Investment trust insider on RTW

Investment Trust Insider on Perpetual Income and Growth

Investment trust insider on RTW – James Carthew: the biotechs behind RTW’s racy rating

Last week I got the chance to speak to Roderick Wong, fund manager  [editing mistake by Citywire – I actually talked to Alexandra Taracanova and Stephanie Sirota] of RTW Venture Fund (RTW), a life sciences fund that listed on the London Stock Exchange last October and has the hallmarks of becoming a rival to Syncona (SYNC).

The shares are quite tightly held after the initial public offer (IPO) raised just $15m (£12m) of new money. The timing was inauspicious, as Woodford’s clumsy adventures in the area had poisoned the market for small and early-stage biotech. However, this was a listing of a pre-existing fund and so it started life with $153m of assets.

There have been some additional share issues since, and with the price rising from $1.04 to $1.44, which represents a chunky 18% premium over their estimated $1.22 net asset value (NAV) to give it a market value above $250m (£200m).

Perhaps because of the lack of liquidity in the share register or possibly the initial portfolio concentration, the investment company chose to list on the LSE’s specialist fund market (SFM). As many of you know, it can be hard to invest in these funds as a private investor. I encouraged them to think about moving to a main market listing as soon as possible.

RTW shares a lot of similarities with £1.7bn Syncona, of which I am fan and a shareholder. Both invest in early-stage biotech companies but there are some subtle differences.

The fund managers at Wong’s RTW Investments are based in the US but invest globally. The 34-strong team includes a mix of biomedical specialists and experts in the corporate, legal and financial fields. They have built up a good track record and now run about $3.5bn. This provides the scale necessary to support the growth of RTW. Any stock suitable for inclusion in RTW’s portfolio will be spread across all their funds – there is no cherry-picking.

Like Syncona, they were attracted to the idea of launching an evergreen closed-end fund that could back biotech companies for the long term, rather than being time-constrained by the typical VC limited partnership (LP) structure…  read more here