Silence Therapeutics - Chairman’s Letter to Shareholders

Silence Therapeutics - Chairman’s Letter to Shareholders

London, 7 January 2007 – Silence Therapeutics, a leading European RNAi therapeutics company, announces today that its Chairman Iain Ross has written to shareholders. The letter outlines briefly the significant progress that has been made at Silence Therapeutics plc over the last 12 months, confirms the Company’s goals and objectives for 2008 and, where possible, corrects any misconceptions that may have arisen as a result of inaccurate reports circulating in the market in the latter part of 2007.

The full text of the letter is set out below.


“Dear Shareholder,

I would like to take the opportunity to wish you a happy and successful New Year.

As we start 2008 I thought it appropriate to outline briefly the significant progress that has been made at Silence Therapeutics plc over the last 12 months, confirm our goals and objectives for 2008 and, where possible, correct any misconceptions that may have arisen as a result of inaccurate reports circulating in the market in the latter part of 2007.

Ground breaking technology base………
As you are aware, Silence Therapeutics plc is focused upon RNA interference (RNAi) technology, which is a groundbreaking technology that has the potential to fundamentally change the way in which new pharmaceutical therapies are identified and developed.  This novel technology could shorten significantly the time taken to screen and identify drug candidates and also opens the way for the pharmaceutical/biotech industry to develop treatments for conditions which up until now have not been treatable with conventional drug therapies.

Products move into the clinic………
During 2007 we have made significant progress in the development of a product pipeline of siRNA molecules utilising our proprietary chemistry and, as appropriate, our proprietary delivery technology.  This has been achieved both in partnership with our collaborators, Quark, Pfizer and AstraZeneca, and through our own internal programmes.  Our success to date is reflected in the fact that out of the five siRNA products in the clinic worldwide, two of them - RTP801i-14 for age-related macular degeneration and AKIi-5 for acute kidney injury - utilise Silence Therapeutics’ proprietary siRNA chemistry and further products relying upon our intellectual property are due to enter the clinic in 2008.

Silence Therapeutics’ lead programme progresses with potentially broader applicability……….
In terms of our lead internal programme Atu027, which is a proprietary siRNA molecule being developed for gastrointestinal cancers, we have significantly progressed preclinical development and our knowledge of the behaviour of the drug after systemic in vivo administration.  In 2007 we completed single dose toxicology, repeat-dose toxicology and genotoxicology studies and we conducted 28-day pre-clinical studies using multiple dosing schedules.

Interestingly we have seen on-target activity at all doses, including the lowest dose, not only in the target tissues but also in the lung.  Additional studies are now underway to establish the MABEL (the minimum anticipated biological effect level), which is recommended by the EMEA (European Medicines Agency) in calculating the starting dose for clinical studies.  This work may also lead to a widening of the therapeutic window for Atu027.  What has emerged as very exciting about the Atu027 programme is that, in the hands of our investigators, we are not only seeing unprecedented activity against pancreatic cancer, particularly in respect to halting metastasis, but the activity in the lung indicates that this product could also be developed as a systemic treatment for lung cancer.

Developing solutions for functional delivery…………
We believe we are developing “state-of-the-art” delivery systems for administering siRNA systemically.  Delivery is and will continue to be the biggest challenge facing RNAi technology and success in this area will be critical in determining whether the technology becomes widely adopted.  We have nine years experience in developing solutions for functional delivery of oligonucleotides and increasingly are being approached by pharmaceutical companies partnered with other RNAi technology companies enquiring about access to our delivery technology and capabilities.

At Silence Therapeutics, despite the important progress that we have made, we do not believe there will be ‘one delivery solution to fit all challenges’ and therefore throughout 2007 we continued to explore a wide range of other delivery approaches in conjunction with partners and academic collaborators.  In particular during the year we established and progressed several delivery partnerships and collaborations, which we have chosen not to publicise until we have secured our proprietary position.

In addition to our work in the delivery area, and importantly for our existing and future partners, we have ensured that all our trial materials are produced under cGMP conditions and it is becoming recognised that our unique lyophilised formulations could offer significant advantages for material stability, transport and handling at hospitals.

Freedom to Operate, a core European patent granted and seeking US allowance …
Our intellectual property position is key to our future success and I can confirm that Silence Therapeutics has freedom-to-operate. In addition we are confident that the German Kreutzer-Limmer patent (DE 10080167), which was recently granted to one of our competitors, will have its scope restricted.  Our confidence is based on the fact that the EPO (European Patent Office) has already restricted the claims of the equivalent European patent EP1144623.

In 2007 our core European AtuRNAi Patent issued in an extremely broad form and as anticipated our competitors filed oppositions, the procedure for which will commence sometime in 2008. These oppositions are expected to take 18 – 36 months to resolve and we, our advisers and R&D partners, remain confident that any potential changes to the scope of our core patent will not impact our business opportunity.

In terms of our US AtuRNAi Patent application I can confirm that in September 2007 we commenced a dialogue with the US PTO and are currently negotiating an allowable set of claims.  Not surprisingly we are encountering the same issues that we successfully overcame in Europe.  I need to emphasise that this is an iterative process and therefore we cannot be precise about the exact outcome and date of allowance but our management team and external advisers are well versed in the process and we all are confident of a US patent allowance in 2008. 

More Deals in 2008 ……..
As previously stated, our aim is to further validate our RNAi technology and to extend our product pipeline by entering into additional R&D collaborations and licensing deals with third parties.  To this end I can confirm that we are in discussions with a number of possible partners.  We take very seriously, however, the need to establish the best quality business relationships and to protect fully the Company’s proprietary position.  In short, we will only sign up to collaborations that provide us with a real opportunity to create a sustainable increase in shareholder value.  I am pleased to confirm that the collaboration established in 2007 with AstraZeneca has already been very productive and jointly we have made real progress in further developing our siRNA technology and would anticipate further significant progress in 2008.  We intend to sign further collaborations but recognise that, in a very competitive environment, we need to secure the right deal at the right time.

Developing a world-class team………….
In July 2007 we appointed Jeffery Vick as Chief Executive. Jeff came to us with a first class background in the biotech industry and has the appropriate scientific, technical, commercial and financial experience to build the Company going forward.  Over the last six months Jeff has initiated discussions with several potential partners and collaborators and, accordingly, we envisage significant progress on the business development front during 2008.

In addition, in November 2007 we appointed John Lucas as Vice President of Intellectual Property & General Counsel. John has a wealth of experience in the biotech sector including working as an Examiner for the US PTO and already he is making a significant contribution in terms of progressing our IP strategy and ongoing business development discussions.  We envisage further significant appointments being made in 2008 as we seek to establish a word-class management team.

In late 2007 we appointed Lazards and Nomura Code to advise the Company through its next stage of development.  In 2008 we are looking to attract additional institutional shareholders and to broaden the geographic spread of our investor base. To this end investor road shows are scheduled over the next few weeks both in Europe and the USA.

In conclusion……..
Your Company has made significant progress over the last 12 months with, in particular, two of our proprietary siRNA partnered products moving into the clinic and the signing of a major R&D collaboration with AstraZeneca.  We have fundamentally strengthened the technology base, progressed the development of our internal siRNA product pipeline, progressed our intellectual property position and established and progressed several partnerships and collaborations.  We are putting a first class management team in place, under the leadership of our new chief executive, Jeffery Vick.  This team has a very strong relationship with the members of the Board, including myself, who continue to play a very active part in the development of the Company.

As a result of the low level of news flow we have been the subject of a variety of inaccurate reports circulating in the market in recent weeks.  This, coupled with the high liquidity in our stock, the recent volatility in the financial markets, has resulted in a decline in our share price which, in the opinion of your Board, is unwarranted and reflects neither the progress made over the last 12 months nor the underlying value of the business.

Your Board believes that Silence Therapeutics plc has developed a leading proprietary based position in the RNAi field over the course of 2007 and from this platform it is committed to enhancing shareholder value further over the next 12 months.

I look forward to reporting on the 2007 performance in more detail in the Annual Report & Accounts, which we expect to release in late March 2008.

Best regards

Iain Ross
4 January 2008”