Annual Report and Financial Statements
For the year ended 31 December 2024
BioPharma Credit PLC
BioPharma Credit PLC provides investors
with the opportunity to gain exposure to the
fast‑growing life sciences industry.
Our diversified portfolio is primarily secured
by approved life sciences products and the
cash flows derived from their sales.
STRATEGIC REPORT
Performance Highlights 1
At a Glance 2
Chairman’s Statement 4
Investment Manager’s Report 6
Case Study – Alphatec 18
Case Study – Geron 19
ESG Programme and Sustainability 20
Strategic Overview 24
GOVERNANCE
Board of Directors 40
Directors’ Report 41
Corporate Governance Statement 44
Audit and Risk Committee Report 49
Remuneration Report 51
Remuneration Policy 55
Statement of Directors’ Responsibilities 56
Independent Auditor’s Report 57
FINANCIAL STATEMENTS
Statement of Comprehensive Income 64
Statement of Changes in Equity 65
Statement of Financial Position 66
Cash Flow Statement 67
Notes to the Financial Statements 68
ADDITIONAL INFORMATION
Glossary of Terms and Alternative Performance
Measures (APM)
94
Corporate Information 96
Shareholder Information 97
1
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
STRATEGIC REPORT
$0.8840
Share price ($):
(31 December 2023: $0.8400)
$0.0999
Net income per share ($):
(31 December 2023: $0.0828)
11 . 3 %
Discount to NAV per share (%):
(31 December 2023: 18.4%)
Performance Highlights
As at 31 December 2024
1,373.9m
Shares outstanding (m):
(31 December 2023: 1,373.9m)
-
Leverage (%)
(31 December 2023: -)
$0.9963
NAV per share ($):
(31 December 2023: $1.0293)
1,186.0m
Ordinary shares in issue with
voting rights (m):
(31 December 2023: 1,302.7m)
¢10.18
2
1
The Company paid total dividends referencing net revenue per ordinary share for the year ended 31 December 2024 and 31 December 2023 of 10.18 cents and 10.21 cents
respectively. Past performance is not an indication of future performance.
2
The Company made three dividend payments over the calendar year, relating to 2024, totaling 7.29 cents per share, referencing net income for the three quarters ending
30September 2024. Following the end of the year, the Company declared a further dividend in respect of the last quarter of 2024 of 2.89 cents per share that was paid on
28February 2025. Past performance is not an indication of future performance.
Dividend declared (Cents)
(31 December 2023: ¢10.21)
This section includes Alternative Performance Measures (APMs). Refer to the glossary on page 94. Past performance is not an indication of
future performance.
TARGET DIVIDEND - 7cents per annum plus additional special dividends when possible
1
$1,181.7m
Net assets ($m):
(31 December 2023: $1,340.9m)
187.9m
Shares in treasury:
(31 December 2023: 71. 2 m)
At a Glance
At a Glance
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
2
Our primary objective is to continue to generate predictable
income for shareholders, primarily through investments in debt
assets secured by royalties or other cash flows derived from
sales of approved life sciences products.
BioPharma Credit PLC (the “Company”) holds a majority of
its investments through its financing subsidiary, BPCR Limited
Partnership.
2024 NEW INVESTMENTS
Investment
Date
Fundedin
2024 $M
Refinanced in
2024 $M
Commitment in
2024 $M
UroGen 2024 13/03/2024 – 50.0 50.0
Tarsus 19/04/2024 37.5 – 100.0
Novocure 01/05/2024 50.0 – 200.0
Collegium 2024 28/07/2024 130.0 160.4 290.4
Alphatec 29/10/2024 35.0 – 35.0
Insmed 2024 31/10/2024 60.0 158.7 218.7
Geron 01/11/2024 50.0 – 100.0
Total 362.5 369.1 994.1
2024 REPAYMENTS
Investment Amount $M Repayment Date Gross IRR
1
Net IRR
1
Akebia 17. 5 29/1/2024 11.4% 8.5%
ImmunoGen 62.5 12/02/2024 60.2% 45.2%
UroGen 2022 50.0 13/03/2024 14.5% 10.9%
Coherus (Total) 125 . 0 16.7% 12.5%
Coherus 87. 5 01/04/2024 16.6% 12.5%
Coherus 37. 5 08/05/2024 16.8% 12.6%
Collegium 2022 160.4 28/07/2024 14.1% 10.6%
LumiraDx (Total) 176.0 -0.5% -0.4%
LumiraDx 2021 120.7 31/07/2024 0.4% 0.3%
LumiraDx 2023 20.1 31/07/2024 -21.9% -16.4%
LumiraDx 2024 35.2 31/07/2024 5.4% 4.0%
Insmed 2022 158.7 31/10/2024 14.7% 11.0%
Immunocore 25.0 08/11/2024 14.6% 10.9%
1
Gross IRR and Net IRR is as of the repayment date. The definition of Gross IRR and Net IRR is set forth in the Glossary, refer to page94. Past performance is not an indication of future performance.
2024 AMORTISATIONS
Opening Balance
2023 $M
Funded in
2024 $M
Principal
Payment in
2024 $M
Amortisation
Payment in
2024 $M
Year End
Balance 2024 $M
BMS 83.6 – 35.5 – 48.1
Collegium 2024 – 290.4 – 7. 3 283.1
Collegium 2022 206.3 – 160.4 45.9 –
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
3
We will seek to achieve this by continuing to build a high-quality
portfolio of investments secured by rights and cash flows derived
from sales of approved life sciences products.
Asset
1
As at 31 Dec 2024
$m
Percentage as at
31Dec 2024
As at 31 Dec 2023
$m
Percentage as at
31Dec 2023
Cash and cash equivalents 168.6 14 . 3% 260.8 19.4%
Collegium 2024 senior secured loan 283.2 24.0% – –
Insmed 2024 senior secured loan 218 . 7 18 .5% – –
BioCryst senior secured loan 129.5 11.0% 125 . 5 9.4%
OptiNose senior secured note, shares and warrants 71.5 6.1% 71. 5 5.3%
Evolus senior secured loan 62.5 5.3% 62.5 4.7%
Geron senior secured loan 50.0 4.2% – –
Novocure senior secured loan 50.0 4.2% – –
UroGen 2024 senior secured loan 50.0 4.2% – –
BMS purchased payments 49.1 4.1% 83.6 6.2%
ImmunoGen senior secured loan – – 48.2 3.6%
Tarsus senior secured loan 37. 5 3.2% – –
Alphatec senior secured loan 35.0 3.0% – –
LumiraDx Colombia equity 7. 5 0.6% – –
Akebia senior secured loan – – 17. 5 1.3%
Coherus senior secured loan – – 125.0 9.3%
Collegium 2022 senior secured loan – – 206.3 15.4%
Immunocore senior secured loan – – 25.0 1.9%
Insmed 2022 senior secured loan – – 151. 0 11.3%
LumiraDx senior secured loan and warrants – – 136.0 10 .1
UroGen 2022 senior secured loan – – 50.0 3.7%
Other net liabilities ( 31. 4) (2.7%) (22.0) (1.6%)
Total net assets 1,181. 7 100.0% 1,340.9 100.0%
1
Included are investments held through BPCR Limited Partnership and the figures are stated on a “look-through basis.”
>
1,400
1,200
1,000
800
600
400
200
-
20232024
$m
1,400
1,200
1,000
800
600
400
200
-
$m
Cash
BMS
OptiNose
Akebia
Collegium
LumiraDx
Evolus
Coherus
UroGen
Insmed
Immunocore
ImmunoGen
BioCryst
Cash
BMS
Optinose
Collegium
Evolus
Urogen
Insmed
BioCryst
Novocure
Tarsus
Alphatec
Geron
>
1,400
1,200
1,000
800
600
400
200
-
20232024
$m
1,400
1,200
1,000
800
600
400
200
-
$m
Cash
BMS
OptiNose
Akebia
Collegium
LumiraDx
Evolus
Coherus
UroGen
Insmed
Immunocore
ImmunoGen
BioCryst
Cash
BMS
Optinose
Collegium
Evolus
Urogen
Insmed
BioCryst
Novocure
Tarsus
Alphatec
Geron
Chairman’s Statement
STRATEGIC REPORT
Chairman’s Statement
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
4
INTRODUCTION
2024 marks the seventh full year since the Company’s Initial Public
Offering (“IPO”) on the London Stock Exchange in March 2017. I
am pleased to be able to report on another year of consistent returns
and targets met. During 2024, the Company generated net income
per share of 9.99 cents and paid 10.18cents in dividends, 3cents
above target
1
. The Company continues to offer investors exposure to
an attractive and diversified portfolio of secured loans.
INVESTMENTS
Over the course of 2024, the Company and its subsidiaries committed
a total of $994.1million into seven new transactions. The Company
also saw repayments totaling $750.2 million from Akebia, Coherus,
Immunocore, ImmunoGen and LumiraDx. Along with this, the Company
received $17.4 million in prepayment and make-whole fees. These
repayments helped secure a very attractive rate of return on those
investments and gave the Company the ability to deploy a substantial
amount of capital in new investments.
The Company committed a total of $435 million to four investments:
$35 million to Alphatec, $100 million to Geron, $200 million to
Novocure and $100 million to Tarsus. The Company also refinanced
a total of $369.1 million with three existing borrowers, UroGen,
Collegium, and Insmed; along with funding additional tranches totaling
$190 million to Collegium and Insmed.
The Company funded $731.6 million over the year to Alphatec,
Collegium, Geron, Ismed, Novocure, Tarsus and UroGen and has
additional unfunded commitments with Geron, Novocure and Tarsus
totaling $250 million. Including assets and liabilities from its financing
subsidiary, BPCR Limited Partnership, the Company ended the year
with total net assets of $1,181.7 million, comprising $1,044.5 million of
investments, $168.6 million of cash less $31.4 million of other net liabilities.
The Company and its subsidiaries saw a $381 million increase in cash
due to the repayments of $17.5 million from Akebia, $125 million
from Coherus, $25 million from Immunocore, $37.5 million from
ImmunoGen, and $176 million from LumiraDx; as well as the scheduled
amortisation payments from Collegium of $53.1 million and the BMS
purchased payments of $38 million.
During the year, Pharmakon Advisors, LP, the Company’s investment
manager (“Pharmakon” or the “Investment Manager”) continued to
work diligently in seeking an optimal outcome for the investment in
LumiraDx. From July 2024 through December 2024, the Company
received $176 million from FTI Consulting LLP, acting as the UK
administrator for LumiraDx. This equates to an approximate 96 per
cent. recovery rate of invested capital. Additionally, the Company and
its subsidiaries received their share ownership of LumiraDx’s Colombian
subsidiary, which they will seek to sell.
DCM AND SHARE BUYBACKS
The Board recognises that the share price represents a meaningful
discount to the NAV and together with the manager is considering new
strategies to ameliorate that discount. On 27March 2024, in order to
enable the Company to participate in future investments, the Company
announced a change to its Discount Control Mechanism (“DCM”).
Under the updated DCM, the Company was required to use up to an
additional $50million for the remainder of calendar year 2024, on top
of repurchases made in 2024 up until the DCM update, to repurchase
shares until such time that the discount to NAV over a two-week period
was less than 5 per cent. During 2024, the DCM was triggered, and
STRATEGIC REPORT
1
Past performance is not indicative of future performance.
During 2024, the Company funded
$731.6 million to four new borrowers
and to three existing borrowers. During
this period, the Company generated net
income per share of 9.99 cents, paid
dividends of 10.18 cents relating to the
year 2024, and repurchased 10 per
cent. of shares outstanding at the start of
the year.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
5
$0.000
$0.020
$0.040
$0.060
$0.080
$0.100
$0.120
$0.140
2017 2018 2019 2020 2021 2022 2023 2024
Special Interim
BPCR annualized dividends per share in US$
1
the Company was required to use its capital to repurchase shares. The
Company repurchased 116,622,535 shares, which is 8.5 per cent. of
the total shares of the Company, at an average share price of 91cents.
and a total cost of $106.7million narrowing the discount to NAV from
18percent. to 11 per cent. Please see page29 for a full description of
the current DCM, that will continue until otherwise amended.
SHAREHOLDER RETURNS
1
The Company reported net income return from ordinary activities
after finance costs and before taxation for the yearended 2024 of
$122 million. On 31 December 2024, the Company’s Ordinary
Shares in issue closed at a share price of 88.4 cents, above the closing
price on 31December 2023 of 84.0 cents. Net Asset Value (“NAV”)
per Ordinary Share in issue decreased during the same timeframe by
3 cents from 102.93 cents to 99.63 cents. The Company made three
dividend payments over the calendar year, which related to 2024,
totaling 7.29 cents per share, referencing net income for the three
quarters ending 30 September 2024. This brought the total dividends
paid in 2024 to 14cents per share. The Company was therefore able
to maintain its record of paying a dividend of at least 1.75 cents per
share in every quarter since 30 June 2018.
Following the end of the year, the Company declared a further
dividend in respect of the last quarter of 2024 of 2.89 cents per share
made up of an ordinary dividend of 1.75 cents together with a special
dividend of 1.14 cent that was paid on 28 February 2025. Total
dividends related to 2024 and 2023 results reached 10.18 cents and
10.21 cents per share respectively. The 2024 and 2023 dividends
were covered from profits.
ESG
The Board has supported the Environmental, Social and Governance
(“ESG”) programme of Pharmakon during 2024, with progress made
in further incorporating ESG as part of the investment process. The key
areas are described in more detail on pages 20 to 23.
GEOPOLITICAL STATEMENT
The effects of major geopolitical and social risks, including the invasion
by Russia of Ukraine and the war between Israel and Hamas, may
have economic consequences that extend beyond the short term.
However, the Company does not have any direct investments in Russia,
Ukraine, or Israel. We will continue to monitor the situation and will
inform shareholders of any material changes to this assessment.
PRICING AND REGULATORY OUTLOOK
A significant portion of the revenues from borrowers in the portfolio
come from sales which are reimbursed by various US government
entities that are highly regulated. While we currently do not expect
major changes to how these entities will continue to reimburse for the
cost of these drugs, we cannot predict whether the US administration
will seek to make changes that may affect the sales of these products.
OUTLOOK
The Investment Manager reports a growing pipeline of investment
opportunities as new products and companies enter the market in
2025 and beyond. The Board believes that the Company’s portfolio
of floating and fixed rate loans will continue to offer an attractive
investment proposition for shareholders in a changing interest rate
environment. Following the general meeting on 28December 2023,
the Company announced that shareholders approved the continuation
of the Company’s business as a closed-ended investment trust with
94per cent. of shares voting, in favor.
Under the existing articles of the Company, a Continuation Resolution is
required to be held at the first annual general meeting following the fifth
anniversary of the Company’s IPO and at every third annual general
meeting thereafter. The next Continuation Resolution will be held at the
Annual General Meeting on 9 June 2025.
On behalf of the Board, I should like to express our thanks to Pharmakon
for their continued efforts and achievements on behalf of the Company
in 2024, in particular with regards to the complex process involved in
maximizing the recovery to the Company from the LumiraDx loan, and
to our shareholders for their continued support.
Harry Hyman
Chairman
24 March 2025
1
Past performance is not indicative of future performance.
Investment Manager
STRATEGIC REPORT
Investment Manager
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
6
Pharmakon is pleased to present an update
on the Company’s portfolio and investment
outlook. The Company’s existing portfolio
investments continue to perform well.
New investments, together with multiple repayments, led to total income and net
income from the portfolio during 2024 of $150million and $122million respectively.
1
Pharmakon’s engagement with current and potential counterparties during 2024 resulted
in $994.1million of new investments for the Company.
2
During the second half of 2024,
the Company saw two repayments from Immunocore and LumiraDx, totaling $201million.
Another year of strong investment returns
1
Past performance is not an indication of future performance.
2
New investments figure represents overall commitments inclusive of any unfunded commitments.
3
Reata shown as of the acquisition closing date of 26 September 2023. Past performance is not indicative of future results.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
Dec-08 Dec-11 Dec-14 Dec-17 Dec-20 Dec-23
Realized Gross/Net IRR
Date of Investment
Chart Title
100%
125%
150%
BPCR Investments
Older Investments
Realised Net IRR
Realised Gross IRR
26% (11) > 15.0%
51% (22)
10.0% > <15.0%
23% (22) < 10.0%
UnleveredReturnshavebeenconsistentovertheyears(43RealizedTransactions)
1
141%
3
106%
3
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
7
MARKET ANAYLSIS
The life sciences industry is expected to
continue to have substantial capital needs
during the coming years as the number of
products undergoing clinical trials continues
to grow. All else being equal, companies
seeking to raise capital are generally more
receptive to non-dilutive debt financing
alternatives at times when equity markets
are soft, increasing the number and size of
fixed-income investment opportunities for the
Company, and will be more inclined to issue
equity or convertible bonds at times when
equity markets are strong. A good indicator
of the life sciences equity market is the New
York Stock Exchange Biotechnology Index
(“BTK Index”). While there was substantial
volatility during the period, the BTK index
increased 6percent. during 2024 compared
to 3 per cent. during 2023
3
. Global equity
issuance by life sciences companies during
2024 was $58.2 billion, a 42 per cent.
increase from the $41.1billion issued during
2023
3
. Similarly, convertible bond issuance
by life sciences companies increased to
$9.7 billion in 2024 from $9.7 billion
in 2023
3
. We anticipate 2025 equity
and convertible bond issuance to remain
comparable to 2024 levels which should
continue to support appetite for non-dilutive
debt during the remainder of 2025.
Acquisition financing is an important driver
of capital needs in the life sciences industry
in general and a source of investment
opportunities. An active M&A market helps
drive opportunities for investors such as the
Company, as acquiring companies need
capital to fund acquisitions. Global life
sciences M&A volume during 2024 was
$131.3billion, a 41per cent. decrease from
the $221.9 billion witnessed during 2023
3
,
driven mainly by the volatility in the equity
markets. We are encouraged by the number
of M&A opportunities that are starting to build
up which should lead to a more active market
in the near term.
Pricing and Regulatory Outlook
A significant portion of the revenues from
borrowers in the portfolio come from
sales which are reimbursed by various US
government entities that are highly regulated.
While we currently do not expect major
changes to how these entities will continue
to reimburse for the cost of these drugs, we
cannot predict whether the US administration
will seek to make changes that may affect the
sales of these products.
USD SOFR
The Company has eight loans with coupons
that reference 3-month USD SOFR and one
loan that references 1-month USD SOFR.
Six loans have a 2.5 per cent. SOFR floor
or greater and three have a floor ranging
from 1.0 per cent. to 2.0 per cent. As of
31 December 2024, the 1-month and
3-month SOFR was 4.33 and 4.31per cent.
respectively, significantly above the floors in
the nine loans.
INTERNATIONAL OUTLOOK
The invasion of Ukraine by Russia and the
war between Israel and Hamas has led to
increased market volatility and widespread
sanctions on Russian and Israeli assets and
individuals, contributing to the high inflation
introduced by the pandemic. While the
portfolio has no direct exposure to Russia,
Ukraine, Belarus, or Israel, we remain vigilant
in monitoring this major event closely and will
inform investors of any material changes.
INVESTMENT OUTLOOK
We expect our investment pipeline to grow as
new products and companies enter the market
in 2025 and beyond. Pharmakon’s extensive
network and thorough approach will continue
to identify strong investment opportunities. We
remain focused on our mission of creating the
premier dedicated provider of debt capital
to the life sciences industry while generating
attractive returns and sustainable income to
investors.
Although the global economic outlook remains
uncertain, Pharmakon remains confident of its
ability to deliver its target dividend yield to its
investors.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
8
Geron
On 1 November 2024, the Company
along with the Private Fund also
managed by the Investment
Manager (the “Private Fund”),
entered into a senior secured term
loan agreement for up to $250million
with Geron Corporation (“Geron”)
(Nasdaq: GERN), a commercial-
stage biopharmaceutical company
committed to extending and
enhancing the lives of people living
with blood cancers.
Geron drew down $125 million on
1November 2024 at closing. The Company’s
share of the transaction was $50million, which
was funded at closing by the Company and
its subsidiaries. The remaining two tranches,
of which the Company’s share is $30 million
and $20 million respectively, will be available
through 31 December 2025. The loan has
a coupon of 3-month secured overnight
financing rate (“SOFR”), plus 5.75 per cent.
(subject to a 3 per cent. floor) and a 2.50 per
cent. upfront fee for Tranche A that was paid
at closing. The upfront fees for the remaining
tranches will be payable on their respective
funding dates.
Geron’s telomerase inhibitor Rytelo (imetelstat)
is approved in the United States for the
treatment of certain adult patients with lower-
risk myelodysplastic syndromes (LR-MDS) with
transfusion dependent anemia. Geron is also
conducting a pivotal Phase 3 clinical trial of
imetelstat in JAK-inhibitor relapsed/refractory
myelofibrosis (R/R MF), as well as studies in
other myeloid hematologic malignancies.
Inhibiting telomerase activity, which is
increased in malignant stem and progenitor
cells in the bone marrow, aims to reduce
proliferation and induce death of malignant
cells. Rytelo was launched in the United States
on June 27, 2024.
Investment type: Secured Loan
Date invested: 1 November 2024
Total loan amount: $250m
Company
commitment:
$100m
Maturity: November 2029
Insmed 2024
On 31 October 2024, the Company
along with the Private Fund entered
into an amended and restated
senior term loan agreement for
up to $547 million with Insmed
Incorporated (“Insmed”) (Nasdaq:
INSM), a biopharmaceutical
company focused on treating
patients with serious and rare
pulmonary diseases.
The new loan consisted of a $397 million
initial term loan to refinance in full the existing
term loan and an additional $150 million
tranche. The Company’s share of the new
term loan was $159million. The Company
and its subsidiaries funded its share of the
new tranche totaling $60million at signing on
31October 2024. The loan bears interest at
a fixed rate of 9.60 per cent. per annum with
a 2 per cent. exit fee.
Insmed’s commercial product, Arikayce,
launched in October 2018 and is indicated
for refractory mycobacterium avium complex
(MAC) lung disease. The product is currently
being commercialized in the US, Europe,
and Japan. Insmed is working on developing
and commercializing Brensocatib, an oral
reversible inhibitor of DPP1 for bronchiectasis
and TPIP, a dry powder inhalation formulation
of a treprostinil prodrug for PAH and PH-ILD.
Investment type: Secured Loan
Date invested: 31 October 2024
Total loan amount: $547m
Company
commitment:
$219m
Maturity: September 2029
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
9
Alphatec
On 29 October 2024, the Company
along with the Private Fund entered
into a new investment in the form
of an assignment of $70 million of a
$200 million senior secured loan to
Alphatec Holdings, Inc. (“Alphatec”)
(Nasdaq: ATEC). The assignor,
Braidwell Transaction Holdings LLC
– Series I, will retain the remaining
$130 million. Alphatec is a medical
device company that designs,
develops, and markets spine fusion
products and solutions for the
treatment of spinal disorders.
Alphatec drew down $50million at closing
on 29 October 2024. The Company and
the Private Fund via assignment received
$70 million in total, where $50 million
consisted of the new funds drawn and the
remaining $20 million was from the existing
funded loan. The loan has a coupon of
3-month SOFR plus 5.75per cent., with a
SOFR adjustment of 0.11448per cent. (subject
to a 3 per cent. floor) with a 1percent. upfront
fee that was paid at closing and an exit fee of
3.25percent. of the principal amount of any
repayment or prepayment on such date of
repayment or prepayment.
Alphatec offers intra-operative information
and neuromonitoring technologies, access
systems, interbody implants, fixation systems,
and various biologics offerings.
Investment type: Secured Loan
(via Assignment)
Date invested: 29 October 2024
Total loan amount: $70m
Company
commitment:
$35m
Maturity: January 2028
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
10
Novocure
On 1 May 2024, the Company
along with the Private Fund entered
into a senior secured term loan
agreement for up to $400 million
with a wholly-owned subsidiary
of Novocure Limited (“Novocure”)
(Nasdaq: NVCR), which owns and
commercialises a proprietary plat
-
form technology that uses electric
fields that exert physical forces
to kill cancer cells via a variety of
mechanisms.
Novocure drew down $100 million of the
$400 million loan on 1 May 2024. The
Company’s share was $50 million, which
was funded at closing by the Company and
its subsidiaries. Of the remaining $300million,
$100 million is required to be drawn by
26 September 2025, subject to customary
conditions precedent, and $200 million is
available to be drawn after achieving certain
sales-based milestones. The loan has a
coupon of 3-month SOFR plus 6.25 per cent.
(subject to a 3.25per cent. floor).
Novocure is a global oncology company
that has a proprietary platform technology
called Tumor Treating Fields (“TTFields”),
which are electric fields that exert physical
forces to kill cancer cells via a variety of
mechanisms. Novocure’s product, Optune
Gio, is approved for the treatment of adult
patients with newly diagnosed glioblastoma.
Novocure also has ongoing or completed
trials investigating TTFields in brain metastases,
gastric cancer, GBM, liver cancer, NSCLC,
and pancreatic cancer.
Investment type: Secured Loan
Date invested: 1 May 2024
Total loan amount: $400m
Company
commitment:
$200m
Maturity: May 2029
Collegium 2024
On 28 July 2024, the Company
along with the Private Fund
provided Collegium Pharmaceutical,
Inc. (Nasdaq: COLL), a bio pharma-
ceutical company focused on
developing and commercialising
new medicines for responsible pain
management, with a commitment to
enter into a new senior secured term
loan agreement for $646 million
(“Collegium”).
The new loan consisted of a $320.8million
initial term loan to refinance in full the existing
term loan, of which the Company’s portion
was $160.4 million, and an additional
$325million tranche to finance a portion of
the acquisition of the Ironshore Therapeutics.
The Company and its subsidiaries funded
its share of the second tranche totaling
$130 million on 3 September 2024 to
assist Collegium in the successful closing of
the acquisition of Ironshore Therapeutics.
The five-year loan will have $138 million
in quarterly amortisation payments and the
remaining $152.5 million balance will be due
at maturity. The loan bears interest at 3-month
SOFR plus 4.5 per cent. per annum with a
SOFR adjustment of 0.130805 per cent.
subject to a 4 per cent. floor along with a
one-time additional consideration of 1.25 per
cent. of the loan amount paid upon signing, a
one-time additional consideration of 2.25per
cent. of the loan amount paid at funding and
paydown fees of 2 per cent. on both tranches
is payable at maturity.
Collegium currently markets Xtampza ER,
an abuse-deterrent, extended-release,
oral formulation of oxycodone; Nucynta
(tapentadol), a centrally acting synthetic
analgesic; Belbuca (buprenorphine buccal
film) for the management of severe chronic
pain; and Jornay PM, an extended-release
formulation of methylphenidate for ADHD in
patients 6 years and older.
Investment type: Secured Loan
Date invested: 28 July 2024
Total loan amount: $646m
Company
commitment:
$290m
Maturity: July 2029
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
11
UroGen 2024
On 13 March 2024, the Company
along with the Private Fund entered
into the amended and restated loan
agreement for up to $200million with
UroGen Inc. (“UroGen”) (Nasdaq:
URGN), a biopharmaceutical
company dedicated to creating
novel solutions that treat urothelial
and specialty cancers.
The new loan consists of a $100million initial
term loan, of which the Company’s share was
$50 million, to refinance in full the existing
term loan and additional tranches of up to
$100 million allocated in full to the Private
Fund. The loan will mature in March 2027
and bears interest at 3-month SOFR plus
7.25 per cent. per annum with a SOFR
adjustment of 0.26161per cent. subject to a
2.50per cent. floor.
UroGen markets JELMYTO (mitomycin), a
prescription medicine used to treat adults
with a type of cancer of the lining of the
upper urinary tract including the kidney called
low-grade Upper Tract Urothelial Cancer
(LG-UTUC). From June through October
2024, UroGen reported positive 12-month
duration of response data from the Phase 3
ENVISION pivotal trial evaluating UGN-102
and completed a rolling NDA submission
to the FDA for UGN-102 for the treatment
of
Non-Muscle Invasive Bladder Cancer
(“NMIBC”). On 15 October 2024, the
FDA accepted UroGen’s NDA for UGN-
102 for low-grade intermediate risk NMIBC
and granted a PDUFA target action date of
13June 2025.
Investment type: Secured Loan
Date invested: 13 March 2024
Total loan amount: $200m
Company
commitment:
$50m
Maturity: March 2027
Tarsus
On 19 April 2024, the Company
along with the Private Fund entered
into a senior secured term loan
agreement for up to $200 million
with Tarsus Pharmaceuticals, Inc.
(“Tarsus”) (Nasdaq:TARS). Tarsus is a
biopharmaceutical company focused
on addressing several diseases with
high unmet need across a range of
therapeutic categories, including eye
care, dermatology, and infectious
disease prevention.
Tarsus drew down $75 million at closing on
19 April 2024, of which the Company and
its subsidiaries funded $37.5 million. The
second tranche of $25 million expired on
31December 2024, of which the Company’s
share was $12.5million. The remaining two
tranches of up to $100million, of which the
Company’s share is $50 million, may be
drawn after achieving certain sales-based
milestones. The loan has a coupon of 3-month
SOFR plus 6.75 per cent. (subject to a
3.75per cent. floor).
Tarsus currently markets XDEMVY® (lotilaner
ophthalmic solution), a treatment for Demodex
blepharitis. XDEMVY® was approved in the
US in July 2023. Tarsus also has 3 additional
clinical programs. Its clinical programs are
TP-03 for Meibomian Gland Disease, TP-04
for Rosacea, and TP-05 for the prevention of
Lyme disease, all of which are in Phase 2.
Investment type: Secured Loan
Date invested: 19 April 2024
Total loan amount: $200m
Company
commitment:
$100m
Maturity: April 2029
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
12
Evolus
On 14 December 2021, the Company
along with the Private Fund entered
into a senior secured loan agreement
for up to $125 million with Evolus
Inc. (“Evolus”) (Nasdaq: EOLS), a
biopharmaceutical company that
develops, produces and markets
clinical neurotoxins for aesthetic
treatments.
Evolus drew down $75 million on
29December 2021, of which the Company’s
share was $37.5 million. On 5 December
2022, the Evolus loan was amended to
extend the draw down date for Tranche B in
exchange for a $500,000 amendment fee,
of which 50 per cent. was allocated to the
Company.
On 9 May 2023, the Evolus loan was
amended to allow them to draw Tranche B
in two installments and to allow the principal
payments to be equal quarterly payments
beginning in 2026. The second tranche of
$25 million was funded on 31 May 2023,
of which the Company funded $12.5million.
The final tranche of $25 million was drawn
down on 15December 2023, of which the
Company funded $12.5 million. The loan
bears interest at 3-month SOFR plus 8.5 per
cent. per annum with a 0.17 per cent. SOFR
adjustment subject to a 1 per cent. floor along
with a one-time additional consideration of
2.25per cent. of the total loan amount paid
at funding of the first tranche.
Evolus currently markets Jeuveau
(prabotulinumtoxinA-xvfs), the first and only
neurotoxin dedicated exclusively to aesthetics.
On 31 October 2024, Evolus announced
that it received approval for Estyme injectable
hyaluronic acid (HA) gels in the European
Union.
Investment type: Secured Loan
Date invested: 14 December 2021
Total loan amount: $125m
Company
commitment:
$63m
Maturity: December 2027
BioCryst
On 17 April 2023, the Company
along with the Private Fund entered
into a senior secured term loan
agreement for up to $450 million
with BioCryst Pharmaceuticals Inc.
(“BioCryst”) (Nasdaq: BCRX), a
biopharmaceutical company that
discovers and commercializes novel,
oral, small molecule medicines.
BioCryst drew down $300 million at closing
on 16 April 2023. The Company’s share
of the transaction is $180 million, of which
$120 million was funded at closing. The
commitment for the remaining three tranches
of up to $50 million each expired on
30September 2024. The loan has a coupon
of 3-month SOFR plus 7percent. (subject to
a 1.75 per cent. floor) and up to 50 per cent.
of the interest during the first 18months may
be paid-in-kind (PIK) at a rate of 3-month
SOFR plus 7.25 per cent. BioCryst elected the
option to accrue 50 per cent. of their interest
due from closing through 30 June 2023 as
a payment-in-kind as allowed in the loan
agreement. There was also a 1.75 per cent.
upfront fee on the loan.
BioCryst’s commercial product, Orladeyo,
is indicated to prevent attacks of hereditary
angioedema (HAE) in adults and pediatric
patients 12 years and older. BioCryst also has
one pipeline product for BCX10013, a factor
D inhibitor being studied in atypical hemolytic
uremic syndrome (aHUS), IgA nephropathy
(IgAN), and complement 3 glomerulopathy
(C3G).
Investment type: Secured Loan
Date invested: 17 April 2023
Total loan amount: $450m
Company
commitment:
$180m
Maturity: April 2028
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
13
OptiNose
On 12 September 2019, along with
Company and the Private Fund
entered into a senior secured note
purchase agreement for the issuance
and sale of senior secured notes in an
aggregate original principal amount
of up to $150 million by OptiNose
US, Inc. (“OptiNose”) a wholly
owned subsidiary of OptiNose Inc.
(Nasdaq: OPTN), a commercial stage
specialty pharmaceutical company.
OptiNose drew a total of $130 million in
three tranches from the Company and the
Private Fund: $80 million on 12 September
2019, $30million on 13February 2020 and
$20million on 1December 2020. There are
no additional funding commitments.
The Company and its subsidiaries funded
a total $72 million across all tranches. The
notes’ original maturity was September 2024
and original interest rate was 10.75 per
cent. per annum along with a one-time
additional consideration of 0.75percent. of
the aggregate original principal amount of
senior secured notes and 445,696 warrants
exercisable into common stock of OptiNose
at a strike price of $6.72. Under the first two
amendments to the OptiNose note purchase
agreement, amendments included re-tiered
sales covenants, permission for an equity
issuance, amended amortisation and make-
whole provisions, and the issuance of new
three-year warrants, with the original warrants
being canceled.
On 10 August 2022, the OptiNose note and
purchase agreement was amended resulting
in re-tiered sales covenants in exchange for
an amendment fee of $780,000, payable
upon repayment, of which the Company
was allocated $429,000. On 9 November
2022, OptiNose negotiated certain waivers
in exchange for a waiver fee, of which the
Company earned $715,000 of the total
$1.3 million waiver fee. On 21 November
2022, OptiNose entered into an Amended
and Restated Note Purchase Agreement
(the “A&R NPA”). As part of the A&R NPA,
Pharmakon revised the sales covenants,
amended the amortisation and make-whole,
extended the maturity date to June 2027, and
modified the loan interest from a fixed rate
of 10.75 per cent. to a floating rate equal
to 3-month SOFR plus 8.5 per cent., subject
to a 2.5 per cent. floor, in exchange for an
amendment fee.
From 5 March 2024 through 9 May 2024,
the Company entered into three amendments
with OptiNose. The amendments collectively
waived the no ‘going concern’ requirement
with respect to its financial statements until the
end of the 2025 fiscal year, extended the
make-whole period by 6 months and revised
the sales and minimum liquidity covenants. The
waiver of the no ‘going concern’ requirement
until the end of the 2025 fiscal year and the
revised minimum liquidity covenant were
contingent on a successful equity raise.
OptiNose announced on 9 May 2024
a successful $55 million registered direct
offering. In connection with these amendments,
OptiNose also issued 4.7 million shares in the
aggregate to the Company and Private Fund
in satisfaction of approximately $4.7 million of
outstanding amendment and waiver fees to
the Company and the Private Fund.
On 15 March 2024, the FDA approved
XHANCE (flucticasone propionate) nasal
spray for the treatment of chronic rhinosinusitis
with and without nasal polyps in patients
18years of age or older.
Investment type: Secured Loan
Date invested: 12 September 2019
Total loan amount: $130m
Company
commitment:
$72m
Maturity: June 2027
Bristol-Myers Squibb Company
On 8 December 2017, the Company’s
wholly-owned subsidiary entered
into a purchase, sale and assignment
agreement with a wholly-owned
subsidiary of Royalty Pharma
Investments (“RPI”), an affiliate of
the Investment Manager, for the
purchase of a 50 per cent. Interest
in a stream of payments (the
“Purchased Payments”) acquired
by RPI’s subsidiary from Bristol
Myers Squibb Company (NYSE:
BMY) through a purchase agreement
dated 14 November 2017.
As a result of the arrangements, RPI’s
subsidiary and the Company’s subsidiary are
each entitled to the benefit of 50 per cent.
of the Purchased Payments under identical
economic terms. The Purchased Payments are
linked to tiered worldwide sales of Onglyza
and Farxiga, diabetes agents marketed by
AstraZeneca, and related products. The
Company was expected to fund $140 million
to $165 million during 2018 through 2020,
determined by product sales over that period,
and will receive payments from 2020 through
2025. The Purchased Payments are expected
to generate attractive risk-adjusted returns in
the high single digits per annum.
The Company funded all of the Purchased
Payments based on sales from 1 January
2018 to 31 December 2019 for a total of
$162 million.
Investment type: Purchased Payments
Date invested: 8 December 2017
Total loan amount: $324m
Company
commitment:
$162m
Maturity: March 2026
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
14
REALISED INVESTMENTS
Amount Funded Repayment Date Gross IRR
1
Net IRR
2
Prepayment and
Make‑whole Fees
Immunocore 25.0 0 8/11/2 0 24 14.6% 10.9% 1.0
Insmed 2022 140.0 31/10/2024 14.7% 11. 0 % –
UroGen 2022 50.0 13/03/2024 14.5% 10.9% –
Collegium 2022 325.0 28/07/2024 14.1% 10.5% –
Akebia (Total) 50.0 11. 4% 8.5% 12.9
Akebia 10.0 15/07/2022 11. 3% 8.5% 12.8
Akebia 40.0 29/01/2024 11. 4 % 8.5% 0.1
ImmunoGen 62.5 12/02/2024 60.2% 45.2% 13.2
Coherus (Total) 125.0 16.7% 12.5% 5.4
Coherus 87. 5 01/04/2024 16.6% 12.5% 3.1
Coherus 37. 5 08/05/2024 16.8% 12.6% 2.3
LumiraDx (Total) 176.0 -0.5% -0.4% –
LumiraDx 120.7 31/07/2024 0.4% 0.3% –
LumiraDx 20.1 31/07/2024 -21.9% -16.4% –
LumiraDx 35.2 31/07/2024 5.4% 4.0% –
Reata 62.5 05/09/2024 141. 4% 106.1% 15.5
Immunocore
On 8 November 2022, the Company along
with the Private Fund entered into a senior
secured loan agreement for up to $100million
with Immunocore Limited (“Immunocore”)
(Nasdaq: IMCR), a biopharmaceutical
company focused on developing a novel
class of TCR bispecific immunotherapies
designed to treat a broad range of diseases,
including cancer, infectious diseases and
autoimmune diseases. The Company and
its subsidiaries funded $25 million of the
first tranche of $50 million on 8 November
2022. The remaining $50million Tranche B
commitment, of which the Company’s share
was $25 million, expired without being
drawn. On 30June 2024, Immunocore paid
$625,000 to the Company in additional
consideration on the expiration of Tranche B.
Tranche A was due to mature in November
2028 and bore interest at 9.75 per cent. per
annum along with an additional consideration
of 2.50 per cent. paid at funding. On
8November 2024, Immunocore repaid the
remaining $25 million of the balance that
was due to amortise to the Company and the
Company received $1.1 million in accrued
interest and prepayment fees. The Company
and its subsidiaries earned a 14.6percent.
gross internal rate of return
1
and 10.9percent
net internal rate of return
2
on its Immunocore
investment.
Insmed 2022
On 19 October 2022, the Company along
with the Private Fund entered into a senior
secured loan agreement for $350 million
with Insmed Incorporated (“Insmed 2022”)
(Nasdaq: INSM), a biopharmaceutical
company focused on treating patients with
serious and rare diseases. The Company
and its subsidiaries funded $140 million of
the $350million loan on 19 October 2022.
Insmed had elected the option to accrue
50per cent. of their interest due from closing
through 30 September 2024 as a payment-
in-kind as allowed in the loan agreement. The
loan was due to mature in October 2027
and bore interest at a rate based upon the
3-month SOFR, plus 7.75 per cent. per annum
subject to a SOFR floor of 2.50 per cent.
with a one-time additional consideration of
2 percent. of the total loan amount paid at
funding. On 31 October 2024, the Insmed
loan was refinanced in full. The Company
and its subsidiaries earned a 14.7 per cent.
gross internal rate of return
1
and 11.0 per cent
net internal rate of return
2
on its Insmed 2022
investment.
UroGen 2022
On 7 March 2022, the Company along with
the Private Fund entered into a senior secured
loan agreement for up to $100 million with
UroGen Pharma, Inc. (“UroGen 2022”)
(Nasdaq: URGN), a biopharmaceutical
company dedicated to creating novel
solutions that treat urothelial and specialty
cancers. UroGen drew down $75 million
at closing and the remaining $25 million on
16 December 2022. The Company and its
subsidiaries funded $50 million across the
two tranches. The loan was due to mature in
March 2027 and bore interest at 3-month
LIBOR plus 8.25 per cent. per annum subject
to a 1.25 per cent. floor along with a one-
time additional consideration of 1.75 per
cent. of the total loan amount paid at funding
of the first tranche. On 29 June 2023, the
Company and the Private Fund entered into
an amendment which modified the loan
interest rate to 3-month SOFR plus 8.25 per
cent and an additional per annum rate of
0.26161per cent. On 13 March 2024, the
UroGen loan was refinanced in full as noted
above. The Company and its subsidiaries
earned a 14.5percent. gross internal rate of
return
1
and 10.9percent net internal rate of
return
2
on its UroGen 2022 investment.
Collegium 2022
On 14 February 2022, the Company along
with the Private Fund provided Collegium
Pharmaceutical, Inc. (“Collegium 2022”)
(Nasdaq: COLL), a biopharmaceutical
company focused on developing and
commercialising new medicines for
responsible pain management, with a
commitment to enter into a new senior secured
term loan agreement for $650million. On
22March 2022, proceeds from the new loan
were used to fund Collegium’s acquisition
of BDSI as well as repay the outstanding
debt of Collegium and BDSI. At closing,
the Company and its subsidiaries invested
$325 million in a single drawing. The four-
year loan would have had $100 million in
amortisation payments during the first year
and the remaining $550 million balance
would have amortised in equal quarterly
installments. The loan was due to mature in
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
15
March 2026 and bore interest at 3-month
LIBOR plus 7.50 per cent. per annum subject
to a 1.20 per cent. floor along with a one-time
additional consideration of 2percent. of the
loan amount paid upon signing and a one-
time additional consideration of 1 per cent. of
the loan amount paid at funding. On 23 June
2023, the Company and the Private Fund
entered into an amendment which modified
the loan interest rate to 3-month SOFR plus
7.50 per cent. with a SOFR adjustment
of 0.26161 per cent. On 28 July 2024,
the Company along with the Private Fund
refinanced the Collegium 2022 loan in full
and as noted above to, among other things,
modify the amortisation of the then outstanding
balance of $320.8million, provide a second
tranche of up to $325 million to be drawn
upon the closing of an acquisition (40 per
cent. of that to be invested by the Company)
and modify the terms reducing the coupon to
3-month SOFR plus 4.50 per cent. per annum
subject to a SOFR floor of 4.00 per cent.
The Company and its subsidiaries earned a
14.1 per cent. gross internal rate of return
1
and 10.5 per cent net internal rate of return
2
on its Collegium 2022 investment.
Akebia
On 11 November 2019, the Company
along with the Private Fund entered into a
senior secured term loan agreement for up to
$100 million with Akebia Therapeutics, Inc.
(“Akebia”) (Nasdaq: AKBA), a fully integrated
biopharmaceutical company focused on
the development and commercialisation of
therapeutics for people living with kidney
disease. Akebia drew down $80 million at
closing and an additional $20 million on
10 December 2020. The Company and its
subsidiaries funded $50 million across both
tranches. The loan was due to mature in
November 2024 and bore interest at LIBOR
plus 7.5 per cent. per annum along with a one-
time additional consideration of 2 per cent. of
the total loan amount paid at funding. The
Akebia loan began amortising in September
2022. On 15 July 2022, the Akebia loan
was amended to provide Akebia with certain
waivers. As a result of this amendment, Akebia
made a $25 million pre-payment, of which
$12.5million went to the Company, as well
as a 2per cent. prepayment fee. On 30June
2023, the Company and the Private Fund
entered into an amendment which modified
the loan interest rate to 3-month SOFR plus
7.50 per cent. On 31 October 2023,
the Akebia loan was amended to extend
the maturity of the senior secured loan to
31 March 2025, delayed the payment of
additional principal until 31 October 2024
and if certain pre-specified events occurred,
required Akebia to make payments of
principal commencing on the original maturity
date through the new extended maturity date
and repay all unpaid principal that would
have been due or payable on or after 1July
2024. On29 January 2024, Akebia prepaid
its remaining $17.5 million of the balance that
was due to amortise to the Company and the
Company received $87,500 in prepayment
fees. The Company and its subsidiaries
earned a 11.4 per cent. gross internal rate of
return
1
and 8.5 per cent net internal rate of
return
2
on its Akebia investment.
ImmunoGen
On 6 April 2023, the Company along
with the Private Fund entered into a senior
secured loan agreement with ImmunoGen,
Inc. (“ImmunoGen”) for up to $125 million.
ImmunoGen drew down $75 million at
closing on 6 April 2023. The Company
and its subsidiaries funded $37.5 million.
The loan would have matured in April 2028
and bore interest at SOFR plus 8 per cent.
(subject to a 2.75 per cent. floor), with an
additional consideration of 2 per cent. of
the total loan amount paid at funding to the
Company. On 30November 2023, AbbVie
announced it had entered into a agreement
to acquire ImmunoGen, Inc. The ImmunoGen
investment was marked up by $10.7 million
as of 31December 2023 to account for the
discounted value of the expected prepayment
and the make-whole fees. The ImmunoGen
repayment was accompanied by prepayment
and make-whole fees totaling $13.1million.
On 12 February 2024, ImmunoGen repaid
its remaining $37.5 million balance to the
Company and the Company received
$13.2 million of accrued interest, additional
consideration, and prepayment and make
whole fees. The Company and its subsidiaries
earned a 60.2percent. gross internal rate of
return
1
and 45.1percent net internal rate of
return
2
on its ImmunoGen investment.
Coherus
On 5January 2022, the Company along with
the Private Fund entered into a senior secured
loan agreement for up to $300 million with
Coherus BioSciences, Inc. (“Coherus”), a
biopharmaceutical company building a
leading immunooncology franchise funded
with cash generated by its commercial
biosimilars business. The Company and its
subsidiaries funded $125 million across the
first three tranches. The loan was due to mature
in January 2027 and bore interest at 3-month
SOFR plus 8.25 per cent. per annum subject
to a 1 per cent. floor along with a one-time
additional consideration of 2 per cent. of the
total loan amount paid at funding of the first
tranche. On 6 February 2023, the Coherus
loan was amended to allow for a short term
waiver to the sales covenant, as well switching
the LIBOR component of the loan coupon
to SOFR. On 19 January 2024, Coherus
announced that it had entered into a Purchase
and Sales Agreement with Sandoz Inc. (the
“Purchase Agreement”). On 5 February
2024, Coherus announced that it had entered
into a Consent, Partial Release and Third
Amendment to the Coherus loan agreement,
under which certain subsidiaries and assets of
Coherus were released in connection with the
Purchase Agreement. Further, Coherus was
permitted to make a partial prepayment of
the principal of the loans outstanding under
the Coherus loan agreement in the amount
of $175 million of the outstanding principal
balance of $250 million, and the minimum
net sales covenant was adjusted. On 1April
2024, Coherus prepaid $87.5 million of its
balance to the Company and the Company
received $3.1 million of accrued interest,
additional consideration, and prepayment
and make-whole fees. On 10 May 2024,
Coherus repaid its remaining $37.5 million
balance to the Company and the Company
received $2.3 million of accrued interest
and prepayment and make-whole fees.
The Company and its subsidiaries earned a
16.7 per cent. gross internal rate of return
1
and 12.5percent net internal rate of return
2
on its Coherus investment.
Reata
On 5May 2023, the Company along with
the Private Fund, entered into a senior secured
term loan agreement for up to $275million
with Reata Pharmaceuticals Inc. (“Reata”)
originally due to mature in May 2028. Tranche
A of $75 million was funded at closing.
Tranche B of $50 million and Tranche C
of $75 million were due to be drawn after
achieving certain performance-based
milestones, and Tranche D of $75 million
was originally due to be available at the
Company’s discretion after achieving certain
sales-based milestones. The loan had a
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16
coupon of 3-month SOFR plus 7.50percent.
(subject to a 2.50percent. floor). There was
also a 2 per cent. upfront fee upon each
draw. The interest only period for the loan was
for 3years but could have been extended to
4 years if trailing twelve month sales were
greater than $250 million. The Company’s
share of the transaction was $137.5million,
of which $37.5million was funded at closing.
On 10 July 2023, the Company funded
Tranche B of the Reata loan for $25million.
On 28 July 2023, Inc. (“Biogen”) Biogen
announced an agreement pursuant to which
Biogen would acquire Reata for an enterprise
value of approximately $7.3 billion. The
acquisition closed on 29 September 2023.
As of the acquisition closing date, the
Company received prepayments, including
$15.5million in prepayment and make-whole
fees.
LumiraDx
On 23 March 2021, the Company along
with the Private Fund entered into a senior
secured loan agreement with LumiraDx for
$300million. The loan would have matured
in March 2024, had interest at 3-month
SOFR plus 8 per cent. with the ability to
PIK anything above 8 per cent., and an
additional consideration of 2.5 per cent. of
the total loan amount and 9per cent. of the
total loan amount payable upon repayment.
The Private Fund’s Lender’s allocation of the
transaction was $150 million. From 24 July
2023 to 9 November 2023, the Company
and the Private Fund funded $53 million
of additional tranches to LumiraDx. On
29 December 2023, LumiraDx announced
the appointment of joint administrators for
two of its subsidiaries, and Roche Diagnostics
Limited (“Roche”) announced that it would
acquire LumiraDx group’s point-of-care
diagnostics platform business and certain
related assets for $295 million. On 29 July
2024, FTI Consulting LLP (“FTI”), as the UK
administrator for LumiraDx, made an initial
payment to the Company and the Private Fund
of $330.6 million, of which $165.3 million
was received by the Company. On
31October 2024, FTI returned $9.2million
to the Company and $9.2million to the Private
Fund which included the agreed holdback
amount under the Roche Sales and Purchase
Agreement. With the addition of cash interest
received from LumiraDx as of the end of Q3
2024, this equated to an approximate 96per
cent. recovery rate of invested capital by
the Company and the Private Fund. At the
end of 2024, the Company and the Private
Fund received LumiraDx’s share ownership of
LumiraDx’s Colombian subsidiary, which it is
seeking to sell.
Pedro Gonzalez de Cosio
Co-founder and CEO, Pharmakon
24 March 2025
1
Gross IRR is set forth in the Glossary, refer to page 94. Past performance is not an indication of future performance.
2
Net IRR is set forth in the Glossary, refer to page 94. Past performance is not an indication of future performance.
3
Source: FactSet
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Case Studies
1
The following pages are Case Studies of
two new investments the Company entered
into during the second half of 2024. We
are proud that these investments help to
bring new life sciences products to market
and help patients globally.
1
Case studies are presented for illustrative purposes only, have been selected in order to provide examples of the types of investments made by the Company and do not purport to be a
complete list thereof. It should not be assumed that investments made in the future will be comparable in quality or performance to the investments described herein. Certain information
in the case studies is based on the Company’s and the Investment Manager’s due diligence at the time of investment, and/or analysis and opinions of the Company, the Investment
Manager and/or the borrower regarding economic conditions and borrower initiatives, plans and opportunities. References to the investments included in the case studies should not
be construed as a recommendation of any particular investment or security. See pages 8-13 for a complete list of current investments by the Company.
Case Study ‒ Alphatec
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
STRATEGIC REPORT
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flip the patient during lateral surgery from their side to their
stomach for posterior fusion.
Alphatec’s key products include: InVictus, a spinal fixation
system; IndentiTi, porous titanium interbody implants; PTP &
LTP, Novel minimally invasive prone and lateral transpsoas
surgical approaches that utilize adjustable patient positioners
and SafeOp SSEP neuromonitoring that reduce procedure
time vs traditional lateral surgery; EOS, Imaging system that
generates 3D models of a patients skeleton with automatic
measurements for procedure planning and better alignment;
Valence, table-mounted robotic navigation systems that
guides instrumentation and implants during surgery; and
Biologics, human derived bone graft for fusions.
Alphatec is a medical device company dedicated to
revolutionizing the approach to spine surgery through
clinical distinction.
Alphatec offers intra-operative information and
neuromonitoring technologies, access systems, interbody
implants, fixation systems, and various biologics offerings.
The company work closely with physicians to develop
new technology and as a result launched 8-10 new
products per year since 2018. Alphatec leads the market
in the development of prone transpsoas (PTP) surgery which
increases procedure efficiency by removing the need to
ALPHATEC
Source: Alphatec
Case Study ‒ Geron
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
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treatment in some of the most difficult-to-treat patient groups,
including those with the highest transfusion burden and those
with high levels of endogenous erythropoietin
Rytelo was approved by the FDA on 6June 2024.
Geron is also conducting a pivotal Phase 3 clinical trial of
imetelstat in JAK-inhibitor relapsed/refractory myelofibrosis
(r/r MF), as well as studies in other myeloid hematologic
malignancies. Inhibiting telomerase activity, which is increased
in malignant stem and progenitor cells in the bone marrow,
aims to reduce proliferation and induce death of malignant
cells.
Geron is a commercial‑stage biopharmaceutical
company committed to extending and enhancing the
lives of people living with blood cancers.
Geron’s first-in-class oligonucleotide telomerase inhibitor
Rytelo (imetelstat) is approved in the US for the treatment of adult
patients with transfusion-dependent lower-risk myelodysplastic
syndrome (LR-MDS) who have not responded to or have lost
response to or are ineligible for erythropoiesis-stimulating
agents (ESAs). Anemia is the primary symptom impacting
quality of life for virtually all patients with LR-MDS. Rytelo
(imetelstat) showed impressive efficacy and duration of
GERON
Source: Geron
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ESG
INTRODUCTION
Founded in 2009, Pharmakon Advisors, LP is the investment manager of
the BioPharma Credit funds, investment funds that provide debt capital
to companies in the life sciences. We are proud that a large portion of
our past and current investments help to fund clinical trials and research
that benefit patients suffering from a wide variety of serious diseases,
including various forms of cancer and orphan diseases including but
not limited to Pompe, Fabry, Cushings, Duchenne Muscular Dystrophy,
Sickle Cell, Friedreich’s Ataxia, and Bronchiectasis. We help increase
the number of life sciences products available to patients globally.
Based in New York, Pharmakon has a small but diverse and highly
specialized team of thirteen professionals focused on responsibly
investing and safeguarding the capital of our clients. As debt investors
we believe that consideration of the material ESG factors applicable
to our industry is critical to our credit underwriting process. Systematic
integration of these considerations combined with our engagement
activities helps us reduce the overall credit risk of our portfolios and
enhances our analysis. We provide competitively priced capital to a
growing number of emerging life sciences companies on the forefront
of developing lifesaving and lifechanging therapies to improve human
health.
The purpose of this policy is to
set out Pharmakon’s approach
to integrating the consideration
of environmental, social, and
governance (“ESG”) risks and
value creation opportunities
into investments made through
our credit facilities with
companies and within our
own business operations.
1
Pharmakon’s ESG
Policy
1
Any ESG or impact, targets, programs, commitments, incentives, initiatives, or benefits referenced on the following pages are not being promoted to investors and do not bind any
investment decisions or the management or stewardship of any funds managed by the Investment Manager for the purpose of Regulation (EU) 2019/2088 on sustainability-related
disclosures in the financial services sector unless otherwise specified in the relevant fund documentation or regulatory disclosures. Any measures implemented in respect of such
targets, programs, commitments, incentives, initiatives, or benefits may not be immediately applicable to the investment of any funds managed by the Investment Manager and any
implementation can be reconsidered at the Investment Manager’s sole discretion.
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$1.6 Bn
in R&D invested by our
current partners during 2024
51%
of the portfolio backed
by treatments for orphan diseases
as at 31 December 2024
$9.5Bn
committed since 2009
as at 31 December 2024
$2.5Bn
assets under management
as at 31 December 2024
89
clinical trials being funded
by our partners
as at 31 December 2024
Pharmakon further recognizes that ESG issues may affect
performance of portfolio investments and, furthermore, that the
effective management of ESG issues may contribute positively to
returns through alignment of interests of fund investors, the general
partner, portfolio company management teams, employees, and
other key stakeholders.
Pharmakon strives to consider material ESG issues during its due
diligence and in the monitoring of portfolio investments to the extent
reasonably practical under the circumstances. It does this subject to
the provisions of the credit agreements, and to the duty of Pharmakon
to seek to maximize the returns on investment for BioPharma Credit
funds.
SCOPE (WHAT DOES ESG MEAN TO PHARMAKON?)
For the purposes of this policy, “material” ESG issues are defined
as those issues that Pharmakon, in its sole discretion, determines
have or have the potential to have a direct substantial impact on an
organization’s ability to create, preserve, or enhance economic value,
as well as environmental and social value for itself and its stakeholders.
The policy is intended to reflect our general framework for managing
ESG issues through the lifecycle of an investment across Pharmakon’s
investment management business. As a debt investor Pharmakon is
generally limited in its ability to influence its portfolio companies. In
cases where Pharmakon determines it has limited ability to conduct
diligence or to influence and control the consideration of ESG issues
in connection with an investment, Pharmakon will only apply those
elements of this policy that it determines to be practicable.
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Examples of material issues are those that involve violations of human
rights, irresponsible treatment of the natural environment or other non-
ethical business conduct. More specifically, and as of the date of
approval of this policy, Pharmakon currently focuses on the following
factors within our definition of ESG:
Environmental
• GHG Emissions
• Green Building Standards
• Handling Hazardous Materials
• Waste Creation & Management
• Responsible Vendor Management
Social
• Labour Practices
• Patient Impact
• Cyber Security
• Employee Engagement
• Diversity
• Job Growth and Turnover
• Supporting Communities and Research
Governance
• Risk Management
• IP Protection
• Compliance with Regulatory Standards (i.e., FDA)
• Board
• Purpose & Affiliations
Pharmakon’s approach to ESG will be adjusted according to the
needs and expectations of its stakeholders. Although we currently
align ourselves with certain environmental and social concerns we
will modify and improve upon our focus to maximise the needs and
expectations of our stakeholders with the aim of creating long-term
stakeholder value and drive toward impactful results. Pharmakon is
conscious that the ultimate success of our ESG initiative will depend on
periodic reviews to ensure adherence and seek ways to continuously
make improvements. We believe that all employees are stakeholders
in the success of Pharmakon’s ESG initiative and should be actively
engaged in its design and compliance.
We are grateful to the Principles for Responsible Investing (PRI) and
the United Nations Department of Economic and Social Affairs.
Our policies and operational ESG strategy have been developed
with their principles in mind and continues to be influenced by their
guidance.
• PRI’s Six Core Principles
• 17 Sustainable Development Goals (“SDGs”)—United Nations
Department of Economic and Social Affairs
In addition, Pharmakon is a signatory to the New Commitment
to Patients signed in January 2020 by 215 biopharma CEOs and
industry leaders who recognize that (a) “we have a moral obligation
to develop the best medicines and ensure that every person who may
benefit has access to them” and (b) “that we need to ensure that we
act with the highest integrity and corporate responsibility—always
putting the interests of patients first”. The full text can be found at:
https://www.statnews.com/2020/01/08/new-biotechnology-
pharmaceutical-industry-commitment-patients-public/
Pharmakon is also a corporate sponsor for Life Science Cares, which
is an organization that was founded in 2016 by a consortium of life
science executives which strives to leverage the financial and human
capital of the life sciences industry, and partners with nonprofits, to
disrupt the cycle of poverty and inequality in communities. More
information can be found at:
https://lifesciencecares.org/.
We believe that our environmental, social and governance strategy,
policies and practices will create sustainable long-term value for our
Company, our employees, our investors and other stakeholders, while
also helping us reduce risk and identify new opportunities.
HIGHLIGHTS OF OUR ESG EFFORTS
• ESG-informed investment processes
• Contributions to multiple SDGs
• Focus on human capital and Diversity, Equity and Inclusion (DEI)
• Commitment to philanthropy
• Independent board and fund advisory committee
• Plans to reduce environmental footprint
DELIVERING FOR PARTNERS, PATIENTS, AND SOCIETY
By delivering value for our partners and their patients, we contribute
positively to multiple SDGs, including those that focus on expanding
health access and opportunity. While our work touches many SDGs,
we focus on those where we can have the greatest impact based
on our business, strategy and expertise. More specifically, those
are SDG-3 on Good Health and Well-Being; SDG-9 on Industry,
Innovation, and Infrastructure; SDG-10 on Reduced Inequality; and
SDG-17 on Partnerships for the Goals.
PHARMAKON’S COMMITMENT TO ESG
Pharmakon on behalf of itself, its employees, and its clients, is
committed to the consideration of ESG issues in connection with its
investment activities.
THE ROLE ESG PLAYS IN PHARMAKON’S OWN
OPERATIONS ENVIRONMENT
Pharmakon is focused on reducing its environmental footprint. Though
the majority of Pharmakon’s direct impact on the environment comes
from daily office-based activities, we are dedicated to protecting the
planet. Pharmakon supports sustainable business practices, and we
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hope to build an internal sustainability program as we prioritise our
own local footprint.
Pharmakon aims to engage all of its employees in managing the
environmental impact of our business. Employees will regularly be
encouraged to participate in environmental awareness, training
and initiatives, including unrestricted access to this ESG policy.
Environmental considerations are also incorporated across our partner
network. For investment, environmental criteria are reviewed in the due
diligence process when appropriate. Pharmakon also seeks to partner
with organisations that promote strong environmental practices.
Appendix II (Environmental Policy) of this policy contains expanded
detail on the environmental policy for internal operations.
Social
The people and culture of Pharmakon are the primary factor in our
success. We strive to continually support the health, well-being,
and growth of our employees. To build a high-performing, diverse
team, we seek to foster an inclusive environment that stays true to
our core values – even as we continue to grow. Pharmakon strives
to maintain and strengthen our social and human capital policies
and practices. This includes attracting, retaining, and developing top
talent and fostering a highly engaged, team-oriented culture with an
owner operator mindset. Our commitment to social responsibility also
includes promoting diversity, equity, and inclusion, as well as engaging
and developing our employees. Pharmakon keeps track of its efforts
to promote diversity, equity, and inclusion, including an annual review
by the CEO during meetings of the ESG committee, and Pharmakon
highlights the importance of such factors when working with any
professional recruiters as it grows its team. Pharmakon will strive to
maintain and adhere to our Diversity & Inclusion Policy, Employee
Handbook, and Human Rights Statement. Additionally, Pharmakon
aims to transform patient lives globally through supporting various
communities. We support our communities through philanthropy, such
as by being a sponsor for Life Science Cares, by engaging on critical
health and social needs to promote access to health care and health
equity because we believe everyone should have the opportunity
to attain their highest level of health. Pharmakon also supports
the development of young students by providing internships and
mentorship to college age individuals who are interested in learning
about investing in the life sciences.
Governance
Risk management, compliance and high ethical standards are
foundational to our culture. One of Pharmakon’s most valuable assets
is our reputation for integrity, professionalism, fairness and good
stewardship. Our strong corporate governance program, from board
and advisory committee oversight to robust management practices,
aligns the interests of our stakeholders and underpins our market-
leading position and the high esteem with which we are held in the
life sciences industry.
Governance Highlights
• BioPharma Credit PLC has a 100% independent board
• Executive-level oversight of ESG
• CEO led Investment Manager ESG committee responsible for ESG
strategy and disclosure
• ESG committee meets on no less than a quarterly basis
• 100% of employees participate in ESG related strategy and imple-
mentation
• Robust governance policies and practices
• Culture of compliance and accountability
• Additional ethical safeguards include our whistleblower policy
• 100% of employees receive and are expected to sign the Employee
Handbook
• 100% of employees participate in compliance and ethics training,
and cybersecurity training
• 100% of employees and investors have access to grievance chan-
nels
Pharmakon will make commercially reasonable efforts to remain
reasonably informed on ESG best practices and the development of
ESG. Pharmakon will aim to review the ESG policy on an annual basis.
DIVERSITY AND INCLUSION
We believe that we will only succeed in our goals if we are able
to attract and retain individuals of diverse backgrounds. Our success
relies on creating an inclusive environment where all of our employees
can do their best work, and where each can play a vital role in
achieving our collective goals. Pharmakon is committed to working
to continuously develop an organization that is diverse, equitable
and inclusive. Our goal is to provide every team member with the
ability to achieve success within an equitable work environment and
to encourage our teams to leverage diversity to drive innovation
and performance. The current makeup of our employee base is
representative of our commitment to diversity:
Current employees: 13
Any other ethnic group 53.8%
White 30.8%
Asian or Asian British 15.4%
% Male 84.6%
% Female 15.4%
Average tenure 4 years
12-month turnover 7. 7 %
Pharmakon is conscious that the ultimate success of our ESG initiative
will depend on periodic review to ensure adherence and seek ways
to continuously make improvement. We believe that all employees
are stakeholders in the success of Pharmakon’s ESG initiative and
should be actively engaged in its design and compliance.
Strategic Overview
Strategic Overview
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
STRATEGIC REPORT
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INVESTMENT OBJECTIVE
The Company aims to generate long-term Shareholder returns, predominantly in the form of sustainable income distributions from exposure to the
life sciences industry.
INVESTMENT POLICY
The Company will seek to achieve its investment objective predominantly through direct or indirect exposure to Debt Assets, which include Royalty
Investments, Senior Secured Debt, Unsecured Debt and Credit Linked Notes.
THE COMPANY MAY ACQUIRE DEBT ASSETS:
y Directly from the entity issuing the Debt Asset (a “Borrower”), which may be: (i) a company operating in the life sciences industry (a “LifeSci
Company”); or (ii) an entity other than a LifeSci Company which directly or indirectly holds an interest in royalty rights to certain products,
including any investment vehicle or special purpose vehicle (“Royalty Owner”);
y Or in the secondary market.
The Company may also invest in equity issued by a LifeSci Company, acquired directly from the LifeSci Company or in the secondary market.
“Debt Assets” will typically comprise:
y Royalty debt instruments
Debt issued by a Royalty Owner where the Royalty Owner’s obligations in relation to the Debt are secured as to repayment of principal and
payment of interest by Royalty Collateral.
y Priority royalty tranches
Contract with a Borrower that provides the Company with the right to receive payment of all or a fixed percentage of the future royalty
payments receivable in respect of a Product (or Products) that would otherwise belong to the Borrower up to a fixed monetary amount or a
pre-set rate of return, with such royalty payment being secured by Royalty Collateral in respect of that Product (or Products).
y Senior secured debt
Debt issued by a LifeSci Company, and which is secured as to repayment of principal and payment of interest by a first priority charge over
some or all of such LifeSci Company’s assets, which may include: (i) Royalty Collateral; or (ii) other intellectual property and marketing rights
to the Products of that LifeSci Company.
y Unsecured debt
Debt issued by a LifeSci Company which is not secured or is secured by a second lien on assets of the Borrower.
y Credit linked notes
Derivative instruments referencing Debt Assets, being a synthetic obligation between the Company and another party where the repayment of
principal and/or the payment of interest is based on the performance of the obligations under the underlying Debt Assets.
“Royalty Collateral” means, with respect to a Debt Asset, (i) future payments receivable by the Borrower on a Product (or Products) in the form
of royalty payments or other revenue sharing arrangements; or (ii) future distributions receivable by the Borrower based on royalty payments
generated from a Product (or Products); or (iii) both (i) and (ii)“Debt” includes loans, notes, bonds and other debt instruments and securities,
including convertible debt, and Priority Royalty Tranches.
Borrowers will predominantly be domiciled in the US, Europe and Japan, though the Company may also acquire Debt Assets issued by Borrowers
in other jurisdictions.
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25
INVESTMENT RESTRICTIONS AND PORTFOLIO DIVERSIFICATION
The Company will seek to create a diversified portfolio of investments by investing across a range of different forms of Debt Assets issued by a
variety of Borrowers. In particular, the Company will observe the following restrictions when making investments in accordance with its investment
policy:
y no more than 25 per cent. of the Company’s gross assets will be exposed to any single Borrower or investment;
y no more than 35 per cent. of the Company’s gross assets will be invested in Unsecured Debt;
y no more than 15 per cent. of the Company’s gross assets will be invested in equity securities issued by LifeSci Companies; and
y the Company will invest no more than 10 per cent., in aggregate, of gross asset value at the time of acquisition in other listed closed‐ended
investment funds.
Each of these investment restrictions will be calculated at the time of each proposed investment. In the event that any of the above limits are
breached at any point after the relevant investment has been made (for instance, as a result of any movements in the value of the Company’s total
assets), there will be no requirement to sell any investment (in whole or in part).
CASH MANAGEMENT
The Company’s uninvested capital may be invested in cash instruments or bank deposits for cash management purposes.
HEDGING
The Company does not propose to enter into any hedging or other derivative arrangements other than as may from time to time be considered
appropriate for the purposes of efficient portfolio management. The Company will not enter into such arrangements for investment purposes.
BUSINESS AND STATUS OF THE COMPANY
The Company is registered in England as a public limited company and is an investment company in accordance with the provisions of Section833
of the Companies Act 2006.
The principal activity of the Company is to carry on business as an investment trust. The Company intends at all times to conduct its affairs so as
to enable it to qualify as an investment trust for the purposes of Sections 1158/1159 of the Corporation Tax Act 2010 (‘S1158/1159”). The
Directors do not envisage any change in this activity in the foreseeable future.
The Company has been granted approval from HM Revenue & Customs (‘HMRC”) as an investment trust under S1158/1159 and will continue
to be treated as an investment trust company, subject to there being no serious breaches of the conditions for approval. The Directors are of the
opinion that the Company has conducted its affairs for the year ended 31 December 2024 so as to be able to continue to qualify as an investment
trust.
The Company has two wholly-owned subsidiaries, BPCR Limited Partnership and BPCR GP Limited, one indirectly wholly-owned subsidiary, BPCR
Ongdapa Limited received its 41 per cent. share ownership of LumiraDx Colombia Holdings Limited (“UK Holdco”), via its subsidiary BPCR
Limited Partnership, details of which can be found in Note 14 to the financial statements.
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26
STAKEHOLDER ENGAGEMENT – SECTION 172(1) STATEMENT
OVERVIEW
The Directors’ overarching duty is to promote the success of the Company for the benefit of its shareholders, having regard to the interests of its
stakeholders, as set out in section 172(1) of the Companies Act 2006 (the “Act”). The Directors have considered each aspect of this section of
the Act and consider that the information set out below is particularly relevant in the context of the Company’s business as an externally managed
investment company which does not have any employees or suppliers.
The importance of stakeholders is taken into account at every Board meeting. All discussions involve careful consideration of the longer-term
consequences of any decisions and their implications for stakeholders.
STAKEHOLDERS
The Board seeks to understand the needs and priorities of the Company’s stakeholders and these are taken into account during all its discussions
and as part of its decision-making. The Board believes that the Company’s key stakeholders comprise its shareholders, clients and service
providers. The section below discusses why these stakeholders are considered of importance to the Company and the actions taken to ensure
that their interests are taken into account. The Company recognises the importance of maintaining high standards of business conduct and seeks
to ensure that these are applied in all of its business dealings and in its engagement with stakeholders. Further information on the impact of the
Company’s operations on the community and the environment is set out on page 37.
The Company’s mechanisms for engaging with its stakeholders are set out below. These are kept under review by the Directors and are discussed
on a regular basis at Board meetings to ensure that they remain effective. The Company is an investment trust and has no employees. It has
therefore not identified employees as a stakeholder group.
For more information on the purpose, culture and values of the Company, and the processes which the Board has put in place to ensure these, see
the Corporate Governance Statement on page44.
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SHAREHOLDERS
Importance
Continued shareholder support and
engagement are critical to the existence of
the Company and the delivery of its long-term
strategy and engagement with shareholders is
given a high priority by both the Board and
the Investment Manager.
How the Company engages
The Chairman ensures that the Board as a
whole has a clear understanding of the views
of shareholders by receiving regular updates
from the Brokers and Investment Manager.
The Investment Manager and the Company’s
Brokers are in regular contact with major
shareholders and report the results of all
meetings and the views of those shareholders
to the Board on a regular basis. The
Investment Manager provides regular investor
updates and presentations to shareholders.
The Chairman and the other Directors are
available to attend these meetings with
shareholders if required. Relations with
shareholders are also considered as part
of the annual Board performance review
process. For further details regarding this
process see page47.
All shareholders are encouraged to attend
and vote at annual general meetings
(“AGM”), during which the Board and the
Investment Manager will be available to
discuss issues affecting the Company and
answer any questions. Further information
regarding the AGM is detailed on page43.
Shareholders wishing to raise questions or
concerns directly with the Chairman, Senior
Independent Director or Company Secretary,
outside of the AGM, should do so using the
contact details provided on page 97. The
Chairman of the Board, Harry Hyman and
the Independent Senor Director of the Board,
Duncan Budge consulted with shareholders
ahead of the 9 June 2024 AGM regarding
the proposed change to the DCM.
Although the Company has been established
with an indefinite life, the Articles provide that
a continuation vote be put to shareholders
periodically. The next continuation vote will be
put to shareholders in 2025.
CLIENTS
Importance
The investments made by the Company
support the large capital needs of its portfolio
companies, supporting their research and
development budgets for life sciences
products and enabling them to achieve their
investment objective.
How the Company engages
The Company’s clients are pharmaceutical
and biotechnology companies within the
life sciences industry to which it provides
debt capital. The Investment Manager is
highly experienced in this area with a strong
track record of meeting the capital needs of
its clients. The Investment Manager meets
regularly with the management teams of
current and prospective investee companies
to enhance relationships and to understand
their views and capital requirements.
The Directors receive updates from the
Investment Manager on the companies within
its investment portfolio at all Board meetings,
and outside of meetings as appropriate.
Further information on the Company’s
engagement with investee companies during
the year is set out on pages6 to 16.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
28
SERVICE PROVIDERS
Importance
In order to function as an investment trust on
the London Stock Exchange, the Company
relies on a number of reputable advisers for
support in complying with all relevant legal
and regulatory obligations.
How the Company engages
The Company’s day-to-day operational
functions are delegated to a number of
third-party service providers, each engaged
under separate contracts. The Company’s
principal service providers include the
Investment Manager, Company Secretary,
Joint Brokers, Administrator, Legal Adviser,
Auditor and the Registrar.
The Board keeps the ongoing performance
of the Investment Manager under continual
review and conducts an annual appraisal
of the Investment Manager, along with
the performance of all other third-party
service providers in December each year.
The Investment Manager has executed the
investment strategy according to the Board’s
expectations and it is the opinion of the
Directors that the continuing appointment of
Pharmakon, as the Investment Manager, is in
the interests of shareholders as a whole.
The Audit and Risk Committee reviews and
evaluates the control environments in place at
each service provider. Further details regarding
the role of the Audit and Risk Committee are
set out on pages49 to 50.
Further information about the review of service
providers and the culture of the Investment
Manager is set out on page45.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
29
KEY PERFORMANCE INDICATORS
The Company assesses its performance in meeting its investment objectives using the following Key Performance Indicators (“KPIs”):
NAV PERFORMANCE
1
The NAV at 31 December 2024 was $0.9963 per Share, compared to $1.0293 per Share at 31 December 2023, giving a return for the
calendar year of -3.2 per cent.
A full description of the Company’s performance for the year ended 31 December 2024 is included in the Investment Manager’s Report on
pages6 to 16.
SHARE PRICE RETURN
1
The Company’s Share price at 31 December 2024 was $0.8840, compared to $0.8400 at 31 December 2023, giving a return for the
calendar year of 5.2 per cent.
SHARE PRICE DISCOUNT/PREMIUM TO NAV PER SHARE
Under the terms of the Discount Control Mechanism (“DCM”), described in the Company’s Prospectuses dated 1 March 2017 and 14 March
2018, if the shares of the Company trade at a discount greater than 5 per cent. over a three-month period (the “First Trigger”), the Company was
required to apply up to 50 per cent. of proceeds from debt repayments in purchasing Company shares until such time that the two-week discount
is less than 1 per cent. In addition, if the discount is greater than 10 per cent. over a six-month period (the “Second Trigger”), the Company was
required to apply up to 100 per cent. of proceeds from debt repayments until such time that the two-week discount is less than 1 per cent. If the
Company’s shares trade at a discount in excess of 10 per cent. to the net asset value per share over a 12 month rolling period, a general meeting
and continuation resolution under the DCM is triggered.
On 7 November 2022, the DCM was updated so that the trigger levels remain at previous levels but provide for greater flexibility as to when the
Company can freely deploy capital:
• The First Trigger would remain at a 5 per cent. discount to NAV and the Company would be required to apply 50 per cent. of the principal
being returned to repurchase shares until such time that the discount to NAV over a two-week period is less than 5 per cent. (compared with
less than 1 per cent. previously).
• The Second Trigger would remain at a 10 per cent discount to NAV and the Company would be required to apply 100 per cent. of
the principal being returned to repurchase shares until such time that the discount to NAV over a two-week period is less than 5 per cent.
(compared with less than 1 per cent. previously).
• On 27 March 2024, the DCM was updated, in order to enable the Company to participate in future deals. Under the updated DCM, the
Company was required to use up to an additional $50 million for the remainder of calendar year 2024, on top of repurchases made in
2024 up until the DCM update, to repurchase shares until such time that the discount to NAV over a two-week period is less than 5 per cent.
During 2024, the DCM was triggered, and the Company was required to use its capital to repurchase shares. For the calender year 2025,
the Company may use $50 million to buy back shares.
ONGOING CHARGES
The Company’s ongoing charges ratio is shown in the table below.
Year ended
31December
2024
%
Year ended
31December
2023
%
Ongoing charges excluding performance fee
1
1.2 1.1
Performance fee 1.1 0.9
Ongoing charges including performance fee 2.3 2.0
1
Ongoing charges are the Company’s expenses (excluding performance fees) expressed as a percentage of its average monthly net assets and follow the AIC recommended
methodology.
DIVIDENDS
Dividend payments totaling 10.18 cents per Ordinary Share, including two special dividends totaling 3.18 cents have been paid in respect to the
year ended 31 December 2024. A dividend was paid in respect of the last quarter of 2024 totaling 2.89 cents per Ordinary Share, including a
special of 1.14 cents on 28 February 2025. Dividends totaling 14.00 cents per Ordinary Share, including one special dividend of 5.25 cents,
were paid during the year ended 31 December 2024.
2
2
Past performance is not an indication of future performance.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
30
RISK MANAGEMENT AND THE INTERNAL CONTROL ENVIRONMENT
The role of the Board
A formal risk identification and assessment process has been adopted by the Company resulting in a risk framework document which summarises
the key risks and their mitigation.
The Board undertakes a formal risk review with the assistance of the Audit and Risk Committee at least twice a year in order to robustly assess
the effectiveness of the Company’s risk management and internal control systems. During the course of its review in respect of the year ended
31December 2024, the Board has not identified, nor been advised of any failings or weaknesses which it has determined to be of a material
nature. The principal risks and uncertainties which the Company faces are set out below.
Principal risks and uncertainties
The Board of Directors has overall responsibility for risk management and internal control of the Company. The Board recognises that risk is
inherent in the operation of the Company and that effective risk management is key to the success of the organisation. The Board has delegated
responsibility for the assurance of the risk management process and the review of mitigating controls to the Audit and Risk Committee.
The principal risks and the Company’s policies for managing these risks are set out below and the policy and practice with regard to financial
instruments are summarised in Note 16 to the financial statements.
There were no changes to these risks in the current year or at the date of this report.
The recent events surrounding the LumiraDx investment help illustrate some of the risks and mitigants described below. LumiraDx faced financial
difficulties that exposed the Company to counterparty risk as it became clear that the Company would be unable to recover the full principal and
fees owed. However, the positive attributes of the collateral and the investment manager’s diligent efforts so far resulted in a 96per cent. recovery
rate to the Company, with the remaining LumiraDx Colombia holding expecting to be sold. The Company being able to ultimately recover a
significant portion of its investment.
Risk Description and mitigation
Failure to achieve target
returns
The target returns are targets only and are based on financial projections that are themselves based on
assumptions regarding market conditions, economic environment, availability of investment opportunities
and investment-specific assumptions that may not be consistent with conditions in the future.
The Company seeks to achieve its investment objective predominantly through direct or indirect
exposure to debt assets. Debt assets typically comprise royalty debt instruments, priority royalty
tranches, senior secured debt, unsecured debt and credit-linked notes. A variety of factors, including
lack of attractive investment opportunities, defaults and prepayments under debt assets, inability of the
Company to obtain debt at an appropriate rate, changes in the life sciences industry, exchange rates,
government regulations, the non-performance (or underperformance) of any life sciences product (or
any life sciences company) could adversely impact the Company’s ability to achieve its investment
objective and deliver the target returns. A failure by the Company to achieve its target returns could
adversely impact the value of the Shares and lead to a loss of investment.
The Company has an investment policy to achieve a balanced investment with a diversified asset base
and has investment restrictions in place to limit exposure to potential risk factors. These factors enable
the Company to build a diversified portfolio that should deliver returns that are in line with its stated
target return.
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BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
31
The success of the Company
depends on the ability and
expertise of the Investment
Manager
In accordance with the Investment Management Agreement, the Investment Manager is responsible for
the investment management of the Company’s assets. The Company does not have its own employees
and all of its Directors are appointed on a non-executive basis. All investment and asset management
decisions are made by the Investment Manager (or any delegates thereof) and not by the Company
or the Directors and, accordingly, the Company is completely reliant upon, and its success depends
on, the Investment Manager and its personnel, services and resources. The Investment Manager is
required, under the terms of the Investment Management Agreement, to perform in accordance with
the Service Standard. The Investment Manager does not submit individual investment decisions to the
Board for approval and the Board does not supervise the due diligence performed by the Investment
Manager. As part of its asset management decisions, the Investment Manager may from time to time
make commitments for future investments for which the Company may need to raise funds in the future
by issuing equity and/or debt or by selling all or part of other investments to raise liquidity.
The Company is entitled to terminate the Investment Management Agreement if the Investment Manager
has (i) committed fraud, gross negligence or wilful misconduct in the performance of its obligations
under the Investment Management Agreement, or (ii) breached its obligations under the Investment
Management Agreement, and the Company is reasonably likely to suffer a loss arising directly or
indirectly out of or in connection with such breach of an amount equal to or greater than 10 per cent. of
the NAV as at the date of the breach. The Investment Management Agreement may also be terminated
at the Company’s discretion on not less than six months’ notice to the Investment Manager.
Under the terms of the Investment Management Agreement, the Investment Manager is only liable
to the Company (and will only lose its indemnity) if it has committed fraud, gross negligence or wilful
misconduct or acted in bad faith, or knowingly violated applicable securities’ laws. The performance
of the Company is dependent on the diligence, skill and judgement of certain key individuals at the
Investment Manager, including Pedro Gonzalez de Cosio and other senior investment professionals
and the information and investments’ pipeline generated through their business development efforts.
On the occurrence of a Key Person Event (as defined in the Investment Management Agreement), the
Company may be entitled to terminate the Investment Management Agreement with immediate effect
(subject to the Investment Manager’s right to find an appropriate replacement to be approved by the
Board (such approval not to be unreasonably withheld or delayed) within 180 days)).
However, if the Company elects to exercise this right, it would be required to pay the Investment
Manager a termination fee equal to either 1 per cent. or 2 per cent. of the invested NAV (depending
on the reason for the Key Person Event), as at the date of such termination. If the Company elects not to
exercise this right, the precise impact of a Key Person Event on the ability of the Company to achieve its
investment objective and target returns cannot be determined and would depend inter alia on the ability
of the Investment Manager to recruit individuals of similar experience, expertise and calibre. There can
be no guarantee that the Investment Manager would be able to do so and this could adversely affect
the ability of the Company to meet its investment objective and target returns and may adversely affect
the NAV and Shareholder returns and result in a substantial loss of a Shareholder’s investment.
The Investment Manager has extensive expertise and a track record of successfully investing in debt and
other cash flows backed by life sciences products. The Investment Management Agreement provides
attractive incentives for the Investment Manager to perform prudently and in the best interests of the
Company. In addition, the Investment Manager and its affiliates own approximately 2 per cent. of the
Company as at 31 December 2024, creating a strong alignment of interests between the Investment
Manager and its affiliates and Shareholders of the Company.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
32
The Company may from time
to time commit to make future
investments that exceed its
current liquidity
From time to time, the Company may commit to make future investments for which the Company
will need to raise funds by issuing equity and/or debt, or by selling all or part of other investments.
Investment opportunities may require the Company to fund transactions in two or more tranches, with
the later tranches to be funded six or more months in the future. Refusing to offer such later tranches
would decrease the attractiveness of the Company’s investment proposals and harm the Company’s
ability to successfully deploy its capital. Requiring the Company to maintain low-yielding cash balances
sufficient to fund all such later tranches at the time of the initial commitment would decrease the average
yield on the Company’s assets, adversely impacting the returns to investors, and may also result in
missed investment opportunities. However, in order to fund all such later tranches, the Company could
be forced to issue debt, sell assets or renegotiate with the party to which it has committed the funding
on unattractive terms. Furthermore, there can be no assurance that the Company will always be able
to raise sufficient liquidity (by issuing equity and/or debt, or by selling investments) to meet its funding
commitments. If the Company were to fail to meet its funding commitments, the Company could be
in breach of its contractual obligations, which could adversely affect the Company’s reputation,
could result in the Company facing legal action from its counterparty, and could adversely affect the
Company’s financial results.
The Investment Manager believes that the risks associated with such unfunded commitment is
manageable without undue risk. The Investment Manager has extensive expertise in raising debt
secured by cash flows from life sciences products and has extensive relationships with banks and
other financial institutions who can be called on to provide debt financing to the Company in order to
raise liquidity. In addition, the Investment Manager has expertise purchasing and selling life sciences
debt assets in the secondary market and has extensive relationships with the major participants in the
life-sciences debt market who would be the likely purchasers of any assets offered for sale by the
Company in order to raise liquidity.
As at 31 December 2024, the risk associated with unfunded commitments is manageable.
The Investment Manager’s
ability to source and advise
appropriately on investments
Returns on the shareholders’ investments will depend upon the Investment Manager’s ability to source
and make successful investments on behalf of the Company. There can be no assurance that the
Investment Manager will be able to do so on an ongoing basis. Many investment decisions of the
Investment Manager will depend upon the ability of its employees and agents to obtain relevant
information. There can be no guarantee that such information will be available or, if available, can
be obtained by the Investment Manager and its employees and agents. Furthermore, the Investment
Manager will often be required to make investment decisions without complete information or in
reliance upon information provided by third parties that is impossible or impracticable to verify. For
example, the Investment Manager may not have access to records regarding the complaints received
regarding a given life science product or the results of research and development related to products.
Furthermore, the Company may have to compete for attractive investments with other public or private
entities, or persons, some or all of which may have more capital and resources than the Company.
These entities may invest in potential investments before the Company is able to do so or their offers
may drive up the prices of potential investments, thereby potentially lowering returns and, in some cases,
rendering them unsuitable for the Company. An inability to source investments would have a material
adverse effect on the Company’s profitability, its ability to achieve its target returns and the value of
the Shares.
The Investment Manager believes that sourcing investments is one of its competitive advantages. The
Investment Manager’s professionals, together with those at its affiliate RP Management LLC, accessible
through the Shared Services Agreement, have complementary scientific, medical, licensing, operating,
structuring and financial backgrounds which the Investment Manager believes provide a competitive
advantage in sourcing, evaluating, executing and managing credit investments in the life sciences
industry.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
33
There can be no assurance
that the Board will be able to
find a replacement investment
manager if the Investment
Manager resigns
Under the terms of the Investment Management Agreement, the Investment Management Agreement
may be terminated by: (A) the Investment Manager on not less than six months’ notice to the Company,
such notice not to expire earlier than 18 months following Admission; or (B) the Company on not less
than six months’ notice to the Investment Manager, such notice not to expire earlier than: (i) 36 months
following Admission, unless approved by Shareholders by ordinary resolution; and (ii) 18 months
following Admission, in any event. The Board would, in these circumstances, have to find a replacement
investment manager for the Company and there can be no assurance that a replacement with the
necessary skills and experience would be available and/or could be appointed on terms acceptable
to the Company. In this event, the Board may have to formulate and put forward to Shareholders
proposals for the future of the Company which may include its merger with another investment company,
reconstruction or winding up. It is possible that, following the termination of the Investment Manager’s
appointment, the Investment Manager will continue to have a role in the investment management of
certain assets, where a debt asset is shared with one or more other entity managed by the Investment
Manager that continue to retain the Investment Manager’s services.
In the event the Investment Manager resigns, the Board will put forward to Shareholders proposals
for the future of the Company which may include its merger with another investment company,
reconstruction or winding up. Entities affiliated with the Investment Manager own approximately
2percent. of the Company as at 31 December 2024. This affiliate ownership level, coupled with the
fact that the Investment Manager is fairly compensated, provide further incentive for them to remain as
Investment Manager to the Company.
Concentration in the
Company’s portfolio may
affect the Company’s ability
to achieve its investment
objective
The Company’s published investment policy allows the Company to invest up to 25 per cent. of the
Company’s assets in a single debt asset or in debt assets issued to a single borrower. While the
investment limits in the investment policy have been set keeping in mind the debt capital requirements
of the life sciences industry and the investment opportunities available to the Investment Manager, it
is possible that the Company’s portfolio may be significantly concentrated at any given point in time.
Concentration in the Company’s portfolio may increase certain risks to which the Company is subject,
some or all of which may be related to events outside the Company’s control. These would include risks
around the creditworthiness of the relevant borrower, the nature of the debt asset and of any life sciences
product(s) in question. The occurrence of these situations may result in greater volatility in the Company’s
investments and, consequently, its NAV, and may materially and adversely affect the performance
of the Company and the Company’s returns to shareholders. Such increased concentration of the
Company’s assets could also result in greater losses to the Company in adverse market conditions than
would have been the case with a less concentrated portfolio, and have a material adverse effect on
the Company’s financial condition, business, prospects and results of operations and, consequently, the
Company’s NAV and/or the market price of the Shares.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
34
Life sciences products are
subject to intense competition
and various other risks
The biopharmaceutical and pharmaceutical industries are highly competitive and rapidly evolving. The
length of any life sciences product’s commercial life cannot be predicted. There can be no assurance
that the life sciences products will not be rendered obsolete or non-competitive by new products or
improvements made to existing products, either by the current marketer of the life sciences products or
by another marketer. Adverse competition, obsolescence or governmental and regulatory life sciences
policy changes could significantly impact royalty revenues of life sciences products which serve as
the collateral or other security for the repayment of obligations outstanding under the Company’s
investments. If a life sciences product is rendered obsolete or non-competitive by new products or
improvements on existing products or governmental or regulatory action, such developments could
have a material adverse effect on the ability of the borrower under the relevant debt asset to make
payment of interest on, and repayments of the principal of, that debt asset, and consequently could
adversely affect the Company’s performance. If additional side effects or complications are discovered
with respect to a life sciences product, and such life sciences product’s market acceptance is impacted
or it is withdrawn from the market, continuing payments of interest on, and repayment of the principal
of, that debt asset may not be made on time or at all. It is possible that over time side effects or
complications from one or more of the life sciences products could be discovered, and, if such a side
effect or complication posed a serious safety concern, a life sciences product could be withdrawn from
the market, which could adversely affect the ability of the borrower under the relevant debt asset to
make continuing payments of interest on, and repayment of the principal of, that debt asset, in which
case the Company’s ability to make distributions to investors may be materially and adversely affected.
Furthermore, if an additional side effect or complication is discovered that does not pose a serious
safety concern, it could nevertheless negatively impact market acceptance and therefore result
in decreased net sales of one or more of the life sciences products, which could adversely affect
the ability of borrowers under the relevant debt asset(s) to make continuing payments of interest on,
and repayment of the principal of, that debt asset(s), in which case the Company’s ability to make
distributions to investors may be materially and adversely affected.
The Investment Manager engages in a thorough diligence process before entering into any debt
instrument with the counterparty and interacts with each counterparty as needed to evaluate the status
of its investment on an ongoing basis.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
35
Investments in debt obligations
are subject to credit and
interest rate risks
Debt instruments are subject to credit and interest rate risks. Credit risk refers to the likelihood that the
borrower will default in the payment of principal and/or interest on an instrument. Financial strength and
solvency of a borrower are the primary factors influencing credit risk. In addition, lack or inadequacy of
collateral or credit enhancement for a debt asset may affect its credit risk. Credit risk may change over
the life of an instrument. Interest rate risk refers to the risks associated with market changes in interest
rates. Interest rate changes may affect the value of a debt asset indirectly (especially in the case of
fixed rate debt assets) and directly (especially in the case of debt assets whose rates are adjustable). In
general, rising interest rates will negatively impact the price of a fixed rate debt asset and falling interest
rates will have a positive effect on price. Adjustable rate instruments also react to interest rate changes
in a similar manner although generally to a lesser degree (depending, however, on the characteristics
of the reset terms, including the index chosen, frequency of reset and reset caps or floors, among
other factors). Interest rate sensitivity is generally more pronounced and less predictable in instruments
with uncertain payment or prepayment schedules. In addition, interest rate increases generally will
increase the interest carrying costs to the Company (or any entity through which the Company invests)
of leveraged investments.
The Company will often seek to be a secured lender for each Debt Asset. However, there is no
guarantee that the relevant borrower will repay the loan or that the collateral will be sufficient to satisfy
the amount owed under the relevant Debt Asset. Credit risk will be assessed on an ongoing basis along
with interest rate risk, and is further mitigated by the Company’s investment policy permitting up to no
worse than 25 per cent. of the Company’s assets to be invested in a single Debt Asset or in Debt Assets
issued to a single borrower. Interest rate risk can be managed in a variety of ways, including with the
use of derivatives.
Counterparty risk The Company intends to hold debt assets that will generate an interest payment. There is no guarantee
that any borrower will honour their obligations. The default or insolvency of such borrowers may
substantially affect the Company’s business, financial condition, results of operations, the NAV and
Shareholder returns.
The Company will often seek to be a secured lender for each Debt Asset. However, there is no
guarantee that the collateral will be sufficient to satisfy the amount owed under the relevant Debt Asset.
Sales of life sciences products
are subject to regulatory
actions that could harm the
Company’s ability to make
distributions to investors
There can be no assurance that any regulatory approvals for indications granted to one or more life
sciences products will not be subsequently revoked or restricted. Such revocation or restriction may
have a material adverse effect on the sales of such products and on the ability of borrowers under the
relevant Debt Asset to make continuing payments of interest on, and repayment of the principal of, that
Debt Asset, in which case the Company’s ability to make distributions to investors may be materially and
adversely affected. Changes in legislation are monitored with the use of third-party legal advisers and
the Investment Manager will maintain awareness of new approvals or revoked approvals.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
36
Net asset values published will
be estimates only and may
differ materially from actual
results
Generally, there will be no readily available market for a significant number of the Company’s
investments and hence, the majority of the Company’s investments are not valued based on market-
observable inputs.
The valuations used to calculate the NAV on a monthly basis will be based on the Investment Manager’s
unaudited estimated fair market values of the Company’s investments. It should be noted any such
estimates may vary (in some cases materially) from the results published in the Company’s financial
statements (as the figures are published at different times) and that they, and any NAV figure published,
may vary (in some cases materially) from realised or realisable values.
The Investment Manager sends valuations on a monthly basis to the administrator for calculation of
the NAV. The NAV is prepared by the administrator on the basis of information received from the
Investment Manager and, once finalised, is reviewed and approved by a representative of the
Investment Manager. Once approved, the Investment Manager notifies the Board and the NAV is
released to the market.
Changes in taxation legislation
or practice may adversely
affect the Company and the
tax treatment for Shareholders
investing in the Company
Any change in the Company’s tax status, or in taxation legislation or practice in the UK, US or elsewhere,
could affect the value of the Company’s investments and the Company’s ability to achieve its investment
objective, or alter the post-tax returns to Shareholders. It is the intention of the Directors to conduct the
affairs of the Company so as to satisfy the conditions for approval of the Company by HMRC as an
investment trust under section 1158 of the Corporation Tax Act 2010 (as amended) and pursuant
to regulations made under Section 1159 of the Corporation Tax Act 2010. However, although the
approval has been obtained, neither the Investment Manager nor the Directors can guarantee that
this approval will be maintained at all times. The Company has been granted approval from HMRC
as an investment trust and will continue to have investment trust status in each subsequent accounting
period, unless the Company fails to meet the requirements to maintain investment trust status, pursuant
to the regulations. For example, it is not possible to guarantee that the Company will remain a non-
close company, which is a requirement to maintain investment trust status, as the Shares are freely
transferable. Failure to maintain investment trust status could, as a result, (inter alia) lead to the Company
being subject to UK tax on its chargeable gains. Existing and potential investors should consult their
tax advisers with respect to their particular tax situations and the tax effects of an investment in the
Company.
STRATEGIC REPORT
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
37
GOING CONCERN
The Directors consider that it is appropriate to adopt the going concern basis in preparing the financial statements. After making enquiries, and
bearing in mind the nature of the Company’s business and assets, the Directors consider that the Company has adequate resources to continue
in operational existence for the foreseeable future. In arriving at this conclusion, the Directors have considered the liquidity of the portfolio and
the Company’s ability to meet obligations as they fall due for a period of at least 12 months from the date that these financial statements were
approved. The next Continuation Resolution will be held at the Annual General Meeting on 9 June 2025.
VIABILITY STATEMENT
The Board has assessed the principal risks facing the Company over a five-year period, including those that would threaten its business model, future
performance, solvency or liquidity. The five-year period was selected to align with the average duration of the Company’s existing investments. The
Board has developed a matrix of risks facing the Company and has put in place certain investment restrictions which are in line with the Company’s
investment objective and policy in order to mitigate these risks as far as practicable. The principal risks which have been identified, and the steps
taken by the Board to mitigate these risks, are presented on pages30 to 36.
The Company believes its borrowing capabilities provide further flexibility and help ensure it is in a position to finance its funding obligations in the
event that internally generated cash flow in the period is insufficient to finance the unfunded portion of a lending commitment. The Board reviews
the Company’s financing arrangements quarterly to ensure that the Company is in a strong position to fund all outstanding commitments on existing
investments as well as being able to finance new investments. In addition, the Board regularly reviews the prospects for the Company’s portfolio
and the pipeline of potential investment opportunities which provide comfort that the Company is able to continue to finance its activities for the
medium-term future.
Based on this assessment, the Directors have 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-year period.
ENVIRONMENTAL, HUMAN RIGHTS, EMPLOYEE, SOCIAL AND COMMUNITY ISSUES
The Board recognises the requirement under the Companies Act 2006 to detail information about employees, human rights, environmental
and community issues, including information about any policies it has in relation to these matters and the effectiveness of these policies. These
requirements do not apply directly to the Company as it has no employees, all the Directors are non-executive and it has outsourced all its functions
to third-party service providers. The Company has therefore not reported further in respect of these provisions.
While the Company is not within the scope of the Modern Slavery Act 2015 and it is not, therefore, obliged to make a slavery and human
trafficking statement, the Company considers its supply chains to be of low risk as its principal service providers are the professional advisers set out
in the Corporate Information section on page96. Further information on the Company’s anti-bribery and corruption policy is set out on page43.
There are six Directors, four male and two female. Further information on the composition and operation of the Board is detailed on pages40 to
48.
This Strategic Report has been approved by the Board and signed on its behalf by
Harry Hyman
Chairman
24 March 2025
38
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
GOVERNANCE
39
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
GOVERNANCE
40
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
BOARD OF DIRECTORS
DUNCAN
BUDGE
Senior
Independent
Director
Duncan Budge is
a non-executive
director of Lowland
Investment
Company Plc and Asset Value Investors Limited.
He was previously the Chairman of Dunedin
Enterprise Investment Trust plc and Artemis Alpha
Trust plc, and a director of Menhaden Resource
Efficiency plc from 2014 to 2023, J. Rothschild
Capital Management from 1988 to 2012 and a
director and chief operating officer of RIT Capital
Partners plc from 1995 to 2011. After graduating
from the University of Oxford, he spent six years
with Lazard Brothers.
Mr Budge was appointed as a Director of the
Company on 24 October 2016 and as Senior
Independent Director on 16 September 2020.
STEPHANIE
LÉOUZON
Director
Stephanie Léouzon
has had over
30 years experience
as a Health Care
Investment Banker,
and is a Managing
Director and Vice Chair of European Healthcare
Investment Banking at Stifel. She has worked on
over 100 strategic and financing transactions in
the biopharmaceutical industry, with an aggregate
value of over $75 billion. Mrs Léouzon joined
Torreya (a Stifel company) in 2011. Previously,
she was a Managing Director and Senior Adviser
at Credit Suisse in London. She has also worked
at Salomon Brothers, as a Director of healthcare
investment banking, and as a Vice President in the
investment banking divisions of JP Morgan and
Lehman Brothers in New York. She was previously
a non-executive director of Innmunovaccine Inc
and Endotis Pharma SA.
Mrs Leouzon was appointed as a Director of the
Company on 5 December 2018.
SAPNA
SHAH
Director
Sapna Shah has over
20 years of investment
banking experience
advising international
companies, including
listed REITs and
investment companies, on mergers and
acquisitions, IPOs and equity capital market
transactions. Ms Shah is the senior independent
director of Supermarket Income REIT plc and
chair of its nominations committee, a non-
executive director of BlackRock Greater Europe
Investment Trust plc, and a non-executive director
and member of the remuneration committee
of The Association of Investment Companies
(“AIC”). She is a Senior Adviser at Panmure
Liberum and prior to this held senior investment
banking roles at UBS AG, Oriel Securities (now
Stifel Nicolaus Europe) and Cenkos Securities.
She has previously served on the advisory
committee for a private solar energy company.
Ms Shah was appointed as a Director of the
Company on 22 March 2023.
ROLF
SODERSTROM
Director
Rolf Soderstrom is
an Executive Partner
and former Chief
Financial Officer at
Syncona Investment
Management Limited and External Independent
Director of Nxera Pharma, which is listed on the
Tokyo Stock Exchange. His previous roles include
Chief Financial Officer of BTG PLC between
2008 and 2018 where he helped implement
and execute a transformational growth strategy
culminating in a sale to Boston Scientific for
$4.2bn. Prior to this he was Chief Financial
Officer at Protherics PLC and held senior finance
roles in Cobham PLC, Cable & Wireless PLC
and PwC. He received a BA honours degree in
History from University College London and is a
member of the Institute of Chartered Accountants
of England and Wales.
Mr Soderstrom was appointed as a Director of
the Company on 16 September 2020.
COLIN
BOND
Chairman of the
Audit and Risk
Committee
Colin Bond was
the Chief Financial
Officer of the
pharmaceutical
company Sandoz AG until the end of June 2024.
He was previously chief financial officer of Vifor
Pharma from 2016 to 2022 and he was the
chief financial officer of Evotec AG from 2010
to 2016. During his early career, he worked as a
pharmacist, auditor, and management consultant
for Procter & Gamble, Arthur Andersen, and
PricewaterhouseCoopers LLP, respectively. He
holds a university degree in Pharmacy from the
University of Aston (Birmingham) and an M.B.A.
degree from London Business School. He is a
fellow of the Institute of Chartered Accountants in
England and Wales and a member of the Royal
Pharmaceutical Society. Mr Bond is a citizen of
Great Britain and Switzerland.
Mr Bond was appointed as a Director of the
Company on 15 November 2016. Mr Bond will
hold his position until the first half of 2026 and
the Board is currently exploring alternatives for his
replacement.
HARRY
HYMAN
Chairman
Harry Hyman is
the founder and
the non-executive
Chair of Primary
Health Properties
PLC (“PHP”), a
FTSE 250 Index company that specialises in the
ownership of property leased on a long-term
basis to healthcare providers. After graduating
from Christ’s College Cambridge, Mr Hyman
qualified as a chartered accountant with Price
Waterhouse. In 1983 he joined Baltic PLC
where he was deputy managing director,
finance director and company secretary. He left
to establish PHP and Nexus in February 1994.
Mr  yman is the founder of The International
Opera Awards. He has been a non-executive
director of a number of listed investment trusts.
Mr Hyman was appointed as a Director
of the Company on 27 February 2017
and as Chairman of the Company on
16 September 2020.
All Directors in office at the date of this report are
non-executive and independent of the Investment Manager
GOVERNANCE
41
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
DIRECTORS’ REPORT
The Directors are pleased to present the Annual Report and audited
financial statements for the year ended 31 December 2024.
DIRECTORS
The Directors of the Company who were in office during the year
and up to the date of signing the financial statements are shown on
page40.
SHARE CAPITAL
An allotment authority for the issuance of up to 123,752,687ordinary
or C shares was passed at the Company’s Annual General Meeting
held on 12 June 2024. This authority will expire at the conclusion of,
and renewal will be sought at, the annual general meeting to be held
on 9 June 2025. No shares were issued during the year.
At the Annual General Meeting held on 12 June 2024, the Company
was granted authority to purchase up to 14.99 percent of the
Company’s Ordinary Share capital in issue at that date, amounting
to 185,505,277 Ordinary Shares in issue. This authority will expire at
the conclusion of, and renewal will be sought at, the Annual General
Meeting to be held in June 2025. No shares were purchased for
cancellation during the year.
As set out in the Chairman’s Statement on page5, during the year,
the Company’s discount control mechanism was triggered and the
Company was required to use its capital to repurchase shares. During
2024, 116,622,535 shares of $0.01 were bought back at a total
cost of $105,955,422 and are held in treasury. This represented
8.40per cent. of the issued share capital as at 31December 2024.
No shares were purchased for cancellation.
At 31December 2024, and as at the date of this report, there are
1,373,932,067 Ordinary Shares in issue. As at 31 December
2024 there were 187,875,410 Ordinary Shares held in treasury.
Since 31 December 2024, a further 46,260,732 shares have
been repurchased and the total number of shares held in treasury is
234,136,142. At general meetings of the Company, shareholders are
entitled to one vote on a show of hands and on a poll, to one vote for
every Share held. Shares held in treasury do not carry voting rights.
The total voting rights of the Company at 31December 2024 was
1,186,056,657 and as at the date of this report 1,139,795,925.
Further information on the Company’s share capital is set out in
Note13 to the financial statements.
SUBSTANTIAL SHAREHOLDINGS
The Directors have been informed of the following notifiable interests in
the Company’s voting rights as at 31 December 2024:
Number of
Ordinary Shares
% of
voting rights
Adage Capital Partners GP LLC 164,014,169 13 . 8 3
Newton Investment Management
Limited
136,378,417 11.50
Interseguro Compañía de Seguros S.A. 72,791,326 6 .14
Sarasin & Partners LLP 70,476,921 5.94
M&G plc 67,215,104 5.67
Inteligo Bank Limited 66,593,210 5 . 61
The Company has not been informed of any changes to the notifiable
interests between 31 December 2024 and the date of this report.
INFORMATION ABOUT SECURITIES CARRYING VOTING
RIGHTS
The following information is disclosed in accordance with The Large
and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 and DTR 7.2.6 of the Financial Conduct Authority’s
Disclosure Guidance and Transparency Rules:
• the Company’s capital structure and voting rights and details of
the substantial shareholders in the Company are set in Note13
to the financial statements and above;
• the giving of powers to issue or buy back the Company’s Shares
requires an appropriate resolution to be passed by shareholders;
and
• there are no restrictions concerning the transfer of securities in
the Company or on voting rights; no special rights with regard to
control attached to securities and no agreements between holders
of securities regarding their transfer known to the Company.
SIGNIFICANT AGREEMENTS
The Company’s facility agreement was considered significant in terms
of its potential impact on the business of the Company. In 2020, the
Company entered into a $200 million revolving credit facility with
JPMorgan Chase Bank through its wholly owned subsidiary, BPCR
Limited Partnership. On 10 September 2021, the Company was able
to negotiate and amend the revolving credit facility on more favourable
terms. The key terms to the amendment included a reduction in the
committed Revolving Credit Facility (“RCF”) from $200 million to $50
million together with changes in the accordion feature that allowed for
an increase in the RCF to $100 million and up to $200 million in term
loans, extension of the maturity date to 22 June 2024 and a reduction
in the margin payable under the RCF from 4per cent. to 2.75 per cent.
(the “Facilities Agreement”). The Company terminated its JPMorgan
revolving credit facility as of 11April 2024 and currently has no debt.
DIRECTORS’ REPORT continued
GOVERNANCE
42
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
DIVIDENDS AND DIVIDEND POLICY
Dividends paid in respect of the year ended 31 December 2024 are
set out on in Note6 to the financial statements.
The Company pays dividends in US dollars or GBP Sterling, if
requested by a specific shareholder, on a quarterly basis. The
Company may, where the Directors consider it appropriate, use the
special distributable reserve created by the cancellation of its Share
premium account to pay dividends.
The Company targets an annual dividend yield of 7cents plus special
on the Ordinary Shares in issue (calculated by reference to the issue
price at IPO), together with a net total return on NAV of 8-9 per cent.
per annum on the Ordinary Shares in issue in the medium term.
FINANCIAL RISK MANAGEMENT
The principal risks and the Company’s policies for managing these risks
are set out in the Strategic Overview on pages 30 to 36 and Note16
to the financial statements.
CORPORATE GOVERNANCE
The Corporate Governance Statement on page 44 forms part of the
Directors’ Report.
STAKEHOLDER ENGAGEMENT
While the Company has no employees, suppliers or customers,
the Directors give regular consideration to the need to foster the
Company’s business relationships with its stakeholders, in particular
with clients, shareholders and service providers. The effect of this
consideration upon the principal decisions taken by the Company
during the financial year is set out in further detail in the Strategic Report
on pages 26 to 28.
STREAMLINED ENERGY AND CARBON REPORTING
The Company is an investment trust, with neither employees nor
premises. It has no direct 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 Report
and Directors’ Report) Regulations 2013, 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 is therefore
exempt from the disclosures required under the Streamlined Energy
and Carbon Reporting criteria
.
REQUIREMENTS OF THE LISTING RULES
UKLR 6.6.4 (R) requires the Company to include specified information
in a single identifiable section of the Annual Report or a cross reference
table indicating where the information is set out. The information
required under UKLR 6.6.1 (R) in relation to allotments of shares is set
out on page41. The Directors confirm that no additional disclosures
are required in relation to Listing Rule 6.6.4 (R).
The Listing Rules require companies to disclose in their annual report
whether they have reported on how climate change affects their
business in a manner consistent with the recommendations of the
Task Force on Climate-related Financial Disclosures (‘TCFD’), and
to provide an explanation and other information if they are unable to
do so. The Company is not required to disclose this information under
UKLR 11.4.23 (R).
CONSUMER DUTY
The FCA’s Consumer Duty rules were published in July 2022 and aim
to improve outcomes for retail customers across the financial services
industry. The Board has reviewed the investment managers annual
assessment of consumer duty obligations and is satisfied they have
been met.
MANAGEMENT ARRANGEMENTS
The Company has appointed Pharmakon Advisors LP, a limited
partnership established under the laws of the State of Delaware, USA
as its Investment Manager and acting Alternative Investment Fund
Manager (“AIFM”) for the purposes of the Alternative Investment
Fund Managers Directive. The Investment Manager is a registered
investment adviser under the Advisers Act and is regulated by the SEC.
The Company and the Investment Manager have entered into an
Investment Management Agreement dated 1 March 2017, as
amended on 14 March 2018, 24 May 2018 and 19 September
2018, pursuant to which the Investment Manager has been given
responsibility, subject to the overall supervision of the Board, for
the active investment management of the Debt Assets and all other
investments of the Company from time to time, including sourcing
and advising on investment opportunities and proposals which are
in accordance with the Company’s investment objective and policy.
The Investment Management Agreement may be terminated by: (a)
the Investment Manager on not less than six months’ notice to the
Company; or (b) the Company on not less than six months’ notice
to the Investment Manager, such notice not to expire earlier than:
(i)36months following Admission, unless approved by Shareholders
by ordinary resolution; and (ii) 18 months following Admission, in any
event.
DIRECTORS’ REPORT continued
GOVERNANCE
43
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Details about the management and performance fee can be found in
Note4 to the financial statements.
The Investment Manager consists of three principals: Pedro Gonzalez
de Cosio, Pablo Legorreta and Martin Friedman. In addition, the
Investment Manager may draw on the expertise of certain employees
of its affiliate, RP Management LLC. For these purposes, the Investment
Manager and RP Management LLC entered into a Shared Services
Agreement as of 1 January 2016, whereby RP Management LLC may
provide the services of its research, legal and compliance, and finance
teams to the Investment Manager.
Under the Shared Services Agreement, each of RP Management LLC
and the Investment Manager has agreed to reimburse the other for
reasonable internal and third-party expenses incurred by the other
on its behalf, or for its benefit, as a result of rendering such services.
Such expenses include (without limitation) business development, due
diligence, legal, consulting, compliance, research and similarexpenses.
Under the Shared Services Agreement, subject to each party’s fiduciary
duties to its clients, each of RP Management LLC and the Investment
Manager has agreed to refer to the other any business opportunities
that fit the other’s investment objectives. To the extent that a business
opportunity involves both equity and debt-like financing transactions,
each of RP Management LLC and the Investment Manager shall be free
to negotiate an offer aligning with its own investment objectives and is
under no obligation to take the other party’s investment objectives into
consideration during such anegotiation.
The Shared Services Agreement is governed by the laws of the State
of New York and may be terminated by either RP Management LLC or
the Investment Manager upon 30 days’ written notice.
INSURANCE AND INDEMNITY PROVISIONS
The Board has agreed arrangements whereby Directors may take
independent professional advice in the furtherance of their duties.
The Company has Directors’ and Officers’ liability insurance and
professional indemnity insurance to cover legal defence costs and
public offering of securities insurance in place in respect of both the
IPO and the Placing Programme. Under the Company’s Articles, the
Directors are provided, subject to the provisions of UK legislation, with
an indemnity in respect of liabilities which they may sustain or incur in
connection with their appointment. This indemnity was in force during
the year and remains in force as at the date of this report. Apart from
this, there are no third-party indemnity provisions in place for the
Directors.
ANTI-BRIBERY AND CORRUPTION
The Company has reviewed the statements regarding compliance with
the Bribery Act 2010 by the Company’s Investment Manager and
service providers. These statements are reviewed regularly by the Audit
and Risk Committee.
FUTURE DEVELOPMENTS
The effects of geopolitical and social risks, may have economic
consequences that extend beyond the short term. The Company does
not have any direct investments with Russia or Israel. We will continue
to monitor the situation and will inform shareholders of any material
changes to this assessment. Further details on the outlook of the
Company are set out in the Chairman’s Statement on page 5.
AUDIT INFORMATION
The Directors who held office at the date of approval of the Directors’
Report confirm that, so far as they are aware, there is no relevant audit
information of which the Company’s Auditor is unaware; and each
Director has taken all reasonable steps that he/she ought to have
taken as a Director to make himself/herself aware of any relevant
audit information and to establish that the Company’s Auditor is aware
of that information.
AUDITOR
Ernst & Young, Chartered Accountants will be proposed for re-
appointment at the AGM. In accordance with s.489(4) of the
Companies Act 2006, resolutions to determine remuneration for the
Auditor are to be agreed at the AGM.
AGM
The Company’s annual general meeting will be held on 9 June 2025.
The notice of this meeting is included with this mailing and will also be
uploaded to the Company’s website www.bpcruk.com.
By order of the Board
MUFG Corporate Governance Limited
Company Secretary
24 March 2025
GOVERNANCE
44
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Corporate Governance Statement
This Corporate Governance Statement forms part of the Directors’
Report.
INTRODUCTION FROM THE CHAIRMAN
I am pleased to introduce this year’s Corporate Governance Statement.
In this statement, the Company reports on its compliance with the
2019 AIC Code of Corporate Governance (the “AIC Code”) and
sets out how the Board has operated during the past year. The Board
is accountable to shareholders for the governance of the Company
and is committed to maintaining the highest standard of corporate
governance for the long-term sustainable success of the Company.
COMPLIANCE WITH THE AIC CODE
The Company reviews its standards of governance against the
principles and recommendations of the AIC Code. The Board considers
that reporting against the principles and recommendations of the AIC
Code provides better information to shareholders as it addresses all
the principles set out in the 2018 UK Corporate Governance Code
(the “UK Code”), as well as setting out additional principles and
recommendations on issues that are of specific relevance to investment
trusts, and is endorsed by the Financial Reporting Council (the “FRC”).
The terms of the FRC’s endorsement mean that AIC members who
report against the AIC Code meet fully their obligations under the UK
Code and the related disclosure requirements contained in the Listing
Rules of the Financial Conduct Authority. A copy of the AIC Code
can be found at www.theaic.co.uk. A copy of the UK Code can be
obtained at www.frc.org.uk.
The Board recognises the importance of a strong corporate
governance culture and has established a framework for corporate
governance which it considers to be appropriate to the business of
the Company.
The UK Code includes provisions relating to:
• the role of the chief executive; and
• executive directors’ remuneration.
For the reasons explained in the AIC Code, the Board considers that
these provisions are not relevant to the Company, being an externally
managed investment company. The Company has therefore not
reported further in respect of these provisions. The Board has reviewed
the principles and recommendations of the AIC Code and considers
that it has complied throughout the year, except as disclosed below:
• Provision 24: Directors are not appointed for a specific term as
all Directors are non-executive and the Company has adopted
a policy of all Directors, including the Chairman, standing for
annual re-election. The Board has determined that no further
policy on tenure is required.
• Provision 22: Given the structure and size of the Board, the Board
does not consider it necessary to appoint separate nomination,
management engagement or remuneration committees. This
is however, kept under review. The roles and responsibilities
normally reserved for these committees are matters for the full
Board.
BOARD OF DIRECTORS
Under the leadership of the Chairman, the Board of Directors is
collectively responsible for the long-term sustainable success of the
Company, generating value for shareholders and contributing to wider
society. It provides overall leadership, sets the strategic aims of the
Company and ensures that the necessary resources are in place for the
Company to meet its objectives and fulfil its obligations to shareholders
within a framework of high standards of corporate governance
and effective internal controls. The Directors are responsible for the
determination of the Company’s investment policy and investment
strategy and have overall responsibility for the Company’s activities,
including the review of investment activity and performance and the
control and supervision of the Investment Manager.
The Board consisted of six independent non-executive Directors as
at 31 December 2024. It seeks to ensure that it has an appropriate
balance of skills and experience, and considers that, collectively,
it has substantial recent and relevant experience of investment trusts
and financial and public company management. The Chairman of the
Audit and Risk Committee, Mr Bond, has recent and relevant financial
experience as set out in his biography on page 40.
The terms and conditions of the appointment of the Directors are
formalised in letters of appointment, copies of which are available
for inspection from the Company’s registered office. None of the
Directors has a contract of service with the Company nor has there
been any other contract or arrangement between the Company and
any Director at any time during the year. Directors are not entitled to
any compensation for loss of office.
Corporate Governance Statement continued
GOVERNANCE
45
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
CULTURE
The Chairman leads the Board and is responsible for its overall
effectiveness in directing the Company. He demonstrates objective
judgement, promotes a culture of openness and debate and facilitates
constructive Board relations and the effective contribution of all
Directors. In liaison with the Company Secretary, he ensures that the
Directors receive accurate, timely and clear information. The Directors
are required to act with integrity, lead by example and promote this
culture within the Company.
The Board seeks to ensure the alignment of its purpose, values and
strategy with this culture of openness, debate and integrity through
ongoing dialogue and engagement with its service providers,
principally the Investment Manager. The culture of the Board is
considered as part of the annual performance evaluation process
which is undertaken by each Director and the culture of the Company’s
service providers, including their policies, practices and behaviour, is
considered by the Board as a whole during the annual review of the
performance and continuing appointment of all service providers. The
Board holds monthly update meetings with the Investment Manager
and seeks to hold one Board meeting a year at Pharmakon’s offices
in New York. Such meetings enable the Directors to understand the
culture of the Investment Manager.
Further information on the Company’s engagement with its stakeholders
is set out on pages 26 to 28.
CHAIRMAN AND SENIOR INDEPENDENT DIRECTOR
The Chairman, Mr Hyman, is deemed by his fellow independent Board
members to be independent in character and judgement and free of
any conflicts of interest. He considers himself to have sufficient time to
spend on the affairs of the Company. Mr Hyman has no significant
commitments other than those disclosed in his biography on page40.
As Senior Independent Director, Mr Budge acts as a sounding board
for the Chairman, meets with major shareholders as appropriate,
provides a channel for any shareholder concerns regarding the
Chairman and takes the lead in the annual evaluation of the Chairman
by the independent Directors. In the event of a period of stress, the
Senior Independent Director would work with the Chairman, the other
Directors, and/or shareholders to resolve any issues.
BOARD OPERATION
The Directors have adopted a formal schedule of matters specifically
reserved for their approval. These include the following:
• approval of the Company’s investment policy, long-term
objectives and commercial strategy;
• approval of the gearing policy of the Company;
• approval of Annual and Half-yearly Reports and financial
statements and accounting policies, prospectuses, circulars and
other shareholder communications;
• raising new capital;
• approval of dividends;
• Board appointments and removals;
• appointment and removal of the Investment Manager, Auditor
and the Company’s other service providers; and
• approval of the Company’s annual expenditure budget.
BOARD MEETINGS
The Company has four scheduled Board meetings a year, and monthly
update calls with the Investment Manager where there is no scheduled
Board meeting. Additional meetings are arranged as necessary.
At each Board meeting, the Directors follow a formal agenda which
is circulated in advance by the Company Secretary. The Company
Secretary, the Administrator and the Investment Manager regularly
provide the Board with financial information, including an annual
expenses budget, together with briefing notes and papers in relation
to changes in the Company’s economic and financial environment,
statutory and regulatory changes and corporate governance best
practice. A description of the Company’s risk management and internal
control systems is set out in the Strategic Report on pages 30 to 36.
At each Board meeting, representatives from the Investment Manager
are in attendance to present reports to the Directors covering the
Company’s current and future activities, portfolio of assets and its
investment performance over the preceding period. The Board and
the Investment Manager operate in a fully supportive, co-operative
and open environment and ongoing communication with the Board is
maintained between formal meetings.
Corporate Governance Statement continued
GOVERNANCE
46
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
AUDIT AND RISK COMMITTEE
The Board has established an Audit and Risk Committee to assist its
operations. The Committee’s delegated responsibilities are clearly
defined in formal terms of reference, which are available on the
Company’s website.
The Committee comprises all Directors and is chaired by MrBond.
Given the size and nature of the Board it is felt appropriate that
all Directors are members of the Audit and Risk Committee. Its
responsibilities are detailed in the Audit and Risk Committee Report
on page 49. The Committee has direct access to the Company’s
Auditor, and provides a forum through which the Auditor reports to the
Board. Representatives of the Auditor attend quarterly meetings of the
Committee.
Further details about the Audit and Risk Committee and its activities
during the year under review are set out on pages 49 to 50.
MEETING ATTENDANCE
The number of scheduled Board and Audit and Risk Committee
meetings held during the year ended 31 December 2024 and the
attendance of the individual Directors is shown below:
Board
Audit and Risk
Committee
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Colin Bond 4 4 6 6
Duncan Budge 4 4 6 6
Harry Hyman 4 4 6 5
Stephanie Léouzon 4 4 6 6
Sapna Shah 4 4 6 6
Rolf Soderstrom 4 4 6 6
INDEPENDENCE OF DIRECTORS
The independence of the Directors is reviewed as part of the annual
evaluation process. Each Director is considered to be independent in
character and judgement and entirely independent of the Investment
Manager. None of the Directors sit on the boards of any other
companies managed by the Investment Manager.
A procedure for the induction of new Directors has been established,
including the provision of an induction pack containing relevant
information about the Company, its processes and procedures. New
appointees have the opportunity of meeting with the Chairman, relevant
persons at the Investment Manager and the Company Secretary.
RE-ELECTION AND RETIREMENT OF DIRECTORS
Under the Company’s Articles and in accordance with the AIC Code,
Directors are subject to election by shareholders at the first AGM
after their appointment. Under the Company’s Articles of Association,
thereafter, at each AGM any Director who has not stood for re-election
at either of the two preceding AGMs shall retire. In addition, one-third
of the Directors eligible to retire by rotation shall retire from office at
each AGM. However, in accordance with the AIC Code, the Board
has agreed a policy whereby all Directors will seek annual re-election
at the Company’s Annual General Meetings.
Following formal performance review as detailed below, the Board
strongly recommends the election/re-election of each of the Directors
on the basis of their experience and expertise in investment matters,
their independence and continuing effectiveness and commitment to
the Company.
The Board is mindful of the need to consider succession planning,
especially in the context of Mr Bond approaching the completion of
his nine-year tenure, as recommended under the AIC Code. Further
statements in respect of this will be made by the Company in due
course.
DIVERSITY POLICY
In accordance with the AIC Code, the Board is comprised of a
mixture of individuals who have an appropriate balance of skills and
experience to meet the future opportunities and challenges facing the
Company. Appointments are made first and foremost on the basis of
merit and taking into account the recognised benefits of all types of
diversity. The Board ensures that diversity is an important consideration
and part of the selection criteria used to assess candidates to achieve
a balanced Board.
The Board has discussed the diversity disclosures required under UKLR
6.6.6R(10), namely, that from accounting periods starting on or after
1 April 2022:
a) at least 40% of individuals on the Board to be women;
b) at least one senior Board position to be held by a woman; and
c) at least one individual on the Board to be from a minority ethnic
background.
In accordance UKLR 6 Annex 1R, the below tables, in prescribed
format, shows the gender and ethnicity of the Directors at the year
ended 31 December 2024. The data below was collected through
self-reporting by the Directors.
Gender identity or sex
Number
of Board
members
Percentage
on the
Board%
Number
of senior
positions on
the Board
Men 4 66 2
Women 2 33 –
Not specified/prefer not to say – – –
Corporate Governance Statement continued
GOVERNANCE
47
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Ethnic background
Number
of Board
members
Percentage
on the
Board(%)
Number
of senior
positions on
the Board
White British or other White
(including minority white
groups)
5 83 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British 1 17 –
Black/African/Caribbean/
Black British
– – –
Other ethnic group – – –
Not specified/prefer not to say – – –
The Board is mindful that at present it does not comply with the gender
representation requirements, and the Board is taking appropriate
steps to ensure that Board succession planning takes these diversity
requirements into consideration.
CONFLICTS OF INTEREST
It is the responsibility of each individual Director to avoid an
unauthorised conflict of interest situation arising. The Director must
request authorisation from the Board as soon as he/she becomes
aware of the possibility of an interest that conflicts, or might possibly
conflict, with the interests of the Company (“situational conflicts”). The
Company’s Articles authorise the Board to approve such situations,
where deemed appropriate.
A register of conflicts is maintained by the Company Secretary and is
reviewed at Board meetings, to ensure that any authorised conflicts
remain appropriate. The Directors are required to confirm at these
meetings whether there has been any change to their position.
The Board is responsible for considering Directors’ requests for
authorisation of situational conflicts and for deciding whether or not the
situational conflict should be authorised. The factors to be considered
will include: whether the situational conflict could prevent the Director
from properly performing their duties; whether it has, or could have,
any impact on the Company; and whether it could be regarded
as likely to affect the judgement and/or actions of the Director in
question. When the Board is deciding whether to authorise a conflict
or potential conflict, only Directors who have no interest in the matter
being considered are able to take the relevant decision, and in taking
the decision the Directors must act in a way they consider, in good faith,
will be most likely to promote the Company’s success. The Directors
are able to impose limits or conditions when giving authorisation if they
think this is appropriate in the circumstances.
PERFORMANCE EVALUATION OF THE BOARD
The Directors are aware that they need to continually monitor and
improve performance and recognise this can be achieved through
regular Board evaluation, which provides a valuable feedback
mechanism for improving Board effectiveness. The Board evaluation in
2024 was undertaken internally by way of a questionnaire. The results
of the Board evaluation process are reviewed and discussed by the
Board as a whole. The evaluation process is carried out annually. The
Board has agreed that an internally facilitated evaluation carried out
by the Company Secretary will be appropriate in 2025.
The composition of the Board and, in particular, succession planning
are kept under review by the Board and are considered on an annual
basis in December each year in conjunction with the evaluation
process in order to ensure an orderly refreshment of the Board and to
develop a diverse pipeline.
Following the evaluation process conducted during the year under
review, the Board noted that further focus was required on succession
planning given that some Directors would soon approach the end of
the nine-year period as suggested by the AIC Code. The Board also
reviewed and updated the presentation of the Company’s risk register
following feedback from the evaluation. The Board considers that
all the current Directors contribute effectively and have the skills and
experience relevant to the leadership and direction of the Company
and that the Board operates effectively. The Board has satisfied itself
that the Directors have enough time to devote to the Company’s affairs.
COMPANY SECRETARY
The Board has direct access to the advice and services of the
Company Secretary, MUFG Corporate Governance Limited, which
is responsible for ensuring that Board and Committee procedures
are followed and that applicable regulations are complied with. The
Company Secretary is also responsible to the Board for ensuring timely
delivery of the information and reports which the Directors require and
that the statutory obligations of the Company are met.
INTERNAL CONTROL REVIEW
The Board is responsible for the systems of internal controls relating
to the Company, including the reliability of the financial reporting
process and for reviewing the systems’ effectiveness. The Directors
have reviewed and considered the guidance supplied by the FRC on
risk management, internal control and related finance and business
reporting and an ongoing process has been established for identifying,
evaluating and managing the principal risks faced by the Company.
This process, together with key procedures established with a view to
providing effective financial control, was in place during the year under
review and at the date of this report.
The internal control systems are designed to ensure that proper
accounting records are maintained, that the financial information on
which business decisions are made and which is issued for publication
is reliable, and that the assets of the Company are safeguarded.
The risk management process and systems of internal control are
designed to manage rather than eliminate the risk of failure to achieve
the Company’s objectives. It should be recognised that such systems
can only provide reasonable, not absolute, assurance against material
misstatement or loss.
Corporate Governance Statement continued
GOVERNANCE
48
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
The Directors have carried out a review of the effectiveness of the
systems of internal control as they have operated over the year and
up to the date of approval of the report and financial statements.
There were no matters arising from this review that required further
investigation and no significant failings or weaknesses were identified.
INTERNAL CONTROL ASSESSMENT PROCESS
Robust risk assessments and reviews of internal controls are undertaken
regularly in the context of the Company’s overall investment objective:
In arriving at its judgement of what risks the Company faces, the Board
has considered the Company’s operations in light of 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 threat of such risks becoming reality;
• the Company’s ability to reduce the incidence and impact of risk
on its performance;
• the cost to the Company and benefits related to the review of risk
and associated controls of the Company; and
• the extent to which third parties operate the relevant controls.
A risk matrix has been produced against which the risks identified and
the controls in place to mitigate those risks can be monitored. The risks
are assessed on the basis of the likelihood of them happening, the
impact on the business if they were to occur and the effectiveness of the
controls in place to mitigate them. This risk matrix is reviewed twice a
year by the Audit and Risk Committee and at other times as necessary.
The principal risks that have been identified by the Board are set out
on pages 30 to 36.
The Board reviews financial information produced by the Investment
Manager and the Administrator on a regular basis.
Most functions for the day-to-day management of the Company are
subcontracted, and the Directors therefore obtain regular assurances
and information from key third-party suppliers regarding the internal
systems and controls operated in their organisations. In addition, each
third party is requested to provide a copy of its report on internal
controls each year, which is reviewed by the Audit and Risk Committee.
This statement was approved by the Board of Directors and signed on
its behalf by:
MUFG Corporate Governance Limited
Company Secretary
24 March 2025
GOVERNANCE
49
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Audit and Risk Committee Report
I am pleased to present the Audit and Risk Committee Report for the
year ended 31 December 2024.
RESPONSIBILITIES OF THE COMMITTEE
The primary responsibilities of the Committee are as follows:
• to monitor the integrity of the financial statements of the Company,
the financial reporting process and the accounting policies of the
Company;
• to review the content of the Annual Report and financial statements
and advise the Board on whether, taken as a whole, it is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy;
• to keep under review the effectiveness of the Company’s internal
control environment and risk management systems;
• to review the scope and effectiveness of the audit process
undertaken by the Auditor;
• to make recommendations to the Board in relation to the
appointment, reappointment or removal of the external Auditor
and to approve its remuneration and terms of engagement;
• to review and monitor the Auditor’s independence, objectivity
and effectiveness; and
• to approve any non-audit services to be provided by the Auditor
and monitor the level of fees payable in that respect.
ACTIVITIES IN THE YEAR
During the year, the Committee has:
• conducted a review of the internal controls and risk management
systems of the Company and its third-party service providers;
• agreed the audit plan and fees with the Auditor in respect of the
first and third quarter agreed upon procedures, the interim review
of the Half-yearly Report for the period ended 30 June 2024
and the statutory audit of the Annual Report for the year ended
31December 2024, including the principal areas of focus;
• received and discussed with the Auditor its report on the results
of the review of the half-yearly financial statements and the year
end audit;
• reviewed the Company’s half-yearly and annual financial
statements and recommended these to the Board for approval;
• examined in detail the methodology and assumptions applied in
revaluing the assets of the Company;
• reviewed the valuation of the Company’s assets on a quarterly
basis;
• reviewed the Auditors’ agreed-upon-procedures reports on
aspects of the data underpinning the valuation process of the
Company’s assets for Q1 and Q3 of 2024; and
• reviewed and updated its terms of reference.
MEETINGS
The Committee met six times during the year under review and once
following the year end.
Details of the composition of the Committee are set out in the Corporate
Governance Statement on page 46.
SIGNIFICANT ISSUES
The Committee considered the following key issues in relation to the
Company’s financial statements during the year. A more detailed
explanation of the consideration of the issues set out below, and
the steps taken to manage them, is set out in the Principal Risks and
Uncertainties on pages 30 to 36.
Valuation of unlisted investments
In the year under review, the Committee reviewed the valuation
process of the Company’s unlisted investments and the systems in
place to ensure the accuracy of these valuations, particularly in view
of the fact that the unlisted investments represent the principal element
of the NAV. During the year, the Committee met on a quarterly as well
as an ad hoc basis to conduct reviews of the investments held by the
Company and was comfortable with the valuations given.
Internal controls
The Committee carefully considers the internal control systems by
continually monitoring the services and controls of its third-party service
providers.
The Committee reviewed, and where appropriate, updated the risk
matrix during the year under review. This is done on a biannual basis.
The Committee received a report on internal control and compliance
from the Administrator and Registrar and no significant matters of
concern were identified.
The Company does not have an internal audit function. During the
year, the Committee reviewed whether an internal audit function
would be of value and concluded that this would provide minimal
additional comfort at considerable extra cost to the Company. While
the Committee believes that the existing system of monitoring and
reporting by third parties remains appropriate and adequate, it will
continue, on an annual basis, to actively consider possible areas within
the Company’s controls environment which may need to be reviewed
in detail.
Going concern and long-term viability of the Company
The Committee considered the Company’s financial requirements for
the next 12 months and concluded that it has sufficient resources to
meet its commitments. Consequently, the financial statements have
been prepared on a going concern basis. The Committee also
considered the longer-term viability statement within the Annual Report
for the year ended 31 December 2024, covering a five-year period,
and the underlying factors and assumptions which contributed to the
Committee deciding that this was an appropriate length of time to
consider the Company’s long-term viability. The Company’s viability
statement can be found on page 37.
Audit and Risk Committee Report continued
GOVERNANCE
50
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
AUDIT FEES AND NON-AUDIT SERVICES PROVIDED BY
THE AUDITOR
The Committee reviewed the audit plan and fees presented by the
Auditor and considered its report on the financial statements. Total fees
for the year payable to the Auditor amounted to $360,275.This figure
includes non-audit fees of $87,000 in respect of the interim review of
the Half-yearly Report and financial statements for the period ended
30 June 2024 and in respect of quarterly agreed upon procedures
over investment valuations. In accordance with the Company’s policy
on the provision of non-audit services, all non-audit services provided
by the Auditor during the year were approved in advance by the
Directors. Further information on the fees paid to the Auditor is set out in
Note4 to the financial statements.
The non-audit services provided by the Auditor during the year under
review were assurance related, and the Committee firmly believes that
Ernst & Young (“EY”) have been best placed to provide them on a
timely and cost-effective basis to the benefit of shareholders.
EFFECTIVENESS OF THE EXTERNAL AUDIT
The Committee reviews the effectiveness of the external audit carried
out by the Auditor on an annual basis. The Chairman of the Committee
maintained regular contact with the Company’s Audit Partner
throughout the year and also met with them prior to the finalisation of
the audit of the Annual Report and financial statements for the year
ended 31 December 2024, without the Investment Manager present,
to discuss how the external audit was carried out, the findings from such
audit and whether any issues had arisen from the Auditor’s interaction
with the Company’s various service providers.
INDEPENDENCE AND OBJECTIVITY OF THE AUDITOR
The Committee has considered the independence and objectivity of
the Auditor and has conducted a review of non-audit services which
the Auditor has provided during the year under review. The Committee
receives an annual confirmation from the Auditor that its independence
is not compromised by the provision of such non-audit services. Vincent
Bergin is the Audit Partner allocated to the Company by EY. The audit
of the financial statements for the year ended 31 December 2024 is his
third audit as Audit Partner. The Committee is satisfied that the Auditor’s
objectivity and independence is not impaired by the performance of
these non-audit services and that the Auditor has fulfilled its obligations
to the Company and its shareholders.
REAPPOINTMENT OF THE AUDITOR
Following consideration of the performance of the Auditor, the
services provided during the year and a review of its independence
and objectivity, the Committee has recommended to the Board the
reappointment of Ernst & Young, Chartered Accountants as Auditor
to the Company.
Colin Bond
Audit and Risk Committee Chairman
24 March 2025
GOVERNANCE
51
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Remuneration Report
STATEMENT FROM THE CHAIRMAN
I am pleased to present the Directors’ Remuneration Report for the year
ended 31 December 2024.
As set out in the Corporate Governance Statement on page 44, the
Directors’ remuneration is determined by the Board as a whole. The
Board reviews Directors’ fees on an annual basis, in December each
year. During the year ended 31 December 2024, the annual fees
were as follows:
Chairman $118,600
Chairman of the Audit and Risk Committee $100,800
Director $83,000
The Board reviewed Directors’ remuneration at its meeting in November
2024, taking into account a number of factors including recent and
relevant benchmarking analysis produced by Trust Associates and
broader inflationary increases since that time. Following consideration,
the Board agreed that, with effect from 1 January 2025, the annual fee
levels for the Chairman, the Chairman of the Audit and Risk Committee
and for a Director should be increased by 5 per cent., rounded to the
nearest $100.
Consequently, the revised fee levels for Directors’ remuneration for the
year ending 31 December 2025 will be as follows:
Chairman $124,000
Chairman of the Audit and Risk Committee $105,800
Director $87,200
The Directors’ Remuneration Report is put to a shareholder vote on an
annual basis.
The Directors’ Remuneration Policy is put to a shareholder vote in the
first year of a company or in any year where there is to be a change
to the policy and, in any event, at least once every three years. The
Directors’ Remuneration Policy was last approved by shareholders in
2024 and it will therefore next be put to shareholders at the AGM to
be held in 2027. There will be no significant change in the way the
current, approved Remuneration Policy will be implemented during the
course of the next financial year.
VOTING AT AGM
The Directors’ Remuneration Report for the year ended 31 December 2024 and Remuneration Policy was approved by shareholders at the AGM
on 12 June 2024. The votes cast were as follows:
Directors Remuneration Report (2024) Directors Remuneration Policy (2024)
Number of votes % of votes cast Number of votes % of votes cast
For 558,576,994 99.7 558,551,021 99.96
Against 177, 87 9 0.03 22 7, 616 0.04
At Chairman’s discretion – – – –
Total votes cast 558,754,873 100.00 558,778,637 100.00
Number of Votes withheld 225,10 4 – 201,340 –
Remuneration Report continued
GOVERNANCE
52
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
PERFORMANCE OF THE COMPANY
The graph below compares the total return to Ordinary Shareholders compared to the Investment Trusts Total Market ex VCTs Indices as a market
reference for investors.
(20.00)
(15.00)
(10.00)
(5.00)
-
5.00
0
20
40
60
80
Feb-21 Aug-21 Feb-22 Aug-22 Feb-23 Aug-23 Feb-24 Aug-24
BPCR - Price TR (%) (L HS)
Invest ment Trusts Total Market ex VCTs - Price TR (%) (LHS)
BPCR - Cum fair disc ount (%) (RHS)
DS Invest ment Trusts incl VCTs ex 3i - Cum fair discount (%) (RHS)
Relative Share Performance of Company in terms of Total Share Return
1
140
120
100
DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 31 DECEMBER 2024 (AUDITED)
The remuneration paid to the Directors during the year ended 31 December 2024 is set out in the table below (USD):
Remuneration Expenses Total
Year ended
31 December
2024
Year ended
31 December
2023
Year ended
31 December
2024
Year ended
31 December
2023
Year ended
31 December
2024
Year ended
31 December
2023
Harry Hyman 118,600 110,300 5,634 6,049 124,234 116,349
Colin Bond 100,800 93,800 11,749 9,866 112,549 103,666
Duncan Budge 83,000 77,200 5,501 – 88,501 77,200
Stephanie Leouzon 83,000 77,200 7,138 5,827 90,138 83,027
Rolf Soderstom 83,000 77,200 5,854 5,094 88,854 82,294
Sapna Shah
2
83,000 60,137 4,510 3,883 87,510 64,020
1
Past performance is not an indication of future performance.
2
Appointed as a Director on 22 March 2023.
Remuneration Report continued
GOVERNANCE
53
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 31 DECEMBER 2024 (AUDITED) (CONTINUED)
The annual percentage change in remuneration paid to the Directors is set out in the table below (USD):
Year ended
31 December
2024
Year ended
31 December
2023
% Change from
2023 to 2024
% Change from
2022 to 2023
% Change over
5 years to
2024
Harry Hyman 118,600 110,300 8% 5% 69.43%
Colin Bond 100,800 93,800 8% 5% 18.59%
Duncan Budge 83,000 77,200 8% 5% 18.57%
Stephanie Léouzon 83,000 77,200 8% 5% 18.57%
Rolf Soderstrom 83,000 77,200 8% 5% 305.63%
Sapna Shah
1
83,000 60,137 38% – 38.02%
2
Total 551,400 495,837 11 % 20% 39.59%
1
Appointed as a Director on 22 March 2023.
2
Mr Soderstrom was appointed as a Director on 16 September 2020 where he was paid on a pro rata basis until the year ended 31 December 2020.
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below sets out in respect of the year ended 31 December 2024:
a) the remuneration paid to the Directors;
b) the Investment management fee;
c) the Investment Manager’s performance fee; and
d) the distributions made to shareholders by way of dividend.
Year ended
31 December
2024
$
Year ended
31 December
2023
$
Change
%
Directors’ remuneration 551,400 495,837 11 . 21
Investment management fee 11,996,555 13,198,675 (9 .11 )
Investment Manager’s performance fee 13,574,065 12,044,346 12 . 70
Dividends paid to shareholders 174,662,511 89,772,752 94.56
The investment management fee and Investment Manager’s performance fee have been selected as they represent a significant payment from the
Company to its investment manager. Further details on their calculation can be found in Note4.
Remuneration Report continued
GOVERNANCE
54
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
There is no requirement under the Company’s Articles for Directors to hold Shares in the Company.
As at 31 December 2024, the interests of the Directors and any connected persons in the Ordinary Shares in issue of the Company are set out
below:
Year ended
31 December 2024
Number of Shares
Year ended
31 December 2023
Number of Shares
Harry Hyman 103,725
1
103,333
2
Colin Bond 100,000 100,000
Duncan Budge 100,000 100,000
3
Stephanie Léouzon nil nil
Rolf Soderstrom 200,000
4
200,000
4
Sapna Shah 96,990 62,542
1
3,851 of these shares are held by Anita Hyman, a connected person of Mr Hyman.
2
2,987 of these shares were held by Anita Hyman, a connected person of Mr Hyman.
3
The legal and beneficial interest in 50% of Mr Budge’s shares is held by Mrs Budge.
4
The legal and beneficial interest in 50% of Mr Soderstrom’s shares is held by Linda Davey, a connected person of Mr Soderstrom.
None of the Directors or any persons connected with them had a material interest in the Company’s transactions, arrangements or agreements
during the year.
GOVERNANCE
55
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Remuneration Policy
INTRODUCTION
The Directors’ Remuneration Policy is put to a shareholder vote at least
once every three years and in any year if there is to be a change
in the Directors’ Remuneration Policy. A resolution to approve this
Remuneration Policy was proposed at the annual general meeting of
the Company held on 12 June 2024. The Company’s Remuneration
Policy, is set out below.
POLICY
The Company follows the recommendation of the AIC Code that
Non-executive Directors’ remuneration should reflect the time
commitment and responsibilities of the role. The Board’s policy is
that the remuneration of Non-executive Directors should reflect the
experience of the Board as a whole, and be determined with reference
to comparable organisations and appointments.
All Directors are Non-executive, appointed under the terms of letters of
appointment. There are no service contracts in place.
DIRECTORS’ FEE LEVELS
The Company has no employees. In line with the majority of investment
trusts, there are no performance conditions attached to the remuneration
of the Directors as the Board does not consider such arrangements or
benefits necessary or appropriate for Non-executive Directors.
The Board has set three levels of fees: for a Director, for the Chairman
of the Audit and Risk Committee and for the Chairman of the Board.
Fees are reviewed annually in accordance with the above policy. The
fee for any new Director appointed to the Board will be determined
on the same basis.
The approval of shareholders would be required to increase the
aggregate limit of $750,000, as set out in the Company’s Articles.
The Company is committed to ongoing shareholder dialogue and any
views expressed by shareholders on the fees being paid to Directors
would be taken into consideration by the Board when reviewing
the Directors’ Remuneration Policy and in the annual review of
Directors’fees.
APPROVAL
The Directors’ Remuneration Report was approved by the Board and
signed on its behalf by:
Harry Hyman
Chairman
24 March 2025
GOVERNANCE
56
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Statement of Directors’ Responsibilities
In respect of the Financial Statements
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have prepared
the financial statements in accordance with UK adopted International
Accounting Standards (“UK IAS”).
Under company law, 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 of the
company for that period. In preparing the financial statements, the
directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK IASs have been followed, subject to
any material departures disclosed and explained in the financial
statements;
• make judgements and accounting estimates that are reasonable
and prudent; and
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in
business.
The directors 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 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
and the Directors’ Remuneration Report comply with the Companies
Act 2006. The directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
DIRECTORS’ CONFIRMATIONS
The Directors consider that the Annual Report and accounts, taken
as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Each of the directors, whose names and functions are listed in the
Board of Directors section on page 40 confirm that, to the best of their
knowledge:
• the company financial statements, which have been prepared in
accordance with UK IASs, give a true and fair view of the assets,
liabilities, financial position and profit of the Company; and
• the Strategic Report includes a fair review of the development
and performance of the business and the position of the company,
together with a description of the principal risks and uncertainties
that it faces.
On behalf of the Board
Harry Hyman
Chairman
24 March 2025
GOVERNANCE
57
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF BIOPHARMA CREDIT PLC
OPINION
We have audited the financial statements of BioPharma Credit plc for
the year ended 31 December 2024 which comprise the Statement
of comprehensive income, the Statement of changes in equity, the
Statement of financial position, Statement of cash flows and the related
notes 1 to 19 including the material accounting policy information. The
financial reporting framework that has been applied in their preparation
is applicable law and UK adopted international accounting standards.
In our opinion, the financial statements:
• give a true and fair view of the company’s affairs as at
31December 2024 and of its profit 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.
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.
INDEPENDENCE
We are 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 the FRC’s Ethical Standard were
not provided to the company and we remain independent of the
company in conducting the audit.
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:
• assessing the relevance and reliability of underlying data and
key assumptions used in managements valuation model, such as
income and paydown forecasts used;
• evaluating management’s plans for future actions in relation to
their going concern assessment;
• assessing market altering factors such as pandemics by looking at
the operational impact; and assessing the appropriateness of the
going concern disclosures in the financial statements.
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 the company’s ability to
continue as a going concern for a period of at least twelve months
when the financial statements are authorised for issue.
In relation to the company’s reporting on how they have 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.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the company’s ability to continue
as a going concern.
OVERVIEW OF OUR AUDIT APPROACH
Key audit matters
• Valuation of unlisted investments
• End User Computing related to valuation of unlisted
investments
Materiality
• Overall materiality of $11.8 million which represents 1% of
net assets.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
TAILORING THE SCOPE
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for the
company. This enables us to form an opinion on the financial statements.
We take into account size, risk profile, the organisation of the company
and effectiveness of controls, the potential impact of climate change
and changes in the business environment when assessing the level of
work to be performed. All audit work was performed directly by the
audit engagement team.
CLIMATE CHANGE
Stakeholders are increasingly interested in how climate change will
impact BioPharma Credit Plc. The Company has determined that the
most significant future impacts from climate change on its operations will
be from the Company’s generally limited ability to influence its portfolio
companies. The Company’s ESG programme and sustainability plan is
explained on pages 20-23 in the Strategic Report. These disclosures
form part of the “Other information,” rather than the audited financial
statements. Our procedures on these unaudited disclosures therefore
consisted solely of considering whether they are materially inconsistent
Independent Auditor’s Report continued
GOVERNANCE
58
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
with the financial statements or our knowledge obtained in the course
of the audit or otherwise appear to be materially misstated, in line with
our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts
of climate change on the company’s business and any consequential
material impact on its financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment,
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. These
matters included 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
our opinion thereon, and we do not provide a separate opinion on
these matters.
Risk Our response to the risk Key observations communicated
to the Audit Committee
Valuation of unlisted investments
($1,162m; 2023: $1,203m)
Refer to the Audit and Risk Committee Report
(page 49); Accounting policies (page 69);
and Note 7 of the Financial Statements
(page 80)
There is a risk of material misstatement relating
to management override of controls over
the calculation of the rate used to discount
future cash flows for unlisted investments, and
in certain circumstances, the estimation of
the timing of those cash flows. The process
involves manual input of a discount rate and
the expected future timing of cash flows.
The discount rate has a higher likelihood of
material misstatement due to complexity and
subjectivity of the judgements made across
a number of investments. We identified this
risk as having an element of management
override of control and hence this significant
risk is also a fraud risk.
To test the valuation of unlisted investments,
our audit procedures included, among
others:
• gaining an understanding of the
controls over the discount rates applied
and the risk of management override of
such controls
• reviewing the latest available
information for each of the borrowers,
in particular, focusing on evidence of
changes in credit risk including through
incremental borrowing from third parties
• considering evidence of changes
in general market rates arising from
transactions involving third parties
• for cash flows dependent on product
sales, obtaining and reviewing
underlying analyst reports used as part
of the future cash flow expectations
• considering whether likely changes in
cash flows have been considered in
management’s estimates
• involving a valuation team with
specialised knowledge in assessing
the discount rates applied to certain
loans, and reviewing and challenging
any observations made on their
reasonableness
• reviewing the underlying security
valuations of the borrower relative to
the loan agreement
• performing sensitivity analysis of
the impact of changes in certain
assumptions used on the fair value in the
model
We concluded that the valuation of unlisted
investments is materially correct based on our
procedures performed.
Independent Auditor’s Report continued
GOVERNANCE
59
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Risk Our response to the risk Key observations communicated
to the Audit Committee
End User Computing related to valuation
of unlisted investments ($1,162m PY
comparative $1,203m)
Refer to the Audit and Risk Committee (page
49); Accounting policies (page 68); and
Note 7 of the Financial Statements (page
80)
There is a risk of errors in the asset models
which derive the fair value of the unlisted
investments, disclosed discount rates, and
discount rate sensitivities.
The asset models are prepared in Microsoft
Excel and are of a manual nature which
involve complex calculations and manual
inputs including updates from amendments to
loan agreements which are subject to error.
To test the end user computing models, our
audit procedures included, among others,
• Gaining an understanding and
evaluating the design and
implementation of the controls over
the manual inputs (for example,
amendments to loan terms in the period)
to the asset model to ensure the inputs
used in the calculations are correct.
• Reperforming model calculations to
consider whether they were materially
correct
• Agreeing key inputs to the models
to agreements or other supporting
documentation
• Considering whether all amendments to
loan agreements have been considered
in the models for all investments.
We concluded that the valuation of unlisted
investments, disclosed discount rates, and
discount rate sensitivities are materially
correct based on our procedures performed.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and performing the
audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
MATERIALITY
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides
a basis for determining the nature and extent of our audit procedures.
We determined materiality for the company to be $11.8 million,
which is 1% of net assets. We believe that net assets provides us with
an appropriate basis for materiality as it is an important measure of
performance for users of the financial statements.
PERFORMANCE MATERIALITY
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of
the company’s overall control environment, our judgement was that
performance materiality was 50% of our planning materiality, namely
$5.9m. We have set performance materiality at this percentage to
ensure that the risk of errors exceeding performance materiality was
appropriately managed and the basis is in line with last year.
REPORTING THRESHOLD
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of $0.59mm, which is set at 5%
of planning materiality, as well as differences below that threshold that,
in our view, warrant reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
OTHER INFORMATION
The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
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 the
other information, we are required to report that fact.
Independent Auditor’s Report continued
GOVERNANCE
60
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006
In our opinion the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
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 directors’ report have been prepared in
accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
BY EXCEPTION
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 directors’ report.
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; 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.
CORPORATE GOVERNANCE STATEMENT
We have reviewed 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 by the
UK Listing Rules.
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:
• Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 49;
• Directors’ explanation as to its assessment of the company’s
prospects, the period this assessment covers and why the period
is appropriate set out on page 37;
• Director’s statement on whether it has a reasonable expectation
that the group will be able to continue in operation and meets its
liabilities set out on page 37;
• Directors’ statement on fair, balanced and understandable set out
on page 56;
• Board’s confirmation that it has carried out a robust assessment of
the emerging and principal risks set out on page 30;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on page 48; and
• The section describing the work of the audit committee set out on
page 46.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set
out on page 56, 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.
Explanation as to what extent the audit was considered
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 irregularities, including fraud. 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 or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
Independent Auditor’s Report continued
GOVERNANCE
61
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the Company
and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Company and determined
that the most significant are the Corporation Tax Act 2010, the
Companies Act 2006, the Listing Requirements of the London
Stock Exchange, the AIC SORP 2021 and the UK Corporate
Governance Code 2018.
• We understood how the Company is complying with those
frameworks by making enquiries of management, to understand
how the Company maintains and communicates its policies and
procedures in these areas, and corroborated this by reviewing
supporting documentation such as the compliance manual,
correspondence with relevant authorities and minutes of meetings
of the Board of Directors and of the audit committee. We also
attended meetings of the audit committee during the period.
• We assessed the susceptibility of the Company’s financial
statements to material misstatement, including how fraud might
occur by discussing with management to understand where they
considered there was a susceptibility to fraud; and assessing any
whistleblowing incidences for those with a potential financial
reporting impact. We considered the internal control environment
of the group to address material misstatements, or that otherwise
prevent, deter and detect fraud and how management monitors
these controls including the risk of management override of
controls.
• Based on this understanding we designed our audit procedures
to identify non-compliance with such laws and regulations. Our
procedures involved enquiries of management, external legal
counsel, and those charged with governance.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
OTHER MATTERS WE ARE REQUIRED TO ADDRESS
• Following the recommendation from the audit committee, we
were appointed by the Company on 9 June 2022 to audit the
financial statements for the year ended 31 December 2022 and
subsequent financial periods.
• The period of total uninterrupted engagement including previous
renewals and reappointments is 3 years, covering the years
ended 2022 to 2024.
• The audit opinion is consistent with the additional report to the
audit committee.
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.
Vincent Bergin (Senior statutory auditor)
for and on behalf of Ernst & Young, Chartered Accountants and
Statutory Auditor
Dublin
24 March 2025
62
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
63
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
For the year ended 31 December 2024 (in $000s except per share amounts)
64
Statement of Comprehensive Income
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
Year ended 31December 2024 Year ended 31December 2023
Note Revenue Capital Total Revenue Capital Total
Income
Investment income 3 148,630 – 148,630 155,358 – 155,358
Other income 3 1,490 – 1,490 4,324 – 4,324
Net losses on investments at fair value 7 – (90) (90) – (23,945) (23,945)
Net currency exchange losses – (2) (2) – (7) (7)
Total income/(expense) 150,120 (92) 150,028 159,682 (23,952) 135,730
Expenses
Management fee 4 (11,997) – (11,997) (13,199) – (13,199)
Performance fee 4 (13,574) – (13,574) (12,044) – (12,044)
Directors’ fees 4 (551) – (551) (496) – (496)
Other expenses 4 (1,728) – (1,728) (1,541) – (1,541)
Total expenses (27,850) – (27,850) (27,280) – (27,280)
Return on ordinary activities
after finance costs and before
taxation
122,270 (92) 122 ,178 132,402 (23,952) 108,450
Taxation on ordinary activities 5 – – – – – –
Return on ordinary activities
after finance costs and taxation
122,270 (92) 122 ,178 132,402 (23,952) 108,450
Net revenue and capital return
per ordinary share (basic and
diluted)
11 $0.1000 ($0.0001) $0.0999 $0.1011 ($0.0183) $0.0828
The total column of this statement is the Company’s Statement of Comprehensive Income prepared in accordance with UK IAS. The supplementary
revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice (“SORP”)
issued by the Association of Investment Companies (“AIC”).
All items in the above Statement derive from continuing operations.
There is no other comprehensive income, and therefore the return on ordinary activities after finance costs and taxation is also the total
comprehensive income.
The notes on pages 68 to 93 form part of these financial statements.
For the year ended 31 December 2024 (In $000s)
65
Statement of Changes in Equity
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
For the year ended 31December 2024
Note
Share
capital
Share
premium
account
Special
distributable
reserve
1
Capital
reserve
1
Revenue
reserve
1
Total equity
attributable to
shareholders of
the Company
Net assets attributable to shareholders at
1January 2024
13, 73 9 6 0 7,125 655,260 (21,791) 86,528 1,340,861
Return on ordinary activities after finance costs
and taxation
– – – (92) 122,270 12 2 ,178
Dividends paid to Ordinary Shareholders 6 – – – – (174,662) (174,662)
Cost of shares bought back for treasury – – (106,699) – – (106,699)
Net assets attributable to shareholders
at 31December 2024
13,739 6 0 7,12 5 548,561 (21,883) 34,136 1,181, 678
For the year ended 31December 2023
Note
Share
capital
Share
premium
account
Special
distributable
reserve
1
Capital
reserve
1
Revenue
reserve
1
Total equity
attributable to
shareholders of
the Company
Net assets attributable to shareholders at
1January 2023
13, 73 9 6 0 7,125 670,529 2 ,161 43,899 1,337,453
Return on ordinary activities after finance costs
and taxation
– – – (23,952) 132,402 108,450
Dividends paid to Ordinary Shareholders
2
6 – – – – (89,773) (89,773)
Cost of shares bought back for treasury
–
– (15,269)
– –
(15,269)
Net assets attributable to shareholders
at 31December 2023
13,739 6 0 7,12 5 655,260 (21,791) 86,528 1,340,861
1
The special distributable and revenue reserves can be distributed in the form of a dividend net of any deficit in the capital reserve. The total distributable amount as at 31 December
2024 was $560,814,000 (2023: $719,997,000).
2
2023 Dividends paid to Ordinary Shareholders does not include the dividend paid on 5January 2024.
The notes on pages 68 to 93 form part of these financial statements.
As at 31 December 2024 (In $000s except per share amounts)
66
Statement of Financial Position
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
Note 31December 2024 31December 2023
Non-current assets
Investments at fair value through profit or loss 7 1,162,200 1,201,362
1,162,200 1,201,362
Current assets
Trade and other receivables 8 31, 797 20,317
Cash and cash equivalents 9 5,620 135,053
37, 417 155,370
Total assets 1,199,617 1,356,732
Current liabilities
Trade and other payables 10 17,884 15, 871
Total current liabilities 17,884 15,871
Total assets less current liabilities 1,181, 733 1,340,861
Non-current liabilities
Deferred income 10 55 –
Net assets 1,181,678 1,340,861
Represented by:
Share capital 13 13 , 739 13 , 73 9
Share premium account 6 0 7,125 6 0 7,12 5
Special distributable reserve 548,561 655,260
Capital reserve (21,883) (21,791)
Revenue reserve 34,136 86,528
Total equity attributable to shareholders of the Company 1,181,678 1,340,861
Net asset value per ordinary share (basic and diluted) 12 $0.9963 $1.0293
The financial statements of BioPharma Credit PLC registered number 10443190 were approved and authorised for issue by the Board of
Directors on 24March 2025 and signed on its behalf by:
Harry Hyman
Chairman
24March2025
The notes on pages 68 to 93 form part of these financial statements.
For the year ended 31 December 2024 (In $000s)
67
Cash Flow Statement
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
Note
Year ended
31December 2024
Year ended
31December 2023
Cash flows from operating activities
Investment income received 136,563 154,835
Other income received 1,925 4,051
Investment management fee paid (12,330) (13,264)
Performance fee paid (12,044) (20,255)
Other expenses paid (2,202) (2,185)
Net cash flow generated from operating activities 111, 912 123,182
Cash flow from investing activities
Purchase of investments
1
– (36,656)
Sales of investments
1
39,072 35,000
Net cash flow generated from investing activities 39,072 (1,656)
Cash flow from financing activities
Dividends paid to Ordinary shareholders 6 (174,662) (89,773)
Share buybacks (105,753)
2
(17,220)
Net cash flow used in financing activities (280,415) (106,993)
(Decrease)/increase in cash and cash equivalents for the
year
(129,431) 14,533
Cash and cash equivalents at start of year 9 135,053 120,527
Revaluation of foreign currency balances (2) (7)
Cash and cash equivalents at end of year 9 5,620 135,053
1
BPCR Limited Partnership investments not included.
2
The Company repurchased 116,622,535 shares, which is 8.5 per cent. of the total shares of the Company, at an average share price of 91 cents.
The notes on pages 68 to 93 form part of these financial statements.
For the year ended 31 December 2024
FINANCIAL STATEMENTS
68
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Notes to the Financial Statements
1. GENERAL INFORMATION
BioPharma Credit PLC is a closed-ended investment company incorporated and domiciled in England and Wales on 24October 2016 with
registered number 10443190. The registered office of the Company is Central Square, 29 Wellington Street, Leeds, LS1 4DL.
The Company carries on the business as an investment trust company within the meaning of Sections 1158/1159 of the Corporation Tax Act
2010.
The Company is the ultimate parent of the group, with three subsidiaries. Please see note 14 for further information.
The Company’s Investment Manager is Pharmakon Advisors, LP (“Pharmakon”). Pharmakon is a limited partnership established under the laws
of the State of Delaware. It is registered as an investment adviser with the Securities and Exchange Commission (“SEC”) under the United States
Investment Advisers Act of 1940, as amended.
Pharmakon is authorised as an Alternative Investment Fund Manager (“AIFM”) under the Alternative Investment Fund Managers Directive
(“AIFMD”). Pharmakon has, with the consent of the Directors, delegated certain administrative duties to Waystone Administration Solutions (UK)
Limited.
2. ACCOUNTING POLICIES
A) BASIS OF PREPARATION
The Company’s annual financial statements covers the year from 1January 2024 to 31December 2024 and have been prepared in accordance
with UK-adopted International Accounting Standards (UK IAS) and as applied in accordance with the Disclosure Guidance Transparency Rules
sourcebook of the Financial Conduct Authority (FCA) and the AIC SORP (issued in July 2022) for the financial statements of investment trust
companies and venture capital trusts, except to any extent where it is not consistent with the requirements of UK IAS. The financial statements have
been prepared in accordance with the Companies Act 2006, as applicable to companies reporting under those standards.
The financial statements are presented in US dollars, being the functional currency of the Company and rounded to the nearest thousand, except
where otherwise indicated. The financial statements have been prepared on a going concern basis under the historical cost convention, except
for the measurement at fair value of investments measured at fair value through profit or loss.
ASSESSMENT AS AN INVESTMENT ENTITY
Entities that meet the definition of an investment entity within IFRS 10 ‘Consolidated Financial Statements’ are required to measure their subsidiaries
at fair value through profit or loss rather than consolidate the entities. The criteria which define an investment entity are as follows:
• an entity that obtains funds from one or more investors for the purpose of providing those investors with investment services;
• an entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income
or both; and
• an entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Directors have concluded that the Company meets the characteristics of an investment entity, in that it has more than one investor and its
investors are not related parties; holds a portfolio of investments, predominantly in the form of loans which generates returns through interest
income. All investments, including its subsidiary BPCR Limited Partnership, are reported at fair value to the extent allowed by UK IAS.
B) PRESENTATION OF STATEMENT OF COMPREHENSIVE INCOME
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 Statement of Comprehensive Income between items of a revenue and capital nature has been prepared alongside the Income
Statement.
C) SEGMENTAL REPORTING
The Directors are of the opinion that the Company has one operating and reportable segment being the investment in debt assets secured by
royalties or other cash flows derived from the sales of approved life sciences products.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
69
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
2. ACCOUNTING POLICIES (CONTINUED)
D) INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
The principal activity of the Company is to invest in interest-bearing debt assets with a contractual right to future cash flows derived from royalties
or sales of approved life sciences products. Most of the Company’s investments are held indirectly via its subsidiary, BPCR Limited Partnership. In
accordance with UK IAS, the financial assets are measured at fair value through profit or loss. They are accounted for on their trade date at fair
value, which is equivalent to the cost of the investment. The fair value of the asset reflects any contractual amortising balance.
The fair value hierarchy consists of the following three levels:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 – Valuation techniques using observable inputs
• Level 3 – Valuation techniques using significant unobservable inputs
Level 1 investments are priced by unadjusted quotedprices in active markets.
Level 2 investments may be valued using market data obtained from external, independent sources. The data used could include quoted prices for
similar assets and liabilities in active markets, prices for identical or similar assets and liabilities in inactive markets, or models with observable inputs.
For unlisted level 3 investments where the market for a financial instrument is not active, fair value is established using valuation techniques in
accordance with the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines (issued in December 2022), which may
include recent arm’s length market transactions between knowledgeable, willing parties, if available, 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 proved reliable from estimates of prices obtained in actual market
transactions, that technique is utilised. More information can be found in Note 2(n) below.
Unlisted investments often require the manager to make estimates and judgements and apply assumptions or subjective judgement to future events
and other matters that may affect fair value. For unlisted investments valued using a discounted cash flow analysis, the key judgements are the size
of the market, pricing, projected sales of the product at trade date and future growth and other factors that will support the repayment of a senior
secured or royalty debt instrument.
Changes in the fair value of investments held at fair value through profit or loss, and gains or losses on disposal, are recognised in the Statement
of Comprehensive Income as gains or losses from investments held at fair value through profit or loss. Transaction costs incurred on the purchase
and disposal of investments are included within the cost or deducted from the proceeds of the investments. All purchases and sales are accounted
for on trade date.
E) FOREIGN CURRENCY
Transactions denominated in currencies other than US dollars are recorded at the rates of exchange prevailing on the date of the transaction.
Items which are denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Any gain or loss arising from
a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the Statement of Comprehensive
Income.
F) INCOME
There are seven main sources of revenue for the Company: interest income, income from subsidiaries, royalty revenue, make-whole and prepayment
income, dividends, paydown fees and the gain or loss on marketable securities.
Interest income is recognised when it is probable that the economic benefits will flow to the Company. Interest is accrued on a time basis,
by reference to the principal outstanding and the effective interest rate that is applicable. Accrued interest is included within trade and other
receivables on the Statement of Financial Position.
The Company recognises accrued income for investments that it holds directly. The Company also holds an investment in BPCR Limited Partnership,
its wholly owned subsidiary which it measures at fair value through profit or loss rather than consolidate. BPCR Limited Partnership also recognises
accrued income for investments it holds directly. When the accrued income is recorded at the Partnership, the Company recognises the income in
capital within the Statement of Comprehensive Income. When the Company’s right to receive the income is established, funds are transferred from
the Partnership to the Company and income is transferred to revenue within the Statement of Comprehensive Income.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
70
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
2. ACCOUNTING POLICIES (CONTINUED)
F) INCOME (CONTINUED)
Royalty revenue is recognised on an accruals basis in accordance with the substance of the relevant agreement provided it is probable that
the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Royalty arrangements that are based on
production, sales and other measures are recognised by reference to the underlying arrangement.
Make-whole and prepayment income is recognised when payments are received by the BPCR Limited Partnership and transferred from the
Partnership to the Company and is recorded to revenue within the Statement of Comprehensive Income.
Dividends are receivable on equity shares and 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. Dividends from investments in unquoted shares and securities are
recognised when they become receivable.
Some investments include additional consideration in the form of structuring fees, which are paid on completion of the transaction. As the investments
are classified as level 3 in the fair value hierarchy, there is no observable evidence of the fair value of the investments excluding the fees, therefore
the fees should be included in the day one fair value of the investments. Such fees are included in the fair value of the investment and released to
the Statement of Comprehensive Income over the life of the investment. We consider incorporating the fees in the fair value gains and losses over
the life of the loans to be more reflective of the period over which the benefit is received. These fees are allocated to revenue within the Statement
of Comprehensive Income.
Bank interest and other interest receivable are accounted for on an accruals basis.
G) DIVIDENDS PAID TO SHAREHOLDERS
The Company intends to pay dividends in US Dollars on a quarterly basis, however, shareholders can elect to have dividends paid in sterling.
The Company may, where the Directors consider it appropriate, use the reserve created by the cancellation of its share premium account to pay
dividends.
The Company intends to comply with the requirements for maintaining investment trust status for the purposes of section 1158 of the Corporation
Tax Act 2010 (as amended) regarding distributable income. As such, the Company will distribute amounts such that it does not retain in respect of
an accounting period an amount greater than 15 per cent. of its income (as calculated for UK tax purposes) for that period.
H) EXPENSES
All expenses are accounted for on an accruals basis, with the exception of director’s expenses, which are accounted for on a cash basis. Expenses,
including investment management fees, performance fees and finance costs, are charged through the revenue account except as follows:
• expenses which are incidental to the acquisition or disposal of an investment are treated as capital costs and separately identified and
disclosed in Note 4; and
• expenses of a capital nature are accounted for through the capital account.
The performance fee is calculated in accordance with the details in Note 4(b). Any performance fee triggered, whether payable or deferred, is
recognised in the Statement of Comprehensive Income. Where a performance fee is payable it is treated as a current liability in the Statement of
Financial Position. Where a performance fee is deferred, it is treated as a non-current liability in the Statement of Financial Position. It becomes
payable to the Investment Manager at the end of the first performance period in respect to which the compounding condition is satisfied.
I) TRADE AND OTHER RECEIVABLES
Trade and other receivables are recognised and carried at amortised cost as the Company collects contractual interest payments from its
borrowers. An allowance for estimated unrecoverable amounts are measured and recognised where necessary. The Company assesses, on a
forward-looking basis, the expected losses associated with its trade and other receivables.
J) CASH AND CASH EQUIVALENTS
Cash comprises cash in hand and demand deposits. Cash equivalents are short-term with original maturities of three months or less and highly
liquid investments, that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
Cash and cash equivalents includes interest and income from money market funds.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
71
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
2. ACCOUNTING POLICIES (CONTINUED)
K) TRADE AND OTHER PAYABLES
Trade and other payables are recognised and carried at amortised cost, do not carry any interest and are short-term in nature.
L) TAXATION
It is the intention of the Directors to conduct the affairs of the Company so as to satisfy the conditions by HMRC as an investment trust under section
1158 of the Corporation Tax Act 2010 (as amended) and pursuant to regulations made under section 1159 of the Corporation Tax Act 2010.
The Company may, if it so chooses, designate as an ‘interest distribution’ all or part of the amount it distributes to shareholders as dividends, to
the extent that it has ‘qualifying interest income’ for the accounting period. Were the Company to designate any dividend it pays in this manner, it
should be able to deduct such interest distributions from its income in calculating its taxable profit for the relevant accounting period. The Company
intends to elect for the ‘streaming’ regime to apply to the dividend payments it makes to the extent that it has such ‘qualifying interest income’.
Shareholders in receipt of such a dividend will be treated, for UK tax purposes, as though they had received a payment of interest, which results
in a reduction of the corporation tax payable by the Company.
Tax on the profit or loss for the year comprises current and deferred tax. Corporation tax is recognised in the Statement of Comprehensive Income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet
date and any adjustment to tax payable in respect of previous periods. The tax effect of different items of expenditure is allocated between revenue
and capital on the same basis as the particular item to which it relates, using the Company’s marginal method of tax, as applied to those items
allocated to revenue, for the accounting period.
Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax basis of assets and
liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are measured at the tax rates that are expected to
apply to the period when the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance
sheet date.
M) SHARE CAPITAL AND RESERVES
The share capital represents the nominal value of the Company’s Ordinary Shares in issue.
The share premium account represents the excess over nominal value of the fair value of consideration received for the Company’s Ordinary
Shares in issue net of expenses of the share issue. This reserve cannot be distributed.
The special distributable reserve was created on 29June 2017 to enable the Company to buy back its own shares and pay dividends out of such
distributable reserve, in each case when the Directors consider it appropriate to do so, and for other corporate purposes.
The capital reserve represents realised and unrealised capital and exchange gains and losses on the disposal and revaluation of investments and
of foreign currency items. The realised capital reserve can be used for the repurchase of shares. This reserve cannot be distributed.
The revenue reserve represents retained profits from the income derived from holding investment assets less the costs and interest on cash balances
associated with running the Company. This reserve can be distributed.
N) CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The preparation of these financial statements in conformity with UK IAS requires the Directors to make accounting estimates which will not always
equal the actual results. The Directors also need to exercise judgement in applying the Company’s accounting policies.
This note provides an overview of the areas that involve a higher degree of judgement or complexity and of items which are more likely to be
materially adjusted due to estimates and judgements included in other notes, together with information about the basis of calculation for each line
in the financial statements.
JUDGEMENTS
Using the criteria in Note 2(a) above, the Directors have judged that the Company meets the characteristics of an investment entity, in that it has
more than one investor and its investors are not related parties; holds a portfolio of investments, predominantly in the form of loans which generates
returns through interest income.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
72
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
2. ACCOUNTING POLICIES (CONTINUED)
ESTIMATES AND ASSUMPTIONS
In particular, judgements and estimates are made in determining the fair valuation of unquoted investments for which there is no observable market
and may cause material adjustments to the carrying value of those investments. Determining fair value of investments with unobservable market
inputs is an area involving management judgement, requiring assessment as to whether the value of assets can be supported by the net present
value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating
the net present value of the future cash flows, certain assumptions may be required to be made including management’s expectations of short and
long term growth rates in product sales and the selection of discount rates to reflect the risks involved. Additionally, when the issuer of an unlisted
investment held is subject to a takeover bid which, if completed, would entitle the company to additional income such as make-whole premium,
or would otherwise change the timing of receipt of cashflows, the company is required to estimate the likelihood of such a bid being successful,
and the timing of transaction completion. These are valued in accordance with Note 2(d) above and using the valuation techniques described
in Note 7 below.
Also, estimates including cash flow projections, discount rates and growth rates in product sales are made when determining any deferred
performance fee; this may be affected by future changes in the Company’s portfolio and other assets and liabilities.
Any deferred performance fee is calculated in accordance with Note 4(b) below and is recognised in accordance with Note 2(h) above.
These judgements and estimates are reviewed on an ongoing basis. Revisions to these judgements and estimates are also reviewed on an ongoing
basis. Revisions are recognised prospectively.
O) ACCOUNTING STANDARDS NOT YET EFFECTIVE
There are no standards or amendments not yet effective which have a material impact on the Company.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
73
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
3. INCOME
Year ended
31December 2024
$000
Year ended
31December 2023
$000
Income from investments
US unfranked investment income from BPCR Limited Partnership 148,485 15 5, 0 61
Additional consideration received
1
14 5 297
148,630 155,358
Other income
Interest income from liquidity/money market funds 1,488 2,988
Interest income from US treasury bonds – 1,325
Other interest 2 11
1,490 4,324
Total income 150,120 159,682
¹ In 2024 $145,000 was recorded as additional income from the Company’s investment in OptiNose warrants (2023: $297,000).
4. FEES AND EXPENSES
EXPENSES
Year ended 31December 2024 Year ended 31December 2023
Revenue
$000
Capital
$000
Total
$000
Revenue
$000
Capital
$000
Total
$000
Management fee (note 4a) 11 , 9 9 7 – 11 , 9 9 7 13 ,19 9 – 13 ,19 9
Performance fee (note 4b) 13,574 – 13,574 12,044 – 12,044
Directors' fees (note 4c) 551 – 551 496 – 496
Other expenses
Company Secretarial fee 119 – 119 95 – 95
Administration fee 135 – 135 135 – 135
Legal and professional fees 192 – 192 99 – 99
Public relations fees 180 – 18 0 175 – 175
Director's and Officer's liability insurance 97 – 97 12 8 – 12 8
Auditors' remuneration – Statutory audit 307 – 307 325 – 325
Auditors' remuneration – Other audit related services – Half year
review and agreed upon procedures
87 – 87 85 – 85
VAT 13 0 – 13 0 1 – 1
Printing fees 87 – 87 87 – 87
Registrars fees 72 – 72 70 – 70
National insurance 67 – 67 60 – 60
Other expenses 255 – 255 2 81 – 281
1,728 – 1,728 1, 541 – 1, 541
Total expenses 27,850 – 27,850 27,280 – 27,280
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
74
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
4. FEES AND EXPENSES (CONTINUED)
A) INVESTMENT MANAGEMENT FEE
With effect from the Initial Admission, the Investment Manager is entitled to a management fee (“Management Fee”) calculated on the following
basis: (1/12 of 1 per cent of the NAV on the last business day of the month in respect of which the Management Fee is to be paid (calculated
before deducting any accrued Management Fee in respect of such month)) minus (1/12 of $100,000).
The Management Fee payable in respect of any quarter will be reduced by an amount equal to the Company’s pro rata share of any transaction
fees, topping fees, break-up fees, investment banking fees, closing fees, consulting fees or other similar fees which the Investment Manager (or an
affiliate) receives in connection with transactions involving investments of the Company (“Transaction Fees”). The Company’s pro rata share of any
Transaction Fees will be in proportion to the Company’s economic interest in the investment(s) to which such Transaction Fees relate.
B) PERFORMANCE FEE
Subject to: (i) the NAV attributable to the Ordinary Shares in issue as at the end of a performance period representing a minimum of 6 per cent.
annualised rate of return on the Company’s IPO gross proceeds (adjusted for dividends, share issues and buybacks as appropriate), (ii) the total
return on the NAV attributable to the Ordinary Shares in issue (adjusted for dividends, share issues and buybacks as appropriate) exceeding 6
per cent. over such performance period, and (iii) a high watermark, the Investment Manager will be entitled to receive a performance fee equal to
the lesser of: (a) 50 per cent. of the total return above 6 per cent; and (b) 10 per cent. of the total return over such performance period provided
always that the amount of any performance fee payable to the Investment Manager will be reduced to the extent necessary to ensure that after
account is taken of such fee, condition (iii) above remains satisfied.
Where the Investment Manager is not entitled to a performance fee solely because condition (i) has not been satisfied, such fee will be deferred
and paid in a subsequent performance period in which such condition is satisfied. Where condition (i) is satisfied in a performance period but the
payment of a performance fee (or any deferred performance fee from previous performance periods) in full would result in that condition failing,
the Investment Manager shall be entitled to such a portion of such fee that does not result in the failure of the condition (i) above and the balance
would be deferred to a future performance period.
Any performance fee (whether deferred or otherwise) shall be paid as soon as practicable after the end of the relevant performance period and,
in any event, within 15 business days of the publication of the Company’s audited annual financial statements relating to such period.
Where the payment of performance fee (or any deferred performance fee from previous performance periods) in full would result in the failure of
condition (i) above, the Investment Manager shall only be entitled to 50 per cent. of such fee that does not result in the failure of condition (i) with
the balance being deferred to a future performance period.
If, during the last month of a performance period, the Shares have, on average, traded at a discount of 1 per cent. or more to the NAV per Share
(calculated by comparing the middle market quotation of the Shares at the end of each business day in the month to the prevailing published
NAV per Share (exclusive of any dividend declared) as at the end of such business day and averaging this comparative figure over the month),
the Investment Manager shall (or shall procure that its Associate does) apply 50 per cent. of any Performance Fee paid by the Company to
the Investment Manager (or its Associate) in respect of that performance period (net of all taxes and charges applicable to such portion of
the Performance Fee) to make market acquisitions of Shares (the “Performance Shares”) as soon as practicable following the payment of the
Performance Fee by the Company to the Investment Manager (or its Associate) and at least until such time as the Shares have, on average, traded
at a discount of less than 1 per cent. to the NAV per Share over a period of five business days (calculated by comparing the middle market
quotation of the Shares at the end of each such business day to the prevailing published NAV per Share (exclusive of any dividend declared) and
averaging this comparative figure over the period of five business days). The Investment Manager’s obligation:
1) shall not apply to the extent that the acquisition of the Performance Shares would require the Investment Manager to make a mandatory bid
under Rule 9 of the Takeover Code; and
2) shall expire at the end of the performance period which immediately follows the performance period to which the obligation relates.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
75
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
4. FEES AND EXPENSES (CONTINUED)
B) PERFORMANCE FEE (CONTINUED)
The below table shows the accrued and payable performance fee.
As at 31December 2024
$000
As at 31December 2023
$000
Accrued performance fee 13,574 12,044
Performance fee payable 13,574 12,044
C) DIRECTORS
Each of the Directors is entitled to receive a fee from the Company at such rate as may be determined in accordance with the Articles. The
Directors’ remuneration for 2024 is $83,000 per annum for each Director other than:
• the Chairman, who will receive an additional $35,600 per annum; and
• the Chairman of the Audit and Risk Committee, who will receive an additional $17,800 per annum.
5. TAXATION ON ORDINARY ACTIVITIES
It is the intention of the Directors to conduct the affairs of the Company so as to satisfy the conditions for approval of the Company by HMRC as
an investment trust under Section 1158 of the Corporation Tax Act 2010 (as amended) and pursuant to regulations made under Section 1159 of
the Corporation Tax Act 2010. As an investment trust, the Company is exempt from corporation tax on capital gains.
The current taxation charge for the year is different from the standard rate of corporation tax in the UK of 25 per cent, the effective tax rate was
0per cent. The differences are explained below.
There was an increase in the UK corporation tax rate from 19 per cent. to 25 per cent. during the year ended 31December 2023, effective from
April 2023, which was substantively enacted on 24May 2021. This had no effect on the tax charge for the Company as the exemptions above
will apply.
Year ended 31December 2024 Year ended 31December 2023
Revenue
$000
Capital
$000
Total
$000
Revenue
$000
Capital
$000
Total
$000
Total return on ordinary activities before taxation 122,270 (92) 12 2 ,178 132,402 (23,952) 108,450
Theoretical tax at UK Corporation tax rate of 25.00%
(2023: 23.50%
1
) 30,568 (23) 30,545 31 ,114 (5,629) 25,485
Effects of:
Capital items that are not taxable – 23 23 – 5,629 5,629
Tax deductible interest distributions (30,568) – (30,568) (31,114) – (31,114)
Total tax charge – – – – – –
¹ The theoretical tax rate for 2023 is calculated using a blended tax rate over the year.
At 31December 2024, the Company had no unprovided deferred tax liabilities.
At that date, based on current estimates and including the accumulation of net allowable losses, the Company had no unrelieved losses.
Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and
intends to continue for the foreseeable future to meet) the conditions for approval as an Investment Trust company.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
76
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
6. DIVIDENDS
Year ended 31December 2024 Year ended 31December 2023
Revenue
$000
Capital
$000
Total
$000
Revenue
$000
Capital
$000
Total
$000
In respect of the previous year ended 31December
2023:
Third interim dividend of $0.0175 per Ordinary share 22,797 – 22,797 – – –
Special dividend of $0.0200 per Ordinary share 26,053 – 26,053 – – –
Fourth interim dividend of $0.0175 per Ordinary share 22,014 – 22,014 – – –
Special dividend of $0.0121 per Ordinary share 15 ,19 5 – 15 ,19 5 – – –
Special dividend of $0.0004 per Ordinary share 469 – 469 – – –
In respect of the previous year ended 31December
2022:
Fourth interim dividend of $0.0175 per Ordinary share – – – 23,076 – 23,076
Special dividend of $0.0158 per Ordinary share – – – 20,823 – 20,823
In respect of the current year:
First interim dividend of $0.0175 per Ordinary share (2023:
$0.0175 per Ordinary share)
21,939 – 21,939 23,077 – 23,077
Second interim dividend of $0.0175 per Ordinary share (2023:
$0.0175 per Ordinary share)
21,334 – 21, 334 22,797 – 22,797
Third interim dividend of $0.0175 per Ordinary share 20,935 – 20,935 – – –
Special dividend of $0.0204 per Ordinary share 23,926 – 23,926 – – –
174,662 – 174,662 89,773 – 89,773
Set out below are the interim dividends paid or proposed on Ordinary Shares in issue in respect of the financial year, which is the basis on which
the requirements of Section 1159 of the Corporation Tax Act 2010 are considered.
Year ended 31December 2024 Year ended 31December 2023
Revenue
$000
Capital
$000
Total
$000
Revenue
$000
Capital
$000
Total
$000
First interim dividend of $0.0175 per Ordinary share
(2023: $0.0175 per Ordinary share)
21,939 – 21,939 23,077 – 23,077
Second interim dividend of $0.0175 per Ordinary share
(2023: $0.0175 per Ordinary share)
21,334 – 21, 334 22,797 – 22,797
Third interim dividend of $0.0175 per Ordinary share
(2023: $0.0175 per Ordinary share)
20,935 – 20,935 22,797 – 22,797
Special dividend of $0.0200 per Ordinary share
(2023: $0.020 per Ordinary share)
23,926 – 23,926 26,053 – 26,053
Fourth interim dividend of $0.0175 per Ordinary share
(2023: $0.0175 per Ordinary share)
20,654 – 20,654 22,014 – 22,014
Special dividend of $0.0114 per Ordinary share
(2023: $0.0121 per Ordinary share)
13,482 – 13,482 15 ,19 5 – 15 ,19 5
Special dividend of $nil per Ordinary share
(2023: $0.0004 per Ordinary share)
– – – 469 – 469
122,270 – 122,270 132,402 – 132,402
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
77
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
6. DIVIDENDS (CONTINUED)
On 23January2025, the Board approved a fourth interim dividend, for the year ended 31December 2024, of $0.0175per Ordinary Share
and a special dividend of $0.0114per Ordinary Share, both paid on 28February2025.
In accordance with IFRS, these dividends have not been included as a liability in these financial statements.
7. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
As at
31December 2024
$000
As at
31December 2023
$000
Investment portfolio summary
Unlisted investments in subsidiaries at fair value through profit or loss 1,162 ,136 1,201,098
Unlisted fixed interest investments at fair value through profit or loss 64 264
1,162,200 1,201,362
Year ended 31December 2024
Unlisted
investments in
subsidiaries
$000
Unlisted
fixed interest
investments
$000
Total
$000
Investment portfolio summary
Opening cost at beginning of year
1,224,944
8 91 1,225,835
Opening unrealised losses at beginning of year (23,846) (627) (24,473)
Opening fair value at beginning of year 1,201,098 264 1,201,362
Movements in the year:
Redemption and sales proceeds (39,072) – (39,072)
Change in unrealised gains/(losses) 110 (200) (90)
Closing fair value at the end of the year 1,162,136 64 1,162,200
Closing cost at end of year 1,185,872 8 91 1,186,763
Closing unrealised losses at end of year (23,736) (827) (24,563)
Closing fair value at the end of the year 1,162,136 64 1,162,200
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
78
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
7. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)
Year ended 31December 2023
Unlisted
investments in
subsidiaries
$000
Unlisted
fixed interest
investments
$000
Total
$000
Investment portfolio summary
Opening cost at beginning of year 1,223,288 8 91 1,224,179
Opening unrealised (losses)/gains at beginning of year (594) 66 (528)
Opening fair value at beginning of year 1,222,694 957 1,223,651
Movements in the year:
Purchases at cost 36,656 – 36,656
Redemption and sales proceeds (35,000) – (35,000)
Change in unrealised losses (23,252) (693) (23,945)
Closing fair value at the end of the year 1,201,098 264 1,201,362
Closing cost at end of year 1,224,944 8 91 1,225,835
Closing unrealised losses at end of year (23,846) (627) (24,473)
Closing fair value at the end of the year 1,201,098 264 1,201,362
Year ended
31December 2024
$000
Year ended
31December 2023
$000
Unrealised losses (90) (23,945)
(90) (23,945)
The Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making
the measurements. The fair value hierarchy consists of the following three levels:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices).
• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level of the fair value hierarchy, within which the fair value measurement is categorised, is determined on the basis of the lowest level input that
is significant to the fair value of the investment.
As at 31December 2024
Financial assets
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Investment portfolio summary
Unlisted investments in subsidiaries measured at fair value through profit or loss – – 1,162,136 1,162,136
Unlisted fixed interest investments at fair value through profit or loss – 64 – 64
– 64 1,162,136 1,162,200
Liquidity/money market funds 5,466 – – 5,466
Total 5,466 64 1,162,136 1,167,666
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
79
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
7. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)
As at 31December 2023
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Investment portfolio summary
Unlisted investments in subsidiaries measured at fair value through profit or loss – – 1,201,098 1,201,098
Unlisted fixed interest investments at fair value through profit or loss – 264 – 264
– 264 1,201,098 1,201,362
Liquidity/money market funds 86,174 – – 86,174
Total 86,174 264 1,201,098 1,287,536
A reconciliation of fair value measurements in Level 3 is set out below.
LEVEL 3 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended 31December 2024
Unlisted investments in
subsidiaries
$000
Total
$000
Opening balance 1,201,098 1,201,098
Redemptions
1
(39,072) (39,072)
Unrealised losses 110 110
Closing balance at 31December 2024 1,162,136 1,162,136
Year ended 31December 2023
Unlisted
investments
$000
Total
$000
Opening balance 1,222,694 1,222,694
Purchases 36,656 36,656
Redemptions
1
(35,000) (35,000)
Unrealised losses (23,252) (23,252)
Closing balance at 31December 2023 1,201,098 1,201,098
¹ Redemptions are the proceeds received from the repayment of investments.
There were no transfers between levels during the year.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
80
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
7. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)
VALUATION TECHNIQUES
Unrealised gains and losses recorded on Level 1 financial instruments are reported in net gains on investments at fair value on the Statement of
Comprehensive Income. The fund administrator utilises quoted prices in active markets that they have access to and the Investment Manager
verifies the quoted prices on Bloomberg.
Unrealised gains and losses recorded on Level 2 and 3 financial instruments are reported in net gains on investments at fair value on the Statement
of Comprehensive Income. Level 2 and Level 3 financial instruments are fair valued using inputs that reflect management’s best estimate of what
market participants would use in pricing the assets or liabilities at the measurement date. Consideration is given to the risk inherent in the valuation
techniques and the risk inherent in the inputs of the model.
Level 3 financial instruments are fair valued using a discounted cash flow methodology. For capped royalty investments, discount rates are applied
to the consensus forecasts or the manager’s forecast for sales of the underlying products to determine fair value. The significant unobservable input
used in the fair value measurement of the Company’s Level 3 investments is the specific discount rate used for each investment summarised in the
table below.
Investments held in subsidiaries, namely BPCR Limited Partnership, are based on the fair value of the investments held in those entities.
The Company’s unlisted investments, including those of its wholly owned subsidiary BPCR Limited Partnership, are all classified as Level 3
investments. The fair values of the unlisted investments have been determined principally by reference to discounted cash flows. The significant
unobservable input used is detailed below:
As at 31 December 2024
Assets
Fair value of Level 3
financial assets at fair
value through profit
or loss $000
Valuation technique
Unobservable
input
Discount
Rate
2
Fair value
sensitivity to a
100bps decrease in
the discount rate
Fair value
sensitivity to a
100bps increase in
the discount rate
Assets held by BPCR
Limited Partnership
1
Alphatec 34 , 719 Discounted cash flow Discount rate 12 .1% 35,547 33,918
BioCryst 12 7, 5 4 3 Discounted cash flow Discount rate 12 . 6% 130,757 124,444
BMS 49,064 Discounted cash flow Discount rate 9.5% 49,405 48,730
Collegium 278,578 Discounted cash flow Discount rate 10.0% 286,346 271,143
Evolus 61,722 Discounted cash flow Discount rate 14 . 5% 62,925 60,556
Geron 48,782 Discounted cash flow Discount rate 11.3% 50,517 47,129
Insmed 215,917 Discounted cash flow Discount rate 11.0% 222,396 209,706
Novocure 47,809 Discounted cash flow Discount rate 12.8% 4 9 ,110 46,559
OptiNose US 70,358 Discounted cash flow Discount rate 15.4% 71,266 69,471
Tarsus 36,661 Discounted cash flow Discount rate 12.4% 3 7, 814 35,559
UroGen 49,600 Discounted cash flow Discount rate 13 .1% 50,351 48,867
Other net assets of BPCR
Limited Partnership
141,447 Amortised cost – – 141,447 141,447
1,162,200 1,187,881 1,137,529
¹ The Company holds an investment in BPCR Limited Partnership, its wholly owned subsidiary, which it measures at fair value through profit or loss rather than consolidate.
² For those interest-bearing loans with variable rates, the discount rates and fair value sensitivities are calculated based on the variable rates extant at 31 December 2024.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
81
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
7. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)
As at 31December 2023
Assets
Fair value of Level 3
financial assets at fair
value through profit
or loss
$000
Valuation technique
Unobservable
input
Discount
rate
2
Fair value sensitivity to a
100bps decrease in the
discount rate
1
$000
Fair value sensitivity to a
100bps increase in the
discount rate
1
$000
Assets held by BPCR
Limited Partnership
1
Akebia 17,480 Discounted cash flow Discount rate 14 .1 % 17,644 17,318
BioCryst 123,081 Discounted cash flow Discount rate 13 . 7 % 126,817 119,502
BMS 83,537 Discounted cash flow Discount rate 8.5% 84,419 82,674
Coherus 12 3 , 0 61 Discounted cash flow Discount rate 15 . 6 % 12 5 , 5 35 120,663
Collegium 206,250 Discounted cash flow Discount rate 15. 6 % 204,863 200,857
Evolus 61, 421 Discounted cash flow Discount rate 15 . 7 % 62,847 60,044
Immunocore 24,467 Discounted cash flow Discount rate 10 .9% 25, 351 23,626
ImmunoGen 48,214 Discounted cash flow Discount rate 10.3% 48,414 48,016
Insmed 148,664 Discounted cash flow Discount rate 14.6% 152,060 145,383
LumiraDx 136,048 Discounted cash flow Discount rate 21. 7 %
3
136,609 135,496
OptiNose US 72,048 Discounted cash flow Discount rate 15. 8 % 73,472 70,668
UroGen 49,399 Discounted cash flow Discount rate 15. 4 % 50,444 48,388
Other net assets of BPCR
Limited Partnership
107,692 Amortised cost – – 107,692 107,692
1,201,362 1,216,167 1,180,327
¹ The Company holds an investment in BPCR Limited Partnership, its wholly owned subsidiary, which it measures at fair value through profit or loss rather than consolidate.
² To conform to the 2024 presentation individual loan amounts and related discount rates above have been amended to reflect an amount of $11.8 million relating to discounts and
fees received previously included separately within net other assets. This does not affect the fair values, net assets or results of the Company.
³
The investment was written down as of 31December 2023 to reflect the expected recoverable net proceeds discounted at an 21.7 per cent. rate to account for remaining risks.
8. TRADE AND OTHER RECEIVABLES
As at
31December 2024
$000
As at
31December 2023
$000
Income receivable from BPCR Limited Partnership 31,684 19 , 761
Interest accrued on liquidity/money market funds 30 465
Other debtors 83 91
31,797 20,317
There have been no write-offs in the year and any expected credit losses are not material.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
82
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
9. CASH AND CASH EQUIVALENTS
As at
31December 2024
$000
As at
31December 2023
$000
Cash at bank 154 28
Liquidity/money market funds 5,466 86,174
5,620 86,202
Ringfenced cash for dividend
1
– 48,851
5,620 135,053
¹ At 31December 2023 the Company had paid $48,851,000 to the registrar in respect of the third interim dividend, which was not paid to shareholders until 5January 2024.
Any expected credit losses are not material.
10. TRADE AND OTHER PAYABLES
Current liabilities
As at
31December 2024
$000
As at
31December 2023
$000
Performance fee payable 13,574 12,044
Management fees accrual
2 ,916
3,249
Repurchase of shares 946 –
Accruals 448 578
17,884 15,871
Non-current liabilities
Deferred income 55 –
17,939 15,871
11. RETURN PER ORDINARY SHARE
Revenue return per ordinary share is based on the net revenue after taxation of $122,270,000 (2023: $132,402,000) and 1,222,360,376
(2023: 1,309,410,271) Ordinary Shares in issue, being the weighted average number of Ordinary Shares in issue for the year.
Capital return per ordinary share is based on net capital loss for the year of $92,000 (2023: net capital loss of $23,952,000) and on
1,222,360,376 (2023:1,309,410,271) Ordinary Shares in issue, being the weighted average number of Ordinary Shares in issue for the year.
Basic and diluted return per share are the same as there are no arrangements which could have a dilutive effect on the Company’s Ordinary
Shares in issue.
12. NET ASSET VALUE PER ORDINARY SHARE
The basic total net assets per ordinary share is based on the net assets attributable to equity shareholders at 31 December 2024 of
$1,181,678,000 (31December 2023: $1,340,861,000) and Ordinary Shares in issue of 1,186,056,657 (2023: 1,302,679,192), being the
number of Ordinary Shares in issue outstanding at 31December 2024. The NAV per ordinary share released on 31January 2024, in respect to
31 December 2023, was based on net assets of $1,293,845,000, which included the dividend payable on 5January2024 of $48,851,000.
This was excluded from the annual report for the year ended 31December2023 as per AIC SORP guidelines.
There is no dilution effect and therefore there is no difference between the diluted total net assets per ordinary share and the basic total net assets
per ordinary share.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
83
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
13. SHARE CAPITAL
Year ended 31December 2024 Year ended 31December 2023
Number of shares $000 Number of shares $000
Issued and fully paid:
Ordinary shares of $0.01:
Balance at beginning of the year 1,373,932,067 13 , 73 9 1,373,932,067 13 , 73 9
Balance at end of the year 1,373,932,067 13,739 1,373,932,067 13,739
Total voting rights at 31December 2024 were 1,186,056,657 (31December 2023: 1,302,679,192). In 2024 116,622,535 shares were
bought back for treasury (2023: 16,499,477). The balance of treasury shares on 31December 2024 was 187,875,410 (31December 2023:
71,252,875).
14. SUBSIDIARIES
The Company formed a wholly-owned subsidiary, BPCR Ongdapa Limited (“BPCR Ongdapa”), incorporated in Ireland on 5October 2017 for
the purpose of entering into a purchase, sale and assignment agreement with a wholly-owned subsidiary of Royalty Pharma for the purchase of a
50 per cent. interest in a stream of payments acquired by Royalty Pharma from Bristol-Myers Squibb (“BMS”). The registered address for BPCR
Ongdapa is BPCR Ongdapa Limited, 2nd Floor, Block 5, Irish Life Center, Abbey Street Lower Dublin 1, Ireland.
The Company formed a wholly-owned subsidiary, BPCR Limited Partnership, incorporated in England and Wales on 27March 2020 for the
purpose of entering into a three year $200million revolving credit facility with JPMorgan Chase Bank. BPCR Limited Partnership has its registered
office at Central Square, 29 Wellington Street, Leeds, LS1 4DL and received an initial contribution of £1.00 at formation from the Company, its
sole Limited Partner. In accordance with IFRS 10, the Company is exempted from consolidating a controlled investee as it is an investment entity.
Therefore, the Company’s investment in BPCR Limited Partnership will be recognised at fair value through profit or loss.
The General Partner for BPCR Limited Partnership is BPCR GP Limited, incorporated in England and Wales on 11March 2020 and is wholly-
owned by the Company. The Company is not exempt from consolidating the financial statements of BPCR GP under IFRS 10, however the highly
immaterial (nil) balance of BPCR GP would produce accounts with almost identical balances to the Company. Furthermore with reference to the
Companies Act, section 405 (2) “A subsidiary undertaking may be excluded from consolidation if its inclusion is not material for the purpose of
giving a true and fair view”. The registered address for BPCR GP Limited is BPCR GP Limited, Central Square, 29 Wellington Street, Leeds, LS1
4DL. The aggregate amount of its capital reserves as at 31December 2024 is $nil (2023: $nil) and a return for the year to 31December 2024
is $nil(2023:$nil).
As part of the successful closing of LumiraDx’s administration, the Company, via its subsidiary BPCR Limited Partnership received its 41 per cent.
share ownership of LumiraDx Colombia Holdings Limited. The registered address for UK Holdco is Central Square, 29 Wellington Street, Leeds,
United Kingdom, LS1 4DL. Additionally the Company received its share ownership of LumiraDx’s Colombian subsidiary which the Company will
seek to sell. At 31 December 2024, the value of the equity is $7,500,000 (2023: $nil).
15
. RECONCILIATION OF TOTAL RETURN FOR THE YEAR BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
Year ended
31December 2024
$000
Year ended
31December 2023
$000
Total return for the year before taxation 12 2 ,178 108,450
Capital losses 92 23,952
Increase in trade receivables (11,480) (479)
Increase/(decrease) in trade payables 1,12 2 (8,741)
Cash generated from operations 111,912 123,182
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
84
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
16. FINANCIAL INSTRUMENTS
The Company’s financial instruments include its investment portfolio, cash balances, trade receivables and trade payables that arise directly from
its operations. Adherence to the Company’s investment policy is key in managing risk. Refer to the Strategic Overview on pages24 to37 for a full
description of the Company’s investment objective and policy.
The Investment Manager monitors the financial risks affecting the Company on an ongoing basis and the Directors regularly receive financial
information which is used to identify and monitor risk. All risks are actively reviewed and monitored by the Board. Details of the Company’s
principal risks can be found in the Strategic Report on pages30 to36.
The main risks arising from the Company’s financial instruments are:
i) market risk, including price risk, currency risk and interest rate risk;
ii) liquidity risk; and
iii) credit risk.
(I) MARKET RISK
Market risk is the risk of loss arising from movements in observable market variables. The fair value of future cash flows of a financial instrument held
by the Company may fluctuate because of changes in market prices.
The Investment Manager assesses the exposure to market risk when making each investment decision and these risks are monitored by the
Investment Manager on a regular basis and the Board at quarterly meetings with the Investment Manager.
MARKET PRICE RISK
The Company is exposed to price risk arising from its investments whose future prices are uncertain. The Company’s exposure to price risk
comprises movements in the value of the Company’s investments. See Note 7 above for investments that fall into Level 3 of the fair value hierarchy
and refer to the description of valuation policies in Note 2(d). The nature of the Company’s investments, with a high proportion of the portfolio
invested in unlisted debt instruments, means that the investments are valued by the Company after consideration of the most recent available
information from the underlying investments. The Company’s portfolio is diversified among counterparties and by the sectors in which the underlying
companies operate, minimising the impact of any negative industry-specific trends.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
85
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
16. FINANCIAL INSTRUMENTS (CONTINUED)
The table below analyses the effect of a 10 per cent. change in the fair value of investments. The Investment Manager believes 10 per cent. is the
appropriate threshold for determining whether a material change in market value has occurred.
As at 31December 2024 At 31December 2023
Fair value
$000
10 per cent.
Increase/decrease
in market value
$000
Fair value
$000
10 per cent
Increase/decrease
in market value
$000
OptiNose US warrants 64 6 264 26
Assets held by BPCR Limited Partnership
Akebia – – 17,500 1,750
Alphatec 35,000 3,500 – –
BioCryst 129,482 12,948 125,465 12,547
BMS Purchased Payments (BPCR Ongdapa) 48,145 4,814 83,537 8,354
Coherus – – 125,000 12,500
Collegium 283,156 28,316 206,250 20,625
Evolus 62,500 6,250 62,500 6,250
Geron 50,000 5,000 – –
Immunocore – – 25,000 2,500
ImmunoGen – – 48,214 4,821
Insmed 218,677 21,868 150,986 15,099
LumiraDx – – 136,048 13,605
LumiraDx Colombia 7,500 750 – –
Novocure 50,000 5,000 – –
OptiNose US Equity 1,15 7 116 32 3
OptiNose US Note 71,500 7,15 0 71,500 7,15 0
Other assets of BPCR Limited Partnership 117, 519 11 , 7 5 2 99,066 9,907
Tarsus 37,500 3,750 – –
UroGen 50,000 5,000 50,000 5,000
1,162,200 116,220 1,201,362 120,137
The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of relevant information from the Investment
Manager. Investment performance and exposure are reviewed at each Board meeting.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
86
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
16. FINANCIAL INSTRUMENTS (CONTINUED)
CURRENCY RISK
Currency risk is the risk that fair values of future cash flows of a financial instrument fluctuate because of changes in foreign exchange rates.
At 31December 2024, the Company held cash balances in GBP Sterling of £120,000 ($150,000) (2023: £16,000 ($21,000)) and in Euro
of €3,000 ($4,000) (2023: €6,000 ($7,000)).
The currency exposures (including non-financial assets) of the Company as at 31December 2024:
Cash
$000
Investments
$000
Other net (liabilities) /assets
$000
Total
$000
Sterling 15 0 – (18) 13 2
Euro 4 – – 4
US Dollar 5,466 1,162,200 13 , 876 1,181,542
5,620 1,162,200 13,858 1,181,678
The currency exposures (including non-financial assets) of the Company as at 31December 2023:
Cash
$000
Investments
$000
Other net (liabilities) /assets
$000
Total
$000
Sterling 21 – (21) –
Euro 7 – – 7
US Dollar 135 , 0 25 1,201,362 4,467 1,340,854
135,053 1,201,362 4,446 1,340,861
A 10 per cent increase in the Sterling exchange rate would have increased net assets by $5,000 (2023: $4,000).
A 10 per cent. increase in the Euro exchange rate would have increased net assets by $nil (2023: $1,000).
A 10 per cent decrease would have decreased net assets by the same amount (2023: same).
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 movements may potentially affect future cash flows from:
• investments in floating rate securities, unquoted loans and purchased payments; and
• the level of income receivable on cash deposits and liquidity funds.
The Insmed instrument has a fixed interest rate and therefore is not subject to interest rate risk. The below table shows the percentage of the
Company’s net assets it represents.
As at 31December 2024
% of Company Net Assets
As at 31December 2023
% of Company Net Assets
Insmed
1
18.51 –
Immunocore – 1.86
¹ In 2024 Insmed changed from a floating interest rate to a fixed rate of interest.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
87
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
16. FINANCIAL INSTRUMENTS (CONTINUED)
The Alphatec, Biocryst, BMS Purchased Payments, Collegium, Evolus, Geron, Novocure, OptiNose US, Tarsus and Urogen loans and cash and
cash equivalents, including investments in liquidity funds, have a floating rate of interest. The below table shows the percentage of the Company’s
net assets they represent.
As at 31December 2024
% of Company Net Assets
As at 31December 2023
% of Company Net Assets
Collegium 23.96 15.38
BioCryst 10.96 9.36
Optinose US 6.05 5.33
Evolus 5.29 4.66
UroGen 4.23 3.73
Novocure 4.23 –
Geron 4.23 –
BMS Purchased Payments (BPCR Ongdapa) 4.07 6.23
Tarsus 3.17 –
Alphatec 2.96 –
LumiraDx Colombia 0.63 –
Insmed
1
– 11.26
LumiraDx – 10 .15
Coherus – 9.32
ImmunoGen – 3.60
Akebia – 1. 31
Cash and cash equivalents 0.48 10.07
¹ In 2024 Insmed changed from a floating interest rate to a fixed rate of interest.
A 100 basis point increase in SOFR would have increased net assets by $28,046,000 (2023: $10,783,000).
A 100 basis point decrease in SOFR would have decreased net assets by $21,415,000 (2023: $6,964,000).
A 300 basis point increase in SOFR would have increased net assets by $82,512,000 (2023: $66,490,000).
(II) LIQUIDITY RISK
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
At 31December 2024, the Company had cash and cash equivalents of $5,620,000 (2023: $135,053,000), including investments in liquidity/
money market funds with balances of $5,466,000 (2023: $86,174,000) and maximum unfunded commitments of $nil (2023: $nil).
At 31December 2024, BPCR Limited Partnership had cash and cash equivalents of $163,029,000 (2023: $125,766,000), including investments
in liquidity/money market funds with balances of $163,029,000 (2023: $80,450,000) and maximum unfunded commitments of $262,500,000
(2023: 85,000,000).
The Company maintains sufficient liquid investments through its cash and cash equivalents to pay accounts payable, accrued expenses and
ongoing expenses of the Company. The Company maintains sufficient liquidity to fulfill obligations due or anticipated within one year after the
financial statements are issued. Liquidity risk is manageable through a number of options, including the Company’s ability to issue debt and/
or equity and by selling all or a portion of an investment in the secondary market. On 22May 2020, BPCR Limited Partnership entered into
a $200million revolving credit facility with JPMorgan Chase Bank that was due to expire on 22May 2023, (the “Facilities Agreement”). The
Partnership paid a commitment fee on undrawn amounts of 200 basis points and would have paid a LIBOR margin of 400 basis points on drawn
amounts. On 10September 2021 the Partnership entered into an amendment including reducing the revolving credit facility from $200million
to $50million together with changes in the accordian feature allowing for an increase in the revolving credit facility to $100million and up to
$200million in term loans, extension of the maturity date to 22June 2024 and a reduction on the LIBOR margin payable under the revolving
credit facility from 400 basis points to 275 basis points. On 11April 2024, the Company terminated its JPMorgan revolving credit facility. As of
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
88
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
the date of such termination, the Company had $67,000,000 available to draw down under the JPM revolving credit facility. As of 31December
2024, the outstanding balance on the credit facility was $nil (2023: $nil).
The Company’s liabilities as at 31December 2024 were $17,939,000 (2023: $15,871,000) of which $17,884,000 (2023: $15,871,000)
was repayable within one year. There is sufficient cash and cash equivalents to repay the liabilities when they become due.
(III) CREDIT RISK
This is the risk the Company’s trade and other receivables will not meet their obligations to the Company.
While the Company will often seek to be a secured lender for each debt asset, there is no guarantee that the relevant borrower will repay the
loan or that the collateral will be sufficient to satisfy the amount owed. All of the Company’s investments are senior secured investments as detailed
in the Investment Manager’s Report on pages6 to 16.
The Investment Manager performs a robust credit risk analysis during the investment process for all new investments and constantly monitors the
collateral on its outstanding senior secured loans as to minimise the credit risk to the Company of default. The credit risk of the senior secured loans
will increase significantly after initial recognition when borrowers are not making principal and interest payments as agreed. The fair value of the
senior secured loan will be adjusted, either partially or in full, when there is a significant change in the prospect of recovery and the amount of the
change in fair value has been determined by the Investment Manager. Subsequent recoveries of amounts previously adjusted will decrease the
amount of the fair value loss recorded. Changes to a counterparty’s risk profile are monitored by the Investment Manager on a regular basis and
discussed with the Board at quarterly meetings.
The Company’s maximum exposure to credit risk at any given time is the fair value of its investment portfolio and cash and receivables. At
31 December 2024, the Company’s maximum exposure to credit risk was $1,199,617,000 (2023: $1,356,732,000). The Company’s
concentration of credit risk by counterparty can be found in the Investment Manager’s Report on pages6 to 16.
CAPITAL MANAGEMENT
The Company’s primary objectives in relation to the management of capital are:
• to ensure its ability to continue as a going concern;
• to ensure that the Company conducts its affairs to enable it to continue to meet the criteria to qualify as an investment trust; and
• to maximise the long-term shareholder returns in the form of sustainable income distributions through an appropriate balance of equity capital
and debt.
This is to be achieved through an appropriate balance of equity capital and gearing. The Company operates a flexible gearing policy which
depends on prevailing conditions. The Company may incur indebtedness up to 25 per cent. of the Company’s net asset value with a maximum of
up to 50 per cent. with Board approval.
17
. RELATED PARTY TRANSACTIONS
1
The amount incurred in respect of management fees during the year to 31 December 2024 was $11,997,000 (31 December 2023:
$13,199,000), of which $2,916,000 (31 December 2023: $3,249,000) was outstanding at 31 December 2024. The amount due to the
Investment Manager for performance fees at 31 December 2024 was $13,574,000 (31 December 2023: $12,044,000).
The amount incurred in respect of Directors’ fees during the year to 31 December 2024 was $551,400 (31 December 2023: $496,000) of
which $nil was outstanding at 31 December 2024 (31 December 2023: $nil).
A Shared Services Agreement was entered into by and between RP Management, LLC, an affiliate of the Investment Manager, and the Investment
Manager as of 1 January 2016. Under the terms of the Shared Services Agreement, the Investment Manager may have access to the expertise
of certain Royalty Pharma employees, including its research, legal and compliance, and finance teams.
BPCR Limited Partnership and its General Partner, BPCR GP Limited, are related entities of the Company, as they are wholly-owned subsidiaries and
formed for the purpose of entering into a new credit facility. On 22 May 2020, several investments totaling $1,070,139,000 were transferred to
BPCR Limited Partnership from the Company. In the year to 31 December 2024, the Company recorded income from BPCR Limited Partnership of
1
Past performance is not an indication of future performance.
16. FINANCIAL INSTRUMENTS (CONTINUED)
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
89
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
$148,485,000 (31 December 2023: $155,061,000) and the outstanding balance on 31 December 2024 was $31,684,000 (31 December
2023: $19,761,000). BPCR GP Limited had an outstanding balance as at 31 December 2024 of $nil (31 December 2023: $nil).
On 1 November 2024, the Company and the Private Fund entered into a senior secured term loan agreement with Geron Corporation. The
Company (through BPCR Limited Partnership) will invest up to $100,000,000 and the Private Fund will invest up to $150,000,000 in parallel,
with the Company acting as collateral agent. The loan will mature in November 2029 and will bear interest at 3-month SOFR plus 5.75 per
cent. (subject to a 3 per cent. floor). The Company funded its share of Tranche A of $50,000,000 and received a 2.5 per cent. upfront fee at
closing. Tranche B and Tranche C will be available through 31 December 2025 and have a 2.5 per cent. upfront fee that will be payable on the
respective funding dates. On 7 November 2024, Royalty Pharma PLC increased funding on the synthetic royalty in Rytelo, Geron's key product,
to $925,000,000. In the year to 31 December 2024, BPCR Limited Partnership recorded interest of $874,000 (31 December 2023: $nil). The
outstanding balance as at 31 December 2024 was $50,000,000. (31 December 2023: $nil).
On 29 October 2024, the Company and the Private Fund entered into a new investment in the form of an assignment of $70,000,000 in a
$200,000,000 senior secured term loan agreement with Alphatec Holdings, Inc. The Company (through BPCR Limited Partnership) invested
$35,000,000 and the Private Fund invested $35,000,000 in parallel, with the Company acting as collateral agent. The loan will mature in
January 2028 and will bear interest at 3-month SOFR plus 5.75 per cent. (subject to a 3 per cent. floor) and a 1 per cent. upfront fee was paid
at funding. The assignor, Braidwell Transaction Holdings LLC - Series I, will retain the remaining $130 million. The loan includes a repayment
premium of 3 per cent. of the principal amount of any such repayment during the first 12 months after the signing date, 2 per cent. of the principal
amount of any such repayment during months 13 through 24 after the signing date, and 1 per cent. of the principal amount of any such repayment
thereafter but prior to the maturity date, as well as an exit fee of 3.25 per cent. of the principal amount of any repayment or prepayment on such
date of repayment or prepayment. In the year to 31 December 2024, BPCR Limited Partnership recorded interest of $658,000 (31 December
2023: $nil). The outstanding balance as at 31 December 2024 was $35,000,000. (31 December 2023: $nil).
On 1 May 2024, the Company and the
Private Fund, entered into a senior secured term loan agreement with a wholly-owned subsidiary
of Novocure Limited. The Company (through BPCR Limited Partnership) will invest up to $200,000,000 and the Private Fund will invest up to
$200,000,000 in parallel, with the Company acting as collateral agent. The loan will mature in May 2029 and will bear interest at 3-month SOFR
plus 6.25 per cent. (subject to a 3.25 per cent. floor). Tranche A of $50,000,000 was drawn on 1 May 2024. Of the remaining $150,000,000,
$50,000,000 is required to be drawn down by 26 September 2025, subject to customary conditions precedent and $100million is available to
be drawn after achieving certain sales-based milestones. Kristin Stafford, an employee of RP Management, LLC is a Director of Novocure. In the
year to 31 December 2024, BPCR Limited Partnership recorded interest of $3,846,000 (31 December 2023: $nil). The outstanding balance as
at 31 December 2024 was $50,000,000. (31 December 2023: $nil).
On 19 April 2024, the Company and the Private Fund entered into a senior secured term loan agreement with Tarsus Pharmaceuticals, Inc. The
Company (through BPCR Limited Partnership) will invest up to $100,000,000 and the Private Fund will invest up to $100,000,000 in parallel,
with the Company acting as collateral agent. The Company invested $37,500,000 at closing in the first tranche. Tranche B of $25,000,000
expired on 31 December 2024, and both Tranche C of $25,000,000 and Tranche D of $25,000,000 may be drawn after achieving certain
sales-based milestones. The loan will mature in April 2029 and has a coupon of 3-month SOFR plus 6.75 per cent. (subject to a 3.75 per cent.
floor). In the year to 31 December 2024, BPCR Limited Partnership recorded interest of $3,163,000 (31 December 2023: $nil). The outstanding
balance as at 31 December 2024 was $37,500,000. (31 December 2023: $nil).
On 5 May 2023, the Company and the Private Fund entered into a senior secured term loan agreement with Reata Pharmaceuticals, Inc. Under
the terms of the transaction, the Company (through BPCR Limited Partnership) was originally due to invest up to $137,500,000 and the Private
Fund was originally due to invest up to an additional $137,500,000 in parallel, with the Company acting as collateral agent. The loan was
originally due to mature in May 2028 and bore interest at 3-month SOFR plus 7.50 per cent. per annum subject to a 2.5 per cent. floor along
with a one-time additional consideration of 2 per cent. of the loan amount payable upon funding. Tranche A of $37,500,000 was funded at
closing and tranche B of $25,000,000 was funded on 10 July 2023. On 28 July 2023, Inc. (“Biogen”) Biogen announced a agreement pursuant
to which Biogen will acquire Reata for an enterprise value of approximately $7.3 billion. The acquisition closed on 29 September 2023. As of
the acquisition closing, the Company received $15,500,000 in prepayment and make-whole fees. In the year to 31 December 2024, BPCR
Limited Partnership recorded interest of $nil (31 December 2023: $2,526,000). The outstanding balance as at 31 December 2024 was $nil.
(31 December 2023: $nil).
On 17 April 2023, the Company and the Private Fund entered into a senior secured term loan agreement with BioCryst Pharmaceuticals, Inc.
Under the terms of the transaction, the Company (through BPCR Limited Partnership) will invest up to $180,000,000 and the Private Fund will invest
17
. RELATED PARTY TRANSACTIONS (CONTINUED)
1
1
Past performance is not an indication of future performance.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
90
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
up to an additional $270,000,000 in parallel, with the Company acting as collateral agent. The commitment for the remaining three tranches of
up to $50 million each expired on 30 September 2024. The loan will mature in April 2028 and will bear interest at 3-month SOFR plus 7 per
cent. per annum subject to a 1.75 per cent. floor and up to 50 per cent of the interest during the first 18 months may be paid-in-kind (PIK) at a rate
of 3-month SOFR plus 7.25 per cent. The Company funded $120,000,000 on 16April 2023. In the year to 31 December 2024, BPCR Limited
Partnership recorded interest of $15,949,000 (31 December 2023: $10,930,000). The outstanding balance as at 31 December 2024 was
$129,481,000. (31 December 2023: $125,465,000).
On 6 April 2023, the Company and the Private Fund entered into a senior secured term loan agreement with ImmunoGen, Inc. Under the terms
of the transaction, the Company (through BPCR Limited Partnership) was to invest up to $62,500,000 and the Private Fund will invest up to an
additional $62,500,000 in parallel, with the Company acting as collateral agent. The loan was due to mature in April 2028 and bore interest at
3-month SOFR plus 8 per cent. per annum subject to a 2.75 per cent. floor with an additional consideration of 2 per cent. of the total loan amount.
The Company funded $37,500,000 on 6 April 2023. On 30 November 2023, AbbVie announced it had entered into a agreement to acquire
ImmunoGen, Inc. On 12 February 2024, ImmunoGen repaid its $37,500,000 loan balance to the Company and the Company received
$13,100,00 in make whole and prepayment fees. In the year to 31 December 2024, BPCR Limited Partnership recorded interest of $597,000
(31 December 2023: $3,712,000). The outstanding balance as at 31 December 2024 was $nil. (31 December 2023: $37,500,000).
On 8 November 2022, the Company and the Private Fund entered into a senior secured term loan agreement with Immunocore Limited. The
Company (through BPCR Limited Partnership) was to invest up to $50,000,000 and the Private Fund will invest up to an additional $50,000,000
in parallel, with the Company acting as collateral agent. The Company funded Tranche A of $25,000,000 on 8November 2022. The remaining
$25,000,000 commitment lapsed on 30 September 2024. Immunocore paid the Company $625,000 in additional consideration on the
expiration of Tranche B. The four-year loan was due to mature in November 2028. Tranche A had a fixed coupon of 9.75per cent. subject
to a 1 per cent. floor, with additional consideration of 2.5 per cent. of the total loan amount. On 8 November 2024, Immunocore repaid its
remaining $25,000,000 of the balance that was due to amortise to the Company and the Company received $1,100,000 in accrued interest
and prepayment fees. In the year to 31 December 2024, BPCR Limited Partnership recorded interest of $2,119,000 (31December 2023:
$2,471,000). The outstanding balance as at 31 December 2024 was $nil (31 December 2023: $25,000,000).
On 19 October 2022, the Company and the Private Fund entered into a senior secured term loan agreement with Insmed, Inc. The Company
(through BPCR Limited Partnership) invested $140,000,000 on 19 October 2022. The loan was due to mature in October 2027, bore interest
at 3-month SOFR plus 7.75 per cent. per annum subject to a 2.5 per cent. floor along with a one-time additional consideration of 2 per cent.
of the loan amount payable upon funding and up to 50 per cent of the interest during the first 24 months may PIK. On 31 October 2024, the
Company and the Private Fund entered into an amended and restated senior term loan agreement for up to $547,00,000 with Insmed. The new
loan consists of a $397,000,000 initial term loan to refinance in full the existing term loan and a new $150,000,000 tranche. The Company
(through BPCR Limited Partnership) funded its share of the new tranche of $60,000,000 at signing. The loan will mature in September 2029
and bears interest at a fixed rate of 9.60 per cent. per annum and a 2 per cent. exit fee. In the year to 31 December 2024, BPCR Limited
Partnership recorded interest of $20,521,000 (31 December 2023: $18,810,000). The outstanding balance as at 31 December 2024 was
$218,677,000 (31December 2023: 150,986,000).
On 7 March 2022, the Company and the Private Fund entered into a senior secured term loan agreement with UroGen Pharma, Inc. Under the
terms of the transaction, the Company (through BPCR Limited Partnership) will invest up to $50,000,000. The loan was due to mature in March
2027 and bore interest at 3-month LIBOR plus 8.25 per cent. per annum subject to a 1.25 per cent. floor along with a one-time additional
consideration of 1.75 per cent. of the total loan amount payable upon funding of the first tranche. The Company funded $37,500,000 on 16
March 2022 and $12,500,000 on 16 December 2022. On 29 June 2023, the UroGen loan was amended to transition from 3-month LIBOR to
3-month SOFR and an additional per annum rate of 0.26161 per cent. On 13 March 2024, the Company and the Private Fund entered into the
amended and restated loan agreement for up to $200 million with UroGen. The new loan consists of a $50,000,000 initial term loan to refinance
in full the existing term loan and additional tranches of up to $100,000,000 allocated in full to the Private Fund. The loan will mature in March
2027 and bears interest at 3-month SOFR plus 7.25 per cent. per annum subject to a 2.50 per cent. floor. In the year to 31December 2024,
BPCR Limited Partnership recorded interest of $6,531,000 (31 December 2023: $6,863,000). The outstanding balance as at 31 December
2024 was $50,000,000 (31 December 2023: $50,000,000).
On 5 January 2022, the Company and the Private Fund entered into a senior secured term loan agreement with Coherus Inc. Under the terms of the
transaction, the Company (through BPCR Limited Partnership) was originally due to invest up to $150,000,000 ($50,000,000 in the first tranche,
$50,000,000 million by 1 April 2022 and up to an additional $50,000,000 by 17 March 2023). The loan will mature in January 2027 and will
bear interest at 3-month LIBOR plus 8.25 per cent. per annum subject to a 1 per cent. floor along with a one-time additional consideration of 2 per
17
. RELATED PARTY TRANSACTIONS (CONTINUED)
1
1
Past performance is not an indication of future performance.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
91
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
cent. of the total loan amount payable upon funding of the first tranche. The Company funded $50,000,000 on 5 January 2022, $50,000,000
on 31 March 2022 and $25,000,000 on 14 September 2022. The remaining $50,000,000 commitment, of which the Company's share was
$25,000,000, lapsed so there were no additional funding commitments. On 6 February 2023, the Coherus loan was amended to transition
from 3-month LIBOR to 3-month SOFR and an additional per annum rate of 0.26161 per cent. On 5 February 2024, Coherus announced that it
had entered into a Consent, Partial Release and Third Amendment to the Coherus loan agreement, under which certain subsidiaries and assets of
Coherus were released in connection with the Purchase Agreement. Further, Coherus was permitted to make a partial prepayment of the principal
of the outstanding loans under the Coherus loan agreement in the amount of $175,000,000 of the outstanding $250,000,000 of its balance
to the Company and the minimum net sales covenant was adjusted. On 1 April 2024, Coherus prepaid $87,500,000 of its balance to the
Company and the Company received $3,100,000 of accrued interest, additional consideration, and prepayment and make-whole fees. On 10
May 2024, Coherus repaid its remaining $37,500,000 balance to the Company and the Company received $2,300,000 of accrued interest
and prepayment and make-whole fees. In 31 December 2024, BPCR Limited Partnership recorded interest of $4,963,000 (31 December 2023:
$17,144,000). The outstanding balance as at 31 December 2024 was $nil (31 December 2023: $125,000,000).
On 14 December 2021, the Company and the Private Fund entered into a senior secured term loan agreement with Evolus Inc. The Company’s
share of the transaction was up to $62,500,000 and the Company funded (through BPCR Limited Partnership) the first tranche of $37,500,000
on 29 December 2021. The loan will mature in December 2027 and bears interest at 3-month LIBOR plus 8.5 per cent. per annum subject to a 1
per cent. floor along with a one-time additional consideration of 2.25 per cent. of the total loan amount paid upon funding of the first tranche. On
5 May 2023, the Evolus loan was amended to allow Evolus to draw Tranche B in two installments, to allow the principal payments to be equal
quarterly payments beginning in 2026 and transition from 3-month LIBOR to 3-month SOFR and an additional per annum rate of 0.17 per cent.
The Company funded $12,500,000 on both 31 May 2023 and 15 December 2023 for a total of $25,000,000 for the second tranche. In 31
December 2024, BPCR Limited Partnership recorded interest of $8,773,000 (31 December 2023: $6,354,000). The outstanding balance as at
31 December 2024 was $62,500,000 (31 December 2023: $62,500,000).
On 23 March 2021, the Company and the Private Fund entered into a senior secured loan agreement with LumiraDx for $300 million. The loan
would have matured in March 2024, bore interest at 3-month SOFR plus 8 per cent. with the ability to PIK anything above 8 per cent., and an
additional consideration of 2.5 per cent. of the total loan amount and 9 per cent. of the total loan amount payable upon repayment. The Private
Fund’s Lender’s allocation of the transaction was $150 million. From 24 July 2023 to 9 November 2023, the Company and the Private Fund
funded $53 million of additional tranches to LumiraDx. On 29 December 2023, LumiraDx announced the appointment of joint administrators for
two of its subsidiaries and Roche Diagnostics Limited (“Roche”) announced that it would acquire select parts of LumiraDx for a purchase price
of $295,000,000. On 29 July 2024, FTI Consulting LLP, as the UK administrator for LumiraDx, made an initial payment to the Company and
the Private Fund of $330,600,000 of which $165,300,000 was received by the Company. On 31 October 2024 and 20December 2024,
FTI Consulting LLP, as the UK administrator for LumiraDx, returned $18,519,000 and $2,924,000, respectively, to the Company and the Private
Fund, which included the agreed holdback amount under the Roche Sales and Purchase Agreement. Additionally, the Company received its
approximate 41% share ownership of LumiraDx’s Colombian subsidiary which the Company will seek to sell. In the year to 31 December 2024,
BPCR Limited Partnership recorded interest of $645,000 (31 December 2023: $13,998,000). The outstanding balance as at 31 December
2024 was $nil (31 December 2023: $136,048,000).
On 7 February 2020, the Company and the Private Fund entered into a senior secured term loan agreement for $200,000,000 with Collegium
Pharmaceutical, Inc. The Company’s share of the transaction was $165,000,000 and the Company funded the term loan on 13 February 2020.
The loan was originally due to mature in February 2024 and bore interest at 3-month LIBOR plus 7.5 per cent. per annum subject to a 2 per
cent. floor along with a one-time additional consideration of 2.5 per cent. of the loan amount which was paid at funding. On 14 February 2022,
the Company and the Private Fund provided Collegium Pharmaceutical, Inc. with a commitment to enter into a new senior secured term loan
agreement for $650,000,000. Proceeds from the new loan were used to fund Collegium’s acquisition of BioDelivery Sciences International, Inc.
(“BDSI”) as well as repay the outstanding debt of Collegium and BDSI. Under the terms of the new loan, the Company invested (through BPCR
Limited Partnership) $325,000,000 in a single drawing. The four-year loan for the Company’s investment had $50,000,000 in amortisation
payments during the first year and the remaining $275,000,000 balance was due to amortise in equal quarterly installments. The loan bore interest
at 3-month LIBOR plus 7.5 per cent. per annum subject to a 1.2 per cent. floor along with a one-time additional consideration of 2 per cent. of
the loan amount payable at signing and 1 per cent. of the loan amount payable at funding. On 23 June 2023, the Collegium loan was amended
to transition from 3-month LIBOR to 3-month SOFR and an additional per annum rate of 0.26161 per cent. On 28 July 2024, the Company and
the Private Fund provided Collegium with a commitment to enter into a new senior secured term loan agreement for $645,833,000. The new
loan consists of a $320,833,000 initial term loan to refinance in full the existing term loan and a $325,000,000 second tranche, which was
drawn on 23 September 2024. Proceeds from the new loan were used to assist Collegium in the successful closing of the acquisition of Ironshore
17
. RELATED PARTY TRANSACTIONS (CONTINUED)
1
1
Past performance is not an indication of future performance.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
92
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
Therapeutics. The new loan for the Company’s investment will have $137,947,000 in quarterly amortisation payments during the five years and
the remaining $152,469,000 balance will be due at maturity. The five-year loan bears interest at 3-month SOFR plus 4.5 per cent. per annum
subject to a 4 per cent. floor along with a one-time additional consideration of 1.25 per cent. of the loan amount paid upon signing, a one-
time additional consideration of 2.25 per cent. of the loan amount paid at funding and paydown fees of 2 per cent. payable at maturity. to 31
December 2024, BPCR Limited Partnership recorded interest of $26,365,000 (31 December 2023: $33,750,000). The outstanding balance as
at 31 December 2024 was $283,156,000 (31 December 2023: $206,250,000).
On 11 November 2019, the Company and the Private Fund entered into a senior secured term loan agreement for up to $100,000,000 with
Akebia Therapeutics. Akebia drew down the first $80,000,000 on 25 November 2019 and the second $20,000,000 tranche on 10December
2020. The Company invested $40,000,000 and $10,000,000 of the first and second tranche, respectively. The loan was due to mature in
March 2025 and bore interest at LIBOR plus 7.5 per cent. per annum along with a one-time additional consideration of 2 per cent. of the total
loan amount. On 15 July 2022, the Company and The Private Fund entered into a Second Amendment and Waiver with Akebia which amends
and waives certain provisions of the Loan Agreement, dated 11 November 2019. As a result of this amendment, Akebia made a $12,500,000
pre-payment, triggering a 2 per cent. prepayment fee on the $12,500,000. On 30 June 2023 the Company and the Private Fund entered into an
amendment which modified the loan interest rate to 3-month SOFR plus a coupon of 7.5 per cent. and an additional per annum rate of 0.30316
per cent. On 31 October 2023, the maturity date was extended from November 2024 to March 2025 and there was no longer a SOFR floor.
On 29 January 2024, Akebia repaid its remaining loan balance of $17,500,000 to the Company, including $87,500 in prepayment fees. In
the year to 31 December 2024, BPCR Limited Partnership recorded interest of $185,000 (31 December 2023: $2,646,000). The outstanding
balance as at 31 December 2024 was $nil (31 December 2023: $17,500,000).
On 12 September 2019, the Company and the Private Fund entered into a senior secured note purchase agreement for the issuance and sale
of senior secured notes in an aggregate original principal amount of up to $150,000,000 by OptiNose US. OptiNose US is a wholly-owned
subsidiary of OptiNose, a commercial-stage specialty pharmaceutical company. OptiNose drew a total of $130,000,000 in three tranches:
$80,000,000 on 12 September 2019, $30,000,000 on 13 February 2020 and $20,000,000 on 1 December 2020. There are no further
funding commitments. The notes were due to mature in September 2024 and bore interest at 10.75 per cent. per annum along with a one-time
additional consideration of 0.75 per cent. of the aggregate original principal amount of senior secured notes which the Company and The Private
Fund are committed to purchase under the facility and 810,357 warrants exercisable into common stock of OptiNose. The Company funded
a total $71,500,000 across all tranches and was allocated 445,696 warrants. In prior years, there were two amendments to the OptiNose
note purchase agreement, resulting in re-tiered sales covenants, permission for an equity issuance, amended amortisation and make-whole
provisions, and the issuance of new three-year warrants, with the original warrants being canceled. On 10 August 2022, the OptiNose note
and purchase agreement was amended resulting in re-tiered sales covenants in exchange for an amendment fee of $780,000, payable upon
repayment, of which the Company was allocated $429,000. On 9 November 2022, OptiNose negotiated certain waivers in exchange for a
waiver fee, of which the Company earned $715,000 of the total $1,300,000 waiver fee. On 21 November 2022, OptiNose entered into an
amended and restated note purchase agreement. As part of the amended and restated note purchase agreement, Pharmakon revised the sales
covenants, amended the amortisation and make-whole, and modified the loan interest rate to 3-month SOFR plus 8.5 per cent., subject to a 2.5
per cent. floor, in exchange for an amendment fee. From 5 March 2024 through 9 May 2024, the Company entered into three amendments
with OptiNose. The amendments collectively waived the no ‘going concern’ requirement with respect to its financial statements until the end of
the 2025 fiscal year, extended the make-whole period by 6 months and revised the sales and minimum liquidity covenants. The waiver of the
no ‘going concern’ requirement remains until the end of the 2025 fiscal year and the revised minimum liquidity covenant were contingent on a
successful equity raise. OptiNose announced on 9 May 2024 a successful $55,000,000 registered direct offering. In connection with these
amendments, OptiNose also issued 4,680,000 million shares in the aggregate to the Company and Private Fund in satisfaction of approximately
$4,680,000 of outstanding amendment and waiver fees. In the year to 31 December 2024, BPCR Limited Partnership recorded interest of
$9,913,000 (31 December 2023: $9,811,000). The outstanding balance as at 31 December 2024 was $71,500,000 (31 December 2023:
$71,500,000). The Company holds 1,375,000 warrants valued at $64,000 (31 December 2023: 1,375,000 warrants valued at $264,000).
On 8 December 2017, the Company’s wholly-owned subsidiary BPCR Ongdapa entered into a purchase, sale and assignment agreement
with RPI Acquisitions (Ireland) Limited (“RPI Acquisitions”), an affiliate Pharma, for the purchase of a 50 per cent. interest in a stream of Purchased
Payments acquired by RPI Acquisitions from Bristol-Myers Squibb through a purchase agreement dated 14 November 2017. As a result of the
arrangements, RPI’s subsidiary and the Company’s subsidiary are each entitled to the benefit of 50 per cent. of the Purchased Payments under
identical economic terms. The Purchased Payments are linked to tiered worldwide sales of Onglyza and Farxiga, diabetes agents marketed
by AstraZeneca, and related products. The Company was expected to fund $140,000,000 to $165,000,000 between 2018 and 2020,
determined by product sales and will receive payments from 2020 through 2025 estimated to yield a return in the high single-digits per annum.
17
. RELATED PARTY TRANSACTIONS (CONTINUED)
1
1
Past performance is not an indication of future performance.
Notes to the Financial Statements continued
FINANCIAL STATEMENTS
93
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
The Company advanced $nil to RPI Acquisitions in the period to 31 December 2024 (31 December 2023: $nil) for the Purchased Payments. In
the period to 31 December 2024 the Company recorded interest of $4,314,000 (31 December 2023: negative interest of $115,000).
The Private Fund and RPI Acquisitions are related entities of the Company due to a principal of the Investment Manager, Pablo Legoretta, having
influence over each of these entities.
18
. CONTINGENCIES, GUARANTEES AND FINANCIAL COMMITMENTS
As at 31 December 2024, there were outstanding commitments in BPCR Limited Partnership of up to $250,000,000 (31 December 2023:
$85,000,000) in respect of investments (see Note 17 for further details).
19
. SUBSEQUENT EVENTS
From 8 January 2025 to 21 March 2025, the Company repurchased 46,260,732 shares. The Company currently holds 234,136,142 of its
ordinary shares in treasury and has 1,139,795,925 ordinary shares in issue (excluding treasury shares).
On 23 January 2025, the Board approved an interim dividend in respect of the financial period ending 31 December 2024 of $0.02892309
per ordinary share, that was paid on 28 February 2025.
On 5March 2025, the Company purchased $15,000,000 of 0.75per cent. senior unsecured convertible notes due 2030 issued by Alphatec
Holdings, Inc.
On 19 March 2025, the Company notes the announcement by Paratek Pharmaceuticals (“Paratek”) regarding the definitive agreement pursuant
to which Paratek will acquire OptiNose, Inc. (“OptiNose”) for a total transaction value of up to $330,000,000. The Company has a $71,500,000
investment in a senior secured loan to OptiNose, out of a total $130,000,000 senior secured loan, which would be prepaid upon the closing of
the transaction. If the transaction were to close on 30 June 2025, the Company would be expected to receive approximately $10,000,000 with
respect to make-whole fees, other fees and in connection with the Company’s outstanding OptiNose shares. In addition to the loan, the Company
owns 91,667 OptiNose warrants that will expire out-of-the money at the closing of the acquisition.
1
Past performance is not an indication of future performance.
17. RELATED PARTY TRANSACTIONS (CONTINUED)
1
ADDITIONAL INFORMATION
Measures (APM)
Glossary of Terms and Alternative Performance
94
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
APMs are employed to enhance the comparability of information across reporting periods. While APMs
are not meant to replace International Financial Reporting Standards (IFRS) measures, they provide
valuable additional insights into the business’s performance.
GROSS IRR
Gross IRR as of such prepayment date means an aggregate, annual, compounded, as applicable, internal
rate of return, calculated on the basis of historical and projected capital inflows and outflows related to the
particular investment, without taking into account the impact of management fees, incentive compensation,
taxes, or transaction and organizational costs and expenses. Past performance is not an indication of
future performance.
NET INCOME PER ORDINARY SHARE
Net income per share is the net revenue for the year divided by the number of ordinary shares outstanding.
NET IRR
The net internal rate of return of a particular investment is calculated by applying a 25per cent. reduction
to the respective gross internal rate of return of a particular investment, which is the average percentage
reduction from the gross internal rate of return and net internal rate of return from all previously realized
investments from prior closed private funds. The net internal rate of return for realized investments in the
prior closed prior funds means an aggregate, annual, compounded, as applicable, internal rate of return,
calculated on the basis of realized capital inflows and outflows for such investment, taking into account,
the impact of its proportional share of fees and expenses actually paid by its relevant closed private fund.
The Investment Manager believes this methodology is the appropriate approach to derive an approximate
realized net internal rate of return for realized investments in the Company. Past performance is not an
indication of future performance.
NAV PER ORDINARY SHARE
Net Asset Value (NAV) is the value of total assets less liabilities. The NAV per share is calculated by
dividing this amount by the number of ordinary shares outstanding.
PREMIUM (DISCOUNT) TO NAV PER ORDINARY SHARE
As stock markets and share prices vary, an investment trust’s share price is rarely the same as its NAV.
When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the
discount is calculated by subtracting the share price from the NAV per share and it is usually expressed
as a percentage of the NAV per share. If the share price is higher than the NAV per share, it is said to be
trading at a premium.
RETURN PER ORDINARY SHARE
Revenue return per Ordinary share is based on the net revenue after taxation divided by the weighted
average number of Ordinary Shares for the year. Capital return per Ordinary Share is based on net
capital gains divided by weighted average number of Ordinary Shares for the year.
Glossary of Terms and Alternative Performance Measures (APM) continued
95
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
ADDITIONAL INFORMATION
ONGOING CHARGES
Ongoing charges are the Company’s expenses expressed (excluding and including performance fee) as
a percentage of its average monthly net assets and follows the AIC recommended methodology.
Ongoing charges are different to total expenses as not all expenses are considered to be operational and
recurring.
The calculation below is in line with AIC guidelines.
Year to
31 December 2024
Total expenses
(d) 27,850,000
Less: Performance fee
(13,574,000)
Total
(a) 14,276,000
Average monthly net assets
(b) 1,207,652,066
Ongoing charges excluding performance fee (c=a/b)
(c) 1.2%
Ongoing charges including performance fee (e=d/b) (e)
2.3%
ADDITIONAL INFORMATION
Corporate Information
96
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
DIRECTORS
Harry Hyman (Chairman)
Colin Bond
Duncan Budge
Stephanie Léouzon
Sapna Shah
Rolf Soderstrom
INVESTMENT MANAGER AND AIFM
Pharmakon Advisors, LP
110 East 59th Street #2800
New York, NY 10022
USA
ADMINISTRATOR
Waystone Administration Solutions (UK) Limited
Broadwalk House
Southernhay West
Exeter
EX1 1TS
COMPANY SECRETARY AND REGISTERED OFFICE
MUFG Corporate Governance Limited
19th Floor
51 Lime Street
London
EC3M 7DQ
COMPANY WEBSITE
www.bpcruk.com
CUSTODIAN
Bank of New York Mellon
One Canada Square
London
E14 5AL
FINANCIAL AND STRATEGIC COMMUNICATIONS
Burson Buchanan Limited
107 Cheapside
London
EC2V 6DN
INDEPENDENT AUDITOR
Ernst & Young, Chartered Accountants
Harcourt Centre
Harcourt Street
Dublin 2 Ireland
JOINT BROKERS
J.P. Morgan Cazenove
25 Bank Street
London
E14 5JP
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
LEGAL ADVISER
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London
EC2A 2EG
REGISTRAR
MUFG Corporate Markets Limited
Central Square
29 Wellington Street
Leeds
LS1 4DL
ADDITIONAL INFORMATION
Shareholder Information
97
BIOPHARMA CREDIT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2024
KEY DATES
March Annual results announced
Payment of fourth interim dividend
June Company’s half-year end
Payment of first interim dividend
Annual General Meeting
September Half-yearly results announced
Payment of second interim dividend
December Company’s year end
Payment of third interim dividend
FREQUENCY OF NAV PUBLICATION
The Company’s NAV is released to the LSE on a monthly basis and is published on the Company’s website.
ANNUAL AND HALF-YEARLY REPORT
Copies of the Company’s Annual and Half-yearly Reports, stock exchange announcements and further information on the Company can be
obtained from the Company’s website www.bpcruk.com.
IDENTIFICATION CODES
SEDOL: BDGKMY2
ISIN: GB00BDGKMY29
TICKER: BPCR
LEI: 213800AV55PYXAS7SY24
CONTACTING THE COMPANY
Shareholder queries are welcomed by the Company. While any queries regarding your shareholding should be directed to the Registrar,
shareholders who wish to raise any other matters with the Company may do so using the following contact details:
Company Secretary – biopharmacreditplc@linkgroup.co.uk
Chairman – chairman@bpcruk.com
Senior Independent Director – sid@bpcruk.com
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