6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2024

(Commission File No. 001-38215)

 

 

NUCANA PLC

(Translation of registrant’s name into English)

 

 

3 Lochside Way

Edinburgh EH12 9DT

United Kingdom

(Address of registrant’s principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒    Form  40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7): ☐

 

 

 


Other Events

On May 13, 2024, NuCana plc (the “Company”) published its 2023 UK Annual Report (the “UK Annual Report”) for the year ended December 31, 2023 and distributed a notice of its annual general meeting to be held on June 18, 2024 (the “AGM”), a form of proxy and its UK Annual Report to its ordinary shareholders. The notice of the AGM is attached as Exhibit 99.1 hereto and the UK Annual Report is attached as Exhibit 99.2 hereto.

On or about May 13, 2024, Citibank, N.A., in its capacity as the depositary bank (the “Depositary”) for the Company’s American Depositary Shares (“ADSs”), commenced mailing notice materials and voting cards to ADS holders to enable ADS holders of record as of May 6, 2024 to instruct the Depositary to vote the ordinary shares represented by their ADSs. If the Depositary receives timely voting instructions from an ADS holder, it will endeavor to vote the ordinary shares (in person or by proxy) represented by the holder’s ADSs in accordance with the ADS holder’s voting instructions. The ability of the Depositary to carry out voting instructions may be limited by practical and legal limitations and ADS holders may not receive voting materials in time to enable them to return voting instructions to the Depositary in a timely manner. The notice materials to be mailed by the Depositary to ADS holders will contain a link to the Company’s website where ADS holders can view and download the AGM notice distributed by the Company to its ordinary shareholders (which contains explanatory notes for the resolutions being voted on at the AGM) and the UK Annual Report.

The information contained in Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth by specific reference in such a filing.

Exhibits

 

Exhibit   

Description

99.1    Notice of Annual General Meeting
99.2    2023 UK Annual Report


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NuCana plc
By:  

/s/ Donald Munoz

Name:   Donald Munoz
Title:   Chief Financial Officer

Date: May 13, 2024

EX-99.1

Exhibit 99.1

 

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Notice f 2024 Annual General Meeting Tuesday, 18th June 2024 at 11.00am Venue: Lochside House 3 Lochside Way Edinburgh EH12 9DT U.K.


 

 

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NuCana plc

77-78 Cannon Street, London, England, EC4N 6AF

Company number: 03308778


 

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NOTICE OF 2024 ANNUAL GENERAL MEETING

 

NOTICE OF 2024 ANNUAL GENERAL MEETING

NOTICE is hereby given that the 2024 annual general meeting of NuCana plc (the “Company”) will be held on 18 June 2024 at 11.00am at Lochside House, 3 Lochside Way, Edinburgh EH12 9DT, UK for transaction of the following business:

Ordinary Resolutions

To consider and, if thought fit, pass the following resolutions (1 to 7 inclusive), which will be proposed as ordinary resolutions:

 

1.

To re-elect (as a Class III director) Adam George, who is retiring by rotation in accordance with the Articles of Association of the Company, as a director of the Company.

 

2.

To re-elect (as a Class III director), Martin Mellish, who is retiring by rotation in accordance with the Articles of Association of the Company, as a director of the Company.

 

3.

To re-appoint Ernst & Young LLP as auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the next annual general meeting of the Company.

 

4.

To authorise the directors to determine the remuneration of the auditors of the Company.

 

5.

To receive the Company’s audited accounts for the financial year ended 31 December 2023, together with the Strategic Report, Directors’ Report and Auditors’ Report on those accounts.

 

6.

To receive and approve the Directors’ Remuneration Report for the financial year ended 31 December 2023.

 

7.

That the directors be generally and unconditionally authorised pursuant to Section 551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £20,000,000. This authority shall, unless previously renewed, revoked or varied by the Company in general meeting, expire on the conclusion of the annual general meeting of the Company to be held in 2025, save that the Company may, at any time before such expiry, make any offer or agreement which would or might require rights to subscribe for or to convert securities into shares to be granted or equity securities to be allotted after the authority expires, and the directors may allot shares or grant such rights in pursuance of such offer or agreement as if the authority had not expired.

Special Resolution

To consider and, if thought fit, pass the following resolution 8, which will be proposed as a special resolution:

 

8.

That, subject to the passing of resolution 7, the directors be empowered pursuant to Section 570 of the Act to allot equity securities (as defined in Section 560 (1) of the Act) for cash under the authority given by that resolution as if Section 561(1) of the Act did not apply to any such allotment, provided that such authority shall be limited to the allotment of equity securities up to a nominal amount of £20,000,000, such authority to expire on the conclusion of the annual general meeting of the Company to be held in 2025, but prior to its expiry the Company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted after the authority expires and the Board may allot equity securities under any such offer or agreement as if the authority had not expired.

Recommendation

The directors of the Company consider that all the proposals to be considered at the AGM are in the best interests of the Company and its shareholders as a whole and are most likely to promote the success of the Company. The directors unanimously recommend that you vote in favour of all the proposed resolutions as they intend to do in respect of their own beneficial holdings.

 

BY ORDER OF THE BOARD

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Registered office

77-78 Cannon Street

London

England

EC4N 6AF

                      
  

Martin Quinn

Company Secretary

10 May 2024

YOUR VOTE IS IMPORTANT. Members will be able to attend the AGM in person however you are strongly encouraged to vote on all resolutions in advance of the AGM by appointing the Chair of the meeting as your proxy. Further details on how shareholders can appoint the Chair of the meeting as their proxy are set out in this document.

 

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NOTICE OF 2024 ANNUAL GENERAL MEETING

 

NOTES

The following notes explain your general rights as a member and your right to attend and vote at the annual general meeting or to appoint someone else to vote on your behalf.

 

1.

Any member entitled to attend, speak and vote at the annual general meeting may appoint one or more proxies to attend, speak and vote on his/her behalf. A proxy need not be a member of the Company but must attend the meeting. A member may appoint more than one proxy in relation to the annual general meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. To appoint more than one proxy you should contact the Company’s registrar, Computershare Investor Services PLC (“Computershare”), at the address below.

 

2.

Only those members registered in the register of members of the Company at close of business on 14 June 2024 or, in the event that the meeting is adjourned, in such register not later than 48 hours before the time of the adjourned meeting, shall be entitled to attend, or vote (whether in person or by proxy) at the meeting in respect of the number of shares registered in their names at the relevant time.

 

3.

A form of proxy has been provided for use by members. To be valid it should be completed, signed and delivered (together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority) to the Company’s registrar, Computershare, at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, not later than 48 hours (not including non-business days) before the time appointed for holding the annual general meeting or any adjourned meeting or, in the case of a poll taken more than 48 hours after it is demanded, not less than 24 hours before the time appointed for the taking of the poll.

 

4.

In the case of a corporation, the form of proxy must be executed under its common seal (or such form of execution as has the same effect) or signed on its behalf by an attorney or a duly authorised officer of the corporation. A corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all its powers as a member provided that they do not do so in relation to the same shares.

 

5.

In the case of joint holders, the vote of the senior who tenders a vote whether in person or by proxy will be accepted to the exclusion of the votes of any other joint holders. For these purposes, seniority shall be determined by the order in which the names stand in the Company’s relevant register of members for the certificated or uncertificated shares of the Company (as the case may be) in respect of the joint holding.

 

6.

CREST members who wish to appoint a proxy or proxies by using the CREST electronic appointment service may do so for the meeting and any adjournments of it by utilising the procedures described in the CREST Manual. The message, (a CREST proxy instruction) must be properly authenticated in accordance with the specifications of Euroclear UK & Ireland Limited (“EUI”) and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company’s registrar, Computershare not later than the time stated in Note (3) above. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which the Company’s registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by EUI.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST proxy instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by any particular time. Reference should be made to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST proxy instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

 

7.

Proxymity Voting. If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 11.00am BST on 14th June 2024 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.

 

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NOTICE OF 2024 ANNUAL GENERAL MEETING

 

8.

The completion and return of a form of proxy will not preclude a member from attending in person at the meeting and voting should he/she wish to do so, but if a member appoints a proxy and attends the meeting in person, the proxy appointment will automatically be terminated. Further, the appointment under the form of proxy may be terminated by the member prior to the commencement of the meeting (or any adjournment of the meeting). To be valid, the notice of termination of the authority of the person appointed to act as proxy must be deposited at the offices of the Company’s registrar, Computershare at, not less than 48 hours (not including non-business days) before the time fixed for the holding of the annual general meeting or any adjournment thereof (as the case may be).

 

9.

Under Section 527 of the Companies Act 2006 (the “Act”), members meeting the threshold requirement set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (a) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the annual general meeting; or (b) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with Section 437 of the Act. The Company may not require the members requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under Section 527 of the Act, it must forward the statement to the Company’s auditors not later than the time when it makes the statement available on the website. The business which may be dealt with at the annual general meeting includes any statement that the Company has been required, under Section 527 of the Act, to publish on a website.

 

10.

Copies of the directors’ service contracts and letters of appointment for non-executive directors will be available for inspection at the Global Headquarters of the Company at 3 Lochside Way, Edinburgh EH12 9DT during normal business hours on any week day (public holidays excepted) from the date of this Notice of annual general meeting until the date of the annual general meeting, and at the place of the annual general meeting for one hour before the meeting and at the meeting itself.

 

11.

Except as set out in the notes to this Notice, any communication with the Company in relation to the annual general meeting, including in relation to proxies, should be sent to the Company’s registrar, Computershare at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. No other means of communication will be accepted. In particular, you may not use any electronic address provided either in this Notice or in any related documents to communication with the Company for any purpose other than those expressly stated.

 

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NOTICE OF 2024 ANNUAL GENERAL MEETING

 

EXPLANATORY NOTES TO THE RESOLUTIONS PROPOSED AT THE ANNUAL GENERAL MEETING

The resolutions to be proposed at the AGM of the Company to be held on 18 June 2024 at 11.00am are set out in this Notice of AGM. The following notes provide an explanation to the resolutions being put to shareholders.

Ordinary Resolutions

Resolutions 1 to 7 are proposed as ordinary resolutions. Assuming that a quorum is present, an ordinary resolution is passed on a show of hands if it is approved by a simple majority (more than 50%) of the votes cast by shareholders present (in person or by proxy) at the meeting and entitled to vote. On a poll, an ordinary resolution is passed if it is approved by holders representing a simple majority of the total voting rights of shareholders present (in person or by proxy) who (being entitled to vote) vote on the resolution.

Resolution 1 - 2: Re-election of directors

Under the Company’s Articles of Association there are three classes of board members (Class I, Class II and Class III) with each class having a specified term of office. The Company’s Articles of Association require the Class III directors to retire from office this year. Adam George currently serves as a Class III director. Adam George is retiring and (being eligible) is standing for re-election as a Class III director at the AGM. Martin Mellish currently serves as a Class III director. Martin Mellish is retiring and (being eligible) is standing for re-election as a Class III director at the AGM. Biographical information for each director standing for re-election is included on page 9 of this Notice.

THE BOARD RECOMMENDS A VOTE FOR THE RE-ELECTION OF EACH OF ADAM GEORGE AND MARTIN MELLISH TO THE BOARD OF DIRECTORS.

Resolution 3: Re-appointment of auditors

The Act requires that auditors be appointed at each general meeting, at which accounts are laid, to hold office until the next AGM. The appointment of Ernst & Young LLP as auditors of the Company terminates at the conclusion of the AGM. They have indicated their willingness to stand for reappointment as auditors of the Company until the conclusion of the AGM in 2025.

The Audit Committee has assessed the effectiveness, independence and objectivity of the auditors, Ernst & Young LLP, and concluded that the auditors were in all respects effective.

THE BOARD RECOMMENDS A VOTE FOR THE RE-APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS.

Resolution 4: Authorising and fixing the remuneration of the auditors

This resolution gives authority to the directors to determine the auditors’ remuneration.

It is normal practice for shareholders to resolve at the AGM that the directors shall decide on the level of remuneration of the auditors for the audit work to be carried out by them in the next financial year. The amount of the remuneration paid to the auditors for the next financial year will be disclosed in the next audited accounts of the Company.

THE BOARD RECOMMENDS A VOTE FOR THE AUTHORISATION OF THE DIRECTORS TO DETERMINE THE AUDITORS’ REMUNERATION.

Resolution 5: Laying of accounts

The directors are required to present to shareholders at the AGM, the annual accounts of the Company for the year ended 31 December 2023, the Strategic Report, the Directors’ Report and the Auditors’ Report on the accounts.

THE BOARD RECOMMENDS A VOTE FOR THE RESOLUTION TO RECEIVE THE ANNUAL ACCOUNTS OF THE COMPANY FOR THE YEAR ENDED 31 DECEMBER 2023, THE STRATEGIC REPORT, THE DIRECTORS’ REPORT AND THE AUDITORS’ REPORT ON THE ACCOUNTS.

Resolution 6: Directors’ Remuneration Report

Shareholders are invited to cast their vote on the Directors’ Remuneration Report, in accordance with Section 439 of the Act. The Directors’ Remuneration Report is set out on pages 17 to 26 of the Company’s annual accounts and reports for the year ended 31 December 2023. The vote is advisory in nature and therefore no entitlement to remuneration is conditional on the passing of this resolution.

THE BOARD RECOMMENDS A VOTE FOR THE RESOLUTION TO RECEIVE AND APPROVE THE DIRECTORS’ REMUNERATION REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023.

Background to Resolution 7 and Special Resolution 8

As a matter of U.K. company law, directors of a company incorporated in England must have authority from shareholders to allot or grant rights to subscribe for, or to convert any security into, the company’s shares. In addition, when an allotment of shares is for cash, the company must first offer those shares on the same terms to existing shareholders of the company on a pro-rata basis (commonly referred to as statutory pre-emption rights) unless these statutory pre-emption rights are dis-applied, by approval of the shareholders.

 

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NOTICE OF 2024 ANNUAL GENERAL MEETING

 

Resolutions 7 and 8, which we refer to as our “Share Issuance Proposals,” ask our shareholders for authority for the directors to allot shares or grant rights over shares up to an aggregate nominal amount of £20,000,000 and the power for the directors to allot shares or grant rights over shares for cash up to an aggregate nominal amount of £20,000,000 on a non-preemptive basis. This authority and power would expire at the conclusion of our 2025 AGM.

Many of our peer companies are listed and incorporated in the United States, and are thus not subject to similar share issuance restrictions. We are asking you to approve our Share Issuance Proposals to allow us to continue to execute on our business and growth strategy in a timely and competitive manner.

Should our shareholders not approve resolutions 7 and 8, whilst we appreciate that we would still have the ability to seek shareholder approval in connection with a specific issuance of shares on a case-by-case basis by convening general meetings from time to time, we do not believe that such an approach is a workable alternative to obtaining approval of resolutions 7 and 8 at the AGM as we propose. The uncertainty as to whether we could obtain shareholder approval for a specific issuance, as well as the delays we would experience in seeking and obtaining such approval, could be harmful to the terms of such a share issuance. In addition, the case-by-case approval approach ignores market windows and other deal timing and competitive realities.

Specifically, the requirement to first offer shares, that we propose to issue for cash, to all of our existing shareholders in time-consuming pro-rata rights offerings would considerably reduce the speed at which we could complete capital-raising activities undertaken in furtherance of our growth strategy, would increase our costs, might otherwise make it difficult or impossible for us to complete such transactions, and could put us at a distinct competitive disadvantage relative to our peer companies.

Access to capital and the ability to raise equity capital at short notice have been important factors that have contributed to our ability to execute our long-term growth strategy. In practice, offering shares to existing shareholders in accordance with U.K. statutory pre-emption rights can be time-consuming, so U.K. market practice for listed companies is to annually seek a shareholder resolution waiving or dis-applying pre-emption rights over new share issuances for cash, up to an agreed limit. We fully appreciate that our proposals are in excess of the investment advisory guidance in this regard and for this reason, our proposals may attract a negative voting recommendation from certain proxy advisory firms. However, we have an established track record since our IPO in October 2017 of securing annual shareholder support for a resolution dis-applying pre-emption rights over amounts of share capital in excess of the investment advisory guidance. Using these authorities, we have responsibly raised capital in order to execute our business plan.

We believe the request for authorisation and disapplication of pre-emption rights sought will provide us with the continued flexibility to raise equity capital that we believe we may require at this stage of development of the Company. This recognises the fact that as a development-stage business, we have needed access to equity capital to ensure that we can maintain the business appropriately capitalised to expedite our development programs. We have publicly stated that we believe our existing cash resources will be sufficient to fund the Company into 2025. We believe it is in the interests of all shareholders to ensure that we retain the ability to raise equity capital on reasonably short notice if advisable. We propose to seek an authority (to expire at the 2025 AGM) to allot shares or grant rights over shares and under this authority to seek the power to allot shares or grant rights over shares for cash on a non-preemptive basis over a maximum of 500,000,000 ordinary shares.

Where passed, in addition to these resolutions giving the Company the necessary flexibility to raise equity capital, they will also give authority to allot shares or grant rights to subscribe for shares under or in connection with any existing, amended or new share option schemes or long term incentive plans as the directors may approve without offering them first to existing shareholders in proportion to their current holdings. Importantly, this will allow the Company to maintain share option schemes with sufficient share reserves to appropriately compensate, motivate and retain our employees, directors and consultants, thereby aligning their interests with those of our shareholders.

Many of the companies with which we compete for talent are listed and incorporated in the United States and are not subject to similar restrictions on the authorisation of shares and disapplication of pre-emption rights related to shares. In this respect we believe the approval of Resolutions 7 and 8 is critical to enable us to continue to execute on our business strategy by attracting and retaining qualified employees, directors and consultants in a highly competitive market for talent.

The Share Issuance Proposals are consistent with U.S. capital markets practice and U.S. governance standards, and, if approved, will keep us on an equal footing with our peer companies which are incorporated and listed in the United States. We believe that the Share Issuance Proposals are appropriate to the needs of the Company and in the best interests of shareholders. We are therefore asking you to approve the Share Issuance Proposals to allow us to continue to execute our business and growth strategy in a timely and competitive manner.

Summary

The Share Issuance Proposals, if approved, will allow our Board of Directors continued flexibility to issue shares subject to other requirements of Nasdaq Stock Market and the Securities and Exchange Commission. The Share Issuance Proposals, as proposed:

 

   

will not exempt us from any Nasdaq corporate governance or other requirements, including those limiting the issuance of shares;

 

   

will keep us on an equal footing with our peer companies who are incorporated and listed in the United States; and

 

   

are fully consistent with U.S. capital markets practice and governance standards.

 

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NOTICE OF 2024 ANNUAL GENERAL MEETING

 

Resolution 7: Authority to allot, or grant rights to subscribe for, shares

The directors may only allot shares or grant rights over shares if authorised to do so by shareholders.

Under this resolution the Board is seeking the authority to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £20,000,000 such authority, unless previously revoked or varied by the Company, to expire at the conclusion of the AGM of the Company to be held in 2025.

THE BOARD RECOMMENDS YOU VOTE FOR THE RESOLUTION SO AUTHORISING THE DIRECTORS.

Special Resolution

Resolution 8 is proposed as a special resolution. A special resolution requires the affirmative vote of not less than 75% of the votes cast by shareholders present (in person or by proxy) at the meeting and entitled to vote. On a poll, a special resolution is passed if it is approved by holders representing at least 75% of the votes cast (in person or by proxy) at the meeting who (being entitled to vote) vote on the resolution.

Resolution 8: Disapplication of pre-emption rights

Please consider our section above entitled Background to Resolution 7 and Special Resolution 8.

As a U.K. company, the Company’s shareholders are entitled, under Section 561 of the Act to pre-emption rights, whereby, in the event that the Company wishes to allot and issue new shares for cash or issue shares pursuant to any rights to subscribe for shares (whether pursuant to share option rights granted to employees or otherwise) those securities must first be offered to existing shareholders in proportion to the number of ordinary shares they each hold before they can be offered to new shareholders.

As set out above, in certain circumstances, it may be in the best interests of the Company to allot shares (or to grant rights over shares) for cash without first offering them proportionately to existing shareholders. This cannot be done under the Act unless the shareholders have first waived their pre-emption rights.

Therefore this resolution, which will be proposed as a special resolution subject to the passing of resolution 7, seeks the empowerment of the directors to allot equity securities under the authority given to them by resolution 7 above without offering them first to existing shareholders in proportion to their current holdings up to an aggregate nominal amount of £20,000,000.

THE BOARD RECOMMENDS YOU VOTE FOR THE RESOLUTION SO EMPOWERING THE DIRECTORS.

 

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NOTICE OF 2024 ANNUAL GENERAL MEETING

 

Appendix A: Directors’ Biography

Adam George (Director, appointed 2018)

Adam George has served as a member of our board of directors since April 2018. Mr. George served as GW Pharmaceutical’s U.K. Managing Director and Company Secretary from March 2017 to December 2020, Chief Financial Officer from 2012 to March 2017, and Financial Controller from 2007 to 2012. GW Pharmaceuticals is a biopharmaceutical company focused on discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. In addition, Mr. George has served as chairman of the board of directors and chief executive officer of Psi Pharmaceuticals Ltd since December 2021 and as a member of the board of directors of Beckley Psytech Ltd since June 2021. Further, Mr. George also serves as a director of PsiClone Ltd, Neurone Ltd, and Kanna Health Ltd, private pharmaceutical development companies. Before joining GW Pharmaceuticals, Mr. George held several senior finance roles within both public and private companies. Mr. George holds a BSc. in Biology from Bristol University and is a Chartered Accountant. He also serves as Chairman of NuCana’s Audit Committee.

Based on his significant experience in the biopharmaceutical industry in positions including chief executive officer, chief operating officer and executive director the Corporate Nominating and Governance Committee concluded that Mr. George is qualified to serve on our Board of Directors.

THE BOARD RECOMMENDS A VOTE FOR THE RE-ELECTION OF ADAM GEORGE TO THE BOARD OF DIRECTORS.

Martin Mellish (Director, appointed 2009)

Martin Mellish has served as a member of our board of directors since December 2009. Mr. Mellish also serves as a non-executive director and Chairman of the Audit Committee of: Spectral AI (NASDAQ: MDAI; formerly London AIM: SMD) a company developing a medical Artificial Intelligence technology for the evaluation of acute burn and chronic diabetic wounds; and of Levitronix Technologies Inc., a technology company, handling high-purity fluids for the semiconductor and life science industries. Further, Mr. Mellish also serves as a director of Kensington Green Management Ltd., Alturki Holding, and Saudi Readymix Concrete Company. Mr. Mellish serves as founding director and Chairman of Aspen Advisory Services Ltd., a London-based private office responsible for the administration of investments in North America, Europe and Asia since 1994. Mr. Mellish holds an M.Sc. from the Master of Health Care Delivery Science program at Dartmouth’s Geisel School of Medicine and Tuck School of Business; an SM (Management) from the Massachusetts Institute of Technology and an M.Sc. (Accounting) from Northeastern University. He also serves as a member of NuCana’s Audit Committee.

Based on his significant experience in accounting, finance and in the life sciences sector, the Corporate Nominating and Governance Committee concluded that Mr. Mellish is qualified to serve on our Board of Directors.

THE BOARD RECOMMENDS A VOTE FOR THE RE-ELECTION OF MARTIN MELLISH TO THE BOARD OF DIRECTORS.

 

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Lochside House,

3 Lochside Way,

Edinburgh,

EH12 9DT,

U.K.

T: +44 (0)131 357 1111

E: info@nucana.com

www.nucana.com

EX-99.2

Exhibit 99.2

 

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Annual Report 2023 for the year ended 31 December 2023


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Directors    Registered Office
Hugh Griffith    77-78 Cannon Street
Andrew Kay    London
Bali Muralidhar    EC4N 6AF
Martin Mellish    U.K.
Adam George   
Cyrille Leperlier    Global Headquarters
Elliott Levy    Lochside House
   3 Lochside Way
Secretary    Edinburgh
Martin Quinn    EH12 9DT
   U.K.
Auditors    E: info@nucana.com
Ernst & Young LLP    www.nucana.com
144 Morrison Street   
Edinburgh   
EH3 8EX    Registered No. 03308778
U.K.   


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Contents   
01     Strategic report      2  
02    Directors’ report      14  
03    Directors’ remuneration report      17  
04    Statement of directors’ responsibilities      27  
05    Independent auditor’s report to the members of NuCana plc      29  
06    Financial statements      37  
07    Notes to the financial statements      44  
08    Advisers      68  

 

1


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introduction

NuCana was incorporated under the laws of England and Wales on 28 January 1997 under the name Biomed (UK) Limited and commenced operations in 2008. On 28 April 2008, we changed our name to NuCana BioMed Limited. On 29 August 2017, we re-registered as a public limited company and changed our name to NuCana plc. On 2 October 2017, we completed our initial public offering of American Depositary Shares, or ADSs, on the Nasdaq Global Select Market. On 9 November 2023 we transferred our listing to The Nasdaq Capital Market. Our ADSs are traded under the symbol “NCNA”. NuCana plc on behalf of itself and its subsidiaries, NuCana, Inc., NuCana Limited (incorporated in Ireland) and NuCana Biomed Trustee Company Limited (which may be referred to as “the Group”, “the Company”, “we”, “us” or “our”), is required to produce a strategic report complying with the requirements of the Companies Act 2006.

 

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overview    strategic report/01

 

We are a clinical-stage biopharmaceutical company focused on significantly improving treatment outcomes for patients with cancer by applying our ProTide technology to transform some of the most widely prescribed chemotherapy agents, nucleoside analogues, into more effective and safer medicines. While these conventional agents are central to the treatment of many solid tumours and haematological malignancies, their efficacy can be limited by: rapid breakdown, which can lead to the generation of toxic by-products; poor uptake by cell membrane transporters; inefficient metabolism to the active anti-cancer metabolite; and poor pharmacokinetic, or PK, properties which often require challenging administration schedules. Utilising our proprietary technology, we are developing new medicines called ProTides, designed to overcome all these key limitations, resulting in much higher concentrations of the active anti-cancer metabolites in cancer cells and avoiding the off-target toxicity associated with conventional chemotherapy.

NUC-3373 is a new chemical entity derived from the nucleoside analogue 5-fluorouracil, a widely used chemotherapy agent, which we believe has the potential to replace 5-FU as the standard of care in the treatment of a wide range of cancers. 5-FU is one of the world’s most widely prescribed anti-cancer agents and is on the World Health Organisation’s List of Essential Medicines. NUC-3373 has been evaluated in a Phase 1 clinical study for patients with advanced solid tumours. NUC-3373 is currently being evaluated in three ongoing clinical studies: a Phase 1b/2 clinical study, in combination with other agents, for patients with metastatic colorectal cancer; a randomised Phase 2 clinical study of NUC-3373, in combination with other agents, for the second-line treatment of patients with advanced colorectal cancer; and a Phase 1b/2 modular clinical study of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer.

NUC-7738 is a ProTide transformation of 3’-deoxyadenosine, or 3’-dA, a novel anti-cancer nucleoside analogue, that has shown potent anti-cancer activity in preclinical studies but due to rapid breakdown has not been successfully developed or approved as an anti-cancer agent. NUC-7738 is in the Phase 2 part of a Phase 1/2 clinical study for patients with advanced solid tumours which is evaluating NUC-7738 as a monotherapy and in combination with pembrolizumab.

The treatment of cancer can be divided into three major categories: surgery, radiotherapy and therapeutics. Therapeutics include chemotherapy, immunotherapy, cell-based therapies, oncolytic viruses and targeted and hormonal agents. The backbone of treatment for patients with cancer consists of chemotherapeutics, which are expected to achieve global revenues of approximately $97.9 billion by 2030. Despite significant progress having been made in the development of new therapeutics, most patients continue to receive chemotherapy either in combination with other treatments or as single agents at some point in their treatment pathway. Thus, we believe that more effective and safer chemotherapeutic agents will have an important role to play in the treatment of patients with cancer for the foreseeable future. We are transforming an important class of chemotherapeutic agents, nucleoside analogues, by applying a well-validated medicinal chemistry approach to overcome their limitations.

Through harnessing the power of phosphoramidate chemistry, we convert nucleoside analogues into activated nucleotide analogues with the addition of a phosphate group, which is protected by specific combinations of aryl, ester and amino acid groupings. By adding and protecting this phosphate group, we design our ProTides to avoid or overcome the limitations associated with breakdown, uptake, activation and administration of nucleoside analogues. In the antiviral

field, this phosphoramidate chemistry approach has resulted in the most successful drug launches in the history of medicine, Gilead’s sofosbuvir, or Sovaldi® which is also a key component of Harvoni®, Vosevi® and Epclusa®; and tenofovir alafenamide fumarate, or TAF, which is a key component of Genvoya®, Descovy® and Odefsey®. In addition, phosphoramidate chemistry is used in Gilead’s remdesivir, or Veklury®, for the treatment of patients with COVID-19.

In preclinical studies, NUC-3373 overcame the key limitations associated with 5-FU, generating higher intracellular levels of the active anti-cancer metabolite than 5-FU while not generating toxic metabolites commonly associated with 5-FU’s side effects. NUC-3373 has been evaluated in a Phase 1 clinical study, also known as the NuTide:301 study, in patients with advanced solid tumours. Enrolment in this study has been completed with 59 patients receiving NUC-3373. The maximum tolerated dose and schedule for NUC-3373 monotherapy was established as 2500 mg/m² weekly. NUC-3373 generated high levels of the active anti-cancer metabolite inside the patients’ cells and demonstrated a favourable pharmacokinetic and safety profile. Evidence of durable anti-cancer activity was observed, with at least 10 patients remaining on treatment for more than four months and three of these patients achieving prolonged stable disease with progression-free survival, or PFS, lasting more than nine months. The results of this study suggest that NUC-3373 has the potential to overcome the limitations associated with 5-FU and may be capable of achieving anti-cancer activity even in patients who have progressed on prior treatment with a fluoropyrimidine.

NUC-3373 is being evaluated in an ongoing Phase 1b/2 study, known as the NuTide:302 study, in patients with metastatic colorectal cancer in which NUC-3373 is being combined with agents typically used with 5-FU, including leucovorin, irinotecan, oxaliplatin and bevacizumab. In October 2019, we presented interim data from this study at the AACR NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics. These interim data supported the previously reported favourable pharmacokinetic profile of NUC-3373. In April 2021, we presented further interim data from this study at the virtual AACR Annual Meeting. These interim data highlighted 38 patients who received NUC-3373 either as monotherapy or in combination with leucovorin. Eleven patient case studies showed NUC-3373’s ability to stabilise disease in a heavily pre-treated population of patients with advanced colorectal cancer and achieve prolonged durations of PFS. Several patients achieved periods of PFS that were longer than those achieved on previous regimens and tumour volume reductions have been observed, including in a patient known to be refractory to all prior fluoropyrimidine-containing regimens. NUC-3373 was also shown to have a favourable safety profile with no hand-foot syndrome observed, which is associated with the toxic metabolite, FBAL, and no neutropenia or Grade 3 or 4 mucositis or diarrhoea adverse events, which are associated with the toxic metabolite, FUTP. In September 2022, we presented data from this study at the virtual ESMO Annual Meeting, or ESMO. These data demonstrated promising anti-tumour activity and a favourable safety and pharmacokinetic profile in combination with leucovorin and either irinotecan, or NUFIRI, or oxaliplatin, or NUFOX, in heavily pre-treated patients with metastatic colorectal cancer. The NuTide:302 study is currently in Part 3, and is evaluating NUFIRI and NUFOX in combination with bevacizumab for the second-line treatment of patients with advanced colorectal cancer. In October 2023, we presented data from this clinical study at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. In this study, NUC-3373 demonstrated a favourable safety profile in both the NUFIRI and bevacizumab, or NUFIRI + bev, and NUFOX and bevacizumab, NUFOX + bev treatment

 

 

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regimens. Additionally, both regimens demonstrated encouraging signs of efficacy, including tumour volume reductions in patients who were refractory to or had progressed on prior fluoropyrimidine treatment. Several patients achieved a longer PFS, on NUFIRI + bev and NUFOX + bev as compared to the PFS achieved in their first-line treatment with 5-FU-based therapy. We expect to report additional data from Part 3 of the NuTide:302 study in 2024.

A randomised Phase 2 study, known as the NuTide:323 study, comparing NUFIRI + bev with 5-FU in combination with irinotecan, leucovorin, and bevacizumab, or FOLFIRI + bev, for the second-line treatment of patients with advanced colorectal cancer was initiated in 2022. In October 2023, we presented data from the NuTide:323 study at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. On 20 March 2024, we announced that this 171-patient study was fully enrolled, and no new safety signals were observed from the aggregated safety data from the first 40 patients enrolled. We expect to report additional data from the NuTide:323 study in 2024.

The anti-cancer mechanism of action of NUC-3373 has been established in preclinical studies, which we believe further supports the biological advantages of NUC-3373 over 5-FU. We believe NUC-3373 has significant commercial potential as approximately 500,000 patients in North America are estimated to receive intravenous 5-FU each year. Replacing 5-FU with NUC-3373 in the treatment of patients with colorectal cancer offers a substantial commercial opportunity. Colorectal cancer is the third most common cancer type globally, representing 10% of the overall annual global cancer incidence. In the United States alone, more than 150,000 new cases of colorectal cancer are diagnosed each year. It is expected that the global colorectal cancer burden will increase by 60% from approximately 1.9 million cases in 2020 to approximately 3.1 million cases in 2040. As colorectal cancer is often diagnosed late in most patients when it is locally advanced or metastatic, and only 14% of patients with stage 4 disease survive for five years, there is a high unmet need for more effective treatment options.

In order to capitalise on the widespread usage of 5-FU across other cancer indications to colorectal cancer and the significant global commercial opportunity for a more effective and safer fluoropyrimidine, we are conducting a Phase 1/2 modular study, known as the NuTide:303 study. The NuTide:303 study is evaluating NUC-3373 in combination with the PD-1 inhibitor pembrolizumab in patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer. We expect to report initial data from the NuTide:303 study in 2024.

In preclinical studies, NUC-7738, generated significantly higher levels of the key anti-cancer metabolite, 3’deoxyadenosine triphosphate, or 3’-dATP, inside cancer cells compared to the parent nucleoside analog, 3’-dA, causing increased cancer cell injury. The cytotoxic effect of NUC-7738 is largely attributed to 3’-dATP, which interferes with RNA polyadenylation, causing changes in the expression of genes involved in various cellular processes, leading to cancer cell death.

NUC-7738, is being evaluated in an ongoing Phase 1/2 clinical study, known as the NuTide:701 study, in patients with advanced solid tumours. In September 2021, we presented interim data from the first 29 patients treated in this study at ESMO. These interim data indicated a favourable pharmacokinetic and safety profile for NUC-7738. Additionally, three case studies highlighted patients with encouraging tumour reductions who remained on NUC-7738 treatment for extended periods of time. In September 2022, we presented data from the Phase 1 dose-finding part of the NuTide:701 study in 38 patients at ESMO. NUC-7738 had

a favourable safety profile with low rates of treatment-related AEs, or TRAEs, very few Grade 3 TRAEs, and no patients experiencing Grade 4 or 5 TRAEs. The maximum tolerated dose was established at 1350mg/m². Encouraging signals of anti-tumour activity across a range of tumour types were observed with numerous patients staying on treatment for extended periods, including one patient with metastatic melanoma who became eligible for complete surgical resection following eleven months of treatment with NUC-7738. In April 2023, we presented data at the AACR Annual Meeting indicating that NUC-7738 reduces soluble PD-L1 and exosomal PD-L1 in melanoma cell lines and in patients. Soluble and exosomal expression of PD-L1 have been implicated in resistance to PD-L1 and PD-1 inhibitors and these data indicate that NUC-7738 has the potential to act as an immune sensitiser and as an effective combination partner for PD-L1 pathway inhibitors. In October 2023, we presented interim data from the Phase 2 part of the NuTide:701 study at the AACR-NCI EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. NUC-7738 was well tolerated both as a monotherapy and in combination with pembrolizumab. Encouraging signs of efficacy, including tumour volume reductions and prolonged time on treatment were observed in both the monotherapy and combination cohorts. In the combination cohort of melanoma patients, who had all been previously treated with anti-PD-1 based therapy, numerous patients achieved tumour volume reductions and prolonged time on treatment. One patient who was refractory to the anti-PD-1 plus anti-CTLA 4 therapy combination of nivolumab plus ipilimumab achieved a 50% reduction in tumour volume on NUC-7738 plus pembrolizumab. Seven of the eleven patients recruited remained on treatment at the time of the data cut-off for the presentation. Patient tumour biopsy data showed that, following treatment with NUC-7738 plus pembrolizumab, expression of PD-1 was reduced and CD8+ T-cells increased, indicating that NUC-7738 may have the ability to potentiate immunotherapy. This finding provides a rationale as to why NUC-7738 plus pembrolizumab may be effective in patients who have progressed on prior immunotherapy. We expect to report additional data from the NuTide:701 study in 2024.

Acelarin is a ProTide transformation of the nucleoside analogue gemcitabine. In clinical studies, Acelarin was well tolerated and showed anti-cancer activity in patients who were refractory to, or had progressed on, prior gemcitabine treatment. Disease control, as well as tumour shrinkages, including partial and complete responses, were observed in challenging indications, including ovarian and biliary tract cancers. In March 2022, we announced the discontinuation of the Phase 3 clinical study, also known as the NuTide:121 study, investigating Acelarin in combination with cisplatin versus the standard of care, gemcitabine plus cisplatin, in patients with previously untreated locally advanced or metastatic biliary tract cancer. This decision was made following a pre-planned futility analysis by the study’s Independent Data Monitoring Committee. Although a higher objective response rate, as assessed by Blinded Independent Central Review, was observed in the Acelarin plus cisplatin arm, this did not translate into an overall survival benefit. We are assessing future development options for Acelarin in biliary tract cancer which may explore lower doses of Acelarin, alternative combination partners or specific sub-sets of biliary tract cancer patients. Indications other than biliary tract cancer are also being assessed as future development options for Acelarin.

Our proprietary ProTide technology was invented in the Cardiff University laboratory of our late Chief Scientific Officer, Professor Christopher McGuigan, who conceived of and filed the original composition of matter patents for our initial ProTides. The unique feature of his discovery was the specific combination of aryl, ester and amino acid groupings that protect the activated, or phosphorylated,

 

 

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nucleoside analogue. This phosphoramidate chemistry approach is the key to the ProTide technology. Every ProTide grouping is distinct, and Professor McGuigan and his team synthesised and tested thousands of compounds in order to identify the optimal ProTide grouping for each underlying nucleoside analogue.

We have licensed what we believe to be the foundational patent estate for the application of phosphoramidate chemistry in oncology. We have granted patents in key markets, including the United States, Europe and Japan, protecting the composition of matter of NUC-3373, NUC-7738, Acelarin and other of our product candidates. Professor McGuigan’s work preceded and helped lead to the development of several U.S. Food and Drug Administration (FDA)-approved anti-viral drugs containing ProTides, including: sofosbuvir, or Sovaldi®, which is also a key component of Harvoni®,

Vosevi® and Epclusa®; and tenofovir alafenamide fumarate, or TAF, which is a key component of Genvoya®, Descovy® and Odefsey®; and remdesivir, or Veklury®.

We are led by Hugh Griffith, our founder and Chief Executive Officer, who brings over 30 years of experience in the biopharmaceutical industry, including at Abbott Laboratories (now AbbVie Inc.) and Parke-Davis Warner Lambert (now Pfizer Inc.). Before founding NuCana, he led the operations of Bioenvision, Inc. from startup through its acquisition by Genzyme Corporation. While at Bioenvision, he was instrumental in developing and commercialising clofarabine, a nucleoside analogue for the treatment of children with acute leukaemia. He also co-founded EdixoMed and 30 Technology who sold their wound care division to Convatec Group in 2023.

 

 

our strategy

“Our goal is to transform standards of care and improve survival for patients across a wide range of cancer indications.”

Our strategy includes the following key components:

 

   

Rapidly develop NUC-3373 to replace 5-FU as the standard of care for the treatment of patients with colorectal cancer.

We reported additional data from our Phase lb/2 study, known as the NuTide:302 study, in patients with advanced colorectal cancer in October 2023 at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. In this study, NUC-3373 is being assessed for safety and a recommended Phase 2 dose when combined with many of the agents typically combined with 5-FU, including leucovorin, irinotecan, oxaliplatin and bevacizumab.

We are also conducting a randomised Phase 2 clinical study of NUC-3373, known as the NuTide:323 study, in combination with leucovorin, irinotecan and bevacizumab (NUFIRI + bev) versus the standard of care FOLFIRI + bev (5-FU, leucovorin, irinotecan and bevacizumab) in patients with second-line advanced colorectal cancer. In October 2023 we reported initial pooled safety data from the NuTide:323 study at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. On 20 March 2024, we announced that this 171-patient study was fully enrolled.

We plan to report additional data from both our Phase lb/2 study, NuTide:302, and our randomised Phase 2 study, NuTide:323, in 2024.

 

   

Identify additional indications for development of NUC-3373.

In order to capitalise on the widespread usage of 5-FU and the significant global commercial opportunity for a more effective and safer fluoropyrimidine, we have initiated a Phase 1b/2 modular study, known as the NuTide:303 study, of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer.

We plan to report data from our Phase 1b/2 study, NuTide:303, in 2024.

 

   

Rapidly develop NUC-7738 as a treatment for patients with solid tumours.

We completed enrolment in the Phase 1 dose-finding part of the ongoing Phase 1/2 study, known as the NuTide:701 study, of NUC-7738 in patients with advanced solid tumours. NUC-7738 is currently in the Phase 2 part of the NuTide:701 study, which is evaluating NUC-7738 as a monotherapy and in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours. In October 2023, we presented interim data from the Phase 2 part of the NuTide:701 study at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023.

We plan to report additional data from our Phase 1b/2 study, NuTide:701, in 2024.

 

   

Leverage our proprietary ProTide technology platform to develop additional product candidates.

We are pursuing the transformation of both well-established and widely used nucleoside analogues as well as novel nucleoside analogues, which we believe have the potential to address additional areas of unmet medical need in oncology.

 

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Continue to protect and strengthen our intellectual property position.

We own or have exclusive rights to the core technologies underlying our ProTide technology platform. We have been granted patents in key markets, including the United States, Europe and Japan, protecting the composition of matter of NUC-3373, NUC-7738, Acelarin and other product candidates. We intend to further expand and enhance our intellectual property position. We are actively evaluating new intellectual property opportunities as they arise, with the intention of further expanding our intellectual property position and defending our patents when necessary.

 

   

Build a focused commercial organisation.

We have worldwide rights to all product candidates that we are developing. We believe that healthcare professionals who treat the majority of patients with the cancers we are initially targeting with our ProTides can be addressed by a focused sales and marketing team. We currently plan to commercialise any product candidates for which we receive regulatory marketing approval using a specialised sales force, either independently or in partnership with a commercialisation partner, in the United States and Europe.

our pipeline

We take a scientifically driven approach to designing ProTides, which we believe have the potential to result in highly efficacious cancer therapies with improved tolerability. Our pipeline of product candidates in clinical development and their current development stage is summarised below.

 

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NuCana is currently developing a portfolio of new medicines to address a broad range of cancers, but we do not have any approved products. As further described in “Our Strategy”, our current intention is to build a sales and marketing capability in the United States and Europe to commercialise our ProTides. We may also consider partnerships, co-promotion agreements or other commercial arrangements, in certain geographic areas or otherwise, to most effectively address our market opportunities.

review of the business

Since our inception, we have incurred significant net losses and negative cash flows from operations. To date, we have financed our operations primarily through placements of equity securities, an initial public offering, a follow-on public offering and research and development tax credits.

DEVELOPMENT AND PERFORMANCE DURING THE PERIOD

Research and Development Expenses

Research and development expenses were £25.1 million for the year ended 31 December 2023 as compared to £36.4 million for the year ended 31 December 2022, a decrease of £11.3 million. Clinical study expenses decreased by £3.2 million in 2023 compared with 2022 largely

 

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due to the discontinuation of the Phase 3 clinical study of Acelarin in March 2022, partially offset by increased expenditure on NuTide:323. Manufacturing costs decreased by £1.9 million in 2023 compared with 2022 primarily due to phasing of NUC-3373 manufacturing activity. Patent costs decreased by £5.0 million in 2023 compared with 2022 primarily due to 2022 including the recognition of total provisions of £4.1 million, as well as there was less patent defense activity in 2023. Other research and development costs decreased in 2023 by £1.2 million principally due to lower personnel costs and share-based payment expenses.

The following table gives a breakdown of the research and development costs incurred by product for the years ended 31 December 2023 and 2022:

 

     Year ended 31 December  
     2023      2022  
     (in thousands)  

NUC-3373

   £ 17,754      £ 12,045  

NUC-7738

     3,603        3,711  

Acelarin

     2,204        19,315  

Other

     1,501        1,355  
  

 

 

    

 

 

 
   £ 25,062      £ 36,426  
  

 

 

    

 

 

 

Administrative Expenses

Administrative expenses were £6.1 million for the year ended 31 December 2023 as compared to £7.3 million for the year ended 31 December 2022, a decrease of £1.2 million. The decrease was primarily related to lower share-based payment expenses, professional fees and insurance costs.

Impairment of Intangible Assets

We regularly review our patent portfolio and during 2023 further development associated with a limited number of non-core patents or patent applications, relating mainly to preclinical drug candidates, was discontinued. Management concluded that this was an indication of impairment and an impairment charge of £0.5 million has been recognised, representing the full aggregate carrying value of those patents as of 31 December 2023. This compared to an impairment charge of £0.3 million recognised during the year ended 31 December 2022.

Net Foreign Exchange (Losses) Gains

For the year ended 31 December 2023, we reported a net foreign exchange loss of £1.2 million as compared to a net foreign exchange gain of £4.9 million for the year ended 31 December 2022. In 2023, the loss primarily arose from cash balances held in U.S. dollars and the U.S. dollar depreciating relative to the U.K. pound sterling. Conversely in 2022, the gain arose from cash balances held in U.S dollars and the U.S. dollar appreciating relative to the U.K. pound sterling.

Finance Income

Finance income represents bank interest and was £0.8 million for the year ended 31 December 2023 and £0.7 million for the year ended 31 December 2022. The increase in bank interest resulted from higher rates of interest being earned on cash deposits.

Income Tax Credit

The income tax credit, which is largely comprised of research and development tax credits, amounted to £4.4 million for the year ended 31 December 2023 and £6.4 million for the year ended 31 December 2022. The decrease in the income tax credit was primarily attributable to a decrease in our eligible research and development expenses, a decrease in the tax credit rate and an adjustment relating to prior periods of £0.2 million.

POSITION OF GROUP AT YEAR END

Liquidity and Capital Resources

Overview

Since our inception, we have incurred significant operating losses and negative operating cash flows. We anticipate that we will continue to incur losses for at least the next several years. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity financings, debt financings, research funding, collaborations, contract and grant revenue or other sources.

As of 31 December 2023 and 31 December 2022, we had cash and cash equivalents of £17.2 million and £41.9 million, respectively. We do not currently have any approved products and have never generated any revenue from product sales. To date we have financed our operations primarily through the issuances of our equity securities.

In August 2021, we entered into an “at-the-market” (ATM) sales agreement with Jefferies LLC, or Jefferies, pursuant to which we may sell from time to time, ADSs having an aggregate offering price of up to $100.0 million through Jefferies, acting as our agent. Sales of our ADSs pursuant to this ATM program are subject to certain conditions specified in the sales agreement. Sales under the ATM program are registered on a shelf registration statement on Form F-3 that we filed with the SEC in August 2021, and which permits the offering, issuance and sale by us of up to a maximum aggregate offering price of $400.0 million of our securities, inclusive of our ADSs sold under the ATM program. During the year ended 31 December 2023 we sold and issued 408,015 ADSs, representing 408,015 ordinary shares, under the ATM program, raising gross proceeds of £0.2 million. Subsequent to the year end a further £1.5 million gross proceeds were raised through this ATM program.

 

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Cash Flows

The following table summarises the results of our cash flows for the years ended 31 December 2023 and 2022.

 

     Year ended 31 December  
     2023      2022  
     (in thousands)  

Net cash used in operating activities

   £ (26,439    £ (23,158

Net cash from investing activities

     2,888        120  

Net cash used in financing activities

     (53      (161
  

 

 

    

 

 

 

Net decrease in cash and cash equivalents

   £ (23,604    £ (23,199
  

 

 

    

 

 

 

Operating activities

Net cash used in operating activities was £26.4 million in 2023 as compared to £23.2 million in 2022, a net increase in cash outflows of £3.2 million. Operating loss cash flows were lower by £3.3 million in 2023, primarily reflecting lower research and development costs, partially offset by movement in provisions. Working capital outflows were £1.3 million for the year ended 31 December 2023 as compared to working capital inflows of £3.7 million for the year ended 31 December 2022. In addition, a tax refund of £5.6 million was received in 2023 compared to £7.2 million in 2022.

Investing activities

Net cash from investing activities was £2.9 million in 2023 as compared to £0.1 million in 2022. Repayment of other assets totalled £2.6 million in the year ended 31 December 2023 with no similar repayment in 2022. Interest received in 2023 was £0.8 million compared with £0.6 million in 2022, an increase of £0.2 million.

Financing activities

Net cash used in financing activities was £0.1 million in 2023 as compared to £0.2 million in 2022 reflecting a decrease in the proceeds from the issue of share capital.

main business trends and factors

NUC-3373 is currently being evaluated in three ongoing clinical studies: a Phase 1b/2 study (NuTide:302) in combination with leucovorin, irinotecan or oxaliplatin, and bevacizumab in patients with metastatic colorectal cancer; a randomised Phase 2 study (NuTide:323) in combination with leucovorin, irinotecan, and bevacizumab for the second-line treatment of patients with advanced colorectal cancer; and a Phase 1b/2 modular study (NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer. NUC-7738 is in the Phase 2 part of a Phase 1/2 study in patients with advanced solid tumours which is evaluating NUC-7738 as a monotherapy and in combination with pembrolizumab. We have retained worldwide rights to these lead product candidates as well as our preclinical product candidates, all of which we refer to as ProTides. The key business trends affecting our development and performance during and at the period ended 31 December 2023 are detailed above.

In addition to these internal trends that have impacted our financial results, we may also in the future face competition for our products if they are approved. The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy, hormone therapy, immunotherapy and targeted drug therapy. There are a variety of available drug therapies marketed for cancer, including many which are administered in combination to enhance efficacy. We believe that our product candidates, if approved, will principally face competition from other chemotherapies, immunotherapy and targeted drug therapies. In the field of chemotherapy, our competitors include companies that manufacture off-patent chemotherapies, including 5-FU, as well as companies that have developed new or improved chemotherapies. In addition, our product candidates, if approved, may face competition from cancer therapies developed by other companies using phosphoramidate chemistry, as well as other approved drugs or drugs that may be approved in the future for indications for which we may develop our product candidates.

The availability of reimbursement from government and other third-party payors will also significantly affect the pricing and competitiveness of our products. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Many of the companies against which we may compete have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical studies, obtaining regulatory approvals and marketing approved products than we do.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical study sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs.

 

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As a measurement of liquidity, we review our total liquidity position (including cash and cash equivalents), as well as our operating cash flow. At 31 December 2023, the total liquidity position was £17.2 million (at 31 December 2022: £41.9 million). Net cash used in operating activities was £26.4 million for the year ended 31 December 2023 (year ended 31 December 2022: £23.2 million).

 

   Total liquidity position        Net cash used in operating activities          

 

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principal risks and uncertainties

In common with other pharmaceutical development companies NuCana faces a number of risks and uncertainties. Internal controls are in place to help identify, manage and mitigate these risks. Further details of risk factors considered by NuCana for the year ended 31 December 2023 are included on Form 20-F filed with the SEC on 20 March 2024.

Financial

We have incurred significant operating losses since our inception. We incurred net losses of £27.6 million for the year ended 31 December 2023 and £32.0 million for the year ended 31 December 2022. As of 31 December 2023, we had an accumulated deficit of £207.7 million. Our product candidate, NUC-3373, is currently being evaluated in three ongoing clinical studies: a Phase 1b/2 study (NuTide:302) in combination with other agents, in patients with advanced colorectal cancer; a randomised Phase 2 clinical study of NUC-3373 (NuTide:323), in combination with approved anti-cancer agents including leucovorin, irinotecan, and bevacizumab for the second-line treatment of patients with advanced colorectal cancer; and a Phase 1b/2 clinical study (NuTide:303) in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer. Our product candidate NUC-7738 is currently in the Phase 2 part of a Phase 1/2 clinical study (NuTide:701) for patients with advanced solid tumours which is evaluating NUC-7738 as a monotherapy and in combination with pembrolizumab. It may be several years, if ever, before we have a product candidate ready for commercialisation. To date, we have financed our operations primarily through public and private placements of our equity securities. We expect to continue to incur significant expenses and operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter.

We anticipate that our expenses will increase substantially if and as we conduct larger-scale clinical studies of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialisation expenses related to product sales, marketing, manufacturing and distribution. We may also need to raise additional funds sooner if we choose to pursue additional indications or geographies for our product candidates or otherwise expand more rapidly than we presently anticipate. Furthermore, we will continue to incur costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we fail to obtain additional financing, we may be unable to complete the development and commercialisation of our product candidates or continue our development programmes.

Dependence on Clinical Candidates

We do not currently generate any revenues from sales of any products, and we may never be able to develop or commercialise a marketable product. We have invested substantially all of our efforts and financial resources to date in the development of NUC-3373 and NUC-7738, as well as Acelarin, for which we discontinued the NuTide:121 clinical study in March 2022. Our ability to generate product revenues, which we do not expect will occur for at least the next several years, if ever, will depend heavily on the successful development and eventual commercialisation of these product candidates, if approved, which may never occur. Each of NUC-3373 and NUC-7738 will require additional clinical development, management of clinical, preclinical and manufacturing activities, regulatory approval in multiple jurisdictions, procurement of manufacturing supply, commercialisation, substantial additional investment and significant marketing efforts before we generate any revenues from product sales, if at all. We are not permitted to market or promote any product candidates in the United States, Europe or other countries before we receive regulatory approval from the FDA, the European Medicines Agency (EMA) or comparable foreign regulatory authorities, and we may never receive such regulatory approval for NUC-3373, NUC-7738 or any future product candidate. We have not submitted a New Drug Application, or NDA, to the FDA, a Marketing Authorisation Application, or MAA, to the EMA or comparable applications to other regulatory authorities for any of our product candidates and do not expect to be in a position to do so in the foreseeable future.

Going Concern

The development of pharmaceutical drugs is capital-intensive. We have incurred recurring losses from our operations, have an accumulated deficit totalling £207.7 million and cash flows used in operating activities of £26.4 million as of and for the year ended 31 December 2023. We had cash and cash equivalents of £17.2 million at 31 December 2023. We expect our expenses to increase in the medium to long-term with our ongoing activities, particularly if we conduct larger-scale clinical studies of, and seek marketing approval for, our product candidates.

 

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In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialisation expenses related to product sales, marketing, manufacturing and distribution. Furthermore, we will continue to incur costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. In addition, we have based estimates of our cash runway on assumptions including, but not limited to, our expectations as to our future expenses and costs and our continued eligibility to receive and timing of R&D tax credits in the United Kingdom. There is no assurance that these assumptions will be correct and, as a result, we could use our available capital resources sooner than we currently expect. The timing of R&D tax credits is out with management’s control and any significant delay in receipt of these tax credits would result in the company exhausting its cash balances earlier than forecast within the going concern assessment period. Because of these funding needs and related risks and the current cash balance on hand, there is material uncertainty related to our ability to raise sufficient additional capital within the going concern period, prior to our cash balances being exhausted, which occurs in the going concern assessment period. These events or conditions give rise to a material uncertainty that may cast doubt on the Group and Company’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialisation of any product candidate or be unable to expand our operations or otherwise capitalise on our business opportunities, or cease trading. We may also need to raise additional funds if we choose to pursue additional indications or geographies for development and commercialisation of our product candidates or otherwise expand more rapidly than we presently anticipate.

In light of the foregoing, we have disclosed in the notes to our financial statements that there is material uncertainty related to the ability of us to raise sufficient additional capital within the going concern assessment period, prior to the cash balances being exhausted. The independent auditor’s report to the members of NuCana plc includes an explanatory paragraph stating that we have concluded that a material uncertainty exists about our ability to continue as a going concern. The inclusion of these may negatively impact the trading price of our securities, have an adverse impact on our relationship with third parties with whom we do business, including our customers, vendors and employees, and could make it challenging and difficult for us to raise additional equity or debt financing to the extent needed, all of which could have a material adverse impact on our business, results of operations, financial condition and prospects..

Economic and Political

As a company based in the United Kingdom, our business is subject to risks associated with conducting business internationally. Many of our suppliers and collaborative and clinical trial relationships are located outside of the United Kingdom and United States. Accordingly, our future results or our ability to raise additional capital could be harmed by a variety of factors, including:

 

 

business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires; and

 

 

changes in financial markets or general economic conditions, including the effects of recession or slow economic growth, interest rates, fuel prices, international currency fluctuations, corruption, political instability, acts of war, including the ongoing conflict in Ukraine and any potential spread of the conflict into a wider war, acts of terrorism, and pandemics or other public health crises.

Manufacturing

We do not currently own or operate, nor do we have any plans to establish in the future, any manufacturing facilities. We rely, and expect to continue to rely, on third parties for the manufacture and shipment of our product candidates for preclinical studies and clinical studies, as well as for the commercial manufacture of our drugs if any of our product candidates receive marketing approval. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or drugs or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialisation efforts.

Commercialisation

We currently have no marketing capability or sales force, but we intend to commercialise or participate in the commercialisation of our product candidates for which we receive regulatory approval in major markets, such as the United States and Europe. This may necessitate building a specialised sales force and other commercial capabilities in such markets. To achieve commercial success for any approved product candidate for which we retain sales and marketing responsibilities, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. There are risks involved with both establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any drug launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialisation expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Regulation

Our product candidates and the activities associated with their development and commercialisation, including their design, testing, manufacture, safety, efficacy, recordkeeping, labelling, storage, approval, advertising, promotion, sale, distribution, import and export are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in other countries.

The process of obtaining marketing approvals, both in the United States and in other countries, is expensive and takes several years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will prevent us from commercialising. We have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. We have limited experience in planning and conducting the clinical studies required for marketing approvals, and we expect to rely on third-party CROs to assist us in this process. Obtaining marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process, and in many cases the inspection of manufacturing facilities by the regulatory authorities. Our product candidates may

 

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not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. Regulatory authorities have substantial discretion in the new drug approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical studies or clinical studies. Our product candidates could be delayed in receiving, or fail to receive, marketing approval.

Intellectual Property

If we are unable to obtain and maintain intellectual property protection for our technology and products, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could commercialise technology and products similar or identical to ours, and our ability to successfully commercialise our technology and products may be impaired. In addition, if we infringe the valid patent rights of others, we may be prevented from making, using or selling our products or may be subject to damages or penalties. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner. We may become involved in administrative adversarial proceedings in the United States Patent and Trademark Office (USPTO) or in the patent offices of other countries brought by a third party to attempt to cancel or invalidate our patent rights, which could be expensive, time consuming and cause a loss of patent rights. We may have to file one or more lawsuits in court to prevent a third party from selling a product or using a product in a manner that infringes our patent, which could be expensive, time consuming and unsuccessful, and ultimately result in the loss of our proprietary market. Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could hurt our business. We may not be able to effectively enforce our intellectual property rights throughout the world. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors. We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. Our proprietary information, or that of our suppliers and any future collaborators, may be lost or we may suffer security breaches. Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

We may not have sufficient financial or other resources to adequately conduct litigation or proceedings relating to intellectual property claims. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon, misappropriating or successfully challenging our intellectual property rights.

In 2018, we were granted a European patent from the European Patent Office, or EPO, European Patent 2955190, or EP 190, that covered the composition of matter of a genus of phosphoramidate nucleotide compounds that includes sofosbuvir, sold under the brand name Sovaldi®, a leading drug for the treatment of hepatitis C sold by Gilead Sciences, Inc. Sofosbuvir is also a key component of Harvoni®, Vosevi® and Epclusa®. Later in 2018, Gilead filed an Opposition to EP 190 at the EPO in an attempt to revoke it. In February 2021, the EPO Opposition Division disagreed with Gilead and upheld amended patent claims that cover sofosbuvir. In June 2021, the decision by the EPO Opposition Division to uphold our EP 190 was appealed by Gilead to the EPO Technical Boards of Appeal. We also filed an appeal to the EPO Technical Boards of Appeal against the decision by the EPO Opposition Division to only allow the patent in an amended form. On 24 March 2023, the EPO Technical Board of Appeal issued an oral decision revoking EP 190. This decision is final and has retroactive effect.

Subsequent to the decision of the Opposition Division, but also in February 2021, Gilead Sciences, Inc. and Gilead Sciences Limited filed a lawsuit against us in the Patents Court of the High Court of Justice of England and Wales requesting revocation of the U.K. part of EP 190. In March 2021, we filed a counterclaim against Gilead Sciences, Inc. and Gilead Sciences Limited alleging infringement of EP 190 resulting from acts including the sale of Sovaldi®, as well as its combination products Harvoni®, Vosevi® and Epclusa®, in the United Kingdom. In 2022, we were granted a further European patent from the EPO, EP 3904365, or EP 365, that covered the composition of matter of a smaller genus of phosphoramidate nucleotide compounds that includes sofosbuvir. Gilead Sciences, Inc. and Gilead Sciences Limited subsequently amended their claim to request revocation of the U.K. part of EP 365 and we counterclaimed for infringement. The U.K. Patents Court trial for this case took place between 20 January 2023 and 3 February 2023 and a judgement was handed down by the court on 21 March 2023. In its judgement, the High Court deemed that EP 190 and EP 365 were invalid in the United Kingdom. As a result of this decision, we reached a settlement with Gilead in relation to their legal fees for these legal proceedings in the United Kingdom.

In April 2021, we initiated legal proceedings against Gilead Sciences Ireland UC and Gilead Sciences GmbH in the German Regional Court of Dusseldorf for patent infringement for the sale of Sovaldi as well as its combination products Harvoni®, Vosevi® and Epclusa® in Germany. In July 2022, the German Regional Court of Dusseldorf issued a judgment that Gilead Sciences Ireland UC and Gilead Sciences GmbH had infringed EP 190. Gilead appealed this decision and the Higher Regional Court of Dusseldorf appeal hearing had been scheduled for 17 August 2023. However, as a result of the decision in March 2023 by the EPO Technical Boards of Appeal, we abandoned all proceedings in Germany in May 2023 and, as a result, we reached a settlement with Gilead in relation to the legal fees for these legal proceedings in Germany.

Conduct of Clinical Studies

We rely on, and expect to continue to rely on, third parties to conduct our clinical studies for our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for or commercialise our product candidates, and our business could be substantially harmed. We do not have the ability to independently conduct clinical studies. Nevertheless, we will be responsible for ensuring that each of our clinical studies are conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards.

 

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Employees

We currently have a limited number of employees, and our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. We are a clinical development-stage group, and, as of 31 December 2023, had 28 employees, including four executive officers. We are highly dependent on the research and development, clinical and business development expertise of Hugh Griffith, our founder and Chief Executive Officer, as well as the other principal members of our management team and our collaborators’ scientific and clinical teams. Recruiting and retaining qualified scientific, clinical, manufacturing, finance, sales and marketing personnel will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialisation objectives and seriously harm our ability to successfully implement our business strategy.

environmental matters

We currently outsource our research, development and manufacturing activities.

Our leased offices in the United Kingdom drive the majority of our carbon emissions. The building currently has a current Energy Performance Certificate, with a Building Energy Performance Rating of “A” (between 0 to 15 kgCO2 per m2 per year). This rating is an improvement from the “C” rating indicated in NuCana’s previous annual report for the financial year ended 31 December 2022. The certificate has been produced under the Energy Performance of Buildings (Scotland) Regulations 2008 from data lodged to the Scottish EPC register. The building energy performance rating is a measure of the effect of a building on the environment in terms of carbon dioxide CO2 emission, with ratings ranging between “A+” (net zero carbon) to “G” (very poor). The better the rating, the less impact on the environment. The current rating is based upon an assessor’s survey of the building, using EPCgen, V6.1.e.0.

Our report on greenhouse gas emissions is included in our Directors’ Report on page 16 of this Annual Report.

employees

The number of employees by function and geographic location at 31 December 2023 and 2022 was as follows:

 

     2023      2022  

By Function:

     

Research and development

     22        25  

Management and administrative

     6        6  
  

 

 

    

 

 

 

Total

     28        31  
  

 

 

    

 

 

 

By Geography:

     

United Kingdom

     26        29  

United States of America

     2        2  
  

 

 

    

 

 

 

Total

     28        31  
  

 

 

    

 

 

 

As of 31 December 2023, we had 25 full-time employees and 3 part-time employees. We have never had a work stoppage and none of our employees are covered by collective bargaining agreements or represented by a labour union. We believe our employee relations are good.

Diversity

We make appointments based on merit according to the balance of skills and experience offered by prospective candidates. Whilst acknowledging the benefits of diversity, individual appointments are made irrespective of personal characteristics such as sex, race, disability, gender, sexual orientation, religion or age.

A breakdown of the statistics as at 31 December 2023 is as follows:

 

Position

   Male      Female      Total  

Company Director

     7        —         7  

Senior Manager

     8        6        14  

Other Employees

     5        8        13  
  

 

 

    

 

 

    

 

 

 

Total Employees(1)

     14        14        28  
  

 

 

    

 

 

    

 

 

 

 

(1)

Total Employees includes one Executive Director, the Chief Executive Officer.

 

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employee consultation and human rights

We place considerable value on the involvement of our employees. Meetings are held with employees to discuss the operations and progress of the business and employees are encouraged to become involved in the success of the Group through share option schemes (see note 16 to the financial statements). We endeavour to impact positively on the communities in which we operate. We do not, at present, have a specific policy on human rights. However, we have several policies that promote the principles of human rights, including our Anti-Slavery and Human Trafficking Policy, which governs our zero-tolerance approach to modern slavery and our commitment to acting ethically and with integrity in all our business dealings; and an Anti-Corruption and Bribery Policy in order to reflect our policy to conduct our business in an honest and ethical manner. Our Health & Safety policy sets out our commitment to provision of a safe working environment for our employees. Furthermore, our Equal Opportunities Policy promotes the right of every employee to be treated with dignity and respect and not to be harassed or bullied on any grounds. Accordingly, we have a policy framework in place to ensure that we will respect the human rights of all our employees, including: provision of a safe, clean working environment; ensuring employees are free from discrimination and coercion; not using child or forced labour and respecting the rights of privacy and protecting access and use of employee personal information. This report does not contain information relating to social or community matters as such information is not relevant in understanding our development, performance, or position.

section 172(1) statement

Section 172 of the Companies Act 2006 requires each of directors to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so, have regard (amongst other matters) to:

 

  a)

the likely consequences of any decision in the long term;

 

  b)

the interests of the company’s employees;

 

  c)

the need to foster the company’s business relationships with suppliers, customers and others;

 

  d)

the impact of the company’s operations on the community and the environment;

 

  e)

the desirability of the company maintaining a reputation for high standards of business conduct; and

 

  f)

the need to act fairly between members of the company.

The directors continue to have regard to the interests of our key stakeholders, including our shareholders, holders of ADSs, and employees. The Board recognises its responsibility to take into consideration the needs and concerns of all our stakeholders as part of our discussion and decision-making processes.

Details of our interactions and engagement with shareholders, ADSs holders and analysts are summarised below.

 

Interests – issues and factors which are most important to shareholders, ADSs holders and analysts   

•  Successful research and development of our pipeline

 

•  Sufficient cash and cash equivalents on hand to fund our anticipated operations

Engagement – examples of engagement in 2023   

•  Annual General Meeting in June 2023

 

•  Directors and senior management meet investors and analysts

 

•  Quarterly financial results and regular press releases

 

•  Investor outreach programme, including regular investor conferences and events

Outcomes – any actions which resulted   

 

•  Helped to inform the objectives and strategy of the business, as outlined in the Our Strategy section of this Strategic Report on page 5

 

•  Attracted new investors in the Group

Our engagement and consultation with employees are outlined in the Employee Consultation and Human Rights section of this Strategic Report on page 13.

The consideration and impact of our operations on the environment are contained in the Environmental Matters section of this Strategic Report on page 12.

The Strategic Report was approved by the Board on 15 April 2024.

On behalf of the Board

 

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Hugh S. Griffith

Chief Executive Officer

 

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directors’ report

Company registration

NuCana plc is registered in England and Wales with the registered number 03308778.

Results and dividends

The loss for the year after taxation amounted to £27.6 million (2022: £32.0 million). The directors do not recommend a final dividend (2022: £nil).

Principal activities

NuCana is a rapidly growing, clinical-stage biopharmaceutical Group developing a portfolio of new medicines (ProTides) to treat patients with cancer. The unique feature of ProTides is their ability to overcome the key limitations associated with many widely used anti-cancer medicines and have the potential to be more effective and safer treatments for patients with cancer.

Future developments

The future developments have been set out in the Strategic Report on page 2.

Research and development activities

NuCana’s research and development strategy and activities have been set out in the Strategic Report on pages 2 to 13.

Directors

The directors who served the Company during the year and up to the date of this report were as follows:

 

Hugh Griffith    Cyrille Leperlier
Andrew Kay    Bali Muralidhar
Adam George    Elliott Levy
Martin Mellish   

Going concern

The Group’s financial statements have been presented on the basis that it is a going concern. The Group has not generated any revenues from operations to date and does not expect to in the foreseeable future. As such, the Group has incurred recurring net losses, has an accumulated deficit totalling £207.7 million and cash flows used in operating activities of £26.4 million for the year ended 31 December 2023. The Group had £17.2 million of cash and cash equivalents at 31 December 2023.

The Group’s board of directors have reviewed the operating budgets and development plans for the 18-month period to 30 June 2025 (the “going concern assessment period”). The base case forecast prepared for the going concern assessment period includes assumptions regarding, among other things, research and development expenses, administrative expenses, staff costs and R&D tax credits. The timing of R&D tax credits is out with management’s control and any significant delay in receipt of these tax credits would result in the company exhausting its cash balances earlier than forecast within the going concern period. The forecast includes the post year end gross “at-the-market” (ATM) cash proceeds of £1.5 million disclosed in note 20 of the financial statements. The base case forecast has been reviewed and approved by the board of directors in accordance with the Group’s normal budgeting and forecasting processes.

Based on the base case forecast, the Group’s cash and cash equivalents on hand will not be sufficient to fund the Group’s anticipated operations for the entirety of the going concern assessment period. As the Group intends to continue to progress its research and development activities, there will be a requirement to seek additional capital within the going concern assessment period to fund operations, which the Group may obtain from additional equity financings, debt financings, partnerships or other sources.

If the Group is unable to obtain additional capital, the Group will be required to delay or reduce its research and development programs or cease trading which could negatively impact its ability to generate future sustainable operating revenues and profits or its ability to continue as a going concern.

The Group’s board of directors, having successfully completed several financings in the past, has prepared plans to raise additional capital and held preliminary discussions with potential financial advisers, and believe the Group will be successful in raising sufficient additional capital to allow the Group and the Company to continue as a going concern.

As a result of these matters there is material uncertainty related to the ability of the Group and the Company to raise sufficient additional capital within the going concern assessment period, prior to its cash balances being exhausted. These events or conditions give rise to a material uncertainty that may cast significant doubt upon the Group and the Company’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not contain the adjustments that would result if the company was unable to continue as a going concern.

Financial instruments

Details of financial instruments are set out in note 18 to the financial statements on page 66.

Charitable and political contributions

No charitable contributions were paid during the 2023 financial year (2022: £nil).

No donations were made during the 2023 financial year to political organisations (2022: £nil).

Structure of group’s capital

Details of the structure of the Group’s capital are set out in note 14 to the financial statements on page 59.

Directors’ insurance and indemnities

The directors have the benefit of the indemnity provisions contained in the Company’s Articles of Association, and the Company has maintained throughout the year directors’ and officers’ liability insurance for the benefit of the Company, the directors and its officers. The Company has entered into qualifying third-party indemnity arrangements for the benefit of all its directors in a form and scope which comply with the requirements of the Companies Act 2006 and which were in force throughout the year and remain in force.

Overseas branches

The Company has no overseas branches.

Environmental matters

The Group measures and reports its greenhouse gas emissions.

 

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As 2020 was the first year of reporting, it is reported as the baseline year against which future performance is measured.

Quantification and reporting methodology

This report was compiled by management. The 2019 U.K. Government Environmental Reporting Guidelines and the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) were followed to ensure the Streamlined Energy and Carbon Reporting (“SECR”) requirements were met.

The energy data was collated using existing reporting mechanisms for the Group’s leased offices in the United Kingdom, where the majority of the Group’s employees work. These methodologies provided a continuous record of electricity use.

The energy data was converted to carbon emissions using the 2023 U.K. Government GHG Conversion Factors for Company Reporting. The associated emissions are divided into the combustion of fuels and the operation of facilities (scope 1), purchased electricity, heating and cooling (scope 2) and indirect emissions that occur as a consequence of company activities (scope 3). During the year the Group only had emissions relating to scope 2.

Estimations

The electricity use was compiled from invoices and meter readings.

 

     2023      2022      2021      2020  

Energy used by the company (in KWH)

     77,495        111,631        128,699        164,026  

Emissions associated with the reported energy use (tCO2e)

     16        22        27        38  

Intensity Ratio

The chosen primary intensity ratio is total gross emissions in metric tonnes CO2e (mandatory emissions) per employee.

 

     2023      2022      2021      2020  

Tonnes of CO2e per employee

     0.59        0.72        1.01        1.37  

Energy efficiency action during current financial year

We will continue to monitor our carbon emissions and look for cost-effective improvements of energy performance.

Energy consumption is expected to be broadly stable this year as we continue to adopt a blended approach to working, with a mix of remote and office working. The COVID-19 pandemic has shown that more flexible working policies have not had a detrimental impact on the day-to-day function of the business. It is therefore expected that our energy consumption will be lower relative to pre-pandemic levels.

As a result of the COVID-19 pandemic, there has been a significant increase in the use of video conferencing for meetings, considerably reducing the need for travel. The emission savings resulting from these activities has not been quantified, but this practice has resulted in behavioural changes that are expected to continue for the foreseeable future.

Climate change

The Group relies on third parties to manufacture and ship our product candidates for preclinical studies and clinical studies, as well as conducting the associated preclinical and clinical studies. As a result, the Group’s direct operational footprint is such that it does not expect any material impact on their operations and financial position as a result of climate change.

The Audit Committee makes recommendations to the Board on the principal risks of relevance to the business. Climate-related issues are considered in terms of potential for contribution to these principal risks. The issues considered include both the risk of physical disruption to the business from climate change, and the risks and opportunities as the global economy transitions to significantly lower carbon emissions. In the current period, the Audit Committee concluded that climate-related risks did not rise to the level of a principal risk.

Events after the reporting period

Details of important events affecting the Group, which have occurred since 31 December 2023, are set out in note 20 to the financial statements on page 67.

Disclosure of information to the auditors

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors and the Group’s auditor, each director has taken all the steps that they are obliged to take as directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

Auditors

Resolutions to re-appoint Ernst & Young LLP as auditor of the Company and to authorise the Board to set its remuneration will be proposed at the Company’s forthcoming annual general meeting (“AGM”).

The Directors’ Report was approved by the Board on 15 April 2024.

On behalf of the Board

 

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Hugh S. Griffith

Director

 

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remuneration committee chair’s annual statement

The information provided in this part of the Directors’ Remuneration Report is not subject to audit.

On behalf of the Board of Directors of NuCana plc, I am pleased to present the Directors’ Remuneration Report for the year ended 31 December 2023.

Voting at our 2023 AGM was conducted on a show of hands by those shareholders (or their proxies, as applicable) in attendance at the relevant meeting. At the meeting, the resolutions to approve the 2022 Directors’ Remuneration Report and the Directors’ Remuneration Policy were each approved by a majority of the votes cast at the meeting on a show of hands. Had a poll been called the proxy vote directions given to the Chairman of the 2023 AGM (and other officers of the Company) would have been exercised as follows:

 

 

Resolution 7 regarding approval of the Directors’ Remuneration Report: 49,709,290 votes for and 1,125,473 votes against which equates to over 97% of the proxy vote being in favour of the resolution. 102,626 votes were withheld.

 

 

Resolution 8 regarding approval of the Directors’ Remuneration Policy: 49,749,595 votes for and 1,069,642 votes against which equates to over 97% of the proxy vote in favour of the resolution. 118,152 votes were withheld.

A copy of the Directors’ Remuneration Policy (approved to take effect from 15 June 2023) is available for inspection at the Global Headquarters of the Company at 3 Lochside Way, Edinburgh, EH12 9DT, United Kingdom, and is also available on pages 25 to 29 of our 2022 Annual Report, which is on our website at http://www.nucana.com.

Remuneration Committee

The Remuneration Committee consists of two independent Non-Executive Directors, Bali Muralidhar (Chair from 27 April 2022 and Member since 5 February 2021), and Elliott Levy (Member since 6 May 2022).

The Remuneration Committee is responsible for reviewing and establishing our executive remuneration policy and philosophy, including reviewing the performance of the senior executive officers and setting the scale and structure of their remuneration and the basis of their service agreements with due regard to the interests of the shareholders. It is the policy of the Remuneration Committee that no individual can participate in discussions or decisions concerning his or her own remuneration.

The Directors’ Remuneration Report that follows is for the year from 1 January 2023 to 31 December 2023 except where otherwise stated.

The Directors’ Remuneration Policy is designed to:

 

 

Increase shareholder value;

 

 

Reward senior executive officers for their contribution to the Company’s development and value creation;

 

 

Recognise individual initiative, leadership, achievement, and other contributions; and

 

 

Provide competitive compensation that will attract and retain qualified executives.

Activities and major decisions

During the year ended 31 December 2023, the Committee undertook the following activities and major decisions:

 

 

Performed a review of director and senior executive officer compensation, which was undertaken to ensure that remuneration for our directors and senior executive officers remains competitive for the retention and engagement of key talent.

As a result of the review completed in 2023, the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Chief Medical Officer (CMO) received increased base salary awards at a level that is broadly aligned with historical peer group comparator data.

 

 

Awarded share options to selected employees in January, June and July 2023.

2024 Annual General Meeting

On behalf of the Board, I wish to thank our shareholders for their input and support during the year ended 31 December 2023. The Remuneration Committee and the Board of Directors welcome feedback from our shareholders on the Directors’ Remuneration Report. We look forward to receiving the support of our shareholders for the Directors’ Remuneration Report at our Annual General Meeting to be held on 18 June 2024.

 

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Bali Muralidhar

Non-Executive Director & Chair of Remuneration Committee

 

15 April 2024

 

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report on remuneration

The information provided in this part of the Directors’ Remuneration Report is subject to audit.

The Remuneration Committee presents the Report on Remuneration for the year ended 31 December 2023, which will be put to shareholders for a non-binding vote at the Annual General Meeting to be held on 18 June 2024.

Single total figure for Remuneration of each Director

The following table shows the remuneration received by the directors for the years ended 31 December 2023 and 31 December 2022.

 

Name

of

director

        Salary &
Fees(1)
£
     Taxable
Benefits(2)
£
     Annual
Bonus(3)
£
     Share
Options(4)
£
     Pension
Benefit(5)
£
     Total
£
     Total Fixed
Remuneration(6)
£
     Total Variable
Remuneration(7)
£
 

Executive Directors(8)

 

Hugh Griffith

   YE 31 Dec 2023      573,688        3,791        339,738        98,598        57,369        1,073,184        634,848        438,336  
   YE 31 Dec 2022      551,623        3,404        414,331        270,253        53,119        1,292,730        608,146        684,584  

Non-Executive Directors

 

Andrew Kay

   YE 31 Dec 2023      78,774        —         —         11,922        —         90,696        78,774        11,922  
   YE 31 Dec 2022      72,061        —         —         17,171        —         89,232        72,061        17,171  

Adam George

   YE 31 Dec 2023      56,555        —         —         3,059        —         59,614        56,555        3,059  
   YE 31 Dec 2022      52,670        —         —         25,245        —         77,915        52,670        25,245  

Martin Mellish

   YE 31 Dec 2023      47,852        —         —         2,744        —         50,596        47,852        2,744  
   YE 31 Dec 2022      44,525        —         —         25,245        —         69,770        44,525        25,245  

Cyrille Leperlier

   YE 31 Dec 2023      65,080        —         —         2,744        —         67,824        65,080        2,744  
   YE 31 Dec 2022      60,449        —         —         25,245        —         85,694        60,449        25,245  

Bali Muralidhar

   YE 31 Dec 2023      —         —         —         —         —         —         —         —   
   YE 31 Dec 2022      29,249        —         —         25,245        —         54,494        29,249        25,245  

Elliot Levy

   YE 31 Dec 2023      54,232        —         —         3,059        —         57,291        54,232        3,059  
   YE 31 Dec 2022      48,276        —         —         25,245        —         73,521        48,276        25,245  

James Healy(9)

   YE 31 Dec 2023      —         —         —         —         —         —         —         —   
   YE 31 Dec 2022      17,026        —         —         —         —         17,026        17,026        —   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   YE 31 Dec 2023      876,181        3,791        339,738        122,126        57,369        1,399,205        937,341        461,864  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   YE 31 Dec 2022      875,879        3,404        414,331        413,649        53,119        1,760,382        932,402        827,980  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

The majority of the remuneration was set and paid in pounds sterling (£). For the purposes of this table, the fees paid in any other currency in which remuneration was paid have been converted into pounds sterling based on the currency/pounds sterling average exchange rate for the period the costs relate to. All of the figures in the table above are in pounds sterling.

(2)

The amount for taxable benefits represents the Company’s contribution to medical insurance.

(3)

The annual bonus amounts shown for the year ended 31 December 2023 represent the total bonus payments that related to performance in 2023, which was paid in early 2024.

(4)

These options only have service conditions attached. There are no performance conditions. The values of these share option awards are therefore recorded in this table at the date of grant. Where the options have vested before the date of this report the value is based on the market value of the shares at the date of vesting, less the exercise price. Where the options have not vested the market value of the options at the date of vesting is not ascertainable. Therefore, the value included in this table is based on the average market value of the shares over the three months to 31 December 2023 and 31 December 2022 respectively, less the applicable exercise price.

(5)

The amount for pension benefit represents the Company’s contribution into a money purchase plan.

(6)

Total fixed remuneration includes salary and fees, taxable benefits and pension benefit.

(7)

Total variable remuneration includes annual bonus and share options.

(8)

Changes to the compensation for our Executive Directors take effect from 1 January in each year.

(9)

James Healy retired from the Board on 27 April 2022.

 

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Annual bonus

Our Executive Directors are eligible for an annual bonus at the discretion of the Remuneration Committee. Bonus awards are reviewed at the end of each calendar year and any such awards are determined by the performance of the individual and the company as a whole, based upon the achievement of strategic objectives set at the beginning of the year. In determining Executive Director compensation for the year ended 31 December 2023, the Remuneration Committee considered achievement of specific performance measures which had been previously approved by the Remuneration Committee to be achieved by the executive team during 2023. These are considered to be commercially sensitive and will not be disclosed in detail, but are linked to our business strategies which include to:

 

 

Rapidly develop NUC-3373 to replace 5-FU as the standard of care for the treatment of patients with colorectal cancer;

 

 

Identify additional indications for development of NUC-3373;

 

 

Rapidly develop NUC-7738 as a treatment for patients with solid tumours;

 

 

Leverage our proprietary ProTide technology platform to develop additional product candidates; and

 

 

Continue to protect and strengthen our intellectual property position.

Share options awarded during the financial year

The table below shows, for each director, the total number of options awarded in the year ended 31 December 2023. The face value of the award is calculated as the share price at date of grant, in pounds sterling, multiplied by the number of options granted. The options granted have no performance conditions, only service conditions.

We periodically grant share options to employees, directors and consultants to enable them to share in our successes and to reinforce a corporate culture that aligns their interests with that of our shareholders.

 

Name

of

director

  

Type

of

plan

   Number of
options granted
     Exercise
price

£
     Share price at
date of grant
£
    Value at date
of grant

£
     Performance
period
end
     Date
of
expiry
 

Executive Directors

                   

Hugh Griffith

   2020 Long-Term Incentive Plan      673,600        1.23        1.23 (1)      828,528        11-Jan-27        11-Jan-33  
   2020 Long-Term Incentive Plan      336,800        0.04        1.23 (2)      414,264        11-Jan-27        11-Jan-33  

Non-Executive Directors

                   

Andrew Kay

   2020 Long-Term Incentive Plan      18,750        1.23        1.23 (1)      23,063        11-Jan-27        11-Jan-33  
   2020 Long-Term Incentive Plan      9,375        0.04        1.23 (2)      11,531        11-Jan-27        11-Jan-33  
   2020 Long-Term Incentive Plan      28,125        0.04        0.59 (3)      16,594        16-Jun-24        16-Jun-33  

Adam George

   2020 Long-Term Incentive Plan      9,375        0.04        0.59 (3)      5,531        16-Jun-24        16-Jun-33  
   2020 Long-Term Incentive Plan      18,750        0.62        0.62 (4)      11,625        12-Jul-24        12-Jul-33  

Martin Mellish

   2020 Long-Term Incentive Plan      18,750        1.23        1.23 (1)      23,063        11-Jan-27        11-Jan-33  
   2020 Long-Term Incentive Plan      9,375        0.04        1.23 (2)      11,531        11-Jan-27        11-Jan-33  

Cyrille Leperlier

   2020 Long-Term Incentive Plan      18,750        1.23        1.23 (1)      23,063        11-Jan-27        11-Jan-33  
   2020 Long-Term Incentive Plan      9,375        0.04        1.23 (2)      11,531        11-Jan-27        11-Jan-33  

Elliott Levy

   2020 Long-Term Incentive Plan      9,375        0.04        0.59 (3)      5,531        16-Jun-24        16-Jun-33  
   2020 Long-Term Incentive Plan      18,750        0.62        0.62 (4)      11,625        12-Jul-24        12-Jul-33  

 

(1)

The share options were granted on 11 January 2023.

(2)

The share options were granted on 11 January 2023. The exercise price of these share options is the nominal value of our ordinary shares of £0.04 rather than at the share price at the date of grant of £1.23. The exercise price of the share options has not changed since the date of the grant.

(3)

The share options were granted on 16 June 2023. The exercise price of these share options is the nominal value of our ordinary shares of £0.04 rather than at the share price at the date of grant of £0.59. The exercise price of the share options has not changed since the date of the grant.

(4)

The share options were granted on 12 July 2023.

 

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Statement of directors’ shareholdings and share interests

The table below shows, for each director, the total number of shares owned, the total number of share options held and the number of share options vested as at 31 December 2023. The table only reflects shares held individually by each director and does not include shares held by any investment fund with which the director is affiliated.

 

Name of director

   Shares
owned
     Share options
Vested not yet
exercised(1)
     Share options
Unvested with
performance conditions(1)
     Share options
Exercised during
the year
     Total
(Shares and Share
Options)
 

Executive Directors

              

Hugh Griffith

     1,265,026        4,260,161        2,701,051        —         8,226,238  

Non-Executive Directors

              

Andrew Kay

     —         114,063        198,437        —         312,500  

Adam George

     —         142,712        124,262        —         266,974  

Martin Mellish

     27,952        132,011        124,261        5,280        284,224  

Cyrille Leperlier

     —         142,712        124,262        —         266,974  

Bali Muralidhar(2)

     540        53,663        81,787        —         135,990  

Elliott Levy

     4,688        54,375        115,312        4,688        174,375  

 

(1)

All share options that were outstanding as at 31 December 2023 use time-based vesting and are not subject to performance targets other than continued service until the date of vesting.

(2)

Consists of 540 ADSs. Excludes 3,333,333 ADSs held by Abingworth Bioventures VII, LP (“Abingworth VII”). Abingworth VII (acting by its general partner Abingworth Bioventures VII GP LP, acting by its general partner Abingworth General Partner VII LLP) has delegated to Abingworth LLP (“Abingworth”), all investment and dispositive power over the securities held by Abingworth VII. Abingworth holds the reported securities indirectly through Abingworth VII. Bali Muralidhar is a managing partner and investment committee member of Abingworth and disclaims beneficial ownership of the ADSs held by Abingworth VII.

Policy on shareholding requirements

We do not currently have a policy requiring our directors to hold a certain number or value of our shares.

 

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Directors’ equity-based awards held at 31 December 2023

The table below presents the interests of the directors in options to acquire our ordinary shares with a nominal value of £0.04 per share as at 31 December 2023. A total of 1,179,150 options were granted to directors during the year ended 31 December 2023. Two of our directors exercised options during the year ended 31 December 2023.

 

Name

of

director

   Options
held
    

Grant

date

  

Start date

for

vesting

  

Earliest date of
potential exercise of
any options(1)

  

Date

of

expiry

Executive Directors

              

Hugh Griffith

     124,999      27-Jan-2014    27-Jan-2014    27-Jan-2015    27-Jan-2024
     625,000      27-Mar-2014    27-Mar-2014    27-Mar-2014    27-Mar-2024
     1,028,533      15-Sep-2017    15-Sep-2017    15-Sep-2017    15-Sep-2027
     428,600      15-May-2019    15-May-2019    15-May-2020    15-May-2029
     1,105,775      10-Jun-2020    10-Jun-2020    10-Jun-2021    10-Jun-2030
     221,155      9-Sep-2020    9-Sep-2020    9-Sep-2021    9-Sep-2030
     590,775      10-Feb-2021    10-Feb-2021    10-Feb-2022    10-Feb-2031
     1,223,800      15-Sep-2021    15-Sep-2021    15-Sep-2022    15-Sep-2031
     401,450      9-Mar-2022    9-Mar-2022    9-Mar-2023    9-Mar-2032
     200,725      12-Jul-2022    12-Jul-2022    12-Jul-2023    12-Jul-2032
     1,010,400      11-Jan-2023    11-Jan-2023    11-Jan-2024    11-Jan-2033
  

 

 

             

Total

     6,961,212              
  

 

 

             

Non-Executive Directors

              

Andrew Kay

     200,000      13-Jan-2021    13-Jan-2021    13-Jan-2022    13-Jan-2031
     56,250      9-Mar-2022    9-Mar-2022    9-Mar-2023    9-Mar-2032
     28,125      11-Jan-2023    11-Jan-2023    11-Jan-2024    11-Jan-2033
     28,125      16-Jun-2023    16-Jun-2023    16-Jun-2024    16-Jun-2033
  

 

 

             

Total

     312,500              
  

 

 

             

Adam George

     21,000      8-May-2018    8-May-2018    8-May-2019    8-May-2028
     25,000      15-May-2019    15-May-2019    15-May-2020    15-May-2029
     47,832      10-Jun-2020    10-Jun-2020    10-Jun-2021    10-Jun-2030
     9,567      9-Sep-2020    9-Sep-2020    9-Sep-2021    9-Sep-2030
     34,650      10-Feb-2021    10-Feb-2021    10-Feb-2022    10-Feb-2031
     44,550      15-Sep-2021    15-Sep-2021    15-Sep-2022    15-Sep-2031
     37,500      9-Mar-2022    9-Mar-2022    9-Mar-2023    9-Mar-2032
     18,750      12-Jul-2022    12-Jul-2022    12-Jul-2023    12-Jul-2032
     9,375      16-Jun-2023    16-Jun-2023    16-Jun-2024    16-Jun-2033
     18,750      12-Jul-2023    12-Jul-2023    12-Jul-2024    12-Jul-2033
  

 

 

             

Total

     266,974              
  

 

 

             

Martin Mellish

     23,250      16-May-2017    28-Oct-2016    28-Oct-2017    16-May-2027
     25,000      15-May-2019    15-May-2019    15-May-2020    15-May-2029
     47,832      10-Jun-2020    10-Jun-2020    10-Jun-2021    10-Jun-2030
     2,391      9-Sep-2020    9-Sep-2020    9-Sep-2021    9-Sep-2030
     28,874      10-Feb-2021    10-Feb-2021    10-Feb-2022    10-Feb-2031
     44,550      15-Sep-2021    15-Sep-2021    15-Sep-2022    15-Sep-2031
     37,500      9-Mar-2022    9-Mar-2022    9-Mar-2023    9-Mar-2032
     18,750      12-Jul-2022    12-Jul-2022    12-Jul-2023    12-Jul-2032
     28,125      11-Jan-2023    11-Jan-2023    11-Jan-2024    11-Jan-2033
  

 

 

             

Total

     256,272              
  

 

 

             

Cyrille Leperlier

     21,000      8-May-2018    8-May-2018    8-May-2019    8-May-2028
     25,000      15-May-2019    15-May-2019    15-May-2020    15-May-2029
     47,832      10-Jun-2020    10-Jun-2020    10-Jun-2021    10-Jun-2030
     9,567      9-Sep-2020    9-Sep-2020    9-Sep-2021    9-Sep-2030
     34,650      10-Feb-2021    10-Feb-2021    10-Feb-2022    10-Feb-2031
     44,550      15-Sep-2021    15-Sep-2021    15-Sep-2022    15-Sep-2031
     37,500      9-Mar-2022    9-Mar-2022    9-Mar-2023    9-Mar-2032
     18,750      12-Jul-2022    12-Jul-2022    12-Jul-2023    12-Jul-2032
     28,125      11-Jan-2023    11-Jan-2023    11-Jan-2024    11-Jan-2033
  

 

 

             

Total

     266,974              
  

 

 

             

 

cont

 

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Name

of

director

   Options
held
    

Grant

date

  

Start date

for

vesting

  

Earliest date of

potential exercise of

any options(1)

  

Date

of

expiry

Bali Muralidhar

     34,650      10-Feb-2021    10-Feb-2021    10-Feb-2022    10-Feb-2031
     44,550      15-Sep-2021    15-Sep-2021    15-Sep-2022    15-Sep-2031
     37,500      9-Mar-2022    9-Mar-2022    9-Mar-2023    9-Mar-2032
     18,750      12-Jul-2022    12-Jul-2022    12-Jul-2023    12-Jul-2032
  

 

 

             

Total

     135,450              
  

 

 

             

Elliot Levy

     90,000      15-Dec-2021    15-Dec-2021    15-Dec-2022    15-Dec-2031
     37,500      9-Mar-2022    9-Mar-2022    9-Mar-2023    9-Mar-2032
     14,062      12-Jul-2022    12-Jul-2022    12-Jul-2023    12-Jul-2032
     9,375      16-Jun-2023    16-Jun-2023    16-Jun-2024    16-Jun-2033
     18,750      12-Jul-2023    12-Jul-2023    12-Jul-2024    12-Jul-2033
  

 

 

             

Total

     169,687              
  

 

 

             

 

(1)

All share options awarded to directors that were outstanding as at 31 December 2023 use time-based vesting and are not subject to performance targets other than continued service until the date of vesting.

The closing market price of our ADSs on 31 December 2023 was $0.30. One ADS represents one ordinary share.

Payments made to past directors

During the year ended 31 December 2023, no payments were made to former directors of the Company.

Payments for loss of office

During the year ended 31 December 2023, no payments were made with respect to a director’s loss of office.

Policy on payments for loss of office

Our approach to payments in the event of termination of an Executive Director is to take account of the individual circumstances including the reason for termination, individual performance, contractual obligations and the terms of the share option scheme in which the Executive Director participates.

Payment obligations would include base salary, target bonus and benefits. In addition, our option scheme rules allow some or all of the options held by our Executive Directors and senior executive officers to vest in certain circumstances upon the event of a change of control.

There are no contractual provisions agreed prior to 27 June 2012 that could impact on the quantum of the payment.

We will comply with applicable disclosure and reporting requirements of the Securities and Exchange Commission with respect to remuneration arrangements with a departing Executive Director.

Illustration of total shareholder return

The information provided in this part of the Directors’ Remuneration Report is not subject to audit.

The graph below shows the daily movements by 31 December 2023, of $100 invested in NuCana plc ADS at our IPO price on 28 September 2017 compared with the value of $100 invested in the SPDR Series Trust SPDR S&P Biotech ETF (XBI). We believe this graph reflects our relative performance against a group of similarly situated comparator companies.

 

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Chief Executive Officer historical remuneration

The table below sets out total remuneration delivered to the Chief Executive Officer over the last eight years valued using the methodology applied to the single total figure of remuneration. The Remuneration Committee does not believe that the remuneration payable in its earlier years as a private company bears any comparative value to that paid in its later years and therefore the Remuneration Committee has chosen to disclose remuneration only for the eight most recent financial years.

 

Period

  Single total figure
of remuneration
£
    Annual bonus payout
against maximum
opportunity
    Long term incentive
vesting rates against
maximum opportunity
 

Year ended 31 December 2023(1)

    1,073,184       59     100

Year ended 31 December 2022(1)

    1,292,730       78     100

Year ended 31 December 2021(1)

    2,158,116       60     100

Year ended 31 December 2020(1)

    1,709,183       60     100

Year ended 31 December 2019

    827,586       57     100

Year ended 31 December 2018

    786,311       58     n/a  

Year ended 31 December 2017(1)

    11,033,025       82     100

Year ended 31 December 2016

    407,533       35     100

 

(1)

The years ended 31 December 2023, 31 December 2022, 31 December 2021, 31 December 2020 and 31 December 2017 include unrealised gains on share options, which have not been exercised.

Change in director remuneration compared to other employees

The following table below shows the percentage change in the remuneration of directors and the average change per employee from 2020 onwards.

 

Percentage change in remuneration

 
            Salary & Fees
%
     Taxable Benefits
%
     Annual Bonus
%
 

Executive Directors

           

Hugh Griffith

     2022 to 2023        4.0        11.4        (18.0
     2021 to 2022        3.8        (2.9      30.0  
     2020 to 2021        (3.7      17.6        3.0  
     2019 to 2020        10.8        24.7        9.6  

Non-Executive Directors(1)

           

Andrew Kay

     2022 to 2023        9.3        —         —   
     2021 to 2022        22.4        —         —   
     2020 to 2021        3,219.8        —         —   
     2019 to 2020        —         —         —   

Adam George

     2022 to 2023        7.4        —         —   
     2021 to 2022        15.6        —         —   
     2020 to 2021        (3.9      —         —   
     2019 to 2020        (1.1      —         —   

Martin Mellish

     2022 to 2023        7.5        —         —   
     2021 to 2022        16.3        —         —   
     2020 to 2021        (3.5      —         —   
     2019 to 2020        22.8        —         —   

Cyrille Leperlier

     2022 to 2023        7.7        —         —   
     2021 to 2022        57.8        —         —   
     2020 to 2021        10.5        —         —   
     2019 to 2020        7.2        —         —   

Bali Muralidhar

     2022 to 2023        (100.0      —         —   
     2021 to 2022        (31.7      —         —   
     2020 to 2021        378.2        —         —   
     2019 to 2020        —         —         —   

 

cont

 

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  directors’ remuneration report/03

 

Percentage change in remuneration

 
            Salary & Fees
%
     Taxable Benefits
%
     Annual Bonus
%
 

Elliott Levy

     2022 to 2023        12.3        
     2021 to 2022        656.3        —         —   
     2020 to 2021        —         —         —   
     2019 to 2020        —         —         —   

Employees(2)

     2022 to 2023        7.9        97.7        (2.3
     2021 to 2022        (1.4      18.3        25.3  
     2020 to 2021        8.9        (1.3      14.3  
     2019 to 2020        12.8        4.3        25.4  

 

(1)

Fees for Non-Executive Directors are set in US dollars and converted to pounds sterling (£) at the average rate for each year. Fees paid also reflect membership of various sub-committees, such as the Audit, Remuneration or Nominations Committee, in each respective year.

(2)

The employee group comprises employees of the Company. The percentage change compares the average annualised costs for all employees employed by the Company in a specific year.

Relative importance of spend on pay

The following table sets forth the total amounts spent by the Group on remuneration for the year ended 31 December 2023 and the year ended 31 December 2022. The comparator chosen to reflect the relative importance of the Group’s spend on pay is the Group’s research and development expenses as shown in its consolidated income statement on page 38 of its Annual Report and Financial Statements for the year ended 31 December 2023. Dividend distribution and share buyback comparators have not been included as the Group has no history of such transactions.

 

Period:

   Year ended 31 December 2023      Year ended 31 December 2022  
     £
(in thousands)
     £
(in thousands)
 

Total spend on remuneration(1)

     10,819        12,353  

Research and development expenses

     25,062        36,426  

 

(1)

The total spend on remuneration includes the value of equity-based awards as recognised in the financial statements in accordance with International Financial Reporting Standard 2 “Share-Based Payments”.

 

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  directors’ remuneration report/03

 

statement of implementation of the directors’ remuneration policy in financial year ending 31 December 2024

In January 2024, the Remuneration Committee considered the extent to which the 2023 calendar year objectives were achieved by the executive team and determined the level of bonus incentive awards payable in respect of the 2023 calendar year. The awards made to our CEO and senior executive officers recognised that the vast majority of our corporate objectives, including stretch objectives and goals, for 2023 had been achieved, with our CEO and senior executive officers receiving bonus awards at 98.7% of the potential target bonus amount. These target bonus amounts had also been benchmarked against peer group comparative data provided by Radford in previous years.

In January 2024, the Committee met to consider the award of share options to the Directors and CEO in respect of services provided and performance attained during 2023, in accordance with the Remuneration Policy. Further details will be provided in the 2024 Annual Report.

In January 2024, the Committee determined that the executive team should continue to focus on achieving the Company’s core objectives during 2024. These are considered to be commercially sensitive and will not be disclosed in detail, but are linked to our business strategies which include to:

 

   

Rapidly develop NUC-3373 to replace 5-FU as the standard of care for the treatment of patients with various cancers;

 

   

Identify additional indications for development of NUC-3373;

 

   

Rapidly develop NUC-7738 as a treatment for patients with solid tumours;

 

   

Leverage our proprietary ProTide technology platform to develop additional product candidates; and

 

   

Continue to strengthen our intellectual property position.

The Remuneration Committee

The Remuneration Committee consists of two independent Non-Executive Directors, Bali Muralidhar and Elliott Levy.

Each of these Non-Executive Director members is a non-employee director as defined in Rule 166-3 under the Securities Exchange Act of 1934, as amended, and an outside director as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended. Bali Muralidhar serves as Chairperson of the Remuneration Committee. The Remuneration Committee reviews, among other things, the performance of the executive officers and sets the scale and structure of their remuneration and the basis of their service agreements with due regard to the interests of the shareholders.

It is a policy of the Remuneration Committee that no individual participates in discussions or decisions concerning his or her own specific remuneration (although the members of the Remuneration Committee do consider the remuneration generally of the Non-Executive Directors as a class).

All members have continued to serve until the date of this Report on Remuneration. The terms of reference of the Remuneration Committee is set forth on our website at http://www.nucana.com.

Advice provided to the Remuneration Committee

The Remuneration Committee had retained Radford, an Aon Hewitt company, in previous years to provide independent advice and consultation with respect to remuneration arrangements for the CEO, CFO, CMO and Non-Executive Directors. For the year ended 31 December 2023 Radford were not engaged, but the Remuneration Committee relied on their previous consistent advice from earlier years. Radford are global remuneration consultants with a well-established reputation for the design and implementation of remuneration programmes, including the design and implementation of equity-based award programmes. Radford have no other connection to, or business relationship with, NuCana. Based on Radford’s extensive experience with similar assignments and the fact that Radford have no other connections to, or business relationships, with NuCana, the Remuneration Committee believes the advice received in the past from Radford is objective and independent.

In addition, the Remuneration Committee solicited and received input from the CEO concerning the remuneration of employees other than himself. The CEO provided recommendations with respect to annual cash bonuses to be paid to these persons for service in the year ending 31 December 2023 and base salary awards effective from 1 January 2024. Finally, the CEO also provided input to the Remuneration Committee regarding the implementation of equity-based remuneration as an element of all other employees’ remuneration.

Approval

This report was approved by the Board of Directors on 15 April 2024 and signed on its behalf by:

 

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Bali Muralidhar

Non-Executive Director

 

15 April 2024

 

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statement of directors’ responsibilities

 

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statement of directors’ responsibilities/04

 

statement of directors’ responsibilities

The directors are responsible for preparing the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report and the financial statements in accordance with applicable United Kingdom law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in conformity with U.K.-adopted international accounting standards.

Under Company law, the directors must not approve the financial statements unless they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing those financial statements the directors are required to:

 

 

present fairly the financial position, financial performance and cash flows of the Group and Company for that period;

 

 

prepare them on the going concern basis unless it is inappropriate to presume that the Group will continue in business;

 

 

select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

 

 

present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

 

 

provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s and Company’s financial position and financial performance;

 

 

state that the Group and Company have complied with IFRSs, subject to any material departures disclosed and explained in the financial statements; and

 

 

make judgements and estimates that are reasonable and prudent.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

The names of the directors are set out on page 15 of this report.

 

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independent report auditor’s to the members of NuCana plc

 

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independent auditor’s report to the members of NuCana plc/05

 

opinion

In our opinion:

 

 

NuCana plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2023 and of the Group’s loss for the year then ended;

 

 

the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in conformity with U.K. adopted international accounting standards;

 

 

the Company financial statements have been properly prepared in accordance with IFRS as issued by the IASB and in conformity with U.K. adopted international accounting standards as applied in accordance with section 408 of the Companies Act; and

 

 

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of NuCana plc (the ‘Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2023 which comprise:

 

Group

  

Company

Group statement of financial position as at 31 December 2023    Company statement of financial position as at 31 December 2023
Group income statement for the year then ended    Company statement of changes in equity for the year then ended
Group statement of comprehensive loss for the year then ended    Company statement of cash flows for the year then ended
Group statement of changes in equity for the year then ended    Related notes 1 to 20 to the financial statements including a summary of material accounting policies
Group statement of cash flows for the year then ended   
Related notes 1 to 20 to the financial statements, including a summary of material accounting policies   

The financial reporting framework that has been applied in their preparation is applicable law and IFRS as issued by the IASB and in conformity with U.K. adopted international accounting standards and as regards to the Company financial statements, as applied in accordance with section 408 of the Companies Act 2006.

basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the U.K., including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 2 in the financial statements, which indicates that there is material uncertainty related to the ability of the Group and Company to raise sufficient additional capital within the going concern period, prior to its cash balances being exhausted. As stated in note 2, these events or conditions, along with the other matters as set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our opinion is not modified in respect of this matter.

Going concern has also been determined to be a key audit matter.

Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of accounting included:

Risk assessment procedures

 

 

We have obtained an understanding of management’s basis for use of the going concern basis of accounting. To challenge the completeness of this assessment, we have independently identified factors that may indicate events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. Events or conditions were identified, and we have designed our audit procedures to evaluate the effect of these risks on the Group and Company’s ability to continue as a going concern.

 

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independent auditor’s report to the members of NuCana plc/05

 

Management’s method

 

 

In conjunction with our walkthrough of the Group’s financial statement close process, we confirmed our understanding of management’s going concern assessment process.

 

 

We obtained management’s board approved clinical development plan and their going concern assessment covering the period to 30 June 2025.

 

 

In order to assess management’s forecasting accuracy, we have compared prior year budgets against actuals and challenged rationale for variances.

Assumptions and stress testing

 

 

We evaluated the relevance and reliability of the underlying data used to make the assessment by challenging management on the assumptions underpinning the forecasts.

 

 

We corroborated the assumptions used by reconciling forecast clinical spend in the going concern assessment period to master clinical study agreements and latest change orders in place, including those signed post year end and held discussions with the clinical team on the status of each clinical study to assess the contract status.

 

 

We assessed the payroll assumptions by performing analytical review of the forecast payroll in comparison to previous periods actual payroll costs incurred, factoring in changes in headcount and wage inflation.

 

 

We challenged the completeness of the expenditure included in cashflow forecasts against the current clinical programs in place.

 

 

We obtained historic SME R&D tax credit submissions and compared to actual cash receipt to assess the expected value of tax credits to be received. We vouched the expenditure incurred during 2023 and assessed the nature and eligibility of these amounts forming part of the future SME claim and the cash inflows assumed within the going concern period. We also calculated the historic time between submission and receipt to assess the expected timing of the future SME R&D tax credits is reasonable.

 

 

We challenged the completeness of managements cash flow projections to understand the earliest point in time the Group is forecast to exhaust liquidity reserves.

 

 

We evaluated management’s controllable cost mitigations to determine whether such actions are feasible in the circumstances and considering management’s intention and likely timing of implementing these mitigations.

Liquidity and management’s plans for future actions

 

 

We verified year-end actual cash positions against bank confirmations and balances as at 31 March 2024 to bank statements.

 

 

We obtained copies of management’s board papers detailing the proposed plans to raise additional capital from current, former and new potential investors.

 

 

We held discussions with the clinical team to determine the timelines of the clinical studies in progress and likely timing of receipt of clinical data for publication.

 

 

We held a discussion with the proposed financial adviser to obtain an understanding of their assessment of the current market conditions for a small company in the life sciences sector to raise additional capital.

 

 

Through the involvement of our specialists, we evaluated the likelihood of management being able to raise additional capital by considering: the capabilities of the financial adviser that management plan to use and their recent track record of assisting companies raise capital in this sector, assessment of management’s proposed investor list and the reasonableness of the current and proposed investors that might choose to invest in NuCana and their ability to make such an investment, together with the market sentiment regarding companies presenting clinical study data that will drive investment grade funding.

Disclosures

 

 

We reviewed the appropriateness and completeness of the Group’s going concern disclosures included in the annual report and assessed that the disclosures were in conformity with the reporting standards.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability to continue as a going concern.

overview of our audit approach

 

Audit scope   

•   We performed an audit of the complete financial information of two components.

 

•   The components where we performed full or specific audit procedures accounted for 100% of loss before tax and 100% of total assets.

Key audit matters   

•   Recognition of clinical study investigator grant expenses.

 

•   Going concern (as detailed in the material uncertainty related to going concern section above).

Materiality   

•   Overall group materiality of £545,000 which represents 2% of operating expenses.

 

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independent auditor’s report to the members of NuCana plc/05

 

an overview scope of the Group and Company audits

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile, the organisation of the group and effectiveness of group-wide controls, changes in the business environment, the potential impact of climate change and other factors when assessing the level of work to be performed at each company.

In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant accounts in the financial statements, we performed audit procedures on the two reporting components that make up the Group.

We performed an audit of the complete financial information of both components (“full scope components”) which were selected based on their size or risk characteristics. No components were untested during the financial year.

The reporting components where we performed audit procedures accounted for 100% (2022: 100%) of the Group’s operating expenses (adjusted for share-based payments as defined in ‘Our application of materiality’ section of this report), 100% (2022: 100%) of the Group’s loss before tax and 100% (2022: 100%) of the Group’s total assets.

Changes from the prior year

We have refined the Key Audit Matters to focus the risk on the recognition of clinical study investigator grant expenses where we consider there to be more judgement applied by management.

Involvement with component teams

All audit work performed for the purposes of the audit was undertaken by the Group audit team.

Climate change

Stakeholders are increasingly interested in how climate change will impact NuCana plc. The Group has determined it does not expect material future impacts from climate change on their operations. This is explained within the financial statements on page 44 in the material accounting policies. It is also explained on pages 15 and 16 in the Directors Report. These disclosures in the Directors Report form part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.

In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential material impact on its financial statements.

As explained in the Basis of Preparation in note 2, management have considered the impact of climate change on its operations when preparing the financial statements and concluded that it does not have a material impact on the financial statements as at 31 December 2023. Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s assessment of the impact of climate risk, physical and transition risks, and ensuring that the effects of climate risks disclosed on pages 15 and 16 have been appropriately reflected by management in reaching areas of judgement in the financial statements. As part of this evaluation, we performed our own risk assessment to determine the risks of material misstatement in the financial statements from climate change which needed to be considered in our audit.

We also challenged the directors’ considerations of climate change risks in their assessment of going concern and associated disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are described above.

Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a key audit matter.

key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

 

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independent auditor’s report to the members of NuCana plc/05

 

Risk

  

Our response to the risk

  

Key observations communicated

to the Audit Committee

Recognition of clinical study investigator grant expenses

 

Refer to Accounting policies and note 2 of the financial statements (page 45).

 

The risk has been refined to focus on investigator grant expenses within clinical study expenses.

 

At 31 December 2023, the Company has recognised accruals for clinical study investigator grant expenses of £4.8 million, within the total of £6.2 million of accruals for clinical study expenses. As disclosed in note 2 of the consolidated financial statements, the Company recognises within clinical study expenses, investigator grant expenses for clinical studies in the Group income statement in the period in which they are incurred, which depends on management’s assessment of the progress of clinical studies and the estimated costs incurred at the period end.

 

A significant risk has been associated with clinical study investigator grant expenses as a result of the level of management judgement involved in the estimate and the estimation uncertainty involved in assessing the completeness of accruals and the stage of progress of the clinical studies.

  

Our principal audit procedures included:

 

Reviewing management’s assessment for investigator grant expenses for clinical studies, and the basis of which expenses are accrued at year end, including agreeing information to supporting documents (contracts, contract amendments, invoices, press releases and other communications).

 

Assessing terms and conditions of significant new contracts, and contract amendments for existing contracts, entered into during the year, and challenging the accounting adopted, ensuring consistency with contract terms and accounting policies.

 

We agreed a sample of unpaid costs at year end to creditors and/or accrual balances.

 

Agreeing values for stages of completion to the signed contracts and the calculation of total costs incurred as at the year end and agreeing the stage of completion of the services under contract to information from the third parties and agreeing payments made to invoices from the third parties.

 

Challenging management on the accounting adopted on investigator grant expenses through independent review of a sample of contracts and through engagement with the clinical operational teams (such as clinical activities

  

We communicated to the audit committee that:

 

As a result of our procedures, we have concluded that clinical study investigator grant expenses have been recognised and valued appropriately.

 

We also concluded that disclosures in the financial statements were free from material misstatement.

  

undertaken). We held discussions with project managers, the Director of Finance, the Senior VP of Clinical Operations and the CFO to understand the progress of clinical studies.

 

We challenged the stage of completion of the clinical studies by directly obtaining confirmations from the Contract Research Organisations (CROs) of the total costs incurred, status of invoices paid and any amounts outstanding and the completeness of their tracker for investigator grant expenses. We also corroborated the number of sites open and patients enrolled for a sample of studies to online government clinical study websites.

 

  
  

We agreed and corroborated trade payable balances, total invoiced amounts, underlying contracts and latest contract amendments via third party supplier confirmations with CROs for a sample of clinical studies.

 

We tested a sample of material post balance sheet payments to determine completeness of clinical study investigator grant accruals.

 

We have reviewed the completeness and accuracy of the related disclosures related to clinical studies.

  

In the prior year, our auditor’s report included key audit matters in relation to recognition of clinical study and contracted manufacturing expenses and to management override of controls in relation to expenses cut-off. In the current year, the recognition of clinical study and contracted manufacturing expenses has been narrowed in scope to focus on investigator grant expenses within the clinical study expenses. In the current year, the management override of controls in relation to expenses cut-off has been deemed to be less subjective by the audit team and this has not been included as a key audit matter.

 

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independent auditor’s report to the members of NuCana plc/05

 

our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group and Company to be £545,000 (2022: £695,000), which is 2% (2022: 2%) of operating expenses excluding share-based payment expense. We believe that operating expenses provides us with an appropriate basis for determining materiality since the Group is in the development stage of its life cycle and is investing in research and development, with no operating income to date. Furthermore, we have based materiality on this measure due to our understanding of the perspective of users of the financial statements. The decrease from prior year reflects the decreased level of activity of the Group.

 

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Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 75% (2022: 75%) of our planning materiality, namely £409,000 (2022: £521,000). We have set performance materiality at this percentage due to various considerations including our ability to assess the likelihood of misstatements, the effectiveness of the internal control environment and other factors affecting the entity and its financial reporting.

Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of performance materiality allocated to components was £102,000 to £409,000 (2022: £104,000 to £521,000).

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £27,000 (2022: £35,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

other information

The other information comprises the information included in the annual report set out on pages 2 to 28, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

 

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independent auditor’s report to the members of NuCana plc/05

 

opinions on other matters prescribed by the Companies Act 2006

In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit:

 

 

the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

 

 

the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.

matters on which we are required to report by exception

In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

 

adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or

 

 

the Company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or

 

 

certain disclosures of directors’ remuneration specified by law are not made; or

 

 

we have not received all the information and explanations we require for our audit.

responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 28, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed overleaf.

 

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independent auditor’s report to the members of NuCana plc/05

 

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and management.

 

 

We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant are those that are directly relevant to specific assertions in the financial statements, those that relate to the reporting framework (IFRS and the Companies Act 2006), and the relevant tax compliance regulations in the jurisdictions in which the Group operates. In addition, we concluded that there are certain significant laws and regulations in relation to health and safety, employee matters and anti-bribery and corruption practices.

 

 

We understood how the Group is complying with those frameworks by making enquiries of management, those responsible for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our review of board minutes and papers provided to the Audit Committee.

 

 

We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by meeting with management, including within various parts of the business, to understand where they considered there was susceptibility to fraud. We also considered performance targets and their propensity to influence reports made by management to manage earnings or influence the perceptions of analysts. Where the risk was considered higher, we performed specific procedures including testing of manual journals to provide reasonable assurance that the financial statements were free from fraud and error. Further details of the procedures performed, and our observations are included in the Key audit matters section of this report.

 

 

Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures included review of board minutes, review of management reports made to the Audit Committee, enquiries of external legal counsel, enquiries of management as well as the application of data analytical tools with a focus on manual journals and transactions that have heightened risk by nature.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

 

LOGO

Kevin Weston (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

Edinburgh

15 April 2024

 

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06 financial statements

 

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financial statements/06

 

group income statement

for the year ended 31 December 2023

 

          2023     2022  
                   
          (in thousands)  
     Notes    £     £  

Research and development expenses

        (25,062     (36,426

Administrative expenses

        (6,063     (7,291

Impairment of intangible assets

   7      (503     (292

Net foreign exchange (losses) gains

        (1,156     4,887  
     

 

 

   

 

 

 

Operating loss

        (32,784     (39,122

Finance income

        754       669  
     

 

 

   

 

 

 

Loss before tax

   3      (32,030     (38,453

Income tax credit

   4      4,398       6,432  
     

 

 

   

 

 

 

Loss for the year

        (27,632     (32,021
     

 

 

   

 

 

 

Attributable to:

       
     

 

 

   

 

 

 

Equity holders of the Company

        (27,632     (32,021
     

 

 

   

 

 

 
          £     £  

Basic and diluted loss per share

   5      (0.53     (0.61
     

 

 

   

 

 

 

group statement of comprehensive loss

for the year ended 31 December 2023

 

     2023     2022  
              
     (in thousands)  
     £     £  

Loss for the year

     (27,632     (32,021

Other comprehensive (expense) income:

    

Items that may be reclassified subsequently to profit or loss:

    

Exchange differences on translation of foreign operations

     (41     61  
  

 

 

   

 

 

 

Other comprehensive (expense) income for the year

     (41     61  
  

 

 

   

 

 

 

Total comprehensive loss for the year

     (27,673     (31,960
  

 

 

   

 

 

 

Attributable to:

    
  

 

 

   

 

 

 

Equity holders of the Company

     (27,673     (31,960
  

 

 

   

 

 

 

 

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financial statements/06

 

group statement of financial position

at 31 December 2023

 

          2023     2022  
                   
          (in thousands)  
     Notes    £     £  

Assets

       

Non-current assets

       

Intangible assets

   7      2,128       2,365  

Property, plant and equipment

   8      521       866  

Deferred tax asset

   4      143       103  
     

 

 

   

 

 

 
        2,792       3,334  
     

 

 

   

 

 

 

Current assets

       

Prepayments, accrued income and other receivables

   12      2,671       3,957  

Current income tax receivable

   4      5,123       6,367  

Other assets

   9      —        2,684  

Cash and cash equivalents

   13      17,225       41,912  
     

 

 

   

 

 

 
        25,019       54,920  
     

 

 

   

 

 

 

Total assets

        27,811       58,254  
     

 

 

   

 

 

 

Equity and liabilities

       

Capital and reserves

       

Share capital and share premium

   14      143,420       143,203  

Other reserves

   15      79,173       75,872  

Accumulated deficit

        (207,706     (180,573
     

 

 

   

 

 

 

Total equity attributable to equity holders of the Company

        14,887       38,502  
     

 

 

   

 

 

 

Non-current liabilities

       

Provisions

   19      58       46  

Lease liabilities

   17      190       396  
     

 

 

   

 

 

 
        248       442  
     

 

 

   

 

 

 

Current liabilities

       

Trade payables

        3,375       4,803  

Payroll taxes and social security

        155       162  

Accrued expenditure

        8,940       10,002  

Lease liabilities

   17      206       243  

Provisions

   19      —        4,100  
     

 

 

   

 

 

 
        12,676       19,310  
     

 

 

   

 

 

 

Total liabilities

        12,924       19,752  
     

 

 

   

 

 

 

Total equity and liabilities

        27,811       58,254  
     

 

 

   

 

 

 

On behalf of the Board

LOGO

Hugh S. Griffith

Director

15 April 2024

 

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financial statements/06

 

company statement of financial position

at 31 December 2023

 

            2023     2022  
                     
            (in thousands)  
     Notes      £     £  

Assets

       

Non-current assets

       

Intangible assets

     7        2,128       2,365  

Property, plant and equipment

     8        452       727  

Investment in subsidiaries

     10        —        —   

Loan receivable from subsidiary

     11        416       397  
     

 

 

   

 

 

 
        2,996       3,489  
     

 

 

   

 

 

 

Current assets

       

Prepayments, accrued income and other receivables

     12        2,586       3,877  

Current income tax receivable

     4        5,121       6,366  

Other assets

     9        —        2,684  

Cash and cash equivalents

     13        17,184       41,851  
     

 

 

   

 

 

 
        24,891       54,778  
     

 

 

   

 

 

 

Total assets

        27,887       58,267  
     

 

 

   

 

 

 

Equity and liabilities

       

Capital and reserves

       

Share capital and share premium

     14        143,420       143,203  

Other reserves

     15        79,509       76,167  

Accumulated deficit

        (208,413     (181,135
     

 

 

   

 

 

 

Total equity

        14,516       38,235  
     

 

 

   

 

 

 

Non-current liabilities

       

Provisions

     19        58       46  

Lease liabilities

     17        190       331  
     

 

 

   

 

 

 
        248       377  
     

 

 

   

 

 

 

Current liabilities

       

Trade payables

        3,354       4,793  

Payroll taxes and social security

        155       162  

Loan payable to subsidiary

     11        873       874  

Accrued expenditure

        8,600       9,550  

Lease liabilities

     17        141       176  

Provisions

     19        —        4,100  
     

 

 

   

 

 

 
        13,123       19,655  
     

 

 

   

 

 

 

Total liabilities

        13,371       20,032  
     

 

 

   

 

 

 

Total equity and liabilities

        27,887       58,267  
     

 

 

   

 

 

 

The Company’s loss for the year was £27.8 million (2022: £32.2 million)

On behalf of the Board

LOGO

Hugh S. Griffith

Director

15 April 2024

 

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financial statements/06

 

group statement of changes in equity

for the year ended 31 December 2023

 

     Share
capital
     Share
premium
    Own
share
reserve
    Share
option
reserve
    Foreign
currency
translation
reserve
    Capital
reserve
     Accumulated
deficit
    Total equity
attributable
to equity
holders
of the
Company
 
                                                    
                        (in thousands)                     
     £      £     £     £     £     £      £     £  

Balance at 1 January 2022

     2,087        141,050       (339     30,027       (17     42,466        (149,726     65,548  

Loss for the year

     —         —        —        —        —        —         (32,021     (32,021

Other comprehensive income for the year

     —         —        —        —        61       —         —        61  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total comprehensive loss for the year

     —         —        —        —        61       —         (32,021     (31,960

Share-based payments

     —         —        —        4,890       —        —         —        4,890  

Exercise of share options

     8        58       —        (362     —        —         320       24  

Lapse of share options

     —         —        —        (854     —        —         854       —   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance at 31 December 2022

     2,095        141,108       (339     33,701       44       42,466        (180,573     38,502  

Loss for the year

     —         —        —        —        —        —         (27,632     (27,632

Other comprehensive expense for the year

     —         —        —        —        (41     —         —        (41
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total comprehensive loss for the year

     —         —        —        —        (41     —         (27,632     (27,673

Share-based payments

     —         —        —        3,857       —        —         —        3,857  

Exercise of share options

     3        1       —        (277     —        —         261       (12

Lapse of share options

     —         —        —        (238     —        —         238       —   

Issue of share capital

     16        233       —        —        —        —         —        249  

Share issue expenses

     —         (36     —        —        —        —         —        (36
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance at 31 December 2023

     2,114        141,306       (339     37,043       3       42,466        (207,706     14,887  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

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financial statements/06

 

company statement of changes in equity

for the year ended 31 December 2023

 

     Share
capital
     Share
premium
    Share
option
reserve
    Capital
reserve
     Accumulated
deficit
    Total equity
attributable
to equity
holders
of the
Company
 
                                        
     (in thousands)  
     £      £     £     £      £     £  

Balance at 1 January 2022

     2,087        141,050       30,027       42,466        (150,136     65,494  

Loss for the year

     —         —        —        —         (32,173     (32,173

Share-based payments

     —         —        4,890       —         —        4,890  

Exercise of share options

     8        58       (362     —         320       24  

Lapse of share options

     —         —        (854     —         854       —   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance at 31 December 2022

     2,095        141,108       33,701       42,466        (181,135     38,235  

Loss for the year

     —         —        —        —         (27,777     (27,777

Share-based payments

     —         —        3,857       —         —        3,857  

Exercise of share options

     3        1       (277     —         261       (12

Lapse of share options

     —         —        (238     —         238       —   

Issue of share capital

     16        233       —        —         —        249  

Share issue expenses

     —         (36     —        —         —        (36
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance at 31 December 2023

     2,114        141,306       37,043       42,466        (208,413     14,516  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

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financial statements/06

 

group and company statement of cash flows

for the year ended 31 December 2023

 

     Group     Company  
     2023     2022     2023     2022  
     (in thousands)  
     £     £     £     £  

Cash flows from operating activities

        

Loss for the year

     (27,632     (32,021     (27,777     (32,173

Adjustments for:

        

Income tax credit

     (4,398     (6,432     (4,352     (6,401

Amortisation, depreciation and loss on disposal

     575       732       508       665  

Impairment of intangible assets

     503       292       503       292  

Movement in provisions

     (4,109     4,100       (4,109     4,100  

Finance income

     (754     (669     (774     (677

Interest expense on lease liabilities

     29       21       22       16  

Share-based payments

     3,857       4,890       3,857       4,890  

Net foreign exchange losses (gains)

     1,176       (5,014     1,173       (5,010
  

 

 

   

 

 

   

 

 

   

 

 

 
     (30,753     (34,101     (30,949     (34,298

Movements in working capital:

        

Decrease in prepayments, accrued income and other receivables

     1,234       307       1,238       322  

(Decrease) increase in trade payables

     (1,428     2,974       (1,439     2,979  

(Decrease) increase in payroll taxes, social security, accrued expenditure and payable to subsidiary

     (1,087     442       (976     579  
  

 

 

   

 

 

   

 

 

   

 

 

 

Movements in working capital

     (1,281     3,723       (1,177     3,880  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash used in operations

     (32,034     (30,378     (32,126     (30,418
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income tax received

     5,595       7,220       5,598       7,220  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in operating activities

     (26,439     (23,158     (26,528     (23,198

Cash flows from investing activities

        

Interest received

     770       638       770       638  

Payments for property, plant and equipment

     (4     (12     (4     (12

Payments for intangible assets

     (474     (506     (474     (506

Repayment of other assets

     2,596       —        2,596       —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash from investing activities

     2,888       120       2,888       120  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities

        

Payments of lease liabilities

     (270     (227     (198     (160

Proceeds from issue of share capital – exercise of share options

     4       66       4       66  

Proceeds from issue of share capital

     249       —        249       —   

Share issue expenses

     (36     —        (36     —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) from financing activities

     (53     (161     19       (94
  

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (23,604     (23,199     (23,621     (23,172

Cash and cash equivalents at beginning of year

     41,912       60,264       41,851       60,230  
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (1,083     4,847       (1,046     4,793  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of year

     17,225       41,912       17,184       41,851  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

notes to the financial statements

1. Authorisation of financial statements

The financial statements of NuCana plc (“Company”) and together with its subsidiaries (“Group”) for the year ended 31 December 2023 were authorised for issue by the board of directors on 15 April 2024.

The Group is a clinical-stage biopharmaceutical company developing a portfolio of new medicines to treat patients with cancer. We are harnessing the power of phosphoramidate chemistry to generate new medicines called ProTides. These compounds have the potential to be more effective and safer than some of the current agents used for the treatment of patients with cancer.

On 29 August 2017 the Company re-registered as a public limited company and changed its name from NuCana BioMed Limited to NuCana plc.

The Company has had American Depository Shares (“ADSs”) registered with the US Securities and Exchange Commission (“SEC”) and has been listed on Nasdaq since 2 October 2017. From 9 November 2023 the Company transferred its listing to The Nasdaq Capital Market. The Company is incorporated in England and Wales and domiciled in the United Kingdom (registration number 03308778) and is limited by shares.

The address of the Company’s registered office and principal place of business are disclosed in the introduction to the report and financial statements.

2. Material accounting policies

Basis of preparation

The financial statements have been prepared in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in conformity with U.K.-adopted international accounting standards. As permitted by section 408 of the Companies Act 2006, no Income Statement is presented for the Company.

The Group financial statements comprise the financial statements of the Company and its subsidiaries at 31 December 2023. The financial statements are presented in pounds sterling, which is also the Company’s functional currency. All values are rounded to the nearest thousand, except where otherwise indicated.

In preparing the financial statements, management has considered the impact of the physical and transition risks of climate change and identified this as an emerging risk as set out on page 16 but have concluded that it does not have a material impact on the recognition and measurement of the assets and liabilities in these financial statements as at 31 December 2023.

Going concern

The Group’s financial statements have been presented on the basis that it is a going concern. The Group has not generated any revenues from operations to date and does not expect to in the foreseeable future. As such, the Group has incurred recurring net losses, has an accumulated deficit totalling £207.7 million and cash flows used in operating activities of £26.4 million for the year ended 31 December 2023. The Group had £17.2 million of cash and cash equivalents at 31 December 2023.

The Group’s board of directors have reviewed the operating budgets and development plans for the 18-month period to 30 June 2025 (the “going concern assessment period”). The base case forecast prepared for the going concern assessment period includes assumptions regarding, among other things, research and development expenses, administrative expenses, staff costs and R&D tax credits. The timing of R&D tax credits is out with management’s control and any significant delay in receipt of these tax credits would result in the company exhausting its cash balances earlier than forecast within the going concern period. The forecast includes the post year end gross “at-the-market” (ATM) cash proceeds of £1.5 million disclosed in note 20. The base case forecast has been reviewed and approved by the board of directors in accordance with the Group’s normal budgeting and forecasting processes.

Based on the base case forecast, the Group’s cash and cash equivalents on hand will not be sufficient to fund the Group’s anticipated operations for the entirety of the going concern assessment period. As the Group intends to continue to progress its research and development activities, there will be a requirement to seek additional capital within the going concern assessment period to fund operations, which the Group may obtain from additional equity financings, debt financings, partnerships, or other sources.

If the Group is unable to obtain additional capital, the Group will be required to delay or reduce its research and development programs or cease trading which could negatively impact its ability to generate future sustainable operating revenues and profits or its ability to continue as a going concern.

The Group’s board of directors, having successfully completed several financings in the past, has prepared plans to raise additional capital and held preliminary discussions with potential financial advisers, and believe the Group will be successful in raising sufficient additional capital to allow the Group and the Company to continue as a going concern.

As a result of these matters there is material uncertainty related to the ability of the Group and the Company to raise sufficient additional capital within the going concern assessment period, prior to its cash balances being exhausted. These events or conditions give rise to a material uncertainty that may cast significant doubt upon the Group and the Company’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not contain the adjustments that would result if the company was unable to continue as a going concern.

Judgements and estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities at the balance sheet date and the amounts reported for revenue and expenses during the year. The nature of estimations means that actual outcomes could differ from those estimates.

The following judgements have had the most material effect on the amounts recognised in the financial statements:

Research and development expenses

The Group recognises research and development expenses in the income statement in the period in which they are incurred. When development activities reach the advanced stage, as set out in the specific criteria of International Accounting Standard (“IAS”) 38, Intangible Assets, there will be a requirement to capitalise such costs as intangible assets. Management will continue to exercise judgement in the appropriate treatment of research and development costs.

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

Taxation

Management judgement is required to determine the amount of deferred tax assets that should be recognised, based upon the likely timing and level of future taxable profits. Further details are contained in note 4.

The following estimates have had the most material effect on the amounts recognised in the financial statements:

Recognition of clinical study expenses

As part of the process of preparing our consolidated financial statements, we may be required to estimate accrued or prepaid expenses related to our clinical studies. In order to obtain reasonable estimates, we review open contracts and master service agreements. In addition, we communicate with applicable personnel in order to identify services that have been performed, but for which we have not yet been invoiced, and services not yet performed for which we have been invoiced in advance. In most cases, our vendors provide us with monthly invoices in arrears for services performed. The following are examples of our accrued expenses:

 

   

fees paid to CROs for services performed on clinical studies; and

 

   

pass-through costs for activities at clinical study investigator sites.

Accruals for clinical study expenses, including estimated amounts recognised consistent with the above policy, were £6.2 million at 31 December 2023 as compared to £6.6 million at 31 December 2022. This includes accruals for investigator fees of £4.8 million at 31 December 2023 as compared to £4.2 million at 31 December 2022.

Prepayments for clinical study expenses, including estimated amounts recognised consistent with the above policy, were £1.0 million at 31 December 2023 as compared to £1.8 million at 31 December 2022. These amounts include sums that are expected to be utilised over the period of the associated studies, which in some cases could be greater than one year.

Recognition of contracted manufacturing expenses

As part of the process of preparing our consolidated financial statements, we may be required to estimate accrued or prepaid expenses related to our contracted manufacturing expenses. In order to obtain reasonable estimates, we review open contracts and master service agreements. In addition, we consult with applicable personnel in order to identify services that have been performed and which have not yet been invoiced, and services not yet performed for which we have been invoiced in advance.

Accruals for contracted manufacturing expenses, including estimated amounts recognised consistent with the above policy, were £0.4 million at 31 December 2023 as compared to £0.4 million at 31 December 2022.

Prepayments for contracted manufacturing expenses, including estimated amounts recognised consistent with the above policy, were £41,000 at 31 December 2023 as compared to £0.1 million at 31 December 2022.

Share-based payments

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model, including the expected life of the share option, historical volatility of the share price, dividend yield and assumptions about them, and the actual market value of an ordinary share in the Company at the date of grant. For the measurement of the fair value of equity-settled transactions at the grant date, the Company uses the Black-Scholes model. The assumptions used for estimating fair value for share-based payment transactions are detailed in note 16.

Legal proceedings

The Group may be party to a number of litigation and other legal proceedings. The Group recognises a provision for any settlement or cost reimbursement due to other parties involved in the legal proceedings if a legal or constructive obligation as a result of a past event exists at the balance sheet date, it is probable that an outflow of economic resources will be required to settle the obligation, and a reasonable estimate can be made of the amount of the obligation, even although the timing or amount of the liability is uncertain. The final amount of any settlement or cost reimbursement may be materially different to management’s estimate.

Similarly, the Group recognises an asset for any settlement or cost reimbursement in relation to the legal proceedings due to the Group if it is virtually certain that the income will be received.

Where an outflow of economic resources is not probable or an inflow of economic resources is not virtually certain, the Group will disclose a contingent liability or contingent asset, respectively.

As of 31 December 2023, the Group had a provision of £nil (2022: £4.1 million) with respect to legal proceedings.

Basis of consolidation

The Group financial statements comprise the financial statements of the Company and its subsidiaries.

Subsidiaries are consolidated from the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the Group financial statements from the date the Company gains control until the date the Company ceases to control the subsidiary.

Foreign currencies

The Group’s consolidated financial statements are presented in pounds sterling, which is also the parent company’s functional currency. For each group entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

Transactions and balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates of exchange at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in the Group income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

Group companies

On consolidation, the assets and liabilities of foreign operations are translated into pounds sterling at the rate of exchange prevailing at the reporting date and their income statements are translated at the average exchange rate for the financial period in which those transactions occur. The exchange differences arising on translation for consolidation are recognised in the group statement of comprehensive income or loss.

Segment reporting

The Group operates in one operating segment. Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision maker (“the CODM”). The Group’s CODM, its Chief Executive Officer, views the Group’s operations and manages its business as a single operating segment, which is the business of developing and commercialising ProTides for use in Oncology. The Group’s principal operations and decision-making functions are located in the United Kingdom from where global decisions are made.

Share issue expenses

Incremental costs incurred and directly attributable to the issuance of shares are deducted from the related proceeds of the issuance. The net amount is recorded as contributed shareholders’ equity in the period when such shares were issued. Costs that are not incremental and directly attributable to issuing new shares, are recorded as an expense in the Group income statement.

Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. There are no restrictions on title to assets nor equipment pledged as security for liabilities.

Depreciation is provided on property, plant and equipment over their expected useful economic life as follows:

 

Asset class    Depreciation method and period
Office and computer equipment    Straight-line over 3 years
Fixtures and fittings    Straight-line over 5 years, or, for non–removable items, the remaining term of an associated lease, whichever is shorter
Right of use assets    Straight-line over the lease terms, which are between two and five years, or the estimated useful lives of the assets, whichever is shorter

Intangible assets

Intangible assets are stated at cost, net of accumulated amortisation and accumulated impairment losses, if any. Cost in relation to patents includes registration, documentation and other legal fees associated with obtaining the patent. Computer software cost represents the initial purchase price of the asset.

The amortisation method and amortisation period for the principal categories of intangible assets are as follows:

 

Asset class    Amortisation method and period
Patents    Straight-line over 20 years
Computer software    Straight-line between 3 and 5 years

The Group’s primary patents each have a life of 20 years. Further patents are granted in various jurisdictions to extend the territorial coverage of the primary patent. These patents are granted up to the period of the related primary patent. Costs are amortised over the remaining life of the relevant primary patent. The amortisation expense on intangible assets with finite lives is recognised in the Group income statement as an administrative expense. The amortisation method and the amortisation period for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful economic life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate.

Intangible assets are tested for impairment when there is an indicator of impairment.

Cash and cash equivalents

Cash and cash equivalents in the statement of financial position include cash at banks with deposit maturity terms of three months or less.

Research and development

Research and development expenses are currently recognised in the income statement in the year in which they are incurred. Development expenses on an individual project will be recognised as an intangible asset when the Group can demonstrate:

 

   

the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;

 

   

its intention to complete and its ability and intention to use or sell the asset;

 

   

how the asset will generate future economic benefits;

 

   

the availability of resources to complete the asset; and

 

   

the ability to measure reliably the expenditure during development.

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s statement of financial position.

Income taxes

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates within the tax regime.

Income tax credit

The Group benefits from the U.K. and U.S. research and development tax credit regimes. In the United Kingdom, a portion of the Company’s losses can be surrendered for a cash rebate of up to 26.97% of eligible expenditures incurred on or after 1 April 2023 (33.35% prior to 1 April 2023). In the U.S. the Group is able to offset the research and development credits against corporation tax payable. Such credits are accounted for within the tax provision in the year in which the expenditures are incurred.

Leases

The Group assesses, at contract inception, whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right of use assets representing the right to use the underlying assets.

Right of use assets

The Group recognises right of use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right of use assets, which relate solely to office space, are depreciated on a straight–line basis over the shorter of the lease terms, which are between two and five years, or the estimated useful lives of the assets.

Lease liability

At the commencement date of the lease, the Group recognises a lease liability measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, and any variable lease payments that depend on an index.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of the lease liability is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of the lease liability is remeasured if there is a modification, a change in the lease term or a change in the lease payments.

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has a number of lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects whether it is reasonably certain to exercise or not to exercise the option to renew or to terminate, such as the construction of significant leasehold improvements.

Refer to note 17 for information on potential future rental payments relating to periods following the exercise date of extension options that are not included in the lease liability.

Provisions

Provisions are recognised when either a legal or constructive obligation as a result of a past event exists at the balance sheet date, it is probable that an outflow of economic resources will be required to settle the obligation, and a reasonable estimate can be made of the amount of the obligation, even although the timing or amount of the liability is uncertain.

Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, the Group estimates the recoverable amount of the asset.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Group income statement.

A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

Calculation of recoverable amount

The recoverable amount of assets and cash-generating units is the higher of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

Reversal of impairment

An assessment is made at each reporting date as to whether there is an indication that a previously recognised impairment loss may no longer exist or may have decreased. If such an indication exists the recoverable amount is estimated.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. If that is the case, the carrying value is increased to its recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Share-based payments

Employees, directors and consultants of the Group receive remuneration in the form of share options, whereby individuals render services as consideration for equity instruments and the cost is recognised as share-based payments under IFRS 2.

Under IFRS 2 Share-based Payment, equity share-based payments are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of fair value of equity settled share-based transactions are set out in note 16.

The fair value determined at the grant date of equity settled share-based payments, after adjusting for an assumed forfeiture rate, is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity to the share option reserve.

Fair value measurement

The fair value of the financial assets and liabilities is included at the amount at which an instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation or sale.

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, IFRS 13 establishes a fair value hierarchy that prioritises observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

The fair values of cash and cash equivalents, other receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments.

Accounting standards

In preparing these financial statements, the Group has applied all relevant IAS, IFRS and International Financial Reporting Interpretations Committee (“IFRIC”) Interpretations as of the date of approval of these financial statements and which are mandatory for the financial year ended 31 December 2023.

The following amendments have been adopted as of 1 January 2023 in these financial statements:

 

   

IFRS 17 Insurance Contracts (effective from 1 January 2023)

 

   

Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 – Disclosure of Accounting Policies (effective from 1 January 2023)

 

   

Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates (effective from 1 January 2023)

 

   

Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective from 1 January 2023)

 

   

Amendments to IAS 12 International Tax Reform – Pillar Two Model Rules (effective from 1 January 2023)

The Group concluded that these have not had a material impact on the Group’s accounts in the period of initial application, but may impact the accounting for future transactions.

The IASB and IFRIC have issued the following standards and amendments with an effective date after the date of these financial statements:

 

   

Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-Current (effective from 1 January 2024)

 

   

Amendments to IAS 1 Presentation of Financial Statements – Non-Current Liabilities with Covenants (effective from 1 January 2024)

 

   

Amendments to IFRS 16 Lease Liability in a Sale and Leaseback (effective from 1 January 2024)

 

   

Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements (effective from 1 January 2024)

 

   

Amendments to IAS 21 Lack of Exchangeability (effective from 1 January 2025)

The Group will adopt the above standards and amendments on their effective date, although the Group has reviewed the above standards and amendments and considers that they either do not apply to the Group or will not have a material impact in future periods.

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

3. Loss before tax

Loss before tax is stated after charging:

 

     2023      2022  
               
     (in thousands)  
     £      £  

Amortisation and depreciation

     

Owned assets

     363        461  

Right of use assets under IFRS 16

     212        251  

Interest expense on lease liabilities (included in administrative expenses) under IFRS 16

     29        21  

Share-based payments

     3,857        4,890  

(a) Auditors’ remuneration

 

     2023      2022  
               
     (in thousands)  
     £      £  

Audit of the financial statements

     353        407  

Other fees:

     

Audit-related fees(1)

     277        128  
  

 

 

    

 

 

 
     630        535  
  

 

 

    

 

 

 

 

(1)

Audit-related fees are primarily for quarterly reviews and services related to SEC filings.

(b) Staff costs and directors’ emoluments

 

Group    2023      2022  
               
     (in thousands)  
Included in research and development expenses:    £      £  

Wages and salaries

     4,530        4,893  

Social security costs

     516        569  

Pension costs

     210        213  

Share-based payments

     2,551        3,125  
  

 

 

    

 

 

 
     7,807        8,800  
  

 

 

    

 

 

 
Included in administrative expenses:              

Wages and salaries

     1,500        1,587  

Social security costs

     160        155  

Pension costs

     46        46  

Share-based payments

     1,306        1,765  
  

 

 

    

 

 

 
     3,012        3,553  
  

 

 

    

 

 

 

Total employee benefit expense

     10,819        12,353  
  

 

 

    

 

 

 
     2023      2022  
               
The average number of staff employed under contracts of service were:    (number)  

Research and development activities

     23        26  

Administrative activities

     6        7  
  

 

 

    

 

 

 
     29        33  
  

 

 

    

 

 

 

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

Company    2023      2022  
               
     (in thousands)  
Included in research and development expenses:    £      £  

Wages and salaries

     3,742        4,010  

Social security costs

     495        536  

Pension costs

     199        202  

Share-based payments

     2,551        3,125  
  

 

 

    

 

 

 
     6,987        7,873  
  

 

 

    

 

 

 
Included in administrative expenses:              

Wages and salaries

     1,119        1,137  

Social security costs

     150        145  

Pension costs

     41        41  

Share-based payments

     1,306        1,765  
  

 

 

    

 

 

 
     2,616        3,088  
  

 

 

    

 

 

 

Total employee benefit expense

     9,603        10,961  
  

 

 

    

 

 

 
     2023      2022  
               
The average number of staff employed under contracts of service were:    (number)  

Research and development activities

     21        23  

Administrative activities

     6        7  
  

 

 

    

 

 

 
     27        30  
  

 

 

    

 

 

 

Directors’ remuneration

 

Company

   2023      2022  
               
     (in thousands)  
     £      £  

Directors’ remuneration in respect of qualifying services

     1,220        1,294  

Pension

     57        53  
  

 

 

    

 

 

 
     1,277        1,347  
  

 

 

    

 

 

 

The number of directors who exercised share options in 2023 was 2 (2022: 3). The gain on exercise of these options was £8,000 (2022: £48,000).

During the year the number of directors who were receiving benefits was as follows:

 

     2023      2022  
               
     (number)  

Accruing benefits under money purchase pension scheme

     1        1  

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

4. Income tax credit

(a) Tax on loss on ordinary activities:

 

     2023      2022  
               
     (in thousands)  
     £      £  

Current tax:

     

In respect of current year U.K.

     4,558        6,366  

In respect of current year U.S.

     (1      (3

In respect of prior year U.K.

     (206      35  
  

 

 

    

 

 

 

Total current tax

     4,351        6,398  
  

 

 

    

 

 

 

Deferred tax:

     

In respect of the current year U.S.

     48        34  

In respect of the prior year U.S.

     (1      —   
  

 

 

    

 

 

 

Total deferred tax

     47        34  
  

 

 

    

 

 

 

Income tax credit

     4,398        6,432  
  

 

 

    

 

 

 

Current income tax receivable:

     

U.K. tax

     5,121        6,366  

U.S. tax

     2        1  
  

 

 

    

 

 

 

Current income tax receivable

     5,123        6,367  
  

 

 

    

 

 

 

Deferred tax:

     
  

 

 

    

 

 

 

U.S. tax

     143        103  
  

 

 

    

 

 

 

(b) Reconciliation of the total income tax credit:

The credit for the year can be reconciled to the loss per the income statement as follows:

 

     2023      2022  
               
     (in thousands)  
     £      £  

Loss before tax

     (32,030      (38,453
  

 

 

    

 

 

 

Tax on loss at standard U.K. tax rate of 23.52% (2022: 19%)

     (7,533      (7,306

Effects of:

     

Expenses not deductible

     4,818        4,595  

Deduction for R&D

     (7,394      (8,342

Losses surrendered for R&D tax credit

     7,394        8,342  

Deferred tax - prior year adjustment

     1        —   

Overseas tax payable - current year

     1        3  

R&D tax credit - U.S.

     (48      (34

R&D tax credit - U.K. current year

     (4,558      (6,366

R&D tax credit - U.K. prior years

     206        (35

Deferred tax asset not recognised

     2,715        2,711  
  

 

 

    

 

 

 

Income tax credit

     (4,398      (6,432
  

 

 

    

 

 

 

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

(c) Deferred tax

In the United Kingdom, the Group has not recognised a deferred tax asset in respect of tax losses carried forward or temporary differences on share-based payment arrangements as at 31 December 2023 on the basis that the timing during which tax losses or temporary differences could be regarded as recoverable against future taxable profits cannot be determined with reasonable certainty. In the United States, a deferred tax asset, which relates to research & development tax credits, has been recognised to the extent that management consider that adequate future taxable profits will be available to realise the deferred tax asset.

Temporary differences and cumulative carry forward tax losses for which deferred tax has not been recognised amount to £99.1 million (2022: £85.9 million), comprising temporary differences on share-based payment arrangements of £0.6 million (2022: £1.3 million) and cumulative carry forward tax losses of £98.5 million (2022: £84.6 million).

(d) Factors affecting future tax

From 1 April 2023 the U.K. corporation tax rate increased from 19% to 25% for U.K. companies with annual profits of £250,000 or higher, which was substantively enacted on 24 May 2021 and means the standard U.K. tax rate was 23.52% for the year ended 31 December 2023.

5. Basic and diluted loss per share

 

     2023      2022  
               
    

(in thousands,

except per share data)

 
     £      £  

Loss for the year

     (27,632      (32,021
  

 

 

    

 

 

 

Basic and diluted weighted average number of shares

     52,573        52,235  
     £      £  

Basic and diluted loss per share

     (0.53      (0.61
  

 

 

    

 

 

 

Basic loss per share is calculated by dividing the loss for the year attributable to the equity holders of the Company by the weighted average number of shares outstanding during the year.

The dilutive effect of potential shares through equity settled transactions were considered to be anti-dilutive as they would have decreased the loss per share and were therefore excluded from the calculation of diluted loss per share.

6. Capital commitments and contingencies

Other commitments

Collaboration and license agreements

Cardiff University License

In August 2009, we entered into a research, collaboration and license agreement with Cardiff University and University College Cardiff Consultants Ltd., or Cardiff Consultants, which we refer to as the Cardiff Agreement. The Cardiff Agreement was subsequently renewed and expired at the end of 31 March 2022.

Prior to the expiration of the Cardiff Agreement, we notified Cardiff University and Cardiff Consultants regarding our selected ProTides for potential development of commercial products. Pursuant to the terms set out in the Cardiff Agreement, Cardiff University and Cardiff Consultants have granted us an exclusive worldwide license to use for all purposes the Cardiff intellectual property in respect of the nucleoside family of our selected ProTides. This license survives expiration of the Cardiff Agreement. During the license period Cardiff University and Cardiff Consultants may not undertake any research for any competing third party on nucleoside families of interest to us where such research would make use of the Cardiff intellectual property, or to grant rights in the Cardiff intellectual property to any third party for use in connection with nucleosides of interest to us.

On our filing, or that of a sublicensee, of patent applications resulting from research under the Cardiff Agreement, we will owe Cardiff Consultants certain immaterial payments. If we or our sublicensees develop and commercialise a product resulting from such research, we will owe Cardiff Consultants clinical development milestone payments of up to £1,875,000, provided that such milestone payments are due only with respect to the first product within each nucleoside family to achieve the milestone. We will also owe Cardiff Consultants royalties equal to a low-single digit percentage on our sales of a product resulting from such research. Should we sublicense our right to commercialise a product resulting from the research, we will owe Cardiff Consultants a high-single digit percentage of payments received in consideration of the sublicense.

Cardiff ProTides Agreement

In October 2009, we entered into a license and collaboration agreement with Cardiff ProTides Ltd., or Cardiff ProTides, which agreement was subsequently amended and restated as an assignment, license and collaboration agreement in March 2012 and was further amended in May 2012, which we refer to as the ProTides Agreement. Under the ProTides Agreement, we collaborated with Cardiff ProTides in the discovery, drug design and in vitro screening of purine and pyrimidine-based nucleosides as potential drug candidates. We funded certain work at Cardiff

 

 

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for the year end 31 December 2023

 

ProTides, and Cardiff ProTides has assigned to us all rights in the results of its research under the ProTides Agreement. Cardiff ProTides also assigned to us patents related to certain compounds of interest, including with respect to Acelarin, and granted us an exclusive, worldwide license, including the right to grant sublicenses, to rights in and technical information related to certain unpatented compounds for all therapeutic, diagnostic, prognostic and prophylactic applications.

If we or a sublicensee develop one or more products covered by a valid claim of an assigned patent or patent resulting from Cardiff ProTides’ research, such as Acelarin, we will owe Cardiff ProTides up to approximately $4.5 million in development and approval milestone payments in the aggregate for the first such product. Additional development and approval milestones would be payable for the first additional product in a new nucleoside series covered by a valid claim of an assigned patent or a patent resulting from Cardiff ProTides’ research, although the maximum potential value of such milestone payments is approximately half the value of the milestone payments associated with the first product. We will also owe Cardiff ProTides royalties equal to a percentage in mid to high single-digits on sales of such products, subject to reduction under certain circumstances. Royalties on sales by sublicensees are set by formula, which formula would be likely to result in a royalty in the mid-single digits.

The ProTides Agreement expires, on a country-by-country basis, on the later of the expiration, invalidity, abandonment, lapsing or rejection of the last valid claim of an assigned patent or patent resulting from Cardiff ProTides’ research, or, if certain technical information licensed from Cardiff ProTides remains confidential or the product is covered by a period of data exclusivity, ten years from the date of first commercial sale of a product in such country. The ProTides Agreement may be sooner terminated on an uncured material breach, bankruptcy of a party or, by Cardiff ProTides, if we challenge, or assist in a challenge, of the validity or ownership of an assigned patent or patent resulting from Cardiff ProTides’ research, or fail to pay amounts payable under the ProTides Agreement. It may also be sooner terminated where sums payable by us remain unpaid for 45 days after we receive a notice from Cardiff ProTides that the relevant sums are overdue. Upon a termination of the ProTides Agreement, our license rights will terminate except where the breach results from certain breaches by Cardiff ProTides, in which case our license rights continue on a non-exclusive basis, subject to reduced payment obligations. Upon termination of the ProTides Agreement, including as a result of our breach, we will be under an obligation to assign back to Cardiff ProTides the patents which Cardiff ProTides originally assigned to us.

CROs and manufacturing commitments

We have agreed to make payments to CROs and manufacturers under various CRO and manufacturing agreements. We have not included further details on such contingent payment obligations as the amount, timing and likelihood of such payments are not fixed or determinable.

Other contingent liabilities

Under the U.K. share-based payment plans, the Group granted unapproved share options that have fully vested. If and when these share options are exercised, the Group will be liable for the Employer Class 1 National Insurance payable to HMRC in the U.K. This contingent liability will be determined based on the market value of the shares on exercise less the exercise price paid by the option holders, at the prevailing rate of Employer National Insurance (currently 13.8%). Based on the closing share price of ADSs on the Nasdaq Capital Market on 29 December 2023, the last trading day of the period to which these financial statements relate, and assuming full exercise of all outstanding and vested unapproved share options on that date, the Employer National Insurance contingent liability would have been £0.1 million (2022: £0.1 million).

 

 

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notes to the financial statements/07

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7. Intangible assets

Group and Company

     Patents      Computer
software
     Total  
            (in thousands)         
     £      £      £  

Cost:

        

At 31 December 2021

     6,784        385        7,169  

Additions

     506        —         506  

Disposals

     —         (234      (234
  

 

 

    

 

 

    

 

 

 

At 31 December 2022

     7,290        151        7,441  
  

 

 

    

 

 

    

 

 

 

Accumulated amortisation:

        

At 31 December 2021

     4,439        320        4,759  

Charge for the year

     195        44        239  

Disposals

     —         (214      (214

Impairment

     292        —         292  
  

 

 

    

 

 

    

 

 

 

At 31 December 2022

     4,926        150        5,076  
  

 

 

    

 

 

    

 

 

 

Net book value:

        

At 31 December 2022

     2,364        1        2,365  
  

 

 

    

 

 

    

 

 

 

At 31 December 2021

     2,345        65        2,410  
  

 

 

    

 

 

    

 

 

 

Cost:

        

At 31 December 2022

     7,290        151        7,441  

Additions

     474        —         474  
  

 

 

    

 

 

    

 

 

 

At 31 December 2023

     7,764        151        7,915  
  

 

 

    

 

 

    

 

 

 

Accumulated amortisation:

        

At 31 December 2022

     4,926        150        5,076  

Charge for the year

     208        —         208  

Impairment

     503        —         503  
  

 

 

    

 

 

    

 

 

 

At 31 December 2023

     5,637        150        5,787  
  

 

 

    

 

 

    

 

 

 

Net book value:

        

At 31 December 2023

     2,127        1        2,128  
  

 

 

    

 

 

    

 

 

 

At 31 December 2022

     2,364        1        2,365  
  

 

 

    

 

 

    

 

 

 

The Group regularly reviews its patent portfolio and during 2023 further development associated with a limited number of patents, relating mainly to preclinical drug candidates, was discontinued. Management concluded that this was an indication of impairment and an impairment charge of £0.5 million has been recognised, representing the aggregate carrying value of those patents as at 31 December 2023. This compares to an impairment charge of £0.3 million recognised as of 31 December 2022.

 

 

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notes to the financial statements/07

for the year end 31 December 2023

 

8. Property, plant and equipment

Group

 

     Right of use
assets
     Office and
computer
equipment
     Fixtures and
fittings
     Total  
            (in thousands)                
     £      £      £      £  

Cost:

           

At 31 December 2021

     1,093        379        715        2,187  

Additions

     —         10        —         10  

Re-measurement

     483        —         —         483  

Disposals

     (237      (34      (130      (401

Effect of foreign currency exchange differences

     17        1        —         18  
  

 

 

    

 

 

    

 

 

    

 

 

 

At 31 December 2022

     1,356        356        585        2,297