Member Info for dallo

Lesley

Archer has copied and paste some of Puretech's website comments but also appears to directly quote some of my own recent analysis ( and others here on LSE ).

I agree with many of his observations but he has omitted the company's commitment to return cash to shareholders following the completion of the Bristol Myers acquisition of Karuna which is only matter of months away which could result in a special dividend/ buyback of the order of £200m.

Also following the completion of the current buyback programme in 4/5 months the free float will be approx

50 million shares which is nothing.

An announcement of an IPO for Vedanta in the near term could also be a major catalyst for a mega rerate of Puretech shares imho.

Like others here I am dumbfounded by the current share price but this could dramatically change in the weeks ahead.

ATB

Well the Directors including Tim have already bought shares in the most recent placings at much higher prices and also they are now in a restricted closed period following the year end and maybe also because of impending newsflow ( we hope).

The two Tims also have options at 5p and 10p so plenty of incentives to get things moving.

Considering the crazy rises in some other AIM stocks recently any bit of good news here could attract the TikTok hordes particularly given the miniscule market cap and the late stage Lupuzor and CIPD trials about to commence.

Patience as always required but we need something positive soon as I am getting old!

ATB

By my back of the envelope calculations, it looks like the current $50m buyback programme is nearly 80% complete with an estimated 4 million further shares ( at a benchmark assumption of the current share price)

to be acquired.

Based on yesterday's buyback of c100,000 it will take a further 2 months or more to finally complete the full buyback and will leave total issued share capital of c265 m of which, at most ,will result in a free float of c50 m shares which is paltry for a company such as Puretech.

One positive announcement could see daily trading volumes close to the free float and then we will see serious upward price movements imho.

Patience still required.

ATB

Oldernowiser

Invesco own c24% with 8 other institutions including Lansdowne, M&G, Baillie Gifford, Hargreaves owning a further 47% or so .

Daphne Zohar owns c 4.8% with other management/Directors holding about 4% between them.

So nearly 80% held by Institutional and management investors leaving a 20% free float.

The share price is being tightly controlled imho and bears no relationship to the actual economic value of the company.

Why this is the case is totally perplexing to me .

Very strange indeed.

Puretech's Pulmonary Fibrosis drug , LYT-100 in Phase 2 trials is a potential blockbuster with only one drug currently approved in the market for this disease and the market size for PPF expected to reach $5 b by 2026.

Interestingly Bristol Myers has progressed its own PPF drug through Phase 2 and has been given advanced drug derogation by the FDA.

I see Bristol Myers having a close look at Puretech in this regard and given the royalties issue, it may prompt an approach particularly at Puretech's derisory current market cap and sizeable cash resources.

A lot to look forward to imho

Lambo

Thanks for your thoughts.

However there are still a number of possible catalysts in the short term including a Rest of the World deal on Lupuzor and some news on CIPD .

Also should Incanthera start delivering in bulk to AS Watson in the 2nd half of 2024 and generates significant revenues ( Mc Carthy intimated orders of 500,000 units in 2024 and increasing dramatically next year with other major retailers being signed up in Europe and the US), Incanthera's market cap could reach £50m thereby giving Immupharma access to over £5m should it sell its shares or part thereof.

And there is also a possibility of a bid from Alora or another Pharma given the late stage trials of Lupuzor and CIPD.

The risk reward ratio is appealing at a market cap of c £6/7 m imho.

But I would say that wouldn't I .

JSB

If you read the Bristol Meyers official statement on its website regarding the acquisition of Karuna you will note that the deal is not contingent on FDA approval but only on shareholders and regulatory approval of the transaction and is expected to be completed by the end of June 2024 at the latest.

FDA approval is assumed as a given .

Puretech will receive c$325m on completion of the Karuna takeover and on FDA approval of Karuna drugs will receive a milestone payment of c$10 m.

Also Royalty Pharma will then pay the balance of $400m in respect of it acquiring Royalty rights of 3% on Karuna revenues up to $2b and 1% above $2b ( Puretech will get 2% royalties above $2b).

So add $325m plus $400m plus $10m gives us $735m payments to Puretech from Karuna deal in the current year alone.

Please tell me I am missing something here!!

As I have said in my previous posts Bristol Myers will surely not allow Puretech and Royalty Pharma to skim of potentially over $1b to $2b in royalties over 15 years on the back of BM's global distribution and marketing power.

Crazy stuff and Puretech has a market cap of £530m with own cash of c$325m.

Are we missing something???

TakeAim

Fully agree with your analysis.

I sometimes think I am stupid in my view on Puretech but the price action today is bewildering and makes no sense

The presentation by Zohar yesterday was highly impressive and clearly set out the value disconnect which the market totally ignored but one suspects there may be deliberate manipulation going on with a predatory objective of offering a false premium in any possible offer ie an offer of 100% or 200% above the last share price which would still undervalue the true worth of Puretech.

I emailed the company of this danger and with Invesco holding 23% of the shares , the company is very vulnerable to a low ball bid .

Short term traders have sold out as the shareholders cash returns now await the closure of the Bristol Myers takeover of Karuna which has a minor regulatory risk.

Wall Street may determine our fate very soon and Puretech better have defenses in place to repel a bid below true value.

ATB

We haven't heard from Oscar22 for a while ,which is a pity as his posts were very informative and interesting.

Maybe he has moved on.

I see Tim McCarthy has just been on Proactive Investor

in a euphoric triumphant interview on the miracle that is Incanthera.

Huge revenues expected this year for Incanthera and more growth to come next year as new deals with other major retailers are announced.

Sounds like a major winner and Tindall Asset Managers has increased its shareholdings to 11.7% per RNS today.

Immupharma's shareholding in Incanthera could be very valuable indeed.

Meanwhile Immupharma remains unloved and unwanted !

J P MORGAN CONFERENCE to be precise!

Presentation at Morgan Stanley Conference at 12pm EST or 5pm UK.

If you want a laugh or a good weep, Incanthera has a market cap of c£9m while Immupharma has a market cap of c £6.8m.

I think I will opt to weep.

Unprecedented

I think some form of corporate action is very possible and may involve a takeover of Puretech.

For instance surely Bristol Myers having paid $14 billion for Karuna is not going to accept a situation whereby Puretech and Royalty Pharma have royalties of 3% on Karuna revenues going forward particularly as these revenues will be driven by Bristol Myers massive distribution and marketing power.

I feel something is going to pop here very soon imho.

I wish I had some more funds to add to the 100 ,000 shares I hold at present.

Greed is a terrible curse!

Pokerchips

Incanthera going well after distribution deal and share placing and up 44% today.

Unprecedented

Now up on Puretech Website I should say.

Unprecedented

Cheers for that ...not up on Puretech website.

I note returns to shareholders to be finalised on the completion of Karuna by Bristol Meyers.

ATB

Unprecedented

Badly worded by me in last post as I meant to say the Puretech investment case rests firmly on Karuna AND the other factors which I mentioned in the following paragraphs notably Vedanta and the new Founded Entities, Seaport and Gallop and Puretech's in-house drug therapies notably LYT-100 ( which Puretech think could a blockbuster) and the Puretech cash holding of $320m.

The issue of how best to return cash to shareholders is a tricky matter and I suspect Invesco will have a say in the matter.

The share buyback option I agree can be laborious so a mix of special dividend and a share buyback may be the answer.

I am not interested in shareholders getting shares in founded companies IPOs as this is far down the road and why invest more in these derisked companies when Puretech will still have a sizeable shareholding.

Also, other than somewhat small additional investment, I don't see the logic in Puretech investing large amounts of cash in derisked founded entities such as Seaport and Gallop as the very reason for setting them up was to derisk the costly financing of the research and development of certain drugs,

free up cash resources for own in-house drug development and return cash to shareholders .

Remember Karuna was blow out winner and maybe Vedanta may be as well but the other founded businesses have underperformed badly.

So we await to see what Zohar has in mind regarding returning cash to shareholders as she was in a bit of bother with large shareholders a few months ago when the share price hit a 5 year low of 145p or so.

ATB

TakeAim

Regarding NAVs , Puretech's investments in its small listed founded entities, Akili, Vor and Gelesis are not material in the overall analysis with a value of just $10 to $15m exclusive of potential royalties.

Gelesis who received FDA approval for Plenity ,its weight loss product has been totally wiped out by the new drugs such as Ozempic and Puretech has abandoned its interest in taking it over.

It's smaller founded entities Sonde and Entrega have potential.

However the Puretech investment case rests firmly on its c$ 1 billion potential receipts from Karuna following the Bristol Myers Squibb takeover ie $325m for its direct shareholding plus $400m from Royalty Pharma for Karuna revenues up to $2b and 2% royalties on revenues above $2b plus c$10m on FDA approval.

The newly incorporated founded entities Seaport and Gallop release major research and development funding from Puretech's cash resources and are involved in exciting new cancer and neuroscience therapies.

Vedanta is possibly the next Karuna and this year's drug trials and maybe an IPO could be transformational .

Then we have Puretech's own in-house drugs particularly LYT-100 reaching end stage trials added to Puretech's current cash pile of C$320m.

I agree a major catalyst for shareholders will be the announcement of a major special dividend and or share buybacks.

Even though Puretech is putting its current share buyback into Treasury, I would rather see this continue at a greater level rather than a dividend at this depressed share price level as it suggests Management is not able to use its surplus cash more wisely.

If Zohar is convinced of the potential of Puretech and recognises the stark underlying mispricing of the shares then what better investment can she make other than buying Puretech shares.

ATB

The Vedanta $1b valuation is higher than the DealRoom.com valuation of c$550-680m in April 2023 after the financing round completed in that month.

The increase is due to major progress in Vedantas drug pipeline with 4 drugs now in late stage clinical trials ( one in Phase3 and three in Phase2 ) and the improvement in the market for Pharma investment particularly in the US...Note Bristol Myers acquisition of Karuna for $14 billion as an example.