RTW Biotech Opportunities (RTW) has reaped a 143% return from backing the sector’s biggest ever flotation in the US as the £725m investment company continues to benefit from the newfound optimism in biotechnology.
Kailera Therapeutics (KRLA), a Massachusetts-based obesity specialist that RTW’s fund manager helped found two years ago, raised $625m (£463m) on Thursday as its $16 a share initial public offer (IPO) completed the company’s move on to the Nasdaq technology exchange.
Enthusiasm for the IPO, which was increased from $500m, pushed the shares up 62.5% to $26 on their first day of trading on Friday.
That represented a 143% rise for RTW since it co-led Kailera’s first series-A financing round with Bain Capital in 2024. In April alone RTW has made a 47% return on an investment that accounted for 3.5% of its portfolio at 31 March.
This made Kailera its second largest private company after Corxel, a cardiometabolic disease specialist, that was RTW’s top holding at 5.8% of net assets. In total, RTW held 24.2% in private companies at the end of last month.
Rod Wong, chief investment officer at RTW Investments, said he was “excited” by the IPO and that “the successful public debut of this investment demonstrates the latent value within RTW Bio’s private portfolio” where he saw “substantial further opportunity” ahead.
Wong said Kailera had four clinical stage products using GLP-1 based mechanisms to mimic the naturally occurring gut hormone, glucagon-like peptide, to inhibit appetites. Its lead treatment, ribupatide (KAI-9531), a weekly injection, is undergoing advanced phase three trials.
Shares in RTW have risen 5.5% from $2.17 on Friday morning to $2.29 today.
According to this website’s data, the shares have soared 88.7% in the past year after a four-year bear market in biotechnology companies ended last May following the launch, and partial relaxation, of US tariffs in the previous month.
Underlying growth in RTW’s portfolio was 39.6% with the difference accounted by a significant re-rating in the shares which have moved from standing nearly 35% below net asset value to a far narrower discount of 8% under NAV.
Over three years the shares have returned 19.4%. Other funds in the sector have also rallied, mostly notably International Biotechnology (IBT) and Biotech Growth (BIOG) whose shares have leaped 87.8% and 95% over one year.
Our view
Matthew Read, senior analyst at QuotedData, said: “This looks like a very good outcome for RTW Biotech Opportunities. Kailera was already one of the company’s largest private holdings, but the IPO pricing alone delivered a meaningful uplift to carrying value, and the first day share price performance suggests there could be more to come if those gains persist.
“The IPO’s success will be particularly satisfying for RTW’s manager who helped create Kailera from scratch. The transaction’s success also gives some validation to its newco model where it aims not just to back promising science, but to build businesses around it and realise value through public markets. With private assets still accounting for a sizeable portion of RTW’s NAV, shareholders will hope Kailera is a sign of further latent value waiting to be unlocked elsewhere in the portfolio.”
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