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Subdued Syncona stumps up £34m for cell therapy start-up

20 May 2019

It has been a quiet year so far for shares in Syncona but the £1.6 billion listed life sciences fund has been busy founding UCL university spin-off Quell.

Leading life sciences investment trust Syncona (SYNC) has expanded its reach into a pioneering cell therapy by founding its tenth company, Quell Therapeutics.

The FTSE 250-listed company has invested £34 million into the company as part of a £35 million financing round, with the University College of London’s (UCL) UCL Technology fund managed by Albion Capital providing the remaining £1 million.

The investment will give Syncona a 69.3% stake in the business, which has been founded in partnership with six leading academics and clinicians from King’s College London, UCL, and Hannover Medical School.

The company will focus on an emerging area of cell therapy, known as T-regulatory (Treg) cells, to treat diseases of the immune system. Quell will use Treg cells to combat problems such as organ transplant rejection, autoimmune and inflammatory disease.

In a stock market announcement today, Syncona said it had identified Treg cells as an area of ‘high interest’ two years ago and had been looking to found a company since by connecting with other organisations in the field.

Martin Murphy, chief executive of Syncona Investment Management who will chair Quell, said the company ‘clearly demonstrates our proactive model in areas of deep domain expertise’.

‘We identified an innovative area of science with the potential to deliver dramatic impact for patients and worked to build a company around it,’ he said.

‘It’s an exciting addition to our cell therapy platform, where we are strategically and uniquely positioned with expertise across a range of modalities.’

Syncona’s portfolio includes a number of cell therapy companies, the most well-known of which is Autolus (AUTL.O), which develops blood cancer therapies. It raised $154.8 million (£117.2 million)  when it floated on the US technology exchange Nasdaq and is also backed by Woodford Patient Capital Trust (WPCT). It also invests in cancer therapy developer Achilles Therapeutics

Syncona, the investment arm of the Wellcome Trust, merged with the Battle Against Cancer investment trust (Bacit) in December 2016. Since then the £1.7 billion company has excited investors with its ability to back commercially successful, cutting-edge diagnostics firms.

The shares shot up a third in 2018 following a 51.5% spike in the previous year. However, they have not participated in the wider rebound in markets this year. The sale of Nightstar Therapeutics to Switzerland’s Biogen – which resulted in a £135 million windfall for the company – marked the recent high point as it was followed by news of Wellcome Trust reducing its stake, cooling the share price, which has fallen 7.3%.

At Friday’s close of 248p Syncona stood 24% premium over net asset value per share of 199.8p. Normally that would be viewed as expensive but even after their 5p or 2% gain to 253p today, the trust is on half its 51% peak premium in March before the Wellcome share sale and looks relatively good value. 

‘We believe that this is an attractive entry point given the substantial potential in the portfolio,’ said analyst Ewan Lovett-Turner at Syncona’s Numis Securities.

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