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Woodford Patient Capital unveils its portfolio

Woodford Patient Capital has published its first set of figures – interims covering the period from its launch until the end of June 2015. The net asset value at the end of the period was 101.86p and the share price 113.5p – putting it on a premium of 11.4%. The Board is planning to issue shares, at a premium, to help address the excess demand for the shares – this should bring the premium down over time if it is successful.

The statement says that more than three quarters of the £800m they raised has been invested so far. Mid and large capitalisation businesses account for about a quarter of the portfolio. This includes stocks like AstraZeneca, GlaxoSmithKline, Legal & General, Rolls-Royce, Allied Minds and IP Group. the latter two came through placings of stock and, similarly, they were able to build positions in Circassia and Oxford Pharmascience. Smaller holdings include Vernalis, 4D Pharma and Xeros.

In the unquoted part of the portfolio, they now have investments in Proton Partners International, which is bringing the first proton beam cancer therapy centres to the UK, and Oxford Sciences Innovation, which they say represents a critical new link in Oxford’s science innovation infrastructure and an important part of the UK’s burgeoning technology commercialisation industry.

In terms of performance attribution, the report says much of the positive performance to date has been delivered by holdings they would classify as early-stage. Blue-chip holdings have typically detracted from performance thus far, with GlaxoSmithKline and AstraZeneca in particular showing short-term share price weakness. Within the UK biotech sector, Vernalis also contributed positively, following FDA approval of its first cough cold product Tuzistra at the end of April. They think investors continue to significantly undervalue the potential of Vernalis’ cough cold franchise. 4D Pharma, which they say is making good progress with two new biotherapeutic treatments: Blautix, for irritable bowel syndrome, and Thetanix, for Crohn’s disease, also performed well. During May, the company announced that both drugs are moving towards first-in-man clinical studies, whilst it is also making good progress in other areas such as asthma and rheumatoid arthritis.

US biotech exposure, principally Prothena (the largest investment in the portfolio) and Northwest Biotherapeutics, also contributed positively to performance. The statement suggests that some US biotechs are trading on bubble like valuations but Prothena, Northwest Biotherapeutics and Alkermes, all trade on valuations more in line with UK biotechs.

Outside of the health care industry, RM2 International performed well. The business is still at an early-stage of its development but they think it has tremendous potential to disrupt the pallet industry. Although it has suffered setbacks over the past few years, its recent contract win with PPG International is very positive news, in their view, and could herald the broader adoption of its composite pallets, which are superior to wooden pallets in almost every way: lighter, more durable and more cost-effective, as well as more environmentally friendly. Norwegian technology business Idex, which is developing a unique and very promising in-glass fingerprint sensor solution which has enormous potential in the tablet & smartphone industry, also contributed positively.

WPCT : Woodford Patient Capital unveils its portfolio

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