Syncona ‘proud’ but not revived by Autolus winning FDA approval

Autolus, the top holding in life sciences fund Syncona, gains US Food and Drug Administration backing for its leukaemia drug Aucatzyl but sees its shares fall further.

Top Syncona holding Autolus has received US regulatory approval for its leukaemia cell therapy, pushing depressed shares in the life sciences fund slightly higher.

Syncona shares rose 1.8%, or 2p, to 113.4p yesterday after the US Food and Drug Administration (FDA) approved Aucatzyl, known as obe-cel, for the treatment of adults with acute lymphoblastic leukaemia, an aggressive type of blood cancer.

The approval was granted following results from a phase 2 trial in which 42% of patients treated achieved complete remissions within three months.

This type of cell therapy is the first to be approved by the FDA without the requirement for a risk evaluation and mitigation strategy programme to address safety concerns.

Chris Hollowood, chief executive of Syncona Investment Management and manager of the £721m fund, said the trial confirmed a ‘strong safety profile’ compared with similar cell therapies offered by rivals.

There are approximately 8,400 new cases of the specific leukaemia diagnosed each year in the US and European Union, but survival rates are poor with a median overall survival of eight months.

Hollowood said the disease was ‘devastating’ and Aucatzyl would ‘bring a much-needed new treatment option to patients suffering from the condition’.

‘This is a proud moment for Syncona,’ he added, explaining:  ‘We co-founded Autolus in 2014 and it is the first company we have supported from the academic bench through to regulatory approval. We would like to congratulate the Autolus team, as well as those that have worked alongside the company, to help it reach this important milestone.’

Headwinds

Syncona listed Autolus on the US technology Nasdaq exchange in 2018, but since late 2020 the shares have had a rough ride, hit by the selloff of biotech stocks as interest rates rose. The shares have tanked 85% since flotation and trade at 3.51 cents, having dropped from $4.04 since the announcement on Friday. 

Autolus is the fourth largest holding in Syncona, at 8.4% of assets, and had been tipped by Hollowood as a potential takeover target.

He said Syncona’s collection of 13 biotech companies was maturing but Autolus and Beacon, which has pioneered a treatment for blindness, were at a stage where they could be acquired by pharmaceutical companies concerned about replacing revenues ahead of a loss of patents in the second half of the decade.

Hollowood has described the sector as going through a ‘nuclear winter’ but with a reduction in inflation and interest rates holding out hope for some ‘rocket fuel’ to reignite life sciences.

Syncona is in sore need of a rally, having seen its shares slide 52% over five years, with an 11% decline in the past year leaving it trailing other listed biotech funds that have rebounded 16% on average. This leaves its shares 37.5% below net asset value, the widest discount in its sector.