New Model Adviser - For professional financial planners

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Woodford Patient shares soar on $2.2bn biotech tie-up

Shares in Woodford Patient Capital trust surge as top holding announces biotech tie-up that could be worth up to $2.2 billion.

Woodford Patient shares soar on $2.2bn biotech tie-up
 

Shares in the Woodford Patient Capital (WPCT) investment trust have surged after top holding Prothena (PRTA.O) announced a tie-up with biotech giant Celgene (CELG.O) in a deal that could be worth as much as $2.2 billion (£1.6 billion).

Shares in the trust jumped 7.4% to 78.2p after Prothena, which accounts for 9.8% of the portfolio, announced it would collaborate with Celgene to develop treatments for neurodegenerative diseases.

Shares in US-listed Prothena, also the seventh largest holding in Woodford's flagship Woodford Equity Income fund, surged 23% in aftermarket trading. Prothena is a 1.9% position in the Woodford Incoms Focus fund.

Prothena will receive a $100 million upfront payment from Celgene and a $50 million equity investment from the biotech group, as well as the rights to royalties on the sales of any products that result.

Total payments to the company as part of the tie-up, focused on three proteins, could amount to $2.2 billion.

For each of the three drugs in development, Celgene would have to pay $80 million if it exercised US rights, $55 million for global rights, and up to $562.5 million as the drugs hit regulatory and commercial milestones.

A spokesman for Woodford Investment Management said: 'The deal makes perfect sense for Prothena and allows its research and development engine to be funded by one of the leading US biotech companies.'

Shares in Prothena have been a drag on performance of both the Woodford Patient Capital trust and Woodford Equity Income fund, after the stock came under attack from short-sellers Kerrisdale Capital.

The shares suffered a further sell-off after a delay to a trial of its flagship drug, a potential therapy for AL Amyloidosis in November last year. Even with today's surge, the shares have lost nearly half their value over the last six months.

But Woodford has stuck by the stock, saying the market's reaction to the delay was misguided and that he was 'encouraged' by progress on the drug.

Woodford has been enduring one of the most challenging periods of his fund management career, with his flagship Woodford Equity Income fund languishing at the bottom of the UK Equity Income sector over one year, hurt by heavy share price falls of top holdings like Provident Financial (PFG) and Capita (CPI).

His Woodford Patient Capital trust has also struggled, and even with today's jump the shares remain well below their 100p price at flotation in April 2015.

The trust also received a boost yesterday from its second largest holding, unquoted Oxford Nanopore, which represents 9.5% of the portfolio.

The handheld DNA test maker's £100 million fundraising took its valuation to £1.5 billion, up from £1.25 billion at its last financing round in 2016.

Oxford Nanopore is also a 1.4% holding in the Woodford Equity Income fund, which has also benefited from the news through its top 10 holding in IP Group (IPO), which owns 18.3% of Oxford Nanopore. Shares in IP Group are up 10% over the last two days.

Another Woodford stock, Softcat (SCTS) is down 12% today, however, as the IT infrastructure company, whose shares had nearly doubled over the last 12 months, succumbed to profit-taking after half-year results. Softcat accounts for 2.2% of the Woodford Income Focus fund.

Share this story

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
More Content
7013.88 -24 0.34% 04:35
More Content

Related Fund Managers

Neil Woodford
Neil Woodford
85/85 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: -12.01%
More Content

BUSINESS

Explain your methods for a successful switchover

Explain your methods for a successful switchover

Like changing a football club manager, firms implementing new technology must ensure everybody is on board to facilitate a smooth transition.

ADVICE

Communication key to delivering fair collective pensions

Communication key to delivering fair collective pensions

The government wants to avoid any intergenerational unfairness in creating CDC schemes, but savers must be made aware this could mean cuts to their pension pot.

twitter_banner

INVESTMENT