Silence Therapeutics plc
Annual Report 2023

Plain-text annual report

3DN31IS A S311 n 3 d vy 3 H 1 Vd Silence Therapeutics Annual Report 2023 SILENCE THERAPEUTICS PLC Contents 1 Strategic report 2 Governance Board of Directors Corporate Governance Report Audit and Risk Committee Report Remuneration Committee Report Directors’ Report 3 Financial Statements 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 Notes to the Company Financial Statements Company Information and Advisers 2 17 23 29 32 53 57 65 65 68 66 67 68 69 101 102 103 114 1 SILENCE THERAPEUTICS PLC Strategic Report Business Overview Silence Therapeutics plc (“we”, “us”, “our”, “the Company” or “Silence”) is a biotechnology company focussed on discovering and developing novel molecules incorporating short interfering ribonucleic acid, or siRNA, to inhibit the expression of specific updated genes thought to play a role in the pathology of diseases with significant unmet medical need. Our siRNA molecules are designed to harness the body’s natural mechanism of RNA interference, or RNAi, by specifically binding to and degrading messenger RNA, or mRNA, molecules that encode specific targeted disease- associated proteins in a cell. By degrading the message that encodes the disease-associated protein, the production of that protein is reduced and its level of activity is lowered. In the field of RNAi therapeutics, this reduction of disease- associated protein production and activity is referred to as “gene silencing.” Our proprietary mRNAi GOLD™ (GalNAc Oligonucleotide Discovery) platform consists of precision-engineered medicines designed to accurately target and ‘silence’ specific disease-associated genes in the liver. Using our mRNAi GOLD™ platform, we have generated siRNA product candidates both for our internal development pipeline as well as for out-licensed programmes with third-party collaborators. Our wholly owned pipeline is currently focused in three therapeutic areas of high unmet need: cardiovascular disease, haematology and rare diseases. Zerlasiran (SLN360), an siRNA targeting the LPA gene, is our wholly owned product candidate in phase 2 clinical development to reduce high levels of lipoprotein(a), or Lp(a). High Lp(a) is a genetically determined cardiovascular risk factor affecting up to 20% of the world’s population and is associated with a high risk of heart attack, stroke and aortic stenosis. There are currently no approved medicines that selectively lower Lp(a). In February 2022, we reported positive results from the single-ascending dose portion of the APOLLO phase 1 program evaluating zerlasiran in 32 healthy adults with high Lp(a) ≥150 nmol/L. In the single dose trial, participants in the top two zerlasiran single dose groups (300 mg and 600 mg) were observed to have experienced up to a 96% and 98% median reduction in Lp(a) levels, respectively, and median reductions of up to 71% and 81% from baseline persisted at 150 days. Further analysis showed median time-averaged Lp(a) reductions over 150 days exceeded 80% in the zerlasiran 300 mg and 600 mg dose groups. At day 365, some participants still exhibited substantial knockdown of Lp(a) to approximately 50% of baseline. Zerlasiran was well tolerated with no serious safety concerns reported. In November 2023, we reported positive topline results from the multiple dose portion of the APOLLO program in 36 adults with baseline Lp(a) levels ≥150 nmol/L and stable atherosclerotic cardiovascular disease (ASCVD). In the multiple dose trial, zerlasiran (200 mg, 300 mg and 450 mg) was administered twice subcutaneously at two different dosing intervals. Data demonstrated a significant reduction from baseline in Lp(a) of up to 99% at 90 days following injection of repeated doses. Lp(a) levels remained approximately 90% lower than baseline at 201 days (end of treatment period) at the two highest doses. A dose dependent reduction in low-density lipoprotein cholesterol (LDL cholesterol) and apolipoprotein B (ApoB) was also observed. Zerlasiran was well tolerated; no clinically important safety concerns were identified. Zerlasiran is currently being evaluated in the fully enrolled ALPACAR-360 phase 2 study in patients with Lp(a) levels 125 nmol/L at high risk of ASCVD events. We expect to report topline 36-week data in the first quarter of 2024 (primary endpoint) and topline 48-week data in the second quarter of 2024. We are currently finalizing the design of our phase 3 Clinical Outcomes Trial. We continue to engage in global partnership discussions for future zerlasiran development and for potential future commercialization. Divesiran (SLN124), an siRNA targeting the TMPRSS6 gene, is our wholly owned product candidate that has shown the potential to address a range of hematological conditions by modulating endogenous hepcidin, a peptide hormone that is the master regulator of systemic iron balance. Divesiran has FDA Fast Track and orphan disease designations for polycythemia vera, or PV, and is currently being evaluated in the SANRECO phase 1/2 trial in patients with PV. We plan to report data from the phase 1 portion of the study in the first half of 2024. Divesiran has demonstrated proof of mechanism in the GEMINI phase 1 trial in healthy volunteers completed in May 2021. In the GEMINI study, divesiran was observed to increase average hepcidin approximately four-fold and reduce serum iron by approximately 50% after a single dose with effects persisting for at least two months. Data were presented at the American Society of Hematology (ASH) 2021 Annual Meeting and published in the American Journal of Hematology in July 2023. The potential of our mRNAi GOLD™ platform has been validated through ongoing research and development collaborations with leading pharmaceutical companies, such as AstraZeneca, Mallinckrodt and Hansoh. These collaborations collectively represent up to 14 pipeline programs and approximately $5.5 billion in potential milestones plus royalties. We believe the potential for our mRNAi GOLD™ platform to address disease-associated genes in the liver is substantial. Only around one percent of the approximately 14,000 liver expressed genes have been targeted by publicly known siRNAs. Once in the clinic, early-stage GalNAC-conjugated RNAi programmes have shown a greater likelihood 2 SILENCE THERAPEUTICS PLC of advancement from the current phase of development compared to the pharma industry average, according to a 2020 industry analysis based on phase transition success rates. We aim to maximize our mRNAi GOLD™ platform by advancing both our proprietary and partnered pipelines. Background on siRNA Molecules and RNA Interference Messenger RNA (mRNA) plays an essential role in the process used by cells to translate genetic information from DNA to create proteins. Transcription from DNA in the cell nucleus generates different types of RNA, including mRNA, which carries in the sequence of its nucleotides the genetic information which serves as molecular blueprints required for translation, or protein synthesis, outside of the nucleus where proteins are made. In some cases, cells produce mRNA erroneously, resulting in synthesis of too much of a particular protein or a mutated protein variant, which can lead to disease. Our siRNAs are designed to bind to undesirable mRNA, whereupon a natural process known as RNA interference, or RNAi, is triggered, resulting in catalytic degradation of the mRNA and reduced production and activity of the disease-associated protein. RNAi is a naturally occurring biological pathway within cells for sequence-specific silencing and regulation of gene expression. RNAi was discovered by Andrew Fire and Craig Mello, for which they were awarded the 2006 Nobel Prize in Physiology or Medicine. RNAi therapeutics represent a novel advance in drug development that has the potential to transform the care of patients with genetic and other diseases. Historically, the pharmaceutical industry had developed only small molecules or recombinant proteins to inhibit the activity of disease-associated proteins. While this approach is effective for many diseases, a number of proteins cannot be inhibited by either small molecules or recombinant proteins. Some proteins lack the binding pockets small molecules require for interaction. Other proteins are solely intracellular and are therefore inaccessible to recombinant protein-based therapeutics, which are limited to cell surface and extracellular proteins. The unique advantage of RNAi is that, instead of targeting proteins, RNAi silences the expression of genes themselves via the targeted destruction of the mRNAs made from the gene. Rather than seeking to inhibit a protein directly, the RNAi approach works upstream to prevent its creation in the first place. Once inside a cell, siRNA molecules are recognized by the endogenous RNAi cellular machinery, which removes one of the strands, referred to as a passenger strand, of the siRNA construct, thereby allowing the other strand, referred to as a guide strand, to find its target mRNA and bind to it through Watson-Crick base pairing. This site- specific binding triggers the biological process of RNAi interference, by which natural cellular machinery degrades target mRNA bound by the guide strand and thereby prevents it from being translated into functional proteins. Our medicines are designed to harness this natural pathway to develop a new generation of therapeutics by designing tailored siRNA sequences that are able to bind through Watson-Crick base pairing to mRNAs that code for specific disease-associated genes, or genes that regulate them. Our siRNA molecules are administered by subcutaneous injection. Once administered, our siRNA molecules are taken up specifically by target liver cells or cleared from the body within hours. A single siRNA molecule, once in the liver and incorporated into the RNAi cellular machinery, can degrade large numbers of targeted mRNAs due to the catalytic nature of the cell’s RNAi machinery. Because the catalytic activity of the RNAi pathway eventually fades with gradual degradation of the guide strands, RNAi-mediated protein reduction is not permanent. In our preclinical studies, we have observed a durable, dose- dependent silencing effect with our product candidates, with the highest dose resulting in reductions of between 50% and 85% or more of the target protein level over the course of several weeks to months following subcutaneous injection. As a result of the phase 1 clinical data we have generated in both our zerlasiran and divesiran programs, we believe that these observed results suggest that our product candidates could lead to similar results in humans. The graphic below shows the steps involved in the pairing of our siRNA molecules with the bases contained in the mRNA sequence for a particular target gene. 3 SILENCE THERAPEUTICS PLC We believe that siRNA molecules can, in theory, be engineered to bind specifically to and silence almost any gene in the human genome to which siRNA can be delivered. This potentially broad application of siRNA therapeutics could allow them to become a new major class of drugs. We are currently able to deliver siRNA molecules to liver cells using GalNAc for receptor-mediated targeting. GalNAc is an amino-modified monosaccharide that binds to asialoglycoprotein receptors, or ASGPRs, with high affinity and specificity. When GalNAc-conjugated siRNA molecules reach the surface of liver cells, they are internalized in those cells, with those not internalized being excreted. Once internalized, the siRNAs specifically bind to their target mRNAs, degrading them through the cell’s natural RNAi pathway. This GalNAc-siRNA drug modality is intended to enable precision medicine through the accuracy of Watson-Crick base pairing of the siRNA to its target gene mRNA, coupled with the specificity of GalNAc- mediated delivery to the target gene-containing liver cell. Our mRNAi GOLD™ platform uses a novel structure of double-stranded RNA with chemical modifications designed to improve the stability and efficacy of our siRNA molecules as well as to enhance delivery to targeted liver cells. We incorporate proprietary chemical modifications to enhance drug properties of our siRNA molecules, such as potency, stability and tissue distribution. We believe this approach results in a powerful modular technology that will be well-suited to tackle life-changing diseases. Particular siRNA molecules are designed to reduce the levels of a disease-associated protein directly, such as in the case of zerlasiran. In preclinical studies and our phase 1 single- ascending dose study, zerlasiran was shown to directly reduce Lp(a) expression. Alternatively, in cases in which a disease-associated protein is normally subject to inhibition by a regulatory protein, siRNA molecules are designed to increase the levels of the disease-associated protein by silencing the inhibitory protein, thereby relieving inhibition and indirectly increasing levels of the protein normally subject to inhibition. In preclinical studies and in a phase 1 clinical trial in healthy volunteers, divesiran was shown to indirectly up-regulate hepcidin levels by reducing the expression of a specific gene, TMPRSS6, which normally inhibits the production of hepcidin. We will use this approach to address ‘iron loading’ anemia conditions in which hepcidin expression is typically low. Using these techniques, we believe we can design siRNA molecules to decrease high protein levels, and in some cases, to increase low protein levels, depending on the particular disease genes being targeted. 4 SILENCE THERAPEUTICS PLC Our mRNAi GOLD™ Platform Our mRNAi GOLD™ platform comprises elements of our GalNAc-siRNA toolbox, our liver cell targeting technology and our target selection and screening process. GalNAc-siRNA Toolbox. Our mRNAi GOLD™ platform is a toolbox comprising several different elements that can be incorporated into our double-stranded siRNA structure, known as blunt-ended 19-mers, either singly or in different combinations depending on individual siRNA sequences. The toolbox elements include: • • • sugar modifications of one or more select individual nucleotides; stabilizing modifications of one or more internucleoside linkages in the sense and antisense strands; stabilizing modifications at one or more of the ends of the siRNA molecules; and • a versatile linker chemistry for GalNAc ligand conjugation in various numbers and configurations. When applying these elements of our toolbox, we also aim to reduce the overall content of the sugar modifications and the number of undefined stereogenic centers in the siRNA molecule. Liver Cell Targeting Technology. Blood flow and fenestra, or small openings in the endothelium, result in a large amount of the injected dose of a conjugated siRNA passing through the liver and reaching the main cell type of the liver known as a hepatocyte. Hepatocytes are cuboidal epithelial cells that line the liver sinusoids. Individual hepatocytes have approximately 0.5 to 1.0 million cell surface ASGPRs. GalNAc binds to ASGPRs with high affinity so that when GalNAc-conjugated siRNA reaches the hepatocytes, they are internalized into the cells where siRNA can bind and, as a result, can degrade the target mRNA, which in turn reduces production of the encoded protein and that protein’s activity, thereby silencing the respective gene. Only a small fraction of the initial dose reaches the hepatocyte and the right compartment of the cell, but once the siRNA is there, it can stay active and intact for several months, allowing a small number of internalized siRNA molecules to exert a potent effect on the target mRNA. We apply the toolbox elements in the lead optimization phase to identify candidates that we believe will be potent with a long duration of action and have a favorable safety profile. Target Selection and Screening Process. We are able to source potential product candidates through a proprietary target selection process. The selection of new targets involves a careful analysis of human genetics evidence, the biology underlying an indication, disease epidemiology and addressable population, the current standard of care and resulting medical need, the commercial landscape and the envisaged clinical path. Our screening process relies on a proprietary in silico algorithm that seeks to predict the most efficacious and specific siRNAs for any given target. This bioinformatics function is designed to continuously improve in silico predictions for finding potentially potent and safe siRNA sequences. The highest scoring drug candidates subsequently undergo a multi-step evaluation process involving several rounds of in vitro screening in cell lines and primary hepatocytes to identify the most potent molecules. Top candidates identified in vitro are then tested for safety and potential efficacy in animal models. At this point in the process, additional modification patterns and new chemistries are introduced for improvement of activity and duration of action while maintaining the desired safety profile. To be selected as a drug candidate for clinical trials, it further needs to be shown that a molecule is well tolerated, elicits no serious adverse effects, and achieves strong and long-lasting knockdown of the targeted gene in a study with non-human primates. Our Pipeline Our pipeline is centred around our liver-targeting mRNAi GOLD™ platform and consists of a diversified set of therapeutic areas, including haematology, cardiovascular disease and rare diseases. 5 SILENCE THERAPEUTICS PLC *Silence retains exclusive rights to this programme outside of the China region, which includes Hong Kong, Macau and Taiwan. Our siRNA Product Candidates Zerlasiran (SLN360) Overview Zerlasiran is an siRNA molecule designed for the treatment of cardiovascular disease associated with elevated Lp(a), a lipoprotein in the blood. Available human data validate Lp(a) as an independent risk factor increasing the chances of developing premature cardiovascular diseases, including coronary heart disease and unstable angina, as well as myocardial infarction and ischemic stroke. Zerlasiran is administered by subcutaneous injection and has the potential to reduce these diseases by specifically binding to and inducing RNAi-mediated degradation of the mRNAs made from LPA, the gene that encodes apolipoprotein(a), a protein specifically found in Lp(a). Zerlasiran’s mode of action creates an opportunity to develop this product candidate for several indications for which Lp(a) has been shown to be a causal, independent risk factor. Elevated levels of Lp(a) ≥ 125 nmol/L or approximately 50mg/dL is considered to affect up to 20% of the world’s population. The incidence of elevated Lp(a) is thought to be higher in people with established cardiovascular disease and calcific aortic valvular stenosis. Additionally, elevated Lp(a) concentrations are associated with an increased risk of myocardial infarction and ischemic stroke, particularly in stroke patients 55 years of age and younger. There is a genetic link between plasma Lp(a) level and cardiovascular risk. Mutations that genetically cause elevated Lp(a) levels have been linked with increases in myocardial infarction, ischemic stroke, carotid stenosis, peripheral arterial disease (including femoral artery stenosis), abdominal aortic aneurysm, obstructed coronary vessels (i.e. coronary atherosclerotic burden), earlier onset of coronary artery disease, cardiovascular and all-cause mortality, increased risk of heart failure and reduced longevity. Importantly, these causal relationships are independent of concentrations of other lipids and lipoproteins, including low-density lipoprotein, or LDL, and conventional cardiovascular disease risk factors. Conversely, a genetically determined decrease in Lp(a) has been associated with a 29% lower risk of coronary artery disease, 31% lower risk of peripheral vascular disease, 17% lower risk of heart failure, 13% lower risk of stroke and a 37% lower risk of aortic stenosis. In the APOLLO phase 1 program evaluating healthy adults and ASCVD patients with high Lp(a) levels ≥ 150 nmol/L, zerlasiran was well tolerated and observed to significantly reduce Lp(a) levels up to 99% with strong durability. Zerlasiran is currently being evaluated in the ALPACAR-360 phase 2 clinical trial in subjects with high Lp(a) ≥ 125 nmol/L at high risk of ASCVD events. 6 SILENCE THERAPEUTICS PLC Disadvantages of existing treatment options Lp(a) is not susceptible to lifestyle changes and there are no currently available pharmacological treatments that cause an appreciable reduction in Lp(a). The only existing treatment to reduce Lp(a) is apheresis, which involves the removal of blood plasma from the body by the withdrawal of blood, its separation into plasma and cells, and the reintroduction of the cells, used especially to remove antibodies in treating autoimmune diseases. This process can take between two and four hours and is performed every one to two weeks. Consequently, it is invasive and burdensome for patients, and it is only available at limited centers at a high cost. Apheresis is primarily used in Europe and it is not incorporated in the treatment guidelines in the United States. There are currently no approved lipid-lowering agents specific to Lp(a). Several non-specific agents, largely targeting LDL cholesterol, have been observed to have only marginal or modest Lp(a) reductions, including ezetimibe (7%), niacin therapy (23%), cholesteryl ester transfer protein, or CETP, inhibitors (25-60%), and antisense oligonucleotide-mediated inhibition of apolipoprotein B (ApoB) by mipomersen (26%). Additionally, two monoclonal antibodies that inhibit proprotein convertase subtilisin/kexin type 9, or PCSK9, have been observed to reduce Lp(a) levels by 20%-30%. However, randomization studies have suggested that to produce a clinically significant reduction in cardiovascular risk, a larger reduction in Lp(a) may be required, something that we believe may be achieved by targeted RNA-based approaches such as ours. APOLLO Phase 1 Clinical Program The APOLLO phase 1 clinical program was a global randomized, double-blind, placebo controlled, single- ascending dose and multiple-ascending dose study investigating the safety, tolerability, pharmacodynamic and pharmacokinetic response of zerlasiran administered subcutaneously in healthy adults and ASCVD patients with high Lp(a) levels of approximately ≥ 60mg/dL or ≥ 150 nmol/L. In February 2022, we reported positive results from the single-ascending dose portion of the APOLLO phase 1 program in 32 healthy adults with high Lp(a) ≥ 150 nmol/L. In April 2022, results were simultaneously presented in a late-breaking presentation at the ACC Annual Meeting and published in JAMA. In the single dose trial, participants in the top two dose groups (300 mg and 600 mg) were observed to have experienced up to a 96% and 98% median reduction in Lp(a) levels, respectively, and median reductions of up to 71% and 81% from baseline persisted at 150 days. Those receiving a placebo saw no change in Lp(a) levels. Other efficacy measures included the effects of zerlasiran on low-density lipoprotein cholesterol (LDL cholesterol) and ApoB, both of which are associated with an increased risk of cardiovascular events. The highest doses of zerlasiran reduced LDL cholesterol and ApoB by about 25%. Zerlasiran was well tolerated with no serious safety concerns reported. In November 2022, we presented a further analysis from the APOLLO trial up to 365 days at the American Heart Association 2022 Annual Meeting. The analysis showed median time-averaged Lp(a) reductions over 150 days exceeded 80% in the zerlasiran 300 mg and 600 mg dose groups. At day 365, some participants still exhibited substantially reduced levels of Lp(a) of approximately 50% compared to baseline. Additionally, extension data to day 365 showed no new drug related safety findings. In November 2023, we reported positive topline results from the multiple-ascending dose portion of the APOLLO program in 36 adults with stable ASCVD and high Lp(a) ≥150 nmol/L. In the multiple dose trial, zerlasiran (200 mg, 300 mg and 450 mg) was administered twice subcutaneously at two different dosing intervals. Data demonstrated a significant reduction from baseline in Lp(a) of up to 99% at 90 days following injection of repeated doses. Lp(a) levels remained approximately 90% lower than baseline at 201 days (end of treatment period) at the two highest doses. A dose dependent reduction in low-density lipoprotein cholesterol (LDL cholesterol) and apolipoprotein B (ApoB) was also observed. Zerlasiran was well tolerated; no clinically important safety concerns were identified. ALPACAR-360 Phase 2 Clinical Program The ALPACAR-360 phase 2 clinical trial is a randomized, double-blind, placebo-controlled trial enrolling approximately 160 patients with high Lp(a) ≥ 125nmol/L at high risk of ASCVD events. The primary endpoint is time averaged change in Lp(a) from baseline. The study is fully enrolled and we expect to report topline 36-week data (primary endpoint) in the first quarter of 2024 and topline 48-week data in the second quarter of 2024. 7 SILENCE THERAPEUTICS PLC Divesiran (SLN124) Overview Divesiran is an siRNA molecule designed for the treatment of genetic hematological conditions, including polycythemia vera (PV). PV is a myeloproliferative neoplasm characterized by the overproduction of blood cells and platelets. Elevated hematocrit is a hallmark of the disease, indicating the overproduction of red blood cells. Patients with hematocrit between 45-50% are four-times more likely to die from cardiovascular causes or major thrombotic events than those with hematocrit less than 45%. PV is a rare disease affecting approximately 150,000 in the U.S. and around 3.5 million worldwide. Divesiran is administered subcutaneously and works by specifically binding to and inducing RNAi-mediated degradation of mRNAs made from the TMPRSS6 gene. TMPRSS6 is a negative regulator of hepcidin, which is the main hormone controlling iron homeostasis in the body. In PV, red blood cells are over-produced as a form of cancer, causing an increase in total red blood cell mass and overall blood thickness/stickiness as well as iron deficiency that adversely affects other cell types. Lowering levels of the TMPRSS6 protein could increase hepcidin production, restricting iron availability to reduce red cell mass, hemoglobin levels, and hematocrit, as well as reallocate iron to normal functions. Divesiran demonstrated proof of mechanism in the GEMINI phase 1 trial in healthy volunteers completed in May 2021. In the GEMINI study, divesiran was observed to increase average hepcidin approximately four-fold and reduce serum iron by approximately 50% after a single dose with effects persisting for at least two months. Data were presented at the American Society of Hematology (ASH) 2021 Annual Meeting and published in the American Journal of Hematology in July 2023. Divesiran has FDA Fast Track and orphan disease designations for PV, and is currently being evaluated in the SANRECO phase 1/2 trial in PV patients. Disadvantages of existing treatment options The primary treatment goal in PV is to reduce the risk of thrombotic events by reducing hematocrit (the percent volume of red blood cells in the blood) to within target levels. The mainstay of treatment is therapeutic phlebotomy to reduce the number of blood cells by regularly removing blood from the patient. Phlebotomy results in erratic, suboptimal control of hematocrit, and regular phlebotomies can be burdensome to the patient. Patients over 60, or those with prior thrombotic events or additional cardiovascular risk factors are also treated with chemotherapy drugs (cytoreductive agents) to suppress blood cell production. The majority of these patients are treated with hydroxyurea, which is poorly tolerated and carries the risk of potential long term side effects. Patients who are resistant or intolerant to hydroxyurea may be treated with the JAK2 inhibitor ruxolitinib (Jakafi), which carries the risk of thrombocytopenia (low platelet count). Finally, some patients are treated with synthetic hepcidin mimetic dosed weekly by subcutaneous injection in clinical trials. In contrast to synthetic hepcidin mimetics, divesiran elevates endogenous hepcidin produced and secreted by the liver, avoiding high local concentrations of hepcidin at the injection site. We believe the sustained duration of action will allow divesiran to be dosed monthly, or less frequently, bringing additional value to patients. GEMINI Trial The GEMINI trial was a randomized, double-blind, placebo controlled, single-ascending dose study to investigate the safety, tolerability, PK and PD response of divesiran (1.0, 3.0 and 4.5 mg/kg doses) administered subcutaneously in 24 healthy volunteers. Key outcomes included: • All 3 dose levels were well tolerated with no serious or severe treatment emergent adverse events, or TEAEs, leading to withdrawal. • Average hepcidin, a key endogenous regulator of iron balance and distribution, increased up to ~4-fold after a single dose with effect sustained for at least 2 months. • Serum iron reduced by ~50% after a single dose with effect sustained for at least 2 months. • Divesiran was rapidly distributed (median tmax was 4.0 or 5.0 hours) and largely eliminated from plasma within 24 hours post-dose in all dosing groups. Divesiran plasma concentrations increased in a greater than dose- linear fashion between dosing groups. • All divesiran doses induced marked reductions in transferrin saturation, or TSAT; absolute levels of TSAT achieved (10–16%) are below the level (< 20%) where iron availability to tissue is restricted and at or below that (< 16%) required to support normal erythropoiesis in health. GEMINI II Phase 1 Program 8 SILENCE THERAPEUTICS PLC The GEMINI II phase 1 trial evaluated divesiran in non-transfusion dependent thalassemia patients. In the study, divesiran was well tolerated with no safety issues identified. While proof of mechanism has been established in healthy volunteers, the effects on indicators of iron metabolism were variable in this study population of heterogeneous thalassemia subjects. We are prioritizing R&D efforts on the ongoing PV program and do not have plans to advance development in thalassemia at this time. SANRECO Phase 1/2 Program The SANRECO phase 1/2 trial is a two-part clinical trial which includes a phase 1 open-label, dose finding trial followed by a phase 2 randomized, double-blind, placebo-controlled parallel arm study of divesiran in PV patients. The trial is expected to enroll approximately 65 participants total. The primary endpoint for the phase 1 portion of the trial is safety/tolerability and the assessment of the number of phlebotomies at different intervals. The phase 2 portion of the trial will evaluate the number of patients who are phlebotomy free after treatment. We plan to report data from the phase 1 portion of the study in the first half of 2024. Collaborations AstraZeneca In March 2020, we entered into a collaboration agreement with AstraZeneca to discover, develop and commercialize siRNA therapeutics for the treatment of cardiovascular, renal, metabolic and respiratory diseases. Under this agreement, AstraZeneca made an upfront cash payment to us of $20.0 million in May 2020. AstraZeneca made an additional unconditional cash payment to us of $40.0 million which was received in May 2021. In March 2020, an affiliate of AstraZeneca also subscribed for 4,276,580 new ordinary shares for an aggregate subscription price of $20.0 million. The collaboration covers five targets initially, with AstraZeneca having the option to extend the collaboration to a further five targets. AstraZeneca has agreed to pay us $10.0 million upon the exercise of each option to collaborate on an additional target. In May 2023, AstraZeneca nominated the first product candidate under our collaboration, triggering a $10 million option fee to us to advance development on an undisclosed program. For each target selected, we will be eligible to receive up to $140.0 million in potential milestone payments upon the achievement of milestones relating to the initiation of specified clinical trials, the acceptance of specified regulatory filings and the first commercial sale in specified jurisdictions. For each target selected, we will also be eligible to receive up to $250.0 million in potential commercial milestone payments, upon the achievement of specified annual net sales levels, as well as tiered royalties as a percentage of net sales ranging from the high single digits to the low double digits. Mallinckrodt In July 2019, we entered into a collaboration agreement with Mallinckrodt to develop and commercialize RNAi drug targets designed to silence the complement cascade in complement-mediated disorders. In connection with the execution of this agreement, Mallinckrodt made an upfront cash payment to us of $20.0 million (equivalent to £16.4 million as of the payment date). Under a separate subscription agreement, Cache Holdings Limited, a wholly owned subsidiary of Mallinckrodt, concurrently subscribed for 5,062,167 new ordinary shares for an aggregate subscription price of $5.0 million (equivalent to £4.0 million as of the payment date). Under the agreement, we granted Mallinckrodt an exclusive worldwide license to our C3 targeting program, SLN501, with options to license two additional undisclosed complement-mediated disease targets from us. In July 2020, Mallinckrodt exercised options on the two additional complement targets. In March 2023, we reacquired exclusive worldwide rights from Mallinckrodt to the two undisclosed preclinical complement targets. Under the terms of the modified agreement, we did not make any upfront payment to get the two assets back and will potentially pay future success-based milestones and low single digit royalties on net sales if the projects advance. SLN501, the C3 targeting program, remained under the original collaboration agreement. In March 2024, Mallinckrodt notified us that they will not pursue further development of SLN501 following the completion of the phase 1 clinical trial. This will conclude all activities and commitments under the collaboration agreement. Hansoh In October 2021, we announced a collaboration agreement with Hansoh, one of the leading biopharmaceutical companies in China, to develop siRNAs for three undisclosed targets leveraging our proprietary mRNAi GOLD™ platform. Under the terms of the agreement, Hansoh will have the exclusive option to license rights to the first two targets 9 SILENCE THERAPEUTICS PLC in Greater China, Hong Kong, Macau and Taiwan following the completion of phase 1 trials. We will retain exclusive rights for those two targets in all other territories. We will be responsible for all activities up to option exercise and will retain responsibility for development outside the China region post phase 1 trials. Hansoh will also have the exclusive option to license global rights to a third target at the point of IND filing. Hansoh will be responsible for all development activities post option exercise for the third target. Hansoh made a $16 million upfront payment to us in December 2021. We achieved our first $2 million research milestone payment in the Hansoh collaboration in April 2022. In 2023, we achieved two additional preclinical milestones and received $4 million from the collaboration. We are eligible to receive up to $1.3 billion in additional development, regulatory and commercial milestones. We will also receive royalties tiered from low double-digit to mid-teens on Hansoh net product sales. 10 SILENCE THERAPEUTICS PLC Financial Review Revenue Revenue for the year ended December 31, 2023 was £25.4 million (2022: £17.5 million). The increase was primarily due to the advancement of targets in our AstraZeneca, and Hansoh collaborations which delivered £14.3 million to us in 2023 and £10.5 million from acquisition of the exclusive worldwide rights to two preclinical siRNA assets under the Mallinckrodt collaboration which resulted in a contract modification. (2022: £16.9 million). In March 2023, the Company reacquired exclusive worldwide rights to two preclinical siRNA assets under its Mallinckrodt collaboration, which resulted in a modification of the agreement. No additional performance obligations were identified as a result of the modification as there were no additional goods or services to be provided by the Company and the modification resulted in the partially satisfied performance obligations relating to the two reacquired targets becoming fully satisfied as the Company was no longer obligated to develop these targets. SLN501, the C3 targeting program, remained under the original collaboration agreement through March 2024. The Company accounted for the modification as if it were part of the existing contract as the remaining services to be delivered form part of a single performance obligation that is partially satisfied at the date of contract modification. The effect of the contract modification was that the consideration originally received for the two preclinical siRNA assets was reallocated to SLN501. The Company recognized the effect of the contract modification on the measure of progress towards complete satisfaction of the SLN501 performance obligation, and recognized an adjustment to revenue at the date of the contract modification on a cumulative catch-up basis. The Company recognized £8.0 million on the contract modification date. In relation to the reacquired targets, the two preclinical siRNA assets were recognized at fair value. The fair value of those assets has been determined to be nil. Under the modification, the Company agreed to pay future success-based milestones and low single digit royalties on net sales if the projects advance. The Company will recognize these variable success-based milestones as an intangible asset at cost when triggered. Any royalties payable will be expensed in cost of sales. Cost of Sales Cost of sales consists of research and development expenditure that is directly related to work carried out on revenue generating contracts, which decreased to £10.3 million for the year ended December 31, 2023 (2022: £10.9 million). There were no costs associated with revenue recognized as a result of the Mallinckrodt collaboration contract modification. The remaining change is due to activity associated with our collaboration agreements, which fluctuate based on the timing of activities and project progression. Research and Development Expenses Research and development costs for the year ended December 31, 2023 were £44.0 million as compared to £35.6 million for the year ended December 31, 2022. Contract development costs increased by £8.4 million from 2022 as a result of additional clinical trials and an increase in contract manufacturing activities for our proprietary programs. Personnel costs also increased by £1.2 million from 2022 associated with the increase of headcount related to the addition of new R&D programs. General and Administrative Expenses General and administrative expenses were £20.6 million for the year ended December 31, 2023 as compared to £19.6 million for the year ended December 31, 2022. The increase is mainly due to a £2.8 million increase in equity-based compensation related to new grants in the current period offset by a reduction of other general and administrative costs including severance, insurance, and legal costs as we continue to benefit from efficiencies gained and the monitoring of administrative costs. Finance and Other Income (Expense) Finance income primarily relates to accretion from U.S. Treasury Bills. For the year ended December 31, 2023 this was £1.4 million compared with £0.2 million for the same period in 2022. There were no related foreign exchange gains in the year ended December 31, 2023 compared with a gains of £1.0 million in the same period in 2022. Net foreign exchange gains and losses result primarily from foreign currency (Euro and USD) denominated bank accounts. 11 SILENCE THERAPEUTICS PLC Finance expense for the year ended December 31, 2023 primarily relates to foreign exchange losses of £2.1 million compared with nil for the same period in 2022. Taxation During 2023 and 2022, we have recognized U.K. research and development tax credits of £7.8 million and £7.4 million, respectively in respect of R&D expenditures incurred; the higher tax credit in current year due to an increase in R&D expenditure compared to previous year. This amount was offset by tax charges in our foreign tax expense. Liquidity, cash and cash equivalents As of December 31, 2023, we had cash and cash equivalents of £54.0 million ($68.8 million). In 2023, we raised net proceeds of approximately $32 million (approximately £25.5 million), before deducting £1.0 million in placement agent fees and other expenses from its open market sale agreement. In January 2024, we raised additional proceeds of £15.7 million ($20 million) before deducting £0.5 million ($0.6 million) in placement agent fees and other expenses, from sales of ADSs under our Sales Agreement. On February 5, 2024 we announced a private placement of 5,714,286 of our ADSs, each representing three ordinary shares, at a price of US $21.00 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of the Private Placement was US $120 million (approximately £94.5 million) before deducting approximately £5.7 million in placement agent fees and other expenses. Key performance Indicators (“KPIs”) The Company is a development stage business and does not yet generate revenues or other operating cash inflows from commercial sales. The Company therefore has primary KPI of cash and short-term investments. Strategic objective: Availability of financial resources to progress the development of research and development activities of the Company and its subsidiaries. Key Performance Indicator: Year-end cash and short-term investments: £54.0 million (2022: £71.1 million). Principal 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. Having carried out a review of the level of risks the Company and its subsidiaries is taking in pursuit of its strategy, the board of directors of the Company (the “Board”) is satisfied that the level of retained risk is appropriate and commensurate with the financial rewards that should result from the achievement of its strategy. The main risks have been identified as followed: • We will require additional financial resources to continue the ongoing development of our product candidates and pursue our business objectives. If we are unable to obtain these additional resources when needed, we may be forced to delay or discontinue our planned operations, including clinical testing of our product candidates. • The approach we are taking to discover and develop drugs is novel and we may not be successful in our efforts to identify or discover potential drug product candidates to bring into clinical trials. • If clinical trials of our product candidates fail to commence or, once commenced, fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities, or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialisation of our product candidates. 12 SILENCE THERAPEUTICS PLC • We have a history of net losses and we anticipate that we will continue to incur significant losses for the foreseeable future. • We will need to raise additional capital, which may not be available on acceptable terms, or at all. • We face competition from other companies that are working to develop novel drugs and technology platforms using technologies similar to ours. If these companies compete with us for limited manufacturing supplies, or for animals critical for preclinical testing, or otherwise develop drugs more rapidly than we do or their technologies, including delivery technologies, are more effective, our ability to successfully commercialise drugs may be adversely affected. • We rely on third parties to conduct some aspects of our manufacturing, research and development activities, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of research or clinical testing. • If we are unable to obtain or protect intellectual property rights related to our current or future product candidates, we may not be able to compete effectively in our markets. • We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company. • • If equity research analysts do not publish research or reports, or publish unfavourable research or reports, about us, our business or our market, the price and trading volume of our ADSs could decline. Inflation may adversely affect our operations, including increases in the prices of goods and services required for our operations. Corporate Social Responsibility Our vision is to transform peoples’ lives around the world by silencing diseases through our precision engineered medicines whilst driving positive change for the communities around us. As part of this we are committed to corporate social responsibility. Social, Community & Human Rights Our aim is to improve global health by bringing transformative treatments to adults and children in need, including for rare diseases for which there are currently limited or no treatments. During 2023, Silence’s potential treatments continued to progress: • Zerlasiran: Announced positive results from the APOLLO phase 1 multiple-ascending dose study and fully enrolled patients in the ALPACAR-360 phase 2 study in patients with high Lp(a) at high risk of ASCVD events. • Divesiran: Initiated enrolment in the SANRECO phase 1/2 study in polycythaemia vera patients. We are committed to creating inclusive policies and equal opportunities for our current generation, while encouraging the future generation of scientists who will deliver tomorrow’s medical breakthroughs. 13 SILENCE THERAPEUTICS PLC Greenhouse Gas Report Period Year ended December 31, 2023 Year ended December 31, 2022 metric tons of CO2 equivalent emissions metric tons of CO2 equivalent emissions Estimated greenhouse gas emissions from our own activities, including the combustion of fuel and the operation of our facilities Estimated greenhouse gas emissions from our own activities, including the combustion of fuel and the operation of our facilities Total estimated greenhouse gas emissions Intensity ratio: Total greenhouse gas emissions per employee on the basis of the average number of 115 full- time equivalent employees during the year ended 2023 (2022: 116) - 112 112 0.97 - 224 224 1.93 We have used the most recent estimates provided by our energy supply partners to generate our disclosures of emissions for the period. These include the purchase of electricity, heat, steam, or cooling. Standard emissions factors from the “UK Government CHG Conversion Factors for Company Reporting 2023” guidance was applied in order to estimate emissions. The group considers the intensity ratio of tonnes of carbon dioxide per full time equivalent employees is a suitable metric for its operations. Electricity usage at our leased facilities in the United States, Germany, and the United Kingdom drive the majority of our gas emissions. The Group’s estimated electricity usage for the reporting period is 543,000 kWh (an estimated 112 metric tons of CO2 equivalent emissions), with 13% of that estimated usage occurring in the United Kingdom. As a matter of course, the group actively looks to minimise indirect areas of emissions by enabling remote working and promoting online conferencing facilities to reduce business travel. Employees We are proud to say that in 2023 Silence maintained its ‘Great Place to Work’ status in the UK and Berlin and was certified in the United States. We have focused on building a diverse and inclusive culture in which upward communication and feedback is valued and encouraged. Silence recognizes that flexibility positively impacts employee productivity, commitment, and loyalty and believes in trying to assist staff to achieve a good balance between their work and home life. We provide private medical insurance to all employees for acute medical conditions to cover full out-patient treatment, therapies, mental health support, dentist and optician cashback and extra cancer cover as a taxable benefit. We also provide several other health and wellbeing programmes to our employees. For example, we provide for all employees to have a subscription to the app-based wellbeing programme called Headspace. We also provide an 14 SILENCE THERAPEUTICS PLC Employee Assistance program with the aim to give people access to 24/7 advice and help in personal and work-related matters. Environment We are monitoring our production processes and investigating new ways to increase the efficiency and reduce the mass intensity. In addition, we have issued company recommendations to reduce individual employee’s environmental impact and better work-from-home practices. Gender of Directors and Employees As of 31 December 2023, we had 109 employees. Of these employees, 82 employees are engaged in research and development activities and 27 employees are engaged in general and administrative activities. We have no collective bargaining agreements with our employees and we have not experienced any work stoppages. Diversity Appointments within the Group are made on merit accounting to the balance of skills and experiences offered by prospective candidates. Whilst acknowledging the benefits of diversity, individual appointments are made irrespective of personal characteristics such as race, disability, gender, sexual orientation, religion or age. A breakdown of the employment statistics on the basis of employees as at 31 December 2023 is as follows: Gender Identity Directors* Senior Leadership** Other employees Female Male Non-Binary - 6 50 1 7 46 Did Not Disclose Gender - - - - - - *Of the Directors, there is one executive director, that is considered both a director and an employee. **Senior Leadership includes Department Heads and Vice Presidents. Human Rights The Group 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 Group complies with all applicable human rights laws. 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: • Investors The interests of its shareholders have been taken into account on a fair basis. This is described in more detail in "Relations with shareholders" in the Corporate Governance Report on page 23. The Company has a frequent 15 SILENCE THERAPEUTICS PLC 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 ensures 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 programmes. 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 page 32. • 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 U.K., Germany and U.S. Diversity in the workplace is actively encouraged. The Company has policies on anti-slavery and anti-bribery which are actively promoted. The Board focuses on maintaining high standards of business conduct. The Company operates a Code 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: Craig Tooman Chief Executive Officer 16 SILENCE THERAPEUTICS PLC Board of Directors Our Board is comprised of six accomplished members, one Executive and five Non-Executive Directors. Together, they bring highly valuable experience across a variety of relevant disciplines to effectively execute our business plan. Iain Ross Chairman Appointed April 2019 Iain Ross has served as our Non-Executive Chairman since September 2020 after serving as Executive Chairman from December 2019 to September 2020. He previously served as our Non-Executive Chairman from April 2019 to December 2019 and as our Chairman from 2004 to 2010. Mr. Ross has 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 eight Initial Public Offerings (IPOs) and has direct experience of M&A transactions in Europe, the United States and the Pacific Rim. Currently he is Executive Chairman of ReNeuron Group plc (LSE). He also advises a number of private companies in the biotechnology sector. He is a qualified Chartered Director and Fellow of Royal Holloway, London University. Areas of Expertise Corporate Strategy, M&A, Business Development and Governance Craig Tooman Executive Director Appointed February 2022 Craig Tooman has served as our President, Chief Executive Officer and as a member of our board of directors since February 2022 and previously served as our Chief Financial Officer from January 2021 until February 2022. Mr. Tooman has experience in the biopharmaceutical industry spanning more than 30 years, including 15 years of experience as a public company CEO and CFO. Prior to joining us, from September 2019 to January 2021, he served as CFO and COO at Vyome Therapeutics, Inc. and prior to his tenure at Vyome, from November 2013 to July 2019, Mr. Tooman served as CFO, and then subsequently as CEO and Board Director of Aratana Therapeutics, Inc., where he successfully negotiated a merger with Elanco. Before Aratana, from 2005 to 2010, Mr. Tooman served as the CFO of Enzon Pharmaceuticals, Inc. until its acquisition by Sigma Tau, and prior to that led the $1.1 billion M&A initiative and integration of ILEX Oncology, Inc. and Genzyme Corporation. Mr. Tooman has also held key positions at Pharmacia and Upjohn. Mr. Tooman currently serves on the Supervisory Board, and the Audit and Remuneration Committees of CureVac. He also serves on the Board of Directors of Ondine Biomedical Inc. and Verté Therapeutics. Mr. Tooman received a BA degree in Economics from Kalamazoo College and studied at Waseda University in Tokyo as part of that program. He earned his MBA in finance from the University of Chicago. Areas of Expertise Leadership, Global Commercialisation, Strategy, Business Development, Biotech build Dave Lemus Non-Executive Director Appointed June 2018 Dave Lemus has served as a member of our Board since June 2018. He also currently serves as a non-executive director of Scilex Holding Company (Nasdaq: SCLX), Sorrento Therapeutics Inc. (OTC: SRNEQ), BioHealth Innovation, Inc., and miRecule Inc., where he also presently serves as the Chief Operating Officer & Chief Financial Officer. Additionally, he is currently the Chief Executive Officer of LEMAX LLC since 2017. Positions prior to this include serving as Chief Executive Officer of Ironshore Pharmaceuticals Inc, Chief Financial Officer and Chief 17 SILENCE THERAPEUTICS PLC Operating Officer of Medigene AG, Chief Executive Officer of Sigma Tau Pharmaceuticals, Inc., and Chief Financial Officer of MorphoSys AG, where he launched Germany’s first biotech IPO in 1999. Prior to these positions he served as the Treasurer of Lindt & Spruengli AG, and in various management positions within F. Hoffman-LaRoche AG. Mr. Lemus received an M.S. from the Massachusetts Institute of Technology and a B.S. in accounting from the University of Maryland College Park. He is also presently an active certified public accountant licensed in the State of Maryland. Areas of Expertise Drug Commercialisation, Strategic Partnerships, Corporate Financing James Ede-Golightly Non-Executive Director Appointed April 2019 James Ede-Golightly has served as a member of our board of directors since April 2019. Mr. Ede-Golightly is currently Chairman of Oxehealth Ltd, Oxeco Ltd and ORA Global Ltd. Among other directorships, Mr. Ede-Golightly is also Non-Executive Director of Sarossa plc. 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. Areas of Expertise Investment and Corporate Finance Alistair Gray Senior Independent Non-Executive Director Appointed November 2015 Alistair Gray has served as a member of our board of directors since November 2015 and was appointed as Senior Independent Director in December 2019. Mr. Gray currently serves as non-executive director/chair of the Edrington Group’s Employee Benefit Trust, chair of the Scottish Enterprise’s Pension Trustee Board and Life Assurance Scheme Trustee Board and Forumm (448 Studio) as well as a non-executive director of Scottish Golf Ltd. 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 Management Consultants (now EY) 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. He is a member of the faculty of Strathclyde Business School and a Visiting Professor at the University’s Design Manufacturing and Engineering Management department. He is also a Visiting Professor at Loughborough University London, University of Liverpool and the University of Stirling. Areas of Expertise Strategic management, Organisation Performance and Governance 18 SILENCE THERAPEUTICS PLC Michael Davidson, MD Non-Executive Director Appointed January 2021 Michael H. Davidson, M.D. FACC, FNLA, has served as a member of our board of directors since January 2021. Dr. Davidson is Professor of Medicine and Director of the Lipid Clinic at the University of Chicago. He also serves as the Chief Executive Officer of New Amsterdam Pharma Company N.V. (Nasdaq: NAMS) which was listed on Nasdaq in November 2022. 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 is a serial biotech entrepreneur, founding three companies, the Chicago Center for Clinical Research, which became the largest investigator site in the United States and was acquired by Pharmaceutical Product Development in 1996, Omthera Pharmaceuticals in 2008, which was acquired by AstraZeneca in 2013 for $440 million, and most recently, he was the founding CEO/CSO of Corvidia Therapeutics, which was acquired by Novo Nordisk for up to $2.1 billion in 2020. He is also an independent director of Nasdaq-listed Tenax Therapeutics, Inc. (Nasdaq: TENX) and serves on the board of two private biotech companies, Sonothera and NanoPhoria Bioscience. 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 The Best Doctors in America for the past 20 years and “Father of the Year” by the American Diabetes Association, 2010. Areas of Expertise Lipidology and Clinical Development 19 SILENCE THERAPEUTICS PLC Chairman’s Statement Introduction The Group’s strategy continues to be to maximize the potential of our proprietary mRNAi GOLD™ platform by building a pipeline of both wholly owned and partnered programmes. Our wholly owned programmes focus and leverage our internal expertise in specific areas with the most opportunity while our partnered programmes provide collaboration for a broader reach and potential source for non-dilutive capital. We believe this hybrid business model balances risk and creates more opportunities. During the year, we made excellent progress advancing both our wholly owned and partnered portfolios, positioning Silence for multiple clinical data readouts in 2024. mRNAi GOLD™ Proprietary Programmes Zerlasiran for cardiovascular disease Zerlasiran is our lead wholly owned siRNA in phase 2 development for high lipoprotein(a), also known as “Lp(a)”, a key cardiovascular risk factor that is almost entirely genetically determined. This means that unlike other cardiac risk factors, Lp(a) can’t be modified by diet or exercise. High Lp(a) is considered to affect up to 1.4 billion people worldwide, or around 20% of the world’s population. It’s associated with a high risk of heart attack, stroke and aortic stenosis. You need pharmacological intervention to manage high Lp(a) and currently there are no approved therapies that selectively lower Lp(a). We believe zerlasiran has the potential to address this major unmet need in cardiovascular disease. APOLLO Phase 1 Clinical Programme In November 2023, we reported positive topline results from the multiple-ascending dose portion of the APOLLO study in 36 adults with stable ASCVD and high Lp(a) ≥150 nmol/L. In the multiple dose trial, zerlasiran (200 mg, 300 mg and 450 mg) was administered twice subcutaneously at two different dosing intervals. Data demonstrated a significant reduction from baseline in Lp(a) of up to 99% at 90 days following injection of repeated doses. Lp(a) levels remained approximately 90% lower than baseline at 201 days (end of treatment period) at the two highest doses. A dose dependent reduction in low-density lipoprotein cholesterol (LDL cholesterol) and apolipoprotein B (ApoB) was also observed. Zerlasiran was well tolerated; no clinically important safety concerns were identified. These data supported results from the single dose portion of the APOLLO study which we presented in 2022. ALPACAR-360 Phase 2 Clinical Programme In January 2023, we started dosing subjects in the ALPACAR-360 phase 2 study evaluating zerlasrian in subjects with high Lp(a) ≥125 nmol/L at high risk of ASCVD events. We completed enrollment within four months, highlighting the medical community’s strong interest in and the potential impact of zerlasiran. We expect to report topline 36-week data (primary endpoint) in the first quarter of 2024. The clinical data we’ve generated to-date support our firm belief that zerlasiran is poised to be a major player in the emerging Lp(a) space with multi-billion-dollar potential. The multiple dose data triggered new interest from partners, and we are continuing to evaluate best options for future development and potential commercialization. Our priority is to ensure we maximize the value of this important asset for Silence shareholders and patients. Divesiran for haematological diseases Divesiran is our second wholly owned siRNA that has shown pre-clinical potential in several haematological diseases. What we really like about this program is we’re targeting a pathway that’s central to the production of hepcidin – the master regulator of iron in the body. Divesiran works by ‘silencing’ TMPRSS6, a negative regulator of hepcidin, to modulate endogenous hepcidin. This has a range of potential therapeutic benefits. We’ve demonstrated proof of mechanism in healthy volunteers and are currently focused on polycythaemia vera. PV is a rare blood disorder with significant unmet needs, affecting around 3.5 million worldwide. Elevated hematocrit is a hallmark of the disease, which indicates the overproduction of red blood cells. Patients with hematocrit between 45-50% are four-times more likely to die from cardiovascular causes or major thrombotic events than those with hematocrit less than 45%. Phlebotomy is the current standard of care, but this is burdensome, and most patients are iron deficient at diagnosis – repeated phlebotomy exacerbates this. Cytoreductive therapies are also used but may not be effective at reaching control and can be associated with significant adverse effects. We believe divesiran has the potential to maintain hematocrit levels at less than 45% and may reduce or even eliminate the need for 20 SILENCE THERAPEUTICS PLC phlebotomy. Additionally, we believe the sustained duration of action may allow divesiran to be dosed monthly, or less frequently, potentially bringing additional value to patients. Divesiran has FDA Fast Track and orphan disease designations for PV and is currently being evaluated in the SANRECO phase 1/2 trial in PV patients. SANRECO Phase 1/2 Programme In 2023, we initiated the SANRECO phase 1/2 trial of divesiran in polycythemia vera patients and made great progress with enrollment in the phase 1 portion of the study throughout the year. This is a two-part clinical trial which includes a phase 1 open-label, dose finding study followed by a phase 2 study. We expect to enroll approximately 65 participants total. The nice thing about this programme is even in phase 1 we’re looking at well-defined clinical outcomes, including the maintenance of hematocrit and phlebotomies. Since the first part is an open label study, we can see the data and, to-date, the emerging data are very encouraging. We look forward to presenting these data publicly sometime before the end of June 2024. GEMINI II Phase 1 Programme In 2023, we completed the GEMINI II phase 1 trial of divesiran in non-transfusion dependent thalassemia patients. In the study, divesiran was well tolerated with no safety issues identified. While proof of mechanism has been established in healthy volunteers, the effects on indicators of iron metabolism were variable in this study population of heterogeneous thalassemia subjects. We are prioritizing R&D efforts on the ongoing PV program and do not have plans to advance development in thalassemia at this time. mRNAi GOLD™ Partnered Programmes AstraZeneca In May 2023, we achieved a $10.0 million research milestone payment from AstraZeneca following the nomination of the first product candidate under our collaboration focused on cardiovascular, renal, metabolic and respiratory diseases. This continues to be a very productive collaboration, and we look forward to AstraZeneca progressing the first product candidate into the clinic in 2024. Mallinckrodt In March 2023, we reacquired exclusive worldwide rights from Mallinckrodt to two undisclosed preclinical complement targets that have shown promising potential. We look forward to advancing these assets as part of our proprietary pipeline. SLN501, the C3 targeting program, remained under the original collaboration agreement through March 2024. In March 2024, Mallinckrodt notified us that they will not pursue further development of SLN501 following the completion of the phase 1 clinical trial. This will conclude all activities and commitments under the collaboration agreement. Hansoh We also continued to advance the three undisclosed targets under our Hansoh collaboration and achieved $4 million in development milestones from two of the programmes in 2023. As a reminder, we have exclusive rights to two targets in all territories except the China Region (Greater China, Hong Kong, Macau and Taiwan) and Hansoh has global rights to a third target. Great Place to Work certified We are proud to say that in 2023 Silence maintained its ‘Great Place to Work’ status in the UK and Berlin and was certified in the United States. We have focused on building a diverse and inclusive culture in which upward communication and feedback is valued and encouraged. Silence recognizes that flexibility positively impacts employee productivity, commitment, and loyalty and believes in trying to assist staff to achieve a good balance between their work and home life. Organizational change In 2023, Giles Campion, MD, retired as our Chief Medical Officer (CMO) and Head of R&D. We appointed Steven Romano, MD, as our Head of R&D and promoted Curtis Rambaran, MD, formerly our VP, Head of Clinical Science, to CMO. We also promoted Marie Wikström Lindholm, PhD, previously our SVP, Head of Molecular Design, to Chief 21 SILENCE THERAPEUTICS PLC Scientific Officer and appointed J.P. Gabriel as our Chief Technical Operations Officer. We believe we have the right leadership team in place to execute on our corporate objectives and deliver on our commitment to patients. Outlook 2023 was marked by strong execution across Silence. We advanced our proprietary pipeline in the clinic, achieved key milestones in our collaborations and invested strategically in early-stage projects where we see clear opportunity to drive additional value. Silence is increasingly being recognized as a platform company and we expect that to continue with more clinical data unfolding in the coming year. Our ultimate goal is to maximize the value of our mRNAi GOLD™ platform for Silence shareholders and patients. Iain Ross Chairman 22 SILENCE THERAPEUTICS PLC Corporate Governance Report 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). While the Company is no longer required to comply with the QCA code as the Company is no longer listed on AIM, the Company has voluntarily continued to comply, where applicable, 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 12 meetings. The high number of Board meetings was driven by the introduction of regular monthly Board update calls to keep Board members fully updated on business developments. Type of meeting Board Audit and Risk Committee Remuneration Committee Nomination Committee (1) Number of meetings 11 6 4 0 (1) During 2023, no new board members were recruited or selected. All Board and Audit and Risk Committee and Renumeration 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 20. 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; 23 SILENCE THERAPEUTICS PLC • 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; • • 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, quarterly 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 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. Whilst we are aiming to hold our Annual General Meeting in May, 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 6 to 8. Our Sustainable Development Goals including goals related to community, health and environment, are set out on page 13. 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 12 where mitigating activities are also explained. Additionally, the Audit and Risk Committee report on page 29 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 one Executive and five Non-Executive Directors. The Board’s composition its current stage of development and priorities. The skillsets of the Board include extensive knowledge of the pharmaceutical and biotechnology industries, strategic consultancy and corporate finance. is geared towards The Nomination Committee is chaired by the Chairman of the Board, Iain Ross. Details of each of the Directors’ experience and background are given in their biographies on pages 17 to 19. 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 one other Non-Executive Director. 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. 24 SILENCE THERAPEUTICS PLC Board Structure The Board Committee memberships are as follows: Audit and Risk Committee Dave Lemus (Chair) Alistair Gray James Ede-Golightly Dr. Michael Davidson Remuneration Committee James Ede-Golightly (Chair) Dr. Michael Davidson Dave Lemus Dr. Steven Romano (until March 31, 2023) Nomination Committee Iain Ross (Chair) Alistair Gray Dr. Steven Romano (until March 31, 2023) Craig Tooman 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 is held by the Chairman of the Company. 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; 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. 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 two Annual General Meetings and has not been appointed or 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. 25 SILENCE THERAPEUTICS PLC The annual performance evaluation for 2022, 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. A review of the CEO was initiated and concluded in December 2023. The CEO reviewed the performance of the CFO for 2023. 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 preparation, the Chairman and the Senior Independent Non-Executive Director, solicited the views of the other Directors, including the completion by each Director of a confidential questionnaire in respect of the Board, the Audit and Remuneration Committee and one specifically relating to the performance of the Chairman. The Senior Independent Non–Executive Director had individual discussions with the Directors about the performance of the Chairman. In the case of the Directors, all questionnaires were returned to the Senior Independent Non-Executive Director, who summarised the overall assessment of each director. Following the reviews, the Chairman and the Senior Independent Non-Executive Director, shared their observations with the other Directors at a Board Meeting in Q1 2024 during which an open feedback session was held in an executive session of the Non-Executive Directors. The individual director evaluations were 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 results of the review were satisfactory overall, actions emerged which can be summarised as follows: • Strategy and Contingency Planning - As in-house capabilities and corresponding operational infrastructure globally, 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 the Board of Directors should be expanded to include external and professional input. External environment we are likely to face should also be considered, both metric based and qualitative. Also, the Board and its Committees should pro-actively consider, review and assess contingency scenarios on a regular basis. the Company expands its development pipeline, • Succession Planning - as the Company expands it was agreed that the Board needs to formalise its approach to Board & Management succession planning in terms of skills, geography and diversity. The Chairman is committed to lead this initiative in liaison with the CEO. In addition, be open and transparent around any concern about conflict of interest if, and when, that exists. • Non-Executive Directors ongoing training and development and interaction with senior management - Following a concerted effort led by the Chairman and the Senior Independent Non-Executive Director, this 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. Further, each Committee should be given the challenge to modernize, in light of changes in regulation and capital markets and other external issues which many include potential changes in scope of the committee. The Nomination Committee is responsible for succession planning and making recommendations to the Board in this respect, as set out above. 26 SILENCE THERAPEUTICS PLC 8. Promote a corporate culture that is based on ethical values and behaviours Ethical values and behaviours are important to the Company and the Company is dedicated to driving positive change for communities around the world. The policies to implement this are explained on page 13. 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 good practice 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, variance analysis, controls in place for one-off accounting items and other ad hoc reports. In 2023 the Group engaged EisnerAmper as consultants to test ICFR (Internal controls over financial reporting). As a result, the Group was able to build up of evidence from an internal control perspective and allow management to attest over the ICFR as required under the Sarbanes-Oxley Act 2002. 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 pages 12 and 13. Internal control and risk management procedures can only provide reasonable and not absolute assurance against material misstatement. Financial and Business Reporting The Board seeks to present a balanced and understandable assessment of the Company’s position and prospects in all quarterly, 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. Conflicts 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 at 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 as necessary 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. 27 SILENCE THERAPEUTICS PLC Iain Ross Chairman 28 SILENCE THERAPEUTICS PLC Audit and Risk Committee Report Commensurate with Silence’s 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. Dave Lemus Chair of the Audit and Risk Committee 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 Scilex Holding Company (Nasdaq: SCLX), and previously served on multiple public and private company boards as a non-executive board member in his more than 25 years of experience in the biopharmaceutical industry. Most recently he was 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 six times during 2023, including prior to results announcements. The Committee interacts primarily with Silence management, external auditors, and internal audit consultants. What does the Audit and Risk Committee do? • Monitors the integrity of the Company’s financial and narrative reporting • Monitors enterprise and systemic risks • 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 2023, the Committee reviewed the 2022 annual report and the 2023 interim announcements. 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 to the adoption of any new accounting pronouncements, the accounting of the partnership agreements and financings, and 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? 29 SILENCE THERAPEUTICS PLC To assess the appropriateness and completeness of internal controls, the Committee reviews changes to 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. Is there an internal audit function? At present the Company does not have an internal audit function. Given the 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 2023, EisnerAmper was engaged as the Company’s internal audit consultants used to review and test the ICFR (Internal controls over financial reporting). As a result, the Group was able to acquire sufficient evidence from an internal control perspective and 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 reviews industry comparables for audit services and evaluates the overall service provided by the external auditors each year. 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 November 2023. 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 including associated accruals and prepayments In determining the R&D expense in relation to contract research organisations (CROs) management 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 Revenue (collaboration agreements) In determining the revenue recognised for collaboration agreements, management have calculated the revenue recognised for the period based on the percentage of completion of each performance obligation, by determining the proportion of costs incurred to date in comparison to the total expected costs (both internal and external). 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 management assessed it as being based 30 SILENCE THERAPEUTICS PLC on its estimated “value in use” (which utilizes an NPV methodology). In doing this the Company has had to estimate the value and timing of future milestone cash inflows, which is however a standard industry practice. Through constant communication and interaction with management and the Company’s auditors, the Audit and Risk Committee aims to ensure appropriate corporate compliance with all accounting, internal controls, risk management and financial reporting requirements and in order to best ensure the Committee is carrying out its oversight responsibilities to the fullest extent possible. Dave Lemus Chair of the Audit and Risk Committee 31 SILENCE THERAPEUTICS PLC Remuneration Committee Report 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. James Ede-Golightly Chair of the Remuneration Committee Dear Shareholder, On behalf of the Remuneration Committee (the “Committee”), I am pleased to present our Directors’ remuneration report for the year ended 31 December 2023. 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. Craig Tooman has served as our President, Chief Executive Officer and as a member of our board of directors since February 2022. Craig has experience in the biopharmaceutical industry spanning more than 30 years, including 15 years of experience as a public company CEO and CFO. In February 2022 we also appointed Rhonda Hellums as our Chief Financial Officer. Rhonda has over 25 years of corporate finance, accounting, strategic planning, M&A, treasury management, investor and public relations experience, largely in the biopharmaceutical industry. Though she is not listed as a U.K director, she sits in on all board meetings. Steven Romano was a member of the board of directors until April 1, 2023 when he was appointed interim Chief Medical Officer. Dr. Romano was then appointed Head of R&D on October 1, 2023. Dr. Romano is a board-certified psychiatrist with over 28 years of drug development experience across a wide range of therapeutic and disease areas. 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 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 four 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 Craig Tooman ; vesting dates for these options are detailed later in this report. In light of our de-listing from AIM and the transition to a Nasdaq-focused company, we have adopted a new compensation strategy for Non-Executive Directors (“NEDs”) that reduces fees and introduces a share options award 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 32 SILENCE THERAPEUTICS PLC Directors’ Remuneration Policy This part of the remuneration report sets out the Directors’ remuneration policy proposed to apply to the Company’s Executive and Non-Executive Directors and has been prepared in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, the Companies (Miscellaneous Reporting) Regulations 2018, and the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 (the “policy”). The proposed policy includes several changes for shareholders to consider from that approved by shareholders on 15 June 2021. However, the focus of the changes made is to ensure the policy remains sufficiently flexible as the Company changes and grows over time. As part of the policy review process, the Committee considered from the views of our major shareholders and major proxy advisory firms, broader corporate governance standards in the United States and the United Kingdom, and the competitive landscape amongst our peer group. The policy will be put forward for approval by shareholders in a binding shareholder vote at the forthcoming AGM on 17 May 2024. If approved, it is intended that the 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). The scenario charts reflect the intended application of the new policy (assuming it is approved) for the 2024 financial year. A copy of the previously approved policy is in the 2020 Annual Report, which is available at: Silence Therapeutics - Investors - Financials - Annual Reports (silence-therapeutics.com). The policy is 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 Variable Remuneration Annual Bonus Fixed Remuneration Base Salary Element Pension Benefits EIP How it is influenced by the remuneration philosophy Assessed with reference to industry compensation benchmarks Assessed with reference to industry compensation benchmarks Assessed with reference to industry compensation benchmarks Set considering industry benchmarking data and consistent with positions held. Determined by 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 2023 Equity Incentive Plan with Non-Employee Sub-Plan and CSOP Sub-Plan (the “EIP”), equity awards, can be issued with performance and/or time based criteria. 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, 401(k) matching, access to pension benefits (or cash in lieu), and eligibility to receive a bonus. All employees are eligible to participate in Silence’s EIP. 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 arrangements for our Executive Directors and employees are 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. 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 33 SILENCE THERAPEUTICS PLC 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. A copy of the Directors’ Remuneration Policy can be found on the Company’s intranet. Remuneration Policy Table The table in the following pages sets out, for each element of pay, a summary of how remuneration is structured and how it supports the Company’s strategy. Executive Directors Purpose and Link to Strategy 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. 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 global companies, 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, but not limited to: • • • • • 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. The main benefits currently provided include private health insurance, dental, life insurance and retirement plan. The Company may make a cash payment to provide a gross up where penalty taxes are payable under section 280G of the US Internal Revenue code of 1986, as amended in connection with a change of No formal metrics, although any increases take account of Company performance and Executive Director appraisal against objectives. Executive Director level salaries are determined considering industry benchmarking data. 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 Committee in line with corporate performance and are consistent with the role currently being undertaken by the individual. Where there has been a change in the role or, if the individual is new to the role, initial base salary may be set at a lower level and/or future increases could be higher. Subsequent demonstration of strong performance may also result in a salary increase that is higher than that awarded to the wider workforce. There is no defined maximum value for benefits, but the Committee will consider the aggregate value of any such benefits when determining what should be offered. Not performance related. No claw-back will be applied in relation to benefits. 34 SILENCE THERAPEUTICS PLC control. The Committee will consider whether this is appropriate taking into account the circumstances of the transaction. In addition, the Company will pay for (i) the preparation and submission of annual tax returns in the UK and USA up to a maximum of USD$10,000 per year, and (ii) reasonable attorney’s fees for the review of an Executive Director’s employment agreement and related documents, up to a maximum of USD$10,000. Under certain circumstances the Company may offer relocation allowances or assistance. Travel, accommodation and any reasonable business- related expenses (including tax thereon) may be reimbursed. Executive Directors may become eligible for other benefits in future where the Committee deems it appropriate. Where additional benefits are introduced for the wider workforce, Executive Directors may participate on broadly similar terms. Executive Directors are eligible to participate in the Company’s all-employee share plans from time to time on the same terms as other employees in the jurisdiction in which they are engaged. The Company operates a defined contribution scheme and all employees, including Executive Directors, are invited to participate. Payments are made directly to a nominated pension scheme or, where payments are made in cash, delivered monthly through payroll. Cash payments in lieu of pension contributions may be made. Pensions The Company aims to provide market- competitive retirement benefits, as a retention tool and to reward sustained contribution. Not performance related. No claw-back will be applied in relation to pensions. 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. 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. 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 Annual cash bonuses have a target of up to 60% of base salary and a maximum payout for “stretch” performance of up to 100% 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 the role currently being undertaken by the individual. 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. 35 The Board can exercise discretion in setting contractual target bonus rates for new Executive Directors above 60%, with discretion exercised with respect to total compensation. The bonus is performance based and the final payout is entirely at the discretion of the Company. The Committee may, in appropriate circumstances, waive the maximum target bonus opportunity for Executive Directors where an additional bonus payout is made to reflect overall business performance, individual contribution or the achievement of separate targets, such as the completion of a transaction. Individual goals set are specific, measurable and are linked to the Company’s longer-term strategy. The Committee may, in appropriate circumstances, disapply any performance measures or award a bonus without such performance measures or apply different performance criteria, such as the completion of a transaction, should they not, in the view of the Committee, reflect overall business performance or individual contribution. The amount of erroneously awarded compensation resulting from an accounting restatement due to the material noncompliance with any financial reporting requirement under United States securities laws will be subject to clawback under the Company’s clawback policy. SILENCE THERAPEUTICS PLC be used each year, as agreed with the Committee, to consider 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. A deferral period may be applied to bonuses. Bonuses are normally paid in cash (but may be paid in the form of an equity award). The Committee may, in appropriate circumstances, override the formulaic outcome to amend the bonus payout or provide for an additional bonus payment, should this not, in the view of the Committee, reflect overall business performance or individual contribution or in connection with a corporate transaction such as a change of control. If the Committee provides for additional bonus payments, the Committee has the discretion to set the terms and value of such bonus payment. Equity Based Awards (EIP or any successor equity incentive plan) The Remuneration Committee believes that a key component of the overall remuneration package is the provision of equity awards to senior executives through an EIP, which is designed to develop a culture which encourages strong corporate performance on an absolute and relative basis to align with shareholder interests. EIP awards granted to Executive Directors have typically taken the form of market value options vesting over time, although different forms of awards may also be granted in accordance with the EIP rules. The Committee may also vary the vesting schedule of awards as it considers appropriate. The Committee has discretion to decide whether and to what extent any deferral or holding period applies to awards or to the shares acquired following the vesting of awards. With the approval of the Company’s shareholders, the Committee may unilaterally modify the terms of share options, in particular to reprice underwater options to There is no defined maximum opportunity under the EIP. The value of Executive Director awards under the EIP are approved by the Committee and reflect the role, duties and responsibilities currently being undertaken by the individual. The Committee can exercise discretion when setting the value of EIP awards for new Executive Directors taking into account such Executive Director’s total compensation package. The Committee seeks to establish equity-based remuneration competitive to that offered by a set of comparable companies with whom the Company may compete for talent. Vesting of EIP 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. Whether performance measures shall apply, and if so, their weightings and the period over which performance is tested will be determined by the Committee. The Committee 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 EIP 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. The Committee has flexibility to vary the mix of measures or introduce new measures for each subsequent award 36 SILENCE THERAPEUTICS PLC provide for a lower exercise price. Chair and Non-Executive Directors taking into account business priorities at the time of grant. The Committee may amend, relax or waive performance conditions if it considers that they have become unfair or impractical. This will help ensure that vesting reflects overall Company performance during the period. Further details, including the vesting terms and any performance targets attached to the EIP in respect of each year, will be disclosed in the relevant Annual Report on Remuneration. The amount of erroneously awarded compensation resulting from an accounting restatement due to the material noncompliance with any financial reporting requirement under United States securities laws will be subject to clawback under the Company’s clawback policy. Purpose and Link to Strategy Cash Fees Set at a level that is sufficient to attract and retain high-calibre non- executives who contribute to the business. Benefits Set at a level that is sufficient to attract and retain high-calibre non- executives who contribute to the business. Equity Based Awards Operation Maximum opportunity Performance Metrics Non-Executive Directors receive an annual retainer paid in cash, comprising a base fee plus additional fees for Committee Chairpersonship or membership. Such fees are set based on peer group comparator data. Non-Executive Directors who participate and serve on any membership committee or advisory board of or for the Company may also receive a retainer paid in cash annually or for each meeting attended. Such fees are set based on peer group comparator data. The Chair’s fee is reviewed annually by the Committee (without the Chair present). Fee levels for the Non-Executive Directors are determined by directors upon the recommendation of the Committee. When reviewing fee levels, account is taken of market movements in fee levels, Board committee responsibilities, ongoing time commitments and the general economic environment. In exceptional circumstances, if there is a temporary yet material increase in the time commitments for Non-Executive Directors, the Board may pay additional fees to recognise that additional workload. 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. Not performance related. No claw-back applies in relation to fees. 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 benefits. When reviewing benefits, account is taken of market movements in the fees of Non-Executive Directors, Board Committee responsibilities and ongoing time commitments. 37 SILENCE THERAPEUTICS PLC Set a level that is sufficient to attract and retain high-calibre non- executives who contribute to the business. Non-Executive Directors may receive equity awards under the EIP (or options, share appreciation rights, restricted shares, restricted share units or such other form as may be permitted by any other equity incentive plan operated by the Company from time to time), with careful consideration being made with respect to ensuring their independence. The Committee may, in its sole discretion, provide for deferred settlement of RSUs awarded to a Non-Executive Director. With the approval of the Company’s shareholders, the Committee may unilaterally modify the terms of share options, in particular to reprice underwater options to provide for a lower exercise price. There is no maximum award level for equity awards to Non- Executive Directors. The size of the equity awards is determined by the full Board, upon recommendation of the Committee. 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. No claw-back applies in relation to Non-Executive Director equity-based awards. Notes to the policy table Legacy arrangements For the duration of this policy, the Company will honour any commitments made in respect of current or former directors before the date on which either: (i) the policy becomes effective; or (ii) an individual becomes a director, even when not consistent with the policy set out in this report or prevailing at the time such commitment is fulfilled, in each case subject to the terms of any prior policy in place at the time such awards or commitments were granted or made, if applicable. Performance conditions The choice of annual bonus performance metrics reflects the Committee’s belief that any incentive remuneration should be appropriately challenging and tied to the delivery of key strategic objectives intended to ensure that Executive Directors are incentivised to deliver across a range of objectives for which they are accountable. The Committee has retained flexibility on the specific measures which will be used to ensure that any measures are fully aligned with the strategic imperatives prevailing at the time they are set. The bonus targets for the forthcoming year will be set out in general terms, subject to limitations with regards to commercial sensitivity. The full details of the targets will be disclosed when they are in the public domain and are no longer considered commercially sensitive. Where used, performance conditions applicable to EIP awards (or other equity incentive plans operated by the Company from time to time) will be aligned with the Company’s objective of delivering superior levels of long-term value to shareholders. Prior to each award, the Committee has flexibility to select measures that are fully aligned with the strategy prevailing at the time awards are granted. The Committee will review the calibration of targets applicable to the annual bonus, and the EIP in years where performance measures apply, annually to ensure they remain appropriate and sufficiently challenging, taking into account the Company’s strategic objectives and the interests of shareholders. Recovery and withholding On 8 November 2023, the board of directors of the Company adopted a new incentive compensation recoupment policy providing for the Company’s recoupment of recoverable incentive compensation that is received by certain executive officers of the Company under certain circumstances. Such clawback policy is designed to comply with, and shall be interpreted to be consistent with, Section 10D of the Exchange Act, Rule 10D-1 promulgated thereunder and Nasdaq Listing Rule 5608. The Committee retains the discretion to update or amend the clawback policy from time to time in order to maintain compliance with applicable laws, regulatory requirements and best practice from time to time. 38 SILENCE THERAPEUTICS PLC Differences in remuneration policy between Executive Directors and other employees The overall approach to reward for employees across the workforce is a key reference point when setting the remuneration of the Executive Directors. When reviewing the salaries of the Executive Directors, the Committee pays close attention to pay and employment conditions across the wider workforce and in normal circumstances (excluding promotions) the increase for Executive Directors will be no higher than the average increase for the general workforce. The key difference between the remuneration of Executive Directors and that of our other employees is that, overall, at senior levels, remuneration is increasingly long-term, and ‘at risk’ with an emphasis on performance-related pay linked to business performance and share-based remuneration. This ensures that remuneration at senior levels will increase or decrease in line with business performance and provides alignment between the interests of Executive Directors and shareholders. Discretions retained by the Committee The Committee will operate annual bonus arrangements and the EIP according to their respective rules (if any) and in accordance with any applicable legislation where relevant. The Committee retains discretion, consistent with market practice, over a number of areas relating to the operation and administration of these arrangements and the policy in general. This includes, but is not limited to, the following: • The participants in incentive arrangements; • The timing of any awards or payments; • The size of any awards or payments and the vehicle with which they are delivered; • The treatment of outstanding awards on a change of control or other corporate events; • The treatment of leavers based on the rules of the plan (where applicable), the internal policies of the Company and appropriate treatments described therein; • Adjustments in certain circumstances (such as a rights issue, corporate restructuring or payment of a special dividend); • The applicability and selection of performance measures and targets applying each year; • Any adjustments to performance measures and targets to reflect changes in circumstances that are expected to have a material impact on the intended difficulty of the targets; and • Whether malus and/or clawback shall be applied to any award in the relevant circumstances and, if so, the extent to which it shall be applied. The Committee retains the discretion to award ad hoc bonus payments in addition to annual bonus, or to adjust annual bonus and/or equity incentive awards, if an event or circumstance occurs which means outcomes do not reflect the overall business performance, individual contribution or external factors which impacts the workforce such as in connection with a corporate event such as a change of control. Any use of the above discretion would, where relevant, be explained in the Annual Report on Remuneration and may, as appropriate, be the subject of consultation with the Parent Company’s major shareholders. The Committee will consider formulaic outcomes of incentive arrangements and will have the discretion to override these where appropriate, taking into account a holistic view of performance and/or wider stakeholder experience, such as in connection with a corporate event such as a change of control. Any use of the above discretions would, where relevant, be explained in the annual report on remuneration and may, as appropriate, be the subject of consultation with the Company’s major shareholders. The Committee may make minor amendments to the policy (for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for that amendment. Shareholder views The Committee will consider shareholder feedback received following the AGM, as well as any additional feedback and guidance received from time to time when considering any significant changes to the Company’s remuneration arrangements. This feedback will be considered by the Committee as it develops the Company’s remuneration framework and practices going forward. Assisted by its independent adviser, the Committee also actively monitors developments in the expectations of institutional investors and their representative bodies. 39 SILENCE THERAPEUTICS PLC Employment conditions The Committee is regularly updated throughout the year on pay and conditions applying to Company employees. Where significant changes are proposed to employment conditions and salary levels elsewhere in the Company these are highlighted for the attention of the Committee at an early stage and the Committee will take such employment considerations into account when setting directors’ remuneration. Whilst the Committee does not currently consult directly with employees regarding its policy for directors, the Committee is considering the best method of bringing the employee voice to the boardroom. Other Remuneration Policies Executive Directors’ Service Contracts Executive Directors have rolling service agreements (entered into with the Company or a subsidiary thereof) which may be terminated in accordance with the terms of these agreements. The period of notice for Executive Directors (to be given by the employer or the Executive Director) will not normally exceed 12 months’ notice. Executive Directors’ service agreements are available for inspection at the Company’s registered office during normal business hours and will also be available to the public if required to be filed by the Parent Company with the SEC. The terms of the current Executive Director’s service contract are: Name Position Date of amended and restated employment agreement Craig Tooman Chief Executive Officer 5 March 2022 Notice period for the Executive No notice period for the Company 45 days’ for the Executive Director The Executive Director 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. Executive Director Termination and Loss of Office Payments The Company’s policy on remuneration for Executive Directors who leave the Company is set out below. The Committee will exercise its discretion when determining amounts that should be paid to leavers (other than in respect of the relevant leaver’s contractual entitlements which will be respected), taking into account the facts and circumstances of each case. If and where applicable, the Company may elect to make a payment in lieu of notice (“PILON”) equivalent in value to basic salary and contractual benefits for any unexpired portion of the notice period (but excluding any annual bonus or holiday entitlement that would have otherwise accrued during the notice period). Where the Executive Director is terminated by the Company without “Cause” (as defined in the service agreement) or by the Executive Director for “Good Reason” (as defined in the service agreement), provided the Executive Director is not in breach of the restrictive covenants (including post-termination) applicable to them, severance pay and any entitlements in respect of the year to the date of termination in accordance with the applicable terms shall be paid to an Executive Director as set out below, subject to the Executive Director signing a release and waiver of claims: Element of pay / benefit Salary Bonus Termination other than within 12 months after a relevant “Change of Control” (as defined in the service agreement) Termination within 12 months after a relevant “Change of Control” (as defined in the service agreement) Monthly payments equal to base salary in accordance with normal payroll practices, less any applicable taxes and withholdings for a period of 12 months Monthly payments equal to base salary in accordance with normal payroll practices, less any applicable taxes and withholdings for a period of 18 months Any unpaid short-term bonus for any completed performance period and a pro rata bonus for the year in which Any unpaid short-term bonus for any completed performance period and a pro rata bonus for the year in which 40 SILENCE THERAPEUTICS PLC Element of pay / benefit Benefits Equity awards Termination other than within 12 months after a relevant “Change of Control” (as defined in the service agreement) Termination within 12 months after a relevant “Change of Control” (as defined in the service agreement) the termination occurs based on the achievement of applicable performance goals the termination occurs based on the achievement of applicable performance goals Provided continuation coverage is elected, payment of the amount of COBRA premiums that exceeds the monthly amount that would have been paid prior to termination, less any applicable taxes and withholdings until the earliest of (i) 12 months post termination; (ii) the date the executive first becomes eligible for healthcare benefits with a subsequent employer; and (iii) the date the executive is no longer eligible for COBRA benefits Awards treated in accordance with plan rules. Provided continuation coverage is elected, payment of the amount of COBRA premiums that exceeds the monthly amount that would have been paid prior to termination, less any applicable taxes and withholdings until the earliest of (i) 18 months post termination; (ii) the date the executive first becomes eligible for healthcare benefits with a subsequent employer; and (iii) the date the executive is no longer eligible for COBRA benefits Awards vest in full on a Change of Control. Where the Executive Director’s employment is terminated due to their incapacity or death, the Executive Director or their estate will be entitled to any unpaid short-term bonus for any completed performance period in such amount as may be earned and payable, if any, and a pro rata bonus for the year in which their termination occurs based on achievement of applicable performance goals. With respect to all vested equity awards, the Executive Director’s termination will be deemed a “Good Leaver Reason” or they will be deemed a “Good Leaver”, under the equity plan rules, as applicable. The Company is against rewards for failure; the circumstances of any departure, including the individual’s performance, would be taken into account in every case. Statutory redundancy payments may be made. Service agreements may be terminated for cause and in certain circumstances, such as gross misconduct or any other material breach of the obligations under their employment contract without payment in lieu of notice if applicable or severance benefits. The Company may require the individual to work during their notice period (if applicable) or may place them on garden leave during which they would be entitled to full pay and benefits. Except in the case of dismissal for cause or gross misconduct or resignation, the Company may at its absolute discretion reimburse for reasonable professional fees relating to the termination of employment and, where an Executive Director has been required to re-locate, to pay reasonable repatriation costs, including possible tax exposure costs and/or settle any other amount the Committee considers reasonable including any statutory entitlements or sums to settle or compromise claims or potential claims in connection with a termination (including, at the discretion of the Committee, reimbursement for legal advice and provision of outplacement services). If post-termination services are to be provided by the Executive Director, the Company may also enter into a consultancy agreement with such Executive Director on such terms as may be agreed between the Company and the Executive Director at the time. Non-Executive Directors’ Terms of Engagement 41 SILENCE THERAPEUTICS PLC All Non-Executive Directors have specific terms of engagement which may be terminated on not less than three months’ notice by either party. The Chairman’s terms of engagement may be terminated on not less than six 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. The dates of appointment of each of the Non-Executive Directors serving at 31 December 2023 are summarised in the table below. Non-Executive Directors Date of appointment Date of appointment letter Michael Davidson James Ede-Golightly Alistair Gray Dave Lemus Iain Ross 6 January 2021 25 April 2019 12 November 2015 21 June 2018 25 April 2019 5 January 2021 3 August 2020 3 August 2020 3 August 2020 21 September 2020 Non-Executive Directors’ terms of engagement are available for inspection at the Company’s registered office during normal business hours and will be available for inspection at the AGM. On termination of a Non-Executive Director’s appointment, the Company may enter into a consultancy agreement with such Non-Executive Director on such terms as may be agreed between the Company and the Non-Executive Director at the time. 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 may 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 EIP or any successor plan. In respect of internal appointments, any commitments entered 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. 42 SILENCE THERAPEUTICS PLC Remuneration scenario for Executive Director The charts below show an estimate of the 2024 remuneration package for the Executive Director under three assumed performance scenarios and these scenarios are based on the policy set out above which will be applicable if it is approved. No performance obligations apply to equity-based awards so they are not included. Minimum (comprising fixed pay only) Base salary as of 1 January 2024 of $619k. Target Fixed pay as above. Assumes target bonus of 60% of base salary. Maximum  Fixed pay as above. Assumes maximum bonus payout of 100% of base salary. Remuneration Committee (the Committee) Governance In its decision-making process, the Committee takes account of information from both internal and independent sources and AON Solutions UK Ltd surveys. AON Solutions UK Ltd were appointed as remuneration consultants by the Committee based on their experience in the industry and relevant geographies via a tender process. AON Solutions UK Ltd advises the Committee on all aspects of senior executive remuneration and has kept the Committee up to date on remuneration trends and corporate governance best practice. AON Solutions UK Ltd does not have any other connection with the Company and is considered to be independent by the Committee. During the year ended 31 December 2023, fees charged by AON Solutions UK Ltd amounted to approximately £4k (2022: £71k). The current members of the Committee are Michael Davidson, James Ede-Golightly, and Dave Lemus. Michael Davidson, James Ede-Golightly and Dave Lemus are deemed to be independent. The Company’s Chief Executive Officer and Chief Financial Officer provide 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. 43 SILENCE THERAPEUTICS PLC 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. The Committee met 4 times in 2023. Director James Ede-Golightly Michael Davidson Dave Lemus Meetings attended 4/4 4/4 4/4 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. The Committee is responsible for: • setting a remuneration policy that is designed to promote the long-term success of the Company, including pension rights and any compensation payments, and review the on-going appropriateness and relevance of the remuneration policy; • ensuring that the remuneration of the Executive Director 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 Director and senior executives, including recruitment and retention terms, whilst having regard to pay and employment conditions across the Company or group; • ensuring that contractual terms on termination, and any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognized; • approving the design and performance targets of any annual incentive arrangements that include the Executive Director 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 incentive arrangements; • determining each year whether awards will be made under the incentive arrangements, and if so, the overall amount of such awards; 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. Pay-for-Performance Scenario Analysis The charts below provide an estimate of the potential reward opportunities for the Executive Director, and the potential split between different elements of remuneration under two performance scenarios: “Earned” and “Minimum”. 44 SILENCE THERAPEUTICS PLC Craig Tooman Compensation 1000 900 800 700 600 500 400 300 200 100 0 £- 425 1 24 473 1 24 473 Earned Minimum - Fixed Salary Benefits Pension Bonus EIP Giles Campion Compensation 500 450 400 350 300 250 200 150 100 50 0 £- 132 56 3 269 35 9 350 Earned Minimum - Fixed Salary Benefits Pension Bonus EIP Amounts are shown in thousands (GBP). The EIP award amounts shown represents the face value. Face value is calculated as the market value of underlying shares at the date of grant, less the applicable exercise price. 45 SILENCE THERAPEUTICS PLC Annual 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 2023, and how it will be implemented during the year ending 31 December 2024. This report splits certain information into that for Executive Directors and that for Non-Executive Directors. Audited Information Directors’ Remuneration – financial year ended 31 December 2023 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 2023. Year Basic Salary(a) Benefits (b) Bonus (c) EIP (d) Pension (e) Total remuneration Total fixed remuneration Total Variable remuneration £000s £000s £000s £000s £000s £000s £000s £000s Executive Directors Craig Tooman (f) 2023 473 2022 408 Giles Campion (g) 2023 269 2022 350 Non-Executive Directors Iain Ross (h) Alistair Gray Dave Lemus 2023 94 2022 90 2023 56 2022 54 2023 47 2022 46 James Ede-GoLightly 2023 45 2022 44 Michael Davidson 2023 41 2022 40 Steve Romano (I) 2023 10 2022 37 1 12 3 9 - - - - - - - - - - - - 425 222 132 158 50 - - - - - - - - - - - - - - - - - - - - - - - - - - - 24 1 56 35 - - - - - - - - - - - - 923 643 460 552 144 90 56 54 47 46 45 44 41 40 10 37 498 421 328 394 94 90 56 54 47 46 45 44 41 40 10 37 425 222 132 158 50 - - - - - - - - - - - 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. (c) For 2023, 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) There were no performance obligations linked to the equity-based awards. (e) The amount shown relates to company contributions to the defined contribution scheme, plus any cash in lieu. (f) Mr. Tooman became our President and Chief Executive Officer on February 21, 2022. His compensation including, salary, bonus, pension and benefits, is prorated from the time of his appointment to Chief Executive Officer. 46 SILENCE THERAPEUTICS PLC (g) Mr. Campion served as an executive director until his resignation from the board of directors on July 1, 2023 and Head of R&D until his retirement on September 1, 2023. His bonus was prorated for his service in 2023. (h) Mr. Romano served as a non-executive director until he became an employee of the company on April 1, 2023. His compensation is prorated for the time he was a non-executive director. Annual Performance Bonus - 2023 In 2023, 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. 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 2023 for all staff (other than the Executive Director and Non-Executive Directors) the percentage attributable to individual goals for employees ranged from 30% to 150% depending on level (excluding the Executive Director). The achievement against the scorecard of corporate goals was as follows: Target Weighting SLN 124 milestone delivery SLN 360 milestone delivery SLN501 milestone delivery Manufacturing processes New GalNAc target identification Achieve planned targets for the development of SLN 124 Achieve planned targets for the development of SLN 360 Achieve planned targets for the development of SLN 501 Increase capacity and build process optimisation capabilities for manufacturing Achieve planned activity and identification of new targets Achievement of financial targets Maintain a cash runway and adherence to budget New business development deal Secure high value business development deal Execution and operations Maintain a cash runway and reporting on KPIs Total % 20.0 12.0 8.0 8.0 5.0 17.0 25.0 5.0 100.0 2023 achievement % 21.0 13.0 8.0 8.0 5.0 18.0 20.0 5.0 98.0 Achievement against objectives is given careful consideration by the Committee prior to finalisation. Each objective is reviewed for overall achievement. For some objectives, further entitlement was approved as the goals were overachieved. The Committee acknowledged the team's significant progress in advancing our clinical-stage programmes in 2023, further financing key programmes, and expanding the US investor base. Therefore, the board determined an achievement score of 98% was fair and justifiable. In relation to the Directors, Craig Tooman’s bonus was calculated as 60% of his salary. It was approved by the board of directors and paid at 150% of the entitlement due to significant strategic accomplishment and effort during the year. Giles Campion’s on-target bonus for 2023 was calculated as 50% of salary granted at 98% achievement of his target for 2023 and pro-rated for his time in service. 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 60% of salary payable in cash, are as follows: Craig Tooman (a) Giles Campion (b) Bonus Scorecard Outcome Maximum opportunity % of salary Cash amount % of salary £000s 425 132 90 % 37 % £000s 425 132 90 % 37 % (a) Craig Tooman’s bonus was calculated as 60% of his salary. It was approved by the board of directors and paid at 150% of the entitlement due to significant strategic accomplishment and effort during the year. (b) Giles Campion’s on-target bonus for 2023 was calculated as 50% of salary granted at 98% achievement of his target for 2023 and pro-rated for his time in service. 47 SILENCE THERAPEUTICS PLC Scheme Interests During the year ended 31 December 2023 Craig Tooman was awarded share option awards under the EIP scheme, details of which are summarised in the table below. EIP awards were granted under the Silence Therapeutics plc 2023 Employee Incentive Plan and were based on an industry peer analysis. Directors share awards Individual Iain Ross Alistair Gray Dave Lemus James Ede- GoLightly Dr Steven Romano Michael Davidson Craig Tooman Date of Grant At 1 Jan, 2023 Awarded Exercised Cancelled At 31 Dec 2023 Exercise price ($/share) Gain on exercises during the year (£000s) 10/06/2019 10/06/2019 21/05/2020 21/05/2020 06/01/2022 14/09/2023 6/01/2022 14/09/2023 6/01/2022 14/09/2023 14/09/2023 250,000 250,000 150,000 350,000 90,000 - 48,000 - 48,000 - - - - - - - 90,000 - 48,000 - 48,000 20,001 06/01/2022 48,000 - 14/09/2023 - 48,000 06/01/2022 48,000 - 14/09/2023 48,000 06/01/2022 48,000 - 14/09/2023 - 48,000 06/01/2021 06/01/2022 21/02/2022 16/09/2022 05/01/2023 14/09/2023 579,999 264,999 375,000 900,000 - - - - - - 2,100,000 216,960 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 250,000 250,000 150,000 350,000 90,000 90,000 48,000 48,000 48,000 48,000 20,001 48,000 48,000 48,000 48,000 $2.53 $0.80 $0.07 $5.87 $7.87 $5.13 $7.87 $5.13 $7.87 $5.13 $5.13 $7.87 $5.13 $7.87 $5.13 48,000 $7.87 48,000 $5.13 579,999 264,999 375,000 900,000 2,100,000 216,960 $7.02 $7.87 $6.33 $3.86 $5.13 $3.33 - - - - - - - - - - - - - - - - - - - - - - - Earliest date of exercise 01/06/20 01/06/20 25/04/22 21/08/20 06/02/22 15/09/23 Last date of exercise 10/06/29 10/06/29 20/05/30 20/05/30 06/01/32 12/09/33 06/02/22 15/09/23 06/01/32 12/09/33 06/02/22 15/09/23 15/09/23 06/01/32 12/09/33 12/09/33 06/02/22 06/01/32 15/09/23 12/09/33 06/02/22 06/01/32 15/09/23 12/09/33 06/02/22 06/01/32 15/09/23 12/09/33 06/01/22 06/02/22 21/03/22 16/10/22 06/01/23 15/09/23 06/01/31 06/02/32 21/03/32 16/10/32 03/01/33 03/01/33 Giles Campion 06/03/2019 200,000 - 90,000 - 110,000 $0.07 £144 06/02/22 06/02/29 10/06/2019 15,000 10/06/2019 228,083 10/06/2019 456,917 23/04/2021 160,002 06/01/2022 199,998 - - - - - - - 15,000 $2.44 - - 228,083 $0.80 - - 456,917 $2.53 - - 160,002 $7.34 - - 199,998 $7.87 05/01/2023 - 257,598 214,716 42,882 $5.13 - - - - - - 10/06/22 10/06/29 01/06/20 10/06/29 01/06/20 10/06/29 23/05/21 23/04/31 06/02/22 06/01/32 06/01/23 01/10/24 48 SILENCE THERAPEUTICS PLC Scheme interests awarded in 2023 Name Date of grant Number awarded Exercise Price Face Value (1) £000s Vesting Schedule Craig Tooman Craig Tooman Giles Campion Iain Ross Alistair Gray Dave Lemus James Ede-GoLightly Michael Davidson Steve Romano 05/01/2023 2,100,000 14/09/2023 05/01/2023 14/09/2023 14/09/2023 14/09/2023 14/09/2023 14/09/2023 14/09/2023 216,960 257,598 90,000 48,000 48,000 48,000 48,000 48,000 $5.13 $3.33 $5.13 $5.13 $5.13 $5.13 $5.13 $5.13 $5.13 - - - - - - - - - Note 2 Note 2 Note 2 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 1. Face value is calculated as the market value of underlying shares at the date of grant, less the applicable exercise price. For the CEO and Non-Executive Directors this was nil because the exercise price is equal to or above the market value of the underlying shares at the date of grant. 2. Share options vest in 48 equal monthly vesting tranches starting from the month of grant. These awards are not subject to any performance conditions. 3. Share options vest in 36 equal monthly vesting tranches starting from the month of grant. These awards are not subject to any performance conditions. These grants were grants at the strike price applicable to when they were approved on January 5, 2023. This price was in excess of the of the market price at the grant date of $3.33 per share. Directors' interests in shares at December 31, 2023 Director Current directors Craig Tooman Giles Campion Iain Ross Alistair Gray Dave Lemus James Ede-Golightly Dr. Steven Romano Dr. Michael Davidson Total shares owned outright plus vested options Shares Owned outright Percentage of issued share capital Options: Vested but not exercised Options: Unvested but subject to performance Options: Unvested and not subjected to performance 1,437,342 1,122,939 1,129,934 44,535 42,159 49,632 47,625 47,625 33,486 90,000 64,941 9,903 7,527 15,000 12,993 12,993 1.21% 0.94% 0.95% 0.04% 0.04% 0.04% 0.04% 0.04% 1,403,856 1.032,939 1,064,993 34,632 34,632 34,632 34,632 34,632 - - - - - - - - 3,033,102 - 205,000 61,368 61,368 61,368 61,368 61,368 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 Nasdaq Biotech Index. 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. 49 SILENCE THERAPEUTICS PLC Aligning Pay with Performance CEO remuneration compared with annual growth in TSR: The total 2023 remuneration figure for the CEO (Craig Tooman) is shown in the table below, along with the value of bonuses paid in respect of the year, and fair value of options granted, as a percentage of the total remuneration. 2023 Total remuneration Actual bonus as a % of the remuneration Actual share award as % of the remuneration 2022 Total remuneration Actual bonus as a % of the remuneration Actual share award vesting as % of the remuneration Craig Tooman £000s 923 46% 0% Craig Tooman £000s 643 35% 0% *As 2021 was 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. 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 Directors and the Company’s employees. Only Directors in office during any part of the 2023 year have been included below. Former director, Dr. Steven Romano is not included in the table above as he served as a Director until 31 March 2023 and therefore the prior period is not comparable. Salary % Change 2022 vs 2023 Benefits % Change 2022 vs 2023 Bonus % Change 2022 vs 2023 Giles Campion Craig Tooman (4) Iain Ross Alistair Gray Dave Lemus James Ede-Golightly Dr. Steven Romano Dr. Michael Davidson All employees excl. directors 3 % 16 % 4 % 4 % 4 % 2 % % 2 % 3 % 26 % 94 % Note 2 Note 3 Note 3 Note 3 Note 3 Note 3 3 % (17) % 92 % Note 2 Note 3 Note 3 Note 3 Note 3 Note 3 10 % 50 98.89999.299.499.699.8100100.2100.41/3/20232/3/20233/3/20234/3/20235/3/20236/3/20237/3/20238/3/20239/3/202310/3/202311/3/202312/3/2023SLNNBI SILENCE THERAPEUTICS PLC Giles Campion Iain Ross Alistair Gray Dave Lemus James Ede-Golightly Dr. Steven Romano Dr. Michael Davidson All employees excl. directors Giles Campion Iain Ross Alistair Gray Dave Lemus James Ede-Golightly Dr. Steven Romano Michael Davidson All employees excl. directors Giles Campion Iain Ross Alistair Gray Dave Lemus James Ede-Golightly Dr. Steven Romano Michael Davidson All employees excl. directors Salary % Change 2021 vs 2022 Benefits % Change 2021 vs 2022 Bonus % Change 2021 vs 2022 9 % -25 % 2 % -16 % -20 % -26 % -33 % 3 % Salary % Change 2020 vs 2021 Note 1 Note 2 22 % 22 % 22 % 22 % N/A 4 % Salary % Change 2019 vs 2020 Note 1 Note 2 13 % 13 % 13 % 13 % N/A 4 % 100 % Note 2 Note 3 Note 3 Note 3 Note 3 Note 3 3 % Benefits % Change 2020 vs 2021 Note 1 -100 % Note 3 Note 3 Note 3 Note 3 N/A 3 % Benefits % Change 2019 vs 2020 Note 1 100 % -100 % -100 % Note 3 Note 3 N/A 3 % 22 % Note 2 Note 3 Note 3 Note 3 Note 3 Note 3 4 % Bonus % Change 2020 vs 2021 Note 1 Note 2 Note 3 Note 3 Note 3 Note 3 N/A 4 % Bonus % Change 2019 vs 2020 Note 1 Note 2 Note 3 Note 3 Note 3 Note 3 N/A 4 % 1. Giles Campion was appointed as a Director (Executive Vice President, Head of R&D and CMO) on 9 June 2020, therefore there is not a comparable change from 2020 or prior. 2. Iain Ross was appointed as Executive Chairman on 17 December 2019. Base salary included additional remuneration of £9 thousand (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 was paid £15 thousand (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 £10 thousand 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 appointment, on 1 June Mr Ross signed an employment contract immediately terminable 1 month following the appointment of a new CEO. For the period 1 June - 14 October 2020 Mr Ross was paid £30 thousand per month plus benefits including a contribution to pension and private healthcare insurance of £3 thousand. 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 thousand per month. On signing the employment agreement effective 1 June 2020 Mr Ross was paid a one-off bonus of £75 thousand 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 £80 thousand in respect of services rendered during the remainder of his time in this Executive role. Throughout 2021, Iain maintained a salary of £10 thousand per month. He was not paid a bonus or benefits in either 2021 or 2022. In 2023, he was paid a bonus of £50 thousand. 3. Non-executive directors were not entitled to a bonus in any year, which the exception of Iain Ross. They were not entitled to benefits in any year, with the exception of Alistair Gray and Dave Lemus who were paid benefits of £13 thousand and £2 thousand, respectively in 2019. 4. Craig Tooman was appointed was appointed as a Director (Chief Executive Officer) on 21 February 2022 and therefore prior year data is not available. 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 Average number of employees Revenue Research and development expenditure 2022 £000 26,875 116 17,501 35,605 2023 £000 30,426 115 25,375 44,025 Change £000 13 % Nil 45 % 24 % 51 SILENCE THERAPEUTICS PLC No dividends distributions or share buyback transactions occurred in either 2022 or 2023. Statement of Implementation of Policy in 2024 Base Salary: The January 2024 target base salary increase was and average of 5% for all eligible employees. There was a 5% increase in Craig Tooman’s base salary. Pension and Benefits: In 2024, Executive Director is eligible for the same benefits as provided to all senior employees. The Executive Director is entitled to a 100% match of 401k contributions up to 6% of their respective base salary or maximum allowed by IRS rules. Annual Performance Bonus: For 2024, the Executive Directors’ annual cash bonus target pay-outs will be 60% of annual base salary for Craig Tooman. 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 Craig Tooman. The Company’s 2024 corporate objectives are weighted as follows: The following tables sets out the Company’s performance objectives for 2024. Objective 1 SLN 360 milestone delivery 2 SLN 124 milestone delivery 3 Manufacturing processes 4 New business development deals 5 Achievement of financial targets 6 Candidate selection 7 Compliance and Quality 8 TOTAL Weighting 20 % 15 % 15 % 15 % 12.5 % 10 % 12.5 % 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. Payments for Loss of Office (audited information) There was no loss of office payments in 2023. James Ede-Golightly Chair of the Remuneration Committee 52 SILENCE THERAPEUTICS PLC Directors’ Report The Directors present their report and the audited financial statements of the Group for the year ended 31 December 2023. Principal Activities The Company has full control and ownership of the following subsidiaries: • Silence Therapeutics GmbH • Silence Therapeutics (London) Ltd • • Silence Therapeutics Inc. Innopeg Ltd 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 UK-adopted international accounting standards and the 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 UK-adopted international accounting standards 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. 53 SILENCE THERAPEUTICS PLC 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. Health, 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 detailed statement in the Corporate Social Responsibility section of the Strategic Report. The Group’s estimated electricity usage for the reporting period is 543,120 kWh (an estimated 112 metric tons of CO2 equivalent emissions), with 13% of that estimated usage occurring in the United Kingdom. The Group’s premises are located in shared facilities so energy consumption is estimated based on space leased. 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 incur any political expenditure during the year (2022: nil). The Group made total charitable donations of £nil during the year (2022: £75 thousand). Research and Development In 2023, the Group spent £44.0 million on research and development (2022: £35.6 million). Subsequent Events The Group has no subsequent events. Financial Risk Management A description of financial risk management is set out in note 28 to the financial statements. Results and Dividends The Group recorded a loss for the year before taxation of £50.3 million (2022: £47.4 million). The loss after tax for the year was £43.3 million (2022: £40.5 million). 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. 54 SILENCE THERAPEUTICS PLC 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 2023 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 Craig Tooman Giles Campion (resigned as Director: 1 July 2023) Alistair Gray Dave Lemus James Ede-Golightly Dr. Steven Romano (resigned as Director: 1 April 2023) Dr. Michael Davidson Job title Chairman Chief Executive Officer Executive Director Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive The interests of the Directors in the share options of the Company are set out in the Directors’ remuneration report. Substantial Interests At 31 December 2023 the Company had been informed of the following substantial interests of over 3% in the issued share capital of the Company: Shareholder Richard Griffiths Compagnie Odier SCA Robert Keith Invus Public Equities Advisors, LLC TCG Crossover Management, LLC Deep Track Capital LP Mallinckrodt AstraZeneca UK Limited BVF Partners L.P. Aquilo Capital Management LLC This report was approved by the Board of Directors and signed on its behalf by: Craig Tooman Chief Executive Officer 8 April 2024 Percentage of issued share capital Number of shares 28,722,255 22,505,532 12,291,528 7,500,000 6,314,625 5,854,740 5,063,859 4,399,452 4,525,248 3,936,699 24.2% 18.9% 10.3% 6.3% 5.3% 4.9% 4.3% 3.7% 3.8% 3.3% 55 SILENCE THERAPEUTICS PLC 3 Financial statements 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 Company balance sheet Company statement of changes in equity Cash flow statements Notes to the financial statements Company information and advisers 56 SILENCE THERAPEUTICS PLC Independent 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 2023 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 UK-adopted international accounting standards as applied in accordance with the provisions 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, including 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, which comprise: The consolidated and company balance sheets as at 31 December 2023; 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 not es 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 Context Silence Therapeutics plc is a public limited company incorporated under the laws of England and Wales and is listed on NASDAQ. Overview Audit scope • The Group’s headquarters are in the United Kingdom, which is where Group management resides • There are 5 reporting units and we identified 2 units which, in our view, required a full scope audit based on their size and risk • All of the work was performed by the Group audit engagement team including the Group consolidation, financial statement disclosures and a number of complex items, prepared by the head office finance function. These included goodwill, current and deferred taxes, going concern and central adjustments recorded as part of the consolidation process. 57 SILENCE THERAPEUTICS PLC • Taken together, the Group companies, as well as the consolidation adjustments, over which we performed our audit procedures accounted for 100% of the loss before tax and 100% of revenue. Our audit scope provided sufficient appropriate audit evidence as a basis for our opinion on the Group financial statements as a whole. Key audit matters • Accuracy of management’s percentage of completion assessment of revenue recognition under collaboration agreements (group and parent) • Accuracy of management’s assessment of costs related to third party research and development (“R&D”) contracts including associated accruals and prepayments (group and parent) • Carrying value of the investment in Silence Therapeutics GmbH (parent) Materiality • Overall group materiality: £2,515,000 (2022: £2,368,000) based on 5% of Loss before tax. • Overall company materiality: £2,263,000 (2022: £2,132,000) based on 5% of Loss before tax. • Performance materiality: £1,886,000 (2022: £1,776,000) (group) and £1,697,000 (2022: £1,599,000) (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. 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. Material uncertainty related to going concern (group and parent), which was a key audit matter last year, is no longer included because of the group and parent now having additional liquidity following the recent private placement. Otherwise, the key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Accuracy of management’s percentage of completion assessment of revenue recognition under collaboration agreements (group and parent) The Group has entered into collaboration agreements with third parties, who obtain research services and options for exclusive licence to certain of Silence’s patents and know-how (“IP”) for specific gene targets. The Directors (management) have assessed the agreements include a mixture of fixed and variable consideration relating to the achievement of future milestones. They have previously been assessed to determine the separability of performance obligations, with the transaction price allocated to performance obligations based on their relative standalone selling price. The agreements overlap between different reporting periods and the timing of invoicing and cash receipts does not match with the progress of performance obligations. At each period end management calculate the revenue recognised for the period based on the percentage of We performed the following audit procedures to address the risk: - Leveraged the previous assessment of the collaboration contracts and obtained an update from management to confirm no changes in this assessment which would impact the accounting treatment; - Obtained and challenged management’s assessment of percentage of completion for the targets including “actual cost incurred to date” and “future cost to complete”. These costs comprise of both non-third party costs (internal costs) and costs from third parties (external costs); - Where applicable, we confirmed that these costs are aligned to the collaboration plan and agreed by all parties; - In testing the internal costs incurred in the year we considered the reasonableness of the proportion of these to the total internal cost recharges which have been invoiced in the year. The invoiced cost recharges are then 58 SILENCE THERAPEUTICS PLC completion of each performance obligation, by using the input method based on cost to complete, whereby management determines the proportion of programme and personnel costs incurred to date in comparison to the total expected costs (both internal and external). Total revenue recognised from collaborations during the year ended 31 December 2023 is £24.8m (2022: £16.9m). (Please see note 3 for further details). During the year Silence reacquired exclusive worldwide rights to two preclinical siRNA assets under its Mallinckrodt collaboration, which resulted in a modification of the agreement. Accuracy of management’s assessment of costs related to third party research and development (“R&D”) contracts including associated accruals and prepayments (group and parent) There is an inherent risk of error as a result of estimates that involve identifying the progress of research projects, which considers the progress of external costs and feeds into the risk around the estimation of completion for revenue over collaboration agreements. As the majority of research and development expenditure arises from the outsourcing of studies and clinical trials to third-parties, management are required to calculate the expense and the associated accruals and prepayments based on the progress of the R&D contract versus the amounts billed to date at the end of each period. Outsourcing to third parties restricts Silence’s visibility and ability to monitor the progression of a piece of research, or a trial's stage of completion. As a result, it can be difficult for management to measure what costs have been incurred in relation to a trial at a specific point in time and, as such, based on the billings received, whether the project accruals and prepayments recorded are appropriately estimated. Our audit risk focuses on whether the research projects are being appropriately recognised in expenses and whether associated accruals and prepayments are being correctly recorded. As at 31 December 2023, third party R&D contracts totalled £6.8m in prepayments and £4.4m in accruals. Please see notes 16 and 18 for further details. agreed to the Workplans (see Key Audit Matter relating to third party research and development contracts below). Tested the external “future cost to complete” per the programme Workplans, We also performed a retrospective review of management’s ability to appropriately forecast these costs; and - Tested the mathematical accuracy of the calculations. For the modification under the Mallinckrodt collaboration in the year we; (i) considered the appropriateness of management's accounting treatment over the modification, including possible alternate accounting treatments (ii) recalculated management's reallocation of the transaction price (iii) recalculated the income recognised based on the percentage of completion of the one remaining asset under the collaboration. All of the testing above has been performed to obtain a high level of assurance. Other elements of revenue calculations, such as, “non-third party related actual costs incurred to date” and the “transactions price” were designated as having a normal risk of material misstatement and have been tested to obtain a normal level of assurance. The testing approach for “third party related actual costs incurred to date” is described in the Key Audit Matter below for “Accuracy of management’s assessment of costs related to third party research and development (“R&D”) contracts including associated accruals and prepayments. We concluded that management’s revenue recognition under collaboration agreements is appropriate. We performed the following audit procedures to address the risk: - Tested a sample of research projects over £100k performing the following procedures: - Obtained and challenged management’s calculations of the expense and associated accruals and prepayments positions as at 31 December 2023, based on progress assessments from project managers; - Tested the mathematical accuracy of the calculations;- Obtained the underlying contracts and understood the basis on which the project managers assessed the progress, and that management had recognised the costs; - Verified the progress of projects by reviewing the support available from the third party. We confirmed that there was no contradictory evidence;- Verified that the assessment of progress confirmed by internal project managers was consistent with that provided by the third parties; and - Performed look-back procedures to assess the outcome of prior year accruals with no matters noted. The testing above has been performed to obtain a moderate level of assurance. Other elements of the calculations, such as the completeness of accruals and prepayments and the completeness of expenses were designated as having a normal risk of material misstatement and have been tested to obtain a lower level of assurance. 59 SILENCE THERAPEUTICS PLC Carrying value of the investment in Silence Therapeutics GmbH (parent) As at 31 December 2023 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 £15.1m. A provision of £20.2m had been recorded against the investment balance in previous years, resulting in a net investment in GmbH of £3.1m, plus the loan balance. Management has performed an impairment assessment on the investment in accordance with IAS 36 (Impairment of assets) and on the receivable in accordance with IFRS 9 (Financial instruments) and determined that £0.8m of impairment was necessary in the current year. Judgement is required in the impairment assessment, specifically in forecasting the timing and probability of future contractual milestone receipts. Please see note C.6 for further details. For projects under £100k we tested a sample of invoices to a low level of assurance to ensure that the expense was accurately recorded and that the accruals or prepayments were reasonable. We concluded that management’s recording of the research costs through the year and the related accruals and prepayments are appropriate. We performed the following audit procedures to address the risk: We obtained management’s impairment analysis for the investment amount (under IAS 36) and the loan receivable amount (under IFRS 9) and gained an understanding of the key assumptions and judgements underlying the assessments. We assessed the appropriateness of the methodology applied and tested the mathematical accuracy of the models, with no exceptions identified.We assessed and challenged the key assumptions, including the timing and probability of future milestones receipts by: -Discussing the status of projects with the project managers - Comparing the expected size and timing of milestone payments to the original collaboration agreements; and - Confirming that the timing of future receipts is consistent with our review of board minutes and project status meetings. We concluded that management’s assessments that no impairment is required in relation to the carrying value of the investment and a provision of £0.8m is required against the loan receivable are 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 sta tements 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’s accounting process is structured around local finance functions in each of the Group’s reporting entities. These functions maintain their own accounting records and controls (although transactional processing and certain controls for some repor ting units are performed by the head office finance team) and report to the head office finance team through an integrated consolidation system. In establishing the overall Group audit strategy and plan, we determined all of the work that needed to be performed at the reporting units could be performed by the Group engagement team. For each reporting entity we determined whether we required an audit of their reported financial information (“full scope”). The two reporting entities where a full scope audit was required included Silence Therapeutics plc (incorporated in the UK) and Silence Therapeutics GmbH (incorporated in the UK) were determined as individually financially significant because both individually contribute more than 15% of the Group’s loss before tax. In addition to the work performed at the in-scope reporting entities, there is work performed at head office by the Group audit engagement team. The Group consolidation, financial statement disclosures and a number of complex items, prepared by the head office finance function, were audited by the Group engagement team. These included goodwill, current and deferred taxes, going concern and central adjustments recorded as part of the consolidation process. Reporting units where audit procedures were performed accounted for 100% of Group revenue and 100% of Group total losses before tax. As a result of its structure and size, the Group also has a number of small reporting entities that make up a trivial portion of the key coverage metrics. These small reporting units are covered by the work performed by the Group audit engagement team, where we perform analytical 60 SILENCE THERAPEUTICS PLC review procedures. Those not subject to analytical review procedures were individually, and in aggregate, immaterial. This gave us the evidence we needed for our opinion on the financial statements as a whole. The Company's accounting process is performed by the head office finance team, who maintain the Company's own accounting records and controls. All of the work is performed at the head office by the Group engagement team. This includes the financial statement disclosur es and complex items, prepared by the head office finance function such as investments and intercompany. The impact of climate risk on our audit As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the group’s and company’s financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of climate risk. Our procedures did not identify any material impact as a result of climate risk on the group’s and company’s financial statements. 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 How we determined it Rationale for benchmark applied Financial statements - group Financial statements - company £2,515,000 (2022: £2,368,000). £2,263,000 (2022: £2,132,000). 5% of Loss before tax 5% of Loss before tax The Group is loss making, as expected given its status as an early stage biotech company which has not yet commercialised its products. As such, loss before tax is deemed to be the most appropriate benchmark on which to calculate materiality, as this is the metric on which the Group's financial performance is assessed. The company is loss making, as expected given its status as an early stage biotech company which has not yet commercialised its products. As such, loss before tax is deemed to be the most appropriate benchmark on which to calculate materiality, as this is the metric on which the company's financial performance is assessed. For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materialit y. The range of materiality allocated across components was £1,509,000 to £2,263,000. 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% (2022: 75%%) of overall materiality, amounting to £1,886,000 (2022: £1,776,000) for the group financial statements and £1,697,000 (2022: £1,599,000) 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. We agreed with those charged with governance that we would report to them misstatements identified during our audit above £12 5,000 (group audit) (2022: £118,000) and £113,000 (company audit) (2022: £107,000) 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 b asis of accounting included: 61 SILENCE THERAPEUTICS PLC • Testing the mathematical accuracy of the cash flow forecasts • Comparing the current year actual results to previous cash flow forecasts • Challenging management on any notable year-on-year changes in the forecasts, including the assumptions used in the forecasts • Obtaining an update on the sources of funding options being sought, as set out in note 2 to the group financial statements and note C.2 in the company financial statements • Using our understanding of the Group and the company and the industry in which they operate to assess the possibility of additional risks arising and their potential impact • Evaluating the disclosures within the financial statements 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 audit ors’ 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 2023 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. Annual Report On Remuneration In our opinion, the part of the Annual Report on Remuneration to be audited has been properly prepared in accordance with the Companies Act 2006. 62 SILENCE THERAPEUTICS PLC Responsibilities 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, 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 accoun ting 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 i t 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. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, 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. Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to the Companies Act 2006 and UK Tax Legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. 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, regulations and fraud • Review of minutes of meeting with the Board of Directors • 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 no n-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. 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 Ch apter 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 63 SILENCE THERAPEUTICS PLC 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 Annual Report on Remuneration to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. 64 SILENCE THERAPEUTICS PLC Consolidated income statement year ended 31 December 2023 Revenue Cost of sales Gross profit Research and development costs Administrative expenses Operating loss Finance and other expenses Finance and other income Loss for the year before taxation Taxation Loss for the year after taxation Note 3 5 7 8 9 2023 £000s 25,375 (10,318 ) 15,057 (44,025 ) (20,636 ) (49,604 ) (2,152 ) 1,446 (50,310 ) 7,043 (43,267 ) 2022 £000s 17,501 (10,880 ) 6,621 (35,605 ) (19,609 ) (48,593 ) (47 ) 1,272 (47,368 ) 6,879 (40,489 ) Loss per ordinary equity share (basic and diluted) 10 (38.9) pence (41.9) pence Consolidated statement of comprehensive income year ended 31 December 2023 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 2023 £000s (43,267 ) 2022 £000s (40,489 ) (134) (134) (43,401 ) 544 544 (39,945 ) The accompanying accounting policies and notes form an integral part of these financial statements. 65 SILENCE THERAPEUTICS PLC Consolidated balance sheet at 31 December 2023 Non-current assets Property, plant and equipment Goodwill Other intangible assets Other long-term assets Financial assets at amortised cost Current assets Cash and cash equivalents Financial assets at amortised cost R&D tax credit receivable Other current assets Trade receivables Non-current liabilities Lease liability 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 11 12 13 17 31 December 2023 £000s 1,813 7,840 284 2,580 284 12,801 14 54,031 15 - 17,627 10 9,135 16 228 17 81,021 19 20 20 18 19 (93) (58,910 ) (59,003 ) (5,161 ) (12,429 ) (179 ) (17,769 ) 17,050 2022 £000s 2,201 8,009 320 - 284 10,814 54,816 16,328 14,882 9,745 915 96,686 (263) (63,485 ) (63,748 ) (8,864 ) (12,633 ) (183 ) (21,680 ) 22,072 22 (5,942) (313,769) 24 (1,951) 304,612 (17,050) 5,390 277,860 2,085 (263,263 ) 22,072 The financial statements on pages 65 to 100 were approved by the Board on 8 April 2024 and signed on its behalf. Craig Tooman Chief Executive Officer Company number: 02992058 The accompanying accounting policies and notes form an integral part of these financial statements. 66 SILENCE THERAPEUTICS PLC Consolidated statement of changes in equity year ended 31 December 2023 At 31 December 2021 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 2022 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 2023 Note 22 22 24 / 22 Share capital £000s 4,489 - - 901 Capital Reserves £000s 225,462 10,252 (192) 42,338 Translation reserve £000s 1,541 - - - Accumulated losses £000s (222,966 ) - 192 - Total equity £000s 8,526 10,252 - 43,239 901 - 52,398 - - - 192 (40,489 ) 53,491 (40,489 ) - - - - 5,390 277,860 13,050 - - (1,918) 24,777 552 24 24 24 / 22 544 544 - (40,489 ) 2,085 (263,263) - 1,918 - - - - 552 - 35,909 - - - 1,918 (43,267 ) 544 (39,945 ) 22,072 13,050 - 25,329 38,379 (43,267 ) - - - 5,942 - - 313,769 (134) (134) 1,951 - (43,267 ) (304,612 ) (134) (43,401 ) 17,050 The accompanying accounting policies and notes form an integral part of these financial statements. 67 SILENCE THERAPEUTICS PLC Consolidated statement of cash flows year ended 31 December 2023 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 (gain)/loss Finance and other expenses Finance and other income (Increase)/decrease in trade and other receivables Increase in other current assets (Increase) in R&D Tax Credit Receivable Decrease/(increase) in other long term current assets Decrease in derivative financial instrument Increase in trade and other payables Increase in contract liabilities Cash generated/(spent) on operations Tax paid R&D tax credits received Net cash (outflow)/inflow from operating activities Cash flow from investing activities Redemption of financial assets at amortised cost – term deposits Purchase of financial assets at amortized cost Interest received Purchase of property, plant and equipment Purchase of intangible assets 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 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 Year ended 31 December 2023 £000s (50,310 ) 462 36 13,050 2,157 2,152 (1,446 ) 314 610 (1,772) (2,580) - 44 (8,278) (45,561) (642) 6,853 (39,350) 36,183 (20,666) 958 (45) - 16,430 2022 £000s (47,368 ) 478 4 10,252 713 - (1,272 ) (584 ) (4,225 ) 502 ) - 1,447 (4,399 ) 45,456 - (45,456 ) - (16,125 ) 23 (140 ) (300 ) (16,542 ) (174 ) 25,329 25,155 (190 ) 43,239 43,049 2,235 (18, 949 ) 73,537 228 54,816 54,816 (3,020) 54,031 The accompanying accounting policies and notes form an integral part of these financial statements. 68 SILENCE THERAPEUTICS PLC Notes to the consolidated financial statements year ended 31 December 2023 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 UK adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. 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 applicable in year adopted During the year ended December 31, 2023 we adopted, beginning January 1, 2023, amendments to IAS12 'Income taxes' on deferred tax assets and liabilities arising from a single transaction and international tax reform - pillar two model rules. This did not have a material impact on the Company's results of operations or financial position. New standards issued but not yet effective and not early adopted Certain new accounting standards and interpretations have been published that are not mandatory for December 31, 2023 reporting periods and have not been early adopted by the Group. These include amendments to IAS1 'Presentation of financial statements' on classification of liabilities. The remaining standards are not applicable to the entity in the current or future reporting periods and on foreseeable future transactions. New standards issued but not yet effective and early adopted There were no standards early adopted. 2.2 Basis of consolidation The Consolidated financial statements consolidate those of the Company and its controlled subsidiary undertakings drawn up to 31 December 2023. 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. 69 SILENCE THERAPEUTICS PLC 2.3 Going concern The Group has incurred recurring losses since inception, including net losses of £43.3 million for the year ended December 31, 2023. As of December 31, 2023, the Group had accumulated losses of £304.6 million and cash outflows from operating activities for the year ended 31 December 2023 of £39.4 million. The Group expects to incur operating losses for the foreseeable future as it continues its research and development efforts, seeks to obtain regulatory approval of its product candidates and pursues any future product candidates the Group may develop. To date, the Group has funded its operations through upfront payments and milestones from collaboration agreements, equity offerings and proceeds from private placements, as well as management of expenses and other financing options to support its continued operations. During 2021, the Group received $40.0 million (£30.8 million) of upfront payments in respect of the AstraZeneca plc ("AstraZeneca") collaboration, $45.0 million from a private placement of American Depositary Shares ("ADSs") (approximately $42.0 million / £30.8 million, net of expenses) and an approximately $16.0 million (£10.7 million) upfront payment (net of taxes withheld, based on the exchange rate at the payment date), related to the Hansoh Pharmaceutical Group Company Limited ("Hansoh") collaboration executed on October 14, 2021. In August 2022, the Group raised additional funds through a registered direct offering with aggregate gross proceeds of $56.5 million (approximately £46.4 million) before deducting $4.1 million (approximately £3.3 million) in placement agent fees and other expenses. In 2023, the Group received a $10.0 million (approximately £7.9 million) milestone from the AstraZeneca collaboration and $4 million (approximately £3.2 million) in milestones from the Hansoh collaboration. The Group also raised gross proceeds of approximately $32.2 million (approximately £25.5 million), before deducting £1.0 million in placement agent fees and other expenses from its open market sale agreement. As of December 31, 2023, the Group had cash and cash equivalents of £54.0 million ($68.8 million). In January 2024, we raised additional proceeds of £15.7 million ($20 million) before deducting £0.5 million ($0.6 million) in placement agent fees and other expenses, from sales of ADSs under our Sales Agreement.. On February 5, 2024 the Group announced a private placement of 5,714,286 of the Company’s American Depositary Shares (“ADSs”), each representing three ordinary shares, at a price of US $21.00 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of the Private Placement was US $120 million (approximately £94.5 million) before deducting approximately £5.7 million in placement agent fees and other expenses. The financing syndicate included 5AM Ventures, Frazier Life Sciences, Logos Capital, Nextech Invest Ltd (on behalf of one or more funds managed by it), Redmile Group, TCGX and Vivo Capital. The Group believes that its current cash and cash equivalents are sufficient to fund its operating expenses for at least the next twelve months from the issuance date of these consolidated financial statements. For this reason, the Company continues to adopt the going concern basis in preparing the financial statements. The Group will need to raise additional funding to fund its operation expenses and capital expenditure requirements in relation to its clinical development activities. The Group may seek additional funding through public or private financings, debt financing or collaboration agreements. Specifically, the Group may receive future milestone payments from existing collaboration agreements which will extend the ability to fund operations. However, these future milestone payments are dependent on achievement of certain development or regulatory objectives that may not occur. The inability to obtain future funding could impact; the Group’s financial condition and ability to pursue its business strategies, including being required to delay, reduce or eliminate some of its research and development programs, or being unable to continue operations or unable to continue as a going concern. 2.4 Research and development The Group recognise expenditure incurred in carrying out its research and development activities in line with management’s best estimation of the costs incurred to date for 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. 70 SILENCE THERAPEUTICS PLC 2.5 Revenue recognition The Group’s revenue for the year ended 31 December 2023 consists of royalty income and revenue from collaboration agreements. Royalty income The Group’s royalty income is generated by a settlement and license agreement with Alnylam. Under this contract, Alnylam is obliged to pay royalties to the Group on the net sales of ONPATTRO™ in the EU 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 when sales data is received, based on the level of sales when the related sales occur. Revenue from collaboration agreements We have considered the Mallinckrodt, AstraZeneca, and Hansoh contracts and assessed whether the research and development services and license of the IP in respect of each target are distinct. For all contracts we have concluded the license of the intellectual property and the R&D services are not distinct, as Mallinckrodt, AstraZeneca, and Hansoh 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, and these services could not be performed by another party, 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. We recognise revenue over the duration of the contract based on an input method based on cost to cost. The contracts have mule 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 continues 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 2023: • • • Total contract costs which includes actual FTE and direct costs incurred up to 31 December 2023 and forecast FTE and direct costs for the remainder of the contract Actual costs incurred up until 31 December 2023 are calculated as a percentage of total contract costs (actual and forecast) This percentage is then multiplied by the transaction price 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 period. 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 achieved is excluded from the calculation. 71 SILENCE THERAPEUTICS PLC Forecast costs are monitored each period, with 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 2023 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. 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 2022 or 2023. All goodwill is attributed to an acquisition that occurred in 2005. 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. 2.9 Property, plant and equipment The Group holds 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. 72 SILENCE THERAPEUTICS PLC 2.10 Goodwill Goodwill is stated at cost less any accumulated impairment losses; it is allocated to the cash generating unit or operating segment that is 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. Careful judgment 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 73 SILENCE THERAPEUTICS PLC 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. At least annually or 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 units 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, U.S. Treasury Bills, and 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. Premiums and discounts, if any, are amortised or accreted as interest expense or income over the life of the related asset using the effective interest method. 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. 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 74 SILENCE THERAPEUTICS PLC 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. 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; 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 comprising the following: the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and restoration costs. 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. 75 SILENCE THERAPEUTICS PLC Lease break clauses and extension options When the Group has the option to extend a lease, management uses its judgment 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. 2.15 Share-based payments Historically the Group has issued equity settled share-based payments to certain employees (see note 23). 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 Black Scholes model, 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. 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. 76 SILENCE THERAPEUTICS PLC 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 U.K. 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. Withholding tax is payable on gross income from dividends, interest, lease of property, royalties, and other China-source passive income since the Group does not have an establishment or place of business in China. 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 judgments 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 judgments 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: • Application of IFRS 15 in determining revenue from contracts with customers specifically: 77 SILENCE THERAPEUTICS PLC o o The determination of the numbers of performance obligations. Judgement was previously required in determining whether the license and the R&D activities are distinct performance obligations or not at the time the collaboration agreements were executed. 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 was concluded that there is only one single performance obligation covering both the R&D services and licenses of the IP in respect of each target at the time the agreements were executed; The allocation of the upfront payments between performance obligations (judgement). Mallinckrodt paid the Group $20 million in 2019, AstraZeneca have paid the Group $60 million in 2020 and 2021, and Hansoh paid $16 million upfront under their respective contracts, which is in 2021. A judgment was required to determine how this should be allocated across the contracted targets. In 2019, due to the compounds being at similar stages of development at the time of contract execution, the $20 million paid by Mallinckrodt was 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; similarly it was concluded that the $60 million amount to be paid by AstraZeneca was allocated evenly across target options for AstraZeneca. The Hansoh $16 million upfront payment was allocated $4 million for each of the two targets in Greater China, Hong Kong, Macau and Taiwan and $8 million for the global target based on the benchmarking exercise, as well as consideration for geography licensed and other contractual terms. These initial transaction amounts are recognized as revenue over the life of the performance obligations for each contract. • The estimate of future costs to be incurred to determine percentage of completion of revenue contracts: o 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 performance obligations per the contract. An increase in future costs could arise as a result of a requested change in scope by the collaboration partner or through higher than anticipated internal costs incurred by Silence. The impact of a change in scope would be largely neutral on revenue recognition because there would be consequential increases in revenue to match the additional costs. There is no experience of internal costs being higher than anticipated to date, but if this were the case then a 10% increase in future estimated costs would lead to a 0.8% decrease in revenue. 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 Chief Executive Officer. The Group has a single reportable segment (see note 4). 3. Revenue Revenue from collaboration agreements for the year ended 31 December 2023 relates to the Research collaboration agreements the Group entered into with Mallinckrodt plc in July 2019, AstraZeneca plc in March 2020, and Hansoh in October 2021. Revenue comprised £0.6 million of royalty income (2022: £0.6 million) and £24.8 million of Research collaboration income (2022: £16.9 million). Disaggregation of Revenue from Contracts with Customers is as follows: 78 SILENCE THERAPEUTICS PLC Revenue from Contracts with Customers Research collaboration - Mallinckrodt plc Research collaboration - AstraZeneca Research collaboration – Other Research collaboration – total Royalties Total revenue from contracts with customers 2023 £000s 10,544 13,682 580 24,806 569 25,375 2022 £000s 11,658 5,081 184 16,923 578 17,501 Under our collaboration agreement with Mallinckrodt, we received an upfront cash payment of £16.4 million ($20 million) in 2019 and are eligible to receive specified development, regulatory and commercial milestone payments. No milestone payments under this agreement were achieved (2022: £2.2 million) during the year ended December 31, 2023. We recognize the upfront payment, milestone payments, payments for personnel costs and other research funding payments over time, in accordance with IFRS 15 para 35 c). During the year ended December 31, 2023, we recognized a total of £10.5 million in revenue under this agreement (2022: £11.7 million). In March 2023, the Company reacquired exclusive worldwide rights to two preclinical siRNA assets under its Mallinckrodt collaboration, which resulted in a modification of the agreement. No additional performance obligations were identified as a result of the modification as there were no additional goods or services to be provided by the Company and the modification resulted in the partially satisfied performance obligations relating to the two reacquired targets becoming fully satisfied as the Company was no longer obligated to develop these targets. SLN501, the C3 targeting program, remains under the original collaboration agreement. The Company accounted for the modification as if it were part of the existing contract as the remaining services to be delivered form part of a single performance obligation that is partially satisfied at the date of contract modification. The effect of the contract modification was that the consideration originally received for the two preclinical siRNA assets was reallocated to SLN501. The Company recognized the effect of the contract modification on the measure of progress towards complete satisfaction of the SLN501 performance obligation and recognized an adjustment to revenue at the date of the contract modification on a cumulative catch-up basis. The Company recognized £8.0 million on the contract modification date. In relation to the reacquired targets, the two preclinical siRNA assets were recognized at fair value. The fair value of those assets has been determined to be nil. Under the modification, the Company agreed to pay future success-based milestones and low single digit royalties on net sales if the projects advance. The Company will recognize these variable success-based milestones as an intangible asset at cost when triggered. Any royalties payable will be expensed in cost of sales. Under our collaboration agreement with AstraZeneca, we received an upfront cash payment of £17.1 million ($20 million) in 2020 with a further amount of £30.8 million ($40 million) received in May 2021. We are also eligible to receive specified development and commercial milestone payments as well as tiered royalties on net sales, if any. We recognize the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the year ended December 31, 2023, the Company achieved a milestone payment of approximately £7.9 million ($10.0 million) (2022: nil). During the year ended December 31, 2023, we recognized a total of £13.7 million in revenue under this agreement (2022: £5.1 million). We entered into a collaboration agreement with Hansoh on October 15, 2021. We received a $16 million (equivalent to approximately £11.9 million based on the exchange rate at the payment date and $14.4 million or £10.7 million, net of taxes) upfront payment to us in December 2021. We are eligible to receive development, regulatory and commercial milestones as well as royalties on Hansoh net product sales. During the year ended December 31, 2023, the Company achieved milestone payments totaling £3.2 million ($4.0 million) (2022: £1.5 million). We recognize the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the year ended December 31, 2023, we recognized a total of £0.6 million in revenue under this agreement (2022: £0.2 million). In December 2018, we entered into a settlement and license agreement with Alnylam Pharmaceuticals Inc., or Alnylam, pursuant to which we settled outstanding patent litigation with Alnylam related to its RNAi product ONPATTRO. As part of the settlement, we license specified patents to Alnylam, and Alnylam pays us a tiered royalty of up to one percent of net sales of ONPATTRO in the European Union. We were eligible to receive these royalties through December 2023. We invoice Alnylam quarterly in arrears based on sales data for that quarter as reported to us by Alnylam. Royalty revenue is recognized based on the level of sales when the related sales occur. During the year ended December 31, 2023, we recognized a total of £0.6 million in royalty income from Alnylam (2022: £0.6 million). 79 SILENCE THERAPEUTICS PLC 4. Segment reporting In 2023, 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 2022 and 2023, 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. 80 SILENCE THERAPEUTICS PLC An analysis of the Group’s assets and revenues by location is shown below: U.S.A. £000s U.K. £000s Germany £000s Non-current assets As at 31 December 2022 As at 31 December 2023 Revenue analysis for the year ended 31 December 2022 Research collaboration Royalties Revenue analysis for the year ended 31 December 2023 Research collaboration Royalties 5. Operating loss This is stated after charging/(crediting): - - - - - - - - 1,166 3,508 9,648 9,293 16,923 - 16,923 - 578 578 Total £000s 10,814 12,801 16,923 578 17,501 24,806 - 24,806 - 569 569 24,806 569 25,375 Depreciation of property, plant and equipment Amortisation of intangibles Share-based payments charge Short lease payments on premises Fees payable to the Company's auditors for the audit of the Company and the consolidation: - audit fees - other assurance services 2023 £000s 462 36 13,050 481 576 222 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 2023 £000s 15,363 1,524 489 13,050 30,426 2022 £000s 478 4 10,252 410 463 150 2022 £000s 14,760 1,434 429 10,252 26,875 Remuneration and share based payments detail for all Directors is presented in the Remuneration Committee report. See page 32 for further details. 81 SILENCE THERAPEUTICS PLC Research and development and related support services Administration Total average number of employees 7. Finance and other expenses Lease liability interest expense Net foreign exchange losses Total Finance and other expenses 8. Finance and other income Bank interest receivable Accreditation on U.S. Treasury Bills Net foreign exchange gains Total Finance and other income 9. Taxation 2023 Number 86 29 115 2022 Number 88 28 116 2023 £000s 34 2,118 2,152 2023 £000s 67 1,379 - 1,446 2022 £000s 47 - 47 2022 £000s 23 203 1,046 1,272 The entire tax credit of £6.9m relates to current tax as shown below. No deferred tax was recognised in the year. The deferred tax charge in 2022 was nil (2021: nil). Reconciliation of tax credit at standard rate of U.K. corporation tax to the current tax credit: Loss before tax Tax credit at the standard rate of U.K. corporation tax of 25% (2022: 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 Effect of overseas taxes 2023 £000s (50,310 ) 12,578 207 (13,177 ) 15 7,793 (373 ) 7,043 2022 £000s (47,368 ) 9,000 544 (9,948 ) (401) 7,836 (152) 6,879 Estimated tax losses of £199.0 million (2022: £167.8 million) are available for relief against future profits. 82 SILENCE THERAPEUTICS PLC The deferred tax asset not recognized in these financial statements on the estimated losses and the treatment of the equity settled share- based payments, net of any other temporary differences is detailed in note 23. During the year, the Group had not yet received a research and development tax credit related to the prior year (2022: £7.8 million). The Group has accrued £7.8 million (2022: £7.8 million) recognizing a current tax asset in respect of 2023 research and development tax credits. Research and development tax credit in respect of the current year includes amounts for unfunded projects that are permissible to claim under the Small or Medium Enterprise ('SME') R&D tax scheme. In addition to this we have also recognised £0.9 million of income from the RDEC scheme in the income statement within research and development costs. The company had a foreign tax expense of £0.4 million. (2022: £0.4 million). The corporation tax main rate during 2023 was 25% (2022: 19%). In the Spring Budget 2021, the U.K. Government announced that from 1 April 2023 the corporation tax rate will increase to 25%. As the company has not recognized any related deferred tax assets as at 31, December 2023, the tax rate increase has no impact. Since the Group does not have an establishment or place of business in China, the Group is subject to withholding tax on gross income from dividends, interest, lease of property, royalties, and other China-source passive income. In 2021 the Group entered into a collaboration agreement with Hansoh, a biopharmaceutical company in China and received a $16 million upfront payment, which required withholding tax of $1.6 million. In 2023 the Group received a milestone payment of £3.2 million ($4.0 million), which required withholding tax of £0.4 million In 2022 the Group received a milestone payment of £1.5 million ($2.0 million), which required withholding tax of £0.2 million. 10. 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 and on the weighted average of 111,277,250 (2022: 96,584,512; 2021: 88,950,441) ordinary shares in issue during the year. The options outstanding at December 31, 2023, December 31, 2022 and December 31, 2021 are considered to be anti- dilutive as the Group is loss-making. 83 SILENCE THERAPEUTICS PLC 11 Property, plant and equipment Cost At 1 January 2022 Additions Disposals Translation adjustment At 31 December 2022 At 1 January 2023 Additions Translation adjustment At 31 December 2023 Accumulated depreciation At 1 January 2022 Charge for the year Eliminated on disposal Translation adjustment At 31 December 2022 At 1 January 2023 Charge for the year At 31 December 2023 Net book value As at 31 December 2022 As at 31 December 2023 12. Goodwill Balance at start of year Translation adjustment Balance at end of year Equipment and furniture £000s Right-of-use asset £000s 5,112 140 (506) 240 4,986 4,986 45 24 5,055 3,293 306 (506 ) 144 3,237 3,237 296 3,533 1,749 1,522 345 499 (346 ) - 498 498 - 5 503 220 172 (346 ) - 46 46 166 212 452 291 Total £000s 5,457 639 (852 ) 240 5,484 5,484 45 29 5,558 3,513 478 (852 ) 144 3,283 3,283 462 3,745 2,201 1,813 2023 £000s 8,009 (169) 7,840 2022 £000s 7,592 417 8,009 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 2023 • Disposal costs have been estimated to be minimal Goodwill is assessed at a segment level. As there is only one operating segment, we have considered the fair value of the entire business as market capitalization at December 31, 2023, which was £540.5 million (2022:£453.3 million), with share price not dropping significantly below its December 31, 2023 value at any point so far in 2024, and therefore a sensitivity analysis has not been presented. 84 SILENCE THERAPEUTICS PLC 13. Other intangible assets Cost At 1 January 2022 Additions Translation adjustment At 31 December 2022 At 1 January 2023 Additions Translation adjustment At 31 December 2023 Accumulated depreciation At 1 January 2022 Charge for the year Translation adjustment At 31 December 2022 At 1 January 2023 Charge for the year Translation adjustment At 31 December 2023 Net book value As at 31 December 2022 As at 31 December 2023 Licenses & software £000s 130 300 - 430 430 - - 430 106 4 - 110 110 36 146 320 284 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, none have been capitalised to date. 14. Cash and cash equivalents Cash at bank and in hand U.S. Treasury Bills Short term bank deposits Total Cash and cash equivalents 2023 £000s 24,993 29,038 - 54,031 2022 £000s 41,986 12,376 454 54,816 Cash at bank comprises balances held by the Group in current, U.S. Treasury Bills 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. 15. Financial assets at amortised cost Non-current financial assets at amortized cost primarily relate to deposits for properties. Current financial assets at amortized cost, other than trade receivables as disclosed in note 17, include U.S. Treasury Bills (with maturities from purchase date over three months) of £nil (2022: £16.3 million). 85 SILENCE THERAPEUTICS PLC Financial assets at amortised cost – U.S. Treasury Bills Total current financial assets at amortised cost Non-current financial assets at amortised cost Total financial assets at amortised cost 16. Other current assets Prepayments VAT receivable Total other current assets 2023 £000s - - 284 284 2022 £000s 16,328 16,328 284 16,612 2023 £000s 8,157 978 9,135 2022 £000s 8,200 1,545 9,745 86 SILENCE THERAPEUTICS PLC 17. Trade receivables Trade receivables 2023 £000s 228 2022 £000s 915 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 (2022: £nil) provision is required. 18. Trade and other payables Trade payables Social security and other taxes Accruals and other payables Corporate income tax payable Total trade and other payables 2023 £000s 2,629 577 8,850 373 12,429 2022 £000s 3,186 467 8,391 589 12,633 The Directors consider that the carrying amount of trade and other payables approximates to their fair value. 19. Lease liability Lease liability – current Lease liability – non-current Total lease liability 2023 £000s 179 93 272 2022 £000s 183 263 446 The lease liability recognised on the face of the balance sheet comprises of the Group’s London office, which was renegotiated upon completion of the original term, with the new term beginning in September 2022. The repayment of the principal portion of these lease liabilities for the year-ending December 31, 2023, was £0.2 million (2022: £0.2 million). There are two short-term leases in Berlin, Germany and seven leases in Hoboken, U. S., not included in the lease liability above. Both leases in Berlin are on a rolling contract basis with either party being able to end the lease with a cancellation notice period of 11.5 months, while the leases in the U. S. are on a rolling contract basis with a notice period of three months, thus allowing exemption using the practical expedient, without significant cost. 87 SILENCE THERAPEUTICS PLC 20. Contract liabilities Contract liabilities comprise entirely deferred revenue in respect of the Mallinckrodt, AstraZeneca plc, and Hansoh research collaborations. The current contract liabilities represent the amount of estimated revenue to be reported in the next 12 months related to amounts invoiced to our partners. Current and non-current contract liabilities include future revenue from collaboration recharged expenses, upfront payments, and milestones achieved to December 31, 2023 Contract liabilities: Current Non-current Total contract liabilities Contract liabilities: At 1 January 2022 Additions during period Revenue unwound during period At 31 December 2022 At 1 January 2023 Additions during period Revenue unwound during period At 31 December 2023 21. Deferred tax 2022 £000s 8,864 63,485 72,349 31 December, 2023 £000s 5,161 58,910 64,071 Total £000s 76,748 12,519 (16,918 ) 72,349 72,349 16,528 (24,806 ) 64,071 The Group has the following unrecognised deferred tax assets as at 31 December 2023: Total unrecognised deferred tax assets are calculated based on the main corporate tax rate of 25% (25% for 2022) as this is the rate applicable to when we expect to utilise these deferred tax assets. Unrecognised deferred tax assets from foreign trading losses are calculated at the tax rate applicable to the related jurisdiction. 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 2023 (2022: nil). 88 20232022GrossGross£000s£000sTrading losses198,422167,828Share based payments7,6798,995Capital losses78737,873Total unrecognised deferred tax asset213,974184,696December 31, SILENCE THERAPEUTICS PLC 22. Share capital Authorised, allotted, called up and fully paid ordinary shares, par value £0.05 Number of shares in issue Number of ADS in issue 2023 £000s 5,942 2022 £000s 5,390 Number 118,846,966 39,615,655 Number 107,808,472 35,936,157 The Group has only one class of share. All ordinary shares have equal voting rights and rank pari passu for the distribution of dividends. On February 5, 2021 the Group announced a private placement of 2,022,218 of the Company’s American Depositary Shares (“ADSs”),, each representing three ordinary shares, at a price of $22.50 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of the Private Placement was US $45 million (approximately £33 million) before deducting approximately £2.4 million in placement agent fees and other expenses. The financing syndicate included Adage Capital Management LP, BVF Partners L.P., Consonance Capital, Great Point Partners, LLC, and other investors. On November 30, 2021, the Company completed delisting from AIM. As a result, the Company converted the existing employee share options to ADSs which represents three ordinary shares and the exercise price was also converted to represent an ADS price at an exchange rate equal to the average of the last five business trading days currency conversion of sterling pounds to US dollars, which was 1.334058 sterling pounds to 1 US dollar. This is not a modification of the existing share option grants, as the value or timing of the grants was unchanged. On August 11, 2022, the Group announced a registered direct offering (the “Offering”) of 5,950,000 of the Company’s ADSs, each representing three ordinary shares, at a price of $9.50 per ADS, with new and existing institutional and accredited investors. The aggregate gross proceeds of the Offering was $56.5 million (approximately £46.4 million) before deducting $4.1 million (approximately £3.3 million) in underwriting discounts, commissions and estimated offering expenses. On October 15, 2021, we entered into an Open Market Sale Agreement (the "Sales Agreement"), with Jefferies LLC ("Jefferies"), under which Jefferies, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the Sales Agreement up to a maximum of $100.0 million of ADSs. Under the terms of the Sales Agreement, Jefferies may sell the ADSs at market prices by any method that is deemed to be an "at the market offering" as defined in Rule 415 under the Securities Act of 1933, as amended. The ADSs offered under the Sales Agreement are being offered pursuant to a registration statement on Form F-3 that became effective on October 22, 2021. We may offer and sell up to $300.0 million of our shares, represented by ADSs, from time to time in one or more offerings. During the year ended December 31, 2023, we sold 3.4 million ADSs for net proceeds of approximately $32.2 million (approximately £25.5 million), before deducting £1.0 million in placement agent fees and other expenses. As of this filing, approximately $67.8 million of ADSs remained available under the Sales Agreement. Details of the shares issued during the current and previous year are as follows: 89 SILENCE THERAPEUTICS PLC Number of shares in issue at 1 January 2022 Shares issued during the year Options exercised at $0.20/ADS or $0.07/ordinary share Options exercised at $4.16/ADS or $1.39/ordinary share Options exercised at $5.12/ADS or $1.72/ordinary share Options exercised at $5.88/ADS or $1.96/ordinary share Options exercised at $7.32/ADS or $2.44/ordinary share Options exercised at $7.60/ADS or $2.53/ordinary share Number of shares in issue at 31 December 2022 Shares issued during the year Options exercised at $0.20/ADS or $0.07/ordinary share Options exercised at $2.40/ADS or $0.80/ordinary share Options exercised at $3.76/ADS or $1.25/ordinary share Options exercised at $7.60/ADS or $2.53/ordinary share Options exercised at $15.38/ADS or $5.13/ordinary share Number of shares in issue at 31 December 2023 Number of equivalent ADS in issue at 31 December 2023 89,784,720 17,850,000 84,835 16,968 12,951 24,000 15,000 19,998 107,808,472 10,230,567 583,857 39,999 27,498 154,386 2,187 118,846,966 39,615,655 At 31 December 2023, there were options outstanding over 15,853,459 (2022: 11,571,487) unissued ordinary shares. Details of the options outstanding are as follows: Year of issue Weighted average Exercise price (£) Weighted average Exercise price ($) At 1 January 2023 Options granted Options forfeited Options expired Options exercised At 31 December, 2023 Weighted average years to expiry date 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total 3.39 3.39 4.12 6.46 0.16 4.30 6.60 17.94 14.83 11.13 4.23 4.23 5.14 8.05 0.20 5.36 8.23 22.37 18.49 13.88 4,000 3,333 9,857 49,165 44,422 725,518 603,440 822,984 1,594,443 - - - - - - - - - - 2,567,942 - - (9,166) (7,826) (147,820) (303,000) (39,233) (71,819) (24,286) (64,535) - (44,517) (729) (130,063) (289,599) (8,025) 4,000 3,333 9,857 39,999 36,596 577,698 261,207 662,344 1,419,863 2,269,589 0.67 1.51 2.35 3.90 4.24 2.83 6.43 7.12 8.09 9.14 3,857,162 2,567,942 (491,481) (379,828) (269,309) 5,284,486 Number of equivalent ADS 11,571,487 7,703,826 (1,474,443) (1,139, 484) (807,927) 15,853,459 90 SILENCE THERAPEUTICS PLC ADSs represent three ordinary shares and the exercise price was also converted to represent an ADS price at an exchange rate equal to the closing current year currency conversion of sterling pounds to US dollars, which was 1.334058 sterling pounds to 1 US Dollar. The market price of Company shares at the year-end was $17.37/ADS or ($5.79 or 464 pence/share). (2022: $15.25/ADS ($5.08 or 420 pence/share)). During the year the minimum and maximum prices were $4.61 and $17.67 per ADS (123 pence and 472 pence per ordinary share), respectively (2022: 215 pence and 680 pence). 23. Equity-settled share-based payments The Group has issued share options under the 2018 Long Term Incentive Plan (EIP), 2018 Non-Employee Long Term Inventive Plan (Non-Employee EIP), 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 2023). Under the EIP, Non-Employee EIP, individual contracts and schemes available, the options typically vest after 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. 2023 2022 Number of Weighted Weighted Number of shares Weighted ADSs Average Exercise price Average Exercise price 000s $ Pence 000s 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 (ordinary shares/pence) Outstanding at the year-end (ADS/$) Exercisable at the year-end 3,857,162 2,567,942 (871,309) (269,309) 0 5,284,486 2,420,614 15.10 14.01 18.50 1.89 0.00 14.80 14.34 Average Exercise price Pence 197.19 600.74 787.96 86.20 2,684,233 1,940,377 (709,531) (57,917) 403.63 374.49 494.51 50.52 0 0 0.00 395.61 3,857,162 383.31 1,889,460 406.78 356.67 91 SILENCE THERAPEUTICS PLC The table above shows the number of options in relation to ordinary shares and equivalent ADSs outstanding and exercisable at year end, on the conversion ratio of three ordinary share options to one ADS as disclosed in Note 24. The options outstanding at the year-end have a weighted average remaining contractual life of 7.68 years (2022: 8.2 years). The weighted average share price at the time of exercise during the year was 274 pence per ordinary share or $10.26 per ADS (2022: 318.31 pence). The Group granted 7,703,826 share options during the year (2022: 5,821,131). The fair value of options granted were calculated using Black Scholes model for 2023 and 2022. Prior to January 1, 2022, the fair value of options granted were calculated using a Binomial or Monte Carlo model. Inputs into the model were as follows: 2023 2022 Inputs and assumptions for options granted in the year Weighted average share price (pence) Weighted average ADS price ($) Weight average hurdle price (pence) Weighted average exercise price (pence) Weighted average ADS price ($) Option life (years) Expected volatility Risk free rate Expected dividend yield 375.0 14.0 375.0 14.0 537.4 19.5 n/a n/a 673.8 24.4 8.9 56%-74% 1.16%-3.57% nil 6.0 72%-79% 3.16%-4.43% nil The Group recognized total charges of £13.1 million (2022: £10.3 million) related to equity settled share-based payment transactions during the year. Fair value of the grants has been calculated using volatility assumptions between 56% and 74%, 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 £0.2 million (2022: £0.4 million). 24. 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. 92 SILENCE THERAPEUTICS PLC At 1 January 2022 Shares issued On options in issue during the year On options exercised during the year Costs capitalised in respect of issuance of shares during the period. Movement in the year At 31 December 2022 Shares issued On options in issue during the year On options exercised during the year Costs capitalised in respect of issuance of shares during the period. Movement in the year At 31 December 2023 Share Premium account £000s 184,332 45,533 - 153 (3,348) 42,338 226,670 25,411 - 381 (1,015) 24,777 251,447 25. Capital commitments and contingent liabilities There were no capital commitments at 31 December 2023 (2022: nil). Merger reserve £000s 22,248 - - - Share-based Payment reserve £000s 13,688 - 10,252 (192 ) Capital redemption reserve £000s 5,194 - - - - - 22,248 - - - - - 22,248 - 10,060 23,748 - 13,050 (1,918 ) - 11,132 34,880 - - 5,194 - - - Total £000s 225,462 45,533 10,252 (39 ) (3,348) 52,398 277,860 25,411 13,050 (1,537 ) - - 5,194 (1,015) 35,909 313,769 93 SILENCE THERAPEUTICS PLC 26. Commitments under short leases At 31 December 2023, the Group had a gross commitment on its office rental and service charge in Berlin, Germany and the Hoboken, U.S. lease equal to £0.4 million (2022: £0.3 million) 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. 27. 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 Other current assets at amortised cost Non-current financial assets at amortised cost Financial liabilities by category Trade and other payables Lease liability All amounts are short-term. Credit quality of financial assets (loans and receivables) 2023 £000s 228 54,031 - 284 54,543 2022 £000s 915 54,816 16,328 284 72,343 2023 £000s 12,429 272 12,701 2022 £000s 12,166 446 12,612 94 SILENCE THERAPEUTICS PLC 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 2023 £000s 228 284 - 512 2022 £000s 915 284 16,328 17,527 Cash and cash equivalents and U.S. Treasury Bills are not considered to be exposed to significant credit risk due to the fact they are held in a financial institution with an “A” rating. The Group considers the possibility of significant loss in the event of non-performance by a financial counterparty to be unlikely. The Group regularly 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 pre-clinical 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 licenses. 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 minimize 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 U.K. 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. 95 SILENCE THERAPEUTICS PLC 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. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customer to settle the receivables. At the year-end there were no debts that were past due or are expected to be past due. It was therefore concluded on this basis that there were no expected credit losses for the trade receivable. Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery includes, 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. Financial assets and liabilities denominated in euros and translated into sterling at the closing rate were: Financial assets Financial liabilities Net financial assets/(liabilities) 2023 £000s 3,254 (1,541 ) 1,713 Financial assets and liabilities denominated in US dollars and translated into sterling at the closing rate were: Financial assets Financial liabilities Net financial assets/(liabilities) 2023 £000s 54,664 (3,290 ) 51,374 2022 £000s 2,302 (1,279 ) 1,023 2022 £000s 53,086 (2,947 ) 50,139 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 2% (2022: 1%) against the euro. The table shows the impact of an additional weakening or strengthening of sterling against the euro by 20%. 2023 Group result for the year Euro denominated net financial liabilities Total equity at 31 December 2023 As reported £000s If sterling rose 20% £000s (43,267 ) 1,713 17,050 (40,221 ) 1,428 16,765 If sterling fell 20% £000s (47,836 ) 2,141 17,478 96 SILENCE THERAPEUTICS PLC 2022 Group result for the year Euro denominated net financial liabilities Total equity at 31 December 2022 (40,489 ) 1,023 22,072 (37,572 ) 853 21,902 (44,865 ) 1,279 22,328 97 SILENCE THERAPEUTICS PLC 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 U.S. dollar. During the year sterling rose by 5% (2022: 10% decrease) against the US dollar. The table shows the impact of an additional weakening or strengthening of sterling against the US dollar by 20%. 2023 Group result for the year U.S. dollar denominated net financial assets Total equity at 31 December 2023 2022 Group result for the year U.S. dollar denominated net financial assets Total equity at 31 December 2022 28. Notes to the cash flow statement Changes in liabilities arising from financing activities Lease liabilities Total liabilities from financing activities 29. Related party transactions As reported £000s If sterling rose 20% £000s (43,267 ) 51,374 17,050 (42,958 ) 42,812 8,488 If sterling fell 20% £000s (43,730 ) 64,218 29,894 (40,489 ) 50,139 22,072 (37,013 ) 41,783 13,716 (45,703 ) 62,674 34,607 1 January Cash flows from financing activities 2023 £000s 446 446 Repayments £000s (174 ) (174 ) Non-cash flows New lease liabilities £000s - - 31 December 2023 £000s 272 272 We have engaged in the following transactions with our directors, executive officers or holders of more than 10% of our outstanding share capital and their affiliates, which we refer to as our related parties. In 2022, the Company agreed to pay Gladstone Consultancy Partnership, a company controlled by the Company’s Non- Executive Chairman, Iain Ross, £60 thousand (plus any applicable value added tax) for consulting and advisory services provided by Mr. Ross. Gladstone Consulting Partnership is no longer being engaged by the Company in 2023. Key management are considered to be Directors of the Group. Directors’ compensation is discussed in the Remuneration Committee Report. 30. Post Balance Sheet Events In January 2024, we raised proceeds of $20 million before deducting $0.6 million in placement agent fees and other expenses, from sales of ADSs under our Sales Agreement. On February 5, 2024 the Group announced a private placement of 5,714,286 of the Company’s American Depositary Shares (“ADSs”), each representing three ordinary shares, at a price of US $21.00 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of the Private Placement was US $120 million (approximately £94.5 million) before deducting approximately £5.7 million in placement agent fees 98 SILENCE THERAPEUTICS PLC and other expenses. The financing syndicate included 5AM Ventures, Frazier Life Sciences, Logos Capital, Nextech Invest Ltd (on behalf of one or more funds managed by it), Redmile Group, TCGX and Vivo Capital. In March 2024, Mallinckrodt notified us that they will not pursue further development of SLN501 following the completion of the phase 1 clinical trial. This will conclude all activities and commitments under the collaboration agreement. 99 SILENCE THERAPEUTICS PLC 31. 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 2023 are disclosed below. All subsidiaries are wholly owned. Name Silence Therapeutics GmbH Silence Therapeutics (London) Ltd Innopeg Ltd Silence Therapeutics Inc. Name Silence Therapeutics GmbH Silence Therapeutics (London) Ltd Innopeg Ltd Silence Therapeutics Inc. Registered office address Place of incorporation and operation Principal technology area Proportion of ownership interest Robert-Rössle-Strasse 10, 13125 Berlin, Germany 27 Eastcastle Street, London, W1W 8DH 27 Eastcastle Street, London, W1W 8DH 0c/o Harvard Business Services Inc., 16192 Coastal Hwy, Lewes, DE 19958 RNA Germany therapeutics England Dormant England Dormant RNA 100 % 100 % 100 % USA therapeutics 100 % Exempt from audit Exempt from filing financial statements Yes Yes Yes Yes No No No No 100 SILENCE THERAPEUTICS PLC Company balance sheet at 31 December 2023 Non-current assets Property, plant and equipment Other intangible assets Other long term assets Investment in subsidiaries Financial assets at amortised cost Current assets Cash and cash equivalents Financial assets at amortised cost – term deposit R&D tax credit receivable Other current assets Trade and other receivables Non-current liabilities Lease liability 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.5 C.9 C.6 C.8 C.7 C.8 C.9 C.10 C.12 C.13 C.13 C.11 C.12 C.14 2023 £000s 360 284 2,580 18,082 284 21,590 53,456 - 17,627 8,895 6,212 86,190 (93) (58,910 ) (59,003 ) (5,161 ) (24,792 ) (179 ) (30,132 ) 18,645 18,645 2022 £000s 563 320 - 17,519 284 18,686 54,067 16,328 14,882 9,505 934 95,716 (263) (63,485 ) (63,748 ) (8,864 ) (20,113 ) (183 ) (29,160 ) 21,494 21,494 5,942 313,585 (300,882 ) 18,645 5,390 277,676 (261,572 ) 21,494 The Company made a loss of £40.5 million in the year ended 31 December 2023 (2022: £43.4 million). The financial statements on pages 101 to 113 were approved by the Board on 8 April 2024 and signed on its behalf. Craig Tooman Chief Executive Officer Company number: 02992058 The accompanying accounting policies and notes form an integral part of these financial statements. 101 SILENCE THERAPEUTICS PLC Company statement of changes in equity year ended 31 December 2023 At 1 January 2022 Recognition of share-based payments Options exercised in the year Proceeds from shares issued Transactions with owners recognised directly in equity Loss for the year At 31 December 2022 Recognition of share-based payments Options exercised in the year Proceeds from shares issued Transactions with owners recognised directly in equity Loss for the financial year At 31 December 2023 Note C.14 C.14 C.14 Share capital £000s 4,489 - - 901 901 5,390 - - 552 552 - 5,942 Capital reserves £000s 225,278 10,252 (192 ) 42,338 52,398 277,676 13,050 (1,918 ) 24,777 35,909 - 313,585 Accumulated losses £000s (218,410 ) - 192 - 192 (43,354 ) (261,572 ) - 1,918 - 1,918 (41,228 ) (300,882 ) The accompanying accounting policies and notes form an integral part of these financial statements. Total equity £000s 11,357 10,252 - 43,239 53,491 (43,354 ) 21,494 13,050 - 25,329 38,379 (41,228 ) 18,645 102 SILENCE THERAPEUTICS PLC Notes to the Company Financial Statements Year ended 31 December 2023 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 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. Going Concern The Company has incurred recurring losses since inception, including net losses of £41.2 million for the year ended December 31, 2023. As of December 31, 2023, the Company had accumulated losses of £300.9 million. The Company expects to incur operating losses for the foreseeable future as it continues its research and development efforts, seeks to obtain regulatory approval of its product candidates and pursues any future product candidates the Company may develop. 103 SILENCE THERAPEUTICS PLC To date, the Company has funded its operations through upfront payments and milestones from collaboration agreements, equity offerings and proceeds from private placements, as well as management of expenses and other financing options to support its continued operations. During 2021, the Company received $40.0 million (£30.8 million) of upfront payments in respect of the AstraZeneca plc ("AstraZeneca") collaboration, $45.0 million from a private placement of American Depositary Shares ("ADSs") (approximately $42.0 million / £30.8 million, net of expenses) and an approximately $16.0 million (£10.7 million) upfront payment (net of taxes withheld, based on the exchange rate at the payment date), related to the Hansoh Pharmaceutical Group Company Limited ("Hansoh") collaboration executed on October 14, 2021. In August 2022, the Company raised additional funds through a registered direct offering with aggregate gross proceeds of $56.5 million (approximately £46.4 million) before deducting $4.1 million (approximately £3.3 million) in placement agent fees and other expenses. In 2023, the Company received a $10.0 million (approximately £7.9 million) milestone from the AstraZeneca collaboration and $4 million (approximately £3.2 million) in milestones from the Hansoh collaboration. The Company also raised net proceeds of approximately $32 million (approximately £25.5 million), before deducting £1.0 million in placement agent fees and other expenses from its open market sale agreement. As of December 31, 2023, the Company had cash and cash equivalents of £54.0 million. In January 2024, we raised an additional proceeds of $20 million net proceeds before deducting £0.6 million in placement agent fees and other expenses, from sales of ADSs under our Sales Agreement. On February 5, 2024 the Company announced a private placement of 5,714,286 of the Company’s American Depositary Shares (“ADSs”), each representing three ordinary shares, at a price of US $21.00 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of the Private Placement was US $120 million (approximately £94.5 million) before deducting approximately £5.7 million in placement agent fees and other expenses. The financing syndicate included 5AM Ventures, Frazier Life Sciences, Logos Capital, Nextech Invest Ltd (on behalf of one or more funds managed by it), Redmile Group, TCGX and Vivo Capital. The Company believes that its current cash and cash equivalents are sufficient to fund its operating expenses for at least the next twelve months. For this reason, the Company continues to adopt the going concern basis in preparing the financial statements. 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 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 (Refer to note 2.18 in the notes to the consolidated financial statements): o the determination of the number of performance obligations (judgement); 104 SILENCE THERAPEUTICS PLC o o 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. C.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 2023 £000s 10,247 823 13,050 420 24,540 2022 £000s 10,249 743 10,252 415 21,659 Remuneration detail for all Directors is presented in the Remuneration Committee report. See page 32 for further details. The total remuneration of the highest paid director was £0.9 million (2022: £0.6 million) The monthly average number of employees of the Company was as follows: Research and development and associated support services Administration Total average number of employees 2023 Number 26 16 42 2022 Number 26 16 42 105 SILENCE THERAPEUTICS PLC C.5 Property, plant and equipment Cost At 1 January 2022 Additions Disposals At 31 December 2022 At 1 January 2023 Additions Disposals At 31 December 2023 Accumulated depreciation At 1 January 2022 Charge for the year Eliminated on disposal At 31 December 2022 At 1 January 2023 Charge for the year Eliminated on disposal At 31 December 2023 Net book value As at 31 December 2022 As at 31 December 2023 Intangible Assets Cost At 1 January 2022 Additions Disposals Translation adjustment At 31 December 2022 At 1 January 2023 Additions Disposals Translation adjustment At 31 December 2023 Accumulated depreciation At 1 January 2022 Charge for the year Eliminated on disposal Translation adjustment At 31 December 2022 At 1 January 2023 Charge for the year Eliminated on disposal Translation adjustment At 31 December 2023 Net book value As at 31 December 2022 As at 31 December 2023 Equipment and Right-of-use furniture £000s asset £000s Total £000s 748 61 (70) 739 739 - - 739 670 34 (70) 634 634 36 (-) 670 105 69 346 499 (346) 499 499 - - 499 216 171 (346) 41 41 167 (-) 208 458 291 1,094 560 (416) 1,238 1,238 - - 1,238 886 205 (416) 675 675 203 (-) 878 563 360 Licenses and Software £000s Total £000s 130 300 - - 430 430 - - - 430 106 4 - - 110 110 36 - - 146 320 284 130 300 - - 430 430 - - - 430 106 4 - - 110 110 36 - - 146 320 284 106 SILENCE THERAPEUTICS PLC C.6 Investments in subsidiaries Company Investment in subsidiary undertakings 2023 £000s 18,082 2022 £000s 17,519 The investment in subsidiary undertakings is made up as follows: Shares and loans in subsidiary undertakings At 1 January 2022 Movement in the year At 31 December 2022 Movement in the year At 31 December 2023 Investment Quasi-equity at cost £000s 23,713 - 23,713 - 23,713 loan £000s 35,476 1,132 36,608 897 37,505 Impairment provision (Investment) £000s Impairment provision (Loan) £000s Net total £000s (20,360 ) - (20,360 ) - (20,360 ) (22,442 ) - (22,442 ) - (22,442 ) 16,387 1,132 17,519 897 18,416 107 SILENCE THERAPEUTICS PLC Investments at cost total of £23.7 million (2022: £23.7 million) are analysed as follows: • • • £23.3 million (2022: £23.3 million) relating to Silence Therapeutics GmbH. £0.2 million (2022: £0.2 million) relating to Silence Therapeutics Inc. The balance of the investments at cost of £0.2 million (2022: £0.2 million) relates to Innopeg Limited (2022: £0.1 million) and Silence Therapeutics (London) Limited (2022: £0.1 million). Quasi-equity loans total of £37.5 million (2022: £36.6 million) are analysed as follows: • • At 31 December 2023, an interest-bearing unsecured loan of £14.7 million (2022: £14.2 million) was outstanding from Silence Therapeutics plc to Silence Therapeutics GmbH. The movement in the year includes a foreign exchange loss of £0.3 (2022: £0.7 million) and accrued interest of £0.9 million (2022: £0.4 million). At 31 December 2023, a non-interest-bearing unsecured loan of £22.4million (2022: £22.4 million) was outstanding from Silence Therapeutics plc to Silence Therapeutics (London) Ltd. This quasi-equity loan has been fully provided for. Impairment provision totalling £42.8 million (2022: 42.8 million) is analysed as follows: • • • • £20.2 million (2022: £20.2 million) relating to Silence Therapeutics GmbH. In accordance with IAS 36 Impairment of Assets, the carrying value of the net investment in Silence Therapeutics GmbH of £3.4 million (£3.4 million) 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 and management determined that there was no impairment. The model is prepared based on a 10 year forecast which management consider to be an accurate measure of further cash flows. The discount rate used was 15.38% and resulting headroom was £12.5 million. Management has assessed that, if no milestones were to be achieved in 2024 or 2025, this would result a reduction the headroom by of £0.8 million. £0.2 million (2022: £0.2 million) 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 (2022: £22.4 million) as they are not deemed to be recoverable. In considering the recoverability of the loan with Silence Therapeutics GmbH, management have calculated the expected credit loss using the 3 stage model methodology under IFRS 9 and recognised a lifetime credit loss. Management assess credit loss as the present value of the difference between: a) the contractual cash flows that are due to an entity under the contract; and b) the cash flows that the entity expects to receive. As a result of this, management has determined that a provision of £30 thousand is required (2022: £30 thousand). In their assessment, management have netted the intercompany trading balances against this loan receivable as allowed under the loan contract. 108 SILENCE THERAPEUTICS PLC 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 Silence Therapeutics GmbH Silence Therapeutics (London) Ltd Innopeg Ltd Silence Therapeutics Inc. Name Silence Therapeutics GmbH Silence Therapeutics (London) Ltd Innopeg Ltd Silence Therapeutics Inc. Registered office address Place of incorporation and operation Principal technology area Proportion of ownership interest RNA Robert-Rössle-Strasse 10, 13125 Berlin, Germany 27 Eastcastle Street, London, W1W 8DH 27 Eastcastle Street, London, W1W 8DH Germany therapeutics England Dormant England Dormant 100 % 100 % 100 % 16192 Coastal Highway, Lewes, DE 19958, U.S.A. USA therapeutics 100 % RNA Exempt from audit Yes Yes Yes Yes Exempt from filing financial statements No No No No C.7 Cash and cash equivalents 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 U.S. Treasury Bills Short term bank deposits Total Cash and cash equivalents 2023 £000s 24,418 29,038 - 53,456 2022 £000s 41,237 12,376 454 54,067 C.8 Financial assets at amortised cost Non-current financial assets at amortized cost primarily relate to deposits for properties. Current financial assets at amortized cost, other than trade receivables as disclosed in C.12, include U.S. Treasury Bills (with maturities from purchase date over three months) of £nil (2022: 16.3 million). Current financial assets at amortised cost – U.S.Treasury Bills Financial assets at amortised cost - non-current Total financial assets at amortised cost C.9 Other current assets 2023 £000s - 284 284 2022 £000s 16,328 284 16,612 109 SILENCE THERAPEUTICS PLC Prepayments VAT receivable Total other current assets Prepayments Other long term assets C.10 Trade and other receivables Trade receivables Amount receivable from subsidiary undertaking Total trade and other receivables 2023 £000s 8,033 862 8,895 2,580 2,580 2023 £000s 228 5,984 6,212 2022 £000s 8,064 1,441 9,505 - - 2022 £000s 915 19 934 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. In considering the recoverability of the amount receivable from Silence Therapeutics GmbH, management have calculated the expected credit loss using the 3 stage model methodology under IFRS 9 and recognised a lifetime credit loss. Management assess credit loss as the present value of the difference between: a) the contractual cash flows that are due to an entity under the contract; and b) the cash flows that the entity expects to receive. As a result of this, management has determined that a provision of £0.8 million is required (2022: £nil). In their assessment, management have netted the intercompany trading balances against the loan receivable as allowed under the loan contract. C.11 Trade and other payables Trade payables Amount payable to subsidiary undertaking Social security and other taxes Accruals and other payables Total trade and other payables 2023 £000s 2,770 14,176 155 7,691 24,792 2022 £000s 3,105 9,356 379 7,274 20,114 The Directors consider that the carrying amount of trade and other payables approximates to their fair value. Amounts payable to subsidiary undertakings are interest free and unsecured. 110 SILENCE THERAPEUTICS PLC C.12 Lease liability Lease liability - current Lease liability – non-current Total lease liability 2023 £000s 179 93 272 2022 £000s 183 263 446 In 2023 the lease liability recognised on the face of the balance sheet comprises of the Group’s London office. The repayment of the principal portion of these lease liabilities for the year-ending 31 December 2023 was £0.2 million (2022: £0.2 million). C.13 Contract liabilities Contract liabilities comprise entirely deferred revenue in respect of the Mallinckrodt, AstraZeneca plc, and Hansoh research collaborations. Contract liabilities – current Contract liabilities – non-current 2023 £000s 5,161 58,910 64,071 2022 £000s 8,864 63,485 72,349 111 SILENCE THERAPEUTICS PLC C.14 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. Share premium account £000s 184,332 45,533 - 153 (3,348) 42,338 226,670 25,411 - 381 (1,015) 24,777 251,447 Merger reserve Share-based payment reserve Capital redemption reserve £000s 22,064 - - - - 22,064 - - - - - 22,064 £000s 13,688 - 10,252 (192 ) 10,060 23,748 - 13,050 (1,918 ) £000s 5,194 - - - - 5,194 - - - 11,132 34,880 - 5,194 Total £000s 225,278 45,533 10,252 (39 ) (3,348) 52,398 277,676 25,411 13,050 (1,537 ) (1,015) 35,909 313,585 At 1 January 2022 Shares issued On options in issue during the year On options exercised during the year Costs capitalised in respect of issuance of shares during the period. Movement in the year At 31 December 2022 Shares issued On options in issue during the year On options exercised during the year Costs capitalised in respect of issuance of shares during the period. Movement in the year At 31 December 2023 C.15 Related party transactions We have engaged in the following transactions with our directors, executive officers or holders of more than 10% of our outstanding share capital and their affiliates, which we refer to as our related parties. In 2022, the Company agreed to pay Gladstone Consultancy Partnership, a company controlled by the Company’s Non-Executive Chairman, Iain Ross, £60 thousand (plus any applicable value added tax) for consulting and advisory services provided by Mr. Ross. Gladstone Consulting Partnership is no longer being engaged by the Company in 2023. We have no related party transactions in 2023. Post balance sheet events C.16 In January 2024, we raised proceeds of $20 million before deducting $0.6 million in placement agent fees and other expenses, from sales of ADSs under our Sales Agreement. On February 5, 2024 the Group announced a private placement of 5,714,286 of the Company’s American Depositary Shares (“ADSs”), each representing three ordinary shares, at a price of US $21.00 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of the Private Placement was US $120 million (approximately £94.5 million) before deducting approximately £5.7 million in placement agent fees and other expenses. The financing syndicate included 5AM Ventures, Frazier Life Sciences, Logos Capital, Nextech Invest Ltd (on behalf of one or more funds managed by it), Redmile Group, TCGX and Vivo Capital. 112 SILENCE THERAPEUTICS PLC In March 2024, Mallinckrodt notified us that they will not pursue further development of SLN501 following the completion of the phase 1 clinical trial. This will conclude all activities and commitments under the collaboration agreement. 113 SILENCE THERAPEUTICS PLC Company Information and Advisers Secretary Rhonda Hellums Registered Office 27 Eastcastle Street London W1W 8DH, United Kingdom Registered Number 02992058 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 22 Bishopsgate London EC2N 4BQ United Kingdom Silence Trademarks Silence Silence Therapeutics The Silence Therapeutics logo AtuRNAi mRNAi GOLD 114 SILENCE THERAPEUTICS PLC 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 221 River Street 9th Floor Hoboken, NJ 07030 www.silence-therapeutics.com 

Continue reading text version or see original annual report in PDF format above