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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.
Grezzz,
Please see some of my recent posts here.
Furthermore I have been in communication with Kana DeLuca of Puretech's Investor Relations regarding the total disconnect between the share price and the company's assets and she confirmed the Board's concern that this clear undervaluation is not recognised by the market and she referred me to the recent RNS regarding Capital allocation and investors returns and some further announcements on these plans are expected soon.
She recognised that the market cap of the company is but a small fraction of the sum of the parts valuation of Puretech and this is being addressed notwithstanding the general market apathy towards Bio tech companies.
For example she cited one of Puretech's own drugs, LYT-100 for pulmonary fibrosis which is in Phase 2B trials and for which headline results are expected in 2024 .
Kana says LYT-100 could be a $billion blockbuster drug and is one of a number within the own in-house suite of drugs which is potentially transformational.
I noted that Karuna Therapeutics, the $8billion Nasdaq listed company founded by Puretech, is a clear case in point of Puretech's ridiculous market cap of c£400m ....Puretech's 3.1% shareholding in Karuna is valued at c$250m plus royalties sold for $500m ( $100m already received and the balance on FDA approval for KartX , Karuna's blockbuster Schizophrenia drug, which is almost certain over the next months) , milestone payments of c$50m plus and other royalties in excess of a certain amount ,total up to almost $800m in real cash against Puretech's market cap of c$500m and ignoring everything else including Puretech's cash $350m and own drugs plus founded entities particularly Vedanta which is a potential multi billion $ company and where Puretech owns 40% of the equity.
Even today Puretech should be valued at around £1-1.5 billion or c4.5 /5 a share and much higher in 12 months time imho .
I am going to buy more , funds permitting, over coming weeks.
Finally I encourage you all to contact Kana by email and to confirm what I have said above and any other questions you may have.
Cheers and ATM
Unprecedented - Thank you very much for that concise and rational summary. Certainly filled some gaps in my background knowledge, which frankly wasn't much more than the price movement.. On balance, I think it's probably a good time to add.
The biggest driver of our share price is still Invesco in my opinion. They were a large investor before our float and still held over 23% at the end of 2022. It will be interesting to see how many shares they still have when they next announce. Most of that investment was through their U.K. high income fund - it had over 4% early in 2023 but that had dropped to 3% in October. All the talk about returning money to shareholders was probably to appease Invesco. It is very frustrating when the news flow continues to be positive and the share price moves don’t reflect it. Just yesterday, very positive news on our cancer drug and the share price drops another couple of percent… Even so, Invesco have been careful sellers - they will not want to hammer the share price any further themselves. Our valuation is ludicrous, our market cap is now approaching our cash position - you virtually get our investments in Karuna, Vedanta and our internal pipeline thrown in for free. Volumes are still tiny though and things will change very rapidly when the investor cash return package gets announced, when Karuna gets approved, and when LYT-100 stage 2 results come in next year.
PRTC had been on my watchlist for years. From 3xx all the way down to 17x I continued to monitor, and with research optimism and the buy-backs continuing I decided to take a position a few weeks back. The further decline to 14x for no obvious reason perplexes me. What have I missed? Some insight from LTHs would be really appreciated.
The share price is beginning to move higher at last and it will interesting to see how the share does on Nasdaq shortly with futures looking very strong and US investors more clued in to Puretech than those in the UK.
I only wish I had some more funds to invest here but after buying 50,000 shares over the past weeks ,I have run out of ammo
Unprecedented
Absolutely
Puretech has some very exciting neuro therapies in its in house drug development but unlike Karuna , whose schizophrenia drug is awaiting FDA approval to launch after a successful Phase 3 trial and Vedanta whose drug is close to final trials, it is probably a year or more away from final FDA approvals.
Hence the usual big yawn from the Market who is not bothered.
Perhaps Dallo - but I wouldn’t underplay the significance of an anti-anxiety drug that is non-addictive, has negligible side effects and is as effective as Xanax.
While this is good news on Puretech's anxiety drug , it is still only a Phase 2(A) trial result so a long way to go.
This is not the news the market is waiting for .
It is clarification on the capital reallocation and potential large return of excess capital to shareholders.
I am expecting this to be announced, as promised by the company, within the next 2/3 weeks.
This has the potential to drive the share price to nearer true values of c £4 plus.
DYOR
It looks to me like todays new has leaked
Thanks for feedback. It just seemed quite a large rise for this share without specific news.
"Undervalued" - agreed. We were nearly 300p 12 months ago and nothing much negative happened since.
Not to mention that if Puretech puts its own drug therapies into new foundation companies, it frees up it own cash pile of c$400m for distribution to shareholders.
Totally and utterly undervalued imho.
Puretech could garner from Karuna, I should say.
Drew
Yes
Puretech are set to announce a capital reallocation plan possibly involving a return to shareholders of a large special dividend and the establishment of new foundation companies to incorporate its own in-house drug therapies.
It looks like Puretech is moving to a royalties/ milestone payments operation and will extract value from Karuna and Vedanta over the coming months.
Karuna could garner c $250m from Puretech's shareholding plus $ $400m from royalties sale.
Vedanta could unlock another another c$500m from its 42% shareholding plus additional funds from royalties and other payments.
Shareholder pressure is driving this change of strategy particularly from Invesco who have 24% of the company.
It could be very exciting.
Read the previous RNS from Puretech to see what it intimated was its plan.
ATB
Dallo; any ideas to explain today's rise?
Trading again
170p
The Sets will be working overtime to clear todays backlog
Very strange!
Dallo i done a dummy trade and was given a price? can't quite figure it out. surely the buy backs would have been recorded. Never seen this before. Anyone else got any clue?
Kerching
I was thinking the very same thing
No RNS from Puretech or LSE disruption notifications so no obvious reasons for no trades.
Bizarre
Anyone know why no trading today??
Correction..
Puretech has now 41% of Vedanta Therapeutics following the c $110m financing round in April this year which valued Vedanta at over $1.5b.
Angel
I have added another 50,000 shares this week to bring my holdings to 100,000 .
Karuna is a jewel in the crown once the FDA approves its blockbuster Schizophrenia drug, releasing another $400m from the royalties buyer, milestone payments as well as its 2.8% equity stake which could be worth c$250m. Vedanta could be the next major winner and backed by Pfizer and the likes of the Gates Foundation and where Puretech has a 48% equity stake and royalties etc.
Reading the last RNS update you will note Puretech is to announce major news soon on capital allocation and perhaps establishing new Foundation companies for its own in house drug therapies with a major return via a special dividend to shareholders hinted at.
Zohar is consulting with major shareholders including Invesco who hold 23% of the shares on best strategy on this proposal which could be announced at the fire side conferences in 2/3 weeks.
Interesting few weeks ahead
Dyor
ATB
Over the last year the steady buybacks have taken about 6 million shares out of circulation and stashed them in treasury. SP has in that time gone from 250p briefly to 300 and then slowly back down to 150, so assuming an approx average cost of 225p that’s cost them about £14M. At end June 2023 they had cash & equivalents of £350M and a stated annual running cost of about £72M (from memory). The market cap today is £425M.
I don’t think they will run out of money anytime soon.
atb
And they are wasting money on a buyback which is making zero difference!!