Woodford Patient Capital discount widens despite NAV growth – Woodford Patient Capital, which mainly invests in early-stage unquoteds, delivered an NAV return of 6.9% in 2018, with several of its more mature holdings potentially being able to seek a listing. The shares performed less well as the discount increased by 8.4% to 15.9% at year-end. After initially trading at a premium in 2016, the shares have traded at a discount since the latter part of 2016.
Portfolio highlights
- On the negative side, WPCT suffered a setback in April 2018 when Prothena announced that its pronto trial, investigating its lead asset, NEOD001, in AL amyloidosis, had been unsuccessful. This was a very disappointing outcome for the company and its investors, which stemmed from a much bigger and more significant placebo effect than anything seen in prior trials would have suggested
- More positively, events at two unquoted companies provided momentum to NAV as the year unfolded. In June, the initial public offering (IPO) of Autolus, a clinical-stage biotechnology business at the forefront of a revolution in cancer treatment, saw this business transition from an unquoted holding to a quoted one at a materially higher valuation. The IPO completed at the top of the guided price range
- Meanwhile, in September, Industrial Heat also saw a meaningful valuation uplift. The company has built a platform of new energy technologies (we think they do not work) focused on harnessing hitherto poorly understood or neglected energy science, including cold fusion
Woodford’s view
Neil Woodford, WPCT’s manager, said: “Against a backdrop of widespread equity market declines, WPCT delivered a positive NAV return of 6.9 per cent in 2018. More broadly, we have been pleased with the operational progress being delivered by the majority of companies in the portfolio. The portfolio’s success stories are gradually beginning to account for a larger proportion of assets, so this has meant that the contribution from the positive uplifts was significantly greater than the contribution from the negatives.
Several of the more mature companies in the portfolio are now at a stage where a stock market listing would appear appropriate. Indeed, several of them are well beyond the stage at which, historically, an introduction to public markets would typically have occurred. We have encouraged these businesses to remain private for as long as possible. We are only comfortable exposing these businesses to the slings and arrows of a stock market listing if we are confident that it can be done in a manner that will not compromise their ability to fulfil the potential that we have always seen in them.
At the same time, our attention is, of course, also on nurturing the next wave of global disruptors. The likes of Inivata (a leader in liquid biopsy), Federated Wireless (mobile spectrum sharing technology) and Carrick Therapeutics (targeted cancer therapies) are hot on the heels of the larger positions in the portfolio, both in terms of the disruption they can bring to their respective industries, and in terms of the value they can continue to create.
Irrespective of their stage of development, we are doing everything we can to ensure positive outcomes for the companies in which WPCT has invested. In turn, we are doing everything we can to ensure positive outcomes for the shareholders of this company. There will always be things that don’t go to plan within a portfolio like this, but with an appropriate balance of patience, support and determination, there is a path forward. Collectively, this represents a path towards long-term value creation, and it is a path upon which WPCT is progressing positively.”
WPCT: Woodford Patient Capital discount widens despite NAV growth