Syncona Ltd (SYNC.L Market Cap. 1489m, FTSE 250 Index, 224p and 3.5% of JIC Portfolio and 0.0% of JIC Top 10)
Half-year results to 30th¬†September.
Conclusion: Given that Autolus, even at the current low price, (see chart below), represents 11.0% of total NAV, it has and will for some time, have a significant impact on total NAV. Having said that, going forward it is clearly not as important as six months ago when the share price was more than double the current level. I think we largely have Mr Woodford to thank for the fall in the share price of Autolus given the large overhang from his stake. The sooner that is resolved the better. Enough of Autolus, the sales of Nightstar and Blue Earth demonstrate that Syncona management can add significant value through its Life Science investments. With their scientific background they know what they are doing whereas, I‚Äôm afraid Mr Woodford did not. The current share price is at a 10-15% premium to NAV. In the past, it has sustained a higher premium. I have the stock as Medium Risk, High Return, suggesting for me a 5.0% position. I remain broadly happy with that rating, convinced that over the long term it will create significant value. I am currently at 3.4% and will look for an opportunity to add towards 5.0% in the coming months. Happy Holder!
The full announcement can be found HERE
Net assets at 30th¬†September were down 7.2% from 31st¬†March to 198.9p per share.
Uplifts from the sale of Blue Earth and financing of Achilles Therapeutics was more than outweighed by the 61% fall in NASDAQ listed Autolus.
It invested ¬£127.m in its life science companies including ¬£100m in Achilles. (It was the largest investor with a ¬£25m contribution).
Since the 30th¬†September, it invested ¬£29.5m to a new portfolio company, Azeria Therapeutics.
Following the sales of Nightstar and Blue Earth and the investment in Azeria, it has nine life science investments, halfway to its target of 15-20.
‚ÄúOutlook – long-term opportunity to create significant value
We see a rich pipeline of opportunities around which to found new companies with the ambition of taking products to market, including across areas such as gene therapy, cell therapy, small molecules and biologics. In our existing portfolio, we provide ambitious, long-term funding to our companies, which are scaling rapidly and progressing through the development cycle enabling us to retain significant ownership positions of strategic influence. In line with this and subject to the timing of financings, we expect our capital deployment for the full year to increase to ¬£200-¬£250 million (prior FY2020 guidance: ¬£100-200 million).
In the short term, data generated from our clinical pipeline will be a core driver of value, and we expect both Freeline’s B-AMAZE trial in Haemophilia B to publish data in this financial year and Autolus to take a decision on whether to initiate a Phase 2 trial in AUTO3 DLBCL in mid CY2020.
Long-term, we believe there is an opportunity to create significant value in life science through our differentiated model. We are halfway to our target of building an evolving, diversified portfolio of 15-20 companies. Over the next 10 years, we expect to deliver 3-5 companies from this portfolio which reach the point of product approval and where Syncona remains a significant shareholder. We believe this approach will maximise risk-adjusted returns for shareholders.
Chris Hollowood, CIO, of Syncona Investment Management Limited, said:
“Following the addition of new Syncona company, Azeria, we have a high-quality portfolio of nine companies. Three are at clinical stage, where the data generated will be a core driver of value. Whilst clinical and regulatory processes involve significant risk, we have a high level of conviction in our companies, and there is strong momentum in the portfolio.
We have a highly expert team, strategic capital base and differentiated model to found, build and fund businesses through the translation of globally leading life science research as we seek to deliver transformational treatments to patients and strong risk-adjusted returns for shareholders.”