Biovance Capital´s mission is to drive innovation and sustainable growth in the biotechnology sector by investing in innovative therapies with the potential to improve the lives of patients worldwide.

At Biovance, we are committed to responsible investment practices that align with sustainability and long-term value creation. Our approach integrates ESG principles across governance, decision-making, and portfolio management. Below are key actions we undertake to ensure a structured and impactful ESG strategy.

• Incorporate responsible investment principles within the investment strategy, integrating them into operational procedures throughout Biovance’s governance framework and organizational culture.
• Create a comprehensive internal Policy clearly defining ESG incorporation into investment decision and portfolio management processes.
• Analyze and evaluate Biovance’s contribution to the Sustainable Development Goals (hereinafter “SDGs”), include and identify relevant SDGs in investment documents made available to the Investment Committee, and ensure that SDG considerations are part of investment decision meetings by the Board.
• Define measurable sustainability goals and targets, approved by the Board of Directors.
• Analyze sustainability risks and ESG materiality in order to identify relevant ESG topics (e.g., diversity and inclusion, human rights, product safety, resource use and efficiency) to the sectors (Biotech, Life Sciences) critical to Biovance’s investment strategy and inclusion in ESG due diligence and reporting processes.
• Develop an integrated framework of decision-making tools for ESG integration throughout investment lifecycles, namely an ESG Due Diligence Checklist applicable to all potential investee companies. These tools will be progressively adapted and updated according to the portfolio characteristics. The review of ESG topics during the due diligence process and following investments will be conducted and ESG factors will be incorporated in the investment recommendations.
• Establish a value creation process that will integrate relevant ESG aspects (e.g.: investment strategy, risk management, remuneration policy, among others). This process will have engagement and oversight of the Biovance management team.
• Create a reporting and disclosure system where ESG matters will be communicated on the company’s and Fund’s website and on annual reports, in compliance with SFDR reporting requirements, namely Annex I of SFDR Delegated Regulation (article 4 Entity level requirements).
• Create a team development plan aiming to provide training and workshops on sustainability for all Biovance team members.

SFDR Disclosures

Sustainability Risks Policies Statement – Article 3 SFDR

According to Article 2(22) of the SFDR, sustainability risk is an ESG event or condition that may cause a significant negative impact on the value of the investment.

Biovance actively incorporate and reflect these sustainability risks into its investment decision-making process, ensuring these considerations are particularly important to the performance of the funds under its management.

Integration of Sustainability Risks into Investment Decision-Making Processes 

Before making any investment decisions on behalf of its managed funds, Biovance conducts a thorough analysis to identify material risks associated with each proposed investment, including relevant sustainability risks. These risks are incorporated into the comprehensive investment proposal submitted to the investment committee.

The investment committee assesses the identified risks alongside other key factors outlined in the proposal, determining whether to approve or reject the investment. External and internal subject matter experts are engaged to evaluate sustainability risks, using private information from company management as well as publicly available data. If significant concerns arise, the investment committee may request further due diligence to address these issues before proceeding. In cases where material risks cannot be adequately mitigated, the investment may be rejected.

The investment commitment documents all identified material sustainability risks to ensure proper monitoring and, when applicable, to enhance ESG performance and create value within portfolio companies throughout the ownership period.

Sustainability risks are considered throughout all stages of the investment process for all funds managed by Biovance:

• Sourcing: Sustainability risks in Biotech space, including the sub-sector in which companies operate, are considered during the research process for new investment opportunities.
• Investment Analysis: After the initial analysis based on external elements, additional information is collected, including data provided by the target entity, to conduct a more detailed analysis of sustainability risks.
• Due Diligence: External consultants, during the due diligence process, consider sustainability risks, and whenever identified, propose mitigation measures.
• Investment Decision: During the decision-making phase, all risks, including sustainability risks, are considered, and the operational and financial impacts are estimated. Necessary mitigation measures are defined and incorporated.

Failure of biotech companies to comply with stringent medical safety regulations, could lead to:

• Delays in approvals or product withdrawals, with potential negative impacts on financial returns and project timelines.
• Governance malpractices, which may result in regulatory fines, legal liabilities, or loss of investor trust.
• Operational delays, legal penalties, or reputational harm due to non-compliance with drug development rules, clinical trial standards, or hazardous waste disposal requirements, all of which can negatively affect investment value.
• Data privacy failures or lack of cybersecurity measures, leading to significant fines or loss of market share.
• Clinical trial failures, ethical breaches, or safety issues in product development, which may reduce investor confidence and trigger financial losses, affecting the fund’s profitability.

Failure to address critical ESG factors can negatively influence financial outcomes by not addressing patient unmet medical needs, leading to an unnecessary patient burden with increased cost to national health care systems. In addition, it could led to reputational harm or legal challenges, thus reducing company value, lowered productivity and higher employee turnover, therefore reducing business stability, and hindering technological progress and reduce long-term competitiveness.

• Portfolio Monitoring: Throughout the investment period, regular monitoring of the portfolio includes sustainability indicators and adequate mitigation measures when required.

Our strategy focuses on selecting portfolio companies committed to regulatory compliance and foreseeing the integration of environmental and social responsibilities into their business operations. Through continuous engagement with our portfolio companies, we foster sustainable growth, safeguard investment value, and drive innovation in Biotech.

Non-Consideration of Negative Impacts of Investment Decisions on Sustainability Factors – Article 4 SFDR

Pursuant to Article 4(1)(b) of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector and in accordance with Article 12 of Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022, which specifies the technical standards for SFDR, Biovance Capital Partners hereby states that it does not take into consideration the adverse impacts of its investment decisions on sustainability factors at entity-level.

Biovance justifies its decision by considering both the size, sector, and scale of its activities, as well as certain limiting factors encountered, primarily upstream of the investment decision:

• Biovance’s investment scope is limited to sectors and geographic regions that, in Biovance’s opinion, entails minimal sustainability impacts.
• Biovance will invest in mostly companies with a virtual or semi-virtual model of operations, supported by outsourcing.
• At present, publicly available information on sustainability matters is not always sufficiently precise, unified and comparable to allow a rigorous assessment of the adverse impacts of its investment decisions on sustainability factors.

Without prejudice to the reasons set out above, Biovance’s decision will be periodically reviewed in light of the reasons provided and does not change Biovance’s commitment to combine its mission and strategic objectives with actively promoting sustainability factors. Should there be any changes to the circumstances presented above, and Biovance starts considering adverse sustainability impacts of its investment decisions, it shall disclose the relevant information to investors and key stakeholders.

Remuneration Policies – Article 5 SFDR

Biovance complies with Article 5 of Regulation (EU) 2019/2088 (SFDR) regarding transparency of remuneration policies in relation to the integration of sustainability risks and with the requirements set forth in the Portuguese legislation that has implemented EU Alternative Investment Funds Manager Directive (AIFMD).