Advancements In RNAi Will Harness Aging Healthcare Demand

Key Takeaways

• Strong clinical progress and unique program design could accelerate commercialization, market share gains, and pricing power, positioning Silence for significant margin and revenue growth.
  
• Expanding pipeline, regained global rights, and preclinical advances in RNAi therapeutics create long-term advantage and substantial high-margin revenue opportunities beyond current market expectations.
  
• Dependence on external funding, lost partnerships, high spend, mounting competition, and macroeconomic pressures threaten financial sustainability and long-term revenue growth.

Catalysts

A biotechnology company, engages in the discovery and development of novel molecules incorporating short interfering ribonucleic acid (siRNA) to inhibit the expression of specific target genes in hematology, cardiovascular, and rare diseases.

• Analyst consensus acknowledges that positive ALPACAR-360 Phase II results and a differentiated Phase III design for zerlasiran could drive future revenues, but this likely understates the true value-securing a partner not only derisks the program but accelerates commercialization, potentially enabling Silence to outpace competitors, capture market share faster, and drive topline revenue growth above expectations.
  
• While consensus sees divesiran's orphan drug designation and positive Phase I results as paths to premium pricing in a rare disease market, the compelling efficacy signals and full Phase II enrollment by year-end position Silence for potential first-mover advantage, enabling them to set new standards of care in PV and unlock dominant pricing power, sharply improving future net margins upon approval.
  
• Unlike consensus, the market has yet to fully reflect the expanding pipeline breadth and proprietary IP after regaining global rights to multiple liver targets from Hansoh, which allows Silence to launch or out-license additional programs without near-term competition, potentially driving new high-margin milestone revenues and long-term earnings growth.
  
• Current valuations overlook how Silence's progress in preclinical extrahepatic RNAi therapeutics positions it at the edge of the next wave in precision medicine, sharply expanding the addressable market beyond liver diseases and unlocking multi-year revenue opportunities as healthcare systems globally ramp up investment in targeted, innovative therapies.
  
• The company's technical and regulatory execution, combined with secular trends of aging populations and rising chronic disease prevalence, suggest Silence is leveraged to capture outsized long-term revenue and gross margin expansion as payer demand shifts strongly toward high-value, durable and infrequently-dosed gene-silencing drugs.

Silence Therapeutics Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Silence Therapeutics compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Silence Therapeutics's revenue will grow by 40.7% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Silence Therapeutics will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Silence Therapeutics's profit margin will increase from -291.2% to the average GB Biotechs industry of 15.9% in 3 years.
• If Silence Therapeutics's profit margin were to converge on the industry average, you could expect earnings to reach $12.1 million (and earnings per share of $0.25) by about August 2028, up from $-79.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 363.5x on those 2028 earnings, up from -3.3x today. This future PE is greater than the current PE for the GB Biotechs industry at 15.4x.
• Analysts expect the number of shares outstanding to grow by 0.93% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.16%, as per the Simply Wall St company report.

Silence Therapeutics Future Earnings Per Share Growth

Risks

• Silence Therapeutics' decision to only initiate the costly Phase III trial of zerlasiran after securing a partner highlights an ongoing reliance on external funding and partnerships for late-stage clinical development, which introduces execution risk and uncertainty around future revenue streams and the company's ability to reduce consistent net losses.
  
• The early termination of the Hansoh Pharma collaboration not only eliminates a significant source of development funding and potential milestone income, but also underlines the risk that other partners could similarly exit or delay agreements, which would negatively affect both recognized revenue and future cash flow projections.
  
• High research and development spend-$67.9 million in 2024, up sharply from $56.9 million in the prior year-combined with only $43.3 million in reported revenue and no approved commercial products, puts pressure on financial sustainability, increasing the risk of continued net losses, shareholder dilution, or a deteriorating cash position.
  
• Intensifying competition in the RNAi and broader gene-silencing therapeutic area, including strong rivals like CRISPR and antisense oligonucleotide platforms, could diminish Silence Therapeutics' pipeline value and erode eventual pricing power, which would limit long-term revenue growth and compress future gross margins.
  
• Ongoing industry-wide and secular headwinds such as rising interest rates and greater drug pricing pressure in key markets threaten to bend up the cost of capital, making fundraising more expensive and dilutive, while also potentially shrinking the revenue opportunity from any future product launches due to tighter reimbursement and payer scrutiny.

Valuation

• The assumed bullish price target for Silence Therapeutics is $74.31, which represents two standard deviations above the consensus price target of $33.94. This valuation is based on what can be assumed as the expectations of Silence Therapeutics's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $75.0, and the most bearish reporting a price target of just $4.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $75.7 million, earnings will come to $12.1 million, and it would be trading on a PE ratio of 363.5x, assuming you use a discount rate of 7.2%.
• Given the current share price of $5.48, the bullish analyst price target of $74.31 is 92.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.