20 June 2024
Syncona
Limited
Full Year Results for the 12
months ended 31 March 2024
Proactive management to
rebalance the portfolio over the last 18 months, with capital
prioritised towards our most promising companies and assets,
providing a platform for future growth
Investment in three highly
innovative new portfolio companies, including one at clinical
stage
Portfolio diversified across
therapeutic area and modality, and weighted towards clinical and
late-stage clinical companies
Syncona Ltd, (the "Company"), a
leading life science investor focused on creating, building and
scaling a portfolio of global leaders in life science, today
announces its Annual Results for the 12 months ended 31 March
2024.
Chris Hollowood, CEO of Syncona Investment Management Limited,
said: "During the year, we have had
a resolute focus on proactively managing our portfolio and a
rigorous approach to capital allocation to maximise value in
challenging market conditions. Against this backdrop, we have
delivered a resilient financial performance, underpinned by strong
execution across the portfolio. In parallel we have added three
exciting and highly innovative new companies to the portfolio that
can further drive medium and long-term growth.
In November 2022, we set out 10-year
targets and our ambition to organically grow net assets to £5
billion. Since then, we have made significant progress in
rebalancing the portfolio to provide a platform for future growth.
Our maturing strategic portfolio of 13 companies expects to deliver
eight key value inflection points with the potential to drive
significant NAV growth by the end of 2026, including two in the
next six months.
We are excited about the opportunity
ahead. We continue to see compelling value in our shares and,
having allocated £40 million to the share buyback in the year, have
today allocated a further £20 million to the programme. We
remain focused on driving NAV growth for shareholders and
delivering transformational impact for patients."
Financial performance
·
Net assets of £1,238.9 million (31 March 2023:
£1,254.7 million), 188.7p[1] per share (31 March 2023: 186.5p per
share), a NAV per share return of 1.2%[2] in the year (31 March 2023:
(4.1)%):
o Positive returns from our life science portfolio and capital
pool, enhanced by accretive share buybacks
·
Life science portfolio valued at £786.1
million[3] (31 March 2023: £604.6 million),
a return of 2.2%[4] in the year (31
March 2023: (14.3)%), with uplifts from Autolus offset by partial
write-downs of Anaveon and Clade and the write-off of Gyroscope
milestones payments
·
Capital pool[5]
of £452.8 million at 31 March 2024 (31 March 2023:
£650.1 million)
·
£20.2 million out of announced £40.0 million
invested into the share buyback:
o 16.5
million shares repurchased at an average 35.1% discount to NAV
resulting in an accretion of 1.61p to NAV per
share[6]
·
£172.2 million deployed[7]
into the life science portfolio, within our guidance for the
year
Proactive management of a maturing strategic
portfolio[8]
·
Proactive management to ensure that our companies
have a path forward to reach late-stage clinical development, where
we believe significant value can be accessed
·
Ongoing focus on widening financing syndicates to
provide broader financial scale:
o Autolus completed a public offering of $350 million
o Supporting portfolio companies to bring in aligned
co-investors to expand syndicates
·
Portfolio company budgets streamlined and capital
deployment focused on most promising assets:
o Anaveon took the strategic decision to focus on its
next-generation compound, ANV600
·
Explored strategic transactions and creative
financing solutions:
o Autolus signed a strategic collaboration and received an
equity investment from BioNTech for upfront aggregate proceeds of
$250 million
o Quell entered into a cell therapy collaboration with
AstraZeneca focused on autoimmune diseases, for which it received
$85 million upfront, in a deal potentially worth over $2
billion[9]
o Beacon announced the sale of its manufacturing facility
post-period end to Ascend Advanced Therapeutics; transaction
includes a long-term partnership with Beacon to continue to
manufacture its products
·
Portfolio company consolidations and
M&A:
o Market conditions presented a differentiated opportunity to
take Freeline private, after which the company acquired SwanBio to create Spur, a new company with a
consolidated adeno-associated virus (AAV) gene therapy
pipeline
o Post-period end an agreement was reached for Clade to be
acquired by Century Therapeutics for up to $45.0 million (£35.9
million), with upfront consideration to Syncona of $9.3 million
(£7.4 million)
Continued focus on rigorous capital allocation to maximise
value
·
Focus on allocating capital to clinical
opportunities and assets that are approaching clinical entry, with
86.1% of capital deployed towards these assets in the
period
·
Syncona's view is that the current share price
represents a compelling investment opportunity given the potential
value within our portfolio
·
As part of Syncona's focus on, and review of,
capital allocation in the year, the Board took the decision to
launch a share buyback programme of up to £40.0 million in
September 2023:
o Post-period end a further £20.0 million has been allocated to
the share buyback programme
71.1% of strategic portfolio value in clinical-stage companies
·
Significant work to rebalance the portfolio,
prioritising capital towards the most promising companies and
assets, and providing a platform for future growth
·
Maturing strategic portfolio of 13 companies, with
five clinical-stage companies of which two are
late-stage
·
Strong clinical, financial and operational
execution across the portfolio, including nine financings and
strategic transactions, 15 clinical data readouts and multiple
senior leadership appointments
Investment in three highly innovative new companies to
underpin medium and long-term growth, including one clinical-stage
asset
·
Invested €30 million (£25.7 million) as part of a
Series B financing of iOnctura, a clinical-stage oncology company
developing innovative therapies for neglected and hard-to-treat
cancers
·
Committed £16.5 million in a Series A financing of
Yellowstone, a new biologics company which is pioneering soluble
bispecific T-cell receptor (TCR)-based therapies to unlock a new
class of cancer therapeutics
·
Syncona committed to a Series A financing in
Forcefield, a company we had previously seed funded, which is a
pioneer of best-in-class therapeutics aiming to revolutionise the
treatment of heart attacks via protection
of cardiomyocytes. Alongside our £20.0 million commitment to
Forcefield's Series A, post-period end Roche Venture Fund committed
a further £10.0 million to the financing valuing Syncona's holding
in Forcefield at £8.9 million, a 38% uplift to the 31 March 2024
value[10]
A
platform to respond to improving market
conditions
·
Expanded senior team and embedded a new operating
model to better support the delivery of Syncona's ambitious plans
to achieve £5 billion of NAV by 2032:
o Roel
Bulthuis joined as Managing Partner and Head of
Investments
o John
Tsai, previously Chief Medical Officer (CMO) at Novartis, joined as
Executive Partner
o Kate
Butler, former Group Finance Director of SIML, took up the role of
Chief Financial Officer (CFO), with former CFO, Rolf Soderstrom
moving to the role of Executive Partner
o Post-period end Harriet Gower Isaac was appointed Head of
People
Outlook
Market conditions have been
challenging. However, value is returning to late-stage clinical
assets and financing conditions are beginning to improve in the
private markets. We continue to proactively manage our maturing
portfolio to drive our companies to late-stage clinical development
and are resolutely focused on delivering the 11 capital access
milestones and eight key value inflection points that are mapped
against our NAV Growth Framework. We have a strong pipeline of new
investment opportunities based on highly innovative science, across
therapeutic area, modality and stage of development, from company
creation to clinical stage.
Syncona is well positioned with a
well-funded portfolio, strong balance sheet, newly embedded
operating model, experienced team and clear strategy to take
advantage of market conditions as they improve. We have rebalanced
the portfolio, prioritising capital towards the most promising
companies and assets, and have preserved value in a challenging
market. We are excited about the opportunity ahead to achieve our
2032 targets. The financial year has started with positive momentum
and we remain focused on driving NAV growth for shareholders whilst
delivering transformational impact for patients.
Capital
deployment
Syncona anticipates that deployment
into the portfolio and pipeline in the financial year to 31 March
2025 will be £150-200 million.
Upcoming capital access
milestones and potential key value inflection points[11]
As we build and scale our companies,
there are opportunities to deliver milestones that drive access to
capital (capital access milestones) and milestones that we believe
have the potential to drive significant NAV growth (key value
inflection points[12]).
·
11 capital access milestones across the
portfolio by the end of CY2026, with nine
expected by the end of CY2025
·
Eight key value inflection points, each of which
has the potential to drive significant NAV growth by the end of
CY2026, including two in the next six months. Syncona is funded to
deliver on all of the portfolio's potential key value inflection
points
· These
capital access milestones and key value inflection points are not
without risk
Strategic life science portfolio company
|
Next expected capital access milestones
|
Syncona team view of potential key value inflection
points
|
Moving towards being on the market
|
Autolus
|
H2 CY2024
-
Initial data from Phase I trial in SLE
H2 CY2024
-
Commence the US commercial launch of obe-cel,
dependent on anticipated FDA regulatory approval in
November
|
CY2025
-
Commercial traction following US launch of
obe-cel, dependent on FDA regulatory approval
|
Beacon
|
CY2025
-
Initial data from its Phase II DAWN trial in
XLRP
|
H2 CY2024
-
24-month data from its Phase II SKYLINE trial in
XLRP
CY2026
-
Data readout from its Phase II/III registrational
VISTA trial in XLRP[13]
|
Moving towards publishing definitive data
|
iOnctura
|
CY2024
-
Initiation of Phase II trial in uveal
melanoma
|
CY2026
-
Data readout from its Phase II trial in uveal
melanoma
|
Spur[14]
|
H2 CY2024
-
Select development candidate for GBA1 Parkinson's
disease programme
H1 CY2025
-
Initial safety readout in higher dose cohort from
its Phase I/II trial in AMN
CY2025
-
Initiation of Phase III trial in Gaucher
disease
|
H2 CY2024
-
Data readout from its Phase I/II trial in Gaucher
disease
|
Resolution
|
H2 CY2024
-
Initiation of Phase I/II trial in end stage liver
disease
|
CY2026
-
Data readout from its Phase I/II trial in end
stage liver disease
|
Moving towards publishing emerging efficacy
data
|
Quell
|
|
CY2025
-
Data readout from its Phase I/II trial in liver
transplantation
|
Anaveon
|
H2 CY2024
-
Initiation of Phase I/II trial of ANV600, the
company's next generation compound
|
CY2026
-
Data readout from its Phase I/II trial of its next
generation asset ANV600
|
Purespring
|
CY2026
-
Initiation of Phase I/II trial in complement
mediated kidney disease
|
|
OMass
|
CY2026
-
Initiation of Phase I trial of its MC2
programme
|
|
Enquiries
Syncona Ltd
Natalie Garland-Collins / Fergus
Witt
Tel: +44 (0) 20 3981 7940
FTI
Consulting
Ben Atwell / Tim Stamper
Tel: +44 (0) 20 3727 1000
About Syncona
Syncona's purpose is to invest to
extend and enhance human life. We do this by creating, building and
scaling companies to deliver transformational treatments to
patients in areas of high unmet need.
We aim to build and maintain a
diversified portfolio of 20-25 globally leading life science
businesses, across development stage, modality and therapeutic
area, for the benefit of all our stakeholders. We focus on
developing treatments that deliver patient impact by working in
close partnership with world-class academic founders and
experienced management teams. Our balance sheet underpins our
strategy, enabling us to take a long-term view as we look to
improve the lives of patients with no or poor treatment options,
build sustainable life science companies and deliver strong
risk-adjusted returns to shareholders.
Forward-looking statements - this announcement contains
certain forward-looking statements with respect to the portfolio of
investments of Syncona Limited. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements. In particular, many companies
in the Syncona Limited portfolio are conducting scientific research
and clinical trials where the outcome is inherently uncertain and
there is significant risk of negative results or adverse events
arising. In addition, many companies in the Syncona Limited
portfolio have yet to commercialise a product and their ability to
do so may be affected by operational, commercial and other
risks.
Syncona Limited seeks to achieve returns over the long term.
Investors should seek to ensure they understand the risks and
opportunities of an investment in Syncona Limited, including the
information in our published documentation, before
investing.
Life science portfolio valuations
Company
|
31 Mar 2023
|
Net investment in the
period
|
Valuation
change
|
FX movement
|
31 Mar 2024
|
% of Group
NAV
|
Valuation
basis[15],[16],[17]
|
Fully diluted owner-ship
stake
|
Focus area
|
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
|
|
(%)
|
|
Strategic portfolio
companies
|
|
|
|
|
|
|
|
|
|
Late-stage
clinical
|
|
|
|
|
|
|
|
|
|
Autolus
|
50.0
|
|
122.4
|
(2.9)
|
169.5
|
13.7%
|
Quoted
|
12.6%
|
Cell
therapy
|
Beacon
|
60.0
|
20.2
|
|
0.1
|
80.3
|
6.5%
|
PRI
|
65.3%
|
Gene
therapy
|
Clinical
|
|
|
|
|
|
|
|
|
|
Spur[18]
|
72.3
|
63.0
|
1.1
|
(0.8)
|
135.6
|
10.9%
|
Cost
|
99.0%
|
Gene
therapy
|
Quell
|
86.7
|
|
|
(2.0)
|
84.7
|
6.8%
|
PRI
|
33.7%
|
Cell
therapy
|
iOnctura
|
0.0
|
25.7
|
|
(0.1)
|
25.6
|
2.1%
|
Cost
|
23.0%
|
Small
molecules
|
Pre-clinical
|
|
|
|
|
|
|
|
|
|
Resolution
|
23.0
|
26.9[19]
|
0.1
|
|
50.0
|
4.0%
|
Cost
|
81.6%
|
Cell
therapy
|
Purespring
|
35.1
|
9.9
|
0.3
|
|
45.3
|
3.6%
|
Cost
|
77.1%
|
Gene
therapy
|
OMass
|
43.7
|
|
|
|
43.7
|
3.5%
|
PRI
|
32.7%
|
Small
molecules
|
Anaveon
|
64.2
|
12.6
|
(42.8)
|
1.7
|
35.7
|
2.9%
|
PRI
|
36.9%
|
Biologics
|
Kesmalea
|
4.0
|
8.0
|
|
|
12.0
|
1.0%
|
Cost
|
62.2%
|
Small
molecules
|
Mosaic
|
7.3
|
|
|
|
7.3
|
0.6%
|
Cost
|
52.4%
|
Small
molecules
|
Forcefield
|
2.5
|
4.0
|
|
|
6.5
|
0.5%
|
Cost
|
88.5%
|
Biologics
|
Yellowstone
|
0.0
|
1.0
|
|
|
1.0
|
0.1%
|
Cost
|
21.6%
|
Biologics
|
Portfolio milestones and
deferred consideration
|
|
|
|
|
|
|
|
|
|
Beacon deferred
consideration
|
15.9
|
|
(1.6)
|
0.1
|
14.4
|
1.2%
|
DCF
|
|
Gene
therapy
|
Neogene milestone payment
|
0.0
|
|
2.2
|
|
2.2
|
0.2%
|
DCF
|
|
Cell
therapy
|
Gyroscope milestone
payments[20]
|
54.5
|
|
(56.4)
|
1.9
|
0.0
|
0.0%
|
Written-
off
|
|
Gene
therapy
|
Syncona
investments
|
|
|
|
|
|
|
|
|
|
CRT Pioneer Fund
|
32.8
|
(1.4)
|
2.5
|
|
33.9
|
2.7%
|
Adj Third
Party
|
64.1%
|
Oncology
|
Biomodal[21]
|
18.5
|
|
|
(0.5)
|
18.0
|
1.5%
|
PRI
|
5.5%
|
Epigenetics
|
Achilles[22]
|
8.6
|
|
2.5
|
(0.1)
|
11.0
|
0.9%
|
Quoted
|
24.5%
|
Cell
therapy
|
Clade
|
24.3
|
|
(14.4)
|
(0.5)
|
9.4
|
0.8%
|
Expected
proceeds
|
21.7%
|
Cell
therapy
|
Adaptimmune
|
1.2
|
(1.4)
|
0.2
|
|
0.0
|
0.0%
|
Quoted
|
|
Cell
therapy
|
Total Life Science Portfolio
|
604.6
|
168.5
|
16.1
|
(3.1)
|
786.1
|
63.5%
|
|
|
|
|
Capital pool
|
650.1
|
(219.7)
|
27.1
|
(4.7)
|
452.8
|
36.5%
|
|
|
|
TOTAL
|
1,254.7
|
|
|
|
1,238.9
|
100%
|
|
|
|
Chair's
statement
Global market conditions have
continued to be impacted by significant macroeconomic and
geopolitical uncertainties, which have weighed on sentiment more
broadly. It has been one of the worst bear markets for biotech on
record, with the S&P Biotech Index (XBI) ending Syncona's
financial year 45.7% lower than its peak in February 2021. Over the
same period Syncona's life science return is (13.5)% and NAV per
share return is (6.1)%[23]. In particular,
the funding environment for pre-clinical and early-stage clinical
biotech companies has been difficult.
Against this backdrop, the Syncona
team[24] has proactively managed the
portfolio to protect value and has taken a rigorous approach to
capital allocation, focused on clinical assets and assets
approaching clinical entry, to enable the delivery of the key value
inflection points outlined at our FY2023/4 Interim Results.
Financial performance
During FY2023/4, Syncona has
delivered a resilient performance, ending the year with net assets
of £1,238.9 million or 188.7p
per share, a 1.2% NAV per share return in the year
(31 March 2023: net assets of £1,254.7 million, NAV per share of
186.5p, (4.1)% NAV per share return). The life science portfolio
delivered a 2.2% return, with the increase in the value of Autolus
Therapeutics (Autolus), offset by the partial write-downs at
Anaveon and Clade Therapeutics (Clade) and the write-off of
Gyroscope Therapeutics (Gyroscope) milestone payments. Performance
was further enhanced by accretive share buybacks and positive
returns from our capital pool assets.
Focused and rigorous capital allocation
The challenging market backdrop and
broader sentiment has impacted Syncona's share price, which
declined by 17.0% in the year, with the discount to NAV widening
from 20.5% to 34.8%. The Board believes that the share price
undervalues the portfolio and its potential and represents a
compelling investment opportunity. In September 2023, the Board
took the decision to allocate up to £40.0 million to a share
buyback programme and post-period end a further £20.0 million has
been allocated[25] to the programme. The
Board believes this strikes the right balance between continuing to
focus capital allocation on Syncona's maturing portfolio and a
share buyback given the material discount to NAV at which the
shares are currently trading. The capital allocated to the buyback
does not impact planned investment into clinical-stage assets in
the next 24 months.
In the period, £20.2 million of
shares have been repurchased at an average discount of 35.1% to NAV
per share, resulting in an accretion of 1.61p to NAV per share in
the year. The share buyback is ongoing, with a further £10.0
million of shares bought back since the period end[26].
Over the course of the year, the
Syncona team has evolved the Company's approach to capital
allocation, moving from focusing on having up to three years of
financing available to ensuring Syncona is positioned to
sustainably deliver capital access milestones, and is funded to
deliver key value inflection points, which have the potential to
deliver significant NAV growth. As our portfolio companies continue
to mature there is increased potential to access third party
capital and liquidity, allowing for a more dynamic approach to
capital allocation. The Board believes the evolution in our
approach retains the strategic balance sheet that underpins the
delivery of Syncona's long-term strategy, whilst also allowing the
Company to optimise returns for shareholders. This Capital
Allocation Policy is covered more fully in the business review and
included in full in the supplementary information section of this
announcement.
Embedding a new operating model
During the year, the Syncona team
has expanded its senior team and embedded a new operating model to
enable the more efficient management of people, capital and the
Syncona portfolio. As part of this process, in April 2023 Roel
Bulthuis joined as Managing Partner and Head of Investments,
bringing over 20 years of global life science venture capital,
business development and investment banking experience. In May
2023, John Tsai (previously CMO at Novartis) joined as Executive
Partner, with significant clinical, pharmaceutical and leadership
experience. Effective 1 April 2024, Rolf Soderstrom former CFO of
SIML moved to the role of Executive Partner, where he now supports
the Leadership and Investment Teams whilst remaining on the SIML
Board and as Chair of the Valuation Committee. Kate Butler, former
Group Finance Director of SIML and an experienced financial leader
from a career across biotech, took up the role of CFO of SIML. Our
Executive Partner group[27] has also
expanded during the year and is well placed to support execution at
the portfolio companies as they scale. This is an important
function for the business and supports our proactive portfolio
management approach.
Martin Murphy stepped down as Chair
of SIML after 11 years of playing an instrumental role in building
Syncona into the business it is today. Martin's impact on both the
Company's trajectory and the wider ecosystem has been remarkable,
and we are indebted to him for his dedication and the platform he
helped us to establish. The Board is pleased with the strategic
progress Syncona has made and with how the senior team, now led by
Chris, as CEO and Interim Chair of SIML, is operating. A
recruitment process to appoint a new permanent Chair of SIML is
ongoing. The evolution of the team and the model are critical to
the delivery of Syncona's ambitious plans to achieve £5 billion of
NAV by 2032.
Building a sustainable life science
ecosystem
Since 2012, Syncona has been a key
part of changing the landscape for ambitious life science company
creation in the UK. As a direct consequence of Syncona's actions,
many potential therapies have been taken from academic research
into the clinic on an industrial and scalable footing. The Board
and Syncona team are passionate about shaping a life science
ecosystem that is sustainable and provides a platform for further
success. We contribute to this in a range of ways, including by
building companies in the UK, funding them at scale and focusing
them on product development. The Board and Syncona team also
continuously engage with a range of stakeholders, including
Government, industry participants, life science property
developers, charities and regulators, to enable the scaling of a
dynamic biotech cluster in which Syncona and the companies we build
can thrive.
The Board is increasingly encouraged
by the growing cross-party public policy support for science and
innovation, and increased investment in high-growth sectors. A key
challenge in translating science from an academic setting and
developing it into a commercial reality is accessing the
appropriate level of capital to enable a company to scale. We are
therefore highly supportive of the ambition behind the Mansion
House reforms. The Board and Syncona team are committed to working
alongside the signatory pension providers and other relevant
parties as these commitments move towards tangible proposals to
provide the scale-up capital that will take the UK's biotech sector
to the next level.
Syncona's positive role within the
ecosystem is also aligned with our commitment to sustainability,
which is embedded into Syncona's investment, portfolio management,
and business processes. I am pleased with our continued progress in
this regard, which includes SIML becoming a signatory of the Net
Zero Asset Managers (NZAM) initiative and completing its first UN
Principles for Responsible Investment (PRI) submission. A full
overview of our progress in and commitment to sustainability and
responsible investment can be found in the Sustainability Report
that has been published today.
Outlook
Macroeconomic and geopolitical
uncertainties have created a challenging backdrop for Syncona and
our portfolio. These conditions have impacted both the cost of
capital and financing environment in our sector. As we move into
FY2024/5, despite the ongoing macro uncertainties, we are
cautiously optimistic given the gradual decline in inflation and
potential for interest rate cuts. We believe improvements in the
macroeconomic environment will create more favourable conditions
for our companies to operate in.
In the last year, the Syncona team's
operational progress and proactive management of the portfolio has
provided a platform for future growth. A newly embedded operating
model, expanded team, and evolved Capital Allocation Policy
underpinning our disciplined approach to managing our balance
sheet, mean Syncona is well positioned to take advantage of market
conditions as they improve.
With three companies added to the
portfolio during the year, including one at clinical stage, we are
on track to deliver on our 10-year targets which were set out in
November 2022:
·
Three new companies created or added to the
portfolio per year
o This
target has been updated to reflect that we will both create
companies from highly innovative science and invest in existing
companies at clinical stage
·
Delivering three to five companies to late-stage
development where we are significant shareholders
·
Building a portfolio of 20-25 life science
companies
The Board remains focused on
overseeing and supporting the Syncona team with delivery of our
long-term strategy to create, build and scale a portfolio of 20-25
leading life science companies and organically grow net assets to
£5 billion by 2032. Together, the Board and Syncona team remain
committed to these targets and to delivering medium and long-term
growth for our shareholders.
Melanie Gee, Chair of Syncona Limited, 19 June
2024
Business
review
The Syncona team has made
significant progress in the year, proactively managing the
portfolio against a challenging market backdrop, embedding a new
operating model to enable scale and adding new companies to the
portfolio to deliver on its 10-year targets.
Life science portfolio performance
The performance of the life science
portfolio has been driven by a £122.4 million valuation gain from
Autolus, which was largely offset by partial write-downs of Anaveon
and Clade and the write-off of Gyroscope milestone
payments.
The share price appreciation at
Autolus was driven by continued strong progress in the development
of its obe-cel therapy. The company has submitted the key
regulatory filing for approval of the drug, its Biologics License
Application (BLA), with the US Food and Drug Administration (FDA)
and expects to receive feedback regarding potential approval in
November 2024. Autolus also completed a strategic collaboration
with BioNTech worth $250 million in upfront proceeds and a public
offering of $350 million.
Elsewhere, the partial write-down of
Syncona's holding in Anaveon to £35.7 million[28] (£42.8 million decline in value) reflected the
company's decision to focus on its next generation, pre-clinical
ANV600 programme and the post-period end sale of Clade to Century
saw a £14.4 million write-down to £9.4 million. These actions,
whilst disappointing from a value perspective, were aligned with
our rigorous approach to capital allocation and proactive
management of the portfolio. In
addition, Novartis' decision during the
year to discontinue the development of GT005, which it had been
responsible for progressing since acquiring Gyroscope in February
2022, resulted in a write-off of the £56.4 million risk-adjusted
valuation of the milestone payments[29].
A
maturing, proactively managed portfolio
In November 2022, we set out 10-year
targets to organically grow net assets to £5 billion. Since then,
the Syncona team has worked hard to rebalance the portfolio whilst
prioritising capital towards the most promising companies and
assets to provide a platform for future growth. We now have 13 core
life science companies in our strategic portfolio that we aim to
build to a portfolio of 20-25 companies by 2032. This portfolio is
diversified across therapeutic area and modality and weighted
towards clinical and late-stage clinical companies.
Over the year, our strategic
portfolio has continued to mature with 71.1% of its value now in
clinical-stage companies. More broadly, we are pleased with the
clinical, operational and financial delivery our companies have
achieved, generating 15 clinical data read-outs, initiating five
new clinical trials, and securing nine financings and strategic
transactions.
The Syncona team has proactively
managed the portfolio to ensure that our companies have a path
forward to reach late-stage clinical development, where we believe
significant value can be accessed. We set out a clear approach at
our annual results last year to navigate our portfolio companies
through challenging market conditions and have delivered well
against this. We have worked alongside our portfolio companies to
widen financing syndicates, execute strategic transactions, focus
capital on their most promising assets, streamline budgets and
consolidate with other companies to drive combined strength.
Notably, the market conditions impacting the biotech sector
presented a differentiated opportunity to take Freeline
Therapeutics (Freeline) private. Following this transaction,
post-period end we announced that Freeline had acquired SwanBio
Therapeutics (SwanBio), creating Spur Therapeutics
(Spur).
In our FY2023/4 Interim Results, we
set out a NAV Growth Framework to provide shareholders with more
clarity on the milestones and stages of the development cycle where
we anticipate our companies will be able to access capital and
drive significant NAV growth in the current market environment. In
the second half, the portfolio has delivered six capital access
milestones, including the initiation of new clinical trials,
publishing new clinical data and the filing of Autolus' BLA
submission to the US FDA. Since the period end, the portfolio has
delivered a further four capital access milestones, including
encouraging clinical data updates. This includes Spur, which
published data at the American Society of Gene & Cell Therapy
(ASGCT) Annual Meeting, underlining the strong potential of the
company's FLT201 therapy in Gaucher disease. The NAV Growth
Framework is covered in further detail in the life science
portfolio review section.
Capital allocation focused on clinical-stage assets or assets
approaching clinical entry
Syncona has been able to leverage
its balance sheet throughout a period where cost of capital and
access to capital have been challenging, deploying £172.2 million
in the year, in line with capital deployment guidance. We have
taken a rigorous approach to capital allocation, with 86.1% of
capital deployed into clinical-stage assets and assets approaching
the clinic, whilst funding our companies through to their next key
value inflection points. In doing so we have closely monitored
potential liquidity and NAV progression alongside capital needs,
whilst considering external factors such as the macro and financing
environment.
Despite the challenging market
conditions for biotech companies, from the £704.5 million raised by
our portfolio, Syncona committed £118.2 million, with our companies
attracting £586.3 million from external investors and pharma
partners. This demonstrates the attractiveness of our portfolio and
our ability to leverage the Syncona balance sheet to access
significant further capital.
Adding highly innovative new companies to the portfolio to
underpin long-term growth
During the year, we have delivered
on our target of adding three new companies to the strategic
portfolio. We have been able to selectively increase our exposure
to clinical assets beyond the natural maturation of the portfolio,
by investing €30 million (£25.7 million) as part of a Series B
financing of iOnctura. This is a clinical-stage company developing
innovative therapies for neglected and hard-to-treat cancers. Its
lead candidate, roginolisib, has demonstrated long-term safety and
emerging efficacy data in a Phase Ib clinical trial for uveal
melanoma, a rare cancer of the eye where patients have very limited
treatment options. Syncona is working with the company to explore
the breadth of roginolisib's potential utility and we are excited
to add iOnctura and this promising asset to our
portfolio.
We are also pleased to announce
today the creation of a new company, Yellowstone Biosciences
(Yellowstone), with a £16.5 million Series A financing. Yellowstone
is an oncology company pioneering soluble bispecific T-cell
receptor (TCR)-based therapies to unlock a new class of cancer
therapeutics.
We have also committed to a Series A
financing of a company we previously seed financed in 2021,
Forcefield Therapeutics (Forcefield), a best-in-class therapeutics
company aiming to revolutionise the treatment of heart attacks.
Alongside Syncona's £20.0 million commitment to Forcefield's Series
A, post-period end Roche Venture Fund committed a further £10.0
million to the financing, valuing Syncona's holding in Forcefield
at £8.9 million, a 38% uplift to the 31 March 2024
valuation.
Ongoing focus on optimising shareholder
returns
During the year, the Syncona team in
partnership with the Board conducted an ongoing review of the
Company's approach to capital allocation. As part of this, the
Board launched a share buyback of up to £40.0 million in September
2023 and post-period end, a further £20.0
million has been allocated to the share buyback programme. Syncona
has set out its Capital Allocation Policy to summarise our evolved
approach to the way we manage capital to drive and maximise returns
for shareholders. The core premise of our investment strategy is
that significant risk-adjusted returns in life science come when
novel technology is developed to a late-stage clinical product. As
a result, many of our investments are both capital intensive and
illiquid. We aim to manage our portfolio as a whole to ensure we
have the capital required to deliver our investment strategy,
either in cash or from liquid assets in our life science portfolio.
We leverage our balance sheet by accessing external sources of
capital to support the funding of our portfolio companies.
We anticipate that we will generate significant
cash proceeds from exits or other liquidity events and that over
time this will be the principal source of capital to fund our
strategy.
Primarily, we will look to re-invest
cash proceeds across our portfolio and into new opportunities,
where we believe we can drive significant returns by funding
companies through to clinical and late-stage
development.
Where we do not see investment
opportunities that allow us to efficiently deploy capital across
our portfolio, we will seek to return capital to shareholders. We
will consider all forms of distribution mechanisms for capital
returns at the time. This includes buying back our own shares, in
particular if market conditions create dislocations between the
share price of Syncona and its stated NAV. We will continue to
ensure that we are positioned to sustainably deliver capital access
milestones and are funded to deliver key value inflection points
which have the potential to deliver significant NAV
growth.
Our approach to capital allocation
is dynamic and continues to evolve as the business scales and
matures, increasing the potential to access third party capital,
liquidity and optimise returns for our shareholders.
Outlook
Market conditions have been
challenging. However, value is returning to late-stage clinical
assets and financing conditions are beginning to improve in the
private markets. We continue to proactively manage our maturing
portfolio to drive our companies to late-stage clinical development
and are resolutely focused on delivering the 11 capital access
milestones and eight key value inflection points that are mapped
against our NAV Growth Framework. We have a strong pipeline of new
investment opportunities based on highly innovative science, across
therapeutic area, modality and stage of development, from company
creation to clinical stage.
Syncona is well positioned with a
well-funded portfolio, strong balance sheet, newly embedded
operating model, experienced team and clear strategy to take
advantage of market conditions as they improve. We have rebalanced
the portfolio, prioritising capital towards the most promising
companies and assets, and have preserved value in a challenging
market. We are excited about the opportunity ahead to achieve our
2032 targets. The financial year has started with positive momentum
and we remain focused on driving NAV growth for shareholders whilst
delivering transformational impact for patients.
Chris Hollowood, CEO of Syncona Investment Management Limited,
19 June 2024
Life science portfolio
review
Our life science portfolio was
valued at £786.1 million at 31 March 2024 (31 March 2023: £604.6
million), delivering a 2.2% return during the year. It comprises
our 13 portfolio companies, potential milestone payments or
deferred consideration, and investments, which are non-core and
provide optionality to deliver returns for our
shareholders.
Our 13 portfolio companies, known as
our strategic portfolio, are the core life science companies where
Syncona has significant shareholdings and plays an active role in
the company's development. These companies are diversified across
modality and therapeutic area, with five companies at the clinical
stage (with two producing definitive data) and the remainder of the
portfolio at pre-clinical stage.
Our
NAV Growth Framework
We are continuing to report against
the NAV Growth Framework we established at our FY2023/4 Interim
Results, to give shareholders more clarity on which milestones and
what stage of the development cycle we anticipate our companies
will be able to access capital and drive significant NAV growth in
the current market environment. Our portfolio companies are mapped
against the categories below.
1. Companies where
delivery against milestones has the potential to enable access to
capital:
·
Operational build
o Clearly defined strategy and business plan
o Leading management team established
·
Emerging efficacy data
o Clinical strategy defined
o Initial efficacy data from Phase I/II in patients
2. Companies where
delivery against milestones have the potential to deliver NAV
uplifts:
·
Definitive data
o Significant clinical data shows path to marketed
product
o Moving to pivotal trial and building out commercial
infrastructure
·
On the market
o Commercialising product
o Revenue streams
Specific portfolio company capital
access milestones and key value inflection points are not without
risk and their impact will be affected by various factors including
the market environment at the time of their
delivery.
Strategic portfolio
Late-stage clinical
companies - 20.2% of NAV
Autolus (13.7% of NAV, 12.6% shareholding) - Moving towards
being on the market
Syncona team view
Syncona believes that Autolus' lead
therapy, obe-cel in relapsed/refractory (r/r) adult acute
lymphoblastic leukaemia (ALL), has the potential to have a
meaningful impact for patients suffering from ALL whilst also
having a very positive safety profile in a last line setting. This
view has been reinforced post-period by positive longer-term
follow-up data presented at The American Society of Clinical
Oncology (ASCO) Annual Meeting. Autolus is well capitalised to
drive the full launch and commercialisation of obe-cel as well as
to advance its pipeline development plans into autoimmune diseases,
which includes publishing data in a Phase I trial of obe-cel
in systemic lupus erythematosus
(SLE) in H2 CY2024. This follows a
strategic collaboration and equity investment from BioNTech for
aggregate proceeds of $250 million upfront, as well as an offering
of American Depositary Shares for $350 million, for gross proceeds
of $600 million received in the year. We are supportive of the
company as it continues to deliver against its operational
milestones as it approaches its Prescription Drug User Fee Act
(PDUFA) date in November 2024, the target action date that the FDA
has set to respond to Autolus' BLA filing for obe-cel.
|
·
|
Company focus: Autolus is
developing next generation programmed T-cell therapies for the
treatment of cancer and autoimmunity with a clinical pipeline
targeting haematological malignancies, solid tumours and autoimmune
diseases.
|
|
·
|
Lead programme: Autolus
announced further data from its study of obe-cel in r/r adult ALL
at the American Society of Haematology (ASH) Annual Meeting in
December 2023, demonstrating prolonged event free survival and a
favourable safety profile across all patient cohorts. Additional
longer-term follow up data released post-period end at ASCO further
underlined the strong safety profile of the drug, whilst
demonstrating a durable response to treatment and potential for
long-term survival outcomes. During the year Autolus filed a BLA
with the US FDA and a Marketing Authorisation Application (MAA)
with the UK's Medicines and Healthcare products and Regulatory
Agency (MHRA) for obe-cel, both of which have been accepted. The
FDA has set a PDUFA target action date of 16 November 2024 for
reviewing the BLA application. The company is preparing for the
commercial launch of obe-cel in H2 CY2024, subject to regulatory
approval.
|
|
·
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Commercialisation readiness: During the year Autolus opened its manufacturing facility, the
Nucleus, in Stevenage, a 70,000 sq. foot advanced manufacturing
facility which will support the commercial launch of obe-cel. The
Nucleus is the first of its kind in the UK and provides a
specialist manufacturing capability for the supply of personalised
cell therapy products. The Nucleus has obtained a Manufacturer's
Importation Authorisation (MIA) together with the accompanying GMP
certificate. This authorisation enables Autolus to manufacture for
global commercial and clinical product supply. Autolus has also
selected Cardinal Health as its US Commercial Distribution Partner,
enabling distribution capabilities required to commercialise a CAR
T-cell therapy in the US. These significant operational milestones
will help to support obe-cel's planned commercialisation in 2024,
enabling Autolus to launch the product at a scale which serves
global demand in r/r adult ALL. Autolus' commercial readiness has
been strengthened through its strategic collaboration with
BioNTech, where under the terms of the agreement BioNTech will
support the launch and expansion of obe-cel and will receive a
royalty on net sales.
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·
|
Pipeline programmes: Autolus
expanded the use of its lead asset, obe-cel, into autoimmune
diseases through the initiation of a Phase I trial in SLE, with an
initial data readout expected in H2 CY2024. During the year Autolus
also published further data from the ALLCAR extension study of
obe-cel in non-Hodgkin's lymphoma (NHL) and chronic lymphocytic
leukaemia (CLL), as well as from its study of obe-cel in primary
central nervous system lymphoma (PCNSL), further supporting the
safety profile of the therapy. The company also continues to make
progress across its broader pipeline, releasing further data from
AUTO1/22 in paediatric ALL and AUTO4 in peripheral T-cell lymphoma,
initial data from AUTO8 in multiple myeloma, and initiating a Phase
I trial of AUTO6NG in neuroblastoma. The data reported to date
further demonstrates the strength of Autolus' technology and
platform.
|
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·
|
Strategic transactions: In
February 2024 Autolus announced a strategic collaboration with
BioNTech aimed at advancing both companies' autologous CAR-T
programmes towards commercialisation, pending regulatory
authorisations. In connection with the strategic collaboration, the
companies entered into a license and option agreement and a
securities purchase agreement. Under the terms of the agreement,
BioNTech made a cash payment of $50 million to Autolus, and agreed
to purchase $200 million of Autolus' American Depositary Shares in
a private placement. BioNTech also has the option to utilise
Autolus' manufacturing capacity in a cost-efficient set up, has
access to Autolus' cell programming technologies and has
co-commercialisation options for Autolus' AUTO1/22 and AUTO6NG
programmes.
|
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·
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People: The company appointed
Robert F. Dolski as CFO and promoted Dr Chris Williams to Chief
Business Officer. Robert brings more than 20 years of diversified
experience as a life sciences financial executive, driving the
strategy, planning, execution and financing of private and public
biopharmaceutical companies. Chris was part of the team that
founded Autolus in 2014 and he initially served on the company's
Board as a Non-Executive Director. He previously worked at
University College London (UCL) Business where he led the
establishment of strategic collaborations, licensing deals, new
companies and financing transactions across a portfolio of cell and
gene therapies in oncology and rare diseases.
|
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·
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Potential key value inflection
point: Commercial traction
following US launch of obe-cel in r/r adult ALL in CY2025,
dependent on FDA regulatory approval.
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Beacon (6.5% of NAV, 65.3% shareholding) - Moving towards
being on the market
Syncona team view
Syncona believes that the eye is a
very attractive target for AAV gene therapy, and Beacon
Therapeutics (Beacon) represents a significant opportunity for
Syncona to apply its domain knowledge in retinal gene therapy,
where it already has prior expertise, to a late-stage clinical
asset in X-linked retinitis pigmentosa (XLRP). The initiation of
Beacon's Phase II/III registrational trial, coupled with its
exciting platform potential, means the company has real opportunity
to drive value for our shareholders.
|
·
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Company focus: Beacon is an
ophthalmic AAV-based gene therapy company founded to save and
restore the vision of patients with a range of prevalent and rare
retinal diseases that result in blindness.
|
|
·
|
Financing stage: Raised £96.0
million in a Series A financing in 2023.
|
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·
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Lead programme: Post-period end
Beacon announced the initiation of its Phase II/III registrational
VISTA study for its lead candidate, AGTC-501, in XLRP. Beacon plans
to use the data generated from the VISTA trial, in combination with
data from the Phase I/II HORIZON and Phase II SKYLINE trials, to
support its regulatory strategies in the EU and US. During the year
the company also entered the clinic with the Phase II DAWN trial,
which assesses the safety, efficacy and tolerability in AGTC-501
amongst patients who have already been treated once with the
therapy in their other eye. There are no approved treatments for
XLRP, and the programme has orphan drug designations from both the
FDA and the European Commission. During the year Beacon presented
encouraging efficacy from the SKYLINE trial at the Annual Macula
Society Meeting, demonstrated by improvements in retinal
sensitivity, the primary endpoint for the trial, with a 63%
response rate in the higher dose cohort. AGTC-501 has also shown a
favourable safety profile through data published from the SKYLINE
and HORIZON studies.
|
|
·
|
Commercialisation update: Post-period end Beacon announced the sale of its manufacturing
team and facility in Alachua, Florida to Ascend Advanced Therapies
(Ascend). The transaction includes a long-term partnership with
Ascend to continue manufacturing its products for clinical and
commercial use, securing GMP product supply for AGTC-501, and
enabling the company to focus on clinical development.
|
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·
|
Pipeline programmes: Beacon has
an exciting pre-clinical programme in dry age-related macular
degeneration (dAMD), a leading cause of irreversible vision loss in
people over 60. Beacon's dAMD programme features an intravitreally
(IVT) delivered novel AAV based gene therapy. IVT delivery is less
invasive, requires less clinician training and can be delivered in
clinic rather than via surgery, hence provides greater access to
more patients.
|
|
·
|
Potential key value inflection
points:
·
24-month data from Phase II SKYLINE trial in XLRP
expected in H2 CY2024.
·
Data readout from its Phase II/III registrational
VISTA trial in XLRP expected in CY2026.
|
Clinical-stage companies - 19.8% of
NAV
Spur (10.9% of NAV, 99.0% shareholding) - Moving towards
publishing definitive data
Syncona team view
Post-period end, we announced that
Freeline had completed the acquisition of Syncona portfolio company
SwanBio to form Spur, which is in line with Syncona's portfolio
management strategy of consolidating companies to strengthen
management teams, improve balance sheets and access to capital,
prioritise the most promising companies and assets, leverage
synergies and drive cost savings. During the period, as a result of
the challenging market conditions impacting the biotech sector, and
our confidence in its lead FLT201 Gaucher disease programme, we
executed on a differentiated opportunity to take Freeline private.
Syncona continues to be encouraged by the data published from the
Gaucher disease programme, which we believe has the potential to
deliver long-term value. Spur's SBT101 programme for the treatment
of AMN, a devastating central nervous system (CNS) disorder for
which there are currently no approved treatments, is currently in a
Phase I/II trial. This programme will further bolster Spur's
growing focus on the use of gene therapy in the CNS, supporting the
development of Spur's pre-clinical research programme in
Parkinson's disease. Syncona believes that Spur represents a
significant opportunity to deliver two first-in-class gene
therapies and progress a pipeline targeting more prevalent chronic
debilitating diseases.
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·
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Company focus: Developing
transformative gene therapies for patients suffering from chronic
debilitating diseases.
|
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·
|
Financing stage: As part of
Syncona's acquisition of Freeline, Syncona provided $15 million
(£11.9 million) of financing to enable the company to meet its
near-term cash requirements to continue to advance FLT201.
Alongside Freeline's acquisition of SwanBio to create Spur, Syncona
committed to providing a further £40.0 million in financing to
support the development of the company's expanded pipeline. During
the year the management team also executed on a series of
operational and clinical actions to extend its cash
runway.
|
|
·
|
Clinical update: Post-period
end the company presented further positive data from its lead
Gaucher disease programme at ASGCT reinforcing the safety,
tolerability and efficacy profile of FLT201, as well as its
potential to improve quality of life for patients. Importantly the
data showed levels of lyso-Gb1[30] were
substantially reduced in patients with persistently high lyso-Gb1
levels, despite years on prior treatment with enzyme replacement
therapy (ERT) or substrate reduction therapy (SRT), the current
standard of care for Gaucher disease patients. Spur's SBT101
programme in AMN continued to make progress during the year.
Following the integration of the AMN programme into Spur's
pipeline, the company's management team is reviewing the clinical
development programme for SBT101 and now expects to release an
interim safety readout from the higher dose cohort in H1
CY2025.
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·
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Strategic transactions: The
challenging market conditions impacting the biotech sector
presented a differentiated opportunity to take Freeline private.
Following this transaction, Freeline completed an acquisition of
Syncona portfolio company SwanBio to form Spur, creating a
consolidated AAV gene therapy pipeline that includes FLT201 and
SBT101. The transaction consolidates costs, drives efficiencies,
provides a broadened clinical pipeline, and brings strategic
synergies including clinical capabilities and manufacturing
know-how. The acquisition has taken place at the portfolio
companies' holding valuations, resulting in a combined valuation of
£135.6 million at the year end[31]. The
combined company is led by Freeline CEO Michael Parini and will
benefit from the world-class leadership of the broader Freeline
management team who are focused on driving forward two potentially
first-in-class gene therapy assets.
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·
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Potential key value inflection point:
Data readout from its Phase I/II trial in Gaucher
disease expected in H2 CY2024.
|
Quell (6.8% of NAV, 33.7% shareholding) - Moving towards
publishing emerging efficacy data
Syncona team view
We have seen strong validation for
the potential of Quell Therapeutics' (Quell) technology and
platform through its collaboration with AstraZeneca, where Quell
received $85 million upfront, predominantly comprising a cash
payment alongside an equity investment, to develop, manufacture and
commercialise autologous T-regulatory (Treg) cell therapies for two
autoimmune disease indications. During the period Quell announced
positive safety data from its lead QEL-001 programme in liver
transplantation. This was confirmed through further safety data
that was published post-period end from the initial safety cohort
of three patients, which has supported Quell's subsequent decision
to advance QEL-001 into the efficacy cohort of its Phase I/II
trial. We continue to work alongside the company's management team
as the company delivers against its upcoming operational and
clinical milestones.
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·
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Company focus: Developing
engineered Treg cell therapies to treat a range of conditions such
as solid organ transplant rejection, autoimmune and inflammatory
diseases.
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·
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Financing stage: Raised $156
million in a Series B financing in November 2021.
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·
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Clinical update: Announced
initial positive safety data from its Phase I/II trial in liver
transplantation. Post-period end Quell presented further safety
data at the American Transplant Congress, demonstrating that
QEL-001 was safe and well tolerated by liver transplant patients.
The company has announced that it is advancing the therapy's
development into the efficacy cohort of the LIBERATE Phase I/II
trial.
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Commercial update: Quell
entered into a collaboration, exclusive option and license
agreement with AstraZeneca to develop, manufacture and
commercialise autologous, engineered Treg cell therapies for two
autoimmune disease indications, providing excellent validation for
Quell's technologies and capabilities. As part of the
collaboration, Quell received $85 million upfront, comprising a
predominant cash payment and an equity investment, with potential
payments of over $2 billion contingent on successfully reaching
development and commercial milestones, plus tiered
royalties.
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·
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Potential key value inflection point:
Data readout from its Phase I/II trial in liver
transplantation expected in CY2025.
|
iOnctura (2.1% of NAV, 23.0% shareholding) - Moving towards
publishing definitive data
Syncona team view
iOnctura represents an opportunity
to invest in a clinical-stage company and to take its lead
programme, roginolisib, through to late-stage clinical development.
This is in line with Syncona's strategy to focus capital deployment
on clinical-stage assets or assets approaching clinical entry. The
Syncona team is working closely alongside iOnctura to review its
pipeline and explore the breadth of roginolisib's utility. Syncona
believes roginolisib has the potential to modulate an important
biological pathway in cancer with a side-effect profile that will
allow it to benefit many patients.
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·
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Company focus: Developing
selective cancer therapeutics against targets that play critical
roles in multiple tumour survival pathways.
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·
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Financing stage: Syncona led a
€80 million (£68.4 million) Series B financing of iOnctura in March
2024. iOnctura has been added to the strategic portfolio in the
financial year.
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·
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Lead programme: iOnctura's lead
programme, roginolisib, is a first-in-class allosteric (indirect)
modulator of PI3K delta (PI3Kδ), which has potential application
across a variety of solid tumour and haematological cancers.
Roginolisib demonstrated long-term safety and emerging efficacy
data in a Phase Ib trial for uveal melanoma, a rare cancer of the
eye where patients have very limited treatment options. Phase II
trials in uveal melanoma and other cancer indications, including
non-small cell lung cancer and primary myelofibrosis, are expected
to begin later in CY2024.
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·
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Pipeline programmes: The
company has a number of clinical and pre-clinical pipeline
programmes in broader oncology indications.
|
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·
|
Potential key value inflection
point: Data readout from its
Phase II trial in uveal melanoma expected in CY2026.
|
Pre-clinical companies - 16.2% of
NAV
Resolution (4.0% of NAV, 81.6% shareholding) - Moving towards
publishing definitive data
|
·
|
Company focus: Resolution
Therapeutics (Resolution) is pioneering macrophage
cell therapy for transformative outcomes in inflammatory organ
diseases.
|
|
·
|
Financing stage: Raised £37.9
million to date from Syncona through its Series A
financing.
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·
|
Clinical update: Resolution's
founders presented clinical data at the American Association for
the Study of Liver Diseases (AASLD) Annual Meeting from an academic
study (MATCH II) which provided proof-of-principle that treatment
with a macrophage cell therapy was well tolerated in patients, and
helped to dramatically reduce liver associated complications,
including death. Further data presented post-period at the European
Association for the Study of the Liver (EASL) Congress confirmed
the excellent safety and efficacy of the therapy at 30 months
post-treatment. Resolution is using the outputs of this trial to
prepare its lead product RTX001, an engineered autologous
macrophage cell therapy, for a Phase I/II clinical trial, expecting
to enter the clinic in H2 CY2024.
|
|
·
|
People update: Resolution
strengthened its leadership team in the period with several
appointments, including of Dr Amir Hefni as CEO, who brings almost
20 years' experience in drug discovery and development leadership
in the biotechnology and pharmaceutical industry and joins
Resolution from Novartis where he was the Head of Cell & Gene
Therapy. Resolution also appointed Simon Ramsden as CFO, who brings
broad corporate and commercial finance experience in the
pharmaceutical and biotechnology industry, and Dr Clifford A. Brass
as CMO. Clifford brings extensive clinical development experience
having spent over 25 years working in the pharmaceutical industry,
with a strong emphasis on advanced liver disease.
|
|
·
|
Potential key value inflection point:
Data readout from its Phase I/II trial in end
stage liver disease expected in CY2026.
|
Purespring (3.6% of NAV, 77.1% shareholding) - Moving towards
publishing emerging efficacy data
|
·
|
Company focus: Developing gene
therapies for the treatment of chronic renal diseases which are
currently poorly served by existing treatments.
|
|
·
|
Financing stage: Raised £45.0
million in a Series A financing in 2020.
|
|
·
|
Development update: Continuing
to develop its pre-clinical pipeline and proprietary
platform.
|
|
·
|
People update: Purespring made
several key appointments including Fredrik Erlandson as CMO, Sachin
Kelkar as CFO and Peter Mulcahy as Chief People Officer. These
appointments strengthen Purespring's leadership team, with Fredrik
leading the clinical development of Purespring's current and future
pipeline, Sachin leading the company's finance strategy and Peter
championing culture and growth.
|
OMass (3.5% of NAV, 32.7% shareholding)
- Moving towards
publishing emerging efficacy data
|
·
|
Company focus: Developing small
molecule drugs to treat rare diseases and immunological
conditions.
|
|
·
|
Financing stage: Raised £75.5
million in a Series B financing in April 2022, with an additional
£10 million investment from British Patient Capital announced in
May 2023.
|
|
·
|
Commercial update: The company
moved to a new purpose-built 16,000 sq. foot mixed-use facility at
the ARC Oxford campus, helping it to prepare for its next phase of
growth and enabling further collaboration as it expands its
team.
|
|
·
|
People update: The company
expanded its leadership team with the appointments of Dr Winfried
Barchet as Vice President of Immunology, who brings more than 15
years of experience across drug discovery and translational
research, and Jim Geraghty joined as Chairman of its Board of
Directors, bringing over 35 years of strategic experience including
more than 25 years as a senior executive at biotechnology companies
developing and commercialising innovative therapies.
|
Anaveon (2.9% of NAV, 36.9% shareholding)
- Moving towards
publishing emerging efficacy data
|
·
|
Company focus: Developing a
selective IL-2 receptor agonist, a type of protein that could
enhance a patient's immune system to respond therapeutically to
cancer.
|
|
·
|
Lead programme: During the year
Anaveon took the strategic decision to focus on its next-generation
compound, ANV600, a targeted version of its first-generation
product ANV419. Pre-clinical data released to date has supported
the potential of ANV600 as a monotherapy and as a combination
therapy for cancer.
|
|
·
|
Financing stage: Reflecting the
strategic decision to focus on the ANV600 programme, which is
pre-clinical stage, Syncona and the syndicate of investors in
Anaveon adjusted the price of the final CHF 36.2 million (£32.5
million) tranche of the 2021 Series B financing.
|
|
·
|
Clinical update: On track to
initiate a Phase I/II clinical trial of ANV600 in H2
CY2024.
|
|
·
|
Potential key value inflection point: Data readout from its Phase I/II trial of ANV600 expected in
CY2026.
|
Kesmalea (1.0% of NAV, 62.2% shareholding) - Moving towards
completing operational build
|
·
|
Company focus: An opportunity
to create a new generation of small molecule oral drugs addressing
diseases through modulating protein homeostasis.
|
|
·
|
Financing stage: £20.0 million
Series A financing led by Syncona in 2022 alongside Oxford Science
Enterprises. An additional £5.0 million was raised during the year
with Syncona committing £4.0 million.
|
|
·
|
Development update: The company
progressed development of its platform technology and discovery
programmes. The Syncona Executive Partner group has also been
working with the company on its strategy and in identifying novel
targets for its platform.
|
|
|
|
Mosaic (0.6% of NAV, 52.4% shareholding)
- Moving towards
completing operational build
|
·
|
Company focus: Oncology
therapeutics company focusing on drug development against
genetically informed targets.
|
|
·
|
Financing stage: £22.5 million
Series A announced in April 2023, led by Syncona with a £16.5
million commitment alongside Cambridge Innovation
Capital.
|
|
·
|
Platform capabilities: Mosaic
Therapeutics' (Mosaic) technology platform uses proprietary disease
models and artificial intelligence and machine learning to enable
identification of novel biological intervention to drive responses
in cancer. The company will then leverage these insights to build a
pipeline of programmes.
|
|
·
|
People update: Syncona Managing
Partner, Edward Hodgkin, became Chairman of the company during the
year.
|
Forcefield (0.5% of NAV, 88.5% shareholding) - Moving towards
publishing emerging efficacy data
|
·
|
Company focus: Pioneering
best-in-class therapeutics aiming to use protective cardiomyocytes
to revolutionise the treatment of heart attacks.
|
|
·
|
Financing stage: Syncona
committed to a Series A financing in Forcefield in March 2024 and
invested £4.0 million into the company during the year[32]. Post-period end Forcefield attracted a further
£10.0 million Series A commitment from Roche Venture Fund, valuing
Syncona's investment at £8.9 million, a 38% (£2.4 million) uplift
to the 31 March 2024 value; Syncona's total commitment in the
Series A is £20.0 million. Forcefield has been added to the
strategic portfolio in the financial year.
|
|
·
|
People update: John Tsai MD,
joined Forcefield as Chair and CEO, bringing over 20 years'
experience in global pharmaceuticals with a proven track record in
leading transformational organisational growth and strategy. He is
currently an Executive Partner at Syncona and was most recently
President, Global Drug Development and CMO at Novartis.
|
Yellowstone (0.1% of NAV, 21.6% shareholding) - Moving towards
completing operational build
|
·
|
Company focus: Pioneering
soluble bispecific T-cell receptor (TCR)-based therapies to unlock
a new class of cancer therapeutics.
|
|
·
|
Financing stage: Syncona
committed £16.5 million to Yellowstone in a Series A financing in
March 2024, and invested £1.0 million into the company during the
year. Yellowstone has been added to the strategic portfolio in the
financial year.
|
|
·
|
People update: The company
launched with an experienced and industry-leading team. This
includes Prof. Paresh Vyas as CSO, who is a Professor of
Haematology and Deputy Director of MRC Molecular Haematology Unit
at the University of Oxford and Oxford University Hospitals NHS
Trust, Julian Hirst as CFO, who has over 20 years of financial
experience, and Neil Johnston as Executive Chair, who spent 17
years at Novartis, most recently as global Head of Business
Development and Licensing and a member of the company's Pharma
Executive Committee.
|
Portfolio milestones and deferred consideration - 1.4% of
NAV
During the year, Novartis took the
decision to discontinue the development of GT005 (previously the
lead asset at Gyroscope Holdings Limited) in Geographic Atrophy
(GA) secondary to dry AMD, which it had been responsible for
progressing since acquiring Gyroscope in February 2022. Syncona had
been eligible for a series of milestone payments in the event of
the successful clinical development and commercialisation of the
programme. The decision taken by Novartis to stop development of
GT005 therefore resulted in a write-off of the £56.4 million
risk-adjusted valuation of the milestone payments.
Syncona also currently has rights to
potential milestone payments related to the sale of Neogene to
AstraZeneca. Alongside these, as part of Syncona's acquisition of
AGTC, the company has the potential to benefit from any future
commercialisation of Beacon's lead asset AGTC-501 via a "deferred
consideration" which provides the right to a mid-single digit
percentage of future income from sales and licensing. Together,
these potential milestones and deferred consideration are valued on
a risk-adjusted discounted cash flow basis at £16.6
million.
Syncona investments - 5.9% of NAV
Syncona has £72.3 million of value
in its investments, which are non-core and provide optionality to
deliver returns for our shareholders. Our assets held within our
investments are Achilles Therapeutics (Achilles), Clade, CRT
Pioneer Fund, and Biomodal (formerly Cambridge
Epigenetix).
Syncona's 0.8% holding in
Adaptimmune was sold during the period for £1.4 million.
Achilles published further data from
18 patients post-period end, which showed that there had been no
further objective responses since the previous data update in
December 2022, including at the higher dose level. Syncona believes
that in order for Achilles to be competitive, it would need to show
an ability to routinely manufacture its products at high doses and
in significant numbers whilst delivering superior efficacy to
comparable treatments. The company has been unable to demonstrate
this to date and on this basis, Syncona has moved Achilles from the
strategic portfolio to being classified as a Syncona investment.
Syncona does not hold a Board role at the company but as a
significant shareholder, is engaging with the Board on a path
forward.
Post-period end, an agreement was
reached for Clade to be acquired by Century Therapeutics for up to
$45.0 million (£35.9 million), with upfront consideration to
Syncona of $9.3 million (£7.4 million). Given the impending sale of
the company and with Syncona no longer holding a Board role, Clade
has been moved from the strategic portfolio to being classified as
a Syncona investment.
Portfolio milestones delivery
since introduction of NAV Growth Framework (FY2023/4 Interim
Results, November 2023)
Strategic life science portfolio company
|
Milestone
|
Milestone type
|
Expected
|
Status
|
Autolus
|
Further long-term follow up data
from its pivotal study in obe-cel in adult r/r B-ALL
|
Capital access milestone
|
H2 CY2023
|
Delivered
|
BLA submission for obe-cel to the
FDA
|
Capital access milestone
|
H2 CY2023
|
Delivered
|
Initiate a Phase I study of obe-cel
in refractory SLE, extending the use of obe-cel into autoimmune
diseases
|
Capital access milestone
|
H1 CY2024
|
Delivered
|
Achilles[33]
|
Provide further data from its Phase
I/IIa clinical trial in NSCLC
|
Capital access milestone
|
Q1 CY2024
|
Delivered in Q2 CY2024
|
Provide further data from its Phase
I/IIa clinical trial in melanoma
|
Capital access milestone
|
Q1 CY2024
|
Delivered in Q2 CY2024
|
Quell
|
Complete dosing of the safety cohort
in its Phase I/II trial in liver transplantation
|
Capital access milestone
|
H2 CY2023
|
Delivered in H1 CY2024
|
Initial safety data in Phase I/II
trial in liver transplantation
|
Capital access milestone
|
H1 CY2024
|
Delivered
|
Beacon
|
Publish 12-month data from its Phase
II trial in XLRP
|
Capital access milestone
|
H1 CY2024
|
Delivered
|
Initiate its Phase II/III trial in
XLRP
|
Capital access milestone
|
H1 CY2024
|
Delivered
|
Freeline (now Spur)
|
Release of additional data from its
Phase I/II trial in Gaucher disease
|
Capital access milestone
|
CY2024
|
Delivered
|
SwanBio (now Spur)
|
Initial safety readout in higher
dose cohort from its Phase I/II trial in AMN
|
Capital access milestone
|
H1 CY2024[34]
|
Now expected in H1 CY2025
|
Anaveon
|
Publish initial data from its Phase
I/II trial of ANV419 in metastatic
melanoma
|
Capital access milestone
|
H2 CY2024
|
ANV419 programme
deprioritised
|
Financial
review
Syncona's strategy is supported by
our capital pool, people and new operating model, which underpin
our ability to deliver medium and long-term growth for our
shareholders. We take a robust and prudent approach to valuation
and managing our balance sheet, whilst closely managing our costs.
This ensures that we are investing to support the delivery of our
strategy, as part of our ongoing focus on optimising medium and
long-term returns for our shareholders.
NAV
performance
Syncona ended the year with net
assets of £1,238.9 million, or 188.7p per share, a 1.2% NAV per
share return in the year.
Rigorous approach to capital allocation
As more fully covered in the
business review, we take a rigorous approach to capital allocation
and managing our balance sheet, closely monitoring potential
liquidity and NAV progression alongside capital needs, whilst
considering external factors. This ensures that we can sustainably
deliver milestones that have the potential to enable capital
access and are funded to deliver key value
inflection points which have the potential to deliver significant
NAV growth.
Within our life science portfolio,
we have continued to prioritise capital towards clinical
opportunities and assets which are approaching clinical entry,
aligning our capital allocation to our NAV Growth Framework. A
total £172.2 million of capital was deployed into the life science
portfolio in the 12 months. Of this, £135.8 million was invested in
companies that are moving towards definitive data or towards being
on the market, where key value inflection points have the potential
to drive significant NAV growth. This includes investments in
Beacon, Spur, Resolution and a new investment iOnctura. In
addition, £26.5 million was invested in companies moving towards
emerging efficacy data, to support programmes that have the
potential to underpin capital access, including investments in
Forcefield, Anaveon and Purespring. The remaining £9.9 million was
invested in earlier stage companies, including the tranched
milestone payment to Kesmalea and the new investment in
Yellowstone, supporting longer-term growth.
Alongside these investments, in
September 2023 the Board allocated £40.0 million to a share buyback
programme and post-period end, a further
£20.0 million has been allocated to the programme. At 30 March
2024, £20.2 million of this had been invested in repurchasing 16.5
million shares, at an average discount of 35.1%, resulting in an
accretion of 1.61p to NAV per share. The share buyback is ongoing,
with a further £10.0 million of shares repurchased since the year
end at an average discount of 38.8%[35].
Looking forward, we have a strong
pipeline of existing and new opportunities and expect to deploy
between £150-200 million across our life science portfolio and into
new opportunities in the financial year to 31 March
2025. We will continue to
focus our capital allocation on clinical opportunities and assets
that are approaching clinical entry, aligning our capital
allocation to our NAV Growth Framework as our companies
scale.
Prudent capital pool management to balance inflationary
risk
Within our capital pool of £452.8
million we ensure that we allocate between 12 and 24 months of
funding to cash and Treasury Bills. Longer-term capital is
allocated to a number of low volatility, highly liquid, multi-asset
and credit funds or mandates, managed by Kempen and M&G with
portfolio mandates to deliver a core CPI (consumer price index)
return over the mid-term. During the year, we exited our position
in the Schroder Diversified Growth Fund and re-deployed the capital
into short-dated treasuries. At the year end, £262.4 million was
held in cash and Treasury Bills, with £182.5 million held in
multi-asset funds and credit funds. The remainder of the capital
pool is invested in mature cash generative private equity funds. To
provide Syncona with a natural hedge against short-term US
dollar cash flows, 14.6% of our capital
pool is held in US dollars and the 2.3% strengthening of Sterling
over the year resulted in a small unrealised foreign exchange loss
at the year end. The overall return across our capital pool during
the year was 3.4%.
|
£m
|
% of Gross capital
pool[36]
|
% of nav
|
CASH
|
99.0
|
20.9%
|
8.0%
|
Treasury
Bills
|
163.4
|
34.5%
|
13.2%
|
Multi-asset
funds
|
70.5
|
14.9%
|
5.7%
|
credit
funds
|
112.0
|
23.6%
|
9.0%
|
private equity
funds
|
28.8
|
6.1%
|
2.3%
|
We will continue to monitor the
asset allocation and foreign exchange exposure within the capital
pool based on our capital requirements and market conditions, with
a focus on balancing inflationary risk with a core strategy of
capital preservation and liquidity access.
Valuation approach
At the year end, our life science
portfolio comprised listed holdings (23.0%), private companies
either valued at price of recent investment (PRI) (33.4%), or on
the basis of capital invested (calibrated cost) (36.0%). In
addition, potential milestone and deferred consideration payments
relating to Neogene and Beacon are valued on a risk-adjusted
discounted cash flow basis in line with our Valuation Policy and
together represent 2.1% of the portfolio[37].
Throughout the challenging macro
environment, which has impacted valuations for early-stage life
science companies, the Syncona team has continued to rigorously
review the robustness of our private company valuations. These
companies have a number of key milestones ahead which will be
central to enabling future access to capital and key valuation
inflection points that have the potential to drive significant NAV
growth. Our approach to valuation includes taking inputs from the
investment team, with a focus on delivery against these upcoming
milestones as well as taking into account any developments during
the period which may have impacted the investment theses of
individual companies. We have also taken into account the input
provided by Syncona's external valuation adviser on our seven
largest private holdings, which together make up 68.2% of the
strategic portfolio by value. We will continue to review our
company valuations on a quarterly basis alongside market data as
conditions evolve, with conditions in the private markets now
beginning to improve.
Investing in our platform to support growth
ambitions
As highlighted in last year's annual
results, we continue to invest in our platform and team to support
our growth ambitions, which has led to an anticipated increase in
our cost base. In particular, we have made a number of senior
appointments to the investment team and Executive Partner group,
alongside further investment across the business to support the
scaling of our model. Syncona is a self-managed vehicle and SIML
costs are managed prudently by the Leadership Team within an annual
budget approved by the Board. SIML management fees for FY2023/4
were £16.6 million (1.34% of NAV[38]), an
increase of £4.5 million on FY2022/3. In addition to an increase in
headcount, this increase also reflects the influence of the
inflationary environment on salaries and business expenses.
Notwithstanding further inflationary impacts, the SIML team does
not expect costs to materially increase in FY2024/5, with
investment in the platform and senior team now largely complete.
Total costs of Syncona Limited during the year increased to £26.3
million (2.12% of NAV) compared to £22.4 million (1.79% of NAV) in
the prior year. These costs incorporate fees paid to SIML, ongoing
operating costs of the Company, the £4.4 million charitable
donation and the costs associated with the long-term incentive
scheme.
Kate Butler, Chief Financial Officer of Syncona Investment
Management Limited, 19 June 2024
Supplementary
information
Capital Allocation Policy
Syncona is committed to driving and
maximising returns for shareholders over the long term as we seek
to deliver on our 10-year targets as set out in November 2022. We
strive to deliver growth through capital appreciation and offer
investors the opportunity to access the expertise of Syncona's
specialist team and the growth potential of a proprietary
investment portfolio in a high risk and high reward
sector.
Focus on driving significant value through investing in life
science
The core premise of our investment
strategy is that significant risk-adjusted returns in life science
come when novel technology is developed to a late-stage clinical
product. We generate opportunities to do this by creating companies
from exceptional science, then building and scaling them over the
long term to reach late-stage clinical development, alongside
third-party investors. We also seek to make new investments in
clinical-stage opportunities, both public and private, where we can
similarly advance them to late-stage clinical development and
generate strong risk-adjusted returns.
Portfolio management and our NAV Growth
Framework
Many of our investments are both
capital intensive and illiquid. We aim to manage our portfolio as a
whole to ensure we have the capital required to deliver our
investment strategy, either in cash or from liquid assets in our
life science portfolio. We leverage our balance sheet by accessing
external sources of capital to support the funding of our portfolio
companies. We take a rigorous approach to capital allocation,
prioritising capital towards clinical opportunities and assets
which are approaching clinical entry, while continuing to create
companies based on exceptional science.
In our FY2023/4 Interim Results, we
set out a NAV Growth Framework to give shareholders more clarity on
which milestones and at what stage of the development cycle we
anticipate our companies will be able to access capital and drive
significant NAV growth. Emerging clinical data typically has the
potential to drive access to capital either through company
financings or, for companies that are publicly listed, it can drive
returns by share price appreciation. Definitive clinical data has
the potential to provide significant NAV growth and has the
potential to provide access to capital through sales of portfolio
companies, or significantly increased market liquidity in listed
shares.
If our investment strategy is
successful, we anticipate that we will generate significant cash
proceeds from exits or other liquidity events and that over time
this will be the principal source of capital to fund our
strategy.
A
sustainable model and a strategic approach to capital
efficiency
Primarily, we will look to re-invest
cash proceeds across our portfolio and into new opportunities,
where we believe we can drive significant returns by continuing to
fund companies through to clinical and late-stage
development.
Where we do not see investment
opportunities that allow us to efficiently deploy capital across
our portfolio, we will seek to return capital to shareholders. We
will consider all forms of distribution mechanisms for capital
returns at the time. This includes buying back our own shares, in
particular if market conditions create dislocations between the
share price of Syncona and its stated NAV. We will continue to
ensure that we are positioned to sustainably deliver milestones
that have the potential to enable capital access and are funded to
deliver key value inflection points which have the potential to
deliver significant NAV growth.
Our approach to capital allocation
is dynamic and continues to evolve as the business scales and
matures, increasing the potential to access third party capital,
liquidity and optimise returns for our shareholders.
Our
track record since 2012
-
|
£1,251.1 million deployed in life
science portfolio since 2012
|
|
-
|
20.2% IRR and 1.4x multiple on cost
across whole portfolio[39]
|
|
Company
|
Cost (£m)
|
Value (£m)
|
Multiple
|
IRR
|
Strategic portfolio
|
|
|
|
|
Autolus
|
147.0
|
169.5
|
1.2
|
2.8%
|
Spur
|
351.8
|
135.6
|
0.4
|
(28.9%)
|
Beacon (incl. Deferred
Consideration)
|
80.2
|
94.6
|
1.2
|
16.6%
|
Quell
|
61.4
|
84.7
|
1.4
|
10.3%
|
Resolution
|
49.9
|
50.0
|
1.0
|
0.0%
|
Purespring
|
45.0
|
45.3
|
1.0
|
0.3%
|
OMass
|
35.4
|
43.7
|
1.2
|
6.5%
|
Anaveon
|
52.5
|
35.7
|
0.7
|
(16.3%)
|
iOnctura
|
25.7
|
25.6
|
1.0
|
NA
|
Kesmalea
|
12.0
|
12.0
|
1.0
|
0.0%
|
Mosaic
|
7.3
|
7.3
|
1.0
|
0.0%
|
Forcefield
|
6.5
|
6.5
|
1.0
|
0.0%
|
Yellowstone
|
1.0
|
1.0
|
1.0
|
0.0%
|
Realised companies
|
|
|
|
|
Blue Earth
|
35.3
|
351.0
|
9.9
|
83.3%
|
Gyroscope
|
113.1
|
325.3
|
2.9
|
50.0%
|
Nightstar
|
56.4
|
255.7
|
4.5
|
71.1%
|
Neogene (incl. Milestone
value)
|
14.3
|
17.6
|
1.2
|
9.5%
|
Azeria
|
6.5
|
2.2
|
0.3
|
(50.1%)
|
14MG
|
5.5
|
0.7
|
0.1
|
(46.4%)
|
Investments
|
|
|
|
|
Achilles[40]
|
60.7
|
11.0
|
0.2
|
(31.0%)
|
Clade[41]
|
23.2
|
9.4
|
0.4
|
(38.8%)
|
Other unrealised
investments
|
34.5
|
51.9
|
1.5
|
5.5%
|
Realised investments
|
25.9
|
25.9
|
1
|
0.0%
|
Total
|
1,251.1
|
1,762.2
|
1.4
|
20.2%
|
|
|
|
|
|
| |
Performance since 2016
In 2016, Syncona merged with the
Battle Against Cancer Investment Trust (BACIT), becoming a FTSE 250
life science investor and expanding its permanent capital base.
Since that time, Syncona's NAV per share has increased from 127.9p
to 188.7p, a total return of 6.1% per annum. Using an IRR
calculation for the performance of the Syncona life science
portfolio over the same period, the portfolio has delivered an IRR
of 15.8% and is valued at a 1.3 multiple of its 2016
value.
Approach to disclosing portfolio company
information
Our model is to create companies
around world-leading science, bringing the commercial vision and
strategy, building the team and infrastructure and providing the
funding to scale these businesses.
When we create or invest in a
portfolio company, or when a portfolio company completes an
external financing or other transaction, we may announce that
transaction. Our decision on whether (and when) to announce a
transaction depends on a number of factors including the commercial
preferences of the portfolio company. We would make an announcement
where we consider that a transaction is material to our
shareholders' understanding of our portfolio, whether as a result
of the amount of the commitment, any change in valuation or
otherwise.
In addition, our portfolio companies
are regularly progressing clinical trials. These trials represent
both a significant opportunity and risk for each company, and may
be material for Syncona.
In many cases, data from clinical
trials is only available at the end of the trial. However, a number
of our portfolio companies carry out open label trials, which are
clinical studies in which both the researchers and the patients are
aware of the drug being given. In some cases, the number of
patients in a trial may be relatively small. Data is generated as
each patient is dosed with the drug in a trial and is collected
over time as results of the treatment are analysed and, in the
early stages of these studies, dose-ranging studies are completed.
Because of the trial design, clinical data in open label trials is
received by our portfolio companies on a frequent basis. Individual
data points need to be treated with caution, and it is typically
only when all or substantially all of the data from a trial is
available and can be analysed that meaningful conclusions can be
drawn from that data about the prospect of success or otherwise of
the trial.
In particular, it is highly possible
that early developments (positive or negative) in a trial can be
overtaken by later analysis with further data as the trial
progresses.
We would expect to announce our
assessment of the results of a trial at the point we conclude on
the data available to us that it has succeeded or failed, unless we
conclude it is not material to our shareholders' understanding of
our portfolio. We would not generally expect to announce our
assessment of interim clinical data in an ongoing trial, other than
in the situation where the portfolio company announces interim
clinical trial data, in which case we will generally issue a
simultaneous announcement unless we believe the data is not
materially different from previously announced data.
In all cases we will comply with our
legal obligations, under the Market Abuse Regulation or otherwise,
in determining what information to announce.
Principal risks and uncertainties
The principal risks that the Board
has identified are set out in the following pages, along with the
potential impact, key controls and what we have done during
the year to manage the risks. Further information on financial risk
management is set out in note 18 to the Consolidated Financial
Statements.
Description
|
Key
Controls
|
What has happened in the year?
|
Portfolio company risks
|
Scientific theses fail
We invest in scientific ideas that
we believe have the potential to be treatments for a range of
diseases, but where there may be no or little substantial evidence
of clinical effectiveness or ability to deliver the technology in a
commercially viable way. Material capital may need to be invested
to resolve these uncertainties.
Impacts:
· Financial loss and reputational impact from failure of
investment.
|
· Extensive due diligence process, resulting in identification
of key risks and clear operational plan to mitigate
these.
· Tranching of investment to minimise capital exposed until key
de-risking steps are completed (particularly fundamental biological
uncertainty). Consideration of syndicating investments.
· Syncona team works closely with new companies to ensure focus
on key risks and high-quality operational build-out. Team
members may take operating roles where appropriate.
· Robust
oversight by Syncona team, including formal review at our quarterly
business review and ongoing monitoring through Board
roles.
· Investment process focused on differentiated science and
pathway to clinic and end market.
· Early
advisory team input brings in specialist advice from the
beginning.
|
· The
investment team and the Executive Partner group have been built out
further with the addition of John Tsai, Kenneth Galbraith and Roel
Bulthuis. This group has provided specialist support and advice
throughout the year.
· Where
required, members of the Executive Partner group and the investment
team have taken on secondments at our portfolio companies and/or
taken a Board position to provide more hands-on support.
· The
support provided by Syncona's launch team to our early-stage
companies enabled better portfolio company management and gave
Syncona increased ability to focus on the scientific
theses.
· Syncona has continued to seek to de-risk scientific theses in
our early-stage companies and to diversify its portfolio while
maintaining concentrated ownership and significant
influence.
· We
have prioritised capital towards assets that can deliver clinical
data in the near term. Alongside this, Syncona has also worked with
its portfolio companies to widen financing syndicates, streamline
pipelines and budgets, and explored creative financing solutions
and consolidations.
· Our
investment in a late-stage company, iOnctura, during the year has
lower risk of scientific thesis failure due to the stage of
development the company is at, however late-stage companies do
potentially require higher capital commitments.
|
Clinical development doesn't deliver a commercially viable
product
Success for our companies depends on
delivering a commercially viable target product profile through
clinical development. This can be affected by trial data not
showing required efficacy or adverse safety events. It can also be
affected by progress of competitors, IP rights, the company's
ability to gain regulatory approval for and credibly market the
product, potential pricing and ability to manufacture
cost-effectively.
Impacts:
· Material impact on valuation, given capital required to take
products through clinical development.
· Material harm to one or more individuals, and potential
reputational issues for Syncona.
|
· Build
products in areas with significant unmet need and that show
substantial and differentiated efficacy.
· Focus,
oversight and support from the Syncona team on recruiting dedicated
specialist clinical teams in each portfolio company.
· Investment process considers strength of IP or regulatory
exclusivity protection and this is then operationalised by each
company.
· Investment process considers manufacturing as a key issue from
inception of each company, rather than leaving to later
stage.
· Company business plans seek to have platform technologies to
lead to more than one product, in different indications, so
that failure in one does not damage all value of
company.
· At
portfolio level, building a portfolio with multiple companies
at clinical/later stages, to enable us to absorb
failures.
· Clinical trials policy requires reporting of significant trial
issues to Syncona team and to Board in serious
cases.
· Business model focuses on unmet needs and differentiated
outcomes.
· Executive Partner group brings specialist insight early to
process to try and identify and de-risk potential
issues.
|
· Portfolio of 13 companies with five at clinical stage,
including two late-stage clinical.
· 15
clinical data read-outs in the period including positive data
published from two late-stage companies, Autolus and Beacon, and
initial data from Anaveon for its clinical-stage asset (ANV419)
resulting in a pivot to a next generation pre-clinical stage asset
(ANV600) as the lead programme.
· 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).
· Significant Syncona team involvement in senior clinical hires
at our portfolio companies ensured the appropriate clinical
development skills were put in place.
· Clinical and regulatory experience provided from within team
by the Executive Partner group, further strengthened this
year with the recruitment of John Tsai.
· Syncona team members carefully monitor portfolio company
pipeline data and take prompt action when not tracking to
target product profile.
|
Portfolio concentration risk to platform
technology
The Syncona team brings strong
domain experience in cell and gene therapy, and a substantial part
of the portfolio is in these areas. Systemic issues (whether
scientific, clinical, regulatory or commercial) may emerge that
affect these technologies.
Impacts:
· Material impact on valuation.
· Impact
on reputation of Syncona resulting from failure of technology we
are strongly identified with.
|
· Team
pays close attention to scientific, clinical, regulatory
or commercial developments in the field.
· Where
there are genuine risks, these are identified and managed through
diligence and investment process.
· Various risks are identified and concentration
is avoided where systemic.
|
· Ongoing monitoring of developments in cell and gene
therapy.
· Syncona continues to invest across a wide range of modalities
and therefore we adopt multiple approaches alongside increasing
portfolio target sizes which reduces the potential impact of the
risk.
|
Concentration risk and binary outcomes
The Company's investment strategy is
to invest in a concentrated portfolio of early-stage life science
businesses where it is necessary to accept very significant and
often binary risks. It is expected that some things will succeed
(and potentially result in substantial returns) but others will
fail (potentially resulting in substantial loss of value). This is
likely to result in a volatile return profile.
Impacts:
· Loss
of shareholder support, potentially reducing ability to raise new
equity when required.
· Shareholder activism, leading to strategy change that delivers
sub-optimal outcomes.
· Reputation risk from perceived failure of business
model.
|
· The
Board provides strong oversight drawing on a range of relevant
experience, including life science, FTSE and investment company
expertise. The Board has clear understanding of strategy and
risk.
· Transparent communication from Syncona team to Board about
portfolio opportunities and risks including upside and downside
valuation cases.
· Clear
communication to shareholders of the opportunities and risks
of the strategy. Provide information to shareholders about
portfolio companies to assist them in understanding portfolio value
and risks.
· Building diversified portfolio with multiple companies and
products at clinical/later stages. Consideration of
syndicating investments.
· Willing to sell investments at/above fair value, prior to
approval, which the cadence of the model naturally diversifies,
mitigating binary risks.
|
· This
is an inherent risk due to the nature of the business model, and
there has been increased focus on the portfolio view during
the year to try to mitigate this risk where possible; as the
portfolio matures this risk decreases.
· Our
focus on allocating capital to clinical opportunities across the
portfolio and assets that are approaching clinical entry means
there are now more companies approaching key value inflection
points, which are potentially binary outcomes. By focusing our
capital deployment we aim to mitigate the downside risks and
maximise the potential to benefit from value growth.
· There
is continued focus on clinical-stage opportunities to add to
our maturing portfolio and drive nearer-term growth. Two of
the new companies invested in during the year are in oncology in
different modalities; with one an early-stage opportunity and the
second a clinical-stage company.
· 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), reflected in increased value
of our holding in Autolus.
· Initial data from Anaveon for its clinical-stage asset
(ANV419) resulted in a pivot to a next generation pre-clinical
stage asset (ANV600) as the lead programme; in addition Novartis
decided during the year to discontinue the development of GT005,
acquired in the Gyroscope acquisition. Each of these led to a
write-down of value.
|
Access to capital
|
Not
having capital to invest
Early-stage life science businesses
are very capital intensive, and delivering our strategy will
require us to have access to substantial capital.
Impacts:
· Dilution of stake in portfolio companies with loss of
potential upside.
· Loss
of control of portfolio companies resulting in poorer
strategic execution.
· Inability for portfolio companies to deliver their business
plans due to financing constraints.
|
· Syncona team monitoring capital allocation on an ongoing basis
with a three-year forward outlook, with transparent reporting to
the Board.
· Seek
to maintain sufficient liquidity to fund all companies with
emerging and definitive data to their next key
milestone.
· Ongoing consideration of options for managing liquidity and
the various sources available, ensuring the appropriate balance
between liquidity risk and return on life science
investments.
· Maximise potential to raise new equity through developing
institutional shareholder base.
· Ongoing consideration of alternative or additional capital
raising structures (e.g. sidecar funds).
· Ongoing consideration of syndication strategy at portfolio
company level, to maximise value and minimise dilution when
external capital is brought in.
· Ongoing consideration of potential options to manage liquidity
from our life science assets, including exit
opportunities.
|
· The
macroeconomic environment continued to pose challenges to
syndication or raising capital for early-stage companies on the
public markets, which led us to increase the likelihood of this
risk occurring. However, we see clear signs of change, with greater
differentiation based on the stage and progress of each individual
portfolio company; we believe that as the markets improve, the risk
profile will decrease. We continued to work closely alongside our
portfolio companies as they sought to raise capital.
· Syncona's strong balance sheet continued to be a key
mitigation of this risk and has enabled us to support our portfolio
companies, subject to ensuring our capital deployment is focused on
assets with the highest potential.
· During
the year Autolus and Quell each entered into strategic
collaborations with BioNTech and AstraZeneca, respectively,
demonstrating the potential for creative financing solutions to
support our portfolio companies' funding needs.
· Syncona has sought to ensure portfolio company budgets are
streamlined and focused on delivery of key milestones.
· Where
appropriate Syncona continues to focus on widening financing
syndicates and exploring creative financing options for portfolio
companies.
· Syncona also continues to evaluate options for alternative or
additional capital raising structures (e.g. sidecar
funds).
|
Private/public markets don't value or fund our companies when
we wish to access them
Our capital allocation strategy
includes considering bringing third-party capital into our
portfolio companies, at the right stage of development. In addition
we may consider exit opportunities either on the public markets or
through private sales.
Impacts:
· Syncona is required to invest further capital, leading to
greater exposure to individual companies than desired and less
ability to support other companies.
· Inability for portfolio companies to deliver their business
plans due to financing constraints.
· Exit
opportunities may be less attractive, with impact on availability
of capital.
· Reputation risk from failed transactions.
|
· Maintain access to significant capital, to reduce risk of
being forced to syndicate/forced seller.
· Focus,
oversight and support from the Syncona team on financing plan for
each company, with support to the company to develop
its financing story at an early stage.
|
· Macroeconomic headwinds have continued to impact sentiment
in the biotech sector, with particular impact on public
markets for early-stage biotech companies.
· Additional scenario planning and modelling has been
implemented during the year to ensure we monitor our ability to
invest at a higher than planned level into companies if
necessary.
· We
have provided significant support to our companies which
are in the process of or will soon need to be
raising capital.
· Continuous internal review of the capital landscape and
potential sources of capital and the timing of capital
required.
· Due to
the challenging syndication environment experienced throughout the
year, there has been increased focus on funding structures,
particularly around seed funding and tranching, to
manage financing and progression towards de-risking. In
addition Syncona has provided convertible loans to some of the
portfolio companies to support them to reach milestones which have
the potential of enabling capital access and key value inflection
points which have the potential of delivering significant NAV
growth.
|
Capital pool losses or illiquidity
The capital pool is exposed to the
risk of loss or illiquidity.
Impacts:
· Loss
of capital (or reduction in the value of capital due to
inflation).
· Inability to finance life science investments.
· Reputation risk from losses in non-core area.
· Counterparty bank or fund fails and we are unable
to recover the money held by them.
|
· Protection against risk and illiquidity are key
characteristics; return is a secondary
consideration.
· Risk
parameters monitored monthly by Syncona team,
with enhanced review on a quarterly basis.
· External adviser (Barnett Waddingham) engaged to carry out
quarterly and annual reviews of capital pool against chosen
parameters.
· Cash
balances are held at multiple investment grade or equivalent banks
and limited to three months' forward funding
requirements.
· Near-term funding is held in UK and US treasuries.
· Longer-term funding is held across multiple fund managers with
strict investment concentration limits, daily liquidity funds,
and either investment grade or strict low volatility limits to
minimise credit risk.
· Currently higher risk due to strategy to mitigate impact of
inflation. Investments made within defined risk volatility limits.
Use of external advisers, two fund managers with differentiated
strategies, performance reviewed and monitored by the Liquidity
Management Committee and external adviser (Barnett
Waddingham).
|
· Continued active management of the capital pool through the
Liquidity Management Committee, reporting on a quarterly basis
to the SIML and Syncona Limited Boards, supported by
external advisers Barnett Waddingham.
· Risk
is being managed through a tiered approach to investment,
and liquidity and return are managed within defined volatility
and concentration limits.
· Our
external advisers support us in evaluating the markets and
providers and funds are spread across multiple banks, government
bonds and two fund managers with differentiated investment
strategies.
· Consideration is also being given to the structure of the
capital pool given the ongoing, challenging macroeconomic
landscape.
|
People
|
Reliance on small Syncona team
The execution of the Company's
strategy is dependent on a small number of key individuals with
specialised expertise. This is at risk if the team does not succeed
in retaining skilled personnel or is unable to recruit new
personnel with relevant skills.
Impacts:
· Poorer
oversight of portfolio companies, risk of loss of value from poor
strategic/operational decisions.
· Less
ability to drive strategies in portfolio companies.
· Insufficient resource to take advantage of investment
opportunities.
· Loss
of licence to operate if insufficient resource or processes mean we
fail to meet stakeholder expectations.
|
· Market
benchmarking of remuneration for employees.
· Provision of long-term incentive scheme to incentivise and
retain employees.
· Ongoing recruitment to strengthen team and deepen
resilience.
· Focus
on investment team development to provide internal succession from
next tier of leaders, with process supported by Leadership
Team.
· Process development within corporate functions to reduce
single point risks.
· Building high-quality teams within portfolio companies that
can operate at a high strategic level.
· Dynamic and simplified governance framework to support
transformational change and ongoing business
requirements.
|
· Completion of the leadership transition has resulted in us
decreasing this risk during the year.
· The
investment team and the Executive Partner group have been further
strengthened with the recruitment of John Tsai, Kenneth Galbraith
and Roel Bulthuis. This has added to the skills, experience and
executional bandwidth already brought to Syncona through the
Executive Partner group and advisers.
· The
changes made in the previous year to both the investment team and
Leadership Team are now embedded in the organisation, providing us
with a stronger team, stronger processes and improved culture.
Significant emphasis on developing and coaching our next generation
investors and launching a dedicated talent programme.
|
Systems and controls failures
We rely on a series of systems and
controls to ensure proper control of assets, record-keeping and
reporting, and operation of Syncona's business.
Impacts:
· Risk
of loss of assets.
· Inability to properly oversee Syncona team.
· Inaccurate reporting to shareholders.
· Syncona and its portfolio companies may be subjected to
phishing and ransomware attacks, data leakage and
hacking.
· Syncona team unable to carry out its functions
properly.
· Breach
of legal or regulatory requirements.
· Reputation risk, loss of confidence from shareholders and
other stakeholders.
|
· Systems and control procedures are reviewed regularly by the
Syncona team, with input from specialist external advisers where
appropriate.
· Certain systems have been outsourced to the Administrator who
provides independent assurance of its own systems.
· Annual
review of the effectiveness of systems and controls carried
out by the Audit Committee.
· Anti-fraud, bribery and corruption controls.
· Anti-money laundering controls.
· Whistleblowing arrangements.
· IT
policies and procedures.
· Back-up and disaster recovery procedures and
testing.
· IT and
cyber security monitoring and control framework, and regular
penetration tests.
|
· Ongoing compliance reviews and review of key processes
performed during the year.
· Implementation of organisational and governance changes to
help simplify processes and decision-making, driving increased
effectiveness and efficiency, and helping to mitigate and reduce
risk.
· Continued programme of phishing and penetration
testing.
|
Unable to build high-quality team/team
culture
Portfolio companies are reliant on
recruiting highly specialised, high-quality employees to deliver
their strategies. This can be challenging given a limited pool of
people with the necessary skills in the UK/Europe. In addition,
these are fast-growing companies and establishing a high-quality
culture from the outset is key.
Impacts:
· Ultimately, failure to deliver key elements of operational
plans resulting in material loss of value.
|
· Seek
to build high-quality teams in portfolio companies. This can begin
before an investment is made.
· Ensure
executive team aims to build a high-quality culture from the
outset, and monitor and support its effectiveness.
· Build
strong portfolio company boards (including representatives from our
team and experienced non-execs) to provide effective oversight and
support.
· Support from our team, including taking operational roles
where necessary, and facilitating access to support from across the
portfolio where appropriate, or external consultant resource from
our networks.
|
· Advice
and guidance provided to the portfolio companies from
within Syncona by the Executive Partner group and investment
team, which were further strengthened this year with the
recruitment of John Tsai, Kenneth Galbraith and Roel
Bulthuis.
· The
strengthening of the Executive Partner group and investment team
differentiates the portfolio companies and should help attract key
talent, thereby reducing the likelihood of this risk.
· Significant Syncona team involvement in senior hires at
portfolio companies.
|
Unable to execute business plans
Portfolio company business plans may
be impacted by a number of external factors, including access
to patients, delivery by suppliers and the wider business
environment (including factors such as COVID-19).
Impacts:
· Ultimately, failure to deliver key elements of operational
plans resulting in material loss of value.
|
· Seek
to build high-quality teams in portfolio companies. This can begin
before an investment is made. Where possible these should include
resilience to deal with unexpected external factors, though
companies will also be focused on maximising value from capital
invested.
· Seek
to maintain capital buffers to cope with unanticipated issues
before cash out.
· Oversight of key external factors/relationships that are
important to delivering business plan.
· Sharing of knowledge (where appropriate) across portfolio to
support companies in managing external factors.
· Syncona involvement in setting strategy and early business
plans. Board representation and significant shareholding allows
some influence on management execution.
|
· Executive Partner group and investment team have been built
out further with the addition of John Tsai, Kenneth Galbraith and
Roel Bulthuis. This group has provided specialist support and
advice throughout the year. Where required, members of the
Executive Partner group and the investment team will take on
secondments at our portfolio companies and/or take a Board
position to provide more hands-on support.
· Additional scenario planning and modelling has been
implemented during the year to ensure we monitor our ability to
invest at a higher than planned level into companies if
necessary.
· Continuous internal review of the capital landscape and
potential sources of capital and the timing of capital required.
Increased focus on strategic syndication to secure long-term access
to capital.
|
Macroeconomic environment
|
Macroeconomic environment has a negative impact on sentiment
for portfolio companies and Syncona business
model
The challenging macroeconomic
environment results in investors being more risk averse, impacting
their appetite to invest in early-stage biotech
companies.
Impacts:
· Investors are focusing on existing portfolios rather than
investing in early-stage biotech companies, therefore Syncona may
be required to invest further capital, leading to greater
exposure to individual companies than desired and less ability to
support other companies.
· Inability for portfolio companies to deliver their business
plans due to financing constraints.
· For
Syncona, exit opportunities may be less attractive, with impact
on availability of capital to fund portfolio
companies.
· A
reduction in demand for the Company's shares would impact
the performance of the Company's share price.
· Failure to deliver strategy.
· Shareholder activism, leading to strategy change that delivers
sub-optimal outcomes.
|
· Syncona team monitoring capital allocation on an ongoing
basis, with transparent reporting to the Board.
· Seek
to maintain sufficient liquidity to fund all companies with
emerging data, or later, to their next key milestone.
· Maximise potential to raise new equity through developing
institutional shareholder base.
· Ongoing consideration of alternative or additional capital
raising structures (e.g. sidecar funds, use of debt).
· Ongoing consideration of syndication strategy at portfolio
company level, to maximise value and minimise dilution when
external capital is brought in.
· Ongoing consideration of potential options to manage liquidity
from our life science assets, including exit
opportunities.
· Seek
to maintain capital buffers to cope with unanticipated issues
before cash out.
|
· We are
concentrating capital allocation towards clinical opportunities
across the portfolio, maintaining a disciplined approach against
a challenging market backdrop.
· We
consider all options with regards to future financing, including
exit options. We have increased our engagement with key pharma
partners.
· Additional scenario planning and modelling has been
implemented during the year to ensure we monitor our ability to
invest at a higher than planned level into companies if
necessary.
· Continuous internal review of the capital landscape and
potential sources of capital and the timing of capital
required.
· We
have continued to have increased engagement with investors
and analysts.
· Continued active management of the capital pool. This involves
managing risk through a tiered approach to investment, and managing
liquidity and return, within defined volatility and concentration
limits. External advisers are used to evaluate the markets and
providers and funds are currently spread across multiple banks,
government bonds, and two fund managers with differentiated
diversified investment strategies.
· Macroeconomic and fund performance is reviewed regularly by
the Syncona team and the Liquidity Management Committee and
reported quarterly to the SIML and Syncona Limited
Boards.
|
Responsibility Statement
The Directors' responsibility
statement below has been prepared in conjunction with, and is
extracted from, the Company's Annual Report and Accounts for the
year ended 31 March 2024 ("2024 Annual Report"), whereas this
announcement contains extracts from the 2024 Annual Report. The
responsibility statement is repeated here solely for the purpose of
complying with DTR 6.3.5. These responsibilities are for the full
2024 Annual Report and not the extracted information presented in
this announcement or otherwise.
The Directors of the Company
are:
Melanie Gee, Chair
Julie Cherrington, Non-Executive
Director
Cristina Csimma, Non-Executive
Director
Virginia Holmes, Non-Executive
Director
Rob Hutchinson, Non-Executive
Director
Kemal Malik, Non-Executive
Director
Gian Piero Reverberi, Non-Executive
Director
The Directors confirm to the best of
our knowledge:
the financial statements, prepared
in accordance with International Financial Reporting Standards as
adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Group and the undertakings included in the consolidation taken as a
whole;
the Annual Report and financial
statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company's position and performance, business model and
strategy; and
the financial statements include
information and details in the Chair's statement, the Strategic
Report, the Corporate Governance report, the Directors' report and
the notes to the Consolidated Financial Statements, which provide a
fair review of the information required by:
a) DTR 4.1.8 of the Disclosure and
Transparency Rules, being a fair review of the Company business and
a description of the principal risks and uncertainties facing the
Company; and
b) DTR 4.1.11 of the Disclosure and
Transparency Rules, being an indication of important events that
have occurred since the end of the financial year and the likely
future development of the Company.
UNAUDITED GROUP PORTFOLIO STATEMENT
As
at 31 March 2024
|
2024
|
|
2023
|
|
Fair value
£'000
|
|
% of
Group NAV
£'000
|
|
Fair value
£'000
|
|
% of
Group NAV
£'000
|
Life science portfolio
|
|
|
|
|
|
|
|
Life science companies
|
|
|
|
|
|
|
|
Autolus Therapeutics plc
|
169,469
|
|
13.7
|
|
50,004
|
|
4.0
|
Spur Therapeutics
Limited(1)
|
135,627
|
|
10.9
|
|
72,303
|
|
5.7
|
Quell Therapeutics
Limited
|
84,745
|
|
6.8
|
|
86,703
|
|
6.9
|
Beacon Therapeutics Holdings
Limited
|
80,257
|
|
6.5
|
|
60,000
|
|
4.8
|
Resolution Therapeutics
Limited
|
49,974
|
|
4.0
|
|
23,027
|
|
1.8
|
Purespring Therapeutics
Limited
|
45,257
|
|
3.7
|
|
35,100
|
|
2.8
|
OMass Therapeutics
Limited
|
43,712
|
|
3.5
|
|
43,712
|
|
3.5
|
Anaveon AG
|
35,713
|
|
2.9
|
|
64,203
|
|
5.1
|
iOnctura B.V.
|
25,646
|
|
2.1
|
|
-
|
|
-
|
Biomodal Limited
|
18,055
|
|
1.5
|
|
18,472
|
|
1.5
|
Companies of less than 1% of the
NAV
|
47,167
|
|
3.8
|
|
47,972
|
|
3.8
|
Total life science companies
|
735,622
|
|
59.4
|
|
501,496
|
|
39.9
|
|
|
|
|
|
|
|
|
CRT Pioneer Fund
|
33,874
|
|
2.7
|
|
32,727
|
|
2.6
|
Deferred consideration
|
14,362
|
|
1.2
|
|
15,882
|
|
1.3
|
Milestone payments
|
2,248
|
|
0.2
|
|
54,516
|
|
4.3
|
|
|
|
|
|
|
|
|
Total life science portfolio(2)
|
786,106
|
|
63.5
|
|
604,621
|
|
48.1
|
|
|
|
|
|
|
|
|
Capital pool investments
|
|
|
|
|
|
|
|
UK and US treasury bills
|
163,373
|
|
13.2
|
|
284,960
|
|
22.7
|
Credit investment funds
|
112,015
|
|
9.0
|
|
101,566
|
|
8.1
|
Multi asset funds
|
70,500
|
|
5.7
|
|
160,036
|
|
12.8
|
Legacy funds
|
28,778
|
|
2.3
|
|
33,001
|
|
2.7
|
|
|
|
|
|
|
|
|
Total capital pool investments(3)
|
374,666
|
|
30.2
|
|
579,563
|
|
46.3
|
|
|
|
|
|
|
|
|
Other net assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents(4)
|
104,819
|
|
8.5
|
|
82,818
|
|
6.6
|
Charitable donations
|
(4,353)
|
|
(0.4)
|
|
(4,634)
|
|
(0.4)
|
Other assets and
liabilities
|
(22,360)
|
|
(1.8)
|
|
(7,713)
|
|
(0.6)
|
|
|
|
|
|
|
|
|
Total other net assets
|
78,106
|
|
6.3
|
|
70,471
|
|
5.6
|
Total capital pool
|
452,772
|
|
36.5
|
|
650,034
|
|
51.9
|
|
|
|
|
|
|
|
|
Total NAV of the Group
|
1,238,878
|
|
100.0
|
|
1,254,655
|
|
100.0
|
(1) Spur Therapeutics Limited (previously Bidco 1354 Limited), a
new entity in the year which acquired Freeline Therapeutics Plc and
SwanBio Therapeutics Limited. The valuation of Spur Therapeutics
Limited reflects the combined valuation of these
companies.
(2) The life science portfolio of £786,106,202 (31 March 2023:
£604,619,696) consists of life science investments totalling
£735,622,223 (31 March 2023: £501,495,018), deferred consideration
of £14,361,660 (31 March 2023: £15,882,241) and milestone payments
of £2,248,059 (31 March 2023: £54,515,861) held by Syncona Holdings
Limited and CRT Pioneer Fund of £33,874,260 (31 March 2023:
£32,726,576) held by Syncona Investments LP
Incorporated.
(3) The capital pool investments of £374,665,784 (31 March 2023:
£579,563,640) are held by Syncona Investments LP
Incorporated.
(4)
Cash amounting to £260,826 (31 March 2023:
£11,402) is held by Syncona Limited. The remaining £104,558,141
(31 March 2023: £82,806,203) is held by its subsidiaries other
than portfolio companies ("Syncona Group Companies"). Cash held by
Syncona Group Companies other than Syncona GP Limited is not shown
in Syncona Limited's Consolidated Statement of Financial Position
since it is included within financial assets at fair value through
profit or loss.
Assets held by the Group are held
primarily through Syncona Holdings Limited and Syncona Investments
LP Incorporated. See note 1 for a description of these
entities.
The totals in the above table may
differ slightly to the audited financial statements due to rounding
differences.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
For
the year ended 31 March 2024
|
|
|
|
2024
|
|
|
|
|
|
2023
|
|
|
|
Notes
|
Revenue
|
|
Capital
|
|
Total
|
|
Revenue
|
|
Capital
|
|
Total
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
6
|
49,138
|
|
-
|
|
49,138
|
|
27,495
|
|
-
|
|
27,495
|
Total investment income
|
|
49,138
|
|
-
|
|
49,138
|
|
27,495
|
|
-
|
|
27,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses on financial assets at
fair value through profit or loss
|
7
|
-
|
|
(18,389)
|
|
(18,389)
|
|
-
|
|
(67,286)
|
|
(67,286)
|
Total losses
|
|
-
|
|
(18,389)
|
|
(18,389)
|
|
-
|
|
(67,286)
|
|
(67,286)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Charitable donations
|
8
|
4,353
|
|
-
|
|
4,353
|
|
4,634
|
|
-
|
|
4,634
|
General expenses
|
9
|
22,608
|
|
-
|
|
22,608
|
|
11,593
|
|
-
|
|
11,593
|
Total expenses
|
|
26,961
|
|
-
|
|
26,961
|
|
16,227
|
|
-
|
|
16,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the
year
|
|
22,177
|
|
(18,389)
|
|
3,788
|
|
11,268
|
|
(67,286)
|
|
(56,018)
|
Profit/(loss) after tax
|
|
22,177
|
|
(18,389)
|
|
3,788
|
|
11,268
|
|
(67,286)
|
|
(56,018)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per Ordinary
Share
|
14
|
3.33p
|
|
(2.76)p
|
|
0.57p
|
|
1.69p
|
|
(10.07)p
|
|
(8.38)p
|
Earnings/(loss) per Diluted
Share
|
14
|
3.33p
|
|
(2.76)p
|
|
0.57p
|
|
1.69p
|
|
(10.07)p
|
|
(8.38)p
|
The total columns of this statement
represent the Group's Consolidated Statement of Comprehensive
Income, prepared in accordance with IFRS Accounting Standards
adopted by the European Union (IFRS).
The profit/(loss) for the year is
equivalent to the "total comprehensive income" as defined by
International Accounting Standards (IAS) 1 "Presentation of
Financial Statements". There is no other comprehensive income as
defined by IFRS.
All the items in the above statement
are derived from continuing operations.
The accompanying notes are an
integral part of the financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As
at 31 March 2024
|
Notes
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
Financial assets at fair value
through profit or loss
|
10
|
1,241,698
|
|
1,258,258
|
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
261
|
|
11
|
Trade and other
receivables
|
11
|
9,138
|
|
10,143
|
Total assets
|
|
1,251,097
|
|
1,268,412
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Share based payments
provision
|
12
|
2,861
|
|
-
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Share based payments
provision
|
12
|
1,760
|
|
7,296
|
Accrued expense and
payables
|
13
|
7,598
|
|
6,461
|
Total liabilities
|
|
12,219
|
|
13,757
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Share capital
|
14
|
767,999
|
|
767,999
|
Capital reserves
|
14
|
444,774
|
|
463,163
|
Revenue reserves
|
|
46,328
|
|
23,493
|
Treasury shares
|
14
|
(20,223)
|
|
-
|
Total equity
|
|
1,238,878
|
|
1,254,655
|
|
|
|
|
|
Total liabilities and
equity
|
|
1,251,097
|
|
1,268,412
|
|
|
|
|
|
Total net assets attributable to holders of Ordinary
Shares
|
|
1,238,878
|
|
1,254,655
|
|
|
|
|
|
Number of Ordinary Shares in
issue
|
14
|
655,335,586
|
|
669,329,324
|
Net assets attributable to holders
of Ordinary Shares
(per share)
|
14
|
£1.89
|
|
£1.87
|
Diluted NAV (per share)
|
14
|
£1.89
|
|
£1.86
|
The audited Consolidated Financial
Statements were approved on 19 June 2024 and signed on behalf of
the Board of Directors by:
Melanie
Gee
Rob Hutchinson
Chair
Non-Executive Director
Syncona
Limited
Syncona Limited
The accompanying notes are an
integral part of the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE
TO HOLDERS OF ORDINARY SHARES
For
the year ended 31 March 2024
|
|
Share
capital
|
|
Capital
reserves
|
|
Revenue
reserves
|
|
Treasury
shares
|
|
Total
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
As
at 31 March 2022
|
|
767,999
|
|
530,449
|
|
11,393
|
|
-
|
|
1,309,841
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the
year
|
-
|
|
(67,286)
|
|
11,268
|
|
-
|
|
(56,018)
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with shareholders:
|
|
|
|
|
|
|
|
|
|
|
Share based payments
|
|
-
|
|
-
|
|
832
|
|
-
|
|
832
|
|
|
|
|
|
|
|
|
|
|
|
As
at 31 March 2023
|
|
767,999
|
|
463,163
|
|
23,493
|
|
-
|
|
1,254,655
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
-
|
|
(18,389)
|
|
22,177
|
|
-
|
|
3,788
|
Acquisition of treasury
shares
|
|
-
|
|
-
|
|
-
|
|
(20,223)
|
|
(20,223)
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with shareholders:
|
|
|
|
|
|
|
|
|
|
|
Share based payments
|
|
-
|
|
-
|
|
658
|
|
-
|
|
658
|
|
|
|
|
|
|
|
|
|
|
|
As
at 31 March 2024
|
|
767,999
|
|
444,774
|
|
46,328
|
|
(20,223)
|
|
1,238,878
|
The accompanying notes are an
integral part of the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For
the year ended 31 March 2024
|
Notes
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
Cash flows from operating activities
|
|
|
|
|
Profit/(loss) for the
year
|
|
3,788
|
|
(56,018)
|
Adjusted for:
|
|
|
|
|
Losses on financial assets at fair
value through profit or loss
|
7
|
18,389
|
|
67,286
|
Non-cash movement in share based
payment provision
|
|
(3,846)
|
|
(12,031)
|
Operating cash flows before
movements in working capital
|
|
18,331
|
|
(763)
|
Decrease/(increase) in trade and
other receivables
|
|
1,005
|
|
(265)
|
Increase in accrued expense and
payables
|
|
1,137
|
|
763
|
Net cash generated from/(used in)
operating activities
|
|
20,473
|
|
(265)
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Acquisition of treasury
shares
|
14
|
(20,223)
|
|
-
|
Net cash used in financing
activities
|
|
(20,223)
|
|
-
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
|
250
|
|
(265)
|
Cash and cash equivalents at
beginning of the year
|
|
11
|
|
276
|
Cash and cash equivalents at end of
the year
|
|
261
|
|
11
|
Cash held by the Company and Syncona
Group Companies is disclosed in the Group Portfolio
Statement.
The accompanying notes are an
integral part of the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
For
the year ended 31 March 2024
1.
GENERAL INFORMATION
Syncona Limited (the "Company") is
incorporated in Guernsey as a registered closed-ended investment
company. The Company's Ordinary Shares were listed on the premium
segment of the London Stock Exchange on 26 October 2012 when it
commenced its business.
The Company makes its life science
investments through Syncona Holdings Limited (the "Holding
Company"), a subsidiary of the Company. The Company maintains its
capital pool through Syncona Investments LP Incorporated (the
"Partnership"), in which the Company is the sole limited partner.
The general partner of the Partnership is Syncona GP Limited (the
"General Partner"), a wholly-owned subsidiary of the Company.
Syncona Limited and Syncona GP Limited are collectively referred to
as the "Group".
Syncona Investment Management
Limited ("SIML"), a subsidiary, was appointed as the Company's
Alternative Investment Fund Manager ("Investment
Manager").
The investment objective and policy
is set out in the Directors' report.
2. ACCOUNTING POLICIES
The Group's investments in life
science companies, other investments within the life science
portfolio and capital pool investments are held, respectively,
through the Holding Company and the Partnership, which are measured
at fair value through profit or loss in accordance with the
requirement of IFRS 10 "Consolidated Financial
Statements".
Statement of compliance
The Consolidated Financial
Statements which give a true and fair view are prepared in
accordance with IFRS as adopted by the European Union and are in
compliance with The Companies (Guernsey) Law, 2008. The
Consolidated Financial Statements were approved by the Board and
authorised for issue on 19 June 2024.
Information reported to the Board
(the Chief Operating Decision Maker (CODM)) for the purpose of
allocating resources and monitoring performance of the Group's
overall strategy to found, build and fund companies in innovative
areas of healthcare, consists of financial information reported at
the Group level. The capital pool is fundamental to the delivery of
the Group's strategy and performance is reviewed by the CODM only
to the extent this enables the allocation of those resources to
support the Group's investment in life science companies. There are
no reconciling items between the results contained within this
information and amounts reported in the financial statements. IFRS
requires operating segments to be identified on the basis of the
internal financial reports that are provided to the CODM, and as
such the Directors present the results of the Group as a single
operating segment.
Basis of preparation
The Consolidated Financial
Statements have been prepared under the historical cost basis,
except for investments and share based payment provision held at
fair value through profit or loss, which have been measured at fair
value.
The financial information set out in
this announcement does not constitute the Group's statutory
accounts for the years ended 31 March 2024 and 31 March 2023 but is
derived from those accounts. The auditors have reported on those
accounts and provided an unqualified opinion, including key audit
matters within their audit report. It did not draw attention to any
matters by way of emphasis without qualifying their report and did
not contain statements under The Companies (Guernsey) Law, 2008. A
copy is available upon written request from the Company's
registered office. The auditors' reports do not necessarily report
on all of the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors' engagement they should
obtain a copy of the auditors' reports together with the
accompanying financial information from the issuer's registered
office.
Functional currency
The Group's functional currency is
Sterling ("£" or "GBP"). £ is the currency in which the Group
measures its performance and reports its results. Ordinary Shares
are denominated in £ and any dividends declared are paid in £. The
Directors believe that £ best represents the functional currency,
although the Group has significant exposure to other currencies as
described in note 18.
Going concern
The financial statements are
prepared on a going concern basis. The net assets held by the Group
and within investment entities controlled by the Group currently
consist of securities and cash amounting to £1,238.9 million (31
March 2023: £1,254.7 million) of which £435.8 million (31 March
2023: £629.4 million) are readily realisable within three months in
normal market conditions, and liabilities including uncalled
commitments to underlying investments and funds amounting to £95.2
million (31 March 2023: £89.2 million).
Given the Group's capital pool of
£452.8 million (31 March 2023: £650.1 million) the Directors
consider that the Group has adequate financial resources to
continue its operations, including existing commitments to its
investments and planned additional capital expenditure for 12
months following the approval of the financial statements. The
Directors also continue to monitor the ever changing macro
environment on the Group. Hence, the Directors believe that it is
appropriate to continue to adopt the going concern basis in
preparing the Consolidated Financial Statements.
Basis of consolidation
The Group's Consolidated Financial
Statements consist of the financial records of the Company and the
General Partner.
The results of the General Partner
during the year are consolidated in the Consolidated Statement of
Comprehensive Income from the effective date of incorporation and
are consolidated in full. The financial statements of the General
Partner are prepared in accordance with United Kingdom (UK)
Accounting Standards under Financial Reporting Standard 101
"Reduced Disclosure Framework". Where necessary, adjustments are
made to the financial statements of the General Partner to bring
the accounting policies used in line with those used by the Group.
During the years ended 31 March 2024 and 31 March 2023,
no such adjustments have been made. All intra-group transactions,
balances and expenses are eliminated on consolidation.
Entities that meet the definition of
an investment entity under IFRS 10 are held at fair value through
profit or loss in accordance with IFRS 9 "Financial Instruments".
The Company, the Partnership and the Holding Company meet the
definition of investment entities. The General Partner does not
meet the definition of an investment entity due to providing
investment management related services to the Group, and is
therefore consolidated.
New
standards adopted by the Group
There are no standards, amendments
to standards or interpretations that are effective for the annual
period ending on 31 March 2024 that have a material effect on the
Group's Consolidated Financial Statements.
Standards, amendments and interpretations not yet
effective
There are a number of other
standards, amendments and interpretation that are not yet effective
and are not relevant to the Group as listed below. These are not
expected to have a material impact on the Group's Consolidated
Financial Statements.
- Amendments to IFRS 17: Insurance
Contracts;
- Amendments to IFRS 10 and IAS 28: Sale or contribution of
assets between an investor and its associate or joint
venture;
- Amendments to IAS 1: Classification of Liabilities as Current
or Non-current;
- Amendments to IAS 1: Non-current Liabilities with
Covenants;
- Amendments to IAS 8: Accounting Policies, Changes in
Accounting Estimates and Errors;
- Amendments to IAS 12: Income Taxes; and
- Amendments to IFRS 16: Lease Liability in a Sale and
Leaseback
Financial instruments
Financial assets are recognised in
the Group's Consolidated Statement of Financial Position when the
Group becomes a party to the contractual provisions of the
instrument. On initial recognition,
financial assets are recognised at fair value less transaction
costs which are recognised in the Statement of Comprehensive
Income.
On subsequent measurement, a
financial asset is classified as measured at amortised cost, fair
value through other comprehensive income, or fair value through
profit or loss.
Financial assets measured at
amortised cost
Financial assets are measured at
amortised cost if held within a business model whose objective is
to hold financial assets in order to collect contractual cash flows
and its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding. The Group includes in this category
short-term non-financing receivables including trade and other
receivables.
As at 31 March 2024 and 31 March
2023, there are no financial assets measured at fair value through
other comprehensive income.
Financial liabilities
measured at amortised cost
This category includes all financial
liabilities, other than those measured at fair value through profit
or loss. The Group includes in this category short-term
payables.
Financial assets at fair
value through profit or loss
The Group's investments in life
science companies and capital pool investments are held through the
Holding Company and the Partnership, respectively, which are
measured at fair value through profit or loss in accordance with
the requirement of IFRS 10. The Net Asset Value (NAV) of the
Holding Company and the Partnership represent the Group's
assessment of the fair value of its directly held assets (see note
10) and have been determined on the basis of the policies adopted
for underlying investments described below.
Fair value - investments in
subsidiaries
The Group classified its direct
investments in subsidiaries as investments at fair value through
profit or loss in accordance with the requirements under IFRS
10.
Fair value - life science
portfolio - life science investments
The Group's investments in life
science companies are, in the case of quoted companies, valued
based on bid prices in an active market as at the reporting
date.
In the case of the Group's
investments in unlisted companies, the fair value is determined in
accordance with the International Private Equity and Venture
Capital (IPEV) valuation guidelines. These may include the use of
recent arm's length transactions, discounted cash flow (DCF)
analysis and earnings multiples as valuation techniques. Wherever
possible, the Group uses valuation techniques which make maximum
use of market-based inputs.
The following considerations are
used when calculating the fair value of unlisted life science
companies:
- Cost
at the transaction date is the primary input when determining fair
value. Similarly, where there has been a recent investment in the
unlisted company by third parties, the price of recent investment
(PRI) is the primary input when determining fair value, although
further judgement may be required to the extent that the instrument
in which the recent investment was made is different from the
instrument held by the Group.
- The
length of period for which it remains appropriate to consider cost
or the PRI as the primary input when determining fair value depends
on the achievement of target milestones of the investment at the
time of acquisition. An analysis of such milestones is undertaken
at each valuation point and considers changes in the key company
indicators, changes to the external environment, suitability of the
milestones and the current facts and circumstances. Where this
calibration process shows there is objective evidence that an
investment has been impaired or increased in value since the
investment was made, such as observable data suggesting a change in
the financial, technical, or commercial performance of the
underlying investment, the Group carries out an enhanced assessment
which may use one or more of the alternative methodologies set out
in the IPEV Valuation Guidelines.
- DCF
involves estimating the fair value of an investment by calculating
the present value of expected future cash flows, based on the most
recent forecasts in respect of the underlying business. Given the
significant uncertainties involved with producing reliable cash
flow forecasts for seed, start-up and early-stage companies, the
DCF methodology will more commonly be used in the event that a life
science company is in the final stages of clinical testing prior to
regulatory approval or has filed for regulatory approval. No life
science investments were valued on a DCF basis as at 31 March 2024
and 31 March 2023.
Fair value - life science
portfolio - milestone payments
Milestone payments which form part
of the total consideration resulting from a business combination
and are dependent on the meeting of future conditions are initially
recognised at fair value through profit or loss. Subsequent
measurement of milestone payments is at fair value through profit
or loss. When estimating the fair value of the milestone payments
the present value of expected future cash flows is calculated based
on the known future cash flows and an estimate of the likelihood of
meeting the stated conditions using publicly available information
where possible.
Fair value - life science
portfolio - deferred consideration
Financial assets resulting from an
investment purchase entitling the Group to future income that has a
price which is dependent on a non-financial variable not specific
to a party in the contract ("deferred consideration") is measured
on initial recognition at fair value. Subsequent measurement of the
financial asset is at fair value through profit or loss. When
estimating the fair value of the financial asset the present value
of expected future cash flows is calculated using an income-based
valuation approach and an estimate of the likelihood of meeting the
stated conditions using publicly available information where
possible.
Fair value - capital pool
investments in underlying funds
The Group's capital pool investments
in underlying funds are ordinarily valued using the values (whether
final or estimated) as advised to the Investment Manager by the
managers, general partners or administrators of the relevant
underlying fund. The valuation date of such investments may not
always be coterminous with the valuation dates of the Company and
in such cases the valuation of the investments as at the last
valuation date is used. The NAV reported by the administrator may
be unaudited and, in some cases, the notified asset values are
based upon estimates. The Group or the Investment Manager may
depart from this policy where it is considered such valuation is
inappropriate and may, at its discretion, permit any other
valuation method to be used if it considers that such valuation
method better reflects value generally or in particular markets or
market conditions and is in accordance with good accounting
practice.
Forward currency
contracts
Forward foreign currency contracts
are derivative contracts and as such are recognised at fair value
on the date on which they are entered into and subsequently
remeasured at their fair value. Fair value is determined by forward
rates in active currency markets. Whilst the Group currently holds
no forward currency contracts, forward currency contracts are held
by the Partnership and Syncona Portfolio Limited from time to time
for hedging purposes only.
Other financial
liabilities
Other financial liabilities include
all other financial liabilities other than financial liabilities at
fair value through profit or loss. The Group's other financial
liabilities include payables and share based payments. The carrying
amounts shown in the Consolidated Statement of Financial Position
approximate the fair values due to the short-term nature of these
other financial liabilities.
Offsetting of financial
instruments
Financial assets and liabilities are
offset and the net amount reported in the Consolidated Statement of
Financial Position if, and only if, there is a currently
enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise assets and
settle the liabilities simultaneously.
Derecognition of financial
instruments
A financial asset is derecognised
when: (a) the rights to receive cash flows from the financial asset
have expired; (b) the Group retains the right to receive cash flows
from the financial asset, but has assumed an obligation to pay them
in full without material delay to a third party under a "pass
through arrangement"; or (c) the Group has transferred
substantially all the risks and rewards of the financial asset, or
has neither transferred nor retained substantially all the risks
and rewards of the financial asset, but has transferred control of
the financial asset.
A financial liability is
derecognised when the contractual obligation under the liability is
discharged, cancelled or expired.
Impairment of financial
assets
IFRS 9 requires the Group to record
expected credit losses (ECLs) on all financial assets held at
amortised cost, all loans and trade receivables, either on a
12-month or lifetime basis. The Group only holds receivables with
no financing component and which have maturities of less than 12
months at amortised cost and therefore has applied the simplified
approach to recognise lifetime ECLs permitted by IFRS 9.
Commitments
Through its investment in the
Holding Company and the Partnership, the Group has outstanding
commitments to investments that are not recognised in the
Consolidated Financial Statements. Refer to note 20 for further
details.
Share based
payments
Certain employees of SIML
participate in equity incentive arrangements under which they
receive awards of Management Equity Shares (MES) in the Holding
Company above a base line value set out at the date of award. The
MES are not entitled to dividends but any dividends or capital
value realised by the Group in relation to the Holding Company are
taken into account in determining the value of the MES. MES vest if
an individual remains in employment for the applicable vesting
period. 25% of an individual MES become realisable each year, they
have the right to sell these realisable shares to the Company and
the Company is obligated to purchase said shares. The price is
determined using a formula stipulated in the Articles of
Association ("Articles") of the Holding Company.
The terms of the equity incentive
arrangements provide that half of the proceeds (net of expected
taxes) are settled in Company shares which must be held for at
least 12 months, with the balance paid in cash. Consequently, the
arrangements are deemed to be partly an equity-settled share based
payment scheme and partly a cash-settled share based payment scheme
under IFRS 2 "Share Based Payments" in the Consolidated Financial
Statements of the Group.
The fair value of the MES at the
time of the initial award is determined in accordance with IFRS 2
and taking into account the particular rights attached to the MES
as described in the Articles. The fair value is measured using a
probability-weighted expected returns methodology, which is an
appropriate future‑oriented approach when considering the fair
value of shares that have no intrinsic value at the time of issue.
The approach replicates that of a binomial option pricing model.
The key assumptions used within the model are: NAV progression;
discount rates ranging from 13% to 28% (31 March 2023: 12% to 27%);
and probabilities of success that result in an average cumulative
probability of success across the life science portfolio of 18% (31
March 2023: 26%). In this case, the expected future payout to the
MES was made by reference to the expected evolution of the Holding
Company's value, including expected dividends and other
realisations which is then compared to the base line value. This is
then discounted into present value terms adopting an appropriate
discount rate. The "capital asset pricing methodology" was used
when considering an appropriate discount rate to apply to the
payout expected to accrue to the MES on realisation.
When MES are awarded, a share based
payment charge is recognised in the Consolidated Statement of
Comprehensive Income of the employing company, SIML, equal to the
fair value at that date, spread over the vesting period. In its own
financial statements, the Company records a capital contribution to
the Holding Company with an amount credited to the share based
payments reserve in respect of the equity-settled proportion and to
liabilities in respect of the cash-settled proportion (see
below).
When the Company issues new shares
to acquire the MES, the fair value of the MES is credited to share
capital.
To the extent that the Company
expects to pay cash to acquire the MES, the fair value of the MES
is recognised as a liability in the Company's Consolidated
Statement of Financial Position. The fair value is established at
each statement of financial position date and recognised in the
Consolidated Statement of Comprehensive Income throughout the
vesting period, based on the proportion vested at each Statement of
Financial Position date and adjusted to reflect subsequent
movements in fair value up to the date of acquisition of the MES by
the Company.
The fair value paid to acquire MES
(whether in shares in the Company or cash) will result in an
increase in the carrying value of the Holding Company by the
Company.
The movement in the share based
payment provision of the Group is a non-cash fair value movement to
the reported liability, rather than a working capital balance
movement. This movement is recognised directly in the Consolidated
Statement of Comprehensive Income.
Treasury shares
Treasury shares are ordinary shares
of the Company held by the Company and presented as a reduction of
equity, at the consideration paid, including any incremental
attributable costs. The ordinary shares are purchased from the
London Stock Exchange at market value.
Income
All income is accounted for in
accordance with IFRS 15 "Revenue from Contracts with Customers" and
is recognised in the Consolidated Statement of Comprehensive Income
when the right to receive is established. Income is further
discussed in note 6.
Expenses
Expenses are accounted for on
accruals basis. Expenses incurred on the acquisition of investments
at fair value through profit or loss are presented within the
Capital column of the Consolidated Statement of Comprehensive
Income. All other expenses are presented within the Revenue column
of the Consolidated Statement of Comprehensive Income. Charitable
donations are accounted for on accruals basis and are recognised in
the Consolidated Statement of Comprehensive Income. Expenses
directly attributable to the issuance of shares are charged against
capital and recognised in the Consolidated Statement of Changes in
Net Assets Attributable to Holders of Ordinary Shares.
Cash and cash equivalents
Cash comprises cash at bank. Cash
equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to insignificant changes in value.
Translation of foreign currency
Items included in the Group's
Consolidated Financial Statements are measured in £, which is the
currency of the primary economic environment where the Group
operates. The Group's assets are primarily denominated in
£.
Transactions in currencies other
than £ are translated at the rate of exchange ruling at the date of
the transaction. Monetary assets and liabilities denominated in
foreign currencies at the date of the Consolidated Statement of
Financial Position are retranslated into £ at the rate of exchange
ruling at that date.
Foreign exchange differences arising
on retranslation are recognised in the Consolidated Statement of
Comprehensive Income. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency are
translated using the rate of exchange at the date of the
transaction.
Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are
retranslated into £ at foreign exchange rates ruling at the date
the fair value was determined.
Presentation of the Consolidated Statement of Comprehensive
Income
In order to better reflect the
activities of an investment company, supplementary information
which analyses the Consolidated Statement of Comprehensive Income
and reserves between items of a revenue and capital nature has been
presented alongside the Consolidated Statement of Comprehensive
Income and Statement of Changes in Net Assets Attributable to
Holders of Ordinary Shares.
3.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
The preparation of the Group's
Consolidated Financial Statements requires judgements, estimates
and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and
expenses at the reporting date. However, uncertainties about these
assumptions and estimates, in particular relating to underlying
investments of private equity investments and the life science
investments could result in outcomes that require a material
adjustment to the carrying amount of the assets or liabilities
affected in future periods.
Critical accounting judgements
In the process of applying the
Group's accounting policies, the following judgements have been
made, which have the most significant effect on the amounts
recognised in the Consolidated Financial Statements:
Fair value - life science
portfolio
In the case of the Group's
investments in unlisted companies, the fair value is determined in
accordance with the IPEV Valuation Guidelines. These include the
use of recent arm's length transactions, DCF analysis and earnings
multiples. Wherever possible, the Group uses valuation techniques
which make maximum use of market-based inputs.
In most cases, where the Group is
the sole institutional investor and/or until such time as
substantial clinical data has been generated, the primary valuation
input is Cost or PRI, subject to adequate consideration being given
to current facts and circumstances. This includes whether there is
objective evidence that suggests the investment has been impaired
or increased in value due to observable data, or technical or
commercial performance.
Where considered appropriate, once
substantial clinical data has been generated the Group will use
input from independent valuation advisers to assist in the
determination of fair value.
The key judgement relates to
determining whether a Cost or PRI (Market) based approach is the
most appropriate for determining fair value of the Group's
investments in unlisted companies. In making this judgement, the
Group highlights that the majority of its investments are
early-stage businesses, typically with products in the discovery
stage of drug development and pre-revenue generation. As a result,
it considers that the determination of fair value should be based
on what a market participant buyer would pay to acquire or develop
a substitute asset with comparable scientific or commercial
progression, adjusted for obsolescence (i.e. its current
replacement cost). This technique is applied until such time that
the life science investment is at a stage in its life cycle where
cash flow forecasts are more predictable, thus using an
income-based approach provides a more reliable estimate of fair
value.
However there are also other
methodologies that can be used to determine the fair value of
investments in private companies including the use of the DCF
methodology. It is possible that the use of an alternative
valuation methodology would result in a different fair value than
that recorded by the Group.
When assessing the judgement, the
Group's determination of the fair values of certain investments
took into consideration multiple sources including management and
publicly available information and publications, as well as input
from an independent review by L.E.K. Consulting LLP (L.E.K.) in
respect of Syncona's valuation of the following
investments:
•
Resolution Therapeutics Limited
• Anaveon
AG
• Freeline
Therapeutics Plc (now Spur Therapeutics Limited)
• SwanBio
Therapeutics Limited (now Spur Therapeutics Limited)
• Beacon
Therapeutics Holdings Limited
• Quell
Therapeutics Limited
• OMass
Therapeutics Limited
•
Purespring Therapeutics Limited
• CRT
Pioneer Fund
As with any review of investments
these can only be considered in the context of the limited
procedures and agreed scope defining such review and are subject to
assumptions which may be forward looking in nature and subjective
judgements. Upon completion of such limited agreed procedures,
L.E.K. estimated an independent range of fair values of those
investments subjected to the limited procedures. In making its
determination of fair value Syncona considered the review as one of
multiple inputs. The limited procedures were undertaken within the
agreed scope and limited by the information reviewed which did not
involve an audit, review, compilation or any other form of
verification, examination or attestation under generally accepted
auditing standards and was based on the review of multiple defined
sources. SIML is responsible for determining the fair value of the
investments, and the agreed limited procedures in the review
performed to assist Syncona in its determination are only one
element of, and are supplementary to, the inquiries and procedures
that SIML is required to undertake to determine the fair value of
the said investments for which Management is ultimately
responsible.
Key
sources of estimation uncertainty
The Group's investments consist of
its investments in the Holding Company and the Partnership, both of
which are classified at fair value through profit or loss and are
valued accordingly, as disclosed in note 2.
The key sources of estimation
uncertainty are the valuation of the Holding Company's investments
in privately held life science companies, the Partnership's private
equity investments and investment in the CRT Pioneer Fund, and the
valuation of the share based payment liability.
The unquoted investments within the
life science portfolio are very illiquid. Many of the companies are
early stage investments and privately owned. Accordingly, a market
value can be difficult to determine. The primary inputs used by the
Company to determine the fair value of investments in privately
held life science companies are the cost of the capital invested
and PRI, adjusted to reflect the achievement or otherwise of
milestones or other factors. The accounting policy for all
investments is described in note 2 and the fair value of all
investments is described in note 19.
In determining a suitable range to
sensitise the fair value of the unlisted life science portfolio,
Management note the progress towards and achievement of core
milestones as well as underlying company indicators being a key
source of estimation uncertainty. Such activities and resulting
data emanating from the life science companies can be the key
trigger for fair value changes and typically involve financing
events which crystallise value at those points in time. The range
of +/-12% (31 March 2023: +/-10%) identified by Management reflects
their estimate of the range of reasonably possible valuations over
the next financial year, taking into account the position of the
portfolio as a whole. Key technical milestones considered by
Management and that typically trigger value enhancement (or
deterioration if not achieved) include the generation of
substantial clinical data.
As at the year end, none (31 March
2023: none) of the Partnership's underlying investments have
imposed restrictions on redemptions. However, underlying managers
often have the right to impose such restrictions.
The Directors believe it remains
appropriate to estimate their fair values based on NAV as reported
by the administrators of the relevant investments.
Where investments held by the
Partnership can be subscribed to, the Directors believe that such
NAV represents fair value because subscriptions and redemptions in
the underlying investments occur at these prices at the
Consolidated Statement of Financial Position date, where
permitted.
4.
INVESTMENT IN SUBSIDIARIES AND ASSOCIATES
The Company meets the definition of
an investment entity in accordance with IFRS 10. Therefore, with
the exception of the General Partner, the Company does not
consolidate its subsidiaries and indirect associates, but rather
recognises them as financial assets at fair value through profit or
loss.
Direct interests in subsidiaries
Subsidiary
|
Principal place
of
business
|
|
Principal activity
|
|
2024
%
interest(1)
|
|
2023
%
interest(1)
|
Syncona GP Limited
|
Guernsey
|
|
General Partner
|
|
100%
|
|
100%
|
Syncona Holdings Limited
|
Guernsey
|
|
Portfolio management
|
|
100%
|
|
100%
|
Syncona Investments LP
Incorporated
|
Guernsey
|
|
Portfolio management
|
|
100%
|
|
100%
|
(1)
Based on undiluted issued share capital and
excluding the MES issued by Syncona Holdings Limited (see note
12).
There are no significant
restrictions on the ability of subsidiaries to transfer funds to
the Company.
Indirect interests in subsidiaries and
associates
Indirect
subsidiaries
|
Principal place
of
business
|
|
Immediate parent
|
|
Principal activity
|
|
2024
%
interest(1)
|
Syncona
Discovery Limited
|
UK
|
|
Syncona Investments LP
Inc
|
|
Portfolio management
|
|
100%
|
Syncona
Portfolio Limited
|
Guernsey
|
|
Syncona Holdings Limited
|
|
Portfolio management
|
|
100%
|
Syncona IP
Holdco Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Portfolio management
|
|
100%
|
Syncona IP
Holdco (2) Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Portfolio management
|
|
100%
|
Syncona IP
Holdco (3) Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Portfolio management
|
|
100%
|
Syncona
Investment Management Limited
|
UK
|
|
Syncona Holdings Limited
|
|
Portfolio management
|
|
100%
|
SIML
Switzerland AG
|
Switzerland
|
|
SIML
|
|
Portfolio management
|
|
100%
|
Bidco 1354
Limited (2)
|
UK
|
|
Syncona Portfolio Limited
|
|
Gene therapy
|
|
99%
|
Forcefield
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Biologics
|
|
94%
|
Resolution
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Cell therapy
|
|
83%
|
Purespring
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Gene therapy
|
|
81%
|
Beacon Therapeutics Holdings
Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Gene therapy
|
|
77%
|
Kesmalea
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Small molecules
|
|
59%
|
Mosaic
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Small molecules
|
|
51%
|
Indirect
associates
|
Principal
place
of business
|
|
Immediate parent
|
|
Principal
activity
|
|
2024
%
interest(1)
|
Quell
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Cell
therapy
|
|
38%
|
Anaveon
AG
|
Switzerland
|
|
Syncona Portfolio Limited
|
|
Biologics
|
|
37%
|
OMass
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Small
molecules
|
|
37%
|
Azeria
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
In
voluntary liquidation
|
|
34%
|
Achilles
Therapeutics plc
|
UK
|
|
Syncona Portfolio Limited
|
|
Cell
therapy
|
|
27%
|
Clade
Therapeutics Inc
|
United
States
|
|
Syncona Portfolio Limited
|
|
Cell
therapy
|
|
22%
|
iOnctura
B.V.
|
Netherlands
|
|
Syncona Portfolio Limited
|
|
Biologics
|
|
20%
|
Indirect subsidiaries
|
Principal place
of
business
|
|
Immediate parent
|
|
Principal activity
|
|
2023
%
interest(1)
|
Syncona Discovery Limited
|
UK
|
|
Syncona Investments LP
Inc
|
|
Portfolio management
|
|
100%
|
Syncona Portfolio Limited
|
Guernsey
|
|
Syncona Holdings Limited
|
|
Portfolio management
|
|
100%
|
Syncona IP Holdco Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Portfolio management
|
|
100%
|
Syncona IP Holdco (2)
Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Portfolio management
|
|
100%
|
Syncona Investment Management
Limited
|
UK
|
|
Syncona Holdings Limited
|
|
Portfolio management
|
|
100%
|
SIML Switzerland AG
|
Switzerland
|
|
SIML
|
|
Portfolio management
|
|
100%
|
Resolution Therapeutics
Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Cell therapy
|
|
85%
|
SwanBio Therapeutics
Limited
|
United States
|
|
Syncona Portfolio Limited
|
|
Gene therapy
|
|
82%
|
Purespring Therapeutics
Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Gene therapy
|
|
81%
|
Forcefield Therapeutics
Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Biologics
|
|
76%
|
Beacon Therapeutics Holdings
Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Gene therapy
|
|
70%
|
Freeline Therapeutics Holdings
plc
|
UK
|
|
Syncona Portfolio Limited
|
|
Gene therapy
|
|
58%
|
Mosaic Therapeutics
Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Small molecules
|
|
51%
|
Indirect
associates
|
Principal
place
of business
|
|
Immediate parent
|
|
Principal
activity
|
|
2023
%
interest(1)
|
Anaveon
AG
|
Switzerland
|
|
Syncona Portfolio Limited
|
|
Biologics
|
|
46%
|
Quell
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Cell
therapy
|
|
44%
|
Kesmalea
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Small
molecules
|
|
41%
|
OMass
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
Small
molecules
|
|
35%
|
Azeria
Therapeutics Limited
|
UK
|
|
Syncona Portfolio Limited
|
|
In
voluntary liquidation
|
|
34%
|
Achilles
Therapeutics plc
|
UK
|
|
Syncona Portfolio Limited
|
|
Cell
therapy
|
|
27%
|
Clade
Therapeutics Inc
|
United
States
|
|
Syncona Portfolio Limited
|
|
Cell
therapy
|
|
17%
|
(1)
Based on undiluted issued share capital and
excluding the MES issued by Syncona Holdings Limited (see note
12).
(2)
Has subsequently been renamed Spur Therapeutics
Limited.
5.
TAXATION
The Company and the General Partner
are exempt from taxation in Guernsey under the provisions of The
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and have both
paid an annual exemption fee of £1,600 (31 March 2023:
£1,200).
The General Partner is incorporated
and a tax resident in Guernsey, its corporate affairs being managed
solely in Guernsey. Having regard to the non-UK tax residence of
the General Partner and the Company, and on the basis that the
Partnership is treated as transparent for UK and Guernsey tax
purposes and that the Partnership's business is an investment
business and not a trade, no UK tax will be payable on either the
General Partner's or the Company's shares of Partnership profit
(save to the extent of any UK withholding tax on certain types of
UK income such as interest).
Some of the Group's underlying
investments may be liable to tax, although the tax impact is not
expected to be material to the Group, and is included in the fair
value of the Group's investments.
6.
INCOME
The Group's income relates to
distributions from the Partnership which are used for paying costs
and dividends of the Group.
During the year, distribution income
from the Partnership amounted to £49,137,740 (31 March 2023:
£27,494,517) of which £4,353,307 (31 March 2023: £4,633,973)
remained receivable as at 31 March 2024. The receivable reflects
the charitable donations of the Group. Refer to note 8.
7.
NET GAINS/(LOSSES) ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT
OR LOSS
The net gains/(losses) on financial
assets at fair value through profit or loss arise from the Group's
holdings in the Holding Company and Partnership.
|
Note
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
Net gains/(losses) from:
|
|
|
|
|
The Holding Company
|
7.a
|
893
|
|
(62,636)
|
The Partnership
|
7.b
|
(19,282)
|
|
(4,650)
|
Total
|
|
(18,389)
|
|
(67,286)
|
7.a
Movements in the Holding Company:
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Expenses
|
(98)
|
|
(97)
|
Movement in unrealised
gains/(losses) on life science investments at fair value through
profit or loss
|
991
|
|
(62,539)
|
Net gains/(losses) on financial
assets at fair value through profit or loss
|
893
|
|
(62,636)
|
7.b
Movements in the Partnership:
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Investment income
|
771
|
|
106
|
Rebates and donations
|
(164)
|
|
81
|
Other income
|
41
|
|
-
|
Expenses
|
(406)
|
|
(342)
|
Realised gains on financial assets
at fair value through profit or loss
|
8,775
|
|
13,933
|
Movement in unrealised gains on
financial assets at fair value through profit or loss
|
16,876
|
|
6,049
|
Gains on foreign currency
|
3,962
|
|
3,018
|
Gains on financial assets at fair
value through profit or loss
|
29,855
|
|
22,845
|
Distributions
|
(49,137)
|
|
(27,495)
|
Net losses on financial assets at
fair value through profit or loss
|
(19,282)
|
|
(4,650)
|
8.
CHARITABLE DONATIONS
For the year ended 31 March 2024,
the Group has agreed to make a charitable donation to The Syncona
Foundation of 0.35% of the total NAV of the Group calculated on a
monthly basis (31 March 2023: 0.35%). The donation is made by the
General Partner.
During the year, charitable
donations expense amounted to £4,353,307 (31 March 2023:
£4,633,973) of which £4,353,307 (31 March 2023: £4,633,973)
remained payable as at 31 March 2024. Refer to note 13.
9.
GENERAL EXPENSES
|
Notes
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Share based payments
provision
|
12
|
2,972
|
|
(2,968)
|
Investment management
fees
|
16
|
16,645
|
|
12,121
|
Directors' remuneration
|
16
|
506
|
|
499
|
Auditor's remuneration
|
|
290
|
|
183
|
Other expenses
|
|
2,195
|
|
1,758
|
Total
|
|
22,608
|
|
11,593
|
Auditor's remuneration includes
audit fees in relation to the Group of £168,650 (31 March 2023:
£132,900). Total audit fees paid by the Group and the Syncona Group
Companies for the year ended 31 March 2024 totalled £322,000 (31
March 2023: £134,900). Additional fees paid to the auditor were
£50,620 (31 March 2023: £44,200) which relates to work performed at
the interim review of £40,600 (31 March 2023: £36,200) and other
non-audit fees of £10,020 (31 March 2023: £8,000) which relates to
regulatory compliance reporting for the Investment Manager and a
subscription fee to the auditor's accounting research
tool.
Further details of the share based
payments provision can be found in note 12.
10.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS
|
Notes
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
The Holding Company
|
10.a
|
922,680
|
|
919,958
|
The Partnership
|
10.b
|
319,018
|
|
338,300
|
Total
|
|
1,241,698
|
|
1,258,258
|
The Holding Company and the
Partnership are the only two investments held directly by the Group
and as such the reconciliation of movement in investments has been
presented separately for each below.
10.a The net assets of the Holding Company
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Cost of the Holding Company's
investment at the start of the year
|
494,810
|
|
494,810
|
Purchases during the year
|
-
|
|
-
|
Cost of the Holding Company's
investments at the end of the year
|
494,810
|
|
494,810
|
Net unrealised gains on investments
at the end of the year
|
432,577
|
|
429,757
|
Fair value of the Holding Company's
investments at the end of the year
|
927,387
|
|
924,567
|
Other net current
liabilities
|
(4,707)
|
|
(4,609)
|
Financial assets at fair value
through profit or loss at the end of the year
|
922,680
|
|
919,958
|
10.b The net assets of the Partnership
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Cost of the Partnership's
investments at the start of the year
|
597,753
|
|
334,834
|
Purchases during the year
|
542,413
|
|
1,848,806
|
Sales during the year
|
(755,229)
|
|
(1,575,336)
|
Return of capital
|
(6,290)
|
|
(10,551)
|
Cost of the Partnership's
investments at the end of the year
|
378,647
|
|
597,753
|
Net unrealised gains on investments
at the end of the year
|
39,072
|
|
22,196
|
Fair value of the Partnership's
investments at the end of the year
|
417,719
|
|
619,949
|
Cash and cash equivalents
|
89,576
|
|
67,190
|
Other net current
liabilities
|
(188,277)
|
|
(348,839)
|
Financial assets at fair value
through profit or loss at the end of the year
|
319,018
|
|
338,300
|
11.
TRADE AND OTHER RECEIVABLES
|
Notes
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Due from related parties
|
16
|
4,720
|
|
5,457
|
Charitable donation
receivable
|
16
|
4,353
|
|
4,618
|
Prepayments
|
|
65
|
|
68
|
Total
|
|
9,138
|
|
10,143
|
12.
SHARE BASED PAYMENTS PROVISION
Share based payments are associated
with awards of MES in the Holding Company, relevant details of
which are set out in note 2.
The total cost recognised
within general expenses in the Consolidated
Statement of Comprehensive Income is shown below:
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Charge/(credit) related to
revaluation of the liability for cash settled share
awards
|
2,972
|
|
(2,968)
|
Total
|
2,972
|
|
(2,968)
|
Other movements in the provision
relating to realisations and granting of awards totalled £5,647,140
(31 March 2023: £7,583,660). Amounts recognised in the
Consolidated Statement of Financial Position, representing the
carrying amount of liabilities arising from share based payments
transactions are shown below:
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Share based payments provision -
current
|
1,760
|
|
7,296
|
Share based payments provision -
non-current
|
2,861
|
|
-
|
Total
|
4,621
|
|
7,296
|
When a participant elects to realise
vested MES by sale of the MES to the Company, half of the proceeds
(net of anticipated taxes) will be settled in shares of the
Company, with the balance settled in cash.
The fair value of the MES is
established using an externally developed model as set out in note
2. Vesting is subject only to the condition that employees must
remain in employment at the vesting date. Each MES is entitled to
share equally in value attributable to the Holding Company above
the applicable base line value at the date of award, provided that
the applicable hurdle value of 15% or 30% growth in the value of
the Holding Company above the base line value at the date of award
has been achieved.
The fair value of awards made in the
year ended 31 March 2024 was £757,576 (31 March 2023: £2,529,130).
This represents 6,859,411 new MES issued (31 March 2023:
9,367,155). Awards were made on 13 July 2023 and 18 December 2023
at 11p and 14p per MES respectively.
The number of MES outstanding are
shown below:
|
2024
|
|
2023
|
|
|
|
|
Outstanding at the start of the
year
|
43,871,228
|
|
42,282,122
|
Issued
|
6,859,411
|
|
9,367,155
|
Realised
|
(6,700,688)
|
|
(7,762,846)
|
Lapsed
|
(3,835,892)
|
|
(15,203)
|
Outstanding at the end of the
year
|
40,194,059
|
|
43,871,228
|
|
|
|
|
Weighted average remaining
contractual life of outstanding MES, years
|
1.15
|
|
1.29
|
Vested MES as at the year
end
|
30,085,530
|
|
29,523,421
|
Realisable MES as at the year
end
|
8,997,656
|
|
12,010,048
|
13.
ACCRUED EXPENSE AND PAYABLES
|
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Charitable donations
payable
|
16
|
4,353
|
|
4,634
|
Management fees accrued
|
|
2,222
|
|
1,374
|
Other payables
|
|
1,023
|
|
453
|
Total
|
|
7,598
|
|
6,461
|
14.
SHARE CAPITAL
14.a Authorised Share Capital
The Company is authorised to issue
an unlimited number of shares, which may have a par value or no par
value. The Company is a closed-ended investment company with an
unlimited life.
As the Company's shares have no par
value, the share price consists solely of share premium and the
amounts received for issued shares are recorded in share capital in
accordance with The Companies (Guernsey) Law, 2008.
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
Authorised Share
Capital
|
|
|
|
Balance at the start of the
year
|
767,999
|
|
767,999
|
Balance at the end of the
year
|
767,999
|
|
767,999
|
|
2024
|
|
2023
|
|
Shares
|
|
Shares
|
Outstanding Ordinary Share Capital
|
|
|
|
Balance at the start of the
year
|
669,329,324
|
|
666,733,588
|
Share based payment shares issued
during the year
|
2,477,342
|
|
2,595,736
|
Treasury shares purchased by the
Company
|
(16,471,080)
|
|
-
|
Balance at the end of the
year
|
655,335,586
|
|
669,329,324
|
At 31 March 2024, 280,000 Ordinary
Shares had no voting rights attached and were entered into treasury
by the close of 3 April 2024. Resulting in the total Ordinary
Shares available for trade on an open market being
655,335,586.
During the year the associated cost
of purchasing the treasury shares totalled £20,223,241.
The Company has issued one Deferred
Share to The Syncona Foundation for £1.
14.b Capital and Revenue Reserves
Gains and losses recorded on the
realisation of investments, realised exchange differences,
unrealised gains and losses recorded on the revaluation of
investments held as at the year end and unrealised exchange
differences of a capital nature are transferred to capital
reserves. Income and expenses of a revenue
nature are transferred to revenue reserves.
14.c Earnings/(loss) per share
The calculations for the
(loss)/earnings per share attributable to the Ordinary Shares of
the Company excluding Ordinary Shares purchased by the Company and
held as treasury shares are based on the following data:
|
2024
|
|
2023
|
|
|
|
|
Earnings/(loss) for the purposes of
earnings per share
|
£3,788,000
|
|
£(56,018,000)
|
|
|
|
|
Basic weighted average number of
shares
|
656,371,037
|
|
668,575,494
|
Basic revenue earnings per
share
|
3.33p
|
|
1.69p
|
Basic capital loss per
share
|
(2.76)p
|
|
(10.07)p
|
Basic earnings/(loss) per
share
|
0.57p
|
|
(8.38)p
|
|
|
|
|
Diluted weighted average number of
shares
|
666,854,451
|
|
668,575,494
|
Diluted revenue earnings per
shares
|
3.33p
|
|
1.69p
|
Diluted capital loss per
share
|
(2.76)p
|
|
(10.07)p
|
Diluted earnings/(loss) per
share
|
0.57p
|
|
(8.38)p
|
|
2024
|
|
2023
|
|
|
|
|
Issued share capital at the start of
the year
|
669,329,324
|
|
666,733,588
|
Weighted effect of share issues and
purchases
|
|
|
|
Share based payments
|
1,732,786
|
|
1,841,906
|
Potential share based payment share
issues
|
1,035,451
|
|
3,487,581
|
Treasury shares
|
(4,207,658)
|
|
-
|
Diluted weighted average number of
shares
|
667,889,903
|
|
672,063,075
|
14.d NAV per share
|
2024
|
|
2023
|
|
|
|
|
Net assets for the purposes of NAV
per share
|
£1,238,878,132
|
|
£1,254,654,716
|
Ordinary Shares available to
trade
|
655,335,586
|
|
669,329,324
|
NAV per share
|
189.04p
|
|
187.40p
|
Diluted number of shares
|
656,371,037
|
|
672,816,905
|
Diluted NAV per share
|
188.74p
|
|
186.50p
|
As at 31 March 2024, if all MES were
realised, the number of shares issued in the Company as a result
would increase by 1,035,451 (31 March 2023: 3,487,581). The
undiluted per share value of net assets attributable to holders of
Ordinary Shares would move from £1.89 to £1.89 (31 March 2023:
£1.87 to £1.86) if these shares were issued.
15.
DISTRIBUTION TO SHAREHOLDERS
The Company may pay a dividend at
the discretion of the Directors.
During the year ended 31 March 2024,
the Company did not declare or pay a dividend (31 March 2023: £Nil
was paid in relation to the year ended 31 March 2022). The
Directors believe that it is not appropriate for the Company to pay
a dividend.
The Company is not declaring a 2024
dividend.
16.
RELATED PARTY TRANSACTIONS
The Group has various related
parties: life science investments held by the Holding Company, the
Investment Manager, the Company's Directors and The Syncona
Foundation.
Life science investments
The Group makes equity investments
in some life science investments where it retains control. The
Group has taken advantage of the investment entity exception as
permitted by IFRS 10 and has not consolidated these investments,
but does consider them to be related parties.
During the year, the total amount
invested in life science investments which the Group controls was
£131,996,869 (31 March 2023: £127,143,441).
The Group makes other equity
investments where it does not have control but may have significant
influence through its ability to participate in the financial and
operating policies of these companies, therefore the Group
considers them to be related parties. These amounts are unsecured,
interest free, and repayable on demand.
During the year, the total amount
invested in life science investments in which the Group has
significant influence was £38,276,591 (31 March 2023:
£25,404,894).
Commitments of milestone payments to
the life science investments are disclosed in note 20.
During the year, SIML charged the
life science investments a total of £268,012 in relation to
Directors' fees (31 March 2023: £215,094).
Investment Manager
SIML, an indirectly held subsidiary
of the Company, is the Investment Manager of the Group.
For the year ended 31 March 2024,
SIML was entitled to receive reimbursement of reasonably incurred
expenses relating to its investment management
activities.
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Amounts paid to SIML
|
16,645
|
|
12,121
|
Amounts owed to SIML in respect of
management fees totalled £2,222,128 as at 31 March 2024 (31 March
2023: £1,374,098).
During the year, SIML received fees
from the Group's portfolio companies of £1,290,464 (31 March 2023:
£864,632).
Company Directors
As at the year end, the Company had
seven Directors, all of whom served in a non-executive capacity.
Rob Hutchinson also serves as a Director of the General
Partner.
Directors' remuneration for the
years ended 31 March 2024 and 31 March 2023, excluding expenses
incurred, and outstanding Directors' remuneration as at the end of
the year, are set out below:
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
|
|
|
|
Directors' remuneration for the
year
|
506
|
|
499
|
Payable at the end of the
year
|
-
|
|
-
|
Shares held by the Directors can be
found in the Report of the Remuneration Committee. The Directors of
Syncona Limited together hold 0.04% (31 March 2023: 0.04%) of the
Syncona Limited voting shares.
The
Syncona Foundation
Charitable donations are made by the
Company to The Syncona Foundation. The Syncona Foundation was
incorporated in England and Wales on 17 May 2012 as a private
company limited by guarantee, with exclusively charitable purposes
and holds the Deferred Share in the Company. The amount donated to
The Syncona Foundation during the year ended 31 March 2024 was
£4,621,843 (31 March 2023: £2,428,478).
Other related parties
As at 31 March 2024, the Company has
a receivable from the Partnership, Holding Company
and Syncona Portfolio Limited amounting to £1,500
(31 March 2023: £15,438), £4,716,678 (31 March 2023:
£5,426,437) and £1,500 (31 March 2023:
£15,438), respectively.
17.
FINANCIAL INSTRUMENTS
In accordance with its investment
objectives and policies, the Group holds financial instruments
which at any one time may comprise the following:
- securities and investments held in accordance with the
investment objectives and policies;
- cash
and short-term receivables and payables arising directly from
operations; and
- derivative instruments including forward currency
contracts.
The financial instruments held by
the Group are comprised principally of the investments in the
Holding Company and the Partnership.
Details of the Group's significant
accounting policies and methods adopted, including the criteria for
recognition, the basis of measurement and the basis on which income
and expenses are recognised, in respect of its financial assets and
liabilities are disclosed in note 2.
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
Financial assets at fair value through profit or
loss
|
|
|
|
The Holding Company
|
922,680
|
|
919,958
|
The Partnership
|
319,018
|
|
338,300
|
Total financial assets at fair value through profit or
loss
|
1,241,698
|
|
1,258,258
|
|
|
|
|
Financial assets measured at amortised cost
|
|
|
|
Cash and cash equivalents
|
261
|
|
11
|
Other financial assets
|
9,138
|
|
10,143
|
Total financial assets measured at amortised
cost
|
9,399
|
|
10,154
|
|
|
|
|
Financial liabilities at fair value through profit or
loss
|
|
|
|
Provision for share based
payments
|
(4,621)
|
|
(7,296)
|
Total financial liabilities at fair value through profit or
loss
|
(4,621)
|
|
(7,296)
|
|
|
|
|
Financial liabilities measured at amortised
cost
|
|
|
|
Other financial
liabilities
|
(7,598)
|
|
(6,461)
|
Total financial liabilities measured at amortised
cost
|
(7,598)
|
|
(6,461)
|
|
|
|
|
Net
financial assets
|
1,238,878
|
|
1,254,655
|
The financial instruments held by
the Group's underlying investments are comprised principally of
life science investments, hedge, equity, credit, long-term
alternative investment funds, short-term UK and US treasury bills
and cash.
The table below analyses the
carrying amounts of the financial assets and liabilities held by
the Holding Company by category as defined in IFRS 9 (see note
2).
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
Financial assets at fair value through profit or
loss
|
|
|
|
Investment in
subsidiaries
|
927,387
|
|
924,567
|
Total financial assets at fair value
through profit or loss
|
927,387
|
|
924,567
|
|
|
|
|
Financial assets measured at amortised
cost(1)
|
|
|
|
Current assets
|
39
|
|
847
|
|
|
|
|
Financial liabilities measured at amortised
cost(1)
|
|
|
|
Current liabilities
|
(4,746)
|
|
(5,456)
|
|
|
|
|
Net
financial assets of the Holding Company
|
922,680
|
|
919,958
|
The table below analyses the
carrying amounts of the financial assets and liabilities held by
the Partnership by category as defined in IFRS 9.
|
2024
|
|
2023
|
|
£'000
|
|
£'000
|
Financial assets at fair value through profit or
loss
|
|
|
|
Listed investments
|
275,388
|
|
445,141
|
Unlisted investments
|
99,278
|
|
134,422
|
Investment in
subsidiaries
|
43,053
|
|
40,386
|
Total financial assets at fair value through profit or
loss
|
417,719
|
|
619,949
|
|
|
|
|
Financial assets measured at amortised
cost(1)
|
|
|
|
Current assets
|
92,053
|
|
67,973
|
|
|
|
|
Financial liabilities measured at amortised
cost(1)
|
|
|
|
Current liabilities
|
(190,754)
|
|
(349,622)
|
Net
financial assets of the Partnership
|
319,018
|
|
338,300
|
(1) Has a fair value which does not materially differ to
amortised cost
Capital risk management
The Group's objectives when managing
capital include the safeguarding of the Group's ability to continue
as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
The Group does not have
externally-imposed capital requirements.
The Group may incur indebtedness for
the purpose of financing share repurchases or redemptions, making
investments (including as bridge finance for investment
obligations), satisfying working capital requirements or to assist
in payment of the charitable donation, up to a maximum of 20% of
the NAV at the point of obtaining debt. The Group may utilise
gearing for investment purposes if, at the time of incurrence, it
considers it prudent and desirable to do so in light of prevailing
market conditions. There is no limitation on indebtedness being
incurred at the level of the underlying investments.
18.
FINANCIAL RISK MANAGEMENT AND ASSOCIATED RISKS
Financial risk management
The Group is exposed to a variety of
financial risks as a result of its activities. These risks include
market risk (including market price risk, foreign currency risk and
interest rate risk), credit risk and liquidity risk. These risks
have existed throughout the year and the Group's policies for
managing them are summarised below.
The risks below do not reflect the
risks of the underlying investment portfolios of certain of the
financial assets at fair value through profit or loss. The Group
has significant indirect exposure to a number of risks through the
underlying portfolios of the investment entities. There is no
mechanism to control these risks without considerably prejudicing
return objectives.
Due to the lack of transparency in
certain underlying assets, in particular certain of those held by
the Partnership, it is not possible to quantify or hedge the impact
of these risks on the portfolio as each investment entity may have
complex and changing risk dynamics that are not easily observable
or predictable. These risks will include interest, foreign exchange
and other market risks which are magnified by gearing in some, not
many, cases, resulting in increased liquidity and return
risk.
Syncona Limited
Syncona Limited is exposed to
financial risks through its investments in the Holding Company and
the Partnership. The risks and policies for managing them are set
out in the following sections.
The
Holding Company
Market price risk
The Holding Company invests in
early-stage life science companies that typically have limited
products in development, and any problems encountered in
development may have a damaging effect on that company's business
and the value of the investment.
This is mitigated by the employment
of highly experienced personnel, the performance of extensive due
diligence prior to investment and ongoing performance
monitoring.
Foreign currency risk
Foreign currency risk represents the
potential losses or gains on the life science investments future
income streams and the potential losses or gains on investments
made in United States Dollars (USD), Swiss Francs (CHF) and Euro
(EUR) by the Holding Company's underlying investments.
The following tables present the
Holding Company's assets and liabilities in their respective
currencies, converted into the Group's functional
currency.
|
CHF
|
|
EUR
|
|
USD
|
|
GBP
|
|
2024
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial
assets at fair value through profit or loss
|
35,713
|
|
25,646
|
|
323,624
|
|
542,404
|
|
927,387
|
Cash and
cash equivalents
|
-
|
|
-
|
|
-
|
|
39
|
|
39
|
Accrued
expense and payables(1)
|
-
|
|
-
|
|
-
|
|
(4,746)
|
|
(4,746)
|
Total
|
35,713
|
|
25,646
|
|
323,624
|
|
537,697
|
|
922,680
|
|
CHF
|
|
EUR
|
|
USD
|
|
GBP
|
|
2023
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial
assets at fair value through profit or loss
|
64,203
|
|
-
|
|
310,625
|
|
549,739
|
|
924,567
|
Cash and
cash equivalents
|
-
|
|
-
|
|
-
|
|
847
|
|
847
|
Accrued
expense and payables (1)
|
-
|
|
-
|
|
-
|
|
(5,456)
|
|
(5,456)
|
Total
|
64,203
|
|
-
|
|
310,625
|
|
545,130
|
|
919,958
|
(1) In which 99.49% (31 March 2023: 99.44%) is payable within the
Group.
Foreign currency sensitivity analysis
The following table details the
sensitivity of the Holding Company's NAV to a 10% change in the
USD, CHF and EUR exchange rate against the GBP currency with all
other variables held constant. The sensitivity analysis percentage
represents the Investment Manager's assessment, based on the
foreign exchange rate movements over the relevant period and of a
reasonably possible change in foreign exchange rates.
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
2023
|
|
CHF
|
|
EUR
|
|
USD
|
|
CHF
|
|
EUR
|
|
USD
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
|
10% increase
|
3,572
|
|
2,565
|
|
32,362
|
|
7,134
|
|
-
|
|
41,490
|
10% decrease
|
(3,572)
|
|
(2,565)
|
|
(32,362)
|
|
(5,837)
|
|
-
|
|
(33,946)
|
Interest rate risk
Interest rate risk is negligible in
the Holding Company as minimal cash and no debt are
held.
Liquidity risk
Liquidity risk is the risk that the
financial commitments made by the Holding Company are not able to
be met as they fall due. The Holding Company holds minimal cash and
has no access to debt and instead relies on liquidity from the
Partnership. The liquidity risk associated with the Partnership is
set out in the Partnership section below.
The table below details the Holding
Company's liquidity analysis for its financial assets and
liabilities.
|
<12
months
|
|
>12
months
|
|
2024
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial
assets at fair value through profit or loss
|
-
|
|
927,387
|
|
927,387
|
Cash and
cash equivalents
|
39
|
|
-
|
|
39
|
Accrued
expense and payables
|
(4,746)
|
|
-
|
|
(4,746)
|
Total
|
(4,707)
|
|
927,387
|
|
922,680
|
|
|
|
|
|
|
Percentage
|
(0.5)%
|
|
100.5%
|
|
100.00%
|
|
<12
months
|
|
>12
months
|
|
2023
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial
assets at fair value through profit or loss
|
-
|
|
924,567
|
|
924,567
|
Cash and
cash equivalents
|
847
|
|
-
|
|
847
|
Accrued
expense and payables
|
(35)
|
|
(5,421)
|
|
(5,456)
|
Total
|
812
|
|
919,146
|
|
919,958
|
|
|
|
|
|
|
Percentage
|
0.1%
|
|
99.9%
|
|
100.00%
|
The
Partnership
Market price risk
The overall market price risk
management of each of the fund holdings of the Partnership is
primarily driven by their respective investment objectives. The
Partnership's assets include investments in multi-asset funds and
segregated portfolios which are actively managed by appointed
investment managers with specific objectives to manage market risk.
The Investment Manager assesses the risk in the Partnership's fund
portfolio by monitoring exposures, liquidity, and concentrations of
the underlying funds' investments, in the context of the historic
and current volatility of their asset classes, and the Investment
Manager's risk appetite. The maximum risk resulting from financial
instruments is generally determined by the fair value of underlying
funds. The overall market exposure as at 31 March 2024 and 31 March
2023 is shown in the Consolidated Statement of Financial
Position.
The financial instruments are
sensitive to market price risk; any increase or decrease in market
price will have an equivalent effect on the market value of the
financial instruments.
Foreign currency risk
Foreign currency risk represents the
potential losses or gains the Partnership may suffer through
holding foreign currency assets in the face of foreign exchange
movements. The Partnership's treatment of currency transactions is
set out in note 2 to the Consolidated Financial Statements under
"Translation of foreign currency" and "Forward currency contracts".
Currency risk exists in the underlying investments, the analysis of
which is not feasible.
The investments of the Partnership
are denominated in USD, EUR, and GBP. The Partnership's functional
and presentation currency is £; hence, the Consolidated Statement
of Financial Position may be significantly affected by movements in
the exchange rates between the foreign currencies previously
mentioned. The Investment Manager may manage exposure to EUR and
USD movements by using forward currency contracts to hedge exposure
to investments in EUR and USD-denominated share classes.
The following tables present the
Partnership's assets and liabilities in their respective
currencies, converted into the Group's functional
currency.
|
|
|
|
|
|
|
2024
|
|
USD
|
|
EUR
|
|
GBP
|
|
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Financial
assets at fair value through profit or loss
|
61,407
|
|
12,130
|
|
344,182
|
|
417,719
|
Cash and
cash equivalents
|
23,522
|
|
15
|
|
66,039
|
|
89,576
|
Trade and
other receivables
|
614
|
|
1,861
|
|
2
|
|
2,477
|
Accrued
expense and payables(1)
|
(170,696)
|
|
-
|
|
(15,705)
|
|
(186,401)
|
Distributions payable
|
-
|
|
-
|
|
(4,353)
|
|
(4,353)
|
Total
|
(85,153)
|
|
14,006
|
|
390,165
|
|
319,018
|
|
|
|
|
|
|
|
2023
|
|
USD
|
|
EUR
|
|
GBP
|
|
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Financial
assets at fair value through profit or loss
|
123,311
|
|
18,565
|
|
478,073
|
|
619,949
|
Cash and
cash equivalents
|
40,519
|
|
27
|
|
26,644
|
|
67,190
|
Trade and
other receivables
|
1
|
|
-
|
|
782
|
|
783
|
Accrued
expense and payables (1)
|
(249,160)
|
|
-
|
|
(95,825)
|
|
(344,985)
|
Distributions payable
|
-
|
|
-
|
|
(4,637)
|
|
(4,637)
|
Total
|
(85,329)
|
|
18,592
|
|
405,037
|
|
338,300
|
(1) In which 91.58% (31 March 2023: 99.97%) is payable within the
Group.
Foreign currency sensitivity analysis
The following table details the
sensitivity of the Partnership's NAV to a 10% (31 March 2023: 10%)
change in the GBP exchange rate against the USD and EUR with all
other variables held constant. The sensitivity analysis percentage
represents the Investment Manager's assessment, based on the
foreign exchange rate movements over the relevant period and of a
reasonably possible change in foreign exchange rates.
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
USD
|
|
EUR
|
|
USD
|
|
EUR
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
10%
increase
|
(8,515)
|
|
(1,401)
|
|
(8,534)
|
|
1,592
|
10%
decrease
|
8,515
|
|
1,401
|
|
8,534
|
|
(1,592)
|
Interest rate risk
Interest receivable on bank deposits
or payable on bank overdrafts is affected by fluctuations in
interest rates, however the effect is not expected to be material.
All cash balances receive interest at variable rates. Interest rate
risk may exist in the Partnership's underlying investments, the
analysis of which is impractical due to the lack of visibility over
the underlying information required to perform this analysis within
the Partnership's investments.
Credit risk
Credit risk in relation to listed
securities transactions awaiting settlement is managed through the
rules and procedures of the relevant stock exchanges. In
particular, settlements for transactions in listed securities are
affected by the credit risk of the Citco Custody (UK) Limited (the
"Custodian") which acts as the custodian of the Partnership's
assets, on a delivery against payment or receipt against payment
basis. Transactions in unlisted securities are affected against
binding subscription agreements. Credit risk may exist in the
Partnership's underlying fund investments, the analysis of which is
impractical due to the lack of visibility over the underlying
information required to perform this analysis within the
Partnership's investments.
The Partnership invests in
short-term UK and US treasury bills and considers the associated
credit risk to be negligible. The Partnership's financial assets
are 40.0% (31 March 2023: 46.5%) short-term treasury
bills.
The principal credit risks for the
Partnership are in relation to deposits with banks. The securities
held by the Custodian are held in trust and are registered in the
name of the Partnership. Citco is "non-rated", however, the
Investment Manager takes comfort over the credit risk of Citco as
they have proven to rank amongst the "Best in class" and "Top
rated" in the recognised industry survey carrying a global presence
and over 40 years of experience in the provision of custodian and
other services to their clients and the hedge fund industry. The
credit risk associated with debtors is limited to trade and other
receivables.
The Group's cash and cash
equivalents are held with major financial institutions; the two
largest ones hold 67% and 32% respectively (31 March 2023: 79% and
20% respectively).
Liquidity risk
The Partnership is exposed to the
possibility that it may be unable to liquidate certain of its
assets as it otherwise deems advisable as the Partnership's
underlying funds or their managers may require minimum holding
periods and restrictions on redemptions. Further, there may be
suspension or delays in payment of redemption proceeds by
underlying funds or holdbacks of redemption proceeds otherwise
payable to the Partnership until after the applicable underlying
fund's financial records have been audited. Therefore, the
Partnership may hold receivables that may not be received by the
Partnership for a significant period of time, may not accrue any
interest and ultimately may not be paid to the Partnership. As at
31 March 2024, no (31 March 2023: Nil) suspension from redemptions
existed in any of the Partnership's underlying
investments.
The Partnership invests in
short-term UK and US treasury bills, daily traded money market
funds and daily traded credit funds and considers the associated
liquidity risk to be negligible. The Partnership's financial assets
are 40.0% (31 March 2023: 46.5%) short-term UK and US treasury
bills, 23.6% (31 March 2023: 16.6%) daily traded credit funds and
12.6% (31 March 2023: Nil) daily traded Money Market
Funds.
The table below details the
Partnership's liquidity analysis for its financial assets and
liabilities. The table has been drawn up based on the undiscounted
net cash flows on the financial assets and liabilities that settle
on a net basis and the undiscounted gross cash flows on those
financial assets and liabilities that require gross
settlement.
|
Within 1
month
|
|
>1 to 3
months
|
|
>3 to 12
months
|
|
>12
months
|
|
2024(1)
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial
assets at fair value through profit or loss
|
232,186
|
|
113,702
|
|
2,368
|
|
69,463
|
|
417,719
|
Cash and
cash equivalents
|
89,576
|
|
-
|
|
-
|
|
-
|
|
89,576
|
Trade and
other receivables
|
2,477
|
|
-
|
|
-
|
|
-
|
|
2,477
|
Accrued
expense and payables
|
(186,401)
|
|
-
|
|
-
|
|
-
|
|
(186,401)
|
Distributions payable
|
-
|
|
(4,353)
|
|
-
|
|
-
|
|
(4,353)
|
Total
|
137,838
|
|
109,349
|
|
2,368
|
|
69,463
|
|
319,018
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
43.2%
|
|
34.3%
|
|
0.7%
|
|
21.8%
|
|
100.0%
|
|
Within 1
month
|
|
>1 to 3
months
|
|
>3 to 12
months
|
|
>12
months
|
|
2023(1)
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial
assets at fair value through profit or loss
|
320,284
|
|
166,425
|
|
59,853
|
|
73,387
|
|
619,949
|
Cash and
cash equivalents
|
67,190
|
|
-
|
|
-
|
|
-
|
|
67,190
|
Trade and
other receivables
|
783
|
|
-
|
|
-
|
|
-
|
|
783
|
Accrued
expense and payables
|
(344,985)
|
|
-
|
|
-
|
|
-
|
|
(344,985)
|
Distributions payable
|
-
|
|
(4,637)
|
|
-
|
|
-
|
|
(4,637)
|
Total
|
43,272
|
|
161,788
|
|
59,853
|
|
73,387
|
|
338,300
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
12.8%
|
|
47.8%
|
|
17.7%
|
|
21.7%
|
|
100.0%
|
(1) The liquidity tables within this note reflect the anticipated
cash flows assuming notice was given to all underlying investments
as at 31 March 2024 and 31 March 2023 and that all UK and US
treasury bills are held to maturity. They include a provision for
"audit hold back" which most hedge funds can apply to full
redemptions and any other known restrictions the managers of the
underlying funds may have placed on redemptions. Where there is
currently no firm indication from the underlying manager on the
expected timing of the receipt of redemption proceeds, the relevant
amount is included in the ">12 months" category. The
liquidity tables are therefore conservative estimates.
19.
FAIR VALUE MEASUREMENT
IFRS 13 "Fair Value Measurement"
requires the Group to establish a fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value
hierarchy under IFRS 13 are set as follows:
- Level
1 Quoted prices (unadjusted) in active markets for identical assets
or liabilities;
- Level
2 Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability either directly (that is, as
prices) or indirectly (that is, derived from prices) or other
market corroborated inputs; and
- Level 3 Inputs for
the asset or liability that are not based on observable market data
(that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant
adjustment based
on unobservable
inputs, that
measurement is
a Level
3 measurement.
Assessing the
significance of
a particular
input to
the fair
value measurement
requires judgement,
considering factors
specific to
the asset
or liability.
The determination of what
constitutes "observable" requires significant judgement by the
Group. The Group considers observable data to be market data that
is readily available, regularly distributed or updated, reliable
and verifiable, and provided by independent sources that are
actively involved in the relevant market.
The following table presents the
Group's financial assets by level within the valuation hierarchy as
at 31 March 2024 and 31 March 2023:
|
|
|
|
|
|
|
2024
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial assets at fair
value through profit or loss:
|
|
|
|
|
|
|
|
The Holding
Company
|
-
|
|
-
|
|
922,680
|
|
922,680
|
The
Partnership
|
-
|
|
-
|
|
319,018
|
|
319,018
|
Total
assets
|
-
|
|
-
|
|
1,241,698
|
|
1,241,698
|
|
|
|
|
|
|
|
2023
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Financial assets at fair
value through profit or loss:
|
|
|
|
|
|
|
|
The Holding
Company
|
-
|
|
-
|
|
919,958
|
|
919,958
|
The
Partnership
|
-
|
|
-
|
|
338,300
|
|
338,300
|
Total
assets
|
-
|
|
-
|
|
1,258,258
|
|
1,258,258
|
The investments in the Holding
Company and the Partnership are classified as Level 3 investments
due to the use of the adjusted NAV of the subsidiaries as a proxy
for fair value, as detailed in note 2. The subsidiaries hold some
investments valued using techniques with significant unobservable
inputs as outlined in the sections that follow.
The underlying assets of the Holding
Company and the Partnership are shown below.
The following table presents the
Holding Company's financial assets and liabilities by level within
the valuation hierarchy as at 31 March 2024 and 31 March
2023:
Asset type
|
Level
|
31 March
2024
£'000
|
31 March
2023
£'000
|
Valuation
technique
|
Significant unobservable
inputs
|
Impact on
valuation
£'000
|
Listed investment
|
1
|
180,448
|
73,943
|
Publicly
available share
bid price as at
statement of financial
position date
|
n/a
|
n/a
|
SIML
|
3
|
5,831
|
6,108
|
Net Assets
of SIML
|
Carrying
value of assets and
liabilities determined in accordance
with generally accepted accounting
principles, without adjustment. A
sensitivity of 5% (31 March 2023: 5%) of the NAV of SIML
is applied.
|
+/-
292
|
Milestone payments
|
3
|
2,248
|
54,516
|
Discounted
cash flow
|
The main
unobservable inputs
consist of the assigned probability of
milestone success and the discount
rate
used.
A
sensitivity of 5ppts (31 March 2023: 5ppts) of the respective
inputs is applied.
|
PoS:
+/- 413
Discount
rate: +/- 100
|
Deferred consideration
|
3
|
14,362
|
15,882
|
Discounted
cash flow
|
The main
unobservable inputs
consist of
the assigned probability of
milestone
success and the discount
rate
used.
A
sensitivity of 5ppts (31 March 2023: 5ppts) of the respective
inputs is applied.
|
PoS:
+/-
898
Discount
rate:
+/-
5,312
|
Calibrated price of
recent investment
(PRI)(1)
|
3
|
555,174
|
427,552
|
Calibrated
PRI
|
The main
unobservable input is the
quantification of the progress
investments make against internal
financing and/or corporate
milestones where appropriate. A
reasonable shift in the fair value of
the investment would be +/-12% (31 March 2023:
+/-10%).
|
+/-
66,621
|
Cash(2)
|
n/a
|
41
|
294
|
Amortised
cost (4)
(31 March
2023: Transaction price)
|
n/a
|
n/a
|
Other net assets(3)
|
n/a
|
169,283
|
346,272
|
Amortised
cost (4)
(31 March
2023: Transaction price)
|
n/a
|
n/a
|
Total financial assets held at fair value through profit or
loss
|
|
927,387
|
924,567
|
|
|
|
(1) Valuation made by reference to price of recent funding
round unadjusted following adequate consideration of current facts
and circumstances.
(2) Cash and other net assets held within the Holding
Company are primarily measured at amortised cost which is
equivalent to their fair value.
(3) Other net assets primarily consists of a receivable due
from the Partnership totalling £170,700,000 (31 March 2023:
£344,900,000).
(4) Amortised cost is considered equivalent to fair
value.
The following table presents the
movements in Level 3 investments of the Holding Company for the
year ended 31 March 2024 and 31 March 2023:
|
Life
science
investments
|
|
Milestone
payments
and
deferred
consideration
|
|
SIML
|
|
2024
Total
|
|
2023
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
Opening balance
|
427,552
|
|
70,398
|
|
6,108
|
|
504,058
|
|
381,286
|
Purchases during the year
|
171,256
|
|
-
|
|
-
|
|
171,256
|
|
156,363
|
Sales during the year
|
(1,030)
|
|
-
|
|
-
|
|
(1,030)
|
|
(15,311)
|
Movement from Level 1 to
Level 3
|
12,934
|
|
-
|
|
-
|
|
12,934
|
|
-
|
Unrealised losses on financial
assets at fair value through profit or loss
|
(55,538)
|
|
(53,788)
|
|
(277)
|
|
(109,603)
|
|
(18,280)
|
Closing balance
|
555,174
|
|
16,610
|
|
5,831
|
|
577,615
|
|
504,058
|
The net unrealised loss for the year
included in the Consolidated Statement of Comprehensive Income in
respect of Level 3 investments in the
Holding Company held as at the year end amounted to £109,603,000
(31 March 2023: £18,280,000 (net unrealised loss)).
During the year, there were no
movements from Level 3 to Level 1 (31 March 2023: £Nil). There was
one movement from Level 1 to Level 3 (31 March 2023: Nil) relating
to the delisting of Freeline Therapeutics Holdings plc from an
active market.
The following table presents the
Partnership's financial assets and liabilities by level within the
valuation hierarchy as at 31 March 2024 and 31 March
2023:
Asset type
|
Level
|
31 March
2024
£'000
|
31 March
2023
£'000
|
Valuation
technique
|
Significant unobservable
inputs
|
Impact on
valuation
£'000
|
UK
and US treasury bills
|
1
|
163,373
|
284,960
|
Publicly
available price as at
statement of financial
position date
|
n/a
|
n/a
|
Capital pool
investment fund -
Credit funds
|
2
|
112,015
|
101,566
|
Valuation
produced
by fund administrator.
Inputs into fund
components are from
observable inputs
|
n/a
|
n/a
|
Capital pool
investment fund -
Multi asset funds
|
2
|
-
|
58,615
|
Valuation
produced
by fund administrator.
Inputs into fund
components are from
observable inputs
|
n/a
|
n/a
|
Capital pool
investment fund -
Multi asset funds
|
3
|
70,500
|
101,421
|
Valuation
produced
by fund administrator
|
The main
unobservable input
include
the assessment of the performance of the underlying assets by the
fund administrator.
A fair
reasonable shift in the
fair value
of the instruments would be +/-5% (31 March 2023: +/-5%)
|
+/-
3,525
|
Legacy funds -
long-term unlisted
investments
|
3
|
28,778
|
33,001
|
Valuation
produced
by fund administrator
|
The main
unobservable input
include the assessment of the
performance of the underlying
fund by the fund administrator.
A reasonable possible shift in the
fair value of the instruments
would be +/-10% (31 March 2023: +/-13%).
|
+/-
2,878
|
CRT
Pioneer Fund
|
3
|
33,874
|
32,727
|
Valuation
produced by
fund administrator and
adjusted by Management
|
Unobservable inputs include the
fund manager's assessment of
the performance of the underlying
investments and adjustments
made to this assessment to
generate the deemed fair value.
A reasonable possible shift in
the fair value of the instruments
would be +/-32% (31 March 2023: +/-36%).
|
+/-
10,840
|
Cash(1)
|
n/a
|
38,957
|
74,863
|
Amortised
cost (4)
(31 March
2023: Transaction price)
|
n/a
|
n/a
|
Cash equivalents - money market
funds(2)
|
n/a
|
59,706
|
-
|
Publicly
available price as at statement of financial position
date
|
n/a
|
n/a
|
Other net liabilities(3)
|
n/a
|
(188,184)
|
(348,853)
|
Amortised
cost (4)
(31 March
2023: Transaction price)
|
n/a
|
n/a
|
Total financial assets held at fair value through profit or
loss
|
|
319,018
|
338,300
|
|
|
|
(1) Cash and other net liabilities held within the
Partnership are primarily measured at amortised cost which is
equivalent to their fair value.
(2) Money Market Funds are deemed as cash equivalents and
valued at amortised cost, being equivalent to their fair
value.
(3) Other net liabilities primarily consists of a payable
due to Syncona Portfolio Limited totalling £170,700,000 (31 March
2023: £344,900,000).
(4) Amortised cost is considered
equivalent to fair value.
During the year ended 31 March 2024,
there were no movements from Level 1 to Level 2 (31 March 2023:
£Nil).
Assets classified as Level 2
investments are primarily underlying funds fair-valued using the
latest available NAV of each fund as reported by each fund's
administrator, which are redeemable by the Group subject to
necessary notice being given. Included within the Level 2
investments above are investments where the redemption notice
period is greater than 90 days. Other assets within the Level 2
investments are daily traded credit funds priced using the latest
market price equivalent to their NAV. Such investments have been
classified as Level 2 because their value is based on observable
inputs. The Group's liquidity analysis is detailed in note
18.
Assets classified as Level 3
long-term unlisted investments are underlying funds which are not
traded or available for redemption. The fair value of these assets
is derived from quarterly statements provided by each fund's
administrator.
The following table presents the
movements in Level 3 investments of the Partnership for the year
ended 31 March 2024:
|
Investment
in
subsidiary
|
|
Capital
pool
investment
|
|
2024
Total
|
|
2023
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Opening
balance
|
40,386
|
|
134,422
|
|
174,808
|
|
71,508
|
Purchases
|
-
|
|
729
|
|
729
|
|
100,352
|
Sales
during the year
|
-
|
|
(37,000)
|
|
(37,000)
|
|
-
|
Return of
capital
|
-
|
|
(6,290)
|
|
(6,290)
|
|
(10,551)
|
Unrealised
gains on financial assets at fair value
|
2,668
|
|
7,416
|
|
10,084
|
|
13,499
|
Closing
balance
|
43,054
|
|
99,277
|
|
142,331
|
|
174,808
|
The net unrealised gain for the year
included in the Statement of Comprehensive Income in respect of
Level 3 investments of the Partnership held as at the year end
amounted to £10,084,000 (31 March 2023: £13,499,000 (unrealised
gain)).
20.
COMMITMENTS AND CONTINGENCIES
The Group had the following
commitments as at 31 March 2024:
|
2024
|
|
2023
|
|
Uncalled
commitment
|
|
Uncalled
commitment
|
|
£'000
|
|
£'000
|
Life science portfolio
|
|
|
|
Milestone payments to
life science companies(1)
|
92,585
|
|
85,143
|
CRT Pioneer
Fund
|
1,561
|
|
2,499
|
Capital pool investments
|
1,018
|
|
1,585
|
Total
|
95,164
|
|
89,227
|
(1) Milestone payments to life science companies consist of
financial commitments undertaken before or at the reporting date,
that are contingent upon the achievement of the agreed investment
milestones. When the agreed investment milestones are not achieved,
the decision to make partial or full payments remains at the
discretion of the Group.
There were no contingent liabilities
as at 31 March 2024 (March 2023: Nil). The commitments are expected
to fall due in the next 36 months.
21.
SUBSEQUENT EVENTS
As of 31 March 2024, 280,000 shares
were in the process of being purchased by the Company and therefore
not available for trade. These shares were withdrawn and held as
treasury shares by the close of 3 April 2024 once the transactions
settled.
As of 19 June 2024, a further
8,655,000 shares have been purchased through the share buyback
programme.
Post period end a further £20.0m has
been allocated to the share buyback programme.
Post period end Forcefield
Therapeutics Limited syndicated their Series A financing resulting
in a valuation uplift of £2.4 million. The accounts have not been
updated to reflect this.
Post period end the valuation of the
quoted life science investments decreased by £69.8
million.
These Consolidated Financial
Statements were approved for issuance by the Directors on 19 June
2024. Subsequent events have been evaluated until 19 June
2024.
GLOSSARY
AAV
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.
AMN
Adrenomyeloneuropathy - a
progressive and debilitating neurodegenerative disease caused by
mutations in the ABCD1 gene that disrupt the function of spinal
cord cells and other tissues.
BLA
Biologics License
Application.
B-NHL
B cell non-Hodgkin's
lymphoma.
Capital access milestone
Milestones which have the potential
to enable capital access.
Capital deployed/deployment
Follow-on investment in our portfolio companies and investment in
new companies during the year. See alternative performance measures
below.
Capital pool Capital pool
investments plus cash less other net liabilities.
Capital pool investments The underlying investments consist of cash and cash
equivalents, including short-term (1 and 3 month) UK treasury
bills, listed fund investments and legacy fixed term
funds.
Capital pool investments return
See alternative performance measures
below.
CAR
T Chimeric antigen receptor
T-cell therapy - a type of immunotherapy which reprogrammes a
patient's own immune cells to fight cancer.
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.
CLL
Chronic lymphocytic
leukaemia.
CNS
Central nervous system - a part of the body's nervous system
comprised of the brain and spinal cord.
Companies Law
Companies (Guernsey) Law 2008.
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.
D&I
Diversity and inclusion.
Definitive data
A category within our NAV Growth
Framework. Companies in this category have significant clinical
data showing a path to marketed product or are moving to pivotal
trial and building out commercial infrastructure.
Emerging efficacy data
A category within our NAV Growth
Framework. Companies in this category have a clinical strategy
defined or have initial efficacy data from Phase I/II in
patients.
ERT
Enzyme replacement therapy - the
standard of care for Gaucher disease.
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.
Group
Syncona Limited and Syncona GP Limited are collectively referred to
as the "Group".
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.
IRR Internal Rate of
Return.
Key
value inflection point
Milestones which have the potential
to deliver significant NAV growth.
Leukaemia
Broad term for cancers of the blood
cells.
Late-clinical/late-stage clinical
Has advanced past Phase II clinical
trials.
Life science investments
Non-core assets which provide
optionality to deliver returns for our shareholders.
Life science portfolio
This incorporates the Company's portfolio companies, potential
milestone payments or deferred consideration, and
investments.
Life science portfolio return
See alternative performance measures below.
Lymphocytes
Specialised white blood cells that help to fight
infection.
Lymphoma
A type of cancer that affects lymphocytes and lymphocyte producing
cells in the body.
Macrophages
A form of white blood cell and the principal phagocytic (cell
engulfing) components of the immune system.
|
|
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.
NAV
per share
See alternative performance measures below.
NAV
per share return
See alternative performance measures below.
NDA
New drug application, the vehicle
through which drug sponsors formally propose that the US FDA
approve a new pharmaceutical for sale and marketing in the
US.
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.
Net
Zero Aspiration
Following NZAM's guidance our
initial focus within our portfolio will be on Scope 1 and 2
emissions and to the extent possible, material portfolio Scope 3
emissions. As data quality and associated methodologies improve for
calculating Scope 3 emissions, we may evolve our
approach.
New
molecular entity
Structurally unique active
ingredients that have never before been marketed.
NSCLC Non-small cell lung
cancer - the most common form of lung cancer.
NZAM The Net Zero Asset
Managers (NZAM) initiative is an international group of asset
managers who are committed to supporting the goal of net zero
greenhouse gas emissions by 2050 or sooner.
On
the market
A category within our NAV Growth
Framework. Companies in this category are commercialising products
or have revenue streams.
Operational build
A category within our NAV Growth
Framework. Companies in this category have a clearly defined
strategy and business plan or a leading management team
established.
Partnership Syncona
Investments LP Incorporated.
PCNSL
Primary central nervous system
lymphoma.
PDUFA
Prescription Drug User Fee Act - the
date the FDA is expected to respond by.
Return
A Simple Rate of Return is the
method used for return calculations.
SBTi
Science Based Targets
initiative.
SIML Syncona Investment
Management Limited.
SLE
Systemic lupus erythematosus - a
long-term autoimmune condition that causes joint pain, skin rashes
and tiredness.
Strategic portfolio
Core life science companies where
Syncona has significant shareholdings and plays an active role in
the company's development.
Syncona Group companies The
Company and its subsidiaries other than those companies within the
life science portfolio.
Syncona Holdings Limited
Holding Company.
Syncona Leadership team
Leadership team of SIML
Syncona team The team of
SIML, the Company's Investment Manager.
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.
TCFD
The Task Force on Climate-related Financial Disclosures (TCFD).
First published in 2017, the TCFD recommendations act as a
framework for assessing the physical and transition risks companies
are exposed to from climate change and the transition to a green
economy.
TCR
T-cell receptor.
The
Syncona Foundation
The Foundation distributes funds to a range of charities,
principally those involved in the areas of life science and
healthcare.
UN
PRI
The United Nations (UN) Principles for Responsible Investment (PRI)
is a network of investors, who commit to working to promote
sustainable investment.
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.
XLRP
X-linked retinitis pigmentosa - a
severe, aggressive, inherited retinal disease.
|
|
|
|
|
|
|
Alternative performance measures
Capital deployed
With reference to the life science
portfolio valuation. Small difference in calculation may be due to
rounding of inputs. This is calculated as follows:
|
2024
|
|
2023
|
A Net investment in the
period
|
£168.5m
|
|
£154.7m
|
adjusted for:
|
|
|
|
B Proceeds from sales
|
£1.4m
|
|
£17.4m
|
C CRT Pioneer Fund
distributions
|
£2.4m
|
|
£5.1m
|
Total Capital deployed
(A+B+C)
|
£172.2m
|
|
£177.2m
|
Capital pool
With reference to the life science
portfolio valuation table this is calculated as follows:
|
2024
|
|
2023
|
A Cash
|
£104.8m
|
|
£82.8m
|
B Other assets and
liabilities
|
£(26.7)m
|
|
£(12.3)m
|
C Net Cash (A+B)
|
£78.1m
|
|
£70.5m
|
D UK and US Treasury
Bills
|
£163.4m
|
|
£285.0m
|
E Credit investment funds
|
£112.0m
|
|
£101.6m
|
F Multi-asset funds
|
£70.5m
|
|
£160.0m
|
G Legacy funds
|
£28.8m
|
|
£33.0m
|
Total Capital Pool (C+D+E+F+G)
|
£452.8m
|
|
£650.1m
|
Capital pool return
Gross capital pool return for 2024
is 3.4 per cent; (2023: 5.5 per cent); This is calculated by
dividing the valuation movement of the gross capital pool
investments by the gross capital pool at the beginning of the
period. Small difference in calculation may be due to rounding of
inputs. This is calculated as follows:
|
2024
|
|
2023
|
Opening capital pool
|
£650.1m
|
|
£784.9m
|
Add back net liabilities not
included in Gross Capital Pool
|
£12.3m
|
|
£19.6m
|
Less SIML cash
|
£(7.3)m
|
|
£(8.2)m
|
A Opening Gross Capital
Pool
|
£655.1m
|
|
£796.3m
|
Life science net investments and
ongoing costs
|
£(203.8)m
|
|
£(185.5)m
|
B Valuation movement
|
£22.4m
|
|
£44.3m
|
Closing Gross Capital
Pool
|
£473.7m
|
|
£655.1m
|
Capital Pool return (B/A)
|
3.4%
|
|
5.5%
|
|
|
|
|
|
2024
|
|
2023
|
Closing Gross Capital
Pool
|
£473.7m
|
|
£655.1m
|
Add back SIML cash
|
£5.8m
|
|
£7.3m
|
Less net liabilities not included in
Gross Capital Pool
|
£(26.7)m
|
|
£(12.3)m
|
Total Capital Pool
|
£452.8m
|
|
£650.1m
|
|
|
|
Life science portfolio return
Gross life science portfolio return
for 2024 is 2.2 per cent; (2023: (14.3) per cent). This is
calculated as follows:
|
2024
|
|
2023
|
A Opening life science
portfolio
|
£604.6m
|
|
£524.9m
|
Net investment in the
period
|
£168.5m
|
|
£154.7m
|
B Valuation movement
|
£13.0m
|
|
£(75.0)m
|
Closing life science
portfolio
|
£786.1m
|
|
£604.6m
|
Life science portfolio return
(B/A)
|
2.2%
|
|
(14.3)%
|
NAV
per share
NAV per share is calculated by
dividing net assets by the number of shares in issue adjusted for
dilution by the potential share based payment share issues. NAV
takes account of dividends payable on the ex-dividend date. This is
calculated as follows:
|
2024
|
|
2023
|
A NAV for the purposes of NAV per
share
|
£1,238,878,132
|
|
£1,254,654,716
|
B Ordinary shares available to trade
(note 14)
|
655,335,586
|
|
669,329,324
|
C Dilutive shares
|
1,035,451
|
|
3,487,581
|
D Fully diluted number of shares
(B+C)
|
656,371,037
|
|
672,816,905
|
NAV
per share (A/D)
|
188.7p
|
|
186.5p
|
NAV
total return
NAV total return ("NAVTR") is a
measure of how the NAV per share has performed over a period,
considering both capital returns and dividends paid to
shareholders. NAVTR is calculated as the increase in NAV between
the beginning and end of the period, plus any dividends paid to
shareholders in the year. This is calculated as follows:
|
2024
|
|
2023
|
A Opening NAV per fully diluted
share (note 14):
|
186.5p
|
|
194.4p
|
B Closing NAV per fully diluted
share (note 14):
|
188.7p
|
|
186.5p
|
C Movement (B-A)
|
2.2p
|
|
(7.9)p
|
D Dividend paid in the year
(note 15):
|
0.0p
|
|
0.0p
|
E Total movement (B+C-A)
|
2.2p
|
|
(7.9)p
|
NAV
Total Return (E/A)
|
1.2%
|
|
(4.06)%
|
|
|
|
All alternative performance measures
are calculated using non-rounded figures.
|
|
|
ONGOING CHARGES RATIO
The ongoing charges ratio for 2024
is 1.93 per cent (2023: 0.88 per cent). Any small differences in
calculation may be due to rounding of inputs. This is calculated as
follows:
|
2024
|
|
2023
|
Management fee
|
£16.6m
|
|
£12.1m
|
Directors' remuneration
|
£0.5m
|
|
£0.5m
|
Auditor's remuneration
|
£0.3m
|
|
£0.3m
|
Other ongoing expenses
|
£3.6m
|
|
£1.8m
|
Share based payment
expense
|
£3.0m
|
|
£(3.0m)
|
A. Total ongoing expenses
|
£24.0
|
|
£11.7m
|
B. Average NAV
|
£1,244.4m
|
|
£1,320.5m
|
Ongoing charges ratio (A/B)
|
1.93%
|
|
0.88%
|
|
|
|