Silence Therapeutics plc

1. General information

1.1. Nature of the business

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. Summary of significant accounting policies

2.1. Basis of preparation

The Group’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC"). Any reference in these notes to the applicable guidance is meant to refer to authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of the Group and its wholly owned subsidiaries, after elimination of intercompany accounts and transactions.

The Group previously prepared its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) when the Group qualified as a foreign private issuer under the rules and regulations of the SEC. In connection with the loss of the Group’s status as a foreign private issuer, the Group is required to report with the SEC on domestic forms and comply with domestic company rules in the United States. The transition to U.S. GAAP was made retrospectively for all periods from the Group’s inception.

2.2. Functional and reporting currency

The reporting currency of the consolidated financial statements is the U.S. Dollars (“USD” or “$”). The functional currency of the Group’s subsidiaries reflects the economic environment of their respective operations. All amounts disclosed have been rounded to the nearest thousand, unless otherwise stated.

Due to the loss of the Group’s status as a foreign private issuer, the Group as a domestic filer, changed its reporting currency of the consolidated financial statements from GBP to USD. The change in reporting currency was applied retrospectively. Consolidated financial statements for all periods have been recast into USD and presented to the nearest thousand dollars.

2.3. Principles of consolidation

The consolidated financial information comprises the financial statements of Silence Therapeutics plc and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation.

2.4. Use of estimates

Thepreparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in the Group’s consolidated financial statements include, but are not limited to, the recognition of revenue and research and development expenses. The

Group bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates.

2.5. Going concern

The Group has incurred recurring losses since inception, including net losses of $45.3 million for the year ended December 31, 2024. As of December 31, 2024, the Group had accumulated losses of $474.0 million and cash outflows from operating activities for the year ended 31, December 2024 of $67.6 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. In 2024, the Group raised additional proceeds of $27.7 million before deducting $0.9 million in placement agent fees and other expenses, from sales of ADSs under its Sales Agreement. On February 5, 2024, the Group announced a private placement of 5,714,286 of the Group’s American Depositary Shares (“ADSs”), each representing three ordinary shares, at a price of $21.00 per ADS, with new and existing institutional and accredited investors (the “Private Placement”). The aggregate gross proceeds of the Private Placement were $120.0 million before deducting approximately $7.7 million in placement agent fees and other expenses. In 2024, the Group received a $10.0 million milestone payment from the AstraZeneca Collaboration and achieved another $2.0 million in milestone payments from the Hansoh collaboration. As of December 31, 2024, the Group had cash and cash equivalents and short-term investments of $147.3 million.

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 Group 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.

2.6. Segment reporting

The Group has determined that its chief executive officer is the chief operating decision maker (“CODM”). The CODM reviews financial information presented on a consolidated basis. Resource allocation decisions are made by the CODM based on consolidated results. There are no segment managers who are held accountable by the CODM for operations, operating results, and planning for levels or components below the consolidated unit level. As such, the Group has concluded that it operates as asingle reportable segment (see Note 4).

2.7. Revenue recognition

The Group’s revenue for the year ended December 31, 2024, consists of royalty income and revenue from collaboration agreements. To determine revenue recognition for arrangements that the Group determines are within the scope of ASC 606: Revenue from Contracts with Customers, (“ASC 606”), it performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Group satisfies the performance obligations. The Group only applies the five-step model to contracts when it is probable that the entity will collect substantially all the consideration it is entitled to in exchange for the goods or services it transfers to the customer. As part of the accounting for these arrangements, the Group must make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.

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.

Under ASC 606, royalty income is recognized at the later date of (i) when the subsequent sale of the commercial partner’s product occurs, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Revenue from collaboration agreements

The Group has 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 the Group has 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, the Group has 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. The Group recognizes revenue over the duration of the contract based on an input method based on cost to cost.

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

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Upfront payments (fixed);

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Subsequent milestone payments (variable);

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FTE costs rechargeable (variable);

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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 recognized over the contract period based on costs to completion.

Revenue has been calculated on the following ongoing basis for the year ended December 31, 2024:

•

Total contract costs which includes actual FTE and direct costs incurred up to December 31, 2024 and forecast FTE and direct costs for the remainder of the contract

•

Actual costs incurred up until December 31, 2024 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 recognized 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 been achieved is excluded from the calculation.

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

Further details of the revenue amounts recognized in the year ended December 31, 2024 can be found in note 3.

2.8. Research and development

Research and development costs consist of salary and personnel related costs and third party costs for the Group's research and development activities. Personnel related costs include a share based compensation charge relating to its stock option plan. The largest component of third party costs is for clinical trials, as well as manufacturing for clinical supplies and associated development, and pre-clinical studies. Research and development costs are expensed as incurred.

The Group recognizes 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 and prepayments 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 2.15.

2.9. 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.

As a company that carries out extensive research and development activities, the Group currently benefits from the U.K. research and development tax credit regime for small or medium-sized enterprises (“SMEs”). A benefit 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 recognized when the receipt is probable. Research and development costs which are not eligible for reimbursement under the U.K. Research and Development Tax Credit scheme, such as expenditure incurred on research projects for which the group receives income, may be reimbursed under the U.K. Research and Development Expenditure Credit (“RDEC”) scheme. Amounts receivable under either scheme are presented within the consolidated statements of income (loss) within Benefit from R&D credit. The U.K. R&D tax credit is fully refundable to the Group and is not dependent on current or future taxable income. As a result, the Company has recorded the entire benefit from the U.K. R&D tax credit as a benefit which is included in net loss before income tax and, accordingly, not reflected it as part of the income tax provision.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting basis and the respective tax basis of the Group’s assets and liabilities, and expected benefits of utilizing net operating loss, capital loss, and tax-credit carryforwards. The Group assesses the likelihood that its deferred tax assets will be realized and, to the extent management does not believe these assets are more likely than not to be realized, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in consolidated statements of income (loss) in the period that includes the enactment date.

2.10. Foreign currency translation

Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured into the functional currency at exchange rates prevailing at the balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies area remeasured into the functional currency at the exchange rates prevailing at the date of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the consolidated statements of income (loss) and comprehensive income (loss) for each respective period.

For financial reporting purposes, the consolidated financial statements of the Group have been presented in USD, the reporting currency. The financial statements of the Group’s entities are translated from their functional currency into USD as follows: assets and liabilities are translated at the exchange rates at the balance sheet dates, revenues and expenses are translated at the average exchange rates for the periods presented, and shareholders’ equity is translated at the prevailing historical exchange rates. Translation adjustments are not included in determining net loss but are included as a foreign exchange adjustment to other comprehensive income, a component of shareholders’ equity.

2.11. Cash and cash equivalents

The Group considers cash and cash equivalents to comprise of 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.

2.12. Property, plant and equipment

The Group only holds equipment and furniture. These are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. The estimated useful life of furniture and equipment is 3 to 10 years. Estimated useful life and residual values are reviewed each year and amended if necessary.

Property, plant and equipment is assessed for impairment upon triggering events that indicate the carrying value of an asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows of the asset group expected to be generated from its use and eventual disposition. If the asset group’s carrying value is determined to not be recoverable, the impairment to be recognized is measured by which the carrying amount exceeds the fair value of the asset group. No impairment charges related to property and equipment were recorded in any of the periods presented.

2.13. Leases

The Group determines if an arrangement contains a lease at inception. The Group currently only has operating leases. The Group recognizes a right-of-use ("ROU") operating lease asset and associated short- and long-term operating lease liability in its consolidated balance sheets for operating leases greater than one year. Its right-of-use assets represent its right to use an underlying asset for the lease term and its lease liabilities represent its obligation to make lease payments arising from the lease arrangement. The Group recognizes its right-of-use operating lease assets and lease liabilities based on the present value of the future minimum lease payments it will pay over the lease term. The Group determines the lease term at the inception of each lease, and in certain cases its lease term could include renewal options if the Group concludes it is reasonably certain to exercise the renewal option. When the Group exercises a lease option that was not previously included in the initial lease term, it reassesses its right-of-use asset and lease liabilities for the new lease term.

As its operating lease do not provide an interest rate implicit in the lease, the Group uses its incremental borrowing rate, based on the information available as of the lease inception date or at the lease option extension date in determining the present value of future payments. The Group recognizes lease expense for its minimum lease payments on a straight-line basis over the expected term of its lease. Its leases do not include material variable or contingent lease payments.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. Instead, these lease payments are recognized on the consolidated statements of income (loss) on a straight-line basis over the lease term.

Similar to property, plant and equipment, ROU lease asset impairment is assessed upon triggering events that indicate the carrying amount may not be recovered by comparison to the future net undiscounted cash flows.

2.14. Goodwill

Goodwill is the excess of the purchase price over the estimated fair values of the underlying net assets of an acquired business. The Group assesses goodwill for impairment annually, or immediately if conditions indicate that such impairment could exist. Impairment testing for goodwill is performed at the reporting unit level. The Group first evaluates qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates potential impairment, or if the Group elects to bypass the qualitative assessment, a quantitative test is performed. The quantitative test calculates the excess of the reporting unit’s fair value over its carrying amount, including goodwill, utilizing a discounted cash flow method. The test for impairment of goodwill requires the Group to make several assumptions and estimates regarding market conditions and its future profitability to determine the fair value of the goodwill at the reporting unit. Significant assumptions used in the reporting unit fair value measurements include forecasted cash flows, including revenue and expense growth rates, discount rates, and revenue and earnings multiples. An impairment loss is recognized when the carrying amount of the reporting unit net assets exceeds the estimated fair value of the reporting unit. Impairment losses recognized for the reporting unit to which goodwill has been allocated are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the reporting unit.

All goodwill for the Group is attributed to an acquisition that occurred in 2005 and the Group has determined thatno impairment was recorded as of December 31, 2024 and 2023.

2.15. Other intangible assets

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortization and less accumulated impairment losses. Amortization is charged to the consolidated statements of income (loss) 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 amortized from the date they are available for use. The estimated useful lives are as follows:

Licenses and software:3 -10 years.

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 software will only be recognized as intangible assets provided they meet the following requirements:

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an asset is created that can be separately identified;

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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;

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

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

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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 software 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. Judgments are based on the information available at each balance sheet date.

2.16. Fair value measurements

The Group’s financial instruments include cash and cash equivalents, trade receivables, U.S. treasury bills, trade and other payables and accrued expenses. These are initially recorded at fair value and subsequently measured at cost, which is considered to approximate their fair value due to the short-term nature of such financial instruments.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance prioritizes the inputs used in measuring fair value into the following hierarchy:

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Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

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Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

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Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

2.17. Share-based compensation expense

Historically the Group has issued equity settled share-based compensation to certain employees (see note 19). 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 number of stock 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 therefore any amount unrecognized that would otherwise have been recorded in future accounting periods is recognized immediately. The Group has elected to recognize the effect of forfeitures on share-based compensation when they occur. Any differences in compensation recognized at the time of forfeiture are recorded as a cumulative adjustment in the period in which the forfeiture occurs.

Fair value is measured using a Black Scholes 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 behavioral 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 recognized as an expense.

2.18. Equity

Ordinary shares is determined using the nominal value of shares issued.

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

Equity settled share-based payments are credited to a share-based payment reserve as a component of additional paid-in capital, until related options or warrants are exercised.

Foreign currency translation differences are included in the accumulated other comprehensive income.

Accumulated deficit includes all current and prior period results as disclosed in the consolidated statements of income (loss).

2.19. Loss per share

Basic income/(loss) per share is computed by dividing the net income/(loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the reporting period without consideration for potentially dilutive securities. Net income/(loss) attributable to ordinary shareholders is computed as if all net income/(loss) for the period had been distributed.

The Group computes diluted income/(loss) per ordinary share after giving consideration to all potentially dilutive ordinary equivalents, except where the effect of such non-participating securities would be antidilutive. The Group been loss making for each fiscal year and therefore all potentially dilutive ordinary equivalents are considered to be antidilutive.

2.20. Recently Issued Accounting Pronouncements

Recently adopted accounting standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. The Group adopted the new accounting standard for fiscal year end 2024. See the Segment Reporting policy above and Note 4 below for further detail.

Accounting standards issued but not yet adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance is effective for annual periods beginning after December 15, 2024, and the adoption of this standard is not anticipated to have a material impact on the Group’s consolidated financial statements other than adding new disclosures, which the Group is currently evaluating.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses at each interim and annual reporting period. The amendments are effective for annual periods beginning after December 15, 2026, and reporting periods beginning after December 15, 2027, with early adoption permitted. The Group is currently evaluating the impact to its consolidated financial statements.

3. Revenue

Revenue from collaboration agreements for the years ended December 31, 2024, 2023 and 2022 predominately relates to the research collaboration agreements the Group entered into with Mallinckrodt in July 2019, AstraZeneca in March 2020, and Hansoh in October 2021.

Revenue comprised $0.1 million of royalty income (2023: $0.7 million; 2022: $0.7 million) and $43.1 million of Research collaboration income (2023: $30.9 million; 2022: $20.9 million). Disaggregation of revenue from contracts with customers is as follows:

Under its collaboration agreement with Mallinckrodt, the Group received an upfront cash payment of $20 million in 2019 and are eligible to receive specified development, regulatory and commercial milestone payments. No milestone payments under this agreement were achieved (2023: nil; 2022: $3.0 million) during the year ended December 31, 2024. The Group recognizes the upfront payment, milestone payments, payments for personnel costs and other research funding payments over time, in accordance with ASC 606.

In March 2023, the Group 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 Group and the modification resulted in the partially satisfied performance obligations relating to the two reacquired targets becoming fully satisfied as the Group was no longer obligated to develop these targets. SLN501, the C3 targeting program, remained under the original collaboration agreement through March 2024. The Group 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 Group 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 Group recognized $10.0 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 Group agreed to pay future success-based milestones and low single digit royalties on net sales if the projects advance. The Group 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.

In March 2024, Mallinckrodt notified the Group that it will not pursue further development of the SLN501 program following the completion of the Phase 1 clinical trial. The completion of the Phase 1 clinical trial also represented the conclusion of all required development activities and commitments under the terms of the Mallinckrodt Collaboration. During the year ended December 31, 2024, the Group recognized a total of $0.6 million in revenue under this agreement (2023: $13.1 million; 2022: $14.4 million).

Under its collaboration agreement with AstraZeneca, the Group received an upfront cash payment of $20 million in 2020 with a further amount of $40 million received in May 2021. The Groupis also eligible to receive specified development and commercial milestone payments as well as tiered royalties on net sales, if any. The Group recognizes the upfront payment and milestone payments over time, in accordance with ASC 606. During the year ended December

31, 2024, the Group achieved a milestone payment of $10.0 million (2023: $10 million; 2022: nil). During the year ended December 31, 2024, the Group recognized a total of $18.0 million in revenue under this agreement (2023: $17.1 million; 2022: $6.3 million).

The Group entered into a collaboration agreement with Hansoh on October 15, 2021. The Group received a $16 million ($14.4 million, net of taxes) upfront payment to us in December 2021. The Groupis eligible to receive development, regulatory and commercial milestones as well as royalties on Hansoh net product sales. During the year ended December 31, 2024, the Group achieved milestone payments totaling $2.0 million (2023: $4.0 million; 2022: $1.5 million). The Group recognizes the upfront payment and milestone payments over time, in accordance with ASC 606.

In December 2024, Hansoh notified the Group that it will not pursue further development under the Hansoh Collaboration. This represented the conclusion of all required development activities and commitments under the terms of the Hansoh Collaboration. During the year ended December 31, 2024, the Group recognized a total of $24.6 million in revenue under this agreement (2023: $0.7 million; 2022: $0.2 million).

In December 2018, the Group entered into a settlement and license agreement with Alnylam Pharmaceuticals Inc. (“Alnylam”), pursuant to which the Group settled outstanding patent litigation with Alnylam related to its RNAi product ONPATTRO. As part of the settlement, the Group licenses specified patents to Alnylam, and Alnylam pays us a tiered royalty of up toone percent of net sales of ONPATTRO in the European Union. The Group was eligible to receive these royalties through December 2023. The Group invoices 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, 2024, the Group recognized a total of $0.1 million in royalty income from Alnylam (2023: $0.7 million; 2022: $0.7 million).

4. Segment reporting

The CODM reviews Consolidated net loss for the year when assessing the Group’s performance, allocating resources and establishing management’s compensation. In addition to Consolidated net loss, the CODM receives discrete information for revenue by major customer and geographic location. Consolidated net loss is used to monitor budget versus actual results and is reviewed against the Group’s peers and competitors as benchmarking. The Group operates asone reportable segment in the specific technology field of RNA therapeutics.

The accounting policies of its operating segment are the same as those described in the Group’s summary of significant accounting policies.

The Group derives revenues from customers through royalty income and research collaboration agreements, each representing a major customer, specifically related to the development of RNAi-based medicines. Refer to Note 3 – Revenue for a further description of the types of products from which the Group derives its revenues.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The table below provides segment information about the Group:

(a)

Contracted development costs primarily consist of costs incurred under agreements with CROs and investigative sites that conduct its preclinical studies and clinical trials; costs related to manufacturing active pharmaceutical ingredients and drug products for its preclinical studies and clinical trials; and costs for materials used for in-house research and development activities.

(b)

Personnel R&D costs primarily consist of salaries and personnel-related costs for personnel performing R&D activities or managing those activities that have been out-sourced; and consultants’ costs associated with target selection, preclinical and clinical research activities, and the progression of programs towards clinical trials.

(c)

Other R&D costs include associated facility costs, equipment and other overheads that are directly attributable to R&D and depreciation of capital assets used for research and development activities.

(d)

The other segment items include foreign currency gain (loss), net, benefit from R&D credit, and other income/ (expense), net inclusive of bank interest receivable and accretion on U.S. Treasury Bills.

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

5. Directors and staff costs

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

6. Other income/(expense), net

7. Loss per share (basic and diluted)

Basic net loss per share is computed by dividing net loss (the numerator) by the weighted average shares outstanding for the period (the denominator). Diluted net loss per share is computed by dividing net income by the weighted average shares outstanding during the period adjusted for the dilutive effects of the exercise of the stock options. In periods when losses from continuing operations are reported, the weighted-average shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. The computation of net loss per share for the years ended December 31, 2024, 2023 and 2022, respectively was as follows:

The following outstanding potentially dilutive securities were excluded from the calculation of diluted net loss per share because their impact would have been anti-dilutive for the period presented.

8. Property, plant and equipment

Property, plant, and equipment balances were as follows:

Depreciation expense of $0.3 million, $0.4 million, $0.4 million was recognized in fiscal years 2024, 2023, and 2022, respectively.

9. Goodwill

Goodwill is assessed annually at a reporting unit level, or whenever events and circumstances indicate impairment may have occurred. The Group has one reporting unit and performs a qualitative impairment test (also known as “Step 0"), and when necessary, a quantitative test. After assessing the totality of events and circumstances as part of the Step 0 test, it was determined that it is not more likely than not (a likelihood that is more than 50%) that the fair value of the reporting unit is less than its carrying amount and therefore a quantitative test is unnecessary. No triggering events were identified during the year.

The following table presents the changes in the carrying amount of goodwill:

10. Other intangible assets

Intangible assets as of December 31, 2024 are as follows:

The intangible assets are amortized beginning from the date of acquisition, over their useful life or written down if they are considered to be impaired.

Amortization expense is included in General and administrative expenses, which included on the consolidated statements of income (loss), and was nominal for the years ended December 31, 2024, 2023 and 2022, respectively.

Expected future amortization expense is as follows:

No impairment charges related to intangible assets were recorded for the years ended December 31, 2024, 2023 and 2022.

11. Cash and cash equivalents

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

12. Other assets

At December 31, 2024 and 2023, the largest component of prepayments are prepaid third party costs for clinical trials, as well as manufacturing for clinical supplies and associated development, and pre-clinical studies which fluctuate based on timing of payments and related expense.

Included within prepayments at December 31, 2024 and 2023 is $11.0 million and $8.7 million respectively, are expenditures relating to research and development.

13. Trade receivables

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 thatno allowance is required for the periods ended December 31, 2024 and 2023.

14. Trade and other payables

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

Included within accruals and other payables at December 31, 2024 and 2023 is $5.9 million and $5.6 million respectively, are expenditures relating to research and development

15. Leases

The Group hasone operating lease for office space in London, which was renegotiated upon completion of the original term, with the new term beginning in September 2022. The Group determines whether a contract is a lease or contains a lease at inception date. Upon commencement, the Group recognizes a right-of-use asset and lease liability. Right-of-use assets represent the Group’s right to use the underlying asset for the lease term. Lease liabilities are the Group’s obligation to make the lease payments arising from a lease. As the Group’s lease does not provide an implicit rate, the Group’s lease liabilities are measured on a discounted basis using the Group’s incremental borrowing rate. Lease terms used in the recognition of right-of-use assets and lease liabilities include only options to extend the lease that are reasonably certain to be exercised. Additionally, lease terms underlying the right-of-use assets and lease liabilities consider terminations that are reasonably certain to be executed.

There aretwo short-term leases in Berlin, Germany andeight leases in Hoboken, U.S., that have not been recognized as right-of-use assets. 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 United States are on a rolling contract basis with a notice period ofthree months. Expense related to these short-term leases are recorded to the consolidated statements of income (loss) over the lease term.

The following table presents supplemental balance sheet information related to the Group’s operating lease:

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate for the Group’s operating leases at December 31, 2024 and 2023:

The following table summarizes the components of total operating lease cost for fiscal year 2024, 2023, and 2022:

The following table summarizes the maturities of the Group’s operating leases at December 31, 2024:

16. Contract liabilities

Contract liabilities represent the Group’s obligation to transfer services to a customer for which the Group has received advanced consideration, before the performance obligation has been satisfied. These liabilities are recognized when a customer prepays for services or when the Group has an unconditional right to consideration before the performance obligation is fulfilled.

Contract liabilities comprise entirely of advance consideration received from customers (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 its partners, while the non-current portion represents everything beyond 12 months. Current and non-current contract liabilities include future revenue from collaboration recharged expenses, upfront payments, and milestones achieved to December 31, 2024.

During the years ended December 31, 2024 and 2023 contract liabilities decreased primarily due to the recognition of revenue in the amount of $43.1 million and $30.9 million, respectively, that was included in the contract liabilities balance at the beginning of the year.

17. Income taxes

The Group operates in the U.K. and is subject to income taxes in that jurisdiction. The U.K. tax rate applied for 2024 was 25% (23.5% for 2023), which results from applying the enacted statutory rate of 19% from January 1, 2023 through April 1, 2023, and 25% for the remainder of 2023 and 2024. U.K. deferred tax assets and liabilities have been measured at a rate of 25%. The entire tax expense of $0.8 million relates to current tax as shown below. No deferred tax was recognized in the year.

Reconciliation of the income tax credit at standard rate of U.K. corporation tax to the current tax credit are as follows:

A reconciliation of the standard U.K. statutory income tax rate to the effective tax rate is as follows:

The Group didnot have any deferred tax liabilities as at December 31, 2024 and 2023. Components of the Group’s deferred tax assets as at December 31, 2024 and 2023 are as follows:

(1)

Included in trading losses is $7.4 million of accumulated tax losses as of December 31, 2024 ($8.6 million as of December 31, 2023) related toits operations in Germany for corporate income taxes and $6.5 million of accumulated losses related to trade taxes inits German entity ($7.5 million as of December 31, 2023).

Movements in deferred tax valuation allowance:

Management has reviewed cumulative tax losses and projections of future taxable losses and determined that it is not more likely than not that they will be realized. Accordingly, valuation allowances have been provided over deferred tax assets.

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 $16.0 million upfront payment, which required withholding tax of $1.6 million. In 2024 the Group received a milestone payment of $2.0 million, which required withholding tax of $0.2 million. In 2023 the Group received a milestone payment of $4.0 million, which required withholding tax of $0.4 million.

During the year, the Group had not yet received the research and development tax credit related to the prior year. The Group has recognized $13.2 millionin respect of the current year for unfunded projects that are permissible to claim underthe SME scheme (2023: $9.9 million; 2022: $9.7 million). In addition, in 2024 we have also recognized $0.3 million related to the RDEC scheme (2023: $1.1 million; 2022: $1.3 million).

18. Shareholders’ equity

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 August 11, 2022, the Group announced a registered direct offering (the “Offering”) of 5,950,000 of the Group’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 were $56.5 million before deducting $4.1 million in underwriting discounts, commissions and estimated offering expenses.

On October 15, 2021, the Group entered into an Open Market Sale Agreement (the "Sales Agreement"), with Jefferies LLC ("Jefferies"), pursuant to which the Group may offer and sell, from time to time, its ADSs through Jefferies. On October 15, 2021, the Group filed a registration statement, which became effective on October 22, 2021, for the issuance and sale of up to $100.0 million of ADSs. During the year ended December 31, 2023, the Group sold 3.4 million ADSs for net proceeds of approximately $32.2 million, before deducting $1.0 million in placement agent fees and other expenses. In 2024, the Group raised additional proceeds of $27.7 million before deducting $0.9 million in placement agent fees and other expenses, from sales of ADSs under the Sales Agreement. On October 22, 2024, the Group filed a new registration statement on Form F-3 which replaced the registration statement originally filed on October 15, 2021, for the issuance and sale, if any, of up to an additional $100 million of its shares represented by ADSs under the Sales Agreement. As of this filing, approximately $139.6 million of ADSs remained.

On February 5, 2024, the Group announced a private placement of 5,714,286 of the Group’s ADSs, each representing three ordinary shares, at a price of $21.00 per ADS, with new and existing institutional and accredited investors. The aggregate gross proceeds of the Private Placement were $120.0 million before deducting $7.7 million in placement agent fees and other expenses.

Details of the shares issued during the current and previous year are as follows:

At December 31, 2024, there were options outstanding of 17,455,390 (2023:15,853,459; 2022:11,571,487) unissued ordinary shares.

Details of the options outstanding are as follows:

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 1.25 sterling pounds to 1 US Dollar.

19. Equity-settled share-based compensation

The Group has issued share options under the 2018 Long Term Incentive Plan (“LTIP”), 2018 Non-Employee Long Term Inventive Plan (“Non-Employee LTIP”), and individual share option contracts, open to all employees of the Group, as well as EMI shares (none of which remain outstanding at December 31, 2024). Under the LTIP, Non-Employee LTIP, individual contracts and schemes available, the options typically vest after three 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.

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.

The options outstanding at the year-end have a weighted average remaining contractual life of 7.7 years (2023:7.7 years; 2022:8.2 years).

As of December 31, 2024, there was $29.1 million of total unrecognized compensation cost related to stock options granted but not vested under the Company’s plans. That cost will be recognized over an expected remaining weighted-average period of 1.5 years.

In the years ended December 31, 2024, 2023 and 2022 the total intrinsic value of stock options exercised was $6.8 million, $2.3 million and $0.5 million, respectively. The weighted average share price at the date of exercise of the options during the year was $20.99 (2023: $10.26; 2022: $11.06).

The Group granted 3,802,542 share options during the year (2023:7,703,826; 2022:5,821,131). The fair value of options granted were calculated using Black Scholes model. Inputs into the model were as follows:

The Group recognized total charges of $16.3 million (2023: $16.3 million; 2022: $12.7 million) related to equity settled share-based payment transactions during the year.

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 nominal (2023: $0.3 million; 2022: $0.5 million).

20. Capital commitments and contingent liabilities

There wereno capital commitments at December 31, 2024 (2023: nil; 2022: nil).

21. Commitments under short leases

At December 31, 2024, the Group had a gross commitment on its office rental and service charge in Berlin, Germany and the Hoboken, U.S. lease equal to $0.5 million (2023: $0.5 million; 2022: $0.4 million) in the next year. No amounts are payable after more than one year.

In addition, the Group enters into contracts in thenormal course of business with contract research organizations 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.

22. 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.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of principally cash and cash equivalents and U.S. Treasury Bills. Cash and cash equivalents, term deposits 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 remote.

The Group regularly monitors the creditworthiness of its collaborators and at the reporting date, no financial assets are credit impaired.

Capital management

The Group considers its capital to be equal to the sum of its total equity. The Group monitors its capital using a number of measures including cash flow projections, working capital ratios, the cost to achieve preclinical and clinical milestones and potential revenue from existing partnerships and ongoing licensing activities. The Group’s objective when managing its capital is to ensure it obtains sufficient funding for continuing as a going concern. The Group funds its capital requirements through the issue of new shares to investors, milestone and research support payments received from existing licensing partners and potential new licensees.

Interest rate risk

The nature of the Group’s activities and the basis of funding are such that the Group has significant liquid resources. The Group uses these resources to meet the cost of future research and development activities. Consequently, it seeks to 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 collaborators is monitored on an ongoing basis.

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’s transactions are commonly denominated in U.K pounds sterling; however, the Group receives payments under its collaboration agreements in U.S. dollars and it incurs a portion of its expenses in other currencies, primarily Euros, and are exposed to the effects of these exchange rates. The Group seeks to minimize this exposure by maintaining currency cash balances at levels appropriate to meet foreseeable short to mid-term expenses in these other currencies. Where significant foreign currency cash receipts are expected, the Group considers the use of forward exchange contracts to manage its exchange rate exposure.

23. Related party transactions

In 2022, the Group agreed to pay Gladstone Consultancy Partnership, a company controlled by the Group’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 Group in 2023.

24. Subsequent events

None.