Half-year Report

14 November 2024

Syncona Limited

Interim Results for the six months ended 30 September 2024

Period of strong clinical progress, with a rebalanced portfolio continuing to attract external capital

Expected key value inflection points to the end of CY2027, give confidence in NAV growth, underpinning the path to £5 billion by 2032

Syncona Ltd, ("Syncona" or the "Company"), a leading life science investor focused on creating, building and scaling a portfolio of global leaders in life science, today announces its Interim Results for the six months ended 30 September 2024.

Financial Performance

·    Net assets of £1,144.6 million (31 March 2024: £1,238.9 million), 178.9p[1] per share (31 March 2024: 188.7p per share), a NAV per share return of (5.2)%^[2]

·    Performance predominantly driven by a decrease in Autolus' share price and a weakening of the US dollar, partially offset by valuation uplifts from private portfolio company financings, alongside accretive share buybacks

·    Life science portfolio valued at £791.9 million[3] (31 March 2024: £786.1 million) a return of (8.8)%^[4],[5]

·    £90.0 million deployed[6] into the life science portfolio, with deployment guidance for the year remaining at £150-200 million

·    £19.4 million of shares repurchased at an average 36.2% discount to NAV per share, resulting in an accretion of 1.59p to NAV per share[7]

·    Capital pool^[8] of £352.7 million at 30 September 2024 (31 March 2024: £452.8 million)

Rebalanced portfolio continues to deliver strong clinical progress and attract significant investment, providing a strong platform for growth

·    Maturing strategic portfolio[9] of 14 companies, with 68.1% of its value now in clinical and late-stage clinical companies[10], following work to rebalance the portfolio over the last 24 months

·    A total of £305.6 million raised across six financings which were closed in the period, including £170.5 million from leading external life science investors, broadening the financial scale of the portfolio

·    Strong clinical execution across six clinical-stage companies, with one company entering the clinic and multiple data readouts delivered during the period, followed by two key value inflection points from Beacon and Spur post-period end

·    Post-period end, Autolus received marketing approval from the US Food and Drug Administration (FDA) for AUCATZYL^® (obe-cel), its novel CAR T-cell therapy, for the treatment of adult patients with relapsed or refractory B-cell precursor acute lymphoblastic leukaemia (r/r B-ALL)

Confidence in the path to our NAV target of £5 billion by 2032

·    The Syncona team[11] believes there is substantial latent value in the portfolio and the delivery of expected key value inflection points by the end of CY2027 has the potential to drive significant NAV growth, underpinning our confidence in the path to £5 billion by 2032

·    This conviction is enhanced by the work undertaken to rebalance to a more mature portfolio, the strong clinical and operational execution of the portfolio, and the milestones expected to be delivered by clinical-stage companies, notably those publishing definitive data by the end of CY2027

Partial realisation of holding in Autolus

·    Syncona's exposure to Autolus rebalanced as it transitions from development stage to a commercial biotech, in line with Syncona's strategy of building companies to late-stage development

·    8.3% of the holding in Autolus sold in the period, generating proceeds of $12.6 million (£9.7 million)

·    A further 5.7% sold post-period end, generating further proceeds of $8.6 million (£6.6 million)

·    Following these partial realisations, Syncona retains a 9.9% fully diluted ownership stake in Autolus valued at $96.0 million (£75.3 million)[12]

Optimising returns for shareholders

·    The Syncona Board continues to believe that the current share price undervalues the portfolio and its prospects and that the shares represent a compelling investment opportunity, particularly given the material discount to NAV at which the shares currently trade

·    Post-period end, the Board has taken the decision to allocate an additional £15.0 million to share buybacks, recycling most of the proceeds from the partial realisation of the Autolus holding[13]

·    Alongside the £20.0 million allocated to share buybacks in June 2024, this takes the total amount allocated to share repurchases to £75.0 million since the buyback was launched in September 2023, of which £46.3 million has been deployed to date[14]

·    Syncona remains funded to deliver on its key value inflection points, whilst retaining capital to drive the broader strategy

Investing in the next frontier of innovation to deliver long-term growth

·    £12.5 million committed to new portfolio company Slingshot Therapeutics (Slingshot), the Syncona Accelerator, focused on accumulating and developing a pipeline of early-stage development programmes

·    Slingshot will efficiently advance and de-risk programmes from academic founders by providing access to high quality management, centralised development expertise, resource, funding and operational support

·    This centralised structure provides Syncona with a capital efficient and de-risked way to gain more exposure to the returns available from translating highly innovative science into promising biotech assets

Platform further strengthened with the appointment of Chair of SIML

·    Appointment of Kenneth Galbraith as Chair of SIML[15]. Kenneth joins the SIML Board with immediate effect, bringing 35 years of experience across biotechnology and venture capital to further support Syncona's growth ambitions

Melanie Gee, Chair of Syncona Limited, said: "The Board remains focused on the delivery of our strategy and our ambition to progress NAV to £5 billion by 2032. The potential for significant corporate activity should come from our later-stage assets, assuming they achieve their key 2025, 2026 and 2027 clinical milestones. This is a result of the considerable work undertaken by the team over the last 24 months.

We continue to believe that there is significant future value in our portfolio. NAV growth, as a result of corporate activity, should follow the progress of clinical milestones over time. The Company has a capital allocation policy and, recognising the significant discount to NAV and balancing this against future funding requirements, the Board has decided to return £15.0 million proceeds from the partial sale of Autolus to shareholders, taking the share buyback allocation to £75.0 million. Syncona's remaining capital is focused on driving milestones across the portfolio to deliver our strategy."

Chris Hollowood, CEO of Syncona Investment Management Limited, commented: "The portfolio has made good clinical and operational progress in the first half of the year. There have been multiple successful financing rounds, and our later-stage companies have continued to deliver positive clinical data readouts, providing further validation of their progress and the quality of the portfolio.

Syncona has been through a period of NAV underperformance in recent years, and we are now emerging from a challenging market environment well positioned to take advantage of conditions as they improve. We are focused on delivering growth and believe that there is substantial latent value in the portfolio that is yet to be reflected in our NAV. Our maturing portfolio is in a strong position and remains funded to deliver its key value inflection points by the end of CY2027, which we believe have the potential to drive significant NAV growth."

Expected capital access milestones and key value inflection points

The Syncona team is focused on driving its companies to late-stage clinical development, where it believes significant value can be accessed. As Syncona builds and scales its portfolio, there are opportunities to deliver milestones that primarily drive access to capital (capital access milestones), and milestones that have the potential to drive significant NAV growth (key value inflection points).

A capital access milestone is a de-risking event for a portfolio company that is expected to enable access to capital, which underpins progression towards a company's next milestone. It is less likely that a capital access milestone will drive significant NAV growth for Syncona, for example by increasing the possibility of a realisation event, such as M&A.

A key value inflection point is a material de-risking event for a portfolio company that has the potential to drive significant NAV growth for Syncona, for example by increasing the possibility of a realisation event, such as M&A. These milestones can also enable companies to access significant capital including through financings and IPOs, which may take place at valuation uplifts and underpin progression to a subsequent key value inflection point which has the potential to drive greater value. M&A or capital access is unlikely to occur immediately following a key value inflection point.

·      Eight key value inflection points expected by the end of CY2027, including three expected before the end of CY2025. These have the potential to drive significant NAV growth. Syncona is funded to deliver on all of the portfolio's key value inflection points

·      Nine capital access milestones across the portfolio expected by the end of CY2026, with seven expected by the end of CY2025

·      These capital access milestones and key value inflection points are not without risk

Further detail on individual capital access milestones and key value inflection points can be found in the life science portfolio review. Detail on portfolio company delivery against individual milestones can be found within the supplementary information.

Life sciences portfolio valuations[16]

About Syncona

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. Our 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 poor treatment options, build sustainable life science companies and deliver strong risk-adjusted returns to shareholders.

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.

Syncona Limited seeks to achieve returns over the long term. Investors should seek to ensure they understand the risks and opportunities of an investment in Syncona Limited, including the information in our published documentation, before investing.

Enquiries

Syncona Ltd

Natalie Garland-Collins / Fergus Witt

Tel: +44 (0) 20 3981 7912

FTI Consulting

Ben Atwell / Tim Stamper

Tel: +44 (0) 20 3727 1000

Syncona Investment Management Limited review

Business review

The first half of the year has been a strong period of execution, with the Syncona team resolutely focused on driving value, capital efficiency and delivery across the portfolio.

We ended the period with net assets of £1,144.6 million (31 March 2024: £1,238.9 million) or 178.9p per share (31 March 2024: 188.7p per share), a NAV per share return of (5.2)%. Our performance has predominantly been driven by a decrease in Autolus' share price and a weakening of the US dollar, partially offset by valuation uplifts in Beacon and Forcefield following their syndicated Series B financings, alongside accretive share buybacks at the Syncona level.

In recent years we have been operating in a challenging market environment and have been through a period of NAV underperformance. We have been working to address this. We have proactively managed and rebalanced the portfolio, weighting it towards clinical and late-stage clinical companies, as well as prioritising capital and the Syncona team's focus towards our most promising companies and assets. Alongside this, we have expanded our senior team and embedded a new operating model, providing a platform for future growth.

We are optimistic on the outlook for our sector, with the private financing environment increasingly showing signs of recovery. This is supported by macro tailwinds including softening inflation and interest rate cuts, which create more favourable conditions for both Syncona and our companies to operate in. This recovery has been underlined by the recent delivery of a number of syndicated financings across the strategic portfolio.

Attracting external investment to the portfolio

The strategic portfolio has been executing well and continues to attract considerable investment. Since 31 March 2024, a total of £305.6 million has been raised by the portfolio across financings closed in the period by Beacon, Purespring, Resolution, Slingshot, Forcefield, and Mosaic, with £170.5 million raised from leading external life science investors, broadening the financial scale of our companies. We were particularly pleased to execute the Beacon and Forcefield financings at valuation uplifts, with Syncona's holdings in these companies written up by 17.6% and 37.6%, respectively.

Following these recent financings, and including the capital pool, £770.1 million (67.3%) of NAV has been priced with reference to a third-party mark since the start of 2022, from the point that the market downturn had fully set in. With the portfolio now substantially refinanced, we believe our NAV is robust and our companies have a strong platform for future growth, supporting them in the delivery of their milestones.

A maturing and rebalanced portfolio that continues to execute

The strategic portfolio of 14 companies is increasingly diversified across therapeutic area and modality and weighted towards clinical and late-stage clinical companies, where 68.1% of strategic portfolio value is held. The core premise of our investment strategy is that significant risk-adjusted returns can be accessed at late-stage clinical development, and we are focused on driving our companies towards this stage.

There has been strong clinical execution across the portfolio, particularly amongst these later-stage assets. Beacon presented promising 36-month interim results from its Phase I/II HORIZON trial in patients with X-linked retinitis pigmentosa (XLRP). Post-period end it also presented positive 24-month interim safety and efficacy data from its Phase II SKYLINE trial in XLRP, a key value inflection point for the company.

Post-period end, Spur presented data from its Phase I/II trial of FLT201 in Gaucher disease which further demonstrated the favourable efficacy and safety profile of the therapy, a key value inflection point for the company. We were also pleased during the period to see Anaveon enter the clinic with its Phase I/II trial of ANV600, taking the total number of clinical-stage companies in our strategic portfolio to six.

Overall, throughout the portfolio there have been six capital access milestones and two key value inflection points delivered since 31 March 2024, including post-period end, with a further seven capital access milestones and three key value inflection points expected by the end of CY2025.

Post-period end, Autolus received approval from the FDA for AUCATZYL^® (obe-cel) and subsequently commenced its commercial launch in the US. This novel CAR T-cell therapy was approved for the treatment of r/r B-ALL, bringing a much-needed new treatment to adult patients suffering from this devastating disease. We believe that AUCATZYL^® has the potential to be a best-in-class therapy in this disease area. The approval was a proud moment for Syncona. We co-founded Autolus in 2014 and, in line with our strategy, we have worked closely with the company's leadership team to support it from the academic bench through to this regulatory decision from the FDA.  

Partial realisation of our holding in Autolus

Syncona's strategy is to build companies to progress therapies to late-stage development. As Autolus transitions to a commercial stage biotech, it is the natural time for Syncona to rebalance its exposure to the business. Syncona sold 8.3% of its holding in Autolus in the period, generating proceeds of $12.6 million (£9.7 million). A further 5.7% was sold post-period end, generating proceeds of $8.6 million (£6.6 million), and Syncona retains a 9.9% fully diluted ownership stake valued at $96.0 million (£75.3 million).[23]

Optimising shareholder returns

The challenging market backdrop and broader sentiment continues to impact Syncona's share price, with the shares moving from a premium to a material discount to NAV over the last two years. Post-period end, the Board has taken the decision to allocate an additional £15.0 million to share buybacks, recycling most of the proceeds from the partial realisation of the Autolus holding. Since launching the programme in September 2023, the Board has allocated a total of £75.0 million to share buybacks, underscoring the view that the share price undervalues the portfolio and its potential. Syncona has a strong platform and, alongside the Board, the Syncona team is focused on driving NAV growth and optimising returns for our shareholders.

In our full year results in June 2024, Syncona set out its Capital Allocation Policy, outlining its approach to managing capital to drive and maximise returns for shareholders. The full policy can be found within the supplementary information. To provide further clarity to shareholders on our approach to capital allocation, within the financial review we have provided a breakdown of how our capital pool is allocated against expected deployment. Our capital pool continues to underpin our strategy and we remain committed to progressively driving balance sheet efficiency. We remain funded to deliver all of our key value inflection points, whilst retaining capital to drive the broader strategy.

Continuing to invest in the next frontier of innovation

The Syncona team's focus and our capital allocation remains weighted towards clinical assets or assets approaching clinical entry. Alongside this, we continue to invest in the next frontier of innovation to support the delivery of long-term growth.

We are pleased to announce today the launch of Slingshot, the Syncona Accelerator. This is an exciting new portfolio company focused on accelerating exceptional academic science towards clinical development. Supported by a high-quality management team, Slingshot will accumulate and develop a pipeline of early-stage development programmes, identified from world-leading academic institutions in the UK, US and Europe. Slingshot will efficiently advance and de-risk these programmes from academic founders by providing access to development expertise that is rarely available to singular early-stage programmes, as well as centralised resource, funding and operational support.

This centralised structure provides Syncona with a capital efficient and de-risked way to gain more exposure to the returns available from translating highly innovative science into promising biotech assets. SIML Managing Partner, Edward Hodgkin has been appointed Executive Chair, and SIML Executive Partner, Richard Wooster has been appointed Slingshot's Chief Scientific Officer (CSO) and Director. Additional appointments have been made to support Slingshot's operations and the development of its pipeline.

Slingshot's first programme, Apini, is focused on inflammatory diseases and sourced from The University of Manchester. Syncona has provided Slingshot with an initial commitment of £12.5 million, which will be used to support the development of Apini, as well as Slingshot's operational build and platform development.

Confidence in the path to our 10-year targets

In November 2022, we set out the following 10-year targets to organically grow net assets to £5 billion:

·      Three new companies created or added to the portfolio per year

·      Delivering three to five companies to late-stage development where we are significant shareholders

·      Building a portfolio of 20-25 life science companies

The Syncona team believes that there is substantial latent value within the portfolio and that the delivery of expected key value inflection points by the end of CY2027 has the potential to drive significant NAV growth, giving us confidence in the path to our NAV target of £5 billion by 2032. Conviction in this is enhanced by the work undertaken to rebalance to a more mature portfolio, the strong execution of our companies, and the milestones that we expect to be delivered from our clinical-stage portfolio.

As we build and scale our portfolio, our companies will reach milestones that primarily have the potential to drive access to capital (capital access milestones) and milestones that also have the potential to drive significant NAV growth for Syncona (key value inflection points).

Primarily, key value inflection points are the delivery of emerging efficacy or definitive data, with the latter typically being more valuable. When delivering these milestones, our companies demonstrate positive clinical progress and the likelihood of their therapies being developed into approved products increases. Therefore, key value inflection points are material de-risking events, which have the potential to lead to significant NAV growth for Syncona, for example by increasing the likelihood of realisation event, such as M&A. These milestones can also enable companies to access significant capital through financings and IPOs, which may take place at valuation uplifts and will support the portfolio company to advance towards the market independently.

It is important to note that not all key value inflection points need to be successful to deliver significant NAV growth, however, it is likely that realisation events will need to occur to in order for Syncona to deliver its 10-year NAV targets. These events can take time to crystalise and any NAV growth is unlikely to occur simultaneously with key value inflection points.

There are currently eight key value inflection points expected by the end of CY2027, including three expected before the end of CY2025, and Syncona is funded to deliver on all of these. These key value inflection points are expected to be delivered by seven portfolio companies, most notably from our most mature private portfolio companies, Beacon, Spur and iOnctura. New opportunities and the wider portfolio offer further optionality for NAV growth beyond CY2027, particularly through the portfolio companies that will enter the clinic.

A maturing portfolio and improving market conditions may present opportunities to accelerate NAV growth. Syncona's proactive management approach constantly evaluates any arising opportunities, and we will pursue those that improve the risk-adjusted returns of the portfolio and support the delivery of our 10-year targets.

Appointment of SIML Chair

Today, we are pleased to announce that Kenneth Galbraith has joined the SIML Board with immediate effect and has accepted the role of Chair of SIML, which will take effect following regulatory approval. From a career spanning over 35 years, Kenneth has outstanding experience in leading and growing businesses. This appointment follows a comprehensive global search process, with Kenneth's expertise across biotechnology and venture capital making him an ideal fit for the role, supported by his existing knowledge of the business from his current role as an Executive Partner.

Looking forward

We are emerging from a period of proactively managing and rebalancing the portfolio to enable a return to NAV growth, whilst maintaining the capital required to deliver our long-term ambitions. With the macro environment improving and potentially providing tailwinds for Syncona and its portfolio companies, we are well positioned to benefit as we deliver against our strategy.

There has been strong execution in the first half of the year in financings and clinical delivery. The latent value this has built into the portfolio, alongside a number of key value inflection points expected by the end of CY2027, increases our confidence in the path to our NAV target of £5 billion by 2032.

Chris Hollowood, CEO of Syncona Investment Management Limited, 13 November 2024

Life science portfolio review

Our life science portfolio was valued at £791.9 million at 30 September 2024 (31 March 2024: £786.1 million), delivering a (8.8)% return in the period. It comprises our strategic portfolio companies, potential milestone payments, and investments, which are non-core and provide optionality to deliver returns for our shareholders.

Our strategic portfolio consists of the 14 core life science portfolio companies where Syncona has significant shareholdings and plays an active role in the company's development. These companies are diversified across modality and therapeutic area, with six companies at the clinical stage (two producing definitive data) and the remainder at pre-clinical stage.

Our NAV Growth Framework

We are continuing to report against our NAV Growth Framework, to give shareholders more clarity on which milestones and what stage of the development cycle we anticipate our companies will be able to access capital and drive significant NAV growth in the current market environment. Our portfolio companies are mapped against the categories below.

1.   Companies where delivery against milestones has the potential to enable access to capital:

·      Operational build

o  Clearly defined strategy and business plan

o  Leading management team established

·      Emerging efficacy data

o  Clinical strategy defined

o  Initial efficacy data from Phase I/II in patients

2.   Companies where delivery against milestones have the potential to deliver NAV uplifts:

·      Definitive data

o  Significant clinical data shows path to marketed product

o  Moving to pivotal trial and building out commercial infrastructure

·      On the market

o  Commercialising product

o  Revenue streams

Strategic portfolio company milestones

Specific portfolio company capital access milestones and key value inflection points[24] (which are set out below) are not without risk and their impact will be affected by various factors including the market environment at the time of their delivery.

Strategic portfolio

Late-stage clinical companies - 17.2% of NAV

Beacon (9.9% of NAV, 41.5% shareholding) - Moving towards being on the market

Syncona team view

Beacon Therapeutics (Beacon) represents a significant opportunity for Syncona to apply its domain knowledge and existing expertise in retinal gene therapy to a late-stage clinical asset in X-linked retinitis pigmentosa (XLRP). Syncona believes that the eye is a very attractive target for adeno-associated virus (AAV) gene therapy and the company possesses a strong set of data from its Phase I/II HORIZON and Phase II SKYLINE trials supporting the therapeutic benefit and safety profile of AGTC-501 in XLRP. This includes positive data from SKYLINE released post-period end which underlines the durability profile of the therapy and supports our thesis that AGTC-501 could be a potentially life-changing treatment for patients suffering from XLRP. The company continues to show strong momentum as it progresses through the clinic, reinforced by the initiation of its Phase II/III VISTA trial which was announced in the period.

Autolus (7.3% of NAV, 10.6% shareholding) - Moving towards being on the market

Syncona team view

Autolus Therapeutics' (Autolus) was granted approval post-period end from the FDA for its lead therapy, AUCATZYL^® (obe-cel), and has subsequently commenced commercial launch. This novel CAR T-cell therapy has the potential to be a best-in-class therapy for patients with r/r B-ALL, supported by its very positive safety profile compared to current CD19 CAR T-cell therapies. The company continues to deliver against its operational milestones, is well capitalised to drive the full launch and commercialisation of AUCATZYL^®, and is on track to advance its pipeline development plans into autoimmune diseases. As Autolus transitions to commercial stage, Syncona believes it is the natural time to rebalance its exposure to the business and, as such, Syncona sold 8.3% of its Autolus holding in the period, generating proceeds of $12.6 million (£9.7 million). A further 5.7% was sold post-period end, generating proceeds of $8.6 million (£6.6 million), and Syncona retains a 9.9% ownership stake valued at $96.0 million (£75.3 million)[26].

Clinical-stage companies - 26.1% of NAV

Spur (13.8% of NAV, 82.9% shareholding) - Moving towards publishing definitive data

Syncona team view

During the period we announced that Freeline had completed the acquisition of Syncona portfolio company SwanBio to form Spur Therapeutics (Spur), a new company with a consolidated AAV gene therapy pipeline. Spur continues to make strong clinical and operational progress, and Syncona has been encouraged by the data published from its lead Gaucher disease programme, including the data published post-period end at the European Society of Gene and Cell Therapy (ESGCT) 31^st Annual Congress, demonstrating a favourable efficacy and safety profile for FLT201. This data de-risks Spur's technology and supports the advancement of the company's pre-clinical pipeline into more prevalent disorders, including Parkinson's disease. We believe FLT201 can be a first- and best-in-class gene therapy for Gaucher disease patients with the potential of delivering value for our shareholders.

Quell (7.0% of NAV, 33.7% shareholding) - Moving towards publishing emerging efficacy data

Syncona team view

During the period Quell Therapeutics (Quell) announced positive and translational safety data from the initial safety cohort of three patients from its lead QEL-001 programme in liver transplantation. This data has supported Quell's subsequent decision to advance QEL-001 into the efficacy cohort of its Phase I/II trial. The company continues to deliver against operational and clinical milestones, and a data readout from the Phase I/II study is expected in CY2025.

Anaveon (3.1% of NAV, 36.9% shareholding) - Moving towards publishing emerging efficacy data

Syncona team view

Anaveon has previously published positive pre-clinical data for ANV600 and Syncona believes this pre-clinical data combined with the clinical data from the previous-generation compound supports ANV600's anticipated clinical safety and efficacy. Syncona looks forward to Anaveon reporting data from its Phase I/II clinical trial of ANV600, which will provide insight into the value potential of this programme.

iOnctura (2.2% of NAV, 23.0% shareholding) - Moving towards publishing definitive data

Syncona team view

iOnctura represents a significant opportunity for Syncona to invest in a clinical-stage company which has the potential to move to late-stage development and deliver high patient impact. The Syncona team continues to work closely alongside iOnctura's management team to review its pipeline and explore the breadth of roginolisib's utility in broader indications. Syncona believes roginolisib has the potential to modulate an important biological pathway in cancer with a side-effect profile that will allow it to benefit many patients.

Pre-clinical companies - 20.2% of NAV

Resolution (5.6% of NAV, 82.6% shareholding) - Moving towards publishing definitive data

Purespring (4.5% of NAV, 38.1% shareholding) - Moving towards publishing emerging efficacy data

OMass (4.3% of NAV, 28.9% shareholding) - Moving towards publishing emerging efficacy data

Kesmalea (1.7% of NAV, 59.7% shareholding) - Moving towards completing operational build

Yellowstone (1.4% of NAV, 60.9% shareholding) - Moving towards completing operational build

Mosaic (1.3% of NAV, 76.6% shareholding) - Moving towards completing operational build

Forcefield (0.9% of NAV, 62.6% shareholding) - Moving towards publishing emerging efficacy data

Slingshot (0.5% of NAV, 100.0% shareholding) - Moving towards completing operational build

Portfolio milestones and deferred consideration - 0.5% of NAV

Syncona also currently has rights to potential milestone payments related to the sale of Neogene to AstraZeneca and the sale of Clade to Century. Together, these potential milestones are valued on a risk-adjusted discounted cash flow basis at £4.8 million.

Alongside these, Syncona has the potential to benefit from any future commercialisation of Beacon's lead asset AGTC-501 via a "deferred consideration", and holds a right to a royalty payment relating to Purespring's lead programme. The valuation of both of these rights is included within our valuation of Syncona's total interest in Beacon and Purespring.

Syncona investments - 5.2% of NAV

Syncona has £60.1 million of value in its investments, which are non-core and provide optionality to deliver returns for our shareholders. Our assets held within our investments are Achilles Therapeutics (Achilles), Century, CRT Pioneer Fund, and Biomodal (formerly Cambridge Epigenetix).

During the period Achilles announced that it would be discontinuing its lead programme, closing its clinical trials and exploring strategies to maximise value for its remaining assets. Syncona has been engaging with the company on routes to maximise value and is supportive of the actions taken by the leadership team as the best path forward for the company.

During the period, Clade was acquired by Century Therapeutics (Century) for up to $45.0 million (£35.9 million), with upfront consideration to Syncona of $9.3 million (£7.4 million). Following completion of the acquisition Syncona holds its shares in Century within its investment portfolio.

Roel Bulthuis, Managing Partner, Head of Investments, Syncona Investment Management Limited, 13 November 2024

Financial review

Syncona's strategy is supported by our capital pool, people and operating model, which underpin our ability to deliver growth for our shareholders. We take a robust and prudent approach to valuation and managing our balance sheet, whilst closely managing our costs. This supports the delivery of our strategy and our ongoing focus on optimising returns for our shareholders.

Capital allocation

We take a rigorous approach to capital allocation and are resolutely focused on delivery and growth, as we continue to prioritise capital towards clinical opportunities and assets that are approaching clinical entry. £90.0 million was deployed in the period, with Syncona continuing to anticipate that deployment into the portfolio and pipeline at financial year end will be £150-200 million, in line with prior guidance.

During the period, the Board allocated a further £20.0 million to the share buyback, with an additional £15.0 million allocated post-period end. This takes the total allocation to date to £75.0 million, of which £46.3 million has been deployed to date, at an average discount of 34.7%, resulting in an accretion of 3.66p to NAV per share since September 2023. £19.4 million of shares were repurchased during the period, at an average discount of 36.2%, resulting in an accretion of 1.59p to NAV per share, with a further £6.7 million of shares repurchased since the period end, at an average discount of 39.3%.

Syncona's rigorous approach to capital allocation is supported by financings completed in the period across the portfolio, with £170.5 million raised from external investors, alongside £139.2 million[29] of capital committed by Syncona[30]. Our key value inflection points expected by the end of CY2027, which have the potential to support significant growth of our NAV, are funded. Key value inflection points are funded by capital committed by Syncona and third-party investors in financings, or underwritten by Syncona's capital pool. A portion of Syncona's capital pool is also committed to funding future operational costs and the current share buyback allocation. The remainder of our capital pool is allocated towards driving broader portfolio company milestones and new investments.

Capital pool management

Within our capital pool of £352.7 million we ensure that we allocate between 12 and 24 months of funding to cash and Treasury Bills. Longer-term capital is allocated to a number of low volatility, highly liquid, multi-asset and credit funds or mandates, managed by Kempen and M&G with portfolio mandates to deliver a core CPI (consumer price index) return over the mid-term. At the period end, £185.6 million was held in cash and Treasury Bills, with £148.5 million held in multi-asset funds and credit funds. The remainder of the capital pool is invested in mature cash generative private equity funds. To provide Syncona with a natural hedge against short-term US dollar cash flows, 19.2% of our capital pool is held in US dollars and the 5.9% weakening of the US dollar versus sterling over the period resulted in an unrealised foreign exchange loss of £3.8 million at the period end. The overall return across our capital pool during the period was 1.0%.

We continue to monitor the asset allocation and foreign exchange exposure within the capital pool based on our capital requirements and market conditions, with a focus on balancing inflationary risk with a core strategy of capital preservation and liquidity access.

Valuation approach

Syncona values its unlisted portfolio companies in accordance with the International Private Equity and Venture Capital (IPEV) Valuation Guidelines. At the period end, our life science portfolio comprised listed holdings (11.8%), private companies either valued at price of recent investment (PRI) (43.3%), or on the basis of capital invested (calibrated cost) (38.3%). In addition, potential milestone and deferred consideration payments relating to Beacon, Neogene and Clade are valued on a risk-adjusted discounted cash flow basis in line with our Valuation Policy and together represent 2.4% of the portfolio[32].

Throughout the challenging macro environment, which has impacted valuations for early-stage life science companies, the Syncona team has continued to rigorously review the robustness of our private company valuations. Our approach to valuation includes taking inputs from the investment team, with a focus on delivery against upcoming milestones as well as taking into account any developments during the period which may have impacted the investment theses of individual companies. We also take into account inputs from Syncona's external valuation adviser, alongside evolving market data. Following the recent work carried out financing the portfolio, including through the delivery of syndicated financings alongside aligned investors, £770.1 million (67.3%) of NAV has been priced with reference to a third-party mark since the start of 2022, from the point that the market downturn had fully set in. Consequently, we believe our NAV is robust, providing Syncona with a strong basis for future growth.

Disciplined cost management 

Syncona continues to remain focused on tightly managing its costs. As highlighted in our recent annual results in June, Syncona has invested in its platform and team to support its growth ambitions. This has included senior appointments to the investment team as well as the Executive Partner group, alongside other investments to support scaling our model. With the team and operating platform required to deliver our strategic targets now largely built, SIML anticipates that management fees for FY2024/5 will be below those of the previous financial year (£16.6 million).

Kate Butler, Chief Financial Officer of Syncona Investment Management Limited, 13 November 2024

Supplementary information

Portfolio milestones delivery since introduction of NAV Growth Framework (Interim Results, November 2023)

Our track record since 2012

Performance since 2016

In 2016, Syncona merged with the Battle Against Cancer Investment Trust (BACIT), becoming a FTSE 250 life science investor and expanding its permanent capital base. Since that time, Syncona's NAV per share has increased from 127.9p to 178.9p, a total return of 5.0% per annum. Using an IRR calculation for the performance of the Syncona life science portfolio over the same period, the portfolio has delivered an IRR of 12.9% and is valued at a 1.3 multiple of its 2016 value.

Peer Group transaction values and market capitalisations for iOnctura, Spur and Beacon

iOnctura:

Constituents of M&A peer group: AnHeart Therapeutics, Kinnate Biopharma, Theseus Pharmaceuticals, ORM, Kinnjiu, Turning Point, Oncoceutics, Forbius, ArQule, Peloton Therapeutics, Loxo Oncology, Ignyta, Tolero, Acerta Pharma 

Constituents of the trading peer group: Revolution Medicines, Nuvalent, IDEAYA, Nurix, Recursion, Relay, Tyra, Monte Rosa, Foghorn, C4, Acrivon, Nuvectis, Black Diamond, Prelude, Immuneering

Spur:

Constituents of M&A peer group: Orchard Therapeutics, Decibel Therapeutics, Akouos, Prevail Therapeutics, AskBio, Audentes Therapeutics, AveXis

Constituents of the trading peer group: Crispr, Intellia, Rocket, Neurogene, RegenxBio, Verve, Taysha, Voyager, UniQure, Editas, Lexeo, Solid Bio, Bluebird Bio

Beacon:

Constituents of M&A peer group: Bota-vec (MeiraGTx), Iveric Bio, Gyroscope Therapeutics, Nightstar Therapeutics, Spark Therapeutics, Ocata

Constituents of the trading peer group: RegenxBio, Meira GTx, 4D Molecular, Adverum

Approach to disclosing portfolio company information

Our model is to create companies around world-leading science, bringing the commercial vision and strategy, building the team and infrastructure and providing the funding to scale these businesses.

When we create or invest in a portfolio company, or when a portfolio company completes an external financing or other transaction, we may announce that transaction. Our decision on whether (and when) to announce a transaction depends on a number of factors including the commercial preferences of the portfolio company. We would make an announcement where we consider that a transaction is material to our shareholders' understanding of our portfolio, whether as a result of the amount of the commitment, any change in valuation or otherwise.

In addition, our portfolio companies are regularly progressing clinical trials. These trials represent both a significant opportunity and risk for each company, and may be material for Syncona.

In many cases, data from clinical trials is only available at the end of the trial. However, a number of our portfolio companies carry out open label trials, which are clinical studies in which both the researchers and the patients are aware of the drug being given. In some cases, the number of patients in a trial may be relatively small. Data is generated as each patient is dosed with the drug in a trial and is collected over time as results of the treatment are analysed and, in the early stages of these studies, dose-ranging studies are completed. Because of the trial design, clinical data in open label trials is received by our portfolio companies on a frequent basis. Individual data points need to be treated with caution, and it is typically only when all or substantially all of the data from a trial is available and can be analysed that meaningful conclusions can be drawn from that data about the prospect of success or otherwise of the trial.

In particular, it is highly possible that early developments (positive or negative) in a trial can be overtaken by later analysis with further data as the trial progresses.

We would expect to announce our assessment of the results of a trial at the point we conclude on the data available to us that it has succeeded or failed, unless we conclude it is not material to our shareholders' understanding of our portfolio. We would not generally expect to announce our assessment of interim clinical data in an ongoing trial, other than in the situation where the portfolio company announces interim clinical trial data, in which case we will generally issue a simultaneous announcement unless we believe the data is not materially different from previously announced data.

In all cases we will comply with our legal obligations, under the Market Abuse Regulation or otherwise, in determining what information to announce.

Chris Hollowood, CEO of Syncona Investment Management Limited, 13 November 2024

Capital Allocation Policy

Syncona is committed to driving and maximising returns for shareholders over the long term as we seek to deliver on our 10-year targets as set out in November 2022. We strive to deliver growth through capital appreciation and offer investors the opportunity to access the expertise of Syncona's specialist team and the growth potential of a proprietary investment portfolio in a high risk and high reward sector.

Focus on driving significant value through investing in life science

The core premise of our investment strategy is that significant risk-adjusted returns in life science come when novel technology is developed to a late-stage clinical product. We generate opportunities to do this by creating companies from exceptional science, then building and scaling them over the long term to reach late-stage clinical development, alongside third-party investors. We also seek to make new investments in clinical-stage opportunities, both public and private, where we can similarly advance them to late-stage clinical development and generate strong risk-adjusted returns.

Portfolio management and our NAV Growth Framework

Many of our investments are both capital intensive and illiquid. We aim to manage our portfolio as a whole to ensure we have the capital required to deliver our investment strategy, either in cash or from liquid assets in our life science portfolio. We leverage our balance sheet by accessing external sources of capital to support the funding of our portfolio companies. We take a rigorous approach to capital allocation, prioritising capital towards clinical opportunities and assets which are approaching clinical entry, while continuing to create companies based on exceptional science.

Our NAV Growth Framework gives shareholders more clarity on which milestones and at what stage of the development cycle we anticipate our companies will be able to access capital and drive significant NAV growth. Emerging efficacy and definitive data both have the potential to provide access to capital. They also have the potential to drive significant NAV growth, with the delivery of definitive data typically being more valuable.

If our investment strategy is successful, we anticipate that we will generate significant cash proceeds from exits or other liquidity events and that over time this will be the principal source of capital to fund our strategy.

A sustainable model and a strategic approach to capital efficiency

Primarily, we will look to re-invest cash proceeds across our portfolio and into new opportunities, where we believe we can drive significant returns by continuing to fund companies through to clinical and late-stage development.

Where we do not see investment opportunities that allow us to efficiently deploy capital across our portfolio, we will seek to return capital to shareholders. We will consider all forms of distribution mechanisms for capital returns at the time. This includes buying back our own shares, in particular if market conditions create dislocations between the share price of Syncona and its stated NAV. We will continue to ensure that we are positioned to sustainably deliver milestones that have the potential to enable capital access and are funded to deliver key value inflection points which have the potential to deliver significant NAV growth.

Our approach to capital allocation is dynamic and continues to evolve as the business scales and matures, increasing the potential to access third party capital, liquidity and optimise returns for our shareholders.

Principal risks and uncertainties

The principal risks and uncertainties facing the Company for the second half of the financial year are substantially the same as those disclosed in the Report and Accounts for the year ended 31 March 2024: https://www.synconaltd.com/media/lw4np1va/syn-ar24.pdf

Portfolio company risks:

-       Scientific theses fail

-       Clinical development doesn't deliver a commercially viable product

-       Portfolio concentration risk to platform technology

-       Concentration risk and binary outcomes

Access to Capital:

-       Not having capital to invest

-       Private/public markets don't value or fund our companies when we wish to access them

-       Capital pool losses or illiquidity

People risks:

-       Reliance on small Syncona team

-       Systems and controls failures

-       Unable to build high-quality team/team culture

-       Unable to execute business plans

Macroeconomic environment:

-       Macroeconomic environment has a negative impact on sentiment for portfolio companies and Syncona business model

Going Concern

The Condensed Consolidated Financial Statements are prepared on a going concern basis. The net assets held by the Group and within investment entities controlled by the Group currently consist of securities and cash amounting to £1,144.6 million (31 March 2024 £1,238.9 million) of which £334.2 million (31 March 2024: £435.8 million) are readily realisable within three months in normal market conditions, including uncalled commitments to underlying investments and funds amounting to £104.0 million (31 March 2024: £95.2 million).

Given the Group's capital pool of £352.7 million (31 March 2024: £452.8 million) the Directors consider that the Group has adequate financial resources to continue its operations, including existing commitments to its investments and planned additional capital expenditure for 12 months following the approval of the Condensed Consolidated financial statements. The Directors also continue to monitor the ever changing macro environment on the Group. Hence, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Condensed Consolidated Financial Statements.

Related Parties

There have been no material changes to the nature of related party transactions as described in the Annual Report and Audited Financial statements for the year ended 31 March 2024. Refer to Note 11 for information on related party transactions at 30 September 2024.

Statement of Directors' Responsibilities

The Directors confirm that to the best of their knowledge:

a)   the condensed set of interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union;

b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c)   the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

The Directors of Syncona Limited are:

Melanie Gee, Chair

Julie Cherrington, Non-Executive Director

Cristina Csimma, Non-Executive Director

Virginia Holmes, Non-Executive Director

Rob Hutchinson, Non-Executive Director

Kemal Malik, Non-Executive Director

Gian Piero Reverberi, Non-Executive Director

John Roche, Non-Executive Director

INDEPENDENT REVIEW REPORT TO SYNCONA LIMITED

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2024 which comprises the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Net Assets Attributable to Holders of Ordinary Shares, the Condensed Consolidated Statement of Cash Flows and the related notes 1 to 14.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2024 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the European Union adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusion Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly financial report, we are responsible for expressing to the company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Deloitte LLP

Recognised Auditor

St Peter Port, Guernsey

13 November 2024

UNAUDITED GROUP PORTFOLIO STATEMENT

As at 30 September 2024

^{1) Value of life science companies reflects the full economic interest attributable to the company. Includes value attributable to equity, debt, and other economic interests such as deferred consideration and royalty rights.}

^{2) The life science portfolio of £791,917,048 (31 March 2024: £786,106,202) consists of life science investments totalling £753,998,271 (31 March 2024: £749,983,883), milestone payments of £4,854,257 (31 March 2024: £2,248,059) held by Syncona Holdings Limited and the CRT Pioneer Fund of £33,064,520 (31 March 2024: £33,874,260) held by Syncona Investments LP Incorporated.}

^{3) The capital pool investments of £296,267,647 (31 March 2024: £374,665,784) are held by Syncona Investments LP Incorporated.}

^{4) Cash and cash equivalents amounting to £560,614 (31 March 2024: £260,826) is held by Syncona Limited. The remaining £61,363,399 (31 March2024: £104,558,141) is held by its subsidiaries other than portfolio companies ("Syncona Group Companies"). Cash held by Syncona Group Companies other than Syncona GP Limited is not shown in Syncona Limited's Condensed Consolidated Statement of Financial Position since it is included within financial assets at fair value through profit or loss.}

Assets held by the Group are held primarily through Syncona Holdings Limited and Syncona Investments LP Incorporated. See note 1 for a description of these entities.

The totals in the above table may differ slightly to the audited financial statements due to rounding differences.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 30 September 2024

The total columns of this statement represent the Group's Condensed Consolidated Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The profit/(loss) for the period is equivalent to the "total comprehensive income" as defined by International Accounting Standards ("IAS") 1 "Presentation of Financial Statements". There is no other comprehensive income as defined by IFRS.

For the period ended 30 September 2024, the Company reported capital loss after tax in the amount of £97,335,000 (year ended 31 March 2024: capital loss after tax in the amount of £18,389,000).

All the items in the above statement derive from continuing operations.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2024