BIOTECH

Fund Information / Factsheet • Jul 21, 2014

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THE BIOTECH GROWTH TRUST PLC - Appointment of AIFM and Depositary

PR Newswire

London, July 21

                                                               NEWS RELEASE21 July 2014The Biotech Growth Trust PLC       The European Union Alternative Investment Fund Managers DirectiveAppointment of Alternative Investment Fund Manager and DepositaryThe Biotech Growth Trust PLC (the "Company) announces that with effect from 22July 2014 the Company will enter into arrangements necessary to ensurecompliance with the European Union Alternative Investment Fund ManagersDirective (the "Directive").The Company has appointed Frostrow Capital LLP (the "Manager") as itsalternative investment fund manager ("AIFM") on the terms and subject to theconditions of a new management agreement between the Company and the Manager(the "Management Agreement").The existing management agreement between the Company and the Manager dated 5April 2007 (the "Original Management Agreement") has been terminated.In addition, the Company has entered into a portfolio management agreement (the"Portfolio Management Agreement") with the Manager and OrbiMed Capital LLC (the"Portfolio Manager"), pursuant to which the Manager has delegated portfoliomanagement of the Company's assets to the Portfolio Manager. The investmentmanagement agreement between the Company and the Portfolio Manager dated 26April 2006 (the "Investment Management Agreement") has been terminated.The Company has appointed J.P. Morgan Europe Limited (the "Depositary") to actas the Company's depositary for the purposes of the Directive pursuant to adepositary agreement between the Company, the Manager and the Depositary (the"Depositary Agreement").The custody agreement between the Company and Goldman, Sachs & Co. has beenterminated.The Company has also entered into a delegation agreement (the "DelegationAgreement") with the Prime Broker, the Manager and the Depositary, pursuant towhich the Depositary has delegated the safe-keeping of certain of the Company'sassets to J.P. Morgan Clearing Corp (the "Prime Broker").The Company has also appointed J.P. Morgan Clearing Corp. (the "Prime Broker")and certain other J.P. Morgan entities to provide the Company with execution,clearing, settlement, custody, financing and other services pursuant to aninstitutional account agreement between the Company, the Prime Broker and othermembers of the JPMorgan group (the "Institutional Account Agreement").Each of the Management Agreement, the Portfolio Management Agreement, theDepositary Agreement and the Delegation Agreement shall enter into effect on 22July 2014.Further details of the agreements follow.Management AgreementThe Management Agreement is based on the Original Management Agreement and onlydiffers to the extent necessary to ensure that the relationship between theCompany and the Manager is compliant with the requirements of the Directive.Under the Management Agreement, the Manager has agreed to, either itself orthrough delegates, provide all of the usual and necessary services of a managerof an investment trust company, including such risk management, portfoliomanagement, accounting, administrative, consultancy, advisory, companysecretarial and general management services as are necessary for this purposeand to advise the Company generally in relation to trends in the investmenttrust sector, and such other corporate, financial, legal, regulatory,accounting and other issues as are likely to affect the policies or strategiesof the Company.The Company will pay the Manager a fixed fee (plus VAT if applicable) of £60,000 per annum accruing daily and payable quarterly in arrears on eachCalculation Date (as defined in the Management Agreement), plus a periodic feeat the rate of 0.30% per annum of Market Capitalisation (as defined in theManagement Agreement) payable quarterly.The Manager's liability to the Company under the Management Agreement islimited in certain respects, including in respect of any loss, claim, costs,charges and expenses, liabilities or damages arising out of the acts oromissions of any investment manager or investment adviser to whom it hasdelegated its portfolio management function. However, in all cases, alllimitations of liability of the Manager to the Company are subject to theapplicable rules of the Directive.The Management Agreement contains provisions under which the Company willindemnify the Manager against liability in the absence of negligence, wilfuldefault, fraud or breach of contract.Either party may terminate the Management Agreement by giving to the other notless than 12 months' written notice (or such shorter period of written noticeas the other party may accept). It may also be terminated with immediate effectby either party in specified circumstances.Portfolio Management AgreementThe Portfolio Management Agreement is based on the Investment ManagementAgreement and only differs to the extent necessary to ensure that therelationship between the Company, the Portfolio Manager and the Manager iscompliant with the requirements of the Directive.The fees payable by the Company to the Portfolio Manager for its services underthe Portfolio Management Agreement remain the same as under the InvestmentManagement Agreement.The liability provisions in the Portfolio Management Agreement are broadly thesame as those in the Investment Management Agreement, but the Company will nowindemnify the Portfolio Manager for any losses incurred as a result of theManager's actions.Either party may terminate the Portfolio Management Agreement by giving to theother not less than 12 months' written notice (or such shorter period ofwritten notice as the other party may accept). It may also be terminated withimmediate effect by the parties in specified circumstances.Depositary AgreementThe Company will pay the Depositary for its services such amounts as may beagreed between the Depositary and the Company, together with the Depositary'sreasonable and properly incurred out of pocket or incidental expenses, costs orcharges. Except for fees of sub-custodians within the Depositary's regularsub-custody network, which will be borne by the Depositary, any sub-custodianfees or fees charged by any other sub-custodian, which will be at normalcommercial rates, will also be recouped from the Company. The Depositary ispermitted to deduct any monies owed to it from the Company's cash accounts.The Depositary will be liable to the Company and its shareholders for any losssuffered by them arising from the negligent or intentional failure to performits obligations pursuant to the Depositary Agreement or applicable law.The Company will indemnify the Depositary against any liabilities imposed on itin connection with the Depositary's appointment or the performance of itsobligations under the Depositary Agreement, other than as a result of theDepositary's fraud, negligence or wilful misconduct.The Depositary Agreement is terminable by any party on six months' writtennotice and (unless the Company has been wound up) will not terminate until areplacement depositary is appointed. It may also be terminated immediately inspecified circumstances.Delegation AgreementThe Delegation Agreement transfers the Depositary's liability under Article 21(12) of the Directive for the loss of the Company's financial instruments heldin custody by the Prime Broker to the Prime Broker in accordance with Article21(13) of the Directive. While the Depositary Agreement prohibits the re-use ofthe Company's assets by the Depositary or the Prime Broker without the priorconsent of the Company or the Manager acting on behalf of the Company, theCompany has consented to the transfer and reuse of its assets by the PrimeBroker in accordance with the terms of the Institutional Account Agreement byentering into the Institutional Account Agreement.The Prime Broker must exercise due care and diligence in the performance of itsservices under the Delegation Agreement and will be liable to the Depositary,the Company, or the Manager acting on behalf of the Company, for any directloss arising from the Prime Broker's negligence, fraud, or wilful default inthe performance of those duties or from its intentional failure to perform themor for its breach of the terms of the Delegation Agreement.The Delegation Agreement is terminable by the Depositary on thirty days' noticeto the other parties, or immediately in specified circumstances.Institutional Account AgreementUnder the terms of the Institutional Account Agreement, the Prime Broker and/orother members of the JPMorgan group (together, "JPMorgan") may provide theCompany with execution, clearing, settlement, custody, financing and otherservices. As security for the Company's obligations to JPMorgan, the Companymay be required to transfer margin to JPMorgan.Upon the occurrence of certain events of default with respect to the Company,as specified in the Institutional Account Agreement, JPMorgan may, inter alia,accelerate, cancel, terminate or liquidate or otherwise close out theInstitutional Account Agreement or any transaction thereunder and retain anymargin, set-off or recoup any obligation of JPMorgan to the Company against anyobligation of the Company to JPMorgan and sell or otherwise liquidate any ofthe Company's margin which it holds.Under the terms of the Institutional Account Agreement, the Prime Broker isauthorised to borrow, lend or otherwise use all cash and any security carriedby the Prime Broker in the Company's accounts for a greater sum than, and forperiod longer than, the Company's obligations to the Prime Broker and the PrimeBroker will have no obligation to maintain a like amount of similar property inpossession or control. In the event of the Prime Broker's insolvency, theCompany may be unable to recover such assets in full.JPMorgan will charge fees for the services provided under the InstitutionalAccount Agreement at its then-prevailing rates and may change such rates uponprior written notice.The Company has agreed to indemnify JPMorgan for its losses, claims, damages,liabilities, obligations, penalties, taxes, judgements, awards and costs otherthan in the event of JPMorgan's wilful misfeasance, bad faith or grossnegligence. JPMorgan will have no liability to the Company under theInstitutional Account Agreement save in the event of its wilful misfeasance,bad faith or gross negligence.Any party may terminate the Institutional Account Agreement on 30 days' priorwritten notice to the others.Certain Information required to be disclosed under the FCA's Investment FundSourcebook ("FUND")In accordance with the requirements of the Directive, the Manager is requiredto make available to potential investors the following information, which isannounced by the Directors of the Company on behalf of the Manager:  FUND 3.2.2R Information                         Information           Item2 Procedures by which the       In accordance with Listing Rule 15.4.8, theAIF may change its              Company must obtain the prior approval of itsinvestment strategy or          shareholders to any material change to itsinvestment policy, or both.     investment policy. Under Listing Rule 15.4.9,                                in considering what is a material change to the                                published investment policy, the Company should                                have regard to the cumulative effect of all the                                changes since its shareholders last had the                                opportunity to vote on the investment policy                                or, if they have never voted, since the                                admission to listing.                                All non-material changes will be made by                                approval of the Board.3 Main legal implications       Legal Implicationsof the contractualrelationship entered into       Upon an investor becoming a shareholder, thefor the purpose of              shareholder will be bound by the terms of theinvestment.                     memorandum and articles of association of the                                Company (the "Articles) which take effect as a                                contract between the shareholders and the                                Company. Shareholders will have the rights and                                obligations set out in the Articles of the                                Company and the U.K. Companies Act 2006.                                The Articles are subject to the laws of England                                and Wales and may be amended by a special                                resolution of holders of the Company's shares                                as provided for under the Articles.                                The Company is incorporated as a public company                                with limited liability in England and Wales and                                the Company and all or substantially all of its                                directors and officers are expected to be                                located in the U.K. Certain judgments obtained                                in EU member states (or Iceland, Norway and                                Switzerland) can be enforced in England and                                Wales under the Brussels Regulation or the 2007                                Lugano Convention and certain judgements in a                                country to which any of the Administration of                                Justice Act 1920, the Foreign Judgments                                (Reciprocal Enforcement) Act 1933 or the Civil                                Jurisdiction and Judgments Act 1982 applies can                                also be enforced in England and Wales by making                                an application to the High Court for an order                                for registration of the judgment for                                enforcement. The Court may decline to recognise                                the judgments in limited circumstances.                                It may be possible to enforce a judgment in a                                country to which none of the above regimes                                apply if it is: (1) final and conclusive on the                                merits; (2) given by a court regarded by                                English law as competent to do so; and (3) for                                a fixed sum of money.                                Investors' rights against service providers                                The Company is reliant on the performance of                                services provided by certain third party                                service providers, including the Manager, the                                Portfolio Manager, the Prime Broker, the                                Depositary, sponsors and corporate                                stockbrokers, legal advisors, registrars and                                the auditor (the "Service Providers"). No                                shareholder, in their capacity as such, will                                generally have any direct contractual claim                                against any Service Provider with respect to                                such Service Provider's default of any of their                                duties towards the Company.5 How AIFM complies with        The Manager intends to cover potentialthe requirements relating       professional liability risks resulting from itsto professional liability       activities as AIFM by holding professionalrisk.                           indemnity insurance against liability arising                                from professional negligence which is                                appropriate to the risks covered, in accordance                                with the Directive and all applicable rules and                                regulations implementing the Directive in the                                UK (the "AIFM Rules").6(a) AIFM management            The Manager has delegated portfolio managementfunctions delegated by the      of the Company's assets to the PortfolioAIFM.                           Manager pursuant to the Portfolio Management                                Agreement.6(b) Any safe-keeping           The Depositary has delegated safe-keeping offunction delegated by the       certain of the Company's assets to the Primedepositary                      Broker pursuant to the Delegation Agreement.6(c) The identity of each       The Portfolio Manager is OrbiMed Capital LLC.delegate                                The Prime Broker is J.P. Morgan Clearing Corp.6(d) Any conflicts of           The Company does not consider that anyinterest that may arise         conflicts of interest arise between the Managerfrom such delegations           and the Portfolio Manager.                                The Company does not consider that any                                conflicts of interest arise between the                                Depositary and the Prime Broker.8 A description of the          The Manager maintains a liquidity managementAIF's liquidity risk            policy to monitor the liquidity risk of themanagement, including the       Company. The Company's shareholders have noredemption rights of            right to redeem their shares from the Companyinvestors                       but may trade shares on the secondary market.                                However, there is no guarantee that there will                                be a liquid market in the shares.10 Fair treatment of            The Manager has established procedures,investors                       arrangements and policies to ensure compliance                                with the principles more particularly described                                in the AIFM Rules relating to the fair                                treatment of investors. The principles of                                treating investors fairly include, but are not                                limited to:                                (a) acting in the best interests of the Company                                and of its shareholders;                                (b) ensuring that the investment decisions                                taken for the account of the Company are                                executed in accordance with the Company's                                investment policy and objective and risk                                profile;                                (c) ensuring that the interests of any group of                                shareholders are not placed above the interests                                of any other group of shareholders;                                (d) ensuring that fair, correct and transparent                                pricing models and valuation systems are used                                for the Company;                                (e) preventing undue costs being charged to the                                Company and its shareholders;                                (f) taking all reasonable steps to avoid                                conflicts of interests and, when they cannot be                                avoided, identifying, managing, monitoring and,                                where applicable, disclosing those conflicts of                                interest to prevent them from adversely                                affecting the interests of shareholders; and                                (g) recognising and dealing with complaints                                fairly.14 Availability of the          The Company's latest annual report can be foundlatest annual report.           on the Company's website at the following                                address: www.biotechgt.com16 Identity of prime            Please see above under "Institutional Accountbrokers, description of         Agreement".material arrangements withprime brokers andmanagement of conflicts,transfer and reuse of AIFassets and any transfer ofliability.17 Availability of periodic     In accordance with the AIFM Rules, the Managerand regular information         intends to publish the following information inrequired under FUND 3.2.5R      relation to the Company's portfolio in itsand FUND 3.2.6R.                annual report and audited accounts, which can                                be found on the Company's website -                                www.biotechgt.com:                                (a) the percentage of the Company's assets that                                are subject to special arrangements arising                                from their illiquid nature;                                (b) any new arrangements for managing the                                liquidity of the Company;                                (c) the current risk profile of the Company and                                the risk management systems employed by the                                Manager to manage those risks; and                                (d) the total amount of leverage employed by                                the Company.                                Any changes to the following information will                                be provided by the Manager to investors without                                undue delay:                                (a) the maximum level of leverage which the                                Manager may employ on behalf of the Company;                                and                                (b) the right of re-use of collateral or any                                changes to any guarantee granted under any                                leveraging arrangement.For further information please contact:Victoria HaleFrostrow Capital LLP, Company SecretaryTelephone: 020 3170 8732

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