RTW Biotech Opportunities Ltd (RTW.L) Earnings Call Transcript & Summary

Hello, everyone, and thank you for taking the time to join the presentation of RTW Bio's half year results till the 30th of June 2025. I'm Woody Stileman, Head of the London Office of RTW, and I'm joined by the Founder and CIO of RTW Investments, Rod Wong, who's based in New York. We have lots of news to share, and I'd encourage you to submit any questions via e-mail to [email protected], and we'll address these following the results presentation. Before we get into the results and the exciting developments within our portfolio, I wanted to take a step back and remind you of who we are. In Biotech, innovation is a core driver of long-term value creation. Innovation expands the opportunity set and unlocks new treatments, cures and revenue streams. We and others believe that the pace of innovation is accelerating at an unprecedented rate. And what makes this particularly compelling is a high alpha potential. The asymmetric return profile in this space means that a small number of successful outcomes can drive significant upside, especially when this is combined with our compelling long-term batting average, i.e., the number of winners versus our number of losers. Importantly, we're seeing attractive risk reward dynamics across the board, whether that's in different therapeutic areas, modalities or stages of development. This breadth allows the construction of a portfolio that's both diversified and opportunity rich. The diversification benefits of having biotech in your portfolio are clear. Successful assets tend to have a low correlation with broader equity markets, which can also provide resilience and balance, particularly in recessions or declining interest rate environments. And finally, we're supported by powerful structural tailwinds, including demographic shifts from an aging population and rising global health care demand. These are long-term secular trends that underpin sustained demand growth for the sector. Why RTW Bio? On a NAV total return basis, RTW Bio has outperformed the Russell 2000 Biotech Index, the NASDAQ Biotech Index and the AIC Biotechnology & Healthcare Peer Index since IPO and over 3 years and 5 years. This consistent delivery underlines the strength of our investment process and quality of the underlying portfolio. RTW is a leading biotech manager and our flagship private fund has delivered circa 21% net annualized return since inception in 2009. And that track record speaks to our ability to navigate cycles, identify transformational signs early and scale investments effectively. We are deeply aligned with shareholders. Partners and employees of RTW alongside Board members of RTW Bio have a collective shareholding of over 15% with further purchases so far this year. We think it's crucial to have skin in the game. It demonstrates our confidence in the underlying portfolio, particularly the valuations of our private investments. And what sets us apart, we think, is our full life cycle approach. We back companies across the spectrum from the earlier stages of venture creation to the public markets and beyond, supporting them across critical inflection points and capturing value for shareholders throughout the journey. Our platform is highly diversified, spanning public equities, private investments and royalty streams with exposure to some of the most transformative assets in health care and life sciences. And this blend allows us to balance near-term liquidity with long-term growth and offer shareholders differentiated access to the most compelling ideas within biotech. Why now? We believe the current market environment presents a highly attractive opportunity to deploy capital. Valuations across the biotech sector remain deeply dislocated with nearly half of the U.S. listed biotechs trading below cash. This disconnect offers significant opportunity. At the same time, we're in what many people call a golden era of scientific discovery. Innovation is accelerating across therapeutic areas with breakthroughs in areas like obesity, RNA-based platforms and precision medicine reshaping the landscape. And this innovation is not going unnoticed. M&A activity is ramping up this year with large pharma companies acquiring biotech assets to offset looming patent cliffs and replenish their pipelines. We expect this trend to continue, and we believe that our portfolio is well positioned to benefit. Biotech is also increasingly being recognized as a strategic asset class. The National Security Commission has explicitly identified it as a critical infrastructure in the U.S., potentially providing an element of national policy support. And finally, from a timing perspective, we see a number of near-term catalysts on the horizon, both at the portfolio level and in terms of broader market sentiment. We believe the current level of discount to NAV offers extremely attractive value for exposure to meaningful drivers of return. On RTW Investments, since our founding in 2009, RTW has grown into a leading life sciences investment platform. We manage about $7 billion in AUM as of today. Our global footprint spans New York, London and Shanghai with a team of 85 professionals, deeply embedded in the ecosystems in which we invest. At the heart of our process is deep research-led investing. We focus on identifying and supporting world-class companies that are developing truly transformational therapies, assets that have the potential to significantly improve patients' lives. We are full life cycle investors, and that means that we can build and invest in companies along the spectrum of early development through to commercialization, providing capital, expertise and long-term support along the way. This strategy has delivered strong and consistent results. Our flagship fund has generated 21% annualized return over 15 years. With significant investments in our team, technology and full life cycle capabilities, we're confident that we'll maintain our ability to deliver exceptional returns for shareholders in the years ahead. RTW Bio itself continues to outperform and deliver markedly greater value to investors than all other related exposure. Shareholders who invested $100 at IPO now have $163 in NAV versus $124 if they had invested in the NASDAQ Biotech Index or $107 if they had invested in the AIC sector index. If they had invested in the Russell 2000 Biotech Index, they would have made a loss of $3. On an annualized basis, RTW Biotech NAV has delivered 9% per annum since IPO. That's materially ahead of the 4% for the annualized return from the NBI, 2% for the AIC sector Index and negative 1% annualized return for the Russell 2000. And it's important to note that this performance has been delivered in the teeth of one of the worst biotech bear markets in memory. Despite this, the near double-digit alpha against the Russell 2000 Biotech Index has delivered, therefore, meaningful returns for investors. In the first half of 2025, RTW Bio's NAV per share declined by 6%. This was ahead of the Russell 2000 Biotech Index, which fell 11.4% and modestly behind the NASDAQ Biotech Index, which was down 1.9%. In a challenging market, this relative resilience reflects the strength of our portfolio selection and construction. We continue to build and evolve the portfolio with select high conviction additions. We added 5 new private positions, further enhancing our exposure to innovative science during the period. We also had 2 go public events with one IPO in Beta Bionics and one reverse merger in Jade Biosciences. On the capital allocation side, we repurchased 5.7 million shares, representing 15% of total trading volumes during the period. These buybacks were, of course, accretive to NAV per share by 0.5% and reflect our ongoing commitment to disciplined capital management. On a similar tack, we're pleased to confirm that following a change in index inclusion rules in February, RTW Bio will be admitted to the FTSE All Share Index at market open on the 22nd of September. This is a significant milestone that we believe will enhance our visibility and broaden our investor base, also acting as a tailwind to the share price as index trackers enter the register. I'll now pass over to Rod to discuss performance over the first half of the year. Over to you Rod.

Thanks, Woody. Hi, everybody. Also, thank you to [ Oli ] and Krisha, who's enabled us to provide you guys with these updates. All right. So we'll start with the top contributors and detractors over the first half of the year. So our performance over the first half was mainly driven by Akero. They released positive clinical trial data for their lead asset in MASH, which is the acronym basically for fatty liver disease. The company was also rumored to be exploring a potential sale. UroGen also performed well after it secured FDA approval. That is the first nonsurgical treatment option for a common form of bladder cancer. I'll talk more about Corxel later. We are pleased to see positive China Phase II data for them released during the period. Also they've begun enrollment in the U.S. Phase II trial. On the detractor side, Rocket was the largest detractor. Its share price has fallen after a patient tragically died during its Phase II trial for Danon disease. Artios released positive clinical trial data that suggests has potential in multiple indications. However, it also means that their development costs could be higher than forecast. And then finally, Dyne lost some P&L after their clinical data missed Street expectations, and there's a bit of a delay in their regulatory time line. All right. So we'll now turn to some of the private assets within our portfolio. So over the first half, the exposure in private overall reduced the NAV by about 2.3%. As mentioned on the last slide, there is some positive progress in our leading obesity company, Corxel. This was offset by the losses at Artios. Also in the period, the 38 private and royalty investments held by RTW Bio were revalued 42x with an average valuation change of minus 6.4%. Thirteen positions were marked up by an average of 7.8% and then 17 positions were marked down by an average of 21.7%. So on the right-hand side, that chart shows how our private companies' cash runways have changed over the period. Now they're at an average of about 19 months. That provides sufficient time to advance their clinical development plans. The longer end of the runway has actually increased with 67% of the private portfolio now with at least a year of cash runway. That's up from 58% actually at the end of the year. Around 1/5 of the portfolio had less than 6 months of runway. Three of these, though, are RTW Investment company creations where we have the flexibility. It's actually kind of our normal business strategy to inject capital when the companies need it. The remainder actively pursuing fundraising solutions. All right. So as many of you know, Biotech entered the year continuing this bear market that we've been in since really 2021. During this period, the XBI has underperformed the S&P 500 for a record-breaking 4 consecutive years. Previous to that, the longest year of underperformance was actually only a single year. As a result of this, the MBI price-to-sales ratio remains low and the number of biotechs that trade with market caps that are less than the cash on the balance sheet remains at record levels. So after -- in addition to this, a relatively scary spring that was driven by unprecedented U.S. policy uncertainty, the XBI has now gradually recovered its losses. It's now back in the black, up a modest 5% on the year. This has been driven -- the recovery has been driven by a decline in FDA and manufacturing tariff concerns. I think also by -- as we're approaching the potential for declining interest rates in the U.S. And then finally, by a solid first half in M&A, primarily led by commercial stage deals. Big picture, I think with rates declining, we are seeing the beginnings of growing interest in small cap companies of all kinds, including in our sector, of course. Now this is yet to be reflected in capital flows into our space or into early-stage company valuations. So we think this recovery is still very, very early. As I mentioned, even with the recovery since the April lows in the year, we're really just at breakeven for the year, which came into the year at a very depressed level. So I think that's potentially bullish and imply that there's plenty of room for the rally to gain momentum. Coming up, we would like to see a test of the IPO market, which we would expect this fall that has not started yet. And then we'd also love to see in addition to the commercial stage M&A that we've seen so far this year, some development stage M&A as well. All right. So one of the drivers of M&A that we and others have expected is due to the patent cliffs that the -- that large cap pharma is in from now really until the end of the decade. So you saw roughly about 1/3 of pharmas that have significant loss of exclusivity needs through the end of the decade. The companies that have the highest near-term needs are Bristol, Merck, Novartis, Pfizer and Roche. Just to give you a sense, there are some really large drugs, $10 billion-plus annual sales drugs that are facing loss of exclusivity before 2030. Those are Eliquis, which is sold in a partnership between Pfizer and Bristol. Then you have Opdivo and Keytruda, the 2 leading immuno-oncology drugs sold by Bristol and Merck, respectively. DARZALEX, J&J, COSENTYX cardiovascular medication sold by Novartis. And so really, that's nearly $80 billion in total sales today. Now there are obviously a majority of companies that don't have major loss of exclusivity needs through the end of the decade, but that doesn't mean they're not interested in also acquisitions. So that list is growing. I would highlight, I think, what the 2 most important are, which are Novo and Lilly. Their success in obesity is generating cash flows that they will need to reinvest. And in fact, this is a record amount of cash flow, the likes of which the industry has really never seen. So combined, Lilly and Novo will be growing from $30 billion in annual net income to based on Street consensus, $80 billion a year. That's really an incredible amount of cash to redeploy. Just to put that in context a little bit, a company like J&J, which historically has been always one of the largest names in the space, they generate roughly $20 billion in net income per year and typically has been on a cadence of about $1 billion to $2 billion, $10 billion acquisitions per year. So if you think about that, when Lilly and Novo join that club, it really has significant potential to transform kind of the M&A volume of the entire sector. All right. As of midyear, total deal value is already ahead of last year's total. It's primarily been driven by a small number of large commercial stage acquisitions. Intra-Cellular kicked off the year in January, then Blueprint in June, most recently, Verona in August. Verona was in our portfolio. So even with this improved M&A picture in the first half, we think it really was significantly suppressed because of this historically high policy uncertainty that I mentioned, especially tariffs and MFN drug pricing. So we think that actually means there's a potential for an even stronger rest of the year, especially if we get resolution to MFN drug pricing. All the 3 deals that I mentioned are commercial stage. I think in general, when you're a big pharma, you don't know what your tariff bill is going to be and the impact on your income statement and your budget, it makes a lot of sense to do these kinds of deals first because they're immediately accretive. They don't require room in the income statement. When you have clarity on that, and I think actually the manufacturing clarity that we already have is a big piece of that, you can see more development stage deals. So bottom line is big pharma remains active. We've included some quotes from CEOs on this slide that publicly state their intent to continue to pursue business development. They're, in general, targeting derisked assets with blockbuster potential in strategically important areas, such as the ones you have heard us talking a lot about, like obesity, immunology, cancer and rare genetic diseases. All right. From a capital markets perspective, the U.S. biotech IPO market remains on pause. So in Q2, you saw no IPOs. There's only been a total of 5 this year, and we have not started this fall yet on retesting the IPO market. Now 2 of the 5 IPOs that have gone out are trading above their offer price. One is Ascentage, which is up over 100%. That is actually a Chinese company. And by the way, the China market has recovered very strongly this year ahead of the U.S. market. And then the other one is Metsera, which is an obesity company that's trading just shy of up 60%. Now this is the first time since 2018, I believe, where we've had 4 consecutive months without a single IPO. As I mentioned, the Hong Kong IPO market is back. There's been several IPOs this year. Those IPOs are trading very well. It includes a national champion, one of China's biggest companies that is Hengrui, that has a $50 billion market cap and even at that size of company traded up north of 20% around the first day. Okay. For public companies, biotech issuance, so secondary offerings, et cetera, has been gaining momentum. So that has recovered first since May. And then June has actually marked the strongest month for new deals since December of last year. So we think activity will continue to pick up as markets stabilize and that bodes well, obviously, for retesting of the IPO market. All right. We wanted to talk a little bit about politics in the U.S. because that has been such a focus, really the primary driver of sector performance this year. The issues really -- the policy issues fall into 3 major buckets: tariffs, FDA and then MFN drug pricing. So first, on manufacturing-related tariffs, I think, are basically resolved. Seven out of the dozen largest pharmas agreed to reshore nearly $300 billion in manufacturing. Trump had said in an interview, he would give companies 1 to 1.5 years to reshore. And then after that, you would have escalating tariffs up to 200%. This has been kind of shrugged off by the market or the market, I should say, is unconcerned because this does give enough time for companies to manage their supply chains. For some of you who are in the industry, you know that it does take longer to stand up a manufacturing facility than 1.5 years. But when you add on other mitigations like bringing in inventory and things like that, the view is that, that is sufficient time to have no significant impact on drug companies. Second bucket, FDA, we think this is basically 90% resolved. The Head of FDA, Marty Makary has really been more externally transparent and even -- well, than probably any prior FDA commissioner. And in addition to that, he has been -- continued to be aggressive with the regulatory flexibility that you saw introduced under Peter Marks, who was the previous FDA commissioner. So that's really given folks in the space a lot of comfort. Now that said, some folks have pointed out that in the few edge cases that we have seen, right, regulatory decisions that have been made under this administration, the decisions have looked a little bit conventional or conservative. But things take time to change. Culture takes time to change. The new initiatives should definitely, we think, be directionally positive. For example, just a few days ago, Makary introduced a new framework for ultrarare diseases specifically that would formalize the ability for company sponsors to use single-arm trials, and that is very flexible and pro innovation. And then as you may have heard about, there is a new program that is introduced called the National Priority Review Program. The goal of that is to experiment with reducing the time for FDA review from 10 months to potentially a few weeks by dramatically reducing the way the different review functions work as silos, really, which is how things have been to working as integrated teams. We think if that experiment goes well, it could be expanded into something that becomes more just regular course of business at FDA, which would be very exciting for the speed of regulatory review at FDA. There's also plans to reduce animal testing, to use AI to make workflows more efficient and support reviewers. Okay. So the final bucket where there remains significant uncertainty is MFN drug pricing. Now even this, we think now, while there still is some uncertainty -- there are now some guardrails or outer bounds around how the kind of the worst-case scenarios. So I'm sure everybody saw that there was a U.S., Europe broad trade deal framework that was introduced that set maximum tariff rates at 15% and that would have been the most significant stick or threat to be used to compel companies to equalize or reduce the pricing gap between the U.S. and Europe. So that really does leave the administration with limited tools to force companies to match prices. Now the biggest stick is likely through Medicare. But that process, which is called the CMMI experiment is slow. It has established process that has lots of loopholes, lots of opportunities for people to -- stakeholders to push back. And so really, we think kind of change here is going to be much more incremental than initial fears. All right. So touch a little bit on China now. China has rapidly emerged as the #2 player in drug discovery. And not only that, they also are an extremely fast and scaled clinical drug developer as well, right? So you used to have the U.K., Australia that really were the fastest in the world in terms of translational to Phase I development. But they were always limited by the fact that those countries are smaller. And so it's hard to have -- to be scalable in terms of speed into Phase II and Phase III. Obviously, China has this natural advantage with a very large population in addition to its kind of centralized research ecosystem. They are now much faster than the U.S. at recruiting patients, and they can do it at significantly lower cost. So bottom line, China has become a significant player in the drug discovery and development ecosystem now. You've seen major pharma interest as a result. And then before really the recovery that just started recently there, the bear market in China was very significant. So many Chinese companies have been very open to deals with global pharma. As a result, last year, you saw about 1/3 of all deal volume in terms of licensing deals were done between Western companies and Chinese companies. Now since then, the China IPO market, as I mentioned, has reopened this year. So we would think dealmaking would likely be a bit more balanced going forward, and you're likely to see a slightly less proportion of global deals coming from China. Now from our perspective, from an RTW perspective, we think this trend is exciting. It does offer both opportunity and challenges. From the opportunity perspective, expands innovation. It's going to accelerate development time lines globally. It opens up new opportunities for collaboration. The challenges are kind of the obvious ones. You must cover China. It's now no longer an option or as an investment firm, you would have a dangerous blind spot. We think that offers our firm a significant advantage because we have a strong presence and brand there. And of course, just from a research perspective, it means much more information. It means much more complexity to manage as an investment research team. Finally, you see on the right side of the slide, AI. We're actually very excited about the investment opportunity in AI. And if you've spoken to some of our peers, you may have heard something different, which is that AI, it's going to take a while for it to impact drug development. We don't disagree with that. However, there's a much more near-term opportunity. We think the first major application of AI in health care is actually going to be outside of therapeutics in medical device and diagnostics. We are one of the few investment firms that have maintained a strong investment practice in those areas really since the inception of the firm. As a result, it's a significant opportunity for RTW because most of our peers, frankly, have exited the space over the last 5 to 10 years. We have that institutional knowledge of the space, which gives us a significant first-mover advantage as we kind of integrate AI into the research process. All right. Moving on. From a reporting perspective, historically, our public holdings were split into 2 buckets, core public and other public. Core public drove our long-term performance, while other public was helped -- was a tool for us to deploy excess cash efficiently. Now over time and engaging with our shareholders, the distinction between core and other public has become less relevant, we think. So we've decided to make a change and combine them, which simplifies reporting and doesn't change how the portfolio is managed. Public investments today now represent 70% of our NAV. As we discussed, we see a great opportunity to drive value from these given the valuation dislocation, especially in the public markets. So our private investments are the balance, roughly 30% of NAV. A majority of these are in companies that are, we think, strategically investment on average, relatively late stage for private companies and are closer to IPO-ready than you see in many traditional venture capital firms. Finally, royalties makes up a small proportion of NAV. We think these are a nice complement. The assets are cash generative. They're uncorrelated, they're downside protected. There is also a growing demand for royalty-based financing, which I will touch on a bit later. This next slide just gives a snapshot of the portfolio looking at through different lenses. As you can see, we're diversified across modalities, disease area and development stage all the way through commercial stage companies. Next slide. This is our top 10 portfolio positions as of the end of June. We have removed the core and noncore designations. There are some names in here that you'll be seeing for the first time. So I'll call out a few names. First, PTC. We're excited about this company. They're launching a best-in-class drug for a rare disease called PKU. Similarly, UroGen is also a launch stage company. They are the ones, I mentioned, they're launching the first nonsurgical option for noninvasive low-grade bladder cancer. Zai Lab, this is a biotech company that really is the preferred China partner for U.S. biotechs when they're looking for someone to commercialize their drugs in China. As an example, they have the China rights to Argenx, one of the leading global biotech companies and also Karuna, which was acquired by Bristol-Myers just a year ago. They're now going global. So they're transitioning from a China company to a global company. And in that pipeline, their lead asset is an oncology drug, an antibody drug conjugate or ADC for small cell lung cancer, which has shown some very promising initial data. Beta Bionics is a great example of one of our AI-enabled med tech companies. This basically uses a smarter algorithm to allow them to create a smarter insulin pump that's much closer to hands-free than traditional insulin pumps that you may be aware of, which basically a patient's life has to kind of revolve around managing. They're making that much better in terms of quality of life. Finally, on the private side, I would just call out Corxel and Kailera again, these are both potential best-in-class obesity companies with an oral and injectable GLP, respectively, touch a bit more on those a little bit later. All right. To bucket these into themes. One is cardiometabolic. Obviously, the -- in particular, the crossover obesity opportunity. MASH, again, which is fatty liver. Akero here is the first drug to show reversal of the latest stage of MASH patients, the cirrhotic patients. These are the sickest patients with the highest unmet need. We think is a multibillion-dollar opportunity. Immunology, this has been a consistent big focus for us over the last several years. We've had a number of winners in the portfolio in this therapeutic area. We're still finding very interesting things to do in here. You see some of the names. Finally, oncology -- actually, next oncology, due to the IRA, which highly disincentivized small molecule development in cancer, we have shifted the portfolio in the direction of biologics. The good news here is that there are quite a number of exciting medicines and using biologic technologies with the potential for transformative drugs. You see 3 of them here. Neuropsych innovation really just continues to get more interesting here. You may have heard us talk about psychedelics. GH Research is one of the ones that we're quite excited about. They had very promising Phase II data in treatment-resistant depression this year. We think theirs and other psychedelics could ultimately be effective in several indications with high unmet need like PTSD, like severe anxiety, like bipolar disorder. Rare disease, this has been another exciting year for genetic medicines. It's an important year for a couple of terrible diseases, Huntington's disease and Rett disease. Both of those are really super high unmet need. And then finally, med tech, it remains a policy safe haven, which is nice. And more excitingly, as I mentioned, it is really the place where you see the early application of AI, of LLM that leads to products that can actually do well commercially. All right. Obesity, as I mentioned, is a key focus for our private portfolio. It is the largest commercial opportunity in the history of the drug industry full stop. As a result, it's a key priority for us. Almost half of our private exposure is invested in companies developing next-gen obesity companies. Of these, of course, Corxel and Kailera are the 2 important ones. Together, they represent roughly 15% of NAV. Kailera, their leading product is an injectable GLP. They are approaching China Phase III data. The -- so far, all the data suggests that it's competitive with the leading drug in the space, which is Eli Lilly's Mounjaro. And they're still testing higher doses. So there's the potential to be the best-in-class. Corxel, this is the second most advanced oral small molecule GLP. They have China Phase II data that is competitive, again, with Lilly's leading compound, which is OFG. Some of you who follow the space might have seen recently over the summer that Lilly reported their Phase III with OFG, and that was disappointing. The weight loss was less than they showed in Phase II. That creates an opening for companies like Corxel to be best-in-class. I should mention that Corxel also has a Phase II/III stroke asset. This does not get as much attention for the obvious reasons, but those data are also promising. It's a very large opportunity, especially in China. So we're excited about it. So the company is not pretty far along in completing its Series D extension, have a lead investor, first close and final close are imminent. All right. So as I mentioned, we've had this emphasis on later stage. We really think that's where the opportunity is, especially the risk reward in a bear market. So 85% of our portfolio is either commercial or in late stages of development, as you can see in the green dotted box at the bottom right of the slide. Phase III assets in general have a relatively high success rate industry-wide. We try to improve upon those, and you can get these assets at enterprise values that sometimes are the same as preclinical stage assets that are in the public markets. So 45% of the portfolio is in this phase. And so we think really the risk reward is quite compelling at this point in the market cycle. You should also expect some more product launches. I mentioned a couple of those earlier. The portfolio is well positioned to capture some of these commercial opportunities that many of our venture capital peers just aren't structured to take advantage of. All right. Of the top private holdings, you see some of the events that are upcoming. I will just mention the most significant one for each, Corxel, so you're going to see our licensing partner in China, their Phase III readout, probably by the end of the year. You're going to see Corxel's own Phase II run in the U.S., that data next year. There's also going to be a stroke readout Phase II next year as well. Kailera, you're going to see China diabetes and obesity Phase III readouts. Ensoma next spring, you're going to see a proof of concept in their lead rare disease program called CGD. And then Artios, you're going to see Phase II data from pancreatic cancer probably by the middle of next year. All right. Just another way to kind of analyze performance over time of our private investments. As I mentioned, about 30% of the portfolio is invested in private assets right now. And just for context, the share price discount to NAV at June 30 was just shy of 30%. It has improved since then, which is good. It's headed in the right direction. But at June 30, that effectively meant that the private portfolio that we had was trading at a 90-plus percent discount, right, if you assume the rest of the portfolio should trade at par. Obviously, we think that's excessively conservative given the track record that we have demonstrated in the private portfolio and what we think are the exciting future prospects. So on this slide, we show the private investments that we've made in any particular year. You can think of them as vintages or cohorts by year and how those have subsequently fared. So for example, in 2020, we made 16 private investments. Of those, 11 have had liquidity events. We delivered a 2.4x MOIC to the one that did have those events. Full exits from the vintage have delivered a 4.4x. The remaining 5 investments that have not had a liquidity event are held at 1.2x MOIC. So even that group of companies that really was right before the beginning of the bear market has done all right. So this is a pretty consistent message across each cohort. On average, those investments without a liquidity event are held at roughly a 1x MOIC. It's -- that's much less than the average across liquidity events of 1.4 or the full exits 2.3. So we think this demonstrates kind of the opposite of the discount to NAV that there is inherent value in the private portfolio. So it's also worth remembering that our holding period to a liquidity event averages just over 1 year because the focus of our private investments are on later-stage companies. We do highest volume in crossovers. Most of our investments, we don't expect to participate in multiple private rounds before those companies go public. All right. Moving on to touch a little bit on royalties. This is a 3% exposure in the fund right now. We do it via another vehicle of ours called the 4010 Royalty Fund. This is managed by RTW on a fee-free basis for RTW Bio shareholders. Royalties, they're a differentiated route to participate in high-quality therapeutics with a different -- a lower risk profile versus equities. We focus really on approved products that are revenue generating or soon will be. And then we build in downside protection in the deal structures to protect the downside. This gives investors lower volatility, more stable returns across market cycles. So far we've deployed or committed to deploy a little bit over $200 million within the 4010 fund. That's across 4 royalties with Avadel, UroGen and Milestone. In terms of additional commitments that have yet to fund, we just announced Aquestive last month, and then we also expect to fund Milestone before the end of the year. The team is very busy. The pipeline is exciting. And this also reflects, I think, not just RTW is attracting this as a partner, but the growing demand for this type of non less dilutive financing for companies. All right. So related to royalties, to really be a successful royalty investor, you really have to have strong commercial forecasting expertise. We are very well positioned because we have always focused on commercial as much as on science. And that's really why I think we're able to enter this space and succeed. One thing I would point out is the data science in this area is growing and evolving very, very rapidly. And we are aggressively pursuing this. And we think right now, we have a leadership position. And bottom line is, as commercial underwriting evolves rapidly, we think we can -- it can continue to be a significant source of alpha for those that are on top of the changes in this part. All right. That's it for me. I'll hand it back to Woody and [ Oli ] to conclude and open it up for Q&A.

Excellent. Thanks, Roderick. Before we open up to Q&A, let me just wrap up quickly with what we think is a compelling outlook for RTW Bio. Since our IPO, we've delivered 63% NAV per share growth. That's well ahead of the Russell 2000 Biotech Index, the NASDAQ Biotech Index and the AIC Biotech & Healthcare Peer Index. And we've done that through many sort of small mini cycles. Looking ahead, the portfolio has many near-term inflection points driven by clinical and commercial catalysts, as Rod has said. And this is where the portfolio really starts to show its full potential. We also hold a number of what we think are attractive M&A targets. Merck's acquisition of Verona is a clear signal, we think Big pharma is actively acquiring innovation, our portfolio is well positioned to benefit from that trend. And we suspect that probably Avidity and Akero, 2 quite large positions are prime takeout candidates. On the policy front, the U.S. environment is becoming more stable, we think. The FDA remains pro-innovation. Tariff risks are receding and the MFN, Most Favored Nation pricing debate looks likely to resolve in a way that's less worse than maybe some had feared. Valuations remain extremely attractive, and we're in a golden era of scientific progress, but public equity prices are dislocated. So that for us creates a strong entry point for new capital. Finally, we expect some share price tailwinds, too. So the inclusion of the FTSE All Share Index and ongoing sector consolidation should support the share price relative to NAV. We'd like to thank you very much for your continued support as we move into what we think is an exciting new phase.