Rtw Biotech Regulatory News (RTW)

LEI: 549300Q7EXQQH6KF7Z84

29 April 2021

RTW Venture Fund Limited

Annual Report and Audited Financial Statements for the Year Ended 31 December 2020

NAV increases by 54% over the calendar year; 88.5% NAV growth since IPO

RTW Venture Fund Limited (the "Company"), the London Stock Exchange-listed investment company focused on identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors, is pleased to announce its Annual Results for the year ended 31 December 2020.

Financial Highlights - robust NAV growth in the period:

Portfolio Highlights - deployment continues to progress:

· As of 31 December 2020, the Company held 22 core portfolio companies (2019: 7)

o 9 of which are publicly-listed

o 13 of which are privately-held

· Of these, 15 new core portfolio companies were added during the period

· 25/33 core portfolio companies' pipeline products are in clinical stage programmes (2019: 14/18)

· As of 31 December 2020, c.69% of NAV was invested in core portfolio companies, c. 25% was invested in non-core portfolio holdings, and c. 6% was held in cash.

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

"We are delighted to report strong results for the RTW Venture Fund during its first full year reporting period, despite the challenges of 2020 due to the COVID-19 pandemic. NAV returns of 54% during the calendar year and 88.5% since IPO in October 2019 reflect our successful full lifecycle crossover investing strategy in action.

We look forward to continuing to deploy capital into carefully selected core portfolio companies developing transformational therapeutic and medical technology products. We believe the healthcare sector remains attractively valued, especially given the recent explosion in scientific innovation. We think there are several exciting areas of significant innovation. In therapeutics, this includes RNA medicines, targeted oncology, gene therapy, and novel antibody-based drugs, and outside of drugs - molecular diagnostics, especially applied to cancer. We are excited to grow the Company's investment pipeline and will continue updating shareholders on further opportunities in due course."

Intention to move to the Premium Segment of the Main Market and intention to raise capital

The Company and its Investment Manager continues to have a significant pipeline of new attractive private investments and is considering a potential capital raise in conjunction with an intention to apply for its shares to be migrated from the Specialist Fund Segment to the Premium Segment of the Main Market of the London Stock Exchange.

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

A further announcement will be made in due course with more detail on the timing of the move to the Premium Segment of the Main Market and fundraise.

Analyst Call

A conference call for analysts will be held at 2 pm BST / 9 am EST today. To register for the event please RSVP to georgeb@buchanan.uk.com.

Notes

(i) As the Company's December NAV was not published until mid-January and the portfolio enjoyed an exceptionally strong month of performance in December the Company's share price is shown as being at a discount to the December 31 NAV even though its shares traded at a premium to the published November NAV during December.

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

(iii) Source: Capital IQ.

For Further Information

About RTW Venture Fund Limited:

RTW Venture Fund Limited (LSE: RTW) is an investment fund focused on identifying transformative assets with high growth potential across the biopharmaceutical and medical technology sectors. Driven by a long-term approach to support innovative businesses, RTW 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.

The following text is extracted from the Annual Report and Financial Statements of the Company for the year ended 31 December 2020:

Chairman's Statement

I am delighted to present the 2020 annual results for RTW Venture Fund Limited (the "Company"). The Company was admitted to the Specialist Fund Segment of the London Stock Exchange (LSE) nearly 18 months ago on 30 October 2019, and I am pleased to report significant progress and a strong performance have been achieved following its admission and through the end of 2020.

2020 Overview

This past year the Company accomplished its stated goals and as a result experienced extraordinary growth delivering outstanding returns on invested capital and share price growth. The performance of the Company's investment manager, RTW Investments, LP (the "Investment Manager" or "RTW") was, and continued to be, excellent. Building upon a strong performance in 2019, the Investment Manager continued executing their strategy in 2020. Notwithstanding the COVID-19 pandemic and significant turmoil in the global markets, the Investment Manager remained focussed on the fundamentals and valuation of the underlying companies. This enabled the Company to continue building its portfolio of innovative biotechnology and medical technology companies.

As a result, the Company's performance was particularly strong. In our first full financial year our NAV grew from US$205.7 million to US$375.3 million, which was largely due to the strong investment performance as our NAV per Ordinary Share grew from US$1.27 to US$1.96, an increase of c. 54%.

It is also encouraging to see that our core portfolio companies where RTW had invested prior to IPO, have been responsible for approximately 85% of our performance uplift during the year despite representing only c. 69% of our NAV at year end. This provides a strong validation of the Investment Manager's business model, which involves identifying transformative companies at an early stage.

At the beginning of the year, the Company had seven core portfolio companies, of which five were privately held and two were already publicly listed. All core portfolio companies were initiated as private investments by the Investment Manager. During the year, the Company added fifteen portfolio companies, bringing the total number of core portfolio companies to twenty-two, representing c. 69% of NAV by the end of the year. To mitigate any drag on performance due to excess cash awaiting deployment into new private assets, the Company also invested in a portfolio of listed companies or non-core portfolio assets selected by the Investment Manager to be representative of positions, which are also held in their other investment funds. Our non-core portion of the portfolio continued to reduce as a percentage of the whole, finishing the year at c. 25% of NAV, as the Investment Manager actively deployed capital. The balance of c. 6% of the remaining NAV was held as cash and working capital.

Share Issuance

During the reporting period our corporate broker J.P. Morgan Cazenove reported significant demand from prospective shareholders, which was reflected in the fact that the Company's share price has traded at an average premium to NAV of c. 11.8% since listing in October 2019. Under UK Listing rules, the Company has the authority to issue new shares of up to 20% of the outstanding share capital in any rolling twelve-month period without filing an updated prospectus, provided the shares are issued on a non-dilutive basis at a premium to NAV. In response to market demand in 2020, the Company issued a further 29,971,040 shares, an 18.6% increase, raising an additional US$41.7 million net of expenses. The share issuance was marginally accretive to NAV, contributing c. 1% to the NAV growth per Ordinary Share.

Outlook

Even with COVID-19 remaining a pressing issue worldwide, the Company is looking ahead with confidence. There have been no material changes to the fundamentals of the underlying assets, nor any supply chain disruptions given the early-stage nature of the science. There was anecdotal evidence of delays in clinical trials, but the portfolio companies have continued to advance their corresponding pipelines and remain sufficiently capitalised, and do not anticipate any negative longer-term impact.

Our 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 Board intends to raise the profile of the Company with a view to broadening its shareholder base by means of exploring a formal capital raise, as well as potential migration to the Premium Listing of the Main Market of the LSE. This will help to finance the Investment Manager's exciting pipeline of new ideas, based upon their strategy of founding, investing and supporting companies, at various points in their respective life cycles, in developing next-generation therapies and technologies that can significantly improve patients' lives. Accordingly, the Board expects the Company to continue delivering a strong performance over the long term and creating value for shareholders.

AGM

The Company will hold its Annual General Meeting (AGM) on 22 June 2021 to review the annual results and provide portfolio updates. We would like to dedicate a part of the meeting to address questions from our shareholders. At the present time, we anticipate holding the AGM in a virtual format although COVID-permitting it may be held in person at Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey. However, we encourage our shareholders to share your questions here and we will endeavour to answer as many as we can: RTWVentureFund@rtwfunds.com.

On behalf of the Board, I would like to express my gratitude for your continued support and wish you and your families a healthy, safe, and prosperous 2021. I look forward to updating you further at the time of our interim results later in the year.

William Simpson

Chairman of the Board of Directors

RTW Venture Fund Limited

28 April 2021

31 December 2020 Highlights

(i) As the Company's December NAV was not published until mid-January and the portfolio enjoyed an exceptionally strong month of performance in December the Company's share price is shown as being at a discount to the December 31 NAV even though its shares traded at a premium to the published November NAV during December.

(ii) Total shareholder return is an alternative performance measure (APM). For more information please refer to APM definitions table below.

Report of the Investment Manager

Executive summary

During 2020, the pandemic due to COVID-19 spread around the globe, affecting millions of people, and challenging the way we function as a society and our definition of "normal". We would like to take a look back at this testing year and review the performance of the Company.

It is with pleasure that we share the strong annual results of the Company as of 31 December 2020. The Company has been publicly listed on the Specialist Fund Segment of the London Stock Exchange since 30 October 2019, during which period the Company has witnessed NAV growth of 88.5% from US$168.0 million, or US$1.04 per Ordinary Share, to US$375.3 million, or US$1.96 per Ordinary Share as of 31 December 2020. For the reporting period, the NAV attributable to Ordinary Shares has grown by 53.9% from US$205.7 million NAV or US$1.27 per Ordinary Share as of 31 December 2019. Since admission, the share price has been trading at an average premium to NAV of c. 11.8%.

Table 1. Financial Highlights

(i) As the Company's December NAV was not published until mid-January and the portfolio enjoyed an exceptionally strong month of performance in December the Company's share price is shown as being at a discount to the December 31 NAV even though its shares traded at a premium to the published November NAV during December.

(ii) Total shareholder return is an alternative performance measure (APM). For more information please refer to APM definitions table below.

(iii) Source: Capital IQ.

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

We are pleased to report that as of 31 December 2020, 68.7% of NAV was invested in core portfolio companies vs 49% as of 31 December 2019. We define core portfolio 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 life cycle and therefore involves retaining our private investments well beyond their IPO, hence our core portfolio consists of both privately-held and publicly-listed companies, which were private at the time of our initial investment.

The Company also invested approximately 25% of its NAV in publicly listed, non-core portfolio assets in order to mitigate any 'cash drag' effect during the initial investment period anticipated to be 18-24 months from launch until the portfolio is fully deployed in core portfolio companies. The non-core portfolio assets have been selected by us and are also held in our other funds. The investments represented in this portfolio are similarly categorized as innovative biotechnology and medical technology companies developing and commercializing potentially disruptive and transformational products.

Significant performance drivers of NAV growth for the reporting period include strong share price returns of Rocket (+135%) contributing c. 41%; the IPOs of six portfolio companies including Avidity, iTeos, Athira, Pulmonx, C4 Therapeutics and Tarsus, together contributing c. 15%; Frequency share price returns (+105%) contributing c. 2%; as well as performance of the non-core portfolio assets, contributing c. 10%. The Company's performance fee allocation and expenses make up the balance of the NAV movement.

Figure 1. Performance drivers as 31 December 2020

[chart]

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

Since listing, the Company has added sixteen companies to its portfolio, with one investment in November 2019 and fifteen additions in the 2020 financial year. Portfolio companies added in the first half of 2020 have been also included in our half-yearly report and are listed below.

Our 2020 investments include:

*Subject to confidentiality

As of 31 December 2020, the portfolio now includes 22 companies that are 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.

The current investment pace remains on track and is in accordance with our track record of investing in 10-12 private biotech and medtech companies per annum. We look forward to continue deploying capital in 2021 and updating our shareholders in due course.

Figure 2. Portfolio breakdown, by (A) modality, (B) therapeutic focus, (C) clinical stage and (D) geography as of 31 December 2020

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

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

*Genetic medicine includes gene therapy and RNA medicines.

Key updates for Portfolio Companies during 2020:

Clinical

· In March 2020, Beta Bionics began its pivotal trial of the insulin-only configuration of the iLet Bionic Pancreas.

· In April 2020, iTeos announced initial data from the dose escalation portion of the Phase 1/2a trial in advanced solid tumours that showed EOS-850 was well tolerated with no dose-limiting toxicities observed. EOS-850 showed preliminary single-agent clinical benefit in seven patients who continued to present with at least stable disease and two partial responses in heavily pre-treated patients.

· In May 2020, Frequency shared top-line data from an exploratory clinical study showing drug levels of its lead molecule FX-322 can be directly measured in the cochlea. In addition to confirming the viability of the approach, the study results showed measurable concentrations of FX-322 in every patient and that anatomical factors did not prevent the active agents of FX-322 from reaching the cochlea.

· In May 2020, Orchestra BioMed presented results from a double-blind randomized clinical trial of BackBeat™ Cardiac Neuromodulation Therapy in patients with hypertension, which demonstrated a significant reduction in systolic blood pressure compared to the control group after six months of therapy.

· In June 2020, iTeos presented preclinical data for its investigational anti-TIGIT antibody, EOS-448 that demonstrated strong functional activity and a clean safety profile in its preclinical studies. iTeos enrolled the first patient in the dose escalation portion of its Phase 1/2a study with EOS-448 in February 2020.

· In November 2020, Immunocore announced that tebentafusp, its lead late-stage clinical program, met its primary endpoint of overall survival (OS) in Phase 3 trial for previously untreated metastatic uveal melanoma. Tebentafusp has the potential to be the first new therapy to improve OS in patients with metastatic uveal melanoma in 40 years.

· In December 2020, Rocket shared positive data readouts on four of its clinical programs, two of which were updates to previously reported data and two of which represented first-time Phase I readouts for: (1) Update to its lentiviral vector (LVV)-based gene therapy programs for the treatment of Fanconi Anaemia (FA) and (2) Leukocyte Adhesion Deficiency-I (LAD-I), (3) first-time readout for Pyruvate Kinase Deficiency (PKD) and (4) first-time readout for an adeno-associated virus (AAV)-based gene therapy for Danon disease, a devastating, paediatric heart failure condition.

Financing

· In July 2020, Ji Xing announced an exclusive licencing agreement with Cytokinetics to develop and commercialize CK-274, a novel cardiac myosin inhibitor, in China. Following this announcement, the Company participated alongside our other investment vehicles in a Series A funding round, investing US$5 million.

· Between June and October 2020, six portfolio companies (Avidity, iTeos, Athira, Pulmonx, C4 Therapeutics, and Tarsus) launched an initial public offering (IPO) with an average 1.8x valuation step-up from the initial time of investment to IPO, followed by an additional average +38% performance on the first day of trading.

· In early 2020, we seeded our latest new company creation Ji Xing, a Shanghai-based biotechnology company focused on the development and distribution of innovative US and European drugs in the Chinese market. Ji Xing will leverage clinical development and commercial expertise in the United States and Europe to bring global innovative medicines to Chinese patients.  

· In December 2020, Immunocore completed a US$75 million Series C financing round. The announcement came following positive Phase 3 trial interim analysis data for tebentafusp in patients with metastatic uveal melanoma that Immunocore presented in the same month. The Company alongside other vehicles managed by the Investment Manager participated in the financing round.

Portfolio performance and updates

The Company's share price traded at an average premium of c. 11.8% since inception (Figure 3A). The Company's overall returns since inception are in line with its biotech benchmarks, generating an overall return of c. 81% vs c. 87% by the small and mid-cap heavy Russell 2000 Biotechnology Index and outperforming the large-cap heavy Nasdaq Biotechnology Index, which returned c. 41% (Figure 3B note: the reporting period for this chart is 30 October 2019 to 31 December 2020). During the twelve-month reporting period, the Company's share price grew by c. 37%, whilst the Nasdaq Biotechnology Index returned c. 27% and the Russell 2000 Biotechnology index returned c. 53% for the same period, respectively.

Source Capital IQ.

Figure 3. RTW.L share price performance (A) and returns (B) as of 31 December 2020

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

Rocket has continued to progress its strong clinical pipeline despite minor COVID-19-related delays. In December 2020, in line with prior milestone and catalyst guidance, Rocket shared positive data readouts on four of its clinical programs. Given highly anticipated positive news on clinical trials progress Rocket's share price traded up (+83.4%) on 09 December 2020, translating into a materially accretive NAV performance for the Company. With the exciting news and share price appreciation, the position size of Rocket grew to c. 41% of NAV as of the end of 2020. Whilst it is indeed the largest position in the portfolio, we view Rocket as a diversified gene therapy holding company and we will continue to add promising gene therapy assets to its pipeline. The Investment Manager has three board seats with Dr. Roderick Wong serving as a chairman of Rocket's board of directors. Rocket is aspiring to become the next "Genentech of gene therapy" and we are looking forward to supporting them on this journey.

In 2020, six portfolio companies, which included Avidity, iTeos, Athira, Pulmonx, C4 Therapeutics and Tarsus, have gone public via an IPO with an average 1.8x step-up from the initial time of investment to IPO and an average holding period of 0.4 years, followed by an additional average c. 38% performance on the first day of trading.

Table 2. Performance of private and public portfolio investments as of 31 December 2020

\* These positions originated in the portfolio as private companies and since the Company's IPO have gone public; as of 31 December 2020, iTeos, Athira, Pulmonx, C4 Therapeutics and Tarsus were under 180-day lock-up provision. ^Milestone is a public company, the Company holds private warrants.

Table 3. NAV capital breakdown as of 31 December 2020

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

As of 31 December 2020, our top five holdings of non-core portfolio assets consisted of: Immunovant (ticker: "IMVT"), a biotech developing treatments for autoimmune diseases based on FcRn technology, Stoke Therapeutics (ticker: "STOK"), a biotech working to address the underlying cause of severe diseases by up-regulating protein expression with RNA-based medicine, PTC Therapeutics (ticker: "PTCT"), a genetic medicine company working on rare diseases, Alnylam (ticker: "ALNY"), a leading RNA medicine company, and Mirati (ticker: "MRTX"), an oncology biotech developing novel therapeutics by targeting genetic and immunologic drivers of cancer. We expect to deploy the capital invested into non-core portfolio assets into private companies as the new opportunities arise.

Table 4. Overview of portfolio companies' valuations* as of 31 December 2020

* Valuations for Private Portfolio Companies on a fair market value basis as of 31 December 2020. The valuations of Rocket, Frequency, Avidity, iTeos, Athira, C4 Therapeutics, Milestone, Pulmonx, and Tarsus have been calculated using their market capitalization as at the Latest Practicable Date. **In accordance with the Company's valuation policy, the Company applies a discount to its investments in Private Portfolio Companies which become Public Portfolio Companies that are subject to customary post-IPO lock-up provisions. ^Also includes Level 1 securities purchased at or after portfolio company IPO.

During the period ended 31 December 2020, three members of the Investment Manager served on the board of directors of Rocket and one member served on the board of directors of Avidity, Landos, Ji Xing, and NiKang, which in aggregate represented 48% of NAV of the Company.

Summary of portfolio assets:

As of 31 December 2020, the Company's portfolio included 22 companies, ranging from biotechnology companies developing preclinical to clinical-stage therapeutic programs, companies developing traditional small molecule pharmaceuticals, and four 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.

Table 5. Portfolio companies as of 31 December 2020

*Based on clinical stage of the leading program.

Table 6. Overview of Portfolio Companies' assets clinical development status as of 31 December 2020

Key Portfolio Company Events Post Period End

On 3 February 2021, Landos announced pricing of its US$100 million IPO, by offering 6,250,000 shares at US$16.00 per share. The shares began trading on Nasdaq Global Market on 4 February 2021 under ticker "LABP". Since IPO Landos shares have traded down 9.58 per cent. as of 19 April 2021.

On 5 February 2021, Immunocore announced pricing of its US$258.3 million IPO, by offering 9,935,896 shares at US$26.00 per share. The shares began trading on Nasdaq Global Market on 5 February 2021 under ticker "IMCR". Since IPO Immunocore shares have traded down 9.28 per cent. as of 19 April 2021.

On 11 March 2021, Prometheus announced pricing of its US$190 million IPO, by offering 10 million shares at US$19.00 per share. The shares began trading on Nasdaq Global Market on 12 March 2021 under ticker "RXDX". Since IPO Prometheus shares have traded up 9.92 per cent. as of 19 April 2021.

On 23 March 2021, Frequency announced top-line data from its Phase 2a clinical study of FX-322 in sensorineural hearing loss (SNHL), the interim results did not demonstrate improvements in hearing measures versus placebo.

On 14 April 2021, Biomea announced pricing of its US$153 million IPO, by offering 9 million shares at US$17.00 per share. The shares began trading on Nasdaq Global Market on 16 April 2021 under ticker "BMEA". Since IPO Biomea share have traded down 8.6 per cent. as of 19 April 2021.

The Company's investments in Landos, Immunocore, Prometheus, and Biomea remain under 180-day lock-up provision.

Between January and April 2021, the Company has added seven portfolio companies: Ancora Heart, Visus Therapeutics, Artiva Biotherapeutics, Ventyx Biosciences, Monte Rosa Therapeutics, Pyxis Oncology and GH Research.

Sector review and 2021 outlook

The innovation boom. We are living in an era where innovation is accelerating at breakneck speed with unparalleled opportunities for value creation. Globally, biotech markets are growing rapidly. According to Global Market Insights, the global biotech market is expected to grow with a compound annual growth rate, or CAGR, of 9.9% from 2019 to 2025. We are seeing validated technologies, such as those derived from DNA and RNA science, that can effectively deliver therapeutic solutions across large swaths of diseases, resulting in companies with highly efficient development engines. We believe there is an opportunity to offer attractive risk-adjusted returns to shareholders by building companies that possess unique and heretofore unrecognized growth opportunities that will benefit by capitalization, proactive skilled management, and supportive and sustainable governance practices.

Genetic therapies are on the rise. Cheap genetic information has revolutionized the discovery process, which is yielding validated drug targets at an unprecedented rate. According to the National Human Genome Research Institute, the approximate cost to sequence a human genome fell to less than $1,000 in 2020. This reduction in cost has fuelled tremendous productivity. According to data from the United States Patent and Trademark Office, the number of patents has inflected upward since 2010, which is translating into more new drugs in company pipelines. Technological applications are also creating platforms of addressable diseases, increasing bandwidth, and enabling companies to target more diseases with superior scientific accuracy and cleaner safety profiles than in previous generations of drug development.

The FDA reported a surge in investigational new drug ("IND") applications for cell and gene therapy products and predicts that it will be approving 10 to 20 cell and gene therapy products per year by 2025. We expect this trend to not only continue, but for genetically targeted therapies to become a substantial proportion of new therapies over the next decade. Further supportive dynamics come from the FDA and peer country regulatory bodies. While the United States leads the way in healthcare innovation, regulatory bodies across Europe, Japan, and recently China are enabling accelerated review programs resulting in faster approvals for therapies for conditions with unmet needs.

Although genetically validated targets can sometimes be addressed by existing traditional approaches, such as small molecules and antibodies, in specific tissues it is hard to beat the speed and ease in which DNA and RNA based medicines can be developed. Gene therapies also carry the potential for a one-time cure and RNA medicines for infrequent injections. The market for gene therapy companies has been growing. According to Capital IQ, at the beginning of 2013, there were five publicly traded gene therapy companies with a total market capitalization of approximately US$1.1 billion, while at the end of 2020 there were 37 publicly traded gene therapy companies with a total market capitalization of approximately US$71 billion. During the same seven-year period, according to Capital IQ, the number of publicly traded RNA medicine companies grew from eight companies with a total capitalization of approximately US$3.8 billion to 26 companies with a total market capitalization of approximately US$141 billion.

The COVID-19 vaccine experience exemplifies modern medicine's speed and ability to transform lives. The COVID-19 genetic sequence was published on 10 January 2020 by Chinese scientists and within a week the first mRNA vaccine candidates were created by separate teams in Boston and Germany that entered preclinical testing. Moderna was first into the clinic in March and Pfizer/BioNtech caught up, with both companies starting Phase 2 clinical trials in late April and reporting promising antibody data in May. Phase 3 clinical trials were initiated in late July, and definitive efficacy data were reported in late November, with emergency use authorizations (EUA) granted in December. The vaccine development effort does not only embody the promise of medical innovation, but hopefully also serves as a beacon of hope in these challenging times. We have never been more optimistic for the potential for medicine to help us live longer and healthier lives. 

Market dynamics and COVID-19 impact. While strong scientific developments have been accelerating over the last several years and we believe are likely to continue for the next decade or longer, the market has been somewhat slow to recognize and reward these developments. While the rest of the broader equity markets steadily marched upward since the 2008 financial crises, publicly traded healthcare companies often found themselves under pressure due to a negative narrative stemming from the drug pricing debate.

In 2020, the biotech sector outperformed the broader market with the Nasdaq Biotech Index ("NBI") finishing up +26.5% versus +16.3% for the S&P 500. We have observed a positive shift in market sentiment, as the record-breaking development and approval of the COVID-19 vaccine and therapies cast a bright light on the sector. Scientific and medical innovation was the only answer to pandemic. Generalist investors seemed to appreciate how quickly new medicines can be discovered and developed by leveraging genetic data and new drug technologies like mRNA and they expressed this new found appreciation through their portfolios. Net inflows into sector turned positive and share prices rose across the board. While we no longer found ourselves in the distressed to significantly below average valuations we have grown accustomed to over the last five years, we were hopeful this could represent a potential first return to normalcy since US drug pricing entered centre stage in 2015. Biden's win in the 2020 U.S. Presidential election did not seem to pose an immediate threat of a dramatic change to the current system of public and private insurance as the COVID-19 pandemic has catalysed a shift in the discourse from drug pricing to public health matters.

However, Q1 2021 has been met with a level of uncertainty in the biotech space that tempered the excitement around the sector from generalist investors. There were a string of disappointing clinical trial results, a handful of FDA rejections, and the FDA Commissioner job remains unfilled. FTC's plan to broaden the definition of anti-trust for pharma deals, rising interest rates, and finally the re-introduction of drug pricing as a potential Infrastructure pay for added top-down uncertainty. Most of the above items, while worth mentioning, don't pose meaningful risks to the prospects for innovation. While it may take several months to resolve the uncertainty around FDA Commissioner job, FTC broadening anti-trust definition and the infrastructure bill reconciliation, the likely outcomes should be relatively benign, and we would just reiterate that innovation continues to accelerate. Valuations remain within historical norms, especially considering the historically low interest rate environment and the bolus of untapped opportunities we see globally. We believe the healthcare sector remains attractively valued, especially given the explosion in scientific innovation.

As for the Company, we remain confident in the portfolio fundamentals; our portfolio companies are well capitalized and have enough cash reserves to fund their efforts well into 2022 and some even further. We saw some minor delays in clinical trials and modest sales impacts from disruptions in sales forces and physician visits; however, that manifested in one-to-two quarter shift with minimal impact on the execution of the portfolio companies' established milestones for 2020. We expect to grow the Company and intend to remain a reliable partner to both existing and new innovative biotech and medtech companies in 2021 and beyond.

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. 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 life-cycle investor, we recognize the importance of providing growth capital along with the support of an experienced team, if and when it is needed, at any critical inflection point in an asset's life cycle. Scientific development rarely follows a linear path and nor do we, which is why we are always thinking about the optimal way to support a company. This can be achieved through providing growth capital, creative financing solutions, capital markets expertise, or guidance through investing our time and sharing our collective experience as directors and stewards of tomorrow's most exciting and disruptive companies.

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

As we look ahead to 2021, based on the breadth of opportunities we have been seeing and continue to see, we expect our efforts will translate into further capital commitments. The past year has been very active, as we have added fifteen new companies to the Company's growing portfolio, and we foresee continuing with a similar investing pace in 2021 with the expectation of being fully deployed by fall 2021 in line with prior guidance in our prospectus.

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

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

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

The Portfolio Companies with at least 1% position of NAV as of 31 December 2020

Rocket Pharmaceuticals (41.1% of NAV,

Rocket was formed in 2015 out of the work of academic institutions in the US and Europe and was listed on the Nasdaq Global Market in January 2018. Rocket is focused on developing first-in-class gene therapy treatment options for rare, devastating diseases. Rocket is platform-agnostic, meaning Rocket's team can choose the most practical gene therapy platform for the disease being targeted. Each program is intended to be transformative, enabling not only reversal of the disorder at molecular and cellular levels, but sustained relief from debilitating and potentially life-threatening symptoms.

Five of Rocket's clinical programs include four lentiviral vector-based gene therapies and an adeno-associated virus-based gene therapy, all of which are developed for rare genetic paediatric diseases. Rocket has a broad pipeline of five disclosed programs, and we anticipate additional programs will be added to the pipeline. In addition to our board representation in the company, working alongside the Investment Manager, Rocket's generous pipeline diversification of now five clinical programs creates an attractive risk reward opportunity, giving us comfort in owning an outsized position in the company.

Drs. Roderick Wong, Naveen Yalamanchi, and Gotham Makker all serve on the company's board, with Dr. Wong serving as Chairman.

Avidity (3.9% of NAV,

Avidity is developing antibody oligonucleotide conjugate (AOC™) therapeutics, which combines the tissue selectivity of monoclonal antibodies and the precision of oligonucleotide-based therapeutics to overcome barriers to the delivery of oligonucleotides and target genetic drivers of disease. Avidity's lead program is for myotonic dystrophy (MD) and has discovery efforts underway to address additional diseases of the muscle. Avidity has generated compelling target gene knockdown of DMPK in animal models. It is estimated that about 40,000 Americans suffer from myotonic dystrophy.

In November 2019, we led a Series C financing round in Avidity. The Company participated in the fundraising alongside our other investment vehicles. Roderick Wong, M.D., Managing Partner and Chief Investment Officer at RTW Investments, LP, joined Avidity's board of directors.

Tarsus (2.5% of NAV,

Tarsus is a late clinical stage biopharma company focused on ophthalmic conditions with high unmet need and limited treatment options. The company is developing a treatment for a common ocular condition - demodex blepharitis, which has no approved therapy. Blepharitis is a type of inflammation of the eyelid margin associated with eye irritation and dry eye, in about 50% of the cases caused by demodex mite infestation. Diagnosed patient population in the U.S. alone is ~2 million, representing a large unmet need population. The lead compound TP-03 is lotilaner-based eye drop designed to specifically eradicate the mites by paralyzing their nervous system, showed compelling efficacy and safety for demodex blepharitis in multiple Phase 2 trials. The compound is in Phase 3 clinical trial with data readout expected in Q2 2021.

Athira (2.5% of NAV,

Athira is a clinical stage biotech company that is developing novel treatments for neurodegenerative diseases. Lead molecule NDX-1017 demonstrated promising data in Alzheimer's disease (AD) in early clinical trials by improving P300 latency, a biomarker of cognitive function with a favourable safety and pharmacological profile. The company has initiated Phase 2/3 clinical trial. AD is a historically hard to treat patient population with high unmet need and represents a substantial market opportunity. Also, Athira is at pre-clinical stages to expand its pipeline into other neurodegenerative disease, such as Parkinson's disease.

C4 Therapeutics (2.3% of NAV,

C4T is a targeted protein degradation biotech company focused on oncology. It is pioneering a new class of small-molecule drugs that selectively destroy disease-causing proteins via degradation using the innate machinery of the cell. C4T leverages this novel targeted protein degradation technology for high unmet need and hard to treat blood cancers. The Investment Manager believes that its lead molecule has a best-in-class potential and is differentiated from other degraders in the space. The company has a strong pipeline with multiple assets on track to enter the clinic in 2021 and 2022.

Frequency (2.2% of NAV,

Frequency was formed in 2014 out of the work of the discoveries in progenitors cell biology from the labs of Robert Langer at MIT and Jeffrey Karp at Harvard. Frequency is developing a small molecule pharmaceutical to stimulate progenitor cells to multiply and create new hair cells in the ear, which has the potential to be the first therapeutic that can improve noise-induced hearing loss. Frequency's clinical Phase 1 data is compelling, showing improvements in hearing function, including audiometry and word scores. It is estimated that more than 30 million Americans suffer from noise-induced hearing loss. Frequency has completed a Phase 1 study in c. 20 patients and has shown good efficacy. Final Phase 2 efficacy data readout is expected in Q2 2021.

RTW Royalty Holding Company (2.0% of NAV,

The Investment Manager formed RTW Royalty Holdings in mid-2020 to advance RTW's strategy of providing tailored financing depending on a company's lifecycle, including bespoke capital solutions for near-launch commercial-stage healthcare and life science companies. This allows the Investment Manager to be ready to provide customized non-dilutive capital and multi-security solutions based on the portfolio companies' needs. RTW Royalty Holdings acquires, holds, and disposes of diligenced healthcare royalty and royalty-related assets. These transactions include royalty monetization, revenue interest financing, credit royalty financing and R&D funding agreements.

In November 2020, RTW Royalty Holdings completed the US$85 million purchase of royalty rights on future sales of mavacamten, a product in development for hypertrophic cardiomyopathy by MyoKardia (since acquired by Bristol Myers Squibb). In July 2020, it announced a funding agreement for up to US$90 million with Cytokinetics to fund Phase 3 clinical trials for CK-274, a novel cardiac myosin inhibitor, for a genetic heart condition with no current treatment. 

Immunocore (1.7% of NAV,

Immunocore was formed in 2008 as a spin-out of the Avidex acquisition by Medigene AG in 2006. Avidex was founded in 1999 out of the work of Dr. Bent Jakobsen's research into T cell receptors at Oxford University. Immunocore is a leading London-based T-cell receptor (TCR) biotechnology company focused on oncology and infectious disease. On the heels of compelling Phase 2 data, the company's lead program, tebentafusp (IMCgp100), has entered pivotal clinical studies as a treatment for patients with metastatic uveal melanoma and since then reported positive outcomes. Collaboration partners include Genentech, GlaxoSmithKline, AstraZeneca, Eli Lilly, and the Bill and Melinda Gates Foundation. Under the stewardship of a new management team, the company has added an early-stage Hepatitis B program to its pipeline.

Ji Xing Pharmaceuticals (1.3% of NAV,

We formed Ji Xing in early 2020, borne out of a two-year study of innovation, biotechnology, and access to healthcare in China. Ji Xing is a Shanghai-based biotechnology company focused on the development and distribution of innovative US and European drugs in the Chinese market. Ji Xing will leverage clinical development and commercial expertise in the United States and Europe to bring global innovative medicines to Chinese patients.

In July 2020, Ji Xing announced an exclusive licencing agreement with Cytokinetics to develop and commercialize CK-274, a novel cardiac myosin inhibitor, in China. Following this announcement, the Company participated alongside our other investment vehicles in a Series A funding round, investing US$5 million.

Roderick Wong, M.D., serves on the board of directors of Ji Xing.

Beta Bionics (1.3% of NAV,

Beta Bionics was formed in 2015 out of the work of Dr. Edward Damiano of Boston University. Beta Bionics' primary product is a closed-loop pancreatic system for automated and autonomous delivery of insulin. Beta Bionics' early clinical trial data suggests the system may be a major advance in the treatment of Type 1 Diabetes with its patented artificial pancreas that has a combined glucose monitor and insulin pump in one, requiring minimal human intervention. The ease of use has been noted during and after studies, which have been conducted on adult and paediatric patients.

Pulmonx (1.1% of NAV,

Pulmonx commercializes Zephyr Valve, a first FDA-approved minimally invasive bronchoscopic procedure for the treatment of severe emphysema, a high unmet need condition. Emphysema, a form of COPD, is a debilitating and life-threatening disease that progressively destroys lung tissue, resulting in a diminishing ability to breathe and engage in the most basic daily activities, leading to a high mortality rate and presents in about 3.8 million people in the U.S with 1.5 million of severe cases. Zephyr Valve was approved by the FDA in 2018 and was granted Breakthrough Medical status. It is an implantable device used to help trapped air in the lung escape until lung lobe volume is reduced and the pressure on the diaphragm is alleviated. The Investment Manager believes that the Zephyr Valve is poised to take a significant market share in the emphysema market initially targeting severe patients with appropriate lung anatomy and potentially further expanding into other indications.

Tenaya Therapeutics (1.1% of NAV,

Tenaya is a US-based privately held biotechnology company with a mission to discover, develop, and deliver curative therapies that address the underlying causes of heart disease. Tenaya is developing three platforms to address heart disease: Gene Therapy, Regeneration, and Precision Medicine. The lead program is an AAV-based gene therapy for genetic hypertrophic cardiomyopathy (HCM). MYBPC3 gene mutations are the leading genetic cause of HCM, presented as loss-of-function haploinsufficiency and therefore could be addressed with gene replacement. Tenaya showed compelling preclinical data of MYBPC3 protein expression and improvement in cardiac function in animal models for its lead gene therapy program, which is currently in IND-enabling studies.

Landos (1.1% of NAV,

Landos was formed in 2017 out of the work of Dr. Josep Bassaganya-Riera. Landos is focused on the discovery and development of first-in-class oral therapeutics for autoimmune diseases and its lead clinical asset, BT-11, acts locally in the gastrointestinal tract for treatment of inflammatory bowel disease (IBD). Landos is currently evaluating BT-11 in clinical studies for ulcerative colitis and Crohn's disease. Roderick Wong, M.D., managing partner at RTW Investments, LP is a board member.

iTeos Therapeutics (1.0% of NAV,

iTeos is a clinical stage biotechnology company, developing innovative immunotherapies for cancer treatment, targeting two key resistance pathways to checkpoint therapy: the adenosine pathway and regulatory T cells (Tregs). The company's lead program, EOS-850, is an adenosine A2A receptor antagonist currently in a Phase 1/2 study. Its second program, a fully human ADCC-enabling anti-TIGIT antibody (EOS-448), entered the clinic in February 2020. The Investment Manager believes EOS-448 has a potential to become a leading therapy in the new class of next generation checkpoint inhibitors that target TIGIT. Data readouts on both programs are expected in H1 2021.

RTW Investments, LP

28 April 2021

Strategic Report

Company Objectives & Strategy

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

We believe the Company is positioned to capture long term value for investors, for the following reasons:

· Access to permanent capital reduces pressure on the Company to make investments during a finite deployment period, which can be especially beneficial to investors during periods of overstated valuations or when there are limited and compromised investment opportunities.

· A permanent capital structure enables the Company to be patient and selective across the venture landscape, investing in only the most compelling ideas. As a true evergreen structure, the Company can avoid harvesting gains far too early in a portfolio company's life cycle allowing for greater value capture.

· Though not averse to acquisitions, the Company is generally not interested in seeking trade sales for its Portfolio Companies. Long term value is maximized when products become commercially viable and accessible to patients who need them.

· The Company has an eye toward building scalable NewCos and turning them into sustainable businesses, thanks to platform enabling technologies. When creating NewCo, we will support a management team by helping them diversify within their own pipeline and benefiting by economies of scale and modular technologies. This also protects against diluting management talent and competitive dynamics within the Company's portfolio. 

· Whilst the Company can invest in a venture capital capacity by providing early-stage funding, we do not necessarily consider monetization events such as IPOs and reverse mergers as exit opportunities, which means that the Company can in certain circumstances capture significant potential upside following such an event.

The Company was listed by the Board of Directors and supported by the Investment Manager, a global leader in full-lifecycle healthcare investing with a special focus on transformative scientific and technological assets. The Investment Manager seeks to identify biopharmaceutical and medical technology assets, ascertained through rigorous scientific analysis that have a high probability of becoming commercially viable products and can dramatically change the course of treatment and in some cases bring effective and/or full curative outcomes to patients.

The Investment Manager has operated its private funds business since 2009 and has built an organization with deep expertise across medical and scientific areas, as well as an elite strategic and financial execution team. The ability to identify untapped value through an unparalleled comprehensive target identification process is a powerful driver of the team's long-term success.

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

A key part of the Company's competitive advantage is the Investment Manager's ability to determine at what point in a company's life cycle it should support the target asset or pipeline. As a full-life cycle investor, the Investment Manager has achieved multiple successful transaction milestones and provided creative financial solutions, including successfully creating new companies around academic licenses, supporting those companies along the life cycle by taking them public through reverse mergers, recapitalizations, SPACs, and offering royalty- backed funding. Various members of the Investment Manager's leadership team have also garnered significant operational experience, serving in interim executive roles at biopharma companies, holding myriad strategic directorships, and influencing companies to prioritize and advance their assets through development and commercialization. The Investment Manager has earned a constructive reputation of being deeply knowledgeable in science, supportive to entrepreneurs and aligned with the companies for the long term, until the maximum value of those underlying assets can be achieved. This has become an earned privilege for the Investment Manager and the Company.

Company Structure

The Company was originally a Delaware limited liability corporation, which was funded by US based seed investors and re-domiciled to Guernsey prior to listing on the London Stock Exchange. The Company is managed and controlled from Guernsey by a majority independent board whose details are provided in the Report of the Directors below. The Company is designated as a foreign private issuer under the US Securities and Exchange Act and is exempt from SEC registration. The Company is managed as a non-resident company for UK tax purposes and a foreign limited partnership for US tax purposes and provides full tax reporting for its US shareholders.

Management

The independent Board is responsible to shareholders for the overall management of the Company. The Board has adopted a Schedule of Matters Reserved for the Board, which sets out the particular duties of the Board. Such reserved powers include decisions relating to the determination of investment policy, oversight of the Investment Manager, approval of changes in strategy, risk assessment, Board composition, capital structure, statutory obligations and public disclosure, financial reporting and entering into any material contracts by the Company.

Through the Committees and the use of external independent advisers, the Board manages risk and governance of the Company. The Board consists of four non-executive Directors, three of whom are independent Guernsey residents and one non-independent, US based director who is a principal of the Investment Manager. Further details of the Board can be found in the Report of the Directors below.

The Investment Manager's key responsibilities include identifying and recommending suitable investments for the Company and negotiating the terms on which such investments will be made.

The Investment Manager focuses on identifying transformational innovations across the life sciences space, specifically backing scientific programs that have the potential to disrupt the prevailing standard of care in their respective disease areas. The Investment Manager's screening process has been honed by Roderick Wong, M.D., throughout his 16-year tenure as an investment management professional. Importantly, the Investment Manager's screening process has the benefit of a robust business and the Investment Manager's 45-person team, including a research team of fifteen individuals with advanced scientific and medical degrees along with academic and industry research and drug development expertise.

The Investment Manager invests across the public/private spectrum, supporting investments through multiple stages of their respective life cycles. To date, the Investment Manager has successfully supported companies through the FDA approval process and the commercialization of the approved drugs. The Investment Manager also engages in new company creation around promising academic licenses.

Following the Company's IPO, the Investment Manager is paid a monthly management fee, in advance, as of the beginning of each month in an amount equal to 0.104% (1.25% per annum) of NAV. Furthermore, as a member of the Performance Allocation Share Class Fund, the Investment Manager will receive a proportion of a further variable amount equivalent to 20% of the NAV appreciation adjusted for distributions and share issuance for the year to 31 December 2020 triggered by outperformance of the Company's hurdle rate of 8% per annum. During the year, the Performance Allocation Share Class Fund entered into a letter agreement pursuant to which the Performance Allocation Share Class Fund agreed to defer distributions of the Company's Ordinary Shares (see Note 10). The agreement effectively gives the performance share class shareholders the same economic outcome that they would have achieved had the shares had been issued.

A summary of the fees paid to the Investment Manager is provided in Note 10 of the financial statements.

Administrator

The Board has delegated administration and company secretarial services to the Administrator. On 1 February 2021, Elysium Fund Management Limited was appointed as Administrator taking over the administration, corporate secretarial, corporate governance and compliance services from Ocorian Administration (Guernsey) Limited. Further, from 1 February 2021 Morgan Stanley Fund Services USA LLC was appointed to serve as the Company's Sub-Administrator.

Further details on the responsibilities assigned to the Investment Manager and the Administrator can be found in the Report of the Directors.

Employees and Officers of the Company

The Company does not have any employees and therefore policies for employees are not required. The Directors of the Company are detailed in the Report of the Directors.

Investment Process

The Company achieves its investment objective by leveraging the Investment Manager's data-driven proprietary pipeline of innovative assets to invest in life science companies across various geographies (primarily the US, Europe, and China); across various therapeutic categories and product types (including but not limited to genetic medicines, biologics, traditional modalities such as small molecule pharmaceuticals and antibodies, and medical devices); and in both a passive and active capacity and intends, from time to time, to take a controlling or majority position with active involvement in a Portfolio Company to assist and influence its management. In those situations, it is expected that the Investment Manager's senior executives may serve in temporary executive capacities.

Deal sourcing is both internally and externally generated. The Investment Manager has developed repeatable internal processes combining technology and manpower to comprehensively cover critical drivers of innovation. The Investment Manager has and continues to cultivate relationships with entrepreneurs, principal investigators, and other peer investors to allow for a wide range of intelligence gathering of investment opportunities. Their team generates ideas from their wide network of doctors, academics, management teams and syndicate partners throughout the world, and can rely on their proprietary in-house research developed over sixteen years of operating in the life sciences sector. Potential investments are then subject to a diligence process: a new ventures team uses data science technology to enhance data management. Their research team uses a collaborative team-based approach that leverages the industry and academic backgrounds of its team members for exceptional research.

Once invested, the Investment Manager is well-placed to offer support to early-stage LifeSci companies and NewCos. The Investment Manager's business and operations teams consist of members with financial, capital markets, legal, regulatory, tax, and accounting expertise and enforces a strong compliance culture. The Investment Manager's capabilities include expertise in intellectual property licensing, hiring experienced management, scientific program management, clinical trial design, commercialization and distribution across geographies, board governance, investor syndicate-building and capital markets.

For example, as illustrated by the largest portfolio holding, Rocket, the Investment Manager was involved in every aspect of forming the company. Rocket was born out of a year-long study in gene therapy. In late 2015, Rocket was formed around a single academic license from a European academic institution. The Investment Manager continued to identify additional targets and licensed four additional academic programs while hiring a strong management team. The Investment Manager completed two private financings, syndicating both the Series A and Series B rounds, and took the company public through a reverse merger in January 2018. While it is publicly listed, Rocket represents a unique value proposition in its scalable platform equipped to advance two types of gene replacement therapies. The Investment Manager has a significant influence through share ownership by funds managed by it and strong board representation and believes it will continue to add value to the company by adding new development targets to Rocket's existing pipeline.

While the United States has been the leader in developing and commercializing disruptive innovations, the Investment Manager believes that access to capital plays a large role in establishing leadership. It believes that important scientific developments are happening worldwide and not only from the most recognized and renowned institutions. The Investment Manager has access to sourcing assets globally and have developed cross-border capabilities. The Investment Manager is committed to building a footprint in the United Kingdom and intends to prioritize advancing early-stage scientific development regardless of origination.

· USA. The Investment Manager has a core focus on the US, with deep coverage of opportunities from academia to mid-size public companies. The US Portfolio Companies reflect a larger pool of opportunities created by the most robust venture and capital markets ecosystem. 

· UK & Europe. The Investment Manager has identified and invested in exceptional British and European scientific assets. It wishes to contribute to these biotech ecosystems by injecting capital where needed and community building. It intends to engage in NewCo creation around promising early-stage assets by partnering with universities and in-licensing academic programs as well as through its proprietary in-house efforts; and providing financial and human capital to entrepreneurs to advance scientific programs in development.

· China. It is early days in the East. The Investment Manager plans to capture commercialization opportunities in China through participation in the building of NewCos to bring successful Western drugs to Chinese patients.

The majority of the Investment Manager's private investments since 2015 have been as lead investor or a strong participant in financing rounds involving other active, highly respected, and well-connected investors in the biopharma and medical technology sectors.

The Investment Manager's team is comprised of individuals with medical and advanced scientific training as well as legal and banking experience, enabling a deeply differentiated approach to research, idea generation, and deal execution. Complementing its outstanding scientific perspicacity and industry relationships is the Investment Manager's Business and New Venture teams, whose members include a life sciences attorney, former investment bankers, former corporate executives, and venture capitalists, who together actively engage with banks, academic institutions, and corporate management teams, cultivating strong relationships and expanding their network of key contacts and syndicate partners. The Investment Manager believes the well-roundedness of the team, strengthened by strong ties across industry, academia, banking platforms, and unaffiliated investor relationships, will enhance its management team's ability to source viable prospective target businesses, capitalise them, and ensure public-market readiness. The Company believes that the Investment Manager's management team is equipped with the knowledge, experience, capital and human resources, strong operations, and forward-thinking sustainable corporate governance practices to pursue unique opportunities that will offer attractive risk-adjusted returns. The Investment Manager's attractive long-term return profile is the result of differentiated deal sourcing and what it refers to as its data-first process, focusing on the comprehensive collection and diligence of primary scientific data.

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

· the Company may not make an investment or a series of investments in a Portfolio Company that result in the Company's aggregate investment in such Portfolio Company exceeding 15% of the Company's gross assets at the time of each such investment, save for Rocket for which the limit will be 30%

· the Company may not make an investment in a Portfolio Company that would cause the Company's holding to exceed 150% of the total issued share capital of that Portfolio Company.

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

Each of these investment restrictions will be calculated as at the time of investment, other than for the original portfolio assets which were calculated as at the time of the re-domiciliation, as prior stated in the prospectus. In the event that any of the above limits are breached at any point after the relevant investment has been made (for instance, upon successful realisation of economic and/or scientific milestones or as a result of any movements in the value of the Company's gross assets), there will be no requirement to sell any investment (in whole or in part).

In addition to the above restrictions which were set by the Investment Manager, the Company currently complies with the investment restrictions set out below and will continue to do so for so long as they remain requirements of the FCA:

· the Company will not conduct any trading activity which is significant in the context of the Company as a whole;

· the Company must, at all times, invest and manage its assets in a way which is consistent with its objective of spreading investment risk and in accordance with the published investment policy; and

· not more than 10% of the gross asset value at the time of investment is made will be invested in other closed-ended investment funds which are listed on the Official List.

As required by the Listing Rules, any material change to the investment policy of the Company will be made only with the prior approval of the FCA and shareholders.

Operational & Financial Review for the period

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

The Company's market capitalisation grew from US$221 million to US$360 million during year. This was driven by appreciation in the Company's share price and several equity issuances.

The Ordinary NAV of the Company grew from US$205.7 million to US$375.3 million during the year. The main drivers of the valuation growth were portfolio assets unrealised gains of 66%, public portfolio realised gains of 2% and further issuance of Ordinary Shares, raising US$41.7 million (net of expenses of issuance).

The growth in NAV per Ordinary share was driven by the strong performance of the Company's investment portfolio. There was also a marginal contribution of approximately 1% from non-dilutive equity issuances during the year.

Premium / discount

The Company's shares traded on average c. 11.8% premium due to market demand during the reporting period.

The return of 54% in the year was the result of strong portfolio performance and exceeded the annual hurdle of 8% p.a. for the portfolio thereby triggering the allocation of a Performance Allocation Amount to the Performance Allocation Share Class Fund.

The return of 37% in the year was the result of strong portfolio performance coupled with high demand for the Company's shares which traded at a premium to net asset value throughout the majority of the period. As the Company's December NAV was not published until mid-January and the portfolio enjoyed an exceptionally strong month of performance in December the Company's shares are shown as being at a discount to the December 31 NAV even though they traded at a premium to the published November NAV during December.

Ongoing Charges

The Company's ongoing charges ratio is 2%, calculated in accordance with the AIC recommended methodology, which excludes non-recurring costs and uses the average NAV in its calculation.

Principal and Emerging Risks and Uncertainties

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

The Company has five categories of risks in its risk register namely:

· Investment Risks

· Operational Risks

· Governance/Reputational Risks

· External Risks

· Emerging Risks

Longer Term Viability Statement

Assessing the prospects of the Company

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

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

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

(1) The Company incurred NAV losses of 37% of NAV over a three-year period ending 30 April 2024.

(2) No new capital was raised.

(3) $132m of private investments were funded from cash and by selling public portfolio investments.

To provide some context for the portfolio loss scenario of 37%, the worst-case annual losses for the NASDAQ Biotech Index (NBI) in the last 10 years were 8.9% in 2018 and 21.4% in 2016 respectively. The Company's three-year loss scenario exceeds the cumulative impact of both of these worst-case years of 28.3% spread over three years. The annualized volatility of the NBI index for the last 10 years is 25%, so an annual loss of 40% or more is only likely to occur every twenty years if the index returns are normally distributed. As there have been no consecutive losing years for the NBI in recent history a cumulative loss of between 28.3% and 40% is therefore assumed to be a reasonable stress test.

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

The period over which we confirm longer term viability

Within the context of the corporate planning framework discussed above, the Board has assessed the prospects of the Company over a three-year period ending 30 April 2024. Whilst the Board has no reason to believe the Company will not be viable over a longer period, given the inherent uncertainty involved, the period over which the Board considers it possible to form a reasonable expectation as to the Company's longer term viability, based on the stress testing scenario planning discussed above, is the three year period to April 2024. This period is used for the Investment Manager's business plans and has been selected because it presents the Board and therefore readers of the annual report with a reasonable degree of confidence whilst still providing an appropriate longer term outlook.

Confirmation of longer term viability

The Board confirms that its assessment of the principal and emerging risks facing the Company was robust.

Based upon the robust assessment of the principal and emerging risks facing the Company and its stress testing-based assessment of the Company's prospects, the Board confirms that it has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to April 2024.

Directors' Responsibilities Pursuant to Section 172 of the Companies Act 2006

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

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

Report of the Directors

The Directors hereby submit the annual report and audited financial statements for the Company for the year ended 31 December 2020.

Principal activities

Further information on the principal activities of the Company can be found above.

Business review

A review of the Company's business and its likely future development is provided in the Chairman's Statement above. The underlying investments of the Company are reviewed in the Investment Manager's Report above.

Results and distributions

The Company

The results of the Company for the year are shown in the audited statement of operations above.

The Net Asset Value of the Company as at 31 December 2020 was US$412.6 million (2019: US$214.4 million).

No dividends or distributions respectively were paid during the years ended 31 December 2020 and 31 December 2019. 

Capital Structure

The Company was incorporated as a limited liability corporation in Delaware on 16 February 2017. The Company was subsequently re-domiciled to Guernsey as a non-cellular company limited by shares under the Companies Law on 2 October 2019 with registered number 66847.

On re-domiciliation, the Company's fully paid issued share capital consisted of 147,144,094 Ordinary Shares, 1 Performance Allocation Share and 1 Management Share.

On 30 October 2019, the Company also issued 14,400,601 Ordinary Shares in connection with the IPO.

On 30 October 2019, all of the issued Ordinary Shares of the Company were listed and admitted to trading on the Specialist Fund Segment of the LSE ("SFS") under ticker symbol: RTW. The Company's issued Ordinary Share capital on initial admission to the SFS was 161,544,695 shares. The Management Share was redeemed upon initial admission. Cornerstone shareholders of the Company who held Ordinary Shares prior to initial admission were subject to certain lock-up restrictions for 12 months in respect of all but 22.5% of those Ordinary Shares, which were lifted on 30 October 2020.

As at 31 December 2020, the Company's issued share capital was 191,515,735 Ordinary Shares and 1 Performance Allocation Share. There are no shares held in treasury. Following year end, there have been further share issuances with the issued share capital as at 17 March 2021 now 204,047,167 Ordinary Shares.

Further issues of shares will only be made if the Directors determine such issues to be in the best interests of shareholders and the Company as a whole. Relevant factors in making such determination include net asset performance, share price rating, perceived investor demand and any regulatory restrictions. In the case of further issues of Ordinary Shares (or sales of Ordinary Shares from treasury), such Ordinary Shares will only be issued at prices which are not less than the NAV per Ordinary Share announced as of the end of the immediately preceding month in which such Ordinary Shares are being issued.

Annual General Meetings

The Annual General Meeting ("AGM") of the Company will be held on 22 June 2021 at 1st Floor, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey GY1 3JX. Details of the resolutions to be proposed at the AGM, together with explanations, appear in the Notices of Meetings which are being sent to shareholders in due course.

Members of the Board, including the Chairman and the Audit Committee Chairman, will be in attendance at the AGM and will be available to answer shareholder questions.

Listing requirements

The Company was a private unlisted investment vehicle throughout 2018 and until admission on 30 October 2019 was not subject to compliance with any corporate governance codes, laws, rules or regulations ordinarily applicable to public companies listed on an EU regulated market.

Following Initial admission to the SFS on 30 October 2019, the Company became subject to the Prospectus Rules, the Disclosure Guidance and Transparency Rules (as implemented in the UK through the Financial Services and Markets Act 2000 of the United Kingdom, as amended), the Market Abuse Regulation and the admission and disclosure standards of the London Stock Exchange.

Since admission to the SFS, the Company has complied with the applicable Listing Rules.

Common Reporting Standard and Tax Reporting Requirements

The Common Reporting Standard ("CRS"), formerly the Standard for Automatic Exchange of Financial Account Information, became effective on 1 January 2016. CRS is an information standard for the automatic exchange of information developed by the Organisation for Economic Co-operation and Development. CRS is a measure to counter tax evasion and it builds upon other information sharing legislation, such as FATCA, the UK-Guernsey Intergovernmental Agreement ("UK-Guernsey IGA") for the Automatic Exchange of Information, and the European Union Savings Directive. Under the UK-Guernsey IGA, certain disclosure requirements may be imposed in respect of certain shareholders in the Company who are, or are entities that are controlled by one or more, residents of the United Kingdom. In addition, under FATCA, the Company is required to make certain disclosures and reports to further compliance with the legislation's requirements. It is the Company's policy to comply with applicable requirements under CRS, the UK-Guernsey IGA and FATCA.

AIFMD

The Directors have considered the impact of AIFMD on the Company and its operations. The Company is a non-EU domiciled Alternative Investment Fund and the Investment Manager has been appointed as the Company's non-EU AIFM. As the Company is managed by a non-EU AIFM, only a limited number of provisions of AIFMD apply. The Investment Manager has made the notifications or applications and received, where relevant, approvals for the marketing of the Ordinary Shares to "professional investors" (as defined in AIFMD) in the following EEA States: the United Kingdom and the Netherlands.

Corporate governance statement

The Board recognises the value of sound corporate governance and, in particular, has regard to the requirements of the UK Code (available from the FRC's website, www.frc.org.uk).

The Company is a registered closed-ended investment scheme pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended, and the Registered Collective Investment Schemes Rules 2015 issued by the GFSC. The GFSC has issued a Finance Sector Code of Corporate Governance ("GFSC Code") that applies to all companies that hold a licence from the GFSC under the regulatory laws or which are registered or authorised as Collective Investment Schemes, which includes the Company. The GFSC has stated in the GFSC Code that companies which report against the UK Code or the AIC Code are deemed to meet their code, and need take no further action.

The Company's prospectus dated 14 October 2019 stated that the Company will be in compliance with the UK Code. The Company became a member of the AIC on listing and the Board of the Company has accordingly considered, and resolved to follow, the principles and recommendations of the AIC Code (available from the AIC's website, www.theaic.co.uk).

The AIC Code addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment companies such as the Company. The Board considers that reporting against the principles and recommendations of the AIC Code (which incorporates the UK Code) provides better information to shareholders whilst meeting the requirements of the GFSC Code.

In respect of the period from re-domiciliation until 30 October 2019, the date of admission to the SFS, the Company substantially complied in all material respects with the relevant provisions of the GFSC Code. As from the date of initial admission, the Company has voluntarily committed to comply with the 2019 AIC Code.

The Company currently complies with the principles and provisions of the AIC code.

For the reasons set out in the preamble to the UK Code, the Board considers certain of these provisions are not relevant to the position of the Company as an externally managed investment company. In particular all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no chief executive or any executive directors, employees or internal operations and has therefore not reported further in respect of these provisions.

Provision 14 of the AIC Code states a Board should consider appointing one independent non-executive Director to be the Senior Independent Director. The Board, having taken into account its small size and that the Chairman and two of the other three Directors are each similarly independent and non-executive, considers it unnecessary to appoint such a Senior Independent Director. All members of the Board are available to shareholders if they have unresolved concerns.

The need for an internal audit function is discussed in the Report of the Audit Committee.

The Board

The Board monitors developments in corporate governance to ensure the Board remains aligned with best practices especially with respect to the increased focus on diversity. The Board acknowledges the importance of diversity, including gender, for the effective functioning of the Board and commits to supporting diversity in the boardroom. It is the Board's ongoing aspiration to have a well-diversified representation. The Board also values diversity of business skills and experience because Directors with diverse skill sets, capabilities and experience gained from different geographical backgrounds enhance the Board by bringing a wide range of perspectives to the Company. No specific diversity parameters have been set as the Board believes that all appointments should be made on merit and taken in the context of skills, knowledge and experience required for an effective Board.

The Board believes the current Board members have the appropriate qualifications, experience and expertise to manage the Company. The Director's biographies can be found below.

The Directors of the Company at the date of this report are William Simpson (Chairman), Paul Le Page (Chair of Audit Committee), William Scott and Stephanie Sirota.

The Board meets on at least a quarterly basis. The dates for each scheduled meeting are planned at the beginning of the year and confirmed in writing in accordance with the Company's articles of incorporation. Meetings for urgent issues may be and are convened at short notice if all Directors are informed. In addition to formal Board and/or committee meetings and, to the extent practicable and appropriate, the Directors maintain close contact with each other and the Administrator, by email and conference calls, for the purpose of keeping themselves informed about the Company's activities. The Board requires information to be supplied in a timely manner by the Administrator and other advisors in a form and of a quality appropriate to enable it to discharge its duties.

The Company has adopted a share dealing code for the Board and will seek to ensure compliance by the Board with the terms of the share dealing code. The share dealing code is compliant with the EU Market Abuse Regulation.

Board tenure and re-election

Each Director will retire at each Annual General Meeting subsequent to his or her election and be eligible for re-election by the Company at such Annual General Meeting.

A Director who retires at an Annual General Meeting may, if willing to continue to act, be elected or re-elected at that meeting. If, at a general meeting at which a Director retires, the Company neither re-elects that Director nor appoints another person to the Board in the place of that Director, the retiring Director shall, if willing to act, be deemed to have been re-elected unless at the general meeting it is resolved not to fill the vacancy or unless a resolution for the re-election of the Director is put to the meeting and not passed.

The Chairman, Mr Le Page and Ms Sirota have been members of the Board since their appointment on 2 October 2019. Mr Scott was appointed on 3 October 2019.

Directors do not have service contracts. Directors are appointed under letters of appointment, copies of which are available at the registered office of the Company. The Board considers its composition and succession planning on an on-going basis.

Directors' remuneration

The Directors shall be remunerated at such a rate as the Directors shall determine provided that the aggregate amount of such fees shall not exceed US$300,000 per annum.

During the year to 31 December 2020 the Directors' remuneration was paid as follows (of which US$53,136 (2019: US$33,140) was outstanding at the year end):

*Directors' remuneration for 31 December 2019 is for the three month period from each Director's appointment in October 2019.

Directors' conflicts of interest

All of the Directors are non-executive. William Simpson and William Scott are directors of a number of funds managed by members of the Man group of companies. Paul Le Page was employed by Man Group until 31 December 2019 and was a director of the investment managers of those funds. None of the Directors were responsible for the appointment of the others, the decision in respect of which was made by an independent party. Having considered the information disclosed above, the Board have concluded that William Simpson, Paul Le Page, and William Scott remain independent under provision 10 of the AIC Code. The Board considers Messrs Simpson, Le Page and Scott as independent of each other and free from any business or other relationship that could materially interfere with the exercise of their independent judgment. The Board when taken as a whole is independent of the Investment Manager. Ms Sirota is a Board representative of the Investment Manager and is therefore not considered independent.

The Chairman of the Board must be independent and is appointed in accordance with the Company's articles of incorporation. Mr Simpson's independence is evaluated annually and he is considered to be independent because he:

· has no direct or indirect current or historical employment with the Investment Manager; and

· has no current directorships in any other entities for which the Investment Manager provide services.

Duties and responsibilities

The Board has overall responsibility for maximising the Company's success by directing and supervising the affairs of the business and meeting the appropriate interests of shareholders and relevant stakeholders, while enhancing the value of the Company and also ensuring the protection of investors. A summary of the Board's responsibilities is as follows:

· statutory obligations and public disclosure;

· strategic matters and financial reporting;

· risk assessment and management including reporting, compliance, governance, monitoring and control; and

· other matters having a material effect on the Company.

The Board is responsible to shareholders for the overall management of the Company. The Board has adopted a Schedule of Matters Reserved for the Board which sets out the particular duties of the Board, which demonstrates the seriousness with which it takes its fiduciary responsibilities. Such reserved powers include decisions relating to the determination of investment policy and approval of changes in strategy, capital structure, statutory obligations and public disclosure, and entering into any material contracts by the Company.

The Directors have access to the advice and services of the Administrator, which is responsible to the Board for ensuring that Board procedures are followed and that it complies with Companies Law and applicable rules and regulations of the GFSC and the LSE. Where necessary, in carrying out their duties, the Directors may seek independent legal or other professional advice and services at the expense of the Company. As a result of the use of professional service providers and the nature of the Company's operations, the Company does not have any employees.

The Company maintains appropriate Directors' and Officers' liability insurance in respect of legal action against its Directors.

The Board's responsibilities for the Annual Report are set out in the Directors' Responsibilities Statement below. The Board is also responsible for issuing appropriate half-yearly financial reports and other price-sensitive public reports.

The primary focus at Board meetings is to review investment performance and associated matters such as share price discount/premium management, investor relations, peer group information, gearing and industry issues.

The attendance record of the Directors for the year is set out below:

The Board will meet at least four times a year with further ad hoc Board and Board Committee meetings as required. Between meetings, there is regular contact with the Secretary and the Company's Broker, as necessary.

* Ms Sirota is not a member of the Audit Committee, Management Engagement Committee or Nomination and Remuneration Committee, however from time to time she is invited to attend and did so during the year.

Board of Directors

William Simpson - Chairman - Guernsey resident

William Simpson is the Chairman and an independent director based in Guernsey providing services to investment and other financial services companies. William has over 30 years' experience within the financial services industry. He previously practiced law in the course of which he advised on the establishment of a wide range of investment funds and related matters. William graduated in law from Leeds University and first qualified as an English barrister. William is a member of the Guernsey Bar. William also holds directorships at Ninety One Premier Funds PCC Limited, Handelsbanken Alternatives Fund Limited, AHL Strategies PCC Limited, Man AHL Diversified PCC Limited and Alpha Real Trust Limited.

Paul Le Page - Chairman of the Audit Committee - Guernsey resident

Paul Le Page is a former executive Director and Senior Portfolio Manager of FRM Investment Management Limited, a subsidiary of Man Group, and holds non-executive directorships at a number of London Stock Exchange listed investment funds. Mr. Le Page is Audit Committee Chair of UK Mortgages Limited and Bluefield Solar Income Fund Limited and was previously Audit Committee Chair of Thames River Multi Hedge PCC Limited and Cazenove Absolute Equity Limited. Mr. Le Page has 17 years' Audit Committee experience within the closed end investment fund sector and has a broad-based knowledge of the global investment industry and product structures. Mr Le Page graduated from University College London and later received an MBA from Heriot Watt University.

William Scott - Chairman of the Nomination and Remuneration Committee - Guernsey resident

William Scott serves as an independent non-executive director of a number of investment companies and funds. From 2003 to 2004, Mr. Scott worked as Senior Vice President with FRM Investment Management Limited, now part of Man Group. Previously (from 1989¬2002), Mr. Scott was a portfolio manager and latterly a director at Rea Brothers (which became part of the Close Brothers group in 1999 and where he was a director of Close Bank Guernsey Limited) and before that Assistant Investment Manager with the London Residuary Body Superannuation Scheme (1987-1989). Mr. Scott graduated from the University of Edinburgh in 1982 and is a Chartered Accountant having qualified with Arthur Young (now EY) in 1987. Mr. Scott also holds the Securities Institute Diploma and is a Chartered Fellow of the Chartered Institute for Securities & Investment. He is also a Chartered Wealth Manager. His other directorships include Axiom European Financial Debt Fund Limited and Worsley Investors Limited, both of which are listed on the Premium Segment of the London Stock Exchange.

Stephanie Sirota - Non-executive Director - non-UK resident

Stephanie A. Sirota, serves as a Partner and Chief Business Officer at RTW Investments, LP. Ms. Sirota is responsible for strategy and oversight of the firm's business development and strategic partnerships with counterparties including limited partners, banks and academic institutions. She is also responsible for shaping the firm's governance policies underscoring impact and sustainability. Ms. Sirota has a decade of deal experience in financial services. Prior to joining the Investment Manager, from 2006 to 2010, she served as a director at Valhalla Capital Advisors, a macro and commodity investment manager. From 2000 to 2003, Ms. Sirota worked in the New York and London offices of Lehman Brothers, where she advised on various mergers & acquisitions, IPOs, and capital market financing transactions with a focus on cross-border transactions for the firm's global corporate clients. She began her career on the Fixed Income trading desk at Lehman Brothers, structuring derivatives for municipal issuers from 1997 to 1999. Ms. Sirota graduated with honours from Columbia University and also received a Master's Degree from the Columbia Graduate School of Journalism. She has contributed to Fortune Magazine and ABCNews.com and is a supporter of the arts, science, and children's initiatives. She serves as Co-Chairman of the Council of the Phil at the New York Philharmonic and as President of RTW Charitable Foundation. Ms. Sirota serves as Vice President of Corporate Strategy and Corporate Communications of Health Sciences Acquisitions Corporation 2 (HSAC2) and served in the same role at Health Sciences Acquisitions Corporation (HSAC) until December 2019.

The performance and effectiveness of the Directors will be assessed annually having regard to the specific responsibilities of each Director as described in their service agreements.

Shareholdings of the Directors

Directors of the Company and their beneficial interests in the Company as at 31 December 2020 are detailed below:

William Simpson has acquired an additional 25,000 shares since 31 December 2020.

Committees of the Board

Audit Committee

The Company has an Audit Committee with formally delegated duties and responsibilities within written terms of reference. Further information on the Audit Committee is included in the Report of the Audit Committee below.

Management Engagement Committee

The Management Engagement Committee is chaired by William Simpson. The committee currently consists of William Simpson, William Scott and Paul Le Page. The Management Engagement Committee meets at least once a year pursuant to its terms of reference which are available on the Company's website www.rtwfunds.com/venture-fund.

The Management Engagement Committee provides a formal mechanism for the review of the performance of the Company's advisors, including the Investment Manager. It carries out this review through consideration of a number of objective and subjective criteria and through a review of the terms and conditions of the advisors' appointments with the aim of evaluating performance, identifying any weaknesses and ensuring value for money for the Company's shareholders.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is chaired by William Scott. The committee currently consists of William Scott, William Simpson and Paul Le Page. The Nomination and Remuneration Committee meets at least once a year pursuant to its terms of reference which are available on the Company's website www.rtwfunds.com/venture-fund.

Regarding nomination, the Nomination and Remuneration Committee's remit is to review regularly the structure, size and composition of the Board, to give full consideration to succession planning for Directors, to keep under review the leadership needs of the Company and be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise. The Board believes that, as a whole, it comprises an appropriate balance of skills, experience and knowledge. The Board also believes that diversity of experience and approach, including gender diversity, amongst Board members is of great importance and it is the Company's policy to give careful consideration to issues of Board balance and diversity when making new appointments.

Regarding remuneration, the Nomination and Remuneration Committee determines and agrees with the Board the remuneration of the Company's Chairman and non-executive Directors and in determining such remuneration, takes into account all factors which it deems necessary including any relevant legal requirements, the provisions and recommendations in the AIC Code, the Listing Rules and associated guidance.

Board performance and evaluation

In accordance with Provision 26 of the AIC Code, the Board is required to undertake a formal and rigorous evaluation of its performance on an annual basis. Such an evaluation of the performance of the Board as a whole and the Chairman will be carried out under the mandate of the Board in the form of self-appraisal questionnaires and a detailed discussion to determine effectiveness and performance in various areas as well as the Directors' continued independence. The Directors believe that the current mix of skills, experience, ages and length of service of the Directors is appropriate to the requirements of the Company. With any new director appointment to the Board, induction training will be provided.

Internal control and financial reporting

The Directors acknowledge that they are responsible for establishing and maintaining the Company's system of internal control and reviewing its effectiveness. Internal control systems are designed to manage rather than eliminate the failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatements or loss. The Directors review all controls including operations, compliance and risk management. The key procedures which have been established to provide internal control are:

• The Board monitors the actions of the Company and undertakings of any external consultant as appointed by the Company at regular Board meetings and is given frequent updates on developments arising from the operations and strategic direction of the underlying investee companies. The Board has also delegated administration and company secretarial services to the Administrator; however, it retains accountability for all functions it delegates.

• The Board clearly defines the duties and responsibilities of the Company's agents and advisors and appointments are made by the Board after due and careful consideration. The Board monitors the ongoing performance of such agents and advisors and will continue to do so.

• The Administrator maintains a system of internal control on which they report to the Board. The Board has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Administrator provide sufficient assurance that a sound system of risk management and internal control, which safeguards shareholders' investment and the Company's assets, is maintained. An internal audit function specific to the Company is therefore considered unnecessary.

The systems of control referred to above are designed to ensure effectiveness and efficient operation, internal control and compliance with laws and regulations. In establishing the systems of internal control, regard is paid to the materiality of relevant risks, the likelihood of costs being incurred and costs of control.

Relations with shareholders

The Board welcomes shareholders' views and places great importance on communication with its shareholders. The Company's Annual General Meeting provides a forum for shareholders to meet and discuss issues with the Directors of the Company. The Chairman and other Directors are also available to meet with shareholders at other times, if required. In addition, the Company maintains a website which contains comprehensive information (www.rtwfunds.com/venture-fund), including company notifications, share information, financial reports, monthly NAVs, investment objectives and policy, investor contacts and information on the Board and corporate governance.

Major Shareholders

As at 17 March 2021, insofar as is known to the Company, the following persons were interested, directly or indirectly, in 5 per cent. or more of the Ordinary Shares in issue:

Details of the voting rights can be found below.

Dividends

The Company does not anticipate paying any dividends on its Ordinary Shares, as it intends to re-invest proceeds received from Portfolio Company sales or distributions. There have been no material changes in the Company's dividend policy from that disclosed in the prospectus published by the Company on 14 October 2019.

Total Return for the year ended 31 December 2020

For the year ended 31 December 2020, the Company recorded a net total return based on NAV per share of 54 per cent.

Directors' authority to issue shares

Subject to the Company's Articles of Association the Directors have the power to issue an unlimited number of shares.

Directors' authority to buy back shares

The current authority of the Company to make market purchases of up to 50 million Ordinary Shares (or, if lower, a maximum of 14.99 per cent. of the issued Share Capital) as authorised at the AGM of the Company on 25 June 2020. At the AGM scheduled to take place on 22 June 2021 the Board will seek to renew such authority. Any buy back of Ordinary Shares will be made subject to Companies Law and within any guidelines established from time to time by the Board and the making and timing of any buy backs will be at the absolute discretion of the Board and not at the option of the shareholders. Ordinary Shares will only be repurchased at a price which, after repurchase costs, represents a discount to the Net Asset Value per Ordinary Share and where the Directors believe such purchases will enhance shareholder value. Such purchases will also only be made in accordance with the Listing Rules of the UK Listing Authority which provide that the price to be paid must not be more than 5 per cent above the average of the middle market quotations for the Ordinary Shares for the five business days before the shares are purchased unless previously advised to shareholders.

In accordance with the Company's Articles and Companies Law up to 10 per cent. of the Company's shares may be held as treasury shares. The Company has not held any shares in treasury at any time.

Articles of Incorporation

The Company's Articles may only be amended by special resolution of the shareholders and if the amendment affects the rights of the holders of shares, by a separate resolution of such holders only.

Change of control

There are no agreements that the Company considers significant and to which the Company is party that would take effect, alter or terminate upon change of control of the Company following a takeover bid.

Anti-Bribery and Corruption Policy

The Board has a zero tolerance approach to instances of bribery and corruption and has reiterated its commitment to carry out business fairly, honestly and openly. Accordingly, it expressly prohibits any Director or associated persons, when acting on behalf of the Company, from accepting, soliciting, paying, offering or promising to pay or authorise any payment, public or private, in the United Kingdom or abroad to secure any improper benefit for themselves or for the Company. The Investment Manager has also adopted a zero tolerance approach to instances of bribery and corruption. The Board insists on strict observance with these same standards by its service providers in their activities for the Company and continues to refine its process in this regard.

Criminal Finances Act

The Board has a zero tolerance commitment to preventing persons associated with it from engaging in criminal facilitation of tax evasion. The Board expects the same of its service providers and will not work with service providers that it knows do not demonstrate the same zero tolerance commitment to preventing persons associated with it from engaging in criminal facilitation of tax evasion.

Environment, Employees, Human Rights and Social Matters

The Company has an investment management contract with the Investment Manager. It has no employees and all of its Directors are non-executive, with day-to-day activities being carried out by third party service providers. There are therefore no disclosures to be made in respect of its employees. Further, because the Company is a closed-ended investment company with no employees, its environmental impact is minimal. The Board notes that the companies in which the Company invests directly or indirectly may have an environmental, employee, human rights or social impact of which the Board has no visibility or control.

The UK Modern Slavery Act

The Board conducts the business of the Company ethically and with integrity, and has a zero tolerance policy towards modern slavery in all its forms. As the Company has no employees, all its Directors are non-executive and all its functions are outsourced, there are no further disclosures to be made in respect of employees and human rights. The Board notes that the companies in which the Company invests directly or indirectly may have an employee, community, human rights or social impact of which the Board has no visibility or control.

Certain Service Providers

Independent Auditor

KPMG Channel Islands Limited ("KPMG"), who are Chartered Accountants and are registered auditors qualified to practice, have been appointed to serve as the Company's auditor (the "Independent Auditor"). In such capacity, the Independent Auditor is responsible for auditing and expressing an opinion on the financial statements of the Company in accordance with applicable law and auditing standards.

Investment Manager

The Directors are responsible for the determination of the Company's investment policy and have overall responsibility for the Company's business activities. The Company and the Investment Manager have entered into the Investment Management Agreement (as amended, supplemented or modified from time to time), pursuant to which the Investment Manager has been appointed as the Company's investment manager and has been delegated the authority and responsibility to manage the Company's investment portfolio.

Principal and emerging risks and uncertainties

The Company's assets consist of investments in promising therapies and technologies in the pharmaceutical industry. There is inherent uncertainty in the long term viability of developing biopharmaceutical technologies and whether these technologies can translate scientific theory into commercially viable business opportunities. Its principal and emerging risks are therefore related to the particular circumstances of the businesses in which it is invested. The Company seeks to mitigate these risks through active asset management initiatives and carrying out due diligence work on potential targets before entering into any investments.

Each Director is aware of the risks inherent in the Company's business and understands the importance of identifying, evaluating and monitoring these risks. The Board has adopted procedures and controls that enable it to manage these risks within acceptable limits and to meet all of its legal and regulatory obligations.

The Board considers the process for identifying, evaluating and managing any significant risks faced by the Company on an on-going basis and these risks are reported and discussed at Board Meetings. It ensures that effective controls are in place to mitigate these risks and that a satisfactory compliance regime exists to ensure all applicable local and international laws and regulations are upheld. Particular attention has been given to the effectiveness of controls to monitor liquidity risk, asset values and counterparty exposure.

For each material risk, the likelihood and consequence are identified, management controls and frequency of monitoring are confirmed and results reported and discussed at the quarterly Board meetings and through updating of the Company's risk matrix. An extraction of the highest rated risks post mitigation forms the basis of the Principal and Emerging Risks and Uncertainties disclosure in the Strategic Report.

Further details on the Company's principal risks and uncertainties can be found above.

The financial risks of the Company are discussed in Note 8 to the financial statements.

The Company's other risk factors are fully discussed in the Company's prospectus, available on the Company's website (www.rtwfunds.com/venture-fund) and should be reviewed by Shareholders.

Going concern

In forming a view on whether the Company is a Going Concern, the Directors have considered the following factors:

· A three year stressed cash-flow forecast prepared by the Investment Manager for the purposes of assessing viability;

· A viability and going concern memorandum from the Investment Manager taking into account the impact of COVID-19 on the Company's business model and operations;

· The Company's ability to raise additional capital both during and after the current financial year-end.

After making enquiries and given the nature of the Company and its investments, the Directors are satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements, and, after due consideration, the Directors consider that the Company is able to continue for the foreseeable future.

By order of the Board

William Simpson

Chairman

28 April 2021

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations. 

Company law requires the directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with accounting principles generally accepted in the United States of America and applicable law.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In preparing these financial statements, the Directors are required to: 

· select suitable accounting policies and then apply them consistently; 

· make judgements and estimates that are reasonable, relevant and reliable; 

· state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and 

· use the going concern basis of accounting unless liquidation is imminent. 

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 

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.

The Directors who hold office at the date of approval of this Director's Report confirm that so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware, and that each Director has taken all the steps he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

· the Annual Report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

By order of the Board

William Simpson Paul Le Page

Chairman Director

28 April 2021 28 April 2021

Report of the Audit Committee

The Audit Committee, chaired by Paul Le Page, operates within clearly defined terms of reference which include all matters indicated by DTR 7.1 and the AIC Code. Its other members are William Simpson and William Scott. Only independent directors can serve on the Audit Committee and members of the Audit Committee must have no current links with the Company's external auditor and must be independent of the Investment Manager. The Audit Committee can request the attendance of the Investment Manager, the auditors or any service provider at its meetings. The performance of the chairman of the Audit Committee is reviewed on an annual basis and the membership of the Audit Committee and its terms of reference are kept under review. The Audit Committee meets no less than twice a year in Guernsey, and meets the external auditor at least once a year in Guernsey. The Audit Committee met four times in the year to 31 December 2020.

The Board has taken note of the requirement that at least one member of the Audit Committee should have recent and relevant financial experience and is satisfied that the Audit Committee is properly constituted in that respect, with all members being highly experienced and, in particular two members having backgrounds as chartered accountants.

The Board has also considered the inclusion of the Chairman within the Audit Committee and having taken into account that the Chairman is independent and non-executive, believes it appropriate for the Chairman to be a member.

The duties of the Audit Committee in discharging its responsibilities include reviewing the Interim Report, Annual Report and Audited Financial Statements, the valuation of the Company's investment portfolio, the system of internal controls, and the terms of appointment of the external auditor together with their remuneration. It is also the formal forum through which the external auditor reports to the Board of Directors and shall meet not less than twice a year and at such other times as the Audit Committee chairman shall require. The objectivity of the external auditor is reviewed by the Audit Committee, which also reviews the terms under which the external auditor is appointed to perform non-audit services and the fees paid to the external auditor or their affiliated firms overseas.

The Audit Committee also reviews, considers and, if thought appropriate, recommends for the purposes of the Company's financial statements, valuations prepared by the Investment Manager.

The main duties of the Audit Committee are:

· giving full consideration and recommending to the Board for approval of the contents of the Interim Report and Annual Report and Audited Financial Statements and reviewing the external auditor's report thereon;

· reviewing the scope, results, cost effectiveness, independence and objectivity of the external auditor;

· reviewing the draft valuation of the Company's investments prepared by the Investment Manager, and making a recommendation to the Board on the valuation of the Company's investments;

· reviewing and recommending to the Board for approval of the audit, audit related and non-audit fees payable to the external auditor and the terms of their engagement;

· reviewing and approving the external auditor's plan for the following financial year;

· reviewing the appropriateness of the Company's accounting policies;

· ensuring the standards and adequacy of the service provider's control systems;

· reviewing and considering the UK Code, the AIC Code and the FRC Guidance on Audit Committees; and

· reviewing the risks facing the Company and monitoring the risk matrix.

The Audit Committee is required to report its findings to the Board, identifying any matters on which it considers that action or improvement is needed, and make recommendations on the steps to be taken.

The external auditor is invited to attend the Audit Committee meetings at which the Interim Reports and Annual Reports are considered and at which they have the opportunity to meet with the Audit Committee without representatives of any external consultant as appointed by the Investment Manager being present at least once a year.

Financial reporting

The primary role of the Audit Committee in relation to the financial reporting is to review with the Administrator, any external consultant as appointed by the Investment Manager and the external auditor the appropriateness of the Interim Reports and Annual Reports, concentrating on, amongst other matters:

· the quality and acceptability of accounting policies and practices;

· the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements;

· material areas in which significant judgements have been applied or there has been discussion with both any external consultant as appointed by the Investment Manager and the external auditor;

· whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy; and

· any correspondence from regulators in relation to the Company's financial reporting.

To aid its review, the Audit Committee considers reports from the Investment Manager and any external consultant as appointed by the Investment Manager and also reports from the external auditor on the outcomes of their interim review and annual audit.

Meetings

The Audit Committee has met on four occasions during the year. The matters discussed at these meetings were:

· review of the terms of reference of the Audit Committee to confirm that they are appropriate to the business of the Audit Committee and the current regulatory environment in which the Company operates;

· semi-annual reviews of the valuations of the Company's investments;

· review of the accounting policies and format of the financial statements;

· oversee the relationship with the external auditor;

· discussion and approval of the fee for the external audit;

· consideration of the requirement for an internal audit function;

· consider and make recommendations to the Board regarding the appointment of third party service providers and the adequacy of their arrangements; and

· review of the Company's key risks and internal controls.

Primary area of judgement

The Audit Committee determined that the key risk of misstatement of the Company's financial statements related to the valuation of investment in securities, at fair value, in the context of the judgements necessary to evaluate current fair values.

As outlined in Note 2 to the financial statements of the Company, the total carrying value of the Company's investments in securities at fair value as at 31 December 2020 was US$390.8 million (2019: US$170.7 million), of which US$47.2 million (2019: US$26.1 million) related to private company investments. Market quotations will be available for those financial assets that are listed and traded and have an active market quote.

For private company investments, the value of the Company's investments is based on the value of the relevant underlying investee companies as determined by the Investment Manager. The valuation of the Company's private and restricted investments and the methodology used for the year end valuation and constitution of the Investment Manager's Valuation Committee was discussed with the Investment Manager and with the external auditor at a Board meeting held on 2 February 2021. The Independent Valuer, as appointed by the Investment Manager, carries out a valuation semi-annually on the private company investments. 

The Audit Committee has reviewed the work of the Investment Manager. The Investment Manager confirmed to the Audit Committee that the valuation methodology had been applied consistently during the year. After reviewing the scope and results of the work of the external auditor the Audit Committee concluded that they had not identified any material errors or inconsistencies.

The external auditor explained the results of their audit work on the valuations, including their challenge of management's underlying projections, the economic assumptions, illiquidity discounts and prices used. On the basis of their audit work, there were no material adjustments proposed to those valuations as approved by the Audit Committee.

Internal audit

The Audit Committee shall consider at least once a year whether there is a need for an internal audit function. Currently, the Audit Committee does not consider there to be a need for an internal audit function, given that there are no employees in the Company and all outsourced functions are with parties who have their own internal controls and procedures.

The Audit Committee worked with the Administrator and the Investment Manager to structure a risk matrix for the Company, which considered the controls applied by the Board, the Investment Manager and key service providers. The matrix was reviewed with the Investment Manager in light of the ongoing COVID-19 pandemic and was used to form the basis of the Company's principal and emerging risk disclosures in the Strategic Report above.

The Audit Committee subsequently reviewed a COVID-19 impact assessment prepared by the Investment Manager as part of the final review process for these financial statements.

Appointment of the external auditor

KPMG has been appointed as the statutory external auditor of the Company since the Company re-domiciled to Guernsey on 2 October 2019. The Audit Committee held meetings with KPMG before the start of the audit to discuss formal planning and to discuss any possible issues along with the scope of the audit and appropriate timetable. Informal meetings have also been held with the Chairman of the Audit Committee in order that the Chairman is kept up to date with the progress of the audit and formal reporting requirement by the Audit Committee.

The objectivity of the external auditor is reviewed by the Audit Committee which also reviews the terms under which the external auditor may be appointed to perform non-audit services. The Audit Committee reviews the scope and results of the audit, its cost effectiveness and the independence and objectivity of the external auditor, with particular regard to any non-audit work that the external auditor may undertake and the level of fees associated to this non-audit work. In order to safeguard external auditor independence and objectivity, the Audit Committee ensures that audit related, non-audit, or advisory services provided by the external auditor do not conflict with its statutory audit responsibilities. Audit related services will generally only cover reviews of interim financial statements and capital raising work. Any non-audit services conducted by the external auditor outside of the reviews of interim financial statements requires the consent of the Audit Committee before being initiated.

KPMG's audit fee for the year ended 31 December 2020 was £127,000 (2019: £117,500). During the prior year, KPMG was paid a reporting accountant fee of £120,000 by the Investment Manager as part of the Company's listing expenses.

The external auditor may not undertake any work for the Company in respect of the following matters - preparation of the financial statements, preparation of valuations used in financial statements, provision of investment advice, taking management decisions or advocacy work in adversarial situations.

The Audit Committee reviews the scope and results of the audit, its cost effectiveness and the independence and objectivity of the Auditor, with particular regard to the level of non-audit fees. During the prior year, KPMG was also engaged as reporting accountant in connection with the Company's listing which is a permissible service under the FRC Ethical Standards for a company's auditor to undertake. The Audit Committee considers KPMG to be independent of the Company and that the provision of such non-audit services is not a threat to the objectivity and independence of the conduct of the audit as appropriate safeguards are in place.

To fulfil its responsibility regarding the independence of the external auditor, the Audit Committee considered:

- audit personnel in the audit plan for the current year;

- a report from the external auditor describing its arrangements to identify, report and manage any conflicts of interest; and

- the extent of non-audit services provided by the external auditor.

To assess the effectiveness of the external auditor, the Audit Committee reviewed:

- the external auditor's fulfilment of the agreed audit plan and variations from it;

- reports highlighting the findings that arose during the course of the audit; and

- feedback from the Investment Manager and any external consultant as appointed by the Investment Manager in evaluating the performance of the audit team.

The Audit Committee is satisfied with KPMG's effectiveness and independence as external auditor having considered the degree of diligence and professional scepticism demonstrated by them. Having carried out the review described above and having satisfied itself that the external auditor remains independent and effective, the Audit Committee has recommended to the Board that KPMG be reappointed as external auditor for the year ending 31 December 2021.

Annual report

The Audit Committee members have each reviewed this annual report and earlier drafts of it in detail, comparing its content with their own knowledge of the Company, reporting requirements and shareholder expectations. Formal meetings of the Audit Committee have also reviewed the report and its content and have received reports and explanations from the Company's service providers about the content and the financial results. The Audit Committee has concluded that the annual report, taken as a whole, is fair, balanced and understandable, and that the Board can reasonably and with justification make the statement of Directors' responsibilities above.

Key activities of the Audit Committee

During the course of the year the Audit Committee undertook a number of projects in addition to its regular duties, which included reviewing the terms of the performance fee allocation accrual and payment process and working with RTW to enhance the Company's viability stress test model. The Audit Committee also reviewed the first NAV produced following the administrator change and the process that was used by the administrator to verify the NAV.

On behalf of the Audit Committee,

Paul Le Page

Chairman of the Audit Committee

28 April 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF

RTW VENTURE FUND LIMITED

Our opinion is unmodified

We have audited the financial statements of RTW Venture Fund Limited (the "Company"), which comprise the statement of assets and liabilities including the condensed schedule of investments as at 31 December 2020, the statements of operations, changes in net assets and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements:

· give a true and fair view of the financial position of the Company as at 31 December 2020, and of the Company's financial performance and cash flows for the year then ended;

· are prepared in conformity with U.S. generally accepted accounting principles; and

· comply with the Companies (Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including FRC Ethical Standards, as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Key audit matters: our assessment of the risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matter was as follows (unchanged from 2019):

Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at $8.3m, determined with reference to a benchmark of net assets of $412.6m, of which it represents approximately 2.0% (2019: 2.0%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole. Performance materiality for the Company was set at 75% (2019: 75%) of materiality for the financial statements as a whole, which equates to $6.2m. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.

We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding $0.4m, in addition to other identified misstatements that warranted reporting on qualitative grounds. 

Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above. 

Going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (the "going concern period").

In our evaluation of the directors' conclusions, we considered the inherent risks to the Company's business model and analysed how those risks might affect the Company's financial resources or ability to continue operations over the going concern period. The risk that we considered most likely to affect the Company's financial resources or ability to continue operations over this period was the availability of capital to meet operating costs and other financial commitments.

We considered whether this risk could plausibly affect the liquidity in the going concern period by comparing severe, but plausible downside scenarios that could arise from this risk against the level of available financial resources indicated by the Company's financial forecasts.

We considered whether the going concern disclosure in note 1 to the financial statements gives a full and accurate description of the directors' assessment of going concern.

Our conclusions based on this work:

· we consider that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate;

· we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the going concern period; and

· we found the going concern disclosure in the notes to the financial statements to be acceptable.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in operation.

Fraud and breaches of laws and regulations - ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud ("fraud risks") we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

· enquiring of management as to the Company's policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud;

· reading minutes of meetings of those charged with governance; and

· using analytical procedures to identify any unusual or unexpected relationships.

As required by auditing standards, and taking into account possible incentives or pressures to misstate performance and our overall knowledge of the control environment, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries, and the risk of bias in accounting estimates such as valuation of private unquoted life science investments. On this audit we do not believe there is a fraud risk related to revenue recognition because the Company's revenue streams are simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks.

We performed procedures including:

· identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to supporting documentation;

· incorporating an element of unpredictability in our audit procedures; and

· assessing significant accounting estimates for bias.

Further detail in respect of valuation of private unquoted life science investments is set out in the key audit matter section of this report.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Company's regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity's procedures for complying with regulatory requirements.

The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

The Company is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or impacts on the Company's ability to operate. We identified financial services regulation as being the area most likely to have such an effect, recognising the regulated nature of the Company's activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. 

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

We have nothing to report on other matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

· the Company has not kept proper accounting records; or

· the financial statements are not in agreement with the accounting records; or

· we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit.

Respective responsibilities

Directors' responsibilities

As explained more fully in their statement set out above, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; 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. 

Auditor's responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. 

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

The purpose of this report and restrictions on its use by persons other than the Company's members, as a body

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's 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 and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Dermot Dempsey

For and on behalf of KPMG Channel Islands Limited

Chartered Accountants and Recognised Auditors

Guernsey

28 April 2021

Statement of Assets and Liabilitiesas at 31 December 2020 and 31 December 2019

(Expressed in United States Dollars)

The audited financial statements of the Company were approved and authorised for issue by the Board of Directors on 28 April 2021 and signed on its behalf by:

William Simpson Paul Le Page

Chairman Director

See accompanying notes to the financial statements.

Condensed Schedule of Investments

as at 31 December 2020

(Expressed in United States Dollars)

*No individual investment security or contract constitutes greater than 5 percent of net assets.

See accompanying notes to the financial statements.

Condensed Schedule of Investments (continued)

as at 31 December 2020

(Expressed in United States Dollars)

See accompanying notes to the financial statements.

Condensed Schedule of Investments (continued)

as at 31 December 2020

(Expressed in United States Dollars)