by Sal Daher, CFA
Daphne Zohar is pioneering a distinctive approach to innovation in biotech that does not attract enough attention. It involves unusual openness to new ideas coupled with disciplined vetting of the ideas’ technical and commercial possibilities. She also has keen eye for talent. The results are astonishing.
I know this first hand because I am an early investor in several of PureTech’s founded entities including Gelesis, Inc. (FDA-cleared weight loss capsule), Akili Interactive (FDA-cleared digital therapy for ADHD), and Vedanta Biosciences (clinical-stage company developing rationally-derived therapies from human gut bacteria which just had great Phase 2 results). I was so impressed by PureTech’s process that I also invested in the company’s public stock after I missed the opportunity to invest directly in another of their founded entities, Follica, which is developing an intriguing treatment for hair loss.
There’s a lot to more to PureTech than just the entities I mentioned above. They founded and took public Karuna Therapeutics that has the potential to upend the treatment of schizophrenia (I also own Karuna stock). There’s Sonde which is measuring people’s health using their speech and Vor which is engineering cell therapies. PureTech also has a wholly-owned pipeline of therapies to treat maladies ranging from solid tumors, to lymphedema, to long COVID. On October 1, 2021 they had a market capitalization of US$ 1.3 billion and about $400 million of cash on hand.
Not all of my PureTech-related investments panned out. I was also an investor in Tal Medical, the PureTech-created entity developing a technology to treat depression using a particular pattern of MRI that had shown early promise. PureTech shut down the company because a clinical trial failed to confirm the early results. This failure actually gave me a keener appreciation of their process. In the depression space, clinical trial results can be affected by a variety of factors. They could have considered a re-designed study but they chose not to pursue the opportunity in the absence of strong signal of the therapy’s value. It impressed me that they had the discipline to suspend work on such an alluring project.
This approach of subjecting candidate therapies to onerous tests and continuing to develop the candidate only if there’s a strong signal is more fully explained in this video interview with Paul Tunnah of Pharmaphorum: https://youtu.be/bssZlyQLUQA
Daphne Zohar has also shown a knack for recruiting top scientific and management talent. Bob Langer, the renowned MIT professor and co-founder of Moderna, is a co-founder of PureTech Health. The CEO of Tal Medical, Jan Skvarka, went on to head Trillium Therapeutics which he took public. The board of directors and scientific boards include top names in their disciplines.
PureTech Health founded entity Gelesis, Inc. is heading to public markets in a deal with the Capstar SPAC. The choice of Capstar was driven by the experience its sponsors have in building consumer brands. It is hoped that Plenity, the FDA-cleared weight loss treatment Gelesis developed, will achieve broad acceptance with consumers since its indication is broad enough to reach a potential market of 150 million people in the US alone. While clinical trials showed that Plenity produces moderate results, it was shown to have an excellent safety profile since its action in the gut is strictly mechanical. As a user of Plenity, I have found it tremendously helpful for staying on a structured weight loss program. I suspect that the feeling of satiety Plenity causes will be appreciated by many dieters.
So my bet is on the process that Daphne Zohar has built at PureTech Health and on her ability to attract and motivate highly talented collaborators.
This is a thought piece and is not meant as investment advice. Investing in shares of companies, private or public, should be done only with due consideration of the risks entailed and of the investors ability to bear such risk. If you are seeking investment advice you should speak with an investment advisor.
