RTW Biotech Opportunities H1 2025: NAV Decline Offset by FTSE All Share Inclusion

H1 2025 at a glance: softer NAV, wider discount, brighter outlook

RTW Biotech Opportunities’ half-year numbers capture a tough first half for small and mid-cap biotech. Net asset value (NAV – the value of the underlying portfolio) fell 6.0% to $561.0 million, or $1.70 per share. The share price slipped 13.6% to $1.21, leaving the discount to NAV at 28.8%.

That is the backward-looking picture. Looking forward, July delivered a +7.8% NAV return and FTSE Russell has confirmed the shares will join the FTSE All Share from 22 September. Management also points to a more supportive policy backdrop in the US and an uptick in M&A.

Key metric	30 Jun 2025	Change in period	31 Dec 2024
NAV (Ordinary Shares)	$561.0 million	(6.0%)	$606.9 million
NAV per share	$1.70	(6.0%)	$1.81
Share price	$1.21	(13.6%)	$1.40
Discount to NAV	(28.8%)	(6.0%)	(22.8%)
Shares in issue	330.1 million	(1.7%)	335.7 million
Portfolio mix	Public 70%, Private 32%, Royalty 3%	–	Public 65%, Private 30%, Royalty 3%
Leverage (commitment method)	1.3x	up from 1.2x	1.2x

Context matters: RTW outperformed the small-cap focussed Russell 2000 Biotech Index (-11.4%) over the half, though it lagged the large-cap skewed Nasdaq Biotech Index (-1.9%). Since IPO in 2019, NAV per share is up 63.4%.

What moved the dial in H1 2025

Public markets did most of the damage in the half, but there were some standout winners. A quick run-through of the biggest swing factors on NAV per share:

• Akero +3.8%: shares rose 91.8% on positive MASH data for EFX and takeover speculation.
• UroGen +1.5%: FDA approval for ZUSDURI, complementing Jelmyto, lifted the stock 28.6%.
• Rocket -4.4%: a patient death placed RP-A501 on clinical hold. The hold was lifted post-period with a recalibrated dose regimen.
• Dyne -2.0%: data were positive in DM1 but not enough for investors; the revised accelerated approval plan pushed timelines.

On the private side:

• Corxel +1.1%: an RTW-created company developing CX11, an oral GLP-1 for obesity, enrolled its first US Phase 2 patient after positive China Phase 2 data and received a dividend related to Aficamten’s sale to Sanofi. GLP-1s are the weight-loss drug class in the headlines.
• Artios -3.0%: encouraging early oncology data hit multiple indications, which increases development costs – and investors marked the position down.

Capital markets activity included the IPO of obesity-focused Metsera (+7.4% since listing) and Jade Biosciences’ reverse merger into Aerovate to become JBIO. Two previously private holdings – Beta Bionics (BBNX) and JBIO – are now part of the public bucket.

Portfolio shape: later stage, more public exposure

The portfolio is tilted to later stage assets, which generally have clearer catalysts and higher probabilities of success than discovery-stage projects:

• Development stage exposure: 32% commercial, 64% clinical, 4% pre-clinical.
• Economic exposure by bucket: 70% public, 32% private, 3% royalties.
• Five new private positions were added, notably American Laboratories (1.4% of NAV) and Prolium Bioscience (1.3% of NAV).

RTW has also simplified its reporting. The old split between “core public” and “other public” is gone; listed holdings are now shown as a single public category alongside private and royalties. Presentation change only – not a strategy shift.

Royalty income: steady contribution with catalysts ahead

Royalties are 2.8% of NAV and added a small positive to returns. Highlights:

• Lumryz sales continue to perform; 2025 revenue guidance raised to $255-$265 million.
• Jelmyto remains on track with 8-12% 2025 growth guidance; Zusduri received FDA approval on 12 June, with royalty rights on both therapies.
• A potential new royalty on Cardamyst at Milestone Pharmaceuticals is contingent on an expected H2 FDA approval.

Discount, buybacks and capital discipline

The discount widened to 28.8%. The board responded with buybacks – 5,650,000 shares in H1 2025, equal to 15% of traded volume, following 8,500,000 repurchased in 2024. Buybacks have been accretive to NAV per share and support liquidity.

The board’s stance is pragmatic: balance buybacks against the opportunity to deploy capital into attractive public and private valuations. If there is a chunky cash inflow from a sale, they intend to consider returning a portion through further buybacks.

After the period end: index inclusion and fresher catalysts

• July NAV return of +7.8%, lifting annualised NAV total return to +76.3% to end-July.
• FTSE All Share inclusion from 22 September should improve visibility and potentially narrow the discount as index trackers build positions.
• Merck agreed to buy Verona Pharma for about $10 billion at $107 per ADS. RTW’s position added 0.9% to July’s NAV return and has been sold.
• Kailera, a 5.0% NAV private holding, announced positive China Phase 3 results for HRS9531 in obesity, with a favourable safety profile consistent with GLP‑1s.
• Rocket announced a 30% workforce reduction and pipeline prioritisation, with cash runway into 2027.
• Cargo Therapeutics entered a definitive agreement to be acquired by Concentra Biosciences after halting its pipeline.

Policy and market backdrop: more favourable than headlines suggest

Management’s read-through is constructive. New FDA leadership is signalling support for regulatory flexibility and faster paths to approval. The US administration’s “Make American Biotech Accelerate” initiative underscores the sector’s strategic importance. Tariff talk and drug pricing noise matter more to large pharma than to early-stage biotech, in their view.

Valuations remain depressed, particularly in US small and mid-cap biotech, with nearly half of companies trading below cash at 30 June. M&A is accelerating – $49 billion of deals were announced in H1, already ahead of the 2024 full-year total – as big pharma faces looming patent cliffs and looks to replenish pipelines.

Why this matters for investors

Here is my take, in plain English, on what to watch and why:

• Wider discount, stronger catalysts: a 28.8% discount gives valuation support, while FTSE inclusion and rising M&A could be the spark for a re-rating.
• Later-stage tilt provides ballast: with 96% of development-stage exposure in clinical or commercial programmes, RTW is leaning into nearer-term news flow.
• Stock picking is driving outcomes: winners like Akero and UroGen offset some knocks from Rocket and Dyne. Expect more volatility around binary clinical readouts – that is the nature of biotech.
• Private pipeline has punch: Corxel and Kailera keep RTW levered to obesity, one of the largest growth markets in healthcare. MOIC history on privates to liquidity event sits at 1.7x since inception, with full exits at 2.3x.
• Royalty sleeve adds non-dilutive cash flows: small today, but the Cardamyst decision in H2 could add another income stream.

Risks to keep in mind

• Clinical and regulatory risk is inherent – adverse events and trial setbacks can hit NAV quickly, as seen with Rocket.
• Market risk in small-cap biotech remains elevated. Benchmark performance diverged sharply in H1 and sentiment can swing on macro headlines.
• Private valuations can be marked down when comps fall or funding costs rise. RTW reported an average private valuation change of -6.4% across 42 adjustments.

Bottom line

H1 2025 was bruising for biotech, yet RTW Bio cushioned the blow versus its small-cap benchmark and kept building optionality across public, private and royalty assets. With July’s rebound, FTSE All Share inclusion, growing M&A, and multiple obesity readouts ahead, the ingredients for a discount-narrowing re-rating are in place. You still need a strong stomach for volatility – but if you want specialist access to otherwise hard-to-reach biotech stories, this vehicle continues to offer it.

Note: the company reports the share price was $1.51 on 9 September 2025. Benchmarks for H1: Russell 2000 Biotech -11.4%, Nasdaq Biotech -1.9%.