Silence Therapeutics PLC (SLN) 2020 Q2 法說會逐字稿

Good morning, and good afternoon, and thank you for joining us for the Silence Therapeutics Half Year 2020 Results Call. Having recently joined Silence as Head of Investor Relations and Corporate Communications, I am delighted to introduce the call today from the company's New York office.

During the call, we will be walking through a slide presentation. If you haven't already received the slide deck, please make sure to visit the Events page of our corporate website at www.silencetherapeutics.com to download a copy or follow along on the webcast.

I'd like to remind you that during the course of today's call, management will make projections or other forward-looking statements regarding anticipated future events or the future financial performance of the company, including clinical development objectives, the therapeutic potential of our product candidates, our operational plans and strategies and projected cash runway.

Actual results may differ materially from current expectations and projections depending on a number of factors affecting the Silence business. These factors are detailed in the prospectus that we filed with the Securities and Exchange Commission on September 8, 2020, and may be updated by our periodic filings with the SEC from time to time.

It's important to note that such statements and events are forward-looking and reflect our current perspective of the business trends and information as of today, Monday, September 14, 2020. Silence disclaims any intent or obligation to update these forward-looking statements, except as expressly required by law.

Joining me today on the call are Iain Ross, our Chairman, who will provide an update on the business and introduce our newly appointed President and CEO, Mark Rothera. We also have with us today Dr. Giles Campion, our Head of R&D and Chief Medical Officer, who will provide an update on R&D; and Rob Quinn, our Chief Financial Officer who will discuss our collaborations and financial performance. Rob will then turn the call over to the operator for questions.

With that, I will turn the call over to Iain. Iain?

Thank you, Gem. Welcome, everybody, and good afternoon for those of you in Europe and good morning for those of you joining us from the U.S. Well, it will surprise you to know that 2020 has been a remarkable year, not only for Silence but for all of us. And despite the challenges posed by the COVID-19 pandemic, we're actually doing okay in Silence. We recognize that the industry sector as a whole is having a great deal of impact from the pandemic.

For Silence, what this has meant for us is optimizing our operations in order to continue to progress our proprietary research and development programs, whilst meeting the needs of our collaboration partners, and we have made a number of changes in the way we operate, not only in Berlin but also in London. I have to say that the response from our staff has been tremendous. And as a result, the impact on us has been minimal.

Now throughout the pandemic, we've been actually working closely with our clinical investigators and a number of external experts to ensure that the procedures are in place to avoid any risk to patient safety or the integrity of the clinical data that we hope to generate.

We actually remain fully committed to continuing the development of our clinical pipeline, but we have to acknowledge the time lines of the clinical programs or data readouts could be impacted by future COVID-related restrictions on patient recruitment at the clinical trial sites.

As we sit here at the moment, we are very confident that we can move forward and obviously, Giles Campion will give you a little bit more flesh on the bone and explain to you where we are with our particular programs.

So given all this, I'm really pleased to tell you that in the nine months of this year, we've made exceptional progress, both operationally and also adding to our financial strength.

Let me move to the slides, please, Gem. We continue to advance our proprietary pipeline programs. And just last week, we announced that our wholly owned unencumbered lead product candidates, SLN360, received IND approval from the FDA to start Phase I study. When Giles Campion joined the company, after a month, he gave us a target date, and I have to tell you, he made the target date spot on for getting the IND.

We also announced that our second wholly owned product candidate, SLN124, we've initiated dosing in a Phase I study with healthy volunteers. And actually, this is really important because this is the first dose of a Silence GalNAc-siRNA given to humans, and it's a combination of several years of work in developing this platform. Giles will also review both clinical programs with you in a few minutes.

On the BD front, we all know what happened. We secured major collaborations with AstraZeneca, with Takeda and actually recently, we expanded our partnership with Mallinckrodt, and Rob Quinn will give you a little bit more on that.

Following the AstraZeneca deal, we are really well capitalized now. We have sufficient runway in the company to see us through to our clinical milestones including Phase I data readouts for both SLN360 and SLN124.

Finally, during my tenure as Executive Chairman over the past nine months, we've been carefully building the right leadership team to deliver clinical success and achieve our vision. During the first half of the year, we announced two very key senior leader -- senior appointments: Barbara Ruskin, our Senior VP, General Counsel and Chief Patent Officer; and Dr. Eric Floyd, our Senior VP, Head of Global Regulatory Affairs and Quality Assurance.

With the anticipation of advancing SLN360 and SLN124 into the clinic, we've made key hires across the entire organization with a large emphasis on clinical development and manufacturing. We also appointed Dr. Giles Campion, our Head of R&D and Chief Medical Officer, to the Silence Board, recognizing that our research and development is front and central to our business.

We're now looking to become a global leader in this area, and we've continued to increase our U.S. footprint this year -- expand our U.S. footprint, should I say, starting with the opening of our New York office earlier this year just before the lockdown. And more recently, we've completed a NASDAQ listing. This is going to be a global business. And of course, it's interesting to note that we're all on different parts of the world and making this call.

One of the things that we've learned through the pandemic is to be able to operate virtually where we can. And today, further building on this momentum, I'm absolutely delighted to announce the appointment of Mark Rothera as the new President, CEO of Silence.

I have been criticized for taking my time to make this appointment. I have to say it's the most important appointment that I will certainly make, and I have deliberately taken my time to find the right person who will fit with this team.

Mark will speak to his own background and decision to join Silence momentarily but just let me say that this reflects his program leadership and his skills and his track record. This is a man who's taken a privately listed company in the U.K. and listed it on NASDAQ and raised $600 million to support that. And he's built real shareholder value.

Previously, he was the CEO of Orchard Therapeutics where he transformed that business from a small privately held company, as I said, to having clinical development products, and I think there are as many as seven clinical stage programs, and he had a fully integrated business. I actually believe Mark will provide the leadership necessary to grow Silence into a leading international biotech company built upon our innovative sRNA technology.

Our legal shareholders have always said to me, we want this to go global. We believe in this company, we believe in this technology, and that's why we've continued to support it. I have to say that the last nine months working with the team has made me realize how important that team is.

And I'd like to thank everybody in Silence for their support, particularly their resilience during this pandemic. They have been extraordinary. And I have enjoyed my nine months as Executive Chairman, but I am also happy to hand over to Mark who has the experience and ability to grow the business.

So Mark, perhaps you'd like to say a few words.

Well, thank you very much, Iain. I'm really delighted to be joining you and the team on the call today. I would like to really congratulate everyone, you and the team, for the significant progress that the company has made under your leadership. And it's truly an honor to take the role of leading Silence at this time in the company's history.

I believe the company is poised to capitalize on its important siRNA technology platform, its proprietary pipeline and research capabilities that have been built over 18 years and position itself as a global leader in the RNAi field.

I think the partnerships with AstraZeneca, Takeda and Mallinckrodt really speak to the importance of our platform. It is not unusual in our industry to see biotech companies evolve their technology and core capabilities over a 15- to 20-year period before suddenly taking off. And this is how I feel about the path ahead for Silence.

I've also been impressed by the quality of the leadership in the executive team through the many interactions that I've had during the hiring process. The mission of the company with its deep focus on science, and importantly, the patient need is very much aligned to my own belief, and I look forward to being able to help drive the company towards long-term success.

Silence has really made great strides under Iain's leadership, and I'm looking forward to working with Iain now in his new capacity as Non-Executive Chair as well as the Board, the management team and Silence employees to build on this momentum.

So with that and to speak more about the momentum from an R&D perspective, let me hand over the call now to Giles. Giles?

Thanks, Mark. Well, as has been alluded, we've made significant progress advancing both our wholly owned product candidates towards clinical testing this year.

On Slide 6, SLN360 is our wholly owned lead product candidate to address a high unmet need in reducing cardiovascular risk in people born with high Lp(a) levels. High Lp(a) levels affect about 20% of the world's population and is an independent risk factor increasing the chances of developing premature cardiovascular diseases, including coronary heart disease and unstable angina as well as myocardial infarction.

Importantly, Lp(a) is not susceptible to lifestyle changes, and there are no currently available pharmacological treatments that cause an appreciable reduction in Lp(a). The only existing treatment to reduce Lp(a) is apheresis, which involves the regular blood transfusion process that is invasive and burdensome for patients and is only available at limited centers at high cost.

SLN360 has the potential to reduce these diseases by specifically binding to and inducing RNAi-mediated degradation of the messenger RNAs made from LPA, the gene that encodes lipoprotein(a), a protein specifically found in Lp(a). SLN360 is administered by subcutaneous injection and is anticipated to have a long duration of action, potentially allowing for fewer treatment, such as once monthly, every two months or even longer.

We announced just last week that the FDA approved our IND application to start dose escalation studies in primary and secondary prevention patients with Lp(a). We're aiming to start dosing primary prevention patients in Phase I trial by the end of the year, save for any negative impact from the pandemic.

We turn now to Slide 7, which talks about SLN124, our wholly owned product candidate for beta-thalassemia and myelodysplastic syndrome. SLN124 represents a novel modality and mechanism to potentially alleviate transfusion dependence and iron overload by a knockdown of TMPRSS6 gene expression. Both beta-thalassemia and MDS are rare diseases often requiring regular blood transfusion, which are highly burdensome and carry the risk of further iron overload.

SLN124 is administered by subcutaneous injection and is anticipated to have a long duration of action potentially allowing for once-monthly treatment. The FDA granted SLN124 rare pediatric disease designation for beta-thalassemia and orphan drug designation for MDS with beta-thalassemia. SLN124 also has an orphan drug designation for beta-thalassemia from the European Medical Agency.

Slide 8 indicates our clinical program. We plan to evaluate our SLN124 initially in two trials. The first is a Phase I randomized, double-blind, placebo-controlled, single-ascending dose study in up to 24 healthy volunteers, which commenced dosing this month.

The second will be a Phase Ib global, randomized, single-blind, placebo-controlled, single-ascending dose and multiple dose study in up to 112 adults with nontransfusion-dependent thalassemia and very low and low-risk MDS. We aim to start this study in the second half of 2020, COVID-19 permitting.

Before turning the call over to Rob for an update on our collaborations and financials, I just want to mention that supporting all of our R&D activities and the optimization of siRNA technology platform, we have a distinguished Scientific Advisory Board that we launched earlier this year. Our Advisory Board is led by Professor Sir Gordon Duff, the Principal of St. Hilda’s College and Pro-Vice-Chancellor at University of Oxford and members include world-leading scientists and clinicians with expertise in the rare disease space.

With that, I'll now turn over the call to Rob.

Thanks, Giles. 2020 has been an incredible year for Silence on the business development front, highlighted by two major collaborations with AstraZeneca and Takeda and the expansion of our partnership with Mallinckrodt.

Now turning to Slide 10. In March, we signed a major collaboration with AstraZeneca to discover and develop siRNA therapeutics for up to 10 targets in cardiovascular, renal, metabolic and respiratory diseases. As part of this deal, we received an upfront cash payment of $20 million and an equity investment of $20 million during the first half of 2020. In addition, AstraZeneca has unconditionally agreed to make a second cash payment of $40 million by the first half of 2021.

We started work on the first target in July, and we anticipate working on five targets within the first three years of the collaboration and with AstraZeneca having the option to extend the collaboration to a further five targets.

AstraZeneca has agreed to pay a $10 million option fee per target when the candidate moves into IND-enabling studies. And under the collaboration, we may receive up to $400 million in potential milestones for each target, plus tiered royalties.

We also commenced a technology evaluation with Takeda to explore the potential of using our platform to generate siRNA molecules against the novel, undisclosed and proprietary target controlled by Takeda. And finally, we expanded our complement RNAi collaboration with Mallinckrodt.

A quick background for those of you who aren't familiar with this collaboration. Last year, we licensed our SLN500 program candidate, which is shown in preclinical studies to reduce the expression of C3 for the treatment of complement pathway mediated diseases. And we licensed that to Mallinckrodt as part of a larger complement RNAi collaboration program.

In July of this year, Mallinckrodt exercised its option to license two additional complement protein targets from us. A $2 million research milestone payment was triggered following the initiation of work on the second of those three targets in August. And we would be entitled to an additional $2 million if work commences on the third target.

Turning to Slide 11 and our financial performance. Revenue recognized for the half year was roughly GBP 1 million. Whilst we have been successful in securing more than $42 million in upfront payments since July 2019, the IFRS 15 accounting standard stipulates that we only recognize revenue as it relates to the stage of completion of the contractual services. So given our collaborations are at a relatively early stage, our revenue recognition is perhaps lower than expected, but we will recognize the remainder of the upfront payments over the course of the coming years.

We reported a loss after tax of GBP 11 million as compared to a loss after tax of GBP 8.2 million during the prior half year period in 2019. The increase in operating costs of roughly 50% from GBP 10 million to GBP 15 million is almost all driven by increasing R&D spend with both SLN360 and SLN124 being prepared for clinical testing this year. G&A costs for half 1 2020 were comparable to half 1 2019 at approximately GBP 5 million.

I'd like to remind listeners that our tax row is a credit balance. As part of the U.K. R&D Tax Credit scheme, we estimate that an R&D tax credit of GBP 2.3 million will be realized for the first half of 2020. The tax credit is paid on a full year basis in arrears. And we estimate that GBP 3.1 million will be receivable from the U.K. tax authorities in Q4, and that relates to the 2019 R&D tax credit claim.

As of June 30, we had cash, cash equivalents and term deposits of around GBP 50 million or approximately $65 million. And on a pro forma basis, we have cash of over $100 million. And I'd say pro forma as we are owed $40 million from AstraZeneca payable in the first half of 2020. And this payment is unconditional.

In cash flow terms, we actually had a net cash inflow from operating activities of almost GBP 1 million in the first half of the year as compared to a GBP 10 million outflow in the first half of 2019. The cash inflows relate to the AstraZeneca collaboration, and they more than offset operational spend in the period.

In summary, we are entering the second half of 2020 with a strong balance sheet and are well positioned to execute on the many opportunities that we see in front of us.

And with that, I'll turn the call over to the operator for questions.

(Operator Instructions) Your first question comes from the line of Patrick Trucchio.

So first, just congratulations to the team on all the progress, and Mark, congratulations on joining the Silence team. So just first, Mark, if you could please discuss how you view Silence’s strategic positioning? And in particular, how you view the wholly owned programs and partnered programs? And how it all fits together with your vision for the business going forward?

So thank you very much, Patrick, for the question. Nice to meet you. Well, let me just say, I joined Silence because it had all the ingredients I was looking for. I do think this technology platform, the siRNA and GalNAc platform, is a platform that has a good probability of success of delivering meaningful medicines, whether that's through partnership, or as you say, proprietary programs.

And those partnerships that we are referring to, I think, are really validating of what we have and what we're building.

You were alluding to the proprietary pipeline and that sort of balance between proprietary and partnership. I mean I'm really pleased to be taking on a company that already has, I think, a great balance here between partnership and go it alone proprietary programs and looking forward to see these programs advance.

I mean these are obviously still very early days in my tenure, in fact, just a few hours, and I'm really looking forward to sort of digging in and looking at the potential of this company along these different dimensions. And I'm sure there will be chances to share any further thoughts on how to build on this momentum going forward.

As Rob mentioned, we have a good financial position. I've been delighted by the quality of the people in the company that I've met throughout the whole hiring process. And as Iain mentioned, the global aspirations of the business, I think, are exactly right. And with the recent listing on the NASDAQ, I'll be focusing on building momentum this side of the planet as well.

So again, these are early days, Patrick, and I'm looking forward to coming back to this question even more -- in more detail in the future.

That's really helpful. And then just on SLN360, the first dosing in the Phase I trial is expected possibly by the end of this year. What level of knockdown are you anticipating in the study? And could -- when do you expect the initial data to be reported?

Giles?

Yes. Well, I mean, the preclinical data that we have suggests that we should be able to reach our goal of the appropriate dose of at least 80% knockdown. At various doses in the nonhuman primate studies, we were able to get beyond that. So I think the key thing in the human study is to see how the human data replicates the nonhuman primate data.

In terms of exactly when we'll be able to report results, I think as we said at the beginning, we are not, at the moment, making any predictions. As you know, not all sites are open and ready to go at the moment. And while the COVID-19 emergency lasts, it makes it difficult in terms of actually predicting when data will be available. But as soon as we are able to start dosing, then you will be informed.

Got it. And then on SLN124, would the Phase Ib trial, would that begin enrolling concurrently with the Phase I trial? And can you discuss the study design of the Phase Ib a bit in terms of the endpoints and expectations for this study? And again, here as well, when we may have the initial data in the trial?

Well, as you've heard earlier, we've just started dosing our healthy volunteer study. So that is now ongoing. The patient study we are -- we said we intend to start dosing by the end of the year, again, subject to COVID-19 provisions.

What -- I mean, the advantage of the sRNA platform is coupling both potent knockdown and long duration of action. So within -- even in our single dose part of the study, we would anticipate seeing some effects on the main readouts, which will be both in terms of haematinic, so reticulocyte count, particularly in single dose and then hemoglobin with multiple dose and then effects on iron flux in the body, such as serum iron and transferrin and transferrin saturation.

Got it. And then just a last one from me for Rob. Can you discuss the timing of the cash receipts from AstraZeneca? And how this is to be flowing through the income statement and the cash flow statement?

Yes, sure. Thanks, Patrick. So we've said that the cash is due in the first half of 2021. We've recognized it on the balance sheet as a trade receivable. But obviously, in terms of the income statement, there's actually no revenue being recognized for AstraZeneca in the half year. Whilst we signed the collaboration in late March, we started on the first target in July, so the work in earnest began in the second half of this year and hence, no revenue recognition for AstraZeneca in the first half.

(Operator Instructions) Your next question comes from the line of Jens Lindqvist of Investec.

Just a few questions for me. First of all, on SLN360. If you could just kind of confirm the dose range and the dosing regimen for the (inaudible) trials? That would be great.

Secondly, on the Takeda relationship. We haven't talked about that very much today. Just curious what we can expect from that going forward. And is it a reasonable expectation that this would get extended and potentially expanded with new targets? As far as I'm aware, it's Takeda's only relationship in the -- your collaboration in the siRNA space, it seems a little bit subscale for them.

Third question, probably slightly unfair. But just curious what's going on with Amgen's 890. If you have any thoughts on that, that would be great. I mean, would it be helpful to have the data from that Phase I before you start your own?

And then finally, how concerned are you about a potential off-target effect of plasminogen for SLN360? And is that something you'll be monitoring in the Phase I? That's all from me.

Okay. So let me just say, Jens, let me just handle the Takeda situation. There is absolutely nothing we can say. It's -- basically, it's a 12-month research evaluation. It is on a proprietary target of theirs. And we will hope to sit down with them early in the new year and review where we've got to. And really, I'm not being difficult, but that's all we can actually -- we're allowed to say at the moment. As far as 360 is concerned, let me hand over to Giles. I'm sure he can answer the other question.

Yes. So as far as 360 is confirmed, as you might imagine, the first study will be in patients who are primary prevention patients, that means that they're otherwise healthy, but have an elevated Lp(a). And we will be looking at a dose escalation study, studying -- both looking at safety and also duration of effect as well as effect on the ability to knock down Lp(a).

As far as the Amgen program is concerned, we understand that the Phase II is underway or it has just started. And we anticipate having what we announced at the American Heart Association and we'll be presenting the data from the Phase I, which, as you say, will be useful information to be at this study.

Sorry, you had a third question. Could you just remind me of that?

Off-target effects on plasminogen in SLN360.

Yes. So as you can imagine, that was a subject during the IND process, and we were able to convince the FDA that we've looked at the potential off-target effects. As you know, there is some similarity between Lp(a) and plasminogen but the work that we have done have suggested there's no significant risk for off-target effects either for that target or others that have been raised.

Okay. The actual dose range in the SLN360 trial, will that be similar to the NHP study?

Yes. We'll be looking at a similar dose range for single dosing initially. And then in the multiple dose, we will look to see what the duration of effect of the single dose is before finally deciding on the design of the multiple dose.

(Operator Instructions) Your next question comes from the line of Miles Dixon of Peel Hunt.

I've got three questions, actually, if I may. So firstly, the -- I just wondered if anybody wanted to make comment on the developments around the extrahepatic therapies or assets for AstraZeneca. How is that work is progressing with AstraZeneca?

Secondly, the second option under the Mallinckrodt deal. Have you guys disclosed what component or complement that's targeting?

And thirdly, on partnerships. I mean given the shared number that you've signed, whether it be with Mallinckrodt, Takeda or AZ, is work internally now turning towards developing new assets for partnerships?

Let me take that maybe in summary, and perhaps Giles can add. Just on the extrahepatic, and I say to you, yes, obviously, that was one of the attractions of working with AstraZeneca. But I should say that separately, we are working with a number of academics and smaller companies in terms of extrahepatic. We're not actually relying on one route, we're actually sort of spreading our chances around. So yes, it's very much something that we are focused upon.

I think the second option -- we haven't actually declared what the second option is. Second target is with Mallinckrodt and won't be doing so at this point. And really, I think the key point you bring up, Miles, is how do you balance the internal with the resourcing of doing the partnerships and actually doing our own proprietary programs. And I would say to you that we have -- we're very confident -- we've been increasing our internal numbers, particularly in clinical development but also in manufacturing, and we've also been increasing our efforts on our R&D pipeline. So we're very comfortable that we can balance these resources at the moment.

Do I think we're going to announce another major partnership in the next couple of months? Well, I'm not sure that market is actually fully up to speed yet. But my view is that we've got plenty on our plate at the moment. And one of the big things that this company is, we've got the validation of the partnerships, we've got the money, we've got the people, we've got the right leadership in place.

We need to execute and get some clinical data. And it's only after we've got that clinical data that we would start looking to maybe expand our relationships and even consider partnering some of our assets. But the overall answer to your question is, we've got plenty to do, and we have got a budding pipeline. And I don't know whether Giles wants to say any more on that.

No, I think you described it adequately, Iain. I think, as you say, the key thing is making sure that we're fully resourced to be able to manage both the partnerships and to develop our internal proprietary program, and that's what we've been doing. And fortunately, having been in a situation where our partners have been investing in our technology platform, that's giving us the resources to be able to do that.

There are no further questions at this time. Please continue.

Well, I think -- thank you very much, indeed, for those questions. And we very much appreciate it. As I've said, I think it's been a fantastic year for us so far. We have signed those partnerships. And let me just emphasize each of those companies have done thorough due diligence on us before actually entering into those partnerships.

There have been some people saying, why didn't we go to NASDAQ and raise money? We don't need to raise money at this level. We have sufficient cash to see us through to some significant clinical milestones.

We have been building the people, and I'm really over the moon that Mark has decided to join us because I feel with his experience and the team that we have in place and the team that we're building, I feel very excited about going forward. And as I said just previously, it's about delivering data now, and we're very confident, pandemic notwithstanding, that we can do that in a timely fashion.

So thank you very much, indeed, everybody. And I look forward to returning to being a Non-Executive and looking at -- when watching the team do that execution and moving forward. So thank you very much, indeed.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect. Would the speakers, please stand by?