to this Report on Form 6-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Overview Silence Therapeutics plc ("we", "us", "our", "the Company" or "Silence")

Condensed consolidated income statement (unaudited)

Condensed consolidated statement of comprehensive income (unaudited)

Condensed consolidated balance sheet (unaudited)

Condensed consolidated statement of changes in equity (unaudited)

Condensed consolidated statement of cash flows (unaudited)

Notes to the financial statements

Three months and nine months ended September 30, 2022

Silence Therapeutics plc and its subsidiaries (together the Group') are primarily involved in the discovery, delivery and development of RNA therapeutics. Silence Therapeutics plc (the Company'), 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.

These condensed consolidated interim financial statements were approved for issue on November 10, 2022.

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended December 31, 2021, were approved by the board of directors on May 12, 2022 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain any statement under section 498 of the Companies Act 2006. It did, however, draw attention to the significant doubt in respect of the Company's going concern.

The financial statements have not been reviewed or audited.

Basis of preparation and accounting policies

This condensed consolidated interim financial report for the three-month and nine-month reporting periods ended September 30, 2022 has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34) as issued by the International Accounting Standards Board (IASB).

The interim report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended December 31, 2021, which was prepared in accordance with IFRS (International Financial Reporting Standards) as issued by the IASB (International Accounting Standards Board).

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period exception for the estimation of income tax (see note 8).

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results might differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are disclosed in the Critical Accounting Policies, Judgments and Estimates' section beginning on page 20.

Out of period adjustment

During the preparation of the condensed consolidated financial statements for the nine months ended September 30, 2022, management identified an immaterial prior period accounting misstatement related to the allocation of non-cash share-based compensation expense between research and development and general and administrative expenses. The misallocation resulted in an overstatement of research and development expenses of 1.1 million and understatement of general and administrative expenses of 1.1 million for the three months ended June 30, 2022. The misallocation did not impact the overall comprehensive loss of the Company or the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity or the condensed consolidated statement of cash flows. We also concluded this adjustment was not material to the interim condensed consolidated financial statements (unaudited) for either the current or prior periods.

The Company has incurred recurring losses since inception, including net losses of 26.7 million for the nine months ended September 30, 2022. As of September 30, 2022, the Company had accumulated losses of 249.6 million and cash outflows from operating activities.

The Company expects to incur operating losses for the foreseeable future as it continues its research and development efforts, seeks to obtain regulatory approval of its product candidates and pursues any future product candidates the Company may develop.

To date, the Company has funded its operations through upfront payments and milestones from collaboration agreements, equity offerings and proceeds from private placements, as well as management of expenses and other financing options to support its continued operations. During 2021, the Company received $40.0 million ( 30.8 million) of the upfront payments in respect of the AstraZeneca plc, or AstraZeneca, collaboration, $45.0 million from a private placement of American Depositary Shares, or ADSs (approximately $42.0 million / 30.8 million, net of expenses) and an approximately $16.0 million ( 10.7 million) upfront payment (net of taxes withheld, based on the exchange rate at the payment date), related to the Hansoh Pharmaceutical Group Company Limited or Hansoh, collaboration executed on October 14, 2021. In August 2022, the Company raised additional funds through a registered direct offering with aggregate gross proceeds of $56.5 million (approximately 46.4 million) before deducting $4.1 million (approximately 3.3 million) in placement agent fees and other expenses. As of September 30, 2022, the Company had cash and cash equivalents of 90.0 million (approximately $113.3 million).

The Company believes that its current cash and cash equivalents are sufficient to fund its operating expenses through early 2024. For this reason, the Company continues to adopt the going concern basis in preparing the financial statements.

Revenue from collaboration agreements for the three and nine months ended September 30, 2022 predominately relates to the research collaboration agreements the Company entered into with Mallinckrodt in July 2019 and AstraZeneca in March 2020.

Revenue for the nine months ended September 30, 2022 comprised 12.3 million of research collaboration income (nine months ended September 30, 2021: 8.7 million) and 0.4 million of royalty income (nine months ended September 30, 2021: 0.3 million).

Under the Company's collaboration agreement with Mallinckrodt, the Company received an upfront cash payment of 16.4 million ($20 million) in 2019 and is eligible to receive specified development, regulatory and commercial milestone payments. During the nine months ended September 30, 2022 the Company received milestone payments totalling 2.2 million or $3.0 million (nine months ended September 30, 2021: 2.9 million). In addition to these payments, Mallinckrodt has agreed to fund some of the Company's research personnel and preclinical development costs. The Company recognizes the upfront payment, milestone payments, payments for personnel costs and other research funding payments over time, in accordance with IFRS 15 para 35 c). During the nine months ended September

30, 2022, the Company recognized a total of 9.5 million in revenue under this agreement (nine months ended September 30, 2021: 6.4 million).

Under the Company's collaboration agreement with AstraZeneca, the Company received an upfront cash payment of 17.1 million ($20.0 million) in 2020 with a further amount of 30.8 million ($40.0 million) received in May 2021. The Company is also eligible to receive specified development and commercial milestone payments as well as tiered royalties on net sales, if any. The Company recognizes the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the nine months ended September 30, 2022, the Company recognized a total of 2.8 million in revenue under this agreement (nine months ended September 30, 2021: 1.8 million).

The Company entered into a collaboration agreement with Hansoh on October 14, 2021. The Company received an approximately $16.0 million ( 10.7 million, net of taxes based on the exchange rate at the payment date) upfront payment in December 2021. The Company is eligible to receive development, regulatory and commercial milestones as well as royalties on Hansoh net product sales. During the nine months ended September 30, 2022, the Company triggered milestone payments totalling $2.0 million ( 1.5 million) (nine months ended September 30, 2021: nil). The Company recognizes the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the nine months ended September 30, 2022, the Company recognized a total of 80 thousand in revenue under this agreement (nine months ended September 30, 2021: nil).

In December 2018, the Company entered into a settlement and license agreement with Alnylam Pharmaceuticals Inc., or Alnylam, pursuant to which the Company settled outstanding patent litigation with Alnylam related to its RNAi product ONPATTRO. As part of the settlement, the Company licenses specified patents to Alnylam, and Alnylam pays the Company a tiered royalty of up to one percent of net sales of ONPATTRO in the European Union. The Company is eligible to receive these royalties through December 2023. The Company invoices Alnylam quarterly in arrears based on sales data for that quarter as reported to the Company by Alnylam. Royalty revenue is recognized based on the level of sales when the related sales occur. During the nine months ended September 30, 2022, the Company recognized a total of 0.4 million in royalty income from Alnylam (nine months ended September 30, 2021: 0.3 million).

4. Segment reporting

In 2022, the Group operated in the specific technology field of RNA therapeutics.

The Group has identified the Chief Executive Officer as the chief operating decision maker, or CODM. For the nine months ended September 30, 2022 and 2021, the CODM determined that the Group had one business segment, the development of RNAi-based medicines. This is consistent with reporting to senior management. The information used internally by the CODM is the same as that disclosed in the financial statements.

An analysis of the Group's assets and revenues by location is shown below:

5. Loss per ordinary equity share (basic and diluted)

The calculation of the loss per share is based on the loss for the three months ended September 30, 2022 after taxation of 7.1 million (three months ended September 30, 2021: loss of 10.0 million) and on the weighted average ordinary shares in issue during the three months ended September 30, 2022 of 98,740,535 (three months ended September 30, 2021: 89,740,014).

The calculation of the loss per share is based on the loss for the nine months ended September 30, 2022 after taxation of 26.7 million (nine months ended September 30, 2021: loss of 30.0 million) and on the weighted average ordinary shares in issue during the nine months ended September 30, 2022 of 92,806,662 (nine months ended September 30, 2021: 88,670,141).

The options outstanding at September 30, 2022 and September 30, 2021 are considered to be anti-dilutive as the Group is loss-making.

7. Contract liabilities

Contract liabilities comprise entirely deferred revenue in respect of the Mallinckrodt, AstraZeneca and Hansoh research collaborations. The current contract liabilities represent the amount of estimated revenue to be reported in the next 12 months related to amounts invoiced to our partners. Current and non-current contract liabilities include

future revenue from collaboration recharged expenses, upfront payments, and milestones achieved to September 30, 2022.

An additional 2.3 million current tax asset was recognized in respect of research and development tax credits in the three months ended September 30, 2022 (three months ended September 30, 2021: 2.1 million). The Company had a foreign tax expense of 0.1 million for the three months ended September 30, 2022 (three months ended September 30, 2021: nil).

A 6.0 million current tax asset was recognized in respect of research and development tax credits in the nine months ended September 30, 2022 (nine months ended September 30, 2021: 3.8 million). In the nine months ended September 30, 2022, a 0.2 million tax expense was recognized on withholding tax. 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 milestone payment of 1.5 million ($2.0 million) in April 2022, which required withholding tax of 0.2 million (three months ended September 30, 2021: nil). The Company had a foreign tax expense of 0.3 million for the nine months ended September 30, 2022 (nine months ended September 30, 2021: nil).

The current tax asset at September 30, 2022 is comprised of 6.0 million in respect of research and development activity for the nine months ended September 30, 2022 and 6.9 million in respect of the year ended December 31, 2021.

The Group has only one class of shares. All ordinary shares have equal voting rights and rank pari passu for the distribution of dividends.

On February 5, 2021 the Group announced a private placement of 2,022,218 of the Company's ADSs, each representing three ordinary shares, at a price of $22.50 per ADS, with new and existing institutional and accredited investors (the "Private Placement"). The aggregate gross proceeds of the Private Placement was $45 million (approximately 33 million) before deducting approximately 2.4 million in placement agent fees and other expenses.

On October 15, 2021, the Company filed a registration statement on Form F-3 with the SEC to cover the offering, issuance and sale of securities from time to time in one or more offerings. The aggregate initial offering price is not to exceed $300,000,000, which includes a sale of up to a maximum aggregate offering price of $100,000,000 of ADSs that may be issued and sold under an Open Market Sale Agreement, dated October 15, 2021, with Jefferies LLC.

On November 29, 2021, the Company completed delisting from AIM. As a result, the Company converted the existing employee share options to ADSs which represents three ordinary shares and the exercise price was also converted to represent an ADS price at an exchange rate equal to the average of the last five business trading days currency conversion of sterling pounds to US dollars, which was 1.334058 sterling pounds to 1 US dollar. This was not a modification of the existing share option grants, as the value and timing of the grants was unchanged.

On August 11, 2022 the Group announced a registered direct offering ("Offering") of 5,950,000 of the Company's ADSs, each representing three ordinary shares, at a price of $9.50 per ADS, with new and existing institutional and accredited investors. The aggregate gross proceeds of the Offering was $56.5 million (approximately 46.4 million) before deducting $4.1 million (approximately 3.3 million) in placement agent fees and other expenses.

Details of the shares issued by the Company during the nine months ended September 30, 2022 are as follows:

10. Related party transactions

Since January 1, 2022, the Company has engaged in the following transactions with its directors, executive officers or holders of more than 10% of its outstanding share capital and their affiliates, which the Company refers to as its related parties.

In 2022, the Company agreed to pay Gladstone Consultancy Partnership, a company controlled by the Company's Non-Executive Chairman, 7,500 (plus any applicable value-added tax) per month from February 1, 2022 until September 30, 2022 for consulting and advisory services to be provided by Iain Ross. Key management are considered to be Directors of the Group.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of financial condition and operating results together with our unaudited financial statements as of and for the three and nine months ended September 30, 2022 and the related notes to those financial statements included as Exhibit 99.1 to this Report on Form 6-K.

The statements in this discussion with respect to our plans and strategy for our business, including expectations regarding our future liquidity and capital resources and other non-historical statements, are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including the risks and uncertainties described in Exhibit 99.1 to this Report on Form 6-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Silence Therapeutics plc ("we", "us", "our", "the Company" or "Silence") is a biotechnology company focused on discovering and developing novel molecules incorporating short interfering ribonucleic acid, or siRNA, to inhibit the expression of specific target genes thought to play a role in the pathology of diseases with significant unmet medical need. Our siRNA molecules are designed to harness the body's natural mechanism of RNA interference, or RNAi, by specifically binding to and degrading messenger RNA, or mRNA, molecules that encode specific targeted disease-associated proteins in a cell. By degrading the message that encodes the disease-associated protein, the production of that protein is reduced, and its level of activity is lowered. In the field of RNAi therapeutics, this reduction of disease-associated protein production and activity is referred to as "gene silencing." Our proprietary mRNAi GOLD (GalNAc Oligonucleotide Discovery) platform consists of precision engineered product candidates designed to accurately target and silence' specific disease-associated genes in the liver, which represents a substantial opportunity. Using our mRNAi GOLD platform, we have generated siRNA product candidates both for our internal development pipeline as well as for out-licensed programs with third-party collaborators. Our wholly owned pipeline is currently focused in three therapeutic areas of high unmet need: hematology, cardiovascular disease, and rare diseases.

SLN360, a siRNA targeting the liver expressed LPA gene, is our wholly owned product candidate in clinical development to reduce high levels of lipoprotein(a), or Lp(a), a genetically determined cardiovascular risk factor affecting up to 20% of the world's population. In February 2022, we reported positive results from the APOLLO phase 1 single-ascending dose study of SLN360 in 32 healthy adults with high Lp(a) defined as 150 nmol/L (or 60 mg/dL). The study showed SLN360 significantly lowered Lp(a) levels up to 96% and 98% at the two highest dose levels, with reductions of up to 70% and 81% persisting at 150 days. SLN360 was well tolerated with no serious safety concerns reported. The multiple-ascending dose portion of the APOLLO phase 1 study in adults with stable atherosclerotic cardiovascular disease (ASCVD) and high Lp(a) is ongoing and expected to readout in 2023. We plan to start the SLN360 phase 2 ASCVD study in the fourth quarter of 2022. SLN124, a siRNA targeting the liver expressed TMPRSS6 gene, is our wholly owned product candidate that has shown the potential to address a range of hematological conditions by modulating endogenous hepcidin, a peptide hormone that is the master regulator of systemic iron balance. SLN124 is being evaluated in the GEMINI II phase 1 study in patients with non-transfusion dependent thalassemia. We announced preliminary results from the single dose arm of the GEMINI II study in September 2022 which evaluated the safety and tolerability of SLN124 in alpha/beta-thalassemia patients. Following a single dose, there were no serious adverse events, severe treatment emergent adverse events (TEAEs) that were SLN124 related or TEAEs leading to withdrawal. No dose limiting toxicities or drug related liver injury were observed. Pharmacokinetic (PK) parameters and pharmacodynamic (PD) biomarkers of iron metabolism are being evaluated in the ongoing multiple dose arm of the study which is anticipated to readout next year. In the GEMINI phase 1 study in healthy volunteers, SLN124 demonstrated proof of mechanism and was generally well tolerated. We plan to start a phase 1/2 study of SLN124 in polycythemia vera, or PV, in the fourth quarter of 2022. SLN124 has rare pediatric disease and orphan drug designations for beta-thalassemia as well as orphan drug designation and FDA Fast Track Designation for PV.

The potential of our mRNAi GOLD platform has been validated through ongoing research and development collaborations with leading pharmaceutical companies, such as AstraZeneca plc, or AstraZeneca, Mallinckrodt plc, or Mallinckrodt and Hansoh Pharmaceutical Group Company Limited, or Hansoh. These collaborations collectively represent up to 16 pipeline programs and approximately $7.5 billion in potential milestones plus royalties. We aim to maximize the substantial opportunity of our mRNAi GOLD platform to address genetic diseases in the liver by advancing both our proprietary and partnered pipelines.

Recent Corporate Highlights

Proprietary Pipeline Updates

Anticipated 2022 Milestones

Collaboration Agreement with AstraZeneca

In March 2020, we entered into a collaboration agreement with AstraZeneca to discover, develop and commercialize siRNA therapeutics for the treatment of cardiovascular, renal, metabolic and respiratory diseases. Under this agreement, AstraZeneca made an upfront cash payment to us of 17.1 million in May 2020 (equivalent to $20.0 million as of the payment date) with a further 30.8 million ($40.0 million) received in May 2021. In March 2020, an affiliate of AstraZeneca also subscribed for 4,276,580 new ordinary shares for an aggregate subscription price of $20.0 million.

We anticipate initiating work on five targets in the early stages of the collaboration, with AstraZeneca having the option to extend the collaboration to an additional five targets. AstraZeneca has agreed to pay us a $10.0 million option fee at the point of candidate nomination for each target. For each target selected, we will be eligible to receive up to $140.0 million in potential milestone payments upon the achievement of milestones relating to the initiation of specified clinical trials, the acceptance of specified regulatory filings and the first commercial sale in specified jurisdictions. For each target selected, we will also be eligible to receive up to $250.0 million in potential commercial milestone payments, upon the achievement of specified annual net sales levels, as well as tiered royalties as a percentage of net sales ranging from the high single digits to the low double digits.

We continue to advance the research and development workplans for each identified target as scheduled and agreed to with our collaboration partner.

Collaboration Agreement with Mallinckrodt

In July 2019, we entered into a collaboration agreement with Mallinckrodt Pharma IP Trading DAC, a wholly owned subsidiary of Mallinckrodt plc, to develop and commercialize RNAi drug targets designed to silence the complement cascade in complement-mediated disorders. Under the agreement, we granted Mallinckrodt an exclusive worldwide license to our C3 targeting program, SLN501, with options to license two additional complement-mediated disease targets from us. Mallinckrodt exercised options to license two additional complement targets from us in July 2020.

While we are responsible for the phase 1 clinical trial in each case, Mallinckrodt will be funding all of our research personnel costs on a full-time equivalent, or FTE, basis associated with preparing for and conducting the phase 1 clinical trials. We are also responsible for the provision of drug product for preclinical activities and for the phase 1 clinical trials, but any manufacturing expense relating to the phase 1 trial will be paid for by Mallinckrodt. After completion of the phase 1 clinical trials, Mallinckrodt will assume clinical development and responsibility for potential global commercialization.

The collaboration provides for potential additional development and regulatory milestone payments in aggregate of up to $100.0 million for the initial complement C3 target and up to $140.0 million for each of the two optioned complement-mediated disease targets, with such milestones relating to the initiation of specified clinical trials in specified jurisdictions, and upon the receipt of regulatory approvals by specified authorities, in each case for multiple indications. We are also eligible to receive potential commercial milestone payments of up to $562.5 million upon the achievement of specified levels of annual net sales of licensed products for each program. We are also eligible to receive tiered, low double-digit to high-teen percentage royalties on net sales for licensed products for each program. We received a research milestone payment of $2.0 million in October 2019 upon the initiation of work for the first complement C3 target. In September 2020, we received another $2.0 million research milestone payment following the initiation of work on a second complement target. In February 2021, we initiated work on the third complement target which triggered another $2.0 million research milestone payment. In April 2021, we received a $2.0 million research milestone for the initiation of the toxicology study for the SLN501 C3 targeting program. We achieved another $3.0 million research milestone following the submission of the SLN501 clinical trial application in March 2022.

In connection with the execution of this agreement, Mallinckrodt made an upfront cash payment in 2019 of $20.0 million (equivalent to 16.4 million as of the payment date). Under a separate subscription agreement, Cache Holdings Limited, a wholly owned subsidiary of Mallinckrodt plc, concurrently subscribed for 5,062,167 new ordinary shares for an aggregate subscription price of $5.0 million (equivalent to 4.0 million as of the payment date).

We continue to advance the research and development workplans for each identified target as scheduled and agreed to with our collaboration partner.

Collaboration Agreement with Hansoh

In October 2021, we entered into a collaboration agreement with Hansoh, one of the leading biopharmaceutical companies in China, to develop siRNAs for three undisclosed targets leveraging our proprietary mRNAi GOLD platform. Under the terms of the agreement, Hansoh has the exclusive option to license rights to the first two targets in Greater China, Hong Kong, Macau and Taiwan following the completion of phase 1 studies. We retain exclusive rights for those two targets in all other territories. We are responsible for all activities up to option exercise and retain responsibility for development outside the China region post phase 1 studies. Hansoh has the exclusive option to license global rights to a third target at the point of IND filing. Hansoh is responsible for all development activities post option exercise for the third target. Hansoh made a $16.0 million upfront payment to us in December 2021. We achieved an undisclosed preclinical milestone in April 2022 which triggered our first $2.0 million milestone payment from Hansoh. We are eligible to receive up to $1.3 billion in additional development, regulatory and commercial milestones. We are also eligible to receive royalties tiered from low double-digit to mid-teens on Hansoh net product sales.

We continue to advance the research and development workplans for each identified target as scheduled and agreed to with our collaboration partner.

Financial Operations Overview

We do not have any approved products. Accordingly, we have not generated any revenue from product sales, and we do not expect to generate any revenue from the sale of any products unless and until we obtain regulatory approvals for, and commercialize any of, our product candidates. In the future, we will seek to generate revenue primarily from product sales and, potentially, regional or global strategic collaborations with third parties.

Under the Company's collaboration agreement with Mallinckrodt, the Company received an upfront cash payment of 16.4 million ($20.0 million) in 2019 and is eligible to receive specified development, regulatory and commercial milestone payments. During the nine months ended September 30, 2022 the Company received milestone payments totalling 2.2 million or $3 million (nine months ended September 30, 2021: 2.9 million). In addition to these payments, Mallinckrodt has agreed to fund some of the Company's research personnel and preclinical development costs. The Company recognizes the upfront payment, milestone payments, payments for personnel costs and other research funding payments over time, in accordance with IFRS 15 para 35 c). During the nine months ended September 30, 2022, the Company recognized a total of 9.5 million in revenue under this agreement (nine months ended September 30, 2021: 6.4 million).

Under the Company's collaboration agreement with AstraZeneca, the Company received an upfront cash payment of 17.1

million ($20.0 million) in 2020 with a further amount of 30.8 million ($40.0 million) received in May 2021. The Company is also eligible to receive specified development and commercial milestone payments as well as tiered royalties on net sales, if any. The Company recognizes the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the nine months ended September 30, 2022, the Company recognized a total of 2.8 million in revenue under this agreement (nine months ended September 30, 2021: 1.8 million).

The Company entered into a collaboration agreement with Hansoh on October 14, 2021. The Company received an approximately $16 million ( 10.7 million, net of taxes based on the exchange rate at the payment date) upfront payment in December 2021. The Company is eligible to receive development, regulatory and commercial milestones as well as royalties on Hansoh net product sales. During the nine months ended September 30, 2022, the Company triggered milestone payments totalling $2.0 million ( 1.5 million) (nine months ended September 30, 2021: nil). The Company recognizes the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the nine months ended September 30, 2022, the Company recognized a total of 80 thousand in revenue under this agreement (nine months ended September 30, 2021: nil).

In December 2018, the Company entered into a settlement and license agreement with Alnylam Pharmaceuticals Inc., or Alnylam, pursuant to which the Company settled outstanding patent litigation with Alnylam related to its RNAi product ONPATTRO. As part of the settlement, the Company licenses specified patents to Alnylam, and Alnylam pays the Company a tiered royalty of up to one percent of net sales of ONPATTRO in the European Union. The Company is eligible to receive these royalties through December 2023. The Company invoices Alnylam quarterly in arrears based on sales data for that quarter as reported to the Company by Alnylam. Royalty revenue is recognized based on the level of sales when the related sales occur. During the nine months ended September 30, 2022, the Company recognized a total of 0.4 million in royalty income from Alnylam (nine months ended September 30, 2021: 0.3 million).

Cost of sales consists of research and development expenditure that is directly related to work carried out on revenue generating contracts. This includes salary costs that are apportioned based on time spent by employees working on these contracts as well as costs of materials and costs incurred under agreements with contract research organizations, or CROs.

We classify our operating expenses into two categories: research and development expenses and administrative expenses. Personnel costs, including salaries, benefits, bonuses and share-based payment expense, comprise a significant component of each of these expense categories. We allocate expenses associated with personnel costs based on the function performed by the respective employees.

Research and Development Expenses

The largest component of our total operating expenses since inception has been costs related to our research and development activities, including the preclinical and clinical development of our product candidates. We expense research and development costs as they are incurred and classify them as contracted development, personnel and other.

Our contracted research and development expense primarily consists of:

Our research and development personnel expense primarily consists of: