REG - Syncona Limited - Half-year Report
16/11/2023 07:00
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RNS Number : 6197T Syncona Limited 16 November 2023
Syncona Limited
Interim Results for the six months ended 30 September 2023
Rigorous capital allocation focus and active portfolio management to deliver
key value inflection points over the next 12-36 months
Syncona Ltd ("Syncona" or the "Company"), a leading life science investor,
focused on creating, building and scaling a portfolio of global leaders in
life science, today announces its Interim Results for the six months ended 30
September 2023.
Chris Hollowood, CEO of Syncona Investment Management Limited, said: "Against
challenging market conditions, which impact cost and access to capital, we
continue to focus our capital allocation on clinical opportunities across the
portfolio, with 71% of portfolio company value now in clinical stage assets.
In parallel, we are proactively managing the portfolio to ensure that our
companies with clinical data have a path forward to reach late-stage clinical
development, where we believe significant value can be accessed.
We will continue to prioritise capital allocation towards our most promising
companies and assets, which we believe is the optimal approach to maximising
value across the portfolio and delivering strong risk-adjusted returns to
shareholders. There are six value inflection points over the next 12-36 months
that have the potential to drive significant value and Syncona is funded to
support its portfolio companies in delivering these key milestones.
Looking forward, the team continue to see a rich pipeline of innovative
science around which we can build the next generation of biotech leaders,
deliver transformational impact for patients, provide sustainable growth and
execute on our long-term strategy. We are well positioned to emerge from the
current environment and deliver strong-risk-adjusted returns for shareholders
and demonstrate progress towards our goal to scale to £5 billion of net
assets by 2032."
Financial performance
· Net assets of £1,201.3 million (31 March 2023: £1,254.7
million), 178.6p 1 (#_ftn1) per share (31 March 2023: 186.5p per share), a
NAV return of (4.2)% 2 (#_ftn2) in the period (30 September 2022: NAV return
of 4.3%)
· Life science portfolio valued at £620.9 million (31 March 2023:
£604.6 million), a return of (7.0)% 3 (#_ftn3) in the period (30 September
2022: 3.9% return)
· Performance of the life science portfolio primarily driven by the
£56.4 million 4 (#_ftn4) write off of the "Gyroscope milestone payments"
following Novartis' decision to discontinue the development of Gyroscope's
lead programme. This valuation impact was partially offset by:
o £12.4 million gain from an uplift in Autolus Therapeutics' (Autolus)
valuation, due to a 26.6% increase in its share price in the period
o £7.2 million gain from positive foreign exchange movements across the
life science portfolio
· Capital pool 5 (#_ftn5) of £580.4 million at 30 September 2023
(31 March 2023: £650.1 million); £58.6 million deployed in the period
Maturing portfolio with 71% of value in the strategic life science portfolio
in clinical-stage companies
· Maturing portfolio of 13 companies, with seven clinical stage
companies of which two are late-stage
· Continued execution across the portfolio as companies deliver
against their clinical, financing and operational milestones with four
financings and four clinical data read-outs in the period, with seven further
read-outs post-period end
Continued focus on rigorous capital allocation to maximise value
· Focus on allocating capital towards clinical assets with the
potential to reach late-stage development; over 80% of the £58.6 million of
capital deployed in the period invested into clinical assets and assets
approaching clinical entry in the near-term
· Syncona continues to anticipate that capital deployment into the
portfolio and pipeline at financial year end will be £150-200 million, in
line with prior guidance
· The Company is funded to deliver expected milestones and value
inflection points in the portfolio that it believes have the potential to
drive access to capital and NAV growth
· As part of Syncona's focus on and review of capital allocation,
the Board took the decision to launch a share buyback programme of up to £40
million during the period; this is excluded from the £150-200 million capital
deployment guidance in the year
· The Board's view is that the share price represents a compelling
and unique investment opportunity given the potential value within Syncona's
portfolio
Active management of the portfolio
· Working with companies on execution of key milestones,
rationalising budgets, reviewing and prioritising pre-clinical pipelines, and
widening financing syndicates whilst exploring creative sources of finance,
including realisations
· Refining investment focus in cell therapy (focus on first- and
best-in-class assets) and gene therapy (focus on products that can reach
late-stage development in the near and medium term) to maximise value
Investing through the cycle to deliver sustainable risk-adjusted returns
· Capital pool and active portfolio management means Syncona is in
a differentiated position to add new companies to the portfolio
· Team focus is on the next frontier of science, matching the right
target with the best modality
· Assessing a number of exciting opportunities across the market
where companies with clinical assets are attractively priced in the current
market conditions
Evolution of team to deliver strategy and long-term targets
· Expansion of senior team with Roel Bulthuis joining as Managing
Partner and Head of Investments (over 20 years of life science venture
capital, business development and investment banking experience)
· The Executive Partner group has been established to support
portfolio companies as they scale; notably John Tsai (previously Chief Medical
Officer at Novartis) joined as Executive Partner during the period, bringing
significant clinical, pharmaceutical and leadership experience
· Expanded senior team and operating model is established and fully
operational; this evolution and expansion will further support the delivery of
the Company's ambitious plans to deliver NAV growth
· As part of this evolution, Martin Murphy is stepping down as
Chair of Syncona Investment Management Limited (SIML) and Chris Hollowood has
been appointed Interim Chair, in addition to his role as Chief Executive
Officer (CEO) of SIML
· Martin will continue to represent Syncona on the Boards of
Autolus, Anaveon and Clade Therapeutics (Clade)
Outlook
Portfolio milestones and potential value inflection points
· 15 expected milestones across the portfolio over the next 12
months which have the potential to enable capital access
· Six key value inflection points which have the potential to drive
significant NAV growth over the next 12-36 months, but are not without risk,
particularly given the importance of delivering de-risking clinical data in
the current market environment
Strategic life science portfolio Next expected milestones with the potential to enable capital access Syncona view of potential value inflection points across the portfolio
Autolus H2 CY2023 CY2025
- Further long-term follow up data from its pivotal study in - Traction following US commercial launch of obe-cel, dependent on
obe-cel in adult r/r B-ALL FDA regulatory approval
- BLA submission for obe-cel to the FDA
H1 CY2024
- Initiate a Phase I study of obe-cel in refractory systemic lupus
erythematosus (SLE), extending the use of obe-cel into autoimmune diseases
H2 CY2024
- Provide initial data from the Phase I trial in SLE
CY2024
- Commence the US commercial launch of obe-cel, dependent on FDA
regulatory approval
Achilles Q1 CY2024
- Provide further data from its Phase I/IIa clinical trial in
NSCLC
- Provide further data from its Phase I/IIa clinical trial in
melanoma
Quell H2 CY2023 CY2025
- Complete dosing of the safety cohort in its Phase I/II trial in - Proof of concept data from its Phase I/II trial in liver
liver transplantation transplantation
Beacon H1 CY2024 H2 CY2024
- Publish 12-month data from its Phase II trial in XLRP - Present 24-month data from its Phase II trial in XLRP
- Initiate its Phase II/III trial in XLRP
Freeline CY2024 CY2024
- Release of additional data from its Phase I/II trial in Gaucher - Release of additional data from its Phase I/II trial in Gaucher
disease disease
SwanBio H1 CY2024
- Initial safety readout in higher dose cohort from its Phase I/II
trial in AMN
Resolution H2 CY2024 CY2026
- Enter the clinic in a Phase I/II trial in liver cirrhosis - Completion of Phase I/II trial in liver cirrhosis
Anaveon H2 CY2024 CY2026
- Publish initial data from its Phase I/II trial of ANV419 in - Clinical data readout from its Phase I/II trial of its next
metastatic melanoma generation asset ANV600
- Initiate a Phase I/II trial of ANV600, the company's next
generation compound
Enquiries
Syncona Ltd
Annabel Clark / Fergus Witt
Tel: +44 (0) 20 3981 7940
FTI Consulting
Ben Atwell / Natalie Garland-Collins / Tim Stamper
Tel: +44 (0) 20 3727 1000
About Syncona
Syncona's purpose is to invest to extend and enhance human life. We do this by
creating and building companies to deliver transformational treatments to
patients in areas of high unmet need.
Our strategy is to create, build and scale companies around exceptional
science to create a diversified portfolio of 20-25 globally leading life
science businesses, across development stage, modality and therapeutic areas,
for the benefit of all our stakeholders. We focus on developing treatments for
patients by working in close partnership with world-class academic founders
and management teams. Our balance sheet underpins our strategy enabling us to
take a long-term view as we look to improve the lives of patients with no or
poor treatment options, build sustainable life science companies and deliver
strong risk-adjusted returns to shareholders.
This announcement includes information that is or may be inside information.
The person responsible for arranging for the release of this announcement on
behalf of Syncona Ltd is Alasdair Moodie, General Counsel, SIML.
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 30 Sep 2023 % of Group NAV Valuation Fully diluted owner-ship stake Focus area
31 Mar 2023 change basis(( 6 (#_ftn6) )),(( 7 (#_ftn7) )),(( 8 (#_ftn8) ))
(£m) (£m) (£m) (£m) (£m)
Strategic portfolio companies
Late-stage clinical
Beacon 60.0 15.0 - - 75.0 6.2% PRI 67.8% Gene therapy
Autolus 50.0 - 12.4 1.6 64.0 5.3% Quoted 17.5% Cell therapy
Clinical
Quell 86.7 - - 1.0 87.7 7.3% PRI 35.0% Cell therapy
SwanBio 58.2 17.5 0.5 1.2 77.4 6.4% Adjusted cost 80.0% Gene therapy
Anaveon 64.2 - - 0.7 64.9 5.4% PRI 37.9% Biologics
Freeline 14.1 - (5.4) 0.1 8.8 0.7% Quoted 49.7% Gene therapy
Achilles 8.6 - (0.4) 0.1 8.3 0.7% Quoted 24.5% Cell therapy
Pre-clinical
OMass 43.7 - - - 43.7 3.6% PRI 28.9% Small molecules
Resolution 23.0 14.9 - - 37.9 3.2% Cost 78.8% Cell therapy
Purespring 35.1 - - - 35.1 2.9% Cost 84.0% Gene therapy
Clade 24.3 - - 0.3 24.6 2.1% Cost 22.3% Cell therapy
Kesmalea 4.0 8.0 - - 12.0 1.0% Cost 71.8% Small molecules
Mosaic 7.3 - - - 7.3 0.6% Cost 52.4% Small molecules
Portfolio milestones and deferred consideration
Beacon deferred consideration 15.9 - (1.9) - 14.0 1.2% DCF - Gene therapy
Neogene milestone payment 0.0 - 2.1 0.1 2.2 0.2% DCF - Cell therapy
Gyroscope milestone payments(( 9 (#_ftn9) )) 54.5 - (56.4) 1.9 0.0 0.0% Written off - Gene therapy
Syncona investments
CRT Pioneer Fund 32.8 - 10 (#_ftn10) 0.1 - 32.9 2.7% Adj Third Party 64.1% Oncology
Biomodal(( 11 (#_ftn11) )) 18.5 - - 0.2 18.7 1.6% PRI 5.5% Epigenetics
Forcefield 2.5 3.0 - - 5.5 0.5% Cost 82.0% Biologics
Adaptimmune 1.2 - (0.3) - 0.9 0.1% Quoted 0.8% Cell therapy
Total Life Science Portfolio 604.6 58.4 12 (#_ftn12) (49.3) 7.2 620.9 51.7%
Capital pool 650.1 (79.4) 10.4 (0.7) 580.4 48.3%
TOTAL 1,254.7 1,201.3 100%
Business review
During the period, the Syncona team has been focused on allocating capital to
clinical opportunities which are most likely to reach late-stage development
whilst actively managing the portfolio to drive future NAV growth. The
macroeconomic environment has been and remains challenging for biotech
companies both in terms of the cost of and access to capital in the public and
private markets. We have, therefore, worked closely with our portfolio
companies to rationalise pipelines, streamline budgets and seek alternate
sources of capital. Our capital pool is of critical strategic importance to
support our portfolio companies in navigating these market conditions and also
provides us with a strong platform to invest in new companies from the new
frontier of science that will lead the industry over the next decade and drive
sustainable growth.
Capital allocation focused on clinical opportunities and new frontier of
investment opportunities
We have continued to focus on allocating capital towards clinical assets with
the potential to reach late-stage development and deliver strong risk-adjusted
returns, driving optionality within the portfolio in a capital constrained
environment. Looking across our capital deployment in the period, of the
£58.6 million invested, more than 80% has been into clinical assets and
assets approaching clinical entry in the near-term.
We are proud of our leadership in cell and gene therapy over the last 10
years. As that part of the portfolio matures, we are focusing it to drive
value. In cell therapy, we are focusing capital allocation on companies where
we have the potential to be first-in-class and best-in-class. In gene therapy,
we are focusing capital allocation on companies with differentiated products
that can reach late-stage development in the near term. These actions allow us
to access the best risk-adjusted returns whilst allowing us to pursue the best
frontier science which will lead the industry over the next decade. This
approach naturally drives modality and therapeutic area diversification across
the portfolio.
Ongoing proactive and decisive action re-focusing the portfolio to maximise
value
Allied with our capital allocation focus, we are following a rigorous
framework outlined earlier in the year to actively manage our companies to
execute key milestones and future funding pathways:
· Working with late-stage clinical companies on execution of key
clinical and regulatory milestones to accelerate their progress towards
product where possible
· Working with companies across the clinical and pre-clinical
portfolio to create financing optionality to deliver key milestones
· Working with companies to reduce cash burn, focus capital on
their highest potential assets whilst looking at all financing and strategic
options
· Focusing on funding 'first- and best-in-class' therapies in cell
therapy and assets that can reach late-stage in the near and medium term in
gene therapy
· Focusing on bringing in aligned co-investors to new portfolio
companies at an early stage to provide broader financial scale across the
portfolio, diversify risk, allow a higher number of companies to be created
and therefore provide potential for a broader range of growth opportunities in
the future
We believe these actions will enable us to maximise value for our shareholders
and enable our portfolio companies to deliver on their ambitions to take
products to market and treatments to patients.
Launch of share buyback following review of capital allocation
As part of Syncona's focus on and review of capital allocation, the Board took
the decision to launch a share buyback programme of up to £40 million during
the period. The Board's view is that the share price represents a compelling
and unique investment opportunity given the potential value within Syncona's
portfolio. The £40 million of capital allocated to the buyback strikes the
right balance between continuing to focus capital allocation on the maturing
portfolio and a share buyback given the material discount to NAV at which the
shares traded at the time.
Syncona's strategy is focused on delivering value for shareholders and its
core focus remains on allocating capital to portfolio companies' assets with
the potential to drive attractive risk-adjusted returns, reach late-stage
clinical development and deliver near-term growth.
Syncona's capital pool provides the opportunity to build the companies of
tomorrow
Our capital pool and continued portfolio focus means we are in a
differentiated position to create and invest in the next wave of frontier
science and build the biotech companies that will lead the industry in the
future. We see a number of opportunities across a range of therapeutic areas
to create companies around early-stage science. We are also seeing a number of
exciting opportunities across the current market where companies with clinical
assets are attractively priced as we look to expand our portfolio, in line
with our target to scale to £5 billion of NAV by 2032.
Continued evolution of team to deliver strategy and long-term targets
Over the last year, the senior investment team has been expanded, including
welcoming Roel Bulthuis as Managing Partner and Head of Investments of SIML.
Roel joined in April 2023 and brings over 20 years of life science venture
capital, business development and investment banking experience. In addition
to this we have also established the Executive Partner group to working
alongside the investment team to support our portfolio companies as they
progress through the development pathway and it is operating well:
· John Tsai (previously Chief Medical Officer at Novartis) joined
as Executive Partner in May 2023 bringing significant clinical, pharmaceutical
and leadership experience
· Lisa Bright (senior commercial leader with over 30 years'
experience in biopharma) has been working to support the new Resolution
Therapeutics (Resolution) CEO Dr Amir Hefni as the company drives towards
clinical entry
· Ken Galbraith (previously CEO and Chair at multiple biotechs)
re-joined as an Executive Partner, bringing significant operational, financing
and investment experience
We are delighted with how the expanded senior team and operating model has
been embedded and the impact our key hires have had, both within Syncona and
across the wider portfolio. With our new structure and team operating well,
Martin sees this juncture as the natural time to step down after 11 years with
the business, confident the Company is well positioned to deliver growth
despite the challenging markets. Martin co-founded Syncona with the Wellcome
Trust in 2012 and since then we have worked closely together, and we both feel
immensely proud of what has been achieved. Syncona has made a significant
contribution to transforming the life science ecosystem here in the UK,
deploying £1.1 billion across 22 companies, taking one product to market, and
three products to pivotal trials. I will hold the role of Interim Chair
alongside my existing role of CEO of SIML and Martin will continue to stay on
the Boards of Autolus, Anaveon and Clade.
Looking forward
We have taken proactive action across our portfolio to drive value against a
challenging market backdrop for biotech, and we remain committed to delivering
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.
We are on track to deliver on our 10-year targets:
· Three new companies created or added to the portfolio per year
· Three-five companies to late-stage development where we are
significant shareholders
· Building a portfolio of 20-25 life science companies
In this current financial year, we expect the composition of the three new
companies added to the portfolio to be made up of three significant
transactions including opportunities based on exciting early-stage science
from universities, strategic opportunities within our portfolio and clinical
stage opportunities.
The opportunity for value creation in our portfolio and pipeline is
compelling. Across our evolved and maturing portfolio, there are 15 expected
milestones across the portfolio over the next 12 months which have the
potential to enable capital access and six key value inflection points which
have the potential drive NAV growth over the next 12-36 months.
These milestones are not without risk, and we recognise that we may have to
take difficult decisions to maximise value for shareholders across the
portfolio. However, we believe we are taking a disciplined approach and have a
strong platform and a unique opportunity to emerge from the current
environment with a portfolio and team that will drive strong, sustainable,
risk-adjusted returns for our shareholders.
Chris Hollowood, CEO of Syncona Investment Management Limited, 15 November
2023
Life science portfolio review
Our life science portfolio was valued at £620.9 million at 30 September 2023
(31 March 2023: £604.6 million), delivering a (7.0)% return in the period (30
September 2022: 3.9% return).
Our strategic portfolio of 13 companies is diversified across modality and
therapeutic area, with seven companies at the clinical stage and the remainder
of the portfolio at pre-clinical stage, with one company (Resolution) expected
to enter the clinic in the next 12 months. Alongside the potential milestone
payments or deferred consideration from potential products, the life science
portfolio also includes investments, the majority of which are non-core where
we typically do not hold Board seats or engage actively but still provide
optionality to deliver returns for our shareholders.
Framework for enabling capital access and NAV growth across the portfolio
In this set of Interim Results, we have provided a 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 NAV growth in the current market environment. The categories are
summarised below, and our portfolio companies are mapped against these
categories.
Companies where delivery against milestones has the potential to drive access
to capital:
· Operational build
o Clearly defined strategy and business plan
o Leading management team established
· Emerging efficacy data
o Pre-clinical companies, with clinical strategy defined
o Clinical companies with initial efficacy data from Phase I/II
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 milestones and 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.
Late-stage clinical companies - 11.5% of NAV
Beacon (6.2% of NAV, 67.8% shareholding) - Moving towards being on the market
Syncona View
Beacon Therapeutics (Beacon) is close to entering a pivotal Phase II/III trial
where it has the potential to unlock significant value in a late-stage asset,
aligning with Syncona's focus on driving near-term value for shareholders.
Beacon represents a significant opportunity for Syncona to apply its domain
knowledge in retinal gene therapy to a late-stage clinical asset in X-linked
retinitis pigmentosa (XLRP), where Syncona already has prior expertise from
its ownership of Nightstar Therapeutics (Nightstar). Syncona has leveraged its
retinal gene therapy network to establish a world class leadership team, with
significant gene therapy and ophthalmic experience, as well as re-setting the
company's regulatory strategy and providing operational support. We believe
that the potential of Beacon is exciting and has the potential to drive
near-term value for our shareholders, with this investment underlining the
opportunities available for Syncona to access attractively priced
clinical-stage opportunities in the current market environment.
· Company focus: Beacon is focused on the development and
commercialisation of AAV-based gene therapies for the treatment of rare and
debilitating diseases with an initial focus on inherited ophthalmic diseases.
· Financing stage: Beacon raised £96m in a Series A financing in
March 2023.
· Lead programme: Beacon is progressing its lead candidate,
AGTC-501, in XLRP through a Phase II trial. There are no approved treatments
for XLRP, and the programme has orphan drug designations from both the FDA and
the European Commission, with 12-month data from the trial expected to be
presented in H1 CY2024. AGTC-501 has a strong body of clinical evidence having
demonstrated meaningful efficacy and a good safety profile in the Phase I/II
HORIZON trial. Syncona is working closely alongside the company as it develops
its regulatory strategy both in the US and EU, with a Phase II/III study
expected to commence in H1 CY2024.
· Development update: Syncona continues to support the company in
building out its operations and developing its manufacturing strategy.
· Pipeline programmes: Beacon has two preclinical programmes in
cone rod dystrophy (CRD) and dry age-related macular degeneration (AMD).
· Potential value inflection point: 24-month data expected from
Phase II trial in XLRP in H2 CY2024.
Autolus (5.3% of NAV, 17.5% shareholding) - Moving towards being on the market
Syncona view
Autolus has reported meaningful and increasingly mature clinical data to date,
underlining the potential of its lead therapy, obe-cel, as a drug which can
deliver important and durable impact for patients with relapsed/refractory
(r/r) adult acute lymphoblastic leukaemia (ALL), as well as an attractive
safety profile compared to other existing CAR-T therapies in the r/r adult ALL
setting. The company continues to expect to file its BLA with the FDA by the
end of the year and has developed a strong platform to prepare for the
commercial launch of obe-cel, a key milestone which has the potential to drive
value for Syncona. The company also has a portfolio of other clinical
programmes, including its expansion into autoimmune diseases through the
expected initiation of a Phase I study of obe-cel in lupus erythematosus (SLE)
in H1 CY2024, further supporting the strength of the company's technology.
From a valuation perspective, Autolus' share price rose by 26.6% during the
period, driving a £12.4 million increase in valuation.
· Company focus: Autolus is developing next generation programmed T
cell therapies for the treatment of cancer with a clinical pipeline targeting
haematological malignancies and solid tumours.
· Financing stage: Company is funded into CY2025.
· Lead programme: Obe-cel previously met its primary endpoint in
the pivotal FELIX trial in December 2022, and the company announced further
positive data updates in the period, underlining the strong safety profile of
the drug with an increase in response rates. Data released in the period by
other approved CAR-T therapies targeting adult ALL also further underlines
obe-cel's strong safety profile compared to other treatments. Post-period end,
the company published further data which will be presented at the American
Society of Haematology (ASH) meeting in December 2023, which further supports
the safety and durability profile of the drug. In addition to the longer-term
follow up data expected to be presented at ASH, the company expects to file a
BLA with the FDA by the end of the year.
· Commercial update: The company has made significant progress
during the period in developing its manufacturing and commercial roll out
capabilities. During the period the company opened its Nucleus facility in
Stevenage, a 70,000 sq. foot advanced manufacturing facility which will
support the commercial launch of obe-cel, with an initial capacity of up to
2,000 batches per year with room to expand if needed. The Nucleus is now fully
operational and is the first of its kind in the UK, providing a specialist
manufacturing capability for the supply of personalised cell therapy products.
Autolus also announced that it had selected Cardinal Health as its U.S.
Commercial Distribution Partner, enabling distribution capabilities required
to commercialise a CAR T-cell therapy in the US. These milestones will help to
support obe-cel's launch, enabling Autolus to launch the product at a scale
which serves global demand in r/r adult ALL.
· Pipeline programmes: Autolus continues to make progress in its
broader pipeline, having announced data from AUTO1/22's Phase I study
(CARPALL) in paediatric B-ALL in the period, and post-period end, published
positive initial data from the trial of AUTO8, Autolus' next-generation
product candidate for multiple myeloma. The company is also planning to
initiate a Phase I study of obe-cel in refractory SLE in H1 CY2024, extending
the use of obe-cel into autoimmune diseases. Syncona is supportive of the
decision by the company to assess the development of obe-cel in autoimmune
diseases, believing this represents an opportunity to broaden the commercial
reach of the programme in an area where academic research 13 (#_ftn13)
suggests CAR-T cell therapy may be effective.
· People update: Appointed Robert F. Dolski as Chief Financial
Officer, who brings more than 20 years of experience as a life sciences
financial executive driving the strategy, planning, execution, and financing
of private and public biopharmaceutical companies. Robert Iannone was also
appointed as a Non-Executive Director to Autolus' Board of Directors.
· Potential value inflection point: Traction following commercial
launch of obe-cel in r/r adult ALL, dependent on FDA regulatory approval, in
CY2025.
Clinical stage companies - 20.5% of NAV
Quell (7.3% of NAV, 35.0% shareholding) - Moving towards publishing emerging
efficacy data
Syncona view
During the period a collaboration agreement between Quell Therapeutics (Quell)
and AstraZeneca was announced, where Quell received $85 million upfront,
predominantly comprising a cash payment alongside an equity investment, to
develop, manufacture and commercialise autologous T-regulatory cell therapies
for two autoimmune disease indications. This was a significant milestone which
underlines the strength of Quell's broader pipeline and technology whilst
strengthening its balance sheet, with the agreement not relating to Quell's
lead programme in liver transplant. We continue to work closely alongside the
company as it delivers against its operational and clinical milestones, with
Quell expecting to complete the dosing in the initial cohort of its lead liver
transplant study by the end of CY2023.
· Company focus: Developing engineered T-regulatory (Treg) cell
therapies to treat a range of conditions such as solid organ transplant
rejection, autoimmune and inflammatory diseases.
· Financing stage: Quell raised $156 million in a Series B
financing in November 2021.
· Clinical update: Expects to complete the dosing of the safety
cohort in its lead programme, QEL-001, by the end of CY2023.
· Commercial update: Quell entered into a collaboration, exclusive
option and license agreement with AstraZeneca to develop, manufacture and
commercialise autologous, engineered T-regulatory 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 value inflection point: Proof of concept data from
liver transplant study in CY2025.
SwanBio (6.4% of NAV, 80.0% shareholding) - Moving towards publishing emerging
efficacy data
Syncona view
Syncona continues to believe that SwanBio Therapeutics' (SwanBio) lead
programme in adrenomyeloneuropathy (AMN) has the potential to be a
first-in-class approved therapy in an indication where there are currently no
approved treatment options and no known cure. The initial safety data from the
Phase I/II PROPEL clinical trial has been encouraging, and we look forward to
seeing further data generated from the higher-dose cohort. Syncona continues
to work closely alongside the company to develop its future financing
strategy, having provided further capital during the period to enable the
delivery of data from the higher-dose cohort of the programme.
· Company focus: SwanBio is developing AAV gene therapies to target
inherited neurological disorders. Its initial drug development candidate,
SBT101, is designed for the treatment of AMN, a genetic neuro-degenerative
disease affecting the spine for which there are currently no approved
treatments.
· Financing stage: $12.0 million (£9.4 million) of financing was
committed by Syncona in June 2023 to support dosing of the first cohort of
patients in the company's Phase I/II clinical trial of SBT101. Upon the
completion of dosing of the first cohort and a positive safety update, Syncona
committed an additional $10 million (£8.2 million) of financing to complete
dosing of the higher-dose cohort of patients and enable the delivery of
further data.
· Clinical update: The company completed dosing of its initial
low-dose cohort. Following a review of the initial safety data readout in
August an independent Data Safety Monitoring Board (DSMB) recommended
progressing the study to the higher-dose cohort. The company has since dosed
the first patient in the second cohort, with initial safety data expected in
H1 CY2024.
· People update: Post-period end, the company announced the
evolution of its leadership team with the appointments of Syncona Executive
Partner John Tsai, MD, as Executive Chair and Christopher "Topher" Brooke as
Chief Operating Officer. As part of the announced changes Tom Anderson has
moved to the position of Strategic Adviser, maintaining his seat on the Board
of Directors.
Anaveon (5.4% of NAV, 37.9% shareholding) - Moving towards publishing emerging
efficacy data
Syncona view
Syncona continues to see clinical and operational progress at Anaveon as it
looks to deliver high dose IL-2 to patients in a way which addresses safety,
tolerability and durability issues seen elsewhere. Data released by the
company continues to support the safety and tolerability profile of the
company's lead ANV419 therapy. Syncona is also supportive of the company's
pre-clinical ANV600 programme, which targets IL-2 to tumour fighting immune
cells in the tumour microenvironment and which we believe may have the
potential to demonstrate superior efficacy.
· 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.
· Financing stage: Raised CHF110 million (£90 million) in a Series
B financing in December 2021.
· Lead programme: Post-period end, Anaveon presented positive
safety data from its Phase I/II dose-finding study of ANV419 in solid tumours.
One patient with advanced immunotherapy-resistant non-small cell lung cancer
(NSCLC) was observed to have a durable response, whilst the study determined
that one injection of ANV419 at the agreed Phase II dose level delivers more
IL-2 exposure than a full cycle of an approved IL-2 therapy (high dose
aldesleukin). Initial data from the Phase I/II study in melanoma is expected
in H2 CY2024.
· Pipeline programmes: The company is planning for a clinical trial
authorisation (CTA) submission for ANV600, a powerful, new, targeted
therapeutic, in H1 CY2024. Post-period end, the company announced positive
pre-clinical data for ANV600 at SITC.
· Potential value inflection point: Clinical data readout from its
Phase I/II trial of its next generation asset ANV600 in CY2026.
Freeline (0.7% of NAV, 49.7% shareholding) - Moving towards publishing
definitive data
Syncona view
Syncona believes that Freeline Therapeutics' (Freeline) lead programme in
Gaucher disease has the potential to be a first- and best-in-class gene
therapy for patients. Initial data released post-period end supports the
safety and activity profile of the drug, in an area where there is a clear
unmet need for better treatment options. The company's management team has
made significant progress in rationalising Freeline's pipeline and operations
to focus on the Gaucher programme, whilst ensuring continued execution in this
programme.
Post-period end, Syncona submitted a non-binding proposal to the special
committee of the Board of Freeline Therapeutics Holdings plc for a transaction
to acquire the entire share capital not already owned by Syncona for an
upfront cash payment of $5.00 per American Depositary Share, representing a
premium of 20% over the volume weighted average price of $4.16 over the period
since the release of Freeline's recent clinical data release on 4 October 2023
until close on 16 October 2023. Syncona will continue to keep the market
updated as appropriate on the proposal.
· Company focus: Developing gene therapies for chronic debilitating
diseases, with a lead programme in Gaucher disease.
· Financing stage: Listed on NASDAQ with cash runway to Q2 CY2024.
· Clinical update: Post-period end, Freeline reported initial
safety, tolerability and enzyme activity data from the ongoing Phase I/II
trial evaluating FLT201, the company's novel AAV gene therapy candidate in
Gaucher disease. The data demonstrated a compelling safety profile and robust
enzyme activity, supporting the potential of FLT201 to be a first- and
best-in-class gene therapy for the condition. Following the data release, the
company also dosed a third patient in the initial cohort.
· Pipeline programmes: During the period Freeline announced an
additional pre-clinical programme in Parkinson's disease. This programme
leverages technology from the company's Gaucher programme to develop a gene
therapy candidate for a subset of Parkinson's disease patients with mutations
in the GBA1 gene.
· Regulatory update: FLT201 awarded the Innovation Passport for the
treatment of Gaucher disease type 1 under the Innovative Licensing and Access
Pathway (ILAP) process by the U.K. Medicines and Healthcare products
Regulatory Agency (MHRA).
· Potential value inflection point: Additional data from Phase I/II
trial in Gaucher disease expected in CY2024.
Achilles (0.7% of NAV, 24.5% shareholding) - Moving towards publishing
emerging efficacy data
Syncona view
Syncona continues to engage with Achilles Therapeutics (Achilles) as it
progresses its lead programmes in advanced NSCLC and metastatic malignant
melanoma. The company is well funded with a cash runway through CY2025, with
Syncona looking to review the next data updates to demonstrate that robust
manufacturing can translate into clinical efficacy for the company's products,
particularly at higher dose levels.
· Company focus: Developing precision T cell therapies targeting
clonal neoantigens to treat solid tumours.
· Financing stage: Listed on NASDAQ with cash runway through
CY2025.
· Clinical update: Achilles is on track to dose 15-20 patients at
the higher dose level with its clonal neoantigen reactive T cells (cNeT)
therapy from the ongoing Phase I/IIa trials in NSCLC and in metastatic
malignant melanoma by the end of CY2023, and expects to release clinical and
translational science data in Q1 CY2024, with additional data expected
mid-CY2024.
· Pipeline programmes: Achilles introduced and presented data
during the period on the neoRankerTM tool, the company's new immunogenicity
prediction module of the AI-Powered PELEUS™ bioinformatics platform that
uniquely identifies the most potent clonal neoantigens. The new AI module
demonstrated potential superiority to commonly used AI tools (BigMHC) in
identifying and prioritising targets for personalised antigen approaches,
supporting potential implementation into the company's ongoing TIL-based
clinical programmes, and into other modalities including clonal neoantigen
cancer vaccines.
Pre-clinical stage companies - 13.4% of NAV
OMass (3.6% of NAV, 28.9% shareholding) - Completed operational build
· Company focus: Developing small molecule drugs to treat rare
diseases and immunological conditions.
· Financing stage: Raised an additional £10 million investment
from British Patient Capital in the period, extending the company's Series B
financing to a total raise of £85.5 million.
· People update: 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. Further hires have also been made during
the period across OMass Therapeutics' (OMass) development team, which will
help to enable the company to scale as it progresses towards the clinic and
deliver on its upcoming priorities.
Resolution (3.2% of NAV, 78.8% shareholding) - Moving towards publishing
definitive data
· Company focus: Resolution is developing macrophage cell therapies
to treat diseases characterised by life-threatening inflammatory organ damage,
with a focus on liver cirrhosis.
· Financing stage: Raised a further £10.0 million from Syncona in
an extension of its £26.6 million Series A financing in April 2022.
· Clinical update: Post-period end, data was published from an
academic clinical study (MATCH II) which provided proof-of-concept that
treatment of patients with a macrophage cell therapy was well-tolerated, and
helped to dramatically reduce liver associated complications, including death.
The company 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 file a clinical trial application (CTA) in H1
CY2024 and 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 Chief Financial Officer, who brings
broad corporate and commercial finance experience in the pharmaceutical and
biotechnology industry, and Dr Clifford A. Brass, as Chief Medical Officer,
who brings extensive clinical development experience having spent over 25
years working in the pharmaceutical industry, with a strong emphasis on
advanced liver disease.
· Potential value inflection point: Completion of Phase I/II trial
in liver cirrhosis in CY2026.
Purespring (2.9% of NAV, 84.0% shareholding) - Moving towards publishing
emerging efficacy data
· Company focus: Purespring Therapeutics (Purespring) is developing
gene therapies for the treatment of chronic renal diseases which are currently
poorly served by existing treatments.
· Financing stage: Raised £45 million in a Series A financing in
2020.
· Development update: Continuing to develop its pre-clinical
pipeline and proprietary platform.
· People update: Purespring appointed Sachin Kelkar as Chief
Financial Officer, who brings over 25 years' experience as a finance and
strategy executive and most recently he was Chief Financial Officer at
biodesign startup, Geltor, where he built the finance and operations functions
and raised significant venture financing. The company also appointed Fredrik
Erlandson as Chief Medical Officer, an experienced developer of novel
nephrology drugs who has worked in all phases of development, from target
identification through to post-product launch Phase IV studies, and in medical
affairs at both large pharma and biotech.
Clade (2.1% of NAV, 22.3% shareholding) - Moving towards publishing emerging
efficacy data
· Company focus: Clade is developing scalable next-generation iPSC
derived medicines.
· Financing stage: Raised $87 million in a Series A financing in
August 2021.
· Development update: Acquired Gadeta, an international R&D
company, expanding Clade's pipeline with the integration of pre-clinical cell
therapy programs and broadening existing cellular platform technology to
enhance the development of engineerable, off-the-shelf, scalable, and
consistent stem-cell based medicines. The company continues to develop its
pre-clinical pipeline, expanding to autoimmune indications alongside oncology,
whilst building out its manufacturing footprint.
Kesmalea (1.0% of NAV, 71.8% shareholding) - Moving towards completing
operational build
· Company focus: Developing a new generation of small molecule oral
drugs addressing diseases through modulating protein homeostasis.
· Development update: The company progressed development of its
platform technology and discovery programmes.
· Financing stage: Series A financing expanded during the period to
£25 million (from previous £20 million), with a total Syncona commitment of
£20 million.
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 financing led by Syncona
with a £16.5 million commitment.
· Platform capabilities: Mosaic Therapeutics' (Mosaic) technology
platform uses artificial intelligence and machine learning (AI/ML) to enable
efficient data analysis alongside the in vitro screening of targets. This
helps to guide Mosaic's approach to target validation, working alongside
statistical models to quickly and effectively analyse large data sets and
maintain a deep understanding of the interaction between biomarkers and drug
targets.
Portfolio milestones and deferred consideration - 1.4% of NAV
During the period, Novartis informed Syncona that it had taken 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. The decision was based on a recommendation from an Independent Data
Monitoring Committee following an overall benefit risk assessment of available
data from the programme, which concluded that overall data from the lead Phase
II HORIZON study did not support continuation of GT005. Syncona had been
eligible for a series of milestone payments in the event of the successful
clinical development and commercialisation of the programme, with these being
valued on a risk adjusted basis at £56.4 million 14 (#_ftn14) . The decision
taken by Novartis to stop development of GT005 therefore resulted in this
valuation being written off.
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 £16.2 million.
Syncona investments - 4.9% of NAV
Syncona has £58.0 million of value in its investments, typically where we do
not hold Board seats or manage the investment actively alongside executive
teams. Our assets held within our investments are CRT Pioneer Fund, Biomodal
(formerly Cambridge Epigenetix), and Adaptimmune.
Forcefield Therapeutics is included as a Syncona investment but has launched
its Series A financing, aligning it with our portfolio model approach. Syncona
Executive Partner, John Tsai, was appointed as CEO of the company during the
period. John will bring his experience driving medicines through the clinic to
regulatory approval to bear on the company as it looks to pioneer the use of
cardioprotective proteins to treat heart attacks.
Finance review
We take a robust and prudent approach to valuation, managing our capital pool
and our costs with a continued focus on optimising returns and driving growth
for shareholders.
NAV Performance
At 30 September 2023, Syncona has net assets of £1,201.3 million (178.6p per
share), a NAV return of (4.2)% in the six months with performance primarily
driven by Novartis' decision to discontinue development of Gyroscope's lead
asset GT005. This has resulted in a negative £(56.4) million valuation
impact, with this being partially offset by positive foreign exchange
movements as well as the share price performance of Autolus.
Valuation approach
At the period end, our life science portfolio comprised listed holdings (13%),
private companies either valued at Price of Recent Investment (PRI) (47%), or
on the basis of capital invested (Calibrated Cost) (32%). 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 3% of the portfolio 15
(#_ftn15) .
Given the continued challenging macro environment and its ongoing impact on
the valuations for early-stage companies, the Syncona team is committed to
rigorously reviewing the robustness of our private company valuations.
Syncona's companies across the pre-clinical and clinical portfolio continue to
operate in a challenging market, with sustained inflation and heightened
interest rates impacting the cost and access to capital in the sector as well
as public and private valuations. These companies have a number of key
milestones ahead which will be key to determining their future financing
strategies. Our approach to valuation includes taking inputs from the
investment team, with a focus on delivery against upcoming milestones as well
as taking into account any developments during the period which may have
impacted the investment theses of individual companies. We will continue to
review our company valuations on a quarterly basis alongside market data as
the macroeconomic environment evolves, as well as working alongside our
external valuation adviser to determine the robustness of our valuations.
Rigorous approach to capital allocation
Syncona's core focus remains on allocating capital to portfolio companies'
assets with the potential to drive attractive risk-adjusted returns, reach
late-stage development and deliver near-term growth. During the period Syncona
has been resolutely focused on ensuring capital is allocated to assets which
have the potential to drive near-term returns for shareholders, whilst
maintaining investment in new and early-stage opportunities in a capital
efficient manner creating optionality within the portfolio in a capital
constrained environment. The Syncona Limited Board also made the decision to
launch a share buyback of up to £40 million, believing that the share price
represented a compelling and unique investment opportunity. The Board believes
that the capital allocated to the buyback strikes the right balance between
continuing to focus capital allocation on our maturing portfolio and a share
buyback given the material discount to NAV at which the shares traded at the
time. As part of this programme, shares valued at £127,000 16 (#_ftn16) were
bought back in the period, at an aggregate 35% discount to NAV, Since the
period end a further £4.7 million of shares have been bought back at an
aggregate discount of 30%. Together these buy backs have resulted in a 0.2%
accretion to NAV per share 17 (#_ftn17) .
We continue to anticipate that deployment into the portfolio and pipeline at
financial year end will be £150-200 million, in line with prior guidance.
This excludes the £40.0 million of capital allocated to the share buyback,
which will not impact our investment into clinical stage assets in the next 24
months. Our capital pool of £580.4 million continues to be central to
Syncona's strategy of building leading life science companies, providing it
with the ability to support its portfolio companies over the long term as well
as the capacity to invest at scale in exciting investment opportunities across
development stage. We continue to aim to maintain up to three years of funding
runway but in markets where this is challenging, we will ensure that we are
funded to deliver milestones that have the potential to deliver capital access
and key value inflection points which have the potential to deliver NAV
growth. If investment opportunities present themselves to deliver significant
NAV growth, we will also hold less than three years of funding runway on our
balance sheet. As previously announced in our Capital Returns Policy, if
realisations from the portfolio take us significantly above three years
financing runway, the Board would look to return the excess cash to
shareholders. In doing so they would consider all forms of distribution
mechanisms for capital returns, taking into account various factors including
the market conditions at the time.
Capital pool management
The mandate for our capital is focused on liquidity and capital preservation,
with between 12 and 24 months of funding being kept in cash and Treasury Bills
to cover near-term liquidity. In order to manage inflationary risk, longer
term capital was allocated to a number of low volatility, highly liquid, multi
asset and credit funds or mandates, managed by Kempen, Schroders and M&G
with portfolio mandates to deliver a core CPI (consumer price index) return
over the mid-term.
Capital requirements are formally reviewed each quarter and following the
recent review, in order to maintain our near-term liquidity requirements,
post-period end we took the decision to sell our position in the Schroder Life
Diversified Growth Fund and re-deploy the capital into short-dated treasuries.
We will continue to monitor asset allocation 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. The overall return across our capital pool during the period was 1.3%.
Gross Capital Pool allocation
£m % of Gross Capital Pool 18 (#_ftn18) % of NAV
Cash 19 (#_ftn19) 81.2 14 7
T-Bills 163.3 28 14
Multi-Asset Funds 201.2 35 17
Credit Funds 106.0 18 9
Legacy private equity funds 31.1 5 3
Capital pool funds
Fund Strategy £m % of NAV
M&G senior asset backed credit Daily liquidity bonds with current weighted average credit rating of AAA+ 42.3 4
M&G total return credit Daily liquidity bonds with current weighted average credit rating of BBB+ 63.7 5
Schroder Diversified Growth Fund Daily liquidity multi asset fund 97.6 8
Kempen Daily liquidity - Bespoke mandate with majority held in UK government bonds 103.6 9
Foreign exchange impact
We hold 19.2% of our capital pool in US dollar linked funds and assets to
provide a natural hedge against expected short-term US dollar cashflows.
During the period fluctuations in foreign currencies resulted in a net £(0.7)
million valuation impact within the capital pool.
Supplementary information
Our track record
- £1,141.7 million deployed in life science portfolio since 2012
- 20.3% IRR and 1.4 multiple on cost across whole portfolio(( 20 (#_ftn20) ))
Company Cost (£m) Value (£m) Multiple IRR
Existing portfolio companies
Beacon (incl. Deferred Consideration) 75.0 89.0 1.2 31%
Quell 61.4 87.7 1.4 14%
SwanBio 123.2 77.4 0.6 -21%
Anaveon 39.9 64.9 1.6 20%
Autolus 147.0 64.0 0.4 -18%
OMass 35.4 43.7 1.2 8%
Resolution 37.9 37.9 1.0 0%
Purespring 35.1 35.1 1.0 0%
Clade 23.2 24.6 1.1 4%
Kesmalea 12.0 12.0 1.0 0%
Freeline 183.1 8.8 0.0 -56%
Achilles 60.7 8.3 0.1 -39%
Mosaic 7.3 7.3 1.0 0%
Realised companies
Blue Earth 35.3 351.0 9.9 83%
Gyroscope 113.1 325.3 2.9 50%
Nightstar 56.4 255.7 4.5 71%
Neogene (incl. milestone value) 14.3 17.5 1.2 10%
Azeria 6.5 2.2 0.3 -50%
Investments
Unrealised investments 52.9 57.9 1.1 2%
Realised investments 22.0 27.3 1.2 25%
Total 1,141.7 1,597.7 1.4 20.3%
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 scaled funding.
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 and uncertainties facing the Company for the second half
of the financial year are substantially the same as those disclosed in the
Report and Accounts for the year ended 31 March 2023:
https://www.synconaltd.com/media/tbyarwqd/annual-report-2023-spreads.pdf
(https://www.synconaltd.com/media/tbyarwqd/annual-report-2023-spreads.pdf)
These include:
Portfolio company risks:
- Scientific theses fail
- Clinical development doesn't deliver a commercially viable
product
- Portfolio concentration to platform technology
- Concentration risk and binary outcomes
Access to Capital:
- Not having capital to invest
- Private/public markets don't value or fund our companies when we
wish to access them
- Capital pool losses or illiquidity
People risks:
- Reliance on small Syncona team
- Systems and controls failures
- Unable to build high-quality team/team culture
- Unable to execute business plans
Macroeconomic environment:
- Macroeconomic environment has a negative impact on sentiment for
portfolio companies and Syncona business model
Going concern
The Condensed Consolidated 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
£1,201.3 million (30 September 2022: £1,365.9 million, 31 March 2023
£1,254.7 million) of which £558.2 million (30 September 2022: £739.0
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 £52.0 million
(30 September 2022: £74.0 million, 31 March 2023: £89.2 million).
Given the Group's capital pool of £580.4 million (30 September 2022: £763.3
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 Condensed Consolidated
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
Condensed Consolidated Financial Statements.
Statement of Directors' Responsibilities
The Directors confirm that to the best of their knowledge:
a) the condensed set of interim financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting', as adopted by the
European Union;
b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events and their impact during
the first six months and description of principal risks and uncertainties for
the remaining six months of the year); and
c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
The Directors of Syncona Limited 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
INDEPENDENT REVIEW REPORT TO SYNCONA LIMITED
Conclusion
We have been engaged by the Company to review the Condensed set of Financial
Statements in the half-yearly financial report for the six months ended 30
September 2023 which comprises the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of Financial
Position, the Condensed Consolidated Statement of Changes in Net Assets
Attributable to Holders of Ordinary Shares, the Condensed Consolidated
Statement of Cash Flows and the related notes 1 to 14.
Based on our review, nothing has come to our attention that causes us to
believe that the Condensed set of Financial Statements in the half-yearly
financial report for the six months ended 30 September 2023 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, "Interim Financial Reporting" as adopted by the European Union and the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with the International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with the European Union adopted International Accounting Standard
34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the Directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the Company a conclusion on the Condensed set of Financial
Statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the Company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Recognised Auditor
St Peter Port, Guernsey
15 November 2023
UNAUDITED GROUP PORTFOLIO STATEMENT
As at 30 September 2023
Fair value % of Fair value % of Fair value % of
£'000 Group NAV £'000 Group NAV £'000 Group NAV
30 30 30 September 30 31 31
September September September March March
2023 2023 2022 2022 2023 2023
Life science portfolio
Life science companies
Quell Therapeutics Limited 87,683 7.3 95,761 7.0 86,703 6.9
SwanBio Therapeutics Limited 77,389 6.4 105,731 7.7 58,186 4.6
Beacon Therapeutics Holdings Limited 75,000 6.2 - - 60,000 4.8
Anaveon AG 64,929 5.4 65,752 4.8 64,203 5.1
Autolus Therapeutics plc 64,037 5.3 37,411 2.7 50,004 4.0
OMass Therapeutics Limited 43,712 3.6 43,712 3.2 43,712 3.5
Resolution Therapeutics Limited 37,942 3.2 23,027 1.7 23,027 1.8
Purespring Therapeutics Limited 35,100 2.9 35,100 2.6 35,100 2.8
Clade Therapeutics Inc 24,592 2.0 13,429 1.0 24,317 1.9
Cambridge Epigenetix Limited 18,681 1.6 20,402 1.5 18,472 1.5
Freeline Therapeutics Holdings plc 8,773 0.7 23,548 1.7 14,117 1.1
Achilles Therapeutics plc 8,270 0.7 22,432 1.6 8,605 0.7
Neogene Therapeutics Inc - - 17,010 1.2 - -
Companies of less than 1% of the NAV 25,713 2.3 8,720 0.8 15,050 1.2
Total life science companies 571,821 47.6 512,035 37.5 501,496 39.9
CRT Pioneer Fund 32,850 2.7 32,004 2.3 32,727 2.6
Deferred consideration 14,041 1.2 - - 15,882 1.3
Milestone payments 2,198 0.2 58,576 4.3 54,516 4.3
Total life science portfolio ((1)) 620,910 51.7 602,615 44.1 604,621 48.1
Capital pool investments
Multi asset funds 201,157 16.7 97,599 7.1 160,036 12.8
UK and US treasury bills 163,312 13.6 311,180 22.8 284,960 22.7
Credit investment funds 106,003 8.8 96,559 7.1 101,566 8.1
Legacy funds 31,055 2.6 33,954 2.5 33,001 2.7
Total capital pool investments ((2)) 501,527 41.7 539,292 39.5 579,563 46.3
Other net assets
Cash and cash equivalents ((3)) 87,767 7.3 233,639 17.1 82,818 6.6
Charitable donations (2,206) (0.2) (2,340) (0.2) (4,634) (0.4)
Other assets and liabilities (6,727) (0.5) (7,303) (0.5) (7,713) (0.6)
Total other net assets 78,834 6.6 223,996 16.4 70,471 5.6
Total NAV of the Group 1,201,271 100.0 1,365,903 100.0 1,254,655 100.0
( )
( )
((1) ) The life science portfolio of £620,909,989 (30 September 2022:
£602,615,195, 31 March 2023: £604,619,696) consists of life science
investments totalling £571,821,342 (30 September 2022: £512,034,843, 31
March 2023: £517,377,259), deferred consideration of £14,041,049 (30
September 2022: £nil, 31 March 2023: £15,882,241), milestone payments of
£2,197,532 (30 September 2022: £58,575,894, 31 March 2023: £54,515,861)
held by Syncona Holdings Limited and the CRT Pioneer Fund of £32,850,066 (30
September 2022: £32,004,458, 31 March 2023: £32,726,576) held by Syncona
Investments LP Incorporated.
((2)) Capital pool investments of £501,526,973 (30 September 2022:
£539,293,325, 31 March 2023: £579,563,640) are held by Syncona Investments
LP Incorporated.
((3)) Cash amounting to £15,874 (30 September 2022: £14,351, 31 March
2023: £11,402) is held by Syncona Limited. The remaining £87,750,741 (30
September 2022: £233,624,884, 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 Condensed 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.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 September 2023
Notes Revenue Capital Unaudited six months to Unaudited six months to Audited
30 September 2022
30 September 2023 year to
31 March
2023
£'000 £'000 £'000 £'000 £'000
Investment income
Other income 17,725 - 17,725 17,929 27,495
Total investment income 17,725 - 17,725 17,929 27,495
Net (losses)/gains on financial assets at fair value through profit or loss 5 - (56,915) (56,915) 47,552 (67,286)
Total (losses)/gains - (56,915) (56,915) 47,552 (67,286)
Expenses
Charitable donations 6 2,206 - 2,206 2,340 4,634
General expenses 12,317 - 12,317 7,495 11,593
Total expenses 14,523 - 14,523 9,835 16,227
(Loss)/profit for the period 3,202 (56,915) (53,713) 55,646 (56,018)
Taxation - - - - -
(Loss)/profit for the period after tax 3,202 (56,915) (53,713) 55,646 (56,018)
(Loss)/earnings per Ordinary Share 9 0.48p (8.49)p (8.01)p 8.33p (8.38)p
(Loss)/earnings per Diluted Share 9 0.48p (8.49)p (8.01)p 8.28p (8.38)p
The total columns of this statement represent the Group's Condensed
Consolidated Statement of Comprehensive Income, prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union.
The profit/(loss) for the period 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.
For the period ended 30 September 2022, the Company reported capital profit
after tax in the amount of £47,552,000 (year ended 31 March 2023: capital
loss after tax in the amount of £67,286,000).
All the items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the Condensed Consolidated
Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
Notes Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
ASSETS
Non-current assets
Financial assets at fair value through profit or loss 7 1,202,257 1,371,939 1,258,258
Current assets
Bank and cash deposits 16 14 11
Trade and other receivables 7,896 5,723 10,143
Total assets 1,210,169 1,377,676 1,268,412
LIABILITIES AND EQUITY
Non-current liabilities
Share based payments provision 8 2,513 846 -
Current liabilities
Share based payments provision 8 901 9,523 7,296
Payables 5,484 1,404 6,461
Total liabilities 8,898 11,773 13,757
EQUITY
Share capital 9 767,999 767,999 767,999
Capital reserves 406,248 578,001 463,163
Revenue reserves 27,024 19,903 23,493
Total equity 1,201,271 1,365,903 1,254,655
Total liabilities and equity 1,210,169 1,377,676 1,268,412
Total net assets attributable to holders of Ordinary Shares 1,201,271 1,365,903 1,254,655
Number of Ordinary Shares in Issue 9 671,806,666 669,329,324 669,329,324
Net assets attributable to holders of Ordinary Shares (per share) 9 £1.79 £2.04 £1.87
Diluted NAV (per share) 9 £1.79 £2.03 £1.86
The unaudited Condensed Consolidated Financial Statements were approved on 15
November 2023.
The accompanying notes are an integral part of the Condensed Consolidated
Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO
HOLDERS OF ORDINARY SHARES
For the period ended 30 September 2023
Notes Share Capital reserves Revenue reserves Total
capital
£'000 £'000 £'000 £'000
As at 31 March 2022 (audited) 767,999 530,449 11,393 1,309,841
Total comprehensive income for the period - 47,552 8,094 55,646
Transactions with shareholders:
Share based payments - - 416 416
As at 30 September 2022 (unaudited) 767,999 578,001 19,903 1,365,903
Total comprehensive loss for the period - (114,838) 3,174 (111,664)
Transactions with shareholders:
Share based payments - - 416 416
As at 31 March 2023 (audited) 767,999 463,163 23,493 1,254,655
Total comprehensive loss for the period - (56,915) 3,202 (53,713)
Transactions with shareholders:
Share based payments - - 329 329
As at 30 September 2023 (unaudited) 767,999 406,248 27,024 1,201,271
The accompanying notes are an integral part of the Condensed Consolidated
Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 September 2023
Notes Unaudited Unaudited Audited year
six months to six months to to 31 March
30 September 30 September 2023
2023 2022
£'000 £'000 £'000
Cash flows from operating activities
(Loss)/profit for the period (53,713) 55,646 (56,018)
Adjusted for:
Losses/(gains) on financial assets at fair value through profit or loss 5 56,915 (47,552) 67,286
Non-cash movement in share based payment provision (4,470) (8,217) (12,031)
Operating cash flows before movements in working capital (1,268) (123) (763)
Decrease/(increase) in other receivables 2,247 4,155 (265)
(Decrease)/increase in other payables (977) (4,294) 763
Net cash generated from/(used in) operating 2 (262) (265)
activities
Net Increase/(decrease) in cash and cash equivalents 2 (262) (265)
Cash and cash equivalents at the beginning of the period 14 276 276
Cash and cash equivalents at the end of the period 16 14 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 Condensed Consolidated
Financial Statements.
CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the period ended 30 September 2023
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 ("LSE") 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 within
the Annual Report and Accounts for the year ended 31 March 2023.
2. ACCOUNTING POLICIES
The accounting policies applied in these interim accounts are the same as
those applied by the Group in its Annual Report and Accounts for the year
ended 31 March 2023 and shall form the basis of the 2024 Annual Report and
Accounts. No new standards that have become effective in the period have had a
material effect on the Group's financial statements.
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 create, build and scale around exceptional
science, consists of financial information reported at the Group level. The
capital pool is fundamental to the delivery of the Group's strategy and
performance and 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.
Statement of compliance
The Condensed Consolidated Financial Statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" as adopted by the
European Union, and should be read in conjunction with the Annual Report and
Accounts for the year ended 31 March 2023, which have been prepared in
accordance with IFRS as adopted by the European Union, and are in compliance
with The Companies (Guernsey) Law 2008.
The annual financial statements of the Group will also be prepared in
accordance with IFRS as adopted by the European Union. The financial
information in these interim accounts was approved by the Board and authorised
for issue on 15 November 2023. The financial information is unaudited but has
been subject to a review by the Group's independent auditor.
Basis of preparation
The Condensed Consolidated Financial Statements have been prepared under the
historical cost basis, except for investments held at fair value through
profit or loss, which have been measured at fair value.
Going concern
The Condensed Consolidated 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
£1,201.3 million (30 September 2022: £1,365.9 million, 31 March 2023
£1,254.7 million) of which £558.2 million (30 September 2022: £739.0
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 £52.0 million
(30 September 2022: £74.0 million, 31 March 2023: £89.2 million).
Given the Group's capital pool of £580.4 million (30 September 2022: £763.3
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 Condensed Consolidated
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
Condensed Consolidated Financial Statements.
Basis of consolidation
The Group's Condensed Consolidated Financial Statements consist of the
financial statements of the Company and the General Partner.
The results of the General Partner during the period are consolidated in the
Condensed 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
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 periods and year ended 30
September 2023, 30 September 2022 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
"Consolidated Financial Statements" 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 and is therefore consolidated.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the interim results requires Management to make 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 life science investments could result in outcomes that require a material
adjustment to the carrying value of the assets or liabilities in future
periods.
In preparing these interim results, the significant judgements made by
Management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the Annual Report and
Accounts for the year ended 31 March 2023.
The key critical accounting judgement is the basis for determining the fair
value of life science investments. Further information can be found in note 3
of the Annual Report and Accounts.
The key sources of estimation uncertainty are the valuation of the Holding
Company's investments in privately held life science companies and milestone
assets on the sale of a subsidiary, the investment in the CRT Pioneer Fund,
the Partnership's private equity investments and the valuation of the share
based payment liability.
The inputs and assumptions which result in estimation uncertainty when
determining the valuation of the share based payment liability are described
in note 2 of the Annual Report and Accounts. Sensitivity of the share based
payment liability to reasonably possible changes in these inputs is not
currently material to the financial statements as a whole.
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 12.
In determining a suitable range to sensitise the fair value of the unlisted
life science portfolio, Management note the achievement or not of value
enhancing milestones as 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 14% (30
September 2022: 17%, 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 that typically trigger value
enhancement (or deterioration if not achieved) include the generation of
substantial clinical data.
The Company has assessed the impact of the current macroeconomic environment
on the private life science companies and does not consider that any
revaluations are required as a direct result.
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
Unaudited Unaudited Audited
30 September 30 September 31 March
Principal place 2023 2022 2023
Subsidiary of business Principal activity % interest ((1)) % interest ((1)) % interest ((1))
Syncona GP Limited Guernsey General Partner 100% 100% 100%
Syncona Holdings Limited Guernsey Portfolio management 100% 100% 100%
Syncona Investments LP Incorporated Guernsey Portfolio management 100% 100% 100%
There are no significant restrictions on the ability of subsidiaries to
transfer funds to the Company.
1) Based on undiluted issued share capital and excluding the Management Equity
Shares ("MES") issued by Syncona Holdings Limited (see note 8).
Indirect interests in subsidiaries
Unaudited Unaudited Audited
30 September 30 September 30 March
Principal place 2023 2022 2023
Indirect Subsidiaries of business Immediate parent Principal activity % interest ((1)) % interest ((1)) % interest ((1))
Syncona Discovery Limited United Kingdom Syncona Investments LP Portfolio management 100% 100% 100%
Incorporated
Syncona Portfolio Limited Guernsey Syncona Holdings Limited Portfolio management 100% 100% 100%
Syncona IP Holdco Limited United Kingdom Syncona Portfolio Limited Portfolio management 100% 100% 100%
Syncona IP Holdco (2) Limited United Kingdom Syncona Portfolio Limited Portfolio management 100% 100% 100%
Syncona IP Holdco (3) Limited United Kingdom Syncona Portfolio Limited Portfolio management 100% -% -%
Syncona Investment Management Limited United Kingdom Syncona Holdings Limited Portfolio management 100% 100% 100%
SIML Switzerland AG Switzerland SIML Gene therapy 100% 100% 100%
Resolution Therapeutics Limited United Kingdom Syncona Portfolio Limited Cell therapy 90% 85% 85%
Forcefield Therapeutics Limited United Kingdom Syncona Portfolio Limited Gene therapy 87% 81% 76%
SwanBio Therapeutics Limited United States Syncona Portfolio Limited Gene therapy 85% 77% 82%
Purespring Therapeutics Limited United Kingdom Syncona Portfolio Limited Gene therapy 82% 86% 81%
Beacon Therapeutics Holdings Limited United Kingdom Syncona Portfolio Limited Gene therapy 78% 100% 70%
Kesmalea Therapeutics Limited United Kingdom Syncona Portfolio Limited Small molecule 59% 41% 41%
Freeline Therapeutics Holdings plc United Kingdom Syncona Portfolio Limited Gene therapy 58% 58% 58%
Mosaic Therapeutics Limited United Kingdom Syncona Portfolio Limited Small molecule 51% -% 51%
Indirect interests in associates
Unaudited Unaudited Audited
30 September 30 September 30 March
Principal place 2023 2022 2023
Indirect associates of business Immediate parent Principal activity % interest ((1)) % interest ((1)) % interest ((1))
Anaveon AG Switzerland Syncona Portfolio Limited Biologics 46% 42% 46%
Quell Therapeutics Limited United Kingdom Syncona Portfolio Limited Cell therapy 38% 43% 44%
OMass Therapeutics Limited United Kingdom Syncona Portfolio Limited Small molecule 37% 38% 35%
Azeria Therapeutics Limited United Kingdom Syncona Portfolio Limited In voluntary liquidation 34% 34% 34%
Achilles Therapeutics plc United Kingdom Syncona Portfolio Limited Cell therapy 27% 27% 27%
Clade Therapeutics Inc United Kingdom Syncona Portfolio Limited Cell therapy 23% 17% 23%
((1)) Based on undiluted issued share capital and excluding the Management
Equity Shares ("MES") issued by Syncona Holdings Limited (see note 8).
5. NET (LOSSES)/GAINS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The net (losses)/gains on financial assets at fair value through profit or
loss arise from the Group's holdings in the Holding Company and Partnership.
Notes Unaudited six months to Unaudited six months to Audited
30 September 2023 30 September 2022 year to
31 March 2023
£'000 £'000 £'000
Net (losses)/gains from:
The Holding Company 5.a (43,979) 71,241 (62,636)
The Partnership 5.b (12,936) (23,689) (4,650)
(56,915) 47,552 (67,286)
5.a Movements in the Holding Company:
Unaudited six months to 30 September 2023 Unaudited six months to 30 September 2022 Audited
year to
31 March 2023
£'000 £'000 £'000
Expenses (46) (45) (97)
Movement in unrealised (losses)/gains on life science investments at fair (43,933) 71,286 (62,539)
value through profit or loss
Net (losses)/gains on financial assets at fair value through profit or loss (43,979) 71,241 (62,636)
5.b Movements in the Partnership:
Unaudited Unaudited Audited
six months to 30 September six months to 30 September year to
2023 2022 31 March
2023
£'000 £'000 £'000
Investment income 103 61 106
Rebates and donations (103) 155 81
Expenses (252) (128) (342)
Realised (losses)/gains on financial assets at fair value through profit or (774) 9,958 13,933
loss
Movement in unrealised gains on financial assets at fair value through profit 8,596 8,903 6,049
or loss
(Losses)/gains on foreign currency (2,781) (24,709) 3,018
Gains/(losses) on financial assets at fair value through profit or loss 4,789 (5,760) 22,845
Distributions (17,725) (17,929) (27,495)
Net losses on financial assets at fair value through profit or loss (12,936) (23,689) (4,650)
6. CHARITABLE DONATIONS
For the year ending 31 March 2024, the Group agreed to make a donation to
charity of 0.35% of the total net asset value ("NAV") of the Group calculated
on a monthly basis, 0.35% (30 September 2022: 0.20%, 31 March 2023: 0.35%) to
be donated to The Syncona Foundation and 0% (30 September 2022: 0.15%, 31
March 2023: 0%) to The Institute of Cancer Research, and these donations are
made by the General Partner.
During the period, charitable donations expense amounted to £2,206,217 (30
September 2022: £2,340,240, 31 March 2023: £4,633,973). As at 30 September
2023, £2,206,217 (30 September 2022: £2,340,240, 31 March 2023: £4,633,973)
remained payable.
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Notes Unaudited Unaudited Audited
six months to 30 September six months to 30 September year to
2023 2022 31 March
2023
£'000 £'000 £'000
The Holding Company 7.a 876,893 1,052,680 919,958
The Partnership 7.b 325,364 319,259 338,300
1,202,257 1,371,939 1,258,258
7.a The net assets of the Holding Company
Unaudited Unaudited Audited
30 September 2023 30 September 2022 year
31 March 2023
£'000 £'000 £'000
Cost of the Holding Company's investment at the start of the period 494,810 494,810 494,810
Purchases during the period - - -
Realised gains on transfer of assets - - -
Cost of the Holding Company's investments at the end of the period 494,810 494,810 494,810
Net unrealised gains on investments at the end of the period 386,738 562,426 429,757
Fair value of the Holding Company's investments at the end of the period 881,548 1,057,236 924,567
Other net current liabilities (4,655) (4,556) (4,609)
Financial assets at fair value through profit or loss at the end of the period 876,893 1,052,680 919,958
7.b The net assets of the Partnership
Unaudited Unaudited Audited
30 September 2023 30 September 2022 year
31 March
2023
£'000 £'000 £'000
Cost of the Partnership's investments at the start of the period 597,753 334,834 334,834
Purchases during the period 394,681 1,336,789 1,848,806
Sales during the period (479,406) (1,122,471) (1,589,269)
Return of capital (1,057) (8,271) (10,551)
Net realised (losses)/gains on disposals during the period (774) 9,958 13,933
Cost of the Partnership's investments at the end of the period 511,197 550,839 597,753
Net unrealised gains on investments at the end of the period 30,792 25,050 22,196
Fair value of the Partnership's investments at the end of the period 541,989 575,889 619,949
Cash and cash equivalents 73,456 216,555 67,190
Other net current liabilities (290,081) (473,185) (348,839)
Financial assets at fair value through profit or loss at the end of the period 325,364 319,259 338,300
8. 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 of the Annual Report and
Accounts for the year ended 31 March 2023.
The total cost recognised within general expenses in the Condensed
Consolidated Statement of Comprehensive Income is shown below:
Unaudited Unaudited Audited
six months to six months to 30 September year to
30 September 2022 31 March
2023 2023
£'000 £'000 £'000
Charge related to revaluation of the liability for cash settled share awards 1,766 (1,585) (2,968)
Total 1,766 (1,585) (2,968)
Amounts recognised in the Condensed Consolidated Statement of Financial
Position, representing the carrying amount of liabilities arising from share
based payments transactions are shown below:
Unaudited Unaudited Audited
30 September 30 September year
2023 2022 31 March
2023
£'000 £'000 £'000
Share based payments provision - current 901 9,523 7,296
Share based payments provision - non-current 2,513 846 -
Total 3,414 10,369 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 MES has been established using an externally developed
model, which is consistent with that used as at 31 March 2023. Key inputs
described in note 2 of the Annual Report and Accounts have been determined
based on internally generated data as at 30 September 2023. 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 period ended 30 September 2023 was
£743,384 (30 September 2022: £2,529,130, 31 March 2023: £2,529,130). An
award was made on 13 July 2023 at 11p per MES.
The number of MES outstanding are shown below:
Unaudited Unaudited Audited
30 September 30 September year
2023 2022 31 March
2023
Outstanding at the start of the period 43,871,228 42,282,122 42,282,122
Issued 6,690,460 9,325,006 9,367,155
Realised (6,700,688) (7,762,846) (7,762,846)
Lapsed (42,149) (15,203) (15,203)
Outstanding at the end of the period 43,818,851 43,829,079 43,871,228
Weighted average remaining contractual life of outstanding MES, years 1.56 1.65 1.29
Vested MES at the end of the period 26,430,859 48,179,285 29,523,421
Realisable MES at the end of the period 8,083,985 11,786,343 12,010,048
As at 30 September 2023, if all MES were realised, the number of shares issued
in the Company as a result would increase by 990,314 (30 September 2022:
4,024,467, 31 March 2023: 3,487,581). The undiluted per share value of net
assets attributable to holders of Ordinary Shares would remain unchanged
£1.79 to £1.79 if these shares were issued (30 September 2022: £2.04 to
£2.03, 31 March 2023: £1.87 to £1.86).
9. SHARE CAPITAL
9.a Authorised share capital
The Company is authorised to issue an unlimited number of shares, which may or
may not have a 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 the
share capital in accordance with The Companies (Guernsey) Law, 2008.
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
Ordinary share capital
Balance at the start of the period 767,999 767,999 767,999
Balance at the end of the period 767,999 767,999 767,999
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
Shares Shares Shares
Ordinary share capital
Balance at the start of the period 669,329,324 666,733,588 666,733,588
Share based payment shares issued during the period 2,477,342 2,595,736 2,595,736
Balance at the end of the period 671,806,666 669,329,324 669,329,324
No cash consideration is paid in relation to the issue of share based payment
shares.
At 30 September 2023, 110,000 Ordinary Shares had no voting rights attached
and were entered into treasury on 2 October 2023. Resulting in the total
Ordinary Shares available for trade on an open market being 671,696,666.
The Company has issued one Deferred Share to The Syncona Foundation for £1.
9.b Capital reserves
Gains and losses recorded on the realisation of investments, realised exchange
differences, unrealised gains and losses recorded on the revaluation of
investments held at the period end and unrealised exchange differences of a
capital nature are transferred to capital reserves.
9.c (Loss)/earnings per share
The calculations for the (loss)/earnings per share attributable to the
Ordinary Shares of the Company are based on the following data:
Unaudited Unaudited Audited
six months to six months to year to
30 September 30 September 31 March
2023 2022 2023
(Loss)/earnings for the purposes of (loss)/earnings per share £(53,713,000) £55,646,000 £(56,018,000))
Basic weighted average number of shares 670,303,415 667,825,783 668,575,494
Basic revenue earnings per share 0.48p 1.22p 1.69p
Basic capital (loss)/earnings per share (8.49p) 7.11p (10.07)p
Basic (loss)/earnings per share (8.01)p 8.33p (8.38)p
Diluted weighted average number of shares 671,293,729 671,850,250 672,063,075
Diluted revenue earnings per shares 0.48p 1.21p 1.69p
Diluted capital (loss)/earnings per share (8.49p) 7.07p (10.07)p
Diluted (loss)/earnings per share (8.01)p 8.28p (8.38)p
9.d NAV per share
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
Net assets for the purposes of NAV per share £1,201,271,352 £1,365,903,347 £1,254,654,716
Ordinary Shares available to trade 671,696,666 669,329,324 669,329,324
NAV per share 178.8p 204.1p 187.4p
Diluted number of shares 672,686,980 673,353,791 672,816,905
Diluted NAV per share 178.6p 202.9p 186.5p
10. DISTRIBUTION TO SHAREHOLDERS
The Company may pay a dividend at the discretion of the Board.
During the period ended 30 September 2023, the Company did not declare or pay
a dividend (30 September 2022: £nil, 31 March 2023: £nil).
11. 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. The total amounts included for
investments where the Group has control are set out below:
During the period, the total amount invested in life science investments which
the Group controls was £58,446,921 (30 September 2022: £44,824,695, 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 period, the total amount invested in life science investments in
which the Group has significant influence was £nil (30 September 2022:
£12,999,998, 31 March 2023: £25,404,894).
Commitments of milestone payments to the life science investments are
disclosed in note 13.
During the period, SIML charged the life science investments a total of
£139,630 (30 September 2022: £99,213, 31 March 2023: £215,094) in relation
to Director's fees and other fees of £521,127 (30 September 2022: £330,538,
31 March 2023: £nil).
Investment Manager
SIML, an indirectly held subsidiary of the Company, is the Investment Manager
of the Group.
For the period ended 30 September 2023, SIML was entitled to receive
reimbursement of reasonably incurred expenses as it relates to its investment
management activities. In the year-ended 31 March 2022 this was capped at
1.05% per annum of the Company's NAV. This cap was removed during the 2023
financial year effective from 1 April 2022.
Unaudited Unaudited Audited
six months to six months to year to
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
Amounts paid to SIML 8,648 5,474 12,121
Amounts owed to SIML in respect of management fees totalled £2,280,663 (30
September 2022: £1,145,213, 31 March 2023: £1,374,098).
During the period, SIML received fees from the Group portfolio companies of
£660,757 (30 September 2022: £285,551, 31 March 2023: £864,632).
Company Directors
At the period 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 periods and year ended, excluding expenses
incurred, and outstanding Directors' remuneration as at the end of the year,
are set out below.
Unaudited Unaudited Audited
six months to six months to year to
30 September 30 September 31 March
2023 2022 2023
£'000 £'000 £'000
Directors' remuneration for the period 253 247 499
Payable at end of the period - - -
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 donation accrued to The Syncona
Foundation during the period ended 30 September 2023 was £2,206,217 (30
September 2022: £2,428,478, 31 March 2023: £4,633,973).
12. 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 and liabilities by
level within the valuation hierarchy as at 30 September 2023, 30 September
2022 and 31 March 2023:
30 September 2023 Level 1 Level 2 Level 3 Total
Assets (unaudited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss:
The Holding Company - - 876,893 876,893
The Partnership - - 325,364 325,364
Total assets - - 1,202,257 1,202,257
30 September 2022 Level 1 Level 2 Level 3 Total
Assets (unaudited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss:
The Holding Company - - 1,052,680 1,052,680
The Partnership - - 319,259 319,259
Total assets - - 1,371,939 1,371,939
31 March 2023 Level 1 Level 2 Level 3 Total
Assets (audited) £'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 unadjusted NAV of the subsidiaries
as a proxy for fair value. 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 Partnership are shown below.
The following table presents the Holding Company's investments by level within
the valuation hierarchy as at 30 September 2023, 30 September 2022 and 31
March 2023:
Asset type Level 30 September 2023 30 September 31 Valuation technique Significant unobservable inputs Impact on
£'000 2022 March valuation
£'000
£'000 2023
£'000
Listed investments 1 81,960 84,716 73,943 Publicly available share bid price as at statement of financial position date n/a n/a
SIML 3 5,555 5,855 6,108 Net assets of SIML Carrying value of assets and liabilities determined in accordance with +/- £278
generally accepted accounting principles, without adjustment. A sensitivity of
5% (September 30, 2022: 5%, 31 March 2022: 5%) of the NAV of SIML is applied.
Milestone payments resulting from sale of subsidiary 3 2,198 58,576 54,516 Discounted Cash The main unobservable inputs PoS: +/-
Flow
consist of the assigned probability of £178
milestone success and the discount Discount
rate used. rate:
£18
Deferred consideration 3 14,041 - 15,882 Discounted Cash The main unobservable inputs PoS: +/-
Flow
consist of the assigned probability of £1,439
milestone success and the discount Discount
rate used. rate: £484
Calibrated price 3 489,861 427,319 427,552 Calibrated PRI The main unobservable input is the +/-£68,581
of recent quantification of the progress
investment investments make against internal
("PRI") ((1)) financing and/or corporate
milestones where appropriate. A
reasonable shift in the Fair Value of
the investment would be +/-
14% (30 September 2022: +/-17%, 31 March 2023: +/-10%).
Cash ((2)) n/a 93 11 294 Amortised cost ((4)) n/a n/a
Other net n/a 283,185 476,203 341,663 Amortised cost ((4)) n/a n/a
assets ((3))
Total financial assets held at fair value through profit or loss 876,893 1,052,680 919,958
((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 £288 million.
((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 period ended 30 September 2023:
Life Milestone SIML Unaudited Unaudited Audited
science payments six months to 30 September 2023 six months to 30 September 2022 six months to 30
investments and deferred consideration March
2023
£'000 £'000 £'000 £'000 £'000 £'000
Opening balance 427,552 70,398 6,108 504,058 381,286 381,286
Purchases during the period 58,409 - - 58,409 58,635 156,363
Sales during the period - - - - - (15,311)
(Losses)/gains on financial assets at fair value through profit or loss 3,900 (54,159) (553) (50,812) 51,829 (18,280)
Closing balance 489,861 16,239 5,555 511,655 491,750 504,058
The net loss for the period included in the Condensed Consolidated Statement
of Comprehensive Income in respect of Level 3 investments of the Holding
Company held at the period end amounted to
£50,812,000 (30 September 2022: £51,829,000 gain, 31 March 2023:
£18,280,000 (loss)).
During the period, there were no movements from Level 3 to Level 1 (30
September 2022: nil, 31 March 2023: nil).
The following table presents the Partnership's investments by level within the
valuation hierarchy as at 30 September 2023, 30 September 2022 and 31 March
2023:
Level Unaudited Unaudited Audited Valuation Significant unobservable Impact on valuation
30 September 2023 30 September 31 technique inputs £'000
£'000 2022 March
£'000 2023
£'000
UK and US treasury bills 1 163,312 311,180 284,960 Publicly available n/a n/a
price as at
statement of
financial
position date
Capital pool investment fund-Credit funds 2 106,003 96,559 101,566 Valuation produced n/a n/a
by fund
administrator.
Inputs into fund
components are
from
observable inputs
Capital Pool Investment fund - Multi asset funds 2 97,563 48,156 58,615 Valuation produced n/a n/a
by fund administrator.
Inputs into fund
components are
from
observable inputs
Capital pool investment fund - Multi asset fund 3 103,595 49,444 101,421 Valuation produced The main unobservable input +/- 5,180
by fund include the assessment of the
administrator performance of the underlying
assets by the fund administrator.
A reasonable shift in the
Fair Value of the instruments would
be +/-5% (30 September
2022:+/-11%, 31 March 2023 +/-5%)
Legacy funds - 3 31,054 33,954 33,001 Valuation produced The main unobservable input +/- 3,726
by fund
Long-term
include the assessment of the
administrator
unlisted performance of the underlying
investments fund by the fund administrator.
A reasonable possible shift in the
fair value of the instruments
would be +/-12% (30 September
2022: +/-11%, 31 March 2023 +/-13%)
CRT Pioneer Fund 3 32,850 32,004 32,727 Valuation produced Unobservable inputs include the +/- 16,754
by fund managers assessment of
fund administrator
the performance of the underlying
and
adjusted by investments and adjustments
Management made to this assessment to
generate the deemed fair value.
A reasonable possible shift in
the fair value of the instruments
would be +/-51% (30 September
2022: +/-34%, 31 March 2023 +/-36%)
Cash ((1)) n/a 81,081 221,151 74,863 Amortised cost ((3)) n/a n/a
Other net n/a (290,094) (473,189) (348,853) Amortised cost ((3)) n/a n/a
liabilities ((2))
Total financial assets held at fair value through profit or loss 325,364 319,259 338,300
((1)) Cash and other net liabilities held within the Partnership are primarily
measured at amortised cost which is equivalent to their fair value.
((2)) Other net liabilities primarily consists of a payable due to Syncona
Portfolio Limited totalling £288 million.
((3)) Amortised Cost is considered equivalent to fair value.
During the period ending 30 September 2023, there were no movements from Level
1 to Level 2 (30 September 2022: nil, 31 March 2023: nil) or between other
levels in the fair value hierarchy.
Assets classified as Level 2 investments are 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. Such investments
have been classified as Level 2 because their value is based on observable
inputs.
Assets classified as Level 3 long-term unlisted investments are underlying
Limited Partnerships 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 six months to 30 September 2023, the six months to 30
September 2022 and the year to 31 March 2023:
Investment in Subsidiary Capital pool Unaudited Unaudited Audited
investment six months to six months to year to 31 March
30 September 30 September 2023
2023 2022
£'000 £'000 £'000 £'000 £'000
Opening balance 40,385 134,423 174,808 71,508 71,508
Purchases during the period - 456 456 50,353 100,352
Return of capital - (1,057) (1,057) (8,271) (10,551)
Gains on financial assets at fair value through profit or loss 77 827 904 6,404 13,499
Closing balance 40,462 134,649 175,111 119,994 174,808
The net gain for the period included in the Condensed Consolidated Statement
of Comprehensive Income in respect of Level 3 investments of the Partnership
held at the period end amounted to £904,000 (30 September 2022: £6,404,000
gain, 31 March 2023: £13,499,000 gain).
13. COMMITMENTS AND CONTINGENCIES
The Group had the following commitments as at 30 September 2023, 30 September
2022 and 31 March 2023:
Unaudited Unaudited Audited
30 September 30 September year
2023 2022 31 March
2023
£'000 £'000 £'000
Life science portfolio
Milestone payments to life science companies ((1)) 48,400 68,993 85,143
CRT Pioneer Fund 2,270 3,268 2,499
Capital pool investment 1,297 1,760 1,585
Total 51,967 74,021 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 30 September 2023 (30 September
2022: £nil, 31 March 2023: £nil). The commitments are expected to fall due
in the next 36 months.
14. SUBSEQUENT EVENTS
On 29 September 2023, Syncona announced the launch of a share buy back
programme. As of 30 September 2023, 110,000 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 on 2 October 2023 once the
transaction settled.
As of 15 November 2023, 3,677,739 shares have been purchased and held in
treasury.
These Condensed Consolidated Financial Statements were approved for issuance
by the Directors on
15 November 2023. Subsequent events have been evaluated until 15 November
2023.
ALTERNATIVE PERFORMANCE MEASURES
Capital deployed
With reference to the life science portfolio valuation table this is
calculated as follows:
September September March
2023 2022 2023
A Net investment in the period £58.4m £57.4m £154.7m
Adjusted for
B. Proceeds from sales - - £17.4m
C Net distributions from CRT Pioneer Fund £0.2m £1.2m £5.1m
Total Capital deployed (A+B+C) £58.6m £58.6m £177.2m
Life science portfolio return
Gross life science portfolio return for September 2023 (7.0) per cent;
September 2022 3.9 per cent; March 2023 (14.3) per cent. This is calculated as
follows:
September September March
2023 2022 2023
A Opening life science portfolio £604.6m £524.9m £524.9m
Net investment in the period £58.4m £57.4m £154.7m
B Valuation movement £(42.1)m £20.3m £(75.0)m
Closing life science portfolio £620.9m £602.6m £604.6m
Life science portfolio return (B/A) (7.0)% 3.9% (14.3)%
Capital pool return
Gross Capital Pool return for September 2023 is 1.3 per cent; September 2022
5.7 per cent; March 2023 5.5 per cent. This is calculated by dividing the
valuation movement of the gross capital pool investments (F) by the gross
capital pool at the beginning of the period (D). Difference in calculation may
be due to rounding of inputs. This is calculated as follows:
September September March
2023 2022 2023
A Opening capital pool £650.1m £784.9m £784.9m
B Opening other net assets/(liabilities) not included in gross capital pool £12.3m £19.6m £19.6m
C Opening SIML cash £(7.3)m £(8.2)m £(8.2)m
D Opening gross capital pool (A+B+C) £655.1m £796.3m £796.3m
E Life science net investments and on going costs £(80.2)m £(68.5)m £(185.5)m
F Valuation movement £7.7m £38.9m £44.3m
G Closing gross capital pool (D+E+F) £582.7m £766.7m £655.1m
Capital pool return (F/D) 1.3% 4.9% 5.5%
September September March
2023 2022 2023
G Closing gross capital pool (D+E+F) £582.7m £766.7m £655.1m
H Closing SIML cash £6.6m £6.3m £7.3m
I Closing other net assets/(liabilities) not included in gross capital pool £(8.9)m £(9.7)m £(12.3)m
J Total capital pool (G+H+I) £580.4m £763.3m £650.1m
Capital Pool
September September March
2023 2022 2023
A Cash £87.7m £233.6m £82.8m
B Other assets and liabilities £(8.9)m £(9.7)m £(12.3)m
C Net Cash (A+B) £78.8m £223.9m £70.5m
D UK and US Treasury Bills £163.3m £311.2m £285.0m
E Credit investment funds £106.0m £96.6m £101.6m
F Multi-asset funds £201.2m £97.6m £160.0m
G Legacy funds £31.1m £34.0m £33.0m
Total Capital Pool (C+D+E+F+G) £580.4m £763.3m £650.1m
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:
September September March
2023 2022 2023
A NAV for the purposes of NAV per share £1,201,271,353 £1,365,902,347 £1,254,654,716
B Ordinary shares available to trade (note 9) 671,696,666 669,329,324 669,329,324
C Dilutive shares 990,314 4,024,467 3,487,581
D Fully diluted number of shares (B+C) 672,686,980 673,353,791 672,816,905
NAV per share (p) (A/D) 178.6p 202.9p 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:
September September March
2023 2022 2023
A Opening NAV per fully diluted share (note 9): 186.5p 194.4p 194.4p
B Closing NAV per fully diluted share (note 9): 178.6p 202.9p 186.5p
C Movement (B-A) (7.9)p 8.5p (7.9)p
D Dividend paid in the year (note 10): 0.0p 0.0p 0.0p
E Total movement (C+D) (7.9)p 8.5p (7.9)p
NAV Total Return (E/A) (4.2)% 4.3% (4.1)%
All alternative performance measures are calculated using non-rounded figures.
GLOSSARY
AAV Adeno-associated virus - a non-enveloped virus that can be engineered to
deliver DNA to target cells.
ALL Acute lymphoblastic leukaemia - a cancer of the bone marrow and blood in which
the body makes abnormal white blood cells.
BLA Biologics License Application.
CAR T-cell therapy Chimeric antigen receptor T-cell therapy - a type of immunotherapy which
reprogrammes a patient's own immune cells to fight cancer.
Capital deployed "See Alternative Performance Measures"
Capital pool Capital pool investments plus cash plus less other net liabilities.
Capital pool investments The underlying investments consist of cash and cash equivalents, including
short-term (1, 3, and 6 month) UK and US treasury bills, and a number of
credit, multi-asset and legacy fixed term funds.
Capital pool investments return "See Alternative Performance Measures"
Cell therapy A therapy which introduces new, healthy cells into a patient's body, to
replace those which are diseased or missing.
Clinical stage Screened and enrolled first patient into a clinical trial.
Company Syncona Limited.
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.
Gaucher disease A genetic disorder in which a fatty substance called glucosylceramide
accumulates in macrophages in certain organs due to the lack of functional
GCase enzyme.
General Partner Syncona GP Limited.
Gene therapy A therapy which seeks to modify or manipulate the expression of a gene in
order to treat or cure disease.
Gross Capital Pool Capital pool investments plus cash held by the Group excluding cash held by
the Investment Manager
Group Syncona Limited and Syncona GP Limited are collectively referred to as the
"Group".
Holding Company Syncona Holdings Limited.
Immunotherapy A type of therapy that uses substances to stimulate or suppress the immune
system to help the body fight cancer, infection, and other diseases.
Investment Manager Syncona Investment Management Limited.
iPSC Induced pluripotent stem cells (iPSCs) are a type of pluripotent stem cell
which can be generated directly from mature cells (such as those of the skin
or blood).
IRR Internal Rate of Return.
Late-stage clinical Has advanced past Phase II clinical trials.
Leukaemia Broad term for cancers of the blood cells.
Life science portfolio The underlying investments in this segment are those whose activities focus on
actively developing products to deliver transformational treatments to
patients.
Life science portfolio return "See Alternative Performance Measures"
Macrophages A form of white blood cell and the principal phagocytic (cell engulfing)
components of the immune system.
Management The management team of Syncona Investment Management Limited.
Melanoma A serious form of skin cancer that begins in cells known as melanocytes.
MES Management Equity Shares.
Myeloma A type of bone marrow cancer.
Net asset value, net assets or NAV 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.
NAV per share "See Alternative Performance Measures"
NAV total return "See Alternative Performance Measures"
NSCLC Non-small cell lung cancer - the most common form of lung cancer.
Ordinary Shares available to trade Ordinary Shares, with voting rights attached, that are freely tradable on the
open market
Partnership Syncona Investments LP Incorporated.
Pre-clinical Not yet entered clinical trials.
Return A Simple Rate of Return is the method used for return calculations.
SIML Syncona Investment Management Limited.
Strategic portfolio Portfolio of core life science companies where Syncona has significant
shareholdings.
Syncona Group Companies The Company and its subsidiaries other than those companies within the life
science portfolio.
T cell A type of lymphocyte white blood cell, which forms part of the immune system
and develops from stem cells in the bone marrow.
The Syncona Foundation The Foundation distributes funds to a range of charities, principally those
involved in the areas of life science and healthcare.
Valuation Policy 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 (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 maximum use of
market-based inputs.
1 (#_ftnref1) Fully diluted, please refer to note 9 in the financial
statements. Alternative performance measure, please refer to glossary
2 (#_ftnref2) Alternative performance measure, please refer to glossary
3 (#_ftnref3) See footnote 2
4 (#_ftnref4) Increase from £54.5 million impact as at June 2023 valuation
due to the impact of foreign exchange during the period
5 (#_ftnref5) See glossary for definition
6 (#_ftnref6) Primary input to fair value
7 (#_ftnref7) 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
8 (#_ftnref8) 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
9 (#_ftnref9) Syncona's risk-adjusted and discounted valuation of the
milestone payments from the sale of Gyroscope Therapeutics
10 (#_ftnref10) Net of £(0.2) million in distributions and £0.2 million in
subscriptions
11 (#_ftnref11) Formerly CEGX
12 (#_ftnref12) £58.4m net investment in the period; £58.6m total capital
deployed in the period is gross of £0.2m in distributions from the CRT
Pioneer Fund
13 (#_ftnref13) Research by Georg Schett and Andreas Mackenson at the
University of Erlangen has suggested that CAR-T CD19 therapy may be effective
in addressing SLE
14 (#_ftnref14) See footnote 4
15 (#_ftnref15) Additional 5% of value within the life science portfolio is
the CRT Pioneer Fund which is valued based on an adjusted third party
valuation
16 (#_ftnref16) As of 30 September 2023, 110,000 shares (value of £127,000)
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
on 2 October 2023 once the transaction settled
17 (#_ftnref17) Figures taken as of 15 November 2023
18 (#_ftnref18) Gross capital excludes other assets/liabilities and cash
held within the Investment Manager, SIML
19 (#_ftnref19) Not including £6.6 million in cash held by the Investment
Manager, SIML
20 (#_ftnref20) Includes sales of Blue Earth, Nightstar, Gyroscope, and
Neogene, and 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
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