Rtw Biotech Regulatory News (RTW)

LEI: 549300Q7EXQQH6KF7Z84

24 September 2020

RTW Venture Fund Limited

Interim Report for the period ended 30 June 2020

RTW Venture Fund Limited (the "Company") is pleased to announce its Half Year Results for the period ended 30 June 2020.

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.

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 US healthcare 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.

Chairman's Statement

It is with great pleasure that I present the 2020 interim results for RTW Venture Fund Limited (the "Company"). The Company was admitted to the Specialist Fund Segment of the London Stock Exchange (LSE) just under a year ago on 30 October 2019, and I am pleased to report significant performance milestones following its admission and through the first half of 2020.

2020 Overview

As expected, the Company was ably managed in the first half of the year by its New York-based Investment Manager, RTW Investments, LP, a global leader in full-lifecycle healthcare investing with a special focus on transformative biopharmaceutical and medical technology assets. Building upon strong performance in 2019, they continued executing our agreed strategy in 2020. Even though the COVID-19 pandemic caused significant turmoil in the global markets, the Company and the Investment Manager remained focussed on the fundamentals and valuation of underlying companies. This allowed the Company to continue building its portfolio of innovative biotechnology and medical technology companies developing breakthrough therapies and providing financing strategies at various points in the individual life cycles of these companies.

Despite the market correction in March 2020 the Company's performance was strong. In the period from the 2019-year end to 30 June 2020, the NAV grew from US$205.7 million or US$1.27 per Ordinary Share to US$238.3 million or US$1.34 per Ordinary Share, representing an increase of c. 5 per cent. The Company's NAV followed a similar path to equity markets with a significant reduction of 20 per cent. in the first quarter, followed by a strong rebound of 31.7 per cent. in the second quarter.

At the beginning of the reporting period, the Company had seven portfolio companies, all of which initiated as private investments, but two of which had already been listed publicly by then. During the reporting period the Company made six additional private investments. In addition to avoid the performance drag associated with cash awaiting deployment into new private assets, the Company invested in a portfolio of listed companies or non-core portfolio assets selected by the Investment Manager, which are also held in their other investment funds. The c. 20 per cent. of the remaining NAV is held in cash.

Significant performance drivers of the NAV growth for the reporting period include the IPO of Avidity (ticker: "RNA"), contributing c. 5 per cent.; strong share price returns (+33%) from Frequency (ticker: "FREQ"), contributing c. 1 per cent.; and the performance of non-core portfolio assets, contributing c. 3 per cent.. Rocket (ticker: "RCKT") share price returns (-8%) overall detracted c. 3 per cent. from the Company's NAV return, despite the strong price action (+50%) in the second quarter of 2020.

Share Issuance

During the reporting period, corporate brokers J.P. Morgan Cazenove and Barclays reported demand from prospective shareholders, which was reflected in the fact that the Company has traded at an average premium to NAV of c. 12.6 per cent. since October 2019. Under UK Listing rules, the Company has the authority to issue new shares of up to 20 per cent. of the outstanding share capital annually 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, the Company has issued a further 18,259,853 shares (representing c. 11 per cent. of the share capital at the start of the period), raising an additional US$24 million net of expenses from the beginning of the year to the time of the date of issuance of this Half-yearly Report. The share issuance was accretive to NAV, contributing c. US$1.8 million in premium.

Outlook

Even with the global pandemic of COVID-19 still being 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 nature of the early stage of the science. There was anecdotal evidence of delays in clinical trials, but the portfolio companies remain sufficiently capitalised and we do not anticipate a negative long-term impact. 

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

AGM Results and Board Composition

The Company held its inaugural Annual General Meeting on 25 June 2020 to consider the audited financial statements, amongst other things. The meeting was hosted in part virtually due to COVID-19 travel restrictions and we encouraged shareholder participation via the ability to table questions on our website. The results and the answers to the questions received from the shareholders have been announced to the market and published on the Investment Manager's website https://www.rtwfunds.com/venture-fund/.

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

On behalf of the Board, I would like to express my gratitude for your continued support and wish you and your families a healthy, safe and prosperous remainder of 2020.

William Simpson

Chairman of the Board of Directors

RTW Venture Fund Limited

23 September 2020

Report of the Investment Manager

30 June 2020 Highlights

Executive summary

It is with distinct pleasure that we share the interim results of the Company as of 30 June 2020. The Company has been publicly listed on the Specialist Fund Segment of the London Stock Exchange since 30 October 2019 and has grown by 28.5 per cent. from a NAV of US$168.0 million, or US$1.04 per Ordinary Share, to a NAV of US$238.3 million, or US$1.34 per Ordinary Share as of 30 June 2020. For the interim results period the NAV attributable to Ordinary Shares has grown by 5 per cent. from US$205.7 million NAV or US$1.27 per Ordinary Share as of 31 December 2019. During the reporting period, the Company's NAV per share fell 20 per cent. in the first quarter of 2020 due to the COVID-19 market correction, while rebounding with 31.7 per cent. NAV growth in the second quarter of 2020. Since admission, the share price has been trading at an average premium to NAV of c. 12.6 per cent.

Table 1. Financial Highlights

\* Total shareholder return is an alternative performance measure.

RTW Investments, LP (the "Investment Manager", "us", "we"), a leading US-headquartered healthcare 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 and the Company invest in companies developing next-generation therapies and technologies that can significantly improve patients' lives.

As of 30 June 2020, 47 per cent. of NAV was attributable to core portfolio companies, which had been designated in the Company's Prospectus and comprised both privately-held and publicly-listed companies such as Rocket Pharmaceuticals, Inc. ("Rocket"), Frequency Therapeutics, Inc. ("Frequency"), and most recently Avidity Biosciences, Inc. ("Avidity"). All three companies, Rocket, Frequency and Avidity, were private at the time of the initial investment.

The Company also invested approximately 34 per cent. of its NAV in non-core portfolio assets in order to mitigate cash drag during the intervening period of 18-24 months from admission in October 2019, until we expect that the portfolio will be fully deployed in core opportunities. The non-core portfolio assets have been selected by the Investment Manager and are also held in its private funds. The investments represented in that portfolio are similarly categorized as innovative biotechnology and medical technology companies developing and commercializing potentially disruptive and transformational products.

Key contributors to performance for the reporting period were the successful Avidity IPO that contributed c. 5 per cent. to the NAV growth, as well as the share price returns from publicly-listed Frequency that contributed c. 1 per cent. Due to the COVID-19 related market volatility, Rocket's share price and the performance of the non-core portfolio assets have been impacted by the market correction but have rebounded since the period end. Overall, Rocket's share price returns detracted c. 3 per cent. from the NAV growth, whilst non-core portfolio returns contributed c. 3 per cent. for the first half of 2020.

At admission, 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 admission, the Company added seven companies to its portfolio, with one investment in November 2019 and six investments in the first half of 2020. 

Our 2020 investments include:

· Ji Xing, a newly formed Shanghai-based biotechnology company, which we identified in our prospectus as part of our business plan. The company is focused on the development and distribution of innovative US and European drugs in the Chinese market.

· iTeos Therapeutics, a biotechnology company developing a TIGIT antibody for solid tumours.

· Pulmonx, a medical technology company commercializing Zephyr Valve for severe emphysema.

· C4 Therapeutics, a biotechnology company pioneering targeted protein degradation technology for blood cancers.

· Athira Pharma, a biotechnology company working to restore cognitive function in Alzheimer's disease.

· Encoded Therapeutics, a biotechnology company developing first-in-class gene therapies for rare paediatric CNS disorders.

The portfolio now includes thirteen companies that are diversified across treatment modalities, therapeutic focus and the clinical stage of their programs (Figure 1A-C). While the portfolio remains dominated by US-based companies (Figure 1D), 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 in accordance with the Investment Manager's track record of investing in 10-12 private biotech and medtech companies per annum. We look forward to continue deploying capital in the second half of 2020 and updating our shareholders in due course.

Figure 1. Portfolio breakdown, by (A) modality, (B) therapeutic focus, (C) clinical stage and (D) geography as at 30 June 2020

[chart]

*Genetic medicine includes gene therapy and RNA medicines

Key clinical updates for Portfolio Companies during H1 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.

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

· Immunocore announced the start of its first-in-human clinical trial of IMC-F106C, the fourth bispecific developed using the company's innovative ImmTAC® technology platform. IMC-F106C is focused on targeting tumours that express PRAME, a Cancer-Testis Antigen (CTA) that is highly expressed in a broad range of solid and hematologic malignancies.

· 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.

· Rocket presented a clinical data update supporting longer-term efficacy and durability of its gene therapy for Fanconi Anemia (FA) and Leukocyte Adhesion Deficiency-I (LAD-I). The data from both LAD-I and FA programs demonstrated a sustained engraftment and durable clinical impact, further supporting the viability of gene therapy in LAD-I and FA, disorders in which bone marrow transplant is the primary curative option and is associated with high rates of toxicity.

· Additionally, Rocket received clearance from FDA for an Investigational New Drug (IND) application for its lentiviral vector (LVV)-based gene therapy RP-L401 for the treatment of Infantile Malignant Osteopetrosis (IMO), Rocket's fifth clinical program. IMO is a rare, severe monogenic bone resorption disorder characterized by skeletal deformities, neurologic abnormalities and bone marrow failure.

· 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.

· Additionally, 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.

Sector review and 2020 outlook

The innovation boom. We are living in an era where we are witnessing innovation accelerating at breakneck speed with unparalleled opportunities for value creation. Globally, biotech markets are growing. According to Global Market Insights, the global biotech market is expected to grow with a compound annual growth rate, or CAGR, of 9.9 per cent. from 2019 to 2025. We are seeing validated technologies, such as those derived from DNA and RNA science that can effectively deliver solutions across large swaths of diseases resulting in companies with highly efficient development engines. We believe there is an opportunity to offer outstanding 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. The first human genome sequence was completed in 2001, and the cost per genome exceeded US$95 million, with an overall cost to the U.S. government in excess of US$3.0 billion. According to the National Human Genome Research Institute, the cost to sequence a human genome fell to approximately US$1,000 in 2019. 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 companies' 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 IND applications for cell and gene therapy products. As of January 2020, there were more than 900 such applications on file with the FDA, and the agency anticipates it will receive more than 200 IND additional applications annually. The FDA 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, making such therapies more convenient versus traditional therapies requiring a higher frequency of administration. 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 2019 there were 31 publicly traded gene therapy companies with a total market capitalization of approximately US$52 billion. During the same six-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 23 companies with a total market capitalization of approximately US$65 billion.

A lag in the market's value recognition 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 have steadily marched upward, more or less, 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 as well as highly publicized frauds such as Theranos and the fall of Valeant Pharmaceuticals, once considered the darling of generalist investors.

During the 2019 and 2020 U.S. Democratic Party presidential primaries, the healthcare debate focused on re-testing Americans' interest in a single payer system but failed in developing the concept into a mainstay of the Democratic platform. The threat of a dramatic change to the current system of public and private insurance has somewhat dissipated and it remains to be seen whether the COVID-19 pandemic may shift the discourse from drug pricing to public health matters.

Going forward, we believe the healthcare sector is in a strong position relative to other industries, as attention to COVID-19 related therapies and vaccines has reignited investor interest across therapeutic areas, preventative vaccines, and healthcare IT (testing and tracing), allowing innovative companies to attract capital through both private and public financings.

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 past 2020. 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-two quarters shift with minimal impact on the execution on the portfolio companies' set-out milestones. That said, we expect to grow the Company and intend to remain a reliable partner to innovative biotech and medtech companies in 2020 and beyond.

Executing on our strategy. We are ardent believers that true value 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 and, as such, 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.

As we look ahead to the rest of 2020, 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 first half of 2020 has been very active, as we have added six new companies to the Company's portfolio, and we foresee continuing with a similar investing pace for the rest of the year. Primary areas of focus remain in gene therapy and RNA medicines, small molecule, antibody and next generation antibody therapies, rare diseases, oncology, and medical technologies. We are excited by advancements we are witnessing in eye diseases, brain disorders, liver, muscular dystrophies, oncology, and cardiovascular and pulmonary diseases.

We have always emphasized the important point that exciting innovation is taking place globally. We are as keen on exploring scientific programs coming out of the UK and Europe as we are for those discovered and developed in 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 eighty per cent. biopharmaceutical assets and twenty per cent. 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.

Portfolio performance and updates

The Company's share price traded at a premium to NAV for most of the period (Figure 2A) and its market capitalization of US$257 million on 30 June 2020, represented a c. 8 per cent. premium to NAV. The Company's overall returns since inception are in line with biotech benchmarks, generating an overall return of 34 per cent. vs 27 per cent. by the Nasdaq Biotechnology Index and 39 per cent. by the Russell 2000 Biotechnology Index (Figure 2B note: the reporting period for this chart is 30 October 2019 to 30 June 2020). During the six-month reporting period, the Company's share price grew by c. 5 per cent., whilst the Nasdaq Biotechnology Index returned c. 14 per cent. and the Russell 2000 Biotechnology index returned c. 12 per cent. for the same period, respectively. The Company's share price saw an earlier rebound than its industry benchmarks after the COVID-19 pandemic market correction in March. Source Capital IQ.

Figure 2. RTW.L share price performance (A) and returns (B) as of 30 June 2020

[chart]

Performance drivers in the first half of 2020 stemmed from the IPO of Avidity, contributing c. 5 per cent. to the NAV growth, Frequency share price returns (+33%), contributing c. 1 per cent., as well as performance of the non-core portfolio assets, contributing c. 3 per cent.. Rocket share price performance (-8%) detracted c. 3 per cent. from the NAV return and the Company had c. 1 per cent. operating profit loss for the reporting period. Overall, the Company's NAV returned c. 5 per cent. for the first half of 2020.

In June 2020, Avidity completed a highly oversubscribed and upsized IPO. Avidity is a biopharmaceutical company pioneering Antibody Oligonucleotide Conjugates (AOCs™) to treat a wide range of serious rare diseases. A US$100 million Series C round in November 2019 was led by the Company and funds managed by the Investment Manager, following which the Investment Manager's Chief Investment Officer and Managing Partner, Roderick Wong joined Avidity's board of directors. Prior to the IPO, the Company and the Investment Manager's other funds owned 14.5 per cent. of Avidity in aggregate, which was reduced to 9.2 per cent. post IPO. Avidity's IPO was significantly oversubscribed, and the deal was upsized ultimately raising US$259.2 million, offering 14.4 million shares at US$18.00 per share. The valuation of Avidity at IPO represented a c.1.8x increase on its valuation at the time of the Company's initial investment in 2019. On the first day of trading, Avidity's share price increased by a further 58 per cent. to close at US$28.50 per share.

Rocket's strong price action (+50%) helped the second quarter rebound from a volatile first quarter, however ultimately remaining a P&L detractor for the reporting period with a loss of c. 3 per cent. of our NAV. Rocket has continued to progress its strong clinical pipeline despite minor COVID-19-related delays. The company presented positive clinical data updates supporting longer-term efficacy and durability of its gene therapy for Fanconi Anemia and Leukocyte Adhesion Deficiency-I, and brought gene therapy program for Infantile Malignant Osteopetrosis into clinic, marking its fifth clinical program.

Table 2. Performance of private and public portfolio investments as of 30 June 2020

\* These positions originated in the portfolio as private companies. Since the Company's IPO, Frequency and Avidity have gone public; Avidity remains under 180-day lock-up provision until 9 December 2020.

Table 3. NAV capital breakdown as of 30 June 2020

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

At the end of the reporting period, the Company had allocated roughly half of its NAV toward thirteen portfolio companies, as well as investing roughly one-third into non-core portfolio assets that are also held by our hedge fund vehicles, to mitigate cash drag while we deploy capital. As of 30 June 2020, top five holdings of non-core portfolio assets include: Dicerna (ticker: "DRNA"), Alnylam (ticker: "ALNY"), both are leading RNA medicine companies, PTC Therapeutics (ticker: "PTCT"), a genetic medicine company working on rare diseases, Adverum (ticker: "ADVM"), a gene therapy company working on wet macular degeneration, and Immunovant (ticker: "IMVT"), a biotech developing treatments for autoimmune diseases based on FcRn technology. 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' valuations1 as of 30 June 2020

1 Valuations for Private Portfolio Companies on a fair market value basis as at 30 June 2020. The valuations of Rocket, Frequency and Avidity 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. *Avidity IPOed in June 2020 and is subject to a post-IPO lock up provision.

During the period ended 30 June 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 and Ji Xing, which in aggregate represented 35.5 per cent. of NAV of the Company.

Summary of portfolio assets:

As of 30 June 2020, the Company's portfolio included thirteen companies, ranging from biotechnology companies developing clinical-stage therapeutic programs, companies developing traditional small molecule pharmaceuticals, and three 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 by clinical stage of the leading program

Table 6. Overview of Portfolio Companies' assets clinical development status as of 30 June 2020

Key Events Post Period End

In the post reporting period, Ji Xing, our latest de novo company creation based in Shanghai, formerly disclosed in the prospectus as a pipeline asset "China NewCo", announced an exclusive licencing agreement with Cytokinetics (ticker: "CYTK") 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 in July 2020.

Additionally, iTeos announced pricing of its US$201.1 million IPO, by offering 10,586,316 shares of common stock at US$19.00 per share. The shares began trading on Nasdaq Global Market on 24 July 2020 under the ticker symbol "ITOS". The investment from March 2020 to pre-IPO valuation generated a 1.8X uplift. An illiquidity discount will be applied for the first six months of trading per SEC Rule 144.

The Portfolio Assets as of 30 June 2020

Avidity (6.7% 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.

In June 2020, Avidity announced pricing of its US$259 million IPO, by offering 14,400,000 shares of common stock at US$18.00 per share. The shares began trading on Nasdaq Global Market on 12 June 2020 under the ticker symbol "RNA". Avidity gained 58.3 per cent. in the first day of trading, which might earn it the title of hottest US Biotech IPO of the year. The investment from November 2019 to pre-IPO valuation generated a 1.8X uplift. An illiquidity discount will be applied for the first six months of trading per SEC Rule 144.

Beta Bionics (2.1% 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.

Clinical updates:

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

Frequency (2.3% 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.

Clinical updates:

· In May 2020, Frequency shared top-line data from an exploratory clinical study designed to show whether 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. Further, the levels of FX-322 in the cochlea were predicted to reach the therapeutically active range of the treatment.

Immunocore (2.3% 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. 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.

Clinical updates:

· In May 2020, Immunocore announced the start of the first-in-human clinical trial of IMC-F106C, the fourth bispecific developed using the company's innovative ImmTAC® technology platform. IMC-F106C is focused on targeting tumours that express PRAME, a Cancer-Testis Antigen (CTA) that is highly expressed in a broad range of solid and hematologic malignancies. The trial is designed to study the safety and preliminary activity of IMC-F106C as a monotherapy and in combination with a checkpoint inhibitor in patients with PRAME-expressing cancers.

Landos (2.1% 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 a Phase 2 study in ulcerative colitis and initiated a Phase 2 study in Crohn's disease in 2020. Roderick Wong, M.D., managing partner at RTW Investments, LP is a board member.

Orchestra BioMed (1.0% of NAV,

Orchestra BioMed was formed in 2017 by David Hochman and Darren Sherman. Orchestra BioMed is focused on the development of the Virtue® sirolimus eluting balloon for the treatment of coronary and peripheral arterial disease, which we believe would disrupt the current standard of treatment, namely stents and lasers. We believe Orchestra's patented balloon to be superior to existing balloons. Other features of the pipeline include BackBeat Cardiac Neuromodulation (CNT) for the treatment of hypertension and Pure-Vu for improved colonoscopy outcomes.

Clinical updates:

· In May 2020, the company 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 control group after six months of therapy.

Rocket (26.6% 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. Two of Rocket's clinical programs are a lentiviral vector-based gene therapy for the treatment of Fanconi Anemia (FA), a difficult to treat genetic disease that leads to bone marrow failure and potentially cancer, and an adeno-associated virus-based gene therapy for Danon disease, a devastating, paediatric heart failure condition. We believe opportunities exist to license additional gene therapy academic assets into the Rocket pipeline in the future. Rocket has a broad pipeline of five disclosed programs, and we anticipate additional programs will be added to the pipeline. In addition to our control position 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.

Clinical updates:

· In May 2020, Rocket presented a clinical data update supporting longer-term efficacy and durability of its gene therapy for Fanconi Anemia (FA) and Leukocyte Adhesion Deficiency-I (LAD-I) at the Annual Meeting of the American Society of Gene and Cell Therapy (ASGCT), highlighting updates from the company's Phase 1/2 study of RP-L201 for the treatment of severe LAD-I and the Phase 1/2 study of RP-L102 "Process A" for the treatment of FA. The data from both LAD-I and FA programs demonstrated a sustained engraftment and durable clinical impact, further supporting the viability of gene therapy in LAD-I and FA, disorders in which bone marrow transplant is the primary curative option and is associated with high rates of toxicity.

· In June 2020, Rocket announced that it had received clearance from FDA for the company's IND application for RP-L401, its fifth clinical program. RP-L401 is a lentiviral vector (LVV)-based gene therapy for the treatment of Infantile Malignant Osteopetrosis (IMO), a rare, severe monogenic bone resorption disorder characterized by skeletal deformities, neurologic abnormalities and bone marrow failure.

Ji Xing Pharmaceuticals, formerly "China NewCo" (0.1% 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. The aim would be for Ji Xing to launch its initial public offering on The Stock Exchange of Hong Kong (HKEX) in three to four years.

In the post reporting period, 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 in July 2020.

iTeos Therapeutics (0.4% 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.

Clinical updates:

· In April 2020, iTeos announced initial data from the dose escalation portion of the Phase 1/2a trial in 21 cancer patients with 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-pretreated patients were ongoing.

· In June 2020, iTeos presented preclinical data for its investigational FcγR-engaging anti-TIGIT antibody, EOS-448 at the American Association of Cancer Research II (AACR II) Virtual Annual Meeting 2020. EOS-448 has 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 the post reporting period, iTeos announced pricing of its US$ 201.1 million IPO, by offering 10,586,316 shares of common stock at US$19.00 per share. The shares began trading on Nasdaq Global Market on 24 July 2020 under the ticker symbol "ITOS". The investment from March 2020 to pre-IPO valuation generated a 1.8X uplift. An illiquidity discount will be applied for the first six months of trading as the Company is restricted from selling its holding under SEC Rule 144.

Pulmonx (0.3% 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.

Athira (0.9% 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 is gearing up to initiate Phase 2/3 clinical trial later this year. 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 (1.0% of NAV,

C4T is a preclinical-stage 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.

Encoded Therapeutics (0.8% of NAV,

Encoded Therapeutics is a gene therapy company developing therapies for rare paediatric Central Nervous System (CNS) disorders. Its lead program ETX101 is a gene therapy for patients with SCN1A+ Dravet syndrome, a rare genetic paediatric epilepsy. The majority of Dravet syndrome cases are caused by loss-of-function mutations in the SCN1A gene, which reduce the function of sodium v1.1 channel and leads to uncontrolled seizures, ataxia, and significant developmental delays, as well as a 15-20 per cent. mortality rate before adulthood. ETX101 is an AAV vector capable of restoring SCN1A to normal expression levels specifically within the affected cell type, GABAergic inhibitory neurons. In preclinical studies, ETX101 showed compelling efficacy in multiple animal models. The platform technology could be applied to many more genetic diseases and the company intends to expand its pipeline in CNS.

RTW Investments, LP

23 September 2020

Statement of Principal Risks and Uncertainties for the Remaining Six Months of the year to 31 December 2020

As described in the Company's annual financial statements as at 31 December 2019, the Company's principal risks and uncertainties include the following:

· Failure to achieve investment objective;

· Counterparty risk;

· The Investment Manager relies on key personnel;

· Exposure to global political and economic risks;

· Clinical development and regulatory risks;

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

· Covid-19.

The Board believes that these risks are unchanged in respect of the remaining six months of the year to 31 December 2020.

Further information in relation to these principal risks and uncertainties may be found on pages 32 to 33 of the Company's annual financial statements as at 31 December 2019.

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

Risks are mitigated and managed by the Board through continual review, policy setting and regular reviews of the Company's risk matrix by the Audit Committee to ensure that procedures are in place with the intention of minimising the impact of the above mentioned risks. The Board carried out a formal review of the risk matrix at the Audit Committee meeting held on 25 June 2020. The Board relies on periodic reports provided by the Investment Manager and Administrator regarding risks that the Company faces. When required, experts will be employed to gather information, including tax advisers, legal advisers, and environmental advisers.

Statement of Directors' responsibilities

The Directors confirm to the best of their knowledge that:

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

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

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

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

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website (www.rtwfunds.com/venture-fund) and the preparation and dissemination of financial statements.

Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By order of the Board

William Simpson Paul Le Page

Chairman Director

23 September 2020 23 September 2020

INDEPENDENT REVIEW REPORT TO

RTW VENTURE FUND LIMITED

Conclusion

We have been engaged by RTW Venture Fund Limited (the "Company") to review the financial statements in the half-yearly financial report for the six months ended 30 June 2020 of the Company which comprises the unaudited interim statement of assets and liabilities and unaudited interim condensed schedule of investments as at 30 June 2020, unaudited interim statements of operations, changes in net assets, cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the financial statements for the six months ended 30 June 2020 do not give a true and fair view of the financial position of the Company as at 30 June 2020 and of its financial performance and its cash flows for the six month period then ended in conformity with U.S generally accepted accounting principles and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

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

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

Directors' responsibilities

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

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

Our responsibility

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

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

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

Dermot Dempsey

For and on behalf of KPMG Channel Islands Limited

Chartered Accountants, Guernsey

23 September 2020

Unaudited Interim Statement of Assets and Liabilities

as at 30 June 2020 and 31 December 2019

(Expressed in United States Dollars)

The unaudited interim financial statements of the Company were approved and authorised for issue by the Board of Directors on 23 September 2020 and signed on its behalf by:

William Simpson Paul Le Page

Chairman Director

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Statement of Operations

For the six month periods ended 30 June 2020 and 30 June 2019

(Expressed in United States Dollars)

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Statement of Changes in Net Assets

For the six month period ended 30 June 2020

(Expressed in United States Dollars)

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Statement of Changes in Net Assets

For the six month period ended 30 June 2019

(Expressed in United States Dollars)

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Statement of Cash Flows

For the six month periods ended 30 June 2020 and 30 June 2019

(Expressed in United States Dollars)

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Condensed Schedule of Investments

as at 30 June 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 unaudited interim financial statements.

Unaudited Interim Condensed Schedule of Investments (continued)

as at 30 June 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 unaudited interim financial statements.

Unaudited Interim Condensed Schedule of Investments (continued)

as at 30 June 2020

(Expressed in United States Dollars)

See accompanying notes to the unaudited interim financial statements.

Unaudited Interim Condensed Schedule of Investments (continued)

as at 30 June 2020

(Expressed in United States Dollars)

See accompanying notes to the unaudited interim financial statements.

Audited Condensed Schedule of Investments

as at 31 December 2019

(Expressed in United States Dollars)