Syncona: a biotech trust that's going for a song
Syncona is an investment trust that invests in promising, privately-held biotechnology companies. It looks too cheap.


Syncona (LSE: SYNC), an investment trust containing stakes in privately-held biotechnology firms, has struggled over the past few months. It was formed in late 2016 when the £650m investment trust BACIT merged with the arm of the Wellcome Foundation that had been commercialising cutting-edge medical research.
Within two years, the share price had doubled to £3 as investors were enthused by the strategy and some promising holdings, but it had fallen to 220p by the end of 2019 and 200p in March.
This was despite the sales of two investments, Nightstar and Blue Earth, for an aggregate 6.2 times cost and the flotation of a third, Autolus, at $17 a share, which provided further uplift. Since March, Syncona has climbed to 231p, but it is remains a strong buy.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The contents of Syncona's portfolio
Syncona now has nine portfolio investments, a number it expects to increase to between 15 and 20 with two or three additions a year. Syncona’s strategy is to invest right at the start by identifying “exceptional science”, bringing in academic partners, adding its own expertise and creating globally competitive companies. It will continue to fund them as their scientific concept is turned into a clinical product that is taken through patient trials and, once in receipt of regulatory approval, brought to the market.
This process used to take 15 years but innovation has brought that down to between eight and ten. “Our management has been doing this for 20 years,” says CEO Martin Murphy.
“Our key differentiator with other venture capital funds is that we don’t set up businesses [simply in order to sell them on relatively quickly]. Our strategy requires a deep, long-term capital base with the ability to invest £100m in each company.” This optimises the terms of any external capital-raising and eventual disposal.
The biotechnology revolution
Chief investment officer Chris Hollowood explains that there has been a revolution in biotechnology; it no longer costs $1bn to develop a drug.“Precision medicine, reliant on human genetics, enables faster development, smaller, more capital-efficient clinical trials and a targeted commercial roll-out.”
Gene and cell therapy enables precise treatment of malfunctioning cells and tumours, reducing side effects. Closely-defined patient groups triple the success rate compared to conventional drugs and enable unsuccessful products to be cut earlier at lower cost. Autolus has made encouraging progress with its treatments of lymphoma and leukaemia.
A firm called Freeline accounts for 11% of net assets and is working on a one-off treatment for haemophilia B and other degenerative genetic diseases. Current treatment requires enzyme replacement in patients three times a week at an annual cost to health systems of $500,000.
Gyroscope (4% of assets) addresses the leading cause of blindness, offering a major improvement on today’s surgical techniques. Achilles (4%) seeks to treat different types of cancer by infiltrating cells of the immune system directly onto the tumour. As Hollowood points out: “Chemotherapy damages... healthy tissue, potentially killing the patient.” Three other investments are at earlier, pre-clinical stages of development and two are recent formations.
Some products will probably fail, but the upside from success is a high multiple of invested capital when the companies are eventually sold. For now, however, Achilles (44%-owned) is valued at 1.5 times cost while other investments are held at cost, despite the progress being made throughout the portfolio. So there is plenty of scope for strong returns in future. Syncona’s price significantly undervalues its potential.

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.
After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.
-
Who is the richest person in the world?
The top five richest people in the world have a combined net worth of $825 billion. Who takes the crown for the richest person in the world?
By Vaishali Varu Published
-
Top 10 stocks with highest growth over past decade - from Nvidia, Microsoft to Netflix, which companies made you the most money?
We reveal the 10 global companies with the biggest returns since 2013. One firm has posted an astonishing 9,870% return, meaning a £1,000 investment would now be worth almost £82,000.
By Ruth Emery Published
-
Halifax: House price slump continues as prices slide for the sixth consecutive month
UK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
By Kalpana Fitzpatrick Published
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?
UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
By Marc Shoffman Published
-
Pension savers turn to gold investments
Investors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
By Ruth Emery Published
-
Where to find the best returns from student accommodation
Student accommodation can be a lucrative investment if you know where to look.
By Marc Shoffman Published
-
Best investing apps
We round up the best investing apps. Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go?
By Ruth Emery Last updated
-
The top funds to invest in
Tips Investors put Scottish Mortgage Investment Trust back on top, and India is the new investment hotspot - We look at what investors have been adding to their portfolios in the last month
By Vaishali Varu Last updated
-
The world’s best bargain stocks
Searching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
By Andrew Van Sickle Published
-
Revealed: the cheapest cities to own a home in Britain
New research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
By Ruth Emery Published