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Drug breakthrough boosts Dobell and Woodford

Novartis cancer drug closer to approval, buoying Tom Dobell holding Oxford BioMedica and Autolos, held by Neil Woodford and Syncona.

 
Drug breakthrough boosts Dobell and Woodford
 

A new cancer therapy developed by Swiss drug maker Novartis (NOVN.S) has moved a step close to approval, with the breakthrough having a ripple effect on UK biotechnology stocks set to benefit.

A panel of scientists reporting to the US Food and Drug Administration (FDA) has unanimously recommended Novartis' CTL019 drug be approved.

Should the FDA act on the recommendation, the drug would be the first gene therapy to be approved by the agency. The treatment, known as CAR-T, extracts the patient's T cells, a type of immune cell, engineers them to recognise and kill cancer cells, then reintroduces them to the patient's body.

Shares in Novartis jumped 1.8% yesterday, with analysts believing the drug could hit $1 billion in sales. But the impact on UK 'small cap' stock Oxford BioMedica (OXB) has been more dramatic. Its shares are up 86% over the last three weeks, after the company signed a deal to supply Novartis with its gene delivering system needed for the new therapy.

Oxford BioMedica has said the agreement could bring more than $100 million in revenues over the next three years.

Shares in the company are up another 5.4% this morning on news of the new milestone. Chief executive John Dawson said: 'The positive vote by 10 to zero provides further support for CTL019, a novel immunocellular therapy, and we are proud to be a part of this important development. We continue to work closely with Novartis in delivering the lentiviral vector that encodes CTL019, a product the company described earlier this year as having "blockbuster" potential.'

Jefferies analyst Peter Welford said the breakthrough underpinned his forecasts for Oxford BioMedica's manufacturing and royalty revenues, maintaining his 'buy' rating and 13p target price.

'We are confident Oxford BioMedica is on a path to sustained profitability,' he said. 'Successfully securing external funding for continued clinical development of the largely overlooked proprietary pipeline could crystallise additional value.'

The news will be welcomed by Tom Dobell, manager of the M&G Recovery fund, one of Oxford BioMedica's biggest investors, with a stake now worth around £53 million.

The Novartis breakthrough also has wider implications for other drug firms working on CAR-T therapies. Analysts at Numis Securities flagged the news as a boost to Autolus, an unquoted company spun out of University College London,  which they said was 'one of the key fast followers in the CAR-T space'.

The Syncona (SYNC ) investment trust, formerly known as the Battle Against Cancer trust, holds a 37% stake in Autolus as a founder investor, valued at £31.2 million at the end of March. Neil Woodford also has a stake in the company in his Woodford Patient Capital (WPCT ) investment trust, having invested a combined £40 million alongside Arix Bioscience, another trust holding, in November last year.

Shares in Syncona have been buoyant following its transition to an investment approach focused on life sciences. Since making the switch  late last year, the shares have rallied 30%, as they raced from a small discount to net asset value to a 24% premium.

'The shares have performed strongly since the reconstruction in December,' said Numis. 'However, we see further upside as the strength of the company's proposition is recognised more widely. The top three life science holdings all appear to have significant upside and the news on regulatory progress in the CAR-T space is highly significant for Autolus, in our view.'

You can read more about Syncona in issue 39 of the Investment Trust Insider e-zine here.

3 comments so far. Why not have your say?

LEICESTER VESTOR

Jul 13, 2017 at 13:33

Its a really welcome news that the WPCT price has started to move upwards after a long wait . And a real satisfaction that my belief in my conviction about this fund has started to prove right .

Though the fund is barely 2 year old and still in its infancy, and proving many critics of Neil Woodford wrong as his seedlings have started to bear buds before reaching full bloom.

report this

CHMM

Jul 13, 2017 at 13:57

Before popping the fizz, WPCT is still down since issue while markets have soared, the loss vs being invested in the broader market or many other specialists sectors is still considerable

report this

Bill Fowler

Jul 15, 2017 at 08:20

Patient is interesting because of its charging structure which implies that Woodford has massive faith it will revive itslef

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