Investments  

Woodford bet delivers boost for investors in Schroders trust

Woodford bet delivers boost for investors in Schroders trust
 Neil Woodford, former-manager of the trust

Investors in the Schroder UK Public Private Trust have received a boost after a company Neil Woodford bet on back in 2016 saw its share price soar when its product received the green light from the regulator.

The price of shares in small-cap biotech firm Evofem Biosciences — a firm looking to innovate women’s contraception — rocketed almost 40 per cent on Tuesday (May 26) after Phexxi, the firm’s non-hormonal contraceptive product, gained approval from the Food and Drug Administration.

Neil Woodford, who managed the mandate as Woodford Patient Capital Trust up until October last year, pledged in 2016 to invest $25m (£22.6m) in the US-based firm through a series of funding promises.

The former star fund manager, and investors in his portfolios, have often been haunted by his previous investment pledges.

The young companies to which he promised funding often underperformed while more than £20m from the now-defunct Equity Income fund has been subtracted from investors’ cash and redirected to honour such pledges.

But his backing of Evofem has helped investors this week. The stock remains in the trust’s top 10 holdings and accounted for just under 3 per cent of the total mandate, as at December 31 last year.

Evofem’s share price has now settled at $5.53 (£4.48) per share , 27 per cent higher than it was last week before FDA approval.

The news saw the Schroder UK Public Private Trust’s share price rise 15 per cent at the time, and investors’ shares remain 10 per cent higher than last week.

The firm is set to market Phexxi directly to consumers during the latter half of 2020 or early 2021. If successful, its shares could increase further in value.

Other biotech firms Mr Woodford had backed have not done as well, however. Last year, administrator Link Fund Solutions reduced the valuation of Benevolent AI, wiping around 4p of the company’s share price at the time. Benevolent AI accounted for about 6 per cent of the trust as at December 31.

Rutherford Health, a long-standing and poorly performing investment Mr Woodford had backed, accounted for 14 per cent of the trust.

The Woodford Patient Capital Trust was initially set up by Mr Woodford as a vehicle to invest in unquoted and illiquid investments.

He walked away from the investment vehicle in October 2019 and the trust's board appointed Schroders as the new manager in December and it is now run by Tim Creed and Ben Wicks.