- Positive NAV return despite weak biotech sector
- Balance sheet strengthened following Gyroscope sale
- Plans to deploy more cash
Life sciences investment trust Syncona (SYNC) reported a largely unchanged net asset value for the year ended 31 March of £1.31 billion, equivalent to 194.4p per share.
The sale of Gyroscope Therapeutics to Novartis for $1.5 billion and valuation write-ups following financings for Quell Therapeutics, Anaveon and OMass Therapeutics drove a £274.8 million uplift in valuation.
However, this was offset by the big decline in share prices in the quoted portfolio following a period of significant market volatility which saw the value of the holdings drop by £278.5 million.
The Nasdaq Biotechnology index has lost around 30% of its value over the last year as a combination of rising interest rates and shifting of investor interest following the reopening of the economy drove prices lower.
The shares were unchanged at 190p on Thursday. Numis estimates the current net asset value adjusted for quoted holdings and currency moves is 192.3p, implying the shares trade at a 1% discount.
STRONG TRACK RECORD
The capital base increased by 35% to £784.9 million following the sale of Gyroscope and represents around 60% of net asset value. The transaction was the company’s largest to date and the UK’s fourth largest biotech exit.
The exit adds to the growing success for Syncona with the three sales from the portfolio generating returns of over £930 million representing an aggregate multiple of 4.6 times the invested capital.
PUTTING MORE CAPITAL TO WORK
After deploying £123.2 million of capital into its companies last year Syncona said it planned to increase the deployment in the current financial year to between £150 million and £250 million.
This will be used to invest in the existing portfolio and in starting new companies. The firm has evolved its investment approach and intends to hold private companies for longer.
Numis noted that the timing of putting extra capital to work might prove attractive given the turmoil in the biotech sector.
The company said it expected positive clinical trial data to be the main driver of value with several portfolio companies approaching key milestones.
EXPERT VIEW
Numis commented: ‘In a torrid year for Biotech companies, we believe that Syncona has done well to deliver a marginally positive NAV total return (+0.3%).
‘Syncona’s portfolio companies are well funded through to milestones and the cash on the balance sheet will also allow it to deploy capital at what may prove to be attractive valuations.
‘Ultimately, success in the science will be the driver of value for the company and Syncona has a strong record in that regard.
‘We believe Syncona benefits from an exceptional management team that has delivered multiple exits that demonstrate its ability to found and build highly-valued life sciences companies.’
