Biotech trust Syncona powers ahead with gene therapy investment

The life sciences investor has had a strong six months, returning almost 10% over the period. 

Life sciences-focused investment trust Syncona (LSE:SYNC)has reported a strong six months as it pours £4 million into a new company focused on gene therapy for kidney disease.

Announcing its interim results for the six months to 30 September, the £1.4 billion trust recorded a net asset value total return of 9.6% over the reporting period. Its life science portfolio is valued at £667 million, an increase of almost 25% from the previous year.

Today, it revealed it has put £3.9 million into founding Purespring, the sixth gene therapy company in its portfolio. Syncona will take an 84% stake in the business as it launches a £45 million series A funding round.

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Clinical trials resume

Meanwhile, the trust reported that clinical trials across its portfolio are starting to resume after delays caused by Covid restrictions and there has been “significant progress” in 10 live trials for conditions including leukaemia, lung cancer and macular degeneration.

One of its holdings, Freeline (NASDAQ:FRLN), raised just under $300 million (£226 million) in a series C financing round and an initial public offering, and this contributed to the trust’s performance, along with a rise in the share price of Autolus Therapeutics (NASDAQ:AUTL). Syncona was the largest investor in Freeline’s fundraising, adding $64.3 million to its total investment in the firm.

It closed down its position in Azeria Therapeutics after pre-clinical data did not support further investment, leading to a £4.5 million write-off for the trust.

Despite ongoing Covid uncertainty, a number of holdings in the portfolio are approaching key milestones, pointing to a positive outlook, the board said. 

“Syncona has delivered a robust performance, underpinned by a strong balance sheet and disciplined capital allocation,” said Syncona’s chief executive officer Martin Murphy. “We have recently founded and invested in two exciting new companies with ambitions to deliver transformational treatments to patients. We also made an investment in an exceptional emerging cell therapy company and continued to invest and support our portfolio companies as they achieved key clinical and financial milestones, despite the unprecedented backdrop of the Covid-19 pandemic.

“Driven by our purpose to invest to extend and enhance human life, we remain focused on the long term as we seek to build a dynamic portfolio of 15 to 20 companies in innovative areas of healthcare.”

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ii’s view

Syncona is one of interactive investor’s ACE 40 recommended funds. We like it because of its position as an established leader in cell and gene therapies, the experience and knowledge of its team, as well as its solid performance track record. However, the risks of this trust are that it has a large portion of its assets in unlisted companies, which can be higher risk, the portfolio is concentrated with just 15 to 20 names, and it charges an above-average management fee of 1.4%, although we still think it offers good value overall.

The trust has returned 17.4% over the last year and is currently trading on a 25% premium to NAV, according to Morningstar.