Syncona Shifts Strategy Amidst Challenging Biotech Market

Life sciences investment firm Syncona has announced a significant shift in its investment strategy, moving away from early-stage biotechs to focus on companies offering near-term rewards. The decision comes in response to what the firm describes as "particularly challenging" market conditions for the biotech sector.

New Focus on Advanced Portfolio Companies

Syncona's revised strategy, outlined in a June 19 release, will prioritize support for existing portfolio companies with the potential to provide liquidity through mergers and acquisitions or public markets. The firm aims to help these companies reach key value inflection points, potentially leading to faster returns on investment.

Currently, Syncona's life sciences portfolio comprises £765 million ($1.03 billion) spread across 14 companies, with eight having reached clinical or commercial stages. Notable among these is Autolus Therapeutics, which secured FDA approval last year for its CD19 CAR-T cell therapy, Aucatzyl.

Market Pressures and Strategic Adjustments

The decision to realign its strategy comes against a backdrop of significant market headwinds. Syncona noted that the S&P Biotechnology Select Industry Index is approximately 52% below its February 2021 pandemic-related peak, reflecting broader challenges in the sector.

"Syncona's share price has continued to be impacted by the significant headwinds in the markets it operates in," stated Melanie Gee, Syncona's chair. "Against this backdrop, the board has undertaken a comprehensive review of strategic options to maximise value for shareholders."

As part of this strategic shift, Syncona is suspending its previously announced objectives of growing its portfolio to around £5 billion ($6.7 billion) across 20 to 25 companies by 2032. Instead, the firm will focus on maximizing value from its existing investments and returning cash to shareholders in a more timely manner.

Exploring New Investment Vehicles

Recognizing that some shareholders may wish to maintain exposure to early-stage life sciences companies, Syncona is exploring the possibility of establishing a new fund. This fund would operate alongside, but independently of, Syncona, providing an opportunity for interested investors to continue supporting less mature biotech ventures.

A spokesperson for the firm emphasized that Syncona remains "a firm believer in the importance and long-term opportunity of creating and building new biotech companies from world-class research, particularly in the U.K." The potential new fund represents an effort to balance this commitment with the changing market dynamics and shareholder expectations.