LEI: 549300Q7EXQQH6KF7Z84

13 September 2024

RTW Biotech Opportunities Ltd

Interim Report for the period ended 30 June 2024

Achieving solid performance in challenging markets with clear catalysts on the near horizon

RTW Biotech Opportunities Ltd (the "Group", "RTW Bio" or the "Company"), a 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 Interim Report for the period ended 30 June 2024.

Financial highlights

The Group continued to achieve a solid performance in challenging markets, with the NAV returning +3.0% over the six-month period, demonstrating the strength of the investment manager, the investment strategy and the portfolio. Key highlights include:

Portfolio highlights:

·      Portfolio Breakdown: As of 30 June 2024, 77.9% of NAV was invested in core portfolio companies (H1 2023: 50.7%), whilst 22.1% was invested in other public portfolio companies (H1 2023: 30.8%) and 0% was held in cash plus assets and current liabilities (H1 2023: 18%).

·      Two significant capital markets events: In the period to 30 June 2024, there were two capital markets events in the core portfolio: one IPO, one reverse merger.

Core Portfolio:

·      14 new core portfolio companies added: As of 30 June 2024, 14 new core portfolio companies have been added and no core public portfolio exited in the period. New core portfolio companies include five new privates, five positions acquired from Arix Bioscience and four that were previously classified 'other public'.

·      78% of NAV invested in core portfolio companies: 78% of NAV has been invested in core portfolio companies compared to 51% in the same period last year. This relates to 50 core portfolio companies in total - 30 private, two royalty and 18 public.

·      Core company status: Nine out of 50 core companies have commercial products. Eight out of 50 core companies are pre-clinical. And 30 out of 50 core companies have clinical programmes.

Core Public:

·      NAV performance in the first half of 2024 driven by the core public positions: Performance was driven by Avidity Biosciences, the Group's largest portfolio holding.  In the period, its share price was up +351% after it reported great data from two of its programs.

·      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.

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

·      Core public investments accounted for 47% of NAV across eighteen positions: The slight increase in exposure reflects performance, the graduation of Kyverna and Lenz to the public markets and the addition of Akero, Urogen, 89Bio and Merus.

Core Private:

·      The core private positions made a small contribution led by Numab: Kyverna completed a successful IPO in February. The gross multiple on invested capital (MOIC) on our initial investment in Kyverna in November 2021 to the IPO was approximately 2.6x. Numab announced in May that Johnson & Johnson will acquire its lead drug candidate for US$1.25bn. The Company's holding value was increased by approximately 2.9x to reflect the deal, which is expected to close in the second half.

·      Core private investments accounted for 24% of NAV: 30 core private investments accounted for 24% of NAV as of 30 June 2024. The increase in exposure and number of investments in the reporting period reflects the addition of five new private positions (Obsidian, Santa Ana, Mirador, Hercules and BioAge) alongside five new private investments from Arix (Ensoma, Evommune, Depixus, Sorriso and Amplyx), less Kyverna, which went public via an IPO and Lenz, which went public via a reverse merger with Graphite Bio.

·      65 core private investments since admission: On 30 June 2024, thirty of these positions had had liquidity events (i.e. go-public or acquisition). The average holding period as private was twelve months and the average MOIC to the liquidity event was 2.0x. Sixteen of these positions have either concurrently or subsequently been exited in full at an average MOIC of 3.0x

Royalty and Other Public:

·      The royalty positions and 'other public' positions both made small positive contributions: Royalties accounted for 7% of NAV across two investments: RTW's 4010 Royalty Fund and RTW Royalty 2, which is a royalty deal based on the revenues of Urogen's Jelmyto and UGN‐102. The Company's royalty investments are performing well and provide a differentiated income stream that is uncorrelated to equity markets. Further, in the current yield environment and with the capital available to biotech companies still relatively constrained, the risk adjusted returns are very attractive and highly complementary to the rest of the portfolio.

·      22% of the Group's NAV is invested in "other publicly" listed companies, which is approximately the same level as the start of the reporting period.

Post Period-End Highlights

·      Artiva Biotherapeutics IPO: On 19th July 2024, Artiva Biotherapeutics (0.13% of NAV as of 30 June), a clinical-stage biotechnology company focused on developing natural killer (NK) cell-based therapies whose mission is to develop effective, safe, and accessible cell therapies for patients with devastating autoimmune diseases and cancers, had its initial public offering (IPO), raising US$167 million. The company started trading on the Nasdaq Global Market under the ticker symbol 'ARTV'.

Company highlights:

·      Improved share price rating: The RTW share price discount to NAV narrowed in the first half of the year, particularly after the closing of the Arix transaction, as the increased scale and liquidity attracted new buyers on top of the considerable shareholder efforts made last year.

·      Share buyback programme: In the reporting period, the Company's share buyback programme bought back 10,253,791 shares for a consideration of US$13,434,904. to help manage any short-term changes in the shareholder base around the deal.

·      New Non-Executive Director appointed: The increased scale of the Company following strong performance and the Arix transaction has also allowed us to appoint a new Non-Executive Director, Baroness Nicola Blackwood, with considerable life sciences experience.

·      Investor Day 2024: After the success of last year's event, RTW will host another Investor Day this year on Monday 18^th November at the offices of Deutsche Numis, 45 Gresham Street, London, EC2V 7BF. The event is for professional investors only.

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

"We are very pleased to report the Group achieved positive performance for the six months to 30 June 2024, with RTW's NAV up +3.0% compared with +1.7% for the Russell 2000 Biotech Index and +4.0% for the Nasdaq Biotech Index.

"Performance since inception remained significantly ahead of both the Nasdaq Biotech and Russell 2000 Biotech indices with RTW achieving a +87.7% NAV performance since inception compared with +34.6% for the Nasdaq Biotech index and +6.5% for the Russell 2000 Biotech index, over the same periods.

"In addition, the discount narrowed in the first six months of the year, particularly after the closing of the Arix deal with the share price +10.1% and the NAV +3.0%. With continued NAV outperformance versus the market and our peers, and with the sector continuing its recovery, we expect the discount to narrow further from here.

"This has been an intense period of activity for the group, with 14 new core positions initiated, an IPO for Kyverna Therapeutics and a reverse merger involving Lenz Therapeutics and Graphite Bio. We have also seen some very encouraging scientific data from the Group's largest holding, Avidity Biosciences and other core positions including Apogee Therapeutics and Tarsus Pharmaceuticals. Elsewhere, the Group has participated in a number of financings including JIXING which also saw the concurrent announcement of a new strategic collaboration with Bayer.

"The market environment for the biotech sector is improving and the opportunity set for stock picking is encouraging. The sector's recovery is still early and changes in interest rate expectations are adding periods of volatility, but good data and good products are being rewarded. The regulatory environment appears relatively sanguine. Drug pricing reform is seemingly not at the top of the political agenda heading into the US presidential election in November. Medical science innovation is accelerating, and the FDA appears willing to support it. Financing and M&A activities are improving overall, and valuations are attractive. Lilly's US$3.2 billion acquisition of Morphic just after the end of the reporting period could be a harbinger of things to come.

"As we look out to the second half of 2024, we are excited by prospects for the biotech sector and opportunities that the Group's scale, post-Arix acquisition, presents."

For Further Information

About RTW Biotech Opportunities Ltd: RTW Biotech Opportunities Ltd (LSE: RTW & 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 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 Ltd ("RTW Bio") is a life sciences and investment innovation fund focused on identifying transformative assets with high growth potential across the biopharma and medtech sectors. With the Group's capital and the Investment Manager's expertise, we're powering medical breakthroughs that will transform the wellbeing of people around the world.

Highlights

30 June 2024 Financial Highlights

¹ The share price was US$1.52 at 11 September 2024.

Portfolio Highlights in the period

1 Core portfolio generally consists of companies that were initially added to the portfolio as private investments, reflecting the key focus of the Group's strategy. As initially private investments continue to be held beyond IPO, the core portfolio consists of both privately-held and publicly-listed companies.

2 New core portfolio companies include five new privates, five positions acquired from Arix Bioscience and four that were previously classified "other public".

3 Statistic was not measured at the previous interim reporting period end.

4 One core company is a specialty clinical laboratory offering testing services, and another is a device company whose technology is based on magnetic force spectroscopy that reveals biomolecular interactions; clinical programs are not applicable.

Our Purpose and Long-Term Strategy

Transforming the lives of millions

RTW'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.

Identify

Identify transformational innovations

RTW 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

RTW 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

RTW has capabilities to partner with universities and in-license academic programs, by providing capital and infrastructure to entrepreneurs to advance scientific programs. 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 RTW'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 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's 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.

Chair's Statement

Once again, I am pleased to report that the Investment Manager ("RTW") has achieved a solid performance for the Group. The Group's NAV returned +3.0% over the six-month period, outperforming the Russell 2000 Biotech Index ("RGUSHSBT") and only narrowly underperforming the Nasdaq Biotech Index ("NBI") which returned +1.7% and +4.0%, respectively. The Group's NAV has beaten the returns of its biotech benchmarks over one year and three years and, since admission in October 2019, the Group's NAV has significantly outperformed them both, returning +87.7% vs. +6.5% and +34.6% for the RGUSHSBT and the NBI. The Company's share price has lagged NAV growth, however. With a +48.6% return, it too has outpaced the benchmarks, but the shares fell to a discount to NAV in 2022, alongside many of our peers, after having traded at a small premium for most of the prior years since admission. Pleasingly, the discount has narrowed in the first half of the year, particularly after the closing of the Arix transaction. The increased scale and liquidity has attracted new buyers on top of the considerable shareholder efforts made last year, which included a rebranding, a name change, the initiation of a capital allocation plan, our first Capital Markets Day and the addition of new joint corporate broker and an investor relations and distribution partner.

H1 2024 Overview and Outlook

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 two go-public events from core private positions in the first half: Kyverna and Lenz. The average step up from holding value in these two events was 1.4x and the average multiple on invested capital was 1.8x. There was one take-out: Numab, a core private position. A core private take-out is somewhat unusual, as biotech M&A normally occurs in the more advanced public domain, but it shows that large pharma companies are still active and keen to acquire high quality assets wherever they are. It still being a private position meant that the impact on the Group was less than it might have been had it occurred after the company was public when we normally take bigger positions, but it was a more than 2.6x uplift from the holding value, which underlines the value of the portfolio's private holdings.

There are always a handful of material clinical events from our core public investments every quarter that have the potential to drive the Group's returns. This semi-annual period saw two such events from Avidity Biosciences alone. Firstly, Avidity announced positive long-term data showing reversal of disease progression in people living with myotonic dystrophy type 1 (DM1), a progressive, and often fatal, disease. On the back of this data, the FDA supported using a novel regulatory endpoint for a Phase 3 trial, which could speed up the delivery of this much needed therapy to patients, and Avidity completed an oversubscribed private placement, which RTW co-led. This financing and Avidity's share price performance elevated the position to the top of the portfolio. Later in the period under review, Avidity then announced "unprecedented" data from its facioscapulohumeral muscular dystrophy (FSHD) program, another muscular dystrophy with no approved drugs that ends with patients in wheelchairs. Avidity's share price was +351% in the first half, making it a very rewarding investment from a shareholder perspective, all the way from our original investment in their 2019 crossover round. Should Avidity succeed through subsequent trials and regulatory approval, it will also be a very rewarding investment from a patient impact perspective.

The Company's royalty investments are performing well and provide a differentiated income stream that is uncorrelated to equity markets. Further, in the current yield environment and with the capital available to biotech companies still relatively constrained, the risk adjusted returns are very attractive and highly complementary to the rest of the portfolio.

At the end of the period, the Group had fifty 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. The core portfolio now represents 78% of NAV, compared to 51% at the previous interim period. The "other public" portfolio (a replica of the long names held in RTW's private funds, devised to mitigate the performance drag of setting aside cash for future deployment into core positions) made up the remainder.

The market environment for the biotech sector is improving and the opportunity set for stock picking is encouraging. The sector's recovery is still early, though. Changes in interest rate expectations are adding periods of volatility, but good data and good products are being rewarded. Medical science innovation is accelerating, and the FDA appears willing to support it. Financing and M&A activities are improving overall, and valuations are attractive. Despite this, sector fund flows remain negative, as they have for several years, although the pace has slowed considerably. Perhaps generalist investors are waiting for the US presidential election to pass before returning. Either way, the setup is good, so only a small pivot away from Big Tech or the first obesity drug winners could mean outsized flows into the small and mid-cap biotech sector.

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. With market conditions improving, all parts of our full life cycle portfolio are well positioned.

RTW Biotech Opportunities Ltd 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 wider range of investment opportunities that would otherwise be hard to exploit, thus making the Company a valuable core satellite holding alongside more mainstream passive, fund or direct equity healthcare exposures.

Arix Bioscience Integration, New Board Member & Shareholder Activity

We are delighted to have completed the acquisition of Arix Bioscience Plc's assets and welcome new shareholders to our register. 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 Company's NAV appreciated materially versus Arix's between the deal announcement and closure, leading to a small dilution on closing, including the revaluation of Arix's private positions. Despite this, we firmly believe that the deal rationale has been vindicated and will continue to be so. The combination has 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 buyers and helped narrow the discount.

The increased scale of the Company following strong performance and the Arix transaction has also allowed us to appoint a new Non-Executive 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. Since 2023, she has been a Supervisory Board member of the biotechnology company, BioNTech. Nicola served as Minister for Innovation in the Department for Health and Social Care under two Prime Ministers where she led on Lifesciences, NHS Data and Digital Transformation, and Global Health Security. She was the first female MP for Oxford and was elected by MPs of all parties to Chair the Commons Science and Tech Committee. She remains one of the youngest committee chairs in British history and the only woman to have chaired the Commons Science & Tech Committee. We are delighted to welcome Nicola, believing that her contribution will help us further develop our mission to harness innovation in biotech to the advantage of patients and shareholders.

Around the time of the Arix closing, the Board increased the previously announced share buyback capacity by up to US$20 million, to help manage any short-term changes in the shareholder base around the deal. Any buybacks are considered against multiple factors, most importantly, our core objective to deliver long-term capital growth for shareholders. In total, to the end of the reporting period, the Group had bought back 10,253,791 shares for a consideration of US$13,433,717.

On behalf of the Board, I would like to express our gratitude for your continued support and wish you all the best for the remainder of 2024.

William Simpson

Chair of the Board of Directors

RTW Biotech Opportunities Ltd

12 September 2024

Report of the Investment Manager

Executive Summary

Since listing on the London Stock Exchange in October 2019, the Group has grown the NAV attributable to Ordinary Shareholders from US$168.0 million to US$655.4 million as of 30 June 2024 and the NAV per Ordinary Share has increased by 87.7% from US$1.04 to US$1.95. Disappointingly, the share price has not kept pace with NAV, returning +48.6%, as the shares fell to a discount in early 2022 with both the Biotech and Investment Companies sectors falling into bear markets. The discount narrowed in the first six months of the year, particularly after the closing of the Arix deal with the share price +10.1% and the NAV +3.0%. With continued NAV outperformance versus the market and our peers, and with the sector continuing its recovery, we would expect the discount to narrow further.

Financial Highlights, Performance Drivers and Significant Events

Table 1. Financial Highlights

(i)                    Total shareholder return is an alternative performance measure

(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 the first half of 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 value creation in biotech happens in the public market, however, it is valuable and important to position oneself and build conviction before an IPO. Core public position Avidity Biosciences is a case in point this reporting period. 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 two of its programs this year. The share price was +351% in the first half and we co-led an oversubscribed US$400m private placement in March where we added to our position.

Rocket, Immunocore and Cargo were the largest detractors amongst the core public positions. Rocket's progress towards 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. The delay should only be modest, and investors consider the program to be financially immaterial. 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 on Cargo, but with the next catalyst not until 2025, the share price gave back much of the gains it made since its IPO in November 2023. 

The core private positions made a small contribution led by Numab. Kyverna completed a successful IPO in February. The gross multiple on invested capital (MOIC) on our initial investment in Kyverna in November 2021 to the IPO was approximately 2.6x. Numab announced in May that Johnson & Johnson will acquire its lead drug candidate for US$1.25bn. The Company's holding value was increased by approximately 2.9x to reflect the deal, which is expected to close in the second half.

The royalty positions and "other public" positions both made small positive contributions. 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 Company'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, which was finalised in the second quarter. Artios, Evoimmune 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.

Since admission, the Group has made sixty-five core private investments. On 30 June 2024, thirty of these positions had had liquidity events (i.e., go-public or acquisition). The average holding period as private was twelve months and the average MOIC to the liquidity event was 2.0x. Sixteen of these positions have either concurrently or subsequently been exited in full at an average MOIC of 3.0x

Table 2. Performance breakdown in H1 2024

Following the Board's increase to the share buyback program in January, there followed several intra-month share buybacks throughout the period. 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 Company'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 30 June.

Key updates for Core Portfolio companies during H1 2024:

Clinical & Commercial Milestones

§ In March, Avidity Biosciences, the Group's largest portfolio holding, 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, which is expected to support a New Drug Application submission later in 2024.

§ 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 the subsequent share price recovery suggests that the market shares this view.

§ June: Immunocore's melanoma data showed a sub-20% response rate at ASCO.

§ In June at ASCO, the premier oncology conference, 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.

Financial Milestones

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

§ In February, Kyverna Therapeutics priced its $US319 million IPO and began trading on Nasdaq Global Select Market under the ticker "KYTX". On the first day of trading, Kyverna's share price traded up by 36.4% to close at $30.00 per share. The gross multiple on invested capital (MOIC) on the initial investment in November 2021 to the IPO was approximately 2.6x.

§ 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, the Group invested in its newest company creation, nicknamed Hercules, one of the largest biotech company creations of the year. Its clinical stage pipeline includes an injectable GLP-GIP and an oral GLP in-licensed from Hengrui, one of China's leading biopharma companies.

§ In June, Numab Therapeutics announced that Johnson & Johnson will 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.

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 30 June 2024, the Group's core positions accounted for 78% of NAV (H1 2023: 51%) and included fifty investments (H1 2023: 37) in private and public biotech and medtech companies and royalty investments. We selected these investments based upon our rigorous assessment of scientific, commercial potential and valuations. Table 6 shows the top ten portfolio investments at the end of the reporting period.

Core private investments accounted for 24% of NAV at 30 June 2024 across thirty investments. The increase in exposure and number of investments in the reporting period reflects the addition of five new private positions (Obsidian, Santa Ana, Mirador, Hercules and BioAge) alongside five new private investments from Arix (Ensoma, Evommune, Depixus, Sorriso and Amplyx), less Kyverna, which went public via an IPO and Lenz, which went public via a reverse merger with Graphite Bio.

Core public investments accounted for 47% of NAV across eighteen positions. The slight increase in exposure reflects performance, the graduation of Kyverna and Lenz to the public markets and the addition of Akero, Urogen, 89Bio and Merus.

Royalties accounted for 7% of NAV across two investments: RTW's 4010 Royalty Fund and RTW Royalty 2, which is a royalty deal based on the revenues of Urogen's Jelmyto and UGN‐102. The 4010 Royalty Fund is currently invested in two royalty deals with Allurion Technologies and Avadel Pharmaceuticals. 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.

22% of the Group's NAV is invested in "other public" listed companies, which is approximately the same level as the start of the reporting period. 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. This portfolio segment has been 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.

As of 30 June 2024, our "full life cycle" portfolio (see table 3) was diversified across treatment modalities, therapeutic focus, clinical stage, and capital position (i.e., equity and royalty) 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:   A full life cycle portfolio has multiple, differentiated return levers and horizons

Table 4. NAV capital breakdown as of 30 June 2024 compared to 30 June 2023

1 At 30 June 2023, Royalties exposure was included within Core Private.

Table 5. Investments added to the core portfolio in the first half of 2024¹

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

2 Arix-acquired position.

Figure 1. Core Portfolio exposure breakdown as a percentage of NAV, adjusted to be out of 100%, by (A) Therapeutic Focus, (B) Modality, (C) Clinical Stage and (D) Geography as of 30 June 2024. Therapeutic Focus, Modality and Geography do not include royalty vehicles.

Table 6. Top ten core portfolio positions as of 30 June 2024

¹ Consists primarily of common stock and pre-funded warrants.

Table 7. Core portfolio positions greater than 50 bps, as of 30 June 2024 and 30 June 2023¹

1 The aggregate exposure of names below 50 bps, consisting of 26 positions, is 4.5% 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.

Table 8. RTW representation on portfolio companies' boards as of 30 June 2024

1 In aggregate these positions represent 24% of the Group's NAV as at 30 June 2024.

Table 9. Top 5 "Other Public" portfolio segment holdings as of 30 June 2024

Private Portfolio Valuations and Cash Runway Analysis

The core private, core public and royalty 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 benefitted 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 30 June 2024, the average cash runway of our core private companies was approximately two years, which provides them with sufficient time to focus on clinical development plans. About one third have less than six months of runway, two of which are RTW company creations, which is by design, as RTW's funds have the flexibility to inject cash when necessary. Of the remainder, only one is in a more challenging financial position and has been written down in our portfolio to an insignificant level, while others are working on various capital raising solutions.

Which brings us to our private valuations. The Board delegates valuation of the portfolio to the Investment Manager. 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 process is overseen at the Investment Manager by the RTW Valuation Committee. The Committee is supported by RTW's valuation team that is independent from the investment team and receives advice from two independent third-party valuation firms. The 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. The integrity of the valuation process is overseen by the Audit Committee of the Board, which conducts an independent review of the Investment Manager's valuation policies and procedures. The valuations are also reviewed twice per year by the Audit Committee as part of the interim and annual reporting process and are subject to the scrutiny of KPMG.

The core private positions have seen a total of thirty-five valuation adjustments so far in 2024. In the first half, twelve positions (not including the Arix positions) were marked up by an average of 27% (excluding Numab, which was marked up by 240% to reflect the deal with Johnson & Johnson, the average was +7%); 10 positions were marked lower by an average of 17%. The balance remained unchanged. 30% of the markdowns were primarily driven by changes to relative comparables or market-based inputs. 50% of the markups were primarily driven by comparables, and 50% were primarily driven by idiosyncratic company performance, a financing round or transaction. At the half year end, the average time since the last third-party valuation was seven weeks and an average of seventeen 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. In the first half of the year, the two such events saw an average step up from our holding value to the event of 41.7%. The average MOIC to the event was 1.8x. This is consistent with our historical averages (figure 3).

Figure 2. New private investments, private liquidity events and private MOIC

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.

3 2024 liquidity events include one IPO and one reverse merger.

4 2024 new privates include BioAge, Mirador, Obsidian, Santa Ana Bio, Hercules and two newly acquired Arix positions greater than 50bps.

Figure 3. Core private portfolio - approximate cash runway as of 30 June 2024

Table 10. Private Valuation Statistics for H1 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 returned +1.7% and +4.0% respectively in the first half. Much of the first quarter continued the strong recovery which started in November last year. Small caps outperformed large caps and IPOs picked up materially. Public financing activity was also strongly up on last year, especially PIPEs (Private Investments in a Public Equity), which hit an all-time high of US$7.8 billion raised in the quarter. Several small acquisitions were announced. Johnson & Johnson's acquisition of Ambrx and AstraZeneca's acquisition of Fusion suggest that pharmas are still keen on Antibody Drug Conjugates (ADCs) and radiotherapy. Both have the potential for more durable pricing in the post Inflation Reduction Act world where Medicare can negotiate the prices for selected high-cost drugs used in their program. Sanofi and Gilead announced tuck-in acquisitions in rare disease:  Inhibrx and CymaBay, respectively. In medtech, Boston Scientific announced the US$3.7 billion acquisition of Axonics to add to its neuromodulation business. This was all suggestive of a more normal market environment.

However, the start of the second quarter saw the sector swoon once more as the Fed adjusted its market signals in response to inflation data. Though painful, it was not long-lived, and in June positive news from four closely watched sector flag bearers boosted the sector. The FDA's Peter Marks granted Sarepta's Duchenne gene therapy full approval despite a failed Phase 3, standing firm on his push for regulatory flexibility. Zealand reported competitive weight loss for petrelintide, the most promising alternative to GLP1s. Argenx's Vyvgart received approval for CIDP, its second blockbuster disease indication. And Alnylam's Amvuttra cut the risk of adverse cardiovascular outcomes by nearly 30% in its landmark TTR cardiomyopathy Phase 3. All four companies posted strong gains.

There were two US biotech IPOs in the second quarter, bringing the year-to-date total to nine, compared to twelve for the whole of last year. There were also three M&A deals over US$1 billion in value, bringing the year-to-date total to thirteen. Despite the quarter-over-quarter slowdown after a bumper first quarter, the year-over-year trend remains positive and public and private financing rounds are significantly up year-over-year. Not all financings are performing well after the event, however, so a selective approach is needed, but the markets are rewarding positive catalysts and companies can finance their pipelines on the back of good news.

Figure 4: US Biopharma Financing Market - IPOs and Follow-Ons

The public market is still digesting the massive wave of new companies that went public in 2020 and 2021, many of which should probably not have done so. Twenty-eight percent of US biotech companies with a market cap over US$10 billion trade at less than the cash on their balance sheets, and about one third of Nasdaq-listed biotech companies have less than a year of cash. Despite that, we are cautiously optimistic that the IPO market will continue to improve through this year and into next. Some will try to get ahead of the US election others may wait until early next year. M&A may follow a similar pattern around the election, but the fundamental reason for it remains unchanged as large pharma companies need to replace their revenues lost to patent cliffs. And with Lilly's and Novo's obesity drug profits likely burning holes in their pockets, it seems possible or probable that they may join the list of potential buyers for quality assets. Lilly's US$3.2 billion acquisition of Morphic just after the end of the reporting period could be a harbinger of things to come.

Figure 5: Proportion of US, small- and midcap biotech companies trading at less than cash on their balance sheets at 30 June 2024

Figure 6: US biotech M&A deal volumes and value

The regulatory environment appears relatively sanguine. Drug pricing reform is seemingly not at the top of the political agenda heading into the US presidential election in November. That could change, but Biden's 2022 Inflation Reduction Act may have drawn the sting, with Medicare given authority to negotiate prices for prescription drugs that had been expensive for the federal health program. The results of negotiations for the first batch of drugs selected were announced on 1^st August and were better than worst case expectations. Meanwhile, the FTC's gaze seems to have been averted from pharma deals to Pharmacy Benefit Managers with a recently published interim report assessing their impact on access to and affordability of medicines. On the FDA side, we are encouraged that it continues to show openness to novel regulatory endpoints that can speed up getting compelling new products to patients. This is particularly true in Peter Marks' Center for Biologic Evaluation and Research (CBER) division, which recently announced another initiative called the "Rare Disease Innovation Hub", which aims to unify the agency's approach in a bid to speed up rare disease medicines.

In summary, the overall backdrop for stock picking continues to improve. Good data and good products are getting rewarded. While rate changes continue to periodically inject volatility, correlations overall have declined. The sector's recovery is still in the early innings. Biotech fund flows remain negative, -5% year to date, suggesting a lack of retail interest and overall market leadership is narrow and dominated by Big Tech and the GLP-1 leaders, Lilly and Novo. We are optimistic that attractive valuations coupled with increasing new drug approvals set the sector up well for when capital returns.

Key portfolio company events post period end

On 19th July 2024, Artiva Biotherapeutics (0.13% of NAV as of 30 June), a clinical-stage biotechnology company focused on developing natural killer (NK) cell-based therapies whose mission is to develop effective, safe, and accessible cell therapies for patients with devastating autoimmune diseases and cancers, had its initial public offering (IPO), raising US$167 million. The company started trading on the Nasdaq Global Market under the ticker symbol "ARTV".

RTW Investments, LP

12 September 2024

Strategy in Action  

IMPACT FOCUS 1: Avidity Biosciences

Learn more about Avidity Biosciences,

Home - Avidity Biosciences (www.aviditybiosciences.com)

NAV

19.2%

30 June 2023: 1.8%

Ticker

"RNA"

Portfolio company ownership

<1%

30 June 2023: <1%

The need

Myotonic dystrophy type 1 (DM1) is a progressive and often fatal neuromuscular disease with no approved therapies. More than 40,000 people are affected by DM1 in the U.S. alone.

Facioscapulohumeral muscular dystrophy (FSHD) is muscle-weakening condition marked by pain, fatigue, and disability. FSHD affects approximately 16,000 to 38,000 people in the U.S. alone.

Duchenne muscular dystrophy (DMD) is a genetic condition that is characterised by progressive muscle damage and weakness. DMD primarily affects males, with 1 in 3,500 to 5,000 born with it.

Mission

Avidity Biosciences, Inc. is a biopharmaceutical company committed to delivering a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates (AOCs™). Avidity aims to revolutionise healthcare by advancing RNA therapeutics that effectively target underlying genetic causes of diseases. Utilising a proprietary AOC platform, Avidity demonstrated the first successful delivery of RNA into muscle tissue. They currently are in clinical development for three rare muscle disorders.

Status

Avidity has been a part of the Company's portfolio since November 2019 when the Company, together with other investment vehicles managed by the Investment Manager, led the Series C financing round and later went on to support Avidity through its IPO. In March of this year, Avidity announced positive long-term data showing reversal of disease progression in people living with DM1 across multiple endpoints.

In June, the company shared what it called "unprecedented" Phase 1 data for its second program, FSHD. Treatment improved muscle damage markers and increased muscle strength. After some struggles the past couple years, second generation RNA medicines are now delivering exciting breakthroughs.

Next milestone

Duchenne Muscular Dystrophy Phase 1 data update expected in Q3 2024.

Duchenne muscular dystrophy patient and trial participant quotes:

"I think that it's amazing that when I was diagnosed, I was told there's no treatment, no cure. The study has given me a lot of hope. I would love for that to be able to be shared with other people in the community who have DM1."

"My strength was better, my outlook was better, my hands were working. I had more strength, and I could stretch them out. I could open things and I could turn door knobs and all these things that were harder."

"We are thrilled to support Avidity in their effort to develop AOC 1001, a potentially first-in-class and disease-modifying therapy for patients with myotonic dystrophy. We also look forward to supporting the Avidity team as they work towards clinical trials execution for AOC 1001 and pipeline programs of antibody conjugated oligonucleotides for rare neuromuscular diseases."

Piratip Pratumsuwan

Research Analyst and Managing Director

RTW Investments LP

IMPACT FOCUS 2: Merus N.V.

Learn more about Merus

https://merus.nl/

NAV

0.4%

30 June 2023: 0.2% (in "other public" portfolio)

Ticker

"MRUS"

Portfolio company ownership

<1%

30 June 2023: <1%

The need

Head and neck squamous cell carcinoma (HNSCC) describes a group of cancers that develop in the squamous cells that line the mucosal surfaces of the mouth, throat, and larynx. These cancers begin when healthy cells change and grow in an unchecked manner, ultimately forming tumours. HNSCC is generally associated with tobacco consumption, alcohol use and/or HPV infections. It is the sixth most common cancer worldwide and it is estimated that there were more than 930,000 new cases and over 465,000 deaths from HNSCC globally in 2020.¹ The incidence of HNSCC continues to rise and is anticipated to increase by 30% to more than 1 million new cases annually by 2030², representing a potential US$3-4 billion global commercial opportunity at peak sales, typically 4-6 years from launch for an oncology drug.

Mission

Closing in on cancer. Merus is a public, clinical-stage oncology company based in the Netherlands, developing innovative full-length human bispecific and trispecific antibody therapeutics, referred to as Multiclonics^®, with a broad application for human disease. Its lead program, petosemtamab, is a novel bispecific antibody for head and neck cancer that it believes could become a new standard of care for patients with HNSCC.

Status

In May, Merus announced interim data from its Phase 1/2 trial of petosemtamab in combination with pembrolizumab, demonstrating a stunning 67% response rate. The company also announced plans to initiate a Phase 3 registrational trial of petosemtamab in combination with pembrolizumab, regardless of HPV status, in first line, PD-L1 expressing, head and neck cancer, which is expected to start by the end of 2024. The company has also initiated a Phase 3 registrational trial of petosemtamab monotherapy in 2/3L HNSCC. 

Next milestone

Phase 1/2 update in Q3 2024 of petosemtamab monotherapy in 2/3L HNSCC. The data could further support that petosemtamab could become a new standard of care for patients with HNSCC.

"We are impressed by the robust clinical data of petosemtamab, Merus' lead bispecific antibody, in head and neck cancer, a disease with high unmet medical need and limited treatment options. We believe that petosemtamab has the potential to transform the standard of care for patients with this devastating cancer and are excited to follow the progress of the ongoing and planned Phase 3 trials."

Chris Liu

Senior Research Analyst

RTW Investments

¹ Sung et al. CA Cancer J Clin, 71:209-49, 2021

² Johnson, D.E., Burtness, B., Leemans, C.R. et al. Head and neck squamous cell carcinoma. Nat Rev Dis Primers 6, 92 (2020)

The RTW Foundation

The Investment Manager's social commitment extends beyond the core business.

Founded in 2018 as the philanthropic arm of RTW Investments, LP, RTW Foundation powers rare disease research, medical innovation, and local community collaborations to improve the health of underserved communities.

Mission: To power community initiatives and scientific research to improve the health of underserved populations.

Through data-driven science, partnership collaboration, and meaningful impact, the RTW Foundation seeks to fund research that helps develop pathways for therapies for ultrarare diseases.

Research grants provide up to $150,000 of funding to conduct early-stage research.

The Foundation also builds partnerships with local organisations to advance health equity and health access.

"One of the hallmarks of our community partnerships is that we go beyond just financial support. Our team truly engages with communities and serves alongside our partners." 

Rod Wong

Chief Investment Officer

RTW Investments LP

Statement of Principal Risks and Uncertainties for the Remaining Six Months of the year to 31 December 2024

As described in the Group's annual consolidated financial statements for the year ended 31 December 2023, the Group's principal and emerging risks and uncertainties include the following:

-     Failure to achieve investment objective;

-     Unfavourable tax exposure;

-     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;

-     Inflation;

-     Availability of capital;

-     Sustainability reporting; and

-     Liquidity risk.

The Board believes that these risks are unchanged in respect of the remaining six months of the year to 31 December 2024.

Further information in relation to these principal risks and uncertainties may be found on pages 34 to 36 of the Group's annual report and audited consolidated financial statements for the year ended 31 December 2023.

These inherent risks associated with investments in the biotech and pharmaceutical sector could result in a material adverse effect on the Group'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 Group'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 30 July 2024. The Board relies on periodic reports provided by the Investment Manager and Administrator regarding risks that the Group faces. When required, experts will be employed to gather information, including tax and legal advisers.

Statement of Directors' Responsibilities

The Directors confirm to the best of their knowledge that:

-     the unaudited interim consolidated financial statements have been prepared in conformity with US generally accepted accounting principles and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

-     the interim management report (which includes the Chair's Statement, Report of the Investment Manager and Statement of Principal Risks and Uncertainties) together with the unaudited interim consolidated 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 consolidated 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 Group 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 Group's website (https://www.rtwfunds.com/rtw-biotech-opportunities-ltd). 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 Biotech Opportunities Ltd

Conclusion

We have been engaged by RTW Biotech Opportunities Ltd (the "Company") to review the consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2024 of the Company and its subsidiary (together, the "Group"), which comprises the unaudited interim consolidated statement of assets and liabilities including the unaudited interim consolidated condensed schedule of investments, the unaudited interim consolidated 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 consolidated financial statements in the half-yearly financial report for the period ended 30 June 2024 do not give a true and fair view of the financial position of the Group as at 30 June 2024 and of its financial performance and its cash flows for the six month period then ended, in accordance 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 consolidated 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 Group and the Company to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group and the Company will continue in operation.

Directors' responsibilities

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

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

In preparing the half-yearly financial report, the directors are responsible for assessing the Group and 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 consolidated 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. 

Andrew J. Salisbury

For and on behalf of KPMG Channel Islands Limited

Chartered Accountants

Guernsey

12 September 2024

Unaudited Interim Consolidated Statement of Assets and Liabilities

as at 30 June 2024 and 31 December 2023

(Expressed in United States Dollars)

The unaudited interim consolidated financial statements of the Group were approved and authorised for issue by the Board of Directors on 12 September 2024 and signed on its behalf by:

William Simpson                                                  Paul Le Page

Chair                                                                       Director

See accompanying notes to the unaudited interim consolidated financial statements.