Life sciences investment firm Syncona has blamed the “particularly challenging” market conditions for shifting its strategy away from early-stage biotechs and focusing on companies likely to offer near-term rewards.
The London-based firm’s current life sciences portfolio consists of 765 million pounds sterling ($1.03 billion) spread across 14 companies, according to its website, of which eight have reached the clinical or commercial stages. Those more advanced startups include fellow London-based Autolus Therapeutics, which secured FDA approval last year for its CD19 CAR-T cell therapy Aucatzyl.
At the less advanced stage are biotechs like London-based Purespring Therapeutics, which is working to get its kidney-tweaking gene therapy to the clinic, and Yellowstone Therapeutics, a U.K.-based preclinical company targeting human leukocyte antigen class II expression in a range of common cancers.
Syncona’s new strategy, outlined in a June 19 release, will see the firm focus its funds on supporting “existing portfolio companies, which have the potential to provide liquidity via M&A or the public markets [and] to deliver their identified key value inflection points.”
The money regained from divesting in certain biotechs that don’t seem likely to deliver a big payday or readout in the near term will then be returned to Syncona’s shareholders.
Alongside this new approach to capital allocation, the firm said it has listened to feedback from shareholders and will tweak its investment strategy to “put more emphasis on returning cash to shareholders in a timely manner and maximising value.”
A spokesperson for the firm told Fierce in an emailed statement that it's still "a firm believer in the importance and long-term opportunity of creating and building new biotech companies from world-class research, particularly in the U.K."
Recognizing that some of Syncona’s shareholders may want to continue investing in less mature life sciences companies, the firm said it was exploring the potential to set up a new fund to run alongside—but be independent of—Syncona as part of its "ambition to find opportunities for shareholders who wish to maintain exposure to this through [via a] new private fund," the spokesperon added.
The firm placed its decision against the backdrop of market conditions that have been “particularly challenging” for early-stage life science startups. “Cost of and access to capital has been impacted for biotech companies across all stages of the development cycle,” added Syncona in the release, which noted that the S&P Biotechnology Select Industry Index was sitting at around 52% below its February 2021 pandemic-related peak.
“Syncona's share price has continued to be impacted by the significant headwinds in the markets it operates in,” the firm’s chair Melanie Gee said in the release. “Against this backdrop, the board has undertaken a comprehensive review of strategic options to maximise value for shareholders.”
This review means the firm is suspending its previously announced objectives of growing its portfolio to around 5 billion pounds ($6.7 billion) spread across 20 to 25 companies by 2032.