Responding to the growing outcry from investors over the size of his holding in the biotech firm, which lost 15% of its share price value on Tuesday, Woodford defended his position as “the product of a long-standing relationship with the company and its management team”, which has given him great insight into the prospects of the firm.
Earlier in November, US hedge fund Kerrisdale Capital hailed Prothena as “the next big biotech blow-up”, putting Woodford, who owns 29.5% of the company, including a 15% weighting in his Patient Capital Trust, firmly in the hot seat.
In his note to unit trust holders, Woodford blamed the share price fall on the market drawing the wrong conclusions from the delay of the firm’s late-stage test read out from its ongoing Vital trials, involving the firm’s amyloidosis drug, NEOD001.
Even before Prothena updated investors with the status of its Vital and Pronto trials, both of which centre around its lead drug, Kerrisdale said it was “certain that … NEOD001 will fail its ongoing Phase 2b and Phase 3 trials”.
“The imminent failure of NEOD001 comes as no surprise to amyloidosis researchers,” said the hedge fund. “In the words of one amyloid antibody co-inventor, the probability of NEOD001 succeeding in its Phase 3 trial is ‘almost zero’.”
“In last week’s R&D day, Prothena gave a series of confident, evidence-based presentations to update shareholders on its progress,” Woodford wrote.
“Despite a lot of positive, reassuring information in the presentations across a range of its late-stage and earlier-stage assets, the market appears to have focused on a delay in its Vital Phase III study read-out – a pivotal trial investigating NEOD001 in AL amyloidosis – as a key negative.”
The fact that Vital’s primary endpoint has been pushed back from H2 2018 to H2 2019 “is a very promising sign that NEOD001 is working”, Woodford insisted. If not that, he believes it is likely an indication that the standard of care has improved or is better than the data suggests.
“I rate the Prothena team very highly,” he continued, “it’s expertise in misfolded proteins and central nervous system disease biology is, in my view, second to none. It is extremely rare to see a biotech so swiftly and so successfully progress from the pre-clinical to the pivotal trial stage.
“The business is fully-funded to deliver on the significant value inflection points that lies ahead, with NEOD001 poised to do that in the near future. No external factors can affect that now.
“I can understand that the publication of negative research can be disconcerting for investors but please bear in mind that the share price today, even after the recent setback, is higher than the average price at which we bought the shares.”
