Neil Woodford has been singled out in a UK biotech report that revealed funding fell 40% in 2019.
The UK biotech sector raised £1.3bn last year compared to the record £2.2bn raised in 2018, according to the UK Bioindustry Association and Informa Pharma Intelligence. The majority of fundraising was via venture capital (£679m) while initial public offerings raised just £64m.
The UK Bioindustry Association argued weaker funding was in line with global trends, but it also noted the demise of Woodford Investment Management had been negative for fundraising while Brexit would end some forms of funding.
Woodford listed among industry headwinds
Steve Bates, chief executive of the industry organisation, said in the report: “Some listed UK biotech stocks saw stellar share price rises while headlines around Neil Woodford’s funds, and the eventual sale process, created a difficult environment for some companies within that portfolio, overshadowing positive milestones.”
Polar Capital fund manager Dan Mahony, who was upbeat on funding opportunities for private companies, also singled out the impact of Woodford on public markets, which faced a more difficult year.
“Investor appetite for small companies has evaporated given the uncertainty surrounding Brexit. While the well-publicised issues with the Woodford Funds have also had an impact on sentiment, the liquidity in UK markets has been low for some time.
On Brexit, Bates added: “The impending loss of the European Investment Fund to the UK however is undoubtedly suppressing investment, impacting the formation of new UK-focused life science funds in 2019.”
The establishment of the £2.5bn British Patient Capital fund, which Neil Woodford had championed, in 2018 would help address the funding shortfall resulting from the absence of the European Investment Fund. “Investments have started to be made but its impact is yet to be felt by the sector and more funding is required,” Bates said.
Biotech industry steps up links with Chinese investors
The CEO was more positive about “a new energised government supportive of our sector”, proposals to let UK pension schemes invest in illiquid assets, and opportunities in China.
“The BIA, with the support of key members like Astrazeneca, used 2019 to firmly establish ourselves as a bridge between the UK cluster and the Asian investor base keen to support innovation,” he said.
In December, Woodford and business partner Craig Newman went on a business trip to China to meet potential investors.
