NuCana plc — FY2019 Form 20-F
Reporting period: Fiscal year ended December 31, 2019; filed March 10, 2020. This is an annual report, not a standalone Q4 filing. Financial statements are prepared under IFRS in pounds sterling (£), unless stated otherwise.
Business context
NuCana is a clinical-stage biopharmaceutical company developing oncology drug candidates using its ProTide technology. It had no approved products and generated no product revenue. Its lead candidates were Acelarin (NUC-1031), NUC-3373 and NUC-7738; substantially all operations and spending support research and development.
Financial results and liquidity
| Metric (£ millions, except per-share data) | 2019 | 2018 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | 19.7 | 16.8 |
| Administrative expense | 6.0 | 5.2 |
| Operating loss | 26.7 | 19.1 |
| Loss before tax | 25.7 | 18.1 |
| Income tax credit | 4.2 | 4.2 |
| Net loss | 21.4 | 13.8 |
| Basic and diluted loss per share | £0.66 | £0.43 |
| Net cash used in operating activities | 23.8 | 12.2 |
| Cash and cash equivalents at year end | 52.0 | 77.0 |
Gross and operating margins are not meaningful because the company had no revenue. The 2019 operating loss widened by £7.6 million, while net loss rose by £7.6 million. R&D expense increased £2.9 million, chiefly from higher clinical trial, nonclinical/patent and personnel costs; lower manufacturing costs partly offset the increases. Net foreign exchange moved from a £2.9 million gain in 2018 to a £1.0 million loss in 2019, primarily reflecting U.S. dollar cash balances and sterling movements.
At December 31, 2019, total assets were £70.3 million, equity £63.5 million and total liabilities £6.7 million. Cash included £28.98 million of financial assets denominated in foreign currencies, primarily U.S. dollars. The filing reports no borrowing debt; lease liabilities were £0.806 million following adoption of IFRS 16. Current income tax receivable was £8.5 million. The company reported an accumulated deficit of £80.1 million.
Operating cash outflow increased by £11.6 million year over year. The filing attributes this to the absence of a comparable £4.2 million tax-refund cash inflow received in 2018, higher working-capital outflows and higher operating costs. Investing cash outflow was £0.1 million; financing cash outflow was £0.05 million. There were no dividends.
Development updates and changes
- Acelarin: FDA-cleared IND and opened the global Phase 3 NuTide:121 trial with cisplatin for first-line biliary tract cancer in October 2019. The planned study could enroll up to 828 patients; the company intended to pursue possible accelerated approval based on interim response-rate results, subject to FDA review and confirmatory evidence.
- Pancreatic cancer: Enrollment in the Phase 3 Acelarin monotherapy trial was suspended in August 2019 after an independent monitoring committee’s futility analysis indicated the trial was unlikely to meet its specified efficacy objective. Existing participants deriving benefit could continue treatment; further analyses were planned.
- Ovarian cancer: The company stopped plans to proceed to part two of the PRO-105 study as it prioritized biliary tract cancer and NUC-3373. Part-one data were preliminary; management said any further Acelarin development in ovarian cancer would likely focus on combination therapy.
- NUC-3373: Phase 1 and Phase 1b studies were ongoing. The company planned further interim data in 2020 and a possible Phase 2/3 colorectal cancer trial in 2020, contingent on regulatory guidance and other factors.
- NUC-7738: A Phase 1 solid-tumor trial was ongoing; ten patients had received treatment as of March 2020, and interim data were expected in 2020.
Outlook, risks and unusual items
Management expects continued losses and rising R&D spending, with profitability dependent on successful development, approval and commercialization. The filing states both that £52.0 million of year-end cash was expected to fund operations for at least 12 months and, elsewhere, that existing resources were expected to fund operations into the second half of 2021. These are management estimates, not a guarantee; the filing emphasizes that additional financing may be needed and may not be available on acceptable terms.
Key risks include clinical-trial failure or delay, patient enrollment, regulatory approval, manufacturing and single-source supply dependencies, intellectual-property and license risks, competition, reimbursement and pricing, and foreign-exchange exposure. The company had no currency hedges. It also identified the emerging coronavirus outbreak as a potential source of clinical, supplier and operational disruption. The Cardiff University collaboration agreement was amended in February 2020 to expire at the end of 2020, with a company option to extend to the end of 2021; this may affect future discovery work. No material pending litigation was reported.
Other notable items: U.K. R&D tax credits contributed to the £4.2 million tax credit, and the company had £8.5 million of current tax receivables at year end. IFRS 16 adoption brought lease right-of-use assets and liabilities onto the balance sheet. The independent auditor issued an unqualified opinion on the IFRS financial statements; management reported effective disclosure controls and internal control over financial reporting, but the auditor did not attest to internal-control effectiveness because the company was an emerging growth company.
Investor facts to verify
- Enrollment pace, interim analyses and eventual efficacy and safety results for NuTide:121, including the basis for any accelerated-approval application.
- Final outcome and any further analyses of the suspended pancreatic Phase 3 trial, and final PRO-105 ovarian study results.
- Actual cash burn, timing and collectability of R&D tax credits, and how the differing cash-runway statements reconcile to updated operating plans.
- Financing needs and potential dilution if trials, manufacturing or commercialization require more capital than anticipated.
- Continuity of clinical supply, Cardiff agreement extensions, and the terms and potential amounts of milestone and royalty obligations.