Syncona
Limited
Third Quarter
Update
Prioritising capital
allocation across the portfolio to enable delivery of key
inflection points; continue to be well positioned to deliver
long-term growth
08 February 2024
Syncona Ltd (the "Company"), a
leading life science investor focused on creating, building and
scaling global leaders in life science, today issues its quarterly
update covering the period from 01 October to 31 December
2023.
Financial performance in the quarter
· Net
assets of £1,251.0 million (30 September
2023: £1,201.3 million), equivalent to 188.2p per share (30
September 2023: 178.6p per share)
· NAV per share
return of 5.4% in the period, driven by a £111.1 million increase
in the value of Autolus Therapeutics (Autolus), outweighing the
partial write down of the Company's holding in Anaveon to £24.9
million (£42.8 million decline in value), which reflects the
company's decision to focus on its next generation, pre-clinical
programme
· Life
science portfolio valued at £699.8 million (30 September 2023:
£620.9 million), a return of 9.7% in the quarter[1]
· Over the nine months to 31 December 2023, NAV per share has
returned 0.9% with the life science portfolio generating a return
of 3.0%
· Capital pool of £551.2 million at 31 December 2023 (30
September 2023: £580.4 million)
o £18.5 million deployed into the life science portfolio in the
quarter and £77.2 million in the nine months to 31 December
2023
o £(4.6) million impact from foreign exchange movements across
the capital pool[2]
o £9.9
million of shares repurchased at an average discount of 33.8%
resulting in a 0.76p accretion to NAV per share in the
quarter[3]
69%
of value in the strategic life science portfolio in clinical-stage
companies with late-stage clinical companies making good
progress
· Portfolio of 13 companies with six at clinical stage,
including two late-stage clinical
· Nine
clinical data read outs in the period including positive data
published from two late-stage companies, Autolus and Beacon
Therapeutics (Beacon)
· Autolus
achieved an important strategic milestone filing its Biologics
License Application (BLA) with the Food and Drug Administration
(FDA) for obe-cel in relapsed/refractory (r/r) adult acute
lymphoblastic leukaemia (ALL)
o The
filing was accepted post-period end and the FDA is expected to make
a decision on approval in November 2024
· The University of Edinburgh published data from an academic
study, which will support Resolution Therapeutics' (Resolution)
upcoming entry into a Phase I/II clinical trial in its lead
macrophage cell therapy programme
· Post-period end, Freeline Therapeutics (Freeline) announced
further data from the company's Gaucher disease programme, which
was supportive of the efficacy and safety profile of the company's
FLT201 gene therapy
Prioritising capital access across the portfolio to enable
delivery of key value inflection points
· Continuing
challenging macro conditions have significantly impacted the
financing environment for life science companies
· Syncona's capital pool provides the flexibility to prioritise
capital towards clinical stage assets
· The
Syncona team continues to take proactive and decisive action across
the portfolio to maximise value:
o
Anaveon has taken the strategic decision to
focus on its next generation compound ANV600
o Reflecting that its next generation programme ANV600 is
pre-clinical (ANV419 was clinical), Syncona and the syndicate of
investors in Anaveon have adjusted the price of the final tranche
of CHF 36.2 million (£32.8 million)[4] of
the 2021 Series B financing which is also aligned with current
market conditions, resulting in a write down of the Company's
holding in Anaveon to £24.9 million, a £42.8 million decline in
value
o The
strategic actions ensure Anaveon is now funded to deliver the key
value inflection point of its clinical data readout from its Phase
I/II trial of ANV600 in CY2026
o Syncona believes in the potential of Anaveon's next generation
compound, which is supported by the positive pre-clinical data
available to date
o A
newly established portfolio company of Syncona entered into an
agreement with Freeline to acquire all of the shares of Freeline
that Syncona does not own in an all-cash transaction. Syncona
continues to be encouraged by the data published by Freeline in its
FLT201 programme and is pleased with how the company is
executing
o The
acquisition is subject to approval or acceptance by the required
number of Freeline's minority shareholders and is expected to close
in the first quarter of 2024, with a General Meeting in which
shareholders will vote on the proposed acquisition scheduled for 12
February 2024
· The
impact of the current financing environment is specific to the
stage and progress of each individual portfolio company. Syncona is
focused on ensuring capital efficiency in its portfolio and
ensuring portfolio companies are executing to deliver key
milestones
· Where
appropriate Syncona continues to focus on widening financing
syndicates and exploring creative financing options for portfolio
companies
· Continuing to work with portfolio company co-investors to fund
companies through to achieving positive clinical and operational
progress
· Syncona is funded to deliver expected milestones and value
inflection points in the portfolio that it believes have the
potential to drive access to capital and NAV growth
Focus on identifying transformational science to deliver
long-term growth
· In
advanced stages of diligence in two new opportunities in oncology;
with one an early-stage opportunity and the second a clinical stage
company
· Continued focus on clinical stage opportunities to add to our
maturing portfolio and drive near-term growth
Operational and Governance changes
· Rolf
Soderstrom, Chief Financial Officer (CFO) of Syncona Investment
Management Limited (SIML) is moving to the role of Executive
Partner, where he will support the Leadership and Investment teams
whilst remaining on the Board of SIML and as Chair of the Valuation
Committee
· Kate
Butler, Group Finance Director of SIML will take up the role of CFO
of SIML, effective 1 April 2024. Kate joined Syncona in September
2022 and brings with her a wealth of experience from previous
finance leadership roles at Vectura Group plc and Gilead Sciences,
Inc.
· During
the period, Martin Murphy also stepped down as Chair of SIML with
Chris Hollowood holding the role of Interim Chair; Martin continues
to represent Syncona on the Boards of Autolus, Anaveon and Clade
Therapeutics
Chris Hollowood, Chief Executive Officer, Syncona Investment
Management Limited, said: "We have
continued to take decisive action to support our companies' ability
to deliver on their next key clinical milestones to maximise value
across the portfolio against a continuing challenging market
backdrop in the third quarter. We have been pleased with the recent
clinical and regulatory progress at Autolus, which we believe is
now being reflected in its recent positive share price performance.
Whilst the macroeconomic outlook is starting to look more
favourable with conditions improving in the public markets, we
continue to see the private markets under pressure especially in
earlier stage assets and where companies are financing ahead of
delivering key milestones. We are focused on funding our companies
to their next key clinical data points to drive long-term value and
whilst the pricing of the recent investment tranche in Anaveon has
led to a partial write-down in our holding, the company is now well
positioned to deliver clinical data from its next generation
asset.
We have also continued to evolve our
operating model with Rolf moving to Executive Partner bringing his
broad experience to support our strategic ambitions whilst
maintaining his governance role at the SIML Board. I would like to
thank Rolf for his support in developing the strategy and
operations for the next phase of Syncona's growth and his
leadership of our Finance team to support our growth ambitions. I
look forward to working with Kate who brings both extensive finance
and life science experience and congratulate her on her
well-deserved promotion to CFO.
Looking ahead, we have six key value
inflection points over the next 12-36 months with the potential to
drive significant NAV growth and are funded to deliver these. We
will continue to take a rigorous approach to capital allocation and
portfolio management, whilst also continuing to fuel our long-term
growth by creating new companies across the new frontier of
science."
Outlook
Capital deployment
guidance
The Company continues to anticipate
that deployment into the portfolio and pipeline at financial year
end will be £150-200 million, in line with prior guidance. This
excludes the £40.0 million of capital allocated to the share
buyback.
Portfolio milestones and potential
value inflection points
· 11
expected milestones across the portfolio over the next 12 months
which have the potential to enable capital access
· Six
key value inflection points which have the potential to drive
significant NAV growth over the next 12-36 months
· These
milestones and value inflection points are not without
risk
Strategic life science portfolio
|
Next expected milestones with the potential to enable capital
access
|
Syncona view of potential value inflection points across the
portfolio
|
Moving towards being on the market
|
Autolus
|
H1 CY2024
- Initiate a Phase I study of obe-cel in refractory systemic
lupus erythematosus (SLE), extending the use of obe-cel into
autoimmune diseases
H2 CY2024
- Provide initial data from the Phase I trial in SLE
CY2024
- Commence the US commercial launch of obe-cel, dependent on
anticipated FDA regulatory approval in November
|
CY2025
- Traction following US commercial launch of obe-cel, dependent
on FDA regulatory approval
|
Beacon
|
H1 CY2024
- Publish 12-month data from its Phase II SKYLINE trial in
XLRP
- Initiate its Phase II/III trial in XLRP
|
H2 CY2024
- Present 24-month data from its Phase II SKYLINE trial in
XLRP
|
Moving towards publishing definitive data
|
Freeline
|
|
H2 CY2024
- Release of additional data from its Phase I/II trial in
Gaucher disease
|
Resolution
|
H2 CY2024
- Enter the clinic in a Phase I/II trial in liver
cirrhosis
|
CY2026
- Completion of Phase I/II trial in liver cirrhosis
|
Moving towards publishing emerging efficacy
data
|
Achilles
|
Q1 CY2024
- Provide further data from its Phase I/IIa clinical trial in
NSCLC
- Provide further data from its Phase I/IIa clinical trial in
melanoma
|
|
Quell
|
H1 CY2024
- Initial safety data in Phase I/II trial in liver
transplantation
|
CY2025
- Proof of concept data from its Phase I/II trial in liver
transplantation
|
SwanBio
|
H2 CY2024
- Initial safety readout in higher dose cohort from its Phase
I/II trial in AMN
-
|
|
Anaveon
|
H2 CY2024
- Initiate a Phase I/II trial of ANV600, the company's next
generation compound
|
CY2026
- Interim clinical data readout from its Phase I/II trial of its
next generation asset ANV600
|
Valuation movements in the quarter
Company
|
30 Sep 2023
|
Net investment in the
period
|
Valuation
change
|
FX movement
|
31 Dec 2023
|
% of Group
NAV
|
Valuation
basis[5],[6],[7]
|
Fully diluted owner-ship
stake
|
Focus area
|
|
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
|
|
|
|
|
Strategic portfolio
companies
|
|
|
|
|
|
|
|
|
|
|
Late-stage
clinical
|
|
|
|
|
|
|
|
|
|
|
Autolus
|
64.0
|
-
|
111.1
|
(5.5)
|
169.6
|
13.5%
|
Quoted
|
17.5%
|
Cell
therapy
|
|
Beacon
|
75.0
|
-
|
-
|
-
|
75.0
|
6.0%
|
PRI
|
65.3%
|
Gene
therapy
|
|
Clinical
|
|
|
|
|
|
|
|
|
|
|
Quell
|
87.7
|
-
|
-
|
(3.7)
|
84.0
|
6.7%
|
PRI
|
33.7%
|
Cell
therapy
|
|
SwanBio
|
77.4
|
-
|
0.6
|
(3.4)
|
74.6
|
6.0%
|
Cost
|
80.0%
|
Gene
therapy
|
|
Freeline
|
8.8
|
8.0
|
4.5
|
(0.7)
|
20.6
|
1.6%
|
Quoted/cost[8]
|
49.7%
|
Gene
therapy
|
|
Achilles
|
8.3
|
-
|
(0.2)
|
(0.3)
|
7.8
|
0.6%
|
Quoted
|
24.5%
|
Cell
therapy
|
|
Pre-clinical
|
|
|
|
|
|
|
|
|
|
|
Purespring
|
35.1
|
9.9
|
0.1
|
-
|
45.1
|
3.6%
|
Cost
|
82.9%
|
Gene
therapy
|
|
OMass
|
43.7
|
-
|
-
|
-
|
43.7
|
3.5%
|
PRI
|
32.7%
|
Small
molecules
|
|
Resolution
|
37.9
|
-
|
-
|
-
|
37.9
|
3.0%
|
Cost
|
81.6%
|
Cell
therapy
|
|
Anaveon
|
64.9
|
-
|
(42.8)
|
2.8
|
24.9
|
2.0%
|
PRI
|
37.9%
|
Biologics
|
|
Clade
|
24.6
|
-
|
-
|
(1.1)
|
23.5
|
1.9%
|
Cost
|
21.7%
|
Cell
therapy
|
|
Kesmalea
|
12.0
|
-
|
-
|
-
|
12.0
|
1.0%
|
Cost
|
71.8%
|
Small
molecules
|
|
Mosaic
|
7.3
|
-
|
-
|
-
|
7.3
|
0.6%
|
Cost
|
52.4%
|
Small
molecules
|
|
Portfolio milestones and
deferred consideration
|
|
|
|
|
|
|
|
|
|
|
Beacon deferred
consideration
|
14.0
|
-
|
0.4
|
(0.6)
|
13.8
|
1.1%
|
DCF
|
-
|
Gene
therapy
|
|
Neogene milestone payment
|
2.2
|
-
|
0.1
|
(0.1)
|
2.2
|
0.2%
|
DCF
|
-
|
Cell
therapy
|
|
Syncona
investments
|
|
|
|
|
|
|
|
|
|
|
CRT Pioneer Fund
|
32.9
|
0.6
|
-
|
-
|
33.5
|
2.7%
|
Adj Third
Party
|
64.1%
|
Oncology
|
|
Biomodal[9]
|
18.7
|
-
|
-
|
(0.8)
|
17.9
|
1.4%
|
PRI
|
5.5%
|
Epigenetics
|
|
Forcefield
|
5.5
|
-
|
-
|
-
|
5.5
|
0.4%
|
Cost
|
82.0%
|
Biologics
|
|
Adaptimmune
|
0.9
|
-
|
-
|
-
|
0.9
|
0.1%
|
Quoted
|
0.8%
|
Cell
therapy
|
|
Total Life Science Portfolio
|
620.9
|
18.5
|
73.8
|
(13.4)
|
699.8
|
55.9%
|
|
|
|
|
|
Capital pool
|
580.4
|
(34.4)
|
9.8
|
(4.6)
|
551.2
|
44.1%
|
|
|
|
|
TOTAL
|
1,201.3
|
|
|
|
1,251.0
|
100%
|
|
|
|
|
Enquiries
Syncona Ltd
Annabel Clark / Fergus
Witt
Tel: +44 (0) 20 3981 7940
FTI Consulting
Ben Atwell / Natalie
Garland-Collin / Tim Stamper
Tel: +44 (0) 20 3727 1000
About Syncona
Syncona's purpose is to invest to
extend and enhance human life. We do this by creating and building
companies to deliver transformational treatments to patients in
areas of high unmet need. Our strategy is to create, build and
scale companies around exceptional science to create a diversified
portfolio of 20-25 globally leading life science businesses, across
development stage, modality and therapeutic areas, for the benefit
of all our stakeholders. We focus on developing treatments for
patients by working in close partnership with world-class academic
founders and management teams. Our balance sheet underpins our
strategy enabling us to take a long-term view as we look to improve
the lives of patients with no or poor treatment options, build
sustainable life science companies and deliver strong risk-adjusted
returns to shareholders.
Forward-looking statements - this announcement contains
certain forward-looking statements with respect to the portfolio of
investments of Syncona Limited. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements. In particular, many companies
in the Syncona Limited portfolio are conducting scientific research
and clinical trials where the outcome is inherently uncertain and
there is significant risk of negative results or adverse events
arising. In addition, many companies in the Syncona Limited
portfolio have yet to commercialise a product and their ability to
do so may be affected by operational, commercial and other
risks.
Syncona Limited seeks to achieve returns over the long term.
Investors should seek to ensure they understand the risks and
opportunities of an investment in Syncona Limited, including the
information in our published documentation, before
investing.