PureTech Launches Seaport Therapeutics with $100 Million Oversubscribed Series A and Announces Management Transitions

PureTech Launches Seaport Therapeutics with $100 Million Oversubscribed Series A and Announces Management Transitions

Bharatt Chowrira, Ph.D., J.D., named Chief Executive Officer of PureTech;

PureTech Co-founder, Eric Elenko, Ph.D., promoted to President

PureTech Founding Chief Executive Officer, Daphne Zohar, to lead Seaport as Chief Executive Officer, together with former Karuna Chief Executive Officer and Chair, Steven M. Paul, M.D., as Chairman

PureTech Health plc (Nasdaq: PRTC, LSE: PRTC) (“PureTech” or the “Company”), a clinical-stage biotherapeutics company dedicated to changing the lives of patients with devastating diseases, today announced key progress on its strategic initiatives to deliver innovative medicines to patients and unlock value for shareholders.

Seaport Therapeutics[i]

Seaport Therapeutics (“Seaport”), the latest Founded Entity to be created by PureTech, today announced that it has raised $100 million[ii] in an oversubscribed Series A financing with participation from top tier biotech investors ARCH Venture Partners, Sofinnova Investments and Third Rock Ventures to support the development of a novel clinical-stage pipeline of neuropsychiatric medicines created and initially developed internally at PureTech. Seaport will be led by Daphne Zohar along with Founder Steven M. Paul, M.D., who is the former Chief Executive officer of Karuna Therapeutics (“Karuna”), another CNS-focused PureTech Founded Entity that was recently acquired by Bristol Myers Squibb for $14 billion. Seaport was established by PureTech to advance certain neuropsychiatric programs and relevant Glyph^TM intellectual property. Following the Series A financing, PureTech will hold equity ownership in Seaport of 61.5 percent on a diluted basis. 

Executing on PureTech’s Hub-and-Spoke Strategy

Consistent with its model, PureTech has internally advanced Seaport’s neuropsychiatric medicines programs to a key inflection point such that the pipeline can now drive value for PureTech through an equity stake and license consideration. This enables PureTech to share the significant costs of later-stage development with outside investors and direct additional resources to its innovative R&D engine for the creation and validation of new therapeutic candidates. This same approach yielded PureTech’s Karuna, which resulted in approximately $1.1 billion in gross proceeds for PureTech to date after the Company directed $18.5 million to Karuna’s founding and internal development. Under its license agreement with Karuna, PureTech retains the right to receive milestone payments upon the achievement of certain regulatory approvals. PureTech is also owed certain royalties on net sales and is eligible to receive up to $400 million in milestone payments under its agreement with Royalty Pharma.[iii]

PureTech’s business model is designed to repeat and scale this type of outcome with rigorous financial discipline. Proceeds are recycled into the support of new programs and returns to shareholders while maintaining at least three years of operating cash runway. The platform supporting Seaport’s pipeline is one of several programs advanced during a period in which PureTech largely fueled its internal development with funds generated from Founded Entity monetization events, and PureTech has not needed to raise capital from the public markets in six years.

Management Transitions

As part of the strategic advancement of Seaport, Daphne Zohar, PureTech’s founding Chief Executive Officer and a successful entrepreneur with a longstanding passion for developing neuropsychiatric medicines, will transition into the role of Seaport’s Chief Executive Officer. Ms. Zohar will formally step down from the board of directors of PureTech with immediate effect and has agreed to serve as a senior advisor and observer to the board of directors of PureTech.

Long-term PureTech senior executive, Bharatt Chowrira, Ph.D., J.D., has been named Chief Executive Officer of PureTech effective as of today and will therefore continue to serve as a director of PureTech. Eric Elenko, Ph.D., a PureTech co-founder and current Chief Innovation Officer, has been promoted to the role of President of PureTech. 

A 30-year veteran of the biotech industry, Dr. Chowrira has been a member of the PureTech senior management team since March 2017, serving as the Company’s President and Chief Business, Finance and Operating Officer and as a member of the Board of Directors. Prior to joining PureTech, he held leadership roles including Chief Executive Officer, Chief Operating Officer and General Counsel in multiple biotech companies, including Auspex Pharmaceuticals Inc., which was acquired by Teva Pharmaceuticals for $3.5 billion, and Sirna Therapeutics, which was acquired by Merck & Co. for $1.1 billion, and was also a Vice President at Merck & Co.

Commenting on today’s announcements, Dr. Chowrira said:

“I am excited to step into the CEO role and to lead PureTech through this next phase of its evolution. We have demonstrated the evergreen success of our hub-and-spoke R&D model of venture creation, where we are able to recycle proceeds from our Founded Entities into both the funding of our current and future programs to change patients’ lives and capital returns for shareholders. As we continue to derive value from our existing pipeline, we will focus on what we have always done best: innovating the next wave of highly differentiated medicines.

“Our fundamentals are centered on careful de-risking and streamlined development internally, quickly de-prioritizing those programs that don’t achieve our prespecified thresholds for advancement to move resources to those that are the most promising. We maintain 100 percent ownership of programs until a key value inflection point is reached, and we then have the option to pursue outside financial or strategic partners to advance these programs or to continue development internally.

“This approach has enabled our R&D engine to be both very productive, as demonstrated by the 28 therapeutics and therapeutic candidates it has generated, and uniquely capital efficient – reflected in the fact that we have not had to raise money from the public markets in more than six years and will have returned $150 million to shareholders, pending shareholder approval of our proposed $100 million tender offer, which is expected to be launched after the publication of the Company's Full Year Results, subject to market conditions. This capital efficiency also allows us to be selective in determining the best path forward for each of our programs, and – as demonstrated today with the top tier syndicate of investors now supporting Seaport – our discerning strategy has created tremendous value internally that has not yet been appropriately recognized by the market.

“At Seaport Therapeutics, PureTech has brought together the proven team that helped build Karuna and some of the investors that backed Karuna’s initial funding rounds. I am confident that following our well charted strategy of starting with validated mechanisms and applying our proprietary Glyph technology to solve previous limitations will enable Seaport to provide important new options for patients with depression, anxiety and other neuropsychiatric conditions.”

“I would like to thank Daphne for her leadership since founding PureTech and for shepherding the Company to this next phase. I am grateful that we will continue to benefit from Daphne’s entrepreneurial spirit while she transitions to run one of our new Founded Entities to drive significant value for PureTech. I look forward to continuing to work alongside our exceptional team, and I fervently believe that with this proven R&D model, supported by a robust balance sheet and strong management team, PureTech has all the ingredients for tremendous, continued growth and success.”

Reflecting on today’s announcement, Daphne Zohar said:

“I am extremely proud of what the PureTech team has accomplished and the pipeline of groundbreaking medicines which we have created that can have an impact on the lives of millions of people. PureTech has now reached both financial independence and the important inflection point of returning capital. The team is positioned to excel and is infused with the spirit of creativity that has been with us since the beginning. I will continue to work on behalf of PureTech shareholders by advancing the exciting Seaport programs through a structure that can help unlock their value for PureTech.

“PureTech is in a strong position with an innovative portfolio of new medicines, stellar team and robust balance sheet, and I am pleased to be passing the baton to Bharatt who is a respected executive in the biotech industry and has been a key senior leader on our team over the last seven years. I have confidence that under his leadership, together with my co-founder Eric Elenko, who is now taking on the expanded role of President, and other outstanding senior team and board members, PureTech will continue to thrive, grow, and innovate on behalf of patients and shareholders. I look forward to supporting PureTech as a senior advisor, board observer and shareholder as it continues to deliver on its mission of ‘Giving Life to Science’ to change patients’ lives.”

Interim Chair of the PureTech Board of Directors, Raju Kucherlapati, Ph.D., said:

“On behalf of the Board, I would like to thank Daphne for her vision, leadership and dedication in founding and building PureTech. Daphne pioneered the hub-and-spoke model to create cutting-edge medicines, assembled a leading team and positioned PureTech for an exciting future and continued growth. I am pleased we will have her ongoing participation. We are fortunate to have someone with Bharatt’s experience and deep knowledge of our business to step into the role of Chief Executive Officer. He is the ideal person to successfully lead PureTech through this next phase of growth.”

[i] Seaport’s business and assets are described in more detail in the press release issued by Seaport. 

[ii] Includes participation by top tier biotech investors ARCH Venture Partners, Sofinnova Investments and Third Rock Ventures alongside PureTech’s $32 million cash contribution. Following the Series A financing, PureTech will hold equity ownership in Seaport of 61.5 percent on a diluted basis. Additionally, as the founder of Seaport, PureTech also has a right to royalty payments on a percentage of net sales of any commercialized product as well as the right under the terms of the license agreement with Seaport to receive milestone payments upon the achievement of certain regulatory approvals and a percentage of sublicense income. As at 30 June 2021, the value of the gross assets contributed by PureTech to Seaport was $18.7 million and the losses for the year ended 31 December 2020 were $32.2 million. Seaport will be consolidated in PureTech’s future consolidated financial statements as a Controlled Founded Entity.

[iii] As of 22 March 2023, PureTech has sold its right to receive a 3 percent royalty from Karuna to Royalty Pharma on net sales up to $2 billion annually, after which threshold PureTech will receive 67 percent of the royalty payments and Royalty Pharma will receive 33 percent.