By Rich Soll, Senior Advisor, Strategic Initiatives at WuXi AppTec (@richsollwx)

For the past few years, PureTech Health has been building a new R&D model for advancing breakthrough scientific discoveries to help solve some of the world’s biggest health challenges. The company has shepherded new modalities from academic discovery through FDA filings.

PureTech is an advanced, clinical-stage biopharmaceutical company developing novel medicines for dysfunctions of the Brain-Immune-Gut or “BIG.” With hundreds of millions of neurons and 80% of immune cells converging in the gastrointestinal (GI) tract, this emerging field of human biology provides a rich source of exciting new biological insights.

PureTech is advancing a rich pipeline of innovative therapies across two divisions. Its Affiliates division includes two product candidates that are preparing for potential regulatory approval in the United States and Europe, as well as a number of clinical and preclinical programs. The company’s Internal division is advancing a pipeline fueled by recent discoveries in lymphatics and immune cell trafficking. These programs build on a new understanding of the transport and biodistribution of various immune system components in order to develop targeted therapies for diseases with major unmet needs, including cancer, autoimmune, and neuroimmune disorders.

PureTech’s Founder and CEO Daphne Zohar describes the company’s hybrid model as “a new biopharma R&D model” in which it develops new medicines in a flexible structure that is designed to be entrepreneurial and enables efficient deployment of resources based on the science.

PureTech (PRTC.L), which raised $196 million through an initial public offering in June 2015 and another $100 million in April 2018, has created a pipeline of nearly a dozen operating affiliates that have pioneered new categories of medicine such as digital medicine, microbiome derived therapeutics, and mechanotherapeutics.

The company’s seasoned management team has also attracted an all-star board, including leading scientists like Robert Langer, Bob Horvitz, and Raju Kucherlapati; MIT Media Lab Director Joi Ito; former CEO of Sanofi Christopher Viehbacher; former R&D heads at Pfizer and Merck, respectively, John LaMattina and Ben Shapiro; and former CEO of The Economist Marjorie Scardino.

Zohar, herself, has been recognized as a top leader and innovator in biotechnology by various sources, including EY, BioWorld, MIT’s Technology Review, the Boston Globe, and Scientific American.

I recently caught up with Zohar, who explained PureTech’s distinctive strategy and model and its passionate mission to develop treatments for unmet medical needs.

Rich Soll: You have described PureTech as a new kind of biopharma company. Can you elaborate on that?

Daphne Zohar: We are focused on developing new medicines for serious diseases. Built into our model is the exciting science, which is necessary, and also a new R&D model that we believe has advantages in aligning incentives between management and investors, deploying resources more efficiently, and the flexibility to monetize assets to provide less dilutive funding as the company grows.

We’re a publicly traded company, and if you think about a lot of publicly traded biopharma or biotech companies, you know they are often set up to do binary experiments where you have a great team and you’re doing this experiment, and you don’t know what’s going to happen. And then if it goes well, you continue to build on that approach, and if it doesn’t go well, the team disassembles. There are a lot of inefficiencies in the way that is set up. One of the things we at PureTech have the ability to do is to say, okay here’s the science that’s looking good, let’s put more resources towards that project and move the resources away from the project that didn’t go well, but it’s the same team and the same cash. So, I think that’s pretty unique, and I think it’s a combination of a flexible entrepreneurial approach and really innovative science focused in a particular area (BIG axis) that works well.

Rich Soll: What are the advantages of this model?

Daphne Zohar: A benefit of this model is that we don’t have the same bias/incentives to continue a program at all costs. When everything rides on one or two programs, it’s hard to look critically and objectively at data. There’s a tendency to push forward because often, the only alternative is to dismantle the team, fold or to radically reboot. We believe our structure –a parent company with operating subsidiaries and an internal pipeline – helps align incentives to overcome this understandable inherent bias that exists in more binary entities. Our management team – which has its equity only in the parent company – assesses each program, with a healthy dose of skepticism, and shifts money and human resources to the programs that can most benefit. This approach aligns incentives between management and investors.

Big pharma has tried to implement similar models but often with limited success because in larger companies it’s hard to turn on a dime. In an entrepreneurial environment such as ours, we can be nimble based on where the science leads us. The biotech industry is an ecosystem; it needs innovators, entrepreneurs and disruptors of many stripes to thrive. We’re not suggesting our model would – or should – work for everyone. But we’re excited by the benefits we’ve seen.

Rich Soll: What unique approaches do you use in vetting an opportunity?

Daphne Zohar: One thing we do in the early phases is thematic sourcing and experimental due diligence. We start with the problem/unmet need and look at what’s been tried, what are sub problems one could address, etc., and often come up with really unique ways to get at the problem through an orthogonal perspective. A lot of times pharma companies will do the same sort of landscaping of what’s happening in a field, but then when it comes to finding a specific approach that might be really innovative, they’ll say, “That’s really intriguing; we’d like to see it after the following three questions have been addressed.” And then the question is, who’s going to do those experiments? Often what happens is an individual scientist is not going to do the experiments that might kill their project; they’ll do the experiments that will advance that project. So, I think our approach is unique in that we take really innovative ideas and say, okay what would it take to convince the skeptics? But we do that as partners to the scientists. For example, in the case of a digital medicine we advanced, the skeptics wanted to see a double blind, randomized controlled study compared to a control game. In other cases, convincing the skeptics may be through repeating the work in multiple labs. We take this very seriously though because a scientist’s life’s work may be at stake; so, if we can’t initially repeat the work, we may try several times collaboratively to increase the chances of a successful outcome.

Rich Soll: So, you have an eye towards commercialization is that right?

Daphne Zohar: Just like any biopharma company, we are focused on developing medicine. One of the key things in developing new medicines is to reach patients. Depending on how we progress with a specific project, we might commercialize it ourselves or develop commercial partnerships, either regionally or globally. I don’t think that’s much different from any biopharma company. Our mission is to develop new medicines to intervene early in serious disease. Two of our affiliates have filed for FDA approval and it was really inspiring to have a role in taking these really novel ideas from inception to the point of filing.

 Rich Soll: What is your number one goal? To sell the companies/technologies PureTech creates?

Daphne Zohar: What is driving us is to have a major impact on human health. Medicine is changing on many levels, with the current system being unsustainable. What is the biggest way to affect positive and important change in healthcare? We believe it’s through intervening earlier in serious diseases where one can potentially make a major impact on outcomes. That requires new thinking, and safer medicines that have the right risk/benefit profile and that can target a very broad patient population.

Rich Soll:  I admire the areas that you chose. Many oncology companies just focus on oncology. You’re coming at it from the immunology concept.  How did you choose those access points?

Daphne Zohar: It really helps to understand that there are 500 million neurons and 80% of the immune cells that we have in our body all converging in the GI tract. And if you think about the Brain-Immune-Gut as our only adaptive systems that directly interface and change based on environmental stimuli, most chronic diseases result from dysfunctions in those systems, and an attempt by those systems to either overshoot or under correct to an external modern environment, which our “ancient” bodies did not evolve to deal with. For example, humans did not evolve to deal with high caloric content, high carb diets that now lead to obesity, diabetes, NASH, and related co-morbidities. Our host immune system and microbiome evolved in a different environment– one that was much less obsessed with cleanliness. Our brains weren’t built to handle the highly intrusive and addictive impacts of constant stimuli and stress. So, for us, the important and exciting science around this Brain-Immune-Gut supersystem ties together some of the most exciting new scientific discoveries and also provide a path to tackling serious chronic diseases.

Rich Soll: How do you deal with the challenges in applying your strategy?

Daphne Zohar: We’re starting with the problem, and before we spend a lot of time in a space, we really try to understand what has been done in the field before, and what have been some of the problems that people keep coming up against. And we then say, well if we could find/develop an approach that had the following characteristics, then we’d have a chance of really tackling this problem in a new way. So, it’s not just coming at it and trying the same thing that other people have tried, but if we can address the areas and key problems other people have run into, then maybe that could be a way around the core gaiting issue.

For example, if you think about obesity, if you ask people about obesity drug development or the marketing of obesity drugs, there haven’t been major success stories. At the same time, more than two thirds of adults are overweight or have obesity, and according to the WHO, that’s around 1.9 billion globally. Then you have obesity-related conditions like heart disease, stroke, diabetes, and cancer, some of the leading causes of preventable death. Then, we look at approved oral therapies that have had issues with side effects, which have limited the treatment population that can access prescription drugs.

Think about it, we’ve evolved to avoid starvation. So, if you’re trying to affect a specific neural target where there are many redundant pathways, there’s a higher risk of safety issues. But if you try to do this mechanically, you’d potentially have something safer, and we knew that surgery works. The approach that we took was to say, okay we’re looking for something that acts like surgery, that acts mechanically, but is very safe and can be delivered orally. Then, when we looked at different ways that you could do that , we considered a number of different materials and approaches, but there weren’t many that were feasible. We took the ones that were most promising and advanced them experimentally, which has now resulted in the completion of a pivotal study and a filing for FDA approval. The idea is that it could potentially be relevant for people not in the 35 plus BMI range, but more importantly, also the lower BMI ranges. The idea is that you can intervene early, for example, in areas like pre-diabetes, and have an effect there.

Rich Soll: The programs you choose typically have breakthrough potential, hence they tend to be risky.  How do you identify and manage the risks?

Daphne Zohar: We try to identify what the biggest risk factors are early on, such as, what would convince the skeptics, and what would convince the leading experts in a field? We set it up so that we’re doing experiments that would be convincing to the skeptics, and in some cases, if it’s a very novel approach, we have to take it further.

What’s good about being in the field that we’re in is it’s not like a tech company where you’re developing something, and you see if you can convince people to use it. We’re focused on major health problems with big needs. If you can show that your approach works in targeting one of the biggest needs, it’s not the same kind of market building problem that you have, for example, with a new consumer technology. We are very interested in the convergence of technology and healthcare and looking at ways where you could connect with consumers differently, given that the healthcare landscape is changing in so many ways, including its distribution channels.

Rich Soll: How has funding helped PureTech achieve its goals, and what do you hope to accomplish over the next few years?

Daphne Zohar: We started PureTech with limited funds in a way that was very capital-efficient; we set up a process where we would bring in capital into specific programs through operating subsidiaries. Over the last few years, as we’ve demonstrated a strong track record using this model, we have also been able to raise significant capital on a parent company level. For example, we recently consolidated our internal pipeline programs into a separate division.  This division, which includes our milk-derived exosome technology, just announced a deal with Roche that could yield over $1 billion in payments if successful. We’re not bringing in outside equity partners into our internal pipeline, but we will continue to work with strategic partners.

The focus across both our internal and affiliates pipeline is on the Brain-Immune-Gut with a specific emphasis on lymphatic and immune cell trafficking in our internal pipeline. We are still developing and managing our Affiliates division and there’s a tremendous growth there as well with two FDA filings, and a number of clinical readouts.

Rich Soll: What can we expect from PureTech and its affiliate companies in the microbiome space?

Daphne Zohar: In areas like the microbiome, we have been a pioneer. For example, our affiliate Vedanta Biosciences is the leader in defined bacterial consortia and is in or entering the clinic in multiple areas: infection, inflammatory bowel disease, allergy and immune-oncology, and Commense is one the pioneers in the early childhood microbiome focused on the first 100 days of life that shape the immune system. It’s lead product candidate is indicated in atopic dermatitis and allergic conditions.

More broadly, over the next few years, PureTech will continue to evolve and grow with an increasing focus on the “I” in BIG – an even greater emphasis on the immune system.

Rich Soll: How has PureTech evolved over time?

Daphne Zohar: Initially, we were thinking of ourselves as sort of an institutional entrepreneur, an institutional version of what an entrepreneur does in life sciences. The idea was to have an unbiased element. Because we started from scratch and we didn’t set things up the way a VC fund would, we set up as an operating company with the approach of developing medicines. We’ve experimented with some things which are new, and I think, are very important and potentially relevant to the industry. There are a few others that are also playing with a similar model, such as RXcelerate, Nimbus, and Bridge Bio. I see it as a new R&D model as opposed to a new VC model. I think that’s really important for the industry because there are going to be a range of opportunities and having different ways to advance them is a good thing.

Rich Soll: Biomedical research is hard. What advice do you have for young people getting into the field?

Daphne Zohar:  My advice would be to worry less about your own status and more about just doing your best work. Importantly, it’s a long game. Being as honest, ethical and compassionate as you can in all dealings not only helps with business even if the near-term gains are less, but it also helps you to sleep well.  There’s a CNS lymphatics connection here – sleep is important.

Rich Soll: What inspires you about your job?

Daphne Zohar: What I find most inspiring is working with scientists who are trying to address problems that have a huge impact on human suffering.