WPCT gets surprise boost up trust leaguetable from Prothena deal

WPCT gets surprise boost up trust leaguetable from Prothena deal

An unexpected recovery in Woodford Patient Capital Trust (WPCT)’s share price last month on the back of the collaboration signed between investee Prothena (NASDAQ:PRTA) and Celgene (NASDAQ:CELG), has made the struggling investment trust the surprise top performer among the sector specialist funds in March, albeit amid a substantial slump for the wider biotech and pharmaceuticals sector, according to an analysis by Marten & Co.

WPCT ranked as the top performer of the 13 closed end funds investing in wholly or largely in biotech or healthcare, in terms of both NAV and share price performance, in March, and was a mid-range performer over the first quarter. This contrasts markedly with its poor longer term performance for NAV and share price in absolute terms and in comparison with benchmarks and peers. WPCT  achieved a 0.6% rise in NAV and a 6.7% increase  in share price in the month, which compared with negative 1-5% changes in NAV (total return, in sterling terms) for all the other funds and 1.5-6.5% declines in price, for all but one other fund (the other exception being HBM Healthcare Investments (HBMN).

The Nasdaq biotechnology index recorded a 3% decline in the month, but the worst performance was among some of the larger cap constituents. Hence several funds with a bias towards the large cap biotechs underperformed but surprisingly these were joined by other funds where biotech is combined with pharmaceutials and/or healthcare, such as Polar Capital Global healthcare (PCGH) . Swiss-listed BB Biotech (BBB) had the worst NAV performance in the month with a 5% decline in sterling terms. Overall nine funds underperformed the Nasdaq biotechnology index in NAV terms and seven in terms of price in the month.

Over the first quarter, the Nasdaq biotechnology index was down by 3.6%, although four of the 13 funds  – HBM, Tekla Life Science Investors (HQL), BB Biotech and Worldwide Healthcare (WWH) – managed to beat this in NAV terms,  albeit all with smaller 1.7-3% declines. Surprisingly, BB Biotech and HBM were the only funds showing a positive return over the quarter in price terms, with rises of 6.6% and 6% in sterling terms.

Prothena has  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 studies, a Phase IIb study study called Pronto, which is due to read-out later this 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.

WPCT’s sudden improvement in NAV and stock price performance will be welcome news for investors, who have seen a long period of underperformance relatiove to benchmarks and peer trusts. WPCT saw some other pieces of positive news in march, notably Oxford Nanopore’s £100m fundraising, 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 currently testing the US markets for an IPO, which if successful and achieves a pre-money valuation above c$305m, could also generate a fair value gain for the Neil Woodford-managed trust. However, hybrid online estate agency Purplebricks, also a large holding accounting for just under 8% of WPCT’s NAV, saw its share price fall by around 30% last month.

The performance of the 13 closed end funds monitored by Marten & Co in March and over the first quarter of 2018 is shown in the tables below.

WPCT get surprise boost up trust leaguetable from Prothena deal