NUCANA PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
Notes 2023 2022 2023 2022
(in thousands, except per share data)
£ £ £ £

Research and development expenses

(7,439 ) (7,386 ) (18,203 ) (23,238 )

Administrative expenses

(1,375 ) (1,715 ) (4,777 ) (5,756 )

Net foreign exchange gains (losses)

562 2,912 (697 ) 7,120

Operating loss

(8,252 ) (6,189 ) (23,677 ) (21,874 )

Finance income

152 216 617 380

Loss before tax

(8,100 ) (5,973 ) (23,060 ) (21,494 )

Income tax credit

3 1,404 1,445 3,083 4,672

Loss for the period attributable to equity holders of the Company

(6,696 ) (4,528 ) (19,977 ) (16,822 )

Basic and diluted loss per share

4 (0.13 ) (0.09 ) (0.38 ) (0.32 )

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

NUCANA PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
2023 2022 2023 2022
(in thousands)
£ £ £ £

Loss for the period

(6,696 ) (4,528 ) (19,977 ) (16,822 )

Other comprehensive income (expense):

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translation of foreign operations

30 52 (8 ) 108

Other comprehensive income (expense) for the period

30 52 (8 ) 108

Total comprehensive loss for the period

(6,666 ) (4,476 ) (19,985 ) (16,714 )

Attributable to:

Equity holders of the Company

(6,666 ) (4,476 ) (19,985 ) (16,714 )

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

NUCANA PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT

September 30,
2023		 December 31,
2022
(in thousands)
Notes £ £

Assets

Non-current assets

Intangible assets

5 2,583 2,365

Property, plant and equipment

612 866

Deferred tax asset

3 127 103
3,322 3,334

Current assets

Prepayments, accrued income and other receivables

3,414 3,957

Current income tax receivable

3 9,428 6,367

Other assets

6 - 2,684

Cash and cash equivalents

7 17,803 41,912
30,645 54,920

Total assets

33,967 58,254

Equity and liabilities

Capital and reserves

Share capital and share premium

9 143,400 143,203

Other reserves

78,430 75,872

Accumulated deficit

(200,056 ) (180,573 )

Total equity attributable to equity holders of the Company

21,774 38,502

Non-current liabilities

Provisions

10 58 46

Lease liabilities

222 396
280 442

Current liabilities

Trade payables

5,174 4,803

Payroll taxes and social security

165 162

Accrued expenditure

6,344 10,002

Lease liabilities

230 243

Provisions

10 - 4,100
11,913 19,310

Total liabilities

12,193 19,752

Total equity and liabilities

33,967 58,254

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

NUCANA PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Nine Months Ended September 30,
Share
capital		 Share
premium		 Own
share
reserve		 Share
option
reserve		 Foreign
currency
translation
reserve		 Capital
reserve		 Accumulated
deficit		 Total
equity
attributable
to equity
holders
(in thousands)
£ £ £ £ £ £ £ £

Balance at January 1, 2022

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

Loss for the period

- - - - - - (16,822 ) (16,822 )

Other comprehensive income for the period

- - - - 108 - - 108

Total comprehensive loss for the period

- - - - 108 - (16,822 ) (16,714 )

Share-based payments

- - - 3,900 - - - 3,900

Exercise of share options

1 - - (362 ) - - 320 (41 )

Lapse of share options

- - - (715 ) - - 715 -

Balance at September 30, 2022

2,088 141,050 (339 ) 32,850 91 42,466 (165,513 ) 52,693

Balance at January 1, 2023

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

Loss for the period

- - - - - - (19,977 ) (19,977 )

Other comprehensive expense for the period

- - - - (8 ) - - (8 )

Total comprehensive loss for the period

- - - - (8 ) - (19,977 ) (19,985 )

Share-based payments

- - - 3,073 - - - 3,073

Exercise of share options

2 1 - (269 ) - - 256 (10 )

Lapse of share options

- - - (238 ) - - 238 -

Issue of share capital

14 210 - - - - - 224

Share issue expenses

- (30 ) - - - - - (30 )

Balance at September 30, 2023

2,111 141,289 (339 ) 36,267 36 42,466 (200,056 ) 21,774

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

NUCANA PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended
September 30,
2023 2022
(in thousands)
£ £

Cash flows from operating activities

Loss for the period

(19,977 ) (16,822 )

Adjustments for:

Income tax credit

(3,083 ) (4,672 )

Amortization, depreciation and loss on disposal

434 676

Movement in provisions

(4,109 ) -

Finance income

(617 ) (380 )

Interest expense on lease liabilities

23 11

Share-based payments

3,073 3,900

Net foreign exchange losses (gains)

661 (7,233 )
(23,595 ) (24,520 )

Movements in working capital:

Decrease (increase) in prepayments, accrued income and other receivables

531 (2,758 )

Increase in trade payables

371 3,785

Decrease in payroll taxes, social security and accrued expenditure

(3,667 ) (101 )

Movements in working capital

(2,765 ) 926

Cash used in operations

(26,360 ) (23,594 )

Net income tax (paid) received

(2 ) 7,220

Net cash used in operating activities

(26,362 ) (16,374 )

Cash flows from investing activities

Interest received

620 368

Payments for property, plant and equipment

(4 ) (12 )

Payments for intangible assets

(377 ) (396 )

Repayment of other current assets

2,596 -

Net cash from (used in) investing activities

2,835 (40 )

Cash flows from financing activities

Payments for lease liabilities

(207 ) (189 )

Proceeds from issue of share capital - exercise of share options

3 1

Proceeds from issue of share capital

224 -

Share issue expense

(30 ) -

Net cash used in financing activities

(10 ) (188 )

Net decrease in cash and cash equivalents

(23,537 ) (16,602 )

Cash and cash equivalents at beginning of period

41,912 60,264

Effect of exchange rate changes on cash and cash equivalents

(572 ) 7,090

Cash and cash equivalents at end of period

17,803 50,752

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

NUCANA PLC

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General information

NuCana plc ("NuCana" or the "Company") is a clinical-stage biopharmaceutical company developing a portfolio of new medicines to treat patients with cancer. NuCana is harnessing the power of phosphoramidate chemistry to generate new medicines called ProTides. These compounds have the potential to improve cancer treatment by enhancing the efficacy and safety of several current standards of care.

The Company has had American Depository Shares ("ADSs") registered with the US Securities and Exchange Commission ("SEC") and has been listed on The Nasdaq Global Select Market ("Nasdaq") since October 2, 2017. From November 9, 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. The Company's registered office is located at 77/78 Cannon Street, London EC4N 6AF, United Kingdom and its principal place of business is located at 3 Lochside Way, Edinburgh, EH12 9DT, United Kingdom.

The Company has three wholly owned subsidiaries, NuCana, Inc., NuCana Limited and NuCana BioMed Trustee Company Limited (together referred to as the "Group").

The financial information presented in these unaudited condensed consolidated financial statements does not constitute the Group's statutory accounts within the meaning of section 434 of the U.K. Companies Act 2006.

The Group's statutory accounts for the year ended December 31, 2022 have been reported on by the Company's auditor, and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified and (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report.

2. Material accounting policies

Basis of preparation

The unaudited condensed consolidated financial statements (the "financial statements") for the three months and nine months ended September 30, 2023 have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34"). The material accounting policies and methods of computation applied in the preparation of the financial statements are consistent with those applied in the Company's annual financial statements for the year ended December 31, 2022. No new standards, amendments or interpretations have had an impact on the financial statements for the three months and nine months ended September 30, 2023. The financial statements comprise the financial statements of the Group at September 30, 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.

The financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company's annual financial statements for the year ended December 31, 2022.

In the opinion of management, these unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of the results of operations, financial position and cash flows. The results of operations for the three months and nine months ended September 30, 2023 are not necessarily indicative of the results that can be expected for the Company's fiscal year ending December 31, 2023.

Going concern

In common with many companies in the biopharmaceutical sector, the Company incurs significant expenditure in its early years as it researches and develops its potential products for market.

Therefore, the Company has incurred recurring losses, has an accumulated deficit totaling £200.1 million and negative cash flows used in operating activities of £26.4 million as of and for the nine months ended September 30, 2023. The Company also had £17.8 million of cash on hand and cash equivalents at September 30, 2023.

In reviewing the going concern assessment the Company's board of directors have considered the period to December 31, 2024. The Company plans to fund its cash flow needs through current cash on hand together with the receipt of research and development tax credits relating to the year ended December 31, 2023 from HMRC, the timing of which is outside of management's control. In assessing the requirements necessary to continue progressing the Company's research and development activities as currently contemplated and considering the material uncertainty regarding the timing of future cash inflows from research and development tax credits relating to the year ended December 31, 2023, there will be a requirement to seek additional capital within the going concern period to fund operations, which the Company may obtain from additional equity financings, debt financings, research funding, collaborations, contract and grant revenue or other sources. If the Company is unable to obtain additional capital, the Company may be required to delay or reduce its research and development programs, which could adversely affect its future business prospects and its ability to continue as a going concern.

As a result of these matters, there is material uncertainty related to the ability of the Company to raise sufficient additional capital within the going concern period prior to its current liquidity being exhausted, which liquidity includes the cash inflows relating to research and development tax credits for the year ended December 31, 2023, which is outside of management's control. These events or conditions may cast significant doubt (or raise substantial doubt as contemplated by Public Company Accounting Oversight Board ("PCAOB") standards) on the Company's ability to continue as a going concern and, therefore, that the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. The consolidated interim financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Judgements and estimates

The accounting estimates and judgements made by management in applying the Group's accounting policies that have the most significant effect on the amounts included within these financial statements were the same as those that applied to the annual financial statements for the year ended December 31, 2022.

3. Income tax

For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
2023 2022 2023 2022
(in thousands)
£ £ £ £

Current tax:

In respect of current period U.K.

1,396 1,404 3,266 4,619

In respect of prior period U.K.

- 35 (206 ) 35

In respect of current period U.S.

- - (1 ) (1 )
1,396 1,439 3,059 4,653

Deferred tax:

In respect of current period U.S.

8 6 25 19

In respect of prior period U.S.

- - (1 ) -

Income tax credit

1,404 1,445 3,083 4,672

The income tax credit recognized primarily represents the U.K. research and development tax credit. In the United Kingdom, the Company is able to surrender some of its losses for a cash rebate of up to 26.97% of expenditure related to eligible research and development projects incurred on or after April 1, 2023 (33.35% prior to April 1, 2023).

September 30,
2023		 December 31,
2022
(in thousands)
£ £

Current income tax receivable

U.K. tax

9,426 6,366

U.S. tax

2 1
9,428 6,367

Deferred tax asset

U.S. deferred tax asset

127 103

4. Basic and diluted loss per share

For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
2023 2022 2023 2022
(in thousands, except per share data)
£ £ £ £

Loss for the period

 (6,696 ) (4,528 ) (19,977 ) (16,822 )

Basic and diluted weighted average number of shares

52,670 52,196 52,480 52,192

Basic and diluted loss per share

 (0.13 ) (0.09 ) (0.38 ) (0.32 )

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

The potential shares issued 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.

5. Intangible assets

Intangible assets comprise patents with a carrying value of £2.6 million as of September 30, 2023 (as of December 31, 2022: £2.4 million).

During the nine months ended September 30, 2023, the Company acquired intangible assets with a cost of £0.4 million in relation to patents.

6. Other assets

September 30,
2023		 December 31,
2022
(in thousands)
£ £

Other assets

- 2,684

In April 2021, the Company initiated legal proceedings against Gilead Sciences Ireland UC and Gilead Sciences GmbH in the German Regional Court of Dusseldorf ("RC Dusseldorf") for patent infringement for the sale of Sovaldi as well as its combination products Harvoni, Vosevi and Epclusa in Germany. Later in 2021, the Company provided a security of €3.0 million by depositing funds with RC Dusseldorf to cover the legal costs of Gilead Sciences Ireland UC and Gilead Sciences GmbH in the event that the Company was unsuccessful in the final outcome of the patent infringement litigation in Germany.

In May 2023, the Company abandoned all proceedings in Germany and reached a settlement agreement with Gilead Sciences Ireland UC and Gilead Sciences GmbH, and as a result, the security deposit was repaid in full in July 2023.

7. Cash and cash equivalents

September 30,
2023		 December 31,
2022
(in thousands)
£ £

Cash and cash equivalents

17,803 41,912

Cash and cash equivalents comprise cash at banks with deposit maturity terms of three months or less. Cash at banks earns interest at fixed or variable rates based on the terms agreed for each account.

8. Share-based payments

The Company has six share-based payment plans for employees, directors and consultants. The share options granted will be settled in equity. If the Company determines, and at its discretion, an arrangement may be made under the 2020 Long-Term Incentive Plan to substitute the right to acquire shares with a cash alternative of equivalent value. Options granted under each of the six plans have a maximum life of 10 years.

As detailed in the table below, during the nine months ended September 30, 2023, 2,733,139 share options were granted under the 2020 Long-Term Incentive Plan (nine months ended September 30, 2022: 1,497,013 share options granted). Options granted under this plan will vest if the option holder remains under respective contract of employment or contract of service for the agreed vesting period. The share options granted in the period will vest over a period of up to four years.

The fair values of options granted were determined using the Black-Scholes model that takes into account factors specific to the share incentive plan such as the assumption that the options are exercised at a point in time of up to two years after vesting. This has been incorporated into the measurement by means of actuarial modelling. As NuCana plc was unlisted until October 2, 2017, it is not possible to derive historical volatility from the Company's ADSs prior to October 2017. For options with an estimated life of greater than five years, the underlying expected volatility was determined by using the average of the historical volatility of similar listed entities as a proxy. Options granted with an estimated life of five years or less, have been valued using the Company's own historical volatility rates.

Options granted on
January 11, 2023 January 11, 2023 January 11, 2023

Vesting dates

January 11, 2024 January 11, 2024 January 11, 2024
January 11, 2025 January 11, 2025 January 11, 2025
January 11, 2026 January 11, 2026 January 11, 2026
January 11, 2027 January 11, 2027 January 11, 2027

Volatility

97.11 % 105.11 % 116.33 %

Dividend yield

0 % 0 % 0 %

Risk-free investment rate

3.31 % 3.34 % 3.38 %

Fair value of option at grant date

£ 0.87 £ 1.19 £ 1.19

Fair value of share at grant date

£ 1.23 £ 1.23 £ 1.23

Exercise price at grant date

£ 1.23 £ 0.04 £ 0.04

Lapse date

January 11, 2033 January 11, 2033 -

Expected option life (years)

4.5 3.5 2.5

Number of options granted

1,774,176 655,425 219,163
June 16, 2023 June 16, 2023 July 12, 2023

Vesting dates

June 16, 2024 June 16, 2024 July 12, 2024

Volatility

121.58 % 124.98 % 106.61 %

Dividend yield

0 % 0 % 0 %

Risk-free investment rate

4.98 % 4.99 % 5.21 %

Fair value of option at grant date

£ 0.56 £ 0.55 £ 0.42

Fair value of share at grant date

£ 0.59 £ 0.59 £ 0.62

Exercise price at grant date

£ 0.04 £ 0.04 £ 0.62

Lapse date

June 16, 2033 - July 12, 2033

Expected option life (years)

2.0 1.0 3.0

Number of options granted

37,500 9,375 37,500

For the three months ended September 30, 2023, the Company recognized £0.9 million of share-based payment expense in the statement of operations (three months ended September 30, 2022: £1.2 million). For the nine months ended September 30, 2023, the Company has recognized £3.1 million of share-based payment expense in the statement of operations (nine months ended September 30, 2022: £3.9 million).

9. Share capital and share premium

September 30,
2023		 December 31,
2022
(in thousands)
£ £

Share capital

2,111 2,095

Share premium

141,289 141,108
143,400 143,203

Number

(in thousands)

Issued share capital comprises:

Ordinary shares of £0.04 each

52,793 52,373
Number of
shares		 Share
capital		 Share
premium
(in thousands)
£ £

Fully paid shares:

Balance at December 31, 2022

52,373 2,095 141,108

Issue of shares on exercise of options

55 2 1

Issue of shares

365 14 180

Balance at September 30, 2023

52,793 2,111 141,289

10. Provisions

Legal
proceedings		 Dilapidations Total
(in thousands)
£ £ £

Balance at December 31, 2022

4,100 46 4,146

Additions

- 21 21

Reverse unused

(46 ) - (46 )

Utilized

(3,801 ) (9 ) (3,810 )

Transfer from prepayments, accrued income and other receivables

(247 ) - (247 )

Effect of foreign currency exchange differences

(6 ) - (6 )

Balance at September 30, 2023

- 58 58

Classified as:

Non-current

- 58 58
- 58 58

All obligations arising from the patent infringement litigation in the U.K. and Germany, reflected within legal proceedings, have been settled as at September 30, 2023.

Attachments

Disclaimer

NuCana plc published this content on 16 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2023 21:12:17 UTC.