Neil Woodford’s (pictured) sullied reputation as a renowned stock picker took a further hit on Friday when 4D Pharma PLC requested an immediate suspension of trading in the company’s shares on AIM.
Joint administrators James Clark and David Pike of Interpath Advisory have been appointed.
At its peak, 4D Pharma was worth £10.16 per share in June 2015. As of 24 June, it had plummeted to 16.7p per share. Over one year, its share price is down over 83%.
Wholly-owned subsidiaries 4D Pharma Research Ltd, 4D Pharma Cork Ltd, 4D Pharma Leon SLU and 4D Pharma Delaware Inc have not been placed into administration.
The PLC’s board said it “intends to work with the joint administrators on proposals to rescue the company as a going concern, albeit there can be no guarantee that this will be successful”.
Misplaced confidence
4D Pharma specialised in developing live biotheraputic products, which are a novel class of drug derived from the microbiome.
It joined AIM in 2014, with the Woodford Equity Income fund (WEIF) initiating a position via share placings in June of that year, and January 2015. By June 2019, the month Woodford’s flagship fund suspended, his boutique Woodford Investment Management held around 27% of 4D Pharma.
The pharmaceutical company was one of 19 healthcare assets sold by Link Fund Solutions to Acacia Research on 5 June 2020 as part of a £223.9m deal. The private equity firm came under fire when it quickly flipped a number of those stocks a mere three weeks later, including 4D Pharma, recouping roughly $185m of the $282m it forked out.
It is not clear who acquired the 4D Pharma stake or how much was paid.
While investors reacted with anger at the time, the sale to Acacia could be viewed with hindsight as a blessing in disguise. The suspension of 4D Pharma comes weeks after a Link slashed its stake in another Woodford darling, Rutherford Health, to nil – with trapped investors taking a £24m hit.
See also: Acacia Research shrugs off ‘silly’ criticism after swiftly flipping Woodford assets
Writing on the wall
Per the stock exchange announcement, 4D Pharma revealed it agreed a senior secured credit facility for up to $30m with a company called Oxford Finance in July 2021.
It drew an initial $12.5m with further tranches available depending on certain milestones being achieved.
4D Pharma’s unsuccessful efforts to secure additional funding in the past few months prompted Oxford to demand immediate repayment of its outstanding loans, amounting to roughly $13.86m, including interest and fees.
A payment from existing cash resources was not possible, hence the suspension from trading and placing of the firm into administration.
See also: Leigh Day and Harcus Parker team up against Link over Woodford scandal
