For those looking for a way to invest in early-stage science since the implosion of Woodford Patient Capital Trust, Syncona may offer a tempting alternative.
Its investments focus on areas such as helping the body’s defences to fight cancer. They include gene therapies to combat eye cancer and blindness, and cell therapies to treat diseases of the immune system.
The FTSE 250 company was formed in 2016 through the merger of Battle Against Cancer Investment Trust, a listed vehicle, and Syncona Partners, a life sciences investor set up in 2012.
Last week, Syncona reported results for the three months to December 31 — its net asset value rose by 16 per cent to £1.4 billion, or 199p per share. On Friday, its shares closed at 187.4p for a value of £1.25 billion — putting it at a 5 per cent discount. Historically, it has traded at a 20 per cent premium, according to Peel Hunt.
Syncona, led by former venture capitalist Martin Murphy, operates in a sector that has been hammered in recent months as investors retreat from riskier stocks. In America, where Syncona portfolio companies such as cancer immunotherapy specialist Autolus are listed, the Nasdaq Biotechnology Index has fallen 13 per cent since the start of the year.
Syncona has valued its life sciences portfolio at £843.2 million, marking a total return of 29.5 per cent on the quarter. It also has a capital base of £497 million — and is still to receive upfront cash proceeds of £327 million for the sale of one of its firms, the retinal gene therapy start-up Gyroscope, to the Swiss pharma giant Novartis, which has agreed to pay up to $1.5 billion (£1.1 billion).
Syncona offers a lower-risk way to invest in early-stage science. Successes include Nightstar Therapeutics, a gene-therapy specialist sold to US biotech Biogen for $877 million in 2019. The deal valued Nightstar, which was listed in the US, at a 70 per cent premium.
In the past three months, Syncona has led $87 million early-stage financing of Clade Therapeutics, a stem cell therapy company, while Blackstone Life Sciences committed up to $250 million in Autolus and it co-led further financing of Quell, another cell therapy firm.
Investors are encouraged to look beyond the existing value of its holdings to the returns that could be achieved should its early-stage bets succeed — and become blockbuster cures. The early signs are good: it netted £351 million, ten times its investment, in a prostate cancer imaging business in 2019.
Syncona’s hefty discount to NAV is worth a punt. Buy.
