10-Q: Silence Therapeutics Reports Q2 Loss, Shifts Pipeline Focus

Silence Therapeutics plc reported a significant increase in net loss and a sharp decline in revenue for Q2 2025, while advancing key clinical programs and pausing another.

Summary

• Net loss for the three months ended June 30, 2025, increased to $27.35 million, up from $19.76 million in Q2 2024.
• Net loss for the six months ended June 30, 2025, was $55.88 million, compared to $22.07 million for the same period in 2024.
• Revenue for Q2 2025 was $0.2 million, a decrease of $0.5 million from Q2 2024, primarily due to the conclusion of the Hansoh Collaboration.
• Total revenue for the six months ended June 30, 2025, was $0.4 million, a substantial decrease of $16.1 million from $16.5 million in the first half of 2024, mainly due to no milestone payments from the AstraZeneca collaboration in 2025.
• Research and development costs increased by $3.8 million to $17.65 million for Q2 2025, and by $12.8 million to $38.46 million for the six months ended June 30, 2025, driven by advancement of proprietary programs like divesiran and zerlasiran.
• General and administrative expenses decreased by $1.9 million to $5.13 million for Q2 2025, and by $0.8 million to $12.82 million for the six months ended June 30, 2025, due to reduced reporting requirements and administrative cost reduction efforts.
• The company incurred $1.32 million in non-recurring restructuring charges in Q2 2025 due to a workforce reduction.
• Cash and cash equivalents and short-term investments totaled $114.2 million as of June 30, 2025, down from $121.33 million in cash and cash equivalents at December 31, 2024.
• Net cash used in operating activities increased to $34.09 million for the six months ended June 30, 2025, from $14.55 million in the prior year, primarily due to reduced milestone payments.
• Divesiran (SLN124) Phase 2 SANRECO trial for polycythemia vera (PV) exceeded 50% enrollment and remains on track for year-end 2025 completion.
• Zerlasiran (SLN360) Phase 3 readiness activities, including manufacturing and supply scale-up, are complete, and the company is in discussions for a third-party partner for Phase 3 development and commercialization.
• The Phase 1 study of SLN548 for complement-mediated diseases has been paused to prioritize extra-hepatic programs.
• A Phase 1 trial for SLN312, licensed to AstraZeneca, is ongoing.

Sentiment

Score: 4

Explanation: The financial results show a significant deterioration with increased losses and sharply decreased revenue due to concluded collaborations and lack of milestone payments. While clinical programs like divesiran and zerlasiran are advancing, the pause of SLN548 and the explicit need for future capital raise, contingent on uncertain milestone payments, indicate financial pressure and strategic re-evaluation. The updated risk factors also highlight increasing regulatory and data privacy challenges.

Positives

• Divesiran (SLN124) Phase 2 SANRECO trial for polycythemia vera (PV) has exceeded 50% enrollment and is on track for completion by year-end 2025.
• Updated Phase 1 data for divesiran in PV patients showed therapeutic phlebotomies were essentially eliminated and mean HCT levels were lowered and maintained to less than or equal to 45% for all cohorts, with good tolerability.
• Zerlasiran (SLN360) has completed core Phase 3 readiness activities, including manufacturing and supply scale-up, indicating progress towards late-stage development.
• Positive regulatory feedback was received from the FDA and EMA on the Phase 3 cardiovascular outcomes study design for zerlasiran.
• Advancement in extra-hepatic cell targeting of siRNA shows promising initial preclinical activity in mice models, leading to prioritization of these programs.
• General and administrative expenses decreased due to reduced reporting requirements and cost reduction efforts.

Negatives

• Net loss significantly increased to $27.35 million for Q2 2025 and $55.88 million for the six months ended June 30, 2025, compared to prior periods.
• Revenue sharply declined to $0.2 million for Q2 2025 and $0.4 million for the six months ended June 30, 2025, primarily due to the absence of milestone payments from the AstraZeneca collaboration and the conclusion of the Hansoh collaboration.
• The Hansoh Collaboration concluded in December 2024, and Mallinckrodt notified the company in March 2024 that they will not pursue further development of SLN501, ending these revenue-generating collaborations.
• The Phase 1 study of SLN548 for complement-mediated diseases has been paused, indicating a delay or reprioritization away from this specific program.
• Cash and cash equivalents decreased significantly from $121.33 million at December 31, 2024, to $41.74 million at June 30, 2025, contributing to a net cash outflow from operating activities of $34.09 million.
• The company continues to incur significant operating losses and negative cash flows, requiring additional capital in the future.

Risks

• Stringent and evolving U.S. and foreign data privacy and security laws (e.g., EU GDPR, UK GDPR, CCPA, US DOJ rule on sensitive personal data) pose risks of regulatory investigations, litigation, fines, business disruptions, and reputational harm if not complied with.
• Cross-border data transfer restrictions, particularly from the EEA and UK to the United States, could lead to significant adverse consequences, including operational interruption, relocation expenses, and inability to work with partners.
• The U.S. Department of Justice's rule on 'Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern' may impact business activities involving certain jurisdictions (e.g., China, Russia, Iran) and covered individuals.
• Use of generative AI technologies by employees could result in additional compliance costs, regulatory investigations, and lawsuits, potentially making the business less efficient or creating competitive disadvantages.
• Healthcare legislative and other regulatory reform measures in the U.S. (e.g., OBBBA, Medicare Drug Price Negotiation Program, tariffs on imported pharmaceuticals) could negatively impact business and results of operations by preventing or delaying marketing approval, restricting post-approval activities, or affecting profitability.
• Uncertainty regarding UK-US and US-EU trade agreements and potential tariffs on pharmaceuticals could lead to companies exploring relocation of manufacturing facilities or restructuring supply chains.
• The EU Clinical Trials Regulation (CTR) has led to added barriers for clinical trials, including regulatory complexity and increasing administrative burden.
• The new EU Regulation (EU) 2021/2282 on health technology assessment (HTA), applying from January 12, 2025, could lead to delays in patient access to medicines if scientific advice is unavailable during development.
• Proposed revisions to EU laws on medicines could decrease data and market exclusivity opportunities for product candidates in the EU, making them open to generic or biosimilar competition earlier.
• Failure of the UK to closely align its regulations with the EU may affect the cost of conducting clinical trials in the UK and/or make it harder to seek marketing authorization for product candidates based on UK clinical trials.
• The company's ability to obtain future funding is dependent on the achievement of certain development or regulatory objectives that may not occur, posing a risk to its financial condition and ability to pursue business strategies.

Future Outlook

Management believes existing cash, cash equivalents, and future anticipated milestone payments from existing collaborations will be sufficient to fund operating expenses and capital expenditure requirements into 2028. Future funding requirements depend on the scope, rate of progress, and cost of clinical trials, preclinical programs, manufacturing, patent prosecution, regulatory approvals, and commercialization efforts. The company expects to incur operating losses for the foreseeable future as research and development efforts continue.

Management Comments

• Current cash and cash equivalents are sufficient to fund operating expenses for at least the next twelve months from the issuance date of these condensed consolidated financial statements.
• Will need to raise additional funding to fund operation expenses and capital expenditure requirements in relation to clinical development activities.
• May seek additional funding through public or private financings, debt financing, or collaboration agreements.
• Future milestone payments from existing collaboration agreements are dependent on achievement of certain development or regulatory objectives that may not occur.

Industry Context

The company operates in the RNA therapeutics space, a rapidly evolving field within biotechnology focused on gene silencing. The industry is characterized by high R&D costs, long development timelines, and significant regulatory hurdles. The company's focus on cardiovascular, hematology, and rare diseases aligns with areas of high unmet medical need, attracting significant investment and competition. The conclusion of two collaboration agreements (Hansoh and Mallinckrodt) highlights the inherent risks and fluctuating nature of partnership-dependent revenue in the biotech sector. The pause of SLN548 to prioritize extra-hepatic programs reflects a strategic pivot towards potentially higher-value or more promising areas within RNAi, a common practice in drug development to optimize resource allocation.

Comparison to Industry Standards

• NA

Corporate Governance

Stakeholder Impact

• Shareholders: Face increased losses and dilution risk from potential future capital raises. The new 'Mandatory Offer' clause in the Articles of Association could impact control dynamics and potential takeover scenarios.
• Employees: Affected by the non-recurring reduction in workforce, resulting in restructuring charges.
• Customers/Partners: Mallinckrodt and Hansoh collaborations have concluded, impacting future revenue streams from these partnerships. AstraZeneca collaboration continues but without milestone payments in the current period.
• Creditors: The company's continued operating losses and need for future funding may impact its credit profile, though current liquidity is projected to last into 2028 with anticipated milestones.

Next Steps

• Complete enrollment of the SANRECO Phase 2 trial for divesiran by year-end 2025.
• Engage in global partnership discussions for potential Phase 3 development and future commercialization activities for zerlasiran.
• Progress extra-hepatic programs based on initial clinical feedback.
• Seek additional funding through public or private financings, debt financing, or collaboration agreements to support future operations and clinical development.

Key Dates

Recommendation

The company's financial performance shows significant deterioration with increased losses and a sharp decline in revenue, primarily due to the conclusion of key collaboration agreements and the absence of milestone payments. This raises concerns about short-term financial stability and reliance on future, uncertain milestone payments for liquidity into 2028. However, the company is making progress in its core clinical pipeline with divesiran advancing in Phase 2 and zerlasiran completing Phase 3 readiness, indicating potential long-term value. The strategic pause of SLN548 to prioritize extra-hepatic programs suggests a focused approach to R&D. Given the mixed bag of financial headwinds and clinical progress, a 'hold' recommendation is appropriate. Investors should monitor the progress of divesiran and zerlasiran, especially partnership developments for the latter, and the company's ability to secure additional funding without significant dilution.

Keywords

RNA therapeutics, siRNA, biotechnology, pharmaceuticals, clinical trials, drug development, polycythemia vera, Lp(a), cardiovascular disease, hematology, rare diseases, gene silencing, SEC filing, 10-Q, financial results, biopharma