WPCT gets boost from Prothena-Celgene deal
Shares in Woodford Patient Capital Trust (WPCT) have risen by almost 10% this morning to 78p on news of a partnership announced after US markets closed last night between its largest investee company, Prothena (NASDAQ:PRTA) and Celgene (NASDAQ:CELG). The partnership will develop new therapies for neurodegenerative disease, including Alzheimer’s, and Prothena – in which WPCT has a holding accounted for 10% of NAV at the end of February – will receive a $100 million up-front payment as well as a $50m equity investment at a 25% premium from Celgene, under the terms of the deal. Prothena stock is up by around 20% this morning.
The collaboration covers three early stage (preclincal) programmes, with Celgene gaining the right to opt-in for later development at the IND stage (a regulatory filing to start clinical trials). The multi-year R&D collaboration is focused on three proteins implicated in the pathogenesis of several neurodegenerative diseases, including tau, TDP-43 and an undisclosed target. Prothena will receive potential opt-in exercise payments and regulatory and commercial milestones for each licensed programme, as well as royalties on sales. Celgene initially has exclusive right to license clinical candidates for the US and, if exercised, it would then have a right to expand the license to global rights at the completion of Phase I studies. Following the exercise of global rights, Celgene will be responsible for funding all further global clinical development and commercialisation.
Prothena has hitherto been a controversial investment for WPCT, with a key investor concern being the outcomes of studies of its lead product NEOD001 for AL amyloidosis, on which much of its value depends. The company is approaching the first of these, a Phase IIb study study called Pronto, which is due to read-out in the second quarter. PRONTO is evaluating NEOD001 in previously treated AL Amyloidosis patients with ongoing cardiac dysfunction. The study aims to confirm the cardiac responses to NEDO001 treatment that were observed in a prior open-label study, in a double-blind, placebo-controlled setting. Cardiac response is measured by the reduction in the biomarker NT-pro-BNP. Positive results in PRONTO is expected to allow Prothena to seek conditional approval of NEOD001 in Europe.
Next year will see the outcome of the VITAL Phase III study in treatment naïve AL Amyloidosis patients. This pivotal study is designed to support full global regulatory registration, and to date, all of the patients have been enrolled for more than six months and more than half for 12 months. This is a time-to-event study and Prothena estimates that the last clinical event required to begin statistical analysis will occur in the second half of 2019.
Last year, Prothena came under a short attack from Kerrisdale Capital, a US investment firm with a reputation for this strategy (see thesis) prompting a decline in its stock price from around $68/share to the current $34/share (WPCT’s average purchase price for Prothena is c$40/share). Kerrisdale predicts the failure of both studies based on complex arguments around endpoints measured.
Notwithstranding this, the Celgene-Prothena deal provides an important boost to confidence in WPC’s investment case. It is also the second piece of positive news after Oxford Nanopore’s £100m fundraising (see earlier Quoteddata.com article), which should generate a fair value gain for the fund. Meanwhile, Autolus – in which WPCT has a stake accounting for 4.5% of its NAV – is testing the US markets for an IPO, which if successful and has a pre-money valuation above c$305m, could also generate a fair value gain for the Neil Woodford-managed trust.
The Prothena and Oxford Nanopore news looks likely to boost WPCT’s performance in March and potentially over the first quarter although it has lagged peers in both January and February this year. However, hybrid online estate agency Purplebricks, also a large holding accounting for just under 8% of WPCT’s NAV, has seen its share price fall by around 30% this month will likely offset some of the gains on the otherwise surprise positive news run.
WPCT’s top 10 shareholdings, as of the end of February, are shown in table below.
| Company | % NAV |
| Prothena | 10.01 |
| Oxford Nanopore | 8.56 |
| Purplebricks | 7.78 |
| Benevolent AI | 7.57 |
| Immunocore | 7.38 |
| Proton Partners | 4.78 |
| Atom Bank | 4.5 |
| Autolus | 4.45 |
| Mereo Biopharma | 4.18 |
| Oxford Sciences | 3.82 |
WPCT gets boost from Prothena-Celgene deal