Syncona H1 Earnings Call Highlights

Key Points

• Net asset value rose 3%, supported by a 4.7% return from the life sciences portfolio and a £48 million increase in Beacon Therapeutics’ deferred consideration; gains were partly offset by a write-down at Anaveon.
• Beacon’s phase III trial of laru-zova showed a 31% response rate, above the 20% rate the study was designed to detect. Syncona is weighing interest in the asset against financing Beacon itself to commercialize the therapy.
• Clinical progress and upcoming milestones underpin the outlook: 92% of the portfolio is in clinical-stage companies, and management expects five further key value inflection points by the end of 2028. Syncona reiterated plans to return £250 million but gave no timetable.

Syncona LON: SYNC reported a 3% increase in net asset value in its interim results, supported by a 4.7% return from its life sciences portfolio and a higher valuation for deferred consideration linked to portfolio company Beacon Therapeutics.

The life sciences portfolio was valued at £921 million. A £48 million increase in the value of Beacon’s deferred consideration and positive movements in Autolus and OMass were partly offset by a write-down at Anaveon, which shifted its focus to a preclinical autoimmune disease program.

Managing Director Sam Roberts said 92% of the portfolio was in clinical-stage companies, compared with 42% in March 2022. Ten portfolio companies were in the clinic, the highest number in Syncona’s history, and 49% of the portfolio was in late-stage clinical trials.

Syncona said it achieved all three of its targeted key value inflection points for the period: Beacon’s clinical trial result, interim data from Resolution Therapeutics and commercial progress at Autolus. CFO Kate Butler said five further inflection points were expected before the end of 2028, including four in the next calendar year.

Beacon result lifts deferred consideration

Beacon’s phase III trial evaluated laru-zova, a gene therapy for X-linked retinitis pigmentosa, an inherited retinal disease that causes progressive vision loss. Syncona said the trial recorded a 31% response rate against a study powered for a 20% response rate. Side effects were in line with those expected from a subretinal injection, according to the company.

Butler said Syncona’s deferred consideration gives it the right to a mid-single-digit percentage of revenues and licensing from laru-zova. The asset is valued using a risk-adjusted discounted cash flow model, and the trial result led the company to update its assumptions, producing the £48 million uplift.

During the question-and-answer session, Syncona said it was considering both an independent path for Beacon and inbound interest following the phase III result. The company said it would assess potential offers against the value of financing Beacon to commercialize the therapy itself.

Butler said Syncona generally values portfolio companies at cost or at a price established through a recent third-party investment. She said reported valuations can lag clinical progress, with value potentially realized through transactions such as acquisitions or listings.

Portfolio financing and clinical progress

Managing Partner Ed Hodgkin highlighted progress at Resolution, which is developing a macrophage cell therapy for patients with end-stage liver disease. He said six-month follow-up data in patients with decompensated cirrhosis showed early signs of benefit supported by biomarker data, but cautioned that the results were early.

Hodgkin also discussed OMass Therapeutics, which is evaluating OMS1620 for congenital adrenal hyperplasia. OMass announced a $310 million Series C financing in October, intended to support the lead program’s progression into phase II and advance other drugs in its pipeline.

Butler said OMass attracted £220 million from external investors during the period. After the period ended, Oyster Therapeutics, formerly Kesmalea, raised $60 million.

Elsewhere, Roberts said Spur’s phase III trial in Gaucher disease was recruiting well. Autolus has a product on the market in the U.S. and U.K., and Syncona said it had exceeded its sales forecast, though its shares subsequently fell in a broader market downturn.

At Anaveon, Syncona said it had prioritized a more differentiated preclinical autoimmune asset over an oncology asset in clinical development. The move to an earlier-stage program was reflected in the company’s valuation.

Capital allocation and outlook

Butler said Syncona had a £148.2 million capital pool, with approximately 86% allocated to existing commitments and supporting portfolio companies through key value inflection points. The remainder provides flexibility for other milestones, participation in third-party financings and selective early-stage opportunities.

Syncona reiterated its intention to return £250 million, but did not specify a timetable during the call. Management said upcoming portfolio events include iOnctura’s phase II result in uveal melanoma and initial results from Quell and Purespring.

Asked about potential effects of U.S. most-favored-nation drug pricing policies, Roberts said Syncona was not forecasting a large decline in U.S. prices or assuming that its medicines would not launch in Europe. She said the company was monitoring the policy and European licensing data closely and would revisit its assumptions if the evidence changed.

About Syncona (LON:SYNC)

Syncona's purpose is to invest to extend and enhance human life. We do this by creating, building and scaling companies to deliver transformational treatments to patients in areas of high unmet need. We aim to build and maintain a diversified portfolio of 20-25 globally leading life science businesses, across development stage, modality and therapeutic area, for the benefit of all our stakeholders. We focus on developing treatments that deliver patient impact by working in close partnership with world-class academic founders and experienced management teams.

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