30 June 2021 Financial Highlights

 

83.3% Ordinary NAV growth since inception (H1 2020: 28.5%)	97.2% total shareholder return since inception (H1 2020: 38.5%)
US$397.2 million Ordinary NAV (H1 2020: US$238.3 million)	US$1.91 NAV per Ordinary Share (H1 2020: US$1.34)
US$2.05 price per Ordinary Share (H1 2020: US$1.44)	US$10 million in cash / cash equivalents (H1 2020: US$49 million)

 

Portfolio Highlights

 

65% of NAV invested in portfolio companies (H1 2020: 47%)	13 new core portfolio companies added in the period (H1 2020: 6)
34 Portfolio Companies: 14 publicly-listed and 20 privately-held (H1 2020: 13 portfolio companies, 3 publicly-listed and 10 privately-held)	29/44 of portfolio companies' pipeline products are in clinical stage programs (H1 2020: 21/26)

 

Investing with purpose

 

We are scientists and entrepreneurs who aspire to change patients' lives through medical and scientific innovation. Our long-term strategy is anchored in identifying sources of transformational innovations by engaging in deep scientific research and a rigorous and repeatable idea generation process, which is complemented with years of capital markets, company building, transactional, operational, and legal expertise.

 

Identify transformational innovations

We have developed expertise through our comprehensive study of industry and academic efforts in targeted areas of significant innovation.

 

Engage deep research and unlocking value

We have developed repeatable internal processes combining technology and manpower to comprehensively cover critical drivers of innovation globally.

 

Build new companies around scalable and sustainable business platforms

We have the capabilities to partner with universities and in-license academic programs, by providing capital and infrastructure to entrepreneurs to advance scientific programs. We have the capabilities to partner with companies with more mature assets to further their development and commercialize them in new geographies. We also have the capability to identify genetic targets and develop therapies to address those targets.

 

Support full lifecycle investment

A key part of our competitive advantage is the ability to determine at what point in a company's life cycle we should support the target asset or pipeline.

 

Our focus on innovative medicine

We have developed expertise through our comprehensive study of industry and academic efforts in targeted areas of significant innovation. In an industry of probable outcomes, we focus energy on efforts we determine to have a high probability of success. We believe we can add more value to entrepreneurs and scientists and ultimately positively impact patients. Our current focus areas include both technology platforms and disease areas.

 

 

Chairman's Statement

 

It is with great pleasure that I present the 2021 interim results for RTW Venture Fund Limited (the "Company"). The Company was admitted to the Specialist Fund Segment of the London Stock Exchange (LSE) nearly two years ago on 30 October 2019, and I am pleased to report significant performance milestones following its admission and through the first half of 2021.

 

2021 Overview

 

Building upon the achievements and extraordinary growth in 2020, the Company and RTW Investments, LP (the "Investment Manager" or "RTW") continued successfully executing their strategy in 2021. Notwithstanding the COVID-19 pandemic and volatility in the global markets, the Investment Manager remained focussed on the fundamentals and valuation of the underlying companies and demonstrated an accelerated pace of capital deployment by investing in almost as many private companies during the first half of 2021 as it did during the whole 2020 calendar year. This enabled the Company to continue building its portfolio of innovative biotechnology and medical technology companies and providing solution-driven financing strategies at various points in the individual life cycles of these companies.

 

Despite the market volatility and rotation out of growth observed this Spring, the Company share price outperformed (+9%) its benchmarks: the small-cap heavy Russell 2000 Biotech Index (-4.5%) and large-cap heavy Nasdaq Biotech Index (+8.2%) for the half-yearly reporting period. In the period from 31 December 2020 to 30 June 2021, the NAV declined by 2.7% from US$375.3 million or US$1.96 per Ordinary Share to US$397.2 million or US$1.91 per Ordinary Share. The main detractor to the NAV was the share price performance of Rocket (c. -9%), offset by IPOs of Landos (c. +2%), Immunocore (c. +2%) and Prometheus (c. +2%).

 

At the beginning of the year, the Company portfolio included twenty-two core portfolio companies, of which thirteen were privately held and nine were publicly listed. All core portfolio companies were initiated as private investments by the Investment Manager. During the first half of 2021, the Company added thirteen portfolio companies, one of which, Inivata, was acquired, bringing the total number of core portfolio companies to thirty-four, representing c. 65% of NAV by the end of the reporting period.

 

As in previous periods, to mitigate any drag on performance due to excess cash awaiting deployment into new private assets, the Company also invested c. 33% of NAV in a high-quality portfolio of listed companies or non-core portfolio assets selected by the Investment Manager to be representative of positions which are also held in their other investment funds. The balance of c. 2% of the remaining NAV was held as cash and working capital.

 

Share Issuance

 

During the reporting period our corporate broker J.P. Morgan Cazenove reported significant demand from prospective shareholders, which was reflected in the fact that the Company's share price has traded at an average premium to NAV of c. 11.5% over this period. Under UK Listing rules, the Company has the authority to issue new shares of up to 20% of the outstanding share capital in any rolling twelve-month period without filing an updated prospectus, provided the shares are issued on a non-dilutive basis at a premium to NAV. In response to market demand in the six months to 30 June 2021, the Company issued a further 16,864,022 shares, a 9% increase in the total outstanding shares of the Company and raising an additional US$36.4 million net of expenses. The share issuance was modestly accretive to NAV, contributing c. 1% to the NAV growth per Ordinary Share.

 

AGM Results and Board Composition

 

The Company held its Annual General Meeting on 22 June 2021 to consider the audited financial statements, amongst other things. The meeting was hosted in part virtually due to COVID-19 travel restrictions and we encouraged shareholder participation via the ability to table questions on our website. The results have been announced to the market and published on the Investment Manager's website https://www.rtwfunds.com/venture-fund/.

 

I am happy to report that all of our AGM resolutions were approved. It is a privilege to continue to serve as Chairman with fellow Guernsey-based independent Directors, William Scott and Paul Le Page, who collectively have several decades of experience in the listed Investment Company sector. I am particularly pleased that our fourth Director, Stephanie Sirota, who is a principal and Chief Business Officer of the Investment Manager, will continue to provide our Board with specialist technical insight and demonstrate her personal commitment to the Company.

 

Migration to the Premium Listing of the Main Market of the LSE

 

As stated in the 2020 Annual Report earlier this year, the Board intended to raise the profile of the Company with a view to broadening its shareholder base by means of exploring a migration to the Premium Listing of the Main Market of the London Stock Exchange.

 

I am pleased to report the Company has successfully completed the migration and was admitted to listing on the Official List of the FCA and to trading on the Premium Segment of the London Stock Exchange plc's Main Market on 6 August 2021. The application for admission was approved by shareholder vote at the extraordinary general meeting held on 30 July 2021. The Company also introduced an additional market quote for the shares on London Stock Exchange denominated in GBP under ticker "RTWG". There were no changes to the legal form or nature of the ordinary shares nor to the reporting currency of the Company's financial statements (which will remain in US Dollars).

 

The Board believes the Premium Segment of the Main Market is the most appropriate platform for the continued growth of the Company by increasing RTW Venture Fund's profile, broadening its shareholder register, adding sterling denomination, and facilitating the Company's eligibility for inclusion in the FTSE UK Index Series.

 

Outlook

 

Even with COVID-19 remaining a pressing issue worldwide, the Company is looking ahead with optimism. As a full life-cycle investor, our Investment Manager may also invest in public biotech and medtech securities trading at attractive levels, by taking advantage of valuation disparities between small to mid-cap and large-cap companies in the sector. The Investment Manager believes that there remains significant demand for reliable capital to support the discovery and development of scientific innovation globally, and that there is an opportunity to grow their footprint in the UK and EU as an active local participant in the biotech ecosystem. The Investment Manager therefore intends to grow the Company's portfolio, by attracting demand from new shareholders to assist in the financing of an exciting pipeline of new ideas, based upon its strategy of founding, investing, and supporting companies developing next-generation therapies and technologies that can significantly improve patients' lives. Accordingly, the Board expects the Company to continue delivering strong performance over the long term and creating value for shareholders.

 

On behalf of the Board, I would like to express my gratitude for your continued support and wish you and your families a healthy, safe, and prosperous remainder of 2021.

 

William Simpson

Chairman of the Board of Directors

RTW Venture Fund Limited

15 September 2021

 

 

 

Report of the Investment Manager

 

Executive summary

 

It is with distinct pleasure that we share the interim results of the Company as of 30 June 2021. Since its listing on London Stock Exchange in October 2019, the Company has witnessed NAV growth of 83.3% from US$168.0 million, or US$1.04 per Ordinary Share, to US$397.2 million, or US$1.91 per Ordinary Share as of 30 June 2021. For the reporting period, the NAV attributable to Ordinary Shares has declined modestly by 2.7% from US$375.3 million NAV or US$1.96 per Ordinary Share as of 31 December 2020. Since admission, the share price has returned 97.2%.

 

Table 1. Financial Highlights

 

RTW Venture Fund Limited	Interim reporting period (01/01/2021-30/06/2021)	Interim reporting period (01/01/2020-30/06/2020)	Admission (30/10/2019)
Ordinary NAV	US$397.2 million	US$238.3 million	US$168.0 million
NAV per Ordinary Share	US$1.91	US$1.34	US$1.04
NAV Growth per Ordinary Share (%)	-3%	5%	--
Price per Ordinary Share	US$2.05	US$1.44	US$1.04
Share price growth (%) (i)	9%	5%
Benchmark returns (ii)
Nasdaq Biotech	8%	14%
Russell 2000 Biotech	-5%	12%

(i)             Total shareholder return is an alternative performance measure.

(ii)            Source: Capital IQ.

 

RTW Investments, LP (the "Investment Manager", "us", "we"), a leading healthcare-focused entrepreneurial investment firm with a strong track record of supporting companies developing life-changing therapies, created the Company as an investment fund focused on identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors. Driven by our deep scientific understanding and a long-term approach to building and supporting innovative businesses, we invest in companies developing transformative next-generation therapies and technologies that can significantly improve patients' lives.

 

We are pleased to report that as of 30 June 2021, c. 65% of NAV was invested in core portfolio companies vs c. 47% as of 30 June 2020. Core portfolio companies typically begin as private investments, reflecting the key focus of the Company's strategy. However, our investment approach is defined as full life cycle and therefore involves retaining our private investments well beyond their IPO, hence our core portfolio consists of both privately-held and publicly-listed companies.

 

The Company also invested approximately 33% of its NAV in publicly listed, non-core portfolio assets in order to mitigate any 'cash drag' effect. The non-core portfolio assets have been selected by us and are also held in our other funds. The investments represented in this portfolio are similarly categorized as innovative biotechnology and medical technology companies developing and commercializing potentially disruptive and transformational products.

 

Our listed core holdings produced the majority of our losses and our private core holdings produced the majority of our gains. In the first half of 2021, the main contributors to the NAV per share decrease were the Rocket share price (c. -9%), Athira (c. -1%), Tarsus (c. -1%) and Frequency (c. -0.4%). These mark to market losses were offset by IPOs of Landos (c.+2%), Immunocore (c.+2%) and Prometheus (c.+2%), the acquisition of Inivata (c.+0.4%), performance of other core positions (c. +1%) and NAV-accretive share issuance (c. +1%). The Company's performance fee allocation and expenses make up the balance of the NAV movement.

 

Figure 1. Performance drivers as of 30 June 2021

[chart]

           

On listing, the Company's core portfolio included six companies, four of which were developing clinical-stage therapeutics and two med tech companies developing transformative devices.

 

Since listing, the Company has added twenty-eight companies to its portfolio and has had one position acquired, with fifteen additions in the 2020 financial year and thirteen in H1 2021. Portfolio companies added in the first half of 2021 are listed below.

 

Our 2021 investments include:

Company name	Description	% NAV
Visus	Clinical stage biotech developing a presbyopia-correcting eye drop.	0.5%
Ancora	Medtech company developing minimally invasive implant for heart failure.	0.7%
Artiva	Developer of allogenic cord blood-derived Natural Killer (NK) cell therapy.	0.2%
Ventyx	Clinical stage biotech advancing a promising immunology pipeline for autoimmune and inflammatory diseases.	0.4%
Pyxis	Oncology biotech developing antibody-drug conjugates.	0.6%
Monte Rosa	Pre-clinical stage targeted protein degradation biotech.	0.9%
GH Research	Clinical stage biotech developing therapies to manage mental disease.	1.4%
RTW Royalty #2	Royalty as a part of RTW-Urogen deal.	2.8%
Numab Therapeutics	Swiss biotech developing next-gen multi-specific antibody-based immunotherapies for cancer and inflammation.	0.4%
Yarrow	RTW-backed new company creation focused on CNS diseases.	0.0%
Alcyone	Gene therapy platform company developing therapies for CNS diseases.	0.9%
Umoja	Preclinical-stage lentiviral in vivo CAR-T oncology biotech.	0.8%
Neurogastrx	Clinical stage spec pharma focused on gastrointestinal disorders.	0.4%

 

As of 30 June 2021, the portfolio included thirty-four companies that were diversified across treatment modalities, therapeutic focus, and clinical stage of their programs (Figure 2A-C). While the portfolio remains dominated by US-based companies (Figure 2D), we are committed to adding UK and EU-based companies in an effort to support the best assets globally and foster local biotech ecosystems.

 

Figure 2. Portfolio breakdown, by (A) modality, (B) therapeutic focus, (C) clinical stage and (D) geography as of 30 June 2021

 

(A) [chart] (B) [chart]

 

(C) [chart] (D) [chart]

 

Key updates for Portfolio Companies during H1 2021:

 

Clinical

·   In March 2021, Frequency announced top-line data from its Phase 2a clinical study of FX-322 in sensorineural hearing loss (SNHL), the interim results did not demonstrate improvements in hearing measures versus the placebo and we exited our position.

·    In May 2021, Rocket shared positive data updates to its lentiviral vector (LVV)-based gene therapy programs for the treatment of Fanconi Anaemia (FA) and (2) Leukocyte Adhesion Deficiency-I (LAD-I), and (3) Pyruvate Kinase Deficiency (PKD). Rocket also announced a clinical hold on its adeno-associated virus (AAV)-based gene therapy for Danon disease, a devastating, paediatric heart failure condition. The hold was not triggered by safety concerns and patient enrollment is expected to resume in Q3 2021.

·    In April 2021, iTeos shared a positive preliminary Phase 1 data update for its TIGIT antibody EOS-448 program in adult patients with advanced solid tumors, indicating EOS-448 was generally well tolerated with no dose-limiting toxicities observed and showed preliminary signs of clinical activity as a monotherapy, including a partial response in a melanoma patient, and stable disease in multiple patients.

·      In June 2021, Tarsus announced positive results of Saturn-1 pivotal trial evaluating TP-03 for the treatment of demodex blepharitis. The Saturn-1 Phase 2b/3 trial met all primary and secondary endpoints, and demonstrated significant, clinically meaningful outcomes with no serious treatment-related adverse events and no treatment-related discontinuations.

 

Financing

·      In H1 2021, six portfolio companies (Landos, Immunocore, Prometheus, Biomea Fusion, Monte Rosa, and GH Research) launched an initial public offering (IPO) with an average 2.1x valuation step-up from the initial time of investment to IPO, followed by an additional average +19% performance on the first day of trading.

·      In May 2021, Ji Xing announced an exclusive licencing agreement with Milestone to develop and commercialize etripamil, a novel calcium channel blocker designed to be a rapid-response therapy for episodic cardiovascular conditions, in China. Following this announcement, the Company participated alongside our other investment vehicles in a Series B financing round.

·      In May 2021, NiKang Therapeutics completed a US$200 million Series C financing round. The Company alongside other vehicles managed by the Investment Manager participated in the financing round.

·      We seeded our latest new company creation Yarrow Biotechnology, a biotech developing antisense oligonucleotide-based therapeutics for disorders with high unmet need. In May 2021, Yarrow announced licensing agreement with ProQR for its antisense oligonucleotide technology (ASO) to develop and commercialize potential therapies for an undisclosed CNS target. 

·      In June 2021, iTeos and GSK announced a deal on development and commercialization of iTeos' EOS-448 TIGIT targeting antibody, under which iTeos is to receive a US$625M upfront payment in addition to potential milestones, and royalty payments on ex-US sales up to US$1.45B in development and commercial milestones.

·      In June 2021, Inivata announced that NeoGenomics, Inc (NASDAQ: NEO.) has completed its acquisition of the company, the intention of which was previously announced on 5 May 2021. NeoGenomics exercised its option to acquire the remaining Inivata equity interest for US$390 million after it had previously made a US$25 million minority equity investment.

 

Portfolio performance and updates

 

The Company's share price has traded at an average premium of c. 11.7% since inception (Figure 3A). The Company's overall returns since inception have outperformed its biotech benchmarks, generating an overall return of c. 83% vs c. 77% by the small and mid-cap heavy Russell 2000 Biotechnology Index and significantly outperforming the large-cap heavy Nasdaq Biotechnology Index, which returned c. 52% (Figure 3B note: the reporting period for this chart is 30 October 2019 to 30 June 2021). During the sixth-month reporting period, the Company's share price grew by c. 9%, whilst the Nasdaq Biotechnology Index returned c. 8% and the Russell 2000 Biotechnology index returned c. -5% for the same period, respectively.

Source Capital IQ.

 

Figure 3. RTW.L share price performance (A) and returns (B) as of 30 June 2021

 

(A) [chart]

(B)  [chart]

 

As of 30 June 2021, six portfolio companies, which included Landos, Immunocore, Prometheus Biosciences, Biomea Fusion, Monte Rosa, and GH Research, had gone public via an IPO with an average 2.1x step-up from the initial time of investment to IPO and an average private holding period of 0.7 years, followed by an additional average c. 19% performance on the first day of trading.

 

Table 2. Performance of private and public portfolio investments as of 30 June 2021

Portfolio company	Initial Investment Date		Valuation Date		MOC	XIRR	Private Holding Period (years)
Beta Bionics	28/6/2019		30/6/2021		1.1x	3.9%	2.0
Orchestra	28/6/2019		30/6/2021		1.0x	0.6%	2.0
Frequency*	17/7/2019		23/3/2021^		2.8x	85.3%	1.7
Immunocore*	13/8/2019		30/6/2021		1.9x	50.0%	1.9
Landos*	9/8/2019		30/6/2021		2.8x	72.6%	1.9
Avidity*	8/11/2019		30/6/2021		2.7x	84.5%	1.6
Ji Xing	10/2/2020		30/6/2021		1.1x	28.6%	1.4
iTeos*	24/3/2020		30/6/2021		2.6x	115.9%	1.3
Pulmonx*	17/4/2020		30/6/2021		3.4x	178.3%	1.2
Athira*	29/5/2020		30/6/2021		2.1x	107.1%	1.1
C4 Therapeutics*	2/6/2020		30/6/2021		4.3x	285.3%	1.1
Encoded	12/6/2020		30/6/2021		1.7x	66.5%	1.0
Milestone^^	23/7/2019		30/6/2021		1.3x	43.9%	0.9
NiKang	9/9/2020		30/6/2021		1.1x	13.1%	0.8
Tarsus*	24/9/2020		30/6/2021		2.1x	159.0%	0.8
Prometheus Biosciences*	30/10/2020		30/6/2021		3.0x	764.7%	0.7
RTW Royalty (#1)	13/11/2020		30/6/2021		1.1x	10.2%	0.6
Nuance Pharma	7/12/2020		30/6/2021		1.0x	0.0%	0.6
Tenaya	17/12/2020		30/6/2021		1.0x	0.0%	0.5
Biomea Fusion*	23/12/2020		30/6/2021		2.0x	270.2%	0.5
Inivata**	24/12/2020		18/6/2021		2.6x	635.5%	0.5
Prometheus Labs	12/31/2020		30/6/2021		1.0x	0.0%	0.5
Ancora Heart	20/1/2021		30/6/2021		1.0x	6.7%	0.4
Visus	01/26/2021		30/6/2021		1.0x	0.0%	0.4
Artiva	23/2/2021		30/6/2021		1.0x	0.0%	0.3
Ventyx	26/2/2021		30/6/2021		1.0x	0.0%	0.3
Pyxis Oncology	8/3/2021		30/6/2021		1.0x	0.0%	0.3
Monte Rosa*	12/3/2021		30/6/2021		2.2x	1,206.4%	0.3
GH Research*	9/4/2021		30/6/2021		1.8x	1,144.4%	0.2
RTW Royalty (#2)	05/05/2021		30/6/2021		1.0x	-2.2%	0.2
Numab	7/5/2021		30/6/2021		1.0x	-13.0%	0.1
Yarrow	14/5/2021		30/6/2021		1.0x	0.0%	0.1
Alcyone	8/6/2021		30/6/2021		1.0x	0.0%	0.1
Umoja	9/6/2021		30/6/2021		1.0x	0.0%	0.1
Neurogastrx	25/6/2021		30/6/2021		1.0x	0.0%	0.0
Average					1.7x	152%	0.8
Public company		Price per share as of 29/10/2019 market close (as of listing of the Company)		% Return
Rocket		US$14.00		216%

 

*These positions originated in the portfolio as private companies and since the Company's IPO have gone public; as of 30 June 2021, Immunocore, Landos, Prometheus Biosciences, Biomea Fusion, GH Research and Monte Rosa were under 180-day lock-up provision; **Acquired; ^Exited the position; ^^Milestone is a public company, the Company holds private warrants.

 

Table 3. NAV capital breakdown as of 30 June 2021

Type	% Of NAV
Core portfolio assets (private and public)	64.9%
Non-core portfolio assets	32.8%
Cash, due to/from brokers, other*	2.4%
Total	100.0%

*Other includes liabilities such as other payables and accrued expenses.

 

As of 30 June 2021, our top five holdings of non-core portfolio assets represented c. 8% of NAV and consisted of: Dermtech (ticker: "DMTK"), a medtech company developing precision genomics for cancer diagnosis, Alnylam (ticker: "ALNY") and Dicerna (ticker: "DRNA"), both are leading RNA medicine companies, Natera (ticker: "NTRA"), a clinical genetic testing company,  and Vericel (ticker: "VCEL"), a manufacturer of advanced cell therapies for the sports medicine and severe burn care markets. We expect to deploy the capital invested into non-core portfolio assets into private companies as the new opportunities arise.

 

Table 4. Overview of portfolio companies' valuations^* as of 30 June 2021

 

Portfolio Company	Public/ Private	Company's % interest in Portfolio Company's capital as of 30 June 2021	Valuation of Company's investment as of 30 June 2021	% of Company's net assets as of 30 June 2021	YTD P&L as of 30 June 2021	Valuation hierarchy
Rocket	Public	<5%	US$104.7 million	24.6%	-US$35.7 million	Level 1
Avidity	Public	<5%	US$15.7 million	3.7%	-US$0.5 million	Level 1
Landos	Public**	<5%	US$14.4 million	3.4%	US$9.2 million	^Level 2
Prometheus Biosciences	Public**	<5%	US$12.7 million	3.0%	US$7.4 million	^Level 2
Ji Xing	Private	<10%	US$12.6 million	2.9%	US$1.3 million	Level 3
Immunocore	Public**	<1%	US$12.3 million	2.9%	US$6.4 million	Level 2
RTW Royalty (#2)	Private	<20%	US$11.8 million	2.8%	US$0.0 million	Level 3
C4 Therapeutics	Public	<1%	US$11.4 million	2.7%	US$1.8 million	Level 1
RTW Royalty (#1)	Private	<10%	US$8.7 million	2.1%	US$0.5 million	Level 3
Tarsus	Public	<1%	US$6.9 million	1.6%	-US$2.7 million	Level 1
GH Research	Public**	<1%	US$6.0 million	1.4%	US$1.9 million	^Level 2
Beta Bionics	Private	<5%	US$5.4 million	1.3%	US$0.0 million	Level 3
NiKang	Private	<5%	US$4.6 million	1.1%	US$0.3 million	Level 3
Tenaya	Private	<5%	US$4.4 million	1.0%	US$0.0 million	Level 3
Monte Rosa	Public**	<1%	US$3.8 million	0.9%	US$1.4 million	^Level 2
Alcyone	Private	<5%	US$3.7 million	0.9%	US$0.0 million	Level 3
Encoded	Private	<1%	US$3.4 million	0.8%	US$1.4 million	Level 3
Milestone	Public	<5%	US$3.4 million	0.8%	-US$0.7 million	^Level 2
Umoja	Private	<1%	US$3.2 million	0.8%	US$0.0 million	Level 3
iTeos	Public	<1%	US$2.9 million	0.7%	-US$1.9 million	Level 1
Ancora	Private	<1%	US$2.9 million	0.7%	US$0.0 million	Level 3
Pyxis	Private	<5%	US$2.7 million	0.6%	US$0.0 million	Level 3
Pulmonx	Public	<1%	US$2.6 million	0.6%	-US$1.4 million	Level 1
Orchestra	Private	<1%	US$2.5 million	0.6%	US$0.1 million	Level 3
Biomea Fusion	Public**	<1%	US$2.3 million	0.5%	US$0.9 million	^Level 2
Visus	Private	<5%	US$2.1 million	0.5%	US$0.0 million	Level 3
Nuance	Private	<1%	US$1.8 million	0.4%	US$0.0 million	Level 3
Numab	Private	<1%	US$1.7 million	0.4%	US$0.0 million	Level 3
Neurogastrx	Private	<1%	US$1.6 million	0.4%	US$0.0 million	Level 3
Ventyx	Private	<1%	US$1.5 million	0.4%	US$0.0 million	Level 3
Athira	Public	<1%	US$1.3 million	0.3%	-US$5.2 million	Level 1
Artiva	Private	<1%	US$0.9 million	0.2%	US$0.0 million	Level 3
Yarrow	Private	<5%	US$0.2 million	0.0%	US$0.0 million	Level 3
Prometheus Labs	Private	<1%	US$0.1 million	0.0%	US$0.0 million	Level 3

 

^* Valuations for Private Portfolio Companies on a fair market value basis as of 30 June 2021. The valuations of Rocket, Avidity, iTeos, Athira, C4 Therapeutics, Milestone, Pulmonx, Tarsus, Landos, Immunocore, Prometheus Biosciences, Biomea, Monte Rosa and GH Research have been calculated using their market capitalization as at the Latest Practicable Date. **In accordance with the Company's valuation policy, the Company applies a discount to its investments in Private Portfolio Companies which become Public Portfolio Companies that are subject to customary post-IPO lock-up provisions. ^Also includes Level 1 securities purchased at or after portfolio company IPO.

 

During the period ended 30 June 2021, two members and one employee of the Investment Manager served on the board of directors of Rocket and one member and four employees served on the board of directors of Avidity, Landos, Ji Xing, NiKang, Visus, Pyxis, Alcyone, and RTW Royalty #1 and #2, which in aggregate represented 42.5% of NAV of the Company.

 

Migration to the Main Market of the London Stock Exchange

 

We are pleased to report that RTW Venture Fund was admitted to the Premium Segment of the Main Market on 6 August 2021 and introduced an additional market quote denominated in GBP under ticker "RTWG" To satisfy the diversification requirements that we agreed with the UK Listing Authority we reduced our position in Rocket and brought it under 25% of NAV, while adding to the position in our private fund making RTW overall a net-buyer of the security. To note, the sale of Rocket shares to reduce the position did not result in any crystalized losses.

 

We believe the Premium Segment of the Main Market is the most appropriate platform for the continued growth of the Company. We look forward to continuing to advance our presence in the UK and are honoured to bring access to private markets and bespoke negotiated opportunities to an even broader investor base now being listed on the Premium Segment. We also believe that by maintaining a strong presence and providing much needed capital to late-stage venture companies, we are doing our part in fostering a stable and well capitalized investment ecosystem, which we believe will in turn benefit UK companies and support further innovation.

 

Summary of Portfolio Companies with at least 1% position of NAV as of 30 June 2021:

 

As of 30 June 2021, the Company's portfolio included 34 companies, ranging from biotechnology companies developing preclinical to clinical-stage therapeutic programs, companies developing traditional small molecule pharmaceuticals, and med-tech companies developing or commercializing transformative devices. We selected the Company's portfolio companies based upon our rigorous assessment of scientific and commercial potential, opportunities to positively impact value, and with regard to the valuation of the assets at the time of investment. The table below includes portfolio companies that have ≥1% position size as end of the reporting period.

 

Table 5. RTW Venture Fund portfolio summary (core portfolio holdings >1% of NAV) as of 30 June 2021

Portfolio Company	Description	Public/ Private	Clinical stage	Expected upcoming catalyst	% NAV
Rocket	Gene therapy platform company for rare pediatric diseases. Five clinical programs for Fanconi anemia, Danon, LAD, PKD and IMO.	Public: "RCKT"	Phase 2	Update Q4 2021	24.6%
Avidity	Antibody conjugated RNA medicines company. Lead program for myotonic dystrophy, a degenerative disease with no therapy.	Public: "RNA"	Preclinical	File IND in 2021	3.7%
Landos	Developer of oral therapies for autoimmune disease. Lead program for inflammatory bowel disease.	Public**: "LABP"	Phase 2 / 3	-	3.4%
Prometheus Biosciences	Precision medicine company focused on IBD, a chronic inflammatory disease of GI tract; lead antibody program against TL1A.	Public**: "RXDX"	Phase 1	Q4 2021	3.0%
Ji Xing	NewCo focused on acquiring rights from innovative therapies in the West for development and commercialization in China.	Private	Phase 1		2.9%
Immunocore	T-cell receptor therapy company focused on oncology and infectious disease. Lead program for uveal melanoma.	Public**: "IMCR"	Phase 3	Submit BLA in Q3 2021	2.9%
RTW Royalty #2	Royalty as a part of RTW-Urogen deal	Private	-	-	2.8%
C4 Therapeutics	Targeted protein degradation company working on blood cancers.	Public: "CCCC"	Phase 1	2022	2.7%
RTW Royalty #1	Royalty as a part of RTW-Ji Xing-Cytokinetics deal	Private	-	-	2.1%
Tarsus	Clinical stage biotech developing first-in-class therapeutics for ophthalmic conditions.	Public: "TARS"	Phase 3	-	1.6%
GH Research	Clinical stage biotech developing therapies to manage mental disease	Public**: "GHRS"	Phase 2		1.4%
Beta Bionics	Closed-loop pancreatic system for automated and autonomous delivery of insulin.	Private	Pivotal	-	1.3%
NiKang	Biotech using a structure-based design to develop innovative small molecules against promising molecular targets in oncology	Private	Preclinical		1.1%
Tenaya	Biotech developing therapies that can address the underlying cause of heart disease; lead asset gene therapy for HCM	Private	Preclinical	-	1.0%
Aggregate of <1% core portfolio companies include: Milestone, Encoded, Alcyone, Athira, iTeos, Pyxis, Pulmonx, Biomea, Orchestra, Visus, Inivata, Nuance, Numab, Ancora, Monte Rosa, Artiva, Ventyx, RTW NewCo, Prometheus Labs, Neurogastrx, Umoja					10.5%

 

Sector review and 2021 outlook

 

This Spring's Russell 2000 Biotech Index selloff of -35% now ranks 4th historically, behind the bursting of the genomics bubble in Spring 2000 -59%, drug pricing entering center stage Fall 2015 -48%, and the short-lived COVID Spring 2020 selloff -38%. In the past, corrections of this magnitude have been followed by recoveries.

 

This has been met with a level of uncertainty in the biotech space that tempered the excitement around the sector from generalist investors. There were a number of disappointing clinical trial results, a handful of FDA rejections, and the FDA Commissioner post remains unfilled. The FTC's plan to broaden the definition of anti-trust for pharma deals, rising interest rates, and finally the re-introduction of drug pricing as a potential source of funding for Infrastructure spending added top-down uncertainty, which did the most to escalate the fear in March.

 

Most of the above items, while worth mentioning, don't pose meaningful risks to the prospects for innovation. While it may take several months to resolve the uncertainties around the FDA Commissioner post, the FTC broadening their anti-trust definition and the infrastructure bill funding reconciliation, the likely outcomes should be relatively benign, and we would just reiterate that innovation continues to accelerate.

 

The FDA approval of Biogen's Aduhelm, after an advisory panel voted an overwhelming 8-to-1 against the drug providing proof of effectiveness, is perhaps the most high-profile pro-innovation decision we have ever seen the Agency make. This also came from the neurology division, a historically conservative group. The value recognition will undoubtably spur further innovation for Alzheimer's Disease, and likely extend to other neurologic unmet needs.

 

Another landmark moment was Intellia's report of human proof-of-concept data for in vivo gene editing, one of the most highly anticipated data readouts for a new modality. We would characterize in vivo gene editing as the technology that has captured the interest of the popular media and tech crowd. This data represents a significant win for non-specialist interest in the sector.

 

All of this volatility has brought us back to not far from where the year began. The small-cap heavy Russell 2000 Biotech Index is now -4.5% YTD and large cap heavy Nasdaq Biotech Index +8.2%. We view this current valuation disparity between small to mid-cap and large-cap biotech companies as an opportunity to invest in innovative companies in the sector that are trading at attractive valuations. Public valuations are modestly above the long-term average, on a Price to Sales basis, the Nasdaq Biotech Index trades at 8.2x, which is above the long-term median of 6.6x, and we think combined with booming innovation offers a favourable market backdrop as we enter the second half of 2021. On the private side, biotech IPO's have poorly performed this year, with less than 40% trading above IPO price, and the group up a modest +4%. We will see if this translates to any downward pressure to private valuations in the months to come. Despite this, our emphasis on quality has helped our portfolio IPOs (Landos, Immunocore, Prometheus Biosciences, Biomea Fusion, GH Research and Monte Rosa) to average +12.5% YTD as of 30 June 2021.

 

Executing on our strategy. We are scientists and entrepreneurs who aspire to change the lives of patients through innovation, and purposeful investing is at the heart of everything we do. We power breakthrough therapies that transform the lives of millions. Maximizing value realization from transformative products takes time, and we believe it is critical to be involved and invested in such companies throughout various stages of their development and ultimately distribution to patients. In the instances where our research leads us to find that a company doesn't exist, we have the capability, human power, and funding to create a company de novo to advance an asset we believe is worth building a business architecture around. As a full life-cycle investor, we recognize the importance of providing growth capital along with the support of an experienced team, if and when it is needed, at any critical inflection point in an asset's life cycle. Scientific development rarely follows a linear path and nor do we, which is why we are always thinking about the optimal way to support a company. This can be achieved through providing growth capital, creative financing solutions, capital markets expertise, or guidance through investing our time and sharing our collective experience as directors and stewards of tomorrow's most exciting and disruptive companies.

 

Taking a long-term full lifecycle approach and having a true evergreen structure enables us to avoid pitfalls of structural constraints of venture-only or public-only vehicles. Our focus is on becoming the best investors and company builders we can be, delivering exceptional results to shareholders and making an impact on patients' lives.

 

As we look ahead to the remainder of 2021 and beyond, based on the breadth of opportunities we have been seeing and continue to see, we expect our efforts will translate into further capital commitments. The last 18 months have been very active, as we have added fifteen new companies in 2020 and thirteen in the H1 2021 to the Company's growing portfolio, and we foresee continuing with a similar investing pace for the rest of the year.

 

Primary areas of focus remain in genetic medicines, small molecule, antibody and next generation antibody therapies, rare diseases, targeted oncology, and medical technologies. We are excited by advancements we are witnessing in neurology, ophthalmology, immunology, muscular dystrophies, and cardiovascular and pulmonary diseases.

 

We have always emphasized the important point that exciting innovation is taking place globally. Building upon our strong reputation in the U.S., we aim to strengthen our presence with new offices in London and Shanghai to further expand our presence and grow roots in these two strategic geographies. We are as keen on exploring scientific programs coming out of the UK and Europe as we are for those discovered and developed in the U.S. labs. We intend to continue to build inroads and have been actively cultivating deeper relationships in the UK. We also see emerging opportunities in China and anticipate spending more time exploring the region.

 

We believe there is a significant demand for reliable capital providers, such as ourselves, to continue to support scientific innovation and development of transformative therapies for patients. With that in mind, we intend to grow the Company's portfolio, by attracting new shareholders to assist in the financing of an exciting pipeline of new ideas. We expect the split to remain close to 80% biopharmaceutical assets and 20% across medical technology assets. In line with prior prospectus guidance, we anticipate two-thirds of the investments will be made in mid to later stage venture companies and one-third of the investments focused on active company building around the discovery and development or licensing and distribution of promising assets.

 

Key Portfolio Company Events Post Period End

 

On 29 July 2021, Tenaya announced pricing of its US$180 million IPO, by offering 12 million shares at US$15.00 per share. The shares began trading on Nasdaq Global Market on 30 July 2021 under ticker "TNYA". Since IPO Tenaya shares have traded up 66% as of 08 September 2021.

 

The Company's investments in Tenaya remains under 180-day lock-up provision.

 

Between July and September 2021, the Company added three portfolio companies:

Artios Pharma, a UK-based privately held oncology company, InBrace, a medical technology company pioneering Smartwire^TM, a behind-the-teeth teeth straightening approach, and Lycia Therapeutics, a biotechnology company developing extracellular protein degraders.

 

RTW Investments, LP

15 September 2021

 

 

Statement of Principal Risks and Uncertainties for the Remaining Six Months of the year to 31 December 2021

 

As described in the Company's annual financial statements for the year ended 31 December 2020, the Company's principal risks and uncertainties include the following:

-     Failure to achieve investment objective;

-     Counterparty risk;

-     The Investment Manager relies on key personnel;

-     Portfolio companies may be subject to litigation;

-     Exposure to global political and economic risks;

-     Clinical development and regulatory risks;

-     Imposition of pricing controls for clinical products and services; and

-     COVID-19.

 

The Board believes that these risks are unchanged in respect of the remaining six months of the year to 31 December 2021.

 

Further information in relation to these principal risks and uncertainties may be found on page 41 of the Company's annual report and audited financial statements for the year ended 31 December 2020.

 

These inherent risks associated with investments in the biotech and pharmaceutical sector could result in a material adverse effect on the Company's performance and value of the Ordinary Shares.

 

Risks are mitigated and managed by the Board through continual review, policy setting and regular reviews of the Company's risk matrix by the Audit Committee to ensure that procedures are in place with the intention of minimising the impact of the above-mentioned risks. The Board carried out a formal review of the risk matrix at the Audit Committee meeting held on 22 June 2021. The Board relies on periodic reports provided by the Investment Manager and Administrator regarding risks that the Company faces. When required, experts will be employed to gather information, including tax advisers and legal advisers.

 

 

 

Statement of Directors' Responsibilities

 

The Directors confirm to the best of their knowledge that:

-     the unaudited interim financial statements have been prepared in conformity with US generally accepted accounting principles; and

-     the interim management report (which includes the Chairman's Statement, Report of the Investment Manager and Statement of Principal Risks and Uncertainties) together with the unaudited interim financial statements include a fair review of the information required by:

a.  DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the unaudited interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

b.  DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

By order of the Board

 

William Simpson Chairman 15 September 2021

Paul Le Page Director 15 September 2021

 

 

INDEPENDENT REVIEW REPORT TO

RTW VENTURE FUND LIMITED

 

Conclusion

We have been engaged by RTW Venture Fund Limited (the "Company") to review the financial statements in the half-yearly financial report for the six months ended 30 June 2021 of the Company which comprises the unaudited interim statement of assets and liabilities including the unaudited interim condensed schedule of investments, the unaudited interim statements of operations, changes in net assets and cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the financial statements for the six months ended 30 June 2021 do not give a true and fair view of the financial position of the Company as at 30 June 2021 and of its financial performance and its cash flows for the six month period then ended in conformity with U.S. generally accepted accounting principles and the Disclosure Guidance and Transparency Rules (the "DTR") of the UK's Financial Conduct Authority (the "UK FCA").

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

The financial statements included in this half-yearly financial report have been prepared in conformity with U.S. generally accepted accounting principles.

Our responsibility

Our responsibility is to express to the Company a conclusion on the financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

 

Dermot Dempsey        
for and on behalf of KPMG Channel Islands Limited  
Chartered Accountants, Guernsey     
15 September 2021

 

 

Unaudited Interim Statement of Assets and Liabilities

as at 30 June 2021 and 31 December 2020

(Expressed in United States Dollars)

				30 June 2021		31 December 2020
				(unaudited)		(audited)
				US$		US$
ASSETS:
Investments in securities, at fair value (cost at 30 June 2021: US$235,168,434; cost at 31 December 2020: US$151,961,275)				424,289,255		390,790,635
Derivative contracts, at fair value (cost at 30 June 2021: US$2,348,466; cost at 31 December 2020: US$1,763,991)				9,843,722		4,713,942
Cash and cash equivalents				18,013,748		4,553,481
Due from brokers				11,937,369		20,032,971
Receivable from unsettled trades				2,536,462		685,498
Other assets				55,709		124,575
TOTAL ASSETS				466,676,265		420,901,102
LIABILITIES:
Securities sold short, at fair value (proceeds at 30 June 2021: US$9,595,504; proceeds at 31 December 2020: US$4,986,163)				11,179,151		6,672,359
Derivative contracts, at fair value (proceeds at 30 June 2021: US$nil; proceeds at 31 December 2020: US$6,903)				6,831,980		579,782
Due to brokers				19,216,624		361,032
Accrued expenses				1,157,667		530,070
Payable for unsettled trades				2,357,934		145,930
TOTAL LIABILITIES				40,743,356		8,289,173
TOTAL NET ASSETS				425,932,909		412,611,929
NET ASSETS attributable to Ordinary Shares (shares at 30 June 2021: 208,379,757; shares at 31 December 2020: 191,515,735)				397,211,032		375,281,126
NET ASSETS attributable to Performance Allocation Shares (shares at 30 June 2021: 1; shares at 31 December 2020: 1)				28,721,877		37,330,803
NAV per Ordinary Share				1.9062		1.9595

 

The unaudited interim financial statements of the Company were approved and authorised for issue by the Board of Directors on 15 September 2021 and signed on its behalf by:

 

William Simpson                                               Paul Le Page

Chairman                                                        Director

 

See accompanying notes to the unaudited interim financial statements.

 

Unaudited Interim Condensed Schedule of Investments

as at 30 June 2021

(Expressed in United States Dollars)

Descriptions			Number of Shares		Cost US$		Fair Value US$		Percentage of Net Assets %
Investments in securities, at fair value
Common stocks
	United States
	Healthcare
	Rocket Pharmaceuticals, Inc.		2,364,728		6,223,376		104,733,803		24.59
	Others*				117,628,742		195,770,132		45.96
	Materials				45,415		58,615		0.01
	Total United States				123,897,533		300,562,550		70.56
	Ireland
	Healthcare				13,199,029		13,653,639		3.21
	United Kingdom
	Healthcare				6,511,976		12,331,071		2.90
	Canada
	Healthcare				5,338,116		3,599,419		0.85
	Netherlands
	Healthcare				1,953,548		2,307,161		0.54
	Cayman Islands
	Healthcare				849,893		961,841		0.22
	British Virgin Islands
	Healthcare				226,450		890,431		0.20
Total common stocks					151,976,545		334,306,112		78.48
Convertible preferred stocks
	United States
	Healthcare*				42,796,355		45,243,482		10.62
	Cayman Islands
	Healthcare				6,862,515		8,242,037		1.94
	Switzerland
	Healthcare				1,704,186		1,669,467		0.39
	Ireland
	Healthcare				116,545		110,628		0.03
Total convertible preferred stocks					51,479,601		55,265,614		12.98
* No individual investment security or contract constitutes greater than 5 percent of net assets.

See accompanying notes to the unaudited interim financial statements.

 

 

 

Unaudited Interim Condensed Schedule of Investments (continued)

as at 30 June 2021

(Expressed in United States Dollars)

Descriptions		Number of Shares		Cost US$		Fair Value US$		Percentage of Net Assets %
Investments in securities, at fair value
(continued)
Exchange traded funds
United States
Index
SPDR S&P 500 ETF TRUST		72,843		28,157,971		31,181,175		7.32
Total exchange traded funds				28,157,971		31,181,175		7.32
American depository receipts
	Cayman Islands
	Healthcare			1,277,619		1,160,607		0.27
	Ireland
	Healthcare			893,338		903,819		0.21
	Sweden
	Healthcare			891,471		870,895		0.20
	Israel
	Healthcare			491,889		601,033		0.15
Total American depository receipts				3,554,317		3,536,354		0.83
Total investments in securities, at fair value				235,168,434		424,289,255		99.61
See accompanying notes to the unaudited interim financial statements.