I have a new fund that has popped up on my radar – it’s a specialist late stage biotech/medtech venture capital fund called RTW Venture Fund. Most investor’s I have talked to haven’t heard of the fund and that’s largely because it’s currently listed on the specialist funds market which is heavily institutional in nature. Also, RTW Ventures has a much better-known peer in the shape of Syncona, which is a main market life sciences VC with a similar strategy.
My suspicion is that if an adventurous type is interested in this risky life sciences niche, they’ll probably be invested in Syncona – which also boasts fairly extensive research coverage.
The table below stacks up some numbers for the two funds, with RTW on a smaller 8.2% premium compared to Syncona’s 11% premium. Last but by no means least I think its also fair to say that RTW didn’t have the most auspicious start to its life as a public fund. According to Numis the fund raised $14.97m through the issue of 14.4m shares at $1.0397 back in October 2019 but had intended to raise up to $350m. The fund had net assets to c.$168m at launch, including cash and seed assets rolled over from existing shareholders.
|Fund||Share price||Premium/discount||Gross Assets||6 mths share price return||6 mths Nav return|
RTW describes itself as a full-lifecycle healthcare investing with a special focus on transformative biopharmaceutical and medical technology assets. Jargon aside RTW is a classic late stage VC focused on life sciences (biotech and medtech). In a sense it’s a bit like a biotech version of Merian Chrysalis – many of the portfolio businesses are one’s where an IPO within the next 1 to 3 years is likely. There’s also a crucial difference from Syncona. The latetr has a much more focused, “ in house” approach where it picks its key therapies, usually on a common or shared technology platform (based on genomics insights) and then builds up a bunch of world class businesses by assembling the right team. RTW takes a more classic VC perspective. It invests in businesses and therapies it likes but has less operational involvement (compared to Syncona).There’s also a much more global focus to RTW with a growing side niche on Chinese investments.
The interim report is out today and there’s not too many surprises about what’s been happening in the portfolio. Here’s some of the key numbers:
- 28.5% NAV growth since inception
- $1.34 NAV or $238m and cash $49m
- 13 portfolio company investments
- 21/26 of portfolio companies pipeline products in clinical stage program
- 6 new investments in last period
- Biggest share in small molecule and medtech followed by genetic medicine
- 4 out of 25 in phase 3, 2 in phase two and 9 in phase 1
- Geographical focus : US 84%, China 8%
- Niche focus : 23% oncology, 23% rare disease
- Performance numbers ? “ 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”.
Looking at 2020 investments, there’s the following:
- 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
My guess is that a combination of Syncona and RTW Ventures would make a great combination for adventurous types. I’d then add an existing listed biotechs’ fund such as BB Biotech to the mix to give you a really potent three stock/fund exposure to what I think is the single most important thematic trend of the next few decades. Forget the cloud, Ai, batteries and so on – focus on the massive changes coming down the track courtesy of genomics and new medtech.
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