| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14.5% | 15.5% | 35.7% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 35.7% | -4.6% | 23.5% | -10.2% | -12.8% | 53.9% |
RTW Biotech Opportunities delivered strong performance in Q4 2025 with NAV per share returning 15.5% and 35.7% year-to-date, outperforming the AIC Healthcare sector. The biotech sector marked a decisive turnaround after four consecutive years of underperformance, with major indices outperforming the S&P 500 and Nasdaq. Key return drivers included a more predictable policy environment, strong equity market performance, and a sharp uptick in M&A activity totaling $105B. The portfolio benefited from successful exits and M&A transactions, leading to an additional $15M share buyback allocation. RTW maintains an optimistic 2026 outlook, expecting biotech to outperform broader markets driven by continued innovation, strong financing environment, and further consolidation. The firm believes the sector is entering the second inning of a new cyclical bull market with net flows and generalist investors returning. Key risks include FDA leadership instability, though the impact is expected to be limited to edge case approvals primarily affecting rare disease therapies.
RTW focuses on identifying transformative life sciences assets by applying deep scientific and commercial expertise with a long-term investment horizon across the full private and public life cycle, positioning for the biotech sector's cyclical recovery and continued innovation-driven growth.
We have an optimistic outlook for 2026 and expect biotech to outperform broader markets, driven by continued innovation, a strong financing environment, and further M&A.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | ALNY, ARGX, AVID, DYN, IMTX, INSM, MDGL, PTCT, RCKT, STOK, TARS, UCB, URGN | Biotechnology, Drug Discovery, Gene Therapy, healthcare, M&A, Pharmaceuticals, Rare Diseases | - | The sector saw $105B in M&A activity, more than double the prior year and fourth highest in the last decade. Combined with a friendlier FTC,… |
| Oct 14 2025 | 2025 Q3 | - | Biotechnology, Clinical Trials, Gene Therapy, Healthcare Innovation, RNA | - | RTW Biotech highlights progress in next-generation therapies, including RNA, gene therapy, and metabolic treatments, with strong portfolio M&A activity and clinical milestones. Policy uncertainty is… |
| Aug 14 2025 | 2025 Q2 | VRNA | Biotechnology, Clinical Trials, innovation, Life Sciences, volatility | - | The letter centers on long-term investment in life sciences innovation aimed at addressing unmet medical needs. Management highlights the importance of scientific validation, clinical milestones,… |
| Mar 31 2025 | 2025 Q1 | AKRO, GHRS, IMCR, RCKT, RNA, TARS | - | - | - |
| Dec 31 2024 | 2024 Q4 | MIST, TARS | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
BiopharmaSector out of favor due to political factors leading to lower industry R&D spend. Manager believes society will continue to need new drugs and health innovations, expecting capital to return and R&D spend to reaccelerate. Initiated diversified basket allocation via ETFs and service-based businesses. |
Biotechnology Pharmaceuticals Drug Development Healthcare Innovation R&D |
Gene TherapyThe manager remains convinced that gene therapies will effectively cure patients with chronic and deadly diseases despite setbacks. Prime Medicine's elegant gene editing function offers simpler and safer treatment options with less off-target activity than first-generation technologies like CRISPR. |
CRISPR Editing Safety Chronic Diseases | |
OncologyGuardant Health, a provider of blood-based diagnostic tests for cancer, was a significant contributor with strong Q3 results. The core oncology business grew revenues 30% with acceleration driven by innovative product enhancements. The company continues to lead the charge in converting oncology testing from tissue to blood, representing a major shift in cancer diagnostics. |
Biotechnology Diagnostics Healthcare Innovation Growth | |
Rare DiseasesThe portfolio includes significant exposure to rare disease therapeutics, with companies like PTC Therapeutics developing medicines for rare neurologic and metabolic conditions. FDA leadership instability could disproportionately impact cell and gene therapy for rare disease through reduced approval of edge cases. |
Rare Disease Gene Therapy Cell Therapy Orphan Drugs | |
TechnologyThe fund added three technology companies that have each halved over 2025 and hopes to add more. Many tech stocks had become expensive but recent falls present opportunities, though most still aren't cheap enough including Xero. |
Software Valuation Opportunity Selloff | |
| 2025 Q3 |
BiotechBiotech companies rallied over 25% in the fourth quarter, driven by a series of high-profile biotech acquisitions by large pharma buyers. The managers generally avoid biotech stocks due to their highly binary nature, though they participate through investments in companies that sell products and services to biotech customers. |
Biotechnology Pharmaceuticals M&A Healthcare Binary Risk |
HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
Innovation |
||
| 2025 Q2 |
Innovation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| ALNY | New position in biotech company Alnylam Pharmaceuticals. |
| ARGX | Shares of argenx SE contributed to performance, rising 14.0% during the fourth quarter and finishing 2025 up 37.8%. Argenx is a leading biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Sales of Vyvgart continue to progress well in Generalized Myasthenia Gravis (Generalized MG) while the Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) launch is also off to a strong start. |
| AVID | Top contributor YTD with +9.5% performance. |
| DYN | Dyne Therapeutics is a biotechnology company developing late-stage RNA-based therapies for muscular dystrophy conditions. With limited existing treatment options and encouraging early data, upcoming clinical milestones represent meaningful potential value creation opportunities. |
| IMTX | Developing novel PRAME immunotherapies for patients with cancer. |
| INSM | Insmed Inc., a biopharmaceutical company focused on developing and commercializing therapies for patients with rare diseases, advanced 21% over the quarter. We have been pleased with the launch of Brensocatib, a first-in-class oral medication that treats non-cystic fibrosis bronchiectasis. The reception has been positive from physicians, patients, and payers. |
| MDGL | The Healthcare sector was once again led by Madrigal |
| PTCT | Developing medicines for people living with rare neurologic and metabolic conditions disorders. |
| RCKT | Top detractor YTD with -3.9% performance. |
| STOK | Restoring protein expression by harnessing the body's potential with RNA medicine. |
| TARS | Other strong performers in the quarter, primarily driven by strong earnings results, included Tarsus Pharmaceuticals |
| UCB | Latest addition to new $50B+ market cap biotechs that generalist growth investors should find increasingly hard to ignore. |
| URGN | Biotech company developing innovative solutions to treat urothelial and specialty cancers. |
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