. Thanks for that.

[Robert Lyne, CEO at PureTech Health]

Sure. Sean, just on your other question, I believe around in terms of our areas of focus for future innovation. I will ask Greg to speak in a moment, very high level. Would say are generally agnostic, but we do have a little bit of a bias, particularly in areas where we have had success before. I will just ask Greg to say a few words to that.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

Yeah. Thanks for the question, Sean. So far this year, we have multiple opportunities we have identified that potentially fit our model. It includes opportunities based on validated pharmacology, as you had noted. They can form the basis for developmental candidates in the future. These opportunities, as Rob mentioned, continue to expand in areas that have been historically successful for PureTech, and that includes a continued focus on small molecule-based therapeutics. Also CNS as a therapeutic area for identifying additional indications. Specifically within CNS, we had success with Karuna and Seaport in looking at opportunities in neuropsychiatry, and that is an area we are continuing to explore. That said, as we discussed, we do remain somewhat agnostic to indication to an extent because we believe our model is broadly applicable and could bring impactful therapies to patients suffering from disorders outside of CNS and still have blockbuster potential.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

We are happy to provide more details in 2027.

[Sean Conroy, Analyst at Shore Capital]

Great. Perfect. Thanks for that. I'll jump back to the queue.

[Operator]

Thank you. Our next question comes from Miles Dixon from Peel Hunt. Miles, your line's open. Please go ahead.

[Miles Dixon, Analyst at Peel Hunt]

Thank you. Good morning. Hopefully, you can hear me. If I could just follow up on the STRIDE-MDS trial for a moment. I appreciate you're not guiding for a cost window for that, but can you just help me understand what the timeline for that trial might look like? Is it similar in format at least or in for the time, for TIBSOVO? Secondly, Rob, if I can ask a broader question, perhaps on Celea first. Obviously, since that's now spun out, you guys have a smaller control holding of that. Seaport obviously has phenomenally successfully built out its programs and platform offering. Is there any plans at Celea to do a similar thing or is it a pure play IPF single asset? Many thanks.

[Robert Lyne, CEO at PureTech Health]

Thanks, Miles. I'll speak to the Celea question first and then hand over to Eric on Gallop. As you say, obviously, Seaport has really done great things in terms of building out their pipeline of programs. At the moment, Celea has obviously stated it has its single asset, the IPF asset, which is obviously now in phase III. I would note of course, that is now a pivotal registrational trial. To some extent, they have a different stage of development there at that business and they all now have line of sight through to a readout which we hope obviously will be registrational. To date, there hasn't been any disclosures from Celea about additional assets that they may or may not bring in or develop, but obviously that is something that the company will consider as it matures.

[Robert Lyne, CEO at PureTech Health]

We have previously guided that we're pleased with the raise they did in the summer raising enough cash due to year end. But it is inevitable that they will need to raise additional money in order to complete the phase III. That may bring opportunities for them to consider other programs that they may wish to advance. But if and when that's something they wish to do, Celea will make announcements of that in the future. In terms of the Gallop program, I'll just hand over to Eric just to talk on that piece.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

Thanks so much, Miles, for the question. The Gallop trial will commence following receipt of external capital. Just also to make that part of any timing clear. The initial projections which are on the more conservative side, just want to get that caveated. This would be probably somewhat under three years to complete the study as currently contemplated. Again, those are using somewhat more conservative projections in terms of recruitment rates. Now, of course, what's going to happen is the actual timeline is more around 30 months or 33 months, will depend also ultimately on the number of sites that are selected, as well as the ultimate recruiting rates that are observed in those sites. But as we think about it go forward, we like to think about things on the more conservative side.

[Miles Dixon, Analyst at Peel Hunt]

Great. Thank you. Perhaps I can just follow up on Gallop specifically. You've had a variety of formats, but how are you thinking about financing? Is that more partnership or syndication, strategic partnerships with pharma? Then lastly, Rob, if I can on capital allocation. You've got a phenomenal amount of, let's call it resources that dwarf the market cap. How are you thinking about capital allocation moving forward? Thank you.

[Robert Lyne, CEO at PureTech Health]

So on that point, Miles, yes, we're looking at a range of options for Gallop at this stage. We believe both the indication and the data we have are exciting enough that it opens up different possibilities. So what we're looking at really in this, maybe linking a little bit into your question on capital allocation. The way we do really think about it is it's all about the relative cost of capital. Different funding structures, whether it's equity, whether it's a pharma partnership, whatever it may be, they all come with different costs to them, whether it's equity dilution, whether it's capping upside. Some of them can come with upfront cash.

[Robert Lyne, CEO at PureTech Health]

We want to remain open-minded about that as we think about the relative cost of capital of the different options to help gain external cash in order to take that forward. As and when we complete any arrangements there, we will make that known. We have guided that we really want to complete that financing by the first half of next year. Part of the reason for that timing is to give us the opportunity to really take a whole of market approach to looking at the optimal funding sources that we can leverage there without being forced to rush into any particular avenues. Looking forward in due course to explaining where we get to with that.

[Robert Lyne, CEO at PureTech Health]

More broadly, as you say, yes, we do see multiple pockets of value across the business in terms of resources that we have, which we think about in terms of capital allocation. As I think we indicated in some of the remarks this morning, our focus really is we want to make sure that we have operational runway within the business. We do not want to be holding too much cash notwithstanding raises in rates at the moment. Obviously, we are not generating great returns in terms of cash pile. That is not where we create value. We create value by putting those dollars to work. In other instances where we can, by returning them to shareholders so that shareholders can reinvest them as they see fit.

[Robert Lyne, CEO at PureTech Health]

We are focused on not holding too much cash, but we want to make sure that we have sufficient cash runway without any pressure or concern about any dilutive raises at the PureTech level. When we then think within the portfolio, one of the advantages of our model is that we have different opportunities to deploy capital, and these can range really from very late-stage opportunities. For example, we have reserved $70 million for future Celea financing, which will be, if needed, to help that company get through to a pivotal trial readout, all the way at the other end of the spectrum to the early-stage innovation programs that Greg and the team are working on.

[Robert Lyne, CEO at PureTech Health]

When we are thinking about how we allocate capital within that, we are looking at what kind of a return we can make, what sort of a money multiple we will get, recognizing that obviously there are different time horizons for returns that may come from those investments. The other component that we have talked about this morning, of course, is considering capital returns to shareholders. We are very conscious that there is substantial value within PureTech. Whilst we cannot control obviously where the share price trades, we recognize that capital returns are a mechanism to ensure that shareholders directly benefit from the cash and value that we generate within PureTech. We do think about those different components and we look to balance them.

[Robert Lyne, CEO at PureTech Health]

But we feel that we're in a good place now with where things are in terms of the assets in the company to have choices ahead of us on those decisions.

[Miles Dixon, Analyst at Peel Hunt]

Great. Sounds good, Rob. Greg, look forward to the first half next year hearing about some of those new programs. Thank you.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

Thank you.

[Operator]

Thank you. The next question comes from Christian Glennie from Stifel. Your line is now open. Please go ahead.

[Christian Glennie, Analyst at Stifel]

Hi. Morning, guys. Thanks for taking the question. I guess just to follow up, another one on Gallop and STRIDE-MDS trial. I guess just set the case. Is this largely a best case sort of trial design as you could have imagined it sort of running in on those discussions you had with the FDA? As you then think about the potential, presumably this is supportive of the financing potential partnerships that presumably have had some discussions already that it sort of ticks those boxes. Then in terms of the trial itself, obviously the objective here dose selection and secondary on response. Given the unmet need, and if you do get a very strong response, is it potentially a pivotal trial or is that probably a bit of a stretch too far at this point? Thanks.

[Robert Lyne, CEO at PureTech Health]

Thanks, Christian. I will ask Eric just to speak to those points.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

Thanks so much, Christian, for the question. We were happy with the results of the FDA meeting, which provided a very clear direction forward. The goals of the trial really are twofold. One is to confirm the efficacy that was observed in the phase I-B study, and the other is to satisfy the FDA's Project Optimus requirements in terms of dose, as you indicated. That is one of the key goals. Project Optimus really being the idea that instead of driving towards the maximum tolerated dose, one is driving towards a biologically meaningful and active dose. So we feel the FDA meeting was a very important step in terms of getting clarity, and we are happy with the trial design. Of course, we are also very happy with the Fast Track designation, which the FDA granted which validates the view that LYT-200, in fact, is an active drug.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

So in terms of the implications of this trial, what differs from the phase I-B versus the phase II STRIDE-MDS study is not only the greater number of subjects, but also the fact that it is a double-blind randomized study. So the idea is to not only confirm what we saw before, but do it in the context where there will be this very clear discernment of the contribution of effect of LYT-200 in the context of combination with HMA which is very important. So what would be the implications of that? We think that if in fact we are able to show similar results and in fact show efficacy and confirm efficacy of LYT-200 coming out of STRIDE-MDS particularly if it had a similar safety profile that was observed in the phase I-B, which was excellent.

[Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology at PureTech Health]

We think that will put Gallop in a very good position in terms of optionality. That optionality is both, we think, commercial and financial, kind of what I think you're getting at. Then it could offer the possibility of more streamlined next steps in terms of development. Of course, that would depend on the data and discussions with the FDA. Just to be very explicit about the third part of your question, we are not guiding that this is a pivotal study. But having said that, the data that would come out of this, we would view as extremely meaningful.

[Christian Glennie, Analyst at Stifel]

Thanks. That's helpful. Then if I can on the overall sort of development strategy, just a bit more in terms of how many. You talked about the three concept stage programs. Sounds like you're going to be announcing maybe one new specific development candidate in early next year, first half of next year. Typically, how many of these things are sort of running in parallel at any one time? You have the bandwidth to run in parallel, and then what's in the mix in terms of decision points about identifying that candidate? Thanks.

[Robert Lyne, CEO at PureTech Health]

Yeah. Thanks, Christian. Look, I'll hand over in a minute to Greg to talk about some of the factors we take into account when we're considering how to advance those programs. But overall, as you say, we guided that we want at least three concept stage programs per year. We're currently running ahead of that, I'm pleased to say, and so we've been pleasantly surprised by both the quantity but also the quality of the opportunities we have there. As you said, Christian, we aren't planning to talk about any of those in detail until next year.

[Robert Lyne, CEO at PureTech Health]

I think as and when we are able to speak about them, I think many people who follow the PureTech story will certainly recognize the PureTech hallmarks on those programs in terms of having come from the hub-and-spoke model and will see a lot of similarities with the success that we've had with KarXT, Cobenfy, and more recently with Seaport and Celea. But I'll just hand over to Greg to talk a little bit just about some of the factors we take into account when we're considering whether to advance or deprioritize these programs internally.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

Yeah. Thank you for the question. We go through a very rigorous process. We've kind of outlined it here in, I would say, broad strokes to give you a sense for how we approach these opportunities. It starts with an analysis of the unmet clinical need. We progress through and look for molecules and mechanisms that have validation, and we look for their limitations. Specifically diving in a little bit more, we really pressure test that clinical data, and really discuss it with leading clinicians in the field, and really understand the weight of the clinical evidence that's behind it. As we advance programs through the preclinical stage, we have a set of predefined criteria for our preclinical experiments that we'll look for.

[Greg Zugates, VP of Research and Innovation at PureTech Health]

We advance them through, I would say, key proof of concept experiments that are really designed to see if we've addressed the underlying limitation. Once we do that can then form the basis for a developmental candidate that we would advance forward.

[Christian Glennie, Analyst at Stifel]

Great. That's helpful. Thank you.

[Operator]

Thank you. Our next question comes from Karl Keegan, who asks, "You flagged that shifting LYT-100 cost to Celea should contribute significantly to lower OpEx going forward. Can you quantify that, even directional?

[Robert Lyne, CEO at PureTech Health]

Sure. Absolutely. Yes, quite right. One of the key drivers for spinning out Celea is obviously these late-stage clinical programs require very significant operational capital spend to continue advancing them. A priority for us was to ensure that we could externalize that spend and take it away from PureTech's P&L. As that completed just over the half year, we're now expecting that to significantly benefit PureTech cash flows in H2 this year. In terms of go forward cash burn, we're looking at the moment on a clean basis to be having cash burn, including overhead, but also crucially our innovation spend, somewhere between $30 million and $40 million a year. That is obviously a significant reduction from the roughly $90 million a year cash burn we had when we were running some of these later-stage clinical programs internally.

[Operator]

Thank you. We have a follow-up question from Karl, which is, "You've targeted at least three concept stage programs progressed per year. How many are currently in that pipeline today? What would you need to be true for one to be named as a new founded entity candidate?

[Robert Lyne, CEO at PureTech Health]

A very good question, but I think we've probably addressed that earlier as saying that, as Greg outlined, there's a really rigorous process that we go through. Again, that's informed not just by the innovation team and the work they're doing, but also the broader corporate knowledge and history we have at PureTech. There are many people working hard in the field of drug development. But within PureTech, we really do have the benefit of having taken programs all the way through to registration approval and dosing to patients.

[Robert Lyne, CEO at PureTech Health]

Really for us, that benefit of having that institutional knowledge of what it means to take a program all the way through ideation through to benefiting patients, that is a really valuable perspective that we can bring to these early-stage programs when we're thinking about whether to green-light them, how far to take them forward, and what the best way is of advancing those programs.

[Operator]

Thank you. We have a next question from Julie Simmonds from Panmure Liberum. Your line is open, Julie. Please go ahead.

[Julie Simmonds, Analyst at Panmure Liberum]

Thank you very much. Just more on the innovation pipeline. Just wondering, when you are going to tell us about these programs, at what stage are they going to be? Is that sort of where you have still got more preclinical work to do, or is it going to be so they are actually going into the clinic in your format first time?

[Robert Lyne, CEO at PureTech Health]

It is a good question, Julie. I think really where they will get to, there may still be a degree of preclinical work that is being done. But I think the key thing is, as Greg was outlining earlier, that we will have done some of the really key de-risking experiments. The great advantage of our hub-and-spoke model is that we know what problem we are trying to fix. And we feel that even the preclinical studies that we do can be very meaningful in indicating whether or not we have really fixed that problem. A big advantage as we move into the clinic, of course, is that the phase I studies then are significantly de-risking even in healthy volunteers. There is every chance that that study in itself would be very indicative as to whether we have really overcome the limitation that we were seeking to fix.

[Robert Lyne, CEO at PureTech Health]

There may still be a bit of preclinical work to be done at the time we are talking around these programs, but we would only be really pulling the covers off that stage where we have a high degree of confidence that there is really a strong chance of success going forward with them.

[Julie Simmonds, Analyst at Panmure Liberum]

Lovely. Thank you.

[Operator]

Thank you. That is all we have time for today. Thank you all for joining, and you may now disconnect your lines.

Participants

Executives

• Allison Mead Talbot, SVP of Communications
• Robert Lyne, CEO
• Eric Elenko, Co-Founder and Acting CEO of Gallop Oncology
• Greg Zugates, VP of Research and Innovation

Analysts

• Sean Conroy, Analyst at Shore Capital
• Miles Dixon, Analyst at Peel Hunt
• Christian Glennie, Analyst at Stifel
• Julie Simmonds, Analyst at Panmure Liberum