Silence Therapeutics plc Annual Report 2020

FY2020 Annual Report · Silence Therapeutics plc

Loading PDF…

Delivering precision
engineered medicines

ANNUAL REPORT 2020

CO N T E N T S

Welcome

Our vision is to transform
peoples’ lives around the world
by silencing diseases through our
precision engineered medicines
and driving positive change for
the communities around us.

W H O W E A R E
We are pioneers in RNAi therapeutics with know-how accumulated
over two decades. Silence is proud to be a global and diverse
company from our locations to our culture and expertise spanning
across bioinformatics to drug discovery and clinical development.

W H AT W E D O
We are developing a deep pipeline of innovative siRNA therapies
– in-house and with our partners – for diseases with a genetic
basis. The depth and versatility of our mRNAi GOLD™ platform
gives us the opportunity to address a wide range of conditions in
virtually any therapeutic area.

O U R T E C H N O LO G Y
Our mRNAi GOLD™ platform leverages a naturally occurring
process in the body, RNAi, to create medicines that precisely target
and ‘silence’ disease-associated genes in the liver. This platform is
well validated with multiple clinical studies ongoing and broad
strategic collaborations in place.

Read more about our business on pages 6 to 8

S T R AT E G I C R E P O R T
Highlights

Chairman’s statement

Chief Executive Officer’s review

How RNAi Works

Our strategy

Our pipeline

SLN360 for cardiovascular disease
due to high lipoprotein(a)

SLN124 for iron loading anaemias

Collaborations

Financial review

Principal risks

Corporate Social Responsibility

Resources and relationships

G OV E R N A N C E
Board of Directors

Corporate Governance report

Audit and Risk Committee report

Remuneration Committee report

Directors’ Report

Statement of Directors’ responsibilities
in respect of the financial statements

FI N A N C I A L S TAT E M E N T S
Independent auditors’ report to the
members of Silence Therapeutics plc

Consolidated income statement

Consolidated statement of
comprehensive income

Consolidated balance sheet

Consolidated statement of
changes in equity

Consolidated statement of cash flows

Notes to the consolidated
financial statements

Company balance sheet

Company statement of changes in equity 78

Notes to the Company
financial statements

Company information and advisers

IBC

Find more online:
silence-therapeutics.com

O P E R AT I O N A L H I G H L I G H T S

• Advanced both wholly owned product
candidates, SLN360 for cardiovascular
disease due to high Lipoprotein(a), or Lp(a),
levels and SLN124 for thalassaemia and
myelodysplastic syndrome (MDS)

> SLN360 received approval of an

investigational new drug application
(IND) by the FDA and we initiated the
APOLLO Phase 1 study in people with
high Lp(a) levels

> SLN124 was granted by the FDA rare
paediatric disease designation for
thalassaemia and orphan drug
designations for MDS and thalassaemia

> Initiated the GEMINI Phase 1 study of

SLN124 in healthy volunteers

• Secured significant collaboration with
AstraZeneca to discover and develop
siRNA therapeutics for up to 10 targets
in cardiovascular, renal, metabolic and
respiratory diseases

> Upfront cash payment of $20m received
and another $40m due in the first half
of 2021

> Deal economics include up to $400m in
milestone payments and royalties for
each programme

• Expanded RNAi collaboration with

Mallinckrodt plc for complement-mediated
diseases with Mallinckrodt exercising options
to license two additional complement protein
targets from us, bringing the total to the
maximum three programmes envisaged in
the collaboration deal

• Commenced a technology evaluation with

Takeda to explore the potential of using our
mRNAi GOLD™ platform against a novel,
undisclosed and proprietary target

• Appointed Dr. Giles Campion as Executive
Director, Dr. Marie Wikström Lindholm as
Senior Vice President, Molecular Design,
Dr. Eric Floyd as Senior Vice President,
Head of Global Regulatory Affairs and
Quality Assurance and Dr. Barbara Ruskin
as Senior Vice President, General Counsel
and Chief Patent Officer

• Launched a Scientific Advisory Board

comprising world-leading scientists and
clinicians to support the optimisation of
our mRNAi GOLD™ platform and guide
development strategies for SLN360
and SLN124

• Completed U.S. listing and our American

Depository Shares (ADSs) began trading on
the Nasdaq Capital Market (Nasdaq) under
the symbol ‘SLN’ on 8 September 2020

• Appointed Mark Rothera as our President,
Chief Executive Officer and Board member

F I N A N C I A L H I G H L I G H T S

Financial highlights for the year ended 31 December 2020

Cash and cash equivalents and term deposits

£37.4m

2019: £33.5m

Net cash outflow from operating activities

£10.8m

2019: £1.7m inflow

Loss after tax

£32.5m

2019: £19.6m

• The cash flow from operating activities was

£10.8m outflow (2019: £1.7m inflow)
against an operating loss of £35.8m
(2019: £22.7m). 2020 included receipts of
$20m upfront from AstraZeneca, $2.0m in
milestones from Mallinckrodt, and a $2.0m
upfront from Takeda

• 2020 loss was higher primarily due to

increased research and development spend
in relation to our SLN360 and SLN124
proprietary programmes, as well as general
and administrative expenses mainly relating
to the Nasdaq listing

P O S T P E R I O D H I G H L I G H T S

Total available resources at 31 December 2020

£97.5m*

• Appointed Dr. Michael H. Davidson,
a leading expert in lipidology and
cardiovascular clinical trials, to our Board
of Directors as Non-Executive Director,
and Craig Tooman to our Executive
Leadership Team as Chief Financial Officer

• Completed an oversubscribed $45m (c.

£33m) private placement led by top-tier US
institutional healthcare funds

• Initiated dosing in the APOLLO Phase 1
study of SLN360 in people with high
Lp(a) levels

• Initiated work with Mallinckrodt on the

third complement target which triggered a
$2.0m research milestone payment to us

• Completed enrolment in the GEMINI Phase
1 study of SLN124 in healthy volunteers

• Initiated the GEMINI II Phase 1b study
of SLN124 in people with thalassaemia
and MDS

* Total available resources at 31 December 2020 is a non-statutory measure and is calculated based on the year end cash
and deposits balance of £37.4m, plus the £29.3m ($40m) receivable from AstraZeneca due in the first half of 2021, plus
net proceeds of £30.8m from the February 2021 PIPE capital raise.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTChairman’s statement

Iain Ross
Chairman

Most importantly, our priority in the current
situation has been to ensure the well-being
and safety of our employees, patients, and
partners, whilst conscientiously safeguarding
the interests of you, our shareholders.

Dear shareholder,

That was the year that was…
As I write this, we are still in the midst of the COVID-19 pandemic.
No business has been left untouched by the impact of the virus,
and at Silence Therapeutics, we have effectively taken all necessary
steps to reduce the potential negative impact on our business.
Most importantly, our priority in the current situation has been
to ensure the well-being and safety of our employees, patients,
and partners, whilst conscientiously safeguarding the interests
of you, our shareholders. Accordingly, we have taken the necessary
precautions and we will continue to monitor the spread of the virus
and implement subsequent actions carefully so the business is in its
strongest possible position to maximise the opportunity when the
international vaccination programmes are rolled out and restrictions
are finally lifted. During the period under review our employees have
done an amazing job to maintain the integrity of our business despite
the unprecedented conditions.

The pace has quickened…
In last year’s annual report, I made it clear I thought that “Silence had
come of age”. This was clearly demonstrated in the second half of 2019
and throughout 2020, and I can confirm the pace has quickened.
We have made significant progress across all facets of the business as
outlined in this year’s CEO’s report. Notably, our R&D organisation and
capabilities have been significantly strengthened and the development
of our potentially world-class clinical assets progressed.
Independently and together with our business partners, we have
ongoing clinical trials and clinical trials planned to start. However, we
recognise that global measures against COVID-19 and the need to
prioritise healthcare resources have undoubtedly affected the
timelines of these studies. As a result, we have put in place
contingency measures and, although the timing of the initial results
from clinical studies may be affected, we remain confident that in 2021
we are well placed to expediently progress our wholly owned SLN360
and SLN124 programmes and our partnered programmes and achieve
significant clinical milestones.

During the year we have concluded additional pivotal partnering
agreements with big pharma including AstraZeneca, and also with
biotech and academic groups and thereby not only accessed
capabilities and assets but also considerably strengthened our balance
sheet by securing further non-dilutive funding. In parallel, as we have
achieved further clinical and regulatory milestones for each of our
wholly owned programmes, there has been a growing excitement
amongst researchers, clinicians, patient groups and further
potential partners.

A competent and cohesive team is now in place…
During the year we opened our office in New York, listed on Nasdaq
and made further key management appointments across the
organisation. In September 2020 we appointed our new CEO, Mark
Rothera, who brings the experience we need to capitalise on the
progress to date and to build the business going forward. Despite the
backcloth of COVID-19, in 2020 Silence Therapeutics was designated
a Great Place to Work®1 in both the UK and Germany, which is further
testament to our management and employees with their high level of
competence and commitment.

Governance…
We remain committed to high standards of governance and continue
to comply with the regulatory standards required of an AIM listed and
Nasdaq foreign private issuer (“FPI”) company. Also, we are committed
to an effective control environment to maintain high standards
throughout the Company. In addition to appointing our new CEO,
during the year we invited Dr Giles Campion, Head of R&D and CMO
to join the Board as an Executive Director to ensure R&D remains at
the front and centre of our thinking. Post period we further
strengthened the Board with the appointment of Dr Michael Davidson
as Non-Executive Director. Michael brings relevant clinical experience
in the cardiovascular sector and also an extensive background in the
US biotech sector.

Outlook – it is now about execution…
This past year has not been without its challenges, but with the
continued support of our major shareholders and the dedication of a
highly resilient and focused management team, I am confident that, by
executing on our strategy in relation to our pipeline delivery, portfolio
focus, geographic expansion and commercial goals, we now have the
momentum and ability to deliver on our ambitious targets for 2021
and beyond.

On behalf of the business, I want to extend our thanks to all our
stakeholders, shareholders, partners and suppliers, who have
supported the business over the past year. As a final word, I would like
to share my sincere thanks to our employees for their hard work and
commitment in 2020. With their dedication and determination, we
have navigated a transformational journey, and during the COVID-19
era, which has enabled us to achieve our goals for the Company while
setting a foundation to deliver long-term advantage. I am proud of
their achievements and look forward to working with them on the
next stage of our journey in 2021.

Iain Ross
Chairman

1 Companies must meet Great Place to Work® criteria and pass the Trust Index employee

survey in order to get Great Place to Work-Certified.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTChief Executive Officer’s review

Mark Rothera
Chief Executive
Officer

Alongside advancing our wholly owned
pipeline, developing high-value collaborations
is a core part of our strategy and we made
great strides with this in 2020.

Dear shareholder,

2020 was a transformational year for Silence, highlighted by
remarkable scientific and corporate progress. After 20 years of
developing our science in the field of RNAi, we enter 2021 as a
clinical-stage company with three Phase 1 data readouts anticipated
this year. Since joining the Company in September 2020, I have been
immensely impressed with our innovative science, unparalleled
know-how and the dedication of our team. I believe Silence is poised
for substantial growth and our team is focused on strong execution
with a clear near-term path to value creation.

Exceptional progress…
Silence is showing rapid progress towards realising our potential, with
several important milestone achievements in 2020, and this progress
has continued at pace in 2021. In 2020, we made significant progress
with our proprietary mRNAi GOLD™ (GalNAc OLigonucleotide
Discovery) platform, advancing both wholly owned candidates,
SLN360 for the high and prevalent unmet need in reducing
cardiovascular risk due to high lipoprotein(a) – Lp(a) – levels and
SLN124 for rare iron loading anaemia conditions thalassaemia and
myelodysplastic syndrome (MDS).

In the year, SLN360 received approval of an investigational new drug
application (IND) from the FDA and we initiated the APOLLO Phase 1
study in people with high Lp(a), a genetically determined independent
cardiovascular risk factor affecting up to 20% of the world’s
population. We also made significant progress with SLN124, which was
granted rare paediatric disease designation for thalassaemia and
orphan drug designation for MDS and adults with thalassaemia by the
FDA. In the year, we were also pleased to initiate the GEMINI Phase 1
study of SLN124 in up to 24 healthy volunteers. Both assets are now
in the clinic with three Phase 1 data readouts anticipated in 2021.

Alongside advancing our wholly owned pipeline, developing high-value
collaborations is a core part of our strategy and we made great strides
with this in 2020. This included a landmark deal with AstraZeneca for
up to 10 programmes, a technology evaluation deal with Takeda for a
first programme as well as deepening our collaboration with
Mallinckrodt for complement-mediated diseases with Mallinckrodt
exercising options on all three programmes covered by the agreement.
Collectively these partnerships represent up to 14 programmes and
economics of up to $6bn in potential milestones plus royalties.

The completion of our Nasdaq listing in September marked a
significant step in our efforts to position ourselves more
globally and gives us access to an important pool of capital,
US biotech investors. Financially, we ended the year with a
strong cash position of £37.4m, driven by payments received
from our collaborations, particularly the $20m upfront from
AstraZeneca. Combined with the capital raise we completed
in February 2021 and payment due from AstraZeneca in the
first half of 2021, we have a proforma cash balance of
£97.5m.

Read more about our business on pages 6 to 8

The right people…
You can have the best science and technology in the world, but it does
not matter if you do not have the right people and culture in place to
execute your strategy. At Silence, I believe we have both. We have
exceptional experience at every level, including a research and
discovery team that has been operating now for 20 years in the RNAi
field. In the year, we strengthened our executive leadership team,
including appointments such as Dr. Giles Campion as Executive
Director, Dr. Eric Floyd as Senior Vice President, Head of Global
Regulatory Affairs and Quality Assurance, Dr. Barbara Ruskin as Senior
Vice President, General Counsel and Chief Patent Officer and Dr.
Marie Wikström Lindholm as Senior Vice President, Molecular Design.
We also introduced a Scientific Advisory Board comprising world-
leading scientists and clinicians to support the optimisation of our
mRNAi GOLD™ platform and guide development strategies for
SLN360 and SLN124. This momentum has continued into 2021 as we
have appointed leading lipidology and cardiovascular clinical trial
expert, Dr. Michael Davidson, to our Board of Directors and Craig
Tooman, an experienced US public biotech company CFO to our
leadership team.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTChief Executive Officer’s review (continued)

C A S H A N D C A S H E Q U I VA L E N T S
A N D T E R M - D E P O S I T S

£37.4m

2019: £33.5m

A clear path to value creation…
It has taken a number of years for the RNA field to mature, and we
have enjoyed watching it soar over the past year, highlighted by the
FDA approval of two mRNA-based vaccines for COVID-19. There is
more awareness and increasing appreciation for the potential benefits
of mRNA-based therapeutics and I believe that Silence is well
positioned to capitalise on this attractive market.

Over the years, Silence has built substantial know-how and expertise
in the science of RNAi, which has given rise to our mRNAi GOLD™
platform that is now in the clinic. Since I joined Silence, we have
conducted a detailed strategic business review and identified three
core components of our strategy going forward – all based on our
mRNAi GOLD™ platform.

Firstly, we must rapidly and effectively execute on our clinical
programmes. We view SLN360 as a key strategic asset as this is a
programme with blockbuster potential that we own outright. We’re
hopeful that the strong pre-clinical profile will translate well into the
clinic and expect to report data from the ongoing APOLLO Phase 1
study of SLN360 in people with high Lp(a) in the second half of this
year. Our plan is to rapidly advance SLN360 in the clinic, positioning
ourselves to initiate phase 2 studies in the second half of 2022
while creating more value for the asset and options for the future.
With SLN124, we expect data from the ongoing GEMINI Phase 1
study in healthy volunteers in the first half of this year. This study
is important because we expect it to validate our preclinical findings
that administering SLN124 effectively reduces iron overload by
increasing hepcidin levels and it will be the first in-human data from
our mRNAi GOLD™ platform. In parallel, we are evaluating SLN124
in the GEMINI II Phase 1b study in people with thalassaemia and MDS
and intend to report interim data from the single-ascending dose
portion in the second half of this year.

Next, we must ensure that we fully unleash the potential of our mRNAi
GOLD™ platform. There are around 14,000 genes expressed in the
liver and only around 1% of those genes are currently being targeted
by an RNAi programme. To address this untapped opportunity, we are
taking a two-pronged approach to target selection – pursuing both
best-in-class and first-in-class opportunities that are focused in areas
of significant unmet need with clear commercial opportunity.
We intend to accelerate our discovery efforts to enable two to
three INDs per year starting in 2023, including wholly owned plus
partnership programmes.

Finally, we will continue with our hybrid business model, building our
wholly owned pipeline while developing partnership programmes that
allow us to do more with our mRNAi GOLD™ platform. This hybrid
approach creates a balance to rapidly grow our pipeline while enabling
us to finance our endeavours largely through non-dilutive capital from
partnership programmes. We believe this is especially worthwhile
given the unusually high probability of success this modality has shown
in the clinic amongst RNAi players.

Looking ahead…
I believe that this is our moment. We have deep scientific know-how in
the RNAi field, two wholly owned programmes advancing in the clinic,
validating partnerships, and a platform technology that is really at the
beginning of what it can do. Importantly, we have the right team to
drive execution. Our goal now is to effectively accelerate this
development and position Silence as a leading global RNAi business.

We are truly motivated by our purpose to transform peoples’ lives
around the world through our precision engineered medicines and
driving positive change for the communities around us. I look forward
to keeping you updated on our progress.

Mark Rothera
Chief Executive Officer

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTHow RNAi
works

Our mRNAi GOLD™ is a platform
for precision engineered therapies
designed to accurately target
and ‘silence’ specific disease-
associated genes in liver cells by
using the body’s natural process
of RNA interference (RNAi).

RNAi involves the use of short interfering
RNAs (siRNAs) to break down messenger
RNA (mRNA), molecules that carry the
genetic instructions used to create specific
proteins that have particular functions in the
body. When mRNA is created from mutated
genes, or the body makes too much of a
certain mRNA, it affects the production
of its corresponding protein, triggering an
unwanted effect and/or causing disease.

By temporarily blocking or ‘silencing’ a
specific gene’s message, our technology
halts or reverses the progress of disease
by targeting the underlying disease source
rather than the symptoms it causes.

Our mRNAi GOLD™ platform delivers gene
silencing medicine to targeted liver cells in the
body by combining siRNA molecules with
chemical “address tags” called GaINAc, a
naturally occurring sugar that attaches
specifically to liver cells. These RNAi
molecules can then enter liver cells and
‘silence’ targeted, disease-associated genes
expressed in the liver.

Natural

Harnesses natural cellular
mechanisms present in every
cell in the human body

Durable

Long-lasting gene knockdown
is possible

Precise

siRNA designed to bind only
to target sequence

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTOur strategy

We are leveraging a hybrid business model based
on our mRNAi GOLD™ platform to rapidly advance
a growing pipeline of wholly owned
programmes and partnership programmes
for diseases with a genetic basis.

Our mRNAi GOLD™ platform:
precision engineered therapies

I M P R OV E S
M O L EC U L A R D E S I G N

M A X I M I S E S
E F F I C AC Y

M I N I M I S E S
O F F-TA R G E T E F F EC T S

S TA B I L I S E S
M O L EC U L E S

E N S U R E S E A S E O F
M A N U FAC T U R I N G

R O B U S T A N D
G R OW I N G I P E S TAT E

high-quality
discovery
programmes

Our mRNAi GOLD™ platform considers all elements
of siRNA, linker and ligand design

siRNA molecule
• We have developed

chemical modification
patterns that
enhance stability
and improve activity

Linker
• We have developed
proprietary linkers,
enabling the
attachment of
targeting ligands to
the siRNA molecule

GalNAc ligand
• We attach the GalNAc
ligand to our siRNA
molecule at one or
more different sites
for highly targeted
delivery to specific
liver cells

Intellectual property
We have a robust and growing intellectual property
estate covering our mRNAi GOLD™ platform,
including all aspects of siRNA modification,
delivery, construct design, specific drug products
and their uses.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTThe depth and versatility of our liver-targeting technology
gives us the opportunity to address a wide range of
conditions in virtually any therapeutic area. Our mRNAi
GOLD™ platform is well validated with multiple clinical
studies ongoing and broad strategic collaborations
in place.

We believe the opportunity for our mRNAi GOLD™
platform is substantial

Existing siRNA programmes have only scratched the surface of the
liver target space

• Only ~1% of genes expressed in the liver have been targeted

by publicly known siRNAs

• Opportunity to identify new GalNAc mRNAi drugs targeting many

of the remaining 99% (~14,000) of liver-expressed genes

Only ~1% of genes
expressed in the liver
have been targeted by
publicly known siRNAs

Maximising output through our mRNAi
GOLD™ platform

• High-quality target identification using

translational genomics

• Lower attrition rates in discovery enabled by

machine learning

• GalNAc strategic partnerships to enhance
pipeline opportunities (e.g. target selection)

TA R G E T I N G

2–3 INDs/yr

F R O M 2 0 2 3 T H R O U G H O U R P R O P R I E TA R Y
A N D PA R T N E R E D G A L N A C P R O G R A M M E S

Early-stage GalNAc-conjugated RNAi programmes
have a much greater likelihood of approval
vs industry average

Note: Phase success is defined as the movement of the programme to the next phase, not
an evaluation of whether endpoints were met. GalNAc-conjugated RNAi includes both
GalNAc-conjugated siRNA and GalNAc-conjugated ASO.

Source: Pharmapremia, Informa Pharma Custom Intelligence analysis.

Likelihood of approval from current phase: GalNAc RNAi vs others

100

51%

56%

67%

53%

17%

Phase 1

Phase 2

Phase 3

GalNAc-conjugated RNAi
Pharma industry average (excluding GalNAc-conjugated RNAi)

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTOur pipeline

Our mRNAi GOLD™ pipeline targets

We are committed to advancing our pipeline as efficiently as
possible to potentially address the needs of patients who have
limited or inadequate treatment options. Our wholly owned pipeline
is currently focused in three therapeutic areas of high unmet need:
haematology, cardiovascular disease, and rare diseases.

Indication

Target

Discovery

Preclinical

Phase 1

Phase 2

Phase 3

Proprietary/Partnered

SLN360

Cardiovascular
disease with
high Lp(a)

Lp(a)

SLN124

thalassaemia

TMPRSS6

SLN124

Myelodysplastic
syndrome

TMPRSS6

Multiple
programmes

Undisclosed

SLN500

Complement-
mediated
diseases

SLN-MNK-2

Complement-
mediated
diseases

2nd
complement
target

SLN-MNK-3

Complement-
mediated
diseases

3rd
complement
target

SLN-AZ-1

Undisclosed

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTSLN360
for cardiovascular disease due to high lipoprotein(a)

Targeting Lp(a) with
SLN360 has the
potential to address
major unmet need in
cardiovascular disease.

Lipoprotein(a) or Lp(a) is an independent risk
factor for cardiovascular disease

Lp(a) is a particle made by the liver, which consists of cholesterol,
fats and proteins. Most people have some Lp(a) in their body, but
up to 20% of individuals worldwide have high levels of Lp(a),
because of a specific gene variation in their DNA. Most people
are unaware if they have high Lp(a). People living with high Lp(a)
have a higher risk of developing early heart disease, heart attacks
and strokes. Most standard cholesterol tests do not currently
include screening for Lp(a). Current medicines that are used to
lower other lipid levels in the blood do not have a meaningful effect
on Lp(a) and are less effective overall in people with high levels
of Lp(a).

Cardiovascular risk significantly increases with
high Lp(a)

Substantial risk of CV event at Lp(a) ~90 mg/dL

Event

Heart attack1

Aortic stenosis3

Heart failure4

Ischaemic stroke5

Mortality6

Increased risk

2–3x

1.6–1.8x

1.2–1.6x

1.2–1.7x

780 million worldwide with >90 mg/dL Lp(a)

Lp(a) level:

Prevalence6

USA

Globally

>50 mg/dL

>90 mg/dL

~20%

66m

103m

1,560m

~10%

33m

51m

780m

Note: Populations: USA 328.2 million, EU 513.5 million (incl. UK), Global 7,800 million.
1 Kamstrup et al. Circulation. 2008;117:176, Kamstrup et al. JAMA. 2009;301(22):2331.
2 Kamstrup et al. J Am Coll Cardiol. 2014;63(5):470.
3 Kamstrup et al. JACC Heart Fail. 2016;4(1):78.
4 Langsted et al. J Am Coll Cardiol. 2019;74(1):54.
5 Langsted et al. Eur Heart J. 2019;40(33):2760, Arsenault et al. JAMA Netw Open.

2020;3(2):e200129.

6 Varvel et al Arterioscler Thromb Vasc Biol. 2016;36:2239, Tsimikas et al. Atherosclerosis.

2020;300:1, Nordestgaard et al. Eur Heart J. 2010;31:2844.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTSLN360 (continued)
for cardiovascular disease due to high lipoprotein(a)

Lp(a)-lowering drugs present a similar opportunity to cholesterol-lowering drugs,
which had over $30bn in sales at peak.

High cholesterol vs. high Lp(a) in cardiovascular disease

High cholesterol:
Modifiable risk factor

High Lp(a):
Genetic risk factor

Some patients require medical treatment:
lifestyle changes can have a positive impact

Most patients will require medical treatment:
lifestyle changes have no effect on Lp(a) levels

Similar medically treated population

Patients with high total cholesterol vs high Lp(a)
USA + EU5 markets1,2,3

High total cholesterol1
USA ≥ 200 mg/dL
EU5 ≥ 190 mg/dL

High Lp(a)2
≥ 50 mg/dL
(no indicated treatments)

Estimated medically treated
Lifestyle changes

136M

103M

132M

Blockbuster potential

Sales of cholesterol-lowering drugs peaked at over $30bn3,4

Lipitor®
(atorvastatin)

$12.9B

P E A K S A L E S

Crestor®
(rosuvastatin)

$7.0B

P E A K S A L E S

Zocor®
(simvastatin)

$5.2B

P E A K S A L E S

1 Datamonitor Healthcare | Informa 2018.
2 Varvel et al Arterioscler Thromb Vasc Biol. 2016;36:2239, Tsimikas et al. Atherosclerosis. 2020;300:1, Nordestgaard et al. Eur Heart J. 2010;31:2844.
3 Biomedtracker, Internal Analysis.
4 Kidd, J., Nat Rev Drug Discov. 2006;5(10):813.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTAbout SLN360

Our wholly owned lead product candidate, SLN360,
aims to ‘silence’ LPA, a gene that tells the body to
make a specific protein that is only found in Lp(a).
By directly targeting and silencing the LPA gene
within the liver, SLN360 is designed to lower levels of
Lp(a), which in turn is expected to lower the risk of
premature cardiovascular disease.

In preclinical studies, SLN360 has demonstrated
potent and sustained reduction of Lp(a) levels in
in vitro and animal models and was not associated
with any adverse or off-target effects.1

We are evaluating SLN360 in the APOLLO Phase 1
clinical programme in people with high levels of Lp(a).

APOLLO Phase 1
clinical programme

The APOLLO Phase 1 clinical programme is a global,
randomised, double-blind, placebo controlled
single-ascending dose and multiple-ascending
dose study of SLN360 in up to 88 participants.
It aims to investigate the safety, tolerability,
pharmacodynamic and pharmacokinetic response
of SLN360 in people with high Lp(a) levels of
approximately ≥ 60 mg/dL.

We initiated the single-ascending dose portion of
the APOLLO study in the second half of 2020
and anticipate data in the second half of 2021.2

1. Rider D, et al. Preclinical Safety Assessment of SLN360, A Novel Short

Interfering Ribonucleic Acid Targeting LPA, presented at the American Heart
Association (AHA) Scientific Sessions, November 2020.

2. All programmes are at potential risk of delay due to COVID-19.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORT

SLN124
for iron loading anaemias

SLN124 aims to temporarily
‘silence’ TMPRSS6, a gene
that prevents the liver
from producing a particular
hormone that controls iron
levels in the body – hepcidin.

Myelodysplastic syndrome (MDS)
and thalassaemia

MDS and thalassaemia are both rare diseases that
prevent a person from producing enough healthy red
blood cells. Low levels of healthy red blood cells,
known as anaemia, result in less oxygen being
delivered to different parts of the body. This can
cause symptoms such as excessive tiredness and
weakness. It can also lead to other serious health
problems, such as heart disease. People living with
MDS or thalassaemia can also store too much iron in
their bodies, leading to a phenomenon called ‘iron
overload’, which damages organs such as the heart
and liver.

Both conditions are typically treated with regular
blood transfusions, which add to the problem of iron
overload. Iron chelation therapy removes excess iron
from the body using special medicines. While it helps
reduce the amount of iron in the blood for people with
MDS or thalassaemia, it does not treat the underlying
cause of the condition or stop it from progressing.
There is therefore a need for therapies that directly
address the biological drivers of disease.

About SLN124

SLN124 aims to temporarily ‘silence’
TMPRSS6, a gene that prevents the liver from
producing a particular hormone that controls
iron levels in the body – hepcidin. As hepcidin
increases, it is hoped that iron levels in the
blood will decrease, which could in turn allow
more healthy red blood cells to be produced,
thereby improving anaemia.

In the animal studies, SLN124 has shown
positive effects on improving levels of red
blood cells and reducing harmful iron levels.

We are evaluating SLN124 in Phase 1 studies
in healthy volunteers and adults with
thalassaemia and MDS. SLN124 has orphan
drug designation for both conditions and rare
pediatric disease designation for thalassaemia.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTSLN124 (continued)
for iron loading anaemias

GEMINI Phase 1 study

GEMINI is a randomised, double-blind, placebo controlled, single-ascending dose
study of SLN124 in healthy volunteers. The study aims to investigate the safety,
tolerability, pharmacokinetic and pharmacodynamic response of SLN124 in up to
24 participants.

We initiated the GEMINI study in the
second half of 2020 and expect data
in the first half of 2021.1

GEMINI II Phase 1b study

GEMINI II is a global, randomised, single-blind, placebo controlled single-
ascending and multiple-ascending dose study in up to 112 participants. It aims
to investigate the safety, tolerability, pharmacokinetic and pharmacodynamic
response of SLN124 in people with thalassaemia and MDS.

We initiated GEMINI II in the first half of
2021 and anticipate interim data from the
single-ascending dose portion of the study
in the second half of 2021.1

1. All programmes are at potential risk of delay due to COVID-19.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORT

13
13

Collaborations

Our partnership programmes further
expand the potential of our pipeline and
provide up to $6bn in potential milestones
plus royalties.

Company

Programme

AstraZeneca: signed major deal to discover, develop and
commercialise siRNA therapeutics for cardiovascular, renal,
metabolic and respiratory diseases in March 2020

• Upfront cash payment of $20m and equity investment of $20m received;

another $40m cash payment due in the first half of 2021

• Up to $4bn in potential milestone and option payments plus tiered royalties

for a total of ten targets

• AstraZeneca to cover preclinical, CMC, clinical development and

commercialisation costs

Mallinckrodt: expanded RNAi collaboration for
complement-mediated diseases in July 2020

• Upfront cash payment of $20m and equity investment of $5m

• Up to $2bn in potential milestones plus royalties for 3 targets

• Exercised option to license all 3 complement targets

Takeda: Commenced technology evaluation in January 2020
to explore the potential of using our platform to generate
siRNA molecules against a novel, undisclosed target

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTFinancial review

Craig Tooman
Chief Financial Officer

We ended the year in a strong financial
position with £37.4m in cash, cash
equivalents and term deposits. In addition,
we received net proceeds of £30.8m post
year-end in a capital raise and will receive
£29.3m ($40m) from AstraZeneca in the
first half of 2021. In total, this gives us
£97.5m on a proforma basis, and sufficient
resources to deliver clinical data using our
mRNAi GOLD™ platform in 2021.

Revenue
Revenue recognised for 2020 increased to £5.5m (2019: £0.2m),
driven by partial recognition of upfront, milestone payments, and
recharges relating to the collaboration with Mallinckrodt, AstraZeneca
and Takeda as well as royalty income from Alnylam Pharmaceuticals.
The balance of the upfront, milestone and recharge amounts will be
recognised as revenue in future years over the period which services
are provided.

Taxation
Taxation for 2020 amounted to a credit of £3.5m compared to £3.3m
for 2019, primarily reflecting the increase in our R&D expenses.
During the year, the Group received a research and development tax
credit of £3.0m in the UK in respect of R&D expenditure in 2019.
The Group recognised a £3.5m credit in the profit and loss account and
£3.5m current tax asset in relation to 2020 research and development
tax credits.

Research and development expenditure
Research and development spend in the year increased by £6.9m to
£20.2m (2019: £13.3m), primarily driven by an increase in third party
and personnel costs needed to support the advancement of both
SLN360 and SLN124 into clinical studies as well as new partnership
programmes with AstraZeneca, Takeda and Mallinckrodt.

The increase in the credit amount was primarily attributable to our
increased expenditure on research and development.

Liquidity, cash and cash equivalents and term deposits
The Group’s cash and cash equivalents and term deposit at year end
totalled £37.4m (2019: £33.5m).

Administrative expenses
General and administration expenses increased by £4.4m to £14.0m
for 2020 (2019: £9.6m), primarily driven by additional finance and legal
costs associated with the Nasdaq listing in September 2020.

The cash flow from operating activities was £10.8m outflow
(2019: £1.7m inflow) against an operating loss of £35.8m
(2019: £22.7m). 2020 included receipts of $20m upfront from
AstraZeneca, $2.0m in milestones from Mallinckrodt Pharmaceuticals,
and a $2.0m upfront from Takeda.

Other (losses)/gains
The Group recognised an expense of £3.4m for 2020 (2019: £nil)
mainly due to £4.9m of foreign exchange losses resulting from
revaluation of foreign currency denominated monetary items, offset
by a £1.5m gain on the fair value of derivative forward contract.

Finance and other income
The Group recognised income of £0.1m for 2020 (2019: £0.02m) in
respect of bank interest receivable.

Finance and other expenses
The Group recognised an expense of £0.3m for 2020 (2019: £0.2m)
mainly due to a foreign exchange losses resulting from revaluation of
foreign currency denominated monetary items.

The Directors have reviewed the working capital requirements of the
Group and Company for the twelve months from signing these
financial statements and are confident that these can be met from
existing funds, which also takes into account the $45.0m raised in
February 2021 and the $40.0m due from AstraZeneca in the first half
of 2021.

Other balance sheet items
Current trade and other payables increased by £1.3m to £8.2m
at the end of 2020 (2019: £6.9m). This was driven by increased
contract research organisation (CRO) costs due to ramp up in
activities associated with our SLN360 and SLN124 clinical
development programmes.

Craig Tooman
Chief Financial Officer
30 March 2021

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTPrincipal risks

We constantly monitor and assess the overall risk of
doing business in the biopharmaceutical industry
and the particular risks associated with our current
activities and corporate profile.

Principal Risks

Impacts

Mitigating Activities

New targets are rigorously assessed with regard to
factors that may make any drug less likely to be
approved, including, but not limited to, dosing and
toxicology. The Company utilises innovation to lower
dosing and minimise safety risks.

CROs and CMOs are selected based on track record and
experience, and the Company performs independent
quality checks of their work.

The Company has a subsidiary in Germany, which can
be used for regulatory purposes in future, if needed.

Clinical and
Regulatory

It is possible that the Company’s drugs may not be
approved for clinical or regulatory reasons.

The Company depends on CROs to support with clinical
trials and contract manufacturing organisations (CMOs) to
manufacture drug product for its clinical trials. If CROs or
CMOs do not deliver as planned, there may be delays in
conducting drug development activities, as well as
increased costs.

Following the departure of the United Kingdom from the
European Union on 31 January 2020 (commonly referred
to as ‘Brexit’), the regulatory framework covering the
development of pharmaceutical products continued to be
derived from the European Union directives and
regulations for the duration of the transition period ending
on 31 December 2020. Following this transition period
(and further negotiations between the UK and the EU),
new rules took effect from 1 January 2021 which could
materially impact the future regulatory regime which
applies to product candidates in the United Kingdom,
although the impact is uncertain.

Technology
Innovation

Research
Practices

Intellectual
Property

Key Talent

Financing

The Company has a relatively low technology innovation
spend compared to its larger competitors. There is a risk
that competitors will be quicker to develop new
technologies and to address novel gene targets earlier
than Silence.

The Company continues to prioritise innovation and is
actively conducting research to sustain a competitive
edge. In tandem with these efforts, we monitor patent
filings and data in the field to identify areas of science
where Silence can excel.

There is a risk from failure to appropriately conduct ethical
and sound research. Scientific misconduct could result in
reputational or IP damage and opportunity costs.

This macro risk is addressed through ensuring that
rigorous internal controls are in place, such as systematic
review of research data by appropriately senior scientists.

The Company has a robust existing patent portfolio.
Other companies may challenge the validity/infringement
position of that portfolio as their products approach the
market. The Company may incur substantial costs
in defending this portfolio from such challenges.

In the competitive, niche market in which the Company
operates, the expertise and experience of its key people
can have an enormous impact on business results.
Poor recognition, incentivisation and a lack of succession
planning could undermine the Company’s success.

In managing the patent portfolio, the Company
continually seeks to strengthen the existing IP position
via patent filings, including divisions and continuations,
combined with external legal opinions.

The Company appreciates the high level of contributions
made by its key talent. It offers stimulating, cutting-edge
work, and a competitive reward structure, including
share options that vest over a number of years.

Progressing a drug via clinical trials is expensive.
The Company may not be able to raise additional funds
that will be needed to support its drug development
programmes, and additional funds raised could cause
dilution to existing shareholders.

The Company will seek to secure risk sharing partnerships
or out-licensing deals at appropriate stages depending on
the product risk and investment profile. Additionally,
contact is maintained with major shareholders to
understand their views regarding the raising of equity.

Information
Protection

Research activities or IP may be compromised if information
is obtained by those not authorised to see it: whether
through cyber breaches or inappropriate disclosure
of gene targets or other price-sensitive information.

We have robust processes to manage information
internally, and our IT system is constantly updated and
monitored. Information is reviewed and scrutinised prior
to public release.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTCorporate Social Responsibility

We are committed to having a positive impact on the world, beyond
the development of gene silencing medicines. That’s why we’ve made
it a central part of our corporate vision – to drive positive change for
the communities around us.

We aim to achieve this by focusing on
three key areas:

2020 achievements:

Environment

Offsetting the carbon emissions under our
direct control, with the ultimate goal of
becoming carbon net neutral in the
coming years

Healthcare

Raising awareness and fundraising for our
healthcare charity and patient group partners

Education

Encouraging the future generation of
scientists who will deliver tomorrow’s medical
breakthroughs

Environmental initiatives:
• In 2020, Silence started measuring its global carbon

footprint to assess which are the main areas of focus for
action. In addition to a reduce, reuse, recycle approach,
we offset over 2,100 tonnes of CO2 in 2020, which
accounts for over 100% of the carbon emissions under
our direct control

• When selecting CO2 offsetting schemes we have

chosen certified projects which address the Sustainable
Development Goals of the United Nations.
Selected projects include borehole regeneration in
Uganda, fuel efficient cookstoves in Darfur, a solar
project power in the Philippines, a deforestation project
in Brazil and a geothermal power project in Indonesia

• We also implemented a number of initiatives during

2020 to reduce our impact on the environment – this
included subsidised public transport, enhanced
transparency on airline emissions, and changes to
minimise waste disposal and promote recycling

Healthcare initiatives:
• Silence works closely with healthcare charities,

supporting them through charitable donations and to
increase disease awareness

• During 2020 employees from across the Company took
part in the MDS Awareness Walk, raising money for the
MDS Foundation to support its important work with
MDS patients and their families

COVID-19:
• Silence reacted quickly to the COVID-19 pandemic,

repurposing some of our equipment to produce critical
reagents for PCR diagnostic kits which were in short
supply. These reagents were supplied to TIB Molbiol on
a cost only basis and all proceeds were donated
to charity

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTResources and relationships

We draw on a range of different resources and
relationships to drive our business forward and,
ultimately, deliver value to our shareholders.

Financial resources

The year-end cash, cash equivalents and term deposits of £37.4 million
will support continued development of the Company’s mRNAi GOLD™
platform. In February 2021, $45m of equity was raised and a further
$40m upfront cash payment is due from AstraZeneca in the first half
of 2021.

Stock information

The Company is listed on AIM and Nasdaq with the ticker SLN.
The percentage of AIM securities that is not in public hands was
57.7% at 31 December 2020.

Physical resources

We are based at three sites: our headquarters in the UK, our
laboratories (R&D) in Germany and corporate office in the US.
Our R&D not only houses state-of-the-art equipment but is located in
the heart of one of the largest biomedical research facilities in Europe.

Our patent estate

We recognise that IP is a complex matter; our dedicated in-house Chief
Patent Officer ensures that our patent portfolio is maintained and
prosecuted in the most effective manner. As of March 2021, we solely
owned 30 granted patents and have 106 pending patent applications.
We expect our patent portfolio to continue to expand and mature over
the next few years.

Our people

With our emphasis on highly specific research, we depend on teams
of skilled individuals working collaboratively. By its innovative nature,
gene silencing attracts some of the smartest graduates and most
experienced professionals in the field, who are passionate in their
pursuit of novel therapies to successfully treat serious diseases.
We work hard to create a working environment that encourages
creativity, rewards commitment and is recognised as being a great
place for the brightest minds to work. Our people and their knowledge
of our platform encapsulate unique know-how that forms an integral
part of our intellectual property.

The Company supports the UN Universal Declaration of Human Rights
and recognises the obligation to promote universal respect for and
observance of human rights and fundamental freedoms for all, without
distinction. The Company complies with all applicable human rights laws.

Our partnerships and relationships

We maintain a network of partnerships and key relationships, including
those with:

Academia and key opinion leaders
A significant portion of the technical expertise in and around RNA
and sophisticated models of disease sits within academia. We work

hand-in-glove with the leading experts, ensuring that we gain access
to the latest thinking at an early stage and are therefore able to help
direct it towards commercially viable outcomes.

Industry
Our goal is to harness the commercial discipline and practical expertise
found within the biopharma industry. To this end, we build
relationships with industry organisations and with other companies in
our sector. As is the case with academia, our interactions with industry
are founded on mutual trust and respect.

Pharma and biopharma
We recognise that it is often advantageous to join forces with a larger
pharmaceutical or specialist biopharma company to progress a specific
programme, or to out-license certain applications of our IP or to
co-develop novel technology. Our deals with Mallinckrodt and
AstraZeneca are examples of this, and we are committed to remaining
alert to the exploitation of such opportunities.

Clinicians
Because some of our work is in the field of rare and orphan diseases,
the number of patients able to take part in clinical trials is often limited.
We communicate regularly with clinicians to ensure that we are able to
access the appropriate patient groups and build an understanding of
their needs and concerns.

Regulators
It is important to investors as well as to patients that timelines
between concept and marketed drug are as short as possible.
We engage with regulators, both directly and via industry bodies, to
ensure that they understand the challenges we face and the platform
nature of our technology, while we maximise the likelihood of success
of our candidates by following their guidance.

Defined goals
In the day to day management of the business, we have an Executive
Leadership Team that operates below Board level with defined
functional goals and monthly reporting against key indices.

Each year, the Board approves detailed corporate goals which are
cascaded throughout the business to departments and individuals.
The Executive Leadership Team meets weekly and considers progress
on these goals, reporting regularly to the Board. In addition to
corporate goals, individuals receive challenging personal goals.

We have reviewed our remuneration and benefit practices against
benchmarked data in the UK and Europe and, where necessary, have
implemented adjustments against the data. We have enhanced our
incentive provisions based on goal achievement, to ensure that our
remuneration package remains competitive and attractive.

Companies Act 2006, S.172 compliance
The Company is required to provide information on how the Directors
have performed their duty under section 172 of the Companies Act
2006 to promote its success, including how the interests of its
stakeholders have been taken into account in Board discussions and
decision-making ; stakeholders include:

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORT• Investors – The interests of its shareholders have been taken into
account on a fair basis. This is described in further detail in the
Corporate Governance Report on page 23 and 25. The Company
has a frequent and transparent dialogue with its investors
throughout the year. Meetings take the form of roadshows, investor
conferences and one on one dialogue as required.

• Regulators – Good dialogue is maintained with regulatory agencies

and the Board ensure our clinical trials are designed appropriately to
allow the maximum potential for our products in development.

• Suppliers – The Company’s supply chain is crucial to the project
work that is being undertaken; policies are in place to identify
suppliers with the right profile and capabilities. Good relationships
are kept with suppliers ; high standards are expected in product and
service, and the Company reciprocates by paying on a prompt basis,
within agreed terms. We meet with our significant suppliers
regularly, monitoring the quality of products and services on a
constant basis to ensure that there is no negative impact or delays
on our research programs. This ensures that the Company’s and our
significant suppliers’ interests are aligned.

• Employees – The Board has a good relationship with the Company’s

employees. The Board maintains productive interactions with
employees. Appropriate remuneration and incentive schemes are
maintained to align employees’ objectives with those of the
Company. As a result, the Company has a high staff retention rate.
More detail on how the board takes into account the interests of
employees can be found in the Remuneration Committee report on
pages 29 and 38.

• Community & Environment – Policies are being formulated with
emphasis on matters like carbon footprint, for example holding
virtual meetings where possible rather than travelling between our
sites in the UK, Germany and US. Diversity in the workplace is
actively encouraged. The Company has policies on anti-slavery and
anti-bribery which are actively promoted.

• Customers – Our business model currently relies on a small

number of very high-profile customers with whom we invest for
the long term.

The Board focuses on maintaining high standards of business conduct.
The Company operates Codes of Business Conduct and Ethics and
provides mechanisms for whistle blowing and complaints.

The Directors continue to review and improve on the Company’s
engagement with its stakeholders.

The strategic report has been approved by the Board and is signed on
its behalf by:

Mark Rothera
Chief Executive Officer
30 March 2021

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | STRATEGIC REPORTBoard of Directors

Our Board is formed of eight accomplished members,
comprising two Executive and six Non-Executive
Directors. Together, they bring highly valuable
experience across a variety of relevant disciplines
to effectively execute our business plan.

Iain Ross
Chairman

Mark Rothera
Executive Director

Giles Campion
Executive Director

A PP O INTED April 2019

A PP O INTED September 2020

A PP O INTED May 2020

Iain Ross has over 40 years’ experience in the
international life sciences and technology sectors
and has held significant roles in multi-national
companies including Sandoz, Hoffman La Roche,
Reed Business Publishing and Celltech Group plc.
He has completed multiple financing transactions,
and has over 30 years’ experience in cross- border
management as a chairman and CEO. He has led
and participated in seven Initial Public Offerings
(IPOs) and has direct experience of M&A
transactions in Europe, the USA and the Pacific
Rim. Currently he is non-executive chairman of
Redx Pharma plc (LSE) and Kazia Therapeutics
Limited (ASX & Nasdaq), and was responsible for
leading the turnaround of both these companies
before appointing new executive management.
In addition he is a non-executive director of Palla
Pharma Limited (ASX) and advises a number of
private companies in the biotechnology sector.
He is a qualified Chartered Director and former
Vice Chairman of the Council of Royal Holloway,
London University.

A R E A S O F E XPERTIS E

Corporate strategy, M&A, business development
and governance

CU R R ENT E X TER N A L RO LE S

Kazia Therapeutics Limited, Redx Pharma plc and
Palla Pharma Limited

Mark Rothera joined as our President, CEO and
Board member in September 2020. He has three
decades of experience in the biopharmaceutical
industry including driving the transition of multiple
emerging biotech companies from the R&D stage
to commercialisation. During his career, he has
focused on bringing novel therapies to patients
and has launched seven orphan drugs globally.
Mark previously served as CEO of Orchard
Therapeutics, where he oversaw its
transformation from a small UK-based privately
held company with two clinical-stage programmes
into a leading gene therapy company with several
clinical-stage programmes and full integrated
capabilities. Prior to that, Mark served as chief
commercial officer of PTC Therapeutics, where he
successfully launched two rare disease therapies
and helped lead the company’s transition from a
private, US-based R&D biotech to a public
company with global commercial footprint.
His previous roles include serving as head of the
EMEA region for Shire Human Genetics and
commercial director for the EMEA region for
Chiron/PathoGeneis. Mark currently serves on the
board of Genpharm.

A R E A S O F E XPERTIS E

Leadership, global commercialisation, strategy,
business development, biotech build

CU R R ENT E X TER N A L RO LE S

Genpharm

Giles Campion, M.D. is our Head of R&D and Chief
Medical Officer, having joined Silence in June
2019. He is an expert in translational medicine and
a highly experienced biotech and pharmaceutical
professional across many therapeutic areas, most
recently in orphan neuromuscular disorders.
He has held senior global research and
development roles in several large pharmaceutical,
diagnostics and biotech companies, including
responsibilities at the board level. Dr.
Campion served as chief medical officer for
Albumedix Ltd from January 2017 to July 2018.
He previously served as group vice president,
neuromuscular franchise at BioMarin
Pharmaceutical Inc., or BioMarin, from February
2015 to March 2016, following BioMarin’s
acquisition of Prosensa Holding N.V., or Prosensa.
Dr. Campion served as chief medical officer and
senior vice president of research and development
at Prosensa from 2009 until its acquisition by
BioMarin. Dr. Campion has also served as medical
adviser to MyoTherix Inc and is a co-founder of
PepGen Ltd. Dr. Campion holds bachelor’s and
doctorate degrees in medicine from the University
of Bristol and is listed on the General Medical
Council (UK) Specialist Register (Rheumatology).

A R E A S O F E XPERTIS E

Pharmaceutical research and development, rare
disease development, translational medicine

CU R R ENT E X TER N A L RO LE S

Co-founder of PepGen Ltd

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEDave Lemus
Non-Executive Director

A PP O INTED June 2018

Alistair Gray
Senior Independent Non-Executive Director

Michael Davidson, MD
Non-Executive Director

A PP O INTED November 2015

A PP O INTED January 2021

Dave Lemus is currently the chief executive officer
of Ironshore Pharmaceuticals Inc. and also serves
on the board of directors of Sorrento
Therapeutics, Inc. and Biohealth Innovation, Inc.
Previously, Mr Lemus had stepped down from
Medigene AG’s board of directors to serve as the
company’s chief operating officer and chief
financial officer and, preceding this position,
served as chief executive officer of Sigma Tau
Pharmaceuticals, Inc. Prior to this, he was chief
financial officer and executive VP of MorphoSys
AG for more than 13 years, taking the company
public in Germany’s first biotechnology initial
public offering. Mr Lemus received an M.S.
from the Massachusetts Institute of Technology
and received a B.S. from the University of
Maryland. Mr Lemus is a Certified Public
Accountant in the USA.

A R E A S O F E XPERTIS E

Drug commercialisation, strategic partnerships,
financing and transactions

CU R R ENT E X TER N A L RO LE S

CEO Ironshore Pharmaceuticals Inc, non-
executive director of Sorrento Therapeutics Inc.,
non-executive director of BioHealth
Innovation Inc.

Alistair Gray currently serves as non-executive
director/chair of the Edrington Group’s Employee
Benefit Trust and of the Scottish Enterprise’s
Pension Trustee Board and Clyde Bergemann
Pension Scheme. Mr Gray is also a founder and
director of Renaissance & Company, a strategic
management consultancy firm. Mr Gray previously
held senior management positions with Unilever
and John Wood Group PLC, and he also chaired
the Audit and Remuneration committees of
AorTech International PLC and Highland Distillers
PLC. Mr Gray entered strategic management
consulting at Arthur Young (now EY) Management
Consultants and PA Consulting Group, where he
served as a director for over ten years. Mr Gray
also served as a Fellow of the Institute of Directors
and Institute of Consultants. He graduated from
the University of Edinburgh in Mathematics and
Economics, following this with a management
accounting qualification.

A R E A S O F E XPERTIS E

Strategic management, organisation performance
and governance

CU R R ENT E X TER N A L RO LE S

Non-executive director/chair of the Edrington
Group’s Employee Benefit Trust, Scottish
Enterprise’s Pension Trustee Board and Clyde
Bergemann Pension Scheme. Founder/director of
Renaissance & Company. He is a member of the
faculty of Strathclyde Business School and Visiting
Professor at the University’s Design
Manufacturing and Engineering Management
department. He is also a Visiting Professor at
Loughborough University London and the
University of Stirling.

Michael H. Davidson, M.D., FACC, FNLA, is
Professor of Medicine and Director of the Lipid
Clinic at the University of Chicago. He also serves
as chief executive officer of NewAmsterdam
Pharma. Dr. Davidson is a leading expert in the field
of lipidology. He has conducted over 1,000 clinical
trials, published more than 350 medical journal
articles and written three books on lipidology.
His research background encompasses both
pharmaceutical and nutritional clinical trials
including extensive research on statins, novel
lipid-lowering drugs, and omega-3 fatty acids. Dr.
Davidson founded the Chicago Center for Clinical
Research, which became the largest investigator
site in the USA and was acquired by Pharmaceutical
Product Development in 1996. Additionally, he
founded Omthera Pharmaceuticals in 2008,
which was acquired by AstraZeneca in 2013 for
$440 miliion, and most recently, he was founding
CEO/CSO of Corvidia Therapeutics, which was
acquired by Novo Nordisk for up to $2.1bn in 2020.
Dr. Davidson is board-certified in internal medicine,
cardiology, and clinical lipidology. He was president
(2010–2011) of the National Lipid Association,
named as one of The Best Doctors in America for
the past 15 years and ‘Father of the Year’ by the
American Diabetes Association, 2010.

A R E A S O F E XPERTIS E

Lipidology and clinical development

CU R R ENT E X TER N A L RO LE S

NewAmsterdam Pharma B.V., Inositec AG,
Sonogene LLC, Caladrius Biosciences, Inc and PHP
Precision Med

James Ede-Golightly
Non-Executive Director

A PP O INTED April 2019

Dr. Steven Romano
Non-Executive Director

A PP O INTED July 2019

James Ede-Golightly is currently chairman of
Oxehealth Ltd, East Balkan Properties Plc and
Oxford Advanced Surfaces Ltd. Among other
directorships, Mr Ede-Golightly is non-executive
director of Sarossa plc and Serendipity Capital Ltd
and has extensive experience as a non-executive
director of AIM-quoted companies with
international business interests. Mr Ede-Golightly
was a founder of ORA Capital Partners in 2006,
having previously worked as an analyst at Merrill
Lynch Investment Managers and Commerzbank.
Mr Ede-Golightly is a CFA Charterholder and
holds an M.A. degree in economics from
Cambridge University. In 2012, he was awarded
New Chartered Director of the Year by the
Institute of Directors.

A R E A S O F E XPERTIS E

Investment and corporate finance

CU R R ENT E X TER N A L RO LE S

DeepMatter Group plc, Dunheved Limited,
East Balkan Properties plc, Gulfsands Petroleum
plc, Oxehealth Limited, Oxford Advanced
Surfaces Limited, Sarossa plc, and Serendipity
Capital Limited

Steven Romano, M.D. is a board-certified
psychiatrist and pharmaceutical executive with
25 years of research and development experience
across a wide range of therapeutic and disease areas.
Dr. Romano currently serves as executive vice
president and chief scientific officer at Mallinckrodt
plc, where he has responsibility for research and
development, and regulatory and medical affairs.
Prior to joining Mallinckrodt, Dr. Romano spent 16
years at Pfizer, Inc. where he held a series of senior
research and development and medical roles of
increasing responsibility, culminating in his most
recent position as SVP, Head, Global Medicines
Development, Global Innovative Pharmaceuticals
Business. Dr. Romano received his M.D. from the
University of Missouri-Columbia School of Medicine
and graduated from Washington University in St.
Louis with a bachelor’s degree in biology and
English literature.

A R E A S O F E XPERTIS E

Research and development, regulatory, and
medical affairs

CU R R ENT E X TER N A L RO LE S

EVP and chief scientific officer at Mallinckrodt
Pharmaceuticals

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCECorporate Governance report

Iain Ross
Chairman

The Directors remain committed to
maintaining high standards of transparency,
ethics and corporate governance.”

What corporate governance standards does the
Company follow?

In July 2018, the Board approved the application of The Quoted
Companies Alliance (QCA) Corporate Governance Code (2018 edition)
(the QCA Code) and the Company has continued to comply through
the reporting period. The QCA Code is a practical, outcome-oriented
approach to corporate governance that is tailored for small and
mid-size quoted companies in the UK. The Board views this as an
appropriate corporate governance framework for Silence Therapeutics
plc and consideration has been given below to each of the ten
principles set out in the QCA Code.

How frequently does the Board meet?

The Board holds four scheduled meetings per year, aligned with
quarterly management reporting; regular monthly Board update calls
and additional meetings and Board calls when circumstances and
urgent business dictate. In the 12-month period under review, there
were 16 meetings. The high number of Board meetings was driven by
the introduction of regular monthly Board update calls so as to keep
Board members fully updated on business developments. There were
also a number of Board and executive changes in the year which
required the Board to convene.

Type of meeting

Board

Audit and Risk Committee

Remuneration Committee

Nomination Committee

Number
of meetings

All Board and Committee meetings were fully attended by the relevant
Directors throughout the year either in person or virtually. All Directors
receive the agenda and Board papers in advance of Board meetings to
enable them to make an effective contribution. Between Board
meetings, the Chairman maintains regular informal contact with
Non-Executive Directors. The Board continues to meet on a regular
basis in order to review progress and agree strategy.

The Board reviews the strategy and at each meeting evaluates the
progress of the Company towards achieving its annual objectives.
It also analyses the risk of potential activities and monitors financial
progress against budget.

How does the Board apply the ten principles set out
in the QCA Code?

1. Establish a strategy and business model which promote
long-term value for shareholders
The Board has a clear strategy, which is set out in the Chairman’s
statement on page 2.

To support the execution of this strategy, the Board performs the
following key tasks:

• setting the Company’s values and standards;

• approval of long-term objectives and strategy;

• approval of revenue, expense and capital budgets and plans;

• approval for therapeutic candidate progression through key

development and clinical stages;

• oversight of operations ensuring that adequate systems of internal

controls and risk management are in place, ensuring maintenance of
accounting and other records, and compliance with statutory and
regulatory obligations;

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEBoard structure

Following the appointment of Mark Rothera in September 2020 and the post period appointment of Dr. Michael Davidson in January 2021,
the Board Committee memberships are as follows:

Audit and Risk Committee

Remuneration Committee

Nomination Committee

Dave Lemus (Chair)

Alistair Gray

James Ede-Golightly

Dr. Michael Davidson

James Ede-Golightly (Chair)

Dr. Michael Davidson

Dave Lemus

Dr. Steven Romano

Iain Ross (Chair)

Mark Rothera

Alistair Gray

Dr. Steven Romano

• review of performance in light of strategy and budgets ensuring that

any necessary corrective actions are taken;

• review progress towards and consider options and terms of business
development and corporate collaboration and development deals;

• approval of the annual report and financial statements, half year

results, material contracts and major projects; changes to structure,
size and composition of the Board;

• determining remuneration policy for the Directors and approval of

the remuneration of the Non-Executive Directors; and

• approval of communications with shareholders and the market.

2. Seek to understand and meet shareholder needs
and expectations
Contact with major shareholders has been principally maintained by
the CEO and the Chairman (Executive Chairman during the period
when there was no CEO) during the reporting period, and they have
ensured that their views are communicated to the Board as a whole.
The Board believes that appropriate steps have been taken during the
reporting period to ensure that the members of the Board, and in
particular the Non-Executive Directors, develop an understanding of
the views of major shareholders about the Company.

We are holding our Annual General Meeting on 15 June 2021.
A Notice of Annual General Meeting will be issued in due course and
will be available on our website. Separate resolutions will be provided
on each issue so that they can be given proper consideration.
Proxy votes are counted and the level of proxies lodged on each
resolution reported after it has been dealt with by a show of hands.

3. Take into account wider stakeholder and social responsibilities
and their implications for long-term success
The Board considers the Company’s ability to help patients and their
caregivers to be highly important and critical to the long-term success
of Silence. For more information on how the Company’s lead drug
candidates, SLN124 and SLN360, can help patients, refer to pages 9 to
13. For information on engagement with wider stakeholders, refer to
Resources and relationships on page 18.

4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
A Risk Register is maintained for regular review by the Audit and Risk
Committee and the Board. Principal risks are set out on page 16 where
mitigating activities are also explained.

Additionally, the Audit and Risk Committee report on pages 26 and 27
sets out how risks are reviewed.

5. Maintain the Board as a well-functioning, balanced team led
by the Chairman
Currently the Board has a majority of Non-Executive Directors,
consisting of two Executive and six Non-Executive Directors.
The Board’s composition is geared towards its current stage of
development and priorities.

The Nomination Committee was chaired by the Senior Independent
Non-Executive Director Alistair Gray during the period whilst Iain Ross
was Executive Chairman.

On 14 September 2020 Mark Rothera was appointed as CEO.
Details of each of the Directors’ experience and background are
given in their biographies on pages 20 and 21.

The Chairman is responsible for leading the Board and ensuring its
effectiveness, and is responsible for the operational management of
the Company and implementation of Board strategy and policy.

The Board delegates certain activities to the Committees, with terms
of reference which are available on the Company website
(www.silence-therapeutics.com). Membership of all three Board
Committees comprises a Non-Executive Chair and at least two other
Non-Executive Directors. All of the Board Committees are authorised
to obtain, at the Company’s expense, professional advice on any
matter within their terms of reference and to have access to sufficient
resources in order to carry out their duties.

6. Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The Board has delegated the tasks of reviewing Board composition,
searching for appropriate candidates and making recommendations
to the Board on candidates to be appointed as Directors, to the
Nomination Committee.

The Nomination Committee chair was re-assumed by the Chairman of the
Company, following on from Senior Independent Non-Executive Director,
Alistair Gray who had chaired the Nomination Committee temporarily.

The main duties of the Nomination Committee are set out in its terms
of reference and include:

• regularly reviewing the structure, size and composition (including
the skills, knowledge, experience and diversity) required of the
Board compared to its current position and making
recommendations to the Board with regard to any changes;

• determining the qualities and experience required of the Company’s
Executive and Non-Executive Directors and identifying suitable
candidates, assisted where appropriate by recruitment consultants;

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCECorporate Governance report (continued)

• formulating plans for succession for both Executive and Non-

Executive Directors and in particular for the key roles of Chair and
Chief Executive Officer;

• assessing the re-appointment of any Non-Executive Director at the

conclusion of their specified term of office, having given due regard to
their performance and ability to continue to contribute to the Board in
the light of the knowledge, skills and experience required; and

• assessing the re-election by shareholders of any Director, having due
regard to their performance and ability to continue to contribute to
the Board in the light of the knowledge, skills and experience required
and the need for progressive refreshing of the Board.

In September 2020 the Company appointed Mark Rothera as CEO,
taking over from Iain Ross who had been interim Executive Chairman
whilst the search for a new CEO was being conducted. Giles Campion
was appointed as Executive Director in May 2020 and has served as
Head of R&D and Chief Medical Officer since June 2019.

With regard to the re-election of Directors, the Company is governed
by its Articles of Association (the Articles).

Under the Articles, the Board has the power to appoint a Director
during the year, but any person so appointed must stand for election at
the next Annual General Meeting. Any Director who has been a
Director at each preceding three Annual General Meetings and has not
been re-appointed since must retire from office at the next Annual
General Meeting.

The Director is then eligible to stand for re-appointment by the
shareholders. Mark Rothera and Dr. Michael Davidson will stand for
election at the 2021 Annual General Meeting, having been appointed
since the last Annual General Meeting. In addition, Giles Campion will
stand for re-election.

The annual performance evaluation for 2020 resulted in
recommendations, which are being implemented by the Board,
to allocate more time at Board meetings to consider business
development and opportunities to grow the business.

Silence is committed to diversity in all aspects of its mission and
activities and at all levels of the organisation, including its Board of
Directors. The Board understands the value in having directors of
diverse gender, race and ethnicity, along with varied skills, perspectives
and experiences. We are constantly looking for opportunities to
improve our diversity and inclusion practices.

7. Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
The Silence Therapeutics plc Board remains mindful that it needs to
continually monitor and identify ways in which it might improve its
performance and recognises that board evaluation is a useful tool for
enhancing a board’s effectiveness.

Under normal circumstances alongside the formal annual evaluation,
the Chairman would routinely assess the performance of the Board
and its members and discuss any problems or shortcomings with the
relevant Directors. However, as Iain Ross fulfilled the role of Interim
Executive Chairman for the greater part of 2020, Alistair Gray, the
Senior Independent Non-Executive Director, worked with the
Chairman to ensure that this year’s process was appropriate and
recommendations independently validated. In addition, with the
appointment of two new Executive Directors – namely Dr Giles
Campion in mid-2020 and Mark Rothera as CEO in the latter part
of the year, the Senior Independent Non-Executive Director held
additional discussions with the two new executive directors.

The Chairman is responsible for the annual performance assessment
of the CEO and this will revert to being the case in 2021, recognising
Mark Rothera’s appointment was with effect from 14 September
2020. Normally the CEO reviews the performance of the CFO, but for
2020, the Interim Executive Chairman carried out mid-year reviews of
all members of the management team. A new CFO was appointed in
January 2021 and accordingly the CEO will assess the new CFO’s
performance in the normal way at the end of 2021. Any performance-
related remuneration is determined by the Remuneration Committee
and recommended to the Board.

The Directors, led by the Senior Independent Non-Executive Director,
are responsible for evaluating the Chairman’s performance.

In conducting the formal annual evaluation, the Board undertakes
a rigorous assessment of its own performance, balance of skills,
experience, independence, diversity (including gender diversity)
and other factors relevant to its effectiveness (and also that of its
Committees) and the performance of its individual Directors. In late
2020 the Board undertook a formal evaluation of its performance.
In conducting this review, the Chairman undertook a formal discussion
with each of the other Directors regarding the performance of the
Board, its Committees and the other Directors’ own individual
contribution and performance.

In preparation, the Chairman and the Senior Independent Non-
Executive Director solicited the views of the other Directors,
including the completion by each Director of confidential
questionnaires in respect of the Board, the Audit and Remuneration
Committees and one specifically relating to the performance of the
Chairman. All questionnaires were returned to the Chairman and
Senior Non-Executive Director for review, with the exception of
that relating to the Chairman’s performance being returned directly
to the Senior Independent Director.

Following the reviews, the Chairman and the Senior Independent
Non-Executive Director shared their observations with the other
Directors. These individual evaluations aimed to confirm that each
Director continues both to contribute effectively and to demonstrate
commitment to the role (including the allocation of necessary time for
preparation and attendance at Board and Committee meetings and
any other duties).

The performance of the Chairman (in both his Interim Executive and
Non-Executive roles) was reviewed through a separate exercise
conducted on behalf of the Board by the Senior Independent
Non-Executive Director.

The results of the 2020 review were satisfactory overall, but a number
of actions emerged which can be summarised as follows:

• Strategy and contingency planning – as the Company expands its
development pipeline, in-house capabilities and corresponding
operational infrastructure, both in Europe and USA, it was agreed
that there should be more emphasis at Board meetings on strategic
discussions and risk analysis and in addition that the Annual Strategy
session for Board Directors should be expanded to include external
and professional input. Also, and in light of the recent COVID-19
pandemic and the ramifications thereof, it was agreed that in such
circumstances the Board and its Committees should pro-actively
consider, review and assess contingency scenarios on a regular basis.

• Succession planning – as the Company expands it was agreed that the
Board needs to formalise its approach to Board and management
succession planning in terms of skills, geography and diversity.
The Chairman is committed to lead this initiative in liaison with the CEO.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEConflicts of Interest
Under the Articles of Association, the Directors may authorise any
actual or potential conflict of interest a Director may have and may
impose any conditions on the Director that are felt to be appropriate.
Directors are not able to vote in respect of any contract, arrangement
or transaction in which they have a material interest and they are not
counted in the quorum. A process has been developed to identify any
of the Directors’ potential or actual conflicts of interest.

This includes declaring any new conflicts before the start of each
Board meeting.

Board Advice
All the Directors have access to the advice and services of the Company
Secretary, who is responsible for ensuring that Board procedures and
applicable regulations under the Company’s Articles of Association or
otherwise are complied with. Each Director is entitled, if necessary, to
seek independent professional advice at the Company’s expense.
The Company maintains Directors’ and officers’ liability insurance.

10. Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders
and other relevant stakeholders
Contact with major shareholders is principally maintained by the
Chairman and CEO, and additionally the Senior Independent Non-
Executive Director is available to discuss governance and other matters
directly with major shareholders, both private and institutional.

The Company uses its corporate website (www.silence-therapeutics.com)
to communicate with institutional shareholders and private investors,
and the website also contains the latest announcements, press releases,
published financial information, current projects and other information
about the Company. The annual report which includes the financial
statements is a key communication document and is available on the
Company’s website. Furthermore, the Company maintains its
consideration of each of the ten QCA Code principles on its website.

Iain Ross
Chairman
30 March 2021

• Non-Executive Directors ongoing training and development and

interaction with senior management – these issues were identified
as a result of last year’s Board review; however, because of the
COVID-19 pandemic it has not been possible to address fully these
issues. Accordingly, and recognising that three new Directors have
been appointed in the last six months, when restrictions allow a
concerted effort, led by the Chairman and the Senior Independent
Non-Executive Director, will be implemented to introduce a more
structured approach to the induction and broader development of
Directors and interaction with the senior management on a more
frequent basis to enhance their knowledge and understanding of
the business as it evolves.

The Nomination Committee is responsible for succession planning
and making recommendations to the Board in this respect, as set
out above.

8. Promote a corporate culture that is based on ethical values
and behaviours
Ethical values and behaviours are important to the Company, and the
policies to implement this are explained on page 17. More information
can be found on the Corporate Responsibility web page on the
Company website.

9. Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board
The Board is supported by the Committees, explained above,
in the task of maintaining governance processes and structures.
Furthermore, the following governance matters support good
decision-making by the Board.

Internal Controls and Risk Management
The Company has in place a system of internal financial controls
commensurate with its current size and activities, which is designed to
ensure that the possibility of misstatement or loss is kept to a
minimum. These procedures include the preparation of management
accounts, forecast variance analysis, controls in place for one-off
accounting items and other ad hoc reports. Risks throughout the
Company are considered and reviewed on a regular basis. Risks are
identified and mitigating actions put into place as appropriate.
Principal risks and uncertainties identified are set out in the strategic
report on page 16.

Internal control and risk management procedures can only provide
reasonable and not absolute assurance against material misstatement.
A material weakness was identified in the F-1 registration statement
in September 2020; action is being taken to address this.

Financial and Business Reporting
The Board seeks to present a balanced and understandable
assessment of the Company’s position and prospects in all half year,
full year and price-sensitive reports and other information required to
be presented by statute. The Board receives a number of reports to
enable it to monitor and clearly understand the Company’s financial
position. The Company maintains a Disclosure Policy to enhance the
process for ensuring that price-sensitive information is identified
effectively and all communications with the market are released
in accordance with expected timescales.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEAudit and Risk Committee report

Dave Lemus
Chair of the Audit
and Risk Committee

Commensurate with Silence’s recent
Nasdaq listing, allowing substantially
greater investor access will be the
Committee’s heightened focus on all
aspects related to Company financings,
internal controls and additional financial
reporting requirements.”

Who are the members and who do they interact with?

Dave Lemus is Chair of the Audit and Risk Committee.

Dave currently also serves as audit committee chair of Sorrento
Therapeutics, Inc. (Nasdaq: SRNE) and previously served on multiple
public and private company boards as a non-executive board member
in his more than 20 years of experience in the biopharmaceutical
industry. Additionally, he is currently the CEO of Ironshore
Pharmaceuticals, Inc., and has been previously a CEO, COO and
CFO in several public and private companies in the U.S and in Europe.
Dave is also a Certified Public Accountant in the USA.

In addition to Dave, the members of the Committee comprise
Alistair Gray, James Ede-Golightly and Dr. Michael Davidson.
The Committee met five times during 2020, including prior to
results announcements.

What does the Audit and Risk Committee do?

• Monitors the integrity of the Company’s financial and

narrative reporting

• Monitors risk

• Reviews accounting policies and key estimates and judgements

• Reviews the appropriateness and completeness of the

internal controls

• Makes recommendations to the Board, to be put to shareholders
for approval at the Annual General Meeting, in relation to the
appointment, re-appointment and removal of the Company’s
external auditors

• Meets with the external auditors, ensuring that they report to it on

all relevant matters to enable the Committee to carry out its
oversight responsibilities

How does the Committee monitor the Company’s
financial reporting?

The Committee monitors the integrity of the Company’s financial
statements, preliminary announcements and any other formal
announcements relating to the Company’s financial performance.

In 2020, the Committee reviewed the 2019 preliminary
announcement, the 2019 annual report, the 2020 interim
announcement and the Nasdaq listing documents.

The Committee reviews and challenges where necessary any changes
to, and the consistency of, accounting policies, advising whether the
Company has followed appropriate accounting standards and made
appropriate estimates and judgements (notably in respect of the
impairment of investments in subsidiaries), taking into account the
views of the external auditors, the going concern assumption and all
material information presented with the financial statements.

What does the Committee do to review risks?

To assess the appropriateness and completeness of internal controls,
the Committee reviews the detailed risk matrix which identifies high
level control issues classified as critical under the Company’s risk
matrix that require, or are subject to, remedial action. The Committee
considers whether the necessary actions are being taken to remedy
any significant failings or weaknesses.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEIs there an internal audit function?

At present the Company does not have an internal audit function.
Given the recent Nasdaq listing, the Company will need to be
compliant with additional Sarbanes-Oxley requirements over a period
of time; this will initially be achieved by in-house initiatives supported
by external specialists. However, the Committee will review the need
for an internal audit function at least annually.

With the Nasdaq listing, the Committee has a new responsibility to
review the system of internal financial control and compliance with the
US Sarbanes-Oxley Act 2002.

In 2020 BDO were appointed as implementation consultants to assist
with the setting up of ICFR (internal controls over financial reporting);
the end objective being the building up of evidence and controls not
only from an internal control perspective but to allow management to
attest over the ICFR as required under the Sarbanes-Oxley Act 2002.

Who are the external auditors and how long have
they been appointed?

PricewaterhouseCoopers LLP were appointed as the external auditors
in 2014.

The Committee ensures that at least every ten years the audit
services contract is put out to tender and oversees the selection
process. Having reviewed the auditors’ independence and
performance, the Committee is recommending that
PricewaterhouseCoopers LLP be re-appointed as the
Company’s auditors at the next Annual General Meeting.

How does the Audit and Risk Committee assess the
effectiveness of the external audit process?

The Committee oversees the relationship with the external auditors,
including approval of their remuneration, approval of their terms of
engagement, annual assessment of their independence and
objectivity, taking into account relevant professional and regulatory
requirements, and the relationship with the auditors, as a whole,
including the provision of any non-audit services. The breakdown of
fees between audit and non-audit services is provided in note 5 to
the financial statements.

The auditors prepare an Audit Plan for the audit of the full year
financial statements, which was presented to the Committee and
discussed in December 2020. The Audit Plan sets out the scope of the
audit, areas to be targeted and the audit timetable. Following the audit,
the auditors present their findings to the Committee for discussion.

Review of Accounting and Financial Reporting
Matters and Matters of Significance and Judgement

The Committee received reports from management and the external
auditor setting out the significant accounting and financial reporting
matters and judgements applicable to the following key areas.

Following discussion and challenge, the Committee reviewed
management’s conclusions on certain significant Company accounting
policies, which included but were not limited to:

R&D costs related to CROs and associated accruals and prepayments
In determining the R&D expense in relation to contract research
organisations (CROs) we have estimated the total percentage of
completion of each contract to date and included consideration of
future costs to be incurred. These estimates have also been used in
determining accruals and prepayments at the year end.

Accounting for the agreements with AstraZeneca UK Limited
(equity investment and research collaboration agreement)
The AstraZeneca contract comprises multiple licence and R&D
services elements. In determining revenue to be recognised in respect
of each contractual element, the judgement has been made to treat
licence and R&D services elements as a single performance obligation
on the basis that they are not separable. Across the entirety of the
contract there are multiple performance obligations based on
contractually agreed targets.

When spreading upfront consideration across each of the
performance obligations, we have determined that the most
appropriate basis is to spread upfront amounts evenly across each
performance obligation. This is based on our current estimation of
how future targets will be delivered.

Carrying value of the investment in Silence Therapeutics GmbH
(to parent company)
Different methodologies can be used to determine the carrying value
of this investment. In determining the carrying value of Silence
Therapeutics plc’s investment in Silence Therapeutics GmbH we have
assessed it as being based on its estimated ‘value in use’ (which utilises
an NPV methodology). In doing this we have had to estimate the value
and timing of future milestone cash inflows, which is however a
standard industry practice.

Dave Lemus
Chair of the Audit and Risk Committee
30 March 2021

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCERemuneration Committee report

We continue to deliver a remuneration programme that rewards both
achievement of short-term goals and fulfilment of our longer-term
objectives, linked with the ultimate exploitation of our platform and its
application in generating novel RNAi medicines. We recognise the
need to retain and motivate Executive Directors and the senior
management team and the need to avoid making remuneration
decisions solely based on shorter-term volatility. Accordingly, we
include two performance- based elements in our remuneration
programme: a shorter-term annual bonus programme, with payment
amounts based on the previous year’s achievement against pre-set
goals for that year; and a longer-term equity-based programme of
share options, vesting over three years and directed towards the
achievement of substantial, longer-term strategic objectives.
The short-term programme and the long- term incentive programme
are providing a balance designed to incentivise Executive Directors
and senior management to work toward achievement of the
corporate strategy.

During the year, share options were awarded to Mark Rothera and Iain
Ross (1,800,000 and 500,000 share options respectively), vesting
dates for these options are detailed later in this report.

While permitted within the QCA Code (the Code), Non-Executive
Directors do not normally participate in the performance- related
remuneration or have a significant participation in a Company share
option scheme. An exception was made in 2020 in light of the
substantial contribution of the Executive Chairman in performance
of executive responsibilities. In accordance with the Code, the
Remuneration Committee has aligned its policies with a long-term
focus on Company strategy and risk management, having regard for
the views of shareholders. In light of the transition to a more Nasdaq-
focused company, the intention in due course is to adopt a new
compensation strategy for NEDs that includes share options,
in order to attract and retain top international talent.

This remuneration policy has the intention of ensuring that Silence
is in line with Biotech industry best practices.

James Ede-Golightly
Chair of the Remuneration Committee
30 March 2021

James Ede-Golightly
Chair of the
Remuneration
Committee

Having the right team to execute on an
internationally competitive strategy in
the fast-moving field of RNAi is a key
priority for the Board and the Company.”

Dear shareholder,

On behalf of the Remuneration Committee, I am pleased to
present our Directors’ remuneration report for the year ended
31 December 2020.

Having the right team to execute on an internationally competitive
strategy in the fast-moving field of RNAi is a key issue for the Board
and the Company. Iain Ross served as our Executive Chairman up
until mid-September 2020 and during this period the Company
successfully secured major business development deals, advanced
both wholly owned programmes, SLN360 and SLN124, towards the
clinic and secured a dual listing on Nasdaq.

After a world-wide search process, we were delighted to appoint
Mark Rothera in September 2020 as President, CEO and Board
Member. Mark Rothera brings with him three decades of experience
in the biopharmaceutical industry including driving the transition of
multiple emerging biotech companies from R&D stage to
commercialisation. Following Mark Rothera’s appointment Iain Ross,
who had served as Executive Chairman in 2020, returned to his role
of Non-Executive Chairman.

In June 2020, and in recognition of the need to keep R&D front and
centre of the business, Giles Campion was made a Board Executive
Director, whilst retaining his existing role of Head of R&D and CMO.
In October 2020, we initiated a search for a U.S. based Chief
Financial Officer following the resignation of Rob Quinn and as part
of our strategy to build a leading global RNAi business. Craig Tooman
was appointed CFO post year end on 6 January 2021 and
immediately played a key role in securing an oversubscribed $45m
private placement led by top-tier U.S. institutional healthcare funds
in February 2021.

Craig Tooman has more than 30 years of financial, operational and
M&A experience. On 6 January 2021 we were also delighted to
appoint Dr. Michael Davidson as NED. Dr. Davidson is a Professor of
Medicine and Director of the Lipid Clinic at the University of Chicago
and brings with him extensive experience in cardiovascular clinical
trials, which we believe will be instrumental in guiding our
development strategies for the SLN360 programme.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEDirectors’ Remuneration Policy

This part of the remuneration report sets out the Directors’ remuneration policy.

The remuneration policy will be put forward for approval by shareholders in a binding vote at the forthcoming AGM on 15 June 2021.
If approved, it is intended that the remuneration policy will take effect from the date of approval and apply for a maximum period of three
years (or until a revised policy is approved by shareholders).

Silence’s remuneration policy has been designed to align to the Company’s strategy and business model and to reflect the Committee’s
remuneration philosophy, as summarised below.

Philosophy: Support value creation for shareholders over the longer term and create alignment with shareholders

Fixed Remuneration

Variable Remuneration

Element

Base Salary

Benefits

Pension

Annual Bonus

LTIP

How it is
influenced by the
remuneration
philosophy.

Assessed with
reference to
industry
compensation
benchmarks.

Set considering industry
benchmarking data
and consistent with
positions held.

Determined by stretch
corporate and individual
targets that support
Silence’s annual goals
and its overall strategy.

The more significant
element of the package
linked to longer-term
share performance.

Under the Silence
Therapeutics plc 2018
employee LTIP, share
options can be issued with
performance criteria
under this scheme.

In developing its policy, the Committee has regard to the policy for remuneration of employees across the Company. The Directors’ remuneration
policy was set considering the pay and conditions for other employees and the Committee does not engage in a wider consultation with
employees on the policy. Remuneration across the Company is implemented in the following ways:

• All employees are rewarded with a remuneration package that includes certain key benefits such as life assurance, private medical insurance,
access to pension benefits (or cash in lieu), and eligibility to receive a bonus. Certain employees are invited to participate in Silence’s share
options scheme. Internal reviews are carried out to ensure that levels of remuneration for all key employees are up to date and competitive
within the sector.

• The bonus scheme for our Executive Director and employees is designed to reward performance, and all individuals work towards challenging

corporate and individual goals.

• In setting the remuneration policy for Directors, the pay and conditions of other employees are taken into account, including any base salary

increases awarded. The Committee is provided with data on the remuneration structure for management level tiers below the level of
Executive Director and uses this information to ensure consistency of approach throughout the Company. The views of shareholders
expressed in respect of directors’ remuneration were considered when formulating the directors’ remuneration policy. It is the
Committee’s intention to consult with shareholders in advance of making any material future changes to remuneration arrangements
for Executive Directors.

The remuneration of senior executives below Board level is reviewed by the Committee on an annual basis.

The remuneration packages of these executives are broadly consistent with the policy outlined above, with the overall impact of the role and the
individual being considered as well as relevant market comparative data, save that lower bonus percentages and lower share option opportunities
are applicable.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCERemuneration Committee report (continued)

Remuneration policy table

Executive Directors

Purpose and Link to Strategy

Operation

Maximum Opportunity

Performance Metrics

The Committee aims to set base
salary at levels that are broadly
aligned with the mid-points for
equivalent roles in comparable
companies in the UK, adjusted to
reflect Company size and complexity.

Salaries are normally reviewed
annually, and changes are generally
effective from 1 January.

The annual salary review of the
Executive Directors takes into
consideration a number of factors,
including:
• business performance;
• salary increases awarded to the
overall employee population;

• skills and experience of the

individual over time;
• scope of the individual’s

responsibilities;

• changes in the size and complexity

of the Company;

• market competitiveness and UK,

European and US market practice;
and

• the underlying rate of inflation.

The Company aims to offer benefits
that are in line with market practice.

Executive Director level
salaries are determined
considering industry
benchmarking data.

No formal metrics, although any
increases take account of Company
performance and Executive Director
appraisal against objectives.

No claw-back will be applied in relation
to salaries.

Base salary increases are
awarded at the discretion of
the Committee; however,
salary increases will
normally be no greater
than the inflationary pay
rises awarded to the
wider workforce.

Executive Director level
salaries are approved by
the Board in line with
corporate performance
and are consistent with
positions held.

The value of each benefit is
not predetermined and is
based upon the taxable
value to the individual.

Not performance related.

No claw-back will be applied in relation
to benefits.

The Company operates a defined
contribution scheme and all
employees, including Executive
Directors, are invited to participate.

Cash payments in lieu of pension
contributions may be made.

Employee contributions are
matched two-fold by
employer contributions up
to a maximum employer
contribution of 10%.
Employees may contribute
more than 5% themselves,
but the Company will not
provide any further
employer contributions
above this level.

Not performance related.

No claw-back will be applied in relation
to pensions.

Base Salary

To attract and retain
executives of the highest
calibre who are capable of
delivering the Company’s
strategic objectives,
reflecting the individual’s
experience and role within
the Company.

Base salary is designed to
provide an appropriate level
of fixed income to avoid an
over-reliance on variable
pay elements that could
encourage excessive
risk taking.

Benefits

Benefits in kind offered to
Executive Directors are
provided on a market-
competitive basis, to assist
with their recruitment
and retention.

Pensions

The Company aims to
provide market- competitive
retirement benefits, as a
retention tool and to reward
sustained contribution.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEExecutive Directors

Purpose and Link to Strategy

Operation

Maximum Opportunity

Performance Metrics

Annual Performance Bonus

An annual cash bonus
rewards the achievement of
objectives that support the
Company’s corporate goals
and delivery of the
business strategy.

Annual cash bonuses are
limited to a target of 60%
of base salary for the
Executive Directors.

Executive Director level
bonuses are approved by
the Board in line with
corporate performance
and are consistent with
positions held.

The Board can exercise
discretion in setting
contractual bonus rates for
new Executive Directors
above 60%, with discretion
exercised with respect to
total compensation.

Corporate goals typically include
development of pipeline and platform,
partnering successes, revenue
generation, strengthening of intellectual
property and control of cash
expenditure, although the Committee
has the discretion to set other targets.

Individual goals set specific, measurable
and are linked to the Company’s
longer-term strategy.

Under the rules of the scheme, the
Committee can claw back up to 100% of
the bonus awarded in the event of
material misstatement of the Company’s
financial results, an error in assessing
the performance conditions to which an
award is subject or for any other matter
which it deems relevant. There is no
claw-back time limit in the policy.

Objectives are agreed with the
Committee, and the Board, at the
start of each financial year although
the Committee retains the discretion
to amend objectives during the year
if it considers that objectives are no
longer appropriate.

Different performance measures
and weightings may be used each
year, as agreed with the Committee,
to take into account changes in the
business strategy.

Bonuses are paid at the discretion of
the Committee. The Committee
considers overall corporate
performance and individual
performance when determining the
final bonus amount to be awarded
and the Committee may adjust any
formulaic outcomes accordingly.

Bonuses are normally paid in cash
(but may be paid in the form of an
equity award) typically in January
or February.

Long Term Incentive Plan (LTIP)

LTIP awards granted to Executive
Directors have typically taken the
form of nominal cost options vesting
according to performance conditions
measured over at least three years,
although different forms of awards
may also be granted in accordance
with the LTIP rules.

The Remuneration
Committee believes that a
key component of the
overall remuneration
package is the provision of
equity awards to senior
executives through an LTIP,
which is designed to develop
a culture which encourages
strong corporate
performance on an absolute
and relative basis to align
with shareholder interests.

Aggregate options
outstanding will vest at up
to a maximum of 300% of
annual salary within a single
financial year.

Executive Director level
LTIP awards are approved
by the Board in line and
are consistent with
positions held.

The Board can exercise
discretion in setting
contractual LTIP awards for
new Executive Directors
above 250% of annual
salary with discretion
exercised with respect to
total compensation.

Vesting of LTIP awards is generally
subject to continued employment and
may also be subject to the achievement
of performance conditions aligned with
the Company’s strategic plan. Measures,
their weightings and the period over
which performance is tested will be
determined by the Committee.

The Board has the discretion to utilise
differing types of performance criteria,
measures and performance periods for
future option grants, should it believe
they are more relevant.

The Committee may adjust the
formulaic LTIP outcome to ensure it
takes account of any major changes to
the Company (e.g. as a result of M&A
activity) and is a fair reflection of the
underlying financial performance of the
Company over the performance period.

Further details, including the
performance targets attached to the
LTIP in respect of each year, will be
disclosed in the relevant Annual Report
on Remuneration.

Awards will be subject to claw-back
where there has been a misstatement
of the Company’s financial results, lack
of protection of the Company’s
intellectual property, an error in
assessing the performance conditions
to which an award is subject or for any
other matter which the Committee
deems relevant. There is a two-year
claw back time limit in the policy.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCERemuneration Committee report (continued)

Chair and Non-Executive Directors

Purpose and Link to Strategy

Operation

Maximum opportunity

Performance Metrics

When reviewing fee levels,
account is taken of market
movements in the fees of
Non-Executive Directors,
Board Committee
responsibilities and ongoing
time commitments.

Not performance related.

No claw-back applies in relation
to fees.

Cash fees

Set at a level that is
sufficient to attract and
retain high calibre non-
executives who contribute
to the business.

The Chair and the Non-Executive
Directors receive fees paid in cash.

Furthermore, in addition to fees for
his Non-Executive Chair role, Iain
Ross was paid through a consultancy
company for services provided from
January – May 2020 as Executive
Chairman. In June 2020, Iain Ross
signed an employment agreement
which was effective until 1 month
after the new CEO appointment in
mid-September at which point, he
returned to his position as Non-
Executive Chairman.

Fees are paid monthly and
reviewed annually.

Benefits

Set at a level that is
sufficient to attract and
retain high calibre non-
executives who contribute
to the business.

Equity-based awards

Set a level that is sufficient
to attract and retain high
calibre non-executives who
contribute to the business.

Since 1 January 2018 Non-Executive
Directors do not receive any benefits
in connection with their roles other
than Company life insurance and
reimbursement of travel costs for
attendance at Board meetings. This
may be reviewed in the future.

When reviewing benefits,
account is taken of market
movements in the fees of
Non-Executive Directors,
Board Committee
responsibilities and ongoing
time commitments.

Not performance related.

No claw-back applies in relation
to benefits.

With the exception of Iain Ross
(details of which are presented in the
Executive Directors’ share options
table on page 37), the Non-Executive
Directors do not currently
participate in any performance-
related incentive schemes.

When reviewing equity-
based awards, account is
taken of market movements
in the fees of Non-Executive
Directors, Board Committee
responsibilities and ongoing
time commitments.

Not performance related.

Claw-back applies in relation to
equity-based awards.

The Non-Executive Directors may
be offered the opportunity to
participate in the Silence
Therapeutics plc 2018 Non-
Employee LTIP in the form of
non-performance restricted stock
units or other equity awards
under the terms of such plan with
careful consideration being made
with respect to ensuring
their independence.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEOther remuneration policies

Termination and loss of office payments
The Company’s policy on remuneration for Executive Directors who
leave the Company is consistent with general market practice and is
set out below. The Committee will exercise its discretion when
determining amounts that should be paid to leavers, considering the
facts and circumstances of each case. When calculating termination
payments, the Committee will consider a variety of factors, including
individual and Company performance, the length of service of the
Executive Directors in question and, where appropriate, the obligation
for the Executive Directors to mitigate loss. In the event of a change of
control and ownership, the Committee may exercise its discretion to
provide for additional remuneration and/or benefits for Executive
Directors who leave the Company in connection with such change of
control, and will take into account all relevant circumstances when
making any such determination.

In the case of a ‘good leaver’, the following policy will normally apply:

• notice period of six months unless contractually longer, and pension

and contractual benefits, or payment in lieu of notice;

• statutory redundancy payments will be made, as appropriate;

• Executive Directors have no entitlement to a bonus payment in the
event that they cease to be employed by the Company; however,
they may be considered for a pro-rated award by the Committee in
good leaver circumstances;

• any share-based entitlements granted to an Executive Director

under the Company’s share and individual share contracts or share
option plans will be determined based upon the relevant individual
share option contracts or plan rules, and performance conditions or
hurdles; and

• the Committee may also provide for the leaver to be reimbursed for

a reasonable level of legal fees in connection with a settlement
agreement, to be paid in ex gratia amounts in settlement of claims
and in respect of other ancillary matters such as amounts in respect
of outplacement services, relocation, and health benefits
(continuation or cash in lieu).

Executive Directors’ service contracts
It is the Company’s policy that Executive Directors should have
contracts with an indefinite term and which provide for a maximum
period of 12 months’ notice.

The Executive Directors may accept outside appointments, with prior
Board approval, provided that these opportunities do not negatively
impact on their ability to fulfil their duties to the Company.
Whether any related fees are retained by the individual or are remitted
to the Company will be considered on a case-by-case basis.

Non-Executive Directors’ terms of engagement
All Non-Executive Directors, including the Chair, have specific terms of
engagement which may be terminated on not less than three months’
notice by either party.

The remuneration of Non-Executive Directors is determined by the
Board within the limits set by the Articles and based on a review of
fees paid to Non-Executive Directors of similar companies.

A Board evaluation has been performed and the results of this exercise
confirmed that all Non-Executive Directors were independent.

Remuneration for new appointments
Where it is necessary to recruit or replace an Executive Director,
the Committee has determined that the new Executive Director will
receive a compensation package in accordance with the provisions
of the Policy.

In setting base salaries for new Executive Directors, the Committee
will consider the existing salary package of the new Director and the
individual’s level of experience.

In setting the annual performance bonus, the Committee may wish
to set different performance metrics (to those of other Executive
Directors) in the first year of appointment. Where it is appropriate to
offer a below-median salary on initial appointment, the Committee will
have the discretion to allow phased salary increases over a period of
time for a newly appointed Director, even though this may involve
increases in excess of inflation and the increases awarded to the
wider workforce.

The Committee wishes to retain the ability to make buy out awards
to a new Executive Director to facilitate the recruitment process.
The amount of any such award would not exceed the expected value
being forfeited and, to the extent possible, would mirror the form of
payment, timing and degree of conditionality. Where awards are
granted subject to performance conditions, these would be relevant
to Silence Therapeutics plc. Any such award would only be made in
exceptional circumstances and shareholders would be informed of any
such payments at the time of appointment. Share-based awards would
be made under the LTIP.

In respect of internal appointments, any commitments entered into in
respect of a prior role, including variable pay elements, may be allowed
to pay out according to their prior terms.

For external and internal appointments, the Committee may consider
it appropriate to pay reasonable relocation or incidental expenses,
including reasonable legal expenses. Tax equalisation may be
considered if a Director is adversely affected by taxation due to
their employment or engagement with the Company.

The terms of appointment for a Non- Executive Director would be in
accordance with the remuneration policy for Non-Executive Directors
as set out in the policy table.

Remuneration Committee (the Committee)

Governance
In its decision-making process, the Committee takes account of
information from both internal and independent sources and Radford
Data & Analytics (Radford) surveys. Radford were appointed as
remuneration consultants by the Committee based on their expertise
in the field. Radford advises the Committee on all aspects of senior
executive remuneration. Radford has kept the Committee up to date
on remuneration trends and corporate governance best practice.
Radford does not have any other connection with the Company and is
considered to be independent by the Committee. During the year
ended 31 December 2020, fees charged by Radford amounted to
approximately £10k and this was charged on a flat fee basis.

The current members of the Committee are James Ede-Golightly,
Alistair Gray, Dave Lemus and Steven Romano. James Ede-Golightly,
Alistair Gray, and Dave Lemus are deemed to be independent.
Stephen Romano is Executive Vice President and Chief Scientific
Officer at Mallinckrodt plc, a company which had a 6% shareholding in
Silence at 31 December 2020.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCERemuneration Committee report (continued)

The Company’s Head of HR provides updates to the Committee, as
required, to ensure that the Committee is fully informed about pay and
performance issues throughout the Company. The Committee takes
these factors into account when determining the remuneration of the
Executive Directors and senior executives.

No Executive Director or employee can participate in any
discussion directly relating to their own personal conditions of
service or remuneration.

No conflicts of interest have arisen during the year and none of the
members of the Committee has any personal financial interest in the
matters discussed, other than as option holders. The fees of the
Non-Executive Directors are approved by the Board on the joint
recommendation of the Committee and the Chief Executive Officer.

Pay-for-performance scenario analysis
The charts below provide an estimate of the potential future reward
opportunities for the Executive Directors, and the potential split
between different elements of remuneration under four different
performance scenarios: ‘Maximum + 50% share price growth’,
‘Maximum’, ‘On target’ and ‘Minimum’.

Potential reward opportunities are based on the forward-looking
policy, applied to annualised 2020 base salaries and incentive
opportunities. Note that the LTIP awards granted in a year will not
normally vest until the third anniversary of the date of grant, and
the projected value of the “Maximum”, “On target” and “Minimum”
scenarios excludes the impact of share price movement. The
“Maximum + 50% SPA” scenario shows the projected impact of
a 50% share price appreciation (SPA).

Director

James Ede-Golightly

Alistair Gray

Dave Lemus

Steven Romano

The Committee met five times in 2020.

Meetings attended

Mark Rothera

Maximum +50% SPA 145

114

Maximum

145

114

On-target

145

Minimum

145

Role
The Committee’s principal function is to support the Company’s
strategy by ensuring that those individuals responsible for delivering
the strategy are appropriately incentivised through the operation of
the Company’s remuneration policy.

In determining the Company’s current policy, and in constructing the
remuneration arrangements for Executive Directors and senior
employees, the Board, advised by the Committee, aims to provide
remuneration packages that are competitive and designed to attract,
retain and motivate Executive Directors and senior employees of the
highest calibre, and align incentives with shareholder interest.

400

800

1200

1600

Giles Campion

Maximum +50% SPA 199

107

1,196

Maximum

199

107

On-target

199

Minimum

199

686

The Committee is responsible for:

400

800

1200

1600

Fixed remuneration

Annual bonus

LTIP

Amounts are shown in thousands (GBP).

The LTIP award amounts shown above relate to share options vesting during the year using
the Company’s AIM closing price at the end of the quarter in which the award vested less
associated exercise price. None of the share options awarded to Mark Rothera in 2020
vested in the year.

Mark Rothera was appointed Director (Chief Executive Officer) on 14 September 2020; his
remuneration in the above table is for the period from 14 September to 31 December 2020.
Mark Rothera’s ‘on-target’ bonus of £76k represents 60% of his salary of £127k for 2020.
Total fixed remuneration of £145k comprised salary of £127k and benefits of £18k.
Maximum bonus potential for 2020 was £114k representing 150% of the ‘on-target’ amount.
For Mark Rothera, 100% of his annual bonus was by reference to corporate goals.

Giles Campion was appointed as a Director (Executive Vice President, Head of R&D and
CMO) on 9 June 2020, his remuneration in the above table is for the period from 9 June to
31 December 2020. Giles Campion’s ‘on-target’ bonus of £89k represents 50% of his
Director’s salary of £178k for 2020. Total fixed remuneration of £199k comprised salary of
£178k, benefits of £3k and pension of £18k. Maximum bonus potential for 2020 was £107k
representing 120% of the ‘on-target’ amount. For Giles Campion, 50% of his annual bonus
was by reference to corporate goals and 50% by reference to individual goals.

• setting a remuneration policy that is designed to promote the

long-term success of the Company;

• ensuring that the remuneration of the Executive Directors and other
senior executives reflects both their individual performance and
their contribution to the overall Company results;

• determining the terms of employment and remuneration of the

Executive Directors and Senior Executives, including recruitment
and retention terms;

• approving the design and performance targets of any annual
incentive schemes that include the Executive Directors and
senior executives;

• approving the design and performance targets, where applicable,

of all share incentive plans requiring shareholder approval;

• rigorously assessing the appropriateness and subsequent

achievement of the performance targets related to any share
incentive plans;

• recommending to the Board the fees to be paid to the Chair

(the Chair is excluded from this process);

• gathering and analysing appropriate data from comparator

companies in the biotech sector; and

• the selection and appointment of the external advisers to the
Committee to provide independent remuneration advice
where necessary.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEAnnual report on remuneration

This section of the remuneration report provides details of how our remuneration policy was implemented during the financial year ended
31 December 2020, and how it will be implemented during the year ending 31 December 2021.

This report splits certain information into that for Executive Directors and that for Non-Executive Directors. Iain Ross served as both an
Executive and a Non-Executive Director during the financial year ended 31 December 2020. He was a Non-Executive Director on 31 December
2020 and disclosures in respect of him have therefore been included in the sections relevant to Non-Executive Directors save where they relate
to remuneration applicable only to Executive Directors (such as annual bonus).

Audited information
Directors’ remuneration – financial year ended 31 December 2020
The total remuneration of the individual Directors who served during the period is shown below. Total remuneration is the sum of emoluments
for the period in service as a director plus Company pension contributions, and the value of long-term incentive awards vesting by reference to
performance in the twelve months to 31 December 2020.

Directors’ Remuneration – financial year ended 31 December 2020

Basic salarya

Benefitsb

Year

£000s

Bonusc

£000s

LTIPd

Pensione

Total
remuneration

Total
fixed
remuneration

Total
variable
remuneration

£000s

Executive Directors

Mark Rothera1&4

Giles Campion2

Non-Executive Directors

Iain Ross3

Alistair Gray

Dave Lemus

James Ede-Golightly

Dr Steven Romano

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

127

–

178

–

282

–

686

–

221

–

983

–

145

–

199

–

784

–

155

762

1,216

299

917

–

1. Appointed as a Director (Chief Executive Officer) on 14 September 2020. Remuneration amounts disclosed reflect the period during which Mark Rothera was in office.
2. Appointed as a Director (Executive Vice President, Head of R&D and CMO) on 9 June 2020. Remuneration amounts disclosed reflect the period during which Giles Campion was in office.

£2k was paid in respect of private medical insurance during 2020 following his appointment as a member of the Board.

3. Following the resignation of the CEO on 16 December 2019, Iain Ross, the non-executive Chairman, was appointed Interim Executive Chairman on 17 December 2019. In recognition of the
additional responsibility and in addition to his monthly Chairman/Director fees of £10,000 per month Mr Ross was paid an additional remuneration of £15,000 per month invoiced through
his consultancy firm Gladstone Consultancy Partnership for the period 1 January – 31 May 2020. On 1 June and in the absence of a permanent CEO appointment, Mr Ross agreed to sign
an employment contract immediately terminable 1 month following the appointment of a new CEO. Accordingly, for the period 1 June – 14 October 2020 Mr Ross was paid £30,000 per
month plus benefits including a contribution to pension and private healthcare insurance. On 14 September 2020 Mr Ross reverted to his role as Non-executive Chairman and from
1 month after this date reverted to his monthly fees of £10,000 per month. On signing the employment agreement effective 1 June 2020 Mr Ross was paid a one-off bonus of £75k in
recognition of his achievements during the period 17 December 2019 – 31 May 2020. Upon completion of his time as Interim Executive Chairman Mr Ross was paid a further one-off bonus
of £80k in recognition of his achievements during the period.

4. Mark Rothera received an annual allowance of £8k in 2020 and a one-off payment of £10k in respect of legal fees.

Notes to the remuneration table
(a) This is the amount earned in respect of the financial period.
(b) This is the taxable value of benefits paid or payable in respect of the financial period. For Non-Executive Directors, the taxable benefits comprise travel costs (and the gross-up for

associated income tax and employees’ National Insurance Contributions which will be settled on behalf of the Non-Executive Directors) for attendance at Board meetings.

(c) This is the total bonus earned under the annual bonus scheme in respect of the financial year (despite being paid in the following financial year, following determination of final outcomes).
(d) The amount shown relates to the market value of the LTIP awards vesting during the year using the Company’s AIM closing price at the end of the quarter in which the award vested less

associated exercise price. The amount of these awards attributable to share price appreciation was £418k and £431k for each of Giles Campion and Iain Ross respectively, calculated as the
difference between the AIM closing price at the end of the quarter in which the award vested and the associated exercise price.

(e) The amount shown relates to Company contributions to the defined contribution scheme, plus any cash in lieu.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCE

Remuneration Committee report (continued)

Annual performance bonus – 2020
In 2020, all employees were eligible for an annual discretionary cash bonus, whereby performance objectives are established at the beginning of
the financial year by reference to suitably challenging corporate goals.

In relation to the Directors, Mark Rothera’s bonus was fixed at 60% of salary for 2020. Giles Campion’s on-target bonus for 2020 was 50% of
salary, with a maximum potential of 60%. Iain Ross was paid a one-off bonus of £75k in respect of services rendered 17 December 2019 –
31 May 2020. Upon completion of his time as Interim Executive Chairman Mr Ross was paid a further one-off bonus of £80k in respect of
services rendered during the remainder of his time in this Executive role.

For all other staff (other than the Executive Directors and Non-Executive Directors) the maximum bonus opportunities ranged from 8% to 40%
of salary, depending on grade. Bonus payments are not pensionable.

For 2020 for all staff (other than the Executive Directors and Non-Executive Directors) 50% of the annual bonus was by reference to corporate
goals, and 50% to individual goals. In the future, the Committee expects the percentage attributable to individual goals to increase for employees
(excluding the Executive Directors).

In 2020, for Mark Rothera 100% of his annual bonus was by reference to corporate goals. For Giles Campion 50% of his annual bonus was
by reference to corporate goals, and 50% to individual goals. The achievement against the scorecard of corporate goals was as follows:

Pipeline

Finance

Target

Achieve planned targets for the development of specified
existing and new SLN assets and extra hepatic research
partnership milestone

Maintain a cash runway, secure additional funding and
adherence to budget

Business development/Corporate development

Secure high value business development deal

Build a professional, compliant, scalable and high
performing organisation

Project management culture, build capabilities to deliver
strategic objectives and build/automate business processes

Investor relations/Communications

Based on investor relations and capital market activities

Sub-total

Application of discretionary additional targets
(as described below)

Total

Weighting
%

2020
achievement
%

35.0

25.0

7.5

100.0

–

15.0

25.0

7.5

6.0

88.5

11.5

100.0

Achievement against objectives is given careful consideration by the Committee prior to finalisation. The Committee exercised discretion in its
assessment of the performance for 2020 by additionally recognising the successful Nasdaq listing in September 2020 and Silence’s response to
the COVID pandemic. In doing so it adjusted the overall scorecard achievement in respect of the Nasdaq listing and COVID response by 5.0% and
6.5% respectively as shown in the table above.

The Committee reviewed the formulaic outcome of the scorecard and concluded that the scorecard outcome, as shown above, reflected the
performance of the Executive Directors in the year. The resulting annual bonus awards under the Policy, i.e. bonus awards of up to 100% of salary
payable in cash, are as follows:

Mark Rothera1

Giles Campion2

Bonus
scorecard
Outcome
£000s

Maximum
opportunity
Cash amount
£000s

107

% of salary

60%

55%

% of salary

60%

1. Appointed as a Director (Chief Executive Officer) on 14 September 2020. Mark Rothera’s bonus was fixed for 2020 at 60% of salary.
2. Appointed as a Director of the Company on 9 June 2020.

Scheme interests
During the year ended 31 December 2020, the Executive Directors were awarded conditional share awards under the LTIP scheme, details of the
which are summarised in the table below. LTIP awards were granted under the Silence Therapeutics plc 2018 Non-Employee Long Term Incentive
Plan or the Silence Therapeutics plc 2018 Employee Long Term Incentive Plan as applicable.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCE
Scheme interests
Executive Directors’ share awards

Individual

Iain Ross

Mark Rothera

Giles Campion

Date of
grant

06/10/2019

21/05/2020

14/09/2020

At Jan 1
2020

250,000

–

Awarded

–

150,000

350,000

At Dec 31
2020

250,000

150,000

350,000

1,800,000

03/06/2019

200,000

06/10/2019

15,000

228,083

456,917

–

200,000

15,000

228,083

456,917

Gain on
exercises
during the
year
(£000s)

Earliest
date of
exercise

Last
date of
exercise

– 06/01/2020 06/10/2029

– 25/04/2022 20/05/2030

– 21/08/2020 20/05/2030

– 14/09/2021 14/09/2030

– 02/06/2022 02/06/2029

– 06/10/2022 06/10/2029

– 06/01/2020 06/10/2029

Exercise
price
(Pence)

60.00

190.00

5.00

440.00

468.00

5.00

183.00

60.00

190.00

Scheme interests awarded in 2020

Iain Ross

Mark Rothera

Date of
grant

21/05/2020

Number
awarded

150,000

350,000

14/09/2020

1,800,000

Exercise
price

5.00

440.00

468.00

Face value
(£000s)

Vesting
schedule

76,350

25,900

82,800

Note 1

Note 2

1. Iain Ross’ share options granted in May 2020 vest over three years with a one year cliff and equal quarterly instalments thereafter subject to the meeting of specified performance

conditions based on share price targets. 50,000 were related to the Nasdaq listing and vested as soon as the share price remained over £4.40 for 30 calendar days.

2. Mark Rothera was granted 1,800,000 share options in September 2020, 450,000 of which vest on 14 September 2021 with the remaining 1,350,000 vesting in 12 equal quarterly tranches

of 112,500 each between September 2020 and June 2023. These awards are not subject to any performance conditions.

Directors’ interests in shares at 31 December 2020

Director

Current Directors
Mark Rothera

Giles Campion

Iain Ross

Alistair Gray

Dave Lemus

James Ede-Golightly

Dr. Steven Romano

Options

Total shares
owned
outright plus
vested options

Shares
owned
outright

Percentage
of issued
share capital

Vested
but not
exercised

Unvested but
subject to
performance

Unvested
and not
subjected to
performance1

17,100

243,277

316,617

9,903

6,876

3,000

17,100

14,945

54,443

9,903

6,876

3,000

14,500

0.02%

0.07%

0.01%

0.00%

0.02%

–

228,332

262,174

–

1,800,000

352,056

173,080

319,612

564,746

–

1. Options unvested and not subject to performance exclude those options that will only vest if a floor condition is met.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCE

Remuneration Committee report (continued)

Unaudited information
Performance graph and table
The following graph shows Silence’s cumulative Total Shareholder Return (TSR) over the last five financial years relative to the FTSE AIM All
Share Index and the Nasdaq Biotech Index. These two indices were chosen due to Silence’s listing on both exchanges and the sector in which
it operates. For the period from December 2015 to August 2020 Silence Therapeutics plc data relates to AIM TSR, and from September 2020
(the month of the Silence’s listing on Nasdaq) the data relates to Nasdaq TSR (as show by the separate line).

TSR is defined as the return on investment obtained from holding a company’s shares over a period. It includes dividends paid, the change in
capital value of the shares and any other payment made to or by shareholders within the period.

Source: Investec

350

300

250

200

150

100

Dec 15

Jun 16

Dec 16

Jun 17

Dec 17

Jun 18

Dec 18

Jun 19

Dec 19

Jun 20

Dec 20

AIM all share

Nasdaq Biotech Index

Silence Therapeutics AIM

Silence Therapeutics Nasdaq

Aligning Pay with Performance
CEO remuneration compared with annual growth in TSR:

The total 2020 remuneration figure for the CEO (Mark Rothera) is shown in the table below, along with the value of bonuses paid in respect of
the year, and LTIP vesting, as a percentage of the maximum opportunity. As this is the first year reported since listing on Nasdaq and therefore
the first year for which this disclosure is required, it is not possible to provide meaningful comparative data. However, full disclosure of the year
on year movement will be provided in future remuneration reports.

Total remuneration

Actual bonus as a % of the maximum

Actual share award vesting as % of the maximum

Mark Rothera
£000s

221

67%

n/a

Percentage change in remuneration of the Directors and employees
Set out below is the change over the prior period in base salary, benefits, pension and annual performance bonus for the CEO, for all the directors
and the Company’s employees. Only directors in office during any part of the 2020 year have been included below. The percentage change for
Mark Rothera will be disclosed from next year.

Iain Ross

Alistair Gray

Dave Lemus

James Ede-Golightly

Dr. Steven Romano

All employees excl. Directors

Salary % change
2019 vs 2020

Benefits % change
2019 vs 2020

Bonus % change
2019 vs 2020

See note 1

13%

–100%

See note 2

See note 3

1. In 2019 Iain Ross was appointed as a Director (Non-Executive Chairman) on 25 April 2019. He was subsequently appointed as Executive Chairman on 17 December 2019. Base salary
includes additional remuneration of £9k (exclusive of VAT) relating to duties undertaken in December 2019 as Executive Chairman. This amount was billed by Iain Ross’ consultancy
company (Gladstone Consulting Partnership) in January 2020. Iain Ross will continue to be paid £15k (exclusive of VAT) on a monthly basis until one month following the appointment of a
new CEO. In 2020, in recognition of the additional executive responsibilities and in addition to his monthly Chairman/Director fees of £10k per month Mr Ross was paid an additional
remuneration of £15k per month invoiced through his consultancy firm Gladstone Consultancy Partnership for the period 1 January to – 31 May 2020. In the absence of a permanent CEO

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEappointment, on 1 June Mr Ross signed an employment contract immediately terminable one month following the appointment of a new CEO. For the period 1 June – 14 October 2020
Mr Ross was paid £30k per month plus benefits including a contribution to pension and private healthcare insurance of £2.5k. On 14 September 2020 Mr Ross reverted to his role as
Non-executive Chairman and from one month after this date reverted to his monthly fees of £10k per month. On signing the employment agreement effective 1 June 2020 Mr Ross was
paid a one-off bonus of £75k in respect of services rendered 17 December 2019 – 31 May 2020. Upon completion of his time as Interim Executive Chairman Mr Ross was paid a further
one-off bonus of £80k in respect of services rendered during the remainder of his time in this Executive role.

2. Alistair Gray and Dave Lemus received no benefits in 2020. James Ede-Golighty and Dr Steven Romano received no benefits in either 2019 or 2020.
3. Iain Ross was not entitled to a bonus in respect of 2019. Alistair Gray, Dave Lemus, James Ede-Golightly and Dr Stephen Romano were not entitled to bonuses in respect of either 2019

or 2020.

Relative importance of spend on pay
Total revenue and research and development expenditure have been selected as comparators for the employee costs as these two financial
measures are strong indicators of the activity within the Company and of its performance.

Total employee remuneration (£000s)

Average number of employees

Revenue (£000s)

Research and development expenditure (£000s)

2019
£000

7,198

244

13,336

2020
£000

12,079

5,479

20,209

Change
£000

68%

41%

2145%

52%

No dividends distributions or share buyback transactions occurred in either 2020 or 2019.

Statement of Implementation of Policy in 2021
Base salary: The January 2021 target base salary increase was 3% for all eligible employees, being those that had joined the business prior to
1 October 2020. There was no change in Mark Rothera’s base salary and a 5% increase in base salary for Giles Campion.

Pension and benefits: In 2021, Executive Directors are eligible for the same benefits as provided to all senior employees. The Executive Directors
are each entitled to the maximum employer pension contribution of 10% of their respective base salary which is paid into a defined contribution
pension scheme / paid in cash in lieu of pension contributions.

Annual performance bonus: For 2021, the Executive Directors’ annual cash bonus target payouts will be 60% and 50%. of annual base salary for
Mark Rothera and Giles Campion respectively with maximum payouts of 90% and 60% respectively. The Committee considers overall corporate
performance and individual performance when determining the final bonus amount to be awarded to an Executive Director. Performance will be
tested against targets set by the Committee at the start of the year and will comprise 100% corporate goals for Mark Rothera and 50% corporate
and 50% individual goals for Giles Campion. The Company’s 2021 corporate objectives are weighted as follows:

The following tables sets out the Company’s performance objectives for 2021.

Objective

SLN124 milestone delivery

SLN360 milestone delivery

3 Manufacturing processes

Systems Improvement

5 New GalNAc target identification

6 Achievement of financial targets

7 New business development deals

Secure additional funding

TOTAL

Weighting

15%

25%

10%

15%

100%

Specific targets are commercially sensitive and therefore are not disclosed in advance. However, full details of the targets and performance
against them will be disclosed when they are no longer considered commercially sensitive.

The Chairman and NEDs will continue to be paid their current level of fees, but consideration is being given to the introduction of NED LTIPs
in lieu of reduced fees.

Payments for loss of office (audited information)
There was no loss of office payments in 2020.

Payments to past Directors (audited information)
David Horn-Solomon ceased to be a Director on 17 December 2019. During 2020 he was paid the following amounts, each of which was accrued
for in 2019: holiday pay in respect of the year ended 31 December 2019 of £16k, pay in lieu of notice of £187k, tax reimbursements of £25k and
accommodation benefits of £65k.

James Ede-Golightly
Chair of the Remuneration Committee
30 March 2021

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEDirectors’ report

The Directors present their report and the audited financial statements of the Group for the year ended 31 December 2020.

Principal activities

The Company has full control and ownership of the following subsidiaries:

• Silence Therapeutics GmbH

• Silence Therapeutics (London) Ltd

• Innopeg Ltd

• Silence Therapeutics Inc.

The Company, Silence Therapeutics GmbH, Silence Therapeutics (London) Ltd, Innopeg Ltd, and Silence Therapeutics Inc. are collectively
referred to as the ‘Group’.

The principal activity of the Group is focused on the discovery, delivery and development of RNA therapeutics.

Statement of Directors’ responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group
financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and company
financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, and applicable law).

Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the group and company and of the profit or loss of the group for that period. In preparing the financial statements, the directors
are required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable international accounting standards in conformity with the requirements of the Companies Act 2006 and international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed for
the group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the company financial
statements, subject to any material departures disclosed and explained in the financial statements;

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue

in business.

The directors are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s
transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that
the financial statements comply with the Companies Act 2006.

The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors’ confirmations

In the case of each director in office at the date the directors’ report is approved:

• so far as the director is aware, there is no relevant audit information of which the group’s and company’s auditors are unaware; and

• they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information

and to establish that the group’s and company’s auditors are aware of that information.

Review of the business and future developments

The strategic report describes research and development activity during the year as well as outlining future planned developments. Details of the
financial performance, including comments on the cash position and research and development expenditure, are given in the financial review.
Principal risks and uncertainties are given in the strategic report.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEHealth, safety and environment

The Directors are committed to ensuring the highest standards of health and safety, both for their employees and for the communities within
which the Group operates and also minimising the impact of the Group’s operations on the environment; see the detailed statement in the
Corporate Social Responsibility section of the strategic report.

Employees

The Directors are committed to continuing involvement and communication with employees on matters affecting both employees and the
Group. Management conducts regular meetings with all employees on site.

Political and charitable contributions

The Group did not make any political donations or incurred any political expenditure during the year (2019: £nil). The Group made total charitable
donations of £49k during the year (2019: £25k).

Research and development

In 2020, the Group spent £20.2m on research and development (2019: £13.3m). See the Financial review on page 15 for more information.

Subsequent events

The Group appointed Dr. Michael H. Davidson, a leading expert in lipidology and cardiovascular clinical trials, to our Board of Directors as
Non-Executive Director, and Craig Tooman to our Executive Leadership Team as Chief Financial Officer.

The Group completed an oversubscribed $45m private placement led by top-tier US institutional healthcare funds.

Financial risk management

A description of financial risk management is set out in note 29 to the financial statements.

Results and dividends

The Group recorded a loss for the year before taxation of £36.0m (2019: £22.9m). The loss after tax for the year was £32.5m (2019: £19.6m).
Further details are given in the financial review. The Group is not yet in a position to pay a dividend and the loss for both periods has been added
to accumulated losses.

Indemnification of Directors

Qualifying third party indemnity provisions (as defined in the Companies Act 2006) are in force for the benefit of Directors and former Directors
who held office during 2020 and up to the signing of the annual report.

Directors

The Directors who served at any time during the year or since the year end were:

Director

Iain Ross

Mark Rothera (appointed as a Director: 14 September 2020)

Giles Campion (appointed as a Director: 9 June 2020)

Alistair Gray

Dave Lemus

James Ede-Golightly

Dr. Steven Romano

The interests of the Directors in the share options of the Company are set out in the Directors’ remuneration report.

Job title

Chairman

Chief Executive Officer

Executive Director

Non–Executive

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEDirectors’ report (continued)

Substantial interests

At 31 December 2020 the Company had been informed of the following substantial interests of over 3% in the issued share capital of
the Company:

Shareholder

Richard Griffiths

Robert Keith

Lombard Odier Asset Management

Robert Quested

Societe Generale

Mallinckrodt

Going concern

Number
of shares

Percentage
of issued
share capital

18,637,085

12,307,924

9,466,673

8,874,417

7,782,237

5,062,167

23.8%

15.7%

12.1%

11.3%

9.9%

6.5%

Based on the Directors’ current forecasts and plans and, considering the cash, cash equivalents and term deposit at 31 December 2020, together
with the unconditional cash receipt in May 2021 under the AstraZeneca plc agreement and the $45m of new equity raised in February 2021, the
Directors are confident that the Group has sufficient funding for the foreseeable future and at least one year from the date of approval of the
financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

This report was approved by the Board of Directors and signed on its behalf by:

Mark Rothera
Chief Executive Officer
30 March 2021

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEStatement of Directors’ responsibilities
in respect of the financial statements

The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulation.

The Directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared the
Group financial statements in accordance with international
accounting standards conformity with the requirements of the
Companies Act 2006 and Company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 Reduced
Disclosure Framework, and applicable law).

Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the group and company and of the profit or
loss of the group for that period. In preparing the financial statements,
the directors are required to:

• select suitable accounting policies and then apply them consistently;

• state whether international accounting standards in conformity with
the requirements of the Companies Act 2006 have been followed
for the group financial statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed for the
company financial statements, subject to any material departures
disclosed and explained in the financial statements;

• make judgements and accounting estimates that are reasonable and

prudent; and

The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to
ensure that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the
company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.

Directors’ confirmations

In the case of each Director in office at the date the directors’ report
is approved:

• so far as the Director is aware, there is no relevant audit information

of which the Group’s and Company’s auditors are unaware; and

• they have taken all the steps that they ought to have taken as a

Director in order to make themselves aware of any relevant audit
information and to establish that the Group’s and Company’s
auditors are aware of that information.

• prepare the financial statements on the going concern basis unless it

is inappropriate to presume that the group and company will
continue in business.

Mark Rothera
Chief Executive Officer
30 March 2021

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | CORPORATE GOVERNANCEIndependent auditors’ report
to the members of Silence Therapeutics plc

Report on the audit of the financial statements

Opinion

In our opinion:

• Silence Therapeutics plc’s group financial statements and company financial statements (the “financial statements”) give a true and fair view of
the state of the group’s and of the company’s affairs as at 31 December 2020 and of the group’s loss and the group’s cash flows for the year
then ended;

• the group financial statements have been properly prepared in accordance with international accounting standards in conformity with the

requirements of the Companies Act 2006;

• the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice

(United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Accounts 2020 (the “Annual Report ”), which comprise: the
consolidated and company balance sheets as at 31 December 2020; the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of cash flows, and the consolidated and company statements of changes in equity for the
year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in
the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.

Our audit approach

Overview

• The scope of our work covered all of the Group’s operating units being Silence Therapeutics plc, Silence

Therapeutics GmbH and Silence Therapeutics Inc.

Audit scope

• Our scope provided us with coverage of 99.7% of the Group’s loss before tax and 98.2% of the Group’s

net assets.

Key audit
matters

• Accounting for the collaboration agreement with AstraZeneca (group and parent).

• Revenue recognition under the Mallinckrodt collaboration agreement (group and parent).

• Accounting for research and development expenditure (group and parent).

• Risks posed by COVID-19 (group and parent).

• Carrying value of the investment in Silence Therapeutics GmbH (parent).

Materiality

• Overall group materiality: £1,357,168 (2019: £1,145,000) based on 3.8% of loss before tax.

• Overall company materiality: £1,215,000 (2019: £1,085,000) based on 5% of loss before tax, restricted by an

allocation of group materiality.

• Performance materiality: £1,017,876 (group) and £911,250 (company).

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined in the Auditors’ responsibilities for the audit of the financial statements section, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSBased on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related
to patent protection, data privacy, product safety and regulatory compliance, and we considered the extent to which non-compliance might have
a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the
financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of
the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate
journal entries to manipulate financial results, misappropriation of cash and potential management bias in accounting estimates. Audit procedures
performed by the engagement team included:

• Discussions with management and internal legal counsel including consideration of known or suspected instances of non-compliance with laws

and regulations and fraud.

• Review of minutes of meeting with the Board of Directors.

• Obtaining direct confirmation from a sample of third party contract research organisations (CROs) that clinical trials are being performed

on behalf of the company as part of confirming that the Company’s cash was not being misappropriated for other purposes.

• Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations and journals posted

by senior management.

• Challenging assumptions made by management in their significant accounting estimates, in particular in relation to the recognition

of revenue related to collaboration agreements.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.

This is not a complete list of all risks identified by our audit.

Accounting for the collaboration agreement with AstraZeneca (Group and Company), Revenue recognition under the Mallinckrodt collaboration
agreement (Group and Company) and Carrying value of the investment in Silence Therapeutics GmbH (Company) are new key audit matters this
year. Accounting for the collaboration agreement with Mallinckrodt (Group and Company) , which was a key audit matter last year, is no longer
included because of the fact that assessment of all the significant judgements and the accounting implication were completed last year which are
not expected to change. Otherwise, the key audit matters below are consistent with last year.

Key audit matter

How our audit addressed the key audit matter

Accounting for the collaboration agreement with AstraZeneca
(Group and Company) (Accuracy assertion)

The Group entered into a collaboration agreement with AstraZeneca in
March 2020. Under the agreement AstraZeneca obtained research
services and an exclusive licence to certain of Silence’s patents and
knowhow (IP) for specific gene targets (up to ten targets).

The agreement included a fixed consideration of $60m ($20m of which
was paid immediately with the remaining $40m due within one year):
on subsequent milestones being achieved, in relation to the
reimbursement of FTE costs and for the recharge of direct costs
associated with certain research activities.

At the same time AstraZeneca entered into an investment agreement
with the Group, subscribing for new ordinary shares in the Company
for total consideration of $20m.

The main areas of judgement were the assessment of the performance
obligations included in the contract and the allocation of the upfront
consideration between the performance obligations, including
assessing whether any of the amounts received for the issue of
ordinary shares related to the performance obligations.

We obtained and reviewed the collaboration and investment
agreements and the associated accounting paper prepared
by management.

We agreed the upfront and subsequent receipts for milestones to bank
statements. We also agreed the remaining $40m due from the initial
fixed consideration to the contract and that it was non-refundable. We
agree with management’s conclusion that this should be recorded as
receivable as at 31 December 2020.

We assessed management’s paper, with support from our technical
experts, which set out the accounting for the collaboration agreement
under IFRS 15 to ensure that the accounting treatment adopted was
appropriate. Specifically, we:

• Assessed the judgement that the licence for the gene target and the

performance of related research and development activities
associated to each asset are not distinct performance obligations
and therefore that there are ten performance obligations in total
(one for each target);

• Assessed the allocation of the upfront receipt between the ten

performance obligations, by holding discussions with management
to understand how the contract was negotiated, considering similar
multi-asset licensing deals in the industry and agreeing the amounts
paid to supporting documentation; and

• Assessed whether the amounts received for the ordinary shares

represented their fair value by considering the market price at the
time, along with other rights as part of the investment.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSIndependent auditors’ report
to the members of Silence Therapeutics plc (continued)

Key audit matter

How our audit addressed the key audit matter

Revenue recognition under the Mallinckrodt collaboration agreement
(Group and Company) (Accuracy assertion)

We tested the calculation methodology for appropriateness
and accuracy.

The Group entered into a collaboration agreement with Mallinckrodt in
2019. Under the agreement Mallinckrodt obtained research services
and an exclusive licence to certain of Silence’s patents and knowhow
(“IP”) for specific gene targets (up to three targets). The agreement
included a fixed consideration of $20m (which was paid immediately),
with further amounts due: on subsequent milestones being achieved,
in relation to the reimbursement of FTE costs and for the recharge of
direct costs associated with certain research activities. In 2019 it was
concluded that the licence for the gene target and the performance of
related research and development activities associated with each
target were not distinct performance obligations and therefore that
there were three performance obligations (one for each target). The
transaction price was allocated to the performance obligations based
on relative standalone selling price.

In 2020 management performed a calculation to assess the amount of
revenue that should be recognised in relation to the collaboration
agreement, multiplying the transaction price by the percentage of
completion of each specific project.

Accounting for research and development expenditure (Group and
Company) (Accuracy assertion)

The Group’s research and development spend in the year amounted to
£20.2m with accruals of £4.8m and prepayments of £3.9m recognised
at the year end. A significant portion of the expense arises through the
Group outsourcing research to third party research organisations. At
the year-end management are required to calculate the costs
recognised based on the progress of the research organisations
contract versus the amounts billed to date.

Due to the nature of the research it is often difficult to estimate the
length of time a particular project is going to take. Outsourcing to
research organisations restricts visibility and the ability to monitor the
progression of a piece of research, or a project’s stage of completion.

As a result, it can be difficult for the Company to measure what costs
have been incurred in relation to a project at a particular point in time
and as such, based on billings received, whether project accruals and
prepayments recorded are reasonably estimated. Our audit risk is
focussed on whether the relevant expenditure has been appropriately
included in the income statement and whether prepayments and
accruals are appropriately calculated and recognised.

In relation to the transaction price:

• we agreed the fixed element back to the original agreement;
• we confirmed that the element of the transaction price related to

milestones included only those milestones that had been received;
and

• we agreed that the total expected revenue from FTE and other
recharges had been derived from the minutes of the latest Joint
Steering Committee meetings with Mallinckrodt. For the FTE and
other recharges made to date, we agreed back to invoices raised
and, where relevant, to cash receipts.

In relation to the percentage of completion calculation:

• we obtained a listing of internal and external costs incurred to date

and tested a sample of these costs back to supporting
documentation, including invoices and, where relevant, cash
payments; and

• we obtained management’s estimate of future internal and external
costs and challenged the basis for their estimates. In doing so we
confirmed that these costs had also been derived from the minutes
of the latest Joint Steering Committee meetings with Mallinckrodt.

For all projects above £100k in value, we obtained management’s
calculations of the costs, accrual and prepayment position as at
31 December 2020, verifying the mathematical calculation used.

For a sample of projects:

• We obtained the underlying contracts and work plans and

understood the basis on which the third party confirmation had
been provided, and that management had recognised the
appropriate costs;

• We obtained confirmations from relevant internal project managers

to test that the progress confirmed by the third party research
organisations was in line with management’s records;

• We tested the status of projects by reading the internal minutes of
meetings held between Silence and the research organisations
(where available) to discuss the progress of the sampled projects and
verified that there was no contradictory evidence available; and
• We independently confirmed with the CROs for the three largest

contracts by value to verify the authenticity of the external
confirmations provided to us by management and to confirm the
status of the project.

For a sample of invoices listed in management’s calculation, we tested
back to the actual invoice and verified that the cost description in the
invoice matched work streams included in management’s schedule and
were supported by the underlying third party statement of work.

In addition, to test the completeness of accruals and prepayments, a
selection of invoices was obtained from the accounts payable listing at
year end and checked to see if these were included in project sheets
to ensure completeness of the calculation. We also tested a selection
of completed CRO contracts to the issuance of the final report and
checked that no work expenditure had been incurred on contracts
signed after the year end.

We also performed look-back procedures to assess the outcome
of prior year accruals.

We found no material exceptions during our testing.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSKey audit matter

How our audit addressed the key audit matter

Risks posed by COVID-19 (Group and Company) (All assertions)

The Directors have considered the risks posed by COVID-19, as set out
in the strategic report. Given the nature of the Group’s operations, the
risks are assessed as being in relation to the risk of delaying the
commencement of clinical trials for SLN124 and SLN360.

Carrying value of the investment in Silence Therapeutics GmbH
(Company Valuation assertion)

As at 31 December 2020 the parent company held an investment in its
wholly owned subsidiary Silence Therapeutics GmbH (‘GmbH’) of
£23.3m as well as a long-term receivable from GmbH of £13.6m.
A provision of £14.3m had been recorded against the investment
balance in previous years, resulting in a net investment in GmbH of
£9.0m, plus the loan balance.

Management have performed an impairment assessment on the net
investment in accordance with IAS 36 (Impairment of assets) and
recorded an impairment of £5.9m in the current year.

Judgement is required in the impairment assessment, specifically
in forecasting the timing and probability of future contractual
milestone receipts.

We read the relevant disclosures in the annual report and checked
their consistency with our knowledge of the business based on our
audit. No exceptions were noted from our testing.

We obtained management’s impairment analysis and gained an
understanding of the key assumptions and judgements underlying the
assessment. We assessed the appropriateness of the methodology
applied and tested the mathematical accuracy of the models, with no
exceptions identified.

We assessed the key assumptions, including the timing and probability
of future milestones receipts by:

• discussing the status of project with the project managers;
• tracing the milestones to the original collaboration agreements; and
• confirming that the timing of future receipts are consistent with our

review of board minutes and project status meetings.

We concluded management’s recognised impairment in relation
to investment carrying value is appropriate.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate.

The Group has two main operating units (Silence Therapeutics plc and Silence Therapeutics GmbH) and we performed a full scope audit on each
unit. The audit of both the units was performed by the group engagement team, with involvement of a team member based in Germany who
assisted with certain aspects of the audit of Silence Therapeutics GmbH.

Our scope provided us with coverage of 99.7% of Group’s loss before tax and 98.2% of Group’s net assets.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the
financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall materiality

£1,357,168 (2019: £1,145,000).

How we determined it

3.8% of loss before tax.

Financial statements – group

Rationale for benchmark applied

Although the Group is currently loss making its goal is to
be a profit making business and therefore we applied a
profit related benchmark.

Financial statements – company

£1,215,000 (2019: £1,085,000).

5% of loss before tax, restricted by an allocation
of group materiality.

Although the Company is currently loss
making its goal is to be a profit making
business and therefore we applied a profit
related benchmark.

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of
materiality allocated across components was £810,000 and £1,215,000. Certain components were audited to a local statutory audit materiality
that was also less than our overall group materiality.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and
extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% of overall materiality, amounting to £1,017,876 for the group financial statements and £911,250 for the company
financial statements.

In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSIndependent auditors’ report
to the members of Silence Therapeutics plc (continued)

We agreed with those charged with governance that we would report to them misstatements identified during our audit above £67,858 (group
audit) (2019: £57,000) and £60,750 (company audit) (2019: £46,000) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern basis of
accounting included:

• Challenging the underlying data and key assumptions used to make the going concern assessment, and evaluating the directors’ plans for

future actions in relation to their going concern assessment.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group’s and the company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the company’s
ability to continue as a going concern.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual report other than the financial statements and our auditors’ report thereon.
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.

Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ report for the
year ended 31 December 2020 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Directors’ report.

Directors’ Remuneration
In our opinion, the part of the Remuneration Committee report to be audited has been properly prepared in accordance with the Companies
Act 2006.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSResponsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to
target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a
conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not

visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the company financial statements and the part of the Remuneration Committee report to be audited are not in agreement with the accounting

records and returns.

We have no exceptions to report arising from this responsibility.

Sam Taylor (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cambridge
30 March 2021

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSConsolidated income statement
year ended 31 December 2020

Revenue

Cost of sales

Gross (loss)/profit

Research and development costs

Administrative expenses

Other (losses)/gains – net

Operating loss

Finance and other expenses

Finance and other income

Loss for the year before taxation

Taxation

Loss for the year after taxation

Note

Year ended 31 December

2020
£000s

5,479

(3,762)

1,717

(20,209)

(13,983)

(3,372)

(35,847)

(323)

129

(36,041)

3,494

(32,547)

2019
£000s

244

–

244

(13,336)

(9,642)

–

(22,734)

(163)

(22,870)

3,288

(19,582)

Loss per ordinary equity share (basic and diluted)

(39.8) pence

(26.1) pence

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSConsolidated statement of comprehensive income
year ended 31 December 2020

Loss for the year after taxation

Other comprehensive expense, net of tax:

Items that may subsequently be reclassified to profit and loss:

Foreign exchange differences arising on consolidation of foreign operations

Total other comprehensive income/(expense) for the year

Total comprehensive expense for the year

Note

Year ended 31 December

2020
£000s

2019
£000s

(32,547)

(19,582)

472

(411)

(32,075)

(19,993)

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS

Consolidated balance sheet
at 31 December 2020

Non-current assets

Property, plant and equipment

Goodwill

Other intangible assets

Financial assets at amortised cost

Current assets

Cash and cash equivalents

Derivative financial instrument

Financial assets at amortised cost – term deposit

Financial asset at amortised cost – other

R&D tax credit receivable

Other current assets

Trade receivables

Non-current liabilities

Contract liabilities

Current liabilities

Contract liabilities

Trade and other payables

Lease liability

Net assets

Capital and reserves attributable to the owners of the parent

Share capital

Capital reserves

Translation reserve

Accumulated losses

Total shareholders equity

Note

31 December

2020
£000s

1,127

8,125

303

9,572

27,449

1,492

10,000

–

3,536

4,616

29,306

76,399

2019
£000s

611

7,692

275

8,612

13,515

–

20,000

3,060

885

37,465

(51,337)

(15,515)

(17,042)

(8,192)

(341)

(25,575)

9,059

(2,478)

(6,888)

(287)

(9,653)

20,909

4,165

3,919

186,891

167,243

2,218

1,746

(184,215)

(151,999)

9,059

20,909

The financial statements on pages 50 to 76 were approved by the Board on 30 March 2021 and signed on its behalf.

Mark Rothera
Chief Executive Officer
Company number: 02992058

The accompanying accounting policies and notes form an integral part of these financial statements.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS

Consolidated statement of changes in equity
year ended 31 December 2020

Note

24/26

At 1 January 2019

Recognition of share-based payments

Options exercised in the year

Proceeds from shares issued

Transactions with owners recognised directly in equity

Loss for year

Other comprehensive expense

Foreign exchange differences arising on consolidation of
foreign operations

Total comprehensive expense for the year

At 31 December 2019

Recognition of share-based payments

Options exercised in the year

Proceeds from shares issued

Transactions with owners recognised directly in equity

Loss for year

Other comprehensive income

Foreign exchange differences arising on consolidation of
foreign operations

Total comprehensive expense for the year

At 31 December 2020

Share
capital
£000s

3,554

–

365

–

Capital
reserves
£000s

Translation
reserve
£000s

Accumulated
losses
£000s

Total
equity
£000s

163,121

2,157

(133,787)

35,045

584

(1,370)

4,908

4,122

–

1,370

–

1,370

584

–

5,273

5,857

(19,582)

(411)

–

(411)

(19,582)

(19,993)

3,919

167,243

1,746

(151,999)

–

246

–

4,395

(331)

15,584

19,648

–

20,909

4,395

–

15,830

20,225

–

331

–

331

–

(32,547)

472

–

472

(32,547)

(32,075)

4,165

186,891

2,218

(184,215)

9,059

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSConsolidated statement of cash flows
year ended 31 December 2020

Cash flow from operating activities

Loss before tax

Depreciation charges

Amortisation charges

Charge for the year in respect of share-based payments

Net foreign exchange loss

Gain on derivative financial instrument

Finance and other expenses

Finance and other income

(Gain)/loss on disposal of property, plant and equipment

Revaluation of trade and other receivables related to contract liabilities

Increase in trade and other receivables

Increase in other current assets

Decrease in current financial assets at amortised cost – other

Increase in trade and other payables

Increase in contract liabilities

Cash spent on operations

R&D tax credits received

Net cash (outflow)/inflow from operating activities

Cash flow from investing activities

Year ended 31 December

2020
£000s

2019
£000s

(36,041)

(22,870)

476

4,395

4,864

(1,492)

323

(129)

(3)

(4,864)

(29,302)

(3,731)

1,303

50,386

(13,794)

3,018

(10,776)

452

584

–

163

(27)

–

(4)

3,058

17,993

(581)

2,308

1,727

Net redemption/(purchase) of financial assets at amortised cost – term deposits

10,000

(15,000)

Interest received/(paid)

Purchase of property, plant and equipment

Purchase of intangible assets

Proceeds from sale of property, plant and equipment

Net cash inflow/(outflow) from investing activities

Cash flow from financing activities

Repayment of lease liabilities

Proceeds from issue of share capital

Net cash inflow from financing activities

Increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at start of year

Effect of exchange rate fluctuations on cash and cash equivalents held

Cash and cash equivalents at end of year

The accompanying accounting policies and notes form an integral part of these financial statements.

129

(511)

(3)

(6)

(9)

–

9,618

(15,015)

(402)

15,830

15,428

14,270

13,515

(336)

–

5,273

(8,015)

21,494

27,449

13,515

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSNotes to the consolidated financial statements
year ended 31 December 2020

1. General information

1.1 Group
Silence Therapeutics plc and its subsidiaries (together the ‘Group’) are primarily involved in the discovery, delivery and development of RNA
therapeutics. Silence Therapeutics plc, a public company limited by shares registered in England and Wales, with company number 02992058,
is the Group’s ultimate parent Company. The Company’s registered office is 27 Eastcastle Street, London, W1W 8DH and the principal place
of business is 72 Hammersmith Road, London, W14 8TH.

2. Principal accounting policies

2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS (International Financial Reporting Standards) as issued by the
IASB (International Accounting Standards Board). The consolidated financial statements have been prepared under the historical cost convention
as modified by revaluation to fair value of the derivative financial instrument. The accounting policies set out below have, unless otherwise
stated, been prepared consistently for all periods presented in these consolidated financial statements. The financial statements are prepared in
sterling and presented to the nearest thousand pounds.

New and amended standards adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020:

> Definition of Material – amendments to IAS 1 and IAS 8

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the
current or future periods.

New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting periods
and have not been early adopted by the Group. These include amendments to IAS1 ‘Presentation of financial statements’ on classification of
liabilities. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable
future transactions.

2.2 Basis of consolidation
The Consolidated financial statements consolidate those of the Company and its controlled subsidiary undertakings drawn up to 31 December
2020. The Group controls an entity when the Group is expected to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. Where necessary, adjustments are made to the financial statements of
subsidiaries to bring accounting policies into line with those used for reporting the operations of the Group. All intra Group transactions,
balances, income and expenses are eliminated on consolidation.

2.3 Going concern
The 2020 coronavirus (COVID-19) pandemic became increasingly prevalent in Europe and the US where the Group’s principal operations are
conducted. Significant restrictions have now been imposed by the governments of those countries where the Group has operations, as well as
the countries of external parties with which we conduct our business. In compliance with these restrictions, the Group and its employees have
adapted to new working arrangements to ensure business continuity as far as is reasonably practicable in the short to medium term. This has so
far proven to be effective, with Management maintaining a strong line of communication with all employees during this period.

The main risk posed to the Group by the pandemic is the potential slowing of Research & Development activities including possible knock-on
delays in clinical trial data and sustained fixed costs during periods of relative inactivity. Whilst this would result in a lengthening of the Group’s
cash runway in the medium term, in the longer term these factors could limit the Group’s ability to meet its corporate objectives. This risk is
mitigated by the receipt by $60m of the unconditional upfront payments in respect of the AstraZeneca collaboration and the $45m from the
private placement, both of which significantly increase the Group’s baseline cash runway.

Based on the Directors’ current forecasts and plans and, considering the cash, cash equivalents and term deposit at 31 December 2020; together
with the unconditional cash receipt in May 2021 under the AstraZeneca plc agreement and the $45m of new equity raised in February 2021, the
directors are confident that the Group has sufficient funding for the foreseeable future and at least one year from the date of approval of the
financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the
strategic report on pages 1 to 19.

2.4 Research and development
The Group recognises expenditure incurred in carrying out its research and development activities in line with management’s best estimation of
the stage of completion of each separately contracted study or activity. This includes the calculation of research and development accruals at
each period to account for expenditure that has been incurred. This requires estimations of the full costs to complete each study or activity and
also estimation of the current stage of completion. In all cases, the full cost of each study or activity is expensed by the time the final report or,
where applicable, product, has been received. Further details on research and development can be found in note 2.11.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS2. Principal accounting policies continued

2.5 Revenue recognition
The Group’s revenue for the year ended 31 December 2020 consists of royalty income and revenue from collaboration agreements.

Royalty income
The Group’s royalty income is generated by a settlement and licence agreement with Alnylam Inc. Under this contract, Alnylam. is obliged to pay
royalties to the Group on the net sales of ONPATTRO™ in the European Union in a manner commensurate with the contractual terms.
Invoices are raised in arrears on a quarterly basis based on sales information provided by Alnylam no later than 75 days after the quarter end.

The royalty exemption under IFRS 15 requires sales-based data. Royalty revenue is recognised based on the level of sales when the related
sales occur.

Revenue from collaboration agreements
We have considered the Mallinckrodt and AstraZeneca contracts and assessed whether the research and development services and licence of
the IP in respect of each target are distinct.

For both contracts we have concluded the license of the intellectual property and the R&D services are not distinct, as both Mallinckrodt and
AstraZeneca cannot benefit from the intellectual property absent the R&D services, as those R&D services are used to discover and develop a
drug candidate and to enhance the value in the underlying intellectual property, indicating that the two are highly interrelated. On this basis, we
have concluded that there is a single performance obligation covering both the R&D services and the license of the intellectual property in
respect of each target (i.e., one for the initial target and one for each additional optioned complement-mediated disease targets which represent
material rights). We recognize revenue over the duration of the contract based on an input method based on cost to cost.

The contracts have multiple elements of consideration (some or all of the following), namely:

• Upfront payments (fixed);

• Subsequent milestone payments (variable);

• FTE costs rechargeable (variable);

• Recharges of direct costs for certain research activities (variable).

The Group’s effort under the contracts continue throughout their entire duration. On this basis revenue is recognised over the contract period
based on costs to completion.

Revenue has been calculated on the following ongoing basis for the year ended 31 December 2020:

• Actual FTE and direct costs incurred up to 31 December 2020 and forecast FTE and direct costs for the remainder of the contract

are determined

• Actual costs incurred up until 31 December 2020 are calculated as a percentage of total contract costs (actual and forecast)

• This percentage is then multiplied by the consideration allocated to the performance obligation in question, thus calculating the cumulative
revenue which is then used to calculate the revenue to be recognised in that six-month period. In the case of the FTE recharges and other
direct cost recharges, the consideration that is multiplied includes all amounts to the end of the contract (including the forecast amounts).
In the case of the upfront and milestones, the consideration that is multiplied is in relation to the upfront and completed milestones only.
Consideration in relation to milestones not yet been achieved is excluded from the calculation.

Forecast costs are monitored each period, with monthly revenue recognised reflecting any changes in forecast or over/under spend in actuals.

Further details of the revenue amounts recognised in the year ended 31 December 2020 can be found in note 3.

2.6 Foreign currency translation
The consolidated financial statements are presented in sterling. The individual financial statements of each Group entity are prepared in the
currency of the primary economic environment in which the entity operates (its functional currency).

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign
currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items
denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income
statement for the year.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including
comparatives) are translated into sterling using exchange rates prevailing on the balance sheet date. Income and expense items (including
comparatives) are translated at the average exchange rates for the year unless individually significant to the Group at which point they are
translated at spot rate. Exchange differences arising, if any, are recognised in equity.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS2. Principal accounting policies continued

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation
and translated at the closing rate.

2.7 Defined contribution pension funds
The contributions payable to defined contribution retirement schemes are recognised as an expense in the period to which they relate. On the
payment of the contribution the Group has no further liability.

2.8 Business combinations
There were no new business combinations as defined by IFRS 3 during 2019 or 2020.

Business combinations which occurred in and after 2010 were accounted for by applying the acquisition method described in IFRS 3 as at the
acquisition date, which is the date on which control is transferred to the Group. In arriving at the cost of acquisition, the fair value of the shares
issued by the Company is taken to be the bid price of those shares at the date of the issue. Where this figure exceeds the nominal value of the
shares, the excess amount is treated as an addition to the merger reserve.

For acquisitions which occurred before 1 January 2010, goodwill represents the excess of the cost of the acquisition over the Group’s interest in
the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. Transaction costs, other
than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were
capitalised as part of the cost of the acquisition.

2.9 Property, plant and equipment
The Group hold no property assets other than leased property assets classified as right-of-use assets. See note 2.14 for further details.

All equipment and furniture is stated in the financial statements at its cost of acquisition less a provision for depreciation.

Depreciation is charged to write off the cost less estimated residual values of furniture and equipment on a straight-line basis over their estimated
useful lives. All equipment and furniture is estimated to have a useful economic life of between three and ten years. Estimated useful economic
lives and residual values are reviewed each year and amended if necessary.

2.10 Goodwill
Goodwill is stated at cost less any accumulated impairment losses; it is allocated to those cash generating units that are expected to benefit from
synergies of the related business combination and represent the lowest level within the Group at which management controls the related cash
flows. Goodwill is not amortised but is tested for impairment annually, or sooner when an indication of impairment has been identified.
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s interest in the net fair value of
the identifiable assets, liabilities and contingent liabilities of the subsidiary at the date of acquisition. On disposal of a subsidiary, the attributable
amount of goodwill is included in the determination of the profit or loss on disposal.

2.11 Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and less accumulated impairment losses.

Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date.
Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Licences and software

10–15 years.

Capitalisation of research and development costs
Costs associated with research activities are treated as an expense in the period in which they are incurred.

Costs that are directly attributable to the development phase of an internal project will only be recognised as intangible assets provided they
meet the following requirements:

• an asset is created that can be separately identified;

• the technical feasibility exists to complete the intangible asset so that it will be available for sale or use and the Group has the intention and

ability to do so;

• it is probable that the asset created will generate future economic benefits either through internal use or sale;

• sufficient technical, financial and other resources are available for completion of the asset; and

• the expenditure attributable to the intangible asset during its development can be reliably measured.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS2. Principal accounting policies continued

Careful judgement by management is applied when deciding whether recognition requirements for development costs have been met. This is
necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of
recognition. Judgements are based on the information available at each balance sheet date.

To date, no development costs have been capitalised in respect of the internal projects on the grounds that the costs to date are either for the
research phase of the projects or, if relating to the development phase, then the work so far does not meet the recognition criteria set out above.
In most cases recognition would not occur until regulatory approval.

2.12 Impairment testing of goodwill, other intangible assets and property, plant and equipment
At each balance sheet date non-financial assets are assessed to determine whether there is an indication that the asset or the asset’s cash
generating unit may be impaired. If there is such an indication the recoverable amount of the asset or asset’s cash generating unit is compared
to the carrying amount.

The recoverable amount of the asset or asset’s cash generating unit is the higher of the fair value less costs to sell and value in use.

Impairment losses recognised for cash generating unit to which goodwill has been allocated are credited initially to the carrying amount
of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit.

2.13 Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to the contractual provisions
of the instrument.

For the periods presented in these financial statements, financial assets were classified in the following categories: derivative financial
instruments, and financial assets at amortised cost. Currently other categories of financial asset are not used. Management determines the
classification of its financial assets at initial recognition.

The de-recognition of financial instruments occurs when the rights to receive cash flows from investments expire or are transferred and
substantially all of the risks and rewards of ownership have been transferred.

Derivative financial instruments
The Group uses forward contracts to manage exposure to risks from foreign exchange movements. Derivatives are initially recognised at fair
value at the date that the contract is entered into and subsequently remeasured at each balance sheet date. The resulting gain or loss is
recognised in the income statement.

Financial assets at amortised cost
Financial assets at amortised cost include trade receivables held in order to collect contractual cash flows, a term deposit held to collect solely
payment of the principal and interest, and deposits on property operating leases and for the procurement of materials. These are measured at
initial recognition at fair value plus, if appropriate, directly attributable transaction costs and are subsequently measured at amortised cost using
the effective interest method, less provision for impairment. Any impairment is assessed using the Expected Credit Losses (ECL) model.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade
receivables. For assessing the recoverability of intercompany loans the Group applies IFRS 9’s three stage ECL model in determining the
recoverable amount. Any impairment is recognised in the income statement.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits with original maturities of three months or less that are readily
convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Financial liabilities and equity
Financial liabilities and equity instruments issued are classified according to the substance of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument. A financial liability is a contractual obligation to either deliver cash or another financial
asset to another entity or to exchange a financial asset or financial liability with another entity, including obligations which may be settled using its
equity instruments. An equity instrument is any contract that evidences a residual interest in the assets after deducting all of its liabilities.
The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Financial liabilities
At initial recognition, financial liabilities are measured at their fair value minus, if appropriate, any transaction costs that are directly attributable to the
issue of the financial liability. After initial recognition, all financial liabilities are measured at amortised cost using the effective interest method.

Equity instruments
Equity instruments issued by the Group are recorded as the proceeds received, net of direct issue costs.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS2. Principal accounting policies continued

2.14 Leased assets
For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains, a lease. A lease is defined
as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
To apply this definition, the Group assesses whether the contract meets two key evaluations, which are whether:

• the contract contains an identifiable asset; and

• the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use.

Measurement and recognition
At lease commencement date, the Group recognises a right-of-use asset (as part of the appropriate underlying class of assets in property,
plant and equipment) and a lease liability on the balance sheet.

The right-of-use asset is measured at cost. The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset
for impairment when such indicators exist.

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted
using the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments
made and increased for interest.

The Group has elected to account for short-term leases (leases with a duration of less than 12 months) and leases of low-value assets using the
practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense
in profit or loss on a straight-line basis over the lease term.

The interest payments for leases are recognised in the statement of cashflows under finance and other expenses.

Lease break clauses and extension options
When the Group has the option to extend a lease, management uses its judgement to determine whether or not an option would be reasonably
certain to be exercised. Management considers all facts and circumstances including past practice and any cost that will be incurred to change the
asset if an option to extend is not taken, to help determine the lease term.

Similarly, when a break clause exists in the lease agreement, management must consider the likelihood of this option to curtail the lease being
exercised. In respect of the Group’s leased Berlin facility, £150k of potential lease payments have been excluded from the lease liabilities as it was
assessed at 1 January 2019 that the break clause pertaining to the lease could reasonably be exercised at any point (as remains the case) – thus
allowing continued exemption using the practical expedients referred to above.

2.15 Share-based payments
Historically the Group have issued equity settled share-based payments to certain employees (see note 25). Equity settled share-based payments
are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value so determined is
expensed on a straight-line basis over the vesting period, based on the Group of the number of shares that will eventually vest and adjusted for
the effect of non-market-based vesting conditions.

The value of the charge is adjusted to reflect expected and actual levels of award vesting, except where failure to vest is as a result of not meeting
a market condition.

Cancellations of equity instruments are treated as an acceleration of the vesting period and any outstanding charge is reversed in full immediately.

Fair value is measured using a binomial pricing model or Monte Carlo model. The key assumptions used in the model have been adjusted, based
on management’s best estimate, for the effects of non transferability, exercise restrictions and behavioural considerations.

Any payment made to a counterparty on the cancellation or settlement of a grant of equity instruments (even if this occurs after the vesting date)
should be accounted for as a repurchase of an equity interest (that is, as a deduction from equity). But, if the payment exceeds the fair value of
the equity instruments repurchased (measured at the repurchase date), any such excess should be recognised as an expense.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS2. Principal accounting policies continued

2.16 Equity
Share capital is determined using the nominal value of shares that have been issued.

The share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the share premium account, net of any related income tax benefits.

The merger reserve represents the difference between the nominal value and the market value at the date of issue of shares issued in connection
with the acquisition by the Group of an interest in over 90% of the share capital of another company.

Equity settled share-based payments are credited to a share-based payment reserve as a component of equity until related options or warrants
are exercised.

Foreign currency translation differences are included in the translation reserve.

Profit and loss account (deficit) includes all current and prior period results as disclosed in the income statement.

2.17 Taxation
Current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. Current tax liabilities are calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Tax receivable arises from the UK legislation regarding the treatment of certain qualifying research and development costs, allowing for the
surrender of tax losses attributable to such costs in return for a tax rebate. Research and development tax credits are recognised when the
receipt is probable.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable
that taxable profits will be available against which deductible temporary differences can be utilised.

Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to
control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realised. Deferred tax is
charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and
when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a
net basis.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS2. Principal accounting policies continued

2.18 Critical accounting estimates and judgements and key sources of estimation uncertainty
In the process of applying the entity’s accounting policies, management makes estimates and judgements that have an effect on the amounts
recognised in the financial statements. Although these estimates are based on management’s best knowledge of current events and actions,
actual results may ultimately differ from those estimates.

The critical judgements concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:

Critical judgement
• Application of IFRS 15 in determining revenue from contracts with customers specifically:

> The determination of the numbers of performance obligations. Judgement was required in determining whether the license and the R&D

activities are distinct performance obligations or not. It is considered the license of the IP and the R&D activities are not distinct as the R&D
services are essential to discover and develop a drug candidate and enhance the value in the underlying IP. In addition, the gene targets are
highly specialised such that only the Group has the specialist knowledge to apply the IP to the specific target. On this basis, it has been
concluded that there is only one single performance obligation covering both the R&D services and licences of the IP in respect of each target;

> The allocation of the upfront payments between performance obligations (judgment). Mallinckrodt have paid the Group $20m and

AstraZeneca have agreed to pay the Group $60m upfront under their respective contracts, which is considered to be the initial transaction
price. A judgment was required in determining how this should be allocated across SLN500 and the additional optioned complement-
mediated disease targets for Mallinckrodt; and across target options for AstraZeneca. It was concluded in 2019 that because the compounds
are at similar stages of development, the $20 million amount should be allocated evenly, on the basis of a benchmarking exercise considering
the standalone selling price per target of past deals announced to the market by comparable companies. It was similarly concluded in the
year that the $60 million amount should be allocated evenly across the targets.

• The estimate of future costs to be incurred to determine percentage of completion of revenue contracts:

> In determining the percentage of completion of the revenue projects, the Group estimated the total future costs expected to be incurred
through the life of the contract and its ability to be reimbursed for these in line with the contractual terms of the arrangement and its
revenue recognition policy as set out in Note 2.5. As all projects are at an early stage of their lifecycle we consider that any reasonably
expected change in the estimate of costs to complete would not result in a material change in the revenue recognised to date.

• Estimated future recoverability of investments in subsidiaries

> Group holds an investment balance with its subsidiary company. This is reviewed for impairment annually, with reviews are undertaken
annually or more frequently if events or changes in circumstances indicate a potential impairment. Estimates are made in respect of the
carrying value as follows:

> The investment assessment is performed using a value-in-use model under IAS 36;

> Management has assessed that a reduction in milestone receipts in the model by 10% would result in an additional impairment of £405k.

2.19 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board. The chief operating decision maker
(CODM), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group’s
Board. The Group has a single reportable segment (see note 4).

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS3. Revenue

Revenue from collaboration agreements for the year ended 31 December 2020 relates to the Research collaboration agreements the Group
entered into with Mallinckrodt plc in July 2019, Takeda Pharmaceutical Company Limited in January 2020 and AstraZeneca plc in March 2020.

Revenue comprised £226k of royalty income (2019: £73k) and £5,253k of Research collaboration income (2019: £171k). Disaggregation of

Revenue from Contracts with Customers is as follows:

Revenue from contracts with customers

Research collaboration – Mallinckrodt plc

Research collaboration – Takeda Pharmaceutical Company Limited

Research collaboration – other

Research collaboration – total

Royalties

Total revenue from contracts with customers

Year ended 31 December

2020
£000s

3,817

1,414

5,253

226

5,479

2019
£000s

171

–

171

244

Under our collaboration agreement with Mallinckrodt, we received an upfront cash payment of £16.4m ($20m) in 2019 and are eligible
to receive specified development, regulatory and commercial milestone payments. We received a milestone payment of £1.5m or $2m
(2019: £1.7m) during the year ended 31 December 2020. In addition to these payments, Mallinckrodt has agreed to fund some of our research
personnel and preclinical development costs. We recognise the upfront payment, milestone payments, payments for personnel costs and
other research funding payments over time, in accordance with IFRS 15. During the year ended 31 December 2020, we recognised a total
of £3.8m in revenue under this agreement.

Under our collaboration agreement with Takeda, we received a milestone payment of £1.6m ($2m) during the year ended 31 December 2020.
We recognise the milestone payments over time, in accordance with IFRS 15. During the year ended 31 December 2020, we recognised a total
of £1.4m in revenue under this agreement.

Under our collaboration agreement with AstraZeneca, we received an upfront cash payment of £17.1 million ($20m) in 2020 with a further
amount of £30.8 million ($40 million) due to be received in May 2021. We recognize the upfront payment and milestone payments over time,
in accordance with IFRS 15. During the year ended 31 December 2020, we recognized a total of £22k in revenue under this agreement.

4. Segment reporting

In 2020, the Group operated in the specific technology field of RNA therapeutics.

Business segments
The Group has identified the Chief Executive Officer as the CODM. For the 12 months ended 31 December 2019 and 2020, the CODM
determined that the Group had one business segment, the development of RNAi-based medicines. This is in line with reporting to senior
management. The information used internally by the CODM is the same as that disclosed in the financial statements.

An analysis of the group’s assets and revenues by location is shown below:

Non-current assets

As at 31 December 2019

As at 31 December 2020

Revenue analysis for the year ended 31 December 2019

Research collaboration

Royalties

Revenue analysis for the year ended 31 December 2020

Research collaboration

Royalties

UK
£000s

557

689

171

–

171

5,253

–

5,253

Germany
£000s

8,055

8,883

–

226

Total
£000s

8,612

9,572

171

244

5,253

226

5,479

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS

5. Operating loss

This is stated after charging/(crediting):

Depreciation of property, plant and equipment

Amortisation of intangibles

Share-based payments charge

(Gain)/loss on disposal of property, plant and equipment

Short lease payments on premises

Fees payable to the Company’s auditors for the audit of the Company and the consolidation:

– audit of these financial statements

– other assurance services

6. Directors and staff costs

Staff costs, including Directors’ remuneration, during the year for the Group were as follows:

Wages and salaries

Social security costs

Other pension costs

Share-based payments charge

Total aggregate remuneration

Year ended 31 December

2020
£000s

476

4,395

(3)

347

284

431

2019
£000s

452

584

374

105

554

Year ended 31 December

2020
£000s

6,656

827

201

4,395

12,079

2019
£000s

5,060

1,391

163

584

7,198

Remuneration and share based payments detail for all Directors is presented in the Remuneration Committee report. See pages 35 to 37 for
further details.

Research and development and related support services

Administration

Total average number of employees

7. Other (losses)/gains

Net foreign exchange losses

Net fair value gain on derivative

Total Other (losses)/gains

Year ended 31 December

2020
Number

2019
Number

Year ended 31 December

2020
£000s

(4,864)

1,492

(3,372)

2019
£000s

–

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS8. Finance and other expenses

Lease liability interest expense

Net foreign exchange losses

Total Finance and other expenses

9. Finance and other income

Bank interest receivable

Total Finance and other income

10. Taxation

Year ended 31 December

2020
£000s

307

323

2019
£000s

130

163

Year ended 31 December

2020
£000s

129

2019
£000s

The deferred tax charge in 2020 was £nil (2019: £nil). Reconciliation of current tax credit at standard rate of UK corporation tax to the current
tax credit:

Loss before tax

Tax credit at the standard rate of UK corporation tax of 19% (2019: 19%)

Effect of overseas tax rate

Impact of unrelieved tax losses not recognised

Adjustment in respect of prior year

Research and development tax credit in respect of current year

Year ended 31 December

2020
£000s

2019
£000s

(36,041)

(22,870)

6,848

(85)

(6,763)

(42)

3,536

3,494

4,345

(4,350)

228

3,060

3,288

Estimated tax losses of £135.6m (2019: £112.6m) are available for relief against future profits.

The deferred tax asset not recognised in these financial statements on the estimated losses and the treatment of the equity settled share-based
payments, net of any other temporary timing differences is detailed in note 23. During the year, the Group received a research and development
tax credit of £3,018k (2019: £2,308k). The Group has accrued £3,536k (2019: £3,060k) recognising a current tax asset in respect of 2020
research and development tax credits.

The corporation tax main rate during 2020 was 19% (2019: 19%).

11. Loss per ordinary equity share (basic and diluted)

The calculation of the loss per share is based on the loss for the financial year after taxation of £32,547k (2019: loss of £19,582k) and on the
weighted average of 81,772,124 (2019: 75,126,869) ordinary shares in issue during the year.

The options outstanding at 31 December 2020 and 31 December 2019 are considered to be anti-dilutive as the Group is loss-making.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS12. Property, plant and equipment

Cost

At 1 January 2019

Additions

Disposals

Translation adjustment

At 31 December 2019

At 1 January 2020

Additions

Disposals

Translation adjustment

At 31 December 2020

Accumulated depreciation

At 1 January 2019

Charge for the year

Eliminated on disposal

Translation adjustment

At 31 December 2019

At 1 January 2020

Charge for the year

Eliminated on disposal

Translation adjustment

At 31 December 2020

Net book value

As at 31 December 2019

As at 31 December 2020

13. Goodwill

Balance at start of year

Translation adjustment

Balance at end of year

Equipment and
furniture
£000s

Right-of-use
asset
£000s

Total
£000s

3,562

(15)

(153)

3,403

511

(2)

154

4,066

2,641

356

(13)

(128)

2,856

291

(2)

129

3,274

547

792

160

3,722

–

160

456

(160)

–

456

–

185

(160)

–

121

335

31 December

2020
£000s

7,692

433

8,125

(15)

(153)

3,563

967

(162)

154

4,522

2,641

452

(13)

(128)

2,952

476

(162)

129

3,395

611

1,127

2019
£000s

8,127

(435)

7,692

The recoverable amount is based on fair value less cost of disposal.

The key assumptions used in the valuation models to determine the fair value less cost of disposal are as follows:

• Fair value has been determined as market capitalisation (share price x number of shares in issue) at 31 December 2020

• Disposal costs have been estimated to be minimal

Goodwill is assessed at a segment level. Management has assessed that the headroom in the valuation model used demonstrates that there is no
reasonably possible change to a key assumption used in determining fair value less cost of disposal that would cause the carrying amount of
goodwill to exceed its recoverable amount (market capitalisation at 31 December 2020 was £428,194,171, with share price not dropping
significantly below its 31 December 2020 value at any point so far in 2021), and therefore a sensitivity analysis has not been presented.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS14. Other intangible assets

Cost

At 1 January 2019

Additions

Disposals

Translation adjustment

At 31 December 2019

At 1 January 2020

Additions

Translation adjustment

At 31 December 2020

Accumulated depreciation

At 1 January 2019

Charge for the year

Translation adjustment

At 31 December 2019

At 1 January 2020

Charge for the year

Translation adjustment

At 31 December 2020

Net book value

As at 31 December 2019

As at 31 December 2020

Licenses
and software
£000s

Total
£000s

104

–

(2)

102

107

(2)

–

(2)

102

107

(2)

The intangible assets included above have finite useful lives estimated to be of 10–15 years from the date of acquisition, over which period they
are amortised or written down if they are considered to be impaired. Internally generated patent costs are only recorded where they are
expected to lead directly to near-term revenues. These costs are amortised on a straight-line basis over 10–15 years, commencing from the date
that the asset is available for use. The charge for amortisation is included in the research and development costs in the income statement.

15. Cash and cash equivalents

Cash at bank comprises balances held by the Group in current and short-term bank deposits with an original maturity of three months or less.
The carrying amount of these assets approximates to their fair value.

31 December

2020
£000s

12,449

15,000

27,449

2019
£000s

13,515

–

13,515

Cash at bank and in hand

Short-term bank deposits

Total Cash and cash equivalents

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS16. Derivative financial instruments

Derivative financial instruments relate to an open forward currency contract measured at fair value through the income statement. The fair value
was calculated from data sourced from an independent financial market data provider using mid-market-end-of-day data as of Close of Business
date as 31 December 2020.

Derivatives carried at fair value

The fair value of the derivative is calculated based on level 2 inputs under IFRS 13.

31 December

2020
£000s

1,492

2019
£000s

–

The fair value of financial instruments that are not traded in active market, in the case an over-the-counter derivative, is determined using
valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. As all significant
inputs required to fair value an instrument are observable, this derivative financial instrument is included in level 2.

The specific valuation technique used to value this derivative has been the use the present value of future cash flows based on the forward
exchange rate relative to its value based on the year-end exchange rate.

17. Financial assets at amortised cost

Non-current financial assets at amortised cost primarily relate to deposits for properties.

Current financial assets at amortised cost, other than trade receivables as disclosed in note 17, include £10m of six-month term fixed interest
deposits (2019: £20m). The other current financial asset at amortised cost in 2019 was an advance payment for the former CEO which was
subsequently deducted from his remuneration. No interest was charged on this amount.

Current financial assets at amortised cost – term deposit

Current financial assets at amortised cost – other

Total current financial assets at amortised cost

Non-current financial assets at amortised cost

Total financial assets at amortised cost

18. Other current assets

Prepayments

VAT receivable

Total other current assets

31 December

2020
£000s

10,000

–

10,000

303

10,303

31 December

2020
£000s

3,940

676

4,616

2019
£000s

20,000

20,001

275

20,276

2019
£000s

431

454

885

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS19. Trade receivables

Trade receivables

31 December

2020
£000s

29,306

2019
£000s

The 2020 receivable balance relates to the upfront payment from AstraZeneca.

The Directors consider that the carrying amount of trade receivables approximates to their fair value.

No interest is charged on outstanding receivables. There were no overdue trade receivables balances.

The Group has applied an expected credit loss model to the balance and determined that £nil (2019: £nil) provision is required

20. Trade and other payables

Trade payables

Social security and other taxes

Accruals and other payables

Total trade and other payables

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

21. Lease liability

Lease liability

Total lease liability

31 December

2020
£000s

2,285

1,107

4,800

8,192

31 December

2020
£000s

341

2019
£000s

1,790

362

4,736

6,888

2019
£000s

287

In 2020 the lease liability recognised on the face of the balance sheet comprises of the Group’s London office and New York office (terminating
May 2021). The repayment of the principal portion of these lease liabilities for the year ended 31 December 2020 was £450k (2019: £nil).

There are 2 short leases relating to the Buch, Germany operation not included in the lease liability above. One is a 3-month rolling lease ending
to March 2021 and the other is a 6-month rolling lease to April 2021, both automatically renew unless cancellation notice is given.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS22. Contract liabilities

Contract liabilities comprise entirely deferred revenue in respect of the Mallinckrodt, Takeda and AstraZeneca plc Research collaborations.

Contract liabilities:

Current

Non-current

Total contract liabilities

Contract liabilities:

At 1 January 2020

Additions during year

Revenue unwound during year – from 2019

Revenue unwound during year – from current year

At 31 December 2020

23. Deferred tax

31 December

2020
£000s

2019
£000s

17,042

51,337

68,379

2,478

15,515

17,993

Current
£000s

Non-current
£000s

Total
£000s

2,478

19,779

(1,048)

(4,167)

15,515

35,822

–

17,993

55,601

(1,048)

(4,167)

17,042

51,337

68,379

The following are the major deferred tax liabilities and assets in respect of trading losses recognised by the Group and Company:

Deferred tax liability in respect of intangible assets

Deferred tax assets

Total deferred tax position

31 December

2020
£000s

(25)

–

2019
£000s

(24)

–

The company has recognised deferred tax assets of £25k to offset its deferred tax liability resulting from acquired intangible assets.

Due to the uncertainty of future profits, a deferred tax asset in respect of trading losses was not recognised at 31 December 2020 (2019: nil).
The Group has the following unrecognised deferred tax assets as at 31 December 2020:

Trading losses

Share based payments

Capital losses

Total unrecognised deferred tax asset

31 December

2020
£000s

31,426

3,443

1,496

2019
£000s

20,214

2,024

2,874

36,365

25,112

Deferred tax assets are recognised where it is probable that future taxable profit will be available to utilise losses. Due to the uncertainty of
future capital gains, a deferred tax asset in respect of capital losses was not recognised at 31 December 2020 (2019: £nil).

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS24. Share capital

Authorised, allotted, called up and fully paid ordinary shares, par value £0.05

Number of shares in issue

31 December

2020
£000s

4,165

2019
£000s

3,919

Number

83,306,259

78,370,265

The Group has only one class of share. All ordinary shares have equal voting rights and rank pari passu for the distribution of dividends.

Details of the shares issued during the current and previous year are as follows:

Number of shares in issue at 1 January 2019

Shares issued during the year

Options exercised at £0.05

Options exercised at £0.25

Options exercised at £1.00

Options exercised at £1.06

Options exercised at £1.10

Options exercised at £1.12

Options exercised at £1.17

Options exercised at £1.25

Number of shares in issue at 31 December 2019

Shares issued during the year

Options exercised at £0.05

Options exercised at £0.85

Options exercised at £1.00

Options exercised at £1.90

Number of shares in issue at 31 December 2020

71,069,933

5,062,167

581,101

728,078

40,000

23,986

200,000

5,000

500,000

160,000

78,370,265

4,276,580

496,666

56,470

60,000

46,278

83,306,259

At 31 December 2020, there were options outstanding over 6,756,594 (2019: 4,302,617) unissued ordinary shares. Details of the options
outstanding are as follows:

Year of issue

Exercise price
(£)

At 1 January
2020

Options
granted

Options
forfeited

Options
expired

Options
exercised

At 31 December
2020

Expiry date

1.06

1.63

1.28

0.05

1.12

1.04

1.00

1.06

0.85

0.94

1.47

2.05

1.99

0.05

10,000

12,000

9,000

10,000

6,000

10,736

13,672

480,000

8,839

16,968

60,000

10,000

56,470

27,500

24,000

50,000

70,000

148,458

19,000

2013

2014

2015

2016

2017

2018

10,000

15/07/2023

12,000

16/06/2024

9,000

31/01/2021

10,000

06/07/2025

6,000

16/11/2025

10,736

05/01/2026

13,672

04/04/2026

(480,000)

–

06/01/2021

8,839

23/05/2026

16,968

02/07/2026

(60,000)

–

07/06/2020

10,000

01/09/2026

(56,470)

–

18/04/2027

27,500

03/07/2027

24,000

18/09/2027

50,000

13/11/2027

70,000

01/12/2027

140,698

01/02/2028

19,000

22/07/2028

(7,760)

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS

24. Share capital continued

Year of issue

Exercise price
(£)

At 1 January
2020

Options
granted

Options
forfeited

Options
expired

Options
exercised

At 31 December
2020

Expiry date

2018

2019

2020

Total

(23,625)

0.05

8,200

19,000

22,068

23,625

14,800

9,075

10,206

100,000

200,000

30,000

150,000

23,000

8,200

12/08/2028

19,000

02/09/2028

22,068

30/09/2028

–

15/01/2020

14,800

14/10/2028

9,075

02/01/2029

10,206

13/01/2029

100,000

16/04/2029

200,000

02/06/2029

30,000

03/09/2029

150,000

30/09/2029

23,000

03/11/2029

0.05 – 1.90

2,650,000

(62,944)

2,587,056

06/10/2029

0.05

1.90 – 4.07

0.05

0.05 – 4.40

0.05

0.05 – 4.68

0.05

0.05 – 4.37

4.16

3.45

4.41

4.55

4.26

–

4,308

1,846

1,596

47,407

10,000

5,500

13,000

9,000

360,000

16,200

32,600

500,000

13,000

19,000

8,740

42,800

20,000

16,000

12,400

23,600

10,340

72,000

44,000

11,500

1,813,000

18,000

9,600

10,400

15,119

1,250

3,710

4,308

1,846

1,596

(8,740)

(12,400)

47,407

23/02/2030

10,000

30/01/2030

5,500

09/03/2030

13,000

29/03/2030

9,000

02/03/2023

360,000

15/03/2024

16,200

30/04/2030

32,600

10/05/2030

500,000

20/05/2030

13,000

25/05/2030

19,000

31/05/2030

–

30/06/2020

42,800

14/06/2030

20,000

30/06/2030

16,000

19/07/2030

–

23/10/2020

23,600

12/07/2030

10,340

19/07/2030

72,000

05/07/2023

44,000

02/08/2023

11,500

02/08/2030

1,813,000

14/09/2030

18,000

05/10/2030

9,600

07/09/2030

10,400

03/11/2030

15,119

01/10/2030

1,250

3,710

4,308

1,846

1,596

05/10/2030

02/11/2030

09/11/2030

16/11/2030

23/11/2030

4,302,617

3,165,916

(52,525)

–

(659,414)

6,756,594

The market price of Company shares at the year-end was 514 pence (2019: 350 pence). During the year the minimum and maximum prices were
304.0 pence and 515.0 pence, respectively (2019: 41.0 pence and 610.0 pence).

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS

25. Equity settled share-based payments

The Group has issued share options under the 2018 Long Term Incentive Plan (LTIP), 2018 Non-Employee Long Term Incentive Plan (Non-
Employee LTIP), and individual share option contracts, open to all employees of the Group, as well as EMI shares (none of which remain
outstanding at 31 December 2020). Under the LTIP, Non-Employee LTIP, individual contracts and schemes available, the options typically vest
aafter 3 years, with the exception of some options granted to certain members of key management personnel. The vesting period for these
options ranges from 3 to 33 months. The options usually lapse after one year following the employee leaving the Group.

Options

Outstanding at the beginning of the year

Granted during the year

Lapsed or forfeited during the year

Exercised during the year

Outstanding at the year end

Exercisable at the year end

2020

2019

Number
of shares
000s

Weighted average
exercise price
Pence

Number
of shares
000s

Weighted average
exercise price
Pence

4,302,617

3,165,916

(52,525)

(659,414)

6,756,594

1,079,609

102.46

351.90

5.00

33.48

226.83

151.33

4,718,302

4,722,281

(2,899,801)

(2,238,165)

4,302,617

647,215

70.17

129.40

105.32

57.51

102.46

31.96

The options outstanding at the year end have a weighted average remaining contractual life of 7.4 years (2019: 7.2 years). The weighted average
share price at the time of exercise during the year was 435.19p (2019: 126.24p).

The Group granted 3,165,916 options during the year (2019:4,722,281). The fair value of options granted were calculated using a Binomial or
Monte Carlo model and inputs into the model were as follows:

Inputs and assumptions for options granted in the year

Weighted average fair value at grant (pence)

Weighted average share price (pence)

Weight average hurdle price (pence)

Weighted average exercise price (pence)

Option life (years)

Expected volatility

Risk free rate

Expected dividend yield

2020

324.0

461.0

90.0

352.0

10.0

2019

118.6

175.9

218.6

129.4

10.0

70%–72%

50%–72%

0.19%–0.44%

0.41%–1.32%

nil

The Group recognised total charges of £4,395k (2019: £584k) related to equity settled share-based payment transactions during the year.

Fair value of the grants has been calculated using volatility assumptions between 70.7% and 72%, based on the three year historical volatility as at
the respective date of grant.

The Group does not bear any responsibility to settle any employee tax obligations that arise on the exercise of share options. The estimated
employer tax obligation on outstanding options at the year-end was £491k (2019: £711k).

26. Capital reserves

The capital redemption reserve was created in 2012 following the reduction of nominal share capital to 0.1p per share. It is required under
Section 733 of the Companies Act 2006, held to maintain the capital of the Company when shares are bought back and subsequently cancelled
without court approval.

Due to the size of the deficit on the accumulated losses account, the Company has no distributable reserves.

The share premium account reflects the premium to nominal value paid on issuing shares less costs related to the issue. The merger reserve was
created on issuance of shares relating to the acquisition of Silence Therapeutics GmbH.

The share-based payments reserve reflects the cost to issue share-based compensation, primarily employee share options.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS26. Capital reserves continued

The share-based payments reserve reflects the cost to issue share-based compensation, primarily employee share options.

At 1 January 2019

Shares issued

On options in issue during the year

On options exercised during the year

Movement in the year

At 31 December 2019

Shares issued

On options in issue during the year

On options exercised during the year

Movement in the year

At 31 December 2020

Share
premium
account
£000s

133,242

3,767

1,141

–

4,908

138,150

15,396

–

188

15,584

153,734

Merger
reserve
£000s

22,248

–

22,248

–

22,248

Share-based
payment
reserve
£000s

Capital
redemption
reserve
£000s

Total
£000s

2,437

–

584

(1,370)

(786)

1,651

–

4,395

(331)

4,064

5,715

5,194

163,121

–

3,767

1,725

(1,370)

4,122

5,194

167,243

–

15,396

4,395

(143)

19,648

5,194

186,891

27. Capital commitments and contingent liabilities

There were no capital commitments at 31 December 2020 (2019: £nil).

28. Commitments under short leases

At 31 December 2020, the Group had a gross commitment on its office rental and service charge at Robert-Rössle-Strasse 10, 13125 Berlin equal
to £100k (2019: £100k) in the next year. No amounts are payable after more than one year.

In addition, the Group enters into contracts in the normal course of business with contract research organisations to assist in the performance of
research and development activities and other services and products for operating purposes. These contracts generally provide for termination
on notice, and therefore are cancellable contracts and not reflected in the disclosure above.

29. Financial instruments and risk management

The Group’s financial instruments comprise primarily cash and other financial assets and various items such as receivables and trade payables
which arise directly from its operations. The main purpose of these financial instruments is to provide working capital for the Group’s operations.
The Group assesses counterparty risk on a regular basis. Board approval is required for adoption of any new financial instrument or counterparty.
The primary focus of the treasury function is preservation of capital.

The Directors consider that the carrying amount of these financial instruments approximates to their fair value.

Financial assets by category
The categories of financial assets included in the balance sheet and the heading in which they are included are as follows. The measurement of
financial assets is at amortised cost unless otherwise stated:

Trade receivables

Cash and cash equivalents

Term deposits

Derivative financial instruments held at fair value

Other current assets at amortised cost

Non-current financial assets at amortised cost

31 December

2020
£000s

29,306

27,449

10,000

1,492

–

303

68,550

2019
£000s

13,515

20,000

–

275

33,795

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS29. Financial instruments and risk management continued

Financial liabilities by category

Trade and other payables

Lease liability

All amounts are short-term.

Credit quality of financial assets (loans and receivables)
The maximum exposure to credit risk at the reporting date by class of financial asset was:

Trade receivables

Financial assets at amortised cost – non-current

Financial assets at amortised cost – current

31 December

2020
£000s

7,085

341

7,426

31 December

2020
£000s

29,306

303

–

29,609

2019
£000s

6,526

287

6,813

2019
£000s

275

280

Cash and cash equivalents and term deposits are not considered to be exposed to credit risk due to the fact they sit with banks with top credit
ratings. The Group considers the possibility of significant loss in the event of non-performance by a financial counterparty to be unlikely.

The Group continually monitors the creditworthiness of its customers and at the reporting date no financial assets are credit impaired.

Capital management
The Group considers its capital to be equal to the sum of its total equity. The Group monitors its capital using a number of measures including
cash flow projections, working capital ratios, the cost to achieve preclinical and clinical milestones and potential revenue from existing
partnerships and ongoing licensing activities. The Group’s objective when managing its capital is to ensure it obtains sufficient funding for
continuing as a going concern. The Group funds its capital requirements through the issue of new shares to investors, milestone and research
support payments received from existing licensing partners and potential new licensees.

Interest rate risk
The nature of the Group’s activities and the basis of funding are such that the Group has significant liquid resources. The Group uses these
resources to meet the cost of future research and development activities. Consequently, it seeks to minimise risk in the holding of its bank
deposits while maintaining a reasonable rate of interest. The Group is not financially dependent on the income earned on these resources and
therefore the risk of interest rate fluctuations is not significant to the business. Nonetheless, the Directors take steps to secure rates of interest
which generate a return for the Group.

Credit and liquidity risk
Credit risk is managed on a Group basis. Funds are deposited with financial institutions with a credit rating equivalent to, or above, the main UK
clearing banks. The Group’s liquid resources are invested having regard to the timing of payments to be made in the ordinary course of the
Group’s activities. All financial liabilities are payable in the short term (between zero and three months) and the Group maintains adequate bank
balances in either instant access or short-term deposits to meet those liabilities as they fall due.

The Group only enters into collaboration agreements with large, reputable companies and the creditworthiness of customers is monitored on an
ongoing basis.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. Expected loss rates are based on payment profiles of past receivables and the aging profiles of outstanding balances at the reporting
period end date. At the year end there were no debts that were past due. It was therefore concluded on this basis that there were no expected
credit losses for the trade receivables.

Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of
recovery include, but is not limited to, a failure to engage in a repayment plan with the Group.

Currency risk
The Group operates in a global market with revenue possibly arising in a number of different currencies, principally in US dollars, sterling or euros.
The majority of the operating costs are incurred in euros with the rest predominantly in sterling. Additionally, to a lesser extent, a number of
operating costs are incurred in US dollars. The Group makes use of forward contracts to reduce its exposure to foreign currency risk where the
existence, timing and quantum of future cash inflows can be accurately predicted.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS29. Financial instruments and risk management continued

Financial assets and liabilities denominated in euros and translated into sterling at the closing rate were:

Financial assets

Financial liabilities

Net financial (liabilities)/assets

Financial assets and liabilities denominated in US dollars and translated into sterling at the closing rate were:

Financial assets

Financial liabilities

Net financial (liabilities)/assets

31 December

2020
£000s

467

(1,190)

(723)

31 December

2020
£000s

29,427

(2,123)

27,304

2019
£000s

2,032

(2,672)

(640)

2019
£000s

1,691

(94)

1,597

The following table illustrates the sensitivity of the net result for the year and the reported financial assets of the Group in regard to the exchange
rate for sterling against the euro.

During the year sterling rose by 6% against the euro. The table shows the impact of an additional weakening or strengthening of sterling against
the euro by 20%.

2020

Group result for the year

Euro denominated net financial liabilities

Total equity at 31 December 2020

2019

Group result for the year

Euro denominated net financial liabilities

Total equity at 31 December 2019

As reported
£000s

If sterling
rose 20%
£000s

If sterling
fell 20%
£000s

(32,547)

(29,056)

(37,784)

(724)

9,059

(603)

9,180

(904)

8,878

As reported
£000s

If sterling
rose 20%
£000s

If sterling
fell 20%
£000s

(19,582)

(18,645)

(21,257)

(640)

(533)

(800)

20,909

18,879

23,995

The following table illustrates the sensitivity of the net result for the year and the reported financial assets of the Group in regards to the
exchange rate for sterling against the US dollar.

During the year sterling rose by 4% against the US dollar. The table shows the impact of an additional weakening or strengthening of sterling
against the US dollar by 20%.

2020

Group result for the year

US dollar denominated net financial assets

Total equity at 31 December 2020

2019

Group result for the year

US dollar denominated net financial assets

Total equity at 31 December 2019

As reported
£000s

If sterling
rose 20%
£000s

If sterling
fell 20%
£000s

(32,547)

(31,283)

(34,442)

27,304

9,059

As reported
£000s

22,753

4,508

If sterling
rose 20%
£000s

34,130

15,885

If sterling
fell 20%
£000s

(19,582)

(19,337)

(19,950)

1,597

20,909

1,330

20,643

1,996

21,308

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTS30. Notes to the cash flow statement

Changes in liabilities arising from financing activities:

Lease liabilities

Total liabilities from financing activities

31. Related party transactions

1 January
2020
£000s

Cash flows from
financing activities
Repayments
£000s

Non-cash flows
New lease
liabilities
£000s

287

(402)

456

31 December
2020
£000s

341

During the year the Group paid £75k (2019: £9k) to Gladstone Partners Limited, a company controlled by Director Iain Ross. The balance owed at
the year-end was £nil (2019: £27k).

Details are presented in the Remuneration Committee report. See pages 35 to 39 for further details. Key management are considered to be
Directors of the Group, whose remuneration is disclosed in the Remuneration Committee report.

32. Post balance sheet events

On 5 February 2021 Silence Therapeutics plc announced an oversubscribed private placement of 2,022,218 of the Company’s American
Depositary Shares (ADSs), each representing three ordinary shares of 5 pence each in the capital of the Company (“Ordinary Shares”), at a price
of US $22.50 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of
the Private Placement were approximately US $45m (approximately £33m) before deducting placement agent fees and other expenses.
The offering closed on 9 February 2021.

33. Group companies

In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries, the address of the registered offices and effective
percentages of equity owned as at 31 December 2020 are disclosed below.

All subsidiaries are wholly owned.

Name

Registered office address

Place of
incorporation
and operation

Principal
technology area

Proportion of
ownership
interest

Silence Therapeutics GmbH

Robert-Rössle-Strasse 10, 13125 Berlin

Germany

RNA therapeutics

Silence Therapeutics (London) Ltd 27 Eastcastle Street, London W1W 8DH

Innopeg Ltd

27 Eastcastle Street, London W1W 8DH

Silence Therapeutics Inc.

434 West 33rd Street, Office 814, New York,
NY 10001

England

USA

Dormant

RNA therapeutics

100%

Exempt from audit

Exempt from
filing financial
statements

Yes

Name

Silence Therapeutics GmbH

Silence Therapeutics (London) Ltd

Innopeg Ltd

Silence Therapeutics Inc.

Notes to the consolidated financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSCompany balance sheet
at 31 December 2020

Non-current assets

Property, plant and equipment

Other intangible assets

Investment in subsidiaries

Financial assets at amortised cost

Current assets

Cash and cash equivalents

Derivative financial instrument

Financial assets at amortised cost – term deposit

Financial asset at amortised cost – other

R&D tax credit receivable

Other current assets

Trade and other receivables

Non-current liabilities

Contract liabilities

Current liabilities

Contract liabilities

Trade and other payables

Lease liability

Total assets less liabilities

Net assets

Capital and reserves attributable to the Company’s equity holders

Share capital

Capital reserves

Accumulated losses

Total equity

Note

C.5

C.6

C.9

C.7

C.8

C.9

C.10

C.11

C.14

C.12

C.13

31 December

2020
£000s

2019
£000s

387

16,969

286

17,659

27,173

1,492

10,000

–

3,536

4,441

29,409

76,051

248

21,596

275

22,153

12,980

–

20,000

3,060

791

36,836

(51,337)

(15,515)

(17,042)

(10,947)

(300)

(2,478)

(8,348)

(287)

(28,289)

(11,113)

14,084

32,361

4,165

3,919

C.15

186,707

167,059

(176,788)

(138,617)

14,084

32,361

The Company made a loss of £(38,502)k in the year ended 31 December 2020 (2019: £(20,092)k).

The financial statements on pages 77 to 84 were approved by the Board on 30 March 2021 and signed on its behalf.

Mark Rothera
Chief Executive Officer
Company number: 02992058

The accompanying accounting policies and notes form an integral part of these financial statements.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSCompany statement of changes in equity
year ended 31 December 2020

At 1 January 2019

Recognition of share-based payments

Lapse of vested options in the year

Options exercised in the year

Proceeds from shares issued

Transactions with owners recognised directly in equity

Loss for the year

At 31 December 2019

Recognition of share-based payments

Lapse of vested options in the year

Options exercised in the year

Proceeds from shares issued

Transactions with owners recognised directly in equity

Loss for the year

At 31 December 2020

Note

Share capital
£000s

Capital
reserves
£000s

Accumulated
losses
£000s

Total equity
£000s

3,554

162,937

(119,895)

46,596

–

365

584

–

(1,370)

4,908

4,122

–

1,370

–

1,370

584

–

5,273

5,857

(20,092)

3,919

167,059

(138,617)

–

246

4,395

–

(331)

15,584

19,648

–

331

–

331

32,361

4,395

–

15,830

20,225

4,165

186,707

(176,788)

14,084

(38,502)

C.15

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSNotes to the Company financial statements
Year ended 31 December 2020

C.1 General information

Silence Therapeutics plc (the Company), is a public company limited by shares registered in England and Wales, with company number 02992058.
The Company’s registered office is 27 Eastcastle Street, London, W1W 8DH.

C.2 Basis of preparation

The Company meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting
Council. Accordingly, the Company has undergone transition from reporting under IFRSs to FRS 101 ‘Reduced Disclosure Framework’ for the
year ended 31 December 2020. This transition is not considered to have a material effect on the financial statements.

As such, these financial statements are prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’.
This applies the recognition, measurement and presentation requirements of international accounting standards in conformity with the
requirements of the Companies Act 2006, but it makes amendments where necessary in order to comply with the Act and take advantage
of the FRS 101 disclosure exemptions.

As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions in relation to:

• business combinations;

• share-based payment;

• financial instruments;

• fair value measurement;

• presentation of a cash flow statement;

• standards not yet effective;

• impairment of assets;

• related party transactions.

The financial statements have been prepared under the historical cost convention as modified by revaluation to fair value of the derivative
financial instrument and on the going concern basis (see note 2 in the consolidated financial statements). The financial statements are prepared
in sterling, which is also the functional currency of the Company, and presented to the nearest thousand pounds.

The principal accounting policies, which have been applied consistently, are as set out in note 2 of the consolidated financial statements except
those that are Company specific and noted below.

Investments in subsidiaries
Investments in subsidiaries comprise shares in the subsidiaries and quasi-equity loans from the Company. Investments in shares of the
subsidiaries are stated at cost less provisions for impairment in line with IAS 27 (Separate Financial Statements). Quasi-equity loans are stated at
amortised cost, net of expected credit losses in line with IFRS 9 (Classification and Measurement of Financial Instruments).

Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the entity’s accounting policies, management makes estimates and judgements that have an effect on the amounts
recognised in the financial statements. Although these estimates are based on management’s best knowledge of current events and actions,
actual results may ultimately differ from those estimates.

The critical judgements concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are those relating to the following:

• the application of IFRS 15 in determining revenue from contracts with customers, specifically:

> the determination of the number of performance obligations (judgement);

> the allocation of the upfront payments between the performance obligations (judgement);

> the estimate of the future costs to be incurred;

• the carrying value of the investment in subsidiary undertakings as detailed in note C.6.

C.3 Income statement

The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own income statement in these
financial statements.

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSC.4 Directors and staff costs

Staff costs, including Directors’ remuneration, during the year for the Company were as follows:

Wages and salaries

Social security costs

Share-based payments charge

Other pension costs

Year ended 31 December

2020
£000s

4,149

487

4,395

201

9,232

2019
£000s

3,040

1,111

584

163

4,898

Remuneration detail for all Directors is presented in the Remuneration Committee report. See pages 35 to 37 for further details. The total
remuneration of the highest paid Director was £1,216k (2019: 623k).

The monthly average number of employees of the Company was as follows:

Year ended 31 December

2020
Number

2019
Number

Equipment
and furniture
£000s

Right-of-use
asset
£000s

706

(2)

712

–

721

386

142

–

528

109

–

637

184

160

–

160

346

(160)

346

–

107

(160)

303

Total
£000s

866

(2)

872

355

(160)

1,067

386

238

–

624

216

(160)

680

248

387

Research and development and associated support services

Administration

Total average number of employees

C.5 Property, plant and equipment

Cost

At 1 January 2019

Additions

Disposals

At 31 December 2019

At 1 January 2020

Additions

Disposals

At 31 December 2020

Accumulated depreciation

At 1 January 2019

Charge for the year

Eliminated on disposal

At 31 December 2019

At 1 January 2020

Charge for the year

Eliminated on disposal

At 31 December 2020

Net book value

As at 31 December 2019

As at 31 December 2020

Notes to the Company financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSC.6 Investments in subsidiaries

Company

Investment in subsidiary undertakings

The investment in subsidiary undertakings is made up as follows:

Shares and loans in subsidiary undertakings

At 1 January 2019

Movement in the year

At 31 December 2019

Movement in the year

At 31 December 2020

31 December

2020
£000s

16,969

2019
£000s

21,596

Investment at
cost
£000s

Quasi-equity
loan
£000s

Impairment
provision
(Investment)
£000s

Impairment
provision
(Loan)
£000s

Net total
£000s

23,495

35,390

(14,473)

(22,442)

21,970

–

(374)

–

23,495

218

23,713

35,016

1,042

36,058

(14,473)

(22,442)

(5,887)

–

(20,360)

(22,442)

(374)

21,596

(4,627)

16,969

Investments at cost total of £23.7m (2019: £23.4m) are analysed as follows:

• £23.3m (2019: £23.3m) relating to Silence Therapeutics GmbH.

• £0.2m movement in the 2020 year relates to investment in Silence Therapeutics Inc.

• The balance of the investments at cost of £0.2m (2019: £0.2m) relates to Innopeg Limited (2020: £63k; 2019 £63k) and Silence Therapeutics

(London) Limited (2020: £142k, 2019: £142k).

Quasi-equity loans total of £36.1m (2019: £35.0m) are analysed as follows:

• At 31 December 2020, an interest-bearing unsecured loan of £13.6m (2019: £12.6m) was outstanding from Silence Therapeutics plc to Silence

Therapeutics GmbH. The movement in the year includes a foreign exchange gain of £0.7m (2019: £0.7m), and accrued interest of £0.3m
(2019: £0.3m).

• At 31 December 2020, a non-interest-bearing unsecured loan of £22.4m (2019: £22.4m) was outstanding from Silence Therapeutics plc to

Silence Therapeutics (London) Ltd. This quasi-equity loan has been fully provided for.

Impairment provision totalling £42.8m (2019: 36.9m) is analysed as follows:

• £20.2m (£2019: 14.3m) relating to Silence Therapeutics GmbH. In 2020 an additional impairment provision of £5.9m was recorded against the
£23.7m investment as the Directors reassessed the near-term future cash flows between Silence Therapeutics GmbH and the Company, and
using a probability adjusted value in use basis and a discount rate of 13.9%, determined that an impairment arose. In accordance with IAS 36
Impairment of Assets, the carrying value of the net investment in Silence Therapeutics GmbH of £3.4m (£9.0m) has been assessed by
comparing its carrying value to its recoverable amount. The recoverable amount is based on value in use. A discounted cash flow model has
been used to make this assessment. Management has assessed that a reduction in milestone receipts in the model by 10% would result in an
additional impairment of £405k.

• £0.2 million (2019: £0.2m) relating to the investments held in Silence Therapeutics (London) Ltd and Innopeg Ltd and they are not deemed to

be recoverable.

• Silence Therapeutics plc has recorded an impairment provision against the quasi-equity loans in Silence Therapeutics (London) Ltd and Innopeg

Ltd (2020: £22.4 million; 2019: 22.4 million) as they are not deemed to be recoverable.

• In considering the recoverability of the loan with Silence Therapeutics GmbH, management have applied an expected credit loss methodology

under IFRS 9 and calculated that a provision of £30k is required (2019: £30k).

Subsidiary companies
The principal activity of all subsidiaries is the research and development of pharmaceutical products. All subsidiary companies are consolidated in
the Group’s financial statements:

Name

Registered office address

Place of
incorporation
and operation

Principal
technology area

Proportion of
ownership
interest

Silence Therapeutics GmbH

Robert-Rössle-Strasse 10, 13125 Berlin, Germany

Germany

RNA therapeutics

Silence Therapeutics (London) Ltd 27 Eastcastle Street, London, W1W 8DH

Innopeg Ltd

27 Eastcastle Street, London, W1W 8DH

England

Dormant

Silence Therapeutics Inc.

434 West 33rd Street, Office 814, New York, NY 10001 USA

RNA therapeutics

100%

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSC.6 Investments in subsidiaries continued

Name

Silence Therapeutics GmbH

Silence Therapeutics (London) Ltd

Innopeg Ltd

Silence Therapeutics Inc.

C.7 Cash and cash equivalents

Exempt from audit

Exempt from filing
financial statements

Yes

Cash at bank comprises balances held by the company in current and short-term bank deposits with an original maturity of three months or less.
The carrying amount of these assets approximates to their fair value.

Cash at bank and in hand

Short-term bank deposits

Total Cash and cash equivalents

C.8 Derivative financial instruments

31 December

2020
£000s

12,173

15,000

27,173

2019
£000s

12,980

–

12,980

Derivatives carried at fair value

C.9 Financial assets at amortised cost

Non-current financial assets at amortised cost primarily relate to deposits for properties.

Current financial assets at amortised cost include fixed interest £10,000k six-month term deposits (2019: £20,000k).

Current financial assets at amortised cost – term deposit

Current financial assets at amortised cost – other

Total current financial assets at amortised cost

Non-current financial assets at amortised cost

Total financial assets at amortised cost

C.10 Other current assets

Prepayments

VAT receivable

Total other current assets

31 December

2020
£000s

1,492

2019
£000s

–

31 December

2020
£000s

10,000

–

10,000

286

10,286

31 December

2020
£000s

3,870

571

4,441

2019
£000s

20,000

20,001

275

20,276

2019
£000s

390

401

791

Notes to the Company financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSC.11 Trade and other receivables

Trade receivables

Amount receivable from subsidiary undertaking

Total trade and other receivables

31 December

2020
£000s

29,306

103

29,409

2019
£000s

–

The 2020 receivable balance relates to the upfront payment from AstraZeneca.

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

No interest is charged on outstanding receivables. There were no overdue trade receivable balances.

The company has applied an expected credit loss model to the balance and determined that £nil (2019: £nil) provision is required.

C.12 Trade and other payables

Trade payables

Amount payable to subsidiary undertaking

Social security and other taxes

Accruals and other payables

31 December

2020
£000s

2,162

3,604

1,060

4,120

10,947

2019
£000s

1,639

2,123

312

4,274

8,348

Trade payables principally comprise amounts outstanding for trade purchases and continuing operating costs. The amount payable by the
Company to a subsidiary undertaking is repayable within 12 months and does not incur interest.

Accruals and other payables primarily represent accrued expenses where an invoice has not been received yet. The Directors consider that the
carrying amount of trade and other payables approximates to their fair value.

C.13 Lease liability

Lease liability

Total lease liability

31 December

2020
£000s

300

2019
£000s

287

Lease liability recognised on the face of the balance sheet comprises only a short lease for the Group’s London office. The repayment of the
principal portion of the lease liability for the year ended 31 December 2020 was £374k (2019: £nil).

C.14 Contract liabilities

Contract liabilities comprise entirely deferred revenue in respect of the Mallinckrodt, AstraZeneca and Takeda collaborations.

Contract liabilities – current

Contract liabilities – non-current

31 December

2020
£000s

17,042

51,337

68,379

2019
£000s

2,478

15,515

17,993

SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSC.15 Capital reserves

At 1 January 2019

Shares issued

On options in issue during the year

On vested options lapsed during the year

On options exercised during the year

Movement in the year

At 31 December 2019

Shares issued

On options in issue during the year

On vested options lapsed during the year

On options exercised during the year

Movement in the year

At 31 December 2020

Share
premium
account
£000s

133,242

3,767

1,141

–

4,908

138,150

15,396

–

188

15,584

153,734

Merger
reserve
£000s

22,064

–

22,064

–

22,064

Share-based
payment
reserve
£000s

Capital
redemption
reserve
£000s

Total
£000s

2,437

5,194

162,937

–

584

–

(1,370)

(786)

1,651

–

4,395

–

(331)

4,064

5,715

–

3,767

1,725

–

(1,370)

4,122

5,194

167,059

–

15,396

4,395

–

(143)

19,648

5,194

186,707

Due to the size of the deficit on the profit and loss account, the Company has no distributable reserves.

The share premium account reflects the premium to nominal value paid on issuing shares less costs related to the issue.

The merger reserve was created on issuance of shares relating to the acquisition of Silence Therapeutics GmbH.

The share-based payments reserve reflects the cost to issue share-based compensation, primarily employee share options.

C.16 Related party transactions

During the year the Group paid £75k (2019: £9k) to Gladstone Partners Limited, a company controlled by Director Iain Ross. The balance owed
at the year end was £nil (2019: £27k).

Detail presented in the Remuneration Committee report. See pages 35 to 39 for further details.

C.17 Post balance sheet events

Notes to the Company financial statements (continued)year ended 31 December 2020SILENCE THERAPEUTICS ANNUAL REPORT 2020 | FINANCIAL STATEMENTSCompany information and advisers

Secretary
Barbara Ruskin

Registered Office
27 Eastcastle Street
London W1W 8DH
United Kingdom

Registered Number
02992058

Nominated Adviser and Broker
Investec PLC
30 Gresham Street
London EC2V 7QP
United Kingdom

Registrar
Link Asset Services
65 Gresham Street
London EC2V 7NQ
United Kingdom

Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory
Auditors
The Maurice Wilkes Building
St John’s Innovation Park
Cambridge CB4 0DS
United Kingdom

Legal Adviser
Cooley (UK) LLP
Dashwood
69 Old Broad Street
London EC2M 1QS
United Kingdom

Silence Trademarks
Silence
Silence Therapeutics
The Silence Therapeutics logo
AtuRNAi

Silence Therapeutics plc
United Kingdom
72 Hammersmith Road
London, W14 8TH
+44(0)20 3457 6900

Germany
Robert-Rossle-Str.10
D-13125 Berlin
+49 30 9489 2800

United States
434 West 33rd Street
Office 814
New York, NY 10001

www.silence-therapeutics.com

Corporate headquarters
Silence Therapeutics plc
72 Hammersmith Road
London, W14 8TH
UK
Tel: +44 (0)20 3457 6900