Silence Therapeutics PLC(SLN) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the company ITEM 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, shareholders' equity, and cash flows Condensed Consolidated Balance Sheets This statement presents the company's financial position, including assets, liabilities, and equity, at specific points in time | Metric | June 30, 2025 ($000s) | December 31, 2024 ($000s) | | :-------------------------- | :--------------------- | :------------------------ | | Cash and cash equivalents | 41,739 | 121,330 | | Short-term investments | 72,416 | 26,004 | | Total current assets | 148,553 | 187,366 | | Total assets | 165,233 | 202,635 | | Total current liabilities | (14,768) | (16,822) | | Total liabilities | (71,078) | (68,612) | | Total shareholders' equity | (94,155) | (134,023) | Condensed Consolidated Statements of Operations This statement details the company's revenues, expenses, and net loss over specific reporting periods | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Revenue | 224 | 756 | 366 | 16,455 | | Gross profit | 139 | (2,577) | 227 | 10,322 | | Research and development costs | (17,647) | (13,802) | (38,460) | (25,647) | | General and administrative expenses | (5,131) | (7,009) | (12,815) | (13,644) | | Restructuring charges | (1,324) | — | (1,324) | — | | Operating loss | (23,963) | (23,388) | (52,372) | (28,969) | | Net Loss | (27,354) | (19,755) | (55,884) | (22,067) | | Loss per share (basic and diluted) | (0.19) | (0.14) | (0.39) | (0.16) | Condensed Comprehensive Loss This statement presents the net loss and other comprehensive income/loss components for the reporting periods | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :-------------------------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Net Loss | (27,354) | (19,755) | (55,884) | (22,067) | | Foreign exchange differences on consolidation (net of tax) | 6,680 | 186 | 10,376 | 129 | | Total comprehensive loss for the period | (20,674) | (19,569) | (45,508) | (21,938) | Condensed Consolidated Statements of Shareholders' Equity This statement outlines changes in the company's equity accounts, including ordinary shares, paid-in capital, and accumulated deficit | Metric | At June 30, 2025 ($000s) | At December 31, 2024 ($000s) | | :-------------------------- | :--------------------- | :------------------------ | | Ordinary Shares | 10,290 | 10,288 | | Additional paid-in capital | 615,113 | 609,560 | | Accumulated deficit | (529,844) | (474,045) | | Accumulated other comprehensive income | (1,404) | (11,780) | | Total shareholders' equity | 94,155 | 134,023 | Condensed Consolidated Statements of Cash Flows This statement summarizes cash inflows and outflows from operating, investing, and financing activities for the reporting periods | Metric | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | Net cash (outflow) from operating activities | (34,093) | (14,552) | | Net cash (outflow) from investing activities | (45,943) | (49,951) | | Net cash inflow from financing activities | 15 | 134,213 | | (Decrease) increase in cash and cash equivalents | (80,021) | 69,710 | | Cash and cash equivalents at end of period | 41,739 | 138,450 | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the financial statements, covering accounting policies, revenue, segments, and equity 1. General information This note provides an overview of Silence Therapeutics plc's primary business activities - Silence Therapeutics plc is primarily involved in the discovery, delivery, and development of RNA therapeutics[26] 2. Summary of significant accounting policies This note outlines the key accounting principles, reporting standards, and going concern considerations applied in the financial statements - The interim financial statements are prepared in accordance with U.S. GAAP for interim reporting and should be read with the Annual Report on Form 10-K for December 31, 2024[27] - The Group transitioned from International Financial Reporting Standards (IFRS) to U.S. GAAP retrospectively for all periods due to losing its foreign private issuer status, effective January 1, 2025[28][30] - The reporting currency changed from British pound sterling (GBP) to U.S. Dollars (USD) retrospectively, effective January 1, 2025[29][30] - The Group incurred net losses of $55.9 million for the six months ended June 30, 2025, and had accumulated losses of $529.8 million as of June 30, 2025[33] - Management believes current cash and cash equivalents are sufficient to fund operating expenses for at least the next twelve months, supporting the going concern basis[36] - The Group will need additional funding for future operations and capital expenditures, potentially through public/private financings, debt, or collaboration agreements, with future milestone payments being uncertain[37] 3. Revenue This note details the sources and recognition of revenue, primarily from collaboration agreements - Revenue for the three and six months ended June 30, 2025, primarily related to the AstraZeneca collaboration agreement[41] Revenue by Source | Revenue Source | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Research collaboration - AstraZeneca | 224 | 348 | 366 | 15,046 | | Research collaboration - Hansoh | - | 408 | - | 688 | | Research collaboration - Mallinckrodt plc | - | - | - | 578 | | Royalties | - | - | - | 143 | | Total revenue from contracts with customers | 224 | 756 | 366 | 16,455 | - No milestone payments were achieved from the AstraZeneca collaboration during the six months ended June 30, 2025, compared to $10.0 million in the prior year period[42] 4. Segment reporting This note provides information on the company's operating segments and geographic revenue distribution - The Group operates as one reportable segment focused on RNA therapeutics[43] Consolidated Revenue and Net Loss by Period | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Revenue | 224 | 756 | 366 | 16,455 | | Consolidated net loss | (27,354) | (19,755) | (55,884) | (22,067) | Non-current Assets and Revenue by Geographic Location | Geographic Location | Non-current assets (Dec 31, 2024, $000s) | Non-current assets (June 30, 2025, $000s) | Revenue (6 Months Ended June 30, 2024, $000s) | Revenue (6 Months Ended June 30, 2025, $000s) | | :------------------ | :--------------------------------------- | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | U.K. | 4,103 | 4,320 | 16,312 | 366 | | Germany | 11,166 | 12,360 | 143 | - | | Total | 15,269 | 16,680 | 16,455 | 366 | 5. Loss per share (basic and diluted) This note presents the calculation of basic and diluted loss per share for the reporting periods Loss Per Share Calculation | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | (27,354) | (19,755) | (55,884) | (22,067) | | Weighted-average shares outstanding | 141,696,047 | 140,208,929 | 141,687,438 | 136,045,022 | | Net loss per share (basic and diluted) | (0.19) | (0.14) | (0.39) | (0.16) | - Options outstanding were considered anti-dilutive due to the Group being loss-making[48] 6. Goodwill This note provides information on the company's goodwill balance and impairment assessment - Goodwill is assessed annually for impairment, and no triggering events were identified during the period[49] Goodwill Balance | Metric | 2025 ($000s) | 2024 ($000s) | | :---------------- | :----------- | :----------- | | Balance at January 1 | 9,392 | 9,981 | | Translation adjustment | 1,225 | (589) | | Balance at period-end | 10,617 | 9,392 | 7. Contract liabilities This note details the nature and balance of contract liabilities, primarily from collaboration agreements - Contract liabilities represent advance consideration received from customers, primarily from the AstraZeneca collaboration[51][52] Contract Liabilities | Metric | June 30, 2025 ($000s) | December 31, 2024 ($000s) | | :-------------------------- | :--------------------- | :------------------------ | | Current contract liabilities | 457 | 306 | | Non-current contract liabilities | 56,310 | 51,790 | | Total contract liabilities at period end | 56,767 | 52,096 | 8. Benefit from R&D credit This note outlines the R&D tax credits recognized and received by the company R&D Tax Credits Recognized | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | R&D tax credits recognized | 2,371 | 2,732 | 5,050 | 5,228 | - The Group received $11.0 million related to the 2023 claim for past R&D tax credits during the six months ended June 30, 2025[55] 9. Shareholders' equity This note provides details on the number of shares and ADSs in issue and recent equity financing activities Shares and ADSs in Issue | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Number of shares in issue | 141,701,848 | 141,674,074 | | Number of ADSs in issue | 47,233,949 | 47,224,691 | - In February 2024, the Group completed a private placement of 5,714,286 ADSs at $21.00 per ADS, generating $120.0 million gross proceeds[57] 10. Equity-settled share-based compensation This note provides a summary of share option activity and outstanding options Share Option Activity | Options | Number of ADSs | Weighted Average Exercise Price ($) | | :------------------------ | :------------- | :-------------------------------- | | Outstanding at January 1, 2025 | 5,818,463 | | | Granted during the period | 1,580,285 | | | Lapsed or forfeited during the period | (363,643) | | | Exercised during the period | (9,258) | | | Outstanding at June 30, 2025 | 7,025,847 | 14.17 | | Exercisable at the period-end | 3,714,364 | | 11. Capital commitments and contingent liabilities This note discloses the company's capital commitments and contingent liabilities - There were no capital commitments at June 30, 2025, or 2024[62] 12. Restructuring charges This note details the restructuring charges incurred due to workforce reduction - The Group incurred $1.3 million in restructuring charges during the three months ended June 30, 2025, due to a workforce reduction, with a remaining accrual of $0.9 million[63] 13. Related party transactions This note confirms the absence of any reported related party transactions - No related party transactions were reported[64] 14. Subsequent events This note reports on events occurring after the balance sheet date - No subsequent events were reported[65] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, operations, liquidity, and critical accounting policies Overview This section provides a high-level summary of the company's biotechnology focus and key product candidates - Silence Therapeutics is a biotechnology company focused on discovering and developing RNA therapeutics using its proprietary mRNAi GOLD™ platform to silence specific target genes in the liver for cardiovascular disease, hematology, and rare diseases[68] - Divesiran (SLN124) is a wholly-owned siRNA product candidate in Phase 2 development for polycythemia vera (PV), with Fast Track and orphan drug designations, showing potential to lower HCT levels and reduce phlebotomy needs[69] - Zerlasiran (SLN360) is a wholly-owned siRNA product candidate that lowers Lp(a) levels, a cardiovascular risk factor, showing substantial Lp(a) reduction in Phase 1 and 2 trials, and the company is seeking a third-party partner for Phase 3 development[70][71] - A third siRNA product candidate from the mRNAi GOLD platform is in Phase 1 development through a collaboration with AstraZeneca, and the company is also advancing extra-hepatic programs[72] Second Quarter 2025 Business Developments This section highlights key operational and clinical milestones achieved during the second quarter of 2025 - Exceeded 50% enrollment in the SANRECO Phase 2 trial of divesiran in PV patients, on track for completion by year-end 2025[76] - Presented updated Phase 1 data for divesiran at EHA 2025, showing essential elimination of therapeutic phlebotomies and maintained HCT levels below 45% in PV patients[76] - Completed core Phase 3 readiness activities for zerlasiran, including manufacturing and supply scale-up, and continues partnership discussions for Phase 3 development and commercialization[76] - Prioritizing extra-hepatic activities due to promising preclinical activity in mice models, leading to a pause in initiating a Phase 1 study of SLN548 for complement-mediated diseases[76] - A Phase 1 trial of SLN312, licensed to AstraZeneca, is ongoing[76] Components of Results of Operations This section details the components of financial results, including revenue, cost of sales, operating expenses, foreign currency, other income, and taxation Revenue This subsection explains the sources and recognition policies for the company's revenue - The company has no commercially approved products and expects future revenue primarily from product sales and strategic collaborations[81] - Revenue from collaboration agreements (upfront payments, milestones, research funding) is recognized over time[82] - No revenue was recognized from Mallinckrodt Collaboration in H1 2025 (vs. $0.7 million in H1 2024) as all development activities concluded in March 2024[83] - Revenue from AstraZeneca Collaboration was $0.4 million in H1 2025 (vs. $15.0 million in H1 2024), with no milestone payments achieved in H1 2025[84] - No revenue was recognized from Hansoh Collaboration in H1 2025 (vs. $0.6 million in H1 2024) as Hansoh concluded further development in December 2024[85] - No royalty income from Alnylam was recognized in H1 2025 (vs. $0.1 million in H1 2024) as royalties were eligible until December 2023[86] Cost of Sales This subsection defines the components included in the cost of sales related to revenue-generating contracts - Cost of sales includes R&D expenditure directly related to revenue-generating contracts, such as salary costs, materials, and CRO expenses[87] Operating Expenses This subsection describes the categories and components of the company's operating expenses - Operating expenses are categorized into research and development costs and general and administrative expenses, with personnel costs being a significant component of both[88] - Research and development costs are expensed as incurred and include contracted development costs (CROs, manufacturing, materials), personnel costs (salaries, benefits, consultants), and other R&D costs (facilities, equipment, patent rights, depreciation)[89][90][91][94] - R&D costs are expected to increase significantly as programs advance to later clinical stages[91] - General and administrative expenses include personnel costs, professional services (legal, audit, tax), public/investor relations, office costs, insurance, and public company compliance costs[93][96] Restructuring Charges This subsection explains the nature of non-recurring restructuring charges incurred by the company - Non-recurring restructuring charges were incurred due to a reduction in force during the three months ended June 30, 2025[97] Foreign Currency Gain (loss), net This subsection describes the primary sources of foreign exchange gains and losses - Foreign exchange gains and losses primarily arise from cash and short-term investments held in foreign currencies (USD and Euros)[98] Other Income, net This subsection outlines the main components of the company's other income - Other income primarily consists of interest earned on cash, cash equivalents, and accretion on U.S. treasury bills[99] Taxation and Benefit from R&D credit This subsection details the company's tax exposure, R&D tax credits, and accumulated tax losses - The company is subject to corporate taxation in the UK, US, and Germany, and has generated losses since inception; income tax credit represents recoverable UK R&D tax credits[100] - The UK R&D tax credit regime allows for a cash rebate of up to 26.97% of qualifying R&D expenditure for R&D-intensive SMEs, but future changes or challenges could impact cash flow[101] - Accumulated tax losses for carry forward were $214.7 million in the UK and $52.6 million in Germany as of June 30, 2025[102] Comparison of the three months and six months ended June 30, 2025, and 2024 This section compares financial performance for the three and six months ended June 30, 2025, against 2024, detailing changes in key metrics Revenue This subsection compares revenue performance for the three and six months ended June 30, 2025, and 2024 Revenue Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :------- | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | Revenue | 224 | 756 | (532) | 366 | 16,455 | (16,089) | - Revenue decreased by $0.5 million for the three months and $16.1 million for the six months ended June 30, 2025, primarily due to concluded Hansoh Collaboration activities and no milestone achievements from AstraZeneca in 2025[108][109] Cost of sales This subsection compares cost of sales for the three and six months ended June 30, 2025, and 2024 Cost of Sales Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :---------- | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | Cost of sales | (85) | (3,333) | 3,248 | (139) | (6,133) | 5,994 | - Cost of sales decreased by $3.2 million for the three months and $6.0 million for the six months ended June 30, 2025, due to fluctuations in collaboration agreement activities and project progression[110][111] Research and development costs This subsection compares research and development costs for the three and six months ended June 30, 2025, and 2024 Research and Development Costs Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :-------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Contracted development costs | 12,232 | 7,771 | 26,905 | 14,074 | | Personnel costs | 4,479 | 5,138 | 10,035 | 10,055 | | Other costs | 936 | 893 | 1,520 | 1,518 | | Total R&D costs | 17,647 | 13,802 | 38,460 | 25,647 | - R&D costs increased by $3.8 million for the three months and $12.8 million for the six months ended June 30, 2025, driven by the advancement of the divesiran Phase 2 clinical trial and increased contract manufacturing for zerlasiran Phase 3 readiness[113] General and administrative expense This subsection compares general and administrative expenses for the three and six months ended June 30, 2025, and 2024 General and Administrative Expense Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | General and administrative expenses | (5,131) | (7,009) | 1,878 | (12,815) | (13,644) | 829 | - G&A expenses decreased by $1.9 million for the three months and $0.8 million for the six months ended June 30, 2025, due to reduced reporting/compliance requirements and administrative cost reduction efforts related to restructuring[114] Restructuring charges This subsection compares restructuring charges for the three and six months ended June 30, 2025, and 2024 Restructuring Charges Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :------------------ | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | Restructuring charges | (1,324) | - | (1,324) | (1,324) | - | (1,324) | - Non-recurring restructuring charges of $1.3 million were incurred during the three months ended June 30, 2025, due to a limited reduction in force[115] Foreign currency gain (loss), net This subsection compares foreign currency gains and losses for the three and six months ended June 30, 2025, and 2024 Foreign Currency Gain (Loss) Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :-------------------------- | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | Foreign currency gain/loss, net | (6,613) | (222) | (6,391) | (10,382) | 129 | (10,511) | - Net foreign exchange losses increased significantly, primarily due to the remeasurement of U.S. treasury bills held in USD to the related functional currency[116] Other Income (expenses), net This subsection compares other income and expenses for the three and six months ended June 30, 2025, and 2024 Other Income (Expenses) Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :------------------ | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | Other income, net | 861 | 1,351 | (490) | 1,830 | 2,017 | (187) | - Other income primarily relates to accretion from U.S. treasury bills and interest on cash accounts[117] Benefit from R&D credit This subsection compares the benefit from R&D credits for the three and six months ended June 30, 2025, and 2024 Benefit from R&D Credit Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :------------------------ | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | Benefit from R&D credit | 2,371 | 2,732 | (361) | 5,050 | 5,228 | (178) | - Benefit from R&D tax credit relates to U.K. research and development tax credits[118] Taxation This subsection compares taxation expenses for the three and six months ended June 30, 2025, and 2024 Taxation Comparison | Metric | 3 Months Ended June 30, 2025 ($000s) | 3 Months Ended June 30, 2024 ($000s) | Change ($000s) | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | Change ($000s) | | :--------- | :----------------------------------- | :----------------------------------- | :------------- | :----------------------------------- | :----------------------------------- | :------------- | | Taxation | (10) | (228) | 218 | (10) | (472) | 462 | - Taxation expense relates to foreign taxation expenses[119] Liquidity and Capital Resources This section analyzes the company's financial position, funding sources, cash flows, and future capital requirements Overview This subsection provides a summary of the company's liquidity position and funding strategy - The company has incurred significant operating losses and negative cash flows since inception and expects this to continue, requiring additional capital from equity, debt, research funding, or collaborations[120] - As of June 30, 2025, cash, cash equivalents, and short-term investments totaled $114.2 million, believed to be sufficient to fund operations into 2028, including $20 million in anticipated collaboration milestones[121] - Operations have been financed primarily through equity issuances and upfront/milestone payments from collaboration agreements[122] - In 2024, the company raised $27.7 million from ADS sales under an Open Market Sale Agreement and $120.0 million gross proceeds from a private placement of ADSs[123][124] Cash Flows This subsection analyzes the company's cash flows from operating, investing, and financing activities Cash Flows Summary | Metric | 6 Months Ended June 30, 2025 ($000s) | 6 Months Ended June 30, 2024 ($000s) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | Net cash (outflow) from operating activities | (34,093) | (14,552) | | Net cash (outflow) from investing activities | (45,943) | (49,951) | | Net cash inflow from financing activities | 15 | 134,213 | | (Decrease) increase in cash and cash equivalents | (80,021) | 69,710 | - Net cash outflow from operating activities increased by $19.5 million in H1 2025, mainly due to reduced collaboration milestones and increased contracted development costs[128] - Net cash outflow from investing activities primarily relates to purchases and redemptions of U.S. treasury bills[129] - Financing activities in 2024 included $120 million from a private placement and proceeds from at-the-market facility sales, with no significant related activities in 2025[130] Operating and Capital Expenditure Requirements This subsection discusses expected increases in operating expenses and future funding needs - The company expects operating expenses to increase with pipeline growth, additional hires, and R&D, and will incur significant public company expenses[131][132] - Future funding requirements depend on clinical trial scope, R&D success, manufacturing costs, patent prosecution, regulatory approvals, commercialization, and hiring[133][135] Contractual Obligations and Commitments This subsection details the company's contractual obligations and contingent payment arrangements Contractual Obligations | Metric | June 30, 2025 ($000s) | December 31, 2024 ($000s) | | :-------------------- | :--------------------- | :------------------------ | | Total lease liability | - | 117 | - As of June 30, 2025, the company had a gross commitment of $0.6 million for office rentals in Berlin and the United States payable within the next year, with no amounts payable after more than one year[136] - Contingent payment obligations to CROs and manufacturers are not included as amounts, timing, and likelihood are not fixed or determinable[137] Critical Accounting Policies, Judgments and Estimates This section outlines key accounting policies, significant estimates, and judgments, especially for revenue recognition and clinical trial expenses Critical Accounting Estimates This subsection highlights significant accounting estimates, particularly for revenue recognition and clinical trial expenses - Revenue recognition under collaboration agreements, particularly with AstraZeneca, Mallinckrodt, and Hansoh, involves significant estimates[140][141] - For collaboration agreements, revenue for each element of consideration is recognized over the contract period using a cost-to-cost method, and variable consideration is recognized when it is highly probable that a significant reversal will not occur[144][145] - Recognition of clinical trial expenses requires estimating accrued expenses based on open contracts, purchase orders, and communication with personnel to identify services performed but not yet invoiced[146] Recent Accounting Pronouncements This subsection discusses the company's evaluation of recently issued accounting standards - The company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03/2025-01 (Expense Disaggregation Disclosures) on its financial statements and disclosures[39][40][147] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This section describes the company's exposure to market risks, including interest rate and currency exchange rate fluctuations Credit and Liquidity Risk This section addresses risks related to credit quality of financial institutions and management of liquid resources - Cash, cash equivalents, and U.S. treasury bills are held with high-credit-quality financial institutions, potentially exceeding federally insured limits[149] - Liquid resources are invested based on expected expenditure timing, and adequate bank balances are maintained for short-term financial liabilities[149] Currency Risk This section discusses the company's exposure to foreign currency fluctuations and its management strategies - The company is exposed to currency risk from transactions denominated in GBP, USD, and Euros, and manages this by maintaining appropriate cash balances and considering forward exchange contracts for significant foreign currency receipts[150] Interest Rate Risk This section describes the company's exposure to interest rate fluctuations on its investment portfolio - As of June 30, 2025, cash, cash equivalents, and short-term investments totaled $114.2 million[151] - Due to the conservative nature of its investment portfolio (capital preservation, short-term maturities), the company does not expect significant impact from changes in market interest rates[151] ITEM 4. Controls and Procedures This section details the company's disclosure controls and procedures and reports on changes in internal control over financial reporting Disclosure Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at a reasonable assurance level[152][153] Changes in Internal Control Over Financial Reporting This section reports on any material changes in internal control over financial reporting - No changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[154] PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal, risk factors, and exhibits ITEM 1. Legal Proceedings This section confirms the company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[157] ITEM 1A. Risk Factors This section updates significant risks to the company's business, focusing on data privacy laws and healthcare regulatory reforms - The company is subject to stringent and evolving U.S. and foreign data privacy and security laws (e.g., GDPR, CCPA, U.S. Department of Justice rule on sensitive personal data), and non-compliance could lead to investigations, litigation, fines, and business disruptions[159][161][162][165][166][171] - Transferring personal data from Europe to the U.S. faces significant restrictions and scrutiny, with no assurance that current mechanisms will remain compliant, potentially impacting operations or requiring relocation[163][164] - Healthcare legislative and regulatory reforms in the U.S. (e.g., OBBBA, drug pricing initiatives) and EU (e.g., CTR, HTA Regulation, revised pharmaceutical legislation) could negatively impact product approval, post-approval activities, and profitability[173][174][175][177][179] - The UK's regulatory alignment with the EU post-Brexit is uncertain, potentially affecting clinical trial costs and marketing authorization processes[176] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or use of proceeds - No unregistered sales of equity securities or use of proceeds were reported[180] ITEM 3. Defaults Upon Senior Securities This section confirms no defaults upon senior securities were reported - No defaults upon senior securities were reported[182] ITEM 4. Mine Safety Disclosures This section clarifies that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[183] ITEM 5. Other Information This section confirms no other information is reported - No other information was reported[184] ITEM 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL documents - The report includes various exhibits such as Amended and Restated Articles of Association, certifications by executive officers (31.1, 31.2, 32.1), and Inline XBRL documents (101.INS, 101.SCH, 104)[186] Signatures This section contains the certifications by the Chief Executive Officer and Chief Financial Officer - The report is signed by Craig Tooman, Chief Executive Officer, and Rhonda Hellums, Chief Financial Officer, on August 7, 2025[191]