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Silence to Shut Down US Operations, Aims to Raise $9.1M in Stock Offering


By Doug Macron

Silence Therapeutics this week announced that, following the end of negotiations over the possible sale of the company, it will shut down its US operations to free up the resources needed to complete a phase I trial of its RNAi-based cancer drug Atu-027 before the end of 2011.

Concurrent with the release of its 2010 financial results, the UK-based company also announced that it is aiming to raise £5.5 million ($9.1 million) through the sale of newly issued common shares. The offering, if completed, will extend Silence's operational runway from the third quarter of this year until mid-2012.

Founded in 2005 as a pure-play RNAi drugs shop when SR Pharma acquired Germany's Atugen that year, the firm was shortly thereafter renamed Silence (GSN 7/29/2005). Four years later it, took a big step toward raising its profile in the field when it bought California-based Intradigm (GSN 12/17/2009). Those two deals gave Silence operations in London, Berlin, and Redwood City, Calif.

However, “over the last 12 months, it has become apparent that, for an organization of approximately 40 employees, the geographical diversity of the group creates considerable operational difficulties, as well as increased operating costs,” Silence CEO Phil Haworth said in a statement. As a result, the company is closing its California operations “as soon as practicable.”

Additionally, the company said it is looking for a new CEO and “additional hires” to support business development and intellectual property activities. Haworth will remain on the company's board until it finds a permanent replacement. Silence noted that the changes will not increase its overall cash burn.

At the same time, as it faces a cash crunch, Silence is prepping to sell roughly 325.4 million newly issued shares at 2 pence per share, a roughly 33-percent discount to the 3 pence that the stock was trading around at the time the offering was disclosed.

The transaction could yield as much as £6.5 million and as little as £5.5 million. Shareholders will vote in mid-May on whether to approve the offering.

With less than a three months' worth of cash in its coffers, the financing is a top priority for Silence. The company said that the money will enable it to complete phase I testing of Atu-027, which would be an important milestone to establish the efficacy of its RNAi molecules and so-called AtuPlex lipid-based delivery technology.

In September 2010, Silence announced that it was in talks with an unnamed party about a merger or acquisition, but by February, it said it had scuttled the negotiations because they were not “sufficiently compelling to pursue further in the context of the continued success of the company” (GSN 2/10/2011).

Atu-027 and Atu-134

With that decision behind it, Silence decided that its best bet would be to raise additional cash through a stock offering, primarily to complete the ongoing phase I study of Atu-027 and move the drug into a small phase Ib/IIa trial.

Earlier this year, Silence released preliminary results from the trial, showing the drug was well tolerated in general and hinting at a possible therapeutic benefit in one patient (GSN 2/17/2011). The company plans to present interim data at this year's American Society for Clinical Oncology meeting in June.

“Successful completion of the Atu-027 phase I trial will provide a major validation of the AtuPlex
delivery system,” Silence said. “The fact that patients [in] the phase I trial of Atu027 have not required pre-treatment provides a major validation of the approach compared to competing delivery systems. The company believes this will strengthen the ability to secure licensing partners for the delivery of different RNAi therapeutics using AtuPlex.”

Besides Atu-027, proceeds of the offering have been earmarked for the preclinical development of Atu-134, which is designed to deliver siRNA targeting CD31 to the endothelium of tumors using the AtuPlex technology.

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Silence said it has completed studies in “multiple pre-clinical cancer models” showing the drug has a “profound impact on slowing the progression of solid tumors.” Money from the offering will help the firm complete the manufacture of materials needed for toxicology studies. The company plans to file an investigational new drug application for Atu-134 in the third quarter of 2012.

One pipeline program that Silence will not take forward is Atu-111, which uses a newly developed lung-delivery technology called drug-assembling cholesterol complex, or DACC, and is under evaluation as a treatment for acute lung injury. The drug's target has not been disclosed.

According to Silence, preclinical data has shown the DACC delivery technology capable of achieving sustained knockdown of up to three weeks in the lung endothelium. Despite these promising findings, the company indicated it will not to pursue further development on its own, but instead plans to seek a partner for the program.

The Financials

For the 12 months ended Dec. 31, Silence reported revenues of £2.37 million, up from £1.72 million in 2009. The revenues include payments received from partners AstraZeneca, Dainippon Sumitomo, and Quark Pharmaceuticals.

Research and development spending in 2010 rose to £5.82 million from £5.1 million, which the company said reflects the cost of maintaining operations in both the US and Europe following the Intradigm acquisition. Meantime, administrative costs jumped to £5.2 million in 2010 from £4.2 million the year before, again as a result of the acquisition.

Silence's net loss for the year climbed to £8.8 million, or 3.16 pence per share, from £7.5 million, or 5.55 pence per share, in 2009.

At the end of 2010, Silence had cash and cash equivalents totaling £3.6 million.

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