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Woodford Patient Capital plunges as Prothena trial fails

Woodford Patient Capital plunges as Prothena trial fails

Prothena, one of the big biotech bets of fund manager Neil Woodford, has failed a key drugs test, wiping more than two-thirds off its market value and souring the third anniversary of his Woodford Patient Capital Trust (WPCT).

Shares in WPCT tumbled 10.6% to 76p, ending a month-long rally, after Prothena, the trust’s third biggest holding, announced it was ceasing further research into NEOD001, a treatment for the rare disease amyloidosis. 

The Irish Nasdaq-listed company, which accounts for over 9% of WPCT’s assets, said the phase 2b Pronto study into the treatment had failed to meet its primary or secondary endpoints.

‘We are deeply disappointed by this outcome, particularly for patients suffering from this devastating disease,’ said Gene Kinney, president and chief executive Prothena as his company’s shares plunged 68%.

‘We are surprised by the results from these two placebo-controlled studies and will continue to analyse the resulting data to share insights with our collaborators in the scientific, medical and advocacy communities,’ his statement added.

The news is damaging for Woodford who in January flagged the Pronto trial as one of the key milestones that could trigger a revival in the portfolio’s performance this year.

After a bright start in 2015, following a record £800 million launch, WPCT has struggled, its shares listed at 100p last month hitting an all-time low of 73p at a 14% discount to their net asset value.

Prothena is also the seventh largest holding in Woodford's £6.6 billion Woodford Equity Income fund, representing 3.1% of the portfolio, and a 1.8% position in the Woodford Income Focus fund.

Woodford’s credibility is also on the line as Prothena was the subject of a short-selling attack by Kerrisdale Capital, which predicted in November that the drug would fail. This is the second time Kerrisdale has clashed with Woodford, having successfully criticised and sold short Allied Minds (ALML), the intellectual property group that was another key holding of Woodford’s.

In a statement Woodford admitted the failure of the trials was a ‘blow’ and that he would work with Prothena’s management on its strategy and options.

‘Prothena still has an early and mid-stage clinical pipeline. It has a technology platform and a world-leading specialism in misfolding proteins, which are implicated in a number of different neurological disorders. This research platform has been validated by two major pharmaceutical companies – Roche (which is partnering Prothena in PRX002 in Parkinson’s disease, currently in Phase II trials) and Celgene (which has recently collaborated with Prothena on three earlier stage clinical assets).

‘The company also has its own, unpartnered assets about to enter the clinic and, with more than $500 million on its balance sheet, it is very well-funded,’ he stated.

WPCT had rallied in the past month on a spate of good news that prompted some investors to scent a bargain in the discounted stock. Last week the shares closed at a reduced discount of 3.5% to net asset value, although that will have widened in response to the setback with Prothena. 

Prothena was spun out of Irish drugmaker Elan in 2012. It specialises in developing immune system-based drugs to fight degenerative diseases such as Alzheimer’s, Parkinson’s and Huntington’s caused by breakdowns in the body’s proteins and cells.




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