Real estate disruptor Purplebricks and unquoted healthcare/technology companies Immunocore, Oxford Nanopore and Benevolent AI are four ‘unicorn’ stocks held by FE Alpha Manager Neil Woodford in his Patient Capital portfolio. 
A unicorn company is a traditionally described as an unlisted start-up company with a value of more than $1bn. They are called unicorns because very few start-ups ever reach such valuations.
“We have four already and those unicorns are going to become elephants quite soon in my view,” the manager of the investment trust told attendees at last month’s Winterflood Investment Trusts conference.
Woodford Patient Capital was launched in 2015 and held 79.76 per cent of the portfolio in unquoted companies at the end of 2017.
However, after starting brightly and attracting £800m in capital, the trust has struggled losing 22.17 per cent since inception compared with a 24.7 per cent gain for the average peer in the IT UK All Companies sector.
Performance of trust vs sector since launch
Source: FE Analytics
Facing criticism for weaker performance of the trust, Woodford (pictured) claimed that the industry was “crippled” with short-termism and investors have not been willing to remain patient.
While returns haven’t yet taken off, Woodford said the companies are developing on schedule and in certain cases faster than planned.
“We measure progress based on the execution of business plans, the achievement of milestones and the advancement of technology through the various stages – so we measure progress based on real-world experience,” he explained.
“That progress is significantly further advanced than I would have said when I started the trust but, of course, what has separated from that process is the share price and valuation.”
Below, FE Trustnet looks at four stocks that have grown particularly strongly and are, in Woodford’s eyes, potential unicorns.
The first is unquoted healthcare technology company Oxford Nanopore, the largest holding in the fund at 9.43 per cent.
The Oxford University spinout has developed a platform that enables the analysis of biological molecules, such as DNA.
“The company is making excellent progress in commercialising its technology, with its lead product, MinION gaining increasing attention from a growing base of clients, not least because it can provide real-time data analysis at a starting price of $1,000,” wrote Woodford in the trust’s half-year results last year.
In 2016, the product was used to sequence the human genome and perform surveillance of the Ebola and Zika viruses as well as to research cancer genetics.
The company’s valuation rocketed in March 2017 following the launch of its new product, GridION as well as other significant technological advances.
Woodford’s next ‘unicorn’ is Immuncore, a clinical-stage biotech company founded in 2008, making up 6.85 per cent of the portfolio.
The company is developing immuno-oncology drugs that redirect the human immune system to unmask and kill cancer cells itself.
Source: Immunocore
Immunocore’s platform creates ImmTACs and ImmTAV – drugs made from engineered T-cell receptors, which are key components in the immune system, that target cancer and viral infections respectively.
“In June 2017, the company attended American Society of Clinical Oncology [ASCO], the world’s biggest oncology conference,” noted Woodford. “It presented compelling data from its lead programme, investigating IMCgp100 in metastatic uveal melanoma, a rare eye disease with no current treatment options.
“As a result, the trust’s position in Immunocore was uplifted to reflect the positive nature of this new data.”
The other unquoted unicorn in the portfolio is Benevolent AI which uses artificial intelligence (AI) to help researchers identify possible cures more quickly and represents 7.13 per cent of Woodford Patient Capital trust.
The firm has developed a medical artificial intelligence program capable of analysing vast amounts of data to inform decisions and form new hypotheses.
On its website, the company said: “The sheer volume of information available means no scientist, or group of scientists, can possibly assimilate, recall and accurately process all the known facts.
“Consequently, only a fraction of relevant knowledge guides hypotheses and a fundamental bottleneck exists – a rapidly accelerating mismatch between information and humanity’s ability to process it.”
Founded in 2013, the firm currently operates two businesses: BenevolentBio which applies its technology in human health and looks for other applications, and, BenevolentTech which develops the technology and identifies wider applications in other industries.
Finally, the only listed unicorn in Woodford Patient Capital is online real estate firm PurpleBricks, which the manager first bought into when it was still unquoted. It represents 7.05 per cent of the portfolio.
Since its launch at the end of 2015, the company has returned 317.63 per cent to investor.
Performance of stock since launch
Source: FE Analytics
“It is a ‘hybrid’ property agent, combining a simple-to-use online platform with a team of flesh-and-blood agents,” Woodford wrote. “It operates 24/7 and is well placed to significantly disrupt the UK’s traditional estate agency business model – indeed, it is already doing so.”
In June 2017 the company released a set of full-year results that reported a 151 per cent rise in group revenue and a strong cash position of £71.3m on its balance sheet.
Additionally, the firm is now making profits in the UK, where it continues to gain market share, and is well on track in Australia, where it launched in August 2016, the manager noted.
“Meanwhile, Purplebricks successfully raised £50m in March 2017 to help it expand in the US, which represents a market opportunity of $70bn. Purplebricks has announced that it will launch in California later this year and, if successful, we expect expansion into other states in the years ahead,” he said.