BioPharma Credit (BPCR) Investor Presentation summary

Market overview and opportunity

• Life sciences industry exceeds $1 trillion in annual sales, with growth uncorrelated to economic cycles and a 6.6% CAGR since 2001.

• R&D spending in life sciences rose from $81bn in 2013 to $249bn in 2021, a 15% CAGR.

• Small and midsize companies account for over 50% of new drug approvals, creating significant demand for debt capital.

• Choppy biotech equity markets have historically increased the attractiveness of debt investments.

• The life sciences debt market is large, underserved, and growing, with $250bn private sector R&D spend in 2021.

Investment strategy and portfolio

• Focus on debt investments backed by approved life sciences products, avoiding clinical trial or approval risk.

• Portfolio consists mainly of senior secured loans to listed companies, diversified across 11 transactions and ~$1.2bn invested as of April 2024.

• Target net return on NAV is 8-9% per annum, with a consistent $0.07 annual dividend plus variable special dividends.

• Gross yield has benefited from higher reference rates and increased floating rate investments, reaching 13.1% in Q1 2024.

• Majority of investments are private loans valued using discounted cash flows, with a weighted average discount rate of 14.7%.

Track record and performance

• $8.2bn committed across 52 investments, with four private funds fully realized and a 10.3% unlevered weighted average annualized net IRR.

• All four previous private funds have returned all capital to investors, with net MOICs ranging from 1.21x to 1.27x.

• BPCR has generated consistent returns since IPO, maintaining its $0.07 annualized dividend target for nearly seven years.

• Emphasis on consistent, reduced-risk returns, with most realized transactions achieving net IRRs between 10% and 15%.

• Debt investments have shown downside protection even when equity values dropped significantly.