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The Woodford Patient Capital Trust (LON:WPCT) has recently announced an 8.8% increase in its NAV due to a massive 357% uplift in the value of its holding in Industrial Heat, an unquoted cold fusion company. WPCT is a unique vehicle that invests mainly in unlisted, early-stage technology and healthcare companies, with the overall performance being driven by the success or failure of its various holdings.
Industrial Heat was revalued from around $24.7 million to $112.9 million following a successful funding round and now accounts for approximately 9.6% of the portfolio, making it the fund’s second-largest holding. The unquoted company has built a platform of new energy technologies that are focused on harnessing poorly understood or neglected energy science such as cold fusion, although it is too early to say whether any of these will reach the commercial stage.
The two largest positive contributions came from Autolus and Proton Partners
The upgrade was especially welcome as it followed hard on the heels of the interim results, which revealed a six-month increase in the NAV of less than 1%. According to the attribution analysis on the fund’s website, over the 12 months to the end of June the two largest positive contributions came from Autolus (NASDAQ:AUTL) and Proton Partners, but these were largely offset by the loss from Prothena (NASDAQ:PRTA).
Autolus was the biggest contributor over the period, with the company listing on the NASDAQ in June 2018 at the top of the guidance range and its shares gaining around 20% since the IPO. The company focuses on developing and commercialising a class of immuno-oncology treatments known as CAR-T therapies, which use a patient’s immune system to combat cancers. Additional clinical trials data is expected later this year.
The second-largest positive contribution came from Proton Partners, which uses proton beam therapy to target and kill cancer cells with little or no damage to the surrounding tissue. It is on course to fulfil its ambition of having a network of unique cancer centres within 90 minutes of 80% of the UK’s population by 2023.
Unfortunately, the gains from these two stocks were almost completely offset by the decline in value of the US biotechnology business Prothena. Its shares fell around 70% when it announced in April that its Pronto trial had been unsuccessful, although Woodford believes that this was an overreaction and that the company still has value in respect of its clinical pipeline and technologies.
Overall portfolio is in extremely good shape
WPCT has struggled since the launch in April 2015 with the shares down around 15% on the issue price, but manager Neil Woodford believes that the overall portfolio is in extremely good shape. He thinks that the investment case for investing in early-stage science is as strong as ever and is optimistic that these young businesses can fulfil their potential.
Woodford Patient Capital is a highly unusual fund and has a strong retail following, yet with 65% of the portfolio invested in unlisted assets, the performance is likely to be highly volatile and driven by stock-specific events. The shares are trading on an estimated 8% discount to NAV, which represents a considerable improvement after the recent uptick in performance.
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