Woodford biotech ‘fire-sale’ looms after rescue bid fails; report

A proposed deal to buy up a portfolio of biotechs in Neil Woodford’s collapsed investment fund has fallen through, raising the risk of a cut-price ‘fire sale’ of the stocks.

Life sciences investment specialist WG Partners had been trying to raise £550 million to take over around 20 stocks in the Woodford Equity Income Fund, but failed to meet a deadline for the deal, according to a Sunday Times report.

Administrator company Link Fund Solutions is overseeing the liquidation of the fund after a decision was taken to close it last October, and remove Woodford as its manager.

The move came a few months after Woodford – faced with investors seeking to withdraw their money amid a drop in confidence – called a halt to money going in or out. He shut down his investment company shortly afterwards.

The WG Partners deal focused on illiquid and unquoted stocks, including a number of small-cap biotech companies.

Companies in the fund include gene analysis specialist Oxford Nanopore, which is reported to be worth more than $1 billion, as well as drug developer Immunocore and proton beam therapy treatment provider Rutherford Health.

Now, the fear is that these assets will be sold off at knock-down prices as Woodford tries to finance redemptions for Equity Income Fund investors.

The first of these redemptions took place late last month after the listed assets in the fund were sold by Blackrock, which is managing the sale along with PJT Park Hill. All told, investors in the fund recouped nearly three-quarters of their remaining cash, equivalent to £2.1 billion from the £2.9 billion fund.

Among the companies involved in that sale was listed biotech group ReNeuron, which had been viewed as one of the few well-performing assets in the fund.

PJT Park Hill has the trickier task of funding buyers for the illiquid assets like Immunocore and Oxford Nanopore.

Funding in the UK biotech sector fell by more than 40% last year, according to figures released by the BioIndustry Association (BIA) last month, with some of that decline attributed to a chill that swept through the sector caused by “headlines around Neil Woodford’s funds, and the eventual sale process.”

The industry raised £1.3 billion last year compared to the record £2.2 billion raised in 2018. It’s worth noting however that ranked as the third best year for the sector behind 2018 and 2015, and represented a 400% improvement on 2012.