REG - PureTech Health PLC - Final Results
Wed 07:00
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RNS Number : 7114G PureTech Health PLC 30 April 2025
30 April 2025
PureTech Health plc
PureTech Announces Annual Results for Year Ended December 31, 2024
Innovation engine drives meaningful clinical, regulatory, and financial
milestones, including positive Phase 2b results for wholly-owned
deupirfenidone (LYT-100) in IPF, compelling Phase 1b data for wholly-owned
LYT-200 in AML and solid tumors, FDA approval of PureTech-invented
Cobenfy™(1) for schizophrenia, and rapid growth of Founded Entity(2),
Seaport Therapeutics, which raised over $325 million
Capital-efficient operations support robust balance sheet with PureTech level
cash, cash equivalents, and short-term investments of $366.8 million(3) and
consolidated cash, cash equivalents, and short-term investments of $367.3
million(4) as of December 31, 2024, with operational runway into at least
2027
As of March 31, 2025, PureTech level cash, cash equivalents and short-term
investments were $339.1 million(5)
Company to host a webcast and conference call today at 9:00am EDT / 2:00pm BST
PureTech Health plc (Nasdaq: PRTC, LSE: PRTC) ("PureTech" or the "Company")
today announces its results for the year ended December 31, 2024, as well as
its cash balance as of the first quarter ended March 31, 2025. The following
information represents select highlights from the full UK Annual Report and
Accounts, except as noted herein, a portion of which will be filed as an
exhibit to PureTech's Annual Report on Form 20-F for the fiscal year ended
December 31, 2024, to be filed with the United States Securities and Exchange
Commission (the "SEC") and will also be available later today at
https://investors.puretechhealth.com/financials-filings/reports.
Webcast and conference call details
Members of the PureTech management team will host a conference call at 9:00am
EDT / 2:00pm BST today, April 30, 2025, 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 3936 2999
United States (Local): +1 646 233 4753
Global Dial-In Numbers
(https://www.netroadshow.com/events/global-numbers?confId=80592)
Access Code: 018948
For those unable to listen to the call live, a replay will be available on the
PureTech website.
Commenting on the annual results, Bharatt Chowrira, Ph.D., J.D., Chief
Executive Officer of PureTech, said:
"2024 was a defining year for PureTech. Our unique hub-and-spoke model
delivered transformative progress across our Wholly-Owned(6) and Founded
Entity programs, advancing our mission and generating meaningful value for
patients and shareholders.
"The FDA approval of Cobenfy™ (formerly KarXT)-the first new mechanism for
schizophrenia in over 50 years-was a milestone, not only for the field, but
for PureTech. Invented by our team and advanced by Karuna Therapeutics, now
part of Bristol Myers Squibb (BMS), the program exemplifies our ability to
translate bold scientific ideas into impactful therapies. With approximately
$1.1 billion in cash generated from an initial $18.5 million investment, it
also demonstrates the financial strength of our model.
"That strength was further validated by the positive results from our Phase 2b
trial of our wholly-owned deupirfenidone (LYT-100), which showed the potential
to stabilize lung function decline over 26 weeks in patients with idiopathic
pulmonary fibrosis (IPF)-a result that, to our knowledge, has not been
demonstrated with any other investigational therapy in IPF to date. Based on
these data, we believe that deupirfenidone has the potential to become a new
standard-of-care treatment for this debilitating rare disease and to help many
patients who currently remain untreated. We are targeting a meeting with the
FDA before the end of the third quarter, with the goal of initiating a Phase 3
trial by the end of the year. Subject to feedback from the FDA with respect to
trial design, we don't believe our current cash balance would be sufficient to
fully fund a Phase 3 trial. As such, we are focused on identifying external
sources of capital to advance this program and unlock the full potential of
this promising therapy.
"We also advanced LYT-200 through our Founded Entity, Gallop Oncology, where
it is emerging as a promising candidate for the treatment of both
hematological malignancies and solid tumors. In the ongoing acute myeloid
leukemia (AML) trial, LYT-200 has demonstrated clinical activity and disease
stabilization in heavily pretreated patients, both as a monotherapy and in
combination with standard-of-care therapy. In the recently completed head and
neck cancer trial, topline data with LYT-200 shared for the first time today
demonstrate a favorable safety profile, disease control, and early signs of
efficacy.
"We also launched Seaport Therapeutics, which raised over $325 million in two
oversubscribed financings to advance neuropsychiatric candidates that were
identified at PureTech based on our Glyph platform. This momentum underscores
the durability and scalability of our innovation engine, which has produced 29
therapeutic candidates to date-three of which have achieved FDA approval.
"As we look ahead, our focus remains clear: to execute with discipline,
continue to harness our highly productive innovation R&D engine with high
capital efficiency, maintain a strong balance sheet, and unlock the full
potential of our programs to drive long-term patient impact and shareholder
value. We are proud of what we achieved in 2024-and we are energized by the
opportunities that lie ahead."
2024 and Early 2025 Operational Highlights
For full details, please see PureTech's 2024 Annual Report.
Delivered clinical, regulatory, and financial milestones across our
Wholly-Owned Programs and Founded Entities, reinforcing the strength of our
innovative R&D engine and its potential to drive long-term value for
patients and shareholders. Key highlights include the following:
· Deupirfenidone (LYT-100)
o PureTech continued to progress the development of deupirfenidone as a
potential new standard of care for the treatment of IPF, a progressive and
fatal lung disease.
o In December 2024, PureTech announced positive topline results from the
ELEVATE IPF Phase 2b clinical trial, which achieved its primary endpoint and
key secondary endpoints. In addition to the overall strong, consistent and
durable efficacy seen, both doses of deupirfenidone were generally well
tolerated, with the higher dose demonstrating the unprecedented potential to
stabilize lung function over 26 weeks. The deupirfenidone 825 mg TID arm also
had an effect size, compared to placebo, that was 50% greater than that seen
with pirfenidone (80.9% vs. 54.1%, respectively). Additionally, preliminary
pharmacokinetic results indicate that deupirfenidone 825 mg TID achieved ~50%
higher exposure than pirfenidone 801 mg TID, corresponding with the greater
efficacy results demonstrated with deupirfenidone 825 mg TID.
o The ELEVATE IPF open label extension (OLE) study is ongoing. As of the
March 2025 post-period, 140 patients have continued in the OLE, with 85
patients having received at least 52 weeks of treatment with deupirfenidone.
Preliminary data from those receiving deupirfenidone 825 mg TID indicate that
the significant slowing of lung function decline observed in Part A of the
trial has been sustained through 52 weeks of treatment, supporting the
durability of the treatment effect with this dose and its potential to
stabilize lung function decline over time.
o PureTech intends to discuss the results from the Phase 2b trial with the
FDA and is targeting a meeting before the end of Q3 2025, with the goal of
initiating a Phase 3 trial by the end of 2025. The Company anticipates
providing further guidance later this year following the finalization of the
trial design and FDA interactions.
o PureTech will present additional details from the Phase 2b trial at the
American Thoracic Society International Conference in May 2025.
· Gallop Oncology (Gallop):
o PureTech continued to progress its wholly-owned Founded Entity, Gallop,
which is advancing LYT-200 (anti-galectin-9 mAb) for the treatment of
hematological malignancies, such as AML and high-risk myelodysplastic
syndromes (MDS), and locally advanced/metastatic, relapsed/refractory solid
tumors including head and neck cancers.
o LYT-200 is currently being evaluated in an ongoing Phase 1b trial in
relapsed/refractory AML and MDS, both as a monotherapy and in combination with
venetoclax/hypomethylating agents (HMA). As of the April 2025 post-period,
LYT-200 has shown a favorable safety profile across both arms and all dose
levels with no dose limiting toxicities, as well as promising clinical
efficacy, as characterized by complete and partial responses, hematological
improvement, and sustained disease management. Importantly, treatment with
LYT-200 in combination with venetoclax/HMA has resulted in 6 complete
responses, 1 morphological leukemia-free state, and 50% of patients
experiencing stable disease. Topline results are expected in Q3 2025.
o In the 2025 post-period, the Phase 1b trial evaluating LYT-200 as a
monotherapy and in combination with tislelizumab for the treatment of locally
advanced/metastatic, relapsed/refractory solid tumors including head and neck
cancers was successfully completed. LYT-200 demonstrated a favorable safety
profile in all cohorts and showed disease control and initial efficacy
signals. The trial demonstrated durable responses-including a complete
response lasting over two years-in head and neck cancer patients treated with
LYT-200 in combination with tislelizumab. For additional trial details, please
see pages 14 to 15 of PureTech's 2024 Annual Report.
o In 2024 and the early 2025 post-period, LYT-200 received both Fast Track
(January 2025 post-period) and Orphan Drug (February 2024) designations from
the FDA for the treatment of AML, underscoring its potential to address a
serious condition with high unmet need.
o In March 2024, the FDA granted Fast Track designation to LYT-200 in
combination with anti-PD-1 therapy for the treatment of recurrent/metastatic
head and neck cancer, supporting the advancement of the program in solid
tumors.
· Karuna Therapeutics (Karuna; a wholly owned subsidiary of BMS):
o In September 2024, BMS announced that Cobenfy™ (formerly known as KarXT)
received FDA approval for the treatment of schizophrenia in adults. The FDA
approval triggered two separate milestone payments to PureTech totaling $29
million under agreements with Royalty Pharma and PureTech's Founded Entity,
Karuna (now BMS). Under these agreements, PureTech is also entitled to
potential future payments related to additional milestones as well as
approximately 2% royalties on net annual sales over $2 billion.
· Seaport Therapeutics (Seaport):
o PureTech launched Seaport with a $100 million oversubscribed Series A
financing to advance novel neuropsychiatric medicines powered by the Glyph
platform identified by, characterized, and validated at PureTech. This
was followed by a $226 million oversubscribed Series B financing, bringing
the total capital raised by Seaport to $326 million since April 2024.
· Vedanta Biosciences (Vedanta):
o In May 2024, Vedanta enrolled the first patient in the pivotal Phase 3
RESTORATiVE303 study of VE303 for the prevention of recurrent C. difficile
infection (rCDI). This study is intended to form the basis for a Biologics
License Application to be filed with the FDA.
o In the January 2025 post-period, Vedanta published additional results from
the VE303 Phase 2 CONSORTIUM clinical trial in Nature Medicine, providing a
new level of profiling of the multiple mechanisms by which VE303 may decrease
the odds of rCDI.
o Vedanta anticipates topline results from its Phase 2b clinical trial of
VE202 in ulcerative colitis in 2025.
· Vor Biopharma (Nasdaq: VOR)
o In 2024, Vor continued to progress its Phase 1/2 VBP101 study of treatment
with trem-cel, a shielded stem cell transplant lacking CD33 manufactured by
Vor, followed by Mylotarg™, a CD33-directed Antibody Drug Conjugate therapy,
in patients with AML and MDS. Trem-cel + Mylotarg continued to show durable
engraftment, shielding from Mylotarg on-target toxicity, a broadened Mylotarg
therapeutic window and early evidence of improved relapse-free survival
compared to published high-risk AML comparators. Vor received supportive
feedback from the FDA regarding a registrational clinical trial design.
o In 2024, Vor also dosed the first patient in VBP301, a Phase 1/2,
multicenter, open-label, first-in-human study of VCAR33(ALLO), a CAR-T cell
therapy, in patients with relapsed or refractory AML after standard-of-care
transplant or a trem-cel transplant and received both Fast Track designation
and Orphan Drug designation from the FDA.
Financial Highlights
· PureTech level cash, cash equivalents and short-term investments were
$366.8 million(3) as of December 31, 2024, based on consolidated cash, cash
equivalents and short-term investments were $367.3 million(4) as of December
31, 2024.
· PureTech's Founded Entities raised $397.5 million in 2024,(7) of
which over 88% came from third parties.
· PureTech level cash, cash equivalents and short-term investments were
$339.1 million(5), based on consolidated cash, cash equivalents and short-term
investments of $339.5 million(4), as of March 31, 2025.
· PureTech has operational runway into at least 2027.
PureTech Health will release its Annual Report for the year ended December 31,
2024, today. In compliance with the Financial Conduct Authority's Listing Rule
9.6.3, the following documents will be submitted to the National Storage
Mechanism today and be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
· Annual Report and Accounts for the year ended December 31, 2024; and
· Notice of 2025 Annual General Meeting (AGM).
Printed copies of these documents together with the Form of Proxy will be
posted to shareholders in accordance with applicable UK rules. The Company
will provide a hard copy of the Annual Report containing its audited financial
statements, free of charge, to its shareholders upon request in accordance
with Nasdaq requirements. Requests should be directed in writing by email to
ir@puretechhealth.com. Copies will also be available electronically on the
Investor Relations section of the Company's website
at https://investors.puretechhealth.com/financials-filings/reports.
PureTech's 2025 AGM will be held on June 16, 2025, at 11:00am EDT /4:00pm BST
at the Company's Corporate Headquarters at 6 Tide Street, Suite 400, Boston,
Massachusetts, United States.
Shareholders are strongly encouraged to submit a proxy vote in advance of the
meeting and to appoint the Chair of the meeting to act as their proxy. If a
shareholder wishes to attend the meeting in person, we ask that the
shareholder notify the Company by email to ir@puretechhealth.com to assist us
in planning and implementing arrangements for this year's AGM.
Any specific questions on the business of the AGM and resolutions can be
submitted ahead of the meeting by e-mail to ir@puretechhealth.com (marked
for the attention of Mr. Charles Sherwood).
Shareholders are encouraged to complete and return their votes by proxy, and
to do so no later than 4:00pm BST on June 12, 2025. This will appoint the
chair of the meeting as proxy and will ensure that votes will be counted even
though attendance at the meeting is restricted and you are unable to attend in
person. Details of how to appoint a proxy are set out in the notice of AGM.
PureTech will keep shareholders updated of any changes it may decide to make
to the current plans for the AGM. Please visit the Company's website at
www.puretechhealth.com for the most up to date information.
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 portfolio 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 29 therapeutics and therapeutic candidates,
including three that have been approved by the U.S. Food and Drug
Administration. 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 portfolio 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 statements that relate to expectations
regarding PureTech's and its Founded Entities' future prospects, development
plans and strategies, including the success and scalability of the Company's
R&D model, the progress and timing of clinical trials and data readouts,
the timing of potential regulatory submissions, and the sufficiency of
available resources and expected operational runway. 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 ability to
realize value from our Founded Entities; 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 compete with companies currently
marketing or engaged in the development of treatments for indications within
our programs are designed to target; our ability to realize the benefits of
our collaborations, licenses and other arrangements; the impact of government
laws and regulations; 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 additional important factors described under the
caption "Risk Factors" in our Annual Report on Form 20-F for the year ended
December 31, 2024, to be 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.
Contact:
PureTech EU/UK media U.S. media
Public Relations Ben Atwell, Rob Winder Justin Chen
publicrelations@puretechhealth.com +44 (0) 20 3727 1000 +1 609 578 7230
Investor Relations puretech@fticonsulting.com jchen@tenbridgecommunications.com
IR@puretechhealth.com
1 Certain third-party trademarks are included here; PureTech does not claim
any rights to any third-party trademarks. COBENFY™ (xanomeline and trospium
chloride) is indicated for the treatment of schizophrenia in adults. For
Important Safety Information, see U.S. Full Prescribing Information, including
Patient Information on COBENFY.com. Following the acquisition of Karuna, KarXT
is now under the stewardship of Bristol Myers Squibb and will be marketed as
Cobenfy.
2 As of the date of this report, Founded Entities represent companies
founded by PureTech in which PureTech maintains ownership of an equity
interest and/or, in certain cases, is eligible to receive sublicense income,
milestone payments and royalties on product sales. References to Founded
Entities include PureTech's ownership interests in Gallop Oncology, Inc.,
Seaport Therapeutics, Inc., Vedanta Biosciences, Inc., Vor Biopharma, Inc.,
Entrega, Inc., Sonde Health, Inc., for all dates prior to July 2, 2024, Akili
Interactive Labs, Inc., for all dates prior to March 18, 2024, Karuna
Therapeutics, Inc., for all dates prior to October 30, 2023, Gelesis, Inc.,
for all dates prior to December 21, 2023, Follica, Incorporated, and for all
dates prior to December 18, 2019, resTORbio.
3 PureTech level cash, cash equivalents and short-term investments excludes
cash and cash equivalents at non-wholly owned subsidiary of $0.5m. PureTech
level cash, cash equivalents and short-term investments is a non-IFRS measure.
For more information in relation to the PureTech level cash, cash equivalents
and short-term investments measure, please see below under the heading
"Financial Review."
4 For more information in relation to the Consolidated cash, cash
equivalents and short-term investments measure, please see below under the
heading "Financial Review."
5 PureTech level cash, cash equivalents and short-term investments as of
March 31, 2025, is an unaudited figured and excludes cash and cash equivalents
at non-wholly owned subsidiary of $0.4m. PureTech level cash, cash equivalents
and short-term investments is a non-IFRS measure. For more information in
relation to the PureTech level cash, cash equivalents and short-term
investments measure, please see below under the heading "Financial Review."
6 Wholly-Owned Programs are comprised of the Company's current and future
therapeutic candidates and technologies that are developed by the Company's
wholly-owned subsidiaries, whether they were announced as a Founded Entity or
not, and will be advanced through with either the Company's funding or
non-dilutive sources of financing. As of December 31 ,2024, Wholly-Owned
Programs were developed by the wholly-owned subsidiaries including PureTech
LYT, Inc., PureTech LYT 100, Inc. and Gallop Oncology, Inc. and included
primarily the programs deupirfenidone (LYT-100) and LYT-200.
7 Funding figure includes private convertible notes and public offerings.
Funding figure excludes future milestone considerations received in
conjunction with partnerships and collaborations.
Letter from the Chair
A Year of Successes for PureTech Innovation
These achievements highlight the power of our proven hub-and-spoke model
to advance science, build value, and deliver meaningful outcomes.
2024 was a landmark year for PureTech-one defined by breakthrough
achievements that created long-term value for both patients and
shareholders. These accomplishments reflect not only the power of our
innovation engine but also the dedication, discipline, and excellence of the
PureTech team. From bold scientific bets to smart capital decisions, this year
demonstrated what's possible when vision meets execution.
We reached major milestones throughout the year, including the third FDA
approval for a therapeutic invented at PureTech, transformative financings for
Seaport Therapeutics (a PureTech Founded Entity), and unprecedented clinical
results for deupirfenidone (LYT-100), an asset fully owned by PureTech. These
achievements, supported by a strong year-end balance sheet of $367 million(1),
underscore the strength of our capital-efficient and disciplined approach.
A standout achievement was the U.S. FDA approval of KarXT-now marketed by
Bristol Myers Squibb (BMS) as Cobenfy™-for the treatment of schizophrenia in
adults. Invented and initially developed at PureTech, Cobenfy represents the
first drug with a novel mechanism of action for schizophrenia in over 50
years, underscoring our scientific invention and leadership. Complementing
this historic approval was a major financial milestone: the acquisition of
Karuna Therapeutics, our Founded Entity that shepherded Cobenfy through
late-stage development, by BMS for $14 billion. Through the monetization of
our equity holdings-including proceeds from the BMS acquisition and a
strategic royalty agreement-PureTech has generated approximately $1.1 billion
in cash from the $18.5 million it initially invested in the program. Together,
these achievements highlight the power of our proven hub-and-spoke model (see
page 10 of our Annual Report) to advance science, build value, and deliver
meaningful outcomes.
Expanding on this success, we launched Seaport Therapeutics-our latest Founded
Entity. Seaport builds on our leadership in neuroscience, a field where we
reignited broader investment interest through the success of Karuna. Several
key team members from Karuna are now involved at Seaport, leveraging their
expertise to advance a promising pipeline of neuropsychiatric medicines. With
over $325 million raised across two oversubscribed Series A and Series B
financings, Seaport is now advancing multiple drugs developed at PureTech
using the Glyph platform that PureTech validated and advanced.
Perhaps the most defining moment of 2024 came in December with the
announcement of positive results from ELEVATE IPF, our global Phase 2b trial
of deupirfenidone in idiopathic pulmonary fibrosis (IPF). The trial met its
primary and key secondary endpoints, demonstrating the potential of
deupirfenidone to stabilize lung function decline and meaningfully improve
patient outcomes-an advance that could redefine the standard of care for IPF.
These results again prove the strength of our scientific platform and our
team's ability to translate bold ideas into patient-impacting innovation.
Advancing deupirfenidone into Phase 3 is now a strategic priority for
PureTech, which we aim to accomplish with financial partners.
Recognizing the significant cash realizations made from our success with
Karuna, we also were able to return significant levels of cash to our
shareholders during the year against a challenging macroeconomic backdrop. We
returned $100 million through a Tender Offer and completed a $50 million share
buyback program, which was initiated in 2022. Notably, we accomplished these
returns without raising capital from public equity markets for seven
consecutive years-all while driving significant patient progress, advancing
our pipeline, and maintaining a very strong balance sheet. These actions
reflect our confidence in PureTech's intrinsic value and our commitment to
delivering returns for shareholders. At the same time, the Board recognizes
that there remains a disconnect between the value of PureTech's assets and our
share price. We are working closely with the CEO and management team to
explore all strategic options to address this gap-including recent
take-private discussions-with the goal of unlocking value in a manner that is
in the best interest of all shareholders.
The Board has been a steadfast partner throughout this journey-providing
strategic oversight, financial discipline, and an unwavering commitment to our
long-term mission. As part of this commitment, I traveled to the UK in 2024 to
meet directly with several shareholders, reflecting the Board's active
engagement and dedication to maintaining strong, direct relationships with our
investor base. I am proud to serve alongside such a thoughtful and
forward-looking group. Their counsel has been instrumental in navigating
complexity and driving results.
On behalf of the Board, I extend my deepest gratitude to our shareholders for
their continued support. Your confidence empowers us to pursue life-changing
therapies and deliver on our vision. To the entire PureTech team-thank you.
Your scientific excellence, operational rigor, and relentless drive have made
this year possible.
Looking ahead, we remain grounded in the disciplined approach that has long
defined PureTech-prioritizing capital efficiency, thoughtful resource
allocation, and strategic agility and flexibility. The momentum we have built
in 2024 has positioned us for a future of continued impact, and we remain
steadfast in our mission to deliver novel medicines that transform patient
outcomes.
Raju Kucherlapati, Ph.D.
Board Chair
April 30, 2025
Letter from the Chief Executive Officer
Delivering on Our Strategy
We remain deeply focused on executing a strategy that maximizes value for our
shareholders while advancing our mission to improve patients' lives.
2024 was a defining year for PureTech-one in which the programs we cultivated
through our R&D engine came to fruition in ways that delivered meaningful
impact for patients and showcased the strength of our innovation engine.
We saw the full arc of our strategy on display: from unprecedented clinical
results with our wholly-owned program that could reshape the standard of care
in a major disease area, to the FDA approval of a first-in-class therapy for
schizophrenia that began with our team, to the launch and successful financing
of a new Founded Entity in neuropsychiatry. These moments weren't isolated
wins-they were outcomes of a deliberate and disciplined model that translates
scientifically validated biology into therapies for areas of high unmet need.
Among the most significant milestones of the year was the progress of our
wholly-owned program, deupirfenidone (LYT-100), which delivered transformative
results in our Phase 2b ELEVATE IPF trial. This randomized, double-blind,
placebo- and active-controlled study evaluated two dose levels of
deupirfenidone in patients with idiopathic pulmonary fibrosis (IPF), a
progressive and fatal lung disease. The trial met its primary and key
secondary endpoints, with the higher dose demonstrating the potential to
stabilize lung function decline over 26 weeks. To our knowledge, this is an
achievement unmatched by any other investigational IPF therapeutic to date.
Notably, this higher dose also showed an effect size that was 50% greater than
that seen in our trial with pirfenidone (80.9% vs. 54.1%, respectively),
further underscoring its potential for superior efficacy. Importantly,
deupirfenidone was generally well-tolerated at this higher dose, overcoming
the tolerability limitations that constrain current standard-of-care therapies
and limit their effectiveness. Furthermore, I'm pleased that we continue to
see strong preliminary data from our ongoing open label extension (OLE) trial.
As of March 14, 2025, 140 patients have continued in the OLE, and 85 patients
have received at least 52 weeks of treatment with deupirfenidone. These
preliminary OLE data show that the potential for stabilization of lung
function decline demonstrated with deupirfenidone 825 mg TID was maintained
out to 52 weeks. These results suggest the potential for deupirfenidone to
offer improved efficacy without compromising safety and position it as a
potential new standard-of-care, not only in IPF, but also potentially in
other underserved fibrotic lung diseases. We intend to discuss these results
with the FDA before the end of the third quarter of 2025 to align on a
potential registrational pathway, with the goal of initiating a Phase 3 trial
by the end of the year. We anticipate providing further guidance later this
year following the finalization of the trial design and FDA interactions. We
will also be presenting details from the Phase 2b ELEVATE IPF trial at the
American Thoracic Society International Conference in May 2025.
We are committed to advancing deupirfenidone while maintaining capital
efficiency, in line with our proven strategy. Subject to feedback from the FDA
with respect to trial design, as well as historical data from other Phase 3
IPF studies, we don't believe our current cash balance would be sufficient to
fully fund a Phase 3 trial. We have therefore initiated discussions to explore
a range of funding mechanisms-including a potential spin-out of the program
into a new Founded Entity and accessing external equity financing, similar
to our approach with Karuna and Seaport; project or royalty-based financing;
and strategic partnerships - which may be used in combination, to support the
program's continued development as we don't intend to fully fund a Phase 3
trial on our own. We will, however, continue to fund the program in the
interim to maintain development momentum.
While deupirfenidone represents our next wave of innovation, we also saw the
full potential of our model realized through the FDA approval of Cobenfy™
(formerly KarXT), which became the first new mechanism approved for
schizophrenia in over 50 years. Invented at PureTech and advanced by our
Founded Entity Karuna Therapeutics, Cobenfy's approval by the FDA in 2024,
following Karuna's acquisition by BMS for approximately $14 billion, marked
the culmination of years of scientific, clinical, and strategic execution.
Through our equity and royalty interest in Karuna, we not only delivered
shareholder returns, but also reinforced the self-funded cycle that fuels our
broader pipeline.
Another example of our flexible funding model in motion is Seaport
Therapeutics, launched in 2024 to develop neuropsychiatric candidates based on
the Glyph platform validated and advanced by PureTech. The rapid growth of
Seaport-including more than $325 million raised across its Series A and B
rounds in just six months-demonstrates continued external conviction in our
R&D engine and our ability to build high-quality companies around
transformational programs.
Several other programs had important developments this year. Our newest
Founded Entity, Gallop Oncology, is advancing LYT-200 for the potential
treatment of hematological malignancies and solid tumors. LYT-200, which
targets galectin-9, received FDA Fast Track designation for both acute myeloid
leukemia (AML) and head and neck cancers, was granted Orphan Drug Designation
for AML, and delivered encouraging data across its two clinical trials. The
ongoing Phase 1b trial in AML and high-risk myelodysplastic syndromes (MDS)
has shown clinical activity and disease stabilization in heavily pretreated
patients, both as a monotherapy and in combination with
venetoclax/hypomethylating agents (HMA), along with a favorable safety
profile. Data were presented at the American Society for Hematology in 2024,
and - since then - the trial has continued to demonstrate robust efficacy and
safety. As of April 28, 2025, treatment with LYT-200 has resulted in one
complete response (CR), three partial responses (PRs) and more than 50% of
patients treated experienced stable disease. When administered in combination
with venetoclax/HMA, results as of April 28, 2025, demonstrate that LYT-200
may enhance the efficacy of standard-of-care therapies, resulting in 6 CRs, 1
morphological leukemia-free state, and 50% of patients experiencing stable
disease. The average time on combination therapy was four months as of the
data cutoff, which is meaningful in a patient population whose time to
progression tends to be less than one month and whose overall survival
averages 1.7-2.4 months with standard-of-care therapy. We're also pleased to
share topline results from the head and neck cancer study, which showed a
favorable safety profile in all cohorts, disease control, and initial efficacy
signals, including one CR lasting more than two years. Additional details from
both studies are available on pages 14-15 of our Annual Report.
Our Founded Entity Vedanta Biosciences initiated its pivotal Phase 3 program
for VE303 in recurrent C. difficile infection, and Vor Bio continued to make
clinical progress with trem-cel (VOR33), a promising shielded transplant
platform for patients with AML.
Taken together, these milestones reflect a robust innovation engine that spans
the biotech lifecycle from discovery through commercialization and delivers
impact across multiple therapeutic areas. Our hub-and-spoke model has enabled
us to achieve this with scientific rigor, executional discipline, and capital
efficiency.
Despite the strength of our innovation engine and the significant milestones
we have achieved, our market capitalization has not reflected the underlying
value of our business for some time. This persistent disconnect has remained
despite meaningful efforts over the past several years-including the return of
$150 million to shareholders via share buybacks and a Tender Offer, engaging
in significant investor outreach and capital market activities, attaining a
dual listing on Nasdaq, and making strategic shifts in our model-all while
delivering meaningful scientific, clinical, and financial milestones that we
believe demonstrate the inherent strength of our business. In response, we
have been evaluating a range of potential pathways to better align our market
value with the strength of our underlying assets and long-term potential.
These efforts are grounded in a clear objective: to address structural
challenges and deliver value to shareholders in a way that reflects both the
maturity of our business and the opportunity ahead.
We remain deeply focused on executing a strategy that maximizes value for our
shareholders while advancing our mission to improve patients' lives, and we
will carefully consider any opportunity that arises to create value for our
shareholders.
Our balance sheet remains strong, with $367 million as of December 31,
2024,(1) and we are committed to maintaining financial discipline by
allocating capital efficiently to high-impact programs while actively pursuing
external funding opportunities. This measured approach allows us to protect
our balance sheet while preserving flexibility in a volatile market
environment. Our model has always emphasized capital efficiency, and we remain
confident in our ability to build value through disciplined execution and
strategic agility.
I want to thank each member of the PureTech team for their contributions to
our work and culture-what we've accomplished together is rare and meaningful.
I'm also grateful to our Board of Directors for their steadfast guidance and
partnership.
Finally, to our broader community of collaborators-patients, advocates,
clinicians, partners-and to our shareholders, thank you. Your trust and
support have been essential to our journey, especially over the past year as I
stepped into the role of CEO. We're deeply grateful for the belief you've
placed in our vision, our model, and our team. It is a privilege to pursue
this mission with you, and we are committed to delivering value to all of our
stakeholders.
We are proud of what we have achieved together-and we are energized by the
impact our science continues to make in the world.
Bharatt Chowrira, Ph.D., J.D.
Chief Executive Officer and Director
April 30, 2025
Note: Certain third-party trademarks are included here; PureTech does not
claim any rights to any third-party trademarks.
COBENFY™ (xanomeline and trospium chloride) is indicated for the treatment
of schizophrenia in adults. For Important Safety Information, see U.S. Full
Prescribing Information, including Patient Information on COBENFY.com.
Following the acquisition of Karuna, KarXT is now under the stewardship of
Bristol Myers Squibb and will be marketed as Cobenfy.
1 PureTech level cash, cash equivalents and short-term investments
excludes cash and cash equivalents at non-wholly owned subsidiary of $0.5m.
PureTech level cash, cash equivalents and short-term investments is a non-IFRS
measure. For more information in relation to the PureTech level cash, cash
equivalents and short-term investments measure, please see below under the
heading "Financial Review."
Risk management
The execution of the Group's strategy is subject to a range of risks and
uncertainties. As a clinical-stage biotherapeutics company, the Group operates
in an inherently high-risk environment. The Group's strategic approach seeks
to aid the Group's risk management efforts to achieve an effective balancing
of risk and reward. Risk assessment, evaluation and mitigation are integral
parts of the Group's management process. The Group, however, also recognizes
that ultimately no strategy provides an assurance against loss, as for example
we saw in 2024 with founded-entity Akili Interactive Labs, Inc., which merged
with privately-held Virtual Therapeutics and ceased trading as a public
company in July 2024.
Risks are formally identified by the Board and appropriate internal controls
are put in place and tailored to the specific risks to monitor and mitigate
them on an ongoing basis. If multiple or an emerging risk event occurs, it is
possible that the overall effect of such events would compound the overall
effect on the Group. The principal risks that the Board has identified as the
key business risks facing the Group are set out in the table below along with
the impact and mitigation management plan with respect to each risk. These
risks are only a high-level summary of the principal risks affecting our
business; any number of these or other risks could have a material adverse
effect on the Group or its financial condition, development, results of
operations, subsidiary companies and/or future prospects. Further information
on the risks facing the Group can be found on pages 182 to 216 which also
includes a description of circumstances under which principal and other risks
and uncertainties might arise in the course of our business and their
potential impact.
Risk Impact* Management Plans/Actions
1 Risks related to science and technology failure
The science and technology being developed or commercialized by some of our The failure of any of our businesses could decrease our value. A failure of Prior to additional steps in the development of any technology, extensive due
businesses may fail and/or our businesses may not be able to develop their one of the major businesses could also impact the reputation of PureTech as a diligence is carried out that covers all the major business risks, including
intellectual property into commercially viable therapeutics or technologies. developer of high value technologies and possibly make additional fundraising technological feasibility, competition and technology advances, market size,
by PureTech or any Founded Entity more difficult or unavailable on acceptable strategy, adoption and intellectual property protection.
There is also a risk that certain of the businesses may fail or not succeed as terms at all.
anticipated, resulting in significant decline of our value.
A capital efficient approach is employed, which requires the achievement of a
level of proof of concept prior to the commitment of substantial capital is
committed. Capital deployment is generally tranched to ensure the funding of
programs only to their next value milestone. Members of our Board or our
management team serve on the board of directors of several of the businesses
so as to continue to guide each business's strategy and to oversee proper
execution thereof. We use our extensive network of advisors to ensure that
each business has appropriate domain expertise as it develops and executes on
its strategy and the R&D Committee of our Board reviews each program at
each stage of development and advises our Board on further actions.
Additionally, we have a diversified model with numerous assets such that the
failure of any one of our businesses or therapeutic candidates would not
result in a failure of all of our businesses.
2 Risks related to clinical trial failure
Clinical trials and other tests to assess the commercial viability of a A critical failure of a clinical trial may result in termination of the We have a diversified model to limit the impact of clinical trial outcomes on
therapeutic candidate are typically expensive, complex and time-consuming, and program and a significant decrease in our value. Significant delays in a our ability to operate as a going concern. We have dedicated internal
have uncertain outcomes. clinical trial to support the appropriate regulatory approvals could impact resources to establish and monitor each of the clinical programs for the
the amount of capital required for the business to become fully sustainable on purpose of maximising successful outcomes. We also engage outside experts to
Conditions in which clinical trials are conducted differ, and results achieved a cash flow basis. help create well-designed clinical programs that provide valuable information
in one set of conditions could be different from the results achieved in and mitigate the risk of failure. Significant scientific due diligence and
different conditions or with different subject populations. If our therapeutic preclinical experiments are conducted prior to a clinical trial to evaluate
candidates fail to achieve successful outcomes in their respective clinical the odds of the success of the trial. In the event of the outsourcing of these
trials, the therapeutics will not receive regulatory approval and in such trials, care and attention are given to assure the quality of the vendors used
event cannot be commercialized. In addition, if we fail to complete or to perform the work.
experience delays in completing clinical tests for any of our therapeutic
candidates, we may not be able to obtain regulatory approval or commercialize
our therapeutic candidates on a timely basis, or at all.
3 Risks related to regulatory approval
The pharmaceutical industry is highly regulated. Regulatory authorities across The failure of one of our therapeutics to obtain any required regulatory We manage our regulatory risk by employing highly experienced clinical
the world enforce a range of laws and regulations governing the testing, approval, or conditions imposed in connection with any such approval, may managers and regulatory affairs professionals who, where appropriate, will
approval, manufacturing, labelling and marketing of pharmaceutical result in a significant decrease in our value. commission advice from external advisors and consult with the regulatory
therapeutics. Stringent standards are imposed which relate to the quality, authorities on the design of our preclinical and clinical programs. These
safety and efficacy of these therapeutics. These requirements are a major experts ensure that high-quality protocols and other documentation are
determinant of the commercial viability of developing a drug substance or submitted during the regulatory process, and that well-reputed contract
medical device given the time, expertise and expense which must be invested. research organizations with global capabilities are retained to manage the
trials. We also engage with experts, including on our R&D Committee, to
help design clinical trials to help provide valuable information and maximize
the likelihood of regulatory approval. Additionally, we have a diversified
We may not obtain regulatory approval for our therapeutic candidates. model with numerous assets such that the failure to receive regulatory
Moreover, approval in one territory offers no guarantee that regulatory approval or subsequent regulatory difficulties with respect to any one
approval will be obtained in any other territory. Even if therapeutics are therapeutic would not adversely impact all of our therapeutics and
approved, subsequent regulatory difficulties may arise, or the conditions businesses.
relating to the approval may be more onerous or restrictive than we
anticipate.
4 Risks related to therapeutic safety
There is a risk of adverse reactions with all drugs and medical devices. If Adverse reactions or unacceptable side effects may result in a smaller market Safety is our top priority in the design of our therapeutics. We conduct
any of our therapeutics are found to cause adverse reactions or unacceptable for our therapeutics, or even cause the therapeutics to fail to meet extensive preclinical and clinical trials which test for and identify any
side effects, then therapeutic development may be delayed, additional expenses regulatory requirements necessary for sale of the therapeutic. This, as well adverse side effects. Despite these steps and precautions, we cannot fully
may be incurred if further studies are required, and, in extreme as any claims for injury or harm resulting from our therapeutics, may avoid the possibility of unforeseen side effects. To mitigate the risk further
circumstances, it may prove necessary to suspend or terminate development. result in a significant decrease in our value. we have insurance in place to cover product liability claims which may arise
This may occur even after regulatory approval has been obtained, in which case during the conduct of clinical trials.
additional trials may be required, the approval may be suspended or withdrawn
or require product labels to include additional safety warnings. Adverse
events or unforeseen side effects may also potentially lead to product
liability claims against us as the developer of the therapeutics and sponsor
of the relevant clinical trials. These risks are also applicable to our
Founded Entities and any trials they conduct or therapeutic candidates they
develop.
5 Risks related to therapeutic profitability and competition
We may be unable to sell our therapeutics profitably if reimbursement from The failure to obtain reimbursement from third party payers, and competition We engage reimbursement experts to conduct pricing and reimbursement studies
third-party payers - such as private health insurers and government health from other therapeutics, could significantly decrease the amount of revenue we for our therapeutics to ensure that a viable path to reimbursement, or direct
authorities - is restricted or not available. If, for example, it proves may receive from therapeutic sales for certain therapeutics. This may result user payment, is available. We also closely monitor the competitive landscape
difficult to build a sufficiently strong economic case based on the burden of in a significant decrease in our value. for our therapeutics and therapeutic candidates and adapt our business plans
illness and population impact. accordingly. Not all therapeutics that we are developing will rely on
reimbursement. Also, while we cannot control outcomes, we seek to design
Third-party payers are increasingly attempting to curtail healthcare costs by studies to generate data that will help support potential reimbursement.
challenging the prices that are charged for pharmaceutical therapeutics and
denying or limiting coverage and the level of reimbursement. Moreover, even if
the therapeutics can be sold profitably, they may not be adopted by patients
and the medical community.
Alternatively, our competitors - many of whom have considerably greater
financial and human resources - may develop safer or more effective
therapeutics or be able to compete more effectively in the markets targeted by
us. New companies may enter these markets and novel therapeutics and
technologies may become available which are more commercially successful than
those being developed by us. These risks are also applicable to our Founded
Entities and could result in a decrease in their value.
6 Risks related to intellectual property protection
We may not be able to obtain patent protection for some of our therapeutics or The failure to obtain patent protection and maintain the secrecy of key We spend significant resources in the prosecution of our patent applications
maintain the secrecy of their trade secrets and know-how. If we are information may significantly decrease the amount of revenue we may receive and maintenance of our patents, and we have in-house patent counsel and patent
unsuccessful in doing so, others may market competitive therapeutics at from therapeutic sales. Any infringement litigation against us may result in group to help with these activities. We also work with experienced external
significantly lower prices. Alternatively, we may be sued for infringement of the payment of substantial damages by us and result in a significant decrease attorneys and law firms to help with the protection, maintenance and
third-party patent rights. If these actions are successful, then we would have in our value. enforcement of our patents. Third party patent filings are monitored to ensure
to pay substantial damages and potentially remove our therapeutics from the the Group continues to have freedom to operate. Confidential information (both
market. We license certain intellectual property rights from third parties. If our own and information belonging to third parties) is protected through use
we fail to comply with our obligations under these agreements, it may enable of confidential disclosure agreements with third parties, and suitable
the other party to terminate the agreement. This could impair our freedom to provisions relating to confidentiality and intellectual property exist in our
operate and potentially lead to third parties preventing us from selling employment and advisory contracts. Licenses are monitored for compliance with
certain of our therapeutics. their terms.
7 Risks related to enterprise profitability
We expect to continue to incur substantial expenditure in further research and The strategic aim of the business is to generate profits for our shareholders We retain significant cash in order to support funding of our Founded Entities
development activities. There is no guarantee that we will become through the commercialization of technologies through therapeutic sales, and our Wholly-Owned Programs. We have close relationships with a wide group
operationally profitable, and, even if we do so, we may be unable to sustain strategic partnerships and sales of businesses or parts thereof. The timing of investors and strategic partners to ensure we can continue to access the
operational profitability. and size of these potential inflows are uncertain. Should revenues from our capital markets and additional monetization and funding for our businesses.
activities not be achieved, or in the event that they are achieved but at Additionally, our Founded Entities are able to raise money directly from third
values significantly less than the amount of capital invested, then it would party investors and strategic partners.
be difficult to sustain our business.
8 Risks related to hiring and retaining qualified employees and key The failure to attract highly effective personnel or the loss of key The Board regularly seeks external expertise to assess the competitiveness of
personnel personnel would have an adverse impact on our ability to continue to grow and the compensation packages of its senior management. Senior management
may negatively affect our competitive advantage. continually monitors and assesses compensation levels to ensure we remain
We operate in complex and specialized business domains and require highly
competitive in the employment market. We maintain an extensive recruiting
qualified and experienced management to implement our strategy successfully. network through our Board members, advisors and scientific community
We and many of our businesses are located in the United States which is a very involvement. We also employ an executive as a full-time in-house recruiter and
competitive employment market. retain outside recruiters when necessary or advisable. Additionally, we are
proactive in our retention efforts and include incentive-based compensation in
the form of equity awards and annual bonuses, as well as a competitive
benefits package. We have a number of employee engagement efforts to
Moreover, the rapid development which is envisaged by us may place strengthen our PureTech community.
unsupportable demands on our current managers and employees, particularly if
we cannot attract sufficient new employees. There is also the risk that we
may lose key personnel.
9 Risks related to business, economic or public health disruptions
Business, economic, financial or geopolitical disruptions or global health Broad-based business, economic, financial or geopolitical disruptions could We regularly review the business, economic, financial and geopolitical
concerns could seriously harm our development efforts and increase our costs adversely affect our ongoing or planned research and development activities. environment in which we operate. It is possible that we may see further
and expenses. Global health concerns, such as a further pandemic, or geopolitical events, impact as a result of current geopolitical tensions. We monitor the position
like the ongoing consequences of the armed conflicts, could also result in of our suppliers, clinical trial sites, regulators, providers of financial
social, economic, and labor instability in the countries in which we operate services and other third parties with whom we conduct business. We develop
or the third parties with whom we engage. We consider the risk to be and execute contingency plans to address risks where appropriate.
increasing since the prior year and note further risks associated with the
banking system and global financial stability. We cannot presently predict the
scope and severity of any potential business shutdowns or disruptions, but if
we or any of the third parties with whom we engage, including the suppliers,
clinical trial sites, regulators, providers of financial services and other
third parties with whom we conduct business, were to experience shutdowns or
other business disruptions, our ability to conduct our business in the manner
and on the timelines presently planned could be materially and negatively
impacted. It is also possible that global health concerns or geopolitical
events such as these ones could disproportionately impact the hospitals and
clinical sites in which we conduct any of our current and/or future clinical
trials, which could have a material adverse effect on our business and our
results of operation and financial impact.
Financial Review
Reporting Framework
You should read the following discussion and analysis together with our
Consolidated Financial Statements, including the notes thereto, set forth
elsewhere in this report. Some of the information contained in this discussion
and analysis or set forth elsewhere in this report, including information with
respect to our plans and strategy for our business and financing our business,
includes forward-looking statements that involve risks and uncertainties. As a
result of many factors, including the risks set forth on pages 60 to 64 and in
the Additional Information section from pages 182 to 219, our actual results
could differ materially from the results described in or implied by these
forward-looking statements.
Our audited Consolidated Financial Statements as of December 31, 2024 and
2023, and for the years ended December 31, 2024, 2023 and 2022, have been
prepared in accordance with UK-adopted International Financial Reporting
Standards ("IFRSs"). The Consolidated Financial Statements also comply fully
with IFRSs as issued by the International Accounting Standards Board ("IASB").
The following discussion contains references to the Consolidated Financial
Statements of PureTech Health plc (the "Parent") and its consolidated
subsidiaries, together "the Group". These financial statements consolidate
PureTech Health plc's subsidiaries and include the Group's interest in
associates by way of equity method, as well as investments held at fair value.
Subsidiaries are those entities over which the Group maintains control.
Associates are those entities in which the Group does not have control for
financial accounting purposes but maintains significant influence over
financial and operating policies. Where the Group 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
Consolidated Statement of Comprehensive Income/(Loss). For purposes of our
Consolidated Financial Statements, each of our Founded Entities(1) are
considered to be either a "subsidiary", an "associate" or an "investment held
at fair value" depending on whether the Group 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. Material Accounting Policies to our
Consolidated Financial Statements included in this report. 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 from pages 1 to 21, which describes
the business development of our Wholly-Owned Programs(3) and Founded Entities.
Our ability to generate product revenue sufficient to achieve profitability
will depend on the successful development and eventual commercialization of
one or more therapeutic candidates of our wholly-owned or Controlled Founded
Entities(2), which may or may not occur. Historically, certain of our Founded
Entities' therapeutics received marketing authorization from the FDA, but our
Wholly-Owned Programs have not generated revenue from product sales to date.
Furthermore, our ability to achieve profitability will largely rely on
successfully monetizing our investment in Founded Entities, including the sale
of rights to royalties, entering into strategic partnerships, and other
related business development activities.
We deconsolidated a number of our Founded Entities, specifically Seaport
Therapeutics, Inc. ("Seaport") in October 2024, Vedanta Biosciences, Inc.
("Vedanta") in 2023, Sonde Health Inc. ("Sonde") in 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 Financial
Statements;
• we record our retained investment in the Founded Entity at fair
value; and
• the resulting amount of any gain or loss is recognized.
Whilst we do not plan to fully fund our LYT-100 or LYT-200 programs, we
anticipate providing certain level of funding in 2025 while we seek external
sources of funding. Consequently, we anticipate our expenses to increase in
the short term as we continue to advance these Wholly-Owned Programs. However,
we anticipate a decrease in our expenses in the mid- and long-term in
connection with execution of our current strategy of housing these
Wholly-Owned Programs in Founded Entities and accessing external sources of
funding at the Founded Entity level, which, over time, could lead to the
deconsolidation of the Founded Entities. The increase in our expenses and
capital requirements in the near term will involve:
• continued research and development efforts to advance our clinical
programs through development; and
• addition of clinical, scientific, operational, financial and
management information systems and maintaining appropriate levels of personnel
to execute on our strategic initiatives.
1. Founded Entities are comprised of the entities which the Company
incorporated and announced the incorporation as a Founded Entity externally.
It includes certain of the Company's wholly-owned subsidiaries which have been
announced by the Company as Founded Entities, Controlled Founded Entities(2)
and deconsolidated Founded Entities. As of December 31, 2024, deconsolidated
Founded Entities included Vor Biopharma, Inc., Gelesis, Inc., Sonde Health,
Inc., Vedanta Biosciences, Inc., and Seaport Therapeutics, Inc.
2. Controlled Founded Entities are comprised of the Company's
consolidated operational subsidiaries that currently have already raised
third-party dilutive capital. As of December 31, 2024, Controlled Founded
Entities included only Entrega. Inc.
3. Wholly-Owned Programs are comprised of the Company's current and
future therapeutic candidates and technologies that are developed by the
Company's wholly-owned subsidiaries, whether they were announced as a Founded
Entity or not, and will be advanced through with either the Company's funding
or non-dilutive sources of financing. As of December 31 ,2024, Wholly-Owned
Programs were developed by the wholly-owned subsidiaries including PureTech
LYT, Inc., PureTech LYT 100, Inc. and Gallop Oncology, Inc. and included
primarily the programs deupirfenidone (LYT-100), and LYT-200.
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
rigorously 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 access to substantial additional funding in the
future at the PureTech level, following the period described below in the
Funding Requirements section, to support our continuing operations and pursue
our growth strategy, including participating in financing activities at the
Founded Entity level. We expect to finance our operations through a
combination of monetization of our interests in our Founded Entities,
collaborations with third parties, or other sources. We may be unable to
access additional funds or enter into such other agreements or arrangements
when needed on favorable terms, or at all. If we are unable to raise capital
or enter into such agreements, as and when needed, we may have to delay, scale
back or discontinue our continuing operations and pursuit of our growth
strategy, including participating in financing activities at the Founded
Entity level. Further, if we are unable to obtain external funding for our
LYT-100 and LYT-200 Wholly-Owned programs, we may have to delay, scale back or
discontinue the development and commercialization of one or more of these
Wholly-Owned programs.
Measuring Performance
The Financial Review discusses our operating and financial performance, our
cash flows and liquidity as well as our financial position and our resources.
The results of current period are compared with the results of the comparative
period in the prior year.
Reported Performance
Reported performance considers all factors that have affected the results of
our business, as reflected in our Consolidated Financial Statements.
Core Performance
Core performance measures are alternative performance measures, which are
adjusted and non-IFRS measures. These measures cannot be derived directly from
our Consolidated Financial Statements. We believe that these non-IFRS
performance measures, when provided in combination with reported performance,
will provide investors, analysts and other stakeholders with helpful
complementary information to better understand our financial performance and
our financial position from period to period. The measures are also used by
management for planning and reporting purposes. The measures are not
substitutable for IFRS financial information and should not be considered
superior to financial information presented in accordance with IFRS.
Cash flow and liquidity
PureTech Level cash, cash equivalents and short-term investments Measure type: Core performance
Definition: Cash and cash equivalents and short-term investments held at
PureTech Health plc and our wholly-owned subsidiaries.
Why we use it: PureTech Level cash, cash equivalents and short-term
investments is a measure that provides valuable additional information with
respect to cash, cash equivalents and short-term investments available to fund
the Wholly-Owned Programs and make certain investments in Founded Entities.
Recent Developments (subsequent to December 31, 2024)
The Group has evaluated subsequent events after December 31, 2024 up to the
date of issuance, April 30, 2025, of the Consolidated Financial Statements,
and has not identified any recordable or disclosable events not otherwise
reported in these Consolidated Financial Statements or notes thereto.
Financial Highlights
The following is the reconciliation of the amounts appearing in our
Consolidated Statement of Financial Position to the alternative performance
measure described above:
(in thousands) December 31, 2024 December 31, 2023
Cash and cash equivalents 280,641 191,081
Short-term investments 86,666 136,062
Consolidated cash, cash equivalents and short-term investments 367,307 327,143
Less: cash and cash equivalents held at non-wholly owned subsidiaries (493) (1,097)
PureTech Level cash, cash equivalents and short-term investments $ 366,813 $ 326,046
Basis of Presentation and Consolidation
Our Consolidated Financial Information consolidates the financial information
of PureTech Health plc, as well as its subsidiaries, and includes our interest
in associates and investments held at fair value and is reported in reportable
segments as described below.
Basis for Segmentation
Our Directors are our strategic decision-makers. Our operating segments are
determined based on the financial information provided to our Directors
periodically for the purposes of allocating resources and assessing
performance. We have determined each of our Wholly-Owned Programs represents
an operating segment, and we have aggregated each of these operating segments
into one reportable segment, the Wholly-Owned Programs segment. Each of our
Controlled Founded Entities represents an operating segment. We aggregate each
Controlled Founded Entity operating segment into one reportable segment, the
Controlled Founded Entities segment. The aggregation is based on the high
level of operational and financial similarities of the operating segments. For
our entities that do not meet the definition of an operating segment, we
present this information in the Parent Company and Other column in our segment
footnote to reconcile the information in this footnote to our Consolidated
Financial Statements. Substantially all of our revenue and profit generating
activities are generated within the United States and, accordingly, no
geographical disclosures are provided.
Following is the description of our reportable segments:
Wholly-Owned Programs
The Wholly-Owned Programs segment is advancing Wholly-Owned Programs which are
focused on treatments for patients with devastating diseases. The Wholly-Owned
Programs segment is comprised of the technologies that are wholly-owned and
will be advanced through with either the Group's funding or non-dilutive
sources of financing. The operational management of the Wholly-Owned Programs
segment is conducted by the PureTech Health team, which is responsible for the
strategy, business development, and research and development.
Controlled Founded Entities
The Controlled Founded Entities segment is comprised of the Group's
consolidated operational subsidiaries as of December 31, 2024 that either
have, or have plans to hire, independent management teams and currently have
already raised third-party dilutive capital. These subsidiaries have active
research and development programs and have an equity or debt investment
partner, who will provide additional industry knowledge and access to
networks, as well as additional funding to continue the pursued growth of the
entity.
The Group's entities that were determined not to meet the definition of an
operating segment are included in the Parent Company and Other column to
reconcile the segment information to the Consolidated Financial Statements.
This column captures activities not directly attributable to the Group's
operating segment and includes the activities of the Parent, corporate support
functions, certain research and development support functions that are not
directly attributable to a strategic business segment as well as the
elimination of intercompany transactions. This column also captures the
operating results for our deconsolidated entities through the date of
deconsolidation (e.g. Seaport in 2024, Vedanta in 2023, and Sonde in 2022),
and accounting for our holdings in Founded Entities for which control has been
lost, which primarily represent: the activity associated with deconsolidating
an entity we no longer control, the gain or loss on our investments accounted
for at fair value (e.g. our ownership stakes in Seaport, Sonde, Vedanta, and
Vor) and our net income or loss of associates accounted for using the equity
method.
There was no change to the reportable segments in 2024, except for the changes
to the composition of the reportable segments as described below.
In January 2024, we launched two new Founded Entities (Seaport Therapeutics
"Seaport" and Gallop Oncology "Gallop") to advance certain programs from the
Wholly-Owned Programs segment. The financial results of these programs were
included in the Wholly-Owned Programs segment as of and for the year ended
December 31, 2023.
Seaport was deconsolidated on October 18, 2024 upon completion of its Series B
preferred share financing. The financial results of Seaport through the date
of deconsolidation are included within the Parent Company and Other column as
of December 31, 2024.
As of December 31, 2024, Alivio, a wholly-owned subsidiary of the Group, was
dormant and did not meet the definition of operating segment. The financial
results of this entity were removed from the Wholly-Owned Programs segment and
are included in the Parent Company and Other column. The corresponding
information for 2023 and 2022 has been restated to include Alivio in the
Parent Company and Other column so that the segment disclosures are presented
on a comparable basis.
The table below summarizes the entities that comprised each of our segments as
of December 31, 2024:
Wholly-Owned Programs Segment Ownership Percentage
PureTech LYT 100.0 %
PureTech LYT-100, Inc. 100.0 %
Gallop Oncology, Inc. (Indirectly Held through PureTech LYT) 100.0 %
Controlled Founded Entities Segment
Entrega, Inc. 77.3 %
Parent Company and Other(1)
Alivio Therapeutics, Inc. 100.0 %
Follica, LLC 85.4 %
Gelesis, Inc.(2) - %
Seaport Therapeutics, Inc.(3) 42.9 %
Sonde Health, Inc.(4) 40.2 %
Vedanta Biosciences, Inc.(5) 46.9 %
PureTech Health plc 100.0 %
PureTech Health LLC 100.0 %
PureTech Securities Corporation 100.0 %
PureTech Securities II Corporation 100.0 %
PureTech Management, Inc. 100.0 %
1 Includes dormant, inactive and shell entities as well as Founded Entities
that were deconsolidated prior to 2024.
2 Gelesis filed for bankruptcy in October 2023.
3 Seaport Therapeutics, Inc. was deconsolidated on October 18, 2024.
4 Sonde Health, Inc was deconsolidated on May 25, 2022.
5 Vedanta Biosciences, Inc. was deconsolidated on March 1, 2023.
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales and we do not
expect to generate any meaningful revenue from product sales in the near
future. We derive our revenue from the following:
Contract revenue
We generate revenue primarily from licenses, services and collaboration
agreements, including amounts that are recognized related to upfront payments,
milestone payments, royalties and amounts due to us for research and
development services. In the future, revenue may include additional milestone
payments and royalties on any net product sales under our licensing
agreements. We expect that any revenue we generate will fluctuate from period
to period as a result of the timing and amount of license, research and
development services and milestone and other payments.
Grant Revenue
Grant revenue is derived from grant awards we receive from governmental
agencies and non-profit organizations for certain qualified research and
development expenses. We recognize grants from governmental agencies and
non-profit organizations as grant revenue in the Consolidated Statement of
Comprehensive Income/(Loss), gross of the expenditures that were related to
obtaining the grant, when there is reasonable assurance that we will comply
with the conditions within the grant agreement and there is reasonable
assurance that payments under the grants will be received. We evaluate the
conditions of each grant as of each reporting date to ensure that we have
reasonable assurance of meeting the conditions of each grant arrangement, and
it is expected that the grant payment will be received as a result of meeting
the necessary conditions.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our
research activities, including our discovery efforts, and the development of
our wholly-owned and our Controlled Founded Entities' therapeutic candidates,
which include:
• employee-related expenses, including salaries, related benefits
and equity-based compensation;
• expenses incurred in connection with the preclinical and clinical
development of our wholly-owned and our Founded Entities' therapeutic
candidates, including our agreements with contract research organizations;
• expenses incurred under agreements with consultants who supplement
our internal capabilities;
• the cost of lab supplies and acquiring, developing and
manufacturing preclinical study materials and clinical trial materials;
• costs related to compliance with regulatory requirements; and
• facilities, depreciation and other expenses, which include direct
and allocated expenses for rent and maintenance of facilities, insurance and
other operating costs.
We expense all research costs in the periods in which they are incurred and
development costs are capitalized only if certain criteria are met. For the
periods presented, we have not capitalized any development costs since we have
not met the necessary criteria required for capitalization.
Research and development activities are central to our business model. Whilst
we do not plan to fully fund our LYT-100 or LYT-200 programs, we anticipate
providing certain level of funding in 2025 while we seek external sources of
funding. Consequently, we anticipate that our research and development
expenses will increase in the short term as we continue to advance these
Wholly-Owned Programs. However, we anticipate a decrease in our research and
development expenses in the mid- and long-term in connection with execution of
our current strategy of housing these Wholly-Owned Programs in Founded
Entities and accessing external sources of funding at the Founded Entity
level, which, over time, could lead to the deconsolidation of the Founded
Entities. The successful development of and external funding for our
wholly-owned and our Founded Entities' therapeutic candidates are highly
uncertain. As such, at this time, we cannot reasonably estimate or know the
nature, timing and estimated costs of the efforts that will be necessary to
complete the remainder of the development of these therapeutic candidates
through our funding or in conjunction with our external partners. We do not
anticipate fully-funding either the programs at the Founded Entities or the
Wholly-Owned Programs and in the absence of access to adequate funding from
external sources, we may have to delay, scale back or discontinue one or more
of these therapeutic candidates. We are also unable to predict when, if ever,
material net cash inflows will commence from our wholly-owned or our Founded
Entities' therapeutic candidates. This is due to the numerous risks and
uncertainties associated with developing therapeutics, including the
uncertainty of:
• progressing research and development of our Wholly-Owned Programs
and Founded Entities and continuing to progress our various technology
platforms and other potential therapeutic candidates based on previous human
efficacy and clinically validated biology within our Wholly-Owned Programs and
Founded Entities;
• establishing an appropriate safety profile with investigational
new drug application;
• the success of our Founded Entities and their need for additional
capital;
• identifying new therapeutic candidates to add to our existing
Wholly-Owned Programs or Founded Entities;
• successful enrollment in, and the initiation and completion of,
clinical trials;
• the timing, receipt and terms of any marketing approvals from
applicable regulatory authorities;
• establishing commercial manufacturing capabilities or making
arrangements with third-party manufacturers;
• addressing any competing technological and market developments, as
well as any changes in governmental regulations;
• negotiating favorable terms in any collaboration, licensing or
other arrangements into which we may enter and performing our obligations
under such arrangements;
• maintaining, protecting and expanding our portfolio of
intellectual property rights, including patents, trade secrets and know-how,
as well as obtaining and maintaining regulatory exclusivity for our
wholly-owned and our Founded Entities' therapeutic candidates;
• continued acceptable safety profile of our therapeutics, if any,
following approval; and
• attracting, hiring and retaining qualified personnel.
A change in the outcome of any of these variables with respect to the
development of a therapeutic candidate could mean a significant change in the
costs and timing associated with the development of that therapeutic
candidate. For example, the FDA, the EMA, or another comparable foreign
regulatory authority may require us to conduct clinical trials beyond those
that we anticipate will be required for the completion of clinical development
of a therapeutic candidate, or we may experience significant trial delays due
to patient enrollment or other reasons, in which case we would be required to
expend significant additional financial resources and time on the completion
of clinical development. In addition, we may obtain unexpected results from
our clinical trials, and we may elect to discontinue, delay or modify clinical
trials of some therapeutic candidates or focus on others. Identifying
potential therapeutic candidates and conducting preclinical testing and
clinical trials is a time-consuming, expensive and uncertain process that
takes years to complete, and we may never generate the necessary data or
results required to obtain marketing approval and achieve product sales. In
addition, our wholly-owned and our Founded Entities' therapeutic candidates,
if approved, may not achieve commercial success.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other
related costs, including stock-based compensation, for personnel in our
executive, finance, corporate and business development and administrative
functions. General and administrative expenses also include professional fees
for legal, patent, accounting, auditing, tax and consulting services, travel
expenses and facility-related expenses, which include direct depreciation
costs and allocated expenses for rent and maintenance of facilities and other
operating costs.
We expect that our general and administrative expenses in support of our
research and development efforts will increase in the short-term while we seek
funding from external sources for the Wholly-Owned Programs. However, we
anticipate a decrease in our general and administrative expenses in the mid-
and long-term in connection with execution of our current strategy as we do
not intend to fully fund our LYT-100 program's Phase 3 trial or LYT-200's
Phase 2 trial on our own, and as we seek to fund future development of the
clinical programs within our Wholly-Owned Programs with external sources of
funding at the Founded Entity level, which, over time, could lead to the
deconsolidation of the Founded Entities that house these programs.
Total Other Income/(Expense)
Gain on Deconsolidation of Subsidiary
Upon losing control over a subsidiary, the assets and liabilities are
derecognized along with any related non-controlling interest ("NCI"). Any
interest retained in the former subsidiary is measured at fair value when
control is lost. Any resulting gain or loss is recognized as profit or loss in
the Consolidated Statement of Comprehensive Income/(Loss).
Gain/(Loss) on Investments Held at Fair Value
Investments held at fair value include both unlisted and listed securities
held by us, which include investments in Seaport, Vedanta, and other
insignificant investments. We account for investments in convertible preferred
shares in accordance with IFRS 9 as investments held at fair value when the
preferred shares do not provide their holders with access to returns
associated with a residual equity interest. Under IFRS 9, the preferred share
investments are categorized as debt instruments that are presented at fair
value through profit and loss because the amounts receivable do not represent
solely payments of principal and interest.
Realized Gain/(Loss) on Sale of Investments
Realized gain/(loss) on sale of investments held at fair value relates to
realized differences in the per share disposal price of a listed security as
compared to the per share exchange quoted price at the time of disposal. The
realized loss in 2022 is attributable to the settlement of call options
written by the Group on Karuna stock. The amounts in 2023 and 2024 are not
significant.
Gain/(Loss) on Investments in Notes from Associates
Gain/(loss) on investments in notes from associates relates to our investment
in the notes from Gelesis and Vedanta. We account for these notes in
accordance with IFRS 9 as investments held at fair value, with changes in fair
value recognized through the Consolidated Statement of Comprehensive
Income/(Loss). The loss in 2023 is primarily attributable to a decrease in the
fair value of our notes from Gelesis as Gelesis ceased operations and filed a
voluntary petition for relief under the provisions of Chapter 7 of Title 11 of
the United States Bankruptcy Code in October 2023. In 2024, the Bankruptcy
Court approved an executed agreement for a third party to acquire the
remaining net assets of Gelesis for $15.0 million. As the only senior secured
creditor, we expect to receive a majority of the proceeds from the sale after
deduction of Bankruptcy Court related legal and administrative costs. We
recorded a gain of $11.4 million in 2024 for the changes in the fair value of
these notes.
Other Income (Expense)
Other income (expense) consists primarily of gains and losses on financial
instruments.
Finance Income/(Costs)
Finance costs consist of loan interest expense, interest expense due to
accretion of and adjustment to the sale of future royalties liability as well
as the changes in the fair value of certain liabilities associated with
financing transactions, mainly subsidiary preferred share liability in respect
of preferred shares issued by our non-wholly owned subsidiaries to third
parties. Finance income consists of interest income on funds invested in money
market funds and U.S. treasuries.
Share of Net Income (Loss) of Associates Accounted for Using the Equity
Method, Gain on Dilution of Ownership Interest and Impairment of Investment in
Associates
Associates (or equity accounted investees) are accounted for using the equity
method and are initially recognized at cost, or if recognized upon
deconsolidation, they are initially recorded at fair value at the date of
deconsolidation. The Consolidated Financial Statements include our share of
the total comprehensive income/(loss) of equity accounted investees, from the
date that significant influence commences until the date that significant
influence ceases. When the share of losses exceeds the net investment in the
investee, including the investment considered long-term interests, the
carrying amount is reduced to nil and recognition of further losses is
discontinued except to the extent that we have incurred legal or constructive
obligations or made payments on behalf of an investee.
We compare the recoverable amount of the investment to its carrying amount on
a go-forward basis and determine the need for impairment.
When our share in the equity of the investee changes as a result of equity
transactions in the investee (related to financing events of the investee), we
calculate a gain or loss on such change in ownership and related share in the
investee's equity.
In 2023, we recorded our share of the net loss of Gelesis which reduced the
carrying amount of our investment in Gelesis to zero. On October 30, 2023,
Gelesis ceased operations and our significant influence in Gelesis ceased. In
2024, we recorded our share of the net losses of Sonde which reduced the
carrying amount of our investment in Sonde to zero.
Income Tax
The amount of taxes currently payable or refundable is accrued, and deferred
tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases. Deferred tax assets are also recognized for realizable loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using
substantively enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. Net deferred
tax assets are not recorded if we do not assess their realization as probable.
The effect on deferred tax assets and liabilities of a change in income tax
rates is recognized in our financial statements in the period that includes
the substantive enactment date or the change in tax status.
Results of Operations
The following table, which has been derived from our audited financial
statements for the years ended December 31, 2024, 2023 and 2022, included
herein, summarizes our results of operations for the periods indicated,
together with the changes in those items:
Year ended December 31,
(in thousands) 2024 2023 2022 Change Change
(2023 to 2024) (2022 to 2023)
Contract revenue $ 4,315 $ 750 $ 2,090 $ 3,565 $ (1,340)
Grant revenue 513 2,580 13,528 (2,067) (10,948)
Total revenue 4,828 3,330 15,618 1,498 (12,288)
Operating expenses:
General and administrative expenses (71,469) (53,295) (60,991) (18,175) 7,696
Research and development expenses (69,454) (96,235) (152,433) 26,781 56,199
Operating income/(loss) (136,095) (146,199) (197,807) 10,104 51,607
Other income/(expense):
Gain/(loss) on deconsolidation of subsidiary 151,808 61,787 27,251 90,021 34,536
Gain/(loss) on investments held at fair value (2,398) 77,945 (32,060) (80,344) 110,006
Realized gain/(loss) on sale of investments 151 (122) (29,303) 273 29,180
Gain/(loss) on investments in notes from associates 13,131 (27,630) - 40,761 (27,630)
Other income/(expense) 961 (908) 8,131 1,869 (9,038)
Other income/(expense) 163,652 111,072 (25,981) 52,580 137,053
Net finance income/(costs) 4,773 5,078 138,924 (306) (133,846)
Share of net income/(loss) of associates accounted for using the equity method (8,754) (6,055) (27,749) (2,699) 21,695
Gain/(loss) on dilution of ownership interest in associate 199 - 28,220 199 (28,220)
Impairment of investment in associates - - (8,390) - 8,390
Income/(loss) before income taxes 23,774 (36,103) (92,783) 59,878 56,680
Taxation 4,008 (30,525) 55,719 34,532 (86,243)
Net income/(loss) including non-controlling interest 27,782 (66,628) (37,065) 94,410 (29,563)
Less income/(loss) attributable to non-controlling interests (25,728) (931) 13,290 (24,797) (14,221)
Net income/(loss) attributable to the Owners of the Group $ 53,510 $ (65,697) $ (50,354) $ 119,207 $ (15,342)
Comparison of the Years Ended December 31, 2024 and 2023
Total Revenue
Year ended December 31,
(in thousands) 2024 2023 Change
Total Contract Revenue 4,315 750 3,565
Total Grant Revenue 513 2,580 (2,067)
Total Revenue $ 4,828 $ 3,330 $ 1,498
Our total revenue was $4.8 million for the year ended December 31, 2024, an
increase of $1.5 million, or 45.0% compared to the year ended December 31,
2023. The increase in revenue is primarily due an increase in contract revenue
driven by the achievement of a $4.0 million milestone payment from Bristol
Myers Squibb ("BMS"), the acquirer of Karuna, our deconsolidated Founded
Entity, upon the U.S. Food and Drug Administration's approval of KarXT which
occurred in September 2024. We also recognized $0.3 million in royalty
revenue from sales of KarXT (Cobenfy) pursuant to a patent license agreement
between PureTech and Karuna. The increase is partially offset by the
completion of a revenue agreement in 2023 for Entrega, our Controlled Founded
Entity, and a decrease in grant revenue of $2.1 million related to completed
grants and the deconsolidation of Vedanta in 2023.
General and Administrative Expenses
Our general and administrative expenses were $71.5 million for the year ended
December 31, 2024, an increase of $18.2 million, or 34% compared to the year
ended December 31, 2023. The increase is primarily driven by a $18.8 million
increase in stock based compensation, $17.4 million of which resulted from new
stock awards granted to employees, officers, founders and directors of Seaport
in 2024 prior to the deconsolidation of Seaport from our Consolidated
Financial Statements, partially offset with decrease in compensation and
benefits expense, driven by an overall decrease in headcount in 2024 compared
to 2023.
Research and Development Expenses
The following table shows the research and development expenses by program.
Year ended December 31,
(in thousands) 2024 2023 Change
LYT-100 Programs external costs (29,942) $ (39,530) 9,588
LYT-200 Programs external costs (10,464) $ (8,850) (1,614)
LYT-300 Programs external costs (1,157) (8,843) 7,686
Wholly owned PureTech Platform and other non-clinical programs external costs (6,514) (8,210) 1,697
Controlled Founded Entities Programs (3,904) (1,974) (1,930)
Other research program external costs (355) (2,032) 1,677
Payroll costs (15,023) (21,102) 6,079
Facilities and other expenses (2,095) (5,693) 3,598
Total Research and Development Expenses: $ (69,454) $ (96,235) $ 26,781
Our research and development expenses were $69.5 million for the year ended
December 31, 2024, a decrease of $26.8 million, or 27.8% compared to the year
ended December 31, 2023.
The decrease in research and development expenses in 2024 is driven by the
following changes in program costs:
• Decrease in LYT-100 program costs of $9.6 million is due to the
completion of phase II study and lower patient enrollment activities in 2024
as compared to 2023.
• Decrease in LYT-300 program costs of $7.7 million is primarily
due to the development of this program, now being driven by Seaport, our
Controlled Founded Entity which was deconsolidated in October, 2024.
• Decrease in wholly owned PureTech Platform and other non-clinical
programs costs of $1.7 million is primarily attributed to the
deprioritization of the Alivio and certain Glyph platform assets.
• The Controlled Founded Entities program costs in 2024 pertain
entirely to Seaport's LYT-300 program during the period of consolidation and
until its deconsolidation. The balance in 2023 pertains primarily to Vedanta's
clinical programs during the period of consolidation and until its
deconsolidation.
• Decrease in other research program costs of $1.7 million is
primarily attributed to the deconsolidation of Vedanta in March 2023.
• Decrease in payroll costs of $6.1 million is driven by the
deconsolidation of Vedanta in 2023, Seaport in 2024, and an overall decrease
in headcount in 2024 as compared to 2023.
• Decrease in facilities and other expenses of $3.6 million is
primarily driven by lower depreciation expense resulting from the lower fixed
asset balance in 2024 and lower fixed asset impairment charge in 2024 compared
to 2023.
This decrease in research and development expenses is partially offset by the
increase in LYT-200 program costs of $1.6 million due to the increased
activity within the two clinical studies in the oncology therapy programs and
increase in Controlled Founded Entities programs of $1.9 million due to the
timing of deconsolidation of the Controlled Founded Entities.
Total Other Income/(Expense)
Total other income was $163.7 million for the year ended December 31, 2024
compared to $111.1 million for the year ended December 31, 2023, an increase
of $52.6 million, or 47%. The increase in other income was primarily
attributable to the following:
• A one time gain of $151.8 million recognized in 2024 as a result
of the deconsolidation of Seaport in October 2024, compared to a one time gain
of $61.8 million recognized in 2023 as a result of the deconsolidation of
Vedanta in March 2023, reflecting an increase in other income of
$90.0 million.
• A gain of $13.1 million in investments in notes from associates
in 2024 attributed to the increase in the fair value of the Gelesis notes. The
loss of $27.6 million in 2023 is primarily attributable to a decrease in the
fair value of our notes from Gelesis as Gelesis ceased operations and filed a
voluntary petition for relief under the provisions of Chapter 7 of Title 11 of
the United States Bankruptcy Code in October 2023. In 2024, the Bankruptcy
Court approved an executed agreement for a third party to acquire the
remaining net assets of Gelesis for $15.0 million. As the only senior secured
creditor, we expect to receive a majority of the proceeds from the sale after
deduction of Bankruptcy Court related legal and administrative costs. This
change resulted in an increase in other income of $40.8 million.
• A loss on investment held at fair value of $2.4 million in 2024
primarily attributed to the decline in fair value of various investments,
compared to a gain of $77.9 million in 2023 primarily attributed to an
increase in the fair value of Karuna shares. The change resulted in a decrease
in other income of $80.3 million.
Net Finance Income/(Costs)
Net finance income/costs) was $4.8 million for the year ended December 31,
2024, compared to $5.1 million for the year ended December 31, 2023, a
decrease of $0.3 million or 6%. The reduction in net finance income is
primarily attributed to an increase in the fair value of subsidiary preferred
share liability offset by various other changes.
Share of Net Income/(loss) of Associates Accounted for Using the Equity Method
For the year ended December 31, 2024, the share in net loss of associates
reported under the equity method was $8.8 million as compared to the share in
net loss of associates of $6.1 million for the year ended December 31, 2023,
an increase in loss of $2.7 million or 45%. The increase in loss was
primarily attributable to the increase in loss from Sonde and Group's share of
loss from Seaport accounted for under the equity method upon deconsolidation
in October, 2024.
Taxation
For the year ended December 31, 2024, the income tax benefit was
$4.0 million, compared to an income tax expense of $30.5 million for the
year ended December 31, 2023, a decrease in income tax expense of
$34.5 million or 113%. This decrease in tax expense was primarily
attributable to the recognition of previously unrecognized deferred tax assets
and related tax benefits in 2024, compared to the income tax expense
recognized in 2023 due to an increase in unrecognized deferred tax assets that
were not expected to be utilized in the future as well as certain discrete
events and transactions from 2023, such as the tax effects from the sale of
future royalties to Royalty Pharma. The income tax benefits in 2024 were
partially offset by an increase in pre-tax income in the tax-consolidated U.S.
group and an increase in Massachusetts income tax expense.
Comparison of the Years Ended December 31, 2023 and 2022
For the comparison of 2023 to 2022, refer to Part I, Item 5 "Operating and
Financial Review and Prospects" of our Annual Report on Form 20-F for the year
ended December 31, 2023.
Material Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and
results of operations is based on our financial statements, which we have
prepared in accordance with UK-adopted International Financial Reporting
Standards ("IFRSs"). The Consolidated Financial Statements also comply fully
with IFRSs as issued by the International Accounting Standards Board ("IASB").
In the preparation of these financial statements, we are required to make
judgments, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from
these estimates under different assumptions or conditions.
Our estimates and assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is
revised if the revision affects only that period or in the period of the
revisions and future periods if the revision affects both current and future
periods.
While our significant accounting policies are described in more detail in the
notes to our Consolidated Financial Statements appearing at the end of this
report, we believe the following accounting policies to be most critical to
the judgments and estimates used in the preparation of our financial
statements. See Note 1. Material Accounting Policies to our Consolidated
Financial Statements for a further detailed description of our material
accounting policies.
Financial instruments
We account for our financial instruments according to IFRS 9. In accordance
with IFRS 9, we carry certain financial assets and financial liabilities at
fair value, with changes in fair value through profit and loss ("FVTPL").
Valuation of these financial instruments includes determining the appropriate
valuation methodology and making certain estimates such as the future expected
returns on the financial instrument in different scenarios, appropriate
discount rate, volatility, and term to exit.
In accordance with IFRS 9, when issuing preferred shares in our subsidiaries,
we determine the classification of financial instruments in terms of liability
or equity. Such determination involves judgement. These judgements include an
assessment of whether the financial instruments include any embedded
derivative features, whether they include contractual obligations upon us to
deliver cash or other financial assets or to exchange financial assets or
financial liabilities with another party at any point in the future prior to
liquidation, and whether that obligation will be settled by exchanging a fixed
amount of cash or other financial assets for a fixed number of the Group's
equity instruments.
Consolidation
The Consolidated Financial Statements include the financial statements of the
Group and the entities it controls. Based on the applicable accounting rules,
we control an investee when we are exposed, or have rights, to variable
returns from our involvement with the investee and have the ability to affect
those returns through our power over the investee. Therefore, an assessment is
required to determine whether we have (i) power over the investee; (ii)
exposure, or rights, to variable returns from our involvement with the
investee; and (iii) the ability to use our power over the investee to affect
the amount of our returns. Judgement is required to perform such assessment,
and it requires that we consider, among others, activities that most
significantly affect the returns of the investee, our voting shares,
representation on the board, rights to appoint board members and management,
shareholders agreements, de facto power and other contributing factors.
Sale of Future Royalties Liability
We account for the sale of future royalties liability as a financial
liability, as we continue to hold the rights under the royalty bearing
licensing agreement and have a contractual obligation to deliver cash to an
investor for a portion of the royalty we receive. This liability is tied to
the future royalties we may receive from product sales. We have no obligation
to pay any amounts to the counterparty if we do not receive any royalties in
the future. Interest on the sale of future royalties liability is recognized
using the effective interest rate over the life of the related royalty stream.
The sale of future royalties liability and the related interest expense are
based on our current estimates of future royalties expected to be paid over
the life of the arrangement. Forecasts are updated periodically as new data is
obtained. Any increases, decreases or a shift in timing of estimated cash
flows require us to re-calculate the amortized cost of the sale of future
royalties liability as the present value of the estimated future contractual
cash flows that are discounted at the liability's original effective interest
rate. The adjustment is recognized immediately in profit or loss as income or
expense.
In determining the appropriate accounting treatment for the Royalty Purchase
Agreement during 2023, management applied significant judgement.
Investment in Associates
When we do not control an investee but maintain significant influence over the
financial and operating policies of the investee, the investee is an
associate. Significant influence is presumed to exist when we hold 20 % or
more of the voting power of an entity, unless it can be clearly demonstrated
that this is not the case. We evaluate if we maintain significant influence
over associates by assessing if we have the power to participate in the
financial and operating policy decisions of the associate.
Associates are accounted for using the equity method (equity accounted
investees) and are initially recognized at cost, or if recognized upon
deconsolidation, they are initially recorded at fair value at the date of
deconsolidation. The Consolidated Financial Statements include our share of
the total comprehensive income or loss of equity accounted investees, from the
date that significant influence commences until the date that significant
influence ceases. When our share of losses exceeds the net investment in an
equity accounted investee, including investments considered to be long-term
interests ("LTI"), the carrying amount is reduced to zero and recognition of
further losses is discontinued except to the extent that we have incurred
legal or constructive obligations or made payments on behalf of an investee.
To the extent we hold interests in associates that are not providing access to
returns underlying ownership interests, the instrument held by us is accounted
for in accordance with IFRS 9.
Judgement is required in order to determine whether we have significant
influence over financial and operating policies of investees. This judgement
includes, among others, an assessment whether we have representation on the
board of the investee, whether we participate in the policy-making processes
of the investee, whether there is any interchange of managerial personnel,
whether there is any essential technical information provided to the investee,
and if there are any transactions between us and the investee.
Judgement is also required to determine which instruments we hold in the
investee form part of the investment in associates, which is accounted for
under IAS 28 and scoped out of IFRS 9, and which instruments are separate
financial instruments that fall under the scope of IFRS 9. This judgement
includes an assessment of the characteristics of the financial instrument of
the investee held by us and whether such financial instrument provides access
to returns underlying an ownership interest.
Where the Group has other investments in an equity accounted investee that are
not accounted for under IAS 28, judgement is required in determining if such
investments constitute long-term interests for the purposes of IAS 28. This
determination is based on the individual facts and circumstances and
characteristics of each investment, but is driven, among other factors, by the
intention and likelihood to settle the instrument through redemption or
repayment in the foreseeable future, and whether or not the investment is
likely to be converted to common stock or other equity instruments.
Recent Accounting Pronouncements
For information on recent accounting pronouncements, see Note 2. New Standards
and Interpretations to our Consolidated Financial Statements.
Cash Flow and Liquidity
Our cash flows may fluctuate and are difficult to forecast and will depend on
many factors, including:
• the expenses incurred in the development of wholly-owned and
Controlled Founded Entities' therapeutic candidates;
• the revenue, if any, generated by wholly-owned and
Controlled-Founded Entities' therapeutic candidates;
• the revenue, if any, generated from licensing and royalty
agreements with Founded Entities;
• the financing requirements of the Wholly-Owned Programs and our
Founded Entities; and
• the investing activities including the monetization, through sale,
of shares held in our public Founded Entities.
As of December 31, 2024, we had cash and cash equivalents of $280.6 million
and short-term investments of $86.7 million. As of December 31, 2024, we had
PureTech Level cash, cash equivalents and short-term investments of
$366.8 million. PureTech Level cash, cash equivalents and short-term
investments is a non-IFRS measure (for a definition of PureTech Level cash,
cash equivalents and short-term investments and a reconciliation with the IFRS
number, see the section Measuring Performance earlier in this Financial
Review). In March 2024, we received total proceeds of $292.7 million before
income tax in exchange for our holding of 886,885 shares of Karuna common
stock as a result of the completion of Karuna acquisition by Bristol Myers
Squibb ("BMS").
Cash Flows
The following table summarizes our cash flows for each of the periods
presented:
Year ended December 31,
(in thousands) 2024 2023 2022
Net cash used in operating activities $ (134,369) $ (105,917) $ (178,792)
Net cash provided by (used in) investing activities 240,888 68,991 (107,223)
Net cash provided by (used in) financing activities (16,958) 78,141 (29,827)
Net increase (decrease) in cash and cash equivalents $ 89,560 $ 41,215 $ (315,842)
Operating Activities
Net cash used in operating activities was $134.4 million for the year ended
December 31, 2024, as compared to $105.9 million for the year ended December
31, 2023, resulting in an increase of $28.5 million in net cash used in
operating activities. The increase in cash outflows is primarily attributable
to $37.8 million increase in tax payments related to the sale of the Karuna
shares, offset by a net increase in interest receipts and decrease in interest
payment of $9.5 million.
Net cash used in operating activities was $105.9 million for the year ended
December 31, 2023, as compared to $178.8 million for the year ended December
31, 2022, resulting in a decrease of $72.9 million in net cash used in
operating activities. The decrease in outflows is primarily attributable to
our lower operating loss mainly due to a decrease in research and development
activities in the Wholly-Owned Programs and Controlled Founded Entities and a
decrease of operating cash flows as a result of the deconsolidation of Vedanta
on March 1, 2023.
Investing Activities
Net cash provided by investing activities was $240.9 million for the year
ended December 31, 2024, as compared to net cash provided by investing
activities of $69.0 million for the year ended December 31, 2023, resulting in
an increase of $171.9 million in cash provided by investing activities. The
increase in net cash provided by investing activities was primarily
attributable to an increase in proceeds from the sale of investments held at
fair value of $264.8 million, partially offset by an increase in cash outflow
from short-term investment activities (redemptions, net of purchases)
amounting to $17.2 million, and the derecognition of cash balances of $91.6
million upon deconsolidation of Seaport in 2024, compared to $13.8 million
from the deconsolidation of Vedanta in 2023, a net increase in cash outflow of
$77.8 million.
Net cash provided by investing activities was $69.0 million for the year ended
December 31, 2023, as compared to net cash outflow of $107.2 for the year
ended December 31, 2022, resulting in an increase of $176.2 million in net
cash from investing activities. The increase in net cash from investing
activities was primarily attributable to increased cash inflow from short-term
investment activities (redemptions, net of purchases) amounting to $264.4
million, partially offset by a reduction in proceeds from the sale of
investments held at fair value of $85.4 million.
Financing Activities
Net cash used in financing activities was $17.0 million for the year ended
December 31, 2024, as compared to net cash provided by financing activities of
$78.1 million for the year ended December 31, 2023, resulting in an increase
of $95.1 million in net cash used in financing activities. The increase in net
cash used in financing activities was primarily attributable to a $87.9
million increase in share repurchase activities, related primarily to the
repurchase of $100.0 million of shares in the June 2024 tender offer, and a
$75.0 million decrease in cash inflow from Royalty Pharma under Royalty
Purchase Agreement, partially offset by a $68.1 million proceeds from issuance
of subsidiary preferred shares in 2024 as compared to 2023.
Net cash provided by financing activities was $78.1 million for the year ended
December 31, 2023, as compared to net cash used in financing activities of
$29.8 million for the year ended December 31, 2022, resulting in an increase
of $108.0 million in the net cash provided by financing activities. The
increase in the net cash provided by financing activities was primarily
attributable to the receipts of $100.0 million upfront payment from Royalty
Pharma upon execution of Royalty Purchase Agreement in March 2023, and a $6.8
million decrease in treasury stock purchase in 2023 as compared to 2022.
Funding Requirements
We have incurred operating losses since inception. Based on our current plans,
we believe our existing financial assets as of December 31, 2024, will be
sufficient to fund our operations and capital expenditure requirements into at
least 2027. We expect to incur substantial additional expenditures in the near
term to support our ongoing and future activities. We anticipate to continue
to incur net operating losses for the foreseeable future to support our
existing Founded Entities and our strategy around creating and supporting
other Founded Entities, should they require it, to reach significant
development milestones over the period of the assessment in conjunction with
our external partners. We also expect to incur significant costs to advance
our Wholly-Owned Programs, although we do not intend to fully fund our LYT-100
program's Phase 3 trial or LYT-200 program's Phase 2 trial, on our own, to
continue research and development efforts, to discover and progress new
therapeutic candidates and to fund the Group's operating costs into at least
2027. Our ability to fund our therapeutic development and clinical operations
as well as ability to fund our existing and future Founded Entities will
depend on the amount and timing of cash received from financings at the
Founded Entity level, monetization of shares of public Founded Entities and
potential business development activities. Our future capital requirements
will depend on many factors, including:
• the costs, timing and outcomes of clinical trials and regulatory
reviews associated with our wholly-owned therapeutic candidates;
• the costs of preparing, filing and prosecuting patent applications
and maintaining, enforcing and defending intellectual property related claims;
• the emergence of competing technologies and products and other
adverse marketing developments;
• the effect on our therapeutic and product development activities
of actions taken by the U.S. Food and Drug Administration ("FDA"), the
European Medicines Agency ("EMA") or other regulatory authorities;
• the number and types of future therapeutics we develop and support
with the goal of commercialization;
• The costs, timing and outcomes of identifying, evaluating, and
investing in technologies and drug candidates to develop as Wholly-Owned
Programs or as Founded Entities; and
• the success of our Founded Entities and their need for additional
capital.
A change in the outcome of any of these or other variables with respect to the
development of any of our wholly-owned therapeutic candidates could
significantly change the costs and timing associated with the development of
that therapeutic candidate.
Further, our operating plans may change, and we may need additional funds to
meet operational needs and capital requirements for clinical trials and other
research and development activities. We currently have no credit facility or
other committed sources of capital beyond our existing financial assets.
Because of the numerous risks and uncertainties associated with the
development and commercialization of our wholly-owned therapeutic candidates,
we have only a general estimate of the amounts of increased capital outlays
and operating expenditures associated with our current and anticipated
therapeutic development programs and these may change in the future.
Financial Position
Summary Financial Position
As of December 31,
(in thousands) 2024 2023 Change
Investments held at fair value $ 191,426 $ 317,841 $ (126,415)
Other non-current assets 24,953 28,930 (3,976)
Non-current assets 216,379 346,771 (130,392)
Cash and cash equivalents, and short-term investments 367,307 327,143 40,164
Other current assets 18,949 20,059 (1,110)
Current assets 386,256 347,201 39,054
Total assets 602,635 693,973 (91,338)
Lease liability 14,671 18,250 (3,579)
Deferred tax liability - 52,462 (52,462)
Sale of future royalties liability, non-current 136,782 110,159 26,623
Other non-current liabilities 1,861 3,501 (1,640)
Non-current liabilities 153,314 184,371 (31,058)
Trade and other payables 27,020 44,107 (17,088)
Notes payable 4,111 3,699 412
Preferred share liability 169 169 -
Sale of future royalties liability, current 6,435 - 6,435
Other current liabilities 3,654 3,394 259
Current liabilities 41,388 51,370 (9,982)
Total liabilities 194,702 235,741 (41,039)
Net assets 407,933 458,232 (50,298)
Total equity $ 407,933 $ 458,232 $ (50,298)
Investments Held at Fair Value
Investments held at fair value decreased by $126.4 million to $191.4 million
as of December 31, 2024. As of December 31, 2024, Investments held at fair
value consist primarily of our preferred share investment in Seaport (from
October, 2024), Vedanta, and our common share investment in Vor. The decrease
is attributed to a $287.1 million decrease due to the sale of Karuna and
Akili shares as a result of Karuna's acquisition by BMS in March 2024 and
Akili's acquisition by Virtual Therapeutics in July 2024 as well as decreases
in fair value of various other investments. The decreases were partially
offset by Group's recognizing its investment in the convertible preferred
shares of Seaport in the amount of $179.2 million subsequent to Seaport being
deconsolidated from the Group's financial statements.
Cash, Cash Equivalents, and Short-Term Investments
Consolidated cash, cash equivalents and short-term investments increased by
$40.2 million to $367.3 million as of December 31, 2024. The increase is
primarily attributed to an aggregate of $298.1 million in proceeds from the
disposition of Karuna and Akili shares, $68.1 million in proceeds from the
issuance of Seaport Series A-2 preferred shares and a $25.0 million milestone
payment from Royalty Pharma during the year ended December 31, 2024, partially
offset by net cash used in operating activities of $134.4 million, purchases
of treasury stock and repurchases in connection with the June 2024 tender
offer of $107.6 million, investment in Seaport Series B preferred shares of
$14.4 million and cash derecognized upon loss of control over Seaport of
$91.6 million.
Non-current liabilities
Non-current liabilities decreased by $31.1 million to $153.3 million as of
December 31, 2024. The decrease is due to the reversal of $52.5 million
deferred tax liability in 2024 which was primarily related to the appreciation
of Karuna shares as of December 31, 2023. The decrease is partially offset by
an increase in the sale of future royalty liability driven by the receipt of a
$25.0 million milestone payment from BMS following the approval by the FDA to
market KarXT as Cobenfy, and the accretion of non-cash interest expense on the
sale of future royalties liability.
Trade and Other Payables
Trade and other payables decreased by $17.1 million to $27.0 million as of
December 31, 2024. The decrease reflected lower operating expenses primarily
from the reduced clinical trials related activities as well as the
deconsolidation of Seaport for the year ended December 31, 2024.
Quantitative and Qualitative Disclosures about Financial Risks
Interest Rate Sensitivity
As of December 31, 2024, we had cash and cash equivalents of $280.6 million
and short-term investments of $86.7 million, while we had PureTech Level
cash, cash equivalents and short-term investments of $366.8 million. PureTech
Level cash, cash equivalents and short-term investments is a non-IFRS measure
(for a definition of PureTech Level cash, cash equivalents and short-term
investments and a reconciliation with the IFRS number, see the section
Measuring Performance earlier in this Financial review). Our exposure to
interest rate sensitivity is impacted by changes in the underlying U.K. and
U.S. bank interest rates. We have not entered into investments for trading or
speculative purposes. Due to the conservative nature of our investment
portfolio, which is predicated on capital preservation and investments in
short duration, high-quality U.S. Treasury Bills and related money market
accounts, we do not believe a change in interest rates would have a material
effect on the fair market value of our portfolio, and therefore, we do not
expect our operating results or cash flows to be significantly affected by
changes in market interest rates.
Foreign Currency Exchange Risk
We maintain our Consolidated Financial Statements in our functional currency,
which is the U.S. dollar. Monetary assets and liabilities denominated in
currencies other than the functional currency are translated into the
functional currency at rates of exchange prevailing at the balance sheet
dates. Non-monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the exchange rates prevailing
at the date of the transaction. Exchange gains or losses arising from foreign
currency transactions are included in the determination of net income (loss)
for the respective periods. Such foreign currency gains or losses were not
material for all reported periods.
Controlled Founded Entity Investments
We maintain investments in certain Controlled Founded Entities. Our
investments in Controlled Founded Entities are eliminated as intercompany
transactions upon financial consolidation. We are exposed to a subsidiary
preferred share liability owing to the terms of existing preferred shares and
the ownership of Controlled Founded Entities preferred shares by third
parties. The liability of preferred shares is maintained at fair value through
profit and loss. We view our exposure to third-party subsidiary preferred
share liability as low as of December 31, 2024 as the liability is not
significant. Please refer to Note 17. Subsidiary Preferred Shares to our
Consolidated Financial Statements for further information regarding our
exposure to Controlled Founded Entity investments.
Deconsolidated Founded Entity Investments
We maintain certain debt or equity holdings in Founded Entities which have
been deconsolidated. These holdings are deemed either as investments carried
at fair value under IFRS 9 with changes in fair value recorded through profit
and loss or as associates accounted for under IAS 28 using the equity method.
Our exposure to investments held at fair value and investments in notes from
associates was $191.4 million and $17.7 million, respectively, as of
December 31, 2024, and we may or may not be able to realize the value in the
future. Accordingly, we view the risk as high. Our exposure to investments in
associates is limited to the carrying amount of the investment. We are not
exposed to further contractual obligations or contingent liabilities beyond
the value of initial investment. Accordingly, we do not view this risk as
high.
Equity Price Risk
As of December 31, 2024, we held 2,671,800 common shares of Vor with a fair
value of $3.0 million. As of December 31, 2023, we held 886,885 common shares
of Karuna, 2,671,800 common shares of Vor, and 12,527,476 common shares of
Akili with fair value of $280.7 million, $6.0 million, and $6.1 million,
respectively. The common shares of Karuna and Akili were disposed of in 2024
as part of Karuna's acquisition by BMS in March 2024 and Akili's acquisition
by Virtual Therapeutics in July 2024.
The investment in Vor is exposed to fluctuations in the market price of Vor's
common shares. We view the exposure to equity price risk as low.
Liquidity Risk
We do not believe we will encounter difficulty in meeting the obligations
associated with our financial liabilities that are settled by delivering cash
or another financial asset. While we believe our cash and cash equivalents and
short-term investments do not contain excessive risk, we cannot provide
absolute assurance that in the future, our investments will not be subject to
adverse changes or decline in value based on market conditions.
Credit Risk
We maintain an investment portfolio in accordance with our investment policy.
The primary objectives of our investment policy are to preserve principal,
maintain proper liquidity and meet operating needs. Although our investments
are subject to credit risk, our investment policy specifies credit quality
standards for our investments and limits the amount of credit exposure from
any single issue, issuer or type of investment. We do not own derivative
financial instruments. Accordingly, we do not believe that there is any
material market risk exposure with respect to derivative or other financial
instruments.
Credit risk is also the risk of financial loss if a customer or counterparty
to a financial instrument fails to meet its contractual obligations. We are
potentially subject to concentrations of credit risk in accounts receivable.
Concentrations of credit risk with respect to receivables is owed to the
limited number of companies comprising our receivable base. However, our
exposure to credit losses is currently low due to the immateriality of the
outstanding receivable balance, a small number of counterparties and the high
credit quality or healthy financial conditions of these counterparties.
Foreign Private Issuer Status
Owing to our U.S. listing on the Nasdaq Global Market, we report under the
Securities Exchange Act of 1934, as amended, or the Exchange Act, as a
non-U.S. company with foreign private issuer status. As long as we qualify as
a foreign private issuer under the Exchange Act, we will be exempt from
certain provisions of the Exchange Act that are applicable to U.S. domestic
public companies, including:
• the sections of the Exchange Act regulating the solicitation of
proxies, consents or authorizations in respect of a security registered under
the Exchange Act;
• sections of the Exchange Act requiring insiders to file public
reports of their stock ownership and trading activities and liability for
insiders who profit from trades made in a short period of time;
• the rules under the Exchange Act requiring the filing with the SEC
of quarterly reports on Form 10-Q containing unaudited financial and other
specified information, or current reports on Form 8-K, upon the occurrence of
specified significant events; and
• Regulation FD, which regulates selective disclosures of material
information by issuers.
Consolidated Statement of Comprehensive Income/(Loss)
For the years ended December 31
Note 2024 2023 2022
$000s $000s $000s
Contract revenue 3 4,315 750 2,090
Grant revenue 3 513 2,580 13,528
Total revenue 4,828 3,330 15,618
Operating expenses:
General and administrative expenses 9 (71,469) (53,295) (60,991)
Research and development expenses 9 (69,454) (96,235) (152,433)
Operating income/(loss) (136,095) (146,199) (197,807)
Other income/(expense):
Gain/(loss) on deconsolidation of subsidiary 8 151,808 61,787 27,251
Gain/(loss) on investments held at fair value 5 (2,398) 77,945 (32,060)
Realized gain/(loss) on sale of investments 5 151 (122) (29,303)
Gain/(loss) on investments in notes from associates 7 13,131 (27,630) -
Other income/(expense) 961 (908) 8,131
Other income/(expense) 163,652 111,072 (25,981)
Finance income/(costs):
Finance income 11 22,669 16,012 5,799
Finance costs - contractual 11 (1,731) (3,424) (3,939)
Finance income/(costs) - fair value accounting 11 (8,108) 2,650 137,063
Finance costs - non cash interest expense related to sale of future royalties 18 (8,058) (10,159) -
Net finance income/(costs) 4,773 5,078 138,924
Share of net income/(loss) of associates accounted for using the equity method 6 (8,754) (6,055) (27,749)
Gain/(loss) on dilution of ownership interest in associates 6 199 - 28,220
Impairment of investment in associates 6 - - (8,390)
Income/(loss) before taxes 23,774 (36,103) (92,783)
Tax benefit/(expense) 27 4,008 (30,525) 55,719
Income/(loss) for the year 27,782 (66,628) (37,065)
Other comprehensive income/(loss):
Items that are or may be reclassified as profit or loss
Equity-accounted associate - share of other comprehensive income (loss) - 92 (166)
Reclassification of foreign currency differences on dilution of interest - - (213)
Total other comprehensive income/(loss) - 92 (379)
Total comprehensive income/(loss) for the year 27,782 (66,535) (37,444)
Income/(loss) attributable to:
Owners of the Group 53,510 (65,697) (50,354)
Non-controlling interests (25,728) (931) 13,290
27,782 (66,628) (37,065)
Comprehensive income/(loss) attributable to:
Owners of the Group 53,510 (65,604) (50,733)
Non-controlling interests (25,728) (931) 13,290
27,782 (66,535) (37,444)
$ $ $
Earnings/(loss) per share:
Basic earnings/(loss) per share 12 0.21 (0.24) (0.18)
Diluted earnings/(loss) per share 12 0.21 (0.24) (0.18)
The accompanying notes are an integral part of these financial statements.
Consolidated Statement of Financial Position
As of December 31,
Note 2024 2023
$000s $000s
Assets
Non-current assets
Property and equipment, net 13 7,069 9,536
Right of use asset, net 23 8,061 9,825
Intangible assets, net 14 601 906
Investments held at fair value 5 191,426 317,841
Investment in associates - equity method 6 2,397 3,185
Investments in notes from associates, non-current 7 6,350 4,600
Other non-current assets 475 878
Total non-current assets 216,379 346,771
Current assets
Trade and other receivables 24 1,522 2,376
Income tax receivable - 11,746
Prepaid expenses 4,404 4,309
Other financial assets 15 1,642 1,628
Investment in notes from associate, current 7 11,381 -
Short-term investments 24 86,666 136,062
Cash and cash equivalents 24 280,641 191,081
Total current assets 386,256 347,201
Total assets 602,635 693,973
Equity and liabilities
Equity
Share capital 16 4,860 5,461
Share premium 16 290,262 290,262
Treasury stock 16 (46,864) (44,626)
Merger reserve 16 138,506 138,506
Translation reserve 16 182 182
Other reserve 16 (4,726) (9,538)
Retained earnings/(Accumulated deficit) 16 32,486 83,820
Equity attributable to the owners of the Group 414,707 464,066
Non-controlling interests 21 (6,774) (5,835)
Total equity 407,933 458,232
Non-current liabilities
Sale of future royalties liability, non-current 18 136,782 110,159
Deferred tax liability - 52,462
Lease liability, non-current 23 14,671 18,250
Liability for share-based awards 10 1,861 3,501
Total non-current liabilities 153,314 184,371
Current liabilities
Lease liability, current 23 3,579 3,394
Trade and other payables 22 27,020 44,107
Sale of future royalties liability, current 18 6,435 -
Taxes payable 75 -
Notes payable 20 4,111 3,699
Preferred share liability 17 169 169
Total current liabilities 41,388 51,370
Total liabilities 194,702 235,741
Total equity and liabilities 602,635 693,973
Please refer to the accompanying Notes to the consolidated financial
information. Registered number: 09582467.
The Consolidated Financial Statements were approved by the Board of Directors
and authorized for issuance on April 30, 2025 and signed on its behalf by:
Bharatt Chowrira
Chief Executive Officer
April 30, 2025
The accompanying notes are an integral part of these financial statements.
Consolidated Statement of Changes in Equity
For the years ended December 31
Share Capital Treasury Shares
Note Shares Amount Share premium Shares Amount Merger reserve $000s Translation reserve Other reserve Retained earnings/ (accumulated deficit) Total Parent equity Non-controlling interests Total
$000s $000s $000s $000s $000s $000s $000s $000s Equity
$000s
Balance January 1, 2022 287,796,585 5,444 289,303 - - 138,506 469 (40,077) 199,871 593,515 (9,368) 584,147
Net income/(loss) - - - - - - - - (50,354) (50,354) 13,290 (37,065)
Other comprehensive income/(loss), net - - - - - - (379) - - (379) - (379)
Total comprehensive income/(loss) for the year - - - - - - (379) - (50,354) (50,733) 13,290 (37,444)
Deconsolidation of Subsidiary - - - - - - - - - - 11,904 11,904
Exercise of stock options 10 577,022 11 321 - - - - - - 332 - 332
Purchase of Treasury stock 16 - - - (10,595,347) (26,492) - - - - (26,492) - (26,492)
Revaluation of deferred tax assets related to share-based awards - - - - - - - 45 - 45 - 45
Equity-settled share-based awards 10 - - - - - - - 8,856 - 8,856 4,711 13,567
Settlement of restricted stock units 10 788,046 - - - - - - 1,528 - 1,528 - 1,528
NCI exercise of share options in subsidiaries 10 - - - - - - - 15,171 - 15,171 (15,164) 7
Other - - - - - - - - - - (4) (4)
Balance December 31, 2022 289,161,653 5,455 289,624 (10,595,347) (26,492) 138,506 89 (14,478) 149,516 542,220 5,369 547,589
Net income/(loss) - - - - - - - - (65,697) (65,697) (931) (66,628)
Other comprehensive income/(loss) for the year - - - - - - 92 - - 92 - 92
Total comprehensive income/(loss) for the year - - - - - - 92 - (65,697) (65,604) (931) (66,535)
Deconsolidation of Subsidiary 8 - - - - - - - - - - (9,085) (9,085)
Exercise of stock options 10 306,506 6 638 239,226 530 - - (22) - 1,153 - 1,153
Purchase of Treasury stock 16 - - - (7,683,526) (19,650) - - - - (19,650) - (19,650)
Equity-settled share-based awards 10 - - - - - - - 3,348 - 3,348 277 3,625
Settlement of restricted stock units 10 - - - 425,219 986 - - 156 - 1,142 - 1,142
Expiration of share options in subsidiary - - - - - - - 1,458 - 1,458 (1,458) -
Other - - - - - - - - - - (6) (6)
Balance December 31, 2023 289,468,159 5,461 290,262 (17,614,428) (44,626) 138,506 182 (9,538) 83,820 464,066 (5,835) 458,232
Balance January 1, 2024 289,468,159 5,461 290,262 (17,614,428) (44,626) 138,506 182 (9,538) 83,820 464,066 (5,835) 458,232
Net income/(loss) - - - - - - - - 53,510 53,510 (25,728) 27,782
Total comprehensive income/(loss) for the year - - - - - - - - 53,510 53,510 (25,728) 27,782
Deconsolidation of Subsidiary 8 - - - - - - - - - - 7,430 7,430
Exercise of stock options 10 - - - 412,729 1,041 - - (146) - 895 - 895
Repurchase and cancellation of ordinary shares from Tender Offer 16 (31,540,670) (600) - - - - - 600 (104,844) (104,844) - (104,844)
Purchase of Treasury stock 16 - - - (1,903,990) (4,791) - - - - (4,791) - (4,791)
Equity-settled share-based awards expense 10 - - - - - - - 4,569 - 4,569 17,372 21,941
Settlement of restricted stock units 10 - - - 599,512 1,512 - - (211) - 1,301 - 1,301
Expiration of share options in subsidiary - - - - - - - 1 - 1 (1) -
Other - - - - - - - - - - (12) (12)
Balance December 31, 2024 257,927,489 4,860 290,262 (18,506,177) (46,864) 138,506 182 (4,726) 32,486 414,707 (6,774) 407,933
The accompanying notes are an integral part of these financial statements.
Consolidated Statement of Cash Flows
For the years ended December 31
Note 2024 2023 2022
$000s $000s $000s
Cash flows from operating activities
Income/(loss) for the year 27,782 (66,628) (37,065)
Adjustments to reconcile income/(loss) for the period to net cash used in
operating activities:
Non-cash items:
Depreciation and amortization 3,571 4,933 8,893
Share-based compensation expense 10 22,850 4,415 14,698
(Gain)/loss on investment held at fair value 5 2,398 (77,945) 32,060
Realized (gain)/loss on sale of investments 5 (151) 265 29,303
Gain on dilution of ownership interest in associate 6 (199) - (28,220)
Impairment of investment in associates 6 - - 8,390
Gain on deconsolidation of subsidiary 8 (151,808) (61,787) (27,251)
Share of net (gain)/ loss of associates accounted for using the equity method 6 8,754 6,055 27,749
(Gain)/loss on investments in notes from associates 7 (13,131) 27,630 -
Fair value gain on other financial instruments 19 - - (8,163)
(Gain)/loss on disposal of assets 14 318 138
Impairment of fixed assets 226 1,260
Income taxes expense (benefit) 27 (4,008) 30,525 (55,719)
Finance (income)/costs, net 11 (4,773) (5,078) (138,924)
Changes in operating assets and liabilities:
Trade and other receivables 629 9,750 (7,734)
Prepaid expenses and other financial assets (1,262) 2,834 (862)
Deferred revenue - (283) 2,123
Trade and other payables 22 (9,695) 3,844 22,033
Other 92 1,374 359
Income taxes paid (37,913) (150) (20,696)
Interest received 23,547 14,454 3,460
Interest paid (1,295) (1,701) (3,366)
Net cash used in operating activities (134,369) (105,917) (178,792)
Cash flows from investing activities:
Purchase of property and equipment 13 (11) (70) (2,176)
Proceeds from sale of property and equipment 255 865 -
Purchases of intangible assets 14 - (175) -
Investment in associates 17 (14,400) - (19,961)
Purchase of investments held at fair value 5 - - (5,000)
Sale of investments held at fair value 5 298,109 33,309 118,710
Short-term note to associate (660) - -
Repayment of short-term note from associate 660 - 15,000
Purchase of convertible note from associate - (16,850) (15,000)
Cash derecognized upon loss of control over subsidiary 8 (91,570) (13,784) (479)
Purchases of short-term investments (308,942) (178,860) (248,733)
Proceeds from maturity of short-term investments 357,447 244,556 50,000
Receipt of payment of sublease - - 415
Net cash provided by (used in) investing activities 240,888 68,991 (107,223)
Cash flows from financing activities:
Receipts from Royalty Purchase Agreement 18 25,000 100,000 -
Issuance of subsidiary preferred Shares 17 68,100 - -
Issuance of Subsidiary Convertible Note - - 393
Payment of lease liability 23 (3,394) (3,338) (4,025)
Exercise of stock options 895 1,153 332
NCI exercise of stock options in subsidiary - - 7
Repurchase of ordinary shares from Tender Offer 16 (102,768) - -
Purchase of treasury stock 16 (4,791) (19,650) (26,492)
Other - (23) (41)
Net cash provided by (used in) financing activities (16,958) 78,141 (29,827)
Net increase (decrease) in cash and cash equivalents 89,560 41,215 (315,842)
Cash and cash equivalents at beginning of year 191,081 149,866 465,708
Cash and cash equivalents at end of period 280,641 191,081 149,866
Supplemental disclosure of non-cash investment and financing activities:
Purchase of intangible assets not yet paid in cash 14 - 25 -
Cost associated with Tender Offer not yet paid in cash 2,076 - -
Settlement of restricted stock units through issuance of equity 1,301 1,142 1,528
The accompanying notes are an integral part of these financial statements.
Notes to the Consolidated Financial Statements
(Amounts in thousands, except share and per share data, or exercise price and
conversion price)
1. Material Accounting Policies
Description of Business
PureTech Health plc (the "Parent") is a public company incorporated, domiciled
and registered in the United Kingdom ("UK"). The registered number is 09582467
and the registered address is 13th Floor, One Angel Court, London, EC2R 7HJ,
United Kingdom.
The Parent and its subsidiaries are together referred to as the "Group". The
Parent company financial statements present financial information about the
Parent as a separate entity and not about its Group.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these group financial
statements.
Basis of Presentation
The consolidated financial statements of the Group (the "Consolidated
Financial Statements") are presented as of December 31, 2024 and 2023, and for
the years ended December 31, 2024, 2023 and 2022. The Consolidated Financial
Statements have been approved by the Directors on April 30, 2025, and are
prepared in accordance with UK-adopted International Financial Reporting
Standards ("IFRSs"). The Consolidated Financial Statements also comply fully
with IFRSs as issued by the International Accounting Standards Board ("IASB").
UK-adopted IFRSs differs in certain respects from IFRSs as issued by the IASB.
However, the differences have no impact for the periods presented.
For presentation of the Consolidated Statement of Comprehensive Income/(Loss),
the Group uses a classification based on the function of expenses, rather than
based on their nature, as it is more representative of the format used for
internal reporting and management purposes and is consistent with
international practice.
Certain amounts in the Consolidated Financial Statements and accompanying
notes may not add due to rounding. All percentages have been calculated using
unrounded amounts.
Basis of Measurement
The Consolidated Financial Statements are prepared on the historical cost
basis except that the following assets and liabilities are stated at their
fair value: investments held at fair value, investments in notes from
associates and liabilities classified as fair value through the profit or
loss.
Use of Judgments and Estimates
In preparing the Consolidated Financial Statements, management has made
judgements, estimates and assumptions that affect the application of the
Group's accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an on-going basis.
Significant estimation is applied in determining the following:
• Financial instruments (see Note 19. Financial Instruments): In
accordance with IFRS 9, Financial Instruments ("IFRS 9"), the Group carries
certain financial assets and financial liabilities at fair value, with changes
in fair value through profit and loss ("FVTPL"). Valuation of the
aforementioned financial instruments includes determining the appropriate
valuation methodology and making certain estimates such as the equity value of
an entity, volatility, and term to liquidity.
Significant judgement is also applied in determining the following:
• Whether financial instruments should be classified as liability or
equity (see Note 17. Subsidiary Preferred Shares.). The judgement includes an
assessment of whether the financial instruments include contractual
obligations of the Group to deliver cash or other financial assets or to
exchange financial assets or financial liabilities with another party, and
whether those obligations could be settled by the Group exchanging a fixed
amount of cash or other financial assets for a fixed number of its own equity
instruments. Further information about these critical judgements and estimates
is included below under Financial Instruments.
• Whether the power to control investees exists (see Note 5.
Investments Held at Fair Value, Note 6. Investments in Associates and Note 8.
Gain/(loss) on Deconsolidation of Subsidiary and accounting policy with regard
to Subsidiaries below). The judgement includes an assessment of whether the
Group has (i) power over the investee; (ii) exposure, or rights, to variable
returns from its involvement with the investee; and (iii) the ability to use
its power over the investee to affect the amount of its own returns. The Group
considers among others its voting shares, shareholder agreements, ability to
appoint board members, representation on the board, rights to appoint
management, de facto control, investee dependence on the Group, etc. If the
power to control the investee exists, it consolidates the financial statements
of such investee in the Consolidated Financial Statements of the Group. Upon
issuance of new shares in an investee and/or a change in any shareholders or
governance agreements, the Group reassesses its ability to control the
investee based on the revised voting interest, revised board composition and
revised subsidiary governance and management structure. When such new
circumstances result in the Group losing its power to control the investee,
the investee is deconsolidated.
• Whether the Group has significant influence over financial and
operating policies of investees in order to determine if the Group should
account for its investment as an associate based on IAS 28 Investments in
Associates and Joint Ventures ("IAS 28") or a financial instrument based on
IFRS 9 (refer to Note 5. Investments Held at Fair Value and Note 6.
Investments in Associates ). This judgement includes, among others, an
assessment whether the Group has representation on the board of directors of
the investee, whether the Group participates in the policy making processes of
the investee, whether there is any interchange of managerial personnel,
whether there is any essential technical information provided to the investee
and if there are any transactions between the Group and the investee.
• Upon determining that the Group does have significant influence
over the financial and operating policies of an investee, if the Group holds
more than a single instrument issued by its equity-accounted investee,
judgement is required to determine whether the additional instrument forms
part of the investment in the associate, which is accounted for under IAS 28
and scoped out of IFRS 9, or it is a separate financial instrument that falls
in the scope of IFRS 9. This judgement includes an assessment of the
characteristics of the financial instrument of the investee held by the Group
and whether such financial instrument provides access to returns underlying an
ownership interest.
• When the Group has other investments in an equity accounted
investee that are not accounted for under IAS 28, judgement is required in
determining if such investments constitute long-term interests ("LTI") for the
purposes of IAS 28. This determination is based on the individual facts and
circumstances and characteristics of each investment, but is driven, among
other factors, by the intention and likelihood to settle the instrument
through redemption or repayment in the foreseeable future, and whether or not
the investment is likely to be converted to common stock or other equity
instruments. After considering the individual facts and circumstances of the
Group's investment in its associate's preferred stock in the manner described
above, including the long-term nature of such investment, the ability of the
Group to convert its preferred stock investment to an investment in common
shares and the likelihood of such conversion, the Group concluded that such
investment was considered a long-term interest.
• In determining the appropriate accounting treatment for the
Royalty Purchase Agreement during 2023, management applied significant
judgement (refer to Note 18. Sale of Future Royalties Liability).
As of December 31, 2024, the Group had cash and cash equivalents of $280,641
and short-term investments of $86,666. Considering the Group's financial
position as of December 31, 2024, and its principal risks and opportunities,
the Group prepared a going concern analysis covering a period of at least the
twelve-month period from the date of signing the Consolidated Financial
Statements ("the going concern period") utilizing realistic scenarios and
applying a severe but plausible downside scenario. Even under the downside
scenario, the analysis demonstrates the Group continues to maintain sufficient
liquidity headroom and continues to comply with all financial obligations. The
Board of Directors believe the Group and the Parent is adequately resourced to
continue in operational existence for at least the twelve-month period from
the date of signing the Consolidated Financial Statements. Accordingly, the
Board of Directors considered it appropriate to adopt the going concern basis
of accounting in preparing the Consolidated Financial Statements and the
PureTech Health plc Financial Statements.
Basis of consolidation
The Consolidated Financial Statements as of December 31, 2024 and 2023, and
for each of the years ended December 31, 2024, 2023 and 2022, comprise
PureTech Health plc and its consolidated subsidiaries. Intra-group balances
and transactions, and any unrealized income and expenses arising from
intra-group transactions, are eliminated.
Subsidiaries
As used in these financial statements, the term subsidiaries refers to
entities that are controlled by the Group. Under applicable accounting rules,
the Group controls an entity when it is exposed to, or has the rights to,
variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. In assessing control,
the Group takes into consideration potential voting rights, board
representation, shareholders' agreements, ability to appoint board of
directors and management, de facto control and other related factors. The
financial statements of subsidiaries are included in the Consolidated
Financial Statements from the date that control commences until the date that
control ceases. Losses applicable to the non-controlling interests ("NCI") in
a subsidiary are allocated to the non-controlling interests even if doing so
causes the non-controlling interests to have a deficit balance.
A list of all current and former subsidiaries organized with respect to
classification as of December 31, 2024, and the Group's total voting
percentage, based on outstanding voting common and preferred shares as of
December 31, 2024, 2023 and 2022, is outlined below. All current subsidiaries
are domiciled within the United States and conduct business activities solely
within the United States.
Voting percentage at December 31, through the holdings in
2024 2023 2022
Subsidiary Common Preferred Common Preferred Common Preferred
Subsidiary operating companies
Gallop Oncology, Inc. (Indirectly Held through PureTech LYT) (2, 5) 100.0 - N/A N/A N/A N/A
Entrega, Inc. (indirectly held through Enlight)(2) - 77.3 - 77.3 - 77.3
PureTech LYT, Inc. (formerly Ariya Therapeutics, Inc.)(2) - 100.0 - 100.0 - 100.0
PureTech LYT 100, Inc.(2) - 100.0 - 100.0 - 100.0
PureTech Management, Inc.(3) 100.0 - 100.0 - 100.0 -
PureTech Health LLC(3) 100.0 - 100.0 - 100.0 -
Deconsolidated former subsidiary operating companies
Sonde Health, Inc.(2, 4, 6) - 40.2 - 40.2 - 40.2
Akili Interactive Labs, Inc.(2, 6, 8) - - 14.6 - 14.7 -
Gelesis, Inc.(1,2) - - - - 22.8 -
Seaport Therapeutics, Inc.(2,) (4, 5, 6) 0.8 42.1 N/A N/A N/A N/A
SPTX, Inc. (held Indirectly through Seaport)(2, 4, 5, 6) 0.8 42.1 N/A N/A N/A N/A
Karuna Therapeutics, Inc.(2,6, 8) - - 2.3 - 3.1 -
Vedanta Biosciences, Inc.(2, 4, 6) - 46.9 - 47.0 - 47.0
Vedanta Biosciences Securities Corp. (indirectly held through Vedanta)(2, 4, - 46.9 - 47.0 - 47.0
6)
Vor Biopharma Inc.(2, 6) 2.1 - 3.9 - 4.1 -
Nontrading holding companies
Endra Holdings, LLC (held indirectly through Enlight)(2) 86.0 - 86.0 - 86.0 -
Ensof Holdings, LLC (held indirectly through Enlight)(2, 7) - - 86.0 - 86.0 -
PureTech Securities Corp.(2) 100.0 - 100.0 - 100.0 -
PureTech Securities II Corp.(2) 100.0 - 100.0 - 100.0 -
Inactive subsidiaries
Alivio Therapeutics, Inc.(2) - 100.0 - 100.0 - 100.0
Appeering, Inc.(2, 7) - - - 100.0 - 100.0
Commense Inc.(2, 7) - - - 99.1 - 99.1
Enlight Biosciences, LLC(2) 86.0 - 86.0 - 86.0 -
Ensof Biosystems, Inc. (held indirectly through Enlight)(2, 7) - - 57.7 28.3 57.7 28.3
Follica, LLC (2) 28.7 56.7 28.7 56.7 28.7 56.7
Knode Inc. (indirectly held through Enlight)(2, 7) - - - 86.0 - 86.0
Libra Biosciences, Inc.(2, 7) - - - 100.0 - 100.0
Mandara Sciences, LLC(2, 7) - - 98.3 - 98.3 -
Tal Medical, LLC.(2, 7) - - - 100.0 - 100.0
1 On October 30, 2023, Gelesis ceased operations and filed a voluntary
petition for relief under the United States bankruptcy code. See Note 6.
Investments in Associates for details.
2 Registered address is Corporation Trust Center, 1209 Orange St.,
Wilmington, DE 19801, USA.
3 Registered address is 2711 Centerville Rd., Suite 400, Wilmington, DE
19808, USA.
4 On October 18, 2024, the Group lost control over Seaport. On March 1,
2023, the Group lost control over Vedanta. On May 25, 2022, the Group lost
control over Sonde. Seaport, Vedanta and Sonde were deconsolidated from the
Group's financial statements, resulting in only the profits and losses
generated by these entities through the deconsolidation date being included in
the Group's Consolidated Statement of Comprehensive Income/(Loss). See Notes
8. Gain/(loss) on Deconsolidation of Subsidiary, Notes 5. Investments Held at
Fair Value and 6. Investments in Associates for further details about the
accounting for the investments in these entities subsequent to
deconsolidation.
5 In January 2024, the Group launched two new Founded Entities (Seaport
Therapeutics and Gallop Oncology) to advance certain programs from the
Wholly-Owned Programs segment.
6 See Notes 5. Investments Held at Fair Value for additional discussion on
the Group's investment held in Seaport, Vedanta, Sonde, Akili, Karuna and Vor
during 2024.
7 Inactive subsidiary dissolved in November 2024.
8 The Group's investments in Akili and Karuna were disposed of in 2024.
Change in Subsidiary Ownership and Loss of Control
Changes in the Group's interest in a subsidiary that do not result in a loss
of control are accounted for as equity transactions.
Where the Group loses control of a subsidiary, the assets and liabilities are
derecognized along with any related non-controlling interest. Any interest
retained in the former subsidiary is measured at fair value when control is
lost. Any resulting gain or loss is recognized as profit or loss in the
Consolidated Statement of Comprehensive Income/(Loss).
Associates
As used in the Consolidated Financial Statements, the term associates are
those entities in which the Group has no control but maintains significant
influence over the financial and operating policies. Significant influence is
presumed to exist when the Group holds between 20 and 50 percent of the voting
power of an entity, unless it can be clearly demonstrated that this is not the
case. The Group evaluates if it maintains significant influence over
associates by assessing if the Group has the power to participate in the
financial and operating policy decisions of the associate.
Application of the Equity Method to Associates
Associates are accounted for using the equity method (equity accounted
investees) and are initially recognized at cost, or if recognized upon
deconsolidation, they are initially recorded at fair value at the date of
deconsolidation. The Consolidated Financial Statements include the Group's
share of the total comprehensive income or loss of equity accounted investees,
from the date that significant influence commences until the date that
significant influence ceases.
To the extent the Group holds interests in associates that are not providing
access to returns underlying ownership interests, the instrument is accounted
for in accordance with IFRS 9 as investments held at fair value.
When the Group's share of losses exceeds its equity method investment in the
investee, losses are applied against long-term interests, which are
investments accounted for under IFRS 9. Investments are determined to be
long-term interests when they are long-term in nature and in substance they
form part of the Group's net investment in that associate. This determination
is impacted by many factors, among others, whether settlement by the investee
through redemption or repayment is planned or likely in the foreseeable
future, whether the investment can be converted and/or is likely to be
converted to common stock or other equity instrument and other factors
regarding the nature of the investment. Whilst this assessment is dependent on
many specific facts and circumstances of each investment, typically conversion
features whereby the investment is likely to convert to common stock or other
equity instruments would point to the investment being a long-term interest.
Similarly, where the investment is not planned or likely to be settled through
redemption or repayment in the foreseeable future, this would indicate that
the investment is a long-term interest. When the net investment in the
associate, which includes the Group's investments in other long-term
interests, is reduced to nil, recognition of further losses is discontinued
except to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of an investee.
The Group has adopted the amendments to IAS 28 that addresses the dual
application of IAS 28 and IFRS 9 when equity method losses are applied against
long-term interests. The amendments provide the annual sequence in which both
standards are to be applied in such a case. The Group has applied the equity
method losses to the long-term interests presented as part of Investments held
at fair value subsequent to remeasuring such investments to their fair value
at balance sheet date.
Sale of Future Royalties Liability
The Group accounts for the sale of future royalties liability as a financial
liability, as it continues to hold the rights under the royalty bearing
licensing agreement and has a contractual obligation to deliver cash to an
investor for a portion of the royalty it receives. Interest on the sale of
future royalties liability is recognized using the effective interest rate
over the life of the related royalty stream.
The sale of future royalties liability and the related interest expense are
based on the Group's current estimates of future royalties expected to be paid
over the life of the arrangement. Forecasts are updated periodically as new
data is obtained. Any increases, decreases or a shift in timing of estimated
cash flows require the Group to re-calculate the amortized cost of the sale of
future royalties liability as the present value of the estimated future
contractual cash flows that are discounted at the liability's original
effective interest rate. The adjustment is recognized immediately in profit or
loss as income or expense.
Financial Instruments
Classification
The Group classifies its financial assets in the following measurement
categories:
• Those to be measured subsequently at fair value either through
other comprehensive income "FVOCI", or through profit or loss "FVTPL", and
• Those to be measured at amortized cost.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses are recorded in profit or
loss.
Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at FVTPL, transaction costs that
are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets that are carried at FVTPL are expensed.
Impairment
The Group assesses on a forward-looking basis the expected credit losses
associated with its debt instruments carried at amortized cost. For trade
receivables, the Group applies the simplified approach permitted by IFRS 9,
which requires expected lifetime losses to be recognized from initial
recognition of the receivables.
Financial Assets
The Group's financial assets consist of cash and cash equivalents, investments
in debt securities, trade and other receivables, investments in notes from
associates, restricted cash deposits and investments in equity securities. The
Group's financial assets are virtually all classified into the following
categories: investments held at fair value, investments in notes from
associates, trade and other receivables, short-term investments and cash and
cash equivalents. The Group determines the classification of financial assets
at initial recognition depending on the purpose for which the financial assets
were acquired.
Investments held at fair value are investments in equity instruments. Such
investments consist of the Group's minority interest holdings where the Group
has no significant influence or preferred share investments that are not
providing access to returns underlying ownership interests and are categorized
as debt instruments that are presented at fair value through profit and loss
because the amounts receivable do not represent solely payments of principal
and interest. These financial assets are initially measured at fair value and
subsequently re-measured at fair value at each reporting date. The Group has
elected to record the changes in fair values for the financial assets falling
under this category through profit and loss. Please refer to Note 5.
Investments Held at Fair Value.
Changes in the fair value of financial assets at FVTPL are recognized in other
income/(expense) in the Consolidated Statement of Comprehensive Income/(Loss)
as applicable.
The investments in notes from associates, since their contractual terms do not
consist solely of cash flow payments of principal and interest on the
principal amount outstanding, are initially and subsequently measured at fair
value, with changes in fair value recognized through profit and loss.
Cash and cash equivalents consist of demand deposits with banks and other
financial institutions and highly liquid instruments with original maturities
of three months or less at the date of purchase. Cash and cash equivalents are
carried at cost, which approximates their fair value.
Short-term investments consist of short-term US treasury bills that are held
to maturity. The contractual terms consist solely of payment of the principal
and interest and the Group's business model is to hold the treasury bills to
maturity. As such, such short-term investments are recorded at amortized cost.
As of balance sheet date, amortized cost approximated the fair value of such
short-term investments.
Trade and other receivables are non-derivative financial assets with fixed and
determinable payments that are not quoted on active markets. These financial
assets are carried at the amounts expected to be received less any expected
lifetime losses. Such losses are determined taking into account previous
experience, credit rating and economic stability of counterparty and economic
conditions. When a trade receivable is determined to be uncollectible, it is
written off against the available provision. As of balance sheet date, the
Group did not record any such expected lifetime losses related to the
outstanding trade and other receivable balances. Trade and other receivables
are included in current assets, unless maturities are greater than 12 months
after the end of the reporting period.
Financial Liabilities
The Group's financial liabilities primarily consist of trade and other
payables, and preferred shares.
The majority of the Group's subsidiaries have preferred shares and certain
notes payable with embedded derivatives, which are classified as current
liabilities. When the Group has preferred shares and notes with embedded
derivatives that qualify for bifurcation, the Group has elected to account for
the entire instrument as FVTPL after determining under IFRS 9 that the
instrument qualifies to be accounted for under such FVTPL method.
The Group derecognizes a financial liability when its contractual obligations
are discharged, cancelled or expire.
Equity Instruments Issued by the Group
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions, in accordance with IAS 32:
1. They include no contractual obligations upon the Group to deliver
cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavorable to the Group; and
2. Where the instrument will or may be settled in the Group's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Group's own equity instruments or is a
derivative that will be settled by the Group exchanging a fixed amount of cash
or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the financial instrument is
classified as a financial liability. Where the instrument so classified takes
the legal form of the Group's own shares, the amounts presented in the Group's
shareholders' equity exclude amounts in relation to those shares.
Changes in the fair value of liabilities at FVTPL are recognized in net
finance income /(costs) in the Consolidated Statement of Comprehensive
Income/(Loss) as applicable.
IFRS 15, Revenue from Contracts with Customers
The standard establishes a five-step principle-based approach for revenue
recognition and is based on the concept of recognizing an amount that reflects
the consideration for performance obligations only when they are satisfied,
and the control of goods or services is transferred.
The majority of the Group's contract revenue is generated from licenses and
services, some of which are part of collaboration arrangements.
Management reviewed contracts where the Group received consideration in order
to determine whether or not they should be accounted for in accordance with
IFRS 15. To date, the Group has entered into transactions that generate
revenue and meet the scope of either IFRS 15 or IAS 20 Accounting for
Government Grants. Contract revenue is recognized at either a point-in-time or
over time, depending on the nature of the performance obligations.
The Group accounts for agreements that meet the definition of IFRS 15 by
applying the following five step model:
• Identify the contract(s) with a customer - A contract with a
customer exists when (i) the Group enters into an enforceable contract with a
customer that defines each party's rights regarding the goods or services to
be transferred and identifies the payment terms related to those goods or
services, (ii) the contract has commercial substance and, (iii) the Group
determines that collection of substantially all consideration for goods or
services that are transferred is probable based on the customer's intent and
ability to pay the promised consideration.
• Identify the performance obligations in the contract - Performance
obligations promised in a contract are identified based on the goods or
services that will be transferred to the customer that are both capable of
being distinct, whereby the customer can benefit from the good or service
either on its own or together with other resources that are readily available
from third parties or from the Group, and are distinct in the context of the
contract, whereby the transfer of the goods or services is separately
identifiable from other promises in the contract.
• Determine the transaction price - The transaction price is
determined based on the consideration to which the Group will be entitled in
exchange for transferring goods or services to the customer. To the extent the
transaction price includes variable consideration, the Group estimates the
amount of variable consideration that should be included in the transaction
price utilizing either the expected value method or the most likely amount
method depending on the nature of the variable consideration. Variable
consideration is included in the transaction price if, in the Group's
judgement, it is probable that a significant future reversal of cumulative
revenue under the contract will not occur.
• Allocate the transaction price to the performance obligations in
the contract - If the contract contains a single performance obligation, the
entire transaction price is allocated to the single performance obligation.
Contracts that contain multiple performance obligations require an allocation
of the transaction price to each performance obligation based on a relative
standalone selling price basis.
• Recognize revenue when (or as) the Group satisfies a performance
obligation - The Group satisfies performance obligations either over time or
at a point in time as discussed in further detail below. Revenue is recognized
at the time the related performance obligation is satisfied by transferring a
promised good or service to a customer.
Revenue generated from services agreements (typically where licenses and
related services were combined into one performance obligation) is determined
to be recognized over time when it can be determined that the services meet
one of the following: (a) the customer simultaneously receives and consumes
the benefits provided by the entity's performance as the entity performs; (b)
the entity's performance creates or enhances an asset that the customer
controls as the asset is created or enhanced; or (c) the entity's performance
does not create an asset with an alternative use to the entity and the entity
has an enforceable right to payment for performance completed to date.
It was determined that the Group has contracts that meet criteria (a), since
the customer simultaneously receives and consumes the benefits provided by the
Group's performance as the Group performs. Therefore, revenue is recognized
over time using the input method based on costs incurred to date as compared
to total contract costs. The Group believes that in research and development
service type agreements using costs incurred to date represents the most
faithful depiction of the entity's performance towards complete satisfaction
of a performance obligation.
Revenue from licenses that are not part of a combined performance obligation
are recognized at a point in time. Such licenses relate to intellectual
property that has significant stand-alone functionality and as such represent
a right to use the entity's intellectual property as it exists at the point in
time at which the license is granted.
Royalty revenue received in respect of licensing agreements when the license
of intellectual property is the predominant item in the arrangement is
recognized as the related third-party sales in the licensee occur.
Amounts that are receivable or have been received per contractual terms but
have not been recognized as revenue since performance has not yet occurred or
has not yet been completed are recorded as deferred revenue. The Group
classifies as non-current deferred revenue amounts received for which
performance is expected to occur beyond one year or one operating cycle.
Grant Revenue
The Group recognizes grants from governmental agencies as grant revenue in the
Consolidated Statement of Comprehensive Income/(Loss), gross of the
expenditures that were related to obtaining the grant, when there is
reasonable assurance that the Group will comply with the conditions within the
grant agreement and there is reasonable assurance that payments under the
grants will be received. The Group evaluates the conditions of each grant as
of each reporting date to ensure that the Group has reasonable assurance of
meeting the conditions of each grant arrangement and that it is expected that
the grant payment will be received as a result of meeting the necessary
conditions.
The Group submits qualifying expenses for reimbursement after the Group has
incurred the research and development expense. The Group records an unbilled
receivable upon incurring such expenses. In cases in which the grant revenue
is received prior to the expenses being incurred or recognized, the amounts
received are deferred until the related expense is incurred and/or recognized.
Grant revenue is recognized in the Consolidated Statement of Comprehensive
Income/(Loss) at the time in which the Group recognizes the related
reimbursable expense for which the grant is intended to compensate.
Functional and Presentation Currency
The Consolidated Financial Statements are presented in United States dollars
("US dollars"). The functional currency of all members of the Group is the
U.S. dollar. The Group's share in foreign exchange differences in associates
were reported in other comprehensive income/(loss).
Foreign Currency
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on remeasurement are recognized in the Consolidated
Statement of Comprehensive Income/(Loss). Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Share Capital
Ordinary shares are classified as equity. The Group's equity is comprised of
share capital, share premium, merger reserve, other reserve, translation
reserve, and retained earnings/accumulated deficit.
Treasury Shares
Treasury shares acquired as a result of repurchasing shares are recognized at
cost and are deducted from shareholders' equity. No gain or loss is recognized
in profit and loss for the purchase, sale, re-issue or cancellation of the
Group's own equity shares. The nominal value related to shares that are
repurchased and cancelled are reduced from share capital and transferred to a
capital redemption reserve.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and any
accumulated impairment losses. Cost includes expenditures that are directly
attributable to the acquisition of the asset. Assets under construction
represent leasehold improvements and machinery and equipment to be used in
operations or research and development activities. When parts of an item of
property and equipment have different useful lives, they are accounted for as
separate items (major components) of property and equipment. Depreciation is
calculated using the straight-line method over the estimated useful life of
the related asset:
Laboratory and manufacturing equipment 2-8 years
Furniture and fixtures 7 years
Computer equipment and software 1-5 years
Leasehold improvements 5-10 years, or the remaining term of the lease, if shorter
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
Intangible Assets
Intangible assets, which include purchased patents and licenses with finite
useful lives, are carried at historical cost less accumulated amortization, if
amortization has commenced. Intangible assets with finite lives are amortized
from the time they are available for their intended use. Amortization is
calculated using the straight-line method to allocate the costs of patents and
licenses over their estimated useful lives.
Research and development intangible assets, which are still under development
and have accordingly not yet obtained marketing approval, are presented as
In-Process Research and Development (IPR&D). The cost of IPR&D
represents upfront payments as well as additional contingent payments based on
development, regulatory and sales milestones related to certain license
agreement where the Group licenses IP from a third party. These milestones are
capitalized as the milestone is triggered. See Note 25. Commitments and
Contingencies. IPR&D is not amortized since it is not yet available for
its intended use, but it is evaluated for potential impairment on an annual
basis or more frequently when facts and circumstances warrant.
Impairment of Non-Financial Assets
The Group reviews the carrying amounts of its property and equipment and
intangible assets at each reporting date to determine whether there are
indicators of impairment. If any such indicators of impairment exist, then an
asset's recoverable amount is estimated. The recoverable amount is the higher
of an asset's fair value less cost of disposal and value in use.
The Group's IPR&D intangible assets are not yet available for their
intended use. As such, they are tested for impairment at least annually.
An impairment loss is recognized when an asset's carrying amount exceeds its
recoverable amount. For the purposes of impairment testing, assets are grouped
at the lowest levels for which there are largely independent cash flows. If a
non-financial asset instrument is impaired, an impairment loss is recognized
in the Consolidated Statement of Comprehensive Income/(Loss).
Investments in associates are considered impaired if, and only if, objective
evidence indicates that one or more events, which occurred after the initial
recognition, have had an impact on the future cash flows from the net
investment and that impact can be reliably estimated. If an impairment exists,
the Group measures an impairment by comparing the carrying value of the net
investment in the associate to its recoverable amount and recording any excess
as an impairment loss. See Note 6. Investments in Associates for impairment
recorded in respect of an investment in associate during the year ended
December 31, 2022.
Employee Benefits
Short-Term Employee Benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and expensed as the related service is provided. A liability is recognized for
the amount expected to be paid if the Group has a present legal or
constructive obligation due to past service provided by the employee, and the
obligation can be estimated reliably.
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an
entity pays fixed contributions into a separate entity and has no legal or
constructive obligation to pay further amounts. Obligations for contributions
to defined contribution plans are recognized as an employee benefit expense in
the periods during which related services are rendered by employees.
Share-based Payments
Share-based payment arrangements, in which the Group receives goods or
services as consideration for its own equity instruments, are accounted for as
equity-settled share-based payment transactions (except certain restricted
stock units - see below) in accordance with IFRS 2. The grant date fair value
of employee share-based payment awards is recognized as an expense with a
corresponding increase in equity over the requisite service period related to
the awards. The amount recognized as an expense is adjusted to reflect the
actual number of awards for which the related service and non-market
performance conditions are expected to be met, such that the amount ultimately
recognized as an expense is based on the number of awards that do meet the
related service and non-market performance conditions at the vesting date. For
share-based payment awards with market conditions, the grant date fair value
is measured to reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
Certain restricted stock units are treated as liability settled awards
starting in 2021. Such awards are remeasured at every reporting date until
settlement date and are recognized as compensation expense over the requisite
service period. Differences in remeasurement are recognized in profit and
loss. The cumulative cost that will ultimately be recognized in respect of
these awards will equal to the amount at settlement.
The fair value of the awards is measured using option pricing models and other
appropriate models, which take into account the terms and conditions of the
awards granted.
Development Costs
Expenditures on research activities are recognized as incurred in the
Consolidated Statement of Comprehensive Income/(Loss). In accordance with IAS
38, development costs are capitalized only if the expenditure can be measured
reliably, the product or process is technically and commercially feasible,
future economic benefits are probable, the Group can demonstrate its ability
to use or sell the intangible asset, the Group intends to and has sufficient
resources to complete development and to use or sell the asset, and it is able
to measure reliably the expenditure attributable to the intangible asset
during its development. The point at which technical feasibility is determined
to have been reached is, generally, when regulatory approval has been received
where applicable. Management determines that commercial viability has been
reached when a clear market and pricing point have been identified, which may
coincide with achieving meaningful recurring sales. Otherwise, the development
expenditure is recognized as incurred in the Consolidated Statement of
Comprehensive Income/(Loss). As of balance sheet date, the Group has not
capitalized any development costs.
Provisions
A provision is recognized in the Consolidated Statement of Financial Position
when the Group has a present legal or constructive obligation due to a past
event that can be reliably measured, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects risks specific to the liability.
Leases
The Group leases real estate for use in operations. These leases have lease
terms of approximately 10 years. The Group includes options that are
reasonably certain to be exercised as part of the determination of the lease
term. The group determines if an arrangement is a lease at inception of the
contract in accordance with guidance detailed in IFRS 16. Right-of-use ("ROU")
assets represent the Group's right to use an underlying asset for the lease
term and lease liabilities represent the Group's obligation to make lease
payments arising from the lease. Operating lease ROU assets and lease
liabilities are recognized at commencement date based on the present value of
the lease payments over the lease term. As most of the Group's leases do not
provide an implicit rate, the Group used its estimated incremental borrowing
rate, based on information available at commencement date, in determining the
present value of future payments.
The Group's leases are virtually all leases of real estate.
The Group has elected to account for lease payments as an expense on a
straight-line basis over the life of the lease for:
• Leases with a term of 12 months or less and containing no purchase
options; and
• Leases where the underlying asset has a value of less than $5,000.
The right-of-use asset is depreciated on a straight-line basis and the related
lease liability gives rise to an interest charge.
Finance Income and Finance Costs
Finance income consists of interest income on funds invested in money market
funds and U.S. treasuries. Finance income is recognized as it is earned.
Finance costs consist mainly of loan, notes and lease liability interest
expenses, interest expense due to accretion of and adjustment to sale of
future royalties liability as well as the changes in the fair value of
financial liabilities carried at FVTPL (such changes can consist of finance
income when the fair value of such financial liabilities decrease).
Taxation
Tax on the profit or loss for the year comprises current and deferred income
tax. In accordance with IAS 12, tax is recognized in the Consolidated
Statement of Comprehensive Income/(Loss) except to the extent that it relates
to items recognized directly in equity.
Current income tax is the expected tax payable or receivable on the taxable
income or loss for the year, using tax rates enacted or substantially enacted
at the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognized due to temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax assets are recognized for
unused tax losses, unused tax credits and deductible temporary differences to
the extent that it is probable that future taxable profits will be available
against which they can be used. Deferred tax assets with respect to
investments in associates are recognized only to the extent that it is
probable the temporary difference will reverse in the foreseeable future and
taxable profit will be available against which the temporary difference can be
utilized. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or
different taxable entities where there is an intention to settle the balances
on a net basis.
Fair Value Measurements
The Group's accounting policies require that certain financial assets and
certain financial liabilities be measured at their fair value.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximizing
the use of relevant observable inputs and minimizing the use of unobservable
inputs. Fair values are categorized into different levels in a fair value
hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group recognizes transfers between levels of the fair value hierarchy at
the end of the reporting period during which the change has occurred.
The carrying amount of cash and cash equivalents, accounts receivable,
restricted cash, deposits, accounts payable, accrued expenses and other
current liabilities in the Group's Consolidated Statement of Financial
Position approximates their fair value because of the short maturities of
these instruments.
Operating Segments
Operating segments are reported in a manner that is consistent with the
internal reporting provided to the chief operating decision maker ("CODM").
The CODM reviews discrete financial information for the operating segments in
order to assess their performance and is responsible for making decisions
about resources allocated to the segments. The CODM has been identified as the
Group's Board of Directors.
2. New Standards and Interpretations
The Group has applied Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current or Non-Current for the
first time for its reporting period ended December 31, 2024. This amendment
did not have any impact on the amounts recognized in prior and current
periods.
In April 2024, IFRS 18, Presentation and Disclosure in Financial Statements
was issued to achieve comparability of the financial performance of similar
entities. The standard, which replaces IAS 1 Presentation of Financial
Statements, impacts the presentation of primary financial statements and
notes, including the statement of earnings where companies will be required to
present separate categories of income and expense for operating, investing,
and financing activities with prescribed subtotals for each new category. The
standard will also require management-defined performance measures to be
explained and included in a separate note within the consolidated financial
statements. The standard is effective for annual reporting periods beginning
on or after January 1, 2027, including interim financial statements, and
requires retrospective application. The Group is currently assessing the
impact of the new standard.
In May 2024, Amendments to IFRS 9 and IFRS 7, Targeted Improvements to
Financial Instruments Standards, was issued to clarify the date of recognition
and derecognition of some financial assets and liabilities, with a new
exception for some financial liabilities settled through an electronic cash
transfer system; clarify and add further guidance for assessing whether a
financial asset meets the solely payments of principal and interest (SPPI)
criterion; add new disclosures for certain instruments with contractual terms
that can change cash flows (such as some instruments with features linked to
the achievement of environment, social and governance (ESG) targets); and
update the disclosures for equity instruments designated at fair value through
other comprehensive income (FVOCI). The standard is effective for annual
reporting periods beginning on or after January 1, 2026, including interim
financial statements, and requires prospective application. The Group is
currently assessing the impact of the new standard.
In July 2024, the International Accounting Standards Board published the IFRS
Interpretations Committee ("Committee")'s agenda decision clarifying certain
requirements for disclosure of revenue and expenses for reporting segments
under IFRS 8, Operating Segments. Committee agenda decisions do not have an
effective date as entities are afforded a sufficient amount of time to
implement them. The Group is currently assessing the impact of the Committee
agenda decision and plans to apply the new requirements in its annual
financial statements for the year ending December 31, 2025.
Certain other new accounting standards, interpretations, and amendments to
existing standards have been published that are effective for annual periods
commencing on or after January 1, 2025 and have not been early adopted by the
Group in preparing the Consolidated Financial Statements. These standards,
amendments or interpretations are not expected to have a material impact on
the Group in the prior, current, or future periods.
3. Revenue
Revenue recorded in the Consolidated Statement of Comprehensive Income/(Loss)
consists of the following:
For the years ended December 31, 2024 2023 2022
$ $ $
Contract revenue 4,315 750 2,090
Grant revenue 513 2,580 13,528
Total revenue 4,828 3,330 15,618
All amounts recorded in contract revenue were generated in the United States.
During the year ended December 31, 2024, the Group achieved and received a
$4,000 milestone payment from Bristol Myers Squibb ("BMS"), the acquirer of
Karuna Therapeutics, Inc. ("Karuna"), the Group's Founded Entity, following
the approval by the U.S. Food and Drug Administration ("FDA") to market KarXT
as Cobenfy, pursuant to a license agreement between PureTech and Karuna in
2011.
During the year ended December 31, 2024, the Group recognized $315 in royalty
revenue pursuant to the license agreement discussed above. Under the terms of
the license agreement, BMS pays the Group a royalty that amounts to 3% of
annual net sales of Cobenfy. Both the milestone payment and the royalties were
recognized as contract revenue during the year ended December 31, 2024.
Substantially all of the Group's contracts related to contract revenue for the
years ended December 31, 2023 and 2022 were determined to have a single
performance obligation which consists of a combined deliverable of license of
intellectual property and research and development services. Therefore, for
such contracts, revenue is recognized over time based on the input method
which the Group believes is a faithful depiction of the transfer of goods and
services. Progress is measured based on costs incurred to date as compared to
total projected costs. Payments for such contracts are primarily made up-front
on a periodic basis. For the Year ended December 31, 2022, contract revenue
also includes royalties received from an associate in the amount of $509.
Disaggregated Revenue
The Group disaggregates contract revenue in a manner that depicts how the
nature, amount, timing, and uncertainty of revenue and cash flows are affected
by economic factors. The Group disaggregates revenue based on contract revenue
or grant revenue, and further disaggregates contract revenue based on the
transfer of control of the underlying performance obligations.
Timing of contract revenue recognition 2024 2023 2022
for the years ended December 31, $ $ $
Transferred at a point in time - Licensing Income 4,315 - 527
Transferred over time - 750 1,563
4,315 750 2,090
Customers over 10% of revenue 2024 2023 2022
$ $ $
Customer A - 750 1,500
Customer B - - 509
Customer C 4,315 - -
4,315 750 2,009
Accounts receivable represent rights to consideration in exchange for products
or services that have been transferred by the Group, when payment is
unconditional and only the passage of time is required before payment is due.
Accounts receivable do not bear interest and are recorded at the invoiced
amount. Accounts receivable are included within trade and other receivable on
the Consolidated Statement of Financial Position. The accounts receivable
related to contract revenue were $868 and $555 as of December 31, 2024 and
2023, respectively.
4. Segment Information
Basis for Segmentation
The Directors are the Group's chief operating decision-makers. The Group's
operating segments are determined based on the financial information provided
to the Board of Directors periodically for the purposes of allocating
resources and assessing performance. The Group has determined each of its
Wholly-Owned Programs represents an operating segment and the Group has
aggregated each of these operating segments into one reportable segment, the
Wholly-Owned Programs segment. Each of the Group's Controlled Founded Entities
represents an operating segment. The Group aggregates each Controlled Founded
Entity operating segment into one reportable segment, the Controlled Founded
Entities segment. The aggregation is based on the high level of operational
and financial similarities of the operating segments. For the Group's entities
that do not meet the definition of an operating segment, the Group presents
this information in the Parent Company and Other column in its segment
footnote to reconcile the information in this footnote to the Consolidated
Financial Statements. Substantially all of the Group's revenue and profit
generating activities are generated within the United States and, accordingly,
no geographical disclosures are provided.
Following is the description of the Group's reportable segments:
Wholly-Owned Programs
The Wholly-Owned Programs segment is advancing Wholly-Owned Programs which are
focused on treatments for patients with devastating diseases. The Wholly-Owned
Programs segment is comprised of the technologies that are wholly-owned and
will be advanced through with either the Group's funding or non-dilutive
sources of financing. The operational management of the Wholly-Owned Programs
segment is conducted by the PureTech Health team, which is responsible for the
strategy, business development, and research and development.
Controlled Founded Entities
The Controlled Founded Entities segment is comprised of the Group's
consolidated operational subsidiaries as of December 31, 2024 that either
have, or have plans to hire, independent management teams and currently have
already raised third-party dilutive capital. These subsidiaries have active
research and development programs and have an equity or debt investment
partner, who will provide additional industry knowledge and access to
networks, as well as additional funding to continue the pursued growth of the
entity.
The Group's entities that were determined not to meet the definition of an
operating segment are included in the Parent Company and Other column to
reconcile the information in this footnote to the Consolidated Financial
Statements. This column captures activities not directly attributable to the
Group's operating segments and includes the activities of the Parent,
corporate support functions, certain research and development support
functions that are not directly attributable to a strategic business segment
as well as the elimination of intercompany transactions. This column also
captures the operating results for the deconsolidated entities through the
date of deconsolidation (e.g. Seaport in 2024, Vedanta in 2023, and Sonde in
2022) and accounting for the Group's holdings in Founded Entities for which
control has been lost, which primarily represent: the activity associated with
deconsolidating an entity when the Group no longer controls the entity, the
gain or loss on the Group's investments accounted for at fair value (e.g. the
Group's ownership stakes in Vor, Vedanta, Sonde and Seaport) and the Group's
net income or loss of associates accounted for using the equity method.
The term "Founded Entities" refers to entities which the Group incorporated
and announced the incorporation as a Founded Entity externally. It includes
certain of the Group's wholly-owned subsidiaries which have been announced by
the Group as Founded Entities, Controlled Founded Entities and deconsolidated
Founded Entities.
In January 2024, the Group launched two new Founded Entities (Seaport
Therapeutics "Seaport" and Gallop Oncology "Gallop") to advance certain
programs from the Wholly-Owned Programs segment. The financial results of
these programs were included in the Wholly-Owned Programs segment as of and
for the year ended December 31, 2023.
Seaport was deconsolidated on October 18, 2024 upon the completion of its
Series B preferred share financing. The financial results of Seaport through
the date of deconsolidation are included within the Parent Company and Other
column as of December 31, 2024. It is impracticable for the Group to recast
its segment results for the years ended December 31, 2023 and 2022 as the cost
to develop the information would be excessive. However, as Seaport is a
pre-commercial, clinical-stage biopharmaceutical company, it primarily
performs research and development activities. Seaport incurred direct research
and development expenses of $8,843 for the year ended December 31, 2023, which
are included in the Wholly-Owned Program segment. Seaport incurred direct
research and development expenses of $5,061 for the year ended December 31,
2024, prior to its deconsolidation from the Group's Consolidated Financial
Statements.
As of December 31, 2024, Alivio was dormant and did not meet the definition of
operating segment. Therefore, the financial results of Alivio were removed
from the Wholly-Owned Programs segment and are included in the Parent Company
and Other column. The corresponding information for 2023 and 2022 has been
restated to include Alivio in the Parent Company and Other column so that the
segment disclosures are presented on a comparable basis.
The Group's Board of Directors reviews segment performance and allocates
resources based upon revenue, operating loss as well as the funds available
for each segment. The Board of Directors does not review any other information
for purposes of assessing segment performance or allocating resources.
2024
Wholly-Owned Programs Controlled Founded Entities Parent Company and Consolidated
$ $ Other $
$
Contract revenue - - 4,315 4,315
Grant revenue 513 - - 513
Total revenue 513 - 4,315 4,828
General and administrative expenses (8,888) (173) (62,408) (71,469)
Research and development expenses (56,849) (672) (11,933) (69,454)
Total operating expense (65,737) (845) (74,341) (140,923)
Operating income/(loss) (65,224) (845) (70,026) (136,095)
Income/expenses not allocated to segments
Other income/(expense):
Gain on deconsolidation of subsidiary 151,808
Gain/(loss) on investment held at fair value (2,398)
Realized gain on sale of investments 151
Gain/(loss) on investment in notes from associates 13,131
Other income/(expense) 961
Total other income/(expense) 163,652
Net finance income/(costs) 4,773
Share of net income/(loss) of associates accounted for using the equity method (8,754)
Gain on dilution of ownership interest in associate 199
Income/(loss) before taxes 23,774
As of December 31, 2024
Available Funds
Cash and cash equivalents 9,062 432 271,148 280,641
Short-term Investments - - 86,666 86,666
Consolidated cash, cash equivalents and short-term investments 9,062 432 357,814 367,307
2023
Wholly-Owned Programs Controlled Founded Entities Parent Consolidated
$ $ Company and $
Other
$
Contract revenue - 750 - 750
Grant revenue 270 - 2,310 2,580
Total revenue 270 750 2,310 3,330
General and administrative expenses (13,203) (562) (39,530) (53,295)
Research and development expenses (87,069) (672) (8,494) (96,235)
Total Operating expenses (100,272) (1,233) (48,024) (149,530)
Operating income/(loss) (100,002) (483) (45,714) (146,199)
Income/expenses not allocated to segments
Other income/(expense):
Gain on deconsolidation 61,787
Gain/(loss) on investment held at fair value 77,945
Realized loss on sale of investments (122)
Gain/(loss) on investment in notes from associates (27,630)
Other income/(expense) (908)
Total other income/(expense) 111,072
Net finance income/(costs) 5,078
Share of net income/(loss) of associate accounted for using the equity method (6,055)
Income/(loss) before taxes (36,103)
As of December 31, 2023
Available Funds
Cash and cash equivalents 1,895 675 188,511 191,081
Short-term Investments - - 136,062 136,062
Consolidated cash, cash equivalents and short-term investments 1,895 675 324,573 327,143
For the year ended December 31, 2022
Wholly-Owned Programs Controlled Founded Entities Parent Consolidated
$ $ Company & $
Other
$
Contract revenue - 1,500 590 2,090
Grant revenue 521 - 13,007 13,528
Total revenue 521 1,500 13,597 15,618
General and administrative expenses (7,737) (419) (52,835) (60,991)
Research and development expenses (109,201) (1,051) (42,182) (152,433)
Total operating expense (116,938) (1,470) (95,018) (213,425)
Operating income/(loss) (116,417) 30 (81,420) (197,807)
Income/expenses not allocated to segments
Other income/(expense):
Gain on deconsolidation 27,251
Gain/(loss) on investment held at fair value (32,060)
Realized loss on sale of investments (29,303)
Other income/(expense) 8,131
Total other income/(expense) (25,981)
Net finance income/(costs) 138,924
Share of net income/(loss) of associate accounted for using the equity method (27,749)
Gain on dilution of ownership interest in associate 28,220
Impairment of investment in associate (8,390)
Income/(loss) before taxes (92,783)
5. Investments Held at Fair Value
Investments held at fair value include both unlisted and listed securities
held by the Group. These investments, which include interests in Seaport,
Vedanta, Vor and other insignificant investments as of December 31, 2024 are
initially measured at fair value, and are subsequently re-measured at fair
value at each reporting date with changes in the fair value recorded through
profit and loss. See Note 19. Financial Instruments for information regarding
the valuation of these instruments. Activities related to such investments
during the periods are shown below:
Investments held at fair value $
Balance as of January 1, 2023 251,892
Investment in Vedanta preferred shares - Vedanta deconsolidation 20,456
Investment in Gelesis 2023 Warrants 1,121
Sale of Karuna shares (33,309)
Loss realised on sale of investments (265)
Gain - changes in fair value through profit and loss 77,945
Balance as of December 31, 2023 and January 1, 2024 317,841
Sale of Karuna shares (292,672)
Investment in Seaport preferred shares - Seaport deconsolidation 179,248
Sale of Akili Shares (5,437)
Gain realised on sale of Karuna shares 151
Loss - changes in fair value through profit and loss (2,398)
Balance as of December 31, 2024 before allocation of equity method loss to 196,733
long-term interest ("LTI")
Equity method loss recorded against LTI (5,307)
Balance as of December 31, 2024 191,426
Vedanta
On March 1, 2023, Vedanta issued convertible debt to a syndicate of investors.
The Group did not participate in this round of financing. As part of the
issuance of the debt, the convertible debt holders were granted representation
on Vedanta's Board of Directors and the Group lost control over the Vedanta
Board of Directors and the power to direct the relevant Vedanta activities.
Consequently, Vedanta was deconsolidated on March 1, 2023 and its results of
operations are included in the Consolidated Financial Statements through the
date of deconsolidation. See Note 8. Gain/(loss) on Deconsolidation of
Subsidiary.
Following Vedanta's deconsolidation, the Group has significant influence over
Vedanta through its voting interest in Vedanta and its remaining
representation on Vedanta's Board of Directors. However, the Group only holds
convertible preferred shares in Vedanta that do not provide their holders with
access to returns associated with a residual equity interest, and as such are
accounted for under IFRS 9 as investments held at fair value with changes in
fair value recorded in profit and loss. Under IFRS 9, the preferred share
investments are categorized as debt instruments that are presented at fair
value through profit and loss because the amounts receivable do not represent
solely payments of principal and interest.
During the years ended December 31, 2024 and December 31, 2023, the Group
recognized losses of $2,990 and $6,303 for the changes in the fair value of
the investment in Vedanta that were included in gain/(loss) on investments
held at fair value within the Consolidated Statement of Comprehensive
Income/(Loss). The fair value of the Group's investment in Vedanta was $11,163
and $14,153 as of December 31, 2024 and 2023, respectively.
Karuna
Karuna was deconsolidated in March 2019. During 2019, Karuna completed its IPO
and the Group lost its significant influence in Karuna. The shares held in
Karuna were accounted for as an investment held at fair value under IFRS 9.
2022
On August 8, 2022, the Group sold 125,000 shares of Karuna common stock. In
addition, the Group wrote a series of call options entitling the holders
thereof to purchase up to 477,100 Karuna common stock at a set price, which
were exercised in full in August and September 2022. Aggregate proceeds to the
Group from all aforementioned transactions amounted to $115,457, net of
transaction fees. As a result of the aforementioned sales, the Group
recognized a loss of $29,303, attributable to the exercise of the
aforementioned call options, in realized gain/(loss) on sale of investment
within the Consolidated Statement of Comprehensive Income/(Loss).
2023
During the twelve months ended December 31, 2023, the Group sold 167,579
shares of Karuna common stock with aggregate proceeds of $33,309, net of
transaction fees. As of December 31, 2023, the Group held 886,885 shares, or
2.3%, of the total outstanding Karuna common stock with a fair value of
$280,708.
2024
In March 2024, the Group's common shares in Karuna were acquired by Bristol
Myers Squibb ("BMS") for $330 per share in accordance with the terms of a
definitive merger agreement signed in December 2023. As a result of this
transaction, the Group received total proceeds of $292,672 before income tax
in exchange for its holding of 886,885 shares of Karuna common stock.
During the years ended December 31, 2024, 2023, and 2022 the Group recognized
gains of $11,813, $107,079, and $134,952, respectively, for the changes in the
fair value of the Karuna investment that were included in gain/(loss) on
investments held at fair value within the Consolidated Statement of
Comprehensive Income/(Loss).
Vor
Vor was deconsolidated in February 2019. On February 9, 2021, Vor closed its
initial public offering. Subsequent to the closing, the Group held 3,207,200
shares of Vor common stock, representing 8.6% of Vor common stock.
In August and December 2022, the Group sold an aggregate of 535,400 shares of
Vor common stock for aggregate proceeds of $3,253.
During the years ended December 31, 2024, 2023 and 2022, the Group recognized
losses of $3,046, $11,756, and $16,247, respectively, for the changes in the
fair value of the investment that were included in gain/(loss) on investments
held at fair value within the Consolidated Statement of Comprehensive
Income/(Loss). The fair value of the Group's investment in Vor was $2,966 and
$6,012 as of December 31, 2024 and 2023, respectively.
Gelesis
Gelesis was deconsolidated in July 2019. The common stock held in Gelesis was
accounted for under the equity method, while the preferred shares and warrants
held by the Group fell under the guidance of IFRS 9 and were treated as
financial assets held at fair value, with changes to the fair value of the
instruments recorded through the Consolidated Statement of Comprehensive
Income/(Loss). Please refer to Note 6. Investments in Associates for
information regarding the Group's investment in Gelesis as an associate.
2022
On January 13, 2022, Gelesis completed its business combination with Capstar
Special Purpose Acquisition Corp ("Capstar"). As part of the business
combination, all shares in Gelesis, common and preferred, including the shares
held by the Group, were exchanged for common shares of the merged entity and
unvested common shares that will vest upon the stock price of the new combined
entity reaching certain target prices (hereinafter "Gelesis Earn-out Shares").
In addition, the Group invested $15,000 in the class A common shares of
Capstar as part of the Private Investment in Public Equity ("PIPE")
transaction that took place immediately prior to the closing of the business
combination and an additional $4,961, as part of the Backstop Agreement signed
with Capstar on December 30, 2021 (See Note 6. Investments in Associates).
Pursuant to the business combination, Gelesis became a wholly-owned subsidiary
of Capstar and Capstar changed its name to Gelesis Holdings, Inc., which began
trading on the New York Stock Exchange under the ticker symbol "GLS" on
January 14, 2022. The exchange of the preferred stock (including warrants) for
common stock (including common stock warrants) represents an additional
investment in Gelesis equity investment. The Group recorded the changes in
fair value of the preferred stock and warrants through the date of the
exchange upon which the preferred shares and warrants were derecognized and
recorded as an additional investment in Gelesis equity interest.
As part of the aforementioned exchange, the Group received 4,526,622 Gelesis
Earn-out Shares, which were valued on the date of the exchange at $14,214. The
Group accounted for such Gelesis Earn-out Shares under IFRS 9 as investments
held at fair value with changes in fair value recorded through profit and
loss.
2023
In February and May 2023, as part of Gelesis' issuance of senior secured
promissory notes to the Group, Gelesis also issued to the Group (i) warrants
to purchase 23,688,047 shares of Gelesis common stock with an exercise price
of $0.2744 per share (ii) warrants to purchase 192,307,692 shares of Gelesis
common stock at an exercise price of $0.0182 per share and (iii) warrants to
purchase 43,133,803 shares of Gelesis common stock at an exercise price of
$0.0142 per share. These warrants expire five years after issuance and are
collectively referred to as the Gelesis 2023 Warrants.
The Gelesis 2023 Warrants were recorded at their initial fair value of $1,121
and then subsequently re-measured to fair value through the profit and loss.
As Gelesis ceased operations in October 2023, the fair value of the Gelesis
2023 Warrants was $0 as of December 31, 2024 and 2023, respectively, and no
gain or loss was recognized in 2024. During the years ended December 31, 2023
and 2022, the Group recognized losses of $1,264 and $18,476, respectively,
related to the change in the fair value of these instruments that was included
in gain/(loss) on investments held at fair value within the Consolidated
Statement of Comprehensive Income/(Loss).
Sonde
On May 25, 2022, Sonde completed a Series B preferred share financing, which
resulted in the Group losing control over Sonde and the deconsolidation of
Sonde. Therefore, the results of operations of Sonde are included in the
Consolidated Financial Statements through the date of deconsolidation. See 8.
Gain/(loss) on Deconsolidation of Subsidiary.
Following deconsolidation, the Group had significant influence in Sonde
through its 48.2% voting interest in Sonde and its remaining representation on
Sonde's Board of Directors. The Group holds Preferred A-1, A-2 and B shares.
The Preferred A-1 shares have the same terms as common stock and provide their
shareholders with access to returns associated with a residual equity
ownership in Sonde. Consequently, the investment in Preferred A-1 shares is
accounted for under the equity method. The convertible Preferred A-2 and B
shares do not provide their shareholders with access to returns associated
with a residual equity interest and as such, are accounted for under IFRS 9 as
investments held at fair value with changes in fair value recorded in profit
and loss. Under IFRS 9, the A-2 and B preferred share investments are
categorized as debt instruments that are presented at fair value through
profit and loss because the amounts receivable do not represent solely
payments of principal and interest.
During the years ended December 31, 2024, 2023 and 2022, the Group recognized
a loss of $5,102, a loss of $994, and a gain of $235, respectively, for the
changes in the fair value of the investment in Sonde that were included in
gain/(loss) on investments held at fair value within the Consolidated
Statement of Comprehensive Income/(Loss). For the year ended December 31,
2024, the Group's recognized an additional loss of $5,307 on its investment in
Sonde's Preferred A-2 and B shares. The recognition of the additional loss
occurs because the Group's share of equity method losses, from applying the
equity method of accounting to its investment in Sonde's Preferred A-1 shares,
was greater than its equity method investment balance and because the Group's
investment in Sonde's Preferred A-2 and B shares represents a long-term
interest. The additional loss of $5,307 is included in share of net income /
(loss) of associates accounted for using the equity method within the
Consolidated Statement of Comprehensive Income/(Loss). The fair value of the
Group's investment in Sonde's Preferred A-2 and B shares was $0 and $10,408 as
of December 31, 2024 and 2023, respectively.
Akili
Akili was deconsolidated in 2018. At time of deconsolidation, the Group did
not hold common shares in Akili and the preferred shares it held did not have
equity-like features. Therefore, the preferred shares held by the Group fell
under the guidance of IFRS 9 and were treated as a financial asset held at
fair value and changes to the fair value of the preferred shares were recorded
through the Consolidated Statement of Comprehensive Income/(Loss), in
accordance with IFRS 9.
2022
On August 19, 2022, Akili Interactive merged with Social Capital Suvretta
Holdings Corp. I, a special purpose acquisition company. The combined
company's securities began trading on August 22, 2022 on the Nasdaq Stock
Market under the ticker symbol "AKLI". As part of this transaction, the Akili
Interactive shares held by the Group were exchanged for the common stock of
the combined company's securities as well as unvested common stock ("Akili
Earnout Shares") that will vest when the share price exceeds certain
thresholds. In addition, as part of a PIPE transaction that took place
concurrently with the closing of the transaction, the Group purchased 500,000
shares for a total consideration of $5,000. Following the closing of the
aforementioned transactions, the Group held 12,527,476 shares of the combined
entity and 1,433,914 Akili Earn-out Shares, with a total fair value of $15,102
as of December 31, 2022.
2024
On July 2, 2024, Akili was acquired by Virtual Therapeutics, and the Group
received total proceeds of $5,437 before income taxes in exchange for its
holding of 12,527,476 shares of Akili common stock. As a result, the Group no
longer holds any ownership interests in Akili.
During the years ended December 31, 2024, 2023 and 2022, the Group recognized
losses of $985, $8,681, and $131,419, respectively, for the changes in the
fair value of the investment in Akili that were included in gain/(loss) on
investments held at fair value within the Consolidated Statement of
Comprehensive Income/(Loss).
Seaport
On October 18, 2024, Seaport Therapeutics, Inc. ("Seaport") completed a Series
B preferred share financing, which resulted in the Group's voting interest
being below 50% and the Group losing control over Seaport Board of Directors.
Consequently, the Group no longer had the power to direct the relevant Seaport
activities. As a result, Seaport was deconsolidated on this date and its
results of operations are included in the Consolidated Financial Statements
through the date of deconsolidation. See Note 8. Gain/(loss) on
Deconsolidation of Subsidiary. Following deconsolidation, the Group still has
significant influence in Seaport through its voting interest in Seaport and
its remaining representation on Seaport's Board of Directors. The Group also
has an investment held at fair value in Seaport through its ownership of
Seaport's Series A-1, A-2 and B convertible preferred shares. The Group's
preferred shares do not provide their shareholders with access to returns
associated with a residual equity interest and as such, are accounted for
under IFRS 9 as investments held at fair value with changes in fair value
recorded in profit and loss. Under IFRS 9, the preferred share investments are
categorized as debt instruments that are presented at fair value through
profit and loss because the amounts receivable do not represent solely
payments of principal and interest.
As of October 18, 2024, the closing date of the Series B preferred share
financing, the Group owns 3,031,578 of Series B preferred stock, 8,421,052 of
Series A-2 preferred stock, and 40,000,000 of Series A-1 preferred stock.
These preferred shares had a fair value of $179,248 and $177,288 as of October
18, 2024 and December 31, 2024, respectively.
The fair value of the preferred shares is determined by management using a
valuation model that utilizes both the market backsolve and
probability-weighted expected return methods. The valuation of the investment
is categorized as Level 3 in the fair value hierarchy due to the use of
significant unobservable inputs, which have a significant effect on the
valuation. The significant assumptions in the valuation include the estimated
equity value of Seaport, the probability of Seaport entering into an initial
public offering and achieving a certain clinical trial development milestone,
and the estimated time to liquidity.
During the year ended December 31, 2024, the Group recognized a loss of $1,960
for the changes in the fair value of the investment in Seaport that were
included in gain/(loss) on investments held at fair value within the
Consolidated Statement of Comprehensive Income/(Loss).
6. Investments in Associates
Gelesis (Boston, MA)
Gelesis was founded by the Group and raised funding through preferred shares
financings as well as issuances of warrants and loans. As of July 1, 2019,
Gelesis was deconsolidated from the Group's financial statements. Upon
deconsolidation, the preferred shares and warrants held by the Group fell
under the guidance of IFRS 9 Financial Instruments and were treated as
financial assets held at fair value and the investment in common shares of
Gelesis was subject to IAS 28 Investment in Associates as the Group had
significant influence over Gelesis.
Backstop agreement - 2022 and 2021
On December 30, 2021, the Group signed an agreement (the "Backstop Agreement")
with Capstar and had committed to acquire Capstar class A common shares at $10
per share immediately prior to the closing of the business combination between
Gelesis and Capstar, in case, the Available Funds, as defined in the
agreement, were less than $15,000. According to the Backstop Agreement, if the
Group had to acquire any shares under the agreement, the Group would receive
an additional 1,322,500 class A common shares of Capstar at no additional
consideration.
The Group determined that such agreement meets the definition of a derivative
under IFRS 9 and as such, should be recorded at fair value with changes in
fair value recorded through profit and loss. The derivative was initially
recorded at fair value adjusted to defer the day 1 gain equal to the
difference between the fair value of $11,200 and transaction price of zero on
the effective date of the Backstop Agreement and as such, was initially
recorded at zero. The deferred gain was amortized over the period from the
effective date until the settlement date, January 13, 2022. During the years
ended December 31, 2022 and 2021, the Group recognized income of $10,400 and
$800, respectively, for the amortization of the deferred gain. During the year
ended December 31, 2022, the Group recognized a loss of $2,776 in respect of
the decrease in the fair value of the derivative until the settlement date,
resulting in a net gain of $7,624 recorded during the year ended December 31,
2022 in respect of the Backstop Agreement. The gain was included in other
Income/(expense) in the Consolidated Statement of Comprehensive Income/(Loss).
The fair value of the derivative on the settlement date in the amount of
$8,424 represents an additional investment in Gelesis as part of the SPAC
transaction described below.
On January 13, 2022, as part of the conclusion of the aforementioned Backstop
Agreement, the Group acquired 496,145 class A common shares of Capstar for
$4,961 and received an additional 1,322,500 class A common shares of Capstar
for no additional consideration.
2022
Share exchange - Capstar
On January 13, 2022, Gelesis completed its business combination with Capstar.
As part of the business combination, all shares in Gelesis, common and
preferred, including the shares held by the Group, were exchanged for common
shares of the merged entity and unvested common shares that will vest upon the
stock price of the new combined entity reaching certain target prices (the
"Gelesis Earn-out Shares"). In addition, the Group invested $15,000 in the
class A common shares of Capstar as part of the PIPE transaction that took
place immediately prior to the closing of the business combination and an
additional $4,961, as part of the Backstop Agreement described above. Pursuant
to the business combination, Gelesis became a wholly-owned subsidiary of
Capstar and Capstar changed its name to Gelesis Holdings, Inc., which began
trading on the New York Stock Exchange under the ticker symbol "GLS" on
January 14, 2022. Following the closing of the business combination, the PIPE
transaction, the settlement of the aforementioned Backstop Agreement with
Capstar, and the exchange of all preferred shares in Gelesis to common shares
in the new combined entity, the Group holds 16,727,582 common shares of
Gelesis Holdings Inc., which was equal to approximately 23.2% of Gelesis
Holdings Inc's outstanding common shares at the time of the exchange. Due to
the Group's significant equity holding and voting interest in Gelesis, the
Group continued to maintain significant influence in Gelesis and as such,
continued to account for its Gelesis equity investment under the equity
method.
Gelesis was deemed to be the acquirer in Gelesis Holdings Inc. and the
financial assets and financial liabilities in Capstar were deemed to be
acquired by Gelesis in consideration for the shares held by Capstar legacy
shareholders. As such, the Group did not revalue the retained investment in
Gelesis but rather treated the exchange as a dilution of its equity interest
in Gelesis from 42.0% as of December 31, 2021 to 22.8% as of January 13, 2022
(including warrants that provide its holders access to returns associated with
equity holders). After considering the aforementioned additional investments,
the exchange of the preferred stock, previously accounted for as an investment
held at fair value, to common stock (and representing an additional equity
investment in Gelesis), the earn-out shares received in Gelesis (see Note 5.
Investments Held at Fair Value) and the offset of previously unrecognized
equity method losses, the net gain recorded on the dilution of interest
amounted to $28,255.
Impairment
Following Gelesis' decline in its market price in 2022 and its lack of
liquidity, the Group recorded an impairment loss of $8,390 as of December 31,
2022 in respect of its investment in Gelesis. The recoverable amount of the
investment in Gelesis was $4,910 as of December 31, 2022, which was determined
based on fair value less costs to sell (which were estimated to be
insignificant). Fair value was determined based on level 1 of the fair value
hierarchy as Gelesis shares were traded on an active market as of December 31,
2022.
The impairment loss was presented separately in the Consolidated Statement of
Comprehensive Income/(loss) for the year ended December 31, 2022 in the line
item impairment of investment in associates.
2023
During the year ended December 31, 2023, the Group entered into agreements
with Gelesis to purchase senior secured convertible promissory notes and
warrants for shares of Gelesis common stock (see Note 7. Investment in Notes
from Associates). The warrants to purchase shares of Gelesis common stock
represented potential voting rights to the Group and it was therefore
necessary to consider whether they were substantive. If these potential voting
rights were substantive and the Group had the practical ability to exercise
the rights and take control of greater than 50% of Gelesis common stock, the
Group would be required to consolidate Gelesis under the accounting standards.
In February 2023, the Group obtained warrants to purchase 23,688,047 shares of
Gelesis common stock (the "February Warrants") at an exercise price of $0.2744
per share. The exercise of the February Warrants was subject to the approval
of the Gelesis stockholders until May 1, 2023. On May 1, 2023, stockholder
approval was no longer required for the Group to exercise the February
Warrants. The potential voting rights associated with the February Warrants
were not substantive as the exercise price of the February Warrants was at a
significant premium to the fair value of the Gelesis common stock.
In May 2023, the Group obtained warrants to purchase 235,441,495 shares of
Gelesis common stock (the "May Warrants"). The May Warrants were exercisable
at the option of the Group and had an exercise price of either $0.0182 or
$0.0142. The May Warrants were substantive as the Group would have benefited
from exercising such warrants since their exercise price was at the money or
at an insignificant premium over the fair value of the Gelesis common stock.
However, that benefit from exercising the May Warrants only existed for a
short period of time because in June 2023, the potential voting rights
associated with the May Warrants were impacted by the terms and conditions of
a merger agreement that the Group signed with Gelesis on June 12, 2023 (the
"Merger Agreement") and were no longer substantive.
On October 12, 2023, the Group terminated the Merger Agreement with Gelesis as
certain closing conditions were not satisfied. In October 2023, Gelesis ceased
operations and filed a voluntary petition for relief under the provisions of
Chapter 7 of Title 11 of the United States Bankruptcy Code. A Chapter 7
trustee has been appointed by the Bankruptcy Court who has control over the
assets and liabilities of Gelesis, effectively eliminating the authority and
powers of the Board of Directors of Gelesis and its executive officers to act
on behalf of Gelesis. The assets of Gelesis are in liquidation and Gelesis no
longer has any officers or employees. The Group ceased accounting for Gelesis
as an equity method investment as it no longer has significant influence in
Gelesis.
During the year ended December 31, 2023, the Group recorded $4,910 as its
share in the losses of Gelesis and the Group's balance in this equity method
investment was zero as of December 31, 2024 and 2023, respectively.
Sonde (Boston, MA)
On May 25, 2022, Sonde completed a Series B preferred share financing. As a
result of the aforementioned financing, the Group's voting interest was
reduced below 50% and the Group lost its control over Sonde, and as such,
ceased to consolidate Sonde on the date the round of financing was completed.
See Note 8. Gain/(loss) on Deconsolidation of Subsidiary.
Following deconsolidation, the Group has significant influence in Sonde
through its voting interest in Sonde and its remaining representation on
Sonde's Board of Directors. The Group's voting interest at the date of
deconsolidation was 48.2% and remained at 40.2% subsequently. The Group holds
Preferred A-1, A-2 and B shares. The Preferred A-1 shares, in substance, have
the same terms as common stock and as such, provide their shareholders with
access to returns associated with a residual equity ownership in Sonde.
Consequently, the investment in Preferred A-1 shares is accounted for under
the equity method. The Preferred A-2 and B shares, however, do not provide
their shareholders with access to returns associated with a residual equity
interest and as such, are accounted for under IFRS 9, as investments held at
fair value.
The fair value of the Preferred A-1 shares on the date of deconsolidation
amounted to $7,716, which is the initial value of the equity method investment
in Sonde.
During the years ended December 31, 2024, 2023, and 2022, the Group recorded a
loss of $8,492, $1,052 and $3,443, respectively, related to Sonde's equity
method of accounting.
As of December 31, 2023, the equity method investment in Sonde had a balance
of $3,185. The Group's share in Sonde's losses in 2024 exceeded the Group's
equity method investment in Sonde. As a result, the Group's equity method
investment in Sonde is reduced to $0 as of December 31, 2024. Since the
Group's investment in Sonde's Preferred A-2 and B shares represents a
long-term interest, the Group recognized additional equity method loses,
totaling $5,307, against its investment in Sonde's Preferred A-2 and B shares
(See Note 5. Investments Held at Fair Value), reducing the balance of the
preferred share investment to $0 as of December 31, 2024. Since the Group did
not incur legal or constructive obligations or made payments on behalf of
Sonde, the Group stopped recognizing additional equity method losses in 2024.
As of December 31, 2024, unrecognized equity method losses amounted to
$14,447.
Seaport (Boston, MA)
On October 18, 2024, Seaport completed a Series B preferred share financing.
As a result of this financing, the Group's voting interest was reduced below
50%, and the Group no longer controls Seaport's Board of Directors.
Consequently, the Group lost control over Seaport, and as such, ceased to
consolidate Seaport on the date the round of financing was completed. See Note
8. Gain/(loss) on Deconsolidation of Subsidiary.
Following deconsolidation, the Group still has significant influence in
Seaport through its voting interest in Seaport and its remaining
representation on Seaport's Board of Directors. The Group's voting interest as
of the date of deconsolidation and as of December 31, 2024 was 43.0% and
42.9%, respectively. The Group holds both common shares and preferred shares
in Seaport. The common shares are subject to IAS 28 Investment in Associates
and Joint Ventures due to the Group's retained significant influence and are
accounted for under the equity method. The preferred shares do not provide
their shareholders with access to returns associated with a residual equity
interest and as such, are accounted for under IFRS 9 as investments held at
fair value.
The fair value of the common shares on the date of deconsolidation amounted to
$2,461, which is the initial value of the equity method investment in Seaport.
When applying the equity method, the Group records its share of the losses in
Seaport based on its common share equity interest in Seaport, which was 13.1%
as of December 31, 2024. During the year ended December 31, 2024, the Group
recorded a loss of $262 related to Seaport's equity method of accounting and a
gain of $199 for the dilution of ownership interest. As of December 31, 2024,
the Seaport equity method investment had a balance of $2,397.
The following table provides summarized financial information for Seaport, the
Group's material associate for the year ended December 31, 2024. The
information disclosed reflects the amounts presented in the financial
statements of Seaport and not the Group's share of those amounts. The amounts
have been amended to reflect adjustments made by the Group when using the
equity method, including fair value adjustments and modifications for
differences in accounting policies.
As of December 31, 2024
Summarized statement of financial position $
Current assets 310,151
Non-current assets 5,632
Current liabilities (11,149)
Non-current liabilities (460,996)
Equity awards issued to third parties (2,042)
Net assets / (liabilities) (158,405)
Reconciliation to carrying amounts:
Opening net assets/(liabilities) (156,414)
Profit/(loss) for the period (1,991)
Other comprehensive income / (loss) -
Dividends paid -
Closing net assets / (liabilities) (158,405)
Group's share in % 13.1 %
Group's share of net assets (net deficit) (20,764)
Unrecognized goodwill and intangibles 23,162
Carrying amount of Investment in associates 2,397
2024
Statement of comprehensive income/(loss)
Revenue -
Profit /(loss) from continuing operations (100%) (1,991)
Profit /(loss) for the year (1,991)
Other comprehensive income / (loss) -
Total comprehensive income/ (loss) (1,991)
Dividends received from associate -
Group's share in gain (net losses) (262)
The following table summarizes the activities related to the investment in
associates balance for the years ended December 31, 2024 and 2023.
Investment in Associates $
Balance as of January 1, 2023 9,147
Share in net loss of associates (6,055)
Share in other comprehensive loss of associates 92
Balance as of December 31, 2023 and January 1, 2024 3,185
Investment in Seaport - deconsolidation 2,461
Gain on dilution of interest in associate 199
Share in gain/(loss) of associates (8,754)
Share of losses recorded against long-term Interests (LTIs) 5,307
Balance as of December 31, 2024 2,397
7. Investment in Notes from Associates
Gelesis
On July 27, 2022, the Group, as a lender, entered into an unsecured promissory
note (the "Junior Note") with Gelesis, as a borrower, in the amount of
$15,000. The Junior Note bears an annual interest rate of 15% per annum. The
maturity date of the Junior Note is the earlier of December 31, 2023 or five
business days following the consummation of a qualified financing by Gelesis.
Based on the terms of the Junior Note, due to the option to convert to a
variable amount of shares at the time of default, the Junior Note is required
to be measured at fair value with changes in fair value recorded through
profit and loss.
During the year ended December 31, 2023, the Group entered into multiple
agreements with Gelesis to purchase senior secured convertible promissory
notes (the "Senior Notes") and warrants for share of Gelesis common stock for
a total consideration of $11,850. The Senior Notes are secured by a
first-priority lien on substantially all assets of Gelesis and the guarantors
(other than the equity interests in, and assets held by Gelesis s.r.l., a
subsidiary of Gelesis, and certain other exceptions). The initial fair value
of the Senior Notes and warrants was determined to be $10,729 and $1,121,
respectively. The Senior Notes represent debt instruments that are presented
at fair value through profit and loss as the amounts receivable do not solely
represent payments of principal and interest as the Senior Notes are
convertible into Gelesis common stock.
In October 2023, Gelesis ceased operations and filed a voluntary petition for
relief under the provisions of Chapter 7 of Title 11 of the United States
Bankruptcy Code. Therefore, the Group determined that the fair value of the
Junior Note and the Senior Notes with the warrants was $0 as of December 31,
2023.
In June 2024, the Bankruptcy Court approved an executed agreement for a third
party to acquire the remaining net assets of Gelesis for $15,000. As the only
senior secured creditor, the Group is expected to receive a majority of the
proceeds from this sale after deduction of Bankruptcy Court related legal and
administrative costs in 2025. As of December 31, 2024 , these notes were
determined to have a fair value of $11,381.
For the years ended December 31, 2024 and 2023, the Group recorded a gain of
$11,381 and a loss of $27,230, respectively, for the changes in the fair value
of these notes, which were included in gain/(loss) on investments in notes
from associates in the Consolidated Statement of Comprehensive Income/(Loss).
Vedanta
On April 24, 2023, Vedanta closed the second tranche of its convertible debt
for additional proceeds of $18,000, of which $5,000 were invested by the
Group. The convertible debt carries an interest rate of 9% per annum. The debt
has various conversion triggers, and the conversion price is established at
the lower of 80% of the equity price of the last financing round, or a certain
pre-money valuation cap established in the agreement. If the convertible debt
is not earlier converted or repaid, the entire outstanding amount of the
convertible debt shall be due and payable upon the earliest to occur of (a)
the later of (x) November 1, 2025 and (y) the date which is sixty (60) days
after all amounts owed under, or in connection with, the loan Vedanta received
from a certain investor have been paid in full, or (b) the consummation of a
Deemed Liquidation Event (as defined in Vedanta's Amended and Restated
Certificate of Incorporation).
Due to the terms of the convertible debt, the investment in such convertible
debt is measured at fair value with changes in the fair value recorded through
profit and loss. As of December 31, 2024 and 2023, the Vedanta convertible
debt was determined to have a fair value of $6,350 and $4,600, respectively.
During the year ended December 31, 2024 and December 31, 2023 Group recorded a
gain of $1,750 and a loss of $400, respectively, for the changes in the fair
value of the Vedanta convertible debt, which were included in gain/(loss) on
investments in notes from associates in the Consolidated Statement of
Comprehensive Income/(Loss).
The following is the activity in respect of investments in notes from
associates during the period. The fair value of the notes from associates of
$17,731 and $4,600 as of December 31, 2024 and 2023, respectively, is
determined using unobservable Level 3 inputs. See Note 19. Financial
Instruments for additional information.
Investment in notes from associates $
Balance as of January 1, 2023 16,501
Investment In Gelesis Notes 10,729
Investment in Vedanta convertible debt 5,000
Changes in the fair value of the notes (27,630)
Balance as of December 31, 2023 and January 1, 2024 4,600
Changes in the fair value of the notes 13,131
Balance as of December 31, 2024 17,731
8. Gain/(loss) on Deconsolidation of Subsidiary
Upon the Group losing control over a subsidiary, the assets and liabilities of
the subsidiary are derecognized along with any related non-controlling
interest. Any interest that the Group retains in the former subsidiary is
measured at fair value when control is lost. Any resulting gain or loss is
included in gain/(loss) on deconsolidation of subsidiary in the Consolidated
Statement of Comprehensive Income/(Loss).
Sonde
On May 25, 2022, Sonde completed a Series B preferred share financing and
amended its Voting Agreement to grant the Series B preferred stockholders
representation on Sonde's Board of Directors. As a result of the Series B
preferred share financing and the amendment to the Voting Agreement, the
Group's voting interest was reduced below 50%, and the Group no longer
controls Sonde's Board of Directors, which is the governance body that has the
power to direct the relevant activities of Sonde. Consequently, the Group
concluded that it lost control over Sonde, and therefore, Sonde was
deconsolidated on May 25, 2022 from the Group's Consolidated Financial
Statements. The results of Sonde's operations are included in the Group's
Consolidated Financial Statements through the date of deconsolidation.
Following deconsolidation, the Group has significant influence over Sonde
through its voting interest in Sonde and its remaining representation on
Sonde's Board of Directors. The Group holds Preferred A-1, A-2 and B shares.
The Preferred A-1 shares have the same terms as common stock and provide their
shareholders with access to returns associated with a residual equity
ownership in Sonde. Consequently, the investment in Preferred A-1 shares is
accounted for under the equity method. The convertible Preferred A-2 and B
shares do not provide their shareholders with access to returns associated
with a residual equity interest, and, as such, are accounted for under IFRS 9,
as investments held at fair value with changes in fair value recorded in
profit and loss. Under IFRS 9, the investments in Preferred A-2 and B shares
are categorized as debt instruments that are presented at fair value through
profit and loss because the amounts receivable do not represent solely
payments of principal and interest.
Upon deconsolidation, the Group derecognized the assets, liabilities and
non-controlling interest in respect of Sonde and recorded its aforementioned
investment in Sonde at fair value. The deconsolidation resulted in a gain of
$27,251. As of the date of deconsolidation, the investment in Sonde
convertible preferred shares amounted to $18,848.
As of December 31, 2024 and 2023, the Group's investment in Sonde's
convertible preferred shares held at fair value was $0 and $10,408,
respectively, and categorized as Level 3 in the fair value hierarchy.
Vedanta
On March 1, 2023, Vedanta issued convertible debt to a syndicate of investors.
The Group did not participate in this round of financing. As part of the
issuance of the debt, the convertible debt holders were granted representation
on Vedanta's Board of Directors, and the Group lost control over the Vedanta
Board of Directors, which is the governance body that has the power to direct
the relevant activities of Vedanta. Consequently, Vedanta was deconsolidated
on March 1, 2023 from the Group's Consolidated Financial Statements. The
results of Vedanta's operations are included in the Group's Consolidated
Financial Statements through the date of deconsolidation.
Following deconsolidation, the Group has significant influence over Vedanta
through its voting interest in Vedanta and its remaining representation on
Vedanta's Board of Directors. The Group only holds convertible preferred
shares in Vedanta that do not provide their holders with access to returns
associated with a residual equity interest, and as such, are accounted for
under IFRS 9, Financial Instruments, as investments held at fair value with
changes in fair value recorded in profit and loss. Under IFRS 9, the Group's
preferred share investment is categorized as a debt instrument that is
presented at fair value through profit and loss because the amounts receivable
does not represent solely payments of principal and interest.
Upon deconsolidation, the Group derecognized the assets, liabilities and
non-controlling interest in respect of Vedanta and recorded its aforementioned
investment in Vedanta at fair value. The deconsolidation resulted in a gain of
$61,787. As of the date of deconsolidation, the investment in Vedanta
convertible preferred shares held at fair value amounted to $20,456.
As of December 31, 2024 and 2023, the Group's investment in Vedanta
convertible preferred shares is held at fair value of $11,163 and $14,153,
respectively, and categorized as Level 3 in the fair value hierarchy. The
significant unobservable inputs used in the fair value measurement of the
Group's investment in the convertible preferred shares of Vedanta and the
sensitivity of the fair value measurement to changes in these significant
unobservable inputs are disclosed in Note 19. Financial Instruments.
Seaport
On October 18, 2024, Seaport completed a Series B preferred share financing
and amended its Voting Agreement to grant the Series B preferred stockholders'
representation on Seaport's Board of Directors. As a result of the Series B
preferred share financing and the amendments to the Voting Agreement, the
Group's voting interest was reduced below 50%, and the Group no longer
controls Seaport's Board of Directors, which is the governance body that has
the power to direct the relevant activities of Seaport. Therefore, the Group
concluded that it lost control over Seaport, and Seaport was deconsolidated on
October 18, 2024 from the Group's Consolidated Financial Statements. The
results of Seaport's operations are included in the Group's Consolidated
Financial Statements through the date of deconsolidation.
Following deconsolidation, the Group has significant influence over Seaport
through its voting interest in Seaport and its remaining representation on
Seaport's Board of Directors. The Group holds Preferred A-1, A-2 and B shares
in addition to common shares. The common shares are accounted for under the
equity method as prescribed by IAS 28, Investments in Associates and Joint
Ventures. The Preferred A-1, A-2 and B shares do not provide their
shareholders with access to returns associated with a residual equity
interest, and, as such, are accounted for under IFRS 9, Financial Instruments,
as investments held at fair value with changes in fair value recorded in
profit and loss. Under IFRS 9, the A-1, A-2 and B preferred share investments
are categorized as debt instruments that are presented at fair value through
profit and loss because the amounts receivable do not represent solely
payments of principal and interest.
Upon deconsolidation, the Group derecognized the assets, liabilities and
non-controlling interest in respect of Seaport and recorded its aforementioned
investment in Seaport at fair value. The deconsolidation resulted in a gain of
$151,808.
As of December 31, 2024, the Group's investment in Seaport's convertible
preferred shares is held at fair value of $177,288 and is categorized as Level
3 in the fair value hierarchy. The significant unobservable inputs used in the
fair value measurement of the Group's investment in the convertible preferred
shares of Seaport and the sensitivity of the fair value measurement to changes
to these significant unobservable inputs are disclosed in Note 19. Financial
Instruments.
The following table summarizes the assets, liabilities and non-controlling
interest of Seaport, Vedanta and Sonde derecognized from the Group in the
years ended December 31, 2024, 2023 and 2022, respectively.
2024 2023 2022
$ $ $
Assets, Liabilities and non-controlling interests in deconsolidated subsidiary Seaport Vedanta Sonde
Cash and cash equivalents (91,570) (13,784) (479)
Trade and other receivables (220) (702) -
Prepaid assets (1,309) (3,516) -
Property and equipment, net (175) (8,092) -
Right of use asset, net - (2,477) -
Trade and other payables 6,102 15,078 1,407
Trade and other payables due to PureTech 3,370 139 -
Deferred revenue - 1,902 -
Lease liabilities (including current portion) - 4,146 -
Long-term loan (including current portion) - 15,446 -
Subsidiary notes payable - - 3,403
Subsidiary preferred shares and warrants 76,208 24,568 15,853
Other assets and liabilities, net (475) (462) 123
Sub-total (net assets)/liabilities (8,070) 32,246 20,307
Derecognize carrying value of non-controlling interest (7,430) 9,085 (11,904)
Recognize investment retained in deconsolidated subsidiary at fair value* 167,308 20,456 18,848
Calculated gain on deconsolidation 151,808 61,787 27,251
* Recognized investment in 2024 includes preferred shares held at fair
value of $164,848 and common stock accounted for under the equity method with
a fair value of $2,461.
9. Operating Expenses
Total operating expenses were as follows:
For the years ended December 31, 2024 2023 2022
$ $ $
General and administrative 71,469 53,295 60,991
Research and development 69,454 96,235 152,433
Total operating expenses 140,923 149,530 213,425
The average number of persons employed by the Group during the year, analyzed
by category, was as follows:
For the years ended December 31, 2024 2023 2022
General and administrative 39 40 57
Research and development 41 56 144
Total 80 96 201
The aggregate payroll costs of these persons were as follows:
2024 2023 2022
$ $ $
For the years ended December 31,
General and administrative 40,559 24,586 25,322
Research and development 15,023 21,102 36,321
Total 55,581 45,688 61,643
Detailed operating expenses were as follows:
2024 2023 2022
$ $ $
For the years ended December 31,
Salaries and wages 29,032 37,084 41,750
Healthcare and other benefits 2,203 2,599 2,908
Payroll taxes 1,496 1,590 2,286
Share-based payments 22,850 4,415 14,699
Total payroll costs 55,581 45,688 61,643
Amortization 1,764 1,979 3,048
Depreciation 1,807 2,955 5,845
Total amortization and depreciation expenses 3,571 4,933 8,893
Other general and administrative expenses 27,491 25,180 31,600
Other research and development expenses 54,280 73,729 111,288
Total other operating expenses 81,771 98,909 142,888
Total operating expenses 140,923 149,530 213,425
Please refer to Note 10. Share-based Payments for further disclosures related
to share-based payments and Note 26. Related Parties Transactions for
management's remuneration disclosures.
Auditor's remuneration:
For the years ended December 31, 2024 2023 2022
$ $ $
Audit of these financial statements 2,377 2,241 1,716
Audit of the financial statements of subsidiaries - - 132
Audit of the financial statements of associate** 150 - 814
Audit-related assurance services* 316 445 1,157
Non-audit related services 6 9 -
Total 2,848 2,695 3,819
* 2024 and 2023 - this amount represents assurance service relating to SOX
controls work for purposes of the ICFR audit of Form 20-F
** The amounts include audit fees of $150 in respect of financial statements
of Seaport for the stub period after deconsolidation in 2024 and audit fees of
$720 in respect of financial statements of Gelesis for the year ended December
31, 2022. The 2022 fees are not included within the Consolidated Financial
Statements. These fees are disclosed as they went towards supporting the audit
opinion on the Group accounts.
10. Share-based Payments
Share-based payments includes stock options and restricted stock units
("RSUs"). Expense for stock options and time-based RSUs is recognized based on
the grant date fair value of these awards. Performance-based RSUs to
executives are treated as liability awards and the related expense is
recognized based on reporting date fair value up until settlement date.
Share-based Payment Expense
The Group's share-based payment expense for the years ended December 31, 2024,
2023 and 2022, was $22,850, $4,415, and $14,699, respectively. The following
table provides the classification of the Group's consolidated share-based
payment expense as reflected in the Consolidated Statement of Income/(Loss):
Year ended December 31, 2024 2023 2022
$ $ $
General and administrative 21,993 3,185 8,862
Research and development 857 1,230 5,837
Total 22,850 4,415 14,699
The Performance Share Plan
In June 2015, the Group adopted the Performance Stock Plan (the "2015 PSP").
Under the 2015 PSP and subsequent amendments, awards of ordinary shares may be
made to the Directors, senior managers and employees, and other individuals
providing services to the Group up to a maximum authorized amount of 10% of
the total ordinary shares outstanding.
In June 2023 the Group adopted a new Performance Stock Plan (the "2023 PSP")
that has the same terms as the 2015 PSP but instituted for all new awards a
limit of 10% of the total ordinary shares outstanding over a five-year period.
The awards granted under these plans have various vesting terms over a period
of service between one and four years, provided the recipient remains
continuously engaged as a service provider. The options awards expire 10 years
from the grant date.
The share-based awards granted under these plans are generally equity-settled
(see cash settlements below). As of December 31, 2024, the Group had issued
29,940,832 units of share-based awards under these plans.
RSUs
During the twelve months ended December 31, 2024 and 2023, the Group granted
the following RSUs to certain non-executive Directors, executives and
employees:
Twelve months ended December 31, 2024 2023
Time based RSUs 4,388,116 102,732
Performance based RSUs 1,822,151 3,576,937
Total RSUs 6,210,267 3,679,669
RSU activity for the years ended December 31, 2024, 2023 and 2022 is detailed
as follows:
Number of Shares/Units Weighted Average Grant Date Fair Value (GBP) (*)
Outstanding (Non-vested) at January 1, 2022 3,632,715 1.91
RSUs Granted in Period 4,309,883 1.76
Vested (696,398) 2.80
Forfeited (1,155,420) 2.67
Outstanding (Non-vested) at December 31, 2022 and January 1, 2023 6,090,780 1.74
RSUs Granted in Period 3,679,669 1.28
Vested (716,029) 2.00
Forfeited (1,880,274) 1.94
Outstanding (Non-vested) at December 31, 2023 and January 1, 2024 7,174,146 1.10
RSUs Granted in Period 6,210,267 1.63
Vested (1,347,729) 1.71
Forfeited (3,057,962) 1.75
Outstanding (Non-vested) at December 31, 2024 8,978,722 1.29
* For liability awards - based on fair value at reporting date or settlement
date.
Each RSU entitles the holder to one ordinary share on vesting and the RSU
awards are generally based on a vesting schedule over a one to three-year
requisite service period in which the Group recognizes compensation expense
for the RSUs. Following vesting, each recipient will be required to make a
payment of one pence per ordinary share on settlement of the RSUs.
RSUs granted to the non-executive directors and employees are time-based and
equity-settled. The grant date fair value on such RSUs is recognized over the
vesting term.
RSUs granted to executives are performance-based and vesting of such RSUs is
subject to the satisfaction of both performance and market conditions. The
performance condition is based on the achievement of the Group's strategic
targets. The market conditions are based on the achievement of the absolute
total shareholder return ("TSR"), TSR as compared to the FTSE 250 Index, and
TSR as compared to the MSCI Europe Health Care Index. The RSU award
performance criteria have changed over time as the criteria are continually
evaluated by the Group's Remuneration Committee.
The Group recognizes the estimated fair value of performance-based awards with
non-market conditions as share-based compensation expense over the performance
period based upon its determination of whether it is probable that the
performance targets will be achieved. The Group assesses the probability of
achieving the performance targets at each reporting period. Cumulative
adjustments, if any, are recorded to reflect subsequent changes in the
estimated outcome of performance-related conditions.
The fair value of the performance-based awards with market conditions is based
on the Monte Carlo simulation analysis utilizing a Geometric Brownian Motion
process with 100,000 simulations to value those shares. The model considers
share price volatility, risk-free rate and other covariance of comparable
public companies and other market data to predict distribution of relative
share performance.
The RSUs to executives are treated as liability awards as the Group has a
historical practice of settling these awards in cash, and as such adjusted to
fair value at every reporting date until settlement with changes in fair value
recorded in earnings as stock based compensation expense.
The Group recorded $4,388, $827, and $1,637, respectively, for the years ended
December 31, 2024, 2023 and 2022 in respect of all restricted stock units, of
which $909, $402, and $1,131, respectively, were in respect of liability
settled share-based awards.
As of December 31, 2024, the carrying amount of the RSU liability awards was
$3,736 with $1,875 current and $1,861 non current, out of which $1,875 related
to awards that have met all their performance and market conditions and were
settled in February, 2025. As of December 31, 2023, the carrying amount of the
RSU liability awards was $4,782 with $1,281 current and $3,501 non- current,
out of which $1,281 related to awards that met all their performance and
market conditions and were settled in March and May of 2024.
Stock Options
Stock option activity for the years ended December 31, 2024, 2023 and 2022, is
detailed as follows:
Number of Options Wtd Average Exercise Price (GBP) Wtd Average of Wtd Average Stock Price at Exercise (GBP)
remaining contractual
term (in years)
Outstanding at January 1, 2022 13,414,118 2.58 8.29
Granted 8,881,000 2.04
Exercised (577,022) 0.50 2.43
Forfeited and expired (3,924,215) 2.89
Options Exercisable at December 31, 2022 and January 1, 2023 6,185,216 2.03 6.21
Outstanding at December 31, 2022 and January 1, 2023 17,793,881 2.31 8.03
Granted 3,120,975 2.22
Exercised (534,034) 1.71 2.46
Forfeited and expired (3,424,232) 2.40
Options Exercisable at December 31, 2023 and January 1, 2024 9,065,830 2.19 6.01
Outstanding at December 31, 2023 and January 1, 2024 16,956,590 2.29 7.20
Granted 2,665,875 1.87
Exercised (412,729) 1.73 2.2
Forfeited and expired (4,725,746) 2.24
Options Exercisable at December 31, 2024 9,534,400 2.33 4.45
Outstanding at December 31, 2024 14,483,990 2.25 5.87
The fair value of the stock options awarded by the Group was estimated on the
grant date using the Black-Scholes option valuation model, considering the
terms and conditions upon which options were granted, with the following
weighted-average assumptions:
At December 31, 2024 2023 2022
Expected volatility 44.76 % 43.69 % 41.70 %
Expected terms (in years) 6.16 6.16 6.11
Risk-free interest rate 4.31 % 4.04 % 2.13 %
Expected dividend yield - - -
Exercise price (GBP) 1.87 2.22 2.04
Underlying stock price (GBP) 1.87 2.22 2.04
Expected volatility is based the Group's historical volatility results.
These assumptions resulted in an estimated weighted-average grant-date fair
value per share of stock options granted during the years ended December 31,
2024, 2023 and 2022 of $1.18 ,$1.37 and $1.15, respectively.
The Group incurred share-based payment expense for the stock options of
$1,092, $3,310 and $8,351 for the years ended December 31, 2024, 2023 and
2022, respectively.
For shares outstanding as of December 31, 2024, the range of exercise prices
is detailed as follows:
Range of Exercise Prices (GBP) Options Wtd Wtd Average of
Outstanding Average remaining contractual
Exercise term (in years)
Price (GBP)
0.01 89,845 - 4.75
1.00 to 2.00 6,133,522 1.63 6.03
2.00 to 3.00 4,823,373 2.25 6.39
3.00 to 4.00 3,437,250 3.41 4.87
Total 14,483,990 2.25 5.87
Subsidiary Plans
For the years ended December 31, 2024, 2023 and 2022, the subsidiaries
incurred share-based payment expense of $17,372, $277 and $4,711,
respectively.
The share-based payment expense for the year ended December 31, 2024, is
primarily related to awards granted under the Seaport 2024 Equity Incentive
Plan (the "Seaport Plan") approved by the Seaport Board of Directors in 2024.
Seaport is deconsolidated from the Group's Consolidated Financial Statements
as of October 18, 2024. See Note 8. Gain/(loss) on Deconsolidation of
Subsidiary.
The options granted under the Seaport Plan are equity settled and expire 10
years from the grant date. Typically, the awards vest in four years but
vesting conditions can vary based on the discretion of Seaport's Board of
Directors. The estimated grant date fair value of the equity awards is
recognized as an expense over the awards' vesting periods. See tables below
for Seaport option-related activities.
Before its deconsolidation on October 18, 2024, Seaport granted 7,200,000
shares of restricted stock awards and restricted stock units to certain
officers and directors, of which 6,227,778 shares were fully vested as of the
deconsolidation date. The fair value of these awards was measured on the date
of grant at the estimated fair value of the Seaport common stock using the
market backsolve and probability adjusted expected return model. See Note 19.
Financial Instruments. The weighted average fair value of these awards was
$0.97. As the substantial majority of these awards were fully vested as of the
deconsolidation date, the stock-based compensation expense for these awards
was recognized in the Group's Consolidated Statement of Comprehensive
Income/(Loss) for the year ended December 31, 2024.
Seaport also granted options to its employees, officers and directors in 2024.
The fair value of the stock options awarded by Seaport was estimated on the
grant date using the Black-Scholes option valuation model. The weighted
average fair value of these awards was $0.92.
A summary of stock option activity by number of shares in these subsidiaries
is presented in the following table:
Outstanding as of January 1, 2024 Granted During the Year Exercised During the Year Expired During the Year Forfeited During the Year Deconsolidation During the Year Outstanding as of December 31, 2024
Entrega 344,500 - - (5,000) (5,000) - 334,500
Seaport - 22,429,780 - - (29,018) (22,400,762) -
Outstanding as of January 1, 2023 Granted During the Year Exercised During the Year Expired During the Year Forfeited During the Year Deconsolidation During the Year Outstanding as of December 31, 2023
Entrega 344,500 - - - - - 344,500
Follica 2,776,120 - - (2,170,547) (605,573) - -
Vedanta 1,824,576 - - (1,313) (29,607) (1,793,656) -
Outstanding as of January 1, 2022 Granted During the Year Exercised During the Year Expired During the Year Forfeited During the Year Deconsolidation During the Year Outstanding as of December 31, 2022
Entrega 349,500 45,000 - (50,000) - - 344,500
Follica 2,686,120 90,000 - - - - 2,776,120
Sonde 2,049,004 - - - - (2,049,004) -
Vedanta 1,991,637 490,506 (400,000) (65,235) (192,332) - 1,824,576
The weighted-average exercise prices and remaining contractual life for the
options outstanding as of December 31, 2024, were as follows:
Outstanding at December 31, 2024 Number of options Weighted-average exercise price Weighted-average contractual life outstanding
$
Entrega 334,500 1.96 2.78
There were no grants in 2023 under any of the subsidiary option plans. The
weighted average exercise prices for the options granted for the years ended
December 31, 2024 and 2022, were as follows:
For the years ended December 31, 2024 2023 2022
$ $ $
Seaport 1.28 - -
Entrega - - 0.02
Follica - - 1.86
Vedanta - - 14.94
The weighted average exercise prices for options forfeited during the year
ended December 31, 2024, were as follows:
Forfeited during the year ended December 31, 2024 Number of options Weighted-average exercise price
$
Entrega 5,000 0.02
Seaport 29,018 0.97
The weighted average exercise prices for options exercisable as of December
31, 2024, were as follows:
Exercisable at December 31, 2024 Number of Options Weighted-average exercise price Exercise Price Range
$ $
Entrega 334,500 1.96 0.02-2.36
There were no subsidiary options exercised during the year ended December 31,
2024.
11. Finance Income/(Costs), net
The following table shows the breakdown of finance income and costs:
2024 2023 2022
$ $ $
For the years ended December 31,
Finance income
Interest income from financial assets 22,669 16,012 5,799
Total finance income 22,669 16,012 5,799
Finance costs
Contractual interest expense on notes payable (684) (1,422) (212)
Interest expense on other borrowings - (363) (1,759)
Interest expense on lease liability (1,295) (1,544) (1,982)
Gain on forgiveness of debt 273 - -
Gain/(loss) on foreign currency exchange (25) (94) 14
Total finance costs - contractual (1,731) (3,424) (3,939)
Gain/(loss) from changes in fair value of warrant liability - 33 6,740
Gain/(loss) from changes in fair value of preferred shares (8,108) 2,617 130,825
Gain/(loss) from changes in fair value of convertible debt - - (502)
Total finance income/(costs) - fair value accounting (8,108) 2,650 137,063
Total finance costs - non cash interest expense related to sale of future (8,058) (10,159) -
royalties
Finance income/(costs), net 4,773 5,078 138,924
12. Earnings/(Loss) per Share
Basic earnings/(loss) per share is calculated by dividing the Group's net
income or loss for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding, net of treasury
shares.
Diluted earnings/(loss) per share is calculated by dividing the Group's net
income or loss for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding, net of treasury
shares, plus the weighted average number of ordinary shares that would be
issued at conversion of all the dilutive potential ordinary shares into
ordinary shares. Dilutive effects arise from equity-settled shares from the
Group's share-based plans.
For the years ended December 31, 2023 and 2022, the Group incurred a net loss,
and therefore, all outstanding potential securities were considered
anti-dilutive. The amount of potential securities that were excluded from the
diluted calculation amounted to 1,509,900 and 3,134,131 shares, respectively.
Earnings/(Loss) Attributable to Owners of the Group:
2024 2023 2022
Basic $ Diluted $ Basic $ Diluted $ Basic $ Diluted $
Income/(loss) for the year, attributable to the owners of the Group 53,510 53,510 (65,697) (65,697) (50,354) (50,354)
Weighted-Average Number of Ordinary Shares:
2024 2023 2022
Basic Diluted Basic Diluted Basic Diluted
Issued ordinary shares at January 1, 271,853,731 271,853,731 278,566,306 278,566,306 287,796,585 287,796,585
Effect of shares issued & treasury shares purchased (17,397,423) (17,397,423) (2,263,773) (2,263,773) (3,037,150) (3,037,150)
Effect of dilutive shares - 1,571,612 - - - -
Weighted average number of ordinary shares at December 31, 254,456,308 256,027,920 276,302,533 276,302,533 284,759,435 284,759,435
Earnings/(Loss) per Share:
2024 2023 2022
Basic $ Diluted $ Basic $ Diluted $ Basic $ Diluted $
Basic and diluted earnings/(loss) per share 0.21 0.21 (0.24) (0.24) (0.18) (0.18)
13. Property and Equipment
Cost Laboratory and Manufacturing Equipment Furniture and Computer Equipment and Leasehold Improvements Construction in Total
$ Fixtures Software $ process $
$ $ $
Balance as of January 1, 2023 13,341 1,510 1,419 23,964 2,803 43,037
Additions, net of transfers - - - - 87 87
Disposals (2,886) - (137) - - (3,023)
Deconsolidation of subsidiaries (5,092) (438) (365) (8,799) (2,871) (17,565)
Reclassifications - - - - (18) (18)
Balance as of December 31, 2023 5,363 1,072 917 15,165 1 22,518
Additions, net of transfers 246 - 11 - - 256
Disposals/Impairment (2,215) - (387) - (1) (2,602)
Deconsolidation of subsidiaries (246) - (11) - - (256)
Reclassifications - - - - - -
Balance as of December 31, 2024 3,148 1,072 530 15,165 - 19,916
Accumulated depreciation and impairment loss Laboratory and Manufacturing Equipment Furniture and Computer Equipment and Leasehold Improvements Construction in Total
$ Fixtures Software $ process $
$ $ $
Balance as of January 1, 2023 (7,711) (875) (1,244) (10,250) - (20,080)
Depreciation (892) (162) (45) (1,856) - (2,955)
Disposals 543 - 38 - - 581
Deconsolidation of subsidiaries 3,917 339 357 4,858 - 9,472
Balance as of December 31, 2023 (4,142) (698) (894) (7,248) - (12,982)
Depreciation (139) (153) (13) (1,503) - (1,807)
Disposals 1,485 - 376 - - 1,861
Deconsolidation of subsidiaries 81 - - - - 81
Balance as of December 31, 2024 (2,715) (851) (530) (8,751) - (12,847)
Property and Equipment, net Laboratory and Manufacturing Equipment Furniture and Computer Equipment and Leasehold Improvements Construction in Total
$ Fixtures Software $ process $
$ $ $
Balance as of December 31, 2023 1,221 375 23 7,917 1 9,536
Balance as of December 31, 2024 433 221 - 6,414 - 7,069
Depreciation of property and equipment is included in the general and
administrative expenses and research and development expenses in the
Consolidated Statement of Comprehensive Income/(Loss). The Group recorded
depreciation expense of $1,807, $2,955 and $5,845 for the years ended December
31, 2024, 2023 and 2022, respectively.
14. Intangible Assets
Intangible assets consist of licenses of intellectual property acquired by the
Group through various agreements with third parties and are recorded at the
value of the consideration transferred. Information regarding the cost and
accumulated amortization of intangible assets is as follows:
Cost Licenses
$
Balance as of January 1, 2023 831
Additions 200
Write-off (105)
Deconsolidation of subsidiary (19)
Balance as of December 31, 2023 906
Write-off (80)
Deconsolidation of subsidiary (225)
Balance as of December 31, 2024 601
All the intangible asset licenses represent
in-process-research-and-development assets that are currently still being
developed and not ready for their intended use. As such, these assets are not
amortized but tested for impairment annually.
During the year ended December 31, 2024, the Group wrote off one of its
research intangible assets for which research was ceased in the amount of $80.
During the year ended December 31, 2024, Seaport Therapeutics, Inc. was
deconsolidated and as such, $225 in net intangible assets were derecognized.
During the year ended December 31, 2023, the Group wrote off two of its
research intangible assets for which research was ceased in the amount of
$105.
During the year ended December 31, 2023, Vedanta, Inc. was deconsolidated and
as such, $19 in net intangible assets were derecognized.
The Group tested all intangible assets for impairment as of the balance sheet
date and concluded that none of such assets were impaired.
15. Other Financial Assets
Other financial assets consist primarily of restricted cash reserved as
collateral against a letter of credit with a bank that is issued for the
benefit of a landlord in lieu of a security deposit for office space leased by
the Group. The restricted cash was $1,642 and $1,628 as of December 31, 2024
and 2023, respectively.
16. Equity
Total equity for the Group as of December 31, 2024, and 2023, was as follows:
December 31, 2024 December 31, 2023
$ $
Equity
Share capital, £0.01 par value, issued and paid 257,927,489 and 289,468,159 4,860 5,461
as of December 31, 2024 and 2023, respectively
Share premium 290,262 290,262
Treasury shares, 18,506,177 and 17,614,428 as of December 31, 2024 and 2023, (46,864) (44,626)
respectively
Merger Reserve 138,506 138,506
Translation reserve 182 182
Other reserves (4,726) (9,538)
Retained earnings/(accumulated deficit) 32,486 83,820
Equity attributable to owners of the Group 414,707 464,066
Non-controlling interests (6,774) (5,835)
Total equity 407,933 458,232
Shareholders are entitled to vote on all matters submitted to shareholders for
a vote. Each ordinary share is entitled to one vote and is entitled to receive
dividends when and if declared by the Group's Directors.
On June 18, 2015, the Group acquired the entire issued share capital of
PureTech LLC in return for 159,648,387 ordinary shares. This was accounted for
as a common control transaction at cost. It was deemed that the share capital
was issued in line with movements in share capital as shown prior to the
transaction taking place. In addition, the merger reserve records amounts
previously recorded as share premium.
Other reserves comprise the cumulative credit to share-based payment reserves
corresponding to share-based payment expenses recognized through Consolidated
Statement of Comprehensive Income/(Loss), settlements of vested stock awards
as well as other additions that flow directly through equity such as the
excess or deficit from changes in ownership of subsidiaries while control is
maintained by the Group.
On May 9, 2022, the Group announced the commencement of a $50,000 share
repurchase program (the "Program") of its ordinary shares of one pence each.
The Group executed the Program in two equal tranches. It entered into an
irrevocable non-discretionary instruction with Jefferies International Limited
("Jefferies") in relation to the purchase by Jefferies of the ordinary shares
for an aggregate consideration (excluding expenses) of no greater than $25,000
for each tranche and the simultaneous on-sale of such ordinary shares by
Jefferies to the Group, subject to certain volume and price restrictions.
In February 2024, the Group completed the Program and has repurchased an
aggregate of 20,182,863 ordinary shares under the Program. These shares have
been held as treasury shares and are being used to settle the vesting of
restricted stock units or exercise of stock options.
In March 2024, the Group announced a proposed capital return of $100,000 to
its shareholders by way of a tender offer (the "Tender Offer"). The proposed
Tender Offer was approved by shareholders at the Annual General Meeting of
Stockholders held on June 6, 2024, to acquire a maximum number of 33,500,000
ordinary shares (including ordinary shares represented by American Depository
Shares (''ADSs'')) for a fixed price of 250 pence per ordinary share
(equivalent to £25.00 per ADS) for a maximum aggregate amount of $100,000
excluding expenses.
The Tender Offer was completed on June 24, 2024. The Group repurchased
31,540,670 ordinary shares under the Tender Offer. Following such repurchase,
the Group cancelled these shares repurchased. As a result of the cancellation,
the nominal value of $600 related to the cancelled shares was reduced from
share capital and transferred to a capital redemption reserve, increasing the
capital redemption reserve balance to $600 which was included within other
reserves in the Consolidated Statement of Changes in Equity.
As of December 31, 2024 and December 31, 2023, the Group's issued share
capital was 257,927,489 shares and 289,468,159 shares, respectively, including
18,506,177 shares and 17,614,428 shares repurchased under the share repurchase
program, and were held by the Group in treasury, respectively. The Group does
not have a limited amount of authorized share capital.
17. Subsidiary Preferred Shares
Preferred shares issued by subsidiaries often contain redemption and
conversion features that are assessed under IFRS 9 in conjunction with the
host preferred share instrument. This balance represents subsidiary preferred
shares issued to third parties.
The subsidiary preferred shares are redeemable upon the occurrence of a
contingent event, other than full liquidation of the subsidiaries, that is not
considered to be within the control of the subsidiaries. Therefore, these
subsidiary preferred shares are classified as liabilities. These liabilities
are measured at fair value through profit and loss. The preferred shares are
convertible into ordinary shares of the subsidiaries at the option of the
holders and are mandatorily convertible into ordinary shares under certain
circumstances. Under certain scenarios, the number of ordinary shares
receivable on conversion will change and therefore, the number of shares that
will be issued is not fixed. As such, the conversion feature is considered to
be an embedded derivative that normally would require bifurcation. However,
since the subsidiary preferred share liability is measured at fair value
through profit and loss, as mentioned above, no bifurcation is required.
The preferred shares are entitled to vote with holders of common shares on an
as converted basis.
In April 2024, Seaport closed a Series A-2 preferred share financing with
aggregate proceeds of $100,100 of which $68,100 was from outside investors and
$32,000 was from the Group. The $68,100 received from the outside investors
was recorded as a subsidiary preferred share liability within the Group's
balance sheet. In October 2024, Seaport closed a Series B preferred share
financing with aggregate proceeds of $226,000 of which $211,600 was from
outside investors and $14,400 was from the Group. As a result of the Series B
preferred share financing, the Group lost control of Seaport, and the Group
derecognized the assets, liabilities and non-controlling interest in respect
of Seaport from its Consolidated Financial Statements. See Note 8. Gain/(loss)
on Deconsolidation of Subsidiary. As such, the balance of subsidiary preferred
share liability in Seaport is reduced to $0 upon deconsolidation.
The fair value of all subsidiary preferred shares as of December 31, 2024 and
December 31, 2023, is as follows:
2024 2023
$ $
Balance as of December 31, 2024 and December 31, 2023
Entrega 169 169
Total subsidiary preferred share balance 169 169
As is customary, in the event of any voluntary or involuntary liquidation,
dissolution or winding up of a subsidiary, the holders of outstanding
subsidiary preferred shares shall be entitled to be paid out of the assets of
the subsidiary available for distribution to shareholders and before any
payment shall be made to holders of ordinary shares. A merger, acquisition,
sale of voting control or other transaction of a subsidiary in which the
shareholders of the subsidiary immediately before the transaction do not own
a majority of the outstanding shares of the surviving company shall be deemed
to be a liquidation event. Additionally, a sale, lease, transfer or other
disposition of all or substantially all of the assets of the subsidiary shall
also be deemed a liquidation event.
As of December 31, 2024 and December 31, 2023, the minimum liquidation
preference reflecting the amounts that would be payable to the subsidiary
preferred holders upon a liquidation event of the subsidiaries, is as follows:
2024 2023
$ $
Balance as of December 31, 2024 and December 31, 2023
Entrega 2,216 2,216
Follica 6,405 6,405
Total minimum liquidation preference 8,621 8,621
For the years ended December 31, 2024 and 2023, the Group recognized the
following changes in the value of subsidiary preferred shares:
$
Balance as of January 1, 2023 27,339
Decrease in value of preferred shares measured at fair value - finance costs (2,617)
(income)
Deconsolidation of subsidiary - (Vedanta) (24,554)
Balance as of December 31, 2023 and January 1, 2024 169
Issuance of Seaport A-2 preferred shares - financing cash flow 68,100
Increase in value of preferred shares measured at fair value - finance costs 8,108
(income)
Deconsolidation of subsidiary - (Seaport) (76,208)
Balance as of December 31, 2024 169
18. Sale of Future Royalties Liability
On March 4, 2011, the Group entered into a license agreement (the "License
Agreement") with Karuna, according to which the Group granted Karuna an
exclusive license to research, develop and sell KarXT in exchange for a
royalty on annual net sales, development and regulatory milestones and a fixed
portion of sublicensing income, if any.
On March 22, 2023, the Group signed an agreement with Royalty Pharma (the
"Royalty Purchase Agreement"), according to which the Group sold Royalty
Pharma a partial right to receive royalty payments made by Karuna in respect
of net sales of KarXT, if and when received. According to the Royalty Purchase
Agreement, all royalties due to the Group under the License Agreement will be
paid to Royalty Pharma up to an annual royalties threshold of $60,000, while
all royalties above such annual threshold in a given year will be split 33% to
Royalty Pharma and 67% to the Group. Under the terms of the Royalty Purchase
Agreement, the Group received a non-refundable initial payment of $100,000 at
the execution of the Royalty Purchase Agreement and is eligible to receive
additional payments in the aggregate of up to an additional $400,000 based on
the achievement of certain regulatory and commercial milestones.
The Group continues to hold the rights under the License Agreement and has a
contractual obligation to deliver cash to Royalty Pharma for a portion of the
royalties it receives. Therefore, the Group will continue to account for any
royalties and milestones due to the Group under the License Agreement as
revenue in its Consolidated Statement of Comprehensive Income/(Loss) and
record the proceeds from the Royalty Purchase Agreement as a financial
liability on its Consolidated Statement of Financial Position. In determining
the appropriate accounting treatment for the Royalty Purchase Agreement,
management applied significant judgement.
The acquisition of Karuna by Bristol Myers Squibb ("BMS"), which closed on
March 18, 2024, had no impact on the Group's rights or obligations under the
License Agreement or the Royalty Purchase Agreement, each of which remains in
full force and effect.
In order to determine the amortized cost of the sale of future royalties
liability, management is required to estimate the total amount of future
receipts from and payments to Royalty Pharma under the Royalty Purchase
Agreement over the life of the agreement. The $100,000 liability, recorded at
execution of the Royalty Purchase Agreement, is accreted to the total of these
receipts and payments as interest expense over the life of the Royalty
Purchase Agreement. These estimates contain assumptions that impact both the
amortized cost of the liability and the interest expense that are recognized
in each reporting period.
Additional proceeds received from Royalty Pharma increase the Group's
financial liability. As royalty payments are made to Royalty Pharma, the
balance of the liability is effectively repaid over the life of the Royalty
Purchase Agreement. The estimated timing and amount of royalty payments to and
proceeds from Royalty Pharma are likely to change over the life of the Royalty
Purchase Agreement. A significant increase or decrease in estimated royalty
payments, or a significant shift in the timing of cash flows, will materially
impact the sale of future royalties liability, interest expense and the time
period for repayment. The Group periodically assesses the expected payments
to, or proceeds from, Royalty Pharma. Any such changes in amount or timing of
cash flows requires the Group to re-calculate the amortized cost of the sale
of future royalties liability as the present value of the estimated future
cash flows from the Royalty Purchase Agreement that are discounted at the
liability's original effective interest rate. The adjustment is recognized
immediately in profit or loss as income or expense.
On October 1, 2024, the Group received $25,000 from Royalty Pharma upon the
FDA's approval for BMS to market KarXT as Cobenfy. The Group paid Royalty
Pharma $315 in the first quarter of 2025 for the royalties received from BMS
for the sale of Cobenfy in the fourth quarter of 2024.
The following shows the activity in respect of the sale of future royalties
liability:
Sale of future royalties liability
$
Balance as of January 1, 2023 -
Amounts received at closing 100,000
Non cash interest expense recognized 10,159
Balance as of December 31, 2023 and January 1, 2024 110,159
Payment from Royalty Pharma - regulatory milestone 25,000
Non cash interest expense recognized 8,058
Balance as of December 31, 2024 143,217
Sale of future royalties liability, current 6,435
Sale of future royalties liability, non-current 136,782
19. Financial Instruments
The Group's financial instruments consist of financial assets in the form of
notes, convertible notes and investment in shares, and financial liabilities,
including preferred shares. Many of these financial instruments are presented
at fair value, with changes in fair value recorded through profit and loss.
Fair Value Process
For financial instruments measured at fair value under IFRS 9, the change in
the fair value is reflected through profit and loss. Using the guidance in
IFRS 13, the total business enterprise value and allocable equity of each
entity being valued can be determined using a market backsolve approach
through a recent arm's length financing round (or a future probable arm's
length transaction), market/asset probability-weighted expected return method
("PWERM") approach, discounted cash flow approach, or hybrid approaches. The
approaches, in order of strongest fair value evidence, are detailed
as follows:
Valuation Method Description
Market - Backsolve The market backsolve approach benchmarks the original issue price (OIP) of the
company's latest funding transaction as current value.
Market/Asset - PWERM Under a PWERM, the company value is based upon the probability-weighted
present value of expected future investment returns, considering each of the
possible future outcomes available to the enterprise. Possible future outcomes
can include IPO scenarios, potential SPAC transactions, merger and acquisition
transactions as well as other similar exit transactions of the investee.
Income Based - DCF The income approach is used to estimate fair value based on the income
streams, such as cash flows or earnings, that an asset or business can be
expected to generate.
At each measurement date, investments held at fair value (that are not
publicly traded) as well as the fair value of subsidiary preferred share
liability, including embedded conversion rights that are not bifurcated, were
determined using the following allocation methods: option pricing model
("OPM"), PWERM, or hybrid allocation framework. The methods are detailed as
follows:
Allocation Method Description
OPM The OPM model treats preferred stock as call options on the enterprise's
equity value, with exercise prices based on the liquidation preferences of the
preferred stock.
PWERM Under a PWERM, share value is based upon the probability-weighted present
value of expected future investment returns, considering each of the possible
future outcomes available to the enterprise, as well as the rights of each
share class.
Hybrid The hybrid method is a combination of the PWERM and OPM. Under the hybrid
method, multiple liquidity scenarios are weighted based on the probability of
the scenario's occurrence, similar to the PWERM, while also utilizing the OPM
to estimate the allocation of value in one or more of the scenarios.
Valuation policies and procedures are regularly monitored by the Group. Fair
value measurements, including those categorized within Level 3, are prepared
and reviewed for reasonableness and compliance with the fair value
measurements guidance under IFRS accounting standards. The Group measures fair
value using the following fair value hierarchy that reflects the significance
of the inputs used in making the measurements:
Fair Value Description
Hierarchy Level
Level 1 Inputs that are quoted market prices (unadjusted) in active markets for
identical instruments.
Level 2 Inputs other than quoted prices included within Level 1 that are observable
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 Inputs that are unobservable. This category includes all instruments for which
the valuation technique includes inputs not based on observable data and the
unobservable inputs have a significant effect on the instruments' valuation.
Whilst the Group considers the methodologies and assumptions adopted in fair
value measurements as supportable and reasonable, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market for the investment
existed.
Subsidiary Preferred Share Liability
As of December 31, 2024 and 2023, the fair value of subsidiary preferred share
liability was $169 and $169, respectively. See Note 17. Subsidiary Preferred
Shares for the changes in the Group's subsidiary preferred share liability
measured at fair value, which are categorized as Level 3 in the fair value
hierarchy.
The changes in fair value of subsidiary preferred share liability is recorded
in finance income/(costs) - fair value accounting in the Consolidated
Statement of Comprehensive Income/(Loss).
Investments Held at Fair Value
Vor Valuation
Vor (Nasdaq: VOR) and additional immaterial investments are listed entities on
an active exchange, and as such, the fair value as of December 31, 2024 was
calculated utilizing the quoted common share price which is categorized as
Level 1 in the fair value hierarchy.
Seaport, Vedanta and Sonde
As of December 31, 2024, the Group accounts for the following investments
under IFRS 9 as investments held at fair value with changes in fair value
through profit and loss: Seaport preferred A-1, A-2, and B shares, Vedanta
preferred A-1, B, C, and D shares, Sonde preferred A-2 and B shares and other
immaterial investment. The valuations of the aforementioned investments are
categorized as Level 3 in the fair value hierarchy due to the use of
significant unobservable inputs to value such assets. During the year ended
December 31, 2024, the Group recorded such investments at fair value and
recognized a loss of $10,361 for the changes in fair value of the investments.
The following table summarizes the changes in all the Group's investments held
at fair value categorized as Level 3 in the fair value hierarchy:
Balance as of January 1, 2023 12,593
Deconsolidation of Vedanta - new investment in Vedanta preferred shares 20,456
Investment in Gelesis 2023 Warrants 1,121
Gain/(loss) on changes in fair value (9,299)
Balance as of December 31, 2023 and January 1, 2024 24,872
Deconsolidation of Seaport - new investment in Seaport preferred shares 179,248
Gain/(loss) on changes in fair value (10,361)
Balance as of December 31, 2024 193,758
Equity method loss recorded against LTI (5,307)
Balance as of December 31, 2024 after allocation of equity method loss to LTI 188,452
The changes in fair value of investments held at fair value is recorded in
gain/(loss) on investments held at fair value in the Consolidated Statement of
Comprehensive Income/(Loss).
As of December 31, 2024, the Group's material investments held at fair value
categorized as Level 3 in the fair value hierarchy include the preferred
shares of Seaport, and Vedanta, with fair value of $177,288, and $11,163,
respectively. The significant unobservable inputs used at December 31, 2024 in
the fair value measurement of these investments and the sensitivity of the
fair value measurements for these investments to changes of these significant
unobservable inputs are summarized in the tables below.
As of December 31, 2024 Investment (Seaport) Measured through
Market Backsolve & PWERM
Unobservable Inputs (Seaport) Input Value Sensitivity Range Fair Value Increase/(Decrease) $
Equity Value 538,635 -10 % (22,099)
+10% 21,716
Time to Liquidity 0.5 -3 months 5,753
+3 months (4,247)
Probability of achieving a certain clinical trial development milestone 80 % -10 % (7,871)
+10% 7,871
Probability of entering into an initial public offering 25% and 20% -10 % (4,754)
+10% 4,754
The unobservable inputs outlined within the table above were used to determine
the fair value of our investment in the convertible preferred shares of a
private company as of December 31, 2024. Whilst the Group considers the
methodologies and assumptions used in the fair value measurement to be
supportable and reasonable, because of the inherent uncertainties associated
with the valuation, the estimated value may differ significantly from the
values that would have been used had a ready market for the investment
existed. The fair value measurement of our investment in the convertible
preferred shares will be updated at each reporting date.
As of December 31, 2024 Investment (Vedanta) Measured through Market Backsolve that Leverages a Monte
Carlo Simulation
Unobservable Inputs (Vedanta) Input Value Sensitivity Range Fair Value Increase/(Decrease) $
Equity Value 30,845 -5 % (1,617)
+5% 1,515
Time to Liquidity 0.27 -3 Months n.a.
+3 Months 5,238
Volatility 155 % -10 % (2,976)
+10% 518
The unobservable inputs outlined within the table above were used to determine
the fair value of our investment in the convertible preferred shares of a
private company as of December 31, 2024. Whilst the Group considers the
methodologies and assumptions used in the fair value measurement to be
supportable and reasonable, because of the inherent uncertainties associated
with the valuation, the estimated value may differ significantly from the
values that would have been used had a ready market for the investment
existed. The fair value measurement of our investment in the convertible
preferred shares will be updated at each reporting date.
Investments in Notes from Associates
As of December 31, 2024 and 2023, the investment in notes from associates was
$17,731 and $4,600, respectively. The balance represents the fair value of
convertible promissory notes with a principal value of $26,850 issued by
Gelesis and convertible debt with a principal value of $5,000 issued by
Vedanta.
During the year-ended December 31, 2024, the Group recorded a gain of $13,131
for the changes in fair value of the notes from associates in the gain/(loss)
on investments in notes from associates within the Consolidated Statement of
Comprehensive Income/Loss. The gain was driven by an increase of $11,381 in
the fair value of the Gelesis convertible promissory notes and an increase of
$1,750 in the fair value of the Vedanta convertible note.
In October 2023, Gelesis ceased operations and filed a voluntary petition for
relief under the provisions of Chapter 7 of Title 11 of the United States
Bankruptcy Code. Therefore, the Group determined the fair value of the
convertible promissory notes issued by Gelesis to be $0 at December 31, 2023.
In June 2024, the Bankruptcy Court approved an executed agreement for a third
party to acquire the remaining net assets of Gelesis for $15,000. As the only
senior secured creditor, the Group is expected to receive a majority of the
proceeds from this sale after deduction of legal and administrative costs
incurred by the Bankruptcy Court in 2025. As of December 31, 2024, these notes
were determined to have a fair value of $11,381.
The convertible debt issued by Vedanta was valued using a market backsolve
approach that leverages a Monte Carlo simulation. The significant unobservable
inputs categorized as Level 3 in the fair value hierarchy used at December 31,
2024, in the fair value measurement of the convertible debt are the same as
the inputs disclosed above for Vedanta preferred shares.
Fair Value Measurement and Classification
The fair value of financial instruments by category as of December 31, 2024
and 2023:
2024
Carrying Amount Fair Value
Financial Assets Financial Liabilities Level 1 Level 2 Level 3 Total
$ $ $ $ $ $
Financial assets(1):
Money Markets(2) 181,716 - 181,716 - - 181,716
Investment in notes from associates 17,731 - - - 17,731 17,731
Investments held at fair value 191,426 - 2,974 - 188,452 191,426
Total financial assets 390,873 - 184,690 - 206,183 390,873
Financial liabilities:
Subsidiary preferred shares - 169 - - 169 169
Share-based liability awards - 3,736 - - 3,736 3,736
Total financial liabilities - 3,905 - - 3,905 3,905
1. Excluded from the table above are short-term investments of $86,666 and
cash equivalent of $62,179 that are classified at amortized cost as of
December 31, 2024. The cost of these short-term investments and cash
equivalent approximates current fair value.
2. Included within cash and cash equivalents.
2023
Carrying Amount Fair Value
Financial Assets Financial Liabilities Level 1 Level 2 Level 3 Total
$ $ $ $ $ $
Financial assets(1):
Money Markets(2) 156,705 - 156,705 - - 156,705
Note from associate 4,600 - - - 4,600 4,600
Investments held at fair value 317,841 - 292,970 - 24,872 317,841
Total financial assets 479,146 - 449,675 - 29,472 479,146
Financial liabilities:
Subsidiary preferred shares - 169 - - 169 169
Share-based liability awards - 4,782 - - 4,782 4,782
Total financial liabilities - 4,951 - - 4,951 4,951
1 Excluded from the table above are short-term investments of $136,062 that
are classified at amortized cost as of December 31, 2023. The cost of these
short-term investments approximates current fair value.
2 Included within cash and cash equivalents.
20. Subsidiary Notes Payable
The subsidiary notes payable is comprised of loans and convertible notes.
These instruments do not contain embedded derivatives, and therefore, are held
at amortized cost. As of December 31, 2024 and December 31, 2023, the balance
of notes payable consists of the following:
2024 2023
$ $
Balance as of December 31,
Loans 4,111 3,439
Convertible notes - 260
Total subsidiary notes payable 4,111 3,699
Loans
In October 2010, Follica entered into a loan and security agreement with
Lighthouse Capital Partners VI, L.P. The loan is secured by Follica's assets,
including Follica's intellectual property and bears interest at a rate of 5.0%
in the interest only period and 12.0% in the repayment period.
Convertible Notes
The activities of the convertible notes were as follows:
Knode Appeering Sonde Total
$ $ $ $
January 1, 2022 94 141 2,461 2,696
Gross principal - issuance of notes - financing activity - - 393 393
Accrued interest on convertible notes - finance costs 5 8 48 60
Changes in fair value - finance costs - - 502 502
Deconsolidation - - (3,403) (3,403)
Balance as of January 1, 2023 99 149 - 248
Accrued interest on convertible notes - finance costs 5 8 - 13
Balance as of December 31, 2023 and January 1, 2024 104 156 - 260
Accrued interest on convertible notes - finance costs 5 7 - 12
Forgiveness of debt - entity dissolution - finance income (109) (164) - (273)
Balance as of December 31, 2024 - - - -
In November 2024, the Group dissolved Knode and Appeering as they were no
longer operational entities. As a result, the principal and interest on these
notes outstanding were written off in full as of the dissolution date.
21. Non-Controlling Interest
As of December 31, 2024 and 2023, non-controlling interests included Entrega
and Follica. Ownership interests of the non-controlling interests in these
entities as of December 31, 2024 were 11.7%, and 19.9%, respectively. There
was no change from December 31, 2023 in the ownership interests of the
non-controlling interests in these two entities. As of December 31, 2022,
non-controlling interests included Entrega, Follica, and Vedanta. Ownership
interests of the non-controlling interests in these entities were 11.7%,
19.9%, and 12.2%, respectively. Non-controlling interests include the amounts
recorded for subsidiary stock awards. See Note 10. Share-based Payments.
For the year ended December 31, 2024, Seaport issued 950,000 shares of fully
vested common stock to the Group and 3,450,000 shares of common stock to
certain officers and directors, of which 2,455,555 shares were fully vested
before Seaport's deconsolidation from the Group's Consolidated Financial
Statements on October 18, 2024. Ownership interest of non-controlling
interests was 61.3% immediately before Seaport's deconsolidation.
During the year ended December 31, 2023, Vedanta Biosciences, Inc was
deconsolidated. During the year ended December 31, 2022, Sonde Health, Inc was
deconsolidated. See Note 8. Gain/(loss) on Deconsolidation of Subsidiary.
On February 15, 2022, option holders in Vedanta exercised options into shares
of common stock, increasing the NCI interest held from 3.7% to 12.2%. The
exercise of the options resulted in an increase in the NCI share in Vedanta
shareholder's deficit of $15,164.
The following table summarizes the changes in the non-controlling ownership
interest in subsidiaries:
Non-Controlling Interest
$
Balance as of January 1, 2022 (9,368)
Share of comprehensive income (loss) 13,290
Deconsolidation of subsidiary (Sonde) 11,904
NCI exercise of share-based awards in subsidiaries - change in NCI interest (15,164)
Equity settled share-based payments 4,711
Other (4)
Balance as of December 31, 2022 and January 1, 2023 5,369
Share of comprehensive income (loss) (931)
Deconsolidation of subsidiary (Vedanta) (9,085)
Equity settled share-based payments 277
Expiration of share options in subsidiary (1,458)
Other (6)
Balance as of December 31, 2023 and January 1, 2024 (5,835)
Share of comprehensive income (loss) (25,728)
Equity settled share-based payments - See Note 10. Share-based Payments 17,372
Deconsolidation of subsidiary (Seaport) 7,430
Other (13)
Balance as of December 31, 2024 (6,774)
22. Trade and Other Payables
Information regarding Trade and other payables was as follows:
Balance as of December 31, 2024 2023
$ $
Trade payables 5,522 14,637
Accrued expenses 18,705 28,187
Liability for share-based awards- short term 1,875 1,281
Other 917 3
Total trade and other payables 27,020 44,107
Trade and other payables decreased by $17,088 to $27,020 as of December 31,
2024. The decrease reflected lower operating expenses primarily from the
reduced clinical trials related activities as well as the deconsolidation of
Seaport for the year ended December 31, 2024.
23. Leases and subleases
The activity related to the Group's right of use asset and lease liability for
the years ended December 31, 2024 and 2023 is as follows:
Right of use asset, net
2024 2023
$ $
Balance as of January 1, 9,825 14,281
Additions - -
Depreciation (1,764) (1,979)
Deconsolidated - (2,477)
Balance as of December 31, 8,061 9,825
Total lease liability
2024 2023
$ $
Balance as of January 1, 21,644 29,128
Additions - -
Cash paid for rent - principal - financing cash flow (3,394) (3,338)
Cash paid for rent - interest (1,295) (1,544)
Interest expense 1,295 1,544
Deconsolidated - (4,146)
Balance as of December 31, 18,250 21,644
Depreciation of the right-of-use assets, which virtually all consist of leased
real estate, is included in the general and administrative expenses and
research and development expenses line items in the Statement of Comprehensive
Income/(Loss). The Group recorded depreciation expense of $1,764, $1,979 and
$3,047 for the years ended December 31, 2024, 2023 and 2022, respectively.
The following table details the short-term and long-term portion of the lease
liability as of December 31, 2024 and 2023:
Total lease liability
2024 2023
$ $
Short-term portion of lease liability 3,579 3,394
Long-term portion of lease liability 14,671 18,250
Total lease liability 18,250 21,644
The following table details the future maturities of the lease liability,
showing the undiscounted lease payments to be paid after the reporting date:
2024
$
Less than one year 4,644
One to two years 4,419
Two to three years 4,551
Three to four years 4,687
Four to five years 2,796
More than five years -
Total undiscounted lease maturities 21,096
Interest 2,846
Total lease liability 18,250
During the year ended December 31, 2019, the Group entered into a lease
agreement for certain premises consisting of 50,858 rentable square feet of
space located at 6 Tide Street, Boston, Massachusetts. The lease commenced on
April 26, 2019 for an initial term consisting of ten years and three months,
and there is an option to extend the lease for two consecutive periods of five
years each. The Group assessed at the lease commencement date whether it was
reasonably certain to exercise the extension options, and deemed such options
were not reasonably certain to be exercised. The Group will reassess whether
it is reasonably certain to exercise the options only if there is a
significant event or significant change in circumstances within its control.
On June 26, 2019, the Group executed a sublease agreement with Gelesis. The
lease is for 9,446 rentable square feet located on the sixth floor of the
Group's former office at 501 Boylston Street, Boston, Massachusetts. The
sublease was set to expire on August 31, 2025, and was determined to be a
finance lease. Gelesis ceased operations and filed for bankruptcy on October
30, 2023. As a result, the Group wrote off its receivable in the lease of
$1,266 in 2023.
On January 23, 2023, the Group executed a sublease agreement with Allonnia,
LLC ("Allonnia"). The sublease is for approximately 11,000 rentable square
feet located on the third floor of the 6 Tide Street building where the
Group's offices are currently located. Allonnia obtained possession of the
premises on February 17, 2023 with a rent commencement date of May 17, 2023.
The lease term is two years from the rent commencement date, and Allonnia has
the option to extend the sublease for an additional year at the same terms.
The annual lease fee is $1,111 per year. The sublease was determined to be an
operating lease, and as such, the total lease payments under the sublease
agreement are recognized over the lease term on a straight-line basis. In
February 2024, Allonnia exercised the option and extended the lease term
through May 31, 2026. The annual lease fee increased to $1,279 per year.
Rental income recognized by the Group during the year ended December 31, 2024
and 2023 was $1,053 and $781, respectively, which was included in the other
income/(expense) line item in the Consolidated Statement of Comprehensive
Income/(Loss).
24. Capital and Financial Risk Management
Capital Risk Management
The Group's capital and financial risk management policy is to maintain a
strong capital base to support its strategic priorities, maintain investor,
creditor and market confidence as well as sustain the future development of
the business. The Group's objectives when managing capital are to safeguard
its ability to continue as a going concern, to provide returns for
shareholders and benefits for other stakeholders, and to maintain an optimal
capital structure to reduce the cost of capital. To maintain or adjust the
capital structure, the Group may issue new shares or incur new debt. The Group
has no material externally imposed capital requirements. The Group's share
capital is set out in Note 16. Equity.
Management continuously monitors the level of capital deployed and available
for deployment in the Wholly-Owned Programs segment and at Founded Entities.
The Directors seek to maintain a balance between the higher returns that might
be possible with higher levels of deployed capital and the advantages and
security afforded by a sound capital position.
The Group's Directors have overall responsibility for the establishment and
oversight of the Group's capital and risk management framework. The Group is
exposed to certain risks through its normal course of operations. The Group's
main objective in using financial instruments is to promote the development
and commercialization of intellectual property through the raising and
investing of funds for this purpose. The nature, amount and timing of
investments are determined by planned future investment activity. Due to the
nature of activities and with the aim to maintain the investors' funds as
secure and protected, the Group's policy is to hold any excess funds in highly
liquid and readily available financial instruments and maintain minimal
exposure to other financial risks.
The Group has exposure to the following risks arising from financial
instruments:
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. Financial instruments that potentially subject the Group to
concentrations of credit risk consist principally of cash and cash
equivalents, short-term investments, and trade and other receivables. The
Group held the following balances:
2024 2023
$ $
Balance as of December 31
Cash and cash equivalents 280,641 191,081
Short-term investments 86,666 136,062
Trade and other receivables 1,522 2,376
Total 368,828 329,518
The Group invests its excess cash in U.S. Treasury Bills (presented as
short-term investments), and money market accounts, which the Group believes
are of high credit quality. Further, the Group's cash and cash equivalents and
short-term investments are held at diverse, investment-grade financial
institutions.
The Group assesses the credit quality of customers on an ongoing basis. The
credit quality of financial assets is assessed by historical and recent
payment history, counterparty financial position, and reference to credit
ratings (if available) or to historical information about counterparty default
rates. The Group does not have expected credit losses due to the high credit
quality or healthy financial conditions of these counterparties. As of
December 31, 2024 and 2023, none of the trade and other receivables were
impaired.
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group actively manages its
liquidity risk by closely monitoring the maturity of its financial assets and
liabilities and projected cash flows from operations, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation. Due to the nature of these financial liabilities,
the funds are available on demand to provide optimal financial flexibility.
The table below summarizes the maturity profile of the Group's financial
liabilities, including subsidiary preferred shares that have customary
liquidation preferences, as of December 31, 2024 and 2023, based on
contractual undiscounted payments:
Balance as of December 31 2024
Carrying Amount Within Three Months Three to Twelve Months One to Five Years Total
$
$
$
$
$ (*)
Subsidiary notes payable 4,111 4,111 - - 4,111
Trade and other payables 27,020 27,020 - - 27,020
Taxes Payable 75 75 - - 75
Subsidiary preferred shares (Note 17)(1) 169 169 - - 169
Total 31,375 31,375 - - 31,375
Balance as of December 31 2023
Carrying Amount Within Three Months Three to Twelve Months One to Five Years Total
$
$
$
$
$ (*)
Subsidiary notes payable 3,699 3,699 - - 3,699
Trade and other payables 44,107 44,107 - - 44,107
Subsidiary preferred shares (Note 17)(1) 169 169 - - 169
Total 47,975 47,975 - - 47,975
1 Redeemable only upon a liquidation or deemed liquidation event, as
defined in the applicable shareholder documents.
* Does not include payments in respect of lease obligations nor payments
on sale of future royalties liability. For the contractual future payments
related to lease obligations, see Note 23. Leases and subleases. For
contractual future payments related to sale of future royalties, see Note 18.
Sale of Future Royalties Liability
Interest Rate Sensitivity
As of December 31, 2024, the Group had cash and cash equivalents of $280,641,
and short-term investments of $86,666. The Group's exposure to interest rate
sensitivity is impacted by changes in the underlying U.K. and U.S. bank
interest rates. The Group has not entered into investments for trading or
speculative purposes. Due to the conservative nature of the Group's investment
portfolio, which is predicated on capital preservation and investments in
short duration, high-quality U.S. Treasury Bills and related money market
accounts, a change in interest rates would not have a material effect on the
fair market value of the Group's portfolio, and therefore, the Group does not
expect operating results or cash flows to be significantly affected by changes
in market interest rates.
Controlled Founded Entity Investments
The Group maintains investments in certain Controlled Founded Entities. The
Group's investments in Controlled Founded Entities are eliminated as
intercompany transactions upon financial consolidation. The Group is, however,
exposed to a subsidiary preferred share liability owing to the terms of
existing preferred shares and the ownership of Controlled Founded Entities
preferred shares by third parties. As discussed in Note 17. Subsidiary
Preferred Shares, certain of the Group's subsidiaries have issued preferred
shares that include the right to receive a payment in the event of any
voluntary or involuntary liquidation, dissolution or winding up of a
subsidiary, including in the event of "deemed liquidation" as defined in the
incorporation documents of the entities, which shall be paid out of the assets
of the subsidiary available for distribution to shareholders, and before any
payment shall be made to holders of ordinary shares. The liability of
preferred shares is maintained at fair value through profit and loss and was
insignificant as of December 31, 2024. The Group's cash position supports the
business activities of the Controlled Founded Entities. Accordingly, the Group
views exposure to the third party subsidiary preferred share liability as low.
Deconsolidated Founded Entity Investments
The Group maintains certain debt or equity holdings in Founded Entities that
are deconsolidated. These holdings are deemed either as investments carried at
fair value under IFRS 9 with changes in fair value recorded through profit and
loss or as associates accounted for under IAS 28 using the equity method. The
Group's exposure to investments held at fair value and investments in notes
from associates was $191,426 and $17,731, respectively, as of December 31,
2024, and the Group may or may not be able to realize the value in the future.
Accordingly, the Group views the risk as high. The Group's exposure to
investments in associates is limited to the carrying amount of the investment
in an associate. The Group is not exposed to further contractual obligations
or contingent liabilities beyond the value of the initial investments. As of
December 31, 2024, the investments in associates include Sonde and Seaport,
and the carrying amounts of the investments under the equity method were $0
and $2,397, respectively. Accordingly, the Group does not view this risk as
high.
Equity Price Risk
As of December 31, 2024, the Group held 2,671,800 common shares of Vor with a
fair value of $2,966. As of December 31, 2023, the Group held 886,885 common
shares of Karuna, 2,671,800 common shares of Vor, and 12,527,476 common shares
of Akili with fair value of $280,708, $6,012, and $6,112, respectively. The
common shares of Karuna and Akili were disposed of in 2024 as part of the
Karuna's acquisition by BMS in March 2024 and Akili's acquisition by Virtual
Therapeutics in July 2024.
The investment in Vor is exposed to fluctuations in the market price of Vor's
common shares. The Group views the exposure to equity price risk as low.
Foreign Exchange Risk
The Group maintains Consolidated Financial Statements in the Group's
functional currency, which is the U.S. dollar. Monetary assets and liabilities
denominated in currencies other than the functional currency are translated
into the functional currency at exchange rates prevailing at the balance sheet
dates. Non-monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the exchange rates prevailing
at the date of the transaction. Exchange gains or losses arising from foreign
currency transactions are included in the determination of net income (loss)
for the respective periods. Such foreign currency gains or losses were not
material for all reported periods.
The Group does not currently engage in currency hedging activities since its
foreign currency risk is limited, but the Group may begin to do so in the
future if and when its foreign currency risk exposure changes.
25. Commitments and Contingencies
The Group is a party to certain licensing agreements where the Group is
licensing IP from third parties. In consideration for such licenses, the Group
has made upfront payments and may be required to make additional contingent
payments based on developmental and sales milestones and/or royalty on future
sales. As of December 31, 2024, certain milestone events have not yet
occurred, and therefore, the Group does not have a present obligation to make
the related payments in respect of the licenses. Such milestones are dependent
on events that are outside of the control of the Group, and many of these
milestone events are remote of occurring. Payments in respect of developmental
milestones that are dependent on events that are outside the control of the
Group but are reasonably possible to occur amounted to approximately $7,121
and $7,371, respectively, as of December 31, 2024 and December 31, 2023. These
milestone amounts represent an aggregate of multiple milestone payments
depending on different milestone events in multiple agreements. The
probability that all such milestone events will occur in the aggregate is
remote. Payments made to license IP represent the acquisition cost of
intangible assets.
The Group is a party to arrangements with contract manufacturing and contract
research organizations, whereby the counterparty provides the Group with
research and/or manufacturing services. As of December 31, 2024 and December
31, 2023, the noncancellable commitments in respect of such contracts amounted
to approximately $8,395 and $16,422, respectively.
In March 2024, a complaint was filed in Massachusetts District Court against
the Group alleging breach of contract with respect to certain payments alleged
to be owed to a previous employee of a Group's subsidiary based on purported
terms of a contract between such individual and the Group. As of December 31,
2024, the Group recognized a provision of $900, which represents management's
best estimate of the expected settlement related to the financial obligation
associated with the lawsuit, considering the likelihood of settlement. The
final settlement amount could vary depending on the outcome of the ongoing
negotiations or litigation. The timing for resolution remains uncertain.
The Group is involved from time-to-time in various legal proceedings arising
in the normal course of business. Although the outcomes of these legal
proceedings are inherently difficult to predict, the Group does not expect the
resolution of such legal proceedings to have a material adverse effect on its
financial position or results of operations. The Group did not book any
provisions and did not identify any contingent liabilities requiring
disclosure for any legal proceedings other than already included above for the
years ended December 31, 2024 and 2023.
26. Related Parties Transactions
Related Party Subleases
During 2019, the Group executed a sublease agreement with a related party,
Gelesis. During 2023, the sublease receivable was written down to zero as
Gelesis ceased operations and filed for bankruptcy.
The Group recorded $0, $23 and $89 of interest income with respect to the
sublease during the years ended December 31, 2024, 2023, and 2022
respectively, which is presented within finance income in the Consolidated
Statement of Comprehensive Income/(Loss).
Related Party Royalties
The Group received $509 in royalties from Gelesis on its product sales for the
year ended December 31, 2022 and recorded such royalty receipt as royalty
revenue which was included in contract revenue in the Consolidated Statement
of Comprehensive Income/(Loss) for the year ended December 31, 2022. The Group
did not record any royalty revenue from Gelesis for the years ended December
31, 2024, and 2023.
Key Management Personnel Compensation
Key management includes executive directors and members of the executive
management team of the Group (not including non-executive directors and not
including subsidiary directors). The key management personnel compensation of
the Group was as follows for the years ended December 31:
2024 2023 2022
$ $ $
As of December 31
Short-term employee benefits 5,166 9,714 4,162
Post-employment benefits 61 41 55
Termination benefits 395 417 152
Share-based payment expense 2,540 599 2,741
Total 8,161 10,772 7,109
Short-term employee benefits include salaries, health care and other non-cash
benefits. Post-employment benefits include 401K contributions from the Group.
Termination benefits include severance pay. Share-based payments are generally
subject to vesting terms over future periods. See Note 10. Share-based
Payments. As of December 31, 2024, and 2023 the payable due to the key
management employees was $1,509, and $4,732, respectively.
In addition the Group paid remuneration to non-executive directors in the
amounts of $670, $475, and $655 for the years ended December 31, 2024, 2023
and 2022, respectively. Also, the Group incurred $501, $373 and $365, of stock
based compensation expense for such non-executive directors for the years
ended December 31, 2024, 2023, and 2022 respectively.
During the years ended December 31, 2024, 2023 and 2022, the Group incurred
$34, $46 and $51, respectively, of expenses paid to related parties.
Convertible Notes Issued to Directors
During the year ended December 31, 2024, the Group dissolved an inactive
subsidiary, which held a convertible note issued to a related party. As a
result of the entity's dissolution, the convertible note's outstanding balance
on the day of dissolution was written down to $0 and a gain of $108 was
recorded and included in finance income/ (costs) within the Consolidated
Statement of Comprehensive Income/(Loss). As of December 31, 2023, the
outstanding related party notes payable was $104, including principal and
interest.
Directors' and Senior Managers' Shareholdings and Share Incentive Awards
The Directors and senior managers hold beneficial interests in shares in the
following businesses as of December 31, 2024:
Business name (share class) Number of shares held as of December 31, 2024 Number of options held as of December 31, 2024 Number of RSUs held as of December 31, 2024 Ownership
interest¹
Directors:
Dr Robert Langer Entrega (Common) 250,000 82,500 - 4.29 %
Dr Raju Kucherlapati Enlight (Class B Common) - 30,000 - 3.00 %
Seaport Therapeutics (Preferred B) 21,052 - - 0.01 %
Dr John LaMattina Vedanta Biosciences (Common) 25,000 15,000 - 0.25 %
Seaport Therapeutics (Preferred B)(2) 21,052 - - 0.01 %
Michele Holcomb Seaport Therapeutics (Preferred B) 21,052 - - 0.01 %
Sharon Barber-Lui Seaport Therapeutics (Preferred B) 21,052 - - 0.01 %
Senior Managers:
Eric Elenko Seaport Therapeutics (Common) 950,000 - - 0.64 %
1 Ownership interests as of December 31, 2024 are calculated on a diluted
basis, including issued and outstanding shares, warrants and options (and
written commitments to issue options) but excluding unallocated shares
authorized to be issued pursuant to equity incentive plans and any shares
issuable upon conversion of outstanding convertible promissory notes.
2 Dr. John and Ms. Mary LaMattina hold 21,052 Series B preferred shares
of Seaport Therapeutics.
Directors and senior managers hold 10,294,322 ordinary shares and 4.3% voting
rights of the Group as of December 31, 2024. This amount excludes options to
purchase 2,155,915 ordinary shares. This amount also excludes 3,517,248
shares, which are issuable based on the terms of performance based RSU awards
granted to certain senior managers covering the financial years 2024, 2023 and
2022, 1,822,151 shares of time based RSUs to senior managers, which vest over
3 years, and 346,010 shares, which are issuable to directors immediately prior
to the Group's 2025 Annual General Meeting of Stockholders, based on the terms
of the RSU awards granted to non-executive directors in 2024. Such shares will
be issued to such senior managers and non-executive directors in future
periods provided that performance and/or service conditions are met, and
certain of the shares will be withheld for payment of customary withholding
taxes.
During the year ended December 31, 2024, certain officers and directors
participated in the Tender Offer. See Note 16. Equity for details on the
program. Consequently, the Group repurchased a total of 767,533 ordinary
shares at 250 pence per ordinary share from these related parties.
Other
See Note 7. Investment in Notes from Associates for details on the notes
issued by Gelesis and Vedanta to the Group.
As of December 31, 2024, the Group has a receivable from Seaport in the amount
of $408.
See Note 6. Investments in Associates for details on the execution and
termination of the Merger Agreement with Gelesis in 2023.
27. Taxation
Tax on the profit or loss for the year comprises current and deferred income
tax. Tax is recognized in the Consolidated Statement of Comprehensive
Income/(Loss) except to the extent that it relates to items recognized
directly in equity.
For the years ended December 31, 2024, 2023 and 2022, the Group filed a
consolidated U.S. federal income tax return which included all subsidiaries in
which the Group owned greater than 80% of the vote and value. For the years
ended December 31, 2024, 2023 and 2022, the Group filed certain consolidated
state income tax returns which included all subsidiaries in which the Group
owned greater than 50% of the vote and value. The remaining subsidiaries file
separate U.S. tax returns.
Amounts recognized in Consolidated Statement of Comprehensive Income/(Loss):
2024 2023 2022
$ $ $
For the year ended December 31
Income/(loss) for the year 27,782 (66,628) (37,065)
Income tax expense/(benefit) (4,008) 30,525 (55,719)
Income/(loss) before taxes 23,774 (36,103) (92,783)
Recognized Income Tax Expense/(Benefit):
2024 2023 2022
$ $ $
For the year ended December 31
Federal - current 35,310 (2,246) 13,065
State - current 13,144 (46) 1,336
Total current income tax expense/(benefit) 48,454 (2,292) 14,401
Federal - deferred (46,442) 29,294 (48,240)
State - deferred (6,020) 3,523 (21,880)
Total deferred income tax expense/(benefit) (52,462) 32,817 (70,120)
Total income tax expense/(benefit), recognized (4,008) 30,525 (55,719)
The income tax expense/(benefit) was $(4,008), $30,525 and $(55,719) for the
tax years ended December 31, 2024, 2023 and 2022, respectively. The income tax
benefit recognized in 2024 was primarily attributable to the recognition of a
deferred tax asset, generated in 2024 from the sale of the Group's investment
in Akili common stock that was used to offset income generated from the sale
of the Group's investment in Karuna common shares, partially offset with state
income tax expense. The income tax expense recognized in 2023 was primarily
due to income from the sale of future royalties to Royalty Pharma and the
recognition of deferred tax liabilities.
Reconciliation of Effective Tax Rate
The Group is primarily subject to taxation in the U.S. A reconciliation of the
U.S. federal statutory tax rate to the effective tax rate is as follows:
2024 2023 2022
For the year ended December 31 $ % $ % $ %
US federal statutory rate 4,994 21.00 (7,573) 21.00 (19,486) 21.00
State taxes, net of federal effect 1,026 4.32 (3,974) 11.01 (8,043) 8.67
Tax credits (2,517) (10.59) (9,167) 25.39 (6,876) 7.41
Stock-based compensation 2,123 8.93 589 (1.63) 788 (0.85)
Finance income/(costs) - fair value accounting 1,640 6.90 (556) 1.54 (28,783) 31.02
Loss with respect to associate for which no deferred tax asset is recognized 210 0.88 249 (0.69) 1,413 (1.52)
Revaluation of deferred due to rate change (3,419) (14.38) - - (8,856) 9.54
Nondeductible compensation 1,534 6.45 872 (2.42) 300 (0.32)
Recognition of deferred tax assets and tax benefits not previously recognized (12,396) (52.14) (433) 1.20 (184) 0.20
Unrecognized deferred tax asset - - 83,984 (232.63) 17,287 (18.63)
Deconsolidation of subsidiary 3,863 16.25 (17,506) 48.49 (3,572) 3.85
Cancellation of Debt Income (987) (4.15) - - - -
Other 755 3.16 1,321 (3.65) 293 (0.32)
Worthless stock deduction (833) (3.50) (17,281) 47.87 - -
(4,008) (16.86) 30,525 (84.52) (55,719) 60.05
The Group is also subject to taxation in the UK, but to date, no taxable
income has been generated in the UK. Changes in corporate tax rates can change
both the current tax expense (benefit) as well as the deferred tax expense
(benefit).
Deferred Tax Assets and Liabilities
Deferred tax assets have been recognized in the U.S. jurisdiction in respect
of the following items:
2024 2023
$ $
For the year ended December 31
Operating tax losses 2,621 3,849
Tax credits 238 2,425
Share-based payments 6,206 5,210
Capitalized research & development expenditures 48,904 39,422
Lease liability 4,851 5,133
Sale of future royalties 42,406 35,920
Other temporary differences - 1,770
Deferred tax assets 105,226 93,729
Investments held at fair value (23,565) (53,411)
Right of use assets (2,143) (2,330)
Property and equipment, net (1,235) (1,637)
Investment in associates (637) (755)
Other temporary differences (1,900) -
Deferred tax liabilities (29,480) (58,133)
Deferred tax assets (liabilities), net 75,746 35,596
Deferred tax liabilities, net, recognized - (52,462)
Deferred tax assets (liabilities), net, not recognized 75,746 88,058
As of December 31, 2024, the Group does not have sufficient taxable temporary
differences, has a history of losses and does not believe it is probable
future profits will be available to support the recognition of its deferred
tax assets. The unrecognized deferred tax assets of $75,746 are primarily
related to capitalized research & development expenditures and deferred
tax asset related to the sale of future royalties to Royalty Pharma.
Unrecognized Deferred Tax Assets
Deferred tax assets have not been recognized in respect of the following
carryforward losses, credits and temporary differences, because it is not
probable that future taxable profit will be available against which the Group
can use the benefits therefrom.
2024 2023
$ $
For the year ended December 31
Gross Amount Tax Effected Gross Amount Tax Effected
Deductible temporary difference 274,227 72,887 353,323 83,741
Tax losses 7,815 2,621 13,681 3,849
Tax credits 238 238 468 468
Total 282,280 75,746 367,472 88,058
Tax Losses and Tax Credits Carryforwards
Tax losses and tax credits for which no deferred tax asset was recognized are
presented below:
Balance as of December 31 2024 2023
$ $
Gross Amount Tax Effected Gross Amount Tax Effected
Tax losses expiring:
Within 10 years 1,537 416 4,741 1,284
More than 10 years 3,285 729 6,635 1,455
Available Indefinitely 2,993 1,476 2,305 1,110
Total 7,815 2,621 13,681 3,849
Tax credits expiring:
Within 10 years 44 44 43 43
More than 10 years 194 194 425 425
Available indefinitely - - - -
Total 238 238 468 468
The Group had U.S. federal net operating losses carry forwards ("NOLs") of
$7,815, $13,681 and $219,466 as of December 31, 2024, 2023 and 2022,
respectively, which are available to offset future taxable income. These NOLs
expire through 2037 with the exception of $2,993 which is not subject to
expiration, and can be utilized up to 80% of annual taxable income. The Group
had U.S. federal research and development tax credits of approximately $238,
$1,396 and $4,500 as of December 31, 2024, 2023 and 2022, respectively, which
are available to offset future taxes that expire at various dates through
2037. The Group also had Federal Orphan Drug credits of approximately $0 and
$930 as of December 31, 2024, and 2023. A portion of these federal NOLs and
credits can only be used to offset the profits from the Group's subsidiaries
who file separate federal tax returns. These NOLs and credits are subject to
review and possible adjustment by the Internal Revenue Service.
The Group had state net operating losses carry forwards ("NOLs") of
approximately $125,322, $111,446 and $71,700 for the years ended December 31,
2024, 2023 and 2022, respectively, which are available to offset future
taxable income. These NOLs expire at various dates beginning in 2030. The
Group had Massachusetts research and development tax credits of approximately
$0, $98 and $600 for the years ended December 31, 2024, 2023 and 2022,
respectively. These NOLs and credits are subject to review and possible
adjustment by state taxing authority.
Utilization of the NOLs and research and development credit carryforwards may
be subject to a substantial annual limitation under Section 382 of the
Internal Revenue Code of 1986 due to ownership change limitations that have
occurred previously or that could occur in the future. These ownership changes
may limit the amount of NOL and research and development credit carryforwards
that can be utilized annually to offset future taxable income and tax,
respectively. The Group has performed a Section 382 analysis through December
31, 2024. The results of this analysis concluded that certain net operating
losses were subject to limitation under Section 382 of the Internal Revenue
Code. None of the Group's net operating losses, which are subject to a Section
382 limitation, has been recognized in the financial statements.
Tax Balances
The tax related balances presented in the Statement of Financial Position are
as follows:
For the year ended December 31 2024 2023
$ $
Income tax receivable - current - 11,746
Income tax payable - current (75) -
Uncertain Tax Positions
The Group has no uncertain tax positions as of December 31, 2024. U.S.
corporations are routinely subject to audit by federal and state tax
authorities in the normal course of business.
28. Subsequent Events
The Group has evaluated subsequent events after December 31, 2024, up to the
date of issuance, April 30, 2025, of the Consolidated Financial Statements,
and has not identified any recordable or disclosable events not otherwise
reported in these Consolidated Financial Statements or notes thereto.
Parent Company Statement of Financial Position
For the years ended December 31
2024 2023
$000s $000s
Note
Assets
Non-current assets
Investment in subsidiary 2 462,734 456,864
Total non-current assets 462,734 456,864
Current assets
Cash and cash equivalents 26,323 20,425
Total current assets 26,323 20,425
Total assets 489,057 477,289
Equity and liabilities
Equity
Share capital 3 4,860 5,461
Share premium 3 290,262 290,262
Treasury stock 3 (46,864) (44,626)
Merger reserve 3 138,506 138,506
Other reserve 3 26,407 21,596
Retained earnings - (Income of $107,421 and loss of $3,178 for 2024 and 2023, 3 44,574 41,997
respectively)
Total equity 457,746 453,196
Current liabilities
Trade and other payables 3,661 2,033
Intercompany payables 4 27,650 22,061
Total current liabilities 31,311 24,093
Total equity and liabilities 489,057 477,289
Please refer to the accompanying notes to the PureTech Health plc financial
information ("Notes"). Registered number: 09582467.
The PureTech Health plc financial statements were approved by the Board of
Directors and authorized for issuance on April 30, 2025 and signed on its
behalf by:
Bharatt Chowrira
Chief Executive Officer
April 30, 2025
The accompanying Notes are an integral part of these financial statements.
Parent Company Statement of Changes in Equity
For the years ended December 31
Share Capital Treasury Shares
Shares Amount Share Shares Amount Merger Reserve Other Reserve Retained earnings/ (Accumulated Total equity
$000s Premium $000s $000s $000s deficit) $000s
$000s $000s
Balance January 1, 2023 289,161,653 5,455 289,624 (10,595,347) (26,492) 138,506 18,114 45,175 470,382
Exercise of stock options 306,506 6 638 239,226 530 - (22) - 1,153
Equity-settled share-based payments - - - - - - 3,348 - 3,348
Settlement of restricted stock units - - - 425,219 986 - 156 - 1,142
Purchase of treasury stock - - - (7,683,526) (19,650) - - - (19,650)
Net Income (loss) - - - - - - - (3,178) (3,178)
Balance December 31, 2023 289,468,159 5,461 290,262 (17,614,428) (44,626) 138,506 21,596 41,997 453,196
Exercise of stock options - - - 412,729 1,041 - (146) - 895
Equity-settled share-based payments - - - - - - 4,569 - 4,569
Settlement of restricted stock units - - - 599,512 1,512 - (211) - 1,301
Repurchase and cancellation of ordinary shares from Tender Offer (31,540,670) (600) - - - - 600 (104,844) (104,844)
Purchase of treasury stock - - - (1,903,990) (4,791) - - - (4,791)
Net income (loss) - - - - - - - 107,421 107,421
Balance December 31, 2024 257,927,489 4,860 290,262 (18,506,177) (46,864) 138,506 26,407 44,574 457,746
The accompanying Notes are an integral part of these financial statements.
Notes to the Financial Statements
(amounts in thousands, except share and per share data)
1. Accounting policies
Basis of Preparation and Measurement
The financial statements of PureTech Health plc (the "Parent") are presented
as of December 31, 2024 and 2023, and for the years ended December 31, 2024
and 2023, and have been prepared under the historical cost convention in
accordance with FRS 101 'Reduced Disclosure Framework' and in accordance with
the Companies Act 2006 as applicable to companies using FRS 101. As permitted
by FRS 101, the Parent has taken advantage of the disclosure exemptions
available under that standard in relation to:
• a cash flow statement
A summary of the material accounting policies that have been applied
consistently throughout the year is set out below.
Certain amounts in the Parent Company Financial Statements and accompanying
notes may not add due to rounding. All percentages have been calculated using
unrounded amounts.
Functional and Presentation Currency
The functional currency of the Parent is United States ("U.S.") Dollars and
the financial statements are presented in U.S. Dollars.
Investments
Investments are stated at historical cost less any provision for impairment in
value, and are held for long-term investment purposes. Provisions are based
upon an assessment of events or changes in circumstances that indicate that an
impairment has occurred, such as the performance and/or prospects (including
the financial prospects) of the investee company being significantly below the
expectations on which the investment was based, a significant adverse change
in the markets in which the investee company operates, or a deterioration in
general market conditions.
Impairment
If there is an indication that an asset might be impaired, the Parent would
perform an impairment review. An asset is impaired if the recoverable amount,
being the higher of fair value less cost to sell and value in use, is less
than its carrying amount. Value in use is measured based on future discounted
cash flows attributable to the asset. In such cases, the carrying value of the
asset is reduced to its recoverable amount with a corresponding charge
recognized in the profit and loss statement.
Dividend Income
Dividend received from the Parent's subsidiary is recorded as dividend income
in the profit and loss statement.
Financial Instruments
Currently the Parent does not have derivative financial instruments. Financial
assets and financial liabilities are recognized and cease to be recognized on
the basis of when the related titles pass to or from the Parent.
Share-Based Payments
Share-based payment awards granted in subsidiaries to employees, Board of
Directors and consultants to be settled in Parent's equity instruments are
accounted for as equity-settled share-based payment transactions in accordance
with IFRS 2. Restricted stock units granted in subsidiaries to the executives
are accounted for as share-based liability awards in accordance with IFRS 2 as
they can be cash-settled at PureTech's discretion and have a history of being
cash-settled. The grant date fair value of equity-settled share-based payment
awards and the settlement date fair value of the share-based liability awards
are recognized as an increase to the investment with a corresponding increase
in equity. For equity-settled restricted stock units, the grant date fair
value is the grant date share price. For share-based liability awards, the
fair value at each reporting date is measured using the Monte Carlo simulation
analysis considering share price volatility, risk-free rate, and other
covariance of comparable public companies and other market data to predict
distribution of relative share performance. For stock options, the fair value
is measured using an option pricing model, which takes into account the terms
and conditions of the options granted. When the subsidiary settles the equity
awards other than by the Parent's equity, the settlement is recorded as a
decrease in equity against a corresponding decrease to the investment account.
2. Investment in subsidiary
$
Balance at December 31, 2021 148,086
Equity-settled share-based payments granted to employees and service providers 10,384
in subsidiaries
Conversion of intercompany receivable (net of a portion of intercompany 293,904
payable) into investment
Balance at December 31, 2022 452,374
Equity-settled share-based payments granted to employees and service providers 4,489
in subsidiaries
Balance at December 31, 2023 456,864
Equity-settled share-based payments granted to employees and service providers 5,870
in subsidiaries
Balance at December 31, 2024 462,734
PureTech consists of the Parent and its subsidiaries (together, the "Group").
Investment in subsidiary represents the Parent's investment in PureTech LLC as
a result of the reverse acquisition immediately prior to the Parent's initial
public offering ("IPO") on the London Stock Exchange in June 2015. PureTech
LLC operates in the U.S. as a US-focused scientifically-driven research and
development company that conceptualizes, sources, validates and commercializes
different approaches to advance the needs of human health. For a summary of
the Parent's major indirect subsidiaries, please refer to Note 1. Material
Accounting Policies, of the Consolidated Financial Statements of the Group.
The Parent recognizes in its investment in its operating subsidiary PureTech
LLC, share-based payments granted to employees, executives, non-executive
directors and service providers in its subsidiary. The increases in investment
in subsidiary in 2022, 2023 and 2024, respectively, are due to such
share-based payments results from the expenses related to the grant of
equity-settled share-based awards, as well as settlements and payments of
these equity awards by the subsidiary, or settlement of share-based payments
through equity by PureTech.
As of December 31, 2024, the Parent performed an impairment assessment on its
investment in subsidiary using the fair value less costs to sell approach. The
carrying amount of its investment in subsidiary was approximately 1% lower
than the implied market capitalization. Applying the estimated control
premium, the Parent determined that its investment in subsidiary was not
impairment as of December 31, 2024.
3. Share capital and reserves
PureTech Health plc was incorporated with the Companies House under the
Companies Act 2006 as a public company on May 8, 2015.
On June 24, 2015, the Group authorized 227,248,008 of ordinary share capital
at one pence apiece. These ordinary shares were admitted to the premium
listing segment of the United Kingdom's Listing Authority and traded on the
Main Market of the London Stock Exchange for listed securities. In conjunction
with the authorization of the ordinary shares, the Parent completed an IPO on
the London Stock Exchange, in which it issued 67,599,621 ordinary shares at a
public offering price of 160 pence per ordinary share, in consideration for
$159,270, net of issuance costs of $11,730.
Additionally, the IPO included an over-allotment option equivalent to 15% of
the total number of new ordinary shares. The stabilization manager provided
notice to exercise in full its over-allotment option on July 2, 2015. As a
result, the Parent issued 10,139,943 ordinary shares at the offer price of 160
pence per ordinary share, which resulted in net proceeds of $24,200, net of
issuance costs of $800.
On March 12, 2018, the Group raised approximately $100,000, before issuance
costs and other expenses, by way of a placing of 45,000,000 placing shares.
During the years ended December 31, 2024 and 2023, other reserves increased by
$4,811 and $3,482, respectively, primarily due to equity-settled share-based
payments granted to employees, the Board of Directors and service providers in
subsidiaries. See Note 2. Investment in subsidiary above.
Treasury stock and Tender Offer
On May 9, 2022, the Group announced the commencement of a $50,000 share
repurchase program (the "Program") of its ordinary shares of one pence each.
The Group executed the Program in two equal tranches. It entered into an
irrevocable non-discretionary instruction with Jefferies International Limited
("Jefferies") in relation to the purchase by Jefferies of the ordinary shares
for an aggregate consideration (excluding expenses) of no greater than $25,000
for each tranche and the simultaneous on-sale of such ordinary shares by
Jefferies to the Group, subject to certain volume and price restrictions.
In February 2024, the Group completed the Program and has repurchased an
aggregate of 20,182,863 ordinary shares under the Program. These shares have
been held as treasury shares and are being used to settle the vesting of
restricted stock units or exercise of stock options.
In March 2024, the Group announced a proposed capital return of $100,000 to
its shareholders by way of a tender offer (the "Tender Offer"). The proposed
Tender Offer was approved by shareholders at the Annual General Meeting of
Stockholders held on June 6, 2024, to acquire a maximum number of 33,500,000
ordinary shares (including ordinary shares represented by American Depository
Shares ("ADSs")) for a fixed price of 250 pence per ordinary share (equivalent
to £25.00 per ADS) for a maximum aggregate amount of $100,000 excluding
expenses.
The Tender Offer was completed on June 24, 2024. The Group repurchased
31,540,670 ordinary shares under the Tender Offer. Following such repurchase,
the Group cancelled these shares repurchased. As a result of the cancellation,
the nominal value of $600 related to the cancelled shares was reduced from
share capital and transferred to a capital redemption reserve, increasing the
capital redemption reserve balance to $600 which was included in other reserve
in the Parent Company Statement of Changes in Equity.
4. Intercompany payables
The Parent had a balance due to its operating subsidiary PureTech LLC of
$27,650 as of December 31, 2024, which is related to IPO costs and operating
expenses. These intercompany payables do not bear any interest and are
repayable upon demand.
5. Profit and loss account
As permitted by Section 408 of the Companies Act 2006, the Parent's profit and
loss account has not been included in these financial statements. The Parent's
net income for the year was $107,421.
During the year ended December 31, 2024, the Parent recorded income of
$110,500 in respect of dividend received from its subsidiary.
6. Directors' remuneration, employee information and share-based payments
The remuneration of the executive Directors of the Parent company is disclosed
in Note 26. Related Parties Transactions, of the Group's Consolidated
Financial Statements. Full details of Directors' remuneration can be found in
the audited sections of the Directors' Remuneration Report. Full detail of the
share-based payment charge and the related disclosures can be found in Note
10. Share-based Payments, of the Group's Consolidated Financial Statements.
The Parent had no employees during 2024 or 2023.
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