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Woodford gives 10 examples where patience pays off

Woodford Patient Capital has had its setbacks recently, but in its latest update the firm highlighted 10 investments that are flourishing.

When Neil Woodford launched his Patient Capital trust in 2014 the key to its overarching philosophy was right there in its title.

Four years on, some investors are feeling increasingly impatient however, with assets falling from £800 million at launch to around £600 million. This caused the trust to be demoted from the FTSE 250 to the small cap index in May.

Over three years the trust's share price is down by around a third, reflected in its 14.1% discount.

At an investor meeting just before the summer, Woodford launched a fierce defence of the strategy: ‘We never promised instant returns. We said to judge us on our three to five year outcomes – the clue is in the name, this is the Patient Capital Trust.’

While a series of stock blowups have grabbed the headlines, Woodford has drawn attention to number of other holdings where patience has proved to be a virtue.

In an update last month, Woodford highlighted 10 such examples.

*Portfolio weightings as at 31 August 2018

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When Neil Woodford launched his Patient Capital trust in 2014 the key to its overarching philosophy was right there in its title.

Four years on, some investors are feeling increasingly impatient however, with assets falling from £800 million at launch to around £600 million. This caused the trust to be demoted from the FTSE 250 to the small cap index in May.

Over three years the trust's share price is down by around a third, reflected in its 14.1% discount.

At an investor meeting just before the summer, Woodford launched a fierce defence of the strategy: ‘We never promised instant returns. We said to judge us on our three to five year outcomes – the clue is in the name, this is the Patient Capital Trust.’

While a series of stock blowups have grabbed the headlines, Woodford has drawn attention to number of other holdings where patience has proved to be a virtue.

In an update last month, Woodford highlighted 10 such examples.

*Portfolio weightings as at 31 August 2018

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1: Autolus

Industry: Healthcare

Country: US

Percentage of Patient Capital Trust: 8.38%

Percentage of Equity Income fund: 1.49%

Theme: Healthcare innovation

First Invested: March 2016

Description

'Autolus is a clinical-stage biotechnology business at the forefront of a revolution in cancer treatment. The company was founded in 2014 based on advanced cell programming technology pioneered at University College London and operates in the fast-developing and rapidly growing immuno-oncology sector.'

Milestone moment:

In June Autolus listed on the Nasdaq. Its price was a 73% premium to the price of the last funding round in September 2017, which Woodford took part in.

Woodford said: ‘Since leading the company’s series B funding round in March 2016, the value of the holding has also previously seen significant uplifts, to reflect the company’s clinical progress and its journey towards life as a publicly quoted business.’

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2: Cequr

Industry: Healthcare

Country: Switzerland

Percentage of Patient Capital Trust: 1.49%

Percentage of Equity Income fund: 0.5%

Theme: Healthcare innovation

First Invested: August 2015


Description

'Cequr is developing and commercialising advanced yet simple-to-use, insulin delivery devices that make it easier for people living with diabetes to adhere to therapy and stay in control of their disease. The company’s simple, three-day, wearable devices provide freedom from multiple daily insulin injections.'

Milestone moment

In July Cequr announced the purchase of a type 2 diabetes device called 'One Touch Via' from Johnson and Johnson (J&J).

The device, which has already received regulatory approval but is not yet launched commercially, enables diabetes patients to deliver rapid-acting insulin at mealtime.

Woodford said: ‘J&J is in the process of divesting its diabetes division and Cequr has acquired an exclusive worldwide licence for the device’s use in diabetes. The company will transfer One Touch Via’s manufacturing capabilities to its world-class contract manufacturer, a move which doesn’t require a new FDA submission.’ 

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3: Federated Wireless

Industry: Technology

Theme: Disruptive technology

Country: US

Percentage of Patient Capital Trust: 1.4%

First Invested: August 2015

Description

'There is only so much space available to send wireless signals – the so-called spectrum – and this is becoming a pressing issue for the rapidly evolving wireless industry, which is already experiencing increasing levels of data traffic. Hence, the traditional model of licensing large segments of spectrum to individual mobile network operators (carriers) is becoming inefficient and under increasing pressure to evolve.' 

Milestone moment

In May Federated Wireless announced in partnership with Ericsson, Verizon and Qualcomm announced the successful testing of 4G technology over CBRS spectrum in Verizon’s live commercial network

Woodford said: ‘This development represents just one indication of the positive progress that is being made across numerous trials that Federated Wireless is conducting with a number of leading industry players.

‘The large market opportunity presented by the CBRS spectrum can only be exploited by contracting with a SAS provider, such as Federated Wireless. Given that the company is the leading independent provider of such technology, we believe it is uniquely positioned in this fast-evolving market.’

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4: Genomics

Industry: Healthcare

Country: UK

Percentage of Patient Capital Trust: 0.39%

Theme: Healthcare innovation

First Invested: November 2014

Description 

'Genomics, a spin-out from Oxford University, uses advanced algorithms to perform complex analysis on its large genomic datasets. It operates in the fast-evolving field of bio-informatics (which involves the use of data analysis tools to assess biological information) and it aims to make the process of drug development more efficient.' 

'The company has built the world’s largest analysis engine for genomic information, with over 100 billion data points. Ultimately, the goal is to bring this genomic analysis to clinicians, pharmaceutical companies and patients.'

Milestone moment

At the end of August Genomics closed an oversubscribed £25 million funding round, aimed to help the company maintain its leadership position in the field of genetics. It also announced a three-year collaboration with global pharmaceuticals giant Vertex. 

Woodford said: ‘We believe this is a further validation of the company’s technology and business approach and are therefore very pleased with this announcement.’

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5: Immunocore

Industry: Healthcare

Country: UK

Percentage of Patient Capital Trust: 0.39%

Percentage of Equity Income fund: 0.72%

Theme: Healthcare innovation

First Invested: July 2015

Description  

'Immunocore is a clinical-stage biotech founded in 2008 with technology spun out from Oxford University in 1999. The company operates in the fast-evolving field of immuno-oncology (treatments that use the immune system to kill cancers) and its foundation is based on T-cell receptor (TCR) technology.'

Milestone moment

At the end of August the firm commenced the start of a phase I study for an ImmTAC molecule (IMCnyeso) in patients with solid tumours. The study is part of an ongoing collaboration with global pharmaceutical company GlaxoSmithKline.

Woodford said: ‘We view this announcement as an execution milestone for Immunocore, which triggered a payment to the company. This represents the second ImmTAC being dosed in patients, following its main asset IMCgp100. Although this is an early-stage asset, successful development of IMCnyeso can trigger further milestone payments, as well as royalties for Immunocore.’

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6: Kymab

Industry: Healthcare

Country: UK

Percentage of Patient Capital Trust: 0.39%

Percentage of Equity Income Fund: 0.26%

Theme: Healthcare innovation

First Invested: April 2015

Description

'Kymab is an early-stage, Cambridge-based biotech company which uses its proprietary technology platform to discover and develop human monoclonal antibody therapies. This is a type of antibody which is created in a laboratory rather than inside a person’s own immune system.'

Milestone moment 

In July Kymab announced positive data from its phase I trial for KY1005, its potential eczema treatment. The data demonstrated that the treatment had a favourable safety profile and was well-tolerated.

Woodford said: 'This is great news for the company as it validates its technology platform. On the back of this data set, Kymab will progress KY1005 into a phase II study in atopic dermatitis, with additional plans to run studies in other immune-mediated diseases, such as graft-versus-host disease (GvHD).

'This serious condition can occur after a transplant when the donated materials recognise the recipient cells as foreign and attack them.'

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7: Oxford Nanopore 

Industry: Healthcare

Country: UK

Percentage of Patient Capital Trust: 8.09%

Percentage of Equity Income Fund: 1.9%

Theme: Healthcare innovation

First Invested: August 2015

Description

'Oxford Nanopore is a sequencing business that was spun out of the University of Oxford in 2005. DNA sequencing systems have traditionally been costly and bulky but Oxford Nanopore has developed a new generation of sequencers that are small, portable and affordable.' 

Milestone moment 

In March the company completed a £100 million fundraise, which valued the business at £1.5 billion. This funding provided the business with the capital it needs to move on to the next leg of its commercial journey, supporting the construction of its new manufacturing facility. 

Woodford said: 'Having worked with the company closely over several years, we have watched it evolve to where it is today and we remain a committed supporter of the business.

'With a rapidly growing customer base, the company’s focus is now on the commercial execution of its core products, including the MinION and PromethION, and that’s where we believe its future potential value now lies.'

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8: Proton Partners International

Industry: Healthcare

Country: UK

Percentage of Patient Capital Trust: 7.14%

Percentage of Equity Income Fund: 0.76%

Theme: Healthcare innovation

First Invested: August 2015

Description

Proton Partners International, a UK-based business, is the country’s first high energy proton beam therapy provider. The company is developing oncology centres across the UK, known as the Rutherford Cancer Centres.

Milestone moment 

This week the firm opened a cancer care centre in the Thames Valley. This is its third, sitting alongside the recent openings in Northumberland and Newport. 

Woodford said: 'Although the company only launched just over three years ago, it is on track to fulfil its goal of having a network of its unique cancer centres within 90 minutes of 75% of the UK’s population by 2023.' 

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9: Sensyne Health

Industry: Healthcare

Country: UK

Percentage of Patient Capital Trust: 2.19%

Percentage of Equity Income Fund: 0.46%

Theme: Healthcare innovation

First Invested: April 2015

Description

'Sensyne’s business model is unique: it acts as an interface between the NHS and pharmaceutical companies, ultimately enabling the healthcare industry to get better at designing trials and discovering therapies that can improve patient care.' 

Milestone moment

In August Sensyne listed on the stockmarket, raising £60 million. Prior to that, it signed up additional collaborations with two more NHS trusts and one with the Oxford Trust for Genetic Data (holder of 11,000 full genomes). 

Woodford said: 'We continue to be excited by the opportunity for Sensyne. The journey so far has taken several twists and turns but it is our patient approach to identify, invest in and support teams and technology that represent the best of British innovation and have enormous potential value.

'The keen focus on ethics by the team at Sensyne and its novel, inclusive business model which fully aligns all stakeholders, including the NHS, marks this long-term investment as a stand out opportunity.' 

 

 

 

 

 

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10: Seedrs 

Industry: Financials 

Country: UK

Percentage of Patient Capital Trust: 1.15%

 

Theme: Disrputive technology

First Invested: August 2015

Description 

Seedrs is an early-stage business founded as part of an MBA project at the Said Business School – it officially launched in the UK in July 2012, as the first equity crowdfunding platform to receive regulatory approval from the FCA. Since then, it has grown to be one of the largest providers of equity crowdfunding to the European market.

Investment case 

'Increasingly, many early-stage companies with high-growth potential are choosing to stay private for longer and investors can struggle to gain direct access to this attractive asset class. Seedrs addresses these fundamental inefficiencies in capital markets by creating an online marketplace for private equity.

'A key point of differentiation for Seedrs is its nominee investment structure. For companies, this has the benefit of reducing the ongoing burden of managing an ever-increasing shareholder group.' 

Milestone moment 

Since its launch, Seedrs has helped investors allocate more than £400 million of captial

Woodford said: 'Seedrs has the potential to build a strong brand and become a leading player in the EU private financing space, developing in time a solid competitive moat. Indeed, the company is already one of the largest and most well-known platforms in the UK and has aspirations for growth in Europe, the US and beyond.' 

 

 

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