TIDMRTW
RNS Number : 9962E
RTW Biotech Opportunities Ltd
05 July 2023
LEI: 549300Q7EXQQH6KF7Z84
5 July 2023
RTW Biotech Opportunities Ltd
Capital allocation plans from Prometheus Biosciences sale
including share buyback
RTW Biotech Opportunities Ltd ("RTW Biotech Opportunities" or
the "Company"), a London Stock Exchange-listed investment company
focused on identifying transformative assets with high growth
potential across the biopharmaceutical and medical technology
sectors , today provides an update on its intended use of proceeds
from its holding in previous Prometheus Biosciences, Inc.
("Prometheus"), following its acquisition by Merck.
Completion of Prometheus acquisition by Merck
Further to the Company's 17 April announcement that portfolio
company Prometheus Biosciences, Inc. had agreed to be acquired by
Merck for $200.00 per share in cash, a 75% premium to the prior
closing price, the Company can confirm the acquisition was
completed on 16 June. Proceeds from the sale of Prometheus shares
subsequent to the announcement have amounted to $92.4 million.
Including sales prior to the announcement, total proceeds amounted
to $99.1 million on total invested capital of $8.4 million,
representing a 11.8x multiple.
RTW Biotech Opportunities first invested in Prometheus in
November 2020 as it co-led a private financing round which raised
$130 million to advance Prometheus' lead antibody program (PRA023).
The Company then increased its holding in Prometheus at its IPO in
March 2021, and also participated in a further $500m fundraise in
December 2022 (to advance PR023 into Phase 3) in an upsized equity
offering priced at $110. At 31 March 2023, just prior to the Merck
acquisition announcement, the Company's holding in Prometheus
represented 14.8% of NAV amounting to $50.2m.
Roderick Wong, M.D., Managing Partner and Chief Investment
Officer at the Investment Manager, said:
"This transaction is a great example of RTW Biotech
Opportunities' investment strategy at work. Our ability to invest
across the company life cycle provides us with significant
advantages. Access to early-stage private assets provides us with
access to experimental data that typically isn't shared in the
public markets. Investing early also gives us time to build
relationships with entrepreneurs and management teams. Given our
blended public-private structure, we do not have any structural
pressure to exit post-IPO, and typically we aim to increase the
size of the most promising investments. It was this flexibility,
enabled by our listed investment company structure, that allowed us
to build our conviction in Prometheus, which, in turn allowed us to
grow our position through multiple inflection points right up to
the end."
Use of Prometheus sale proceeds
In light of this significant success in demonstrating the value
of the Company's full life cycle investment strategy, the Board has
given careful consideration to the Company's capital allocation
framework.
The Company's primary focus is to identify and invest in
transformative assets with growth potential. With the biotech
sector only just recovering from the second deepest and second
longest bear market in its history, the Board consider now to be an
opportune time to take receipt of such gains. Valuations are
attractive, fundamentals have turned around with the maturation of
some modalities and companies, and M&A has become a significant
tailwind. As a result, the Company will retain an appropriate level
of the Prometheus proceeds which it believes can be invested into
highly attractive opportunities (across the private, core public
and other public portfolios) over the medium term as per the
Company's core objective.
Financing conditions in the sector remain tight, however. This
environment allows the Investment Manager to flex the transactional
capabilities it has built up over the years to help support
exciting companies by offering strategic financing solutions
including royalty financing. The Board intends to deploy some of
the Prometheus proceeds into such opportunities through the
Investment Manager's "4010 Royalty Fund". There will be no
double-charging as fees will be taken at the Company level only.
The Board considers that this presents an attractive uncorrelated,
income-generating investment that would complement the core
portfolio. The Board intends to limit the Company's royalty
investment exposure to approximately 15% of NAV including the
current royalty holding in the portfolio.
Share buyback
The Board also believes that distributing a portion of the
Prometheus proceeds will help to further demonstrate the life cycle
of RTW Biotech Opportunities' invested capital. Given that the
Board believes that the discount to NAV per Ordinary Share at which
the Company's shares currently trade materially undervalues the
Company and its portfolio, it therefore intends to initiate, and
implement over time at its discretion, capital returns to
shareholders through an NAV-accretive share buyback of up to
approximately $10 million (equivalent to c. 7.92 million shares at
current mid-market price).
The Board believes that this allocation clearly demonstrates 1)
its confidence in the outlook for the biotech sector and the
Company's portfolio; 2) capital allocation discipline; and 3) the
proven value of the Company's model. Since admission to 31 May
2023, the Company's NAV per Ordinary Share increased by +65.3%
versus a
-0.7% return for the Russell 2000 Biotech Index and a +20.6%
return for the Nasdaq Biotech Index.
For Further Information:
RTW Investments, LP +44 (0)20 7959 6361
Woody Stileman, Managing Director
Krisha McCune, Director, Client Service
Buchanan +44 (0)20 7466 5107
Charles Ryland
Henry Wilson
George Beale
Numis +44 (0)20 7260 1000
Freddie Barnfield
Nathan Brown
Euan Brown
BofA Securities +44 (0) 20 7628 1000
Edward Peel
Kieran Millar
Cadarn Capital +44 (0) 73 6888 3211
David Harris
Elysium Fund Management Limited +44 (0) 14 8181 0100
Joanna Duquemin Nicolle, Chief Executive Officer
Sadie Morrison, Managing Director
Morgan Stanley Fund Services USA LLC +1 (914) 225 8885
About RTW Biotech Opportunities Ltd:
RTW Biotech Opportunities Ltd (LSE: RTW & RTWG) is an
investment fund focused on identifying transformative assets with
high growth potential across the biopharmaceutical and medical
technology sectors. Driven by a long-term approach to support
innovative businesses, RTW Biotech Opportunities invests in
companies developing next-generation therapies and technologies
that can significantly improve patients' lives.
RTW Biotech Opportunities Ltd is managed by RTW Investments, LP,
a leading healthcare-focused entrepreneurial investment firm with
deep scientific expertise and a strong track record of supporting
companies developing life-changing therapies.
RTW Biotech Opportunities Ltd retains absolute discretion as to
the execution, pricing and timing of any share buybacks, subject to
the conditions set out in the authority to execute share buybacks
approved at the 2023 annual general meeting. Any shares repurchased
will be held in treasury. Any repurchase of shares will be
announced no later than 7.30 a.m. on the business day following the
calendar day on which the repurchase occurred.
Visit the RTW website at www.rtwfunds.com for more
information.
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(END) Dow Jones Newswires
July 05, 2023 02:00 ET (06:00 GMT)
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