Woodford-backed business strikes £80m deal with pharma giant

Star manager owns 35% of Reneuron

An Aim-listed stem cell business that is majority owned by Neil Woodford (pictured) has struck an £80m deal with a multi-billion-pound listed Chinese pharmaceutical firm.

Reneuron has signed an exclusive agreement with Shanghai-based Fosun Pharma to fully fund the development, manufacture and commercialisation of its lead CTX and hRPC cell therapy programmes in China.

Shares in the company soared on the back of the news on Tuesday, leaping 32% from 173p to 226p.

Woodford is the largest investor in Reneuron, having first invested in the company via his Patient Capital Trust in April 2015.

A breakdown on Reneuron’s website shows him owning the bulk of the group’s issued share capital at 35.39% as at 12 March 2019. The Aim-listed company makes up 0.93% of the Patient Capital Trust and 0.24% of the Woodford Equity Income fund respectively.

The only other listed shareholder, the Arthurian Life Sciences special purpose vehicle, owns a 9.48% stake.

£80m windfall

Fosun Pharma, which is listed on both the Shanghai Stock Exchange and Hong Kong Stock Exchange, will pay Reneuron £6m upon entering into the agreement and will dole out up to £14m additionally for near-term operational and future regulatory milestones that are met. If all milestones and profit thresholds are met Reneuron will receive £80m.

Reneuron is also entitled to double digit tiered royalties between 12% and 14% on sales of its therapies in China.

The funding from Fosun will go toward the development of Reneuron’s CTX and hRPC cell therapy programmes, which seeks to treat patients left disabled by a stroke and those suffering from a blindness-causing disease called retinitis pigmentosa respectively.

Both therapies have reported positive data in recent clinical trials, Woodford Patient Capital trust noted in an RNS announcement confirming the Reneuron and Fosun partnership.

Woodford has been burned before by gambles on biotech companies. His investment in listed group Prothena resulted in a £49m loss for the trust last year after its shares plunged on news it would be halting the development of its star drug used in the treatment of a degenerative disease.

Signs of life

However analysts from Stifel were optimistic on the trust’s prospects, encouraged by the “signs of life” in the unquoted portion of the portfolio.

“There appear to be some signs of life in the unquoted portfolio, which supports our expectations of increasing realisation and IPO activity as the portfolio continues to mature,” they said in a note published on Tuesday morning before the Patient Capital Trust updated markets on the Reneuron deal.

“We think if the managers can demonstrate some NAV accretive events and deliver some shareholder value, there could be increased demand for the shares and scope for the discount to narrow from its current 15% as a result.”

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