Woodford fallout to blame for shrinking biotech valuations, co-investor says
The IP Group did not have a good first half of the year. And the UK investment company thinks Neil Woodford — its second-largest shareholder — is to blame.
Gaining the backing of Woodford, a prominent supporter of the country’s biotech industry, was once a badge of honor for upstarts. But in its half-yearly results, the IP Group said his holdings in 12 of its companies had in some cases “adversely impacted valuations and constrained funding availability.”
Woodford’s stakes in IP Group companies make up 34% of the portfolio’s total value. The unicorn sequencing player Oxford Nanopore is the largest of the pack, capturing 24% of the overall value, with the remaining 11 — including Cell Medica, Mission Therapeutics and PsiOxus Therapeutics — representing 10%.
That overall value shrank by £36.7m, or approximately 3%, compared to a slight gain in the last financial year.
“Market sentiment towards the sector in which the Group operates was impacted by the well-publicised difficulties experienced by Woodford Investment Management (“WIM”), one of the sector’s longest-standing supporters,” the IP Group wrote.
Plagued by underperformance and investor outflow for the past few years, Woodford’s already damaged reputation took a further hit when he abruptly suspended his flagship £3.7 billion Woodford Equity Income Fund, blocking investors from pulling out. While he has contended that the drastic measure was only necessary to turn the fund around and does not impact his other funds, the fallout has reverberated far and wide.
Co-investors are feeling the pain. Venture investor Arix Biosciences had to report a 14.5% shrinkage in net asset value at the end of the H1 period as Autolus’ share price $AUTL plunged by more than half in the face of several unexpected delays and setbacks. At ailing Prothena, EcoR1 Capital stepped in to buy out Woodford’s remaining stake in the company.