Syncona
Hosking Partners is a London boutique founded in 2013 by Jeremy Hosking, a portfolio manager at Marathon Asset Management for over 25 years. It runs a single global equity strategy built on the capital-cycle, supply-side approach — contrarian, long-term, and unusually diversified (350+ holdings) under a multi-counsellor model, managing around $5.5bn.
In plain words
This analysis explains why Syncona, a biotech investment company, is a good bet right now. Unlike normal funds that must return money after 10 years, Syncona has permanent capital from the Wellcome Trust, so it can wait for drug research to pay off. Its stock trades at a 47% discount to its assets' actual value, but the author thinks that's a buying opportunity. Biotech M&A is picking up, and three of Syncona's late-stage drugs are about to release key data, likely attracting big pharma buyers. The author argues against selling assets cheap now, saying patience will be rewarded.
Hosking Partners argues that the returns from biopharmaceutical venture capital are concentrated in the late-stage pre-commercialization phase, making it difficult for traditional 10-year fund structures to cover the long cycles of early-stage investments. Syncona, benefiting from the permanent capi
Theme and Background
This chapter discusses the structural characteristic of biopharmaceutical venture capital returns concentrating in the pre-commercialization late-stage phase, and the mismatch between the traditional 10-year VC fund cycle and the long development cycle of early-stage R&D. The market backdrop is the significant industry downturn following the post-pandemic retreat of biotech capital and rising interest rates. From a capital cycle analysis perspective, Hosking Partners believes that Syncona’s permanent capital structure offers unique investment value in this environment.
Core Thesis
The author’s central judgment is: Syncona, by virtue of the permanent capital structure granted by Wellcome Trust, has gained a structural advantage over traditional VC funds, enabling it to acquire low-cost assets at early stages and hold them until exit. The author emphasizes that as M&A and IPO activity in the biotech sector is currently rebounding, key data readouts from three of Syncona’s late-stage assets are imminent, positioning them as acquisition targets for large pharma companies.
Contrarian view: While most investors grow impatient with Syncona’s wide discount, the author has been steadily increasing their position and strongly opposes breaking up or selling assets at a discount at the cycle trough. The author believes that management’s choice to preserve portfolio value rather than compromise with short-term investors is the correct long-term strategy.
Key Arguments and Data
- Timing mismatch in returns: Successful biopharma exits mostly occur in the few years before commercialization, with returns concentrated in the later stages of VC investment, while the 10-year fund cycle can hardly cover the uncertain long duration of early-stage R&D.
- Syncona’s NAV performance: From March 2021 to March 2025, Syncona’s NAV fell from 193.9p to 170.9p, a decline of only 12%; over the same period, the XBI biotech index fell 60% from its January 2021 peak and experienced a three-year stagnation.
- Discount and share price performance: When the author first invested, the share price discount was approximately 30%; the discount later widened to as much as 55% (2024 trough). As of May 2026, the discount remains approximately 47% (market cap of £560 million vs. Dec-25 NAV of £1,058 million).
- Sector recovery signals: The XBI has risen 62% over the past year (approximately 70% from its June 2024 low), though it remains about 15% below its 2021 peak. Biopharma M&A transaction values in 2025 have increased significantly compared to the previous five years.
- Asset structure: Among Syncona’s 15 portfolio companies, 85% are clinical-stage assets.
Syncona’s share price fell from a 2021 baseline of 100 to a 2025 low of about 35, then recovered to 40, while its NAV remained stable in the 80–100 range, significantly outperforming the share price performance.
| Indicator | Syncona NAV | XBI Biotech Index |
|---|---|---|
| March 2021 / January 2021 peak | 193.9p | Peak high |
| March 2025 / cycle trough | 170.9p | Down 60% |
| Change over period | -12% | -60% |
Companies/Assets Involved
- Syncona (target company, bullish): The author began investing in 2023 and has been increasing their position, believing its structural advantages are irreplicable. The author supports management’s refusal to sell at the trough and voted in favor of the new investment policy (the first £250 million of exit proceeds returned to shareholders, after which the plan to rebuild a portfolio of 25 companies resumes).
- Wellcome Trust (significant shareholder): Holds approximately 30% of shares and supported the strategy of preserving portfolio value during the strategic review.
- XBI ETF (market benchmark): Used as an indicator of the biotech sector cycle; its 62% annual gain is seen as a signal of sector recovery.
Investment Implications
The author believes that Syncona’s current 47% discount provides a significant margin of safety, and that clinical data readouts from three late-stage assets over the next two years will attract acquisition interest from large pharma companies. For investors, this implies:
- Opportunity for discount narrowing over time: If asset value is confirmed through exits, the discount is likely to shrink.
- Alignment of management incentives: The new LTIP (15% outperformance fee, threshold of £1.2 billion in exit proceeds — twice the current market cap) ties management’s interests to maximizing long-term value.
- Cyclical window: The recovery in M&A and IPO activity is a leading indicator of NAV improvement; the current juncture favors holding rather than selling.