Insider: biotech receives significant boardroom backing

A new-look board at PureTech Health (LSE:PRTC) has followed up on its pledge to sharpen the biotech’s focus on shareholder value by spending almost £300,000 on personal stakes.

The FTSE All-Share company, which invented the schizophrenia treatment KarXT before it was acquired by Bristol Myers Squibb for $14 billion (£11 billion), has refined its strategy so that it looks to prioritise spend that is “truly value accretive to shareholders”.

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House broker Peel Hunt, whose price target of 507p compares with the average price of 124p at which four directors bought shares last week, said recently: “A criticism we occasionally hear is that portfolio progress doesn’t translate into share price movement.”

It believes the strategic clarity outlined in August’s half-year results is a first step in addressing this, having seen the company lose its FTSE 250 status following a fall from 400p in 2021.

The broker said: “There is little doubt, in our view, that the portfolio value at PureTech exceeds the market cap several times over. There is a noticeable change in tone in these results and a return to the core of what PureTech does well.”

PureTech operates a hub-and-spoke R&D model, where the “hub” drives new innovations and early programme advancements, which are spun out into founded entities or “spokes” that leverage external capital to further advance a programme.

The portfolio includes 100% economic interests in Celea Therapeutics, which is delivering treatments for people with serious respiratory diseases, and in Gallop Oncology.

It returned $100 million (£80 million) to shareholders in 2024, having generated significant proceeds from the schizophrenia treatment business it founded from an initial investment of $18.5 million.

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PureTech retains rights to certain regulatory and commercial milestone payments to Cobenfy, as the treatment is now known, in addition to 2% royalties on annual sales above $2 billion.

The company’s primary financial metric of cash balances stood at $320 million in the half-year results, which contrasts with a market capitalisation of £303 million. PureTech was valued at £363 million in its 2015 IPO, when shares were priced at 160p.

Interim chief executive Richard Lyne, who spent £100,000 on PureTech shares last week, said the new strategy represented a return to the company’s core strengths – “a capital-efficient engine for high-impact innovation”.

He said this meant optimising spend on current and any new programmes to reach key inflection points, after which they can be advanced through founded entities or other structures with dedicated operational capacity and external financing.

Lyne has also committed to strengthen the Massachusetts-based company’s engagement with UK capital markets, alongside its Nasdaq dual listing: “We view our presence on the London Stock Exchange as an important part of our history and identity.”

The former chief executive of Arix Bioscience joined PureTech as chief portfolio officer in January 2024. He replaced Bharatt Chowrira, whose departure in July after eight years at the company was announced a week after Raju Kucherlapati stepped down as chair.

Sharon Barber-Lui, who is the former chief financial officer of Merck & Co, leads the board on an interim basis. She spent £81,000 on PureTech shares on Wednesday, alongside purchases worth £74,000 by long-term non-executive director and former Pfizer Global R&D president John LaMattina and £36,500 by fellow board member Michele Holcomb.

Returning to dividend list?

The executive chair of Gulf Marine Services (LSE:GMS) has upped his stake after the company’s progress towards a first dividend in almost a decade failed to stem a reverse for shares.

Gulf’s 14 self-propelled, self-elevating support vessels serve the offshore oil, gas and renewables industries in the Arabian Gulf and the North Sea.

Mansour Al Alami, who has overseen a debt reduction drive since joining Gulf in November 2020, spent £20,400 on shares on Wednesday at a price of 15.8p.

The FTSE All-Share stock had been 21p in June and 18.2p prior to half-year results on 9 September, compared with house broker Panmure Liberum’s price target of 32p.

The company, which last paid a dividend of 1.2p a share in May 2017, has reduced its net leverage ratio to 1.73 times earnings from as high as 8.06 times at the end of 2020.

Having nudged up earnings guidance for this year to $101-109 million, the company is on track to transfer value from lenders to equity holders through dividends and/or share buybacks.

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Panmure Liberum assumes the company will pay 25% of annual adjusted net profit to shareholders based on 2025 results, implying a dividend of 0.51p a share for a yield of about 3% and covered five times by earnings.

The broker expects underlying demand for the company’s vessels to remain high as OPEC+ members ramp up production to meet their increased quotas.

It said: “We would expect this to translate into higher day-rates for GMS and a build in the backlog as current contracts are extended.”

Revenues rose 8% to $87.1 million in the half-year results, reflecting an increase in fleet average day rates offset by a decrease in average utilisation from 91% to 87%.

Al Alami said: “Despite ongoing operational and market challenges, including recent geopolitical tensions, we grew the business and remain confident of stronger performance through the rest of the year.”

Gulf, which was established in 1977 and joined the stock market in 2014, traded on Friday at 16.1p for a market value of £185 million.