Silence Therapeutics Reports Half-Year 2021 Results

-    Full enrollment achieved for four cohorts of the APOLLO study of SLN360 in healthy individuals living with high levels of lipoprotein(a)

-    Silence to host R&D Day in New York City on October 21, 2021

 

August 12, 2021

LONDON, Silence Therapeutics plc, AIM: SLN and Nasdaq: SLN ("Silence" or "the Company"), a leader in the discovery, development and delivery of novel short interfering ribonucleic acid (siRNA) therapeutics for the treatment of diseases with significant unmet medical need, today announced results for its half-year ended June 30, 2021.

Mark Rothera, President and CEO of Silence Therapeutics, commented: "The first half of 2021 was marked by strong execution, highlighted by the first clinical data from our proprietary mRNAi GOLD™ platform that successfully translated results from pre-clinical models into humans. In addition to achieving positive clinical data from our platform, we started dosing patients in two wholly owned programs and added two new targets to our partnered pipeline. The progress we made across both our proprietary and partnered pipelines underscores our firm commitment to maximize the substantial opportunity of our mRNAi GOLD™ platform and enable 2-3 INDs per year beginning in 2023."

"Looking ahead, we have now fully enrolled four cohorts of the APOLLO study of SLN360 in healthy individuals living with high levels of Lp(a) and we anticipate topline data in the first quarter of 2022. We look forward to discussing the progress of our SLN360 and SLN124 programs as well as our broader pipeline in more detail during our R&D Day on Thursday, October 21^st in New York City." 

Half-Year 2021 and Recent Corporate Highlights

Proprietary Pipeline

SLN360

·      Started dosing patients and completed enrollment in four cohorts of the APOLLO phase 1 single-ascending dose study of SLN360 in healthy individuals living with high levels of lipoprotein(a), or Lp(a), a genetically determined cardiovascular risk factor affecting around 20% of the world's population. The APOLLO study protocol includes the option to add a fifth cohort if the Company wants to further evaluate the clinical profile of SLN360.

SLN124

·      Announced positive topline results from the GEMINI healthy volunteer study of SLN124, an siRNA targeting TMPRSS6, a gene that limits the liver's ability to produce the body's central iron regulator - hepcidin. The 8-week, randomized, double-blind, placebo-controlled, single-ascending dose study of SLN124 demonstrated safety and proof-of-mechanism to support the ongoing SLN124 GEMINI II phase 1 program in patients with thalassemia and myelodysplastic syndrome (MDS). Data from the healthy volunteer study showed:

o  All doses of SLN124 (1.0, 3.0 and 4.5 mg/kg doses) were safe and generally well-tolerated with no serious or severe treatment emergent adverse events (TEAEs) or TEAEs leading to withdrawal.

o  Following a single dose, SLN124 increased average hepcidin up to approximately four-fold and reduced serum iron by around 50%.

o  Effects on hepcidin and iron appear to be dose dependent and were still observed at the end of the 8-week study at all dose levels, indicating a sustained and long duration of action.

·      Started dosing patients in the GEMINI II phase 1 single-ascending dose studies of SLN124 for thalassemia and MDS.

·      Presented preclinical data highlighting the potential of SLN124 to address a range of hematological conditions characterized by iron dysregulation at the European Haematology Association (EHA) Congress.

o  A poster entitled, Non-clinical safety of SLN124, a GalNAc conjugated 19-mer double stranded siRNA targeting TMPRSS6 facilitating evaluation in clinical studies, showed the strong preclinical safety profile of SLN124 that is consistent with clinical results reported from the GEMINI healthy volunteer study.

o  A second poster entitled, Anti-TMPRSS6 RNAi Therapy as a Novel Treatment Option for Polycythaemia Vera (PV), highlighted the potential for SLN124 to address broader hematological diseases by controlling hepcidin expression.

Partnered Pipeline

·      Started work on a second undisclosed target with AstraZeneca and are on-track to initiate work on a total of five disease targets within the first three years of the siRNA collaboration for cardiovascular, renal, metabolic, and respiratory diseases.

·      Initiated work with Mallinckrodt on a third and final target covered under the collaboration for complement-mediated diseases and began IND-enabling studies for SLN501, an siRNA targeting C3.

New Appointments

·      Appointed Dr. Michael H. Davidson to the Silence Board of Directors as a Non-Executive Director and Craig Tooman to the Executive Leadership Team as Chief Financial Officer.

Upcoming Events and Anticipated Data Milestones

·      Silence will host an R&D day in New York City on the morning of Thursday, October 21, 2021. The event will be webcasted live for those unable to attend in-person. More information will be made available via press release closer to the date.

·      Additional results from the GEMINI healthy volunteer study of SLN124 will be presented at an upcoming medical congress, pending abstract acceptance.

·      Topline data from the APOLLO phase 1 single-ascending dose study of SLN360 in people with high Lp(a) is now anticipated in the first quarter of 2022 versus the second half of 2021. The Company remains on-track to start phase 2 development in the second half of 2022 pending regulatory discussions.

·      Topline data from the GEMINI II phase 1 single-ascending dose studies of SLN124 in people with thalassemia and MDS is now anticipated in the third quarter of 2022 versus the second half of 2021 primarily due to COVID-19.

Financial Highlights for the Half-Year Ended June 30, 2021

Craig Tooman, CFO of Silence Therapeutics, commented: "During the first half of 2021, we were successful in completing an oversubscribed £30.8 million private placement led by top-tier U.S. institutional healthcare funds.  We further improved our cash position with the receipt of approximately £33.7 million of non-dilutive capital from our collaboration partners.  The £81.2m in cash, cash equivalents, and term deposits as of June 30, 2021 positions us well to advance our proprietary technology platform."

·      Raised £30.8m net proceeds from an oversubscribed private placement led by top-tier U.S. institutional healthcare funds.  

·      Revenues from collaborations were £5.8 million compared to £1.1 million in the first half of 2020, primarily driven by the AstraZeneca and Mallinckrodt collaborations.

·      Research and development (R&D) expenses increased to £15.6m compared to £10.2m in the first half of 2020. The increase is primarily a result of investment in experienced personnel and clinical trial expenses related to the advancement of our proprietary programs, SLN360 and SLN124. 

·    Administrative expenses increased to £9.1m compared to £5.2m in the first half of 2020, primarily due to increased investment in support activities for pipeline growth, as well as requirements of being a public company dual listed on AIM and Nasdaq.

·    As of June 30, 2021, we had cash, cash equivalents and term deposits of £81.2 million, compared to approximately £37.4 million at the end of December 31, 2020.

 

Enquiries:

 

Silence Therapeutics plc Gem Hopkins, Head of IR and Corporate Communications ir@silence-therapeutics.com	Tel:  +1 (646) 637-3208
Investec Bank plc (Nominated Adviser and Broker) Daniel Adams/Gary Clarence	Tel: +44(0) 20 7597 5970
European PR Consilium Strategic Communications Mary-Jane Elliott/ Angela Gray / Chris Welsh silencetherapeutics@consilium-comms.com	Tel: +44(0) 20 3709 5700

 

About Silence Therapeutics

Silence Therapeutics is developing a new generation of medicines by harnessing the body's natural mechanism of RNA interference, or RNAi, to inhibit the expression of specific target genes thought to play a role in the pathology of diseases with significant unmet need. Silence's proprietary mRNAi GOLD™ platform can be used to create siRNAs (short interfering RNAs) that precisely target and silence disease-associated genes in the liver, which represents a substantial opportunity. Silence's wholly owned product candidates include SLN360 designed to address the high and prevalent unmet medical need in reducing cardiovascular risk in people born with high levels of lipoprotein(a) and SLN124 designed to address iron-loading anemia conditions. Silence also maintains ongoing research and development collaborations with AstraZeneca, Mallinckrodt Pharmaceuticals, and Takeda, among others. For more information, please visit https://www.silence-therapeutics.com/.

 

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other securities laws, including with respect to the Company's clinical and commercial prospects and the anticipated timing of data reports from the Company's clinical trials. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions.  Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including those risks identified in the Company's most recent Admission Document and its amended Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 29, 2021. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

 

 

Conference Call

 

Company management will host a live webcast to discuss its half-year 2021 results and recent business performance today, August 12, 2021 at 8:00 a.m. EDT / 13:00 BST.

 

Details of the webcast and conference call:

 

Dial-in details:

New York, United States: +1 646 741 3167

United States: 1 877 870 9135

London, United Kingdom: +44 2071 928338

United Kingdom: 08002796619

 

Passcode: 9869230

 

Webcast link: https://edge.media-server.com/mmc/p/g85x6hug

 

 

 

 

Chief Executive Officer's Report

 

In January I said this would be a transformational year for Silence. Within five months we delivered the first clinical data from our proprietary mRNAi GOLD™ platform that successfully translated the results of pre-clinical models into humans. I also set out our path to value creation. We must maximize the substantial opportunity of our mRNAi GOLD™ platform to target disease associated genes in the liver - rapidly and effectively - through a combination of building and advancing our proprietary as well as our partnered pipelines. We made strong progress advancing both in the first half of the year and remain on-track to deliver 2-3 INDs per year from 2023.

 

Delivering our strategy

 

In addition to achieving positive clinical data with our proprietary mRNAi GOLD™ platform, we started dosing patients in two wholly owned phase 1 clinical programs - the APOLLO single-ascending dose study of SLN360 for cardiovascular disease due to high levels of lipoprotein(a), or Lp(a), and the GEMINI II single-ascending dose studies of SLN124 for rare iron loading anemia conditions, thalassemia and myelodysplastic syndrome (MDS).

 

We also advanced our partnered pipeline. We started work on a second undisclosed target with AstraZeneca and are on-track to initiate work on a total of five targets within the first three years of our collaboration for cardiovascular, renal, metabolic, and respiratory diseases. Under our Mallinckrodt collaboration for complement-mediated diseases, we started work on a third target and initiated IND-enabling studies for the complement pathway C3 targeting program.

 

We achieved all this despite the ongoing challenges of COVID-19, which underscores the focus and commitment of our team to control what we can control so we can maximize our mRNAi GOLD™ platform and ultimately bring life-changing medicines to patients as quickly as possible.

 

Executing our clinical pipeline

 

While thousands of clinical trials have been substantially delayed because of COVID-19, with slow trial recruitment being a significant cause, we have been successful in implementing a number of mitigation strategies to minimize this impact.

 

This has worked particularly well for the SLN360 single-ascending dose study where we started dosing patients in February and have now fully enrolled four cohorts at US, European and Australian sites. The protocol has a post-dosing follow-up period of around five months to assess duration of action. We now anticipate reporting topline data from the four cohorts in the first quarter of 2022 versus the second half of 2021. Pending regulatory discussions, we remain well positioned to start phase 2 development in the second half of next year.

 

The impact of COVID-19 on the SLN124 program for thalassemia and MDS is more complex. We are thrilled that we were able to report positive topline data in the SLN124 healthy volunteer study in May. In addition to being the first clinical data from our mRNAi GOLD™ platform, the study demonstrated safety and proof-of-mechanism to support the ongoing SLN124 single-ascending dose studies in patients with thalassemia and MDS. While it is imperative that we address rare diseases in developing countries where there is such a high unmet need, these are also the areas hardest hit by COVID-19. For the SLN124 patient studies, we selected multiple sites across Asia, Middle East and Europe where thalassemia and MDS are most prevalent, however, some key sites have not yet been activated due to COVID-19 surges. We are uncertain today how the situation will evolve and therefore need to be more conservative with our timelines. We are now guiding that both of  the SLN124 single-ascending dose studies in thalassemia and MDS will readout in third quarter of 2022 versus the second half of 2021.  We are looking to add further sites as a contingency and continuing to work closely with local patient advocacy organizations to inform and educate patients about the trials to expedite the process.

 

Beyond our evaluation of SLN124 for thalassemia and MDS, the healthy volunteer study showed the potential for SLN124 to become a franchise that is much broader than these two indications. We learned that SLN124 is safe and effective in increasing the expression of hepcidin - which is the master regulator of iron balance in the body. Through this approach, we believe SLN124 has the potential to address a range of hematological conditions characterized by iron imbalance.

 

We look forward to discussing the continued progress of our SLN360 and SLN124 clinical programs as well as our broader pipeline in more detail during our R&D Day on Thursday, October 21^st in New York City.  We will have a live webcast of the meeting for those unable to attend in-person. 

 

Funded for growth

 

The first half of the year highlighted the value of leveraging a hybrid business model. In addition to completing an oversubscribed £30.8m private placement led by top-tier U.S. institutional healthcare funds, we received £33.7m in non-dilutive capital from our collaboration partners. We ended June with £81.2m in cash, cash equivalents and term deposits, positioning us well to advance our clinical pipeline and deliver on our goal of 2-3 INDs per year beginning in 2023.

 

Achieving our mission

 

We have never been better placed to deliver on our mission to transform the lives of patients around the world through our precision engineered medicines and drive positive change for the communities around us. Thank you to our staff for their hard work, particularly through the COVID-19 era, and to our shareholders for your continued support. I look forward to updating you on the further implementation of our strategy in due course.

 

 

Mark Rothera

 

Chief Executive Officer

 

 

 

 

 

 

Condensed consolidated income statement (unaudited)

 

		Six months ended								Year ended
		June 30, 2021				June 30, 2020				December 31, 2020
£000s (except per share information)
Revenue			5,845				1,146				5,479
Cost of sales			(3,362	)			-				(3,762	)
Gross profit			2,483				1,146				1,717
Research and development costs			(15,625	)			(10,179	)			(20,209	)
Administrative expenses			(9,126	)			(5,160	)			(13,983	)
Other (losses)/gains - net			-				-				(3,372	)
Operating loss			(22,268	)			(14,193	)			(35,847	)
Finance and other expenses			(312	)			-				(323	)
Finance and other income			2				864				129
Loss for the period before taxation			(22,578	)			(13,329	)			(36,041	)
Taxation			2,530				2,300				3,494
Loss for the period after taxation			(20,048	)			(11,029	)			(32,547	)
Loss per ordinary equity share (basic and diluted)		(22.8) pence				(13.7) pence				(39.8) pence

 

 

Condensed consolidated statement of comprehensive income (unaudited)

 

		Six months ended								Year ended
		June 30, 2021				June 30, 2020				December 31, 2020
		£000s				£000s				£000s
Loss for the period after taxation			(20,048	)			(11,029	)			(32,547	)
Other comprehensive expense, net of tax:
Items that may subsequently be reclassified to profit and    loss:
Foreign exchange differences arising on consolidation of foreign    operations			(452	)			585				472
Total other comprehensive income/(expense) for the period			(452	)			585				472
Total comprehensive expense for the period			(20,500	)			(10,444	)			(32,075	)

 

 

Condensed consolidated balance sheet (unaudited)

 

		June 30, 2021				June 30, 2020				December 31, 2020
		£000s				£000s				£000s
Non-current assets
Property, plant and equipment			1,308				832				1,127
Goodwill			7,763				8,237				8,125
Other intangible assets			7				28				17
Financial assets at amortized cost			301				293				303
			9,379				9,390				9,572
Current assets
Cash and cash equivalents			71,238				10,322				27,449
Derivative financial instrument			-				-				1,492
Financial assets at amortized cost - term deposit			10,000				40,021				10,000
R&D tax credit receivable			6,066				5,360				3,536
Other current assets			3,604				2,067				4,616
Trade receivables			438				32,927				29,306
			91,346				90,697				76,399
Non-current liabilities
Contract liabilities			(62,294	)			(63,230	)			(51,337	)
			(62,294	)			(63,230	)			(51,337	)
Current liabilities
Contract liabilities			(6,717	)			(4,507	)			(17,042	)
Trade and other payables			(7,868	)			(4,711	)			(8,192	)
Lease liability			(179	)			(15	)			(341	)
			(14,764	)			(9,233	)			(25,575	)
Net assets			23,667				27,624				9,059
Capital and reserves attributable to the owners of the parent
Share capital			4,487				4,141				4,165
Capital reserves			221,097				184,065				186,891
Translation reserve			1,766				2,331				2,218
Accumulated losses			(203,683	)			(162,913	)			(184,215	)
Total shareholders equity			23,667				27,624				9,059

 

 

Condensed consolidated statement of changes in equity (unaudited)

 

Six Months ended June 30, 2020 (unaudited)

 

		Share Capital				Capital Reserves				Translation Reserve				Accumulated Losses				Total
		£000s				£000s				£000s				£000s				£000s
At January 1, 2020			3,919				167,243				1,746				(151,999	)			20,909
Recognition of share-based payments			-				1,353				-				-				1,353
Options exercised in the period			-				(115	)			-				115				-
Proceeds from shares issued			222				15,584				-				-				15,806
Transactions with owners recognised directly    in equity			222				16,822				-				115				17,159
Loss for the period			-				-				-				(11,029	)			(11,029	)
Other comprehensive income																			-
Foreign exchange differences arising on    consolidation of foreign operations			-				-				585				-				585
Total comprehensive expense for the period			-				-				585				(11,029	)			(10,444	)
At June 30, 2020			4,141				184,065				2,331				(162,913	)			27,624

 

 

Six Months ended June 30, 2021 (unaudited)

 

		Share Capital				Capital Reserves				Translation Reserve				Accumulated Losses				Total
		£000s				£000s				£000s				£000s				£000s
At January 1, 2021			4,165				186,891				2,218				(184,215	)			9,059
Recognition of share-based payments			-				4,206				-				-				4,206
Options exercised in the period			-				(580	)			-				580				-
Proceeds from shares issued			322				30,580				-				-				30,902
Transactions with owners recognised directly    in equity			322				34,206				-				580				35,108
Loss for the period			-				-				-				(20,048	)			(20,048	)
Other comprehensive expense																			-
Foreign exchange differences arising on    consolidation of foreign operations			-				-				(452	)			-				(452	)
Total comprehensive expense for the period			-				-				(452	)			(20,048	)			(20,500	)
At June 30, 2021			4,487				221,097				1,766				(203,683	)			23,667

 

Condensed consolidated statement of cash flows (unaudited)

 

		Six months ended								Year ended
		June 30, 2021				June 30, 2020				December 31, 2020
		£000s				£000s				£000s
Cash flow from operating activities
Loss before tax			(22,578	)			(13,329	)			(36,041	)
Depreciation charges			241				204				476
Amortization charges			10				10				20
Charge for the period in respect of share-based payments			4,206				1,353				4,395
Net foreign exchange loss			-			-					4,864
(Gain) on derivative financial instrument			-			-					(1,492	)
Finance and other expenses			312			-					323
Finance and other income			(2	)			(865	)			(129	)
(Gain) on disposal of property, plant, and equipment			69			-					(3	)
Decrease/(increase) in trade and other receivables			28,868				(32,923	)			(34,166	)
Decrease/(increase) in other current assets			1,012				(1,182	)			(3,731	)
Decrease in current financial assets at amortized cost - other			-				1				1
(Decrease)/increase in trade and other payables			(323	)			(2,177	)			1,303
Decrease in derivative financial instrument			1,492
Increase in contract liabilities			631				49,744				50,386
Cash provided/(spent) on operations			13,938				836				(13,794	)
R&D tax credits received			-				-				3,018
Net cash inflow/(outflow) from operating activities			13,938				836				(10,776	)
Cash flow from investing activities
Redemption/(purchase) of financial assets at amortized cost - term deposits			2				(20,021	)			10,000
Interest received			2				63				129
Purchase of property, plant, and equipment			(453	)			(394	)			(511	)
Purchase of intangible assets		-					(3	)			(3	)
Proceeds from sale of property, plant, and equipment		-					-				3
Net cash (outflow)/inflow from investing activities			(449	)			(20,355	)			9,618
Cash flow from financing activities
Repayment of lease liabilities			(616	)			(272	)			(402	)
Proceeds from issue of share capital			30,902				15,806				15,830
Net cash inflow from financing activities			30,286				15,534				15,428
Increase/(decrease) in cash and cash equivalents			43,775				(3,985	)			14,270
Cash and cash equivalents at start of the period			27,449				13,515				13,515
Effect of exchange rate fluctuations on cash and cash equivalents held			14				792				(336	)
Cash and cash equivalents at end of the period			71,238				10,322				27,449

 

Results of Operations

Comparison of the Six Months Ended June 30, 2021 and 2020

 

Revenue

Revenue for the six months ended June 30, 2021 was £5.8 million (six months ended June 30, 2020: £1.1 million). The increase was primarily due to the AstraZeneca and Mallinckrodt collaborations which delivered £1.3 million (six months ended June 30, 2020: £nil) and £3.8 million (six months ended June 30, 2020: £0.5 million) of revenue respectively in 2021. 

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2021 and 2020, based on their classification as direct or indirect.

 

		Six months ended
		June 30, 2021				June 30, 2020
		£000s				£000s
Research and development expenses
Direct			14,276				8,182
Indirect			1,349				1,997
Total			15,625				10,179

 

Research and development expenses for the six months ended June 30, 2021 were £15.6 million as compared to £10.2 million for the six months ended June 30, 2020, an increase of £5.4 million. Direct research and development expenses increased by £6.1 million, while indirect expenses decreased by £0.6 million. The largest contributor to the increase in R&D spend is R&D personnel costs (including payroll, consultants, travel and recruitment fees), which increased from £3.1 million in the first six months of 2020 to £5.4 million in the first six months of 2021, as well as clinical trial and clinical material expenses relating to the SLN124 and SLN360 proprietary programs. 

Administrative Expenses

Administrative expenses were £9.1 million for the six months ended June 30, 2021 as compared to £5.2 million for the six months ended June 30, 2020. Administrative expenses consist of personnel costs, allocated expenses and other expenses for outside professional services, including legal, audit, tax and accounting services and public relations and investor relations services. Personnel costs consist of salaries, bonuses, benefits, recruitment costs and share-based payment expense for personnel in executive, finance, business development and other support functions. Other administrative expenses include office space-related costs not otherwise allocated to research and development expense, costs of our information systems and costs for compliance with the day-to-day requirements of being a listed public company. We anticipate that our administrative expenses will continue to increase in the future to support our continued research and development activities of our product candidates.

Finance and Other Income (Expense)

Finance income includes:

·      interest earned on our cash, cash equivalents and short-term deposits was £2k and £67k for the six months ended June 30, 2021 and 2020, respectively. The decrease is primarily attributable to fewer instances of funds being placed on term deposits through the first half of 2021 due to lower available cash balances and also due to a general decrease in interest rates being offered by Deposit Taking Institutions.

·      net foreign exchange gains of £802k and £nil for the six months ended June 30, 2021 and 2020, respectively; foreign exchange gains relate to cash held in foreign currencies.

Finance expense for the six months ended June 30, 2021 was £312k (six months ended June 30, 2020: £nil), attributable to net foreign exchange losses incurred primarily from foreign currency denominated bank accounts.

Taxation

We have recognised U.K. research and development tax credits of £2.3 million for the six months ended June 30, 2021 as compared to £2.3 million for the six months ended June 30, 2020. We expect to receive the amount in respect of the full year 2020 in 2021.

Liquidity and Capital Resources

Overview

Since our inception, we have incurred significant operating losses. We anticipate that we will continue to incur losses for at least the next several years. We expect that our research and development and administrative expenses will increase in connection with conducting clinical trials and seeking marketing approval for our product candidates, as well as costs associated with operating as a public company. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity financings, debt financings, research funding, collaborations, contract and grant revenue or other sources.

As of June 30, 2021, we had cash, cash equivalents and term deposits of £81.2 million (June 30, 2020: £50.3 million).

We do not currently have any approved products and have never generated any revenue from product sales or otherwise. To date, we have financed our operations primarily through the issuances of our equity securities and from upfront, milestone and research payments under collaboration agreements with third parties.

We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than leases.

Cash Flows

The following table summarizes the results of our cash flows for the six months ended June 30, 2021 and 2020.

 

		Six months ended
		June 30, 2021				June 30, 2020
		£000s				£000s
Net cash inflow from operating activities			13,938				836
Net cash (outflow) from investing activities			(449	)			(20,355	)
Net cash inflow from financing activities			30,286				15,534
Increase/(decrease) in cash and cash equivalents			43,775				(3,985	)

 

Operating activities

The increase in net cash generated from operating activities of £13.5 million for the six months ended June 30, 2021 from net cash inflow of £0.8 million for the six months ended June 30, 2020 was primarily due to the $40 million (£30.8 million) upfront payment from AstraZeneca in the first half of 2021 partially offset by higher research, development and administrative costs, share based payments charge, increase in contract liabilities and a decrease in trade & other receivables.

Investing activities

Net cash outflow from investing activities was £0.5 million for the six months ended June 30, 2021, compared to £20.4 outflow for the six months ended June 30, 2020 which was primarily due to the purchase of short-term deposits. Short-term deposits for the six months ended June 30, 2021 were £10.0 million.

Financing activities

The increase in net cash from financing activities to £30.7 million for the six months ended June 30, 2021 (six months ended June 30, 2020: £15.5 million), was due to the proceeds from the issuance of share capital. The only other financing activity for the six months ended June 30, 2021 £0.2 million (six months ended June 30, 2020: £0.3 million) was the repayment of lease liabilities.

 

Notes to the financial statements

Six months ended June 30, 2021

1.1 General information

Silence Therapeutics plc and its subsidiaries (together the 'Group') are primarily involved in the discovery, delivery and development of RNA therapeutics. Silence Therapeutics plc, a public company limited by shares registered in England and Wales, with company number 02992058, is the Group's ultimate parent Company. The Company's registered office is 27 Eastcastle Street, London, W1W 8DH and the principal place of business is 72 Hammersmith Road, London, W14 8TH.

 

These condensed interim financial statements were approved for issue on August 12, 2021.

 

These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended December 31, 2020 were approved by the board of directors on March 31, 2021 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

 

The financial statements have not been reviewed or audited.

 

1.2 Basis of preparation

 

On December 31, 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board.  Silence Therapeutics Plc transitioned to UK-adopted international accounting standards in its consolidated financial statements on January 1, 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework.

 

This condensed consolidated interim financial report for the half-year reporting period ended June 30, 2021 has been prepared in accordance with UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' (IAS 34)

 

The interim report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended December 31, 2020, which was prepared in accordance with "international accounting standards in conformity with the requirements of the Companies Act 2006".

 

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results might differ from these estimates.

 

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are disclosed in the 'Critical Accounting Policies, Judgments and Estimates' section on Page 20.

2. Going concern

The financial statements have been prepared on a going concern basis that assumes that the Group will continue in operational existence for the foreseeable future.

The 2020 coronavirus (COVID-19) pandemic became increasingly prevalent in Europe, the UK and the US where the Group's principal operations are conducted. Significant restrictions have now been imposed by the governments of those countries where the Group has operations, as well as the countries of external parties with which we conduct our business. In compliance with these restrictions, the Group and its employees have adapted to new working arrangements to ensure business continuity as far as is reasonably practicable in the short to medium term. This has so far proven to be effective, with Management maintaining a strong line of communication with all employees during this period.

The main risk posed to the Group by the pandemic is the potential slowing of Research & Development activities including possible knock-on delays in clinical trial data and sustained fixed costs during periods of relative inactivity. Whilst this would result in a lengthening of the Group's cash runway in the medium term, in the longer term these factors could limit the Group's ability to meet its corporate objectives. This risk is mitigated by the receipt of $60m (£47.9 million) of the upfront payments in respect of the AstraZeneca collaboration and the $45m (net of expenses approximately $42.0 million / £30.8 million) from the private placement, both of which significantly increase the Group's baseline cash runway.

Based on the current operating forecasts and plans and, considering the cash, cash equivalents and term deposit at June 30, 2021, the Directors are confident that the Group has sufficient funding for the foreseeable future and at least one year from the date of these condensed interim financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

3. Revenue

Revenue from collaboration agreements for the 6 months ended June 30, 2021 relates to the Research collaboration agreements the Group entered into with Mallinckrodt plc in July 2019, Takeda Pharmaceutical Company Limited in January 2020 and AstraZeneca plc in March 2020.

Revenue for the 6 months ended June 30, 2021 comprised £5,677k of Research collaboration income (6 months to June 30, 2020: £995k) and £168k of royalty income (6 months to June 30, 2020: £151k).

 

		Six months ended								Year ended
		June 30, 2021				June 30, 2020				December 31, 2020
		£000s				£000s				£000s
Revenue from Contracts with Customers
Research collaboration - Mallinckrodt plc			3,788				474				3,817
Research collaboration - Astra Zeneca			1,271				-				22
Research collaboration - Other			618				521				1,414
Research collaboration - total			5,677				995				5,253
Royalties			168				151				226
Total revenue from contracts with customers			5,845				1,146				5,479

 

Under our collaboration agreement with Mallinckrodt, we received an upfront cash payment of £16.4 million ($20 million) in 2019 and are eligible to receive specified development, regulatory and commercial milestone payments. We received milestone payments of £2.9 million or $4 million during the 6 months ended June 30, 2021. In addition to these payments, Mallinckrodt has agreed to fund some of our research personnel and preclinical development costs. We recognize the upfront payment, milestone payments, payments for personnel costs and other research funding payments over time, in accordance with IFRS 15. During the 6 months ended June 30,2021, we recognized a total of £3.8 million in revenue under this agreement.  

Under our collaboration agreement with AstraZeneca, we received an upfront cash payment of £17.1 million ($20m) in 2020 with a further amount of £30.8 million ($40 million) received in May 2021. We recognize the upfront payment and milestone payments over time, in accordance with IFRS 15. During the 6 months ended June 30, 2021, we recognized a total of £1.3m in revenue under this agreement.

We entered into a Technology Evaluation Agreement with Takeda on January 7, 2020 to explore the potential of our platform to generate siRNA molecules against a novel, undisclosed target controlled by Takeda.  Under our collaboration agreement, we received a milestone payment of £1.6 million ($2 million) during the year ended December 31, 2020. We recognize the milestone payments over time, in accordance with IFRS 15. Our activities under the Technology Evaluation Agreement were effectively complete as of June 30, 2021. We may negotiate to enter into an exclusive follow-on license and collaboration agreement covering the Takeda target at some point in the future.

4. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Board. The chief operating decision maker (CODM), who has been identified as the Chief Executive Officer responsible for allocating resources and assessing performance of the operating segments.

For the 6 months ended June 30, 2021 and 6 months ended June 30, 2020, the CODM determined that the Group had one business segment, the development of RNAi-based medicines. This is in line with reporting to senior management. The information used internally by the CODM is the same as that disclosed in the financial statements.

 

		U.K.				Germany				Total
		£000s				£000s				£000s
Non-current assets
As at December 31, 2020			689				8,883				9,572
As at June 30, 2020			458				8,932				9,390
As at June 30, 2021			571				8,808				9,379
Revenue analysis for the 6 months ended June 30, 2020
Research collaboration			995				-				995
Royalties			-				151				151
			995				151				1,146
Revenue analysis for the year ended December 31, 2020
Research collaboration			5,253				-				5,253
Royalties			-				226				226
			5,253				226				5,479
Revenue analysis for the 6 months ended June 30, 2021
Research collaboration			5,677				-				5,677
Royalties			-				168				168
			5,677				168				5,845

 

5. Loss per ordinary equity share (basic and diluted)

The calculation of the loss per share is based on the loss for the 6 months to June 30, 2021 after taxation of £20,048k (6 months ended June 30, 2020: loss of £11,029k) and on the weighted average ordinary shares in issue during the year of 88,121,772 (6 months ended June 30, 2020: 80,619,119).

The options outstanding at June 30, 2021 and June 30, 2020 are considered to be anti-dilutive as the Group is loss-making.

6. Goodwill

 

		June 30, 2021				June 30, 2020				December 31, 2020
		£000s				£000s				£000s
Balance at start of the period			8,125				7,692				7,692
Translation adjustment			(362	)			545				433
Balance at end of the period			7,763				8,237				8,125

 

7. Derivative financial instruments

Derivative financial instruments relate to an open forward currency contract measured at fair value through the income statement. The fair value was calculated from data sourced from an independent financial market data provider using mid-market-end-of-day data as of Close of Business date as December 31, 2020. The derivative contract in place at December 31, 2020 was closed out on May 28, 2021.

The fair value of the derivative is calculated based on level 2 inputs under IFRS 13.

 

June 30, 2021

June 30, 2020

December 31, 2020

£000s

£000s

£000s

Derivatives carried at fair value

-

-

1,492

 

The fair value of financial instruments that are not traded in active market, in the case an over-the-counter derivative, is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity specific estimates. As all significant inputs required to fair value an instrument are observable, this derivative financial instrument is included in level 2.

The specific valuation technique used to value this derivative is the present value of future cash flow based on the forward exchange rate relative to its value based on the year-end exchange rate.

The derivative fair value movement is disclosed in the Income Statement under "Other (losses)/gains - net". For the six month period to June 30, 2021 the gain on the derivative financial instrument (£1.02 million), which was closed out in May 2021, matched the related loss (£1.02 million) on the receivable, resulting in a net nil impact on the Income Statement.

8. Contract liabilities

Contract liabilities comprise entirely deferred revenue in respect of the Mallinckrodt, Takeda and AstraZeneca plc Research collaborations.  The current contract liabilities represent the amount of estimated revenue to be reported in the next 12 months related to amounts invoiced to our partners. The current and non-current contract liabilities include only recharge expenses and milestones achieved through June 30, 2021.

 

		June 30, 2021				June 30, 2020				December 31, 2020
		£000s				£000s				£000s
Contract liabilities:
Current			6,717				4,507				17,042
Non-current			62,294				63,230				51,337
Total contract liabilities			69,011				67,737				68,379
		Current				Non-current				Total
		£000s				£000s				£000s
Contract liabilities:
At January 1, 2020			2,478				15,515				17,993
Additions during period			3,024				47,715				50,739
Revenue unwound during period			(995	)			-				(995	)
At June 30, 2020			4,507				63,230				67,737
Additions during period			4,862				-				4,862
Revenue unwound during period			(4,220	)							(4,220	)
Program rephasing			11,893				(11,893	)			-
At December 31, 2020			17,042				51,337				68,379
At January 1, 2021			17,042				51,337				68,379
Additions during period			2,270				4,039				6,309
Revenue unwound during period			(5,677	)							(5,677	)
Program rephasing			(6,917	)			6,917				-
At June 30, 2021			6,717				62,294				69,011

 

 

9. Taxation

A £2.3 million current tax asset was recognised in respect of research and development tax credits in the six months ended June 30, 2021 (six months ended June 30, 2020: £2.3 million).  Additionally, the current tax asset expected to be received in respect of research and development tax credits for the year ended December 31, 2020 is £3.5 million.

10. Capital reserves

 

		Share premium account				Merger reserve				Share based payment reserve				Capital redemption reserve				Total
		£000s				£000s				£000s				£000s				£000s
At January 1, 2019			133,242				22,248				2,437				5,194				163,121
Shares issued			3,767																3,767
On options in issue during the year			1,141								584								1,725
On vested options lapsed during the year																			-
On options exercised during the year											(1,370	)							(1,370	)
Movement in the year			4,908				-				(786	)			-				4,122
At December 31, 2019			138,150				22,248				1,651				5,194				167,243
Shares issued			15,396																15,396
On options in issue during the year			188								4,395								4,583
On vested options lapsed during the year																			-
On options exercised during the year											(331	)							(331	)
Movement in the year			15,584				-				4,064				-				19,648
At December 31, 2020			153,734				22,248				5,715				5,194				186,891
Shares issued			32,585			-				-				-					32,585
On options in issue during the period		-				-					4,206			-					4,206
On vested options lapsed during the period		-				-				-				-					-
On options exercised during the period			442			-					(580	)		-					(138	)
Costs capitalised in respect of issuance of shares during the period			(2,447	)		-								-					(2,447	)
Movement in the period			30,580				-				3,626				-				34,206
At June 30, 2021			184,314				22,248				9,341				5,194				221,097

 

		June 30, 2021				June 30, 2020				December 31, 2020
		£000s				£000s				£000s
Authorised, allotted, called up and fully paid ordinary shares, par value £0.05			4,487				4,141				4,165
Number of shares in issue			89,735,448				82,826,259				83,306,259

 

The Group has only one class of share. All ordinary shares have equal voting rights and rank pari passu for the distribution of dividends.

 

On February 5, 2021 the Group announced a Private Placement of 2,022,218 of the Company's American Depositary Shares ("ADSs"), each representing three ordinary shares of 5 pence each in the capital of the Company ("Ordinary Shares"), at a price of US $22.50 per ADS, with new and existing institutional and accredited investors (the "Private Placement"). The aggregate gross proceeds of the Private Placement was US $45 million (approximately £33 million) before deducting approximately £2.3 million in placement agent fees and other expenses. The financing syndicate included Adage Capital Management LP, BVF Partners L.P., Consonance Capital, Great Point Partners, LLC, and other investors.

 

The Group intends to use the net proceeds from the Private Placement primarily to support development of the Group's pipeline based on its mRNAi GOLD™ (GalNAc Oligonucleotide Discovery) Platform, and for general corporate purposes.

 

Details of the shares issued by the Company during the six months ended 30 June 2020 are as follows:

 

Number of shares in issue at January 1, 2020			78,370,265
Shares issued during the period			4,276,580
Options exercised at £0.05			46,666
Options exercised at £0.85			56,470
Options exercised at £1.00			30,000
Options exercised at £1.90			46,278
Number of shares in issue at June 30, 2020			82,826,259
Shares issued during the period			-
Options exercised at £0.05			450,000
Options exercised at £0.85			-
Options exercised at £1.00			30,000
Options exercised at £1.90			-
Number of shares in issue at December 31, 2020			83,306,259
Shares issued during the period			6,066,654
Options exercised at £0.05			59,114
Options exercised at £0.60			80,302
Options exercised at £1.06			25,000
Options exercised at £1.90			198,119
Number of shares in issue at June 30, 2021			89,735,448

 

11. Related party transactions

Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

During the six months to June 30, 2021 the Group paid £nil (six months to June 30, 2020: £75k) to Gladstone Partners Limited, a company controlled by Director Iain Ross. The amounts payable were settled before the relevant period ends.

Quantitative and Qualitative Disclosures about Market Risk

Market risk arises from our exposure to fluctuation in interest rates and currency exchange rates. These risks are managed by maintaining an appropriate mix of cash deposits in the two main currencies we operate in, which is placed with a variety of financial institutions for varying periods according to expected liquidity requirements.

Interest Rate Risk

As of June 30, 2021, we had cash, cash equivalents and term deposits of £81.2 million (June 30, 2020: £50.3 million). Our exposure to interest rate sensitivity is impacted primarily by changes in the underlying U.K. bank interest rates. Our surplus cash and cash equivalents are invested in interest-bearing savings accounts and fixed term and fixed interest rate term deposits from time to time. We have not entered into investments for trading or speculative purposes in the year ended December 31, 2020 or the six months ended June 30, 2021. Due to the conservative nature of our investment portfolio, which is predicated on capital preservation of investments with short-term maturities, an immediate one percentage point change in interest rates would not have a material effect on the fair market value of our portfolio, and therefore we do not expect our operating results or cash flows to be significantly affected by changes in market interest rates.

Currency Risk

Our functional currency is U.K. pounds sterling, and our transactions are commonly denominated in that currency. However, we receive payments under our collaboration agreements in U.S. dollars and we incur a portion of our expenses in other currencies, primarily Euros, and are exposed to the effects of these exchange rates. We seek to minimize this exposure by maintaining currency cash balances at levels appropriate to meet foreseeable short to mid-term expenses in these other currencies. Where significant foreign currency cash receipts are expected, we consider the use of forward exchange contracts to manage our exchange rate exposure. A 10% increase in the value of the pound sterling relative to the U.S. dollar or Euro would not have had a material effect on the carrying value of our net financial assets and liabilities in foreign currencies at June 30, 2021.

Counterparty, Credit and Liquidity Risk

Our cash, cash equivalents and term deposits are on deposit with financial institutions with a credit rating equivalent to, or above, the main U.K. clearing banks. We invest our liquid resources based on the expected timing of expenditures to be made in the ordinary course of our activities. All financial liabilities are payable in the short term, meaning no more than three months, and we maintain adequate bank balances in either instant access or short-term deposits to meet those liabilities as they fall due. We believe we have had minimal credit risk relating to our trade receivables as of June 30, 2021 and 2020, which consisted solely of amounts due from AstraZeneca, Mallinckrodt and Alnylam.

Critical Accounting Policies, Judgments and Estimates

In the application of our accounting policies, we are required to make judgments, estimates, and assumptions about the value of assets and liabilities for which there is no definitive third-party reference. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. We review our estimates and assumptions on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revisions and future periods if the revision affects both current and future periods.

The following are our critical judgments that we have made in the process of applying our accounting policies and that have the most significant effect on the amounts recognized in our consolidated financial statements included elsewhere in this report.

Recent Accounting Pronouncements

We have reviewed new IFRS standards issued and updates to existing standards in the reporting period and concluded that none of the recent pronouncements are relevant to Silence Therapeutics Plc (either because they relate to standards not relevant to Silence Therapeutics Plc or because they have not yet become effective; and there is currently no preference for early adoption). The group did not have to change its accounting policies or make retrospective adjustments as a result.