Silence Therapeutics plc Unaudited Preliminary Results for the Year Ended 31 December 2009

LONDON, April 29 /PRNewswire/ -- Silence Therapeutics plc (AIM: SLN) ("Silence" or the "Company") announces its results for the year ended 31 December 2009.

On 5 January 2010, Silence merged with U.S.-based RNA interference (RNAi) therapeutic company, Intradigm Corporation, to form a leading company in the field of RNAi.  The merger offers a number of strategic benefits including multiple RNAi discovery, development and delivery technologies, a broad internal and partnered product pipeline and a strong portfolio of intellectual property.  Details and outlook relating to this merger are provided in the Chairman's Statement and the Chief Executive's Review.

Analyst Conference Call and Webcast:  An analyst briefing call and simultaneous webcast will be held Thursday, 29 April 2010 at 2:00pm BST / 9:00am ET.  The webcast can be accessed via Silence Therapeutics' website at www.silence-therapeutics.com.  The conference call can be accessed by dialing:

U.K.:  0 808 101 7548

U.S.:  913-312-1483

Participant PIN code:  6504213

The archived webcast will be available afterwards on Silence Therapeutics' website.

HIGHLIGHTS 2009

OPERATIONAL

• Silence initiated a Phase I clinical trial of Atu027, its lead drug candidate for the treatment of advanced solid tumours. The trial, being conducted at the clinical study centre of the Cancer Hospital SanaFontis in Freiburg, Germany, is an open-label, dose-finding study to address the safety, tolerability and pharmacokinetics of Atu027. It is expected that results from the trial will be available in the second half of 2011.
• Silence's licensing partner, Quark Pharmaceuticals, commenced Phase I/II clinical trials with QPI-1002, a short interfering RNA (siRNA) therapeutic product candidate in development for use in kidney transplants.   QPI-1002 is based on Silence's proprietary AtuRNAi chemistry.
• 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.
• Silence entered into a delivery collaboration with Dainippon Sumitomo Pharma Co., Ltd. of Japan to demonstrate the functional delivery of Silence's proprietary siRNA molecules to specific targets.  The collaboration is evaluating Silence's proprietary AtuRNAi, a novel proprietary siRNA molecule which is chemically modified to improve stability, reduce manufacturing costs and increase yield. The collaboration is also making use of Silence's AtuPLEX delivery technology, which has been shown to improve functional intracellular uptake.
• The Opposition Division of the EPO upheld Silence's core AtuRNAi patent EP 1 527 176 ('176) in amended form.  The amended form of patent '176 covers Silence's proprietary blunt-ended siRNA molecules containing alternating 2'-O-Methyl modifications.

FINANCIAL

• Revenue generated in the year was 1.72m pounds Sterling  (2008: 2.21m pounds)
• Administrative expenses increased to 4.20m pounds (2008: 3.29m pounds)
• Research and development expenditure decreased to 5.07m pounds (2008: 6.71m pounds)
• The cash position at year-end was 1.13m pounds. A further 15.0m pounds (gross) was raised shortly after the year-end through an institutional placing that closed in January 2010. At the end of 2008, Silence had cash of 3.35m pounds.

POST YEAR-END BOARD AND MANAGEMENT CHANGES

• Silence announced a board change with the resignation of Iain Ross as chairman. Jerry Randall, who was appointed to the Silence board in 2008, was appointed non-executive chairman.
• Silence announced a management and board change with the resignation of Melvyn Davies as chief financial officer.  Silence also announced the appointment of Max Herrmann as the company's chief financial officer and company secretary with effect from 4 May 2010.  

CHAIRMAN'S STATEMENT

2009 was a defining year for Silence Therapeutics.  Each of the company's internal programs advanced steadily - we entered into a new collaboration with Dainippon Sumitomo and made excellent progress with each of our pharma partnerships, and we strengthened our intellectual property position by expanding our portfolio of filed and issued patents.

Despite our many internal successes, the turbulence of the world's financial markets created a significant degree of uncertainty that required the company's attention and decisive action.  In an effort to address the declining opportunity for financing and the erosion of our share value, we began to evaluate our options, with the goal of achieving the following objectives:

• Establish Silence as a partner-of-choice for the world's leading pharmaceutical companies;
• Expand our technology base to allow us to best address the challenges of RNAi delivery; and,
• Secure additional financing for the company.

The merger with Intradigm Corporation, which was completed in January 2010, took Silence Therapeutics a long way to achieving these goals including a concurrent financing of 15.0m pounds (gross).  As a result, Silence is now better funded and holds a strong strategic position in the three areas we believe are critical to building, protecting and commercializing RNAi therapeutics:

• Proprietary delivery technologies
  • Silence's delivery platform is one of the industry's broadest, including both lipid and polymer technologies, offering drug developers an increased opportunity for successful delivery to specific tissues to cause specific therapeutic benefits.
• Potent siRNA sequences
  • Silence has issued and pending patents on multiple high-value siRNA sequences of varying structure.
• Innovative siRNA structural features
  • Silence has issued and pending patents directed to one of the industry's most advanced siRNA chemical modification technologies optimized for improved stability, yield and safety.
  • Silence's exclusive licenses from the University of Massachusetts provide access to issued and pending patents associated with the Zamore "Design Rules" including methods for increased potency and reduced off-target effects.

A key factor in establishing Silence as a partner-of-choice for pharmaceutical companies is our ability to provide novel and effective siRNA delivery solutions.  As it is not likely that the vast range of siRNA delivery challenges will be addressed by a single platform, we believe it's critical to build a broad toolbox of solutions and technologies. By combining the impressive expertise of both Silence and Intradigm, we now have one of the industry's most comprehensive and versatile delivery technology platforms, providing Silence with unmatched potential to develop solutions for successful siRNA delivery to particular tissues to cause specific therapeutic benefits.

The combined assets of the new company have drawn the attention of a number of leading pharmaceutical companies worldwide and we are actively engaged in partnering discussions spanning a range of new and exciting development opportunities.

In summary, the merger combined the strength of two innovative entities and created a new leadership in RNAi therapeutic development. As a result, we have succeeded in establishing a new company with the following strengths and advantages:

• Comprehensive platform of technologies capable of addressing the discovery, development and delivery of RNAi therapeutics. Capabilities extend to all essential areas for successful product development including formulation and drug delivery, siRNA structure and chemistry and a diverse library of therapeutic siRNA sequences.
• Advancing pipeline of internal and partnered product candidates. At least half of the siRNA programs currently in clinical development globally incorporate Silence's technology. These include product candidates that are being advanced by partners such as Pfizer and Quark Pharma.
• Broad and diverse intellectual property portfolio. IP protection covering essential areas of RNAi therapeutic development (target sequences, delivery and siRNA structural features).
• Validating partnerships with global pharmaceutical companies. The multiple major partnerships with companies such as AstraZeneca, Pfizer, Quark Pharma and Dainippon Sumitomo demonstrate the credibility of Silence's technologies.
• Experienced management team and board of directors. Our new management team, board and recent reorganization provide the expertise and focused skills required to advance Silence's discovery and development activities.
• Expanded financial support and stability to facilitate new growth opportunities. International shareholder base offers broader access to capital, which should ultimately provide additional strength to negotiate favorable strategic transactions.

We believe the merger produced a stronger, more stable and technologically sophisticated company that is well positioned as a new leader in RNAi therapeutic development. We are actively developing our strategic plan for the near term, and we will continue to take all steps required to advance our internal and partnership programs, as well as establish new collaborations to fuel our pipeline in the future.

We are grateful for the support of our shareholders and new investors alike and we wish to assure them both that we are committed to building corporate value through meaningful scientific progress and additional high-value partnerships with the pharmaceutical industry.

Thank you for your continued support of Silence Therapeutics.

Jerry Randall ACA

Chairman

CHIEF EXECUTIVE'S REVIEW

OVERVIEW

In 2009, a number of pivotal events provided the foundation and framework that will propel Silence forward in 2010 and beyond.  During the year, the company made progress on all fronts – in the clinic, with partnerships, financially and in securing critical intellectual property (IP). These successes opened the door for further opportunity, culminating in the merger with Intradigm on 5 January 2010.  We believe post-merger Silence is a new leader in RNAi therapeutic development with a unique potential to develop delivery solutions that can be tailored to address various therapeutic requirements. With our expanded technologies and assets, we are aggressively executing a plan designed to further strengthen the business and create increasing value for our shareholders.  

Before looking ahead, I'd like to address each of the critical 2009 events that contributed to our new company and our future opportunities.

OPERATIONAL

Progress in the Clinic

In 2009, we made great strides in the clinic with two of our programs in human trials.  In January 2009, our licensing partner, Quark Pharmaceuticals, commenced a Phase I/II clinical trial with QPI-1002, its RNAi drug targeting the p53 gene for the prevention of delayed graft function (DGF) following kidney transplants. QPI-1002 incorporates Silence's AtuRNAi technology and we believe this independent advancement of our technology represents a significant validation of Silence's science and drug candidates.  While this program is managed by Quark, we believe the trial is progressing as planned and we look forward to the results.

In June 2009, Silence initiated a Phase I study of Atu027, our lead drug candidate for the treatment of advanced solid tumours. The trial, being conducted at the clinical study centre of the Cancer Hospital SanaFontis in Freiburg, Germany, is an open-label, dose-finding study to address the safety, tolerability and pharmacokinetics of Atu027.  This trial has 11 dosing regimens.  We are advancing through the dosing protocol as planned and we remain on target to have results in the second half of 2011.

Atu027 specifically targets PKN3, a molecule involved in cancer growth and metastasis formation. Atu027 is Silence's most advanced clinical candidate for a systemically delivered siRNA using the company's proprietary AtuPLEX delivery technology.  It is our belief that Atu027 may ultimately be a valuable treatment option for cancer patients that do not respond to standard therapy.

Silence is also working to develop three pre-clinical programs.  Atu134 is being evaluated for potential treatment of acute lung injury and Atu111 and Atu150 are both being evaluated for the potential treatment of solid tumours.

Expanding Our Collaborations

In August 2009, Silence expanded its partnerships with the addition of a new collaboration with Dainippon Sumitomo Pharma Co., Ltd. of Japan.  The purpose of the collaboration is to demonstrate the functional delivery of Silence's proprietary siRNA molecules to specific targets.  The ongoing collaboration is currently evaluating Silence's proprietary AtuRNAi molecule that is chemically modified to improve safety, reduce manufacturing costs and increase stability. The collaboration is also making use of Silence's AtuPLEX delivery technology, which has been shown to improve functional intracellular uptake.

Though this collaboration is currently only seven months old, we were pleased to announce in March 2010 that Dainippon Sumitomo has elected to expand this collaboration by examining delivery to additional disease targets that were not originally specified under the initial collaboration.  

As a company focused on addressing the challenges of RNAi delivery, we are very pleased that Dainippon Sumitomo has elected to expand our collaboration so quickly.  We believe this is a strong testimony to the potential of our delivery technology as well as the value we bring our partners.  

In addition to our partnership with Dainippon Sumitomo, we currently have two ongoing collaborations with AstraZeneca, which were initiated in June 2007 and March 2008.  The June 2007 collaboration was established for the purpose of developing novel siRNA therapeutics against specific targets exclusive to AstraZeneca, and the March 2008 collaboration seeks to develop a range of novel approaches for the delivery of siRNA molecules.  These collaborations continue to advance as planned and we, together with our partners, are very pleased with the progress to date.  We look forward to providing updates on these collaborations in the near future.

Building Financial Strength

In January 2009, Silence raised 2.65m pounds net of expenses through the issue of 15m shares at a price of 18p per share.  Concurrent with our merger with Intradigm in January 2010, we raised an additional 15m pounds (gross) at a price of 23p per share. Such funds are intended to support the company's ongoing development efforts and provide a position of strength as we work to pursue additional partnerships and development deals.

Beyond the funding itself, it is important to note who invested in each of these rounds.  We are fortunate to have the support of several preeminent institutions in the U.K., as well as several leading U.S. institutions.  We are also very fortunate to have the financial backing of a number of strategic pharmaceutical venture groups including Lilly Ventures, Roche Finance and Astellas Venture, who were investors in Intradigm.

Enhancing Our Intellectual Property Estate

The importance of intellectual property to success in the RNAi therapeutic field cannot be overstated.  Yet, we argue that the true value of IP lies in the specific claims as opposed to the number of patents.  During 2009 and continuing in 2010, both Silence and the former Intradigm secured a number of pivotal patents that are all now owned by post-merger Silence. The following events contributed significantly to the strength of Silence's IP estate:

• 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.
• The Opposition Division of the EPO upheld Silence's core AtuRNAi patent EP 1 527 176 ('176) in amended form.  The amended form of patent '176 covers Silence's proprietary blunt-ended siRNA molecules containing alternating 2'-O-Methyl modifications.
• The United States Patent and Trademark Office (USPTO) issued a notice of allowance on a patent application directed to methods of treatment using PKN-3, a high-value therapeutic target in the area of oncology. The allowed subject matter is directed to, among other things, methods of treating cancer with siRNA or antisense molecules that target the PKN-3 messenger RNA (mRNA). The claims cover the siRNA molecule in Silence's lead clinical compound, Atu027, an RNAi therapeutic that targets PKN-3 for the treatment of advanced solid tumours.

In addition to these events, Silence also now owns key intellectual property rights previously secured by Intradigm as follows:

• Issued and pending patents on multiple high-value siRNA sequences of varying structure;
• Issued and pending patents directed to one of the industry's most advanced siRNA chemical modification technologies optimized for improved stability, yield and safety; and,
• Three exclusive licenses from the University of Massachusetts to the issued and pending patents associated with the Zamore "Design Rules" including methods for increased potency and reduced off-target effects.

With these combined assets, we believe our patent estate today is one of the most useful, most functional portfolios in the RNAi field and we believe it will provide us with the opportunity to actively pursue all our areas of interest.

FINANCIAL

Silence successfully strengthened its financial position through the completion of two financings in 2009 and early 2010 that generated proceeds of approximately 17.7m pounds (gross). This funding provided cash resources that will support the company's operations into the second quarter of 2011. This is without taking into account any milestone or other receipts that the company believes it could receive in 2010.

Revenue

Revenue generated in the year declined to 1.72m pounds in 2009 from 2.21m pounds in 2008.  The decrease in revenue was primarily attributable to receiving milestone income from previous deals in 2008 which did not arise in 2009.

Administrative Expenses

Administrative expenses during the year increased to 4.20m pounds in 2009 from 3.29m pounds in 2008.  The increase in administrative expenses is primarily attributed to costs incurred in respect of the acquisition of Intradigm subsequent to the year end.

Research and Development Expenses

Research and development expenses during the year decreased to 5.07m pounds in 2009 from 6.71m pounds in 2008.  The decrease in research and development expense is primarily attributed to the group having incurred substantial pre-clinical development costs in 2008 prior to the commencement of its clinical trials of Atu027 which commenced in 2009.

Interest

Interest income fell from 0.25m pounds  in 2008 to less than 0.1m pounds in 2009 due to lower average balances on deposit and the marked fall in interest rates during 2008 and 2009.

Taxation

The taxation credit arises through the availability of UK R&D tax credits in respect of some of the group's research and development costs.

Liquidity, cash, cash equivalents and money market investments

The group's cash position at year-end was 1.13m pounds. A further 15.0m pounds (gross) was raised shortly after the year-end through an institutional placing that closed in January 2010.  At the end of 2008, Silence had cash of 3.35m pounds.

The net cash outflow from operating activities was 4.65m pounds against an operating loss of 7.55m pounds primarily reflecting the impact of changes in other working capital of 1.6m pounds and of non-cash items such as depreciation, amortisation and share option charges of 1.0m pounds.

SUMMARY AND OUTLOOK

I'd like to conclude by reviewing the rationale for the recent merger and the subsequent goals we aim to achieve.

In setting out to combine these two companies, our objective was to dramatically change the competitive landscape in the field of RNAi therapeutics. While other companies in the sector may claim leadership, this merger created one of the most sophisticated platforms in RNAi therapeutic development. As a result of this merger, Silence now holds a powerful and strategic position in the three areas we believe are critical to building, protecting and commercializing RNAi therapeutics: proprietary delivery technologies, potent siRNA sequences and innovative siRNA structural features.

This unique combination of technology has created an unparalleled technology platform that we believe will drive many of the most critical advances in the field. Perhaps most exciting about the merger is the powerful range of RNAi delivery technology solutions possessed by the new company. The most significant hurdle to overcome in realization of the vast potential of RNAi therapeutics is that of enabling safe and effective delivery of siRNA payloads. By combining the expertise of both Intradigm and Silence, we now have one of the industry's most comprehensive and versatile delivery technology platforms, providing Silence with unmatched potential to develop delivery solutions that can be tailored to address various therapeutic requirements.

Beyond our technology platform, Silence is a clear leader in the enablement of clinical development of RNAi therapeutic candidates. At present, we believe that at least half of the siRNA programs currently in clinical trials worldwide are based on Silence's technology, representing the significant impact that our technology platform has within the sector. This impressive pipeline of products not only validates the strength of Silence's technology, it also validates the team of researchers that has guided the development path.

In summary, the rationale driving this merger was to combine the strength of two innovative entities to create a new leadership in RNAi therapeutic development.  With the transaction complete, it is now our task to establish a path that allows us to optimize our resources and efficiently advance our development programs and clinical efforts.  To this end, we recently announced a restructuring of the company to focus research in Berlin, and business operations in Palo Alto.  We will continue to evaluate the most beneficial strategies to address the challenges ahead.

In closing, I wish to express my sincere appreciation to our dedicated employees and the shareholders who support our company.  In the coming year, we will continue to work diligently to advance our groundbreaking science and to continue to build shareholder value.

Thank you for your continued support of Silence Therapeutics.

Philip Haworth, Ph.D.

Chief Executive Officer

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.

SOURCE Silence Therapeutics plc

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