ANNUAL REPORT

FOR THE YEAR ENDED

31 MARCH 2022

The Biotech Growth Trust PLC Annual Report for the year ended 31 March 2022

The Biotech

Growth Trust PLC

The Biotech Growth Trust PLC seeks capital

appreciation through investment in the

worldwide biotechnology industry. In order to

achieve its investment objective, the Company

invests in a diversified portfolio of shares and

related securities in biotechnology companies

on a worldwide basis.

Further details of the Company’s investment policy are set out

on pages 23 and 24.

ORBIMED CAPITAL LLC – PORTFOLIO MANAGER

OrbiMed’s investment business was founded in 1989 with a

vision to invest across the spectrum of healthcare companies:

from venture capital start-ups to large multinational companies.

Beginning with its first public equity fund in 1989, OrbiMed

expanded to include long/short equity and private equity

investments in 1993. On 19 May 2005 OrbiMed was appointed

as the Company’s Portfolio Manager. In 2007 OrbiMed

expanded to Asia, opening offices in Mumbai and Shanghai,

and launching a fund focused on private equity healthcare

opportunities in China and India. In 2010 OrbiMed expanded to

the Middle East, opening an office in Israel to seek innovative

life sciences venture capital opportunities across the region.

Today, OrbiMed has a singular focus on seeking successful

investments on a worldwide basis across the entire spectrum

of private and publicly-traded life sciences companies. With

approximately U.S. $19 billion under management, OrbiMed

ranks as one of the world’s largest healthcare-dedicated

investment firms.

OrbiMed’s investment professionals possess a combination of

extensive scientific, medical and financial expertise.

HOW TO INVEST

The Company’s shares are traded on the London Stock

Exchange and can be purchased through a stock broker or

other financial intermediary. The shares are available through

savings plans (including investment dealing accounts, ISAs,

Junior ISAs and SIPPs) which facilitate both regular monthly

investments and lump sum investments in the Company’s

shares. There are a number of investment platforms that offer

these facilities. Further details can be found on page 97.

CONTENTS

STRATEGIC REPORT

Financial Highlights

Chairman’s Statement

Key Information

Company Performance

Investment Portfolio

Portfolio Manager’s Review

Principal Contributors to and Detractors from Net Asset

Value Performance and Performance Attribution

Business Review

GOVERNANCE

Board of Directors

Corporate Governance

Report of the Directors

Statement of Directors’ Responsibilities

Audit Committee Report

Directors’ Remuneration Report

Directors’ Remuneration Policy

Independent Auditor’s Report

FINANCIAL STATEMENTS

Income Statement

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

FURTHER INFORMATION

Shareholder Information

93 Glossary of Terms and Alternative Performance

Measures

97 How to Invest

98 Notice of the Annual General Meeting

101

Explanatory Notes to the Resolutions

103

Company Information

For more information about

The Biotech Growth Trust PLC

visit the website at

www.biotechgt.com

@biotechgt

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 1

* Source: Morningstar

^Alternative Performance Measure (see glossary beginning on page 93)

† NASDAQ Biotechnology Index (sterling adjusted)

** UK GAAP Measure

FINANCIAL HIGHLIGHTS

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PERFORMANCE FOR THE YEAR TO 31 MARCH 2022

Figures have been rebased to 100 as at 31 March 2021.

Source: Morningstar

-33.8%

957.8p

Net asset value per

share (total return)*^

Net asset value

per share**

-7.4%

Benchmark*

†

2021: +55.1%

2021: 1,446.4p

898.0p

Share price

2021: 1,426.0p

2021: +25.1%

-37.0%

Share price

(total return)*^

2021: +75.2%

Shareholders’ funds**

£394.2m

2021: £601.5m

6.2%

Discount of share price to

net asset value per share*^

1.1%

Ongoing Charges^

2021: 1.1% 2021: 1.4%

77.3%

Active Share*^

2021: 76.3%

2 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

CHAIRMAN’S STATEMENT

ANDREW JOY

INTRODUCTION AND RESULTS

The Biotech Growth Trust PLC was launched in June 1997,

making this year the 25th anniversary of its listing on the

London Stock Exchange. The Company was incorporated

as Reabourne Merlin Life Sciences Investment Trust PLC,

with an initial net asset value of £29.2 million. Our current

Portfolio Manager, OrbiMed, was appointed on 19 May

2005. Since OrbiMed’s appointment and to the year end, the

Company’s net asset value (NAV) has increased by 861.6%

or 14.3% per annum.

Following the very strong results of the previous year, this

has been a difficult year for the Company. The Company’s

NAV per share total return^ was -33.8% (2021: +55.1%), and

the share price total return^ was -37.0% (2021: +75.2%),

both underperforming the Company’s benchmark, the

NASDAQ Biotechnology Index (sterling adjusted) which

over the year fell 7.4% (2021: rose by 25.1%). The disparity

between the performance of the Company’s NAV per share

and its share price reflected a widening of the share price

discount to the NAV per share from 1.4% at the start of the

Company’s financial year to 6.2% at the year end.

The majority of the Company’s assets are denominated in

U.S. dollars with the result that the Company’s performance

was affected by the headwind of sterling strength during

the year, particularly against the U.S. dollar, with the average

exchange over the period being $1.363, some 3.9% stronger

than the previous year’s average of $1.312. However,

towards the end of the year, the situation in Ukraine saw

the dollar benefit from its ‘safe haven’ status, strengthening

to $1.317 at the year-end (2021: $1.380). It has continued

to strengthen since the year-end and at the time of writing

stood at $1.261.

The Company’s gearing, which increased to 8.4% at the

year-end from 6.8% at the beginning of the year, detracted

3.8% from the Company’s overall NAV return during the

year.

The factors that contributed to the Company’s

disappointing performance are analysed in detail in the

Portfolio Manager’s report beginning on page 9. The

principal driver has been the very significant divergence

in performance affecting all sectors, but particularly those

with a technology base, including biotech, between large

capitalisation stocks and smaller capitalisation ones. This

represents a reversal in the long trend of recent decades.

Within the biotech sector itself, the Company

underperformed its Benchmark not only because it is

invested almost exclusively in small capitalisation stocks,

whereas the index is more evenly divided between large and

small, but also because it has some exposure to Chinese

biotechnology companies, which were affected by the

broad market downturn in China during the year. The index

does not include China-listed stocks.

The principal detractors from performance reflected these

macro trends, including Guardant Health, an oncology

diagnostics company, which declined in value despite

generally strong financial results. However, there were some

positive contributors during the year, most notably Trillium

Therapeutics (which develops cancer immunotherapy

treatments) which was acquired by Pfizer at a price

representing a 203% premium to the pre-bid share price. As

our Portfolio Manager explains in their report, mergers and

acquisitions in the biotechnology sector may accelerate if

valuations remain depressed and independent financing

options become less attractive for smaller capitalisation

biotechnology companies.

The Company has maintained its selective exposure to

crossover investments (investments in a company’s last

private funding round prior to an initial public offering (“IPO”))

as well as to Chinese biotech; areas in which the Portfolio

Manager has particular expertise. Chinese investments

represented 13% (2021: 12%) of the portfolio at the year-end.

The value of these Chinese investments declined in line with

the broader sell-off of Chinese companies during the year.

However, despite the difficult macroeconomic environment,

our Portfolio Manager continues to believe the high levels of

innovation that can be found in China represent a significant

investment opportunity.

Further analysis of the Company’s performance can be found

in the Portfolio Manager’s Review beginning on page 9.

CAPITAL STRUCTURE

The Company’s shares traded at a premium for the first

three months of the year, leading to the issue of 150,000

new shares, at an average premium of 1.0% to the

Company’s cum income NAV per share at the time, raising

£2.1m of new funds.

^Alternative Performance Measures (see glossary beginning on page 93).

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 3

CHAIRMAN’S STATEMENT CONTINUED

However, towards the end of the first six months, as

the Company’s performance suffered as a result of the

aforementioned macroeconomic factors, the Company’s

share price fell to a discount to the NAV per share.

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 its NAV

per share is higher than 6%. Accordingly, during the period

the Company bought back 576,087 shares, at an average

discount of 6.6% to the cum income NAV per share at the

time, at a total cost of £6.9m.

At the year end there were 41,158,682 shares in issue

and the share price traded at a 6.2% discount to the cum

income NAV per share. As we have previously commented,

while it remains possible for the shares to trade at a

discount wider than 6% on any one day, the Company

remains committed to protecting a 6% share price discount

over the longer term. Since the year end, a further 236,953

shares have been bought back for cancellation and at the

time of writing the share price discount stands at 1.2%.

RETURN AND DIVIDEND

The revenue return per share was 0.0p (2021: (0.2)p). No

dividend is recommended in respect of the year ended 31

March 2022 (2021: nil).

THE BOARD

During the year, and as announced in November, we were

delighted to welcome Roger Yates to the Board as a non-

executive Director and the Chairman-elect. We are very

pleased to have recruited a Director with such extensive

expertise, both in investment management and in the

investment companies sector. It is intended that Roger will

succeed me as Chairman after I retire at the conclusion of

the forthcoming Annual General Meeting (AGM).

For my part, I have served on the Board for ten years, the

last six as Chairman, and have been lucky to have had

such constructive and hardworking colleagues. Particularly

over the last two years, since the start of the COVID-19

pandemic, there have been challenges and the Board has

been adaptable and resourceful throughout. I would also like

to pay tribute to the professionalism and hard work of both

our Portfolio Manager, OrbiMed, and AIFM, Frostrow. I have

greatly enjoyed working with them over the last ten years,

and would like to thank them for all they do for the Company,

and for the calm thoughtfulness with which they carry it

out. Although recent results have been disappointing, it has

always been the case that investing in early stage biotech is

a long-term game, and knowing their skills and experience,

Ibelieve it is only a question of time before the Company will

resume its superlative long termrecord.

At the heart of the Company’s strategy is support for the new

technologies highlighted by the Portfolio Manager on page

20. These are transforming the diagnosis and treatment of

an increasing number of human diseases, and their success

will mean both relief to those suffering and their families as

well as financial success for the Company.

PERFORMANCE FEE

During the year, following prior periods of sustained

outperformance, a performance fee of £6.98 million

crystallised and became payable on 30 June 2021. The

balance of the performance fee accrual as at 31 March

2021 was reversed as a result of the underperformance

experienced over the year and therefore there is currently no

provision within the Company’s NAV for any performance

fee payable at a future calculation date. The arrangements

for performance fees are described in detail on pages 46

and 47 of this Annual Report.

OUTLOOK

There has been no let up in the difficult financial conditions

since the year end, and the Company’s NAV and share

price have continued to be weak. Looking at the broader

economic environment, the immediate future looks

challenging at best.

The largest driver of the current volatile stock market

conditions is the recent rise in interest rates, which are

aimed at nipping inflation in the bud. As noted earlier, this is

a reversal of a long trend.

Adding to this headwind has been Russia’s invasion

of Ukraine. This has resulted in a sharp rise in political

instability, created economic disruption and threatens

to exacerbate inflationary pressures as energy and food

supplies are constrained. Alongside these direct economic

effects, geopolitical instability reduces investors’ risk

appetites, potentially undermining asset prices across a

wide range of markets and sectors.

Strategic Report

4 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

Although the impact of vaccine roll outs means that life

in the US and other developed economies is returning to

normal, new variants continue to pose a risk, and China

in particular continues to grapple with rising incidence

of the disease, compounded by low vaccination rates in

the elderly population, in turn leading the authorities to

imposelockdowns.

Although the impact of these factors will continue to

weigh on financial markets, our Portfolio Manager remains

confident that there are a number of potential catalysts

that could lead to a recovery in the biotechnology sector

this year and into the future, and their overall investment

strategy remains unchanged. Furthermore, they believe that

the fundamental investment themes for the biotechnology

sector remain intact and their focus remains on the

selection of stocks with strong prospects for capital

enhancement. Your Board fully supports this strategy

and continues to believe that long-term investors will be

rewarded.

Looking back over the ten years I have been on the

Board, life sciences, including biotech, have assumed

an increasingly central role in healthcare. Their critical

role in developing modern vaccines for COVID-19 is a

good example. The speed and scale of innovation are

breathtaking, and will surely remain so. The Company is an

excellent way to participate in this growing, dynamic sector.

ANNUAL GENERAL MEETING

The Company’s AGM will be held at the Apothecaries’ Hall,

10 Blackfriars Lane, London EC4V 6ER on Tuesday, 19 July

2022 at 12 noon. As well as the formal proceedings, there

will be an opportunity for shareholders to meet the Board

and to receive an update from the Portfolio Manager on the

Company’s strategy and its key investments.

After COVID-19 restrictions have prevented us from

welcoming shareholders to this event for the past two years,

I very much look forward to seeing as many shareholders

as possible on the day. Of course, should circumstances

change and restrictions be reintroduced, we will update

shareholders on the final arrangements for the meeting

through the Company’s website: www.biotechgt.com. For

those investors who are not able to attend the meeting

in person, a video recording of the Portfolio Manager’s

presentation will be uploaded to the website after the

meeting. Shareholders can submit questions in advance by

writing to the Company Secretary at info@frostrow.com.

I encourage all shareholders to exercise their right to vote at

the AGM. The Board strongly encourages shareholders to

to vote can be found on page 100). Registering your vote in

advance will not restrict you from attending and voting at

the meeting in person should you wish to do so, subject to

any Government guidance to the contrary. The votes on the

resolutions to be proposed at the AGM will be conducted

on a poll. The results of the proxy votes will be published

immediately following the conclusion of the AGM by way

of a stock exchange announcement and on the Company’s

website: www.biotechgt.com.

Andrew Joy

Chairman

31 May 2022

CHAIRMAN’S STATEMENT CONTINUED

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 5

KEY INFORMATION

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PERFORMANCE SINCE THE DATE OF APPOINTMENT OF ORBIMED CAPITAL LLC

AS PORTFOLIO MANAGER TO 31 MARCH 2022

(DISCOUNT)/PREMIUM TO 31 MARCH 2022

6 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

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COMPANY PERFORMANCE

HISTORIC PERFORMANCE FOR THE YEARS ENDED 31 MARCH

2017 2018 2019 2020 2021 2022

Net asset value per share total return*^ 27.5% (6.7%) 5.3% 18.5% 55.1%

(33.8%)

Share price total return*^ 27.9% (6.1%) 4.6% 10.9% 75.2%

(37.0%)

Benchmark return* 29.2% (2.2%) 13.0% 1.2% 25.1%

(7.4%)

Net asset value per share 800.8p 747.5p 786.8p 932.4p 1,446.4p

957.8p

Share price 748.0p 702.0p 734.0p 814.0p 1,426.0p

898.0p

Discount of share price to net asset value

per share*^ 6.6% 6.1% 6.7% 12.7% 1.4% 6.2%

Ongoing charges (excluding performance

fees)^

1.1% 1.1% 1.1% 1.1% 1.1%

1.1%

Gearing^ 3.2% 6.8% 5.5% 9.0%

6.8%

8.4%

* Source: Morningstar

^ Alternative Performance Measure (see glossary beginning on page 93).

FIVE YEAR PERFORMANCE TO 31 MARCH 2022

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 7

INVESTMENT PORTFOLIO

INVESTMENTS HELD AS AT 31 MARCH 2022

Security Country/Region #

Fair value

£’000

% of

investments

Seagen United States 20,789 4.9

BioMarin Pharmaceutical United States 18,377 4.3

GH Research United States 18,239 4.2

Horizon Therapeutics United States 17,856 4.2

Keros Therapeutics United States 16,934 4.0

Aclaris Therapeutics United States 16,058 3.8

Syndax Pharmaceuticals United States 15,230 3.6

Xenon Pharmaceuticals Canada 14,651 3.4

Yisheng Biopharma* China 14,319 3.3

Gilead Sciences United States 12,986 3.0

Ten largest investments 165,439 38.7

Milestone Pharmaceuticals Canada 12,461 2.9

Vaxcyte United States 12,276 2.9

Illumina United States 11,967 2.8

Theravance Biopharma United States 11,609 2.7

Guardant Health United States 11,274 2.6

XtalPi* China 11,182 2.6

Biogen United States 10,780 2.5

Amgen United States 10,482 2.4

Ultragenyx Pharmaceutical United States 9,227 2.2

Mirati Therapeutics United States 8,899 2.1

Twenty largest investments 275,596 64.4

MeiraGTx Holdings United States 8,705 2.0

Jounce Therapeutics United States 8,700 2.0

Global Blood Therapeutics United States 8,009 1.9

Neurocrine Biosciences United States 7,749 1.8

Argenx Netherlands 7,175 1.7

Mersana Therapeutics United States 7,007 1.6

StemiRNA Therapeutics* China 6,677 1.6

Clover Biopharmaceuticals China 6,622 1.5

Singular Genomics Systems United States 6,282 1.5

Aerovate Therapeutics United States 5,519 1.3

Thirty largest investments 348,041 81.3

PMV Pharmaceuticals United States 4,202 1.0

Janux Therapeutics United States 3,758 0.9

Magenta Therapeutics United States 3,736 0.9

Compass Therapeutics United States 3,635 0.9

RAPT Therapeutics United States 3,618 0.8

Alphamab Oncology China 3,470 0.8

HK inno N South Korea 3,464 0.8

Graphite Bio United States 3,280 0.7

Nanobiotix France 2,805 0.7

Iovance Biotherapeutics United States 2,703 0.6

Forty largest investments

382,712 89.4

HBM Holdings China 2,678 0.6

CSPC Pharmaceutical Group China 2,607 0.6

ALX Oncology Holdings United States 2,544 0.6

RemeGen China 2,535 0.6

VistaGen Therapeutics United States 2,519 0.6

Verona Pharma United Kingdom 2,501 0.6

Shanghai Junshi Biosciences China 2,435 0.6

AWAKN Life Sciences Canada 2,221 0.5

Natera United States 2,129 0.5

Galapagos Belgium 2,035 0.5

Fifty largest investments 406,916 95.1

# Primary listing

* Unquoted investment

8 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

INVESTMENT PORTFOLIO

INVESTMENTS HELD AS AT 31 MARCH 2022

Security Country/Region #

Fair value

£’000

% of

investments

Edgewise Therapeutics United States 1,947 0.5

Prelude Therapeutics United States 1,811 0.4

OrbiMed Asia Partners * † Asia 1,749 0.4

Gracell Biotechnologies China 1,427 0.3

Burning Rock Biotech China 1,398 0.3

Aslan Pharmaceuticals Singapore 1,286 0.3

CytomX Therapeutics United States 1,278 0.3

Suzhou Basecare Medical China 1,222 0.3

VectivBio Holding Switzerland 1,047 0.3

Small Pharma Canada 979 0.2

Sixty largest investments 421,060 98.4

Harpoon Therapeutics United States 759 0.2

Talaris Therapeutics United States 689 0.2

Fusion Pharmaceuticals Canada 583 0.1

Field Trip Health Canada 572 0.1

Repare Therapeutics Canada 532 0.1

Galecto Denmark 481 0.1

Cabaletta Bio United States 466 0.1

Longboard Pharmaceuticals United States 440 0.1

I-Mab China 377 0.1

Landos Biopharma United States 316 0.1

Seventy largest investments 426,275 99.6

Pyxis Oncology United States 287 0.1

LogicBio Therapeutics United States 268 0.1

IMARA United States 266 0.1

AWAKN Life Sciences warrant 16/06/2023 * Canada 238 0.1

AWKN Life Sciences warrant 21/3/2024 * Canada 65 –

Total investments 427,399 100.0

All of the above investments are equities unless otherwise stated.

# Primary listing

† Partnership interest

* Unquoted

PORTFOLIO BREAKDOWN

Investments

Fair value

£’000

% of

investments

Quoted

Equities

393,169 92.0

Unquoted

Equities

32,178 7.5

Warrants 303 0.1

Partnership interest

1,749 0.4

34,230 8.0

Total investments 427,399 100.0

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 9

PORTFOLIO MANAGER’S REVIEW

Strategic Report

PERFORMANCE REVIEW

After posting an exceptionally strong year on both an

absolute and relative basis for the year ended 31 March

2021, the Company encountered an extremely challenging

period of performance for the year ended 31 March 2022.

The Company’s net asset value per share total return was

down 33.8% at the end of the fiscal year, compared with a

7.4% decrease for the Company’s benchmark, the NASDAQ

Biotechnology Index, measured on a sterling adjusted basis

(the “Benchmark”).

A “perfect storm” of macro factors led to this disappointing

performance. The fiscal year began with a rotation of

investors from growth to value stocks, as managers

repositioned portfolios to overweight economically sensitive

sectors that would benefit most from a post-COVID-19

reopening of the economy. Biotechnology (biotech)

underperformed during this period, as did many other growth

sectors in which investors had allocated capital during the

COVID-19 pandemic. Many of the investor “tourists” who

did not regularly invest in biotech but who were transiently

attracted to the industry’s defensive nature and

COVID-19-related research appeared to exit the sector. In

the second half of the fiscal y

ear, increasing concerns about

the U.S. Federal Reserve’s plans to raise interest rates to

combat inflation led to continued weakness in tech stocks,

especially earlier-stage enterprises which are not expected

to realize earnings for many years. This macro dynamic

was especially damaging to small capitalization (small cap)

biotech performance. Adding pressure on the portfolio was

a significant drawdown in the Chinese markets, including in

Hong Kong, in the second half of the fiscal year. The sell-off

was precipitated by regulatory tightening by the Chinese

government across a variety of sectors, including the

Internet tech industry and the for-profit education industry.

Even though there were no new significant regulations

targeting Chinese biotech, the broad market downturn in

China adversely impacted our Chinese biotech positions.

Unfortunately, all of these macro pressures persisted through

the end of the fiscal year. Importantly, much of the weakness

in the portfolio was simply due to the general market rerating

downwards rather than any negative fundamental news

about the companies themselves.

The underperformance of the Company versus the

Benchmark can be primarily attributed to two factors: 1) the

portfolio’s heavier weighting in small cap biotech and 2) the

portfolio’s exposure to the Chinesemarket.

As we previously outlined in the half yearly report for the six

months ended 30 September 2021, the portfolio is more

heavily weighted towards small cap biotech relative to the

Benchmark Index. This reflects the structural strategy shift

the Company undertook in 2019 to emphasize the emerging

biotech companies that are now estimated to account for

more than two-thirds of the R&D pipeline candidates in

the biopharmaceutical industry. As shown in Figure 1 on

page10, if one looks at the market capitalization (market

cap) distribution of the Company as at the beginning of the

fiscal year, the Company was 38% overweight small cap

stocks and 33% underweight large capitalization (large cap)

stocks relative to the Benchmark. If one charts the average

stock price performance of the Benchmark constituents

in each of those market cap categories, one observes that

small cap biotech underperformed large cap biotech by

over 30% during the review period. This size divergence in

performance was a significant headwind to performance for

the portfolio.

GEOFF HSU

10 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

PORTFOLIO MANAGER’S REVIEW CONTINUED

The disappointing performance of small cap biotech companies primarily resulted from a general market shift from growth

to value, which favored revenue-generating large cap companies over non-revenue-generating small cap companies.

This phenomenon was not isolated to biotech. As shown in Figure 2 on page 11, the Russell 2000 - a commonly used

market-wide index to track small cap performance - underperformed the Russell 1000 - a proxy for large-cap performance -

by 18.5% during the review period.

-50%

-40%

-30%

-20%

-10%

10%

20%

30%

40%

Mar 2021 Apr 2021 May 2021 June 2021 July 2021 Aug 2021 Sep 2021 Oct 2021 Nov 2021 Dec 2021 Jan 2022 Feb 2022 Mar 2022

Benchmark Performance of

Large Cap Stocks

-1.9%

Benchmark Performance of

Mid Cap Stocks

-31.0%

Benchmark Performance of

Small Cap Stocks

-32.8%

Market Cap Breakdown

(As of 31 March 2021)

BIOG Benchmark

Delta

26% 59%

-33%

22% 29%

-7%

51%

Large Cap (>$10bn)

Mid Cap ($2-10bn)

Small Cap (<$2bn) 13%

38%

*Snapshot exposure as of 31 March 2021. %NAV Exposure of BIOG portfolio vs. Benchmark, excluding private securities.

Figure 1

Note: Chart shows equal-weighted performance of Benchmark stocks in their respective market cap buckets, using market cap classifications as of 31March

2021. updated as of 31 March 2022, performance calculated in USD.

Source: Bloomberg

DIVERGENCE IN THE PERFORMANCE OF LARGE, MID AND SMALL CAP BIOTECH COMPANIES

NASDAQ

BIOTECHNOLOGY INDEX (THE “BENCHMARK”) PERFORMANCE BY MARKET CAP CLASSIFICATION

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 11

PORTFOLIO MANAGER’S REVIEW CONTINUED

Strategic Report

Fears over rising interest rates during the review period

contributed to this small cap underperformance.

Conventional thinking suggests that companies with

earnings far out in the future are more susceptible to

interest rate rises due to the adverse impact of higher

discount rates and higher financing costs. We believe

such fears are overblown, as biotech company valuations

are far more dependent on the probability of success of a

company’s lead asset and the future expected revenue from

that asset than by the discount rate. Historical data suggest

that rising interest rates actually have very little correlation

with performance of small capbiotech.

Consistent with the small cap weakness, many of the

recent IPOs in the portfolio, which had delivered strong

performance in 2020, saw a significant retracement of their

gains in 2021. Across the biotech industry, the average

biotech IPO completed in 2020 saw a share price decline

of 28% through 31 March 2022. IPO performance for deals

priced in 2021 was -46% through 31 March 2022.

During the first six months of the fiscal year, our

underweight positioning in the COVID-19 vaccine stocks,

Moderna and BioNTech, was a significant contributor to

the Company’s underperformance. Both stocks had market

capitalizations above $10 billion at the start of the fiscal

year, and thus would be considered large cap names. We

had remained underweight those names throughout the

review period because we could not justify their valuations

and believed investors were overestimating the recurring

revenue from COVID-19 vaccine sales. As we anticipated,

those stocks began correcting in the second half of the

fiscal year as case counts declined and positive data were

released for oral antivirals such as Pfizer’s Paxlovid and

Merck’s molnupiravir. Even though the U.S. had to deal

with an Omicron COVID-19 case surge during the winter,

the hospitalization rate remained manageable, leading to

optimism that future variants would also be more benign

given widespread vaccination and better treatments. At its

peak in August, Moderna had become the largest biotech

company in the world by market cap, and Moderna and

BioNTech represented close to 18% of the Benchmark

SIZE DIVERGENCE IN THE BROAD MARKET

RUSSELL 2000 VS. RUSSELL 1000

Figure 2

Note: Chart updated from 31 March 2021 to 31 March 2022. The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index.

The Russell 1000 Index is comprised of the largest 1000 companies in the Russell 3000 Index.

Source: Bloomberg

12 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

Index. The Company’s underweight positioning in both

names cost the Company about 11 percentage points

of relative NAV performance in the first half of the fiscal

year. By the end of the review period, shares in both had

corrected significantly, reducing the negative aggregate

impact of our underweight positioning to approximately

4.5 percentage points for the entire fiscal year. Due to a

rebalancing of the Benchmark Index in September 2021,

Moderna’s weight in the Index was cut from 13.5% to 9.2%

near the peak of its share price. Unfortunately, this meant

that the negative alpha the Company suffered while the

stock was rising could not be fully recouped when the

stockdeclined.

The Chinese biotech portion of our portfolio, representing

about 13% of NAV at 31 March 2022, was intended to

provide some geographic diversification while capturing

some of the biotech innovation emerging in China. During

the review period, macro headwinds adversely affected

the Chinese and Hong Kong stock markets that were

completely distinct from the macro drivers seen in the U.S.

The Chinese stock market was pressured by regulatory

tightening by the Chinese government, slowing economic

growth, and potential delisting of Chinese ADRs* from

the U.S. stock market due to disagreements between U.S.

and Chinese regulators about accounting disclosures.

Compounding these macro dynamics was the advent of

a COVID-19 surge in China towards the end of the fiscal

year, resulting in restrictive lockdowns in certain cities that

further impaired China’s economic growth outlook. As a

result of these macro factors, the Hang Seng Healthcare

Index (HSHCI), an index tracking healthcare securities

traded in Hong Kong, fell 45% during the review period. Our

China biotech positions traded in tandem with the broader

sell-off. We estimate the Company’s China-listed positions,

which are all considered “active share” since they are not

in the Benchmark, contributed approximately 4 percentage

points of relative underperformance during the review

period.

EMERGING BIOTECH VALUATIONS AT 20-YEAR

LOWS, SUGGESTING A RECOVERY IS OVERDUE

Despite the challenging macro environment adversely

impacting the Company’s performance, we have many

reasons to be optimistic that biotech will stage a rebound in

the near-term.

One proxy commonly used to track performance of

small and mid-capitalization biotech is the XBI

, an equal

weighted index of biotech companies created in 2006.

About 50% of this index consists of small cap names. If

one plots the relative performance of the XBI versus the

S&P 500 (”SPX” shown in Figure 3 on page 13 ), one can

see that since inception, the XBI has outperformed the

S&P 500, indicating that emerging biotech has historically

been a sector offering better returns than the broader

market. Over the past 15 years though, there have been

short periods when the XBI has underperformed the S&P

500, shown by the red circles. Typically, these drawdown

periods result in underperformance versus the S&P 500 of

30-45%. The current relative performance drawdown of the

XBI is 65%, making it the longest and most severe period of

underperformance in the XBI’s history. Importantly, each of

the prior drawdowns was followed by a period of significant

outperformance of the XBI versus the S&P 500. Given the

severity of the current drawdown, history would suggest we

are overdue for a period of biotech outperformance.

PORTFOLIO MANAGER’S REVIEW CONTINUED

*See glossary beginning on page 93

SPDR S&P Biotech ETF (“XBI”)

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 13

We believe the unprecedented sell-off in emerging biotech has driven valuations to 20-year lows, giving a compelling

valuation argument to our bullish stance on the sector. Because emerging biotech companies are not yet profitable, one way

to look at their valuations is simply to compare their market caps with the net cash on their balance sheets. We view this as

an objective measure of valuation as it does not depend on assumptions regarding probability of success of assets, launch

timing, or future revenue estimates. By this simple market cap-to-cash metric, data indicate that almost 20% of biotech

companies were trading at market capitalizations below the net cash on their balance sheets as of the end of the fiscal year.

As seen from the graphs below, this is a level that we have not seen in over 20 years. This translates to over 100 companies

which are now trading at negative enterprise values. While some of these companies have failed programs that merit a

valuation below cash, many have interesting technologies and programs that just haven’t reached fruition yet. The high

proportion of companies trading below cash reflects an overall biotech sector valuation that is extremely depressed.

PERCENT OF BIOTECH COMPANIES TRADING NUMBER OF BIOTECH COMPANIES TRADING

BELOW NET CASH ON BALANCE SHEET BELOW NET CASH ON BALANCE SHEET

Figure 4

Figure 5

Source: Bloomberg Source: Bloomberg

PORTFOLIO MANAGER’S REVIEW CONTINUED

XBI – SPX SPREAD SINCE XBI INCEPTION

Figure 3

Note: Drawdowns are calculated using daily closing prices, while chart is shown using monthly periodicity for smoothing purposes. Updated as of 31 March 2022.

Source: JPM (Drawdowns and Recoveries) Bloomberg (XBI – SPX Spread Chart since XBI Inception).

14 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

PORTFOLIO MANAGER’S REVIEW CONTINUED

CONTRIBUTORS AND DETRACTORS

Trillium Therapeutics, GH Research, StemiRNA

Therapeutics, Xenon Pharmaceuticals, and Horizon

Therapeutics were the leading positive contributors to

performance in the portfolio during the year.

• Trillium Therapeutics is an emerging biotechnology

company developing immunotherapies for cancer. The

stock rose in August when Pfizer announced it was

acquiring the company for $2.26 billion, representing a

203% premium to Trillium’s share price.

• GH Research is a biopharmaceutical company focused

on the treatment of psychiatric and neurological

disorders. The initial focus of the company is on

developing its proprietary 5-MeO-DMT inhaled therapy

for the treatment of patients with treatment-resistant

depression (TRD). We participated in a crossover round

for GH Research and purchased additional shares in

the IPO. After the IPO, GH Research announced positive

Phase 2 data from its Phase 1/2 trial in TRD with a large

effect size over current standard of care.

Figure 6

Source: Bloomberg

Note: Updated through 31 March 2022, SSHLTH vs SPX premium/discount using 12M Forward Price-to-Earnings (PE).

Looking more generally at healthcare valuations, we note that the healthcare constituents of the S&P 500 across all

subsectors (not including just biotech) were also trading at an average forward price/earnings multiple below historical

averages during the fiscal year. As noted in Figure 6 below,, sector-wide valuation contraction typically occurs when

healthcare reform is being considered by the U.S. government. Over much of the fiscal year, there was Congressional debate

about drug pricing proposals to be included in the Biden administration’s social spending bill. This likely contributed to

depressed valuations for healthcare broadly. As the graph shows, a relief rally generally ensues once there is certainty about

such reform proposals, so passage of a drug pricing bill could act as a clearing event for the sector.

S&P HEALTHCARE (S5HLTH): PREMIUM/DISCOUNT TO S&P

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 15

• StemiRNA Therapeutics is a private Chinese vaccine

company developing an mRNA-based vaccine for

COVID-19. To date, there are no mRNA-based COVID-19

vaccines approved in China. Given the Chinese

government’s preference for homegrown vaccines to

inoculate its population, we expect domestic vaccine

manufacturers like StemiRNA will be preferred as China

further develops vaccine options for its population. The

valuation of the company was written up during the

review period in expectation of another private financing

round contingent upon clinical trial commencement of

their vaccine.

• Xenon Pharmaceuticals is an emerging biotechnology

company developing innovative therapeutics to improve

the lives of patients with neurological disorders.

The company’s main pipeline program, XEN1101,

is a differentiated Kv7 potassium channel opener

being developed for the treatment of epilepsy and

major depressive disorder. In October 2021, shares

appreciated significantly after Xenon announced

positive results from its Phase 2b X-TOLE clinical trial

of XEN1101 in adult patients with focal epilepsy, which

showed a higher seizure reduction than currently

approved medications.

• Horizon Therapeutics is a specialty pharmaceutical

company focused on rare autoimmune and

inflammatory disorders. The stock moved up sharply

in February 2021 when its largest growth product,

Tepezza, an insulin growth factor-1 receptor inhibitor

for the treatment for thyroid eye disease, meaningfully

surpassed sales expectations. The stock moved

incrementally higher throughout the year as the growth

outlook for Tepezza continued to be revised upward.

Singular Genomics Systems, Guardant Health, Aptose

Biosciences, Mersana Therapeutics, and Curis were the

principal detractors for the year.

• Singular Genomics Systems is an emerging life

science tools company that has developed a novel

sequencing chemistry. The company’s first product,

G4, is a benchtop sequencer and the company is also

developing the PX, a single cell sequencer launching

in 2023. The Company participated in the crossover

round for Singular Genomics in early 2021 and it

subsequently went public in May 2021. Shares pulled

back significantly after the IPO as early-stage tools

companies fell out of favor. Additional competitive

concerns from Illumina and private company Element

Biosciences, ahead of Singular’s G4 launch, further

exacerbated this decline. The company has begun

taking orders for G4 and will begin shipping the product

in 2022.

• Guardant Health is an oncology diagnostics company

that has emerged as the preeminent liquid biopsy

vendor in therapy selection. The company also plans

to enter the non-invasive screening market in 2022.

Guardant shares suffered due to a broad pullback

in growth names in tools and diagnostics, despite

reporting generally strong financial results throughout

the course of the year. The stock was particularly

weak after rumors came out that it was considering a

purchase of NeoGenomics, another public oncology

diagnostics company, though the deal was never

consummated.

• Aptose Biosciences is a biopharmaceutical company

developing precision medicines to address unmet

medical needs in oncology. The shares were weak after

disappointing data from the company’s lead asset in

acute myeloid leukemia. Given earlier initial promising

data from a lower dose cohort, investors were expecting

response rates to increase with dose escalation;

however, the company failed to show any additional

responses and there were some tolerability issues that

arose.

• Mersana Therapeutics shares declined in Sept 2021

upon the announcement of interim data for its drug

for the treatment of ovarian cancer. As a result of the

findings, the company decided to amend its ongoing

registration trial, resulting in a delay in the timing of

potential approval of the drug.

• Curis is a biotechnology company focused on the

development of therapeutics for the treatment of

cancer. The initial focus of the company is its IRAK4/

FLT3 inhibitor, emavusertib, for acute myeloid

leukemia (AML) and B-cell malignancies. The shares

underperformed after the company announced

lackluster updated efficacy data for emavusertib in AML,

where response rates were similar to existing approved

FLT3 inhibitors.

PORTFOLIO MANAGER’S REVIEW CONTINUED

16 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

PORTFOLIO MANAGER’S REVIEW CONTINUED

POLITICAL RISK FROM DRUG PRICING REFORM DECREASES AS MIDTERM ELECTIONS IN THE USNEAR

With the presidency and both houses of Congress controlled by Democrats following the 2020 election, investors had

expected some form of drug pricing reform would be enacted over the past year. The biotech industry was primarily

concerned about any legislation that would allow the United States federal government to negotiate drug prices. Indeed, a

watered-down version of drug pricing reform was included in the Democrats’ proposed Build Back Better (BBB) bill in 2021,

which would have allowed the federal government to negotiate prices for some high-cost drugs covered by Medicare and

limit annual increases of drug prices. However, BBB was unable to garner the necessary support from moderate Democrats,

so it did not pass during the fiscal year.

Democrats are currently attempting to rework BBB into a form that all Senate Democrats can support. Given that Democrats

hold a slim majority in the Senate, the party would look to use a legislative pathway called budget reconciliation that only

requires a simple majority in the Senate for passage. We believe that such legislation would likely include limited drug pricing

provisions that appeal to both moderates and progressives in the party. Our view remains that any such legislation will be

manageable for the industry and would actually remove an overhang for the sector. However, the window to pass an updated

version of BBB is rapidly closing as midterm elections approach in the fall. If the Democrats fail to pass the legislation this

spring, the chances of passage dramatically decrease as politicians increasingly focus on elections in November. In addition,

with Democrats polling poorly ahead of the midterm elections and President Biden’s low approval numbers, the party is likely

to lose control of at least the House of Representatives and potentially also the Senate in 2022. This would severely hinder

any efforts to pass significant drug pricing legislation.

REGULATORY CLIMATE IN THE US LIKELY TO REMAIN CONSTRUCTIVE DESPITE COVID-19-RELATED DELAYS

We have noted in the past that the U.S. Food and Drug Administration (FDA) regulatory climate over the past few years has

been constructive for new drug approvals. Indeed, in 2021, total new drug approvals were on par with the elevated pace of

approvals seen during the Trump administration (see Figure 7 above). Having said that, there were a number of regulatory

delays for drugs being reviewed at the FDA during the fiscal year. In many cases this was due to delays in facility inspections

stemming from COVID-19-related travel restrictions rather than any fundamental issues with the drugs themselves. For

most of the fiscal year, Janet Woodcock, a longstanding senior FDA official, served as acting commissioner of the agency.

In February 2022, Dr. Robert Califf, a cardiologist, was confirmed as the new permanent FDA Commissioner, bringing stable

leadership to the agency. Dr. Califf formerly served as FDA commissioner during the Obama administration, where he

presided over a stable and productive drug approval period at the FDA. He is regarded as data-driven and industry-friendly.

We believe he is unlikely to change the current constructive regulatory stance at the FDA.

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Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 17

PORTFOLIO MANAGER’S REVIEW CONTINUED

IPO AND CROSSOVER ACTIVITY SLOWS DOWN; ATTRACTIVE INVESTMENTS LIKELY TO EMERGE

After two to three years of robust crossover and IPO deal activity, such activity slowed in the last two quarters of the fiscal

year as sector valuations declined. During the fiscal year, the Company participated in 13 IPOs and seven of the Company’s

private investments went public. The Company made five new crossover investments: GH Research, a European biotech

company developing an agent for depression; Janux Therapeutics, a cancer immunotherapy company developing T-cell

engagers; Awakn Life Sciences, a UK-based company listed in Canada, developing a drug for alcohol use disorder; StemiRNA

Therapeutics, a Chinese company developing an mRNA-based vaccine for COVID-19; and XtalPi, a Chinese artificial

intelligence drug discovery company. Of these new crossover investments, only StemiRNA and XtalPi remained private as of

31 March 2022. As of 31 March 2022, the Company had three private investments (excluding the investment in OrbiMed Asia

Partners Fund) totalling 8.2% of NAV. Given current market conditions, the IPOs for these crossover investments have been

delayed until the IPO environment improves. All private investments are valued by a third-party valuation agent at the end

of each quarter and incorporate the latest expectation on the timing and valuation of a future IPO. Crossover investing will

remain a part of the Company’s strategy as opportunities arise, and we will remain vigilant about entry prices in the current

market environment.

With the depressed valuations now seen in small and mid-cap biotech, we expect that many companies will be forced to

undertake financings at very compelling prices. This presents an opportunity for the Company to potentially invest in quality

assets at lower-than-usual valuations. We expect more companies will undertake PIPE financings (i.e. private investments in

public equity) in which investors can purchase unregistered shares at a negotiated discount to the market price, occasionally

with additional warrant coverage as a bonus. OrbiMed’s platform and presence in the healthcare investing space give us

excellent access to this deal flow.

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BIOTECH IPOS – COUNT BY QUARTER

Figure 8

Note: Includes all SEC registered biotech IPOs greater than $50 million.

Source: Bank of America Securities, April 2022.

18 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

MERGERS AND ACQUISITION (M&A) ACTIVITY WILL LIKELY ACCELERATE

The pace of biotech M&A largely remained consistent with historical averages for the biotech industry during the fiscal

year. As shown in Figure 9 above, acquisitions of publicly traded biotech companies have averaged approximately 4-5

transactions per quarter for the past few years. The Company benefited directly from two M&A transactions during the fiscal

year because of holdings in the targetcompanies:

• Pacira Pharmaceuticals’ acquisition of Flexion Therapeutics for $450 million

• Pfizer’s acquisition of Trillium Pharmaceuticals for $2.3billion

‘Big Pharma’ interest in acquiring innovative biotech companies has always been strong, but due to the robust financing

environment for biotech in the last two to three years, many biotech companies did not see any urgency to sell to a larger

player. They could simply raise money from equity investors and continue to build value for their programs on their own. Now,

with small cap biotech valuations at such depressed levels, these management teams are faced with the daunting prospect

of undertaking highly dilutive financings to support themselves as independent entities. We expect many of these companies

will be more receptive to M&A overtures now that independent financing options look less attractive. We also expect potential

acquirors to increase their acquisition activity now that the market valuations of prospective targets are significantly lower.

M&A premiums from current depressed valuation levels could be significant. As an example, in April 2022, Regeneron

Pharmaceuticals announced its intention to acquire Checkmate Pharmaceuticals, an immunotherapy oncology company

trading below net cash, for a 335%premium.

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Figure 9

Source: Factset.

PORTFOLIO MANAGER’S REVIEW CONTINUED

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 19

Despite the weakness in share prices, the fundamental innovation occurring in the biotech sector remains robust. According to

data provider IQVIA, a record 84 novel active substances were launched globally in 2021 across the biopharmaceutical industry,

double the number five years ago.

Of the 50 drug approvals in 2021 by the FDA, 54% of them were first-in-class drugs with mechanisms of action different from

those of existing therapies. Below are just some examples of first-in-class novel drug approvals by biotech companies in

2021:

• Adbry, first IL-13 inhibitor for atopic dermatitis

• Aduhelm, first beta-amyloid antibody for Alzheimer’s disease

• Lupkynis, first calcineurin inhibitor approved for lupus nephritis

• Tezspire, first anti-TSLP antibody for severe asthma

• Lumakras, first KRAS G12C inhibitor for lung cancer

• Empaveli, first anti-C3 complement antibody for paroxysmal nocturnal hemoglobinuria

• Tavneos, first C5a receptor antagonist for ANCA-associated vasculitis

• Bylvay, first ileal bile acid transporter inhibitor for progressive familial intrahepatic cholestasis

This material includes information derived from market research provided by IQVIA, Inc and its affiliated subsidiaries (“IQVIA”). IQVIA market research

information is proprietary to IQVIA and available on a confidential basis by subscription from IQVIA. IQVIA market research information reflects estimates of

marketplace activity and should be treated accordingly. The statements, findings, conclusions, views and opinions contained herein are not necessarily those

ofIQVIA. Any analysis is independently arrived at by OrbiMed on the basis of information from various sources.

INNOVATION ENGINE STILL ROBUST

GLOBAL LAUNCHES OF NOVEL ACTIVE SUBSTANCES (NASs) BY THERAPY AREA, 2012-2021

Figure 10

Source: IQVIA, IQVIA Institute, Global Trends in R&D, February 2022.

PORTFOLIO MANAGER’S REVIEW CONTINUED

20 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

The number of next-generation biotherapeutics entering development based on novel development technologies like cell

therapy and gene therapy continues to rise:

The Company has exposure across a wide swath of these new technologies, as shown below (note some positions are

double counted because they use more than one technology):

Figure 12

Source: OrbiMed.

Figure 11

Source: IQVIA, IQVIA Institute, Global Trends in R&D, February 2022.

NEXT-GENERATION BIOTHERAPEUTICS PHASE I TO REGULATORY SUBMISSION PIPELINE BY MECHANISM,

2011-2021

PORTFOLIO MANAGER’S REVIEW CONTINUED

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 21

Other seminal events in the biotech sector during the review

period include:

• Yescarta became the first CAR-T therapy to receive

approval in China

• Intellia Therapeutics announced positive data for its

gene editing therapy for ATTR amyloidosis, the first in

human gene editing therapy to show durable efficacy

from a single systemic administration

• Compass Pathways and GH Research announced

positive data for a new class of psychedelic therapies

for treatment-resistant depression

While not all of the news in the biotech space was positive

during the review period (as usual, certain companies had

setbacks as well), our view is that the overall trajectory

of the industry in terms of value creation remains

overwhelmingly positive. We think there is a significant

disconnect between the share price action during the

fiscal year and the fundamental innovation occurring in

thesector.

OUTLOOK AND ORBIMED UPDATE

Given the unprecedented correction we have seen in

emerging biotech and historically low valuations, we think

the sector is poised for a substantial recovery. A rebound

in the sector could be catalyzed by clarity on drug pricing

legislation, M&A activity, positive clinical data, or strong

product launches. Our overall strategy has not changed. We

will continue to overweight emerging biotech and invest in

crossover rounds and IPOs as opportunities arise. Gearing

will remain in the 5-10% range. Given the substantial

drawdown we have witnessed, we believe current

conditions offer an excellent opportunity for long-term

investors to add to their exposure in biotech.

As the biotech universe has expanded, OrbiMed has

continued to hire additional analysts to buttress our

research effort. During the review period, we hired three

new biotech analysts and two new China analysts. Our

biotech research team now consists of nine analysts, three

of whom have PhD degrees, and our China team consists

of four analysts based in Shanghai and Hong Kong. To

manage COVID-19 risk, our office continues to operate with

a hybrid work schedule (three days in the office, two days

work from home), which has worked smoothly for the team.

We have begun increasing our travel to companies and

medical conferences as COVID-19 risk declines.

While it was a difficult fiscal year for the Company due

to macro factors, we continue to believe strongly in the

investment case for biotech over the long term and look

forward to a recovery in performance.

Geoff Hsu

OrbiMed Capital LLC, Portfolio Manager

31 May 2022

PORTFOLIO MANAGER’S REVIEW CONTINUED

22 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

PRINCIPAL CONTRIBUTORS TO AND DETRACTORS FROM NET ASSET VALUE PERFORMANCE

Top Five Contributors

Contribution

for year ended

31 March 2022

£’000

Contribution

per share

(pence)*

Trillium Therapeutics

7,755 18.7

GH Research 4,880 11.8

StemiRNA Therapeutics 4,195 10.1

Xenon Pharmaceuticals 3,547 8.6

Horizon Therapeutics 2,937 7.1

23,314 56.3

Top Five Detractors

Singular Genomics

(13,216) (31.9)

Guardant Health (11,945) (28.8)

Aptose Biosciences

(11,394) (27.5)

Mersana Therapeutics (11,382) (27.5)

Curis

(11,033) (26.6)

(58,970) (142.3)

* based on 41,441,570 shares being the weighted average number of shares in issue during the six months period ended 31 March 2022

not held in the portfolio at 31 March 2022

PERFORMANCE ATTRIBUTION FOR THE YEAR ENDED 31 MARCH 2022

Contribution to total returns % %

Benchmark return

(7.4)

Portfolio Manager’s contribution

(21.6)

Portfolio total return (29.0)

Gearing

(3.8)

Management fee and other expenses

(1.1)

Performance fees

0.0

Share buyback 0.1

Other effects

(4.8)

Return on net assets

(33.8)

Source: Frostrow Capital LLP.

PORTFOLIO MANAGER’S REVIEW CONTINUED

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 23

BUSINESS REVIEW

The Strategic Report on pages 1 to 35

contains a review of the Company’s

business model and strategy, an

analysis of its performance during

the financial year and its future

developments, as well as details of the

principal risks and challenges it faces.

Its purpose is to inform shareholders in the Company and

help them to assess how the Directors have performed their

duty to promote the success of the Company. The Strategic

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. Such statements should be treated with caution

due to the inherent uncertainties, including both economic

and business risk factors, underlying such forward-looking

information.

BUSINESS MODEL

The Biotech Growth Trust PLC is an externally managed

investment trust and its shares are listed on the premium

segment of the Official List and traded on the main market of

the London Stock Exchange.

The purpose of the Company is to provide a vehicle for

investors to gain exposure to a portfolio of worldwide

biotechnology companies, through a single investment.

The Company’s strategy is to create value for shareholders

by addressing its investment objective.

As an externally managed investment trust, all of the

Company's day-to-day management and administrative

functions are outsourced to service providers. As a result, the

Company has no executive directors, employees or internal

operations.

The Company employs Frostrow Capital LLP (Frostrow) as

its Alternative Investment Fund Manager (AIFM), OrbiMed

Capital LLC (OrbiMed) as its Portfolio Manager, J.P. Morgan

Europe Limited as its Depositary and J.P. Morgan Securities

LLC as its Custodian and Prime Broker. Further details

about their appointments can be found in the Report of the

Directors on pages 46 and 47.

The Board is responsible for all aspects of the Company’s

affairs, including setting the parameters for and monitoring

the investment strategy as well as the review of investment

performance and policy.

The Company is an investment company within the meaning

of Section 833 of the Companies Act 2006 and has been

approved by HM Revenue & Customs as an investment trust

(for the purposes of Section 1158 of the Corporation Tax Act

2010). As a result, the Company is not liable for taxation on

capital gains. The Directors have no reason to believe that

approval will not continue to be retained. The Company is not

a close company for taxation purposes.

INVESTMENT OBJECTIVE AND POLICY

To seek capital appreciation through investment in the

worldwide biotechnology industry. In order to achieve its

investment objective, the Company invests in a diversified

portfolio of shares and related securities in biotechnology

companies on a worldwide basis. Performance is measured

against the NASDAQ Biotechnology Index (sterling adjusted)

(the Benchmark).

INVESTMENT STRATEGY

The implementation of the Investment Objective has been

delegated to OrbiMed by Frostrow (as AIFM) under the

Board’s and Frostrow’s supervision and guidance.

Details of OrbiMed’s investment strategy and approach are

set out in the Portfolio Manager’s Review on pages 9 to 22.

While performance is measured against the Benchmark, the

Board encourages OrbiMed to manage the portfolio without

regard to the Benchmark and its make-up.

While the Board’s strategy is to allow flexibility in managing

the investments, in order to manage investment risk it

has imposed various investment, gearing and derivative

guidelines and limits, within which Frostrow and OrbiMed are

required to manage the investments, as set out below.

INVESTMENT LIMITS AND GUIDELINES

The Board seeks to manage the Company’s risk by imposing

various investment limits and restrictions as follows:

• The Company will not invest more than 10%, in

aggregate, of the value of its gross assets in other

closed ended investment companies (including

24 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

investment trusts) listed on the London Stock Exchange,

except where the investment companies themselves

have stated investment policies to invest no more

than 15% of their gross assets in other closed ended

investment companies (including investment trusts)

listed on the London Stock Exchange.

• The Company will not invest more than 15%, in

aggregate, of the value of its gross assets in other closed

ended investment companies (including investment

trusts) listed on the London Stock Exchange.

• The Company will not invest more than 15% of the value

of its gross assets in any one individual stock at the

time of acquisition.

• The Company will not invest more than 10% of the value

of its gross assets in unquoted investments at the time

of acquisition. This limit includes any investment in

private equity funds managed by the Portfolio Manager

or any affiliates of such entity (see below).

• The Company may invest or commit for investment

a maximum of U.S.$15 million, after the deduction

of proceeds of disposal and other returns of capital,

in private equity funds managed by OrbiMed, the

Company’s Portfolio Manager, or an affiliate thereof.

• The Company’s borrowing policy is that borrowing

will not exceed 20% of the Company’s net assets. The

Company’s borrowing requirements are met through

the utilisation of a loan facility, repayable on demand

and provided by J.P. Morgan Securities LLC. This facility

can be drawn by the Portfolio Manager overseen by

theAIFM.

• The Company may be unable to invest directly in certain

countries. In these circumstances, the Company may

gain exposure to companies in such countries by

investing indirectly through swaps. Where the Company

invests in swaps, exposure to underlying assets will not

exceed 5% of the gross assets of the Company at the

time of entering into the contract.

In accordance with the requirements of the UK Listing Authority,

any material change to the investment policy will only be made

with the approval of shareholders by ordinary resolution.

FOREIGN CURRENCY EXPOSURE

The Company does not currently hedge against foreign

currency exposure.

DIVIDEND POLICY

The Company invests with the objective of achieving capital

growth and it is expected that dividends, if any, are likely to

be small. The Board intends only to pay dividends on the

Company’s shares to the extent required in order to maintain

the Company’s investment trust status.

No dividends were paid or declared during the year (2021:

None).

CONTINUATION OF THE COMPANY

An opportunity to vote on the continuation of the Company

is given to shareholders every five years. The next such

continuation vote will be proposed at the Annual General

Meeting to be held in 2025.

COMPANY PROMOTION

The Company has appointed Frostrow to provide marketing

and investor relations services, in the belief that a well-

marketed investment company is more likely to grow over

time, have a more diverse, stable list of shareholders and its

shares will trade at close to net asset value per share over

the long run. Frostrow actively promotes the Company in

the following ways:

Engaging regularly with institutional investors, discretionary

wealth managers and a range of execution-only platforms:

Frostrow regularly meets with institutional investors,

discretionary wealth managers and execution-only

platform providers to discuss the Company’s strategy

and to understand any issues and concerns, covering

both investment and corporate governance matters. Such

meetings have been conducted on a virtual basis during the

COVID-19 pandemic;

Making Company information more accessible: Frostrow

works to raise the profile of the Company by targeting key

groups within the investment community, holding periodic

investment seminars, commissioning and overseeing PR

output and managing the Company’s website and wider

digital offering, including Portfolio Manager videos and

social media;

BUSINESS REVIEW CONTINUED

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 25

Disseminating key Company information: Frostrow

performs the Investor Relations function on behalf of the

Company and manages the investor database. Frostrow

produces all key corporate documents, distributes monthly

factsheets, Annual and Half Yearly Reports and updates from

OrbiMed on the portfolio and market developments; and

Monitoring market activity, acting as a link between the

Company, shareholders and other stakeholders: Frostrow

maintains regular contact with sector broker analysts and

other research and data providers, and conducts periodic

investor perception surveys, liaising with the Board to

provide up-to-date and accurate information on the latest

shareholder and market developments.

KEY PERFORMANCE INDICATORS (KPIs)

The Board assesses the Company’s performance in

meeting its objective against the following key performance

indicators:

• net asset value total return;

• share price total return;

• share price discount to net asset value per share; and

• ongoing charges.

Information on the Company’s performance is provided

in the Chairman’s Statement and the Portfolio Manager’s

Review and a record of these measures is shown on page1,

5 and 6. The KPIs have not changed from the prior year:

NET ASSET VALUE PER SHARE TOTAL RETURN^

The Directors regard the Company’s net asset value per

share total return as being the overall measure of value

delivered to shareholders over the long term. The Board

considers the principal comparator to be the NASDAQ

Biotechnology Index (sterling adjusted) (the Benchmark)

OrbiMed’s investment style is such that performance is

likely to deviate from that of the Benchmark.

During the year under review the Company’s net asset

value per total share return was -33.8%, underperforming

the Benchmark by 26.4% (2021: +55.1%, outperforming

the Benchmark by 17.3%). Since OrbiMed’s date of

appointment (19 May 2005) to 31 March 2022, the

Company’s net asset value per share total return is 861.6%

compared with 750.2% for the Benchmark. Please refer

to the Chairman’s Statement (beginning on page 2) and

the Portfolio Manager’s Review (beginning on page 9) for

further information.

SHARE PRICE TOTAL RETURN^

The Directors also regard the Company’s share price total

return to be a key indicator of performance. This reflects

share price growth of the Company which the Board

recognises is important to investors.

During the year under review the Company’s share price

total return was -37.0% (2021: +75.2%%). Since OrbiMed’s

date of appointment (19 May 2005) to 31 March 2022, the

Company’s share price total return is 852.8% compared

with Benchmark performance of 750.2%. Please refer to

the Chairman’s Statement beginning on page 2 for further

information.

SHARE PRICE (DISCOUNT)/PREMIUM TO NET

ASSET VALUE PER SHARE^

The Board regularly reviews the level of the discount/

premium of the Company’s share price to the net asset

value per share and considers ways in which share price

performance may be enhanced, including the effectiveness

of marketing, share issuance and buybacks, where

appropriate. The Board has a discount control mechanism

in place, the aim of which is to prevent the level of the

share price discount to the net asset value per share

exceeding 6%. Shareholders should note, however, that it

remains possible for the discount to be greater than 6% on

any one day due to sector volatility and the fact that the

share price continues to be influenced by overall supply

and demand for the Company’s shares in the secondary

market. Any decision to repurchase shares is at the

discretion of the Board. 576,087 shares were repurchased

by the Company during the year (2021: Nil). The Board is

committed to protecting the discount at or near the 6% level

in normal market conditions. Please refer to the Chairman's

Statement on pages 2 and 3 for further information.

In addition, in order to help prevent the Company's share

price from trading at a high premium to its net asset value

per share, new shares can be issued at a premium to the

Company’s net asset value per share.

BUSINESS REVIEW CONTINUED

^ Alternative Performance Measure (See Glossary beginning on page 93).

26 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

BUSINESS REVIEW CONTINUED

The Board believes that the benefits of issuing new shares

are as follows:

• to fulfil excess demand in the market in order to help to

manage the premium at which the Company’s shares

trade to net asset value per share;

• to provide a small enhancement to the net asset value

per share of existing shares through new share issuance

at a premium to the estimated net asset value per share;

• to grow the Company, thereby spreading operating

costs over a larger capital base which should reduce the

ongoing charges ratio; and

• to improve liquidity in the market for the Company’s

shares.

In total, 150,000 new shares were issued during the year

(2021: 2,377,500). The volatility of the net asset value per

share in an asset class such as biotechnology is a factor

over which the Board has no control. The making and

timing of any share buy-backs or share issuance is at the

absolute discretion of the Board. Please see the Chairman’s

Statement on pages 2 and 3 for further information.

ONGOING CHARGES^

Ongoing charges represent the costs that shareholders can

reasonably expect to pay from one year to the next, under

normal conditions. The Board continues to be conscious

of expenses and seeks to maintain a sensible balance

between high quality service and costs. The Board therefore

considers the ongoing charges ratio to be a KPI and reviews

the figure on a regular basis.

As at 31 March 2022 the ongoing charges figure was 1.1%.

^ Alternative Performance Measure (see Glossary beginning on page 93).

RISK MANAGEMENT

The Board is responsible for the management of risks

faced by the Company. Through delegation to the Audit

Committee, the Board has established procedures to

manage risk, to review the Company’s internal control

framework and to establish the level and nature of the

principal risks the Company is prepared to accept in

order to achieve its long-term strategic objective. At least

twice during a year the Audit Committee carries out a

robust assessment of the principal and emerging risks

with the assistance of Frostrow Capital (the AIFM). Arisk

management process has been established to identify

and assess risks, their likelihood and the possible severity

of impact. Further information is provided in the Audit

Committee Report beginning on page 53. These principal

risks and the ways they are managed or mitigated are

detailed on pages 27 to 31.

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 27

BUSINESS REVIEW CONTINUED

PRINCIPAL RISKS AND UNCERTAINTIES MANAGEMENT/MITIGATION

OBJECTIVE AND STRATEGY

The Company becomes unattractive

to investors.

The Boar

d reviews regularly the Company’s investment objective and investment

guidelines in the light of investor sentiment, monitoring closely whether the

Company should continue in its present form. The Board also considers the size

of the Company to ensure that it is at an appropriate level. The Board, through the

AIFM and the Portfolio Manager, holds regular discussions with major shareholders.

Each month the Board receives a report which monitors the investments held in the

portfolio compared with the Benchmark and the investment guidelines. Additional

reports and presentations are regularly presented to investors by the Company’s

AIFM and Portfolio Manager.

SHARE PRICE VOLATILITY AND LEVEL OF DISCOUNT/PREMIUM

The risk that the Company’s share price is not

representative of its underlying net assets.

To manage this risk, the Board:

• regularly reviews the level of the share price discount/premium to the net asset

value per share and considers ways in which share price performance may be

enhanced, including the effectiveness of marketing and investor relations services,

new share issuance and share buybacks, as appropriate;

• has implemented a discount management policy, buying back the Company’s

shares when the level of the share price discount to the net asset value per share

exceeds 6% (in normal market conditions). Further information on this policy is set

out on pages 25 to 26.

• may issue shares at a premium to the net asset value per share to help prevent a

share price premium reaching too high a level;

• reviews an analysis of the shareholder register at each Board meeting and is kept

informed of shareholder sentiment; and

• regularly discusses the Company’s future development and strategy with the

Portfolio Manager and the AIFM.

PORTFOLIO PERFORMANCE

Investment performance may not meet

shareholder requirements.

The Board reviews regularly investment performance against the Benchmark and

against the Company’s peer group. The Board also receives regular reports that

analyse performance against other relevant indices. The Portfolio Manager provides

an explanation of significant stock selection decisions and an overall rationale for

the make-up of the portfolio. The Portfolio Manager discusses current and potential

investment holdings with the Board on a regular basis.

DecreasedNo change Increased

28 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

BUSINESS REVIEW CONTINUED

PRINCIPAL RISKS AND UNCERTAINTIES MANAGEMENT/MITIGATION

PORTFOLIO MANAGEMENT KEY PERSON RISK

The risk that the individual(s) responsible for

managing the Company’s portfolio may leave

their employment or may be prevented from

undertaking their duties.

The Board manages this risk by:

• appointing OrbiMed, who in turn have appointed Geoff Hsu to manage the

Company’s portfolio. Mr Hsu is ably supported by a team of researchers and

analysts dedicated to the biotechnology sector;

• receiving reports from OrbiMed at each Board meeting, such reports include any

significant changes in the make-up of the team supporting the Company;

• meeting the wider team at OrbiMed’s offices and encouraging the participation

of the wider OrbiMed team in investor updates; and

• delegating to the Management Engagement Committee, the responsibility to

perform an annual review of the service received from OrbiMed, including, inter

alia, the team supporting the lead manager and their succession plans.

OPERATIONAL AND REGULATORY

As an externally-managed investment trust,

the Company is reliant on the systems of its

service providers for dealing, trade processing,

administration, financial and other functions.

If such systems were to fail or be disrupted

(including, for example, as a result of cyber-

crime or a pandemic) this could lead to a failure

to comply with applicable laws, regulations and

governance requirements and/or to a financial

loss.

To manage these risks, the Board (in some cases meeting as the Audit Committee):

• periodically meets representatives from the Company's key service providers to

gain a better understanding of their control environment, and the processes in place

to mitigate any disruptive events (including the

COVID

-19 pandemic);

• receives a monthly report from Frostrow, which includes, inter alia, confirmation of

compliance with applicable laws and regulations;

• reviews the internal control reports and key policies (including disaster recovery

procedures and business continuity plans) of its service providers;

• maintains a risk matrix with details of risks to which the Company is exposed, the

approach to managing those risks, the key controls relied on and the frequency of

the controls operation;

• receives updates on pending changes to the regulatory and legal environment and

progress towards the Company’s compliance with such changes; and

• has considered the increased risk of cyber-attacks and received reports and

assurance from its service providers regarding the information security controls in

place.

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 29

BUSINESS REVIEW CONTINUED

PRINCIPAL RISKS AND UNCERTAINTIES MANAGEMENT/MITIGATION

MARKET PRICE RISK

The Company’s portfolio is exposed to

fluctuations in market prices in the biotechnology

sector and the regions in which it invests. The

biotechnology sector is expected to be more

volatile than some other sectors. One sector-

specific uncertainty is the exposure to the

implications of US drug pricing policy in the US.

More generally, market-wide uncertainties which

have recently caused increased volatility in stock

markets include the COVID-19 pandemic; the

outbreak of war in Ukraine and the effects of

sanctions against Russia (including rising oil

and wider energy pricing and the risk of prices

remaining elevated for a prolonged period);

the effects of rising interest rates and inflation;

slowing global economic growth; and the fear of

recession.

The Portfolio Manager has responsibility for selecting investments in accordance

with the Company’s investment objective and policy and seeks to ensure that

investment in individual stocks falls within acceptable risk levels. Compliance

with the limits and guidelines contained in the Company’s investment policy is

monitored daily by Frostrow and OrbiMed and reported monthly to the Board.

The investment restrictions ensure that the portfolio is diversified, reducing the

risks associated with individual stocks and markets. OrbiMed report at each Board

meeting on the Company’s performance and the macro factors affecting it.

The Portfolio Manager spreads investment risk over a wide portfolio of

investments. At the year end the Company’s portfolio comprised investments in

74companies.

As part of its review of the going concern and long-term viability of the Company,

the Board also considers the sensitivity of the Company to changes in market prices

and foreign exchange rates (see note 14 beginning on page 84) and the ability of

the Company to liquidate its portfolio if the need arose. Further details are included

in the Going Concern and Viability Statements beginning on pages 50 and 32

respectively.

VALUATION RISK

Pursuant to the Investment Policy, the Company

may invest up to 10% of its gross assets in

unquoted investments at the time of acquisition.

The valuation of unquoted assets involves a

degree of subjectivity and there is a risk that

proceeds received on the disposal of unquoted

holdings may prove to be significantly lower than

the value at which the investment is held in the

Company’s portfolio.

The majority of the Company’s unquoted investments are valued by an independent,

third party valuation agent. The Board has established a Valuation Committee to

review the valuations of the unquoted investments and the methodologies used in

the valuations. The Valuation Committee makes recommendations to the Board, as

appropriate. Further information can be found in the Audit Committee Report beginning

on page 53 and note 1 to the financial statements on page 74.

CLIMATE CHANGE

Climate change events could have an impact

on portfolio companies and their operations,

as well as on the Company’s service providers,

potentially affecting their operating models,

supply chains, physical locations and energy

costs.

Although the effects of climate change have yet to be fully understood, the Board

and the Portfolio Manager keep the subject under review.

The Board is conscious that climate change poses a general risk to the investment

environment and through discussions with the Portfolio Manager, has noted

that the biotechnology industry is not a major contributor to greenhouse gas

emissions. Although the Portfolio Manager does not consider climate change

to be a material ESG consideration for the sector for this reason, energy

management is noted as a material concern in the wider healthcare and

pharmaceutical sectors, and this forms part of OrbiMed’s ESG monitoring. Please

refer to pages 41 and 42 for further information.

LIQUIDITY RISK

Ability to meet funding requirements when

they arise.

The Portfolio Manager has constructed the portfolio in line with the Company's

investment policy; the majority of the Company’s assets are investments in quoted

equities that are readily realisable and therefore funds can be raised at short notice

if required. Please see pages 7 and 8 for further information on the make-up of the

portfolio and note 14 beginning on page 84 for further information on this risk.

30 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

BUSINESS REVIEW CONTINUED

PRINCIPAL RISKS AND UNCERTAINTIES MANAGEMENT/MITIGATION

SHAREHOLDER PROFILE

Activist shareholders whose interests are

not consistent with the long-term objectives

of the Company may be attracted onto the

shareholder register.

The AIFM provides a shareholder analysis at every Board meeting so that the Board can

give consideration to any action required; this is in addition to regular reporting by the

Company’s broker. The Board has implemented an active discount management policy

in order to try to ensure that the Company’s share price trades at a discount no greater

than 6% to the Company’s net asset value per share. The intention is that keeping the

discount within a relatively narrow range should discourage activist and other short-

term investors. Please see page 25

for further information.

CURRENCY RISK

Movements in exchange rates could

adversely affect the sterling performance of

the portfolio.

A significant proportion of the Company’s assets is, and will continue to be, invested in

securities denominated in foreign currencies, in particular U.S. dollars. As the Company’s

shares are denominated and traded in sterling, the return to shareholders will be affected

by changes in the value of sterling relative to those foreign currencies. The Board has

made clear the Company’s position with regard to currency fluctuations which is that it

does not currently manage or mitigate for foreign currency exposure (see page 85).

LOAN FACILITY

The provider of the Company’s loan facility

may no longer be prepared to lend to the

Company.

The Company’s borrowing requirements are met through the utilisation of a loan

facility, repayable on demand, provided by J.P. Morgan Securities LLC (see Credit

Risk below). The Company’s borrowing policy is that borrowing will not exceed

20% of the Company’s net assets.

The Board, the AIFM and the Portfolio Manager will be kept fully informed of any

intention to withdraw the loan facility so that repayment can be effected in an

orderly fashion.

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 31

BUSINESS REVIEW CONTINUED

PRINCIPAL RISKS AND UNCERTAINTIES MANAGEMENT/MITIGATION

CREDIT RISK

The Company is exposed to credit risk

arising from the use of counterparties. If a

counterparty were to fail, the Company could

be adversely affected through either a delay in

settlement or a loss of assets.

The most significant counterparty the Company is exposed to is J.P. Morgan

Securities LLC (the Company’s Custodian and Prime Broker) which is responsible

for the safekeeping of the Company’s assets and provides the loan facility to the

Company. As part of the arrangements with J.P. Morgan Securities LLC

(J.P.Morgan) they may take assets as collateral up to 140% of the value of the loan

drawn down. S

uch assets taken as collateral by J.P. Morgan may be used, loaned,

sold, rehypothecated* or transferred. The level of the Company's gearing is at the

discretion of the AIFM and the Board and can be repaid at any time, at which point

the assets taken as collateral will be released back to the Company. Any of the

Company’s assets taken as collateral are not covered by the custody arrangements

provided by J.P. Morgan.

J.P. Morgan is a registered broker-dealer and is accordingly subject to limits on

rehypothecation*, in particular limitations set out in U.S. Securities and Exchange

Commission (SEC) Rule 15c3-3. In the event of J.P. Morgan’s insolvency, the

Company may be unable to recover in full assets held by it as Custodian or held as

collateral. See page 88 for further information.

The risk is managed through the selection of a financially stable counterparty,

limitations on the use of gearing and reliance on a robust regulatory regime (SEC).

In addition, the Board regularly monitors the credit rating of J.P. Morgan.

J.P. Morgan is also subject to regular monitoring by J.P. Morgan Europe Limited,

the Depositary, and the Board receives regular reports from the Depositary.

During the year the Company entered into swap transactions with Goldman Sachs

International (further details on the associated risks can be found in note 14

beginning on page 84).

Further information on financial instruments and risk can be found in note 14 to

the financial statements beginning on page 84.

* See glossary beginning on page 93.

32 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

BUSINESS REVIEW CONTINUED

EMERGING RISKS

The Company has carried out a robust assessment of

the Company’s emerging risks and the procedures in

place to identify emerging risks are described below. The

International Risk Governance Council definition of an

‘emerging’ risk is one that is new, or is a familiar risk in a

new or unfamiliar context or under new context conditions

(re-emerging).

The Audit Committee reviews a risk map at its half-yearly

meetings. Emerging risks are discussed in detail as part of

this process and also throughout the year to try to ensure

that emerging (as well as established) risks are identified

and, so far as practicable, mitigated.

Current identified emerging risks are:

1. The increase in passive investment vehicles investing

in the healthcare and biotechnology sectors may make

markets more volatile as the prices of companies in the

Benchmark index are inflated by substantial inflows and

deflated by substantial outflows.

2. The economic slowdown in China as a result of the re-

emergence of COVID-19 may affect the performance of

the Company’s China-based investments.

3 There is an increase in geopolitical risks threatening

economic growth, market stability and investment

returns. This includes current or potential conflicts,

such as between Russia and Ukraine, North and South

Korea or China and Taiwan. Alongside this there are

broader shifts in political, economic and cultural power

and allegiances that may, over the longer term, threaten

established commercial norms, the protection of

intellectual property rights and market access to the

detriment of potential investment opportunities.

These emerging risks may be considered as new contexts

for or examples of market price risk and the mitigating

factors for that risk are set out on page 29.

COVID-19

The Board recognises that the emergence and spread of

new coronavirus variants represents a continuing risk, to

the Company’s investments, investment performance and

to its operations. The Portfolio Manager has continued

its dialogue with investee companies and the Board has

stayed in close contact with the AIFM and the Portfolio

Manager, regularly monitoring portfolio and share price

developments. The Board has also received assurances

from all of the Company’s service providers in respect of:

• their business continuity plans and the steps being

taken to guarantee the efficiency of their operations

while ensuring the safety and well-being of their

employees;

• their cyber security measures including improved

user-access controls, safe remote working and evading

malicious attacks; and

• any increased risks of fraud as a result of weakness in

user access controls.

As global vaccination rates continue to grow, the outlook is

cautiously positive, but the Board will continue to monitor

developments as they occur.

VIABILITY STATEMENT

In accordance with the UK Corporate Governance Code and

the Listing Rules, the Directors have carefully assessed the

Company’s position and prospects as well as the principal

risks and have formed a reasonable expectation that the

Company will be able to continue in operation and meet its

liabilities as they fall due over the next five financial years.

The Company’s shareholders are asked every five years

to vote for the continuation of the Company, and the next

such vote will take place at the Annual General Meeting to

be held in 2025. At the current time, the Directors believe

they have a reasonable expectation that this vote will be

passed. The Board has chosen a five-year horizon in view of

the long-term nature and outlook adopted by the Portfolio

Manager when making investment decisions. To make

this assessment and in reaching this conclusion, the Audit

Committee has considered the Company’s financial position,

its ability to liquidate its portfolio and meet its liabilities as

they fall due and, in particular, notes the following:

• The portfolio is principally comprised of investments

traded on major international stock exchanges. Based

on recent market volumes

88.3

% of the current portfolio

could be liquidated within 30 trading days with

80.5

% in

seven days and there is no expectation that the nature of

the investments held within the portfolio will be materially

different in future;

• The expenses of the Company are predictable and

modest in comparison with the assets and there are no

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 33

BUSINESS REVIEW CONTINUED

capital commitments foreseen which would alter that

position; and

• The Company has no employees, only its non-executive

Directors. Consequently it does not have redundancy or

other employment related liabilities or responsibilities.

The Audit Committee, as well as considering the potential impact

of the Company’s principal risks and various severe but plausible

downside scenarios, has also made the following assumptions in

considering the Company’s longer-term viability:

• There will continue to be demand for investment trusts;

• The Portfolio Manager will continue to adopt a long-term

view when making investments, and anticipated holding

periods will be at least five years;

• The Company invests principally in the securities of listed

companies traded on international stock exchanges to

which investors will wish to continue to have exposure;

• The closed-ended nature of the Company means that,

unlike open-ended funds, it does not need to realise

investments when shareholders wish to sell their shares;

• Regulation will not increase to a level that makes running

the Company uneconomical; and

• The long-term performance of the Company will continue

to be satisfactory.

The ongoing pandemic and certain geopolitical events

were factored into the assumptions made by assessing

their impact on markets, the Company’s portfolio, and

the Company’s service providers and their operations

and considering whether the likelihood of the principal

risks materialising had increased. As part of the viability

assessment, the Board considered the impact of one or

more of the principal risks (as identified on pages

)

materialising, modelling substantial falls in the value of the

portfolio and the Company’s NAV as well as severely reduced

market liquidity. In all scenarios, the Board concluded that the

Company would be able to meet its liabilities as they fall due.

ENVIRONMENTAL, SOCIAL, COMMUNITY AND

HUMAN RIGHTS MATTERS

As an externally-managed investment trust, the Company

does not have any employees or maintain any premises,

nor does it undertake any manufacturing or other

physical operations itself. All its operational functions are

outsourced to third party service providers. Therefore, the

Company has no material, direct impact on the environment

or any particular community and, as a result, the Company

itself has no environmental, human rights, social or

community policies.

For the same reasons, the Company is also exempt from

reporting against the Taskforce for Climate-Related

Financial Disclosures (TCFD) framework. However, the

Board is aware that climate change poses a general risk to

the investment environment and regularly discusses this

with the Portfolio Manager.

The Board is committed to carrying out the Company’s

business in an honest and fair manner with a zero-tolerance

approach to bribery, tax evasion and corruption. As such,

policies and procedures are in place to prevent this. In

carrying out the Company’s activities, the Board aims to

conduct itself responsibly, ethically and fairly. The Board’s

expectations are that the Company’s principal service

providers have appropriate governance policies in place.

The Board believes that consideration of environmental,

social and governance (“ESG”) factors is important to

shareholders and other stakeholders, and has the potential

to protect and enhance investment returns. The Portfolio

Manager’s investment criteria ensure that ESG factors are

integrated into their investment process and best practice

in this area is encouraged by the Board. The Portfolio

Manager engages with the Company’s underlying investee

companies in relation to their corporate governance

practices and the development of their policies on social,

community and environmental matters. Further information

on OrbiMed’s responsible investing policy, including

their approach to the consideration of climate change in

their investment process, can be found in the Corporate

Governance section beginning on page 38.

PERFORMANCE AND FUTURE DEVELOPMENTS

A review of the Company’s year, its performance and the

outlook for the Company can be found in the Chairman’s

Statement on pages

and in the Portfolio Manager’s

Review on pages

The Company’s overall strategy remains unchanged.

34 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

BUSINESS REVIEW CONTINUED

STAKEHOLDER INTERESTS AND BOARD DECISION-MAKING (SECTION 172 OF THE

COMPANIES ACT 2006)

The following disclosure, which is required by the AIC Code of Corporate Governance, describes how the Directors have had

regard to the views of the Company’s stakeholders in their decision-making.

STAKEHOLDER GROUP HOW THE BOARD HAS ENGAGED WITH THE COMPANY’S STAKEHOLDERS

Investors

The Board’s key mechanisms of engagement with investors include:

• The Annual and Half-yearly Reports

• The Annual General Meeting

• The Company’s website which hosts reports, articles and insights, monthly factsheets and video

interviews with the Portfolio Manager

• The Company’s distribution list which is maintained by Frostrow and is used to communicate with

shareholders on a regular basis

• Online seminars with presentations from the Portfolio Manager

• One-to-one investor meetings

The AIFM and the Portfolio Manager, on behalf of the Board, completed a programme of investor

relations throughout the year, reporting to the Board on the feedback received. In addition, the Chairman

has been and remains available to engage with the Company’s shareholders where required.

Portfolio

Manager

The Board met regularly with the Portfolio Manager throughout the year, both formally at quarterly

Board meetings and informally, as required. The Board engaged primarily with key members of the

portfolio management team, discussing the Company’s overall performance as well as developments in

individual portfolio companies and wider macroeconomic developments.

The Board, meeting as the Audit Committee, also met with members of the Portfolio Manager’s risk

management and compliance teams to better understand their internal controls, as well as their ESG

Officer to discuss the integration of ESG factors into the investment process.

Service Providers

The Board met regularly with the AIFM, representatives of which attend every quarterly Board

meeting to provide updates on risk management, accounting, administration, corporate governance

and marketing matters.

The Board, meeting as the Management Engagement Committee, reviewed the performance of all

the Company’s service providers, receiving feedback from Frostrow in their capacity as AIFM and

Company Secretary. The AIFM, which is responsible for the day-to-day operational management

of the Company, meets and interacts with the other service providers including the Depositary,

Custodian and Registrar, on behalf of the Board, on a daily basis. This can be through email, one-to-

one meetings and/or regular written reporting.

The Audit Committee reviewed the quality and effectiveness of the audit and recommended to the

Board that it be proposed to shareholders that BDO LLP (“BDO”) be re-appointed as Auditor. The

Audit Committee also met with BDO to review the audit plan and set their remuneration for the year.

Strategic Report

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 35

As an externally managed investment trust, the Company has no employees, customers, operations or premises. Therefore,

the Company’s key stakeholders (other than its shareholders) are considered to be its service providers. The need to foster

good business relationships with the service providers and maintain a reputation for high standards of business conduct are

central to the Directors’ decision-making as the Board of an externally managed investment trust.

KEY AREAS OF ENGAGEMENT MAIN DECISIONS AND ACTIONS TAKEN

• Ongoing dialogue with shareholders concerning

the strategy of the Company, performance and

the portfolio.

• The impact of market volatility caused by,

inter alia, the COVID-19 pandemic and certain

geopolitical events, on the portfolio.

• Share price performance.

The Board and the Portfolio Manager provided updates via RNS, the Company’s website,

the distribution list and the usual financial reports and monthly fact sheets.

The Board continued to monitor share price movements closely. When the discount of the

share price to the net asset value per share exceeded 6%, the Company sought to buy back

shares in the market. As a result, 576,087 shares were bought back during the year. As a

result of the emergence of a premium during the start of the year, 150,000 shares were

issued at a premium to the net asset value per share at the time. Please refer to page25

and 26 for further information.

• Portfolio composition, performance, outlook

and business updates.

• The ongoing impact of the COVID-19

pandemic on the Portfolio Manager’s business

and the businesses of the portfolio companies.

• The integration of sustainability and ESG

factors to the Portfolio Manager’s investment

process.

• The Portfolio Manager’s system of internal

controls and investment risk management

including their cyber security arrangements.

The Board concluded that the Portfolio Manager had continued to successfully implement

temporary remote working with no material adverse impact on service delivery. The Board

agreed that high standards of research had been maintained and the Portfolio Manager’s

strategy has been implemented consistently.

The Board concluded that it was in the interests of shareholders for OrbiMed to continue in

their role as Portfolio Manager on the same terms and conditions. Please refer to page 47

for further details.

The Board, meeting as the Audit Committee, concluded that the Portfolio Manager’s

internal controls were satisfactory. Please refer to the Audit Committee Report, beginning

on page 53, for further information.

The Board has asked OrbiMed to enhance their reporting on their engagements with

portfolio companies, including relevant ESG issues.

• The ongoing impact of the COVID-19

pandemic and restrictions on service providers’

businesses and service provision.

• The promotion and marketing strategy of the

Company.

• Service providers’ internal controls, business

continuity plans and cyber security provisions.

• The assessment of the effectiveness of the

audit and the Auditor’s reappointment.

• The terms and conditions under which the

Auditor is engaged.

The Board concluded that the Company’s principal service providers had continued to

successfully implement temporary remote working with no material adverse impact on

service delivery.

The Board concluded that it was in the interests of shareholders for Frostrow to continue in

their role as AIFM on the same terms and conditions. See page 47 for further details.

The Board approved the Audit Committee’s recommendation that it would be in the

interests of shareholders for BDO to be re-appointed as the Company’s auditor for a

further year. Please refer to the Audit Committee Report beginning on page 53 and the

Notice of AGM beginning on page 98 for further information.

By order of the Board

Frostrow Capital LLP

Company Secretary

31 May 2022

BUSINESS REVIEW CONTINUED

36 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

ANDREW JOY

Independent Non-Executive Chairman

STEVE BATES

Independent Non-Executive Director

JULIA LE BLAN

Independent Non-Executive Director

BOARD OF DIRECTORS

Joined the Board in 2012 and became

Chairman in July 2016

Remuneration: £40,000 pa*

Committees

Andrew is Chairman of the Nominations

Committee. (See page 38 for further

information).

Shareholding in the Company

55,000

Skills and Experience

Andrew was one of the founding Partners

of Cinven, a leading private equity firm

investing in Europe and the U.S. He has

been Chairman or a Director of numerous

growing companies over the past 30 years.

He is a former Chairman of the BVCA

(British Venture Capital and Private Equity

Association) and a Director of the EVCA.

Other Appointments

Andrew is a Senior Advisor of Stonehage

Fleming Group, Chairman of the

investment committee of FPE Capital and

is a Trustee of several charities.

Standing for re-election: No

Joined the Board in 2015

Remuneration: £30,000 pa*

Committees

Steve is Chairman of the Management

Engagement Committee. (See page 38 for

further information).

Shareholding in the Company

10,000

Skills and Experience

Steve has extensive experience as an

Investment Manager and was head of

global emerging markets at J.P. Morgan

Asset Management until 2002. Since then,

he has been an Executive Director of Guard

Cap Asset Management Limited (and its

predecessor company).

Other Appointments

Steve is non-executive Chairman of

J.P. Morgan Elect PLC. He also sits on,

or is advisor to, various committees

in the wealth management and

pension fund areas.

Standing for re-election: Yes

Joined the Board in 2016

Remuneration: £ 30,000 pa*

Committees

Julia is Chair of the Audit Committee.

(Seepage 38 for further information).

Shareholding in the Company

7,000

Skills and Experience

A Chartered Accountant, Julia has worked

in the financial services industry for over 30

years. Julia was formerly a non-executive

Director of Impax Environmental Markets

plc, and was also formerly a tax partner at

Deloitte and sat for two terms on the AIC’s

technical committee.

Other Appointments

Julia is a non-executive Director of British

& American Investment Trust PLC and

Aberforth Smaller Companies Trust plc.

Standing for re-election: Yes

* Information as at 31 March 2022

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 37

GEOFF HSU

Non-Executive Director

Joined the Board in 2018

Remuneration: Nil

Committees

Geoff does not sit on any of the

Board’s Committees. (See page 38

for further information).

Shareholding in the Company

Nil

Skills and Experience

Geoff is a General Partner of

OrbiMed, having joined in 2002 as a

biotechnology analyst. Prior to joining

OrbiMed, he worked as an analyst in

the healthcare investment banking

group at Lehman Brothers. MrHsu

received his A.B. degree summa

cum laude from Harvard University

and holds an M.B.A. from Harvard

Business School. Prior to business

school, he spent two years studying

medicine at Harvard Medical School.

Other Appointments

Geoff is a General Partner of

OrbiMed and does not have any other

appointments.

Standing for re-election: Yes

* Information as at 31 March 2022

BOARD OF DIRECTORS CONTINUED

THE RT HON LORD

WILLETTS FRS

Independent Non-Executive

Director

DR NICKI SHEPHERD

Independent Non-Executive

Director

ROGER YATES

Independent Non-Executive

Director

Joined the Board in 2015

Remuneration: £27,500 pa*

Committees

(See page 38 for further information).

Shareholding in the Company

Nil

Skills and Experience

A former Board member of the

Francis Crick Institute and of the

Biotech Industry Association,

Lord Willetts was the Member of

Parliament for Havant from 1992-

2015 and was Minister for Universities

and Science from 2010-2014. Before

that, he worked at HM Treasury and

the Number 10 Policy Unit. He also

served as Paymaster General in John

Major’s Government.

Other Appointments

Lord Willetts is a non-executive

Director of Darktrace plc and

is President of the Resolution

Foundation and a Visiting Professor

at King’s College London. He is also

a Board Member of Tekcapital and

a founder Director of Synbiotek. He

is also an Honorary Fellow of the

Royal Society and of Nuffield College

and Chancellor of the University

of Leicester.

Standing for re-election: Yes

Joined the Board in December 2021

Remuneration: £27,500 pa*

Committees

(See page 38 for further information).

Shareholding in the Company

Nil

Skills and Experience

Roger started his career in

investment management at

GT Management in 1981 and

subsequently held positions at

Morgan Grenfell and Invesco as Chief

Investment Officer. He was appointed

Chief Executive Officer of Henderson

Group plc in 1999 and led the

company for a decade. More recently,

Roger was the Senior Independent

Director and Remuneration

Committee Chairman at IG Group

Holdings plc, Chairman of Electra

Private Equity PLC and Chairman of

Pioneer Global Asset Management

S.p.A. He was also a Non-Executive

Director of J.P. Morgan Elect PLC

from 2008 until 2018.

Other Appointments

Roger is a non-executive director,

senior independent director and

remuneration committee chair at

St James’s Place Plc and Jupiter

Fund Management plc. He is also

a non-executive director and

senior independent director at

Mitie Group plc.

Standing for election: Yes

Joined the Board in January 2021

Remuneration: £27,500 pa*

Committees

(See page 38 for further information).

Shareholding in the Company

Nil

Skills and Experience

Nicki is the Founder and Director

of Bellows Consulting focused on

supporting Translational Research

in the Biomedical Space. She was

previously at the Wellcome Trust

where she was responsible for

the establishment, management

and oversight of the Translation

Fund, a £30m a year investment

into new product development

covering therapeutics, vaccines,

diagnostics, medical devices and

regenerative medicine over a range

of clinical indications. Nicki has

also held positions at AstraZeneca

in Late-Stage Development and

Manufacturing.

Other Appointments

Nicki is a Member of the CARB-X

Advisory Board.

Standing for re-election: Ye

38 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

THE BOARD AND COMMITTEES

Responsibility for effective governance lies with the Board. The governance framework of the Company reflects the fact

that as an investment company it has no employees. Portfolio management is delegated to OrbiMed and risk management,

company management, company secretarial, administrative and marketing services are delegated to Frostrow. The Board

generates value for shareholders through its oversight of the service providers and management of costs associated with

running the Company.

THE BOARD

Chairman – Andrew Joy

Senior Independent Director – Steve Bates

Five additional non-executive Directors, all considered independent except for Geoff Hsu.

Key responsibilities:

• to provide leadership and set strategy, values and standards within a framework of prudent effective controls which

enable risk to be assessed and managed;

• to ensure that a robust corporate governance framework is implemented; and

• to challenge constructively and scrutinise performance of all outsourced activities.

Audit Committee Nominations Committee

Management Engagement

Committee

Valuation Committee

Chair

Julia Le Blan

All Independent Dir

ectors

Key responsibilities:

• to review the Company’s

financial reports;

• to oversee the risk and

control environment and

financial reporting; and

• to have primary

responsibility for the

relationship with the

Company’s external

auditor, to review their

independence and

performance, and

to determine their

remuneration.

Chairman

Andrew Joy

All Independent Directors

Key responsibilities:

• to review regularly the

Board’s structure and

composition; and

• to make

recommendations for

any changes or new

appointments.

Chairman

Steve Bates

All Independent Directors

Key responsibilities:

• to review regularly

the contracts, the

performance and

remuneration of the

Company’s principal

service providers.

Chairman

Julia Le Blan

Andrew Joy, Steve Bates

Key responsibilities:

• to consider the

valuations of the

Company’s unquoted

investments; and

• to consider the

appropriateness

of the Company’s

valuation policies and

methodologies.

Copies of the full terms of reference, which clearly define the responsibilities of each Committee, can be obtained from the

Company Secretary, will be available for inspection at the Annual General Meeting, and can be found on the Company’s

website at www.biotechgt.com

CORPORATE GOVERNANCE

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 39

CORPORATE GOVERNANCE STATEMENT

The Board is committed to maintaining and demonstrating

high standards of corporate governance. The Board has

considered the principles and recommendations of the AIC

Code of Corporate Governance published in February2019

(the AIC Code). The AIC Code addresses all the principles

set out in the UK Corporate Governance Code (the UK

Code), as well as setting out additional provisions on issues

that are of specific relevance to the Company.

The Board considers that reporting against the principles

and provisions of the AIC Code (which has been endorsed

by the Financial Reporting Council) will provide better

information to shareholders. By reporting against the

AIC Code, the Company meets its obligations under the

UK Code (and associated disclosure requirements under

paragraph 9.8.6 of the Listing Rules) and as such does

not need to report further on issues contained in the UK

Code which are irrelevant to the Company as an externally-

managed investment company, including the provisions

relating to the role of the chief executive, executive

directors’ remuneration and the internal audit function.

The AIC Code is available on the AIC’s website

www.theaic.co.uk and the UK Code can be viewed on the

Financial Repor

ting Council website www.frc.org.uk. The

AIC Code includes an explanation of how the AIC Code

adapts the principles and provisions set out in the UK Code

to make them relevant for investment companies.

The Company has complied with the principles and

provisions of the AIC Code. The Corporate Governance

Report on pages 38 to 45, forms part of the Report of the

Directors on pages 46 to 51.

BOARD LEADERSHIP AND PURPOSE

PURPOSE AND STRATEGY

The purpose and strategy of the Company are described in

the Strategic Report.

BOARD CULTURE

The Board aims to consider and discuss fully differences

of opinion, unique vantage points and to exploit fully areas

of expertise. The Chairman encourages open debate

to foster a supportive and cooperative approach for all

participants. Strategic decisions are discussed openly and

constructively. The Board aims to be open and transparent

with shareholders and other stakeholders and for the

Company to conduct itself responsibly, ethically and fairly

in its relationships with service providers.

The Board has gained assurance on whistleblowing

procedures at the Company’s principal service providers

to ensure employees at those companies are supported in

speaking up and raising concerns. No concerns relating to

the Company were raised during the year.

SHAREHOLDER RELATIONS

The Company has appointed Frostrow to provide marketing

and investor relations services in the belief that a well-

marketed investment company is more likely to grow over

time, have a more diverse, stable list of shareholders and

its shares will trade at close to net asset value per share

over the long run. Frostrow actively promotes the Company

as set out on pages 24 and 25.

SHAREHOLDER COMMUNICATIONS

The Board, the AIFM and the Portfolio Manager consider

maintaining good communications with shareholders to

be a key priority. They engage with larger shareholders

through meetings and presentations. Shareholders are

informed by the publication of annual and half-yearly

reports which include financial statements. These reports

are supplemented by the daily release of the net asset

value per share to the London Stock Exchange and the

publication of monthly fact sheets. All this information,

including interviews with the Portfolio Manager, is available

on the Company’s website at www.biotechgt.com.

The Board monitors changes to the share register of

the Company; it also reviews correspondence from

shareholders (if any) at each meeting and maintains regular

contact with major shareholders. Shareholders who wish to

raise matters with a Director may do so by writing to them

at the registered office of the Company.

The Board supports the principle that the Annual General

Meeting (AGM) be used to communicate with private

investors in particular. While the COVID-19 pandemic

has necessitated different arrangements for the past two

years, shareholders are usually encouraged to attend the

AGM, where they are given the opportunity to question the

Chairman, the Board and representatives of the Portfolio

Manager. In addition, the Portfolio Manager makes a

presentation to shareholders covering the investment

CORPORATE GOVERNANCE CONTINUED

40 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

CORPORATE GOVERNANCE CONTINUED

performance and strategy of the Company at the AGM.

Voting at the AGM is conducted on a poll and details of the

proxy votes received in respect of each resolution are made

available on the Company’s website.

SIGNIFICANT HOLDINGS AND VOTING RIGHTS

Details of the shareholders with substantial interests in the

Company’s shares, the Directors’ authorities to issue and

repurchase the Company’s shares, and the voting rights

of the shares are set out in the Report of the Directors on

pages 46 to 51.

CONFLICTS OF INTEREST

In line with the Companies Act 2006, the Board has the

power to authorise any potential conflicts of interest that

may arise and impose such limits or conditions as it thinks

fit. A register of interests and potential conflicts is maintained

and is reviewed at every Board meeting. No conflicts of

interest arose during the year.

DIVISION OF RESPONSIBILITIES

THE CHAIRMAN AND THE SID

The Chairman’s primary role is to provide leadership to the

Board, assuming responsibility for its overall effectiveness

in directing the Company.

The Senior Independent Director (“SID”) serves as

a sounding board for the Chairman and acts as an

intermediary for the other Directors and the shareholders.

A full description of the responsibilities of the Chairman

and the SID can be found on the Company’s website: www.

biotechgt.com

DIRECTOR INDEPENDENCE

The Board consists of seven non-executive Directors.

All of the Directors except for Geoff Hsu are independent

of OrbiMed and the Company’s other service providers.

Nomember of the Board is a Director of another investment

company managed by OrbiMed, nor has any Board member

(with the exception of Geoff Hsu) been an employee of

OrbiMed or any of the Company’s service providers. Further

details regarding the Directors can be found on pages 36

to37.

The Board carefully considers the various guidelines for

determining the independence of non-executive Directors,

placing particular weight on the view that independence

is evidenced by an individual being independent of mind,

character and judgement. All Directors, with the exception

of Geoff Hsu, are presently considered to be independent.

Directors obtain approval from the Chairman prior to

accepting any new appointments..

BOARD MEETINGS

The Board is responsible for the effective stewardship of

the Company’s affairs. Strategy issues and all material

operational matters are considered at its meetings.

The Board meets formally at least four times each year. The

primary focus at regular Board meetings is the review of

investment performance and associated matters, including

asset allocation, marketing/investor relations, peer group

information and industry issues. The Board reviews

key investment and financial data, revenue and expense

projections, analyses of transactions, performance metrics

and performance comparisons, share price and net asset

value performance.

The Board is responsible for setting the Company’s

corporate strategy and reviews the continued

appropriateness of the Company’s investment objective,

investment strategy and investment restrictions at each

meeting.

MATTERS RESERVED FOR DECISION BY THE

BOARD

The Board has adopted a schedule of matters reserved for its

decision. This includes:

– decisions relating to the strategic objectives and overall

management of the Company, including the appointment

or removal of the Portfolio Manager and other service

providers, establishing the investment objectives,

restrictions, strategy and performance comparators;

– approval of the annual and half yearly financial

statements, recommendation or declaration of any

dividends, determining the policy on share issuance and

buybacks;

– the Company’s internal controls, corporate governance

structure, policies and procedures; and

– matters relating to the Board and its committees,

including the appointment of directors.

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 41

Day-to-day portfolio management is delegated to OrbiMed

and operational management is delegated to Frostrow.

The Board takes responsibility for the content of

communications regarding major corporate issues, even if

OrbiMed or Frostrow acts as spokesman. The Board is kept

informed of relevant promotional material that is issued by

Frostrow.

RELATIONSHIP WITH SERVICE PROVIDERS

Representatives of the Portfolio Manager and the AIFM are

in attendance at each Board meeting. The Management

Engagement Committee evaluates the performance of

all the Company’s service providers as well as the terms

and conditions on which they are engaged. At the most

recent review in February 2022, the Committee concluded

that all the service providers were performing well and

recommended to the Board that they should be retained on

the existing terms and conditions. Please refer to page 47 for

further information on the Committee’s assessment of the

AIFM and the Portfolio Manager.

EXERCISE OF VOTING POWERS

The Board and the AIFM have delegated authority to

the Portfolio Manager to vote the shares owned by the

Company. The Portfolio Manager has been instructed

to submit votes for such shares wherever possible. The

Portfolio Manager may refer to the Board or the AIFM

on any matters of a contentious nature. The Board has

reviewed OrbiMed’s Voting Guidelines and is satisfied with

their approach.

The Company does not retain voting rights on any shares

that are subject to rehypothecation* in connection with the

loan facility provided by J.P. Morgan Securities LLC.

STEWARDSHIP AND ORBIMED’S RESPONSIBLE

INVESTING POLICY

The Board recognises that Environmental, Social and

Governance (“ESG”) issues can impact the performance of

investments. The Board has delegated authority to OrbiMed

to evaluate investee companies’ performance and engage

with their management teams on material ESG issues. These

matters and any other ESG related issues are discussed

regularly with the Board.

The Portfolio Manager, OrbiMed, believes that there is a high

congruence between companies that seek to act responsibly

and those that succeed in building long-term shareholder value.

OrbiMed seeks to integrate its Responsible Investing Policy

into its overall investment process for the Company in order to

maximise investment returns.

OrbiMed negatively screens potential investments and

business sectors that may objectively lead to negative impacts

on public health or well-being. OrbiMed makes investment

decisions based on a variety of financial and non-financial

company factors, including ESG information.

OrbiMed considers sector-specific guidance from the

Sustainability Accounting Standards Board (SASB)

to determine material ESG factors. Depending on the

investment, all or a subset of the ESG factors that are

financially material and relevant are considered in OrbiMed’s

research. The evaluation of a company’s performance on

ESG issues provides guidance for investment decisions

and constitutes part of the investment analysis, as

opposed to ESG factors forming the sole, or primary, set of

considerations for an investment decision.

ESG Monitoring

SASB’s sector guidance for the Biotechnology and

Pharmaceutical sectors lists the following as financially

material ESG issues: safety of clinical trial participants; access

to medicines, affordability & pricing; drug safety; counterfeit

drugs; ethical marketing; employee recruitment; development

and retention; supply chain management; and business

ethics. Depending on the investment, all or a subset of the

ESG factors that are financially material and relevant are

considered in OrbiMed’s research during due diligence as well

as ongoing monitoring.

Data sources for OrbiMed’s ESG assessments include

company reports/disclosures such as ESG reports,

sustainability reports, in-house ESG due diligence,

management meetings, investor calls, third-party service

providers, and analyst reports amongst others.

OrbiMed is taking the initiative in leading meaningful ESG

engagement in the sector. As part of these efforts, OrbiMed

facilitates dialogues and an exchange of leading practices

among investors, companies and other relevant experts

on ESG in the large capitalisation pharmaceutical sector.

OrbiMed also engages with a number of companies,

including one-on-one discussions on ESG issues. Recently,

OrbiMed held a meeting with Horizon Therapeutics

on leading ESG practices and provided feedback and

CORPORATE GOVERNANCE CONTINUED

*See glossary beginning on page 93 for further information.

42 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

CORPORATE GOVERNANCE CONTINUED

the necessary balance of professional skills, experience,

length of service and industry/Company knowledge.

During the year, the Nominations Committee led the

process for the appointment of a new director to succeed

the Chairman, in line with the aforementioned succession

planning policy. Further information is provided in the

following ‘Appointments to the Board’ section.

POLICY ON THE TENURE OF THE CHAIRMAN AND

OTHER NON-EXECUTIVE DIRECTORS

The tenure of each independent, non-executive director,

including the Chairman, is not ordinarily expected to exceed

nine years. It should be noted that, in practice, the date for

departure from the Board may be on the Annual General

Meeting following this anniversary. However, the Board has

agreed that the tenure of the Chairman may be extended

for a limited time provided such an extension is conducive

to the Board’s overall orderly succession. The Board

believes that this more flexible approach to the tenure of

the Chairman is appropriate in the context of the regulatory

rules that apply to investment companies, which ensure

that the chair remains independent after appointment, while

being consistent with the need for regular refreshment and

diversity.

Notwithstanding this expectation, the Board considers that

a Director’s tenure does not necessarily reduce his or her

ability to act independently and will continue to assess

each Director’s independence annually, through a formal

performance evaluation.

APPOINTMENTS TO THE BOARD

The rules governing the appointment and replacement of

Directors are set out in the Company’s articles of association

and the aforementioned succession planning policy.

Where the Board appoints a new Director during the year,

that Director will stand for election by shareholders at the

next AGM. Subject to there being no conflict of interest, all

Directors are entitled to vote on candidates for appointment

to the Board and on the recommendation for shareholders’

approval for the Directors seeking re-election at the AGM.

When considering new appointments, the Board endeavours

to ensure that it has the capabilities required to be effective

and oversee the Company’s strategic priorities. This will

include an appropriate range, balance and diversity of skills,

experience and knowledge. The Company is committed to

ensuring that any vacancies arising are filled by the most

qualified candidates.

recommendations on specific ESG topics such as talent

management, disclosure and governance benchmarks to

the company. The company has published its inaugural ESG

report as a response to such stakeholder feedback.

Climate Change

Climate change does not appear in the list of financially

material ESG considerations presented by SASB for the

biotechnology and pharmaceutical sector. However, energy

management is noted as a material ESG concern for the

healthcare delivery sector. To that end, OrbiMed includes

metrics to determine the portfolio company’s performance

on energy management for the relevant sectors in its

overall ESG monitoring, where available.

OrbiMed votes via proxy to promote ESG best practices

and engages with companies on all ESG matters such

as energy management and climate change. OrbiMed

generally follows the guidelines and recommendations

of Glass Lewis & Co LLC, a leading proxy voting services

provider, including on climate change matters.

OrbiMed’s full Responsible Investing Policy is available on

the Company’s website: www.biotechgt.com.

INDEPENDENT PROFESSIONAL ADVICE

The Directors have access to the advice and services of

a specialist investment trust company secretary, who

is responsible for advising the Board on all governance

matters. The Company Secretary ensures governance

procedures are followed and that the Company complies

with applicable statutory and regulatory requirements.

The Board has formalised arrangements under which

the Directors, in the furtherance of their duties, may

seek independent professional advice at the Company’s

expense. No such advice was sought during the year.

BOARD COMPOSITION, SUCCESSION AND

EVALUATION

SUCCESSION PLANNING

The Board, meeting as the Nominations Committee,

regularly considers its structure and recognises the need

for progressive refreshment.

The Board has an approved succession planning policy to

ensure that (i) there is a formal, rigorous and transparent

procedure for the appointment of new Directors; and (ii) the

Board is comprised of members who collectively display

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 43

CORPORATE GOVERNANCE CONTINUED

The Nominations Committee considers annually the skills

possessed by the Board and identifies any skill shortages

to be filled by new Directors.

Following the recommendation of the Nominations

Committee, Roger Yates was appointed to the Board as a

Director and the Chairman-elect on 1December 2021. The

Chairman did not chair the committee when it was dealing

with the appointment of his successor. Instead MrBates,

as the Senior Independent Director, led the process.

Anexternal executive search firm, Nurole, was engaged to

assist in this process. Nurole has no other connection with

the Company or any of the Directors.

INDUCTION AND TRAINING

New appointees to the Board are provided with a full

induction programme. The programme covers the

Company’s investment strategy, policies and practices.

The Directors are also given key information on the

Company’s regulatory and statutory requirements as they

arise including information on the role of the Board, matters

reserved for its decision, the terms of reference of the

Board Committees, the Company’s corporate governance

practices and procedures and the latest financial

information. It is the Chairman’s responsibility to ensure

that the Directors have sufficient knowledge to fulfil their

role and Directors are encouraged to participate in training

courses where appropriate.

DIVERSITY POLICY

The Board supports the principle of Boardroom diversity, of

which gender and ethnicity are two important aspects. The

Company’s policy is that the Board should be comprised

of Directors who collectively display the necessary balance

of professional skills, experience, length of service and

industry knowledge and that appointments to the Board

should be made on merit, against objective criteria,

including diversity in its broadest sense.

The objective of the policy is to have a broad range of

approaches, backgrounds, skills, knowledge and experience

represented on the Board. The Board believes that this will

make the Board more effective at promoting the long-

term sustainable success of the Company and generating

value for all shareholders by ensuring there is a breadth

of perspectives among the Directors and the challenge

needed to support good decision making.

To this end, achieving a diversity of perspectives and

backgrounds on the Board will be a key consideration in

any Director search process.

MEETING ATTENDANCE

The table below sets out the number of scheduled Board and Committee meetings held during the year ended 31 March

2022 and the number of meetings attended by each Director.

Board

Management

Engagement

Committee

Audit

Committee

Nominations

Committee

Valuation

Committee

Number of meetings held in 2021/22: 4 1 2 1 1

Steve Bates 4 1 2 1 1

Geoff Hsu

4 – – – –

Andrew Joy 4 1 2 1 1

Julia Le Blan 4 1 2 1 1

Dr Nicki Shepherd 4 1 2 1 –

The Rt Hon Lord Willetts

3 0 2 0 –

Roger Yates

1 – – – –

Professor Dame Kay Davies CBE

1 – 1 – –

All of the serving Directors attended the Annual General Meeting held on 14 July 2021.

1 Geoff Hsu is not a member of any committees.

2 Lord Willetts was unable to attend the July 2021 Board meeting and the February 2022 committee meetings as he was required to be in the House of Lords at

the time.

3 Roger Yates joined the Board on 1 December 2021. He will join the Board’s committees when Andrew Joy retires at the next AGM.

4 Professor Dame Kay Davies retired from the Board on 14 July 2021.

44 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

CORPORATE GOVERNANCE CONTINUED

served on the boards of numerous investment and asset

management companies.

Julia Le Blan joined the Board in July 2016. A Chartered

Accountant and a former tax partner at Deloitte, she has

considerable knowledge of the financial services industry

and the investment company sector. Julia became the

Chair of the Audit Committee in July 2017.

Geoff Hsu, who has been a Director since May 2018, is

a General Partner of OrbiMed, the Portfolio Manager. He

has been a part of the team that manages the Company’s

portfolio since OrbiMed’s appointment in 2005.

Steve Bates joined the Board in July 2015. He is an

experienced investment manager with broad knowledge

of the investment company sector. He is Chairman of the

Management Engagement Committee.

The Rt Hon Lord Willetts joined the Board in November 2015.

A former government minister, he has relevant experience

and a strong interest in the biotechnology sector.

Dr Nicki Shepherd joined the Board in January 2021.

DrShepherd has been working in the biomedical sector

for 25 years across academia, large pharma and global

biomedical charities. She brings breadth of experience

across technology and therapeutic areas and the full

product development pipeline from 'bench to bedside'.

The Chairman is pleased to report that following

the internal performance evaluation, the Directors’

performance continues to be effective and they continue

to demonstrate commitment to the role. Accordingly, the

Board recommends that shareholders vote in favour of the

Directors' election and re-election (as applicable) at the

forthcoming AGM.

AUDIT, RISK AND INTERNAL CONTROL

The Statement of Directors’ Responsibilities on page 52

describes the Directors’ responsibility for preparing this

report.

The Audit Committee Report, beginning on page 53,

explains the work undertaken to allow the Directors to

make this statement and to apply the going concern

basis of accounting. It also sets out the main roles and

responsibilities and the work of the Audit Committee

throughout the year, and describes the Directors’ review

of the Company’s risk management and internal control

systems.

In view of its size, the Board does not consider it

appropriate to set measurable objectives in relation to

diversity, however the Board notes that following the short

period of overlap between the incumbent and incoming

chairman, the gender balance of four men and two women

will meet the recommendation of the Hampton-Alexander

Review.

The Board is aware that the FCA has recently introduced

new Listing Rules, which will take effect for financial years

starting on or after 1 April 2022, to require listed companies

to report on specific diversity targets. The Board anticipates

making the relevant disclosures next year.

BOARD EVALUATION

During the year an internal review of the Board, its

committees and individual Directors (including each

Director’s independence) was carried out by the Board, in the

form of electronic performance evaluation questionnaires.

The review concluded that the Board worked in a collegiate,

efficient and effective manner, and there were no material

weaknesses or concerns identified. The Board is satisfied

that the structure, mix of skills and operation of the Board, its

committees, and individual Directors continue to be effective.

As an independent external review of the Board was

undertaken in 2021 and it is anticipated that the next such

review will be in 2024.

The Board pays close attention to the capacity of individual

Directors to carry out their work on behalf of the Company.

In recommending individual Directors to shareholders for

re-election, it considered their other Board positions and

their time commitments and is satisfied that each Director

has the capacity to be fully engaged with the Company’s

business. The Board has considered the position of all of

the Directors as part of the evaluation process, and believes

that it would be in the Company’s best interests to propose

them for election and re-election at the forthcoming AGM

(with the exception of Andrew Joy who will retire at the

conclusion of the meeting) for the following reasons:

Roger Yates was appointed to the Board on 1 December

2021. He was appointed as the Chairman-elect and is

expected to succeed Andrew Joy when Mr Joy retires at

the forthcoming AGM. He has extensive knowledge of the

investment sector, having held CIO positions at Morgan

Grenfell and Invesco, and having led Henderson Group

as CEO for 10 years. More recently, he has chaired and

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 45

CORPORATE GOVERNANCE CONTINUED

A description of the principal risks facing the Company and

an explanation of how they are being managed is provided

in the Strategic Report on pages 27 to 31.

The Board’s assessment of the Company’s longer-term

viability is set out in the Report of the Directors on pages32

to 33.

REMUNERATION

The Directors’ Remuneration Report, beginning on page 58,

sets out the levels of remuneration for each Director and

explains how Directors’ remuneration is determined.

By order of the Board

Frostrow Capital LLP

Company Secretary

31 May 2022

46 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

REPORT OF THE DIRECTORS

The Directors present this Annual Report on the affairs

of the Company together with the audited financial

statements and the Independent Auditor’s Report for

the year ended 31 March 2022. Disclosures relating to

performance, future developments and risk management

can be found in the Strategic Report on pages 1 to 35.

COMPANY MANAGEMENT

ALTERNATIVE INVESTMENT FUND MANAGER

Frostrow, under the terms of its AIFM agreement with the

Company (the “AIFM Agreement”) provides, inter alia, the

following services:

• delegation (subject to the oversight of Frostrow and

the Board) of the portfolio management function to

OrbiMed;

• investment portfolio administration and valuation;

• risk management services;

• marketing and shareholder services;

• share price discount and premium management;

• administrative and secretarial services;

• advice and guidance in respect of corporate

governance requirements;

• maintenance of the Company’s accounting records;

• preparation and dispatch of annual and half yearly

reports and monthly fact sheets;

• ensuring compliance with applicable legal and

regulatory requirements; and

• maintenance of the Company’s website.

Under the terms of the AIFM Agreement, Frostrow is

entitled to receive a periodic fee equal to 0.30% per annum

on the Company’s market capitalisation up to £500m,

0.20% on market capitalisation above £500m to £1bn and

0.10% on market capitalisation over £1bn.

Either party may terminate the AIFM Agreement on not less

than 12 months’ notice.

PORTFOLIO MANAGER

OrbiMed, under the terms of its portfolio management

agreement with the AIFM and the Company (the “Portfolio

Management Agreement”) provides, inter alia, the following

services:

• the seeking out and evaluating of investment

opportunities;

• recommending the manner by which monies should be

invested, disinvested, retained or realised;

• advising on how rights conferred by the investments

should be exercised;

• analysing the performance of investments made; and

• advising the Company in relation to trends, market

movements and other matters which may affect the

investment objective and policy of the Company.

OrbiMed receives a periodic fee equal to 0.65% per annum

of the Company’s net asset value. The proportion of the

Company’s assets committed for investment in OrbiMed

Asia Partners L.P., alimited partnership managed by

OrbiMed Asia G.P., L.P., an affiliate of the Portfolio Manager,

is excluded from the fee calculation.

The Portfolio Management Agreement may be terminated

by the Company, Frostrow or the Portfolio Manager giving

notice of not less than 12 months.

PERFORMANCE FEE

Dependent on the level of long-term outperformance of the

Company, the Portfolio Manager is entitled to the payment

of a performance fee. The performance fee is calculated by

reference to the amount by which the Company’s net asset

value (NAV) performance has outperformed the NASDAQ

Biotechnology Index (sterling adjusted), the Company’s

benchmark index.

The fee is calculated quarterly by comparing the cumulative

performance of the Company’s NAV with the cumulative

performance of the Benchmark since the commencement

of the performance fee arrangement on 30 June 2005. The

performance fee amounts to 15% of any outperformance

over the Benchmark. Provision is also made within the daily

NAV per share calculation as required and in accordance

with generally accepted accounting standards.

In order to ensure that only sustained outperformance

is rewarded, at each quarterly calculation date any

performance fee is based on the lower of:

(i) the cumulative outperformance of the portfolio over the

Benchmark as at the quarter end date; and

(ii) the cumulative outperformance of the portfolio over the

Benchmark as at the corresponding quarter end date in

the previous year.

In addition, a performance fee only becomes payable to the

extent that the cumulative outperformance gives rise to a

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 47

total fee greater than the total of all performance fees paid

to date. During the year, a performance fee of £6,979,000

crystallised and became payable to OrbiMed and Frostrow

as at 30 June 2021. As announced last year, Frostrow is no

longer entitled to receive a performance fee. As at the date

of this report, there is no provision for future payments (see

note 3 on page 79 for further details).

The proportion of the Company’s assets invested in

OrbiMed Asia Partners L.P. is excluded from the

performance fee calculation.

DEPOSITARY AND CUSTODIAN AND PRIME

BROKER

The Company has appointed J.P. Morgan Europe Limited

(theDepositary) as its depositary. Under the terms of

the Depositary Agreement, the Company has agreed to

pay theDepositary a fee calculated at 1.75 bps on net

assets up to £150 million, 1.50 bps on net assets between

£150million and £300 million, 1.00 bps on net assets

between £300million and £500 million and 0.50 bps on

netassets above £500 million.

The Depositary has delegated the custody and safekeeping

of the Company’s assets to J.P. Morgan Securities LLC

which acts as the Company’s Custodian and Prime Broker.

Under the terms of a Delegation Agreement, liability

for the loss of the Company’s financial instruments

held in custody by J.P. Morgan Securities LLC has been

transferred from the Depositary to J.P. Morgan Securities

LLC in accordance with the AIFMD. While the Depositary

Agreement prohibits the re-use of the Company’s assets

by the Depositary or the Custodian and Prime Broker

without the prior consent of the Company or Frostrow,

the Company has consented to the transfer and re-use

of its assets by the Custodian and Prime Broker (known

as “rehypothecation”) in accordance with the terms of an

institutional account agreement between the Company,

J.P. Morgan Securities LLC and certain other J.P. Morgan

entities (as defined therein) (the “Institutional Account

Agreement”). This activity is undertaken in order to take

advantage of lower financing costs on the Company’s loan

borrowings as well as lower custody charges.

J.P. Morgan Securities LLC is a registered broker-dealer

and is accordingly subject to limits on rehypothecation, in

accordance with SEC rules. In the event of J.P. Morgan’s

insolvency, the Company may be unable to recover in full

all assets held by J.P. Morgan as collateral for the loan or

REPORT OF THE DIRECTORS CONTINUED

as Custodian (see note 14 beginning on page84 for further

details).

AIFM AND PORTFOLIO MANAGER

EVALUATION AND RE-APPOINTMENT

The performance of the AIFM and the Portfolio Manager

is reviewed by the Board with a formal evaluation being

undertaken by the Management Engagement Committee

(the MEC) each year. As part of this process, the Board

monitors the services provided by the AIFM and the

Portfolio Manager and receives regular reports and views

from them. The Board also receives comprehensive

performance measurement reports to enable it to

determine whether or not the performance objectives set

by the Board have been met. The Committee reviewed

the appointment of the AIFM and the Portfolio Manager in

February 2022 with a recommendation being made to the

Board.

The Board believes the continuing appointment of

the AIFM and the Portfolio Manager, under the terms

described above, is in the interests of shareholders as a

whole. In coming to this decision, the Board also took into

consideration the following reasons:

– the quality and depth of experience allocated by the

Portfolio Manager to the management of the portfolio

and the level of performance of the portfolio in absolute

terms and also by reference to the Benchmark; and

– the quality and depth of experience of the company

management, company secretarial, administrative

and marketing team that the AIFM allocates to the

management of the Company.

LOAN FACILITY

The Company’s borrowing requirements are met through

the utilisation of a loan facility, repayable on demand,

provided by J.P. Morgan Securities LLC. The potential draw

down of the Company’s loan facility with J.P. Morgan is

limited to 50% of the Company’s Marginable Securities*;

however as described on page 24 the maximum amount of

gearing permitted by the Board is 20% of net assets (further

details can be found in note 1 beginning on page74 and

note 14 beginning on page 84).

*see glossary beginning on page 93.

48 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

REPORT OF THE DIRECTORS CONTINUED

SHARE CAPITAL

At 31 March 2022, there were 41,158,682 ordinary shares

of 25p each (‘shares’) in issue (2021: 41,609,769). All

shares rank equally for dividends and distributions. Each

shareholder is entitled to one vote on a show of hands

and, on a poll, to one vote for every share held. Details of

the substantial shareholders in the Company are listed on

page49.

At the start of the year under review, the Directors had

shareholder authority to issue up to 4,155,634 shares on

a non-pre-emptive basis and to buy back up to 5,895,907

shares in the market. At the Company’s annual general

meeting held on 14 July 2021, these authorities expired

and new authorities to allot up to 4,173,476 shares

(representing 10% of the Company’s issued share capital)

on a non-pre-emptive basis and to buy back up to

6,256,041 shares (representing 14.99% of the Company’s

issued share capital) were granted.

During the year, 150,000 new shares were issued. 576,087

shares were repurchased during the year and cancelled;

there are no shares held in Treasury. Further information on

the Company’s share issuance and buyback policies can be

found on pages 25 and 26.

The giving of powers to issue or buy back the Company’s

shares requires the relevant resolution to be passed by

shareholders. Proposals for the renewal of the Board’s

authorities to issue and buy back shares are detailed in the

Notice of AGM beginning on page 98.

There are no restrictions concerning the transfer of

securities in the Company; no special rights with regard

to control attached to the securities; no restrictions on

voting rights; no agreements between holders of securities

regarding their transfer known to the Company; and no

agreements which the Company is party to that might

affect its control following a successful takeover bid.

ANNUAL GENERAL MEETING

THE FOLLOWING INFORMATION TO BE CONSIDERED

AT THE FORTHCOMING ANNUAL GENERAL MEETING

IS IMPORTANT AND REQUIRES YOUR IMMEDIATE

ATTENTION.

If you are in any doubt about the action you should take, you

should seek advice from your stockbroker, bank manager,

solicitor, accountant or other financial adviser authorised

under the Financial Services and Markets Act2000 (as

amended). If you have sold or transferred all of your ordinary

shares in the Company, you should pass this document,

together with any other accompanying documents, including

the form of proxy, at once to the purchaser or transferee, or

to the Stock broker, bank or other agent through whom the

sale or transfer was effected, for onward transmission to the

purchaser or transferee.

The Company’s Annual General Meeting will be held at the

Apothecaries’ Hall, 10 Blackfriars Lane, London EC4V 6ER

on Tuesday, 19 July 2022 at 12noon. Please refer to the

Chairman’s Statement beginning on page 2 for details of

this year’s arrangements.

Resolutions relating to the following items of special

business will be proposed at the forthcoming Annual

General Meeting.

Resolution 11 Authority to allot shares

Resolution 12 Authority to disapply pre-emption rights

Resolution 13 Authority to buy back shares

Resolution 14 Authority to hold General Meetings (other

than the AGM) on at least 14 clear days’ notice

The full text of the resolutions can be found in the Notice of

Annual General Meeting on pages 98 to 100. Explanatory

notes regarding the resolutions can be found on pages 101

and 102.

DIRECTORS

DIRECTORS’ FEES

A report on Directors’ Remuneration and the Directors’

Remuneration Policy are set out on pages 58 to 62.

DIRECTORS’ & OFFICERS’ LIABILITY INSURANCE

COVER

Directors’ & Officers’ liability insurance cover was

maintained by the Board during the year ended

31March2022. It will continue in effect for the year ending

31 March 2023 and subsequent years.

DIRECTORS’ INDEMNITIES

As at the date of this report, indemnities are in force

between the Company and each of its Directors under

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 49

which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities

incurred as a result of carrying out his/her role as a Director of the Company. The Directors are also indemnified against the

costs of defending any criminal or civil proceedings or any claim by the Company or a regulator as they are incurred provided

that where the defence is unsuccessful the Director must repay those defence costs to the Company. The indemnities are

qualifying third party indemnity provisions for the purposes of the Companies Act 2006.

A copy of each deed of indemnity is available for inspection at the Company’s registered office during normal business hours

and will be available for inspection at the Annual General Meeting.

SUBSTANTIAL SHAREHOLDINGS

The Company was aware of the following substantial interests in the voting rights of the Company as at 30 April 2022, the

latest practicable date before publication of this report.

30 April 2022 31 March 2022

Shareholders

No. of

% of

Issued

capital

No. of

% of

Issued

capital

Hargreaves Lansdown

5,143,859 12.6 5,062,860 12.3

Interactive Investor

4,415,395 10.8 4,366,212 10.6

Rathbones

2,228,234 5.4 2,201,116 5.4

Brewin Dolphin 2,266,248 5.5 1,930,000 4.7

Border to Coast Pensions Partnership 1,985,000 4.9 1,896,951 4.6

Charles Stanley 1,897,261 4.6 2,152,931 5.2

AJ Bell Stockbrokers

1,601,097 3.9 1,605,689 3.9

BlackRock 935,568 2.3 1,419,888 3.5

As at 31 March 2022, there were 41,158,682 shares in issue. As at 30 April 2022, there were 40,932,529 shares in issue.

FINANCIAL INSTRUMENTS

The Company’s financial instruments comprise its portfolio, including derivative instruments, cash balances, debtors and

creditors that arise directly from its operations, such as sales and purchases awaiting settlement, accrued income and the

loan facility. The financial risk management and policies arising from its financial instruments are disclosed in note 14 to the

Financial Statements on page 84.

RESULTS AND DIVIDEND

The results attributable to shareholders for the year and the transfer from reserves are shown on pages 70 and 73.

Nodividend is proposed in respect of the year ended 31 March 2022 (2021: nil).

ALTERNATIVE PERFORMANCE MEASURES

The financial statements (on pages 70 to 91) set out the required statutory reporting measures of the Company’s financial

performance. In addition, the Board assesses the Company’s performance against a range of criteria which are viewed as

particularly relevant for investment trusts, which are summarised on page 1 and explained in greater detail in the Strategic

Report, under the heading ‘Key Performance Indicators’ on pages 25 and 26. Please also see the glossary beginning on page 93.

REPORT OF THE DIRECTORS CONTINUED

50 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

REPORT OF THE DIRECTORS CONTINUED

AWARENESS AND DISCLOSURE OF RELEVANT

AUDIT INFORMATION

So far as each of the Directors is aware, there is no relevant

audit information (as defined in the Companies Act) of

which the Company’s auditors are unaware.

Each of the Directors has taken all the steps that he or she

ought to have taken as a Director in order to make himself or

herself aware of any relevant audit information (as defined)

and to establish that the Company’s auditors are aware of

that information.

The above confirmation is given and should be interpreted

in accordance with the provision of Section 418(2) of the

Companies Act 2006.

POLITICAL AND CHARITABLE DONATIONS

The Company has not in the past and does not intend in

the future to make political or charitable donations.

MODERN SLAVERY ACT 2015

The Company does not provide goods or services in the

normal course of business, and as a financial investment

vehicle, does not have customers. The Directors do not

therefore consider that the Company is required to make a

statement under the Modern Slavery Act 2015 in relation to

slavery or human trafficking. The Company’s suppliers are

typically professional advisers and the Company’s supply

chains are considered to be low risk in this regard.

ANTI-BRIBERY AND CORRUPTION POLICY

The Board has adopted a zero tolerance approach to

instances of bribery and corruption. Accordingly, it

expressly prohibits any Director or associated persons,

when acting on behalf of the Company, from accepting,

soliciting, paying, offering or promising to pay or authorise

any payment, public or private, in the United Kingdom or

abroad to secure any improper benefit for themselves or for

the Company.

A copy of the Company’s anti-bribery and corruption policy

can be found on its website at www.biotechgt.com. The

policy is reviewed annually by the Audit Committee.

CRIMINAL FINANCES ACT 2017

The Board has adopted a zero-tolerance approach to the

criminal facilitation of tax evasion. A copy of the Company’s

policy on preventing the facilitation of tax evasion can be

found on the Company’s website www.biotechgt.com. The

policy is reviewed annually by the Audit Committee.

GLOBAL GREENHOUSE GAS EMISSIONS

The Company is an investment trust, with neither

employees nor premises, nor has it any financial or

operational control of the assets it owns. It has no

greenhouse gas emissions to report from its operations,

nor does it have responsibility for any other emissions

producing sources under the Companies Act 2006

(Strategic Reports and Directors’ Reports) Regulations

2013 or the Companies (Directors’ Report) and Limited

Liability Partnerships (Energy and Carbon Report)

Regulations 2018, including those within the Company’s

underlying investment portfolio. Consequently, the

Company consumed less than 40,000 kWh of energy

during the year in respect of which the Directors’ Report

is prepared and therefore is exempt from the disclosures

required under the Streamlined Energy and Carbon

Reporting criteria.

COMMON REPORTING STANDARD (CRS)

CRS is a global standard for the automatic exchange

of information commissioned by the Organisation for

Economic Cooperation and Development and incorporated

into UK law by the International Tax Compliance

Regulations 2015. CRS requires the Company to provide

certain additional details to HMRC in relation to certain

shareholders. The Registrars, Link Group, have been

engaged to collate such information and file the reports

with HMRC on behalf of the Company.

CORPORATE GOVERNANCE

The Corporate Governance Report set out on pages 38

to45 forms part of the Report of the Directors.

GOING CONCERN

The financial statements have been prepared on a

going concern basis. The Directors consider this is the

appropriate basis as the Company has adequate resources

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 51

to continue in operational existence for at least the next

12 months from the date of approval of this report. The

Company’s portfolio, trading activity, cash balances,

revenue and expense forecasts, and the trends and factors

likely to affect the Company’s performance are reviewed

and discussed at each Board meeting. The Board has

considered a detailed assessment of the Company’s ability

to meet its liabilities as they fall due, including stress tests

which modelled the effects of substantial falls in portfolio

valuations and liquidity constraints on the Company’s

financial position. Further information is provided in the

Audit Committee report beginning on page53.

Based on the information available to the Directors at the

date of this report, including the results of these stress

tests, the conclusions drawn in the Viability Statement on

pages 32 and 33, the Company’s current cash balances,

and the liquidity of the Company’s investments, the

Directors are satisfied that the Company has adequate

financial resources to continue in operation for at least the

next 12months and that, accordingly, it is appropriate to

continue to adopt the going concern basis in preparing the

financial statements.

NOMINEE SHARE CODE

Where shares are held in a nominee company name and

where the beneficial owner of the shares is unable to vote

in person, the Company nevertheless undertakes:

• to provide the nominee company with multiple copies of

shareholder communications, so long as an indication of

quantities has been provided in advance; and

• to allow investors holding shares through a nominee

company to attend general meetings, provided the

correct authority from the nominee company is

available.

Nominee companies are encouraged to provide the

necessary authority to underlying shareholders to attend

the Company’s general meetings.

BENEFICIAL OWNERS OF SHARES –

INFORMATION RIGHTS

Beneficial owners of shares who have been nominated by

the registered holder of those shares to receive information

rights under section 146 of the Companies Act 2006 are

required to direct all communications to the registered

holder of their shares rather than to the Company’s

registrar, Link Group, or to the Company directly.

SECURITIES FINANCIAL TRANSACTIONS

REGULATION (SFTR) DISCLOSURE

Securities financing transactions (SFTs) include repurchase

transactions, securities or commodities lending and

securities or commodities borrowing, buy-sell back

transactions or sell-buy back transactions and margin

lending transactions. Whilst the Company does not engage

in such SFTs it does engage in Total Return Swaps (TRS).

The Company’s exposure to TRS can be found on the

Company’s website www.biotechgt.com.

ARTICLES OF ASSOCIATION

Amendment of the Company’s Articles of Association

requires a special resolution to be passed by shareholders.

There are no changes proposed this year.

By order of the Board

Frostrow Capital LLP

Company Secretary

31 May 2022

REPORT OF THE DIRECTORS CONTINUED

52 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

The Directors are responsible for preparing the Annual

Report and the financial statements in accordance with

applicable law and regulations.

Company law requires the Directors to prepare financial

statements for each financial year. Under that law, the

Directors are required to prepare the financial statements

in accordance with UK-adopted international accounting

standards. Under company law, the Directors must not

approve the financial statements unless they are satisfied

that they give a true and fair view of the state of affairs of

the Company and of the profit or loss for the Company for

that period.

In preparing these financial statements, the Directors are

required to:

• select suitable accounting policies and then apply them

consistently;

• make judgements and accounting estimates that are

reasonable and prudent;

• state whether they have been prepared in accordance

with UK-adopted international accounting standards,

subject to any material departures disclosed and

explained in the financial statements;

• prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the

Company will continue in business; and

• prepare a directors’ report, a strategic report and

directors’ remuneration report which comply with the

requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

the Company’s transactions and disclose with reasonable

accuracy at any time the financial position of the Company

and enable them to ensure that the financial statements

comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of

the Company and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Annual

Report and financial statements, taken as a whole, are fair,

balanced, and understandable and provide the information

necessary for shareholders to assess the performance,

business model and strategy.

WEBSITE PUBLICATION

The Directors are responsible for ensuring the Annual Report

and the financial statements are made available on a website.

Financial statements are published on the Company’s

website in accordance with legislation in the United

Kingdom governing the preparation and dissemination of

financial statements, which may vary from legislation in

other jurisdictions. The maintenance and integrity of the

Company’s website is the responsibility of the Directors.

The Directors’ responsibility also extends to the ongoing

integrity of the financial statements contained therein.

RESPONSIBILITY STATEMENT OF THE

DIRECTORS IN RESPECT OF THE ANNUAL

REPORT

We confirm that to the best of our knowledge:

• the financial statements have been prepared in

accordance with the applicable set of accounting

standards and give a true and fair view of the assets,

liabilities, financial position and the return of the

Company for the year ended 31March 2022; and

• the Annual Report includes a fair review of the

development and performance of the business and

the financial position of the Company, together with a

description of the principal risks and uncertainties that

they face.

The Directors consider the Annual Report taken as a

whole, is fair, balanced and understandable and provides

the information necessary for shareholders to assess the

Company’s position and performance, business model and

strategy.

On behalf of the Board

Andrew Joy

Chairman

31 May 2022

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 53

AUDIT COMMITTEE REPORT

COMPOSITION AND MEETINGS

The Audit Committee (the Committee) comprises all of the

independent Directors whose biographies can be found

on pages 36 to 37. Julia Le Blan, who has recent and

relevant financial experience, was appointed Chair of the

Committee in July 2017. Inaddition, the Board recognises

the requirement for the Committee as a whole to have

competence relevant to the sector in which the Company

operates. The Committee members have a combination

of financial, investment and business experience which is

highly relevant to both the biotechnology and investment

trust sectors.

The Committee met twice during the year. Attendance by

each Director is shown in the table on page 43.

Role and Responsibilities of the Committee:

1. To review the Company’s half-yearly and annual

financial statements.

2. To advise the Board on whether the Annual Report,

taken as a whole, is fair, balanced and understandable.

3. To review the risk management and internal control

processes of the Company and its key service

providers.

4. To assess the effectiveness of the external audit

as well as the independence and objectivity of the

Auditor.

5. To be responsible for the selection/tender process for

the external Auditor, to agree the scope of the external

Auditor's work and set their remuneration.

6. To review and approve any non-audit work to be

carried out by the Auditor.

7. To consider the need for an internal audit function.

8. To assess the going concern and longer-term viability

of the Company.

9. To report its findings to the Board.

A comprehensive description of the Committee’s role, its

duties and responsibilities, can be found in its terms of

reference which are available for review on the Company’s

website at www.biotechgt.com..

SIGNIFICANT ISSUES CONSIDERED BY THE

COMMITTEE DURING THE YEAR

FINANCIAL STATEMENTS

The production of the Annual Report (including the external

audit) is a thorough process involving input from a number

of different organisations. In order to be able to confirm

that the Annual Report is fair, balanced and understandable,

the Board has requested that the Committee advise on

whether it considers these criteria have been satisfied. As

part of this process, the Committee has considered the

following:

• the procedures followed in the production of the Annual

Report, including the processes in place to ensure the

accuracy of the factual content;

• the extensive levels of review that were undertaken in

the production process by the AIFM and the Committee;

and

• the internal control environment as operated by the

Portfolio Manager, AIFM and other service providers.

As a result of the work undertaken by the Committee, it

has confirmed that the Annual Report for the year ended

31 March 2022, taken as a whole, is fair, balanced and

understandable and provides the information necessary for

shareholders to assess the Company’s financial position,

performance, business model and strategy. The Committee

has confirmed this to the Board.

COMPANY’S INVESTMENTS – VALUATION AND

OWNERSHIP

The Committee approached and dealt with this area of risk by:

• ensuring that all investment holdings and cash/deposit

balances had been agreed to an independent confirmation

from the Custodian and Prime Broker. In addition,

receiving and reviewing details of the internal control

procedures in place at the Portfolio Manager, the AIFM

and the Custodian and Prime Broker and also receiving

regular reports from both the Custodian and Prime Broker

and the Depositary (whose role it is to safeguard the

Company’s assets and to verify their valuation);

• reconfirming its understanding of the processes in

place to record investment transactions and income,

and to value the portfolio;

54 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

AUDIT COMMITTEE REPORT CONTINUED

• reviewing and amending, where necessary, the

Company’s register of key risks in light of changes to

the portfolio and the investment environment; and

• gaining an overall understanding of the performance of

the portfolio both in capital and revenue terms through

comparison to the Benchmark.

VALUATION OF UNQUOTED INVESTMENTS

The Company has the ability to make unquoted

investments up to a limit of 10% of the portfolio at the

time of acquisition. This will not include any holdings that

are subject to an IPO lock-in (see glossary beginning on

page93). Both the Directors and the AIFM need to ensure

that an appropriate value is placed on such investments

within the Company’s net asset value. The Committee

has worked with the Company’s Portfolio Manager and

the AIFM to establish clear guidelines for the valuation

of unquoted investments, including the use of valuations

produced by independent external valuers, where

appropriate.

During the year, the Board established a Valuation

Committee which considers in detail the valuations and

valuation methodologies employed in respect of the

unquoted assets. The Valuation Committee also considers

whether the third party valuer has followed appropriate

standards and established valuation procedures, taking

into account the views of the Company's external auditor.

The Audit Committee notes the recommendations of the

Valuation Committee.

RECOGNITION OF REVENUE FROM

INVESTMENTS

The Committee took steps to gain an understanding

of the processes in place to record investment income

and transactions. The Committee sought and received

confirmation from the Company’s AIFM that all dividends

both received and receivable had been accounted for

correctly. The Committee noted and took comfort from

the segregation of duties in place between the Company’s

AIFM and the Custodian and Prime Broker.

TAXATION – INVESTMENT TRUST STATUS

The Committee ensured that the Company continued to

comply with section 1158 of the Corporation Tax Act 2010,

in order to maintain its investment trust status, by:

– seeking confirmation from the AIFM that the Company

continues to meet the eligibility conditions, as outlined

in section 1158, through reports received at each Board

meeting and also as part of the monthly compliance

monitoring report sent to the Board; and

– understanding the risks and consequences if the

Company breaches this approval in future years.

CALCULATION OF AIFM, PORTFOLIO

MANAGEMENT AND PERFORMANCE FEES

The AIFM, portfolio management and performance

fees are calculated in accordance with the AIFM and

Portfolio Management Agreements. Both the Committee

and the Auditor review and agree the calculation of any

performance fee that becomes payable.

OTHER REPORTING MATTERS

AUDIT REGULATION

The Committee has not had to consider any new audit

regulations in the past year. It has, however, taken note

of reporting guidance and thematic reviews published by

the FRC and determined how to apply any relevant best

practice to the Company’s reporting.

The Committee also reviews the outcomes of the FRC’s

annual Audit Quality Reviews and discusses the findings

with our Auditor.

The Committee is aware of the extensive proposals

outlined by the Department of Business, Enterprise,

Industry and Skills consultation which seek to strengthen

the UK’s audit and corporate governance framework. The

Committee awaits the outcomes of the consultation.

COVID-19

The Committee continued to pay particular attention to

the effects and potential effects on the Company of the

COVID-19 pandemic.

In order to mitigate the business risks caused by the

pandemic, the Committee continues to review the

operational resilience of its various service providers, which

have continued to demonstrate their ability to provide

services to the expected level, whilst doing so remotely.

There have been no breaks in the services provided

or operational failures. Many businesses will not have

had business continuity plans that envisaged operating

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 55

remotely for this length of time, but the Committee believes

that the Company’s service providers have adapted their

businesses well in this regard.

INVESTMENT PERFORMANCE

The Committee also gained an overall understanding of

the performance of the investment portfolio both in capital

and revenue terms through ongoing discussions with the

Portfolio Manager and also with comparison to suitable key

performance indicators (see pages 25 and 26).

ACCOUNTING POLICIES

During the year, the Committee ensured that the

accounting policies, as set out on pages 74 to 78, were

applied consistently throughout the year. In light of there

being no unusual transactions during the year or other

possible reasons, the Committee agreed that there was no

reason to change the policies.

GOING CONCERN

Having reviewed the Company’s financial position and

liabilities, the Committee is satisfied that it is appropriate

for the Board to prepare the financial statements on the

going concern basis. The Committee’s review of the

Company’s financial position included consideration of

the cash and cash equivalent position of the Company;

the diversification of the portfolio; and an analysis of

portfolio liquidity, which estimated a liquidation of c.80.5%

of the portfolio within seven trading days (based on current

market volumes). Stress testing was also conducted as

described below. Further information is provided in the

Report of the Directors on pages 50 and 51.

VIABILITY STATEMENT

The Committee also considered the longer-term viability of

the Company in connection with the Board’s statement in

the Strategic Report on pages 32 and 33. The Committee

reviewed the Company’s financial position (including its

cash flows and liquidity position), the principal risks and

uncertainties and the results of stress tests. The tests

assumed falls in the Company's NAV and reductions in the

liquidity of the portfolio and then examined the effect this

would have on the Company's expenses and the Company's

ability to meet its liabilities as they fell due. The tests

considered the extent of market falls experienced over the

last 100 years and applied the reductions to the Company's

portfolio. A reverse stress test was also conducted to

AUDIT COMMITTEE REPORT CONTINUED

understand the extent of a decline that would threaten the

Company's long-term viability.

In even the most stressed scenario, the Company was

shown to have sufficient cash, or to be able to liquidate

a sufficient portion of its listed holdings, in order to be

able to meet its liabilities as they fall due. Based on the

information available to the Directors at the time, the

Committee therefore concluded it was reasonable for the

Board to expect that the Company will be able to continue

in operation and meet its liabilities as they fall due over the

next five financial years.

RISK MANAGEMENT AND INTERNAL CONTROLS

The Board has established an ongoing process for identifying,

evaluating and managing the principal and emerging risks

faced by the Company. The process accords with guidance

issued by the FRC and is subject to regular review by

the Committee. The Board has overall responsibility for

the Company’s risk management and internal controls

systems, and for reviewing their effectiveness. Operational

responsibility is delegated to the Audit Committee. Internal

controls systems are designed to manage rather than

eliminate risks of failure to achieve the Company’s business

objectives and can provide only reasonable and not absolute

assurance against material misstatement or loss. These

controls aim to ensure that the Company's assets are

safeguarded, that proper accounting records are maintained

and that the Company's financial information is reliable.

The Committee has reviewed the effectiveness of the

Company’s system of internal controls for the year ended

31 March 2022. During the course of its review, the

Committee has not identified or been advised of any failings

or weaknesses that have been determined as significant.

All business risks faced by the Company are recorded in a

detailed risk register which is reviewed at each Committee

meeting. In arriving at its judgement of what constitutes a

sound system of internal control, the Directors considered the

following factors:

• the nature and extent of risks which it regards as

acceptable for the Company to bear within its overall

business objective;

• the likelihood of such risks becoming a reality; and

• the Company’s ability to reduce or mitigate the

incidence and impact of risk on its performance.

56 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

AUDIT COMMITTEE REPORT CONTINUED

Against this background, the Board has split the review of

risk and associated controls into five sections (as contained

in the Company’s risk matrix) reflecting the nature of the

risks being addressed. These sections are as follows:

• corporate strategy;

• investment activity;

• published information, compliance with laws and

regulations;

• service providers; and

• financial activity.

The Committee also considers at each meeting whether

there are any emerging risks to which the Company is

becoming increasingly exposed. Details of the key risks to

the Company (including emerging risks) can be found on

pages 27 and 31.

The Committee also obtained from the Company's various

service providers assurances and information relating to

their internal controls systems to enable the Board to make

an appropriate risk and control assessment, including the

following:

• details of the control environment in operation;

• identification and evaluation of risks and control

objectives;

• review of communication methods and procedures; and

• assessment of the control procedures.

All of the Company’s management functions are performed

by third parties whose internal controls are reviewed by the

Audit Committee or on its behalf by Frostrow.

In addition to reviewing the systems of internal control in

place at the Company’s principal service providers, the

Committee also reviewed the cyber security strategies

adopted by them.

In accordance with guidance issued to directors of listed

companies, the Directors confirm that they have carried

out a review of the effectiveness of the system of internal

financial control and risk management during the year, as

set out above, and that the ongoing process for identifying,

evaluating and managing significant risks faced by the

Company, has been in place for the year under review and

up to the date of approval of this report.

HALF YEAR REPORT AND FINANCIAL

STATEMENTS

The Committee reviewed the Half Year Report and

financial statements, which are not audited or reviewed

by the Auditor, to ensure that the accounting policies

were consistent with those used in the annual financial

statements and that they portrayed a fair, balanced and

understandable picture of the period in question.

INTERNAL AUDIT

The Committee considered whether there was a need for

the Company to have an internal audit function. As the

Company delegates its day-to-day operations to third

parties and has no employees, the Committee concluded

that there was no such need.

EXTERNAL AUDITOR

APPOINTMENT AND TENURE

BDO LLP (BDO) was the Auditor for the financial year and

this was their third audit of the Company.

Peter Smith was the audit partner for the financial year

under review and he has been the audit partner since BDO's

appointment.

THE AUDIT

The Committee reviewed BDO's audit plan on 4 November

2021. The review considered, inter alia, the scope of the

audit, the level of materiality, the audit risks identified by

BDO, the Auditor's approach to testing the portfolio, and

pertinent regulatory developments. The Committee met

with BDO on 16 May 2022 to discuss the progress of the

audit and the draft Annual Report. The Committee then met

BDO on 26 May to review formally the outcome of the audit.

The Auditor was provided with an opportunity to meet with

the Committee without the AIFM or the Portfolio Manager

being present. No concerns were raised by the Auditor

or the Committee in relation to the service provided by

the AIFM, the Portfolio Manager, or any other third-party

service provider. There were no material or significant

adverse matters brought to the Committee's attention

in respect of the 2022 audit, which should be brought to

shareholders' attention.

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 57

INDEPENDENCE AND EFFECTIVENESS:

The Committee evaluated the independence of the Auditor

and the effectiveness of the external audit. In order to fulfil

this responsibility, the Committee reviewed:

– the senior audit personnel in the audit plan for the year,

in order to ensure that there were sufficient, suitably

experienced staff with knowledge of the investment

trust sector working on the audit;

– the steps the Auditor takes to ensure its independence

and objectivity including their arrangements concerning

any conflicts of interest;

– the extent of any non-audit services provided by the

Auditor during the year; and

– the statement by the Auditor that they remain

independent within the meaning of the regulations and

their professional standards.

In order to consider the effectiveness of the audit process,

the Committee reviewed:

– the Auditor’s fulfilment of the agreed audit plan,

including their ability to communicate with

management and to resolve any issues promptly and

satisfactorily;

– the presentation of the audit findings; and

– feedback from BDO and Frostrow as the AIFM and

Company Secretary.

The Committee is satisfied with the Auditor's independence

and the effectiveness of the audit process.

REMUNERATION

The Committee approved a fee of £40,000 for the audit

for the year ended 31 March 2022 (2021: £37,500). This

represents an increase of 6.7% compared with the previous

year’s fee and is in line with the average inflation rate in

financial services, as provided by the ONS. The Committee

believes that the fee is in line with general audit fees payable

for the quoted investment trust sector and is reflective of the

level of work required to audit a listed company.

NON-AUDIT SERVICES

During the year, BDO LLP undertook a review of the

performance fee calculation, which crystallised at 30June

2021, prior to payment of the fee by the Company. The

AUDIT COMMITTEE REPORT CONTINUED

Company’s share of the cost amounted to £5,000. BDO did

not undertake any other non-audit services during the year.

The provision of all non-audit services by the Auditor has

to be approved by the Audit Committee. Such services

are only permissible where no conflicts of interest arise,

the service is not expressly prohibited by audit legislation,

where the independence of the Auditor is not likely to be

impinged by undertaking the work and the quality and the

objectivity of both the non-audit work and audit work will

not be compromised. In particular, non-audit services may

be provided by the Auditor if they are inconsequential or

would have no direct effect on the Company’s financial

statements and the audit firm would not place significant

reliance on the work for the purposes of the statutory audit.

A copy of the Company's non-audit services policy can be

found on the Company's website: www.biotechgt.com

AUDITOR’S REAPPOINTMENT

BDO have indicated their willingness to continue to act as

Auditor for the forthcoming year and a resolution for their

re-appointment will be proposed at the Annual General

Meeting.

The Committee conducted a review of the performance

of the Auditor during the year and concluded that

performance was satisfactory and there were no grounds

for change.

PERFORMANCE EVALUATION

The Committee’s performance over the past year was

reviewed as part of the annual Board evaluation. The

internal evaluation considered the composition of the

Committee and the efficacy of Committee meetings, as

well as assessing the Committee’s role in monitoring

and overseeing the Company’s financial reporting and

accounting, risk management and internal controls,

compliance with corporate governance regulations and the

assessment of the external audit.

I am pleased to confirm that the evaluation result was

positive and no matters of concern or requirements for

change were highlighted.

Julia Le Blan

Chair of the Audit Committee

31 May 2022

58 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

DIRECTORS’ REMUNERATION REPORT

The Directors’ Remuneration Report is subject to an annual advisory shareholder vote and therefore an ordinary resolution

for the approval of this report will be put to shareholders at the Company’s forthcoming Annual General Meeting (AGM).

The law requires the Auditor to audit certain disclosures provided in this report. Where disclosures have been audited,

they are indicated as such and the Auditor’s opinion is included in their report to shareholders beginning on page 63. The

Remuneration Policy on page 62 forms part of this report.

During the year, due to the small size and entirely non-executive nature of the Board, the Remuneration Committee was

disbanded and therefore it is now the independent Directors on the Board who consider the framework for the Directors’

remuneration on an annual basis. The independent Directors review the ongoing appropriateness of the Company’s

remuneration policy and the remuneration of individual Directors by reference to the activities of the Company and comparison

with other companies of a similar structure and size. This is in line with the AIC Code.

The simple fee structure reflects the non-executive nature of the Board, which itself reflects the Company’s business model

as an externally-managed investment trust (please refer to the Business Review beginning on page 23 for more information).

Accordingly, statutory reporting requirements relating to executive directors’ and employees’ pay do not apply.

During the year, it was agreed to maintain Directors’ fees at their current levels with the exception of the fee payable to the

Chair of the Audit Committee, which was increased with effect from 1 April 2022 to bring it more into line with the peer group

average.

The table below shows the level of fees paid to Directors and the percentage increase from the prior year:

Forecasted

Year Ending

31 March 2023

Fee Level

(per annum)

2023 increase

(%)

Year Ended

31 March 2022

Fee Level

(per annum)

2022 increase

(%)

Year Ended

31 March 2021

Fee Level

(per annum)

Chairman of the Board £40,000 – £40,000 8.1 £37,000

Audit Committee Chair £32,000 6.7 £30,000 5.3 £28,500

Management Engagement Committee Chair £30,000 – £30,000 5.3 £28,500

Director £27,500 – £27,500 5.8 £26,000

The Board believes these levels of remuneration reflect both the time commitment and the level of responsibility of the role.

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 59

DIRECTORS’ REMUNERATION FOR THE YEAR (AUDITED)

The Directors who served in the year received the following remuneration:

Year ended 31 March 2022 Year ended 31 March 2021

Date of

Appointment

to the Board

Fees

Taxable

Benefits+

Total

Fees

Taxable

Benefits+

Total

Andrew Joy (Chairman) 15 March 2012 40,000 – 40,000 37,000 – 37,000

Steve Bates 8 July 2015 30,000 – 30,000 28,500 – 28,500

Julia Le Blan 12 July 2016 30,000 – 30,000 28,500 – 28,500

Dr Nicki Shepherd 18 January 2021 27,500 – 27,500 5,333 – 5,333

The Rt Hon Lord Willetts 11 November 2015 27,500 – 27,500 26,000 – 26,000

Roger Yates 1 December 2021 9,667 – 9,667 – – –

Professor Dame Kay Davies CBE* 15 March 2012

8,654 – 8,654 28,500 – 28,500

173,321 – 173,321 153,833 – 153,833

The amounts shown in the table above exclude any employers’ national insurance contributions, if applicable.

+ Taxable benefits primarily comprise travel and associated expenses incurred by the Directors in attending Board and Committee meetings in London. Any

amounts shown would be subject to tax and National Insurance as a benefit in kind.

* Professor Davies retired from the Board on 14 July 2021.

Geoff Hsu joined the Board on 16 May 2018. Mr Hsu has waived his Director’s fee as he is a General Partner at OrbiMed, the

Portfolio Manager, which is party to the Portfolio Management Agreement with the Company and receives fees as described

on page 46 of this Annual Report.

The Directors are entitled to be reimbursed for reasonable expenses incurred by them in connection with the performance of

their duties and attendance at Board and General Meetings.

In certain circumstances, under HMRC rules, travel and other out of pocket expenses reimbursed to the Directors may be

considered as taxable benefits. Where expenses are classed as taxable under HMRC guidance they would be shown in the

Taxable Benefits column of the table above.

RELATIVE COST OF DIRECTORS’ REMUNERATION

To enable shareholders to assess the relative cost of Directors’ remuneration, the table below shows the amount spent on

Directors’ fees compared with AIFM, portfolio management fees and the Company’s other expenses, performance fees, and

the amount spent on share buybacks during the year.

2022

£’000

2021

£’000

Difference

£’000

Fees payable to non-executive Directors 173 154 19

AIFM, portfolio management fees and other re-occurring expenses 5,412 6,008 (596)

Performance fees crystallised and paid during the year 6,979 1,025 5,954

Repurchase of own shares for cancellation 6,933 – 6,933

DIRECTORS’ REMUNERATION REPORT CONTINUED

60 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

DIRECTORS’ REMUNERATION REPORT CONTINUED

DIRECTORS’ REMUNERATION REPORT

At the Annual General Meeting held in July 2021, the results in respect of the non-binding resolution to approve the Directors’

Remuneration Report were as follows:

Percentage of

votes cast

For

Percentage of

votes cast

Against

Number of

votes

withheld

99.97% 0.21% 5,319

LOSS OF OFFICE

Directors do not have service contracts with the Company but are engaged under letters of appointment. These specifically

exclude any entitlement to compensation upon leaving office for whatever reason.

SHARE PRICE RETURN

The chart below illustrates the shareholder return for a holding in the Company’s shares as compared to the NASDAQ

Biotechnology Index (sterling adjusted), which the Board has adopted as the principal comparator for both the Company’s

performance and that of the Portfolio Manager.

SHAREHOLDER TOTAL RETURN FOR TEN YEARS TO 31 MARCH 2022

1$6'$4%LRWHFKQRORJ\,QGH[VWHUOLQJDGMXVWHG7KH%LRWHFK*URZWK7UXVW6KDUH3ULFH

5HEDVHGWRDVDW0DUFK

6RXUFH%ORRPEHUJ









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0DU 0DU0DU0DU0DU0DU0DU0DU0DU0DU0DU

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 61

DIRECTORS’ INTERESTS IN SHARES (AUDITED)

The Directors’ interests in the share capital of the Company are shown in the table below:

Number of shares held as at

30 May

2022

31 March

2022

31 March

2021

Andrew Joy (Chairman) 55,000 55,000

55,000

Steve Bates 10,000 10,000

10,000

Julia Le Blan 7,000 7,000

7,000

Geoff Hsu nil nil

nil

Dr Nicki Shepherd

nil

nil nil

The Rt Hon Lord Willetts nil nil

nil

Roger Yates

nil nil

nil

1 Dr Shepherd joined the Board on 18 January 2021.

2 Mr Yates joined the Board on 1 December 2021.

None of the Directors were granted or exercised rights over shares during the year.

Andrew Joy

Chairman

31 May 2022

DIRECTORS’ REMUNERATION REPORT CONTINUED

62 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

DIRECTORS’ REMUNERATION POLICY

The Board’s policy is that the remuneration of the Directors should reflect the experience of the Board as a whole, and is

determined with reference to comparable organisations and appointments. There are no performance conditions attaching

to the remuneration of the Directors as the Board does not believe that this is appropriate for non-executive directors. This

policy is reviewed annually and it is intended that it will continue for the year ending 31 March 2023 and for subsequent

financial years.

The fees for the Directors are determined within the limits set out in the Company’s Articles of Association. The present

aggregate limit is £250,000 per annum. Directors are not eligible for bonuses, pension benefits, share options, long-term

incentive schemes or other benefits. The Company does not have any employees.

DIRECTORS’ REMUNERATION YEAR ENDED 31 MARCH 2022

The current and projected Directors’ fees are disclosed on page 58. None of the Directors has a service contract. The terms

of their appointment provide that Directors shall retire and be subject to election at the first Annual General Meeting after

their appointment and to re-election annually thereafter. The terms also provide that a Director may be removed without

notice and that compensation will not be due on leaving office.

No communications have been received from shareholders regarding Directors’ remuneration.

The Directors’ Remuneration Policy is subject to a binding shareholder vote every three years. Approval of this policy was

granted by shareholders at the Annual General Meeting held in July 2020 and so shareholder approval will be sought next

at the Annual General Meeting to be held in 2023. There have been no changes to the Remuneration Policy during the year

and no changes are proposed for the year ending 31 March 2023. If, however, the Remuneration Policy is varied, shareholder

approval for the new policy will be sought at the AGM following such variation. The Board reviews the Remuneration Policy

annually to ensure that it remains appropriate.

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 63

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF THE BIOTECH GROWTH TRUST PLC

OPINION ON THE FINANCIAL STATEMENTS

In our opinion the financial statements:

• give a true and fair view of the state of the Company’s

affairs as at 31 March 2022 its loss for the year

thenended;

• have been properly prepared in accordance with UK

adopted International accounting standards; and

• have been prepared in accordance with the

requirements of the Companies Act 2006.

We have audited the financial statements of The Biotech

Growth Trust PLC (the ‘Company’) for the year ended

31March 2022 which comprise the Income Statement, the

Statement of Financial Position, the Statement of Changes

in Equity, the Statement of Cash Flows and notes to the

financial statements, including a summary of significant

accounting policies. The financial reporting framework that

has been applied in their preparation is applicable law and

UK adopted international accounting standards.

BASIS FOR OPINION

We conducted our audit in accordance with International

Standards on Auditing (UK) (ISAs (UK)) and applicable

law. Our responsibilities under those standards are further

described in the Auditor’s responsibilities for the audit of

the financial statements section of our report. We believe

that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion. Our audit

opinion is consistent with the additional report to the

auditcommittee.

Independence

Following the recommendation of the audit committee, we

were appointed by the Board of Directors on 20February

2020 to audit the financial statements for the year ending

31 March 2020 and subsequent financial periods. The

period of total uninterrupted engagement including

retenders and reappointments is three years, covering the

years ending 31 March 2020 to 31 March 2022. We remain

independent of the Company in accordance with the ethical

requirements that are relevant to our audit of the financial

statements in the UK, including the FRC’s Ethical Standard

as applied to listed public interest entities, and we have

fulfilled our other ethical responsibilities in accordance with

these requirements. The non-audit services prohibited by

that standard were not provided to the Company.

CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have concluded

that the Directors’ use of the going concern basis of

accounting in the preparation of the financial statements

is appropriate. Our evaluation of the Directors’ assessment

of the Company’s ability to continue to adopt the going

concern basis of accounting included:

• Evaluating the Directors’ method of assessing going

concern in light of market volatility and the present

uncertainties, including assessing how the Directors

have factored in the potential impact of the Ukraine/

Russia conflict on the business, and checking that

this had been appropriately considered as part of the

Directors’ going concern assessment.

• Challenging Directors’ assumptions and judgements

made namely with regards to stress-testing potential

bear market scenarios, portfolio liquidity, and validating

data assumptions used, that could have a material

impact, by agreeing these to supporting documentation

where possible.

• Recalculating the liquidity of the investment portfolio,

using our own independently obtained trading data,

to verify the liquidity assumptions which underpinned

the going concern assessment and comparing it to the

liabilities and expenditure.

• Calculating and considering financial ratios, namely

comparison of the investments balance to the current

liabilities and expenditure, to ascertain the financial

health of the Company.

• Considering any other factors which could impact

on going concern such as non-compliance with laws

and regulation, legal matters and the presence of

contingencies and commitments.

Based on the work we have performed, we have not

identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast

significant doubt on Company’s ability to continue as a

going concern for a period of at least twelve months from

when the financial statements are authorised for issue.

64 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BIOTECH GROWTH TRUST PLC CONTINUED

In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material

to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors

considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant

sections of this report.

OVERVIEW

2022 2021

Key audit matters Valuation and ownership of investments

3 3

Materiality Financial statements as a whole

£3,940,000 (2021: £6,000,000) based on 1% (2021: 1%)

of net assets

AN OVERVIEW OF THE SCOPE OF OUR AUDIT

Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system

of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk

of management override of internal controls, including assessing whether there was evidence of bias by the Directors that

may have represented a risk of material misstatement.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy,

the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in

the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters.

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 65

Key audit matter

Valuation and ownership of investments

Note 1 and note 8

The inv

estment portfolio comprises quoted and unquoted

investments.

We consider that the valuation and ownership of

investments is the most significant audit area as

investments represent the most significant balance in the

Financial Statements and underpin the principal activity of

the entity. Given the significance of the investments there is

a risk that an error in their valuation could have a material

impact on the financial statements.

The investment valuations are prepared by the Alternative

Investment Fund Manager (AIFM), Frostrow Capital LLP and

are reviewed and approved by the Board. Notwithstanding

this review, there is a potential risk of misstatement in

the investment valuations as the AIFM’s performance

fee remuneration is based on the net asset value of the

Company. The majority of the investments are Level 1

quoted investments which we do not consider to be a

highly subjective area. We do note there are five unquoted

investments which are collectively material. The valuation

of which involves a higher level of judgment and subjectivity

which should be disclosed in the financial statements.

As investments make up the majority of the balance

sheet, it will be necessary to ensure that the Company has

appropriate confirmation of title over investments.

Due to the significance of this balance we consider this to

be a key audit matter.

How the scope of our audit addressed the key audit matter

We have responded to this matter by testing the valuation

and ownership of 100% of the portfolio of investments.

In respect of the quoted investments valuation testing we

have for 100% of the portfolio:

• Confirmed that bid price has been used by agreeing

to externally quoted prices using our data analytics

software;

• Confirmed the foreign exchange rates used in the

valuations are appropriate by corroborating these to

independent sources;

• Recalculated the valuation by multiplying the number of

shares held by the valuation per share;

• Checked that there are no contra indicators, such as

liquidity considerations, to suggest the bid price is not the

most appropriate indication of fair value by considering

the realisation period for individual holdings.

In respect of the unquoted investments valuation testing we:

• Considered whether the valuation methodology is

the most appropriate in the circumstances under

the International Private Equity and Venture Capital

Valuation (“IPEV”) Guidelines;

• Verified and benchmarked key inputs and estimates to

independent information and our own research;

• Recalculated the value attributable to the Company;

• Performed an independent calculation using the Black-

Scholes model for the share warrants;

• Performed back testing by comparing the selling price

of sold unquoted investments or the valuation at IPO

to the most recent fair value per the books and records

prior to the sale;

• Considered the competence, capabilities and expertise

of the management expert through consideration of

the qualifications held by the expert. We considered

the independence and objectivity of the expert

through review of the independence declaration made

by the expert to the Company. We considered the

appropriateness of the methodology and assumptions

employed by the expert through review of the accounting

policy and valuation guidelines followed.

• Where reasonable alternative assumptions existed, we

performed sensitivity analysis on the valuation.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BIOTECH GROWTH TRUST PLC CONTINUED

66 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BIOTECH GROWTH TRUST PLC CONTINUED

Key audit matter How the scope of our audit addressed the key audit matter

We reviewed financial statement disclosures in respect of

investment valuations to assess if these are in accordance

with the requirements of IFRS, in particular that sensitivities

in the financial instruments with regards to currency and

other risks are appropriately disclosed.

We have corroborated ownership by reference to

confirmations:

• from the custodian, J.P. Morgan Securities LLC for

quoted investments; and,

• from the investee companies for the unquoted

investments.

Key observations:

Based on our procedures performed we considered

management’s valuations of these investments to be

appropriate and that existence is appropriately supported.

OUR APPLICATION OF MATERIALITY

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.

We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic

decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower

materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these

levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and

the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance

materiality as follows:

Financial statements

2022 2021

Materiality £3,940,000 £6,000,000

Basis for determining materiality 1% of net assets

Rationale for the benchmark applied As an investment trust, net asset value is considered to be the

key measure of performance.

Performance materiality £2,950,000 £4,500,000

Basis for determining performance

materiality

Performance materiality was set at 75% of total materiality based on past

experience and history of uncorrected misstatements.

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 67

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BIOTECH GROWTH TRUST PLC CONTINUED

Specific testing threshold

We also determined that for items impacting on revenue return, a misstatement of less than materiality for the financial

statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we determined a

specific testing threshold for these items based on the higher of our reporting threshold and 10% of revenue return before tax,

being £197,000 (2021: £300,000).

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £197,000

(2021: £300,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on

qualitative grounds.

OTHER INFORMATION

The directors are responsible for the other information. The other information comprises the information included in the

Annual Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements

does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any

form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether

the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of

the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material

misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements

themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact.

We have nothing to report in this regard.

CORPORATE GOVERNANCE STATEMENT

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that

part of the Corporate Governance Statement relating to the company’s compliance with the provisions of the UK Corporate

Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.

Going concern and longer-term viability • The Directors’ statement with regards to the appropriateness of adopting

the going concern basis of accounting and any material uncertainties

identified; and

• The Directors’ explanation as to their assessment of the Company’s

prospects, the period this assessment covers and why the period is

appropriate.

Other Code provisions • Directors’ statement on fair, balanced and understandable;

• Board’s confirmation that it has carried out a robust assessment of the

emerging and principal risks set;

• The section of the annual report that describes the review of effectiveness

of risk management and internal control systems; and

• The section describing the work of the audit committee.

68 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BIOTECH GROWTH TRUST PLC CONTINUED

OTHER COMPANIES ACT 2006 REPORTING

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the

Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic report and the Directors’ report

for the financial year for which the financial statements are prepared is

consistent with the financial statements; and

• the Strategic report and the Directors’ report have been prepared in

accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company and its

environment obtained in the course of the audit, we have not identified

material misstatements in the strategic report or the Directors’ report.

Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has

been properly prepared in accordance with the Companies Act 2006.

Matters on which we are required to

report by exception

We have nothing to report in respect of the following matters in relation to

which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Company, or

returns adequate for our audit have not been received from branches not

visited by us; or

• the financial statements and the part of the Directors’ remuneration

report to be audited are not in agreement with the accounting records and

returns; or

• certain disclosures of Directors’ remuneration specified by law are not

made; or

• we have not received all the information and explanations we require for

our audit.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the Statement of Directors’

Responsibilities, the Directors are responsible for the

preparation of the financial statements and for being

satisfied that they give a true and fair view, and for such

internal control as the Directors determine is necessary to

enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are

responsible for assessing the Company’s ability to continue

as a going concern, disclosing, as applicable, matters

related to going concern and using the going concern basis

of accounting unless the Directors either intend to liquidate

the Company or to cease operations, or have no realistic

alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT

OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error,

and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is

not a guarantee that an audit conducted in accordance

with ISAs (UK) will always detect a material misstatement

when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of these

financial statements.

Governance

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 69

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BIOTECH GROWTH TRUST PLC CONTINUED

Extent to which the audit was capable of detecting

irregularities, including fraud

Irregularities, including fraud, are instances of non-

compliance with laws and regulations. We design procedures

in line with our responsibilities, outlined above, to detect

material misstatements in respect of irregularities, including

fraud. The extent to which our procedures are capable of

detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory

framework applicable to the Company and industry in

which the Company operates, and considered the risk of

acts by the Company which were contrary to applicable

laws and regulations, including fraud. These included but

were not limited to compliance with Companies Act 2006,

the FCA listing and DTR rules, the principles of the AIC Code

of Corporate Governance, industry practice represented

by the AIC SORP and UK adopted International accounting

standards, VAT, and other taxes. We also considered the

company’s qualification as an Investment Trust under UK

tax legislation.

We considered compliance with this framework through

discussions with the Directors and the Audit Committee

and performed audit procedures on these areas as

considered necessary.

We focused on laws and regulations that could give rise

to a material misstatement in the Company financial

statements and the susceptibility of the entity’s financial

statements to material misstatement including fraud. We

considered that the areas in which fraud might occur are

in respect of management override and the valuation and

ownership of investments. Our tests included, but were not

limited to:

• agreement of the financial statement disclosures to

underlying supporting documentation;

• enquiries of the AIFM, Administrator, the Directors and

the Audit Committee about any known or suspected

non-compliance with laws and regulations or fraud;

• testing of journal postings which met specific criteria to

identify potential management override of controls;

• the procedures as outlined in our key audit matter above;

• review of legal invoice and correspondence to look for

potential non-compliance with laws and regulations or

undisclosed contingencies and commitments;

• checked compliance with each of the Investment Trust

tax legislation tests to assess whether the Company

has maintained its investment trust status;

• review of minutes of board meetings throughout the

period to look for potential non-compliance with laws

and regulations or undisclosed contingencies and

commitments; and

• obtaining an understanding of the control environment

in monitoring compliance with laws and regulations.

We also communicated relevant identified laws and

regulations and potential fraud risks to all engagement

team members and remained alert to any indications

of fraud or non-compliance with laws and regulations

throughout the audit.

Our audit procedures were designed to respond to risks

of material misstatement in the financial statements,

recognising that the risk of not detecting a material

misstatement due to fraud is higher than the risk of

not detecting one resulting from error, as fraud may

involve deliberate concealment by, for example, forgery,

misrepresentations or through collusion. There are inherent

limitations in the audit procedures performed and the

further removed non-compliance with laws and regulations

is from the events and transactions reflected in the financial

statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on

the Financial Reporting Council’s website at: www.frc.org.

uk/auditorsresponsibilities. This description forms part of

our auditor’s report.

USE OF OUR REPORT

This report is made solely to the Company’s members,

as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken

so that we might state to the Company’s members those

matters we are required to state to them in an auditor’s

report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility

to anyone other than the Company and the Company’s

members as a body, for our audit work, for this report, or for

the opinions we have formed.

Peter Smith (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, UK

BDO LLP is a limited liability par

tnership registered in

England and Wales (with registered number OC305127).

70 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2022

Notes

Revenue

£’000

2022

Capital

£’000

Total

£’000

Revenue

£’000

2021

Capital

£’000

Total

£’000

Investment income 2 1,084 – 1,084 986 – 986

(Losses)/gains on investments held at fair

value through profit or loss

8 – (206,032) (206,032) – 221,127 221,127

Exchange (losses)/gains on currency balances – (2,340) (2,340) – 3,394 3,394

AIFM, Portfolio management and performance

fees

3 (237) 6,232 5,995 (268) (23,826) (24,094)

Other expenses 4 (678) (124) (802) (647) (30) (677)

Profit/(loss) before finance costs and taxation 169 (202,264) (202,095) 71 200,665 200,736

Finance costs 5 (9) (166) (175) (9) (170) (179)

Profit/(loss) before taxation 160 (202,430) (202,270) 62 200,495 200,557

Taxation 6 (149) – (149) (131) – (131)

Profit/(loss) for the year 11 (202,430) (202,419) (69) 200,495 200,426

Basic and diluted earnings/(loss) per share 7 0.0p (488.5)p (488.5)p (0.2)p 500.7p 500.5p

The Company does not have any income or expenses which are not included in the profit/(loss) for the year. Accordingly the “profit/(loss)

for the year” is also the “total comprehensive profit/(loss) for the year”, as defined in IAS 1 (revised) and no separate Statement of Other

Comprehensive Income has been presented.

The “Total” column of this statement represents 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

Investment Companies.

The accompanying notes from page 74 to page 91 are an integral part of this statement.

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 71

STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2022

Notes

2022

£’000

2021

£’000

Non current assets

Investments held at fair value through profit or loss 8 427,399 643,270

Current assets

Other receivables 10 49 4,760

Cash and cash equivalents – 1,502

49 6,262

Total assets 427,448 649,532

Current liabilities

Other payables 11 1,499 20,668

Loan 14 31,741 26,779

Derivative – OTC equity swaps 8, 9 – 618

33,240 48,065

Net assets 394,208 601,467

Equity attributable to equity holders

Ordinary share capital 12 10,289 10,396

Share premium account 79,951 77,895

Capital redemption reserve 13,141 12,997

Capital reserve 16 291,231 500,594

Revenue reserve (404) (415)

Total equity 394,208 601,467

Net asset value per share 13 957.8p 1,446.4p

The financial statements on pages 70 to 91 were approved by the Board on 31 May 2022 and were signed on its behalf by:

Andrew Joy

Chairman

The accompanying notes from page 74 to 91 are an integral part of this statement.

The Biotech Growth Trust PLC – Company Registration Number 3376377 (Registered in England and Wales)

72 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2022

Notes

Ordinary

capital

£’000

premium

account

£’000

Capital

redemption

reserve

£’000

Capital

reserve

£’000

Revenue

reserve

£’000

Total

£’000

At 1 April 2021

10,396 77,895 12,997 500,594 (415) 601,467

Net (loss)/profit for the year

– – – (202,430) 11 (202,419)

Issue of new shares 12

37 2,060 –

– – 2,097

Cost of share issuance

– (4) –

– – (4)

Repurchase of own shares for cancellation

(144) – 144

(6,933) –

(6,933)

At 31 March 2022 13

10,289 79,951 13,141 291,231 (404) 394,208

FOR THE YEAR ENDED 31 MARCH 2021

Notes

Ordinary

capital

£’000

premium

account

£’000

Capital

redemption

reserve

£’000

Capital

reserve

£’000

Revenue

reserve

£’000

Total

£’000

At 1 April 2020

9,802 43,021 12,997 300,099 (346) 365,573

Net profit/(loss) for the year

– – – 200,495 (69) 200,426

Issue of new shares 12 594 34,945 –

– – 35,539

Cost of share issuance – (71) –

– –

(71)

At 31 March 2021 13

10,396 77,895 12,997 500,594 (415) 601,467

The accompanying notes from page 74 to 91 are an integral part of this statement.

See note 16 on page 91 for details of the amounts of reserves available for distribution.

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 73

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2022

Notes

2022

£’000

2021

£’000

Operating activities

(Loss)/profit before taxation* (202,270) 200,557

Finance costs 175 179

Losses/(gains) on investments held at fair value through profit or loss 8 204,987 (222,562)

Transaction costs 1,045 1,435

Foreign exchange losses/(gains) 2,340 (3,394)

(Increase)/decrease in other receivables (14) 3

(Decrease)/increase in other payables (18,255) 18,239

Taxation paid 6 (149) (131)

Net cash outflow from operating activities (12,141) (5,674)

Investing activities

Purchases of investments and derivatives (439,160) (599,120)

Sales of investments and derivatives 453,237 575,006

Transaction costs (1,045) (1,435)

Net cash inflow/(outflow) from investing activities 13,032 (25,549)

Financing activities

Gross proceeds from the issue of shares 2,097 35,539

Cost of share issuance (4) (71)

Repurchase of own shares for cancellation (6,933) –

Finance costs – interest paid (175) (179)

Net drawdown/(repayment) of the loan facility 2,622 (2,564)

Net cash (outflow)/inflow from financing activities (2,393) 32,725

Net (decrease)/increase in cash and cash equivalents (1,502) 1,502

Cash and cash equivalents at start of year 1,502 –

Cash and cash equivalents at end of year – 1,502

* Includes dividends earned during the year of £1,027,000 (2021: £875,000) and bond income of £37,000 (2021: £111,000).

CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

2022

£’000

2021

£’000

Balance as at 1 April 26,779 32,737

Net cash flow on the loan facility 2,622 (2,564)

Foreign exchange losses/(gains) 2,340 (3,394)

Loan balance at 31 March 31,741 26,779

The accompanying notes from page 74 to page 91 are an integral part of this statement.

74 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

(A) BASIS OF PREPARATION

The financial statements of the Company have been 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 principal accounting policies adopted are set out below.

The financial statements have been prepared under the historical cost convention, except for the measurement at fair value

of investments. Where presentational guidance is 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

April 2021, the Directors have sought to prepare the Financial Statements on a basis compliant with the recommendations of

the SORP.

The Board has considered an assessment of the Company’s ability to meet its liabilities as they fall due, including stress and

liquidity tests which modelled the effects of significant reductions in market liquidity on the Company’s financial position.

The results of the tests showed that the Company would have sufficient cash through access to the JP Morgan loan facility,

or the ability to liquidate a sufficient proportion of its listed holdings, to meet its liabilities as they fall due. Based on the

information available to the Directors at the time of this report, including the liquidity of the Company’s listed investments

and the results of the stress tests, the Directors are satisfied that the Company has adequate financial resources to continue

in operation for at least the next 12 months from the date the financial statements are approved and that, accordingly, it is

appropriate to adopt the going concern basis in preparing these financial statements.

The Company’s financial statements are presented in sterling and all values are rounded to the nearest thousand pounds

(£’000) except when otherwise indicated.

Judgements and key sources of estimation and uncertainty

The preparation of the financial statements requires the Directors to make judgements, estimates and assumptions that

affect the amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported

for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ

from those estimates. In the process of applying the Company’s accounting policies, the Directors have made the following

estimate:

Fair value of the unquoted investments estimate

The Board has established a Valuation Committee to review the valuations and the valuation methodologies of the

Company’s unquoted investments. The Board has approved the valuations of the unquoted investments on the

recommendation of the Valuation Committee.

The unquoted investment, OrbiMed Asia Partners L.P., has been valued using the net asset value as presented in the

partnership’s Consolidated Financial Statements as at 31 December 2021. The statements were audited by KPMG LLP

(New Jersey Headquarters) and were approved on 30 March 2022. As at the date of this report, the Directors have received

confirmation that the March 2022 valuation is in line with the estimated valuation used in these financial statements.

The following three investments, StemiRNA, XtalPi and Yisheng Biopharma have been valued by Kroll, formerly Duff & Phelps,

an independent valuer, using the probability – weighted expected returns methodology: (“PWERM”). Under the PWERM, fair

value is determined using models based on the consideration of values for the Company under different scenarios, such as

‘partial recovery’, ‘full recovery’ and expected IPO dates. Examples of inputs into the valuation models are:

• the probability assigned to potential future outcomes;

• discount rates and

• likely exit scenarios.

AWAKN warrants have been valued using the Black Scholes model with the volatility having been assessed by Kroll. See

note14 beginning on page 84 for further details.

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 75

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

1. ACCOUNTING POLICIES continued

(B) INVESTMENTS

Investments are recognised and de-recognised on the trade date.

As the entity’s business is investing in financial assets with a view to profiting from their total return in the form of dividends

or increases in fair value, investments are classified as fair value through profit or loss (FVTPL) and are initially recognised at

fair value. The entity manages and evaluates the performance of these investments on a fair value basis in accordance with

its investment strategy, and information about the investments is provided internally on this basis to the Board.

Investments classified at fair value through profit or loss, which are quoted investments, are measured at subsequent

reporting dates at fair value which is either the bid or the last trade price, depending on the convention of the exchange on

which it is quoted.

In respect of unquoted investments, or where the market for a financial instrument is not active, fair value is established

by using valuation techniques which may include using weighted expected returns, reference to the current fair value of

another instrument that is substantially the same, discounted cash flow analysis and option pricing models. Where there

is a valuation technique commonly used by market participants to price the instrument and that technique has been

demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised.

Gains and losses on disposal and fair value changes are also recognised in the Income Statement.

In order to better reflect the activities of an investment trust company, and in accordance with guidance issued by the AIC,

supplementary information which analyses the Income Statement between items of a revenue and capital nature has been

presented alongside the Income Statement. Net revenue is the measure the Directors believe appropriate in assessing the

Company’s compliance with certain requirements set out in section 1158 of the Corporation Tax Act 2010. The requirements

are to distribute net revenue but only so far as there are positive revenue reserves.

(D) INVESTMENT INCOME

Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted,

dividends are recognised when the Company’s right to receive payment is established. Foreign dividends are grossed up at

the appropriate rate of withholding tax, with the withholding tax recognised in the taxation charge.

Dividends from investments in unquoted shares and securities are also recognised when the Company’s right to receive

payment is established.

Income from fixed interest securities is recognised on a time appointment basis so as to reflect the effective interest rate.

In deciding whether a dividend should be regarded as a Capital or Revenue receipt, the Company reviews all relevant

information as to the reasons for and sources of the dividend on a case by case basis depending upon the nature of the

receipt.

Special dividends of a revenue nature are recognised through the revenue column of the Income Statement. Special

dividends of a capital nature are recognised through the capital column of the Income Statement.

(E) EXPENSES AND FINANCE COSTS

All expenses are accounted for on an accruals basis. Expenses are charged through the Income Statement as follows:

• transaction costs on the acquisition or disposal of an investment are charged to the capital column of the Income

Statement;

• expenses are charged to the capital column of the Income Statement where a connection with the maintenance or

enhancement of the value of the investment can be demonstrated, and accordingly;

• during the year, AIFM and Portfolio Management fees were charged 95% to the capital column of the Income Statement

as the Directors had expected that in the long term virtually all of the Company’s returns would come from capital;

• during the year, loan interest was charged 95% to the capital column of the Income Statement as the Directors had

expected that in the long term virtually all of the Company’s returns would come from capital;

76 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

1. ACCOUNTING POLICIES continued

• performance fees are charged 100% to the capital column of the Income Statement. Performance fees are recognised

as a liability of the Company when they crystallise and become due for payment. Details of the performance fee are

set out on page 46 and 47; and

• all other expenses are charged to the revenue column of the Income Statement.

(F) TAXATION

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented

against capital returns in the supplementary information in the Income Statement is the “marginal basis”. Under this basis,

if taxable income is capable of being offset entirely by expenses presented in the revenue column of the Income Statement,

then no tax relief is transferred to the capital column.

Investment trusts which have approval under Section 1158 Corporation Tax Act 2010 are not liable for taxation on capital

gains.

Current tax is provided at the amounts expected to be paid or recovered.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and

liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is

accounted for using the Balance Sheet liability method. Deferred tax liabilities are recognised for all taxable temporary

differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available

against which deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is

realised. Deferred tax is charged or credited in the Income Statement, except when it relates to items charged or credited

directly to equity, or Other Comprehensive Income (OCI), in which case the deferred tax is also dealt with in equity or OCI

respectively.

(G) FUNCTIONAL AND PRESENTATION CURRENCY

The financial information is shown in sterling, being the Company’s presentational currency. In arriving at the functional

currency the Directors have considered the following:

(i) the primary economic environment of the Company;

(ii) the currency in which the original capital was raised;

(iii) the currency in which distributions would be made;

(iv) the currency in which performance is evaluated; and

(v) the currency in which the capital would be returned to shareholders on a break up basis.

The Directors have also considered the currency to which the underlying investments are exposed and liquidity is managed.

The Directors are of the opinion that sterling best represents the functional currency.

(H) FOREIGN CURRENCIES

Transactions involving currencies other than sterling are recorded at the exchange rate ruling on the transaction date. At

each Statement of Financial Position date, monetary items and non-monetary assets and liabilities that are fair valued, which

are denominated in foreign currencies, are retranslated at the closing rates of exchange.

Exchange differences are included in the Income Statement and allocated as capital if they are of a capital nature, or as

revenue if they are of a revenue nature.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 77

1. ACCOUNTING POLICIES continued

(I) RESERVES

Ordinary share capital

• represents the nominal value of the issued share capital.

Share premium account

• represents the surplus of net proceeds received from the issue of new shares over the nominal value of such shares. The

Share premium account is non-distributable.

Capital redemption reserve

• a transfer will be made to this reserve on cancellation of the Company’s own shares purchased, equal to the nominal

value of the shares. This reserve is non-distributable.

Capital reserves

The following are credited or charged to the capital column of the Income Statement and then transferred to the Capital Reserve:

• gains or losses on disposal of investments;

• exchange differences of a capital nature;

• expenses allocated to this reserve in accordance with the above policies;

• increases and decreases in the valuation of investments held at year-end; and

• shares which have been bought back by the Company for cancellation.

Realised Capital Reserves are distributable by way of a dividend.

Revenue reserve

• reflects all income and expenditure recognised in the revenue column of the Income Statement. Amounts standing to the

credit of the Revenue Reserve are distributable by way of dividend.

(J) CASH AND CASH EQUIVALENTS

Cash and cash equivalents are defined as cash in hand, demand deposits and short-term deposits with a maturity of three

months or less, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of

changes in value.

(K) OTHER RECEIVABLES AND OTHER PAYABLES

Other receivables and payables are typically settled in a short time frame and are carried at the amount due to be settled. As

a result, the fair value of these balances is considered to be materially equal to the carrying value.

(L) LOAN

The Company has a loan facility repayable on demand, provided by J.P. Morgan Securities LLC (“J.P. Morgan”). As part of the

arrangements with J.P. Morgan they may take assets as collateral, up to 140% of the value of the loan drawn down. Such

assets taken as collateral by J.P. Morgan may be used, loaned, sold, rehypothecated† or transferred. Any of the Company’s

assets taken as collateral are not covered by the custody arrangements provided by J.P. Morgan. Loans payable on demand

are carried at the undiscounted amount of the cash or other consideration expected to be paid. Interest on the facility is

charged at the United States overnight bank funding rate plus 45 basis points. Finance costs are apportioned 95% to capital

in accordance with the policy set out under note 1(e) expenses and finance costs on page 75.

† See glossary beginning on page 93.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

78 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

1. ACCOUNTING POLICIES continued

(M) OPERATING SEGMENTS

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 the investments business. The results published in this report therefore correspond to this sole

operating segment.

(N) FINANCIAL INSTRUMENTS INCLUDING DERIVATIVE FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised on the statement of financial position when the Company becomes

a party to the contractual provisions of the instrument. Financial assets are derecognised when the Company’s contractual

right to the cash flows from the asset expires or substantially all the risks and rewards of ownership are transferred. Financial

liabilities are derecognised when the contractual obligation is discharged, with gains and losses recognised in the income

statement.

The Company uses derivative financial instruments namely equity swaps. All derivative instruments are valued initially, and at

subsequent reporting dates, at fair value in the Statement of Financial Position.

The equity swaps are accounted for as Fixed Assets or Current Liabilities (see the glossary beginning on page 93).

(O) ADOPTION OF NEW AND REVISED STANDARDS

At the date of authorisation of these financial statements the following standards and amendments to standards, which have

not been applied in these financial statements, were in issue, but not yet effective:

• IFRS 17, ‘Insurance contracts’ (effective for accounting periods beginning on or after 1 January 2023).

• Amendments to IAS1 ‘Classification of liabilities as current or non-current’ (effective for accounting periods beginning on

or after 1 January 2023).

• Amendments to IAS 8 ‘Definition of Accounting Estimates’ (effective for accounting periods on or after 1 January 2023).

• Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ (effective for accounting periods

on or after 1 January 2023).

• Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ (effective for

accounting periods on or after 1 January 2023).

The Company does not believe that there will be a material impact on the financial statements or the amounts reported from

the adoption of these standards.

In the current financial period the Company has applied to the following amendment to standards:

• IFRS 9, IAS 39, IFRS 7, IFRS 16 and IFRS 4: Interest Rate Benchmark Reform – phase 2 (amended) (effective for

accounting periods beginning on or after 1 January 2021).

There is no material impact on the financial statements or the amounts reported from the adoption of these amendment to

the standards.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 79

2. INCOME

2022

£’000

2021

£’000

Investment income

Overseas dividend income 1,027 875

Bond income 37 111

Other income

Derivatives 17 –

Deposit interest 3 –

Total income 1,084 986

3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES

Revenue

£’000

Capital

£’000

2022

Total

£’000

Revenue

£’000

Capital

£’000

2021

Total

£’000

AIFM fee – Frostrow Capital LLP 72 1,369 1,441 84 1,600 1,684

Portfolio management fee – OrbiMed Capital LLC 165 3,128 3,293 184 3,493 3,677

Performance fee (written back)/charged during the year* – (10,729) (10,729) – 18,733 18,733

237 (6,232) (5,995) 268 23,826 24,094

* During the financial year under review, due to underperformance against the Benchmark and in accordance with the

performance fee arrangements in place, a reversal of prior period provisions totalling £10,729,000 occurred. (2021:

charge of £18,733,000).

As at 31 March 2022, no performance fees were accrued or payable (31 March 2021: £17,708,000 accrued). Of the

£17,708,000 prior year accrual, £6,979,000 crystallised and became payable at 30 June 2021, resulting in the £10,729,000

reversal noted above.

Further details of the AIFM, portfolio management fee and the performance fee basis can be found in the Report of the

Directors on page 46 and 47.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

80 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

4. OTHER EXPENSES

2022

Total

£’000

2021

Total

£’000

Directors’ emoluments 173 154

AIFM fixed fee – 60

Fees payable to the Company’s auditor for the audit of the Company’s financial statements 40 38

Fees payable to the Company’s auditor for other services to the Company+ 5 4

Registrar fees 35 35

Depositary fees 68 70

Marketing and PR costs

70 63

Legal and professional fees

103 64

Listing fees 46 35

Printing costs 30 24

Other costs 108 100

Total expenses charged to Revenue 678 647

Professional fees (charged to Capital)* 124 30

Total expenses 802 677

^ Includes quarterly valuation fees in relation to the valuation of the unquoted investments (2021: valued six monthly).

* Professional fees in respect of acquisition of unquoted and pre-IPO investments.

+ See page 57 for further information.

Details of the amounts paid to Directors are included in the Directors’ Remuneration Report on pages 58 to 61.

5. FINANCE COSTS

Revenue

£’000

Capital

£’000

2022

Total

£’000

Revenue

£’000

Capital

£’000

2021

Total

£’000

Loan interest 9 166 175 9 170 179

9 166 175 9 170 179

6. TAXATION

(A) ANALYSIS OF CHARGE IN THE YEAR:

Revenue

£’000

Capital

£’000

2022

Total

£’000

Revenue

£’000

Capital

£’000

2021

Total

£’000

Overseas tax suffered 149 – 149 131 – 131

Total taxation for the year (see note 6(b)) 149 – 149 131 – 131

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 81

6. TAXATION continued

(B) FACTORS AFFECTING TOTAL TAX CHARGE FOR YEAR

Approved investment trusts are exempt from tax on capital gains made within the Company.

The tax assessed for the year is higher than the standard rate of corporation tax in the UK of 19% (2021: 19%). The differences

are explained below:

Revenue

£’000

Capital

£’000

2022

Total

£’000

Revenue

£’000

Capital

£’000

2021

Total

£’000

Net profit/(loss) before taxation 160 (202,430) (202,270) 62 200,495 200,557

Corporation tax at 19% (2021: 19%) 30 (38,462) (38,432) 12 38,094 38,106

Effects of:

Non-taxable losses/(gains) on investments – 39,591 39,591 – (42,659) (42,659)

Non-taxable overseas dividends (195) – (195) (166) – (166)

Overseas tax suffered 149 – 149 131 – 131

Excess expenses unused 165 (1,129) (964) 154 4,565 4,719

Total tax charge 149 – 149 131 – 131

No provision for deferred taxation has been made in the current or prior year.

The Company has not provided for deferred tax on capital profit or losses arising on the revaluation or disposal of

investments, as it is exempt from tax on these items because of its status as an investment trust company.

At 31 March 2022, the Company had unutilised management expenses and other losses of £78,625,000 (2021: £83,655,000)

that are available to offset future taxable revenue.

A deferred tax asset of £19,656,000 (25% tax rate) (2021: £15,895,000 (19% tax rate)) arising as a result of these excess

management expenses and other losses has not been recognised because the Company is not expected to generate

sufficient taxable income in future periods in excess of the available deductible expenses. Given the composition of the

Company’s portfolio, it is not likely that this asset will be used in the foreseeable future and therefore no asset has been

recognised in the financial statements.

7. BASIC AND DILUTED EARNINGS/(LOSS) PER SHARE

Revenue

pence

Capital

pence

2022

Total

pence

Revenue

pence

Capital

pence

2021

Total

pence

Earnings/(loss) per share 0.0 (488.5) (488.5) (0.2) 500.7 500.5

The total loss per share of 488.5p (2021: profit of 500.5p) is based on the total loss attributable to equity shareholders of

£202,419,000 (2021: profit of £200,426,000).

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

82 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

7. BASIC AND DILUTED EARNINGS/(LOSS) PER SHARE continued

The revenue profit per share of 0.0p (2021: loss of 0.2p) is based on the revenue profit attributable to equity shareholders

of £11,000 (2021: loss of £69,000). The capital loss per share of 488.5p (2021: profit of 500.7p) is based on the capital loss

attributable to equity shareholders of £202,430,000 (2021: profit of £200,495,000).

The total loss per share is based on the weighted average number of shares in issue during the year of 41,441,570 (2021:

40,046,064).

There are no dilutive instruments issued by the Company (2021: none).

8. INVESTMENTS

As at 31 March 2022, all investments with the exception of the unquoted investments have been classified as Level 1. The

unquoted investments have been classified as either Level 2 or Level 3. See note 14 beginning on page 84 for further details.

2022 2021

Quoted

Investments

£’000

Unquoted

£’000

Derivative

Financial

Instruments

– Net

£’000

Total

£’000

Quoted

Investments

£’000

Unquoted

£’000

Derivative

Financial

Instruments

– Net

£’000

Total

£’000

Opening book cost 534,610 29,098 – 563,708 345,728 11,000 – 356,728

Opening investment

holding gains

70,926 8,636 (618) 78,944 36,023 5,906 – 41,929

Valuation at 1 April 2021 605,536 37,734 (618) 642,652 381,751 16,906 – 398,657

Movements in the year

Purchases at cost 424,962 13,284 – 438,246 556,274 29,824 6,286 592,384

Sales proceeds (450,556) (123) 2,167 (448,512) (552,465) (11,594) (6,892) (570,951)

Transfer between levels 19,625 (19,625) –

– – – – –

Net movement in

investment holding

(losses)/gains

(206,398) 2,960 (1,549) (204,987) 219,976 2,598 (12) 222,562

Valuation at 31 March

2022

393,169 34,230 – 427,399 605,536 37,734 (618) 642,652

Closing book cost at

31March 2022

512,894 22,943 – 535,837 534,610 29,098 – 563,708

Investment holding

(losses)/gains at

31 March 2022

(119,725) 11,287 – (108,438) 70,926 8,636 (618) 78,944

Valuation at 31 March

2022

393,169 34,230 – 427,399 605,536 37,734 (618) 642,652

The Company received £447,863,000 (2021: £570,367,000) from investments sold in the year. The book cost of these

investments when they were purchased was £466,513,000 (2021: £385,989,000).

These investments have been revalued over time and until they were sold any unrealised gains/loss were included in the fair

value of these investments.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 83

8. INVESTMENTS continued

GAINS ON INVESTMENTS (PER THE INCOME STATEMENT)

2022

£’000

2021

£’000

(Losses)/gains on disposal based on historical cost (204,987) 222,562

Transaction costs (1,045)

(1,435)

(Losses)/gains on investments held at fair value through profit or loss (206,032)

221,127

The total transaction costs for the year were £1,045,000 (31 March 2021: £1,435,000) broken down as follows: purchase

transaction costs for the year to 31 March 2022 were £396,000 (31 March 2021: £851,000), sale transaction costs were

£649,000 (31 March 2021: £584,000). These costs consist mainly of commission. Transaction costs are recorded in the

capital column of the Income Statement.

9. DERIVATIVE FINANCIAL INSTRUMENTS

2022

£’000

2021

£’000

Fair value of OTC equity swaps (assets)

–

Fair value of OTC equity swaps (liabilities)

–

(618)

–

(618)

(See page 95 for further details).

10. OTHER RECEIVABLES

2022

£’000

2021

£’000

Future settlements – sales

–

4,725

Prepayments and accrued income 49

4,760

11. OTHER PAYABLES

2022

£’000

2021

£’000

Future settlements – purchases 452 1,366

Other creditors and accruals 1,047

1,594

Performance fees accrued –

17,708

1,499

20,668

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

84 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

12. ORDINARY SHARE CAPITAL

2022

Number of

2021

Number of

Allotted, issued and fully paid at 1 April 2021 41,584,769 39,207,269

Issue of new shares

150,000 2,377,500

Shares bought back for cancellation during the year

(576,087)

At 31 March 2022

41,158,682 41,584,769

During the year 150,000 new ordinary shares were issued for a consideration of £2,093,000 net of issue costs of £4,000

(2021:2,377,500 shares were issued for a consideration of £35,468,000 net of issue costs of £71,000) and 576,087 shares bought

back for cancellation for a consideration of £6,933,000 (2021: nil) .

2022

£’000

2021

£’000

Allotted, issued and fully paid shares of 25p 10,289

10,396

13. NET ASSET VALUE PER SHARE

2022 2021

Net asset value per share 957.8p 1,446.4p

The net asset value per share is based on the net assets attributable to equity shareholders of £394,208,000 (2021: £601,467,000)

and on 41,158,682 (2021: 41,584,769) shares in issue at 31 March 2022.

14. RISK MANAGEMENT POLICIES AND PROCEDURES

As an investment trust, the Company invests in equities and other investments for the long term in order to achieve its

investment objective as stated on page 23. In pursuing its investment objective, the Company is exposed to a variety of risks

that could result in either a reduction or increase in the Company’s net assets or in profits.

The Company’s financial instruments comprise securities and other investments, cash balances, debtors and creditors and a

loan facility that arise directly from its operations (for example, in respect of sales and purchases awaiting settlement).

The main risks the Company faces from its financial instruments are (i) market price risk (comprising currency risk, interest

rate risk and other price risk (i.e. changes in market prices other than those arising from interest rate or currency risk)), (ii)

liquidity risk and (iii) credit risk. The Board also considers (iv) fair value measurement and (v) capital management.

The Board reviews and agrees policies regularly for managing and monitoring each of these risks.

OTC EQUITY SWAPS

(See glossary beginning on page 93 for further details)

The Company uses OTC equity swap positions to gain access to Chinese markets where the Company is not locally

registered to trade directly. The swap positions previously held in BGI Genomics were sold prior to the Company’s year end.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 85

14. RISK MANAGEMENT POLICIES AND PROCEDURES continued

1. MARKET PRICE RISK:

The Company’s portfolio is exposed to fluctuations in market prices in the biotechnology sector and the regions in which it

invests. Market-wide uncertainties which have recently caused increased volatility in the markets include the outbreak of war

in Ukraine and the ongoing COVID-19 pandemic including further lockdowns in China, and increased inflationary pressures.

The Company’s exposure to market price fluctuations are monitored by the AIFM and the Portfolio Manager in pursuance of

the investment objective. Further information on the composition of the portfolio is set out on pages 7 and 8..

This market risk comprises three elements – foreign currency risk, interest rate risk and other price risk.

(a) Foreign currency risk:

The Company’s portfolio is denominated in currencies other than sterling (the Company’s functional currency, and in which it

reports its results). As a result, movements in exchange rates can significantly affect the sterling value of those items.

Management of the risk

The AIFM and the Portfolio Manager monitor the Company’s exposure to foreign currencies on a continuous basis and report

to the Board regularly. The Company does not hedge against foreign currency movements to manage market price risk.

The Company does not use financial instruments to mitigate the currency exposure in the period between the time that the

income is included in the financial statements and its receipt.

Foreign currency exposure

At the date of the Statement of Financial Position the Company held £395,486,000 (2021: £588,142,000) of investments

denominated in U.S. dollars and £31,913,000 (2021: £54,510,000) in other non-sterling currencies.

Foreign currency sensitivity

The fair value of the Company’s monetary items that have foreign currency exposure at 31 March 2022 is shown below.

Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency they are shown

separately in the analysis as to show the overall level of exposure..

2022

£’000

2021

£’000

Sterling equivalent of US$ and other non-sterling exposure

Current assets 19 6,251

Creditors (452) (1,366)

Loan (non-sterling) (31,709) (26,779)

Foreign currency exposure on net monetary items (32,142) (21,894)

Investments held at fair value through profit or loss including derivative equity swap 427,399 642,652

Total net foreign currency exposure 395,257 620,758

The table on page 86 details the sensitivity of the Company’s profit or loss after taxation for the year (investment values) to a

10% increase and decrease in the value of sterling compared to the U.S. dollar and other non-sterling currencies (2021: 10%

increase and decrease).

The above percentages have been determined based on market volatility in exchange rates over the previous twelve months.

The analysis is based on the Company’s foreign currency financial instruments held at each Statement of Financial Position

date, after adjusting for an increase/decrease in the AIFM and Portfolio management fees.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

86 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

14. RISK MANAGEMENT POLICIES AND PROCEDURES continued

If sterling had weakened against the U.S. dollar and other non-sterling currencies, as stated above, this would have had the

following effect:

2022

£’000

2021

£’000

Impact on revenue return

–

Impact on capital return 43,500 72,055

Total return after tax/effect on shareholders’ funds 43,500 72,055

If sterling had strengthened against the U.S. dollar and other non-sterling currencies, as stated above, this would have had

the following effect:

2022

£’000

2021

£’000

Impact on revenue return

–

Impact on capital return (35,592) (52,836)

Total return after tax/effect on shareholders’ funds (35,592) (52,836)

(b) Interest rate risk:

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes

in market interest rates.

Interest rate exposure

The Company’s main exposure to interest rate risk is through its loan facility with J.P. Morgan Securities LLC which is

repayable on demand.

At the year-end financial liabilities subject to interest rate risk were as follows (there were no assets subject to interest rate risk).

Fixed

rate

2022

£’000

Floating

rate

2022

£’000

Floating

rate

2021

£’000

Unquoted debt instruments cash – – –

Loan facility

31,741 26,779

Financial swap position (Gross exposure)

– 3,397

– 31,741 30,176

Management of the risk

The level of borrowings is approved and monitored by the Board and the AFIM on a regular basis.

Interest rate sensitivity

The majority of the Company’s financial assets are equity shares and other investments which neither pay interest nor have

a maturity date. The Company has a loan facility with J.P.Morgan Securities LLC as disclosed above. The amount utilised

at 31March 2022 was £31,741,000 (2021: £26,779,000). Interest is charged at the United States overnight bank funding

rate plus 45 basis points. The level of interest fluctuates in line with the funding rate and the amount of the loan. If the rate

increased by 1%, the impact on the profit or loss and net assets would be expected to be £317,000 (2021: £268,000).

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 87

14. RISK MANAGEMENT POLICIES AND PROCEDURES continued

Other price risk may affect the value of the quoted investments.

If market prices at the date of the Statement of Financial Position had been 20% higher or lower (2021: 20% higher or lower)

while all other variables had remained constant, the return and net assets attributable to shareholders for the year ended

31 March 2022 would have increased/decreased by £84,668,000 (2021: £127,982,000), after adjusting for an increase or

decrease in the AIFM and the Portfolio management fees. The calculations are based on the portfolio valuations as at the

respective Statement of Financial Position dates.

Other price risk exposure

2022 2021

Assets

£’000

Liabilities

£’000

Notional

exposure*

£’000

Assets

£’000

Liabilities

£’000

Notional

exposure*

£’000

Investments 427,399 – 427,399 643,270 – 643,270

OTC Equity Swaps – – – – (618) 2,779

427,399 – 427,399 643,270 (618) 646,049

* Calculated in accordance with AIFMD requirements, see glossary beginning on page 93 for further details.

2. LIQUIDITY RISK:

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Management of the risk

Liquidity risk is not significant as the majority of the Company’s assets are investments in quoted equities that are readily

realisable within one week, in normal market conditions. Stress tests have been performed to understand how long the

portfolio would take to realise in such situations. The Board is comfortable that in such situations the Company would be

able to meet its liabilities as they fall due. Short-term funding flexibility can be achieved through the use of the bank loan

facility. The maximum amount of gearing permitted by the Board is 20% of net assets.

The Board gives guidance to the Portfolio Manager as to the maximum amount of the Company’s resources that should be

invested in any one company.

Liquidity exposure and maturity

Contractual maturities of the financial liabilities as at 31 March 2022, based on the earliest date on which payment can be

required, are as follows:

2022

3 months

or less

£’000

2022

3 to

12 months

£’000

2021

3 months

or less

£’000

2021

3 to

12 months

£’000

Loan facility (repayable on demand) 31,741

–

26,779 –

Future settlements 452

–

1,366 –

Performance fees accrued –

–

– 17,708

Derivative – OTC equity swaps –

–

– 618

Other creditors and accruals 1,047

–

1,594 –

33,240

–

29,739 18,326

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

88 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

14. RISK MANAGEMENT POLICIES AND PROCEDURES continued

3. CREDIT RISK:

Credit risk is the risk of failure of a counterparty to discharge its obligations resulting in the Company suffering a loss.

As noted on page 31, J.P. Morgan Securities LLC (“J.P. Morgan”) may take assets with a value of up to 140% of the loan as

collateral. Such assets held by J.P. Morgan are available for rehypothecation†.

As at 31 March 2022, the maximum value of assets available for rehypothecation was £44,437,000 being 140% of the loan

balance of £31,741,000 (31 March 2021: £37,491,000 being 140% of the loan balance of £26,779,000).

See pages 31 and 47 for further details on the loan facility and the associated credit risk.

† See glossary beginning on page 93.

Management of the risk

The risk is not significant and is managed as follows:

J.P. Morgan

• by receiving and reviewing regular updates from the Custodian and Prime Broker and Depository.

• by reviewing their Internal Control reports and regularly monitor J.P. Morgan’s credit rating. J.P. Morgan has a credit rating

of Aa3 (Moody’s), A+ (S&P) and AA (Fitch).

• by reviewing on a monthly basis assets which are available for rehypothecation.

Other counterparties

• by only dealing with brokers which have been approved by OrbiMed Capital LLC and banks with high credit ratings such

as Goldman Sachs International who have a credit rating of A1 (Moody’s), A+ (S&P) and A+ (Fitch);

• by investing in markets that mainly operate DVP (delivery versus payment) settlement.

• all cash balances are held with approved counterparties. J.P. Morgan is the Custodian of the Company’s assets and all

assets are segregated from J.P. Morgan’s own assets.

At 31 March 2022 the Company’s exposure to credit risk amounted to £nil and was in respect of amounts due from brokers

in relation to future settlements (2021: £4,725,000).

4. FAIR VALUE MEASUREMENT

Hierarchy of investments

As required under IFRS 13 “Fair Value Measurement”, the Company has classified its financial assets designated at fair value

through profit or loss using a fair value hierarchy that reflects the significance of the inputs used in making the fair value

measurements. The hierarchy has the following 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).

As of 31 March 2022

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Assets 393,169 303 33,927 427,399

Financial investments held at fair value through profit or loss 393,169 303 33,927 427,399

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 89

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

14. RISK MANAGEMENT POLICIES AND PROCEDURES continued

As of 31 March 2021

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Assets 605,536 251 37,483 643,270

Derivatives: equity Swap (liabilities) – (618) – (618)

Financial investments held at fair value through profit or loss 605,536 (367) 37,483 642,652

As at 31 March 2022, the investment in OrbiMed Asia Partners LP Fund has been classified as Level 3. The OrbiMed

Asia Partners Fund LP has been valued at the net asset value as at 31 December 2021 and the Directors have received

confirmation that the March 2022 valuation is in line with the estimated valuation. If the value of the fund were to increase or

decrease by 10%, while all other variables had remained constant, the return and net assets attributable to shareholders for

the year ended 31 March 2022 would have increased/decreased by £175,000 (2021: £212,000).

The following investments have been valued by the Board, following recommendations received from the Valuation

Committee which has reviewed in detail both the valuation and the methodologies provided by Kroll, an independent valuer.

StemiRNA, XtalPi and Yisheng Biopharma have been valued using the probability-weighted expected returns methodology

and 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 year ended 31 March 2022 would have increased/decreased

by £3,218,000.

These Level 3 investments include assumptions based on non-observable market data such as:

(i) probability of scenario,

(ii) expected time to sale date and

(iii) discount rates.

The table below sets out the range of inputs applied in arriving at the fair value of the level three investments valued by Kroll.

2022 Probability of scenario* 10%-35%

Probability of scenario weighted average 22.5%

2021 Probability of scenario* 7.5%-35%

Probability of scenario weighted average 21.3%

2022 Expected time to sale range 0.3-1.8 years

Expected time to sale weighted average 1.05 years

2021 Expected time to sale range 0.2-1.8 years

Expected time to sale weighted average 1.0 year

2022 Discount rate 20.5%

Discount rate weighted average 20.5%

2021 Discount rate 20.5%

Discount rate weighted average 20.5%

*Scenarios include probability of partial recovery, full recovery and IPO.

AWAKN warrants have been valued using the Black Scholes model with the volatility having been assessed by Kroll. They

have been classified as Level 2.

90 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

14. RISK MANAGEMENT POLICIES AND PROCEDURES continued

Level 3 Reconciliation

The reconciliation below shows the changes during the year for the financial assets and liabilities designated at fair value

through profit or loss classified as being Level 3.

2022

£’000

2021

£’000

Assets

As at 1 April 37,483 16,906

Purchase of unquoted investments 13,266 29,824

Sale of unquoted investments (40) (11,594)

Net movement in investment holding gains during the year 2,843 2,347

Transfer from level 3 to level 1 (19,625) –

Assets as at 31 March 33,927 37,483

FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES:

Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value or at a

reasonable approximation of fair value.

5. CAPITAL MANAGEMENT

The Company’s capital management objectives are:

• to ensure that it will be able to continue as a going concern; and

• to maximise the total return to its equity shareholders.

The Board’s policy is to limit gearing to a maximum of 20% of the Company’s net assets. As at 31 March 2022 the Company

was geared 8.4% (2021: 6.8%).

The Company’s capital is disclosed in the Statement of Financial Position on page 71 and is managed on a basis consistent

with its investment objective and policy as set out on pages 23 and 24.

Shares may be repurchased by the Company as explained on page 25.

The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting

period.

As at 31 March 2022, the maximum value of assets available for rehypothecation was £44,437,000 being 140% of the loan

balance of £31,741,000 (31 March 2021: £37,491,000 being 140% of the loan balance of £26,779,000).

15. TRANSACTIONS WITH THE MANAGERS AND RELATED PARTIES

The following are considered to be related parties:

• Frostrow Capital LLP

• OrbiMed Capital LLC

• The Directors of the Company

Details of the relationship between the Company and Frostrow Capital LLP, the AIFM, and OrbiMed Capital LLC, the Portfolio

Manager, are disclosed in the Report of the Directors on page 46. Geoff Hsu, who joined the Board on 16 May 2018, is a

General Partner at OrbiMed. Details of fees paid to OrbiMed by the Company can be found in note 3 on page 79. All material

related party transactions have been disclosed in notes 3 and 4 on pages 79 and 80.

The Company holds an interest in OrbiMed Asia Partners Fund which equates to 0.4% of the investments held at 31March

2022. Further details can be found on pages 8 and 74.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial Statements

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 91

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

15. TRANSACTIONS WITH THE MANAGERS AND RELATED PARTIES continued

Details of the remuneration of all Directors can be found on page 59. Geoff Hsu has waived his Director’s fees. Details of the

Directors’ interests in the capital of the Company can be found on page 61.

Three current and two former partners at OrbiMed Capital LLC have a minority financial interest totalling 20% in Frostrow

Capital LLP, the AIFM. Details of the fees paid to Frostrow Capital LLP by the Company can be found in note 3 on page 79.

16. CAPITAL RESERVE

2022

2021

Capital Reserves Capital Reserves

Other

£’000

Investment

holdings

gains/

(losses)

£’000

Total

£’000

Other

£’000

Investment

holdings

gains/

(losses)

£’000

Total

£’000

At 1 April 421,917 78,677 500,594 258,170 41,929 300,099

Net (losses)/gains on investments (19,170) (186,862) (206,032) 184,379 36,748 221,127

Exchange (losses)/ gains (2,340) – (2,340) 3,394 – 3,394

Expenses charged to capital 5,942 – 5,942 (24,026) – (24,026)

Repurchase of own shares for cancellation (6,933) – (6,933) – – –

At 31 March 399,416 (108,185) 291,231 421,917 78,677 500,594

Sums within the Total Capital Reserve less unrealised gains (those on investments not readily convertible to cash) are

available for distribution. Investment holding gains in the table above are unrealised.

17. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

As at 31 March 2022 there were no contingent liabilities or capital commitments for the Company (2021: nil).

92 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

FINANCIAL CALENDAR

31 March Financial Year End

June Final Results Announced

July Annual General Meeting

30 September Half Year End

November Half Year Results Announced

ANNUAL GENERAL MEETING

The Annual General Meeting of The Biotech Growth Trust PLC will be held at the Apothecaries’ Hall, 10 Black Friars Lane,

London EC4V 6ER on Tuesday, 19July, 2022 at 12 noon. Please refer to the Chairman’s Statement beginning on page 2 for

details of this year’s arrangements.

SHARE PRICES

The Company’s Ordinary Shares are listed on the London Stock Exchange under ‘Investment Companies’. The price is given

daily in the Financial Times and other newspapers.

CHANGE OF ADDRESS

Communications with shareholders are mailed to the address held on the share register. In the event of a change of address

or other amendment this should be notified to the Company’s Registrars, Link Group, under the signature of the registered

holder.

DAILY NET ASSET VALUE

The daily net asset value of the Company’s shares can be obtained on the Company’s website at www.biotechgt.com and is

published daily via the London Stock Exchange.

PROFILE OF THE COMPANY’S OWNERSHIP

% OF ORDINARY SHARES HELD AT 31 MARCH

2022 2021

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SHAREHOLDER INFORMATION

Further Information

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 93

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.

ADR

An American depositary receipt (ADR) is a negotiable security that represents securities of a foreign company and allows that

company’s shares to trade in the U.S. financial markets. Shares of many non-U.S. companies trade on U.S. stock exchanges

through ADRs, which are denominated and pay dividends in U.S. dollars, and may be traded like regular shares of stock.

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

Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors in an

investment trust such as the Company.

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 usually 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.

pages

As at 31

March 2022

As at 31

March 2021

Share price

1&6

898.0

1,426.0

Net asset value per share (see note 13 on page 84 for further information)

1&6

957.8 1,446.4

Discount of share price to net asset value per share

1&6

6.2% 1.4%

GLOSSARY OF TERMS AND ALTERNATIVE

PERFORMANCE MEASURES

^ Alternative Performance Measure

94 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

GEARING^

Gearing represents prior charges, adjusted for net current liabilities, expressed as a percentage of net assets. Prior charges

includes all loans and overdrafts for investment purposes.

pages

31 March

2022

£’000

31 March

2021

£’000

Loan

31,741

26,779

Net current liabilities (excluding loan and derivatives) –

1,450 14,406

–

33,191 41,185

Net assets 71

394,208 601,467

Gearing

8.4% 6.8%

IPO LOCK-IN

When a company offers shares in an initial public offering (IPO), investors sometimes enter into a lock-in agreement

preventing them from selling their shares for a specified period after the IPO.

LEVERAGE

The AIFM Directive leverage definition is slightly different from the Association of Investment Companies’ method of

calculating gearing and is defined as follows: any method by which the AIFM increases the exposure of an AIF it manages

whether through borrowing of cash or securities, or leverage embedded in derivative positions.

For the purposes of the Alternative Investment Fund Managers (AIFM) Directive, leverage is any method which increases

the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the

Company’s exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross

method, exposure represents the sum of the Company’s positions after the deduction of sterling cash balances, without

taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without

the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Gross

Method

Commitment

Method

Maximum limit

130.0% 130.0%

Actual as at 31 March 2022

108.4% 107.7%

MARGINABLE SECURITIES

Marginable securities are stocks, bonds, futures or other securities capable of being traded on a Margin Account and are

available for rehypothecation*.

NET ASSET VALUE (“NAV”)

The net asset value of the Company’s assets, principally investments made in other companies and cash held, less 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 have been issued. 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.

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED

* See glossary definition on page 95.

^ Alternative Performance Measure

Further Information

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 95

NET ASSET VALUE PER SHARE TOTAL RETURN^

The net asset value per share return for the year ended 31 March 2022 is calculated by taking percentage movement from

the net asset value per share as at 31 March 2021 of 1,446.4pp (2020: 932.4p) to the net asset value at 31 March 2022 of

957.8p (2021: 1,446.4p). The Company has not paid any dividends to shareholders during the above mentioned years.

(See pages 1 and 6).

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.

pages

31 March

2022

£’000

31 March

2021

£’000

AIFM & portfolio management fees (note 3)

79 4,734

5,361

Other re-occurring expenses (note 4)

80 678 647

Total ongoing charges

5,412 6,008

Performance fees paid/crystallised during the year*

–

1,025

Total ongoing charges including performance fees paid/crystallised*

5,412 7,033

Average daily net assets for the year

507,333

551,514

Ongoing charges

1&6 1.1%

1.1%

Ongoing charges (including performance fees paid or crystallised)

1.1% 1.3%

* See note 3 on page 79 for further information

OTC EQUITY SWAPS

Over-the-Counter (OTC) refers to the process of how securities are traded via a broker - dealer network, as opposed to on 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 security; 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.

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED

96 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

SUSTAINABILITY ACCOUNTING STANDARDS BOARD (SASB)

The Sustainability Accounting Standards Board (SASB) is a non-profit organisation, founded in 2011 to develop sustainability

accounting standards. Its stated mission is “to establish industry-specific disclosure standards across ESG topics that

facilitate communication between companies and investors about financially material, decision-useful information. Such

information should be relevant, reliable and comparable across companies on a global basis.”

SHARE PRICE TOTAL RETURN^

The share price total return represents the theoretical return to a shareholder, on a closing market price basis. The share

price total return is calculated by taking the percentage movement from the share price as at 31 March 2021 of 1,426.0p

(2020: of 814.0p) to the share price as at 31 March 2022 of 898.0p (2021: of 1,426.0p). The Company has not paid dividends

to shareholders during the above mentioned years.

See pages 1 and 6 for further information.

^ Alternative Performance Measure

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED

Further Information

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 97

HOW TO INVEST

RETAIL INVESTORS ADVISED BY IFAS

The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers

(“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relationship

to non-mainstream investment procedures and intends to continue to do so. The shares are excluded from the FCA’s

restrictions which apply to non-mainstream investment products because they are shares in an investment trust.

INVESTMENT PLATFORMS

The Company’s shares are traded openly on the London Stock Exchange and can be purchased through a stock broker

or other financial intermediary. The shares are available through savings plans (including Investment Dealing Accounts,

ISAs, Junior ISAs and SIPPs) which facilitate both regular monthly investments and lump sum investments in the

Company’s shares. There are a number of investment platforms that offer these facilities. A list of some of them, that is not

comprehensive nor constitutes any form of recommendation, can be found below:

AJ Bell Youinvest http://www.youinvest.co.uk/

Barclays Smart Investor https://www.smartinvestor.barclays.co.uk/

Bestinvest http://www.bestinvest.co.uk/

Charles Stanley Direct https://www.charles-stanley-direct.co.uk/

Halifax Share Dealing https://www.halifaxsharedealing-online.co.uk/

Hargreaves Lansdown http://www.hl.co.uk/

HSBC https://www.hsbc.co.uk/investments/

iDealing http://www.idealing.com/

Interactive Investor http://www.iii.co.uk/

IWEB http://www.iweb-sharedealing.co.uk/share-dealing-home.asp

The Share Centre https://www.share.com/

98 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

Notice is hereby given that the Annual General Meeting of The Biotech Growth Trust PLC will be held at the Apothecaries’ Hall,

10 Blackfriars Lane, London EC4V 6ER on Tuesday, 19 July 2022 at 12 noon, for the following purposes:

ORDINARY BUSINESS

To consider and, if thought fit, pass the following as ordinary resolutions:

1. To receive the audited financial statements and the Report of the Directors for the year ended 31 March 2022.

2. To approve the Directors’ Remuneration Report for the year ended 31 March 2022.

3. To elect Roger Yates as a Director of the Company.

4. To re-elect Dr Nicki Shepherd as a Director of the Company.

5. To re-elect Steve Bates as a Director of the Company.

6. To re-elect The Rt Hon Lord Willetts as a Director of the Company.

7. To re-elect Julia Le Blan as a Director of the Company.

8. To re-elect Geoff Hsu as a Director of the Company.

9. To re-appoint BDO LLP as Auditor to the Company to hold office from the conclusion of the meeting to the conclusion

of the next Annual General Meeting at which accounts are laid, and to authorise the Audit Committee to determine their

remuneration.

SPECIAL BUSINESS

To consider and, if thought fit, pass the following resolutions of which resolutions 11, 12 and 13 will be proposed as special

resolutions:

AUTHORITY TO ALLOT SHARES

10. THAT in substitution for all existing authorities the Directors be and are hereby generally and unconditionally authorised in

accordance with Section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of the Company to allot relevant

securities (within the meaning of Section 551 of the Act) up to a maximum aggregate nominal amount of £1,023,043 (being

10% of the issued share capital of the Company at the date of the notice convening the meeting at which this resolution is

proposed) and representing 4,092,172 shares of 25 pence each or, if changed, the number representing 10% of the issued

share capital of the Company at the date at which this resolution is passed, provided that this authority shall expire at the

conclusion of the Annual General Meeting of the Company to be held in 2023 or 15 months from the date of passing this

resolution, whichever is the earlier, unless previously revoked, varied or renewed, by the Company in general meeting and

provided that the Company shall be entitled to make, prior to the expiry of such authority, an offer or agreement which

would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities

pursuant to such offer or agreement as if the authority conferred hereby had not expired.

DISAPPLICATION OF PRE-EMPTION RIGHTS

11. THAT in substitution of all existing powers the Directors be and are hereby generally empowered pursuant to Sections

570 and 573 of the Companies Act 2006 (the “Act”) to allot equity securities (within the meaning of section 560 of the

Act) including if immediately before the allotment, such shares are held by the Company as treasury shares (as defined

in Section 724 of the Act) for cash pursuant to the authority conferred on them by resolution 10 set out in the notice

convening the Annual General Meeting at which this resolution is proposed or otherwise as if section 561(1) of the Act

did not apply to any such allotment and to sell relevant shares (within the meaning of section 560 of the Act) for cash

as if section 561(1) of the Act did not apply to any such sale, provided that this power shall be limited to the allotment of

equity securities pursuant to:

NOTICE OF THE ANNUAL GENERAL MEETING

Further Information

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 99

(a) an offer of equity securities open for acceptance for a period fixed by the Directors where the equity securities

respectively attributable to the interests of holders of shares of 25 pence each in the Company (“Shares”) are

proportionate (as nearly as may be) to the respective numbers of Shares held by them but subject to such

exclusions or other arrangements in connection with the issue as the Directors may consider necessary,

appropriate, or expedient to deal with equity securities representing fractional entitlements or to deal with legal or

practical problems arising in any overseas territory, the requirements of any regulatory body or stock exchange, or

any other matter whatsoever; and

(b) (otherwise than pursuant to sub-paragraph (a) above) up to an aggregate nominal value of £1,023,043 (or, if

changed, the number representing 10% of the issued share capital of the Company at the date of the meeting at

which this resolution is passed),

and expires at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or

15months from the date of passing this resolution, whichever is the earlier, unless previously revoked, varied or renewed

by the Company in general meeting and provided that the Company shall be entitled to make, prior to the expiry of such

authority, an offer or agreement which would or might require equity securities to be allotted after such expiry and the

Directors may allot equity securities pursuant to such offer or agreement as if the power conferred hereby had not expired.

AUTHORITY TO REPURCHASE ORDINARY SHARES

12. THAT the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of the

Companies Act 2006 (the “Act”) to make one or more market purchases (within the meaning of section 693(4) of the Act)

of ordinary shares of 25 pence each in the capital of the Company (“Shares”) either for retention as treasury shares for

future reissue, resale, transfer or for cancellation provided that:

(a) the maximum aggregate number of Shares authorised to be purchased shall be that number of Shares which is

equal to 14.99% of the issued Share capital of the Company as at the date of the passing of this resolution;

(b) the minimum price (exclusive of expenses) which may be paid for a Share is 25 pence;

of (i) 105% of the average of the middle market quotations for a Share as derived from the Daily Official List of

the London Stock Exchange for the five business days immediately preceding the day on which that Share is

purchased and (ii) the higher of the price of the last independent trade in Shares and the highest then current

independent bid for Shares on the London Stock Exchange;

(d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be

held in 2023 or, if earlier, on the expiry of 15 months from the date of the passing of this resolution unless such

authority is renewed prior to such time; and

(e) the Company may make a contract to purchase Shares under this authority before the expiry of such authority

which will or may be executed wholly or partly after the expiration of such authority, and may make a purchase of

Shares in pursuance of any such contract.

GENERAL MEETINGS

13. THAT the Directors be authorised to call general meetings (other than Annual General Meetings) on not less than 14 clear

days’ notice, such authority to expire at the conclusion of the next Annual General Meeting of the Company or, if earlier,

until expiry of 15 months from the date of the passing of this resolution.

By order of the Board Registered office:

One Wood Street

Frostrow Capital LLP London EC2V 7WS

Company Secretary

31 May 2022

NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED

100 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

NOTES

1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting. A shareholder

may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise the rights attached to a different share or

shares held by that shareholder. A proxy need not be a shareholder of the Company.

2. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolutions. If no voting

indication is given, a proxy may vote or abstain from voting at his/her discretion. A proxy may vote (or abstain from voting) as he or she thinks fit in relation

to any other matter which is put before the meeting.

3. Members can vote by: logging onto www.signalshares.com and following instructions; requesting a hard copy form of proxy directly from the registrars,

Link Group at enquires@linkgroup.co.uk or, in the case of CREST members, utilising the CREST electronic proxy appointment service in accordance with the

procedures set out below. To be valid any proxy form or other instrument appointing a proxy must be completed and signed and received by post or (during

normal business hours only) by hand at Link Group, PXS1, 10thFloor, Central Square, 29 Wellington Street, Leeds LS1 4DL no later than 12 noon on 15 July

2022.

4. In the case of a member which is a company, the instrument appointing a proxy must be executed under its seal or signed on its behalf by a duly authorised

officer or attorney or other person authorised to sign. Any power of attorney or other authority under which the instrument is signed (or a certified copy of it)

must be included with the instrument.

5. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described below) will not prevent a shareholder attending

the meeting and voting in person if he/she wishes to do so.

6. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a “Nominated

Person”) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or have someone

else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under

any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.

7. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 3 above does not apply to Nominated Persons. The

rights described in these paragraphs can only be exercised by shareholders of the Company.

8. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, only shareholders registered on the register of members of the Company (the

“Register of Members”) at the close of business on 15 July 2022 (or, in the event of any adjournment, on the date which is two days before the time of the

adjourned meeting) will be entitled to attend and vote or be represented at the meeting in respect of shares registered in their name at that time. Changes to

the Register of Members after that time will be disregarded in determining the rights of any person to attend and vote at the meeting.

9. As at 30 May 2022 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of 40,921,729 ordinary

shares, carrying one vote each. Therefore, the total voting rights in the Company as at 30 May 2022 are 40,921,729.

10. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures

described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service

provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

11. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”)

must be properly authenticated in accordance with the specifications of Euroclear UK and Ireland Limited (“CRESTCo”), and must contain the information

required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an

amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent

(ID RA10) no later than 48 hours before the time appointed for holding the meeting. For this purpose, the time of receipt will be taken to be the time (as

determined by the timestamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message

by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be

communicated to the appointee through other means.

12. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that CRESTCo does not make available special

procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy

Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member,

or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to

ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their

CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST

system and timings.

13. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations

2001.

14. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder

will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Register of Members in respect of the joint

holding (the first named being the most senior).

15. Members who wish to change their proxy instructions should submit a new proxy appointment using the methods set out above. Note that the cut-off time

for receipt of proxy appointments (see above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant

cut-off time will be disregarded.

16. Members who have appointed a proxy using the hard-copy proxy form and who wish to change the instructions using another hard-copy form, should

contact Link Group on 0371 664 0300 or +44 371 664 0300 if calling from outside the United Kingdom. Calls are charged at the standard geographic rate

and will vary by provider. Calls outside the United Kingdom are charged at the applicable international rate. Lines are open between 09.00-17.30, Monday to

Friday excluding public holidays in England and Wales.

17. If a member submits more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take

precedence.

18. In order to revoke a proxy instruction, members will need to inform the Company. Members should send a signed hard copy notice clearly stating their

intention to revoke a proxy appointment to Link Group, PXS1, 10thFloor, Central Square, 29 Wellington Street, Leeds LS1 4DL.

In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the

company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of

such power of attorney) must be included with the revocation notice. If a member attempts to revoke their proxy appointment but the revocation is received

after the time for receipt of proxy appointments (see above) then, subject to paragraph 4, the proxy appointment will remain valid.

NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED

Further Information

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 101

Resolution 1 – To receive the Audited Financial Statements and the Report of the Directors

The audited financial statements and the Report of the Directors for the year ended 31 March 2022 will be presented to the

Annual General Meeting. These accompanied this Notice of Meeting.

Resolution 2 – Directors’ Remuneration Report

The Report on Directors’ Remuneration is set out in full on pages 58 to 61.

Resolutions 3 to 8 – Election and re-election of Directors

Resolutions 3 to 8 deal with the election and re-election of the Directors. Biographies of each of the current Directors can be

found on pages 36 and 37.

The Board has confirmed, following a performance review, that the Directors standing for re-election continue to performeffectively.

Resolution 9 – Re-appointment of Auditor and the determination of their remuneration

Resolution 9 relates to the re-appointment of BDO LLP as the Company’s independent auditor to hold office until the next

Annual General Meeting of the Company and also authorises the Audit Committee to set their remuneration.

Resolutions 10 and 11 – Issue of Shares

Ordinary Resolution 10 in the Notice of Annual General Meeting will renew the authority to allot the unissued share capital

up to an aggregate nominal amount of £1,023,043 (equivalent to 4,092,172 shares, or 10% of the Company’s existing issued

share capital on 30May 2022 or, if changed, the number representing 10% of the issued share capital of the Company at the

date at which this resolution is passed). Such authority will expire on the date of the next Annual General Meeting or after

a period of 15months from the date of the passing of the resolution, whichever is earlier. This means that the authority will

have to be renewed at the next Annual General Meeting.

When shares are to be allotted for cash, Section 551 of the Companies Act 2006 (the “Act”) provides that existing

shareholders have pre-emption rights and that the new shares must be offered first to such shareholders in proportion to

their existing holding of shares. However, shareholders can, by special resolution, authorise the Directors to allot shares

otherwise than by a pro rata issue to existing shareholders. Special Resolution 11 will, if passed, give the Directors power to

allot for cash equity securities up to 10% of the Company’s existing share capital on 30 May 2022 or, if changed, the number

representing 10% of the issued share capital of the Company at the date at which this resolution is passed, as if Section 551

of the Act does not apply. This is the same nominal amount of share capital which the Directors are seeking the authority to

allot pursuant to Resolution 10. This authority will also expire on the date of the next Annual General Meeting or after a period

of 15 months, whichever is earlier. This authority will not be used in connection with a rights issue by the Company.

The Directors intend to use the authority given by Resolutions 10 and 11 to allot shares and disapply pre-emption rights only

in circumstances where this will be clearly beneficial to shareholders as a whole. The issue proceeds would be available for

investment in line with the Company’s investment policy. No issue of shares will be made which would effectively alter the

control of the Company without the prior approval of shareholders in general meeting. New shares will be only issued at a

premium to the Company’s net asset value per share.

Resolution 12 – Share Repurchases

The Directors wish to renew the authority given by shareholders at the Annual General Meeting held in July 2021. The

principal aim of a share buy-back facility is to enhance shareholder value by acquiring shares at a discount to net asset value,

as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to

net asset value per share, should result in an increase in the net asset value per share for the remaining shareholders. This

authority, if conferred, will only be exercised if to do so would result in an increase in the net asset value per share for the

remaining shareholders and if it is in the best interests of shareholders generally. Any purchase of shares will be made within

guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for

another year at the Annual General Meeting.

EXPLANATORY NOTES TO THE RESOLUTIONS

102 / THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022

Under the current Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the

higher of (i) 105% of the average of the middle market quotations for the shares over the five business days immediately

preceding the date of purchase and (ii) the higher of the last independent trade and the highest current independent bid on

the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per share. Shares which

are purchased under this authority will either be cancelled or held as treasury shares.

Special Resolution 12 in the Notice of Annual General Meeting will renew the authority to purchase in the market a maximum

of 14.99% of shares in issue as at the date of the passing of the resolution. Such authority will expire on the date of the next

Annual General Meeting or after a period of 15 months from the date of passing of the resolution, whichever is earlier. This

means in effect that the authority will have to be renewed at the next Annual General Meeting or earlier if the authority has

been exhausted.

Resolution 13 – General Meetings

Special Resolution 13 seeks shareholder approval for the Company to hold General Meetings (other than the Annual General

Meeting) on not less than at 14 clear days’ notice.

Recommendation

The Board considers that the resolutions relating to the above items are in the best interests of shareholders as a whole.

Accordingly, the Board unanimously recommends to the shareholders that they vote in favour of the above resolutions to be

proposed at the forthcoming Annual General Meeting as the Directors intend to do in respect of their own beneficial holdings

totalling 72,000 shares.

EXPLANATORY NOTES TO THE RESOLUTIONS CONTINUED

Further Information

THE BIOTECH GROWTH TRUST PLC Annual Report for the year ended 31 March 2022 / 103

DIRECTORS

Andrew Joy (Chairman)

Steve Bates (Chairman of the Management

Engagement Committee)

Julia Le Blan

(Chair of the Audit Committee)

Geoff Hsu

Dr Nicki Shepherd

The Rt Hon Lord Willetts FRS

Roger Yates

REGISTERED OFFICE

One Wood Street

London EC2V 7WS

WEBSITE

www.biotechgt.com

COMPANY REGISTRATION NUMBER

03376377 (Registered in England)

The Company is an investment company as defined under

Section 833 of the Companies Act 2006.

The Company was incorporated in England on 20 May 1997

as Reabourne Merlin Life Sciences Investment Trust PLC.

ALTERNATIVE INVESTMENT FUND MANAGER,

COMPANY SECRETARY AND ADMINISTRATOR

Frostrow Capital LLP

25 Southampton Buildings

London WC2A 1AL

Telephone: 0203 008 4910

E-Mail: info@frostrow.com

Website: www.frostrow.com

uthorised and regulated by the Financial Conduct Authority.

If you have an enquiry about the Company or if you would

like to receive a copy of the Company’s monthly fact sheet

by e-mail, please contact Frostrow Capital using the above

e-mail address.

PORTFOLIO MANAGER

OrbiMed Capital LLC

601 Lexington Avenue, 54th Floor

New York NY10022 USA

Telephone: +1 212 739 6400

Website: www.orbimed.com

ed under the U.S. Securities and Exchange

Commission.

INDEPENDENT AUDITOR

BDO LLP

55 Baker Street

London

W1U 7EU

DEPOSITARY

J.P. Morgan Europe Limited

25 Bank Street

London E14 5JP

CUSTODIAN AND PRIME BROKER

J.P. Morgan Securities LLC.

Suite 1, Metro Tech Roadway

Brooklyn, NY11201

USA

REGISTRAR

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

E-mail: enquiries@linkgroup.co.uk

Telephone (in UK): 0371 664 0300†

Telephone (from overseas): + 44 371 664 0300†

Shareholder Portal: www.signalshares.com

Website: www.linkgroup.eu

Please contact the Registrars if you have a query about a

certificated holding in the Company’s shares.

STOCK BROKER

Winterflood Securities Limited

The Atrium Building

Cannon Bridge

25 Dowgate Hill

London EC4R 2GA

SOLICITORS

Charles Russell Speechlys

5 Fleet Place

London EC4M 7RD

IDENTIFICATION CODES

Shares: SEDOL: 0038551

ISIN: GB0000385517

BLOOMBERG: BIOG LN

EPIC: BIOG

GLOBAL INTERMEDIARY IDENTIFICATION

NUMBER

(GIIN): U1MQ70.99999.SL.826

LEGAL ENTITY IDENTIFIER (LEI)

549300Z41EP32MI2DN29