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Receive a 3% royalty from Karuna to Royalty Pharma on sales up to $2 billion annually, after which threshold Royalty Pharma will receive 33% and PureTech will retain 67% of the royalty payments. PureTech retains its 3.1% equity ownership in Karuna.1 Additionally, under its license agreement with Karuna, PureTech retains the right to receive milestone payments upon the achievement of certain regulatory approvals and 20% of sublicense income.
KarXT was invented by a team at PureTech, including its Chief Innovation Officer, Eric Elenko, Ph.D., who served as the founding CEO of Karuna Therapeutics. KarXT is an oral, investigational M1/M4-preferring muscarinic agonist in development for the treatment of psychiatric and neurological conditions, including schizophrenia as a monotherapy and adjunctive therapy and psychosis in Alzheimer’s disease. Karuna has announced that it plans to submit a New Drug Application for KarXT in schizophrenia to the U.S. Food and Drug Administration (FDA) in mid-2023.
Sills Cummis & Gross P.C., acted as legal advisors to PureTech and Gibson, Dunn & Crutcher, LLP, Jones Day and Maiwald GmbH acted as legal advisors to Royalty Pharma.
About PureTech’s Wholly Owned Pipeline
In addition to the excellent progress across its Founded Entities, PureTech’s Wholly Owned Pipeline is rapidly advancing, and the Company’s operational runway, including its $341.4 million Cash and Cash Equivalents as of June 30, 2022, not including this transaction, is expected to support this growth into the first quarter of 2026. PureTech’s pipeline is comprised of six therapeutic candidates, four of which are currently clinical stage, including one partnered program. These candidates are centered on a strategy of leveraging validated biology to rapidly advance therapeutics with proven efficacy. Several upcoming milestones are anticipated for these candidates, including the following:
LYT-100 (deupirfenidone) is in development for the potential treatment of conditions involving inflammation and fibrosis, including idiopathic fibrosis (IPF), for which current standards of care are associated with significant tolerability issues, resulting in approximately three out of four patients in the U.S. foregoing treatment with these otherwise efficacious medicines.2 LYT-100 is a deuterated form of one of the two standard of care treatments, pirfenidone, which has proven efficacy and has been shown to improve survival in these patients by approximately three years, but its side effects cause patients to discontinue or dose reduce, thereby limiting its effectiveness.3 LYT-100 has shown a 50% reduction in gastrointestinal tolerability issues in a head-to-head study versus pirfenidone, and it can be dosed at a higher exposure level, but with a lower Cmax, than the FDA-approved dosage of pirfenidone, potentially enabling improved efficacy. PureTech is currently evaluating two doses of LYT-100, one with comparable exposure to the approved dose o
Dallo
It seems they hold 3.1% of the Karuna equity still
after the deal with Royalty Pharma Enter into KarXT Royalty Agreement for up to $500 Million
Royalty Pharma has acquired an interest in PureTech’s royalty in Karuna Therapeutics’ KarXT; Royalty Pharma and PureTech will share in royalties above certain annual sales thresholds.
PureTech retains its current equity stake in Karuna in addition to milestone payments and 20% of sublicense revenues due to PureTech.
Transaction provides further non-dilutive capital for PureTech’s growing and rapidly advancing Wholly Owned Pipeline, with five clinical-stage candidates expected by the end of 2023.
March 23, 2023 03:00 AM Eastern Daylight Time
BOSTON & NEW YORK--(BUSINESS WIRE)--PureTech Health plc (Nasdaq: PRTC, LSE: PRTC) ("PureTech" or the "Company"), a clinical-stage biotherapeutics company dedicated to changing the treatment paradigm for devastating diseases, and Royalty Pharma (Nasdaq: RPRX), the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the life sciences industry, today announced that Royalty Pharma has acquired an interest in PureTech’s royalty in Karuna Therapeutics’ KarXT for up to $500 million, with $100 million in cash up front and up to $400 million in additional payments contingent on the achievement of certain regulatory and commercial milestones.
“We are delighted to partner with PureTech, which began a remarkable innovation story with KarXT that has demonstrated an impressive clinical profile in Phase 3,” said Pablo Legorreta, Royalty Pharma’s Founder and Chief Executive Officer. “We believe this important therapy will have a significant impact on patients with schizophrenia if approved by the FDA. This medicine is a notable addition to our royalty portfolio and is well aligned with our strategy of investing in breakthrough therapies that address areas of high unmet medical need.”
“We’ve seen extraordinary clinical success demonstrated by KarXT, which, if approved, will be the first new mechanism for treating schizophrenia in more than fifty years. KarXT has now demonstrated efficacy in registration enabling studies and is heralded as a potential treatment paradigm shift that could impact millions of patients,” said Daphne Zohar, Founder and Chief Executive Officer of PureTech. “This agreement will provide PureTech with additional non-dilutive capital to advance our Wholly Owned Pipeline, including our rapidly maturing clinical programs, towards potential commercialization. Such non-dilutive sources of capital have allowed us to fund our pipeline and operations without having to raise capital from the public markets in over five years, and we are pleased to be able to benefit from the success of our invented programs.”
As part of this transaction, PureTech has sold its right to receive a 3% royalty from Karuna to Royalty Pharma on sales up to $2 billion annually, after which threshold Royal
Always
The fact that Bristol Meyers is paying $14billion means the FDA approval for Karuna's KarXT Schizophrenia drug is considered a formality and thus the receipt of up to $400m in royalties plus milestone payments on approval and incoming sharing with Bristol Meyers is now almost assured.
Don't forget Puretech has current cash balances of its own of C$340m.
Watch Puretech share price on Nasdaq this afternoon .
Thanks Dallo. Good PR for Puretech also
Always
Just saw the latest..Bristol Meyers to pay $14 Billion for Karuna so Puretech's 2.4% share is worth $336m
which is mind blowing.
Always
The shareholding of 2.4% currently held by Puretech in Karuna was confirmed in the update of 2 days ago ..so it is 2.4% of c$ 12 billion or say $290m.
Lovely Christmas present for Puretech shareholders.
Tough to calculate what the Karuna stake could be worth as had been diluted of course this year
Nice Xmas present today though 😊
https://www.businesswire.com/news/home/20230323005234/en/PureTech-Health-and-Royalty-Pharma-Enter-into-KarXT-Royalty-Agreement-for-up-to-500-Million
Good work guys and a Merry Xmas 🎅 feet up 🥃
Found it PM. Yes, this is it
https://www.marketwatch.com/story/karuna-therapeutics-stock-rockets-into-record-territory-after-report-bristol-myers-14-billion-buyout-agreement-a64768b1
Jesus
How wrong could I be if Bristol Myers is taking out Karuna.
Huge benefits to Puretech in value of its shareholding plus royalties et al.
Great news if true
The WSJ is reporting that Bristol Myers has bid $14b $330 a share for Karuna that is the reason for the jump today
Always
Reas update issued 2 days ago.
Major special dividend and / or share buyouts to be announced within weeks.
I have suggested to Kana in Investor Relations that the remaining Puretech 2.4% shareholding in Karuna valued at $200m be sold and used to fund the return of a similar amount to shareholders.
This message was passed on to the Executive management who I feel are already beginning this process.
The remaining Karuna Royalty payments of up to $400m payable to Puretech from Royalty Pharma plus
further milestone and income sharing receipts are enough risk/ benefit to carry in Karuna and hence the smart move is divest the shareholding in Karuna whose market cap of $8b is in my view is fully valued.
ATB
Bristol Myers’s is bidding $14b or $330 per share for Karuna according to the WSJ
The MMs took down yesterday. Sector is poor of course but this one always felt way undervalued. Looks like the is lid coming off today ( half day)
Read the results mate look at the share price prtc was far to cheap they brought it down far to low
Came good here at last. Still can’t see a major reason though but saw trades building.
Opened a position here yesterday and added today on the back of the AJ Bell recommendation.
Good timing (which has been a rarity overt the last 12 months).
Can't find any reason for this rise yet though.
Up 14%
Let's see what happens on the Nasdaq opening
Interesting
Yes, it's almost as if the market is saying "OK, you've taken two products to market and generated oodles of cash, but we don't believe that KarXT will get FDA approval, and we don't believe that any of the other 28 candidates will either."
I know where I sit on this, it's now my biggest holding too.
Just read a article on Citywire. Peel Hunt have a price target of £9.30!! but we are at all time lows. US fairing a bit better real head scratcher this share. I normally ignore broker targets but on this occasion I'd be happy if they were half correct. Now my biggest holding hopefully 2024 will see true value out. GLA
Superb update today.
New founded entities established to fund and drive forward some of Puretech's wholly owned therapies thereby releasing funds for shareholders.
Special dividend and/or share buybacks to be announced.
Sale of remaining 2.4% equity interest in Karuna looks likely in the near term releasing c $200m for distribution to shareholders.
Vedanta progressing very well and could be next Karuna with multi billion valuation with c 47% shareholding held by Puretech.
Other founded entities, apart from Gelesis , moving along and the wholly owned drugs being kept in house by Puretech could be blockbusters after trial results later in 2024.
All in all fantastic news and validates everything I have said in my previous posts.
As usual the UK Stock Market hasn't responded in terms of an uplift in the Puretech share price...maybe Nasdaq will.
ATB
Topped up this morning after the update.
Nas pre trade seems positive. Let’s see …
I've bought a small holding yesterday and today. Like the margin of safety and no funding concerns.
Added here this morning
Dallo - Thanks to you also for taking time to reply, particularly with information you've requested personally from IR. I also feel the health sector in general is out of favour just now (my holdings in GSK, HLN, HIK and SN are a testament to that) but the valuations are becoming hard to ignore. In fact, I think that AI will be making a significant contribution to valuations in the next few years, so I'm happy to build slowly. For my sins, I have modest investments in a large number of different stocks, which means at times I don't have enough time to fully research everything equally.