SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
Building a platform
for long-term growth
and impact
Syncona Limited
Annual Report and Accounts 2024
STRATEGIC REPORT
02
At a glance
04
Chair’s statement
06
Business review
10
Our NAV Growth Framework in action
18
Market review
22
Our purpose and strategy
24
Our investment process
26
Our value creation model
28
Key performance indicators
30
Our ESG approach
32
Purpose-led stakeholder engagement
40
Our people and culture
44
Portfolio review
54
Financial review
56
SECR disclosure
58
TCFD report
62
Risk management
66
Principal risks and uncertainties
73
Viability statement
GOVERNANCE
74
Corporate governance report
78
Board of Directors
80
Report of the Nomination
and Governance Committee
84
Report of the Audit Committee
89
Report of the Remuneration Committee
95
Directors’ report
98
Statement of Directors’ responsibilities
FINANCIAL STATEMENTS
99
Independent Auditor’s report
105
Unaudited Group portfolio statement
106
Consolidated statement
of comprehensive income
107
Consolidated statement
of financial position
108
Consolidated statement of changes
in net assets attributable to holders
of Ordinary Shares
109
Consolidated statement
of cash flows
110
Notes to the consolidated
financial statements
SHAREHOLDER INFORMATION
132
AIFMD Disclosures (unaudited)
133
Report of the Depositary
to the shareholders
134
Company summary and
e-communications for shareholders
135
Glossary
137
Alternative performance measures
138
Advisers
Our purpose is to invest
to extend and enhance
human life
1. Alternative performance measure, please refer to page 137.
2.
Fully diluted, please refer to note 14 in the financial statements on page 121.
3.
Please see glossary on page 135 for definition.
We do this by creating, building and scaling companies to
deliver transformational treatments to patients in areas of
high unmet need. We aim to build and maintain a diversified
portfolio of 20-25 globally leading life science businesses,
across development stage, modality and therapeutic area,
for the benefit of all our stakeholders.
Business review p.06
2024 HIGHLIGHTS
synconaltd.com
Syncona Limited
£1.24bn
Net Asset Value (NAV) (188.7p per share
1,2
)
(2023: £1.25bn; 186.5p per share)
£786.1m
Life science portfolio valuation
1
(2023: £604.6m)
£452.8m
Capital pool
1,3
(2023: £650.1m)
1.2%
NAV per share return
1
(2023: (4.1)%)
2.2%
Life science portfolio return
1
(2023: (14.3)%)
£172.2m
Capital deployment
1
(2023: £177.2m)
Syncona is a leading life science investor with a strong
balance sheet and clear strategy for growth and patient
impact. The core premise of our investment strategy is that
significant risk-adjusted returns in life science come when
novel technology is developed to a late-stage clinical
product. We apply a differentiated investment model and
take a long-term approach to build world-class companies
which can reach this point.
SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2024
01
STRATEGIC REPORT
BUILD
sustainable
businesses by
taking a hands-
on partnership
approach
SCALE
our companies
over the long term,
leveraging our
capital pool and
relationships
with strategic
co-investors and
industry partners
CREATE
or add globally
leading
companies
based on
exceptional
science
AT A GLANCE
Creating and investing in life science
pioneers to deliver growth and
transform lives
BUILDING A PORTFOLIO
OF GLOBAL LEADERS
Our strategy is to create, build and scale companies around
exceptional science to build a portfolio of 20-25 globally leading
life science businesses, across development stage, modality
and therapeutic area for the benefit of all our stakeholders.
A MULTI-DISCIPLINARY TEAM
WITH A STRONG TRACK RECORD
Our team is at the heart of Syncona’s strategy. They leverage
their expertise to find and build future global leaders in life
science, whilst providing the operational, clinical and regulatory
expertise necessary to support our portfolio companies through
the development cycle. 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, an
aggregate 4.3x multiple of cost.
OUR CAPITAL POOL
We have a balance sheet structure which underpins our
strategy and provides us with the flexibility to fund our
companies from foundation to late-stage clinical development.
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 to provide a
strong negotiating position for financing rounds or M&A.
A DIFFERENTIATED VALUE CREATION MODEL
We believe that significant value in our asset class
can be accessed by delivering companies to late-stage
clinical development.
Our purpose and strategy p.22
Financial review p.54
BY CREATING OR ADDING
3 new companies a year
based on exceptional science
WE WILL ACHIEVE OUR PORTFOLIO TARGET SIZE OF
20-25 companies
targeting top quartile returns
AND DELIVER
3-5 companies
to late-stage development where we have
significant ownership positions
If we do this, we will have driven strong risk-adjusted returns for
investors and delivered transformational impact for patients
OUR AMBITION IS TO GROW OUR NAV TO
£5bn
BY 2032
£452.8m
In the capital pool
150+
Years of life science and investing
experience in the investment team
02
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
IMPACT ON
PATIENT QUALITY
OF LIFE
MATURITY
ADDRESSABLE
PATIENT
NUMBERS
(PREVALENCE
1
)
CATEGORY
LEADING
PLATFORM
AVAILABILITY
OF EXISTING
TREATMENTS
LIFE
THREATENING
PROXIMITY TO
REGULATORY
FILING
CURATIVE
POTENTIAL
Patient
impact
factors
OUR STRATEGIC PORTFOLIO
Our strategic portfolio is made up of 13 leading life science companies, all built with product-focused strategies in emerging
categories of novel science where we believe there is an opportunity to make a difference to the lives of patients.
MAKING A POSITIVE IMPACT
Delivering a positive impact is fundamental to what we do at
Syncona and we are motivated every day by our purpose of
investing to extend and enhance human life. During the year
we developed our first patient impact framework, which
illustrates how we embed patient impact factors within our
investment model.
Our ESG approach p.30
Our NAV Growth Framework in action p.10
BEST IDEAS
PRE-CLINICAL
CLINICAL
LATE-STAGE CLINICAL
BLA
1
Autolus Therapeutics
Beacon Therapeutics
iOnctura
Spur Therapeutics
Resolution Therapeutics
Quell Therapeutics
Anaveon
Purespring Therapeutics
Forcefield Therapeutics
OMass Therapeutics
Mosaic Therapeutics
Kesmalea Therapeutics
Yellowstone Biosciences
Syncona investment point. 1. Biologics License Application.
MOVING TO
MARKET
MOVING TO
DEFINITIVE
DATA
MOVING TO
EMERGING
EFFICACY DATA
MOVING TO
OPERATIONAL
BUILD
Portfolio review p.44
1. The number of existing cases of a disease.
STRATEGIC REPORT
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
03
NAV GROWTH FRAMEWORK
CHAIR’S STATEMENT
Resilient performance
against challenging
backdrop
Global market conditions have
continued to be impacted by significant
macroeconomic and geopolitical
uncertainties, which have weighed on
sentiment more broadly. It has been one
of the worst bear markets for biotech
on record, with the S&P Biotech Index
(XBI) ending Syncona’s financial year
45.7% lower than its peak in February
2021. Over the same period Syncona’s
life science return is (13.5)% and NAV
per share return is (6.1)%
1
. In particular,
the funding environment for pre-clinical
and early-stage clinical biotech
companies has been difficult.
Against this backdrop, the Syncona team
2
has proactively managed the portfolio to
protect value and has taken a rigorous
approach to capital allocation, focused
on clinical assets and assets approaching
clinical entry, to enable the delivery of the
key value inflection points outlined at our
FY2023/4 Interim Results.
FINANCIAL PERFORMANCE
During FY2023/4, Syncona has delivered a
resilient performance, ending the year with
net assets of £1,238.9 million or 188.7p per
share, a 1.2% NAV per share return in the
year (31 March 2023: net assets of £1,254.7
million, NAV per share of 186.5p, (4.1)%
NAV per share return). The life science
portfolio delivered a 2.2% return, with the
increase in the value of Autolus Therapeutics
(Autolus), offset by the partial write-downs
at Anaveon and Clade Therapeutics (Clade)
and the write-off of Gyroscope Therapeutics
(Gyroscope) milestone payments.
Performance was further enhanced by
accretive share buybacks and positive
returns from our capital pool assets.
FOCUSED AND RIGOROUS
CAPITAL ALLOCATION
The challenging market backdrop and
broader sentiment has impacted Syncona’s
share price, which declined by 17.0% in the
year, with the discount to NAV widening
from 20.5% to 34.8%. The Board believes
that the share price undervalues the portfolio
and its potential and represents a compelling
investment opportunity. In September 2023,
the Board took the decision to allocate
up to £40.0 million to a share buyback
programme and post-period end a further
£20.0 million has been allocated
3
to the
programme. The Board believes this strikes
the right balance between continuing to
focus capital allocation on Syncona’s
maturing portfolio and a share buyback
given the material discount to NAV at which
the shares are currently trading. The capital
allocated to the buyback does not impact
planned investment into clinical-stage
assets in the next 24 months.
In the last year, the Syncona team’s
operational progress and proactive
management of the portfolio has
provided a platform for future growth.”
MELANIE GEE
CHAIR, SYNCONA LIMITED
1. 31 December 2020 used as starting valuation for life science and NAV per share returns.
2. Use of “Syncona team” refers to the Syncona Investment Management Limited (SIML) team.
3.
The further £20.0 million allocated to the share buyback programme will be on the same terms as announced on
29 September 2023, save that the programme has been extended beyond the Company’s 2024 Annual General
Meeting, subject to the grant of a new buyback authority to the Company by the shareholders at that meeting.
Any share purchases under the share buyback programme will be made pursuant to the authority to repurchase
shares granted to the Company at its Annual General Meeting held on 1 August 2023, or any new authority
granted to the Company at its 2024 Annual General Meeting.
4. As at 19 June 2024.
5. Please refer to glossary on page 135.
04
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
In the period, £20.2 million of shares have
been repurchased at an average discount
of 35.1% to NAV per share, resulting in an
accretion of 1.61p to NAV per share in the
year. The share buyback is ongoing, with
a further £10.0 million of shares bought
back since the period end
4
.
Over the course of the year, the Syncona
team has evolved the Company’s approach
to capital allocation, moving from focusing
on having up to three years of financing
available to ensuring Syncona is positioned
to sustainably deliver capital access
milestones, and is funded to deliver key
value inflection points, which have the
potential to deliver significant NAV growth.
As our portfolio companies continue to
mature there is increased potential to access
third party capital and liquidity, allowing
for a more dynamic approach to capital
allocation. The Board believes the evolution
in our approach retains the strategic balance
sheet that underpins the delivery of
Syncona’s long-term strategy, whilst also
allowing the Company to optimise returns
for shareholders. This Capital Allocation
Policy is covered more fully in the business
review and included in full on page 8.
EMBEDDING A NEW OPERATING MODEL
During the year, the Syncona team has
expanded its senior team and embedded
a new operating model to enable the more
efficient management of people, capital
and the Syncona portfolio. As part of this
process, in April 2023 Roel Bulthuis joined as
Managing Partner and Head of Investments,
bringing over 20 years of global life science
venture capital, business development and
investment banking experience. In May
2023, John Tsai (previously CMO at Novartis)
joined as Executive Partner, with significant
clinical, pharmaceutical and leadership
experience. Effective 1 April 2024, Rolf
Soderstrom former CFO of SIML moved to
the role of Executive Partner, where he now
supports the Leadership and Investment
Teams whilst remaining on the SIML Board
and as Chair of the Valuation Committee.
Kate Butler, former Group Finance Director
of SIML and an experienced financial leader
from a career across biotech, took up the
role of CFO of SIML. Our Executive Partner
group
5
has also expanded during the year
and is well placed to support execution
at the portfolio companies as they scale.
This is an important function for the
business and supports our proactive
portfolio management approach.
Martin Murphy stepped down as Chair
of SIML after 11 years of playing an
instrumental role in building Syncona into the
business it is today. Martin’s impact on both
the Company’s trajectory and the wider
ecosystem has been remarkable, and we
are indebted to him for his dedication and
the platform he helped us to establish. The
Board is pleased with the strategic progress
Syncona has made and with how the senior
team, now led by Chris, as CEO and Interim
Chair of SIML, is operating. A recruitment
process to appoint a new permanent Chair
of SIML is ongoing. The evolution of the team
and the model are critical to the delivery
of Syncona’s ambitious plans to achieve
£5 billion of NAV by 2032.
BUILDING A SUSTAINABLE
LIFE SCIENCE ECOSYSTEM
Since 2012, Syncona has been a key part
of changing the landscape for ambitious life
science company creation in the UK. As a
direct consequence of Syncona’s actions,
many potential therapies have been taken
from academic research into the clinic on an
industrial and scalable footing. The Board and
Syncona team are passionate about shaping
a life science ecosystem that is sustainable
and provides a platform for further success.
We contribute to this in a range of ways,
including by building companies in the UK,
funding them at scale and focusing them
on product development. The Board and
Syncona team also continuously engage
with a range of stakeholders, including
Government, industry participants, life
science property developers, charities and
regulators, to enable the scaling of a dynamic
biotech cluster in which Syncona and the
companies we build can thrive.
The Board is increasingly encouraged by the
growing cross-party public policy support
for science and innovation, and increased
investment in high-growth sectors. A key
challenge in translating science from an
academic setting and developing it into
a commercial reality is accessing the
appropriate level of capital to enable a
company to scale. We are therefore highly
supportive of the ambition behind the
Mansion House reforms. The Board and
Syncona team are committed to working
alongside the signatory pension providers and
other relevant parties as these commitments
move towards tangible proposals to
provide the scale-up capital that will take
the UK’s biotech sector to the next level.
Syncona’s positive role within the
ecosystem is also aligned with our
commitment to sustainability, which is
embedded into Syncona’s investment,
portfolio management, and business
processes. I am pleased with our continued
progress in this regard, which includes SIML
becoming a signatory of the Net Zero Asset
Managers (NZAM) initiative and completing
its first UN Principles for Responsible
Investment (PRI) submission. A full overview
of our progress in and commitment to
sustainability and responsible investment
can be found in the Sustainability Report.
OUTLOOK
Macroeconomic and geopolitical
uncertainties have created a challenging
backdrop for Syncona and our portfolio.
These conditions have impacted both the
cost of capital and financing environment
in our sector. As we move into FY2024/5,
despite the ongoing macro uncertainties,
we are cautiously optimistic given the
gradual decline in inflation and potential for
interest rate cuts. We believe improvements
in the macroeconomic environment will
create more favourable conditions for
our companies to operate in.
In the last year, the Syncona team’s
operational progress and proactive
management of the portfolio has provided
a platform for future growth. A newly
embedded operating model, expanded
team, and evolved Capital Allocation Policy
underpinning our disciplined approach
to managing our balance sheet, mean
Syncona is well positioned to take advantage
of market conditions as they improve.
With three companies added to the
portfolio during the year, including one at
clinical stage, we are on track to deliver
on our 10-year targets which were set out
in November 2022:
–
Three new companies created or added
to the portfolio per year
–
This target has been updated to reflect
that we will both create companies from
highly innovative science and invest
in existing companies at clinical stage
–
Delivering three to five companies to
late-stage development where we are
significant shareholders
–
Building a portfolio of 20-25 life science
companies
The Board remains focused on overseeing
and supporting the Syncona team with
delivery of our long-term strategy to
create, build and scale a portfolio of
20-25 leading life science companies and
organically grow net assets to £5 billion by
2032. Together, the Board and Syncona
team remain committed to these targets
and to delivering medium and long-term
growth for our shareholders.
Melanie Gee
Chair
Syncona Limited
19 June 2024
STRATEGIC REPORT
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
05
BUSINESS REVIEW
Resolute focus on proactively
managing our portfolio
The Syncona team has made significant
progress in the year, proactively managing
the portfolio against a challenging market
backdrop, embedding a new operating
model to enable scale and adding new
companies to the portfolio to deliver on
its 10-year targets.
LIFE SCIENCE PORTFOLIO
PERFORMANCE
The performance of the life science
portfolio has been driven by a £122.4
million valuation gain from Autolus, which
was largely offset by partial write-downs
of Anaveon and Clade and the write-off
of Gyroscope milestone payments.
The share price appreciation at Autolus
was driven by continued strong progress
in the development of its obe-cel therapy.
The company has submitted the key
regulatory filing for approval of the drug,
its Biologics License Application (BLA),
with the US Food and Drug Administration
(FDA) and expects to receive feedback
regarding potential approval in November
2024. Autolus also completed a strategic
collaboration with BioNTech worth $250
million in upfront proceeds and a public
offering of $350 million.
Elsewhere, the partial write-down
of Syncona’s holding in Anaveon to
£35.7 million
1
(£42.8 million decline in value)
reflected the company’s decision to focus
on its next generation, pre-clinical ANV600
programme and the post-period end sale
of Clade to Century saw a £14.4 million
write-down to £9.4 million. These actions,
whilst disappointing from a value
perspective, were aligned with our rigorous
approach to capital allocation and proactive
management of the portfolio. In addition,
Novartis’ decision during the year to
discontinue the development of GT005,
which it had been responsible for
progressing since acquiring Gyroscope
in February 2022, resulted in a write-off
of the £56.4 million risk-adjusted
valuation of the milestone payments
2
.
The financial year has started with
positive momentum and we remain
focused on driving NAV growth
for shareholders whilst delivering
transformational impact for patients.”
CHRIS HOLLOWOOD
CEO, SYNCONA INVESTMENT
MANAGEMENT LIMITED
1.
Includes additional £12.6 million invested following the write
down as part of the final tranche of the Series B financing.
2.
Increase from £54.5 million as at June 2023 due to the
impact of foreign exchange during the period.
06
SYNCONA LIMITED ANNUAL REPORT AND ACCOUNTS 2024
Late-stage clinical
8%
Clinical stage
23%
Pre-clinical
69%
Late-stage clinical
36%
Clinical stage
35%
Pre-clinical
29%
Cell therapy
6
Gene therapy
3
Small molecules
2
Biologics
1
Cell therapy
3
Gene therapy
3
Small molecules
4
Biologics
3
Moving towards definitive data
8%
Moving towards emerging efficacy data
91%
Moving towards operational build
1%
Moving towards the market
36%
Moving towards definitive data
30%
Moving towards emerging efficacy data
31%
Moving towards operational build
3%
A MATURING, PROACTIVELY
MANAGED PORTFOLIO
In November 2022, we set out 10-year
targets to organically grow net assets
to £5 billion. Since then, the Syncona
team has worked hard to rebalance the
portfolio whilst prioritising capital towards
the most promising companies and
assets to provide a platform for future
growth. We now have 13 core life science
companies in our strategic portfolio that
we aim to build to a portfolio of 20-25
companies by 2032. This portfolio is
diversified across therapeutic area and
modality and weighted towards clinical
and late-stage clinical companies.
Over the year, our strategic portfolio has
continued to mature with 71.1% of its
value now in clinical-stage companies.
More broadly, we are pleased with the
clinical, operational and financial delivery
our companies have achieved, generating
15 clinical data readouts, initiating five
new clinical trials, and securing nine
financings and strategic transactions.
The Syncona team has proactively
managed the portfolio to ensure that our
companies have a path forward to reach
late-stage clinical development, where we
believe significant value can be accessed.
We set out a clear approach at our annual
results last year to navigate our portfolio
companies through challenging market
conditions and have delivered well against
this. We have worked alongside our
portfolio companies to widen financing
syndicates, execute strategic transactions,
focus capital on their most promising
assets, streamline budgets and consolidate
with other companies to drive combined
strength. Notably, the market conditions
impacting the biotech sector presented a
differentiated opportunity to take Freeline
Therapeutics (Freeline) private. Following
this transaction, post-period end we
announced that Freeline had acquired
SwanBio Therapeutics (SwanBio), creating
Spur Therapeutics (Spur).
In our FY2023/4 Interim Results, we set
out a NAV Growth Framework to provide
shareholders with more clarity on the
milestones and stages of the development
cycle where we anticipate our companies
will be able to access capital and drive
significant NAV growth in the current
market environment. In the second half,
the portfolio has delivered six capital
access milestones, including the initiation
of new clinical trials, publishing new
clinical data and the filing of Autolus’ BLA
submission to the US FDA. Since the
period end, the portfolio has delivered
a further four capital access milestones,
including encouraging clinical data
updates. This includes Spur, which
published data at the American Society
of Gene & Cell Therapy (ASGCT) Annual
Meeting, underlining the strong potential
of the company’s FLT201 therapy in
Gaucher disease. The NAV Growth
Framework is covered in further detail in
the life science portfolio review section.
CAPITAL ALLOCATION FOCUSED ON
CLINICAL-STAGE ASSETS OR ASSETS
APPROACHING CLINICAL ENTRY
Syncona has been able to leverage its
balance sheet throughout a period where
cost of capital and access to capital have
been challenging, deploying £172.2 million
in the year, in line with capital deployment
guidance. We have taken a rigorous
approach to capital allocation, with 86.1%
of capital deployed into clinical-stage assets
and assets approaching the clinic, whilst
funding our companies through to their next
key value inflection points. In doing so we
have closely monitored potential liquidity and
NAV progression alongside capital needs,
whilst considering external factors such as
the macro and financing environment.
REBALANCED PORTFOLIO
Weighted towards later-stage companies with increased diversification
CLINICAL PROFILE (BY VALUE)
DIVERSIFICATION (BY NUMBER)
SEPTEMBER 2022: PORTFOLIO OF 12 COMPANIES
MARCH 2024: PORTFOLIO OF 13 COMPANIES
NAV GROWTH FRAMEWORK (BY VALUE)
STRATEGIC REPORT
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
07
BUSINESS REVIEW
CONTINUED
Syncona is committed to driving and maximising returns for
shareholders over the long term as we seek to deliver on our
10-year targets as set out in November 2022. We strive to
deliver growth through capital appreciation and offer investors
the opportunity to access the expertise of Syncona’s specialist
team and the growth potential of a proprietary investment
portfolio in a high risk and high reward sector.
FOCUS ON DRIVING SIGNIFICANT VALUE THROUGH INVESTING IN LIFE SCIENCE
The core premise of our investment strategy
is that significant risk-adjusted returns in life
science come when novel technology is
developed to a late-stage clinical product.
We generate opportunities to do this by
creating companies from exceptional
science, then building and scaling them over
the long term to reach late-stage clinical
development, alongside third-party investors.
We also seek to make new investments in
clinical-stage opportunities, both public and
private, where we can similarly advance
them to late-stage clinical development
and generate strong risk-adjusted returns.
PORTFOLIO MANAGEMENT AND OUR NAV GROWTH FRAMEWORK
Many of our investments are both capital
intensive and illiquid. We aim to manage our
portfolio as a whole to ensure we have the
capital required to deliver our investment
strategy, either in cash or from liquid assets
in our life science portfolio. We leverage our
balance sheet by accessing external sources
of capital to support the funding of our
portfolio companies. We take a rigorous
approach to capital allocation, prioritising
capital towards clinical opportunities and
assets which are approaching clinical
entry, while continuing to create companies
based on exceptional science.
In our FY2023/4 Interim Results, we set out a
NAV Growth Framework to give shareholders
more clarity on which milestones and at what
stage of the development cycle we anticipate
our companies will be able to access capital
and drive significant NAV growth. Emerging
clinical data typically has the potential to drive
access to capital either through company
financings or, for companies that are publicly
listed, it can drive returns by share price
appreciation. Definitive clinical data has the
potential to provide significant NAV growth
and has the potential to provide access to
capital through sales of portfolio companies,
or significantly increased market liquidity
in listed shares.
If our investment strategy is successful, we
anticipate that we will generate significant
cash proceeds from exits or other liquidity
events and that over time this will be the
principal source of capital to fund our strategy.
A SUSTAINABLE MODEL AND A STRATEGIC APPROACH TO CAPITAL EFFICIENCY
Primarily, we will look to re-invest cash
proceeds across our portfolio and into
new opportunities, where we believe we
can drive significant returns by continuing
to fund companies through to clinical
and late-stage development.
Where we do not see investment
opportunities that allow us to efficiently
deploy capital across our portfolio, we
will seek to return capital to shareholders.
We will consider all forms of distribution
mechanisms for capital returns at the time.
This includes buying back our own shares,
in particular if market conditions create
dislocations between the share price
of Syncona and its stated NAV.
We will continue to ensure that we are
positioned to sustainably deliver milestones
that have the potential to enable capital
access and are funded to deliver key value
inflection points which have the potential
to deliver significant NAV growth.
Our approach to capital allocation is dynamic
and continues to evolve as the business
scales and matures, increasing the potential
to access third party capital, liquidity and
optimise returns for our shareholders.
Despite the challenging market conditions
for biotech companies, from the £704.5
million raised by our portfolio, Syncona
committed £118.2 million, with our
companies attracting £586.3 million from
external investors and pharma partners.
This demonstrates the attractiveness of
our portfolio and our ability to leverage
the Syncona balance sheet to access
significant further capital.
ADDING HIGHLY INNOVATIVE NEW
COMPANIES TO THE PORTFOLIO TO
UNDERPIN LONG-TERM GROWTH
During the year, we have delivered on
our target of adding three new companies
to the strategic portfolio. We have been
able to selectively increase our exposure
to clinical assets beyond the natural
maturation of the portfolio, by investing
€30 million (£25.7 million) as part of a
Series B financing of iOnctura. This is
a clinical-stage company developing
innovative therapies for neglected and
hard-to-treat cancers. Its lead candidate,
roginolisib, has demonstrated long-term
safety and emerging efficacy data in a
Phase Ib clinical trial for uveal melanoma,
a rare cancer of the eye where patients
have very limited treatment options.
Syncona is working with the company to
explore the breadth of roginolisib’s potential
utility and we are excited to add iOnctura
and this promising asset to our portfolio.
We are also pleased to announce the
creation of a new company, Yellowstone
Biosciences (Yellowstone), with a £16.5
million Series A financing. Yellowstone is
an oncology company pioneering soluble
bispecific T-cell receptor (TCR)-based
therapies to unlock a new class of
cancer therapeutics.
We have also committed to a Series A
financing of a company we previously
seed financed in 2021, Forcefield
Therapeutics (Forcefield), a best-in-class
therapeutics company aiming to
revolutionise the treatment of heart
attacks. Alongside Syncona’s £20.0
million commitment to Forcefield’s Series
A, post-period end Roche Venture Fund
committed a further £10.0 million to
the financing, valuing Syncona’s holding
in Forcefield at £8.9 million, a 38%
uplift to the 31 March 2024 valuation.
CAPITAL ALLOCATION POLICY
08
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
ONGOING FOCUS ON OPTIMISING
SHAREHOLDER RETURNS
During the year, the Syncona team in
partnership with the Board conducted
an ongoing review of the Company’s
approach to capital allocation. As part of
this, the Board launched a share buyback
of up to £40.0 million in September 2023
and post-period end, a further £20.0
million has been allocated to the share
buyback programme. Syncona has set out
its Capital Allocation Policy to summarise
our evolved approach to the way we
manage capital to drive and maximise
returns for shareholders. The core premise
of our investment strategy is that significant
risk-adjusted returns in life science come
when novel technology is developed to
a late-stage clinical product. As a result,
many of our investments are both capital
intensive and illiquid. We aim to manage
our portfolio as a whole to ensure we
have the capital required to deliver our
investment strategy, either in cash or from
liquid assets in our life science portfolio.
We leverage our balance sheet by
accessing external sources of capital
to support the funding of our portfolio
companies. We anticipate that we will
generate significant cash proceeds from
exits or other liquidity events and that
over time this will be the principal source
of capital to fund our strategy.
Primarily, we will look to re-invest cash
proceeds across our portfolio and into
new opportunities, where we believe
we can drive significant returns by
funding companies through to clinical
and late-stage development.
Where we do not see investment
opportunities that allow us to efficiently
deploy capital across our portfolio, we
will seek to return capital to shareholders.
We will consider all forms of distribution
mechanisms for capital returns at the time.
This includes buying back our own shares,
in particular if market conditions create
dislocations between the share price
of Syncona and its stated NAV. We will
continue to ensure that we are positioned
to sustainably deliver capital access
milestones and are funded to deliver key
value inflection points which have the
potential to deliver significant NAV growth.
Our approach to capital allocation is dynamic
and continues to evolve as the business
scales and matures, increasing the potential
to access third party capital, liquidity and
optimise returns for our shareholders.
OUTLOOK
Market conditions have been challenging.
However, value is returning to late-stage
clinical assets and financing conditions
are beginning to improve in the private
markets. We continue to proactively
manage our maturing portfolio to drive
our companies to late-stage clinical
development and are resolutely focused
on delivering the 11 capital access
milestones and eight key value inflection
points that are mapped against our NAV
Growth Framework. We have a strong
pipeline of new investment opportunities
based on highly innovative science,
across therapeutic area, modality and
stage of development, from company
creation to clinical stage.
Syncona is well positioned with a well-
funded portfolio, strong balance sheet,
newly embedded operating model,
experienced team and clear strategy to
take advantage of market conditions as
they improve. We have rebalanced the
portfolio, prioritising capital towards the
most promising companies and assets,
and have preserved value in a challenging
market. We are excited about the
opportunity ahead to achieve our 2032
targets. The financial year has started
with positive momentum and we remain
focused on driving NAV growth for
shareholders whilst delivering
transformational impact for patients.
Chris Hollowood
Chief Executive Officer
Syncona Investment Management Limited
19 June 2024
Our NAV Growth Framework in action p.10
POTENTIAL TO ENABLE CAPITAL ACCESS
POTENTIAL TO DRIVE SIGNIFICANT NAV GROWTH
OUR NAV GROWTH FRAMEWORK
As we build and scale our companies, in the current market environment there are opportunities to deliver milestones
that drive capital access and key value inflection points that have the potential to drive significant NAV growth.
MOVING TO
OPERATIONAL BUILD
MOVING TO EMERGING
EFFICACY DATA
MOVING
TO MARKET
MOVING TO
DEFINITIVE DATA
OPERATIONAL BUILD
−
Clearly defined strategy
and business plan
−
Leading management
team established
DEFINITIVE DATA
−
Significant clinical data shows
path to marketed product
−
Moving to pivotal trial and
building out commercial
infrastructure
EMERGING EFFICACY DATA
−
Clinical strategy defined
−
Initial efficacy data from
Phase I/II in patients
ON THE MARKET
−
Commercialising product
−
Revenue streams
STRATEGIC REPORT
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024
09
OUR NAV GROWTH FRAMEWORK IN ACTION
Completed operational build
£20.0m
Series A commitment
2024 PORTFOLIO HIGHLIGHT
Further commitment to a Series A financing
During the year Syncona committed to a
Series A financing of Forcefield, following an
initial seed investment in 2021. This funding
will support Forcefield as it works towards the
initiation of its Phase I/II trial. Post-period end
Forcefield attracted a further £10.0 million
Series A commitment from Roche Venture
Fund, with Syncona’s total commitment
to the Series A being £20.0 million.
CREATING AND BUILDING
COMPANIES FROM LEADING SCIENCE
Forcefield has developed a strategy
focused on harnessing the potential
of its first-in-class cardioprotective
proteins to retain heart function
following heart attacks, an area devoid
of any significant advancements in
the past two decades. Forcefield was
founded by Syncona and Professor
Mauro Giacca, a leading authority in
cardiovascular disease, who is the
Head of the School of Cardiovascular
and Metabolic Medicine & Sciences
at King’s College London.
PLANNING A PATH TO THE CLINIC
The company has plans for
its progression towards clinical
development as it works towards the
initiation of its planned Phase I/II trial.
There is a significant commercial
opportunity within the field, with heart
attacks being the number one global
cause of death. Syncona has worked
closely with the Forcefield team on its
financing and clinical strategy as it
seeks to bring its therapies to patients
in an area of high unmet need.
ESTABLISHING A LEADING
MANAGEMENT TEAM
In line with Syncona’s approach of
establishing world-class management
teams at our portfolio companies, in
September 2023 Syncona Executive
Partner John Tsai, MD was appointed
as Chief Executive Officer of Forcefield.
He was previously President, Global
Drug Development and Chief Medical
Officer at Novartis AG and has over
20 years of experience in bringing
innovative therapies to market across
geographies and therapeutic areas.
John’s proven track record in leading
transformational organisational growth
and strategy, along with expertise
in regulatory approval, commercial
launches, medical affairs, and great
leadership skills make him ideally
placed to lead Forcefield in progressing
its cardioprotective protein technology
towards clinical development.
An ambition to
transform the
lives of millions
10
SYNCONA LIMITED
ANNUAL REPORT AND ACCOUNTS 2024