Investment trust insider on Syncona – James Carthew: Syncona has cash for life sciences land grab
In August 2018 I questioned the 51% premium that life sciences investment company Syncona (SYNC) was then trading on and queried its high cash weighting. Syncona’s shares have been quite volatile but after spiking beyond £3 in October that year, they began to drift lower.
One reason for this was Neil Woodford’s woes. He was a forced seller of Autolus, Syncona’s largest holding. I decided to take a closer look and, by July 2019, I was ready to buy a few Syncona shares and have topped up my position since.
Last week’s capital markets day when Syncona and the companies it invests in made presentations to analysts and investors has confirmed my positive view of the investment company which now stands on a high, but less exorbitant, 19% premium.
Syncona was the brainchild of the Wellcome Trust, the health charity. It saw a need for a source of permanent capital to support the commercial exploitation of ideas emanating from British universities.
Venture capital funds were working with five-year horizons that were too short. That compromised the science and led to promising companies being sold off, to mainly US investors, while still early in their development. Syncona wants to back companies until they are ready to launch products eight to ten years after launch, and sometimes well beyond that.
Commercialisation of science provides a way of accelerating the development of novel therapies. Many speakers testified to the frustration and delay of having to secure relatively small amounts of academic grant funding to follow up on promising lines of thought.
This was my hope for Woodford Patient Capital but unfortunately it was bungled. It would be great if Schroders could now make a go of it but my guess is that investors will clamour for their money back and it will be many years before anyone can launch a similar vehicle.
Since launch, Syncona has backed 13 companies. Two of these, Nightstar and Blue Earth, have been sold for $877m and $476m respectively, realising significant profits of 10 times and 2.1 times invested money.
….read more here