RTW BIOTECH OPPORTUNITIES: The ‘super cycle’ of innovation could set off the biotech fund like a rocket

New York-based RTW has successfully invested in life sciences companies over the past 15 years.

But never has founder Roderick Wong been as enthusiastic about the investment case for life sciences and biotechnology in particular as he is now.

Wong, who has built a company overseeing more than $7 billion in investments with support offices in China and London, says biotech is at a “historic moment in terms of investment opportunities.”

His bullishness is based on two trends. First, biotech is now emerging from a three-year bear market caused by a combination of high interest rates, runaway inflation and a resulting shortage of companies making the jump from private to publicly traded companies.

Second, and even more exciting, Wong believes the industry is in the “early phase of an innovation supercycle.”

He says: ‘It is powered by new technology leading to exciting new discoveries in a wide range of areas – from gene and cell therapy to small molecule therapies.’

While Wong believes many investors’ eyes are understandably fixated on artificial intelligence and the rise and rise of AI giant Nvidia, he says they should also look at biotechnology.

“It’s not getting the attention it deserves,” he adds.

For British investors, Wong’s company runs a listed investment trust called RTW Biotech Capabilities.

With a capitalization of £522 million, it invests in a diverse portfolio of biotech stocks – from start-ups to established companies listed on a public stock market.

Wong is the portfolio manager alongside Naveen Yalamanchi. Ideally, he prefers to invest throughout the entire life cycle of a company.

He says: ‘We like to be involved from the start when a company is private. We do our due diligence and then work closely with them, perhaps taking a seat on the board and gaining trust along the way.

‘But unlike venture capitalists, we do not exit the company if the company goes public. Often we stick with our investment and reap a greater reward as a result.”

The company has taken this approach with gene therapy specialist Rocket Pharmaceuticals, a US company it helped found almost nine years ago.

Rocket went public in early 2018 and is now one of the largest gene therapy companies in the world, leading the fight against cardiovascular disease.

Wong is chairman of the company and says that “the future looks more exciting than the past.” The largest portfolio interest is in US-listed Avidity Biosciences.

This year, the share price has already risen by more than 300 percent – reflecting impressive results for a study into the treatment of a rare form of muscular dystrophy.

RTW Biotech’s assets got a boost earlier this year when it acquired Arix Bioscience. In terms of performance, the trust’s shares have returned 45 per cent since the fund’s launch in October 2019.

This is better than the average return of 22 percent from the biotech and healthcare sectors. It’s also a gain that came despite the three-year biotech bear market.

Rivals include Biotech Growth and International Biotechnology. Like RTW, they are both listed on the London Stock Exchange.

The total costs of RTW Biotech are high at 2.78 percent. The stock market identifier is BKTRRM2 and the ticker is RTW. The shares are priced in both US dollars and British pounds.

Currently, they stand at a 14 percent discount to the value of the underlying assets.