April roundup

Important Information

We want to make investing with us simple and straightforward for all of our clients.

Please select your investor type from the options below.

Alternatively you can register or log in to an existing account.

Please note that by making your selection here you are agreeing to the Woodford Investment Management Ltd Privacy Statement and to our Terms and Conditions.

Mitchell Fraser-Jones 3 May 2019 Est. reading: 7 min read

April Roundup

Mitchell Fraser-Jones
3 May 2019

“Slower growth is a major challenge for global markets. This has been felt most acutely in Europe, emerging economies and in China and there is evidence that this slowing will continue through 2019. This, in turn, will raise earnings risk against a backdrop of excessive valuation in markets – a potentially dangerous combination. A further headwind as we approach the summer is a significant deterioration in global US dollar liquidity, which may be the catalyst for a much less benign market environment than that which we have witnessed in the first four months of the year. The comfortable consensus view that prevails in equity markets globally is about to be challenged.”

— Neil Woodford

Global equity markets continued to move higher in April, with similar preferences evident to those that have prevailed for much of the last three years. Accordingly, the UK market’s leadership again came principally from Asian-exposed businesses. We continue to see the widespread enthusiasm for the large, global-facing businesses that dominate the UK stock market as fundamentally flawed and increasingly dangerous from the perspective of valuation risk.

The loss of momentum in global economic growth has been widespread and is perhaps best epitomised by what’s happening in China and its local trading partners in Asia. China’s economic problems are well known, and a meaningful slowdown in growth has been evident over the last 18 months. Policy has been loosened slightly in response, and this has been enough to prompt a rapid stock market recovery in China, albeit one that remains highly speculative. Although official economic data seems to have stabilised in recent months, other, less malleable data points provide a better indication of what is really happening. These include domestic car sales, as an indicator of domestic demand, and industrial production and export data in other Asian economies that are dependent on Chinese growth. Here, the numbers remain troubling and it is increasingly difficult to reconcile the behaviour of equity markets with the economic evidence that we continue to see.

Strategy update

In recent months there has been considerable commentary about the shape of the portfolios Neil manages, in particular, the LF Woodford Equity Income Fund. In light of this, Neil explains why the fund is positioned as it is today and what this means for investors in the months ahead.

Read the full article

Month in numbers

Source: Bloomberg, Office for National Statistics, Woodford

0.5%

German GDP growth forecast for 2019, down from 2.1% a year ago

-6.7%

Latest change in China car sales (year-on-year)

$100.8m

Amount raised by Autolus for to support a new clinical trial in AUTO1, a potential treatment for adult acute lymphotic leukaemia

-9.9%

Latest change in Taiwan industrial production (year-on-year)

£80m

Potential value of ReNeuron’s partnership with China-based Fosun Pharma

2.6%

Halifax house price index increased by a higher-than-expected amount in Q1 2019

1.1%

UK retail sales rise in March, vs expectations of a -0.3% decline

179,000

Increase in UK employment in the three months to February 2019, to a record high level

3.2%

US GDP growth for Q1 2019, much better-than-expected

Woodford Patient Capital Trust: April’s milestones

Several of the portfolio companies held in Woodford Patient Capital Trust plc (WPCT) reached significant milestones during April. They included Inivata’s valuation uplift and Benevolent AI’s collaboration with AstraZeneca.

Inivata

Following a positive reimbursement decision in the US for Inivata’s maiden non-invasive blood cancer test and a successful $52.6m fund raising in March, the company’s valuation has this week been revised upwards by Link Fund Solutions Limited, WPCT’s appointed Alternative Investment Fund Manager (AIFM). The value of Inivata has increased by 58% and is valued at £31.2m.

Inivata is a clinical cancer genomics company commercialising its initial blood biopsy test that helps clinicians make more informed treatment decisions for patients with lung cancer based on their blood samples. Its initial test in the US is called InVisionFirst®-Lung and recent data demonstrated that it reveals the same quality of information as tissue-based cancer profiling in a less invasive way. As at the end of March 2019, it represented a 1.91% position in the WPCT portfolio.

Read more

Benevolent AI

Benevolent AI announced a partnership with AstraZeneca to identify new targets in two therapeutic areas of huge unmet need, Idiopathic Pulmonary Fibrosis (IPF) and Chronic Kidney Disease (CKD). The collaboration comes with an undisclosed upfront payment, development milestone payments and tiered royalties on future revenues.

Mene Pangalos, on the executive management team at AstraZenca, said: “By combining AstraZeneca’s disease area expertise and large, diverse datasets with BenevolentAI’s leading AI and machine learning capabilities, we can unlock the potential of this wealth of data to improve our understanding of complex disease biology and identify new targets that could treat debilitating diseases.”

As at the end of March 2019, Benevolent AI represented an 8.33% position in the WPCT portfolio.

Read more

ReNeuron

On 9 April, ReNeuron announced it had signed an exclusive agreement with Shanghai-based Fosun Pharma to fully fund the development, manufacture and commercialisation of its CTX and hRPC cell therapy programmes in China.

ReNeuron is also developing a therapy (known as hRPC) for blindness-causing disease retinitis pigmentosa. Over the past few weeks, the company has reported an ongoing and clinically meaningful improvement in all patients of the first group of phase II patients receiving the treatment. As at the end of March 2019, it represented a 0.48% position in the WPCT portfolio.

Read more

Idex Biometrics

Idex Biometrics entered into an agreement with a major global information and technology company that provides hardware, analytical software, data services, and news to the world’s financial companies. The agreement includes a multi-million dollar commitment for Idex’s SmartFinger® IDX 3200 dual-interface sensors.

The Norwegian technology company was founded in 1996 to pioneer miniaturised fingerprint sensors. The company aims to provide consumers with a secure and user-friendly use of personal identification by developing and commercialising fingerprint imaging, recognition and authentication technology. Last month, Idex also announced that along with China smart card provider, Chutian Dragon, which it has been collaborating with since 2018, it will be working alongside point of sales terminal provider PAX to accelerate biometric smart card adoption in Asia. As at 31 March 2019, it represents a 1.33% position in the WPCT portfolio.

Read more

Evofem

Evofem has entered into a securities purchase agreement to raise up to $80 million through a private placement of common stock from new and existing investors, including a strategic investment from NASDAQ-listed PDL BioPharma (PDL). The financing, at a premium to the current share price, enables Evofem to maximise the opportunity for its contraceptive gel Amphora, which if approved, will be the first hormone-free, woman-controlled birth control method. As at the end of March 2019, it represents a 0.37% position in the WPCT portfolio.

Read more

Autolus

Autolus is at the forefront of a revolutionary immuno-oncology treatment, dubbed the ‘living medicine’, that is offering new hope to patients suffering from blood-related cancers such as lymphoma and myeloma. In April, the company raised $100.8m that will propel the company to a position of strength. It will be able to resource late stage clinical activities for its leukaemia asset Auto1 (which recently reported impressive data in both adult and paediatric patients) and build out a commercially viable manufacturing base. As at the end of March 2019, it represents a 9.33% position in the WPCT portfolio.

Read more

Reaction Engines

The company is developing SABRE with the support of BAE Systems, Rolls-Royce and Boeing. The Sabre air-breathing rocket engine is designed to drive space planes to orbit and take airliners around the world in just a few hours and its propulsion system technology has passed a key milestone in April.

The company’s pre-cooler heat exchanger passed all test objectives in the first phase of high-temperature testing designed to directly replicate supersonic flight conditions. It demonstrated the ability to handle the simulated conditions of flying at more than three times the speed of sound. As at the end of March 2019, it represented a 0.48% position in WPCT.

Conclusion

Our strategy remains focused on avoiding the considerable risks that have built up in equity markets over the last decade of QE-fuelled exuberance and capturing the opportunity that exists in the few parts of the market that have been left behind. For the funds, this results in portfolios that have a strong but selective bias towards profoundly undervalued companies that are exposed to the UK economy.

Elsewhere, the Woodford Equity Income Fund and Woodford Patient Capital Trust portfolios continue to be positioned to capture an exciting long-term opportunity across a range of earlier-stage businesses exposed to the themes of healthcare innovation and disruptive technology more broadly.

Register for updates

Register now to receive roundup alerts by email.

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.

© 2019 Woodford Investment Management Ltd.
All rights reserved.

Are you sure?

By disagreeing you will no longer have access to our site and will be logged out.

Privacy Preference Center

Experience Tracking

Lets our analytics service track you across our different websites and enables data sharing among our different marketing tools.

AMCV_[Tracker ID]@AdobeOrg (Adobe), [Tracker ID]@AdobeOrg (Adobe)
Adobe Analytics (helps us provide you with more relevant experiences and content based on your likely interests). Cookies: demdex, dextp, dpm, DST, DSTJS
Twitter personalisation (by better understanding how devices are related, Twitter can use information from one device to help personalize the Twitter experience on another device). Cookies: personalization_id
Heap Analytics (provides metrics on user behaviour and actions throughout the site). Cookies: _gid, _hp2_id.[Tracker ID],_hp2_props.[Tracker ID], _ga, _mkto_trk, optimizelyBuckets, optimizelyEndUserId, optimizelySegments, raygun4js-userid, _attribution_referrer, _csrf
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: _tmae ,ev_sync_dd,ev_sync_yh,everest_g_v2,gglck

Traffic Metrics

Allows Woodford to aggregate information on website usage and popular content

_ga, _gid
Google Analytics (tracks and reports website traffic and user behaviour): Cookie: CONSENT
New Relic (application and server performance monitoring – allows us to spot problems with our website code and improve them to keep things running smoothly). Cookie: JSESSIONID
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: __qca,__smToken, _ga, _mkto_trk, _rtbmedia

Search History

Populates the 'recent searches' section of the website navigation.

wf__recent_searches_untracked

Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?