Silence Therapeutics plc Interim Results for the Six Months Ended 30 June 2012

LONDON, September 25, 2012 /PRNewswire/ --

Silence Therapeutics Plc (AIM: SLN), a leading international RNAi therapeutics company, today provides a corporate update and announces its interim results for the six months ended 30 June 2012.

Ali Mortazavi, Director of Corporate Strategy, said: "These results, including the writedown of our Intradigm investment, mark the end of a very difficult period for Silence Therapeutics. However, post this period, the Company has been refinanced and is uniquely positioned to take advantage of the enormous potential of RNAi-based therapeutics. Significant recent developments in the industry also give us confidence that RNAi is finally poised to make the breakthroughs that it  has long promised. With its strong patent position, drugs in the clinic, unique delivery systems and exciting pre-clinical data, we believe that the Company will be at the forefront of the new RNAi wave."

Operational Highlights

  • In June 2012, Silence published interim data from Atu027 Phase I ascending dose trial at the American Society of Clinical Oncology ('ASCO') annual meeting. Results demonstrated that Atu027 was safe and well tolerated.
  • Silence's partner Quark Pharmaceutical Inc. ('Quark') initiated the MATISSE trial, a large Phase IIb trial exploring PF-4523655 for the treatment of diabetic macular oedema, a leading cause of blindness in the elderly.
  • Quark also announced plans to expand development of PF-4523655 in glaucoma increasing the potential milestones payable to Silence on this program by US$24.8m.
  • Scientific advisory board established with two key opinion leaders in area of liver disease.
  • Collaboration deal signed with micro-RNAi partner, Miragen Inc. to explore the delivery of microRNA-based therapeutics with Silence's liver delivery system, DBTC.

Financial Highlights

  • Revenue for the six months ended 30 June 2012 was £0.04m (six months ended 30 June 2011: £0.35m).
  • Research and development costs increased to £1.89m (six months ended 30 June 2011: £1.82m) reflecting continued investment in the development of Atu027.
  • Administrative expenses decreased to £1.13m (six months ended 30 June 2011: £1.56m) reflecting the closure of the US operations in August 2011.
  • Loss for the six months ended 30 June 2012 was £23.53m (six months ended 30 June 2011: loss of £3.43m) after impairment charges totalling £20.57m (six months ended 30 June 2011: £nil).

Post-Period Events

  • In August 2012, Silence raised £5.20m (net of expenses). The cash position as of 30 June 2012 was £0.95m (at 31 December 2011: £3.69m). Cash usage in operating and investing activities in the half year amounted to £2.72m (six months ended 30 June 2011: £2.59m).
  • Atu027 Phase I ascending dose trial successfully completed demonstrating excellent safety. Plans to initiate a new study of Atu027 in combination with chemotherapy are now well advanced.
  • Collaborative deal signed with another micro-RNAi partner, MirEven PTY Ltd to explore the delivery of miR-7 microRNA with all three of Silence's three delivery systems.
  • Jerry Randall expanded his role to Executive Chairman (previously Non-Executive Chairman) following the resignation of Dr Tony Sedgwick and Max Herrmann.  Ali Mortazavi appointed Director of Corporate Strategy.
  • Reported encouraging pre-clinical proof-of-concept results in acute lung injury with Atu111. These results were supported by research at Hannover Medical School using Atu111 in murine septic shock.
  • Appointed Dr Michael Khan as chief medical adviser. He is an associate professor of medicine at the University of Warwick and is a highly cited researcher and experienced clinician.

Jerry Randall, Executive Chairman of Silence Therapeutics, commented: "The completion of the Phase I trial of Atu027 in patients with solid tumours represents a major milestone for the Company. The strong safety profile and encouraging signs of stable disease that Atu027 has demonstrated in the trial give us confidence to progress Atu027 to the next stage of development. Plans for a trial combining Atu027 with chemotherapy are now well advanced. The promising prospects for Atu027 were a major reason we were able to raise £5.45m shortly after the end of the period. This fundraise is expected to support the further development of Atu027 and Silence's other programmes into the second half of 2014. "  

CHAIRMAN'S STATEMENT

Silence Therapeutics is prominent in an exciting new sector in the drug development arena known as RNA interference ('RNAi'). The last few years have been particularly challenging for companies working in the field as initial optimism about the technology's ability to transform the drug discovery and pharmaceutical process gave way to increasing scepticism by the pharmaceutical industry and investors alike.  This experience is normal in the evolution of a new technology because our greater understanding of a field uncovers new hurdles that need to be overcome. We believe that with continued perseverance these hurdles will be surpassed. It is therefore gratifying to see that over the last few months there are now real signs that the perseverance shown by Silence, our partners and our peers is starting to deliver results.

For Silence, the first half of 2012 saw the achievement of some significant events. In particular, we not only presented interim Phase I data from our lead programme Atu027 at the ASCO annual meeting confirming the drug's safety and encouraging signs of efficacy, but also completed enrolment of patients into the study during the period. This trial has taken three years to complete and I would like to take this opportunity to thank the staff at Silence and our clinical partners without whose dedication this milestone would not have been achieved.

Our partner Quark has also made good progress over the period with its two lead programmes, which are both based on Silence's AtuRNAi technology. In February 2012, Quark initiated a 264 patient Phase IIb trial of PF-'655 in diabetic macular oedema, a leading cause of blindness in the elderly. In addition, Quark now plans to initiate a further Phase II trial with the drug in glaucoma. Quark is also close to completion of a 366 patient Phase II trial of QPI-1002 in prevention of delayed graft function in kidney transplant patients.

2012 has seen significant Board and management changes at Silence. In February 2012, Dr Tony Sedgwick was appointed Chief Executive Officer following the departure of Thomas Christely. However, following the recently completed fundraising Dr Sedgwick, Annette Clancy and Max Herrmann have decided to leave the Company. I have therefore been asked to take on the role of Executive Chairman, which I am pleased to accept. In addition, we have appointed Ali Mortazavi as Director of Corporate Strategy. I would like to thank Annette, Max and Tony for their dedication and hard work and wish them well in the future.

Finally, in July this year we raised £5.45m before expenses from existing and new investors. The proceeds of the fundraising have significantly enhanced the Group's financial position and provides it with sufficient cash resources to fund the business until 2014. The injection of funding is expected to extend the existing window of opportunity for exploitation of the RNAi platform and the Company's lead development candidate Atu027. In particular, it should enable the Company to conduct a small Phase Ib trial and a subsequent small Phase IIa trial of Atu027. It should also enable the Company, and its Shareholders, to benefit from potential milestone payments which may arise from existing licensing agreements and licences which may arise from recently announced research collaborations.

OPERATIONAL REVIEW

Advancements with Internal Pipeline Products

Atu027

Atu027, for the treatment of solid tumours, is Silence Therapeutics' most advanced internal product candidate. Atu027, which combines our proprietary drug delivery system, AtuPLEX™, with AtuRNAi, the Company's proprietary RNAi chemistry, specifically targets PKN3, a protein implicated in cancer growth and metastases.

During the first half of 2012, we not only completed patient enrolment into our Phase I clinical trial of Atu027 but also announced interim results at the prestigious American Society of Clinical Oncology ('ASCO') meeting in June.

The Phase I clinical trial of Atu027 was an open label, single-centre, dose-finding study in subjects with advanced solid cancer. It was designed to evaluate up to a total of 11 escalating doses of Atu027. The enrolment of patients in the last cohort in dose level 10 has now been completed. Atu027 was very well tolerated and safe up to the 10th dose level. No premedication was needed in support of Atu027 treatment. The prospective recommended maximum tolerated dose is 0.336 mg/kg. "Stable disease" response for three and six months after treatment was observed in 10 and 3 patients, respectively, of the 33 evaluable patients. Two patients with neuroendocrine cancer had disease stabilisation for 9 and 12 months. Partial regression of pulmonary metastases was found in another patient.  A further patient with breast cancer showed regression of liver metastases.

Plans are now well underway to initiate a Phase Ib clinical study of Atu027 in combination with chemotherapy. The trial is expected to start patient recruitment in late 2012 or early 2013. The Company believes that this encouraging Phase I data and the important validation of our AtuPLEX™ delivery system on which Atu027 is based, are important factors in realising value for Shareholders.

Partnered Programs

PF-04523655 (PF-'655)

In March 2011, our partner, Quark Pharmaceuticals, announced the completion of the DEGAS study, a Phase II clinical trial of PF-04523655 for the treatment of diabetic macular oedema. PF-04523655, which incorporates Silence's AtuRNAi technology and is sublicensed to Pfizer by Quark, was shown to be more effective than laser therapy.

Based on this encouraging data, in February 2012, Quark initiated a 264 patient Phase IIb trial of PF-'655 in patients with diabetic macular oedema. The trial is designed to compare the efficacy of PF-'655 when used alone or in combination with Lucentis (Novartis/Roche) against Lucentis alone in patients with diabetic macular oedema. The trial is expected to complete in the middle of 2014.

In May 2012, Quark also announced it had amended its agreement with Pfizer to enable it to initiate a 108 patient Phase IIa trial of PF-'655 in patients with open-angle glaucoma (the most common type of glaucoma). Quark and Pfizer have also conducted a Phase II trial of PF-'655 in age-related macular degeneration, the leading cause of blindness in the elderly. In addition to royalties on product sales, milestones from these programmes could now total up to US$120 million of which US$6 million has been received to date. A further milestone of almost US$4 million is due to Silence on initiation by Pfizer of a Phase III trial.

QPI-1002

In addition to PF-'655, Quark is also developing QPI-1002 for the prevention of delayed graft function in kidney transplant patients and for the prevention of acute kidney injury. QPI-1002 is based on Silence AtuRNAi technology. In August 2010, Quark signed an option and licence agreement for QPI-1002 with Novartis for an upfront payment of US$10 million. Quark is currently conducting a 366 patient Phase II trial of QPI-1002 in prevention of delayed graft function in kidney transplant patients. The trial is due to be completed before the end of 2012. Based on the results of this study, Novartis may decide to exercise its option to license QPI-1002. Quark also plans to initiate a Phase II trial of QPI-1002 in acute kidney injury. In addition to royalties on product sales, milestones to Silence from these programmes could total up to US$100 million.

Other Research Collaborations

During the last 12 months, Silence has signed a number of delivery collaborations to evaluate the Company's three RNAi delivery systems including agreements with InteRNA Technologies BV, miRagen Inc., Mireven PTY Ltd and Mirna Inc. If successful, these collaborations could lead to these parties taking a licence to Silence delivery technologies.

Continued Intellectual Property Strength

Our broad and diverse intellectual property portfolio continues to provide us with a competitive advantage and a strong proprietary position in the RNAi therapeutics space. We believe that we have been successful in aggressively building one of the world's most comprehensive RNAi patent estates and expect that this asset will continue to offer significant support for our ongoing partnering activities.  Importantly, we have achieved significant successes in establishing key levels of patent protection for our technologies in Europe, the USA and Japan, offering opportunities in all of these important markets.    

Silence remains committed to the expansion and strengthening of its intellectual property portfolio in target markets around the globe. So far this year we have strengthened our intellectual property portfolio via the following:

  • Notice of allowance of a US patent that covers certain siRNA molecules specifically designed to silence PKN-3, the target of Atu027.
  • Issuance of a new European patent that covers so-called 'Blunt-Ended' siRNA molecules. Notice of allowance of this patent has also been received in the US.

Looking forward, the Company will continue to expand and strengthen our intellectual property portfolio in target markets around the globe. However, it is important to actively manage a patent estate and therefore where necessary we will review and cease patent prosecution where the cost of such action is deemed to outweigh the benefits. As an example of such, following a review of the Company's Zamore Design Rules licences, Silence has now decided that their high cost of maintenance is not warranted and has entered into an agreement with the University of Massachusetts to terminate these licences. This led to an impairment charge of £0.17m in the first half of 2012.

FINANCIAL REVIEW

Revenue in the first half of 2012 at £0.04m (six months ended 30 June 2011: £0.35m) was below that in the prior year reflecting lower income from licence partners. Research and development expenditure at £1.89m (six months ended 30 June 2011: £1.82m) was broadly in line with the prior year. This reflects continued investment in the Phase I trial of Atu027. Administrative expenses in the first half of 2012 decreased to £1.13m from £1.56m (£2.00m including restructuring of the US operations) in the first half of 2011. This reflects cost savings made as a result of the closure of the US Redwood City operations in August 2011

The net loss for the half-year before intangible assets impairment charges was £2.96m (six months ended 30 June 2011: £3.43m; full year 2011: £5.74m). The Zamore Design rules licences were the main asset held by Intradigm. The decision to terminate them therefore meant the £20.4m goodwill held on the balance sheet relating to Intradigm had to be written off. After reflecting these items, the net loss for the half year after taxation was £23.53m.

Cash used in operating and investing activities in the first half of the year amounted to £2.72m (six months ended 30 June 2011: £2.59m) which left the Group with cash at bank of £0.95m at the period end.

Following the period end, 2012 Silence raised £5.45m (£5.20m net of expenses) in a subscription and open offer of shares as well as the issuance of a £1.00m zero coupon convertible bond. This funding is expected to provide cash resources that will support the Company's operations into the second half of 2014.

RISKS AND UNCERTAINTIES

There are a number of potential risks and uncertainties that could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The risks (identified and outlined in the Annual Report and Accounts 2011 in the Directors' Report on pages 18-20, which does not form part of this interim statement, include:

  • Clinical and regulatory risk - our drug trials may not be successful.
  • Competition and intellectual property risk - several companies are developing RNAi technology. Intellectual property may expire before products are successful commercially.
  • Economic and financial risk - with no recurring revenue, the Group is reliant on receiving additional funds.

SUMMARY AND OUTLOOK

In the first half of 2012, we achieved the following milestones which we believe significantly strengthened our business and created value for Shareholders:

  • Completed patient recruitment and announced further positive interim data from our Phase I clinical trial of Atu027. Based on the data from the Phase I trial, plans are now well advanced to initiate a trial of Atu027 in combination with chemotherapy.
  • Signed a collaboration deal with microRNA company Miragen Inc. for our DBTC delivery technology, our third such delivery collaboration.
  • Established a Scientific Advisory Board with key opinion leaders in the area of liver disease.
  • Expanded our already strong intellectual portfolio by receiving key patent issuances with global reach.

In light of the advances we have made in the first half of the year, we look ahead to the second half of 2012 with great optimism.

Thank you for your continued support of Silence Therapeutics.

Jerry Randall

Executive Chairman


SILENCE THERAPEUTICS PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2012

                                                                          Year
                                          Six months    Six months    ended 31
                                  Note         ended         ended    December
                                        30 June 2012  30 June 2011        2011
                                         (Un-audited)  (Un-audited)   (Audited)
                                             GBP000s       GBP000s     GBP000s
 
                                   3
    Revenue                                       37           354         694
 
    Research and development
    costs                                     (1,893)       (1,819)     (3,361)
    Impairment of intangible
    assets                                   (20,565)            -           -
    Administrative expenses                   (1,128)       (1,560)     (2,647)
    Restructuring charge                           -          (443)       (472)
    Operating loss                 3         (23,549)       (3,468)     (5,786)
    Finance and other income                       9            38          57
    Finance expense                                -             -         (13)
    Gain on sale of fixed assets                  14             4           5
 
    Loss for the period before
    taxation                       3         (23,526)       (3,426)     (5,737)
    Taxation                                       -             -           -
    Loss for the period
    attributable to owners of the
    Parent Company                           (23,526)       (3,426)     (5,737)
 
    Loss per ordinary equity
    share (basic and diluted)                  (4.1p)        (1.0p)      (1.2p)
 


All transactions, with the exception of the Restructuring charge and impairment of intangible assets relating to Intradigm Corporation, arose from continuing activities and there are no recognised gains or losses other than those presented above.    

 

SILENCE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2012

                                                                         Year
                                         Six months    Six months    ended 31
                                              ended         ended    December
                                       30 June 2012  30 June 2011        2011
                                        (Un-audited)  (Un-audited)   (Audited)
                                            GBP000s       GBP000s     GBP000s
 
    Loss for the period after taxation      (23,526)       (3,426)     (5,737)
 
    Other comprehensive income:
    Exchange differences arising on
    consolidation of foreign operations        (696)          (63)          5
 
    Total comprehensive income for                        
    the period                              (24,222)       (3,489)     (5,732)
 



SILENCE THERAPEUTICS PLC
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2012

                                        30 June        30 June   31 December
                                           2012           2011          2011
                                    (Un-audited)   (Un-audited)     (Audited)
                                        GBP000s        GBP000s       GBP000s
 
    Non-current assets
    Property, plant and equipment           181            269           225
    Goodwill                              7,289         28,211        28,342
    Other intangible assets                 513          1,048           971
                                          7,983         29,528        29,538
 
    Current assets
    Investments                               -             27            38
    Trade and other receivables             113            397           174
    Cash and cash equivalents               950          6,486         3,688
 
                                          1,063          6,910         3,900
 
    Current liabilities
    Trade and other payables               (981)        (2,073)       (1,260)
 
    Net current assets                       82          4,837         2,640
 
    Net assets                            8,065         34,365        32,178
 
    Capital and Reserves attributable
    to the Company's Equity Holders
 
    Share capital                         5,771          5,766         5,771
 
    Capital reserves                     80,981         82,886        81,141
 
    Translation reserve                   2,342          2,970         3,038
 
    Profit and loss account             (81,029)       (57,257)      (57,772)
 
    Equity Holders' funds                 8,065         34,365        32,178
 



 

SILENCE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2012

    (Un-audited)                      Share  Capital Translation Profit and loss    Total
                                    Capital Reserves     Reserve         Account
                                    GBP000s  GBP000s     GBP000s         GBP000s  GBP000s

    At 1 January 2012                 5,771   81,141       3,038        (57,772)   32,178
 
    Recognition of share-based 
    payments                              -      109           -              -       109
    Issuance of warrants                  -        -           -              -         -
    Transfer upon:
    - exercise of options in period       -        -           -              -         -
    - lapse of vested options in period   -     (269)          -            269         -
    Shares issued in period, 
    net of expenses                       -        -           -              -         -
    Transactions with owners              -     (160)          -            269       109
 
    Loss for six months to 
    30 June 2012                          -        -           -        (23,526)  (23,526)
 
    Other comprehensive income                                                -          
    Exchange differences arising on  
    consolidation of foreign operations   -        -        (696)                    (696)
 
    At 30 June 2012                   5,771   80,981       2,342        (81,029)    8,065


 

SILENCE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE SIX MONTHS ENDED 30 JUNE 2011

    (Un-audited)                      Share  Capital Translation Profit and loss   Total
                                    Capital Reserves     Reserve         Account
                                    GBP000s  GBP000s     GBP000s         GBP000s GBP000s

    At 1 January 2011                 2,799   80,269       3,033        (53,831)  32,270
 
    Recognition of share-based
    payments                              -       76           -              -       76
    Issuance of warrants                           1                                   1
    Transfer upon:
    - exercise of options in period       -        -           -              -        -
    - lapse of vested options in period   -        -           -              -        -
    Shares issued in period, 
    net of expenses                   2,967    2,540           -              -    5,507
    Transactions with owners          2,967    2,617           -              -    5,584
 
    Loss for six months to 
    30 June 2011                          -        -           -         (3,426)  (3,426)
 
    Other comprehensive income
    Exchange differences arising on
    consolidation of foreign operations   -        -         (63)             -      (63)
 
    At 30 June 2011                   5,766   82,886       2,970        (57,257)  34,365



SILENCE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011

    (Audited)                         Share  Capital Translation Profit and loss   Total
                                    Capital Reserves     Reserve         Account
                                    GBP000s  GBP000s     GBP000s         GBP000s GBP000s

    At 1 January 2011                 2,799   80,269       3,033        (53,831)  32,270
 
    Recognition of share-based payments   -      120           -              -      120
    Issue of warrants in period           -        1           -              -        1
    Transfer upon:
    -exercise of options in period        -        -           -              -        -
    -lapse of vested options in period    -   (1,796)          -          1,796        -
    Shares issued in year, 
    net of expenses                   2,972    2,547           -              -    5,519
    Transactions with owners          2,972      872           -          1,796    5,640
 
    Loss for the year ended 
    31 December 2011                      -        -           -         (5,737)  (5,737)
 
    Other comprehensive income
    Exchange differences arising on 
    consolidation of foreign operations   -        -           5              -        5
 
    At 31 December 2011               5,771   81,141       3,038        (57,772)  32,178
 


 

SILENCE THERAPEUTICS PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2012

                                            Six months   Six months   Year ended
                                                    to           to  31 December
                                          30 June 2012 30 June 2011         2011
                                           (Un-audited) (Un-audited)    (Audited)
    Cash flows from operating activities       GBP000s      GBP000s      GBP000s

    Loss before taxation                       (23,526)      (3,426)      (5,737)
    Adjustments for:
    Impairment of intangible assets             20,565            -            -
    Depreciation charges                            36           61           91
    Amortisation charges                           104           87          214
    (Gain)/loss on sale of property,
    plant and equipment                            (14)          (4)          (5)
    Charge for the period in respect of
    share-based payments                           109           77          121
    Foreign exchange movement                        1           55            -
    Finance expense                                  -            -           13
    Finance and other income                        (9)         (39)         (57)
                                                (2,734)      (3,189)      (5,360)
    Decrease in trade and other receivables         53          360          667
    Decrease in inventory                            -           27           27
    Increase/(decrease) in trade payables            2          386         (431)
    Cash absorbed by operations                 (2,679)      (2,416)      (5,097)
 
    Taxation received                                -            -            -
    Interest paid                                    -            -          (13)
    Net cash outflow from operating activities  (2,679)      (2,416)      (5,110)
 
    Cash flows from investing activities
    Investment in assets held for sale               -            -           (6)
    Proceeds from the sale of property,
    plant and equipment                             16            8           10
    Interest received                                6           18           27
    Proceeds from sale of assets held for sale      39            -            -
    Additions to property, plant and equipment       -          (33)         (27)
    Additions to intangible assets                (104)        (163)        (248)
    Net cash used in investing activities          (43)        (170)        (244)
 
    Cash flows from financing activities
    Net proceeds from issue of share capital         -        5,507        5,519
    Repayment of notes payable                       -            -            -
    Net cash generated from financing activities     -        5,507        5,519
 
    Net (decrease)/increase in cash and
    cash equivalents                            (2,722)       2,920          165
 
    Cash and cash equivalents at                                         
    beginning of period                          3,688        3,567        3,567
    Net (decrease)/increase in cash and
    cash equivalents                            (2,722)       2,920          165
    Effect of exchange rate fluctuations
    on cash held                                   (16)          (1)         (44)
 
    Cash and cash equivalents at end of period     950        6,486        3,688
 
    Cash and cash equivalents include
    Instant access bank accounts                   950        6,486        3,688



SILENCE THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2012

1.  Basis of Preparation and Accounting Policies

This condensed consolidated interim financial information for the six months ended 30 June 2012 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 - 'Interim Financial Reporting' as adopted by the European Union.

This condensed consolidated interim financial information has been neither reviewed nor audited. The interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the financial year ended 31 December 2012 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of companies. The report of the auditors was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. However, the report of the auditors did contain an emphasis of matter paragraph in relation to the receipt of sufficient additional funds, including the successful completion of an equity fundraising.

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.  

During the period the Group met its day-to-day working capital requirements through existing cash resources. The Group had a net cash outflow in the six months ended 30 June 2012 of £2.72m and at 30 June 2012 had cash balances of £0.95m. However, the Group raised £5.45m before expenses in August 2012. The directors have reviewed the working capital requirements of the Group for the next 12 months from the date of the approval of these interim financial statements and are confident that these can be met.  

Given the continued efforts noted above, 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.

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE SIX MONTHS ENDED 30 JUNE 2012

3.  Segment Reporting

For the Six Months Ended 30 June 2012

                                                          Unallocated
                                       RNAi                 Corporate
    Business Segments          Therapeutics Immunotherapy       items Consolidated
                                    GBP000s       GBP000s     GBP000s      GBP000s
  
    Revenue                              37             -           -           37
 
    Operating results               (22,691)            -        (858)     (23,549)
    Finance and other income (net)       16             -           7           23
 
    Net loss for the period         (22,675)            -        (851)     (23,526)
 
    Segment assets                    8,356             -         690        9,046
    Segment liabilities                (808)            -        (173)        (981)
 
    Costs to acquire property, 
    plant and equipment                   -             -           -            -
    Costs to acquire other
    intangible assets                   104             -           -          104
    Depreciation and amortisation       139             -           1          140
    Charge for non-cash expenses     20,565             -           -       20,565


In accordance with IFRS 8 'Operating Segments', the identification of the Group's operating segments is based on internal management reporting as reviewed by the senior management team in order to assess performance and allocate resources.

The Group is managed on a business segment basis - RNAi Therapeutics, Immunotherapy and unallocated corporate items. Transfer prices between segments are set on an arm's length basis. Segment revenue and profit include transfers between segments, which are eliminated on consolidation. The operations, segment assets and liabilities of the RNAi Therapeutics segment are located in Germany. The operations segment assets and liabilities of the remaining two segments are located in the United Kingdom and the USA.

In accordance with IAS 36 Impairment of Assets, the carrying value of goodwill is assessed comparing its carrying value to its net recoverable amount. The recoverable amount is calculated by the Directors as being the value in use. For the purpose of impairment testing of goodwill, the Directors perform risk adjusted discounted cash flow analysis of the RNAi therapeutics business area, the cash generating unit that encompasses Silence Therapeutics AG and Intradigm Corporation. Following a review of the Company's portfolio during the period, the Group decided that the high cost of maintenance of the Zamore Design Rules licences (Intradigm Corporation) was no longer warranted and decided to terminate these licenses with the University of Massachusetts. This led to an impairment charge of £0.17m in the first half of 2012 and triggered a test of the goodwill for impairment.

Given the Group plans to fully exit the Intradigm business, the goodwill that arose from acquisition was fully impaired and a charge of £20.4 million was recorded for the first half year. The impairment loss has been recognised in Research and development costs.

The remaining goodwill in the the RNAi therapeutics business area, which totals £7.3 million, is supported by the value in use of the on-going business.

For the Six Months Ended 30 June 2011

                                                        Unallocated
                                     RNAi                 Corporate
    Business Segments        Therapeutics Immunotherapy       items Consolidated
                                  GBP000s       GBP000s     GBP000s      GBP000s
 
    Revenue                           354             -           -          354
 
    Operating results              (2,964)           (1)       (503)      (3,468)
    Finance and other income (net)     33             -           9           42
 
    Net loss for the period        (2,931)           (1)       (494)      (3,426)
 
    Segment assets                 30,219             6       6,213       36,438
    Segment liabilities            (1,869)           (1)       (203)      (2,073)
 
    Costs to acquire property, 
    plant and equipment                33             -           -           33
    Costs to acquire other
    intangible assets                 163             -           -          163
    Depreciation and amortisation     147             -           1          148
    Charge for non-cash expenses       72             -           5           77


4.  Earnings per share

The loss per share is based on the loss for the period after taxation attributable to equity holders of £23.53m (year ended 31 December 2011 - loss £5.74m; six months ended 30 June 2011 - loss £3.43m) and on the weighted average of 577,114,517 ordinary shares in issue during the period (year ended 31 December 2011 - 466,864,698; six months ended 30 June 2011 - 352,015,733).  

The options outstanding at 30 June 2012, 31 December 2011 and 30 June 2011 are considered to be non-dilutive in that their conversion into ordinary shares would decrease the net loss per share.  Consequently, there is no diluted loss per share to report for the periods reported.

5.  Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. On 2 August 2012 Robert Keith and ACP IV LP subscribed for £1m of loan notes as described in note 6. Before the issue they held 92,682,266 shares (16.06%) of the Company.

6.  Post-balance sheet events

On 31 July 2012, Shareholders approved a share capital reorganisation whereby each existing ordinary share of 1 pence nominal value was converted into an ordinary share of 0.1 pence nominal value and one deferred share of 0.9 pence nominal value. The Company then purchased all of the issued deferred shares.

On 2 August 2012, the Company raised £5.45m in cash before expenses. The fundraising was conducted by way of a subscription and open offer of 889,088,220 new Ordinary shares of 0.1 pence each at a price of 0.5 pence per share as well as the issuance of a zero coupon convertible £1.00m loan note maturing on 1 August 2019. The nominal value of the shares issued was £889,088.22. The convertible loan note is convertible into shares by the bondholder at anytime at a conversion rate of 0.5 pence per share.

Notes for editors                    

About Silence Therapeutics plc (http://www.silence-therapeutics.com)

Silence Therapeutics plc (AIM: SLN) is a leading biotechnology company dedicated to the discovery, development and delivery of targeted, systemic RNA interference (RNAi) therapeutics for the treatment of serious diseases. Silence offers one of the most comprehensive short interfering RNA (siRNA) therapeutic platforms available today based on a strong intellectual property portfolio and large clinical safety database. Silence's clinical siRNA product pipeline is one of the broadest in the industry. The Company possesses multiple proprietary siRNA delivery technology platforms including AtuPLEX™, DACC and DBTC. AtuPLEX enables the broad functional delivery of siRNA molecules to targeted diseased tissues and cells, while increasing their bioavailability and intracellular uptake. The DACC delivery system allows functional delivery of siRNA molecules selectively to the lung endothelium with a long duration of target mRNA and protein knock-down. The DBTC delivery system enables functional delivery of siRNA molecules selectively to liver cells including hepatocytes. Additionally, the Company has a platform of novel siRNA molecules based around its AtuRNAi chemical modification technology, which provides a number of advantages over conventional siRNA molecules. Silence's unique RNAi assets also include structural features for RNAi molecules and specific design rules for increased potency and reduced off-target effects of siRNA sequences.

The Company's lead internal drug candidate is Atu027, a liposomal formulation in clinical development for systemic cancer indications and one of the most clinically advanced RNAi therapeutic candidates in the area of oncology. Atu027 incorporates two of the Company's technologies, AtuRNAi and AtuPLEX™. Silence is currently conducting an open-label, single-centre, dose-escalation Phase I study with Atu027 in patients with advanced solid tumors involving single, as well as repeated, intravenous administration. Encouraging interim safety and pharmacokinetic data were presented at the American Society of Clinical Oncology Annual Meeting in June 2012. The study was completed in July 2012 and results are due shortly.

The Company's RNAi therapeutic platform has received key validation through multiple partnerships with pharmaceutical companies including AstraZeneca, Dainippon Sumitomo, Pfizer/Quark, and Novartis/Quark. Silence is actively pursuing the establishment of additional partnerships. Silence Therapeutics has operations in both Berlin and London.

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.

For further information, please contact:

Silence Therapeutics

Jerry Randall / Ali Mortazavi
T: +44-20-7491-6520
j.randall@silence-therapeutics.com
a.mortazavi@silence-therapeutics.com

 

Singer Capital Markets

Shaun Dobson
T: +44-20-3205-7500
shaun.dobson@singercm.com
jenny.wyllie@singercm.com

 

M:Communications

Mary-Jane Elliott / Sarah Macleod / Claire Dickinson
T: +44-20-7920-2333
silencetherapeutics@mcomgroup.com


SOURCE Silence Therapeutics Plc



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