Syncona (SYNC ), the listed life sciences fund whose shares have halved in the past five years, has shown signs of a recovery from the biotech bear market after posting a 5.4% gain in the last quarter.

Net asset value (NAV) per share rose 9.6p to 188.2p in the three months to 31 December to value the portfolio at £1.5bn, up from £1.2bn.

Autolus, the Nasdaq-listed cancer therapy group that is Syncona’s fifth largest holding at 4.6% of assets, drove much of the gains. Its shares leaped on its application for Food and Drugs Administration (FDA) approval for its leukaemia treatment in the US.

Chris Hollowood, chief executive of Syncona Investment Management, said: ‘We have been pleased with the recent clinical and regulatory progress at Autolus, which we believe is now being reflected in its recent positive share price performance.’

Autolus has subsequently announced a strategic collaboration with Germany’s BioNTech – which came to prominence during lockdown thanks to the use of the Covid vaccine it devise with Pfizer – to advance its cell therapy programme towards commercialisation. BioNTech has taken a $200m stake in Autolus at a cost of $50m in order to gain access to its manufacturing capabilities.

In parallel, Autolus announced a $350m equity placement of 58m shares at $6 a share to strengthen its balance sheet ahead of the deal.

The gains on Autolus were, however, offset by Syncona having to write down the value of its holding in Anaveon, a Swiss-based developer of treatments for immune diseases, to £24.9m from £42.8m after it dropped work on one clinical stage programme to focus on an earlier stage, pre-clinical one.

‘While the pricing of the recent investment tranche in Anaveon has led to a partial write-down in our holding, the company is now well positioned to deliver clinical data from its next generation asset,’ Hollowood said.

Inflection points

Hollowood is also looking ahead to ‘six key value inflection points’ over the next 12-to-36 months which he believes have the potential ‘to drive significant NAV growth’.

This includes Beacon Therapeutics, which presented its 12-month safety and efficacy results from its phase II Skyline trial of patients with retinitis pigmentosa – a genetic disease causing blindness in men. The data showed good efficacy with improvements in retinal sensitivity shown by 63% of participants.

Overall Syncona invested £19m in its companies in the quarter and spent £10m buying back its heavily discounted shares to leave its cash pile at £551m or 44% of net assets. Since the update a week ago, the shares have added 4p to 119.6p, leaving them at a 37% discount to NAV. They peaked at 290p in August 2018. 

Hollowood said: ‘We will continue to take a rigorous approach to capital allocation and portfolio management, while also continuing to fuel our long-term growth by creating new companies across the new frontier of science.’

Deutsche Numis, a corporate broker of Syncona, said the wide discount remained attractive. It pointed out Syncona’s £790m market value was almost all due to the £551m capital pool and £170m stake in Autolus. That implied the portfolio of unquoted, early-stage drug developers was valued at a 90% discount.