Member Info for JSB1989

There is no love for the company. The hub and spoke model and company strategy significantly derisks them as a biotech but it doesn’t seem to attract the appetite of many investors.

Many mid cap biotechs are one or two trial results from being boom or bust. Had Puretech kept a significant % of Karuna and it failed P3, they would have been left with very little but in hindsight we can look and say that they could have had another couple more billion if they held a higher % for longer.

I see four valuable assets in Puretech now. We have Seaport, Gallop, Vedanta and LYT-100. I’d expect the first two to list on the NASDAQ at some point as Karuna did and more value unlocked as they progress through clinical trials.

I don’t know what the answer is to unlocking the true valuation but here is hoping that our new CEO does. The share price is dire for what is on offer. The company is sitting on $600+ million (pre tender offer) and the valuation just under $750 million. So you have the above mentioned for $150 million and the remaining royalties and milestone payments from KAR-XT still to come.

She will become the CEO of Seaport which will be integral to the valuation of Puretech and given her holding in Puretech is nearly 5%, she has incentive to deliver. I'd imagine that Zohar is privy to the levels of interest in Seaport and having seen the meteoric rise of Karuna, she wants to be the lead face of the company rather than essentially the lead of a biotech portfolio in Puretech.

We have $600 million in cash with $100 million payout, further payments due at the end of the year from Karuna and now a share in Seaport worth $150 million. That's before adding in value to LYT-100, Vedanta and Gallop where I would expect a similar route to Seaport.

Give Seaport 12-18 months and I think they will list on the NASDAQ. Valuation will only increase for Puretech on it from here.

Clearly investors believe in the team behind Karuna and have confidence that success can be repeated. $100 million raised leaving Puretech with 61.5% that values our stake $160 million. As if the valuation of Puretech didn’t get crazier!!

Frustrating to be lingering at £2.15! Makes you wonder when the value will be fully realised by the markets.

Some big A trades going through today. Let’s hope it’s close to £2.50 before the tender closing date. Any chance they would revise it nearer the time to £2.80 or £3. Is that possible or would the special dividend just be paid?

If the markets improve further and we continue with further good news, the SP may sit above the tender offer by the end of April in which case the $100 million will be paid as a special dividend to shareholders instead.

Still with $500 million in the bank and possibly more with approval milestone and potential deal on the royalties with BMS. I’d expect any further monies related to the Karuna deal to be distributed out to shareholders via tender offer towards the end of the year.

Would that not just drop off the SP? When is the cut off normally for a special dividend to be received to be on the shareholder register?

Won't be long before proceeds are with Puretech and they will announce the capital distribution. Anyone have a preference for this?

Karuna now moved pre market to buyout price of $330 following the HSR waiting period. Close of deal cited as early as next Monday (18th).

https://seekingalpha.com/news/4079400-karuna-therapeutics-gains-as-hsr-waiting-period-for-bristol-myers-deal-expires

Oldbutnowisa - You share the same perplexion at the share price as everyone else on this board. Cash = MC and then you have milestone and royalty payments and all of the other asset in the portfolio.

Approved by Karuna shareholders. Significantly derisked the transaction now.

Lesley - £5 certainly isn't a pipedream and is possible in the near term. That would value PRTC at around £1.3 billion ($1.6 billion).

Cash post Karuna transaction will be $615 million with a further $150-200 million added from post FDA approval at the end of September totalling $750-800 million in the bank. The 40% stake in Vedanta could be worth between $200-400 million and an IPO would firm up that valuation. If they did IPO, I'd like to see PRTC reduce some of the holding and release more cash. LYT-100 has the potential to be a monster but the P2 needs to be a success first and statistically beat Pirfenidone by some margin. IF it does that, there will be a lot of interest, possible tie ups with a big pharma to reduce the risk or a buyout as a P3 ready drug. Estimated value for that could be north of $500 million.

There are a lots of IFs and BUTs in a fair valuation but £5-6 certainly looks doable in the next 12-18 months.

I can’t see a small shareholder pausing a $14 billion deal. The argument presented doesn’t particularly hold water! I’m pretty sure I read that the ‘other bid’ was lower than BMS hence why they took that deal.

It would be the equivalent of PRTC getting taken over for £4. It would in most our eyes be too cheap but every shareholder will have made profit and most a significant chunk.

have you got a link or article to it ****nal?

Lesley, The only way Puretech would be at £1 in a year is if they were facing some kind of serious litigation against them. They have £1 cash per share pre Karuna. By May / June, we will have £2 per share and then by September with further milestone payments closer to £2.50 per share in the bank.

A couple of false dawns recently but I dare not trade this. Always a chance of waking up to a £4+ cash offer which would be cheap.

AKLI is a 15% holding for Puretech. The news was announced in the US yesterday and the shares were up over 100%. The MC was at $20 million and sits around $40 million after hours so $6 million to Puretech. That’s not going to move the dial massively on a $700 million company.

The drivers of the share price will be:

- Karuna deal and royalties completion news

- Buyback, special dividend, tender offer

- LYT 100 p2 readout and deals

- Vedanta IPO / takeover etc

I would imagine there has been a seller holding the share price down. The metrics are clearly out of sync. On receipt of the Karuna takeover expected by the end of H1, Puretech will have $640 million in the bank. We may or may not by that point have a deal with BMS on the royalties, milestone payments. If no deal is done, by the end of Q3 there will be a milestone paid on FDA approval which you would expect to be around $100 million. Year end cash will be eye watering either way.

Thanks for posting the link. It’s a good summary of the investment case and as Dallo pointed out it does miss out a couple of important notes such as returning capital to shareholders following the Karuna sale.

Whichever way you look at the investment case, undervalued is an understatement. I will continue to add whilst the SP is playing around at these levels.

If LYT-100 were to fail, you will still have a company with more cash than the market cap, 40% in Vedanta which could IPO in the coming year and a stacked pipeline across multiple indications. I don’t see much risk on the side of shareholders when the SP languishes under 200p.