The collapse of star investor Neil Woodford’s business empire reverberated beyond his own stockholdings, dealing a blow to the fundraising environment for early-stage British biotechnology that’s just starting to heal.
Budding biotech companies, which counted Woodford as a champion, saw money from global investors drop after the mogul froze withdrawals in his flagship fund in June. Five months later, his empire is moribund and early biotech investing is working to recover.
Fledgling life-sciences firms, often born from university laboratory discoveries, are part of the lifeblood of pharma and biotechnology companies, keeping pipelines stocked with innovations. The amount of venture capital raised by these small UK companies declined almost 70% in July from a year earlier, according to an industry analysis.
Woodford “was like a linchpin,” said Cengiz Tarhan, a consultant who formerly ran the technology commercialization arm of University College London. “Now there’s clearly a funding gap that needs to be filled.”
Woodford developed a cult following by correctly calling swings in tobacco, technology and other stocks over decades. An investor in big and medium-sized health companies, he was also seen as willing to write checks for smaller biotech businesses.