Northwest Biotherapeutics

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Neil Woodford 4 December 2015 Est. reading: 2 min read

Over the past few days you may have become aware of press reports concerning our investment in Northwest Biotherapeutics. It’s a stock that we hold in the CF Woodford Equity Income Fund and Woodford Patient Capital Trust.

Many of these press reports were informed by a public filing we made to the U.S. Securities and Exchange Commission on 24 November 2015, which for our part was driven by our belief in robust and corporate governance, and our responsibility to our investors to protect their investments where we deem it necessary.

The filing called for the appointment of an independent non-executive director to the Board of Northwest and, following this appointment, the convening of a special committee of non-executive directors to investigate recent allegations of financial improprieties and regulatory failure that have been published by at least one anonymous source.

Given the level of coverage, I believe it is appropriate to share my views on the situation with you, to give you the context behind our investment in Northwest.

When my team and I first met with Northwest we were attracted to its technology, which looks to harness the power of the body’s immune system to fight cancer. It’s a broad-based technology for a range of solid tumours and is being trialled in patients who have exhausted all other avenues of cancer treatment.

Our conviction in the technology and early clinical data, supported by globally leading oncology clinicians, is the principal factor in our investment. Our long-term aim is also to help the company get into a position where it can attract the consistent funding it will need to successfully complete a Phase III clinical study and beyond. If the company is going to move into a sustainable position to attract a broader range of investors that, in turn, will give it a runway to complete its clinical trials, it needs to put these allegations to rest once and for all.

What I have said all along, and reiterate today, is that with some early-stage investments not everything will go well. There will be bumps in the road and some won’t make it to a successful destination. It is too early to pass judgement on Northwest but we have hit a bump in the road that needs to be addressed.

We have often talked about how, as active fund managers, we engage with boards to represent the interests of our shareholders. The situation with Northwest is such an example. We remain confident in our approach to early-stage investments across all sectors. Indeed, we have seen some notable success over the past 18 months that have contributed to some positive performance for our investors.

Over the next few weeks, we hope that an investigation of the allegations will begin and I will, of course, keep you up-to-date on developments.

What are the risks?

  • The value of investments and any income from them may go down as well as up, so you may get back less than you invested
  • Past performance cannot be relied upon as a guide to future performance
  • The ongoing charges figure is charged to capital, so the income of the funds may be higher but capital growth may be restricted or capital may be eroded
  • The funds may invest in other transferable securities, money market instruments, warrants, collective investment schemes and deposits – some of these security types could increase the funds’ volatility and increase the level of indirect charges to which the funds are exposed
  • The funds and trust may invest in overseas securities and be exposed to currencies other than pound sterling – as a result, exchange rate movements may cause the sterling value of these investments and the income from them, to fluctuate
  • The LF Woodford Income Focus Fund will be invested in a concentrated portfolio of securities – the fund is not restricted by reference to any geographical region, sector or market capitalisation
  • The LF Woodford Equity Income Fund and the Woodford Patient Capital Trust may invest in unquoted securities, which may be less liquid and more difficult to value, because they are generally not publicly traded – the lack of an open market may also make it more difficult to establish fair value
  • The price of shares in the Woodford Patient Capital Trust is determined by market supply and demand, and this may be different to the net asset value of the trust. This means the price may be volatile in response to changes in demand
  • Long-term outcomes are more binary – extremely attractive rewards for success but some businesses will inevitably fail to fulfil their potential and this may expose investors to the risk of capital losses
  • Young businesses have a different risk profile to mature blue-chip companies – risks are much more stock-specific, which implies a lower correlation with equity markets and the wider economy – it can take years for young businesses to fulfil their potential, this investment requires patience

Important information

Before investing, you should read the Key Investor Information Document (KIID) for the fund – or Key Information Document (KID) for the trust – and the Prospectus which, along with our terms and conditions, can be obtained from the downloads page or from our registered office. If you have a financial adviser, you should seek their advice before investing. Woodford Investment Management Ltd is not authorised to provide investment advice.

The Woodford Patient Capital Trust currently intends to conduct its affairs so that its securities can be recommended by IFAs to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust.

The Woodford Funds (Ireland) ICAV (the “Fund”) has appointed as Swiss Representative Oligo Swiss Fund Services SA, Av. Villamont 17, 1005 Lausanne, Switzerland. The Fund’s Swiss paying agent is Neue Helvetische Bank AG. All fund documentation including, Prospectus, Key Investor Information Documents, Instrument of Incorporation and financial reports may be obtained free of charge from the Swiss Representative in Lausanne. The place of performance and jurisdiction for all shares distributed in or from Switzerland is at the registered office of the Swiss Representative. Fund prices can be found at www.fundinfo.com.

 

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

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