Silence Therapeutics Reports Third Quarter 2021 Financial Results
16 November 2021
Financial Highlights
· Revenue for the three-month period ended September 30, 2021 increased by
· Research and development expenses for the three months ended September 30, 2021 were
· Administrative expenses increased
· As of September 30, 2021, we had cash, cash equivalents and term deposits of
De-Listing from AIM
· On October 15, 2021, we announced our intention to cancel the admission of our ordinary shares of nominal value
Shelf Filing Registration
· On October 15, 2021, we filed Form F-3 registration statement to cover the offering, issuance and sale of our securities from time to time in one or more offerings, for an aggregate initial offering price not to exceed
Enquiries:
|
Silence Therapeutics plc Gem Hopkins, Head of IR and Corporate Communications
|
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 Hansoh Pharma, 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
Condensed consolidated income statement (unaudited)
|
|
|
Three months ended |
|
|
Three months ended |
|
|
Nine months ended |
|
|
Nine months ended |
|
|
||||
|
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
|
||||
|
£000s (except per share information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
3,156 |
|
|
|
1,988 |
|
|
|
9,001 |
|
|
|
3,134 |
|
|
|
Cost of sales |
|
|
(2,052 |
) |
|
|
(2,331 |
) |
|
|
(5,414 |
) |
|
|
(2,331 |
) |
|
|
Gross profit |
|
|
1,104 |
|
|
|
(343 |
) |
|
|
3,587 |
|
|
|
803 |
|
|
|
Research and development costs |
|
|
(7,916 |
) |
|
|
(3,468 |
) |
|
|
(23,541 |
) |
|
|
(13,647 |
) |
|
|
Administrative expenses |
|
|
(5,472 |
) |
|
|
(2,666 |
) |
|
|
(14,597 |
) |
|
|
(7,826 |
) |
|
|
Other losses - net |
|
|
- |
|
|
|
(3,091 |
) |
|
|
- |
|
|
|
(3,091 |
) |
|
|
Operating loss |
|
|
(12,284 |
) |
|
|
(9,568 |
) |
|
|
(34,551 |
) |
|
|
(23,761 |
) |
|
|
Finance and other expenses |
|
|
(64 |
) |
|
|
(119 |
) |
|
|
(86 |
) |
|
|
(119 |
) |
|
|
Finance and other income |
|
|
296 |
|
|
|
147 |
|
|
|
8 |
|
|
|
1,011 |
|
|
|
Loss for the period before taxation |
|
|
(12,052 |
) |
|
|
(9,540 |
) |
|
|
(34,629 |
) |
|
|
(22,869 |
) |
|
|
Taxation |
|
|
2,123 |
|
|
|
462 |
|
|
|
4,653 |
|
|
|
2,762 |
|
|
|
Loss for the period after taxation |
|
|
(9,929 |
) |
|
|
(9,078 |
) |
|
|
(29,976 |
) |
|
|
(20,107 |
) |
|
|
Loss per ordinary equity share (basic and diluted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Condensed consolidated statement of comprehensive income (unaudited)
|
|
|
Three months ended |
|
|
Three months ended |
|
|
Nine months ended |
|
|
Nine months ended |
|
||||
|
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
||||
|
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
||||
|
Loss for the period after taxation |
|
|
(9,929 |
) |
|
|
(9,078 |
) |
|
|
(29,976 |
) |
|
|
(20,107 |
) |
|
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 |
|
|
18 |
|
|
|
(12 |
) |
|
|
(434 |
) |
|
|
573 |
|
|
Total other comprehensive income/(expense) for the period |
|
|
18 |
|
|
|
(12 |
) |
|
|
(434 |
) |
|
|
573 |
|
|
Total comprehensive expense for the period |
|
|
(9,911 |
) |
|
|
(9,090 |
) |
|
|
(30,410 |
) |
|
|
(19,534 |
) |
Condensed consolidated balance sheet (unaudited)
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
|
£000s |
|
|
£000s |
|
||
|
Non-current assets |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
1,535 |
|
|
|
1,127 |
|
|
Goodwill |
|
|
7,786 |
|
|
|
8,125 |
|
|
Other intangible assets |
|
|
3 |
|
|
|
17 |
|
|
Financial assets at amortized cost |
|
|
302 |
|
|
|
303 |
|
|
|
|
|
9,626 |
|
|
|
9,572 |
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
71,469 |
|
|
|
27,449 |
|
|
Derivative financial instrument |
|
|
- |
|
|
|
1,492 |
|
|
Financial assets at amortized cost - term deposit |
|
|
5,000 |
|
|
|
10,000 |
|
|
Financial assets at amortized cost - other |
|
|
- |
|
|
|
- |
|
|
R&D tax credit receivable |
|
|
3,778 |
|
|
|
3,536 |
|
|
Other current assets |
|
|
2,882 |
|
|
|
4,616 |
|
|
Trade receivables |
|
|
- |
|
|
|
29,306 |
|
|
|
|
|
83,129 |
|
|
|
76,399 |
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
Contract liabilities |
|
|
(57,998 |
) |
|
|
(51,337 |
) |
|
|
|
|
(57,998 |
) |
|
|
(51,337 |
) |
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Contract liabilities |
|
|
(9,030 |
) |
|
|
(17,042 |
) |
|
Trade and other payables |
|
|
(9,236 |
) |
|
|
(8,192 |
) |
|
Lease liability |
|
|
(131 |
) |
|
|
(341 |
) |
|
|
|
|
(18,397 |
) |
|
|
(25,575 |
) |
|
Net assets |
|
|
16,360 |
|
|
|
9,059 |
|
|
Capital and reserves attributable to the owners of the parent |
|
|
|
|
|
|
|
|
|
Share capital |
|
|
4,489 |
|
|
|
4,165 |
|
|
Capital reserves |
|
|
223,637 |
|
|
|
186,891 |
|
|
Translation reserve |
|
|
1,784 |
|
|
|
2,218 |
|
|
Accumulated losses |
|
|
(213,550 |
) |
|
|
(184,215 |
) |
|
Total shareholders equity |
|
|
16,360 |
|
|
|
9,059 |
|
Condensed consolidated statement of changes in equity (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 |
|
|
- |
|
|
|
4,395 |
|
|
|
- |
|
|
|
- |
|
|
|
4,395 |
|
|
Options exercised in the period |
|
|
- |
|
|
|
(331 |
) |
|
|
- |
|
|
|
331 |
|
|
|
- |
|
|
Proceeds from shares issued |
|
|
246 |
|
|
|
15,584 |
|
|
|
- |
|
|
|
- |
|
|
|
15,830 |
|
|
Transactions with owners recognized directly in equity |
|
|
246 |
|
|
|
19,648 |
|
|
|
- |
|
|
|
331 |
|
|
|
20,225 |
|
|
Loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(32,547 |
) |
|
|
(32,547 |
) |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange differences arising on consolidation of foreign operations |
|
|
- |
|
|
|
- |
|
|
|
472 |
|
|
|
- |
|
|
|
472 |
|
|
Total comprehensive expense for the period |
|
|
- |
|
|
|
- |
|
|
|
472 |
|
|
|
(32,547 |
) |
|
|
(32,075 |
) |
|
At December 31, 2020 |
|
|
4,165 |
|
|
|
186,891 |
|
|
|
2,218 |
|
|
|
(184,215 |
) |
|
|
9,059 |
|
|
At January 1, 2021 |
|
|
4,165 |
|
|
|
186,891 |
|
|
|
2,218 |
|
|
|
(184,215 |
) |
|
|
9,059 |
|
|
Recognition of share-based payments |
|
|
- |
|
|
|
6,790 |
|
|
|
- |
|
|
|
- |
|
|
|
6,790 |
|
|
Options exercised in the period |
|
|
- |
|
|
|
(641 |
) |
|
|
- |
|
|
|
641 |
|
|
|
- |
|
|
Proceeds from shares issued |
|
|
324 |
|
|
|
30,597 |
|
|
|
- |
|
|
|
- |
|
|
|
30,921 |
|
|
Transactions with owners recognized directly in equity |
|
|
324 |
|
|
|
36,746 |
|
|
|
- |
|
|
|
641 |
|
|
|
37,711 |
|
|
Loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(29,976 |
) |
|
|
(29,976 |
) |
|
Other comprehensive expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange differences arising on consolidation of foreign operations |
|
|
- |
|
|
|
- |
|
|
|
(434 |
) |
|
|
- |
|
|
|
(434 |
) |
|
Total comprehensive expense for the period |
|
|
- |
|
|
|
- |
|
|
|
(434 |
) |
|
|
(29,976 |
) |
|
|
(30,410 |
) |
|
At September 30, 2021 |
|
|
4,489 |
|
|
|
223,637 |
|
|
|
1,784 |
|
|
|
(213,550 |
) |
|
|
16,360 |
|
Condensed consolidated statement of cash flows (unaudited)
|
|
|
Nine months ended |
|
|||||
|
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
||
|
|
|
£000s |
|
|
£000s |
|
||
|
Cash flow from operating activities |
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
(34,629 |
) |
|
|
(22,869 |
) |
|
Depreciation charges |
|
|
347 |
|
|
|
295 |
|
|
Amortization charges |
|
|
14 |
|
|
|
15 |
|
|
Charge for the period in respect of share-based payments |
|
|
6,790 |
|
|
|
1,353 |
|
|
Net foreign exchange (gain)/loss |
|
|
(226 |
) |
|
|
3,410 |
|
|
Finance and other expenses |
|
|
86 |
|
|
|
(801 |
) |
|
Finance and other income |
|
|
(8 |
) |
|
|
(91 |
) |
|
Decrease/(increase) in trade and other receivables |
|
|
29,306 |
|
|
|
(31,905 |
) |
|
Decrease/(increase) in other current assets |
|
|
1,735 |
|
|
|
(2,325 |
) |
|
Decrease in current financial assets at amortized cost - other |
|
|
- |
|
|
|
7 |
|
|
Increase/(decrease) in trade and other payables |
|
|
1,044 |
|
|
|
(912 |
) |
|
Decrease in derivative financial instrument |
|
|
1,492 |
|
|
|
- |
|
|
(Decrease)/increase in contract liabilities |
|
|
(1,351 |
) |
|
|
48,454 |
|
|
Cash provided/(spent) on operations |
|
|
4,600 |
|
|
|
(5,369 |
) |
|
R&D tax credits received |
|
|
4,411 |
|
|
|
- |
|
|
Net cash inflow/(outflow) from operating activities |
|
|
9,011 |
|
|
|
(5,369 |
) |
|
Cash flow from investing activities |
|
|
|
|
|
|
|
|
|
Redemption of financial assets at amortized cost - term deposits |
|
|
5,000 |
|
|
|
10,000 |
|
|
Purchase of financial assets at amortized cost - term deposits |
|
|
- |
|
|
|
(20,021 |
) |
|
Interest received |
|
|
8 |
|
|
|
86 |
|
|
Purchase of property, plant and equipment |
|
|
(784 |
) |
|
|
(417 |
) |
|
Net cash (outflow)/inflow from investing activities |
|
|
4,224 |
|
|
|
(10,352 |
) |
|
Cash flow from financing activities |
|
|
|
|
|
|
|
|
|
Repayment of lease liabilities |
|
|
(210 |
) |
|
|
(272 |
) |
|
Proceeds from issue of share capital |
|
|
30,921 |
|
|
|
15,806 |
|
|
Net cash inflow from financing activities |
|
|
30,711 |
|
|
|
15,534 |
|
|
Increase/(decrease) in cash and cash equivalents |
|
|
43,946 |
|
|
|
(187 |
) |
|
Cash and cash equivalents at start of the period |
|
|
27,449 |
|
|
|
13,515 |
|
|
Effect of exchange rate fluctuations on cash and cash equivalents held |
|
|
74 |
|
|
|
587 |
|
|
Cash and cash equivalents at end of the period |
|
|
71,469 |
|
|
|
13,915 |
|
Notes to the financial statements
Nine months ended September 30, 2021
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
These condensed interim financial statements were approved for issue on 15 November 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 31 December 2020 were approved by the board of directors on 31 March 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.
The Company announced on October 15, 2021, its intention to cancel the admission of the Company's ordinary shares of nominal value
Basis of Preparation and Accounting Policies
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into
This condensed consolidated financial report for the interim reporting period ended 30 September 2021 has been prepared in accordance with
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 31 December 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 21.
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.
Since 2020, the coronavirus (COVID-19) pandemic has been prevalent in
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
Based on the current operating forecasts and plans and, considering the cash, cash equivalents and term deposit at September 30, 2021, the Directors are confident that the Group has sufficient funding through early 2023. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
3. Revenue
Revenue from collaboration agreements for the nine months ended September 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 nine months ended September 30, 2021 comprised
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
||||
|
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
||||
|
Revenue from Contracts with Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research collaboration - Mallinckrodt plc |
|
|
2,574 |
|
|
|
1,826 |
|
|
|
6,362 |
|
|
|
2,300 |
|
|
Research collaboration - AstraZeneca |
|
|
506 |
|
|
|
11 |
|
|
|
1,777 |
|
|
|
11 |
|
|
Research collaboration - Other |
|
|
(29 |
) |
|
|
151 |
|
|
|
589 |
|
|
|
672 |
|
|
Research collaboration - total |
|
|
3,051 |
|
|
|
1,988 |
|
|
|
8,728 |
|
|
|
2,983 |
|
|
Royalties |
|
|
105 |
|
|
|
- |
|
|
|
273 |
|
|
|
151 |
|
|
Total revenue from contracts with customers |
|
|
3,156 |
|
|
|
1,988 |
|
|
|
9,001 |
|
|
|
3,134 |
|
Under our collaboration agreement with Mallinckrodt, we received an upfront cash payment of
Under our collaboration agreement with AstraZeneca, we received an upfront cash payment of
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
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 nine months ended September 30, 2021 and nine months ended September 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.
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
||||
|
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
||||
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2020 |
|
|
54 |
|
|
|
689 |
|
|
|
8,829 |
|
|
|
9,572 |
|
|
As at September 30, 2021 |
|
|
17 |
|
|
|
521 |
|
|
|
9,088 |
|
|
|
9,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 nine months ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research collaboration |
|
|
- |
|
|
|
8,728 |
|
|
|
- |
|
|
|
8,728 |
|
|
Royalties |
|
|
- |
|
|
|
- |
|
|
|
273 |
|
|
|
273 |
|
|
|
|
|
- |
|
|
|
8,728 |
|
|
|
273 |
|
|
|
9,001 |
|
5. Loss per ordinary equity share (basic and diluted)
The calculation of the loss per share is based on the loss for the nine months to September 30, 2021 after taxation of
The options outstanding at September 30, 2021 and September 30, 2020 are considered to be anti-dilutive as the Group is loss-making.
6. Goodwill
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
|
£000s |
|
|
£000s |
|
||
|
Balance at start of the period |
|
|
8,125 |
|
|
|
7,692 |
|
|
Translation adjustment |
|
|
(339 |
) |
|
|
433 |
|
|
Balance at end of the period |
|
|
7,786 |
|
|
|
8,125 |
|
7. Derivative financial instruments
Derivative financial instruments related 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 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.
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
|
£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 of 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 nine-month period to September 30, 2021 the gain on the derivative financial instrument (
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 September 30, 2021.
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
|
|
|
|
||
|
|
|
£000s |
|
|
£000s |
|
|
|
|
|
||
|
Contract liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
9,030 |
|
|
|
17,042 |
|
|
|
|
|
|
Non-current |
|
|
57,998 |
|
|
|
51,337 |
|
|
|
|
|
|
Total contract liabilities |
|
|
67,028 |
|
|
|
68,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
Non-current |
|
|
Total |
|
|||
|
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
|||
|
Contract liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2020 |
|
|
2,478 |
|
|
|
15,515 |
|
|
|
17,993 |
|
|
Additions during period |
|
|
19,779 |
|
|
|
35,822 |
|
|
|
55,601 |
|
|
Revenue unwound during period |
|
|
(5,215 |
) |
|
|
- |
|
|
|
(5,215 |
) |
|
At December 31, 2020 |
|
|
17,042 |
|
|
|
51,337 |
|
|
|
68,379 |
|
|
At January 1, 2021 |
|
|
17,042 |
|
|
|
51,337 |
|
|
|
68,379 |
|
|
Additions during period |
|
|
3,419 |
|
|
|
3,958 |
|
|
|
7,377 |
|
|
Revenue unwound during period |
|
|
(8,728 |
) |
|
|
- |
|
|
|
(8,728 |
) |
|
Program rephasing |
|
|
(2,703 |
) |
|
|
2,703 |
|
|
|
- |
|
|
At September 30, 2021 |
|
|
9,030 |
|
|
|
57,998 |
|
|
|
67,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. Taxation
A
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 |
|
|
- |
|
|
|
- |
|
|
|
7,090 |
|
|
|
- |
|
|
|
7,090 |
|
|
On vested options lapsed during the period |
|
|
- |
|
|
|
- |
|
|
|
(300 |
) |
|
|
- |
|
|
|
(300 |
) |
|
On options exercised during the period |
|
|
459 |
|
|
|
- |
|
|
|
(641 |
) |
|
|
- |
|
|
|
(182 |
) |
|
Costs capitalized in respect of issuance of shares during the period |
|
|
(2,447 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,447 |
) |
|
Movement in the period |
|
|
30,597 |
|
|
|
- |
|
|
|
6,149 |
|
|
|
- |
|
|
|
36,746 |
|
|
At September 30, 2021 |
|
|
184,331 |
|
|
|
22,248 |
|
|
|
11,864 |
|
|
|
5,194 |
|
|
|
223,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
|
£000s |
|
|
£000s |
|
||
|
Authorized, allotted, called up and fully paid ordinary shares, par value £0.05 |
|
|
4,489 |
|
|
|
4,165 |
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares in issue |
|
|
89,777,000 |
|
|
|
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, at a price of US
On October 15, 2021, the Company filed a registration statement on Form F-3 with the SEC to cover the offering, issuance and sale of securities from time to time in one or more offerings. The aggregate initial offering price is not to exceed
The Company also announced on October 15, 2021, its intention to cancel the admission of the Company's ordinary shares of nominal value
Details of the shares issued by the Company during the nine months ended September 30, 2021 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 |
|
|
496,666 |
|
|
Options exercised at £0.85 |
|
|
56,470 |
|
|
Options exercised at £1.00 |
|
|
60,000 |
|
|
Options exercised at £1.90 |
|
|
46,278 |
|
|
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 |
|
|
Options exercised at £0.05 |
|
|
10,407 |
|
|
Options exercised at £0.60 |
|
|
31,145 |
|
|
Number of shares in issue at September 30, 2021 |
|
|
89,777,000 |
|
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 nine months to September 30, 2021 the Group paid £nil (nine months to September 30, 2020:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The statements in this discussion with respect to our plans and strategy for our business, including expectations regarding our future liquidity and capital resources and other non-historical statements, are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including the risks and uncertainties described in Exhibit 99.1 filed on Form 6-K on August 12, 2021. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Overview
Silence Therapeutics plc ("we", "us", "our", "the Company" or "Silence") is a biotechnology company focused on discovering and developing novel molecules incorporating short interfering ribonucleic acid, or siRNA, to inhibit the expression of specific target genes thought to play a role in the pathology of diseases with significant unmet medical need. Our siRNA molecules are designed to harness the body's natural mechanism of RNA interference, or RNAi, by specifically binding to and degrading messenger RNA, or mRNA, molecules that encode specific targeted disease-associated proteins in a cell. By degrading the message that encodes the disease-associated protein, the production of that protein is reduced, and its level of activity is lowered. In the field of RNAi therapeutics, this reduction of disease-associated protein production and activity is referred to as "gene silencing." Our proprietary mRNAi GOLD™ (GalNAc Oligonucleotide Discovery) platform is a platform of precision engineered medicines designed to accurately target and 'silence' specific disease-associated genes in the liver, which represents a substantial opportunity. Using our mRNAi GOLD™ platform, we have generated siRNA product candidates both for our internal development pipeline as well as for out-licensed programs with third-party collaborators. In May 2021, we presented the first clinical data from our mRNAi GOLD platform that successfully translated the results from pre-clinical models into humans.
Our proprietary clinical programs include SLN360 designed to address the high and prevalent unmet need in reducing cardiovascular risk in people born with high levels of lipoprotein(a), or Lp(a), and SLN124 designed to address rare hematological disorders, including thalassemia and myelodysplastic syndrome, or MDS, and polycythemia vera, or PV. We are evaluating SLN360 in the APOLLO phase 1 single-ascending dose study in healthy individuals with high levels of Lp(a) ≥ 60 mg/dL. In August 2021, we announced complete enrollment in the SLN360 single-ascending dose study and we anticipate topline data in the first quarter of 2022. We are evaluating SLN124 in the GEMINI II phase 1 single-ascending dose studies in patients with thalassemia and MDS. We anticipate topline data from both studies in the third quarter of 2022. In May 2021, we reported positive topline results from the SLN124 GEMINI healthy volunteer study, which was the first clinical data from our mRNAi GOLD™ platform. The SLN124 healthy volunteer study demonstrated safety and proof-of-mechanism to support the ongoing SLN124 phase 1 studies in patients with thalassemia and MDS.
Our partnered pipeline includes ongoing research and development collaborations with leading pharmaceutical companies, such as AstraZeneca plc, or AstraZeneca, Mallinckrodt plc, or Mallinckrodt, Takeda Pharmaceutical Company Limited, or Takeda and Hansoh Pharmaceutical Group Company Limited or Hansoh. These collaborations collectively represent up to 14 pipeline programs and up to
There are approximately 14,000 liver-expressed genes and only around one percent of them have been targeted by publicly known siRNAs. We aim to maximize the substantial opportunity of our mRNAi GOLD™ platform through a combination of building and advancing our proprietary and partnered pipelines. Through this hybrid model, we plan to significantly expand our portfolio of mRNAi GOLD™ platform programs by delivering 2-3 initial new drug applications per year from 2023.
Recent Corporate Highlights
We held a R&D Day on October 21, 2021 to provide updates on our mRNAi GOLD™ platform and pipeline. The updates included the following:
Proprietary Pipeline
SLN360
· The independent safety review committee recommended to extend the follow-up period in the single-ascending dose study from 150 days to 365 days to fully assess the duration of action, which may be longer than initially anticipated based on preclinical modelling. The therapeutic dose range has been established based on Cohorts 1-4 (optional Cohort 5 not needed) and the study can now proceed to the multiple-ascending dose phase.
SLN124
· We plan to pursue new polycythemia vera (PV) indication and start a phase 1 trial in the second half of 2022.
· We received the FDA Acceptance of the US IND in myelodysplastic syndrome (MDS) on October 20, 2021.
· The positive results from the healthy volunteer study reported in May 2021 was accepted for poster presentation at the American Society of Hematology (ASH) Annual Meeting being held December 11-14, 2021.
Partnered Pipeline
· On October 15, 2021, we announced a collaboration agreement with Hansoh, one of the leading biopharmaceutical companies in
· In our Mallinckrodt collaboration for complement-mediated diseases, we are progressing IND-enabling studies for SLN501 C3 targeting program and expect to initiate a phase 1 study in the first half of 2022.
De-Listing from AIM
· On October 15, 2021, we announced our intention to cancel the admission of our ordinary shares of nominal value
Shelf Filing Registration
· On October 15, 2021, we filed a registration statement on Form F-3 to cover the offering, issuance and sale of our securities from time to time in one or more offerings, for an aggregate initial offering price not to exceed
Upcoming Events and Anticipated Data Milestones
· Additional results from the SLN124 healthy volunteer study will be presented at ASH Annual Meeting being held December 11-14, 2021.
· Topline data from the SLN360 phase 1 single-ascending dose study in people with high Lp(a) is anticipated in the first quarter of 2022. The Company plans to start phase 2 development in the second half of 2022 pending regulatory discussions.
· Topline data from the SLN124 phase 1 single-ascending dose studies in people with thalassemia and MDS is anticipated in the third quarter of 2022.
· Silence plans to initiate a phase 1 study of SLN124 in PV patients in the second half of 2022.
· We anticipate initiating a phase 1 study of SLN501 in our Mallinckrodt collaboration for complement-mediated diseases in the first half of 2022.
Collaboration Agreement with AstraZeneca
In March 2020, we entered into a collaboration agreement with AstraZeneca to discover, develop and commercialize siRNA therapeutics for the treatment of cardiovascular, renal, metabolic and respiratory diseases. Under this agreement, AstraZeneca made an upfront cash payment to us of
We anticipate initiating work on five targets within the first three years of the collaboration, with AstraZeneca having the option to extend the collaboration to an additional five targets. AstraZeneca has agreed to pay us
We continue to advance the research and development workplans for each identified target as scheduled and agreed to with our collaboration partner.
Collaboration Agreement with Mallinckrodt
In July 2019, we entered into a collaboration agreement with Mallinckrodt Pharma IP Trading DAC, a wholly owned subsidiary of Mallinckrodt plc, to develop and commercialize RNAi drug targets designed to silence the complement cascade in complement-mediated disorders. Under the agreement, we granted Mallinckrodt an exclusive worldwide license to our C3 targeting program, SLN500, with options to license two additional complement-mediated disease targets from us. Mallinckrodt exercised options to license two additional complement targets from us in July 2020.
While we are responsible for the Phase 1 clinical trial in each case, Mallinckrodt will be funding all of our research personnel costs on a full-time equivalent, or FTE, basis associated with preparing for and conducting the Phase 1 clinical trials. We are also responsible for the provision of drug product for preclinical activities and for the Phase 1 clinical trials, but any manufacturing expense relating to the Phase 1 trial will be paid for by Mallinckrodt. After completion of the Phase 1 clinical trials, Mallinckrodt will assume clinical development and responsibility for potential global commercialization.
The collaboration provides for potential additional development and regulatory milestone payments in aggregate of up to
In connection with the execution of this agreement, Mallinckrodt made an upfront cash payment in 2019 of
We continue to advance the research and development workplans for each identified target as scheduled and agreed to with our collaboration partner.
Financial Operations Overview
Revenue
We do not have any approved products. Accordingly, we have not generated any revenue from product sales, and we do not expect to generate any revenue from the sale of any products unless and until we obtain regulatory approvals for, and commercialize any of, our product candidates. In the future, we will seek to generate revenue primarily from product sales and, potentially, regional or global strategic collaborations with third parties.
Under our collaboration agreement with AstraZeneca, we received an upfront cash payment of
Under our collaboration agreement with Mallinckrodt, we received an upfront cash payment of
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, during the nine months ended September 30, 2021 we received a milestone payment of £nil (nine months ended September 30, 2020:
In December 2018, we entered into a settlement and license agreement with Alnylam Pharmaceuticals Inc., or Alnylam, pursuant to which we settled outstanding patent litigation with Alnylam related to its RNAi product ONPATTRO. As part of the settlement, we license specified patents to Alnylam, and Alnylam pays us a tiered royalty of up to one percent of net sales of ONPATTRO in the EU. We are eligible to receive these royalties until 2023. We invoice Alnylam quarterly in arrears based on sales data for that quarter as reported to us by Alnylam. Royalty revenue is recognized based on the level of sales when the related sales occur. During the nine months ended September 30, 2021, we recognized a total of
Cost of Sales
Cost of sales consists of research and development expenditure that is directly related to work carried out on revenue generating contracts. This includes salary costs that are apportioned based on time spent by employees working on these contracts as well as costs of materials and costs incurred under agreements with contract research organizations, or CROs.
Operating Expenses
We classify our operating expenses into two categories: research and development expenses and administrative expenses. Personnel costs, including salaries, benefits, bonuses and share-based payment expense, comprise a significant component of each of these expense categories. We allocate expenses associated with personnel costs based on the function performed by the respective employees.
Research and Development Expenses
The largest component of our total operating expenses since inception has been costs related to our research and development activities, including the preclinical and clinical development of our product candidates. We account for research and development costs on an accruals basis.
Our contracted research and development expense primarily consists of:
· costs incurred under agreements with CROs and investigative sites that conduct preclinical studies and clinical trials;
· costs related to manufacturing active pharmaceutical ingredients and drug products for preclinical studies and clinical trials; and
· costs for materials used for in-house research and development activities.
Our research and development personnel expense primarily consists of:
· salaries and personnel-related costs, including bonuses, benefits, recruitment costs and any share-based payment expense, for our personnel performing research and development activities or managing those activities that have been out-sourced;
· consultants' costs associated with target selection, preclinical and clinical research activities, and the progression of programs towards clinical trials;
Other research and development expense primarily consists of:
· costs of related facilities, equipment and other overhead expenses that are considered directly attributable to research and development;
· costs associated with obtaining and maintaining patents for intellectual property; and
· depreciation of capital assets used for research and development activities.
The successful development of our product candidates is highly uncertain. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Accordingly, we expect research and development costs to increase significantly for the foreseeable future as programs progress. However, we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization. We are also unable to predict when, if ever, material net cash inflows will commence from our product candidates to offset these expenses. Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:
· the scope, rate of progress, results and expenses of our ongoing and future clinical trials, preclinical studies and research and development activities;
· the potential need for additional clinical trials or preclinical studies requested by regulatory agencies;
· potential uncertainties in clinical trial enrollment rates or drop-out or discontinuation rates of patients;
· competition with other drug development companies in, and the related expense of, identifying and enrolling patients in our clinical trials and contracting with third-party manufacturers for the production of the drug product needed for our clinical trials;
· the achievement of milestones requiring payments under in-licensing agreements, if any;
· any significant changes in government regulation;
· the terms and timing of any regulatory approvals;
· the expense of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and
· the ability to market, commercialize and achieve market acceptance for any of our product candidates, if they are approved.
We have not historically tracked research and development expenses on a program-by-program basis for our preclinical product candidates.
Administrative Expenses
Administrative expenses consist of personnel costs, including salaries, bonuses, benefits, recruitment costs and share-based payment expense for personnel in executive, finance, business development and other support functions. Administrative expenses also include those costs associated with being a public company, such as general and D&O insurance, legal, audit, tax, public relations and investor relations services.
Finance and Other Income (Expense)
Finance and other income primarily relates to interest earned on our cash, cash equivalents and short-term deposits, as well as foreign exchange gains. Finance and other expense primarily relates to lease liability interest expense and foreign exchange losses. Foreign exchange gains and losses relate to cash held in foreign currencies (primarily Euros).
Taxation
We are subject to corporate taxation in the
As a company that carries out extensive research and development activities, we currently benefit from the
We may not be able to continue to claim research and development tax credits in the future under the current research and development tax credit scheme if we cease to qualify as a small or medium-sized company which is not anticipated at the time of this filing. However, should this occur in the future we may be able to file under the
Total estimated tax losses of £142.0 million as of September 30, 2021 were available for relief against our future profits. Unsurrendered
In the event we generate revenues in the future, we may benefit from the
Value Added Tax, or VAT, is charged on all qualifying goods and services by VAT-registered businesses. Where applicable, an amount of 20% of goods and services is added to all sales invoices and is payable to the
Results of Operations
Comparison of the Three Months and Nine Months Ended September 30, 2021 and 2020
The following tables summarize the results of our operations for the three months and nine months ended September 30, 2021 and 2020.
Consolidated Income Statements (unaudited)
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
||||
|
£000s (except per share information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
3,156 |
|
|
|
1,988 |
|
|
|
9,001 |
|
|
|
3,134 |
|
|
Cost of sales |
|
|
(2,052 |
) |
|
|
(2,331 |
) |
|
|
(5,414 |
) |
|
|
(2,331 |
) |
|
Gross profit |
|
|
1,104 |
|
|
|
(343 |
) |
|
|
3,587 |
|
|
|
803 |
|
|
Research and development costs |
|
|
(7,916 |
) |
|
|
(3,468 |
) |
|
|
(23,541 |
) |
|
|
(13,647 |
) |
|
Administrative expenses |
|
|
(5,472 |
) |
|
|
(2,666 |
) |
|
|
(14,597 |
) |
|
|
(7,826 |
) |
|
Other (losses)/gains - net |
|
|
- |
|
|
|
(3,091 |
) |
|
|
- |
|
|
|
(3,091 |
) |
|
Operating loss |
|
|
(12,284 |
) |
|
|
(9,568 |
) |
|
|
(34,551 |
) |
|
|
(23,761 |
) |
|
Finance and other expenses |
|
|
(64 |
) |
|
|
(119 |
) |
|
|
(86 |
) |
|
|
(119 |
) |
|
Finance and other income |
|
|
296 |
|
|
|
147 |
|
|
|
8 |
|
|
|
1,011 |
|
|
Loss for the period before taxation |
|
|
(12,052 |
) |
|
|
(9,540 |
) |
|
|
(34,629 |
) |
|
|
(22,869 |
) |
|
Taxation |
|
|
2,123 |
|
|
|
462 |
|
|
|
4,653 |
|
|
|
2,762 |
|
|
Loss for the period after taxation |
|
|
(9,929 |
) |
|
|
(9,078 |
) |
|
|
(29,976 |
) |
|
|
(20,107 |
) |
|
Loss per ordinary equity share (basic and diluted) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue
Revenue for the three-month period ended September 30, 2021 increased by
Research and Development Expenses
The following table summarizes our research and development expenses for the nine months ended September 30, 2021 and 2020, based on their classification.
|
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
||||
|
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
|
£000s |
|
||||
|
Research and development expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracted development costs |
|
|
4,171 |
|
|
|
1,576 |
|
|
|
13,084 |
|
|
|
7,573 |
|
|
Personnel costs |
|
|
3,268 |
|
|
|
1,561 |
|
|
|
9,284 |
|
|
|
5,126 |
|
|
Other costs |
|
|
477 |
|
|
|
331 |
|
|
|
1,173 |
|
|
|
948 |
|
|
Total |
|
|
7,916 |
|
|
|
3,468 |
|
|
|
23,541 |
|
|
|
13,647 |
|
Research and development expenses for the three months ended September 30, 2021 were
Administrative Expenses
Administrative expenses increased
Finance and Other Income (Expense)
Finance income/(expense) includes:
· interest income on our cash, cash equivalents and short-term deposits of
· net foreign exchange income was
Taxation
We have recognized
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 September 30, 2021, we had cash, cash equivalents and term deposits of
Currency Risk
Our functional currency is
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
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.
Revenue Recognition under Collaboration Agreements
During the nine months ended September 30, 2021 and the nine months ended September 30, 2020, a significant portion of our revenue from collaboration agreements was derived from our agreements with AstraZeneca (in 2021), Mallinckrodt (in 2020 and 2021) and Takeda (2020 through the six months ended June 30, 2021).
For the nine months ended September 30, 2021 and 2020, we determined actual costs and forecast costs for the remainder of the contract. We then calculated total contract costs across the contract term, including costs that will be reimbursed to us, and costs incurred to date as a percentage of total contract costs. We then multiplied this percentage by the consideration deemed probable, calculating the cumulative revenue to be recognized. When variable consideration increases due to a further milestone becoming probable, a catch-up in revenue is recorded to reflect efforts already expended by us up to that point.
AstraZeneca Research Collaboration, Option and License Agreement
We have out-licensed the rights to some of our intellectual property associated with our siRNA stabilization chemistry technology to AstraZeneca through a Research Collaboration, Option and License Agreement, dated March 24, 2020, under which we and AstraZeneca will collaborate to discover, develop and commercialize siRNA therapeutics for the treatment of cardiovascular, renal, metabolic and respiratory diseases.
AstraZeneca agreed to make an upfront cash payment of
For each target selected under the collaboration, we will be eligible to receive up to
As there is only a single performance obligation per target under the collaboration agreement, the revenue for each element of consideration will be recognized over the contract period based on a cost-to-cost method, which is considered to be the best available measure of our effort during the contract period. The total cost estimate for the contract includes costs expected to be incurred during a Phase 1 clinical trial for which we will be reimbursed. Other variable elements of consideration will only begin to be recognized when the amounts are considered probable.
Mallinckrodt License and Collaboration Agreement
On July 18, 2019, Mallinckrodt obtained an exclusive worldwide license from us for an early-stage RNAi program targeting C3 in the complement cascade (known as SLN500), with options to license additional complement-mediated disease targets. The license of the intellectual property and the R&D services are not distinct, as Mallinckrodt cannot benefit from the intellectual property absent the R&D services, since R&D services are used to discover and develop a drug candidate and to enhance the value in the underlying intellectual property. On this basis, we have concluded that there is a single performance obligation covering both the R&D services and the license of the intellectual property in respect of each target (i.e., one for the initial target and one for each additional optioned complement-mediated disease targets which represent material rights). We recognize revenue over the duration of the contract based on an input method based on cost to cost.
The agreement with Mallinckrodt has four elements of consideration:
· a fixed upfront payment, which we received in July 2019;
· subsequent milestone payments, which are variable and depend upon our achievement of specified development, regulatory and commercial milestones;
· payments in respect of certain research personnel costs on an FTE, basis, which costs are variable depending on activity under the collaboration; and
· funding for Phase 1 clinical development and certain preparatory activities, including GMP manufacturing, which costs are also variable.
The upfront payment has been allocated evenly between the initial target and the optioned complement-mediated disease targets, because the compounds are at a similar stage of development, on the basis of a benchmarking exercise that took into account the standalone selling price per target, of similar precedent transactions that had been publicly announced by comparable companies. The upfront payment will be recognized as revenue in line with the time period over which services are expected to be provided.
As there is only a single performance obligation per target under the collaboration agreement, the revenue for each element of consideration will be recognized over the contract period based on a cost-to-cost method, which is considered to be the best available measure of our effort during the contract period. The total cost estimate for the contract includes costs expected to be incurred during a Phase 1 clinical trial for which we will be reimbursed. Other variable elements of consideration will only begin to be recognized when the amounts are considered probable.
Takeda Technology Evaluation 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. Our activities under the Technology Evaluation Agreement with Takeda were effectively complete as of September 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.
Recognition of Clinical Trial Expenses
As part of the process of preparing our consolidated financial statements, we may be required to estimate accrued expenses related to our preclinical studies and clinical trials. In order to obtain reasonable estimates, we review open contracts and purchase orders. In addition, we communicate with applicable personnel in order to identify services that have been performed, but for which we have not yet been invoiced. In most cases, our vendors provide us with monthly invoices in arrears for services performed. We confirm our estimates with these vendors and make adjustments as needed. Examples of our accrued expenses include fees paid to CROs for services performed on preclinical studies and clinical trials and fees paid for professional services.
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.
Implications of Being an Emerging Growth Company and a Foreign Private Issuer
We have taken advantage of reduced reporting requirements in this report. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold equity securities.
Emerging Growth Company
As of the date of this filing, we are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we may take advantage of certain exemptions from various reporting requirements that are applicable to publicly traded entities that are not emerging growth companies. These exemptions include:
· an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended;
· to the extent that we no longer qualify as a foreign private issuer, (i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirement to hold a non-binding advisory vote on executive compensation, including golden parachute compensation; and
· an exemption from compliance with the requirement that the Public Company Accounting Oversight Board has adopted regarding a supplement to the auditor's report providing additional information about the audit and the financial statements.
We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenue of at least
Foreign Private Issuer
We report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-
· the rules under the Exchange Act requiring domestic filers to issue financial statements prepared under
· the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;
· the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
· the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial statements and other specified information, and current reports on Form 8-K upon the occurrence of specified significant events.
Notwithstanding these exemptions, we will file with the SEC, per foreign private issuer requirements.
We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held directly or indirectly by
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 September 30, 2021, we had cash, cash equivalents and term deposits of
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 nine months ended September 30, 2021 and 2020.
|
|
|
Nine months ended |
|
|||||
|
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
||
|
|
|
£000s |
|
|
£000s |
|
||
|
Net cash inflow/(outflow) from operating activities |
|
|
9,011 |
|
|
|
(5,369 |
) |
|
Net cash inflow/(outflow) from investing activities |
|
|
4,224 |
|
|
|
(10,352 |
) |
|
Net cash inflow from financing activities |
|
|
30,711 |
|
|
|
15,534 |
|
|
Increase/(decrease) in cash and cash equivalents |
|
|
43,946 |
|
|
|
(187 |
) |
Operating activities
The increase in net cash generated from operating activities of
Investing activities
Net cash inflow from investing activities was
Financing activities
The increase in net cash from financing activities to
Operating and Capital Expenditure Requirements
We have not achieved profitability on an annual basis since our inception, and we expect to incur net losses in the future. We expect that our operating expenses will increase as we continue to invest to grow our product pipeline, hire additional employees and increase research and development expenses.
Additionally, as a public company, we incur significant additional audit, legal and other expenses. We believe that our existing capital resources will be sufficient to fund our operations, including currently anticipated research and development activities and planned capital spending, at least through the end of 2022.
Our future funding requirements will depend on many factors, including but not limited to:
· the scope, rate of progress and cost of our clinical trials, preclinical programs and other related activities;
· the extent of success in our early preclinical and clinical-stage research programs, which will determine the amount of funding required to further the development of our product candidates;
· the cost of manufacturing clinical supplies and establishing commercial supplies of our product candidates and any products that we may develop;
· the costs involved in filing and prosecuting patent applications and enforcing and defending potential patent claims;
· the outcome, timing and cost of regulatory approvals of our product candidates;
· the cost and timing of establishing sales, marketing and distribution capabilities; and
· the costs of hiring additional skilled employees to support our continued growth and the related costs of leasing additional office space.
Trend Information
Other than as disclosed elsewhere in this Report, we are not aware of any trends, uncertainties, demands, commitments or events since December 31, 2020 that are reasonably likely to have a material adverse effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. For more information, see Exhibit 99.1 filed on Form 6-K on August 12, 2021.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and do not currently have, any off-balance sheet arrangements.
Contractual Obligations and Commitments
The following table summarizes our contractual commitments and obligations as of September 30, 2021 and December 31, 2020.
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
|
£000s |
|
|
£000s |
|
||
|
Lease liability |
|
|
131 |
|
|
|
341 |
|
We have agreed to make payments to CROs and manufacturers under various CRO and manufacturing agreements that generally provide for our ability to terminate on short notice. We have not included any such contingent payment obligations in the table above as the amount, timing and likelihood of such payments are not fixed or determinable.
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