Annual Financial Report

LEI: 549300Q7EXQQH6KF7Z84

31 March 2025

RTW Biotech Opportunities Ltd

Annual Report and Audited Consolidated Financial Statements for the Year Ended 31 December 2024

Significant progress made with near-term catalysts

RTW Biotech Opportunities Ltd (the "Group", "RTW Bio" or the "Company"), the London Stock Exchange-listed investment company focused on identifying transformative assets with high growth potential across the life sciences sector, is pleased to announce its Annual Results for the year ended 31 December 2024.

Roderick Wong, MD, Managing Partner and Chief Investment Officer of RTW Investments LP (the "Investment Manager") commented:

"We are pleased with the progress made by the Group during 2024 with a number of material milestones achieved, both at portfolio and company level. During the year, the NAV increased from US$399 million to US$607 million, we added 21 new core portfolio companies, saw five capital markets events and marked our fifth anniversary since listing on the London Stock Exchange. In that time, we have delivered NAV per share growth of +86.3%, materially ahead of both the Nasdaq Biotech and Russell 2000 Biotech indices, which achieved +34.6% and +6.5%, respectively.

"During this active period, Kyverna, Artiva and BioAge completed successful IPOs whilst Lenz went public through a reverse merger. The average gross multiple of invested capital on our initial investments in these companies to the go-public event was approximately 1.3x. In addition, Numab sold its lead drug candidate to Johnson & Johnson for US$1.25 billion in July. Our holding value of this investment was increased by 2.6x as of year end to reflect the deal.

"The standout performers for the period were Avidity Biosciences and Tarsus Pharmaceuticals. Avidity's share price increased by +221% in 2024 following the announcement of positive long-term data showing reversal of disease progression in people living with myotonic dystrophy type 1, a condition for which there is no current cure and leads to muscle weakness over time. Tarsus also saw its share price rise materially in 2024 as its treatment for demodex infection, an ocular disease, continued to exceed consensus revenue expectations.

"The market environment for the biotech sector continues to show signs of improvement and whilst the sector's recovery is still in its infancy, there are a number of catalysts on the horizon that we expect will be rewarding both for shareholders and the patients that our products and therapies treat. Additionally, we are expecting the environment for M&A to improve dramatically, thanks to remarkable innovation, depressed sector valuations, impending patent cliffs for large pharma and a change in leadership at the FTC. This is an important factor for the small and mid-cap biotech companies we invest in as, in many cases, M&A is the endgame for these companies.

"We look ahead to 2025 with growing optimism and are excited by the prospects of the biotech sector. The Company is in a strong position to deliver on its targets with a number of near-term catalysts for its portfolio investments that we look forward to reporting on as the year progresses."

Key highlights

As of 31 December 2024, 67% of NAV was invested in core portfolio companies (2023: 67%), whilst 31% was invested in other public portfolio companies (2023: 20%) and 2% was held in cash plus current assets and liabilities (2023: 13%).

Financial summary:

(i) Total shareholder return is an alternative performance measure. Share price at 31 December 2023 was $1.403 and as at 31 December 2024 was $1.395.

(ii) Source: Capital IQ.

Core Portfolio:

● 21 new core portfolio companies added: As at 31 December 2024, 67% of NAV was invested in core portfolio companies, in-line with 2023. 21 new core portfolio companies were added over the year whilst three were exited. New core portfolio companies include ten new privates, one RTW-incubated company, six positions acquired from Arix Bioscience and four that were previously classified as "other public".

● Focus on clinical programmes and commercial products: 30 out of 54 core portfolio companies have clinical programmes, eight have commercial products and 13 are pre-clinical.

Core Public:

● Overall NAV performance driven by core public positions: 19 out of 54 core portfolio companies are public (34% of NAV) and performance was driven by Avidity Biosciences, the Group's second largest portfolio holding, and Tarsus Pharmaceuticals, the Group's third largest portfolio holding. The change in exposure and number of investments mostly reflects underlying performance, the graduation of Kyverna, Artiva, BioAge and Lenz to the public markets and the addition of Akero, Urogen, 89Bio and Merus.

● Avidity Biosciences: In March, Avidity Biosciences announced positive long-term data showing reversal of disease progression in people living with myotonic dystrophy type 1 (DM1), across multiple endpoints. Having been impressed by Avidity's initial patient data, the FDA supported using hand opening time, a sensitive and early marker of change, as the primary endpoint for a Phase 3 trial. RTW co-led an oversubscribed US$400m private placement in March, where the Group added to its position.

● Tarsus Pharmaceuticals: Tarsus' share price rose materially (+173%) in 2024 as its treatment for demodex infection, Xdemvy, continued to exceed consensus revenue expectations.

Core Private:

● Core private made a small contribution, led by Numab: 33 out of 54 core portfolio companies are private (30% of NAV). During the year, Numab sold its lead drug candidate to J&J for US$1.25bn and the Company's holding value was increased by 2.6x to reflect the deal, which closed in July. Kyverna, BioAge and Artiva completed IPOs whilst Lenz went public through a reverse merger. The average gross multiple of invested capital (MOIC) on our initial investments in these companies to the go-public event was approximately 1.3x. The increase in exposure and number of investments in the reporting period reflects the addition of several new private positions from Arix (Ensoma, Evommune, Depixus, Sorriso and Amplyx), less the exit activity described above for Kyverna, BioAge, Artiva and Lenz.

● 2024 was a strong and auspicious year for Corxel: The RTW Investments-founded company changed its name from Ji Xing Pharmaceuticals to reflect an expanding portfolio of global assets. During the year, it was announced that Bayer AG invested in Corxel's Series D financing and a new strategic collaboration between the two companies was launched, focused on cardiovascular diseases in China. In December, after successfully completing its Phase 3 trial, Corxel sold its China Aficamten rights to Sanofi. The asset sale recognised the value created by the team and made it possible to in-license ex-China rights to CX11, an oral small molecule GLP-1 for obesity. In a China Phase 2 trial, CX11 showed competitive weight loss with Lilly's Orforglipron, the leading small molecule in development.

● 69 core private investments since admission: As of 31 December 2024, thirty-one of these have since experienced liquidity events (i.e. by going public or through acquisition). Since admission, the average holding period as a private company was fourteen months and the average MOIC to the liquidity event was 1.8x. Sixteen of these positions have either concurrently or subsequently been exited in full at an average MOIC of 2.8x.

Royalty and Other Public:

● The Group's two royalty positions (3% of NAV) made a solid +2.4% contribution in 2024: The Group's investment in the Investment Manager's 4010 Royalty Fund performed well. 4010 currently holds two investments with Avadel Pharmaceuticals and Urogen Pharma (which is also the underlying asset of RTW Royalty 2). In the third quarter, 4010 sold its Allurion royalty at a small profit including royalties received to date, allowing us to redeploy the capital into more attractive risk-reward opportunities.

● Avadel: This royalty agreement is associated with the sales of Lumryz, the sole extended-release sodium oxybate medication approved by the FDA as a once-at-bedtime treatment for cataplexy or excessive daytime sleepiness (EDS) in adults with narcolepsy. Lumryz's sales ramp is significantly outperforming 4010's underwriting target.

● Urogen: The Urogen royalty is connected to two oncology franchises: Jelmyto and UGN-102, both of which are topical therapies in the urinary tract for urothelial and bladder cancers, typically treated by surgical interventions. The majority of the royalty returns are derived from Jelmyto, which is an established and growing product. UGN-102 is nearing FDA approval with Phase 3 data, and we expect it to be approved in June 2025.

● 31% of the Group's NAV is invested in "other publicly" listed companies: The 50 "other public" holdings are carefully selected, mostly matching, on a pro-rata basis, the long investments held in the Investment Manager's private funds.

Post Period-End Events

● In January, Kailera announced positive topline data from the 8 mg dose of Hengrui Pharmaceuticals' Phase 2 clinical trial (HRS9531-203) of HRS9531, a GLP-1/GIP receptor dual agonist, in individuals living with obesity or overweight. The clinical trial results showed that a once-weekly subcutaneous injection demonstrated a statistically significant placebo-adjusted mean weight loss, with no plateau. Additionally, 59% of treated participants achieved a weight loss greater than 20%. The trial results also demonstrated a favourable safety profile. These results increase our confidence that Kailera is one of the leading players in next-generation obesity management and bode well for Kailera's planned global Phase 3 trial.

● Also in January, Akero (Nasdaq: AKRO) released preliminary topline results from its Phase 2b study evaluating the efficacy and safety of its lead product candidate, efruxifermin (EFX), in patients with compensated cirrhosis due to metabolic dysfunction-associated steatohepatitis MASH. Treated patients demonstrated a statistically significant improvement in fibrosis with no worsening of MASH, representing a 24% effect size over placebo at 15%. Upon the news, shares in Akero, a 5.2% position at year end, rose 100%.

● Cargo Therapeutics announced it would seek a reverse merger: After halting work on its lead candidate following a failed Phase 2 study, Cargo announced that it would discontinue its entire R&D pipeline, lay off most of its staff and seek a reverse merger or other business combination.Beta Bionics went public on 30 January: it issued 12 million shares of common stock at $17.00 each, raising proceeds of US$204 million. The shares now trade on the Nasdaq Global Market under the ticker symbol "BBNX".

Other Company highlights:

● The Investment Manager continues to demonstrate its commitment to and alignment with the Group: RTW Investments' CIO, Rod Wong, bought 19,949,441 shares in 2024, increasing his stake to 14.8% at the period end. On 26 February 2025, Rod further increased his stake to 15.0%, bringing his total holding to 50,356,880 shares.

● Specialist non-executive director appointed: The increased scale of the Company following strong performance and the Arix transaction allowed us to appoint a new Non-Executive Director, Baroness Nicola Blackwood, a leader in science and entrepreneurship. She is a member of the House of Lords, and Chair of Genomics England and Oxford University Innovation. She is also a board member of the biotechnology company, BioNTech.

Enquiries:

About Biotech Opportunities Ltd:

RTW Biotech Opportunities Ltd (LSE: RTW) is an investment fund focused on identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors. Driven by a long-term approach to support innovative businesses, RTW Biotech Opportunities Ltd invests in companies developing next-generation therapies and technologies that can significantly improve patients' lives. RTW Biotech Opportunities Ltd is managed by RTW Investments, LP, a leading healthcare-focused entrepreneurial investment firm with deep scientific expertise and a strong track record of supporting companies developing life-changing therapies.

Visit the website at www.rtwfunds.com/rtw-biotech-opportunities-ltd for more information.

RTW Biotech Opportunities at a Glance

Our Purpose: Transforming the lives of millions

RTW Bio's long-term strategy is anchored in identifying sources of transformational innovations with significant commercial potential by engaging in deep scientific research and a rigorous idea generation process, which is complemented by years of investment, company building, and both transactional and legal expertise.

What we do goes beyond short term financial gain

We invest for the long term, powering the next generation of breakthroughs in science and medicine to help transform lives. That's what drives us - the greater impact we can help create.

Our global reach

RTW Investments headquarters

RTW Investments global offices

Netherlands: Merus, Alesta

Germany, Spain, Switzerland and the Nordic countries: Rocket Pharmaceuticals, Numab

Ireland: GH Research

Israel: Urogen Pharma

China: Corxel, Nuance, Oricell

UK: Immunocore, Artios

THE US 

We have a core focus on the US, with deep coverage of opportunities from academia to mid-size public companies. We apply a full range of deal execution and company building capabilities.

THE UK & EUROPE

We have identified and invested in exceptional British and European scientific assets. We look to contribute to these biotech ecosystems by engaging in creation or ongoing development of new companies around promising early-stage assets by partnering with universities and in-licensing academic programmes, and by providing financial and human capital to entrepreneurs to advance scientific programmes.

What this means for investors:

· access to cutting edge research labs and academic knowledge

· access to greater breadth of science and opportunity

· participation in value creation in local biotech ecosystems

CHINA

We are capturing commercialisation opportunities in China by investing across the venture capital life cycle: from new company formation to IPO, to bringing successful, innovative drugs to patients in China and across the globe.

What this means for investors:

· access to a budding biotech market, innovation and expertise

· an opportunity to be established in a market with the scope for significant growth

Members of the RTW Investments team

2024: 77

2023: 70

The RTW Investments culture

RTW Investments' priority is unlocking value by advancing early-stage scientific development to deliver innovative therapies to patients in need.

At the core of our business is a set of guiding principles.

COLLABORATION

Leveraging collective genius

PROGRESS

From research, to innovation, to reality

HUMILITY

The hunger to learn and improve

TENACITY

Finding pathways to success while overcoming obstacles

RIGOUR

Poring over the data

LEADERSHIP

The courage to shape a better future

The RTW Investments Difference

RTW Investments connects data, experience, and talent to bring opportunities into focus

We identify transformative assets with growth potential across the life sciences sector. Our approach is driven by deep scientific expertise with a long-term investment horizon.

RTW Investments' COMPETITIVE ADVANTAGES

DEEP RESEARCH

We dive into the data to spot opportunities that others miss. Opportunities, potential, errors, and risks are all easily overlooked, so we analyse and scrutinise, applying a unique, repeatable research approach, fine-tuned over years of successful life sciences investment. We combine the best data, technology, and scientific insight to unearth opportunity.

SELECTIVITY

We cast a wide net, but only assets with high probability of becoming commercially viable products and those with the greatest potential to revolutionise treatment outcomes for patients pass the test. We choose partners who care less about quick wins and more about lasting change.

KNOWLEDGE

We are doctors, academics, and drug developers; venture capitalists and investment bankers; lawyers, data scientists and company operators. We work as a team, applying collective expertise to spark ideas, solve problems, avoid pitfalls, and build successful companies.

FLEXIBLE SOLUTIONS

Drug development rarely follows a linear path. Whatever the twists and turns, we have the skills in house to solve problems and accelerate progress, from providing capital and infrastructure to advance promising academic programmes, to forming new companies and taking those companies public. We carve new pathways, allowing scientists and entrepreneurs to bring life-changing therapies to patients.

PEOPLE

Healthcare innovation is hard work, and easy wins are few and far between. Those who succeed don't lose sight of why it matters. These are the people we love working with. We come from many different backgrounds but are united in a mission to improve people's lives.

LONG-TERM PARTNERS

Bringing new therapies to patients is a long journey that comes with both thrilling triumphs and inevitable setbacks. We are hands-on and fully invested in the success of our partners because their success is our success. We choose partners who are as passionate about revolutionising medicine as we are.

RTW Biotech Opportunities' Full Life Cycle portfolio has multiple, differentiated return levers and horizons

Investment Objective and Investment Policy

Applying deep scientific expertise with a long-term investment horizon

Investment Objective

The Group seeks to achieve positive absolute performance and superior long-term capital appreciation, with a focus on forming, building, and supporting world-class life sciences, biopharmaceutical and medical technology companies. It intends to create a diversified portfolio of investments across a range of businesses, each pursuing the development of superior pharmacological or medical therapeutic assets to enhance the quality of life and/or extend patient life.

Investment Policy

The Group seeks to achieve its investment objective by leveraging the Investment Manager's data-driven proprietary pipeline of innovative assets to invest in life sciences companies:

· across various geographies (globally);

· across various therapeutic categories and product types (including but not limited to genetic medicines, biologics, traditional modalities such as small molecule pharmaceuticals and antibodies, and medical devices);

· in both a passive and active capacity and intends, from time to time, to take a controlling or majority position with active involvement in a Portfolio Company to assist and influence its management. In those situations, it is expected that the Investment Manager's senior executives may serve in temporary executive capacities; and

· by participation in opportunities created by the Investment Manager's formation of companies de novo when a significant unmet need has been identified and the Group is able to build a differentiated, sustainable business to address said unmet need.

The Group expects to invest approximately 80 per cent of its gross assets in the biopharmaceutical sector and approximately 20 per cent of its gross assets in the medical technology sector.

The Group's portfolio will reflect its view of the most compelling opportunities available to the Investment Manager, with an initial investment in each privately held Portfolio Company ("Private Portfolio Company") expected to start in a low single digit per cent of the Group's gross assets and grow over time, as the Group may, if applicable, participate in follow-on investments and/or continue holding the Portfolio Company as it becomes publicly-traded. It is intended certain long-term holds will increase in size and may represent between five and ten per cent or greater of the Group's gross assets.

The Group anticipates deploying one-third of its capital designated for core private investments toward early-stage and de novo company formations (including newly formed entities around early-stage academic licenses and commercial stage corporate assets) and two-thirds of its capital in mid- to late-stage ventures.

The Company may choose to invest in Portfolio Companies listed on a public stock exchange ("Public Portfolio Companies") depending on market conditions and the availability of appropriate investment opportunities. Equally, as part of a full-life cycle investment approach, it is expected that Private Portfolio Companies may later become Public Portfolio Companies. Monetisation events such as IPOs and reverse mergers will not necessarily be taken as exit opportunities for the Group. Rather, the Group may decide to retain all or some of or add to its investment in such Portfolio Companies or the acquiring Company where they meet the standard of diligence set by the Investment Manager. The Group is not required to allocate a specific percentage of its assets to Private Portfolio Companies or Public Portfolio Companies.

The Group also intends, where appropriate, to invest further in its Portfolio Companies, supporting existing investments throughout their lifecycle. The Group may divest its interest in Portfolio Companies in part or in full when the risk-reward trade-off is deemed to be less favourable.

From time to time, the Group may seek opportunities to optimise investing conditions, and to allow for such circumstances, the Group will have the ability to hedge or enter into securities or derivative structures in order to enhance the risk-reward position of the portfolio and its underlying securities.  

Investment restrictions

The Group will be subject to the following restrictions when making investments in accordance with its investment policy:

· the Group may not make an investment or a series of investments in a Portfolio Company that result in the Group's aggregate investment in such Portfolio Company exceeding 15 per cent (or, in the case of Rocket Pharmaceuticals, Inc., 25 per cent) of the Group's gross assets at the time of each such investment;

· the Group may not make any direct investment in any tobacco company and not knowingly make or continue to hold any Public Portfolio Company investments that would result in exposure to tobacco companies exceeding one per cent of the aggregate value of the Public Portfolio Companies from time to time.

Each of these investment restrictions will be calculated as at the time of investment. In the event that any of the above limits are breached at any point after the relevant investment has been made (for instance, upon successful realisation of economic and/or scientific milestones or as a result of any movements in the value of the Group's gross assets), there will be no requirement to sell or otherwise dispose of any investment (in whole or in part).

Leverage and borrowing limits

The Group may use conservative leverage in the future in order to enhance returns and maximise the growth of its portfolio, as well as for working capital purposes, up to a maximum of 50 per cent of the Group's net asset value at the time of incurrence. Any other decision to incur indebtedness may be taken by the Investment Manager for reasons and within such parameters as are approved by the Board. There are no limitations placed on indebtedness incurred in the Group's underlying investments.

Capital deployment

The Group anticipates that it will, upon any subsequent capital raises, invest up to 80% of available cash in Public Portfolio Companies that have been diligenced by the Investment Manager and represent holdings in other portfolios managed by the Investment Manager, subsequently rebalancing the portfolio between Public Portfolio Companies and Private Portfolio Companies as opportunities to invest in the latter become available.

Cash management

The Group's uninvested capital may be invested in cash instruments or bank deposits pending investment in Portfolio Companies or used for working capital purposes.

Hedging

As described above, the Group may seek opportunities to optimise investing conditions, and to allow for such circumstances, there will be no limitations placed on the Group's ability to hedge or enter into securities or derivative structures in order to enhance the risk-reward position of the portfolio and its underlying securities.

On an ongoing basis, the Group does not intend to enter into any securities or financially engineered products designed to hedge portfolio exposure or mitigate portfolio risk as a core part of its investment strategy but may enter into hedging transactions to hedge individual positions or reduce volatility related to specific risks such as fluctuations in foreign exchange rates, interest rates, and other market forces.

RTW Biotech Opportunities' 5th Anniversary

On 30th October 2024, RTW Biotech Opportunities Ltd celebrated its fifth anniversary since listing on the London Stock Exchange (LSE). From listing through to its fifth year, the Group grew its NAV from US$153.0m to US$650.6m and NAV per share by +86.3%. Along the way, several key milestones marked the journey:

· Market-beating and peer-leading performance: the Group's NAV per share return of +86.3% over the five years marked RTW Bio as the best performing biotech-focused listed investment company on a NAV per share basis on the London Stock Exchange in that time. This compared to a +37.7% return for the Nasdaq Biotech Index and +16.3% for the Russell 2000 Biotech Index over the same period.

· A London IPO and subsequent move to the LSE's premium listing: London was selected as the listing destination because of the benefits of the listed investment company structure. It gives both flexibility and duration to invest opportunistically across the full life cycle, avoiding the pitfalls and structural constraints of venture-only or public-only vehicles. In August 2021, RTW Bio migrated from the Specialist Segment to the Premium Segment, which was subsequently consolidated into the Main Market in 2024. In 2022, the Investment Manager set up an office in London to be closer to the listing, shareholders and investment opportunities in the UK.

· Prometheus Biosciences acquisition shows the value of full life cycle approach: In April 2023, Prometheus, a clinical-stage biotechnology company pioneering treatment of immune-mediated diseases, was acquired by Merck for US$10.8 billion. The investment was a great example of the value of full life cycle investing. RTW Bio co-led Prometheus' crossover financing round in 2020, supported it through its IPO in 2021 and ultimately its sale, generating a more than 12x total multiple on invested capital (MOIC) in just over three years.

· Arix transaction added scale and capital to a best-in-class platform: In November 2023, RTW Bio announced plans to acquire Arix Bioscience Plc ("Arix"), a venture capital company focused on investing in breakthrough biotechnology companies. Completed in February 2024, the transaction made RTW Bio one of the largest biotech-focused listed investment companies trading on the LSE and provided additional capital at an opportune time in the biotech market cycle.

Chair's Statement

Investing in tomorrow's most promising medicines

We are delighted to have celebrated, on 30 October, the passing of our fifth anniversary since listing on the London Stock Exchange. In that time, the Group's NAV per share delivered a five-year return of +86.3% marking it as the best performing biotech-focused listed investment company on a NAV per share basis on the London Stock Exchange. This compared to a +37.7% return for the Nasdaq Biotech Index and +16.3% for the Russell 2000 Biotech Index over the same period. We are pleased to mark the fifth Anniversary this year with market-beating and peer-leading performance, despite most of the last three years experiencing the sector's second worst bear market in history. Encouragingly, the backdrop is now improving and we believe that we are still in the early innings of a recovery for the sector.

2024 Overview and 2025 Outlook

The Group's NAV returned -4.6% per Ordinary Share over the twelve months to 31 December 2024, slightly underperforming the Russell 2000 Biotechnology Index and the Nasdaq Biotech Index (NBI) which returned +2.5% and -1.4%, respectively. This is the first year that the Group's NAV per share has underperformed, but it remains markedly ahead of sector indices over three years, five years and since admission. Like many listed investment companies, particularly those with private exposure, the Company's share price has lagged NAV per share growth, although the discount narrowed modestly in 2024.

As always, there was plenty of activity in the portfolio to report. One of the benefits of having a full life cycle approach is that there are always opportunities and events including private financing rounds, go-public events, take-outs, clinical developments and royalty distributions.

There were four go-public events from core private positions in the first half: Kyverna, Lenz, Artiva and BioAge. The average step up from holding value to go-public in these four events was +9.7% and the average multiple on invested capital was 1.3x. There was one M&A deal involving Numab, a core private position, which sold its lead program to Johnson & Johnson for US$1.25bn. Being a private position meant that the impact on the Group was less than it might have been had it occurred after the company became public when we normally take bigger positions, but it led to a near 2.6x uplift from the holding value as at 31 December 2024. Combined, these transactions continue to underline the embedded value of the portfolio's private holdings and provide evidence of the robustness of the Group's valuation process. But despite continued successes here, the market appears to discount the private assets.

In the core public portfolio, two genetic medicine companies had the biggest impacts on NAV. Avidity Biosciences announced several positive clinical events for patients suffering from severe muscular diseases which in many cases have no approved drugs. Avidity's share price increased by 221% in 2024, making it a very rewarding investment from a shareholder perspective this year and from our original investment in their 2019 crossover round, since when it has returned a 4.5x multiple on invested capital. Should Avidity succeed through subsequent trials and regulatory approval, it will also be a very rewarding investment from a patient impact perspective too. Rocket Pharmaceuticals' share price struggled in 2024. With no clinical readouts on the calendar, the shares were buffeted by top-down factors whilst it also did not deliver on clinical and regulatory timelines for its two lead programs. Despite the volatility and setbacks, we continue to see value and transformational potential for patients suffering from horrendous diseases like Danon.

Since admission, the Group has made 69 private investments. Thirty-one of these have since experienced liquidity events (by going public or via acquisition). The average holding period as a private investment was fourteen months and the average MOIC to the liquidity event was 1.8x. This was despite a very muted IPO market for most of the last three years. It is important to note that, being a full life cycle investor, we view the IPO as another funding round and a public mark, rather than an exit opportunity, but the step up to the IPO is a nice way to start a public investment especially when one considers the other advantages of investing in the private rounds, most particularly, getting closer to the science to build conviction.

The Group's royalty investments are performing well and provide a differentiated income stream that is uncorrelated to equity markets. The risk adjusted returns are very attractive and highly complementary to the rest of the portfolio. The ability to offer a full suite of financing solutions to companies helps position RTW Investments as one of the preferred capital providers in the space. Our exposure to royalties is expected to increase in the years ahead as the 4010 Royalty Fund, in which we are invested, draws down capital for new investments.

At the end of the period, the Group had fifty-four core portfolio holdings, a material increase from the start of the year as several new private and public positions were added on top of the new private positions from Arix. Opportunities are abundant and capital is valuable. The core portfolio represents 67.1% of NAV at year end. The "other public" portfolio (mostly matching the long listed names held in the Investment Manager's private funds, devised to mitigate the performance drag of setting aside cash for future deployment into core positions) makes up the remainder. It is important to note that this portion of the portfolio is also expected to generate solid returns through the cycle and is made up of similarly innovative but slightly larger, later stage biotech companies, many of which already have approved drugs.

The market environment for the biotech sector is improving and the opportunity set for stock picking is encouraging albeit the sector's recovery is still early. Changes in interest rate expectations are adding periods of volatility, but good data and good products are being rewarded. Medical science innovation has never been better, financing activity is robust and M&A looks set to rebound. President Trump's appointment for Secretary of Health and Human Services, RFK Jr, has added a little uncertainty but that should lift as it becomes clear that innovation is part of the solution in his pursuit of "making America healthy again".

With a growing pipeline of interesting opportunities at attractive valuations, our private investing activity has returned to normal after a couple of years when it was more optimal to focus on public market opportunities. All parts of our full life cycle portfolio are well positioned and competition for capital within the portfolio is intense.

RTW Bio continues to provide investors with exposure to the most innovative and exciting parts of the healthcare sector via a range of public, private and royalty investments. This full life cycle approach gives our shareholders access to a wide range of investment opportunities that would otherwise be hard to exploit, thus making the Group an attractive holding alongside passive, private equity fund or direct equity healthcare exposures. This proposition is most stark in next-generation obesity drugs, which are mostly still private at this point. With the addition to the portfolio of Kailera and the acquisition by Corxel (formerly known as JiXing) of CX11, RTW Bio is unique among listed investment companies for shareholders looking for meaningful exposure on the private side to this exciting area.

Corporate Developments

We are delighted to have completed the acquisition of Arix Bioscience Plc's assets and welcome new shareholders to our register. The combination added capital and scale to our best-in-class platform. RTW Bio is now one of the largest biotech investment companies quoted on the London Stock Exchange and the increased scale, liquidity and awareness has attracted several new potential buyers.

The increased scale that the Arix transaction has brought us has also allowed us to appoint a Senior Independent Director with considerable life sciences experience. Baroness Nicola Blackwood is a leader in science and entrepreneurship. She is a member of the House of Lords, and Chair of Genomics England and Oxford University Innovation. She is also Board Member of the biotechnology company, BioNTech. Nicola is also a member of the Oxford Harrington Rare Disease Centre Advisory Board and the Royal Society Science Policy Expert Advisory Committee. Nicola served as a Minister in the Department for Health and Social Care under two Prime Ministers. As Minister for Innovation, she led on Life Sciences, NHS Data and Digital Transformation, and Global Health Security. She was the first female Member of Parliament for Oxford and was elected by MPs of all parties as the first female Chair of the House of Commons Science and Technology Committee. She remains one of the youngest committee chairs in British history. We are delighted to welcome Nicola, believing that her contributions will help us further our mission to harness innovation in biotech to the advantage of patients and shareholders.

Capital Allocation

Around the time of the Arix closing, the Board increased the previously announced share buyback capacity to help manage any short-term changes in the shareholder base around the deal. In total, the Group bought back 8,500,000 shares in 2024 for a total consideration of US$11,340,306. Buybacks are considered through a capital allocation lens against multiple factors, most importantly, our core objective to deliver long-term capital growth. With this context it is important to recognise that our investments generally consume cash to progress through clinical trials or early commercialisation, so retaining capital and some liquidity is essential, especially in challenging market environments where opportunities are available to those who can provide a quantum of capital quickly. However, in recent times when the Group has received a significant cash inflow (i.e. the sale of Prometheus to Merck and the acquisition of Arix and its substantial cash position), we have returned a portion through NAV-accretive buybacks. As with Prometheus, in the event of cash realisations from public M&A in our portfolio, a proportion of the profits may be used to buy back shares. However, we strongly believe that now is a once-in-a-generation time to be making private and public investments in biotech, so we must balance short term discount considerations that are impacting the whole investment trust industry, and our healthcare peers within it, against very significant medium to long term capital growth potential.

Manager Commitment and Alignment

I am pleased to note the expansion of the Investment Manager's wider team in the UK in recent years, focussing amongst other things on servicing RTW Bio shareholders, and am particularly pleased to note the continued alignment of the Investment Manager with the Group. Since IPO, the Investment Manager has not sold any of its shares in the Company and key principals, including CIO Rod Wong, continue to increase their personal holdings. Last year Rod Wong bought 19,949,441 shares bringing his total shareholding to 49,643,313 (14.8% of ordinary shares in issue not held in treasury). Post period-end, he bought additional shares increasing his position to 15.0%. Furthermore, since admission the Investment Manager has only taken one distribution, in shares, from the Performance Allocation share class, increasing its investment in the Group. This further demonstrates both the value of the Group to the Investment Manager and its long-term commitment.

Looking Forward

Whilst 2024 was a challenging year for the biotech sector and UK investment companies, I am very pleased with the compelling long-term performance of RTW Bio and look forward with confidence to the next five years. We enter this period with significant assets under management, increasing public interest in what we do and the skilled support of our manager and other stakeholders. We anticipate many more opportunities to further medical innovations which improve the lives of patients and provide attractive returns to our investors.

2025 AGM

The Company will hold its Annual General Meeting on 9 June 2025 to review the annual results and provide portfolio updates. The meeting will take place at Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey. We would like to dedicate a part of the meeting to address questions from shareholders. We encourage shareholders to submit questions at the following email, and we will endeavour to answer as many as we can: [email protected].

On behalf of the Board, I would like to express my gratitude for your continued support and wish you all the best for 2025.

William Simpson

Chair of the Board of Directors

RTW Biotech Opportunities Ltd

28 March 2025

Report of the Investment Manager

A full life cycle approach to investing in innovative healthcare companies

Financial Highlights, Performance Drivers and Significant Events

Since its listing on the London Stock Exchange on 30 October 2019, the Group has grown the NAV attributable to Ordinary Shareholders from US$168.0 million to US$606.9 million as of 31 December 2024. The NAV per Ordinary Share has grown +73.8% from US$1.04 to US$1.81 as of 31 December 2024. Disappointingly, the share price has not kept pace with the NAV, returning +34.1% in the same period, as the shares fell to a discount in early 2022 (as did many listed investment trusts) and have remained there since, despite strong NAV per Ordinary Share performance. In 2024, the NAV per Ordinary Share returned -4.6% while the share price returned -0.6%. With continued NAV outperformance versus the market and peers, in addition to an improving outlook for the biotech sector, we would expect the discount to narrow.

Table 1. Financial Highlights

(i) Total shareholder return is an alternative performance measure. Share price at 31 Dec 2023 was $1.403 and at 31 Dec 2024 was $1.395.

(ii) Source: Capital IQ

RTW Investments, LP, the "Investment Manager", a leading global healthcare-focused investment firm with a strong track record of supporting companies developing life-changing therapies, created the Group as an investment fund focused on identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors. Driven by deep scientific expertise 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 while creating significant value for our shareholders.

NAV performance in 2024 has been driven by the core public positions. This is how the portfolio is designed to function. As full life cycle investors, our belief is that the majority of value creation in biotech happens in the public market, however, it is valuable and important to position oneself and build conviction before an IPO. Our core public position Avidity is a case in point. We co-led the crossover round at the end of 2019 and supported the IPO in 2020. Since then, the company experienced some challenges until reporting great data from several of its programs in 2024. We had significantly increased our position in February 2024 by co-leading an oversubscribed US$400m private placement, proving the value of the Investment Manager's position as a preferred capital provider in the sector. The shares returned +221% over the course of 2024 giving rise to a +12.4% contribution to NAV. The other major contributor was Tarsus, which sits at the other end of the development life cycle, being a commercial stage company. Tarsus' share price rose materially in 2024 as its treatment for demodex infection, Xdemvy, continued to exceed consensus revenue expectations.

Rocket, Immunocore and Cargo were the largest detractors amongst the core public positions. After strong performance in 2023, Rocket's shares performed poorly in 2024. Rocket raised US$165m in a follow-on offering in December after a year in which it did not deliver on clinical and regulatory timelines for its two lead programs. Despite the setbacks, we think both the Danon and Fanconi anaemia programs continue to have transformative potential for patients. Immunocore reported melanoma data at ASCO showing a disappointing sub-20% response rate. It is important to note that both Rocket and Immunocore are multi-pipeline companies, so even if one asset disappoints there are other shots on goal. There was no material fundamental news during the year on Cargo, but with the next catalyst not forecast until 2025, the share price gave back much of the gains it made since its IPO in November 2023. Following period end, Cargo announced it was halting work on its lead candidate after a failed Phase 2 study, followed a couple months later by the discontinuation of its entire pipeline, and the announcement that it would lay off most of its staff and seek a reverse merger or other business combination.

The core private positions made a small contribution led by Numab. Kyverna, Artiva and BioAge Labs completed successful IPOs while Lenz went public through a reverse merger. The average gross multiple on invested capital (MOIC) on our initial investments in these four companies to the go-public event was approximately 1.3x. Numab sold its lead drug candidate to J&J for US$1.25bn. The company's holding value was increased by approximately 2.6x to reflect the deal, which closed in July.

2024 was an auspicious year for RTW Investments-founded Corxel, which changed its name from Ji Xing Pharmaceuticals during the year to reflect an expanding portfolio of global assets. Firstly, Ji Xing (as it was then called) announced that Bayer AG had invested in its Series D financing, whilst concurrently announcing a new strategic collaboration between the two companies focused on cardiovascular diseases in China. Later in the year, Corxel announced two significant transactions in December. First, after successfully completing its Phase 3 trial, Corxel sold its China Aficamten rights to Sanofi. The asset sale recognised the value created by the team and made it possible to in-license ex-China rights to CX11, an oral small molecule GLP-1 for obesity. In a China Phase 2 trial, CX11 showed competitive weight loss with Lilly's Orforglipron, the leading small molecule in development. We believe orals are one of the largest unmet needs in obesity and are excited for Corxel's transformation into a global cardiometabolic company.

The Group's royalty positions, representing ~3% of NAV, made a solid contribution this year, underlining the attractiveness of their uncorrelated, income-oriented returns. The Group's investment in the Investment Manager's 4010 Royalty Fund performed well. 4010 currently holds two investments with Avadel Pharmaceuticals and Urogen Pharma (which is also the underlying asset of RTW Royalty 2). The royalty agreement with Avadel is associated with the sales of Lumryz, which is an extended-release sodium oxybate medication approved by the FDA on 1st May 2023 as the first and only once-at-bedtime treatment for cataplexy or excessive daytime sleepiness (EDS) in adults with narcolepsy. Lumryz's sales ramp is significantly outperforming 4010's underwriting target. The Urogen royalty is connected to two oncology franchises: Jelmyto and UGN-102. The products are topical therapies in the urinary tract for urothelial and bladder cancers, which are typically treated by surgical intervention. Most of the royalty returns are derived from Jelmyto, which is an established and growing product. UGN-102 is nearing FDA approval with Phase 3 data, and we expect it to be approved in early 2025. In the third quarter, 4010 sold its Allurion royalty asset at a small profit including royalties received to date. A sale within the investment period allows us to redeploy the capital into the more attractive risk-reward opportunities we see. 4010 will start distributing on a quarterly basis soon after the final close, which is expected to be in the first half of 2025.

At the outset, the Arix transaction was expected to be accretive, as the cancellation of shares previously owned by Acacia would offset the transaction costs, while the share conversion ratio was set on a NAV-for-NAV basis. However, the Group's NAV appreciated materially versus Arix's between the deal announcement and closure, leading to a small NAV per share dilution on closing, including the revaluation of Arix's private positions. Artios, Evommune and Ensoma increased in value, while we wrote down the values of Depixus, Sorriso and Amplyx. We believe the long-term benefits of the increase in scale and potential future accretion of the acquired positions will far outweigh the short-term costs. The increased cash position at an opportune time allowed us to make investments in a handful of core public positions like Akero that have subsequently been highly accretive to NAV.

Since admission, the Group has made sixty-nine core private investments. At 31 December 2024, thirty-one of these positions had had liquidity events (i.e., go-public or acquisition). The average holding period as private was fourteen months and the average MOIC to the liquidity event was 1.8x. Nineteen of these positions have either concurrently or subsequently been exited in full at an average MOIC of 2.8x.

Table 2. Performance breakdown for the year ending 31 December 2024

Following the Board's increase to the share buyback program in January, there followed several intra-month share buybacks in the first half of the year. In addition, the intra-month acquisition of Arix Bioscience significantly increased shares outstanding in mid-February. Due to these fluctuations in weighted average shares outstanding during the period, and because the Group's NAV is calculated on a monthly basis, the above breakdown of NAV contributions by portfolio segment is an estimate for the period 1 January to 31 December 2024.

Key updates for Core Portfolio companies during 2024:

Clinical & Commercial Milestones

· In March, Avidity Biosciences, the Group's largest portfolio holding at the time, announced positive long-term data showing reversal of disease progression in people living with myotonic dystrophy type 1 (DM1), across multiple endpoints. Having been impressed by Avidity's initial patient data, the FDA supported using hand opening time, a sensitive and early marker of change, as the primary endpoint for a Phase 3 trial.

· In March, Apogee Therapeutics reported interim Phase 1 data supportive of best-in-class convenience for its long-acting IL-13 antibody, a target that Eli Lilly has validated for atopic dermatitis (AD).

· In March, Tarsus Pharmaceuticals reported in their results announcement that they saw sales from Xdemvy (the first and only FDA-approved treatment to directly target demodex mites, the root cause of demodex blepharitis) more than double consensus expectations in its first full quarter since launch.

· In April, Lenz Therapeutics announced positive topline data from its Phase 3 presbyopia trial, following which the FDA accepted its New Drug Application in October.

· In June, Avidity Biosciences announced "unprecedented" AOC 1020 data from its Phase 1/2 clinical trial. AOC 1020 is an investigational therapy that targets DUX4, the root cause of facioscapulohumeral muscular dystrophy (FSHD). Avidity plans to accelerate initiation of registrational cohorts in its Phase 1/2 trial.

· In June, Rocket Pharmaceuticals' progress toward its first approval for Kresladi, for the treatment of LAD-1, was delayed after the FDA issued a Complete Response Letter requesting additional manufacturing information. In our view, the delay should be modest and we are hopeful they will receive the FDA's approval in 2025.

· In June, Immunocore's melanoma data showed a sub-20% response rate at ASCO.

· In June, also at ASCO, Merus reported stunning proof-of-concept data in combination with PD1 therapies for the treatment of head and neck cancer. The data demonstrated a 60+% response rate, further evidencing the drug's potential to redefine front-line standard of care.

· In November, Corxel Pharmaceuticals announced the acceptance by China's National Medical Products Administration (NMPA) of the New Drug Application (NDA) for Aficamten, an investigational, next-in-class selective small molecule cardiac myosin inhibitor for the treatment of obstructive hypertrophic cardiomyopathy (HCM).

Financial Milestones

· In January, Bayer AG and RTW Investments announced the US$162 million initial closing of a Series D financing in Ji Xing. Bayer and Ji Xing concurrently announced a new strategic collaboration focused on cardiovascular diseases in China. 

· In February, Kyverna Therapeutics priced its US$319 million IPO and began trading on Nasdaq Global Select Market under the ticker "KYTX".

· In February, the Group participated in the US$170 million Series D financing round of BioAge Labs. The capital will be used to fund Phase 2 trials for Azelaprag, an oral drug with the potential to increase weight loss and prevent muscle loss when used together with a GLP.

· In March, Lenz Therapeutics went public through the completion of a merger with Graphite Bio and now trades on the Nasdaq Global Market under the ticker "LENZ".

· In March, the Group participated in the Series A financing round of Mirador Therapeutics, raising over US$400 million for its launch. The Group has worked with Mirador's team previously, when they led Prometheus Biosciences to its acquisition by Merck for US$10.8 billion in 2023. 

· In April, the Group participated in the US$160.5 million Series C financing round of Obsidian Therapeutics, a clinical stage biotech pioneering engineered cell and gene therapies.

· In May, the Group participated in Santa Ana Bio's Series A financing round that raised $US168 million. Santa Ana is a biotech company developing a pipeline of innovative therapeutics and leveraging its multi-omics platform to unlock the full potential of precision medicines.

· In June, Numab Therapeutics announced that Johnson & Johnson would acquire its wholly owned subsidiary, Yellow Jersey Therapeutics, for $US1.25 billion in cash. Yellow Jersey Therapeutics holds the rights to Numab's NM26, a first-in-class, bi-specific antibody targeting two clinically proven pathways in atopic dermatitis, the most common inflammatory skin disease. The transaction completed in July.

· In July Artiva Biotherapeutics priced its IPO at US$167 million and began trading on Nasdaq Global Market under the ticker "ARTV".

· In August, the Company made a new investment in the seed round of Jade Biosciences, Inc. that raised US$80 million for its launch. The funding will be used to support Jade's plans to develop targeted therapies for indications with high unmet need across inflammation and immunology.

· In September, BioAge Labs, Inc. ("BioAge") completed a US$198 million IPO and now trades on Nasdaq Global Select Market under the ticker "BIOA".

· In September, the Company co-led Aktis Oncology's Series B round, raising US$175 million in financing to further advance its proprietary pipeline of novel targeted alpha radiopharmaceuticals to treat a broad range of solid tumours.

· In October, the Company announced the launch of new portfolio company, Kailera Therapeutics. The US$400 million Series A financing round was co-led by RTW Investments alongside Atlas Venture and Bain Capital Life Sciences, with participation from Lyra Capital. Kailera is developing a broad, advanced, and differentiated portfolio of clinical-stage injectable and oral therapies that have demonstrated potential as best-in-class treatments for the treatment of chronic weight management.

· In October, the Company invested in the US$115 million Series C financing round of Evommune, Inc. The Company received a legacy position in Evommune earlier in 2024 when it acquired the assets of Arix Bioscience. Evommune is a clinical-stage biotechnology company discovering and developing new ways to treat immune-mediated inflammatory diseases.

· In November, the Company made a new investment in the seed round of Mantle Therapeutics. Mantle is a biotech company targeting the treatment of rare, fatal diseases across multiple modalities.

· In December, the Company made a new investment in Ottimo Pharma, a company pioneering bifunctional medicines to extend the lives of people living with cancer. The Series A financing round of over US$140 million will accelerate the lead asset, Jankistomig, a first-in-class PD1/VEGFR2 bifunctional antibody for multiple solid tumour indications, and a pipeline of follow-on bifunctional assets.

· In December the Company made a new investment in the Series A round of Dutch biotech, Alesta Therapeutics, a company focused on developing transformative small molecule therapies for rare diseases. Its lead asset is an orally active therapeutic candidate for hypophosphatasia (HPP), a rare genetic disorder caused by mutations in the ALPL gene.

· In December the Company made a new investment in the Series A round of City Therapeutics, a biopharmaceutical company developing a pipeline of next-generation RNAi-based medicines to make a significant impact for patients across multiple therapeutic areas.

· In December Corxel announced that it had entered into a definitive agreement whereby Sanofi would acquire its exclusive rights to develop and commercialise Aficamten in Greater China for an undisclosed amount. The transaction has since closed.

Portfolio breakdown and new investments

Core public positions are typically investments that were added to the portfolio as private investments, reflecting the key focus of the Group's strategy. Our investment approach is defined as full life cycle and, therefore, involves retaining private investments beyond their IPOs; hence the core portfolio consists of both privately-held and publicly-listed companies and royalty investments.

As of 31 December 2024, the Group's core positions accounted for 67% of NAV (2023: 67%) and included fifty-four companies (2023: 36) in private and public biotech and medtech companies and royalty investments. We selected these investments based upon our rigorous assessment of the science, commercial potential and valuations. Table 3 shows the top ten portfolio investments at the end of the reporting period.

Core private investments accounted for 30% of NAV at 31 December 2024 (2023: 18%) across thirty-three investments (2023: 22). The increase in exposure and number of investments in the reporting period reflects the addition of several new private positions (see Table 4 alongside the new private investments from Arix (Ensoma, Evommune, Depixus, Sorriso and Amplyx) less Kyverna, BioAge and Artiva which went public via IPOs and Lenz, which went public via a reverse merger.

Core public investments accounted for 34% of NAV (2023: 39%) across nineteen positions (2023: 12). The change in exposure and number of investments mostly reflects underlying performance, the graduation of Kyverna and Lenz to the public markets and the addition of Akero, Urogen, 89Bio and Merus.

Royalties accounted for 3% of NAV (2023: 10%) across two investments (2023: 2): RTW Investments' 4010 Royalty Fund (4010) and RTW Royalty 2. These investments are cash generative, providing life sciences exposure that is uncorrelated to the volatility of the equity markets, and have limited scientific risk due to their being typically constructed around commercial products. The reduction in exposure reflects a rebalanced exposure to 4010 after new investors came into the fund and the sale and transfer of a portion of RTW Royalty 2's underlying assets.

"Other public" listed companies make up 31% of the Group's NAV at 31 December 2024 (2023: 20%). The "other public" portfolio segment is designed as a cash management strategy to mitigate the drag of setting aside cash for future deployment into core positions and to provide ready cash as needed for those purchases. The 50 "other public" holdings are carefully selected, mostly matching, on a pro-rata basis, the long investments held in our private funds and generally rebalanced on a monthly basis. The investments represented in this portfolio are similarly categorised as innovative biotechnology and medical technology companies developing and commercialising potentially disruptive and transformational products but are generally later stage (both in terms of clinical development and duration as a public company), have larger market capitalisations and have greater trading liquidity than our core public positions. The average market capitalisation of the "other public" holdings is $8.8b at 31 December 2024. Available cash at 31 December 2024 was 2%, significantly lower than at the same point last year (13%). The elevated cash position at 31 December 2023 was in preparation for the purchase of a stake in Arix Bioscience, which closed in January 2024. From time to time, we may make use of derivatives and other instruments to manage individual position sizing for the purpose of efficient portfolio management. In 2024, the use of derivatives and hedging shorts increased for this reason.

Our "full life cycle" portfolio is diversified across clinical stages, capital position (i.e., equity and royalty), treatment modalities, and therapeutic focus giving it multiple, differentiated return levers and horizons. By constructing the portfolio in such a way, investors get exposure to the most innovative parts of a highly specialised sector with the explosive potential of companies that successfully navigate clinical, regulatory or commercial inflection points.

While the portfolio is still majority invested in US-based companies, we are committed to adding UK and EU investments in an effort to support the best assets across the globe and help foster local biotech ecosystems. When we first came to market in October 2019, we had zero exposure to the UK, now two of our top ten positions are based in the UK: Immunocore (public: "IMCR") and Artios (private).

Looking forward, we expect the total portfolio sector allocation to remain close to 80% biopharmaceutical assets and 20% medical technology assets. In line with prospectus guidance, we anticipate two-thirds of new private investments will be made in mid- to later-stage venture companies and one-third focused on active company building around the discovery and development or licensing and distribution of promising assets. Royalty investments will be limited to approximately 15% of NAV. 

Table 3. Top ten core portfolio positions as of 31 December 2024¹

1 Positions are shown on a net basis. Any differences with the Schedule of Investments are due to short holdings.

Table 4. New core portfolio investments greater than 50bps in 2024¹

1 Includes new privates, re-designations from "other public" to core public and Arix acquisition positions.

2 Arix-acquired position

Royalty Financing

What is royalty financing?

Financing based on royalty payments. In exchange for an upfront payment, investors receive quarterly cash payments based on a pre-determined percentage of the future revenues of a specified product or asset. Within healthcare, royalty financing is a growing source of funding for small and medium-sized companies launching new drugs. A bespoke solution that aligns the interest of the provider/investor with the company through revenue participation, while avoiding some of the negatives of debt (i.e. covenants, refinancing, warrant coverage etc.) is an increasingly popular one.

How does RTW Bio gain exposure to royalty financing?

Historically, RTW Bio has made royalty investments directly alongside other RTW Investments funds through individual vehicles such at RTW Royalty 1, which held the Mavacamten royalty that was subsequently sold to Bristol Myers Squibb. Since 2023, RTW Bio has gained exposure to royalties through the RTW Investments-managed 4010 Royalty Fund ("4010") on a no fee basis. It is expected that RTW Bio will continue to gain exposure to royalties through successor vintages of 4010. Investing through a co-mingled drawdown fund has several benefits from a cost and administration perspective.

The 4010 Royalty Fund

The 4010 Royalty Fund is looking to generate uncorrelated, income-oriented returns for investors by targeting a gap in financing available to small and medium-sized companies launching first-in-class or best-in-class products with high unmet needs. RTW Investments' full life cycle investment platform provides 4010 with several advantages by seeing more royalty opportunities earlier and with greater underwriting insight. These advantages combined with RTW Investments' in-house transactional capabilities allow it to offer holistic financing solutions to companies and to structure innovative deals to protect downside for investors.

Table 5. NAV capital breakdown as of 31 December 2024 and 31 December 2023

1 As defined in Alternative Performance Measures.

Figure 1. Core portfolio breakdown, by (A) Modality, (B) Therapeutic focus, (C) Clinical stage and (D) Geography as of 31 December 2024. Except for clinical stage, these breakdowns do not include royalty vehicles.

Table 6. Core portfolio positions greater than 50 bps, as of 31 December 2024 and 31 December 2023¹̛ ⁵

1 The aggregate exposure of names below 50 bps, consisting of 26 positions, is 4.8% of the Group's NAV.

2 Names in which the fund owns both private and public securities of a public company are categorised as public.

3 Includes pre-funded warrants.

4 Includes shares held in the initial SPAC vehicle (HSAC2) that merged with Orchestra in January 2023.

5 Positions are shown on a net basis. Any differences with the Schedule of Investments are due to short holdings.

Table 7. RTW Investments representation on portfolio company boards as of 31 December 2024

1 In aggregate these represented 26.7% of the Group's NAV at 31 December 2024.

Table 8. Top 5 "Other Public" portfolio segment holdings as of 31 December 2024¹

1 Positions are shown on a net basis. Any differences with the Schedule of Investments are due to short holdings.

Private Portfolio Valuations and Cash Runway Analysis

The core private positions are the foundation of the Group's strategy. They are built on our rigorous assessment of the best investment opportunities we can find. We have always been highly selective in this area, focusing only on companies with both well-founded science and attractive commercial opportunities. We have benefited from this discipline as we continue to emerge from a challenging capital markets environment. We have a private portfolio that is well-sized and well-funded.

As of 31 December 2024, the average cash runway of our core private companies was slightly over two years, which provides them with sufficient time to focus on clinical development plans. About a fifth have less than six months of runway, one of which is an RTW Investments company creation, which is by design, as the Investment Manager's funds have the flexibility to inject cash when necessary. The remainder are working on various capital raising solutions.

We hold our private company investments at 'fair value' i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. This is assessed in accordance with US GAAP, utilising valuation techniques consistent with the International Private Equity and Venture Capital Guidelines including, but not limited to, the income approach and the market approach. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events', which may include changes in fundamentals, an intention to carry out an IPO, or changes to the valuations of comparable public companies. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The Board delegates valuation of the private investments to the Investment Manager while the Board's Audit Committee oversees the integrity of the valuation process and conducts an independent review of the Investment Manager's valuation policies and procedures twice a year when the interim and annual statements are produced and also on an ad hoc basis when appropriate.

The process is overseen at the Investment Manager by the RTW Investments Valuation Committee. The Committee is supported by RTW Investments' valuation team that is independent from the investment team and receives advice from two independent third-party valuation firms. The Valuation Committee approves valuations of private company investments on a monthly basis and utilises the analysis of an independent third-party valuation firm no less frequently than twice a year in helping to determine the fair value of each material private investment.

Thirty core private and royalty positions saw a total of seventy-one valuation adjustments in 2024 with an average of two adjustments per position. Fourteen positions (not including the Arix positions) were marked up by an average of 38.3% (excluding Numab, which was marked up by 264% to reflect the deal with Johnson & Johnson, the average was 21.0%); 11 positions (not including Arix positions) were marked lower by an average of -20.1%. The balance remained unchanged. 29% of the markdowns were primarily driven by changes to relative comparables or market-based inputs. 38% of the markups were primarily driven by comparables, and 62% were primarily driven by idiosyncratic company performance, a financing round or transaction. At year end, the average time since the last third-party valuation was seven weeks and an average of twelve months had elapsed since the last financing round.

Of the positions acquired from Arix, we wrote up the values of Artios, Evommune and Ensoma and we look forward to seeing them develop further in the future. We wrote down the values of Depixus, Sorriso and Amplyx which are immaterial in the context of the whole portfolio.

We believe that the value of the private portfolio is best demonstrated by go-public events or transactions. The five such go-public events in 2024 (including the Numab acquisition) saw an average step up from our holding value to the event of 8%. The average MOIC to the event was 1.7x. This is consistent with our historical averages (Figure 2).

Figure 2. New private investments, private liquidity events¹ and private MOIC²

1 Liquidity event = IPO, SPAC merger, reverse merger, acquisition from private.

2 Multiple of Invested Capital ("MOIC") represents the ratio of total value to the corresponding amount of total capital invested, expressed

as a multiple. Gross MOIC is utilised, which is calculated before giving effect to management fees, carried interest, taxes and other 

expenses, which would reduce performance and the rate of return.

Figure 3. Core private portfolio - approximate cash runway as of 31 December 2024

Table 9. Private Valuation Statistics for 2024

1 Does not include positions acquired in the Arix transaction

Sector review and outlook

The Russell 2000 Biotech Index and the Nasdaq Biotech Index (NBI) returned +2.5% and -1.4%, respectively, in 2024. The Russell 2000 Biotech Index remains below levels first reached in 2018. Interest rate worries dominated for much of the year and continued to after the US Federal Reserve's latest shift in December. While the results of the first round of Inflation Reduction Act (IRA) drug negotiations were on the better end of expectations, the uncertainty surrounding RFK Jr's nomination and subsequent appointment as Trump's Secretary of Health and Human Services became a new reason for some to stay on the sidelines. Coming into 2024, the biotech sector had already underperformed the S&P 500 by a record amount and this continued through the year with -26% and -22% relative performance for the NBI and the Russell 2000 Biotech Index, respectively. Eli Lilly basically carried biopharma, generating ~US$200B in market cap while the rest of pharma (-US$180B) and biotech (+US$20B) combined, lost value. The total market cap of small and midcap biotech is only US$700bn, less than Lilly alone and about the same value as the market cap that Nvidia lost on "DeepSeek Monday" (i.e. 27th January 2025). If some flows are diverted from AI-tech to biotech, the impact on biotech could be significant given the relative market caps we see these days.

Figure 4. Russell 2000 Biotechnology index value

M&A was too small to get things going. While five-hundred-million-dollar-plus acquisition volumes remain near record highs (27 vs last year's record 26), dollar value dropped to US$44 billion vs US$140 billion in 2023. This was the first year in twenty that we did not see an M&A deal over US$5 billion in value as there was a shift towards earlier stage assets as some buyers (namely Lilly, Novo, AbbVie, and AstraZeneca) are focused on revenues beyond 2030. To compound matters, China's bear market has increased the supply of early-stage assets looking for capital, giving buyers more options. Despite this dynamic, we don't think this spells the end for larger late-stage deals. Merck, Bristol, Roche, Novartis, and Sanofi are still on the hunt for revenues this decade and Lilly and Novo are sure to get more aggressive as their obesity revenues grow. Several large pharma companies face losses of exclusivity patent cliffs totalling approximately US$500bn over the next decade and currently have approximate US$1 trillion of dry powder (cash plus debt capacity) to make acquisitions. Only western biotech companies have the late-stage assets needed to fill their needs and a more friendly Federal Trade Commission (FTC) in the US should lower the barriers that have discouraged bigger deals in recent times.

Figure 5. US biotech M&A deal volumes and value

Source: Jefferies Biotech M&A Report 2008-2004 as of 31 December 2024

IPOs made incremental progress towards normalisation. 17 companies made it out this year versus 12 last year. This is consistent with a slow transition from a bear market (less than 10) to a healthy one (more than 30). Consolidation also continued. After peaking in 2021 at 590 publicly traded small and mid-caps, the number is now 547. Most small and mid-cap companies have been disciplined around spending, with cash burn trending lower to extend runways. Public follow-on financing activity returned to near record levels as companies with good data were able to raise the capital they needed. Venture financing is extremely robust. Every category from Series A to D surged in 2024 supported by many "mega-rounds" (i.e. more than US$250m) in the As and Bs, the fuel for future waves of innovation.

Figure 6. US Biopharma Financing Market - IPOs and Follow-Ons

Source: Bloomberg and Lazard 2024 Life Sciences US Equity Issuance Recap report as of 31 December 2024.

The FDA approved 56 novel drugs this year, shy of last year's record-setting 61, but still one of the highest in history. Novel modalities made up 10 vs 14 last year, including two gene therapies, four cell therapies, one RNA medicine, and three bispecifics. 2024 saw notable breakthroughs across therapeutic areas with the first approval for NASH (the most severe form of nonalcoholic fatty liver disease), the first cell therapy approved for solid tumours, bispecific data that could potentially challenge Keytruda's dominance in solid tumours and compelling CD19 CAR-T data demonstrating the possibility of drug-free remission in autoimmunity, not to mention the significant advances in obesity (more below). It's worth noting that 56% of last year's approvals came from biotech companies under $5bn in market capitalisation. This is where the innovation is. 2025 holds the potential to be on par with record-setting 2023 with many highly probably PDUFA dates set.

Figure 7. The FDA approved 56 novel drugs in 2024

Source: FDA.gov website (CDERS and CBER)

NME = new molecular entity

GtX = gene therapy

We are tracking how the Department of Human and Health Services (HHS) could look under RFK Jr's leadership. Considering the scope of the job, guardrails, and players surrounding him, we currently don't expect a change in direction when it comes to FDA's pro-innovation trend. Innovation momentum could go either way, depending more on Dr Marty Makary and other staff. Separately, we are optimistic we could see pharmacy benefit manager (PBM) and insurance reform. If and when RFK Jr uncertainty declines, we would note that the sector outperformed the S&P 500 in two of the past three Republican first terms, and we would expect no different an outcome today, given the promising science our team is evaluating daily.

From a modality or therapeutic area perspective, oncology, immunology, rare disease and obesity remain a focus with next generation obesity drugs probably offering the most exciting opportunities. We call it "the $1 trillion GLP-1 revolution" because it is the first innovation in healthcare - not just drugs, all of healthcare - to create about US$1 trillion in value. Obesity is the most common disease in Western society with over 100m obese people in America alone. It is highly linked to three of the top ten causes of death: cardiovascular, stroke and diabetes. It is also strongly associated with other diseases like cancer, kidney disease and maybe even dementia. Recent outcome studies from some of the GLP-1s are showing 20-30% improvements in these other associated diseases and conditions. It is probably the most significant medical advance in terms of the sheer impact that we have seen in recent history (more below in the Impact section). If you want to learn more about the science, impact, evolving competitive landscape, and the opportunities we see, please check out The RTW Podcast: "The $1 Trillion GLP-1 Revolution". You can find it on all the main podcast platforms.

In the here and now of policy speculation and public share prices, it is easy to lose sight of the drastic longer-term need for a healthy, innovative healthcare system. Globally, senior populations (i.e. over 65 years old) are expected to double from 800m in 2024 to 1.6bn in 2050. In the US, people over 65 represent 18% of the current population but 36% of the health spending. Innovation is part of the solution.

Figure 8: Percentage of US small- and midcap biotech companies trading at less than cash on their balance sheets at 31 December 2024

Post period-end updates and other key portfolio company events

The following events all occurred in January 2025:

Kailera announced positive topline data from the 8 mg dose of Hengrui Pharmaceuticals' Phase 2 clinical trial (HRS9531-203) of HRS9531, a GLP-1/GIP receptor dual agonist, in individuals living with obesity or who are overweight. The clinical trial results showed that a once-weekly subcutaneous injection of the 8 mg dose demonstrated a statistically significant placebo-adjusted mean weight loss, with no plateau. Additionally, 59% of treated participants achieved a weight loss greater than 20%. The trial results also demonstrated a favourable safety profile. These results increase our confidence that Kailera is one of the leading players in next-generation obesity management and bode well for Kailera's planned global Phase 3 trial.

Akero (Nasdaq: AKRO) released preliminary topline results from its Phase 2b study evaluating the efficacy and safety of its lead product candidate efruxifermin (EFX) in patients with compensated cirrhosis due to metabolic dysfunction-associated steatohepatitis MASH. Treated patients demonstrated a statistically significant improvement in fibrosis with no worsening of MASH, representing a 24% effect size over placebo at 15%. Upon the news, shares in Akero, a 5.2% position at year end, rose 100%.

Cargo Therapeutics announced it was halting work on its lead candidate after a failed Phase 2 study, followed a couple months later by the discontinuation of its entire pipeline, and the announcement that it would lay off most of its staff and seek a reverse merger or other business combination.

Beta Bionics went public on 30 January, issuing 12 million shares of common stock at US$17.00 each, raising proceeds of US$204 million. The shares now trade on the Nasdaq Global Market under the ticker symbol "BBNX".

RTW Investments, LP

28 March 2025

RTW Bio's Long-Term Strategy

Transforming the lives of millions

RTW Bio's long-term strategy is anchored in identifying sources of transformational innovations with significant commercial potential by engaging in deep scientific research and a rigorous idea generation process, complemented by years of investment, company building, and both transactional and legal expertise.

Identify

Identify transformational innovations

The Investment Manager has developed expertise through a comprehensive study of industry and academic efforts in targeted areas of significant innovation. Thanks to the decoding of the human genome, there is more clarity around the causes of disease. Coupled with exciting new modalities that can address genetic diseases in a targeted way, drug innovation is accelerating.

Engage

Engage in deep research to unlock value

The Investment Manager has developed repeatable internal processes, combining technology and manpower to comprehensively cover critical drivers of innovation across the globe. We seek to identify, through rigorous scientific analysis, biopharmaceutical and medical technology assets that have a high probability of becoming commercially viable products, dramatically changing the course of treatment, and bringing effective, or in some cases, even fully curative outcomes to patients.

Build

Build new companies around promising academic licences

The Investment Manager has capabilities to partner with universities and in-license academic programmes, by providing capital and infrastructure to entrepreneurs to advance scientific programmes. Particularly in rare disease, there is often little existing research and few treatment options, so forming a rare disease-focused company is a way of shining a light on this space and creating a roadmap to developing potentially curative treatments.

Support

Support investments through the full life cycle

A key part of the Investment Manager's competitive advantage is the ability to determine at which point in a company's life cycle we should support the target asset or pipeline. As a full life cycle investor, RTW Investments provides growth capital, creative financing solutions, capital markets expertise, and guidance. Taking a long-term, full life cycle approach and having an evergreen structure enables us to avoid the pitfalls and structural constraints of venture-only or public-only vehicles. RTW Investments' focus is on becoming the best investors and company builders we can be, delivering exceptional results to shareholders and making a positive impact on patients' lives.

Strategy in Action

Impact Focus: Treating Obesity and Related Conditions

Obesity is the most common disease in Western society

Obesity affects more than 100 million US adults, more than 764 million people globally and is the most common disease in Western society.

What are GLP-1 drugs?

GLP-1 drugs, also known as GLP-1 receptor agonists or incretin mimetics, mimic the action of a naturally occurring hormone called glucagon-like peptide-1 (GLP-1), which is produced in the intestines. GLP-1 plays a crucial role in regulating blood sugar levels by stimulating insulin release, slowing stomach emptying and reducing appetite. GLP-1 drugs work by binding to the same receptors as the natural GLP-1 hormone, triggering these same actions. This can help improve blood sugar control in people with type 2 diabetes and promote weight loss in people with obesity or who are overweight. The term "GLP-1 drugs" has become shorthand for a broader category of (incretin mimetics) drugs that are used to treat obesity, so are informally known as "obesity drugs".

Note: * BMI ≥30kg/m2; ** BMI ≥40kg/m2

Source: World Obesity Atlas, March 2023 report; Stierman 2021 National Health Statistics Report; Prospective Studies Collaboration 2009 Lancet

Obesity Drugs: the most significant medical advance in terms of the sheer impact that we have seen in recent history

GLP-1 drugs like Wegovy and Mounjaro have gained significant popularity for weight loss since 2021 when the FDA approved semaglutide (Wegovy) for chronic weight management in adults with obesity or who are overweight with weight-related conditions. GLP-1 drugs were initially developed to treat type 2 diabetes. In fact, Wegovy is a higher-dose formulation of Ozempic, a drug that was already marketed for diabetes. The first GLP-1 agonist, exenatide (Byetta), was approved by the FDA in 2005 and iterative innovation over the subsequent twenty years has brought us to where we are today.

Obesity is a major risk factor for a number of chronic diseases like diabetes, hypertension and liver disease, as well as cardiovascular diseases such as heart disease and stroke, which are the leading causes of death worldwide. So, the health impacts of the obesity drugs go well beyond diabetes and weight loss. In fact, recent outcome studies from some of the GLP-1s are showing 20-30% improvements in some of these diseases.

Groundbreaking data from SELECT trial: GLP-1s shown to improve MACE¹ outcomes in overweight or obese adults

Source: Lincoff AM, Brown-Frandsen K, Colhoun HM, et al. Semaglutide and cardiovascular outcomes in obesity without diabetes. N Engl J Med 2023;389:2221-32. DOI: 10.1056/NEJMoa2307563

1 MACE, or major adverse cardiovascular events, refers to cardiovascular death, myocardial infarction (heart attack), stent thrombosis (blood clot in a coronary artery stent), repeat revascularisation (bypass surgery), ischemic stroke.

RTW Bio and obesity drugs / GLP-1s

Currently, Eli Lilly and Novo Nordisk are leading the way with their GLP-1 drugs with the only currently approved drugs. However, their rates of adverse side effects are not optimal, and there are a lot of ways in which these drugs can be improved. We are still early in the current cycle of obesity drug development and the next generation of drugs are targeting many of the shortcomings of the incumbents.

Obesity (and its related conditions) is a large and growing focus for RTW Bio, and we are at forefront of the second wave of the obesity revolution, leveraging cutting-edge science and strategic partnerships to invest in exciting assets. With a portfolio of private obesity investments, RTW Bio is unique among listed investment companies for shareholders looking for exposure on the private side to the area.

https://www.corxelbio.com/

Corxel Pharmaceuticals

8.5% of NAV (2023: 7.9%)

Corxel is a leading biotech company headquartered in the US and China, focused on developing innovative cardiometabolic therapies globally. Backed by RTW Investments, LP, Corxel (formerly Ji Xing) was founded in 2019 and has been committed to bringing innovative science and medicines to underserved patients around the world. With a strong and further developing asset pipeline, industry leading talent, and patient-centric focus, Corxel is dedicated to delivering meaningful and lasting impact on patients.

In December, Corxel announced the acquisition of CX11, an oral small molecule glucagon-like peptide-1 receptor agonist (GLP-1 RA), for worldwide (excluding Greater China) development and commercialisation, from Vincentage. CX11 is an investigational, oral small molecule GLP-1 RA for the treatment of cardiometabolic diseases, including obesity and type 2 diabetes. GLP-1 RAs have been shown to lower body weight, improve insulin sensitivity, and reduce glucose and overall appetite. CX11, in a once daily, orally available formulation, could offer convenience and accessibility to patients, and lower the cost of manufacturing compared to injectables. In a Phase 2 clinical trial conducted in China, CX11 demonstrated competitive weight loss with Lilly's Orforglipron, the leading small molecule in development. The registrational Phase 3 study in obese and overweight patients in China was initiated in November 2024. Corxel plans to initiate a global (excluding Greater China) Phase 2 study in 2025.

We are excited about the potential of CX11, which has shown impressive efficacy in weight reduction, making it a potential best-in-class oral small molecule GLP-1 RA. There are currently no oral small molecule GLP1's available. The oral peptide Rybelsus has limited efficacy and is cumbersome to take, requiring 30 minutes of fasting, no drinking, and no other medications taken at the same time. Lilly is likely to be the first to bring one to market and we would expect CX11 to be second or third. We believe this is not a "winner takes all market", and there is room for several players given the very large market potential.

https://www.kailera.com/

Kailera Therapeutics

3.4% of NAV (2023: N/A)

Kailera is a clinical-stage biopharmaceutical company developing a broad and advanced therapeutic pipeline that is poised to deliver differentiated treatment options for obesity and related conditions. Kailera is committed to developing therapies that give people the power to transform their lives and elevate their overall health. The company was founded in 2024 and backed by RTW Investments along with Atlas Venture and Bain Capital Life Sciences with participation from Lyra Capital.

In January 2025, Kailera's injected GLP-1/GIP dual agonist KAI-9531 demonstrated potentially best-in-class obesity data in a Phase 2 trial in China conducted by Jiangsu Hengrui Pharmaceuticals. KAI-9531 was one of three assets Kailera licensed from Hengrui at its launch, acquiring the worldwide rights (excluding Greater China) to develop the drugs. With 22.8% additional weight loss compared to placebo treatments at 36 weeks, it beats the 21% shown by Eli Lilly's Retatrutide. Kailera is preparing for its upcoming global Phase 3 study of the same asset. These data increase our confidence that Kailera is one of the leading players in next-generation obesity management.

Kailera's KAI-9531 is competing for best-in-class injectable efficacy with a favourable gastro-intestinal adverse effects profile.

1 With placebo adjustment.

Amycretin and Semaglutide are Novo Nordisk drugs; Retatrutide and Tirzepatide are Eli Lilly drugs.

Sources: KAI9531 and Amycretin data from company press releases; Retratrutide data from ADA 2023 meeting; Tirzepatide and Semaglutide data from DOI: 10.1056/NEJMoa2206038 and DOI: 10.1056/NEJMoa2032183.

Operational and Financial Review for the Year

Innovative asset growth

MARKET CAPITALISATION

The Company's market capitalisation increased from U$295 million at 31 December 2023 to US$470 million at 31 December 2024. The Company issued 181,901,165 shares in 2024 in conjunction with the Arix acquisition and repurchased 8,500,000 shares, so the 59% increase in market capitalisation was due to the increase in the shares outstanding since the share price was marginally down from 2023 to 2024.

ORDINARY NAV

The Ordinary NAV increased from US$399 million to US$607 million during the year, which was due largely to the acquisition of the assets of Arix Bioscience.

NAV PER ORDINARY SHARE

The NAV per share decreased from US$1.90 per share to US$1.81 per share. The main driver of this decrease was the share price performance of Rocket Pharmaceuticals (-7.0%), Immunocore (-3.1%) and Cargo (-1.5%) as well as the other public portfolio (-3.4%) and the dilution from the Arix transaction (-5.0%).

PREMIUM / DISCOUNT

The Company's shares traded on average at a c.24% discount to NAV due to reduced market demand for growth and venture capital assets during the reporting period. At year end, the Company's Ordinary Shares were trading at a 23% discount to NAV (2023: 26% discount to NAV). The modest reduction in US and UK interest rates during the period was offset by rising US treasury and gilt yields resulting in only a modest improvement in the rating of the company's shares.

TOTAL RETURN TO SHAREHOLDERS BASED ON ORDINARY NAV

As the Company has not paid dividends, the total return for the year of -4.6% (2023: +23.5%) equates to the decrease in NAV per Ordinary Share.

TOTAL RETURN TO SHAREHOLDERS BASED ON SHARE PRICE

The share price return of -0.6% was the result of the decline in the company's NAV per share being offset by a modest re-rating of its discount. The shares remained at a discount during the year although the discount modestly narrowed.

ONGOING CHARGES

The Group's ongoing charges ratio is 1.75% (2023: 1.87%), calculated in accordance with the AIC recommended methodology, which excludes non-recurring costs and uses the average NAV in its calculation.

Highlights

Market Capitalisation as of 31 Dec 2024

2024: US$470m

2023: US$295m

2022: US$257m

Ordinary NAV as of 31 Dec 2024

2024: US$607m

2023: US$399m

2022: US$326m

Discount to NAV as of 31 Dec 2024

2024: -22.8%

2023: -26.0%

2022: -21.2%

Ongoing charges as of 31 Dec 2024

2024: 1.8%

2023: 1.9%

2022: 1.9%

Key Performance Indicators

Measuring our performance

The Board has identified the following indicators for assessing the Group's annual performance in meeting its objectives:

Financial KPIs

NAV Growth

PERFORMANCE

Performance of the portfolio companies and cash management strategy net of all fees and costs

KEY FACTORS

· Portfolio performance and progression through clinical trials

· Cash management

· Capital pool and deployment

· Scientific and financial risks

· Market context including interest rates and bond yields

PROGRESS

Ordinary NAV

2024: -4.6%

2023: +23.5%

During the reporting period this was largely driven by public companies' share price performance. After strong performance in 2023, Rocket's shares performed poorly in 2024. The company did not deliver on clinical and regulatory timelines for its two lead programs, but despite the setbacks, we think both the Danon and Fanconi anaemia programs continue to have transformative potential for patients. Immunocore reported melanoma data at ASCO showing a disappointing sub-20% response rate. There was no material fundamental news on Cargo during the financial year, but with the next catalyst not forecast until 2025, the share price gave back much of the gains it made since its IPO in November 2023. After period end, Cargo announced it would discontinue its entire pipeline, lay off most of its staff and seek a reverse merger or other business combination.

FUTURE INTENT

Achieve superior long-term capital appreciation; target an annualised total return of 20% over the medium term

LINK TO STRATEGY

Identifying

Engaging

Building

Supporting

LINK TO PRINCIPAL RISKS

Failure to achieve investment objective

Exposure to global political and economic risks

Clinical Development & Regulatory Risks

Total shareholder return

PERFORMANCE

Delivering value to the shareholders

KEY FACTORS

· Portfolio performance

· Liquidity of RTW Bio shares

· General market sentiment

PROGRESS

Share Price Return

2024: -0.6%

2023: +16.0%

The company's share price recorded a smaller decline than its NAV as falling interest rates led to an increase in demand for early stage and venture capital investments despite muted returns from the Biotech sector.

FUTURE INTENT

Achieve superior long-term capital appreciation; target an annualised total return of 20% over the medium term.

LINK TO STRATEGY

Identifying

Engaging

Building

Supporting

LINK TO PRINCIPAL RISKS

Failure to achieve investment objective

Exposure to global political and economic risks

Clinical Development & Regulatory Risks

Premium/Discount to NAV

PERFORMANCE

The level of supply and demand for the Company's shares

KEY FACTORS (in order of impact at year end)

· The percentage of private growth assets within the Group's portfolio

· Portfolio performance

· Liquidity of the Company's shares

· Increased visibility with key UK shareholder audience (London office, UK distribution partner)

PROGRESS

Premium/discount to NAV (average during the year)

2024: -24%

2023: -25%

The discount moderately narrowed during the year. US and UK interest rates moved in the right direction, but unfortunately this was offset by rising US treasury and gilt yields.

FUTURE INTENT

Return to a premium to NAV such that total shareholder returns match or exceed NAV performance

LINK TO STRATEGY

Identifying

Engaging

Building

Supporting

LINK TO PRINCIPAL RISKS

Failure to achieve investment objective

Exposure to global political and economic risks

Percent of NAV invested in core portfolio companies

PERFORMANCE

Level of capital deployment into core portfolio companies

KEY FACTORS

· Level of capital deployment and investment pace, as well as availability of funds to be deployed into new portfolio companies and follow-on investments

PROGRESS

NAV invested in core portfolio

2024: 67%

2023: 67%

Deployed into core portfolio companies

FUTURE INTENT

Identify transformative assets with high growth potential across the biopharmaceutical and medical technology sectors

LINK TO STRATEGY

Identifying

Engaging

Building

Supporting

LINK TO PRINCIPAL RISKS

Clinical Development & Regulatory Risks

The Investment Manager relies on key personnel

Exposure to global political and economic risks

Non-financial KPIs

Geographically & therapeutically diversified portfolio

PERFORMANCE

Measures the Group's commitment to invest in best-in-class science and innovative assets worldwide

KEY FACTORS

· Continue to diversify within the life sciences sector and support local biotech ecosystems across the globe

PROGRESS

Therapeutic areas addressed

2024: 11

2023: 10

Core portfolio companies' focus spans multiple therapeutic areas, treatment modalities and geographies. In 2024, metabolic diseases were added as a core therapeutic area, as the Group pivoted toward a strong focus on obesity.

FUTURE INTENT

Continue investing in and supporting companies developing next generation therapies and technologies that can significantly improve patients' lives

LINK TO STRATEGY

Identifying

Engaging

Building

Supporting

LINK TO PRINCIPAL RISKS

Clinical Development & Regulatory Risks

Exposure to global political and economic risks

Active and robust pipeline

PERFORMANCE

Delivers transformational new treatments to patients in need.

KEY FACTORS

· Balance and breadth of the pipeline across all clinical stages

· Data readouts and progress through multiple clinical stages

· Commercial opportunity and competitive landscape

PROGRESS

Core portfolio companies that have leading programs in a clinical stage

2024: 30 of 54

2023: 22 of 36

Capturing a spectrum of early-stage Phase 1 to late stage Pivotal

FUTURE INTENT

Progress towards delivering transformational treatments to patients in areas of high unmet need.

LINK TO STRATEGY

Identifying

Engaging

Building

Supporting

LINK TO PRINCIPAL RISKS

Clinical Development & Regulatory Risks

Exposure to global political and economic risks

Imposition of pricing controls

Risk Management

Applying deep scientific expertise with a long-term investment horizon

RTW Bio's long-term strategy is anchored in identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors. Driven by a deep scientific understanding and a long-term approach to supporting innovative businesses, we invest in companies developing next-generation therapies and technologies that have the potential to significantly improve patients' lives. With this significant opportunity also comes risk.

RTW Bio's risk framework is overseen by the Audit Committee under delegation from the Board. Multiple parties contribute to managing risk, including the Board, the RTW Investments team, and the Group's advisers.

Risk framework

The risk framework begins with the Board who oversee the process to ensure a robust assessment of principal risks, consider current and potential risks, and receive an update from the Investment Manager at each Board meeting. A risk register is maintained that sets out principal risks, their probabilities and an impact assessment. The RTW Investments team is responsible for day-to-day operations and oversight of the risk framework. The Investment Manager has a culture of transparency, ensuring that developments are shared and addressed timely, with the benefit of input from multiple team members, and reported to the Board as appropriate. The Group relies on having highly experienced personnel at the Investment Manager to support and manage issues as they arise.

The Audit Committee oversees and monitors the risk framework, including reviewing the risk register regularly to ensure it properly captures principal risks, continuously identifying potential risks, reviewing the ongoing operation and effectiveness of the control environment, and ensuring that proposed actions are implemented by the RTW Investments team. This process drives continuous improvement in risk identification and monitoring.

Identifying principal risks

The Board uses both top-down and bottom-up inputs to evaluate principal risks. Over the past year, the Board and the Investment Manager had ongoing discussions to consider the Group's risks. The discussions generated insights into potential emerging risks and have helped to focus attention on additional areas for monitoring.

The RTW Investments team carries out a bottom-up review, considering each portfolio company, as well as internal operations, both as a specific exercise and on an ongoing basis. The team also draws on assessments made by management teams of portfolio companies. These inputs are brought together in the risk register, which is reviewed by the Audit Committee in detail each quarter The principal risks identified by the Board are set out below. These have not substantially changed in the last year. The Board also monitors future risks that may arise, including the longer-term risks of changes to US pharmaceutical drug pricing and US FDA productivity.

Risk management structure

Board of Directors

Risk management leadership; risk appetite

Audit Committee

Reviews and monitors the risk framework

RTW Investments Team

Risk management is integral to the investment process and financial management

Implementing and monitoring risk controls; risk reporting

Other advisers

Risk identification; risk reporting

Portfolio companies' management teams

 Risk identification and mitigation

Risk appetite

The Board is willing to accept a certain level of risk in order to achieve strategic goals. Where a risk is approaching or moves beyond its target, the Board will consider the actions being taken to manage it. This year the Audit Committee carried out a detailed review of the defined risk types, to ensure that they continue to reflect the understanding of the Board and accurately reflect relevant risks. Following that review, the Audit Committee advised the Board that the risk appetite remained appropriate, and the Board has accepted that assessment.

Principal and Emerging Risks and Uncertainties

Principal risks and how we mitigate them

Under the FCA's Disclosure Guidance and Transparency Rules, the Directors are required to identify the material risks to which the Group is exposed and the steps taken to mitigate those risks.

The Group has five categories of risk in its risk register, namely:

· Investment Risks

· Operational Risks

· Governance/Reputational Risks

· External Risks

· Emerging Risks

Investment Risks

1. FAILURE TO ACHIEVE THE INVESTMENT OBJECTIVE

RISK DESCRIPTION

The Group's target return on net assets is not guaranteed and may not be achieved.

RISK CONTROL MEASURES

The Board will monitor and supervise the Group's performance compared to the target return, similar investment funds and broader market conditions. Where performance is unsatisfactory, the Board will discuss the appropriate response with the Investment Manager.

STABLE

STRATEGIC LINK

Identify

Engage

Support

Operational Risks

2. UNFAVOURABLE TAX EXPOSURE

RISK DESCRIPTION

With the prior year acquisition of Arix Bioscience, the Group's structure became more complex, and along with this complexity came the potential for new tax-related risk. As of year-end, subsidiaries acquired or created for the transaction were either in liquidation or in the process of winding up.

RISK CONTROL MEASURES

The Group consulted throughout the planning and execution of the acquisition with legal counsel having expertise in corporate structure and tax matters. The Investment Manager's team dedicated to the transaction, along with the Board, received advice and evaluated structural options at every step, and continues to do so as the structure evolves.

STABLE

STRATEGIC LINK

Identify

Engage

3. COUNTERPARTY RISK

RISK DESCRIPTION

The Group has the potential to be exposed to the creditworthiness of trading counterparties in OTC derivatives contracts, its prime broker in the event of re-hypothecation of its investments, and any counterparty where collateral or cash margin is provided or where cash is deposited in the normal course of business.

RISK CONTROL MEASURES

The Group uses Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch, JP Morgan and Jefferies as prime brokers and Cowen, UBS, Bank of America Merrill Lynch, Goldman Sachs, Jefferies, and Morgan Stanley as ISDA counterparties. To monitor counterparty risk, the Investment Manager monitors fluctuations in share prices, percentage changes in daily, monthly, and annual 5-year CDS spreads and S&P credit ratings. If a counterparty group share price moves up or down in excess of 20%, the trader at the Investment Manager is alerted immediately. In case of an alert, the trader notifies RTW Investments' Chief Compliance Officer. There has been no disruption in operations with the Group's counterparties to date. The Group's bankers are an offshore branch of Barclays Bank PLC and are also included in the Investment Manager's CDS monitoring program.

STABLE

STRATEGIC LINK

Identify

Engage

Build

Support

Governance/Reputational Risks

4. THE INVESTMENT MANAGER RELIES ON KEY PERSONNEL

RISK DESCRIPTION

The Investment Manager relies on its founder, Roderick Wong M.D. Roderick Wong is a key figure at the Investment Manager and is extensively involved in investment decisions.

RISK CONTROL MEASURES

In the event that Roderick Wong was to no longer work for the Investment Manager or was incapacitated, the Board is able to terminate the Investment Management Agreement within 180 days if a suitable replacement has not been found and would consider whether it would be appropriate to wind up the Group and return capital to shareholders, or to appoint a new Investment Manager.

STABLE

STRATEGIC LINK

Identify

Engage

Build

Support

5. PORTFOLIO COMPANIES AND INVESTMENT MANAGER MAY BE SUBJECT TO LITIGATION

RISK DESCRIPTION

Portfolio Companies may be subject to product liability claims. Such liability claims would have a direct financial impact and may impact market acceptance even if ultimately rebutted. The Investment Manager may be swept up in class action suits against companies that include major shareholders.

RISK CONTROL MEASURES

The Investment Manager's due diligence process includes considering the risk that innovative therapies may have unforeseen side effects, based on the Investment Manager's extensive sector knowledge and experience, published research, and publicly available information. The Investment Manager maintains Directors & Officers as well as Errors & Omissions insurance policies.

STABLE

STRATEGIC LINK

Identify

Engage

Build

Support

External Risks

6. EXPOSURE TO GLOBAL POLITICAL AND ECONOMIC RISKS

RISK DESCRIPTION

It is anticipated that approximately 75% on average of investments will be in US companies or licensing agreements with US institutions, and 25% of investments will be made outside of the US. The Group's investments will be exposed to foreign exchange, and global political, economic, and regulatory risks, including those associated with current conflicts in Ukraine, Israel/Palestine, and the Middle East more broadly. The core portfolio currently has approximately 64% exposure to the US and Canada, 21% to the UK and Europe, and 15% to the rest of the world, including 3.7% to Israel and none to other Middle Eastern countries, Ukraine or Russia. Israel exposure derives from Urogen Pharma, which has R&D in Israel but is headquartered and maintains its broader team in Princeton, New Jersey.

RISK CONTROL MEASURES

The Investment Manager has extensive experience transacting across the global healthcare marketplace and will be responsible for identifying relevant events and updating investment plans appropriately.

INCREASING

STRATEGIC LINK

Identify

Engage

Build

Support

7. CLINICAL DEVELOPMENT & REGULATORY RISKS

RISK DESCRIPTION

New drugs, medical devices and procedures are subject to extensive regulatory scrutiny before approval, and approvals can be revoked.

RISK CONTROL MEASURES

The Investment Manager's due diligence process includes a rigorous process of assessing preclinical and clinical assets and their probabilities of success, utilising scientific, clinical, commercial and regulatory benchmarks. Additionally, the Investment Manager's process includes assessing the likely attitudes of regulators towards a potential new therapy. The due diligence will also consider the unmet need of the disease and whether the therapy offers advantages over the current standard of care.

STABLE

STRATEGIC LINK

Identify

Engage

Build

Support

8. IMPOSITION OF PRICING CONTROLS FOR CLINICAL PRODUCTS AND SERVICES

RISK DESCRIPTION

Portfolio company products may be subject to price controls, price gouging claims, and other pricing regulation in the US and other major markets. Government healthcare systems may be major purchasers of the products.

RISK CONTROL MEASURES

While future political developments cannot be reliably forecast, the Investment Manager's due diligence process includes an assessment of political risk and the likely acceptability of the investee's pricing intentions.

STABLE

STRATEGIC LINK

Build

Support

9. INFLATION

RISK DESCRIPTION

Global inflation is generally trending downwards; however, it remains a complex and somewhat volatile situation with differing regional experiences. While headline inflation (which includes volatile food and energy prices) is moderating, core inflation (which excludes them) is proving more stubborn in some regions, particularly due to service sector inflation and wage growth. Uncertainty about the inflation outlook and central bank actions is likely to contribute to market volatility.

RISK CONTROL MEASURES

The creation of value through innovation in the biotechnology sector outweighs the singular and/or short-term adjustment to valuation levels arising from changes in discount rates as a result of rising inflation. The Investment Manager holds investments that have current earnings and cash-flows and has significant exposure to Phase 3 products which have a high probability of achieving cash-flows in the near-term. Whilst interest rates have been reduced in the US and UK in reaction to reductions in inflation, it is not possible to say that this risk is reducing yet, as inflationary risks such as tariffs and restrictions on global trade are beginning to emerge following the election of a new administration in the US.

STABLE

STRATEGIC LINK

Identify

Engage

Build

Support

Emerging Risks

10. AVAILABILITY OF CAPITAL

RISK DESCRIPTION

IPOs made incremental progress towards normalisation this year (17 in 2024 vs 12 last year). This is consistent with a slow transition from a bear market (less than 10) to a healthy one (more than 30). Public follow-on financing activity returned to near record levels as companies with good data were able to raise the capital they needed.

RISK CONTROL MEASURES

The Investment Manager is experienced in identifying potential in companies that have strong fundamentals at attractive valuations that create an asymmetric and attractive risk/reward profile. The Board reviews the financing status of the Group's private portfolio with the Investment Manager at least twice each year. Approximately 10% of the Group's NAV is exposed to companies that will need refinancing within the next 12 months. Most of these companies have re-financing plans in place.

REDUCING

STRATEGIC LINK

Identify

Engage

Build

Support

11. SUSTAINABILITY REPORTING

RISK DESCRIPTION

Sustainability reporting standards are evolving rapidly and investors may require more detailed sustainability disclosures to maintain or add new positions in our shares.

RISK CONTROL MEASURES

The Board monitors sustainability reporting standards and is advised by the Group's service providers, including an external sustainability consultant. The Group has adopted a responsible investment policy also appointed a Sustainability Committee to provide oversight and advice in relation to the Company's responsible investment strategy.

STABLE

STRATEGIC LINK

Identify

Engage

Build

Support

Longer Term Viability Statement

Realising a robust and resilient company

ASSESSING THE PROSPECTS OF THE GROUP 

The corporate planning process is underpinned by scenarios that encompass a wide spectrum of potential outcomes. These scenarios are designed to explore the resilience of the Group to the potential impact of significant risks set out below. 

The scenarios are designed to be severe but plausible and take full account of the availability and likely effectiveness of the mitigating actions that could be taken to avoid or reduce the impact or occurrence of the underlying risks and which would realistically be open to management in the circumstances. In considering the likely effectiveness of such actions, the conclusions of the Board's regular monitoring and review of risk and the Investment Manager's internal control systems, is taken into account. 

The Board reviewed the impact of stress testing the quantifiable risks to the Group's cash flows as detailed in risk factors 1-5 and concluded that the Group, would have sufficient working capital to fund its operations in the following extreme scenario:

(1) The Group incurred NAV losses of 39% of NAV over a three-year period ending 28 February 2028. 

(2) No new capital was raised. 

(3) US$152 million of private investments were funded from cash and by selling public portfolio investments over the three-year period ending 28 February 2028.

To provide some context for this scenario the worst-case annual losses for the NASDAQ Biotech Index (NBI) in the last 10 years were 10.9% in 2022 and 21.4% in 2016 respectively. The Group's three-year loss scenario exceeds the cumulative impact of both of these worst-case years of 32.3% spread over three years. The annualised volatility of the NBI Index for the last 10 years is 24.5% and the index has an annualised return of 3.7% for this period, so an annual loss of 40% or more is only likely to occur every twenty years if the index returns are normally distributed. Considering this context, a cumulative loss of between 32.3% and 40% is therefore assumed to be a reasonable stress test. 

The Board considers that this stress testing-based assessment of the Group's prospects is reasonable in the circumstances of the inherent uncertainty involved. 

THE PERIOD OVER WHICH WE CONFIRM LONGER TERM VIABILITY 

Within the context of the corporate planning framework discussed above, the Board has assessed the prospects of the Group over a three-year period ending 28 February 2028. Whilst the Board has no reason to believe the Group will not be viable over a longer period, given the inherent uncertainty involved, the period over which the Board considers it possible to form a reasonable expectation as to the Group's longer-term viability, based on the stress testing scenario planning discussed above, is the three-year period to March 2028. This period is used for the Investment Manager's business plans and has been selected because it presents the Board and therefore readers of the Annual Report with a reasonable degree of confidence whilst still providing an appropriate longer-term outlook. 

CONFIRMATION OF LONGER-TERM VIABILITY 

The Board confirms that it has carried out a robust assessment of the emerging and principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. Based upon the robust assessment of the principal and emerging risks facing the Group and its stress testing-based assessment of the Group's prospects, the Board confirms that it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to February 2028.

On behalf of the Board

William Simpson

Chair

28 March 2025

Engaging with Stakeholders (Section 172)

Close collaborators and committed partners

The AIC Code requires that the matters set out in Section 172 of the Companies Act 2006 are reported on by all companies, irrespective of domicile, provided this does not conflict with local company law.

Section 172 recognises that directors are responsible for acting in a way that they consider, in good faith, to be most likely to promote the success of the Group for the benefit of all shareholders. In doing so, they are also required to consider the broader implications of their decisions and the Group's operations on key stakeholders, the wider community, and the environment. Key decisions are those that are either material to the Group or are significant to any of the Group's key stakeholders. The Group's engagement with key stakeholders and the key decisions that were made or approved by the Directors during the year are described below.

Responsible Investment

The Group aims to achieve superior long-term capital appreciation, focusing on forming, building, and supporting world-class life sciences, biopharmaceutical, and medical technology companies. The Group's primary consideration is to support companies that promote health and well-being by bringing drugs and devices to market that are expected to save or extend life, improve quality of life, or revolutionise the course of treatment for diseases and conditions that afflict people. The Investment Manager's team of scientists and researchers work tirelessly to evaluate the science behind thousands of treatments and potential cures for diseases and conditions in order to improve quality of life across the globe. As a guiding principle, they prioritise overall positive impact on patients and long-term meaningful outcomes to society and believe this is the foundation of the Group's success.

As a long-term investor, the Group (via the Investment Manager) seeks to meet regularly with the management teams of portfolio companies. This approach fosters long-term relationships with company management teams. This ongoing dialogue enables open discussions on issues that could affect long-term returns. The decision to engage with a portfolio company depends on both the materiality of the issue and the size of the holding.

Pre-investment, the Group adopts a positive screening methodology. Potential investments are screened to ensure alignment with investment objectives.

The Group's Board of Directors has established a Sustainability Committee which meets with the Investment Manager bi-annually where they are briefed on updates to process, policy, and portfolio engagement. The Sustainability Committee provides oversight on behalf of and advice to the Board in relation to the Company's Responsible Investment strategy and ensures that all stakeholders receive appropriate related information. The Committee assists the Board in overseeing the development of the Responsible Investment Policy and reviews relevant matters to be presented in this annual report, maintaining oversight of and making recommendations to the Board regarding upcoming reporting requirements. 

The Investment Manager espouses a strong culture of compliance, risk management and ethical behaviour. It aims always to act in the best interests of shareholders, employees and stakeholders. Its corporate code of ethics addresses the largest areas of risk pertaining to the alternative asset management industry, including but not limited to conflicts of interest, anti-bribery, employee investing, insider trading and political contributions. Furthermore, it seeks to ensure that investments do not lead to negative impacts on public health or well-being or contribute to human or labour rights violations, corruption, serious environmental harm or other actions which may be perceived to be unethical. It seeks long-term investment partners that evidence equivalent professional and ethical rigour. 

Consolidated Statement of Assets and Liabilities

as at 31 December 2024 and 31 December 2023

(Expressed in United States Dollars)

The audited consolidated financial statements of the Group were approved and authorised for issue by the Board of Directors on 28 March 2025 and signed on its behalf by:

William Simpson Paul Le Page

Chair Director

See accompanying notes to the consolidated financial statements.

Consolidated Condensed Schedule of Investments

as at 31 December 2024

(Expressed in United States Dollars)

See accompanying notes to the consolidated financial statements.

Consolidated Condensed Schedule of Investments (continued)

as at 31 December 2024

(Expressed in United States Dollars)