1 Apr 2009 07:00
SILENCE THERAPEUTICS PLC ("Silence Therapeutics", "Silence", "the Group" or "the Company") UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
London, 1 April 2009 - Silence Therapeutics plc (AIM: SLN) today announces its unaudited preliminary consolidated results for the year ended 31 December 2008.
HIGHLIGHTS 2008
OPERATIONAL
* Silence announced a collaboration agreement with AstraZeneca to develop novel approaches for the delivery of short interfering RNA (siRNA) molecules. * Silence's licensing partner Quark Pharmaceuticals, together with Pfizer, commenced Phase II clinical trials with RTP-801i-14 (PF-4523655) aimed at the acute macular degeneration (AMD) market. This siRNA therapeutic product candidate relies upon Silence's AtuRNAi technology. Silence received a $1.9m milestone payment from Quark. * The US Patent and Trademark Office granted Silence's core RNAi patent application (US Patent Number 7,452,987). During the year, the European Patent Office revoked in their entirety two fundamental patents held by a rival company. * The journal, Cancer Research, published comprehensive pre-clinical data on Atu027, Silence's lead oncology drug candidate. * Silence submitted a Clinical Trial Application for Atu027 to the Bundesinstitut f¼r Arzneimittel und Medizinprodukte (BfArM), the German regulator for drugs and medical devices.
BOARD
* Silence strengthened its Board with the appointment of Annette Clancy and Jerry Randall as non-executive directors. Jeremy Curnock Cook was named as Senior Independent Director and Chairman Iain Ross took on the additional role of chief executive.
FINANCIAL
* Revenue generated in the year was £2.21m (2007: £4.05m) * Administrative expenses were reduced to £3.29m (2007: £4.99m) * Research and Development expenditure increased to £6.71m (2007: £4.84m) due to continued investment in our pipeline of novel siRNA molecules. * The cash position at year-end was £3.35m. This was increased to £6m following the £2.65m Institutional Placing in early 2009. At the end of 2007, Silence had cash of £10.17m.
POST YEAR-END
* Silence completed a placing to raise £2.65m (net) at 18p per share. Placees included Gartmore, Fidelity and Insight. * Quark initiated Phase I/II clinical trials with QPI-1002, another siRNA therapeutic product candidate based upon Silence's unique proprietary chemistry being developed by Quark for use in kidney transplants. * The European Patent Office (EPO) granted a patent on protein kinase N3 (PKN3), the target gene for Silence's lead compound Atu027. * The Technical Board of Appeal of the European Patent Office revoked in its entirety European patent EP1 214 945, which is a fundamental competitor patent owned by Alnylam Europe AG.
CHAIRMAN'S STATEMENT
In 2008, Silence Therapeutics made substantial progress across all facets of its business. In an extraordinary year for the world's financial markets, we were quick to adapt to the changing circumstances and we took decisive steps to minimise the impact. Recognising the need to conserve cash, we implemented cost savings across the business and re-focused our business to ensure that our expenditure is directed only to those initiatives that will create shareholder value in the short to medium term.
Consolidation within the pharmaceutical industry also required Silence to adapt and we adjusted our approach to ensure that we remain competitive in terms of technology and funding discussions. Currently we are engaged in negotiations with several major pharma companies and are pursuing a number of agreements to broaden our technology and RNAi delivery capabilities.
The Silence Board shares the frustration of shareholders that we have not yet been able to deliver further validating deals. However, we remain confident that we are well positioned to conclude further non-dilutive collaboration deals during 2009.
Following an institutional placing in early January that raised new funds of £ 2.65m net of expenses, we are confident that the £6m cash balance at that date will fund Silence well into 2010 after the steps we have taken across the business to control costs. The cash balance will be augmented by further grant and milestone income, and by the cash-generating deals that we are pursuing.
From a Research and Development perspective, 2008 was another good year with the Group successfully completing and publishing its pre-clinical data on Atu027, our lead siRNA programme, which is aimed at treating solid tumours. In December 2008 we reached a major milestone for the Group with the Clinical Trial Application (CTA) for Atu027 being submitted to the BfArM, the German regulator for drugs and medical devices. Upon receiving regulatory approval we will commence our first human clinical trial with Atu027. This trial will take the form of a dose escalation study in cancer patients and is designed to confirm the safety and tolerance of Atu027. The costs of this trial will be spread over a two year period and will be significantly less than the pre-clinical programme costs incurred over the last two years.
We made excellent progress on our RNAi intellectual property portfolio in terms of filing, issuing and granting of key patents. We saw our core RNAi chemistry patent being granted in the US and also a grant of our PKN3 target patent in Europe. Our position in the overall patent landscape was further enhanced during the year as key competitor patents in the RNAi space were revoked and/or successfully opposed.
I am pleased to report that we have made strong progress with our existing collaborations and partnerships. Quark and Pfizer announced that they have moved RTP-801i-14 into Phase II clinical trials, and Quark's clinical development of AKLi-5 for acute kidney injury has progressed. Quark also announced that it had commenced clinical trials with QPI-1002 for use in kidney transplantation. All of these products rely upon Silence's proprietary AtuRNAi chemistry and as a consequence Silence will be entitled to milestone and royalties payments during their development and commercialisation.
During the year we have worked closely with AstraZeneca and excellent progress has been made on the target-specific collaboration programme announced in 2007. In addition, we have made significant progress on the siRNA delivery collaboration announced in March 2008 and already we have developed novel delivery concepts and structures. We hope to make further announcements on each of our existing partnership and licence agreements during 2009.
Recognising the costs of late-stage clinical development, the Company will continue to balance the risk and reward of partnering and/or licensing our product programmes. In addition, Silence remains open to the possibility of participating in mergers and acquisitions and other moves to strengthen the Company's financial position, build its critical mass and enhance its product and technology platform.
I would like to thank the Board, management, staff and shareholders alike for their support during a challenging year and look forward to ultimately delivering value for shareholders.
Iain G RossChairmanFINANCIAL REVIEW
Despite the turmoil in world financial markets over the past year, the group continued to expand its research and development activities. Expenditure on R&D rose from £3.19m in 2006 to £4.84m in 2007 and then to £6.71m in 2008. The figures are skewed by the sharp movements in exchange rates between sterling and euros over the past 18 months. Stripping out the impact of those fluctuations, on a like-for-like basis the investment in our core RNAi technology rose by 26% during the year. The Group has continued to generate revenues from its existing development partnerships and gain access to grant financing. Group turnover in 2008 amounted to £2.21m from milestone and grant income, compared to £1.55m from those sources in 2007. However, the absence of new licence income in 2008 (2007: £2.5m) resulted in an overall fall in turnover to £2.21m from £4.05m.
Group administration costs were reduced during the year to £3.29m, from £4.99m in 2007. The Group reduced general administration costs by more than 10%, and the charges attributable to option expenses fell by £1.5m.
Outlook
At the start of the new financial year, the Group raised £2.65m net of expenses through a placing of 15 million new shares at 18p to a small number of existing shareholders. This increased our cash balances to £6m. Through a combination of existing partnership arrangements and new deals, the Board is confident that additional resources will become available during 2009 to enable it to enhance its technology and value. In the meantime, the Group has refocused some of its expenditure on its core technology and has instituted cost reduction measures that will result in savings of over £0.5m in a full year.
The Group will continue to add value to its portfolio of RNAi-based assets by expanding and developing its technology, either alone or with selected development partners. The Board continues its commitment to maintaining a strong cash balance relative to current cash usage, enabling a secure basis for the planning of future activities.
Melvyn DaviesFinance DirectorSILENCE THERAPEUTICS PLC
UNAUDITED CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2008 2008 2007 £ £ Revenue 2,208,699 4,046,974 Research and development costs (6,712,032) (4,842,529) Gross loss (4,503,333) (795,555) Administrative expenses (3,288,304) (4,992,159) Operating loss (7,791,637) (5,787,714) Finance income 356,996 543,817 Loss for the year before taxation (7,434,641) (5,243,897) Taxation credit for the year - 136,019 Loss for the year after taxation (7,434,641) (5,107,878) Loss per share (basic and diluted) (6.20)p (4.39)p
SILENCE THERAPEUTICS PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2008 2008 2007 £ £ Non-current assets Property, plant and equipment 535,909 398,764 Goodwill 8,611,087 6,653,990 Other intangible assets 812,696 779,703 9,959,692 7,832,457 Current assets Trade and other receivables 998,702 1,340,860 Tax recoverable 70,000 130,000 Cash and cash equivalents 3,350,187 10,174,389 4,418,889 11,645,249 Liabilities - current Trade and other payables (934,601) (1,801,946) (934,601) (1,801,946) Net assets 13,443,980 17,675,760 Equity Share capital 1,199,134 1,198,835 Capital reserves 47,010,414 46,465,165 Translation reserve 3,291,489 636,594 Retained loss (38,057,057) (30,624,834) Total equity 13,443,980 17,675,760 SILENCE THERAPEUTICS PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AT 31 DECEMBER 2008
Share Capital Translation Retained
capital reserves reserve loss Total
£ £ £ £ £
At 1 January 2007 1,130,650 40,212,619 (47,466) (25,589,190) 15,706,613
________ ________ _______ _________ _________
Changes in equity for 2007
Exchange differences arising on
consolidation of foreign operations - - 684,060 - 684,060
________ ________ _______ _________ ________
Net income recognised directly
in equity - - 684,060 - 684,060
Loss for the year ended
31 December 2007 - - - (5,107,878) (5,107,878)
________ ________ _______ _________ ________
Total recognised income and
expense for the year - - 684,060 (5,107,878) (4,423,818)
Recognition of share-based payments - 1,221,952 - - 1,221,952
Transfer upon exercise of
options in year - (72,234) - 72,234 -
Shares issued in the year 68,185 5,102,828 - - 5,171,013
______ ________ ________ _________ ________
Movement in the year 68,185 6,252,546 684,060 (5,035,644) 1,969,147
______ ________ ________ _________ ________
________ ________ ________ _________ ________
At 31 December 2007 1,198,835 46,465,165 636,594 (30,624,834) 17,675,760
________ ________ ________ _________ ________
Changes in equity for 2008
Exchange differences arising on
consolidation of foreign operations - - 2,654,895 - 2,654,895
______ ________ _______ _________ ________
Net income recognised directly
in equity - - 2,654,895 - 2,654,895
Loss for the year ended
31 December 2008 - - - (7,434,641) (7,434,641)
______ ________ _______ _________ ________
Total recognised income and
expense for the year - - 2,654,895 (7,434,641) (4,779,746)
Recognition of share-based payments - 544,158 - - 544,158
Transfer upon:
- exercise of options in year - (1,687) - 1,687 -
- lapse of vested options in year - (731) - 731 -
Shares issued in the year 299 3,509 - - 3,808
______ ________ ________ _________ ________
Movement in the year 299 545,249 2,654,895 (7,432,223) (4,231,780)
______ ________ ________ _________ ________
________ ________ ________ _________ ________
At 31 December 2008 1,199,134 47,010,414 3,291,489 (38,057,057) 13,443,980
________ ________ ________ _________ ________
SILENCE THERAPEUTICS PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007 £ £ Cash flow from operating activities Loss before taxation (7,434,641) (5,243,897) Adjustments for: Depreciation charges 116,489 78,069 Amortisation charges 306,916 240,021 Impairment of goodwill - 153,915 Loss on sale of property, plant and equipment 307 39 Charge for the year in respect of Share-based payments 544,158 1,221,952 Foreign exchange movement 73,410 25,856 Recovery of loan provided for in (31,000) (36,000) previous years Finance income (253,634) (507,817) (6,677,995) (4,067,862) Decrease/(increase) in trade and other 668,891 (608,407) receivables (Decrease)/increase in trade and other (1,032,708) 756,997 payables Cash (absorbed) by operations (7,041,812) (3,919,272) Taxation received 60,000 86,019 Net cash (outflow) from operating (6,981,812) (3,833,253)activities Cash flow from investing activities £ £ Recovery of loan made in previous years 31,000 36,000 Finance income 253,634 507,817 Additions to property, plant and (135,584) (306,463) equipment Additions to intangible assets (135,752) (224,769) Net cash generated from investing 13,298 12,585 activities Cash flows from financing activities Proceeds from issue of share capital 3,808 5,171,013 (Decrease)/increase in cash & cash (6,964,706) 1,350,345 equivalents Cash and cash equivalents at start of 10,174,389 8,824,044 year Net (decrease)/increase in the year (6,964,706) 1,350,345 Effect of exchange rate fluctuations on 140,504 - cash held Cash and cash equivalents at end of 3,350,187 10,174,389 year Cash and cash equivalents includes Instant access bank accounts 3,350,187 10,174,389 SILENCE THERAPEUTICS PLC
NOTES TO THE UNAUDITED PRELIMINARY ANNOUNCEMENT
YEAR ENDED 31ST DECEMBER 20081 GENERAL INFORMATION1.1 Group Information
Silence Therapeutics ("Silence" or "the Company") and its subsidiaries (together "the Group") are primarily involved in the research and development of novel pharmaceutical products. Silence Therapeutics plc, a public limited company incorporated and domiciled in England, is the Group's ultimate parent company. The address of the Company's registered office is: 22 Melton Street, London NW1 2EP and the principal place of business is The Royal Institution of Great Britain, 21 Albemarle Street, London W1S 4BS.
1.2 Going concern
The financial statements have been prepared on a going concern basis which assumes that the group will continue in operational existence for the foreseeable future.
The group had a net cash outflow for 2008 of £6.82m and at 31 December 2008 had cash balances of £3.35m. In early January 2009, the group raised £2.65m (net of costs) through a share placement, increasing the cash position to £6m.
The directors have reviewed the working capital requirements of the group for the next 12 months and are confident that these can be met. The directors have a reasonable expectation that further finances will become available during the course of the year through grants, milestone and licence fee payments, relating to either new or existing agreements. The directors note that there is a material uncertainty as to the exact timing and source of these funds and that the failure to receive sufficient funding from these sources would cast significant doubt on the Group's ability to continue as a going concern. The directors have also taken a number of steps to reduce administration costs and to restrict the research and development expenditure to core areas pending the availability of additional funds.
The directors consider that the continued adoption of the going concern basis is appropriate and the accounts do not reflect any adjustments that would be required if they were to be prepared on any other basis.
1.3 The financial information set out above does not constitute the Company's statutory accounts within the meaning of section 240 of the Companies Act 1985. The 2008 figures are based on unaudited accounts for the year ended 31 December 2008. The directors anticipate that the auditor's report, to be issued with the Group's statutory accounts for the year ended 31 December 2008, will be unqualified but will contain an emphasis of matter paragraph. This emphasis of matter paragraph will draw attention to the material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern, referred to in note 1.2 above.
The unaudited preliminary announcement has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for 2007.
The 2007 comparatives are derived from the statutory accounts for 2007 which have been delivered to the Registrar of Companies and received an unqualified audit report and did not contain a statement under the Companies Act 1985, s237 (2) or (3).
2. LOSS PER SHARE
The calculation of the loss per share is based on the loss for the financial year after taxation of £7,434,641 (2007: loss £5,107,878) and on the weighted average of 119,885,617 (2007: 116,296,656) ordinary shares in issue during the year.
The options outstanding at 31 December 2008 and 31 December 2007 are considered to be non-dilutive in that their conversion into ordinary shares would not increase the net loss per share. Consequently, there is no diluted loss per share to report for either year.
- Ends -
Enquiries:
For further information, please contact the following:
Silence Therapeutics plc Powerscourt +44(0)20 7491 6520 +44(0)20 7250 1446 Iain Ross, Chairman & CEO Paul Durman Melvyn Davies, Finance Director Kay Larsen Nominated Advisers Nomura Code Securities Limited +44(0)20 7776 1200 Richard Potts Notes to Editors:
About Silence Therapeutics plc (www.silence-therapeutics.com )
Silence Therapeutics plc (AIM: SLN) is a leading European RNAi-focused biotechnology company.
RNA interference (RNAi), is a Nobel Prize winning technology and one of the most exciting areas of drug discovery today. It represents a completely new approach to selectively 'silence' or inactivate disease relevant genes and as such it has the potential to create a new class of therapeutic products. RNAi could therefore offer a therapeutic approach to a broad range of diseases (cancer, infectious diseases, inherited diseases), many of which have been regarded as incurable and are not addressed by current therapeutics, therefore providing a large market opportunity.
Silence Therapeutics has developed a platform of novel short interfering RNA
('siRNA') molecules, AtuRNAi, which provide a number of advantages over conventional siRNA molecules, including increased stability against nuclease degradation. In addition, the Company has developed a proprietary systemic delivery system, AtuPLEX. This system enables the functional delivery of siRNA molecules to targeted diseased tissues and cells, while increasing their bioavailability and intracellular uptake.
Following the granting of its patents in Europe, the USA and Australia, Silence Therapeutics is one of only two companies worldwide with a proprietary position on composition of matter for siRNA therapeutics.
Silence's lead internal product, Atu027, is a proprietary AtuRNAi molecule in preclinical development for systemic cancer indications. Atu027 has successfully completed single and repeat dose toxicology and geno-toxicology studies, as well as a 28-day toxicology study using multiple dosing regimens. Silence made a regulatory filing in 2008 and expects to commence clinical trials for Atu027 in 2009.
In March 2008 Silence Therapeutics announced a collaboration with AstraZeneca
focused on the development of a range of novel delivery approaches for siRNA molecules. Under the terms of the agreement both Silence Therapeutics and AstraZeneca will be allowed to commercialize the truly novel delivery systems that the two partners develop together.
Silence Therapeutics has granted a licence to AstraZeneca to develop novel AtuRNAi therapeutics against five specific targets. This collaboration was the first industry validation of the potential application of Silence Therapeutics' proprietary AtuRNAi molecules and solidified the Company's leadership position in field of RNAi therapeutics.
The Company's AtuRNAi technology also has been sublicensed to Pfizer via Quark's license to them of the compound RTP-801i-14 for the treatment of age-related macular degeneration (AMD) and a number of other indications. This compound entered a phase II clinical study in July 2008. Silence Therapeutics also has licensed to Quark rights to the AtuRNAi structure for Quark's proprietary compound, AKIi-5, which is in a Phase I human clinical study for treatment of acute kidney injury.
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 is based in London, UK, and Berlin, Germany, and is listed on AIM.
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