Quarterly and Business Update

Quarterly and Business Update

11 February 2021  

Syncona Ltd, a leading healthcare company focused on founding, building and funding a portfolio of global leaders in life science, today issues its quarterly update covering the period from 1 October to 31 December 2020.

·      Clinical, financial and operational progress across the portfolio in the quarter, with positive data updates, further financing rounds and a new portfolio company founded

·      NAV return of (1.1) per cent in the period, 8.3 per cent NAV return in the nine months from 31 March 2020

·      Continued capital deployment across the portfolio with £81.0 million deployed in the quarter, £149.9 million in the nine-month period; continue to expect to deploy between £150-250 million in this financial year

Martin Murphy, CEO, Syncona Investment Management Limited, said: "Syncona has performed robustly throughout the COVID-19 pandemic which has continued to present a significant challenge to healthcare systems, economies and society. Despite this environment, our portfolio companies have been resilient and innovative, delivering key milestones and adapting to new ways of working. I am proud of the Syncona team, who remain committed to our purpose of investing to extend and enhance human life, despite these challenging conditions.

The pandemic has also highlighted the importance of continuous and rapid innovation in the life science sector. Our expert team, differentiated strategy and strong capital base means we are well positioned to build innovative companies that aim to leverage speed and flexibility in drug development. We believe we will have an important role in continuing to translate and commercialise innovation into products for patients over the long-term."

Business update

The Syncona team is working productively remotely and continues to generate promising opportunities to found new companies.

Following the outbreak of the COVID-19 pandemic in March 2020, the Syncona team worked closely with our portfolio companies to put in place scenario plans which accounted for our view on the potential ongoing impact of the COVID-19 pandemic and our companies continue to operate in line with these plans.

Since our half year update, we have continued to see a varying impact of the COVID-19 pandemic on clinical trials across our portfolio:

·      We have seen a relatively limited impact on trials in the oncology setting, where the acute unmet need for patients in these disease settings is very high. However, when there is significant disruption to healthcare systems' abilities to manage severe COVID-19 patient volumes, as we are seeing currently in the UK, there are likely to be short periods of more significant disruption.

·      In indications where there is an existing treatment or a lower mortality risk, we have seen trials halted in light of new national lockdowns across Europe. However, we have worked closely with our companies to put in place innovative clinical solutions or identify geographies where patients can be treated, to ensure that trials are able to progress where possible.

·      We have largely been able to progress pre-clinical work and the development of manufacturing capabilities and expect this work to continue.

Syncona does not currently anticipate that the limited near-term delays across our portfolio will have any impact to the reported valuations of our privately held companies, applying our rigorous approach to recognising changes to fair value and, in part, reflecting the long term nature of our investments in these companies. 

Performance:

·      Net assets of £1,350.5 million, 201.1p[1] per share, a NAV return of (1.1) per cent in the period, and an 8.3 per cent return over the nine months from 31 March 2020

·      Life science portfolio valued at £735.9 million (£666.6 million Sept 2020), a total return of (1.7) per cent in the quarter and 22.4 per cent over the nine months from 31 March 2020

Funding growth across the portfolio

·      Capital base of £614.6 million at 31 December 2020; with approximately 93 per cent in cash and cash equivalents and the remainder held in legacy funds

·      £81.0 million of capital deployed in the quarter, £149.9 million of capital deployed over the nine months from 31 March 2020

Portfolio company update

Clinical progress with further data reported: 

·      Freeline reported positive data in its Phase I/II trial in Haemophilia B demonstrating potential for a functional cure with Factor IX expression levels in the normal range

·      Gyroscope dosed first patients in its Phase II programme for dry age-related macular degeneration (AMD) which comprises one trial where patients have a mutation in Complement Factor I and a second trial focused on a broader patient population

·      Achilles continued to dose patients in its first two programmes: non-small cell lung cancer (NSCLC) and melanoma

·      Anaveon published encouraging pre-clinical data on its selective interleukin-2 (IL-2) agonist at the Society for Immunotherapy of Cancer (SITC) demonstrating a high level of activity and excellent safety profile

Autolus prioritisation of AUTO1

·      Autolus took the decision to prioritise the development of the AUTO1 programme for Adult Acute Lymphoblastic Leukemia (ALL) based on the positive data that the programme has generated to date; Syncona strongly supports this decision

·      Over the next six months, Martin Murphy is working closely alongside the senior leadership team of Autolus as they progress the AUTO1 programme through to its pivotal trial

·      In addition, the company:

o  Plans to seek partnership opportunities to fund additional clinical development plans for AUTO3, in relapsed/refractory diffuse large B cell lymphoma (DLBCL)

o  Took decisive action in Q1 2021 to reduce its overall headcount by approximately 20 per cent, realising cost savings, on an annualised basis, of approximately $15 million once the operational changes are fully implemented

o  Continues to build and leverage its platform and capability to progress its pipeline of next generation programmes

Companies accessing capital from specialist leading investors at valuation uplifts

·      Achilles raised £52.7 million in a Series C financing, led by specialist life science investors, further strengthening the syndicate of investors and the company's capital position

o  Series C priced at a premium to Syncona's holding value

o  Final tranche of Series B invested of £11.7 million and holding in Achilles revalued to £94.8 million, a £10.7 million (1.6p per share) uplift to 30 September 2020 value

o  Following the financing, Syncona retains a 34 per cent holding in Achilles

Founding Purespring and attracting global leaders to the Syncona platform

·      Foundation of Purespring, one of the first kidney focussed AAV gene therapy companies

globally, with a £45.0 million Series A commitment

·      Appointed of Richard Francis, former Chief Executive of Sandoz and former member of Novartis Executive Committee, as Chief Executive Officer

·      Richard will spend part of his time as a Partner at Syncona Investment Management Limited, providing valuable advice and bringing significant commercial and operational expertise across the Syncona portfolio

New commitment to Quell in Syncona's largest ever Series A financing

·      Further commitment of £25.3 million a £61.0 million expanded Series A financing; taking Syncona's total commitment to Quell to £59.3 million

·      Quell is the first company globally targeting liver transplantation with engineered T regulatory cell therapy and is set for clinical entry in the first half of CY2022

·      The company has also initiated research programmes in Type 1 Diabetes and neuroinflammatory diseases

Post period end:

Achilles announced that it expects to consider additional capital raising options this year, which could include an initial public offering in the United States.[2] The company also reported that it has dosed the first six patients in its phase I/II trials for non-small cell lung cancer and melanoma which showed no significant safety issues with an Independent Data and Safety Monitoring Committee recommending that both clinical trials continued. Achilles now plans to move to higher doses and Syncona supports this approach.

Freeline announced a modification to the clinical development plan for its FLT180a program for Hemophilia B. Under the modified clinical development plan, Freeline now plans to conduct dose confirmation in a FLT180a Phase I/II trial instead of in the Phase IIb part of the pivotal trial. Undertaking a Phase I/II in CY2021 will enable the company to address questions from the U.S. Food and Drug Administration regarding Chemistry, Manufacturing and Controls requirements and will enable the company to remain on track to enter its Phase III pivotal study in the middle of CY2023 and target a filing of the Biologic License Application with the U.S. Food and Drug Administration by the end of 2024.

Autolus completed a public offering, raising total gross proceeds of approximately $100.0 million, and with Syncona agreeing to invest approximately $25.0 million (£18.1[3] million). Following the offering, Syncona retains a stake of approximately 26.2% in Autolus. The financing will enable the company to progress its AUTO1 adult ALL programme through pivotal study.

Upcoming milestones:

·      Autolus to progress its pivotal study in AUTO1 adult ALL and provide data update in calendar year CY2022

·      Autolus will publish clinical data from its AUTO 4 (T-cell Lymphoma) and AUTO1/22 (paediatric ALL) in Q4 CY2021

·      Freeline to initiate phase I/II dose confirmation study for its Haemophilia B programme in CY2021; will dose the next patient in its Fabry trial when it is safe to do so

·      Achilles expects to begin enroling patients for its higher dose cNet[4] therapy in its NSCLC and melanoma programmes in the second half of CY2021

·      Gyroscope will report interim data from its lead Phase I/II programme targeting dry AMD on 12^th February 2021*

·      SwanBio expects to file an Investigational New Drug application in FY2022

·      Quell expects initiation of Phase I/II clinical trial in FY2022

·      Anaveon expects initiation of Phase I/II clinical trial in FY2022

*Gyroscope's Chief Medical Officer, Dr Nadia Waheed, will present data at the Angiogenesis conference on 12^th February in a presentation entitled: Results of Phase 1/2 Study on Gene Therapy for the Treatment of Geographic Atrophy. The programme for the conference can be found here: https://umiamihealth.org/en/bascom-palmer-eye-institute/healthcare-professionals/continuing-medical-education/angiogenesis/program.

Valuation movements in the quarter:

Enquiries

Syncona Ltd 

Annabel Clay

Tel: +44 (0) 20 3981 7940

FTI Consulting

Ben Atwell / Natalie Garland-Collins / 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 create a dynamic portfolio of 15-20 globally leading healthcare businesses 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 strategic 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 few treatment options, build sustainable life science companies and deliver strong risk-adjusted returns to shareholders.

Copies of this press release, a company results presentation, 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.