Half-year Report

15 September 2022

RTW Venture Fund Limited

Interim Report for the period ended 30 June 2022 

Robust performance against a challenging market

RTW Venture Fund Limited (the "Company"), the London Stock Exchange-Premium listed investment company focused on identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors, is pleased to announce its Interim Report for the six months ended 30 June 2022.

Financial Highlights:

· The Company continued to outperform the benchmarks in the period since Admission, demonstrating strength of the Investment Manager and the portfolio:

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

(ii) Source: Capital IQ.

Portfolio Highlights

· Further progress made in investing capital and realising gains from high growth biotech companies with transformative assets:

· As at 30 June 2022, the Company had increased the number of Portfolio Companies to 41(H1 2021: 34 Portfolio Companies)

o  15 publicly-listed (H1 2021: 14)

o  26 privately-held (H1 2021: 20)

· 2 new core portfolio companies were added during the period (H1 2021: +13)

o  Lenz Therapeutics representing 0.5% of NAV

o  Mineralys representing 0.4% of NAV

· 28/41 core portfolio companies' pipeline products were in clinical stage programmes (H1 2021: 29/44) on 30 June 2022

· As at 30 June 2022, 62% of NAV was invested in core portfolio companies (H1 2021: c.65%)

· In H1 2022, the company exited 3 public portfolio companies, Athira (1.6x MOC), Biomea (0.9x) and iTeos (3.6x)

· 1 private portfolio company, Cincor, successfully launched an initial public offering (IPO) during the period, at a price of US$16.00 per share, raising US$193.6 million

o  1.4x valuation step-up from the initial time of investment to 30 June 2022

· Sale of the Company's Mavacamten royalty to Bristol Myers Squibb following the successful completion of its phase three trials providing a +4.9% uplift to NAV

· The Company continued to invest additionally in a portfolio of listed companies selected by the Investment Manager to be representative of positions which are also held in their other investment vehicles, currently this comprises c. 34% of NAV

Post period-end

· Share price has materially recovered by 23% since the period-end from US$0.97 to US$1.19 at 13 September 2022

· The Company, alongside other investment vehicles of RTW Investments, participated in Immunocore's series D financing round in July 2022

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

"Given the headwinds being faced by the sector, we are pleased to report that good progress has been made across the portfolio during the period, with the successful IPO of Cincor and two new core portfolio companies added, Lenz Therapeutics and Mineralys.

During the six months to 30 June 2022, the decrease in the NAV of -26.8% compared with -39.1% for the Russell 2000 Biotech index. Performance since inception remained comfortably ahead of both the Nasdaq Biotech and Russell 2000 Biotech benchmarks with RTW delivering a +20.1% NAV performance since inception compared with +11% for the Nasdaq Biotech index and -16.1% for the Russell 2000 Biotech index, over the same periods.

Looking ahead, we feel that sentiment across the biotech sector is now beginning to change which has been highlighted by the stronger share price performance of the Company post-period end, up 23% as of 13 September 2022. Also supporting this is the increasing volume of M&A activity with the highest number of M&A deals in a quarter since Q2 2018, driven in part by the compelling valuations on offer for many attractive companies.

Accordingly, we also continue to see a number of attractively valued opportunities in our investment pipeline and look ahead to the next period with confidence as we continue to add both public and private companies to our portfolio of transformative assets. We look forward to updating shareholders with our continued progress throughout the remainder of 2022."

Analyst and Investor Call

A conference call for analysts will be held at 2pm BST / 9am EST today. To register for the event please RSVP to [email protected].

For Further Information

About RTW Venture Fund Limited:

RTW Venture Fund Limited (LSE: RTW and RTWG) 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 Venture Fund invests in companies developing next-generation therapies and technologies that can significantly improve patients' lives.

RTW Venture Fund Limited 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 RTW website at www.rtwfunds.com for more information.

30 June 2022 Financial Highlights

*Excludes amounts due from brokers.

*\* The share price has since recovered to US$1.19 at 13 September 2022.

Portfolio Highlights

Investing with purpose

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

Identify transformational innovations

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

Engage deep research and unlocking value

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

Build new companies around promising academic licences

We have the capabilities to partner with universities and in-license academic programs, by providing capital and infrastructure to entrepreneurs to advance scientific programs.

Support full lifecycle investment

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

Chairman's Statement

It is with pleasure that I present the 2022 interim results for RTW Venture Fund Limited (the "Company"). The Company was admitted to the London Stock Exchange ("LSE") nearly three years ago on 30 October 2019, and I am pleased to report that, despite a challenging external environment that impacted on our share price and NAV, and those of our competitors throughout the sector, the Company continued to progress well and has recently committed further resources to developing the life science ecosystem in the UK.

H1 2022 Overview

In a record-breaking year for private and public financing activity last year, the Company invested in 21 new companies. Whilst it could have been substantially more, the disciplined and resolute focus on science, fundamentals, and valuation by RTW Investments, LP (the "Investment Manager" or "RTW") provided a balanced approach reflecting an appropriate view of market conditions at the time. It is on this foundation that the Company has continued to deliver on its strategy during the first half of 2022, despite the challenging financing environment, demonstrating a clarity of process and creativity of execution. In particular, the sale of the Company's Mavacamten royalty to Bristol Myers Squibb following the successful completion of its phase three trials, the IPO of Cincor, and the two-part transaction (licensing and equity investment) with Lenz Therapeutics, together demonstrate the breadth of the Company's capabilities.

In the period from 31 December 2021 to 30 June 2022, the Company's NAV declined by 26.8% from US$363.0 million or US$1.71 per Ordinary Share to US$265.7 million or US$1.25 per Ordinary Share. The NAV was significantly impacted by declines in public market valuations, in particular the largest detractor to the NAV was the mark to market share price performance of Rocket (c. -5.3%), which was slightly offset by the private core portfolio (+1.3%), where a realised gain in RTW Royalty Holdings 1, following the successful sale of Mavacamten which was the largest contributor (c. +4.9% of NAV). RTW Venture Fund's share price has declined by 45.7%, while the small-cap heavy Russell 2000 Biotechnology Index declined by 39.1% and the large-cap heavy Nasdaq Biotechnology Index declined by 20.7% for the period. Since admission, the Company's NAV per Ordinary Share has appreciated by 20.1% against a -16.1% decline for the Russell 2000 Biotechnology Index. By any standards, this is a commendable and consistent degree of outperformance and testament to the Investment Manager's robust business model.

At the end of the period, the Company had forty-one core portfolio companies, of which twenty-six were privately held and fifteen were publicly listed. All core portfolio companies were initiated as private investments by the Investment Manager. During the first half of 2022, the Company added two portfolio companies, Lenz Therapeutics and Mineralys, and exited three portfolio public companies, Athira, Biomea and iTeos. One private portfolio company, Cincor successfully went public this year. The core portfolio represented c. 62% of NAV at the end of the reporting period. To mitigate any drag on performance due to excess cash awaiting deployment into new private assets, the Company has c. 34% of NAV in a portfolio of listed companies selected by the Investment Manager to be representative of positions which are also held in their other investment funds. The balance of c. 5% of the remaining NAV was held as cash and working capital.

AGM Results, Board Composition and Corporate Brokers Updates

The Company held its Annual General Meeting on 21 June 2022 to consider the audited financial statements, and other matters. The results have been announced to the market and published on the Investment Manager's website https://www.rtwfunds.com/venture-fund/. I am happy to report that all of our AGM resolutions were approved. It is a privilege to continue to serve as Chairman with fellow Guernsey-based Independent Directors, William Scott, and Paul Le Page, who collectively have several decades of experience in the listed Investment Company sector. I am pleased that our fourth Director, Stephanie Sirota, who is a principal and Chief Business Officer of the Investment Manager, will continue to provide our Board with specialist technical insight and demonstrate her personal commitment to the Company. I am also pleased that a resolution was passed to increase the maximum annual amount of renumeration available to be paid to all Directors such that we will have the ability to further grow and diversify our Board.

To further strengthen our work with shareholders, the Board has appointed Merrill Lynch International (BofA Securities) as a corporate broker and financial adviser to the Company alongside J.P. Morgan Cazenove.

Outlook

Over the last eighteen months, the Company's NAV and share price have been significantly impacted by what is, to date, the second worst biotech bear market in history. However, we now look ahead with renewed confidence. Public market valuations are at historic lows while innovation remains at an all-time high. The Investment Manager provides greater detail in its report but, in summary, the valuation metrics of the sector and our portfolio are truly compelling by historic standards with many companies developing great potential therapies trading at a fraction of long-term valuation norms. The recent dislocation of markets has created significant opportunities for skilled investors such as RTW who have the scale of scientific resource and understanding, together with extensive capital markets experience to outpace their less experienced and less-resourced rivals.

The Investment Manager believes that there remains significant demand for reliable capital to support the discovery and development of scientific innovation, and that there is an opportunity to grow their footprint in the UK and EU as an active local participant in the biotech ecosystem. The Investment Manager therefore intends to grow the Company's portfolio, by attracting demand from new shareholders to assist in the financing of an exciting pipeline of new ideas, based upon its strategy of founding, investing, and supporting companies developing next-generation therapies and technologies that can significantly improve patients' lives. Accordingly, the Board expects the Company to continue to achieve a strong performance over the long term and creating value for shareholders.

On behalf of the Board, I would like to express my gratitude for your continued support and wish you all the best for the remainder of 2022.

William Simpson

Chairman of the Board of Directors

RTW Venture Fund Limited

14 September 2022

Report of the Investment Manager

Executive summary

Given the headwinds being faced by the sector, we are pleased to report that good progress has been made across the portfolio during the period, with the successful IPO of Cincor and two new core portfolio companies added. During the six months to 30 June 2022, the decrease in the NAV of -26.8% compared with -39.1% for the Russell 2000 Biotech index. Performance since inception remained comfortably ahead of both the Nasdaq Biotech and Russell 2000 Biotech benchmarks. Looking ahead, we feel that sentiment across the biotech sector is now beginning to change, supported by the increasing volume of M&A activity, driven in part by the compelling valuations on offer for many attractive companies. We look ahead to the next period with confidence.

Table 1. Financial Highlights

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

(ii) Source: Capital IQ.

RTW Investments, LP (the "Investment Manager", "us", "we"), a leading global healthcare-focused investment firm with a strong track record of supporting companies developing life-changing therapies, created the Company as an investment fund focused on identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors. Driven by our deep scientific 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.

As of 30 June 2022, c. 31% of NAV was invested in private companies and c. 31% was invested in core public companies. This was approximately the same as 30 June 2021 and 31 December 2021 as disposals and additions have largely offset each other. We define core public companies as companies that were initially added to our portfolio as private investments, reflecting the key focus of the Company's strategy. Our investment approach is defined as full lifecycle and therefore involves retaining our private investments well beyond their IPO, hence our core portfolio consists of both privately-held and publicly-listed companies, which were private at the time of our initial investment.

Approximately 34% of the Company's NAV is invested in other publicly listed companies in order to mitigate the drag of setting aside cash for future private investments. This portfolio of assets has been carefully selected by us, matching, on a pro-rated basis, the long investments held in our other funds. The investments represented in this portfolio are similarly categorized as innovative biotechnology and medical technology companies developing and commercializing potentially disruptive and transformational products.

The 26.8% reduction in NAV during the first half of 2022 was largely driven by our public core holdings (-17.6% contribution) with other public positions (-11.7%) making up the rest. This was offset slightly by the core private portfolio, which contributed +1.3% as the realised gain on the sale of Mavacamten in RTW Royalty outweighed our other private portfolio write-downs for the period and the Company's performance fee allocation and expenses, which contributed +1.1% (as the decline in NAV led to a credit to the performance fee accrual). The top contributors to the NAV were RTW Royalty Holding 1 (+4.9%), RTW Royalty Holding 2 (+0.5%), Immunocore (+0.3%) and Cincor (+0.1%). The top detractors were Rocket (-5.3%), Ji Xing (-2.4%), C4 Therapeutics (-2.0%) and Avidity (-2.0%). Please see the next section on performance drivers as of 30 June 2022 for further details on individual names.

Figure 1. Performance drivers as of 30 June 2022

Our 2022 new investments include:

As of 30 June 2022, the portfolio was diversified across treatment modalities, therapeutic focus, and clinical stage of their programs (Figure 2A-C). While the portfolio remains dominated by US-based companies (Figure 2D), we are committed to adding UK and EU-based companies in an effort to support the best assets globally and foster local biotech ecosystems.

Figure 2. Portfolio breakdown, by (A) modality, (B) therapeutic focus, (C) clinical stage and (D) geography as of 30 June 2022

Key updates for Core Portfolio Companies during H1 2022:

Clinical

§ In January 2022, Immunocore received an FDA approval for Kimmtrak (tebentafusp), its first-in-class T cell therapy for the treatment of uveal melanoma.

§ In April 2022, C4 Therapeutics shared Phase 1 first in human clinical data for its targeted protein degradation program in multiple myeloma that unfortunately had limited efficacy and needs to refine its treatment regimen.

§ In May 2022, Rocket shared positive top line data for its registrational gene therapy program for Leukocyte Adhesion Deficiency-I (LAD-I), a rare genetic disorder of immunodeficiency in young children.

§ In May 2022, Tarsus shared positive data in the second Phase 3 trial for their blepharitis demodex treatment. The company is expecting to file a New Drug Application ("NDA") with the FDA by the end of 2022.

§ In June 2022, Beta Bionics shared results of the multi-center randomized Insulin-Only Bionic Pancreas Pivotal Trial for Type 1 diabetes patients at the American Diabetes Association ("ADA") conference. The trial met key endpoints and showed consistent mean HbA1c reductions across various patient subgroups.

Financing

§ In January 2022, Cincor announced the pricing of its IPO at US$16.00 per share, raising US$193.6 million and beginning to trade on Nasdaq Global Market under ticker "CINC".

§ In January 2022, Magnolia Medical raised US$46 million in a follow-on cross-over round where RTW served as a co-lead investor. Ovid Amadi, PhD, Senior Analyst at RTW joins Magnolia Medical's Board of Directors.

§ In February 2022, the Company and other affiliated funds of the Investment Manager participated in a follow-on Series C financing round in Beta Bionics.

§ In April 2022, Ji Xing announced an exclusive licensing agreement with Lenz Therapeutics to develop and commercialize LNZ100 and LNZ101 for the treatment of presbyopia in Greater China. As a part of the transaction, Lenz Therapeutics has also become the latest addition to the Company's portfolio.

§ In April 2022, Mavacamten, the underlying asset of RTW Royalty Holding 1 received FDA approval in April and the Company subsequently sold its stake in the royalty to Bristol Myers Squibb for a significant gain.

§ In June 2022, the Company and other affiliated funds of the Investment Manager participated in Series B financing round in Mineralys Therapeutics, a clinical-stage biopharma working on hypertension.

Portfolio performance and updates

The Company's NAV has outperformed its biotech benchmarks since admission on 30 October 2019, returning +20% vs. +11% and -16% for the Nasdaq Biotechnology Index and the Russell 2000 Biotechnology Index, respectively. However, the Company's share price has returned -7% since admission after a -46% return during the first half of 2022 compared with -21% for the Nasdaq Biotechnology Index and -39% for the Russell 2000 Biotechnology Index. Having traded at an average premium to NAV of c.+10% from admission to 31 December 2021, the shares fell to a discount in 2022, which increased in June alongside many of our peers with a wave of de-risking.

Figure 3. RTW NAV per Ordinary Share vs. RTW.L Share Price and Benchmarks as of 30 June 2022

Source: Capital IQ

Table 2. Performance of all private and core public portfolio investments since inception as of 30 June 2022

*Alternative Performance Measure

^ Exited the position

Table 3. Performance of Rocket Pharmaceutical from admission to 30 June 2022

* Negative return from Rocket's share price performance did not result in a crystalized loss.

Table 4. NAV capital breakdown as of 30 June 2022

As of 30 June 2022, our top five holdings in the "other public" portfolio were: 

- 3.6% of NAV in Argenx (ticker: "ARGX"), a commercial stage multi-pipeline immunology company

- 2.1% in Cytokinetics ("CYTK"), a biopharma company developing treatments for cardiovascular conditions

- 2.1% in Stoke Therapeutics ("STOK"), a biotech company developing RNA-based treatments for severe genetic diseases

- 1.8% in PMV Pharma ("PMVP"), a targeted oncology company

- 1.7% in PTC Therapeutics ("PTCT"), a biotech company developing therapies for rare genetic diseases

We expect to deploy the capital invested into "other public" assets into private companies as the new opportunities arise.

Table 5. Overview of core portfolio companies' valuations as of 30 June 2022

* Valuations for private portfolio companies on a fair value basis as of 30 June 2022.

*\* The valuations of public positions have been calculated using their market capitalization as at the Latest Practicable Date.

***In accordance with the Company's valuation policy, the Company applies a discount to its investments in private portfolio companies which become public Portfolio Companies that are subject to customary post-IPO lock-up provisions. The valuation policy also includes Level 1 securities purchased at or after portfolio company IPO.

Table 6. RTW representation on portfolio companies' boards

*In aggregate this represented 23% of the NAV of the company at 30 June 2022

Summary of top fifteen core portfolio companies as of 30 June 2022:

As of 30 June 2022, the Company's portfolio included forty-one companies, ranging from biotechnology companies developing preclinical to clinical-stage therapeutic programs, companies developing traditional small molecule pharmaceuticals, and med-tech companies developing or commercializing transformative devices. We selected the Company's portfolio companies based upon our rigorous assessment of scientific and commercial potential, opportunities to positively impact value, and with regard to the valuation of the assets at the time of investment. The table below includes the top fifteen portfolio companies at the end of the reporting period.

Table 7. RTW Venture Fund core portfolio - Top fifteen positions as of 30 June 2022

Sector review and outlook

The Russell 2000 Biotech Index declined -39.1% in the first half of 2022, bringing the total decline to c. -70% from the peak in February 2021. This bear market now significantly surpasses all prior falls, in both depth and duration, except for the bursting of the genomics bubble in 2000-2002. Stage one of the bear market was almost entirely related to sector specific issues in 2021 (i.e. a lack of a permanent commissioner at the FDA, which was still consumed by COVID-19; and a risk of a detrimental drug pricing reform package at that time proposed in the Build Back Better Bill). Stage two of the bear market in 2022 has been largely driven by broader macro factors including inflation, interest rates and general risk aversion brought on by the war in Ukraine.

We thought sector valuations presented a very attractive opportunity at the start of the year; now they look even more attractive at crisis-like levels. Price-to-Sales (for the Nasdaq Biotechnology Index, the broadest sector index) has fallen to 4.5x, which is equal to the spring of 2009, the trough of the Global Financial Crisis. What is more, the smaller companies, where we generally invest, have been marked down furthest. Given the lack of revenues in this space, we use cash multiples to assess valuations. As of 30 June 2022, 65% of the sub-US$10bn market cap companies are trading at less than 2x their net cash and a record 34% are trading at less than the net cash on their balance sheets. For perspective, less than 10% of our public (core and other) portfolio is trading at less than 1x and c. 20% are trading at between one and two times.

The main cause behind the distress in smaller companies are newly public companies after a record 108 IPOs in the sector last year. Most of these companies are now trading at significantly below their IPO prices and many are trading below their net cash. New issuances in the sector have plummeted in number this year with just thirteen IPOs so far. This sounds terrible, but it is much better than the Global Financial Crisis when there were just three IPOs in 2008 and four in 2009. Despite the significant drop, there are still 82% more public biopharma companies than there were in 2015. However, the sector is relatively well funded. Average cash balances currently stand at about US$235m, which is roughly double the level in 2015, just before the last significant sector fall. That said, burn rates have also doubled, so the runways are the same at about 2.9 years. Private financings are also down and the mix within it has changed significantly as large new vintages are supporting early-stage rounds, but there is a significant lack of funding activity beyond that. We have been keeping our powder dry so far this year in case this presents a significant opportunity in the coming months.

The key question is, will the number of challenged small companies prevent a recovery for the sector as participants deal with the clean-up? We do not think so because the sum of negative enterprise value companies amounts to only 3% of the total market cap of sub-US$25bn companies. In other words, from a financial perspective, the bad ideas have been written down and are no longer financially material. However, whilst it may not matter for the sector as a whole, it may well matter for some healthcare funds. In theory, the firms that should be better positioned through this period are ones that are selective stock-pickers with a focus on mid cap post proof of concept opportunities (i.e. those that are not weighed down by the challenges of supporting young, struggling companies), with sufficient capital to finance and bandwidth to selectively invest more in their high conviction names. In addition, we believe that syndicate partners and positioning on a company's cap table will be increasingly important in the new environment.

Before returning to the positives, it is important to highlight the impact of the recent US drug pricing reform that formed part of the recently passed Inflation Reduction Act. The overall deal is palatable and is largely similar to that negotiated last year. However, in the Investment Manager's opinion, the proposal for a reduced pricing window before government negotiation starts for small molecules is too short. Over the long term, this will act as a significant disincentive for small molecule development, similar to the situation in antibiotics about ten years ago. That is why there are so few new antibiotics on the market now. Unfortunately, some disease areas can only be addressed by small molecules and that will be a significant loss for those patient populations, especially given how productive targeted oncology has become. However, the reality is that no one will notice the drugs that they do not have. In the short and medium term, the impact will likely be limited to a handful of pharma and large cap biotech companies which have very large, successful products that are sold into the Medicare population. For smaller biotech companies, the impact will only be felt in companies that have high expectations for product sales to the Medicare population. Crucially, though, the reform bites in 2026, just as the patent cliffs for large cap pharma companies also appear, adding further to their revenue challenges. This can only be addressed by M&A. So, while the Inflation Reduction Act will likely have a small hit to sector sentiment, it will also likely accelerate M&A. 

The good news is that we have already started to see a significant acceleration of M&A activity. In fact, the second quarter saw the highest number of M&A deals in a quarter since Q2 2018 with fourteen deals in total (nine public, five private). Furthermore, it has been heavily rumored, that Seagen may be acquired by a major pharma company. If the deal happens, then over 15% of the total market cap of companies smaller than US$25bn (i.e. the likely sellers to large pharma) will have been acquired in just a few months. This is very significant, and we think it can re-catalyze the start of the virtuous cycle (especially seen in the context of the c. 3% of distressed small caps that might be written off).

The risk-reward asymmetry on a sector level and most importantly for our portfolio and opportunities we are diligencing keeps us optimistic and team morale remains strong. With our leadership team having lived through several such periods in the past we are reminded that this bear market too shall pass. We believe that the greatest opportunities are born in corrections like this one, and we are hard at work trying to pick our next several "multi-baggers".

Executing on our strategy

We are scientists and entrepreneurs who aspire to change the lives of patients through innovation, and our mission is at the heart of everything we do. We power the breakthrough therapies that transform the lives of millions. True value realization from transformative products takes time, and in order to capture that value, it is critical to be involved and invested in such companies throughout the various stages of their development and ultimately distribution to patients. As a full lifecycle investor, we recognize the importance of providing growth capital along with the support of an experienced team, if and when it is needed, at any critical inflection point in an asset's lifecycle. Scientific development rarely follows a linear path and nor do we, which is why we are always thinking about the optimal way to support a company. This can be achieved through providing growth capital, creative financing solutions, capital markets expertise, or guidance through investing our time and sharing our collective experience as directors and stewards of tomorrow's most exciting and disruptive companies.

Our full lifecycle approach and broad offering of financial solutions for investee companies enables us to capture a diverse opportunity set. This was mostly clearly demonstrated in April when we sold our royalty stake in Mavacamten, the underlying asset of RTW Royalty Holding 1 to Bristol Myers Squibb immediately after the drug had achieved the primary endpoint of its phase three trials, achieving a greater than 3x return on our investment in November 2020. We originally acquired the royalty asset as part of a multi-solution transaction with Cytokinetics, a promising mid-stage cardiovascular company, which also included an equity investment, a regional partnering deal with Ji Xing, and future clinical trial funding. It was a ground-breaking transaction because, as a single counterparty we were able to move quickly, simplify and de-risk the execution of a process that would otherwise have taken much longer with the involvement of multiple partners. Under the circumstances, we believe that we are the only investment manager who could have accomplished what we did.

Our global reach continues to expand with new offices opened in London and Shanghai. In China, our own NewCo, Ji Xing, continues to build out its clinical pipelines with the addition of an exclusive licensing agreement with Lenz Therapeutics for their LNZ100 and LNZ101 treatments for presbyopia. As part of the transaction, Lenz Therapeutics also became the latest addition to the Company's portfolio, underlining the value of our multi-asset approach. In London, we have continued to support the development of Immunocore with our participation in a US$140m PIPE (Private Investment in Public Equity) alongside a small handful of other investors in July. As a firm, we have been supporting Immunocore since their series A in 2015, underlining the value of our full lifecycle approach and we are proud to part of a significant UK success story.

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

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

Key portfolio company events post period end

On 5 July 2022, Orchestra BioMed announced a strategic collaboration, closing of US$110 million private equity financing and plans to list on Nasdaq through merger with RTW-sponsored Health Sciences Acquisitions Corporation 2.

On 18 July 2022, the Company alongside other investment vehicles of the Investment Manager participated in a private investment in public equity ("PIPE") financing in Immunocore together with Rock Springs Capital and General Atlantic.

RTW Investments, LP

14 September 2022

Statement of Principal Risks and Uncertainties for the Remaining Six Months of the year to 31 December 2022

As described in the Company's annual financial statements for the year ended 31 December 2021, the Company's principal and emerging risks and uncertainties include the following:

- Failure to achieve investment objective;

- Counterparty risk;

- The Investment Manager relies on key personnel;

- Portfolio companies may be subject to litigation;

- Exposure to global political and economic risks;

- Clinical development and regulatory risks;

- Imposition of pricing controls for clinical products and services;

- COVID-19;

- Inflation;

- Availability of capital; and

- Conflict in Ukraine.

The Covid-19 pandemic was considered to be a risk to the global economy when the 31 December 2021 Strategic Report was released although it was diminishing in severity due to the successful vaccine roll-out, and it is expected that the risk to the Company from it will continue to decrease throughout 2022.

Except as above, the Board believes that these risks are unchanged in respect of the remaining six months of the year to 31 December 2022.

Further information in relation to these principal risks and uncertainties may be found on pages 48 to 49 of the Company's annual report and audited financial statements for the year ended 31 December 2021.

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

Risks are mitigated and managed by the Board through continual review, policy setting and regular reviews of the Company's risk matrix by the Audit Committee to ensure that procedures are in place with the intention of minimising the impact of the above-mentioned risks. The Board carried out a formal review of the risk matrix at the Audit Committee meeting held on 21 June 2022. The Board relies on periodic reports provided by the Investment Manager and Administrator regarding risks that the Company faces. When required, experts will be employed to gather information, including tax advisers and legal advisers.

Statement of Directors' Responsibilities

The Directors confirm to the best of their knowledge that:

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

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

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

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

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website (www.rtwfunds.com/venture-fund). Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By order of the Board

INDEPENDENT REVIEW REPORT TO

RTW VENTURE FUND LIMITED

Conclusion

We have been engaged by RTW Venture Fund Limited (the "Company") to review the financial statements in the half-yearly financial report for the six months ended 30 June 2022 of the Company, which comprises the unaudited interim statement of assets and liabilities including the unaudited interim condensed schedule of investments, the unaudited interim statements of operations, changes in net assets and cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the financial statements in the half-yearly financial report for the period ended 30 June 2022 do not give a true and fair view of the financial position of the Company as at 30 June 2022 and of its financial performance and its cash flows for the six month period then ended, in conformity with U.S generally accepted accounting principles and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

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

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

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Scope of review section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the Company to cease to continue as a going concern, and the above conclusions are not a guarantee that the Company will continue in operation.

Director's responsibilities

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

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

In preparing the half-yearly financial report, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless liquidation is imminent.

Our responsibility

Our responsibility is to express to the Company a conclusion on the financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Scope of review paragraph of this report.

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

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

Dermot Dempseyfor and on behalf of KPMG Channel Islands Limited Chartered Accountants, Guernsey 14 September 2022

Unaudited Interim Statement of Assets and Liabilities

as at 30 June 2022 and 31 December 2021

(Expressed in United States Dollars)

The unaudited interim financial statements of the Company were approved and authorised for issue by the Board of Directors on 14 September 2022 and signed on its behalf by:

William Simpson Paul Le Page

Chairman Director

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Condensed Schedule of Investments

as at 30 June 2022

(Expressed in United States Dollars)

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Condensed Schedule of Investments (continued)

as at 30 June 2022

(Expressed in United States Dollars)

Unaudited Interim Condensed Schedule of Investments (continued)

as at 30 June 2022

(Expressed in United States Dollars)