Prothena, a biotech firm in which fund manager Neil Woodford has more than £200m across his three funds, has seen its shares plunged 60 per cent today after one its drug trials proved a failure.
Prothena is listed on the US Nasdaq stock exchange and headquartered in Ireland. Its shares are 67 per lower today (23 April).
It is the third largest holding in the Patient Capital Investment trust, and the sixth largest in the Woodford Equity Income fund.
Shares in the Patient Capital trust are down about 10 per cent since news of the failed trial emerged.
Mr Woodford defended the investment, however.
“We have always been clear why we have backed Prothena and, given the positive progress throughout the development of this drug, we have been increasingly confident it would be successful.
"Such trial results are symptomatic of early-stage investing, however, and with specific regard to biotech trials outcomes are binary.
"Nevertheless, the result of this trial is undoubtedly a blow and we will be working with the company and its management team on its strategy– it has options.
“Prothena still has an early and mid-stage clinical pipeline. It has a technology platform and a world-leading specialism in misfolding proteins, which are implicated in a number of different neurological disorders.
"This research platform has been validated by two major pharmaceutical companies – Roche (which is partnering Prothena in PRX002 in Parkinson’s disease, currently in Phase II trials) and Celgene (which has recently collaborated with Prothena on three earlier stage clinical assets).
"The company also has its own, unpartnered assets about to enter the clinic and, with more than $500m (£358m) on its balance sheet, it is very well-funded.”
Shares in Prothena had already been bet against by a US short selling firm, Kerrisdale, which had questioned the effectiveness of the potential pipeline of drugs owned by Prothena.
Fund manager Simon Edelsten, who runs the £165m Mid Wynd investment trust, a global fund, said he has never invested much in biotech companies as he believes he does not have the expertise to select investments in that area.
Elsewhere there was better news for Mr Woodford as Capita, another long-standing holding in his Equity Income fund, completed a refinancing, seeing the shares rise 11 per cent.
David.Thorpe@ft.com
