Syncona Limited
Annual report and accounts 2022
Building a
diversified
portfolio of
global leaders
in life science
STRATEGIC REPORT
2 At a glance
4 Investment proposition
6 Chair’s statement
9 Section 172 statement
10 Business review
14 Our strategy
16 Investment process
18 The Syncona team
20 Life science portfolio review
34 Market review
36 Key performance indicators
38 Business model
40 Business model in action
42 The Corporate Team
44 Risk management
48 Principal risks and uncertainties
54 Sustainability
72 TCFD report
GOVERNANCE
76 Corporate governance report
80 Board of Directors
82 Our stakeholders
84 Report of the Nomination and Governance
Committee
87 Report of the Audit Committee
92 Report of the Remuneration Committee
98 Directors’ report
FINANCIAL STATEMENTS
101 Statement of Directors’ responsibilities
102 Independent Auditor’s report
108 Unaudited Group Portfolio Statement
109 Consolidated Statement of Comprehensive Income
110 Consolidated Statement of Financial Position
111 Consolidated Statement of Changes in Net Assets
Attributable to Holders of Ordinary Shares
112 Consolidated Statement of Cash Flows
113 Notes to the Consolidated Financial Statements
SHAREHOLDER INFORMATION
138 AIFMD Disclosures (unaudited)
139 Report of the Depositary to the shareholders
140 Company summary and e-communications
forshareholders
141 Glossary
143 Alternative performance measures
144 Advisers
Our purpose
We invest to extend
andenhance human life.
We found, build and fund
companies to deliver
transformational treatments
to patients in areas of high
unmetneed.
Found
We found our companies around exceptional science
with the ability to deliver dramatic efficacy for patients
and to take products to market on a stand-alone basis.
Build
We partner with our companies’ management teams to
build globally competitive businesses, setting them up
to be successful and sustainable over the long term.
Fund
Our strategic capital pool is central to our model. It
gives us the flexibility to fund our companies over the
long term through to product approval, maximising their
ambition, and helps ensure we are not a forced seller.
Read more:
Business model
Page 38
FY2021/2 marks an important milestone for
Syncona, a decade since it was founded. Whilst
wehave seen macroeconomic headwinds impact
sentiment in the biotech sector, our model has
continued to deliver notable successes in the year.
We have worked closely with our companies to drive
progress, investing at scale into the portfolio and
generating valuation uplifts across our privately
heldcompanies. We also executed our largest
transaction to date, the sale ofGyroscope to
Novartis for up to $1.5 billion.
Our balance sheet is an important competitive
advantage, particularly in challenging market
conditions, and will allow us to continue topursue
new investment opportunities, whilst supporting our
existing portfolio of 11 companies asthey scale.
2022 Highlights
£1.3bn
*
Net Asset Value (NAV)
(194.4p
1
per share)
(2021: £1.3bn; 193.9p per share)
0.3%
*
NAV total return
(2021: 4.4%)
£524.9m
Life science portfolio valuation
(2021: £722.1m)
£784.9m
Capital pool
(2021: £578.2m)
£123.2m
*
Capital deployment
(2021: £189.2m)
11
Portfolio companies
(2021: 11)
11
Clinical trials
(2021: 11)
* Alternative performance measure, refer
to page 143
1 Fully diluted, please refer to note 14 in the
financial statements
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
1
Syncona Limited Annual report and accounts 2022
At a glance
We build companies
to deliver transformational
outcomes for patients
Syncona is a leading FTSE 250 healthcare
company. Our purpose is to invest to extend
andenhance human life. We do this by
foundingand building companies to deliver
transformational treatments to patients in
areasof high unmet need.
Our strategy is to create a diversified portfolio of
15-20globally leading healthcare businesses with a
goal, over a rolling 10-year basis, of delivering three
tofive companies in which we retain a significant
ownership position to the point of product approval.
We focus on developing treatments for patients by
working in close partnership with world-class
academicfounders and management teams.
Our balance sheet underpins our strategy, enabling
usto take a long-term view as we look to improve the
lives of patients with no or few treatment options, build
sustainable life science companies and deliver strong
risk-adjusted returns to shareholders.
Who we are
Our team
Syncona is differentiated by its people, who identify
innovative technology and take a commercial approach
to building businesses capable of delivering
transformational treatments to patients.
Our multi-disciplined investment team has deep
scientific, operational, commercial and investment
expertise and an ability to navigate the lifecycle of a
company. They have extensive experience working
alongside global key opinion leaders, whilst appointing
and supporting leading management teams.
Scientific Investment Operational Commercial
85% 220+ 10 16
Investment
team with PhDs
or M.D.s
Years of life
science and
investing
experience
Portfolio
companies
where we have
held operational
roles
Board seats
at portfolio
companies
Our rolling 10-year targets
15-20
Portfolio of leading
life science companies
3-5
Companies to the point
of product approval
2-3
New companies founded
per year
Syncona Limited Annual report and accounts 20222
Building a diversified portfolio to deliver long-term value
DRUG DISCOVERY PRE-CLINICAL CLINICAL
CELL
THERAPY
£204.5m
Autolus Therapeutics
Achilles Therapeutics
Quell Therapeutics
Resolution Therapeutics
Neogene Therapeutics
Clade Therapeutics
GENE
THERAPY
£125.9m
Freeline Therapeutics
SwanBio Therapeutics
Purespring Therapeutics
BIOLOGICS
£59.8m
Anaveon
SMALL
MOLECULE
£34.7m
OMass Therapeutics
4
Companies at
clinical stage
3
Pre-clinical
companies
atclinical
candidate stage
11
Clinical trials
Domain focus of our portfolio companies
1
Underpinned by our strong capital base
SMALL MOLECULE
8%
CELL THERAPY
48%
GENE THERAPY
30%
BIOLOGICS
14%
1 Representative of domain focus of our 11 core portfolio companies
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
3
Investment proposition
We are building a diversied portfolio bycreating globally leading life science companies,
providing our investors withaccess tothe returns that can be deliveredfrom growing our
companies over the long term.
Building
the next
generation
of global
leaders in
life science
DRUG DISCOVERY
PRE-CLINICAL
Syncona
Generation 1
c2012 – 2014
Syncona
Generation 2
c2015 – 2017
Syncona
Generation 3
c2018 – 2019
Syncona
Generation 4+
2020+
Investment proposition
01
Access to the best
scientific innovation
UK/Europe has a globally signicant
scientic research base
Extensive network and strong relationships
across industry
Proactive approach to sourcing and
generating proprietary opportunities
02
Expert team with strong
track record
Technical skill set with deep scientic,
investment, operational and
commercialexpertise
Signicant experience in managing risk and
reward inspecialised asset class
Three exits delivering strong cash returns
Deep domain expertise incell
and gene therapy
03
Differentiated company
creation model
Partnering with globally leading academics
maximises ability to set strategy and
inuence company
Potential for best cost basis of any investor,
supporting opportunity to deliver bestreturns
Hands-on operational approach to
building companies
3.1x
Gross multiple
ofcost
1,2
1.2x
Gross multiple
ofcost
1
1.2x
Gross multiple
ofcost
3
1.0x
Gross multiple
of cost
1 Reflects capital invested by Syncona Partners where applicable
2 Includes capital invested in CEGX and write off of 14MG
3 Includes write off of Azeria
We have a highly skilled team, strong capital base and a differentiated
strategy to commercialise the best scientic innovation.
Syncona Limited Annual report and accounts 20224
EARLY CLINICAL LATE CLINICAL
Portfolio diversified across therapeutic areas and the development cycle
* Illustrative and assumes successful clinical development and approval, Syncona team view
Syncona’s assets are at various stages of clinical development and in the process of generating clinical data, companies shaded
grey denote those which have been sold
04
Opportunity to build
highvalue companies
Found companies around science in areas
ofhigh unmet medical need
Selecting only those assets that can
credibly be developed to approval by
abiotechnology company
Maximises ability to access out-return in life
science by being able to hold companies late
into development and to approval
05
Strategic balance sheet
Provides exibility to fund our companies
over the long term, maintaining signicant
ownership positions and inuence
Ability to fund helps to attract best
academics, founders, executives and
nancing syndicate partners
Provides strong negotiating position for
external nancing rounds or M&A
06
Portfolio with the potential
to deliver transformational
treatments
Portfolio of high growth companies
diversied across therapeutic area, tissue
compartment and development stage
Companies built with the ambition and
capability to deliver products to patients
Increasing value creation potential
*
Delivering value
We have a diverse and maturing
portfolio that has the potential to
deliver value for our shareholders
over the long term.
£905.7m
Invested in life science portfolio
since 2012
1
1.6x
Gross multiple on invested capital
1,2
3
Portfolio companies sold
4.6x
Gross multiple on invested capital
on three companies sold to date
1
1 Reflects capital invested by Syncona
Partners where applicable
2 Includes write offs from Azeria and 14MG
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
5
Chair’s statement
£1.3bn
Net Asset Value
£40.6m
Donated to charity since 2012, the
year the Foundation was started
T
his was a pivotal year for Syncona.
We completed our third successful
exit, added a new company to the
portfolio, optimised our financing
approach, strengthened our team and
capital base, and made positive financial,
clinical and operational progress in the
portfolio. I’m proud that the team achieved
this while navigating continued COVID-19
constraints and volatile market conditions
for much of the year, overcoming these
challenges to deliver significant progress
towards our long-term goals.
Financial performance
The second half of CY2021 was marked by
significant volatility across equity markets
globally. This uncertainty has carried on into
2022, compounded by concerns around
inflation, interest rates and Russia’s invasion
of Ukraine and the ongoing humanitarian
crisis. This has impacted investor sentiment
towards risk assets. We have seen a macro
rotation away from growth stocks, impacting
both valuations and financings of biotech
companies, especially smaller, earlier
stagecompanies. As market volatility has
increased, the Syncona team continues to
carefully review the requirements of each of
our portfolio companies and our capital pool
to ensure that our Company is well positioned
to navigate continuing challenging markets.
Our balance sheet provides us with a
strategic advantage, and the team’s expertise
and rigorous approach to risk management
means we continue to take a disciplined
approach to capital allocation across a
well-funded portfolio and exciting pipeline.
Syncona ended the year with net assets of
£1,309.8 million or 194.4p per share, a 0.3
per cent return in the year (31 March 2021:
net assets of £1,300.3 million, NAV per share
of 193.9p, 4.4 per cent return), despite the
wider market backdrop for life science
companies, which saw the NASDAQ
This was a pivotal year for Syncona.
We completed our third successful
exit, added a new company to the
portfolio, optimised our financing
approach, strengthened our team
andcapital base, and made positive
financial, clinical and operational
progress in the portfolio”
Melanie Gee
Chair of Syncona Ltd
Syncona Limited Annual report and accounts 20226
Our values are at the heart of all that we
do as we seek todeliver Syncona’s
purpose for our stakeholders
Teamwork
Entrepreneurial
Leadership
Excellence
Data Driven
Biotechnology Index decline 12 per cent
during the period. The significant NAV uplift
achieved through the sale of Gyroscope to
Novartis and multiple successful private
financings offset the decline in share prices
ofour three listed companies, Autolus,
Freeline and Achilles. We recognise that the
performance of these listed companies has
been disappointing for our shareholders.
Ourteam have worked closely with portfolio
company management teams to support
them as they continue to execute their
development plans. Similarly, the challenging
market conditions have also impacted
Syncona’s share price performance in the
financial year, which has been disappointing.
Whilst the market environment for early
stagebiotech companies continues to be
challenging, our listed companies are funded
to deliver clinical data which represent key
milestones for their businesses, and we
believe Syncona is well positioned to deliver
growth over the long term.
Delivering our long-term strategy
underpinned by a disciplined approach
to capital allocation
Ensuring we have a strong capital base to
support our companies, as they scale and
access the significant value that can be
created when companies are set up and built
to deliver products to patients, is fundamental
to the Syncona model. This is a key strategic
advantage that has been considerably
strengthened with the sale of Gyroscope.
Together with the management team, the
Syncona Board has undertaken a review of
our financing strategy and, as outlined in our
interim results in November 2021, we have
optimised our approach to support us in
shaping the balance of financial risk and
reward across the portfolio as we build
towards a diversified portfolio of 15-20
companies. We believe holding a small
number of companies privately over a longer
time frame than we have historically will
provide our shareholders with improved
risk-adjusted returns over the long term.
Our role in society and engaging our
major stakeholders
Whilst a core focus is looking at how to
deliver value for our shareholders, the Board
and the investment team have continued to
engage with our major stakeholders over the
year. Our people are highly motivated by
making a difference to the lives of patients
by founding and building companies based
on exciting science. We believe our work
can have a positive social impact across
different areas of society. I was particularly
pleased that the discussions we had around
the decision to sell Gyroscope to Novartis
considered the impact of the change in
Excellence
We continually strive for the best
outcome for all of Syncona’s
stakeholders
We have high expectations of
ourselves and each other; we act
with integrity
We work with the best people to
deliver our goals
Entrepreneurial
We actively engage with the
external world and work to create
its future
We are curious and creative to
bring about the change we seek
to make
We take risks in a competitive
world and facethem with bravery,
determination and urgency
Teamwork
We seek to give and receive
constructive feedback
We are collaborative
andtransparent, valuing our
diverse talents andperspectives
We admit our mistakes and
perpetually seek to improve
Data Driven
We are relentless in searching
out all of the data
We ensure our hypotheses
and decisions are rmly
grounded in the data
We are intellectually honest
and provide open and
constructive challenge
Leadership
We see what needs to be done
and take responsibility for doing it
We take personal ownership for
delivering Syncona’s mission
We think independently; weare
not bound byprecedent
We are trusted and empowered
to progress our own development
We have drive, resilience and
persistence
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
7
TheSyncona Foundation (the “Foundation”).
The Foundation continues to have a
significant impact across the UK and
throughout the world. The charities the
Foundation supports have faced immense
challenges throughout the pandemic, and
we are proud that our support has helped
them to continue their important work
duringthis time.
Sustainable impact
Following the publication of our Sustainability
Policy and Responsible Investment Policy
lastyear, the team have worked with passion
and dedication to advance our sustainability
agenda this year. I have been delighted to see
the progress that has been made in engaging
our portfolio companies on these important
issues. We recognise, as significant
shareholders in these businesses, the
influence we can have, and have engaged
them on a number of important topics
suchas diversity and animal welfare. The
leadershipteams at our portfolio companies
have positively engaged with us and share
ourpriorities. We expect to report on their
progress in these areas as they move forward.
There has also been good progress on our
own culture and diversity initiatives. These will
be covered in further detail in our Sustainability
Report 2022. I am proud of the progress the
Company has made in trying to improve
diversity in the life science space, whilst
recognising it is an area where we have
morework to do.
We recognise the importance of having a
strong framework in place to minimise our
carbon footprint. With this in mind, Syncona
has reported this year for the first time in line
with the recommendations of the Task Force
on Climate-related Financial Disclosures
(TCFD). It has also set an aspiration to be
netzero amongst its full value chain by 2050,
including portfolio company emissions.
Governance changes
As Syncona entered its 10th year since
foundation, there have been a number
ofBoard changes, with Nigel Keen
andNicholas Moss stepping down as
Non-Executive Directors on 31 December
2021, whilst Tom Henderson stepped down
at the 2021/2 Annual General Meeting.
Nigel was the founding Chair of Syncona
Partners in 2012 while Nicholas had been
aDirector of Syncona (then BACIT) when
itoriginally listed in that year; both made
invaluable contributions to the business
overtheir nine-year tenures and leave with
our immense gratitude for their service and
with the Company well positioned for
futuregrowth. Tom also made a significant
contribution to the business during his time
Chair’s statement
There were a number of changes to
the Board during the financial year:
Dr Julie Cherrington
Joined in February 2022 as an
experienced life sciences executive,
with a strong track record of drug
development, from the clinic through
to commercialisation.
Dr Cristina Csimma
Joined in February 2022, bringing
significant expertise as a biopharma
executive, along with experience in
venture capital and the US biotech
capital market environment.
Tom Henderson
Stepped down in August 2021, after
serving nine years as a Non-Executive
Director. He will continue his role as
Chair of the Syncona Foundation.
Nigel Keen
Stepped down in December 2021, after
making an invaluable contribution since
co-founding Syncona Partners in 2012,
to being a member of the Syncona Ltd
Board and chairing theSyncona
Investment Management Ltd Board.
Nicholas Moss
Stepped down in December 2021,
after serving nine years as a
Non-Executive Director including as
Senior Independent Director.
Read more:
Board of Directors
Page 80
Changes at Board level
with us and we have been delighted that he
has continued his involvement with Syncona
through his Chair role at The Syncona
Foundation. Following their departures,
Virginia Holmes has taken up the role of
Senior Independent Director and Gian
PieroReverberi became Chair of the
Remuneration Committee, whilst Martin
Murphy has taken over the role of Chair of
Syncona Investment Management Limited.
We have also appointed two Directors
withsignificant life science experience to
enhance the diverse blend of expertise
andinsights that the Board provides to the
management team as they seek to expand
and develop a maturing portfolio. Dr Julie
Cherrington comes with a strong track
record of bringing drugs into the clinic and
through to commercialisation, with particular
expertise in the oncology setting, and Dr
Cristina Csimma joins Syncona with nearly
30 years’ experience of drug development,
new company formation, value creation and
strategic guidance across a broad range of
therapeutic areas. Cristina also brings
significant expertise in venture capital and
the US biotech capital market environment.
I am delighted to be working alongside both
Julie and Cristina on the next phase of
Syncona’s growth and development.
Looking ahead
We have further strengthened our platform
this year with key hires to our expert team,
astrategic capital base, optimised financing
approach, and exciting portfolio of life science
companies. The business is well positioned
tocreate a diversified portfolio of 15-20
companies with a goal of delivering three to
five companies in which we retain a significant
ownership interest to the point of product
approval on a rolling 10-year basis. We
believe if we achieve this goal, we will deliver
transformational outcomes for patients and
strong risk-adjusted returns for shareholders.
I would like to close by thanking the Syncona
team, the portfolio company management
teams and my Board colleagues for their hard
work and dedication this year, as well as our
shareholders and other stakeholders for their
continuing support.
Melanie Gee
Chair of Syncona Ltd
ownership on each of our key stakeholder
groups, critically from a patient perspective.
Our view was that Novartis has the capability
and expertise to drive Gyroscope’s exciting
therapies through the development and
regulatory pathway to reach patients on an
accelerated trajectory.
A core part of our social contribution,
outside of the day-to-day work that we do,
has always been our donation (currently
0.35 per cent of NAV) to charity delivered
primarily through our commitment to
Syncona Limited Annual report and accounts 20228
SECTION 172 STATEMENT
In line with the Corporate Governance
Code 2018, this statement covers
how the Board has considered the
matters set out in section 172 of the
UK Companies Act 2006.
Section 172 requires directors to have
regard to the long-term consequences
oftheir decisions, the interests of key
company stakeholders, the impact of the
company’s activities on the community
and the environment, the desirability of
maintaining a reputation forhigh standards
of business conduct, and fair treatment
between the members of the company,
against a backdrop of the company’s
overall strategy and business model.
As a Guernsey company that legislation
does not directly apply to Syncona, but
the Board recognises the importance
ofthese issues.
As described in the Corporate
governance report (pages 76-79),
Syncona is an investment company and
has appointed its subsidiary Syncona
Investment Management Limited (SIML)
as Investment Manager, and delegated
responsibility for managing the
investment portfolio to it. Accordingly
theBoard is not directly involved in
management of the investment portfolio,
other than in respect of very large
decisions (such as the Gyroscope sale
this year) but sets strategy and oversees
the activities oftheSyncona team. The
Board’s consideration of the section 172
matters therefore mostly takes place in
the context of setting strategy and
oversight, with individual decisions being
relatively infrequent. During the year the
Board was required to consider the
proposed sale of the Company’s
investment in Gyroscope and further
details of how the Board approached
that decision are set out on the right.
Long-term decision-making
The Board is responsible for setting the
Company’s purpose, investment policy,
strategic objectives and risk appetite.
Ourpurpose is to extend and enhance
human life by founding and building
companies to deliver transformational
treatments to patients in areas of high
unmet need.
Inherent in this model is that we are
making investments where it could take
10 to 15 years to reach product approval,
and where significant investment and risk
is involved to get to that point. A long-term
outlook is therefore embedded in the
Company’s approach, and is a core part
of the Board’s discussions on strategy
and its oversight of the Syncona team and
when it does make individual decisions.
Further details: see Our strategy (pages
14-15); Investment process (pages
16-17); Risk management and Principal
risks (pages 44-53); Corporate
governance report (pages 76-79).
Our key stakeholders
Positive relationships with our
stakeholders are important to the success
of our business and in maintaining our
reputation and the Board reviews how it
and the Syncona team engage with these
stakeholders on an ongoing basis. Our
key stakeholders include our patients,
shareholders, the Syncona team and
portfolio companies. We also regard
wider society, including our impact on the
community and the environment, as one
of our key stakeholders. How the interests
of each of these key stakeholders are
taken into account in the business and by
the Board, is described in more detail on
pages 82-83.
Further details: see Sustainability (pages
54-71); Corporate governance report
(pages 76-79).
Maintaining a reputation for high
standards of business conduct
The Board is responsible for monitoring
theculture, values and reputation of the
business. Last year the Board worked
withthe Syncona team to capture the
Company’s purpose and values and
during this year has reviewed the steps
taken by the team to ensure that our
processes and ways of working are
aligned with those values. The Board
also monitors the implementation of our
sustainability framework, which sets out
how we will actas a responsible investor.
Further details: see Sustainability (pages
54-71); Corporate governance report
(pages76-79).
Case study: Sale of Gyroscope
During the year the Company sold its
investment in Gyroscope toNovartis. This
was a significant transaction for Syncona
and required Board approval of the sale.
The Board discussed and agreed that
thetransaction was consistent with
theCompany’s long-term strategy,
particularly given the transaction structure
which gives Syncona ongoing exposure to
Gyroscope’s development and the potential
for significant additional returns subject to
certain milestones. In addition, the Board
considered that there would be a positive
impact on the Company as the proceeds
ofthe sale would enable us to fund
opportunities elsewhere in theCompany
portfolio, particularly at a time of increased
market volatility affecting sentiment towards
early stage biotech businesses. While
retaining the investment was also attractive,
the Board noted the significant funding
required to get the Gyroscope business
tothe point of product approval, and
thatthere were risks, including market
conditions, around whether Gyroscope
could obtain this funding.
The Board also considered the impact
onvarious stakeholders and in particular
considered that Novartis’ strong
ophthalmology and gene therapy
experience had the potential to provide
astrong platform for the Gyroscope
business, potentially improving the speed
of getting a product to approval and
making it widely available to patients. For
shareholders the transaction represented
astrong return with the opportunity
forfurther upside from milestones. For
employees, while the Board acknowledged
the potential that some employees may
not be retained following the transaction,
the Board believed that the transaction
would benefit employees through the
incentive schemes that were in place
priorto the sale, and balanced these
considerations against the positive impacts
for Syncona and its other stakeholders.
Having considered all of these factors
theBoard approved the sale of the
Company’s investment in Gyroscope. The
sale transaction was signed in December
2021 and completed in February 2022.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Syncona Limited Annual report and accounts 2022
9