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”, &#x201

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 ended March 31, 2023

1. General information

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 May 16, 2023.

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, 2022, were approved by the board of directors on March 23, 2023 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 condensed consolidated interim financial statements have not been audited.

Basis of preparation and accounting policies

This condensed consolidated interim financial report for the three-month reporting period ended March 31, 2023 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, 2022 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 except for the estimation of income tax (see note 8) and a new policy to account for the potential variable payments relating to reacquired rights under the modified Mallinckrodt collaboration as further explained note 3.

The preparation of these unaudited condensed consolidated 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 unaudited 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 21.

The Group has incurred recurring losses since inception, including net losses of 10.2 million for the three months ended March 31, 2023. As of March 31, 2023, the Group had accumulated losses of 272.4 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 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 March 31, 2023, the Company had cash, cash equivalents and U.S. treasury bills of 62.9 million (approximately $77.8 million).

The Group has the responsibility to evaluate whether conditions and/or events raise material uncertainty about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. The forecast for evaluating the going concern basis of the Group includes continued investment in our technology platform and product pipeline. The forecast does not include collaboration milestones which have not been fully achieved or other assumptions for potential future non-dilutive or dilutive funding sources. This represents a material uncertainty which may cast significant doubt (or raise substantial doubt as contemplated by Public Company Accounting Oversight Board ( PCAOB ) standards) on the Group's ability to continue as a going concern and therefore the Group may be unable to realize assets and discharge liabilities in the normal course of business. These consolidated financial statements have been prepared assuming that the Group will continue as a going concern which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business and does not include adjustments that would result if the Group were unable to continue as a going concern.

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. On May 4, 2023, the Group announced that it had achieved a $10 million milestone from the AstraZeneca collaboration. The Group anticipates achievement of additional future milestone payments of up to $14 million from existing collaboration agreements in the next 12 months which will extend the ability to fund operations through the third quarter of 2024. However, these future milestone payments are dependent on achievement of certain development or regulatory objectives that may not occur. The Group has an authorized open market sale agreement and can potentially raise funds through the sale of ADSs. 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 and ability to continue as a going concern.

Revenue from collaboration agreements for the three months ended March 31, 2023 predominately relates to the research collaboration agreements the Company entered into with Mallinckrodt in July 2019 and AstraZeneca in March 2020.

Revenue for the three months ended March 31, 2023 comprised 11.2 million of research collaboration income (March 31, 2022: 5.6 million) and 0.1 million of royalty income (March 31, 2022: 0.1 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 was eligible to receive specified development, regulatory and commercial milestone payments. During the three months ended March 31, 2023 the Company received no milestone payments (three months ended March 31, 2022: 2.2 million). In addition to these payments, Mallinckrodt had agreed to fund some of the Company's research personnel and preclinical development costs. The Company recognized 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 three months ended March 31, 2023, the Company recognized a total of 8.9 million in revenue under this agreement (three months ended March 31, 2022: 4.9 million).

In March 2023, the Company 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 Company and the modification resulted in the partially satisfied performance obligations relating to the two reacquired targets becoming fully satisfied as the Company was no longer obligated to develop these targets. SLN501, the C3 targeting program, remains the same under the original collaboration agreement. The Company has 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 Company has 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 Company recognized 8.0 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 Company agreed to pay future success-based milestones and low single digit royalties on net sales if the projects advance. The Company 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.

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 three months ended March 31, 2023, the Company recognized a total of 2.5 million in revenue under this agreement (three months ended March 31, 2022: 0.7 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 three months ended March 31, 2023, the Company did not trigger any milestone payments (three months ended March 31, 2022: nil). The Company recognizes the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the three months ended March 31, 2023, the Company recognized reduction in revenue of a total of 0.2 million in revenue under this agreement due to changes in overall workplans (three months ended March 31, 2022: 19 thousand).

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 three months ended March 31, 2023, the Company recognized a total of 0.1 million in royalty income from Alnylam (three months ended March 31, 2022: 0.1 million).

4. Segment reporting

In 2023, 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 three months ended March 31, 2023 and 2022, 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 March 31, 2023 after taxation of 10.2 million (three months ended March 31, 2022: loss of 7.7 million) and on the weighted average ordinary shares in issue during the three months ended March 31, 2023 of 107,941,744 (three months ended March 31, 2022: 89,789,214).

The options outstanding at March 31, 2023 and March 31, 2022 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 March 31, 2023.

An additional 2.7 million current tax asset was recognized in respect of research and development tax credits in the three months ended March 31, 2023 (three months ended March 31, 2022: 1.9 million). The Company had a foreign tax expense of 0.2 million for the three months ended March 31, 2023 (three months ended March 31, 2022: nil).

The current tax asset at March 31, 2023 is 10.7 million, comprised of 2.7 million in respect of research and development activity for the three months ended March 31, 2023 and 8.0 million in respect of the year ended December 31, 2022.

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

Details of the shares issued by the Company during the three months ended March 31, 2023 are as follows:

10. Related party transactions

In 2022, the Company had 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.

Gladstone Consulting Partnership, a company controlled by the Company's Non-Executive Chairman, is no longer being engaged in 2023. In 2022, the Company agreed to pay Gladstone Consultancy Partnership, 60 thousand (plus any applicable value-added tax) for consulting and advisory services provided by Iain Ross. Key management are considered to be Directors of the Group. There were no related party transactions in the three months ended March 31, 2023.

11. Subsequent Events

In May 2023, we achieved a $10.0 million milestone payment from AstraZeneca following the nomination of the first product candidate under our siRNA collaboration focused on cardiovascular, renal, metabolic and respiratory diseases.

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 months ended March 31, 2023 and the related notes to those financial statements included as Exhibit 99.1 to this Report on Form 6-K, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 20-F for the year ended December 31, 2022 filed with the Securities and Exchange Commission on March 15, 2023.

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. 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: cardiovascular disease, hematology and rare diseases.

Zerlasiran (SLN360), an siRNA targeting the LPA gene, is our wholly owned product candidate currently in phase 2 clinical development (ALPACAR-360 trial) 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 single-ascending dose portion of the APOLLO phase 1 program evaluating zerlasiran in 32 healthy adults with high Lp(a) 150 nmol/L. In the APOLLO trial, participants in the top two zerlasiran single dose groups (300 mg and 600 mg) were observed to have experienced up to a 96% and 98% median reduction in Lp(a) levels, respectively, and median reductions of up to 71% and 81% from baseline persisted at 150 days. Those receiving a placebo saw no change in Lp(a) levels. Further analysis showed median time-averaged Lp(a) reductions over 150 days exceeded 80% in the zerlasiran 300 mg and 600 mg dose groups. At day 365, some participants still exhibited substantial knockdown of Lp(a) to approximately 50% of baseline. Zerlasiran was well tolerated with no serious safety concerns reported. The multiple-ascending dose portion of the APOLLO program in subjects with high Lp(a) and stable atherosclerotic cardiovascular disease, or ASCVD, is ongoing and expected to readout in the fourth quarter of 2023. In January 2023, we started dosing in the ALPACAR-360 trial evaluating subjects with high Lp(a) 125 nmol/L at high risk of ASCVD events. In May 2023, we announced complete enrollment in the study, and we expect to report topline data in mid-2024. We are engaged in global partnership discussions for this program to ensure we are well positioned to scale up zerlasiran development and potential future commercialization.

SLN124, an siRNA targeting the 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 SANRECO phase 1/2 trial in patients with polycythemia vera, or PV, and the GEMINI II phase 1 trial in patients with non-transfusion dependent, or NTD, thalassemia. In September 2022, we reported preliminary results from the single dose portion of the GEMINI II trial which showed SLN124 was well tolerated with no serious adverse events (AEs), no severe treatment emergent AEs (TEAEs) that were SLN124 related and no TEAEs leading to withdrawal. No dose limiting toxicity or drug related liver injury was observed. Effects on hepcidin, serum iron, transferrin saturation and hemoglobin are being evaluated in the ongoing multiple-dose arm expected to readout in the fourth quarter of 2023. SLN124 demonstrated proof of mechanism in the GEMINI phase 1 trial in healthy volunteers completed in May 2021, representing the first clinical data from our mRNAi GOLD platform. SLN124 has FDA Fast Track and orphan disease designations for PV as well as orphan disease and rare pediatric disease designations for beta-thalassemia.

The potential of our mRNAi GOLD platform has been validated through ongoing research and development collaborations with leading pharmaceutical companies, such as AstraZeneca, Mallinckrodt and Hansoh. These collaborations collectively represent up to 14 pipeline programs and approximately $5.5 billion in potential milestones plus royalties.

We believe the potential for our mRNAi GOLD platform to address disease-associated genes in the liver is substantial. Only around one percent of the approximately 14,000 liver expressed genes have been targeted by publicly known siRNAs. Once in the clinic, early-stage GalNAC-conjugated RNAi programs have shown a much greater likelihood of advancement from the current phase of development compared to the pharmaceutical industry average. We aim to maximize our mRNAi GOLD platform by advancing both our proprietary and partnered pipelines.

First Quarter 2023 and Recent Business Highlights

mRNAi GOLD Proprietary Program Updates

Zerlasiran (cardiovascular disease)

-In January 2023, we initiated the ALPACAR-360 phase 2 study in subjects with ASCVD and high Lp(a). In May 2023, we announced complete enrollment in the ALPACAR-360 phase 2 study. We expect to report topline data in mid-2024.

-In April 2023, we completed dosing in the multiple dose portion of the APOLLO phase 1 study in subjects with stable ASCVD and high Lp(a). We remain on-track to report topline data in the fourth quarter of 2023.

SLN124 (hematological disorders)

-In January 2023, we initiated the SANRECO phase 1/2 study in patients with PV.

-In March 2023, we completed dosing in the multiple dose portion of the GEMINI II phase 1 study in thalassemia patients. We remain on-track to report topline data in the fourth quarter of 2023.

mRNAi GOLD Partnered Program Updates

-In March 2023, we reacquired exclusive worldwide rights to two preclinical siRNA assets under our Mallinckrodt collaboration for complement-mediated diseases. Under the terms of the modified agreement, Silence is required to pay future success-based milestones and low single digit royalties on net sales if the projects advance. SLN501, the C3 targeting program, remains the same as under the original collaboration agreement.

-In May 2023, we achieved a $10.0 million milestone payment from AstraZeneca following the nomination of the first product candidate under our siRNA collaboration focused oncardiovascular, renal, metabolic and respiratory diseases.

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 $20.0 million in May 2020. AstraZeneca made an additional unconditional cash payment to us of $40.0 million which was 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.

The collaboration covers five targets initially, with AstraZeneca having the option to extend the collaboration to a further five targets. AstraZeneca has agreed to pay us $10.0 million upon the exercise of each option to collaborate on an additional target. In May 2023, AstraZeneca nominated the first product candidate under our collaboration, triggering a $10 million option fee to us to advance development on an undisclosed program. 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.

Collaboration Agreement with Mallinckrodt

In July 2019, we entered into a collaboration agreement with Mallinckrodt to develop and commercialize RNAi drug targets designed to silence the complement cascade in complement-mediated disorders. In connection with the execution of this agreement, Mallinckrodt made an upfront cash payment to us 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, 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). Under the agreement, we granted Mallinckrodt an exclusive worldwide license to our C3 targeting program, SLN501, with options to license two additional undisclosed complement-mediated disease targets from us. In July 2020, Mallinckrodt exercised options on the two additional complement targets.

In March 2023, we reacquired exclusive worldwide rights from Mallinckrodt to the two undisclosed preclinical complement targets. Under the terms of the modified agreement, we did not make any upfront payment to get the two assets back and will potentially pay future success-based milestones and low single digit royalties on net sales if the projects advance. SLN501, the C3 targeting program, remains the same as under the original collaboration agreement.

Under the terms of the SLN501 partnership, we are responsible for phase 1 development and Mallinckrodt is funding all of our research personnel costs on a full-time equivalent, or FTE, basis associated with this program. We are also responsible for the provision of drug product for preclinical activities and for the phase 1 clinical trial, but any manufacturing expense relating to the phase 1 trial is paid for by Mallinckrodt. After completion of the phase 1 clinical trial, 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 million for the C3 target. Milestones relate to the initiation of specified clinical trials in specified jurisdictions and upon the receipt of regulatory approvals by specified authorities for multiple indications. We are also eligible to receive potential commercial milestone payments upon the achievement of specified levels of annual net sales and tiered, low double-digit to high-teen percentage royalties on net sales. In October 2019, we received a $2 million research milestone payment upon the initiation of work on the SLN501 C3 program. In April 2021, we received another $2 million for initiating IND-enabling studies. In March 2022, we triggered another $3 million milestone payment following the submission of the SLN501 clinical trial application. The SLN501 program is currently in phase 1 clinical trials.

Collaboration Agreement with Hansoh

On October 15, 2021, we announced a collaboration agreement with Hansoh, one of the leading biopharmaceutical companies in China, to develop siRNAs for three undisclosed targets leveraging Silence's proprietary mRNAi GOLD platform. Under the terms of the agreement, Hansoh will have 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 trials. We will retain exclusive rights for those two targets in all other territories. Silence will be responsible for all activities up to option exercise and will retain responsibility for development outside the China region post phase 1 trials. Hansoh will also have the exclusive option to license global rights to a third target at the point of IND filing. Hansoh will be responsible for all development activities post option exercise for the third target. Hansoh made a $16 million upfront payment to us in December 2021. We achieved our first $2 million research milestone payment in the Hansoh collaboration in April 2022. We are eligible to receive up to $1.3 billion in additional development, regulatory and commercial milestones. We will also receive royalties tiered from low double-digit to mid-teens on Hansoh net product sales.

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 million) in 2019 and was eligible to receive specified development, regulatory and commercial milestone payments. During the three months ended March 31, 2023 the Company received no milestone payments (three months ended March 31, 2022: 2.2 million). In addition to these payments, Mallinckrodt had agreed to fund some of the Company's research personnel and preclinical development costs. The Company recognized 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 three months ended March 31, 2023, the Company recognized a total of 8.9 million in revenue under this agreement (three months ended March 31, 2022: 4.9 million).

In March 2023, the Company 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 Company and the modification resulted in the partially satisfied performance obligations relating to the two reacquired targets becoming fully satisfied as the Company was no longer obligated to develop these targets. SLN501, the C3 targeting program, remains the same as under the original collaboration agreement. The Company has 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 Company has 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 Company recognized 8.0 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 Company agreed to pay future success-based milestones and low single digit royalties on net sales if the projects advance. The Company 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.

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 three months ended March 31, 2023, the Company recognized a total of 2.5 million in revenue under this agreement (three months ended March 31, 2022: 0.7 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 three months ended March 31, 2023, we did not trigger any milestone payments (three months ended March 31, 2022: nil). The Company recognizes the upfront payment and milestone payments over time, in accordance with IFRS 15 para 35 c). During the three months ended March 31, 2023, the Company recognized a reduction in revenue of 0.2 million due to changes in overall workplans (three months ended March 31, 2022: 19 thousand).

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 three months ended March 31, 2023, the Company recognized a total of 0.1 million in royalty income from Alnylam (three months ended March 31, 2022: 0.1 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.