REG-The Biotech Growth Trust PLC: Half-year Financial Report
20/11/2025 07:02
LONDON STOCK EXCHANGE ANNOUNCEMENT
The Biotech Growth Trust PLC
(the “Company”)
Unaudited Half-Year Results for the Six Months ended 30 September 2025
The statements below are extracted from the Company’s half-year report for
the six months ended 30 September 2025 (the "Half Year Report"). This
announcement contains references to graphs and charts which appear in the Half
Year Report, which will shortly be available on the Company’s website at
www.biotechgt.com .
Up to date information on the Company, including daily NAVs, share prices and
monthly fact sheets, can also be found on the website.
The Half Year Report has been submitted to the Financial Conduct Authority,
and will shortly be available for inspection on the National Storage Mechanism
(NSM) at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information please contact: Katherine Manson, Frostrow Capital
LLP, 020 3709 8734
COMPANY PERFORMANCE
KEY STATISTICS
As at As at
30 September 31 March %
2025 2025 Change
Net asset value (“NAV”) per share 1,117.2p 815.9p 36.9%
Share price 1,005.0p 754.0p 33.3%
Discount of share price to NAV per share^ 10.0% 7.6%
Benchmark 1,139.0 1,030.1 10.6%
Gearing/(net cash)^ 9.3% (3.8%)
Ongoing Charges^ 1.3% 1.1%
Active Share*^ 76.2% 73.0%
^ Alternative Performance Measure (see Glossary)
* Source: Frostrow Capital LLP
CHAIR’S STATEMENT
INTRODUCTION AND RESULTS
I am pleased to report that in the first six months of this financial year,
the Company’s NAV per share total return^ was 36.9%, outperforming the
increase of 10.6% in the NASDAQ Biotechnology Index (total return, net of
withholding tax, sterling adjusted)(the “Benchmark”). This performance was
driven by a resurgence in small-cap biotech stocks, a segment where the
Company remains structurally overweight.
Several holdings delivered exceptional returns, notably Mineralys
Therapeutics, Alnylam Pharmaceuticals and Avidity Biosciences, each benefiting
from positive clinical data, regulatory progress or acquisition interest. The
Company also benefitted from a general increase in merger and acquisition
(“M&A”) activity in the sector, a trend that is expected to continue as
large pharmaceutical companies seek to replenish pipelines ahead of looming
patent expirations. Indeed, after the period end, Novartis announced that it
had reached an agreement to acquire Avidity Biosciences at a 46% premium to
the last closing share price.
Exposure to Chinese biotech was increased mid-period to capture a recovery in
that market, supported by increasingly strong innovation and favourable
clinical trial economics. However, exposure was subsequently reduced to
reallocate to more promising US biotech opportunities and to mitigate risks
relating to geopolitical developments. Investments in China represented 15.7%
of the portfolio as at the period end. The Portfolio Manager continues to
monitor and participate selectively in opportunities in China. For example,
the Company was a cornerstone investor in the initial public offering of
GenFleet Therapeutics, a biotech company based in Shanghai which is focused on
developing cutting-edge therapies in oncology and immunology. Our
participation in this type of opportunity reflects OrbiMed’s local presence
and research expertise in China.
Gearing has increased from nil to 9.3% over the period. The presence of
gearing over the period contributed 1.6% to the Company’s NAV performance.
Despite the positive performance, the period was not without challenges.
Holdings including Vertex Pharmaceuticals and Gilead Sciences detracted from
returns due to regulatory setbacks and weaker-than-expected product launches.
The Company’s NAV return was also dampened by the increase in sterling over
the period by 4.3% against the U.S. dollar, being the currency in which the
majority of the Company’s investments are denominated.
Overall therefore, following a difficult period, I am pleased to report an
excellent six-month period for the Company. The performance during the period
highlights the volatility inherent in the biotechnology sector, particularly
within the small-cap segment, and underscores the importance of active
portfolio management. The Company’s high turnover rate reflects OrbiMed’s
approach to managing risk: positions are actively traded to avoid overexposure
to companies approaching pivotal, potentially binary events.
A comprehensive explanation of performance over the period is set out in the
Portfolio Manager’s Review.
SHARE PRICE PERFORMANCE
The discount^ of the share price to the NAV per share widened over the period:
at 31 March 2025, the discount was 7.6% and at 30 September, 10.0%. This meant
that the share price return^ over the six months was 33.3%, falling short of
the NAV return.
Shareholders will be aware that the Company pursues an active discount
management policy, buying back shares when the discount of the Company’s
share price to the NAV per share is higher than 6%. Accordingly, during the
period the Company bought back 4,029,569 shares, at an average discount of
9.1% to the NAV per share, at a cost of £32.8m. At the
period end there were 23,083,022 shares in issue and, as noted above, the
share price traded at a 10.0% discount to the NAV per share. As we have
previously commented, the shares can trade at a discount wider than 6%,
particularly in volatile markets or in periods of muted demand for the
Company, the investment trust sector or for equities in general. Furthermore,
during periods of rapid NAV appreciation it is not uncommon for the share
price to lag temporarily, reflecting the time it takes for market sentiment
and trading activity to adjust to the underlying portfolio performance.
The Company remains committed to protecting a 6% share price discount over the
longer term and on 12 November shareholders approved the Board’s proposal to
renew the Company’s authority to buy back shares, the previous authority
(which was granted at the last annual general meeting in July) having nearly
been exhausted. Over 99% of the votes received were in favour of the proposal.
Since the period end a further 1,436,551 shares have been bought back for
cancellation and at the time of writing the share price discount stands at
9.5%.
COMPANY CONTINUATION
At the Annual General Meeting (“AGM”) held in July, shareholders approved
a resolution for the Company to continue as an investment trust for a further
five-year period. The resolution received 77% of votes cast in favour.
Approximately 31% of the Company’s issued share capital was voted. The Board
engaged with the dissenting shareholder both prior to and following the AGM
and understands that, as a large institutional investor, their concerns
centred on the Company’s performance, size and liquidity.
The Board recognises that a period of weak performance, combined with the
Company’s active discount management policy, has led to a material reduction
in the Company’s size. In response, and to provide shareholders with an
earlier opportunity to reassess the Company’s future, the Board has
committed to holding a one-off continuation vote in 2028, two years ahead of
the next scheduled vote in 2030.
Should the Company’s performance continue to improve, the Board hopes that
the pace of share buybacks will abate and, ultimately, our ambition is for the
Company to return to a position where it can grow through the issuance of new
shares.
PERFORMANCE FEE
Although the Company significantly outperformed the Benchmark during the
period, there is no provision within the Company’s NAV for any performance
fee payable at a future calculation date. This is because the performance fee
is dependent on the Company’s long-term outperformance: a performance fee
only becomes payable if and when the Company’s cumulative outperformance
gives rise to a performance fee that exceeds the total of performance fees
paid to date. This ensures that a performance fee is not payable for any
outperformance until previous “lost ground” has been recovered.
THE BOARD
As previously announced, we were very pleased to welcome Professor Dame Jenny
Harries to the Board, with effect from 16 September 2025. We believe Dame
Jenny’s unparalleled experience in healthcare will bring an invaluable
perspective to the Board.
OUTLOOK
The biotech sector has entered the final quarter of 2025 with renewed
momentum. After several years of subdued performance, signs of a more
sustained recovery are emerging. Although valuations remain low, particularly
among small and mid-cap companies, investor confidence is returning as
interest rates in the U.S. fall and political uncertainties begin to
dissipate.
Innovation is the driving force behind the sector’s progress. As our
Portfolio Manager highlights, advances in cutting-edge areas such as gene
therapy, RNA-based treatments, and immuno-oncology are delivering promising
clinical results, with several first-in-class therapies approved or nearing
approval. The regulatory stance in the U.S. remains broadly supportive, with
recent changes aimed at accelerating drug approvals and streamlining clinical
trials. M&A activity has picked up meaningfully in 2025 and is expected to
remain robust into 2026.
While the outlook is encouraging, challenges remain. Drug pricing reforms,
tariffs, geopolitical tensions between the U.S. and China, and competition in
high-profile therapeutic areas such as obesity and oncology continue to pose
risks. As long-term investors in this space, we remain acutely aware of its
inherent volatility; sentiment and valuations can shift rapidly, in both
directions. The past six months have demonstrated how swiftly fortunes can
change, so while we welcome this nascent recovery, we do so with measured
optimism.
The Portfolio Manager will remain focused on identifying high-quality,
innovative companies capable of navigating these complexities and delivering
long-term value. The Board believes that the Portfolio Manager’s investment
strategy, which is focused on fundamental research, scientific innovation,
active management and prudent risk management, will serve long-term
shareholders effectively in the years ahead.
Roger Yates
Chair
19 November 2025
^ Alternative Performance Measure. See glossary.
PORTFOLIO MANAGER’S REVIEW
PERFORMANCE
The Company’s net asset value per share increased 36.9% during the six-month
period ended 30 September 2025. The Company’s performance significantly
exceeded that of the benchmark, the NASDAQ Biotechnology Index (net, total
return, sterling adjusted), which increased 10.6% over the same period.
Currency movement contributed negatively to performance, as the U.S. dollar
depreciated 4.3% relative to the British pound during the review period. Over
80% of the Company’s investments are in U.S. listed securities.
The global biotech sector experienced a strong resurgence during the review
period, driven by especially robust performance by small cap biotech
companies, as shown in Figure 1 (shown on page 5 of the Half Year Report). The
Company’s significant overweighting in small cap biotech companies drove
much of the outperformance versus the Benchmark.
The first three months of the review period were characterised by more muted
performance given macro healthcare policy overhangs that emerged after
President Trump’s election, including the appointment of Robert F. Kennedy,
Jr. as Secretary of Health & Human Services, investor fears over U.S. Food and
Drug Administration (“FDA”) budget cuts, Trump’s executive order calling
for “most favored nation” pricing for drugs, and the prospect of tariffs
on pharmaceuticals. The latter three months of the review period were
characterised by much stronger sector performance as many of those political
overhangs lifted, M&A continued, and investors anticipated rate cuts by the
U.S. Federal Reserve (the “Fed”).
CONTRIBUTORS TO PERFORMANCE
Contribution
per share
Top Five Contributors £’000 (pence)*
Mineralys Therapeutics 6,997 27.5
Alnylam Pharmaceuticals 5,419 21.3
Avidity Biosciences 4,524 17.8
Akeso 4,449 17.5
CG Oncology 4,104 16.1
25,493 100.2
* based on 25,459,150 shares being the weighted average
number of shares in issue during the six months ended 30 September 2025
The principal contributors to performance during the review period were
Mineralys Therapeutics, Alnylam Pharmaceuticals, Avidity Biosciences, Akeso
and CG Oncology.
• Mineralys
Therapeutics is a clinical-stage biotechnology company
developing lorundrostat, a drug with a novel mechanism of action for the
treatment of hypertension. In March 2025, the company announced positive data
from two Phase 3 studies of lorundrostat in hypertension with efficacy
superior to standard of care. In August 2025, AstraZeneca announced inferior
hypertension data for its competing drug, baxdrostat, suggesting lorundrostat
could be the best-in-class treatment for this indication. Mineralys’ stock
outperformed following these data releases.
• Alnylam
Pharmaceuticals is a commercial biotech company with an
industry-leading platform based on small interfering RNA (siRNA). The company
reported stronger-than-expected initial sales for its first-in-class siRNA
therapy, Amvuttra for ATTR cardiomyopathy. Driven by sales of Amvuttra, the
company is on track to achieve profitability this calendar year and continues
to develop a rapidly expanding pipeline targeting diseases in the
cardiovascular, metabolic, and rare disease areas.
• Avidity
Biosciences is a clinical stage company developing a new
class of RNA therapeutics targeting neuromuscular diseases. The stock rose
after the company achieved alignment with regulators in June on approval
requirements for its drug for facioscapulohumeral muscular dystrophy, a rare
muscle disorder. In early August, there was also media speculation that
Avidity had attracted acquisition interest from multinational pharma
companies. Avidity is on track to launch three blockbuster neuromuscular
disease therapies in the next 18 months should pivotal trials read out
positively in 2026.
• Akeso
is a Chinese biotech company developing a first-in-class PD-1/VEGF
bispecific antibody for a variety of cancers, including lung, gastric, and
liver cancer. Initial data for the antibody showed promising efficacy versus
standard-of-care treatments for lung cancer. Pfizer and Bristol Myers Squibb
have also in-licensed drug candidates with a similar mechanism of action,
validating the potential for this drug class.
• CG Oncology
is a near-commercial stage biopharmaceutical company
developing treatments for non-muscle-invasive bladder cancer (NMIBC). In
September, the company announced potentially best-in-class durability of
benefit for its drug in NMIBC over 24 months. Additionally, Johnson & Johnson
announced a higher-than-expected price for its competing product in NMIBC,
suggesting the market potential for CG’s drug may be higher than initially
anticipated.
DETRACTORS FROM PERFORMANCE
Contribution per share
Top Five Detractors £’000 (pence)*
Vertex Pharmaceuticals (2,594) (10.2)
Gilead Sciences (1,998) (7.8)
Edgewise Therapeutics (1,325) (5.2)
Catalyst Pharmaceuticals (1,272) (5.0)
Amgen (1,140) (4.5)
(8,329) (32.7)
* based on 25,459,150 shares being the weighted average
number of shares in issue during the six months ended 30 September 2025
The principal detractors from performance were Vertex Pharmaceutics, Gilead
Sciences, Edgewise Therapeutics, Catalyst Pharmaceuticals and Amgen.
• Vertex
Pharmaceuticals commercialises treatments for cystic
fibrosis, sickle cell disease, transfusion-dependent beta thalassemia and
acute pain and has a clinical-stage pipeline focused on these disease areas.
Vertex underperformed due to a disappointing Q1 2025 earnings report and
subsequent negative updates for its pain franchise. The company announced the
Phase 2 failure of its next-generation acute pain treatment, VX-993, and the
FDA informed the company that it would not be able to get a broad label in
chronic peripheral pain for its first-generation product, suzetragine. Given
more limited prospects for the pain franchise and slowing growth for the core
cystic fibrosis franchise, the Company exited its position in Vertex.
• Gilead Sciences
is a commercial-stage biopharmaceutical company developing
medicines to prevent and treat life-threatening diseases, including HIV, viral
hepatitis, COVID-19, and cancer. Gilead stock declined modestly in the period
as investors tempered their expectations for the launch of the company’s
biannual HIV prevention treatment, Yeztugo.
• Edgewise
Therapeutics is a clinical stage company developing
treatments for muscle dystrophy and cardiovascular disease. Edgewise shares
declined after reporting top-line Phase 2 results in April for its drug EDG
- 7500 for hypertrophic cardiomyopathy. While the trial showed
promising efficacy, the results also showed concerning safety signals,
including atrial fibrillation. These adverse events, while not unexpected in a
Phase 2 trial, raised investor concerns about a potential negative impact on
regulatory approval prospects and market acceptance.
• Catalyst
Pharmaceuticals is a commercial stage company focusing on
rare diseases. Catalyst’s stock declined after reporting
weaker-than-expected revenues from its products in Q2 2025. Investors were
also likely disappointed by the lack of increase in annual guidance.
• Amgen
is a diversified biopharmaceutical company developing and
commercialising medicines to treat cancer, heart disease, osteoporosis,
inflammatory diseases and rare diseases. Amgen’s stock price declined during
the period on perceived risk from Trump’s pharmaceutical tariffs and
concerns about the prospects for its obesity drug, MariTide, in an
increasingly competitive market.
VALUATIONS REMAIN COMPELLING
Despite the recovery seen during the review period, absolute valuations for
the sector remain depressed relative to historical averages, suggesting
further substantial upside in the months ahead after four years of tepid
sector performance.
As shown in Figure 2 (on page 8 of the Half Year Report), the median ratio of
market cap to net cash on the balance sheet for publicly-traded biotech
companies at the end of the review period remains well below historical
averages. As of 30 September, we estimate roughly 10% of publicly-traded
biotech companies were still trading at market caps below the net cash on
their balance sheets.
Biotech staged a nascent rally in late 2023 and early 2024, but this recovery
was stopped prematurely by new political overhangs that emerged after
Trump’s election in November 2024 which drove valuations back down to
all-time lows. As those political overhangs began to lift over the past six
months, coupled with anticipation that the Fed would start cutting interest
rates, a second recovery attempt began, which we believe will be more
sustained.
Structurally, we remain significantly overweight small cap and mid cap stocks
as we believe these segments are the most undervalued and have the most upside
potential in the months ahead.
On a relative performance basis, Figure 3 (shown on page 9 of the Half Year
Report) shows how small cap biotech in particular (as captured by the Russell
2000 Biotech Index) has underperformed the S&P 500 by 116% over the past four
and a half years. This relative performance drawdown has been unprecedented in
its severity and duration, and we believe this segment of the biotech universe
therefore offers the highest potential for gains if the long-anticipated
reversion in performance materialises in the months ahead.
HEALTHCARE POLICY OVERHANGS DISSIPATING AS RATE CUTS RECOMMENCE
A number of healthcare policy developments weighed on the sector during the
first half of the review period which gradually dissipated during the latter
half:
1) Pharmaceutical tariffs – As early as
March 2025, President Trump had publicly floated the
idea of instituting a 200% tariff on pharmaceuticals imported from outside the
U.S. The prospect of pharmaceutical tariffs was much more of a threat to Big
Pharma, which have established manufacturing locations outside the U.S. in
such places as Ireland, rather than a significant threat to biotech, most of
which are pre-commercial companies that have time to switch manufacturing to
U.S. locations and whose costs of goods sold are still relatively low.
However, the prospect of tariffs weighed on the biopharmaceutical sector
generally. In late July, the Trump administration agreed to a broad 15% tariff
cap on products imported from the EU into the U.S. The cap applies to
pharmaceutical products, so fears of excessive tariffs of pharmaceuticals
abated.
2) FDA budget cuts – In February 2025,
the Trump administration began instituting budget cuts
at the FDA as part of Trump’s broad campaign to reduce federal government
spending. Investors feared that such cuts would slow down the drug approval
process at the agency. Notably, a majority of the budget allocated to drug
reviews is actually paid by the biopharmaceutical industry itself in the form
of drug application fees, so that funding remained intact despite budget cuts
elsewhere in the agency. Additionally, FDA commissioner Marty Makary stated
publicly numerous times that the FDA would not cut key staff relevant for drug
reviews. In fact, he stated that he wanted to accelerate drug approvals by
reducing regulatory roadblocks that delay novel drugs from reaching the
market. Consistent with this aim, Makary introduced policies that exempt
certain drugs from animal testing and also introduced a National Priority
Voucher program that allows selected drugs to gain approval in 1-2 months
rather than 10-12 months.
Over the course of the review period, drug approvals largely occurred on time,
meeting statutory deadlines. As investors recognised that the pace of drug
approvals was not being impaired by the budget cuts, fears over the impact of
such cuts gradually dissipated.
As shown by the dotted box in the last column of Figure 4 (shown on page 10 of
the Half Year Report), the annualised expected number of drug approvals for
2025 based on the run rate for the first three quarters of the year remains
consistent with the high level of drug approvals for the previous eight years.
3) Controversial FDA and HHS leadership appointees –
Right after Trump’s election in
November 2024, the President nominated Robert F. Kennedy, Jr. to head up the
Department of Health and Human Services (HHS), which oversees the FDA. Given
Kennedy’s reputation as a noted vaccine sceptic, there was widespread
concern among investors that the FDA would become less science-based when
evaluating drugs and vaccines.
While significant uncertainty has been introduced with regards to the
regulatory process for vaccines, it does not appear that drug reviews have
been adversely affected. Additionally, new FDA commissioner Marty Makary, an
academic surgeon, appears to be reasonable and science-based. In May,
investors became alarmed when Makary appointed Dr. Vinay Prasad as the next
director of the FDA’s Center of Biologics Evaluation and Research (CBER),
the centre that approves gene and cell therapies. Prasad had previously stated
in media interviews and published comments that he felt the FDA had not been
stringent enough in its regulatory approval standards, suggesting that it
would be more difficult to get those therapies approved under his leadership.
Thus far, we have seen no adverse change in regulatory requirements for gene
and cell therapies since Prasad’s appointment. In fact, in late September,
CBER published a new FDA guideline recommending more efficient clinical trial
designs to expedite approvals of cell and gene therapies for small
populations.
4) Drug pricing reform – In May, President Trump signed
an executive order calling for “most favored nation” (“MFN”) pricing
for drugs in the U.S., causing concern among investors that drug pricing in
the U.S. could be negatively affected. Trump expressed his dismay that drug
prices in Europe are significantly lower than prices in the U.S. and called
for equalisation of pricing so that Europe paid its fair share of research and
development costs. The order was very similar to an executive order that Trump
had signed during his first term, which ultimately was not implemented. Our
view is that significant drug pricing reform can only occur through
Congressional legislation, which will be very difficult to pass. However, in
late September, Pfizer announced a landmark agreement with the Trump
administration in which the company agreed to offer significantly discounted
pricing for certain Pfizer drugs sold directly to consumers via Trump’s new
TrumpRx website. Pfizer also agreed to offer MFN pricing for its drugs sold to
Medicaid, the government-sponsored healthcare program for the poor. In
exchange, the government agreed to spare Pfizer from pharmaceutical tariffs
for three years as long as the company continued to invest in manufacturing in
the U.S. The deal has minimal negative financial impact to Pfizer yet gives
Trump an important headline win to show the American people he is succeeding
in lowering drug prices in the U.S. Importantly, the Pfizer agreement creates
a template that other Big Pharma companies can follow to placate the Trump
administration without significant negative impact to future earnings.
Overall, the political overhangs that weighed on the biotech sector during the
first half of the review period have gradually waned, allowing the biotech
sector to recover.
The other macro catalyst that helped spur a recovery in biotech during the
latter half of the review period was increasing investor expectations that the
Fed would start cutting interest rates again. At the Jackson Hole Economic
Policy Symposium in August, Federal Reserve Chair Jerome Powell acknowledged
the weakening U.S. labour market and indicated that the Fed was open to
lowering rates at the September meeting if economic data justified it. Indeed,
the Fed did cut interest rates by 0.25% in September and signalled further
rate cuts were likely. As a long-duration, high-growth sector, biotechnology
has historically outperformed the broader markets in a rate-cut cycle, with
small-cap biotech generally doing particularly well.
CONTINUED RISE OF BIOTECH IN CHINA
In 2015, China announced its 10-year “Made in China 2025” plan, which made
developing a domestic biotechnology industry a priority for the country. With
explicit government support, the biotechnology industry in China has grown in
scale and quality. The research and development capabilities of Chinese
biotech companies are now on par and in some cases better than their Western
peers. Importantly, Chinese companies can conduct clinical trials faster and
cheaper than U.S. and European companies, shortening early-stage drug
development timelines. As shown in Figure 5 (on page 12 of the Half Year
Report), approximately 30% of new clinical trial starts in the global
biopharmaceutical industry are now being conducted by Chinese companies, a
level higher than that of Europe and rapidly approaching the clinical trial
activity of the United States.
The speed and cost advantages of conducting clinical trials in China have not
gone unnoticed by western Big Pharma companies. A new business model is
emerging in which a Big Pharma company in-licenses ex-China rights for an
innovative drug from a Chinese biotech company and conducts early Phase1/2
clinical trials in China to demonstrate initial efficacy and safety of the
drug. Since the FDA does not accept drug applications that only include
Chinese data, the Big Pharma company would still be required to conduct large
Phase 3 registrational trials in the U.S. and Europe in order to garner
regulatory approval in those geographies. In exchange, the Chinese biotech
company would receive royalties on any ex-China sales.
As shown in Figure 6 (on page 13 of the Half Year Report), the number of such
licensing deals has increased dramatically over the past five years, with
upfront payments that can exceed $1 billion. The number of deals signed in
calendar year 2025 has already exceeded that of prior years and is on pace for
a fifth consecutive record year.
The rise of biotech innovation in China has led to a recovery in the Chinese
healthcare sector, as shown in Figure 7 (on page 13 of the Half Year Report),
a graph of the Hang Seng Healthcare Index (“HSHCI”), which tracks Hong
Kong-listed healthcare companies. Despite the recent recovery, the HSHCI is
still 44% below its highs in June 2021, and we believe there is more upside
for the sector as further business development deals and clinical data are
announced.
Given the Company’s global mandate, we have historically maintained a 10-15%
weighting in Chinese biotech. We increased that exposure in July and August to
capture the recovery in China, but began taking profits in many of those
positions by the end of September.
OrbiMed has a longstanding local presence in China and now has three public
equity analysts based in our Shanghai and Hong Kong offices identifying
Chinese biotech investments. Our presence in the region allowed us to secure
cornerstone investments in two Hong Kong IPOs of Chinese biotech companies: 1)
Nanjing Leads Biolabs, which is developing bispecific antibodies for cancer,
and 2) GenFleet Therapeutics, which is developing cancer therapeutics
targeting the Ras pathway. Both investments were up over 95% from their
respective IPO prices through the end of the review period. We will continue
to capitalise on our competitive advantage in sourcing attractive Chinese
biotech investments.
M&A ACTIVITY INCREASED DURING THE PERIOD
As shown in Figure 8 (on page 14 of the Half Year Report), M&A activity in the
biotech sector increased during the review period after a transient lull in
the second half of 2024 due to macro policy uncertainties. We believe M&A
activity will remain robust for the balance of the fiscal year. Global
pharmaceutical companies continue to face patent expirations on many of their
blockbuster drugs over the coming years and will look to acquire biotech
companies to maintain their revenue growth.
The Company benefited directly from one transaction during the review period:
Merck KGaA’s $3.9 billion acquisition of SpringWorks Therapeutics. While the
timing of M&A can be difficult to predict, we estimate over 80% of the
Company’s NAV as of 30 September 2025 is in names that could be acquired by
a larger company. Ongoing M&A activity should continue to serve as a tailwind
for the sector, lifting the valuations of biotech companies with de-risked
assets in particular.
INNOVATION CONTINUES TO DELIVER NOVEL THERAPIES FOR UNMET MEDICAL NEEDS
Fundamental innovation in the biotech sector remains very strong, with
significant advances in drug development across a wide range of technologies.
We prefer to invest in companies developing either a first-in-class or
best-in-class drug.
Some examples of groundbreaking developments that have occurred in the sector
in 2025 include:
• United Therapeutics
reported positive Phase 3 data for Tyvaso, its inhaled prostacyclin analogue,
for the treatment of idiopathic pulmonary fibrosis (“IPF”), a chronic
progressive lung disease characterised by the gradual scarring and stiffening
of the lungs. Tyvaso could potentially be the first inhaled medicine approved
for IPF.
• Roivant Sciences reported
positive Phase 3 results for its first-in-class Jak1/ Tyk2 inhibitor
brepocitinib, a once-daily oral therapy for the treatment of dermatomyositis.
The drug showed benefits on both skin and muscle symptoms over 52 weeks. If
approved, brepocitinib will be the first oral medicine for dermatomyositis.
• Mineralys Therapeutics
reported two positive Phase 3 trials showing a material reduction in blood
pressure for its aldosterone synthase inhibitor lorundrostat in patients with
uncontrolled or resistant hypertension.
• uniQure’s AMT-130 gene
therapy showed it could slow symptom progression of Huntington’s disease by
75% over a three-year period. This was the first therapy to show a benefit in
slowing the effects of this devastating neurological disorder.
• Abivax SA’s obefazimod,
a miR-124 enhancer, demonstrated significant clinical remission versus placebo
in two Phase 3 trials in patients with ulcerative colitis. If approved, the
drug would be a first-in-class treatment in a multi-billion dollar market.
• Ionis Pharmaceuticals
reported a highly successful Phase 3 trial for olezarsen, an antisense
oligonucleotide, for the treatment of severe hypertriglyceridemia. Olezarsen
cut fasting triglycerides by 72% and reduced pancreatic events by 85% relative
to placebo.
• Akero Therapeutics’
efruxifermin, an FGF21 analog, was the first drug to show reversal of early
liver cirrhosis caused by metabolic dysfunction-associated steatohepatitis in
a Phase 2 placebo-controlled trial.
Figure 9 (shown on page 16 of the Half Year Report) shows some biotech drugs
that have been approved and launched in 2025. The column on the right shows
that each entry in the table is a “first” in some way, either because it
is the first approved with a novel mechanism of action or the first drug
approved for a particular disease or patient population. For example, Insmed,
a portfolio position, developed the first therapy approved to treat
bronchiectasis, a chronic lung condition which leaves patients susceptible to
infection. Another portfolio position is UroGen Pharma, which recently
launched the first treatment for low-grade intermediate-risk non-muscle
invasive bladder cancer. This therapy gives patients an alternative to chronic
invasive surgeries to remove tumours in the bladder.
While the drug launches listed above are still nascent, another core component
of the Company’s strategy is investing in companies whose products are
expected to beat sales expectations. Examples include Alnylam Pharmaceuticals,
argenx, Ascendis Pharma and Neurocrine Biosciences.
As shown in Figure 10 (on page 17 of the Half Year Report), shareholders of
the Company get exposure to a wide swathe of novel technologies used by
biotech companies. Allocation to each technology will shift dynamically in the
portfolio depending on where we identify the most attractive investment
prospects at any given time.
We aim to invest across all therapeutic areas and drug development
technologies as long as the approaches or assets are promising. As of 30
September 2025, some of the themes reflected in the portfolio include:
• New product launches
across previously underserved orphan diseases such as TTR cardiac amyloidosis,
Demodex blepharitis, congenital adrenal hyperplasia, Bardet-Biedel syndrome
and Pompe disease. Therapies targeting smaller patient populations which are
treated by specialty physicians typically face less competition and offer
companies an efficient business model that can generate high margins;
• Bispecific antibody
therapies to enhance the body’s immune response for the treatment of cancer
or dampen an overactive immune response for autoimmune diseases such as lupus
and rheumatoid arthritis;
• Next-generation therapies
that have demonstrated breakthroughs in treatment of respiratory diseases such
as pulmonary fibrosis, chronic cough and bronchiectasis;
• RNA-based approaches to
address rare muscle disorders. Some approaches, like antibody oligonucleotide
conjugates, are completely novel paradigms of drug delivery; and
• Oncology drugs that have
the potential to improve on standard of care in prostate cancer, bladder
cancer, lung cancer, cervical cancer, breast cancer, head and neck cancer,
lymphoma and multiple myeloma.
STRATEGY AND OUTLOOK
Despite the strong performance of the Company during the review period, we
believe we are still in the beginning stages of a sustained recovery. The
biotechnology sector has underperformed the broader markets for multiple years
and valuations remain extremely compelling relative to historical norms. Many
of the political overhangs that weighed on the sector in early 2025 are now
fading, and we believe the Fed’s commencement of a new interest rate cutting
cycle in September should spur continued momentum for the sector in the months
ahead. The core innovation engine driving value in the sector remains robust,
with novel first-in-class drugs being approved, offering significant clinical
benefit for patients. The regulatory climate remains very favourable for the
approval of new drugs, with new leadership at the FDA seeking to accelerate
drug approval timelines even further. The increase in M&A activity that
we’ve observed recently should continue as large pharma companies facing
upcoming patent expirations on key products look to augment their revenue
growth.
Our positioning will remain heavily skewed towards small and mid cap biotech
companies because they are delivering the majority of the innovation in the
sector and because they remain the most undervalued constituents of the
industry, thereby offering the most potential upside in a recovery. Gearing
should remain in the 5-10% range. We will selectively invest in Chinese
biotech as opportunities present themselves while being mindful of the broader
geopolitical landscape. Given the confluence of favourable macro and
fundamental factors, we are optimistic the Company can deliver continued
outperformance.
Geoff Hsu and Josh Golomb
OrbiMed Capital LLC
Portfolio Manager
19 November 2025
INVESTMENT PORTFOLIO
INVESTMENTS HELD AS AT 30 SEPTEMBER 2025
Country/ Fair value % of
Security Region # £’000 investments
uniQure Netherlands 13,150 4.7
argenx~ Netherlands 10,991 3.9
CG oncology United States 10,472 3.7
Avidity Biosciences United States 10,333 3.7
UroGen Pharma United States 10,205 3.6
Mineralys Therapeutics United States 9,750 3.4
Ascendis Pharma Denmark 9,732 3.4
Axsome Therapeutics United States 9,499 3.4
ORIC Pharmaceuticals United States 8,649 3.1
Akero Therapeutics United States 8,376 3.0
Ten largest investments 101,157 35.9
Akeso China 8,088 2.9
EyePoint Pharmaceuticals United States 7,918 2.8
Alnylam Pharmaceuticals United States 7,713 2.7
Abbisko Cayman China 7,474 2.7
Dyne Therapeutics United States 7,006 2.5
Trevi Therapeutics United States 6,880 2.5
Janux Therapeutics United States 6,761 2.4
ADC Therapeutics Switzerland 6,284 2.2
Roivant Sciences United States 6,277 2.2
Rhythm Pharmaceuticals United States 5,982 2.1
Twenty largest investments 171,540 60.9
Forte Biosciences United States 5,922 2.1
Nanjing Leads Biolabs China 5,612 2.0
Amicus Therapeutics United States 5,352 1.9
Abivax France 5,300 1.9
Structure Therapeutics United States 5,179 1.8
GenFleet Therapeutics Shanghai China 4,811 1.7
Krystal Biotech United States 4,608 1.6
Shanghai Henlius Biotech China 4,601 1.6
Amylyx Pharmaceuticals United States 4,402 1.6
Neurocrine Biosciences United States 4,105 1.5
Thirty largest investments 221,432 78.6
Vir Biotechnology United States 4,003 1.4
Exact Sciences United States 3,857 1.4
Corbus Pharmaceuticals Holdings United States 3,700 1.3
Mind Medicine MindMed United States 3,216 1.1
Edgewise Therapeutics United States 3,202 1.1
Laekna China 3,159 1.1
Xenon Pharmaceuticals Canada 3,142 1.1
Apellis Pharmaceuticals United States 3,064 1.1
United Therapeutics United States 3,018 1.1
Milestone Pharmaceuticals^ Canada 3,005 1.1
Forty largest investments 254,798 90.4
# Primary listing.
~ Includes argenx ADR amounting to £3,342,000.
* Unquoted investment.
† Partnership interest.
^ Includes level 2 warrants amounting to £1,808,000.
Country/ Fair value % of
Security Region # £’000 investments
Immatics Germany 2,946 1.0
Tarsus Pharmaceuticals United States 2,914 1.0
3SBio China 2,840 1.0
C4 Therapeutics United States 2,203 0.8
Vistagen Therapeutics United States 2,121 0.8
BioCryst Pharmaceuticals United States 1,939 0.7
Cullinan Therapeutics United States 1,833 0.7
Insmed United States 1,438 0.5
Celcuity United States 1,159 0.4
Korro Bio United States 1,144 0.4
Fifty largest investments 275,335 97.7
Cutia Therapeutics China 898 0.4
OrbiMed Asia Partners*† United States 856 0.3
Alto Neuroscience United States 745 0.3
Enliven Therapeutics United States 628 0.2
Kezar Life Sciences United States 557 0.2
Prelude Therapeutics United States 365 0.1
Gracell Biotechnologies CVR* China 365 0.1
Repare Therapeutics Canada 62 0.0
New Horizon Health* China 0 0.0
Stemirna Therapeutics* China 0 0.0
Total investments 279,811 99.3
OTC Equity Swaps – Financed
Swaps China 6,266 2.2
Less: Gross exposure on financed swaps (4,309) (1.5)
Total OTC Swaps 1,957 0.7
Total investments including OTC Swaps 281,768 100.0
All of the above investments are equities unless otherwise stated.
# Primary listing.
* Unquoted investment.
† Partnership interest.
^ Contingent Value Right (see Glossary)
PORTFOLIO BREAKDOWN
Fair value % of
Investments £’000 investments
Quoted
Equities 276,782 98.2
276,782 98.2
Unquoted
Equities 365 0.1
Partnership interest 856 0.3
1,221 0.4
Warrants (level 2) 1,808 0.7
1,808 0.7
Derivatives
OTC Equity Swaps 1,957 0.7
Total investments 281,768 100.0
CONDENSED INCOME STATEMENT
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 2025 30 September 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Investment income 2 205 – 205 643 – 643
Gains on investments held at fair value through profit or loss – 70,992 70,992 – 9,747 9,747
Exchange gains on currency balances – 75 75 – 572 572
AIFM, portfolio management and performance fees 3 (55) (1,037) (1,092) (82) (1,565) (1,647)
Other expenses (382) (31) (413) (380) (10) (390)
(Loss)/profit before finance costs and taxation (232) 69,999 69,767 181 8,744 8,925
Finance costs (17) (324) (341) (37) (693) (730)
(Loss)/profit before taxation (249) 69,675 69,426 144 8,051 8,195
Taxation (5) – (5) (84) – (84)
(Loss)/profit for the period (254) 69,675 69,421 60 8,051 8,111
Basic and diluted (loss)/earnings per share 4 (1.0)p 273.7p 272.7p 0.2p 24.5p 24.7p
The Company does not have any income or expenses which are not included in the
profit or (loss) for the period. Accordingly the “(loss)/profit for the
period” is also the “Total Comprehensive (loss)/profit for the period”,
as defined in IAS 1 (revised) and no separate Statement
of Other Comprehensive Income has been presented.
The “Total” column of this statement is the Company’s Income Statement,
prepared in accordance with UK-adopted International Accounting Standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The “Revenue” and “Capital” columns
are supplementary to this and are prepared under guidance published by the
Association of the Investment Companies.
All items in the above statement are from continuing operations.
CONDENSED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED) SIX MONTHS ENDED 30 SEPTEMBER 2025
Ordinary Share Capital
Share Special premium redemption Capital Revenue
capital reserve* account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 March 2025 6,778 – 79,951 16,652 118,804 (979) 221,206
Net profit/(loss) for the period – – – – 69,675 (254) 69,421
Repurchase of own shares for cancellation (1,007) – – 1,007 (32,752) – (32,752)
Transfer of Share premium account and capital redemption reserve – 97,330 (79,951) (17,379) – – –
At 30 September 2025 5,771 97,330 – 280 155,727 (1,233) 257,875
* The balances held as at 19 August 2025 were cancelled
from the Share premium account and Capital redemption reserve and transferred
to a new Special reserve account.
(UNAUDITED) SIX MONTHS ENDED 30 SEPTEMBER 2024
Ordinary Share Capital
Share Special premium redemption Capital Revenue
capital reserve* account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 March 2024 8,371 – 79,951 15,059 258,891 (965) 361,307
Net profit for the period – – – – 8,051 60 8,111
Repurchase of own shares for cancellation (380) – – 380 (15,302) – (15,302)
At 30 September 2024 7,991 – 79,951 15,439 251,640 (905) 354,116
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Audited)
30 September 31 March
2025 2025
Notes £’000 £’000
Non current assets
Investments held at fair value through profit or loss 279,811 217,414
Derivative - OTC equity swaps 1,957 745
Current assets
Other receivables 8,206 17
Cash and cash equivalents – 8,453
8,206 8,470
Total assets 289,974 226,629
Current liabilities
Other payables 4,386 5,423
Loan 27,713 –
32,099 5,423
Net assets 257,875 221,206
Equity attributable to equity holders
Ordinary share capital 5,771 6,778
Special reserve 97,330 –
Share premium account – 79,951
Capital redemption reserve 280 16,652
Capital reserve 155,727 118,804
Revenue reserve (1,233) (979)
Total equity 257,875 221,206
Net asset value per share 5 1,117.2p 815.9p
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 2025 30 September 2024
£’000 £’000
Operating activities
Profit before taxation* 69,426 8,195
Finance costs 341 730
Gains on investments held at fair value through profit & loss (71,926) (10,897)
Foreign exchange gains (75) (572)
Decrease in other receivables (29) –
Increase/(decrease) in other payables 92 (74)
Taxation paid (5) (84)
Net cash outflow from operating activities (2,176) (2,702)
Investing activities
Purchases of investments (228,527) (199,001)
Sales of investments 231,891 227,847
Net cash inflow from investing activities 3,364 28,846
Financing activities
Repurchase of own shares for cancellation (37,088) (16,095)
Net repayment of the loan facility 27,788 (7,482)
Finance costs - interest paid (341) (730)
Net cash outflow from fiinancing activities (9,641) (24,307)
Net (decrease)/increase in cash and cash equivalents (8,453) 1,837
Cash and cash equivalents at start of period 8,453 2,131
Cash and cash equivalents at end of period † – 3,968
* Includes dividends earned during the period of
£106,000 (six months ended 30 September 2024: £559,000).
† Collateral cash held at Goldman Sachs £nil (as at 30
September 2024: £3,968,000).
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
(Unaudited) (Unaudited)
Six months ended Six months ended
30 September 2025 30 September 2024
£’000 £’000
Balance as at start of period – 47,078
Net repayment of the loan facility 27,788 (7,482)
Foreign exchange gains (75) (572)
Loan balance 27,713 39,024
NOTES TO THE FINANCIAL STATEMENTS
1.A) GENERAL INFORMATION
The Biotech Growth Trust PLC is a company incorporated and registered in
England and Wales. The Company operates as an investment company within the
meaning of Section 833 of the Companies Act 2006 and has made a successful
application under Regulation 5 of the Investment Trust (Approved Company)
(Tax) Regulations 2011 for investment trust status to apply to all accounting
periods commencing on or after 1 April 2012.
1.B) BASIS OF PREPARATION
The Company’s condensed financial statements for the six months ended 30
September 2025 have been prepared in accordance with IAS 34 “Interim
Financial Reporting”. They do not include all the financial information
required for the full annual financial statements and have been prepared using
accounting policies adopted in the audited financial statements for the year
ended 31 March 2025.
Those financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”).
The Directors have sought to prepare the financial statements in compliance
with presentational guidance set out in the Statement of Recommended Practice
(the “SORP”) for Investment Trust Companies and Venture Capital Trusts
produced by the Association of Investment Companies (“AIC”), dated July
2022.
The Company’s financial statements are presented in sterling and all values
are rounded to the nearest thousand pounds (£’000) except when otherwise
indicated.
The financial statements have not been audited by the Company’s auditors.
1.C) SEGMENTAL REPORTING
IFRS 8 requires entities to define operating segments and segment performance
in the financial statements based on information used by the Board of
Directors. The Directors are of the opinion that the Company is engaged in a
single segment of business, being investment business.
1.D) GOING CONCERN
The Directors believe that it is appropriate to adopt the going concern basis
in preparing the financial statements as the assets of the Company consist
mainly of securities that are readily realisable and, accordingly, the Company
has adequate financial resources to continue in operational existence for at
least 12 months from the date of the approval of the financial statements. The
next continuation vote of the Company will be held at the Annual General
Meeting in 2028 and further opportunities to vote on the continuation of the
Company will be given to shareholders every five years thereafter.
2. INCOME
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 September 30 September
2025 2024
£’000 £’000
Investment income
Overseas dividend income 115 559
Interest from liquidity fund 35 –
Other income – bank interest 55 84
Total income 205 643
3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES
Total Total
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 September 30 September
Revenue Capital 2025 Revenue Capital 2024
£’000 £’000 £’000 £’000 £’000 £’000
AIFM fee 17 310 327 25 472 497
Portfolio management fee – OrbiMed Capital LLC 38 727 765 57 1,093 1,150
Performance fee – – – – – –
55 1,037 1,092 82 1,565 1,647
As at 30 September 2025, no performance fees were accrued or payable (30
September 2024: Nil).
For further details on the performance fee arrangements see pages 51 and 52 of
the Company’s 2025 Annual Report.
4. BASIC AND DILUTED EARNINGS/(LOSS) PER SHARE
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 September 30 September
2025 2024
£’000 £’000
The earnings per share is based on the following figures:
Net revenue (loss)/return (254) 60
Net capital return 69,675 8,051
Net total return 69,421 8,111
Weighted average number of shares in issue during the period 25,459,150 32,866,827
Pence Pence
Revenue (loss)/earnings per share (1.0) 0.2
Capital earnings per share 273.7 24.5
Total earnings per share 272.7 24.7
5. NET ASSET VALUE PER SHARE
The net asset value per share is based on the net assets attributable to
equity shareholders of £257,875,000 (31 March 2025: £221,206,000) and on
23,083,022 shares (31 March 2025: 27,112,591) being the number of shares in
issue at the period end.
6. TRANSACTION COSTS
Purchase and sale transaction costs for the six months ended 30 September 2025
amounted to £934,000 (six months ended 30 September 2024: £1,150,000);
broken down as follows: purchase transactions for the six months ended 30
September 2025 amounted to £505,000 (six months ended 30
September 2024: £493,000); sale transactions amounted to £429,000 (six
months ended 30 September 2024: £657,000). These costs comprise mainly
commission.
7. INVESTMENTS
IFRS 13 requires the Company to classify fair value measurements using the
fair value hierarchy that reflects the significance of the inputs used in
making the measurements. The fair value hierarchy consists of the following
three levels:
• Level 1 – quoted prices
(unadjusted) in active markets for identical assets or liabilities;
• Level 2 – inputs other
than quoted prices included with Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices); and
• Level 3 – inputs for the
asset or liability that are not based on observable market data (unobservable
inputs).
At 30 September 2025 the investments in OrbiMed Asia Partners LP Fund (the LP
Fund), New Horizon Health, Gracell Biotechnologies (a
contingent value right or CVR) and Stemirna Therapeutics have been classified
as Level 3 (see Level 3
reconciliation below).
The LP Fund is valued quarterly by OrbiMed Advisors LLC and is audited
annually by KPMG LLP. As the 30 September 2025 valuation is not yet available,
the LP Fund has been valued at its net asset value as at 30 June 2025. It is
believed that the value of the LP Fund as at 30 September 2025 will not be
materially different. If the value of the LP Fund were to increase or decrease
by 10%, while other variables had remained constant, the return and net assets
attributable to shareholders for the period ended 30 September 2025 would have
increased or decreased by £86,000 or 0.37p per share (year ended 31 March
2025: £89,000 or 0.33p per share).
The following investments have been valued by the Board following
recommendations made by the Valuation Committee which has reviewed in detail
both the valuations and the methodologies provided by Kroll, an independent
valuer.
Gracell Biotechnologies CVR has been valued using the probability-weighted
expected returns methodology. New Horizon Health and Stemirna Therapeutics
have been written down to nil as the companies have been delisted and entered
into liquidation, respectively. These investments are classified as Level 3.
If the value of these investments were to increase or decrease by 10%, while
all other variables remain constant, the return attributable to shareholders
for the period ended 30 September 2025 would have increased or decreased by
£37,000 or 0.16 per share (year ended 31 March 2025:
£130,000 or 0.48p per share).
Milestone Pharmaceuticals warrants have been valued using the Black Scholes
Model using the volatility calculated by Kroll.
The table overleaf sets out fair value measurements of financial assets in
accordance with the IFRS13 fair value hierarchy system:
(UNAUDITED) SIX MONTHS ENDED 30 SEPTEMBER 2025
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity investments 276,782 1,808 365 278,955
Derivatives: equity swap – 1,957 – 1,957
Partnership interest in LP Fund – – 856 856
Total 276,782 3,765 1,221 281,768
(AUDITED) YEAR ENDED 31 MARCH 2025
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity investments 215,220 – 1,301 216,521
Derivatives: equity swap – 745 – 745
Partnership interest in LP Fund – – 893 893
Total 215,220 745 2,194 218,159
LEVEL 3 RECONCILIATION
Please see below a reconciliation disclosing the changes during the six months
for the financial assets and liabilities, designated at fair value through
profit or loss, classified as being Level 3.
(Unaudited)
Six months (Audited)
ended Year ended
30 September 31 March
2025 2025
£’000 £’000
Assets as at beginning of period 2,194 15,138
Purchase of unquoted investments – 46
Sale of unquoted investments – –
Net movement in investment holding gains during the period/year (973) (441)
Transfer from level 3 to level 1 – (13,408)
Transfer from level 1 to level 3 – 859
Assets as at 30 September/31 March 1,221 2,194
8. PRINCIPAL RISKS PROFILE
The principal risks the Company faces from its financial instruments are:
i) market price risk, including
currency risk, interest rate risk and other price risk;
ii) liquidity risk; and
iii) credit risk.
Market price risk – This is the risk that the fair value
or future cash flows of a financial instrument held
by the Company may fluctuate because of changes in market prices.
Liquidity risk – This is the risk that the Company will
encounter difficulty in meeting obligations
associated with financial liabilities.
Credit risk – This is the risk that the counterparty to
a transaction fails to discharge its obligations
under that transaction, which could result in the Company suffering
a loss. See page 33 of the Annual Report for further details on the
counterparty risk experienced by the Company.
Details of the Company’s management of these risks can be found in note 14
in the Company’s 2024 Annual Report.
There have been no changes to the management of or the exposure to these risks
since the date of the Annual Report.
9. CREDIT RISK
J.P. Morgan Securities LLC (“J.P. Morgan") may take assets with a value of
up to 140% of the Company’s loan facility as collateral. Such assets held by
J.P. Morgan are available for rehypothecation*.
As at 30 September 2025, the maximum value of assets available for
rehypothecation was £38.8 million being 140% of the loan balance (£27.7
million).
* See Glossary.
10. COMPARATIVE INFORMATION
The financial information contained in this half year report does not
constitute statutory accounts as defined in sections 434 to 436 of the
Companies Act 2006. The financial information for the six months ended 30
September 2024 and 2025 has not been audited by the Company’s auditor.
The information for the year ended 31 March 2025 has been extracted from the
latest published audited financial statements. The audited financial
statements for the year ended 31 March 2025 have been filed with the Registrar
of the Companies. The report of the Company’s auditor on those accounts was
unqualified, did not include a reference to any matters to which the
Company’s auditor drew attention by way of emphasis without qualifying the
report and did not contain statements under section 498(2) or 498(3) of the
Companies Act 2006.
INTERIM MANAGEMENT REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
A review of the half year, including reference to the risks and uncertainties
that existed during the period and the outlook for the Company can be found in
the Chair’s Statement and the Portfolio Manager’s Review. The principal
risks faced by the Company fall into the following broad categories: market
risk; portfolio performance; share price performance; cyber risk; key person
risk; valuation risk; counterparty risk; and operational disruption.
Information on each of these areas is given in the Strategic Report/Business
Review within the Annual Report for the year ended 31 March 2025. The
Company’s principal risks and uncertainties have not changed materially
since the date of that report and are not expected to change materially for
the remaining six months of the Company’s financial year.
The Board, the AIFM and the Portfolio Manager discuss and identify emerging
risks as part of the risk identification process and have discussed, in
particular, emerging market risks such as the instability caused by the new
administration in the USA, including the consequences of trade wars, tariffs,
constraints on pharmaceutical pricing and the possible rise of the
anti-vaccine movement. The Board has also noted that new cyber risks continue
to emerge at an accelerated pace.
RELATED PARTY TRANSACTIONS
During the first six months of the current financial year, no transactions
with related parties have taken place which have materially affected the
financial position or the performance of the Company.
GOING CONCERN
The Directors believe, having considered the Company’s investment objective,
risk management policies, capital management policies and procedures, the
nature of the portfolio and expenditure projections, that the Company has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future and, more specifically, that there are no material uncertainties
relating to the Company that would prevent its ability to continue in such
operational existence for at least twelve months from the date of the approval
of this half yearly financial report. For these reasons, they consider there
is reasonable evidence to continue to adopt the going concern basis in
preparing the financial statements.
DIRECTORS’ RESPONSIBILITIES
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial
statements contained within the Half Year Report have been prepared in
accordance with applicable International Accounting Standards (“IAS") 34;
and
(ii) the interim management report
includes a true and fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance
and Transparency Rules, being an indication of important events that have
occurred during the first six months of the financial year and their impact on
the condensed set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance
and Transparency Rules, being related party transactions that have taken place
in the first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that
period; and any changes in the related party transactions described in the
last annual report that could do so.
The Half Year Report has not been audited by the Company’s auditors.
This Half Year Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the date of this report and such statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward-looking
information.
For and on behalf of the Board
Roger Yates
Chair
19 November 2025
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES
AIC
Association of Investment Companies.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (“AIFMD”)
Agreed by the European Parliament and the Council of the European Union and
transposed into UK legislation, the AIFMD classifies certain investment
vehicles, including investment companies, as Alternative Investment Funds
(“AIFs”) and requires them to appoint an Alternative Investment Fund
Manager (“AIFM”) and depositary to manage and oversee the operations of
the investment vehicle. The Board of the Company retains responsibility for
strategy, operations and compliance and the Directors retain a fiduciary duty
to shareholders.
ALTERNATIVE PERFORMANCE MEASURE (“APM”)
An APM is a numerical measure of the Company’s current, historical or future
financial performance, financial position or cash flows, other than a
financial measure defined or specified in the applicable financial framework.
In selecting these APMs, the Directors considered the key objectives and
expectations of typical investors in an investment trust such as the Company.
Definitions of the terms used and the basis of calculation are set out in this
Glossary and the APMs are indicated with a caret (^).
ACTIVE SHARE^
Active Share is expressed as a percentage and shows the extent to which a
fund’s holdings and their weightings differ from those of the fund’s
benchmark index. A fund that closely tracks its index might have a low Active
Share of less than 20% and be considered passive, while a fund with an Active
Share of 60% or higher is generally considered to be actively managed.
CROSSOVER INVESTMENTS
Investments in a company’s last private round prior to an initial public
offering (“IPO”).
CONTINGENT VALUE RIGHT (“CVR”)
A CVR is a right granted to a company’s shareholders by an acquirer to
provide additional value if certain future events occur. They give
shareholders the right to receive a benefit, usually a cash payment or
additional stock, if a specific event occurs within a set time frame.
DISCOUNT OR PREMIUM^
A description of the difference between the share price and the net asset
value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and is
expressed as a percentage (%) of the net asset value per share. If the share
price is higher than the net asset value per share the result is a premium. If
the share price is lower than the net asset value per share, the shares are
trading at a discount.
As at As at
30 September 31 March
2025 2025
Pages pence pence
Share price 1 1,005.0p 754.0
Net asset value per share (see note 5 for further information) 1 1,117.2p 815.9
Discount of share price to net asset value per share 1 10.0% 7.6%
DRAWDOWN
A measure of downside volatility, a drawdown refers to how much an investment
or sector is down from the peak before it recovers back to the peak.
GEARING^
Gearing represents prior charges, adjusted for net current assets/liabilities,
expressed as a percentage of net assets. Prior charges includes all loans for
investment purposes.
As at As at
30 September 31 March
2025 2025
Pages £’000 £’000
Loan facility 27,713 –
Cash and cash equivalents – (8,453)
Net current assets (excluding loan and derivatives) – (3,820) –
23,893 (8,453)
Net assets 257,875 221,206
Gearing/(net cash) 1 9.3% (3.8)%
GICS
Global Industry Classification Standards. GICS is an industry analysis
framework that helps investors understand the key business activities for
companies around the world. MSCI and S&P Dow Jones Indices developed this
classification standard to provide investors with consistent and exhaustive
industry definitions.
NET ASSET VALUE (“NAV”)
The value of the Company’s assets, principally investments made in other
companies and cash being held, minus any liabilities. The NAV is also
described as ‘shareholders’ funds’. The NAV is often expressed in pence
per share after being divided by the number of shares which are in issue at
the relevant date. The NAV per share is unlikely to be the same as the share
price which is the price at which the Company’s shares can be bought or sold
by an investor. The share price is determined by the relationship between the
demand and supply of the shares in the secondary market.
NAV PER SHARE TOTAL RETURN^
The NAV per share total return for the period ended 30 September 2025 is
calculated by taking the percentage movement from the NAV per share as at 31
March 2025 of 815.9p (31 March 2024: 1,078.9p) to the NAV at 30 September 2025
of 1,118.1p (30 September 2024: 1,107.9p). The Company has not paid any
dividends to shareholders during the period.
ONGOING CHARGES^
Ongoing charges are calculated by taking the Company’s annualised operating
expenses expressed as a proportion of the average daily net asset value of the
Company over the year.
The costs of buying and selling investments are excluded, as are interest
costs, taxation, performance fees, cost of buying back or issuing ordinary
shares and other non-recurring costs.
As at As at
30 September 31 March
2025 2025
Pages £’000 £’000
AIFM and portfolio management fees* – 2,318 2,872
Operating expenses* – 693 771
Total expenses* – 3,011 3,643
Average daily net assets for the period/year – 238,366 326,317
Ongoing charges 1 1.3% 1.1%
* Estimated expenses for the year ending 31 March 2026
based on assets as at 30 September 2025.
OTC EQUITY SWAPS
Over-the-Counter (“OTC”) refers to the process of how securities are
traded via a broker-dealer network, as opposed to a centralised exchange.
An equity swap is an agreement where one party (counterparty) transfers the
total return of an underlying equity position to the other party (swap holder)
in exchange for a payment of the principal, and interest for financed swaps,
at a set date. Total return includes dividend income and gains or losses from
market movements. The exposure of the holder is the market value of the
underlying equity position.
There are two main types of equity swaps:
* Funded – where payment is made on acquisition. They are
equivalent to holding the underlying equity position with the exception of
additional counterparty risk and not possessing voting rights in the
underlying investment; and
* Financed – where payment is made on maturity. As there is no
initial outlay, financed swaps increase exposure by the value of the
underlying equity position with no initial increase in the investments’
value – there is therefore embedded leverage within a financed swap due to
the deferral of payment to maturity.
REHYPOTHECATION
Rehypothecation is the practice by banks and brokers of using collateral
posted as security for loans as regulated by the U.S. Securities Exchange
Commission.
SHARE PRICE TOTAL RETURN^
The share price total return for the period ended 30 September 2025 is
calculated by taking the percentage movement from the share price as at 31
March 2025 of 754.0p (31 March 2024: 995.0p) to the share price as at 30
September 2025 of 1,005.0p (30 September 2024: 1,026.0p). The Company has not
paid any dividends to shareholders during the period.
^ Alternative Performance Measure
20 November 2025
Frostrow Capital LLP
Company Secretary
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