REG - Syncona Limited - Strategy Update

SynconaAnnouncement

19/06/2025 07:00

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RNS Number : 5465N  Syncona Limited  19 June 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

19 June 2025

 

Syncona Limited
("Syncona" or the "Company")

 

Strategy update

 

Proposed change to investment objective and policy to maximise value for
shareholders over the medium term

 

Exploring options to provide shareholders with accelerated cash returns

 

Seeking to offer certain shareholders opportunity to roll interests into a new
independent private fund managed by SIML

 

Syncona's Board of Directors (the "Board") has, in consultation with the
Company's investment manager, Syncona Investment Management Limited ("SIML"),
and advisers, undertaken a comprehensive review of options to maximise value
for shareholders.

 

As part of this review, the Board has engaged extensively with shareholders,
who expressed a range of perspectives, reflecting Syncona's diverse
shareholder register.

 

The review follows a period of underperformance for the biotech sector with
the S&P Biotechnology Index still 52.0% 1  below its peak in February
2021. Market conditions have been particularly challenging for early-stage
life science companies, and cost of and access to capital has been impacted
for biotech companies across all stages of the development cycle. The
challenging market and broader negative sentiment towards listed investment
companies have also continued to impact Syncona's ordinary shares, with the
price moving from a premium to a material discount to net asset value ("NAV")
over the last three years.

 

Over this period, the SIML team has rebalanced the portfolio, prioritising
capital towards the most promising assets. Whilst the Board believes SIML has
made significant steps in driving portfolio companies to late-stage and
clinical development, where there is the potential to deliver strong
risk-adjusted returns over the medium term, it has also listened to the broad
range of shareholder views and will, in the near term, seek shareholder
approval for a change to the Company's investment objective and policy.

 

Proposed change to investment objective and policy and capital allocation
policy to maximise value over the medium term

 

The Board intends, subject to approval by the Financial Conduct Authority (the
"FCA"), to propose to its shareholders a change to the Company's investment
objective and policy to move to an orderly realisation of its portfolio
assets, with a view to achieving a balance between returning cash to
shareholders in a timely manner and maximising value.

 

Alongside the proposed new investment objective and policy, the Board also
intends to adopt a new capital allocation policy. This will seek to continue
financial support to existing portfolio companies, which have the potential to
provide liquidity via M&A or the public markets, to deliver their
identified key value inflection points, and additionally to preserve portfolio
company value in third-party financings.

 

It is the Board's intention that net proceeds from any disposal of interests
in private portfolio companies will be returned to shareholders, subject to
retaining a prudent reserve for operating costs. Any general meeting to
approve the proposed change of the Company's investment objective and policy
will take place once the Board has certainty on whether an acceleration of
cash returns to shareholders will be achievable (see below).

 

Maximising value for shareholders over the medium term

 

If approved, the Board intends that the Company's new investment objective and
policy will be reviewed by the Board once significant proceeds have been
returned to shareholders or after three years to ensure the continued return
of net proceeds from realisations remains in the best interests of
shareholders. Any amendment to the Company's investment objective and policy
at that point would require further FCA and shareholder approval.

 

Potential acceleration of cash returns to shareholders

 

In conjunction with the proposed investment objective and policy changes, the
Company is also exploring options to accelerate realisations, which may
include a sale of a small portion of its interests in certain of its portfolio
companies at a modest implied premium to the current share price and at a
discount to NAV. If the Company was able to achieve any such realisations, it
would seek to return the net proceeds to shareholders, together with the cash
the Company has currently allocated to support future investments into any
divested assets.

 

Subject to shareholder approval of a new investment objective and policy, it
will be the Board's intention to seek to accelerate cash returns in light of
the Company's new strategy, even in the absence of near-term realisations.

 

Seeking to find alternative opportunities for shareholders who wish to
continue to have exposure to early-stage companies

 

The Board recognises that certain shareholders may wish to continue to have
exposure to new and early-stage life science companies. As such, the Board is
exploring the possibility of providing institutional shareholders with an
opportunity to roll their interests in the Company into a new private
investment vehicle ("New Fund") independent of the Company. Discussions are
ongoing with a number of sophisticated institutional and strategic investors
and London based university and research partners ("LRPs") around
participating in the New Fund.

 

The New Fund's strategy would be to build world-class companies from
ground-breaking science or technology sourced from the LRPs and elsewhere. The
New Fund would be managed by SIML, harnessing its expertise and track record.
In such circumstances, SIML may be separated from the Syncona Group to enable
it to manage both the portfolio of the Company and the New Fund.

 

If the New Fund is successful in raising sufficient capital, the Company would
seek to enter into the sale of a small portion of its interests in certain of
its portfolio companies to the New Fund. There can be no certainty that new
capital will be raised or any sale will occur.

 

Suspension of 2032 targets

 

As a consequence of the proposed change in investment objective and policy,
the Board would, following guidance from SIML, seek to suspend its previously
published 2032 targets, including the ambition to grow assets to £5 billion
by 2032, create three new companies per annum and build a portfolio of 20 to
25 companies.

 

Board changes

 

In the event the new investment objective and policy are approved by
shareholders, the Company would expect to reduce the size of the Board to
reflect the Company's strategy.

 

The Company will keep the market updated on progress of the new strategy as
and when appropriate.

 

Melanie Gee, Chair of Syncona Limited, said: "Syncona's share price has
continued to be impacted by the significant headwinds in the markets it
operates in. Against this backdrop, the Board has undertaken a comprehensive
review of strategic options to maximise value for shareholders. Our intention
to change the Company's strategy and propose the change of investment
objective and policy is the result of extensive engagement with our diverse
shareholder base and the significant work of, and partnership with, the SIML
team. This process has underpinned our confidence in the SIML team's ability
to deliver strong risk-adjusted returns from our existing assets over time, as
relevant markets stabilise and volatility decreases. We remain focused on
exploring options to provide shareholders with accelerated cash returns and
are seeking to offer certain Syncona shareholders the opportunity to roll
their interest into a new private fund."

 

Chris Hollowood, CEO of Syncona Investment Management Limited, commented: "We
have worked closely with the Board as they have reviewed options to maximise
value for shareholders. We recognise that the share price performance over the
last three years has been disappointing and there is a diverse range of views
across Syncona's shareholder register. We also believe there is a significant
opportunity to maximise value from the portfolio over the medium term by
focusing on the delivery of the key value inflection points we have outlined.
We are confident in the long-term opportunity to continue creating and
building companies leveraging world-class research and are working to explore
the possibility of a new private vehicle for interested current shareholders
and prospective new investors. We look forward to keeping the market updated
on the portfolio's continued progress and engaging with stakeholders on the
continued path forward."

 

The person responsible for making this announcement on behalf of the Company
is Marc Perkins, General Counsel of SIML.

 

Enquiries

 

Syncona Limited

 

Annabel Clark / Tim Stamper

 

Tel: +44 (0) 20 3981 7940

 

FTI Consulting

 

Ben Atwell / Natalie Garland-Collins

 

Tel: +44 (0) 20 3727 1000

 

IMPORTANT NOTICES

 

This announcement or any part of it does not constitute or form part of any
offer to issue or sell, or the solicitation of an offer to acquire, purchase
or subscribe for, any securities.

 

Certain statements contained in this announcement constitute "forward-looking
statements" with respect to the results, financial condition, performance,
developments or achievements of Syncona and its subsidiaries. Words such as
"believes", "anticipates", "estimates", "expects", "intends", "plans", "aims",
"potential", "will", "would", "could", "considered", "likely", "estimate" and
variations of these words and similar future or conditional expressions, are
intended to identify forward-looking statements but are not the exclusive
means of identifying such statements. These statements and forecasts are
inherently predictive, speculative and involve risks and uncertainties and
assumptions that could cause actual results, financial condition, performance,
developments or achievements to differ materially from those expressed or
implied by these forward-looking statements and forecasts. Many of these
risks, uncertainties and assumptions relate to factors that are beyond
Syncona's ability to control, predict or estimate precisely. No representation
or warranty is made, and no responsibility or liability is accepted, as to the
achievement or reasonableness of, and no reliance should be placed on, such
forward-looking statements. The forward-looking statements contained in this
announcement speak only as of the date of this announcement. Syncona expressly
disclaims any obligation or undertaking to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise, unless required to do so by applicable law or regulation,
the FCA or London Stock Exchange plc.

 

No statement in this announcement is intended to be a profit forecast or
profit estimate for any period, and no statement in this announcement should
be interpreted to mean that earnings, earnings per share or income, cash flow
from operations or free cash flow for Syncona for the current or future
financial years would necessarily match or exceed the historical published
earnings, earnings per share or income, cash flow from operations or free cash
flow for Syncona.

 

Neither the content of Syncona's website (or any other website) nor the
content of any website accessible from hyperlinks on Syncona's website (or any
other website) is incorporated into or forms part of this announcement.

 

This announcement has been prepared for the purposes of complying with
applicable law and regulation in the United Kingdom and the information
disclosed may not be the same as that which would have been disclosed if this
announcement had been prepared in accordance with the laws and regulations of
any jurisdiction outside the United Kingdom.

 

 

 1  As at 13 June 2025

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