Neil Woodford. Woodford Investment Management via YouTube

Wood­ford braces po­lit­i­cal storm as UK fi­nan­cial reg­u­la­tors scru­ti­nize fund sus­pen­sion

The shock of Neil Wood­ford’s de­ci­sion to block with­drawals for his flag­ship fund is still rip­pling through the rest of his port­fo­lio — and be­yond. Un­der po­lit­i­cal pres­sure, UK fi­nan­cial reg­u­la­tors are now tak­ing a hard look while in­vestors con­tin­ue to flee.

In a re­sponse let­ter to an MP, the Fi­nan­cial Con­duct Au­thor­i­ty re­vealed that it’s opened an in­ves­ti­ga­tion in­to the sus­pen­sion fol­low­ing months of en­gage­ment with Link Fund So­lu­tions, which tech­ni­cal­ly del­e­gat­ed Wood­ford’s firm to man­age its funds.

Ear­li­er this month, in­vestors were abrupt­ly no­ti­fied that they would not be al­lowed to re­deem, sell, trans­fer or can­cel their shares in the Wood­ford Eq­ui­ty In­come Fund for at least 28 days. At that point, as­sets added up to £3.7 bil­lion — down from £10.2 bil­lion just two years ago due large­ly to an ex­o­dus of in­vestors dis­ap­point­ed with the fund’s per­for­mance.

An­drew Bai­ley, FCA chief ex­ec­u­tive, shed some light on the fi­nal straw that forced Wood­ford’s hand:

Dur­ing May 2019, net out­flows (mean­ing re­demp­tions were larg­er than sub­scrip­tions) av­er­aged one per cent of [net as­set val­ue] per week. How­ev­er, the re­demp­tion re­quests on 31st May and the 3rd June amount­ed to £296m, rep­re­sent­ing 8.2% of NAV, with the fund hold­ing no cash at the time, hav­ing pre­vi­ous­ly drawn down some of an over­draft fa­cil­i­ty. Funds are per­mit­ted to have ac­cess to over­draft fa­cil­i­ties, to pro­vide liq­uid­i­ty where nec­es­sary, but the val­ue of the over­draft is re­strict­ed rel­a­tive to the size of the fund. The re­demp­tions on 31st May and 3rd June were very high and co­in­cid­ed with the re­pay­ment of the over­draft.

Wood­ford’s whole busi­ness is reel­ing. As much as the fund man­ag­er tried to stress that the sus­pen­sion was lim­it­ed to the Eq­ui­ty Fund, in­vestors have pulled out of the Fo­cus Fund (which is still open) and sent shares of the FTSE 250-list­ed Pa­tient Cap­i­tal Trust down more than 30%. Among the dis­en­chant­ed was Har­g­reaves Lans­down — which has in the past sold and pro­mot­ed the Wood­ford funds via its re­tail in­vest­ment plat­form — pulling its en­tire po­si­tion of £45 mil­lion from the Fo­cus Fund.

On Tues­day Fi­deli­ty, an­oth­er house­hold name in per­son­al in­vest­ment, said it’s al­so ban­ning clients from putting new mon­ey in­to the Fo­cus Fund.

Wood­ford has made a slew of biotech in­vest­ments, many of which have soured. They ranged from Cir­cas­sia and Alk­er­mes, both hit by set­backs in 2016, to on­go­ing trou­bles at now-pen­ny stock biotech North­west Bio­ther­a­peu­tics. More re­cent­ly, Prothena owned up to ut­ter fail­ure in two late-stage tests of its lead drug, which was ul­ti­mate­ly rel­e­gat­ed to the scrap heap.

Cen­tral to the sus­pen­sion de­ba­cle was the pro­por­tion of illiq­uid and/or un­list­ed as­sets in the Eq­ui­ty Fund port­fo­lio, which made it hard­er to re­trieve cus­tomers’ in­vest­ments on de­mand. Bai­ley sug­gest­ed that un­list­ed se­cu­ri­ties made up around 20% of the Eq­ui­ty Fund in Feb­ru­ary — al­most dou­ble the re­quired lev­el — hav­ing breached that lim­it twice in 2018.

Mean­while, Wood­ford has at­tract­ed the ire of Nicky Mor­gan, chair of the Par­lia­men­tary trea­sury com­mit­tee, for still pock­et­ing as much as £100,000 in to­tal man­age­ment fees from in­vestors who were es­sen­tial­ly trapped. Mor­gan has since is­sued in­quiries to the FCA and Har­g­reaves Lans­down on their knowl­edge of the mat­ter.

Bai­ley and Charles Ran­dell, chair­man of the FCA, are set to give ev­i­dence at a trea­sury com­mit­tee meet­ing next week.

In a state­ment pro­vid­ed to the Fi­nan­cial Times, Wood­ford In­vest­ment Man­age­ment said they’re co­op­er­at­ing with the in­ves­ti­ga­tion and in­sists the brief spikes in per­cent­age of un­list­ed stock hold­ings did not con­sti­tute breach­es.

“Wood­ford al­ways pro­vid­ed month-end da­ta for in­vestors and at no time was there a month-end pas­sive breach,” they said. “The FCA ref­er­ence to breach­es in Feb­ru­ary and March 2018 re­lates to two in­ad­ver­tent in­tra-month pas­sive breach­es, both re­solved be­fore month-end.”

Con­quer­ing a silent killer: HDV and Eiger Bio­Phar­ma­ceu­ti­cals

Hepatitis delta, also known as hepatitis D, is a liver infection caused by the hepatitis delta virus (HDV) that results in the most severe form of human viral hepatitis for which there is no approved therapy.

HDV is a single-stranded, circular RNA virus that requires the envelope protein (HBsAg) of the hepatitis B virus (HBV) for its own assembly. As a result, hepatitis delta virus (HDV) infection occurs only as a co-infection in individuals infected with HBV. However, HDV/HBV co-infections lead to more serious liver disease than HBV infection alone. HDV is associated with faster progression to liver fibrosis (progressing to cirrhosis in about 80% of individuals in 5-10 years), increased risk of liver cancer, and early decompensated cirrhosis and liver failure.
HDV is the most severe form of viral hepatitis with no approved treatment.
Approved nucleos(t)ide treatments for HBV only suppress HBV DNA, do not appreciably impact HBsAg and have no impact on HDV. Investigational agents in development for HBV target multiple new mechanisms. Aspirations are high, but a functional cure for HBV has not been achieved nor is one anticipated in the forseeable future. Without clearance of HBsAg, anti-HBV investigational treatments are not expected to impact the deadly course of HDV infection anytime soon.

No­var­tis is ax­ing 150 ear­ly dis­cov­ery jobs as CNI­BR shifts fo­cus to the de­vel­op­ment side of R&D

Novartis is axing some 150 early discover jobs in Shanghai as it swells its staff on the drug development side of the equation in China. And the company is concurrently beefing up its investment in China’s fast-growing biotech sector with a plan to add to its investments in local VCs.

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Democratic presidential candidate, U.S. Sen. Elizabeth Warren (D-MA) speaks during the Nevada Democrats' "First in the West" event at Bellagio Resort & Casino on November 17, 2019 in Las Vegas, Nevada (Getty Images)

Eliz­a­beth War­ren pro­pos­es us­ing com­pul­so­ry li­cens­ing, an­titrust ac­tions to break bio­phar­ma’s con­trol of drug pric­ing — and here are the block­busters she’s tar­get­ing first

Nancy Pelosi’s drug pricing bill may have sparked some industrial strength headaches on the money side of biopharma, but Elizabeth Warren seems determined to become biopharma’s Nightmare on Pennsylvania Avenue.
Warren, one of the top-ranked candidates for the Democratic presidential nomination backing Medicare for all, is circulating a new plan that promises to break the industry’s grip on drug prices — and she has some very specific examples of how she would do it.
The Warren plan would rely on the federal government’s compulsory licensing powers to seize the IP of blockbuster drugs like Truvada and Harvoni to provide them at a fraction of what Gilead sells them for in the US. And she would throw some antitrust actions in as needed to rein in the price of Humira, AbbVie’s cash cow that continues to dominate the list of the most profitable therapeutics on the market.
Notably, she plans to rely on the powers already vested in the federal government, rather than suggest remedies that would require the assent of a deeply divided Congress.
In addition to the blockbusters on the list, Warren sends a clear signal that the same tactics would be used to beef up the supply of cheap antibiotics, as needed. And the same action could befall any other therapy patients can’t afford.

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Mer­ck’s $1B cash gam­ble pays off with a sur­pris­ing PhI­II car­dio suc­cess for Bay­er’s heart drug veri­ciguat

More than 3 years after Merck stepped up and paid $1 billion in cold, hard cash to gain the US commercial rights to Bayer’s high-risk heart drug vericiguat in a broad-ranging cardio alliance, the partners say their Phase III study has come through with promising data and a date with regulators.
We don’t have the data, and won’t until they put it out at an upcoming scientific session, but Merck touted the results, saying that their big Phase III VICTORIA study hit the primary endpoint  — with vericiguat combined with available therapies reducing “the risk of the composite endpoint of heart failure hospitalization or cardiovascular death in patients with worsening chronic heart failure with reduced ejection fraction (HFrEF) compared to placebo when given in combination with available heart failure therapies.”
Depending on the hard data, and how it breaks out with the combinations used, this drug could pose a threat to Novartis’ blockbuster drug Entresto, currently at $1.6 billion while analysts expect peak sales to hit $4 billion.
The drug is a soluble guanylate cyclase (sGC) stimulator, which Bayer and Merck have had high hopes for. Evidently, so did cardiologists. Cowen’s last analysis set potential sales at $400 million in 2024, but that number could go up significantly now.
Cowen’s Steve Scala noted this morning:
Vericiguat could be a lucrative product for Merck, and one with potentially under-appreciated value. At Cowen’s Therapeutics Conference in September 2019, 80% of specialists anticipated a positive result from VICTORIA whereas only 51% of investors shared this optimism.
Investigators recruited more than 5,000 patients at more than 600 centers in 42 countries for this study — one of the most expensive propositions in R&D. Millions of people in the US suffer from heart failure with reduced ejection fraction when the failing heart fails to contract properly to eject blood into the system. Bayer holds ex-US rights to the drug and also stands to earn cash from the $1.1 billion in milestones Merck agreed on for their collaboration.
Remarkably, the drug was pushed into Phase III despite failing the mid-stage trial — though investigators flagged a success at the high dose of 10 mg. In VICTORIA, researchers started patients at 2.5 mg and then titrated up to 5 and then 10 mg.

Alk­er­mes forges $950M biotech buy­out deal in a bold bet on an ear­ly-stage CNS drug plat­form

Alkermes $ALKS is investing $100 million cash and committing up to $850 million more in milestones in a big wager on a very early-stage CNS discovery platform. And the biotech is adding $20 million more to fund next year’s new research work on the platform it’s acquiring in today’s buyout with an eye to expanding the research work in oncology.

The biotech, helmed by Richard Pops, is buying Rodin Therapeutics, which had focused early on Alzheimer’s disease. Pops’ buyout, though, isn’t focused solely on the most troublesome sector in pharma R&D.

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(Image: Associated Press)

Amarin emerges from an ex­pert pan­el re­view with a clear en­dorse­ment for Vas­cepa and high odds of suc­cess when the FDA weighs in for­mal­ly

Several FDA experts who gathered Thursday to consider the landmark approval of Vascepa to reduce cardio events in an at-risk population voiced their unease about various aspects of the efficacy and safety data, or ultimately the population it should be used to treat. But the overwhelming belief that the data pointed to the drug’s benefit and clearly outweighed risks carried the day for Amarin.

The panel voted unanimously (16 to 0) to support the company’s positive data presentation — backing an OK for expanding the label to include reducing cardio risk. The vote points Amarin $AMRN down a short path to a formal decision by the FDA, with the odds heavily in its favor. Chances are the rest of the questions about the future of this drug will be hashed out in the label’s small print.

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Left to right: Arthur Pappas, Robert Nelsen, Peter Kolchinsky Doug Cole and David Beier

In rare po­lit­i­cal for­ay, top biotech in­vestors urge Con­gress to re­ject drug pric­ing bill

Thirteen of the top biotech venture capitalists in the country wrote a letter last week warning lawmakers that if Congress passes a drug pricing bill House Speaker Nancy Pelosi has put before lawmakers, they won’t be able to invest in biomedical research at their current rate, and patients will suffer.

“If policies such as those included within H.R. 3, the Lower Drug Costs Now Act, are passed, our ability to continue to invest in future biomedical innovation will be severely constrained, thus crushing the hopes of millions of patient waiting for the next breakthroughs to treat or cure their cancers, rare genetic diseases, Alzheimer’s, or other serious and life-threatening conditions,” they wrote in a letter addressed to the highest-ranking Democrats and Republicans in the House and Senate and acquired by Endpoints News. 

Dicer­na scores broad, 'rest of liv­er' deal with No­vo Nordisk, bag­ging $225M in cash to hit some 30 tar­gets with RNAi plat­form

Turns out Dicerna wasn’t done with deals yet after locking in $200 million upfront from Roche for a hepatitis B cocktail two weeks ago.

Novo Nordisk has signed on as the latest partner to its GalXC RNAi platform, handing over $175 million in cash to claim any and all targets of interest in liver-related cardio-metabolic diseases that are not already reserved in previous pacts. The Danish drugmaker — which has signaled its interest to expand considerably beyond its core diabetes franchise into areas like NASH — is also purchasing $50 million worth of Dicerna’s equity at a 25% premium of $21.93 per share. More research payments and milestones extending to the billions are on the line.

Gene ther­a­py wins the in­side track at EMA; PPD files for IPO

→ Gene therapy maker Orchard Therapeutics has been granted an accelerated assessment for OTL-200 by the EMA’s Committee for Medicinal Products for Human Use (CHMP). The gene therapy — in development in partnership with the San Raffaele-Telethon Institute for Gene Therapy (SR-Tiget) in Milan, Italy — being used towards the treatment of metachromatic leukodystrophy.

→ Pharmaceutical Product Development has announced that its parent company, PPD, Inc has submitted a draft to the SEC relating to the proposal of an IPO of the parent company’s common stock. Number of shares and price range have not yet been determined.