Scaling
for growth
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2023
SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Our purpose is to
invest to extend and
enhance human life
Earlier this financial year, we set
out an ambitious plan to organically
scale the business to £5 billion
of net assets within 10 years.
At the heart of this is improving
shareholder returns. Growing the
asset base will allow us to operate
our model at scale, driving balance
sheet eiciency and enabling
enhanced risk-adjusted returns.
Navigating our companies through the clinical
pathway to late-stage where we believe
significant value can be accessed is particularly
important in the current environment. In the
short term, however, it is important that our
strategy addresses the near-term challenges
from the macroeconomic environment where
there have been dramatic changes to the cost
and access to capital. We have undertaken a
thorough review of the portfolio focusing our
portfolio companies’ pipelines on the most
promising advanced assets, widening financing
syndicates and executing on strategic
transactions. We believe these steps balance
the need to focus Syncona’s capital on the
assets with the potential to drive attractive
risk-adjusted returns, reach late-stage
development and deliver near-term growth.
We will continue to grow the portfolio through
the addition of the next wave of cutting-edge
biotech companies which will drive the
forefront of the industry in the future.
Whilst we expect conditions to improve over the
medium term with valuations already improving
for late-stage assets, we have taken decisive
action across the portfolio to navigate the current
period, take advantage of these conditions where
possible and build a wave of new companies
to drive longer term sustainable growth.
However, the action taken across the
portfolio, coupled with the challenging market
environment has contributed to a reduction in
net assets, with our listed companies’ share
prices declining and SwanBio being partially
written down.
More broadly, however, we have seen positive
progress across the portfolio with 16 clinical
data read-outs, seven financings, and a further
three post-period end, including one significant
pharma investment. Syncona’s portfolio is
increasingly diversified with a number of
near-term value drivers, particularly from
our late clinical stage companies.
I am also pleased with the changes we
have made to our organisational structure
and the corresponding expansion of the team.
The proactive approach we have taken to
portfolio management combined with these
improvements will provide increased resilience
in the current market conditions as well as
a platform to drive growth. We believe our
focus on building companies to late-stage
development alongside our balance sheet
strength will ultimately enable us to deliver
strong risk-adjusted returns for our
shareholders over the long term, driving
transformational impact for patients.
2023 PERFORMANCE
synconaltd.com
STRATEGIC REPORT
1 Financial highlights
2 At a glance
4 Chair’s statement
6 Chief Executive Officer’s statement
10 Our value creation model
12 Our value creation model in action
18 Our purpose and strategy
20 Our investment process
22 Market review
26 Portfolio review
36 Financial overview
38 Key performance indicators
40 Engaging with our stakeholders
44 Our people and culture
48 Sustainability review
62 TCFD report
66 Risk management
69 Principal risks and uncertainties
75 Viability statement
GOVERNANCE
76 Corporate governance report
80 Board of Directors
82 Report of the Nomination
and Governance Committee
86 Report of the Audit Committee
90 Report of the Remuneration
Committee
96 Directors’ report
99 Statement of Directors’
responsibilities
FINANCIAL STATEMENTS
100 Independent Auditor’s report
106 Unaudited Group portfolio statement
107 Consolidated statement
of comprehensive income
108 Consolidated statement
of financial position
109 Consolidated statement of
changes in net assets attributable
to holders of Ordinary Shares
110 Consolidated statement
of cash flows
111 Notes to the consolidated
financial statements
SHAREHOLDER INFORMATION
135 AIFMD Disclosures (unaudited)
136 Report of the Depositary
to the shareholders
137 Company summary and
e-communications for shareholders
138 Glossary
140 Alternative performance measures
141 Advisers
Create Build Scale
Our vision is to unlock the potential from truly
innovative science to transform patients’ lives
Our strategy is to create, build and scale companies around
exceptional science to create a diversified portfolio of 20-25 globally
leading life science businesses, across development stage,
modality and therapeutic areas, for the benefit of all our stakeholders.
We focus on developing treatments for patients by working in close
partnership with world-class academic founders and management
teams. Our capital pool underpins our strategy, enabling us to take
a long-term view as we look to improve the lives of patients with no
or poor treatment options, build sustainable life science companies
and deliver strong risk-adjusted returns to shareholders.
Chris Hollowood
Chief Executive Officer
Syncona Investment Management Limited
1. Alternative performance measure, please refer to page 140.
2. Fully diluted, please refer to note 14 in the financial statements on page 122.
3. Please see glossary on page 138 for definition.
£1.3bn
Net Asset Value (NAV)
(186.5p
1,2
per share)
(2022: £1.3bn; 194.4p per share)
(4.1)%
NAV return
1
(2022: 0.3%)
£604.6m
Life science portfolio valuation
(2022: £524.9m)
£650.1m
Capital pool
3
(2022: £784.9m)
£177.2m
Capital deployment
1
(2022: £123.2m)
FINANCIAL HIGHLIGHTS
1SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
A highly skilled team, an increasingly diversified portfolio, a permanent capital structure
combined with a long-term approach and commitment to responsible investing.
CLINICAL COMPANIES
Achilles Therapeutics
Anaveon
SwanBio Therapeutics
Freeline Therapeutics
Quell Therapeutics
PRECLINICAL COMPANIES
Resolution Therapeutics
Purespring Therapeutics
Clade Therapeutics
OMass Therapeutics
Mosaic Therapeutics
Kesmalea Therapeutics
LATE CLINICAL COMPANIES
Autolus Therapeutics
Beacon Therapeutics
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
Syncona investment point.
Our strategy, team and balance sheet position us to take
advantage of a compelling market opportunity centred
on delivering products to late-stage development.
AT A GLANCE
What sets us apart
Our multi-disciplinary team has a
technical skill-set with deep scientific,
investment and operational expertise.
We have significant experience in
managing risk and reward in a specialised
asset class. To date our four exits
have generated proceeds of £948 million,
a 4.3x multiple of cost.
170
Years of life science and investing
experience in the investment team
We have a balance sheet structure
which provides us with the flexibility to
fund our companies from foundation to
late-stage development – connecting
science with its full value potential.
Whilst we will bring in co-investors
alongside us to diversify financial risk,
our ability to fund over the long term
helps to attract the best academics,
founders, executives and financing
syndicate partners. It also helps
provide a strong negotiating position
for financing rounds or M&A.
£650.1m
In the capital pool
Our capital pool
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.
A commitment to
making a positive impact
and responsible investing
A multi-disciplinary team
with a strong track record
Our strategic portfolio is made up
of 13 leading life science companies,
all built with product-focused
strategies where we believe there
is an opportunity to make a
difference to the lives of patients.
Our strategic portfolio
7/13
Portfolio companies
at clinical stage
P26
P44 P36 P48
2 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
This year we outlined our plan to scale Syncona over the next 10 years, setting out our
new long-term targets. Our ambition to organically grow net assets to £5 billion by 2032
reflects the potential returns available from a maturing and expanded portfolio.
Our ambition
by 2032
Our roadmap to organically grow net assets to £5 billion by 2032
P18
A long-term strategy
A dierentiated value creation model
P10
We create, build and scale
companies that can make a
real difference in people’s lives
by providing transformational
treatments in areas of high
unmet medical need.
Create
companies around
exceptional science
Build
our companies by taking
a hands-on partnership
approach
Scale
our companies over
the long term, leveraging
our capital pool and
relationships with
strategic co-investors
£1.1bn
Deployed since 2012
Our strategy is to create
a diversified portfolio of
20-25 leading life science
businesses. We believe that
significant value in our asset
class can be accessed
by delivering companies
to late-stage development.
£5bn
net assets
Delivered through
our long-term
growth targets
22
Syncona portfolio companies
since 2012 foundation
13
Number of companies
in the portfolio today
14
Clinical trials across Syncona
portfolio
Building global
leaders today
3
New companies
created p.a.
20-25
Portfolio of leading life
science companies
3-5
Companies in which we retain
a significant ownership position
to late-stage development
10-year rolling
targets
3SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
The last year has seen a series of significant
economic and geopolitical events, including
the Russia and Ukraine conflict, that have
led to a very challenging global economic
environment. We have seen increased
inflation with Central Banks weighing up
difficult decisions on raising interest rates
and significant valuation moves across
several sectors leading to increased volatility
across global markets. The widespread
economic uncertainty has had a substantial
impact on the biotech space and we have
seen a dramatic change to both valuations
and the cost of capital in the sector in which
we operate. We have seen the impact of
this macro backdrop on our listed holdings
and have also seen challenging financing
conditions across the market for early-stage
biotech companies.
It is against this backdrop that Syncona
initiated a review of its strategy, conducted
by the Syncona team in partnership with the
Board, announcing our evolved approach
at our Interim Results last November. We
believe the changes we are in the process
of implementing will enable the Company to
increase its resilience to challenging market
conditions, help our portfolio companies
to navigate their complex, high-risk
development pathways successfully, grow
the portfolio to provide better diversification
and thereby improve shareholder returns
over time. The team have made a good
start embedding these changes and the
Board looks forward to seeing further
progress in the coming financial year.
FINANCIAL PERFORMANCE
Syncona ended the year with net assets
of £1,254.7 million or 186.5p per share, a
(4.1)% return in the year (31 March 2022:
net assets of £1,309.8 million, NAV per
share of 194.4p, 0.3% return). Performance
has been driven by the continued share
price declines of our listed holdings which
partially reflected the wider market
backdrop for biotech companies and the
write down of our valuation of SwanBio,
which outweighed the positive impact of
foreign exchange and uplifts elsewhere in
the portfolio. The Syncona team have been
actively working to maximise value across
our portfolio, focusing on navigating our
companies through their clinical pathway to
late-stage development, where we believe
the most significant value can be accessed,
and ensuring capital discipline to enable
them to deliver on their missions to get
products to patients.
DECISIVE ACTION ACROSS THE PORTFOLIO
WITH CONTINUED FOCUS ON CLINICAL
ASSETS; MAINTAINING DISCIPLINED
CAPITAL ALLOCATION AGAINST A
CHALLENGING MARKET BACKDROP
In the context of the current environment,
Syncona’s balance sheet is of critical
strategic importance. The Syncona
Investment Committee has continued to take
a disciplined approach to capital allocation
across the portfolio, whilst ensuring that
where companies are delivering on key
milestones and maintaining a clear path to
take products to patients, we are able to
continue to support them. We have been
focusing our capital where we believe
there is a differentiated opportunity to fund
companies to milestones close to late-stage
development and where recently we have
seen valuations start to recover.
The Syncona team has also been quick
to respond to opportunities that have
been presented by the current market
environment, and the Board has been
pleased to see that our balance sheet has
enabled us to add four new companies to
the portfolio in this financial year, in line with
our evolved strategy. These included one
late-stage asset (AGTC-501), which we
believe has exciting potential for both
patients and shareholders over the long term.
STRATEGY EVOLUTION
Our strategy evolution includes a number
of enhancements to our processes and,
importantly an updated set of long-term
targets. We have looked closely at how
to optimise our approach to financing our
companies and also at improving the way
we manage our companies through the
development cycle, particularly as they
navigate the clinical pathway. Reducing the
impact of our cash holding for shareholders
has been a core focus for the Board this
year, and we are pleased that the Syncona
team has committed to a target of
expanding the life science portfolio by
creating three new companies per year,
having historically created one to two
companies on an annual basis. We believe
an expanded and diversified portfolio,
where we reach a portfolio size of 20-25
companies, which sits alongside a capital
pool that provides three years of financing
will help to deliver our growth ambitions
whilst minimising the impact of cash on
the return shareholders experience.
As part of this work, we also recognised
the impact that proceeds from realisations
may have on balance sheet efficiency and
longer-term performance. We anticipate
that shareholder returns will continue to be
predominantly driven by long-term capital
appreciation. However, if, in the event of
realisations, our capital pool increases
significantly in excess of our three year
forward capital deployment guidance, and
subject to an assessment of investment
opportunities at the time, the Board would
look at returning capital to shareholders.
SYNCONA TEAM EVOLUTION
To support the expansion of the portfolio
and the management of mature portfolio
companies as they scale through the clinic,
the Board, in partnership with the Syncona
Leadership Team, has reviewed the
Company’s organisational structure, to enable
the delivery of the Company’s long-term
growth targets. We have been pleased to see
the expansion of the senior investment team,
alongside the implementation of the evolved
operational model. We believe these changes
will support the delivery of a sustainable
portfolio, reduce volatility and improve
shareholder returns.
Melanie Gee
Chair
Syncona Limited
CHAIR’S STATEMENT
A year of strategic evolution in
challenging market conditions
4 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
OUTLOOK
The Board is disappointed by Syncona’s
share price performance and where it
is trading relative to NAV. We continue
to monitor it closely, whilst focusing on
supporting the team to drive our evolved
strategy and deliver on our stated NAV
ambition. The team has made good
progress on executing our evolved strategy
and our long-term targets are clear. We are
looking to deliver an expanded portfolio of
20-25 companies by 2032, and to hold
three to five companies with significant
shareholdings to late-stage development
to enable our shareholders to participate in
the significant value creation in our sector.
The UK life science landscape remains
exciting and provides a rich set of
opportunities. The UK Government’s support
for the sector is encouraging and the team
are actively engaged in discussions with
them across a range of important initiatives,
most critically around how to attract more
capital to the sector. We look forward
to seeing the impact of these initiatives.
As I look forward more broadly, I am
confident that the evolution of both our
strategy and the Syncona team, alongside
the clear action taken in the portfolio to
support companies to navigate the current
market backdrop, will help the Company
deliver for all of our stakeholders over the
long term.
Finally, I would like to take the opportunity
to thank the Syncona team, the portfolio
company management teams and my
Board colleagues for their hard work and
dedication this year.
Melanie Gee
Chair
Syncona Limited
14 June 2023
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 to 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 in the previous
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.
LONGTERM DECISIONMAKING
The Board is responsible for setting the
Company’s purpose, Investment Policy,
strategic objectives and risk appetite. Our
purpose is to invest to extend and enhance
human life. We do this by creating, building
and scaling companies to turn exceptional
science into transformational treatments for
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.
MATERIAL DECISIONS MADE P42 AND 43
OUR PURPOSE AND STRATEGY P18 AND 19
RISK MANAGEMENT P66 TO 68
CORPORATE GOVERNANCE REPORT
P76 TO 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. How the interests of
each of these key stakeholders, including
our shareholders, our people, our patients,
the scientific research community and the
government and the wider community,
are taken into account in the business and
by the Board is described in more detail
on pages 40 to 43. For further information
relating to our impact on the environment,
please see pages 48 to 61.
As an investment company, our suppliers
are limited: other than SIML, they are
principally our Administrator and Custodian,
and professional service providers.
Accordingly, we have not included suppliers
as a key stakeholder on pages 40 to 43.
ENGAGING WITH OUR STAKEHOLDERS
P40 TO 41
SUSTAINABILITY REVIEW P48 TO 61
MAINTAINING A REPUTATION FOR HIGH
STANDARDS OF BUSINESS CONDUCT
The Board is responsible for monitoring
the culture, values and reputation of the
business. During the year the Board
reviewed the steps taken by the Syncona
team to ensure that our processes and
ways of working are aligned with the
Company’s purpose and values. The Board
also monitors the implementation of our
sustainability framework, which sets out
how we will act as a responsible investor.
CORPORATE GOVERNANCE REPORT
P76 TO 79
SUSTAINABILITY REVIEW P48 TO 61
5SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
Scaling
for growth
4
New companies
added to portfolio
16
Clinical data read-outs
across the portfolio
CHIEF EXECUTIVE OFFICER’S STATEMENT
Navigating our companies
through the clinical
pathway to late-stage
where we believe
significant value can be
accessed is particularly
important in the current
environment."
Chris Hollowood
Chief Executive Officer
Syncona Investment Management Limited
6 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
This year Syncona has implemented a range
of key strategic initiatives which we believe
will position ourselves to deliver our long-term
growth ambitions. These strategic changes
at Syncona have been executed alongside
decisive actions taken to re-focus certain
portfolio companies’ clinical pipelines around
the highest value potential programmes. We
have also sought to take advantage of the
market conditions where possible creating
the next wave of leading biotech companies.
NAV PERFORMANCE DRIVEN BY
THE DECLINE IN SHARE PRICES OF
LISTED COMPANIES AND THE PARTIAL
WRITEDOWN IN VALUE OF SWANBIO
In terms of financial performance, we ended
the year with net assets of £1,254.7 million or
186.5p per share, a (4.1)% return in the year
(31 March 2022: net assets of £1,309.8
million, NAV per share of 194.4p, NAV return
of 0.3%). Performance has been driven
by both declines in the value of our listed
holdings as well as the partial write-down of
SwanBio, which were partially offset by
the positive impact of foreign exchange
and uplifts elsewhere in the portfolio.
We recognise that the share prices of
Syncona’s listed holdings have continued
to weigh on performance, and that this
has been impacted by the current macro
conditions as well as specific company
issues. The Syncona team has worked
closely with the management teams at
these portfolio companies to ensure they
remain funded to deliver their next key
milestones and are focused on delivering
value from their clinical stage programmes.
The Company has written down its holding
in SwanBio to £58.2 million, a £51.0 million
decline in value during the year. We continue to
believe in the potential impact of gene therapy
to treat patients with Adrenomyeloneuropathy
(AMN) . SwanBio’s management team has
taken the strategic decision to restructure the
pipeline and have chosen to focus on its lead
programme. As part of our valuation process,
we have recognised that the company is now
driving forward one programme, rather than a
pipeline of programmes. We will work closely
with the company as it generates data from its
initial dose cohort. The financing environment
has been challenging for early-stage
companies and SwanBio has not executed a
third-party financing to date. We are, therefore,
working on a range of financing and strategic
options for the company in parallel.
Across the rest of the private portfolio, our
companies are making strong operational
and clinical progress, whilst also leveraging
strategic opportunities to bring in further
financing in order to help realise their ambitions
in a challenging environment. Overall, the
portfolio has diversified and matured over the
year and now includes seven clinical stage
companies where there have been 16 clinical
data read-outs, whilst we have also seen five
clinical trial initiations, two companies enter
the clinic and seven financings completed.
FOCUSING PORTFOLIO COMPANY
CLINICAL PIPELINE ON LATESTAGE
ASSETS AND ATTRACTING STRATEGIC
SOURCES OF FUNDING
Navigating our companies through the clinical
pathway to late-stage where we believe
significant value can be accessed is particularly
important in the current environment. Across
the portfolio, we have been able to support our
companies as they execute on a number of
opportunities to ensure the companies are able
to deliver on their plans prudently and are
positioned to achieve key milestones. Similar to
the difficult decision we have taken at SwanBio,
at Freeline, we have worked with the
management team to streamline its pipeline
of programmes, executing the sale of its
manufacturing facility and focusing on its
Gaucher programme where it has a potential
first mover advantage. At Autolus, we
participated in a $163.9 million financing, with
the company now funded into 2025 as it
approaches the filing of a BLA with the US
Food and Drug Administration (FDA) for its lead
obe-cel therapy later in 2023, a key milestone.
Despite the difficult financing environment
for public and private companies, we have
seen the completion of the sale of Neogene
to AstraZeneca for up to $320.0 million
(£261.2 million)
1
. The sale of Neogene is the
fourth sale of a Syncona portfolio company
over the last four years, generating total
potential sale proceeds of up to £1.2 billion
2
,
with upfront proceeds alone generating a
4.3x return on capital invested. Outside of
M&A, our portfolio also continues to attract
Our strategy is underpinned by four key drivers
1
Team and track record
A multi-disciplinary team with significant
expertise and a strong track record in creating
and building leading life science companies.
2
Capital
Maintain a capital pool structure to provide us with
flexibility to fund our companies over the long term.
3
Portfolio
We have access to exceptional science coming out
of leading universities and our network enabling
us to build a diversified portfolio of high-growth
companies in areas of high unmet medical need.
4
Risk-adjusted returns
We seek to deliver strong risk-adjusted returns
through our differentiated model and financing
approach which optimises our capital allocation
so that we effectively manage risk and reward.
35
Number of Syncona team
members
£650.1m
Capital pool
13
Companies in the portfolio
22%
IRR and 1.5x multiple on
cost across whole portfolio
since 2012
3
OUR STRATEGY
OUR PURPOSE AND STRATEGY P18
1. FX rate taken at date of transaction closing.
2. Since 2012, includes potential full receipt of milestones from sales of Gyroscope and Neogene.
3. Includes sales of Blue Earth, Nightstar, Gyroscope, and Neogene closures of 14MG and Azeria. All IRR and multiple on cost
figures are calculated on a gross basis, reflects original Syncona Partners capital invested where applicable.
7SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
Portfolio companies
interest from both pharma and strategic
investors, underlined by the post-period end
collaboration and exclusive option and
license agreement Quell has entered into
with AstraZeneca, for which it will receive
$85 million upfront, predominantly in cash
alongside equity, and the additional £10.0
million commitment from British Patient
Capital into OMass Therapeutics (OMass)
in its expanded Series B financing.
BALANCE SHEET AND SYNCONA
EXPERTISE IS IMPORTANT IN NAVIGATING
THE CURRENT MARKET BACKDROP
£394.3 million has been committed to the
portfolio during the year by Syncona and third
parties, with Syncona committing £176.9
million
1
. Our balance sheet has been more
important than ever in the current environment
enabling us to protect our positions where
companies are making strong progress
and also take advantage of current market
valuations to access late-stage assets that
can be operated on our model. It has always
been critical to our long-term approach but
in an environment where there is a greater
scarcity of capital, we are able to support
companies with products that have huge
potential for patients and continue to progress
these through the development pathway
to ensure they achieve their missions.
The team continue to take a disciplined
approach to capital allocation across the
portfolio, rigorously balancing the risk
and reward potential of each investment
decision and ensuring investment into
companies that have made the necessary
decisions to drive capital efficiency into their
operations to deliver our return targets.
SCALING THE BUSINESS TO DELIVER
LONGTERM GROWTH AND VALUE FOR
SHAREHOLDERS
A key part of our strategy evolution is our
plan to increase the rate of new company
creation to three per year, having previously
founded one to two companies a year. We
believe this will enable increased potential
for growth from the life science portfolio,
providing greater optionality to optimise
capital allocation, and helping us to build
an expanded portfolio of 20-25 companies.
Growing the life science portfolio whilst
maintaining a runway of three years of
capital will mean that over time our capital
pool becomes a smaller proportion of
overall NAV, driving balance sheet efficiency.
CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
Leveraging a highly experienced team with a wide
range of expertise throughout the clinical pathway
Syncona Executive and Advisory Group
The Group
in action
Gwenaelle Pemberton
has been heavily involved
in developing the company’s
regulatory strategy
Lisa Bright
has worked with the company
on its commercial strategy, as it
approaches commercial launch
of its lead obe-cel therapy
1. Syncona has invested £177.2 million in the year into its portfolio and new opportunities. Uncalled commitments at 31 March 2023 were £87.6 million.
MARKUS JOHN
Experienced clinician and
former Franchise Head,
Immunology and
Ophthalmology at Roche
JOHN TSAI
Experienced clinical
leader and former
CMO of Novartis
LISA BRIGHT
Experienced commercial
leader with a focus on
launching innovative
medicines
KEN GALBRAITH
Experienced biotech
executive; Chair/CEO
of multiple quoted
companies
GWENAELLE
PEMBERTON
Regulatory expert with over
30 years’ experience in
global regulatory strategy
in biopharma
AN EVOLVED MODEL
8 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Overall, we are aiming to grow NAV to
£5.0 billion by 2032, delivering an IRR of
15% over the cycle, whilst aiming to deliver
top quartile returns from the life science
portfolio. This target reflects the continued
returns potentially available from a maturing
and expanded portfolio as our companies
progress through the development cycle.
DIFFERENTIATED COMPANY CREATION
MODEL, BALANCE SHEET AND
STRATEGIC APPROACH TO DELIVERING
VALUE HAS SUPPORTED PORTFOLIO
EXPANSION AND DIVERSIFICATION
We are delighted to have made a strong
start to delivering on our new 10-year rolling
targets this year, adding four new companies
to the portfolio including a late-stage asset,
which provides further diversification.
The breadth of our approach to company
creation exemplifies our multi-disciplinary
expertise and differentiated model. The team
has created an ophthalmic gene therapy
company, Beacon, based around two
pre-clinical assets, one of which is in-licensed
from the University of Oxford. Beacon has
now been combined with AGTC, previously
a NASDAQ listed company with a late-stage
asset which was acquired by Syncona
during the year, creating a combined
company with a diverse pipeline of assets
in an area where Syncona has significant
expertise. As part of the transaction,
Syncona is set to benefit from any future
commercialisation of the company’s
lead AGTC-501 asset via a “deferred
consideration” which provides the right
to a mid-single digit percentage of future
income from sales and licensing.
Incorporating royalties (or similar structures)
into our investments has the potential
to offer Syncona future income streams
aligned with our strategic approach to
creating value for our shareholders. We
were also pleased during the year to add
two cutting edge companies in the small
molecule space in Mosaic and Kesmalea.
EVOLVING OUR TEAM AND OPERATIONAL
MODEL TO DELIVER OUR UPDATED
LONGTERM GROWTH AMBITIONS
To continue to deliver on our 10-year rolling
targets, we have evolved and expanded our
senior team. Roel Bulthuis has joined as
Managing Partner and Head of Investments,
bringing over 20 years of life science
Moving to our pipeline of new opportunities,
our core sourcing approach remains
focused on identifying exciting science
generated by world-class academics at
universities both here in the UK and on a
global basis. We continue to see a rich
pipeline of ground-breaking science around
which to create new companies across a
range of therapeutic areas, leveraging our
model and relationships with world-class
academics. Our team has a strong track
record in picking great science which has
the potential to have a meaningful impact
for patients, and we are excited by the
potential of our platform to create and build
more great companies based on this strong
opportunity set.
WELL POSITIONED TO NAVIGATE
THE CURRENT MARKET CONDITIONS;
PORTFOLIO INCREASINGLY
DIVERSIFIED WITH POTENTIAL FOR
NEARTERM INFLECTION POINTS
AND LONGTERM GROWTH
Our portfolio is increasingly diversified with
seven clinical stage companies including two
late-stage clinical companies, Autolus and
Beacon, that have key clinical and regulatory
milestones in the next 12 months and are
well positioned to deliver value. To achieve
our long-term ambitions, we have worked
hard to build and invest in our platform this
year to scale the business to deliver on the
significant opportunity that lies ahead.
The opportunity to build the best globally
leading life science companies here in the
UK is exciting for patients and all of our
stakeholders. We believe our evolved
ambition, talented team and ambitious
target to grow NAV to £5.0 billion will
deliver strong risk-adjusted returns for
shareholders over the long term.
Chris Hollowood
Chief Executive Officer
Syncona Investment Management Limited
14 June 2023
venture capital, business development
and investment banking experience, and
Ed Hodgkin was promoted to Managing
Partner, with Elisa Petris and Magdalena
Jonikas promoted to Lead Partner. We were
also pleased post-period end to welcome
John Tsai and Ken Galbraith to Syncona as
Executive Partners. Both bring significant
experience in clinical and commercial roles,
with John Tsai joining Syncona from
Novartis, where he was President, Global
Development and CMO, and Ken Galbraith
bringing over 30 years as a senior biotech
leader, including as CEO of four companies.
We have also evolved our operational model
to enable the efficiency needed to scale and
support our growth ambitions and to improve
the clinical execution of our companies
as they navigate complex development
pathways to bring innovative drugs through to
late-stage. We have formed a discrete Launch
Team within Syncona to support our new
portfolio companies in becoming operational.
Our new Executive and Advisory Group
has also been formed to provide functional
expertise, particularly through the mid- and
late-stage of clinical development, to support
our portfolio companies to pre-empt potential
clinical and operational issues and course
correct when challenges arise.
VALUATIONS FOR LATESTAGE ASSETS
IMPROVING, WHILST LIFE SCIENCE
RESEARCH BASE REMAINS EXCITING
FOR SOURCING LEADING SCIENCE
The financing environment for biotech
companies has been acutely challenging
over the last 12 months. However,
valuations are starting to recover for
later-stage clinical assets, as investors
focus on good science validated by clinical
data. This market dynamic validates a core
principle of our strategy to build companies
that are focused on delivering products to
patients and we believe our companies are
well positioned to progress to clinical stage
with our ongoing support. Alongside
the improving market conditions, we are
seeing for late-stage companies, pharma
companies are increasingly active in the
M&A space, and we are seeing assets
with strong clinical data being acquired
at attractive multiples, another core tenet
of our strategy. As our portfolio matures,
we believe it is well positioned to take
advantage of these evolving dynamics.
9SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
Our create, build, scale model is our dierentiated
approach to building globally competitive life
science companies.
We take a proactive approach to sourcing
science with a focus on how it could
translate to products that can deliver
transformational eicacy for patients
in areas of high unmet need. We then
apply our rigorous due diligence process.
We ambitiously scale our companies
at key stages of the investment cycle…
UNDERPINNED BY OUR
Create
new businesses
in partnership with
leading academics
working on
exceptional science.
Build
out our newly created
companies through a
hands-on partnership
approach.
OUR VALUE CREATION MODEL
A dierentiated approach
HOW WE SELECT OUR INVESTMENTS OUR CORE ACTIVITIES
A dierentiated platform investing
in a globally significant scientific
research base:
A multi-disciplinary team
with a strong track record
Our capital pool
A commitment to making a positive
impact and responsible investing
Our strategic portfolio
A long-term strategy
WHAT SETS US APART
Opportunities based on
exceptional science which
has the potential to have a
transformational impact
for patients
OUR INVESTMENT PROCESS P20
10 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
The value we create is on behalf of our eight stakeholder groups,
who are all key to our ongoing success.
…whilst maintaining a disciplined
approach to capital allocation
across the portfolio.
Strong risk-adjusted returns generated by creating
a portfolio of companies with the potential to reach
late-stage development
Scale
our businesses over
the long term, bringing
in co-investors to
diversify financial risk,
whilst retaining the
flexibility to fund
them to late-stage
development;
maximising their
ambition.
PROCEEDS
FROM
REALISATIONS
Returned to
shareholders
Reinvested in
the portfolio
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.
VALUE CREATED
For patient groups
it means developing
transformational treatments
in areas of high unmet need.
For the government and
the wider community
it means building sustainable
life science businesses.
For our people
it means creating an environment
where everyone can flourish.
For our portfolio
companies
it means providing expertise,
support and funding to enable
them to achieve their ambitions.
For the scientific
research community
it means translating exceptional
science into a commercial product.
For our shareholders
it means generating attractive
and sustainable returns
by providing access to a
diversified portfolio of highly
innovative companies.
For our co-investors
it means growing partnerships,
building long-term relationships
and enhancing their returns.
For the Syncona Foundation
and its supported charities
it means providing sustainable funding
so it can deliver on its objectives.
Learn more about our
Capital Return Policy
FINANCIAL
OVERVIEW P36
CAPITAL POOL
11SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
We
1 in 22,000
Men commonly thought
to have XLRP
1
£96m
Series A financing
Beacon Therapeutics
Creating a late-stage gene therapy company
where Syncona has unique expertise to drive
value for shareholders and impact for patients.
OUR VALUE CREATION MODEL IN ACTION
At Syncona, we seek to
combine world-class science
with world-class leaders to
create globally leading life
science companies. Beacon
is a perfect example of this.”
Michael Kyriakides
Investment Partner
CASE STUDY
PORTFOLIO REVIEW P26
SPOTLIGHT ON SUSTAINABILITY
The impact of products for patients is at the centre of our
investment process, with Beacon’s late-stage asset in XLRP
having significant potential for delivering impact in an area
of high unmet need. AGTC had a strong set of established
sustainability principles which we have successfully carried
over to Beacon, and we look forward to working closely with
Beacon over the next 12 months to further build upon these
strong foundations.
1. Research suggests that 50-70% of patients have a mutation in
the RPGR gene; this is the group targeted by the Beacon therapy
(iovs.arvojournals.org/article.aspx?articleid=2125553).
The team has created a new
leading ophthalmic gene therapy
company, Beacon, by acquiring
Applied Genetic Technologies
Corporation (AGTC), previously a
NASDAQ listed company with a
late-stage asset, and combining
it with two exciting pre-clinical
programmes. With a purpose to
restore and improve the vision of
patients with a range of prevalent
and rare retinal diseases that
result in blindness, Beacon’s
pipeline has an established
scientific foundation that
combines a late-stage
development candidate to treat
X-linked retinitis pigmentosa
(XLRP) with two pre-clinical
programmes, one targeting
dry age-related macular
degeneration (AMD) and another
in-licensed from the University
of Oxford targeting cone-rod
dystrophy (CRD). Beacon
also has access to a target
generation technology platform
that will identify, screen and
search secreted proteins in
the ophthalmology space.
12 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
create
commercial concepts around ground-breaking
science to deliver treatments for patients in
areas of high unmet need
Sourcing world-class science
• Syncona had been following AGTC for a
number of years, having had experience
in XLRP through its previous investment
in Nightstar Therapeutics, a retinal gene
therapy company which it sold to Biogen
in 2018 for $877 million, a 4.5x return
• Syncona acquired a Phase II clinical
asset in XLRP in November 2022 when it
completed its acquisition of AGTC for an
initial $23.3 million upfront investment
• Syncona identified the potential of
AGTC’s lead asset, AGTC-501, and
could see an innovative approach to the
clinical and regulatory pathway for the
drug which could lead to it continuing
its progress towards patients
Partnering with leading
academics
• Syncona has a strong relationship with
Professor Robert MacLaren, Professor
of Ophthalmology at the University
of Oxford. He was a co-founder of
Nightstar Therapeutics and also served
on the Scientific Advisory Board of
Gyroscope Therapeutics. Professor
MacLaren will act as a Scientific
Adviser to Beacon as well as join
the company’s Board as a Director
• We have also leveraged our broader
relationship with the University of Oxford
to identify and then in-license a
pre-clinical programme targeting CRD
Selecting products with
commercial potential which
can be taken to market
• Beacon’s one clinical and two pre-clinical
programmes are all targeting diseases
which are underserved by current
treatments and result in blindness,
a devastating condition for patients
• We had seen strong data from AGTC-501,
demonstrating the potential for the drug,
and saw a differentiated opportunity to
create a company with a late-stage asset
on the Syncona model
• Combining AGTC-501 with highly
innovative pre-clinical assets has created
an exciting and diversified platform
company with the potential for near-term
commercialisation
13SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
We
OUR VALUE CREATION MODEL IN ACTION CONTINUED
Making long-term decisions
consistent with a company
taking a product to approval
independently
• Syncona worked closely alongside
OMass, helping the team think through
target identification
• OMass announced its pipeline in 2021
with a focus on immunological and
rare diseases
• The company has invested in its R&D
and clinical capabilities, moving in 2023
to a new 16,000 sq foot mixed-use
space at the new Oxford ARC campus
with a laboratory space specifically
designed for OMass’ scientific and
technical requirements
Attracting the best
management teams
• OMass is led by CEO Rosamond (Ros)
Deegan, who joined the company
in May 2019 and has significant
experience across senior operational
and commercial roles at both private
and listed biotechs, including a track
record in business development and
both public and private financings
• Ros works alongside a strong
management team, including Chief
Scientific Officer Ali Jazayeri, former
Chief Technology Officer at Heptares
Therapeutics and an experienced leader
in therapeutics drug development
Focusing on execution through
people and access to capital
• The team at OMass has continued to
grow, with headcount almost doubling
over the last two years as a broad range
of experienced personnel have joined the
business to help it drive towards delivering
on its scientific and operational milestones
• OMass has a strong syndicate of
investors, led by Syncona alongside
Oxford Science Enterprises, Oxford
University, GV, Northpond, Sanofi
Ventures and British Patient Capital (BPC)
• The company has raised £128.5 million to
date, including an expanded £85.5 million
Series B financing which included an
additional £10 million investment from
BPC, announced in May 2023
14 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
globally leading, diverse life
science companies by leveraging
our expertise and track record
to drive success
build
32%
Uplift to Syncona’s holding
value from OMass Series B
financing in 2022
5
Programmes in OMass pipeline
We provide expert insight
across a range of specialisms
including regulatory,
commercial and clinical,
ensuring that our portfolio
companies have access to
the resources and expertise
they need to succeed.”
Magdalena Jonikas
Lead Partner
OMass Therapeutics
CASE STUDY
PORTFOLIO REVIEW P32
SPOTLIGHT ON SUSTAINABILITY
OMass has made significant progress in developing its
approach to sustainability. It has already built a strong
reporting framework across environmental, social and
governance areas, and has worked very closely with
Syncona as it has developed its thinking in this area. In
particular, the company has shown a strong commitment
to limiting its environmental footprint, implementing
operational changes to limit emissions and reporting its
Scope 1 to 3 emissions to Syncona for the last two years.
OMass uses 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.
Its platform is based on work
originated in the laboratory
of Professor Dame Carol
Robinson at Oxford University,
and was originally spun out
of Oxford as a research and
consultancy business before
being re-launched in 2018 as a
therapeutics business following
the Syncona-led Series A
financing. Since this, Syncona
has been working closely with
OMass as it develops as a
business, guiding it through
pre-clinical development and
a Series B financing.
15SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
OUR VALUE CREATION MODEL IN ACTION CONTINUED
AstraZeneca’s recent
collaboration with Quell is
excellent validation of its
platform and technology. We
are proud Quell has attracted
a strong partner to support
the development of its high
potential Treg cell therapies.”
Elisa Petris
Lead Partner
Quell Therapeutics
CASE STUDY
PORTFOLIO REVIEW P30
We
$85m
Received upfront in cash
and equity investment from
AstraZeneca through a licensing
agreement in June 2023
£164.8m
In capital raised
1
SPOTLIGHT ON SUSTAINABILITY
Quell has shown a strong commitment to sustainability
reporting. The company clearly recognises the importance
of diversity and inclusion by establishing an Equal
Opportunities Policy. It has also worked alongside Syncona
to develop its environmental reporting, providing Scope 1
to 3 emissions to Syncona for the last two years.
Quell Therapeutics was
founded with the aim
of developing engineered
T regulatory (Treg)
cell therapies.
Tregs are a subset of T cells with
the potential to downregulate
the immune system. Quell was
founded by Syncona in 2019
having brought together six
prominent immunological
experts from King’s College
London, University College
London and Hannover Medical
School, with the company on
track to be the first company to
potentially present data in the
engineered Treg field in the liver
transplant setting. Guided
by Syncona, Quell has been
making strong progress as
it heads towards the clinic
later this year, successfully
completing a Series B financing
and signing a licensing
agreement with AstraZeneca.
1. At 31 March 2023.
16 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
scale
ambitiously by leveraging our
significant ownership positions as our
companies progress through the clinic
Leveraging our balance sheet
to invest through the cycle
• Quell was created by Syncona,
following the team identifying Treg cells
as an area of interest in late 2017
• Syncona led Quell’s £35.0 million
Series A financing in 2019 with a
£34.0 million commitment
• In 2021 Syncona provided another
£25.3 million in financing in an
expanded Series A, with the level
of funding raised at this point
being the largest ever amount
of funding committed to a
stand-alone Treg company
Attracting world-class investor
syndicates to our portfolios
• Quell was able to attract a top tier syndicate
of investors to its Series B financing in
2021, with Jeito Capital, Ridgeback Capital,
SV Health Investors, Fidelity, British Patient
Capital (BPC) and others participating
in a £117 million financing
• Syncona committed £19 million as part
of the Series B, which took place at a
41% uplift to Syncona’s previous holding
value for Quell
• The success of this financing underlined
the market view on the potential of
Tregs, with Syncona benefitting from
its early mover advantage in spotting
the technology’s potential
Building portfolio companies
with product-focused
strategies which are attractive
to pharma partners
• In June 2023, Quell announced that it had
signed an option and license agreement
with AstraZeneca to develop, manufacture
and commercialise engineered Treg cell
therapies for autoimmune diseases, for
which it received $85 million in upfront
and equity payments
• Quell could also potentially be eligible
to receive over $2 billion in further
development and commercialisation
milestones, plus potential tiered royalties
• This agreement underlines the continued
value of Syncona portfolio companies to
pharma investors. It will enable Quell to
leverage AstraZeneca’s expertise and
capability in driving its products through
the development pathway
17SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
3
Portfolio
We have access to exceptional science
coming out of leading universities and our
network enabling us to build a diversified
portfolio of high-growth companies in
areas of high unmet medical need.
4
Risk-adjusted returns
We seek to deliver strong risk-adjusted returns
through our dierentiated model and financing
approach which optimises our capital allocation
so that we eectively manage risk and reward.
2
Capital
Maintain a capital pool structure to provide
us with flexibility to fund our companies
over the long term.
1
Team and track record
A multi-disciplinary team with significant
expertise and a strong track record in creating
and building leading life science companies.
• Evolved Leadership Team, with Martin Murphy moving to Chair of SIML
and Chris Hollowood becoming CEO
• Expanded and re-structured investment team, with Ed Hodgkin being
promoted to Managing Partner and Elisa Petris and Magdalena Jonikas
being promoted to Lead Partner
• Roel Bulthuis also joined post-period end as Managing Partner and
Head of Investments
• John Tsai and Ken Galbraith joined post-period end as Executive Partners
• Launch and Executive and Advisory functions launched and operational
• Team has worked closely with portfolio companies to focus on delivering
against key milestones with capital discipline
• £177.2 million of capital deployed into exciting new opportunities and to support
our existing portfolio
• £394.3 million has been committed to the portfolio during the year by Syncona
and third parties, with Syncona committing £176.9 million
• Introduction of new Capital Return Policy to ensure balance sheet efficiency
in the event of realisations
• Addition of three low-volatility, highly liquid, multi-asset funds and mandates
to capital pool to manage inflationary risk
• Portfolio of 13 companies, with the addition of four new companies to the
portfolio during the year, with three created by Syncona
• Acquisition of AGTC, subsequently combined with new portfolio company
Beacon to create a new Syncona ophthalmic gene therapy company
• Addition of small molecule drug discovery platforms Mosaic and Kesmalea
• 16 clinical data read-outs during the year with seven companies now at
clinical stage
• Updated 10-year targets and set a long-term growth target to organically grow
net assets to £5 billion by 2032
• NAV return of (4.1)% and life science portfolio return of (14.3)%
1
during the year
against a challenging market backdrop with performance impacted by decline in
share prices of listed company holdings and the write down of our holding in SwanBio
• Sale of Neogene to AstraZeneca for up to $320.0 million, the fourth sale of a
Syncona portfolio company since foundation
OUR PURPOSE AND STRATEGY
Our purpose is to invest to extend and enhance human life.
We do this by creating, building and scaling companies to
turn exceptional science into transformational treatments
for patients in areas of high unmet need.
THE DRIVERS TO ACHIEVE OUR PURPOSE AND STRATEGY HOW HAVE WE PERFORMED IN 2023?
1. Alternative performance measure, please refer to page 140.
18 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
RELEVANT KPIS
• Targeting a portfolio of 20-25 companies, creating 3 new
companies a year, with a goal of delivering 3-5 companies
to late-stage development over a rolling 10-year basis
• Access to capital, aim to maintain 3 years of financing runway
• NAV growth
• Progress in de-risking pre-clinical and early-stage clinical companies
• People in the Syncona team
• Portfolio progress to patient impact
• Targeting a portfolio of 20-25 companies, creating 3 new
companies a year, with a goal of delivering 3-5 companies
to late-stage development over a rolling 10-year basis
• Access to capital, aim to maintain 3 years of financing runway
• NAV growth
• Progress in de-risking pre-clinical and early-stage clinical companies
• Portfolio progress to patient impact
• Targeting a portfolio of 20-25 companies, creating 3 new
companies a year, with a goal of delivering 3-5 companies
to late-stage development over a rolling 10-year basis
• Access to capital, aim to maintain 3 years of financing runway
• NAV growth
• Progress in de-risking pre-clinical and early-stage clinical companies
• Portfolio progress to patient impact
• Targeting a portfolio of 20-25 companies, creating 3 new
companies a year, with a goal of delivering 3-5 companies
to late-stage development over a rolling 10-year basis
• Access to capital, aim to maintain 3 years of financing runway
• NAV growth
• Portfolio progress to patient impact
RELEVANT KPIS
RELEVANT KPIS
RELEVANT KPIS
Our strategy is to create, build and scale companies
around exceptional science to create a diversified
portfolio of 20-25 globally leading life science
businesses, across development stage, modality and
therapeutic areas, for the benefit of all our stakeholders.
HOW DO WE MEASURE PROGRESS?
KEY PERFORMANCE INDICATORS P38
Achieving
our long-term
objectives
10-YEAR ROLLING TARGETS
3
New companies
created p.a.
3-5
Companies in which we retain
a significant ownership position
to late-stage development
20-25
Portfolio of leading life
science companies
£5bn
Net assets by 2032
19SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
LT
Company creation for us
starts by talking to leading
academics developing highly
innovative science and IP.
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 ifrelevant
or appropriate
Write business plan
and develop strategy for
building out team and
operational capability
Underpinned by
our disciplined
investment
approach
Our team’s background in basic science,
clinical development and commercialisation
enables a holistic understanding of the
opportunity and enables us to bring the
commercial vision to form a company that
can take a product to market and patients.
We take a proactive approach to seeking out
scientists from leading universities and then
conduct rigorous due diligence to identify the
range of key risks and opportunities.
We ask ourselves the following key questions:
OUR INVESTMENT PROCESS
Creating new companies and
a long-term funding approach
Q
IS THE COMPANY SOLVING A PROBLEM
WHERE THERE IS A HIGH UNMET NEED
FOR PATIENTS?
Central to all investment decisions is the impact
a potential treatment can have on the lives of
patients with a devastating disease. The team
looks carefully at the disease setting and
evaluates the current standard of care to ensure
that the product being developed will have a
transformational impact.
Q
ARE THE SCIENCE AND ACADEMIC
FOUNDERS GLOBALLY LEADING?
Syncona focuses on highly innovative science
and we seek to work with globally leading
academics in the space, leveraging our
network in the UK and overseas. We take
the time to get to know, understand and
align around a vision for the company.
We share their passion for translating
and commercialising their technology.
Q
CAN A BIOTECHNOLOGY COMPANY
CREDIBLY TAKE THE PRODUCT TO MARKET?
Syncona’s thesis is that significant value can
be accessed in life science investment at
late-stage development and product approval.
We therefore seek to build companies that can
deliver products to market and where we can
remain a significant shareholder. This means we
look at potential products that can treat defined
patient segments/target markets, where there
is opportunity for accelerated development
and regulatory pathways which enable a faster
route to market.
Q
CAN THE SCIENCE BE TRANSLATED INTO
A COMMERCIAL LEAD PROGRAMME THAT
WILL MEET OUR REQUIRED RETURN TARGET
AND IS THERE PIPELINE POTENTIAL?
An important filter for the team is to look at
whether there is a clear lead programme for the
product that has the potential to deliver a strong
risk-adjusted return for shareholders. This means
our team assesses the total addressable markets,
potential pricing, the competitive environment
and the standard of care in the disease for the
lead programme, applying a broad range of
expertise, benchmarks and experience.
IC
DISCIPLINED ALLOCATION OF CAPITAL
ENABLES QUICK AND EFFECTIVE
OPERATIONALISATION OF STARTUP COMPANY
Once an opportunity
has been identified
and invested in...
HANDS ON...
20 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
IT
EA
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
Syncona’s dierentiated approach to company creation
provides us with a proprietary pipeline of opportunities.
Q
HAS THE COMPANY DELIVERED
ON ITS KEY MILESTONES?
When we commit funding to a company,
we typically tranche the financing against
the delivery of key milestones which
ensures the company is progressing
towards its ultimate goal. Before providing
further capital, we require the company
to have demonstrated positive progress.
Q
HAVE ANY FURTHER RISKS EMERGED
AND DOES INVESTMENT OF FURTHER
CAPITAL MEET OUR RETURNS CRITERIA?
Before providing further funding, the Syncona
team does a rigorous analysis of emerging
data from its portfolio companies and a review
of changes to the competitive environment.
Our approach to managing risks is fully
integrated with our Responsible Investment
Policy, with sustainability risks actively
monitored by the investment team.
Q
HOW IS THE MANAGEMENT TEAM
BUILD OUT PROGRESSING AND
HOW IS THE COMPANY EXECUTING?
Syncona actively engages with its portfolio
companies to ensure that they are building
high-performing management teams who
are executing against their operational and
clinical priorities. The team looks at progress
being made against key hires, and how the
management team is delivering, ahead of
any follow-on investment.
Q
DOES FURTHER INVESTMENT MEET
OUR CAPITAL ALLOCATION FRAMEWORK
AND ALIGN WITH OVERALL PORTFOLIO
DIVERSIFICATION?
As well as a rigorous bottom-up analysis, we look
at capital allocation from a top-down perspective.
The team looks at the current allocations to the
portfolio, future requirements over a three-year
period and total capital available in our capital
pool, allied with a review of where the weight of
capital sits relative to the potential risk/reward.
ONGOING EVALUATION OF EMERGING DATA AND LANDSCAPE
PROVIDING INSIGHT THROUGH THE DEVELOPMENT PROCESS
AND EARLY DIAGNOSIS OF ISSUES WHERE NECESSARY
...we are an active
partner, working
together to scale
companies for success
...BUILD OUT
IT
INVESTMENT TEAM
EA
EXECUTIVE AND ADVISORY TEAM
IC
INVESTMENT COMMITTEE
LT
LAUNCH TEAM
21SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
0%
20%
40%
60%
80%
100%
20222020201820162014201220102008200620042002
Academic Small Mid Large Emerging
MARKET REVIEW
Innovation driving growth
2/3
Emerging biopharmas are
now responsible for two-thirds
of the global R&D pipeline
4
>50%
By 2026, biotech drugs will
account for more than half of
the top 100 selling medicines
5
Biotech companies have been the driving force
in translating medicines into commercial products
in recent years
• The era of precision medicine has meant that we now have a better
understanding of what drives diseases and how we can treat them
• A supportive regulatory environment and our ability to target
patient populations has reduced the capital necessary to
progress medicines through the development cycle
• There remains a significant opportunity to leverage the power of
genetics and increased access to data to identify exciting targets
• Biotech companies are at the forefront of leveraging these advances
in science and technology to bring products towards approval
• Artificial intelligence is also becoming a mainstream technology in
healthcare, increasingly playing a pivotal role in de-risking the drug
development process with algorithms enabling fast and precise
target identification
SHARE OF PHASE I TO REGULATORY SUBMISSION PIPELINE
BY BIOPHARMA COMPANY SEGMENT, 20022022
4
4. iqvia.com/insights/the-iqvia-institute/reports/global-trends-in-r-and-d-2023; page 21.
5. info.evaluate.com/rs/607-YGS-364/images/JN%2346%20World%20Preview%20
Report_Final_06-10_HR_no_crops.pdf; page 18.
• The UK’s academic institutions are a source of world-class
science and are experts at translational research; four
of the world’s top 10 life sciences and medicine universities
are in the UK
1
• The UK life science sector supports over 260,000 jobs
and contributes more than £85 billion annually in GDP
2
• Crucial for the development of the UK’s life science sector will be
building on its existing academic and research base by creating
significant pools of scale-up capital which can fund biotech
companies through the eight to 10-year development cycle
• The UK displays a higher rate of pharmaceutical invention than
international comparators
UK life science opportunity
A globally significant research base with
one of the world’s richest concentrations
of life science research universities
1. topuniversities.com/university-rankings/university-subject-rankings/2022/life-sciences-medicine.
2. bidwells.co.uk/globalassets/science--tech/ls2030/life-sciences-2030-report.pdf; page 4.
3. biotechfinance.org/wp-content/uploads/2023/04/BIA-Finance-report-27.02.23.pdf; page 32. Percentage calculated based on all inventions published in each area 2010-2021.
A HIGH PROPORTION OF INVENTIONS MADE IN
THE UK ARE RELATED TO PHARMACEUTICALS
4.3%
MAINLAND
CHINA
11.8%
UK
9.3%
US
7.4%
REST OF
EUROPE
Proportion of inventions
made in each area that are
related to pharmaceuticals
3
A world-class scientific research base
provides a rich set of opportunities
4
Out of the top 10 medical
research universities
>260,000
Jobs are supported by
the UK life science sector
>£85bn
GDP contribution
to the UK economy
22 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
$0
$200
$400
$600
$800
$1,000
Phase IIIPhase IIPhase IPre-clinical
24 Feb 2331 Dec 2216 Jun 2231 Dec 21
Pharma is increasingly looking to outsource discovery,
with late-stage deals fuelling the recovery in M&A
Challenging financing conditions in the year, with recovery in valuations
for late-stage assets
CHALLENGING PUBLIC AND PRIVATE MARKET BACKDROP FOR BIOTECHS
• Listed biotech throughout the year had challenges with
S&P’s XBI index dropping 26% during 2022 and IPO issuance
dropping to $2.4 billion from $29 billion in 2021
9
• Private financings were also impacted, with overall US biotech
and pharma VC deal activity down 25% in 2022
10
COMMERCIAL AND LATE-STAGE BIOTECHS HAVE SEEN THE STRONGEST
RECOVERY IN VALUATIONS AND ARE ATTRACTIVE TARGETS FOR M&A
• Whilst M&A continues to be suppressed against the record levels
of 2021, later-stage assets are attractive, with all eight public
acquisitions in Q1 2023 involving biotechs with Phase II or later
candidates, five of which were commercial-stage
11
• This outlook has also been reflected in the public markets,
with the average Enterprise Value of US listed companies with
Phase III assets in Q1 2023 having recovered to 2021 levels
12
• With financing challenges for pre-clinical companies remaining,
the importance of focusing on commercial opportunity remains clear
9. mizuhogroup.com/americas/insights/2023/1/equity-capital-markets--healthcare-
2022-year-in-review-copy.html.
10. forvis.com/article/2023/04/funding-strategies-trends-medtech-biotech-startups.
11. William Blair, The Quarterly Rx: Q1 2023 U.S. Biopharma Recap; page 22.
12. CapitalIQ and Torreya analysis.
AVERAGE ENTERPRISE VALUE OF A BIOTECH LISTED
ON US EXCHANGES BY STAGE OF DEVELOPMENT
12
6. biotechfinance.org/wp-content/uploads/2023/04/BIA-Finance-report-27.02.23.pdf. Note the map above is solely VC funding.
7. cbre.co.uk/insights/reports/trends-that-transcend-the-us-uk-life-sciences-industry; page 8.
8. cushmanwakefield.com/en/united-kingdom/insights/life-sciences-golden-triangle-report; page 1.
FUNDING IN THE UK
• 2022 was a challenging year for the UK biotech market as it was
impacted by the broader macro environment. There was a 60% fall
in the level of total fundraising, including venture capital (VC) and other
sources, in the UK life sciences and biotech sector in 2022 at £1,785
million raised, down from £4,506 million in 2021 – a record year
6
• Although the UK VC financing maintains its pre-eminent position
in Europe, access to scale-up capital remains a major hurdle
for high-growth life science businesses, and it continues to lag
behind the US
THE GOLDEN TRIANGLE
• The ‘golden triangle’ of London, Oxford and Cambridge is one of the
world’s leading clusters for life sciences, having received 80% of
the life science VC funding in the UK, but it is struggling with readily
available lab space as a result of very high demand.
7
However, there
is 1.56 million sq foot of life sciences space under construction in
the golden triangle, of which 504,300 sq foot is already pre-let
8
• Readily available lab space needs to become a core part of
the life sciences ecosystem to ensure that globally significant
life science companies operate and scale here in the UK
San Diego
£995m
San Francisco
£3,343m
Massachusetts
£5,480m
Denmark
£178m
Switzerland
£469m
France
£605m
UK
£1,272m
South Korea
£66m
Singapore
£347m
China*
£1,571m
US EUROPE ASIA
* Including Hong Kong
INTERNATIONAL VC FINANCING
Total
£13,208m
Total
£3,684m
Total
£2,071m
1.56m sq ft
Under construction
THE GOLDEN TRIANGLE: A LEADING LIFE SCIENCE CLUSTER
CAMBRIDGE
LONDON
OXFORD
23SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
$0
$400
$800
$1,200
$1,600
$2,000
31 December 2021
16 September 2022
24 February 2023
Gene therapy
Other
Oncology – small molecule
Immunology
Cardiometabolic
Rare disease
Oncology – biologics
Gastroenterology
Vaccines
Neuro
Ophthalmology
Cell therapy
Oncology – precision
Protein degradation
RNA therapeutics
Gene editing
The Syncona
perspective
T
he past decade has seen the
development of new modalities that
have caused a paradigm shift in
drug development. Syncona was an early
investor in precision medicine and led the
creation of a number of new companies,
particularly in the cell and gene therapy
space. However, our attraction to these
modalities was not the novelty for its own
sake, but rather the power and precision
with which they allowed access to validated
targets and the impact they could have on
some devastating diseases. For instance, cell
therapy has allowed scientists to utilise the
potential of CD19 for novel immune therapies
in oncology. Meanwhile gene therapy has
allowed in-situ enzyme replacement therapy
for monogenic (single gene) disorders – the
highest form of target validation – unlocking
previously hard-to-treat parts of the body,
for example the central nervous system.
Syncona has always been focused
on finding high science that delivers
transformative impact in areas of high unmet
medical need. The question of which
modality to use has always been dependent
for us on the specific biology and clinical
setting – whatever shape or form that was
to come in. Rather than make the modality
fit the target, we take the target and explore
which modality offers the most effective way
to reach it. It just so happened that advances
in cell and gene therapy offered us numerous
opportunities to reach novel targets.
As we move forward into the second
decade of Syncona’s growth, we continue
to look for high-quality science that shines
a light on novel targets. We are of the view
Chris Hollowood
CEO of SIML shares his perspective on
the future of the scientific landscape
MARKET REVIEW CONTINUED
Syncona has always
been focused on finding
high science that
delivers transformative
impact in areas of high
unmet medical need.”
that the diversity of modalities now available
after the expansion of the last decade
brings new levels of precision to drug
development where the power of a novel
target paired with the best modality can
drive even greater benefit for patients – but
also jeopardy where calling the pairing
wrong in a world of increasingly narrow IP
leaves companies vulnerable to disruption.
We are already seeing this and over the
past year, for instance, we announced new
companies in small molecules (Mosaic)
and protein degradation (Kesmalea),
as well as in gene therapy (Beacon).
The new modalities that entered the fray
over the past decade include cell and gene
therapy, gene editing, and protein degradation.
We’ve also witnessed a renaissance of
others, such as oligonucleotides and
antibody-drug conjugates.
Looking ahead, there is no obvious new
disruptive modality imminently on the horizon.
We will see incremental improvements in the
suite of technologies already in play, and they
will continue to be developed and fine-tuned,
but it’s hard to imagine a totally new entrant
over the next few years of quite the same
disruptive power to those of the last decade.
In this respect, the next decade will see the
industry return to ‘business as usual’. The
fundamental point of drug development has
always been to discover a target that can be
modulated to treat a horrible disease. Now,
we have at our disposal a vast armoury of
modalities to launch at these targets, more
than at any other time in history, so simply
being the first mover against a given target
Modality precision is the
new precision in medicine
• Valuations within Third Wave
therapeutic fields have been
more severely impacted by
the macro environment
• There has been a narrowing
in the range of valuations
between modalities
• Investors focused on assets
which are delivering clinical data
and are moving to late-stage
regardless of modality
AVERAGE ENTERPRISE VALUE OF US BIOTECHS BY FIELD
1
1. CapitalIQ and Torreya analysis.
24 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Our strategic portfolio
won’t be enough. Instead, life sciences
companies will find that, as IP narrows, they
will need to achieve more than one first of
‘firsts’: starting with the right modality, for
the right target, and in the right indication.
Crucially, this marrying up of modality with
disease and target will be the barrier to entry
that also ensures commercial success.
We are already seeing this dynamic with the
rotation of investment away from modality/
platform companies towards therapeutic
areas of interest (see graph on page 24).
This holistic, modality-precision approach
is precisely what Syncona was set up to
follow. Our team is structured to dissect a
new piece of science from scratch and
then create a company around how best
to deliver a therapy for it.
Our investments in cell and gene therapy,
for example, go through the same method.
Gyroscope is a good example of this. It was
founded around the premise that a one-time
therapy would address the issue patients
with dry age-related macular degeneration
faced – needing regular intravitreal injections
for a disease that is asymptomatic in the early
phase and where adherence to treatment
was a real issue. Permanent expression would
deliver greater efficacy and the early data
corroborating this premise is what compelled
Novartis to acquire the company.
We continue to remain committed to cell and
gene therapy, as we look to reap the rewards
of our early mover advantage. We will also be
looking to evolve and expand their application,
for example by moving gene therapy into
larger diseases just as we did with Gyroscope.
But this is in the context of only when it is
the right modality and disease to target.
OUT WITH THE OLD AND IN WITH THE NEW
We appear to be moving out of a decade
dominated by new modalities and entering a
world where the sheer volume of data and the
number of modalities provide an incredible
set of opportunities for our sector to leverage.
Our ability to sequence genes quickly and
cost effectively, coupled with our deeper
understanding of genetics as a driver for many
diseases and conditions, is also allowing
researchers to understand which approach
is most effective for a given disease.
Deciphering all this, reducing it to practice
and allocating capital to it is going to be
incredibly complex, but it presents a huge
opportunity. Syncona’s robust, nimble and
modality-agnostic model places us at the
forefront of this trend and will spur our growth
over the next decade. Only a few groups are
set up with the analytical horsepower paired
with the commercial vision to succeed.
I believe Syncona is one of these groups.
Our life science portfolio was valued at £604.6 million
at 31 March 2023 (31 March 2022: £524.9 million),
delivering a (14.3)% return during the year.
Our strategic portfolio
1
of 13 companies is diversified across modality and therapeutic
area, with seven companies at the clinical stage and the remainder of the portfolio at
pre-clinical stage. Alongside the potential milestone payments or deferred consideration
from potential products, the life science portfolio also includes investments, which
are non-core where we typically do not hold Board seats or engage actively but they
still provide optionality to deliver returns for our shareholders.
CLINICAL COMPANIES
Achilles Therapeutics
Anaveon
SwanBio Therapeutics
Freeline Therapeutics
Quell Therapeutics
PRECLINICAL COMPANIES
Resolution Therapeutics
Purespring Therapeutics
Clade Therapeutics
OMass Therapeutics
Mosaic Therapeutics
Kesmalea Therapeutics
LATE CLINICAL COMPANIES
Autolus Therapeutics
Beacon Therapeutics
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
Syncona investment point.
Read more
overleaf
1. Please see glossary on page 138 for definition.
25SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
PORTFOLIO REVIEW
• Syncona acquired a late-stage asset
in AGTC and combined it with Beacon
and its two exciting pre-clinical
programmes, including one from the
University of Oxford, creating a leading
ophthalmic gene therapy company.
• Syncona has committed £75.0 million
of a £96.0 million Series A financing,
with the new company becoming
Syncona’s third ophthalmic gene
therapy company, having previously
created Nightstar and Gyroscope
Therapeutics (Gyroscope) – two of
Syncona’s most successful exits.
• Builds on late-stage pipeline and
operations of AGTC alongside exciting
pre-clinical programmes in dry age-related
macular degeneration (AMD), and an
additional programme from the University
of Oxford in cone-rod dystrophy (CRD).
• As part of the transaction, Syncona
is set to benefit from any future
commercialisation of the lead asset
AGTC-501 via a “deferred consideration”
which provides the right to a mid-single
digit percentage of future income from
sales and licensing.
• Beacon benefitting from experienced
leadership of CEO David Fellows
(ex Nightstar), CMO Dr Nadia Waheed
(ex Gyroscope) and gene therapy
expert Dr Abraham Scaria as Chief
Scientific Officer.
Beacon is a clinical-stage company focused
on the development and commercialisation
of AAV-based gene therapies for the
treatment of rare and debilitating diseases
with an initial focus on inherited ophthalmic
diseases. Syncona believes that the eye is a
very attractive target for AAV gene therapy.
Late clinical
companies
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
Syncona view
Beacon represents a significant opportunity
for Syncona to apply its domain knowledge
in retinal gene therapy to a late-stage
clinical asset in XLRP, where Syncona
already has prior expertise from its
ownership of Nightstar Therapeutics
(Nightstar), which had an asset looking to
treat the disease. Syncona has leveraged
its network to establish a world-class
leadership team, with decades of gene
therapy and ophthalmic experience.
We believe that the platform potential
of Beacon is incredibly exciting and has
the potential to drive near-term value
for our shareholders.
4.8%
Of NAV
65%
Shareholding
Next key milestones (as at 31 March 2023)
XLRP 12-month data from the
Phase II trial in XLRP
expected in H2 CY2023
Board seats 2
Date of founding 2023
Date of Syncona investment 2022
Syncona capital invested £60.0m
Number of employees 80
Uncalled commitment £15.0m
Total capital raised £96.0m
Syncona valuation £60.0m
1
Key competitors MeiraGTx, Novartis,
Apellis, IvericBio
Late clinical
8.8%
Of NAV
Lead programme: Beacon is progressing
its lead candidate, AGTC-501, in XLRP
through a Phase II trial. There are no
approved treatments for XLRP, and the
programme has orphan drug designations
from both the FDA and the European
Commission, with 12-month data from the
trial expected in H2 CY2023. AGTC-501
has a strong body of clinical evidence
having demonstrated meaningful efficacy
and a good safety profile in its recent Phase
I/II HORIZON trial.
Commercial: Following the acquisition of
AGTC, Syncona made significant progress
during the year in re-setting focus on the
company’s lead AGTC-501 asset and
re-defining its clinical and manufacturing
plan to prepare for a commercial roll out.
Syncona also restructured the team and
company’s facilities, adding expertise in key
areas across the business in order to drive
delivery against its refined clinical plan.
This significant amount of work carried
out by Syncona team during the year has
provided a solid platform for Beacon as
it now progresses its expanded pipeline.
Pipeline programmes: Beacon has
in-licensed an exciting pre-clinical
programme from the University of Oxford,
targeting CRD. Beacon’s second
pre-clinical programme is in dry AMD.
Professor Robert MacLaren, who was a
co-founder of Nightstar and served on the
Scientific Advisory Board of Gyroscope,
will act as a Scientific Advisor to Beacon,
with a focus on the CRD programme,
and has also joined the Board as a
non-executive director.
People: The company is led by CEO David
Fellows, who previously served as CEO of
Nightstar. Former Gyroscope executive
Nadia Waheed has also joined the company
as CMO, along with Dr Abraham Scaria
as CSO. Syncona’s CEO Chris Hollowood
acts as Chair of the company’s Board with
Syncona Lead Partner Elisa Petris also
serving as a Director, with the company
now able to leverage an experienced
leadership team who have a broad level
of expertise across ophthalmic diseases.
1. Syncona also has the right to a mid-single digit percentage of AGTC-501 sales and licensing,
which is valued on a risk-adjusted discounted basis at £15.9 million.
£110m
Valuation
XLRP
IVT – dry AMD
CRD
26 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Syncona view
Autolus has reported encouraging clinical
data to date, underlining the potential of
its lead therapy, obe-cel, as a drug which
can deliver meaningful impact for patients
with relapsed/refractory (r/r) adult acute
lymphoblastic leukaemia (ALL). The
company continues to deliver against its
operational milestones as it approaches the
planned filing of its BLA with the FDA later
in CY2023 and prepares for the commercial
launch of obe-cel, a longstanding goal, which
is an important milestone for the business.
From a valuation perspective, Autolus’ share
price continues to be impacted by difficult
market conditions however we believe the
company has made positive operational
progress and are supportive of the business
as it progresses to its BLA filing.
• Announced that the FELIX pivotal study
of lead therapy obe-cel in r/r adult ALL
had met its primary endpoint; clinical data
presented supports the encouraging
safety profile of the drug.
• Additional data announced at the American
Society of Clinical Oncology (ASCO) and
the European Haematology Association
(EHA) conferences post-period end, further
underlining the potential of the drug to drive
meaningful impact for patients.
• Share price continues to be impacted
by challenging market environment.
• Autolus funded into CY2025 with $343.4
million at 31 March 2023 following the
recent financing, in addition to the $70
million received in non-dilutive funds
from Blackstone for the achievement of
development and manufacturing milestones.
Autolus is developing next generation
programmed T cell therapies for the treatment
of cancer with a clinical pipeline targeting
haematological malignancies and solid
tumours. Syncona believes that the company’s
lead therapy, obe-cel in r/r adult ALL, has the
potential to have a meaningful impact for
patients suffering from ALL whilst also having a
very positive safety profile in a last line setting.
Lead programme: Obe-cel reached an
important milestone during the year, with
Autolus announcing in December 2022 that
it had met its primary endpoint in the pivotal
FELIX trial. The data released was consistent
with data already presented in the ALLCAR19
academic study, with a 70% overall remission
rate (ORR), meeting the primary endpoint
for the trial, based on a pre-planned interim
analysis of 50 patients, as verified by an
independent data monitoring committee.
Additional data released post-period at the
ASCO and EHA conferences in June further
underlined the strong safety profile of the drug,
with an increase in response rates. The
company expects to release further follow up
data from the study at the American Society
of Haematology (ASH) meeting in late 2023.
Syncona believes further data read-outs have
the potential to underline obe-cel’s durability
profile, which, at the latest data point from
the ALLCAR19 study, showed that 35% of
adult relapsed/refractory B-ALL patients
treated with obe-cel had sustained complete
4.0%
Of NAV
18%
Shareholding
Next key milestones (as at 31 March 2023)
Obe-cel – adult ALL Further follow up data
from pivotal FELIX study
in obe-cel in r/r adult ALL
expected in H2 CY2023
Obe-cel – B-NHL
and CLL
Further data expected
in CY2023
AUTO1/22 –
paediatric ALL
Further data expected
in CY2023
AUTO4 in peripheral
T cell lymphoma
Further data expected
in CY2023
Board seats 1
Date of founding 2014
Date of Syncona investment 2014
Syncona capital invested £147.0m
Number of employees 400+
Uncalled commitment –
Total capital raised £837.7m
Syncona valuation £50.0m
Key competitors Gilead, Novartis,
Fate Therapeutics,
Johnson & Johnson
remissions between 24 and 47 months
without any need for additional anti-leukaemia
therapy. With data from competitor
programmes showing challenges with
durability and toxicity, obe-cel has potential to
be differentiated, delivering impact for patients
suffering from a devastating disease.
Scaling for commercial roll out: The
company has also made significant progress
in developing its manufacturing and
commercial roll out capabilities. Post-period
end, the company opened its Nucleus facility
in Stevenage, a 70,000 sq. foot advanced
manufacturing facility which will support the
commercial launch of obe-cel, with an initial
capacity of up to 2,000 batches per year
with room to expand if needed. The Nucleus
is the first of its kind in the UK and provides
a specialist manufacturing capability for the
supply of personalised cell therapy products.
Autolus also announced post-period end
that it had selected Cardinal Health as its
US Commercial Distribution Partner,
enabling distribution capabilities required to
commercialise a CAR T-cell therapy in the
US. These significant operational milestones
will help to support obe-cel’s launch, enabling
Autolus to launch the product at a scale
which serves global demand in r/r adult ALL.
Pipeline programmes: Autolus also
continues to make progress in its broader
pipeline, releasing further data in CY2023 from
its studies of AUTO1/22 in paediatric ALL,
AUTO4 in T cell lymphoma, and obe-cel in
relapsed/refractory B cell non-Hodgkin’s
lymphoma (B-NHL) and chronic lymphocytic
leukaemia (CLL). The data reported thus far
not only continues to underline the strength
of Autolus’ technology and platform, but the
encouraging data from the ALLCAR extension
study of obe-cel also supports the safety
profile of its lead product candidate in
additional haematological indications.
Further data read-outs are expected from
all of these programmes later in CY2023.
Licensing agreements: The company
has also made progress in developing its
commercial pipeline, announcing partnerships
during the year allowing Bristol Myers Squibb
and Cabaletta Bio use of Autolus’ proprietary
RQR8 safety switch. These agreements
further underline the commercial potential of
the company’s technology, with Moderna also
exercising an option during the year to license
Autolus’ proprietary binders against an
undisclosed immune-oncology target.
People: At an executive level, the company
has announced that Chief Financial Officer
(CFO) Dr Lucinda Crabtree will be leaving
to join MorphoSys as CFO. A search is
underway for her replacement, and she
will remain with Autolus until Q3 CY2023
to ensure a smooth transition.
Late clinical
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
Obe-cel – adult ALL
Obe-cel – B-NHL
AUTO1/22 – paediatric ALL
AUTO4 – TCL
Obe-cel – PCNSL
27SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
PORTFOLIO REVIEW CONTINUED
Company focus: Developing a selective
IL-2 receptor agonist, a type of protein that
could enhance a patient’s immune system
to respond therapeutically to cancer.
Financing stage: Remains funded to
deliver on upcoming milestones following
CHF110 million (£90 million) Series B
financing in December 2021.
Clinical update: Published encouraging
data from the Phase I/II dose-finding trial
in ANV419; company has now initiated
two further Phase I/II trials of the drug
in metastatic melanoma and multiple
myeloma. Further data from the Phase I/II
dose-finding study in solid tumours is
expected in H2 CY2023, whilst initial data
from the Phase I/II studies in melanoma
and myeloma is expected in CY2024.
Syncona view
Syncona continues to be encouraged by
the progress at Anaveon. The company
continues to show strong momentum as it
delivers against its milestones, with clinical
data released during the year underlining
the potential of its ANV419 therapy to
address issues seen elsewhere in the use
of Interleukin 2 (IL-2) in solid tumours.
We believe Anaveon is well positioned
to deliver on its goal of becoming the
best-in-class therapy in the IL-2 space.
5.1%
Of NAV
38%
Shareholding
Next key milestones (as at 31 March 2023)
ANV419 – multiple
tumour types
Further data from
dose-finding study
expected in H2
CY2023
ANV419 – metastatic
melanoma
Initial data expected
in CY2024
ANV419 – multiple
myeloma
Initial data expected
in CY2024
Board seats 2 (including Chair)
Date of founding 2017
Date of Syncona investment 2019
Syncona capital invested £39.9m
Number of employees 25+
Uncalled commitment £12.4m
Total capital raised £121.5m
Syncona valuation £64.2m
Key competitors Roche, Sanofi,
Alkermes, Sotio,
Medicenna
Clinical
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
Clinical
companies
18.5%
Of NAV
£231.8m
Valuation
People: Dr Gary Phillips joined as Chief
Business Officer (CBO), bringing 30 years
of healthcare leadership across a variety
of commercial roles, and Dr Eduard Gasal
joined as Chief Medical Officer (CMO),
having previously held senior clinical roles
at Amgen, Novartis and Innovent Biologics.
ANV419 – metastatic
melanoma
ANV419 – multiple
myeloma
ANV419 – multiple
tumour types
28 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Clinical
Syncona view
Syncona continues to believe in the
potential of gene therapy to impact
patients with AMN. The company has
taken the decision to restructure its
pipeline to focus on its lead programme
and to reflect this Syncona has written
down its holding in SwanBio to £58.2
million, a £51.0 million decline in value
during the year. Syncona invested £30.6
million during the year in the company,
including £6.5 million later in the period
and a further $12.0 million post-period end
to enable the company to generate safety
data from the initial dose cohort of the
SBT101 programme. In parallel, given that
the financing environment for early-stage
companies remains challenging and
SwanBio has not executed a third-party
financing to date, Syncona will be working
with the company to explore all strategic
and financing options.
Company focus: Developing gene
therapies to target neurological disorders;
lead SBT101 programme is targeting
the treatment of AMN, a genetic
neuro-degenerative disease affecting
the spine for which there are currently
no approved treatments.
Financing stage: Additional $12.0 million
of financing committed post-period end
by Syncona to support dosing of the first
cohort of patients in the company’s
Phase I/II clinical trial of SBT101.
Clinical update: Post-period end the
company successfully dosed its first patient
in its Phase I/II clinical trial of SBT101, an
important milestone for the business. The
company expects to complete dosing the
low dose cohort in H2 CY2023.
4.7%
Of NAV
80%
Shareholding
SBT101 –
Adrenomyeloneuropathy
(AMN)
Next key milestones (as at 31 March 2023)
SBT101 –
Adrenomyeloneuropathy
(AMN)
Expects to have
dosed the initial
dose cohort in its
Phase I/II AMN
programme in H2
CY2023
Board seats 2 (including Chair)
Date of founding 2018
Date of Syncona investment 2018
Syncona capital invested £105.7m
Number of employees 30+
Uncalled commitment –
Total capital raised £110.4m
Syncona valuation £58.2m
Key competitors SwanBio’s broader
peer group includes:
Voyager, Taysha,
Passage Bio, Lilly,
Alcyone, Novartis,
Neurogene
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
29SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
PORTFOLIO REVIEW CONTINUED
Clinical companies continued
FLT201 – Gaucher disease
Type 1
Company focus: Clinical delivery
in Gaucher disease.
Financing stage: Listed on NASDAQ
with cash runway to Q2 CY2024.
Clinical update: Announced its decision
to pause development of the FLT190 Fabry
programme following an assessment of
the company’s current financial position
and strategic priorities. Based on highly
encouraging pre-clinical data, Freeline
believes its FLT201 programme in Gaucher
disease has the potential to be its greatest
value driver and a first- and best-in-class
therapy in its setting. The company expects
to release initial data from the FLT201
programme in H2 CY2023.
Commercial update: Along with its
decision to pause development of FLT190,
the company also announced a reduction
of its workforce by nearly 30%, with these
changes extending the company’s cash
runway to Q2 CY2024. The company also
sold its German chemistry, manufacturing
and controls (CMC) subsidiary and related
intellectual property for $25 million, subject
to purchase price adjustments.
People update: Paul Schneider joined as
CFO in May 2022 and has since also joined
the company’s Board, bringing more than
20 years’ experience in leadership roles in
biopharmaceutical companies. Co-founder
Professor Amit Nathwani has retired from
the Board and will remain engaged with the
company as a clinical and scientific advisor.
Syncona view
Freeline’s share price has been
impacted by market sentiment and the
re-prioritisation of its clinical pipeline.
Freeline has taken the decision to prioritise
the development of its FLT201 Gaucher
programme, which Syncona believes has
the potential to deliver long-term value.
The management team has executed
on a series of operational and clinical
actions to extend its cash runway.
It has implemented a reduction in its
workforce and sold its German chemistry,
manufacturing and controls subsidiary.
With a refocused clinical pipeline and
extended cash runway, we believe the
company can deliver data from FLT201
later in the year, building on the positive
pre-clinical data we have seen to date.
1.1%
Of NAV
49%
Shareholding
Next key milestones (as at 31 March 2023)
FLT201 – Gaucher
disease Type 1
Initial data expected
in H2 CY2023
Board seats 1 (Chair)
Date of founding 2015
Date of Syncona investment 2015
Syncona capital invested £183.1m
Number of employees 90
Uncalled commitment –
Total capital raised £372.8m
Syncona valuation £14.1m
Key competitors Avrobio, Eli Lilly
Clinical
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
Syncona view
We have seen excellent validation for Quell’s
technology and platform through the
collaboration with AstraZeneca announced
post-period end, where Quell received $85
million upfront, comprising a cash payment
predominantly and an equity investment, to
develop, manufacture and commercialise
autologous T-regulatory cell therapies for
two autoimmune disease indications. This
agreement further underlines the continued
interest in Syncona portfolio companies from
pharma and provides validation for the
Syncona model for building globally
competitive businesses. Quell expects to
dose its first patients in its lead programme in
liver transplantation in H2 CY2023. We will
continue to work alongside the company’s
management team as it delivers against its
upcoming operational and clinical milestones.
QEL-001 – Liver transplant
Clinical
6.9%
Of NAV
37%
Shareholding
Board seats 2 (including Chair)
Date of founding 2019
Date of Syncona investment 2019
Syncona capital invested £61.4m
Number of employees 130+
Uncalled commitment £2.8m
Total capital raised £164.8m
Syncona valuation £86.7m
Key competitors Sangamo, Sonoma,
Kyverna, GentiBio,
Mozart Therapeutics,
Abata
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
30 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Company focus: Developing precision
T cell therapies targeting clonal
neoantigens to treat solid tumours.
Financing stage: Listed on NASDAQ
with cash runway to mid-CY2025.
Clinical update: Presented data in its
Phase I/IIa trials in advanced NSCLC and
recurrent or metastatic melanoma with
16 patients dosed across the two trials to
date, additional clinical and translational
science data expected in Q4 2023.
Whilst Syncona was pleased to see
the data underlining the safety profile
of Achilles’ product and a partial
durable response, it is critical that the
company can demonstrate that robust
manufacturing can translate into clinical
efficacy for the company’s products.
Post-period end the company announced
that its new AI application had been
integrated into its PELEUS™
bioinformatics platform, supporting
the potential of the platform in other
modalities such as cancer vaccines.
People update: James Taylor joined the
company as CBO, bringing over 25 years
of deal making experience across
pharmaceutical and biotech companies.
cNeT
1
– melanoma
cNeT – non-small cell
lung cancer
Syncona view
Syncona continues to engage with
Achilles Therapeutics (Achilles) as it
progresses its lead programmes in
advanced non-small cell lung cancer
(NSCLC) and recurrent or metastatic
melanoma. The company is well funded
with a cash runway to mid-CY2025.
Whilst we were pleased to see further
data released from its lead programmes
during the period, we are looking
to review the next data updates to
demonstrate that robust manufacturing
can translate into clinical efficacy for
the company’s products.
0.7%
Of NAV
27%
Shareholding
Next key milestones (as at 31 March 2023)
cNeT – melanoma Further update from
ongoing Phase I/IIa
trials of cNeT therapy
in Q4 CY2023
cNeT – non-small
cell lung cancer
Further update from
ongoing Phase I/IIa
trials of cNeT therapy
in Q4 CY2023
Board seats –
Date of founding 2016
Date of Syncona investment 2016
Syncona capital invested £60.7m
Number of employees 240+
Uncalled commitment –
Total capital raised £308.7m
Syncona valuation £8.6m
Key competitors Gritstone,
Iovance, InstilBio,
Turnstone Biologics
Clinical
1. Clonal neoantigen-reactive T cell.
BEST IDEAS PRECLINICAL CLINICAL LATE CLINICAL BLA
Next key milestones (as at 31 March 2023)
QEL- 001 –
liver transplant
Expect to dose first
patient in H2 CY2023
Company focus: Developing engineered
T-regulatory (Treg) cell therapies to treat
a range of conditions such as solid organ
transplant rejection, autoimmune and
inflammatory diseases.
Financing stage: Raised $156 million in
a Series B financing in November 2021.
Clinical update: Expects to dose its first
patient in its Phase I/II lead programme
targeting liver transplant in H2 CY2023.
Commercial update: Post-period
end Quell entered into a collaboration,
exclusive option and license agreement
with AstraZeneca to develop, manufacture
and commercialise autologous, engineered
T-regulatory cell therapies for two
autoimmune disease indications, providing
excellent validation for Quell’s technologies
and capabilities. As part of the collaboration,
Quell received $85 million upfront,
comprising a predominant cash payment
and an equity investment, with potential
payments of over $2 billion contingent on
successfully reaching development and
commercial milestones, plus tiered royalties.
Following the agreement, Syncona’s
ownership stake in Quell is 33.7%,
whilst our valuation for the company
remains unchanged at £86.7 million.
People update: Appointed Dr Luke Devey
as CMO. Dr Devey has over 15 years of
clinical experience and brings significant
translational and scientific expertise to
the Quell executive team, most recently
at Janssen Immunology where he was
Vice President of Translational Science.
31SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
Pre-clinicalPre-clinical
PORTFOLIO REVIEW CONTINUED
2.8%
Of NAV
84%
Shareholding
Board seats 2 (including Chair)
Date of founding 2020
Date of Syncona investment 2020
Syncona capital invested £35.1m
Number of employees 40+
Uncalled commitment £9.9m
Total capital raised £45.0m
Syncona valuation £35.1m
Key competitors Novartis, Calliditas,
Reata, Sanofi, Travere,
Omeros, Alexion,
Apellis
Company focus: Purespring Therapeutics
(Purespring) is developing gene therapies
for the treatment of chronic renal diseases
which are currently poorly served by
existing treatments.
Financing stage: Raised £45 million in a
Series A financing in 2020.
Development update: Continuing
to develop its pre-clinical pipeline and
proprietary platform.
People update: Purespring CEO Richard
Francis became CEO of Teva Pharmaceutical
Industries in January 2023, with Chief
Development Officer (CDO) Julian Hanak
moving to the role of CEO. Richard will
remain actively involved with the business as
a member of the Board. Purespring also
strengthened its Leadership Team with the
appointment of Dr Alice Brown as Chief
Scientific Officer (CSO), who brings more
than a decade of experience working in
advanced therapies across both large
pharma and early-stage biotech.
3.5%
Of NAV
31%
Shareholding
Board seats 2
Date of founding 2016
Date of Syncona investment 2018
Syncona capital invested £35.4m
Number of employees 50+
Uncalled commitment £6.0m
Total capital raised £128.5m
Syncona valuation £43.7m
Key competitor Crinetics
Company focus: Developing small
molecule drugs to treat rare diseases
and immunological conditions.
Financing stage: Raised £75.5 million
in a Series B financing in April 2022, with
additional £10 million investment from
British Patient Capital post-period end
announced in May 2023.
Development update: Announced a joint
publication in Nature Chemistry with co-founder
Professor Dame Carol Robinson’s team at
Oxford University, underlining some of the key
benefits of OMass’ OdyssION™ platform in
searching for new drugs against inadequately
drugged and previously intractable targets.
Commercial update: Post-period end the
company announced its move to a new
purpose-built 16,000 sq. foot mixed-use facility
at the ARC Oxford campus, helping it to prepare
for its next phase of growth and enabling
further collaboration as it expands its team.
People update: Announced the appointment
of Dr Jon Roffey as Vice President, Head of
Medicinal Chemistry, who brings over 20
years of drug discovery experience across
biotech and pharmaceuticals, including taking
multiple candidate drugs into late-stage clinical
development. Post-period end the company
also announced the expansion of its
Leadership Team with the arrival of Dr Winfried
Barchet as Vice President of Immunology,
who brings more than 15 years of experience
across drug discovery and translational
research, whilst Jim Geraghty joined as
Chairman of its Board of Directors, bringing
over 35 years of strategic experience including
more than 25 years as a senior executive
at biotechnology companies developing
and commercialising innovative therapies.
Pre-clinical
companies
10.9%
Of NAV
£137.4m
Valuation
32 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Pre-clinicalPre-clinical
1.9%
Of NAV
22%
Shareholding
Board seats 1
Date of founding 2021
Date of Syncona investment 2021
Syncona capital invested £23.2m
Number of employees 50+
Uncalled commitment –
Total capital raised £67.3 m
Syncona valuation £24.3m
Key competitors CRISPR, Bristol Myers
Squibb, Gilead,
Century, Allogene,
Legend Biotech,
Notch, Sana, Gilead
Company focus: Clade Therapeutics
(Clade) is developing scalable next-
generation iPSC derived medicines.
Financing stage: Raised $87 million
in a Series A financing in August 2021.
Development update: Continuing
to develop its pre-clinical pipeline
whilst building out its manufacturing
footprint under the leadership of CEO
Chad Cowan (co-founder of Sana
Biotechnology and CRISPR Therapeutics)
and CBO Jim Glasheen (co-founder
of Atalanta Therapeutics).
Board seats 3 (including Chair)
Date of founding 2020
Date of Syncona investment 2018
Syncona capital invested £23.0m
Number of employees 60+
Uncalled commitment £14.9m
Total capital raised £37.9 m
Syncona valuation £23.0m
Key competitors Carisma, Shoreline
Company focus: Resolution Therapeutics
(Resolution) is developing macrophage cell
therapies to treat diseases characterised by
life-threatening inflammatory organ damage.
Financing stage: Raised a further £10.0
million from Syncona in an extension of its
£26.6 million Series A financing in April 2022.
Commercial update: Announced
research collaborations with panCELLA
and CCRM, as it looks to progress its
allogeneic programme and further develop
its manufacturing capabilities.
People update: Post-period end the
company has appointed Dr Clifford A.
Brass as CMO. Most recently Dr Brass
was Vice President, Head of Clinical
Sciences for Hepatology, Gastroenterology
and Transplantation in Global Drug
Development at Novartis, and has over 25
years of experience in the pharmaceutical
industry. Resolution has also strengthened
its Board with the appointment of Syncona
Commercial Adviser Lisa Bright as Chair
and Altavant Sciences CEO Dr Bill Symonds
as a non-executive director.
1.8%
Of NAV
81%
Shareholding
33SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
PORTFOLIO REVIEW CONTINUED
Pre-clinical companies continued
Pre-clinical Pre-clinical
0.6%
Of NAV
52%
Shareholding
Board seats 2 (including Chair)
Date of founding 2020
Date of Syncona investment 2022
Syncona capital invested £7.3 m
Number of employees 10+
Uncalled commitment £9.2m
Total capital raised £22.5m
Syncona valuation £7.3 m
Key competitors IDEAYA
Company focus: Oncology therapeutics
company focusing on drug development
against genetically informed targets.
Financing stage: £22.5 million Series A
announced in April 2023, led by Syncona
with a £16.5 million commitment.
People update: Company is led by CEO
Brian Gladsden, a global leader in cancer
therapeutics with 25 years of experience
in biopharmaceuticals, most recently at
Novartis Oncology, where he was Senior
Vice President and a member of the
Worldwide Leadership Team. Syncona
CEO Chris Hollowood has been appointed
Chair of the company’s Board with Lead
Partner Magdalena Jonikas also a director.
Board seats 1
Date of founding 2020
Date of Syncona investment 2022
Syncona capital invested £4.0m
Number of employees 3
Uncalled commitment £12.0m
Total capital raised £20.0m
Syncona valuation £4.0m
Key competitors Arvinas, Kymera
Company focus: An opportunity to
create a new generation of small molecule
oral drugs addressing diseases through
modulating protein homeostasis.
Financing stage: £20.0 million Series A
financing led by Syncona with a £16.0
million commitment.
People update: Company is Chaired by
Dr Clive Dix, CEO of C4X Discovery and
former Chair of the UK Vaccine Taskforce.
Company founder Dr Harry Finch, the
co-inventor of GSK’s Serevent™, is a
Director of the company alongside
Syncona Lead Partner Magdalena Jonikas.
0.3%
Of NAV
58%
Shareholding
34 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Syncona has £55.0 million of value in
its investments, typically where we do
not hold Board seats or manage the
investment actively alongside executive
teams. Our assets held within our
investments are CRT Pioneer Fund,
Forcefield Therapeutics, Biomodal (formerly
Cambridge Epigenetix), and Adaptimmune.
Key updates during the period from these
investments include:
• Our largest investment is CRT Pioneer
Fund, which invests in early-stage
drug discovery projects with a focus on
oncology. The fund was written up by
£8.8 million in the year, predominantly
driven by a change in valuation for its
HSF1 inhibitor asset, which has been
licensed to Nuvectis and has now
initiated a Phase Ib study.
• Syncona has written off its $1 million
investment in Tier 1 Bio, following a
lack of adequate progress in initial
target discovery which led to the
company deciding to close down.
Company valuations
Company
31 March
2022
(£m)
Net investment
in the period
(£m)
Valuation
change
(£m)
FX
movement
(£m)
31 March
2023
(£m)
% of
Group
NAV
Valuation
basis
1,2 ,3
Fully diluted
ownership
stake
(%) Focus area
Strategic portfolio companies
Late clinical
Beacon – 60.0 – – 60.0 4.8% PRI 65.3 Gene therapy
Autolus 62.0 23.0 (38.7) 3.7 50.0 4.0% Quoted 17.9 Cell therapy
Clinical
Quell 81.4 – – 5.3 86.7 6.9% PRI 36.7 Cell therapy
Anaveon 59.8 – – 4.4 64.2 5.1% PRI 38.0 Biologics
SwanBio 75.1 30.6 (51.0) 3.5 58.2 4.7% Adjusted cost 79.9 Gene therapy
Freeline 32.3 – (20.3) 2.1 14.1 1.1% Quoted 49.2 Gene therapy
Achilles 24.8 – (17.8) 1.6 8.6 0.7% Quoted 27.1 Cell therapy
Pre-clinical
OMass 34.7 9.0 – – 43.7 3.5% PRI 30.7 Small molecules
Purespring 18.5 16.6 – – 35.1 2.8% Cost 84.0 Gene therapy
Neogene 14.5 (17.4) 2.1 0.8 – – Sold – Cell therapy
Clade 11.4 12.4 – 0.5 24.3 1.9% Cost 22.4 Cell therapy
Resolution 10.4 12.6 – – 23.0 1.8% Cost 81.1 Cell therapy
Mosaic – 7.3 – – 7.3 0.6% Cost 52.4 Small molecules
Kesmalea – 4.0 – – 4.0 0.3% Cost 57.5 Small molecules
Portfolio milestones and deferred consideration
Gyroscope milestone payments
4
49.8 – 1.4 3.3 54.5 4.3% DCF – Gene therapy
Beacon deferred consideration – – 15.9 – 15.9 1.3% DCF – Gene therapy
Syncona investments
CRT Pioneer Fund 28.2 (4.2) 8.8 – 32.8 2.6% Adj third party 64.1 Oncology
Biomodal
5
17.3 – – 1.2 18.5 1.5% PRI 5.5 Epigenetics
Forcefield 2.5 – – – 2.5 0.2% Cost 93.2 Biologics
Adaptimmune 2.2 – (1.1) 0.1 1.2 0.1% Quoted 0.8 Cell therapy
Tier 1 Bio – 0.8 (0.8) – – – Written off – Biologics
Total life science portfolio 524.9 154.7 (101.5) 26.5 604.6 48.2%
Capital pool 784.9 (175.2) 14.4 26.0 650.1 51.8%
TOTAL 1,309.8 (20.5) (87.1) 52.5 1,254.7 100%
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. Syncona’s risk-adjusted and discounted valuation of the milestone payments from the sale of Gyroscope Therapeutics.
5. Formerly CEGX.
Syncona has rights to potential milestone
payments related to the sale of Gyroscope
to Novartis. Alongside these, as part
of Syncona’s acquisition of AGTC, the
Company has the potential to benefit
from any future commercialisation of the
lead asset AGTC-501 via a “deferred
consideration” which provides the right to a
mid-single digit percentage of future income
from sales and licensing. These potential
milestones and deferred consideration
are valued on a discounted risk-adjusted
basis at £70.4 million.
Milestones and deferred
considerations
5.6%
Of NAV
Syncona investments
4.4%
Of NAV
35SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
NAV PERFORMANCE
Overall NAV performance is down in the
year driven by a decline in value of our listed
holdings and the partial write-down of our
holding in SwanBio which was partially offset
by positive foreign exchange movements
on our US dollar assets, both within our life
science portfolio and balance sheet, alongside
uplifts from some of our smaller investments
and potential deferred considerations and
future milestone payments.
VALUATION APPROACH
At the year end, our life science portfolio
comprised listed holdings (12%), private
companies either valued at Price of Recent
Investment (PRI) (45%), or on the basis of
capital invested (Calibrated Cost) (26%).
In addition, we have the right to potential
milestone payments related to the sale of
Gyroscope and a deferred consideration for
our right to a mid-single digit percentage of
future income from AGTC-501 sales and
licensing. These potential income streams
are valued on a risk-adjusted discounted
basis in line with our Valuation Policy and
together represent 12% of the portfolio
1
.
Given the public market valuation
reductions in the year and the challenging
macroeconomic market conditions impacting
the financing environment for early-stage
companies, in line with our usual process we
have carried out year-end private portfolio
valuations against a backdrop of heightened
valuation uncertainty. We have carried out
a rigorous review of each of our portfolio
companies to ensure the robustness of the
valuations, including taking account of the
input provided by our external valuation
adviser on our five largest private holdings.
Regarding SwanBio, despite inbound
investor interest, the business was not able
to execute a third-party financing. The
company’s management team determined
it was necessary to restructure its pipeline
to focus solely on SBT101 to drive cost
efficiency and allocate capital to its most
promising and most advanced asset. Whilst
Syncona is continuing to work with the
company on progressing SBT101 and its
future financing and strategic options, this
change to its investment thesis triggered a
revisit of our valuation of the company and
subsequent write off of the value attributed
to the pipeline programmes no longer being
progressed. This has been treated as an
adjusting post balance sheet event, the
details of which are set out in note 21 of
the financial statements. The remainder
of our private portfolio companies are
funded to deliver their key milestones.
OPTIMISING CAPITAL EFFICIENCY
As part of a wider strategy review, we
have looked at how to improve returns for
shareholders. Our aim is that returns will be
predominantly driven by long-term capital
appreciation and growing the value of the
life science portfolio remains our core focus.
To support our strategy execution, we
aim to maintain around three years of
financing runway. We seek to leverage our
capital to deliver returns to shareholders.
During the financial year our portfolio
companies brought in £394.3 million of
capital commitments of which Syncona
contributed £176.9 million. Over the next
12 months, we expect to deploy between
£150 million to £200 million across our
portfolio and new companies and we
have already seen further examples of
high-quality external financings in the
first quarter of the current financial year.
To optimise capital efficiency, if in the
future, due to cash inflows from realisations,
our capital pool increases significantly in
excess of our expected three-year capital
deployment and potential investment
opportunities, the Board would look at
returning capital to shareholders.
INVESTING TODAY TO BUILD
FOR THE FUTURE
Growing our team to deliver on our growth
plans means a modest increase to our cost
base. Syncona is a self-managed vehicle
and SIML costs are managed prudently
by the Leadership Team within an annual
budget approved by the Board. We take
a disciplined approach to costs. SIML
Management Fees for FY2022/3 were
£12.1 million (0.96% of NAV
2
; an increase
of £1.4 million on FY2021/2). This increase
is due to a number of factors including the
addition of senior hires to deliver a growing
portfolio and salary increases across the
team to reflect the inflationary environment.
Total costs to Syncona Limited during the
year, which incorporates fees paid to SIML,
ongoing operating costs of the Company,
the charitable donation and costs associated
with the long-term incentive scheme, were
£22.4 million (1.8% of NAV) (FY2021/2:
£24.2 million). The decrease in the year was
primarily a result of changes to the valuation
of the long-term incentive scheme. To deliver
on our evolved strategy, we will be making
selective incremental investments in further
expanding the team over the next one to two
years and whilst there will be associated
costs with these hires, we expect these to
be appropriate for the scale of our business
and aligned with our prudent approach to
managing our cost base.
Rolf Soderstrom
Chief Financial Officer
Syncona Investment Management Limited
14 June 2023
FINANCIAL OVERVIEW
A strategic and disciplined
approach to capital allocation
We take a robust and
prudent approach to
valuation, managing
our balance sheet
and our costs with a
continued focus on
optimising returns for
our shareholders.”
Rolf Soderstrom
Chief Financial Officer
Syncona Investment Management Limited
1. Additional 5% of value within the life science portfolio
is the CRT Pioneer Fund which is valued based on an
adjusted third party valuation.
2. Using NAV at 31 March 2023.
36 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Net cash
£69.7m
T-bills
£285.0m
Multi-manager funds
£261.6m
Legacy funds
£33.8m
CAPITAL POOL COMPOSITIONCAPITAL POOL MANAGEMENT
Syncona’s capital pool of £650.1 million
is central to the delivery of our strategy of
building life science companies of scale
over the long term. The mandate for our
capital is focused on liquidity and capital
preservation. We aim to keep between
12 and 24 months of funding in cash and
Treasury Bills. During the year, in response
to the inflationary environment, we allocated
our longer duration capital to a number of
low volatility, highly liquid, multi-asset funds
or mandates, managed by Schroders,
Kempen and M&G with portfolio mandates
to deliver core CPI return over the mid-term.
We also hold 25% of our capital pool in US
dollar linked funds and assets to provide a
natural hedge against expected short-term
US$ cashflows. The depreciation of Sterling
against the US dollar and other foreign
currencies has resulted in a £26.0 million gain,
which when combined with the returns from
our funds, resulted in an overall return within
our capital pool of 5.5% in the year. We
continually monitor our capital pool based
on our objectives and market conditions.
APR 22 MAY 22 SEP 22 OCT 22 NOV 22 DEC 22 MAR 23
£394.3m raised by the portfolio
with £176.9m committed
by Syncona
• £83.0m invested into late stage
assets (Autolus and Beacon)
• £11.3m invested into early-stage
Series A (Kesmalea and Mosaic)
• £81.2m into existing portfolio
companies to support delivery
of key milestones
• Further £87.6m of uncalled
commitments from Syncona
expected to be deployed in
12-18 months
£75.5m Series B
financing
£15.0m commitment
from Syncona
1
£20.0m Series A
financing
£16.0m commitment
from Syncona
Raised $163.9m
$28.0m investment
from Syncona
£6.5m CLN
from Syncona
2
£96.0m Series A
financing
£75.0m commitment
from Syncona
$56.0m Series B financing
$54.0m commitment
from Syncona
£22.5m Series A financing
£16.5m commitment
from Syncona
Our strategic capital pool
Our balance sheet is a strategic and competitive advantage;
it gives us flexibility to bring in specialist institutional investors
at the right time and price
Supporting our portfolio companies
as they scale
£650.1m
Capital pool
Funding our portfolio and new opportunities
Capital pool remains a dierentiator in a challenging market environment
Capital Return Policy
• Syncona anticipates that shareholder returns
will predominantly be driven by long-term
capital appreciation.
• To support our strategy, we aim to maintain
3 years of financing runway to fund our
portfolio and our target of three new companies
per annum.
• If, in the event of realisations, the Company’s
capital pool increases significantly in excess
of three year forward capital deployment
guidance, and subject to an assessment of
investment opportunities at the time, the Board
would look to return capital to shareholders.
• We will consider all forms of distribution
mechanisms for capital returns, taking into
account various factors including the market
conditions at the time.
Syncona capital deployment
guidance for FY2023/4 is
£150-200m
$23.3m
acquisition
of AGTC
1. £10m additional investment from BPC announced May 2023.
2. Additional $12m invested post-period end.
Late clinical companies
Clinical companies
Pre-clinical companies
STRATEGIC REPORT
37SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
-15%
-12%
-9%
-6%
-3%
0%
3%
6%
9%
1 year 3 years 5 years
Life science return NAV return
0
1
2
3
4
Average number over the last three years
FY21 FY22 FY23
0
1
2
3
4
5
FY21 FY22 FY23
Late clinical
Clinical
Pre-clinical
Milestones
and deferred
consideration
Investments
KEY PERFORMANCE INDICATORS
How we measure our performance
3 NAV growth
RATIONALE
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.
HOW WE MEASURE PROGRESS
• NAV return: 1, 3 and 5-year basis
• Life science portfolio return: 1, 3 and 5-year basis
2023 HIGHLIGHTS
• Net assets of £1.3 billion
• (4.1)% NAV return per share in the year
• (14.3)% return from the life science portfolio
in the year with performance impacted by a
decline in share prices of listed holdings and
the write down of SwanBio
RELEVANT STRATEGIC DRIVERS
1
2
3
4
RELEVANT RISKS
A
B
C
D
We measure our performance against a number of financial
and non-financial key performance indicators (KPIs) that are
aligned to our strategic priorities. During the year we evolved
our strategy, which has led to a number of minor changes to
how we report against the KPIs set out below, including in
some of the metrics that we use to track progress. We expect
next year to report against an updated set of KPIs which are
reflective of our updated business strategy and ambitious
10-year growth targets.
1. FX rate taken at receipt of funds.
2. Capital pool divided by mid-point of capital
deployment guidance.
RATIONALE
By creating three new companies per annum we
aim to expand the portfolio to 20-25 companies,
diversified across clinical stage and therapeutic area.
HOW WE MEASURE PROGRESS
• Average number of companies added to the
portfolio over the last three years
• Critical senior hires achieved at company launch
• Capital deployed
• Portfolio size
• % of portfolio at different clinical stage and value
2023 HIGHLIGHTS
• Portfolio of 13 companies diversified across
therapeutic area and development stage
• Four new companies added to the portfolio
• £177.2 million of capital deployed during the year,
with £83.0 million into late clinical investments
• Industry leaders Brian Gladsden and David Fellows
appointed as CEOs of new portfolio companies
Mosaic and Beacon
• An average number of 3 portfolio companies have
been added to the portfolio over the last three years
1 Targeting a portfolio of 20-25 companies, creating 3 new companies a year, with a goal
of delivering 3-5 companies to late-stage development over a rolling 10-year basis
RELEVANT STRATEGIC DRIVERS
1
2
3
4
RELEVANT RISKS
A
B
C
D
NAV PER SHARE/PORTFOLIO RETURN
NUMBER OF NEW PORTFOLIO COMPANIES
RATIONALE
A deep pool of capital underpins our strategy,
enabling us to take a long-term view and support
our portfolio companies as they scale, remaining
a significant shareholder through to late-stage
development.
HOW WE MEASURE PROGRESS
• Years of capital available
• Aggregate capital raised across Syncona
and its portfolio companies
2023 HIGHLIGHTS
• £177.2 million deployed in the year
• £650.1 million capital pool at 31 March 2023
• Sale of Neogene to AstraZeneca for up to
$320.0 million, with total proceeds to Syncona
of up to £21.9 million, including £15.3 million
in upfront proceeds
1
• £394.3 million raised across the portfolio,
with £176.9 million committed by Syncona
• 3.7 years of available capital to fund new
and existing portfolio companies
2
2 Access to capital, aim to maintain 3 years of financing runway
RELEVANT STRATEGIC DRIVERS
1
2
3
4
RELEVANT RISKS
A
B
C
D
YEARS OF AVAILABLE CAPITAL
PORTFOLIO BY CLINICAL STAGE % OF LS NAV
38 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Female 3
Male 4
RATIONALE
The Syncona team is differentiated by its people
and the quality of the team’s expertise is critical
to the success of the Company. We are also
focused on ensuring that we create an inclusive
and supportive environment for our people to
thrive whilst delivering our strategy.
HOW WE MEASURE PROGRESS
• Employee Engagement Survey
• Progress against our diversity and inclusion
framework
• Key hires to the Syncona team
2023 HIGHLIGHTS
• Launch of first Employee Engagement Survey
• Developed first diversity and inclusion framework
• Updated family friendly policy framework
• Became a supporter of Level 20, a not-for-
profit organisation dedicated to improving
gender diversity in European private equity,
post-period end
• Key changes to the structure of the Syncona
investment team with Ed Hodgkin promoted
to Managing Partner and Elisa Petris and
Magdalena Jonikas becoming Lead Partners.
Roel Bulthuis joined post-period end as
Managing Partner and Head of Investments
92%
Response rate to first Employee
Engagement Survey
1
Team and track record
2
Capital
3
Portfolio
4
Risk-adjusted returns
OUR STRATEGIC DRIVERS
A
Portfolio companies
• Scientific theses fail
• Clinical development doesn’t deliver
a commercially viable product
• Portfolio concentration risk
to platform technology
• Concentration risk and
binary outcomes
B
Access to capital
• Not having capital to invest
• Private/public markets don’t value
or fund our companies when we
wish to access them
• Capital pool losses or illiquidity
C
People
• Reliance on small Syncona team
• Systems and controls failures
• Unable to build high-quality
team/team culture
• Unable to execute business plans
D
Macroeconomic environment
• Macroeconomic environment has a
negative impact on sentiment for portfolio
companies and Syncona business model
OUR RISKS
OUR PURPOSE AND STRATEGY P18 RISK MANAGEMENT P66
1. To date.
5 People in the Syncona team
RELEVANT STRATEGIC DRIVERS
1
RELEVANT RISKS
C
4 Progress in de-risking pre-clinical and early-stage clinical companies
RATIONALE
A measurement of progress of our portfolio
companies through the clinical pathway.
HOW WE MEASURE PROGRESS
• Clinical stage companies
• Number of clinical trials commenced in the year
2023 HIGHLIGHTS
• Seven portfolio companies at clinical stage
• Five clinical trials commenced in the year
• 16 data read-outs across the portfolio
RELEVANT STRATEGIC DRIVERS
1
2
3
RELEVANT RISKS
A
B
C
D
RATIONALE
A measurement of our progress in delivering
transformational treatments to patients.
HOW WE MEASURE PROGRESS
• Number of pivotal studies initiated by companies
where Syncona has been a significant shareholder
• Number of products to be approved by the
EMA or FDA by companies where Syncona
has been a significant shareholder
• Patients benefitting from Syncona products
• Number of companies in pivotal trial
2023 HIGHLIGHTS
• Autolus’ obe-cel reached its primary endpoint
in its pivotal FELIX trial, in advance of filing a
BLA with the US FDA in 2023
• Addition of late-stage clinical asset to the
portfolio in Beacon’s lead programme in XLRP,
with Phase II data expected in H2 CY2023
• 250+ patients in clinical trials
6 Portfolio progress to patient impact
RELEVANT STRATEGIC DRIVERS
1
2
3
4
RELEVANT RISKS
A
B
C
D
14
Clinical trials across
the portfolio
2
Companies entered
the clinic inthe year
3
Programmes taken
to pivotal trial:
Axumin (Blue Earth),
Choroideremia
(Nightstar) and
AUTO1 (obe-cel)
(Autolus)
1
1
Approved product
(Axumin; Blue Earth)
1
Company in
pivotal trial
(Autolus, obe-cel)
SYNCONA LEADERSHIP TEAM
39SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
ENGAGING WITH OUR STAKEHOLDERS
Making a positive impact
£1.1bn
Invested in our life science
portfolio since 2012
35
Members of the
Syncona team
£177.2m
Capital deployment
3
Companies launched in the year
from UK-based academics
WHY DO WE ENGAGE?
We source exceptional science
from the scientific research
community, creating a company
around it that we believe can
develop a product and drive
returns for shareholders and
impact patients.
Translating exceptional science
to a commercial product is a
complex and challenging progress
requiring varying expertise.
We offer the scientific community
the commercial perspective.
HOW DO WE ENGAGE?
Regular contact by the Syncona
team with universities and other
institutions across the UK and
more broadly.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
Core responsibility for this
relationship rests with the
Syncona team, with the
Board being updated on the
status of certain key academic
relationships via updates
received on the Syncona
investment pipeline.
WHY DO WE ENGAGE?
Our people drive the long-term
success of the Company. The nature
of the work that we do means
that multi-disciplinary expertise
and experience is required.
Ensuring that our people are
recruited, retained and fully engaged
with the Company’s strategy is key
to our success and a key risk for us
– included within our risk process.
Engagement also reinforces the
Board’s commitment to a positive
culture and helps people feel
engaged with the Company’s
strategy and vision.
HOW DO WE ENGAGE?
Managing our team is a core part
of the Leadership Team’s role.
During the year the team carried
out Syncona’s first Employee
Engagement Survey. Outputs of
the survey have been analysed,
with key priority areas identified for
integration into process change.
The Board designated an employee
engagement director – Gian Piero
Reverberi. He provides a direct
contact point between the Board
and the wider team, with activities
being refreshed in 2023.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
Future plans for team development
a key part of September’s
strategy session.
Discussions on senior hires and
leavers form part of the Board’s
review of Syncona’s team budget.
The Board was provided with an
overview of the outputs from the
Employee Engagement Survey
and the plans for integrating these
into ongoing process changes.
The Remuneration Committee
considers cross-team incentivisation
through the LTIP incentive scheme.
WHY DO WE ENGAGE?
As a company builder who takes a
hands-on approach to managing
our portfolio companies, we believe
ongoing engagement through the
development cycle adds value to
our companies and supports their
management team. This can be
through the team’s experience,
our broader network or capital.
Our approach to portfolio
engagement also provides us with
more regular and better visibility
on portfolio company practices,
progress and culture, which in
turn informs the way in which
we are able to provide support.
HOW DO WE ENGAGE?
Support and oversight of portfolio
companies is a core part of the
Syncona team’s role.
There is generally a 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, including taking
board seats to promote
high-quality governance.
The oversight includes
monitoring against our
sustainability expectations.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
Regular reporting from the
Syncona team to the Board,
with senior members of the
investment team regularly
presenting to the Board on
progress at key portfolio
companies as well as potential
upcoming investments.
WHY DO WE ENGAGE?
The Board recognises the critical
importance of understanding,
and aligning to, the expectations
of our shareholders. Our
long-term goal is to deliver both
impact for patients and returns
for shareholders.
HOW DO WE ENGAGE?
Regular dialogue with
shareholders through a range
of different channels helps us
to understand their short and
long-term views.
Regular communication with
shareholders is maintained
through individual and group
meetings hosted by IR and
members of the Leadership
Team, particularly following
the publication of interim and
full-year results.
The Chair seeks to engage
with key shareholders and
investor groups each year
via written correspondence
and in-person meetings.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
Shareholder relations activities
are reported at each Board
meeting and considered
as part of strategy and
other discussions.
Shareholder perspectives
and effectiveness of ongoing
engagement is regularly
considered by the Board.
The Board will conduct an
investor perception study
in FY2023/4.
Our people
Our portfolio
companies
The scientific
research community
Our shareholders
40 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
OUR VALUE CREATION MODEL P10 SUSTAINABILITY REVIEW P48
7
Companies at clinical stage
£217.4m
Of capital committed to the
portfolio from third-party
investors in the year
£45.2m
Total donations to
charities since 2012
5.5
Gross tCO
2
e per
full time employee
1
WHY DO WE ENGAGE?
Our strategy is often to focus on
small (orphan) diseases that can
be taken to market by a small
biotech company. Access to
relevant patient groups is critical
to enable clinical trials.
HOW DO WE ENGAGE?
Engagement is typically by
portfolio companies, although
at the point of founding we are
likely to have carried out extensive
research which may involve
speaking to key patient advocates
for relevant diseases.
Under our Responsible Investment
Policy we set expectations for
portfolio companies around
conduct of research and access
to medicines.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
Board reviewed and updated
Sustainability and Responsible
Investment Policies in March
2023, which reflect patient
access in a number of areas.
WHY DO WE ENGAGE?
We must maintain our licence
to operate. More broadly, we
believe that Syncona’s purpose
is positive and want to share
that with key stakeholders and
the wider community, and
ensure we understand any
issues or concerns they have.
HOW DO WE ENGAGE?
Public-facing communications
through our website and
other communications and
sustainability reporting each year.
Given the recent focus from
the UK Government on the life
science sector, Syncona has
increasingly engaged them
on the issues which are most
critical in the space.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
Opportunities for engagement
with government are reported
to the Board within ongoing
reporting from the IR and
Corporate Affairs team.
The Board receives a formal
update on Syncona’s progress
in delivering against its
Sustainability Policy twice a year.
WHY DO WE ENGAGE?
Our strategy is to maintain
significant ownership positions
in the companies we create
through the lifecycle.
However, an important part of our
financing and risk management
approach is to bring in co-investors
to provide the capital, network
and expertise which will help our
companies scale ambitiously
and deliver on their vision.
Our companies often conduct
syndicated financings (syndicated
or strategic syndicated) and good
relationships with high-quality
co-investors are important,
particularly in a capital constrained
environment. Our companies
also seek to enter business
development partnerships with
pharma companies, and again
good relationships with these
are important.
HOW DO WE ENGAGE?
Ongoing contact and relationships
between the Syncona team
and leading life science
investors, generalist investors
with an interest in the space
and pharma companies.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
Largely managed at a Syncona
team level, although this forms
part of the wider capital strategy
which is discussed with the Board.
WHY DO WE ENGAGE?
We believe it is important
to have a positive impact
on the wider community.
HOW DO WE ENGAGE?
Trustees of the Foundation
are asked to present annually
to the Board.
The relationship with the charities
principally sits with the Foundation
and a member of the Syncona
team attends trustee meetings
as an observer.
HOW DOES THIS IMPACT
ON BOARD ACTIVITIES?
The Board is invited to attend
charity presentations each quarter.
The Board discusses the
relationship with the
Foundation each year to
ensure it remains relevant
and appropriate to Syncona.
Patient groups
Government and the
wider community
Our co-investors
The Syncona Foundation
and its supported charities
1. Using market-based approach for SIML emissions. Excludes portfolio companies.
41SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
1
2
Evolving our strategy
CONTEXT
As part of the Company’s annual strategy
review, the Syncona team reviewed our
approach, focusing on what has worked well
but critically on what lessons we have learnt
to enable us to evolve our strategy to address
and improve the way we operate and deliver
our objectives. The changes have focused
on optimising our approach to financing our
companies and improving the way we manage
our companies through the development
cycle, particularly as they navigate the clinical
pathway. We have also looked at how to
reduce the impact of our cash holding
for shareholders and are committed to
expanding the life science portfolio.
During the year, the Syncona Board and Syncona
team conducted a review of our strategy, focusing
on how to optimise returns for our shareholders
and scale the Company for growth
ENGAGING WITH OUR STAKEHOLDERS CONTINUED
We factor the potential impact our decisions could
have on stakeholders into Boardroom discussions.
Material decisions made
BOARD CONSIDERATIONS
The Board considered how the proposed
changes to the Company’s strategy would
optimise returns for shareholders. The Board
was confident that the headline change to
expand the life science portfolio, whilst keeping
cash at the minimum level required to run
the strategy, would mean that shareholders
experienced improved returns. The changes
to the financing approach also have the
opportunity to provide increased NAV uplifts
and improve the risk profile of the portfolio.
OUTCOME
An evolved strategy focused on building an
expanded portfolio of 20-25 companies with
three new companies added on average per
annum with the over-arching target to scale
the Company’s NAV to be £5 billion by 2032.
Within the target of £5 billion net assets is
the goal that the life science portfolio will
constitute a larger proportion of NAV.
KEY STAKEHOLDERS CONSIDERED
• Our shareholders
• Our people
• Our portfolio companies
• The scientific research community
• Our co-investors
• Patient groups
OUR PEOPLE AND CULTURE P44
OUR PURPOSE AND STRATEGY P18
Reviewed the Company’s
organisational structure to
enable the business to scale
CONTEXT
To deliver our evolved strategy and increase
the cadence at which we create companies
and scale companies in the portfolio,
the Board recognised the importance of
developing the team structure to deliver
on the new long-term targets.
BOARD CONSIDERATIONS
The Board considered how to best leverage
the most senior investors to focus on capital
allocation decisions, portfolio management and
new opportunities – this is the key to driving
shareholder value and returns and therefore
central to the Board’s thinking.
The Board also considered expanding the team
to deliver on the ambitious long-term targets and
was supportive of building out the Syncona
team. The Board endorsed the focus on adding
senior investment experience, developing key
corporate functions and adding experienced
hires to support the process for optimising the
launch of our portfolio companies and improving
the build-out of the companies, particularly
at critical junctures.
Developing our
team structure
OUTCOME
A new team structure with Martin Murphy
moving to the Executive Chair role at SIML
and Chris Hollowood moving into the CEO
role, alongside a number of promotions,
including Ed Hodgkin to Managing Partner
and Magdalena Jonikas and Elisa Petris
to Lead Partner. Post-period end, Roel
Bulthuis joined as Managing Partner and
Head of Investments.
The Syncona team has established ‘Launch’
and ‘Executive and Advisory’ functions to
improve the process the team undertakes
for setting up a company and ensuring that
the team can effectively course correct as
critical issues arise.
KEY STAKEHOLDERS CONSIDERED
• Our shareholders
• Our people
42 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
4
3
SUSTAINABILITY REVIEW P48
PORTFOLIO REVIEW P26
Syncona acquired a late-stage
asset approaching a pivotal
study with the potential
to drive a transformational
impact for patients with
a devastating disease
CONTEXT
Fundamental to each investment Syncona
makes is the potential impact of the
technology to deliver a transformational
impact for patients in an area of high
unmet medical need.
During the year Syncona acquired a late-stage
asset in AGTC’s lead retinal gene therapy
for XLRP, subsequently combining it with
pre-clinical stage programmes for the
treatment of dry AMD and CRD to form
Beacon Therapeutics.
BOARD CONSIDERATIONS
The Board was engaged throughout the
acquisition of AGTC by the Investment
Committee and senior members of the
investment team. The impact of a potential
treatment for patients with patients suffering
from XLRP was clear and the Board was
confident in the potential of the company
to deliver for all of our stakeholders.
OUTCOME
Syncona completed its acquisition of AGTC in
November 2022, with Beacon’s Series A financing
closing in March 2023
1
. Syncona will now be
able to leverage its expertise in retinal gene
therapy to drive Beacon’s lead XLRP programme
through its Phase II trial and closer towards
becoming a marketed product for patients.
1. Announced June 2023.
Adding a new late-stage asset to the portfolio
KEY STAKEHOLDERS CONSIDERED
• Patient groups
• Our shareholders
• Our portfolio companies
Our people are vital to the delivery of our strategy and during
the year we conducted an Employee Engagement Survey to
see what was important to them and what we could do better
CONTEXT
As the Syncona team has grown and
the operating model has changed,
we commissioned our first Employee
Engagement Survey to find out if the
employee experience aligns with the
environment and culture we aspire to
at Syncona. The survey was undertaken
in December 2022 with a 92%
participation rate.
92%
Response to Employee
Engagement Survey
Commissioning an Employee
Engagement Survey
BOARD CONSIDERATIONS
The Board was provided with an overview of the
outputs from the Employee Engagement Survey
by the Chief Human Resources Officer, along
with initial Leadership Team plans for integrating
these into ongoing process changes.
OUTCOME
Outputs of the survey have been analysed
by working groups across the business, with
key priority areas identified for integration
into process change in the Syncona team.
KEY STAKEHOLDERS CONSIDERED
• Our people
43SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
SIML operating model evolved and team expanded to deliver strategy
10+
Portfolio companies where
we have held operational roles
16
Board seats at
portfolio companies
A TEAM WITH A DIFFERENTIATED
SKILL SET
Our highly experienced team members
have a wide range of skills. Our life
sciences investment team members have
a deep technical scientific background,
supplemented by strong commercial
experience ranging from venture capital
investment to pharmaceutical launch. This
skill set has resulted in a strong network in
life science, enabling the best talent to be
attracted at the level of Syncona’s portfolio
companies. Alongside our investment
team sits a highly skilled corporate
function with strong operating capability.
OUR PEOPLE AND CULTURE
Syncona is dierentiated by its people, who identify
innovative technology and take a commercial approach to
building businesses capable of delivering transformational
treatments to patients and investing through the lifecycle.
A highly skilled,
multi-disciplinary team
BUILDING FOR THE FUTURE
CHAIR
Sources world-class
investment opportunities
CEO
Sources world-class investment
opportunities and responsible
for delivery of strategy
Leadership Team
Incorporates
experience from
across the business
and responsible for
the operational
delivery of Syncona’s
strategic priorities
Executive and
Advisory Group
Expert advice
and support
• Utilise own networks to bring opportunities to Syncona
• Lead deal teams during investment process,
supported by the investment team
• Lead the investment team
• Utilise own networks to bring opportunities to Syncona
• Provide operational expertise to support deal decisions
INVESTMENT COMMITTEE
Managing
Partners
Lead
Partners
44 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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
DATA DRIVEN
• We are relentless in
searching out all of the data
• We ensure our hypotheses
and decisions are firmly
grounded in the data
• We are intellectually honest
and provide open and
constructive challenge
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 facethem with bravery,
determination and urgency
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; weare
not bound byprecedent
• We are trusted and empowered
to progress our own development
• We have drive, resilience and
persistence
TEAMWORK
• We seek to give and receive
constructive feedback
• We are collaborative
andtransparent, valuing
our diverse talents
andperspectives
• We admit our mistakes and
perpetually seek to improve
CORPORATE GOVERNANCE REPORT P76
Our values are at the heart of all that we do as we
seek todeliver Syncona’s purpose for our stakeholders
LEVERAGING OUR INVESTMENT TEAM
Over the last year, the Leadership Team
and the Board have looked closely at how
to better leverage the investment team
to deliver our long-term growth targets
and also improve the execution through
the clinic at our portfolio companies.
The Syncona team has established two
new functions: the Launch Team and
the Executive and Advisory Group.
The Launch Team, which has finance,
legal, HR and operational expertise, is
to ensure our companies operationalise
effectively and at pace in line with best
practice. Whilst the Executive and
Advisory Group enables us to access a
range of commercial, regulatory clinical
and leadership experience which
is critical to bring to bear through the
company’s development cycle, better
enabling us to diagnose issues and
subsequently lead the execution of
the required change of course.
A THRIVING CULTURE
Syncona has a strong cultural identity
which underpins its strategy and a clear
set of values which are at the heart of all
that the Company does to deliver for its
stakeholders. Over the next year, following
the Employee Engagement Survey, the
business is working to deliver on a number
of actions and initiatives and, as part of this,
we will review our values to ensure that they
continue to align with what is important to
our people, our purpose and the delivery
of our strategy.
OUR VALUES
45SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
Investment and Executive and Advisory teams
15
Corporate functions
20
BROAD AND DIVERSE EXPERTISE
The Syncona team
MARTIN MURPHY
CHAIR, SIML
HIGHLIGHTS
• Scientific, commercial, company
creation and investment expertise
• 22 years in venture capital and
management consultancy
• PhD in Biochemistry
PORTFOLIO COMPANY AFFILIATION
• Quell Therapeutics (Chair)
• Anaveon (Chair)
• Clade Therapeutics (Board)
• Autolus (Board)
• Resolution Therapeutics (Board)
Martin is the Chair of Syncona
Investment Management Limited.
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.
A multi-disciplinary team
with a dierentiated skill set
INVESTMENT COMMITTEE
CHRIS HOLLOWOOD
CHIEF EXECUTIVE OFFICER, SIML
HIGHLIGHTS
• Scientific, commercial, company
creation and investment expertise
• 21 years in venture capital
• PhD in Organic Chemistry
PORTFOLIO COMPANY AFFILIATION
• Freeline Therapeutics (Chair)
• SwanBio Therapeutics (Chair)
• Purespring Therapeutics (Chair)
• Beacon Therapeutics (Chair)
• Mosaic Therapeutics (Chair)
Chris is the Chief Executive Officer
of Syncona Investment Management
Limited. 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.
OUR PEOPLE AND CULTURE CONTINUED
Syncona’s multi-disciplinary team
has deep scientific, operational,
commercial and investment expertise
enabling us to maximise value through
the lifecycle of a company. Our people
have extensive experience working
alongside global key opinion leaders
and appointing and advising leading
management teams.
Our senior investment team, made
up of Chris Hollowood, Martin
Murphy, Roel Bulthuis, Ed Hodgkin,
Elisa Petris and Magdalena Jonikas,
have 125 years of experience in life
science investment. This team lead
the creation of new companies,
whilst the Investment Committee
drives capital allocation decisions
across the portfolio.
The Syncona Leadership Team,
which incorporates experience
from the Investment, Finance,
Legal, HR, Investor Relations, and
Executive and Advisory teams,
is responsible for the operational
delivery of Syncona’s strategy and
drives day-to-day delivery against
Syncona’s strategic priorities.
35
Total headcount
46 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
SENIOR INVESTMENT TEAM
ROEL BULTHUIS
MANAGING PARTNER AND HEAD
OF INVESTMENTS
HIGHLIGHTS
• 20 years’ experience across
life sciences venture capital
• MSc in Biopharmaceutical
Sciences from Leiden University
• MBA from Helsinki School
of Economics
Roel is a Managing Partner at
Syncona, where he manages
the investment team and utilises
more than 20 years of life
science venture capital, business
development and investment
banking experience to help
Syncona deliver value through
the investment cycle. He joined
Syncona from Inkef Capital,
an Amsterdam-based venture
capital firm focused on life
science investments.
EDWARD HODGKIN
MANAGING PARTNER
HIGHLIGHTS
• 32 years’ experience as a life
sciences company builder
• Degree and DPhil in Chemistry
from the University of Oxford
• Former Chairman of the BIA
PORTFOLIO COMPANY AFFILIATION
• OMass Therapeutics (Board)
• Resolution Therapeutics (CEO)
Edward is a Managing Partner
at Syncona. He is currently CEO
of Resolution Therapeutics and
Director of OMass Therapeutics
1
,
and was previously the first CEO
and a board member of Autolus
Therapeutics (NASDAQ: AUTL).
Within the Syncona life science
team, he is involved in creation
of new businesses and then
fills executive roles within
those companies to make
them operational.
ELISA PETRIS
LEAD PARTNER
HIGHLIGHTS
• 15 years’ experience in life
sciences investing
• PhD in Molecular Biology
from Imperial College
• MBA from London
Business School
PORTFOLIO COMPANY AFFILIATION
• Quell Therapeutics (Board)
• Beacon Therapeutics (Board)
Elisa is a Lead Partner at Syncona.
She is a Director on the Board of
Quell Therapeutics and Beacon
Therapeutics, and was previously
on the Board of former portfolio
company Blue Earth Diagnostics.
She was closely involved in the
foundation of Quell, Blue Earth and
Achilles (where she formerly served
on the Board), including their
operational and strategic set-up.
MAGDALENA JONIKAS
LEAD PARTNER
HIGHLIGHTS
• 12 years’ experience in life
sciences investing
• PhD in Bioengineering from
Stanford University
• Postdoctoral fellow in Harvard
Medical School’s Computational
Health Informatics Programme
PORTFOLIO COMPANY AFFILIATION
• OMass Therapeutics (Board)
• Kesmalea Therapeutics (Board)
• Mosaic Therapeutics (Board)
Magdalena is a Lead Partner
at Syncona. She is a Director
at OMass Therapeutics,
Kesmalea Therapeutics and
Mosaic Therapeutics. She
previously worked at McKinsey
& Company, where she
specialised in pharmaceuticals
R&D, portfolio management,
and business development
and licensing.
1. Post-period end Edward transitioned from Chair to a Non-Executive Director.
47SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
positive
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 the life science
industry and our support for charity.
We are actively engaged with our
portfolio companies as they seek
tobuild sustainable businesses.
Delivering a sustainable
SUSTAINABILITY REVIEW
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 dierence to the lives
of patients and their families.
We believe our sustainability agenda is
important in ensuring our business and
our portfolio companies are able to deliver
on our shared mission – to get products
to patients who really need them.”
Chris Hollowood
Chief Executive Officer
Syncona Investment Management Limited
NZAM
Signatory
1
1. Net Zero Asset Managers initiative.
1st
D&I Framework developed
48 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
impact
Disciplined
allocation of
capital
Ongoing evaluation
of emerging data
and landscape
Quick and
effective
operationalisation
of start-up
company
Providing insight
through the
development process
1
Our social impact
READ MORE P52
2
Responsible investor and partner
READ MORE P54
3
Inspiring and empowering our people
READ MORE P56
4
Responsible and ethical business
READ MORE P58
SYNCONA’S
DIFFERENTIATED
INVESTMENT
PROCESS
Embedding our sustainability pillars
throughout our investment process
Our Sustainability Policy outlines our goals and
commitment tobeing a sustainable and responsible
business. This is built around four core pillars:
VIEW MORE
synconaltd.com/sustainability
FIND OUT MORE
Sustainability Report 2023
STRATEGIC REPORT
49SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
OUR INVESTMENT PROCESS P20
ALIGNMENT TO SDGSPROGRESS IN THE YEAR
SUSTAINABILITY REVIEW CONTINUED
Strong progress against
our sustainability pillars
OUR 2023 PROGRESS
1
Our social impact
We seek to make a
positive social impact
through extending and
enhancing human life.
2
Responsible investor
and partner
We create, build and scale
sustainable life science
companies, supporting them
through their lifecycle.
3
Inspiring and empowering
our people
We are dierentiated by
our people, who are highly
motivated by Syncona’s
purpose and values.
4
Responsible and
ethical business
Our business operates
responsibly and ethically,
in line with our values and
with clear accountability.
Obe-cel
Autolus’ lead therapy
meets primary endpoint
in pivotal FELIX trial
3
Portfolio CEOs signed up
to European Biotech Social
Pact or US equivalent
NZAM
Signatory
1
Top 10
Firm in the FTSE 250 for
appointing women to
Board and leadership
positions in the FTSE
Women Leaders Review
1,200+
Jobs supported by Syncona
and its portfolio companies,
including over 1,000 in the UK
4
New companies added in full
alignment with Responsible
Investment Policy
Published
Full portfolio carbon footprint
1st
D&I Framework developed
18
Active clinical trial
sites in the UK
11
Portfolio companies reporting
Scope 1 to 3 carbon emissions
to Syncona
5.5
Gross tCO
2
e per
full time employee
2
Launched
First Employee Engagement
Survey across the Company
£4.6m
Donated to charity
1. Net Zero Asset Managers initiative.
2. Using market-based approach for SIML
emissions. Excludes portfolio companies.
50 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Sector and social issues Governance issuesEnvironmental issues
Access to healthcare
Animal welfare
Talent attraction
and retention
Community investment
and engagement
Environmental
impacts
Data privacy
Health and safety
Ethics and compliance
Product quality
and safety
Responsible procurement
Pandemics
Climate risk
and disclosure
Clinical trials
Low
High
Stakeholder concern
Importance
Impact on Syncona and portfolio
Importance
Low High
Our material
sustainability
issues
Syncona first conducted a comprehensive
sustainability materiality analysis in 2020,
which included views from a range of
stakeholders, including leadership teams
at our portfolio companies, shareholders,
key charitable partners, sustainability
experts and biotech industry experts.
Following this, we agreed our sustainability
priority areas, which are now integrated
into the Syncona Sustainability Policy and
Responsible Investment Policy.
The materiality matrix is not a static
document, and will evolve as the views
of our stakeholders and our own
business and portfolio change. We seek
to understand these on an ongoing
basis, supported by the work of the
Syncona Sustainability Committee
in horizon scanning for changes to
expectations. We believe that the
materiality matrix remains appropriate
without any changes in 2022/3.
VIEW MORE
synconaltd.com/sustainability
OUR MATERIALITY MATRIX
51SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
Delivering patient impact
SUSTAINABILITY REVIEW CONTINUED
1
Our social impact
Autolus
8,400
New cases of ALL diagnosed
per year across the US and EU
1
Beacon
1 in 22,000
People commonly thought
to have XLRP
2
1. SEER and EUCAN estimates (respectively) for US and EU.
2. Research suggests that 50-70% of patients have a mutation in the RPGR gene; this is the group targeted by the Beacon therapy (iovs.arvojournals.org/article.aspx?articleid=2125553).
Our purpose is to invest to extend
and enhance human life.
At Syncona, our purpose is to
invest to extend and enhance
human life. We do this by
creating, building and scaling
companies to turn exceptional
science into transformational
treatments for patients in
areas of high unmet need.
We have a portfolio of 13 companies,
seven of which are at clinical stage.
This includes Beacon, which was added
to the portfolio during the year, and is
currently running a late-stage study in
XLRP. With no currently approved therapy
for XLRP, this is another example of an
indication where we are developing
treatments which have the potential to
have a meaningful impact for patients.
Our most clinically advanced company,
Autolus, reported during the year that
the pivotal trial of its lead therapy, obe-cel
in relapsed/refractory (r/r) adult Acute
Lymphoblastic Leukaemia (ALL), had met
its primary endpoint at an interim analysis,
alongside publishing data which underlined
the efficacy and safety profile of the drug.
With Autolus approaching the filing of a
Biologics Licensing Application (BLA) with
the US Food and Drug Administration (FDA)
later in 2023, and 8,400 new cases of ALL
diagnosed per year
1
, obe-cel has real
potential to have a significant impact for
patients suffering from a devastating disease.
We were also pleased during the year
to see significant progress at another
Syncona clinical stage company, Anaveon.
On page 12 of our Sustainability Report
you can see a case study on progress
at the company, which is at an exciting
moment in its development.
Delivering transformational
treatments to patients in
areas of high unmet need
Syncona led the Series A financing in Anaveon
in 2019, alongside the Novartis Venture Fund.
The Syncona team has worked in partnership
with the Anaveon management team to progress
the company from pre-clinical studies to running
multiple clinical trials across a range of indications.
BUILDING GLOBAL LEADERS
FIND OUT MORE
Sustainability Report 2023
52 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Supporting UK life science
12
Conference speaking
engagements by the Syncona
team during the year
1,200+
Jobs supported by Syncona
portfolio companies, including
over 1,000 in the UK
3. topuniversities.com/university-rankings/university-subject-rankings/2023/life-sciences-medicine.
1
Scale-up
capital
2
Attract
talent
3
Continued innovation
from the regulator
Solutions to these issues will help ensure that companies
commit themselves to the UK with a critical mass of capital,
expertise, know-how and talent; helping attract further
investment and building a stronger, more sustainable life
sciences industry for the future.
The UK has a thriving life sciences
industry and world-class research
infrastructure, with four of the top
10 life sciences and medicine
universities in the world situated in
this country.
3
This forward-thinking
sector fuses science, innovation
and technology to help solve the
global healthcare challenges of our
time, making valuable contributions
to patients worldwide.
Whilst the industry has ambition and
a rich source of cutting-edge science
from leading universities, access to
scale-up capital remains a major hurdle
for high-growth life science businesses.
As a leading life science company builder
we feel passionately about this issue.
We actively seek to engage in relevant
initiatives that we believe will support the
life science industry in the UK and globally,
through working groups, advocacy and
engagement in consultations, and
participating in a wide range of industry
conferences and events. We look forward
to continuing to play our role in ensuring the
UK life science sector is best positioned to
realise its growth potential from translating
the UK’s world-class research base into
transformational treatments for patients.
We have a key role in supporting UK life
sciences by creating UK-based leading
biotech companies. These companies
provide skilled jobs for people in the sector,
across scientific, clinical, commercial and
manufacturing roles.
On page 13 of our Sustainability Report,
you can see a case study of portfolio
company Autolus, and the important work
it has been doing as it prepares to file
a BLA with the US FDA later in 2023 for
its lead therapy obe-cel.
Three priorities for making the UK a life sciences superpower
At Syncona we are supportive of the UK
Government’s stated aim to make the UK
a life sciences superpower. We believe that
many of the key elements are already in
place, given the strong foundation that is
already present in this country for academic
and scientific leadership. However, we
believe there are a number of areas where
there is room for improvement, in order for
the UK to challenge the dominance of the
US as a place to identify leading science
and build sustainable biotech companies
for the long term. In our mind, there are
three clear priorities...
CHAMPIONING THE UK
53SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
SUSTAINABILITY REVIEW CONTINUED
Our approach to responsible investing
Syncona continues to make
progress in embedding its
approach to responsible
investment across our portfolio.
In the two years since we first launched
our Responsible Investment Policy,
we continue to be pleased with the
engagement that we have seen across
our portfolio.
We believe that engaging with our
portfolio companies on sustainability
issues will improve company
performance and by instilling our core
principles at company foundation we
will set our companies up with strong
cultures and position them for long-term
success. We look to embed and monitor
sustainability issues throughout our
investment process and we believe
this is an important tool in managing
risk and driving value in our companies.
ENGAGING EARLY WITH OUR
PORTFOLIO TO UNDERSTAND THEIR
SUSTAINABILITY PRIORITIES
At Syncona we work in partnership with
our portfolio companies to set them up
with clear approaches to important
issues. Having now developed our own
Sustainability Policy we have developed
a broad level of institutional knowledge in
this area. We recognise that progress in
sustainability reporting can be gradual,
and we are committed to working with
our portfolio as they formulate their own
strategies, providing support in areas
where there can be a high initial
resource requirement.
Overall, we have made great progress
in integrating our approach to responsible
investment across our business and
portfolio. Within what has been a
challenging market environment for
biotech, we rightly continue to ensure
sustainability is on the agenda in our
interactions with our portfolio.
With sustainability factors incorporated into
our initial screen of investments, investment
memos and deal terms, we engage with
companies on sustainability and ensure
they are aware of our expectations.
With the development of the Syncona
company Launch Team, we aim to embed
these processes further from an earlier
stage, ensuring that we are providing
companies with expertise on sustainability
as they are building their operations and
footprint. We believe this is the best way
for a company to develop a sustainable
and long-term approach to integrating
sustainability into their business and
strategic priorities.
WORKING ALONGSIDE OUR
PORTFOLIO TO DEVELOP THEIR
REPORTING FRAMEWORK
We view ourselves as a partner to our
portfolio companies as they develop their
sustainability priorities and reporting. This
year, we have increased the number of our
private portfolio reporting environmental
data to us from nine to eleven, including
a number of companies within our
early-stage portfolio.
This underlines the importance of close
collaboration between investors and their
portfolio companies in improving reporting
in what is a constantly evolving space.
It has been pleasing to see such strong
engagement from our portfolio on this issue.
2
Responsible investor
and partner
An active partner for
our portfolio companies.
THE ROLE OF THE
SUSTAINABILITY COMMITTEE
Syncona’s Sustainability Committee
includes representatives from across the
business, including finance, IR, legal, HR,
the investment team, and the new Launch
Team. Its role is to advise the business on
Syncona’s Sustainability Policy, and to
oversee its integration into the ongoing
roles and activities of the investment team
and broader business whilst identifying
areas where the business can improve
its approach.
FIND OUT MORE
Sustainability Report 2023
54 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Portfolio companies are expected to report against
these KPIs on an annual basis. Below is a summary
of our requirements for each pillar and progress
made against these during the year.
1
Throughout the year we have continued to make
progress in introducing new portfolio companies
to our Responsible Investment Policy, as well as
seeing progress across our portfolio companies
in our sustainability reporting.
10/12
Companies with anti-fraud, bribery
and corruption policies
1
100%
Companies have Standard
Operating Procedures
1
8/12
Portfolio companies
with a D&I Policy
1,2
11/12
Companies reported
environmental data
1
Companies where executives have signed
up to the European Biotech Social Pact in
the financial year
100%
Compliance with 3Rs across portfolio
1
Syncona has an aspiration
to be net zero throughout its
value chain (including portfolio
companies) by 2050.
Tracking progress across our portfolio
Throughout the year Syncona
has engaged with its portfolio
companies to review their
compliance and governance
policies and help them to
improve these where necessary.
Syncona believes that our
portfolio companies should
meet high standards in how
they carry out the clinical
development process.
Syncona is committed to making
medicines accessible by working
with its portfolio companies.
Syncona is committed to being
an advocate for D&I. We expect
our companies to build a strong
culture, a diverse and inclusive
team and high-quality
relationships.
Syncona is committed to
high standards of ethical
care across all aspects of our
business. We expect companies
to adhere to the ‘3Rs’ set of
standards when using animals
in their research activities.
1. COMPLIANCE AND GOVERNANCE
4. GOOD R&D PRACTICE
2. ACCESS TO MEDICINES
5. DIVERSITY AND INCLUSION
3. ANIMAL WELFARE
6. ENVIRONMENTAL IMPACT
1. Mosaic did not provide Syncona with full sustainability reporting this year, having been launched and appointing its management team post-period end. We have therefore focused our
reporting on the 12 portfolio companies who were able to provide us with data this financial year.
2. Whilst 4/12 companies do not yet have policies in place, we have been pleased in our discussions with leadership teams to see the importance that they place on the issue and expect this
to improve in the coming year.
55SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
SUSTAINABILITY REVIEW CONTINUED
3
Inspiring and empowering
our people
Our highly motivated people are
attracted to our platform and the
opportunity to improve the lives
of patients and their families.
Developing our people strategy
ENHANCING ORGANISATIONAL
STRUCTURE AND BUILDING DEPTH
ACROSS THE BUSINESS
To support the expansion of our portfolio
and to enable the delivery of three new
companies per annum, a key principle has
been that we need to leverage our people
better. This has meant some changes to
how the team is structured, with Chris
Hollowood becoming CEO of SIML. Chris
has been with Syncona for 10 years and
has played a pivotal role in building the
portfolio and driving the team’s culture and
success. As CEO, Chris will lead the
delivery of our growth plans and manage
the team, whilst continuing to have an
important role in company creation and
management. We also announced that
Martin Murphy has become Chair of SIML,
and he will focus his time on sourcing new
opportunities, alongside managing portfolio
companies, remaining as a member of the
Investment Committee. This is a natural
next step for the Company and one which
has bedded in well. We have also promoted
Ed Hodgkin to the role of Managing Partner,
whilst Magdalena Jonikas and Elisa Petris
have taken up the role of Lead Partners.
These partners have taken on the
primary role in driving the creation of new
companies with Magdalena leading on both
Kesmalea and Mosaic in this financial year.
The creation of a senior investment team
has meant adding additional expertise and
we have been delighted to announce the
appointment of Roel Bulthuis as Managing
Partner and Head of Investments. Roel
brings over 20 years of life science venture
capital, business development and
investment banking experience and we are
already seeing the impact of his experience
and strong sense of purpose.
We have also looked to ensure that we
have embedded our new Leadership
Team, which is made up of representatives
from across the business, with senior
leaders from the investment, finance,
human resources, IR, legal, and executive
and advisory teams. The breadth of this
team ensures that senior leaders from
across the business are taking a multi-
functional approach to driving our strategy.
BUILDING AN OPERATIONAL
MODEL TO SCALE AND IMPROVE
PORTFOLIO EXECUTION
To drive our team’s ability to deliver an
expanded portfolio and better leverage our
senior investors, we have also created a
multi-functional portfolio company ‘Launch
Team’. This team has been created to drive
and support the creation and development
of new companies, using Syncona best
practices. The Launch Team will help our
portfolio companies in becoming operational,
allowing our investment partners to focus
their time on the strategic aspects of a new
portfolio company and working on the next
wave of company creations. Members of the
Launch Team have already been supporting
new portfolio company launches, making
key functional contributions to Mosaic,
Kesmalea and Beacon.
A critical learning from the last 10 years
of Syncona has been the importance of
portfolio company execution as they drive
their products through the clinic. Syncona’s
hands-on operational model is important in
helping our management teams navigate
this pathway and to complement our own
team’s expertise, our developing Executive
and Advisory Team will add significant
operational, regulatory and clinical expertise
to the team, helping us to build further
sustainability into our model.
The last 12 months have
been an exciting time
for Syncona. During the
year we announced our
strategy to deliver growth
over the next decade
and critical to the delivery
of our ambitious targets
will be our people,
organisational structure
and, of course, culture.”
Fiona Langton-Smith
Chief Human Resources Officer
Syncona Investment Management Limited
D&I
Framework launched
56 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FIND OUT MORE
Sustainability Report 2023
Female 0
Male 3
Female 19
Male 16
Female 4
Male 3
Female 3
Male 4
SIML BOARD 31 MARCH 2023 SIML TEAM 31 MARCH 2023
SYNCONA LIMITED BOARD 31 MARCH 2023 SIML LEADERSHIP TEAM 31 MARCH 2023
EMBEDDING A STRONG CULTURE
I passionately believe that culture drives
strategy. Syncona has a clear identity and
set of values but I believe it is important
to regularly check in with the team and
understand what is important to them and
what we can do better. Given the growth
of the Syncona team and the change in
operating model, this year we launched our
first annual Employee Engagement Survey,
which was an important exercise that
allowed people to express themselves
freely. The feedback from it generated
a number of key themes, which the
Leadership Team are seeking to address
going forward, and I look forward to reporting
back on these and the progress we make
against them in the next financial year.
DIVERSITY AND INCLUSION
We believe that diversity optimises our
decision-making and thereby gives us a
competitive advantage, and whilst the team
has always passionately believed in the
importance of a diversity of perspectives,
this year we formalised our approach. This
exercise included identifying our four key areas
of focus: women in leadership, family
support, global talent and socioeconomic
development. Whilst Syncona recognises that
it has a good level of female representation
at senior levels within the business, it is
committed to further empowering female
leaders by providing access to mentorship,
coaching programmes and, most importantly,
peer access support. In June 2023, to help
us on our D&I journey, we were incredibly
pleased to become a supporter of Level 20,
a not-for-profit organisation with a mission to
encourage greater representation of women
in the private equity industry. Our new D&I
Framework is also aligned with our existing
charitable partnerships, including our work
with the Windsor Fellowship, and our close
engagement with Syncona Foundation
charity Generating Genius.
We have made strong progress expanding
the team, evolving our operating model and
understanding our culture. I am excited to
embed the changes we’ve made over the
coming year.
Fiona Langton-Smith
Chief Human Resources Officer
Syncona Investment Management Limited
14 June 2023
Our Diversity and Inclusion Framework
At Syncona we believe that diversity of
perspectives optimises our decision-making
and thereby gives us a competitive advantage.
We employ individuals with varying
backgrounds and views and actively seek
to include their experiences and views
when working together and developing
our environment.
DRIVING OUR D&I FORWARD
We have listened to our people to
understand what matters to them.
OUR D&I FRAMEWORK IS BUILT AROUND FOUR KEY AREAS:
1
Women in leadership
• Increase representation of women
at Board, lead investor and senior
leadership levels
• Empower women in leadership roles
by providing access to mentorship,
coaching programmes and, most
importantly, peer access support
• Encourage participation in global
leadership network groups focused
on connecting and supporting women
executive leaders, such as Level 20
3
Global talent
• To maintain our world-class reputation
we are increasingly aware of the need
to access global talent
• We are committed to accessing talent
across the globe to enrich our thinking
and to ensure we have the strongest
workforce possible
2
Family support
• A large proportion of Syncona’s
workforce are parents or carers
• We believe parents will be an important
part of our workforce for years to
come and want to ensure our culture
supports them in being able to deliver
their best work
4
Socioeconomic breadth
• We are committed to hiring people
from a broad range of socioeconomic
backgrounds
• We believe that as with all diversity,
this strengthens our thinking, and
therefore our competitive advantage
• We are committed to increasing
socioeconomic diversity in the life
science industry
57SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
SUSTAINABILITY REVIEW CONTINUED
4
Responsible and ethical business
We aim to have a robust set of policies,
internal controls and management processes
covering all of the areas for our business
to operate responsibly and ethically.
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.
Modern slavery and ethical procurement
Syncona has zero tolerance for modern
slavery and human trafficking. Syncona
publishes an annual Modern Slavery
Statement to set out how it furthers 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 54 and 55.
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.
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.
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.
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.
58 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Standards of conduct and behaviour
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.
FIND OUT MORE
Sustainability Report 2023
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.
59SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
0
50
100
150
200
250
FY2022/23FY2021/22FY2019/20
2
Market based
Location based
SUSTAINABILITY REVIEW CONTINUED
Minimising our environmental impact
REPORTING ON OUR
ENVIRONMENTAL IMPACT
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 2023.
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 21
st
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 DIRECT FOOTPRINT
Given the relatively small nature of our
operations, with one primary office location
and around 35 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 powered by renewable
energy. Our office space also has a zero
to landfill waste policy (Scope 3).
METHODOLOGY FOR SECR REPORTING
AND PERFORMANCE
We have employed the services of a
specialist adviser, Accenture, to quantify
the greenhouse gas (GHG) emissions
associated with the Company’s emissions
for FY2022/3. Syncona’s FY2022/3 SECR
location-based footprint is equivalent to
203.8 tCO
2
e
1
, with the largest portion being
made up of emissions relating to business
travel via air at 174.4 tCO
2
e. Syncona’s
market-based footprint, which takes into
account the green energy used by its
head office, amounts to 192.6 tCO
2
e.
Relative to the FY2021/2 financial year
we have seen an increase in our overall
emissions, primarily driven by the easing
of COVID-19 restrictions and subsequent
increase in business travel. Syncona’s
emissions remain lower than FY2019/20,
the last year before the impact of
COVID-19, with Company headcount
having increased since then by 25%.
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)
• UK office emissions have been
calculated using the Defra 2022 issue
of the conversion factor repository
Following an operational control approach
to defining our organisational boundary,
our calculated GHG emissions from
business activities fall within the reporting
period of April 2022 to March 2023, using
the reporting period of April 2021 to
March 2022 for comparison. We do not
1. Tonnes of CO
2
equivalent.
2. FY2019/20 chosen as a comparative year due to the fact it was the last financial year before the impact of COVID-19.
classify portfolio company emissions as
being within our organisational boundary
for the purposes of SECR reporting.
Whilst Accenture 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, given that is the
Company’s primary office location.
TOTAL ENERGY USE
The total energy use for the Company
for FY2022/3 was 68,775 kWh, compared
to 61,834 kWh in FY2021/2.
INTENSITY RATIO
As well as reporting its absolute emissions,
the Company also follows the SECR
requirement of reporting its emissions through
the publishing of an intensity metric. In doing
so, it reports a metric of tonnes of CO
2
equivalent per employee. This is the most
appropriate metric given that the majority
of emissions result from the operations of
Syncona Investment Management Limited
and the day-to-day activities of its employees.
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 FY2022/3 this
amounted to 5.5 tonnes of CO
2
equivalent
per employee using a market-based
approach, and 5.8 tonnes of CO
2
equivalent
per employee using a location-based
approach. This compares to FY2021/2
figures of 1.7 tonnes of CO
2
equivalent per
employee using a market-based approach,
and 2.1 tonnes of CO
2
equivalent per
employee using a location-based approach.
ENERGY EFFICIENCY INITIATIVES
Syncona has clear guidance for business
travel which is followed by its team in order
to ensure environmental impacts are
considered. The following principles act
as guidance for travel by team members:
4
Responsible and ethical business continued
OUR EMISSIONS
1
60 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
• 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 continually monitors adherence
with its travel policy and its alignment
with its net zero aspiration.
OUR FULL ENVIRONMENTAL FOOTPRINT
In FY2022/3, Syncona made a commitment
to publish its full portfolio carbon footprint for
the first time. This incorporates its enhanced
Scope 3 footprint, including category 1
emissions (purchased goods and services)
and category 15 (investments). In doing
so Syncona has engaged with 11 of its
portfolio companies to collect data which
has enabled a more accurate projection
of Syncona’s overall footprint
3
.
Global emissions
(FY2022/3)
Scope 1-3 emissions as reported
for SECR (limited Scope 3)
Market based 192.6
Location based 203.8
Scope 3 category 1
(purchased goods and services)
Total emissions,
excluding paper and
water supply (included
in SECR report)
501.6
Scope 3 category 15 (investments)
4
Total emissions 17,207. 3
Total (market based) 17,901.5
Total (location based) 17,912 .6
The publishing of this data underlines
Syncona’s strong commitment to
transparency in its environmental reporting.
Moving forward, the Company will continue to
work closely with its portfolio companies to
track their environmental footprints and has an
aspiration to continue providing portfolio-wide
environmental data in order to enable
long-term benchmarking and analysis.
SYNCONA AND NET ZERO
Syncona has an aspiration to become net
zero throughout its full value chain (including
portfolio companies) by 2050, aligning the
Company and its portfolio of investments
with the 2015 Paris Goals. In order to
support this goal, Syncona has become a
signatory to the Net Zero Asset Managers
(NZAM) initiative, fulfilling a commitment that
was set in its FY2021/2 Annual Report. The
NZAM initiative is a growing collective of
leading asset managers, including over 300
signatories holding nearly $59 trillion of AUM.
The aim of the initiative is to bring together
asset managers committed to supporting
the goal of reaching net zero GHG emissions
by 2050 or sooner, in line with the Paris
Goals. Given the limited operational
emissions reported at the Syncona-level,
it believes that the greatest impact it can
have in supporting its net zero aspiration
is by working alongside its portfolio
companies to reduce their emissions. As
part of our model to work closely alongside
our portfolio companies to support them in
their operations, we believe that NZAM is
the appropriate framework for Syncona as
we look to manage our overall footprint.
3. Syncona has endeavoured to obtain accurate and complete data wherever possible, and when not available
we’ve asked Accenture to provide reasonable estimates.
4. Includes Scope 1 to 3 data from portfolio companies, including category 1 (purchased goods and services).
GHG emissions (tCO
2
e) and associated energy consumption (kWh) for FY2022/3
Emissions source
Global emissions tCO
2
e Percentage
change (%)
2022 2023
Scope 1 Natural gas 0.7 0.7 +4%
Total Scope 1 0.7 0.7 +4%
Scope 2
Electricity (market based) – – 0%
Electricity (location based) 11.8 11.2 -5%
Total Scope 2 (market based) – – 0%
Scope 3
Electricity transmission and distribution 4.4 3.9 -10%
Natural gas well-to-tank 0.1 0.1 +4%
Employee cars 0.6 2.2 +264%
Business flights 43.0 174.4 +308%
International rail 0.1 0.03 -66%
Domestic rail 0.3 0.9 +16 3%
Public transport 2.1 1.6 -23%
Employee commuting 2.4 8.5 +253%
Paper 0.1 0.1 0%
Waste and recycling 0.1 0.1 -0.06%
Water 0.04 0.1 +76%
Total Scope 3 53.2 191.9 +261%
Total (market based)
1
53.9 192.6 +257%
Total (location based)
1
65.7 203.8 +210%
Total energy usage (kWh)
2
61,834 68,775 +11%
Normaliser
tCO
2
e per FTE (market based) 1.7 5.5 +217%
tCO
2
e per FTE (location based) 2.1 5.8 +176%
1. 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.
2. Energy reporting includes kWh from Scope 1, Scope 2 and Scope 3 employee cars only (as required by the
SECR regulation).
OFFSETTING OUR CARBON EMISSIONS
Syncona has continued its programme
of purchasing carbon credits to offset
the direct emissions resulting from the
Company’s operations. It has purchased
carbon credits for the FY2021/2 and
FY2022/3 reporting years, through
purchasing offsets from the Forestal el
Arriero project. This project supports carbon
emissions removal through afforestation and
is registered under Verra’s Verified Carbon
Standard (VCS) – the world’s most widely
used greenhouse gas (GHG) crediting
programme. We intend to continue to
review best practice in using carbon credits
to align with our net zero aspiration.
By signing up to NZAM, Syncona has
underlined its commitment to managing
its portfolio in a responsible manner which
is aligned with net zero. Having become
a signatory to NZAM, Syncona will be
required in the next 12 months to set a
target for the proportion of its assets to be
managed in line with the attainment of net
zero emissions by 2050 or sooner, as well
as interim targets for 2030. To achieve this,
Syncona will be working with its portfolio
companies to develop strategies to reduce
their emissions, enabling them to move
towards a net zero pathway.
61SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
TCFD REPORT
Climate-related financial
disclosures 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 21
st
century. There is scientific consensus among
the world’s leading climate scientists that
limiting human-caused global warming
requires reaching net zero CO
2
emissions
by 2050 at the latest.
We create 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.
In 2020 Syncona undertook a
comprehensive materiality review to
understand the sustainability issues most
material to the business, including climate
risk and disclosure (see page 51). In 2022,
the Syncona team performed a scenario
analysis to assess the physical and transition
risks that Syncona might be exposed to.
The results of these analyses have led us to
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.
We are, however, committed to making an
impact where possible and using our influence
to ensure that our portfolio companies are
addressing the challenges of climate change
– we have chosen to address the climate-
related issues in our business within our
wider sustainability framework.
Although the Company is not required
to provide a Task Force on Climate-related
Financial Disclosures (TCFD) disclosure as
the legislation does not currently apply to it,
we are voluntarily providing climate-related
financial disclosures consistent with all of
the recommendations and recommended
disclosures of the TCFD, including the
Additional Guidance, to illustrate our
commitment to climate-related issues
given their increasing importance to
our stakeholders.
• Approves and
oversees
implementation
of climate-related
policies
• Considers, monitors
and oversees the
Syncona team’s
management of
climate-related risks
• Publishes Scope 1
to 3 emissions
• Reports against
the TCFD
Syncona Limited
• Oversees and manages the
implementation of climate-related
policies and procedures in
portfolio companies
• Assesses and manages
any portfolio company
limate-related issues
Syncona team
• Implement climate-related
policies and procedures in
line with Syncona guidelines,
values and expectations
• Report to SIML on any
material climate-related issues
Portfolio companies
62 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Plans for FY2023/4
• We are an existing signatory to the
Principles for Responsible Investment
and will be reporting against those
principles for the first time this coming
year, which includes reporting around
sustainability issues.
• We will continue to progress our
aspiration to be net zero throughout our
full value chain (including our portfolio
companies) by 2050, including through
our work as a signatory to NZAM.
• We will set clear interim targets for
2030 for the proportion of our assets
under management which are to be
managed in line with net zero and
publish these within 12 months of
our becoming a signatory to NZAM.
2050
Our ultimate ambition is to become net
zero across all of our assets by 2050
Progress this year
• Post-period end we became a
signatory to the Net Zero Asset
Managers (NZAM) initiative.
Committing to NZAM supports our
ultimate ambition to become net zero
across all of our assets by 2050, and
we plan to set out targets in line with
NZAM’s requirements in the next
12 months. As part of this, we have
been reviewing our current portfolio’s
emissions – see the emissions
reporting for FY2022/3 on pages 60
and 61 – and will be working with
portfolio companies on strategies to
align them with a net zero pathway.
Our sustainability governance framework
Governance of climate-related issues is addressed within our wider framework for governance of sustainability issues.
SYNCONA LIMITED BOARD
SYNCONA LIMITED
AUDIT COMMITTEE
– Approves Sustainability Policy and Responsible Investment Policy
– Oversees implementation of the Sustainability Policy, including oversight of any targets set
– Considers risks facing the Company from sustainability issues as part of its role in the risk
management process
– Oversees monitoring of risks arising from sustainability issues as part of 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 TEAM
LEADERSHIP TEAM
– Overall responsibility for implementation
of Sustainability Policy
– Manages integration of Syncona approach
to sustainability across portfolio
INVESTMENT COMMITTEE
– Implements the Responsible
Investment Policy
– Assesses and manages sustainability
risks in the portfolio
SUSTAINABILITY COMMITTEE
– Advises on Sustainability Policy
– Oversees the integration of the Sustainability
Policy into the ongoing roles and activities of
the investment team and broader business
– Identifies areas where business can
improve its approach
The table above sets out our sustainability governance structure,
which includes climate-related issues. Given our judgement that
climate-related risks do not represent a material risk to our
business, they are addressed as part of our wider consideration
of sustainability issues and not separately.
The table describes the main areas where the Board considers
sustainability issues. Syncona is an investment company and, as
further described in the Corporate governance report on pages 76
to 79, the Board is not directly involved in management of the
investment portfolio, which is delegated to the Syncona team.
Within the Syncona team, the Sustainability Committee acts as a
cross-functional 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. See our
Sustainability Report for further information on the Committee.
A key focus for the Sustainability Committee this year has been to
increase the number of our portfolio companies where we are able
to directly gather environmental data, as well as carrying out
extensive preparatory work in advance of us signing up to NZAM.
The Committee has also led a desktop review of our climate-related
risks and opportunities under a number of scenarios (see overleaf).
The Sustainability Committee is also responsible for coordinating
reporting through the Leadership 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 (when set).
The Board also receives reports on the results of the desktop climate
scenario analysis that was carried out and the risks to the business.
Reports to on a biannual basis Reports to on an annual basis
SUSTAINABILITY REVIEW P48
Governance
• We have provided fuller carbon
reporting for FY2022/3 by including
more emission categories, covering
our own operational emissions and
purchased goods and services, following
our alignment with a full Scope 1 to 3
methodology and environmental reporting
for our portfolio companies; see pages
60 and 61 for further information.
• We have increased the number of portfolio
companies who directly provide us with
environmental data.
• Active engagement with new portfolio
companies on sustainability matters.
For our new portfolio companies, Kesmalea
Therapeutics, Mosaic Therapeutics and
Beacon Therapeutics, we are actively
engaging with them on sustainability
matters, including putting in place
policies in line with our expectations
and principles.
63SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
TCFD REPORT CONTINUED
Strategy
Our business is focused on a single investment strategy in a single
industry of pre-revenue generating life science investments which
are predominantly concentrated in the UK, Western Europe and
the US. See pages 18 to 21 for further information on our strategy
and investment process.
As reported last year, in FY2021/2 we undertook a climate scenario
analysis with support from Avieco (now Accenture), 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.
This year, the Sustainability Committee conducted a desktop review of the
FY2021/2 climate scenario analysis, including a horizon-scanning exercise
for any new potential risks and opportunities, building on the work
done last year with Accenture. The Sustainability Committee reviewed
the specific climate scenarios and time horizons that were selected
for FY2021/2. It was concluded that the scenarios are still internally
consistent, logical and based on explicit assumptions and constraints that
present plausible future development paths. Indeed, no new or further
risks or opportunities were identified this year and the Sustainability
Committee concluded that the climate scenario analysis remained
representative of the risks and opportunities faced by our business.
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. We believe 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.
Risk evaluation
Through the risk identification process, we identified four potential risks
and one potential opportunity for evaluation by the business. As an
investment business, materiality is principally driven by the impact on
the value of our portfolio companies, and our ability and the cost of
accessing capital to deliver our strategy. Given the dynamic nature of
our portfolio (see below) and the data available, our assessment was
qualitative rather than driven by specific financial thresholds.
We assessed the potential impact on our business and likelihood of such
risk or opportunity occurring for each time horizon and climate scenario
in order to determine a numerical score of potential materiality on our
business. Physical risks were assessed taking account of physical
locations of facilities and desktop analysis of supply chains (principally
of our portfolio companies), combined with publicly available data on
vulnerability of different locations/logistics routes, and the value of our
investment in each portfolio company. We also sought to consider the
likely evolution of the businesses of our companies, though that is
challenging both because our companies typically change significantly
as they proceed through clinical development, and also because our
portfolio is itself dynamic and subject to change. We assessed the
transition risks by analysing internal data and publicly available data
to look at the impact of sustainability factors on cost of capital.
We only operate in a single sector and so sectoral analysis was not
relevant to us. Geographic variations were taken into account in respect
of physical risks as described above, but given the dynamic nature of
our portfolio our overall assessment was carried out on a global basis.
It remains our view 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. For that
reason, climate-related issues are not a material input in our planning,
but we take account of the identified mitigation actions where relevant.
Description of
risk or opportunity
Impact on our business
and our response
Scenario where this
has highest impact
Time
horizon
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
64 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Risk management
As described above, during the year the Sustainability Committee
carried out a desktop review of the climate scenario analysis that
was supported by Avieco in FY2021/2, including a horizon-scanning
exercise to determine whether there were any new potential risks or
opportunities that were relevant to our business. We concluded that
none of these risks (individually or collectively) materially impact 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.
Accordingly, we address risk management of climate-related risks
alongside other sustainability issues and as part of our wider risk
management process. 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, as set out
in the risk management section of this Annual Report on pages 66 to 68.
As we have done this year, we expect that the Sustainability Committee
will continue to 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 is responsible for
encouraging the portfolio company to meet our sustainability
requirements, 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 are set out in the responsible investor and
partner section of our Sustainability Report, on pages 17 to 28.
The Leadership Team is responsible for considering sustainability
issues within Syncona’s own business and operations.
Metrics and targets
As mentioned above, as we believe that climate-related risks
do not represent a material risk to our business, we have taken
a proportionate approach in our reporting. We therefore use the
metrics and targets described within this section to assess and
manage risks and opportunities that may become material to
the business.
Metrics applicable to Syncona and our portfolio companies
• Our principal metric is our carbon footprint. We have included full
carbon footprint reporting, incorporating both Syncona operations
and our portfolio, on pages 60 and 61 of this Annual Report, and
page 38 of the Sustainability Report. The environmental pages
of our Annual Report also include our full SECR reporting,
which provides details of our emissions at an operational level.
• The number of portfolio companies who directly provide us with
environmental data.
• Our progress in delivering our sustainability policies, including
those relating to climate, and these form an element of annual
performance reviews for individual Syncona team members
which impacts on the discretionary bonus for the Syncona team.
We have considered other cross-industry climate-related metrics
and targets as detailed in the TCFD Additional Guidance, including
reporting on weighted average carbon intensity. We do not believe
that such metrics and targets are appropriate or meaningful for our
business at this stage given our single investment strategy focused
on pre-revenue single industry businesses, however we continue to
keep these under review.
Targets applicable to Syncona and our portfolio
companies and our transition plans
To date we have not set any specific climate-related targets, as
we evaluate how best to address these issues. As stated above,
it is our ambition to be net zero throughout our full value chain
(including our portfolio companies) by 2050.
The majority of our climate impact is within our investment portfolio
and as part of becoming a signatory to NZAM, over the next year we
will set clear interim targets for 2030 for the proportion of our assets
under management which are to be managed in line with net zero.
As we do not have any specific climate-related targets, we do not
currently have a formal transition plan. However, we have begun
work internally to consider what steps this might include:
• Syncona operations are already relatively low intensity, and in
particular we have already adopted 100% renewable electricity
supply to our primary office through green energy tariffs.
• We are encouraging our existing companies to implement
strategies to reduce their carbon emissions where possible,
particularly in relation to electricity supply.
For our portfolio companies, while we are long-term investors,
the nature of our investments means that the period from today to
either 2030 or 2050 is likely to see significant change in our investment
portfolio, as companies succeed or fail, and enter or leave the portfolio.
We continue to remain focused on developing a meaningful
transition plan that accommodates that change in a proportionate
way, and we are considering what processes are most appropriate.
Identification of climate-related risks Assessment of climate-related risks Management of climate-related risks
• Detailed identification exercise
as part of climate scenario analysis
in FY2021/2.
• Ongoing horizon scanning
of sustainability issues by
Sustainability Committee.
• Scenario analysis by
Sustainability Committee.
• Within the Syncona team, managed by
Investment Committee and Leadership
Team as part of wider management of
sustainability issues.
• Feeds into wider risk management process
overseen by Audit Committee and Board.
65SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
RISK MANAGEMENT
Understanding and managing risk
is at the core of everything we do
Our strategy of creating, building
and scaling a portfolio of
companies, turning exceptional
science into transformational
treatments, involves significant
risk and opportunity.
We create 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 involves high execution risk given the
nature of drug discovery and development
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.
Our risk management framework enables
the business to protect value, helping
us to identify opportunities and minimise
threats to the delivery of our strategic
and operational objectives.
The framework is designed to ensure that
existing or emerging risks are identified,
assessed and managed, and are reported to
relevant stakeholders in a timely manner to
inform and support decision-making. This
process has been in place for the year under
review and up to the date of approval of the
Annual Report and Accounts. Our process
aims to mitigate the significant risks faced by
Syncona in accordance with our risk appetite.
It is recognised that no risk management
process can provide absolute assurance
against material misstatement and loss.
At the Board meeting in March 2023, the
Board completed its year-end assessment
of risks. This followed the Audit Committee’s
formal assessment of risk and internal
controls in February 2023, which was
supported by a detailed risk assessment by
the Syncona Leadership Team. The Board
believes that it has taken all reasonable steps
to satisfy itself that the risk management
process is effective and fit for purpose. No
material control weaknesses or deficiencies
were identified as part of this review.
Our governance framework for risk
RISK REPORT RISK REGISTER
ACTIVE DAYTODAY MANAGEMENT
– Oversees and monitors the risk framework
– Reviews risk register to ensure it properly
captures the principal risks identified by
the Board
– Oversees the framework for identifying
risks (including emerging 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
– Oversees the process
– Defines risk appetite
– Ensures a robust assessment
of principal risks
– Considers key strategic risks
and potential future risks
– Receives quarterly risk reports
– Approves the viability statement
– Responsible for the day-to-day operations
of the risk management framework
– Designs the systems
– Reviews the risks each quarter
– Implements and updates controls
and mitigations
– Reviews the quarterly risk reports
INVESTMENT COMMITTEE
– Approves investment
transactions taking account
of key risks identified
– Assesses plans to manage
risks in the portfolio
VALUATION COMMITTEE
– Approves the valuation of
the life science investments
LIQUIDITY MANAGEMENT
COMMITTEE
– Approves investment of
the capital pool in line
with agreed parameters
– Monitors macro environment
SUSTAINABILITY COMMITTEE
– Oversees integration of
Sustainability Policy into
ongoing roles and activities
of the investment team
and broader business
– Horizon-scanning for changes
to sustainability risks
QUARTERLY BUSINESS
REVIEWS
– Reviews progress of each
life science portfolio company
each quarter
– Assesses progress in managing
key risks to investment case
PARTNER MEETINGS
– Reviews potential opportunities
and makes proposals to
the Investment Committee
PEOPLE AND
ORGANISATIONAL TEAM
– Responsible for organisational
culture within Syncona
and portfolio companies
– Monitors recruitment markets,
key hires and compensation
– Monitors industry relationships
CAPITAL MANAGEMENT TEAM
– Reviews and proposes capital
allocation requirements
– Monitors and assesses potential
capital sources and availability
SYNCONA LIMITED BOARD
SYNCONA LIMITED AUDIT COMMITTEE
SIML BOARD SUPPORTED BY THE SYNCONA LEADERSHIP TEAM
GOVERNANCE FRAMEWORK FOR RISK
Our governance framework for risk is set out
below. The Board owns and oversees the
process, ensures a robust assessment of
principal risks, and defines risk appetite.
Under delegation from the Board, the Audit
Committee oversees and monitors the risk
framework, and assesses the ongoing
operation and effectiveness of our internal
control environment to manage the principal
risks we face. This review process provides
a focus to drive continuous improvement
in our risk processes.
The Syncona Leadership Team is responsible
for day-to-day operation and oversight of
the risk framework and implementation
of any actions. Different groups, including
the Investment Committee, Valuation
Committee, Liquidity Management
Committee and Sustainability Committee,
together with the Investment Team through
partner meetings and quarterly business
reviews, identify new risks, and lead or input
into different risks, and these are then
collated into the risk register and reported
to the Board and Audit Committee.
66 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
PRINCIPAL RISKS
Not all the risks identified as part of our risk
management processes are considered
to be principal risks. The principal risks
reported in the following section are those
risks that the Board believes to be the most
important and which could cause Syncona’s
results to differ materially from expected or
historical results, or to significantly impact
our strategy. Not all of these risks are within
the control of the Group and other factors
besides those listed may affect the Group’s
performance. As with all businesses
operating in a dynamic environment, some
risks may not yet be known whilst other
low-level risks could become material in the
future. All risks are given a risk score based
on likelihood of occurrence and impact
if it were to occur, and this is monitored
throughout the year. In addition, each risk is
assigned a risk appetite that the Board is
willing to accept. The correlation between
the risk score and risk appetite for each risk
is also monitored throughout the year.
Emerging risks
Emerging risks are new risks which have
the potential to crystallise at some point
in the future but are unlikely to impact the
business during the next year. The potential
future impact of such risks is often more
uncertain. They may begin to evolve rapidly
or simply not materialise. We monitor our
business activities and external and internal
environments for new, emerging risks and
changes to risks, ensuring that these are
managed appropriately. This process is
fully embedded within the overall risk
management framework.
Areas to be kept under review include:
• Sustainability issues
• 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
• 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 risk.
Our risk appetite is set out on page 68 with a
brief description of the rationale in each case.
HOW OUR RISKS HAVE EVOLVED
SINCE THE 2022 ANNUAL REPORT
We have reviewed our risks in light of
changes to the internal and external
environment, in particular our updated
strategy, economic uncertainty, inflation,
rising interest rates, availability of capital,
erratic capital markets, changing value of
sterling, a tightening labour market, and
the current political situation including the
Russia-Ukraine conflict. Following this
review we have changed the categories
under which each risk is considered as we
believe these categories more appropriately
reflect how we think about the business and
manage the risks. The new categories are:
Portfolio company risks, Access to capital,
People, and Macroeconomic environment.
The challenging macroeconomic environment
has been discussed at length throughout
the year. Whilst we seek to mitigate the
macroeconomic risk by managing capital
allocation and actively managing our capital
pool, investor sentiment remains cautious
about early-stage biotech. To reflect this
we have added a new principal risk:
‘Macroeconomic environment has negative
impact on sentiment for portfolio companies
and Syncona business model’.
The updated strategy identified ways
in which we can mitigate and diversify
a number of our principal risks.
We are managing our portfolio company
risk by scaling our business. With increased
scale we can reduce concentration risk,
increase the cadence of exits, hold assets
for longer, and drive a more efficient balance
sheet with a scalable investment process,
all of which should drive NAV appreciation,
shareholder returns and access to capital.
We have already made progress on
managing the people risk both at the
Syncona level and the portfolio level and this
will remain a key area of focus going forward.
During 2023 the SIML CEO transition
was announced and implemented, the
Investment, Launch, and Executive and
Advisory teams have been built out and the
Corporate teams have been strengthened.
We are managing our capital risk through a
tiered approach to investment, considering
different capital sources at the portfolio level,
managing liquidity and return within defined
volatility and concentration limits, and have
implemented a capital policy focusing on
driving balance sheet efficiency. External
advisers are used to evaluate the markets and
providers, and funds are currently spread
across multiple banks, government bonds,
and three fund managers with differentiated
diversified investment strategies.
APPROACH TO DISCLOSING
PORTFOLIO COMPANY INFORMATION
Our model is to create companies around
world-leading science, bringing the commercial
vision and strategy, building the team and
infrastructure and providing scaled funding.
When we create or invest in a portfolio company,
or when a portfolio company completes an external
financing or other transaction, we may announce
that transaction. Our decision on whether (and when)
to announce a transaction depends on a number
of factors including the commercial preferences
of the portfolio company. We would make an
announcement where we consider that a transaction
is material to our shareholders’ understanding of our
portfolio, whether as a result of the amount of the
commitment, any change in valuation or otherwise.
In addition, our portfolio companies are regularly
progressing clinical trials. These trials represent
both a significant opportunity and risk for each
company, and may be material for Syncona.
In many cases, data from clinical trials is only
available at the end of the trial. However, a number
of our portfolio companies carry out open label
trials, which are clinical studies in which both the
researchers and the patients are aware of the drug
being given. In some cases, the number of patients
in a trial may be relatively small. Data is generated
as each patient is dosed with the drug in a trial and
is collected over time as results of the treatment are
analysed and, in the early stages of these studies,
dose-ranging studies are completed. Because of
the trial design, clinical data in open label trials is
received by our portfolio companies on a frequent
basis. Individual data points need to be treated
with caution, and it is typically only when all or
substantially all of the data from a trial is available
and can be analysed that meaningful conclusions
can be drawn from that data about the prospect
of success or otherwise of the trial.
In particular it is highly possible that early
developments (positive or negative) in a trial can
be overtaken by later analysis with further data
as the trial progresses.
We would expect to announce our assessment
of the results of a trial at the point we conclude on
the data available to us that it has succeeded or
failed, unless we conclude it is not material to
our shareholders’ understanding of our portfolio.
We would not generally expect to announce our
assessment of interim clinical data in an ongoing
trial, other than in the situation where the portfolio
company announces interim clinical trial data, in
which case we will generally issue a simultaneous
announcement unless we believe the data is not
materially different from previously announced data.
In all cases we will comply with our legal obligations,
under the Market Abuse Regulation or otherwise,
in determining what information to announce.
67SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
RISK MANAGEMENT CONTINUED
The table below shows the direction of travel of the risks and risk appetite as a result of the updated strategy, macroeconomic
conditions and other internal and external factors. It also shows the related strategic drivers for each risk. More detail of the changes
and what we have done to address them is shown on pages 69 to 74.
Relevant
strategic
driver
Direction
of travel Appetite Rationale
PORTFOLIO COMPANY RISKS
Scientific theses fail
1
3
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 lower.
Clinical development doesn’t deliver
a commercially viable product
1
3
High These risks are core to our business model; while we
manage these intensely, the stage of development is
typically capital-intensive and requires significant funding.
Portfolio concentration risk
to platform technology
1
3
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
1
3
Medium We want to minimise this risk but recognise the
challenges of a portfolio with significant value and
risk in each investment.
ACCESS TO CAPITAL
Not having capital to invest
2
4
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 wish to access them
2
4
Medium We are exposed to this risk when we need to bring in
third-party capital, but manage it particularly through
our wider access to capital.
Capital pool losses or illiquidity
2
4
Low We manage the capital pool to limit the likelihood
of loss (absolute or real value).
PEOPLE
Reliance on small Syncona team
1
Low We want to minimise this risk but recognise the
constraints of our small, focused team and model.
Systems and controls failures
1
Averse Our aim is to eliminate the risk of control failures as far
as possible and to actively manage any residual risks.
Unable to build high-quality
team/team culture
1
3
Low We want to minimise this risk but recognise the
challenges of recruiting and integrating global
high-quality staff with highly specialised skills.
Unable to execute business plans
1
2
3
Medium We want to minimise this risk but recognise many external
factors may impact the execution of business plans.
MACROECONOMIC ENVIRONMENT
Macroeconomic environment has
a negative impact on sentiment for
portfolio companies and Syncona
business model
2
4
N/A We have no ability to influence the macroeconomic
environment, however we ensure we monitor and
prepare appropriately and actively manage the risks
above relative to the environment.
1
Team and track record
2
Capital
3
Portfolio
4
Risk-adjusted returns
OUR STRATEGIC DRIVERS
Unchanged
Increased
Decreased
New risk
DIRECTION OF TRAVEL
68 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks that the Board has identified are set out in the following pages, along with the potential impact, key controls and
what we have done during the year to manage the risks. Further information on financial risk management is set out in note 18 to
the Consolidated Financial Statements.
A
Portfolio company risks
Scientific theses fail
We invest in scientific ideas that we believe have
the potential to be treatments for a range of
diseases, but where there may be no or little
substantial evidence of clinical eectiveness or
ability to deliver the technology in a commercially
viable way. Material capital may need to be
invested to resolve these uncertainties.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
3
IMPACTS
• Financial loss and reputational impact from failure of investment.
KEY CONTROLS
• Extensive due diligence process, resulting in identification of key
risks and clear operational plan to mitigate these.
• Tranching of investment to minimise capital exposed until key
de-risking steps are completed (particularly fundamental biological
uncertainty). Consideration of syndicating investments.
• Syncona team works closely with new companies to ensure focus
on key risks and high-quality operational build-out. Team members
may take operating roles where appropriate.
• Robust oversight by Syncona team, including formal review at
our quarterly business review and ongoing monitoring through
Board roles.
WHAT HAS HAPPENED IN THE YEAR?
• 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.
• The build out of the Executive and Advisory Group including
experienced subject matter experts during the year enables
specialist advice which aids the identification and resolution of
issues at an early stage and ongoing support to assist in managing
the operational challenges of drug discovery and development.
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 aected
by trial data not showing required eicacy or
adverse safety events. It can also be aected 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-eectively.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
3
IMPACTS
• Material impact on valuation, given capital required to take
products through clinical development.
• Material harm to one or more individuals, and potential
reputational issues for Syncona.
KEY CONTROLS
• 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. Consideration of syndicating investments.
• At portfolio level, building a portfolio with multiple companies
at clinical/later stages, to enable us to absorb failures.
• Clinical trials policy requires reporting of significant trial issues
to Syncona team and to Board in serious cases.
WHAT HAS HAPPENED IN THE YEAR?
• 16 clinical data read-outs during the financial year with our most
clinically advanced company, Autolus, approaching a meaningful
milestone as it plans to file a BLA with the US FDA in H2 CY2023.
• The acquisition of AGTC added a clinical stage company to the
portfolio thereby diluting this risk.
• The build out of the Executive and Advisory Group during the year
brings specialist knowledge to Syncona which reduces this risk.
69SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
A
Portfolio company risks continued
Portfolio concentration risk
to platform technology
The Syncona team brings strong domain experience
in cell and gene therapy, and a substantial part
of the portfolio is in these areas. Systemic issues
(whether scientific, clinical, regulatory or commercial)
may emerge that aect these technologies.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
3
IMPACTS
• Material impact on valuation.
• Impact on reputation of Syncona resulting from failure
of technology we are strongly identified with.
KEY CONTROLS
• 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.
WHAT HAS HAPPENED IN THE YEAR?
• Ongoing monitoring of developments in cell and gene therapy.
• In addition, we invest across a range of modalities and therefore
we adopt multiple approaches alongside increasing portfolio
target size which reduces the potential impact of this risk.
Concentration risk
and binary outcomes
The Company’s investment strategy is to invest in
a concentrated portfolio of early-stage life science
businesses where it is necessary to accept very
significant and often binary risks. It is expected
that some things will succeed (and potentially
result in substantial returns) but others will fail
(potentially resulting in substantial loss of value).
This is likely to result in a volatile return profile.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
3
IMPACTS
• Loss of shareholder support, potentially reducing ability
to raise new equity when required.
• Reputation risk from perceived failure of business model.
KEY CONTROLS
• 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.
WHAT HAS HAPPENED IN THE YEAR?
• This is an inherent risk due to the nature of the business model,
however as the portfolio matures, the binary and concentration
risk profile changes.
• Scientific risk will reduce over time as the clinical development
pathway develops.
• Financial exposure risk increases as our investment in individual
assets increases.
• As we grow, concentration risk should reduce as we increase
the number of new companies we are starting and individual
investment relative to NAV should become more diluted.
• The acquisition of AGTC during the year has diversified the
risk of having primarily early-stage life science businesses.
70 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
2
4
IMPACTS
• Dilution of stake in portfolio companies with loss of potential upside.
• Loss of control of portfolio companies resulting in poorer
strategic execution.
• Inability for portfolio companies to deliver their business plans
due to financing constraints.
KEY CONTROLS
• Syncona team monitoring capital allocation on an ongoing basis with
a three-year forward outlook, with transparent reporting to the Board.
• Seek to maintain capital pool of three years’ 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 exits.
WHAT HAS HAPPENED IN THE YEAR?
• Whilst this is not an immediate risk as we have a strong balance
sheet with over three years of capital available, we are seeing
the impact of current negative market sentiment in our portfolio
syndications and across the broader market place.
• As the portfolio matures, capital requirements will increase.
However, more mature assets attract higher valuations so our
ability to realise value will increase.
• Increasing the quantum and cadence of investment will drive
better capital efficiency and an increasingly mature portfolio
which can be realised over time.
• For new investments, we have invested alongside strategic
co-investors, maintaining the core Syncona model whilst
diversifying financial risk.
• We have introduced a Capital Return Policy focusing on driving
balance sheet efficiency by balancing reinvestment with capital returns.
• During the financial year our portfolio companies brought in
£394.3 million of capital commitments of which Syncona
contributed £176.9 million.
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.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
2
4
IMPACTS
• Syncona is required to invest further capital, leading to greater
exposure to individual companies than desired and less ability
to support other companies.
• Inability for portfolio companies to deliver their business plans
due to financing constraints.
• Exit opportunities may be less attractive, with impact on
availability of capital.
• Reputation risk from failed transactions.
KEY CONTROLS
• 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.
WHAT HAS HAPPENED IN THE YEAR?
• Macroeconomic headwinds have continued to impact sentiment
in the biotech sector, with particular impact on public markets for
early-stage biotech companies.
• During the year we have increased the level of scenario planning
and modelling we perform to ensure we monitor our ability to
invest at a higher than planned level into our companies if
necessary. We have also increased the frequency of our internal
meetings to discuss the capital landscape, the potential sources
of capital and the timing of capital required.
• During the financial year our portfolio companies brought
in £394.3 million of capital commitments of which Syncona
contributed £176.9 million.
B
Access to capital
71SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
B
Access to capital continued
Capital pool losses
or illiquidity
The capital pool is exposed to the risk of loss
or illiquidity.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
2
4
IMPACTS
• Loss of capital (or reduction in the value of capital due to inflation).
• Inability to finance life science investments.
• Reputation risk from losses in non-core area.
• Counterparty bank or fund fails and we are unable to recover the
money held by them.
KEY CONTROLS
• Protection against risk and liquidity are key characteristics; return is
a focus to avoid loss of real value, but a secondary consideration.
• Risk parameters monitored monthly by Syncona team, with
enhanced review on a quarterly basis.
• External adviser (Barnett Waddingham) engaged to carry
out quarterly and annual reviews of capital pool against
chosen parameters.
• Cash balances are held at multiple investment grade or equivalent
banks and limited to three months’ forward funding requirements.
• Near-term funding is held in UK and US treasuries.
• Longer-term funding is held across low volatility, highly liquid,
multi-asset funds or mandates.
WHAT HAS HAPPENED IN THE YEAR?
• This risk has increased primarily due to high inflation currently
being experienced alongside volatile capital markets. As a result,
more active management of the capital pool is in place.
• Risk is being managed through a tiered approach to investment.
We are managing liquidity and return within defined volatility and
concentration limits. External advisers are used to evaluate the
markets and providers, and funds are currently spread across
multiple banks, government bonds, and three fund managers
with differentiated diversified investment strategies.
• Macroeconomic and fund performance is reviewed regularly by
the Liquidity Management Committee and reported quarterly to
the SIML and Syncona Limited Boards.
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.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
IMPACTS
• 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.
KEY CONTROLS
• 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 Chief Human Resources Officer.
• 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.
WHAT HAS HAPPENED IN THE YEAR?
• Part of the evolved strategy is an increased focus on people
and capabilities. During the year the SIML CEO transition was
announced and implemented. The Investment, Launch and
Executive and Advisory teams have been built out and the
Corporate teams have been strengthened.
C
People
72 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
IMPACTS
• 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.
KEY CONTROLS
• 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 the effectiveness of systems and controls
carried out by the Audit Committee.
• Anti-fraud, bribery and corruption controls.
• Anti-money laundering controls.
• Whistleblowing arrangements.
WHAT HAS HAPPENED IN THE YEAR?
• Ongoing compliance reviews and reviews of key processes
performed during the year to assess quality, identify efficiencies
and ensure compliance.
Unable to build high-quality
team/team culture
Portfolio companies are reliant on recruiting
highly specialised, high-quality sta 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.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
3
IMPACTS
• Ultimately, failure to deliver key elements of operational plans
resulting in material loss of value.
KEY CONTROLS
• Seek to build high-quality teams in portfolio companies.
This can begin before an investment is made.
• Ensure executive team aims to build a high-quality culture from
the outset, and monitor and support its effectiveness.
• Build strong portfolio company boards (including representatives
from our team and experienced non-execs) to provide effective
oversight and support.
• Support from our team, including taking operational roles where
necessary, and facilitating access to support from across the
portfolio where appropriate, or external consultant resource from
our networks.
WHAT HAS HAPPENED IN THE YEAR?
• The build out of the Executive and Advisory Group to include
experienced subject matter experts during the year enables the
provision of specialist advice thereby differentiating a Syncona
portfolio company.
• As we move further through the clinical pathway with our
companies and execute on our strategy our track record will
continue to strengthen which will attract high-quality people.
73SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
C
People continued
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).
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
1
2
3
IMPACTS
• Ultimately, failure to deliver key elements of operational plans
resulting in material loss of value.
KEY CONTROLS
• 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.
WHAT HAS HAPPENED IN THE YEAR?
• The build out of the Executive and Advisory Group including
experienced subject matter experts during the year enables
specialist advice which aids the identification and resolution of
issues at an early stage and ongoing support to assist in managing
the operational challenges of drug discovery and development.
• During the year we have increased the level of scenario planning
and modelling we perform to ensure we monitor our ability to
invest at a higher than planned level into our companies if
necessary, enabling us to support our portfolio companies through
execution challenges as appropriate.
• We have also increased the frequency of our internal meetings to
discuss the capital landscape, the potential sources of capital and
the timing of capital required.
Macroeconomic environment has a
negative impact on sentiment for portfolio
companies and Syncona business model
The challenging macroeconomic environment
results in investors being highly risk averse.
RELEVANT STRATEGIC DRIVERS YEARONYEAR CHANGE
2
4
IMPACTS
• Investors are focusing on existing portfolios rather than investing in
early-stage biotech companies, therefore Syncona may be required
to invest further capital, leading to greater exposure to individual
companies than desired and less ability to support other companies.
• Inability for portfolio companies to deliver their business plans due
to financing constraints.
• For Syncona, exit opportunities may be less attractive, with
impact on availability of capital to fund portfolio companies.
• A reduction in demand for the Company’s shares would impact
the performance of the Company’s share price.
• Failure to deliver strategy.
KEY CONTROLS
• Ongoing consideration of syndication strategy at portfolio company
level alongside potential partnership and licensing agreements to
extend portfolio companies’ cash runways, maximise value and
minimise dilution when external capital is brought in.
• Syncona team monitor capital allocation on an ongoing basis with a
three-year forward outlook, with transparent reporting to the Board.
• Seek to maintain capital pool of three years’ financing requirements,
although noting this risks being a significant drag on overall returns.
• Regular engagement with shareholders and analysts.
• Maximise potential for Syncona 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 exits.
• Seek to maintain capital buffers to cope with unanticipated
issues before cash out.
• Maintain access to significant capital, to reduce risk of being
forced to syndicate/forced seller.
WHAT HAS HAPPENED IN THE YEAR?
• We have focused capital allocation on clinical opportunities across
the portfolio, maintaining disciplined approach against a challenging
market backdrop.
• We have continued to monitor capital requirements across the
entire portfolio closely, ensuring we consider all options with
regards to future financing, including exit options.
• We have increased the level of scenario planning and modelling
we perform to ensure we monitor our ability to invest at a higher than
planned level into our companies if necessary. We have also increased the
frequency of our internal meetings to discuss the capital landscape,
the potential sources of capital and the timing of capital required.
• We have increased engagement with investors and analysts.
• We have implemented more active management of the capital pool. This
involves managing risk through a tiered approach to investment, and
managing liquidity and return, within defined volatility and concentration
limits. External advisers are used to evaluate the markets and providers and
funds are currently spread across multiple banks, government bonds, and
three fund managers with differentiated diversified investment strategies.
• Macroeconomic and fund performance is reviewed regularly by the
Syncona team, the Liquidity Management Committee and reported
quarterly to the SIML and Syncona Limited Boards.
D
Macroeconomic environment
74 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
VIABILITY STATEMENT
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
2026. 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 18 and 19) and includes longer-term
targets of creating three new companies per
year, developing a portfolio of 20-25 globally
leading healthcare businesses and taking
three to five companies to late-stage
development over a rolling 10-year basis.
The Company does not generate income
on a regular basis and relies on its capital
pool or realisations to fund its investments.
The Company has stated its desire to hold
three 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
69 to 74. 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 Finance team with input from the
wider business, including the SIML CEO,
challenged and reviewed by the Audit
Committee, and approved by the Board.
The Company’s viability testing considers a
base case and a number of stress scenarios.
The base case reflects current and future
investments assuming preferred investment
levels. The table below gives an overview
of the scenarios modelled and the
mapping to the relevant principal risks, with
the overarching risk being that the Company
has insufficient access to cash to fund the
life science companies and its own liabilities.
The reverse stress test 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 three years’
funding for the life science portfolio plus its
expenses. As at 31 March 2023, Syncona
had a net capital pool of £650.1 million, of
which £622.1 million is accessible within 12
months, and expects that investment into the
life science portfolio will be £150 million-£200
million in the current financial year. This year
it was £177.2 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.
Scenario Principal risk mapping
1. Base case: growth plan
Preferred funding pattern for existing portfolio and three
new companies per year over the next three years.
• Not having capital to invest
• Private/public markets don’t value or fund
our companies when we need to access them
• Capital pool losses or illiquidity
2. Defend the existing portfolio
Sources of external funding for our portfolio companies
are not available so Syncona has to participate pro-rata
in future funding rounds. New company set-ups are
deprioritised and/or some existing company financings
are scaled back in this scenario.
• Not having capital to invest
• Private/public markets don’t value or fund
our companies when we need to access them
• Capital pool losses or illiquidity
• Unable to execute business plans
• Macroeconomic environment has negative
impact on sentiment
3. Protect the capital pool
Actively manage investment choices to ensure the
current capital pool extends beyond three years. The
base case growth plan can be achieved for the existing
portfolio but new company set-ups would need to be
reduced and/or some existing company financings
would be scaled back.
• Not having capital to invest
• Private/public markets don’t value or fund
our companies when we need to access them
• Capital pool losses or illiquidity
• Unable to execute business plans
4. Reverse stress test
An assessment to determine what would be required
to deploy all of Syncona’s capital pool in 12 months
indicates that all upcoming financing rounds of
portfolio companies would have to be funded in full by
only Syncona for this to happen, which is considered
highly unlikely.
• Not having capital to invest
• Private/public markets don’t value or fund
our companies when we need to access them
• Macroeconomic environment has negative
impact on sentiment
The Company’s Strategic Report is set
out on pages 1 to 75 and was approved
by the Board on 14 June 2023.
Melanie Gee
Chair
Syncona Limited
75SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
STRATEGIC REPORT
This Corporate governance report,
together with the reports on pages
82 to 95, provides a summary of
the system of governance adopted
by the Company in the year ended
31March 2023 and how the
Company has applied the principles
and reported against the provisions of
the UK Corporate Governance Code.
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, including
employees, 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% of the Company’s NAV).
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, including employees.
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.
Corporate governance report
CORPORATE GOVERNANCE REPORT
At the 2022/23 Strategy
day the Board re-airmed
our fundamental model
of creating companies
around world-leading
science.”
Melanie Gee
Chair
Syncona Limited
76 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
NOMINATION AND GOVERNANCE
COMMITTEE
Responsibilities
• Reviews Board composition and
oversees succession planning.
• Recommends Board re-elections, and
appointments to Board Committees.
• Oversees succession planning
for the CEO and Chair 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
• Kemal Malik
• Gian Piero Reverberi
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.
AUDIT COMMITTEE
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)
• Julie Cherrington
• Virginia Holmes
• Kemal Malik
• Gian Piero Reverberi
REMUNERATION COMMITTEE
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 and Chair.
• Oversees the incentive scheme that
provides long-term rewards to the
Investment Manager’s team.
Members
• Gian Piero Reverberi (Chair)
• Cristina Csimma
• 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 investment strategy.
• Manages Syncona’s investment portfolio in line with the Investment
Policy and the long-term sustainable success of the Company.
• Ensures the culture of the business is in accordance with the
purpose, Investment Policy, strategy and values approved by
theBoard.
• Ensures appropriate resources are available to manage the
investment portfolio and support the Syncona business.
• Reports to the Board on portfolio performance.
• Approves transactions with significant value or
involving borrowing.
• Robustly assesses the principal risks facing the
Company and its risk appetite, and oversees the
risk management process.
• Ensures appropriate engagement with shareholders
and other stakeholders, including employees.
• Sets the Sustainability Policy for the business and
monitors the implementation of the policy.
• Monitors risks and reports to the Board; makes
recommendations in relation to risk appetite.
• Proposes and implements risk and control processes and
reports on these to the Board.
• Engages with stakeholders in line with the approach agreed
by theBoard.
• Implements the Syncona Sustainability Policy.
• Ensures compliance with regulatory obligations of an
investment manager.
THE INVESTMENT MANAGER
THE BOARD
COMMITTEES OF THE BOARD
Our corporate
governance structure
READ MORE P82 READ MORE P86 READ MORE P90
77SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
CORPORATE GOVERNANCE REPORT CONTINUED
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 there were no changes to the Board. All
Directors are considered to be independent.
The Board holds quarterly Board meetings,
along with a Strategy 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 five times
each year 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 Board meetings were held
in-person with Committee meetings using
a mixture of remote and in-person formats,
reflecting the most effective use of time.
STRATEGY AND RISK
At the Board’s Strategy day in September,
we reflected on what had been achieved in
Syncona’s first decade, and our plans for
the next 10 years. The Board re-affirmed our
fundamental model of creating companies
around world-leading science and our
commercial strategy, building the team and
infrastructure, and providing scaled funding
when the risk is appropriate. We also agreed
our ambition to organically grow net assets to
£5 billion by 2032, and the enhanced strategy
to do that including targeting the creation
of three new companies a year as we work
towards a portfolio of 20 to 25 companies, as
more fully described in the Chair’s introduction
to the Annual Report.
At all times the Board is 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. 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 86 to 89). 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.
Following the Strategy day the Board
reviewed the KPIs used to assess the
performance of our business, to ensure
these were aligned with our ambition and
the Investment Manager’s operating model.
Updated KPIs reflecting this discussion will
be reported in next year’s Annual Report.
THE SYNCONA TEAM
A key development in the year was the
change to the Investment Manager’s
leadership, with Chris Hollowood taking on
the role of CEO of the Investment Manager,
and Martin Murphy remaining Chair of the
Investment Manager and a member of its
Investment Committee. These changes
were approved by the Board after careful
consideration of succession options, working
with support from specialist recruitment and
leadership advisers. The Board considered
that these changes were right to provide the
Company with the leadership and resources
it needs to deliver the enhanced strategy
over the next 10 years. The Board also
discussed other changes to the Investment
Manager’s operating model and resources
to support it to deliver the strategy.
The Board recognises the importance of
ensuring that the Company’s culture (and the
culture of the Syncona team) is aligned with
its purpose and strategy. This is particularly
important at a time of change in the leadership
of the Investment Manager, as we seek to
scale the business and operating model to
deliver our 10-year ambitions. During the year
the Investment Manager carried out an
Employee Engagement Survey, the results
of which were considered by the Board at
its March meeting. Key themes included
significant pride in Syncona’s work and
purpose and the potential for patient impact,
and strong respect for team members. A
number of areas have been identified for
further work, including ensuring everyone felt
able to challenge, clearer development and
career progression, and supporting cross-
function teamwork. The Investment Manager’s
leadership team is taking forward a series of
actions to address the issues and these will
be monitored by the Board over the next year.
BOARD ATTENDANCE 2022/23
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 (Chair) 8/8 – 4/4 5/5
Julie Cherrington 8/8 3/3 – –
Cristina Csimma 8/8 – – 4/4
Virginia Holmes 7/8
1
5/5 4/4 5/5
Rob Hutchinson 8/8 5/5 4/4 5/5
Kemal Malik 8/8 5/5 2/2 –
Gian Piero Reverberi 8/8 5/5 4/4 5/5
1. Virginia Holmes was unable to attend an ad hoc Board meeting in February 2023 due to illness.
78 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Gian Piero Reverberi is the designated
Director for engagement with the team of
the Investment Manager. In that capacity
Gian Piero has been engaged with the
outcomes of the Employee Engagement
Survey, and a series of follow-up meetings
with the team are to be scheduled over the
coming year which will support the Board in
its oversight. The Board also engages with
the Syncona team in other ways, and further
details are set out on pages 40 to 43.
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
ofthe Audit Committee.
OTHER STAKEHOLDERS
The Board also holds responsibility for
overseeing the effective engagement with
other stakeholders to ensure that their
interests are considered, and reviews this
every year. As part of its review this year the
Board noted the increased focus of the
Syncona team on access to capital for our
portfolio companies, in the face of more
challenging financing markets for early-stage
life science businesses, and agreed that it
should increase its focus on the investors
and partners who are the most likely
third-party source of that capital and treat
them as a key stakeholder. The Board also
considered how it should best seek to
engage with patient groups, and agreed this
was best done through its engagement with
portfolio companies that typically have those
direct relationships. Further details around
engagement with stakeholders are set out
on pages 40 to 43.
The Board recognises the wider economic
concerns affecting stakeholders, particularly
in relation to cost of living and inflationary
pressures. Given the current status of the
portfolio companies, the Board does not
consider these are material issues affecting
our key stakeholders at this present time,
but expects to keep this under review.
ENGAGEMENT 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 the investor relations team and
our advisers at every Board meeting. During
the year and after the interim results were
announced, 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. Topics discussed included market
conditions for early-stage life companies, the
management transition within the Investment
Manager, and implementation of the strategy.
The feedback was supportive of our
long-term strategy and the Investment
Manager’s team in executing this.
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, 49 presentations
were made to shareholders and potential
shareholders by senior members of the
Investment Manager’s team during the year.
Members of the Board, particularly the Chair,
Senior Independent Director and Chair of
each of the Committees, are also available to
meet shareholders on any issues that arise.
SUSTAINABILITY
The Company has adopted a formal
Sustainability Policy and Responsible
Investment Policy, which are overseen by
the Board, with regular reports from the
Investment Manager on implementation.
During the year the Board reviewed the
policies and updated them, principally to
extend the Responsible Investment Policy
to describe how this applies to our capital
pool and other life science investments.
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, are the most significant way in
which the Company can seek to 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 of sustainability matters,
including our approach to governance,
are set out on pages 48 to 61.
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
or otherwise.
UK CORPORATE GOVERNANCE CODE
COMPLIANCE STATEMENT
The Company has complied with the
relevant provisions of the 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.
79SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
DATE OF APPOINTMENT
1 January 2020 as Chair
(4June 2019 as Director)
COMMITTEE MEMBERSHIP
N
R
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 and 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 Grosvenor Property UK
• Sits on advisory groups for
two private family offices
DATE OF APPOINTMENT
1 February 2022
COMMITTEE MEMBERSHIP
A
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 BS in biology and
an MS in microbiology from the
University of California, Davis. She
earned a PhD 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)
• Venture Partner at Brandon Capital
• Non-Executive Director of a
number of other early-stage
private life science companies
DATE OF APPOINTMENT
1 February 2022
COMMITTEE MEMBERSHIP
R
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
Aceragen, Inc. (NASDAQ: ACGN)
MELANIE GEE
Chair
JULIE CHERRINGTON
Non-Executive Director
CRISTINA CSIMMA
Non-Executive Director
A diverse Board taking a long-term view
BOARD OF DIRECTORS
BOARD GENDER DIVERSITY
BOARD ETHNIC DIVERSITY
BOARD TENURE
0-2 years 29%
2-4 years 57%
4-6 years 14%
6+ 0%
57%
Female
14%
Person of colour
43%
Male
80 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
DATE OF APPOINTMENT
1 January 2021
COMMITTEE MEMBERSHIP
A
N
R
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 brings a wide
range of non-executive director
experience of UK listed companies.
She is also a current and past chair
and trustee of a number of pension
funds and a founder director of the
Investor Forum.
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
• Non-Executive Director of Murray
International Trust plc
DATE OF APPOINTMENT
1 November 2017
COMMITTEE MEMBERSHIP
A
N
R
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
DATE OF APPOINTMENT
15 June 2020
COMMITTEE MEMBERSHIP
A
N
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
BayerAG, 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
DATE OF APPOINTMENT
1 April 2018
COMMITTEE MEMBERSHIP
R
A
N
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
VIRGINIA HOLMES
Senior Independent Director
ROB HUTCHINSON
Non-Executive Director
KEMAL MALIK
Non-Executive Director
GIAN PIERO REVERBERI
Non-Executive Director
Director responsible for
engagement with team
COMMITTEE MEMBERSHIP
A
Audit
N
Nomination and Governance
R
Remuneration Committee
Chair
81SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
I am pleased to present the work of the
Nomination and Governance Committee
in the year ended 31 March 2023.
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;
• oversee succession planning for the CEO
and Chair of the Investment Manager;
• 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
earlier this year to add responsibility for succession
planning for the CEO and Chair of the Investment
Manager, and the Committee reviewed its performance
against them this year. The current version is available
on the Company’s website synconaltd.com.
The Committee’s members in the year were as per the table below:
MEETINGS ATTENDED
Melanie Gee (Chair) 4/4
Virginia Holmes 4/4
Rob Hutchinson 4/4
Kemal Malik (appointed to the Committee on 1 July 2022) 2/2
Gian Piero Reverberi 4/4
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 Kemal Malik
joined the Committee.
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 to deal with ongoing matters between meetings.
Defining the shape of the Board
REPORT OF THE NOMINATION AND GOVERNANCE COMMITTEE
The Committee will continue to
evaluate Board membership in
line with its succession planning
process, and any changes to
the needs of the Company.”
Melanie Gee
Chair of the Committee
82 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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 on
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 has also approved a Board
Diversity Policy (set out on page 85).
Diversity covers a range of aspects,
including personal characteristics such
as gender or race, ways of thinking or
geographical location and experience. The
policy seeks to ensure that the Board, and
its Committees, bring a broad strategic
perspective, based on an inclusive culture
that recognises and values the advantages
of a diverse range of people.
Further considerations in Board succession
planning include identifying individuals to
take on key Board roles such as Committee
chairs and considering the arrangements if a
Director becomes unexpectedly unavailable.
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, and the overall mix of lengths
of service of the Board as a whole.
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 for the Board 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.
The Committee’s responsibilities were
expanded during the year to add
responsibility for succession planning for
the CEO and Chair of the Investment
Manager. As described in the Corporate
governance report, the Board itself
considered the changes to those roles
that took place this year. The Committee
intends to give further consideration
to longer-term succession planning
arrangements for these roles.
BOARD COMPOSITION
There were no changes to Board
composition in the year, which was in line
with the Committee’s expectations at the
beginning of the year, and has allowed the
Board a period to consolidate relationships
following a period of significant Board
change. The Committee 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 tables on page 85 provide
further details of diversity of the Board and
the leadership team of the Investment
Manager, as at 31 March 2023. The data
was collected using a self-assessment
questionnaire reflecting the categories set
out in the table, which each of the relevant
individuals was requested to complete.
The Company has met the following
targets on Board diversity as at that date:
i. At least 40% of the individuals on the
Board are women.
ii. At least one of the following senior
positions on the Board is held by a
woman: (A) the Chair or (B) the Senior
Independent Director (as the Company
is an investment company and does
not have Executive Directors, the role
of Chief Executive or Chief Financial
Officer is not relevant to it).
iii. At least one individual on the Board
is from a minority ethnic background.
There are no changes to the Board since
31March 2023 that affect these targets.
The Committee 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 1 August 2023.
During the year the Committee, led by the
Senior Independent Director, considered my
reappointment as Chair of the Company for
a second three-year term. I was pleased to
receive the support of my colleagues to be
reappointed from 1 January 2023.
The Committee also reviewed other Board
roles including Committee memberships,
and recommended a number of changes
in those roles to the Board, which were
approved. This review included considering
the diversity of each Committee. 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. The Committee also considered
arrangements in the event of a Director
becoming unexpectedly unavailable.
The Committee has now begun to
consider future Board recruitment.
Rob Hutchinson will reach six years on
the Board later this year and, while the
Committee has recommended that he is
reappointed for a third three-year term,
the Committee anticipates that it will in
due course begin a search for an additional
Director with accounting and valuation
experience, who could potentially take on
the role of Chair of the Audit Committee
when Rob Hutchinson retires. In addition,
the Committee will continue to evaluate
Board membership in line with its
succession planning process, and any
changes to the needs of the Company.
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.
As set out in the Committee’s report last
year, in 2021/22 the Committee agreed
that an in-depth externally facilitated
evaluation would be carried out in 2022/3,
once the new Board composition had
become more established. In line with
that, the evaluation was externally
facilitated by Ffion Hague, founder of
Independent Board Evaluation, who has
no other connection with the Company.
83SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
A comprehensive brief was given to the
assessment team by the Chair and the
Investment Manager’s General Counsel in
spring 2023. The lead evaluator observed
main Board and Committee meetings in
March and support materials for briefing
purposes were provided by the Company.
Subsequently, detailed interviews were
conducted with every Board member.
All participants were interviewed for 1½
hours according to a set agenda, tailored
for the Board. In addition, senior members
of the Investment Manager’s team were
interviewed. Draft conclusions were
discussed with the Chair, and a report
on the main Board and Committees was
subsequently discussed with the Board
at meetings on 5 and 13 June 2023 with
Ffion Hague present. The conclusions
of that discussion are recorded in the
minutes of the meetings. In addition, the
Chair received a report with feedback on
individual Directors’ performance as an
input to the regular annual performance
review process, and the Senior
Independent Director received a report
with feedback on the Chair’s performance.
The outcome of the review was positive,
while noting that the Board was still in
transition after the changes of the past
two years. Key points included:
• The Board itself has a fair and
consistent view of its own effectiveness.
Directors commented positively on
Board culture, with full encouragement
to speak up, and mutual respect
between Board members and the team
of the Investment Manager.
• Board members agree that the Board
should focus on strategy, oversight of
the business and top talent, directing
the Board’s focus to mitigating the
volatility of the years ahead.
• In light of the evolved strategy, the
Board wanted to review and update
metrics and KPIs to ensure continued
effective oversight of the business,
something which was supported by the
senior team of the Investment Manager.
There was also strong confidence from the
Board in the performance of all three Board
Committees and no major issues were
raised with regard to their performance.
A number of recommendations were made
to reflect these points, including:
• Continue to focus the Board agenda,
to maximise the time to review business
performance and to debate major issues.
• Ensure the updated KPIs and risk
metrics continue to support the Board
to focus on portfolio-wide issues and
the most material risks.
The Board is supportive of these
recommendations and intends to take
them forward over the next year.
Alongside the Board evaluation, Virginia
Holmes as Senior Independent Director led
the appraisal of the Chair’s performance,
taking account of the feedback from
Directors. 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 2021/22 evaluation to
ensure this has been acted upon:
• Develop the Board’s engagement and
focus on key stakeholders, including the
impact of what we do on patients. The
Board discussed this during the year
and agreed further steps in relation to its
engagement with stakeholders, as set
out in the Corporate governance report.
• Continue to support the Investment
Manager’s team as they scale the
business, ensuring that the culture of
Syncona supports effective strategy
execution. This has been a core activity
for the Board during the year as it
considered the evolved strategy and
changes to the Investment Manager’s
leadership team and operating model.
Further details are also set out in the
Corporate governance report and in the
Chair’s introduction to the Annual Report.
REPORT OF THE NOMINATION AND GOVERNANCE COMMITTEE CONTINUED
DIRECTOR SHAREHOLDING
REQUIREMENTS
During the year, the Committee considered
whether to introduce a minimum
shareholding guideline for Directors. This
review took account of views of shareholder
groups and a review of market practice.
Following the review, the Committee
adopted guidance for Directors that
encourages them to acquire and hold
shares in the Company at an appropriate
level. However, the Committee recognised
that each Director’s individual situation is
different and therefore the decision is one
for each Director.
COMMITTEE EVALUATION AND
EFFECTIVENESS
During the year, the Committee completed
its annual review of effectiveness, and
concluded that it had performed its
responsibilities effectively. The Committee
also considered the findings of the
externally facilitated Board evaluation
as it related to the Committee.
While the Committee does not consider that
there are any matters within its responsibilities
on which it should consult with shareholders,
the Committee Chair is available to respond
to any questions on matters not addressed
in this report.
Melanie Gee
Chair of the Committee
14 June 2023
84 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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.
DATA ON DIVERSITY OF THE BOARD AND EXECUTIVE MANAGEMENT
For reporting purposes we have treated the leadership team of the Investment Manager as executive management,
although they are not employees of the Company.
GENDER
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(Chair and SID)
Number in
executive
management
Percentage
of executive
management
Men 3 43% 0 4 57%
Women 4 57% 2 3 43%
Not specified /
preferred not to say
– – – – –
ETHNIC BACKGROUND
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(Chair and SID)
Number in
executive
management
Percentage
of executive
management
White British or other
White (including
minority white groups)
6 86% 2 7 100%
Mixed / multiple
ethnic groups
– – – – –
Asian / Asian British 1 14% – – –
Black / African /
Caribbean / Black
British
– – – – –
Other ethnic group
(including Arab)
– – – – –
Not specified /
preferred not to say
– – – – –
BOARD DIVERSITY POLICY ADOPTED JUNE 2022
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
1
on the Board.
1. 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.
85SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
Robust oversight of valuation and risk
REPORT OF THE AUDIT COMMITTEE
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 investments.”
Rob Hutchinson
Chair of the 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.
ROLE OF THE COMMITTEE
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.
The Committee’s members in the year were as per the table below:
MEETINGS ATTENDED
Rob Hutchinson (Chair) 5/5
Julie Cherrington (appointed to the Committee on 1 July 2022) 3/3
Virginia Holmes 5/5
Kemal Malik 5/5
Gian Piero Reverberi 5/5
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
Julie Cherrington joined the Committee.
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 are also 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, as well as the meeting when the independent
valuation expert meets with the Committee. 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.
86 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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 Neogene. In total, the Group holds a life
science portfolio with a fair value of £604.6
million (2022: £524.9 million) through Syncona
Portfolio Limited (a wholly owned subsidiary
of Syncona Holdings Limited), £32.8 million
(2022: £28.2 million) in respect of the CRT
Pioneer Fund through Syncona Discovery
Limited (a subsidiary of Syncona Investments
LP Incorporated) and £54.5 million (2022:
£49.8 million) attributable to milestone
payments that may become payable to
Syncona Portfolio Limited, subject to certain
milestones, on the sale of former life science
portfolio companies.
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
investments. 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 Auditor’s report on pages 100 to 105.
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) 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. Details of the valuation
methodology and accounting treatment
applicable to the milestone payments
(deferred consideration) are also disclosed
in note 2. 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 106. 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.
Valuations are prepared by the Investment
Manager in line with the Valuation Policy
and a key part of the Committee’s role is
to ensure that the Investment Manager’s
judgements are challenged appropriately.
As part of this, the Committee discusses
the appropriateness of the valuation
methodology chosen by the Investment
Manager in determining the fair value of
unquoted investments, and 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. For particular investments the
Committee instructs an independent valuation
expert to provide their own view of the
valuation to assist with this, and has a
separate meeting with the valuation expert to
discuss and understand those views, which in
turn support the Committee’s challenge of the
Investment Manager. In the current year the
Committee has particularly challenged the
Investment Manager’s change in valuation
of the investment in SwanBio Therapeutics
Limited that was triggered by the restructuring
of that business, as described in note 21,
including challenging the trigger, proposed
valuation approach and resulting valuation.
The Committee has also challenged whether
public market valuation reductions in the
year and the challenging macroeconomic
market conditions impacting the financing
environment for early-stage private companies
should impact the Investment Manager’s
valuation of the unquoted companies within
the life science portfolio. It has also taken input
from the independent valuation expert on the
wider cell therapy market and the appropriate
weighted average cost of capital for
early-stage life science companies.
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 change in valuation
of the investment in SwanBio, where the
Committee discussed with the Independent
Auditor how it had gained comfort over
the Investment Manager’s judgement.
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
2023 was £2.5 million (31 March 2022:
£2.9 million) and the liability related to the
cash settled element at 31 March 2023 was
£7.3 million (31 March 2022: £17.8 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
in note 2. The valuation of the incentive
scheme in accordance with IFRS 2 does
not affect its value to employees of the
Investment Manager.
The Committee reviews the valuation and
met with PwC during the year to discuss
the methodology adopted in the model.
The Committee challenges the Investment
Manager on key judgements that have been
made, such as key assumptions associated
with the valuation methodology. 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.
87SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
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 reappointed at the
Company’s Annual General Meeting
(AGM) on 2 August 2022 for the current
financial year. Marc Cleeve is the lead
audit partner and opinion signatory.
The Committee held formal meetings with
Deloitte, and the Chair also met informally 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 substantially
concluded to discuss any significant issues;
and 3) to consider and discuss the interim
condensed Consolidated Financial Statements.
The Committee is closely engaged with
overseeing the Independent Auditor to
ensure the effectiveness and independence
of the audit. The Committee:
• 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;
• discussed key elements of audit quality with
the Independent Auditor, particularly around
behaviours and mindset, relevant experience
of the team, use of specialists and
demonstration of scepticism and challenge;
• reviewed and discussed the audit findings
report and challenged them on their
process and conclusions, in particular
around valuation methodologies,
valuation components and valuation
outcomes (see above for further details);
• monitored changes to audit personnel;
• sought feedback from the Investment
Manager on the audit process, based on
their ongoing monitoring of it, including
factors that could affect audit quality and
how any risks identified were addressed;
• reviewed the Independent Auditor’s
reporting against certain indicative audit
quality indicators;
• reviewed and approved the terms of
engagement during the year, including
review of the scope and related fees;
• reviewed the non-audit services
performed and fees charged by the
Independent Auditor during the year;
• 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 2021/2022 cycle of reviews;
• discussed if any relationships existed
between the Independent 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.
The Committee carried out an evaluation
of the performance, independence and
objectivity of the Independent Auditor
taking account of all of these factors.
There were no significant adverse findings, or
any issues faced in relation to the financial
statements, from the evaluation this year
and the Committee is satisfied that the audit
process is effective and that the Independent
Auditor is independent and objective.
The table below summarises the
remuneration paid by the Group to Deloitte
for audit and non-audit services provided:
31 March
2023
£’000
31 March
2022
£’000
Audit services
Audit services 125.1 98.0
Audit fee for Syncona
Group companies 142.7 112.0
Non-audit services
Interim review 36.2 30.0
CASS limited assurance
report for SIML 8.0 8.0
Subscription for
accounting research tool 1.0 1.0
In accordance with the non-audit services
policy, non-audit services must be on the
‘white list’ included in the policy. Further,
permitted non-audit services in excess of
£15,000 require prior approval from the
Committee before being undertaken by
the Independent Auditor.
The Committee does not consider that the
non-audit services provided are a threat
to the objectivity and independence of the
audit, taking into account that the fees
were insignificant to the Group as a whole,
representing 14.4% of the total audit fee, and
when required a separate team was utilised.
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 Independent Auditor.
REPORT OF THE AUDIT COMMITTEE CONTINUED
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 described in the
Committee’s report last year, the Committee
carried out a competitive audit tender process
during summer 2021 for the appointment
of the Independent Auditor for the financial
year ended 31 March 2023 onwards, and
recommended Deloitte’s reappointment.
The Committee remains satisfied with
Deloitte’s effectiveness and independence
and accordingly considers it in the best
interests of shareholders to complete a
competitive tender process for the audit
before the financial year ended 2033.
Accordingly, the Company has complied
with the requirements of the Order that
audit work is tendered at least every 10
years and will comply with the requirement
that the auditor is rotated at least every 20
years. Notwithstanding these plans, the
Committee will continue to consider the
tender of the audit annually depending on
the Independent Auditor’s performance
and to ensure it meets the best interests
of the shareholders.
The Committee has noted the recent
publication of the FRC’s ‘Audit Committees
and the External Audit: Minimum Standard’
and intends to review its procedures in the
coming year to ensure these are aligned.
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.
During the year the Committee carried out a
review of the Company’s principal risks, taking
account of changes to the internal and
external environment, including our updated
strategy, economic uncertainty, inflation, rising
interest rates, availability of capital, erratic
capital markets, changing value of sterling, a
tightening labour market, and the current
political situation including the Russia-Ukraine
conflict. The Committee noted the increased
risk relating to access to capital, reflecting the
current macroeconomic environment, and
discussed the direction of travel of other risks.
88 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
Following the review by the Committee, and
taking into account feedback from the Board,
Committee and Investment Manager, the
principal risks were recategorised under
portfolio companies, access to capital,
people, and macroeconomic environment, to
better reflect how we think about the business
and manage the risks. A new principal risk
was also added to reflect the potential for
the macroeconomic environment to impact
on the Company’s business model. Further
details are given on pages 66 to 74.
As part of the effectiveness review, the
Committee also reviewed the control
framework, including 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 controls review includes
the risk events and breaches that occurred in
the year and the actions taken in response to
them. 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 further
discussed the implementation of an Audit
and Assurance Policy for the Group, and
agreed to monitor developments, including
proposed changes to the UK Corporate
Governance Code and other steps being
taken to implement the UK Government’s
reforms to audit and corporate governance.
During the year, the Committee reviewed
its previous assessment 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, and confirmed it
remained appropriate. The Audit Committee
intends to monitor this matter each year.
GOING CONCERN AND VIABILITY
ASSESSMENT
The Committee assesses going concern
and viability each year.
Given the Group’s capital pool of
£650.1 million, of which £629.4 million
are liquid assets, the Committee does not
consider any material uncertainties arise in
relation to the Company’s ability to continue
as a going concern for the next 12 months.
The Committee also carefully reviewed the
Investment Manager’s view of the Company’s
viability for the three-year period ending
31March 2026, including the rationale for
assessing viability over a three-year period.
The testing of viability involved the analysis
of base case and severe combined stress
projected forwards over this three-year period
by reference to current investment
assumptions. The Committee noted that
the Company can 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 realising assets,
and that the portfolio is actively managed on
this basis. Following the review the Committee
recommended that the Company make its
viability statement as set out on page 75.
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.
The Committee also considered the findings
of the externally facilitated Board evaluation
as it related to the Committee.
During the year the Company received the
FRC Corporate Reporting Review team’s
review of the 2022 Annual Report. The
Committee was pleased that no questions
or queries were raised, and has considered
the matters identified by the review in the
preparation of this Annual Report.
While the Committee does not consider
that there are any matters within its
responsibilities on which it should consult
with shareholders, the Committee Chair
attends each AGM and is otherwise
available to respond to any questions
on matters not addressed in this report.
CONCLUSION AND RECOMMENDATION
After discussing with the Investment Manager
and Independent Auditor and assessing the
Significant Financial Statement matters listed
on page 87, 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 further concludes, having
carefully reviewed the Annual Report, and
discussed with the Investment Manager
and Independent Auditor, that the Annual
Report, taken as a whole, is fair, balanced
and understandable and provides 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. 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 reappointment is subject to
shareholder approval at the 2023 AGM.
Rob Hutchinson
Chair of the Committee
14 June 2023
89SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
Overseeing our approach
to remuneration
REPORT OF THE REMUNERATION COMMITTEE
The Committee is satisfied that
the approach to remuneration
and incentive scheme are
appropriate to align the team
of the Investment Manager
with the Company’s strategy.”
Gian Piero Reverberi
Chair of the Committee
I am pleased to introduce the remuneration
report for the year ended 31 March 2023, which
sets out the work performed by the Committee.
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 and the Chair 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.
The Committee’s members in the year were as per the table below:
MEETINGS ATTENDED
Gian Piero Reverberi (Chair from 1 January 2022) 5/5
Cristina Csimma (appointed to the Committee on 1 July 2022) 4/4
Melanie Gee 5/5
Virginia Holmes 5/5
Rob Hutchinson 5/5
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
Cristina Csimma joined the Committee.
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.
90 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
During the year, PwC provided the
Committee with an update on the
remuneration landscape for listed
companies, and also provided advice to
support the Committee’s work in
reviewing the remuneration of the CEO
and Chair of the Investment Manager. 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 £93,000
(excluding VAT) (2022: £22,500 (excluding
VAT)). PwC also separately advise the
Company and the Investment Manager on
various matters, including the valuation,
accounting treatment and process relating
to the issue of awards under the incentive
scheme, transaction due diligence and tax
advice, tax compliance, and processes
and controls, but do not have any other
connection with the Company or
individual Directors.
REMUNERATION POLICY FOR
NONEXECUTIVE 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 94.
The Committee has reviewed the
Remuneration Policy and concluded it
remained appropriate for the Company.
Given the scope of the Remuneration Policy
no shareholder views were sought in this
review, although any comments received
from shareholders will be considered on
an ongoing basis. Although the Company
is not subject to the laws of England and
Wales, it will submit the Remuneration
Policy for approval by shareholders at its
AGM on 1 August 2023.
The Committee will continue to review the
Remuneration Policy annually to ensure that
it remains appropriate.
As reported in the Committee’s report last
year, the Committee approved changes
to the fees paid to the Chair of the Board
and to Non-Executive Directors with effect
from 1 April 2022 and the amounts
included in this report include those
changes. These changes were made to
ensure the fees remain appropriate to
recruit high-quality directors with
appropriate skills and other attributes,
and fairly remunerate them for the work
performed, and took account of
benchmarking against comparable peer
groups, and 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.
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 in the next
section, and the remuneration policy and
remuneration of the Investment Manager’s
CEO and Chair, as described below.
During the year the Committee reviewed
and approved the remuneration and
objectives of the CEO of the Investment
Manager. It then carried out a more
substantive exercise to review the
remuneration and objectives of the CEO
and Chair of the Investment Manager
as part of the Board’s discussions of a
potential change of leadership of the
Investment Manager, as discussed in
the Corporate governance report. PwC
provided the Committee with advice and
benchmarking data to support its work.
The Committee also 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 95. The Committee is satisfied
that the approach to remuneration and
incentive scheme are appropriate to align
the team of the Investment Manager with
the Company’s strategy.
The Committee considers 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 and so the existing incentive
structures already align the team with
delivering a positive impact on society. In
addition, part of the Syncona team’s annual
objectives relate to implementation of our
wider sustainability policies and these feed
into performance and bonus assessments.
The Committee continues to monitor the
appropriateness of further sustainability
metrics for remuneration.
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 95.
91SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
As described in the Committee’s report last year, the Committee
now only approves individual awards for specific senior members
of staff of the Investment Manager (the CEO and Chair) and has
delegated authority to approve individual awards for other staff to
the Investment Manager, within designated bands. In line with its
normal practice the Committee approved awards in July 2022.
The Committee carried out a review of the terms and operation of
the incentive scheme during the year. 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. The
Committee agreed that employees should be able to participate in
the incentive scheme through options as an alternative to being
issued with Management Equity Shares (in line with certain existing
provisions of the incentive scheme).
The Committee also noted that the last year in which awards can
be made under the scheme is 2026, and anticipates that it will carry
out a fuller review of the scheme before that time, to allow sufficient
time for shareholder consultation and implementation.
COMMITTEE EVALUATION
AND EFFECTIVENESS
During the year, the Committee completed its annual review
of effectiveness, and concluded that it had performed its
responsibilities effectively.
While the Committee does not consider that there are any
matters within its responsibilities on which it should consult
with shareholders, the Committee Chair is available to respond
to any questions on matters not addressed in this report.
REPORT OF THE REMUNERATION COMMITTEE CONTINUED
REPORT ON IMPLEMENTATION OF THE REMUNERATION POLICY
FOR NONEXECUTIVE 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, except that 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.
The Committee anticipates carrying out a routine review of the fees
paid to the Chair and Non-Executive Directors during next year, to
ensure they remain appropriate to recruit high-quality directors with
appropriate skills and other attributes, and fairly remunerate them
for the work performed. Other than that review, 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 £125,000
Director £50,000
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
Travel time allowance £2,500 additional allowance
for each meeting attended
outside the Director’s
continent of residence
The fee paid to each Director is set out in the single total figure
table on page 93.
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 on page 93 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.
92 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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.
Non-Executive Directors are engaged under Letters of Appointment,
copies of which are available for inspection at the Company’s
Registered Office. None of the Directors has a service contract with
the Company and, accordingly, the Directors are not entitled to
any compensation in the event of termination of their appointment
or loss of office, other than the payment of any outstanding fees.
SINGLE TOTAL FIGURE TABLE AUDITED INFORMATION
For the year to 31 March 2023, the fees for Directors were as follows:
For the
year ended
31 March 2023
£’000
For the
year ended
31 March 2022
£’000
Melanie Gee (Chair) 125 100
Julie Cherrington
1
61 10
Cristina Csimma
1
58 10
Thomas Henderson
2
– 0
Virginia Holmes 65 53
Rob Hutchinson 76 63
Nigel Keen
3
– 34
Kemal Malik 55 50
Nicholas Moss
4
– 49
Gian Piero Reverberi 60 52
Total 499 419
1. Julie Cherrington and Cristina Csimma were appointed to the Board on 1 February 2022.
Julie and Cristina are each resident in the USA and the amounts paid to them include
payment of the travel time allowance for travel to Board meetings in the UK.
2. Thomas Henderson retired from the Board on 3 August 2021. Tom had waived his right to
receive fees.
3. Fees paid to Imperialise Limited, a company controlled by Nigel Keen. Nigel retired from the
Board on 31 December 2021. In addition, Nigel 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. Nigel also retired as Chair of the Investment
Manager on 31 December 2021; following his retirement he received a payment from the
Investment Manager 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 by
the Company in the year. No payments to past Directors have
been made by the Company in the year.
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 2023 or future years.
For the year ended
31 March 2023
£’000
For the year ended
31 March 2022
£’000
Difference
£’000
Total Directors’ pay 499 419 80
Dividends 0 0 0
Directors’ pay as a %
of distributions to
shareholders N/A N/A –
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, although the Company encourages Directors to
consider holding shares. The interests of the Directors and their
connected persons in the equity securities of the Company at
31 March 2023 are shown in the table below:
Ordinary Shares
31 March 2023 31 March 2022
Melanie Gee (Chair) 76,500 76,500
Julie Cherrington – –
Cristina Csimma – –
Virginia Holmes 38,000 38,000
Rob Hutchinson 94,827 94,827
Kemal Malik 11,475 11,475
Gian Piero Reverberi 50,000 50,000
Gian Piero Reverberi
Chair of the Committee
14 June 2023
RESULTS OF THE VOTING AT THE 2022 AGM
At the 2022 AGM, shareholders approved the remuneration report that was published in the 2022 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 463,065,971 99.68% 1,475,563 0.32% 28,620 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 1 August 2023.
93SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
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 amount
determined in accordance with the Company’s Articles of
Incorporation (currently £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.
REPORT OF THE REMUNERATION COMMITTEE CONTINUED
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 under 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.
There are no changes in the elements above relative to the previous Remuneration Policy.
REMUNERATION POLICY
This is the Remuneration Policy for the Non-Executive Directors of the
Company which will be submitted for approval by shareholders at the
Company’s Annual General Meeting to be held on 1 August 2023.
The Remuneration Policy set out below will apply from the date of
approval until it is next put to shareholders for approval, which will
be at the Company’s Annual General Meeting in 2026 or sooner if
it is proposed to vary the Remuneration Policy. If it is not approved
then the previous Remuneration Policy will continue to apply.
94 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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.
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 normally 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 (which are in turn linked to
delivery of strategy, in line with the
Company’s purpose and values) 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
approximately 13 per cent of 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 to MES realisations, 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 increased by a total of £500
million, of which £729 million is a realised gain.
As an alternative, since the MES awards
made in 2022 employees have been
offered the alternative of being awarded
nil cost options to acquire MES. These
have the same economic characteristics
as holding MES, but are expected to be
taxed differently for UK taxpayers.
In the 12 months to 31 March 2023 the
following payments were made as a result
of realisations of MES:
• In July 2022, a cash payment of £9.1
million was made to MES holders (total
since December 2016: £27.9 million).
• In July 2022, 2,595,736 Ordinary
Shares were issued to MES holders
(valued at £5.1 million at the time of
issue); these shares are subject to a
12-month lock-up (total since December
2016: 7,267,761 shares valued at
£15.8 million at the time of issue).
• At 31 March 2023: 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 £7.3 million
(see note 12). Of that amount, a
maximum of £7.3 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
3,487,581 (taking account of all MES,
whether vested or not vested, and
based on the share price at 31 March
2023 of £1.48/share), equal to 0.52 per
cent of the number of Ordinary Shares
in issue at that date. Of those shares,
a maximum of 3,106,382 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.
95SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
The Directors present their Annual Report and audited
Consolidated Financial Statements for the year ended
31 March 2023, 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 98. This includes a
non-material amendment made by the Board of Directors on
13June 2023 to take effect on publication of this Annual Report.
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. The amount
of the fee was previously limited to a maximum of 1.05 per cent per
annum of the Company’s NAV, but as previously announced the
Company and the Investment Manager agreed to remove that limit in
November 2022. In addition, the Company has in place an incentive
scheme that provides long-term rewards to employees of the
Investment Manager. Further details of the incentive scheme are set
out in the Remuneration Committee report on page 95.
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 2023 totalled
£12.1 million (2022: £10.7 million); 0.93 per cent of NAV for the
12 months (2022: 0.82 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 0.88 per cent (2022: 0.48 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 93.
DIRECTORS’ REPORT
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.
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 2023, the Company had 669,329,324 nil paid
Ordinary Shares in issue. No shares were held in treasury. The total
number of voting rights at 31 March 2023 was 669,329,324. 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 2023, the Company had 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 27.79
Schroders plc 33,488,292 5.00
BlackRock, Inc 34,677,487 5.18
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 107.
No dividend was declared in the year ending 31 March 2023
(31March 2022: £0.00), and the Company does not intend to
declare a dividend in relation to the year ended 31 March 2024
or in future years.
96 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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 £1,254.7 million (31 March 2022: £1,309.8 million) of which
£629.4 million (31 March 2022: £764.7 million) are readily realisable
within three months in normal market conditions, and liabilities
including uncalled commitments to underlying investments and funds
amounting to £89.2 million (31 March 2022: £88.5 million).
Given the Group’s capital pool of £650.1 million (31 March 2022:
£784.9 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 the war in Ukraine and
the ever-changing macro environment, including inflationary
pressures, 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 Frances House, Sir William Place, St Peter
Port, Guernsey, GY1 1GX on 1 August 2023 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), all of which is donated to
The Syncona Foundation which in turn makes grants to selected
charities. The Company expects to make the donation calculated
by reference to the year ending 31 March 2023 during July 2023.
Further details of the Company’s charitable donations are set out in
the Sustainability Review in the Strategic Report on pages 48 to 61
and in the Company’s separate Sustainability Report, available
on its website.
STAKEHOLDERS, EMISSIONS AND OTHER MATTERS
For stakeholder information, see Engaging with 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 note 17 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
2024 and to authorise the Directors to determine their remuneration
will be proposed at the Annual General Meeting.
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
Syncona Limited
14 June 2023
97SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
INVESTMENT POLICY
1
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 20 to 25 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.
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.
DIRECTORS’ REPORT CONTINUED
1. Effective from the date of publication of this Annual Report. The prior policy has been
amended to update the third paragraph under Life Science Investments to refer to a
portfolio of 20 to 25 life science opportunities (previously 15 to 20 life science opportunities).
98 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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.
The Companies 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 the Companies 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 14 June 2023 and is signed on its behalf by:
Melanie Gee Rob Hutchinson
Chair Non-Executive Director
Syncona Limited Syncona Limited
14 June 2023 14 June 2023
99SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SYNCONA LIMITED
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 a retrospective review of previous assumptions
and estimates to assess the accuracy of Management’s
historical 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 holding 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 amounting to £150 million – £200 million,
as well as forecast annual expenditure for the Group and entities in
the investment holding structure;
• Considering the mitigating actions identified by Management as
available responses to liquidity risks, principally the ability to
realise assets held within the capital pool (Syncona Investments
LP Incorporated), including UK treasury bills with an aggregate
value at 31 March 2023 of £285.0 million. An additional £160.0
million is also held in daily traded funds managed externally
which could be accessed if required; and
• Evaluating the disclosures made in relation to going concern
within note 2.
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
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.
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 2023 and of its loss for the year then ended;
• have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs) as
adopted by the European Union; and
• 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 we have not provided any non-audit services prohibited by the
FRC’s Ethical Standard 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.
Materiality
The materiality that we used in the current year was £25.1 million
which was determined on the basis of 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
holding 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.
100 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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 2023 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’ methodologies, against the
requirements of IFRS 13 and IPEV guidelines;
• Evaluated Management’s assessment of the impact of the
current economic headwinds 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 as a result;
• 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.
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 (including information
arising after the reporting period) to assess progress against
technical milestones anticipated by the investment thesis in
the last funding round;
• Compared exit price for any disposals with the last determined
fair value and inspected post year end transactions/funding
rounds to test for conditions that would suggest that the
year-end fair value was materially misstated;
• Challenged Management’s assumptions over the
appropriateness of the valuation methodologies used, and
whether other valuation methods may have been more
appropriate, including comparison to independent valuations
performed by Management’s expert, benchmarking of M&A
activity for early-stage life science and wider consultation with
our life sciences and healthcare consulting team;
• Completed market based analysis in the context of share
indices and price movements on the life science/biotech
market to challenge Management’s assertion that calibration
of cost or PRI remains an appropriate basis without
adjustment for certain investments;
• Reviewed open source information for any other contradictory
evidence; and
• Assessed whether the disclosures made were in accordance
with IFRS 13.
5.1. Key judgements within the valuation of unquoted life
science investments
Key audit matter description
The Group holds unquoted life science investments with a fair value
of £498.0 million through Syncona Portfolio Limited, a direct
subsidiary of Syncona Holdings Limited, and £32.7 million through
Syncona Discovery Limited, a direct subsidiary of Syncona
Investments LP Incorporated (“life science investments”). The
unquoted life science investments constitute 36.7% of the Group
NAV. The life science portfolio includes “milestone payments” and
“deferred consideration” related to cash flow entitlements due to
Syncona Portfolio Limited from disposal and restructuring deals,
with a reported fair value of £70.4 million (5.6% 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 a theoretical
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:
• 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.
• 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.
• A DCF is prepared for milestone payments and deferred
consideration using the contractual and estimated 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 misstate 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 Audit Committee Report on page 87.
101SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SYNCONA LIMITED CONTINUED
• We 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 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;
• Involving our modelling specialists we assessed the
mechanical accuracy, design and structure of the model used
to calculate the fair value of the LTIP;
• We performed procedures as noted in key audit matter 5.1
relating to key judgments in the valuation of unquoted life
science investments, the valuation being a key input into the
model; and
• We reviewed the disclosures in the notes to the financial
statements for the LTIP to assess whether they meet the
requirements of the IFRS 2.
Key observations
We conclude that the valuation of the LTIP liability at 31 March 2023
and the related disclosures are appropriate.
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 £25.1 million (2022: £26.2 million)
Basis for determining
materiality
2% (2022: 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
NAV Group materiality
£1,255m
Group materiality
£25.1m
Audit Committee
reporting threshold
£1.25m
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
2023 audit (2022: 70%). In determining performance materiality, we
considered the following factors:
In respect of the milestone payments and deferred consideration,
we performed the following additional procedures:
• Reviewed the accounting papers prepared by Management in
consideration of relevant guidance to assess the appropriateness
of the recognition and measurement policy adopted for the
milestone payments and deferred consideration;
• Challenged Management on the valuation methodologies
used in light of our understanding of general practice in the
sector and through consultation with valuation specialists; and
• Challenged the assumptions adopted within the DCF model
to estimate 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 2023 was
£2.5 million and the carrying amount of the cash element of the
liability arising for the year ended 31 March 2023 was £7.3 million.
The Board 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 2023 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.
This is a key audit matter due to the complexity of the valuation,
requiring involvement of senior members of the audit team and
support from valuation specialists to address the risk of material
misstatement.
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 87.
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 competency, capability and objectivity
of the Group’s independent expert, who were engaged
in the development of model assumptions;
102 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
We have assessed whether the risks identified by the entity are
consistent with our understanding of the Group’s business and
evaluated whether appropriate disclosures have been made in the
financial statements in this regard. The Directors have voluntarily
adopted the Task Force for Climate Related Disclosures (“TCFD”)
and therefore we engaged with our ESG assurance specialists to
assist with assessing disclosures in the TCFD Report to consider
whether they are materially consistent with the guidelines.
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.
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.
• our risk assessment, including our assessment of the Group’s
overall control environment, including that of the administrator; 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 £1.25m (2022:£1.31m),
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 levels of materiality applicable to each entity
(Syncona GP Ltd materiality was set at £0.2 million (2022: £0.2 million)).
7.2. Our consideration of the control
The Board of Directors delegates Management functions to Syncona
Investment Management Limited as investment manager. As part of
our risk assessment, we assessed the control environment in place
at the investment manager, and obtained an understanding of the
relevant controls, such as those in relation to our key audit matters
and the financial reporting cycle. A third-party administrator maintains
the books and records of the Group. In addition to the above, we
also obtained an understanding of relevant controls at the
administrator that are relevant to the business processes of the
Group and parent company, including general IT controls.
This included obtaining and reviewing the Assurance Report
on Controls which documents the suitability of the design and
operating effectiveness of controls. We further obtained a bridging
letter from the investment manager detailing that there have not
been any material changes to the internal control environment.
We have decided not to rely on controls as the Group 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 risk assessment, we have considered the potential
impact of climate change on the Group’s business and its financial
statements. We have obtained an understanding of the process
for identifying climate-related risks, the processes and controls in
place, as well as the determination of any mitigating actions.
The Group continues to assess the potential impact of
environmental, social and governance (“ESG”) related risks,
including climate change, as outlined on page 51 and within the
TCFD Report on pages 62 to 65. The Directors have assessed that
the Group, and the portfolio companies in which they invest, are not
materially exposed to climate change and that neither the risks nor
opportunities (individually or collectively) materially impact their
strategy or viability, or financial results, including the valuation of
the unquoted life science investments. This is disclosed in Note 3
to the financial statements.
103SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SYNCONA LIMITED CONTINUED
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 Group’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
within the valuation of unquoted life science investments 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, the Audit Committee and in-house
legal counsel of the investment manager 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.
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 Group’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 97;
• the directors’ explanation as to their assessment of the
Group’s prospects, the period this assessment covers
and why the period is appropriate set out on page 75;
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 6 February 2023;
• results of our enquiries of Management and the Audit
Committee about their own identification and assessment
of the risks of irregularities, including those that are specific
to the Group’s sector;
• 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; and
• the matters discussed among the audit engagement team and
relevant internal specialists, including tax, valuations, modelling,
life science and healthcare, and ESG 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 area:
Key judgements within the valuation of unquoted life
science investments.
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.
104 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
15. Use of our report
This report is made solely to the parent 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 parent 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 parent
company and the parent 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
14 June 2023
• the directors’ statement on fair, balanced and understandable
set out on page 99;
• the board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 67;
• the section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on page 88; and
• the section describing the work of the Audit Committee set
out on page 86.
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 twelve periods/years, covering the periods/years ending
25 October 2012 to 31 March 2023.
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).
105SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
UNAUDITED GROUP PORTFOLIO STATEMENT
AS AT 31 MARCH 2023
2023 2022
Fair value
£’000
% of
Group NAV
£’000
Fair value
£’000
% of
Group NAV
£’000
Life science portfolio
Life science companies
Quell Therapeutics Limited 86,703 6.9 81,416 6.2
Anaveon AG 64,203 5.1 59,818 4.6
Beacon Therapeutics Holdings Limited
1
60,000 4.8 – –
SwanBio Therapeutics Limited 58,186 4.6 75,103 5.7
Autolus Therapeutics plc 50,004 4.0 61,979 4.7
OMass Therapeutics Limited 43,712 3.5 34,712 2.7
Purespring Therapeutics Limited 35,100 2.8 18,500 1.4
Resolution Therapeutics Limited 23,027 1.8 10,388 0.8
Cambridge Epigenetix Limited 18,472 1.5 17,345 1.3
Freeline Therapeutics Holdings plc 14,117 1.1 32,277 2.5
Companies of less than 1% of the NAV 47,972 3.8 55,251 4.2
Total life science companies 501,496 39.9 446,889 34.1
Milestone payments 54,516 4.3 49,802 3.8
CRT Pioneer Fund 32,727 2.6 28,183 2.2
Deferred consideration 15,882 1.3 – –
Total life science portfolio
2
604,621 48.1 524,874 40.1
Capital pool investments
Treasury bills 284,960 22.7 179,984 13.7
Credit investment funds 101,566 8.1 99,489 7.6
Multi-asset funds 160,036 12.8 – –
Legacy funds 33,001 2.7 39,857 3.1
Total capital pool investments
3
579,563 46.3 319,330 24.4
Other net assets
Cash and cash equivalents
4
82,818 6.6 485,223 37.0
Charitable donations (4,634) (0.4) (4,250) (0.3)
Other assets and liabilities (7,713) (0.6) (15,336) (1.2)
Total other net assets 70,471 5.6 465,637 35.5
Total NAV of the Group 1,254,655 100.0 1,309,841 100.0
1. As at 31 March 2023 the legal name for this investment was SPL 123 Limited. The entity was renamed Beacon Therapeutics Holdings Limited on 1 June 2023.
2. The life science portfolio of £604,619,696 (31 March 2022: £524,873,761) consists of life science investments totalling £517,377,259 (31 March 2022: £446,888,721), milestone payments
on Gyroscope sale of £54,515,861 (31 March 2022: £49,801,548) held by Syncona Holdings Limited and CRT Pioneer Fund of £32,726,576 (31 March 2022: £28,183,492) held by Syncona
Investments LP Incorporated.
3. Capital pool investments of £579,563,640 (31 March 2022: £319,330,598) are held by Syncona Investments LP Incorporated.
4. Cash amounting to £11,402 (31 March 2022: £275,902) is held by Syncona Limited. The remaining £82,806,203 (31 March 2022: £484,947,557) is held by its subsidiaries other than portfolio
companies (‘Syncona Group Companies’). Cash held by Syncona Group Companies other than Syncona GP Limited is not shown in Syncona Limited’s Consolidated Statement of Financial
Position since it is included within financial assets at fair value through profit or loss.
Assets held by the Group are held primarily through Syncona Holdings Limited and Syncona Investments LP Incorporated. See note 1
for a description of these entities.
The totals in the above table may differ slightly to the audited financial statements due to rounding differences.
106 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
2023 2022
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment income
Other income 6 27,495 – 27,495 25,391 – 25,391
Total investment income 27,495 – 27,495 25,391 – 25,391
Net losses on financial assets at fair value through profit
or loss 7 – (67,286 ) (67,286 ) – (6,698 ) (6,698 )
Total losses – (67,286 ) (67,286 ) – (6,698 ) (6,698 )
Expenses
Charitable donations 8 4,634 – 4,634 4,250 – 4,250
General expenses 9 11,593 – 11,593 5,605 – 5,605
Total expenses 16,227 – 16,227 9,855 – 9,855
(Loss)/profit for the year 11,268 (67,286 ) (56,018 ) 15,536 (6,698 ) 8,838
(Loss)/profit after tax 11,268 (67,286 ) (56,018 ) 15,536 (6,698 ) 8,838
Earnings/(loss) per Ordinary Share 14 1.69 p (10.07 )p (8.38 )p 2.34 p (1.01 )p 1.33 p
Earnings/(loss) per Diluted Share 14 1.69 p (10.07 )p (8.38 )p 2.31 p (1.00 )p 1.31 p
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 are derived from continuing operations. The accompanying notes are an integral part of the
financial statements.
107SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
Notes
2023
£’000
2022
£’000
Assets
Non-current assets:
Financial assets at fair value through profit or loss 10 1,258,258 1,323,232
Current assets:
Bank and cash deposits 11 276
Trade and other receivables 11 10,143 9,878
Total assets 1,268,412 1,333,386
Liabilities and equity
Non-current liabilities:
Share based payments 12 – 8,459
Current liabilities:
Share based payments 12 7,296 9,388
Payables 13 6,461 5,698
Total liabilities 13,757 23,545
Equity
Share capital 14 767,999 767,999
Capital reserves 14 463,163 530,449
Revenue reserves 23,493 11,393
Total equity 1,254,655 1,309,841
Total liabilities and equity 1,268,412 1,333,386
Total net assets attributable to holders of Ordinary Shares 1,254,655 1,309,841
Number of Ordinary Shares in issue 14 669,329,324 666,733,588
Net assets attributable to holders of Ordinary Shares (per share) 14 £1.87 £1.96
Diluted NAV (per share) 14 £1.86 £1.94
The audited Consolidated Financial Statements were approved on 14 June 2023 and signed on behalf of the Board of Directors by:
Melanie Gee Rob Hutchinson
Chair Non-Executive Director
Syncona Limited Syncona Limited
The accompanying notes are an integral part of the financial statements.
108 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF ORDINARY SHARES
FOR THE YEAR ENDED 31 MARCH 2023
Share
capital
£’000
Capital
reserves
£’000
Revenue
reserves
£’000
Total
£’000
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
Total comprehensive income for the year – (67,286 ) 11,268 (56,018 )
Transactions with shareholders:
Share based payments – – 832 832
As at 31 March 2023 767,999 463,163 23,493 1,254,655
The accompanying notes are an integral part of the financial statements.
109SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
Notes
2023
£’000
2022
£’000
Cash flows from operating activities
(Loss)/profit for the year (56,018 ) 8,838
Adjusted for:
Losses on financial assets at fair value through profit or loss 7 67,286 6,698
Non-cash movement in share based provision (12,031 ) (15,764 )
Operating cash flows before movements in working capital (763 ) (228 )
(Increase)/decrease in other receivables (265 ) 568
Increase/(decrease) in other payables 763 (78 )
Net cash (used in)/generated from operating activities (265 ) 262
Net (decrease)/increase in cash and cash equivalents (265 ) 262
Cash and cash equivalents at beginning of the year 276 14
Cash and cash equivalents at end of the year 11 276
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.
110 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
111SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
112 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
113SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
114 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
115SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
116 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
117SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
118 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
119SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
120 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
121SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
122 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
123SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
124 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
125SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
126 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
127SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
128 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
129SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
130 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
131SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
132 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
133SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 MARCH 2023
134 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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 2023.
AMOUNT OF REMUNERATION PAID
The Investment Manager paid the following remuneration to staff in
respect of the financial year ending on 31 March 2023 in relation to
work on the Company:
£m
Total staff
Fixed remuneration 6.4
Variable remuneration 15.8
1
22.2
Of which senior management and risk takers 12
Number of beneficiaries 39
1. 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 2023
Gross
leverage as at
31 March 2023
Leverage ratio 0% 0%
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 126 to 130 and the principal risks and
uncertainties on pages 69 to 74.
PREINVESTMENT 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 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.
135SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
SHAREHOLDER INFORMATION
DEPOSITARY REPORT
Report of the Depositary to the shareholders
We, Citco Custody (UK) Limited, are the appointed Depositary to
Syncona Limited (the “AIF”) 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 Syncona Investment
Management Limited (the “AIFM”) and the AIF for the year
ended 31 March 2023, 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.
REPORT OF THE DEPOSITARY TO THE SHAREHOLDERS
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.
136 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
THE COMPANY
Syncona is a leading healthcare company focused on creating,
building and scaling 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 ECOMMUNICATIONS FOR
SHAREHOLDERS
In line with a large number of other listed companies, the Company
uses its website as its default method of publication of shareholder
communications. When shareholder communications are placed on
the website, shareholders are notified either by email (where they
have previously agreed to receive communications by such means)
or otherwise by post. Postal communications with shareholders are
mailed to the address held on the share register.
To receive shareholder notifications electronically in future, shareholders
should register their details free on: signalshares.com, using
the ‘shareholder reference’ printed on correspondence from the
registrar and the shareholder’s registered address.
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.
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, 10
th
Floor, Central Square,
29Wellington Street, Leeds LS1 4DL
COMPANY SUMMARY AND ECOMMUNICATIONS FOR SHAREHOLDERS
Should you require further information, please visit:
synconaltd.com.
Email: contact@synconaltd.com
137SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
SHAREHOLDER INFORMATION
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.
BLA
Biologics License Application.
BNHL
B cell non-Hodgkin’s lymphoma.
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 on page 140.
CAPITAL POOL
Capital pool investments plus cash less other net liabilities.
See alternative performance measures on page 140.
CAPITAL POOL INVESTMENTS
The underlying investments consist of cash and cash equivalents,
including short-term treasury bills, listed fund investments and
legacy fixed-term funds.
CAPITAL POOL INVESTMENTS RETURN
See alternative performance measures on page 140.
CAR TCELL 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 which introduces new, healthy cells into a patient’s body,
to replace those which are diseased or missing.
CLINICAL STAGE
Screened and enrolled first patient into a clinical trial.
CLL
Chronic lymphocytic leukaemia.
CNS
Central nervous system – a part of the body’s nervous system
comprised of the brain and spinal cord.
COMPANIES LAW
Companies (Guernsey) Law 2008.
COMPANY
Syncona Limited.
CRT PIONEER FUND
The Cancer Research Technologies Pioneer Fund LP. The CRT
Pioneer Fund is managed by Sixth Element Capital and invests
in oncology focused assets.
GLOSSARY
D&I
Diversity and inclusion.
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”.
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 are a type of pluripotent
stem cell which can be generated directly from mature cells
(such as those of the skin or blood).
IRR
Internal Rate of Return.
LATE CLINICAL
Has advanced past Phase II clinical trials.
LEUKAEMIA
Broad term for cancers of the blood cells.
LIFE SCIENCE PORTFOLIO
The underlying investments in this segment are those whose
activities focus on actively developing products to deliver
transformational treatments to patients.
138 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
LIFE SCIENCE PORTFOLIO RETURN
See alternative performance measures on page 140.
LYMPHOCYTES
Specialised white blood cells that help to fight infection.
LYMPHOMA
A type of cancer that affects lymphocytes and lymphocyte
producing cells in the body.
MACROPHAGES
A form of white blood cell and the principal phagocytic (cell
engulfing) components of the immune system.
MANAGEMENT
The management team of Syncona Investment Management
Limited.
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.
MYELOMA
A type of bone marrow cancer.
NET ASSET VALUE, NET ASSETS OR NAV
Net Asset Value (“NAV”) is a measure of the value of the Company,
being its assets – principally investments made in other companies
and cash and cash equivalents held – minus any liabilities.
NAV PER SHARE
See alternative performance measures on page 140.
NAV RETURN
See alternative performance measures on page 140.
NSCLC
Non-small cell lung cancer – the most common form
of lung cancer.
NZAM
The Net Zero Asset Managers 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.
ONGOING CHARGES RATIO
See alternative performance measures on page 140.
PARTNERSHIP
Syncona Investments LP Incorporated.
PRECLINICAL
Not yet entered clinical trials.
RETURN
A Simple Rate of Return is the method used for return calculations.
SIML
Syncona Investment Management Limited.
STRATEGIC PORTFOLIO
Portfolio of core life science companies where Syncona has
significant shareholdings.
SYNCONA GROUP COMPANIES
The Company and its subsidiaries other than those companies
within the life science portfolio.
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.
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.
THIRD WAVE THERAPIES
Advanced biologics and genetic medicines such as gene therapy
and cell therapy, and DNA/RNA medicines.
UN PRI
The United Nations Principles for Responsible Investment is a
network of investors, who commit to working to promote
sustainable investment.
VALUATION POLICY
The Group’s investments in life science companies are, in the
case of quoted companies, valued based on bid prices in an
active market as at the reporting date. In the case of the Group’s
investments in unlisted companies, the fair value is determined in
accordance with the International Private Equity and Venture Capital
(IPEV) Valuation Guidelines. These may include the use of recent
arm’s length transactions (Price of Recent Investment or PRI),
Discounted Cash Flow (DCF) analysis and earnings multiples as
valuation techniques. Wherever possible, the Group uses valuation
techniques which make maximum use of market-based inputs.
139SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
SHAREHOLDER INFORMATION
CAPITAL DEPLOYED
With reference to the life science portfolio valuation table on page 35.
This is calculated as follows:
2023 2022
A. Net investment in the period £154.7m £(203.0)m
B. Proceeds from sales £17.4m £325.8m
C. CRT Pioneer Fund distributions £5.1m £0.4m
Total capital deployed (A+B+C) £177.2m £123.2m
CAPITAL POOL
With reference to the life science portfolio valuation table
on page 35. This is calculated as follows:
2023 2022
A. Cash £82.8m £485.2m
B. Other assets and liabilities £(12.3)m £(19.7)m
C. Net cash (A+B) £70.5m £465.5m
D. UK and US Treasury bills £285.0m £180.0m
E. Credit investment funds £101.6m £99.5m
F. Multi-asset funds £160.0m –
G. Legacy funds £33.0m £39.9m
Total Capital Pool (C+D+E+F+G) £650.1m £784.9m
CAPITAL POOL RETURN
Gross Capital Pool return for 2023 is 5.5 per cent (2022: 1.6 per cent).
Any small differences in calculation may be due to rounding of inputs.
This is calculated as follows:
2023 2022
Opening Capital Pool £784.9m £578.2m
Add back net liabilities not included in
Gross Capital Pool £19.6m £38.9m
Less SIML cash £(8.2)m £(7.5) m
A. Opening Gross Capital Pool £796.3m £609.6m
Life science net investments
and ongoing costs £(185.5)m £177.0 m
B. Valuation movement £44.3m £9.7m
Closing Gross Capital Pool £655.1m £796.3m
Capital Pool return (B/A) 5.5% 1.6%
2023 2022
Closing Gross Capital Pool £655.1m £796.3m
Add back SIML cash £7.3 m £8.2m
Less net liabilities not included in Gross
Capital Pool £(12.3)m £(19.6)m
Total Capital Pool £650.1m £784.9m
ALTERNATIVE PERFORMANCE MEASURES
LIFE SCIENCE PORTFOLIO RETURN
Gross life science portfolio return for 2023 is (14.3) per cent
(2022: 0.8 per cent). This is calculated as follows:
2023 2022
A. Opening life science portfolio £524.9m £722.1m
Net investment in the period £154.7m £(203.0)m
B. Valuation movement £(75.0)m £5.9m
Closing life science portfolio £604.6m £524.9m
Life science portfolio return (B/A) (14.3)% (0.80)%
NAV PER SHARE
NAV takes account of dividends payable on the ex-dividend date.
This is calculated as follows:
2023 2022
A. NAV for the purposes
of NAV per share £1,254,654,716 £1,309,840,518
B. Ordinary Shares in issue (note 14) 669,329,324 666,733,588
C. Dilutive shares 3,487,581 6,880,057
D. Fully diluted number of shares (B+C) 672,816,905 673,613,645
NAV per share (A/D) 186.5p 194.4p
NAV RETURN
NAV return is a measure of how the NAV per share has performed
over a period, considering both capital returns and dividends paid
to shareholders. NAV return 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:
2023 2022
A. Opening NAV per fully diluted share
(note 14) 194.4p 193.9p
B. Closing NAV per fully diluted share
(note 14) 186.5p 194.4p
C. Movement (B-A) (7.9)p 0.5p
D. Dividend paid in the year (note 15) 0.0p 0.0p
E. Total movement (B+C-A) (7.9 )p 0.5p
NAV return (E/A) (4.06)% 0.3%
ONGOING CHARGES RATIO
The ongoing charges ratio for 2023 is 0.88 per cent
(2022: 0.48 per cent). Any small differences in calculation may
be due to rounding of inputs. This is calculated as follows:
2023 2022
Management fee £12.1m £10.7m
Directors’ remuneration £0.5m £0.4m
Auditor’s remuneration £0.3m £0.2m
Other ongoing expenses £1.8m £1.8m
Share based payment expense £(3.0m) £ (7. 3m)
A. Total ongoing expenses £11.7m £5.8m
B. Average NAV £1,320.5m £1,215.0m
Ongoing charges ratio (A/B) 0.88% 0.48%
140 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
SECRETARY, ADMINISTRATOR AND REGISTERED OFFICE
Citco Fund Services (Guernsey) Limited
Frances House, PO Box 273, Sir William Place, St Peter Port,
Guernsey GY1 3RD
INVESTMENT MANAGER
Syncona Investment Management Limited
2
nd
floor, 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
Plumtree Court, 25 Shoe Lane, London EC4A 4AU, United Kingdom
Numis Securities
45 Gresham Street, London EC2V 7BF, United Kingdom
ADVISERS
141SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
SHAREHOLDER INFORMATION
NOTES
142 SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2023
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