Silence Therapeutics plc (NASDAQ:SLN) Q4 2023 Earnings Call Transcript

Silence Therapeutics plc (NASDAQ:SLN) Q4 2023 Earnings Call Transcript March 13, 2024

Silence Therapeutics plc misses on earnings expectations. Reported EPS is $-0.47 EPS, expectations were $-0.25. SLN isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the Silence Therapeutics 2023 Full Year Results Webcast and Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your first speaker today, Gem Hopkins. Please go ahead.

Gem Hopkins: Good morning and good afternoon, everyone. Thank you for joining us today. My name is Gem Hopkins, Vice President of Investor Relations and Corporate Communications at Silence. Joining me on today’s call are Craig Tooman, our President and CEO, who will provide an update on the business; Rhonda Hellums, our Chief Financial Officer, who will review our financial performance; and Steven Romano, our Head of R&D, who will provide an update on our clinical programs. For those of you participating via conference call, the accompanying slides can be accessed by going to the Investors section of our corporate website at www.silence-therapeutics.com. Turning to Slide 2, I’d like to remind you that during 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, timing and objectives, the therapeutic potential of our product candidates, our operational plans and strategies, anticipated milestone payments, anticipated operating and capital expenditures, business prospects and projected cash runway.

Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in our most recent annual report on file with the SEC. In addition, any forward-looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views of any subsequent date. We specifically disclaim any obligation to update such statements. With that, I’d like to turn the call over to Craig. Craig?

Craig Tooman: Thank you, Gem, and welcome everyone. Thank you for joining us today. 2023 was a year of strong execution across Silence’s and setting ourselves up for what we anticipate being a very data rich year in 2024. In fact, we were very pleased to announce just this morning positive top line Phase 2 data for zerlasiran in patients with high Lp(a)(a), which we will discuss more in a moment. But first, I want to remind everyone what we accomplished in 2023. While this was clearly a challenging year in the broader market, I’m very proud of our team’s relentless focus and commitment to deliver on our promises to both our shareholders and our patients. We remain very focused on the fundamentals of the company and that is clearly bearing fruit today.

Looking back over the year, we completed enrollment in our zerlasiran Phase 2 program for high Lp(a)(a) in just four months, highlighting the unmet need and growing excitement from the medical community for zerlasiran. We also reported positive multiple dose data from the APOLLO study in patients with ASCVD and high Lp(a)(a). You’ll recall we saw significant Lp(a)(a) reductions of up to 99%, which was durable up to 201 days. In addition to zerlasiran, we made great progress advancing SLN124 or divesiran in the clinic for polycythemia vera or PV. This is an area that we think siRNA and divesiran are particularly well suited to address. The ongoing Phase 1 study is open label and the emerging data continue to look promising. During the year, we also continued to execute across our partner portfolio, achieving $14 million in milestones between our AstraZeneca and Hansoh collaborations.

We are particularly pleased that we now have a clinical program with AstraZeneca. While 2023 was primarily focused on advancing our clinical programs, we did not lose sight of the fact that we are increasingly being understood as a platform company. While we have been focusing our efforts on our clinical successes, we also made very strategic investments in early stage projects where we see clear opportunity to either be first-in-class or best-in-class in areas of high unmet need. The buyback of our complement assets from Mallinckrodt is a great example of that. Our GOLD platform is advancing results across multiple programs and that’s driving strong new partnership interest. Partnering has always been a key facet of our business and an area we expect will continue to evolve considerably.

Turning to our 2024 key strategic priorities, we’ve already made great strides against each pillar so far this year. Starting with our lead proprietary clinical programs and zerlasiran for high Lp(a)(a). As I mentioned, today we reported positive top line 36 week data from the ongoing Phase 2 study in patients with high Lp(a)(a). Steve will discuss this in more detail, but in summary, Lp(a)(a) reductions were consistent with Phase 1 results and support a competitive profile for zerlasiran to potentially address the needs of up to 1.4 billion people worldwide living with Lp(a)(a). Phase 3 planning activities are well underway to ensure we fully maximize the potential of this high value asset and are well positioned to bring it to patients as soon as possible.

We are equally excited about the ongoing divesiran PV study. As I mentioned, the Phase 1 study is open label and the emerging data look promising. Our team has done an excellent job enrolling and overseeing this trial and we are on track to report data by June of this year. On the partnering side, as I mentioned, we are very pleased to enter the clinic with the first product candidate under our AstraZeneca collaboration in February, triggering a $10 million milestone payment to us. This is another great example of the productivity of our GOLD platform and how synergies with great partners can create unique development opportunities. Beyond our current clinical programs, we are committed to advancing and expanding our proprietary pipeline. Here’s a look at our proprietary pipeline.

In addition to the zerlasiran and divesiran programs, we have the two complement assets, two undisclosed targets that we’re working on with Hansoh that are wholly owned to us outside the China region and several other undisclosed programs. Silence has always been a platform company. We’ve been in the siRNA arena for over two decades and have developed extensive know how in IP. We are starting to see the fruits of that labor and the potential for our platform to produce a pipeline of differentiated programs with zerlasiran and divesiran clinical profiles now emerging. We believe we are at the early stages of what we can do with this technology platform. We have generated encouraging preclinical data across other portfolio programs that we look forward to talking more about as they get closer to the clinic.

Importantly, underpinning all of this is a strong balance sheet following the $120 million PIPE financing we completed in February. With that, I’ll turn the call to Rhonda for a review of our financials.

Rhonda Hellums: Thank you, Craig. For the year ended December 31, 2023, the company recorded GBP25.4 million in revenue versus GBP17.5 million in 2022. The increase of GBP7.9 million was primarily driven by the advancement of targets in our partner programs. As a reminder, we record revenue from our collaborations based on the percentage of contract completion. As Craig mentioned, our AstraZeneca collaboration continues to advance nicely. In 2023 AstraZeneca nominated the first product candidate, and we received a $10 million option fee. In February of this year, that candidate entered to the clinic, and we will receive another $10 million milestone. We also advanced our three Hansoh targets and achieved $4 million in development milestones from two of those programs in 2023.

Under our Mallinckrodt collaboration, you will recall, we reacquired two of the preclinical complement assets last March. As a result, we recognized an GBP8 million cumulative catch up adjustments to revenue when the contract modification was complete with the unrecognized revenue for those two assets. This month, Mallinckrodt notified us that they will not pursue further development of SLN501 following the completion of the Phase 1 study. This will conclude all activities and commitments under the Mallinckrodt collaboration. Any remaining unrecognized revenue under this collaboration will be recorded in the first quarter of 2024. Finally, during 2023, we recorded approximately GBP569,000 in royalty revenue from Alnylam. The expenses related to our partner programs, including the portion of our employees’ time dedicated to these programs are recorded as cost of sales as these are attributable to the revenues.

These expenses were GBP10.3 million in 2023. As expected, R&D costs rose in 2023 to GBP44 million versus GBP35.6 million in 2022. This increase was primarily due to advancing our proprietary zerlasiran and divesiran programs. We also strategically invest in further development of our platform and identifying new targets to further expand our proprietary pipeline. General and administrative costs were GBP20.6 million in 2023 versus GBP19.6 million in 2022. The increase was primarily a result of non-cash share based expenses related to the granting of employee share options. We continue to be prudent in our spending. The company’s net loss for the full year of 2023 was GBP43.3 million versus a net loss of GBP40.5 million in 2022. The small increase in our net loss is due to the increase in R&D as a result of advancing our programs in clinical development.

The company’s cash and cash equivalents were GBP54 million or approximately $68.8 million at the end of December 2023. As Craig mentioned, we were pleased to announce in February an oversubscribed private placement of approximately $5.7 million ADSs at $21 per ADS, resulting in gross proceeds of $120 million. We are delighted to have expanded our shareholder base with this group of top tier biotech investors. We also raised an additional $20 million in proceeds in January of 2024 from sales of our ADSs under our ATM. Together with our cash at December 31, we have significantly increased our cash balance in early 2024 to over $200 million. Further, as our collaborations continue to advance, we anticipate that we will achieve additional milestones.

As mentioned earlier, we have already achieved $10 million in early 2024. We estimate that our cash will now extend our runway into 2026. We continue to be committed to responsibly investing in initiatives that will advance our pipeline and expand our platform and new targets. We also continue to evaluate additional partnering opportunities that could provide additional non-dilutive funding and further extend our cash runway. With that, I will turn the call over to Steve for a clinical update. Steve?

Steven Romano: Thanks, Rhonda. As Craig mentioned, we were pleased to announce this morning positive top line 36 week data from the ALPACAR-360 Phase 2 study of zerlasiran in patients with high Lp(a)(a). Zerlasiran has demonstrated a consistent clinical profile that we believe is ideal for advancing into Phase 3 and eventually for treating patients living with high levels of Lp(a)(a). Just a quick reminder for those of you less familiar with Lp(a), this is a key cardiovascular risk factor that is almost entirely genetically determined. This means that unlike other cardiac risk factors, Lp(a) can’t be modified by diet or exercise. Your level of Lp(a) is the same at age five as it is at age 45. High Lp(a) is considered to affect around 20% of the world’s population.

It’s associated with a high risk of heart attack, stroke and aortic stenosis. You need pharmacological intervention to manage high Lp(a). There are currently no approved therapies that selectively lower Lp(a). Clearly, this is a major unmet need in cardiovascular disease and why we’re so excited about the potential for zerlasiran. Fortunately, the recognition of Lp(a) as a key cardiovascular risk factor is growing rapidly. Major societies are now including Lp(a) in their testing guidelines. We expect awareness to grow even more in the coming years, particularly as new therapies become available. Now turning to our zerlasiran clinical program. First, I want to remind you what we saw in APOLLO Phase I program. In the single dose study, we evaluated healthy volunteers with high Lp(a) greater than or equal to 150 nanomoles per liter.

Here we saw Lp(a) reductions up to 98% following a single dose with effects persisting over a five month period, very effective, durable and well tolerated. In the multiple dose study, we evaluated ASCVD patients with high Lp(a) and saw Lp(a) reductions up to 99% following repeated doses with effects persisting at 201 days. Again, very effective, durable and well tolerated. The multiple dose study also showed we can achieve substantial Lp(a) reduction at the 300 milligram and 450 milligram doses. We don’t need the 600 milligram dose we explored in the single dose study. Turning to the ongoing ALPACAR-360 Phase 2 study and the positive 36 week top line data we reported this morning. As a reminder, the study enrolled 178 subjects with baseline Lp(a) levels at or over125 nanomoles per liter at high risk of ASCVD events.

Zerlasiran was administered at 300 milligrams subcutaneously every 16 or 24 weeks and 450 milligrams every 24 weeks to patients with a median baseline Lp(a) of approximately 215 nanomoles per liter. I want to emphasize that today we are only looking at 36 week data for the primary endpoint. As designed, this is a 60 week study that’s still ongoing. Secondary endpoints including change in Lp(a) from baseline to week 48, week 60 and potential effects on other lipids and lipoproteins are still being evaluated. Today, we are pleased to report the study met its primary endpoint and demonstrated a highly significant reduction from baseline in Lp(a) compared to placebo at week 36. Median percentage reduction in Lp(a) of 90% or greater were observed for both doses at week 36.

No new safety concerns were identified during this treatment period. Zerlasiran continues to be very well tolerated. These preliminary data support at least quarterly dosing and potentially longer. We need to review the 48 week data and updated modeling before we confirm dosing regimen for Phase 3. Bottom line, we’re very excited about the emerging Phase 2 data, which are consistent with Phase 1 results and continue to support competitive profile for treating patients with high Lp(a). We look forward to reviewing the 48 week data expected in the second quarter of this year. Turning to divesiran, our second wholly owned siRNA for hematological disorders. What we really like about this program is. we’re targeting a pathway that’s central to the production of hepcidin, the master regulator of iron in the body.

Divesiran works by silencing TMPRSS6, a negative regulator of hepcidin to modulate endogenous hepcidin. This has a range of potential therapeutic benefits. We’ve demonstrated proof of mechanism in healthy volunteers and are currently focused on polycythemia vera. Polycythemia vera is a rare blood disorder with significant unmet needs. PV affects around 150,000 people in the U.S. and around 3.5 million people worldwide. Elevated hematocrit is a hallmark of the disease. The treatment goal is to maintain hematocrit levels at less than 45% to reduce cardiovascular and major thrombotic events. Patients with hematocrits between 45% and 50% are 4 times more likely to die from cardiovascular causes or major thrombotic events. Phlebotomy is the current standard of care.

This is burdensome and most patients are iron deficient at diagnosis. Repeated phlebotomy exacerbates this. Cytoreductive therapies are also used, but may not be effective at reaching control and can be associated with significant adverse events. In PV, divesiran is designed to inhibit TMPRSS6 expression to raise hepcidin and reduce iron delivery to the bone marrow. Iron restriction reduces erythropoiesis resulting in lower red blood cell production. As I mentioned, we showed proof of mechanism in healthy volunteers. In this study, divesiran increased hepcidin up to 4 fold and reduced serum iron by about 50% after a single dose. The effects persisted for at least two months, which was the study period and divesiran was well tolerated. As Craig mentioned, we were pleased to kick off the SANRECO Phase 1/2 PV study last January and have made great progress with enrollment throughout the year.

This is a two part study. We’re currently in the Phase 1 open label study and that will be followed by a Phase 2 study. In the Phase 1 study, we are testing divesiran in a wide range of PV patients, including those with high baseline hematocrit, as well as those who are well controlled. Remember, this is a Phase 1 study, so the goal here is to learn as much as possible about dosing and therapeutic effect. All patients entered the study are phlebotomy dependent. The nice thing about this program is, even in Phase 1, we’re looking at well-defined clinical outcomes, including the maintenance of hematocrit and the number of phlebotomies. So this is an open label study, we can see the data. And as Craig mentioned, the emerging data are encouraging.

We look forward to presenting these data publicly sometime before the end of June. As a reminder, divesiran has FDA Fast Track and orphan drug designations for PV. With that, I’ll turn the call back over to Craig. Craig?

Craig Tooman: Thanks, Steve. 2023 was all about execution and the Silence team delivered on all fronts. 2024 is poised to be an exciting year for our proprietary clinical programs. This morning, we announced positive top line 36 week data from the Phase 2 study of zerlasiran in patients with high Lp(a), and we expect 48 week data in Q2, followed by 60 week data in Q4. We remain on-track to report PV data with divesiran by June. We see substantial potential for our mRNA GOLD platform across a range of genetic diseases and look forward to communicating more as we move ahead. I’d like to thank everyone for listening today and I’ll pass back over to the operator for your questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] And your first question comes from the line of Mike Ulz from Morgan Stanley. Please go ahead.

Mike Ulz: Hey, guys. Thanks for taking the question and congratulations on the data. Maybe just a question related to the data, if you could provide maybe additional color on the curves potentially between the two doses. Just curious if one stands out relative to the other. And then maybe Steve, you also mentioned waiting for the 48 week results to sort of decide which dose to go forward with. What kind of criteria will you be looking for there in those data? Thanks.

Craig Tooman: Steve?

Steven Romano: Yes. So thank you for the question, Mike. First of all, let’s just remember what we’re presenting here is the primary outcome measure, which was a time average change from baseline. So that’s the reference to a very significant change. We’re not sharing the details of that, because this is a rather novel endpoint and I don’t believe any other companies in this space have yet revealed data with regards to this endpoint. So we’re going to preserve that for a upcoming research meeting later in this year. What we did share was the median change from baseline at week 36. But remember at week 36, we’re between intervals. So remember, we’re testing a dose ranges here. We’re testing 300 and 450, but we’re testing them at 16 weeks and 24 weeks.

So that 36 week time point, which is the primary point for evaluating the time average change is in between intervals. And this is why we need to wait to see 48 week data as well. Now what I can say very clearly, and remember, I’ve talked to many of you about this before, we are going to look at all of the data from our single ascending, our multiple dose data and the ongoing Phase 2 data to update our PK and PD modeling in order to make sure we make the best choice going forward to the Phase 3. So I can’t really tell you too much more about the differences between the lines as you were suggesting. We’ll preserve that information for research meeting and we’ll get greater confirmation of our dose and range later this year. We are confident that 300 milligrams is a well-supported dose and it’s unlikely we will require a dose above that.

Mike Ulz: Got it. That’s very helpful. Thank you and congratulations again.

Craig Tooman: Thanks, Ulz.

Operator: Thank you. We will now go to the next question. And your next question comes from the line of Kostas Biliouris from BMO Capital Markets. Please go ahead.

Kostas Biliouris: Good morning, everyone. Thanks for taking our question and congrats on the very strong data. A couple of questions from us. One on the Lp(a) and one on the PV program. On the Lp(a) program, maybe any new information that these data provide compared to the previous one that can help you better inform the Phase 3 design? And then on the PV side, a twofold question. In the press release, you mentioned that the PV data continued to look promising. Any additional color around the parameters that you may be referring to here? And then given the activity that we see in the PV space with the recent Takeda [indiscernible] partnership? Any thoughts around the potential partnership for the PV program? Thank you very much and congrats again.

Craig Tooman: Thank you, Kostas. Let me just say that the amazing thing about this technology is how consistent it is. And it’s been very consistent, as Steve mentioned, across the Phase 1 multiple dose and single dose and now the Phase 2. So, while we are gleaning new insights from the intervals, and also the doses, it has been very, very consistent. And Steve, I’ll let you expound on that. In terms of, PV, we are aware of the endpoints that others have studied in this arena and we’ve looked at it very closely and our categorization of our data looking very good is with that in mind. Steve, I’ll hand over to you.

Steven Romano: Yes, sure, Craig. And thank you, Kostas for the questions. So maybe I’ll start with PV since it’s top of mind. Yes, so when we say it’s looking promising, it’s because in this study we are actually evaluating relevant clinical outcomes. Now it’s observational, so we’re not doing inferential stats because it’s Phase 1, but what we can look at is the number of phlebotomies as well as the maintenance of hematocrit. So we’re looking at both of those. So when we say it continues to look good, it’s because we’re looking at those two indicators of efficacy. So we really look forward to sharing that data more fully over the next few months. Again, with regards to the dosing of the Lp(a), remember, you see we didn’t test directly in this trial 12 week intervals.

And that’s important because, as I’ve said before, and I’ll repeat it because I think it’s really important. We’re going to look across the single multiple dose and the data we’re getting from the Phase 2, which is looking at 16 weeks and 24 weeks, which brackets the range across a broad array of dosing intervals and choose the best one. So we really need to update our PK, PD modeling, which we’ll do with the 36 week data and we’ll continue to do that with the 48 week data. But we want to see — since we’ve given this dose relatively infrequent to 16 and to 24, that 48 week data will be important as we progress to a confirmation of a specific dose and more importantly an interval that we’ll choose going into Phase 3.