PureTech fully funded through to 2025

Biotherapeutics specialist PureTech Health (PRTC) saw its operating loss narrow by 12 per cent last year, to $120m (£87m), on the back of lower general and administrative expenses and spending on research and development. This reflects the deconsolidation of three of its ‘founded entities’ in 2019, which are companies that have been spun-off from PureTech to continue to develop a drug separately. Operating expenses are expected to rise moving forward as the group advances its pipeline of therapies and maintains its secondary listing on Nasdaq.

PureTech currently has 26 therapeutics across its own wholly owned pipeline and that of its founded entities. Two of these affiliates’ treatments have received clearance from the US Food and Drugs Administration (FDA) and marketing authorisation in Europe – Gelesis’ weight management drug Plenity, and Akili’s EndeavorRx therapy for attention deficit hyperactivity disorder (ADHD). Both products will be rolled out across the US this year.

The group has three ongoing clinical trials in its wholly owned portfolio, including its LYT-100 drug, which is being evaluated as a treatment for lymphedema (swelling of tissue) and Long Covid respiratory complications.

PureTech remains some way off from turning a consistent profit – broker Peel Hunt is forecasting that its adjusted loss per share will widen from 24.1p in 2020, to 26.8p and 34.3p in 2021 and 2022, respectively.

But the investment case is more about the potential of its pipeline. PureTech expects to start at least 10 new clinical trials this year and, having sold equity stakes in its founded entities, the group is now sitting on $443m of cash and cash equivalents, which it says is sufficient to fund its operations through to the first quarter of 2025. Buy.

Last IC View: Buy, 271p, 28 Aug 2020