What BioPharma Credit (BPCP) Said on Its H1 Earnings Call

Key Points

• Portfolio performance and diversification improved: BioPharma Credit’s share price rose to $0.95, while its portfolio reached its broadest diversification since the 2017 IPO. Insmed was the largest holding at 19% of assets, with its $550 million loan expected to be repaid or refinanced around October 2027.
• New lending expanded across geographies and healthcare segments: Recent investments included Kestra Medical Technologies, Swiss pharmaceutical company Idorsia, pre-approval borrower Mineralys and ARCHIMED’s acquisition of Esperion. The Idorsia loan was BPCP’s first non-U.S.-dollar investment and delivers an estimated dollar-equivalent coupon of about 10.8% after hedging.
• Management is preserving liquidity for growth: Pharmakon said it is monitoring borrower drawdowns, maintaining cash and evaluating a pipeline of new opportunities while diversifying the portfolio. Projected loan returns are in the low double digits, with potential upside from floating-rate exposure, fees and early repayments.

BioPharma Credit LON: BPCP reported a higher share price and continued portfolio diversification in its half-year investor presentation, while manager Pharmakon said it is managing cash to support new lending opportunities and potential future repayments.

Pedro Gonzalez de Cosio, chief executive of Pharmakon, said the company invests primarily in debt issued by small- and mid-sized life sciences businesses, with a focus on pharmaceutical companies but also the ability to lend to device and diagnostics companies. He said the investment team tracks more than 300 companies annually and conducts extensive clinical, commercial and legal diligence before extending credit.

The company’s share price rose from $0.91 at the end of December 2025 to $0.95 at the end of the reporting period, Gonzalez de Cosio said. It was trading around $0.97 as of the day before the presentation. As the share price improved, BioPharma Credit repurchased fewer shares than in the prior period and was no longer within the range that triggers its discount-control mechanism, according to the CEO.

Net income per share for the first six months was slightly below $0.045, trailing the comparable prior-year figure. Gonzalez de Cosio said the decline did not reflect deterioration in the portfolio. Instead, the prior-year period benefited from three substantial loan prepayments, which generated prepayment premiums and accelerated recognition of unamortized upfront fees, as well as an $8 million-plus settlement payment from Biogen related to Reata.

Portfolio updates and recoveries

Since June 30, the company has sold most of its convertible position in Zenas after the securities appreciated. Gonzalez de Cosio said BioPharma Credit acquired the converts at 100 and sold the majority at 132, explaining that the company does not generally intend to hold convertible debt for extended periods once it trades significantly above par.

The company also funded tranche A of its loan to ARCHIMED and completed the sale of its remaining interest in Lumira Colombia. The sale marked the final disposal related to LumiraDx, which Gonzalez de Cosio described as Pharmakon’s first and only default in 17 years. Following the disposal, the company had recovered approximately 101% of its initial investment, he said.

As of September, the portfolio was substantially invested and more diversified than at any time since the company’s 2017 initial public offering, according to Gonzalez de Cosio. Insmed was the largest position and accounted for 19% of assets. He said the company’s current limit for a single borrower is approximately 20%, except potentially for short periods.

Gonzalez de Cosio said Insmed is expected to refinance or repay its $550 million loan around October 2027, when its three-year make-whole period expires. He cited Insmed’s market capitalization, projected sales exceeding $1.5 billion this year, gross margins in the 90% range and cash balance of more than $1 billion. While he said the company had no credit concerns regarding Insmed, he identified reinvestment risk once the loan is repaid.

The portfolio’s projected internal rates of return to maturity were in the low double digits, based on loans running to maturity and risk-free rates remaining at September 2026 levels. Gonzalez de Cosio said returns could rise if SOFR increases, given that more than half of the portfolio carries floating rates. He added that early prepayments have historically enhanced returns through fees and accelerated recognition of upfront fees.

New lending activity

BioPharma Credit recently entered into a loan with Kestra Medical Technologies, which makes a wearable defibrillator designed to monitor patients at risk of cardiac events and provide a shock if needed. Gonzalez de Cosio said Kestra is the second product to enter the market and has features intended to improve comfort for women and reduce false alarms compared with the existing competing device. The loan was priced at SOFR plus 550 basis points and included what he called attractive fees.

The company also made its first non-U.S.-dollar loan through a Swiss franc-denominated investment in Idorsia. The Swiss company markets QUVIVIQ, a treatment for insomnia that Gonzalez de Cosio said has gained reimbursement across major European markets. The loan has a fixed 7% Swiss franc coupon, but BioPharma Credit hedged the currency exposure back into dollars. He said the dollar-equivalent coupon after hedging is closer to 10.8%.

Idorsia reported about CHF134 million in QUVIVIQ sales last year and is expected to exceed CHF200 million this year, according to Gonzalez de Cosio. BioPharma Credit’s initial loan totals CHF150 million and may increase to CHF250 million based on specified outcomes.

Another new investment, Mineralys, is a pre-approval loan to a company developing lorundrostat for high blood pressure. BioPharma Credit initially funded $100 million, while Mineralys had more than $600 million in cash, Gonzalez de Cosio said. The company’s drug application had been accepted by the U.S. Food and Drug Administration, with an action date of Dec. 22. If approved, BioPharma Credit plans to fund an additional $150 million, with further capital potentially available upon milestones.

The company also financed ARCHIMED’s acquisition of cholesterol-drug developer Esperion. Gonzalez de Cosio said the approximately $1.2 billion transaction was funded by roughly $800 million of equity and $400 million of BioPharma Credit debt.

Capital management and market outlook

Addressing questions about unfunded commitments, Gonzalez de Cosio said the manager has visibility into potential borrower drawdowns, tracks loan conditions tied to commercial milestones and does not rely on uncertain prepayments. He said the company also could sell portions of loans if necessary and held about $45 million of publicly traded securities that could be sold.

He said the market for life sciences lending continues to expand, noting that the FDA approves approximately 40 to 50 new drugs per year and that many are developed by smaller companies. Gonzalez de Cosio estimated the market he reviews at roughly $4 billion to $5 billion annually, though he said the firm would likely seek to complete $1.5 billion to $2 billion of that activity and regularly declines opportunities.

Pharmakon has a private fund investing alongside BioPharma Credit that stood at about $1.9 billion and was expected to exceed $2 billion by year-end. Gonzalez de Cosio said BioPharma Credit could grow through new equity issuance if its share price recovers further. He said the company has several transactions in its pipeline and intends to manage cash while further diversifying the fund and seeking floating-rate investments.

About BioPharma Credit (LON:BPCP)

BioPharma Credit PLC, an investment trust, primarily invests in interest-bearing debt assets. Its debt assets are secured by royalties or other cash flows derived from the sales of approved life sciences products. BioPharma Credit PLC was incorporated in 2016 and is based in London, the United Kingdom.

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