Syncona Limited
Annual report and accounts 2022
Building a
diversified
portfolio of
global leaders
in life science
STRATEGIC REPORT
2 At a glance
4 Investment proposition
6 Chair’s statement
9 Section 172 statement
10 Business review
14 Our strategy
16 Investment process
18 The Syncona team
20 Life science portfolio review
34 Market review
36 Key performance indicators
38 Business model
40 Business model in action
42 The Corporate Team
44 Risk management
48 Principal risks and uncertainties
54 Sustainability
72 TCFD report
GOVERNANCE
76 Corporate governance report
80 Board of Directors
82 Our stakeholders
84 Report of the Nomination and Governance
Committee
87 Report of the Audit Committee
92 Report of the Remuneration Committee
98 Directors’ report
FINANCIAL STATEMENTS
101 Statement of Directors’ responsibilities
102 Independent Auditor’s report
108 Unaudited Group Portfolio Statement
109 Consolidated Statement of Comprehensive Income
110 Consolidated Statement of Financial Position
111 Consolidated Statement of Changes in Net Assets
Attributable to Holders of Ordinary Shares
112 Consolidated Statement of Cash Flows
113 Notes to the Consolidated Financial Statements
SHAREHOLDER INFORMATION
138 AIFMD Disclosures (unaudited)
139 Report of the Depositary to the shareholders
140 Company summary and e-communications
forshareholders
141 Glossary
143 Alternative performance measures
144 Advisers
Our purpose
We invest to extend
andenhance human life.
We found, build and fund
companies to deliver
transformational treatments
to patients in areas of high
unmetneed.
Found
We found our companies around exceptional science
with the ability to deliver dramatic efficacy for patients
and to take products to market on a stand-alone basis.
Build
We partner with our companies’ management teams to
build globally competitive businesses, setting them up
to be successful and sustainable over the long term.
Fund
Our strategic capital pool is central to our model. It
gives us the flexibility to fund our companies over the
long term through to product approval, maximising their
ambition, and helps ensure we are not a forced seller.
Read more:
Business model
Page 38
FY2021/2 marks an important milestone for
Syncona, a decade since it was founded. Whilst
wehave seen macroeconomic headwinds impact
sentiment in the biotech sector, our model has
continued to deliver notable successes in the year.
We have worked closely with our companies to drive
progress, investing at scale into the portfolio and
generating valuation uplifts across our privately
heldcompanies. We also executed our largest
transaction to date, the sale ofGyroscope to
Novartis for up to $1.5 billion.
Our balance sheet is an important competitive
advantage, particularly in challenging market
conditions, and will allow us to continue topursue
new investment opportunities, whilst supporting our
existing portfolio of 11 companies asthey scale.
2022 Highlights
£1.3bn
*
Net Asset Value (NAV)
(194.4p
1
per share)
(2021: £1.3bn; 193.9p per share)
0.3%
*
NAV total return
(2021: 4.4%)
£524.9m
Life science portfolio valuation
(2021: £722.1m)
£784.9m
Capital pool
(2021: £578.2m)
£123.2m
*
Capital deployment
(2021: £189.2m)
11
Portfolio companies
(2021: 11)
11
Clinical trials
(2021: 11)
* Alternative performance measure, refer
to page 143
1 Fully diluted, please refer to note 14 in the
financial statements
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
1
Syncona Limited Annual report and accounts 2022
At a glance
We build companies
to deliver transformational
outcomes for patients
Syncona is a leading FTSE 250 healthcare
company. Our purpose is to invest to extend
andenhance human life. We do this by
foundingand building companies to deliver
transformational treatments to patients in
areasof high unmet need.
Our strategy is to create a diversified portfolio of
15-20globally leading healthcare businesses with a
goal, over a rolling 10-year basis, of delivering three
tofive companies in which we retain a significant
ownership position to the point of product approval.
We focus on developing treatments for patients by
working in close partnership with world-class
academicfounders and management teams.
Our balance sheet underpins our strategy, enabling
usto take a long-term view as we look to improve the
lives of patients with no or few treatment options, build
sustainable life science companies and deliver strong
risk-adjusted returns to shareholders.
Who we are
Our team
Syncona is differentiated by its people, who identify
innovative technology and take a commercial approach
to building businesses capable of delivering
transformational treatments to patients.
Our multi-disciplined investment team has deep
scientific, operational, commercial and investment
expertise and an ability to navigate the lifecycle of a
company. They have extensive experience working
alongside global key opinion leaders, whilst appointing
and supporting leading management teams.
Scientific Investment Operational Commercial
85% 220+ 10 16
Investment
team with PhDs
or M.D.s
Years of life
science and
investing
experience
Portfolio
companies
where we have
held operational
roles
Board seats
at portfolio
companies
Our rolling 10-year targets
15-20
Portfolio of leading
life science companies
3-5
Companies to the point
of product approval
2-3
New companies founded
per year
Syncona Limited Annual report and accounts 20222
Building a diversified portfolio to deliver long-term value
DRUG DISCOVERY PRE-CLINICAL CLINICAL
CELL
THERAPY
£204.5m
Autolus Therapeutics
Achilles Therapeutics
Quell Therapeutics
Resolution Therapeutics
Neogene Therapeutics
Clade Therapeutics
GENE
THERAPY
£125.9m
Freeline Therapeutics
SwanBio Therapeutics
Purespring Therapeutics
BIOLOGICS
£59.8m
Anaveon
SMALL
MOLECULE
£34.7m
OMass Therapeutics
4
Companies at
clinical stage
3
Pre-clinical
companies
atclinical
candidate stage
11
Clinical trials
Domain focus of our portfolio companies
1
Underpinned by our strong capital base
SMALL MOLECULE
8%
CELL THERAPY
48%
GENE THERAPY
30%
BIOLOGICS
14%
1 Representative of domain focus of our 11 core portfolio companies
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
3
Investment proposition
We are building a diversied portfolio bycreating globally leading life science companies,
providing our investors withaccess tothe returns that can be deliveredfrom growing our
companies over the long term.
Building
the next
generation
of global
leaders in
life science
DRUG DISCOVERY
PRE-CLINICAL
Syncona
Generation 1
c2012 – 2014
Syncona
Generation 2
c2015 – 2017
Syncona
Generation 3
c2018 – 2019
Syncona
Generation 4+
2020+
Investment proposition
01
Access to the best
scientific innovation
UK/Europe has a globally signicant
scientic research base
Extensive network and strong relationships
across industry
Proactive approach to sourcing and
generating proprietary opportunities
02
Expert team with strong
track record
Technical skill set with deep scientic,
investment, operational and
commercialexpertise
Signicant experience in managing risk and
reward inspecialised asset class
Three exits delivering strong cash returns
Deep domain expertise incell
and gene therapy
03
Differentiated company
creation model
Partnering with globally leading academics
maximises ability to set strategy and
inuence company
Potential for best cost basis of any investor,
supporting opportunity to deliver bestreturns
Hands-on operational approach to
building companies
3.1x
Gross multiple
ofcost
1,2
1.2x
Gross multiple
ofcost
1
1.2x
Gross multiple
ofcost
3
1.0x
Gross multiple
of cost
1 Reflects capital invested by Syncona Partners where applicable
2 Includes capital invested in CEGX and write off of 14MG
3 Includes write off of Azeria
We have a highly skilled team, strong capital base and a differentiated
strategy to commercialise the best scientic innovation.
Syncona Limited Annual report and accounts 20224
EARLY CLINICAL LATE CLINICAL
Portfolio diversified across therapeutic areas and the development cycle
* Illustrative and assumes successful clinical development and approval, Syncona team view
Syncona’s assets are at various stages of clinical development and in the process of generating clinical data, companies shaded
grey denote those which have been sold
04
Opportunity to build
highvalue companies
Found companies around science in areas
ofhigh unmet medical need
Selecting only those assets that can
credibly be developed to approval by
abiotechnology company
Maximises ability to access out-return in life
science by being able to hold companies late
into development and to approval
05
Strategic balance sheet
Provides exibility to fund our companies
over the long term, maintaining signicant
ownership positions and inuence
Ability to fund helps to attract best
academics, founders, executives and
nancing syndicate partners
Provides strong negotiating position for
external nancing rounds or M&A
06
Portfolio with the potential
to deliver transformational
treatments
Portfolio of high growth companies
diversied across therapeutic area, tissue
compartment and development stage
Companies built with the ambition and
capability to deliver products to patients
Increasing value creation potential
*
Delivering value
We have a diverse and maturing
portfolio that has the potential to
deliver value for our shareholders
over the long term.
£905.7m
Invested in life science portfolio
since 2012
1
1.6x
Gross multiple on invested capital
1,2
3
Portfolio companies sold
4.6x
Gross multiple on invested capital
on three companies sold to date
1
1 Reflects capital invested by Syncona
Partners where applicable
2 Includes write offs from Azeria and 14MG
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
5
Chair’s statement
£1.3bn
Net Asset Value
£40.6m
Donated to charity since 2012, the
year the Foundation was started
T
his was a pivotal year for Syncona.
We completed our third successful
exit, added a new company to the
portfolio, optimised our financing
approach, strengthened our team and
capital base, and made positive financial,
clinical and operational progress in the
portfolio. I’m proud that the team achieved
this while navigating continued COVID-19
constraints and volatile market conditions
for much of the year, overcoming these
challenges to deliver significant progress
towards our long-term goals.
Financial performance
The second half of CY2021 was marked by
significant volatility across equity markets
globally. This uncertainty has carried on into
2022, compounded by concerns around
inflation, interest rates and Russia’s invasion
of Ukraine and the ongoing humanitarian
crisis. This has impacted investor sentiment
towards risk assets. We have seen a macro
rotation away from growth stocks, impacting
both valuations and financings of biotech
companies, especially smaller, earlier
stagecompanies. As market volatility has
increased, the Syncona team continues to
carefully review the requirements of each of
our portfolio companies and our capital pool
to ensure that our Company is well positioned
to navigate continuing challenging markets.
Our balance sheet provides us with a
strategic advantage, and the team’s expertise
and rigorous approach to risk management
means we continue to take a disciplined
approach to capital allocation across a
well-funded portfolio and exciting pipeline.
Syncona ended the year with net assets of
£1,309.8 million or 194.4p per share, a 0.3
per cent return in the year (31 March 2021:
net assets of £1,300.3 million, NAV per share
of 193.9p, 4.4 per cent return), despite the
wider market backdrop for life science
companies, which saw the NASDAQ
This was a pivotal year for Syncona.
We completed our third successful
exit, added a new company to the
portfolio, optimised our financing
approach, strengthened our team
andcapital base, and made positive
financial, clinical and operational
progress in the portfolio”
Melanie Gee
Chair of Syncona Ltd
Syncona Limited Annual report and accounts 20226
Our values are at the heart of all that we
do as we seek todeliver Syncona’s
purpose for our stakeholders
Teamwork
Entrepreneurial
Leadership
Excellence
Data Driven
Biotechnology Index decline 12 per cent
during the period. The significant NAV uplift
achieved through the sale of Gyroscope to
Novartis and multiple successful private
financings offset the decline in share prices
ofour three listed companies, Autolus,
Freeline and Achilles. We recognise that the
performance of these listed companies has
been disappointing for our shareholders.
Ourteam have worked closely with portfolio
company management teams to support
them as they continue to execute their
development plans. Similarly, the challenging
market conditions have also impacted
Syncona’s share price performance in the
financial year, which has been disappointing.
Whilst the market environment for early
stagebiotech companies continues to be
challenging, our listed companies are funded
to deliver clinical data which represent key
milestones for their businesses, and we
believe Syncona is well positioned to deliver
growth over the long term.
Delivering our long-term strategy
underpinned by a disciplined approach
to capital allocation
Ensuring we have a strong capital base to
support our companies, as they scale and
access the significant value that can be
created when companies are set up and built
to deliver products to patients, is fundamental
to the Syncona model. This is a key strategic
advantage that has been considerably
strengthened with the sale of Gyroscope.
Together with the management team, the
Syncona Board has undertaken a review of
our financing strategy and, as outlined in our
interim results in November 2021, we have
optimised our approach to support us in
shaping the balance of financial risk and
reward across the portfolio as we build
towards a diversified portfolio of 15-20
companies. We believe holding a small
number of companies privately over a longer
time frame than we have historically will
provide our shareholders with improved
risk-adjusted returns over the long term.
Our role in society and engaging our
major stakeholders
Whilst a core focus is looking at how to
deliver value for our shareholders, the Board
and the investment team have continued to
engage with our major stakeholders over the
year. Our people are highly motivated by
making a difference to the lives of patients
by founding and building companies based
on exciting science. We believe our work
can have a positive social impact across
different areas of society. I was particularly
pleased that the discussions we had around
the decision to sell Gyroscope to Novartis
considered the impact of the change in
Excellence
We continually strive for the best
outcome for all of Syncona’s
stakeholders
We have high expectations of
ourselves and each other; we act
with integrity
We work with the best people to
deliver our goals
Entrepreneurial
We actively engage with the
external world and work to create
its future
We are curious and creative to
bring about the change we seek
to make
We take risks in a competitive
world and facethem with bravery,
determination and urgency
Teamwork
We seek to give and receive
constructive feedback
We are collaborative
andtransparent, valuing our
diverse talents andperspectives
We admit our mistakes and
perpetually seek to improve
Data Driven
We are relentless in searching
out all of the data
We ensure our hypotheses
and decisions are rmly
grounded in the data
We are intellectually honest
and provide open and
constructive challenge
Leadership
We see what needs to be done
and take responsibility for doing it
We take personal ownership for
delivering Syncona’s mission
We think independently; weare
not bound byprecedent
We are trusted and empowered
to progress our own development
We have drive, resilience and
persistence
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
7
TheSyncona Foundation (the “Foundation”).
The Foundation continues to have a
significant impact across the UK and
throughout the world. The charities the
Foundation supports have faced immense
challenges throughout the pandemic, and
we are proud that our support has helped
them to continue their important work
duringthis time.
Sustainable impact
Following the publication of our Sustainability
Policy and Responsible Investment Policy
lastyear, the team have worked with passion
and dedication to advance our sustainability
agenda this year. I have been delighted to see
the progress that has been made in engaging
our portfolio companies on these important
issues. We recognise, as significant
shareholders in these businesses, the
influence we can have, and have engaged
them on a number of important topics
suchas diversity and animal welfare. The
leadershipteams at our portfolio companies
have positively engaged with us and share
ourpriorities. We expect to report on their
progress in these areas as they move forward.
There has also been good progress on our
own culture and diversity initiatives. These will
be covered in further detail in our Sustainability
Report 2022. I am proud of the progress the
Company has made in trying to improve
diversity in the life science space, whilst
recognising it is an area where we have
morework to do.
We recognise the importance of having a
strong framework in place to minimise our
carbon footprint. With this in mind, Syncona
has reported this year for the first time in line
with the recommendations of the Task Force
on Climate-related Financial Disclosures
(TCFD). It has also set an aspiration to be
netzero amongst its full value chain by 2050,
including portfolio company emissions.
Governance changes
As Syncona entered its 10th year since
foundation, there have been a number
ofBoard changes, with Nigel Keen
andNicholas Moss stepping down as
Non-Executive Directors on 31 December
2021, whilst Tom Henderson stepped down
at the 2021/2 Annual General Meeting.
Nigel was the founding Chair of Syncona
Partners in 2012 while Nicholas had been
aDirector of Syncona (then BACIT) when
itoriginally listed in that year; both made
invaluable contributions to the business
overtheir nine-year tenures and leave with
our immense gratitude for their service and
with the Company well positioned for
futuregrowth. Tom also made a significant
contribution to the business during his time
Chair’s statement
There were a number of changes to
the Board during the financial year:
Dr Julie Cherrington
Joined in February 2022 as an
experienced life sciences executive,
with a strong track record of drug
development, from the clinic through
to commercialisation.
Dr Cristina Csimma
Joined in February 2022, bringing
significant expertise as a biopharma
executive, along with experience in
venture capital and the US biotech
capital market environment.
Tom Henderson
Stepped down in August 2021, after
serving nine years as a Non-Executive
Director. He will continue his role as
Chair of the Syncona Foundation.
Nigel Keen
Stepped down in December 2021, after
making an invaluable contribution since
co-founding Syncona Partners in 2012,
to being a member of the Syncona Ltd
Board and chairing theSyncona
Investment Management Ltd Board.
Nicholas Moss
Stepped down in December 2021,
after serving nine years as a
Non-Executive Director including as
Senior Independent Director.
Read more:
Board of Directors
Page 80
Changes at Board level
with us and we have been delighted that he
has continued his involvement with Syncona
through his Chair role at The Syncona
Foundation. Following their departures,
Virginia Holmes has taken up the role of
Senior Independent Director and Gian
PieroReverberi became Chair of the
Remuneration Committee, whilst Martin
Murphy has taken over the role of Chair of
Syncona Investment Management Limited.
We have also appointed two Directors
withsignificant life science experience to
enhance the diverse blend of expertise
andinsights that the Board provides to the
management team as they seek to expand
and develop a maturing portfolio. Dr Julie
Cherrington comes with a strong track
record of bringing drugs into the clinic and
through to commercialisation, with particular
expertise in the oncology setting, and Dr
Cristina Csimma joins Syncona with nearly
30 years’ experience of drug development,
new company formation, value creation and
strategic guidance across a broad range of
therapeutic areas. Cristina also brings
significant expertise in venture capital and
the US biotech capital market environment.
I am delighted to be working alongside both
Julie and Cristina on the next phase of
Syncona’s growth and development.
Looking ahead
We have further strengthened our platform
this year with key hires to our expert team,
astrategic capital base, optimised financing
approach, and exciting portfolio of life science
companies. The business is well positioned
tocreate a diversified portfolio of 15-20
companies with a goal of delivering three to
five companies in which we retain a significant
ownership interest to the point of product
approval on a rolling 10-year basis. We
believe if we achieve this goal, we will deliver
transformational outcomes for patients and
strong risk-adjusted returns for shareholders.
I would like to close by thanking the Syncona
team, the portfolio company management
teams and my Board colleagues for their hard
work and dedication this year, as well as our
shareholders and other stakeholders for their
continuing support.
Melanie Gee
Chair of Syncona Ltd
ownership on each of our key stakeholder
groups, critically from a patient perspective.
Our view was that Novartis has the capability
and expertise to drive Gyroscope’s exciting
therapies through the development and
regulatory pathway to reach patients on an
accelerated trajectory.
A core part of our social contribution,
outside of the day-to-day work that we do,
has always been our donation (currently
0.35 per cent of NAV) to charity delivered
primarily through our commitment to
Syncona Limited Annual report and accounts 20228
SECTION 172 STATEMENT
In line with the Corporate Governance
Code 2018, this statement covers
how the Board has considered the
matters set out in section 172 of the
UK Companies Act 2006.
Section 172 requires directors to have
regard to the long-term consequences
oftheir decisions, the interests of key
company stakeholders, the impact of the
company’s activities on the community
and the environment, the desirability of
maintaining a reputation forhigh standards
of business conduct, and fair treatment
between the members of the company,
against a backdrop of the company’s
overall strategy and business model.
As a Guernsey company that legislation
does not directly apply to Syncona, but
the Board recognises the importance
ofthese issues.
As described in the Corporate
governance report (pages 76-79),
Syncona is an investment company and
has appointed its subsidiary Syncona
Investment Management Limited (SIML)
as Investment Manager, and delegated
responsibility for managing the
investment portfolio to it. Accordingly
theBoard is not directly involved in
management of the investment portfolio,
other than in respect of very large
decisions (such as the Gyroscope sale
this year) but sets strategy and oversees
the activities oftheSyncona team. The
Board’s consideration of the section 172
matters therefore mostly takes place in
the context of setting strategy and
oversight, with individual decisions being
relatively infrequent. During the year the
Board was required to consider the
proposed sale of the Company’s
investment in Gyroscope and further
details of how the Board approached
that decision are set out on the right.
Long-term decision-making
The Board is responsible for setting the
Company’s purpose, investment policy,
strategic objectives and risk appetite.
Ourpurpose is to extend and enhance
human life by founding and building
companies to deliver transformational
treatments to patients in areas of high
unmet need.
Inherent in this model is that we are
making investments where it could take
10 to 15 years to reach product approval,
and where significant investment and risk
is involved to get to that point. A long-term
outlook is therefore embedded in the
Company’s approach, and is a core part
of the Board’s discussions on strategy
and its oversight of the Syncona team and
when it does make individual decisions.
Further details: see Our strategy (pages
14-15); Investment process (pages
16-17); Risk management and Principal
risks (pages 44-53); Corporate
governance report (pages 76-79).
Our key stakeholders
Positive relationships with our
stakeholders are important to the success
of our business and in maintaining our
reputation and the Board reviews how it
and the Syncona team engage with these
stakeholders on an ongoing basis. Our
key stakeholders include our patients,
shareholders, the Syncona team and
portfolio companies. We also regard
wider society, including our impact on the
community and the environment, as one
of our key stakeholders. How the interests
of each of these key stakeholders are
taken into account in the business and by
the Board, is described in more detail on
pages 82-83.
Further details: see Sustainability (pages
54-71); Corporate governance report
(pages 76-79).
Maintaining a reputation for high
standards of business conduct
The Board is responsible for monitoring
theculture, values and reputation of the
business. Last year the Board worked
withthe Syncona team to capture the
Company’s purpose and values and
during this year has reviewed the steps
taken by the team to ensure that our
processes and ways of working are
aligned with those values. The Board
also monitors the implementation of our
sustainability framework, which sets out
how we will actas a responsible investor.
Further details: see Sustainability (pages
54-71); Corporate governance report
(pages76-79).
Case study: Sale of Gyroscope
During the year the Company sold its
investment in Gyroscope toNovartis. This
was a significant transaction for Syncona
and required Board approval of the sale.
The Board discussed and agreed that
thetransaction was consistent with
theCompany’s long-term strategy,
particularly given the transaction structure
which gives Syncona ongoing exposure to
Gyroscope’s development and the potential
for significant additional returns subject to
certain milestones. In addition, the Board
considered that there would be a positive
impact on the Company as the proceeds
ofthe sale would enable us to fund
opportunities elsewhere in theCompany
portfolio, particularly at a time of increased
market volatility affecting sentiment towards
early stage biotech businesses. While
retaining the investment was also attractive,
the Board noted the significant funding
required to get the Gyroscope business
tothe point of product approval, and
thatthere were risks, including market
conditions, around whether Gyroscope
could obtain this funding.
The Board also considered the impact
onvarious stakeholders and in particular
considered that Novartis’ strong
ophthalmology and gene therapy
experience had the potential to provide
astrong platform for the Gyroscope
business, potentially improving the speed
of getting a product to approval and
making it widely available to patients. For
shareholders the transaction represented
astrong return with the opportunity
forfurther upside from milestones. For
employees, while the Board acknowledged
the potential that some employees may
not be retained following the transaction,
the Board believed that the transaction
would benefit employees through the
incentive schemes that were in place
priorto the sale, and balanced these
considerations against the positive impacts
for Syncona and its other stakeholders.
Having considered all of these factors
theBoard approved the sale of the
Company’s investment in Gyroscope. The
sale transaction was signed in December
2021 and completed in February 2022.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
9
£325.8m
Upfront cash proceeds from sale
of Gyroscope to Novartis
2.9x
Upfront cash proceeds from sale
of Gyroscope to Novartis, as a
multiple of Syncona’s investment
2
T
he Syncona life science business is
celebrating 10 years of exceptional
progress and I am delighted that
FY2021/2 was a year in which we further
validated our model and approach. We have
made significant progress with multiple
financings and the sale of Gyroscope to
Novartis, our third successful exit and our
largest ever transaction. Our portfolio has
positive momentum and we have further
strengthened our team and capital base as
we continue to scale for long-term success.
I am pleased that we have also delivered a
solid financial performance in what has been
challenging market conditions for biotech.
Strong financial, clinical and
operational progress in the portfolio
delivered against a challenging
marketbackdrop
We ended the year with a portfolio of
11companies diversified across the
development cycle and therapeutic focus
areas, with four at clinical stage and Quell,
SwanBio and Neogene expected to enter
the clinic in the next 12 months.
We have made significant
progress with multiple
financings and the sale of
Gyroscope to Novartis, our
third successful exit and our
largest ever transaction”
Martin Murphy
Chief Executive Officer and Chair,
Syncona Investment Management Limited
Business review
Syncona Limited Annual report and accounts 202210
Many of our portfolio companies have
madegood progress, with multiple
privatefinancings at uplifted valuations,
andsignificant clinical and operational
progress with 12 clinical data read-outs
during FY2021/2. We continue to seek to
build globally competitive businesses which
have the potential to make a difference to
the lives of patients and to deliver attractive
returns for our shareholders.
Against a challenging macro backdrop,
wehave delivered value progression through
financings in our private companies and the
sale of Gyroscope to Novartis. However, this
strong performance, which delivered an
aggregate uplift of £274.8 million in NAV, has
been offset by the decline in the share prices
of our listed holdings, Autolus, Achilles and
Freeline, with the value of these holdings
reducing by £278.5 million. These listed
holdings were impacted by volatility in the
equity markets and challenging market
sentiment towards cell and gene therapies.
In the case of Freeline, the COVID-19
pandemic also led to operational challenges
in the business, which we have worked
closely with the company to address.
Weended the year with net assets of
£1,309.8 million or 194.4p per share, a
0.3per cent return in the year (31 March
2021: net assets of £1,300.3 million, NAV
per share of 193.9p, 4.4 per cent return),
and a strengthened capital base of £784.9
million at 31 March 2022 (31 March 2021:
£578.2 million). The life science portfolio
delivered a return of 0.8 per cent in the year,
compared to a return from the NASDAQ
Biotechnology Index of (12) per cent.
For Autolus and Achilles, the focus is on
executing well on their clinical plans and
thenew leadership team at Freeline has
driven efficiencies and increased focus on
execution across the pipeline. Clinical data
is the key driver of value in our sector and
allthree are well positioned and well funded
to deliver on their key upcoming clinical
milestones. I believe a core strength of
ourdiverse portfolio, which provides
accesstoinnovative private companies,
isthat wehave been able to deliver solid
performance even when the biotech sector
is experiencing very challenging conditions.
A growing track record of successfully
building globally competitive businesses
In December 2021, we announced our
largest exit to date, the sale of retinal gene
therapy company, Gyroscope, to Novartis,
for up to $1.5 billion (£1.1 billion)
1
. The
transaction generated upfront cash
proceeds of $442.2 million (£325.8 million)
for our holding in Gyroscope, a 2.9 multiple
on cost and 50 per cent IRR
2
.
We have shown through the sales of
Nightstar, Blue Earth and now Gyroscope,
that we can deliver strong risk-adjusted
returns for our shareholders. These three
exits have generated returns of >£930
million, an aggregate 4.6 multiple on our
invested capital
3
.
We founded Gyroscope in 2016 upon the
research of the late Sir Peter Lachmann into
complement factor I, and in under six years
built it from an idea to a leader in retinal
gene therapy; a platform company with
world-class delivery and manufacturing
capability, and an exciting therapy
advancing through Phase II development for
the treatment of geographic atrophy (GA)
secondary to dry age-related macular
degeneration (dAMD).
In addition to the upfront cash proceeds,
the sale of Gyroscope will potentially
generate a further £255.3 million for
Syncona, through future milestone
payments, which, if received, would
taketotal proceeds to £581.1 million, a
5.1multiple on original cost
4
. At 31 March
2022, we are valuing these potential
futurepayments, on a risk-adjusted and
discounted valuation basis, at $65.4 million
(£49.8 million)
5
. Syncona is also positioned
to benefit from any future commercialisation
of Gyroscope’s lead programme via a low
single-digit royalty on future sales revenue.
We believe this transaction further validates
our strategy that a long-term approach to
ownership and focus on delivering approved
medical products ensures that we are able
to build globally competitive businesses
andcan deliver cash returns to fund
excitingopportunities in the portfolio
andinour pipeline.
A well-funded portfolio with
$712.2million of capital raised
Our portfolio companies have continued
toattract substantial capital commitments
from specialist institutional and strategic
investors, with financings announced across
seven of our portfolio companies in the
financial year: Autolus, Quell, Anaveon,
Gyroscope, Clade, Freeline and Resolution,
totalling $712.2 million (£531.8 million), of
which Syncona committed $126.4 million
(£97.7 million).
$712.2m
Raised by portfolio against a
challenging market backdrop
12
Clinical data read-outs across
theportfolio
1 FX rates taken at receipt of funds from the transaction
2 All IRR and multiple on cost figures are calculated on a gross
basis, reflects original Syncona Partners capital invested
where applicable
3 Includes sales of Blue Earth, Nightstar and Gyroscope, reflects
original Syncona Partners capital invested where applicable.
Includes upfront proceeds from sale of Gyroscope. All IRR and
multiple on cost figures are calculated on a gross basis
4 See footnote 2
5 FX rate taken at 31 March 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
11
Managing risk and reward, core to the
delivery of our long-term strategy
As we build towards our rolling 10-year target
of a balanced and diversified portfolio of
15-20 companies across development stage
and domain area, we have optimised our
approach to funding our portfolio companies.
Our balance sheet and expertise provide us
with flexibility but, as outlined in our interim
announcement, there will be an earlier
decision for each portfolio company to
follow one of two main financing paths
forour companies:
1. Bring in external investors early (before the
point of clinical validation) to provide capital
at scale, allowing Syncona to maintain a
significant ownership position in the
company whilst providing the company
with a broader set of supportive investors
2. Companies to be funded privately for
longer, to the point of clinical validation
Decisions on which approach to pursue for
each portfolio company will be taken on a
company-by-company basis. This continued
evolution and refinement of the funding
approach for our companies will change
thefinancial risk profile of our portfolio.
This significant investment into the portfolio
continued post period end. In April, OMass
announced an oversubscribed Series B
financing of £75.5 million, with Syncona
committing £15.0 million alongside a
leadingglobal syndicate of new and
existinginvestors including GV, Northpond,
Sanofi Ventures, Oxford Science Enterprises
and Oxford University. In May, we also
announced a $53.7 million (£43.6 million)
commitment to SwanBio in a $55.9 million
(£45.3 million) Series B financing, which will
provide further funding to the company as it
prepares to dose the first patient in its lead
SBT101 programme, as well as develop its
broader pipeline.
Overthe long term, we believe this approach
will create a well-diversified portfolio and
help us to effectively manage some of the
volatility seen to date through accessing the
public markets, as we look to provide our
shareholders with access to a financially
diversified portfolio of private and listed
highgrowth life science companies.
We will continue to balance our position as a
long-term strategic holder of our companies
alongside our focus on delivering strong
risk-adjusted returns to our shareholders.
Insome instances, our view of the balance
of risk and reward may result in us selling
aportfolio company, as we have recently
done with Gyroscope. In any exit decision,
we look at the opportunity available to the
business, the market context, the level of
scientific or clinical risk, the level of funding
required to take full advantage of the
opportunity, and the potential return that
could be delivered today and in the future.
Capital deployment to increase over
the next financial year
During the financial year, Syncona has
deployed £123.2 million of capital into the
portfolio, underpinned by our strong capital
base, which has increased to £784.9 million
following the recent sale of Gyroscope. This
provides us with a strategic advantage to
fund our companies over the long term and
attract world-class leaders to our portfolio,
as well as the ability to support our portfolio
companies during challenging market
conditions, such as we see today.
We have reviewed our approach to capital
pool asset allocation in light of the current
inflationary environment, including our
approach to foreign exchange exposure,
resulting in a decision to selectively introduce
a number of fund investments tothe capital
pool, and to hold more US dollars on an
ongoing basis to align against future US
dollar portfolio investment requirements.
Wecontinue to balance liquidity and
accessto capital to protect the value
ofthecapital pool.
We expect to deploy £150-£250 million
ofcapital in FY2022/3 as we found new
companies, our existing portfolio companies
continue to scale, and we hold a select
number of companies privately for longer.
£784.9m
Capital pool
£150-250m
Capital deployment guidance
forFY2022/3
Business review
Syncona Limited Annual report and accounts 202212
There have been some challenges identified
across the cell and gene therapy sector,
namely around safety in certain gene therapy
approaches and the complexity of cell
therapy manufacturing, which have impacted
sentiment towards early stage businesses
operating in this space. These are not new
issues and, as part of our investment thesis,
we work to navigate and address these
challenges as we found and build our
companies. We are comfortable that our
companies are continuing to strive to deliver
safe and effective treatments for patients.
Scaling the Syncona business
forsuccess
We are continuing to scale Syncona,
broadening the bench of talent and skills
across all areas of the business.
As previously announced, during the year
Syncona has appointed Rolf Soderstrom as
Chief Financial Officer, Markus John, M.D.
as Chief Medical Officer and Head of R&D,
and Fiona Langton-Smith as Chief Human
Resources Officer. These hires are already
making a valuable contribution to Syncona,
driving growth and execution across
thebusiness.
We have also appointed Lisa Bright as
Commercial Advisor and Ben Woolven as
Business Strategy and Operations partner.
Lisa is a senior commercial leader and board
member with over 30 years’ experience in
biopharmaceuticals, serving in executive and
general management roles where she has
developed expertise in launching innovative
specialty medicines. Lisa already serves on
the board of portfolio company Resolution
and this expanded role will allow her to
utiliseher experience more broadly across
Syncona. Ben joined from GSK, bringing
over a decade of strategy development,
business operations and project
management experience, to help build our
portfolio of innovative life science companies.
Innovative cell therapy company added
to the portfolio and a strong pipeline of
opportunities ahead
We continue to be excited about the
opportunities we see in our sector. We
welcomed Clade to our portfolio, an
innovative, next generation stem-cell based
therapeutics company, leading a $87.1
million Series A financing alongside a
syndicate of long-term investors. This
investment provides us with exposure to
theallogeneic cell therapy field, and further
builds out our cell therapy portfolio.
We have a strong pipeline of potential new
Syncona companies as well, with multiple
advanced opportunities that are in late-stage
due diligence. We are excited by the diverse
opportunities for new investment that we
continue to see across therapeutic and
domain areas, including in gene therapy,
celltherapy, small molecules, biologics,
antibodies, and other Third Wave modalities
such as nucleic acid therapies, as we
continue to leverage the team’s expertise in
identifying exceptional science that has the
potential to deliver dramatic efficacy in areas
of high unmet medical need.
We are excited by the opportunities for new
investment, as we look to continue to add
on average two to three companies per year.
A leading cell and gene
therapyportfolio
Within our portfolio, our companies are
atthe forefront of innovation in cell and
genetherapy. We are excited by the
transformational potential of these
treatments for patients and the significant
commercial opportunity for pioneering
biotech companies in this field.
Milestones across the portfolio provide
opportunity for value creation and
significant long-term opportunity
Clinical data is key to driving value in our
portfolio, and we are excited by the potential
for our companies to deliver transformational
treatments to patients in areas of high unmet
medical need. As we look ahead, we believe
our companies are well positioned to deliver
on their upcoming milestones. Our clinical
stage companies are approaching key data
milestones that we believe will drive value for
our shareholders.
After a decade of exciting progress across
our industry and business, we remain
focused on delivering on our strategy and
long-term targets. There continues to be a
thriving life science industry in the UK and
Europe, which provides us with a significant
opportunity to apply the Syncona model to
found, build and fund globally competitive
businesses. With a strengthened balance
sheet and optimised funding approach, we
believe Syncona is in a strong position to
build a portfolio of 15-20 leading life science
companies over a 10-year rolling period. I
am excited about the next 10 years and the
potential to change the lives of patients and
deliver strong returns for shareholders.
Martin Murphy
Chief Executive Officer and Chair,
Syncona Investment Management Limited
3
Companies expected to enter
theclinic in the next 12 months
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
13
Our strategy
Our strategy
Delivering value for our
stakeholders over the long term
Our strategy is to found, build and fund
companies around exceptional science
tocreate a diversified portfolio of 15-20
globally leading healthcare businesses for
the benefit of all our stakeholders. We focus
on developing transformational treatments
for patients by working in close partnership
with world-class academic founders and
management teams.
We continue to evolve and refine our
approach to funding our companies. Our
balance sheet underpins our strategy, and
gives us the flexibility to fund our companies
over the long term, on a sole basis or
through syndication with external investors.
To deliver value, we seek to build
awell-diversified portfolio across a range of
therapeutic areas and development stages.
Over a rolling 10-year basis, our goal is to
deliver three to five companies in which we
retain a significant ownership position to the
point of product approval, which maximises
our ability to obtain the out-return.
Within our portfolio, we expect to sell
someofour companies where we receive
attractive offers, whilst some of our
companies will not succeed. We operate in
a sector where there issignificant risk and
reward. Disciplined allocation of capital and
taking action quickly when data does not
support our investment theses are two core
principles in life science investment and our
skill set.
We ultimately seek to manage risk and
reward, whilst executing our strategy
tooptimise strong risk-adjusted returns
forinvestors.
Martin Murphy
Chief Executive Officer
and Chair,
Syncona Investment
Management Limited
Chris Hollowood
Chief Investment Officer,
Syncona Investment
Management Limited
OUR STRATEGIC DRIVERS
The Syncona team has
deep scientific, investment,
operational and commercial
expertise
Syncona’s expertise is critical to the delivery
of our strategy. Theteam leverages deep
scientific knowledge to assess the scientific
strength of a technology or programme
andis able to quickly build an understanding
of what it takes to translate the science into
acommercial product for patients.
There is also a wealth of experience and
capability across the team in operationalising
companies and building out leading
management teams.
Our team has significant investment
experience and deep domain expertise in the
fields of cell and gene therapy, particularly in
building out manufacturing capabilities,
which we are also able to bring to bear
across the portfolio.
UK/Europe has a globally
significant scientific
researchbase
The UK leads the way in biomedical research
in Europe.There is an excellent network of
universities and world-class research facilities
across the country. Five of the top 10
universities worldwide for medical research
are in Europe, with four being in the UK
1
.
There is also a broad funding base with
various governmental, non-governmental
and private sector institutions helping to
provide research funding across the UK.
Beyond research funding, it has traditionally
been venture capital funds in the UK/Europe
that have been the primary funders of life
science companies seeking to develop
therapeutics. However, these types of
vehicles typically invest over short (four to
fiveyears) time horizons. This differs from
Syncona, which is able to utilise its balance
sheet to take a long-term approach to
funding its companies, aligning its funding
strategy with the timeframes necessary to
develop innovative medicines.
Links to strategic driver Links to strategic driver
426
Sourcing meetings
220+
Years of life science and
investing experience
$1.5bn
Sale of Gyroscope to Novartis,
highlighting the quality of UK life science
Build Back Better
UK government engagement continued by
Martin Murphy
85%
Investment team with PhDs or M.D.s
4
Operational roles at portfolio
companies during the year
Please refer to page 144 for references
Syncona Limited Annual report and accounts 202214
Setting companies up with the
capability to take products to
approval can deliver the best
risk-adjusted returns
Syncona’s thesis is that significant returns
inlife science come through taking products
late into development andto approval.
It is, therefore, central to our strategy that
webuild our companies with a long-term
approach, investing in strategic capabilities
and globally leading management teams at
foundation. We seek to build our companies
to a global standard that can attract external
specialist investors to invest alongside us,
ifthat is the right financing decision for
thecompany.
We also believe it means that they are
attractive to potential acquirers, for instance
in the sale of Gyroscope to Novartis, our third
exit, in a transaction worth up to $1.5 billion.
New technologies and
approaches have enabled
biotechnology companies
to take products to market
on a stand-alone basis
The advent of new technologies, such as the
ability to sequence a genome, has spurred a
new age of discovery in medicine by enabling
scientists to identify the genetic targets which
cause disease. Today, we are in an era
whereindividualised analysis can be
basedon each person’s genome, leading
tomore personalised, precise and even
preventative medicines.
At the heart of personalised medicine is
whatSyncona calls the ‘Third Wave’ of
healthcare. Third Wave medicines are
advanced therapies that harness the power
of genetics and the patient themselves to
treat disease, in particular in areas like cell
and gene therapy.
The team’s track record and domain
expertise mean we continue to be well
placed to identify the next waves of
innovation in this area.
Balance sheet provides the
flexibility to take a long-term
approach to building and
funding companies
A strong balance sheet and certainty of
funding are key todelivering our strategy.
Ourcapital base enables us tofund our
companies over the long term on the
timeframes necessary to deliver
innovativemedicines.
Life science companies require significant
capital as they scale and our balance sheet
provides us with the flexibility to maintain a
significant ownership position in our
companies through to product approval.
It also provides us with the flexibility to
support our companies as we drive
long-term decision-making and navigate
clinical risks. We believe our strong balance
sheet isa key differentiator, particularly in the
current challenging macro environment,
enabling us to fund a diversified portfolio of
global leaders over thelong term.
Links to strategic driver Links to strategic driver Links to strategic driver
£123.2m
Capital deployed into portfolio
11
Portfolio companies
11
Clinical trials across the portfolio
£784.9m
Capital base, following sale
ofGyroscope to Novartis
4
Companies at clinical stage
Clade
Added to the portfolio with $87m
Series A financing, with $30m commitment
from Syncona
Optimised
Financing approach to support
our companies as they scale
2.9x
Gross multiple on cash proceeds from
sale of Gyroscope
*
* Reflects capital invested by Syncona Partners
whereapplicable
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
15
Investment process
Ideal characteristics
of a scientific asset
Proactive search by
team for investable
therapeutic areas,
technology and
appropriate assets
Data driven
investment
process
Accelerated
development
and regulatory
pathways
Defined
patient
segments /
targeted
markets
Opportunity
to develop
differentiated
platform or no
incumbent
Transformational
efficacy for
patients in areas
of high unmet
need
Therapeutic
areas where
Syncona has
deep domain
expertise
Defined,
commercial
lead programme
with pipeline
potential
We take a proactive approach to sourcing new opportunities. Our team’s background in basic
science, clinical development and commercialisation enables a holistic understanding of the
opportunity. More specifically, the Syncona team conducts a rigorous returns analysis for existing
investments ahead of each portfolio company financing round, and re-evaluates the original
investment thesis. Read more below:
Syncona Limited Annual report and accounts 202216
Other key decision-making
factors
Our disciplined
investment approach
FY2021/2
Hands on
build out:
scaling our
companies for
success
Continued
disciplined
allocation
of capital
Intellectual
property
Technology
Globally leading
academics
Investment Committee
assessment of capital invested
across the portfolio to ensure it
remains diversified and well
balanced
Assess probability of success
for the product’s approval,
taking into account benchmarks
ifrelevant or appropriate
Write business plan and
develop plan to build out
team and operational
capability
Analyse competitive
landscape
Assess the long-term capital
requirements, key risks and
value inflection points
Undertake rigorous
returns analysis
Analyse all academic
literature and data available
Ongoing
evaluation of
emerging data
and analysis
ofevolving
competitive
landscape
11
Companies
16
Board seats
4
Operational
roles
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
17
The Syncona team
Our
investment
team
Investment Committee:
Martin Murphy Chris Hollowood
Co-founder, Chief Executive Officer and Chair, SIML
PhD
Chief Investment Officer, SIML
PhD
– Scientic, commercial, company creation and investment expertise
– 21 years in venture capital and management consultancy
– PhD in Biochemistry
– Scientic, commercial, company creation and investment expertise
– 20 years in venture capital
– PhD in Organic Chemistry
Martin is Chief Executive Ofcer and Chair of Syncona
Investment Management Ltd. He co-founded Syncona in 2012
alongside The Wellcome Trust. Previously, he was a partner at
MVM Life Science Partners LLP, a venture capital company
focused on life science and healthcare, where he led their
European operations. Martin has also held roles with 3i Group
plc and McKinsey & Company. He has a PhD in Biochemistry
from the University of Cambridge.
Chris is the Chief Investment Ofcer of Syncona Investment
Management Ltd. Previously, Chris was a partner of Apposite
Capital LLP, a venture and growth capital healthcare investment
company. Before Apposite, Chris had roles with Bioscience
Managers Ltd, Neptune Investment Management Ltd and in
the pharmaceutical industry. Chris holds a degree in Natural
Sciences and a PhD in Organic Chemistry, both from the
University of Cambridge.
Syncona’s multi-disciplined investment team has deep
scientific, operational, commercial and investment
expertise and an ability to navigate the lifecycle of a
company. They have extensive experience working
alongside global key opinion leaders, whilst appointing
and supporting leading management teams.
Our investment team is led by Martin Murphy, CEO,
and Chris Hollowood, CIO, who sit on Syncona’s
Investment Committee, and supported by Syncona’s
wider team of highly experienced professionals across
finance, legal, investor relations and human resources.
Syncona Limited Annual report and accounts 202218
Investment team:
Magda Jonikas
Lead Partner
Alex Hamilton
Investment Partner
Edward Hodgkin
Senior Partner
Qualification
PhD
Gonzalo Garcia
Investment Partner
Hitesh Thakrar
Partner
Elisa Petris
Lead Partner
Michael Kyriakides
Investment Partner
Ben Woolven
Business Strategy and
Operations partner
Alice Renard
Investment Partner
Markus John
Chief Medical Officer
and Head of R&D
Experience
31 years
Qualification
PhD
Experience
8 years
Qualification
PhD
Experience
7 years
Qualification
M.D.
Experience
21 years
Qualification
PhD
Experience
14 years
Qualification
PhD
Experience
6 years
Company affiliation
Qualification
PhD
Experience
11 years
Qualification
BChem
Experience
28 years
Qualification
PhD
Experience
20 years
Qualification
PhD
Experience
6 years
Lisa Bright
Commercial Advisor
Qualification
BSc
Experience
33 years
Raghd Rostom
Associate Partner*
Qualification
PhD
Experience
3 years
Scientific Operational Commercial
Our portfolio is managed by a team with
expertise and knowledge across key areas
Investment
Company affiliation
Company affiliation
Company affiliation
Company affiliation
Company affiliation
Company affiliation
Company affiliation
Company affiliation
*Joined post period end
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
19
Life science portfolio review
Applying a broad range of technologies
to build a pipeline of precisely targeted
Tcell therapies designed to better
recognise and attack cancer
Board seats 1
Date of founding 2014
Date of Syncona investment 2014
Syncona capital invested £124.0m
No of employees 350+
Uncalled commitment –
Total capital raised £699.4m
Syncona valuation £62.0m
Competitor landscape
†
Companies with CAR-T programmes for ALL
that have been approved or are in clinical
development include: Gilead, Novartis and Fate
Valuation basis
Quoted
Opportunity
Syncona believes obe-cel has a differentiated
safety profile and improved persistence to
address limitations of current T cell therapies
Unmet medical need in lead programme: only
30-40% of patients with adult ALL achieve
long-term remission with combination
chemotherapy, the current standard of care
2
Key risks
†
– Highly competitive environment
– Differentiated product required
– Complex manufacturing and supply chain
Please refer to page 144 for references
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
Published further data in lead programme
of obe-cel in adult acute lymphoblastic
leukaemia (ALL); meaningful data read-out
expected in H2 CY2022
Positive data published at EHA Congress,
including from AUTO1/22 in paediatric ALL
(pALL) and AUTO4 in T cell lymphoma
Commitment of up to $250.0 million
fromBlackstone; funded into 2024
with$268.6 million* in cash
Autolus is developing next generation
programmed T cell therapies for the
treatment of cancer with a broad clinical
pipeline targeting haematological
malignancies and solid tumours.
During the period Autolus released further
encouraging data in its lead programme
obe-cel in relapsed/refractory (r/r) adult ALL.
As presented at the American Society of
Hematology (ASH) conference in December
2021, patients in the Phase Ib portion of the
potentially pivotal FELIX study showed
comparable results in efficacy and safety
tothe Phase I ALLCAR19 study, with
furtherdata released from ALLCAR19
demonstrating continued durability of
response in patients up to 42 months
post-dosing. Autolus continues to enrol
patients in the Phase II portion of the FELIX
study and expects to report initial data from
this trial in the second half of CY2022, in
advance of a full read-out in H1 CY2023.
This data is expected to form the basis of a
planned Biologics License Application (BLA)
submission by the company. During the
period, obe-cel received Orphan Medical
Product Designation and PRIority MEdicines
(PRIME) designation from the European
Medicines Agency (EMA), and Regenerative
Medicine Advanced Therapy (RMAT)
designation from the US Food and Drug
Administration (FDA) post period end.
Thesedesignations further underline the
opportunity for obe-cel as a potentially
transformational treatment for patients
withr/r adult ALL.
RESEARCH PRE-CLINICAL CLINICAL
Autolus
Obe-cel – adult ALL
AUTO4 – TCL
AUTO1/22 – paediatric ALL
Obe-cel – B-NHL
Obe-cel – PCNSL
Clinical
£178.9m
Total value of clinical stage
portfolio
* As at 31 March 2022
Syncona Limited Annual report and accounts 202220
4.7%
Of NAV
18.8%
Shareholding
‡
The business continued to attract strong
leadership to the company at Board and
executive level throughout the period.
Experienced biopharma executive John H.
Johnson joined as Chair in September,
following a period where Syncona’s CEO
Martin Murphy held the position, bringing to
the company more than 30 years’ life
science experience in a non-executive and
executive capacity, where most recently he
served as CEO of Strongbridge Biopharma.
Edgar Braendle joined the company as Chief
Development Officer (CDO) from Sumitomo
Dainippon where he was Chief Medical
Officer (CMO) and Global Head of
Development, and moving forward will have
an important role in leading the company’s
development functions. Dr Lucinda Crabtree
was appointed Chief Financial Officer (CFO).
Lucinda was previously Senior Vice President
of Finance and played a key role in the
Blackstone transaction in November 2021.
Whilst Autolus’ share price has fallen this
year, and has been impacted by broader
biotech sector market dynamics, we remain
confident in its potential as it approaches a
meaningful data read-out in its lead obe-cel
programme in the second half of CY2022.
In addition, the company has demonstrated
positive momentum across its broader
pipeline and continues to show the potential
opportunity that autologous CAR-T
therapies represent for patients suffering
from a range of cancers.
The company has also shown strong
progress in its broader pipeline, releasing
encouraging data from four programmes
atthe European Hematology Association
(EHA) Congress post period end. The
earlyclinical data showed a promising
safetyand efficacy profile across the AUTO4
programme in T cell lymphoma, AUTO1/22
in pALL, obe-cel in r/r primary central
nervous system lymphoma (PCNSL),
andobe-cel in r/r B cell non-Hodgkin’s
lymphoma (B-NHL) and chronic lymphocytic
leukaemia (CLL). This data reinforces the
strength of the pipeline at Autolus, which is
diversified across therapies targeting both B
cell malignancies and T cell lymphomas.
Autolus has continued to attract external
validation for its technology in the period,
signing an Option and License Agreement
with Moderna granting Moderna an exclusive
licence to develop and commercialise
messenger RNA (mRNA) therapies
incorporating Autolus’ proprietary binders in
up to four immuno-oncology targets. It also
attracted a commitment of up to $250.0
million from Blackstone, consisting of an
investment of $100.0 million in equity and up
to $150.0 million in product financing. With
this funding Autolus is able to operate with a
strengthened balance sheet and is funded
into CY2024, past the delivery of the pivotal
data in its lead obe-cel programme.
Next key milestones
Obe-cel – adult ALL Meaningful data read-out from
pivotal FELIX study in obe-cel in
r/r adult ALL expected in H2
CY2022; full data expected in
H1 CY2023
AUTO1/22
– paediatric ALL
Longer-term follow-up data
expected in H2 CY2022
STRATEGIC REPORT
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Syncona Limited Annual report and accounts 2022
21
Life science portfolio review
Clinical
continued
Published initial Phase I clinical data from
its lead programme ANV419 post period
end; further data from this study is
expected in H2 CY2022
Successful Series B financing of CHF 110.0
million (£89.8 million) from international
syndicate of specialist investors,
cornerstoned by Syncona at an uplift of
88per cent (£19.7 million, 3p per share) to
previous holding value; CHF 35.0 million
(£28.6 million) commitment from Syncona
Anaveon is developing a selective Interleukin
2 (IL-2) Receptor Agonist, a type of protein
that could enhance a patient’s immune
system to respond therapeutically to cancer.
The company released its first clinical data
from its lead programme ANV419 in April
2022, post period end. This data underlined
the compelling selectivity and safety profile
for the drug, which is highly encouraging
given the severe, dose-limiting side effects
which have been seen elsewhere in the use
of human IL-2 in solid cancers. Further data
from the Phase I study is expected later in
CY2022. Based on this initial data, a Phase
I/II programme of ANV419 has been initiated
Next key milestones
ANV419 – multiple
tumour types
Further data in Phase I study of
selective IL-2 agonist expected
in H2 CY2022
RESEARCH PRE-CLINICAL CLINICAL
Anaveon
ANV419 – multiple tumour types
Exploiting the power of cytokines to
orchestrate immune responses by using
protein engineering with the potential to
create safe and effective treatments for
various diseases
Board seats 2 (incl. Chair)
Date of founding 2017
Date of Syncona investment 2019
Syncona capital invested £39.9m
No of employees 20
Uncalled commitment £11.6m
Total capital raised £118 .6m
Syncona valuation £59.8m
Competitor landscape
†
Companies developing products in the IL-2
field include Roche, Sanofi, Alkermes and
Neoleukin
Valuation basis
PRI
Opportunity
Developing a selective IL-2 agonist with
improved administration and toxicity burden
Wide potential utility across multiple oncology
indications and wider markets
Key risks
†
– Multiple players and highly competitive
– Strategy for differentiation and clinical /
commercial positioning
– Clinical risk
See page 33 footnote (3) for the definition of “PRI”
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
in multiple tumour types to evaluate
clinicalefficacy in both monotherapy and
combination settings and post period end,
the company received FDA clearance of its
Investigational New Drug (IND) application
for the Phase I/II study of ANV419 in
advanced cutaneous melanoma.
Anaveon also successfully completed an
oversubscribed CHF 110.0 million (£89.8
million) financing in the period, attracting a
leading international investor syndicate,
resulting in Syncona’s holding being written
up by £19.7 million (3p per share), an 88 per
cent uplift. Syncona committed CHF 35.0
million (£28.6 million) to the financing, and
remains Anaveon’s largest investor with a 38
per cent holding in the company. Anaveon is
now well financed and is delivering well on
its clinical plan, as it progresses towards its
goal of becoming the best-in-class therapy
in the IL-2 space.
4.6%
Of NAV
37.9%
Shareholding
‡
Syncona Limited Annual report and accounts 202222
Data read-outs from FLT190 programme in
Fabry disease, with accelerated
progression to second dose cohort; further
encouraging data in FLT180a programme
in haemophilia B
New executive leadership with Michael
Parini becoming CEO, Pamela Foulds
joining as CMO and Henning Stennicke
becoming Chief Scientific Officer; Paul
Schneider joined as CFO post period end
Extended cash runway to H2 CY2023
following $26.1 million registered direct
offering, including $20.0 million
commitment from Syncona
RESEARCH PRE-CLINICAL CLINICAL
Freeline
FLT180a – haemophilia B*
FLT190 – Fabry disease
FLT201 – Gaucher disease Type 1
Seeking to deliver constant high protein
expression levels with curative potential
across a broad pipeline of systemic
diseases; opportunity to deliver curative
gene therapy
Board seats 1 (Chair)
Date of founding 2015
Date of Syncona investment 2015
Syncona capital invested £183.1m
No of employees c.200
Uncalled commitment –
Total capital raised £372.8m
Syncona valuation £32.3m
Competitor landscape
†
Companies developing competing gene
therapy programmes include uniQure, Spark
(acquired by Roche in December 2019),
Avrobio, 4DMT, Pfizer andSangamo
Valuation basis
Quoted
Opportunity
To deliver therapies for a broad pipeline of
systemic diseases which require the delivery of
high protein expression levels, with the aim of
curing and transforming patients’ lives
Current standard of care in clinical
programmes is Enzyme Replacement Therapy
(ERT); requires regular administration with
protein activity remaining unstable
3
Key risks
†
– Highly competitive environment
– Differentiated product required
– Complex manufacturing
Please refer to page 144 for references
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
Freeline, our gene therapy company
focused on liver expression for a range
ofchronic systemic diseases, continued
toprogress its programmes through the
clinic during the period.
In its most advanced programme, FLT180a
in haemophilia B, Freeline has completed
dosing its first cohort in the B-LIEVE dose
confirmation study and has initiated dosing
the second cohort post period end. Efficacy
and safety data from the first cohort will
bepresented at the Congress of the
International Society on Thrombosis and
Haemostasis (ISTH) being held between
9-13 July 2022. This follows positive
long-term follow-up data presented in
December 2021 by the company from the
B-AMAZE dose-finding trial for FLT180a,
which found sustained expression of factor
IX (FIX), the key enzyme for patients with
haemophilia B, up to 3.5 years post dosing.
Freeline has continued to progress the
Phase I/II MARVEL-1 study for its FLT190
programme in Fabry disease. The company
presented encouraging data from the first
two patients at the lower dose cohort at
the18th Annual WORLDSymposium
TM
inFebruary 2022, demonstrating that
thetreatment continued to be well
toleratedwith a potentially dose-dependent
increase in levels of the key enzyme
(α-GalA), which is absent or markedly
deficient in Fabry patients. In March, Freeline
announced it would progress immediately
tothe second dose cohort in the MARVEL-1
study. This followed a comprehensive review
of the pre-clinical data, and the clinical
efficacy andsafety data from the first and
second patients in the MARVEL-1 study.
* Includes two active clinical trials, B-AMAZE andB-LIEVE
STRATEGIC REPORT
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Syncona Limited Annual report and accounts 2022
23
2.5%
Of NAV
53.4%
Shareholding
‡
Life science portfolio review
Clinical
continued
This data was presented to the study’s
independent Data Monitoring Committee,
which supported accelerated progression
tothe second cohort. This resulted in a
revision to the previous clinical development
plan which included dosing a third patient
inthe lower dose cohort and publishing
updated data from the first two patients
dosed, and initial data from the third, in
thefirst half of 2022. The company now
expects to provide a programme update
inH2 CY2022.
Freeline continued to progress its FLT201
programme in the year. FLT201 is a therapy
seeking to provide a functional cure in
patients with Gaucher disease Type 1,
anindication where there is currently no
approved gene therapy. The company
announced in May 2022 that it expects
tocomplete dosing of the first cohort of its
Phase I/II trial by mid-CY2022, and progress
to the second cohort in H2 CY2022. An initial
data read-out is expected in H2 CY2022.
The company has made a number of key
changes to its executive team; Michael
Parini, formerly President and Chief
Operating Officer, became CEO in August
2021 with Pamela Foulds, who was formerly
at Aegerion Pharmaceuticals and Biogen,
joining as CMO in November 2021. In
addition, Henning Stennicke joined as CSO
in March 2022 from Novo Nordisk, while
Paul Schneider joined as CFO post period
end from Exo Therapeutics. These four
experienced executives have substantial
lifescience experience, bringing significant
development, clinical, regulatory, operational
and financial expertise in rare diseases to
the executive team.
Under the leadership of Michael Parini,
thecompany led a thorough review of its
operational plans, discontinuing further
development of its pre-clinical programme of
FLT210 in haemophilia A. This, along with a
$26.1 million direct offering by the company
in March 2022 which was led by Syncona,
has provided an extension of Freeline’s cash
runway to H2 CY2023. Freeline also stands
to benefit from the flexibility of an American
Depositary Share (ADS) purchase
agreement with Lincoln Park Capital (LPC),
which was entered into during the period.
This will provide Freeline with the right to sell
LPC up to $35 million in ADSs, subject to
certain conditions being satisfied.
Whilst Freeline has experienced operational
issues, partly driven by the impact of delays
in its clinical trials due to the COVID-19
pandemic, it is now delivering effectively
onits updated operational plan with
programme updates expected in all three
ofits programmes in H2 CY2022. Whilst the
share price has continued to be impacted
by market conditions which have particularly
affected the valuations of smaller cap listed
biotech companies, we remain confident in
the fundamentals of the business as it
moves forward with its clinical pipeline.
Next key milestones
FLT180a
– haemophilia B
Initial data from first cohort in Phase
I/II dose confirmation study in
haemophilia B to be presented at
the Congress of the International
Society on Thrombosis and
Haemostasis (ISTH), July 2022
FLT190 – Fabry
disease
Initiate second cohort in
mid-CY2022; programme update
expected in H2 CY2022
FLT201
– Gaucher
disease Type 1
Initial data from Phase I/II Gaucher
disease Type 1 programme
expected in H2 CY2022
Syncona Limited Annual report and accounts 202224
Encouraging progress in Phase I/IIa studies
in non-small cell lung cancer (NSCLC) and
melanoma, with positive data from the
initial lower dose process reported as the
trials move to a higher dose
Strong cash position of $236.9 million**
with runway into H2 CY2024
Achilles, a clinical-stage biopharmaceutical
company developing precision T cell
therapies to treat solid tumours, continued to
make good operational progress in the year.
The company continued to progress its
ongoing Phase I/IIa studies in advanced
NSCLC and melanoma. In November 2021,
the company presented data at the Society
for Immunotherapy of Cancer (SITC) annual
meeting, showing the ability of Achilles’
technology to detect, quantify, and track
patient-specific clonal neoantigen-reactive
Tcells (cNeT). At the ESMO I-O annual
meeting in December 2021, the company
presented data from pre-clinical GMP
manufacturing runs showing increased
cNeT doses from its VELOS™
Process2manufacturing, the company’s
manufacturing process to generate higher
doses. The company also released further
data at SITC from its VELOS™ Process 1
process, underlining that the tolerability
profile of the therapy was in-line with
standard tumour-infiltrating lymphocyte (TIL)
products that have not been enriched for
cNeT reactivity.
The company continues to make progress in
moving towards the higher dose VELOS™
Process 2 manufacturing, dosing its first
patient in the higher dose in the CHIRON trial
in NSCLC post period end, and expects
toannounce data from the higher dose
processes in both CHIRON and the THETIS
trial in melanoma in H2 CY2022. The move
tothe higher dose will be supported from
Achilles’ manufacturing facilities at the UK Cell
and Gene Therapy Catapult (CGT Catapult),
which received a manufacturing licence from
the Medicines and Healthcare products
Regulatory Agency (MHRA) post period end,
and a new facility in the US in partnership with
the Center for Breakthrough Medicines (CBM).
The company also continued to strengthen
itsBoard, with Julie O’Neill joining as a
non-executive in May 2021, bringing more
than two decades of executive experience in
senior leadership roles, most recently as
Executive Vice President of Global Operations
at Alexion Pharmaceuticals. Post period end,
Bernhard Ehmer also joined the Achilles
Board, bringing more than three decades of
experience across senior leadership roles in
biotechnology and pharmaceuticals, most
recently as CEO of Biogest AG.
Achilles continues to be well funded with
acash runway through to H2 CY2024,
andalthough it has seen share price volatility
through the year, we remain confident that it
is well positioned to deliver on its upcoming
operational and clinical plans as it moves
towards clinical read-outs from its higher
dose programmes.
RESEARCH PRE-CLINICAL CLINICAL
Achilles
cNeT* – melanoma
cNeT – non-small cell lung cancer
1.9%
Of NAV
25.3%
Shareholding
‡
Next key milestones
cNeT – non-small cell
lung cancer
Data from higher dose cNeT
therapy expected in H2 CY2022
cNeT – melanoma Data from higher dose cNeT
therapy expected in H2
CY2022
** As at 31 March 2022
Differentiated cell therapy approach
targeting solid tumours utilising
AI-enabled bioinformatics and precision
tumour-infiltrating lymphocytes (TILs) to
target clonal neoantigens for
personalised treatments
Board seats –
Date of founding 2016
Date of Syncona investment 2016
Syncona capital invested £60.7m
No of employees 250+
Uncalled commitment –
Total capital raised £308.7m
Syncona valuation £24.8m
Competitor landscape
†
Companies using TILs or other methods to
target solid tumours include Iovance, Instil,
Gritstone and Turnstone
Valuation basis
Quoted
Opportunity
TILs have shown convincing efficacy in solid
tumours
4
Leveraging clonal neoantigens to develop
patient specific immunotherapies to increase
response rates and reduce risk of relapse
Key risks
†
– Highly innovative concept in emerging space
– Complex manufacturing
– Increasing competition
Please refer to page 144 for references
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
* Clonal neoantigen-reactive T cell
STRATEGIC REPORT
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Syncona Limited Annual report and accounts 2022
25
Initiated clinical trial sites in lead
QEL-001programme
Successful $156.3 million (£116.6 million)
Series B financing with leading international
syndicate at a 41 per cent uplift (£18.5
million, 3p per share) to the previous
holding value; co-led by Syncona with a
$25.0 million (£18.7 million) commitment
Quell has been established with the aim of
developing engineered T-regulatory (Treg)
cell therapies to treat a range of conditions
such as solid organ transplant rejection,
autoimmune and inflammatory diseases.
The company has made good progress as it
prepares to dose its first patient with its lead
candidate QEL-001, which is designed to
prevent organ rejection in liver transplant
patients. It announced a collaboration with
CGT Catapult which allows the company
access to one of the CGT Catapult’s
specialist large-scale manufacturing
facilities. Quell’s Clinical Trial Application
(CTA) for QEL-001 was also approved by
the UK MHRA during the period, with the
company now initiating trial sites for the
programme, and is expected to dose its
firstpatient in H2 CY2022.
The company successfully completed a
$156.3 million (£116.6 million) Series B
financing during the period, with Syncona
committing $25.0 million (£18.7 million)
alongside a syndicate of international
specialist investors. Following the financing,
Syncona’s holding in Quell was written up
by £18.5 million (3p per share), a 41 per
cent uplift to the previous holding value.
Thisfunding will enable Quell to fund
thedevelopment of its lead QEL-001
programme in liver transplantation, as well
as allowing Quell to progress its broader
clinical pipeline, its plans to develop an
allogeneic CAR-Treg platform, and the
expansion of its manufacturing footprint.
The company also expanded its leadership
team during the period with Dominik Hartl
joining as CMO from the Novartis Institutes
for BioMedical Research (NIBR), and Tracey
Lodie joining as CSO from Gamida Cell.
They bring a wealth of experience across
cell therapies and autoimmune disorders
and will play a key role as Quell progresses
QEL-001 and its broader pipeline.
Next key milestones
QEL-001 – liver
transplant
Expects to dose the first
patient in Phase I/II lead
programme targeting liver
transplant in H2 CY2022
Pre-clinical
£211.3m
Total value of pre-clinical stage
portfolio
Engineered cell therapy company
addressing immune dysregulation
Board seats 2 (incl. Chair)
Date of founding 2019
Date of Syncona investment 2019
Syncona capital invested £61.4m
No of employees 110+
Uncalled commitment £2.6m
Total capital raised £163.8m
Syncona valuation £81.4m
Competitor landscape
†
Field is nascent, companies developing Treg
cell therapies include Sonoma, Kyverna,
GentiBio, Mozart, Abata and Sangamo
Valuation basis
PRI
Opportunity
Current standard of care for prevention of
solidorgan transplant rejection is life-long
immunosuppression which results in an array
ofserious long-term side effects significantly
impacting patient quality of life
5
Potential pipeline to treat serious, chronic
conditions mediated by the immune system
Potential to be first-in-class in CAR-Tregs; an
early mover in the space
Key risks
†
– Highly innovative concept in emerging space
– Complex manufacturing
See page 33 footnote (3) for the definition of “PRI”
Please refer to page 144 for references
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
Life science portfolio review
Syncona Limited Annual report and accounts 202226
6.2%
Of NAV
37.4%
Shareholding
‡
SwanBio is a gene therapy company
focused on neurological disorders. Its
leadprogramme is targeting the treatment
of adrenomyeloneuropathy (AMN), a
geneticneuro-degenerative disease
affecting the spine.
The company continues to make progress
as it approaches the clinical entry of its lead
programme SBT101 in AMN. The company
received clearance for its IND application for
the programme from the FDA in January
2022, with Fast Track and Orphan Drug
designations following in February and
March 2022 respectively. The company
willenter the clinic with a Phase I/II study
toassess the safety and efficacy of SBT101
in H2 CY2022, assisted by the insights
gathered from its ongoing natural history
study, CYGNET, which enrolled its first
patient earlier in the period. Post period end,
the company announced further pre-clinical
data from SBT101, which supports the
safety profile of the therapy and supports
the dosing strategy for the upcoming
PhaseI/II trial.
Post period end SwanBio also completed
a$55.9 million (£45.3 million) Series B
financing, with Syncona committing
$53.7million (£43.6 million). The proceeds
will primarily be used to fund the ongoing
clinical development of SBT101, as well as
supporting the company’s broader pipeline
for other neurological conditions. Following
the financing, Syncona’s holding is now
valued at £96.3 million following the first
tranche investment of $19.2 million
(£15.6million), with Syncona holding
80 per cent of the company on a fully
diluted basis.
Next key milestones
SBT101 –
adrenomyeloneuropathy
(AMN)
Expects to enter the clinic with
lead programme targeting AMN
in H2 CY2022
5.7%
Of NAV
75.4%
Shareholding
‡
Developing leading-edge gene therapies
to deliver dramatic clinical efficacy for the
treatment of neurological diseases
Board seats 2 (incl. Chair)
Date of founding 2018
Date of Syncona investment 2018
Syncona capital invested £75.1m
No of employees 50+
Uncalled commitment –
Total capital raised £78.8m
Syncona valuation £75.1m
Competitor landscape
†
Companies exploring gene therapies in the
CNS field include Voyager, Taysha, Novartis,
PassageBio, Lilly, Neurogene and Alcyone
Valuation basis
Cost
Opportunity
Gene therapy has the potential to be
transformational in neurology
6
One-off delivery mechanism and multiple
tractable pipeline programmes
Lead programme targeting AMN, an inherited
neurodegenerative disease in which the
causative gene is definitively known and
wellcharacterised
Key risks
†
– Slowly progressing disease
– Clinical risk
– Complex manufacturing
See page 33 footnote (2) for the definition of “cost”
Please refer to page 144 for references
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
STRATEGIC REPORT
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FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
27
Shareholdings reported as fully diluted
2 Competitors and key risks represent Syncona team view
Life science portfolio review
Purespring was founded by Syncona in
November 2020, with the company seeking
to advance gene therapies for the treatment
of chronic renal diseases which are currently
poorly served by existing treatments.
The company continues to deliver on its
ambitious operational growth plans as it
progresses towards the clinic with its three
pre-clinical programmes, with the goal of
becoming the first AAV gene therapy
company targeting the kidney in clinical trials.
Purespring built out its executive team in the
period, in particular through Julian Hanak
joining as CDO. He brings 25 years’
experience spanning gene therapy,
manufacturing, regulatory affairs and CMC,
previously serving as head of manufacturing
at Nightstar. He will support Purespring’s
CEO Richard Francis as he looks to progress
the company to the clinic and become a
global leader in renal gene therapy.
Pre-clinical
continued
Advancing gene therapies for the
treatment of chronic renal diseases that
are currently poorly addressed with
existing treatments
Board seats 2 (incl. Chair)
Date of founding 2020
Date of Syncona investment 2020
Syncona capital invested £18.5m
No of employees 20+
Uncalled commitment £26.5m
Total capital raised £45.0m
Syncona valuation £18.5m
Competitor landscape
†
Competitors include Novartis, Calliditas, Reata,
Sanofi, Omeros, Travere and Apellis
Valuation basis
Cost
Opportunity
A number of chronic kidney diseases are poorly
addressed by existing therapies, which are
primarily based around the lowering of blood
pressure, and often progress to dialysis and
kidney transplantation
7
Purespring is developing disease modifying
therapies for a number of monogenic and
non-monogenic kidney diseases
Key risks
†
– Highly innovative concept in emerging space
– Clinical risk by addressing non-monogenic
disorders
See page 33 footnote (2) for the definition of “cost”
Please refer to page 144 for references
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
Syncona Limited Annual report and accounts 202228
1.4%
Of NAV
84.0%
Shareholding
‡
Neogene is developing an engineered cell
therapy product for solid tumours based on
a patient’s own neoantigens. The company
was founded in 2018 around the work of
world-class founders, Dr Ton Schumacher
and Dr Carsten Linnemann.
The company signed an exclusive licence
during the period with the US National
Cancer Institute for a portfolio of T cell
receptors (TCRs) targeting KRAS and TP53
mutations for the treatment of cancer. These
two mutations are among the most
commonly mutated genes in cancers and
combined with Neogene’s proprietary TCR
isolation platform, this licence will expand
Neogene’s capability in targeting multiple
neoantigens in individual patients.
The company continued to attract
world-class executive leaders throughout
theperiod. Brent Pfeiffenberger joined as
COO from Bristol Myers Squibb, where he
was senior vice president of U.S. Oncology.
The company also welcomed Han Lee
(previously CFO at Arcellx, Inc) as CFO, and
Raphael Rousseau, M.D, PhD, as CMO from
Gritstone Bio, where he was Executive Vice
President, Head of Product Development
and CMO. Dr Rousseau brings extensive
experience in oncology drug development,
including in engineered T cell therapies.
These three key hires are already playing a
key role in the development of Neogene as it
moves towards clinical stage, having had its
CTA approved for its lead programme in the
Netherlands post period end. The company
expects to enter the clinic in H1 CY2023.
Next key milestones
NT-125 – advanced
solid tumours
Expects to enter clinic with TCR
therapy in H1 CY2023
1.1%
Of NAV
7.9%
Shareholding
‡
Pioneering the development of
next-generation, fully personalised
engineered T cell therapies for a
broad spectrum of cancers
Board seats 1
Date of founding 2018
Date of Syncona investment 2020
Syncona capital invested £14.3m
No of employees 100+
Uncalled commitment –
Total capital raised £82.5m
Syncona valuation £14.5m
Competitor landscape
†
PACT, TCR Cure and Adaptive/Genentech are
all active in this space
Valuation basis
Cost
Opportunity
Limited treatment options for relapsed/refractory
patients with advanced solid tumours that have
progressed through front line therapies
Cell therapies offer the potential for deep
anddurable responses in the populations
asevidenced by Iovance’s tumour-infiltrating
lymphocyte therapy. We believe Neogene’s
approach should result in a more efficacious
product that can address a larger number
ofpatients
Key risks
†
– Complex early stage technology
– Complex manufacturing
– Highly competitive field
See page 33 footnote (2) for the definition of “cost”
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
29
Life science portfolio review
Clade was established with the aim
ofdiscovering and delivering scalable
next-generation induced pluripotent stem
cell (iPSC) derived medicines. Syncona
ledthe $87.1 million Series A financing in
November 2021, with a commitment of
$30.0 million (£21.7 million). This investment
further expanded our leading cell therapy
portfolio into next generation stem
cell-based therapeutics.
The company is led by a world class team,
with Dr Chad Cowan, a scientific co-founder
of CRISPR Therapeutics and former
Associate Professor at Harvard University
inthe Department of Stem Cell and
Regenerative Biology as CEO and
DrJimGlasheen, co-founder of Atlanta
Therapeutics and former general partner
atTechnology Partners Venture Capital
asPresident and Chief Business Officer.
Clade continues to build out its operations
and leadership team, and in the period
appointed Dr Derek Hei as its Chief
Technology Officer. Dr Hei joined Clade
fromVertex Pharmaceuticals, where he
wasSenior Vice President of Preclinical
andClinical Manufacturing, Cell and Gene
Therapies, and brings significant expertise
incell therapy and over 20 years’
experience of leading manufacturing
teamsat biotech companies.
Pre-clinical
continued
Harnessing iPSC immune cloaking and
differentiation platform technology to
deliver ‘off-the-shelf’ cell therapies
Board seats 1
Date of founding 2021
Date of Syncona investment 2021
Syncona capital invested £10.8m
No of employees 20+
Uncalled commitment £11.4m
Total capital raised £64.6m
Syncona valuation £11.4m
Competitor landscape
†
The iPSC space is nascent with CRISPR
Therapeutics, Bristol Myers Squibb and
Century active in the field
Valuation basis
Cost
Opportunity
Harnessing the power of cloaking technology
iniPSCs to deliver stem cell based therapies
topatients
Syncona believes Clade’s technology has the
potential to deliver greater efficacy than the first
generation of allogeneic cell therapies
“Off the shelf” stem cell based therapies have
potential to deliver practical and commercial
benefits in cell therapeutics
8
Key risks
†
– Highly innovative concept in emerging space
See page 33 footnote (2) for the definition of “cost”
Please refer to page 144 for references
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
Syncona Limited Annual report and accounts 202230
0.9%
Of NAV
22.6%
Shareholding
‡
Resolution is a cell therapy company
investigating the use of the restorative
effectof macrophages in the treatment
ofend-stage liver disease.
The company continued its strong
operational momentum during the
period.Itcontinued to progress its
ongoingMATCH II academic study of
non-engineered autologous macrophages
inliver cirrhosis. During the period Syncona
committed £10.0 million to the company in
an extension to its Series A financing, which
will fund the continued development of its
existing autologous programme as well
asits developing allogeneic platform*.
Following this financing, Syncona’s holding
in Resolution is £10.4 million, with Syncona
holding 81 per cent of the company on a
fully diluted basis.
Post-period end, the company announced
a research collaboration with panCELLA Inc,
which will allow Resolution access to the
company’s hypo-immunogenic engineered
iPSC technology, potentially providing
Resolution with the technology to develop
“off the shelf” macrophage cell therapies.
The company also continued to attract
senior leaders at Board level, with Lisa
Bright joining as a non-executive in the
period, bringing 30 years’ experience
acrosspharma and early stage biotech.
0.8%
Of NAV
81.1%
Shareholding
1
Developing macrophage cell therapies
torepair inflammatory organ damage,
including treatment of end-stage chronic
liver disease
Board seats 2 (incl. Chair)
Date of founding 2020
Date of Syncona investment 2018
Syncona capital invested £10.4m
No of employees c.20
Uncalled commitment £ 27. 5 m
Total capital raised £ 37.9 m
Syncona valuation £10.4m
Competitor landscape
†
Carisma and Shoreline are developing
macrophage cell therapies in cancer
Valuation basis
Cost
Opportunity
An opportunity to create the leading
inflammation-focused macrophage cell therapy
business, focusing initially on treatment of liver
cirrhosis. The goal is to repair the livers of
patients sufficiently to reduce the risk of
decompensation. Future opportunity lies in lung
and kidney repair in chronic fibrotic disease
Chronic inflammatory organ damage
represents a major burden to patients. If left
untreated, liver cirrhosis will often progress to
decompensation through significant loss of
liver function. Today there are no efficacious
treatments to prevent deterioration in the latter
stages of the disease
Key risks
†
– Highly innovative concept in an emerging
space
– Future competition
* Investment announced by company post period end
See page 33 footnote (2) for the definition of “cost”
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
31
OMass is developing small molecule drugs
to treat rare diseases and immunological
conditions. It uses its proprietary drug
platform, OdyssION™, to accurately
interrogate potential targets within their
natural ecosystem, providing critical
information which heightens the chances
offinding effective small molecule medicines
which will be successful in clinical trials.
During the period the company made
significant progress in developing its pipeline
of programmes, announcing five candidates
with a focus on immunological and orphan
diseases. Its lead programme, focused on
the MC2 receptor, has entered lead
optimisation stage and is targeting
orphanendocrine disorders.
Post period end, the company successfully
completed a £75.5 million Series B
financing, of which Syncona committed
£15.0 million. This financing included a
syndicate of top-tier international life science
investors, including new investors GV,
Northpond and Sanofi Ventures, with the
proceeds to be used to fund OMass’
pipeline of programmes as the company
moves towards clinical trials. The financing
resulted in a 32 per cent uplift (£8.3 million,
1p per share) to Syncona’s previous holding
value in the company. Including the first
tranche of Syncona’s Series B investment,
its holding of OMass is now valued at £43.7
million, holding 31 per cent of the company
on a fully diluted basis.
Drug
discovery
Using novel biochemistry techniques, native
mass spectrometry and custom chemistry to
deliver novel medicines against highly validated
but inadequately drugged targets, with a focus
on immunological and rare diseases
Board seats 2 (incl. Chair)
Date of founding 2016
Date of Syncona investment 2018
Syncona capital invested £26.4m
No of employees 40+
Uncalled commitment –
Total capital raised £43.0m
Syncona valuation £34.7m
Competitor landscape
†
Crinetics also have a pipeline in rare endocrine
diseases
Valuation basis
PRI
Opportunity
Opportunity to develop differentiated small
molecule drugs leveraging a world-leading
Native Mass Spectrometry platform
Key risks
†
– Attrition of potential drugs
See page 33 footnote (3) for the definition of “PRI”
‡ Shareholdings reported as fully diluted
† Competitors and key risks represent Syncona team view
Life science portfolio review
£34.7m
Total value of drug discovery
portfolio
Syncona Limited Annual report and accounts 202232
2.6%
Of NAV
49.3%
Shareholding
‡
Life Science Investments
Beyond our core portfolio of 11 life science
portfolio companies, we have a smaller
number of life science investments. During the
period, Cambridge Epigenetix (CEGX) raised
$88.0 million in a Series D financing which
was led by Temasek. We chose not to
participate in this funding round, however
wewere pleased to see the company attract
significant funding, seeing this as validation of
the company’s potential. The financing round
resulted in a £15.4 million uplift to Syncona’s
previous holding value in the company, with
Life science portfolio valuation table
Company
31 March
2021
(£m)
Net
investment
inthe period
(£m)
Valuation
change
(£m)
FX
movement
(£m)
31 March
2022
(£m)
% of
Group
NAV
Valuation
basis
1,2,3
Fully
diluted
ownership
stake
Focus
area
Portfolio Companies
Clinical
Autolus 81.2 – (22.1) 2.9 62.0 4.7% Quoted 18.8% Cell therapy
Anaveon 18.5 20.4 17.9 3.0 59.8 4.6% PRI 37.9% Biologics
Freeline 167.9 15.4 (151.6) 0.6 32.3 2.5% Quoted 53.4% Gene therapy
Achilles 133.1 – (109.5) 1.2 24.8 1.9% Quoted 25.3% Cell therapy
Gyroscope 150.1 (325.8) 168.3 7.4 – 0.0% Sold 0.0% Gene therapy
Pre-Clinical
Quell 35.1 26.3 18.5 1.5 81.4 6.2% PRI 37.4% Cell therapy
SwanBio 53.7 17.7 0.5 3.2 75.1 5.7% Cost 75.4%
4
Gene therapy
Purespring 3.9 14.6 – – 18.5 1.4% Cost 84.0% Gene therapy
Neogene 11.0 2.9 – 0.6 14.5 1.1% Cost 7.9% Cell therapy
Clade – 10.8 – 0.6 11.4 0.9% Cost 22.6% Cell therapy
Resolution 7.4 3.0 – – 10.4 0.8% Cost 81.1% Cell therapy
Drug discovery
OMass 16.4 10.0 8.3 – 34.7 2.6% PRI 49.3%
5
Small molecule
Life Science Investment
Gyroscope milestone payments
6
– – 49.8 – 49.8 3.8% DCF 0.0% Gene therapy
CRT Pioneer Fund 36.6 (0.4) (8.0) – 28.2 2.2% Adj Third Party 64.1% Oncology
CEGX 1.5 – 15.4 0.4 17.3 1.3% PRI 5.5% Epigenetics
Forcefield 0.4 2.1 – – 2.5 0.2% Cost 82.0% Biologics
Adaptimmune 5.3 – (3.2) 0.1 2.2 0.2% Quoted 0.8% Cell therapy
Total Life Science Portfolio 722.1 (203.0) (15.7) 21.5 524.9 40.1%
1 Primary input to fair value
2 The basis of valuation is stated to be “Cost”, this means the primary input to fair value is capital invested (cost) which is then calibrated in accordance with our Valuation Policy
3 The basis of valuation is stated to be “PRI”, this means the primary input to fair value is price of recent investment which is then calibrated in accordance with our Valuation Policy
4 Fully diluted ownership increases to 80 per cent post the Series B financing in May 2022
5 Fully diluted ownership reduces to 31 per cent post the Series B financing in April 2022
6 Syncona’s risk-adjusted and discounted valuation of the milestone payments from the sale of Gyroscope
Syncona’s holding now valued at £17.3 million
following an initial investment of £2.4 million.
Post period end, another of Syncona’s life
science investments, Forcefield Therapeutics
(Forcefield), announced its official company
launch. The company is a pioneer of
best-in-class therapeutics, with its approach
seeking to retain heart function following
myocardial infarctions (heart attacks),
specifically by preventing the loss of
cardiomyocytes. Syncona first announced its
£5.5 million Series A investment in Forcefield
in 2020, and since this time the company has
been working to identify its pre-clinical
pipeline, which is centred on three identified
proteins which have the potential to retain
heart function. These targets have been
identified through the ‘FunSel’ discovery
platform, which is also used by Syncona
portfolio company Purespring. The company
was founded by Purespring co-founder
Professor Mauro Giacca, a leader in
cardiovascular disease and genetic biology
atthe School of Cardiovascular Medicine
andSciences, King’s College London, and
Richard Francis, CEO of Purespring, also
actsas CEO of Forcefield.
STRATEGIC REPORT
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FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
33
Market review
The life science sector has remained in the spotlight as the COVID-19
pandemic has continued to evolve. The first approved vaccines have
significantly diminished the impact of the pandemic, while the development
ofadditional vaccines and therapeutics will be critical for avoiding further
disruption caused by existing and novel variants. The disruption caused by the
pandemic has forced the life science industry to optimise existing processes
and move towards more efficient and virtual operations such as decentralised
clinical trials.
The success of the first two mRNA vaccines has spurred investment in mRNA
technologies and mRNA vaccines in other infectious diseases, while other
RNA-based therapeutics have also received increased interest. Other Third
Wave technologies such as cell and gene therapies continue to remain in the
forefront, as more programmes are generating clinical data, some of which are
providing unequivocal evidence regarding the transformational efficacy these
modalities can deliver.
Other key drivers of the field include the advances in technologies such as
artificial intelligence and genomics. The potential of artificial intelligence and
machine learning has been widely accepted, and established companies are
forming partnerships to test these technologies in both pre-clinical and clinical
applications. The continuous improvement in access to genomics is also
enabling companies to develop more precise hypotheses and develop better
targeted therapeutics, moving us a step closer to personalised medicines.
2
Approved COVID-19
RNAvaccines
9
19.4%
Expected CAGR in global
genomics market 2021-28
10
3,400+
Cell, gene and RNA
therapies in development
globally
11
3x
Medicines targeted at
defined patient groups 3x
more likely to succeed than
conventional drugs
12
Emerging trends
inlife sciences
Beyond these general industry trends, the
Syncona team expects the following three
areas to be ofparticular interest to Syncona
and itsportfolio.
Read more:
opposite
Please refer to page 144 for references
Syncona Limited Annual report and accounts 202234
26
Good Manufacturing
Practice (GMP) cell
and gene therapy
facilities in the UK
13
25
Viral vector
therapeutics in late
stage development
14
Increased focus on
manufacturing in cell
andgenetherapies
Manufacturing is a key challenge and a critical
component of successful cell and gene therapy
platforms. Significant capital, time and expertise
arerequired to establish commercial-grade
manufacturing and analytics, and therefore it can be
tempting to seek short-term solutions and rely on
small-scale manufacturing, without having a reliable
path to commercialisation. This may become
problematic as regulators are implementing more
stringent quality controls, whilst also demanding
more thorough characterisations of the quality
andpotency of products.
Syncona has recognised these challenges since
establishing its first cell and gene therapy companies
and therefore establishing commercial grade,
scalable, manufacturing and analytics has been
akey aspect of Syncona’s investment approach.
Market focus:
An evolving regulatory
environment in gene therapy
As more gene therapy programmes approach
commercialisation and more clinical data is
becoming available, regulatory requirements
areevolving and government agencies are
placinga greater focus on product quality
andmanufacturing. The characterisation of gene
therapy product impurities and potency is critical
for ensuring patient safety and optimal therapeutic
effect and could help mitigate unexpected adverse
events in the clinic. A more robust manufacturing
platform can minimise the presence of impurities
and can confer other advantages such as lower
costs of goods, which improves the commercial
viability of these programmes.
Syncona’s portfolio companies are at the forefront
of quality control and product analytics from
foundation, as we believe it is critical to have the
appropriate infrastructure in place to best position
a company for regulatory and commercial success.
Market focus:
Cell and gene therapies coming of age
The significant investment in cell and gene therapy in the past decade
hasculminated in the progression of several programmes to the late
clinical development or registrational stage, with several market Biologics
Licence Applications and market authorisations expected in 2022 and
into 2023. Several companies will therefore have the opportunity to
validate the early promising clinical effect demonstrated by their
programmes, which first provided a glimpse of the transformative
potentialof these therapies for patients.
As we would expect in drug development, some programmes may
haveequivocal efficacy or unclear safety profiles, and may therefore face
regulatory setbacks, as was seen with some late-stage programmes in
2021. Beyond traditional cell and gene therapy, gene editing programmes
are also expected to generate further data, which will shed more light on the
therapeutic potential and competitive positioning of these programmes, for
example the first Biologics Licence Application for a CRISPR-Cas9 based
gene editing programme is expected by the end of 2022. Syncona believes
cell and gene therapies have the potential to disrupt the market, and we are
well positioned to capture this opportunity.
Market focus:
60
FDA approved cell and
gene therapies expected
in the US by 2030
15
UK
The largest cell and gene
therapycluster outside
the US
16
9
FDA approved cell and
genetherapies
17
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
35
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
1
Number of new portfolio companies
2020 2021 2022
4
3
2
1
0
Average number over the last 3 years
1
2
3
4
5
6
7
8
9
10
11
– Total of 11 portfolio companies at year end
– Led the Series A for one new company,
CladeTherapeutics
– 1.7 is the average number of portfolio companies
founded or invested in over the last three years
– 19 high interest investment opportunities subject to
diligence during the year
A measurement of our progress towards our rolling
10-year goals, with a focus on total number of portfolio
companies and the average number of companies added
to the portfolio over the previous three years. Critical to
our strategy is the creation of a diversified portfolio across
the development cycle over time.
Targeting a portfolio
of15-20 companies,
founding 2-3 new
companies a year, with
agoal of delivering
3-5products to the point
of approval over a rolling
10-year basis
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
2
Years of available capital
2020 2021 2022
6
4
2
0
5
6
7
9
– £123.2m deployed in the year
– £784.9m capital pool at 31 March 2022
– Capital pool was significantly strengthened during the
year with the sale of Gyroscope to Novartis, which
completed in February 2022, generating cash
proceeds of £325.8m for Syncona
– 3.9 years of available capital to fund new and
existing portfolio companies
A strong balance sheet and deep pool of capital underpin
our strategy, enabling us to take a long-term view and
support our portfolio companies as they scale, remaining
a significant shareholder through to product approval.
Access to capital,
seeking to maintain
acapital pool of a
minimum of 2-3 years
ofexpected capital
deployment
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
3
NAV per share growth (p.a.)
1 year 3 years 5 years
10%
5%
0%
-5%
1
2
3
4
5
6
7
8
9
10
11
– 0.3% growth in NAV per share in the year
– 0.8% growth in the life science portfolio
– Sale of Gyroscope to Novartis at £225.5m uplift to
NAV from 31March 2021 valuation
– Quell and Anaveon Series B financings delivered
41% and 88% uplifts to previous holding valuations
– Positive valuation progression from Gyroscope,
Anaveon and Quell, offset by decline in share prices
of Autolus, Freeline and Achilles
We seek to deliver strong risk-adjusted returns for
shareholders over the long term, recognising that our NAV
can be volatile year on year. We have a long-term target of
15% IRR on NAV and a key metric of five-year compound
annual NAV growth at year end.
NAV growth
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
4
1
Company entered
the clinic inthe year
3
Pre-clinical companies at
clinical candidate stage
11
Clinical trials
1
2
8
10
11
– Anaveon entered the clinic in the year
– 2 new clinical trials commenced during the year
– Pre-clinical companies, SwanBio, Quell and
Neogene, at clinical candidate stage
A measurement of progress of our portfolio companies
through the pre-clinical and clinical pathway,with the
keymeasurements of number ofclinical candidate
nominations and clinical programmes across the portfolio.
Progress in de-risking
pre-clinical and early
stage clinical companies
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
5
1
Approved product
Axumin (Blue Earth)
3
Programmes taken to pivotal
trial: Axumin (Blue Earth),
Choroideremia (Nightstar)
andAUTO1 (obe-cel) (Autolus)
1
2
8
10
11
– Autolus’ AUTO1 (obe-cel) progressing its pivotal trial
with meaningful data expected H2 CY2022
A measurement of our progress in delivering
transformational treatments to patients, with a focus on total
number of programmes in pivotal trial, and then approval for
any product. We measure pivotal studies and approved
products on a cumulative basis to reflect our 10-year rolling
targets and the timeframe it takes to develop products.
Portfolio progress
to patient impact
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
6
220+
Years of life science
andinvesting
experience
17
Average years
of life science and
investment experience
oninvestment team
13
Members of the
life science
investment team*
85%
Investment team
with PhDs and M.D.s
1
2
3
4
8
– Chief Medical Officer appointed
– New Chief Financial Officer appointed
– Chief Human Resources Officer appointed
The Syncona team is differentiated by its people and the
quality and depth of the team’s expertise is critical to the
success of the Company. We measure the depth of the
team at year end to show its development over time.
People in the
Synconateam
Key performance indicators
We measure our performance against a number of financial and non-financial key performance indicators (KPIs) that are
aligned to our strategic priorities. These KPIs are not specific targets; they are metrics that are reported on each year to
show progression of the business and reflect the nature of the asset class.
UK/Europe has a globally
signicant scientic
researchbase
The Syncona team has
deepscientic, investment,
operational and
commercialexpertise
Balance sheet provides the
exibility to take a long-term
approach to building and
funding companies
Setting companies up with the
capability to take products to
approval candeliver the best
risk-adjusted returns
New technologies and
approaches have enabled
biotechnology companies to
take products to market on a
stand-alone basis
Strategic drivers:
Read more:
Our strategy
Page 14
Business model risks
1
Scientic theses fail
2
Clinical development doesn’t deliver
acommercially viable product
3
Portfolio concentration to platform
technology
4
Concentration risk and binary
outcomes
Financing risks
5
Not having capital to invest
6
Private/public markets don’t value or
fund portfolio companies
7
Capital pool losses or illiquidity
Operational execution risks
8
Reliance on small Syncona team
9
Systems and controls failures
Portfolio company operational risks
10
Unable to build high quality teams in
portfolio companies
11
Unable to execute business plans
Key risks:
Read more:
Risk management
Page 44
Syncona Limited Annual report and accounts 202236
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
1
Number of new portfolio companies
2020 2021 2022
4
3
2
1
0
Average number over the last 3 years
1
2
3
4
5
6
7
8
9
10
11
– Total of 11 portfolio companies at year end
– Led the Series A for one new company,
CladeTherapeutics
– 1.7 is the average number of portfolio companies
founded or invested in over the last three years
– 19 high interest investment opportunities subject to
diligence during the year
A measurement of our progress towards our rolling
10-year goals, with a focus on total number of portfolio
companies and the average number of companies added
to the portfolio over the previous three years. Critical to
our strategy is the creation of a diversified portfolio across
the development cycle over time.
Targeting a portfolio
of15-20 companies,
founding 2-3 new
companies a year, with
agoal of delivering
3-5products to the point
of approval over a rolling
10-year basis
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
2
Years of available capital
2020 2021 2022
6
4
2
0
5
6
7
9
– £123.2m deployed in the year
– £784.9m capital pool at 31 March 2022
– Capital pool was significantly strengthened during the
year with the sale of Gyroscope to Novartis, which
completed in February 2022, generating cash
proceeds of £325.8m for Syncona
– 3.9 years of available capital to fund new and
existing portfolio companies
A strong balance sheet and deep pool of capital underpin
our strategy, enabling us to take a long-term view and
support our portfolio companies as they scale, remaining
a significant shareholder through to product approval.
Access to capital,
seeking to maintain
acapital pool of a
minimum of 2-3 years
ofexpected capital
deployment
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
3
NAV per share growth (p.a.)
1 year 3 years 5 years
10%
5%
0%
-5%
1
2
3
4
5
6
7
8
9
10
11
– 0.3% growth in NAV per share in the year
– 0.8% growth in the life science portfolio
– Sale of Gyroscope to Novartis at £225.5m uplift to
NAV from 31March 2021 valuation
– Quell and Anaveon Series B financings delivered
41% and 88% uplifts to previous holding valuations
– Positive valuation progression from Gyroscope,
Anaveon and Quell, offset by decline in share prices
of Autolus, Freeline and Achilles
We seek to deliver strong risk-adjusted returns for
shareholders over the long term, recognising that our NAV
can be volatile year on year. We have a long-term target of
15% IRR on NAV and a key metric of five-year compound
annual NAV growth at year end.
NAV growth
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
4
1
Company entered
the clinic inthe year
3
Pre-clinical companies at
clinical candidate stage
11
Clinical trials
1
2
8
10
11
– Anaveon entered the clinic in the year
– 2 new clinical trials commenced during the year
– Pre-clinical companies, SwanBio, Quell and
Neogene, at clinical candidate stage
A measurement of progress of our portfolio companies
through the pre-clinical and clinical pathway,with the
keymeasurements of number ofclinical candidate
nominations and clinical programmes across the portfolio.
Progress in de-risking
pre-clinical and early
stage clinical companies
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
5
1
Approved product
Axumin (Blue Earth)
3
Programmes taken to pivotal
trial: Axumin (Blue Earth),
Choroideremia (Nightstar)
andAUTO1 (obe-cel) (Autolus)
1
2
8
10
11
– Autolus’ AUTO1 (obe-cel) progressing its pivotal trial
with meaningful data expected H2 CY2022
A measurement of our progress in delivering
transformational treatments to patients, with a focus on total
number of programmes in pivotal trial, and then approval for
any product. We measure pivotal studies and approved
products on a cumulative basis to reflect our 10-year rolling
targets and the timeframe it takes to develop products.
Portfolio progress
to patient impact
Key metrics Key risks/factors Links to strategic driversProgress in the yearRationale
6
220+
Years of life science
andinvesting
experience
17
Average years
of life science and
investment experience
oninvestment team
13
Members of the
life science
investment team*
85%
Investment team
with PhDs and M.D.s
1
2
3
4
8
– Chief Medical Officer appointed
– New Chief Financial Officer appointed
– Chief Human Resources Officer appointed
The Syncona team is differentiated by its people and the
quality and depth of the team’s expertise is critical to the
success of the Company. We measure the depth of the
team at year end to show its development over time.
People in the
Synconateam
*Increased to 14 members post period end
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
37
Purpose and values
We are driven by our purpose to extend and
enhancehuman life.
Our responsible investment process
We are committed to integrating sustainability issues into
our investment and management processes.
Effective risk management
Understanding risk and managing it throughout the
investment process is core to optimising our returns.
Effective governance
We seek to uphold a high standard of corporate
governance, operating in an effective and efficient manner.
Fund
Our strategic capital pool gives us the
flexibility to fund our companies over the
long term through to product approval,
maximising their ambition.
Found
We found our companies around
exceptional science with the ability to
deliver dramatic efficacy for patients
andtotake products to market on a
stand-alone basis.
Build
We take a hands-on, partnership approach,
bringing the commercial vision, setting
strategy, writing the business plans
andhiringexceptional teams to lead
ourcompanies.
Transformational
treatments for
patients in areas
ofhigh unmet
medical need
Expert
team
Strong track
record
Capital
pool
Extensive
network
Exceptional
science
Effective risk
management
Disciplined
capital
allocation
Business model
Our differentiated model
We are focused on maximising value at all points of the
investment cycle to deliver transformational treatments to
patients, capture superior risk-adjusted returns for shareholders
and build long-term value for all our stakeholders.
Syncona Limited Annual report and accounts 202238
Purpose and values
We are driven by our purpose to extend and
enhancehuman life.
Our responsible investment process
We are committed to integrating sustainability issues into
our investment and management processes.
Effective risk management
Understanding risk and managing it throughout the
investment process is core to optimising our returns.
Effective governance
We seek to uphold a high standard of corporate
governance, operating in an effective and efficient manner. 
Taking products late into
development and to approval
We set our companies up with the
capability of taking products to market
and our balance sheet gives us the
flexibility to maintain a significant
ownership position to the point of
product approval.
Divestments
Our strategic capital pool ensures we
have control and flexibility over the
management of our companies – we
seek to not be a forced seller and can
thereby maximise returns. However, we
will sell companies when it makes sense,
driven by the balance of risk and reward.
Driving the out-return
in life science
We take a long-term approach to
investing and we believe that returns
inlife science are weighted towards
latein the development cycle and at
product approval.
Who benefits
Shareholders
0.3%
NAV growth
Portfolio companies
1
New portfolio company formed
1,200+
Total no. of portfolio company employees
Patients
11
Clinical trials
Charities
£4.2m
Amount donated
Rolling 10-year
targets
15-20
Portfolio of leading life
science companies
3-5
Companies to the
point of product
approval
2-3
New companies
founded per year
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
39
Business model in action
Our deep scientific expertise, understanding of the competitive market, and
rigorous due diligence process allow us to identify areas of science which can be
built into independent companies, addressing areas of real unmet need. The output
of this is evidenced by our three exits to date, including Gyroscope, which was sold
to Novartis in February 2022.
Building a global leader in
retinal gene therapy
The science
Syncona was introduced to Professor
SirPeter Lachmann at the University of
Cambridge in September 2015. Sir Peter,
who sadly passed away in December 2020,
was one of the world’s leading researchers in
a part of the immune system called the
complement system. The complement
system is a series of proteins that circulate in
the blood and have a ‘first responder’ role in
the body’s immune defence. The main focus
of his work was a particular protein in the
system called complement factor I (CFI), a
natural regulator of this immune response.
SirPeter had for many years considered CFI
as a therapeutic anti-inflammatory, but had
not been able to test this thesis because of
the technical difficulty of manufacturing this
protein at scale.
Connecting the science with the
commercial opportunity
One of the largest unaddressed healthcare
markets is for a disease called dry
age-related macular degeneration (dAMD),
which is the world’s leading cause of
blindness. The disease is characterised
byagrowing area of dead retina which
impairs vision and eventually progresses
toblindness. In 2006, an antibody therapy
called Lucentis was approved for a sub-set
of the disease called wet-AMD, with overall
sales reaching $4.3 billion by 2014
18
. The
dAMD market had the potential to be larger,
accounting for 85-90 per cent of AMD
cases. Subsequent to Lucentis’ approval,
various genome-wide association studies
(GWAS) showed that genetics play a major
role in determining the risk of dAMD. These
studies linked proteins in the complement
system to dAMD, which suggested that the
body’s ‘first responder’ system in some
incidences could erroneously identify the
retina for destruction, killing these cells and
leading to progressive debilitating blindness.
Further research into these genetic studies
led Syncona to Newcastle University and
Professor David Kavanagh, who had
extensively studied the genetics of CFI in
dAMD. His insight demonstrated that whilst
mutations that caused patients to have low
natural levels of CFI were rare, they were
incredibly impactful to driving dAMD and,
coupled with Sir Peter’s biological insight,
confirmed CFI to be the favoured protein
target in the complement system to address
the disease. However, the protein could not
be made and if it could be made, it would
require regular injections directly in the eye,
which, whilst justified by the severity of the
disease, would not be welcomed by patients.
Syncona’s deep expertise in gene therapy
provided the solution. If CFI could be
formatted as a gene therapy, the genetic
code could be delivered into the body, so it
could be made naturally, thereby removing
the need for regular injections. This format
also allowed for direct injection to the site
ofthe disease, the retina, maximising
itsimpact whilst also preventing the
complement system from being
weakenedelsewhere in the body.
$1.5bn
Total value of transaction, including
$700m of milestone payments
£325.8m
Upfront cash proceeds
to Syncona
2.9x
Upfront cash proceeds
as a gross multiple of cost*
Fourth
Largest UK biotech exit of all time
Timeline
May 2016
Gyroscope founded
with an initial £34 million
Series A investment from
Syncona
Sept 2015
Syncona first
introduced to
Sir Peter Lachmann
Feb 2021
Gyroscope releases first pharmacodynamic
data from GT005 programme, providing
strong evidence of down regulation of
complement system
Oct 2015
Syncona first
introduced to
Professor David
Kavanagh
Please refer to page 144 for references
*Reflects capital invested by Syncona Partners where applicable
Syncona Limited Annual report and accounts 202240
Building Gyroscope
Gyroscope was founded around this
conceptual insight in 2016. In advance of
Gyroscope’s official launch in May 2016,
Syncona initiated preparatory work in the
lab of Robert MacLaren (Professor of
Ophthalmology at the University of Oxford
and founder of Nightstar). Syncona also
quickly initiated work on manufacturing,
withSyncona’s CIO Chris Hollowood
closelyinvolved with the early operational
development of the company as its Chair.
The early momentum that was driven in
advance and through the launch of
Gyroscope enabled it to establish a first
mover advantage with high barriers to entry
for competitors, positioning the company
well to capture greater value in the event
ofclinical validation.
Syncona recognised the importance of
finding a safe injection mechanism for
Gyroscope to scale delivery to a large
population with a disease such as dAMD.
Syncona saw an opportunity in the Orbit
subretinal delivery system device developed
by Janssen Biotech, which was originally
designed to precisely and safely deliver a
cell therapy to the subretinal space.
Syncona acquired the device from Janssen
in 2018 so that it could be repurposed for
gene therapy by Gyroscope, and following it
being sold to the company in 2019, this
provided Gyroscope with a world class
delivery system which could safely deliver its
gene therapy to the subretinal space and
provide further competitive advantage.
With the lead programme, GT005, now
moving towards the clinic, attention turned
to building Gyroscope’s management team.
This led Syncona to Khurem Farooq, who
atthe time was SVP of Opthalmology at
Genentech, one of the world’s leading
biotech companies. Khurem joined as
CEOin 2019 and quickly made an impact,
further strengthening the executive team and
scaling the business for clinical development.
Key senior hires were also made by the
company, including Nadia Waheed as
CMOin early 2020, who we worked with
todevelop Gyroscope’s clinical strategy
andinterpret the emerging clinical data.
Proof of concept
In Q1 CY2021 the first pharmacodynamic
data from GT005 was reported, providing,
in Syncona’s view, strong evidence that it
was successful in down-regulating the
complement system. This conviction was
further validated in September 2021, when
one of Gyroscope’s competitors in the
space, Apellis, reported its results for two
Phase III studies in pegcetacoplan, a small
molecule complement C3 inhibitor being
trialled in dAMD. Syncona believed that the
results represented the strongest clinical
evidence produced to date linking
modulation of the complement system with
arresting the progression of GA, which is an
advanced form of dAMD. In Syncona’s view,
this significantly de-risked Gyroscope’s lead
programme. In addition, Syncona believed
that GT005 had a key advantage over the
Apellis programme, given its status as a
one-time gene therapy and its employment
of a natural regulatory protein to dial down
the inflammatory response endogeneously.
Funding the company to deliver on its
potential
Syncona led Gyroscope through its Series A
and B financings, and in March 2021
invested alongside external investors raising
$148 million in a Series C financing. In April
2021, Gyroscope launched an IPO, but
against a highly volatile market backdrop
decided not to proceed and in November
2021 attracted further external validation
viaan investment of up to $60million from
Sanofi. This investment underlined the
ongoing interest in Gyroscope from
pharmaceutical companies, including
Novartis, who initiated discussions
withGyroscope concerning a possible
acquisition of the company. The sale was
announced in December 2021 and
completed in February 2022.
The sale completed a six-year journey for
Gyroscope, with the company developing
from an idea in 2015, through to its sale in
2022, in a transaction which was at the time
the fourth largest UK biotech exit of all time.
Nov 2021
Sanofi makes
investment of up
to $60 million in
Gyroscope
Mar 2021
Gyroscope Series C
financing raises $148
million
Feb 2020
Nadia Waheed joins as CMO of
Gyroscope, from Tufts University
School of Medicine
Apr 2019
Orbit SDS acquired
by Gyroscope
following merger with
Orbit Biomedical
Dec 2021
Sale of Gyroscope
to Novartis for up
to $1.5 billion is
announced
Sept 2021
Apellis pegcetacoplan data
read-out reinforces link between
modulation of complement system
and slowing of progression of
geographic atrophy
Feb 2019
Khurem Farooq
joins as CEO of
Gyroscope, from
Genentech
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Syncona Limited Annual report and accounts 2022
41
SHAREHOLDER INFORMATION
The Corporate Team
Syncona Investment Management Limited’s Corporate
Team is led by the CEO and CIO, and is made up of
highly experienced professionals working across
investment, finance, legal, investor relations and human
resources. They act as the operational leadership team
for Syncona, ensuring that the Company is operating
effectively as it seeks to deliver on its strategy.
Corporate
Team
Martin Murphy Rolf Soderstrom Fiona Langton-Smith Markus John Annabel Clark Andrew Cossar
Co-founder, Chief Executive Officer and
Chair, SIML
PhD
Chief Financial Officer Chief Human Resources Officer Chief Medical Officer and Head of R&D Head of Investor Relations and
Communications
General Counsel
– Scientic, commercial, company creation
and investment expertise
– 21 years in venture capital and management
consultancy
– PhD in Biochemistry
– PLC nancial and corporate leadership
experience
– Over 30 years’ experience in nance,
14years in life sciences as an executive and
non-executive
– Chartered accountant
– HR specialist with expertise in organisation
structure
– Over 20 years’ experience in HR leadership
across biotech
– Honours degree in Fine Art from the
University of Newcastle
– Experienced physician-scientist with
background in clinical development
– Previously held leadership positions at
Roche and Novartis
– M.D. from the University of Heidelberg
– Cross-sector experience acrossnancial
communications
– Expertise in communications and reputation
management for the investment industry
– Honours degree in History from the
University of Bristol
– Corporate and in-house legal expertise,
including at the WellcomeTrust
– Broad transaction and company secretarial
experience
– LLB from the University of Glasgow
Rolf joined Syncona Investment
Management Ltd in July 2021 as Chief
Financial Ofcer (CFO). Rolf has over
30years’ experience in nance and has
worked in the life science sector for the
past 14 years. He has broad expertise
across business building, M&A, corporate
nance, and commercial operations, and
was previously CFO of BTG plc where
hehelped drive the successful
transformation into a fully integrated
global specialist healthcare business.
Prior to this he was CFO of Protherics
plc, and worked in senior nance roles in
Cobham plc and Cable and Wireless plc
after qualifying as a chartered accountant
with PwC. Rolf has a degree in history
from University College London.
Fiona is Chief Human Resources Ofcer
ofSyncona Investment Management Ltd.
Fiona has over 20years’ experience in
human resources leadership across
thebiotechnology and process
engineering industries with afocus
onorganisation design for mergers,
acquisitions and keybusiness inection
points. Previously Fiona was head of
Organisation Consulting at Susurrate and
prior to that she spentseven years with
Biogen culminating as head of people,
processes and analytics. She has an
honours degree in Fine Art from the
University of Newcastle upon Tyne.
Markus joined Syncona Investment
Management Ltd in July 2021 as
ChiefMedical Ofcer and Head of R&D.
He has more than 20 years’ experience
as a clinician, principally spent within
various leadership roles across large
pharmaceutical companies, most recently
as Global Medical Affairs Franchise Head
of Immunology and Ophthalmology at
Roche. He has an M.D. which he earned
inthe eld of inammatory and cancer
gastrointestinal diagnostics, from the
University of Heidelberg.
Annabel is Head of Investor Relations
and Communications at Syncona
Investment Management Ltd. Previously,
she was a Consultant at Greenbrook
Communications, advising clients ona
wide range of projects and transactions.
Prior to that, Annabel spent several years
at a leading nancial communications
rm, where she worked with companies
across a number of sectors. She has an
Honours Degree inHistory from the
University of Bristol.
Andrew is General Counsel of Syncona
Investment Management Ltd. Previously,
he was Chief Investment Counsel at the
Wellcome Trust, responsible for legal
issues arising from its then-£23 billion
global multi-asset investment portfolio,
and where he was involved in the initial
formation of Syncona Partners LLP. Prior
to that he worked as a corporate lawyer
in London and Edinburgh. Andrew has
an LLB from the University of Glasgow.
Chris Hollowood
Chief Investment Officer, SIML
PhD
– Scientic, commercial, company creation
and investment expertise
– 20 years in venture capital
– PhD in Organic Chemistry
Syncona Limited Annual report and accounts 202242
Martin Murphy Rolf Soderstrom Fiona Langton-Smith Markus John Annabel Clark Andrew Cossar
Co-founder, Chief Executive Officer and
Chair, SIML
PhD
Chief Financial Officer Chief Human Resources Officer Chief Medical Officer and Head of R&D Head of Investor Relations and
Communications
General Counsel
– Scientic, commercial, company creation
and investment expertise
– 21 years in venture capital and management
consultancy
– PhD in Biochemistry
– PLC nancial and corporate leadership
experience
– Over 30 years’ experience in nance,
14years in life sciences as an executive and
non-executive
– Chartered accountant
– HR specialist with expertise in organisation
structure
– Over 20 years’ experience in HR leadership
across biotech
– Honours degree in Fine Art from the
University of Newcastle
– Experienced physician-scientist with
background in clinical development
– Previously held leadership positions at
Roche and Novartis
– M.D. from the University of Heidelberg
– Cross-sector experience across nancial
communications
– Expertise in communications and reputation
management for the investment industry
– Honours degree in History from the
University of Bristol
– Corporate and in-house legal expertise,
including at the WellcomeTrust
– Broad transaction and company secretarial
experience
– LLB from the University of Glasgow
Rolf joined Syncona Investment
Management Ltd in July 2021 as Chief
Financial Ofcer (CFO). Rolf has over
30years’ experience in nance and has
worked in the life science sector for the
past 14 years. He has broad expertise
across business building, M&A, corporate
nance, and commercial operations, and
was previously CFO of BTG plc where
hehelped drive the successful
transformation into a fully integrated
global specialist healthcare business.
Prior to this he was CFO of Protherics
plc, and worked in senior nance roles in
Cobham plc and Cable and Wireless plc
after qualifying as a chartered accountant
with PwC. Rolf has a degree in history
from University College London.
Fiona is Chief Human Resources Ofcer
ofSyncona Investment Management Ltd.
Fiona has over 20years’ experience in
human resources leadership across
thebiotechnology and process
engineering industries with afocus
onorganisation design for mergers,
acquisitions and keybusiness inection
points. Previously Fiona was head of
Organisation Consulting at Susurrate and
prior to that she spentseven years with
Biogen culminating as head of people,
processes and analytics. She has an
honours degree in Fine Art from the
University of Newcastle upon Tyne.
Markus joined Syncona Investment
Management Ltd in July 2021 as
ChiefMedical Ofcer and Head of R&D.
He has more than 20 years’ experience
as a clinician, principally spent within
various leadership roles across large
pharmaceutical companies, most recently
as Global Medical Affairs Franchise Head
of Immunology and Ophthalmology at
Roche. He has an M.D. which he earned
inthe eld of inammatory and cancer
gastrointestinal diagnostics, from the
University of Heidelberg.
Annabel is Head of Investor Relations
and Communications at Syncona
Investment Management Ltd. Previously,
she was a Consultant at Greenbrook
Communications, advising clients ona
wide range of projects and transactions.
Prior to that, Annabel spent several years
at a leading nancial communications
rm, where she worked with companies
across a number of sectors. She has an
Honours Degree inHistory from the
University of Bristol.
Andrew is General Counsel of Syncona
Investment Management Ltd. Previously,
he was Chief Investment Counsel at the
Wellcome Trust, responsible for legal
issues arising from its then-£23 billion
global multi-asset investment portfolio,
and where he was involved in the initial
formation of Syncona Partners LLP. Prior
to that he worked as a corporate lawyer
in London and Edinburgh. Andrew has
an LLB from the University of Glasgow.
Chris Hollowood
Chief Investment Officer, SIML
PhD
– Scientic, commercial, company creation
and investment expertise
– 20 years in venture capital
– PhD in Organic Chemistry
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
43
Our risk framework is overseen by the
AuditCommittee under delegation from the
Board. Everyone, including the Board, the
Syncona team, and the management teams
at our portfolio companies, plays a part in
managing the risks.
Governance framework for risk
Our governance framework for risk is set
out below. The Board oversees the process,
ensures a robust assessment of principal
risks and defines risk appetite.
The Syncona team is responsible for
day-to-day operation and oversight of the risk
framework and implementation of any actions.
Within the team different groups, including the
Investment Committee, Corporate Team,
quarterly portfolio review meeting, Liquidity
Management Committee and Sustainability
Committee, will lead or input into different
risks, and these are then collated into the risk
register and reporting to the Board and Audit
Committee. The Sustainability Committee
hasbeen established over the last year to
oversee implementation of Syncona’s
sustainability policies.
The Audit Committee oversees and monitors
the risk framework, including overseeing the
framework for identifying risks (including
potential futurerisks) and reviewing the
ongoing operationand effectiveness of our
control environment to manage the principal
riskswe face on an annual basis. Thisreview
process provides a focus to drivecontinuous
improvement in our riskprocesses.
Identifying principal risks
We evaluate our principal risks on an ongoing
basis using both top-down and bottom-up
inputs. We also horizon scan for future risks
that could have a potential impact.
During the year the Board again carried out an
exercise to consider the current and potential
risks of the business, and whether the way we
categorise and report on risks was the most
helpful to support high quality oversight by the
Board. The Syncona team also considered
different ways to consider risk, with a
particular focus on technical, financial and
operational risks, and taking account of
experiences in the business and portfolio.
Separately, the Syncona team considered
how best to address sustainability risks within
the business. This took into account the
outputs of the climate-related risk identification
process (see TCFD box, right) and other
analysis of our sustainability risks. While
clearlysustainability issues are important
toour business, the conclusion and
recommendation was that none of them
represented new principal risks for the
business, and that where relevant they were
already taken into account in our existing risks.
These inputs were then discussed with the
Audit Committee in detail and formed the
basis to update the principal risks faced by
Syncona which were then approved by the
Board. The updated principal risks are set out
on pages 48 to 53. While few of the matters
identified in the updated principal risks are
Our strategy of founding, building
andfunding a portfolio of companies
turning exceptional science into
transformational treatments involves
significant risk and opportunity.
Wefound early stage life science
businesses prior to clinical proof
ofconcept, and build them through
scientific and operational development,
clinical trials, approval and potentially
commercialisation; this is capital-
intensive and requires significant
funding from us or third-party investors.
It is therefore key to our business that
our risk appetite is clearly defined and
that we have robust processes to
manage risk.
Managing and
understanding
risk is at the core
of everything
we do
Risk management
Syncona Limited Board
– Oversees the process to
ensurea robust assessment
ofprincipal risks
– Considers key strategic risks
and potential future risks
– Defines risk appetite
– Receives quarterly risk reports
– Oversees and monitors the risk
framework
– Reviews risk register to ensure it
properly captures the principal
risks identified by the Board
– Overseeing the framework for
identifying risks (including potential
future risks)
– Reviews the ongoing operation
and effectiveness of our control
environment to manage the
principal risks faced
– Oversees the implementation
ofagreed actions by the
Syncona team
– Reviews progress of each life science
portfolio company each quarter
– Assesses progress in managing key risks to
investment case
– Approves investment transactions taking
account of key risks identified
– Assesses plans to manage risks in
theportfolio
– Responsible for day-to-day operation of
the risk management framework
– Reviews risk register each quarter
– Implements and updates risk controls
Syncona team
Investment Committee
Corporate Team
Quarterly portfolio review meeting
Syncona Limited Audit Committee
Our governance framework for risk
– Oversees implementation of Sustainability
Policy
– Horizon-scanning for changes to
sustainability risks
– Approves investment of the capital pool in
line with agreed risk parameters
Sustainability CommitteeLiquidity Management Committee
Syncona Limited Annual report and accounts 202244
RISK APPETITE RATIONALE
Business model risks
Scientific theses fail Medium These risks are core to our business model, but we seek to de-risk them as far as
possible at an early stage when the value at risk is typically less.
Clinical development doesn’t deliver a
commercially viable product
High These risks are core to our business model; while we manage these intensely, this
stage of development is typically capital-intensive and requires significant funding.
Portfolio concentration to platform
technology
Medium Strong domain expertise is core to our business model. While systemic issues
could potentially have a major impact, we believe our deep understanding
significantly mitigates the risk that these arise.
Concentration risk and binary outcomes Medium We want to minimise this risk but recognise the challenges of a portfolio with
significant value and risk in each investment.
Financing risks
Not having capital to invest Low We want to minimise this risk, although balance that with the cost of holding
capital to achieve this.
Private/public markets don’t value or
fund our companies when we need to
access them
Medium We are exposed to this risk when we choose to bring in third party capital, but
manage it particularly through our wider access to capital.
Capital pool losses or illiquidity Low We manage the capital pool to limit the likelihood of loss (absolute or real value).
Operational execution risks
Reliance on small Syncona team Low We want to minimise this risk but recognise the constraints of our small, focused
team and model.
Systems and controls failures Risk averse Our aim is to eliminate risks of control failures as far as possible and to actively
manage any residual risks.
Portfolio company operational risks
Unable to build high quality teams in
portfolio companies
Low We want to minimise this risk but recognise the challenges of recruiting and
integrating global quality staff with highly specialised skills.
Unable to execute business plans Medium We want to minimise this risk but recognise many external factors may impact
execution of business plans.
completely new, the updated principal risks
have given greater prominence to certain
risks, including portfolio concentration to
platform technologies, concentration risk and
binary outcomes, and a broader lens on our
portfolio companies accessing third party
funding. The Board believes the updated
principal risks give a clearer articulation of
thekey risks facing the business.
Our Board, Audit Committee and Syncona
team discussions also generated insight into
a range of potential emerging risks and have
helped to focus attention on additional areas
for horizon scanning. Areas to be kept
under review include changes to the
business environment from:
– the long-term impact of COVID-19;
– future path of interest rates and inflation,
and the impact on cost of capital and
market appetite for biotech stocks;
– sustainability and other stakeholder
pressures;
– legal and regulatory changes;
– changes to the competitive environment
for people and life science businesses;
– new competing platform technologies;
– the longer-term risks of changes to US
pharmaceutical pricing;
– the potential long-term impact of Brexit on
the UK bioscience research environment
or wider business environment;
– the potential for tax changes in the UK
that impact its attractiveness in recruiting
from a global talent pool; and
– future “black swan” events such as
climate change, pandemics, terrorism
andcyber-threats.
Risk appetite
The Board is willing to accept a level of risk in
managing our business to achieve our strategic
goals. As part of the risk framework, the Board
sets the risk appetite in relation to each of the
principal risks, and monitors the actual risk
against that. Where a risk is approaching or
outside the target risk, the Board considers the
actions being taken to manage the risks.
Our risk appetite is set out below with a brief
description of the rationale in each case.
TCFD and risk management
This year we have published our first
report in line with the recommendations
of the Task Force on Climate-related
Financial Disclosures (pages 72 to 75).
As set out in that report, our
processfor managing risk around
climate-related issues is integrated
in,and forms part of, our wider risk
management framework as set out to
the left. The report also gives further
details of the risk identification
process, supported by external
consultants and considering a range
of potential scenarios, through which
we identified four potential risks for
evaluation by the business.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
45
Currently, our portfolio companies are
progressing 11 clinical trials. These trials
represent both a significant opportunity and
risk for each company and for Syncona.
Unlike typical randomised controlled
pharmaceutical clinical trials, currently
allclinical trials are open-label trials.
Open-label trials 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. However,
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.
Our portfolio companies may decide or be
required to announce publicly interim clinical
trial data, for example where the company
or researchers connected with it are
presenting at a scientific conference, and
we will generally also issue a simultaneous
announcement about that clinical trial data.
We would also 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. We
would not generally expect to otherwise
announce our assessment of interim
clinical data in an ongoing trial, although
we review all such data to enable us to
comply with our legal obligations under
theMarket Abuse Regulation or otherwise.
Risk management
Impact of changes in
sentiment towards
early stage biotech
businesses
A key risk for Syncona is that private or
public markets don’t value or fund our
companies, when we wish to access them.
From mid-2021 we saw significant volatility
across equity markets globally and
particularly a move away from growth stocks,
affecting both valuations and financings of
biotech (especially early stage) businesses.
This volatility increased our companies’ future
funding risk and it was a matter of focus for
the Board during 2021/22 to ensure
Synconaand the portfolio companies were
well-positioned for this more challenging
market environment. The Board had a series
of discussions about capital allocation and
funding options during the year, taking input
from the Syncona team and external advisors
to ensure it understood the options available
for both Syncona and its portfolio companies.
Our strong capital base is a key mitigant for
this risk; the fact that the sale of Gyroscope
would significantly strengthen the capital
pool and enhance our ability to fund our
companies through periods of volatility was a
factor in the Board’s decision-making on the
sale. However, being able to fund does not
mean that it will always be right to fund; the
Board and Syncona team have a rigorous
approach to risk management and maintain
careful discipline in capital allocation.
While public markets continue to be volatile,
the Board has also been pleased to see that
many of our portfolio companies have
continued to successfully raise capital from
third party investors, with $585.8 million
committed by global institutional investors
and companies, and the Syncona team
remains strongly engaged with portfolio
companies to support them to identify
sources of capital through volatile markets.
CASE STUDY
Managing risk and uncertainty around the disclosure of clinical trial data
Syncona Limited Annual report and accounts 202246
The Directors have assessed the
prospects of the Company, considering its
ability to continue in operation and meet its
liabilities as they fall due over the period to
31 March 2025. The period selected was
considered appropriate as: it covers a
period over which a majority of current
uncalled commitments are expected to
becalled; the Directors believe this to be
areasonable period of time for the life
science investments to make meaningful
progress on the journey towards
fulfillingtheir long-term potential;
andtheDirectors have a reasonable
confidence over this horizon.
The Company’s strategy is well
documented (see pages 14 to 15) and
includes longer-term targets of creating
2-3 new companies per year, developing
aportfolio of 15-20 globally leading
healthcare businesses and taking 3-5
companies to the point of product
approval over a rolling 10-year basis.
The Company does not generate income
on a regular basis and relies on its
capitalpool to fund its investments.
TheCompany has stated its desire to
holdbetween 2-3 years of capital.
However the level of the capital pool
willvary over time dependent on asset
realisations, anticipated investments and
access to other forms of capital. The
Company has the ability to manage its
capital consumption by varying the
number of investments it makes, the level
of capital commitment allocated to each
investment, the level of syndication and
the ability to realise assets. The portfolio
isactively managed on this basis.
Key factors affecting the Company’s
prospects over the assessment period
arereflected in the principal risks set out
on pages 48 to 53. These include the
ability to access capital; failure of material
investment assets; and people risks. The
table of principal risks sets out the key
controls for these risks.
These factors also apply over the longer
term identified in the strategy, although
factors such as access to capital become
more challenging to mitigate. In addition,
over the longer term, other risks may arise
such as longer-term risks around US
pharmaceutical pricing or changes to the
business environment. These potential risks
are monitored by the Directors.
The assessment process and key
assumptions
The assessment is carried out by the
Syncona team and challenged and reviewed
by the Audit Committee and approved by
the Board.
The Company’s viability testing considers
base and severe combined stress scenarios.
The principal risk is that the Company has
insufficient access to cash to fund the life
science companies and its liabilities.
The Company has used the following
scenarios to assess the impact on viability,
none of which assume asset realisations.
1. A base case which reflects current and
future investments assuming preferred
investment levels.
2. A downside case which adds
additionaldiscretionary investment
tothe base case.
3. A mitigated downside case which adds
in incremental running costs, reduced
capital pool access, increased funding
commitments for a number of assets
where syndication is not available.
Offsetting mitigations include reducing
the number of new investments and
syndicating assets which are held in
thepreferred case.
4. A non mitigated downside case –
where no mitigating actions are taken.
A non mitigated case is highly unlikely given
the active management of the portfolio and
the various levers available to the Company.
Our viability testing also considers the
impact of material life science investment
failures; these do not change the
Company’s access to cash and so do not
directly negatively impact the outcome of
the viability testing but could have other
negative impacts on the Company. In
addition we assess how additional capital
can be generated should it be needed,
whether through the sale of existing
investments, receipt of milestone
payments, raising equity financing in the
public markets or other private options.
The Company seeks to maintain a liquid
capital pool sufficient to provide at least
2-3 years’ funding for the life science
portfolio plus its expenses. As at 31 March
2022, Syncona had a net capital pool of
£784.9 million, of which £764.7 million is
accessible within 12 months, and expects
that investment into the life science
portfolio will be £150 million-£250 million in
the current financial year. This year it was
£123.2 million. Our analysis shows that,
while there may be a significant impact on
the Group’s reported performance in the
short term under the tested scenarios, the
resilience and quality of our balance sheet
is such that solvency is maintained and
our business remains viable.
Viability statement
Based on the results of this analysis, the
Directors have a reasonable expectation
that the Company will be able to continue
in operation and meet its obligations as
they fall due over the three-year period
ofassessment.
Viability statement
STRATEGIC REPORT
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Syncona Limited Annual report and accounts 2022
47
Principal risks and uncertainties
The principal risks that the Board has identified are set out
in the following table, along with the consequences and
mitigation of each risk. Further information on how these risks
have evolved over the last year is set out in the risk management
section on pages 44-45. Further information on risk factors is set
out in note 18 to the Consolidated Financial Statements.
DESCRIPTION KEY CONTROLS CHANGES IN THE YEAR
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 include:
– 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 work 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.
Continued to seek to de-risk
scientific theses in our early
stage companies.
Significant capital raised by
portfolio companies to
support de-risking scientific
theses.
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 include:
–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 and therefore will
potentially have less competition and more
pricing power.
– Focus, oversight and support from the Syncona
team on recruiting dedicated specialist clinical
teams in each portfolio company to manage
trials effectively, maximise likelihood of success,
and with a clear understanding of the
requirements of regulators.
– 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,
and this is then operationalised.
– Company business plans seek to have multiple
products 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. Consideration of
syndicating investments.
– Clinical trials policy requires reporting of
significant trial issues to Syncona team and
to Board in serious cases.
12 clinical data read-outs
during the financial year with
our most clinically advanced
company, Autolus,
approaching a meaningful
read-out from its pivotal trial
in obe-cel in H2 CY2022.
One company, Anaveon,
moved into the clinic with its
lead programme, ANV419.
Competitive environment has
intensified for some of our
companies.
Business model risks
Principal risks
Syncona Limited Annual report and accounts 202248
Unchanged Increased Decreased
N
New risk
DESCRIPTION KEY CONTROLS CHANGES IN THE YEAR
N
Portfolio concentration
toplatform technology
The Syncona team bring 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 include:
– 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, identified
andmanaged through diligence and
investment process.
Continued to monitor
developments in cell and
gene therapy, particularly
theoutcomes of the FDA
advisory committee on gene
therapy in September and
safety developments on
certain programmes under
development; market
sentiment to cell and gene
therapy has been less
positive in the year.
N
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 include:
–Loss of shareholder support, potentially reducing ability to
raise new equity when required.
–Reputation risk from perceived failure of business model.
– Board provides strong oversight drawing on
a range of relevant experience, including life
science, FTSE and investment company
expertise. 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 removes binary risks.
Sale of Gyroscope allowed us
to capture significant returns
and retain exposure to future
successful development
through milestone payments
and royalties, while removing
risk of a negative outcome.
Significant reduction in value
during year of listed portfolio
companies, as market
sentiment changed.
STRATEGIC REPORT
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Syncona Limited Annual report and accounts 2022
49
Principal risks and uncertainties
DESCRIPTION KEY CONTROLS CHANGES IN THE YEAR
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 include:
–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 constraint.
– Syncona team monitoring capital allocation
on an ongoing basis with a 3-year forward
outlook, with transparent reporting to
theBoard.
– Seek to maintain capital pool of 2-3 years’
(ormore) financing requirements, although
noting this risks being a significant drag
onoverall returns.
– Maximise potential to raise new equity
through developing institutional
shareholderbase.
– Ongoing consideration of alternative or
additional capital raising structures (e.g. side
funds; operating company vs investment
company; use of debt).
– Ongoing consideration of syndication
strategy at portfolio company level, to
maximise value and minimise dilution
whenexternal capital is brought in.
Clarityoffunding options: solo hold
andpartner approaches.
– Ongoing consideration of exit opportunities
for portfolio companies.
Sale of Gyroscope
strengthened capital base to
£784.9 million at 31 March
2022.
Portfolio raised $712.2 million
of capital across seven
financings during the period;
$585.8 million committed by
global institutional investors
and companies, with $126.4
million from Syncona.
Financing risks
Syncona Limited Annual report and accounts 202250
DESCRIPTION KEY CONTROLS CHANGES IN THE YEAR
N
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 include:
– 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 constraint.
–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 impacted sentiment in
the biotech sector, with
particular impact on public
markets for biotech
companies.
Sale of Gyroscope to Novartis
for up to $1.5 billion, with
$800 million in up-front cash
proceeds to the selling
shareholders and up to
$700million in further
milestone payments.
Portfolio raised $712.2 million
of capital across seven
financings during the period;
$585.8 million committed by
global institutional investors
and companies, with $126.4
million from Syncona, to fund
to key milestones.
Capital pool losses
orilliquidity
The capital pool is exposed to the risk of
loss orilliquidity.
Impacts include:
– 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.
– Protection against risk and liquidity are key
characteristics; return a focus to avoid loss
ofreal value, but secondary consideration.
– Risk parameters monitored monthly by
Syncona team, with enhanced review on
aquarterly basis.
– External adviser (Barnett Waddingham)
engaged to carry out annual review of capital
pool against chosen parameters.
Reviewed approach to capital
pool asset allocation in light of
inflationary environment,
resulting in decision to
introduce a number of fund
investments to the capital
pool and to hold more US
dollars on an ongoing basis.
Unchanged Increased Decreased
N
New risk
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Syncona Limited Annual report and accounts 2022
51
Principal risks and uncertainties
DESCRIPTION KEY CONTROLS CHANGES IN THE YEAR
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 include:
– Poorer oversight of portfolio companies, risk of loss
of value from poor strategic/operational decisions.
–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
staff.
– Provision of long-term incentive scheme to
incentivise and retain staff.
– 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 CHRO.
– 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.
Changes to life science
investment landscape in the
UK and Europe, potentially
creating greater competition
in recruitment, as a result
thisrisk was increased in
theperiod.
Seeking to broaden bench
oftalent and skills within the
business. Appointed Rolf
Soderstrom as Chief Financial
Officer, Markus John, M.D.
asChief Medical Officer and
Head of R&D, and Fiona
Langton-Smith as Chief
Human Resources Officer,
and established a
CorporateTeam to oversee
management of the business.
During the year Dominic
Schmidt and Ken Galbraith
left the business, and we
appointed Lisa Bright as
Commercial Advisor
andBenWoolven as
BusinessStrategy and
Operations partner.
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 include:
– Risk of loss of assets.
–Inability to properly oversee Syncona team.
–Inaccurate reporting to shareholders.
–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 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 systems and controls
carried out by the Audit Committee.
Implementing processes
during the year to deliver
onour Sustainability Policy.
Ongoing reviews of our
processes, working with
external advisers where
appropriate, to seek to
meetcurrent stakeholder
requirements.
Operational execution risks
Syncona Limited Annual report and accounts 202252
DESCRIPTION KEY CONTROLS CHANGES IN THE YEAR
Unable to build high quality
teams in portfolio companies
Portfolio companies are reliant on recruiting
highly specialised, high quality staff 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 include:
–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 aim 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.
Team and Board changes in a
number of our companies,
including Autolus, Freeline,
Achilles, Quell, Purespring,
Resolution and others.
Anaveon entered the clinic,
joining Autolus, Freeline and
Achilles, and a further three
companies are approaching
the clinic. With an increasing
number of companies in the
clinic, both the capital
invested and the operational
challenges have increased.
As a result, this risk was
increased in the period.
N
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 include:
– 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.
Operational issues at Freeline,
partly driven by the impact of
delays in its clinical trials due
to the COVID-19 pandemic.
Portfolio company operational risks
Unchanged Increased Decreased
N
New risk
STRATEGIC REPORT
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Syncona Limited Annual report and accounts 2022
53
Delivering positive
and sustainable
impact
Sustainability
Syncona Limited Annual report and accounts 202254
Our Sustainability Policy outlines our goals and commitment tobeing a
sustainable and responsible business. This is built around four core pillars:
Our sustainability pillars
01
Pillar
Our social
impact
02
Pillar
Responsible investor
and partner
03
Pillar
Inspiring and
empowering
our people
04
Pillar
Responsible and
ethical business
We are committed to managing
our business in a sustainable
way, investing responsibly and
supporting our portfolio
companies in making positive
contributions to society by
developing treatments that will
make a difference to the lives
ofpatients and their families.
We aim to have effective
governance, a strong business
culture, clear values and positive
engagement with our wider
stakeholders and society through
our work in life sciences and our
support for charity.
We are actively engaged with our
portfolio companies as they seek
tobuild sustainable businesses.
STRATEGIC REPORT
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Syncona Limited Annual report and accounts 2022
55
Sustainability
Message from the Chief Executive
of Syncona Investment Management
Limited
T
his is the second year since the
launch of our Sustainability Policy,and
it provides us with the opportunity to
demonstrate the progress that we have
made over the year indeveloping and
implementing our sustainability framework
across our business and our portfolio. We
aim to be transparent about the progress
wehave made and to clearly identify areas
where we can do more.
At the heart of everything we do at Syncona
is our purpose to invest to extend and
enhance human life. Our team, our portfolio
and the industry we operate in are hugely
motivated by making a difference to the
livesof patients and this is the lens
throughwhich we seek to advance
oursustainability agenda.
Over the course of this year, we have
madesignificant progress on our four key
sustainability pillars:
– Our social impact
– Being a responsible investor and
partnerfor our portfolio companies
– Inspiring and empowering our people
– Operating as a responsible and
ethicalbusiness
We continue to believe that we have a
positive social impact through the progress
our portfolio companies make in developing
treatments for patients. For example,
Autolus is advancing its lead product
through a late-stage clinical trial and
Anaveon entered the clinic with its
productin this financial year. The Syncona
Foundation also continues to share our
vision of having a transformational impact
on the lives of patients and others.
A core part of our approach to building
aportfolio of global leaders in life science
istopartner with leading academics and
management teams. In engaging with
themon our sustainability priorities we have
sought to take a partnership approach, and
have been delighted that in many cases
these are areas that are important to them
and that they are already focused on.
Our team, our portfolio and
the industry we operate in
arehugely motivated by
making a difference to the
livesof patients and this
isthelens throughwhich
weseek to advance our
sustainability agenda”
Last year we introduced a number of
diversity and inclusion initiatives, conscious
that we can play a role in improving diversity
in our sector. It has been a real pleasure to
see these roll-out so successfully and
whilstwe recognise we still have more
workto do ourselves, we are delighted
withour early progress.
We have made progress this year in
developing our environmental agenda.
Thisis the first year that we will report
against the recommendations of TCFD,
demonstrating our commitment to
incorporating environmental issues
withinour overall risk reporting framework.
We have also worked closely with our
portfolio companies to develop their own
environmental reporting, having provided
support as six of our privately held
companies initiated reporting on their Scope
1 to 3 carbon emissions. Moving forward,
we intend to develop our environmental
agenda further in FY2022/3, with a focus
onmanaging carbon emissions within our
portfolio, and with this in mind have set an
aspiration to be net zero by 2050 on a full
portfolio basis.
I would like to take the opportunity to
thankall of our stakeholders for their
support as we seek to advance our
sustainability agenda. We are privileged to
have employees who work together every
day tobuild a sustainable business, portfolio
leaders who work collaboratively and with
dedication to develop treatments that
havethe potential to reach patients, and
shareholders who continue to support us
and ensure that we seek to deliver our vision
and strategy in a sustainable way. We look
forward continuing to work with you all to
deliver our purpose and strategy in the
years to come.
Martin Murphy
Chief Executive Officer and Chair,
Syncona Investment Management Limited
Syncona Limited Annual report and accounts 202256
Sector and social issues Governance issues Environmental issues
Syncona materiality matrix
In 2020 Syncona undertook a
comprehensive materiality review to
understand the sustainability issues
most material to the business.
Throughout this process views were sought
from a range of stakeholders, including
leadership teams at our portfolio companies
and shareholders, whilst external opinion
was sought from key charitable partners
and sustainability experts alongside
prominent biotech industry experts.
Following this, Board approval was sought
for our agreed sustainability priority areas.
These were then integrated into the
Syncona Sustainability Policy and
Responsible Investment Policy, which
wereannounced in 2021.
In 2022, the Syncona team has focused
onimplementing the Sustainability Policy
and Responsible Investment Policy
andintegrating these into the ongoing
operations at Syncona. This year for the
firsttime we have reported in line with the
recommendations of TCFD. As part of this
process Syncona, with the help of an
external agency, conducted a thorough
climate scenario analysis to assess physical
and transition risks that Syncona might be
Our materiality matrix outlines
the sustainability issues which
are most material to Syncona
exposed to. The output of this work
demonstrated that neither Syncona nor its
portfolio companies are currently exposed
to climate or transition risks at a material
level. However, it has also been clear that
climate risk and disclosure are increasingly
important for Syncona’s external
stakeholders, including investors. We have
therefore changed the position of climate
risk and disclosure on our materiality matrix
this year, to better reflect that importance.
Talent Attraction
and Retention
Clinical
Trials
Data
Privacy
Access to
Healthcare
Community
Investment
and Engagement
Health and Safety
Ethics and
Compliance
Product Quality
and Safety
Responsible
Procurement
Environmental
Impacts
Extreme Weather Events
and Pandemics
Climate Risk
FY2020/1
position
and Disclosure
Animal
Welfare
Impact on Syncona and portfolio
ImportanceLow High
Stakeholder concern
ImportanceLow High
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
57
Pillar FY2021/2 sustainability priorities Progress in the year FY2022/3 focus Alignment to SDGs
01
Pillar
Our social
impact
Continue to support the vibrant life
sciences ecosystem in the UK
0.35% of NAV donated to charity every
year
19
Clinical trial sites
across the UK within
Syncona portfolio
3
New charities
supported by The
Syncona Foundation
900+
People employed
bySyncona and its
portfolio companies
inthe UK
£4.2m
Donated to charity
Work towards patient impact through founding, building
and funding our portfolio companies to develop
transformational treatments
Donation of 0.35% of NAV to The Syncona Foundation
Read more:
Page 60
02
Pillar
Responsible
investor and
partner
Roll-out Responsible Investment Policy
Work with our portfolio companies to
develop net zero strategies
Become a signatory of the UN PRI
5
Portfolio companies
intending to sign up
toEuropean Biotech
Social pact or US
equivalent
11
Portfolio companies
engaged in roll-out
ofResponsible
Investment Policy
9
Portfolio companies
reporting Scope 1 to 3
carbon emissions to
Syncona
UN PRI
Became a signatory
Targeting improvements in sustainability reporting
fromportfolio companies against 2022 base levels
Continue to ensure sustainability is an active part
ofourinvestment decision-making and portfolio
companymonitoring
Read more:
Page 62
03
Pillar
Inspiring and
empowering
our people
Take concrete actions to progress
diversity and inclusion agenda at Syncona
Progress new Windsor Fellowship,
Generating Genius and FastFutures
partnerships
First
Windsor Fellowship
intern completes
six-month placement
Majority
Female Syncona
Limited Board
52%
Female representation
onSyncona Investment
Management Limited
team
Further develop Syncona’s diversity and inclusion strategy
Continue to maximise engagement with Windsor
Fellowship, Generating Genius and FastFutures
partnerships, focusing on tackling the underrepresentation
of black minorities within Science, Technology, Engineering
and Maths (STEM) careers in the UK
Read more:
Page 64
04
Pillar
Responsible
and ethical
business
Report in line with the recommendations
of TCFD for the first time
Begin development of a wider Scope 3
emissions strategy, incorporating portfolio
company emissions
First
TCFD disclosure
Net zero
Aspiration on a full
portfolio basis by 2050
1.7
Gross tCO
2
e per full
time employee*
Target publishing a full carbon emissions portfolio footprint
in FY2022/3 Annual Report
Intention to sign up to Net Zero Asset Managers (NZAM)
initiative
Publish first UN PRI questionnaire
Read more:
Page 66
Read more online:
www.synconaltd.com
Progress in the year
We published our Sustainability
Policyin 2021 and over the course
ofthis financial year we have made
strong progress against our
sustainability goals.
Under our first pillar, our social impact,
across the portfolio there has been
continued progress towards the delivery of
an approved product for patients. Autolus
is approaching a meaningful data read-out
from its pivotal trial in AUTO1 (obe-cel)
and Anaveon has entered the clinic,
takingour clinical stage portfolio to
fourcompanies, following the sale
ofGyroscope in the financial year.
In our role as a responsible investor
andpartner, we have engaged with
ourportfolio companies to implement our
Responsible Investment Policy. The output
of these discussions has been positive,
with companies in many cases already
actively prioritising sustainability issues
andshowing a willingness to improve
theirsustainability reporting in linewith
Syncona’s expectations.
Under our pillar of inspiring and
empowering our people, we have
continued to focus on attracting,
developing and retaining the best talent.
The team’s first PhD student intern from
the Windsor Fellowship programme has
had asuccessful placement within the
investment team for a six-month period,
whilst progress has also been made with
Syncona’s other diversity and inclusion
initiative partners, FastFutures and
Generating Genius.
It is fundamental that our business
operates in a responsible and ethical
manner. We have reported for the first
timein line with the recommendations of
TCFD to illustrate our commitment to a
strong sustainability reporting framework.
Sustainability
OUR SUSTAINABILITY PILLARS
Syncona Limited Annual report and accounts 202258
Pillar FY2021/2 sustainability priorities Progress in the year FY2022/3 focus Alignment to SDGs
01
Pillar
Our social
impact
Continue to support the vibrant life
sciences ecosystem in the UK
0.35% of NAV donated to charity every
year
19
Clinical trial sites
across the UK within
Syncona portfolio
3
New charities
supported by The
Syncona Foundation
900+
People employed
bySyncona and its
portfolio companies
inthe UK
£4.2m
Donated to charity
Work towards patient impact through founding, building
and funding our portfolio companies to develop
transformational treatments
Donation of 0.35% of NAV to The Syncona Foundation
Read more:
Page 60
02
Pillar
Responsible
investor and
partner
Roll-out Responsible Investment Policy
Work with our portfolio companies to
develop net zero strategies
Become a signatory of the UN PRI
5
Portfolio companies
intending to sign up
toEuropean Biotech
Social pact or US
equivalent
11
Portfolio companies
engaged in roll-out
ofResponsible
Investment Policy
9
Portfolio companies
reporting Scope 1 to 3
carbon emissions to
Syncona
UN PRI
Became a signatory
Targeting improvements in sustainability reporting
fromportfolio companies against 2022 base levels
Continue to ensure sustainability is an active part
ofourinvestment decision-making and portfolio
companymonitoring
Read more:
Page 62
03
Pillar
Inspiring and
empowering
our people
Take concrete actions to progress
diversity and inclusion agenda at Syncona
Progress new Windsor Fellowship,
Generating Genius and FastFutures
partnerships
First
Windsor Fellowship
intern completes
six-month placement
Majority
Female Syncona
Limited Board
52%
Female representation
onSyncona Investment
Management Limited
team
Further develop Syncona’s diversity and inclusion strategy
Continue to maximise engagement with Windsor
Fellowship, Generating Genius and FastFutures
partnerships, focusing on tackling the underrepresentation
of black minorities within Science, Technology, Engineering
and Maths (STEM) careers in the UK
Read more:
Page 64
04
Pillar
Responsible
and ethical
business
Report in line with the recommendations
of TCFD for the first time
Begin development of a wider Scope 3
emissions strategy, incorporating portfolio
company emissions
First
TCFD disclosure
Net zero
Aspiration on a full
portfolio basis by 2050
1.7
Gross tCO
2
e per full
time employee*
Target publishing a full carbon emissions portfolio footprint
in FY2022/3 Annual Report
Intention to sign up to Net Zero Asset Managers (NZAM)
initiative
Publish first UN PRI questionnaire
Read more:
Page 66
Read more online:
www.synconaltd.com
* Using market-based method across Scope 1, 2 and
limited Scope 3 emissions
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
59
We look for technology which
candeliver dramatic efficacy and
cancredibly betaken to the point
ofregulatory approval, and we
buildcompanies around this
exceptional science.
We aim to develop transformational
treatments and have already seen the
impact we can make to patients’ lives.
Wetook Blue Earth Diagnostics’ lead
product, Axumin®, a diagnostic imaging
agent for prostate cancer, through clinical
trials to market, before selling the business
to Bracco Imaging. This product has now
benefitted over 165,000 patients since its
launch in 2016.
In our portfolio of 11 companies, we
nowhave four at clinical stage. Our most
clinically advanced company, Autolus, is
expected to report clinical data from its
pivotal trial of AUTO1 (obe-cel) in relapsed/
refractory adult acute lymphoblastic
leukaemia (ALL) in the second half of this
calendar year. Obe-cel has the potential to
be a transformational therapy in adult ALL
patients, and further detail on this can be
found in the following case study.
Acute lymphoblastic leukaemia (ALL)
is a severe form of blood cancer
affecting white blood cells called
lymphocytes. ALL usually develops
rapidly, over days or weeks, and can
affect children and adults. Without any
treatment, this aggressive type of
leukaemia is fatal.
The standard treatment for ALL can
includechemotherapy, radiation therapy,
and targeted therapies such as monoclonal
antibodies. Unfortunately, the prognosis
based on current treatments for adults with
ALL is still extremely poor. The median
overall survival is less than one year in
therelapsed/refractory adult ALL setting.
Autolus is focused on developing obe-cel,
an innovative and potentially transformational
treatment for adult ALL. Obe-cel is a CAR-T
cell therapy. It involves collecting a patient’s
own white blood cells, called T cells, and
programming them to destroy cancer. This
means every treatment is customised for
each individual patient.
There are other CAR-T products approved
for use in cancer, including ALL, but there
are some challenges that need addressing,
particularly around the longevity of the
treatment and debilitating side effects
forpatients.
Obe-cel has been designed to have a
long-lasting, potentially curative effect,
alongside a more favourable safety profile.
Based on the positive clinical data to date,
it has the potential to address a significant
unmet medical need by making a real
difference to the lives of patients suffering
with ALL.
Portfolio case study
Autolus Therapeutics: addressing a severe
form ofleukaemia
Sustainability
Delivering transformational
treatments to patients
in areas of high unmet need
Our social impact
We aim to develop
transformational
treatments and have
already seen the
impact we can make
to patients’ lives”
Syncona Limited Annual report and accounts 202260
New cases of adult ALL
diagnosed every year in
the US and EU
8,400
patients
*
Estimated addressable adult
ALL patients in relapsed
refractory setting
3,000
patients
*
* SEER and EUCAN estimates (respectively)
for US and EU
Founded by Syncona in 2019,
Quell is investigating the use of
T-regulatory (Treg) cells to control
unwanted immune activity.
If successful, Quell’s programmes will
enable the treatment of patients with
autoimmune and inflammatory disease, as
well as potentially prevent organ rejection
without the need to take immunosuppressive
medication. Its group of scientific
co-founders include academics from
University College London and King’s
College London, as well as Hannover
Medical School.
Since its foundation, Quell has continued
to grow its footprint in the UK. It moved
into its headquarters in west London in
March 2020, and in September 2021
announced that it would be significantly
expanding its manufacturing capabilities
and capacity at the Cell and Gene Therapy
(CGT) Catapult in Stevenage, with three
Syncona portfolio companies now leasing
space at this facility. This added a second
Good Manufacturing Practice (GMP)
facility to Quell’s operational footprint,
providing the company with the capacity
to develop and scale production of its
therapies for clinical trials. The company’s
lead therapy, investigating the use of Tregs
in preventing organ rejection in liver
transplant patients, is on course to enter
the clinic in 2022 and is enrolling patients
at four sites across the UK.
Quell employs 110 employees in the UK in
a variety of scientific and operational roles.
Its presence in the UK provides the country
with a global leader in Tregs, with Quell set
to become one of the first companies to
enter the clinic with this technology. Quell
has also been able to benefit from the UK’s
position as a life science leader, through
both its links to the CGT Catapult and from
the investment from British Patient Capital’s
Future Fund: Breakthrough into Quell’s
Series B financing. As it continues to grow
and potentially broaden its clinical pipeline,
Quell will continue to benefit from, and
contribute towards, UK life sciences,
underlining the economic benefits of a
thriving early stage biotech industry.
Syncona is fortunate to benefit from the
outstanding life science research found within
the UK and Europe, where we have strong
links to academics at many of the world’s
leading universities. These relationships are
often where we take the initial step in
developing an investment opportunity,
working with academic founders to
understand the potential of their research
and building this into a viable business.
Once founded, our companies continue to
benefit from the strength of the life science
infrastructure in the UK and Europe, as they
seek to build out their manufacturing
capabilities and carry out clinical trials with
the goal of eventually delivering marketed
products to patients.
Syncona and our portfolio companies are
able to contribute directly to the life science
ecosystem of the countries in which they
are based. These companies conduct
clinical trials, employ and train staff, invest
ininfrastructure, and drive innovation,
benefitting their local economies and
populations over the long term.
Building globally competitive
businesses leveraging UK/
European scientific research
Portfolio case study
Quell Therapeutics: a UK biotech innovating
thefield of T-regulatory cell therapies
The Syncona Foundation
The Syncona Foundation was set up a
decade ago with charitable objectives
focusing on the prevention, treatment,
cure and ultimately eradication of
cancer and other diseases, as well as
other charitable activities.
Each year, Syncona provides a
significant level of philanthropic funding
to the two charities it supports, The
Syncona Foundation and The Institute
of Cancer Research (ICR).
Since 2012, Syncona has donated
£40.6 million to charity.
This is the final year in which the two
charities will be funded separately,
withdonations to the ICR from 2023
onwards to be made through the
Foundation. Focusing all our donations
via the Foundation will enable a more
holistic view of the charities that can
benefit from our support and will
maximise the impact of our funding.
A case study outlining the support
provided to the ICR over the last
decade by Syncona and The
SynconaFoundation can be found
onpage 19 of Syncona’s Sustainability
Report 2022.
Number of Quell UK employees
110
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
61
S
yncona developed and published its
Responsible Investment Policy in
2021 and since then the Syncona
team has continued to make good progress
in embedding this into our investment
process and the management of our
portfolio companies.
We continue to believe that engaging
ourportfolio companies on sustainability
issues ensures that Syncona is fulfilling its
obligations as a responsible investor, whilst
also contributing to business performance,
given that sustainability factors can be a
significant driver of risk and value within
ourinvestments. We look to embed
sustainability throughout our investment
process and through the stewardship of
ourcompanies. This allows the objectives
within Syncona’s Sustainability Policy to be
effectively implemented, positively impacting
portfolio companies, the patients they seek
to ultimately treat and the communities
within which they operate.
Embedding our Responsible
Investment Policy
Throughout the year, Syncona’s investment
team, supported by the Sustainability
Committee, has worked closely with our
portfolio companies to implement our
Responsible Investment Policy. We work
hand in hand with our portfolio companies,
and this includes having a partnership
approach to sustainability. We believe it is
important that our companies develop their
own sustainability priorities most suited to
their specific visions and corporate activities.
The output of our ongoing discussions with
our portfolio has been very positive, with
companies in many cases already actively
prioritising sustainability issues across their
own operations and showing a willingness
to improve their reporting in line with
Syncona’s expectations. Moving forward,
the investment team will continue to
engagewith the portfolio to understand
howcompanies are continuing to pursue
their sustainability priorities and will track
progress on an ongoing basis.
The investment team now reports on
portfolio company progress across the six
pillars of Syncona’s Responsible Investment
Policy on a bi-annual basis at Syncona’s
quarterly business reviews. These reviews
are attended by the Syncona team, as well
as members of the Syncona Limited Board.
We believe that ensuring our portfolio
companies are operating as good
corporatecitizens helps to support their
own longer-term interests as businesses,
whilst also helping to unlock value creation
across the Syncona portfolio.
The Sustainability Committee has also
worked with the investment team during the
year to ensure that sustainability factors are
considered at the point of investment, with
these now noted in the initial screen of
investments, investment memorandums
Sustainability
Syncona believes that robust and effective
compliance and governance is important
for any successful business, and that we
and our portfolio companies should clearly
set out conduct expectations for our
employees and others that we work with.
Syncona is committed to achieving broad
patient access to medicines. We support
our companies in considering and
designing strategies to address larger
patient groups as the company
progresses through the drug development
cycle and the therapy has been de-risked.
Syncona is committed to high standards
of ethical care across all aspects of our
business, including research activity. We
acknowledge that, at this time, research
involving animals remains an essential tool
in developing new technologies, whilst
also expecting our portfolio companies to
have high standards in this area.
1. Compliance
and governance
2. Access to medicines
3. Animal welfare
Sustainability within the Syncona portfolio
Does the company have an Anti-fraud,
Bribery and Corruption Policy?
Have you signed up to the European
Biotech Social pact or US equivalent?
Has your company committed to the 3Rs
principles?
Responsible
investor and partner
Yes 6
Not yet reporting 5
Yes 6
Not yet reporting 5
Intend to in next
12 months 5
Not yet reporting 6
Syncona Limited Annual report and accounts 202262
Our entire approach to
building companies centres
on partnering with founders
and academic institutions,
and rolling up our sleeves
towork alongside them
day-to-day. When it comes to
rolling out our sustainability
policies, we think about them
in exactly the same way”
Gonzalo Garcia
Syncona Partner
We expect the drug development process
at our portfolio companies to be managed
prudently and in line with accepted
standards, to minimise risks as far as
practical, recognising the huge
opportunity that new treatments can
bring, particularly in indications with high
unmet need.
Syncona is committed to being an
advocate for diversity and inclusion in the
scientific and investment communities.
We expect our companies to build
strong cultures grounded in diversity
andinclusivity.
Syncona is committed to operating its
business in an environmentally responsible
and sustainable manner. It seeks to
engage proactively with its portfolio
companies as they develop their own
environmental strategies.
4. Good R&D practice 5. Diversity & inclusion 6. Environment
seeking investment approval, and term
sheets. In line with the Responsible
Investment Policy, sustainability factors
arealso considered if we choose to exit a
business, and were noted at the time of the
decision to sell Gyroscope to Novartis in
December 2021. Further information on this
process can be seen in the box on the right.
Ongoing commitment to responsible
investment
Members of the investment team, supported
by the Sustainability Committee, work closely
with portfolio companies to make them
aware of the six core pillars set out in
Syncona’s Responsible Investment Policy.
Whilst the policy has been communicated to
all 11 Syncona portfolio companies, we have
taken into account the developmental stage
of each company, current circumstances
within that particular business, and the timing
of the roll-out within Syncona’s financial year
when setting an expectation for immediate
action in implementing elements of the policy.
We have asked our portfolio companies to
track their progress by reporting against a
collection of sustainability KPIs. Six portfolio
companies have responded this year, and
we expect to take a step forward in this
regard in the 2022/3 financial year.
Chris Hollowood
Chief Investment Officer,
Syncona Investment Management Ltd
Gyroscope: Sustainability
factors at the point of exit
Sustainability considerations were
included in the decision-making
process during the sale of Gyroscope
to Novartis, which was completed
inthe financial year. For example,
giventhe strong gene therapy and
ophthalmology franchise at Novartis,
thetransaction will potentially improve
the speed of approval for Gyroscope’s
lead programme in geographic atrophy,
an advanced form of dry age-related
macular degeneration, making it
available to patients more quickly.
Thisfollowed the provision set out
within the Syncona Responsible
Investment Policy for sustainability
factors to be considered at the point
ofexit, with Syncona also identifying
nooverarching ethical issues with the
Novartis proposal when it was made.
Do you have established Standard
Operating Procedures where necessary,
and are all relevant employees
appropriately trained in these procedures
and related policies?
Does your company have a diversity and
inclusion policy?
Do you report Scope 1 to 3 emissions to
Syncona?
Yes 5
Not yet reporting 6
Yes 9
Not yet reporting 2
Yes 2
Intend to in next
12 months 3
Not yet reporting 6
Key to pie charts
Yes – when a portfolio company is already
reporting in line with the requirement e.g. via a
policy already being in place.
Intend to in next 12 months – when the
requirement is not being reported against
currently, but the company intends to do so in
the next 12 months.
Not yet reporting – when the portfolio
company has not provided a response to
Syncona on this reporting requirement in this
financial year.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
63
I
have thoroughly enjoyed my first year at
Syncona and have been impressed by
the culture of the organisation. The team
are open and honest in their discussions,
and there are strong relationships that
existbetween team members at every
levelof Syncona.
I have spent much of the last year working
with Syncona’s leadership team to identify
and implement the optimum organisational
structure for the next stage of Syncona’s
growth trajectory. The team has been
incredibly open to the process, recognising
the clear benefits that evolving our way of
thinking at an operational level can have for
business performance. As part of this work,
we have implemented a Corporate Team to
act as the operational leadership team for
Syncona. This forum allows senior leaders
toalign on key issues at a corporate level,
toensure ongoing objectives are being
delivered against.
We have also taken an active approach
todeveloping our diversity and inclusion
(D&I) agenda during the year. We have
progressed our D&I initiatives with the
Windsor Fellowship, Generating Genius and
FastFutures, whilst also initiating a project to
refresh and update our family-friendly
policies, specifically maternity and paternity
leave. The new Corporate Team includes
two female leaders, including myself, and I
remain committed to ensuring that Syncona
has the appropriate structures in place to
attract and retain female talent at all levels
ofthe business.
Moving forward, I am very focused on the
benefits that Syncona portfolio companies
can draw from relationships with operational
experts at Syncona. We currently have a
number of team members working in
operational roles at portfolio companies,
and believe this is a model which can help
our portfolio companies as they move
through their development cycles.
We have made good progress in the year,
ensuring our people strategy aligns with
thestrategic priorities of Syncona and its
portfolio. I am excited by the prospect of
continuing to develop and empower our
people and ensuring Syncona is an inclusive
and inspiring place to work.
Fiona Langton-Smith
Chief Human Resources Officer, Syncona
Investment Management Limited
Sustainability
Inspiring and empowering
our people
EMPLOYEE WELFARE AND WELLBEING
Career development
Our structure lends itself to small teams,
with junior staff benefitting from
on-the-job training alongside significant
exposure to the senior team and senior
industry leaders.
Formal benefits
Syncona team members benefit from a
range of formal benefits, including life
assurance, income protection, pension
contributions, private medical insurance
and family-friendly benefits.
Flexible working
We strive to have flexible working policies
that meet the needs of our people and
support our business. Syncona follows
ahybrid working model, with team
members asked to be in the office two or
three days a week, depending on their
department and business projects.
Mental health and employee
assistance
We place increasing importance on
mental wellbeing and have been acutely
aware of the strains on our people during
the COVID-19 pandemic, which has
continued to have an impact on the team
through the financial year. Along with
support structures which are in place at
Syncona, team members have access to
professional support, as needed, from
our private medical insurance providers.
Team engagement
Syncona team members are engaged on
a range of business initiatives. This has
been particularly true this year, where
sub-groups across the investment and
broader team have worked together on
anumber of important strategic initiatives.
Whilst we have looked to introduce new
elements of structure to the organisation
during the year to formalise some
processes, this has been done so in a
way which does not unduly impact our
openness as an organisation, which is
important for our employees and key to
our ongoing success. Board members,
including the Chair, also regularly interact
with members of the Syncona team.
Syncona Limited Annual report and accounts 202264
Female 4
Male 3
Gender diversity at Syncona
Diversity of Syncona Limited Board
(31 March 2022)
Female 0
Male 3
Diversity of Syncona Investment
Management Limited Board (31 March 2022)
Female 2
Male 5
Diversity of Syncona Investment Management
Limited Corporate Team (31 March 2022)
Female 15
Male 14
Diversity of Syncona Investment Management
Limited team (31 March 2022)
Gender diversity at Syncona
Developing our
diversity agenda
Syncona has continued to develop its three D&I
initiatives during the year.
Read more:
Sustainability Report 2022
www.synconaltd.com
During the financial year the first five students
supported by the David Twumasi Syncona
Foundation Scholarship began their studies at
university. The scholarship covers tuition fees as
wellas most living expenses for the recipients, all of
whom are studying a STEM subject. The programme
is specifically targeted at low-income students, and
The Syncona Foundation will provide over £300,000
in funding to Generating Genius over the length of
the programme.
This financial year marked the first year of Syncona’s
partnership with FastFutures. Aimed at 18-22
year-olds, the 12-week intensive FastFutures
programme aims to provide young people with
thepractical skills, network and confidence to take
the first step in their careers. Syncona provided a
donation of £25,000 to FastFutures in FY2021/2,
and 13 Syncona employees also provided
mentorship to 30 participants in the programme.
The Windsor Fellowship aims to design and deliver
personal development and leadership programmes,
with the goal of supporting minority communities as
they pursue academic journeys within STEM.
Duringthe year Syncona welcomed its first Windsor
Fellowship intern, with scholars joining Syncona for
asix-month placement after their third year as a PhD
candidate. Syncona also started funding its first
Windsor Fellowship PhD student, who began their
studies in October 2021.
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Syncona Limited Annual report and accounts 2022
65
Syncona’s D&I initiatives
Standards of conduct and behaviour
Syncona has in place a robust set of
policies, internal controls and management
processes covering all areas of our
business. Many of these primarily apply
toSIML, the Investment Manager which is
regulated by the FCA. SIML is subject to the
FCA’s compliance requirements, including
the Conduct Rules that apply to employees.
Training is provided to all employees each
year, and to new joiners. All employees must
confirm in writing every six months that they
have complied with the policies.
Key policies
Anti-fraud, Bribery and
Corruption Policy
Syncona adopts a zero tolerance approach
to fraud and corruption. All employees,
contractors and those providing services
foror on behalf of Syncona are required
toact at all times with integrity and to
safeguard the resources for which they are
responsible. The business is committed to
the promotion of an anti-fraud and
corruption culture.
Political and charitable contributions
All political or charitable contributions by
Syncona must be approved by the Syncona
Board. As part of this, it is important to
ensure there is no potential conflict of interest
or other relationships that may be perceived
as being affected by the contributions.
Gifts and inducements
The Gifts and Hospitality Policy provides
that employees may not offer or accept
giftsor hospitality which seek to influence,
support or reward any business act or are
provided in consideration of any potential
further business.
Financial crime and anti-money
laundering
SIML has anti-money laundering procedures
in place. As SIML has a single, listed client
in Syncona, the main focus of the controls is
on carrying out appropriate due diligence on
the investee company for new investments
and any key individuals with significant
control or influence.
Conflicts of interest
SIML maintains a Conflicts of Interest Policy
to support employees in identifying any
actual or potential conflicts and managing
them to minimise the risk that a conflict
could compromise or be perceived to
compromise the judgement of the parties.
Inside information
An Inside Information Policy is maintained
and each member of the Syncona team
isresponsible for notifying any relevant
information that they become aware of.
Thepolicy is supplemented by policies
relating to personal account dealing.
Syncona policies and practices
Responsible and
ethical business
Sustainability
Syncona’s Sustainability Policy establishes
the foundation for integrating environmental,
social and governance risks and
opportunities into our business. Syncona also
has in place a Climate Ambition Statement.
Modern slavery and ethical
procurement
Syncona has zero tolerance for modern
slavery and human trafficking. Syncona
publishes an annual Modern Slavery
Statement to further this goal and has
policies in place to tackle modern slavery
and human trafficking throughout its supply
chain, recognising that the nature of our
business and suppliers results in a relatively
low risk of modern slavery issues arising.
Syncona’s approach to modern slavery
andhuman trafficking risks in our supply
chain sits within our wider approach to
procurement, where ethical considerations
such as carbon footprint and regulatory
compliance also form a key part of due
diligence and ongoing monitoring.
Syncona also aims to address any modern
slavery and human trafficking risk in the
Syncona portfolio companies through our
responsible investment process. For further
information on the Responsible Investment
Policy, please see pages 62-63.
Sustainability
Syncona Limited Annual report and accounts 202266
Health and safety
The team is principally office-based, based
ata site in London, UK and a site in Basel,
Switzerland, and engages in low-risk
activities. As an employer, SIML is committed
to maintaining and improving effective health
and safety management throughout the
business, in line with applicable legislation.
During the year to 31 March 2022 there were
no reportable accidents.
Data protection and information
security
Syncona maintains a Data Protection Policy
in line with legal requirements. The business
is committed to protecting the confidentiality
and integrity of personal data that we hold
and this is a key responsibility that we take
seriously at all times. The policy is
supported by appropriate privacy notices
that are made available to employees and
other third parties whose information we
hold. Syncona does not expect to hold
significant amounts of personal data.
Syncona also maintains an Information
Security Policy, which sets out our
commitment to maintaining the security and
confidentiality of any sensitive/confidential
information, including any personal data,
and only using that information for the
appropriate purposes.
Approach to taxation
Syncona’s approach to taxation is built
onthe following principles:
– As a collective investment scheme,
Syncona seeks to prevent investors
fromsuffering double taxation on their
investment returns, that is once at the
level of Syncona and then again in the
hands of the investors. In other words,
weaim for investors in Syncona to not
pay more tax than they would have
incurred if they had been able to invest
directly in Syncona’s underlying portfolio
of investments.
– Fee income arising from commercial
activity will be taxable in the jurisdiction in
which the managing or advising entity is
based. SIML is based in the UK and is
liable to pay corporation tax in the UK.
– To act lawfully and with integrity, including
complying with all statutory obligations
and disclosure requirements, and maintain
open and constructive relationships with
tax authorities worldwide.
– Where tax laws require interpretation
orwhere tax regulations or codes are
ambiguous or untested, Syncona takes
reasonable steps to determine their
applicability, including seeking tax advice
where necessary, and with due regard to
fair outcomes for our relevant stakeholders.
Whistleblowing
Syncona maintains a Whistleblowing Policy,
which is a key part of creating a working
environment that meets the highest standards
of openness and accountability. Employees
are encouraged to raise any concerns about
malpractice in the workplace at the earliest
possible stage. Concerns should normally
be raised with an employee’s line manager.
Where this is not appropriate the issue may
be referred to the Compliance Officer or any
of the senior members of the team. Alternatively,
any concerns can be raised with the Chair
of the Syncona Audit Committee. Our policies
are clear that there should be no fear of
reprisal or victimisation or harassment for
whistleblowing. There were no incidents
ofwhistleblowing in the year.
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Syncona Limited Annual report and accounts 2022
67
This section includes ourStreamlined
Energy and Carbon Reporting (SECR).
Although the Company is not subject
to the laws of England and Wales, its
reporting has been prepared in line
with the relevant English legislation as
set out below. The reporting period is
Syncona’s financial year, the 12 months
to 31March 2022.
Syncona’s climate ambition statement
Syncona understands that climate change
represents a systemic risk to our societies
and economies.
We agree with the signatories to the 2015
Paris Agreement that our collective approach
needs to limit climate change to within a 1.5
degree Celsius global temperature increase
by the end of the 21st century. This means
reaching a point where there are net zero
emissions associated with human activity
released into the atmosphere by 2050 at
thelatest, as advised by scientific advice.
Our footprint
Given the relatively small nature of our
operations, with one primary office
locationand around 30 employees, our
environmental impacts are relatively small.
Our clearest direct impact (Scope 1 and 2)
comes from the energy we use in our
headquarters, of which the electricity is 100
per cent powered by renewable wind, solar
and hydro asset sources.
Our office space also has a zero to landfill
waste policy (Scope 3).
Methodology for SECR reporting
We have employed the services of a
specialist adviser, Avieco, part of Accenture,
to quantify the greenhouse gas (GHG)
emissions associated with the Company’s
emissions for FY2021/2.
Syncona’s FY2021/2 SECR location-based
footprint is equivalent to 65.0 tCO
2
e, with
the largest portion being made up of
emissions relating to business travel via air,
taxi and rail at 45.3 tCO
2
e. Syncona’s
market-based footprint, which takes into
account the green energy used by its head
office, amounts to 52.2 tCO
2
e.
The methodology used to calculate the
GHG emissions is in accordance with the
requirements of the following standards:
– World Resources Institute (WRI)
Greenhouse Gas (GHG) Protocol
(revisedversion)
– Defra’s Environmental Reporting
Guidelines: Including Streamlined Energy
and Carbon Reporting requirements
(March 2019)
Avieco has calculated our emissions
following an operational control approach
todefining our organisational boundary
andour calculated GHG emissions from
business activities falling within the reporting
period of April 2021 to March 2022. We do
not classify portfolio company emissions as
being within our organisational boundary.
Whilst Avieco have endeavoured to obtain
accurate and complete data wherever
possible, where there have been data gaps,
they have used reasonable estimations such
as annualisation of actual data, use of
expenditure data as a proxy and typical
office consumption benchmarks where data
was not available for the preparation of this
report. The emissions reported by Syncona
are UK-based only.
Total energy use
The total energy use for the Company for
FY2021/2 was 59,717 kWh.
Intensity ratio
As well as reporting its absolute emissions,
the Company also follows the SECR
requirement of reporting its emissions
through the publishing of intensity metrics.
In doing so, it reports metrics of tonnes of
CO
2
equivalent per employee and tonnes of
CO
2
equivalent per square foot of occupied
floor area. These are the most appropriate
metrics given that the majority of emissions
result from the operations of Syncona
Investment Management Limited and the
day-to-day activities of its employees.
Minimising our
environmentalimpact
Summary of Syncona Scope 1 to 3 emissions broken down by Scope
*
2022
(Location-based emissions of Syncona) 2022 (Market-based
**
emissions of Syncona)
Scope 1 0.4
Scope 2 11.8
Scope 3 52.8
Scope 1 0.4
Scope 2 0.0
Scope 3 51.8
* Tonnes of CO
2
equivalent
** Market-based emissions account for the type of electricity that a company purchases. In the case of Syncona, market-based
emissions are lower than location-based because it uses a green electricity provider at its headquarters.
Sustainability
Syncona Limited Annual report and accounts 202268
The intensity ratio for occupied space has
been calculated using Scope 1 and Scope
2 data only as these are the emissions
associated with the office space. The
employee intensity metric has been
calculated from the emissions for Scope 1,
2 and 3 to give a ratio per employee
covering all of Syncona’s activities.
For FY2021/2 the intensity metrics were:
Location-based method:
– 2.1 tonnes of CO
2
e per employee
– 0.010 tonnes of CO
2
e per square foot
ofoccupied space
Market-based method:
– 1.7 tonnes of CO
2
e per employee
– 0.008 tonnes of CO
2
e per square foot
ofoccupied space
Energy efficiency initiatives
During the financial year, Syncona
implemented new guidance for business
travel by its team to be as carbon efficient
as possible. This included incorporating the
following guiding principles into Syncona’s
travel policy:
– all flight travel to be carefully considered,
encouraging employees to substitute air
travel with rail travel where possible;
– Syncona’s business travel provider
includes associated emissions data for
each mode of transport and this should
be a consideration for the travel booker;
– considering practical arrangements for
meetings, for example arranging several
meetings within one trip, holding
meetings by video call or meeting
atamore closely located office;
– clarity for employees that there are higher
emissions associated with business-class
and long-haul travel; and
– encouraging employees to use hotels and
taxi firms with lower carbon emissions.
Syncona’s travel policy was rolled out during
the financial year, with employees responding
positively to its aims and objectives.
This follows energy efficiency actions taken
in the previous year, including an air quality
and temperature survey at the Syncona
head office, which resulted in changes being
made to the local control systems.
Portfolio company emissions
During the financial year, Syncona initiated
aproject with its privately held portfolio
companies in order to better understand
their individual carbon footprints and
increase awareness at the companies of
environmental issues. With the assistance of
an environmental consultancy, six portfolio
companies across the US, UK and Europe
initiated emissions reporting on a Scope 1
to 3 basis for the first time. Syncona’s three
listed portfolio companies, Freeline, Autolus
and Achilles, are already required to report
their Scope 1 to 3 emissions as quoted
companies incorporated in the UK and
listed on NASDAQ.
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Syncona Limited Annual report and accounts 2022
69
Syncona and net zero
Syncona conducted a review during the
year which took into account changing best
practice in the field of net zero target setting
as well as the outputs from its project
working with portfolio companies to assess
their carbon emission footprints. Following
this review, Syncona concluded that the
greatest contribution it can make to
minimising the carbon emissions found
within its value chain can be made via its
work engaging with its portfolio companies
to limit their carbon emissions. Syncona is
therefore setting an aspiration to become
net zero throughout its value chain (including
portfolio companies) by 2050, aligning the
Company and its portfolio of investments
with the 2015 Paris Goals, which aim for
emissions related to human activity to be
net zero by 2050 at the latest.
Syncona will continue to review developing
guidance in the field as we work towards
net zero, recognising that methodologies
and best practice in working towards this
aspiration are undergoing a process of
change. Moving forward, Syncona intends
to actively engage with its portfolio
companies as they develop their own net
zero strategies, with a number of portfolio
companies already initiating reviews with the
aim of developing pathways to achieve net
zero by 2050.
Environmental plans for FY2022/3
In line with its approach to prioritise limiting
emissions within its portfolio in order to
achieve net zero throughout its value chain
(including portfolio companies) by 2050,
Syncona intends to take further steps in
FY2022/3 to move towards net zero on
afull portfolio basis. Syncona intends to
become a signatory to the NZAM initiative
and is also committed in its FY2022/3
reporting to publish its full portfolio carbon
footprint, incorporating emissions at
Syncona and within its portfolio. As part of
becoming a signatory to NZAM, Syncona
intends to initiate work with the goal of
publishing interim carbon emissions
targetsfor 2030 for a proportion of
itsassets under management.
Offsetting our carbonemissions
During the financial year, Syncona initiated a programme of purchasing
carbon credits in order to offset the direct emissions resulting from the
Company’s operations. It has purchased emissions for the FY2019/20
and FY2020/1 reporting years, purchasing offsets from the Maísa REDD+
Project. These carbon credits are registered with Verra under their Verified
Carbon Standard (VCS) and Climate, Community and Biodiversity (CCB)
standards, validated by the Rainforest Alliance. Moving forward, we will
continue to review best practice in using carbon credits to align with our
net zero aspiration.
Sustainability
Syncona Limited Annual report and accounts 202270
Emissions source 2021 (tCO
2
e) 2022 (tCO
2
e)
Scope 1 Natural gas 2.2 0.4
Total Scope 1 2.2 0.4
Scope 2 Electricity (Location-based) 10.3 11.8
Electricity (Market-based)
2
0.0 0.0
Total Scope 2 10.3 11.8
Scope 3 Fuel and energy related activity (T&D, WTT)
3
(LB) 3.1 4.4
Fuel and energy related activity (T&D, WTT) (MB) 2.2 3.3
Employee cars 0.7 0.6
Employee commuting 0.6 2.4
Business travel via air, taxi, and rail 0.2 45.3
Paper 0.0 0.1
Waste 0.3 0.1
Water 0.2 0.04
Total Scope 3 (Location-based) 5.1 52.8
Total Scope 3 (Market-based) 4.2 51.8
Total Scope 1, 2, and 3 emissions (Location-based) 17.5 65.0
Total Scope 1, 2, and 3 emissions (Market-based) 6.3 52.2
Total Energy Usage (kWh)
4
61,896 59,717
Intensity tCO
2
e per square foot (Location-based)
5
0.002 0.010
tCO
2
e per square foot (Market-based)
5
0.0003 0.008
tCO
2
e per FTE (Location-based) 0.6 2.1
tCO
2
e per FTE (Market-based) 0.2 1.7
Notes:
1 – Tonnes of CO
2
equivalent
2 – Market-based emissions account for the type of electricity that a company purchases. In the case of Syncona, market-based
emissions are lower than location-based because it uses a green electricity provider at its headquarters
3 – T&D = Transmission and Distribution. WTT = Well to Tank
4 – Includes electricity, natural gas and employee cars
5 – Calculated using only Scope 1 and 2 data as these emissions are associated with office space
GHG emissions (tCO
2
e)
1
and associated
energy consumption (kWh) for FY2021/2
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71
Portfolio companies
– Implement climate-related policies and procedures in line with
Synconaguidelines, values and expectations; and
– Report to SIML on any material climate-related issues.
Syncona team
– Oversees and manages the implementation of climate-related policies
and procedures in portfolio companies; and
– Assesses and manages any climate-related issues of the
portfoliocompanies.
Syncona Ltd
– Approves climate-related policies;
– Considers, monitors and oversees the Syncona team’s management of
climate-related risks;
– Publishes Scope 1 to 3 emissions; and
– Reports against TCFD.
Climate-related financial
disclosures report
TCFD report
Our approach to climate-related financial disclosures
We understand that climate change represents a
systemic risk to our societies and economies. We agree
with the signatories to the 2015 Paris Agreement that
our collective approach needs to limit climate change to
within a 1.5 degree Celsius global temperature increase
by the end of the 21st century. This means reaching a
point where there are net zero emissions associated with
human activity released into the atmosphere by 2050 at
the latest, as advised by the latest scientific advice.
We found and build companies to deliver
transformational treatments to patients in areas of high
unmet need. As such, we indirectly bear the potential
transition andphysical risks to which the portfolio
companies and other investments are exposed. In
addition, we also benefit the most from any potential
opportunities whichare associated with the transition
toalow-carbon economy that the portfolio companies
are able to take advantage of.
We believe that our business, and the portfolio
companies in which we invest, are not materially
exposed to climate change and that neither the risks
noropportunities (individually or collectively) materially
impactour strategy or viability, or financial results,
eitherin the short or longer term. However, we remain
convinced that it is important for everyone to contribute
to addressing the challenges of climate change. We have
therefore chosen to address the climate-related issues in
our business within our wider sustainability framework.
Although the Company is not required to provide a
TCFD disclosure as the legislation does not currently
apply to it, we are voluntarily providing disclosures
consistent with the recommended disclosures of the
Task Force on Climate-related Financial Disclosures
toillustrate our commitment to climate-related issues
giventheir increasing importance to ourstakeholders.
Plans for FY2022/3
– Include full carbon footprint reporting incorporating
bothSyncona operations and our portfolio in our
AnnualReport 2023.
– Intention to become a signatory to the Net Zero Asset
Managers (NZAM) initiative and adopt the NZAM
commitments which are available on their website.
– Progress our aspiration to be net zero throughout our full
value chain (including our portfolio companies) by 2050.
We are determined to play our small part to
reduce our emissions to net zero, and aspire
to achieve this in advance of 2050 thereby
supporting the 2015 Paris Agreement”
Melanie Gee
Chair, Syncona Ltd
Syncona Limited Annual report and accounts 202272
Governance
Governance of climate-related issues is addressed within our wider framework for governance of sustainability issues, as set out below.
Within the Syncona team, the Sustainability Committee acts as a cross-function group to coordinate the implementation of our
sustainability policies, horizon-scan for sustainability developments or changes in risks, and support and advise the business on
sustainability issues, including climate-related issues. A key focus for the Sustainability Committee this year has been to carry out
further work on understanding our climate-related risks and opportunities under a number of scenarios (on which see overleaf) and
proposing our climate-related targets.
The Sustainability Committee is also responsible for coordinating reporting through the Corporate Team and onwards to the Board.
Regular reporting covers our progress against the commitments in our policy and targets and KPIs, including climate-related targets.
The Board also receives reports on the results of the climate scenario analysis carried out and the risks to the business.
This is the first year where we have collected Scope 1, 2 and limited Scope 3 emissions data from the majority of our portfolio
companies; we hope to have a fuller data set over the next year which will let us set further targets and measure progress.
Responsibilities
– Implements the Responsible
Investment Policy
– Assesses and manages sustainability
risks in the portfolio
Responsibilities
– Overall responsibility for
implementation of Sustainability
Policy
– Manages integration of Syncona
approach to sustainability
acrossportfolio
Responsibilities
– Advises on Sustainability Policy
– Identifies areas where business can
improve its approach
Syncona Limited Board Syncona Limited Audit Committee
– Approves Sustainability Policy and
Responsible Investment Policy
– Considers risks facing the Company
from sustainability issues as part of its
role in the risk management process
– Oversees implementation of the
Sustainability Policy
– Oversees monitoring of risks arising
from sustainability issues as part of the
wider process of monitoring of risk
management and internal controls
– Reviews scope and effectiveness
of internal controls and risk
management systems
– Reviews and assesses risks and
associated frameworks to
manage and mitigate such risks
Syncona management team
Investment CommitteeCorporate Team Sustainability Committee
Our governance framework for sustainability issues, including climate-related matters
Reports to (6-monthly) Reports to (annually)
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73
TCFD report
Strategy
This year we undertook a climate scenario analysis with support from Avieco, an external consulting firm, to consider the potential
impact that certain physical and transitional climate-related risks and opportunities could have on our business and portfolio
companies, in a range of different climate scenarios and on a short, medium and long-term time horizon. This work drew on support
across the business and from our portfolio companies.
Climate scenarios – to analyse potential impact we selected three climate scenarios from the Network for Greening the Financial
Systems: ‘Net Zero 2050’ (which assumes orderly progress towards net zero in 2050 and is aligned with the 2015 Paris Agreement
scenario of 1.5 degrees Celsius), ‘Divergent Net Zero’ (which also assumes that net zero is reached by 2050, but with a much less
orderly path to it and therefore higher transition costs), and ‘Current Policies’ (which assumes a 3 degrees Celsius or greater increase
in global temperatures from baseline). We believe that these scenarios reflect a core range of potential outcomes that allow us to
analyse impacts on our business.
Time horizons – for the purpose of this exercise, and acknowledging that climate-related issues tend to manifest themselves over
themedium to long term, we have characterised our short, medium and long-term time horizons as 0-5 years, 5-15 years and
15-30years respectively. These are reflective of the lifecycle of the portfolio companies that we invest in; company creation and drug
development can take between 10-15 years and a granted patent for a therapy could last for around 20 years.
Through the risk identification process we identified four potential risks and one potential opportunity for evaluation by the business.
We assessed the potential impact of physical risks taking account of physical locations of facilities and desktop analysis of supply
chains, combined with publicly available data on vulnerability of different locations/logistics routes, and of transition risks by analysing
internal data and publicly available data to look at the impact of sustainability factors on cost of capital. See below for further details
on these risks and opportunities.
As described above, our view is that neither the risks nor opportunities (individually or collectively) materially impact our strategy
orviability, or financial results, either in the short or longer term. Accordingly we do not consider there should be any impact to
ourfinancial results. However, we intend to keep the risks and opportunities under review.
Description of risk Description of risk
or opportunityor opportunity
Impact on our business Impact on our business
and our responseand our response
Scenario where this Scenario where this
has highest impacthas highest impact
Time Time
horizonhorizon
Extreme weather events (physical) – climate
change could disrupt portfolio company
manufacturing and other facilities, as a result of
storms, flooding etc.
Low impact given the relatively small footprint of
our portfolio companies, which are typically in
clinical development. However we can
recommend mitigation through site choice and
physical mitigation steps.
Current Policies Medium term
5 - 15 years
Logistics and supply chain disruption
(physical) – climate change could cause
chronic and acute upstream and downstream
disruption to portfolio companies using supply
chains and transport links as a result of rising
sea levels, hurricanes and other weather
events, particularly as they move towards larger
clinical trials and manufacturing products.
Low impact currently though may increase in
the future as companies develop. Mitigation
actions could include recommending that
climate-related risks are integrated into supply
chain management and resilience
assessments.
Current Policies Medium term
5 - 15 years
Impact of not achieving net zero
(transitional) – there could be increased costs
or negative business impacts (such as
increased stewardship from investors or voting
action) associated with achieving net zero in a
short timeframe for both Syncona and its
portfolio companies.
Low impact given we are working towards a net
zero strategy and due to the nature of our
business and our portfolio companies.
Divergent Net Zero Short term
0 - 5 years
Increased cost of capital (transitional)
– Syncona may face increased costs of capital
or be constrained in raising capital in the public
market if investors perceive us as high risk from
a climate perspective.
Low impact due to our low emissions and our
wider sustainability focus. Mitigation could
include providing further sustainability data
reporting, aligned with emerging global
standards on sustainability issues, to seek to
maintain investor confidence in our approach to
these issues.
Divergent Net Zero Medium term
5 - 15 years
Opportunity to address new health issues
(products and services) – for example, climate
change may result in an increase in melanoma
and respiratory issues.
Low impact and not a current focus for our
business. We typically seek to build stand-
alone biotech companies that have the ability to
take products to market, and believe it is less
likely there will be relevant opportunities on this
business model. However we will keep this on
our radar.
Current Policies Medium term
5 - 15 years
Syncona Limited Annual report and accounts 202274
Risk management
As described above, during the year we carried out a risk identification process, supported by Avieco, external consultants, and
considering a range of potential scenarios, through which we identified four potential risks for evaluation by the business. None of
these risks (individually or collectively) were evaluated as materially impacting our strategy or viability, or financial results, either in the
short or longer term, and accordingly climate-related risks have not been included as a principal risk of the business.
Within the Syncona team, the Sustainability Committee takes a lead on horizon-scanning for sustainability developments or changes
in risks, including climate-related issues. This then acts as an input into the wider risk management process, both within the Syncona
team and at Board and Audit Committee. Our process for assessing and managing risk around climate-related issues is integrated
in, and forms part of, our wider risk management framework, which is set out in the risk management section of this Annual Report.
We expect that the Sustainability Committee will keep the scenario analysis under review with external support where this is helpful.
We will continue to monitor climate-related risks and should any of these become a material or principal risk, we will embed these
within our existing risk management processes.
The Investment Committee is responsible for considering sustainability issues in Syncona investment transactions. Once an
investment is made the investment team are responsible for encouraging the portfolio company to meet our sustainability
requirements, with reporting to the team’s quarterly review meeting where the entire investment team carries out an in-depth review
of all portfolio companies. Further details of how we engage with our portfolio companies is set out in the responsible investor and
partner section of our sustainability reporting, on pages 62-63.
The Corporate Team is responsible for considering sustainability issues within Syncona’s own business and operations.
Metrics & targets
At present we consider metrics and targets separately for Syncona’s own business and operations (that is, the Syncona team and
related activities) and the activities of our portfolio companies. We plan to include full carbon footprint reporting, incorporating both
Syncona operations and our portfolio, in our Annual Report 2023.
We collect and report annually on the Scope 1, 2 and limited Scope 3 emissions arising from Syncona’s own business and
operations (excluding portfolio companies), and these are set out on pages 68-71. Given the type of business we operate and
thesteps already taken, including adoption of 100% renewable electricity supply to our primary office, our emissions are already
relatively low.
At portfolio level, we expect each of our portfolio companies to report on their Scope 1 to 3 emissions and encourage them to adopt
a net zero strategy. We have provided assistance to a number of our portfolio companies this year by giving them access to an
environmental consultancy firm, who have helped these portfolio companies obtain relevant data to report on their Scope 1, 2 and
limited Scope 3 emissions as a first step.
We aspire to be net zero throughout our full value chain (including our portfolio companies) by 2050. Further details on our
aspirations and commitments are set out on pages 68-71. We also intend to become a signatory to the NZAM initiative during
FY2022/3 and intend to adopt the NZAM commitments which are detailed on their website.
The Company’s Strategic Report is set out on pages 1 to 75 and was approved by the
Board on 15 June 2022.
Melanie Gee
Chair, Syncona Ltd
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
75
Melanie Gee
Chair, Syncona Limited
Corporate
governance report
The Board remains
focused on ensuring that
governance supports
robust oversight of
strategy execution
bytheInvestment
Manager’steam”
Members of the Investment Manager’s team provide administrative
and other support to the Board, for example in preparing Board
materials and briefings and drafting of the Annual Report. The
Board also has access to the advice and services of an
Administrator and Company Secretary, Citco Fund Services
(Guernsey) Limited, who are responsible to the Board for ensuring
that Board procedures are followed, and that applicable rules and
regulations are complied with.
The page opposite gives further details of our governance structure.
Further details of matters reserved to the Board, and the role of the
Committees, Chair and Senior Independent Director, are available
on our website.
Role of the Board
The Company is a closed-ended investment company. The
Company has appointed its subsidiary SIML as Investment
Manager, and delegated responsibility for managing the investment
portfolio to it. The Board seeks to ensure the long-term sustainable
success of the Company and other Syncona Group companies; it
sets their purpose, investment policy (with shareholder agreement),
strategic objectives and risk appetite, ensures effective engagement
with stakeholders, and oversees and supports the Investment
Manager in its execution of the investment strategy. The Board is
not directly involved in management of the investment portfolio,
other than in respect of very large decisions (meaning decisions
relating to more than 10 per cent of the Company’s NAV) – see
Section 172 statement on page 9 for further information.
The Chair is responsible for ensuring that the Board upholds a high
standard of corporate governance and operates effectively and
efficiently, promoting a culture of openness and debate, facilitating
constructive relations and open contributions and exercising
effective stewardship over the Company’s activities in the interests
of shareholders and other stakeholders.
This corporate governance report, together with the
reports on pages 84 to 97, provides a summary of
thesystem of governance adopted by the Company in
the year ended 31 March 2022 and how the Company
has applied the principles and reported against the
provisions of the UK Corporate Governance Code.
Corporate governance report
Syncona Limited Annual report and accounts 202276
Further details of the work of each of the Committees are set out in the separate reports for each of them.
As the Board is entirely made up of independent Non-Executive Directors, we have not considered it necessary to appoint a
management committee. All members of the Board are considered independent and are responsible for reviewing the performance
of the Investment Manager in relation to the investment portfolio.
Committees of the Board
The Board
Investment Manager
Nomination and Governance Committee Audit Committee Remuneration Committee
Responsibilities
– Reviews Board composition and
oversees succession planning.
– Recommends Board re-elections,
and appointments to Board
committees.
– Oversees succession planning for
the CEO of the Investment Manager.
– Supports the Chair in carrying out
the Board evaluation each year.
– Reviews compliance with the UK
Corporate Governance Code.
Members
– Melanie Gee (Chair)
– Virginia Holmes
– Rob Hutchinson
– Gian Piero Reverberi
Responsibilities
– Oversees financial reporting and
advises the Board on whether the
Annual Report is fair, balanced and
understandable.
– Evaluates the appointment,
effectiveness and independence of
the auditors.
– Oversees portfolio valuation.
– Monitors risk management and
internal controls.
Members
– Rob Hutchinson (Chair)
– Virginia Holmes
– Kemal Malik
– Gian Piero Reverberi
Responsibilities
– Approves remuneration paid to the
Chair of the Board.
– Recommends the remuneration of
the Non-Executive Directors.
– Reviews the overall employee cost
ofthe Investment Manager and
approves the remuneration of its CEO.
– Oversees the incentive scheme that
provides long-term rewards to the
Investment Manager’s team.
Members
– Gian Piero Reverberi (Chair)
– Melanie Gee
– Virginia Holmes
– Rob Hutchinson
– Seeks to ensure the long-term sustainable success of
theCompany.
– Sets purpose, strategy and values and seeks to ensure
theculture of the business is aligned.
– Recommends the Investment Policy to shareholders.
– Oversees and supports the Investment Manager in its
execution of the investment strategy.
– Reviews portfolio performance considering the investment
policy and strategic objectives.
– Approves transactions with significant value or involving
borrowing.
– Robustly assesses the principal risks facing the Company
and its risk appetite, and defines the risk management
process.
– Ensures appropriate engagement with shareholders and
other stakeholders.
– Sets the Sustainability Policy for the business and monitors
the implementation of the policy.
– Management of Syncona’s investment portfolio in line with
the Investment Policy and the long-term sustainable
success of the Company.
– Ensuring the culture of the business is in accordance with
the purpose, Investment Policy, strategy and values
approved by the Board.
– Ensuring appropriate resources are available to manage the
investment portfolio and support the Syncona business.
– Reporting to the Board on portfolio performance.
– Monitoring risks and reporting to the Board; making
recommendations in relation to risk appetite.
– Implementing the risk and control processes and reporting
on these to the Board.
– Engaging with stakeholders in line with the approach
agreed by the Board.
– Implementing the Syncona Sustainability Policy.
– Ensuring compliance with regulatory obligations of an
investment manager.
Read more on pages 84 to 86
Read more on pages 87 to 91
Read more on pages 92 to 97
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
77
Corporate governance report
Board attendance 2021/2
The Board is satisfied that each of the Directors commits sufficient
time to the affairs of the Company to fulfil their duties and meet their
responsibilities. Attendance at the Board and Committee meetings
during the year was as shown in the table below.
Board
meetings
Audit
Committee
meetings
Nomination and
Governance
Committee
meetings
Remuneration
Committee
meetings
Melanie Gee 8/8 – 3/3 4/4
Julie Cherrington
1
1/1 – – –
Cristina Csimma
1
1/1 – – –
Thomas Henderson
2
1/1 – – –
Virginia Holmes 8/8 6/6 0/0 4/4
Rob Hutchinson 8/8 6/6 3/3 4/4
Nigel Keen
3
5/6
4
– – –
Kemal Malik 7/8
5
6/6 – –
Nicholas Moss
3
6/6 5/5 3/3 3/3
Gian Piero Reverberi 8/8 6/6 1/1 4/4
1 Julie Cherrington and Cristina Csimma were appointed to the Board on 1 February 2022.
2 Thomas Henderson retired from the Board on 3 August 2021.
3 Nigel Keen and Nicholas Moss retired from the Board on 31 December 2021.
4 Nigel Keen was unable to attend an ad hoc Board meeting in December 2021 due to a
priorcommitment as the meeting was arranged at short notice; the Board was aware of
Nigel’s prior commitment at the time of planning such meeting.
5 Kemal Malik was unable to attend the November 2021 Board meeting due to personal
familycircumstances.
Strategy and risk
As usual, the Board held a Strategy session in September, where
itconsidered progress towards implementing our strategy. A key
topic of discussion was changes in the appetite of public markets
for early stage life science businesses, particularly those using
innovative cell and gene therapy technologies, and the potential
impacts of this on our portfolio companies given the capital intensity
of these businesses and the capital resources available to the
Company. The Board also discussed how to ensure the long-term
scalability of the Syncona platform as we build our diversified
portfolio of 15-20 leading life sciences companies at any one time,
and ensuring that the Investment Manager has the right resources
to support that. The Board remains focused on ensuring that
governance supports robust oversight of strategy execution by the
Investment Manager’s team, particularly given the very significant
and often binary risks of loss within our investments (with the
potential for substantial returns).
During the year, the Board discussed the key risks to our business,
both current risks and potential risks that may arise, and from this
our risk appetite was updated. This feeds into the Company’s risk
register, and more details are reported in the Principal risks section
of the Annual Report. The Board also considers the effectiveness
ofthe Company’s risk management and internal control systems,
supported by the work carried out by the Audit Committee (see its
report on pages 87-91). The Board is satisfied that the Company
has adequate and effective systems in place to identify, mitigate
andmanage the risks to which it is exposed, although recognises
that the system of internal control is designed to manage rather
than to eliminate the risk of failure to achieve these objectives.
Composition and meetings
All of the Board are Non-Executive Directors and profiles of each,
including length of service, are on pages 80 and 81. During the
year, as noted in the Chair’s introduction to this Annual Report,
Cristina Csimma and Julie Cherrington joined the Board and Tom
Henderson, Nicholas Moss and Nigel Keen retired. All Directors are
considered to be independent.
As stated in last year’s Annual Report, Tom Henderson did not seek
re-appointment at the Company’s AGM in 2021. Nicholas Moss
and Nigel Keen retired from the Board and resigned from their
respective Committee roles, and in the case of Nicholas Moss,
therole of the Senior Independent Director, on 31 December 2021.
Virginia Holmes was appointed as the Senior Independent Director
on 1 January 2022 and Gian Piero Reverberi was appointed as
Chair of the Remuneration Committee on 1 January 2022.
The Board holds quarterly Board meetings, along with a Strategy
Review Day each year. The Board meetings follow an annual work
plan that seeks to ensure a strong focus on key strategy and
governance issues, alongside monitoring the Company’s operations
in a structured way. The Investment Manager works closely with
theChair, and liaises with the Company Secretary, to ensure the
information provided to the Board meets its requirements. All
members of the Board also have access to the advice of the
Company Secretary as they require. The Board may also hold
adhoc meetings or discussions between its routine quarterly
meetings,where required for the business of the Company.
Thesenior members of the Investment Manager’s team attend
eachBoard meeting; the Board also schedules part of each
meeting to be held without those individuals.
The Audit Committee also meets quarterly whilst the Nomination
and Governance Committee and Remuneration Committee typically
meet three times each year but will meet more often if they consider
it appropriate to do so to carry out their roles.
During the year the meetings were a mixture of remote and
in-person, reflecting both the ongoing impact of the COVID-19
pandemic and making the most effective use of time. As noted in
last year’s Annual Report, the Board was fortunate that the team
ofthe Investment Manager was able to move quickly and smoothly
to remote working and continue to work effectively throughout
theCOVID-19 pandemic, which (amongst other things) enabled
reporting and oversight by the Board to continue. As COVID-19
moves beyond its pandemic phase we will continue to seek to work
in the most effective way.
Syncona Limited Annual report and accounts 202278
Culture and stakeholders
The Board recognises the importance of ensuring that the
Company’s culture (and the culture of the Investment Manager) is
aligned with its strategy and delivery of a sustainable business. This
is particularly important as the Investment Manager’s team grows
tosupport progress towards our mature portfolio.
Gian Piero Reverberi is the designated Director for engagement with
the team of the Investment Manager. Engagement has continued
tobe challenging this year as a result of the COVID-19 pandemic.
However, we were pleased that Gian Piero, with the rest of the
Board, had an opportunity to meet with the entire team in March
2022. We will be able to expand opportunities for engagement in
the next year. Please see pages 82-83 for further details of how
theSyncona Board engages with the Syncona team.
The Board believes the Company’s purpose and values are
embedded in the business and support effective delivery of the
strategy and business. This year, as part of scaling the business,
theteam have identified an opportunity to provide a more
structureddevelopment path for investment team members,
whichthe Board supports.
Alongside Board engagement with the Investment Manager’s team,
there is a Whistleblowing Policy in place which includes provision
forany issues to be notified (where appropriate) to the Chair of the
Audit Committee.
The Board also holds responsibility for overseeing the effective
engagement with other stakeholders to ensure that their interests are
considered. Further details around engagement with stakeholders
are set out on pages 82-83. The Board reviews this every year and
considers whether there are any areas for improvement.
The Board recognises the wider economic concerns affecting
stakeholders, particularly in relation to the economic environment,
cost of living and inflationary pressures. Given the current status of
the portfolio companies, the Board does not consider these issues
as material issues affecting our key stakeholders at this present
time. The Board does however review how the interests of our key
stakeholders are taken into account in the business every year and
further details are set out on pages 82-83.
Ongoing communication with shareholders
The Board is focused on understanding the views of shareholders
so these can be taken into account in decision-making. The Board
considers feedback and shareholder views collated by our advisers
at every Board meeting, with specific sessions set aside for this in
November 2021 and March 2022. During the year, the Chair again
took the opportunity to meet directly with a number of our key
shareholders, to directly hear their perspectives and communicate
these to the Board. The feedback confirms that shareholders
continue to be supportive of our long-term strategy and the
Investment Manager’s team in executing this. Members of the
Board, particularly the Chair, Senior Independent Director and Chair
of the Audit Committee, are available to meet shareholders on any
issues that arise.
More broadly, the Company organises a comprehensive investor
relations programme, where members of the Investment Manager’s
team meet with existing and potential investors following the
publication of the annual and interim results, and as required during
the year. As part of this programme, 55 presentations were made to
shareholders and potential shareholders by senior members of the
Investment Manager’s team during the year.
Sustainability
At the start of the year (as reported in last year’s Annual Report)
theBoard adopted a formal Sustainability Policy and Responsible
Investment Policy. During the current year the Board’s focus has
been on overseeing the Investment Manager as it puts processes
inplace to implement these, and considering its own governance
ofsustainability issues.
The Board believes that the Company’s core activities, of investing
inbusinesses that seek to develop treatments that will make a
difference to the lives of patients and their families, make a positive
contribution to society. Given these are at the centre of what the
Company does, the Board has decided to integrate its consideration
of sustainability issues within its normal governance processes.
Further details are set out on page 90.
Training and advice
The Company provides an extensive induction process for new
Directors, including briefings from a significant portion of the
Investment Manager’s team and discussions with the Chair and
chairs of each of the Board’s Committees.
In addition consideration is given to whether any additional training
would be helpful to the Board, taking account of feedback from
Directors as part of the Board evaluation. As a result, Directors have
been provided with access to updates on key corporate
governance developments, and teach-in sessions have been
organised on specific issues relating to the Syncona business.
UK Corporate Governance Code compliance statement
The Company has complied with the relevant provisions of the
revised UK Corporate Governance Code (July 2018), which is
publicly available at frc.org.uk, except that given the Company’s
structure, and that it has no Executive Directors and is managed by
the Investment Manager, the Board considers that the following
provisions are not relevant to the Company:
– the role of the Chief Executive Officer – there is no Chief
Executive Officer of the Company, and responsibility for
management of the investment portfolio is delegated to the
Investment Manager;
– Executive Directors’ remuneration – this is not relevant as the
Company has no Executive Directors.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
79
Board of Directors
An experienced
and dedicated Board
Biography
Dr Cristina Csimma has 30 years’
experience in drug development, new
company formation, value creation
and strategic guidance across a
broad range of therapeutic areas.
She also brings significant expertise
in venture capital and theUS biotech
capital market environment.
Previously, Cristina was the Executive
Chair of the Board of Directors of
Forendo Pharma and Exonics
Therapeutics, and a Board Director of
Juniper Pharma, Seneca BioPharma,
Vtesse, and Cydan, where she was
also the founding President and CEO.
She has served as Board Director of
T1D Exchange and on anumber of
National Institutes of Health and other
non-profit advisory committees.
Cristina holds a Doctor of Pharmacy
and a Bachelor of Science from
Massachusetts College of Pharmacy,
as well as a Master of Health
Professions from Northeastern
University.
Importance of contribution
Cristina has significant experience
across a variety of biotechnology
companies throughout their
lifecycles. In particular, her expertise
covers drug development, company
building and capital raising,
particularly in the US, which is a key
market for Syncona’s portfolio.
Current positions
Chair of Caraway Therapeutics
Non-Executive Director of Palisade
Bio (NASDAQ: PALI)
Non-Executive Director of Idera
Pharmaceuticals (NASDAQ: IDRA)
Biography
Melanie Gee is Chair and originally
joined the Board as a Non-Executive
Director in June 2019. Melanie has
over 30 years of financial advisory
experience in executive positions in
investment banking, advising clients
across a broad range of sectors and
geographies. She is a Senior Adviser
at Lazard & Co Ltd, having joined as
a managing director in 2008. Before
that, Melanie spent 25 years with
SGWarburg & Co Ltd and then
UBS.Melanie also has extensive
Non-Executive experience, with more
than a decade as a Non-Executive
Director atFTSE 100 and 250
companies. Until October 2021
shewas a Non-Executive Director
atabrdn plc, where she sat onthe
Nomination & Governance and Audit
Committees and was theNon-
executive Director with responsibility
for bringing the employee voice into
the Boardroom. She was also
previously a Non-Executive Director
at The Weir Group PLC andDrax
Group PLC.
Importance of contribution
Melanie brings extensive
non-executive experience in
FTSE 100 and 250 companies, giving
her an in-depth understanding of
governance requirements and an
understanding of how to build and
maintain a highly effective Board as
Chair of the Board and Nomination
and Governance Committee. Her
financial advisory experience is highly
relevant to effective oversight of the
Company’s investment and
stakeholder strategies.
Current positions
Senior Adviser, Lazard & Co Ltd
Chair of the Grosvenor Britain &
Ireland Board
Sits on advisory groups fortwo
private family offices
Biography
Dr Julie Cherrington is an experienced
life science executive with a strong
track record in bringing drugs
intotheclinic and through to
commercialisation, and particular
expertise in the oncology setting. She
is also an accomplished company
builder and has previously served as
President and Chief Executive Officer
at several biotechnology companies in
the US West Coast, Canada and
Australia. Julie holds a B.S. in biology
and an M.S. in microbiology from the
University ofCalifornia, Davis. She
earned aPh.D. in microbiology and
immunology from the University of
Minnesota and Stanford University.
She completed a postdoctoral
fellowship at the University of
California, San Francisco.
Importance of contribution
Julie brings extensive understanding
of the US regulatory and clinical
development environment. Her
experience of bringing drugs through
the clinic and to commercialisation in
the US will help the Syncona Board
tounderstand the strategic needs
ofthe business in North America
andbeyond.
Current positions
Chair of Actym Therapeutics
Non-Executive Director of Mirati
Therapeutics (NASDAQ: MRTX)
Non-Executive Director of Vaxart
Therapeutics (NASDAQ: VXRT)
Venture Partner at Brandon Capital
Non-Executive Director of a number
of other early stage private life
science companies
Cristina Csimma
Non-Executive Director
Melanie Gee
Chair
Julie Cherrington
Non-Executive Director
Date of appointment
– 1 February 2022
Date of appointment
– 1 January 2020 (as Chair);
4June 2019 (as Director)
Committee memberships
N
R
Date of appointment
– 1 February 2022
Committee memberships/
roles
A
Audit Committee
N
Nomination and Governance
Committee
E
Engagement with team
R
Remuneration Committee
Chair
Male
Female
43%
57%
0-2 years
2-4 years
4-6 years
6+
43%
29%
29%
0%
Person of colour 14%
Syncona Limited Annual report and accounts 202280
Biography
Rob Hutchinson has over 30 years’
experience in the financial sector asa
Chartered Accountant. He qualified in
1990 and spent 28 years with KPMG
across various roles. Rob retired from
practice in 2014 and is a Fellow of the
Institute of Chartered Accountants in
Englandand Wales. He served as
President of the Guernsey Society of
Chartered and Certified Accountants
between 2007 and2009.
Importance of contribution
Rob has many years of broad
financial experience. He spent a
number of years in roles specialising
in the audit of banking and fund
clients at KPMG and was appointed
apartner in 1999. Rob led the audits
for a number of UK and European
private equity and venture capital
houses as well as listed funds
covering a variety of asset classes,
bringing broad experience in issues
arising from the valuation of private
assets. Rob led the firm’s fund and
private equity practices for seven
years and served as Head of Audit for
KPMG in the Channel Islands for five
years until 2013.
Current positions
Non-Executive Director of
Ravenscroft Holdings
Non-Executive Director of Pantheon
group entities based in Guernsey
Biography
Virginia Holmes has an extensive
knowledge of the financial services
industry, including both investment
management and banking. She was
previously Chief Executive of AXA
Investment Managers UK and held
anumber of senior leadership
rolesover more than a decade at
Barclays Bank Group. Virginia also
brings a wide range of non-executive
experience, both with UK listed
companies and organisations across
various jurisdictions. She was
previously Chair for nine years of USS
Investment Management Ltd, the
fiduciary manager of the Universities
Superannuation Scheme.
Importance of contribution
Virginia’s extensive experience and
proven track record of working with
investment businesses as they look
to develop and expand is highly
relevant to the Board in defining
theCompany’s strategy and
overseeing its delivery. In addition her
extensive non-executive experience
gives her an in-depth understanding
of governance requirements,
supporting our goalofa highly
effective Board.
Current positions
Chair of Unilever UK Pension Fund
Non-Executive Director of European
Opportunities Trust plc
Non-Executive Director of
Intermediate Capital Group plc
Biography
Kemal Malik joined the Board in June
2020. He has 30 years of experience
in global pharmaceutical research
anddevelopment. He has been
responsible for bringing many
innovative medicines through R&D
tosuccessful commercialisation. From
2014 to 2019 he was a member of the
Board of Management of Bayer AG
responsible for innovation across the
Bayer group. He was also responsible
for Bayer LEAPS, the organisational
unit responsible for strategic venturing
in areas of disruptive breakthrough
innovation. Prior to his appointment
tothe Bayer Board he was Head of
Global Development and Chief
Medical Officer at Bayer Healthcare
for10 years and was previously
anon-executive director at
AcceleronPharma, a Boston based
biopharmaceutical company. Kemal
began his career in the pharmaceutical
industry atBristol-Myers Squibb with
responsibilities in medical affairs,
clinical development and new product
commercialisation. Kemal qualified in
medicine at Charing Cross and
Westminster Medical School (Imperial
College) and is a Member of the Royal
College of Physicians.
Importance of contribution
Kemal brings extensive experience in
breakthrough innovation and
commercialisation in the life science
sector, which are highly relevant to
the Board in defining the Company’s
strategy and overseeing its delivery.
Current positions
Scientific Adviser to Atomwise
Trustee of Our Future Health
Biography
Gian Piero Reverberi is a senior
healthcare executive at Ferring
Pharmaceuticals, a leader in the
areas of reproductive medicine and
maternal health, gastroenterology
and urology. Prior to this Gian Piero
was Senior Vice President and
ChiefCommercial Officer at
VandaPharmaceuticals, a specialty
pharmaceutical company focused
onnovel therapies to address
high-unmet medical needs. He also
spent 10 years at Shire, where he
served as Senior Vice President
International Specialty Pharma, with
responsibility for EMEA, Canada,
Asia Pacific and Latin America. He
started his pharmaceutical career at
Eli Lilly inthe US and Italy, where he
had responsibilities including finance,
business development, sales and
business unit leadership.
Importance of contribution
Gian Piero has over 20 years of
experience in commercialising
noveltherapies spanning commercial
strategy, business development,
business unit leadership and
management, launching specialty
and orphan drugs across
international markets. He has a
degree in Economics andBusiness
Administration from Sapienza
University of Rome and aMaster in
Business Administration from SDA
Bocconi in Italy.
Current positions
Senior Vice President Europe,
Canada and Latin America at Ferring
Pharmaceuticals
Gian Piero Reverberi
Non-Executive Director
Rob Hutchinson
Non-Executive Director
Virginia Holmes
Senior Independent Director
Kemal Malik
Non-Executive Director
Date of appointment
– 1 November 2017
Committee memberships
A
N
R
Date of appointment
– 1 January 2021
Committee memberships
A
N
R
Date of appointment
– 15 June 2020
Committee memberships
A
Date of appointment
– 1 April 2018
Committee memberships/roles
R
A
N
E
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
81
Our six key stakeholders
Patients
Charities
Syncona
team
Shareholders
Wider society
Our portfolio
companies
Our stakeholders
Positive relationships with our stakeholders are
key to the success of our business
Stakeholder Key issues for Syncona
and the stakeholder
How does Syncona
engage with them?
Impact on Board activities
Patients
Further details:
Our strategy (pages 14-15);
Investment process (pages
16-17); Portfolio and market
review (pages 20-35); Our
business model (pages
38-41); S172 statement (page
9); Risk management,
Principal risks and
uncertainties (pages 44-53);
Sustainability (pages 54-71);
Sustainability Report.
Our portfolio companies work
closely with patients as they develop
transformational treatments for high
unmet medical needs. Patients
areinterested in the success
ofdevelopment, their ability to
access treatments, and that clinical
research takes place in a safe and
compliant manner.
At the point of founding a new business,
we would expect to have carried out
extensive research which may involve
speaking to key patient advocates for
relevant diseases.
Once our businesses are formed,
engagement is then typically led by the
business itself, which also has
responsibility for conducting clinical
research to a high standard. Syncona sets
expectations for our portfolio companies
around access to medicines and conduct
of research, as part of our Responsible
Investment Policy. The Syncona team
monitors the activities of the portfolio
companies as part of their wider
investment monitoring.
The Board takes into account the purpose of
the business, being a focus on investing to
extend and enhance human life, in all of its
decision-making.
The Board adopted the Sustainability Policy
and Responsible Investment Policy this year,
which reflect patient interests in a number
ofareas.
Any relevant and major issues arising from
portfolio companies are reported to the
Board as appropriate.
The impact on patients was considered by
the Board when deciding whether to approve
the sale of Gyroscope. The Board believed
that the transaction was likely to improve the
speed and extent to which patients would be
able to access the Gyroscope therapy, given
Novartis’ wider ophthalmology platform.
Shareholders
Further details:
Our strategy (pages 14-15);
Investment process (pages
16-17); Risk management,
Principal risks and
uncertainties (pages 44-53);
Corporate governance report
(pages 76-79).
Shareholders want to know that we
are running a long-term, sustainable
business that seeks to deliver strong
risk adjusted returns (both in
absolute terms and relative to other
opportunities available to them). The
business model is capital intensive
and so maintaining alignment with
shareholders and access to capital
is key for us.
The Chair seeks to engage with key
shareholders and investor groups
eachyear.
The Syncona team meets with key
shareholders after the annual and interim
results, typically reaching shareholders
holding more than 80% of shares. The
team also engages on an ongoing basis
with existing and potential shareholders.
Feedback from shareholders is reported at
each Board meeting and considered by the
Board as part of strategy and other
discussions. This is a key determination for
measuring the strength of our relationships with
our shareholders, alongside our annual review
of how our shareholders voted at our AGM.
The Board also discusses the effectiveness
of shareholder engagement and shareholder
perspective. This was a key aspect for
discussion at the Board’s Strategy Day in
September and in the November meeting,
alongside the Group’s corporate advisers.
Syncona Limited Annual report and accounts 202282
Stakeholder Key issues for Syncona
and the stakeholder
How does Syncona
engage with them?
Impact on Board activities
Syncona team
Further details:
Our strategy (pages 14-15);
Investment process (pages
16-17); Syncona team (pages
18-19); Risk management,
Principal risks and
uncertainties (pages 44-53);
Sustainability (pages 54-71);
Sustainability Report;
Corporate governance
report(pages 76-79);
Remuneration Committee
Report (pages92-97).
Our business is driven by a small
investment team. Ensuring the team
is recruited, retained and fully
engaged with the Company’s
strategy is key to our success and a
key risk for us. The team seeks a
working environment providing a
high-quality culture, strong
opportunities for development and
aligned remuneration. In addition,
each individual team member’s
purpose must align with the wider
purpose of the business, to deliver
positive benefits to society and run in
a long-term sustainable manner.
Managing the team is a core part of the
Syncona executive team’s role.
The small size of the team also allows a
direct connection between the Board and
the Syncona team.
The Board has designated a Non-
Executive Director for engagement with the
team, Gian Piero Reverberi, who provides
a direct contact point between the Board
and the wider team, although the ability to
have wider engagements has been
impacted by the COVID-19 pandemic.
The Board also joins the Syncona team
forits quarterly review meetings, and
(outside of the COVID-19 pandemic) for
informal lunches.
The Board has regular discussions regarding
the Syncona team, including discussions on
culture and values. This year, key Board
agenda items have included team
development at the Strategy Day and in the
November and March meetings, a wider
culture discussion in the March meeting and
quarterly discussions on recruitment activities
and updates on senior hires and leavers.
Discussions on the Syncona team also feed
into the Board’s review of Syncona’s budget.
Our risk process, which is approved by the
Audit Committee, recognises the Syncona
team as one of the key risks of the business.
The Remuneration Committee considers the
remuneration of the CEO and the overall
framework and incentivisation of the Syncona
team and approves awards under the
long-term incentive scheme.
Portfolio companies
Further details:
Our strategy (pages 14-15);
Investment process (pages
16-17); Portfolio and market
review (pages 20-35); Our
business model (pages
38-41); Sustainability (pages
54-71); Sustainability Report.
Our strategy is executed through our
portfolio companies, and we aim to
ensure they act in line with our
expectations as a responsible
investor. In turn, our portfolio
companies rely on our support for
them, both financial and through
ourknowledge and networks.
Support and oversight of portfolio
companies is a core part of the Syncona
team’s role. There is generally a very close
relationship with one or more Syncona
team members in regular contact with the
portfolio company’s senior team to support
their business and clinical strategies and
drive long-term value and taking board
seats to promote high quality governance
and oversight. There are extensive
discussions on each portfolio company at
quarterly board review meetings, attended
by the Syncona team and the Board.
Syncona sets expectations for our
portfolio companies as part of our
Responsible Investment Policy and the
Board receives sustainability information
half-yearly on portfolio companies.
The Syncona team provides extensive
reporting on portfolio companies to the
Board at each meeting, as a key element
ofthe Board’s oversight and assurance
role.Reporting is centred around how the
portfolio company is delivering against its
business plan and our sustainability
expectations for our portfolio companies.
The Board also periodically meets directly
with portfolio companies, or attends
presentations, to understand their
businesses more fully and (particularly) how
the Syncona team interacts with them.
The impact of the proposed sale of
Gyroscope on the company itself was
considered by the Board as part of the
decision on the sale.
Charities
Further details:
Sustainability (pages 54-71);
Sustainability Report.
Charitable giving has been part of
the Syncona story since 2012, when
BACIT Limited (now Syncona) was
established with a commitment to
donate a percentage of its NAV to
charity each year. The charities
benefit from long-term and
sustainable donations, and the
potential for growth as the Syncona
NAV grows.
Syncona’s donations are principally
through The Syncona Foundation, which
is independent of Syncona but closely
aligned with its aim of transforming the
lives of patients. The Foundation in turn
supports and maintains relationships with
a range of charities. A member of the
Syncona team attends trustee meetings
as an observer.
The Foundation’s trustees present annually
to the Board on the impact of the donations.
In addition, the Board is invited to attend
charity presentations each quarter, to gain
afuller understanding of the impact that
Syncona’s support has had.
Wider society, the
community and the
environment
Further details:
Our strategy (pages 14-15);
Investment process (pages
16-17); Sustainability (pages
54-71); TCFD disclosure
(pages 72-75); Sustainability
Report.
The development of, and access to,
innovative new treatments is key to
wider society and maintaining our
licence to operate is vital in order to
continue to develop new treatments.
Our businesses and portfolio
companies must be run in a safe and
compliant manner, with us acting as
a responsible investor, in order to
meet wider societal expectations
around sustainability, business
conduct and our impact on the
community and the environment.
We aim to provide information about our
wider impacts to the public and other
stakeholders through our website and
other public communications.
We published our inaugural Sustainability
Report last year and we intend to do this
each year. This sets out more details of
ourapproach on sustainability issues.
When the opportunity arises, we seek
toengage with the government on key
issues affecting wider society and our
stakeholders generally. This year, for
example, we engaged with the Life Science
Scale-Up Task Force which has been
created to further the government’s Life
Sciences Sector Vision.
The Board takes into account the purpose
ofthe business, being a focus on investing
toextend and enhance human life, in all of
itsdecision-making. The Board adopted
policies around sustainability and responsible
investment during the year.
The Board has decided to voluntarily disclose
against the TCFD recommendations to align
with wider society’s expectations.
As an investment company our suppliers are limited: other than SIML (our subsidiary that is our Investment Manager) they are principally our Administrator and Custodian, and
professional service providers. Accordingly, we have not included suppliers as a key stakeholder above.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
83
Report of the Nomination and Governance Committee
I am pleased to present the work of the
Nomination and Governance Committee
intheyear ended 31 March 2022.
Role of the Committee
The Committee’s role is to:
– review the Board’s structure, size and composition (including the
skills, knowledge, diversity and experience) and make
recommendations to the Board accordingly;
– identify and nominate, for the approval of the Board, candidates
to fill Board vacancies and for putting in place succession plans
for Directors;
– have an advisory role to the Board regarding the re-election and
election of Directors at the Company’s AGM and,
whereappropriate, considering any issues relating to any
Director’s continuation in office;
– support the Chair in carrying out the Board evaluation each year;
– make recommendations for the membership of Board
sub-committees and boards of subsidiaries (other than portfolio
companies); and
– review the Company’s compliance with the UK Corporate
Governance Code.
The Committee’s Terms of Reference were revised in 2020 and
theCommittee reviewed its performance against them this year.
Thecurrent version is available on the Company’s website
synconaltd.com. During the year the Committee’s name was
changed to reflect its role in considering governance matters and,
after year end, the Terms of Reference were updated to add
responsibility for succession planning for the CEO of the
InvestmentManager.
A key aim of the
Committee is to build
a diverse and inclusive
Board, which is
essential to bringing
a broad strategic
perspective”
Melanie Gee
Chair, Nomination and
Governance Committee
Nomination and Governance Committee
members and structure
The Committee’s members in the year were:
Meetings attended
Melanie Gee (Chair) 3/3
Virginia Holmes (appointed to the
Committee on 1 January 2022)
0/0
Rob Hutchinson 3/3
Nicholas Moss (resigned from the
Committee on 31 December 2021)
3/3
Gian Piero Reverberi (appointed to the
Committee on 1 October 2021)
1/1
The Committee comprises at least three members,
who are appointed by the Board. All members of the
Committee in the year were independent Directors.
During the year Virginia Holmes and Gian Piero
Reverberi joined the Committee, and Nicholas Moss
resigned from the Committee. The Board has also
appointed Kemal Malik to join the Committee from
1July 2022.
The Committee meets as required, and at least twice
each year. The table above sets out the number of
meetings held during the year and the number of
meetings attended by each of the members. Other
Directors who are not members of the Committee
may also be invited to the meetings. In addition, the
Committee members communicated by email or
phone on several occasions to deal with ongoing
matters between meetings.
Syncona Limited Annual report and accounts 202284
The Committee has considered the impact of the appointments and
retirals on the overall makeup of the Board and is satisfied that the
Board continues to bring the relevant skills needed by the Board.
Inaddition, we believe that the Board brings a diverse range of
characteristics and perspectives in line with our Board Diversity
Policy. The table below outlines our progress against the specific
targets set out in the policy:
Target
(June 2022)
Position at
31 March 2022
Women on Board 40% women 57%
Women in role of Chair or SID 1 or more 2
Ethnic minority representation on Board 1 or more 1
With this year’s changes to the Board, the Committee has also
reviewed Board roles including Committee memberships, and
recommended a number of changes to the Board, which were
approved. These include appointing Virginia Holmes as the Senior
Independent Director, and Gian Piero Reverberi as Chair of the
Remuneration Committee, effective from 1 January 2022. Full
details of the current members of each Committee are set out in
therelevant Committee report. The Committee is satisfied that each
of the Audit Committee, Remuneration Committee and Nomination
and Governance Committee has the skill sets and diversity required
to carry out its role.
Following these changes the Committee does not anticipate any
further short-term changes to the Board, but will continue to evaluate
Board membership in line with its succession planning processes.
Board evaluation
As described in the Corporate Governance report, the Board is
focused on ensuring that governance supports robust oversight of
strategy execution by the Investment Manager’s team, given the
Company’s business model. Board evaluation is a key element for
the Board to monitor whether it is delivering that.
The Board last carried out an externally facilitated evaluation of
itsperformance in 2018/9, and accordingly planned to carry out
afurther externally facilitated evaluation this year. Earlier in the year
the Committee engaged CoachNudge, an external Board coaching
andadvisory consultancy, to support the Board in maximising its
performance. Given the overlap with Board evaluation, the
Committee agreed to also ask CoachNudge to carry out the
Boardevaluation. Other than the wider Board coaching work
referred to above, CoachNudge has no other connection with
theCompany or the Directors.
However, the Committee also noted the significant level of change
to Board membership during the year. To maximise the benefit to
the Board from an external evaluation, it agreed that this year’s
evaluation should be relatively light touch, with the intention that
amore in-depth externally facilitated evaluation would be carried
outin 2022/3, once the new Board composition has become
moreestablished.
The evaluation was carried out in March 2022 using self-
assessment questionnaires to assist CoachNudge to analyse the
Board’s overall effectiveness and, amongst other things, its
composition, diversity and how effectively members work together
to achieve objectives. Key feedback from the evaluation was:
– The purpose and values of Syncona are clearly set out and Board
members are aligned with them. The Board continues to ensure
appropriate oversight of strategy and performance against a
fast-changing environment.
Board succession planning
A key part of the Committee’s role is to plan for Board succession.
The Committee seeks to do this using a number of tools. At the
core of its approach is a skills matrix which identifies the skill sets
needed at the Board and against which each of the Directors are
asked to evaluate themselves. Our core skill sets focus around life
sciences and private investing, overlaid with the governance and
other skills required by the Board of a listed company, reflecting the
Board’s feedback through the annual evaluation process over
recent years.
In addition to the skills matrix, the Committee aims to build a diverse
and inclusive Board, which we regard as essential to the success of
the Company. Our Board Diversity Policy was updated in June
2022 as a result of the Committee having considered the outputs of
the Hampton-Alexander Review, the Parker Review and the FTSE
Women Leaders Review and the updated policy is set out below.
Diversity covers a range of aspects, including personal
characteristics such as gender or race, ways of thinking or
geographical location and experience.
Further considerations in Board succession planning include
identifying individuals to take on key Board roles such as Committee
chairs. Finally, the Committee considers the performance of each
Director, length of service on the Board and their future intentions
around continuing to be a Director, as well as the overall tenure of
the Board.
Taken together, these items allow the Committee to define the
desired shape of the Board and to recruit against it. As a wholly
Non-Executive Board, internal succession planning is not relevant
tothe Company. Recruitment is carried out using external search
consultants who are provided with a brief of desired characteristics
for candidates. Our search consultants are required to include a
diverse range of candidates bringing the desired skill sets in
preparing their long list.
The Committee re-evaluates Board succession planning annually,
taking account of any feedback from the Board evaluation to ensure
it has a clear outlook on the actions it should take. In the coming
year a focus will be ensuring it has clear arrangements in place for
aDirector becoming unexpectedly unavailable.
Board changes
There have been significant changes to Board membership over
thelast year, with three Directors retiring and two new Directors
being appointed.
We reported in the Annual Report 2021 that we were seeking
torecruit Directors who had experience in building a successful
US-listed life science business and in private equity and venture
capital investing, and we were pleased that Dr Cristina Csimma and
Dr Julie Cherrington joined the Board from February 2022. Further
details on Cristina and Julie’s background and experience can be
found on pages 80 to 81. The recruitment process was supported
bythe executive search consultant Korn Ferry (who only acted for
theCompany in that role, and do not have any other connection
withindividual Directors, but were also engaged by the Investment
Manager during the year to support SIML team recruitment).
During the year Tom Henderson retired from the Board at the AGM
and both Nicholas Moss and Nigel Keen retired at the end of 2021.
Tom and Nicholas had both been Directors since August 2012, and
Nigel had been involved with the Syncona life science business
since its original founding in 2012, and collectively they brought a
great deal of experience to the Board.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
85
Board Diversity Policy (adopted June 2022)
A key component of the Company’s investment strategy is to
buildsuccessful, sustainable and globally leading healthcare
businesses. To do this we rely on identifying high quality people
atall levels. We believe this can best be done with an inclusive
culture that recognises and values the advantages of a diverse
range of people. The same applies at Board level as much as
within our management team or our portfolio companies.
A diverse and inclusive Board helps to ensure that the Board
brings a broad strategic perspective. We make Board
appointments on merit, with candidates assessed against
measurable objective criteria, but strive to maintain a Board in
which a diverse range of skills, knowledge and experiences are
combined in an environment which values the input of every
Director. Due regard is given to this when identifying and selecting
candidates for Board appointments, to achieve a Board that
reflects diversity in the broadest sense by embracing different
perspectives and dynamics, including different skills, industry
experience, background, race, sexual orientation and gender.
The Nomination and Governance Committee regularly reviews
andassesses Board composition on behalf of the Board and
willconsider the balance of skills, experience, independence
andknowledge of the Board. When new appointments are
beingmade, we instruct search agents that a diverse range
ofcandidates bringing the desired skill sets must be included
inpreparing their long list.
The Board intends:
– to have at least 40% female representation on the Board, as part
of a broadly gender balanced Board;
– that at least one of the Chair or the Senior Independent Director
should be female; and
– to have at least one person of colour on the Board.
* We follow the definition of ‘person of colour’ from the Parker Review, which encompasses
those who identify as or have evident heritage from African, Asian, Middle Eastern, Central
and South American regions.
– Consideration of how the Board can engage more effectively
withthe Investment Manager’s team, shareholders, and other
stakeholders, to ensure it has a full understanding of each group’s
views and can take them into account. The Board has made
progress in these areas during the year but, as already discussed,
considers there is more to be done with its stakeholders.
– Board to continue to challenge itself to ensure that its discussions
avoid groupthink and that its members embrace a wide range
ofways of thinking. This work is ongoing with the support of
CoachNudge and the Board expects to continue to engage
withthis over the next year.
Committee evaluation and effectiveness
During the year, the Committee completed its annual review
ofeffectiveness, and concluded that it had performed its
responsibilities effectively.
Contribution and time commitment
During the year, the Committee has formally considered the
contribution of each Board member and whether they each devote
sufficient time to fulfil their respective duties and responsibilities
effectively. The Committee is satisfied with the level of commitment
and contribution offered to the performance of the Board and
recommended to the Board that each of the Board members be
recommended for re-election to the Board at the Company’s AGM
on 2 August 2022.
Melanie Gee
Chair, Nomination and Governance Committee
15 June 2022
– The recent appointment of Directors with life sciences experience
was seen to have brought the Board to an appropriate mix of
expertise and capability.
– The culture of the Board, the ability for all members to participate
and the constructive nature of the relationship with management
were all rated strongly. This was reflected in the quality of Board
discussions.
– Board engagement with shareholders is effective and appropriate.
– A small number of areas were identified for further work, many
ofwhich are areas that were already being actively addressed by
the Board:
– Develop the Board’s engagement and focus on key stakeholders,
including the impact of what we do on patients. As described on
pages 79 and 82 to 83, there is already significant engagement
with key stakeholders, but the Board acknowledges an
opportunity to enhance further its understanding of their
concernsand maximise the positive impact on the business.
– Continue to support the Investment Manager’s team as they scale
the business, ensuring that the culture of Syncona supports
effective strategy execution. This links to the previous point and
reflects the importance of maintaining the culture of Syncona at
atime of growth and significant volatility in biotech investments.
The Board intends to review these points further at its upcoming
Strategy meeting in September/October and agree Board goals to
address them.
Alongside the Board evaluation, Virginia Holmes as Senior
Independent Director led the appraisal of the Chair’s performance.
The Board was satisfied that the Chair was providing effective
leadership for the Board, supporting it to work together effectively
and maintain its focus on key strategic issues for the business.
The Committee has also revisited the key feedback from the 2020/1
evaluation to ensure this has been acted upon:
– Continue to develop the membership of the Board to ensure it
has the right skills, experience and diversity to fully support the
growth and aspirations of the business. As set out above, the
Committee considers that this has been achieved taking account
of recruitment during the year, but will keep it under review.
Report of the Nomination and Governance Committee
Syncona Limited Annual report and accounts 202286
Report of the Audit Committee
I am pleased to present the Audit Committee’s
report for the past financial year, setting out the
Committee’s structure, duties and evaluations
during the year.
The role of the Committee includes:
– reviewing the valuations of the life science portfolio and the
valuation methods for all investments;
– monitoring the integrity of the Consolidated Financial Statements
and interim reports;
– reviewing any significant issues and judgements made in the
preparation of the Consolidated Financial Statements and other
financial information, including the viability statement;
– reviewing the content of the Annual Report and Consolidated
Financial Statements and advising the Board on whether, taken
as a whole, it is fair, balanced and understandable;
– monitoring changes in accounting practices;
– oversight of the Company’s risk management framework and
monitoring, reviewing the relevant internal control and risk
management systems including the arrangements of the
Company’s Investment Manager for oversight of risks within the
life science portfolio, and reviewing and approving the statements
to be made in the Annual Report concerning internal controls and
risk management systems;
– reviewing and making recommendations on the Company’s
arrangements for compliance with legal requirements including
controls for preventing and detecting fraud and bribery; and
– reviewing the appointment and remuneration of the Company’s
Independent Auditor, including monitoring and reviewing the
quality, effectiveness and independence of the Independent
Auditor and the quality and effectiveness of the audit process.
The Committee’s Terms of Reference were revised in 2020.
Thecurrent version is available on the Company’s website
synconaltd.com.
Rob Hutchinson
Chair, Audit Committee
Audit Committee members
and structure
The Committee’s members in the year were:
Meetings attended
Rob Hutchinson (Chair)
6/6
Virginia Holmes
6/6
Kemal Malik
6/6
Nicholas Moss (resigned from the
Committee on 31 December 2021)
5/5
Gian Piero Reverberi
6/6
The Committee comprises at least three members,
who are appointed by the Board. All members of the
Committee in the year were independent Directors.
The Board has also appointed Julie Cherrington to
join the Committee from 1 July 2022.
The members of the Committee consider that they
have the requisite skills and experience to fulfil the
responsibilities of the Committee. Further details on
the experience and qualifications of members of the
Committee can be found on pages 80 and 81. The
Board is satisfied that the Committee has recent
andrelevant financial experience, and competence
relevant to the Company’s portfolio.
The Committee meets formally at least quarterly.
Thetable above sets out the number of meetings
held during the year and the number of meetings
attended by each of the members. Other Directors
who are not members of the Committee may also be
invited to the meetings. The Independent Auditor is
invited to attend those meetings at which the annual
and interim reports, as well as its planning report, are
considered. In addition, the Chair of the Committee
meets with the Independent Auditor outside of the
formal meetings, to be briefed on any relevant issues.
Other relevant advisers, including the independent
valuation expert, are invited to attend meetings to
present to the Committee and enable the Committee
to ask questions.
The Committee gives
particular focus to the
valuation of the life
science portfolio and
requests the Independent
Auditor to focus on it”
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
87
Report of the Audit Committee
TheCommittee also assesses the Independent Auditor’s work
onthe valuation, in particular to understand how the Independent
Auditor challenged the Investment Manager’s key assumptions
within the life science valuations. An example this year relates to
theSeries B financing of OMass which completed after the
Group’sfinancial year-end, where the Committee discussed with
the Independent Auditor how it had gained comfort over the
Investment Manager’s judgement to recognise a value uplift at
year-end and the range of assumptions considered reasonable
bythe Independent Auditor – see note 2 for further information.
Although it appears that the COVID-19 pandemic is drawing to an
end, at least in the United Kingdom, the Committee has considered
any impact on valuation arising from the pandemic. The Committee
has also considered any impacts on valuation arising from the war
inUkraine and associated macroeconomic factors. Based on its
review, the Committee considers the valuation of these investments
to be reasonable and the Committee is satisfied that the Group has
valued its interests in accordance with the approved Valuation Policy.
b. Incentive scheme. Employees of the Investment Manager may
be offered the opportunity to participate in an incentive scheme
under which Syncona Holdings Limited may award Management
Equity Shares (“MES”) to them. Awards entitle participants to share
in growth of the valuation of the life science investments held
through Syncona Holdings Limited, subject to a hurdle rate on
invested capital being met. MES vest on a straight-line basis over
four years and participants are able to realise 25 per cent of their
vested MES each year following the publication of the Company’s
annual financial statements, partly in the Company’s shares and
partly in cash.
The Investment Manager uses a model originally prepared by
PricewaterhouseCoopers LLP (“PwC”), and certain inputs provided
by them, to value the incentive scheme in accordance with IFRS 2
Share-based Payments (“IFRS 2”). The fair value of awards of MES
made in the year ended 31 March 2022 was £2.9 million (31 March
2021: £2.9 million) and the liability related to the cash settled
element at 31 March 2022 was £17.8 million (31 March 2021:
£32.3 million).
Details of the incentive scheme are disclosed in the Report of the
Remuneration Committee and in note 2, and the accounting
policies and key judgements related to them are disclosed at
notes2 and 3.
The Committee reviews the valuation and has previously met with
PwC to discuss the methodology adopted in the model. The
Committee has discussions with the Investment Manager to
challenge whether key judgements that have been made, such as
key assumptions associated with the valuation methodology, are
correct. The Committee also assesses the Independent Auditor’s
work on the value of the incentive scheme to confirm it is satisfied
that the Independent Auditor has properly considered key
assumptions. Based on those discussions, the Committee
considers the accounting for the incentive scheme to be
reasonable. The accounting for the incentive scheme is undertaken
in accordance with the accounting policies disclosed in note 2 and is
regularly reviewed by the Investment Manager and the Committee.
Significant Financial Statement matters
a. Valuation of life science portfolio. In the year, the
Group continued to deploy significant capital into its portfolio of life
science investments and also completed the sale of Gyroscope. In
total, the Group holds a life science portfolio with a fair value of
£446.9 million (2021: £685.6 million) through Syncona Holdings
Limited, £28.2 million (2021: £36.6 million) in respect of the CRT
Pioneer Fund through Syncona Discovery Limited (a subsidiary of
Syncona Investments LP Incorporated) and £49.8 million (2021:
£Nil) attributable to milestone payments that may become payable
to Syncona Portfolio Limited (a subsidiary of Syncona Holdings
Limited), subject to certain milestones, on the sale of Gyroscope.
The valuation of the life science portfolio is a critical element in the
Company’s reporting, given the concentration of that portfolio and
the range of potential values of these companies. As the value of
the payout under the incentive scheme provided to employees of
the Investment Manager is based upon the valuation of life science
investments held through Syncona Holdings Limited, the
Committee is aware of the potential risk that elevated life science
valuations might inappropriately increase the payout under the
scheme. Accordingly, this is an area that the Committee gives
particular focus to and which it specifically requests the
Independent Auditor to focus on as part of the audit and its work in
this area is detailed in the Audit Report on pages 102 to 107.
The Group fair values its interests in Syncona Holdings Limited
andSyncona Discovery Limited which are based on the fair value
ofunderlying investments and other assets and liabilities. Life
science investments are valued at fair value through profit and loss
in accordance with IFRS 13 Fair Value Measurement (“IFRS 13”)
and International Private Equity and Venture Capital (“IPEV”)
guidelines. In accordance with the accounting policy in note 2,
unquoted investments are generally fair valued based on either cost
or price of recent investment (PRI) and then appropriately calibrated
to take into consideration any changes that might have taken place
since the transaction date, including consideration of market related
events, or through discounted cash flow (“DCF”) models,
price-earnings multiple methodology or by using market
comparators. The majority of our unlisted life science investments
are valued using cost or PRI as the primary valuation input. Note 2
includes the considerations and challenges that the Group faces
when valuing its interests. See also note 3 which sets out the critical
accounting judgements and sources of estimation uncertainty that
the Group faces when valuing its interests.
Details of the life science portfolio balance are disclosed in the
Unaudited Group Portfolio Statement on page 108 and the accounting
policy and further information relating to them are disclosed in note
2. The risk exists that the pricing and calibration methodology
applied to the underlying investments in the life science portfolio
does not reflect an exit price in accordance with IFRS 13 and IPEV
guidelines. Details of the valuation methodology and accounting
treatment applicable to the deferred consideration that may be
payable to Syncona Portfolio Limited are disclosed in note 2.
The Committee discusses the appropriateness of the valuation
methodology chosen by the Investment Manager in determining the
fair value of unquoted investments. The Committee challenges the
Investment Manager on the process and assumptions it has used
and the parameters around the calibration exercise, especially in
relation to the effect milestones may have on the valuations, and
instructs an independent valuation expert to provide their own view
of the valuation to assist with this. The Committee has a separate
meeting with the independent valuation expert to challenge those
views ahead of a meeting with the Independent Auditor.
Syncona Limited Annual report and accounts 202288
The Committee also performs a specific evaluation of the
performance of the Independent Auditor on an annual basis,
including a review of independence and objectivity of the
Independent Auditor (see further below). There were no significant
adverse findings, or any issues faced with relation to the financial
statements, from the evaluation this year and the Committee is
satisfied that the audit process is effective.
Audit fees and assessment of independence and objectivity
of the Independent Auditor
The Committee conducts an annual assessment of the
independence and objectivity of the Independent Auditor and
reviews the terms under which the Independent Auditor is
appointed to perform permitted non-audit services. In accordance
with the non-audit services policy, proposals for all permitted
non-audit services must be approved by the Committee in advance
and such services must be on the ‘white list’ included in the policy.
Further, proposals for all permitted non-audit services in excess of
£15,000 require prior approval from the Committee before being
undertaken by the Independent Auditor.
The audit and non-audit fees proposed by the Independent Auditor
each year are reviewed by the Committee taking into account the
Company’s structure, operations and other requirements during the
year. The annual budget for both the audit and non-audit related
services was presented to the Committee for consideration and
recommendation to the Board.
The table below summarises the remuneration paid by the Group to
Deloitte for audit and non-audit services provided:
31 March 2022
£’000
31 March 2021
£’000
Audit services
Audit services 98.0 87.5
Audit fee for Syncona Group companies 112.0 99.5
Non-audit services
Interim review 30.0 23.0
CASS limited assurance report for SIML 8.0 7.0
Subscription for accounting research tool 1.0 1.0
The Committee reviews the non-audit services policy annually to
ensure that there continues to be independence and objectivity of
the audit. The Committee does not consider that the provision of
the permitted non-audit services is a threat to the objectivity and
independence of the audit and Deloitte may only provide such
services if their work does not conflict with their statutory
responsibilities, ethical guidance and such services are included
within the ‘white list’. Where non-audit services were performed, the
fees were insignificant to the Group as a whole and when required a
separate team was utilised. Further, the Committee has obtained
Deloitte’s confirmation that the other services provided do not
prejudice its independence.
The Committee has also produced and approved a policy on the
recruitment of any employees by the Company or the Investment
Manager that are associated with the auditor.
Challenge of the Investment Manager’s judgements
The Committee considers that a key part of its role is to ensure that
the Investment Manager’s judgements are challenged appropriately.
Key areas of challenge include judgements in the following areas:
– valuation of the MES – see above for further details;
– valuation methodology chosen by the Investment Manager in
determining the fair value of unquoted investments – see above
for further details; and
– key judgements and key assumptions, including judgements
used in the going concern and viability statements.
Effectiveness of the external audit
Deloitte LLP (“Deloitte”) has acted as the Independent Auditor from
the date of the initial listing on the London Stock Exchange and was
re-appointed at the Company’s Annual General Meeting on 3 August
2021 for the current financial year. John Clacy, previously the lead
audit partner and opinion signatory, was required to rotate off the audit
during this financial year. Mr Clacy was replaced by Marc Cleeve.
The Committee held formal and informal meetings with Deloitte
during the course of the year: 1) before the start of the annual audit
to discuss formal planning, discuss any potential issues and to agree
the scope that would be covered; 2) after the annual audit work was
concluded to discuss any significant issues; and 3) to consider and
discuss the interim condensed Consolidated Financial Statements.
The Committee focused on audit quality as part of the audit tender
process and subsequently with the Independent Auditor during the
audit process, particularly around behaviours and mindset, relevant
experience of the team, use of specialists and demonstration of
scepticism and challenge. In particular, the Committee performed
the following in relation to its review of the effectiveness and
independence of the Independent Auditor:
– reviewed and discussed the audit plan presented to the
Committee before the start of the audit including any changes
that might have an impact on the audit approach;
– reviewed and discussed the audit findings report and challenged
them on their process and conclusions, in particular around their
valuation methodologies, valuation components and valuation
outcomes (see above for further details);
– monitored changes to audit personnel;
– discussed with the Investment Manager and the Administrator
any feedback on the audit process including factors that could
affect audit quality and how any risks identified were addressed;
– reviewed and approved the terms of engagement during the
year, including review of the scope and related fees;
– reviewed and discussed Deloitte’s report on its own internal
procedures, safeguarding measures and conclusion on its
independence and objectivity, together with the results of the
FRC’s Audit Quality Inspection and Supervision Review of
Deloitte for the 2020/2021 cycle of reviews;
– discussed if any relationships existed between the auditor and
the Company (other than in the ordinary course of business) that
would compromise independence; and
– had a private session with the Independent Auditor following the
audit to discuss any issues raised by the Independent Auditor in
respect of the Investment Manager and/or audit quality.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
89
Audit tender process
Although the Company, as a Guernsey company, is not subject to
theStatutory Audit Services Order 2014, the Committee considers
it appropriate to report in the manner set out in the Order.
TheCompany has complied with the provisions of the Order
inthefinancial year.
As referenced in the Committee’s report last year, the Committee
undertook a competitive audit tender process during the year for
the appointment of the Independent Auditor for the financial year
ended 31 March 2023 onwards.
The tender process was carried out in line with ethical standards,
guidance issued by theFRC and the Investment Association and
concluded in August 2021. The process was managed by the
AuditTender Steering Group led by the Chair of the Committee,
supported by certain members of the Investment Manager’s
financeteam. The Committee held two additional meetings in
connection with the tender process, as well as attending the
oralpresentations.
Four audit firms in Guernsey who the Committee considered had
appropriate audit capability (including one non ‘Big Four’ firm) were
invited to tender. This list included Deloitte who were the incumbent
auditor. Two firms declined to tender due to potential conflicts.
Formal written tenders were received from two firms which were
followed by an oral presentation by each firm attended by the
Committee and the Steering Group, allowing for a question-and-
answer session with key members of each firm’s proposed
auditteam. The tendering firms were evaluated against key
selection criteria set by the Committee in a scorecard format,
focusing on the strength and depth of expertise in the team,
inparticular around life science and valuationexperience.
Following the presentations, the Committee reviewed and
discussed the outcomes of the presentations and responses. After
considering the findings and debate, the Committee recommended
both firms to the Board, with Deloitte identified as the preferred
choice. In making this recommendation the Committee considered
the fact that Deloitte were the incumbent auditor and there was a
risk to independence due to the long tenure of appointment, but
considered that of the firms who had chosen to tender, its
experience and capabilities in the life sciences sector made
itthepreferred choice.
In August 2021, the Board agreed to recommend that Deloitte
bere-appointed as the Independent Auditor for the financial
yearended 31 March 2023. The re-appointment is subject
toshareholder approval being received atthe 2022 AGM.
Risk management and internal control
The Committee is responsible for assisting the Board in reviewing
the effectiveness of the Group’s risk management and internal
control systems. The review covers financial, operational,
compliance and risk management matters, and aims to ensure that
suitable controls are in place for key risks of the Company, assets of
the Company are safeguarded, proper accounting records are
maintained and the financial information for publication is reliable.
Following such review by the Committee, and taking into account
feedback received from the Board, Audit Committee and the
Investment Manager, the Company’s principal risks were updated
this year in line with our risk management processes and are
summarised on pages 48-53. Key amendments to the principal risks
include particular processes now being in place to identify emerging
risks and thematic grouping of risks into three categories covering
business model risks (acknowledging the concentration risk that the
Group has in cell and gene therapy portfolio companies), operational
execution risks (focusing on key man risk and risks inherent in the
small investment team) and financing risks (particularly in light of
market sentiment and shifts that we have witnessed this year in the
life sciences sector more broadly). Work was also undertaken to
review and determine how climate-related risks were addressed in
the Company’s risk management processes.
As part of the effectiveness review, the Committee also carried out
adetailed assessment of the control framework and included an
assessment of any fraud risks. The Company’s system of internal
control is designed to manage rather than to eliminate the risk of
failure to achieve the objectives set out above, and by its nature
canonly provide reasonable and not absolute assurance against
misstatement and loss.
The controls are maintained and implemented on an ongoing basis
by the Investment Manager, working with the Administrator. Key
internal controls include the separate role of the Administrator in
maintaining the financial records of the Group, and the Custodian
inoverseeing the investment assets; the existence of an Investment
Committee, Valuation Committee and Liquidity Management
Committee within the Investment Manager to approve investment
decisions and capital allocation; and processes to determine and
review valuations of investments. The effectiveness review includes
compliance with legal requirements, preventing and detecting
fraudand bribery, anti-money laundering and whistleblowing
arrangements. The Committee also discussed the risk events
andbreaches that occurred in the year and the actions taken
inresponse to them.
Key amendments to the control framework included the
implementation of additional policies in a number of areas, including
sustainability, to help mitigate risks and increased controls to help
prevent fraud and corruption within the Group and against the Group.
Report of the Audit Committee
Syncona Limited Annual report and accounts 202290
Following the review, the Committee believes that the Company has
adequate and effective systems in place to identify, mitigate and
manage the risks to which it is exposed.
The Committee has examined the need for an internal audit
function. The Committee considers that the systems and
procedures employed by the Investment Manager, the Administrator
and the Custodian provided sufficient assurance that a sound
system of internal control, which safeguards the Company’s assets,
has been maintained. An internal audit function specific to the
Company is therefore considered unnecessary.
During the year the Committee discussed the implementation of an
Audit and Assurance Policy for the Group. It was agreed that it would
be in line with best practice to implement such a policy and work has
begun on preparing a policy.
Climate-related matters
During the year, the Committee assessed the materiality of
climate-related matters to the Group and how climate-related risks
and opportunities should be addressed and the impact of these
matters in the preparation of the Consolidated Financial Statements.
The Committee concluded that climate-related risks continue to
notbe material to the Group, and that they could accordingly be
addressed within the Group’s existing risk management processes
to address them. Given the increase in our stakeholders’ interest
onthis topic, the Audit Committee continues to monitor this matter
each year.
Committee evaluation and effectiveness
During the year, the Committee undertook its annual review of
effectiveness against its Terms of Reference and concluded that
ithad performed its responsibilities effectively and that it had met
itskey priorities for the year.
Conclusion and recommendation
After discussing with the Investment Manager and Independent
Auditor and assessing the Significant Financial Statement matters
listed on page 88, the Committee is satisfied that the Consolidated
Financial Statements appropriately address the critical judgements
and key estimates in respect to the amounts reported and the
disclosures. The Committee is also satisfied that the significant
assumptions used for determining the value of assets and
liabilitieshave been appropriately scrutinised, challenged and are
sufficiently robust. The Committee does not consider any material
uncertainties arise in relation to the Company’s ability to continue
asa going concern.
The Committee further concludes that the Consolidated Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Group’s performance, business model and strategy.
The Independent Auditor reported to the Committee that no
material misstatements were found in the course of its work.
TheInvestment Manager and the Administrator confirmed to the
Committee that they were not aware of any material misstatements
including matters relating to the presentation of the Consolidated
Financial Statements.
The Committee confirms that it is satisfied that the Independent
Auditor has fulfilled its responsibilities with diligence and has acted
independently on the work undertaken on behalf of the Group.
Following the outcome of the formal audit tender process this year,
and in considering the work that the Independent Auditor has
undertaken this year, the Committee has recommended, and the
Board has agreed to recommend to shareholders, that Deloitte
bereappointed as the Independent Auditor for the next financial
year. The re-appointment is subject to shareholder approval at
the2022 AGM.
The Committee Chair attends each Annual General Meeting to
respond to any questions on matters not addressed in the foregoing.
Rob Hutchinson
Chair, Audit Committee
15 June 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
91
Report of the Remuneration Committee
I am pleased to introduce the remuneration report
for the year ended 31 March 2022, which sets out
the work performed by the Committee.
It has been a privilege to take over chairing the Committee during
the year. I would like to extend my, and the Committee’s, thanks to
Nicholas Moss for all of his work as Chair of the Committee over the
last four years.
Role of the Committee
The Committee’s role is to:
– approve the remuneration paid to the Chair of the Board;
– make recommendations to the Board on the remuneration of the
other Directors;
– review the overall employee cost of the Investment Manager;
– oversee and operate the incentive scheme that provides
long-term rewards to the staff of the Investment Manager; and
– set the remuneration policy and remuneration of the CEO of the
Investment Manager.
The Company has no Executive Directors and accordingly the
Committee does not have any responsibilities for reviewing
Executive Director remuneration.
The Committee’s Terms of Reference were revised earlier this year
to reflect the new responsibilities of the Committee and the updated
version is available on the Company’s website synconaltd.com.
The Committee retains PricewaterhouseCoopers LLP (PwC) to
provide independent professional advice on remuneration issues.
During the year, PwC provided the Committee with an update on
the remuneration landscape for listed companies, and also provided
advice to support work by the Committee in reviewing the fees paid
to the Chair and Non-Executive Directors. The Committee has
reviewed the advice provided to it by PwC during the year and is
satisfied that it has been objective and independent. The total fees
of PwC for the advice during the year were £22,500 (excluding VAT)
(2021: £13,900 (excluding VAT)). PwC also separately advise the
Company and the Investment Manager on tax compliance and the
Company on the valuation, accounting treatment and process
relating to the issue of awards under the incentive scheme,
butdonot have any other connection with the Company or
individual Directors.
Gian Piero Reverberi
Chair, Remuneration Committee
Remuneration Committee members
and structure
The Committee’s members in the year were:
Meetings attended
Gian Piero Reverberi
(Chair from 1 January 2022)
4/4
Melanie Gee 4/4
Virginia Holmes 4/4
Rob Hutchinson 4/4
Nicholas Moss
(resigned from the Committee on 31 December
2021; Chair until 31 December 2021)
3/3
The Committee comprises at least three members,
who are appointed by the Board. All members of the
Committee in the year were independent Directors.
The Board has also appointed Cristina Csimma to
join the Committee from 1 July 2022.
The Committee meets as required and expects to
meet at least three times each year. The table above
sets out the number of meetings held during the year
and the number of meetings attended by each of the
members. Other Directors who are not members of
the Committee may also be invited to the meetings.
Syncona Limited Annual report and accounts 202292
As previously reported, the Committee carried out a review of the
terms and operation of the incentive scheme during 2019/20. The
Committee concluded that the incentive scheme remains fit for
purpose, aligning the team of the Investment Manager with the
Company’s strategy by ensuring that a material part of individual
compensation is directly tied to gains in the Company’s life science
portfolio, which is the key driver of shareholder returns, and that the
staged realisation structure ensures that rewards are principally
driven by long-term performance rather than short-term changes
invaluation. In line with its normal cycle the Committee intends
tocarry out a further review of the scheme during 2022/3.
Remuneration of Investment Manager staff
The remuneration policy for, and remuneration of, the staff of the
Investment Manager is determined by the Investment Manager, with
the exception of awards under the incentive scheme, where the
Committee is involved as set out above, and the remuneration
policy and remuneration of the CEO, as described below.
The Committee reviews the overall employee cost of the
InvestmentManager on an annual basis. A summary of the
Investment Manager’s approach to remuneration is set out on
page97. The Committee is satisfied that the remuneration policy,
overall cost and incentive scheme are appropriate to align the team
of the Investment Manager with the Company’s strategy.
As noted above, during the year the Board agreed that the
Committee should also take responsibility for setting the
remuneration policy and remuneration of the CEO of the Investment
Manager. The Committee expects to establish its processes to do
this over the next financial year.
The Committee has also begun to consider how sustainability
issuesshould impact remuneration policy. As described elsewhere
inthis Annual Report, the Board believes our core activities have
thepotential for transformational impact on patients in areas of high
unmet need whilst also providing strong risk-adjusted returns for
shareholders. The team of the Investment Manager is incentivised
tocreate value through building valuable businesses that deliver new
treatments for patients, and as such we believe the existing incentive
structures already align the team with delivering a positive impact on
society. In addition, part of the team’s annual objectives relate to
implementation of our wider sustainability policies and these feed
intoperformance and bonus assessments. As our sustainability
implementation matures, the Committee expects there will be further
discussion within the Investment Manager around additional
sustainability metrics for remuneration.
Committee evaluation and effectiveness
During the year, the Committee completed its annual review
ofeffectiveness, and concluded that it had performed its
responsibilities effectively.
Remuneration Policy for Non-Executive Directors and
Director fees
A Remuneration Policy for Non-Executive Directors was approved
by shareholders at the AGM on 28 July 2020. The Remuneration
Policy can be found on page 96. The Remuneration Policy is
reviewed annually to ensure that it remains appropriate.
During the year, and as reported in the Committee’s report for
2020/1, the Committee reviewed the fees paid to the Chair of the
Board and to Non-Executive Directors generally. These were last fully
reviewed in October 2017 and the Committee considered it was
important to ensure that Board remuneration remained at a level that
enables the Board to recruit and retain Directors with the skill sets
and diversity required. Changes have been approved to take effect
from 1 April 2022 and are set out in further detail below.
In addition, the Committee was grateful for the support of
shareholders at the Company’s AGM on 3 August 2021, to increase
the limit on the aggregate fees paid to the Directors in any year to
£1,000,000.
Incentive scheme
The Committee is responsible for approving the making of awards
under the incentive scheme that provides long-term rewards to the
staff of the Investment Manager, and in which most of the staff of
the Investment Manager participate. Further details of the scheme
can be found in the summary of the Investment Manager’s
approach to remuneration on page 97. In line with its normal
practice, the Committee approved awards in July 2021 and made
one further award in November 2021 to a member of staff when
they became eligible for an award.
During the year the Committee discussed its process for making
awards, and has agreed that with effect from awards made in 2022
it will only approve individual awards for specific senior members of
staff of the Investment Manager and will delegate authority to
approve individual awards for other staff to the Investment Manager,
within designated bands.
The incentive scheme
aligns the team of the
Investment Manager with
delivering shareholder
returns and a positive
impact on society”
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
93
Report of the Remuneration Committee
None of the Directors has any entitlement to taxable benefits,
pensions or pension-related benefits, medical or life insurance
schemes, share options, long-term incentive plan, or performance
related payments. No Director is entitled to any other monetary
payment or assets of the Company except in their capacity
(whereapplicable) as shareholders of the Company. Accordingly,
the table below does not include columns for these items or their
monetary equivalents.
Directors’ and Officers’ insurance is maintained and paid for by the
Company on behalf of the Directors.
In line with market practice, the Company has undertaken, subject
to the Companies Law and certain limitations, to indemnify each
Director out of the assets and profits of the Company against
certain charges, losses, damages, expenses and liabilities arising
out of any claims made against him or her in connection with the
performance of his or her duties as a Director of the Company. The
indemnities would also provide financial support from the Company
should the level of cover provided by the Directors’ and Officers’
insurance maintained by the Company be exhausted.
No Director was interested in any contracts with the Company
during the period or subsequently.
None of the Directors has a service contract with the Company.
Non-Executive Directors are engaged under Letters of
Appointment, copies of which are available for inspection at the
Company’s Registered Office.
Single total figure table (audited information)
For the year to 31 March 2022, the fees for Directors were as follows:
31 March 2022
£’000
31 March 2021
£’000
Melanie Gee (Chair) 100 100
Julie Cherrington
1
10 –
Cristina Csimma
1
10 –
Thomas Henderson
2
– –
Virginia Holmes 53 12
Rob Hutchinson 63 60
Nigel Keen
3
34 45
Kemal Malik 50 38
Nicholas Moss
4
49 55
Gian Piero Reverberi 52 45
Total 419 386
1 Julie Cherrington and Cristina Csimma were appointed to the Board on 1 February 2022.
2 Thomas Henderson retired from the Board on 3 August 2021. Mr Henderson had waived his
right to receive fees.
3 Fees paid to Imperialise Limited, a company controlled by Nigel Keen. Mr Keen retired from
the Board on 31 December 2021. In addition, Mr Keen was the Chair of the Investment
Manager and received a fee of £136,766 per annum, payable by the Investment Manager, in
respect of his services to the Investment Manager. Mr Keen also retired as Chair of the
Investment Manager on 31 December 2021; following his retirement he received a payment
in April 2022 of £91,612 consisting of contractual notice pay and an ex gratia payment of
£42,341.
4 Nicholas Moss retired from the Board on 31 December 2021.
No payments to Directors for loss of office have been made in the
year. No payments to past Directors have been made in the year.
Report on implementation of the Remuneration Policy for
Non-Executive Directors
Although the Company is not subject to the laws of England and
Wales, this report is prepared in accordance with Schedule 8 of the
Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013.
The Directors have chosen not to include a chart of Total
Shareholder Return, which is required by paragraph 18 of Schedule
8, as they are voluntarily adopting the Regulations.
During the year, the Committee conducted a detailed review of the
fees paid to the Chair and Non-Executive Directors (which were last
fully revised with effect from 1 October 2017), to ensure they remain
appropriate to recruit high quality directors with appropriate skills and
other attributes, and fairly remunerate them for the work performed.
As part of this evaluation, the Committee consulted with PwC,
conducted benchmarking against comparable peer groups (taking
account of the Company’s structure as a self-managed investment
company, its business model of founding and building early stage life
science businesses, and the Company’s market capitalisation). The
Committee also reviewed the responsibilities undertaken by the Chair
and Non-Executive Directors including time spent on the respective
roles and the extent to which these have changed since 2017 as the
Company’s life science business has evolved. Following the review,
the Board approved, on the recommendation of the Committee, an
increase in annual base fees to the Chair andNon-Executive
Directors with effect from 1 April 2022. TheBoard also approved
additional allowances in two situations, namely for Directors who
also serve as a director of the Company’s Guernsey subsidiary
companies, and a travel time allowance for meetings attended
outside the Director’s continent of residence.
Details of the previous and revised fees are set out below. Following
these changes, the Committee does not anticipate any significant
change to the way in which the Remuneration Policy is
implemented in the next financial year.
Directors’ fees
The fees payable to the Non-Executive Directors are set out below.
Fee per annum
Chair £100,000
Increased to £125,000
with effect from 1 April 2022
Director £45,000
Increased to £50,000
with effect from 1 April 2022
Senior Independent Director £10,000 additional fee
Chair of Audit Committee £15,000 additional fee
Member of Audit Committee
(other than Chair)
£5,000 additional fee
Chair of Remuneration Committee £5,000 additional fee
Director of Guernsey subsidiary
companies
£10,500 additional fee
payable from 1 January 2022
Travel time allowance £2,500 additional allowance for each
meeting attended outside the
Director’s continent of residence
payable from 1 January 2022
The fee paid to each Director is set out in the single total figure
tableopposite.
Syncona Limited Annual report and accounts 202294
Relative importance of spend on pay
The following table shows the proportion of the Company’s
Directors’ fees relative to returns to shareholders. This table includes
Directors only as the Company did not have any other staff. In line
with previous announcements, the Company does not intend to
declare a dividend in relation to the year ended 31 March 2022 or
future years.
For the year ended
31 March 2022
£’000
For the year ended
31 March 2021
£’000
Difference
£’000
Total Directors’
pay 419 386
Dividends 0 0 0
Directors’ pay as
a % of
distributions to
shareholders N/A N/A -
Results of the voting at the 2021 AGM
At the 2021 AGM, shareholders approved the remuneration report
that was published in the 2021 Annual Report. The results for this
vote are shown below:
Resolution Votes for % for
Votes
against
%
against Withheld Discretion
Approval of
the Directors’
remuneration
report 483,970,337 99.67% 1,618,992 0.33% 9,883 0
An ordinary resolution for the approval of the annual remuneration
report will be put to the shareholders at the Annual General Meeting
to be held on 2 August 2022.
Statement of Directors’ shareholding and share interests
(audited information)
Neither the Company’s Articles of Association nor the Directors’
Letters of Appointment require a Director to own shares in the
Company. The interests of the Directors and their connected
persons in the equity securities of the Company at 31 March 2022
are shown in the table below.
Ordinary Shares
31 March 2022 31 March 2021
Melanie Gee (Chair) 76,500 26,500
Julie Cherrington
1
– –
Cristina Csimma
1
– –
Virginia Holmes 38,000 38,000
Rob Hutchinson 94,827 68,827
Kemal Malik 11,475 11,475
Gian Piero Reverberi 50,000 50,000
1 Julie Cherrington and Cristina Csimma were appointed to the Board on 1 February 2022.
Gian Piero Reverberi
Chair, Remuneration Committee
15 June 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
95
General
The Board has the power at any time to
appoint any person to be a Director,
either to fill a casual vacancy or as an
addition to the existing Directors. There is
no maximum number of Directors unless
otherwise determined by the Company
by Ordinary Resolution. Any Director so
appointed holds office only until the next
following Annual General Meeting and is
then eligible for re-election.
The Directors are non-executive and the
aggregate fees payable in any year are
restricted to a maximum of £1,000,000.
The Board currently has no intention to
appoint any executive directors who will
be paid by the Company.
Non-Executive Directors
All Directors are appointed under the
terms of Letters of Appointment, and
none has a service contract. The
Company has no employees.
The Non-Executive Directors of the
Company are entitled to such rates of
annual fees as the Board at its discretion
shall from time to time determine (subject
to any limit set in the Company’s Articles
of Association) and reimbursement of
reasonable fees and expenses incurred
by them in the performance of their
duties. Non-Executive Directors have
noentitlement to pensions or
pension-related benefits, medical or
lifeinsurance schemes, share options,
Long-Term Incentive Plans or
performance-related payments. Where
expenses are recognised as a taxable
benefit, a Non-Executive Director may
receive the grossed-up costs of that
expense as a benefit.
The Company has no employees.
Accordingly, pay and employment
conditions of employees generally were
not taken into account when setting the
Remuneration Policy and there was no
consultation with employees. The
Remuneration Committee considers
theapproach set out in this
Remuneration Policy is consistent with
the remuneration approach taken by
theInvestment Manager.
Table of Directors’ remuneration components
Element
Purpose and link to
strategy Operation Maximum
Board Chair fee To attract and retain a
high-calibre Chair by
offering a market
competitive fee level.
The Chair is paid a single fee for all their responsibilities. The level
of the fee is reviewed periodically by the Remuneration
Committee , with reference to workload, time commitment and
fees paid in other relevant listed companies.
At the discretion of the Remuneration Committee part or all of the
annual fee paid to the Chair may be paid in the Company’s
Ordinary Shares. There is no requirement for the Chair to retain
any such shares.
The fees paid to the Chair are
subject to change periodically by
the Remuneration Committee
under this policy. There is no
maximum fee level.
Non-Executive
Director fees
To attract and retain
high-calibre
Non-Executive
Directors by offering a
market competitive
fee level.
The Non-Executives are paid a basic fee. Additional fees may be
paid to Non-Executives carrying out further Board responsibilities
as considered appropriate from time to time, for example acting
as Senior Independent Director or Audit Committee Chair. The
fee levels are reviewed periodically by the Chair and the
Remuneration Committee, with reference to workload, time
commitment and market levels in other relevant listed companies,
and a recommendation is then made to the Board.
At the discretion of the Board part or all of the annual fee paid to
any Non-Executive Director may be paid in the Company’s
Ordinary Shares. There is no requirement for Non-Executive
Directors to retain any such shares.
These fee levels are subject to
change periodically under this
policy. There is no maximum
feelevel.
Notes to the Table of Directors’ remuneration components
No Director is entitled to receive any remuneration from the Company which is performance-related. As a result there are no
performance conditions in relation to any elements of the Directors’ remuneration in existence to set out in this Remuneration Policy.
The Company has no employees. Accordingly, there are no differences in policy on the remuneration of Directors and the
remuneration of employees.
There are no provisions in Directors’ Letters of Appointment for recovery or withholding of fees or expenses. Annual fees are
pro-rated where a change takes place during a financial year.
Relative to the previous policy, each element above has changed to note that part or all of the annual fee may be paid in the
Company’s Ordinary Shares. This change has been made to allow flexibility where the Board considers it would be appropriate
todo this.
Remuneration Policy
This is the Remuneration Policy for the Non-Executive Directors of the Company, as approved by shareholders at the Company’s
Annual General Meeting on 28 July 2020.
The Remuneration Policy set out below will apply until it is next put to shareholders for approval, which will be at the Company’s
Annual General Meeting in 2023 or sooner if it is proposed to vary the Remuneration Policy.
Report of the Remuneration Committee
Syncona Limited Annual report and accounts 202296
The policy and components of current
remuneration are set out below, and are
intended to ensure that there is alignment
with the Syncona purpose, strategy and
values. Stretching targets are set for the
Investment Manager’s team after careful
consideration of the anticipated
challenges and opportunities faced
bythe business.
For the senior leadership team within
theInvestment Manager, remuneration
isstructured to align them with
shareholders’ interests with a significant
percentage of total remuneration linked
to long-term performance through
participation in the incentive scheme.
Base salary
Base salaries are reviewed annually on
1April. When conducting the annual
salary review for all employees, account
is taken of the external market, which
may include market data provided by the
Investment Manager’s independent
advisers, and individual performance.
Pension
The Investment Manager makes
contributions for eligible employees into a
personal pension plan up to a maximum
of 10 per cent of base salary.
Annual bonus
A discretionary annual bonus may be
awarded. An award will take into account
two factors: the performance of the
Investment Manager against its corporate
objectives and the individual’s performance.
Bonus payments are not pensionable.
Other benefits
These include private medical insurance,
income protection and life cover.
Incentive scheme
The Company operates an incentive
scheme that provides long-term rewards
to the employees of the Investment
Manager. The incentive scheme was
approved by shareholders in December
2016 and is designed to reward
long-term performance and align the
investment team with shareholders.
Afuller description can be found in
thecircular to shareholders dated
28November 2016.
Under the incentive scheme, employees of
the Investment Manager are awarded
Management Equity Shares (“MES”) in
Syncona Holdings Limited (“SHL”) at no
cost. The majority of the employees of the
Investment Manager participate in the
incentive scheme.
– MES entitle holders to share in the growth
of the Net Asset Value of the life science
portfolio (excluding the interest in the CRT
Pioneer Fund but including the value of
prior realisations from the life science
portfolio) subject to certain adjustments.
– The growth is measured from the Net
Asset Value at the most recent valuation
point, which will generally be the value
determined at the most recent financial
year end, or if greater the total capital
invested in the life science portfolio.
– For a MES to have value there must have
been growth in the adjusted Net Asset
Value of the life science portfolio of at least
15 or 30 per cent (depending on when the
MES were issued) from the starting value.
– A limit applies to the maximum number of
MES that can be issued at any time,
defined by reference to the total capital
invested in the life science portfolio.
– MES vest on a straight-line basis over a
four-year period. Holders are able to
realise 25 per cent of their vested MES
annually after the publication of the
Company’s Annual Results.
– On realisation 50 per cent of the after-tax
value is paid in the Company’s Ordinary
Shares (which must normally be held for
at least 12 months) and the balance is
realisable in a cash payment. In practice a
tax rate of 28 per cent is assumed to
apply and so 36 per cent of the realisation
value is paid in the Company’s Ordinary
Shares and the remaining 64 per cent of
the realisation value is paid in cash.
The incentive scheme accordingly reflects
the value generated in the life science
portfolio over a number of years. Since
December 2016 (when the incentive
scheme was established), the adjusted Net
Asset Value of the life science portfolio has
moved by a total of £574.7 million, of which
£727.8 million is a realised gain.
In the 12 months to 31 March 2022 the
following payments were made as a
result of realisations of MES:
– In July 2021, a cash payment of £8.4
million was made to MES holders (total
since December 2016: £18.8 million).
– In July 2021, 2,153,171 Ordinary
Shares were issued to MES holders
(valued at £4.8 million at the time of
issue); these shares are subject to a
12month lock-up (total since
December 2016: 4,672,025 shares
valued at £10.7 million at the time
ofissue).
– At 31 March 2022: The total liability
forthe cash settled element of the
incentive scheme for MES that have
vested but not yet been realised
determined in accordance with IFRS 2
was £17.8 million (see note 12). Of that
amount, a maximum of £9.4 million can
be realised at the next realisation date.
– The total number of Ordinary Shares in
the Company that could potentially be
issued under the incentive scheme was
6,880,057 (taking account of all MES,
whether vested or not vested, and
based on the share price at 31 March
2022 of £1.60/share), equal to 1.03 per
cent of the number of Ordinary Shares
in issue at that date. Of those shares,
amaximum of 3,316,834 Ordinary
Shares could be issued at the next
realisation date (the actual number of
shares that can be issued will depend
on the share price at the time of
realisation). The aggregate number of
new Ordinary Shares which may be
issued on the realisation of MES under
the incentive scheme in any 10-year
period may not exceed 10 per cent of
the number of Ordinary Shares in issue
from time to time.
Share interests
Members of the Investment Manager’s
team are encouraged to build up
aninterest in the Company’s shares,
butare not subject to a formal
shareholding guideline.
Remuneration approach of the Investment Manager
This section of the remuneration report gives brief details of the remuneration approach applied by the Investment Manager for its
team. This approach applies to the entire team, although adjustments may be made for employees who live outside the UK to take
account of local requirements.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
97
Directors’ report
The Directors are required to disclose all actual and potential
conflicts of interest to the Board as they arise for consideration and
approval. These are considered carefully, taking into account the
circumstances around them, and if considered appropriate are
approved. The Board may impose restrictions or refuse to authorise
such conflicts if deemed appropriate.
During the year, the Company maintained cover for its Directors and
Officers under a Directors’ and Officers’ liability insurance policy.
Share capital
As at 31 March 2022, the Company had 666,733,588 nil paid
Ordinary Shares in issue. No shares were held in treasury. The total
number of voting rights at 31 March 2022 was 666,733,588. The
Ordinary Shares each have standard rights as to voting, dividends
and payment on winding up and no special rights and obligations
attaching to them. There are no material restrictions on transfers of
shares. In addition, the Company has one Deferred Share in issue.
This share has the right to payment of £1 on the liquidation of the
Company, and a right to vote only if there are no other classes of
voting shares of the Company in issue, but no other rights.
As at 31 March 2022, the Company has been notified of the
following significant (5 per cent or more) direct or indirect holdings
of securities in the Company:
Shareholder
Number of Ordinary
Shares held
% of issued share capital
held
The Wellcome Trust 186,000,000 27.90
Schroders plc 40,386,504 6.06
Waverton Investment
Management Limited 34,026,037 5.10
Other than as disclosed above, the Company is not aware of any
person who has a significant direct or indirect holding of securities
in the Company. There are no restrictions on voting rights. The
Company is not aware of any agreements between holders of
securities that may result in restrictions on the transfer of securities
or on voting rights.
The Company has the authority, subject to various terms as set out
in its Articles and in accordance with The Companies (Guernsey)
Law, 2008, to acquire up to 14.99 per cent of the shares in issue.
The Company intends to renew this authority annually. The Directors
have no current intention to utilise this authority.
Results and dividends
The results for the year are set out in the Consolidated Statement of
Comprehensive Income on page 109.
No dividend was declared in the year ending 31 March 2022 (31
March 2021: £0.00), and the Company does not intend to declare a
dividend in relation to the year ended 31 March 2023 or in future
years.
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 £1,309.8 million (31 March 2021: £1,300.3 million) of
which £764.7 million (31 March 2021: £544.7 million) are readily
realisable within three months in normal market conditions, and
liabilities including uncalled commitments to underlying investments
and funds amounting to £88.5 million (31 March 2021: £115.5 million).
The Directors present their Annual Report and Audited
Consolidated Financial Statements for the year ended 31
March 2022,
which have been prepared in accordance with
The Companies (Guernsey) Law, 2008.
Principal activity
The Company is a Guernsey authorised closed-ended investment
company
listed on the Premium Segment of the London Stock
Exchange.
The Company is governed by an independent Board of Directors
and has no employees. Management of its investments is
contracted to its subsidiary Syncona Investment Management
Limited, the Investment Manager. Its company secretarial and
administrative functions are outsourced to Citco Fund Services
(Guernsey) Limited, with further support and oversight provided by
the Investment Manager. Further details on the Company’s
Investment Manager are given below.
The Company’s investment objective is to achieve superior
long-term capital appreciation from its investments.
A copy of the
investment policy can be found on page 100.
Investment Manager
The investment portfolio is managed by the Investment Manager,
which was appointed to that role on 12 December 2017. The
Investment Manager is regulated by the Financial Conduct Authority
as an Alternative Investment Fund Manager.
The Company pays the Investment Manager an annual fee equal to
expenses incurred in managing the investment portfolio, up to a
maximum of 1.05 per cent per annum of the Company’s NAV. In
addition, the Company has in place an incentive scheme that
provides long-term rewards available to employees of the
Investment Manager.
The appointment of the Investment Manager is indefinite and can
be terminated by the Company on 180 days’ notice. No
compensation is payable to the Investment Manager on termination
of its appointment.
The Directors review the performance of the Investment Manager
each year and consider that the Investment Manager is performing
well. Accordingly, the Directors consider that the continuing
appointment of the Investment Manager on the terms agreed is in
the interests of the Company and its shareholders as a whole.
Expenses
Management fees paid to the Investment Manager in 2022 totalled
£10.7 million (2021: £8.2 million); 0.82 per cent of NAV for the 12
months (2021: 0.63 per cent of NAV). The ongoing charges ratio,
which includes the management fee, costs and reduction in value
associated with the Company’s incentive scheme and costs incurred
in running the Company, was 0.48 per cent (2021: 1.54 per cent).
Directors
Biographical details of the current Directors of the Company are
shown on pages 80 and 81. Details of the Directors’ shareholdings
are included in the Directors’ remuneration report on page 95.
At each Annual General Meeting of the Company, all the Directors at
the date of the notice convening the Annual General Meeting retire
from office and each Director may offer himself or herself for election
or re-election by the shareholders. There is no age limit on Directors.
Syncona Limited Annual report and accounts 202298
Given the Group’s capital pool of £784.9 million
1
(31 March 2021:
£578.2 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 potential
future impact of COVID-19, the war in Ukraine and 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.
Annual General Meeting
The AGM will be held at Arnold House, St Julian’s Avenue, St. Peter
Port, Guernsey GY1 3RD on 2 August 2022 at 10:30am. Details of
the resolutions to be proposed at the AGM, together with
explanations, appear in the Notice of Annual General Meeting sent
to shareholders separately.
The Board remains committed to allowing shareholders the
opportunity to engage with the Board, and if shareholders have any
questions for the Board in advance of the AGM, these can be sent
by email to contact@synconaltd.com. The Board will endeavour to
answer key themes of these questions on the Company’s website
as soon as practical.
Charitable donations
The Company has agreed with The Syncona Foundation that
one-twelfth of 0.35 per cent of the total NAV of the Company at
each month-end during the year will be donated annually by the
Company to charity (subject to review each year). Of this donation,
in the current year 0.15 per cent of NAV is donated to The Institute
of Cancer Research and the remainder is donated to The Syncona
Foundation, for it to make grants to selected charities.
Further details of the Company’s charitable donations are set out in
the Sustainability section of the Strategic Report on pages 54-71
and in the Company’s separate Sustainability Report, available on
its website.
Stakeholders, emissions and other matters
For stakeholder information, see Our stakeholders section. For
emissions reporting, see Strategic Report. For future developments,
see Strategic Report and for post-balance sheet events, see note
21 of the Consolidated Financial Statements. For information
regarding financial instruments, see notes 17 and 18 of the
Consolidated Financial Statements.
The Directors have considered the relevance of the risks of climate
change and transition risks in the preparation of the Consolidated
Financial Statements and confirm that the financial impact of
climate-related matters, to the extent relevant to the Company, has
been incorporated into the Consolidated Financial Statements.
The Directors have considered the impact of events in Russia and
Ukraine in the preparation of the Consolidated Financial Statements
and confirm that the financial impact of such matters, to the extent
relevant to the Company, has been incorporated into the
Consolidated Financial Statements.
Other information
Under Listing Rule 9.8.4CR, a listed company must include all
information required by LR 9.8.4R in a single identifiable location or
a cross-reference table indicating where that information is set out.
For the purposes of LR 9.8.4CR, the information that is required to
be disclosed by LR 9.8.4R can be found as per the below table.
Requirement Location
Interest capitalised Not applicable
Unaudited financial information Not applicable
Long-term incentive schemes Audit Committee Report
Remuneration Committee Report
Waiver of emoluments / future emoluments
by a director
Not applicable
Non pre-emptive issues of equity for cash Not applicable
Non pre-emptive issues of equity for cash
in relation to major subsidiary undertakings
Not applicable
Information for unlisted major subsidiary
undertaking
Not applicable
Parent undertaking details Not applicable
Contract of significance Not applicable
Controlling shareholder provision of services Not applicable
Dividend waiver by shareholders Not applicable
Future dividend waiver by shareholders Not applicable
Agreements with controlling shareholders Not applicable
All the relevant information cross-referenced above is hereby
incorporated by reference into this Directors’ report.
Auditor
The Company is required to appoint auditors for each financial year
of the Company, to hold office until the conclusion of the next
general meeting at which accounts are presented. Our Independent
Auditor, Deloitte LLP, has indicated their willingness to remain in
office and resolutions to reappoint them for the year to 31 March
2023 and to authorise the Directors to determine their remuneration
will be proposed at the Annual General Meeting. The Audit
Committee carried out a tender for the role of Independent Auditor
during the financial year and the Board recommends that Deloitte
LLP continues as auditor.
As far as the Directors are aware, there is no relevant audit
information of which the Auditor is unaware and they have taken all
steps they should have taken as Directors in order to make
themselves aware of any relevant audit information and to establish
that the Auditor is aware of that information.
Signed on behalf of the Board.
Melanie Gee
Chair
15 June 2022
1 Refer to glossary
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
99
Directors’ report
Capital Pool
The objective of the Capital Pool is to provide the Company with
access to liquidity in all market conditions, with limited annualised
volatility across the Capital Pool as a whole.
In implementing this objective the Capital Pool may be held in a
combination of cash, short-term deposits, other liquid and low
volatility assets, and funds including credit, fixed income and
multi-strategy funds.
In addition, parts of the Capital Pool may be held in funds that
were invested in accordance with any prior investment policy of
the Company, until those funds are realised.
The composition of the Capital Pool will vary over time,
depending on the aggregate amount of the Company’s gross
assets that are allocated to it.
The Capital Pool is subject to the requirement, measured at the
time of investment, that no more than 20 per cent of the
Company’s gross assets may be held in any single fund or
managed account.
Investment restrictions
The Company will not make any direct investment in any
tobacco company and has agreed with (a) The Institute of
Cancer Research (the “ICR”) not knowingly to make any
investment which contravenes the tobacco restriction contained
in the investment policy of the ICR and (b) Cancer Research UK
not knowingly to make or continue to hold any investments in
the Fund Investment portfolio which would result in exposure to
tobacco companies exceeding 1 per cent of the aggregate value
of the Capital Pool from time to time.
The Company will not invest more than 15 per cent of its gross
assets in other closed-ended investment funds that are listed on
the FCA’s Official List.
The Group may incur indebtedness for the purpose of financing
share repurchases or redemptions, satisfying working capital
requirements or to assist in payment of the annual charitable
donation, up to a maximum of 20 per cent of the Company’s Net
Asset Value at the time of incurrence.
Any decision to incur indebtedness for the purpose of servicing
any awards under the Group’s Long-Term Incentive Plan must
be approved by the Board. Any other decision to incur
indebtedness may be taken by the Investment Manager within
such parameters as are approved by the Board from time to
time. There are no limitations on indebtedness being incurred
atthe level of the Company’s underlying investments.
The Company does not propose to enter into any securities or
derivative hedging or other derivative arrangements other than
those that may from time to time be considered appropriate for
the purposes of efficient portfolio management and will not enter
into such arrangements for investment purposes, although there
are no limitations on such arrangements being entered into at
the level of the Company’s underlying investments.
Investment objective and policy
The Company’s investment objective is to achieve superior
long-term capital appreciation from its investments. The
Company invests in life science businesses (including private
andquoted companies) and single or multi-asset projects
(“LifeScience Investments”).
The Company will target an annualised return across its net
assets of 15 per cent per annum over the long term.
The Company also holds a portion of its assets as a capital pool
(“Capital Pool”) to ensure it has capital available to make future Life
Science Investments. There is no limit on the size of the Capital
Pool although it is intended that the Company should invest the
significant majority of its assets in Life Science Investments.
Life Science Investments
Life Science Investments will principally be privately owned
businesses or single or multi-asset opportunities, together with
the Company’s investment in the CRT Pioneer Fund.
The Company anticipates that its Life Science Investment
businesses will primarily be headquartered in the United Kingdom
and, to a lesser extent, continental Europe, although some may
have operations elsewhere in the world and may market and
commercialise their products on a global basis.
The Company anticipates that, over time, its Life Science
Investments portfolio will consist of around 15 to 20 life science
opportunities, of which three to five are likely to become
significant core holdings. The Company will invest further in its
existing portfolio of Life Science Investments and will seek to
create further opportunities by founding new businesses to
commercialise academic science.
The Company will seek to create and invest in new or existing Life
Science Investment businesses or opportunities with a view to
long-term ownership, to support the building of companies that
are capable of taking their products to market on an independent
basis and therefore to build sustainable, revenue-generating
businesses. However, the Company may selectively divest
companies in part or in full where it is in the Company’s interest
todo so.
The Company will commit at least 25 per cent of the assets that it
commits to Life Science Investments to oncology projects or Life
Science Investment businesses with a sole or dominant focus
ononcology.
The Life Science Investment portfolio is subject to the following
diversification requirements, each of which is measured only at
the time of an investment and with respect to the impact of
thatinvestment:
– no more than 35 per cent of the Company’s gross assets may
be invested in any single Life Science Investment;
– no more than 60 per cent of the Company’s gross assets may
be invested in the largest two Life Science Investments;
– no more than 75 per cent of the Company’s gross assets may
be invested in the largest three Life Science Investments; and
– no more than 15 per cent of the Company’s gross assets may
be invested in quoted companies, disregarding for these
purposes any investments which have become quoted
companies during their ownership by the Company.
Syncona Limited Annual report and accounts 2022100
Statement of Directors’
responsibilities
In respect of the Annual Report and audited
Consolidated Financial Statements
The Directors are responsible for preparing the Annual Report
andthe financial statements in accordance with applicable law
andregulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors are required to
prepare the Group financial statements in accordance with
International Financial Reporting Standards (“IFRSs”) as adopted
bythe European Union.
Under company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the profit or loss of the
Company for that period. In preparing these financial statements,
International Accounting Standard 1 requires that Directors:
– properly select and apply accounting policies;
– present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
– provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity’s financial position and financial
performance; and
– make an assessment of the Company’s ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with The Companies (Guernsey)
Law, 2008. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
Responsibility statement
We confirm that 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.
This responsibility statement was approved by the Board of
Directors on 15 June 2022 and is signed on its behalf by:
Melanie Gee
Chair
Rob Hutchinson
Non-Executive Director
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
101
Report on the audit of the financial statements
1. Opinion
In our opinion the financial statements of Syncona Limited (the
“parent company”) and its subsidiary (together the “Group”):
– give a true and fair view of the state of the Group’s affairs as
at 31 March 2022 and of its profit for the year then ended;
– have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the
European Union;
– have been prepared in accordance with the requirements of
the Companies (Guernsey) Law, 2008.
We have audited the financial statements which comprise:
– the Consolidated Statement of Comprehensive Income;
– the Consolidated Statement of Financial Position;
– the Consolidated Statement of Changes in Net Assets Attributable
to Holders of Ordinary Shares;
– the Consolidated Statement of Cash Flows; and
– the related notes 1 to 21.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the
European Union.
2. Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of
our report.
We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the Financial Reporting Council’s (the “FRC’s”)
Ethical Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services provided to the Group
for the year are disclosed in note 9 to the financial statements. We
confirm that the non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
– Key Judgements within the Valuation of Unquoted Life Science
Portfolio; and
– Valuation of the Long-Term Incentive Plan (“LTIP”) Liability.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used in the current year was £25.7 million
which was determined on the basis of approximately 2% of net
assets attributable to holders of Ordinary Shares (‘NAV’).
Scoping
The Group engagement team carried out audit work on the parent
company, its subsidiary and the underlying entities in the investment
structure, executed at levels of materiality applicable to each entity,
which in all instances was lower than Group materiality.
Significant changes in our approach
There have been no significant changes in our audit approach.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s ability to
continue to adopt the going concern basis of accounting included:
– Evaluating management’s going concern paper, identifying the
assumptions applied in the going concern assessment and
testing the mechanical accuracy of the underlying forecasts;
– Performing sensitivity analysis on the key assumptions applied
tounderstand those that could potentially give rise to a material
uncertainty in respect of the use of the going concern basis;
– Checking consistency of the forecast assumptions applied in
thegoing concern assessment with other forecasts, including
investment funding and valuation assumptions;
– Assessing the liquidity position of the Group and the underlying
entities in the investment structure by evaluating the impact of
near term requests for capital from the portfolio of life science
investments. This included scenarios where cash outflows are
over and above commitments and anticipated deployment of
funds into life science investments totalling £150 million –
£250million;
– We considered the mitigating actions identified by management
as available responses to liquidity risks, principally the ability to
utilise cash totalling £485.2 million held in the Group and the
underlying entities in the investment structure, as well as the
realisation of UK treasury bills with an aggregate value at 31
March 2022 of £180.0 million, also held in Syncona Investments
LP Incorporated; and
– Evaluated the disclosures made in relation to going concern within
note 2.
Independent Auditor’s report to the members of Syncona Limited
Syncona Limited Annual report and accounts 2022102
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s
and parent company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
In relation to the reporting on how the Group has applied the UK
Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report.
5. Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which
hadthe greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Our assessment of fraud risk factors related to the Valuation of the
LTIP has identified that the key area of potential manipulation and
fraud risk relates to the matters already identified for the key
judgements in the valuation of unquoted life science portfolio, on
the basis the settlement of the awards reflects the prevailing
performance of the portfolio. As a result, we have presented this as
representing a decreased level of risk 5.2 but continue to include
this as a key audit matter as a reflection of the relative audit effort
required.
5.1. Key judgments in the valuation of unquoted
life science portfolio
Key audit matter description
The Group holds unquoted life science investments with a fair value
of £325.7 million through Syncona Portfolio Limited, a direct
subsidiary of Syncona Holdings Limited, and £28.1 million through
Syncona Discovery Limited, a direct subsidiary of Syncona
Investments LP Incorporated (“life science investments”). The
unquoted life science investments constitute 24.9% of the Group
NAV. In addition, the life science portfolio includes “milestone
payments” related to contractual deferred contingent consideration
due to Syncona Portfolio Limited from the sale of Gyroscope
Therapeutics Ltd (“Gyroscope”), with a reported fair value of £49.8
million (3.5% of the Group NAV).
The Group records its interests in Syncona Holdings Limited and
Syncona Investments LP Incorporated at fair value. The amounts
are based on the fair value of underlying unquoted life science
investments and other assets and liabilities, and these are recorded
in accordance with IFRS 9 Financial Instruments (“IFRS 9”). The
underlying unquoted life science investments are recorded at fair
value through profit and loss in accordance with IFRS 13 Fair Value
Measurement (“IFRS 13”) and International Private Equity and
Venture Capital (“IPEV”) guidelines.
The risk exists that the pricing methodology applied to the
underlying life science investments does not reflect an exit price
inaccordance with IFRS 13 and IPEV guidelines.
The portfolio is valued at fair value either at a calibration of
cost,price of recent investment (“PRI”), or through other
valuationtechniques:
– The CRT Pioneer Fund valuation (held through Syncona Discovery
Limited) is based on the valuation provided by Sixth Element
Capital LLP, the underlying Investment Manager using a
Discounted Cash Flow (“DCF”) for those investments. These
investments are adjusted by management to apply the policies,
discount rates and/or probability of success rates that are
consistent with the rest of the Group.
– Calibrated Cost/PRI are used for investments recently made, or
recent transactions with third parties where available. Judgement
exists as to whether there is objective evidence of change in fair
value, based on more recent financial, technical and other data.
– A discounted cash flow was prepared for the Gyroscope
milestone payments using the contractual cash flows, adjusted for
probability of success rates and discounted to present value.
The valuation was prepared by the Investment Manager, Syncona
Investment Management Limited (“SIML”) and the Board also
commissioned an independent advisor to provide an alternative
valuation for certain investments.
In addition to the judgement inherent in the valuation of these
investments, management may seek to manipulate the valuation of
thelife science investments and milestone payments to influence
key performance indicators. As such there is an incentive to
overstate investment valuation and we identified this as a
potentialarea forfraud.
Details of the life science investments balance and milestone
payments are disclosed in notes 7, 17, 18 and 19 and the
accounting policies relating to them are disclosed in note 2. Critical
accounting judgements and key sources of estimation uncertainty
are described in note 3 and the Audit Committee Report on page 88.
How the scope of our audit responded to the key audit matter
In order to test the key judgements in the valuation of the underlying
unquoted life science investments as at 31 March 2022 we
performed the following procedures:
– Obtained an understanding of and tested relevant controls relating
to the valuation process applied by SIML, and the monitoring and
review by the Board;
– Evaluated the directors’ methodology against the requirements of
IFRS 13 and IPEV guidelines;
– Evaluated management’s assessment of the impact of the
COVID-19 pandemic and the Ukraine-Russia War on the
underlying life science investments and subsequently the impact
on the valuation of the investments;
– Assessed the market volatility in determining whether there has
been a change in fair value of the underlying life science
investments;
– Evaluated the competence, capability and objectivity of the
Group’s independent advisor; and
– Analysed the valuations performed by the independent advisor,
and challenged the directors’ rationale for adopting a valuation
approach different to that used by the independent advisor.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
103
For investments where the calibration of cost or PRI are determined
to be the best method to determine fair value in accordance with
IFRS 13 we performed the following procedures:
– Obtained supporting documentation for amounts invested, to assess
whether the cost recorded is accurate and to understand whether
the use of calibrated cost/PRI is a reasonable valuation basis;
– Inspected the latest financial information, board meeting minutes,
investor reports, and other external information sources to assess
whether there has been any indication of a change in fair value since
the latest funding round on an investment by investment basis;
– Searched for contradictory evidence in reports and information
obtained from the portfolio companies to assess progress against
technical milestones anticipated by the investment thesis in the
last funding round;
– Inspected post year end transactions to test that conditions did
not exist at the balance sheet date that would suggest that the
year-end fair value was materially misstated;
– Challenged management’s assumptions over the appropriateness
of the valuation methodology used, and whether other valuation
methods may have been more appropriate, including comparison
to independent valuations performed by management’s expert; and
– Assessed whether the disclosures made were in accordance with
IFRS 13.
In respect of the milestone payments, we performed the following
additional procedures:
– Reviewed the terms of the sale of Gyroscope and the accounting
paper prepared by management in consideration of relevant
guidance to assess the appropriateness of the recognition and
measurement policy adopted for the milestone payments;
– Challenged management on the valuation methodology used in
light of our understanding of general practice in the sector and
through consultation with specialists; and
– Reconciled inputs used in the discounted cash flow model with
contractual terms and challenged the assumptions used in the
calculation of the fair value, including the probabilities of success
and discount rate, with reference to published benchmarks and
independently determined ranges.
Key observations
We concluded that the methodologies and assumptions applied by
management in arriving at the fair value of the Group’s unquoted life
science portfolio were reasonable, and that the resulting valuations
are appropriately stated.
5.2. Valuation of the Long-Term Incentive Plan (“LTIP”)
Liability
Key audit matter description
Employees of Syncona Investment Management Limited (“SIML”)
are entitled to participate in an Incentive Scheme (the “LTIP”) and
Syncona Holdings Limited may award Management Equity Shares
(“MES”) to those employees. Awards entitle participants to share in
the growth of the valuation of the life science investments, subject
to a hurdle rate on invested capital being met. The fair value of
awards of MES issued in the year ended 31 March 2022 was £2.9
million (31 March 2021: £2.9 million) and the carrying amount of the
cash element of the liability arising for the year ended 31 March
2022 was £17.8 million (31 March 2021: £32.3 million).
The Board previously commissioned an independent expert to value
the LTIP in accordance with IFRS 2 Share-based Payment (“IFRS
2”) and the model developed for this purpose has been utilised by
management for determining the 31 March 2022 LTIP value.
The risk therefore exists that the valuation of the LTIP liability and
equity portions are not calculated accurately or that not all
information relating to the valuation of the underlying life science
investments relevant to its calculation is included, such that the
amounts recognised by the Group are materially misstated.
Details of the LTIP balances are disclosed in note 12 and the
accounting policies relating to them are disclosed in note 2 and in
the Audit Committee Report on page 88.
How the scope of our audit responded to the key audit matter
To respond to the key audit matter, we have performed the following
audit procedures:
– We obtained an understanding of relevant controls relating to the
valuation of the LTIP;
– We evaluated the competence, capability and objectivity of the
Group’s independent expert, who were engaged to provide
discount rates;
– We have reviewed the accounting considerations around the
award date fair value and intrinsic value of the awards in the LTIP,
to assess whether this has been accounted for appropriately;
– We have performed a recalculation of the value of any LTIP liability
and equity portions, based on the terms of the LTIP rules and the
Articles of Association of Syncona Holdings Limited. We have
compared this to the value calculated by SIML, to determine
whether the value is reasonable;
– We have challenged the assumptions and the model used in the
calculation of the MES fair value including the evolution of the life
science portfolio and the associated probabilities of success;
– We involved our modelling specialists to assess the mechanical
accuracy, design and structure of the model used to calculate the
fair value of the LTIP;
– We have performed procedures as noted in the key audit matter
relating to key judgements in the valuation of unquoted life
science investments over the life science investment valuation, as
this is a key input into the model; and
– We have reviewed the disclosures in the notes to the financial
statements for the LTIP to assess whether they meet the
requirements of IFRS 2.
Key observations
We conclude that the valuation of the LTIP liability at 31 March 2022
and the related disclosures are appropriate.
Independent Auditor’s report to the members of Syncona Limited
continued
Syncona Limited Annual report and accounts 2022104
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed
or influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for
the financial statements as a whole as follows:
Group
materiality
£26.2 million (2021: £25.7 million)
Basis for
determining
materiality
2% (2021: 2%) of Net Asset Value
Rationale for
the benchmark
applied
The Group’s investment objective is to achieve
superior long-term capital appreciation from its
investments. We therefore evaluated the Group’s NAV
as the most appropriate benchmark as it is one of the
principal considerations for members of the Group in
assessing financial performance and represents total
shareholders’ interest.
NAV
Group materiality
£26.2m
NAV
£1,310m
Audit Committee
reporting threshold
£1.31m
Group materiality
6.2. Performance materiality
We set performance materiality at a level lower than materiality to
reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial
statements as a whole. Performance materiality was set at 70% of
materiality for the 2022 audit (2021: 70%). In determining
performance materiality, we considered the following factors:
– our risk assessment, including our assessment of the Group’s
overall control environment, including that of the administrator;
– the performance of the Group during the year ended 31 March
2022, in particular the resilience of the Group’s results against the
impact of COVID-19 on the UK and global economy; and
– our past experience of the audit, which has indicated a low
number of corrected and uncorrected misstatements identified in
prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £1.31million (2021:
£1.29 million), as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds. We also report
to the Audit Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Scoping
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group and
component level.
The Group audit engagement team carried out audit work directly
on the parent company and its consolidated subsidiary Syncona GP
Limited executed at statutory levels of materiality applicable to each
entity (Syncona GP Ltd set at £0.2 million (2021: £0.2 million)).
7.2. Our consideration of the control environment
The accounting function for the Group and parent company is
provided by a third-party administrator. In performing our audit, we
obtained an understanding of relevant controls at the administrator
that are relevant to the business processes of the Group and
parentcompany.
We have decided not to rely on controls as the Group and parent
company does not perform significant automated processing of
large volumes of data and the control environment is predominantly
manual in nature.
7.3. Our consideration of climate related risks
As part of our audit we made enquiries of management to
understand the process they have adopted to assess the potential
impact of climate change on the financial statements. Management
considers that the impact of climate change does not give rise to a
material financial statement impact. We used our knowledge of the
Group to evaluate management’s assessment. We particularly
considered how climate change risks could impact the assumptions,
such as funding requirements for portfolio companies, considered in
the valuation of the Unquoted Life Science Portfolio. We also
considered the consistency of the disclosures in relation to climate
change made in the other information within the Annual Report with
the financial statements and our knowledge from our audit.
8. Other information
The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
105
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement,
the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the Group’s ability to continue as a going concern,
disclosing as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit
ofthefinancial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance isa
high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financialstatements.
A further description of our responsibilities for the audit of
thefinancial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
11. Extent to which the audit was considered
capable of detecting irregularities,
includingfraud
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
inrespect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud
isdetailed below.
11.1. Identifying and assessing potential risks related
toirregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
– the nature of the industry and sector, control environment and
business performance including the design of the Group’s
remuneration policies, key drivers for the investment manager and
directors’ remuneration, bonus levels, performance targets and
incentive scheme;
– the Group’s own assessment of the risks that irregularities may
occur either as a result of fraud or error that was approved by the
board on 31 January 2022;
– results of our enquiries of management and the audit committee
about their own identification and assessment of the risks of
irregularities;
– any matters we identified having obtained and reviewed the
Group’s documentation of their policies and procedures relating to:
• identifying, evaluating and complying with laws and regulations
and whether they were aware of any instances of non-compliance;
• detecting and responding to the risks of fraud and whether they
have knowledge of any actual, suspected or alleged fraud;
• the internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations;
– the matters discussed among the audit engagement team and
relevant internal specialists, including tax, valuations and industry
specialists regarding how and where fraud might occur in the
financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities
and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas:
– Key judgements in the Valuation of unquoted Life Science Portfolio.
In common with all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of management
override.
We also obtained an understanding of the legal and regulatory
frameworks that the Group operates in, focusing on provisions of
those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this
context included the Companies (Guernsey) Law, 2008, the Listing
Rules and relevant tax legislation.
In addition, we considered provisions of other laws and regulations
that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability to
operate or to avoid a material penalty. These included the
Company’s regulatory licences under The Protection of Investors
(Bailiwick of Guernsey) Law, 2020.
11.2. Audit response to risks identified
As a result of performing the above, we identified key judgements in
the valuation of unquoted life science portfolio (including milestone
payments) as a key audit matter related to the potential risk of fraud.
The key audit matters section of our report explains this matter in
more detail and also describes the specific procedures we
performed in response to this key audit matter.
In addition to the above, our procedures to respond to risks
identified included the following:
– reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct
effect on the financial statements;
– enquiring of management and the audit committee concerning
actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
– reading minutes of meetings of those charged with governance,
reviewing internal audit reports and reviewing correspondence
with the Guernsey Financial Services Commission; and
– in addressing the risk of fraud through management override of
controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making
accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members including
internal specialists, and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the audit.
Independent Auditor’s report to the members of Syncona Limited
continued
Syncona Limited Annual report and accounts 2022106
Report on other legal and regulatory requirements
12. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 98;
– the directors’ explanation as to its assessment of the Group’s
prospects, the period this assessment covers and why the period
is appropriate set out on page 47;
– the directors’ statement on fair, balanced and understandable set
out on page 101;
– the board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page101;
– the section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on page 90; and
– the section describing the work of the audit committee set out on
pages 87-91.
13. Matters on which we are required to report
by exception
13.1. Adequacy of explanations received and accounting
records
Under the Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
– we have not received all the information and explanations we
require for our audit; or
– proper accounting records have not been kept by the parent
company; or
– the financial statements are not in agreement with the
accountingrecords.
We have nothing to report in respect of these matters.
14. Other matters which we are required
toaddress
14.1. Auditor tenure
Following the recommendation of the audit committee, we were
appointed by the Board of Directors on 22 September 2012 to
audit the financial statements for the period from 14 August 2012
(date of incorporation) to 25 October 2012 and subsequent financial
periods/years. The period of total uninterrupted engagement
including previous renewals and reappointments of the firm is
eleven periods/years, covering the periods/years ending 25 October
2012 to 31 March 2022.
14.2. Consistency of the audit report with the additional
report to the audit committee
Our audit opinion is consistent with the additional report to the audit
committee we are required to provide in accordance with ISAs (UK).
15. Use of our report
This report is made solely to the Company’s members, as a body,
inaccordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state
to the Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rule (DTR) 4.1.14R, these financial
statements form part of the European Single Electronic Format
(ESEF) prepared Annual Financial Report filed on the National
Storage Mechanism of the UK FCA in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report
provides no assurance over whether the annual financial report has
been prepared using the single electronic format specified in the
ESEF RTS.
Marc Cleeve, FCA
For and on behalf of Deloitte LLP
Recognised Auditor
St Peter Port, Guernsey
15 June 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
107
2022 2021
Fair value
£’000
% of
Group NAV
£’000
Fair value
£’000
% of
Group NAV
£’000
Life science portfolio
Life science companies
Achilles Therapeutics plc 24,810 1.9 133,127 10.2
Anaveon AG 59,818 4.6 18,575 1.4
Autolus Therapeutics plc 61,979 4.7 81,180 6.2
Cambridge Epigenetix Limited 17,345 1.3 – –
Freeline Therapeutics Holdings plc 32,277 2.5 167,902 12.9
Gyroscope Therapeutics Limited – – 150,062 11.5
OMass Therapeutics Limited 34,712 2.7 16,436 1.3
Purespring Therapeutics Limited 18,500 1.4 – –
Quell Therapeutics Limited 81,416 6.2 35,069 2.7
SwanBio Therapeutics Limited 75,103 5.7 53,689 4.1
Companies of less than 1% of NAV 40,929 3.1 29,526 2.4
Total life science companies
(1)
446,889 34.1 685,566 52.7
CRT Pioneer Fund
(2)
28,183 2.2 36,576 2.8
Milestone payments 49,802 3.8 – –
Total life science portfolio
(3)
524,874 40.1 722,142 55.5
Capital pool investments
UK treasury bills 179,984 13.7 344,862 26.5
Capital pool investment funds 99,489 7.6 – –
Legacy funds 39,857 3.1 72,366 5.6
Total capital pool investments
(2)
319,330 24.4 417,228 32.1
Other net assets
Cash and cash equivalents
(4)
485,223 37.0 199,833 15.4
Charitable donations (4,250) (0.3) (4,710) (0.4)
Other assets and liabilities (15,336) (1.2) (34,204) (2.6)
Total other net assets 465,637 35.5 160,919 12.4
Total NAV of the Group 1,309,841 100.0 1,300,289 100.0
(1) The fair value of Syncona Holdings Limited amounting to £980,282,165 (31 March 2021: £956,279,205) is comprised of investments in life science companies of £446,888,721 (31 March
2021: £685,566,309), investments in Syncona Investment Management Limited of £5,822,250 (31 March 2021: £5,752,423), milestone payments on Gyroscope sale of £49,801,548 (31
March 2021: £Nil), other net assets of £482,281,565 (31 March 2021: £269,383,714) in Syncona Portfolio Limited and other net liabilities of £4,511,919 (31 March 2021: £4,422,241) in
Syncona Holdings Limited.
(2) The fair value of the investment in Syncona Investments LP Incorporated amounting to £342,949,949 (31 March 2021: £371,667,317) is comprised of the investment in the capital pool
investments of £319,330,598 (31 March 2021: £417,227,726), the investment in the CRT Pioneer Fund of £28,183,492 (31 March 2021: £36,576,032), cash of £475,786,299 (31 March
2021: £189,439,798) and other net liabilities of £480,350,440 (31 March 2021: £271,576,239).
(3) The life science portfolio of £524,873,761 (31 March 2021: £722,142,341) consists of life science investments totalling £446,888,721 (31 March 2021: £685,566,309), milestone payments
on Gyroscope sale of £49,801,548 held by Syncona Holdings Limited and CRT Pioneer Fund of £28,183,492 (31 March 2021: £36,576,032) held by Syncona Investments LP Incorporated.
(4) Cash amounting to £275,902 (31 March 2021: £13,916) is held by Syncona Limited. The remaining £484,947,557 (31 March 2021: £199,819,232) 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.
See note 1 for a description of Syncona Holdings Limited and Syncona Investments LP Incorporated.
Unaudited Group Portfolio Statement
As at 31 March 2022
Syncona Limited Annual report and accounts 2022108
2022 2021
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment income
Other income 6 25,391 – 25,391 19,934 – 19,934
Total investment income 25,391 – 25,391 19,934 – 19,934
Net (losses)/gains on financial assets at fair value through
profit or loss 7 – (6,698) (6,698) – 58,605 58,605
Total (losses)/gains – (6,698) (6,698) – 58,605 58,605
Expenses
Charitable donations 8 4,250 – 4,250 4,710 – 4,710
General expenses 9 5,605 – 5,605 20,671 – 20,671
Total expenses 9,855 – 9,855 25,381 – 25,381
Profit/(loss) for the year 15,536 (6,698) 8,838 (5,447) 58,605 53,158
Profit/(loss) for the year after tax 15,536 (6,698) 8,838 (5,447) 58,605 53,158
Earnings/(loss) per Ordinary Share 14 2.34p (1.01)p 1.33p (0.82)p 8.82p 8.00p
Earnings/(loss) per Diluted Share 14 2.31p (1.00)p 1.31p (0.81)p 8.74p 7.93p
The total columns of this statement represent the Group’s Consolidated Statement of Comprehensive Income, prepared in accordance
with International Financial Reporting Standards (“IFRS”) as adopted by the European Union.
The profit/(loss) for the 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 derive from continuing operations.
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
109
Notes
2022
£’000
2021
£’000
ASSETS
Non-current assets
Financial assets at fair value through profit or loss 10 1,323,232 1,327,946
Current assets
Bank and cash deposits 276 14
Trade and other receivables 11 9,878 10,446
Total assets 1,333,386 1,338,406
LIABILITIES AND EQUITY
Non-current liabilities
Share based payments 12 8,459 23,505
Current liabilities
Share based payments 12 9,388 8,836
Payables 13 5,698 5,776
Total liabilities 23,545 38,117
EQUITY
Share capital 14 767,999 767,999
Capital reserves 14 530,449 537,147
Revenue reserves 11,393 (4,857)
Total equity 1,309,841 1,300,289
Total liabilities and equity 1,333,386 1,338,406
Total net assets attributable to holders of Ordinary Shares 1,309,841 1,300,289
Number of Ordinary Shares in issue 14 666,733,588 664,580,417
Net assets attributable to holders of Ordinary Shares (per share) 14 £1.96 £1.96
Diluted NAV (per share) 14 £1.94 £1.94
The audited Consolidated Financial Statements were approved on 15 June 2022 and signed on behalf of the Board of Directors by:
Melanie Gee Rob Hutchinson
Chair Non-Executive Director
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of Financial Position
As at 31 March 2022
Syncona Limited Annual report and accounts 2022110
Notes
Share
capital
£’000
Capital
reserves
£’000
Revenue
reserves
£’000
Total
£’000
As at 31 March 2020 767,999 478,542 – 1,246,541
Total comprehensive income for the year – 58,605 (5,447) 53,158
Transactions with shareholders:
Share based payments – – 590 590
As at 31 March 2021 767,999 537,147 (4,857) 1,300,289
Total comprehensive income for the year – (6,698) 15,536 8,838
Transactions with shareholders:
Share based payments – – 714 714
As at 31 March 2022 767,999 530,449 11,393 1,309,841
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 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
111
Notes
2022
£’000
2021
£’000
Cash flows from operating activities
Profit for the year 8,838 53,158
Adjusted for:
Losses/(gains) on financial assets at fair value through profit or loss 7 6,698 (58,605)
Non-cash movement in share based payment provision (15,764) 6,374
Operating cash flows before movements in working capital (228) 927
Decrease/(increase) in trade and other receivables 568 (1,315)
(Decrease)/increase in other payables (78) 385
Net cash generated from/(used in) from operating activities 262 (3)
Net increase/(decrease) in cash and cash equivalents 262 (3)
Cash and cash equivalents at beginning of the year 14 17
Cash and cash equivalents at end of the year 276 14
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.
Consolidated Statement of Cash Flows
As at 31 March 2022
Syncona Limited Annual report and accounts 2022112
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 within the Annual Report and Accounts.
2. Accounting policies
The Group’s investments in life science companies, other investments within the life science portfolio and capital pool investments are held
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 15 June 2022.
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 derivatives held at
fair value through profit or loss, which have been measured at fair value.
Functional and presentational 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.
£ is also the Group’s presentational currency.
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 £1,309.8 million (31 March 2021: £1,300.3 million) of which £764.7
million (31 March 2021: £544.7 million) are readily realisable within three months in normal market conditions, and liabilities including
uncalled commitments to underlying investments and funds amounting to £88.5 million (31 March 2021: £115.5 million).
Given the Group’s capital pool of £784.9 million (31 March 2021: £578.2 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 potential future impact of
COVID-19, the war in Ukraine and 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.
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
113
Notes to the Consolidated Financial Statements
continued
2. Accounting policies (continued)
Basis of consolidation
The Group’s Consolidated Financial Statements consist of the financial statements 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 is 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2022 and 31 March 2021, 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
The following amendments to accounting standards became effective during the year and were applied consistently:
Amendments to IFRS 16 “Accounting for COVID-19 related rent concessions”
In March 2021, the IASB issued the amendment to IFRS 16 COVID-19-Related Rent Concessions beyond 30 June 2021, to update the
condition to apply the relief to a reduction in lease payments originally due on or before 30 June 2022 from 30 June 2021.
The amendment has had no impact on the Group’s financial statements.
There are no other standards, amendments to standards or interpretations that are effective for annual periods beginning on 31 March
2022 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 discussed in detail as no material impact to the Group’s Consolidated Financial Statements is expected.
– 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 IFRS 3: Reference to the Conceptual Framework;
– Amendments to IAS 37: Onerous Contracts – Cost of Fulfilling a Contract;
– Amendments to IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors;
– Amendments to IAS 12: Income Taxes.
Financial instruments
Financial assets and derivatives are recognised in the Group’s Consolidated Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument.
Under IFRS 9, on initial recognition, 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 at fair value through profit or loss
The Group classifies its financial assets as investments at fair value through profit or loss based on the Group’s business model and the
contractual cash flow characteristics of the financial assets.
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 2022 and 31 March 2021, there are no financial assets measured at fair value through other comprehensive income.
Syncona Limited Annual report and accounts 2022114
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.
Fair value
The Group’s investments in life science companies and capital pool investments are held 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. 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 – 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, which can
be value maintaining or value enhancing, is undertaken at each valuation point and considers changes to the external environment 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 of 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 investments
were valued on a DCF basis as at 31 March 2022 and 31 March 2021.
Fair value – life science portfolio – milestone payments
Milestone payments which form part of the total consideration resulting from a business combination and is dependent on the meeting of
future conditions is initially recognised 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 – 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. 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.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
115
Notes to the Consolidated Financial Statements
continued
2. Accounting policies (continued)
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 12% to 30% (31 March 2021: 11% to 31%); and probabilities of success that result in an average
cumulative probability of success across the life science portfolio of 32% (31 March 2021: 31%). 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).
Syncona Limited Annual report and accounts 2022116
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.
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. 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 and cash equivalents comprise cash at bank and demand deposits. 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 between items of a revenue and capital nature has been presented alongside the Consolidated Statement of
Comprehensive Income.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
117
Notes to the Consolidated Financial Statements
continued
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,
technical, or commercial performance.
Where considered appropriate, once substantial clinical data has been generated the Group will use input from independent valuation
advisors 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: Anaveon AG; OMass Therapeutics Limited; Quell
Therapeutics Limited; and SwanBio Therapeutics Limited.
The review was limited to certain specific limited procedures which we identified and requested L.E.K. to perform within an agreed limited
scope, and it was subject to assumptions which are forward looking in nature and subjective judgements. Upon completion of the review
within the parameters of the agreed procedures L.E.K. estimated an independent range of fair values of those investments. The limited
procedures carried out by L.E.K. did not involve an audit, review, compilation or any other form of verification, examination or attestation
under generally accepted auditing standards and were based on the sources agreed in the limited scope only. Syncona Investment
Management Limited (“the AIFM”) is responsible for determining the fair value of the investments, and the review performed by L.E.K. to
assist Syncona is only one element of the enquiries and procedures in the process in making a determination of the fair value of those
investments and for which SIML is ultimately responsible.
During the year the investment in Gyroscope was sold to an external third party for consideration comprising of upfront cash and cash to
be paid in the future subject to certain milestones being met (“milestone payments”). Gyroscope was previously held as an investment at
fair value through profit or loss by Syncona Portfolio Limited due to Syncona Portfolio Limited meeting the conditions of being an
investment entity and holding its subsidiaries at fair value through profit or loss.
There is currently no prescriptive accounting standard for the seller where milestone payments which are contingent on a future event is
agreed in a contract for the disposal of a subsidiary. Guidance available within IFRS 3 “Business Combinations” to the acquiring entity was
therefore applied to the recognition and measurement of the milestone payments. IFRS 3 requires the acquirer to recognise any milestone
payments dependent on uncertain events to be recognised as a financial liability at fair value through profit or loss in their financial
statements. In accordance with available guidance and industry practice it was concluded that the milestone payments receivable following
the sale of Gyroscope are required to be recognised as a financial asset measured at fair value through profit or loss in the financial
statements of Syncona Portfolio Limited. This forms part of the fair value of the Groups investment in the Holding Company.
Syncona Limited Annual report and accounts 2022118
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
and milestone payments on sale of a subsidiary, 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 achievement or not of
value enhancing milestones as being a key source of estimation uncertainty. Such activities and resulting data emanating from the life
science companies can be the key trigger for fair value changes and typically involve financing events which crystallise value at those points
in time. The range of 18% (2021: 18%) 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.
The Company has analysed the impact of the COVID-19 pandemic on the private life science companies and does not consider that any
COVID-19 revaluations are required, however the final impact of the pandemic is not yet certain and may have effects on the portfolio
companies that have not been anticipated.
The Company has assessed the current impact of the war in Ukraine on the private life science companies and does not consider that any
revaluations are required as a result, however the final impact of the war is not yet certain and may have effects on the portfolio companies
that have not been anticipated.
The fair value of the milestone payments is inherently difficult to calculate with the value being dependent on contingent events. To this end
the valuation is determined using a DCF model where the key unobservable inputs are the probability of the contingent events occurring
and the discount rate applied in order to generate a present value of the asset. The accounting policy for the milestone payments is
described in note 2 and the fair value is detailed in note 19.
In determining a suitable range to sensitise the fair value of the milestone payments Management note varying sources of publicly available
information for relevant probabilities of success that could be applied to the DCF in order to generate differing valuations. The range of £42
million - £54 million by Management reflects their estimate of a range of reasonably possible valuations as at 31 March 2022.
The CRT Pioneer Fund is invested in early-stage life science projects and companies. A market value can be difficult to determine for assets
of this nature. The Company values its interest in the CRT Pioneer Fund by reference to the valuation provided by the manager of that fund,
adjusted to reflect the Company’s view on certain of the key valuation inputs. Sensitivity to a 48% (31 March 2021: 23%) movement in the
valuation of the CRT Pioneer Fund is included in note 19 being the identified range of other alternative valuations of this asset.
As at the year end, none (31 March 2021: 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.
The share based payment charge is determined using an externally generated model in accordance with IFRS 2 using a probability-
weighted expected returns methodology. Additional details regarding the key inputs into the valuation are stated in note 2.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
119
Notes to the Consolidated Financial Statements
continued
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
2022
% interest
(1)
2021
% 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
2022
% 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 Investment Management Limited UK Syncona Holdings Limited Portfolio management 100%
SIML Switzerland AG Switzerland SIML Portfolio management 100%
SwanBio Therapeutics Limited United States Syncona Portfolio Limited Gene therapy 76%
Purespring Therapeutics Limited UK Syncona Portfolio Limited Gene therapy 76%
Forcefield Therapeutics Limited UK Syncona Portfolio Limited Gene therapy 76%
Resolution Therapeutics Limited UK Syncona Portfolio Limited Cell therapy 73%
Freeline Therapeutics Holdings plc UK Syncona Portfolio Limited Gene therapy 61%
OMass Therapeutics Limited UK Syncona Portfolio Limited Small molecule 53%
Indirect associates
Principal place
of business Immediate parent Principal activity
2022
% interest
(1)
Quell Therapeutics Limited UK Syncona Portfolio Limited Cell therapy 44%
Anaveon AG Switzerland Syncona Portfolio Limited Biologics 41%
Azeria Therapeutics Limited UK Syncona Portfolio Limited In voluntary liquidation 34%
Achilles Therapeutics plc UK Syncona Portfolio Limited Cell therapy 27%
Autolus Therapeutics plc UK Syncona Portfolio Limited Cell therapy 21%
(1) Based on undiluted issued share capital and excluding the MES issued by Syncona Holdings Limited (see note 12).
Syncona Limited Annual report and accounts 2022120
Indirect Subsidiaries
Principal place
of business Immediate parent Principal activity
2021
% 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 Investment Management Limited UK Syncona Holdings Limited Portfolio management 100%
Quell Therapeutics Limited UK Syncona Portfolio Limited Cell therapy 83%
SwanBio Therapeutics Limited United States Syncona Portfolio Limited Gene therapy 76%
Resolution Therapeutics Limited (formerly Syncona
Collaboration (E) Limited) UK Syncona Portfolio Limited Cell therapy 66%
Purespring Therapeutics Limited UK Syncona Portfolio Limited Gene therapy 65%
Gyroscope Therapeutics Limited UK Syncona Portfolio Limited Gene therapy 59%
Freeline Therapeutics Holdings plc UK Syncona Portfolio Limited Gene therapy 53%
Anaveon AG Switzerland Syncona Portfolio Limited Biologics 50%
OMass Therapeutics Limited UK Syncona Portfolio Limited Small molecule 49%
Forcefield Therapeutics Limited UK Syncona Portfolio Limited Gene therapy 47%
Indirect associates
Principal place
of business Immediate parent Principal activity
2021
% interest
(1)
Azeria Therapeutics Limited UK Syncona Portfolio Limited In voluntary liquidation 34%
Autolus Therapeutics plc UK Syncona Portfolio Limited Cell therapy 28%
Achilles Therapeutics plc UK Syncona Portfolio Limited Cell therapy 27%
(1) Based on undiluted issued share capital and excluding the MES issued by Syncona Holdings Limited (see note 12).
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 £1,200 (31 March 2021: £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 cash transfers from the Partnership which are used for paying costs and dividends of the Group.
During the year, income received from the Partnership amounted to £25,390,625 (31 March 2021: £19,933,644) of which £4,249,836
(31March 2021: £4,710,217) remained receivable as at 31 March 2022. The receivable reflects the charitable donations of the Group.
Refer to note 8.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
121
Notes to the Consolidated Financial Statements
continued
7. Net (losses)/gains on financial assets at fair value through profit or loss
The net (losses)/gains on financial assets at fair value through profit or loss arise from the Group’s holdings in the Holding Company and
Partnership.
Note
2022
£’000
2021
£’000
Net (losses)/gains from:
The Holding Company 7.a 22,019 60,551
The Partnership 7.b (28,717) (1,946)
(6,698) 58,605
7.a Movements in the Holding Company:
2022
£’000
2021
£’000
Expenses (90) (89)
Movement in unrealised gains on life science investments at fair value through profit or loss 22,109 60,640
Net gains on financial assets at fair value through profit or loss 22,019 60,551
7.b Movements in the Partnership:
2022
£’000
2021
£’000
Investment income 23 117
Rebates and donations 409 18
Other income – 53
Expenses (229) (273)
Realised gains on financial assets at fair value through profit or loss 13,716 33,479
Movement in unrealised losses on financial assets at fair value through profit or loss (19,185) (10,740)
Gains/(losses) on foreign currency 1,940 (4,666)
Gains on financial assets at fair value through profit or loss (3,326) 17,988
Distributions (25,391) (19,934)
Net losses on financial assets at fair value through profit or loss (28,717) (1,946)
8. Charitable donations
For the years ended 31 March 2022 and 31 March 2021, the Group has agreed to make a donation to charity of 0.35% of the total NAV
ofthe Group calculated on a monthly basis, 0.15% to be donated to The Institute of Cancer Research and 0.20% to be donated to The
Syncona Foundation, and these donations are made by the General Partner.
During the year, charitable donations expense amounted to £4,249,836 (31 March 2021: £4,710,217). As at 31March 2022, £4,249,836
(31 March 2021: £4,710,217) remained payable. Refer to note 13.
Syncona Limited Annual report and accounts 2022122
9. General expenses
2022
£’000
2021
£’000
Share based payments (7,304) 10,561
Investment management fees 10,699 8,177
Directors’ remuneration 419 386
Auditor’s remuneration 141 143
Other expenses 1,650 1,404
5,605 20,671
Auditor’s remuneration includes audit fees in relation to the Group of £105,000 (31 March 2021: £87,500). Total audit fees paid by the
Group and the Syncona Group Companies for the year ended 31 March 2022 totalled £210,000 (31 March 2021: £187,000). Additional
fees paid to the auditor were £38,000 (31 March 2021: £30,000) which relates to work performed at the interim review of £30,000
(31March 2021: £23,000) and other non-audit fees of £8,000 (31 March 2021: £7,000).
Further details of the share based payments can be found in note 12.
10. Financial assets at fair value through profit or loss
Note
2022
£’000
2021
£’000
The Holding Company 10.a 980,282 956,279
The Partnership 10.b 342,950 371,667
1,323,232 1,327,946
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
2022
£’000
2021
£’000
Cost of the Holding Company’s investment at the start of the year 494,810 493,310
Purchases during the year – 1,500
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 489,984 465,891
Fair value of the Holding Company’s investments at the end of the year 984,794 960,701
Other current liabilities (4,512) (4,422)
Financial assets at fair value through profit or loss at the end of the year 980,282 956,279
10.b The net assets of the Partnership
2022
£’000
2021
£’000
Cost of the Partnership’s investments at the start of the year 418,472 682,750
Purchases during the year 835,375 1,075,333
Sales during the year (923,659) (1,340,000)
Return of capital (9,070) (33,090)
Net realised gains on disposals during the year 13,716 33,479
Cost of the Partnership’s investments at the end of the year 334,834 418,472
Net unrealised gains on investments at the end of the year 16,147 35,332
Fair value of the Partnership’s investments at the end of the year 350,981 453,804
Cash and cash equivalents 475,786 189,440
Other net current liabilities (483,817) (271,577)
Financial assets at fair value through profit or loss at the end of the year 342,950 371,667
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
123
Notes to the Consolidated Financial Statements
continued
11. Trade and other receivables
2022
£’000
2021
£’000
Due from related parties (see note 16) 5,462 5,736
Charitable donation receivable from related party 4,250 4,710
Prepayments 166 –
9,878 10,446
12. Share based payments
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:
2022
£’000
2021
£’000
Charge related to revaluation of the liability for cash settled share awards (7,304) 10,561
Total (7,304) 10,561
Amounts recognised in the Consolidated Statement of Financial Position, representing the carrying amount of liabilities arising from share
based payments transactions are shown below:
2022
£’000
2021
£’000
Share based payments - current 9,388 8,836
Share based payments - non-current 8,459 23,505
Total 17,847 32,341
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 2022 was £2,883,500 (31 March 2021: £2,907,000). This represents 8,238,571
new MES issued (31 March 2021: 5,902,624). An award was made on 15 July 2021 at 35p per MES.
The number of MES outstanding are shown below:
2022 2021
Outstanding at the start of the year 43,873,239 41,937,713
Issued 8,238,571 5,902,624
Realised (7,253,638) (3,953,906)
Lapsed (2,576,050) (13,192)
Outstanding at the end of the year 42,282,122 43,873,239
Weighted average remaining contractual life of outstanding MES, years 1.20 1.24
Vested MES as at the year end 31,293,486 38,502,646
Realisable MES as at the year end 11,478,050 9,625,668
As at 31 March 2022, if all MES were realised, the number of shares issued in the Company as a result would increase by 6,880,057
(31March 2021: 6,177,787). The undiluted per share value of net assets attributable to holders of Ordinary Shares would fall from £1.97
to£1.94 (31 March 2021: £1.96 to £1.94) if these shares were issued.
Syncona Limited Annual report and accounts 2022124
13. Payables
2022
£’000
2021
£’000
Charitable donations payable 4,250 4,710
Management fees payable 1,048 600
Other payables 400 466
5,698 5,776
14. Share capital
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.
2022
£’000
2021
£’000
Ordinary Share Capital
Balance at the start of the year 767,999 767,999
Balance at the end of the year 767,999 767,999
2022
Shares
2021
Shares
Ordinary Share Capital
Balance at the start of the year 664,580,417 663,665,537
Share based payment shares issued during the year 2,153,171 914,880
Balance at the end of the year 666,733,588 664,580,417
The Company has issued one Deferred Share to The Syncona Foundation for £1.
B. Capital reserves
Gains and losses recorded on the realisation of investments, realised exchange differences, unrealised gains and losses recorded on the
revaluation of investments held as at the year end and unrealised exchange differences of a capital nature are transferred to capital reserves.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
125
Notes to the Consolidated Financial Statements
continued
14. Share capital (continued)
C. Earnings/(loss) per share
The calculations for the earnings/(loss) per share attributable to the Ordinary Shares of the Company are based on the following data:
2022 2021
Earnings for the purposes of earnings per share £8,838,000 £53,158,000
Basic weighted average number of shares 666,108,284 664,314,726
Basic revenue earnings per share 2.3p (0.8)p
Basic capital (loss)/earnings per share (1.0)p 8.8p
Basic earnings per share 1.3p 8.0p
Diluted weighted average number of shares 672,988,341 670,492,513
Diluted revenue earnings per shares 2.3p (0.8)p
Diluted capital (loss)/earnings per share (1.0)p 8.7p
Diluted earnings per share 1.3p 7.9p
2022 2021
Issued share capital at the start of the year 664,580,417 663,665,537
Weighted effect of share issues
Share based payments 1,527,867 649,189
Potential share based payment share issues 6,880,057 6,177,787
Diluted weighted average number of shares 672,988,341 670,492,513
D. NAV per share
2022 2021
Net assets for the purposes of NAV per share £1,309,840,518 £1,300,287,998
Ordinary Shares in issue 666,733,588 664,580,417
NAV per share 196.5p 195.7p
Diluted number of shares 673,613,645 670,758,204
Diluted NAV per share 194.4p 193.9p
15. Distribution to shareholders
The Company may pay a dividend at the discretion of the Directors.
During the year ended 31 March 2022, the Company did not declare or pay a dividend (31 March 2021: £Nil was paid in relation to the
year ended 31 March 2020). The Directors believe that it is not appropriate for the Company to pay a dividend.
The Company is not declaring a 2022 dividend.
16. Related party transactions
The Group has various related parties; life sciences 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 £62,765,311 (31March 2021:
£145,075,244).
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.
Syncona Limited Annual report and accounts 2022126
During the year, the total amount invested in life science investments in which the Group has significant influence was £46,592,768
(31March 2021: £29,767,748).
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 £222,406 in relation to Director’s fees (31 March 2021: £188,965).
Investment Manager
SIML, an indirectly held subsidiary of the Company, is the Investment Manager of the Group.
For the year ended 31 March 2022, SIML was entitled to receive an annual fee of up to 1.05% of the Company’s NAV (31March 2021:
1.05%) per annum.
2022
£’000
2021
£’000
Amounts paid to SIML 10,699 8,177
Amounts owed to SIML in respect of management fees totalled £1,047,525 as at 31 March 2022 (31 March 2021: £599,519).
During the year, SIML received fees from the Group’s portfolio companies of £615,342 (31 March 2021: £305,819).
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.
Thomas Henderson resigned as a Director of the Company with effect from 3 August 2021.
Nicholas Moss resigned as a Director of the Company with effect from 31 December 2021. He retained his Directorship of the General
Partner, the Holding Company and Syncona Portfolio Limited.
Nigel Keen retired as a Director of the Company and Chairman of the Investment Manager with effect from 31 December 2021. He
received fees of £102,575 (31 March 2021: £133,430) from the Investment Manager, in respect of his services to the Investment Manager.
Julie Cherrington and Cristina Csimma were appointed as Directors of the Company with effect from 1February 2022.
Directors’ remuneration for the years ended 31 March 2022 and 31 March 2021, excluding expenses incurred, and outstanding Directors’
remuneration as at the end of the year, are set out below.
2022
£’000
2021
£’000
Directors’ remuneration for the year 419 386
Payable at 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 2021: 1.24%) 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 2022 was £2,691,553 (31 March
2021:£2,632,809).
Other related parties
As at 31 March 2022, the Company has a receivable from the Partnership, Holding Company and Syncona Portfolio Limited amounting to
£15,409 (31 March 2021: £106,981), £5,431,409 (31 March 2021: £5,489,048) and £15,409 (31 March 2021: £137,246), respectively.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
127
Notes to the Consolidated Financial Statements
continued
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.
2022
£’000
2021
£’000
Financial assets at fair value through profit or loss
The Holding Company 980,282 956,279
The Partnership 342,950 371,667
Total financial assets at fair value through profit or loss 1,323,232 1,327,946
Financial assets measured at amortised cost
Bank and cash deposits 276 14
Other financial assets 9,878 10,446
Total financial assets measured at amortised cost 10,154 10,460
Financial liabilities at fair value through profit or loss
Provision for share based payments (17,847) (32,341)
Total financial liabilities at fair value through profit or loss (17,847) (32,341)
Financial liabilities measured at amortised cost
Other financial liabilities (5,698) (5,776)
Total financial liabilities measured at amortised cost (5,698) (5,776)
Net financial assets 1,309,841 1,300,289
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 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).
2022
£’000
2021
£’000
Financial assets at fair value through profit or loss
Investment in subsidiaries 984,794 960,701
Total financial assets at fair value through profit or loss 984,794 960,701
Financial assets measured at amortised cost
(1)
Current assets 947 1,088
Financial liabilities measured at amortised cost
(1)
Current liabilities (5,459) (5,510)
Net financial assets of the Holding Company 980,282 956,279
Syncona Limited Annual report and accounts 2022128
The table below analyses the carrying amounts of the financial assets and liabilities held by the Partnership by category as defined in IFRS 9.
2022
£’000
2021
£’000
Financial assets at fair value through profit or loss
Listed investments 279,473 344,862
Unlisted investments 39,857 72,366
Investment in subsidiaries 31,651 36,576
Total financial assets at fair value through profit or loss 350,981 453,804
Financial assets measured at amortised cost
(1)
Current assets 476,586 189,913
Financial liabilities measured at amortised cost
(1)
Current liabilities (484,617) (272,050)
Net financial assets of the Partnership 342,950 371,667
(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.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
129
Notes to the Consolidated Financial Statements
continued
18. Financial risk management and associated risks (continued)
The Holding Company
Market price risk
The Holding Company invests in early stage life science companies that typically have limited products in development, 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 and the performance of extensive due diligence prior to investment.
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”) and Swiss Francs (“CHF”) 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
£’000
USD
£’000
GBP
£’000
2022
Total
£’000
Financial assets at fair value through profit or loss 59,818 370,772 554,204 984,794
Cash and cash equivalents – – 297 297
Receivables – – 650 650
Payables – – (5,459) (5,459)
Total 59,818 370,772 549,692 980,282
CHF
£’000
USD
£’000
GBP
£’000
2021
Total
£’000
Financial assets at fair value through profit or loss 18,582 487,421 454,698 960,701
Cash and cash equivalents – – 438 438
Receivables – – 650 650
Payables – – (5,510) (5,510)
Total 18,582 487,421 450,276 956,279
Foreign currency sensitivity analysis
The following table details the sensitivity of the Holding Company’s NAV to a 10% change in the £ exchange rate against the USD and CHF
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.
2022
USD
£’000
2022
CHF
£’000
2021
USD
£’000
2021
CHF
£’000
10% increase 35,663 6,646 66,922 2,064
10% decrease (29,179) (5,438) (54,754) (1,689)
Interest rate risk
Interest rate risk is negligible in the Holding Company as minimal cash and no debt is held.
Syncona Limited Annual report and accounts 2022130
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.
>3 to 12
months
£’000
>12 months
£’000
2022
Total
£’000
Financial assets at fair value through profit or loss – 984,794 984,794
Cash and cash equivalents 297 – 297
Receivables – 650 650
Payables (37) (5,422) (5,459)
Total 260 980,022 980,282
Percentage 0.0% 100.0% 100.0%
>3 to 12
months
£’000
>12 months
£’000
2021
Total
£’000
Financial assets at fair value through profit or loss – 960,701 960,701
Cash and cash equivalents – 438 438
Receivables – 650 650
Payables (89) (5,421) (5,510)
Total (89) 956,368 956,279
Percentage 0.0% 100.0% 100.0%
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 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 2022 and 31 March 2021 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, Euro (“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.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
131
Notes to the Consolidated Financial Statements
continued
18. Financial risk management and associated risks (continued)
The following tables present the Partnership’s assets and liabilities in their respective currencies, converted into the Group’s functional currency.
USD
£’000
EUR
£’000
GBP
£’000
2022
Total
£’000
Financial assets at fair value through profit or loss 3,899 27,418 319,664 350,981
Cash and cash equivalents 354,553 28 121,205 475,786
Trade and other receivables 2 – 798 800
Payables (334,998) – (145,369) (480,367)
Distributions payable – – (4,250) (4,250)
23,456 27,446 292,048 342,950
USD
£’000
EUR
£’000
GBP
£’000
2021
Total
£’000
Financial assets at fair value through profit or loss 7,785 57,259 388,760 453,804
Cash and cash equivalents 51,207 14 138,219 189,440
Trade and other receivables – – 473 473
Payables – – (267,340) (267,340)
Distributions payable – – (4,710) (4,710)
58,992 57,273 255,402 371,667
Foreign currency sensitivity analysis
The following table details the sensitivity of the Partnership’s NAV to a 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.
2022
USD
£’000
2022
EUR
£’000
2021
USD
£’000
2021
EUR
£’000
10% increase 2,355 2,745 5,686 4,683
10% decrease (2,355) (2,745) (5,686) (4,683)
The above includes the effect of the Group’s hedging strategy.
Interest rate risk
Interest receivable on bank deposits or payable on bank overdrafts are 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 effected by 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 Partnerships investments.
The Partnership invests in short-term UK treasury bills and considers the associated credit risk to be negligible.
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 other receivables.
Syncona Limited Annual report and accounts 2022132
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 2022, no (31 March 2021: Nil) suspension from redemptions existed in any of the Partnership’s
underlying investments.
The Partnership invests in short-term UK treasury bills and considers the associated liquidity risk to be negligible.
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
£’000
>1 to 3
months
£’000
>3 to 12
months
£’000
>12 months
£’000
2022
(1)
Total
£’000
Financial assets at fair value through profit or loss 279,473 – – 71,508 350,981
Cash and cash equivalents 475,786 – – – 475,786
Trade and other receivables 800 – – – 800
Payables (480,367) – – – (480,367)
Distributions payable – (4,250) – – (4,250)
Total 275,692 (4,250) – 71,508 342,950
Percentage 80.3% (1.2)% 0.0% 20.9% 100.0%
Within 1
month
£’000
>1 to 3
months
£’000
>3 to 12
months
£’000
>12 months
£’000
2021
(1)
Total
£’000
Financial assets at fair value through profit or loss 70,001 259,861 15,000 108,942 453,804
Cash and cash equivalents 189,440 – – – 189,440
Trade and other receivables 473 – – – 473
Payables (267,340) – – – (267,340)
Distributions payable – (4,710) – – (4,710)
Total (7,426) 255,151 15,000 108,942 371,667
Percentage (2.0)% 68.7% 4.0% 29.3% 100.0%
(1) The liquidity tables above reflect the anticipated cash flows assuming notice was given to all underlying investments as at 31 March 2022 and 31 March 2021 and that all UK 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.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
133
Notes to the Consolidated Financial Statements
continued
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 and liabilities by level within the valuation hierarchy as at 31 March 2022 and
31March 2021:
Assets
Level 1
£’000
Level 2
£’000
Level 3
£’000
2022
Total
£’000
Financial assets at fair value through profit or loss:
The Holding Company – – 980,282 980,282
The Partnership – – 342,950 342,950
Total assets – – 1,323,232 1,323,232
Assets
Level 1
£’000
Level 2
£’000
Level 3
£’000
2021
Total
£’000
Financial assets at fair value through profit or loss:
The Holding Company – – 956,279 956,279
The Partnership – – 371,667 371,667
Total assets – – 1,327,946 1,327,946
The investments in the Holding Company and the Partnership are classified as Level 3 investments due to the use of the unadjusted NAV
of the subsidiaries as a proxy for fair value, 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 Partnership and the Holding Company are shown below.
Syncona Limited Annual report and accounts 2022134
The following table presents the Holding Company’s financial assets by level within the valuation hierarchy as at 31 March 2022 and
31March 2021:
Asset type Level
31 March
2022
£’000
31 March
2021
£’000 Valuation technique Significant unobservable inputs
Impact on
valuation
£’000
Listed investments 1 121,226 387,514 Publicly available share
bid price as at statement
of financial position date
n/a n/a
SIML 3 5,822 5,752 Net Assets of SIML Carrying value of assets and liabilities determined
in accordance with generally accepted accounting
principles, without adjustment. A sensitivity of 5%
of the NAV of SIML is applied.
+/- £291
Milestone payments 3 49,802 – Discounted Cash Flow The main unobservable inputs consist of the
assigned probability of milestone success and the
discount rate used.
PoS: +/- £5,889
Discount rate:
£7,558
Calibrated PRI
(1)
3 325,662 296,497 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 +/-18%.
+/- £58,619
Adjusted price of
latest funding round
(2)
3 – 1,555 Price of latest funding
round adjusted by
Management
The main unobservable input was the potential
value returned in various exit scenarios and the
weighting between these scenarios. A reasonable
shift in the Fair Value of the investment was +/-18%.
+/- 274
(1) Valuation made by reference to price of recent funding round unadjusted following adequate consideration of current facts and circumstances.
(2) Valuation made by reference to price of recent funding round adjusted following adequate consideration of current facts and circumstances.
The following table presents the movements in Level 3 investments of the Holding Company for the years ended 31 March 2022 and
31March 2021:
Life
science
investments
£’000
Other
asset
£’000
SIML
£’000
2022
Total
£’000
2021
Total
£’000
Opening balance 298,052 – 5,752 303,804 363,476
Purchases during the year 107,817 – – 107,817 151,014
Sales during the year (325,837) – – (325,837) (3,017)
Gains on financial assets at fair value through profit or loss 245,630 49,802 70 295,502 37,827
Transfer from Level 3 – – – – (245,496)
Closing balance 325,662 49,802 5,822 381,286 303,804
The net gains 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 £295,502,000 (2021:£37,827,000).
During the year, there were no movements from Level 3 to Level 1 (31 March 2021: £245,495,636) or between Level 2 and Level 1
(31March 2021: £nil)
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
135
Notes to the Consolidated Financial Statements
continued
19. Fair value measurement (continued)
The following table presents the Partnership’s financial assets by level within the valuation hierarchy as at 31 March 2022 and 31 March 2021:
Asset type Level
31 March
2022
£’000
31 March
2021
£’000 Valuation technique Significant unobservable inputs
Impact on
valuation
£’000
UK treasury bills 1 179,984 344,862 Publicly available price as at
statement of financial
position date
n/a n/a
Capital pool
investment
fund - Credit funds
2 99,489 – Valuation produced by fund
administrator. Inputs into
fund components are from
observable inputs
n/a n/a
Legacy funds -
Unlisted fund
investments
2 – 26,098 Valuation produced by fund
administrator. Inputs into
fund components are from
observable inputs
n/a n/a
Legacy funds –
Long-term unlisted
investments
3 39,857 46,268 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%.
+/- £3,986
Investment in
Subsidiary
3 28,183 36,576 Valuation produced by fund
administrator and adjusted
by Management
Unobservable inputs include the fund managers
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 +/-48%.
+/- £13,528
During the year ended 31 March 2022, there were no movements from Level 1 to Level 2 (31 March 2021: £Nil) or between other Levels in
the fair value hierarchy.
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 2022:
Investment in
Subsidiary
£’000
Capital pool
investment
£’000
2022
Total
£’000
2021
Total
£’000
Opening balance 36,576 46,268 82,844 92,980
Purchases 1,832 760 2,592 5,748
Return of capital – (9,070) (9,070) (34,491)
(Losses)/gains on financial assets at fair value through profit or loss (6,757) 1,899 (4,858) 18,607
Closing balance 31,651 39,857 71,508 82,844
The net (losses)/gains for the year included in the Consolidated Statement of Comprehensive Income in respect of Level 3 investments of
the Partnership held as at the year end amounted to £4,857,645 (31 March 2021: £18,607,213 gains).
Syncona Limited Annual report and accounts 2022136
20. Commitments and contingencies
The Group had the following commitments as at 31 March 2022:
2022
Uncalled
commitment
£’000
2021
Uncalled
commitment
£’000
Life science portfolio
Milestone payments to life science companies 82,617 106,854
CRT Pioneer Fund 3,424 4,888
Capital pool investments 2,429 3,751
Total 88,470 115,493
There were no contingent liabilities as at 31 March 2022 (March 2021: nil). The commitments are expected to fall due in the next 36 months.
21. Subsequent events
These Consolidated Financial Statements were approved for issuance by the Directors on 15 June 2022. Subsequent events have been
evaluated until 14 June 2022.
Since the statement of financial position date share price movements resulted in a decrease in value of the listed life science investments of
£37.1 million as at 14 June 2022.
The Directors continue to monitor the Group’s assets and strategy in light of the latest market events including inter alia, the war in Ukraine,
inflationary and interest rate rises, and COVID-19 impacts. At the date of signing they are not aware of any direct or immediate post year
end impacts that materially affect the financial statements.
Post year end the Group invested £9 million in the OMass Series B and $19 million in the SwanBio Series B, with £13 million invested in
Resolution as part of the existing Series A financing. In addition $400 million was invested in US treasury bills.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
137
AIFMD Disclosures (unaudited)
Other risk disclosures
The risk disclosures relating to risk framework and risk profile of
theGroup are set out in note 18 to the Consolidated Financial
Statements on pages 129 to 133 and the principal risks and
uncertainties on pages 48-53.
Pre-investment disclosures
The AIFMD requires certain information to be made available to
investors in an Alternative Investment Fund (“AIF”) before they invest
and requires that material changes to this information be disclosed
in the Annual Report of the AIF. A notice giving AIFMD Article 23
Disclosures, setting out information on the Group’s investment
strategy and policies, leverage, risk, liquidity, administration,
management, fees, conflicts of interest and other shareholder
information, is available on the Group’s website at www.synconaltd.
com (in the “Regulatory Publications” section within “Investors”).
The notice predominantly gives information by reference to the AIF’s
most recent Annual Report and accordingly will be updated to refer
to this document following its publication.
Report on remuneration and quantitative remuneration
disclosure
Under the Alternative Investment Fund Managers Directive
(“AIFMD”), we are required to make disclosures relating to
remuneration of staff working for the Investment Manager
fortheyear to 31 March 2022.
Amount of remuneration paid
The Investment Manager paid the following remuneration to staff
inrespect of the financial year ending on 31 March 2022 in relation
to work on the Company:
£m
Total staff
Fixed remuneration 5.7
Variable remuneration 15.2*
20.9
Of which senior management and risk takers 12.4
Number of beneficiaries 36
*Including historical payments from the Syncona LTIP Scheme
Leverage
The Group may employ leverage and borrow cash, up to a
maximum of 20 per cent of the NAV at the time of incurrence, in
accordance with its stated investment policy. The use of borrowings
and leverage has attendant risks and can, in certain circumstances,
substantially increase the adverse impact to which the Group’s
investment portfolio may be subject. For the purposes of this
disclosure, leverage is any method by which the Group’s exposure
is increased, whether through borrowing of cash or securities, or
leverage embedded in foreign exchange forward contracts or by
any other means. The AIFMD requires that each leverage ratio be
expressed as the ratio between a Group’s exposure and its Net
Asset Value, and prescribes two required methodologies, the gross
methodology and the commitment methodology (as set out in
AIFMD Level 2 Implementation Guidance), for calculating such
exposure. Using the methodologies prescribed under the AIFMD,
the leverage of the Group is detailed in the table below:
Commitment
leverage as at
31 March 2022
Gross leverage
as at 31 March
2022
Leverage ratio 0% 0%
Syncona Limited Annual report and accounts 2022138
Depositary Report
Report of the Depositary to the shareholders
Citco Custody (UK) Limited has been appointed as Depositary
toSyncona Limited (the “Company”) in accordance with the
requirements of Article 36 and Articles 21(7), (8) and (9) of the
Directive 2011/61/EU of the European Parliament and of the
Council of 8 June 2011 on Alternative Investment Fund Managers
(the “AIFM Directive”).
We have enquired into the conduct of the AIFM and Syncona Ltd
(the “AIF”) for the year ended 31 March 2022, in our capacity as
Depositary to the AIF. This report including the opinion has been
prepared for and solely for the shareholders in the AIF, in
accordance with the stated Depositary requirements in the FCA
Investment Fund Sourcebook. We do not, in giving our opinion,
accept or assume responsibility for any other purposes or to any
other person to whom this report is shown.
Responsibilities of the Depositary
Our duties and responsibilities are outlined in the FCA Investment
Fund Sourcebook. One of those duties is to enquire into the
conduct of the AIFM and the AIF in each annual accounting period
and report thereon to the shareholders. Our report shall state
whether, in our opinion, the AIF has been managed in that period
inaccordance with the provisions of the AIF’s Memorandum and
Articles of Association and the FCA Investment Fund Sourcebook.
Itis the overall responsibility of the AIFM and the AIF to comply with
these provisions. If either the AIFM or the AIF has not so complied,
we as Depositary must state why this is the case and outline the
steps which we have taken to rectify the situation.
Basis of Depositary Opinion
The Depositary conducts such reviews as it, in its reasonable
opinion, considers necessary in order to comply with its duties as
outlined in the FCA Investment Fund Sourcebook and to ensure
that, in all material respects, the AIF has been managed (i) in
accordance with the limitations imposed on its investment and
borrowing powers by the provisions of its constitutional
documentation and the appropriate regulations and (ii) otherwise
inaccordance with the AIF’s constitutional documentation and the
appropriate regulations.
Opinion
In our opinion, the AIF has been managed during the year, in all
material respects:
i) in accordance with the limitations imposed on the investment
andborrowing powers of the AIF by the constitutional document;
and by the AIFMD legislation as prescribed in the FCA Investment
Fund Sourcebook; and
ii) otherwise in accordance with the provisions of the constitutional
document and the AIFMD legislation.
Report of the Depositary to the shareholders
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022 139
Company summary and e-communications for shareholders
The Company
Syncona is a leading healthcare company focused on founding,
building and funding a portfolio of global leaders in life science.
The Company is a Guernsey authorised closed-ended
investmentcompany listed on the Premium Segment of the
LondonStock Exchange.
Information for shareholders
The Stock Exchange code for the shares is SYNC.
The Company publishes updates with a full investment portfolio
review as at 30 September and 31 March each year. The Company
also publishes an interim management statement as at 30 June and
31 December each year.
Registrar services and e-communications for shareholders
Communications with shareholders are mailed to the address held
on the share register. Any notifications and enquiries relating to
registered share holdings, including a change of address or other
amendment, should be directed to Link Asset Services.
By phone:
UK: 0371 664 0300.
From overseas: +44 371 664 0300. Calls outside the United
Kingdom will be charged at the applicable international rate.
We are open between 9.00am and 5.30pm, Monday to Friday
excluding public holidays in England and Wales.
By email:
shareholder.services@linkgroup.co.uk
By post:
Link Group Shareholder Services, 10th Floor, Central Square,
29Wellington Street, Leeds LS1 4DL
Syncona Limited would like to encourage shareholders to receive
shareholder documents electronically, via our website or by email
notification instead of hard copy format. This is a faster and more
environmentally friendly way of receiving shareholder documents.
The online Signal Shares service from our registrar, Link, provides
allthe information required regarding your shares.
Its features include:
– The option to receive shareholder communications electronically
instead of by post.
– Direct access to data held for you on the share register including
recent share movements.
– The ability to change your address online.
To receive shareholder communications electronically in future,
including all reports and notices of meetings, you just need the
‘shareholder reference’ printed on your proxy form and knowledge
of your registered address. Please register your details free on:
www.signalshares.com
Should you require further information, please visit:
www.synconaltd.com
Email: contact@synconaltd.com
Syncona Limited Annual report and accounts 2022140
AAV
Adeno-associated virus – a non-enveloped virus that can be
engineered to deliver DNA to target cells.
ALL
Acute lymphocytic leukaemia – a cancer of the bone marrow and
blood in which the body makes abnormal white blood cells.
CAGR
Compound Annual Growth Rate.
Capital deployed/deployment
Follow-on investment in our portfolio companies and investment
innew companies during the year. See alternative performance
measures, page 143.
Capital pool/Capital base
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.
CAR-T therapy
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 in which cells are transferred into a patient to help lessen
or cure a disease.
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.
Fabry disease
A rare genetic disease resulting from a deficiency of the enzyme
alpha-galactosidase A, leading to dysfunctional lipid metabolism
and abnormal glycolipid deposits.
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”.
Haemophilia B
A genetic disorder caused by missing or defective Factor IX that
can result in dangerously low levels of the essential clotting protein.
Holding Company
Syncona Holdings Limited.
ICR
The Institute of Cancer Research.
Immunotherapy
A type of therapy that uses substances to stimulate or suppress
theimmune system to help the body fight cancer, infection, and
other diseases.
Investment Manager
Syncona Investment Management Limited.
iPSC technology
Induced pluripotent stem cells (iPSCs) are a type of pluripotent stem
cell which can be generated directly from mature cells (such as
those of the skin or blood).
IRR
Internal Rate of Return.
Glossary
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022 141
Glossary
Partnership
Syncona Investments LP Incorporated.
SIML
Syncona Investment Management Limited.
Syncona Group companies
The Company and its subsidiaries other than those companies
within the life science portfolio.
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.
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.
Viral vectors
A modified version of a virus which is designed to deliver genetic
material to cells.
Life science portfolio
The underlying investments in this segment are those whose
activities focus on actively developing products to deliver
transformational treatments to patients.
Life science portfolio return
See alternative performance measures, page 143.
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.
Mass Spectrometry
A technique used by which chemical substances are identified by
the sorting of gaseous ions in electric fields according to their
mass-to-charge ratios.
Melanoma
A serious form of skin cancer that begins in cells known
asmelanocytes.
MES
Management Equity Shares.
mRNA
Messenger ribonucleic acid (RNA).
Net Asset Value, Net Assets or NAV
Net Asset Value (“NAV”) is a measure of the value of the Company,
being its assets – principally investments made in other companies
and cash and cash equivalents held – minus any liabilities.
NAV per share
See alternative performance measures, page 143.
NAV total return
See alternative performance measures, page 143.
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.
Syncona Limited Annual report and accounts 2022142
Capital deployed
With reference to the life science portfolio valuation table on
page33 this is calculated as follows:
A Net investment in the period £(203.0)m
adjusted for:
B Gyroscope proceeds £325.8m
C CRT Pioneer fund distributions £0.4m
Total Capital deployed (A+B+C) £123.2m
Life science portfolio return
Gross life science portfolio return for 2022 0.8 per cent; 2021
11.8per cent. This is calculated as follows:
A Opening life science portfolio £722.1m
Net investment in the period £(203.0)m
B Valuation movement £5.9m
Closing life science portfolio £524.9m
Life science portfolio return (B/A) 0.8%
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:
A NAV for the purposes of NAV per share £1,309,840,518
B Ordinary shares in issue (note 14) 666,733,588
C Dilutive shares 6,880,057
D Fully diluted number of shares (B+C) 673,613,645
NAV per share (p) (A/D) 194.4
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:
A Opening NAV per fully diluted share (note 14): 193.9p
B Closing NAV per fully diluted share (note 14): 194.4p
C Movement (B-A) 0.5p
D Dividend paid in the year (note 15): 0.0p
E Total movement (B+C-A) 0.5p
NAV Total Return (E/A) 0.3%
Alternative performance measures
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022 143
Secretary, Administrator and registered office
Citco Fund Services (Guernsey) Limited
Arnold House St Julian Avenue St. Peter Port Guernsey GY1 3RD
Investment Manager
Syncona Investment Management Limited
8 Bloomsbury Street London WC1B 3SR United Kingdom
Depositary and Custodian
Citco Custody (UK) Limited
7 Albemarle Street London W1S 4HQ United Kingdom
Auditors
Deloitte LLP
PO Box 137 Regency Court Glategny Esplanade St Peter Port
Guernsey GY1 3HW
Brokers
Goldman Sachs
River Court 120 Fleet Street London EC4A 2BE United Kingdom
Numis Securities
45 Gresham Street London EC2V 7BF United Kingdom
References for Our strategy, pages 14-15
1 https://www.topuniversities.com/university-rankings/university-subject-
rankings/2021/medicine
References for Life science portfolio re-
view, pages 20-33
2 https://www.autolus.com/media/cevjb3q5/corporate-presentation-may-2022.pdf
- slide 6
3 https://www.freeline.life/media/1483/freeline-corporate-2022-presentation-q1-
2022-earnings.pdf
4 https://www.nature.com/articles/s41416-021-01353-6
5 https://www.ema.europa.eu/en/clinical-investigation-immunosuppressants-
solid-organ-transplantation
6 See impact of approved gene therapy for SMA, Zolgensma: www.zolgensma-
hcp.com/clinical-experiences/str1ve-trial-efficacy/
7 https://www.hopkinsmedicine.org/health/conditions-and-diseases/chronic-
kidney-disease
8 https://www.regmednet.com/lonza-2020-q3spotlight-human-induced-
pluripotent-stem-cell-ipsc-based-therapies-manufacturing-challenges-and-
enabling-current-and-emerging-applications/
References for Market review, pages 34-35
9 https://www.fda.gov/emergency-preparedness-and-response/coronavirus-
disease-2019-covid-19/covid-19-vaccines#authorized-vaccines
10 https://www.fortunebusinessinsights.com/industry-reports/genomics-
market-100941
11 https://asgct.org/global/documents/asgct-pharma-intelligence-quarterly-
report-q4-2021.aspx – slide 4
12 Informa Business Intelligence, Biomedtracker: Clinical Development Success
rates 2006-15 – pages 18-19
13 https://fr.zone-secure.net/64109/.Catapult-Annual-Review-2021/#page=8
– pages 8-9
14 https://www.mckinsey.com/industries/life-sciences/our-insights/viral-vector-
therapies-at-scale-todays-challenges-and-future-opportunities
15 https://newdigs.mit.edu/sites/default/files/NEWDIGS-Research-Brief-
2020F207v51-PipelineAnalysis.pdf
16 https://fr.zone-secure.net/64109/.Catapult-Annual-Review-2021/#page=8
– pages 8-9
17 https://www.fda.gov/vaccines-blood-biologics/cellular-gene-therapy-products/
approved-cellular-and-gene-therapy-products, Syncona internal company
analysis
References for Business model in action,
pages 40-41
18 https://info.evaluategroup.com/rs/607-YGS-364/images/wp15.pdf - page 42
Advisers
Syncona Limited Annual report and accounts 2022144
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