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Highlights
- Investment firm Syncona Ltd is selling its portfolio investment company Gyroscope Therapeutics Holdings plc to Novartis AG.
- The deal has been agreed for a total value of £1.1 billion on a cash and debt-free basis.
- The transaction will give the company a 3.0x return on its original investment of £113 million.
FTSE250 listed investment firm Syncona Ltd (LON: SYNC), which specialise in healthcare and life science investment, is going to sell its portfolio investment company Gyroscope Therapeutics Holdings Plc to Novartis, a global healthcare company. The deal has been agreed for a total value of £1.1 billion on a cash and debt-free basis. However, the deal payment will be made in two tranches with an upfront cash payout of £604 million. The remaining £528 million will be released upon achieving certain milestones like successful clinical development and regulatory approvals.
Gyroscope Therapeutics and the deal
Gyroscope Therapeutics was co-founded by Syncona Ltd in 2016. It is engaged in the research and development of gene therapies. The company which employs close to 200 people is a global leader in ocular gene treatments and at present is taking out clinical trials for its different treatments.
Syncona Ltd is expected to receive cash proceeds of £334 million for its stake in Gyroscope Therapeutics. The transaction will give the company a 3.0x return on its original investment of £113 million and a £180 million rise compared to the previous valuation. In addition, the deal is expected to give a further £255 million of cash proceeds upon achieving certain milestones, which will lead to 5.2 multiples on its original investment. Also, the company is set to receive a low single-digit royalty payout after the successful commercialisation of Gyroscope’s gene therapies treatment.
The upfront proceeds, when received, will increase the company’s capital pool, which can be used for future investment in new companies and startups.
Syncona’s half-year performance
Syncona Ltd is an investment fund that invests in different companies, from healthcare and life science companies. It builds and funds different companies and aims to create a portfolio of 15-20 leading healthcare companies which will deliver a high return on investment for its stakeholders.
The company reported a net asset of £1,152.8 million for the six months ended 30 September 2021. Many of its portfolio companies are currently making good progress in pre-clinical and clinical trials. However, the total NAV return of Syncona was down by 11.4%, mainly due to a decline in the share price of two listed portfolio companies.
Should you invest in the stock?
The company primarily focuses on investment in new-age companies that are not listed on the exchange and are expected to grow substantially in future. Hence, it is most suitable for risk-taking investors. Also, investors who are looking for investment in new companies from the healthcare segment can consider the stock, through further research before investing is required.
Stock price performance
(Image Source: Refinitiv)
Syncona’s stock closed at GBX 219.00, up by 3.79% on 23 December 2021 with a market cap of £1,406.81 million as of 23 December 2021. The 52-week high for the stock is GBX 272.49.
