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Syncona Limited
16 June 2022
Syncona Limited
Final Results for the Year Ended 31 March 2022
Pivotal year further validating the Syncona model; positive
progress and momentum delivered across the portfolio against a
challenging macro backdrop
16 June 2022
Syncona Ltd, ("Syncona"), a leading healthcare company focused
on founding, building and funding a portfolio of global leaders in
life science, today announces its Final Results for the year ended
31 March 2022.
Martin Murphy, CEO and Chair, Syncona Investment Management
Limited, said: "This year marks an important milestone for Syncona,
a decade since it was founded. I am proud of our achievements over
the last 10 years, which have validated the vision we set out in
2012, to build globally leading life science companies that have
the potential to deliver transformational outcomes for
patients.
Whilst we have seen underperformance across our listed holdings
in this financial year and macroeconomic headwinds have impacted
sentiment in the biotech sector, our model has continued to deliver
notable successes in the period. We have worked closely with our
companies to continue to drive progress, investing at scale into
the portfolio and generating valuation uplifts across our privately
held companies. Our companies raised more than $700 million across
seven financings during the financial year, ensuring they are well
funded to deliver on key upcoming milestones. We also executed our
largest transaction to date, the sale of Gyroscope to Novartis for
up to $1.5 billion including milestones. Our strengthened 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 companies as they scale.
The future for the life science industry in the UK and across
Europe is exciting and our platform is well-placed to capture the
significant opportunity ahead."
Financial performance
-- Net assets of GBP1,309.8 million (31 March 2021: GBP1,300.3
million); 194.4p ([1]) per share (31 March 2021: 193.9p per
share), a NAV total return of 0.3 per cent ([2]) (31 March
2021: 4.4 per cent)
o The sale of Gyroscope Therapeutics (Gyroscope) and valuation
write ups from Series B financings of Quell Therapeutics
(Quell), Anaveon and OMass Therapeutics (OMass) drive GBP274.8
million (41p per share) valuation uplift
o Performance offset by decline in share prices of our listed
portfolio companies Autolus Therapeutics (Autolus), Achilles
Therapeutics (Achilles) and Freeline Therapeutics (Freeline)
in a period of significant market volatility, with the value
of these holdings reducing by GBP278.5 million
-- Life science portfolio, valued at GBP524.9 million (31 March
2021: GBP722.1 million), a 0.8 per cent return ([3]) (31 March
2021: 11.8 per cent return); delivering a return in challenging
market conditions for biotech ([4])
-- Strengthened capital base of GBP784.9 million at 31 March 2022
(31 March 2021: GBP578.2 million) following sale of Gyroscope
to Novartis
-- Deployed GBP123.2 million ([5]) of capital in the year (31
March 2021: GBP189.2 million)
Sale of Gyroscope to Novartis for up to $1.5 billion,
demonstrating growing track record of success ([6])
-- Syncona's largest transaction to date and the UK's fourth largest
biotech exit; builds on successful track record with the three
sales from Syncona's portfolio generating returns of >GBP930
million, an aggregate 4.6 multiple on invested capital ([7])
-- Transaction included $800.0 million (GBP589.4 million) in upfront
cash proceeds, which represents $442.2 million (GBP325.8 million)
for our holding in Gyroscope delivering a 2.9 multiple on cost
and 50 per cent IRR in the six years following its foundation
([8])
-- The sale of Gyroscope will potentially generate a further GBP255.3
million for Syncona, through future milestone payments which,
if received, would take total proceeds to GBP581.1 million,
a 5.1 multiple on cost
-- The upfront cash proceeds and the value of the discounted risk-adjusted
milestone payments represent an uplift to NAV of GBP225.5 million
to Syncona's 31 March 2021 valuation of Gyroscope
-- Syncona also positioned to benefit from any future commercialisation
of Gyroscope's lead programme via a low single-digit royalty
on future sales revenue
Multiple financings across the portfolio at valuation uplifts,
with $712.2 million of capital raised in the financial year
-- Portfolio raised $712.2 million (GBP531.8 million) of commitments
across seven financings during the period; $585.8 million (GBP434.1
million) raised from global institutional investors and companies,
with $126.4 million (GBP97.7 million) committed by Syncona
-- Two further Series B financings announced post period end:
o OMass raised GBP75.5 million in a syndicated round, with
Syncona committing GBP15.0 million at a 32 per cent valuation
uplift to previous holding value
o SwanBio Therapeutics (SwanBio) raised $55.9 million, with
Syncona committing $53.7 million
-- Our diversified portfolio of 11 companies is well positioned
and funded to deliver on its key upcoming milestones
Positive clinical progress and upcoming clinical milestones have
potential to drive value over the next 12 months
-- 12 clinical data read-outs during FY2021/2 with our most clinically
advanced company, Autolus, approaching a meaningful read-out
from its pivotal trial in obe-cel in H2 CY2022
-- Seven clinical stage companies expected in the next 12 months,
with Quell, SwanBio and Neogene Therapeutics (Neogene) set
to enter the clinic
Next generation cell therapy company, Clade Therapeutics
(Clade), added to the portfolio, and a strong pipeline of new
opportunities
-- $87.1 million Series A financing in November 2021 into new
portfolio company Clade, with a $30.0 million commitment from
Syncona
-- Excited by the diverse opportunities for new investment that
we continue to see across therapeutic and domain areas, including
in gene therapy, cell therapy, small molecules, biologics,
antibodies, and other Third Wave modalities such as nucleic
acid therapies
Strengthening the Syncona team to scale the business
-- Three appointments to the senior leadership team, including
Rolf Soderstrom as Chief Financial Officer, Markus John, M.D.
as Chief Medical Officer and Head of R&D, and Fiona Langton-Smith
as Chief Human Resources Officer
-- Two further additions to the senior investment team: Lisa Bright
as Commercial Advisor and Ben Woolven as Business Strategy
and Operations partner
Delivering on our strategy to build a diversified portfolio of
leading life science companies and deliver strong risk-adjusted
returns
Optimised financing approach
As outlined in our interim results in November 2021, as we build
Syncona towards our target of having a diversified portfolio of
15-20 companies, we are evolving our approach to funding our
companies to optimise the balance of risk and reward across the
portfolio and further leverage our competitive differentiation in
identifying science, defining commercial opportunity, and building
a company around it. This optimised approach will involve holding a
small number of companies privately for longer, whilst syndicating
others at an earlier stage before the point of clinical
validation.
Capital deployment to increase in FY2022/3
Syncona's strengthened capital base, following the Gyroscope
sale, provides us with a strategic advantage, particularly in the
current market environment. We expect to deploy GBP150-GBP250
million of capital in FY2022/3 as we found new companies, invest in
our existing portfolio, and hold a select number of companies
privately for longer as part of the evolution of our financing
approach. We continue to maintain a disciplined approach to capital
allocation.
Key upcoming milestones
Positive data generated from our clinical pipeline will be the
main driver of value and, while not without risk, we have a number
of portfolio companies approaching key clinical milestones.
-- Autolus expects to:
o Progress its pivotal study in obe-cel in r/r adult ALL and
provide a meaningful data read-out in H2 CY2022; full data
expected H1 CY2023
o Announce longer follow-up data for AUTO1/22 in paediatric
ALL in H2 CY2022
-- Achilles expects to provide interim data from higher dose
clinical cohorts of its cNeT therapy in NSCLC and melanoma
in H2 CY2022
-- Freeline expects to make progress across its three programmes:
o Initial data from first cohort in Phase I/II dose confirmation
study in haemophilia B to be presented at Congress of the
International Society on Thrombosis and Haemostasis (ISTH)
in July 2022
o Initiate second cohort of Phase I/II Fabry disease programme
in mid-CY2022, programme update expected in H2 CY2022
o Report initial data from Phase I/II Gaucher disease Type
1 programme in H2 CY2022
-- Anaveon expects to publish further data from its Phase I trial
for its selective IL-2 agonist, ANV419, in H2 CY2022
-- Quell expects to dose the first patient in its lead programme,
QEL-001, in H2 CY2022
-- SwanBio expects to enter the clinic with its lead SBT101 programme
in adrenomyeloneuropathy (AMN) in H2 CY2022
-- Neogene expects to enter the clinic with its NT-125 TCR therapy
in advanced solid tumours in H1 CY2023
Enquiries
Syncona Ltd
Natalie Garland-Collins / Fergus Witt
Tel: +44 (0) 7714 916615
FTI Consulting
Ben Atwell / Julia Bradshaw / Tim Stamper
Tel: +44 (0) 20 3727 1000
About Syncona
Syncona's 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 found, build and fund companies around
exceptional science to create a diversified portfolio of 15-20
globally leading healthcare businesses, across development stage
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 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 poor treatment options, build sustainable life science
companies and deliver strong risk-adjusted returns to
shareholders.
Copies of this press release and other corporate information can
be found on the company website at: www.synconaltd.com
Forward-looking statements - this announcement contains certain
forward-looking statements with respect to the portfolio of
investments of Syncona Limited. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements. In particular, many companies
in the Syncona Limited portfolio are conducting scientific research
and clinical trials where the outcome is inherently uncertain and
there is significant risk of negative results or adverse events
arising. In addition, many companies in the Syncona Limited
portfolio have yet to commercialise a product and their ability to
do so may be affected by operational, commercial and other
risks.
Chair statement, Melanie Gee
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. 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 GBP1,309.8 million or
194.4p per share, a 0.3 per cent return in the year (31 March 2021:
net assets of GBP1,300.3 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 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 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 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 10(th) 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 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.
Strategic and operational review, Martin Murphy, CEO and Chair
of Syncona Investment Management Limited
The Syncona life science business is celebrating 10 years of
exceptional progress and I am delighted that FY2021/2 was a year in
which we further validated our model and approach. We have made
significant progress with multiple financings and the sale of
Gyroscope to Novartis, our third successful exit and our largest
ever transaction. Our portfolio has positive momentum and we have
further strengthened our team and capital base as we continue to
scale for long-term success. I am pleased that we have also
delivered a solid financial performance in what has been
challenging market conditions for biotech.
Strong financial, clinical and operational progress in the
portfolio delivered against a challenging market backdrop
We ended the year with a portfolio of 11 companies diversified
across the development cycle and therapeutic focus areas, with four
at clinical stage and Quell, SwanBio and Neogene expected to enter
the clinic in the next 12 months.
Many of our portfolio companies have made good progress, with
multiple private financings at uplifted valuations, and significant
clinical and operational progress with 12 clinical data read-outs
during FY2021/2. We continue to seek to build globally competitive
businesses which have the potential to make a difference to the
lives of patients and to deliver attractive returns for our
shareholders.
Against a challenging macro backdrop, we have delivered value
progression through financings in our private companies and the
sale of Gyroscope to Novartis. However, this strong performance,
which delivered an aggregate uplift of GBP274.8 million in NAV, has
been offset by the decline in the share prices of our listed
holdings, Autolus, Achilles and Freeline, with the value of these
holdings reducing by GBP278.5 million. These listed holdings were
impacted by volatility in the equity markets and challenging market
sentiment towards cell and gene therapies. In the case of Freeline,
the COVID-19 pandemic also led to operational challenges in the
business, which we have worked closely with the company to address.
We ended the year with net assets of GBP1,309.8 million or 194.4p
per share, a 0.3 per cent return in the year (31 March 2021: net
assets of GBP1,300.3 million, NAV per share of 193.9p, 4.4 per cent
return), and a strengthened capital base of GBP784.9 million at 31
March 2022 (31 March 2021: GBP578.2 million). The life science
portfolio delivered a return of 0.8 per cent in the year, compared
to a return from the NASDAQ Biotechnology Index of (12) per
cent.
For Autolus and Achilles, the focus is on executing well on
their clinical plans and the new leadership team at Freeline has
driven efficiencies and increased focus on execution across the
pipeline. Clinical data is the key driver of value in our sector
and all three are well positioned and well funded to deliver on
their key upcoming clinical milestones. I believe a core strength
of our diverse portfolio, which provides access to innovative
private companies, is that we have been able to deliver solid
performance even when the biotech sector is experiencing very
challenging conditions.
A growing track record of successfully building globally
competitive businesses
In December 2021, we announced our largest exit to date, the
sale of retinal gene therapy company, Gyroscope, to Novartis, for
up to $1.5 billion (GBP1.1 billion) ([9]) . The transaction
generated upfront cash proceeds of $442.2 million (GBP325.8
million) for our holding in Gyroscope, a 2.9 multiple on cost and
50 per cent IRR ([10]) .
We have shown through the sales of Nightstar, Blue Earth and now
Gyroscope, that we can deliver strong risk-adjusted returns for our
shareholders. These three exits have generated returns of
>GBP930 million, an aggregate 4.6 multiple on our invested
capital ([11]) .
We founded Gyroscope in 2016 upon the research of the late Sir
Peter Lachmann into complement factor I, and in under six years
built it from an idea to a leader in retinal gene therapy; a
platform company with world-class delivery and manufacturing
capability, and an exciting therapy advancing through Phase II
development for the treatment of geographic atrophy (GA) secondary
to dry age-related macular degeneration (dAMD).
In addition to the upfront cash proceeds, the sale of Gyroscope
will potentially generate a further GBP255.3 million for Syncona,
through future milestone payments, which, if received, would take
total proceeds to GBP581.1 million, a 5.1 multiple on original cost
([12]) . At 31 March 2022, we are valuing these potential future
payments, on a risk-adjusted and discounted valuation basis, at
$65.4 million (GBP49.8 million) ([13]) . Syncona is also positioned
to benefit from any future commercialisation of Gyroscope's lead
programme via a low single-digit royalty on future sales
revenue.
We believe this transaction further validates our strategy that
a long-term approach to ownership and focus on delivering approved
medical products ensures that we are able to build globally
competitive businesses and can deliver cash returns to fund
exciting opportunities in the portfolio and in our pipeline.
A well-funded portfolio with $712.2 million of capital
raised
Our portfolio companies have continued to attract substantial
capital commitments from specialist institutional and strategic
investors, with financings announced across seven of our portfolio
companies in the financial year: Autolus, Quell, Anaveon,
Gyroscope, Clade, Freeline and Resolution Therapeutics
(Resolution), totalling $712.2 million (GBP531.8 million), of which
Syncona committed $126.4 million (GBP97.7 million).
This significant investment into the portfolio continued post
period end. In April, OMass announced an oversubscribed Series B
financing of GBP75.5 million, with Syncona committing GBP15.0
million alongside a leading global syndicate of new and existing
investors including GV, Northpond, Sanofi Ventures, Oxford Science
Enterprises and Oxford University. In May, we also announced a
$53.7 million (GBP43.6 million) commitment to SwanBio in a $55.9
million (GBP45.3 million) Series B financing, which will provide
further funding to the company as it prepares to dose the first
patient in its lead SBT101 programme, as well as develop its
broader pipeline.
Managing risk and reward, core to the delivery of our long-term
strategy
As we build towards our rolling 10-year target of a balanced and
diversified portfolio of 15-20 companies across development stage
and domain area, we have optimised our approach to funding our
portfolio companies.
Our balance sheet and expertise provide us with flexibility but,
as outlined in our interim announcement, there will be an earlier
decision for each portfolio company to follow one of two main
financing paths for our companies:
1. Bring in external investors early (before the point of clinical
validation) to provide capital at scale, allowing Syncona to
maintain a significant ownership position in the company whilst
providing the company with a broader set of supportive investors
2. Companies to be funded privately for longer, to the point of
clinical validation
Decisions on which approach to pursue for each portfolio company
will be taken on a company-by-company basis. This continued
evolution and refinement of the funding approach for our companies
will change the financial risk profile of our portfolio. Over the
long term, we believe this approach will create a well-diversified
portfolio and help us to effectively manage some of the volatility
seen to date through accessing the public markets, as we look to
provide our shareholders with access to a financially diversified
portfolio of private and listed high growth life science
companies.
We will continue to balance our position as a long-term
strategic holder of our companies alongside our focus on delivering
strong risk-adjusted returns to our shareholders. In some
instances, our view of the balance of risk and reward may result in
us selling a portfolio company, as we have recently done with
Gyroscope. In any exit decision, we look at the opportunity
available to the business, the market context, the level of
scientific or clinical risk, the level of funding required to take
full advantage of the opportunity, and the potential return that
could be delivered today and in the future.
Capital deployment to increase over the next financial year
During the financial year, Syncona has deployed GBP123.2 million
of capital into the portfolio, underpinned by our strong capital
base, which has increased to GBP784.9 million following the recent
sale of Gyroscope. This provides us with a strategic advantage to
fund our companies over the long term and attract world-class
leaders to our portfolio, as well as the ability to support our
portfolio companies during challenging market conditions, such as
we see today.
We have reviewed our approach to capital pool asset allocation
in light of the current inflationary environment, including our
approach to foreign exchange exposure, resulting in a decision to
selectively introduce a number of fund investments to the capital
pool, and to hold more US dollars on an ongoing basis to align
against future US dollar portfolio investment requirements. We
continue to balance liquidity and access to capital to protect the
value of the capital pool.
We expect to deploy GBP150-GBP250 million of capital in FY2022/3
as we found new companies, our existing portfolio companies
continue to scale, and we hold a select number of companies
privately for longer.
Innovative cell therapy company added to the portfolio and a
strong pipeline of opportunities ahead
We continue to be excited about the opportunities we see in our
sector. We welcomed Clade to our portfolio, an innovative, next
generation stem-cell based therapeutics company, leading a $87.1
million Series A financing alongside a syndicate of long-term
investors. This investment provides us with exposure to the
allogeneic cell therapy field, and further builds out our cell
therapy portfolio.
We have a strong pipeline of potential new Syncona companies as
well, with multiple advanced opportunities that are in late-stage
due diligence. We are excited by the diverse opportunities for new
investment that we continue to see across therapeutic and domain
areas, including in gene therapy, cell therapy, small molecules,
biologics, antibodies, and other Third Wave modalities such as
nucleic acid therapies, as we continue to leverage the team's
expertise in identifying exceptional science that has the potential
to deliver dramatic efficacy in areas of high unmet medical
need.
We are excited by the opportunities for new investment, as we
look to continue to add on average two to three companies per
year.
A leading cell and gene therapy portfolio
Within our portfolio, our companies are at the forefront of
innovation in cell and gene therapy. We are excited by the
transformational potential of these treatments for patients and the
significant commercial opportunity for pioneering biotech companies
in this field.
There have been some challenges identified across the cell and
gene therapy sector, namely around safety in certain gene therapy
approaches and the complexity of cell therapy manufacturing, which
have impacted sentiment towards early stage businesses operating in
this space. These are not new issues and, as part of our investment
thesis, we work to navigate and address these challenges as we
found and build our companies. We are comfortable that our
companies are continuing to strive to deliver safe and effective
treatments for patients.
Scaling the Syncona business for success
We are continuing to scale Syncona, broadening the bench of
talent and skills across all areas of the business.
As previously announced, during the year Syncona has appointed
Rolf Soderstrom as Chief Financial Officer, Markus John, M.D. as
Chief Medical Officer and Head of R&D, and Fiona Langton-Smith
as Chief Human Resources Officer. These hires are already making a
valuable contribution to Syncona, driving growth and execution
across the business.
We have also appointed Lisa Bright as Commercial Advisor and Ben
Woolven as Business Strategy and Operations partner. Lisa is a
senior commercial leader and board member with over 30 years'
experience in biopharmaceuticals, serving in executive and general
management roles where she has developed expertise in launching
innovative specialty medicines. Lisa already serves on the board of
portfolio company Resolution and this expanded role will allow her
to utilise her experience more broadly across Syncona. Ben joined
from GSK, bringing over a decade of strategy development, business
operations and project management experience, to help build our
portfolio of innovative life science companies.
Milestones across the portfolio provide opportunity for value
creation and significant long-term opportunity
Clinical data is key to driving value in our portfolio, and we
are excited by the potential for our companies to deliver
transformational treatments to patients in areas of high unmet
medical need. As we look ahead, we believe our companies are well
positioned to deliver on their upcoming milestones. Our clinical
stage companies are approaching key data milestones that we believe
will drive value for our shareholders.
After a decade of exciting progress across our industry and
business, we remain focused on delivering on our strategy and
long-term targets. There continues to be a thriving life science
industry in the UK and Europe, which provides us with a significant
opportunity to apply the Syncona model to found, build and fund
globally competitive businesses. With a strengthened balance sheet
and optimised funding approach, we believe Syncona is in a strong
position to build a portfolio of 15-20 leading life science
companies over a 10-year rolling period. I am excited about the
next 10 years and the potential to change the lives of patients and
deliver strong returns for shareholders.
Life science portfolio review
Clinical
Autolus (4.7% of NAV, 19% shareholding)
-- Published further data in lead programme of obe-cel in adult
acute lymphoblastic leukaemia (ALL); meaningful data read-out
expected in H2 CY2022
-- Positive data published at EHA Congress, including from AUTO1/22
in paediatric ALL (pALL) and AUTO4 in T cell lymphoma
-- Commitment of up to $250.0 million from Blackstone; funded
into 2024 with $268.6 million ([14]) in cash
Autolus is developing next generation programmed T cell
therapies for the treatment of cancer with a broad clinical
pipeline targeting haematological malignancies and solid
tumours.
During the period Autolus released further encouraging data in
its lead programme obe-cel in relapsed/refractory (r/r) adult ALL.
As presented at the American Society of Hematology (ASH) conference
in December 2021, patients in the Phase Ib portion of the
potentially pivotal FELIX study showed comparable results in
efficacy and safety to the Phase I ALLCAR19 study, with further
data released from ALLCAR19 demonstrating continued durability of
response in patients up to 42 months post-dosing. Autolus continues
to enrol patients in the Phase II portion of the FELIX study and
expects to report initial data from this trial in the second half
of CY2022, in advance of a full read-out in H1 CY2023. This data is
expected to form the basis of a planned Biologics License
Application (BLA) submission by the company. During the period,
obe-cel received Orphan Medical Product Designation and PRIority
MEdicines (PRIME) designation from the European Medicines Agency
(EMA), and Regenerative Medicine Advanced Therapy (RMAT)
designation from the US Food and Drug Administration (FDA) post
period end. These designations further underline the opportunity
for obe-cel as a potentially transformational treatment for
patients with r/r adult ALL.
The company has also shown strong progress in its broader
pipeline, releasing encouraging data from four programmes at the
European Hematology Association (EHA) Congress post period end. The
early clinical data showed a promising safety and efficacy profile
across the AUTO4 programme in T cell lymphoma, AUTO1/22 in pALL,
obe-cel in r/r primary central nervous system lymphoma (PCNSL), and
obe-cel in r/r B cell non-Hodgkin's lymphoma (B-NHL) and chronic
lymphocytic leukaemia (CLL). This data reinforces the strength of
the pipeline at Autolus, which is diversified across therapies
targeting both B cell malignancies and T cell lymphomas.
Autolus has continued to attract external validation for its
technology in the period, signing an Option and License Agreement
with Moderna granting Moderna an exclusive licence to develop and
commercialise messenger RNA (mRNA) therapies incorporating Autolus'
proprietary binders in up to four immuno-oncology targets. It also
attracted a commitment of up to $250.0 million from Blackstone,
consisting of an investment of $100.0 million in equity and up to
$150.0 million in product financing. With this funding Autolus is
able to operate with a strengthened balance sheet and is funded
into CY2024, past the delivery of the pivotal data in its lead
obe-cel programme.
The business continued to attract strong leadership to the
company at Board and executive level throughout the period.
Experienced biopharma executive John H. Johnson joined as Chair in
September, following a period where Syncona's CEO Martin Murphy
held the position, bringing to the company more than 30 years' life
science experience in a non-executive and executive capacity, where
most recently he served as CEO of Strongbridge Biopharma. Edgar
Braendle joined the company as Chief Development Officer (CDO) from
Sumitomo Dainippon where he was Chief Medical Officer (CMO) and
Global Head of Development, and moving forward will have an
important role in leading the company's development functions. Dr
Lucinda Crabtree was appointed Chief Financial Officer (CFO).
Lucinda was previously Senior Vice President of Finance and played
a key role in the Blackstone transaction in November 2021.
Whilst Autolus' share price has fallen this year, and has been
impacted by broader biotech sector market dynamics, we remain
confident in its potential as it approaches a meaningful data
read-out in its lead obe-cel programme in the second half of
CY2022. In addition, the company has demonstrated positive momentum
across its broader pipeline and continues to show the potential
opportunity that autologous CAR T therapies represent for patients
suffering from a range of cancers.
Anaveon (4.6% of NAV, 38% shareholding)
-- Published initial Phase I clinical data from its lead programme
ANV419 post period end; further data from this study is expected
in H2 CY2022
-- Successful Series B financing of CHF 110.0 million (GBP89.8
million) from international syndicate of specialist investors,
cornerstoned by Syncona at an uplift of 88 per cent (GBP19.7
million, 3p per share) to previous holding value; CHF 35.0
million (GBP28.6 million) commitment from Syncona
Anaveon is developing a selective Interleukin 2 (IL-2) Receptor
Agonist, a type of protein that could enhance a patient's immune
system to respond therapeutically to cancer.
The company released its first clinical data from its lead
programme ANV419 in April 2022, post period end. This data
underlined the compelling selectivity and safety profile for the
drug, which is highly encouraging given the severe, dose-limiting
side effects which have been seen elsewhere in the use of human
IL-2 in solid cancers. Further data from the Phase I study is
expected later in CY2022. Based on this initial data, a Phase I/II
programme of ANV419 has been initiated in multiple tumour types to
evaluate clinical efficacy in both monotherapy and combination
settings and post period end, the company received FDA clearance of
its Investigational New Drug (IND) application for the Phase I/II
study of ANV419 in advanced cutaneous melanoma.
Anaveon also successfully completed an oversubscribed CHF 110.0
million (GBP89.8 million) financing in the period, attracting a
leading international investor syndicate, resulting in Syncona's
holding being written up by GBP19.7 million (3p per share), an 88
per cent uplift. Syncona committed CHF 35.0 million (GBP28.6
million) to the financing, and remains Anaveon's largest investor
with a 38 per cent holding in the company. Anaveon is now well
financed and is delivering well on its clinical plan, as it
progresses towards its goal of becoming the best-in-class therapy
in the IL-2 space.
Freeline (2.5% of NAV, 53% shareholding)
-- Data read-outs from FLT190 programme in Fabry disease, with
accelerated progression to second dose cohort; further encouraging
data in FLT180a programme in haemophilia B
-- New executive leadership with Michael Parini becoming CEO,
Pamela Foulds joining as CMO and Henning Stennicke becoming
Chief Scientific Officer; Paul Schneider joined as CFO post
period end
-- Extended cash runway to H2 CY2023 following $26.1 million registered
direct offering, including $20.0 million commitment from Syncona
Freeline, our gene therapy company focused on liver expression
for a range of chronic systemic diseases, continued to progress its
programmes through the clinic during the period.
In its most advanced programme, FLT180a in haemophilia B,
Freeline has completed dosing its first cohort in the B-LIEVE dose
confirmation study and has initiated dosing the second cohort post
period end. Efficacy and safety data from the first cohort will be
presented at the Congress of the International Society on
Thrombosis and Haemostasis (ISTH) being held between 9-13 July
2022. This follows positive long-term follow-up data presented in
December 2021 by the company from the B-AMAZE dose-finding trial
for FLT180a, which found sustained expression of factor IX (FIX),
the key enzyme for patients with haemophilia B, up to 3.5 years
post dosing.
Freeline has continued to progress the Phase I/II MARVEL-1 study
for its FLT190 programme in Fabry disease. The company presented
encouraging data from the first two patients at the lower dose
cohort at the 18th Annual WORLDSymposium(TM) in February 2022,
demonstrating that the treatment continued to be well tolerated
with a potentially dose-dependent increase in levels of the key
enzyme (<ALPHA>-Gal A), which is absent or markedly deficient
in Fabry patients. In March, Freeline announced it would progress
immediately to the second dose cohort in the MARVEL-1 study. This
followed a comprehensive review of the pre-clinical data, and the
clinical efficacy and safety data from the first and second
patients in the MARVEL-1 study. This data was presented to the
study's independent Data Monitoring Committee, which supported
accelerated progression to the second cohort. This resulted in a
revision to the previous clinical development plan which included
dosing a third patient in the lower dose cohort and publishing
updated data from the first two patients dosed, and initial data
from the third, in the first half of 2022. The company now expects
to provide a programme update in H2 CY2022.
Freeline continued to progress its FLT201 programme in the year.
FLT201 is a therapy seeking to provide a functional cure in
patients with Gaucher disease Type 1, an indication where there is
currently no approved gene therapy. The company announced in May
2022 that it expects to complete dosing of the first cohort of its
Phase I/II trial by mid-CY2022, and progress to the second cohort
in H2 CY2022. An initial data read-out is expected in H2
CY2022.
The company has made a number of key changes to its executive
team; Michael Parini, formerly President and Chief Operating
Officer, became CEO in August 2021 with Pamela Foulds, who was
formerly at Aegerion Pharmaceuticals and Biogen, joining as CMO in
November 2021. In addition, Henning Stennicke joined as CSO in
March 2022 from Novo Nordisk, while Paul Schneider joined as CFO
post period end from Exo Therapeutics. These four experienced
executives have substantial life science experience, bringing
significant development, clinical, regulatory, operational and
financial expertise in rare diseases to the executive team.
Under the leadership of Michael Parini, the company led a
thorough review of its operational plans, discontinuing further
development of its pre-clinical programme of FLT210 in haemophilia
A. This, along with a $26.1 million direct offering by the company
in March 2022 which was led by Syncona, has provided an extension
of Freeline's cash runway to H2 CY2023. Freeline also stands to
benefit from the flexibility of an American Depositary Share (ADS)
purchase agreement with Lincoln Park Capital (LPC), which was
entered into during the period. This will provide Freeline with the
right to sell LPC up to $35 million in ADSs, subject to certain
conditions being satisfied.
Whilst Freeline has experienced operational issues, partly
driven by the impact of delays in its clinical trials due to the
COVID-19 pandemic, it is now delivering effectively on its updated
operational plan with programme updates expected in all three of
its programmes in H2 CY2022. Whilst the share price has continued
to be impacted by market conditions which have particularly
affected the valuations of smaller cap listed biotech companies, we
remain confident in the fundamentals of the business as it moves
forward with its clinical pipeline.
Achilles (1.9% of NAV, 25% of shareholding)
-- Encouraging progress in Phase I/IIa studies in non-small cell
lung cancer (NSCLC) and melanoma, with positive data from the
initial lower dose process reported as the trials move to a
higher dose
-- Strong cash position of $236.9 million ([15]) with runway into
H2 CY2024
Achilles, a clinical-stage biopharmaceutical company developing
precision T cell therapies to treat solid tumours, continued to
make good operational progress in the year.
The company continued to progress its ongoing Phase I/IIa
studies in advanced NSCLC and melanoma. In November 2021, the
company presented data at the Society for Immunotherapy of Cancer
(SITC) annual meeting, showing the ability of Achilles' technology
to detect, quantify, and track patient-specific clonal
neoantigen-reactive T cells (cNeT). At the ESMO I-O annual meeting
in December 2021, the company presented data from pre-clinical GMP
manufacturing runs showing increased cNeT doses from its VELOS(TM)
Process 2 manufacturing, the company's manufacturing process to
generate higher doses. The company also released further data at
SITC from its VELOS(TM) Process 1 process, underlining that the
tolerability profile of the therapy was in-line with standard
tumour-infiltrating lymphocyte (TIL) products that have not been
enriched for cNeT reactivity.
The company continues to make progress in moving towards the
higher dose VELOS(TM) Process 2 manufacturing, dosing its first
patient in the higher dose in the CHIRON trial in NSCLC post period
end, and expects to announce data from the higher dose processes in
both CHIRON and the THETIS trial in melanoma in H2 CY2022. The move
to the higher dose will be supported from Achilles' manufacturing
facilities at the UK Cell and Gene Therapy Catapult (CGT Catapult),
which received a manufacturing licence from the Medicines and
Healthcare products Regulatory Agency (MHRA) post period end, and a
new facility in the US in partnership with the Center for
Breakthrough Medicines (CBM).
The company also continued to strengthen its Board, with Julie
O'Neill joining as a non-executive in May 2021, bringing more than
two decades of executive experience in senior leadership roles,
most recently as Executive Vice President of Global Operations at
Alexion Pharmaceuticals. Post period end, Bernhard Ehmer also
joined the Achilles Board, bringing more than three decades of
experience across senior leadership roles in biotechnology and
pharmaceuticals, most recently as CEO of Biogest AG.
Achilles continues to be well funded with a cash runway through
to H2 CY2024, and although it has seen share price volatility
through the year, we remain confident that it is well positioned to
deliver on its upcoming operational and clinical plans as it moves
towards clinical read-outs from its higher dose programmes.
Pre-clinical
Quell (6.2% of NAV, 37% shareholding)
-- Initiated clinical trial sites in lead QEL-001 programme
-- Successful $156.3 million (GBP116.6 million) Series B financing
with leading international syndicate at a 41 per cent uplift
(GBP18.5 million, 3p per share) to the previous holding value;
co-led by Syncona with a $25.0 million (GBP18.7 million) commitment
Quell has been established with the aim of developing engineered
T-regulatory (Treg) cell therapies to treat a range of conditions
such as solid organ transplant rejection, autoimmune and
inflammatory diseases.
The company has made good progress as it prepares to dose its
first patient with its lead candidate QEL-001, which is designed to
prevent organ rejection in liver transplant patients. It announced
a collaboration with CGT Catapult which allows the company access
to one of the CGT Catapult's specialist large-scale manufacturing
facilities. Quell's Clinical Trial Application (CTA) for QEL-001
was also approved by the UK MHRA during the period, with the
company now initiating trial sites for the programme, and is
expected to dose its first patient in H2 CY2022.
The company successfully completed a $156.3 million (GBP116.6
million) Series B financing during the period, with Syncona
committing $25.0 million (GBP18.7 million) alongside a syndicate of
international specialist investors. Following the financing,
Syncona's holding in Quell was written up by GBP18.5 million (3p
per share), a 41 per cent uplift to the previous holding value.
This funding will enable Quell to fund the development of its lead
QEL-001 programme in liver transplantation, as well as allowing
Quell to progress its broader clinical pipeline, its plans to
develop an allogeneic CAR-Treg platform, and the expansion of its
manufacturing footprint.
The company also expanded its leadership team during the period
with Dominik Hartl joining as CMO from the Novartis Institutes for
BioMedical Research (NIBR), and Tracey Lodie joining as CSO from
Gamida Cell. They bring a wealth of experience across cell
therapies and autoimmune disorders and will play a key role as
Quell progresses QEL-001 and its broader pipeline.
SwanBio (5.7% NAV, 75% shareholding)
SwanBio is a gene therapy company focused on neurological
disorders. Its lead programme is targeting the treatment of
adrenomyeloneuropathy (AMN), a genetic neuro-degenerative disease
affecting the spine.
The company continues to make progress as it approaches the
clinical entry of its lead programme SBT101 in AMN. The company
received clearance for its IND application for the programme from
the FDA in January 2022, with Fast Track and Orphan Drug
designations following in February and March 2022 respectively. The
company will enter the clinic with a Phase I/II study to assess the
safety and efficacy of SBT101 in H2 CY2022, assisted by the
insights gathered from its ongoing natural history study, CYGNET,
which enrolled its first patient earlier in the period. Post period
end, the company announced further pre-clinical data from SBT101,
which supports the safety profile of the therapy and supports the
dosing strategy for the upcoming Phase I/II trial.
Post period end SwanBio also completed a $55.9 million (GBP45.3
million) Series B financing, with Syncona committing $53.7 million
(GBP43.6 million). The proceeds will primarily be used to fund the
ongoing clinical development of SBT101, as well as supporting the
company's broader pipeline for other neurological conditions.
Following the financing, Syncona's holding is now valued at GBP96.3
million following the first tranche investment of $19.2 million
(GBP15.6 million), with Syncona holding 80 per cent of the company
on a fully diluted basis.
Purespring (1.4% NAV, 84% shareholding)
Purespring Therapeutics (Purespring) was founded by Syncona in
November 2020, with the company seeking to advance gene therapies
for the treatment of chronic renal diseases which are currently
poorly served by existing treatments.
The company continues to deliver on its ambitious operational
growth plans as it progresses towards the clinic with its three
pre-clinical programmes, with the goal of becoming the first AAV
gene therapy company targeting the kidney in clinical trials.
Purespring built out its executive team in the period, in
particular through Julian Hanak joining as CDO. He brings 25 years'
experience spanning gene therapy, manufacturing, regulatory affairs
and CMC, previously serving as head of manufacturing at Nightstar.
He will support Purespring's CEO Richard Francis as he looks to
progress the company to the clinic and become a global leader in
renal gene therapy.
Neogene (1.1% NAV, 8% shareholding)
Neogene is developing an engineered cell therapy product for
solid tumours based on a patient's own neoantigens. The company was
founded in 2018 around the work of world-class founders, Dr Ton
Schumacher and Dr Carsten Linnemann.
The company signed an exclusive licence during the period with
the US National Cancer Institute for a portfolio of T cell
receptors (TCRs) targeting KRAS and TP53 mutations for the
treatment of cancer. These two mutations are among the most
commonly mutated genes in cancers and combined with Neogene's
proprietary TCR isolation platform, this licence will expand
Neogene's capability in targeting multiple neoantigens in
individual patients.
The company continued to attract world-class executive leaders
throughout the period. Brent Pfeiffenberger joined as COO from
Bristol Myers Squibb, where he was senior vice president of U.S.
Oncology. The company also welcomed Han Lee (previously CFO at
Arcellx, Inc) as CFO, and Raphael Rousseau, M.D, PhD, as CMO from
Gritstone Bio, where he was Executive Vice President, Head of
Product Development and CMO. Dr Rousseau brings extensive
experience in oncology drug development, including in engineered T
cell therapies. These three key hires are already playing a key
role in the development of Neogene as it moves towards clinical
stage, having had its CTA approved for its lead programme in the
Netherlands post period end. The company expects to enter the
clinic in H1 CY2023.
Clade (0.9% NAV, 23% shareholding)
Clade was established with the aim of discovering and delivering
scalable next-generation induced pluripotent stem cell (iPSC)
derived medicines. Syncona led the $87.1 million Series A financing
in November 2021, with a commitment of $30.0 million (GBP21.7
million). This investment further expanded our leading cell therapy
portfolio into next generation stem cell-based therapeutics.
The company is led by a world class team, with Dr Chad Cowan, a
scientific co-founder of CRISPR Therapeutics and former Associate
Professor at Harvard University in the Department of Stem Cell and
Regenerative Biology as CEO and Dr Jim Glasheen, co-founder of
Atlanta Therapeutics and former general partner at Technology
Partners Venture Capital as President and Chief Business Officer.
Clade continues to build out its operations and leadership team,
and in the period appointed Dr Derek Hei as its Chief Technology
Officer. Dr Hei joined Clade from Vertex Pharmaceuticals, where he
was Senior Vice President of Preclinical and Clinical
Manufacturing, Cell and Gene Therapies, and brings significant
expertise in cell therapy and over 20 years' experience of leading
manufacturing teams at biotech companies.
Resolution (0.8% NAV, 81% shareholding)
Resolution is a cell therapy company investigating the use of
the restorative effect of macrophages in the treatment of end-stage
liver disease.
The company continued its strong operational momentum during the
period. It continued to progress its ongoing MATCH II academic
study of non-engineered autologous macrophages in liver cirrhosis.
During the period Syncona committed GBP10.0 million to the company
in an extension to its Series A financing, which will fund the
continued development of its existing autologous programme as well
as its developing allogeneic platform ([16]) . Following this
financing, Syncona's holding in Resolution is GBP10.4 million, with
Syncona holding 81 per cent of the company on a fully diluted
basis.
Post-period end, the company announced a research collaboration
with panCELLA Inc, which will allow Resolution access to the
company's hypo-immunogenic engineered iPSC technology, potentially
providing Resolution with the technology to develop "off the shelf"
macrophage cell therapies.
The company also continued to attract senior leaders at Board
level, with Lisa Bright joining as a non-executive in the period,
bringing 30 years' experience across pharma and early stage
biotech.
Drug discovery
OMass (2.6% NAV, 49% shareholding)
OMass is developing small molecule drugs to treat rare diseases
and immunological conditions. It uses its proprietary drug
platform, OdyssION(TM), to accurately interrogate potential targets
within their natural ecosystem, providing critical information
which heightens the chances of finding effective small molecule
medicines which will be successful in clinical trials.
During the period the company made significant progress in
developing its pipeline of programmes, announcing five candidates
with a focus on immunological and orphan diseases. Its lead
programme, focused on the MC2 receptor, has entered lead
optimisation stage and is targeting orphan endocrine disorders.
Post period end, the company successfully completed a GBP75.5
million Series B financing, of which Syncona committed GBP15.0
million. This financing included a syndicate of top-tier
international life science investors, including new investors GV,
Northpond and Sanofi Ventures, with the proceeds to be used to fund
OMass' pipeline of programmes as the company moves towards clinical
trials. The financing resulted in a 32 per cent uplift (GBP8.3
million, 1p per share) to Syncona's previous holding value in the
company. Including the first tranche of Syncona's Series B
investment, its holding of OMass is now valued at GBP43.7 million,
holding 31 per cent of the company on a fully diluted basis.
Life Science Investments
Beyond our core portfolio of 11 life science portfolio
companies, we have a smaller number of life science investments.
During the period, Cambridge Epigenetix (CEGX) raised $88.0 million
in a Series D financing which was led by Temasek. We chose not to
participate in this funding round, however we were pleased to see
the company attract significant funding, seeing this as validation
of the company's potential. The financing round resulted in a
GBP15.4 million uplift to Syncona's previous holding value in the
company, with Syncona's holding now valued at GBP17.3 million
following an initial investment of GBP2.4 million.
Post period end, another of Syncona's life science investments,
Forcefield Therapeutics (Forcefield), announced its official
company launch. The company is a pioneer of best-in-class
therapeutics, with its approach seeking to retain heart function
following myocardial infarctions (heart attacks), specifically by
preventing the loss of cardiomyocytes. Syncona first announced its
GBP5.5 million Series A investment in Forcefield in 2020, and since
this time the company has been working to identify its pre-clinical
pipeline, which is centred on three identified proteins which have
the potential to retain heart function. These targets have been
identified through the 'FunSel' discovery platform, which is also
used by Syncona portfolio company Purespring. The company was
founded by Purespring co-founder Professor Mauro Giacca, a leader
in cardiovascular disease and genetic biology at the School of
Cardiovascular Medicine and Sciences, King's College London, and
Richard Francis, CEO of Purespring, also acts as CEO of
Forcefield.
Next key milestones for clinical programmes at 31 March 2022
Autolus - cell therapy / oncology
Obe-cel - adult ALL Meaningful data read-out from pivotal FELIX
study in obe-cel in r/r adult ALL expected
in H2 CY2022; full data expected in H1 CY2023
---------------------------------------------------
AUTO1/22 - paediatric Longer-term follow-up data expected in H2 CY2022
ALL
---------------------------------------------------
Achilles - cell therapy / oncology
cNeT - non-small Data from higher dose cNeT therapy expected
cell lung cancer in H2 CY2022
---------------------------------------------------
cNeT - melanoma Data from higher dose cNeT therapy expected
in H2 CY2022
---------------------------------------------------
Freeline - gene therapy / systemic diseases
FLT180a - haemophilia Initial data from first cohort in Phase I/II
B dose confirmation study in haemophilia B to
be presented at the Congress of the International
Society on Thrombosis and Haemostasis (ISTH),
July 2022
---------------------------------------------------
FLT190 - Fabry disease Initiate second cohort in mid-CY2022; programme
update expected in H2 CY2022
---------------------------------------------------
FLT201 - Gaucher Initial data from Phase I/II Gaucher disease
disease Type 1 Type 1 programme expected in H2 CY2022
---------------------------------------------------
Anaveon - biologics
ANV419 - multiple Further data in Phase I study of selective
tumour types IL-2 agonist expected in H2 CY2022
---------------------------------------------------
Next milestones for pre-clinical programmes as at 31 March
2022
Quell - cell therapy / autoimmune diseases
QEL-001 - liver transplant Expects to dose the first patient in Phase
I/II lead programme targeting liver transplant
in H2 CY2022
------------------------------------------------
SwanBio - gene therapy / neurological diseases
SBT101 - adrenomyeloneuropathy Expects to enter the clinic with lead programme
(AMN) targeting AMN in H2 CY2022
------------------------------------------------
Neogene - TCR cell therapy
NT-125 - advanced Expects to enter clinic with TCR therapy in
solid tumours H1 CY2023
------------------------------------------------
Life science portfolio valuation table
Company 31 Net Valuation FX 31 % of Valuation Fully Focus area
March invest-ment change movement March Group basis diluted
2021 in the 2022 NAV ([17]) owner-
period , ([18]) ship
, ([19]) stake
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Portfolio
Companies
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Clinical
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Autolus 81.2 - (22.1) 2.9 62.0 4.7% Quoted 18.8% Cell therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Anaveon 18.5 20.4 17.9 3.0 59.8 4.6% PRI 37.9% Biologics
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Freeline 167.9 15.4 (151.6) 0.6 32.3 2.5% Quoted 53.4% Gene therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Achilles 133.1 - (109.5) 1.2 24.8 1.9% Quoted 25.3% Cell therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Gyroscope 150.1 (325.8) 168.3 7.4 - 0.0% Sold 0.0% Gene therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Pre-Clinical
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Quell 35.1 26.3 18.5 1.5 81.4 6.2% PRI 37.4% Cell therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
75.4%
SwanBio 53.7 17.7 0.5 3.2 75.1 5.7% Cost ([20]) Gene therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Purespring 3.9 14.6 - - 18.5 1.4% Cost 84.0% Gene therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Neogene 11.0 2.9 - 0.6 14.5 1.1% Cost 7.9% Cell therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Clade - 10.8 - 0.6 11.4 0.9% Cost 22.6% Cell Therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Resolution 7.4 3.0 - - 10.4 0.8% Cost 81.1% Cell Therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Drug discovery
------ ------------ --------- --------- ------ ------ --------- -------- --------------
49.3%
OMass 16.4 10.0 8.3 - 34.7 2.6% PRI ([21]) Small molecule
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Life Science
Investment
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Gyroscope
milestone
payments
([22]) - - 49.8 - 49.8 3.8% DCF 0.0% Gene therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
CRT Pioneer Adj Third
Fund 36.6 (0.4) (8.0) - 28.2 2.2% Party 64.1% Oncology
------ ------------ --------- --------- ------ ------ --------- -------- --------------
CEGX 1.5 - 15.4 0.4 17.3 1.3% PRI 5.5% Epigenetics
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Forcefield 0.4 2.1 - - 2.5 0.2% Cost 82.0% Biologics
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Adaptimmune 5.3 - (3.2) 0.1 2.2 0.2% Quoted 0.8% Cell therapy
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Total Life
Science
Portfolio 722.1 (203.0) (15.7) 21.5 524.9 40.1%
------ ------------ --------- --------- ------ ------ --------- -------- --------------
Supplementary information
Our growing track record
- GBP905.7 million deployed in life science portfolio since foundation
- 27 per cent IRR and 1.6x multiple on cost across whole portfolio ([23])
Company Cost (GBPm) Value (GBPm) Multiple IRR
Generation 1
------------ ------------- --------- -----
Blue Earth 35.3 351.0 9.9 83%
------------ ------------- --------- -----
Nightstar 56.4 255.8 4.5 71%
------------ ------------- --------- -----
Autolus 124.0 62.0 0.5 -18%
------------ ------------- --------- -----
Generation 2
------------ ------------- --------- -----
Freeline 183.1 32.3 0.2 -55%
------------ ------------- --------- -----
Gyroscope 113.1 374.8 3.3 57%
------------ ------------- --------- -----
Achilles 60.7 24.8 0.4 -29%
------------ ------------- --------- -----
Generation 3
------------ ------------- --------- -----
OMass 26.4 34.7 1.3 16%
------------ ------------- --------- -----
Resolution 10.4 10.4 1.0 0%
------------ ------------- --------- -----
SwanBio 75.1 75.1 1.0 0%
------------ ------------- --------- -----
Anaveon 39.9 59.8 1.5 38%
------------ ------------- --------- -----
Quell 61.4 81.4 1.3 24%
------------ ------------- --------- -----
Azeria 6.5 2.1 0.3 -58%
------------ ------------- --------- -----
Generation 4
------------ ------------- --------- -----
Neogene 14.3 14.5 1.0 0%
------------ ------------- --------- -----
Purespring 18.5 18.5 1.0 0%
------------ ------------- --------- -----
Clade 10.8 11.4 1.1 9%
------------ ------------- --------- -----
Forcefield 2.5 2.5 1.0 0%
------------ ------------- --------- -----
Investments
------------ ------------- --------- -----
Unrealised Investments 50.9 47.7 0.9 0%
------------ ------------- --------- -----
Realised Investments 16.5 21.8 1.3 26%
------------ ------------- --------- -----
Total 905.7 1,480.5 1.6 27%
------------ ------------- --------- -----
Clinical trial disclosure process
Currently, our portfolio companies are progressing 11 clinical
trials. These trials represent both a significant opportunity and
risk for each company and for Syncona.
Unlike typical randomised controlled pharmaceutical clinical
trials, currently all clinical trials are open-label trials. Open
label trials 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.
However, 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.
Our portfolio companies may decide or be required to announce
publicly interim clinical trial data, for example where the company
or researchers connected with it are presenting at a scientific
conference, and we will generally also issue a simultaneous
announcement about that clinical trial data. We would also 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. We would not generally expect to otherwise announce our
assessment of interim clinical data in an ongoing trial, although
we review all such data to enable us to comply with our legal
obligations under the Market Abuse Regulation or otherwise.
Principal risks and uncertainties
The principal risks that the Board has identified are set out in
the following table, along with the consequences and mitigation of
each risk. Further information on risk factors is set out in note
18 to the Consolidated Financial Statements.
Description Key Controls Changes in the
year
Business model risks
Scientific theses Continued to
fail * Extensive due diligence process, resulting in seek
identification of key risks and clear operational to de-risk
We invest in scientific plan to mitigate these. scientific
ideas that we believe theses in our
have the potential early
to be treatments for * Tranching of investment to minimise capital exposed stage
a range of diseases, until key de-risking steps are completed companies.
but where there may (particularly fundamental biological uncertainty).
be no or little substantial Consideration of syndicating investments. Significant
evidence of clinical capital
effectiveness or ability raised by
to deliver the technology * Syncona team work closely with new companies to portfolio
in a commercially ensure focus on key risks and high quality companies to
viable way. Material operational build-out. Team members may take support
capital may need to operating roles where appropriate. de-risking
be invested to resolve scientific
these uncertainties. theses.
* Robust oversight by Syncona team, including formal
Impacts include: review at our quarterly business review and ongoing
* Financial loss and reputational impact from failure monitoring through board roles.
of investment.
------------------------------------------------------------ ----------------
Clinical development 12 clinical
doesn't deliver a * Build products in areas with significant unmet need data read-outs
commercially viable and that show substantial and differentiated efficacy during the
product and therefore will potentially have less competition financial
and more pricing power. year with our
Success for our companies most
depends on delivering clinically
a commercially viable * Focus, oversight and support from the Syncona team on advanced
target product profile recruiting dedicated specialist clinical teams in company,
through clinical development. each portfolio company to manage trials effectively, Autolus,
This can be affected maximise likelihood of success, and with a clear approaching a
by trial data not understanding of the requirements of regulators. meaningful
showing required efficacy read-out from
or adverse safety its
events. It can also * Investment process considers strength of IP or pivotal trial
be affected by progress regulatory exclusivity protection and this is then in obe-cel
of competitors, IP operationalised by each company. in H2 CY2022.
rights, the company's
ability to gain regulatory One company,
approval for and credibly * Investment process considers manufacturing as a key Anaveon,
market the product, issue from inception of each company, rather than moved into the
potential pricing leaving to later stage, and this is then clinic
and ability to manufacture operationalised. with its lead
cost-effectively. programme,
ANV419.
Impacts include: * Company business plans seek to have multiple products
* Material impact on valuation, given capital required in different indications so that failure in one does Competitive
to take products through clinical development. not damage all value of company. environment
has intensified
for
* Material harm to one or more individuals, and * At portfolio level, building a portfolio with some of our
potential reputational issues for Syncona. multiple companies at clinical/later stages, to companies.
enable us to absorb failures. Consideration of
syndicating investments.
* Clinical trials policy requires reporting of
significant trial issues to Syncona team and to Board
in serious cases.
------------------------------------------------------------ ----------------
Portfolio concentration Continued to
to * Team pays close attention to scientific, clinical, monitor
platform technology regulatory or commercial developments in the field. developments in
cell
The Syncona team bring and gene
strong domain experience * Where there are genuine risks, identified and managed therapy,
in cell and gene therapy, through diligence and investment process. particularly
and a substantial the outcomes
part of the portfolio of the FDA
is in these areas. advisory
Systemic issues (whether committee on
scientific, clinical, gene
regulatory or commercial) therapy in
may emerge that affect September
these technologies. and safety
developments
Impacts include: on certain
* Material impact on valuation. programmes
under
development;
* Impact on reputation of Syncona resulting from market
failure of technology we are strongly identified sentiment to
with. cell and gene
therapy
has been less
positive
in the year.
------------------------------------------------------------ ----------------
Concentration risk Sale of
and binary outcomes * Board provides strong oversight drawing on a range of Gyroscope
The Company's investment relevant experience, including life science, FTSE and allowed us to
strategy is to invest investment company expertise. Board has clear capture
in a concentrated understanding of strategy and risk. significant
portfolio of early returns
stage life science and retain
businesses where it * Transparent communication from Syncona team to Board exposure
is necessary to accept about portfolio opportunities and risks including to future
very significant and upside and downside valuation cases. successful
often binary risks. development
It is expected that through
some things will succeed * Clear communication to shareholders of the milestone
(and potentially result opportunities and risks of the strategy. payments
in substantial returns) and royalties,
but others will fail while
(potentially resulting * Provide information to shareholders about portfolio removing risk
in substantial loss companies to assist them in understanding portfolio of a
of value). This is value and risks. negative
likely to result in outcome.
a volatile return
profile. * Building diversified portfolio with multiple Significant
Impacts include: companies and products at clinical/later stages. reduction
* Loss of shareholder support, potentially reducing Consideration of syndicating investments. in value during
ability to raise new equity when required. year
of listed
* Willing to sell investments at/above fair value, portfolio
* Reputation risk from perceived failure of business prior to approval, which removes binary risks. companies, as
model. market
sentiment
changed.
------------------------------------------------------------ ----------------
Financing risks
Not having capital Sale of
to invest * Syncona team monitoring capital allocation on an Gyroscope
ongoing basis with a 3-year forward outlook, with strengthened
Early stage life science transparent reporting to the Board. capital
businesses are very base to
capital intensive, GBP784.9
and delivering our * Seek to maintain capital pool of 2-3 years' (or more) million
strategy will require financing requirements, although noting this risks at 31 March
us to have access being a significant drag on overall returns. 2022.
to substantial capital.
Portfolio
Impacts include: * Maximise potential to raise new equity through raised $712.2
* Dilution of stake in portfolio companies with loss of developing institutional shareholder base. million of
potential upside. capital
across seven
* Ongoing consideration of alternative or additional financings
* Loss of control of portfolio companies resulting in capital raising structures (e.g. side funds; during the
poorer strategic execution. operating company vs investment company; use of period;
debt). $585.8 million
committed
* Inability for portfolio companies to deliver their by global
business plans due to financing constraint. * Ongoing consideration of syndication strategy at institutional
portfolio company level, to maximise value and investors and
minimise dilution when external capital is brought companies,
in. Clarity of funding options: solo hold and partner with $126.4
approaches. million
from Syncona.
* Ongoing consideration of exit opportunities for
portfolio companies.
------------------------------------------------------------ ----------------
Private/public markets Macroeconomic
don't value or fund * Maintain access to significant capital, to reduce headwinds
our companies when risk of being forced to syndicate / forced seller. have impacted
we wish to access sentiment
them in the biotech
* Focus, oversight and support from the Syncona team on sector,
Our capital allocation financing plan for each company, with support to the with particular
strategy includes company to develop its financing story at an early impact
considering bringing stage. on public
third party capital markets
into our portfolio for biotech
companies, at the companies.
right stage of development.
In addition we may Sale of
consider exit opportunities Gyroscope
either on the public to Novartis for
markets or through up
private sales. to $1.5
billion, with
Impacts include: $800 million in
* Syncona is required to invest further capital, up-front
leading to greater exposure to individual companies cash proceeds
than desired and less ability to support other to the
companies. selling
shareholders
and up to $700
* Inability for portfolio companies to deliver their million
business plans due to financing constraint. in further
milestone
payments.
* Exit opportunities may be less attractive, with
impact on availability of capital. Portfolio
raised $712.2
million of
* Reputation risk from failed transactions. capital
across seven
financings
during the
period;
$585.8 million
committed
by global
institutional
investors and
companies,
with $126.4
million
from Syncona,
to fund
to key
milestones.
------------------------------------------------------------ ----------------
Capital pool losses Reviewed
or illiquidity * Protection against risk and liquidity are key approach
characteristics; return a focus to avoid loss of real to capital pool
The capital pool is value, but secondary consideration. asset
exposed to the risk allocation in
of loss or illiquidity. light
Impacts include: * Risk parameters monitored monthly by Syncona team, of inflationary
* Loss of capital (or reduction in the value of capital with enhanced review on a quarterly basis. environment,
due to inflation). resulting in
decision
* External adviser (Barnett Waddingham) engaged to to introduce a
* Inability to finance life science investments. carry out annual review of capital pool against number
chosen parameters. of fund
investments
* Reputation risk from losses in non-core area. to the capital
pool
and to hold
more US
dollars on an
ongoing
basis.
------------------------------------------------------------ ----------------
Operational execution risks
Reliance on small Changes to life
Syncona team * Market benchmarking of remuneration for staff. science
investment
The execution of the landscape
Company's strategy * Provision of long-term incentive scheme to in the UK and
is dependent on a incentivise and retain staff. Europe,
small number of key potentially
individuals with specialised creating
expertise. This is * Ongoing recruitment to strengthen team and deepen greater
at risk if the team resilience. competition
does not succeed in in recruitment,
retaining skilled as
personnel or is unable * Focus on investment team development to provide a result this
to recruit new personnel internal succession from next tier of leaders, with risk
with relevant skills. process supported by CHRO. was increased
in the
Impacts include: period.
* Poorer oversight of portfolio companies, risk of loss * Process development within corporate functions to
of value from poor strategic/operational decisions. reduce single point risks. Seeking to
broaden
bench of talent
* Insufficient resource to take advantage of investment * Building high quality teams within portfolio and
opportunities. companies that can operate at a high strategic level. skills within
the
business.
* Loss of license to operate if insufficient resource Appointed
or processes mean we fail to meet stakeholder Rolf Soderstrom
expectations. as
Chief Financial
Officer,
Markus John,
M.D.
as Chief
Medical Officer
and Head of
R&D, and
Fiona
Langton-Smith
as Chief Human
Resources
Officer, and
established
a Corporate
Team to
oversee
management
of the
business.
During the year
Dominic
Schmidt and Ken
Galbraith
left the
business,
and we
appointed Lisa
Bright as
Commercial
Advisor and Ben
Woolven
as Business
Strategy
and Operations
partner.
------------------------------------------------------------ ----------------
Systems and controls Im plementing
failures * Systems and control procedures are reviewed regularly processes
by Syncona team, with input from specialist external during the year
We rely on a series advisers where appropriate. to
of systems and controls deliver on our
to ensure proper control Sustainability
of assets, record-keeping * Certain systems have been outsourced to the Policy.
and reporting, and Administrator who provides independent assurance of
operation of Syncona's its own systems. Ongoing reviews
business. of
our processes,
Impacts include: * Annual review of systems and controls carried out by working
* Risk of loss of assets. the Audit Committee. with external
advisers
where
* Inability to properly oversee Syncona team. appropriate,
to seek to meet
current
* Inaccurate reporting to shareholders. stakeholder
requirements.
* 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.
------------------------------------------------------------ ----------------
Portfolio company operational risks
Unable to build high Team and Board
quality teams in portfolio * Seek to build high quality teams in portfolio changes
companies companies. This can begin before an investment is in a number of
made. our
Portfolio companies companies,
are reliant on recruiting including
highly specialised, * Ensure executive team aim to build a high quality Autolus,
high quality staff culture from the outset, and monitor and support its Freeline,
to deliver their strategies. effectiveness. Achilles,
This can be challenging Quell,
given a limited pool Purespring,
of people with the * Build strong portfolio company boards (including Resolution and
necessary skills in representatives from our team and experienced others.
the UK/Europe. In non-execs) to provide effective oversight and
addition, these are support. Anaveon entered
fast-growing companies the
and establishing a clinic, joining
high quality culture * Support from our team, including taking operational Autolus,
from the outset is roles where necessary, and facilitating access to Freeline and
key. support from across the portfolio where appropriate, Achilles,
or external consultant resource from our networks. and a further
Impacts include: three
* Ultimately, failure to deliver key elements of companies are
operational plans resulting in material loss of approaching
value. the clinic.
With an
increasing
number
of companies in
the
clinic, both
the capital
invested and
the operational
challenges have
increased.
As a result,
this
risk was
increased
in the period.
------------------------------------------------------------ ----------------
Unable to execute Operational
business plans * Seek to build high quality teams in portfolio issues
companies. This can begin before an investment is at Freeline,
Portfolio company made. Where possible these should include resilience partly
business plans may to deal with unexpected external factors, though driven by the
be impacted by a number companies will also be focused on maximising value impact
of external factors, from capital invested. of delays in
including access to its clinical
patients, delivery trials due to
by suppliers, and * Seek to maintain capital buffers to cope with the
the wider business unanticipated issues before cash out. COVID-19
environment (including pandemic.
factors such as COVID-19).
* Oversight of key external factors/relationships that
Impacts include: are important to delivering business plan.
* Ultimately, failure to deliver key elements of
operational plans resulting in material loss of
value. * Sharing of knowledge (where appropriate) across
portfolio to support companies in managing external
factors.
------------------------------------------------------------ ----------------
Responsibility statement
The Directors' responsibility statement below has been prepared
in conjunction with, and is extracted from, the Company's Annual
Report and Accounts for the year ended 31 March 2022 ("2022 Annual
Report"), whereas this announcement contains extracts from the 2022
Annual Report. The responsibility statement is repeated here solely
for the purpose of complying with DTR 6.3.5. These responsibilities
are for the full 2022 Annual Report and not the extracted
information presented in this announcement or otherwise.
The Directors of the Company are:
Melanie Gee, Chair
Julie Cherrington, Non-Executive Director
Cristina Csimma, Non-Executive Director
Virginia Holmes, Non-Executive Director
Rob Hutchinson, Non-Executive Director
Kemal Malik, Non-Executive Director
Gian Piero Reverberi, Non-Executive Director
The Directors confirm 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
SYNCONA LIMITED
UNAUDITED GROUP PORTFOLIO STATEMENT
As at 31 March 2022
2022 2021
% of % of
Fair value Group NAV Fair value Group NAV
GBP'000 GBP'000 GBP'000 GBP'000
Life science portfolio
Life science companies
Achilles Therapeutics plc 24,810 1.9 133,127 10.2
Anaveon AG 59,818 4.6 18,575 1.4
Autolus Therapeutics plc 61,979 4.7 81,180 6.2
Cambridge Epigenetix Limited 17,345 1.3 - -
Freeline Therapeutics Holdings
plc 32,277 2.5 167,902 12.9
Gyroscope Therapeutics Limited - - 150,062 11.5
OMass Therapeutics Limited 34,712 2.7 16,436 1.3
Purespring Therapeutics Limited 18,500 1.4 - -
Quell Therapeutics Limited 81,416 6.2 35,069 2.7
SwanBio Therapeutics Limited 75,103 5.7 53,689 4.1
Companies of less than 1%
of NAV 40,929 3.1 29,526 2.4
Total life science companies(1) 446,889 34.1 685,566 52.7
---------- ---------- ---------- ----------
CRT Pioneer Fund(2) 28,183 2.2 36,576 2.8
Milestone payments 49,802 3.8 - -
Total life science portfolio(3) 524,874 40.1 722,142 55.5
---------- ---------- ---------- ----------
Capital pool investments
UK treasury bills 179,984 13.7 344,862 26.5
Capital pool investment funds 99,489 7.6 - -
Legacy funds 39,857 3.1 72,366 5.6
Total capital pool investments(2) 319,330 24.4 417,228 32.1
---------- ---------- ---------- ----------
Other net assets
Cash and cash equivalents(4) 485,223 37.0 199,833 15.4
Charitable donations (4,250) (0.3) (4,710) (0.4)
Other assets and liabilities (15,336) (1.2) (34,204) (2.6)
Total other net assets 465,637 35.5 160,919 12.4
---------- ---------- ---------- ----------
Total NAV of the Group 1,309,841 100.0 1,300,289 100.0
========== ========== ========== ==========
( (1) The fair value of Syncona Holdings Limited amounting to
GBP980,282,165 (31 March 2021: GBP956,279,205) is comprised of
investments in life science companies of GBP446,888,721 (31 March
2021: GBP685,566,309), investments in Syncona Investment Management
Limited of GBP5,822,250 (31 March 2021: GBP5,752,423), milestone
payments on Gyroscope sale of GBP49,801,548 (31 March 2021:
GBPNil), other net assets of GBP482,281,565 (31 March 2021:
GBP269,383,714) in Syncona Portfolio Limited and other net
liabilities of GBP4,511,919 (31 March 2021: GBP4,422,241) in
Syncona Holdings Limited.
(2) The fair value of the investment in Syncona Investments LP
Incorporated amounting to GBP342,949,949 (31 March 2021:
GBP371,667,317) is comprised of the investment in the capital pool
investments of GBP319,330,598 (31 March 2021: GBP417,227,726), the
investment in the CRT Pioneer Fund of GBP28,183,492 (31 March 2021:
GBP36,576,032), cash of GBP475,786,299 (31 March 2021:
GBP189,439,798) and other net liabilities of GBP480,350,440 (31
March 2021: GBP271,576,239).
(3) The life science portfolio of GBP524,873,761 (31 March 2021:
GBP722,142,341) consists of life science investments totalling
GBP446,888,721 (31 March 2021: GBP685,566,309), milestone payments
on Gyroscope sale of GBP49,801,548 held by Syncona Holdings Limited
and CRT Pioneer Fund of GBP28,183,492 (31 March 2021:
GBP36,576,032) held by Syncona Investments LP Incorporated.
(4) Cash amounting to GBP275,902 (31 March 2021: GBP13,916) is
held by Syncona Limited. The remaining GBP484,947,557 (31 March
2021: GBP199,819,232) 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.
See note 1 for a description of Syncona Holdings Limited and
Syncona Investments LP Incorporated.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2022
2022 2021
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income
Other income 6 25,391 - 25,391 19,934 - 19,934
Total investment
income 25,391 - 25,391 19,934 - 19,934
------- ------- ------- ------- ------- -------
Net (losses)/gains
on financial assets
at fair value through
profit or loss 7 - (6,698) (6,698) - 58,605 58,605
------- -------
Total (losses)/gains - (6,698) (6,698) - 58,605 58,605
------- ------- ------- -------
Expenses
Charitable donations 8 4,250 - 4,250 4,710 - 4,710
General expenses 9 5,605 - 5,605 20,671 - 20,671
Total expenses 9,855 - 9,855 25,381 - 25,381
------- ------- ------- ------- ------- -------
Profit/(loss) for
the year 15,536 (6,698) 8,838 (5,447) 58,605 53,158
Profit/(loss)
for the year after
tax 15,536 (6,698) 8,838 (5,447) 58,605 53,158
======= ======= ======= ======= ======= =======
Earnings/(loss)
per Ordinary Share 14 2.34p (1.01)p 1.33p (0.82)p 8.82p 8.00p
======= ======= ======= ======= ======= =======
Earnings/(loss)
per Diluted Share 14 2.31p (1.00)p 1.31p (0.81)p 8.74p 7.93p
======= ======= ======= ======= ======= =======
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 derive from continuing
operations.
The accompanying notes are an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2022
Notes 2022 2021
GBP'000 GBP'000
ASSETS
Non-current assets
Financial assets at fair value through
profit or loss 10 1,323,232 1,327,946
Current assets
Bank and cash deposits 276 14
Trade and other receivables 11 9,878 10,446
Total assets 1,333,386 1,338,406
----------- -----------
LIABILITIES AND EQUITY
Non-current liabilities
Share based payments 12 8,459 23,505
Current liabilities
Share based payments 12 9,388 8,836
Payables 13 5,698 5,776
Total liabilities 23,545 38,117
----------- -----------
EQUITY
Share capital 14 767,999 767,999
Capital reserves 14 530,449 537,147
Revenue reserves 11,393 (4,857)
Total equity 1,309,841 1,300,289
----------- -----------
Total liabilities and equity 1,333,386 1,338,406
----------- -----------
Total net assets attributable to holders
of Ordinary Shares 1,309,841 1,300,289
=========== ===========
Number of Ordinary Shares in issue 14 666,733,588 664,580,417
----------- -----------
Net assets attributable to holders of
Ordinary Shares
(per share) 14 GBP1.96 GBP1.96
----------- -----------
Diluted NAV (per share) 14 GBP1.94 GBP1.94
----------- -----------
The audited Consolidated Financial Statements were approved on
15 June 2022 and signed on behalf of the Board of Directors by:
Melanie Gee Rob Hutchinson
Chair Non-Executive Director
The accompanying notes are an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO
HOLDERS OF ORDINARY SHARES
For the year ended 31 March 2022
Share Capital Revenue
Notes capital reserves reserves Total
GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2020 767,999 478,542 - 1,246,541
Total comprehensive income
for the year - 58,605 (5,447) 53,158
Transactions with shareholders:
Share based payments - - 590 590
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
======== ========= ========= =========
The accompanying notes are an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2022
Notes 2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year 8,838 53,158
Adjusted for:
Losses/(gains) on financial assets at
fair value through profit or loss 7 6,698 (58,605)
Non-cash movement in share based payment
provision (15,764) 6,374
-------- --------
Operating cash flows before movements
in working capital (228) 927
Decrease/(increase) in trade and other
receivables 568 (1,315)
(Decrease)/increase in other payables (78) 385
-------- --------
Net cash generated from/(used in) from
operating activities 262 (3)
-------- --------
Net increase/(decrease) in cash and
cash equivalents 262 (3)
Cash and cash equivalents at beginning
of the year 14 17
-------- --------
Cash and cash equivalents at end of the
year 276 14
======== ========
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2022
1. GENERAL INFORMATION
Syncona Limited (the "Company") is incorporated in Guernsey as a
registered closed-ended investment company. The Company's Ordinary
Shares were listed on the premium segment of the London Stock
Exchange on 26 October 2012 when it commenced its business.
The Company makes its life science investments through Syncona
Holdings Limited (the "Holding Company"), a subsidiary of the
Company. The Company maintains its capital pool through Syncona
Investments LP Incorporated (the "Partnership"), in which the
Company is the sole limited partner. The general partner of the
Partnership is Syncona GP Limited (the "General Partner"), a
wholly-owned subsidiary of the Company. Syncona Limited and Syncona
GP Limited are collectively referred to as the "Group".
Syncona Investment Management Limited ("SIML"), a subsidiary,
was appointed as the Company's Alternative Investment Fund Manager
("Investment Manager").
The investment objective and policy is set out in the Directors'
Report within the Annual Report and Accounts.
2. ACCOUNTING POLICIES
The Group's investments in life science companies, other
investments within the life science portfolio and capital pool
investments are held through the Holding Company and the
Partnership, which are measured at fair value through profit or
loss in accordance with the requirement of IFRS 10 "Consolidated
Financial Statements".
Statement of compliance
The Consolidated Financial Statements which give a true and fair
view are prepared in accordance with IFRS as adopted by the
European Union and are in compliance with The Companies (Guernsey)
Law, 2008. The Consolidated Financial Statements were approved by
the Board and authorised for issue on 15 June 2022.
Information reported to the Board (the Chief Operating Decision
Maker ("CODM")) for the purpose of allocating resources and
monitoring performance of the Group's overall strategy to found,
build and fund companies in innovative areas of healthcare,
consists of financial information reported at the Group level. The
capital pool is fundamental to the delivery of the Group's strategy
and performance is reviewed by the CODM only to the extent this
enables the allocation of those resources to support the Group's
investment in life science companies. There are no reconciling
items between the results contained within this information and
amounts reported in the financial statements. IFRS requires
operating segments to be identified on the basis of the internal
financial reports that are provided to the CODM, and as such the
Directors present the results of the Group as a single operating
segment.
Basis of preparation
The Consolidated Financial Statements have been prepared under
the historical cost basis, except for investments and derivatives
held at fair value through profit or loss, which have been measured
at fair value.
The financial information set out in this announcement does not
constitute the Group's statutory accounts for the years ended 2022
and 2021 but is derived from those accounts. The auditors have
reported on those accounts and provided an unqualified opinion,
including key audit matters within their audit report. It did not
draw attention to any matters by way of emphasis without qualifying
their report and did not contain statements under The Companies
(Guernsey) Law, 2008. A copy is available upon written request from
the Company's registered office. The auditors' reports do not
necessarily report on all of the information contained in these
financial results. Shareholders are therefore advised that in order
to obtain a full understanding of the nature of the auditors'
engagement they should obtain a copy of the auditors' reports
together with the accompanying financial information from the
issuer's registered office.
Functional and presentational currency
The Group's functional currency is Sterling ("GBP" or "GBP").
GBP is the currency in which the Group measures its performance and
reports its results. Ordinary Shares are denominated in GBP and any
dividends declared are paid in GBP. The Directors believe that GBP
best represents the functional currency, although the Group has
significant exposure to other currencies as described in note
18.
GBP is also the Group's presentational currency.
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 GBP1,309.8 million (31 March 2021: GBP1,300.3 million)
of which GBP764.7 million (31 March 2021: GBP544.7 million) are
readily realisable within three months in normal market conditions,
and liabilities including uncalled commitments to underlying
investments and funds amounting to GBP88.5 million (31 March 2021:
GBP115.5 million).
Given the Group's capital pool of GBP784.9 million (31 March
2021: GBP578.2 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 COVID-19, the war in Ukraine and the
ever changing macro environment 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.
Basis of consolidation
The Group's Consolidated Financial Statements consist of the
financial statements of the Company and the General Partner.
The results of the General Partner during the year are
consolidated in the Consolidated Statement of Comprehensive Income
from the effective date of incorporation and is consolidated in
full. The financial statements of the General Partner are prepared
in accordance with United Kingdom ("UK") Accounting Standards under
Financial Reporting Standard 101 "Reduced Disclosure Framework".
Where necessary, adjustments are made to the financial statements
of the General Partner to bring the accounting policies used in
line with those used by the Group. During the years ended 31 March
2022 and 31 March 2021, no such adjustments have been made. All
intra-group transactions, balances and expenses are eliminated on
consolidation.
Entities that meet the definition of an investment entity under
IFRS 10 are held at fair value through profit or loss in accordance
with IFRS 9 "Financial Instruments". The Company, the Partnership
and the Holding Company meet the definition of Investment Entities.
The General Partner does not meet the definition of an Investment
Entity due to providing investment management related services to
the Group, and is therefore consolidated.
New standards adopted by the Group
The following amendments to accounting standards became
effective during the year and were applied consistently:
Amendments to IFRS 16 "Accounting for COVID-19 related rent
concessions"
In March 2021, the IASB issued the amendment to IFRS 16
COVID-19-Related Rent Concessions beyond 30 June 2021, to update
the condition to apply the relief to a reduction in lease payments
originally due on or before 30 June 2022 from 30 June 2021.
The amendment has had no impact on the Group's financial
statements.
There are no other standards, amendments to standards or
interpretations that are effective for annual periods beginning on
31 March 2022 that have a material effect on the Group's
Consolidated Financial Statements.
Standards, amendments and interpretations not yet effective
There are a number of other standards, amendments and
interpretation that are not yet effective and are not relevant to
the Group as listed below. These are not discussed in detail as no
material impact to the Group's Consolidated Financial Statements is
expected.
- Amendments to IFRS 17, "Insurance Contracts";
- Amendments to IFRS 10 and IAS 28: Sale or contribution of
assets between an investor and its associate or joint venture;
- Amendments to IAS 1: Classification of Liabilities as Current
or Non-current;
- Amendments to IFRS 3: Reference to the Conceptual
Framework;
- Amendments to IAS 37: Onerous Contracts - Cost of Fulfilling a
Contract.
- Amendments to IAS 8: Accounting Policies, Changes in
Accounting Estimates and Errors
- Amendments to IAS 12: Income Taxes
Financial instruments
Financial assets and derivatives are recognised in the Group's
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument.
Under IFRS 9, on initial recognition, a financial asset is
classified as measured at amortised cost, fair value through other
comprehensive income, or fair value through profit or loss.
Financial assets at fair value through profit or loss
The Group classifies its financial assets as investments at fair
value through profit or loss based on the Group's business model
and the contractual cash flow characteristics of the financial
assets.
Financial assets measured at amortised cost
Financial assets are measured at amortised cost if held within a
business model whose objective is to hold financial assets in order
to collect contractual cash flows and its contractual terms give
rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding. The
Group includes in this category short-term non-financing
receivables including trade and other receivables.
As at 31 March 2022 and 31 March 2021, there are no financial
assets measured at fair value through other comprehensive
income.
Financial liabilities measured at amortised cost
This category includes all financial liabilities, other than
those measured at fair value through profit or loss. The Group
includes in this category short-term payables.
Fair value
The Group's investments in life science companies and capital
pool investments are held through the Holding Company and the
Partnership which are measured at fair value through profit or loss
in accordance with the requirement of IFRS 10. The net asset value
("NAV") of the Holding Company and the Partnership represent the
Group's assessment of the fair value of its directly held assets
(see note 10) and have been determined on the basis of the policies
adopted for underlying investments described below.
Fair value - life science portfolio - life science
investments
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,
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.
The following considerations are used when calculating the fair
value of unlisted life science companies:
- Cost at the transaction date is the primary input when
determining fair value. Similarly, where there has been a recent
investment in the unlisted company by third parties, the Price of
Recent Investment ("PRI") is the primary input when determining
fair value, although further judgement may be required to the
extent that the instrument in which the recent investment was made
is different from the instrument held by the Group.
- The length of period for which it remains appropriate to
consider cost or the PRI as the primary input when determining fair
value depends on the achievement of target milestones of the
investment at the time of acquisition. An analysis of such
milestones, which can be value maintaining or value enhancing, is
undertaken at each valuation point and considers changes to the
external environment and the current facts and circumstances. Where
this calibration process shows there is objective evidence that an
investment has been impaired or increased in value since the
investment was made, such as observable data suggesting a change of
the financial, technical, or commercial performance of the
underlying investment, the Group carries out an enhanced assessment
which may use one or more of the alternative methodologies set out
in the IPEV Valuation Guidelines.
- DCF involves estimating the fair value of an investment by
calculating the present value of expected future cash flows, based
on the most recent forecasts in respect of the underlying business.
Given the significant uncertainties involved with producing
reliable cash flow forecasts for seed, start-up and early-stage
companies, the DCF methodology will more commonly be used in the
event that a life science company is in the final stages of
clinical testing prior to regulatory approval or has filed for
regulatory approval. No investments were valued on a DCF basis as
at 31 March 2022 and 31 March 2021.
Fair value - life science portfolio - milestone payments
Milestone payments which form part of the total consideration
resulting from a business combination and is dependent on the
meeting of future conditions is initially recognised at fair value
through profit or loss. When estimating the fair value of the
milestone payments the present value of expected future cash flows
is calculated based on the known future cash flows and an estimate
of the likelihood of meeting the stated conditions using publicly
available information where possible.
Fair value - capital pool investments in underlying funds
The Group's capital pool investments in underlying funds are
ordinarily valued using the values (whether final or estimated) as
advised to the Investment Manager by the managers, general partners
or administrators of the relevant underlying fund. The valuation
date of such investments may not always be coterminous with the
valuation dates of the Company and in such cases the valuation of
the investments as at the last valuation date is used. The NAV
reported by the administrator may be unaudited and, in some cases,
the notified asset values are based upon estimates. The Group or
the Investment Manager may depart from this policy where it is
considered such valuation is inappropriate and may, at its
discretion, permit any other valuation method to be used if it
considers that such valuation method better reflects value
generally or in particular markets or market conditions and is in
accordance with good accounting practice.
Forward currency contracts
Forward foreign currency contracts are derivative contracts and
as such are recognised at fair value on the date on which they are
entered into and subsequently remeasured at their fair value. Fair
value is determined by forward rates in active currency markets.
Whilst the Group currently holds no forward currency contracts,
forward currency contracts are held by the Partnership and Syncona
Portfolio Limited from time to time for hedging purposes only.
Other financial liabilities
Other financial liabilities include all other financial
liabilities other than financial liabilities at fair value through
profit or loss. The Group's other financial liabilities include
payables. The carrying amounts shown in the Consolidated Statement
of Financial Position approximate the fair values due to the
short-term nature of these other financial liabilities.
Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount
reported in the Consolidated Statement of Financial Position if,
and only if, there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to settle on a net
basis, or to realise assets and settle the liabilities
simultaneously.
Derecognition of financial instruments
A financial asset is derecognised when: (a) the rights to
receive cash flows from the financial asset have expired, (b) the
Group retains the right to receive cash flows from the financial
asset, but has assumed an obligation to pay them in full without
material delay to a third party under a "pass through arrangement";
or (c) the Group has transferred substantially all the risks and
rewards of the financial asset, or has neither transferred nor
retained substantially all the risks and rewards of the financial
asset, but has transferred control of the financial asset.
A financial liability is derecognised when the contractual
obligation under the liability is discharged, cancelled or
expired.
Impairment of financial assets
IFRS 9 requires the Group to record expected credit losses
("ECLs") on all financial assets held at amortised cost, all loans
and trade receivables, either on a 12-month or lifetime basis. The
Group only holds receivables with no financing component and which
have maturities of less than 12 months at amortised cost and
therefore has applied the simplified approach to recognise lifetime
ECLs permitted by IFRS 9.
Commitments
Through its investment in the Holding Company and the
Partnership, the Group has outstanding commitments to investments
that are not recognised in the Consolidated Financial Statements.
Refer to note 20 for further details.
Share based payments
Certain employees of SIML participate in equity incentive
arrangements under which they receive awards of Management Equity
Shares ("MES") in the Holding Company above a base line value set
out at the date of award. The MES are not entitled to dividends but
any dividends or capital value realised by the Group in relation to
the Holding Company are taken into account in determining the value
of the MES. MES vest if an individual remains in employment for the
applicable vesting period. 25% of an individual MES become
realisable each year, they have the right to sell these realisable
shares to the Company and the Company is obligated to purchase said
shares. The price is determined using a formula stipulated in the
Articles of Association ("Articles") of the Holding Company.
The terms of the equity incentive arrangements provide that half
of the proceeds (net of expected taxes) are settled in Company
shares which must be held for at least 12 months, with the balance
paid in cash. Consequently, the arrangements are deemed to be
partly an equity-settled share based payment scheme and partly a
cash-settled share based payment scheme under IFRS 2 "Share Based
Payments" in the Consolidated Financial Statements of the
Group.
The fair value of the MES at the time of the initial award is
determined in accordance with IFRS 2 and taking into account the
particular rights attached to the MES as described in the Articles.
The fair value is measured using a probability-weighted expected
returns methodology, which is an appropriate future-oriented
approach when considering the fair value of shares that have no
intrinsic value at the time of issue. The approach replicates that
of a binomial option pricing model. The key assumptions used within
the model are: NAV progression; discount rates ranging from 12% to
30% (31 March 2021: 11% to 31%); and probabilities of success that
result in an average cumulative probability of success across the
life science portfolio of 32% (31 March 2021: 31%). In this case,
the expected future payout to the MES was made by reference to the
expected evolution of the Holding Company's value, including
expected dividends and other realisations which is then compared to
the base line value. This is then discounted into present value
terms adopting an appropriate discount rate. The "capital asset
pricing methodology" was used when considering an appropriate
discount rate to apply to the payout expected to accrue to the MES
on realisation.
When MES are awarded, a share based payment charge is recognised
in the Consolidated Statement of Comprehensive Income of the
employing company, SIML, equal to the fair value at that date,
spread over the vesting period. In its own financial statements,
the Company records a capital contribution to the Holding Company
with an amount credited to the share based payments reserve in
respect of the equity-settled proportion and to liabilities in
respect of the cash-settled proportion (see below).
When the Company issues new shares to acquire the MES, the fair
value of the MES is credited to share capital.
To the extent that the Company expects to pay cash to acquire
the MES, the fair value of the MES is recognised as a liability in
the Company's Consolidated Statement of Financial Position. The
fair value is established at each statement of financial position
date and recognised in the Consolidated Statement of Comprehensive
Income throughout the vesting period, based on the proportion
vested at each Statement of Financial Position date and adjusted to
reflect subsequent movements in fair value up to the date of
acquisition of the MES by the Company.
The fair value paid to acquire MES (whether in shares in the
Company or cash) will result in an increase in the carrying value
of the Holding Company by the Company.
The movement in the share based payment provision of the Group
is a non-cash fair value movement to the reported liability, rather
than a working capital balance movement. This movement is
recognised directly in the Consolidated Statement of Comprehensive
Income.
Income
All income is accounted for in accordance with IFRS 15 "Revenue
from Contracts with Customers" and is recognised in the
Consolidated Statement of Comprehensive Income. Income is further
discussed in note 6.
Expenses
Expenses are accounted for on accruals basis. Expenses incurred
on the acquisition of investments at fair value through profit or
loss are presented within the Capital column of the Consolidated
Statement of Comprehensive Income. All other expenses are presented
within the Revenue column of the Consolidated Statement of
Comprehensive Income. Charitable donations are accounted for on
accruals basis and are recognised in the Consolidated Statement of
Comprehensive Income. Expenses directly attributable to the
issuance of shares are charged against capital and recognised in
the Consolidated Statement of Changes in Net Assets Attributable to
Holders of Ordinary Shares.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and demand
deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash
and which are subject to insignificant changes in value.
Translation of foreign currency
Items included in the Group's Consolidated Financial Statements
are measured in GBP, which is the currency of the primary economic
environment where the Group operates. The Group's assets are
primarily denominated in GBP.
Transactions in currencies other than GBP are translated at the
rate of exchange ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
date of the Consolidated Statement of Financial Position are
retranslated into GBP at the rate of exchange ruling at that
date.
Foreign exchange differences arising on retranslation are
recognised in the Consolidated Statement of Comprehensive Income.
Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the rate
of exchange at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated into GBP
at foreign exchange rates ruling at the date the fair value was
determined.
Presentation of the Consolidated Statement of Comprehensive
Income
In order to better reflect the activities of an investment
company, supplementary information which analyses the Consolidated
Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Consolidated
Statement of Comprehensive Income.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
The preparation of the Group's Consolidated Financial Statements
requires judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses at the reporting date.
However, uncertainties about these assumptions and estimates, in
particular relating to underlying investments of private equity
investments and the life science investments could result in
outcomes that require a material adjustment to the carrying amount
of the assets or liabilities affected in future periods.
Critical accounting judgements
In the process of applying the Group's accounting policies, the
following judgements have been made, which have the most
significant effect on the amounts recognised in the Consolidated
Financial Statements:
Fair value - life science portfolio
In the case of the Group's investments in unlisted companies,
the fair value is determined in accordance with the IPEV Valuation
Guidelines. These include the use of recent arm's length
transactions, DCF analysis and earnings multiples. Wherever
possible, the Group uses valuation techniques which make maximum
use of market-based inputs.
In most cases, where the Group is the sole institutional
investor and/or until such time as substantial clinical data has
been generated, the primary valuation input is Cost or PRI, subject
to adequate consideration being given to current facts and
circumstances. This includes whether there is objective evidence
that suggests the investment has been impaired or increased in
value due to observable data, technical, or commercial
performance.
Where considered appropriate, once substantial clinical data has
been generated the Group will use input from independent valuation
advisors to assist in the determination of fair value.
The key judgement relates to determining whether a Cost or PRI
(Market) based approach is the most appropriate for determining
fair value of the Group's investments in unlisted companies. In
making this judgement, the Group highlights that the majority of
its investments are early-stage businesses, typically with products
in the discovery stage of drug development and pre-revenue
generation. As a result, it considers that the determination of
fair value should be based on what a market participant buyer would
pay to acquire or develop a substitute asset with comparable
scientific or commercial progression, adjusted for obsolescence
(i.e. its current replacement cost). This technique is applied
until such time that the life science investment is at a stage in
its life cycle where cash flow forecasts are more predictable, thus
using an income-based approach provides a more reliable estimate of
fair value.
However there are also other methodologies that can be used to
determine the fair value of investments in private companies
including the use of the DCF methodology. It is possible that the
use of an alternative valuation methodology would result in a
different fair value than that recorded by the Group.
When assessing the judgement, the Group's determination of the
fair values of certain investments took into consideration multiple
sources including Management and publicly available information and
publications, as well as input from an independent review by L.E.K.
Consulting LLP ("L.E.K.") in respect of Syncona's valuation of the
following investments: Anaveon AG; OMass Therapeutics Limited;
Quell Therapeutics Limited; and SwanBio Therapeutics Limited.
The review was limited to certain specific limited procedures
which we identified and requested L.E.K. to perform within an
agreed limited scope, and it was subject to assumptions which are
forward looking in nature and subjective judgements. Upon
completion of the review within the parameters of the agreed
procedures L.E.K. estimated an independent range of fair values of
those investments. The limited procedures carried out by L.E.K. did
not involve an audit, review, compilation or any other form of
verification, examination or attestation under generally accepted
auditing standards and were based on the sources agreed in the
limited scope only. Syncona Investment Management Limited ("the
AIFM") is responsible for determining the fair value of the
investments, and the review performed by L.E.K. to assist Syncona
is only one element of the enquiries and procedures in the process
in making a determination of the fair value of those investments
and for which SIML is ultimately responsible.
During the year the investment in Gyroscope was sold to an
external third party for consideration comprising of upfront cash
and cash to be paid in the future subject to certain milestones
being met ("milestone payments"). Gyroscope was previously held as
an investment at fair value through profit or loss by Syncona
Portfolio Limited due to Syncona Portfolio Limited meeting the
conditions of being an investment entity and holding its
subsidiaries at fair value through profit or loss.
There is currently no prescriptive accounting standard for the
seller where milestone payments which are contingent on a future
event is agreed in a contract for the disposal of a subsidiary.
Guidance available within IFRS 3 "Business Combinations" to the
acquiring entity was therefore applied to the recognition and
measurement of the milestone payments. IFRS 3 requires the acquirer
to recognise any milestone payments dependent on uncertain events
to be recognised as a financial liability at fair value through
profit or loss in their financial statements. In accordance with
available guidance and industry practice it was concluded that the
milestone payments receivable following the sale of Gyroscope are
required to be recognised as a financial asset measured at fair
value through profit or loss in the financial statements of Syncona
Portfolio Limited. This forms part of the fair value of the Groups
investment in the Holding Company.
Key sources of estimation uncertainty
The Group's investments consist of its investments in the
Holding Company and the Partnership, both of which are classified
at fair value through profit or loss and are valued accordingly, as
disclosed in note 2.
The key sources of estimation uncertainty are the valuation of
the Holding Company's investments in privately held life science
companies and milestone payments on sale of a subsidiary, the
Partnership's private equity investments and investment in the CRT
Pioneer Fund, and the valuation of the share based payment
liability.
The unquoted investments within the life science portfolio are
very illiquid. Many of the companies are early stage investments
and privately owned. Accordingly, a market value can be difficult
to determine. The primary inputs used by the Company to determine
the fair value of investments in privately held life science
companies are the cost of the capital invested and PRI, adjusted to
reflect the achievement or otherwise of milestones or other
factors. The accounting policy for all investments is described in
note 2 and the fair value of all investments is described in note
19.
In determining a suitable range to sensitise the fair value of
the unlisted life science portfolio, Management note the
achievement or not of value enhancing milestones as being a key
source of estimation uncertainty. Such activities and resulting
data emanating from the life science companies can be the key
trigger for fair value changes and typically involve financing
events which crystallise value at those points in time. The range
of 18% (2021: 18%) identified by Management reflects their estimate
of the range of reasonably possible valuations over the next
financial year, taking into account the position of the portfolio
as a whole. Key technical milestones considered by Management and
that typically trigger value enhancement (or deterioration if not
achieved) include the generation of substantial clinical data.
The Company has analysed the impact of the COVID-19 pandemic on
the private life science companies and does not consider that any
COVID-19 revaluations are required, however the final impact of the
pandemic is not yet certain and may have effects on the portfolio
companies that have not been anticipated.
The Company has assessed the current impact of the war in
Ukraine on the private life science companies and does not consider
that any revaluations are required as a result, however the final
impact of the war is not yet certain and may have effects on the
portfolio companies that have not been anticipated.
The fair value of the milestone payments is inherently difficult
to calculate with the value being dependent on contingent events.
To this end the valuation is determined using a DCF model where the
key unobservable inputs are the probability of the contingent
events occurring and the discount rate applied in order to generate
a present value of the asset. The accounting policy for the
milestone payments is described in note 2 and the fair value is
detailed in note 19.
In determining a suitable range to sensitise the fair value of
the milestone payments Management note varying sources of publicly
available information for relevant probabilities of success that
could be applied to the DCF in order to generate differing
valuations. The range of GBP42 million - GBP54 million by
Management reflects their estimate of a range of reasonably
possible valuations as at 31 March 2022.
The CRT Pioneer Fund is invested in early-stage life science
projects and companies. A market value can be difficult to
determine for assets of this nature. The Company values its
interest in the CRT Pioneer Fund by reference to the valuation
provided by the manager of that fund, adjusted to reflect the
Company's view on certain of the key valuation inputs. Sensitivity
to a 48% (31 March 2021: 23%) movement in the valuation of the CRT
Pioneer Fund is included in note 19 being the identified range of
other alternative valuations of this asset.
As at the year end, none (31 March 2021: none) of the
Partnership's underlying investments have imposed restrictions on
redemptions. However, underlying managers often have the right to
impose such restrictions. The Directors believe it remains
appropriate to estimate their fair values based on NAV as reported
by the administrators of the relevant investments.
Where investments held by the Partnership can be subscribed to,
the Directors believe that such NAV represents fair value because
subscriptions and redemptions in the underlying investments occur
at these prices at the Consolidated Statement of Financial Position
date, where permitted.
The share based payment charge is determined using an externally
generated model in accordance with IFRS 2 using a
probability-weighted expected returns methodology. Additional
details regarding the key inputs into the valuation are stated in
note 2.
4. INVESTMENT IN SUBSIDIARIES AND ASSOCIATES
The Company meets the definition of an investment entity in
accordance with IFRS 10. Therefore, with the exception of the
General Partner, the Company does not consolidate its subsidiaries
and indirect associates, but rather recognises them as financial
assets at fair value through profit or loss.
Direct interests in subsidiaries
Principal
place 2022 2021
Subsidiary of business Principal activity % interest(1) % interest(1)
Syncona GP Limited Guernsey General Partner 100% 100%
Syncona Holdings Limited Guernsey Portfolio management 100% 100%
Syncona Investments
LP Incorporated Guernsey Portfolio management 100% 100%
(1) Based on undiluted issued share capital and excluding the
MES issued by Syncona Holdings Limited (see note 12).
There are no significant restrictions on the ability of
subsidiaries to transfer funds to the Company.
Indirect interests in subsidiaries and associates
Principal
place 2022
Principal
Indirect Subsidiaries of business Immediate parent activity % interest(1)
Syncona Investments
Syncona Discovery Limited UK LP Inc Portfolio management 100%
Syncona Holdings
Syncona Portfolio Limited Guernsey Limited Portfolio management 100%
Syncona Portfolio
Syncona IP Holdco Limited UK Limited Portfolio management 100%
Syncona Investment
Management Syncona Holdings
Limited UK Limited Portfolio management 100%
SIML Switzerland AG Switzerland SIML Portfolio management 100%
SwanBio Therapeutics Syncona Portfolio
Limited United States Limited Gene therapy 76%
Purespring Therapeutics Syncona Portfolio
Limited UK Limited Gene therapy 76%
Forcefield Therapeutics Syncona Portfolio
Limited UK Limited Gene therapy 76%
Resolution Therapeutics Syncona Portfolio
Limited UK Limited Cell therapy 73%
Freeline Therapeutics Syncona Portfolio
Holdings plc UK Limited Gene therapy 61%
Syncona Portfolio
OMass Therapeutics Limited UK Limited Small molecule 53%
Principal
place 2022
Principal
Indirect associates of business Immediate parent activity % interest(1)
Syncona Portfolio
Quell Therapeutics Limited UK Limited Cell therapy 44%
Syncona Portfolio
Anaveon AG Switzerland Limited Biologics 41%
Azeria Therapeutics Syncona Portfolio In voluntary
Limited UK Limited liquidation 34%
Achilles Therapeutics Syncona Portfolio
plc UK Limited Cell therapy 27%
Autolus Therapeutics Syncona Portfolio
plc UK Limited Cell therapy 21%
(1) Based on undiluted issued share capital and excluding the
MES issued by Syncona Holdings Limited (see note 12).
Principal
place 2021
Principal
Indirect Subsidiaries of business Immediate parent activity % interest(1)
Syncona Investments
Syncona Discovery Limited UK LP Inc Portfolio management 100%
Syncona Holdings
Syncona Portfolio Limited Guernsey Limited Portfolio management 100%
Syncona Portfolio
Syncona IP Holdco Limited UK Limited Portfolio management 100%
Syncona Investment
Management Syncona Holdings
Limited UK Limited Portfolio management 100%
Syncona Portfolio
Quell Therapeutics Limited UK Limited Cell therapy 83%
SwanBio Therapeutics Syncona Portfolio
Limited United States Limited Gene therapy 76%
Resolution Therapeutics
Limited (formerly Syncona Syncona Portfolio
Collaboration (E) Limited) UK Limited Cell therapy 66%
Purespring Therapeutics Syncona Portfolio
Limited UK Limited Gene therapy 65%
Gyroscope Therapeutics Syncona Portfolio
Limited UK Limited Gene therapy 59%
Freeline Therapeutics Syncona Portfolio
Holdings plc UK Limited Gene therapy 53%
Syncona Portfolio
Anaveon AG Switzerland Limited Biologics 50%
Syncona Portfolio
OMass Therapeutics Limited UK Limited Small molecule 49%
Forcefield Therapeutics Syncona Portfolio
Limited UK Limited Gene therapy 47%
Principal
place 2021
Principal
Indirect associates of business Immediate parent activity % interest(1)
Azeria Therapeutics Syncona Portfolio In voluntary
Limited UK Limited liquidation 34%
Autolus Therapeutics Syncona Portfolio
plc UK Limited Cell therapy 28%
Achilles Therapeutics Syncona Portfolio
plc UK Limited Cell therapy 27%
5. TAXATION
The Company and the General Partner are exempt from taxation in
Guernsey under the provisions of The Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 1989 and have both paid an annual exemption
fee of GBP1,200 (31 March 2021: GBP1,200).
The General Partner is incorporated and a tax resident in
Guernsey, its corporate affairs being managed solely in Guernsey.
Having regard to the non-UK tax residence of the General Partner
and the Company, and on the basis that the Partnership is treated
as transparent for UK and Guernsey tax purposes and that the
Partnership's business is an investment business and not a trade,
no UK tax will be payable on either the General Partner's or the
Company's shares of Partnership profit (save to the extent of any
UK withholding tax on certain types of UK income such as
interest).
Some of the Group's underlying investments may be liable to tax,
although the tax impact is not expected to be material to the
Group, and is included in the fair value of the Group's
investments.
6. INCOME
The Group's income relates to cash transfers from the
Partnership which are used for paying costs and dividends of the
Group.
During the year, income received from the Partnership amounted
to GBP25,390,625 (31 March 2021: GBP19,933,644) of which
GBP4,249,836 (31 March 2021: GBP4,710,217) remained receivable as
at 31 March 2022. The receivable reflects the charitable donations
of the Group. Refer to note 8.
7. NET (LOSSES)/GAINS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH
PROFIT OR LOSS
The net (losses)/gains on financial assets at fair value through
profit or loss arise from the Group's holdings in the Holding
Company and Partnership.
Note 2022 2021
GBP'000 GBP'000
Net (losses)/gains from:
The Holding Company 7.a 22,019 60,551
The Partnership 7.b (28,717) (1,946)
(6,698) 58,605
======== =======
7.a Movements in the Holding Company:
2022 2021
GBP'000 GBP'000
Expenses (90) (89)
Movement in unrealised gains on life science
investments at fair value through profit or
loss 22,109 60,640
Net gains on financial assets at fair value
through profit or loss 22,019 60,551
======= =======
7.b Movements in the Partnership:
2022 2021
GBP'000 GBP'000
Investment income 23 117
Rebates and donations 409 18
Other income - 53
Expenses (229) (273)
Realised gains on financial assets at fair
value through profit or loss 13,716 33,479
Movement in unrealised losses on financial
assets at fair value through profit or loss (19,185) (10,740)
Gains/(losses) on foreign currency 1,940 (4,666)
-------- --------
Gains on financial assets at fair value through
profit or loss (3,326) 17,988
Distributions (25,391) (19,934)
-------- --------
Net losses on financial assets at fair value
through profit or loss (28,717) (1,946)
======== ========
8. CHARITABLE DONATIONS
For the years ended 31 March 2022 and 31 March 2021, the Group
has agreed to make a donation to charity of 0.35% of the total NAV
of the Group calculated on a monthly basis, 0.15% to be donated to
The Institute of Cancer Research and 0.20% to be donated to The
Syncona Foundation, and these donations are made by the General
Partner.
During the year, charitable donations expense amounted to
GBP4,249,836 (31 March 2021: GBP4,710,217). As at 31 March 2022,
GBP4,249,836 (31 March 2021: GBP4,710,217) remained payable. Refer
to note 13.
9. GENERAL EXPENSES
2022 2021
GBP'000 GBP'000
Share based payments (7,304) 10,561
Investment management fees 10,699 8,177
Directors' remuneration 419 386
Auditor's remuneration 141 143
Other expenses 1,650 1,404
5,605 20,671
======= =======
Auditor's remuneration includes audit fees in relation to the
Group of GBP105,000 (31 March 2021: GBP87,500). Total audit fees
paid by the Group and the Syncona Group Companies for the year
ended 31 March 2022 totalled GBP210,000 (31 March 2021:
GBP187,000). Additional fees paid to the auditor were GBP38,000 (31
March 2021: GBP30,000) which relates to work performed at the
interim review of GBP30,000 (31 March 2021: GBP23,000) and other
non-audit fees of GBP8,000 (31 March 2021: GBP7,000).
Further details of the share based payments can be found in note
12.
10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Note 2022 2021
GBP'000 GBP'000
The Holding Company 10.a 980,282 956,279
The Partnership 10.b 342,950 371,667
1,323,232 1,327,946
========= =========
The Holding Company and the Partnership are the only two
investments held directly by the Group and as such the
reconciliation of movement in investments has been presented
separately for each below.
10.a The net assets of the Holding Company
2022 2021
GBP'000 GBP'000
Cost of the Holding Company's investment at
the start of the year 494,810 493,310
Purchases during the year - 1,500
Cost of the Holding Company's investments
at the end of the year 494,810 494,810
Net unrealised gains on investments at the
end of the year 489,984 465,891
------- -------
Fair value of the Holding Company's investments
at the end of the year 984,794 960,701
Other current liabilities (4,512) (4,422)
Financial assets at fair value through profit
or loss at the end of the year 980,282 956,279
======= =======
10.b The net assets of the Partnership
2022 2021
GBP'000 GBP'000
Cost of the Partnership's investments at the
start of the year 418,472 682,750
Purchases during the year 835,375 1,075,333
Sales during the year (923,659) (1,340,000)
Return of capital (9,070) (33,090)
Net realised gains on disposals during the
year 13,716 33,479
--------- -----------
Cost of the Partnership's investments at the
end of the year 334,834 418,472
Net unrealised gains on investments at the
end of the year 16,147 35,332
--------- -----------
Fair value of the Partnership's investments
at the end of the year 350,981 453,804
Cash and cash equivalents 475,786 189,440
Other net current liabilities (483,817) (271,577)
Financial assets at fair value through profit
or loss at the end of the year 342,950 371,667
========= ===========
11. TRADE AND OTHER RECEIVABLES
2022 2021
GBP'000 GBP'000
Due from related parties (see note 16) 5,462 5,736
Charitable donation receivable from related
party 4,250 4,710
Prepayments 166 -
9,878 10,446
======= =======
12. SHARE BASED PAYMENTS
Share based payments are associated with awards of MES in the
Holding Company, relevant details of which are set out in note
2.
The total cost recognised within general expenses in the
Consolidated Statement of Comprehensive Income is shown below:
2022 2021
GBP'000 GBP'000
Charge related to revaluation of the liability
for cash settled share awards (7,304) 10,561
Total (7,304) 10,561
======= =======
Amounts recognised in the Consolidated Statement of Financial
Position, representing the carrying amount of liabilities arising
from share based payments transactions are shown below:
2022 2021
GBP'000 GBP'000
Share based payments - current 9,388 8,836
Share based payments - non-current 8,459 23,505
Total 17,847 32,341
======= =======
When a participant elects to realise vested MES by sale of the
MES to the Company, half of the proceeds (net of anticipated taxes)
will be settled in shares of the Company, with the balance settled
in cash.
The fair value of the MES is established using an externally
developed model as set out in note 2. Vesting is subject only to
the condition that employees must remain in employment at the
vesting date. Each MES is entitled to share equally in value
attributable to the Holding Company above the applicable base line
value at the date of award, provided that the applicable hurdle
value of 15% or 30% growth in the value of the Holding Company
above the base line value at the date of award has been
achieved.
The fair value of awards made in the year ended 31 March 2022
was GBP2,883,500 (31 March 2021: GBP2,907,000). This represents
8,238,571 new MES issued (31 March 2021: 5,902,624). An award was
made on 15 July 2021 at 35p per MES.
The number of MES outstanding are shown below:
2022 2021
Outstanding at the start of the year 43,873,239 41,937,713
Issued 8,238,571 5,902,624
Realised (7,253,638) (3,953,906)
Lapsed (2,576,050) (13,192)
Outstanding at the end of the year 42,282,122 43,873,239
=========== ===========
Weighted average remaining contractual life
of outstanding MES, years 1.20 1.24
Vested MES as at the year end 31,293,486 38,502,646
Realisable MES as at the year end 11,478,050 9,625,668
As at 31 March 2022, if all MES were realised, the number of
shares issued in the Company as a result would increase by
6,880,057 (31 March 2021: 6,177,787). The undiluted per share value
of net assets attributable to holders of Ordinary Shares would fall
from GBP1.97 to GBP1.94 (31 March 2021: GBP1.96 to GBP1.94) if
these shares were issued.
13. PAYABLES
2022 2021
GBP'000 GBP'000
Charitable donations payable 4,250 4,710
Management fees payable 1,048 600
Other payables 400 466
------- -------
5,698 5,776
======= =======
14. SHARE CAPITAL
A. Authorised Share Capital
The Company is authorised to issue an unlimited number of
shares, which may have a par value or no par value. The Company is
a closed-ended investment company with an unlimited life.
As the Company's shares have no par value, the share price
consists solely of share premium and the amounts received for
issued shares are recorded in share capital in accordance with The
Companies (Guernsey) Law, 2008.
2022 2021
GBP'000 GBP'000
Ordinary Share Capital
Balance at the start of the year 767,999 767,999
Balance at the end of the year 767,999 767,999
======= =======
2022 2021
Shares Shares
Ordinary Share Capital
Balance at the start of the year 664,580,417 663,665,537
Share based payment shares issued during the
year 2,153,171 914,880
Balance at the end of the year 666,733,588 664,580,417
=========== ===========
The Company has issued one Deferred Share to The Syncona
Foundation for GBP1.
B. Capital reserves
Gains and losses recorded on the realisation of investments,
realised exchange differences, unrealised gains and losses recorded
on the revaluation of investments held as at the year end and
unrealised exchange differences of a capital nature are transferred
to capital reserves.
C. Earnings/(loss) per share
The calculations for the earnings/(loss) per share attributable
to the Ordinary Shares of the Company are based on the following
data:
2022 2021
Earnings for the purposes of earnings per
share GBP8,838,000 GBP53,158,000
Basic weighted average number of shares 666,108,284 664,314,726
Basic revenue earnings per share 2.3p (0.8)p
Basic capital (loss)/earnings per share (1.0)p 8.8p
Basic earnings per share 1.3p 8.0p
Diluted weighted average number of shares 672,988,341 670,492,513
Diluted revenue earnings per shares 2.3p (0.8)p
Diluted capital (loss)/earnings per share (1.0)p 8.7p
Diluted earnings per share 1.3p 7.9p
2022 2021
Issued share capital at the start of the year 664,580,417 663,665,537
Weighted effect of share issues
Share based payments 1,527,867 649,189
Potential share based payment share issues 6,880,057 6,177,787
----------- -----------
Diluted weighted average number of shares 672,988,341 670,492,513
=========== ===========
D. NAV per share
2022 2021
Net assets for the purposes of NAV per share GBP1,309,840,518 GBP1,300,287,998
Ordinary Shares in issue 666,733,588 664,580,417
NAV per share 196.5p 195.7p
Diluted number of shares 673,613,645 670,758,204
Diluted NAV per share 194.4p 193.9p
15. DISTRIBUTION TO SHAREHOLDERS
The Company may pay a dividend at the discretion of the
Directors.
During the year ended 31 March 2022, the Company did not declare
or pay a dividend (31 March 2021: GBPNil was paid in relation to
the year ended 31 March 2020). The Directors believe that it is not
appropriate for the Company to pay a dividend.
The Company is not declaring a 2022 dividend.
16. RELATED PARTY TRANSACTIONS
The Group has various related parties; life sciences investments
held by the Holding Company, the Investment Manager, the Company's
Directors and The Syncona Foundation.
Life science investments
The Group makes equity investments in some life science
investments where it retains control. The Group has taken advantage
of the investment entity exception as permitted by IFRS 10 and has
not consolidated these investments, but does consider them to be
related parties.
During the year, the total amount invested in life science
investments which the Group controls was GBP62,765,311 (31 March
2021: GBP145,075,244).
The Group makes other equity investments where it does not have
control but may have significant influence through its ability to
participate in the financial and operating policies of these
companies, therefore the Group considers them to be related
parties.
During the year, the total amount invested in life science
investments in which the Group has significant influence was
GBP46,592,768 (31 March 2021: GBP29,767,748).
Commitments of milestone payments to the life science
investments are disclosed in note 20.
During the year, SIML charged the life science investments a
total of GBP222,406 in relation to Director's fees (31 March 2021:
GBP188,965).
Investment Manager
SIML, an indirectly held subsidiary of the Company, is the
Investment Manager of the Group.
For the year ended 31 March 2022, SIML was entitled to receive
an annual fee of up to 1.05% of the Company's NAV (31 March 2021:
1.05%) per annum.
2022 2021
GBP'000 GBP'000
Amounts paid to SIML 10,699 8,177
Amounts owed to SIML in respect of management fees totalled
GBP1,047,525 as at 31 March 2022 (31 March 2021: GBP599,519).
During the year, SIML received fees from the Group's portfolio
companies of GBP615,342 (31 March 2021: GBP305,819).
Company Directors
As at the year end, the Company had seven Directors, all of whom
served in a non-executive capacity. Rob Hutchinson also serves as a
Director of the General Partner.
Thomas Henderson resigned as a Director of the Company with
effect from 3 August 2021.
Nicholas Moss resigned as a Director of the Company with effect
from 31 December 2021. He retained his Directorship of the General
Partner, the Holding Company and Syncona Portfolio Limited.
Nigel Keen retired as a Director of the Company and Chairman of
the Investment Manager with effect from 31 December 2021. He
received fees of GBP102,575 (31 March 2021: GBP133,430) from the
Investment Manager, in respect of his services to the Investment
Manager.
Julie Cherrington and Cristina Csimma were appointed as
Directors of the Company with effect from 1 February 2022.
Directors' remuneration for the years ended 31 March 2022 and 31
March 2021, excluding expenses incurred, and outstanding Directors'
remuneration as at the end of the year, are set out below.
2022 2021
GBP'000 GBP'000
Directors' remuneration for the year 419 386
Payable at end of the year - -
Shares held by the Directors can be found in the Report of the
Remuneration Committee. The directors of Syncona Limited together
hold 0.04% (31 March 2021: 1.24%) of the Syncona Limited voting
shares.
The Syncona Foundation
Charitable donations are made by the Company to The Syncona
Foundation. The Syncona Foundation was incorporated in England and
Wales on 17 May 2012 as a private company limited by guarantee,
with exclusively charitable purposes and holds the Deferred Share
in the Company. The amount donated to The Syncona Foundation during
the year ended 31 March 2022 was GBP2,691,553 (31 March 2021:
GBP2,632,809).
Other related parties
As at 31 March 2022, the Company has a receivable from the
Partnership, Holding Company and Syncona Portfolio Limited
amounting to GBP15,409 (31 March 2021: GBP106,981), GBP5,431,409
(31 March 2021: GBP5,489,048) and GBP15,409 (31 March 2021:
GBP137,246), respectively.
17. FINANCIAL INSTRUMENTS
In accordance with its investment objectives and policies, the
Group holds financial instruments which at any one time may
comprise the following:
- securities and investments held in accordance with the investment objectives and policies;
- cash and short-term receivables and payables arising directly from operations; and
- derivative instruments including forward currency contracts.
The financial instruments held by the Group are comprised
principally of the investments in the Holding Company and the
Partnership.
Details of the Group's significant accounting policies and
methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are
recognised, in respect of its financial assets and liabilities are
disclosed in note 2.
2022 2021
GBP'000 GBP'000
Financial assets at fair value through profit
or loss
The Holding Company 980,282 956,279
The Partnership 342,950 371,667
--------- ---------
Total financial assets at fair value through
profit or loss 1,323,232 1,327,946
--------- ---------
Financial assets measured at amortised cost
Bank and cash deposits 276 14
Other financial assets 9,878 10,446
--------- ---------
Total financial assets measured at amortised
cost 10,154 10,460
--------- ---------
Financial liabilities at fair value through
profit or loss
Provision for share based payments (17,847) (32,341)
Total financial liabilities at fair value
through profit or loss (17,847) (32,341)
--------- ---------
Financial liabilities measured at amortised
cost
Other financial liabilities (5,698) (5,776)
--------- ---------
Total financial liabilities measured at amortised
cost (5,698) (5,776)
--------- ---------
Net financial assets 1,309,841 1,300,289
========= =========
The financial instruments held by the Group's underlying
investments are comprised principally of life science investments,
hedge, equity, credit, long-term alternative investment funds,
short-term UK treasury bills and cash.
The table below analyses the carrying amounts of the financial
assets and liabilities held by the Holding Company by category as
defined in IFRS 9 (see note 2).
2022 2021
GBP'000 GBP'000
Financial assets at fair value through profit
or loss
Investment in subsidiaries 984,794 960,701
Total financial assets at fair value t h
r o ug h p r o f i t o r l o s s 984,794 960,701
------- -------
Financial assets measured at amortised cost(1)
Current assets 947 1,088
------- -------
Financial liabilities measured at amortised
cost(1)
Current liabilities (5,459) (5,510)
------- -------
Net financial assets of the Holding Company 980,282 956,279
======= =======
The table below analyses the carrying amounts of the financial
assets and liabilities held by the Partnership by category as
defined in IFRS 9.
2022 2021
GBP'000 GBP'000
Financial assets at fair value through profit
or loss
Listed investments 279,473 344,862
Unlisted investments 39,857 72,366
Investment in subsidiaries 31,651 36,576
Total financial assets at fair value through
profit or loss 350,981 453,804
--------- ---------
Financial assets measured at amortised cost(1)
Current assets 476,586 189,913
--------- ---------
Financial liabilities measured at amortised
cost(1)
Current liabilities (484,617) (272,050)
--------- ---------
Net financial assets of the Partnership 342,950 371,667
========= =========
(1) Has a fair value which does not materially differ to
amortised cost
Capital risk management
The Group's objectives when managing capital include the
safeguarding of the Group's ability to continue as a going concern
in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The Group does not have externally-imposed capital
requirements.
The Group may incur indebtedness for the purpose of financing
share repurchases or redemptions, making investments (including as
bridge finance for investment obligations), satisfying working
capital requirements or to assist in payment of the charitable
donation, up to a maximum of 20% of the NAV at the point of
obtaining debt. The Group may utilise gearing for investment
purposes if, at the time of incurrence, it considers it prudent and
desirable to do so in light of prevailing market conditions. There
is no limitation on indebtedness being incurred at the level of the
underlying investments.
18. FINANCIAL RISK MANAGEMENT AND ASSOCIATED RISKS
Financial risk management
The Group is exposed to a variety of financial risks as a result
of its activities. These risks include market risk (including
market price risk, foreign currency risk and interest rate risk),
credit risk and liquidity risk. These risks have existed throughout
the year and the Group's policies for managing them are summarised
below.
The risks below do not reflect the risks of the underlying
investment portfolios of certain of the financial assets at fair
value through profit or loss. The Group has significant indirect
exposure to a number of risks through the underlying portfolios of
the investment entities. There is no mechanism to control these
risks without considerably prejudicing return objectives.
Due to the lack of transparency in certain underlying assets in
particular certain of those held by the Partnership it is not
possible to quantify or hedge the impact of these risks on the
portfolio as each investment entity may have complex and changing
risk dynamics that are not easily observable or predictable. These
risks will include interest, foreign exchange and other market
risks which are magnified by gearing in some, not many cases,
resulting in increased liquidity and return risk.
Syncona Limited
Syncona Limited is exposed to financial risks through its
investments in the Holding Company and the Partnership. The risks
and policies for managing them are set out in the following
sections.
The Holding Company
Market price risk
The Holding Company invests in early stage life science
companies that typically have limited products in development, any
problems encountered in development may have a damaging effect on
that company's business and the value of the investment.
This is mitigated by the employment of highly experienced
personnel and the performance of extensive due diligence prior to
investment.
Foreign currency risk
Foreign currency risk represents the potential losses or gains
on the life science investments future income streams and the
potential losses or gains on investments made in United States
Dollars ("USD") and Swiss Francs ("CHF") by the Holding Company's
underlying investments.
The following tables present the Holding Company's assets and
liabilities in their respective currencies, converted into the
Group's functional currency.
2022
CHF USD GBP Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss 59,818 370,772 554,204 984,794
Cash and cash equivalents - - 297 297
Receivables - - 650 650
Payables - - (5,459) (5,459)
------- ------- ------- -------
Total 59,818 370,772 549,692 980,282
======= ======= ======= =======
2021
CHF USD GBP Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss 18,582 487,421 454,698 960,701
Cash and cash equivalents - - 438 438
Receivables - - 650 650
Payables - - (5,510) (5,510)
------- ------- ------- -------
Total 18,582 487,421 450,276 956,279
======= ======= ======= =======
Foreign currency sensitivity analysis
The following table details the sensitivity of the Holding
Company's NAV to a 10% change in the GBP exchange rate against the
USD and CHF with all other variables held constant. The sensitivity
analysis percentage represents the Investment Manager's assessment,
based on the foreign exchange rate movements over the relevant
period and of a reasonably possible change in foreign exchange
rates.
2022 2022 2021 2021
USD CHF USD CHF
GBP'000 GBP'000 GBP'000 GBP'000
10% increase 35,663 6,646 66,922 2,064
10% decrease (29,179) (5,438) (54,754) (1,689)
Interest rate risk
Interest rate risk is negligible in the Holding Company as
minimal cash and no debt is held.
Liquidity risk
Liquidity risk is the risk that the financial commitments made
by the Holding Company are not able to be met as they fall due. The
Holding Company holds minimal cash and has no access to debt and
instead relies on liquidity from the Partnership. The liquidity
risk associated with the Partnership is set out in the Partnership
section below.
The table below details the Holding Company's liquidity analysis
for its financial assets and liabilities.
>3 to 12 2022
months >12 months Total
GBP'000 GBP'000 GBP'000
Financial assets at fair value through
profit or loss - 984,794 984,794
Cash and cash equivalents 297 - 297
Receivables - 650 650
Payables (37) (5,422) (5,459)
-------- ---------- -------
Total 260 980,022 980,282
======== ========== =======
Percentage 0.0% 100.0% 100.0%
-------- ---------- -------
>3 to 12 2021
months >12 months Total
GBP'000 GBP'000 GBP'000
Financial assets at fair value through
profit or loss - 960,701 960,701
Cash and cash equivalents - 438 438
Receivables - 650 650
Payables (89) (5,421) (5,510)
-------- ---------- -------
Total (89) 956,368 956,279
======== ========== =======
Percentage 0.0% 100.0% 100.0%
-------- ---------- -------
The Partnership
Market price risk
The overall market price risk management of each of the fund
holdings of the Partnership is primarily driven by their respective
investment objectives. The Investment Manager assesses the risk in
the Partnership's fund portfolio by monitoring exposures,
liquidity, and concentrations of the underlying funds' investments,
in the context of the historic and current volatility of their
asset classes, and the Investment Manager's risk appetite. The
maximum risk resulting from financial instruments is generally
determined by the fair value of underlying funds. The overall
market exposure as at 31 March 2022 and 31 March 2021 is shown in
the Consolidated Statement of Financial Position.
The financial instruments are sensitive to market price risk;
any increase or decrease in market price will have an equivalent
effect on the market value of the financial instruments.
Foreign currency risk
Foreign currency risk represents the potential losses or gains
the Partnership may suffer through holding foreign currency assets
in the face of foreign exchange movements. The Partnership's
treatment of currency transactions is set out in note 2 to the
Consolidated Financial Statements under "Translation of foreign
currency" and "Forward currency contracts". Currency risk exists in
the underlying investments, the analysis of which is not
feasible.
The investments of the Partnership are denominated in USD, Euro
("EUR"), and GBP. The Partnership's functional and presentation
currency is GBP; hence, the Consolidated Statement of Financial
Position may be significantly affected by movements in the exchange
rates between the foreign currencies previously mentioned. The
Investment Manager may manage exposure to EUR and USD movements by
using forward currency contracts to hedge exposure to investments
in EUR and USD-denominated share classes.
The following tables present the Partnership's assets and
liabilities in their respective currencies, converted into the
Group's functional currency.
2022
USD EUR GBP Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss 3,899 27,418 319,664 350,981
Cash and cash equivalents 354,553 28 121,205 475,786
Trade and other receivables 2 - 798 800
Payables (334,998) - (145,369) (480,367)
Distributions payable - - (4,250) (4,250)
23,456 27,446 292,048 342,950
========= ======= ========= =========
2021
USD EUR GBP Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss 7,785 57,259 388,760 453,804
Cash and cash equivalents 51,207 14 138,219 189,440
Trade and other receivables - - 473 473
Payables - - (267,340) (267,340)
Distributions payable - - (4,710) (4,710)
58,992 57,273 255,402 371,667
======= ======= ========= =========
Foreign currency sensitivity analysis
The following table details the sensitivity of the Partnership's
NAV to a 10% change in the GBP exchange rate against the USD and
EUR with all other variables held constant. The sensitivity
analysis percentage represents the Investment Manager's assessment,
based on the foreign exchange rate movements over the relevant
period and of a reasonably possible change in foreign exchange
rates.
2022 2022 2021 2021
USD EUR USD EUR
GBP'000 GBP'000 GBP'000 GBP'000
10% increase 2,355 2,745 5,686 4,683
10% decrease (2,355) (2,745) (5,686) (4,683)
The above includes the effect of the Group's hedging
strategy.
Interest rate risk
Interest receivable on bank deposits or payable on bank
overdrafts are affected by fluctuations in interest rates, however
the effect is not expected to be material. All cash balances
receive interest at variable rates. Interest rate risk may exist in
the Partnership's underlying investments, the analysis of which is
impractical due to the lack of visibility over the underlying
information required to perform this analysis within the
Partnership's investments.
Credit risk
Credit risk in relation to listed securities transactions
awaiting settlement is managed through the rules and procedures of
the relevant stock exchanges. In particular, settlements for
transactions in listed securities are effected by the Citco Custody
(UK) Limited (the "Custodian") which acts as the custodian of the
partnership's assets, on a delivery against payment or receipt
against payment basis. Transactions in unlisted securities are
affected against binding subscription agreements. Credit risk may
exist in the Partnership's underlying fund investments, the
analysis of which is impractical due to the lack of visibility over
the underlying information required to perform this analysis within
the Partnerships investments.
The Partnership invests in short-term UK treasury bills and
considers the associated credit risk to be negligible.
The principal credit risks for the Partnership are in relation
to deposits with banks. The securities held by the Custodian are
held in trust and are registered in the name of the Partnership.
Citco is "non-rated", however, the Investment Manager takes comfort
over the credit risk of Citco as they have proven to rank amongst
the "Best in Class" and "Top rated" in the recognised industry
survey carrying a global presence and over 40 years of experience
in the provision of custodian and other services to their clients
and the hedge fund industry. The credit risk associated with
debtors is limited to other receivables.
Liquidity risk
The Partnership is exposed to the possibility that it may be
unable to liquidate certain of its assets as it otherwise deems
advisable as the Partnership's underlying funds or their managers
may require minimum holding periods and restrictions on
redemptions. Further, there may be suspension or delays in payment
of redemption proceeds by underlying funds or holdbacks of
redemption proceeds otherwise payable to the Partnership until
after the applicable underlying fund's financial records have been
audited. Therefore, the Partnership may hold receivables that may
not be received by the Partnership for a significant period of
time, may not accrue any interest and ultimately may not be paid to
the Partnership. As at 31 March 2022, no (31 March 2021: Nil)
suspension from redemptions existed in any of the Partnership's
underlying investments.
The Partnership invests in short-term UK treasury bills and
considers the associated liquidity risk to be negligible.
The table below details the Partnership's liquidity analysis for
its financial assets and liabilities. The table has been drawn up
based on the undiscounted net cash flows on the financial assets
and liabilities that settle on a net basis and the undiscounted
gross cash flows on those financial assets and liabilities that
require gross settlement.
Within
1 >1 to 3 >3 to 12 2022(1)
month months months >12 months Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through
profit or loss 279,473 - - 71,508 350,981
Cash and cash equivalents 475,786 - - - 475,786
Trade and other receivables 800 - - - 800
Payables (480,367) - - - (480,367)
Distributions payable - (4,250) - - (4,250)
Total 275,692 (4,250) - 71,508 342,950
========= ======= ======== ========== =========
Percentage 80.3% (1.2)% 0.0% 20.9% 100.0%
--------- ------- -------- ---------- ---------
Within
1 >1 to 3 >3 to 12 2021(1)
month months months >12 months Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through
profit or loss 70,001 259,861 15,000 108,942 453,804
Cash and cash equivalents 189,440 - - - 189,440
Trade and other receivables 473 - - - 473
Payables (267,340) - - - (267,340)
Distributions payable - (4,710) - - (4,710)
Total (7,426) 255,151 15,000 108,942 371,667
========= ======= ======== ========== =========
Percentage (2.0)% 68.7% 4.0% 29.3% 100.0%
--------- ------- -------- ---------- ---------
(1) The liquidity tables above reflect the anticipated cash
flows assuming notice was given to all underlying investments as at
31 March 2022 and 31 March 2021 and that all UK treasury bills are
held to maturity. They include a provision for "audit hold back"
which most hedge funds can apply to full redemptions and any other
known restrictions the managers of the underlying funds may have
placed on redemptions. Where there is currently no firm indication
from the underlying manager on the expected timing of the receipt
of redemption proceeds, the relevant amount is included in the "
>12 months" category. The liquidity tables are therefore
conservative estimates.
19. FAIR VALUE MEASUREMENT
IFRS 13 "Fair Value Measurement" requires the Group to establish
a fair value hierarchy that prioritises the inputs to valuation
techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The
three levels of the fair value hierarchy under IFRS 13 are set as
follows:
- Level 1 Quoted prices (unadjusted) in active markets for
identical assets or liabilities;
- Level 2 Inputs other than quoted prices included within Level
1 that are observable for the asset or liability either directly
(that is, as prices) or indirectly (that is, derived from prices)
or other market corroborated inputs; and
- Level 3 Inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement. For this purpose, the significance of an input
is assessed against the fair value measurement in its entirety. If
a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that
measurement is a Level 3 measurement. Assessing the significance of
a particular input to the fair value measurement requires
judgement, considering factors specific to the asset or
liability.
The determination of what constitutes "observable" requires
significant judgement by the Group. The Group considers observable
data to be market data that is readily available, regularly
distributed or updated, reliable and verifiable, and provided by
independent sources that are actively involved in the relevant
market.
The following table presents the Group's financial assets and
liabilities by level within the valuation hierarchy as at 31 March
2022 and 31 March 2021:
2022
Level 1 Level 2 Level 3 Total
Assets GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair
value through profit or loss:
The Holding Company - - 980,282 980,282
The Partnership - - 342,950 342,950
Total assets - - 1,323,232 1,323,232
========= ========= ========= =========
2021
Level 1 Level 2 Level 3 Total
Assets GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair
value through profit or loss:
The Holding Company - - 956,279 956,279
The Partnership - - 371,667 371,667
Total assets - - 1,327,946 1,327,946
========= ========= ========= =========
The investments in the Holding Company and the Partnership are
classified as Level 3 investments due to the use of the unadjusted
NAV of the subsidiaries as a proxy for fair value, as detailed in
note 2. The subsidiaries hold some investments valued using
techniques with significant unobservable inputs as outlined in the
sections that follow.
The underlying assets of the Partnership and the Holding Company
are shown below.
The following table presents the Holding Company's financial
assets by level within the valuation hierarchy as at 31 March 2022
and 31 March 2021:
Asset type Level 31 March 31 March Valuation Significant unobservable Impact
2022 2021 technique inputs on
GBP'000 GBP'000 valuation
GBP'000
Publicly available
share bid price
as at statement
of financial
Listed investments 1 121,226 387,514 position date n/a n/a
----- -------- -------- ------------------- ---------------------------- -------------
Carrying value of
assets and liabilities
determined in accordance
with generally accepted
accounting principles,
without adjustment.
A sensitivity of
Net Assets 5% of the NAV of
SIML 3 5,822 5,752 of SIML SIML is applied. +/- GBP291
----- -------- -------- ------------------- ---------------------------- -------------
The main unobservable
inputs consist of PoS: +/-
the assigned probability GBP5,889
of milestone success Discount
Milestone Discounted and the discount rate:
payments 3 49,802 - Cash Flow rate used. GBP7,558
----- -------- -------- ------------------- ---------------------------- -------------
The main unobservable
input is the quantification
of the progress investments
make against internal
financing and/or
corporate milestones
where appropriate.
A reasonable shift
in the fair value
Calibrated Calibrated of the investment
PRI(1) 3 325,662 296,497 PRI would be +/-18%. +/- GBP58,619
----- -------- -------- ------------------- ---------------------------- -------------
The main unobservable
input was the potential
value returned in
various exit scenarios
and the weighting
between these scenarios.
Price of latest A reasonable shift
Adjusted price funding round in the Fair Value
of latest funding adjusted by of the investment
round(2) 3 - 1,555 Management was +/-18%. +/- 274
----- -------- -------- ------------------- ---------------------------- -------------
(1) Valuation made by reference to price of recent funding round
unadjusted following adequate consideration of current facts and
circumstances.
(2) Valuation made by reference to price of recent funding round
adjusted following adequate consideration of current facts and
circumstances.
The following table presents the movements in Level 3
investments of the Holding Company for the years ended 31 March
2022 and 31 March 2021:
Life
science Other 2022 2021
investments asset SIML Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 298,052 - 5,752 303,804 363,476
Purchases during the
year 107,817 - - 107,817 151,014
Sales during the year (325,837) - - (325,837) (3,017)
Gains on financial
assets at fair value
through profit or loss 245,630 49,802 70 295,502 37,827
Transfer from Level
3 - - - - (245,496)
------------
Closing balance 325,662 49,802 5,822 381,286 303,804
============ ======= ======= ========= =========
The net gains for the year included in the Consolidated
Statement of Comprehensive Income in respect of Level 3 investments
in the Holding Company held as at the year end amounted to
GBP295,502,000 (2021: GBP37,827,000).
During the year, there were no movements from Level 3 to Level 1
(31 March 2021: GBP245,495,636) or between Level 2 and Level 1 (31
March 2021: GBPnil)
The following table presents the Partnership's financial assets
by level within the valuation hierarchy as at 31 March 2022 and 31
March 2021:
Asset type Level 31 March 31 March Valuation Significant unobservable Impact
2022 2021 technique inputs on
GBP'000 GBP'000 valuation
GBP'000
Publicly available
price as at
statement of
UK treasury financial position
bills 1 179,984 344,862 date n/a n/a
----- -------- -------- ----------------------- --------------------------- -------------
Valuation produced
by fund administrator.
Capital pool Inputs into
investment fund components
fund - Credit are from observable
funds 2 99,489 - inputs n/a n/a
----- -------- -------- ----------------------- --------------------------- -------------
Valuation produced
by fund administrator.
Inputs into
Legacy funds fund components
- Unlisted are from observable
fund investments 2 - 26,098 inputs n/a n/a
----- -------- -------- ----------------------- --------------------------- -------------
The main unobservable
input include the
assessment of the
performance of the
underlying fund by
the fund administrator.
Legacy funds A reasonable possible
- shift in the fair
Long-term Valuation produced value of the instruments
unlisted investments 3 39,857 46,268 by fund administrator would be +/-10%. +/- GBP3,986
----- -------- -------- ----------------------- --------------------------- -------------
Unobservable inputs
include the fund
managers assessment
of the performance
of the underlying
investments and adjustments
made to this assessment
to generate the deemed
fair value. A reasonable
Valuation produced possible shift in
by fund administrator the fair value of
Investment and adjusted the instruments would
in Subsidiary 3 28,183 36,576 by Management be +/-48%. +/- GBP13,528
----- -------- -------- ----------------------- --------------------------- -------------
During the year ended 31 March 2022, there were no movements
from Level 1 to Level 2 (31 March 2021: GBPNil) or between other
Levels in the fair value hierarchy.
Assets classified as Level 2 investments are primarily
underlying funds fair-valued using the latest available NAV of each
fund as reported by each fund's administrator, which are redeemable
by the Group subject to necessary notice being given. Included
within the Level 2 investments above are investments where the
redemption notice period is greater than 90 days. Other assets
within the level 2 investments are daily traded credit funds priced
using the latest market price equivalent to their NAV. Such
investments have been classified as Level 2 because their value is
based on observable inputs. The Group's liquidity analysis is
detailed in note 18.
Assets classified as Level 3 long-term unlisted investments are
underlying funds which are not traded or available for redemption.
The fair value of these assets is derived from quarterly statements
provided by each fund's administrator.
The following table presents the movements in Level 3
investments of the Partnership for the year ended 31 March
2022:
Investment Capital
in pool 2022 2021
Subsidiary investment Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 36,576 46,268 82,844 92,980
Purchases 1,832 760 2,592 5,748
Return of capital - (9,070) (9,070) (34,491)
(Losses)/gains on financial
assets at fair value through
profit or loss (6,757) 1,899 (4,858) 18,607
Closing balance 31,651 39,857 71,508 82,844
=========== =========== ======= ========
The net (losses)/gains for the year included in the Consolidated
Statement of Comprehensive Income in respect of Level 3 investments
of the Partnership held as at the year end amounted to GBP4,857,645
(31 March 2021: GBP18,607,213 gains).
20. COMMITMENTS AND CONTINGENCIES
The Group had the following commitments as at 31 March 2022:
2022 2021
Uncalled Uncalled
commitment commitment
GBP'000 GBP'000
Life science portfolio
Milestone payments to life science companies 82,617 106,854
CRT Pioneer Fund 3,424 4,888
Capital pool investments 2,429 3,751
----------- -----------
Total 88,470 115,493
=========== ===========
There were no contingent liabilities as at 31 March 2022 (March
2021: nil). The commitments are expected to fall due in the next 36
months.
21. SUBSEQUENT EVENTS
These Consolidated Financial Statements were approved for
issuance by the Directors on 15 June 2022. Subsequent events have
been evaluated until 14 June 2022.
Since the statement of financial position date share price
movements resulted in a decrease in value of the listed life
science investments of GBP37.1 million as at 14 June 2022.
The Directors continue to monitor the Group's assets and
strategy in light of the latest market events including inter alia,
the war in Ukraine, inflationary and interest rate rises, and
COVID-19 impacts. At the date of signing they are not aware of any
direct or immediate post year end impacts that materially affect
the financial statements.
Post year end the Group invested GBP9 million in the OMass
Series B and $19 million in the SwanBio Series B, with GBP13
million invested in Resolution as part of the existing Series A
financing. In addition $400 million was invested in US treasury
bills.
GLOSSARY
AAV IRR
Adeno-associated virus - a non-enveloped Internal Rate of Return.
virus that can be engineered Life science portfolio
to deliver DNA to target cells. The underlying investments in
ALL this segment are those whose
Acute lymphocytic leukaemia activities focus on actively
- a cancer of the bone marrow developing products to deliver
and blood in which the body makes transformational treatments to
abnormal white blood cells. patients.
CAGR Life science portfolio return
Compound Annual Growth Rate. See alternative performance
Capital deployed/deployment measures below.
Follow-on investment in our Lymphocytes
portfolio companies and investment Specialised white blood cells
in new companies during the year. that help to fight infection.
See alternative performance measures Lymphoma
below. A type of cancer that affects
Capital pool/Capital base lymphocytes and lymphocyte producing
Capital pool investments plus cells in the body.
cash less other net liabilities. Macrophages
Capital pool investments A form of white blood cell and
The underlying investments consist the principal phagocytic (cell
of cash and cash equivalents, engulfing) components of the
including short-term (1 and 3 immune system.
month) UK treasury bills, listed Mass Spectrometry
fund investments and legacy fixed A technique used by which chemical
term funds. substances are identified by
CAR-T therapy the sorting of gaseous ions in
Chimeric antigen receptor T-cell electric fields according to
therapy - a type of immunotherapy their mass-to-charge ratios.
which reprogrammes a patient's Melanoma
own immune cells to fight cancer. A serious form of skin cancer
Cell therapy that begins in cells known as
A therapy which introduces new, melanocytes.
healthy cells into a patient's MES
body, to replace those which Management Equity Shares.
are diseased or missing. mRNA
CNS Messenger ribonucleic acid (RNA).
Central nervous system - a part Net Asset Value, Net Assets
of the body's nervous system or NAV
comprised of the brain and spinal Net Asset Value ("NAV") is a
cord. measure of the value of the Company,
Companies Law being its assets - principally
Companies (Guernsey) Law 2008. investments made in other companies
Company and cash and cash equivalents
Syncona Limited. held - minus any liabilities.
CRT Pioneer Fund NAV per share
The Cancer Research Technologies See alternative performance
Pioneer Fund LP. The CRT Pioneer measures below.
Fund is managed by Sixth Element NAV total return
Capital and invests in oncology See alternative performance
focused assets. measures below.
Fabry disease NSCLC
A rare genetic disease resulting Non-small cell lung cancer -
from a deficiency of the enzyme the most common form of lung
alpha-galactosidase A, leading cancer.
to dysfunctional lipid metabolism NZAM
and abnormal glycolipid deposits. The Net Zero Asset Managers
Gaucher disease (NZAM) initiative is an international
A genetic disorder in which group of asset managers who are
a fatty substance called glucosylceramide committed to supporting the goal
accumulates in macrophages in of net zero greenhouse gas emissions
certain organs due to the lack by 2050 or sooner.
of functional GCase enzyme. Partnership
General Partner Syncona Investments LP Incorporated.
Syncona GP Limited. SIML
Gene therapy Syncona Investment Management
A therapy which seeks to modify Limited
or manipulate the expression Syncona Group companies
of a gene in order to treat or The Company and its subsidiaries
cure disease. other than those companies within
Group the life science portfolio.
Syncona Limited and Syncona Syncona team
GP Limited are collectively referred The team of SIML, the Company's
to as the "Group". Investment Manager.
Haemophilia B T cell
A genetic disorder caused by A type of lymphocyte white blood
missing or defective Factor IX cell, which forms part of the
that can result in dangerously immune system and develops from
low levels of the essential clotting stem cells in the bone marrow.
protein. TCFD
Holding Company The Task Force on Climate-related
Syncona Holdings Limited. Financial Disclosures (TCFD).
ICR First published in 2017, the
The Institute of Cancer Research. TCFD recommendations act as a
Immunotherapy framework for assessing the physical
A type of therapy that uses and transition risks companies
substances to stimulate or suppress are exposed to from climate change
the immune system to help the and the transition to a green
body fight cancer, infection, economy.
and other diseases. The Syncona Foundation
Investment Manager The Foundation distributes funds
Syncona Investment Management to a range of charities, principally
Limited. those involved in the areas of
iPSC technology life science and healthcare.
Induced pluripotent stem cells UN PRI
(iPSCs) are a type of pluripotent The United Nations (UN) Principles
stem cell which can be generated for Responsible Investment (PRI)
directly from mature cells (such is a network of investors, who
as those of the skin or blood). commit to working to promote
sustainable investment.
Viral vectors
A modified version of a virus
which is designed to deliver
genetic material to cells.
ALTERNATIVE PERFORMANCE MEASURES
Capital deployed
With reference to the life science
portfolio valuation table this is calculated
as follows:
A Net investment in the period GBP(203.0)m
adjusted for:
-----------
B Gyroscope proceeds GBP325.8m
-----------
C CRT Pioneer fund distributions GBP0.4m
-----------
Total Capital deployed (A+B+C) GBP123.2m
-----------
Life science portfolio return
Gross life science portfolio return
for 2022 0.8 per cent; 2021 11.8 per
cent. This is calculated as follows:
A Opening life science portfolio GBP722.1m
Net investment in the period GBP(203.0)m
-----------
B Valuation movement GBP5.9m
-----------
Closing life science portfolio GBP524.9m
-----------
Life science portfolio return
(B/A) 0.8%
-----------
NAV per share
NAV per share is calculated by dividing
net assets by the number of shares
in issue adjusted for dilution by the
potential share based payment share
issues. NAV takes account of dividends
payable on the ex-dividend date. This
is calculated as follows:
A NAV for the purposes of
NAV per share GBP1,309,840,518
B Ordinary shares in issue
(note 14) 666,733,588
----------------
C Dilutive shares 6,880,057
----------------
D Fully diluted number of
shares (B+C) 673,613,645
----------------
NAV per share (p) (A/D) 194.4
----------------
NAV total return
NAV total return ("NAVTR") is a measure
of how the NAV per share has performed
over a period, considering both capital
returns and dividends paid to shareholders.
NAVTR 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:
A Opening NAV per fully diluted
share (note 14): 193.9p
B Closing NAV per fully diluted
share (note 14): 194.4p
------
C Movement (B-A) 0.5p
------
D Dividend paid in the year
(note 15): 0.0p
------
E Total movement (B+C-A) 0.5p
------
NAV Total Return (E/A) 0.3%
------
[1] Fully diluted, please refer to note 14 in the financial
statements. Alternative performance measure, please refer to
glossary
[2] Alternative performance measure, please refer to
glossary
([3]) See footnote 2
([4]) Life science portfolio return takes into consideration
upfront cash proceeds of GBP325.8m from the sale of Gyroscope to
Novartis, as well as the GBP49.8m valuation of the discounted
risk-adjusted milestone payments
[5] Alternative performance measure, please refer to
glossary
[6] All IRR and multiple on cost figures are calculated on a
gross basis, reflects original Syncona Partners capital invested
where applicable
[7] Includes sales of Blue Earth, Nightstar and Gyroscope,
reflects original Syncona Partners capital invested where
applicable. Includes upfront proceeds from sale of Gyroscope. All
IRR and multiple on cost figures are calculated on a gross
basis
[8] FX rates taken at receipt of funds from the transaction
[9] FX rates taken at receipt of funds from the transaction
[10] See footnote 6
[11] See footnote 7
[12] See footnote 6
[13] FX rate taken at 31 March 2022
[14] As at 31 March 2022
[15] At 31 March 2022
[16] Investment announced by company post period end
[17] Primary input to fair value
[18] 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
[19] 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
[20] Fully diluted ownership increases to 80 per cent post the
Series B financing in May 2022
[21] Fully diluted ownership reduces to 31 per cent post the
Series B financing in April 2022
[22] Syncona's risk-adjusted and discounted valuation of the
milestone payments from the sale of Gyroscope Therapeutics
[23] Includes sales of Blue Earth, Nightstar and Gyroscope,
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
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