28 Sep 2007 07:00
SILENCE THERAPEUTICS plc ("Silence Therapeutics" or "the Group") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
London, UK, 28 September 2007 - Silence Therapeutics plc (previously SR Pharma) today announces its unaudited interim financial results for the six months ended 30 June 2007.
Operational highlights
* The European Patent Office grants Silence Therapeutics' core chemistry
patent for its novel AtuRNAi¢â€ž¢ molecule providing Silence Therapeutics with
commercial protection for its novel RNAi therapeutics * Quark Pharmaceuticals and Pfizer begin Phase I trials with the first Silence Therapeutics' AtuRNAi¢â€ž¢ based molecule in Age-related Macular Degeneration (AMD)
* Quark is granted an IND for a second AtuRNAi¢â€ž¢ molecule, AKIi-5, for Acute
Kidney Injury
* The Group adopts a new corporate identity and changes its name to Silence
Therapeutics to reflect the Group's core focus and leadership position in
the RNAi sector Post-period highlights
* AstraZeneca collaboration signed to develop novel AtuRNAi molecules against
five specific, mainly respiratory, targets - potential to generate up to ‚£
200m (US$ 400m) in access fees and milestone payments plus royalties on
product sales
* Silence Therapeutics appoints Jeff Vick as Group CEO in order to strengthen
its core management team as the Group seeks to expand its business
partnerships
* Silence Therapeutics and Quark Pharmaceuticals, Inc. announce an expansion
of their strategic technology licensing agreement - Quark granted
non-exclusive license options against three specific targets
Financial highlights
* Group revenues increased to ‚£1.2m from its RNAi technology
* Cash position of ‚£6.4m at the period end (31 December 2006: ‚£8.8m). Post 30
June 2007, ‚£7.5m was received from AstraZeneca
Jeff Vick, Silence Therapeutics' Chief Executive Officer, commenting on today's results announcement said:
"The significant progress that Silence Therapeutics has made over the course of2007 has positioned us as one of the global leaders in RNAi. Our deal withAstra Zeneca was clearly a major positive as it validated our technology, gaveus access to the respiratory field via one of the world leaders and hasprovided additional funds to support the development of our own pipeline. Theentry of the first AtuRNAi molecule into the clinic, via Quark and Pfizer, wasa further important milestone, as was the granting of our core chemistry patentin Europe. We are looking forward to the next twelve months with greatconfidence and expect to generate further value for shareholders as we continueto make progress across all areas of our business."Enquiries:Silence Therapeutics plc Citigate Dewe Rogerson +44(0)20 7307 1620 +44(0)20 7638 9571 Iain Ross, Chairman David Dible
Jeff Vick, Chief Executive Officer Yvonne Alexander Melvyn Davies, Finance Director Nominated Adviser Grant Thornton Corporate Finance
+44 (0) 20 7383 5100 Gerry Beaney Colin Aaronson Notes to Editors
Silence Therapeutics plc (www.silence-therapeutics.com)
Silence Therapeutics plc is a leading RNAi company. RNA interference (RNAi) can selectively "silence" genes linked to the onset of disease.
Silence Therapeutics has developed novel, proprietary short interfering RNA("siRNA") molecules, AtuRNAi, which provide a number of advantages overconventional siRNA molecules as they show increased stability against nucleasedegradation. In addition, the Company has developed a proprietary systemicdelivery system, AtuPLEX. This enables the delivery of siRNA molecules totargeted diseased tissues and cells, whilst increasing their bioavailabilityand intracellular uptake.In July 2007, Silence Therapeutics formed a research and developmentcollaboration with Astra Zeneca to develop AtuRNAi against five specifictargets including those in respiratory indications. The Group's AtuRNAitechnology also has been sublicensed to Pfizer through Quark's license toPfizer of the compound RTP-801i-14 for the treatment of Age-related MacularDegeneration (AMD) and a number of other indications. This compound entered theclinic in early 2007. Silence Therapeutics also has licensed to Quark rights tothe AtuRNAi structure for Quark's proprietary compound AKIi-5. This compoundhas been granted an IND for acute kidney injury and is expected to enter theclinic in 2007. In addition, Silence Therapeutics expects to begin the clinicaldevelopment of its own proprietary AtuRNAi therapeutic molecules for systemiccancer indications, such as gastrointestinal and non-small lung cancer, in2008.
Silence Therapeutics is based in London, UK, and Berlin, Germany, and is listed on AIM.
About RNAiRNA interference (RNAi), a Nobel Prize winning technology, is one of the mostexciting areas of drug discovery today. This is because it represents acompletely new approach to selectively "silence" or inactivate disease relevantgenes and as such it has the potential to create a new class of therapeuticproducts. RNAi could therefore offer a therapeutic approach to a broad range ofdiseases (cancer, infectious diseases, inherited diseases), many of which havebeen regarded as incurable and are not addressed by current therapeutics,therefore providing a large market opportunity.
Forward-Looking Statements
This press release includes forward-looking statements that are subject to risks, uncertainties and other factors. These risks and uncertainties could cause actual results to differ materially from those referred to in the forward-looking statements. All forward-looking statements are based on information currently available to Silence Therapeutics and Silence Therapeutics assumes no obligation to update any such forward-looking statements.
SILENCE THERAPEUTICS plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Chairman's Statement
During the course of 2007, Silence Therapeutics has clearly positioned itselfas one of the global leaders in the rapidly emerging field of RNAitherapeutics. In the last nine months we have focused our activities on ourRNAi business, signed a major research and development collaboration with AstraZeneca, which has given our technology access to the respiratory area, seen ourfirst product enter the clinic and further advanced our novel deliverytechnology. The decision to rename the Group Silence Therapeutics is designedto further enhance our profile in the RNAi space.The progress that we have made across all areas of our business, allied to thegrowing interest in RNAi as a source of truly novel therapeutics, has resultedin a rapid rise in our share price as investors begin to appreciate the valueof our technology.Recently I was delighted, after an extensive worldwide search, to be able toannounce the appointment of Jeff Vick as our Group CEO. He brings with him agreat wealth of experience in science, intellectual property and orchestratingbusiness deals in the high technology sector with big pharma and biotechcompanies. Under Jeff's leadership we are confident that we can take the Groupthrough its next stage of growth and development.In July, I am happy to report that we achieved a key milestone with the signingof an important R&D collaboration with AstraZeneca, which is based on our ownintellectual property. This, along with the expansion of our agreement withQuark Pharmaceuticals, is further validation of the value of our technologybase and I can confirm we continue to have discussions with other third partieswith a view to announcing further significant partnerships.There is little doubt that the RNAi sector is set to maintain a very highprofile and we anticipate that Silence Therapeutics along with its competitorswill be able to command increasingly higher deal values as the bigger playerscome to realise the true value of RNAi technology. Our recent deal withAstraZeneca and that of Alnylam with Roche only serve to emphasise theincreasing interest in this sector.The Board has noted the recent share price volatility, which is not only as aresult of general fluctuations in the financial markets but also because of thehigh liquidity in our shares. However we remain confident that, whilst we maysee further fluctuations in the share price, we are well placed to continue toenhance significantly the overall shareholder value over the next 12 months.
I would like to thank the Board, the management and the staff for their continued efforts and the shareholders for their continuing support.
Iain G RossChairman27 September 2007
CHIEF EXECUTIVE OFFICER'S REVIEW
2007 has seen increased recognition in the pharmaceutical and investmentcommunities that RNAi therapeutics are an important and exciting area fordevelopment of a new class of products which can address a broad range ofdisease targets, including those which are difficult to treat with conventionalsmall molecules, antibodies or protein approaches. This recognitionspecifically has extended to Silence Therapeutics as a clear global leader inthe field.
I am pleased to report that during the first half of 2007 the Company has made continued progress across all facets of the business.
R&D Programmes
In February 2007 the first AtuRNAi molecule commenced Phase I clinical trials.RTP801i entered the clinic under a development program of QuarkPharmaceuticals, Inc. and Pfizer for the treatment of age-related maculardegeneration. Quark anticipates initiating clinical development of twoadditional AtuRNAi products in the second half of 2007, AKIi-5 for treatment ofAcute Kidney Injury and AHLi-11 for treatment of chemotherapy-induced hearingloss. All of these products were discovered and developed by Quark under ourlong-standing option and license agreement, which we expanded in July 2007 toinclude three additional targets.Our internal programs also have advanced. We successfully completed 28 daypre-clinical toxicology studies on Atu027 and have identified a dose level atwhich further pre-clinical studies will be conducted under GLP prior to the INDsubmission to enable human studies to commence in 2008 for a systemic cancerindication, such as gastrointestinal or non-small lung cancer. Atu027 isdesigned to silence the function of a novel kinase protein involved in tumourgrowth and metastases.
We have continued our pre-clinical studies on prostate and liver cancers. In particular we have developed formulations for systemic applications to eradicate metastases, the spread of cancer cells to distant organs.
We have further continued our efforts to design and test new formulations and drug delivery systems through in-house activities and by starting collaborations with outside institutions and companies.
Intellectual Property
In January 2007 the European Patent Office granted the Company its core RNAipatent EP1527176 B1. This patent covers Silence's novel, stabilised, smallinterfering RNA (siRNA) molecules which we refer to as "AtuRNAi" and which haveblunt ends and positional modifications. Issuance of this patent cementscommercial protection for the Company and its partners for all products whichwe and our partners currently are working on or anticipate developing.We also have maintained a continued and open dialogue with the US Patent andTrademark Office (PTO) and have advanced significantly the prosecution of ourcore US AtuRNAi application. Working with the PTO we understand well the issuesrequired to differentiate our technology and seek allowance of our patentclaims. We are confident that a US patent will be allowed which will expand ourproprietary position on AtuRNAi to include the United States.
Third Party Collaborations and Licenses
In July 2007 we signed with AstraZeneca a Research & Development collaboration,which will be primarily in the respiratory field. The collaboration istarget-specific, with development to be focused on up to five targets providedby AstraZeneca. Silence Therapeutics will receive milestone payments of up to ‚£200m (~US$400m) as well as royalties on product sales and already has received(in July) a licence fee payment of ‚£2.5m (~US$5m) plus an equity investment of‚£5m (~US$10m) in respect of initial access fees. This collaboration is veryimportant for us. It allies us with a world leader in respiratory medicine andprovides additional validation of the attractiveness of our proprietary AtuRNAitechnology, and the intellectual property surrounding it, for generation of anew class of therapeutic compounds.In July 2007 we also expanded our strategic technology licensing agreement withQuark Pharmaceuticals, Inc. to provide Quark with options to non-exclusivelicenses to develop AtuRNAi molecules against 3 specific targets. Quark alreadyhas proved successful in discovering and developing AtuRNAi products andadvancing them into the clinic and we welcome the opportunity for them toincrease the number of AtuRNAi products in active development.In both of these agreements we have maintained our strategy of signingtarget-specific agreements with our partners. This allows us to enter intomultiple collaborations, and develop our own programmes, unencumbered by broadobligations to existing partners. We continue in discussions with a range ofpharmaceutical and biotechnology companies and anticipate the announcement ofadditional partnerships going forward.
Financial Performance
Since the deal with AstraZeneca was signed in early July, the figures do notrecord any of the financial benefits of this deal. The impact of the funds thatwe received in July 2007 will be reflected in our figures in second half of theyear.During the six months ended 30 June 2007, the group generated revenues of ‚£1,269,000 (six months ended 30 June 2006: ‚£780,000), of which ‚£1,225,000 arosefrom its RNAi technology. Total costs have risen to ‚£4,808,000 for the halfyear compared to ‚£3,028,000 in the same period last year resulting in a lossafter interest income and tax credits of ‚£3,308,000 compared to ‚£2,041,000 forthe same period last year and ‚£3,826,000 for 2006 as a whole.There are two principal reasons for the increase in reported costs. Firstly theGroup has continued to expand its own in-house development programmes,resulting in an increase in Research and Development costs from ‚£1,674,000 forthe first half of 2006 to ‚£2,379,000 for the first half of 2007. This comparesto a cost of ‚£3,186,000 for the whole of 2006.Secondly, the share price increased sharply in the first half of 2007. Thismovement does have a direct and marked impact on reported costs and financialresults. The Group is required to make provision in its profit and loss accountfor national insurance contributions that would be chargeable as if all the UKbased employees and directors exercised all of the outstanding options at thecurrent share price. During the first half of 2007 the Group has recordedoptions based costs in the profit and loss account of ‚£1,243,000 compared to ‚£207,000 for the same period in 2006 (‚£713,000 for 2006 as a whole) and of thissum ‚£864,000 related to accrued national insurance costs (six months ended 30June 2006: nil). Excluding the charges in respect of share options,administration costs rose from ‚£1,147,000 in the first half of 2006 to ‚£1,186,000 for the first half of 2007.At the start of the year the group had cash balances of ‚£8,824,000. The grouphas used ‚£2,419,000 of these resources in its operations for the first sixmonths of 2007, net of its revenue raised of ‚£1,269,000. With the inflow offunds from our deal with AstraZeneca coming in the second half of the year, weare confident of ending the year with strong cash balances for investment infurther development and advancement of our technology base.
Personal Statement
This is my first report to you as Chief Executive Officer of SilenceTherapeutics plc. I was attracted to join Silence Therapeutics for manyreasons. I am extremely impressed with all of the people involved in thecompany, their competence, professionalism and dedication and theirextraordinary achievements to date, by the solid and differentiated science andtechnology which form the foundation of the company, the tremendous commercialprospects we have, and by the increased attention to our sector and company byboth the pharmaceutical and investment communities.I am both honoured and delighted to join Silence and lead the company throughthe next stage of growth. I thank all of you for your support of the companyand I look forward to working with you to enhance the value of our company.
Summary
During 2007, we have clearly positioned Silence Therapeutics as one of theglobal leaders in the rapidly emerging RNAi space. We have also worked hard tocreate a platform from which we can move the Group forward rapidly. Over thenext twelve months we expect to sign further deals which will allow us togenerate more value from our unique RNAi technology, to have strengthened ourintellectual property position, to see more AtuRNAi molecules enter the clinicin the hands of our partners and to have progressed our own lead product to apoint where it is about to enter the clinic. Given these developments it isclear that Silence Therapeutics has the potential to generate furthersignificant value for its shareholders.Jeffery S. VickChief Executive Officer27 September 2007SILENCE THERAPEUTICS PLCCONSOLIDATED INCOME STATEMENTSIX MONTHS ENDED 30 JUNE 2007 Six months Six months Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 ‚£ ‚£ ‚£ Revenue 1,268,837 780,104 1,947,301 Research and development (2,378,618) (1,674,494) (3,185,886) direct costs Gross Loss (1,109,781) (894,390) (1,238,585) Administrative expenses (2,429,415) (1,354,404) (3,029,764) Operating Loss (3,539,196) (2,248,794) (4,268,349) Finance income 180,955 174,193 347,676 Finance costs - (1,372) (19,905) Loss for the period (3,358,241) (2,075,973) (3,940,578) before tax Taxation credit for the 50,000 35,000 114,094 period Retained loss for the period after taxation attributable to Equity Holders (3,308,241) (2,040,973) (3,826,484) transferred from reserves Loss per Ordinary Equity (2.92)p (2.24)p (4.02)p Share ==== ==== =====
All transactions arose from continuing activities.
SILENCE THERAPEUTICS PLCCONSOLIDATED BALANCE SHEETAT 30 JUNE 2007 As at As at As at 30 June 31 December 30 June 2007 2006 2006 ‚£ ‚£ ‚£ Non-current assets Property, plant and 274,636 146,897 156,002 equipment Goodwill 6,240,181 6,239,679 6,399,743 Other intangible assets 756,385 728,489 788,689 7,271,202 7,115,065 7,344,434 Current assets Inventories - - 82,103 Trade and other 1,047,481 812,453 574,187 receivables Cash and cash equivalents 6,405,044 8,824,044 6,801,274 7,452,525 9,636,497 7,457,564 Current liabilities Trade and other payables 1,929,566 929,607 663,304 Provisions - current - 115,342 189,680 Provisions - non current - - 47,420 1,929,566 1,044,949 900,404 Net assets 12,794,161 15,706,613 13,901,594 Capital and Reserves attributable to the Company's Equity Holders Share capital 1,132,234 1,130,650 930,433 Share premium account 32,204,134 32,185,514 28,192,197 Merger reserve 6,140,874 6,140,874 6,140,874 Share-based payment 2,257,228 1,886,231 1,602,710 reserve Translation reserve (51,031) (47,466) 164,067 Profit and loss account (28,889,278) (25,589,190) (23,128,687) Equity Holders' funds 12,794,161 15,706,613 13,901,594 SILENCE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CHANGES IN NET EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Shares Share Merger Share Translation Profit and Shareholder based Premium Reserve Payment Reserve Loss Account Funds Reserve ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ at 1 January 2007 1,130,650 32,185,514 6,140,874 1,886,231 (47,466) (25,589,190) 15,706,613 Loss for 6 months (3,308,241) (3,308,241)to 30 June 2007 Exercise of staff 1,584 18,620 - (8,153) - 8,153 20,204options Charge based on - - - 379,150 - - 379,150options issued Translation - - - - (3,565) - (3,565)adjustment at 30 June 2007 1,132,234 32,204,134 6,140,874 2,257,228 (51,031) (28,889,278) 12,794,161 SILENCE THERAPEUTICS PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Six months Six months Year ended to to 30 June 30 June 31 December 2006 2006 2006 Cash flows from operating ‚£ ‚£ ‚£ activities Loss before taxation (3,358,241) (2,075,973) (3,940,578) Adjustments for: Depreciation charges 38,934 91,351 142,053 Amortisation charges 110,597 105,961 211,416
(Profit)/loss on sale of fixed - (178) 2,255
assets
Charge for the period in respect 379,150 206,855 491,489
of share-based payments
Foreign exchange losses/(gains) (4,142) 16,522 (27,712)
(Decrease)/increase in provision (18,000) (18,000) (33,000) against loan Investment income (180,955) (159,881) (314,676) Investment expense - 1,372 1,360 (3,032,657) (1,831,971) (3,467,393) (Increase)/decrease in trade and (185,028) (43,464) (287,101) other receivables
(Increase)/decrease in inventories - (251) 81,852
Increase/(decrease) in trade 884,617 (585,237) (440,692) payables Cash absorbed by operations (2,333,068) (2,460,923) (4,113,334) Interest paid - (1,372) (1,360) Income taxes received - - 84,466 Net cash outflow from operating (2,333,068) (2,462,295) (4,030,228)activities Cash flows from investing activities
Recovery of loan made in previous 18,000 - 33,000
years Interest received 180,955 159,881 314,676 Additions to property, plant and (166,658) (1,854) (48,434) equipment
Additions to intangible assets (138,433) (15,224) (80,917)
Proceeds from sale of equipment - 2,248 - Cash generated from/(absorbed in) (106,136) 145,051 218,325
investing activities Cash flows from financing activities Proceeds from issue of share 20,204 27,317 3,544,746 capital and options Net (decrease) in cash and cash (2,419,000) (2,289,927) (267,517) equivalents Cash and cash equivalents at 8,824,044 9,091,201 9,091,201 beginning of period Net (decrease) in cash and cash (2,419,000) (2,289,927) (267,517) equivalents Cash and cash equivalents at end 6,405,044 6,801,274 8,824,044 of period SILENCE THERAPEUTICS PLCNOTES1. Basis of preparationThe financial information has been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) and using the same accounting policies asin the preparation of the audited accounts for the year ended 31 December 2006.
The accounts are drawn up in compliance with IAS 34, Interim Financial Reporting.
The above financial information does not constitute statutory accounts withinthe meaning of Section 240, Companies Act 1985. The information relating to thesix months ended 30 June 2007 is neither audited nor reviewed. Informationrelating to the year ended 31 December 2006 has been extracted from thestatutory accounts of the Group which have been audited by the Group's auditorsGrant Thornton UK LLP and whose report thereon is unqualified.2. Segment ReportingSix months ended 30 June 2007 Business Segments RNAi Immunotherapy Unallocated Consolidated Therapeutics Group items ‚£ ‚£ ‚£ ‚£ Revenue 1,224,837 44,000 - 1,268,837 Operating results (1,555,117) (872,630) (1,111,449) (3,353,196) Net finance income 12,068 17,956 150,931 180,955 Net result for the (1,543,049) (854,674) (960,518) (3,358,241) period Segment assets 8,286,198 883,771 5,553,648 14,723,727 Segment liabilities (461,304) (601,622) (866,640) (1,929,566) Costs to acquire 162,467 4,191 - 166,658 property, plant and equipment Costs to acquire 138,443 - - 138,443 intangible assets Depreciation and 146,393 3,318 - 149,531 amortisiation Charge for non-cash 85,340 41,785 252,025 379,150 expenses Six months ended 30 June 2006 Business Segments RNAi Immunotherapy Unallocated Consolidated Therapeutics Group items ‚£ ‚£ ‚£ ‚£ Revenue 780,104 - - 780,104 Operating results (1,092,367) (657,360) (499,067) (2,248,794) Net finance income 1,190 6,987 164,644 172,821 Net result for the (1,091,177) (650,373) (334,423) (2,075,973) period Segment assets 8,320,803 537,688 5,943,507 14,801,998 Segment liabilities (432,335) (468,069) - (900,404) Costs to acquire 1,854 - - 1,854 property, plant and equipment Costs to acquire 15,224 - - 15,224 intangible assets Depreciation and 194,182 3,130 - 197,312 amortisiation Charge for non-cash 59,068 32,828 114,959 206,855 expenses 3. Earnings per shareThe loss per share is based on the loss for the period after taxationattributable to Equity Holders of ‚£3,308,241 (year ended 31 December 2006 -loss ‚£3,826,484; six months ended 30 June 2006 - loss ‚£2,040,973) and on theweighted average of 113,117,428 ordinary shares in issue during the period(year ended 31 December 2006 - 95,138,708; six months ended 30 June 2006 -91,126,570). The options outstanding at 30 June 2007, 31 December 2006 and 30June 2006 are considered to be antidilutive in that their conversion intoordinary shares would decrease the net loss per share. Consequently, there isno diluted earnings per share to report for either year.
4. Taxation
The credit for UK Corporation Tax arises from the Group taking advantage of thelegislation regarding the treatment and surrender of tax losses arising fromcertain qualifying research and development expenditure.
SILENCE THERAPEUTICS PLC