Life sciences investor Syncona is banking on a recovery in biotech as it has struggled to keep up its share price over recent years.
In the investment trust’s annual results to 31 March, Syncona reported that net assets had dropped from £1.25bn to £1.24bn over the year, though net asset value per share had increased by 1.2 per cent thanks to share buybacks.
The trust has over 70 per cent of its portfolio invested in clinical-stage companies, and is hoping on a recovery in the poorly performing biotech sector, with a further £150m to £200m capital deployment in the year ahead.
Syncona also added two new oncology companies to its portfolio, both leading a 30m euro (£25.4m) series-B financing round for a 23 per cent stake in iOnctura, and launching a new company from Oxford University, Yellowstone Biosciences, with a £16.5m series-A financing commitment for a 61 per cent stake.
The FTSE 250 trust currently sits on an almost 40 per cent discount to its net asset value, but has a large capital pool of £453m, alongside an additional £20m committed to a share buyback.
“We see no operational reasons to justify a discount,” said Peel Hunt analysts Miles Dixon and Leolie Telford-Cooke.
However, the trust’s share price has continued to fall, dropped 22.6 per cent in the last year compared to a 2.5 per cent gain in the wider biotech and healthcare trust sector
The numbers are even worse on a longer horizon, with shares down 50 per cent in the last five years compared to a five per cent rise in the sector.
“We expect a reversion to the mean with the return of any kind of risk appetite in the UK,” added Dixon and Telfore-Cooke
Chris Hollowood, CEO of Syncona, said: “During the year, we have had a resolute focus on proactively managing our portfolio and a rigorous approach to capital allocation to maximise value in challenging market conditions.
“Against this backdrop, we have delivered a resilient financial performance, underpinned by strong execution across the portfolio. In parallel we have added three exciting and highly innovative new companies to the portfolio that can further drive medium and long-term growth.”