NuCana plc — FY 2017 Form 20-F
Reporting period: Year ended December 31, 2017; filed March 22, 2018. This is an annual report, not a standalone fourth-quarter filing. Financial statements are prepared under IFRS and reported in pounds sterling (£).
Business context
NuCana is a clinical-stage biopharmaceutical company developing oncology drugs using its ProTide technology. It had no approved products and generated no product revenue. Its lead candidates were Acelarin, in Phase 1b, Phase 2 and Phase 3 trials; NUC-3373, in Phase 1; and NUC-7738, in preclinical development. The company completed its Nasdaq IPO in October 2017.
Financial and liquidity highlights
| Metric | FY 2017 / Dec. 31, 2017 | FY 2016 / Dec. 31, 2016 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | £17.673 million | £7.904 million |
| Administrative expense | £4.573 million | £1.143 million |
| Operating loss | £25.694 million | £8.448 million |
| Net loss | £23.085 million | £6.049 million |
| Basic and diluted loss per share | £0.89 | £0.25 |
| Net cash used in operating activities | £8.708 million | £9.264 million |
| Cash and cash equivalents | £86.703 million | £19.990 million |
| Total assets / liabilities | £96.355 million / £2.935 million | £27.214 million / £1.973 million |
No borrowings are shown in the reported balance sheet; liabilities were principally trade payables, payroll taxes and accrued expenditure. The filing reports no off-balance-sheet arrangements. Management believed year-end cash would fund its current operating plan at least through the first quarter of 2020. The company remained loss-making, and profitability depended on successful development, approval and commercialization of candidates.
Material changes and unusual items
- Net loss increased by £17.036 million year over year, with R&D expense rising £9.769 million as clinical activity and staffing expanded. Administrative expense also increased.
- Share-based payment expense rose to £11.731 million from £1.132 million, materially contributing to reported expenses; this is a non-cash charge.
- The October IPO generated £79.834 million of share proceeds before related costs. Net financing cash flow was £77.747 million, driving the increase in cash.
- Foreign exchange moved from a £0.599 million gain in 2016 to a £1.654 million loss in 2017, principally reflecting U.S. dollar cash balances and currency movements. The company had no currency hedges.
- The £2.401 million income-tax credit largely reflected R&D tax credits. No U.K. deferred tax asset was recognized for carried-forward losses because future taxable profits were not sufficiently certain.
Outlook, clinical progress and risks
- Management expected R&D spending and operating losses to rise as trials advanced. It outlined 2018 plans, subject to regulatory guidance and other factors, including further Acelarin trials, NUC-3373 studies in colorectal and breast cancer, and a Phase 1 trial of NUC-7738. These are plans, not assured milestones.
- In January 2018, NuCana reported interim Acelarin-plus-cisplatin results in eight biliary-cancer patients: a 50% objective response rate and 63% disease-control rate on an intent-to-treat basis. The small, early-stage dataset is not evidence of definitive efficacy; the company planned a Phase 3 trial.
- Management reported interim NUC-3373 Phase 1 pharmacokinetic and pharmacodynamic findings, including a 9.7-hour plasma half-life. Further data were expected in 2018; clinical benefit and safety remained unproven.
- Key risks include clinical-trial failure or delay, regulatory approval uncertainty, dependence on external manufacturers and single-source suppliers, financing needs beyond the stated cash runway, competition, intellectual-property and licensing exposure, and foreign-exchange volatility. The Cardiff University research agreement runs through 2019; certain milestone and royalty obligations are contingent and not quantified as fixed commitments.
- The company reported no material pending litigation and no significant changes since year-end. The auditor issued an unqualified opinion on the IFRS financial statements; it did not opine on internal-control effectiveness. Management said disclosure controls were effective, while the filing omitted an auditor attestation under the emerging-growth-company exemption.
Most important facts to verify
- Whether subsequent trial results support the interim findings and whether planned 2018 studies began on schedule.
- Actual cash burn, trial costs and any change to the stated runway through Q1 2020, including future financing needs.
- The non-cash share-based compensation impact and the assumptions used to value the 2017 option grants.
- Progress on manufacturing capacity, alternative suppliers, regulatory requirements and key patent or license protections.
- Eligibility and timing of U.K. R&D tax-credit receipts, and the effect of foreign-exchange movements on cash and spending.