It was a challenging month of performance for the Woodford Patient Capital Trust, despite, as the stock specific updates below highlight, continued meaningful operational progress across a number of holdings. Although this has not yet been reflected in share prices, we remain very confident that ultimately it will be. In the meantime, we understand that investors may feel impatient at the lack of NAV progression. However, we would remind investors of the long-term nature of this investment vehicle and the length of time it can take early-stage businesses to mature.
ReNeuron reported two positive developments during the month. Firstly, the company reported supportive pre-clinical data for ExoPr0, its exosome therapy candidate for cancer. Exosomes are nanoparticles which are believed to play a key role in a number of cell functions, including regulating cellular immunity and helping the activation of repair mechanisms in diseased or injured cells. This asset is at a very early-stage of its development but the new data is very encouraging, as it underlines the potential of ExoPr0 as both a drug delivery vehicle and a therapeutic platform with broad applicability in multiple diseases, including solid tumours.
Meanwhile, towards the end of the month, ReNeuron released further positive news from the phase II clinical trial (Pisces II) of its CTX therapy for sufferers of stroke disability. The company first reported positive data from the trial late last year and this additional release re-enforces the clinical potential of ReNeuron’s therapy. The data demonstrates that patients sustained the positive effects of the treatment – regaining some of the motor function lost after stroke – for 12 months. This indicates that CTX is well-tolerated and has the potential to produce meaningful improvements as a therapy for stroke disability.
Peer-to-peer lending platform, RateSetter was granted full regulatory authorisation by the Financial Conduct Authority (FCA) during the month. This represents an important milestone for the business, as it provides validation of the company’s business model and paves the way for the launch of its individual savings account (ISA) range. Already, Ratesetter has more than 50,000 investors and has lent over £2bn – full regulatory approval opens up the opportunity for significant further expansion.
Evofem, the US biotechnology business which has been an unquoted holding in the portfolio since November 2015, has agreed a merger with US-listed business Neothetics (not held in the portfolio). The deal, which is expected to complete in the first quarter of 2018, is essentially a reverse takeover, through which the newly formed company, Evofem Biosciences, will attain a Nasdaq listing as a specialty pharmaceuticals business focused on the $9bn women’s health industry.
Evofem’s main asset, Amphora, is a non-hormonal, woman-controlled contraceptive gel which is currently in a phase III trial which is expected to read out in late 2018. The company is also identifying and developing other novel products to address unmet needs in sexual and reproductive health. This deal is very good news, because it creates a strong platform for the future development of Evofem’s pipeline and represents a significant step forward in the company’s journey towards commercialisation.
Norwegian technology business Idex announced during the month that it has reached an R&D agreement with its major global partner in payment cards to deliver advanced biometric technologies for payment card products. Although financial details of the agreement were not disclosed, this is a positive development for Idex in its efforts to commercialise its technology in the biometric payment card market, which is expected to grow substantially in the years ahead.
Idex shares have been under pressure in recent months, as investors reacted to the narrowing opportunity for its fingerprint sensor technology in mobile phones. However, the Idex share price does now appear to be significantly undervaluing the potential that exists for the company in the payment card market, as demonstrated by this latest announcement, which moves Idex even closer to its commercial goals.
Towards the end of the month, Mereo BioPharma announced that it had reached an agreement with AstraZeneca to acquire an exclusive license for AZD9668, which is being developed as a potential oral therapy for alpha-1 antitrypsin deficiency, an untreated orphan disease that causes progressive lung destruction. Mereo will now initiate a phase II trial for the asset in this condition and the agreement includes the option to acquire it outright, should the trial proceed successfully.
This new deal brings Mereo its fourth clinical-stage asset, which is already supported by substantial clinical data in a range of respiratory conditions. The deal also brings AstraZeneca on to the Mereo share register. From our perspective, this latest deal makes sense financially and provides further validation of the Mereo business model, which looks to acquire and develop novel, mid-to-late stage therapies from major pharmaceutical companies. These assets are typically in rare and specialty disease areas which means they are too small to be prioritised by the major industry players, but they represent meaningful opportunities for Mereo to pursue, develop and commercialise.