Collapse of £550M deal to sell Woodford's biotechs sparks fire sale fears

Neil Woodford
Neil Woodford (Woodford Funds)

A £550 million ($711 million) deal to find new homes for Neil Woodford’s biotech holdings has collapsed, raising the prospect that stakes in companies including Immunocore will be auctioned off for knock-down prices. 

Woodford became a go-to source of money for private British biotechs in the years after he left Invesco to set up his own fund. However, the illiquid nature of Woodford’s holdings in such companies became a problem as more and more investors began taking money out of the fund. The retreat by investors led Woodford to suspend trading in his flagship fund.

The suspension was intended to buy Woodford time to pivot the fund from private biotechs to easy-to-trade stocks. However, the process went too slowly to satisfy the fund’s administrator, leading it to fire Woodford and start to wind up the fund.

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Having sold off the liquid assets, the administrators tried to put together a £550 million deal with American and Chinese investors for Woodford’s holdings of unquoted and otherwise illiquid companies. That deal has now hit the rocks, with The Times reporting that the bank handling the sale has missed the deadline for completion.

The failure to close the deal on time means the assets may be auctioned off. Woodford’s stake in stem cell therapy biotech ReNeuron has already been sold to German investors and the rest of the 20-strong portfolio of hard-to-trade assets may also be sold off piecemeal. The portfolio includes 4D Pharma, Arix Bioscience and Mereo BioPharma. 

Link, the administrator handling the winding up of the fund, needs to sell the holdings to enable it to return money to investors. The sale of the liquid assets, which accounted for 74% of the portfolio, enabled Link to return some money to investors last month. The timing and size of the next payment will be dictated by the sale of the illiquid assets. 

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