Investor in global life sciences businesses, Syncona (SYNC) reported a 13.3% fall in the total return of its portfolio to £1.25bn, or 185.6p per share for the year ended 31 March 2020.
The decline was the result of an 81% decline in the value of listed holding, Autolus Therapeutics (NASDAQ:AUTL). Shares in Syncona gave up 1% to trade at 220.7p on the news.
ABOUT AUTOLUS
The portfolio has a 27% shareholding in Autolus, which is developing next generation programmed T cell therapies for the treatment of cancer. T cells are a type of immune system cell which are changed in the laboratory so they will attack cancer cells.
Syncona’s investment in Autolus fell from £280.9m to £77m, which wiped out both the write-up of Achilles and the uplift in value of Blue Earth when it was sold to Bracco Imaging.
Management said the share price decline was driven by ‘concerns relating to manufacturing delays and the company’s decision to discontinue its AUTO2 and AUTO3 programmes.’
COVID-19 has impacted the ability of some clinical sites to operate normally but current expectations are that the effect will remain relatively limited. In addition after the year-end Autolus reported positive data showing good efficacy, safety and durability for its AUTO3 programme.
Since the end of March Autolus' shares have rebounded by 131%, increasing Syncons's valuation by £95.5m.
A YEAR OF CHANGE
Over the last year the company has significantly changed the shape of its portfolio with the sale of Blue Earth for $476.3m and Nightstar Therapeutics for $877m, achieving in aggregate a 6.6 times return on invested capital. Consequently the capital pool has expanded to £767m at 31 March 2020.
Maintaining a strong capital pool of liquidity is central to the company delivering on its strategy and enables the firm to make long-term commitments to its portfolio of companies.
During the year most of the legacy investments were redeemed to leave the capital pool 90% invested in cash and short-term UK treasury bills. The fund had £147.3m of uncalled commitments at the period end.
The long-term goal is to build a diverse portfolio of 15-to-20 companies over a rolling 10-year period, with two or three companies founded each year and three-to-five being taken to product approval. The portfolio consisted of nine companies at year-end.
During the year, Syncona committed £206.4m of capital across the portfolio to build out industrial capabilities and scale as well as funding a new company Azeria, focussed on developing small molecule therapies to treat hormone resistant breast cancer.
For the year ahead the company expects to deploy between £150m and £250m across the portfolio, determined by the amount of third-party capital that the investee companies are able to access.
Syncona does not anticipate COVID-19 related delays to clinical trials having an impact on the reported valuations of its privately held companies.
