REG - Syncona Limited - Final Results
20/06/2024 07:00
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RNS Number : 1370T Syncona Limited 20 June 2024
20 June 2024
Syncona Limited
Full Year Results for the 12 months ended 31 March 2024
Proactive management to rebalance the portfolio over the last 18 months, with
capital prioritised towards our most promising companies and assets, providing
a platform for future growth
Investment in three highly innovative new portfolio companies, including one
at clinical stage
Portfolio diversified across therapeutic area and modality, and weighted
towards clinical and late-stage clinical companies
Syncona Ltd, (the "Company"), a leading life science investor focused on
creating, building and scaling a portfolio of global leaders in life science,
today announces its Annual Results for the 12 months ended 31 March 2024.
Chris Hollowood, CEO of Syncona Investment Management Limited, said: "During
the year, we have had a resolute focus on proactively managing our portfolio
and a rigorous approach to capital allocation to maximise value in challenging
market conditions. Against this backdrop, we have delivered a resilient
financial performance, underpinned by strong execution across the portfolio.
In parallel we have added three exciting and highly innovative new companies
to the portfolio that can further drive medium and long-term growth.
In November 2022, we set out 10-year targets and our ambition to organically
grow net assets to £5 billion. Since then, we have made significant progress
in rebalancing the portfolio to provide a platform for future growth. Our
maturing strategic portfolio of 13 companies expects to deliver eight key
value inflection points with the potential to drive significant NAV growth by
the end of 2026, including two in the next six months.
We are excited about the opportunity ahead. We continue to see compelling
value in our shares and, having allocated £40 million to the share buyback in
the year, have today allocated a further £20 million to the programme. We
remain focused on driving NAV growth for shareholders and delivering
transformational impact for patients."
Financial performance
· Net assets of £1,238.9 million (31 March 2023: £1,254.7 million),
188.7p(( 1 )) per share (31 March 2023: 186.5p per share), a NAV per share
return of 1.2%(( 2 )) in the year (31 March 2023: (4.1)%):
o Positive returns from our life science portfolio and capital pool,
enhanced by accretive share buybacks
· Life science portfolio valued at £786.1 million 3 (31 March 2023:
£604.6 million), a return of 2.2%(( 4 )) in the year (31 March 2023:
(14.3)%), with uplifts from Autolus offset by partial write-downs of Anaveon
and Clade and the write-off of Gyroscope milestones payments
· Capital pool(( 5 )) of £452.8 million at 31 March 2024 (31 March
2023: £650.1 million)
· £20.2 million out of announced £40.0 million invested into the
share buyback:
o 16.5 million shares repurchased at an average 35.1% discount to NAV
resulting in an accretion of 1.61p to NAV per share 6
· £172.2 million deployed 7 into the life science portfolio, within
our guidance for the year
Proactive management of a maturing strategic portfolio 8
· Proactive management to ensure that our companies have a path forward
to reach late-stage clinical development, where we believe significant value
can be accessed
· Ongoing focus on widening financing syndicates to provide broader
financial scale:
o Autolus completed a public offering of $350 million
o Supporting portfolio companies to bring in aligned co-investors to expand
syndicates
· Portfolio company budgets streamlined and capital deployment focused
on most promising assets:
o Anaveon took the strategic decision to focus on its next-generation
compound, ANV600
· Explored strategic transactions and creative financing solutions:
o Autolus signed a strategic collaboration and received an equity investment
from BioNTech for upfront aggregate proceeds of $250 million
o Quell entered into a cell therapy collaboration with AstraZeneca focused
on autoimmune diseases, for which it received $85 million upfront, in a deal
potentially worth over $2 billion 9
o Beacon announced the sale of its manufacturing facility post-period end to
Ascend Advanced Therapeutics; transaction includes a long-term partnership
with Beacon to continue to manufacture its products
· Portfolio company consolidations and M&A:
o Market conditions presented a differentiated opportunity to take Freeline
private, after which the company acquired SwanBio to create Spur, a new
company with a consolidated adeno-associated virus (AAV) gene therapy pipeline
o Post-period end an agreement was reached for Clade to be acquired by
Century Therapeutics for up to $45.0 million (£35.9 million), with upfront
consideration to Syncona of $9.3 million (£7.4 million)
Continued focus on rigorous capital allocation to maximise value
· Focus on allocating capital to clinical opportunities and assets that
are approaching clinical entry, with 86.1% of capital deployed towards these
assets in the period
· Syncona's view is that the current share price represents a
compelling investment opportunity given the potential value within our
portfolio
· As part of Syncona's focus on, and review of, capital allocation in
the year, the Board took the decision to launch a share buyback programme of
up to £40.0 million in September 2023:
o Post-period end a further £20.0 million has been allocated to the share
buyback programme
71.1% of strategic portfolio value in clinical-stage companies
· Significant work to rebalance the portfolio, prioritising capital
towards the most promising companies and assets, and providing a platform for
future growth
· Maturing strategic portfolio of 13 companies, with five
clinical-stage companies of which two are late-stage
· Strong clinical, financial and operational execution across the
portfolio, including nine financings and strategic transactions, 15 clinical
data readouts and multiple senior leadership appointments
Investment in three highly innovative new companies to underpin medium and
long-term growth, including one clinical-stage asset
· Invested €30 million (£25.7 million) as part of a Series B
financing of iOnctura, a clinical-stage oncology company developing innovative
therapies for neglected and hard-to-treat cancers
· Committed £16.5 million in a Series A financing of Yellowstone, a
new biologics company which is pioneering soluble bispecific T-cell receptor
(TCR)-based therapies to unlock a new class of cancer therapeutics
· Syncona committed to a Series A financing in Forcefield, a company we
had previously seed funded, which is a pioneer of best-in-class therapeutics
aiming to revolutionise the treatment of heart attacks via protection of
cardiomyocytes. Alongside our £20.0 million commitment to Forcefield's Series
A, post-period end Roche Venture Fund committed a further £10.0 million to
the financing valuing Syncona's holding in Forcefield at £8.9 million, a 38%
uplift to the 31 March 2024 value 10 (#_ftn10)
A platform to respond to improving market conditions
· Expanded senior team and embedded a new operating model to better
support the delivery of Syncona's ambitious plans to achieve £5 billion of
NAV by 2032:
o Roel Bulthuis joined as Managing Partner and Head of Investments
o John Tsai, previously Chief Medical Officer (CMO) at Novartis, joined as
Executive Partner
o Kate Butler, former Group Finance Director of SIML, took up the role of
Chief Financial Officer (CFO), with former CFO, Rolf Soderstrom moving to the
role of Executive Partner
o Post-period end Harriet Gower Isaac was appointed Head of People
Outlook
Market conditions have been challenging. However, value is returning to
late-stage clinical assets and financing conditions are beginning to improve
in the private markets. We continue to proactively manage our maturing
portfolio to drive our companies to late-stage clinical development and are
resolutely focused on delivering the 11 capital access milestones and eight
key value inflection points that are mapped against our NAV Growth Framework.
We have a strong pipeline of new investment opportunities based on highly
innovative science, across therapeutic area, modality and stage of
development, from company creation to clinical stage.
Syncona is well positioned with a well-funded portfolio, strong balance sheet,
newly embedded operating model, experienced team and clear strategy to take
advantage of market conditions as they improve. We have rebalanced the
portfolio, prioritising capital towards the most promising companies and
assets, and have preserved value in a challenging market. We are excited about
the opportunity ahead to achieve our 2032 targets. The financial year has
started with positive momentum and we remain focused on driving NAV growth for
shareholders whilst delivering transformational impact for patients.
Capital deployment
Syncona anticipates that deployment into the portfolio and pipeline in the
financial year to 31 March 2025 will be £150-200 million.
Upcoming capital access milestones and potential key value inflection
points 11
As we build and scale our companies, there are opportunities to deliver
milestones that drive access to capital (capital access milestones) and
milestones that we believe have the potential to drive significant NAV growth
(key value inflection points 12 ).
· 11 capital access milestones across the portfolio by the end of
CY2026, with nine expected by the end of CY2025
· Eight key value inflection points, each of which has the potential to
drive significant NAV growth by the end of CY2026, including two in the next
six months. Syncona is funded to deliver on all of the portfolio's potential
key value inflection points
· These capital access milestones and key value inflection points
are not without risk
Strategic life science portfolio company Next expected capital access milestones Syncona team view of potential key value inflection points
Moving towards being on the market
Autolus H2 CY2024 CY2025
- Initial data from Phase I trial in SLE - Commercial traction following US launch of obe-cel, dependent on
FDA regulatory approval
H2 CY2024
- Commence the US commercial launch of obe-cel, dependent on
anticipated FDA regulatory approval in November
Beacon CY2025 H2 CY2024
- Initial data from its Phase II DAWN trial in XLRP - 24-month data from its Phase II SKYLINE trial in XLRP
CY2026
- Data readout from its Phase II/III registrational VISTA trial in
XLRP 13
Moving towards publishing definitive data
iOnctura CY2024 CY2026
- Initiation of Phase II trial in uveal melanoma - Data readout from its Phase II trial in uveal melanoma
Spur 14 H2 CY2024 H2 CY2024
- Select development candidate for GBA1 Parkinson's disease - Data readout from its Phase I/II trial in Gaucher disease
programme
H1 CY2025
- Initial safety readout in higher dose cohort from its Phase I/II
trial in AMN
CY2025
- Initiation of Phase III trial in Gaucher disease
Resolution H2 CY2024 CY2026
- Initiation of Phase I/II trial in end stage liver disease - Data readout from its Phase I/II trial in end stage liver disease
Moving towards publishing emerging efficacy data
Quell CY2025
- Data readout from its Phase I/II trial in liver transplantation
Anaveon H2 CY2024 CY2026
- Initiation of Phase I/II trial of ANV600, the company's next - Data readout from its Phase I/II trial of its next generation
generation compound asset ANV600
Purespring CY2026
- Initiation of Phase I/II trial in complement mediated kidney
disease
OMass CY2026
- Initiation of Phase I trial of its MC2 programme
Enquiries
Syncona Ltd
Natalie Garland-Collins / Fergus Witt
Tel: +44 (0) 20 3981 7940
FTI Consulting
Ben Atwell / 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, building and scaling companies to deliver transformational
treatments to patients in areas of high unmet need.
We aim to build and maintain a diversified portfolio of 20-25 globally leading
life science businesses, across development stage, modality and therapeutic
area, for the benefit of all our stakeholders. We focus on developing
treatments that deliver patient impact by working in close partnership with
world-class academic founders and experienced 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.
Life science portfolio valuations
Company Net investment in the period Valuation FX movement 31 Mar 2024 % of Group NAV Valuation Fully diluted owner-ship stake Focus area
31 Mar 2023 change basis(( 15 )),(( 16 )),(( 17 ))
(£m) (£m) (£m) (£m) (£m) (%)
Strategic portfolio companies
Late-stage clinical
Autolus 50.0 122.4 (2.9) 169.5 13.7% Quoted 12.6% Cell therapy
Beacon 60.0 20.2 0.1 80.3 6.5% PRI 65.3% Gene therapy
Clinical
Spur 18 72.3 63.0 1.1 (0.8) 135.6 10.9% Cost 99.0% Gene therapy
Quell 86.7 (2.0) 84.7 6.8% PRI 33.7% Cell therapy
iOnctura 0.0 25.7 (0.1) 25.6 2.1% Cost 23.0% Small molecules
Pre-clinical
Resolution 23.0 26.9 19 0.1 50.0 4.0% Cost 81.6% Cell therapy
Purespring 35.1 9.9 0.3 45.3 3.6% Cost 77.1% Gene therapy
OMass 43.7 43.7 3.5% PRI 32.7% Small molecules
Anaveon 64.2 12.6 (42.8) 1.7 35.7 2.9% PRI 36.9% Biologics
Kesmalea 4.0 8.0 12.0 1.0% Cost 62.2% Small molecules
Mosaic 7.3 7.3 0.6% Cost 52.4% Small molecules
Forcefield 2.5 4.0 6.5 0.5% Cost 88.5% Biologics
Yellowstone 0.0 1.0 1.0 0.1% Cost 21.6% Biologics
Portfolio milestones and deferred consideration
Beacon deferred consideration 15.9 (1.6) 0.1 14.4 1.2% DCF Gene therapy
Neogene milestone payment 0.0 2.2 2.2 0.2% DCF Cell therapy
Gyroscope milestone payments(( 20 )) 54.5 (56.4) 1.9 0.0 0.0% Written- off Gene therapy
Syncona investments
CRT Pioneer Fund 32.8 (1.4) 2.5 33.9 2.7% Adj Third Party 64.1% Oncology
Biomodal(( 21 )) 18.5 (0.5) 18.0 1.5% PRI 5.5% Epigenetics
Achilles 22 8.6 2.5 (0.1) 11.0 0.9% Quoted 24.5% Cell therapy
Clade 24.3 (14.4) (0.5) 9.4 0.8% Expected proceeds 21.7% Cell therapy
Adaptimmune 1.2 (1.4) 0.2 0.0 0.0% Quoted Cell therapy
Total Life Science Portfolio 604.6 168.5 16.1 (3.1) 786.1 63.5%
Capital pool 650.1 (219.7) 27.1 (4.7) 452.8 36.5%
TOTAL 1,254.7 1,238.9 100%
Chair's statement
Global market conditions have continued to be impacted by significant
macroeconomic and geopolitical uncertainties, which have weighed on sentiment
more broadly. It has been one of the worst bear markets for biotech on record,
with the S&P Biotech Index (XBI) ending Syncona's financial year 45.7%
lower than its peak in February 2021. Over the same period Syncona's life
science return is (13.5)% and NAV per share return is (6.1)% 23 . In
particular, the funding environment for pre-clinical and early-stage clinical
biotech companies has been difficult.
Against this backdrop, the Syncona team 24 has proactively managed the
portfolio to protect value and has taken a rigorous approach to capital
allocation, focused on clinical assets and assets approaching clinical entry,
to enable the delivery of the key value inflection points outlined at our
FY2023/4 Interim Results.
Financial performance
During FY2023/4, Syncona has delivered a resilient performance, ending the
year with net assets of £1,238.9 million or 188.7p per share, a 1.2% NAV per
share return in the year (31 March 2023: net assets of £1,254.7 million, NAV
per share of 186.5p, (4.1)% NAV per share return). The life science portfolio
delivered a 2.2% return, with the increase in the value of Autolus
Therapeutics (Autolus), offset by the partial write-downs at Anaveon and Clade
Therapeutics (Clade) and the write-off of Gyroscope Therapeutics (Gyroscope)
milestone payments. Performance was further enhanced by accretive share
buybacks and positive returns from our capital pool assets.
Focused and rigorous capital allocation
The challenging market backdrop and broader sentiment has impacted Syncona's
share price, which declined by 17.0% in the year, with the discount to NAV
widening from 20.5% to 34.8%. The Board believes that the share price
undervalues the portfolio and its potential and represents a compelling
investment opportunity. In September 2023, the Board took the decision to
allocate up to £40.0 million to a share buyback programme and post-period end
a further £20.0 million has been allocated 25 to the programme. The Board
believes this strikes the right balance between continuing to focus capital
allocation on Syncona's maturing portfolio and a share buyback given the
material discount to NAV at which the shares are currently trading. The
capital allocated to the buyback does not impact planned investment into
clinical-stage assets in the next 24 months.
In the period, £20.2 million of shares have been repurchased at an average
discount of 35.1% to NAV per share, resulting in an accretion of 1.61p to NAV
per share in the year. The share buyback is ongoing, with a further £10.0
million of shares bought back since the period end 26 .
Over the course of the year, the Syncona team has evolved the Company's
approach to capital allocation, moving from focusing on having up to three
years of financing available to ensuring Syncona is positioned to sustainably
deliver capital access milestones, and is funded to deliver key value
inflection points, which have the potential to deliver significant NAV growth.
As our portfolio companies continue to mature there is increased potential to
access third party capital and liquidity, allowing for a more dynamic approach
to capital allocation. The Board believes the evolution in our approach
retains the strategic balance sheet that underpins the delivery of Syncona's
long-term strategy, whilst also allowing the Company to optimise returns for
shareholders. This Capital Allocation Policy is covered more fully in the
business review and included in full in the supplementary information section
of this announcement.
Embedding a new operating model
During the year, the Syncona team has expanded its senior team and embedded a
new operating model to enable the more efficient management of people, capital
and the Syncona portfolio. As part of this process, in April 2023 Roel
Bulthuis joined as Managing Partner and Head of Investments, bringing over 20
years of global life science venture capital, business development and
investment banking experience. In May 2023, John Tsai (previously CMO at
Novartis) joined as Executive Partner, with significant clinical,
pharmaceutical and leadership experience. Effective 1 April 2024, Rolf
Soderstrom former CFO of SIML moved to the role of Executive Partner, where he
now supports the Leadership and Investment Teams whilst remaining on the SIML
Board and as Chair of the Valuation Committee. Kate Butler, former Group
Finance Director of SIML and an experienced financial leader from a career
across biotech, took up the role of CFO of SIML. Our Executive Partner
group 27 has also expanded during the year and is well placed to support
execution at the portfolio companies as they scale. This is an important
function for the business and supports our proactive portfolio management
approach.
Martin Murphy stepped down as Chair of SIML after 11 years of playing an
instrumental role in building Syncona into the business it is today. Martin's
impact on both the Company's trajectory and the wider ecosystem has been
remarkable, and we are indebted to him for his dedication and the platform he
helped us to establish. The Board is pleased with the strategic progress
Syncona has made and with how the senior team, now led by Chris, as CEO and
Interim Chair of SIML, is operating. A recruitment process to appoint a new
permanent Chair of SIML is ongoing. The evolution of the team and the model
are critical to the delivery of Syncona's ambitious plans to achieve £5
billion of NAV by 2032.
Building a sustainable life science ecosystem
Since 2012, Syncona has been a key part of changing the landscape for
ambitious life science company creation in the UK. As a direct consequence of
Syncona's actions, many potential therapies have been taken from academic
research into the clinic on an industrial and scalable footing. The Board and
Syncona team are passionate about shaping a life science ecosystem that is
sustainable and provides a platform for further success. We contribute to this
in a range of ways, including by building companies in the UK, funding them at
scale and focusing them on product development. The Board and Syncona team
also continuously engage with a range of stakeholders, including Government,
industry participants, life science property developers, charities and
regulators, to enable the scaling of a dynamic biotech cluster in which
Syncona and the companies we build can thrive.
The Board is increasingly encouraged by the growing cross-party public policy
support for science and innovation, and increased investment in high-growth
sectors. A key challenge in translating science from an academic setting and
developing it into a commercial reality is accessing the appropriate level of
capital to enable a company to scale. We are therefore highly supportive of
the ambition behind the Mansion House reforms. The Board and Syncona team are
committed to working alongside the signatory pension providers and other
relevant parties as these commitments move towards tangible proposals to
provide the scale-up capital that will take the UK's biotech sector to the
next level.
Syncona's positive role within the ecosystem is also aligned with our
commitment to sustainability, which is embedded into Syncona's investment,
portfolio management, and business processes. I am pleased with our continued
progress in this regard, which includes SIML becoming a signatory of the Net
Zero Asset Managers (NZAM) initiative and completing its first UN Principles
for Responsible Investment (PRI) submission. A full overview of our progress
in and commitment to sustainability and responsible investment can be found in
the Sustainability Report that has been published today.
Outlook
Macroeconomic and geopolitical uncertainties have created a challenging
backdrop for Syncona and our portfolio. These conditions have impacted both
the cost of capital and financing environment in our sector. As we move into
FY2024/5, despite the ongoing macro uncertainties, we are cautiously
optimistic given the gradual decline in inflation and potential for interest
rate cuts. We believe improvements in the macroeconomic environment will
create more favourable conditions for our companies to operate in.
In the last year, the Syncona team's operational progress and proactive
management of the portfolio has provided a platform for future growth. A newly
embedded operating model, expanded team, and evolved Capital Allocation Policy
underpinning our disciplined approach to managing our balance sheet, mean
Syncona is well positioned to take advantage of market conditions as they
improve.
With three companies added to the portfolio during the year, including one at
clinical stage, we are on track to deliver on our 10-year targets which were
set out in November 2022:
· Three new companies created or added to the portfolio per year
o This target has been updated to reflect that we will both create companies
from highly innovative science and invest in existing companies at clinical
stage
· Delivering three to five companies to late-stage development where we
are significant shareholders
· Building a portfolio of 20-25 life science companies
The Board remains focused on overseeing and supporting the Syncona team with
delivery of our long-term strategy to create, build and scale a portfolio of
20-25 leading life science companies and organically grow net assets to £5
billion by 2032. Together, the Board and Syncona team remain committed to
these targets and to delivering medium and long-term growth for our
shareholders.
Melanie Gee, Chair of Syncona Limited, 19 June 2024
Business review
The Syncona team has made significant progress in the year, proactively
managing the portfolio against a challenging market backdrop, embedding a new
operating model to enable scale and adding new companies to the portfolio to
deliver on its 10-year targets.
Life science portfolio performance
The performance of the life science portfolio has been driven by a £122.4
million valuation gain from Autolus, which was largely offset by partial
write-downs of Anaveon and Clade and the write-off of Gyroscope milestone
payments.
The share price appreciation at Autolus was driven by continued strong
progress in the development of its obe-cel therapy. The company has submitted
the key regulatory filing for approval of the drug, its Biologics License
Application (BLA), with the US Food and Drug Administration (FDA) and expects
to receive feedback regarding potential approval in November 2024. Autolus
also completed a strategic collaboration with BioNTech worth $250 million in
upfront proceeds and a public offering of $350 million.
Elsewhere, the partial write-down of Syncona's holding in Anaveon to £35.7
million 28 (£42.8 million decline in value) reflected the company's decision
to focus on its next generation, pre-clinical ANV600 programme and the
post-period end sale of Clade to Century saw a £14.4 million write-down to
£9.4 million. These actions, whilst disappointing from a value perspective,
were aligned with our rigorous approach to capital allocation and proactive
management of the portfolio. In addition, Novartis' decision during the year
to discontinue the development of GT005, which it had been responsible for
progressing since acquiring Gyroscope in February 2022, resulted in a
write-off of the £56.4 million risk-adjusted valuation of the milestone
payments 29 .
A maturing, proactively managed portfolio
In November 2022, we set out 10-year targets to organically grow net assets to
£5 billion. Since then, the Syncona team has worked hard to rebalance the
portfolio whilst prioritising capital towards the most promising companies and
assets to provide a platform for future growth. We now have 13 core life
science companies in our strategic portfolio that we aim to build to a
portfolio of 20-25 companies by 2032. This portfolio is diversified across
therapeutic area and modality and weighted towards clinical and late-stage
clinical companies.
Over the year, our strategic portfolio has continued to mature with 71.1% of
its value now in clinical-stage companies. More broadly, we are pleased with
the clinical, operational and financial delivery our companies have achieved,
generating 15 clinical data read-outs, initiating five new clinical trials,
and securing nine financings and strategic transactions.
The Syncona team has proactively managed the portfolio to ensure that our
companies have a path forward to reach late-stage clinical development, where
we believe significant value can be accessed. We set out a clear approach at
our annual results last year to navigate our portfolio companies through
challenging market conditions and have delivered well against this. We have
worked alongside our portfolio companies to widen financing syndicates,
execute strategic transactions, focus capital on their most promising assets,
streamline budgets and consolidate with other companies to drive combined
strength. Notably, the market conditions impacting the biotech sector
presented a differentiated opportunity to take Freeline Therapeutics
(Freeline) private. Following this transaction, post-period end we announced
that Freeline had acquired SwanBio Therapeutics (SwanBio), creating Spur
Therapeutics (Spur).
In our FY2023/4 Interim Results, we set out a NAV Growth Framework to provide
shareholders with more clarity on the milestones and stages of the development
cycle where we anticipate our companies will be able to access capital and
drive significant NAV growth in the current market environment. In the second
half, the portfolio has delivered six capital access milestones, including the
initiation of new clinical trials, publishing new clinical data and the filing
of Autolus' BLA submission to the US FDA. Since the period end, the portfolio
has delivered a further four capital access milestones, including encouraging
clinical data updates. This includes Spur, which published data at the
American Society of Gene & Cell Therapy (ASGCT) Annual Meeting,
underlining the strong potential of the company's FLT201 therapy in Gaucher
disease. The NAV Growth Framework is covered in further detail in the life
science portfolio review section.
Capital allocation focused on clinical-stage assets or assets approaching
clinical entry
Syncona has been able to leverage its balance sheet throughout a period where
cost of capital and access to capital have been challenging, deploying £172.2
million in the year, in line with capital deployment guidance. We have taken a
rigorous approach to capital allocation, with 86.1% of capital deployed into
clinical-stage assets and assets approaching the clinic, whilst funding our
companies through to their next key value inflection points. In doing so we
have closely monitored potential liquidity and NAV progression alongside
capital needs, whilst considering external factors such as the macro and
financing environment.
Despite the challenging market conditions for biotech companies, from the
£704.5 million raised by our portfolio, Syncona committed £118.2 million,
with our companies attracting £586.3 million from external investors and
pharma partners. This demonstrates the attractiveness of our portfolio and our
ability to leverage the Syncona balance sheet to access significant further
capital.
Adding highly innovative new companies to the portfolio to underpin long-term
growth
During the year, we have delivered on our target of adding three new companies
to the strategic portfolio. We have been able to selectively increase our
exposure to clinical assets beyond the natural maturation of the portfolio, by
investing €30 million (£25.7 million) as part of a Series B financing of
iOnctura. This is a clinical-stage company developing innovative therapies for
neglected and hard-to-treat cancers. Its lead candidate, roginolisib, has
demonstrated long-term safety and emerging efficacy data in a Phase Ib
clinical trial for uveal melanoma, a rare cancer of the eye where patients
have very limited treatment options. Syncona is working with the company to
explore the breadth of roginolisib's potential utility and we are excited to
add iOnctura and this promising asset to our portfolio.
We are also pleased to announce today the creation of a new company,
Yellowstone Biosciences (Yellowstone), with a £16.5 million Series A
financing. Yellowstone is an oncology company pioneering soluble bispecific
T-cell receptor (TCR)-based therapies to unlock a new class of cancer
therapeutics.
We have also committed to a Series A financing of a company we previously seed
financed in 2021, Forcefield Therapeutics (Forcefield), a best-in-class
therapeutics company aiming to revolutionise the treatment of heart attacks.
Alongside Syncona's £20.0 million commitment to Forcefield's Series A,
post-period end Roche Venture Fund committed a further £10.0 million to the
financing, valuing Syncona's holding in Forcefield at £8.9 million, a 38%
uplift to the 31 March 2024 valuation.
Ongoing focus on optimising shareholder returns
During the year, the Syncona team in partnership with the Board conducted an
ongoing review of the Company's approach to capital allocation. As part of
this, the Board launched a share buyback of up to £40.0 million in September
2023 and post-period end, a further £20.0 million has been allocated to the
share buyback programme. Syncona has set out its Capital Allocation Policy to
summarise our evolved approach to the way we manage capital to drive and
maximise returns for shareholders. The core premise of our investment strategy
is that significant risk-adjusted returns in life science come when novel
technology is developed to a late-stage clinical product. As a result, many of
our investments are both capital intensive and illiquid. We aim to manage our
portfolio as a whole to ensure we have the capital required to deliver our
investment strategy, either in cash or from liquid assets in our life science
portfolio. We leverage our balance sheet by accessing external sources of
capital to support the funding of our portfolio companies. We anticipate that
we will generate significant cash proceeds from exits or other liquidity
events and that over time this will be the principal source of capital to fund
our strategy.
Primarily, we will look to re-invest cash proceeds across our portfolio and
into new opportunities, where we believe we can drive significant returns by
funding companies through to clinical and late-stage development.
Where we do not see investment opportunities that allow us to efficiently
deploy capital across our portfolio, we will seek to return capital to
shareholders. We will consider all forms of distribution mechanisms for
capital returns at the time. This includes buying back our own shares, in
particular if market conditions create dislocations between the share price of
Syncona and its stated NAV. We will continue to ensure that we are positioned
to sustainably deliver capital access milestones and are funded to deliver key
value inflection points which have the potential to deliver significant NAV
growth.
Our approach to capital allocation is dynamic and continues to evolve as the
business scales and matures, increasing the potential to access third party
capital, liquidity and optimise returns for our shareholders.
Outlook
Market conditions have been challenging. However, value is returning to
late-stage clinical assets and financing conditions are beginning to improve
in the private markets. We continue to proactively manage our maturing
portfolio to drive our companies to late-stage clinical development and are
resolutely focused on delivering the 11 capital access milestones and eight
key value inflection points that are mapped against our NAV Growth Framework.
We have a strong pipeline of new investment opportunities based on highly
innovative science, across therapeutic area, modality and stage of
development, from company creation to clinical stage.
Syncona is well positioned with a well-funded portfolio, strong balance sheet,
newly embedded operating model, experienced team and clear strategy to take
advantage of market conditions as they improve. We have rebalanced the
portfolio, prioritising capital towards the most promising companies and
assets, and have preserved value in a challenging market. We are excited about
the opportunity ahead to achieve our 2032 targets. The financial year has
started with positive momentum and we remain focused on driving NAV growth for
shareholders whilst delivering transformational impact for patients.
Chris Hollowood, CEO of Syncona Investment Management Limited, 19 June 2024
Life science portfolio review
Our life science portfolio was valued at £786.1 million at 31 March 2024 (31
March 2023: £604.6 million), delivering a 2.2% return during the year. It
comprises our 13 portfolio companies, potential milestone payments or deferred
consideration, and investments, which are non-core and provide optionality to
deliver returns for our shareholders.
Our 13 portfolio companies, known as our strategic portfolio, are the core
life science companies where Syncona has significant shareholdings and plays
an active role in the company's development. These companies are diversified
across modality and therapeutic area, with five companies at the clinical
stage (with two producing definitive data) and the remainder of the portfolio
at pre-clinical stage.
Our NAV Growth Framework
We are continuing to report against the NAV Growth Framework we established at
our FY2023/4 Interim Results, to give shareholders more clarity on which
milestones and what stage of the development cycle we anticipate our companies
will be able to access capital and drive significant NAV growth in the current
market environment. Our portfolio companies are mapped against the categories
below.
1. Companies where delivery against milestones has the potential to enable
access to capital:
· Operational build
o Clearly defined strategy and business plan
o Leading management team established
· Emerging efficacy data
o Clinical strategy defined
o Initial efficacy data from Phase I/II in patients
2. Companies where delivery against milestones have the potential to
deliver NAV uplifts:
· Definitive data
o Significant clinical data shows path to marketed product
o Moving to pivotal trial and building out commercial infrastructure
· On the market
o Commercialising product
o Revenue streams
Specific portfolio company capital access milestones and key value inflection
points are not without risk and their impact will be affected by various
factors including the market environment at the time of their delivery.
Strategic portfolio
Late-stage clinical companies - 20.2% of NAV
Autolus (13.7% of NAV, 12.6% shareholding) - Moving towards being on the
market
Syncona team view
Syncona believes that Autolus' lead therapy, obe-cel in relapsed/refractory
(r/r) adult acute lymphoblastic leukaemia (ALL), has the potential to have a
meaningful impact for patients suffering from ALL whilst also having a very
positive safety profile in a last line setting. This view has been reinforced
post-period by positive longer-term follow-up data presented at The American
Society of Clinical Oncology (ASCO) Annual Meeting. Autolus is well
capitalised to drive the full launch and commercialisation of obe-cel as well
as to advance its pipeline development plans into autoimmune diseases, which
includes publishing data in a Phase I trial of obe-cel in systemic lupus
erythematosus (SLE) in H2 CY2024. This follows a strategic collaboration and
equity investment from BioNTech for aggregate proceeds of $250 million
upfront, as well as an offering of American Depositary Shares for $350
million, for gross proceeds of $600 million received in the year. We are
supportive of the company as it continues to deliver against its operational
milestones as it approaches its Prescription Drug User Fee Act (PDUFA) date in
November 2024, the target action date that the FDA has set to respond to
Autolus' BLA filing for obe-cel.
· Company focus: Autolus is developing next generation programmed T-cell
therapies for the treatment of cancer and autoimmunity with a clinical
pipeline targeting haematological malignancies, solid tumours and autoimmune
diseases.
· Lead programme: Autolus announced further data from its study of obe-cel in
r/r adult ALL at the American Society of Haematology (ASH) Annual Meeting in
December 2023, demonstrating prolonged event free survival and a favourable
safety profile across all patient cohorts. Additional longer-term follow up
data released post-period end at ASCO further underlined the strong safety
profile of the drug, whilst demonstrating a durable response to treatment and
potential for long-term survival outcomes. During the year Autolus filed a BLA
with the US FDA and a Marketing Authorisation Application (MAA) with the UK's
Medicines and Healthcare products and Regulatory Agency (MHRA) for obe-cel,
both of which have been accepted. The FDA has set a PDUFA target action date
of 16 November 2024 for reviewing the BLA application. The company is
preparing for the commercial launch of obe-cel in H2 CY2024, subject to
regulatory approval.
· Commercialisation readiness: During the year Autolus opened its manufacturing
facility, the Nucleus, in Stevenage, a 70,000 sq. foot advanced manufacturing
facility which will support the commercial launch of obe-cel. The Nucleus is
the first of its kind in the UK and provides a specialist manufacturing
capability for the supply of personalised cell therapy products. The Nucleus
has obtained a Manufacturer's Importation Authorisation (MIA) together with
the accompanying GMP certificate. This authorisation enables Autolus to
manufacture for global commercial and clinical product supply. Autolus has
also selected Cardinal Health as its US Commercial Distribution Partner,
enabling distribution capabilities required to commercialise a CAR T-cell
therapy in the US. These significant operational milestones will help to
support obe-cel's planned commercialisation in 2024, enabling Autolus to
launch the product at a scale which serves global demand in r/r adult ALL.
Autolus' commercial readiness has been strengthened through its strategic
collaboration with BioNTech, where under the terms of the agreement BioNTech
will support the launch and expansion of obe-cel and will receive a royalty on
net sales.
· Pipeline programmes: Autolus expanded the use of its lead asset, obe-cel, into
autoimmune diseases through the initiation of a Phase I trial in SLE, with an
initial data readout expected in H2 CY2024. During the year Autolus also
published further data from the ALLCAR extension study of obe-cel in
non-Hodgkin's lymphoma (NHL) and chronic lymphocytic leukaemia (CLL), as well
as from its study of obe-cel in primary central nervous system lymphoma
(PCNSL), further supporting the safety profile of the therapy. The company
also continues to make progress across its broader pipeline, releasing further
data from AUTO1/22 in paediatric ALL and AUTO4 in peripheral T-cell lymphoma,
initial data from AUTO8 in multiple myeloma, and initiating a Phase I trial of
AUTO6NG in neuroblastoma. The data reported to date further demonstrates the
strength of Autolus' technology and platform.
· Strategic transactions: In February 2024 Autolus announced a strategic
collaboration with BioNTech aimed at advancing both companies' autologous
CAR-T programmes towards commercialisation, pending regulatory authorisations.
In connection with the strategic collaboration, the companies entered into a
license and option agreement and a securities purchase agreement. Under the
terms of the agreement, BioNTech made a cash payment of $50 million to
Autolus, and agreed to purchase $200 million of Autolus' American Depositary
Shares in a private placement. BioNTech also has the option to utilise
Autolus' manufacturing capacity in a cost-efficient set up, has access to
Autolus' cell programming technologies and has co-commercialisation options
for Autolus' AUTO1/22 and AUTO6NG programmes.
· People: The company appointed Robert F. Dolski as CFO and promoted Dr Chris
Williams to Chief Business Officer. Robert brings more than 20 years of
diversified experience as a life sciences financial executive, driving the
strategy, planning, execution and financing of private and public
biopharmaceutical companies. Chris was part of the team that founded Autolus
in 2014 and he initially served on the company's Board as a Non-Executive
Director. He previously worked at University College London (UCL) Business
where he led the establishment of strategic collaborations, licensing deals,
new companies and financing transactions across a portfolio of cell and gene
therapies in oncology and rare diseases.
· Potential key value inflection point: Commercial traction following US launch
of obe-cel in r/r adult ALL in CY2025, dependent on FDA regulatory approval.
Beacon (6.5% of NAV, 65.3% shareholding) - Moving towards being on the market
Syncona team view
Syncona believes that the eye is a very attractive target for AAV gene
therapy, and Beacon Therapeutics (Beacon) represents a significant opportunity
for Syncona to apply its domain knowledge in retinal gene therapy, where it
already has prior expertise, to a late-stage clinical asset in X-linked
retinitis pigmentosa (XLRP). The initiation of Beacon's Phase II/III
registrational trial, coupled with its exciting platform potential, means the
company has real opportunity to drive value for our shareholders.
· Company focus: Beacon is an ophthalmic AAV-based gene therapy company founded
to save and restore the vision of patients with a range of prevalent and rare
retinal diseases that result in blindness.
· Financing stage: Raised £96.0 million in a Series A financing in 2023.
· Lead programme: Post-period end Beacon announced the initiation of its Phase
II/III registrational VISTA study for its lead candidate, AGTC-501, in XLRP.
Beacon plans to use the data generated from the VISTA trial, in combination
with data from the Phase I/II HORIZON and Phase II SKYLINE trials, to support
its regulatory strategies in the EU and US. During the year the company also
entered the clinic with the Phase II DAWN trial, which assesses the safety,
efficacy and tolerability in AGTC-501 amongst patients who have already been
treated once with the therapy in their other eye. There are no approved
treatments for XLRP, and the programme has orphan drug designations from both
the FDA and the European Commission. During the year Beacon presented
encouraging efficacy from the SKYLINE trial at the Annual Macula Society
Meeting, demonstrated by improvements in retinal sensitivity, the primary
endpoint for the trial, with a 63% response rate in the higher dose cohort.
AGTC-501 has also shown a favourable safety profile through data published
from the SKYLINE and HORIZON studies.
· Commercialisation update: Post-period end Beacon announced the sale of its
manufacturing team and facility in Alachua, Florida to Ascend Advanced
Therapies (Ascend). The transaction includes a long-term partnership with
Ascend to continue manufacturing its products for clinical and commercial use,
securing GMP product supply for AGTC-501, and enabling the company to focus on
clinical development.
· Pipeline programmes: Beacon has an exciting pre-clinical programme in dry
age-related macular degeneration (dAMD), a leading cause of irreversible
vision loss in people over 60. Beacon's dAMD programme features an
intravitreally (IVT) delivered novel AAV based gene therapy. IVT delivery is
less invasive, requires less clinician training and can be delivered in clinic
rather than via surgery, hence provides greater access to more patients.
· Potential key value inflection points:
· 24-month data from Phase II SKYLINE trial in XLRP expected in H2
CY2024.
· Data readout from its Phase II/III registrational VISTA trial in XLRP
expected in CY2026.
Clinical-stage companies - 19.8% of NAV
Spur (10.9% of NAV, 99.0% shareholding) - Moving towards publishing definitive
data
Syncona team view
Post-period end, we announced that Freeline had completed the acquisition of
Syncona portfolio company SwanBio to form Spur, which is in line with
Syncona's portfolio management strategy of consolidating companies to
strengthen management teams, improve balance sheets and access to capital,
prioritise the most promising companies and assets, leverage synergies and
drive cost savings. During the period, as a result of the challenging market
conditions impacting the biotech sector, and our confidence in its lead FLT201
Gaucher disease programme, we executed on a differentiated opportunity to take
Freeline private. Syncona continues to be encouraged by the data published
from the Gaucher disease programme, which we believe has the potential to
deliver long-term value. Spur's SBT101 programme for the treatment of AMN, a
devastating central nervous system (CNS) disorder for which there are
currently no approved treatments, is currently in a Phase I/II trial. This
programme will further bolster Spur's growing focus on the use of gene therapy
in the CNS, supporting the development of Spur's pre-clinical research
programme in Parkinson's disease. Syncona believes that Spur represents a
significant opportunity to deliver two first-in-class gene therapies and
progress a pipeline targeting more prevalent chronic debilitating diseases.
· Company focus: Developing transformative gene therapies for patients suffering
from chronic debilitating diseases.
· Financing stage: As part of Syncona's acquisition of Freeline, Syncona
provided $15 million (£11.9 million) of financing to enable the company to
meet its near-term cash requirements to continue to advance FLT201. Alongside
Freeline's acquisition of SwanBio to create Spur, Syncona committed to
providing a further £40.0 million in financing to support the development of
the company's expanded pipeline. During the year the management team also
executed on a series of operational and clinical actions to extend its cash
runway.
· Clinical update: Post-period end the company presented further positive data
from its lead Gaucher disease programme at ASGCT reinforcing the safety,
tolerability and efficacy profile of FLT201, as well as its potential to
improve quality of life for patients. Importantly the data showed levels of
lyso-Gb1 30 were substantially reduced in patients with persistently high
lyso-Gb1 levels, despite years on prior treatment with enzyme replacement
therapy (ERT) or substrate reduction therapy (SRT), the current standard of
care for Gaucher disease patients. Spur's SBT101 programme in AMN continued to
make progress during the year. Following the integration of the AMN programme
into Spur's pipeline, the company's management team is reviewing the clinical
development programme for SBT101 and now expects to release an interim safety
readout from the higher dose cohort in H1 CY2025.
· Strategic transactions: The challenging market conditions impacting the
biotech sector presented a differentiated opportunity to take Freeline
private. Following this transaction, Freeline completed an acquisition of
Syncona portfolio company SwanBio to form Spur, creating a consolidated AAV
gene therapy pipeline that includes FLT201 and SBT101. The transaction
consolidates costs, drives efficiencies, provides a broadened clinical
pipeline, and brings strategic synergies including clinical capabilities and
manufacturing know-how. The acquisition has taken place at the portfolio
companies' holding valuations, resulting in a combined valuation of £135.6
million at the year end 31 . The combined company is led by Freeline CEO
Michael Parini and will benefit from the world-class leadership of the broader
Freeline management team who are focused on driving forward two potentially
first-in-class gene therapy assets.
· Potential key value inflection point: Data readout from its Phase I/II trial
in Gaucher disease expected in H2 CY2024.
Quell (6.8% of NAV, 33.7% shareholding) - Moving towards publishing emerging
efficacy data
Syncona team view
We have seen strong validation for the potential of Quell Therapeutics'
(Quell) technology and platform through its collaboration with AstraZeneca,
where Quell received $85 million upfront, predominantly comprising a cash
payment alongside an equity investment, to develop, manufacture and
commercialise autologous T-regulatory (Treg) cell therapies for two autoimmune
disease indications. During the period Quell announced positive safety data
from its lead QEL-001 programme in liver transplantation. This was confirmed
through further safety data that was published post-period end from the
initial safety cohort of three patients, which has supported Quell's
subsequent decision to advance QEL-001 into the efficacy cohort of its Phase
I/II trial. We continue to work alongside the company's management team as the
company delivers against its upcoming operational and clinical milestones.
· Company focus: Developing engineered Treg cell therapies to treat a range of
conditions such as solid organ transplant rejection, autoimmune and
inflammatory diseases.
· Financing stage: Raised $156 million in a Series B financing in November 2021.
· Clinical update: Announced initial positive safety data from its Phase I/II
trial in liver transplantation. Post-period end Quell presented further safety
data at the American Transplant Congress, demonstrating that QEL-001 was safe
and well tolerated by liver transplant patients. The company has announced
that it is advancing the therapy's development into the efficacy cohort of the
LIBERATE Phase I/II trial.
· Commercial update: Quell entered into a collaboration, exclusive option and
license agreement with AstraZeneca to develop, manufacture and commercialise
autologous, engineered Treg cell therapies for two autoimmune disease
indications, providing excellent validation for Quell's technologies and
capabilities. As part of the collaboration, Quell received $85 million
upfront, comprising a predominant cash payment and an equity investment, with
potential payments of over $2 billion contingent on successfully reaching
development and commercial milestones, plus tiered royalties.
· Potential key value inflection point: Data readout from its Phase I/II trial
in liver transplantation expected in CY2025.
iOnctura (2.1% of NAV, 23.0% shareholding) - Moving towards publishing
definitive data
Syncona team view
iOnctura represents an opportunity to invest in a clinical-stage company and
to take its lead programme, roginolisib, through to late-stage clinical
development. This is in line with Syncona's strategy to focus capital
deployment on clinical-stage assets or assets approaching clinical entry. The
Syncona team is working closely alongside iOnctura to review its pipeline and
explore the breadth of roginolisib's utility. Syncona believes roginolisib has
the potential to modulate an important biological pathway in cancer with a
side-effect profile that will allow it to benefit many patients.
· Company focus: Developing selective cancer therapeutics against targets that
play critical roles in multiple tumour survival pathways.
· Financing stage: Syncona led a €80 million (£68.4 million) Series B
financing of iOnctura in March 2024. iOnctura has been added to the strategic
portfolio in the financial year.
· Lead programme: iOnctura's lead programme, roginolisib, is a first-in-class
allosteric (indirect) modulator of PI3K delta (PI3Kδ), which has potential
application across a variety of solid tumour and haematological cancers.
Roginolisib demonstrated long-term safety and emerging efficacy data in a
Phase Ib trial for uveal melanoma, a rare cancer of the eye where patients
have very limited treatment options. Phase II trials in uveal melanoma and
other cancer indications, including non-small cell lung cancer and primary
myelofibrosis, are expected to begin later in CY2024.
· Pipeline programmes: The company has a number of clinical and pre-clinical
pipeline programmes in broader oncology indications.
· Potential key value inflection point: Data readout from its Phase II trial in
uveal melanoma expected in CY2026.
Pre-clinical companies - 16.2% of NAV
Resolution (4.0% of NAV, 81.6% shareholding) - Moving towards publishing
definitive data
· Company focus: Resolution Therapeutics (Resolution) is pioneering macrophage
cell therapy for transformative outcomes in inflammatory organ diseases.
· Financing stage: Raised £37.9 million to date from Syncona through its Series
A financing.
· Clinical update: Resolution's founders presented clinical data at the American
Association for the Study of Liver Diseases (AASLD) Annual Meeting from an
academic study (MATCH II) which provided proof-of-principle that treatment
with a macrophage cell therapy was well tolerated in patients, and helped to
dramatically reduce liver associated complications, including death. Further
data presented post-period at the European Association for the Study of the
Liver (EASL) Congress confirmed the excellent safety and efficacy of the
therapy at 30 months post-treatment. Resolution is using the outputs of this
trial to prepare its lead product RTX001, an engineered autologous macrophage
cell therapy, for a Phase I/II clinical trial, expecting to enter the clinic
in H2 CY2024.
· People update: Resolution strengthened its leadership team in the period with
several appointments, including of Dr Amir Hefni as CEO, who brings almost 20
years' experience in drug discovery and development leadership in the
biotechnology and pharmaceutical industry and joins Resolution from Novartis
where he was the Head of Cell & Gene Therapy. Resolution also appointed
Simon Ramsden as CFO, who brings broad corporate and commercial finance
experience in the pharmaceutical and biotechnology industry, and Dr Clifford
A. Brass as CMO. Clifford brings extensive clinical development experience
having spent over 25 years working in the pharmaceutical industry, with a
strong emphasis on advanced liver disease.
· Potential key value inflection point: Data readout from its Phase I/II trial
in end stage liver disease expected in CY2026.
Purespring (3.6% of NAV, 77.1% shareholding) - Moving towards publishing
emerging efficacy data
· Company focus: Developing gene therapies for the treatment of chronic renal
diseases which are currently poorly served by existing treatments.
· Financing stage: Raised £45.0 million in a Series A financing in 2020.
· Development update: Continuing to develop its pre-clinical pipeline and
proprietary platform.
· People update: Purespring made several key appointments including Fredrik
Erlandson as CMO, Sachin Kelkar as CFO and Peter Mulcahy as Chief People
Officer. These appointments strengthen Purespring's leadership team, with
Fredrik leading the clinical development of Purespring's current and future
pipeline, Sachin leading the company's finance strategy and Peter championing
culture and growth.
OMass (3.5% of NAV, 32.7% shareholding) - Moving towards publishing emerging
efficacy data
· Company focus: Developing small molecule drugs to treat rare diseases and
immunological conditions.
· Financing stage: Raised £75.5 million in a Series B financing in April 2022,
with an additional £10 million investment from British Patient Capital
announced in May 2023.
· Commercial update: The company moved to a new purpose-built 16,000 sq. foot
mixed-use facility at the ARC Oxford campus, helping it to prepare for its
next phase of growth and enabling further collaboration as it expands its
team.
· People update: The company expanded its leadership team with the appointments
of Dr Winfried Barchet as Vice President of Immunology, who brings more than
15 years of experience across drug discovery and translational research, and
Jim Geraghty joined as Chairman of its Board of Directors, bringing over 35
years of strategic experience including more than 25 years as a senior
executive at biotechnology companies developing and commercialising innovative
therapies.
Anaveon (2.9% of NAV, 36.9% shareholding) - Moving towards publishing emerging
efficacy data
· Company focus: Developing a selective IL-2 receptor agonist, a type of protein
that could enhance a patient's immune system to respond therapeutically to
cancer.
· Lead programme: During the year Anaveon took the strategic decision to focus
on its next-generation compound, ANV600, a targeted version of its
first-generation product ANV419. Pre-clinical data released to date has
supported the potential of ANV600 as a monotherapy and as a combination
therapy for cancer.
· Financing stage: Reflecting the strategic decision to focus on the ANV600
programme, which is pre-clinical stage, Syncona and the syndicate of investors
in Anaveon adjusted the price of the final CHF 36.2 million (£32.5 million)
tranche of the 2021 Series B financing.
· Clinical update: On track to initiate a Phase I/II clinical trial of ANV600 in
H2 CY2024.
· Potential key value inflection point: Data readout from its Phase I/II trial
of ANV600 expected in CY2026.
Kesmalea (1.0% of NAV, 62.2% shareholding) - Moving towards completing
operational build
· Company focus: An opportunity to create a new generation of small molecule
oral drugs addressing diseases through modulating protein homeostasis.
· Financing stage: £20.0 million Series A financing led by Syncona in 2022
alongside Oxford Science Enterprises. An additional £5.0 million was raised
during the year with Syncona committing £4.0 million.
· Development update: The company progressed development of its platform
technology and discovery programmes. The Syncona Executive Partner group has
also been working with the company on its strategy and in identifying novel
targets for its platform.
Mosaic (0.6% of NAV, 52.4% shareholding) - Moving towards completing
operational build
· Company focus: Oncology therapeutics company focusing on drug development
against genetically informed targets.
· Financing stage: £22.5 million Series A announced in April 2023, led by
Syncona with a £16.5 million commitment alongside Cambridge Innovation
Capital.
· Platform capabilities: Mosaic Therapeutics' (Mosaic) technology platform uses
proprietary disease models and artificial intelligence and machine learning to
enable identification of novel biological intervention to drive responses in
cancer. The company will then leverage these insights to build a pipeline of
programmes.
· People update: Syncona Managing Partner, Edward Hodgkin, became Chairman of
the company during the year.
Forcefield (0.5% of NAV, 88.5% shareholding) - Moving towards publishing
emerging efficacy data
· Company focus: Pioneering best-in-class therapeutics aiming to use protective
cardiomyocytes to revolutionise the treatment of heart attacks.
· Financing stage: Syncona committed to a Series A financing in Forcefield in
March 2024 and invested £4.0 million into the company during the year 32 .
Post-period end Forcefield attracted a further £10.0 million Series A
commitment from Roche Venture Fund, valuing Syncona's investment at £8.9
million, a 38% (£2.4 million) uplift to the 31 March 2024 value; Syncona's
total commitment in the Series A is £20.0 million. Forcefield has been added
to the strategic portfolio in the financial year.
· People update: John Tsai MD, joined Forcefield as Chair and CEO, bringing over
20 years' experience in global pharmaceuticals with a proven track record in
leading transformational organisational growth and strategy. He is currently
an Executive Partner at Syncona and was most recently President, Global Drug
Development and CMO at Novartis.
Yellowstone (0.1% of NAV, 21.6% shareholding) - Moving towards completing
operational build
· Company focus: Pioneering soluble bispecific T-cell receptor (TCR)-based
therapies to unlock a new class of cancer therapeutics.
· Financing stage: Syncona committed £16.5 million to Yellowstone in a Series A
financing in March 2024, and invested £1.0 million into the company during
the year. Yellowstone has been added to the strategic portfolio in the
financial year.
· People update: The company launched with an experienced and industry-leading
team. This includes Prof. Paresh Vyas as CSO, who is a Professor of
Haematology and Deputy Director of MRC Molecular Haematology Unit at the
University of Oxford and Oxford University Hospitals NHS Trust, Julian Hirst
as CFO, who has over 20 years of financial experience, and Neil Johnston as
Executive Chair, who spent 17 years at Novartis, most recently as global Head
of Business Development and Licensing and a member of the company's Pharma
Executive Committee.
Portfolio milestones and deferred consideration - 1.4% of NAV
During the year, Novartis took the decision to discontinue the development of
GT005 (previously the lead asset at Gyroscope Holdings Limited) in Geographic
Atrophy (GA) secondary to dry AMD, which it had been responsible for
progressing since acquiring Gyroscope in February 2022. Syncona had been
eligible for a series of milestone payments in the event of the successful
clinical development and commercialisation of the programme. The decision
taken by Novartis to stop development of GT005 therefore resulted in a
write-off of the £56.4 million risk-adjusted valuation of the milestone
payments.
Syncona also currently has rights to potential milestone payments related to
the sale of Neogene to AstraZeneca. Alongside these, as part of Syncona's
acquisition of AGTC, the company has the potential to benefit from any future
commercialisation of Beacon's lead asset AGTC-501 via a "deferred
consideration" which provides the right to a mid-single digit percentage of
future income from sales and licensing. Together, these potential milestones
and deferred consideration are valued on a risk-adjusted discounted cash flow
basis at £16.6 million.
Syncona investments - 5.9% of NAV
Syncona has £72.3 million of value in its investments, which are non-core and
provide optionality to deliver returns for our shareholders. Our assets held
within our investments are Achilles Therapeutics (Achilles), Clade, CRT
Pioneer Fund, and Biomodal (formerly Cambridge Epigenetix).
Syncona's 0.8% holding in Adaptimmune was sold during the period for £1.4
million.
Achilles published further data from 18 patients post-period end, which showed
that there had been no further objective responses since the previous data
update in December 2022, including at the higher dose level. Syncona believes
that in order for Achilles to be competitive, it would need to show an ability
to routinely manufacture its products at high doses and in significant numbers
whilst delivering superior efficacy to comparable treatments. The company has
been unable to demonstrate this to date and on this basis, Syncona has moved
Achilles from the strategic portfolio to being classified as a Syncona
investment. Syncona does not hold a Board role at the company but as a
significant shareholder, is engaging with the Board on a path forward.
Post-period end, an agreement was reached for Clade to be acquired by Century
Therapeutics for up to $45.0 million (£35.9 million), with upfront
consideration to Syncona of $9.3 million (£7.4 million). Given the impending
sale of the company and with Syncona no longer holding a Board role, Clade has
been moved from the strategic portfolio to being classified as a Syncona
investment.
Portfolio milestones delivery since introduction of NAV Growth Framework
(FY2023/4 Interim Results, November 2023)
Strategic life science portfolio company Milestone Milestone type Expected Status
Autolus Further long-term follow up data from its pivotal study in obe-cel in adult Capital access milestone H2 CY2023 Delivered
r/r B-ALL
BLA submission for obe-cel to the FDA Capital access milestone H2 CY2023 Delivered
Initiate a Phase I study of obe-cel in refractory SLE, extending the use of Capital access milestone H1 CY2024 Delivered
obe-cel into autoimmune diseases
Achilles 33 Provide further data from its Phase I/IIa clinical trial in NSCLC Capital access milestone Q1 CY2024 Delivered in Q2 CY2024
Provide further data from its Phase I/IIa clinical trial in melanoma Capital access milestone Q1 CY2024 Delivered in Q2 CY2024
Quell Complete dosing of the safety cohort in its Phase I/II trial in liver Capital access milestone H2 CY2023 Delivered in H1 CY2024
transplantation
Initial safety data in Phase I/II trial in liver transplantation Capital access milestone H1 CY2024 Delivered
Beacon Publish 12-month data from its Phase II trial in XLRP Capital access milestone H1 CY2024 Delivered
Initiate its Phase II/III trial in XLRP Capital access milestone H1 CY2024 Delivered
Freeline (now Spur) Release of additional data from its Phase I/II trial in Gaucher disease Capital access milestone CY2024 Delivered
SwanBio (now Spur) Initial safety readout in higher dose cohort from its Phase I/II trial in AMN Capital access milestone H1 CY2024 34 Now expected in H1 CY2025
Anaveon Publish initial data from its Phase I/II trial of ANV419 in metastatic Capital access milestone H2 CY2024 ANV419 programme deprioritised
melanoma
Financial review
Syncona's strategy is supported by our capital pool, people and new operating
model, which underpin our ability to deliver medium and long-term growth for
our shareholders. We take a robust and prudent approach to valuation and
managing our balance sheet, whilst closely managing our costs. This ensures
that we are investing to support the delivery of our strategy, as part of our
ongoing focus on optimising medium and long-term returns for our shareholders.
NAV performance
Syncona ended the year with net assets of £1,238.9 million, or 188.7p per
share, a 1.2% NAV per share return in the year.
Rigorous approach to capital allocation
As more fully covered in the business review, we take a rigorous approach to
capital allocation and managing our balance sheet, closely monitoring
potential liquidity and NAV progression alongside capital needs, whilst
considering external factors. This ensures that we can sustainably deliver
milestones that have the potential to enable capital access and are funded to
deliver key value inflection points which have the potential to deliver
significant NAV growth.
Within our life science portfolio, we have continued to prioritise capital
towards clinical opportunities and assets which are approaching clinical
entry, aligning our capital allocation to our NAV Growth Framework. A total
£172.2 million of capital was deployed into the life science portfolio in the
12 months. Of this, £135.8 million was invested in companies that are moving
towards definitive data or towards being on the market, where key value
inflection points have the potential to drive significant NAV growth. This
includes investments in Beacon, Spur, Resolution and a new investment
iOnctura. In addition, £26.5 million was invested in companies moving towards
emerging efficacy data, to support programmes that have the potential to
underpin capital access, including investments in Forcefield, Anaveon and
Purespring. The remaining £9.9 million was invested in earlier stage
companies, including the tranched milestone payment to Kesmalea and the new
investment in Yellowstone, supporting longer-term growth.
Alongside these investments, in September 2023 the Board allocated £40.0
million to a share buyback programme and post-period end, a further £20.0
million has been allocated to the programme. At 30 March 2024, £20.2 million
of this had been invested in repurchasing 16.5 million shares, at an average
discount of 35.1%, resulting in an accretion of 1.61p to NAV per share. The
share buyback is ongoing, with a further £10.0 million of shares repurchased
since the year end at an average discount of 38.8% 35 .
Looking forward, we have a strong pipeline of existing and new opportunities
and expect to deploy between £150-200 million across our life science
portfolio and into new opportunities in the financial year to 31 March 2025.
We will continue to focus our capital allocation on clinical opportunities and
assets that are approaching clinical entry, aligning our capital allocation to
our NAV Growth Framework as our companies scale.
Prudent capital pool management to balance inflationary risk
Within our capital pool of £452.8 million we ensure that we allocate between
12 and 24 months of funding to cash and Treasury Bills. Longer-term capital is
allocated to a number of low volatility, highly liquid, multi-asset and credit
funds or mandates, managed by Kempen and M&G with portfolio mandates to
deliver a core CPI (consumer price index) return over the mid-term. During the
year, we exited our position in the Schroder Diversified Growth Fund and
re-deployed the capital into short-dated treasuries. At the year end, £262.4
million was held in cash and Treasury Bills, with £182.5 million held in
multi-asset funds and credit funds. The remainder of the capital pool is
invested in mature cash generative private equity funds. To provide Syncona
with a natural hedge against short-term US dollar cash flows, 14.6% of our
capital pool is held in US dollars and the 2.3% strengthening of Sterling over
the year resulted in a small unrealised foreign exchange loss at the year end.
The overall return across our capital pool during the year was 3.4%.
£m % of Gross capital pool 36 % of nav
CASH 99.0 20.9% 8.0%
Treasury Bills 163.4 34.5% 13.2%
Multi-asset funds 70.5 14.9% 5.7%
credit funds 112.0 23.6% 9.0%
private equity funds 28.8 6.1% 2.3%
We will continue to monitor the asset allocation and foreign exchange exposure
within the capital pool based on our capital requirements and market
conditions, with a focus on balancing inflationary risk with a core strategy
of capital preservation and liquidity access.
Valuation approach
At the year end, our life science portfolio comprised listed holdings (23.0%),
private companies either valued at price of recent investment (PRI) (33.4%),
or on the basis of capital invested (calibrated cost) (36.0%). In addition,
potential milestone and deferred consideration payments relating to Neogene
and Beacon are valued on a risk-adjusted discounted cash flow basis in line
with our Valuation Policy and together represent 2.1% of the portfolio 37 .
Throughout the challenging macro environment, which has impacted valuations
for early-stage life science companies, the Syncona team has continued to
rigorously review the robustness of our private company valuations. These
companies have a number of key milestones ahead which will be central to
enabling future access to capital and key valuation inflection points that
have the potential to drive significant NAV growth. Our approach to valuation
includes taking inputs from the investment team, with a focus on delivery
against these upcoming milestones as well as taking into account any
developments during the period which may have impacted the investment theses
of individual companies. We have also taken into account the input provided by
Syncona's external valuation adviser on our seven largest private holdings,
which together make up 68.2% of the strategic portfolio by value. We will
continue to review our company valuations on a quarterly basis alongside
market data as conditions evolve, with conditions in the private markets now
beginning to improve.
Investing in our platform to support growth ambitions
As highlighted in last year's annual results, we continue to invest in our
platform and team to support our growth ambitions, which has led to an
anticipated increase in our cost base. In particular, we have made a number of
senior appointments to the investment team and Executive Partner group,
alongside further investment across the business to support the scaling of our
model. Syncona is a self-managed vehicle and SIML costs are managed prudently
by the Leadership Team within an annual budget approved by the Board. SIML
management fees for FY2023/4 were £16.6 million (1.34% of NAV 38 ), an
increase of £4.5 million on FY2022/3. In addition to an increase in
headcount, this increase also reflects the influence of the inflationary
environment on salaries and business expenses. Notwithstanding further
inflationary impacts, the SIML team does not expect costs to materially
increase in FY2024/5, with investment in the platform and senior team now
largely complete. Total costs of Syncona Limited during the year increased to
£26.3 million (2.12% of NAV) compared to £22.4 million (1.79% of NAV) in the
prior year. These costs incorporate fees paid to SIML, ongoing operating costs
of the Company, the £4.4 million charitable donation and the costs associated
with the long-term incentive scheme.
Kate Butler, Chief Financial Officer of Syncona Investment Management Limited,
19 June 2024
Supplementary information
Capital Allocation Policy
Syncona is committed to driving and maximising returns for shareholders over
the long term as we seek to deliver on our 10-year targets as set out in
November 2022. We strive to deliver growth through capital appreciation and
offer investors the opportunity to access the expertise of Syncona's
specialist team and the growth potential of a proprietary investment portfolio
in a high risk and high reward sector.
Focus on driving significant value through investing in life science
The core premise of our investment strategy is that significant risk-adjusted
returns in life science come when novel technology is developed to a
late-stage clinical product. We generate opportunities to do this by creating
companies from exceptional science, then building and scaling them over the
long term to reach late-stage clinical development, alongside third-party
investors. We also seek to make new investments in clinical-stage
opportunities, both public and private, where we can similarly advance them to
late-stage clinical development and generate strong risk-adjusted returns.
Portfolio management and our NAV Growth Framework
Many of our investments are both capital intensive and illiquid. We aim to
manage our portfolio as a whole to ensure we have the capital required to
deliver our investment strategy, either in cash or from liquid assets in our
life science portfolio. We leverage our balance sheet by accessing external
sources of capital to support the funding of our portfolio companies. We take
a rigorous approach to capital allocation, prioritising capital towards
clinical opportunities and assets which are approaching clinical entry, while
continuing to create companies based on exceptional science.
In our FY2023/4 Interim Results, we set out a NAV Growth Framework to give
shareholders more clarity on which milestones and at what stage of the
development cycle we anticipate our companies will be able to access capital
and drive significant NAV growth. Emerging clinical data typically has the
potential to drive access to capital either through company financings or, for
companies that are publicly listed, it can drive returns by share price
appreciation. Definitive clinical data has the potential to provide
significant NAV growth and has the potential to provide access to capital
through sales of portfolio companies, or significantly increased market
liquidity in listed shares.
If our investment strategy is successful, we anticipate that we will generate
significant cash proceeds from exits or other liquidity events and that over
time this will be the principal source of capital to fund our strategy.
A sustainable model and a strategic approach to capital efficiency
Primarily, we will look to re-invest cash proceeds across our portfolio and
into new opportunities, where we believe we can drive significant returns by
continuing to fund companies through to clinical and late-stage development.
Where we do not see investment opportunities that allow us to efficiently
deploy capital across our portfolio, we will seek to return capital to
shareholders. We will consider all forms of distribution mechanisms for
capital returns at the time. This includes buying back our own shares, in
particular if market conditions create dislocations between the share price of
Syncona and its stated NAV. We will continue to ensure that we are positioned
to sustainably deliver milestones that have the potential to enable capital
access and are funded to deliver key value inflection points which have the
potential to deliver significant NAV growth.
Our approach to capital allocation is dynamic and continues to evolve as the
business scales and matures, increasing the potential to access third party
capital, liquidity and optimise returns for our shareholders.
Our track record since 2012
- £1,251.1 million deployed in life science portfolio since 2012
- 20.2% IRR and 1.4x multiple on cost across whole portfolio(( 39 ))
Company Cost (£m) Value (£m) Multiple IRR
Strategic portfolio
Autolus 147.0 169.5 1.2 2.8%
Spur 351.8 135.6 0.4 (28.9%)
Beacon (incl. Deferred Consideration) 80.2 94.6 1.2 16.6%
Quell 61.4 84.7 1.4 10.3%
Resolution 49.9 50.0 1.0 0.0%
Purespring 45.0 45.3 1.0 0.3%
OMass 35.4 43.7 1.2 6.5%
Anaveon 52.5 35.7 0.7 (16.3%)
iOnctura 25.7 25.6 1.0 NA
Kesmalea 12.0 12.0 1.0 0.0%
Mosaic 7.3 7.3 1.0 0.0%
Forcefield 6.5 6.5 1.0 0.0%
Yellowstone 1.0 1.0 1.0 0.0%
Realised companies
Blue Earth 35.3 351.0 9.9 83.3%
Gyroscope 113.1 325.3 2.9 50.0%
Nightstar 56.4 255.7 4.5 71.1%
Neogene (incl. Milestone value) 14.3 17.6 1.2 9.5%
Azeria 6.5 2.2 0.3 (50.1%)
14MG 5.5 0.7 0.1 (46.4%)
Investments
Achilles 40 60.7 11.0 0.2 (31.0%)
Clade 41 23.2 9.4 0.4 (38.8%)
Other unrealised investments 34.5 51.9 1.5 5.5%
Realised investments 25.9 25.9 1 0.0%
Total 1,251.1 1,762.2 1.4 20.2%
Performance since 2016
In 2016, Syncona merged with the Battle Against Cancer Investment Trust
(BACIT), becoming a FTSE 250 life science investor and expanding its permanent
capital base. Since that time, Syncona's NAV per share has increased from
127.9p to 188.7p, a total return of 6.1% per annum. Using an IRR calculation
for the performance of the Syncona life science portfolio over the same
period, the portfolio has delivered an IRR of 15.8% and is valued at a 1.3
multiple of its 2016 value.
Approach to disclosing portfolio company information
Our model is to create companies around world-leading science, bringing the
commercial vision and strategy, building the team and infrastructure and
providing the funding to scale these businesses.
When we create or invest in a portfolio company, or when a portfolio company
completes an external financing or other transaction, we may announce that
transaction. Our decision on whether (and when) to announce a transaction
depends on a number of factors including the commercial preferences of the
portfolio company. We would make an announcement where we consider that a
transaction is material to our shareholders' understanding of our portfolio,
whether as a result of the amount of the commitment, any change in valuation
or otherwise.
In addition, our portfolio companies are regularly progressing clinical
trials. These trials represent both a significant opportunity and risk for
each company, and may be material for Syncona.
In many cases, data from clinical trials is only available at the end of the
trial. However, a number of our portfolio companies carry out open label
trials, which are clinical studies in which both the researchers and the
patients are aware of the drug being given. In some cases, the number of
patients in a trial may be relatively small. Data is generated as each patient
is dosed with the drug in a trial and is collected over time as results of the
treatment are analysed and, in the early stages of these studies, dose-ranging
studies are completed. Because of the trial design, clinical data in open
label trials is received by our portfolio companies on a frequent basis.
Individual data points need to be treated with caution, and it is typically
only when all or substantially all of the data from a trial is available and
can be analysed that meaningful conclusions can be drawn from that data about
the prospect of success or otherwise of the trial.
In particular, it is highly possible that early developments (positive or
negative) in a trial can be overtaken by later analysis with further data as
the trial progresses.
We would expect to announce our assessment of the results of a trial at the
point we conclude on the data available to us that it has succeeded or failed,
unless we conclude it is not material to our shareholders' understanding of
our portfolio. We would not generally expect to announce our assessment of
interim clinical data in an ongoing trial, other than in the situation where
the portfolio company announces interim clinical trial data, in which case we
will generally issue a simultaneous announcement unless we believe the data is
not materially different from previously announced data.
In all cases we will comply with our legal obligations, under the Market Abuse
Regulation or otherwise, in determining what information to announce.
Principal risks and uncertainties
The principal risks that the Board has identified are set out in the following
pages, along with the potential impact, key controls and what we have done
during the year to manage the risks. Further information on financial risk
management is set out in note 18 to the Consolidated Financial Statements.
Description Key Controls What has happened in the year?
Portfolio company risks
Scientific theses fail · Extensive due diligence process, resulting in identification of · The investment team and the Executive Partner group have been
key risks and clear operational plan to mitigate these. built out further with the addition of John Tsai, Kenneth Galbraith and Roel
Bulthuis. This group has provided specialist support and advice throughout the
· Tranching of investment to minimise capital exposed until key year.
We invest in scientific ideas that we believe have the potential to be de-risking steps are completed (particularly fundamental biological
treatments for a range of diseases, but where there may be no or little uncertainty). Consideration of syndicating investments. · Where required, members of the Executive Partner group and the
substantial evidence of clinical effectiveness or ability to deliver the
investment team have taken on secondments at our portfolio companies and/or
technology in a commercially viable way. Material capital may need to be · Syncona team works closely with new companies to ensure focus taken a Board position to provide more hands-on support.
invested to resolve these uncertainties. on key risks and high-quality operational build-out. Team members may take
operating roles where appropriate. · The support provided by Syncona's launch team to our early-stage
companies enabled better portfolio company management and gave Syncona
· Robust oversight by Syncona team, including formal review at our increased ability to focus on the scientific theses.
Impacts: quarterly business review and ongoing monitoring through Board roles.
· Syncona has continued to seek to de-risk scientific theses in our
· Financial loss and reputational impact from failure of · Investment process focused on differentiated science and pathway early-stage companies and to diversify its portfolio while maintaining
investment. to clinic and end market. concentrated ownership and significant influence.
· Early advisory team input brings in specialist advice from the · We have prioritised capital towards assets that can deliver
beginning. clinical data in the near term. Alongside this, Syncona has also worked with
its portfolio companies to widen financing syndicates, streamline pipelines
and budgets, and explored creative financing solutions and consolidations.
· Our investment in a late-stage company, iOnctura, during the year
has lower risk of scientific thesis failure due to the stage of development
the company is at, however late-stage companies do potentially require higher
capital commitments.
Clinical development doesn't deliver a commercially viable product · Build products in areas with significant unmet need and that show · Portfolio of 13 companies with five at clinical stage, including
substantial and differentiated efficacy. two late-stage clinical.
· Focus, oversight and support from the Syncona team on recruiting · 15 clinical data read-outs in the period including positive data
Success for our companies depends on delivering a commercially viable target dedicated specialist clinical teams in each portfolio company. published from two late-stage companies, Autolus and Beacon, and initial data
product profile through clinical development. This can be affected by trial
from Anaveon for its clinical-stage asset (ANV419) resulting in a pivot to a
data not showing required efficacy or adverse safety events. It can also be · Investment process considers strength of IP or regulatory next generation pre-clinical stage asset (ANV600) as the lead programme.
affected by progress of competitors, IP rights, the company's ability to gain exclusivity protection and this is then operationalised by each company.
regulatory approval for and credibly market the product, potential pricing and
· Autolus achieved an important strategic milestone, filing its
ability to manufacture cost-effectively. · Investment process considers manufacturing as a key issue from Biologics License Application (BLA) with the Food and Drug Administration
inception of each company, rather than leaving to later stage. (FDA) for obe-cel in relapsed/refractory (r/r) adult acute
lymphoblastic leukaemia (ALL).
· Company business plans seek to have platform technologies to
Impacts: lead to more than one product, in different indications, so that failure · Significant Syncona team involvement in senior clinical hires at
in one does not damage all value of company. our portfolio companies ensured the appropriate clinical development skills
· Material impact on valuation, given capital required to take
were put in place.
products through clinical development. · At portfolio level, building a portfolio with multiple companies
at clinical/later stages, to enable us to absorb failures. · Clinical and regulatory experience provided from within team
· Material harm to one or more individuals, and potential
by the Executive Partner group, further strengthened this year with the
reputational issues for Syncona. · Clinical trials policy requires reporting of significant trial recruitment of John Tsai.
issues to Syncona team and to Board in serious cases.
· Syncona team members carefully monitor portfolio company
· Business model focuses on unmet needs and differentiated pipeline data and take prompt action when not tracking to target product
outcomes. profile.
· Executive Partner group brings specialist insight early to
process to try and identify and de-risk potential issues.
Portfolio concentration risk to platform technology · Team pays close attention to scientific, clinical, regulatory · Ongoing monitoring of developments in cell and gene therapy.
or commercial developments in the field.
· Syncona continues to invest across a wide range of modalities and
· Where there are genuine risks, these are identified and managed therefore we adopt multiple approaches alongside increasing portfolio target
The Syncona team brings strong domain experience in cell and gene therapy, and through diligence and investment process. sizes which reduces the potential impact of the risk.
a substantial part of the portfolio is in these areas. Systemic issues
(whether scientific, clinical, regulatory or commercial) may emerge that · Various risks are identified and concentration is avoided where
affect these technologies. systemic.
Impacts:
· Material impact on valuation.
· Impact on reputation of Syncona resulting from failure of
technology we are strongly identified with.
Concentration risk and binary outcomes · The Board provides strong oversight drawing on a range of · This is an inherent risk due to the nature of the business model,
relevant experience, including life science, FTSE and investment company and there has been increased focus on the portfolio view during the year to
expertise. The Board has clear understanding of strategy and risk. try to mitigate this risk where possible; as the portfolio matures this risk
decreases.
The Company's investment strategy is to invest in a concentrated portfolio of · Transparent communication from Syncona team to Board about
early-stage life science businesses where it is necessary to accept very portfolio opportunities and risks including upside and downside valuation · Our focus on allocating capital to clinical opportunities across
significant and often binary risks. It is expected that some things will cases. the portfolio and assets that are approaching clinical entry means there are
succeed (and potentially result in substantial returns) but others will fail
now more companies approaching key value inflection points, which are
(potentially resulting in substantial loss of value). This is likely to result · Clear communication to shareholders of the opportunities and potentially binary outcomes. By focusing our capital deployment we aim to
in a volatile return profile. risks of the strategy. Provide information to shareholders about portfolio mitigate the downside risks and maximise the potential to benefit from value
companies to assist them in understanding portfolio value and risks. growth.
· Building diversified portfolio with multiple companies and · There is continued focus on clinical-stage opportunities to add
Impacts: products at clinical/later stages. Consideration of syndicating investments. to our maturing portfolio and drive nearer-term growth. Two of the new
companies invested in during the year are in oncology in different modalities;
· Loss of shareholder support, potentially reducing ability to · Willing to sell investments at/above fair value, prior to with one an early-stage opportunity and the second a clinical-stage company.
raise new equity when required. approval, which the cadence of the model naturally diversifies, mitigating
binary risks. · Autolus achieved an important strategic milestone, filing its
· Shareholder activism, leading to strategy change that delivers Biologics License Application (BLA) with the Food and Drug Administration
sub-optimal outcomes. (FDA) for obe-cel in relapsed/refractory (r/r) adult acute lymphoblastic
leukaemia (ALL), reflected in increased value of our holding in Autolus.
· Reputation risk from perceived failure of business model.
· Initial data from Anaveon for its clinical-stage asset (ANV419)
resulted in a pivot to a next generation pre-clinical stage asset (ANV600) as
the lead programme; in addition Novartis decided during the year to
discontinue the development of GT005, acquired in the Gyroscope acquisition.
Each of these led to a write-down of value.
Access to capital
Not having capital to invest · Syncona team monitoring capital allocation on an ongoing basis · The macroeconomic environment continued to pose challenges to
with a three-year forward outlook, with transparent reporting to the Board. syndication or raising capital for early-stage companies on the public
markets, which led us to increase the likelihood of this risk occurring.
· Seek to maintain sufficient liquidity to fund all companies with However, we see clear signs of change, with greater differentiation based on
Early-stage life science businesses are very capital intensive, and delivering emerging and definitive data to their next key milestone. the stage and progress of each individual portfolio company; we believe that
our strategy will require us to have access to substantial capital.
as the markets improve, the risk profile will decrease. We continued to work
· Ongoing consideration of options for managing liquidity and the closely alongside our portfolio companies as they sought to raise capital.
various sources available, ensuring the appropriate balance between liquidity
risk and return on life science investments. · Syncona's strong balance sheet continued to be a key mitigation
Impacts:
of this risk and has enabled us to support our portfolio companies, subject to
· Maximise potential to raise new equity through developing ensuring our capital deployment is focused on assets with the highest
· Dilution of stake in portfolio companies with loss of potential institutional shareholder base. potential.
upside.
· Ongoing consideration of alternative or additional capital · During the year Autolus and Quell each entered into strategic
· Loss of control of portfolio companies resulting in poorer raising structures (e.g. sidecar funds). collaborations with BioNTech and AstraZeneca, respectively, demonstrating the
strategic execution.
potential for creative financing solutions to support our portfolio companies'
· Ongoing consideration of syndication strategy at portfolio funding needs.
· Inability for portfolio companies to deliver their business plans company level, to maximise value and minimise dilution when external capital
due to financing constraints. is brought in. · Syncona has sought to ensure portfolio company budgets are
streamlined and focused on delivery of key milestones.
· Ongoing consideration of potential options to manage liquidity
from our life science assets, including exit opportunities. · Where appropriate Syncona continues to focus on widening
financing syndicates and exploring creative financing options for portfolio
companies.
· Syncona also continues to evaluate options for alternative or
additional capital raising structures (e.g. sidecar funds).
Private/public markets don't value or fund our companies when we wish to · Maintain access to significant capital, to reduce risk of being · Macroeconomic headwinds have continued to impact sentiment
access them forced to syndicate/forced seller. in the biotech sector, with particular impact on public markets for
early-stage biotech companies.
· Focus, oversight and support from the Syncona team on financing
plan for each company, with support to the company to develop its financing · Additional scenario planning and modelling has been implemented
Our capital allocation strategy includes considering bringing third-party story at an early stage. during the year to ensure we monitor our ability to invest at a higher than
capital into our portfolio companies, at the right stage of development. In planned level into companies if necessary.
addition we may consider exit opportunities either on the public markets or
through private sales. · We have provided significant support to our companies which
are in the process of or will soon need to be raising capital.
· Continuous internal review of the capital landscape and potential
Impacts: sources of capital and the timing of capital required.
· Syncona is required to invest further capital, leading to greater · Due to the challenging syndication environment experienced
exposure to individual companies than desired and less ability to support throughout the year, there has been increased focus on funding structures,
other companies. particularly around seed funding and tranching, to manage financing and
progression towards de-risking. In addition Syncona has provided convertible
· Inability for portfolio companies to deliver their business plans loans to some of the portfolio companies to support them to reach milestones
due to financing constraints. which have the potential of enabling capital access and key value inflection
points which have the potential of delivering significant NAV growth.
· Exit opportunities may be less attractive, with impact on
availability of capital.
· Reputation risk from failed transactions.
Capital pool losses or illiquidity · Protection against risk and illiquidity are key characteristics; · Continued active management of the capital pool through the
return is a secondary consideration. Liquidity Management Committee, reporting on a quarterly basis to the SIML
and Syncona Limited Boards, supported by external advisers Barnett Waddingham.
· Risk parameters monitored monthly by Syncona team,
The capital pool is exposed to the risk of loss or illiquidity. with enhanced review on a quarterly basis. · Risk is being managed through a tiered approach to investment,
and liquidity and return are managed within defined volatility and
· External adviser (Barnett Waddingham) engaged to carry out concentration limits.
quarterly and annual reviews of capital pool against chosen parameters.
Impacts:
· Our external advisers support us in evaluating the markets and
· Cash balances are held at multiple investment grade or equivalent providers and funds are spread across multiple banks, government bonds and two
· Loss of capital (or reduction in the value of capital due to banks and limited to three months' forward funding requirements. fund managers with differentiated investment strategies.
inflation).
· Near-term funding is held in UK and US treasuries. · Consideration is also being given to the structure of the capital
· Inability to finance life science investments.
pool given the ongoing, challenging macroeconomic landscape.
· Longer-term funding is held across multiple fund managers with
· Reputation risk from losses in non-core area. strict investment concentration limits, daily liquidity funds, and either
investment grade or strict low volatility limits to minimise credit risk.
· Counterparty bank or fund fails and we are unable to recover
the money held by them. · Currently higher risk due to strategy to mitigate impact of
inflation. Investments made within defined risk volatility limits. Use of
external advisers, two fund managers with differentiated strategies,
performance reviewed and monitored by the Liquidity Management Committee and
external adviser (Barnett Waddingham).
People
Reliance on small Syncona team · Market benchmarking of remuneration for employees. · Completion of the leadership transition has resulted in us
decreasing this risk during the year.
· Provision of long-term incentive scheme to incentivise and retain
employees. · The investment team and the Executive Partner group have been
The execution of the Company's strategy is dependent on a small number of key
further strengthened with the recruitment of John Tsai, Kenneth Galbraith and
individuals with specialised expertise. This is at risk if the team does not · Ongoing recruitment to strengthen team and deepen resilience. Roel Bulthuis. This has added to the skills, experience and executional
succeed in retaining skilled personnel or is unable to recruit new personnel
bandwidth already brought to Syncona through the Executive Partner group and
with relevant skills. · Focus on investment team development to provide internal advisers.
succession from next tier of leaders, with process supported by Leadership
Team. · The changes made in the previous year to both the investment team
and Leadership Team are now embedded in the organisation, providing us with a
Impacts: · Process development within corporate functions to reduce single stronger team, stronger processes and improved culture. Significant emphasis
point risks. on developing and coaching our next generation investors and launching a
· Poorer oversight of portfolio companies, risk of loss of value
dedicated talent programme.
from poor strategic/operational decisions. · Building high-quality teams within portfolio companies that can
operate at a high strategic level.
· Less ability to drive strategies in portfolio companies.
· Dynamic and simplified governance framework to support
· Insufficient resource to take advantage of investment transformational change and ongoing business requirements.
opportunities.
· Loss of licence to operate if insufficient resource or processes
mean we fail to meet stakeholder expectations.
Systems and controls failures · Systems and control procedures are reviewed regularly by the · Ongoing compliance reviews and review of key processes performed
Syncona team, with input from specialist external advisers where appropriate. during the year.
· Certain systems have been outsourced to the Administrator who · Implementation of organisational and governance changes to help
We rely on a series of systems and controls to ensure proper control of provides independent assurance of its own systems. simplify processes and decision-making, driving increased effectiveness and
assets, record-keeping and reporting, and operation of Syncona's business.
efficiency, and helping to mitigate and reduce risk.
· Annual review of the effectiveness of systems and controls
carried out by the Audit Committee. · Continued programme of phishing and penetration testing.
Impacts: · Anti-fraud, bribery and corruption controls.
· Risk of loss of assets. · Anti-money laundering controls.
· Inability to properly oversee Syncona team. · Whistleblowing arrangements.
· Inaccurate reporting to shareholders. · IT policies and procedures.
· Syncona and its portfolio companies may be subjected to phishing · Back-up and disaster recovery procedures and testing.
and ransomware attacks, data leakage and hacking.
· IT and cyber security monitoring and control framework, and
· Syncona team unable to carry out its functions properly. regular penetration tests.
· Breach of legal or regulatory requirements.
· Reputation risk, loss of confidence from shareholders and other
stakeholders.
Unable to build high-quality team/team culture · Seek to build high-quality teams in portfolio companies. This can · Advice and guidance provided to the portfolio companies from
begin before an investment is made. within Syncona by the Executive Partner group and investment team, which were
further strengthened this year with the recruitment of John Tsai, Kenneth
· Ensure executive team aims to build a high-quality culture from Galbraith and Roel Bulthuis.
Portfolio companies are reliant on recruiting highly specialised, high-quality the outset, and monitor and support its effectiveness.
employees to deliver their strategies. This can be challenging given a limited
· The strengthening of the Executive Partner group and investment
pool of people with the necessary skills in the UK/Europe. In addition, these · Build strong portfolio company boards (including representatives team differentiates the portfolio companies and should help attract key
are fast-growing companies and establishing a high-quality culture from the from our team and experienced non-execs) to provide effective oversight and talent, thereby reducing the likelihood of this risk.
outset is key. support.
· Significant Syncona team involvement in senior hires at portfolio
· Support from our team, including taking operational roles where companies.
necessary, and facilitating access to support from across the portfolio where
Impacts: appropriate, or external consultant resource from our networks.
· Ultimately, failure to deliver key elements of operational plans
resulting in material loss of value.
Unable to execute business plans · Seek to build high-quality teams in portfolio companies. This can · Executive Partner group and investment team have been built out
begin before an investment is made. Where possible these should include further with the addition of John Tsai, Kenneth Galbraith and Roel Bulthuis.
resilience to deal with unexpected external factors, though companies will This group has provided specialist support and advice throughout the year.
also be focused on maximising value from capital invested. Where required, members of the Executive Partner group and the investment team
Portfolio company business plans may be impacted by a number of external
will take on secondments at our portfolio companies and/or take a Board
factors, including access to patients, delivery by suppliers and the wider · Seek to maintain capital buffers to cope with unanticipated position to provide more hands-on support.
business environment (including factors such as COVID-19). issues before cash out.
· Additional scenario planning and modelling has been implemented
· Oversight of key external factors/relationships that are during the year to ensure we monitor our ability to invest at a higher than
important to delivering business plan. planned level into companies if necessary.
Impacts:
· Sharing of knowledge (where appropriate) across portfolio to · Continuous internal review of the capital landscape and potential
· Ultimately, failure to deliver key elements of operational plans support companies in managing external factors. sources of capital and the timing of capital required. Increased focus on
resulting in material loss of value.
strategic syndication to secure long-term access to capital.
· Syncona involvement in setting strategy and early business plans.
Board representation and significant shareholding allows some influence on
management execution.
Macroeconomic environment
Macroeconomic environment has a negative impact on sentiment for portfolio · Syncona team monitoring capital allocation on an ongoing basis, · We are concentrating capital allocation towards clinical
companies and Syncona business model with transparent reporting to the Board. opportunities across the portfolio, maintaining a disciplined approach against
a challenging market backdrop.
· Seek to maintain sufficient liquidity to fund all companies with
emerging data, or later, to their next key milestone. · We consider all options with regards to future financing,
The challenging macroeconomic environment results in investors being more risk
including exit options. We have increased our engagement with key pharma
averse, impacting their appetite to invest in early-stage biotech companies. · Maximise potential to raise new equity through developing partners.
institutional shareholder base.
· Additional scenario planning and modelling has been implemented
· Ongoing consideration of alternative or additional capital during the year to ensure we monitor our ability to invest at a higher than
Impacts: raising structures (e.g. sidecar funds, use of debt). planned level into companies if necessary.
· Investors are focusing on existing portfolios rather than · Ongoing consideration of syndication strategy at portfolio · Continuous internal review of the capital landscape and potential
investing in early-stage biotech companies, therefore Syncona may be required company level, to maximise value and minimise dilution when external capital sources of capital and the timing of capital required.
to invest further capital, leading to greater exposure to individual is brought in.
companies than desired and less ability to support other companies.
· We have continued to have increased engagement with investors
· Ongoing consideration of potential options to manage liquidity and analysts.
· Inability for portfolio companies to deliver their business plans from our life science assets, including exit opportunities.
due to financing constraints.
· Continued active management of the capital pool. This involves
· Seek to maintain capital buffers to cope with unanticipated managing risk through a tiered approach to investment, and managing liquidity
· For Syncona, exit opportunities may be less attractive, with issues before cash out. and return, within defined volatility and concentration limits. External
impact on availability of capital to fund portfolio companies. advisers are used to evaluate the markets and providers and funds are
currently spread across multiple banks, government bonds, and two fund
· A reduction in demand for the Company's shares would impact managers with differentiated diversified investment strategies.
the performance of the Company's share price.
· Macroeconomic and fund performance is reviewed regularly by the
· Failure to deliver strategy. Syncona team and the Liquidity Management Committee and reported quarterly to
the SIML and Syncona Limited Boards.
· Shareholder activism, leading to strategy change that delivers
sub-optimal outcomes.
Responsibility Statement
The Directors' responsibility statement below has been prepared in conjunction
with, and is extracted from, the Company's Annual Report and Accounts for the
year ended 31 March 2024 ("2024 Annual Report"), whereas this announcement
contains extracts from the 2024 Annual Report. The responsibility statement is
repeated here solely for the purpose of complying with DTR 6.3.5. These
responsibilities are for the full 2024 Annual Report and not the extracted
information presented in this announcement or otherwise.
The Directors of the Company are:
Melanie Gee, Chair
Julie Cherrington, Non-Executive Director
Cristina Csimma, Non-Executive Director
Virginia Holmes, Non-Executive Director
Rob Hutchinson, Non-Executive Director
Kemal Malik, Non-Executive Director
Gian Piero Reverberi, Non-Executive Director
The Directors confirm to the best of our knowledge:
the financial statements, prepared in accordance with International Financial
Reporting Standards as adopted by the European Union, give a true and fair
view of the assets, liabilities, financial position and profit or loss of the
Group and the undertakings included in the consolidation taken as a whole;
the Annual Report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy; and
the financial statements include information and details in the Chair's
statement, the Strategic Report, the Corporate Governance report, the
Directors' report and the notes to the Consolidated Financial Statements,
which provide a fair review of the information required by:
a) DTR 4.1.8 of the Disclosure and Transparency Rules, being a fair review of
the Company business and a description of the principal risks and
uncertainties facing the Company; and
b) DTR 4.1.11 of the Disclosure and Transparency Rules, being an indication of
important events that have occurred since the end of the financial year and
the likely future development of the Company.
SYNCONA LIMITED
UNAUDITED GROUP PORTFOLIO STATEMENT
As at 31 March 2024
2024 2023
Fair value % of Fair value % of
£'000 Group NAV £'000 Group NAV
£'000 £'000
Life science portfolio
Life science companies
Autolus Therapeutics plc 169,469 13.7 50,004 4.0
Spur Therapeutics Limited((1)) 135,627 10.9 72,303 5.7
Quell Therapeutics Limited 84,745 6.8 86,703 6.9
Beacon Therapeutics Holdings Limited 80,257 6.5 60,000 4.8
Resolution Therapeutics Limited 49,974 4.0 23,027 1.8
Purespring Therapeutics Limited 45,257 3.7 35,100 2.8
OMass Therapeutics Limited 43,712 3.5 43,712 3.5
Anaveon AG 35,713 2.9 64,203 5.1
iOnctura B.V. 25,646 2.1 - -
Biomodal Limited 18,055 1.5 18,472 1.5
Companies of less than 1% of the NAV 47,167 3.8 47,972 3.8
Total life science companies 735,622 59.4 501,496 39.9
CRT Pioneer Fund 33,874 2.7 32,727 2.6
Deferred consideration 14,362 1.2 15,882 1.3
Milestone payments 2,248 0.2 54,516 4.3
Total life science portfolio((2)) 786,106 63.5 604,621 48.1
Capital pool investments
UK and US treasury bills 163,373 13.2 284,960 22.7
Credit investment funds 112,015 9.0 101,566 8.1
Multi asset funds 70,500 5.7 160,036 12.8
Legacy funds 28,778 2.3 33,001 2.7
Total capital pool investments((3)) 374,666 30.2 579,563 46.3
Other net assets
Cash and cash equivalents((4)) 104,819 8.5 82,818 6.6
Charitable donations (4,353) (0.4) (4,634) (0.4)
Other assets and liabilities (22,360) (1.8) (7,713) (0.6)
Total other net assets 78,106 6.3 70,471 5.6
Total capital pool 452,772 36.5 650,034 51.9
Total NAV of the Group 1,238,878 100.0 1,254,655 100.0
((1)) Spur Therapeutics Limited (previously Bidco 1354 Limited), a new entity
in the year which acquired Freeline Therapeutics Plc and SwanBio Therapeutics
Limited. The valuation of Spur Therapeutics Limited reflects the combined
valuation of these companies.
((2)) The life science portfolio of £786,106,202 (31 March 2023:
£604,619,696) consists of life science investments totalling £735,622,223
(31 March 2023: £501,495,018), deferred consideration of £14,361,660 (31
March 2023: £15,882,241) and milestone payments of £2,248,059 (31 March
2023: £54,515,861) held by Syncona Holdings Limited and CRT Pioneer Fund of
£33,874,260 (31 March 2023: £32,726,576) held by Syncona Investments LP
Incorporated.
((3)) The capital pool investments of £374,665,784 (31 March 2023:
£579,563,640) are held by Syncona Investments LP Incorporated.
((4) ) Cash amounting to £260,826 (31 March 2023: £11,402) is held by
Syncona Limited. The remaining £104,558,141 (31 March 2023: £82,806,203) is
held by its subsidiaries other than portfolio companies ("Syncona Group
Companies"). Cash held by Syncona Group Companies other than Syncona GP
Limited is not shown in Syncona Limited's Consolidated Statement of Financial
Position since it is included within financial assets at fair value through
profit or loss.
Assets held by the Group are held primarily through Syncona Holdings Limited
and Syncona Investments LP Incorporated. See note 1 for a description of these
entities.
The totals in the above table may differ slightly to the audited financial
statements due to rounding differences.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2024
2024 2023
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income
Other income 6 49,138 - 49,138 27,495 - 27,495
Total investment income 49,138 - 49,138 27,495 - 27,495
Net losses on financial assets at fair value through profit or loss 7 - (18,389) (18,389) - (67,286) (67,286)
Total losses - (18,389) (18,389) - (67,286) (67,286)
Expenses
Charitable donations 8 4,353 - 4,353 4,634 - 4,634
General expenses 9 22,608 - 22,608 11,593 - 11,593
Total expenses 26,961 - 26,961 16,227 - 16,227
Profit/(loss) for the year 22,177 (18,389) 3,788 11,268 (67,286) (56,018)
Profit/(loss) after tax 22,177 (18,389) 3,788 11,268 (67,286) (56,018)
Earnings/(loss) per Ordinary Share 14 3.33p (2.76)p 0.57p 1.69p (10.07)p (8.38)p
Earnings/(loss) per Diluted Share 14 3.33p (2.76)p 0.57p 1.69p (10.07)p (8.38)p
The total columns of this statement represent the Group's Consolidated
Statement of Comprehensive Income, prepared in accordance with IFRS Accounting
Standards adopted by the European Union (IFRS).
The profit/(loss) for the year is equivalent to the "total comprehensive
income" as defined by International Accounting Standards (IAS) 1 "Presentation
of Financial Statements". There is no other comprehensive income as defined by
IFRS.
All the items in the above statement are derived from continuing operations.
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2024
Notes 2024 2023
£'000 £'000
ASSETS
Non-current assets
Financial assets at fair value through profit or loss 10 1,241,698 1,258,258
Current assets
Cash and cash equivalents 261 11
Trade and other receivables 11 9,138 10,143
Total assets 1,251,097 1,268,412
LIABILITIES AND EQUITY
Non-current liabilities
Share based payments provision 12 2,861 -
Current liabilities
Share based payments provision 12 1,760 7,296
Accrued expense and payables 13 7,598 6,461
Total liabilities 12,219 13,757
EQUITY
Share capital 14 767,999 767,999
Capital reserves 14 444,774 463,163
Revenue reserves 46,328 23,493
Treasury shares 14 (20,223) -
Total equity 1,238,878 1,254,655
Total liabilities and equity 1,251,097 1,268,412
Total net assets attributable to holders of Ordinary Shares 1,238,878 1,254,655
Number of Ordinary Shares in issue 14 655,335,586 669,329,324
Net assets attributable to holders of Ordinary Shares 14 £1.89 £1.87
(per share)
Diluted NAV (per share) 14 £1.89 £1.86
The audited Consolidated Financial Statements were approved on 19 June 2024
and signed on behalf of the Board of Directors by:
Melanie
Gee
Rob Hutchinson
Chair
Non-Executive Director
Syncona
Limited
Syncona Limited
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF
ORDINARY SHARES
For the year ended 31 March 2024
Share Capital Revenue Treasury shares Total
capital reserves reserves
£'000 £'000 £'000 £'000 £'000
As at 31 March 2022 767,999 530,449 11,393 - 1,309,841
Total comprehensive loss for the year - (67,286) 11,268 - (56,018)
Transactions with shareholders:
Share based payments - - 832 - 832
As at 31 March 2023 767,999 463,163 23,493 - 1,254,655
Total comprehensive income for the year - (18,389) 22,177 - 3,788
Acquisition of treasury shares - - - (20,223) (20,223)
Transactions with shareholders:
Share based payments - - 658 - 658
As at 31 March 2024 767,999 444,774 46,328 (20,223) 1,238,878
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2024
Notes 2024 2023
£'000 £'000
Cash flows from operating activities
Profit/(loss) for the year 3,788 (56,018)
Adjusted for:
Losses on financial assets at fair value through profit or loss 7 18,389 67,286
Non-cash movement in share based payment provision (3,846) (12,031)
Operating cash flows before movements in working capital 18,331 (763)
Decrease/(increase) in trade and other receivables 1,005 (265)
Increase in accrued expense and payables 1,137 763
Net cash generated from/(used in) operating activities 20,473 (265)
Cash flows from financing activities
Acquisition of treasury shares 14 (20,223) -
Net cash used in financing activities (20,223) -
Net increase/(decrease) in cash and cash equivalents 250 (265)
Cash and cash equivalents at beginning of the year 11 276
Cash and cash equivalents at end of the year 261 11
Cash held by the Company and Syncona Group Companies is disclosed in the Group
Portfolio Statement.
The accompanying notes are an integral part of the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2024
1. GENERAL INFORMATION
Syncona Limited (the "Company") is incorporated in Guernsey as a registered
closed-ended investment company. The Company's Ordinary Shares were listed on
the premium segment of the London Stock Exchange on 26 October 2012 when it
commenced its business.
The Company makes its life science investments through Syncona Holdings
Limited (the "Holding Company"), a subsidiary of the Company. The Company
maintains its capital pool through Syncona Investments LP Incorporated (the
"Partnership"), in which the Company is the sole limited partner. The general
partner of the Partnership is Syncona GP Limited (the "General Partner"), a
wholly-owned subsidiary of the Company. Syncona Limited and Syncona GP Limited
are collectively referred to as the "Group".
Syncona Investment Management Limited ("SIML"), a subsidiary, was appointed as
the Company's Alternative Investment Fund Manager ("Investment Manager").
The investment objective and policy is set out in the Directors' report.
2. ACCOUNTING POLICIES
The Group's investments in life science companies, other investments within
the life science portfolio and capital pool investments are held,
respectively, through the Holding Company and the Partnership, which are
measured at fair value through profit or loss in accordance with the
requirement of IFRS 10 "Consolidated Financial Statements".
Statement of compliance
The Consolidated Financial Statements which give a true and fair view are
prepared in accordance with IFRS as adopted by the European Union and are in
compliance with The Companies (Guernsey) Law, 2008. The Consolidated Financial
Statements were approved by the Board and authorised for issue on 19 June
2024.
Information reported to the Board (the Chief Operating Decision Maker (CODM))
for the purpose of allocating resources and monitoring performance of the
Group's overall strategy to found, build and fund companies in innovative
areas of healthcare, consists of financial information reported at the Group
level. The capital pool is fundamental to the delivery of the Group's strategy
and performance is reviewed by the CODM only to the extent this enables the
allocation of those resources to support the Group's investment in life
science companies. There are no reconciling items between the results
contained within this information and amounts reported in the financial
statements. IFRS requires operating segments to be identified on the basis of
the internal financial reports that are provided to the CODM, and as such the
Directors present the results of the Group as a single operating segment.
Basis of preparation
The Consolidated Financial Statements have been prepared under the historical
cost basis, except for investments and share based payment provision held at
fair value through profit or loss, which have been measured at fair value.
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the years ended 31 March 2024 and 31 March 2023
but is derived from those accounts. The auditors have reported on those
accounts and provided an unqualified opinion, including key audit matters
within their audit report. It did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain statements under
The Companies (Guernsey) Law, 2008. A copy is available upon written request
from the Company's registered office. The auditors' reports do not necessarily
report on all of the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors' engagement they should obtain a
copy of the auditors' reports together with the accompanying financial
information from the issuer's registered office.
Functional currency
The Group's functional currency is Sterling ("£" or "GBP"). £ is the
currency in which the Group measures its performance and reports its results.
Ordinary Shares are denominated in £ and any dividends declared are paid in
£. The Directors believe that £ best represents the functional currency,
although the Group has significant exposure to other currencies as described
in note 18.
Going concern
The financial statements are prepared on a going concern basis. The net assets
held by the Group and within investment entities controlled by the Group
currently consist of securities and cash amounting to £1,238.9 million (31
March 2023: £1,254.7 million) of which £435.8 million (31 March 2023:
£629.4 million) are readily realisable within three months in normal market
conditions, and liabilities including uncalled commitments to underlying
investments and funds amounting to £95.2 million (31 March 2023:
£89.2 million).
Given the Group's capital pool of £452.8 million (31 March 2023: £650.1
million) the Directors consider that the Group has adequate financial
resources to continue its operations, including existing commitments to its
investments and planned additional capital expenditure for 12 months following
the approval of the financial statements. The Directors also continue to
monitor the ever changing macro environment on the Group. Hence, the Directors
believe that it is appropriate to continue to adopt the going concern basis in
preparing the Consolidated Financial Statements.
Basis of consolidation
The Group's Consolidated Financial Statements consist of the financial records
of the Company and the General Partner.
The results of the General Partner during the year are consolidated in the
Consolidated Statement of Comprehensive Income from the effective date of
incorporation and are consolidated in full. The financial statements of the
General Partner are prepared in accordance with United Kingdom (UK) Accounting
Standards under Financial Reporting Standard 101 "Reduced Disclosure
Framework". Where necessary, adjustments are made to the financial statements
of the General Partner to bring the accounting policies used in line with
those used by the Group. During the years ended 31 March 2024 and 31 March
2023, no such adjustments have been made. All intra-group transactions,
balances and expenses are eliminated on consolidation.
Entities that meet the definition of an investment entity under IFRS 10 are
held at fair value through profit or loss in accordance with IFRS 9 "Financial
Instruments". The Company, the Partnership and the Holding Company meet the
definition of investment entities. The General Partner does not meet the
definition of an investment entity due to providing investment management
related services to the Group, and is therefore consolidated.
New standards adopted by the Group
There are no standards, amendments to standards or interpretations that are
effective for the annual period ending on 31 March 2024 that have a material
effect on the Group's Consolidated Financial Statements.
Standards, amendments and interpretations not yet effective
There are a number of other standards, amendments and interpretation that are
not yet effective and are not relevant to the Group as listed below. These are
not expected to have a material impact on the Group's Consolidated Financial
Statements.
- Amendments to IFRS 17: Insurance Contracts;
- Amendments to IFRS 10 and IAS 28: Sale or contribution of assets
between an investor and its associate or joint venture;
- Amendments to IAS 1: Classification of Liabilities as Current or
Non-current;
- Amendments to IAS 1: Non-current Liabilities with Covenants;
- Amendments to IAS 8: Accounting Policies, Changes in Accounting
Estimates and Errors;
- Amendments to IAS 12: Income Taxes; and
- Amendments to IFRS 16: Lease Liability in a Sale and Leaseback
Financial instruments
Financial assets are recognised in the Group's Consolidated Statement of
Financial Position when the Group becomes a party to the contractual
provisions of the instrument. On initial recognition, financial assets are
recognised at fair value less transaction costs which are recognised in the
Statement of Comprehensive Income.
On subsequent measurement, a financial asset is classified as measured at
amortised cost, fair value through other comprehensive income, or fair value
through profit or loss.
Financial assets measured at amortised cost
Financial assets are measured at amortised cost if held within a business
model whose objective is to hold financial assets in order to collect
contractual cash flows and its contractual terms give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding. The Group includes in this category short-term
non-financing receivables including trade and other receivables.
As at 31 March 2024 and 31 March 2023, there are no financial assets measured
at fair value through other comprehensive income.
Financial liabilities measured at amortised cost
This category includes all financial liabilities, other than those measured at
fair value through profit or loss. The Group includes in this category
short-term payables.
Financial assets at fair value through profit or loss
The Group's investments in life science companies and capital pool investments
are held through the Holding Company and the Partnership, respectively, which
are measured at fair value through profit or loss in accordance with the
requirement of IFRS 10. The Net Asset Value (NAV) of the Holding Company and
the Partnership represent the Group's assessment of the fair value of its
directly held assets (see note 10) and have been determined on the basis of
the policies adopted for underlying investments described below.
Fair value - investments in subsidiaries
The Group classified its direct investments in subsidiaries as investments at
fair value through profit or loss in accordance with the requirements under
IFRS 10.
Fair value - life science portfolio - life science investments
The Group's investments in life science companies are, in the case of quoted
companies, valued based on bid prices in an active market as at the reporting
date.
In the case of the Group's investments in unlisted companies, the fair value
is determined in accordance with the International Private Equity and Venture
Capital (IPEV) valuation guidelines. These may include the use of recent arm's
length transactions, discounted cash flow (DCF) analysis and earnings
multiples as valuation techniques. Wherever possible, the Group uses valuation
techniques which make maximum use of market-based inputs.
The following considerations are used when calculating the fair value of
unlisted life science companies:
- Cost at the transaction date is the primary input when determining
fair value. Similarly, where there has been a recent investment in the
unlisted company by third parties, the price of recent investment (PRI) is the
primary input when determining fair value, although further judgement may be
required to the extent that the instrument in which the recent investment was
made is different from the instrument held by the Group.
- The length of period for which it remains appropriate to consider
cost or the PRI as the primary input when determining fair value depends on
the achievement of target milestones of the investment at the time of
acquisition. An analysis of such milestones is undertaken at each valuation
point and considers changes in the key company indicators, changes to the
external environment, suitability of the milestones and the current facts and
circumstances. Where this calibration process shows there is objective
evidence that an investment has been impaired or increased in value since the
investment was made, such as observable data suggesting a change in the
financial, technical, or commercial performance of the underlying investment,
the Group carries out an enhanced assessment which may use one or more of the
alternative methodologies set out in the IPEV Valuation Guidelines.
- DCF involves estimating the fair value of an investment by
calculating the present value of expected future cash flows, based on the most
recent forecasts in respect of the underlying business. Given the significant
uncertainties involved with producing reliable cash flow forecasts for seed,
start-up and early-stage companies, the DCF methodology will more commonly be
used in the event that a life science company is in the final stages of
clinical testing prior to regulatory approval or has filed for regulatory
approval. No life science investments were valued on a DCF basis as at 31
March 2024 and 31 March 2023.
Fair value - life science portfolio - milestone payments
Milestone payments which form part of the total consideration resulting from a
business combination and are dependent on the meeting of future conditions are
initially recognised at fair value through profit or loss. Subsequent
measurement of milestone payments is at fair value through profit or loss.
When estimating the fair value of the milestone payments the present value of
expected future cash flows is calculated based on the known future cash flows
and an estimate of the likelihood of meeting the stated conditions using
publicly available information where possible.
Fair value - life science portfolio - deferred consideration
Financial assets resulting from an investment purchase entitling the Group to
future income that has a price which is dependent on a non-financial variable
not specific to a party in the contract ("deferred consideration") is measured
on initial recognition at fair value. Subsequent measurement of the financial
asset is at fair value through profit or loss. When estimating the fair value
of the financial asset the present value of expected future cash flows is
calculated using an income-based valuation approach and an estimate of the
likelihood of meeting the stated conditions using publicly available
information where possible.
Fair value - capital pool investments in underlying funds
The Group's capital pool investments in underlying funds are ordinarily valued
using the values (whether final or estimated) as advised to the Investment
Manager by the managers, general partners or administrators of the relevant
underlying fund. The valuation date of such investments may not always be
coterminous with the valuation dates of the Company and in such cases the
valuation of the investments as at the last valuation date is used. The NAV
reported by the administrator may be unaudited and, in some cases, the
notified asset values are based upon estimates. The Group or the Investment
Manager may depart from this policy where it is considered such valuation is
inappropriate and may, at its discretion, permit any other valuation method to
be used if it considers that such valuation method better reflects value
generally or in particular markets or market conditions and is in accordance
with good accounting practice.
Forward currency contracts
Forward foreign currency contracts are derivative contracts and as such are
recognised at fair value on the date on which they are entered into and
subsequently remeasured at their fair value. Fair value is determined by
forward rates in active currency markets. Whilst the Group currently holds no
forward currency contracts, forward currency contracts are held by the
Partnership and Syncona Portfolio Limited from time to time for hedging
purposes only.
Other financial liabilities
Other financial liabilities include all other financial liabilities other than
financial liabilities at fair value through profit or loss. The Group's other
financial liabilities include payables and share based payments. The carrying
amounts shown in the Consolidated Statement of Financial Position approximate
the fair values due to the short-term nature of these other financial
liabilities.
Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the
Consolidated Statement of Financial Position if, and only if, there is a
currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise assets and settle the
liabilities simultaneously.
Derecognition of financial instruments
A financial asset is derecognised when: (a) the rights to receive cash flows
from the financial asset have expired; (b) the Group retains the right to
receive cash flows from the financial asset, but has assumed an obligation to
pay them in full without material delay to a third party under a "pass through
arrangement"; or (c) the Group has transferred substantially all the risks and
rewards of the financial asset, or has neither transferred nor retained
substantially all the risks and rewards of the financial asset, but has
transferred control of the financial asset.
A financial liability is derecognised when the contractual obligation under
the liability is discharged, cancelled or expired.
Impairment of financial assets
IFRS 9 requires the Group to record expected credit losses (ECLs) on all
financial assets held at amortised cost, all loans and trade receivables,
either on a 12-month or lifetime basis. The Group only holds receivables with
no financing component and which have maturities of less than 12 months at
amortised cost and therefore has applied the simplified approach to recognise
lifetime ECLs permitted by IFRS 9.
Commitments
Through its investment in the Holding Company and the Partnership, the Group
has outstanding commitments to investments that are not recognised in the
Consolidated Financial Statements. Refer to note 20 for further details.
Share based payments
Certain employees of SIML participate in equity incentive arrangements under
which they receive awards of Management Equity Shares (MES) in the Holding
Company above a base line value set out at the date of award. The MES are not
entitled to dividends but any dividends or capital value realised by the Group
in relation to the Holding Company are taken into account in determining the
value of the MES. MES vest if an individual remains in employment for the
applicable vesting period. 25% of an individual MES become realisable each
year, they have the right to sell these realisable shares to the Company and
the Company is obligated to purchase said shares. The price is determined
using a formula stipulated in the Articles of Association ("Articles") of the
Holding Company.
The terms of the equity incentive arrangements provide that half of the
proceeds (net of expected taxes) are settled in Company shares which must be
held for at least 12 months, with the balance paid in cash. Consequently, the
arrangements are deemed to be partly an equity-settled share based payment
scheme and partly a cash-settled share based payment scheme under IFRS 2
"Share Based Payments" in the Consolidated Financial Statements of the Group.
The fair value of the MES at the time of the initial award is determined in
accordance with IFRS 2 and taking into account the particular rights attached
to the MES as described in the Articles. The fair value is measured using a
probability-weighted expected returns methodology, which is an appropriate
future‑oriented approach when considering the fair value of shares that have
no intrinsic value at the time of issue. The approach replicates that of a
binomial option pricing model. The key assumptions used within the model are:
NAV progression; discount rates ranging from 13% to 28% (31 March 2023: 12% to
27%); and probabilities of success that result in an average cumulative
probability of success across the life science portfolio of 18% (31 March
2023: 26%). In this case, the expected future payout to the MES was made by
reference to the expected evolution of the Holding Company's value, including
expected dividends and other realisations which is then compared to the base
line value. This is then discounted into present value terms adopting an
appropriate discount rate. The "capital asset pricing methodology" was used
when considering an appropriate discount rate to apply to the payout expected
to accrue to the MES on realisation.
When MES are awarded, a share based payment charge is recognised in the
Consolidated Statement of Comprehensive Income of the employing company, SIML,
equal to the fair value at that date, spread over the vesting period. In its
own financial statements, the Company records a capital contribution to the
Holding Company with an amount credited to the share based payments reserve in
respect of the equity-settled proportion and to liabilities in respect of the
cash-settled proportion (see below).
When the Company issues new shares to acquire the MES, the fair value of the
MES is credited to share capital.
To the extent that the Company expects to pay cash to acquire the MES, the
fair value of the MES is recognised as a liability in the Company's
Consolidated Statement of Financial Position. The fair value is established at
each statement of financial position date and recognised in the Consolidated
Statement of Comprehensive Income throughout the vesting period, based on the
proportion vested at each Statement of Financial Position date and adjusted to
reflect subsequent movements in fair value up to the date of acquisition of
the MES by the Company.
The fair value paid to acquire MES (whether in shares in the Company or cash)
will result in an increase in the carrying value of the Holding Company by the
Company.
The movement in the share based payment provision of the Group is a non-cash
fair value movement to the reported liability, rather than a working capital
balance movement. This movement is recognised directly in the Consolidated
Statement of Comprehensive Income.
Treasury shares
Treasury shares are ordinary shares of the Company held by the Company and
presented as a reduction of equity, at the consideration paid, including any
incremental attributable costs. The ordinary shares are purchased from the
London Stock Exchange at market value.
Income
All income is accounted for in accordance with IFRS 15 "Revenue from Contracts
with Customers" and is recognised in the Consolidated Statement of
Comprehensive Income when the right to receive is established. Income is
further discussed in note 6.
Expenses
Expenses are accounted for on accruals basis. Expenses incurred on the
acquisition of investments at fair value through profit or loss are presented
within the Capital column of the Consolidated Statement of Comprehensive
Income. All other expenses are presented within the Revenue column of the
Consolidated Statement of Comprehensive Income. Charitable donations are
accounted for on accruals basis and are recognised in the Consolidated
Statement of Comprehensive Income. Expenses directly attributable to the
issuance of shares are charged against capital and recognised in the
Consolidated Statement of Changes in Net Assets Attributable to Holders of
Ordinary Shares.
Cash and cash equivalents
Cash comprises cash at bank. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash and which
are subject to insignificant changes in value.
Translation of foreign currency
Items included in the Group's Consolidated Financial Statements are measured
in £, which is the currency of the primary economic environment where the
Group operates. The Group's assets are primarily denominated in £.
Transactions in currencies other than £ are translated at the rate of
exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the date of the Consolidated
Statement of Financial Position are retranslated into £ at the rate of
exchange ruling at that date.
Foreign exchange differences arising on retranslation are recognised in the
Consolidated Statement of Comprehensive Income. Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign
currency are translated using the rate of exchange at the date of the
transaction.
Non-monetary assets and liabilities denominated in foreign currencies that are
stated at fair value are retranslated into £ at foreign exchange rates ruling
at the date the fair value was determined.
Presentation of the Consolidated Statement of Comprehensive Income
In order to better reflect the activities of an investment company,
supplementary information which analyses the Consolidated Statement of
Comprehensive Income and reserves between items of a revenue and capital
nature has been presented alongside the Consolidated Statement of
Comprehensive Income and Statement of Changes in Net Assets Attributable to
Holders of Ordinary Shares.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Group's Consolidated Financial Statements requires
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses at the reporting date. However, uncertainties about these
assumptions and estimates, in particular relating to underlying investments of
private equity investments and the life science investments could result in
outcomes that require a material adjustment to the carrying amount of the
assets or liabilities affected in future periods.
Critical accounting judgements
In the process of applying the Group's accounting policies, the following
judgements have been made, which have the most significant effect on the
amounts recognised in the Consolidated Financial Statements:
Fair value - life science portfolio
In the case of the Group's investments in unlisted companies, the fair value
is determined in accordance with the IPEV Valuation Guidelines. These include
the use of recent arm's length transactions, DCF analysis and earnings
multiples. Wherever possible, the Group uses valuation techniques which make
maximum use of market-based inputs.
In most cases, where the Group is the sole institutional investor and/or until
such time as substantial clinical data has been generated, the primary
valuation input is Cost or PRI, subject to adequate consideration being given
to current facts and circumstances. This includes whether there is objective
evidence that suggests the investment has been impaired or increased in value
due to observable data, or technical or commercial performance.
Where considered appropriate, once substantial clinical data has been
generated the Group will use input from independent valuation advisers to
assist in the determination of fair value.
The key judgement relates to determining whether a Cost or PRI (Market) based
approach is the most appropriate for determining fair value of the Group's
investments in unlisted companies. In making this judgement, the Group
highlights that the majority of its investments are early-stage businesses,
typically with products in the discovery stage of drug development and
pre-revenue generation. As a result, it considers that the determination of
fair value should be based on what a market participant buyer would pay to
acquire or develop a substitute asset with comparable scientific or commercial
progression, adjusted for obsolescence (i.e. its current replacement cost).
This technique is applied until such time that the life science investment is
at a stage in its life cycle where cash flow forecasts are more predictable,
thus using an income-based approach provides a more reliable estimate of fair
value.
However there are also other methodologies that can be used to determine the
fair value of investments in private companies including the use of the DCF
methodology. It is possible that the use of an alternative valuation
methodology would result in a different fair value than that recorded by the
Group.
When assessing the judgement, the Group's determination of the fair values of
certain investments took into consideration multiple sources including
management and publicly available information and publications, as well as
input from an independent review by L.E.K. Consulting LLP (L.E.K.) in respect
of Syncona's valuation of the following investments:
• Resolution Therapeutics Limited
• Anaveon AG
• Freeline Therapeutics Plc (now Spur Therapeutics Limited)
• SwanBio Therapeutics Limited (now Spur Therapeutics Limited)
• Beacon Therapeutics Holdings Limited
• Quell Therapeutics Limited
• OMass Therapeutics Limited
• Purespring Therapeutics Limited
• CRT Pioneer Fund
As with any review of investments these can only be considered in the context
of the limited procedures and agreed scope defining such review and are
subject to assumptions which may be forward looking in nature and subjective
judgements. Upon completion of such limited agreed procedures, L.E.K.
estimated an independent range of fair values of those investments subjected
to the limited procedures. In making its determination of fair value Syncona
considered the review as one of multiple inputs. The limited procedures were
undertaken within the agreed scope and limited by the information reviewed
which did not involve an audit, review, compilation or any other form of
verification, examination or attestation under generally accepted auditing
standards and was based on the review of multiple defined sources. SIML is
responsible for determining the fair value of the investments, and the agreed
limited procedures in the review performed to assist Syncona in its
determination are only one element of, and are supplementary to, the inquiries
and procedures that SIML is required to undertake to determine the fair value
of the said investments for which Management is ultimately responsible.
Key sources of estimation uncertainty
The Group's investments consist of its investments in the Holding Company and
the Partnership, both of which are classified at fair value through profit or
loss and are valued accordingly, as disclosed in note 2.
The key sources of estimation uncertainty are the valuation of the Holding
Company's investments in privately held life science companies, the
Partnership's private equity investments and investment in the CRT Pioneer
Fund, and the valuation of the share based payment liability.
The unquoted investments within the life science portfolio are very illiquid.
Many of the companies are early stage investments and privately owned.
Accordingly, a market value can be difficult to determine. The primary inputs
used by the Company to determine the fair value of investments in privately
held life science companies are the cost of the capital invested and PRI,
adjusted to reflect the achievement or otherwise of milestones or other
factors. The accounting policy for all investments is described in note 2 and
the fair value of all investments is described in note 19.
In determining a suitable range to sensitise the fair value of the unlisted
life science portfolio, Management note the progress towards and achievement
of core milestones as well as underlying company indicators being a key source
of estimation uncertainty. Such activities and resulting data emanating from
the life science companies can be the key trigger for fair value changes and
typically involve financing events which crystallise value at those points in
time. The range of +/-12% (31 March 2023: +/-10%) identified by Management
reflects their estimate of the range of reasonably possible valuations over
the next financial year, taking into account the position of the portfolio as
a whole. Key technical milestones considered by Management and that typically
trigger value enhancement (or deterioration if not achieved) include the
generation of substantial clinical data.
As at the year end, none (31 March 2023: none) of the Partnership's underlying
investments have imposed restrictions on redemptions. However, underlying
managers often have the right to impose such restrictions.
The Directors believe it remains appropriate to estimate their fair values
based on NAV as reported by the administrators of the relevant investments.
Where investments held by the Partnership can be subscribed to, the Directors
believe that such NAV represents fair value because subscriptions and
redemptions in the underlying investments occur at these prices at the
Consolidated Statement of Financial Position date, where permitted.
4. INVESTMENT IN SUBSIDIARIES AND ASSOCIATES
The Company meets the definition of an investment entity in accordance with
IFRS 10. Therefore, with the exception of the General Partner, the Company
does not consolidate its subsidiaries and indirect associates, but rather
recognises them as financial assets at fair value through profit or loss.
Direct interests in subsidiaries
Subsidiary Principal place Principal activity 2024 2023
of business % interest((1)) % interest((1))
Syncona GP Limited Guernsey General Partner 100% 100%
Syncona Holdings Limited Guernsey Portfolio management 100% 100%
Syncona Investments LP Incorporated Guernsey Portfolio management 100% 100%
((1) ) Based on undiluted issued share capital and excluding the MES issued
by Syncona Holdings Limited (see note 12).
There are no significant restrictions on the ability of subsidiaries to
transfer funds to the Company.
Indirect interests in subsidiaries and associates
Indirect subsidiaries Principal place Immediate parent Principal activity 2024
of business % interest((1))
Syncona Discovery Limited UK Syncona Investments LP Inc Portfolio management 100%
Syncona Portfolio Limited Guernsey Syncona Holdings Limited Portfolio management 100%
Syncona IP Holdco Limited UK Syncona Portfolio Limited Portfolio management 100%
Syncona IP Holdco (2) Limited UK Syncona Portfolio Limited Portfolio management 100%
Syncona IP Holdco (3) Limited UK Syncona Portfolio Limited Portfolio management 100%
Syncona Investment Management Limited UK Syncona Holdings Limited Portfolio management 100%
SIML Switzerland AG Switzerland SIML Portfolio management 100%
Bidco 1354 Limited ((2)) UK Syncona Portfolio Limited Gene therapy 99%
Forcefield Therapeutics Limited UK Syncona Portfolio Limited Biologics 94%
Resolution Therapeutics Limited UK Syncona Portfolio Limited Cell therapy 83%
Purespring Therapeutics Limited UK Syncona Portfolio Limited Gene therapy 81%
Beacon Therapeutics Holdings Limited UK Syncona Portfolio Limited Gene therapy 77%
Kesmalea Therapeutics Limited UK Syncona Portfolio Limited Small molecules 59%
Mosaic Therapeutics Limited UK Syncona Portfolio Limited Small molecules 51%
Indirect associates Principal place Immediate parent Principal activity 2024
of business % interest((1))
Quell Therapeutics Limited UK Syncona Portfolio Limited Cell therapy 38%
Anaveon AG Switzerland Syncona Portfolio Limited Biologics 37%
OMass Therapeutics Limited UK Syncona Portfolio Limited Small molecules 37%
Azeria Therapeutics Limited UK Syncona Portfolio Limited In voluntary liquidation 34%
Achilles Therapeutics plc UK Syncona Portfolio Limited Cell therapy 27%
Clade Therapeutics Inc United States Syncona Portfolio Limited Cell therapy 22%
iOnctura B.V. Netherlands Syncona Portfolio Limited Biologics 20%
Indirect subsidiaries Principal place Immediate parent Principal activity 2023
of business % interest((1))
Syncona Discovery Limited UK Syncona Investments LP Inc Portfolio management 100%
Syncona Portfolio Limited Guernsey Syncona Holdings Limited Portfolio management 100%
Syncona IP Holdco Limited UK Syncona Portfolio Limited Portfolio management 100%
Syncona IP Holdco (2) Limited UK Syncona Portfolio Limited Portfolio management 100%
Syncona Investment Management Limited UK Syncona Holdings Limited Portfolio management 100%
SIML Switzerland AG Switzerland SIML Portfolio management 100%
Resolution Therapeutics Limited UK Syncona Portfolio Limited Cell therapy 85%
SwanBio Therapeutics Limited United States Syncona Portfolio Limited Gene therapy 82%
Purespring Therapeutics Limited UK Syncona Portfolio Limited Gene therapy 81%
Forcefield Therapeutics Limited UK Syncona Portfolio Limited Biologics 76%
Beacon Therapeutics Holdings Limited UK Syncona Portfolio Limited Gene therapy 70%
Freeline Therapeutics Holdings plc UK Syncona Portfolio Limited Gene therapy 58%
Mosaic Therapeutics Limited UK Syncona Portfolio Limited Small molecules 51%
Indirect associates Principal place Immediate parent Principal activity 2023
of business % interest((1))
Anaveon AG Switzerland Syncona Portfolio Limited Biologics 46%
Quell Therapeutics Limited UK Syncona Portfolio Limited Cell therapy 44%
Kesmalea Therapeutics Limited UK Syncona Portfolio Limited Small molecules 41%
OMass Therapeutics Limited UK Syncona Portfolio Limited Small molecules 35%
Azeria Therapeutics Limited UK Syncona Portfolio Limited In voluntary liquidation 34%
Achilles Therapeutics plc UK Syncona Portfolio Limited Cell therapy 27%
Clade Therapeutics Inc United States Syncona Portfolio Limited Cell therapy 17%
((1) ) Based on undiluted issued share capital and excluding the MES issued
by Syncona Holdings Limited (see note 12).
((2) ) Has subsequently been renamed Spur Therapeutics Limited.
5. TAXATION
The Company and the General Partner are exempt from taxation in Guernsey under
the provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989
and have both paid an annual exemption fee of £1,600 (31 March 2023:
£1,200).
The General Partner is incorporated and a tax resident in Guernsey, its
corporate affairs being managed solely in Guernsey. Having regard to the
non-UK tax residence of the General Partner and the Company, and on the basis
that the Partnership is treated as transparent for UK and Guernsey tax
purposes and that the Partnership's business is an investment business and not
a trade, no UK tax will be payable on either the General Partner's or the
Company's shares of Partnership profit (save to the extent of any UK
withholding tax on certain types of UK income such as interest).
Some of the Group's underlying investments may be liable to tax, although the
tax impact is not expected to be material to the Group, and is included in the
fair value of the Group's investments.
6. INCOME
The Group's income relates to distributions from the Partnership which are
used for paying costs and dividends of the Group.
During the year, distribution income from the Partnership amounted to
£49,137,740 (31 March 2023: £27,494,517) of which £4,353,307 (31 March
2023: £4,633,973) remained receivable as at 31 March 2024. The receivable
reflects the charitable donations of the Group. Refer to note 8.
7. NET GAINS/(LOSSES) ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The net gains/(losses) on financial assets at fair value through profit or
loss arise from the Group's holdings in the Holding Company and Partnership.
Note 2024 2023
£'000 £'000
Net gains/(losses) from:
The Holding Company 7.a 893 (62,636)
The Partnership 7.b (19,282) (4,650)
Total (18,389) (67,286)
7.a Movements in the Holding Company:
2024 2023
£'000 £'000
Expenses (98) (97)
Movement in unrealised gains/(losses) on life science investments at fair 991 (62,539)
value through profit or loss
Net gains/(losses) on financial assets at fair value through profit or loss 893 (62,636)
7.b Movements in the Partnership:
2024 2023
£'000 £'000
Investment income 771 106
Rebates and donations (164) 81
Other income 41 -
Expenses (406) (342)
Realised gains on financial assets at fair value through profit or loss 8,775 13,933
Movement in unrealised gains on financial assets at fair value through profit 16,876 6,049
or loss
Gains on foreign currency 3,962 3,018
Gains on financial assets at fair value through profit or loss 29,855 22,845
Distributions (49,137) (27,495)
Net losses on financial assets at fair value through profit or loss (19,282) (4,650)
8. CHARITABLE DONATIONS
For the year ended 31 March 2024, the Group has agreed to make a charitable
donation to The Syncona Foundation of 0.35% of the total NAV of the Group
calculated on a monthly basis (31 March 2023: 0.35%). The donation is made by
the General Partner.
During the year, charitable donations expense amounted to £4,353,307 (31
March 2023: £4,633,973) of which £4,353,307 (31 March 2023: £4,633,973)
remained payable as at 31 March 2024. Refer to note 13.
9. GENERAL EXPENSES
Notes 2024 2023
£'000 £'000
Share based payments provision 12 2,972 (2,968)
Investment management fees 16 16,645 12,121
Directors' remuneration 16 506 499
Auditor's remuneration 290 183
Other expenses 2,195 1,758
Total 22,608 11,593
Auditor's remuneration includes audit fees in relation to the Group of
£168,650 (31 March 2023: £132,900). Total audit fees paid by the Group and
the Syncona Group Companies for the year ended 31 March 2024 totalled
£322,000 (31 March 2023: £134,900). Additional fees paid to the auditor were
£50,620 (31 March 2023: £44,200) which relates to work performed at the
interim review of £40,600 (31 March 2023: £36,200) and other non-audit fees
of £10,020 (31 March 2023: £8,000) which relates to regulatory compliance
reporting for the Investment Manager and a subscription fee to the auditor's
accounting research tool.
Further details of the share based payments provision can be found in note 12.
10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Notes 2024 2023
£'000 £'000
The Holding Company 10.a 922,680 919,958
The Partnership 10.b 319,018 338,300
Total 1,241,698 1,258,258
The Holding Company and the Partnership are the only two investments held
directly by the Group and as such the reconciliation of movement in
investments has been presented separately for each below.
10.a The net assets of the Holding Company
2024 2023
£'000 £'000
Cost of the Holding Company's investment at the start of the year 494,810 494,810
Purchases during the year - -
Cost of the Holding Company's investments at the end of the year 494,810 494,810
Net unrealised gains on investments at the end of the year 432,577 429,757
Fair value of the Holding Company's investments at the end of the year 927,387 924,567
Other net current liabilities (4,707) (4,609)
Financial assets at fair value through profit or loss at the end of the year 922,680 919,958
10.b The net assets of the Partnership
2024 2023
£'000 £'000
Cost of the Partnership's investments at the start of the year 597,753 334,834
Purchases during the year 542,413 1,848,806
Sales during the year (755,229) (1,575,336)
Return of capital (6,290) (10,551)
Cost of the Partnership's investments at the end of the year 378,647 597,753
Net unrealised gains on investments at the end of the year 39,072 22,196
Fair value of the Partnership's investments at the end of the year 417,719 619,949
Cash and cash equivalents 89,576 67,190
Other net current liabilities (188,277) (348,839)
Financial assets at fair value through profit or loss at the end of the year 319,018 338,300
11. TRADE AND OTHER RECEIVABLES
Notes 2024 2023
£'000 £'000
Due from related parties 16 4,720 5,457
Charitable donation receivable 16 4,353 4,618
Prepayments 65 68
Total 9,138 10,143
12. SHARE BASED PAYMENTS PROVISION
Share based payments are associated with awards of MES in the Holding Company,
relevant details of which are set out in note 2.
The total cost recognised within general expenses in the Consolidated
Statement of Comprehensive Income is shown below:
2024 2023
£'000 £'000
Charge/(credit) related to revaluation of the liability for cash settled share 2,972 (2,968)
awards
Total 2,972 (2,968)
Other movements in the provision relating to realisations and granting of
awards totalled £5,647,140 (31 March 2023: £7,583,660). Amounts recognised
in the Consolidated Statement of Financial Position, representing the carrying
amount of liabilities arising from share based payments transactions are shown
below:
2024 2023
£'000 £'000
Share based payments provision - current 1,760 7,296
Share based payments provision - non-current 2,861 -
Total 4,621 7,296
When a participant elects to realise vested MES by sale of the MES to the
Company, half of the proceeds (net of anticipated taxes) will be settled in
shares of the Company, with the balance settled in cash.
The fair value of the MES is established using an externally developed model
as set out in note 2. Vesting is subject only to the condition that employees
must remain in employment at the vesting date. Each MES is entitled to share
equally in value attributable to the Holding Company above the applicable base
line value at the date of award, provided that the applicable hurdle value of
15% or 30% growth in the value of the Holding Company above the base line
value at the date of award has been achieved.
The fair value of awards made in the year ended 31 March 2024 was £757,576
(31 March 2023: £2,529,130). This represents 6,859,411 new MES issued (31
March 2023: 9,367,155). Awards were made on 13 July 2023 and 18 December 2023
at 11p and 14p per MES respectively.
The number of MES outstanding are shown below:
2024 2023
Outstanding at the start of the year 43,871,228 42,282,122
Issued 6,859,411 9,367,155
Realised (6,700,688) (7,762,846)
Lapsed (3,835,892) (15,203)
Outstanding at the end of the year 40,194,059 43,871,228
Weighted average remaining contractual life of outstanding MES, years 1.15 1.29
Vested MES as at the year end 30,085,530 29,523,421
Realisable MES as at the year end 8,997,656 12,010,048
13. ACCRUED EXPENSE AND PAYABLES
2024 2023
£'000 £'000
Charitable donations payable 16 4,353 4,634
Management fees accrued 2,222 1,374
Other payables 1,023 453
Total 7,598 6,461
14. SHARE CAPITAL
14.a Authorised Share Capital
The Company is authorised to issue an unlimited number of shares, which may
have a par value or no par value. The Company is a closed-ended investment
company with an unlimited life.
As the Company's shares have no par value, the share price consists solely of
share premium and the amounts received for issued shares are recorded in share
capital in accordance with The Companies (Guernsey) Law, 2008.
2024 2023
£'000 £'000
Authorised Share Capital
Balance at the start of the year 767,999 767,999
Balance at the end of the year 767,999 767,999
2024 2023
Shares Shares
Outstanding Ordinary Share Capital
Balance at the start of the year 669,329,324 666,733,588
Share based payment shares issued during the year 2,477,342 2,595,736
Treasury shares purchased by the Company (16,471,080) -
Balance at the end of the year 655,335,586 669,329,324
At 31 March 2024, 280,000 Ordinary Shares had no voting rights attached and
were entered into treasury by the close of 3 April 2024. Resulting in the
total Ordinary Shares available for trade on an open market being 655,335,586.
During the year the associated cost of purchasing the treasury shares totalled
£20,223,241.
The Company has issued one Deferred Share to The Syncona Foundation for £1.
14.b Capital and Revenue Reserves
Gains and losses recorded on the realisation of investments, realised exchange
differences, unrealised gains and losses recorded on the revaluation of
investments held as at the year end and unrealised exchange differences of a
capital nature are transferred to capital reserves. Income and expenses of a
revenue nature are transferred to revenue reserves.
14.c Earnings/(loss) per share
The calculations for the (loss)/earnings per share attributable to the
Ordinary Shares of the Company excluding Ordinary Shares purchased by the
Company and held as treasury shares are based on the following data:
2024 2023
Earnings/(loss) for the purposes of earnings per share £3,788,000 £(56,018,000)
Basic weighted average number of shares 656,371,037 668,575,494
Basic revenue earnings per share 3.33p 1.69p
Basic capital loss per share (2.76)p (10.07)p
Basic earnings/(loss) per share 0.57p (8.38)p
Diluted weighted average number of shares 666,854,451 668,575,494
Diluted revenue earnings per shares 3.33p 1.69p
Diluted capital loss per share (2.76)p (10.07)p
Diluted earnings/(loss) per share 0.57p (8.38)p
2024 2023
Issued share capital at the start of the year 669,329,324 666,733,588
Weighted effect of share issues and purchases
Share based payments 1,732,786 1,841,906
Potential share based payment share issues 1,035,451 3,487,581
Treasury shares (4,207,658) -
Diluted weighted average number of shares 667,889,903 672,063,075
14.d NAV per share
2024 2023
Net assets for the purposes of NAV per share £1,238,878,132 £1,254,654,716
Ordinary Shares available to trade 655,335,586 669,329,324
NAV per share 189.04p 187.40p
Diluted number of shares 656,371,037 672,816,905
Diluted NAV per share 188.74p 186.50p
As at 31 March 2024, if all MES were realised, the number of shares issued in
the Company as a result would increase by 1,035,451 (31 March 2023:
3,487,581). The undiluted per share value of net assets attributable to
holders of Ordinary Shares would move from £1.89 to £1.89 (31 March 2023:
£1.87 to £1.86) if these shares were issued.
15. DISTRIBUTION TO SHAREHOLDERS
The Company may pay a dividend at the discretion of the Directors.
During the year ended 31 March 2024, the Company did not declare or pay a
dividend (31 March 2023: £Nil was paid in relation to the year ended 31 March
2022). The Directors believe that it is not appropriate for the Company to pay
a dividend.
The Company is not declaring a 2024 dividend.
16. RELATED PARTY TRANSACTIONS
The Group has various related parties: life science investments held by the
Holding Company, the Investment Manager, the Company's Directors and The
Syncona Foundation.
Life science investments
The Group makes equity investments in some life science investments where it
retains control. The Group has taken advantage of the investment entity
exception as permitted by IFRS 10 and has not consolidated these investments,
but does consider them to be related parties.
During the year, the total amount invested in life science investments which
the Group controls was £131,996,869 (31 March 2023: £127,143,441).
The Group makes other equity investments where it does not have control but
may have significant influence through its ability to participate in the
financial and operating policies of these companies, therefore the Group
considers them to be related parties. These amounts are unsecured, interest
free, and repayable on demand.
During the year, the total amount invested in life science investments in
which the Group has significant influence was £38,276,591 (31 March 2023:
£25,404,894).
Commitments of milestone payments to the life science investments are
disclosed in note 20.
During the year, SIML charged the life science investments a total of
£268,012 in relation to Directors' fees (31 March 2023: £215,094).
Investment Manager
SIML, an indirectly held subsidiary of the Company, is the Investment Manager
of the Group.
For the year ended 31 March 2024, SIML was entitled to receive reimbursement
of reasonably incurred expenses relating to its investment management
activities.
2024 2023
£'000 £'000
Amounts paid to SIML 16,645 12,121
Amounts owed to SIML in respect of management fees totalled £2,222,128 as at
31 March 2024 (31 March 2023: £1,374,098).
During the year, SIML received fees from the Group's portfolio companies of
£1,290,464 (31 March 2023: £864,632).
Company Directors
As at the year end, the Company had seven Directors, all of whom served in a
non-executive capacity. Rob Hutchinson also serves as a Director of the
General Partner.
Directors' remuneration for the years ended 31 March 2024 and 31 March 2023,
excluding expenses incurred, and outstanding Directors' remuneration as at the
end of the year, are set out below:
2024 2023
£'000 £'000
Directors' remuneration for the year 506 499
Payable at the end of the year - -
Shares held by the Directors can be found in the Report of the Remuneration
Committee. The Directors of Syncona Limited together hold 0.04% (31 March
2023: 0.04%) of the Syncona Limited voting shares.
The Syncona Foundation
Charitable donations are made by the Company to The Syncona Foundation. The
Syncona Foundation was incorporated in England and Wales on 17 May 2012 as a
private company limited by guarantee, with exclusively charitable purposes and
holds the Deferred Share in the Company. The amount donated to The Syncona
Foundation during the year ended 31 March 2024 was £4,621,843 (31 March
2023: £2,428,478).
Other related parties
As at 31 March 2024, the Company has a receivable from the Partnership,
Holding Company and Syncona Portfolio Limited amounting to £1,500 (31 March
2023: £15,438), £4,716,678 (31 March 2023: £5,426,437) and £1,500 (31
March 2023: £15,438), respectively.
17. FINANCIAL INSTRUMENTS
In accordance with its investment objectives and policies, the Group holds
financial instruments which at any one time may comprise the following:
- securities and investments held in accordance with the investment
objectives and policies;
- cash and short-term receivables and payables arising directly from
operations; and
- derivative instruments including forward currency contracts.
The financial instruments held by the Group are comprised principally of the
investments in the Holding Company and the Partnership.
Details of the Group's significant accounting policies and methods adopted,
including the criteria for recognition, the basis of measurement and the basis
on which income and expenses are recognised, in respect of its financial
assets and liabilities are disclosed in note 2.
2024 2023
£'000 £'000
Financial assets at fair value through profit or loss
The Holding Company 922,680 919,958
The Partnership 319,018 338,300
Total financial assets at fair value through profit or loss 1,241,698 1,258,258
Financial assets measured at amortised cost
Cash and cash equivalents 261 11
Other financial assets 9,138 10,143
Total financial assets measured at amortised cost 9,399 10,154
Financial liabilities at fair value through profit or loss
Provision for share based payments (4,621) (7,296)
Total financial liabilities at fair value through profit or loss (4,621) (7,296)
Financial liabilities measured at amortised cost
Other financial liabilities (7,598) (6,461)
Total financial liabilities measured at amortised cost (7,598) (6,461)
Net financial assets 1,238,878 1,254,655
The financial instruments held by the Group's underlying investments are
comprised principally of life science investments, hedge, equity, credit,
long-term alternative investment funds, short-term UK and US treasury bills
and cash.
The table below analyses the carrying amounts of the financial assets and
liabilities held by the Holding Company by category as defined in IFRS 9 (see
note 2).
2024 2023
£'000 £'000
Financial assets at fair value through profit or loss
Investment in subsidiaries 927,387 924,567
Total financial assets at fair value through profit or loss 927,387 924,567
Financial assets measured at amortised cost((1))
Current assets 39 847
Financial liabilities measured at amortised cost((1))
Current liabilities (4,746) (5,456)
Net financial assets of the Holding Company 922,680 919,958
The table below analyses the carrying amounts of the financial assets and
liabilities held by the Partnership by category as defined in IFRS 9.
2024 2023
£'000 £'000
Financial assets at fair value through profit or loss
Listed investments 275,388 445,141
Unlisted investments 99,278 134,422
Investment in subsidiaries 43,053 40,386
Total financial assets at fair value through profit or loss 417,719 619,949
Financial assets measured at amortised cost((1))
Current assets 92,053 67,973
Financial liabilities measured at amortised cost((1))
Current liabilities (190,754) (349,622)
Net financial assets of the Partnership 319,018 338,300
((1)) Has a fair value which does not materially differ to amortised cost
Capital risk management
The Group's objectives when managing capital include the safeguarding of the
Group's ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The Group does not have externally-imposed capital requirements.
The Group may incur indebtedness for the purpose of financing share
repurchases or redemptions, making investments (including as bridge finance
for investment obligations), satisfying working capital requirements or to
assist in payment of the charitable donation, up to a maximum of 20% of the
NAV at the point of obtaining debt. The Group may utilise gearing for
investment purposes if, at the time of incurrence, it considers it prudent and
desirable to do so in light of prevailing market conditions. There is no
limitation on indebtedness being incurred at the level of the underlying
investments.
18. FINANCIAL RISK MANAGEMENT AND ASSOCIATED RISKS
Financial risk management
The Group is exposed to a variety of financial risks as a result of its
activities. These risks include market risk (including market price risk,
foreign currency risk and interest rate risk), credit risk and liquidity risk.
These risks have existed throughout the year and the Group's policies for
managing them are summarised below.
The risks below do not reflect the risks of the underlying investment
portfolios of certain of the financial assets at fair value through profit or
loss. The Group has significant indirect exposure to a number of risks through
the underlying portfolios of the investment entities. There is no mechanism to
control these risks without considerably prejudicing return objectives.
Due to the lack of transparency in certain underlying assets, in particular
certain of those held by the Partnership, it is not possible to quantify or
hedge the impact of these risks on the portfolio as each investment entity may
have complex and changing risk dynamics that are not easily observable or
predictable. These risks will include interest, foreign exchange and other
market risks which are magnified by gearing in some, not many, cases,
resulting in increased liquidity and return risk.
Syncona Limited
Syncona Limited is exposed to financial risks through its investments in the
Holding Company and the Partnership. The risks and policies for managing them
are set out in the following sections.
The Holding Company
Market price risk
The Holding Company invests in early-stage life science companies that
typically have limited products in development, and any problems encountered
in development may have a damaging effect on that company's business and the
value of the investment.
This is mitigated by the employment of highly experienced personnel, the
performance of extensive due diligence prior to investment and ongoing
performance monitoring.
Foreign currency risk
Foreign currency risk represents the potential losses or gains on the life
science investments future income streams and the potential losses or gains on
investments made in United States Dollars (USD), Swiss Francs (CHF) and Euro
(EUR) by the Holding Company's underlying investments.
The following tables present the Holding Company's assets and liabilities in
their respective currencies, converted into the Group's functional currency.
CHF EUR USD GBP 2024
Total
£'000 £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss 35,713 25,646 323,624 542,404 927,387
Cash and cash equivalents - - - 39 39
Accrued expense and payables((1)) - - - (4,746) (4,746)
Total 35,713 25,646 323,624 537,697 922,680
CHF EUR USD GBP 2023
Total
£'000 £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss 64,203 - 310,625 549,739 924,567
Cash and cash equivalents - - - 847 847
Accrued expense and payables ((1)) - - - (5,456) (5,456)
Total 64,203 - 310,625 545,130 919,958
((1)) In which 99.49% (31 March 2023: 99.44%) is payable within the Group.
Foreign currency sensitivity analysis
The following table details the sensitivity of the Holding Company's NAV to a
10% change in the USD, CHF and EUR exchange rate against the GBP currency with
all other variables held constant. The sensitivity analysis percentage
represents the Investment Manager's assessment, based on the foreign exchange
rate movements over the relevant period and of a reasonably possible change in
foreign exchange rates.
2024 2024 2024 2023 2023 2023
CHF EUR USD CHF EUR USD
£'000 £'000 £'000 £'000 £'000 £'000
10% increase 3,572 2,565 32,362 7,134 - 41,490
10% decrease (3,572) (2,565) (32,362) (5,837) - (33,946)
Interest rate risk
Interest rate risk is negligible in the Holding Company as minimal cash and no
debt are held.
Liquidity risk
Liquidity risk is the risk that the financial commitments made by the Holding
Company are not able to be met as they fall due. The Holding Company holds
minimal cash and has no access to debt and instead relies on liquidity from
the Partnership. The liquidity risk associated with the Partnership is set out
in the Partnership section below.
The table below details the Holding Company's liquidity analysis for its
financial assets and liabilities.
<12 months >12 months 2024
Total
£'000 £'000 £'000
Financial assets at fair value through profit or loss - 927,387 927,387
Cash and cash equivalents 39 - 39
Accrued expense and payables (4,746) - (4,746)
Total (4,707) 927,387 922,680
Percentage (0.5)% 100.5% 100.00%
<12 months >12 months 2023
Total
£'000 £'000 £'000
Financial assets at fair value through profit or loss - 924,567 924,567
Cash and cash equivalents 847 - 847
Accrued expense and payables (35) (5,421) (5,456)
Total 812 919,146 919,958
Percentage 0.1% 99.9% 100.00%
The Partnership
Market price risk
The overall market price risk management of each of the fund holdings of the
Partnership is primarily driven by their respective investment objectives. The
Partnership's assets include investments in multi-asset funds and segregated
portfolios which are actively managed by appointed investment managers with
specific objectives to manage market risk. The Investment Manager assesses the
risk in the Partnership's fund portfolio by monitoring exposures, liquidity,
and concentrations of the underlying funds' investments, in the context of the
historic and current volatility of their asset classes, and the Investment
Manager's risk appetite. The maximum risk resulting from financial instruments
is generally determined by the fair value of underlying funds. The overall
market exposure as at 31 March 2024 and 31 March 2023 is shown in the
Consolidated Statement of Financial Position.
The financial instruments are sensitive to market price risk; any increase or
decrease in market price will have an equivalent effect on the market value of
the financial instruments.
Foreign currency risk
Foreign currency risk represents the potential losses or gains the Partnership
may suffer through holding foreign currency assets in the face of foreign
exchange movements. The Partnership's treatment of currency transactions is
set out in note 2 to the Consolidated Financial Statements under "Translation
of foreign currency" and "Forward currency contracts". Currency risk exists in
the underlying investments, the analysis of which is not feasible.
The investments of the Partnership are denominated in USD, EUR, and GBP. The
Partnership's functional and presentation currency is £; hence, the
Consolidated Statement of Financial Position may be significantly affected by
movements in the exchange rates between the foreign currencies previously
mentioned. The Investment Manager may manage exposure to EUR and USD movements
by using forward currency contracts to hedge exposure to investments in EUR
and USD-denominated share classes.
The following tables present the Partnership's assets and liabilities in their
respective currencies, converted into the Group's functional currency.
2024
USD EUR GBP Total
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss 61,407 12,130 344,182 417,719
Cash and cash equivalents 23,522 15 66,039 89,576
Trade and other receivables 614 1,861 2 2,477
Accrued expense and payables((1)) (170,696) - (15,705) (186,401)
Distributions payable - - (4,353) (4,353)
Total (85,153) 14,006 390,165 319,018
2023
USD EUR GBP Total
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss 123,311 18,565 478,073 619,949
Cash and cash equivalents 40,519 27 26,644 67,190
Trade and other receivables 1 - 782 783
Accrued expense and payables ((1)) (249,160) - (95,825) (344,985)
Distributions payable - - (4,637) (4,637)
Total (85,329) 18,592 405,037 338,300
((1)) In which 91.58% (31 March 2023: 99.97%) is payable within the Group.
Foreign currency sensitivity analysis
The following table details the sensitivity of the Partnership's NAV to a 10%
(31 March 2023: 10%) change in the GBP exchange rate against the USD and EUR
with all other variables held constant. The sensitivity analysis percentage
represents the Investment Manager's assessment, based on the foreign exchange
rate movements over the relevant period and of a reasonably possible change in
foreign exchange rates.
2024 2024 2023 2023
USD EUR USD EUR
£'000 £'000 £'000 £'000
10% increase (8,515) (1,401) (8,534) 1,592
10% decrease 8,515 1,401 8,534 (1,592)
Interest rate risk
Interest receivable on bank deposits or payable on bank overdrafts is affected
by fluctuations in interest rates, however the effect is not expected to be
material. All cash balances receive interest at variable rates. Interest rate
risk may exist in the Partnership's underlying investments, the analysis of
which is impractical due to the lack of visibility over the underlying
information required to perform this analysis within the Partnership's
investments.
Credit risk
Credit risk in relation to listed securities transactions awaiting settlement
is managed through the rules and procedures of the relevant stock exchanges.
In particular, settlements for transactions in listed securities are affected
by the credit risk of the Citco Custody (UK) Limited (the "Custodian") which
acts as the custodian of the Partnership's assets, on a delivery against
payment or receipt against payment basis. Transactions in unlisted securities
are affected against binding subscription agreements. Credit risk may exist in
the Partnership's underlying fund investments, the analysis of which is
impractical due to the lack of visibility over the underlying information
required to perform this analysis within the Partnership's investments.
The Partnership invests in short-term UK and US treasury bills and considers
the associated credit risk to be negligible. The Partnership's financial
assets are 40.0% (31 March 2023: 46.5%) short-term treasury bills.
The principal credit risks for the Partnership are in relation to deposits
with banks. The securities held by the Custodian are held in trust and are
registered in the name of the Partnership. Citco is "non-rated", however, the
Investment Manager takes comfort over the credit risk of Citco as they have
proven to rank amongst the "Best in class" and "Top rated" in the recognised
industry survey carrying a global presence and over 40 years of experience in
the provision of custodian and other services to their clients and the hedge
fund industry. The credit risk associated with debtors is limited to trade and
other receivables.
The Group's cash and cash equivalents are held with major financial
institutions; the two largest ones hold 67% and 32% respectively (31 March
2023: 79% and 20% respectively).
Liquidity risk
The Partnership is exposed to the possibility that it may be unable to
liquidate certain of its assets as it otherwise deems advisable as the
Partnership's underlying funds or their managers may require minimum holding
periods and restrictions on redemptions. Further, there may be suspension or
delays in payment of redemption proceeds by underlying funds or holdbacks of
redemption proceeds otherwise payable to the Partnership until after the
applicable underlying fund's financial records have been audited. Therefore,
the Partnership may hold receivables that may not be received by the
Partnership for a significant period of time, may not accrue any interest and
ultimately may not be paid to the Partnership. As at 31 March 2024, no (31
March 2023: Nil) suspension from redemptions existed in any of the
Partnership's underlying investments.
The Partnership invests in short-term UK and US treasury bills, daily traded
money market funds and daily traded credit funds and considers the associated
liquidity risk to be negligible. The Partnership's financial assets are 40.0%
(31 March 2023: 46.5%) short-term UK and US treasury bills, 23.6% (31 March
2023: 16.6%) daily traded credit funds and 12.6% (31 March 2023: Nil) daily
traded Money Market Funds.
The table below details the Partnership's liquidity analysis for its financial
assets and liabilities. The table has been drawn up based on the undiscounted
net cash flows on the financial assets and liabilities that settle on a net
basis and the undiscounted gross cash flows on those financial assets and
liabilities that require gross settlement.
Within 1 >1 to 3 >3 to 12 >12 months 2024((1))
month months months Total
£'000 £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss 232,186 113,702 2,368 69,463 417,719
Cash and cash equivalents 89,576 - - - 89,576
Trade and other receivables 2,477 - - - 2,477
Accrued expense and payables (186,401) - - - (186,401)
Distributions payable - (4,353) - - (4,353)
Total 137,838 109,349 2,368 69,463 319,018
Percentage 43.2% 34.3% 0.7% 21.8% 100.0%
Within 1 >1 to 3 >3 to 12 >12 months 2023((1))
month months months Total
£'000 £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss 320,284 166,425 59,853 73,387 619,949
Cash and cash equivalents 67,190 - - - 67,190
Trade and other receivables 783 - - - 783
Accrued expense and payables (344,985) - - - (344,985)
Distributions payable - (4,637) - - (4,637)
Total 43,272 161,788 59,853 73,387 338,300
Percentage 12.8% 47.8% 17.7% 21.7% 100.0%
((1)) The liquidity tables within this note reflect the anticipated cash flows
assuming notice was given to all underlying investments as at 31 March 2024
and 31 March 2023 and that all UK and US treasury bills are held to maturity.
They include a provision for "audit hold back" which most hedge funds can
apply to full redemptions and any other known restrictions the managers of the
underlying funds may have placed on redemptions. Where there is currently no
firm indication from the underlying manager on the expected timing of the
receipt of redemption proceeds, the relevant amount is included in the ">12
months" category. The liquidity tables are therefore conservative estimates.
19. FAIR VALUE MEASUREMENT
IFRS 13 "Fair Value Measurement" requires the Group to establish a fair value
hierarchy that prioritises the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3
measurements). The three levels of the fair value hierarchy under IFRS 13 are
set as follows:
- Level 1 Quoted prices (unadjusted) in active markets for identical
assets or liabilities;
- Level 2 Inputs other than quoted prices included within Level 1
that are observable for the asset or liability either directly (that is, as
prices) or indirectly (that is, derived from prices) or other market
corroborated inputs; and
- Level 3 Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. For this purpose, the
significance of an input is assessed against the fair value measurement in its
entirety. If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that measurement is a
Level 3 measurement. Assessing the significance of a particular input to the
fair value measurement requires judgement, considering factors specific to the
asset or liability.
The determination of what constitutes "observable" requires significant
judgement by the Group. The Group considers observable data to be market data
that is readily available, regularly distributed or updated, reliable and
verifiable, and provided by independent sources that are actively involved in
the relevant market.
The following table presents the Group's financial assets by level within the
valuation hierarchy as at 31 March 2024 and 31 March 2023:
2024
Level 1 Level 2 Level 3 Total
Assets £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss:
The Holding Company - - 922,680 922,680
The Partnership - - 319,018 319,018
Total assets - - 1,241,698 1,241,698
2023
Level 1 Level 2 Level 3 Total
Assets £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss:
The Holding Company - - 919,958 919,958
The Partnership - - 338,300 338,300
Total assets - - 1,258,258 1,258,258
The investments in the Holding Company and the Partnership are classified as
Level 3 investments due to the use of the adjusted NAV of the subsidiaries as
a proxy for fair value, as detailed in note 2. The subsidiaries hold some
investments valued using techniques with significant unobservable inputs as
outlined in the sections that follow.
The underlying assets of the Holding Company and the Partnership are shown
below.
The following table presents the Holding Company's financial assets and
liabilities by level within the valuation hierarchy as at 31 March 2024 and 31
March 2023:
Asset type Level 31 March 2024 31 March 2023 Valuation technique Significant unobservable inputs Impact on
£'000 £'000 valuation
£'000
Listed investment 1 180,448 73,943 Publicly available share n/a n/a
bid price as at
statement of financial
position date
SIML 3 5,831 6,108 Net Assets of SIML Carrying value of assets and +/- 292
liabilities determined in accordance
with generally accepted accounting
principles, without adjustment. A
sensitivity of 5% (31 March 2023: 5%) of the NAV of SIML
is applied.
Milestone payments 3 2,248 54,516 Discounted cash flow The main unobservable inputs PoS:
consist of the assigned probability of
+/- 413
milestone success and the discount
Discount
rate: +/- 100
rate used.
A sensitivity of 5ppts (31 March 2023: 5ppts) of the respective inputs is
applied.
Deferred consideration 3 14,362 15,882 Discounted cash flow The main unobservable inputs PoS:
consist of the assigned probability of +/- 898
milestone success and the discount Discount
rate used. rate:
A sensitivity of 5ppts (31 March 2023: 5ppts) of the respective inputs is +/- 5,312
applied.
Calibrated price of 3 555,174 427,552 Calibrated PRI The main unobservable input is the +/- 66,621
quantification of the progress
recent investment
investments make against internal
financing and/or corporate
(PRI)((1))
milestones where appropriate. A
reasonable shift in the fair value of
the investment would be +/-12% (31 March 2023: +/-10%).
Cash((2)) n/a 41 294 Amortised cost ((4)) n/a n/a
(31 March 2023: Transaction price)
Other net assets((3)) n/a 169,283 346,272 Amortised cost ((4)) n/a n/a
(31 March 2023: Transaction price)
Total financial assets held at fair value through profit or loss 927,387 924,567
((1)) Valuation made by reference to price of recent funding round
unadjusted following adequate consideration of current facts and
circumstances.
((2)) Cash and other net assets held within the Holding Company are
primarily measured at amortised cost which is equivalent to their fair value.
((3)) Other net assets primarily consists of a receivable due from the
Partnership totalling £170,700,000 (31 March 2023: £344,900,000).
((4)) Amortised cost is considered equivalent to fair value.
The following table presents the movements in Level 3 investments of the
Holding Company for the year ended 31 March 2024 and 31 March 2023:
Life Milestone SIML 2024 2023
science payments Total Total
investments and deferred
consideration
£'000 £'000 £'000 £'000 £'000
Opening balance 427,552 70,398 6,108 504,058 381,286
Purchases during the year 171,256 - - 171,256 156,363
Sales during the year (1,030) - - (1,030) (15,311)
Movement from Level 1 to 12,934 - - 12,934 -
Level 3
Unrealised losses on financial assets at fair value through profit or loss (55,538) (53,788) (277) (109,603) (18,280)
Closing balance 555,174 16,610 5,831 577,615 504,058
The net unrealised loss for the year included in the Consolidated Statement of
Comprehensive Income in respect of Level 3 investments in the Holding Company
held as at the year end amounted to £109,603,000 (31 March 2023: £18,280,000
(net unrealised loss)).
During the year, there were no movements from Level 3 to Level 1 (31 March
2023: £Nil). There was one movement from Level 1 to Level 3 (31 March 2023:
Nil) relating to the delisting of Freeline Therapeutics Holdings plc from an
active market.
The following table presents the Partnership's financial assets and
liabilities by level within the valuation hierarchy as at 31 March 2024 and 31
March 2023:
Asset type Level 31 March 2024 31 March 2023 Valuation technique Significant unobservable inputs Impact on
£'000 £'000 valuation
£'000
UK and US treasury bills 1 163,373 284,960 Publicly available price as at n/a n/a
statement of financial
position date
Capital pool 2 112,015 101,566 Valuation produced n/a n/a
by fund administrator.
investment fund -
Inputs into fund
components are from
Credit funds
observable inputs
Capital pool 2 - 58,615 Valuation produced n/a n/a
by fund administrator.
investment fund -
Inputs into fund
components are from
Multi asset funds
observable inputs
Capital pool 3 70,500 101,421 Valuation produced The main unobservable input +/- 3,525
by fund administrator
investment fund -
include the assessment of the performance of the underlying assets by the fund
administrator.
Multi asset funds
A fair reasonable shift in the
fair value of the instruments would be +/-5% (31 March 2023: +/-5%)
Legacy funds - 3 28,778 33,001 Valuation produced The main unobservable input +/- 2,878
long-term unlisted
by fund administrator
include the assessment of the
investments
performance of the underlying
fund by the fund administrator.
A reasonable possible shift in the
fair value of the instruments
would be +/-10% (31 March 2023: +/-13%).
CRT Pioneer Fund 3 33,874 32,727 Valuation produced by Unobservable inputs include the +/- 10,840
fund administrator and
fund manager's assessment of
adjusted by Management
the performance of the underlying
investments and adjustments
made to this assessment to
generate the deemed fair value.
A reasonable possible shift in
the fair value of the instruments
would be +/-32% (31 March 2023: +/-36%).
Cash((1)) n/a 38,957 74,863 Amortised cost ((4)) n/a n/a
(31 March 2023: Transaction price)
Cash equivalents - money market funds((2)) n/a 59,706 - Publicly available price as at statement of financial position date n/a n/a
Other net liabilities((3)) n/a (188,184) (348,853) Amortised cost ((4)) n/a n/a
(31 March 2023: Transaction price)
Total financial assets held at fair value through profit or loss 319,018 338,300
((1)) Cash and other net liabilities held within the Partnership are
primarily measured at amortised cost which is equivalent to their fair value.
((2)) Money Market Funds are deemed as cash equivalents and valued at
amortised cost, being equivalent to their fair value.
((3)) Other net liabilities primarily consists of a payable due to Syncona
Portfolio Limited totalling £170,700,000 (31 March 2023: £344,900,000).
((4)) Amortised cost is considered equivalent to fair value.
During the year ended 31 March 2024, there were no movements from Level 1 to
Level 2 (31 March 2023: £Nil).
Assets classified as Level 2 investments are primarily underlying funds
fair-valued using the latest available NAV of each fund as reported by each
fund's administrator, which are redeemable by the Group subject to necessary
notice being given. Included within the Level 2 investments above are
investments where the redemption notice period is greater than 90 days. Other
assets within the Level 2 investments are daily traded credit funds priced
using the latest market price equivalent to their NAV. Such investments have
been classified as Level 2 because their value is based on observable inputs.
The Group's liquidity analysis is detailed in note 18.
Assets classified as Level 3 long-term unlisted investments are underlying
funds which are not traded or available for redemption. The fair value of
these assets is derived from quarterly statements provided by each fund's
administrator.
The following table presents the movements in Level 3 investments of the
Partnership for the year ended 31 March 2024:
Investment in Capital pool 2024 2023
subsidiary investment Total Total
£'000 £'000 £'000 £'000
Opening balance 40,386 134,422 174,808 71,508
Purchases - 729 729 100,352
Sales during the year - (37,000) (37,000) -
Return of capital - (6,290) (6,290) (10,551)
Unrealised gains on financial assets at fair value 2,668 7,416 10,084 13,499
Closing balance 43,054 99,277 142,331 174,808
The net unrealised gain for the year included in the Statement of
Comprehensive Income in respect of Level 3 investments of the Partnership
held as at the year end amounted to £10,084,000 (31 March 2023: £13,499,000
(unrealised gain)).
20. COMMITMENTS AND CONTINGENCIES
The Group had the following commitments as at 31 March 2024:
2024 2023
Uncalled Uncalled
commitment commitment
£'000 £'000
Life science portfolio
Milestone payments to life science companies((1)) 92,585 85,143
CRT Pioneer Fund 1,561 2,499
Capital pool investments 1,018 1,585
Total 95,164 89,227
((1)) Milestone payments to life science companies consist of financial
commitments undertaken before or at the reporting date, that are contingent
upon the achievement of the agreed investment milestones. When the agreed
investment milestones are not achieved, the decision to make partial or full
payments remains at the discretion of the Group.
There were no contingent liabilities as at 31 March 2024 (March 2023: Nil).
The commitments are expected to fall due in the next 36 months.
21. SUBSEQUENT EVENTS
As of 31 March 2024, 280,000 shares were in the process of being purchased by
the Company and therefore not available for trade. These shares were withdrawn
and held as treasury shares by the close of 3 April 2024 once the transactions
settled.
As of 19 June 2024, a further 8,655,000 shares have been purchased through the
share buyback programme.
Post period end a further £20.0m has been allocated to the share buyback
programme.
Post period end Forcefield Therapeutics Limited syndicated their Series A
financing resulting in a valuation uplift of £2.4 million. The accounts have
not been updated to reflect this.
Post period end the valuation of the quoted life science investments decreased
by £69.8 million.
These Consolidated Financial Statements were approved for issuance by the
Directors on 19 June 2024. Subsequent events have been evaluated until 19 June
2024.
GLOSSARY
AAV Management
Adeno-associated virus - a non-enveloped virus that can be engineered to
deliver DNA to target cells. The management team of Syncona Investment Management Limited.
ALL Melanoma
Acute lymphoblastic leukaemia - a cancer of the bone marrow and blood in which
A serious form of skin cancer that begins in cells known as melanocytes.
the body makes abnormal white blood cells.
MES
AMN
Management Equity Shares.
Adrenomyeloneuropathy - a progressive and debilitating neurodegenerative
disease caused by mutations in the ABCD1 gene that disrupt the function of
spinal cord cells and other tissues. Myeloma
A type of bone marrow cancer.
BLA
Biologics License Application. NAV per share
See alternative performance measures below.
B-NHL
NAV per share return
B cell non-Hodgkin's lymphoma.
See alternative performance measures below.
Capital access milestone NDA
Milestones which have the potential to enable capital access. New drug application, the vehicle through which drug sponsors formally propose
that the US FDA approve a new pharmaceutical for sale and marketing in the US.
Capital deployed/deployment
Follow-on investment in our portfolio companies and investment in new Net Asset Value, Net Assets or NAV
companies during the year. See alternative performance measures below.
Net Asset Value ("NAV") is a measure of the value of the Company, being its
assets - principally investments made in other companies and cash and cash
equivalents held - minus any liabilities.
Capital pool
Capital pool investments plus cash less other net liabilities.
Net Zero Aspiration
Following NZAM's guidance our initial focus within our portfolio will be on
Capital pool investments Scope 1 and 2 emissions and to the extent possible, material portfolio Scope 3
The underlying investments consist of cash and cash equivalents, including emissions. As data quality and associated methodologies improve for
short-term (1 and 3 month) UK treasury bills, listed fund investments and calculating Scope 3 emissions, we may evolve our approach.
legacy fixed term funds.
New molecular entity
Capital pool investments return
Structurally unique active ingredients that have never before been marketed.
See alternative performance measures below.
NSCLC
CAR T Non-small cell lung cancer - the most common form of lung cancer.
Chimeric antigen receptor T-cell therapy - a type of immunotherapy which
reprogrammes a patient's own immune cells to fight cancer.
NZAM
The Net Zero Asset Managers (NZAM) initiative is an international group of
Cell therapy asset managers who are committed to supporting the goal of net zero greenhouse
A therapy which introduces new, healthy cells into a patient's body, to gas emissions by 2050 or sooner.
replace those which are diseased or missing.
On the market
Clinical stage
A category within our NAV Growth Framework. Companies in this category are
Screened and enrolled first patient into a clinical trial. commercialising products or have revenue streams.
CLL Operational build
Chronic lymphocytic leukaemia. A category within our NAV Growth Framework. Companies in this category have a
clearly defined strategy and business plan or a leading management team
established.
CNS
Central nervous system - a part of the body's nervous system comprised of the
brain and spinal cord. Partnership
Syncona Investments LP Incorporated.
Companies Law
Companies (Guernsey) Law 2008. PCNSL
Primary central nervous system lymphoma.
Company
Syncona Limited.
PDUFA
Prescription Drug User Fee Act - the date the FDA is expected to respond by.
CRT Pioneer Fund
The Cancer Research Technologies Pioneer Fund LP. The CRT Pioneer Fund is
managed by Sixth Element Capital and invests in oncology focused assets.
Return
A Simple Rate of Return is the method used for return calculations.
D&I
Diversity and inclusion.
SBTi
Science Based Targets initiative.
Definitive data
A category within our NAV Growth Framework. Companies in this category have
significant clinical data showing a path to marketed product or are moving to SIML
pivotal trial and building out commercial infrastructure. Syncona Investment Management Limited.
Emerging efficacy data SLE
A category within our NAV Growth Framework. Companies in this category have a Systemic lupus erythematosus - a long-term autoimmune condition that causes
clinical strategy defined or have initial efficacy data from Phase I/II in joint pain, skin rashes and tiredness.
patients.
Strategic portfolio
ERT
Core life science companies where Syncona has significant shareholdings and
Enzyme replacement therapy - the standard of care for Gaucher disease. plays an active role in the company's development.
Gaucher disease Syncona Group companies
A genetic disorder in which a fatty substance called glucosylceramide The Company and its subsidiaries other than those companies within the life
accumulates in macrophages in certain organs due to the lack of functional science portfolio.
GCase enzyme.
Syncona Holdings Limited
General Partner
Syncona GP Limited. Holding Company.
Gene therapy Syncona Leadership team
A therapy which seeks to modify or manipulate the expression of a gene in
order to treat or cure disease. Leadership team of SIML
Group Syncona team
Syncona Limited and Syncona GP Limited are collectively referred to as the The team of SIML, the Company's Investment Manager.
"Group".
T-cell
Immunotherapy
A type of lymphocyte white blood cell, which forms part of the immune system
A type of therapy that uses substances to stimulate or suppress the immune and develops from stem cells in the bone marrow.
system to help the body fight cancer, infection, and other diseases.
TCFD
Investment Manager
The Task Force on Climate-related Financial Disclosures (TCFD). First
Syncona Investment Management Limited. published in 2017, the TCFD recommendations act as a framework for assessing
the physical and transition risks companies are exposed to from climate change
and the transition to a green economy.
IRR
Internal Rate of Return.
TCR
T-cell receptor.
Key value inflection point
Milestones which have the potential to deliver significant NAV growth.
The Syncona Foundation
The Foundation distributes funds to a range of charities, principally those
involved in the areas of life science and healthcare.
Leukaemia
Broad term for cancers of the blood cells.
UN PRI
The United Nations (UN) Principles for Responsible Investment (PRI) is a
network of investors, who commit to working to promote sustainable investment.
Late-clinical/late-stage clinical
Has advanced past Phase II clinical trials.
Valuation Policy
The Group's investments in life science companies are, in the case of quoted
Life science investments companies, valued based on bid prices in an active market as at the reporting
date. In the case of the Group's investments in unlisted companies, the fair
Non-core assets which provide optionality to deliver returns for our value is determined in accordance with the International Private Equity and
shareholders. Venture Capital ("IPEV") Valuation Guidelines. These may include the use of
recent arm's length transactions (Price of Recent Investment or PRI),
Discounted Cash Flow ("DCF") analysis and earnings multiples as valuation
techniques. Wherever possible, the Group uses valuation techniques which make
Life science portfolio maximum use of market-based inputs.
This incorporates the Company's portfolio companies, potential milestone
payments or deferred consideration, and investments.
XLRP
Life science portfolio return
See alternative performance measures below. X-linked retinitis pigmentosa - a severe, aggressive, inherited retinal
disease.
Lymphocytes
Specialised white blood cells that help to fight infection.
Lymphoma
A type of cancer that affects lymphocytes and lymphocyte producing cells in
the body.
Macrophages
A form of white blood cell and the principal phagocytic (cell engulfing)
components of the immune system.
Alternative performance measures
Capital deployed
With reference to the life science portfolio valuation. Small difference in
calculation may be due to rounding of inputs. This is calculated as follows:
2024 2023
ANet investment in the period £168.5m £154.7m
adjusted for:
BProceeds from sales £1.4m £17.4m
CCRT Pioneer Fund distributions £2.4m £5.1m
Total Capital deployed (A+B+C) £172.2m £177.2m
Capital pool
With reference to the life science portfolio valuation table this is
calculated as follows:
2024 2023
ACash £104.8m £82.8m
BOther assets and liabilities £(26.7)m £(12.3)m
CNet Cash (A+B) £78.1m £70.5m
DUK and US Treasury Bills £163.4m £285.0m
ECredit investment funds £112.0m £101.6m
FMulti-asset funds £70.5m £160.0m
GLegacy funds £28.8m £33.0m
Total Capital Pool (C+D+E+F+G) £452.8m £650.1m
Capital pool return
Gross capital pool return for 2024 is 3.4 per cent; (2023: 5.5 per cent); This
is calculated by dividing the valuation movement of the gross capital pool
investments by the gross capital pool at the beginning of the period. Small
difference in calculation may be due to rounding of inputs. This is calculated
as follows:
2024 2023
Opening capital pool £650.1m £784.9m
Add back net liabilities not included in Gross Capital Pool £12.3m £19.6m
Less SIML cash £(7.3)m £(8.2)m
AOpening Gross Capital Pool £655.1m £796.3m
Life science net investments and ongoing costs £(203.8)m £(185.5)m
BValuation movement £22.4m £44.3m
Closing Gross Capital Pool £473.7m £655.1m
Capital Pool return (B/A) 3.4% 5.5%
2024 2023
Closing Gross Capital Pool £473.7m £655.1m
Add back SIML cash £5.8m £7.3m
Less net liabilities not included in Gross Capital Pool £(26.7)m £(12.3)m
Total Capital Pool £452.8m £650.1m
Life science portfolio return
Gross life science portfolio return for 2024 is 2.2 per cent; (2023: (14.3)
per cent). This is calculated as follows:
2024 2023
AOpening life science portfolio £604.6m £524.9m
Net investment in the period £168.5m £154.7m
BValuation movement £13.0m £(75.0)m
Closing life science portfolio £786.1m £604.6m
Life science portfolio return (B/A) 2.2% (14.3)%
NAV per share
NAV per share is calculated by dividing net assets by the number of shares in
issue adjusted for dilution by the potential share based payment share issues.
NAV takes account of dividends payable on the ex-dividend date. This is
calculated as follows:
2024 2023
ANAV for the purposes of NAV per share £1,238,878,132 £1,254,654,716
BOrdinary shares available to trade (note 14) 655,335,586 669,329,324
CDilutive shares 1,035,451 3,487,581
DFully diluted number of shares (B+C) 656,371,037 672,816,905
NAV per share (A/D) 188.7p 186.5p
NAV total return
NAV total return ("NAVTR") is a measure of how the NAV per share has performed
over a period, considering both capital returns and dividends paid to
shareholders. NAVTR is calculated as the increase in NAV between the beginning
and end of the period, plus any dividends paid to shareholders in the year.
This is calculated as follows:
2024 2023
AOpening NAV per fully diluted share (note 14): 186.5p 194.4p
BClosing NAV per fully diluted share (note 14): 188.7p 186.5p
CMovement (B-A) 2.2p (7.9)p
DDividend paid in the year (note 15): 0.0p 0.0p
ETotal movement (B+C-A) 2.2p (7.9)p
NAV Total Return (E/A) 1.2% (4.06)%
All alternative performance measures are calculated using non-rounded figures.
Capital pool
With reference to the life science portfolio valuation table this is
calculated as follows:
2024 2023
A Cash £104.8m £82.8m
B Other assets and liabilities £(26.7)m £(12.3)m
C Net Cash (A+B) £78.1m £70.5m
D UK and US Treasury Bills £163.4m £285.0m
E Credit investment funds £112.0m £101.6m
F Multi-asset funds £70.5m £160.0m
G Legacy funds £28.8m £33.0m
Total Capital Pool (C+D+E+F+G) £452.8m £650.1m
Capital pool return
Gross capital pool return for 2024 is 3.4 per cent; (2023: 5.5 per cent); This
is calculated by dividing the valuation movement of the gross capital pool
investments by the gross capital pool at the beginning of the period. Small
difference in calculation may be due to rounding of inputs. This is calculated
as follows:
2024 2023
Opening capital pool £650.1m £784.9m
Add back net liabilities not included in Gross Capital Pool £12.3m £19.6m
Less SIML cash £(7.3)m £(8.2)m
A Opening Gross Capital Pool £655.1m £796.3m
Life science net investments and ongoing costs £(203.8)m £(185.5)m
B Valuation movement £22.4m £44.3m
Closing Gross Capital Pool £473.7m £655.1m
Capital Pool return (B/A) 3.4% 5.5%
2024 2023
Closing Gross Capital Pool £473.7m £655.1m
Add back SIML cash £5.8m £7.3m
Less net liabilities not included in Gross Capital Pool £(26.7)m £(12.3)m
Total Capital Pool £452.8m £650.1m
Life science portfolio return
Gross life science portfolio return for 2024 is 2.2 per cent; (2023: (14.3)
per cent). This is calculated as follows:
2024 2023
A Opening life science portfolio £604.6m £524.9m
Net investment in the period £168.5m £154.7m
B Valuation movement £13.0m £(75.0)m
Closing life science portfolio £786.1m £604.6m
Life science portfolio return (B/A) 2.2% (14.3)%
NAV per share
NAV per share is calculated by dividing net assets by the number of shares in
issue adjusted for dilution by the potential share based payment share issues.
NAV takes account of dividends payable on the ex-dividend date. This is
calculated as follows:
2024 2023
A NAV for the purposes of NAV per share £1,238,878,132 £1,254,654,716
B Ordinary shares available to trade (note 14) 655,335,586 669,329,324
C Dilutive shares 1,035,451 3,487,581
D Fully diluted number of shares (B+C) 656,371,037 672,816,905
NAV per share (A/D) 188.7p 186.5p
NAV total return
NAV total return ("NAVTR") is a measure of how the NAV per share has performed
over a period, considering both capital returns and dividends paid to
shareholders. NAVTR is calculated as the increase in NAV between the beginning
and end of the period, plus any dividends paid to shareholders in the year.
This is calculated as follows:
2024 2023
A Opening NAV per fully diluted share (note 14): 186.5p 194.4p
B Closing NAV per fully diluted share (note 14): 188.7p 186.5p
C Movement (B-A) 2.2p (7.9)p
D Dividend paid in the year (note 15): 0.0p 0.0p
E Total movement (B+C-A) 2.2p (7.9)p
NAV Total Return (E/A) 1.2% (4.06)%
All alternative performance measures are calculated using non-rounded figures.
ONGOING CHARGES RATIO
The ongoing charges ratio for 2024 is 1.93 per cent (2023: 0.88 per cent). Any
small differences in calculation may be due to rounding of inputs. This is
calculated as follows:
2024 2023
Management fee £16.6m £12.1m
Directors' remuneration £0.5m £0.5m
Auditor's remuneration £0.3m £0.3m
Other ongoing expenses £3.6m £1.8m
Share based payment expense £3.0m £(3.0m)
A. Total ongoing expenses £24.0 £11.7m
B. Average NAV £1,244.4m £1,320.5m
Ongoing charges ratio (A/B) 1.93% 0.88%
1 Fully diluted, please refer to note 14 in the financial statements.
Alternative performance measure, please refer to glossary
2 Alternative performance measure, please refer to glossary
3 See footnote 2
4 See footnote 2
5 See footnote 2
6 Since the period end, as of 19 June 2024, a further £10.0 million of
shares have been bought back at an average discount of 38.8%
7 See footnote
2
8 Portfolio of core life science companies where Syncona has significant
shareholdings. Please refer to glossary
9 Contingent on successfully reaching development and commercial milestones,
plus tiered royalties
10 The change in valuation in Forcefield is not included in the 31 March
2024 valuation of the company
11 The evolved terminology "potential key value inflection points" refers to
the same portfolio milestones that were defined as "potential value inflection
points" at our FY2023/4 Interim Results in November 2023. This terminology
reflects their role in potentially driving significant NAV growth
12 Key value inflection points across the portfolio also have the potential
to enable capital access
13 The UK's MHRA and the EU's EMA have accepted the VISTA study design as
being pivotal
14 Capital access milestones and potential key value inflection points
relate to programmes formerly being progressed by Freeline and SwanBio
15 Primary input to fair value
16 The basis of valuation is stated to be "Cost", this means the primary
input to fair value is capital invested (cost) which is then calibrated in
accordance with our Valuation Policy
17 The basis of valuation is stated to be "PRI", this means the primary
input to fair value is price of recent investment which is then calibrated in
accordance with our Valuation Policy
18 New company following Freeline's acquisition of SwanBio
19 Capital invested incorporates Series A commitment in addition to a £12.0
million convertible note
20 Syncona's risk-adjusted and discounted valuation of the milestone
payments from the sale of Gyroscope Therapeutics
21 Formerly CEGX
22 Syncona has moved Achilles from the strategic portfolio to being
classified as a Syncona investment, further information can be found in the
portfolio review
23 31 December 2020 used as starting valuation for life science and NAV per
share returns
24 Use of "Syncona team" refers to the Syncona Investment Management Limited
(SIML) team
25 The further £20.0 million allocated to the share buyback programme will
be on the same terms as announced on 29 September 2023, save that the
programme has been extended beyond the Company's 2024 Annual General Meeting,
subject to the grant of a new buyback authority to the Company by the
shareholders at that meeting. Any share purchases under the share buyback
programme will be made pursuant to the authority to repurchase shares granted
to the Company at its Annual General Meeting held on 1 August 2023, or any new
authority granted to the Company at its 2024 Annual General Meeting
26 As at 19 June 2024
27 Please refer to glossary
(( 28 )) Includes additional £12.6 million invested following the write down
as part of the final tranche of the Series B financing
29 Increase from £54.5 million as at June 2023 due to the impact of foreign
exchange during the period
30 Established biomarker of response in Gaucher disease patients
31 £104.7 million valuation within the announcement of the acquisition on
17 June 2024 reflected the 31 December 2023 valuation of SwanBio (£74.6m) and
Freeline (£20.5m), pro-rata for the movement in share price to the
acquisition date and the consideration paid for the remaining shares in
Freeline (£9.6m). Further movements in the valuation primarily reflect an
additional £27.9 million invested by Syncona alongside the acquisition
32 £1.0 million of investment during the year was part of the Series A
commitment
33 Achilles is now a Syncona investment and not part of the strategic
portfolio
34 In the Q3 Update in February 2024, Syncona updated its guidance for the
SBT101 programme to report that it expected its safety read-out to be
published in H2 CY2024
35 As at 19 June 2024
36 Gross capital excludes other assets/liabilities and cash held within the
Investment Manager, SIML
37 Additional 5.5% of value within the life science portfolio is from the
CRT Pioneer Fund (4.3%) which is valued based on an adjusted third-party
valuation, and anticipated proceeds from the sale of Clade to Century (1.2%)
38 Using NAV at 31 March 2024
39 Includes sales of Blue Earth, Nightstar, Gyroscope, and Neogene, closures
of 14MG and Azeria. All IRR and multiple on cost figures are calculated on a
gross basis, reflects original Syncona Partners capital invested where
applicable
40 Syncona has moved Achilles from the strategic portfolio to being
classified as a Syncona investment, further information can be found in the
life science portfolio review
41 Syncona has moved Clade from the strategic portfolio to being classified
as a Syncona investment, further information can be found in the life science
portfolio review
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