Life sciences fund warns trials at its investee companies will be delayed for at least three months as the healthcare sector focuses resources to fighting spread of the coronavirus.
Life sciences fund Syncona (SYNC ) has warned that trials at its investee companies will be delayed for at least three months as the healthcare sector switches its focus to fighting the spread of Covid-19.
The FTSE 250-listed fund, which founds and invests in life sciences companies specialising in cell and gene therapy, said the outbreak of the viral pandemic will have a ‘major impact across the healthcare systems where we are running our clinical studies’.
Martin Murphy, chief executive of fund manager Syncona Investment Management, said that healthcare companies were focusing their resources on ‘managing Covid-19 patients and, as a result, certain elective procedures and clinical trials will be de-prioritised while the peak epidemic is management’.
‘Our companies have made or are considering appropriate plans for delays to clinical trials,’ said Murphy.
‘While it is hard to forecast the precise impact, we would anticipate delays to a number of our clinical stage programmes of at least three months.’
While the extent of the delays are not yet known as government and the healthcare sector battle the contagion, Murphy said the portfolio companies were working to ‘minimise disruption, avoid unnecessary burdens on health services, and ensure the safety of their employees and the patients taking part in clinical studies’.
The trust did not expect the delays to affect the valuations of its companies. Syncona shares gained 2% yesterday on the announcement on a day when the FTSE 100 surged 9% on hopes that a US emergency package would halt the coronavirus stock market crash. The shares are up another 2% today at 188.4p.
The past year has been tough for Syncona shares which have derated from a 32% premium to a 7% discount below net asset value. Before the gains this week the shares had slumped 28% in the past month. However, its strong returns in 2017 and 2018 mean investors have still enjoyed annualised returns of 16% in the past three years, according to Morningstar.
Syncona has a capital base of £780m - 90% of which is cash - which Murphy said means it can support its companies through a ‘prolonged period of disruption’ and push ahead with new opportunities. The cash pile mostly comes from the £337m Syncona generated from the sale of prostate cancer imaging business Blue Earth Diagnostics and another £354.3m from the sale of Bracco Imaging of Italy, a global leader in diagnostic imaging.
‘While covid-19 represents an unparalleled challenge to the public health system, it is important to remember that the need for medicines in other diseases continues undiminished and, once the Covid-19 situation has stabilised, clinical development activity will continue,’ said Murphy.