SCHEDULE: RTW Investments Cuts Avidity Biosciences Stake Below 5%

RTW Investments, LP and Roderick Wong have reduced their beneficial ownership in Avidity Biosciences, Inc. to 3.1%, falling below the 5% threshold.

Summary

• RTW Investments, LP and Roderick Wong, M.D. (Reporting Persons) filed Amendment No. 5 to their Schedule 13D for Avidity Biosciences, Inc.
• The Reporting Persons now beneficially own 4,686,110 shares, representing 3.1% of the Issuer's common stock.
• We ceased to be beneficial owners of more than five percent of the shares on October 29, 2025.
• The calculation of ownership is based on 149,665,205 shares outstanding, which includes 17,250,000 shares from a public offering and 3,761,868 shares from warrant exercises.
• Transactions over the past 60 days included significant sales, exercise of 3,761,868 pre-funded warrants, and covering short positions.
• We have settled our entire short position in the shares.
• We maintain long economic notional exposure to 1,200,000 shares (approximately 0.8%) through cash-settled swaps, which do not confer voting or dispositive control.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to a significant institutional investor reducing its stake below the 5% threshold, which can signal reduced confidence or a strategic divestment. While the short position was covered, the overall reduction in ownership is a key takeaway.

Positives

• Reporting Persons have settled their entire short position in the shares, indicating a potential reduction in bearish sentiment from their direct shorting activities.
• Exercise of 3,761,868 Pre-Funded Warrants on October 27, 2025, at a nominal price of $0.001 per share, indicates a conversion of existing rights into common stock.

Negatives

• Reporting Persons significantly reduced their stake, falling below the 5% beneficial ownership threshold, which could be interpreted as a loss of conviction or a strategic portfolio adjustment.
• Significant sales of shares occurred at prices ranging from $44.44 to $70.03, including large blocks on October 27, 28, and 29, 2025.

Risks

• RTW Investments, L.P. previously settled with the SEC on May 30, 2023, for violations of the Investment Advisors Act of 1940 and the Exchange Act, related to conflicts of interest disclosure and beneficial ownership reporting, resulting in a cease-and-desist order, censure, and a $1.4 million civil penalty. While this is a past event, it highlights a historical regulatory compliance issue for the reporting entity.

Future Outlook

No explicit forward-looking statements or guidance from the issuer or reporting persons regarding the issuer's future performance are provided in this filing.

Industry Context

This filing reflects an institutional investor's (RTW Investments, a life sciences-focused firm) adjustment of its position in a biotechnology company (Avidity Biosciences). Such adjustments are common in the biotech sector, often driven by clinical trial results, regulatory milestones, or broader market sentiment towards specific therapeutic areas. The reduction below 5% suggests a strategic portfolio rebalancing rather than a direct commentary on Avidity's operational performance, though it could be interpreted as a reduced conviction.

Legal Proceedings

• RTW Investments, L.P. entered into a settlement order with the SEC on May 30, 2023, for violations of Sections 206(2) and 206(4) of the Investment Advisors Act of 1940 and Rule 206(4)-7 thereunder, and Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder.
• The violations related to conflicts of interest disclosure and beneficial ownership reporting.
• The settlement included a cease-and-desist order, a censure, and a civil penalty of $1.4 million.

Stakeholder Impact

• Shareholders: The reduction in stake by a significant institutional investor could lead to negative market sentiment and potentially impact share price. Existing shareholders might view this as a signal of reduced confidence.
• Company Management: While not directly impacting operations, a major investor reducing their stake could prompt questions from other investors and potentially influence strategic decisions or investor relations efforts.

Key Dates

Recommendation

The significant reduction in beneficial ownership by a major institutional investor like RTW Investments, falling below the 5% threshold, typically signals a loss of conviction or a strategic divestment. This action, coupled with substantial share sales, suggests that the reporting persons see less upside or increased risk, which could be a bearish indicator for other investors. While the short position was covered, the overall reduction in long-term stake is a strong signal.

Keywords

Avidity Biosciences, RTW Investments, Roderick Wong, Schedule 13D, beneficial ownership, stock sales, warrant exercise, SEC filing, institutional investor, biotech, common stock