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Syncona Limited
22 December 2021
Syncona Limited
Gyroscope Therapeutics to be acquired for up to $1.5 billion
Sale generates IRR of 55% for Syncona
22 December 2021
-- Agreement reached for Gyroscope Therapeutics to be acquired
by Novartis for up to $1.5 billion (GBP1.1 billion [1] ) with an
upfront cash payment of $800 million (GBP604 million) and up to
$700 million (GBP528 million) in cash potentially due upon the
achievement of certain milestones
-- Syncona co-founded Gyroscope in 2016, building and funding it
through to this successful sale to Novartis
-- Upfront cash proceeds for Syncona at closing anticipated to
be GBP334 million [2] , which will represent a GBP180 million
uplift (27p per share) to the current holding value [3] ; a 3.0
multiple of original cost and 55% IRR [4]
-- Ongoing exposure to Gyroscope's development based on the
achievement of milestones, with the potential to generate a further
GBP255 million of proceeds for Syncona; if received in full,
proceeds anticipated to be GBP589 million, a 5.2 multiple of
original cost
Syncona Ltd, a leading healthcare company focused on founding,
building and funding global leaders in life science, today
announces that an agreement has been reached to sell its portfolio
company Gyroscope Therapeutics Holdings plc ("Gyroscope") to
Novartis, a leading global medicines company, for up to $1.5
billion (GBP1.1 billion) on a cash and debt free basis, with an
upfront payment of $800 million (GBP604 million) and up to $700
million (GBP528 million) potentially due upon the achievement of
certain customary milestones related to clinical development,
regulatory approvals and reimbursement.
Syncona co-founded Gyroscope in 2016 and has taken a long-term
approach to building the business, working closely with its
management team. Today the company is a global leader in ocular
gene therapies, combining discovery, research, drug development, a
manufacturing platform and surgical delivery capabilities. It has
nearly 200 employees and is executing on its Phase II clinical
trials for the treatment of geographic atrophy (GA) secondary to
age-related macular degeneration (AMD), having generated positive
clinical data in its Phase I/II FOCUS trial.
On closing, the transaction is anticipated to result in cash
proceeds of GBP334 million for Syncona's holding in Gyroscope,
representing a GBP180 million uplift (27p per share) to the
previous valuation, a 3.0 multiple on Syncona's original cost of
GBP113 million and an internal rate of return (IRR) of 55% [5] . In
addition, the sale of Gyroscope will potentially generate a further
GBP255 million of proceeds for Syncona, through future milestone
payments, which if received would take total proceeds to GBP589
million, a 5.2 multiple on original cost. Syncona is also
positioned to benefit from any future commercialisation of
Gyroscope's lead programme via a low single digit royalty on future
sales revenue.
The upfront proceeds, when received, will further strengthen
Syncona's capital pool and enhance its ability to expand its
portfolio and fund its companies ambitiously as they scale, to
capitalise on the opportunities available to them.
At its next valuation update, Syncona expects to value its
holding in Gyroscope on the basis of the transaction value,
including the upfront proceeds and Syncona's risk adjusted and
discounted valuation of the milestone payments. Based on its
preliminary assessment, Syncona estimates a risk adjusted and
discounted valuation for its share of the milestone payments in the
range of GBP40 million to GBP55 million (6p - 8p per share),
leading to a total estimated value for Syncona's holding in
Gyroscope in the range of GBP374 million - GBP389 million [6] .
This would deliver an estimated IRR of 61-63% [7] , and a multiple
of 3.3 - 3.4 of original cost.
Chris Hollowood, Chief Investment Officer of Syncona Investment
Management Limited, said: "In five and a half years, enabled by
collaborations with four leading UK universities, we have taken
Gyroscope from a concept to a potential treatment for geographic
atrophy secondary to AMD, a leading cause of blindness with no
approved therapies. Gyroscope is now an international company with
world-class management, positive clinical data, proprietary
surgical and manufacturing platforms, and a team of nearly 200
people. The structure of the transaction will provide us with
ongoing exposure to Gyroscope's development and the potential for
significant additional returns, subject to certain milestones. We
look forward to seeing Gyroscope fulfil its potential during the
next phase of its growth with Novartis, who have an extensive track
record in gene therapy and ophthalmology and are ideally placed to
complete the journey of taking this transformational therapy to
patients.
This transaction further demonstrates the success and pace of
the Syncona model to deliver for all our stakeholders. We have a
growing track record of founding and building globally competitive
life science companies with product-focused strategies in areas of
high unmet need. On closing this will mark the third sale of a
portfolio company over the last three years, generating total
potential proceeds, assuming full receipt of milestones from the
sale of Gyroscope, of up to GBP1.2 billion [8] , an aggregate 5.8
multiple of cost. We are excited that the proceeds will further
strengthen our capital base, enhance our growing portfolio
companies as they scale, and fund exciting new opportunities as
they emerge."
Transaction Terms
Novartis plans to finance the transaction with cash in hand.
Closing of the transaction is subject to customary closing
conditions including regulatory approvals. Until closing, Novartis
and Gyroscope Therapeutics will continue to operate as separate and
independent companies.
Advisers on transaction
Centerview Partners acted as exclusive Financial Adviser to
Gyroscope and Skadden, Arps, Slate, Meagher & Flom acted as
Legal Adviser to Gyroscope. Goldman Sachs International and Numis
acted as Corporate Brokers and Financial Advisers to Syncona.
[S]
This announcement includes information that is inside
information as defined in Article 7 of the Market Abuse Regulation
(EU) No.596/2014. The person responsible for arranging for the
release of this announcement on behalf of Syncona Ltd is Andrew
Cossar, General Counsel, SIML.
Copies of this press release and other corporate information can
be found on the company website at: www.synconaltd.com
Forward-looking statements - this announcement contains certain
forward-looking statements with respect to the portfolio of
investments of Syncona Limited. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements. In particular, many companies
in the Syncona Limited portfolio are conducting scientific research
and clinical trials where the outcome is inherently uncertain and
there is significant risk of negative results or adverse events
arising. In addition, many companies in the Syncona Limited
portfolio have yet to commercialise a product and their ability to
do so may be affected by operational, commercial and other
risks.
Enquiries
Syncona Ltd
Natalie Garland-Collins / Fergus Witt
Tel: +44 (0) 7714 916615
FTI Consulting
Ben Atwell / Tim Stamper
Tel: +44 (0) 20 3727 1000
About Syncona
Syncona's purpose is to invest to extend and enhance human life.
We do this by founding and building companies to deliver
transformational treatments to patients in areas of high unmet
need.
Our strategy is to found, build and fund companies around
exceptional science to create a diversified portfolio of 15-20
globally leading healthcare businesses for the benefit of all our
stakeholders. We focus on developing treatments for patients by
working in close partnership with world-class academic founders and
management teams. Our balance sheet underpins our strategy enabling
us to take a long-term view as we look to improve the lives of
patients with no or poor treatment options, build sustainable life
science companies and deliver strong risk-adjusted returns to
shareholders.
[1] FX rates taken at 21 December 2021
[2] Syncona holding of Gyroscope is 48.5% on a fully diluted
basis; initial proceeds to Syncona include Syncona's share of the
estimated $46.5m of net cash within Gyroscope and also take into
account the net exercise of options/incentive shares in
Gyroscope
[3] Uplift taken as at 21 December 2021 to 30 September 2021
holding value
[4] On total upfront proceeds (including net cash), calculated
as at 21 December 2021
[5] See footnote 4
[6] Includes total upfront proceeds (including net cash) and
risk adjusted and discounted valuation of the milestone
payments
[7] On total upfront proceeds (including net cash) and risk
adjusted and discounted valuation of the milestone payments,
calculated as at 21 December 2021
[8] Assuming full receipt of milestones from the sale of
Gyroscope. On closing of the transaction, the three sales will have
generated cash proceeds of GBP940 million, at an aggregate 4.6
multiple of cost
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