Syncona blames £80M drop in its biotech valuations on 'challenging market'

Syncona has blamed the “challenging market environment” for another quarter of falling valuations, as the life sciences investment firm pushes its portfolio of biotechs to trim back their pipelines.

London-based Syncona saw a 77.9 million pound sterling ($98.6 million) decline in the valuation of its publicly listed life science companies over the first quarter of the year, which it attributed to “macro conditions as well as company-specific challenges.” The firm also name-checked the halving in value of its holding in SwanBio Therapeutics to 58.2 million pounds ($73.6 million) as a result of the biotech narrowing its focus to its lead program, a gene therapy for a spinal cord disorder.

In its first-quarter earnings report, Syncona CEO Chris Hollowood said the firm had taken a “proactive approach” to managing its biotechs, including “focusing our portfolio companies’ pipelines on the most promising advanced assets, widening financing syndicates and executing on strategic transactions.”

Hollowood added that while they expect conditions to get better in the medium term, and valuations are "already improving for late-stage assets," the firm has "taken decisive action across the portfolio to navigate the current period, take advantage of these conditions where possible and build a wave of new companies to drive longer term sustainable growth." 

The firm has seen a reduction in net assets because of "the action taken across the portfolio, coupled with the challenging market environment," the CEO said. 

The firm ended March with net assets of 1.25 billion pounds ($1.58 billion), a slight drop on the 1.29 billion pounds ($1.63 billion) it entered the year with, according to the firm's earnings report. The company’s pool of capital currently stands at 650.1 million pounds ($822.8 million).

The firm did see 28.2 million pounds ($35.7 million) in valuation uplifts across its portfolio, including 15.9 million pounds ($20.1 million) from deferred consideration relating to the recently launched Beacon Therapeutics gene therapy for genetic retinal disease. But this was more than outweighed by the almost 80 million pound drop in valuations of its listed companies.

That marked an even steeper drop in valuations than the final quarter of 2022, when the firm revealed a slump of 52.9 million pounds ($66.9 million).

Still, Syncona had successes to point to in the first three months of 2023, including the launch of Beacon and the sale of T-cell receptor-focused Neogene Therapeutics to AstraZeneca for $200 million upfront, which was completed in January.

More recently, AstraZeneca has taken an interest in another Syncona company, paying Quell Therapeutics $85 million upfront last week to collaborate on candidates including a “one and done” cure for Type 1 diabetes.