REG - Syncona Limited - Third Quarter Update
08/02/2024 07:15
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RNS Number : 4096C Syncona Limited 08 February 2024
Syncona Limited
Third Quarter Update
Prioritising capital allocation across the portfolio to enable delivery of key
inflection points; continue to be well positioned to deliver long-term growth
08 February 2024
Syncona Ltd (the "Company"), a leading life science investor focused on
creating, building and scaling global leaders in life science, today issues
its quarterly update covering the period from 01 October to 31 December 2023.
Financial performance in the quarter
· Net assets of £1,251.0 million (30 September 2023: £1,201.3
million), equivalent to 188.2p per share (30 September 2023: 178.6p per share)
· NAV per share return of 5.4% in the period, driven by a £111.1
million increase in the value of Autolus Therapeutics (Autolus), outweighing
the partial write down of the Company's holding in Anaveon to £24.9 million
(£42.8 million decline in value), which reflects the company's decision to
focus on its next generation, pre-clinical programme
· Life science portfolio valued at £699.8 million (30 September
2023: £620.9 million), a return of 9.7% in the quarter 1 (#_ftn1)
· Over the nine months to 31 December 2023, NAV per share has returned
0.9% with the life science portfolio generating a return of 3.0%
· Capital pool of £551.2 million at 31 December 2023 (30 September
2023: £580.4 million)
o £18.5 million deployed into the life science portfolio in the quarter and
£77.2 million in the nine months to 31 December 2023
o £(4.6) million impact from foreign exchange movements across the capital
pool 2 (#_ftn2)
o £9.9 million of shares repurchased at an average discount of 33.8%
resulting in a 0.76p accretion to NAV per share in the quarter 3 (#_ftn3)
69% of value in the strategic life science portfolio in clinical-stage
companies with late-stage clinical companies making good progress
· Portfolio of 13 companies with six at clinical stage, including
two late-stage clinical
· Nine clinical data read outs in the period including positive
data published from two late-stage companies, Autolus and Beacon Therapeutics
(Beacon)
· Autolus achieved an important strategic milestone filing its
Biologics License Application (BLA) with the Food and Drug Administration
(FDA) for obe-cel in relapsed/refractory (r/r) adult acute lymphoblastic
leukaemia (ALL)
o The filing was accepted post-period end and the FDA is expected to make a
decision on approval in November 2024
· The University of Edinburgh published data from an academic study,
which will support Resolution Therapeutics' (Resolution) upcoming entry into a
Phase I/II clinical trial in its lead macrophage cell therapy programme
· Post-period end, Freeline Therapeutics (Freeline) announced further
data from the company's Gaucher disease programme, which was supportive of the
efficacy and safety profile of the company's FLT201 gene therapy
Prioritising capital access across the portfolio to enable delivery of key
value inflection points
· Continuing challenging macro conditions have significantly impacted
the financing environment for life science companies
· Syncona's capital pool provides the flexibility to prioritise
capital towards clinical stage assets
· The Syncona team continues to take proactive and decisive action
across the portfolio to maximise value:
o Anaveon has taken the strategic decision to focus on its next
generation compound ANV600
o Reflecting that its next generation programme ANV600 is pre-clinical
(ANV419 was clinical), Syncona and the syndicate of investors in Anaveon have
adjusted the price of the final tranche of CHF 36.2 million (£32.8
million) 4 (#_ftn4) of the 2021 Series B financing which is also aligned with
current market conditions, resulting in a write down of the Company's holding
in Anaveon to £24.9 million, a £42.8 million decline in value
o The strategic actions ensure Anaveon is now funded to deliver the key
value inflection point of its clinical data readout from its Phase I/II trial
of ANV600 in CY2026
o Syncona believes in the potential of Anaveon's next generation compound,
which is supported by the positive pre-clinical data available to date
o A newly established portfolio company of Syncona entered into an agreement
with Freeline to acquire all of the shares of Freeline that Syncona does not
own in an all-cash transaction. Syncona continues to be encouraged by the data
published by Freeline in its FLT201 programme and is pleased with how the
company is executing
o The acquisition is subject to approval or acceptance by the required
number of Freeline's minority shareholders and is expected to close in the
first quarter of 2024, with a General Meeting in which shareholders will vote
on the proposed acquisition scheduled for 12 February 2024
· The impact of the current financing environment is specific to
the stage and progress of each individual portfolio company. Syncona is
focused on ensuring capital efficiency in its portfolio and ensuring portfolio
companies are executing to deliver key milestones
· Where appropriate Syncona continues to focus on widening
financing syndicates and exploring creative financing options for portfolio
companies
· Continuing to work with portfolio company co-investors to fund
companies through to achieving positive clinical and operational progress
· Syncona is funded to deliver expected milestones and value
inflection points in the portfolio that it believes have the potential to
drive access to capital and NAV growth
Focus on identifying transformational science to deliver long-term growth
· In advanced stages of diligence in two new opportunities in
oncology; with one an early-stage opportunity and the second a clinical stage
company
· Continued focus on clinical stage opportunities to add to our
maturing portfolio and drive near-term growth
Operational and Governance changes
· Rolf Soderstrom, Chief Financial Officer (CFO) of Syncona
Investment Management Limited (SIML) is moving to the role of Executive
Partner, where he will support the Leadership and Investment teams whilst
remaining on the Board of SIML and as Chair of the Valuation Committee
· Kate Butler, Group Finance Director of SIML will take up the role
of CFO of SIML, effective 1 April 2024. Kate joined Syncona in September 2022
and brings with her a wealth of experience from previous finance leadership
roles at Vectura Group plc and Gilead Sciences, Inc.
· During the period, Martin Murphy also stepped down as Chair of
SIML with Chris Hollowood holding the role of Interim Chair; Martin continues
to represent Syncona on the Boards of Autolus, Anaveon and Clade Therapeutics
Chris Hollowood, Chief Executive Officer, Syncona Investment Management
Limited, said: "We have continued to take decisive action to support our
companies' ability to deliver on their next key clinical milestones to
maximise value across the portfolio against a continuing challenging market
backdrop in the third quarter. We have been pleased with the recent clinical
and regulatory progress at Autolus, which we believe is now being reflected in
its recent positive share price performance. Whilst the macroeconomic outlook
is starting to look more favourable with conditions improving in the public
markets, we continue to see the private markets under pressure especially in
earlier stage assets and where companies are financing ahead of delivering key
milestones. We are focused on funding our companies to their next key clinical
data points to drive long-term value and whilst the pricing of the recent
investment tranche in Anaveon has led to a partial write-down in our holding,
the company is now well positioned to deliver clinical data from its next
generation asset.
We have also continued to evolve our operating model with Rolf moving to
Executive Partner bringing his broad experience to support our strategic
ambitions whilst maintaining his governance role at the SIML Board. I would
like to thank Rolf for his support in developing the strategy and operations
for the next phase of Syncona's growth and his leadership of our Finance team
to support our growth ambitions. I look forward to working with Kate who
brings both extensive finance and life science experience and congratulate her
on her well-deserved promotion to CFO.
Looking ahead, we have six key value inflection points over the next 12-36
months with the potential to drive significant NAV growth and are funded to
deliver these. We will continue to take a rigorous approach to capital
allocation and portfolio management, whilst also continuing to fuel our
long-term growth by creating new companies across the new frontier of
science."
Outlook
Capital deployment guidance
The Company continues to anticipate that deployment into the portfolio and
pipeline at financial year end will be £150-200 million, in line with prior
guidance. This excludes the £40.0 million of capital allocated to the share
buyback.
Portfolio milestones and potential value inflection points
· 11 expected milestones across the portfolio over the next 12
months which have the potential to enable capital access
· Six key value inflection points which have the potential to drive
significant NAV growth over the next 12-36 months
· These milestones and value inflection points are not without risk
Strategic life science portfolio Next expected milestones with the potential to enable capital access Syncona view of potential value inflection points across the portfolio
Moving towards being on the market
Autolus H1 CY2024 CY2025
- Initiate a Phase I study of obe-cel in refractory systemic lupus - Traction following US commercial launch of obe-cel, dependent on
erythematosus (SLE), extending the use of obe-cel into autoimmune diseases FDA regulatory approval
H2 CY2024
- Provide initial data from the Phase I trial in SLE
CY2024
- Commence the US commercial launch of obe-cel, dependent on
anticipated FDA regulatory approval in November
Beacon H1 CY2024 H2 CY2024
- Publish 12-month data from its Phase II SKYLINE trial in XLRP - Present 24-month data from its Phase II SKYLINE trial in XLRP
- Initiate its Phase II/III trial in XLRP
Moving towards publishing definitive data
Freeline H2 CY2024
- Release of additional data from its Phase I/II trial in Gaucher
disease
Resolution H2 CY2024 CY2026
- Enter the clinic in a Phase I/II trial in liver cirrhosis - Completion of Phase I/II trial in liver cirrhosis
Moving towards publishing emerging efficacy data
Achilles Q1 CY2024
- Provide further data from its Phase I/IIa clinical trial in
NSCLC
- Provide further data from its Phase I/IIa clinical trial in
melanoma
Quell H1 CY2024 CY2025
- Initial safety data in Phase I/II trial in liver transplantation - Proof of concept data from its Phase I/II trial in liver
transplantation
SwanBio H2 CY2024
- Initial safety readout in higher dose cohort from its Phase I/II
trial in AMN
-
Anaveon H2 CY2024 CY2026
- Initiate a Phase I/II trial of ANV600, the company's next - Interim clinical data readout from its Phase I/II trial of its
generation compound next generation asset ANV600
Valuation movements in the quarter
Company 30 Sep 2023 Net investment in the period Valuation FX movement 31 Dec 2023 % of Group NAV Valuation Fully diluted owner-ship stake Focus area
change basis(( 5 (#_ftn5) )),(( 6 (#_ftn6) )),(( 7 (#_ftn7) ))
(£m) (£m) (£m) (£m) (£m)
Strategic portfolio companies
Late-stage clinical
Autolus 64.0 - 111.1 (5.5) 169.6 13.5% Quoted 17.5% Cell therapy
Beacon 75.0 - - - 75.0 6.0% PRI 65.3% Gene therapy
Clinical
Quell 87.7 - - (3.7) 84.0 6.7% PRI 33.7% Cell therapy
SwanBio 77.4 - 0.6 (3.4) 74.6 6.0% Cost 80.0% Gene therapy
Freeline 8.8 8.0 4.5 (0.7) 20.6 1.6% Quoted/cost 8 (#_ftn8) 49.7% Gene therapy
Achilles 8.3 - (0.2) (0.3) 7.8 0.6% Quoted 24.5% Cell therapy
Pre-clinical
Purespring 35.1 9.9 0.1 - 45.1 3.6% Cost 82.9% Gene therapy
OMass 43.7 - - - 43.7 3.5% PRI 32.7% Small molecules
Resolution 37.9 - - - 37.9 3.0% Cost 81.6% Cell therapy
Anaveon 64.9 - (42.8) 2.8 24.9 2.0% PRI 37.9% Biologics
Clade 24.6 - - (1.1) 23.5 1.9% Cost 21.7% Cell therapy
Kesmalea 12.0 - - - 12.0 1.0% Cost 71.8% Small molecules
Mosaic 7.3 - - - 7.3 0.6% Cost 52.4% Small molecules
Portfolio milestones and deferred consideration
Beacon deferred consideration 14.0 - 0.4 (0.6) 13.8 1.1% DCF - Gene therapy
Neogene milestone payment 2.2 - 0.1 (0.1) 2.2 0.2% DCF - Cell therapy
Syncona investments
CRT Pioneer Fund 32.9 0.6 - - 33.5 2.7% Adj Third Party 64.1% Oncology
Biomodal(( 9 (#_ftn9) )) 18.7 - - (0.8) 17.9 1.4% PRI 5.5% Epigenetics
Forcefield 5.5 - - - 5.5 0.4% Cost 82.0% Biologics
Adaptimmune 0.9 - - - 0.9 0.1% Quoted 0.8% Cell therapy
Total Life Science Portfolio 620.9 18.5 73.8 (13.4) 699.8 55.9%
Capital pool 580.4 (34.4) 9.8 (4.6) 551.2 44.1%
TOTAL 1,201.3 1,251.0 100%
Enquiries
Syncona Ltd
Annabel Clark / Fergus Witt
Tel: +44 (0) 20 3981 7940
FTI Consulting
Ben Atwell / Natalie Garland-Collin / Tim Stamper
Tel: +44 (0) 20 3727 1000
About Syncona
Syncona's purpose is to invest to extend and enhance human life. We do this by
creating and building companies to deliver transformational treatments to
patients in areas of high unmet need. Our strategy is to create, build and
scale companies around exceptional science to create a diversified portfolio
of 20-25 globally leading life science businesses, across development stage,
modality and therapeutic areas, for the benefit of all our stakeholders. We
focus on developing treatments for patients by working in close partnership
with world-class academic founders and management teams. Our balance sheet
underpins our strategy enabling us to take a long-term view as we look to
improve the lives of patients with no or poor treatment options, build
sustainable life science companies and deliver strong risk-adjusted returns to
shareholders.
Forward-looking statements - this announcement contains certain
forward-looking statements with respect to the portfolio of investments of
Syncona Limited. These statements and forecasts involve risk and uncertainty
because they relate to events and depend upon circumstances that may or may
not occur in the future. There are a number of factors that could cause actual
results or developments to differ materially from those expressed or implied
by these forward-looking statements. In particular, many companies in the
Syncona Limited portfolio are conducting scientific research and clinical
trials where the outcome is inherently uncertain and there is significant risk
of negative results or adverse events arising. In addition, many companies in
the Syncona Limited portfolio have yet to commercialise a product and their
ability to do so may be affected by operational, commercial and other risks.
Syncona Limited seeks to achieve returns over the long term. Investors should
seek to ensure they understand the risks and opportunities of an investment in
Syncona Limited, including the information in our published documentation,
before investing.
1 (#_ftnref1) Life science portfolio return reflects net valuation movement
in the period excluding net capital invested
2 (#_ftnref2) Net valuation movement from foreign exchange across the
capital pool and life science portfolio of £(18.0)m
3 (#_ftnref3) Since the period end, as of 6 February 2024, a further £5.6
million of shares have been bought back at an aggregate discount of 37.3%
4 (#_ftnref4) FX rate taken at 7 February 2024
5 (#_ftnref5) Primary input to fair value
6 (#_ftnref6) 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
7 (#_ftnref7) 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
8 (#_ftnref8) As of 31 December, £8.0m of the value of Freeline was in
relation to a convertible loan valued at cost. The value of Syncona's shares
held in Freeline was £12.6m, valued at the quoted market price
9 (#_ftnref9) Formerly CEGX
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