As filed with the Securities and Exchange Commission on March 20, 2025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to ______________________________
Commission File Number 001-38215
NUCANA PLC
(Exact name of Registrant as specified in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
NuCana plc
3 Lochside Way
Edinburgh EH12 9DT
United Kingdom
Telephone: +44 (0)131 357 1111
(Address of principal executive offices)
Hugh S. Griffith, Chief Executive Officer
NuCana plc
3 Lochside Way
Edinburgh EH12 9DT
United Kingdom
Telephone: +44 (0)131 357 1111
Email: info@nucana.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
American Depositary Shares, each representing twenty-five
Ordinary Shares, nominal value £0.04 per share
NCNA
The Nasdaq Stock Market LLC
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 142,037,199 ordinary shares, par value
£0.04 per share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐
No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,”
“accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☒
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued
by the International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
ii
A
TABLE OF CONTENTS
Page
GENERAL INFORMATION
iv
PRESENTATION OF FINANCIAL AND OTHER DATA
iv
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
iv
WEBSITE DISCLOSURE
v
PART I
1
Item 1.
Identity of Directors, Senior Management and Advisers
1
Item 2.
Offer Statistics and Expected Timetable
1
Item 3.
Key Information
1
A.
Selected Financial Data
1
B.
Capitalization and Indebtedness
2
C.
Reasons for the Offer and Use of Proceeds
2
D.
Risk Factors
2
Item 4.
Information on the Company
58
A.
History and Development of the Company
58
B.
Business
58
C.
Organizational Structure
101
D.
Property, Plant and Equipment
101
Item 4A.
Unresolved Staff Comments
101
Item 5.
Operating and Financial Review and Prospects
102
A.
Operating Results
102
B.
Liquidity and Capital Resources
107
C.
Research and Development, Patents and Licenses, etc.
110
D.
Trend Information
110
E.
Critical Accounting Estimates
110
F.
[Reserved]
110
G.
[Reserved]
110
H.
Non-GAAP Financial Measures
110
Item 6.
Directors, Senior Management and Employees
111
A.
Directors and Senior Management
111
B.
Compensation
113
C.
Board Practices
122
D.
Employees
124
E.
Share Ownership
125
F.
Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation
125
Item 7.
Major Shareholders and Related Party Transactions
126
A.
Major Shareholders
126
B.
Related Party Transactions
127
C.
Interests of Experts and Counsel
128
Item 8.
Financial Information
129
A.
Consolidated Statements and Other Financial Information
129
B.
Significant Changes
129
Item 9.
The Offer and Listing
129
A.
Offer and Listing Details
129
B.
Plan of Distribution
129
C.
Markets
129
D.
Selling Shareholders
129
E.
Dilution
129
F.
Expenses of the Issue
129
iii
TABLE OF CONTENTS
(continued)
Item 10.
Additional Information
129
A.
Share Capital
129
B.
Memorandum and Articles of Association
130
C.
Material Contracts
145
D.
Exchange Controls
145
E.
Taxation
145
F.
Dividends and Paying Agents
153
G.
Statement by Experts
153
H.
Documents on Display
154
I.
Subsidiary Information
154
Item 11.
Quantitative and Qualitative Disclosures About Market Risk
154
Item 12.
Description of Securities Other than Equity Securities
155
A.
Debt Securities
155
B.
Warrants and Rights
155
C.
Other Securities
155
D.
American Depositary Shares
155
PART II
157
Item 13.
Defaults, Dividend Arrearages and Delinquencies
157
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
157
Item 15.
Controls and Procedures
157
A.
Disclosure Controls and Procedures
157
B.
Management’s Annual Report on Internal Control over Financial Reporting
157
C.
Attestation Report of the Registered Public Accounting Firm
157
D.
Changes in Internal Control Over Financial Reporting
157
Item 16A.
Audit Committee Financial Expert
157
Item 16B.
Code of Ethics
158
Item 16C.
Principal Accountant Fees and Services
158
Item 16D.
Exemptions From the Listing Standards For Audit Committees
158
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
158
Item 16F.
Change in the Registrant’s Certifying Accountant
158
Item 16G.
Corporate Governance
158
Item 16H.
Mine Safety Disclosure
159
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
160
Item 16J.
Insider Trading Policy
160
Item 16K.
Cybersecurity
160
PART III
163
Item 17
Financial Statements
163
Item 18
Financial Statements
163
Item 19
Exhibits
164
iv
GENERAL INFORMATION
In this annual report on Form 20-F (“Annual Report”), “NuCana,” “NuCana plc,” the “Group,” the “Company,” “we,” “us” and “our” refer to
NuCana plc and its consolidated subsidiaries, except where the context otherwise requires.
NuCana® and Acelarin® are our registered trademarks and ProTidesTM is our trademark.
PRESENTATION OF FINANCIAL AND OTHER DATA
The consolidated financial statement data as at December 31, 2024, 2023, 2022, 2021, and 2020 and for the years ended December 31, 2024, 2023,
2022, 2021, and 2020 have been derived from our consolidated financial statements, which have been prepared in accordance with International Financial
Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB and audited in accordance with the standards of the
Public Company Accounting Oversight Board (United States). The financial statement data as at December 31, 2022, 2021 and 2020 and for the years
ended December 31, 2021 and 2020 have been derived from our consolidated financial statements, which are not presented herein, which have also been
prepared in accordance with IFRS as issued by IASB.
All references in this Annual Report to “$” are to U.S. dollars and all references to “£” are to pounds sterling.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains estimates and forward-looking statements, principally in the sections titled “Risk Factors,” “Operating and Financial
Review and Prospects” and “Business.” Some of the matters discussed concerning our operations and financial performance include forward-looking
statements and estimates within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. The words
“believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward-looking statements
and estimates. Forward-looking statements include, but are not limited to, statements about:
•
the development of NUC-7738 and NUC-3373, as well as Acelarin, including statements regarding the expected initiation, timing, progress
and availability of data from our clinical trials;
•
the potential attributes and benefit of our ProTides and their competitive positions;
•
our ability to successfully commercialize our ProTides, if approved;
•
our estimates regarding expenses, capital requirements and our need for additional financing;
•
our ability to acquire or in-license new product candidates;
•
potential collaborations; and
•
the duration and strength of our patent portfolio.
These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual
results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets
we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Factors that could cause actual
results, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results to differ materially include, but are not limited
to, those discussed under “Risk Factors” in this Annual Report. Additional risks that we may currently deem immaterial or that are not presently known to
us could also cause the forward-looking events discussed in this Annual Report not to occur. These forward-looking statements are based on assumptions
regarding our present and future business strategies and the environment in which we expect to operate in the future.
Forward-looking statements and estimates speak only at the date they were made, and we undertake no obligation to update or to review any
forward-looking statement or estimate because of new information, future events or other factors. Forward-looking statements and estimates involve risks
and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these forward-looking
statements and estimates.
v
The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify estimates
and forward-looking statements. Estimates and forward-looking statements speak only at the date they were made, and we undertake no obligation to
update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. In light of the risks and
uncertainties described above, the estimates and forward-looking statements discussed in this Annual Report might not occur, and our future results and our
performance may differ materially from those expressed in these forward-looking statements due to, inclusive of, but not limited to, the factors mentioned
above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.
WEBSITE DISCLOSURE
We maintain a public website at https://www.nucana.com and use our website as a routine channel of distribution of company information,
including press releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for
complying with our disclosure obligations under Regulation FD. Our website includes an Investors section through which we make available, free of
charge, our Annual Reports on Form 20-F, Reports on Form 6-K, as well as any amendments to those reports filed or furnished pursuant to the Exchange
Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Accordingly, investors should monitor our
website in addition to following press releases, filings with the SEC, and public conference calls and webcasts.
None of the information provided on our website, in our press releases or public conference calls and webcasts or through social media is
incorporated into, or deemed to be a part of, this Annual Report or in any other report or document we file with the SEC, and any references to such
website is intended to be inactive textual references only.
1
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not Applicable.
Item 2. Offer Statistics and Expected Timetable
Not Applicable.
Item 3. Key Information
A.
Selected Financial Data
The following tables summarize our consolidated financial data as of the dates and for the periods indicated. The consolidated financial data as of
and for the years ended December 31, 2024, 2023, 2022, 2021 and 2020 have been derived from our consolidated financial statements, which have been
prepared in accordance with IFRS, as issued by the IASB, and audited in accordance with the standards of the Public Company Accounting Oversight
Board (United States).
Our historical results are not necessarily indicative of the results that may be expected in the future. The following selected consolidated financial
data should be read in conjunction with Item 5, “Operating and Financial Review and Prospects” and our consolidated financial statements included
elsewhere in this Annual Report.
Year Ended December 31,
2024
2023
2022
2021
2020
(in thousands, except per share data)
Consolidated statement of operations
and comprehensive loss data:
Research and development expenses
£
(18,017) £
(25,062) £
(36,426) £
(36,834) £
(25,899)
Administrative expenses
(4,988)
(6,063)
(7,291)
(8,529)
(7,050)
Impairment of intangible assets
(33)
(503)
(292)
(2,809)
—
Net foreign exchange gains (losses)
229
(1,156)
4,887
267
(3,472)
Operating loss
(22,809)
(32,784)
(39,122)
(47,905)
(36,421)
Finance income
358
754
669
103
246
Loss before tax
(22,451)
(32,030)
(38,453)
(47,802)
(36,175)
Income tax credit
3,454
4,398
6,432
7,269
5,493
Loss for the year
(18,997)
(27,632)
(32,021)
(40,533)
(30,682)
Other comprehensive income (expense):
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of foreign
operations
15
(41)
61
5
(12)
Total comprehensive loss for the year
£
(18,982) £
(27,673) £
(31,960) £
(40,528) £
(30,694)
Basic and diluted loss per ordinary share
£
(0.26) £
(0.53) £
(0.61) £
(0.78) £
(0.81)
2
As of December 31,
2024
2023
2022
2021
2020
(in thousands)
Consolidated statement of
financial position data:
Cash and cash equivalents
£
6,749 £
17,225 £
41,912 £
60,264 £
87,356
Total assets
14,774
27,811
58,254
77,474
107,792
Share capital
5,681
2,114
2,095
2,087
2,047
Share premium
146,146
141,306
141,108
141,050
140,890
Accumulated deficit
(224,294)
(207,706)
(180,573)
(149,726)
(110,594)
Capital reserve (1)
42,466
42,466
42,466
42,466
42,466
Net assets/Total equity attributable
to equity holders of the Company
5,954
14,887
38,502
65,548
99,230
Total liabilities
(8,820)
(12,924)
(19,752)
(11,926)
(8,562)
Number of ordinary shares
142,037
52,860
52,373
52,180
51,175
(1)
The capital reserve balance arose from the impact of the reduction of our share premium account and corresponding increase to our capital reserve
account reflected as of June 30, 2017 in connection with our re-registration as a public limited company, as further described in Note 12 to the
consolidated financial statements.
B.
Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
Our business has significant risks. You should carefully consider the following risk factors and all other information contained in our Annual
Report on Form 20-F for the year ended December 31, 2024, or Annual Report, and in subsequent reports filed on Form 6-K, including our consolidated
financial statements and the related notes. The risks and uncertainties described below are those significant risk factors, currently known and specific to
us, that we believe are relevant to our business, results of operations and financial condition. If any of these risks materialize, our business, results of
operations or financial condition could suffer and the price of the American Depositary Shares, or ADSs, could decline. Additional risks and uncertainties
not currently known to us or that we now deem immaterial may also harm us and adversely affect our business, results of operations and financial
condition.
Summary of Risk Factors
An investment in our ADSs is subject to a number of risks, including risks related to our business and industry, risks related to development of our
product candidates, and risks related to our ADSs. The following summarizes some, but not all, of these risks. Please carefully consider all of the
information discussed in our Annual Report and in subsequent reports filed on Form 6-K for a more thorough description of these and other risks.
Risks Related to Our Business and Industry
•
We have incurred significant operating losses since our inception. We expect to incur losses for the foreseeable future and may never
achieve or maintain profitability.
•
We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern, which may hinder our
ability to obtain future financing.
•
We depend heavily on the success of our product candidates NUC-7738 and NUC-3373. We cannot give any assurance that these product
candidates will receive regulatory approval for any indication, which is necessary before any of them can be commercialized. If we, and any
collaborators with whom we may enter into
3
agreements for the development and commercialization of any of these product candidates, are unable to commercialize them, or experience
significant delays in doing so, our ability to generate revenue and our financial condition will be adversely affected.
•
Our lack of any approved products may make it difficult for you to evaluate the success of our business to date and to assess our future
viability.
•
Our business could be significantly and adversely affected by a pandemic.
•
Exchange rate fluctuations may adversely affect our results of operations and financial condition.
Risks Related to Development of Our Product Candidates
•
Initial success in the ongoing and completed early-stage clinical trials may not be indicative of results obtained when these trials are
completed or in later stage trials.
•
Drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays
in completing, or ultimately be unable to complete, the development and may experience delays in obtaining, or ultimately be unable to
obtain, the approval of our product candidates.
•
Due to our limited resources and access to capital, we must, and have in the past decided to, prioritize development of certain ProTide
candidates over other potential candidates and certain indications over other potential indications. These decisions may prove to have been
wrong and may adversely affect our performance.
•
We may not be successful in our efforts to use and expand our technology platform to build a pipeline of additional ProTide candidates.
Risks Related to Marketing Approval of Our Product Candidates
•
If we are not able to obtain, or if there are delays in obtaining, required marketing approvals, we will not be able to commercialize our
product candidates and our ability to generate revenue will be impaired.
•
Our product candidates may cause undesirable side effects that could delay or prevent their marketing approval, limit the commercial profile
of an approved label, or result in significant negative consequences following marketing approval, if any.
•
Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and
could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with
regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
Risks Related to Our Dependence on Third Parties
•
We rely on, and expect to continue to rely on, third parties to conduct our clinical trials 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 commercialize our product candidates, and our business could be substantially harmed.
•
We contract with third parties for the manufacture and shipment of our product candidates for preclinical studies and clinical trials and expect
to continue to do so for commercialization. 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, which could delay, prevent or impair our development or
commercialization efforts.
•
If we fail to comply with our obligations under our license and collaboration agreement with Cardiff ProTides Ltd., we could lose rights to
licensed and assigned intellectual property that are necessary for developing and commercializing certain potential product candidates.
Risks Related to the Commercialization of Our Product Candidates
•
Even if any of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians,
patients, third-party payors and others in the medical community necessary for commercial success.
4
•
We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more
successfully than we do.
•
Even if we are able to commercialize any product candidates, such drugs may become subject to unfavorable pricing regulations or third-
party coverage and reimbursement policies.
Risks Related to Our 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 commercialize technology and products similar or identical to
ours, and our ability to successfully commercialize 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.
•
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest,
and our business may be adversely affected.
•
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.
•
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
•
Our proprietary information, or that of our suppliers and any future collaborators, may be lost or we may suffer security breaches or other
cybersecurity incidents.
Risks Related to Employee Matters, Managing Growth and Other Risks Related to Our Business
•
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 expect to expand our development and regulatory capabilities and potentially implement sales, marketing and distribution capabilities,
and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
Risks Related to the ADSs
•
The price of our ADSs may be volatile and may fluctuate due to factors beyond our control.
•
We will continue to incur increased costs as a result of operating as a public company in the United States, and our management is required
to devote substantial time to new compliance initiatives and corporate governance practices.
•
Certain of our existing shareholders, members of our board of directors and senior management maintain the ability to exercise significant
control over us. Your interests may conflict with the interests of these existing shareholders.
•
Future sales, or the possibility of future sales, of a substantial number of our ADSs or ordinary shares could adversely affect the price of our
ADSs.
•
Holders of our ADSs may be subject to limitations on transfer of their ADSs.
Risks Related to Our Business and Industry
We have incurred significant operating losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or
maintain profitability.
We have incurred significant operating losses since our inception. We incurred net losses of £30.7 million for the year ended December 31, 2020,
£40.5 million for the year ended December 31, 2021, £32.0 million for the year ended December 31, 2022, £27.6 million for the year ended December 31,
2023, and £19.0 million for the year ended December 31, 2024. As of December 31, 2024, we had an accumulated deficit of £224.3 million. Our product
candidate, NUC-7738, is currently in the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) for patients with advanced solid tumors which is evaluating
NUC-7738 as a monotherapy in patients with advanced solid tumors and in combination with pembrolizumab in patients with melanoma. Our product
candidate, NUC-3373, is currently being evaluated in a Phase 1b/2 modular clinical trial
5
(NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumors and in combination with
docetaxel for patients with lung cancer. It may be several years, if ever, before we have a product candidate ready for commercialization. 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:
•
continue development of our ProTides, including completing ongoing clinical trials and initiating additional clinical trials of NUC-7738 and
NUC-3373;
•
complete preclinical studies and potentially initiate clinical trials of any preclinical-stage product candidates;
•
identify and develop new product candidates;
•
establish a robust supply chain for the manufacture of our product candidates in accordance with current good manufacturing practice, or
cGMP;
•
seek marketing approvals for our product candidates that successfully complete pivotal clinical trials;
•
establish a sales, marketing and distribution infrastructure to commercialize any products for which we obtain marketing approval;
•
pursue market acceptance of our product candidates in the medical community and with third-party payors;
•
maintain, expand and protect our intellectual property portfolio;
•
expand our headcount by recruiting personnel to drive our clinical development programs and effectively manage out-sourced development
activities;
•
enter into collaboration arrangements, if any, for the development of our product candidates or in-license other products and technologies;
•
achieve milestones which will trigger payments under our license agreements; and
•
add operational, financial and management information systems and personnel, including personnel to support our product development and
planned future commercialization efforts.
In addition, protecting our intellectual property may result in litigation aimed at enforcing or defending our patents. Intellectual property litigation is
expensive and, in the event that we lose any such litigation, we may be subject to additional significant legal expense, including the potential requirement
to pay the legal expenses of opposing parties.
Because of the numerous risks and uncertainties associated with developing new pharmaceutical drugs, we are unable to predict the extent of any
future losses or when we will become profitable, if at all. In addition, our expenses could increase beyond expectations if we are required by the Food and
Drug Administration, or FDA, the European Medicines Agency, or EMA, or other foreign regulatory agencies, to perform studies and clinical trials in
addition to those that we currently anticipate, or if there are any delays in the completion of planned clinical trials or the development of any of our
ProTides.
To become and remain profitable, we must develop and eventually commercialize products with significant market potential. This will require us to
be successful in a range of challenging activities, including the following:
•
completing clinical trials of our product candidates that achieve their clinical endpoints;
•
obtaining marketing approval for our product candidates;
•
obtaining satisfactory acceptance, formulary placement coverage and adequate reimbursement for our approved products from third-party
payors, including private health insurers, managed care providers and governmental payor programs, including Medicare and Medicaid in the
United States;
•
manufacturing, marketing and selling those products for which we may obtain marketing approval; and
•
achieving market acceptance of our product candidates in the medical community and with third-party payors.
We may never succeed in these activities and, even if we do, may never generate revenues that are significant or large enough to achieve profitability.
If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain
profitable would decrease the value of the company and could impair our ability to raise capital, maintain our discovery and preclinical development
efforts, expand our business or
6
continue our operations and may require us to raise additional capital that may dilute your ownership interest. A decline in the value of the company could
also cause you to lose all or part of your investment.
We depend heavily on the success of our product candidates, NUC-7738 and NUC-3373. We cannot give any assurance that these product candidates
will receive regulatory approval for any indication, which is necessary before any of them can be commercialized. If we, and any collaborators with
whom we may enter into agreements for the development and commercialization of any of these product candidates, are unable to commercialize them,
or experience significant delays in doing so, our ability to generate revenue and our financial condition will be adversely affected.
We do not currently generate any revenues from sales of any products, and we may never be able to develop or commercialize a marketable product.
We have invested substantially all of our efforts and financial resources to date in the development of NUC-7738 and NUC-3373, as well as Acelarin, for
which we discontinued the NuTide:121 clinical trial 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 commercialization of these product candidates, if
approved, which may never occur. Each of NUC-7738 and NUC-3373 will require additional clinical development, management of clinical, preclinical
and manufacturing activities, regulatory approval in multiple jurisdictions, procurement of manufacturing supply, commercialization, 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 EMA or comparable foreign
regulatory authorities, and we may never receive such regulatory approval for NUC-7738, NUC-3373 or any future product candidate. We have not
submitted a New Drug Application, or NDA, to the FDA, a Marketing Authorization 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. The success of our
product candidates will depend on many factors, including the following:
•
we may not be able to demonstrate that the product candidate is safe and effective as a treatment for our targeted indications to the
satisfaction of the applicable regulatory authorities;
•
the applicable regulatory authorities may require additional nonclinical studies or clinical trials of the product candidate, including additional
toxicology trials, which would increase our costs and prolong our development;
•
the results of clinical trials of our product candidates may not meet the level of statistical or clinical significance required by the applicable
regulatory authorities for marketing approval;
•
the applicable regulatory authorities may disagree with the number, design, size, conduct or implementation of our planned clinical trials;
•
the contract research organizations, or CROs, that we retain to conduct clinical trials may take actions outside of our control that adversely
impact our clinical trials;
•
the applicable regulatory authorities may not find the data from preclinical studies and clinical trials sufficient to demonstrate that the clinical
and other benefits of the product candidate outweigh its safety risks;
•
the applicable regulatory authorities may disagree with our interpretation of data from preclinical studies and clinical trials or may require
that we conduct additional studies;
•
the applicable regulatory authorities may not accept data generated at our clinical trial sites;
•
if we submit an NDA to the FDA or an MAA to the EMA, and it is reviewed by an advisory committee, the advisory committee may
recommend against approval of our application or may recommend that the FDA or the EMA require, as a condition of approval, additional
nonclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;
•
the applicable regulatory authorities may require development of a risk evaluation and mitigation strategy, or REMS, as a condition of
approval;
•
the applicable regulatory authorities may change its approval policies or adopt new regulations;
•
the applicable regulatory authorities may identify deficiencies in our formulation and manufacturing processes or facilities of our third-party
manufacturers;
•
we may face delays in our formulation and manufacturing process as a result of having not yet optimized formulations or due to lack of
availability of starting materials;
•
we may be unable to scale up the manufacture process for some of our product candidates;
7
•
we may face challenges on the safe and appropriate administration of our drugs in the clinic, including with respect to the conversion of our
product candidates from a dry powder formulation to a liquid formulation prior to intravenous, or IV, administration, precipitation or other
blockages in IV infusion lines, and the handling and storage of the IV infusion bags containing our product candidates, any of which may
result in the need to carry out additional studies on the administration and compatibility of our product candidates with infusion sets and
pumps;
•
we may be faced with challenges from third parties with respect to our right to use certain processes used in the formulation and process
development of our product candidates;
•
we may have to defend our patents against infringement by third parties;
•
we may unknowingly infringe third-party patents;
•
we may face a “freedom to operate” issue;
•
we are dependent on the efforts of third parties in completing clinical trials of, receiving regulatory approval for and commercializing, any
product candidate we license to such third parties;
•
through our clinical trials, we may discover factors that limit the commercial viability of the product candidate or make its commercialization
unfeasible;
•
we may not be successful in completing preclinical studies and clinical trials of, receiving marketing approvals for, establishing commercial
manufacturing capabilities for and commercializing, any product candidate to which we retain rights under a collaboration agreement; and
•
we may not be successful in gaining acceptance of any product candidate by patients, the medical community and third-party payors,
effectively competing with other therapies, maintaining a continued acceptable safety profile following approval and qualifying for,
maintaining, enforcing and defending our intellectual property rights and claims.
With respect to each of NUC-7738 and NUC-3373, if we or our suppliers, as applicable, do not overcome one or more of these factors in a timely
manner or at all, we could experience significant delays or an inability to successfully commercialize that product candidate.
We cannot be certain that NUC-7738 or NUC-3373 or any future product candidates will be successful in clinical trials or receive regulatory approval.
Further, NUC-7738 or NUC-3373 or any future product candidates may not receive regulatory approval even if they are successful in clinical trials. If we
do not receive regulatory approvals for NUC-7738 or NUC-3373 or any future product candidates, we may not be able to continue our operations. Even if
we successfully obtain regulatory approvals to manufacture and market NUC-7738 or NUC-3373 or any future product candidates, our revenues will be
dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for
patient groups that we are targeting are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.
We plan to seek regulatory approval to commercialize NUC-7738 and NUC-3373 in the United States and the European Union, and potentially in
additional countries. While the scope of regulatory approval is similar in many countries, to obtain separate regulatory approval in multiple countries
requires us to comply with the numerous and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other
things, clinical trials, commercial sales, pricing and distribution of NUC-7738 and NUC-3373, and we cannot predict success in these jurisdictions.
Products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over
existing treatments may receive accelerated approval from the FDA and may be approved on the basis of adequate and well-controlled clinical trials
establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or an effect on an intermediate
clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality. Discussions with the FDA about the feasibility of an
accelerated approval typically begin early in the development of a new drug product in order to identify, among other things, an appropriate surrogate or
intermediate clinical endpoint.
However, even if we were to generate clinical data sufficient to support an NDA submission seeking accelerated approval for any of our product
candidates, there can be no assurance that such marketing application will be accepted by the FDA for substantive review or that approval will be granted
on a timely basis, or at all. In addition, if another company receives full approval from the FDA to market a product for treatment of a similar indication to
our product candidate, our ability to seek and obtain accelerated approval for our product candidate in the same or similar indication may be materially
adversely affected. The FDA or foreign regulatory authorities also could require us to conduct further studies or trials prior
8
to considering our application or granting a marketing approval of any type. We might not be able to fulfill the FDA’s requirements in a timely manner,
which would cause delays, or approval might not be granted because our submission is deemed incomplete by the FDA. A failure to obtain accelerated
approval for any of our product candidates would result in a longer time period to obtain approval for and commercialize such product candidate, could
increase the cost of development of such product candidates and could harm our competitive position in the marketplace.
Even if we were to receive accelerated approval from the FDA for any of our other product candidates, we will be subject to rigorous post-marketing
requirements, including the submission of confirmatory clinical data verifying the clinical benefit of the product. Drug products marketed under an
accelerated approval NDA also are subject to a requirement that all promotional materials must be submitted to the FDA at least 30 days prior to their
dissemination. The FDA could seek to withdraw accelerated approval for multiple reasons, including if we fail to complete the required post-marketing
study with due diligence, the post-marketing study fails to verify the product’s clinical benefit, other evidence shows that the product is not safe or effective
under the conditions of use, or we disseminate promotional materials that are found by the FDA to be false and misleading.
Our lack of any approved products may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
Biopharmaceutical drug development is a highly speculative undertaking and involves a substantial degree of risk. Our operations to date have been
limited to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential product candidates,
undertaking preclinical studies, and conducting clinical trials of our product candidates. We have not yet demonstrated our ability to successfully complete
large-scale, randomized, pivotal clinical trials compared to standards of care, obtain marketing approvals, manufacture a commercial scale product, or
arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Typically, it
takes several years to develop one new drug from the time it is discovered to when it is available for treating patients. In addition, we may encounter
unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from a company with a research
and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.
We will require substantial additional funding which may not be available to us on acceptable terms, or at all. If we fail to obtain additional financing,
we may be unable to complete the development and commercialization of our product candidates or continue our development programs.
The development of pharmaceutical drugs is capital-intensive. We expect our expenses to increase with our ongoing activities, particularly as we
conduct larger-scale clinical trials 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 commercialization 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.
As of December 31, 2024, we had £6.7 million in cash and cash equivalents. We believe, based upon our current operating plan, that, our cash and
cash equivalents on hand will not be sufficient to fund our anticipated operations for at least the next twelve months. Our future capital requirements and
the period for which we expect our existing resources to support our operations may vary significantly from what we expect. Our monthly spending levels
vary based on new and ongoing research and development and other corporate activities. Because the length of time and activities associated with
successful research and development of our product candidates is highly uncertain, we are unable to estimate the actual funds we will require for
development and any approved marketing and commercialization activities. In addition, our future capital requirements will depend on many factors, and
could increase significantly as a result of many factors, including:
•
the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates;
•
the scope, prioritization and number of our research and development programs;
•
the costs, timing and outcome of regulatory review of our product candidates;
•
the extent to which we enter into non-exclusive, jointly funded clinical research collaboration arrangements, if any, for the development of
our product candidates in combination with other companies’ products;
•
our ability to establish collaboration arrangements for the development of our product candidates on favorable terms, if at all;
9
•
the achievement of milestones or occurrence of other developments that trigger payments under our license agreements and any collaboration
agreements into which we may enter, if any;
•
the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements,
if any;
•
the extent to which we acquire or in-license product candidates and technologies, and the terms of such in-licenses;
•
the costs of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product
candidates for which we receive marketing approval;
•
revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;
and
•
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims.
Conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that can take years to complete, and we may
never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if
approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that may not be commercially
available for several years, if ever. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.
Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and
commercialize our product candidates. Volatility in the financial markets has generally made equity and debt financing more difficult to obtain and may
compromise our ability to meet our fundraising needs. We cannot guarantee that future financing will be available in sufficient amounts or on terms
acceptable to us, if at all.
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 commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business
opportunities.
We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern, which may hinder our ability to
obtain future financing.
The development of pharmaceutical drugs is capital-intensive. We have incurred recurring losses from our operations, have an accumulated deficit
totaling £224.3 million and cash flows used in operating activities of £19.1 million as of and for the year ended December 31, 2024. We had cash and cash
equivalents of £6.7 million at December 31, 2024. We expect our expenses to increase in the medium to long-term with our ongoing activities, particularly
if we conduct larger-scale clinical trials 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 commercialization 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 tax relief or credits in connection with our R&D expenditure
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. Because of these funding needs and related risks and the current cash balance on hand, there is 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 raise substantial doubt on our ability to continue as a going concern and, therefore, that we may be unable to
realize our assets and discharge our 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 commercialization of any product candidate or be
unable to expand our operations or otherwise capitalize on our business opportunities. We may also need to raise additional funds if we choose to pursue
additional indications or geographies for development and commercialization of our product candidates or otherwise expand more rapidly than we
presently anticipate.
In light of the foregoing, we have disclosed in the footnotes to our financial statements that there is uncertainty related to the ability of us to raise
additional capital within the going concern period and our independent registered public accounting firm has included an explanatory paragraph stating that
we have concluded that a substantial doubt 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
10
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.
In addition, we have also disclosed in the footnotes to our financial statements that we plan to commence an equity financing process in order to raise
additional capital. However, while our board of directors believe there is a reasonable prospect that the financing process will be completed successfully in
the coming months, there can be no assurance that we will be successful and if we are unable to raise additional capital, we could be forced to complete a
wind down of our operations and/or seek bankruptcy protection. Because our ADSs are currently trading at a price below the nominal value of our
ordinary shares of £0.04 each, we are unable to issue new ordinary shares or ADSs at current market value. To facilitate the planned equity financing
process, on March 18, 2025, we distributed a notice of our general meeting to be held on April 7, 2025 to approve the sub-division and related
redesignation of our ordinary shares. Our ability to obtain shareholder approval of the resolutions proposed to be addressed at the planned general meeting
are subject to our ability to achieve the quorum necessary to convene the meeting and to obtain the requisite votes in favor of the resolutions. If we are
unable to achieve quorum or obtain the requisite votes in favor, we may be required to adjourn and/or reschedule the general meeting and, as a result, we
may be unable to raise the additional capital necessary to continue our operations. For more information regarding our planned general meeting, please see
the Notice of General Meeting, dated March 18, 2025 and furnished as an exhibit to our Form 6-K filed on March 18, 2025.
Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our technologies or
product candidates.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity and
debt financings. The sale of additional equity or convertible debt securities would dilute all of our shareholders. The incurrence of indebtedness could
result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur
additional debt, limitations on our ability to acquire, sell or license intellectual property rights, limitations on declaring dividends and other operating
restrictions that could adversely impact our ability to conduct our business. Moreover, the terms of any financing may adversely affect the holdings or the
rights of our shareholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market
price of our ADSs to decline.
We could decide to seek funds through collaborations, strategic alliances or licensing arrangements with third parties, and we could be required to do
so at an earlier stage than otherwise would be desirable. In connection with any such collaborations, strategic alliances or licensing arrangements, we may
be required to relinquish valuable rights to our intellectual property, future revenue streams, research programs or product candidates, grant rights to
develop and market product candidates that we would otherwise prefer to develop and market ourselves, or otherwise agree to terms unfavorable to us.
Inadequate funding for the FDA, the SEC and other, government agencies could hinder such agencies’ ability to hire and retain key leadership and
other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies
from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels,
ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the
agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations
may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government
agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and
certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical
activities. Moreover, shutdowns or slowdowns in normal agency work caused by public health emergencies can increase the time needed for the agency to
complete its review or make final approval or other administrative decisions. If a prolonged government shutdown or slowdown occurs, it could
significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our
business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public market and obtain
necessary capital in order to properly capitalize and continue our operations.
In addition, three decisions from the U.S. Supreme Court issued in July 2024 may lead to an increase in litigation against regulatory agencies that
could create uncertainty and thus negatively impact our business. The first decision overturned established precedent that required courts to defer to
regulatory agencies’ interpretations of ambiguous statutory language.
11
The second decision overturned regulatory agencies’ ability to impose civil penalties in administrative proceedings. The third decision extended the statute
of limitations within which entities may challenge agency actions. These cases may result in increased litigation by industry against regulatory agencies,
including but not limited to the FDA and SEC, and may impact how such agencies choose to pursue enforcement and compliance actions. However, the
specific, lasting effects of these decisions, which may vary within different judicial districts and circuits, is unknown. We also cannot predict the extent to
which FDA and SEC regulations, policies, and decisions may become subject to increasing legal challenges, delays, and changes.
We may be unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments or benefit from
favorable United Kingdom tax legislation.
As a United Kingdom resident company, we are subject to U.K. corporate taxation. We have generated losses since inception. As of December 31,
2024, we had cumulative carry forward tax losses of £104.2 million. Subject to any relevant restrictions, including the Corporate Income Loss Restriction
and the Corporate Capital Loss Restriction that, broadly, restrict the amount of carried forward losses that can be utilized to 50% of group profits or gains
arising above £5.0 million per tax year, we expect these to be available to carry forward and offset against future operating profits.
As a company that carries out extensive research and development activities, we have historically benefited from the United Kingdom’s research and
development tax credit regime for small and medium-sized companies that was in place until March 31, 2024. On April 1, 2024, this regime was replaced
with a new regime (including a standalone scheme applying to R&D-intensive loss-making small and medium-sized companies) that applies in respect of
accounting periods beginning on or after that date. We are in the process of reviewing the terms of the new rules, our eligibility to benefit under them, and
the nature and amount of relief available in respect of our R&D costs incurred in this and future accounting periods.
We may benefit in the future from the United Kingdom’s “patent box” regime, which allows certain profits attributable to revenues from patented
products to be taxed at an effective rate of 10%. As we have many different patents covering our products, future upfront fees, milestone fees, product
revenues and royalties could be taxed at this favorably low tax rate. When taken in combination with the enhanced relief available on our research and
development expenditures, we expect a long-term lower rate of corporation tax to apply to us. However, as a result of the changes to the United Kingdom
research and development tax credit regimes (whether as a result of the reform of the U.K. research and development tax regime outlined above, or
otherwise) or if there are unexpected adverse changes to the “patent box” regime, or for any reason we are unable to qualify for such advantageous tax
legislation, or we are unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments then our
business, results of operations and financial condition may be adversely affected.
Tax authorities may disagree with our positions and conclusions regarding certain tax positions, or may apply existing rules in an arbitrary or
unforeseen manner, resulting in unanticipated costs, taxes or non-realization of expected benefits.
A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, His Majesty’s
Revenue & Customs, or HMRC, the U.S. Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and
the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including methodologies for
valuing developed technology and amounts paid with respect to our intellectual property development. Similarly, a tax authority could assert that we are
subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under
international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
A tax authority may take the position that material income tax liabilities, interest and penalties are payable by us, for example where there has been a
technical violation of contradictory laws and regulations that are relatively new and have not been subject to extensive review or interpretation, in which
case we expect that we might contest such assessment. Contesting such an assessment may be lengthy and costly and if we were unsuccessful in disputing
the assessment, the implications could increase our anticipated effective tax rate, where applicable.
Changes and uncertainties in the tax system in the countries in which we have operations, could materially adversely affect our financial condition and
results of operations, and reduce net returns to our shareholders.
We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have on our business, but such
changes, to the extent they are brought into tax legislation, regulations, policies or practices in jurisdictions in which we operate or in the future into which
we sell our products, could increase the estimated tax liability that we have expensed to date and paid or accrued on our balance sheets, and otherwise
affect our financial position, future results of operations, cash flows in a particular period and overall or effective tax rates in the future in countries where
we have operations or may sell our products, reduce post-tax returns to our shareholders and increase the complexity, burden and cost of tax compliance.
12
Our business may become subject to economic, political, regulatory and other risks associated with international operations.
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 States. Accordingly, our future results could be harmed by a
variety of factors, including:
•
economic weakness, including inflation, or political instability;
•
differing and changing regulatory requirements for drug approvals;
•
differing jurisdictions could present different issues for securing, maintaining or obtaining freedom to operate in such jurisdictions;
•
potentially reduced protection for intellectual property rights;
•
difficulties in compliance with non-U.S. laws and regulations;
•
changes in regulations and customs, tariffs and trade barriers;
•
changes in currency exchange rates of the pound sterling, the euro and currency controls;
•
changes in a specific country’s or region’s political or economic environment, including the implications of the United Kingdom’s
withdrawal from the European Union, or any potential future referendum regarding the independence of Scotland;
•
trade protection measures, import or export licensing requirements or other restrictive actions by U.S. or non-U.S. governments;
•
differing reimbursement regimes and price controls in certain non-U.S. markets;
•
negative consequences from changes in tax laws;
•
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
•
workforce uncertainty in countries where labor unrest is more common than in the United States;
•
difficulties associated with staffing and managing international operations, including differing labor relations;
•
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
•
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 in the U.S. and
abroad, 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.
We may be adversely affected by the effects of inflation.
Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost
structure. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs,
supply shortages, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may
continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective our
business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are effective, there could be
a difference between the timing of when these beneficial actions impact our results of operations and when the cost inflation is incurred.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by
financial institutions or transactional counterparties, could adversely affect our current and projected business operations and its financial condition
and results of operations.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional
counterparties or other companies in the financial services industry or the financial services
13
industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide
liquidity problems. For example, on March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and
Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver. Similarly, on March 12, 2023, Signature Bank and
Silvergate Capital Corp. were each swept into receivership. A statement issued on March 12, 2023, by the Department of the Treasury, the Federal Reserve
and the FDIC stated that all depositors of SVB would have access to all of their money, including funds held in uninsured deposit accounts, borrowers
under credit agreements, letters of credit and certain other financial instruments with SVB, Signature Bank or any other financial institution that is placed
into receivership by the FDIC. In the United Kingdom, on March 13, 2023, the Bank of England, or BoE, issued a press release stating that the BoE, in
consultation with the Prudential Regulation Authority, or PRA, HM Treasury, or HMT, and the Financial Conduct Authority, or FCA, had taken the
decision (using the resolution powers for stabilizing failing banks under the Banking Act 2009) to sell Silicon Valley Bank UK Limited, or SVBUK, the
U.K. affiliate of SVB, to HSBC UK Bank Plc. In the press release, the BoE and HMT confirmed that depositors would have access to all of their money
with SVBUK as a result of this transaction, and the BoE subsequently confirmed (in a report published on November 6, 2024) that continuity of banking
services was maintained following the transfer. However, if any of our other counterparties to instruments such as uninsured deposit accounts, credit
agreements, letters of credit and certain other financial instruments were to be placed into receivership, we may be unable to access such funds. In
addition, if any parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a
financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us
could be adversely affected. In this regard, counterparties to SVB credit agreements and arrangements, and third parties such as beneficiaries of letters of
credit (among others), may experience direct impacts from the closure of SVB and uncertainty remains over liquidity concerns in the broader financial
services industry. Similar impacts have occurred in the past, such as during the 2008-2010 financial crisis.
Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates
below current market interest rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up
to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential
losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediate
liquidity may exceed the capacity of such program. There is no guarantee that the U.S. Department of Treasury, FDIC and Federal Reserve Board will
provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely
fashion.
Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in
amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the
financial institutions with which we have arrangements directly, or the financial services industry or economy in general. These factors could include,
among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity
agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the
prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with
which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and
projected business operations and our financial condition and results of operations. These could include, but may not be limited to, the following:
•
Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets;
•
Loss of access to revolving existing credit facilities or other working capital sources and/or the inability to refund, roll over or extend the
maturity of, or enter into new credit facilities or other working capital resources;
•
Potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; or
•
Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.
In addition, investor concerns regarding the U.S., U.K. or international financial systems could result in less favorable commercial financing terms,
including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources,
thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and
liquidity resources could, among other risks,
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adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or
contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors
described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or
projected business operations and financial condition and results of operations.
In addition, any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by parties with
whom we conduct business, which in turn, could have a material adverse effect on our current and/or projected business operations and results of
operations and financial condition. For example, a party with whom we conduct business may fail to make payments when due, default under their
agreements with us, become insolvent or declare bankruptcy. Any bankruptcy or insolvency, or the failure to make payments when due, of any
counterparty of ours, or the loss of any significant relationships, could result in material losses to us and may material adverse impacts on our business.
Future pandemics or public health crises could adversely impact our business, including our preclinical studies and clinical trials.
Public health crises such as pandemics or similar outbreaks could adversely impact our business. We rely on third-party manufacturers, distributors,
information technology and software service providers, law and accounting firms, CROs, and consultants who are subject to, or may become subject to,
pandemic-related controls. Pandemics or epidemics may also affect employees of third-party CROs located in affected geographies that we rely upon to
carry out clinical trials. If these third parties cannot perform the services we require in a timely way and we cannot successfully implement replacements or
workarounds, our business, results of operations, and financial condition could be harmed. As a result of potential future pandemics, we may in the future
experience disruptions that could severely impact our business, preclinical studies and clinical trials, including:
•
delays or difficulties in enrolling patients in our clinical trials;
•
delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
•
delays or disruptions in preclinical experiments and investigational new drug application-enabling good laboratory practice standard
toxicology studies due to unforeseen circumstances at CROs and vendors along their supply chain;
•
increased rates of patients withdrawing from our clinical trials following enrollment as a result of contracting a virus, infection, or other
disease, being forced to quarantine, or not wanting to attend hospital visits;
•
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites
and hospital staff supporting the conduct of our clinical trials;
•
interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by
national, state or local governments, employers and others or interruption of clinical trial subject visits and trial procedures (particularly any
procedures that may be deemed non-essential), which may impact the integrity of subject data and clinical trial endpoints;
•
interruption or delays in the operations of the FDA, the EMA or other foreign regulatory agencies, which may impact approval timelines;
•
interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing
shortages, production slowdowns or stoppages and disruptions in our supply chain or distribution vendors’ ability to ship product candidates;
and
•
limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including
because of sickness of employees or their families, the desire of employees to avoid contact with large groups of people, an increased
reliance on working from home or mass transit disruptions.
These and other factors could further adversely impact our ability to conduct clinical trials and our business generally, and could have a material
adverse impact on our operations and financial condition and results.
In addition, the trading prices for our ADSs and for the securities of other biopharmaceutical companies may be highly volatile during certain periods
as a result of a pandemic. As a result, we may face difficulties raising capital through sales of our ADSs or such sales may be on unfavorable terms. The
extent to which a pandemic may impact our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain
and cannot be predicted with confidence, such as the emergence, severity and spread of new variants of a disease, the duration of a pandemic and any
15
outbreak of future variants, the potential imposition of travel restrictions and actions to contain a pandemic and any future outbreaks, such as social
distancing and quarantines or lock-downs in the United Kingdom, the United States and other countries, business closures or business disruptions and the
effectiveness of actions taken in the United Kingdom, the United States and other countries to contain and treat a disease.
The ongoing conflicts in Ukraine and the Middle East could adversely impact our business, in particular with respect to enrollment and data collection
in any clinical trials of our product candidates that may be conducted in Ukraine, Russia, Belarus or the Middle East.
The ongoing military and geopolitical conflicts in Ukraine and the Middle East could disrupt our clinical trials that may be conducted in these regions
and increase our costs in these regions. Although the length and impacts of any military action or geopolitical conflicts are highly unpredictable, clinical
trial sites that may be established in Ukraine, Russia and Belarus and neighboring countries, as well as in the Middle East could suspend or terminate their
participation in trials, and patients and physicians could be forced to evacuate or voluntarily choose to relocate far from clinical trial sites, making them
unavailable and potentially making data collection more difficult or not possible. Any such difficulties at clinical trial sites that may be established, or the
unavailability of such clinical trial sites, could result in delays in enrolling or completing clinical trials, the need to identify alternative clinical trial sites,
and increased overall development costs. Furthermore, the United States and its European allies have imposed significant sanctions against Russia and
Belarus, as well as certain countries in the Middle East, including embargoes, sanctions and other restrictions. Our ability to conduct potential future
clinical trials or make purchases from suppliers located in Russia, Belarus and parts of Ukraine and elsewhere in the region, as well as certain countries in
the Middle East, has become restricted under applicable sanctions laws. All of the foregoing could impede the execution of our clinical development plans,
which could materially harm our business.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.
The global credit and financial markets have experienced extreme volatility and disruptions in recent years, including severely diminished liquidity
and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic
stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including
the conflicts in the Middle East and between Russia and Ukraine, terrorism or other geopolitical events. Sanctions imposed by the United States, the
United Kingdom, and other countries in response to such conflicts, including the ones in the Middle East and in Ukraine, may also adversely impact the
financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic
instability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our
general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and
unstable market conditions. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more
costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our
growth strategy, financial performance and stock price and could require us to delay, limit, reduce, or terminate our product development or future
commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such
product candidates ourselves, or on less favorable terms than we would otherwise choose. In addition, one or more of our current service providers,
manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our clinical development goals on
schedule and on budget.
Uncertainty about global economic conditions could result in increased costs related to the manufacture of our product candidates and, if our drug
candidates are approved and made available for sale, customers may postpone purchases of our drug candidates in response to tighter credit,
unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material adverse
effect on demand for our drug candidates.
Exchange rate fluctuations may adversely affect our results of operations and financial condition.
Owing to the international scope of our operations, fluctuations in exchange rates, particularly between the pound sterling and the U.S. dollar, may
adversely affect us. Although we are based in the United Kingdom, we source our active pharmaceutical ingredient, or API, and other raw materials and
our research and development, manufacturing, consulting and other services worldwide, including from the United States, the European Union and India.
Any weakening of the pound sterling against the currencies of such other jurisdictions makes the purchase of such goods and services more expensive for
us. Further, potential future revenue may be derived from abroad, particularly from the United States. As a result, our business and the price of our ADSs
may be affected by fluctuations in foreign exchange rates not only between the pound sterling and the U.S. dollar, but also the currencies of other countries,
which may have a significant impact on our results of operations and cash flows from period to period. Currently, we do not have any exchange rate
hedging arrangements in place.
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Our business may be negatively impacted by future changes in applicable regulatory regimes.
We may face new regulatory costs and challenges that could have an adverse effect on our operations. The regulatory frameworks applicable to our
operations and the development of our product candidates, including those with respect to the FDA and the EMA, can change at any time as a result of
political decisions. Any changes to the applicable regulatory frameworks could have a material impact on our plans and development strategy, including
our supply of investigational medicinal products. Similarly, any significant political changes in Europe or the United Kingdom could result in disruption
that could in turn delay the approval of new medicines at the EMA or the Medicines and Healthcare products Regulatory Agency, or MHRA, in the United
Kingdom.
Risks Related to Development of Our Product Candidates
Initial success in the completed and ongoing early-stage clinical trials may not be indicative of results obtained when these trials are completed or in
later stage trials.
NUC-7738 is currently being evaluated in the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) which is evaluating NUC-7738 as a monotherapy
in patients with advanced solid tumors and in combination with the PD-1 inhibitor pembrolizumab in patients with melanoma. While favorable results were
obtained from the Phase 1 part of the Phase 1/2 clinical trial (NuTide:701), they may not be replicated in any ongoing or future clinical trials. NUC-3373 is
currently being evaluated in a Phase 1b/2 modular clinical trial (NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for
patients with advanced solid tumors and in combination with docetaxel for patients with lung cancer. While favorable results were obtained from our
Phase 1 clinical trial of NUC-3373 in patients with advanced solid tumors, our ongoing Phase 1b/2 modular clinical trial of NUC-3373 may not be
replicated in any future clinical trials. As an example, our Phase 1b/2 clinical trial of NUC-3373 in patients with metastatic colorectal cancer and our Phase
2 randomized NuTide:323 clinical trial investigating NUFIRI + bevacizumab versus the global standard of care, 5-FU in combination with leucovorin,
irinotecan and bevacizumab, or FOLFIRI + bevacizumab, were discontinued despite the favorable Phase 1 results of NUC-3373. In addition, data
generated in early-stage trials in particular are not the basis on which marketing approval by the FDA or a comparable foreign regulatory authority would
be sought. Furthermore, the results of our clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign
regulatory authorities for marketing approval. Statistical significance means that an effect is unlikely to have occurred by chance. Clinical trial results are
considered statistically significant when the probability of the results occurring by chance, rather than from the efficacy of the product candidate, is
sufficiently low. There can be no assurance that any of our clinical trials will ultimately be successful or support further clinical development of any of our
product candidates. There is a high failure rate for drugs proceeding through clinical trials. A number of companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies.
Preliminary and interim data from our clinical trials that we may announce or publish from time to time may change as patient enrollment continues,
patient data are further examined and more patient data become available.
From time to time, we may announce or publish preliminary or interim data from our clinical studies, which include preliminary or interim data from
our clinical trials, including those from the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) which is evaluating NUC-7738 as a monotherapy in
patients with advanced solid tumors and in combination with pembrolizumab in patients with melanoma, the Phase 1b/2 modular clinical trial
(NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumors and in combination with
docetaxel for patients with lung cancer, and any future clinical trials of any of product candidates. Preliminary and interim data from a clinical trial are not
always entirely representative of final data. Preliminary and interim data are subject to the risk that one or more of the clinical outcomes may materially
change as patient enrollment continues, patient data are further examined, more patient data become available, and we prepare and issue our final clinical
trial report. As a result, preliminary and interim data should be viewed with caution until the final data are available. Material adverse changes in the final
data compared to the preliminary or interim data could significantly harm our business prospects.
We are relatively early in our development efforts. If we are unable to successfully develop and commercialize our product candidates or experience
significant delays in doing so, our business will be harmed.
We currently do not have any products that have gained marketing approval. We have invested substantially all of our efforts and financial resources
identifying and developing our ProTides, such as NUC-7738 and NUC-3373, as well as Acelarin for which we discontinued the NuTide:121 clinical trial in
March 2022. Our ability to generate product revenues, which may not occur for several years, if ever, will depend on the successful development and
eventual commercialization of our product candidates: NUC-7738, for which the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) which is evaluating
NUC-7738 as a monotherapy in patients with advanced solid tumors and in combination with pembrolizumab in patients with melanoma is ongoing; and
NUC-3373, for which a Phase 1b/2 modular clinical trial (NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients
with advanced solid tumors and in combination with
17
docetaxel for patients with lung cancer is ongoing. We currently do not generate any revenues from sales of any products, and we may never be able to
develop or commercialize a marketable drug. Each of our product candidates will require development, management of development and manufacturing
activities, marketing approval in multiple jurisdictions, obtaining manufacturing supply, building of a commercial organization, substantial investment and
significant marketing efforts before we generate any revenues from drug sales.
We have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new
and rapidly evolving fields, particularly in the biopharmaceutical area. For example, to execute our business plan, we will need to successfully:
•
execute development activities for our product candidates, including successful enrollment in and completion of clinical trials;
•
manage our spending as costs and expenses increase due to preclinical development, clinical trials, marketing approvals and
commercialization;
•
obtain required marketing approvals for the development and commercialization of our product candidates;
•
obtain and maintain patent and trade secret protection and regulatory exclusivity for our product candidates and ensure that we do not
infringe the valid patent rights of third parties;
•
protect, leverage and expand our intellectual property portfolio;
•
establish and maintain clinical and commercial manufacturing capabilities or make arrangements with third-party manufacturers for clinical
and commercial manufacturing;
•
build and maintain robust sales, distribution and marketing capabilities, either on our own or in collaboration with strategic partners, if our
product candidates are approved;
•
gain acceptance for our product candidates, if approved, by patients, the medical community and third-party payors;
•
compete effectively with other therapies;
•
obtain and maintain healthcare coverage and adequate reimbursement;
•
maintain a continued acceptable safety profile for our product candidates following approval, if approved; and
•
develop and maintain any strategic relationships we elect to enter into, if any.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully
commercialize our product candidates, which would harm our business. If we do not receive marketing approvals for our product candidates, we may not
be able to continue our operations.
If we experience delays or difficulties in the enrollment of patients in clinical trials, development of our product candidates may be delayed or
prevented.
Identifying and qualifying patients to participate in clinical trials for our product candidates is critical to our success. We may not be able to initiate or
continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials.
Patient enrollment may be affected by many factors including:
•
the severity of the disease under investigation;
•
the size of the patient population for a product indication;
•
the eligibility criteria for the clinical trial in question;
•
the perceived risks and benefits of the product candidate under study;
•
the efforts to facilitate timely enrollment in clinical trials;
•
the patient referral practices of physicians;
•
the availability of competing therapies and clinical trials; and
•
the proximity and availability of clinical trial sites for prospective patients.
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Congress also recently amended the Federal Food, Drug, and Cosmetic Act, or FD&C Act, to require sponsors of a Phase 3 clinical trial, or other
“pivotal study” of a new drug to support marketing authorization, to design and submit a diversity action plan for such clinical trial. The action plan must
describe appropriate diversity goals for enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them. Although none
of our product candidates has reached Phase 3 of clinical development, we must submit a diversity action plan to the FDA by the time we submit a Phase 3
trial, or pivotal study, protocol to the agency for review, unless we are able to obtain a waiver for some or all of the requirements for a diversity action plan.
Initiation of such trials may be delayed if the FDA objects to our proposed diversity action plans for any future Phase 3 trial for our product candidates, and
we may experience difficulties recruiting a diverse population of patients in attempting to fulfill the requirements of any approved diversity action plan.
If we experience delays or difficulties in the enrollment of patients in clinical trials for any reason, our clinical trials may be delayed or terminated.
Any delays in completing our clinical trials will increase our costs, delay or prevent our product candidate development and approval process, and
jeopardize our ability to commence product sales and generate revenue.
Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in
completing, or ultimately be unable to complete, the development and may experience delays in obtaining, or ultimately be unable to obtain, the
approval of our product candidates.
The risk of failure in drug development is high. NUC-7738 is in the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) which is evaluating NUC-
7738 as a monotherapy in patients with advanced solid tumors and in combination with pembrolizumab in patients with melanoma, and NUC-3373 is
currently being studied in a Phase 1b/2 modular clinical trial (NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for
patients with advanced solid tumors and in combination with docetaxel for patients with lung cancer. Before obtaining marketing approval from regulatory
authorities for the sale of any product candidate, we must complete nonclinical development and conduct extensive clinical trials to demonstrate the safety
and efficacy of our product candidates in patients. Clinical trials are expensive, difficult to design and implement and can take several years to complete,
and their outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Further, the results of preclinical studies and early
clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials, and interim results of a clinical trial do not
necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies
that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing
approval of their products. It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive
marketing approval.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing
approval or commercialize our product candidates. Clinical trials may be delayed, suspended or prematurely terminated because costs are greater than we
anticipate or for a variety of reasons, such as:
•
an epidemic or pandemic, which may affect the ability to initiate and/or complete preclinical studies or conduct ongoing clinical trials, and
may delay initiation of planned and future clinical trials;
•
delay or failure in reaching agreement with the FDA, the EMA or a comparable foreign regulatory authority on a trial design that we are able
to execute;
•
delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority
regarding the scope or design of a clinical trial;
•
delays in reaching, or failure to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, the terms of which
can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
•
inability, delay, or failure in identifying and maintaining a sufficient number of trial sites, many of which may already be engaged in other
clinical programs;
•
delay or failure in recruiting and enrolling suitable subjects to participate in a trial;
•
delay or failure in having subjects complete a trial or return for post-treatment follow-up;
•
clinical sites and investigators deviating from the clinical protocol, failing to conduct the trial in accordance with regulatory requirements, or
dropping out of a trial;
•
failure to initiate or delay of or failure to complete a clinical trial as a result of an Investigational New Drug Application, or IND, being
placed on clinical hold by the FDA, or for other reasons;
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•
lack of adequate funding to continue a clinical trial, including unforeseen costs due to enrollment delays, requirements to conduct additional
clinical trials and increased expenses associated with the services of our CROs and other third parties;
•
clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to
conduct additional clinical trials or abandon product development programs;
•
the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials
may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;
•
our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or
at all;
•
regulators, or a Data Safety Monitoring Board, or DSMB, if one is used for our clinical trials, may require that we suspend or terminate our
clinical trials for various reasons, including noncompliance with regulatory requirements, unforeseen safety issues or adverse side effects,
failure to demonstrate a benefit from using a drug, or a finding that the participants are being exposed to unacceptable health risks;
•
the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be
insufficient;
•
the FDA or other regulatory authorities may require us to submit additional data or impose other requirements before permitting us to initiate
a clinical trial; or
•
there may be changes in governmental regulations or administrative actions.
Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of
marketing approval for our product candidates. The FDA may disagree with our clinical trial design and our interpretation of data from clinical trials, or
may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials. For example, the FDA published
guidance in 2022 on “Project Optimus”, an initiative to reform dose selection in oncology drug development. If the FDA does not believe we have
sufficiently demonstrated that the selected doses for our investigational products maximize not only the efficacy of the investigational product, but the
safety and tolerability as well, our ability to initiate new studies may be delayed. Even if we conducted the additional studies or generated the additional
information requested, the FDA could disagree that we have satisfied their requirements, all of which will cause significant delays and expense to our
programs.
In addition, even though NUC-3373 is a transformation of a chemotherapeutic agent that has been widely used for many years and there is a clear
unmet medical need in the indications that we are currently pursuing, as well as others that we may pursue, in the clinic, there can be no assurance that the
FDA will permit us to move more quickly to the initiation of pivotal clinical trials in large patient populations. Furthermore, NUC-7738 is a transformation
of 3’-deoxyadenosine, a nucleoside analog that has never been successfully developed or approved as a chemotherapy, which may result in the need for
more nonclinical studies or clinical trials than would be the case for transformations of approved chemotherapeutic agents.
If we are required to conduct additional clinical trials or other studies of our product candidates beyond those that we currently contemplate, if we are
unable to successfully complete clinical trials of our product candidates or other studies, if the results of these trials or tests are not positive or are only
modestly positive or if there are safety concerns, we may:
•
be delayed in obtaining marketing approval for our product candidates;
•
not obtain marketing approval for our product candidates at all;
•
obtain approval for indications or patient populations that are not as broad as intended or desired;
•
obtain approval with labeling that includes significant use or distribution restrictions or safety warnings that would reduce the potential
market for our products or inhibit our ability to successfully commercialize our products;
•
be subject to additional post-marketing restrictions or requirements, including confirmatory trials; or
•
have the product removed from the market after obtaining marketing approval.
Our product development costs will also increase if we experience delays in preclinical and clinical development or receiving the requisite marketing
approvals. We do not know whether any of our preclinical studies or clinical trials will need to be restructured or will be completed on schedule, or at all.
Significant preclinical or clinical trial delays also could
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shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to
market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.
We face regulation and potential liability related to the privacy of personal data, including health information we obtain from clinical trials sponsored
by us or our collaborators.
The regulatory environment surrounding information security and privacy is increasingly demanding, and these laws and regulations are increasing in
complexity and number, and may change frequently and sometimes conflict. We are subject to numerous regulations governing the protection of personal
and confidential information of our clinical trial subjects, clinical investigators, and employees, including in relation to medical records, credit card data
and financial information, which encompass state privacy and confidentiality laws (including state laws requiring disclosure of breaches), federal and state
consumer protection and employment laws, the Health Insurance Portability and Accountability Act, or HIPAA, and European and other foreign data
protection laws. For example, the European Union General Data Protection Regulation, or GDPR, is applicable in all E.U. member states and member
states of the European Economic Area, or E.E.A. In the United Kingdom the data protection obligations of the GDPR continue to apply to U.K.-related
processing of personal data in substantially unvaried form and fashion (retained in U.K. law as the “U.K. GDPR”).
We are subject to the GDPR and/or U.K. GDPR when conducting clinical trials involving U.K.- or E.E.A.-based data subjects (whether the trials are
conducted directly by us or through a clinical vendor or collaborator) or offering approved products (or any other products or services) to U.K.- or E.E.A.-
based data subjects (regardless of whether involving a U.K. or E.E.A. based subsidiary or operation), when monitoring of their behavior of data subjects in
the United Kingdom or E.E.A. and/or when acting through a U.K.- or E.E.A.-based subsidiary, operation or other establishment.
The GDPR (and U.K. GDPR) sets out a number of requirements that must be complied with when handling personal data (i.e., data relating to an
identified or identifiable living individual) in these circumstances, including: having an appropriate lawful basis for processing, and a relevant condition if
processing ‘special category’ personal data (which includes personal data related to health, biometric data used for unique identification purposes and
genetic information); the obligation to appoint data protection officers in certain circumstances; accountability and record-keeping obligations;
transparency obligations for data controllers; the obligation to carry out ‘data protection impact assessments’ in certain circumstances; rights for data
subjects (such as rights for individuals to be “forgotten”, rights to data portability, rights to object etc.); a stringent standard of data subject consent; and the
obligation to notify certain significant personal data breaches to the relevant Supervisory Authority(ies) and affected individuals. In addition, the GDPR
provides a very broad definition of what constitutes personal data (for example, the GDPR expressly clarifies that it applies to ‘pseudonymized’ (i.e., key-
coded) data). A number of opinions from Supervisory Authorities has further supported a very wide interpretation of the concept of personal data and,
thus, the application of the GDPR. Recent decisions by E.U. supervisory authorities and the Court of Justice of the E.U. have confirmed that the rights
granted to individuals under the GDPR must be applied broadly, and the law itself must be interpreted strictly, to guarantee the protection of the rights of
individuals.
The GDPR and U.K. GDPR also impose strict rules on the transfer of personal data out of the E.E.A. and United Kingdom to U.S. and other Third
Countries. Legal developments in the past five years have created further complexity and uncertainty regarding transfers of personal data from the E.E.A.
and United Kingdom to the United States. The E.U.-U.S. Data Privacy Framework, the U.K. Extension to the E.U.-U.S. Data Privacy Framework and the
Swiss-E.U. Data Privacy Framework, have made it easier to transfer personal data from the E.E.A., the United Kingdom and Switzerland to the United
States (respectively). However, a decision by the Court of Justice of the European Union in January 2025 to award compensation to an individual whose
personal data was transferred to the United States demonstrates that this remains a sensitive legal topic. The new U.S. administration may, potentially,
offer additional scope to challenge the validity of the Data Privacy Framework under E.U. law.
As the Data Privacy Framework is limited to transfers to certified participants in the U.S., many transfers continue to rely on the standard contractual
clauses. Use of the standard contractual clauses must be assessed on a case-by-case basis taking into account the legal regime applicable in the destination
country, in particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be put in
place, however, the nature of these additional measures is currently uncertain. In May 2023, the Irish Data Protection Commission issued a €1.2 billion
fine against Meta for transferring personal data to the United States in reliance on standard contractual clauses, on the basis that the personal data was not
sufficiently protected in the United States. In light of all of these developments, it is expected that the uncertainty surrounding data transfers will continue
into 2025 and beyond.
As the legal challenges continue and/or supervisory authorities increase their enforcement activities, we could suffer additional costs, complaints,
and/or regulatory scrutiny, investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in
which we operate, it could affect the manner in which we provide
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our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results and generally
increase compliance risk.
The GDPR also provides that E.E.A. member states may make their own further laws and regulations to introduce specific requirements related to the
processing of: “special categories of personal data”, including personal data related to health, biometric data used for unique identification purposes and
genetic information; as well as personal data related to criminal offences or convictions. This fact may lead to greater divergence on the law that applies to
the processing of such data types across the E.E.A. and U.K., compliance with which as and where applicable may increase our costs and could increase
our overall risk.
In the past 12 months, the European data protection authorities have been particularly active in seeking to regulate Artificial Intelligence, in the
absence of comprehensive A.I. regulation. At least until the A.I. Act becomes applicable in the European Union (there is a staged implementation through
to 2027), we expect to see this focus continue and so any use of A.I. within the healthcare sector will be subject to a heightened risk under European
privacy laws.
Now that the United Kingdom is no longer a member of the European Union, there is increasing scope for divergence in application, interpretation
and enforcement of the data protection law between the United Kingdom and European Union. On October 23, 2024, the U.K. Government presented the
‘Data (Use and Access) Bill’ to Parliament, which seeks to amend various aspects of the United Kingdom’s data protection regime. The Bill is proceeding
through the legislative process, but is expected to become law in Spring or Summer 2025. As currently drafted, the Bill will result in only very minor
changes to the substance of the U.K. GDPR, and so the United Kingdom will remain very closely aligned with the European Union in this regard.
However, any changes relating to the U.K. and E.U. position regarding aspects of data protection law may lead to additional compliance costs and could
increase our overall risk. The Bill also significantly increases the maximum fines for the U.K.’s direct marketing and ‘cookie compliance’ rules, from the
current £500,000 to GDPR levels (see below).
Alongside the GDPR, the European Union has recently passed a number of new laws affecting data and security, including the Data Governance Act,
the Network and Information Security (NIS) 2 Directive and the European Health Data Space, or EHDS, Regulation. The EHDS Regulation is likely to,
for example, require us to make health data available to other organizations in this sector (in an anonymized form) and to the patients themselves. The
EHDS was adopted by the Council of the European Union in January 2025, and will enter into force after being formally signed by the Council and
European Parliament. We are likely to have to devote substantial resources to understanding and preparing for it.
These laws and regulations are increasing in complexity and number, and new regulatory guidance and case law means the regulatory landscape
changes frequently. Complying with these numerous, complex and often changing regulations is expensive and difficult. Failure by us, any partners, our
service providers, or our employees or contractors to comply with the GDPR could result in regulatory investigations, enforcement notices and/or fines of
up to the higher of €20 million or up to 4% of our total worldwide annual turnover. Further, following the withdrawal of the United Kingdom from the
European Union, we now have to comply with the GDPR and U.K. GDPR separately, each regime separately having the ability to fine up to the higher of
€20 million / £17.5 million or 4% of global turnover. In addition, the value of fines issued by supervisory authorities has increased substantially in recent
years: numerous multi-million € / £ fines have been issued by supervisory authorities across the E.E.A. and by the U.K. Information Commissioner’s
Office, and the first €1.2 billion fine was issued against Meta by the Irish supervisory authority in May 2023. Guidance from the European Data Protection
Board has indicated that turnover will be taken into account when defining the starting amount of fines, resulting in higher fines for larger organizations.
Therefore, we expect the amount of fines to continue to rise. In addition to administrative fines, a wide variety of other potential enforcement powers are
available to competent authorities in respect of potential and suspected violations of the GDPR, including extensive audit and inspection rights, and powers
to order temporary or permanent bans on all or some processing of personal data carried out by non-compliant actors.
In addition to the foregoing, a breach of privacy laws or data security laws, particularly those resulting in a significant cybersecurity incident or breach
involving the misappropriation, corruption, modification, loss or other unauthorized use or disclosure of sensitive or confidential patient or consumer
information, could have a material adverse effect on our business, reputation and financial condition. In addition, widely publicized security breaches are
increasingly being followed in the European Union by attempts to bring large ‘class action’ style claims; this trend is likely to continue in light of recent
decisions by the European Court of Justice confirming data subjects’ right to compensation even for minor non-material damage. Although such ‘class
action’ style claims have yet to succeed in any significant compensation orders, defending these claims is costly and could still result in substantial liability
for compensation and legal fees. As a data controller, we are accountable for any third-party service providers we engage to process personal data on our
behalf, including our CROs. We attempt to mitigate the associated risks by performing security assessments and due diligence of our vendors and
requiring all such third-party providers with data access to sign agreements, and obligating them to only process data according to our instructions and to
take sufficient security measures to protect such data. There is no assurance that these contractual measures and our own privacy and security-related
safeguards will protect us from the risks associated with the
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third-party processing, storage and transmission of such information. Any violation of data or security laws by our third-party processors could have a
material adverse effect on our business and result in fines, penalties and/or other enforcement actions outlined above.
In addition, various U.S. states have enacted privacy and security laws and regulations, and such laws and regulations vary from state to state,
constantly evolve, and remain subject to significant change. In some cases, such laws and regulations can impose more restrictive requirements than
HIPAA and other U.S. federal laws, thus complicating compliance efforts. Several U.S. federal and state laws establish additional requirements for
protecting the privacy and security of health information that is not protected by HIPAA. For instance, Washington State recently passed the “My Health
My Data” Act, which regulates “consumer health data,” which is defined as “personal information that is linked or reasonably linkable to a consumer and
that identifies a consumer’s past, present, or future physical or mental health.” The “My Health My Data” Act provides exemptions for personal data used
or shared in connection with certain research activities, including data subject to 45 C.F.R. Parts 46, 50 and 56. Notably, the “My Health My Data” Act
contains a private right of action. In addition, Nevada recently enacted a consumer health data privacy bill, SB 370, which also regulates “consumer health
data” and shares many similarities with Washington’s “My Health My Data” Act, and Connecticut recently amended its comprehensive privacy law to
include heighted regulation of “consumer health data.” Additional states may adopt health-specific privacy laws that could impact our business activities
and our collection and handling of health-related data.
More broadly, various U.S. state laws regulate the processing of personal information. For example, California has enacted the California Consumer
Privacy Act, or CCPA, which went into effect in January of 2020. The CCPA gives California residents expanded rights to access and require deletion of
their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation. Although
the CCPA includes exemptions for certain categories of health information, if we become subject to the CCPA, our compliance costs and potential liability
with respect to other personal information we collect about California residents may increase. Additionally in 2020, California voters passed the California
Privacy Rights Act, or the CPRA, which went into full effect on January 1, 2023. The CPRA significantly amended the CCPA, potentially resulting in
further uncertainty, additional costs and expenses in an effort to comply and additional potential for harm and liability for failure to comply. Among other
things, the CPRA established a new regulatory authority, the California Privacy Protection Agency, which is tasked with enacting new regulations under
the CPRA and has expanded enforcement authority. In addition to California, more U.S. states are enacting similar legislation, increasing compliance
complexity and increasing risks of failures to comply. In 2023, comprehensive privacy laws in Virginia, Colorado, Connecticut, and Utah all took effect,
and laws in Montana, Oregon, and Texas took effect during 2024. Laws in a number of other U.S. states took effect, or are set to take effect, in 2025, in
2026, and beyond. Additional U.S. states have proposals under consideration, all of which are likely to increase our regulatory compliance costs and risks,
exposure to regulatory enforcement action, and other liabilities if we become subject to such laws in the future.
We strive to comply with all applicable laws, but they may conflict with each other, and by complying with the laws or regulations of one jurisdiction,
we may find that we are violating the laws or regulations of another jurisdiction. Despite our efforts, we may not have fully complied in the past and may
not in the future. If we become liable under laws or regulations applicable to us, we could be required to pay significant fines and penalties (including
those described above), our reputation may be harmed and we may be forced to change the way we operate. That could require us to incur significant
expenses or to discontinue certain services, which could negatively affect our business.
Due to our limited resources and access to capital, we must, and have in the past decided to, prioritize development of certain ProTide candidates over
other potential candidates. These decisions may prove to have been wrong and may adversely affect our performance.
Because we have limited resources and access to capital to fund our operations, we must decide which ProTides to pursue and the resources to allocate
to each. Our decisions concerning the allocation of research, collaboration, management and financial resources toward particular ProTides or therapeutic
areas may not lead to the development of viable commercial products and may divert resources away from better opportunities. Similarly, our decisions to
delay, terminate or collaborate with third parties in respect of product development programs may also prove not to be optimal and could cause us to miss
valuable opportunities. If we make incorrect determinations regarding the market potential of our ProTides or misread trends in the biopharmaceutical
industry, in particular for our lead ProTides, then our business may be adversely affected.
We may not be successful in our efforts to use and expand our technology platform to build a pipeline of additional ProTide candidates.
A key element of our strategy is to use and expand our proprietary ProTide technology to build a pipeline of additional ProTide candidates and
progress these ProTide candidates through clinical development for the treatment of cancer. Although our research and development efforts to date have
resulted in a pipeline of ProTide candidates directed at
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the treatment of many solid tumors and hematological malignancies, we may not be able to develop ProTide candidates that are safe and effective. Even if
we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical development,
including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive
marketing approval and achieve market acceptance.
Risks Related to Marketing Approval of Our Product Candidates
If we are not able to obtain, or if there are delays in obtaining, required marketing approvals, we will not be able to commercialize our product
candidates and our ability to generate revenue will be impaired.
Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture,
safety, efficacy, recordkeeping, labeling, 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.
These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, current
good manufacturing practice, or cGMP, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of
records and documents, including periodic inspections by FDA and other regulatory authorities, requirements regarding the distribution of samples to
physicians and recordkeeping. Before we can commercialize any of our product candidates, each such product candidate must be approved by the FDA
pursuant to an NDA in the United States, by the EMA pursuant to an MAA in the European Union, and by similar regulatory authorities outside the United
States prior to commercialization.
The process of obtaining marketing approvals, both in the United States and abroad, 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 commercializing the product candidate. 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 trials 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 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. Because a number of our clinical trials will be in combination with other approved therapies, there may also be
undesirable or unintended side effects, toxicities or other characteristics resulting from the other therapy or from its combination with our product
candidate.
In addition, because our product candidates are transformations of nucleoside analogs, including those that are approved chemotherapeutic agents and
those that have never been approved as chemotherapeutic agents, our product candidates could be negatively impacted by the identification of any new
undesirable or unintended side effects, toxicities or other characteristics in such existing nucleoside analogs, in particular in those that have never been
approved as chemotherapeutic agents.
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 trials. Our product candidates could be delayed in receiving, or fail to
receive, marketing approval for many reasons, including the following:
•
the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials or require that we
perform additional clinical trials, including toxicology trials;
•
we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe
and effective for its proposed indication;
•
the results of our clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory
authorities for marketing approval;
•
we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
•
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;
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•
the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA or other
submission to obtain marketing approval in the United States or elsewhere;
•
third-party manufacturers or our clinical or commercial product candidates may be unable to meet the FDA’s cGMP requirements or similar
requirements of foreign regulatory authorities; and
•
the approval requirements or policies of the FDA or comparable foreign regulatory authorities may significantly change in a manner
rendering our clinical data insufficient for approval.
In addition, even if we were to obtain approval, regulatory authorities may approve our product candidates for fewer or more limited indications than
we request, may grant approval contingent on the performance of costly post-marketing clinical trials, may approve a product candidate with restrictions on
distribution or other REMS elements, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for
the successful commercialization of that product candidate. Any of the foregoing scenarios could harm the commercial prospects for our product
candidates.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product
candidates may be harmed and our ability to generate revenues will be impaired.
Our product candidates may cause undesirable side effects that could delay or prevent their marketing approval, limit the commercial profile of an
approved label, or result in significant negative consequences following marketing approval, if any.
Undesirable side effects caused by our product candidates could cause us or the FDA or other regulatory authorities to interrupt, delay or halt our
clinical trials and could result in more restrictive labels or the delay or denial of marketing approval by the FDA or other regulatory authorities of our
product candidates. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of these or other side effects. In such an
event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of
or deny approval of our product candidates for any or all targeted indications. The drug-related side effects could also affect patient recruitment or the
ability of enrolled patients to complete the trial or result in potential product liability claims.
Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients, rare and severe side
effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate. If our product
candidates receive marketing approval and we or others identify undesirable side effects caused by such product candidates or any other similar drugs after
such approval, a number of potentially significant negative consequences could result, including:
•
regulatory authorities may withdraw or limit their approval of such product candidates;
•
regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contraindication;
•
we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
•
we may be required to change the way such product candidates are distributed or administered, conduct additional clinical trials or change the
labeling of the product candidates;
•
regulatory authorities may require a REMS plan to mitigate risks, which could include medication guides, physician communication plans, or
elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools;
•
we may be subject to regulatory investigations and government enforcement actions;
•
we may decide to remove such product candidates from the marketplace after they are approved;
•
we could be sued and held liable for injury caused to individuals exposed to or taking our product candidates; and
•
our reputation may suffer.
In addition, the patient profile in the indications for which we are currently developing our product candidates, with many patients already seriously ill
at the time of initiation of treatment, may result in an increased risk of claims that undesirable side effects or poor prognoses or outcomes are related to our
product candidates. Regardless of whether or not such side effects or prognoses or outcomes are ultimately determined to be related to our product
candidates, the claims themselves could result in some or all of the foregoing negative consequences.
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We believe that any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidates and could
substantially increase the costs of commercializing our product candidates, if approved, and significantly impact our ability to successfully commercialize
our product candidates and generate revenues.
A Fast Track Designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or
approval process and does not increase the likelihood that our product candidates will receive marketing approval.
If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs
for this condition, the drug sponsor may apply for FDA Fast Track Designation. The FDA has broad discretion whether to grant this designation. Even if
we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even if we do receive
Fast Track Designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA
may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development program. Many
drugs that have received Fast Track Designation have failed to obtain drug approval.
Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be
subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory
requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
If the FDA or a comparable foreign regulatory authority approves any of our product candidates, activities such as the manufacturing processes,
labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive
and ongoing regulatory requirements. The FDA or a comparable foreign regulatory authority may also impose requirements for costly post-marketing
preclinical studies or clinical trials and surveillance programs to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval
marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved
labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding use of their products, and if we promote our products
beyond their approved indications or in a way that is inconsistent with the FDA-approved labeling, we may be subject to enforcement actions or
prosecution arising from that off-label promotion. Violations of the FD&C Act relating to the promotion of prescription drugs may also lead to
investigations alleging violations of federal and state healthcare fraud and abuse and other laws, as well as state consumer protection laws.
Drug manufacturers and manufacturers’ facilities are also required to continuously comply with FDA and comparable foreign regulatory authority
requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations and corresponding foreign regulatory
manufacturing requirements. As such, we and our third-party suppliers will be subject to continual review and inspections to assess compliance with
cGMP and adherence to commitments made in any NDA or other marketing authorization application.
In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or
failure to comply with regulatory requirements, may yield various results, including:
•
restrictions on such products, manufacturers or manufacturing processes;
•
restrictions on the labeling or marketing of a product;
•
restrictions on product distribution or use;
•
requirements to conduct post-marketing studies or clinical trials;
•
warning or untitled letters;
•
withdrawal of the products from the market;
•
refusal to approve pending applications or supplements to approved applications that we submit;
•
recall of products;
•
fines, restitution or disgorgement of profits or revenues;
•
suspension or withdrawal of marketing approvals;
•
refusal to permit the import or export of our products;
•
product seizure; or
•
injunctions or the imposition of civil or criminal penalties.
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Non-compliance with European Union requirements regarding safety monitoring or pharmacovigilance can also result in significant financial
penalties. Similarly, failure to comply with the European Union’s requirements regarding the protection of personal information can also lead to significant
penalties and sanctions.
The FDA’s or other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or
delay marketing approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new
requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.
Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and
regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future
earnings.
Although we do not currently have any drugs on the market, once we begin commercializing our product candidates, we will be subject to additional
healthcare statutory and regulatory requirements and enforcement by the U.S. federal and state governments and the foreign governments in the
jurisdictions in which we conduct our business. Healthcare providers, physicians and third-party payors will play a primary role in the recommendation
and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with third-party payors and customers may
expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and
relationships through which we market, sell and distribute any products for which we obtain marketing approval. Restrictions under applicable U.S. federal
and state healthcare laws and regulations include the following:
•
the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or
paying remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or
the purchase, order or recommendation of, any good or service for which payment may be made under a federal healthcare program such as
Medicare and Medicaid; a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to
have committed a violation;
•
the federal false claims laws, including, without limitation, the civil False Claims Act (which can be enforced by private citizens through qui
tam actions), impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the
federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to
pay money to the federal government; in addition, the government may assert that a claim including items and services resulting from a
violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;
•
HIPAA imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program, or knowingly and willfully
falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment
for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual
knowledge of the statute or specific intent to violate it in order to have committed a violation;
•
the federal physician payment transparency requirements under the Physician Payments Sunshine Act, enacted as part of the Affordable Care
Act, or ACA, require manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the
Children’s Health Insurance Program to report to the Centers for Medicare & Medicaid Services, or CMS, information related to payments
and other transfers of value to physicians, teaching hospitals, and certain advanced non-physician health care practitioners, as well as and the
ownership and investment interests of physicians and their immediate family members in such manufacturers;
•
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which
also imposes obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouses as well as their business
associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory
contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
•
some state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and
the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related
to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and
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•
state and foreign laws that govern the privacy and security of health information in certain circumstances, many of which differ from each
other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and
claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial
costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or
case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws
or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines,
disgorgement, imprisonment, exclusion of our products from government funded healthcare programs, such as Medicare and Medicaid, additional reporting
requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with
these laws, reputational harm, and the curtailment or restructuring of our operations. In addition, if any of the physicians or other healthcare providers or
entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or
administrative sanctions, including exclusions from government funded healthcare programs.
Current and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates
and affect the prices we may obtain.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding
the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our
ability to profitably sell any product candidates for which we obtain marketing approval. If we are slow or unable to adapt to changes in existing
requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval
that we otherwise may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial
condition and results of operations.
In addition, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and
improve the quality of healthcare. For example, in March 2010, the ACA was enacted in the United States, substantially changing the way healthcare is
financed by both governmental and private insurers and significantly affecting the pharmaceutical industry. The ACA contained a number of provisions,
including those governing enrollment in federal healthcare programs, reimbursement adjustments and changes to fraud and abuse laws. As another
example, the 2021 Consolidated Appropriations Act signed into law on December 27, 2020 incorporated extensive health care provisions and amendments
to existing laws, including a requirement that all manufacturers of drugs products covered under Medicare Part B report the product’s average sales price to
the federal government.
As another example, on March 11, 2021, former President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the
statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer’s price, or AMP, for single source and innovator multiple
source drugs, which began on January 1, 2024. Payment methodologies may also be subject to changes in healthcare legislation and regulatory initiatives.
For example, CMS may develop new payment and delivery models, such as bundled payment models. Recently, there has been heightened governmental
scrutiny over the manner in which manufacturers set prices for their products. Such scrutiny has resulted in several recent U.S. Congressional inquiries and
proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription
drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement
methodologies for drugs. By way of example, in August 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law. Among other things, the
IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes
rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (which were first due in 2023); and replaces the Part D
coverage gap discount program with a new manufacturer discount program (which began in January 2025). The IRA permits CMS to implement many of
these provisions through guidance, as opposed to regulation, for the initial years. CMS has begun to implement these new authorities, entering into the first
set of agreements with pharmaceutical manufacturers to conduct price negotiations in October 2023 and ultimately announcing the first round of negotiated
prices for the first 10 drugs in August 2024; those negotiated “maximum fair prices” will be effective as of January 1, 2026 (payment year 2026). CMS is
currently engaged in its second round of negotiations and published the next 15 drugs selected for negotiation in January 2025. However, the IRA’s impact
on the biopharmaceutical industry in the United States remains uncertain, in part because multiple large pharmaceutical companies and other stakeholders
(e.g., the U.S. Chamber of Commerce) have initiated federal lawsuits against CMS arguing the program is
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unconstitutional for a variety of reasons, among other complaints. The outcome of such ongoing lawsuits, as well as potential legislative changes enacted
by Congress or programmatic changes implemented at CMS by the Trump Administration, may impact the IRA drug price negotiation program in the
future. For that and other reasons, it is currently unclear how the IRA will be effectuated, or the impact of the IRA on our business.
In addition, individual states in the U.S. have also passed legislation and implemented regulations designed to control pharmaceutical product pricing,
including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency
measures, and regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products
and which suppliers will be included in their prescription drug and other healthcare programs. In December 2020, the U.S. Supreme Court held
unanimously that federal law does not preempt the states’ ability to regulate pharmacy benefit managers, or PBMs, and other members of the health care
and pharmaceutical supply chain, an important decision that has led to more aggressive efforts by states in this area. The U.S. Federal Trade Commission,
or FTC, in mid-2022 also launched sweeping investigations into the practices of the PBM industry, and published interim reports with its findings in mid-
2024 and January 2025, that could lead to additional federal and state legislative or regulatory proposals targeting such entities’ operations, pharmacy
networks, or financial arrangements, including in the current 2025-2026 congressional session where PBM reform continues to be a bipartisan priority.
During the previous session, numerous PBM reforms were considered in both the Senate and the House of Representatives; they included diverse
legislative proposals such as eliminating rebates; divorcing service fees from the price of a drug, discount, or rebate; prohibiting spread pricing; limiting
administrative fees; requiring PBMs to report formulary placement rationale; and promoting transparency. Significant efforts to change the PBM industry
as it currently exists in the U.S. may affect the entire pharmaceutical supply chain and the business of other stakeholders, including pharmaceutical
developers like us.
In the European Union, similar political, economic and regulatory developments may affect our ability to profitably commercialize our products. In
addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or E.U. member state level may
result in significant additional requirements or obstacles that may increase our operating costs.
We expect that the ACA and the IRA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous
coverage criteria and in additional downward pressure on the price that we will receive for any approved product. Any reduction in payments from
Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment
measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any of our products for
which we receive marketing approval.
Legislative and regulatory proposals have also been made in recent years to expand post-approval requirements and restrict sales and promotional
activities for pharmaceutical products, and the FDA’s statutory authorities are periodically amended by Congress. For example, Congress recently
provided the FDA with additional authorities related to the accelerated approval pathway for human drugs and biologics. Under these recent amendments
to the FD&C Act, the agency may require a sponsor of a product granted accelerated approval to have a confirmatory trial underway prior to approval. The
amendments also give the FDA the option of using expedited procedures to withdraw product approval if the sponsor’s confirmatory trial fails to verify the
claimed clinical benefits of the product. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations,
guidance or interpretations will be changed or what the impact of such changes on the marketing approvals, if any, of our product candidates, may be. In
addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject
us to more stringent product labeling and post-marketing conditions and other requirements.
Our future growth may depend, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and
other risks and uncertainties.
Our future profitability may depend, in part, on our ability to commercialize our product candidates in foreign markets. In order to market and sell our
products in the European Union and many other jurisdictions, we or our third-party collaborators must obtain separate marketing approvals and comply
with numerous and varying regulatory requirements. The approval procedure varies among countries and economic areas and can involve additional
testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The marketing approval process outside
the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is
required that the product be approved for reimbursement before the product can be approved for sale in that country. We or these third parties may not
obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by
regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by
regulatory authorities in other countries or jurisdictions or by the FDA. Additionally, a failure or delay in
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obtaining marketing approval in one jurisdiction may have a negative effect on the marketing approval process in others. Approval procedures vary among
jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including
additional preclinical studies or clinical trials. Obtaining foreign marketing approvals and compliance with foreign regulatory requirements could result in
significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the
regulatory requirements in international markets or receive applicable marketing approvals, our target market will be reduced and our ability to realize the
full market potential of our product candidates will be harmed.
•
We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market. If
we obtain approval of our product candidates and ultimately commercialize our product candidates in foreign markets, we would be subject
to additional risks and uncertainties, including:
•
our customers’ ability to obtain reimbursement for our product candidates in foreign markets;
•
our inability to directly control commercial activities because we are relying on third parties;
•
the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements;
•
different medical practices and customs in foreign countries affecting acceptance in the marketplace;
•
import or export licensing requirements;
•
longer accounts receivable collection times;
•
longer lead times for shipping;
•
language barriers for technical training;
•
reduced or no protection on pharmaceutical products or their use in some foreign countries;
•
the unwillingness of courts in some foreign jurisdictions to enforce patents even when valid and infringed in that country;
•
the possibility of pre-grant or post-grant review proceedings in certain foreign countries that allow a petitioner to hold up patent rights for an
extended period or permanently by challenging the patent filing at the patent office of that country;
•
the possibility of a compulsory license issued by a foreign country that allows a third-party entity or a government to manufacture, use or sell
our products with a government-set low royalty to us;
•
the existence of additional potentially relevant third-party intellectual property rights;
•
foreign currency exchange rate fluctuations;
•
an increase in restrictions on trade or other protectionist measures; and
•
the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
Foreign sales of our product candidates could also be adversely affected by the imposition of governmental controls, political and economic
instability, trade restrictions and changes in tariffs.
Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.
In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In
these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To
obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our
product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at
unsatisfactory levels, our financial results would suffer.
We are subject to the U.K. Bribery Act, the U.S. Foreign Corrupt Practices Act and other anti-corruption laws, as well as export control laws, import
and customs laws, trade and economic sanctions laws and other laws governing our operations.
Our operations are subject to anti-corruption laws, including the U.K. Bribery Act 2010, or the Bribery Act, the Foreign Corrupt Practices Act, or
FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. §201, the U.S. Travel Act, and
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other anti-corruption laws that apply in countries where we do business. The Bribery Act, the FCPA and these other laws generally prohibit us and our
employees and intermediaries from authorizing, promising, offering, soliciting, requesting, or providing, directly or indirectly, improper or prohibited
payments, or anything else of value, to or from persons in the public or private sector to obtain or retain business or gain some other business advantage.
Under the Bribery Act, we may also be liable for failing to prevent a person associated with us from committing a bribery offense. We and those
acting on our behalf operate in a number of jurisdictions that pose a high risk of potential Bribery Act or FCPA violations, and we participate in
collaborations and relationships with third parties whose corrupt or illegal activities could potentially subject us to liability under the Bribery Act, FCPA or
local anticorruption laws, even if we do not explicitly authorize or have actual knowledge of such activities. In addition, we cannot predict the nature,
scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be
administered or interpreted.
Compliance with the Bribery Act, the FCPA and these other laws is expensive and difficult, particularly in countries in which corruption is a
recognized problem. In addition, anti-corruption laws present particular challenges in the pharmaceutical industry, because, in many countries, hospitals
are operated by the government, and doctors and other hospital employees are considered foreign officials under anti-corruption laws. Certain payments to
health care providers in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to
enforcement actions.
Our operations are also subject to the Criminal Finances Act 2017, or CFA 2017, which contains offences of failing to prevent the facilitation of tax
evasion in the United Kingdom and abroad. This legislation makes organizations accountable for any part played by their personnel in deliberately and
dishonestly facilitating tax evasion by others, where those organizations have not made reasonable efforts to prevent such facilitation.
We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the
United States and the United Kingdom, and authorities in the European Union, including applicable export control regulations, economic sanctions and
embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively
referred to as the Trade Control laws. Such Trade Control laws include restrictions or prohibitions on the sale or supply of certain products and services to
embargoed countries or sanctioned countries, governments, persons and entities.
There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the Bribery
Act, the FCPA, the CFA 2017 or other legal requirements, including Trade Control laws. If we are not in compliance with the Bribery Act, the FCPA, the
CFA 2017 and other anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and
remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity.
Likewise, any investigation of any potential violations of the Bribery Act, the FCPA, the CFA 2017, other anti-corruption laws or Trade Control laws by
United States, United Kingdom or other authorities could also have an adverse impact on our reputation, our business, results of operations and financial
condition. Further, the failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and
suspension or debarment from government contracting.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could
harm our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling,
use, storage, treatment and disposal of hazardous materials and wastes. Our operations, and the operations of our contracted third parties, may involve the
use of hazardous and flammable materials, including chemicals and biological materials. The risk of contamination or injury from these materials cannot
be eliminated. In the event of contamination or injury resulting from the use of hazardous materials, we could be held liable for any resulting damages, and
the amount of the liability could exceed our resources or those of our contracted third parties. We also could incur significant costs associated with civil or
criminal fines and penalties for failure to comply with such laws and regulations.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees, this
insurance may not provide adequate coverage. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against
us. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These
current or future laws and regulations may impair our discovery, preclinical development or production efforts. Our failure to comply with these laws and
regulations also may result in substantial fines, penalties or other sanctions.
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Risks Related to Our Dependence on Third Parties
We rely on, and expect to continue to rely on, third parties to conduct our clinical trials 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 commercialize our product candidates, and our business could be substantially harmed.
We do not have the ability to independently conduct clinical trials. We rely on medical institutions, clinical investigators, contract laboratories and
other third parties, such as CROs, to conduct or otherwise support clinical trials for our product candidates. We expect to rely heavily on these parties for
performance of clinical trials for our product candidates. Nevertheless, we will be responsible for ensuring that each of our clinical trials is conducted in
accordance with the applicable protocol, legal and regulatory requirements and scientific standards.
We, our investigators, and our CROs will be required to comply with regulations, including good clinical practice, or GCP, and other related
requirements for conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible
and accurate, and that the trial patients are adequately informed of the potential risks of participating in clinical trials and their rights are protected. These
regulations are enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory
authorities for any drugs in clinical development. The FDA enforces GCPs through periodic inspections of clinical trial sponsors, principal investigators
and trial sites. If we, our investigators or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be called into
question and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before considering our marketing
applications for approval. We cannot assure you that, upon inspection, the FDA will determine that any of our future clinical trials will comply with GCPs.
In addition, our clinical trials must be conducted with product candidates produced under cGMPs. Our failure or the failure of our investigators or
CROs to comply with these requirements may require us to repeat clinical trials, which would delay the marketing approval process and could also subject
us to enforcement action. We also are required to register certain clinical trials and post the results of such completed clinical trials involving product
candidates for which we receive marketing approval on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so
can result in fines, adverse publicity and civil and criminal sanctions.
Although we intend to design the clinical trials for our product candidates, CROs and individual site investigators will administer the clinical trials on
our behalf. As a result, many important aspects of our development programs, including their conduct and timing, will be outside of our direct control.
Our reliance on third parties to conduct future clinical trials will also result in less direct control over the management of data developed through clinical
trials than would be the case if we were relying entirely upon our own staff. Communicating with outside parties can also be challenging, potentially
leading to mistakes as well as difficulties in coordinating activities. Outside parties may:
•
have staffing difficulties;
•
fail to comply with contractual obligations;
•
experience regulatory compliance issues;
•
undergo changes in priorities or become financially distressed;
•
make errors in the design, management or retention of our data or data systems; or
•
form relationships with other entities, some of which may be our competitors.
These factors may adversely affect the willingness or ability of third parties to conduct our clinical trials and may subject us to unexpected cost
increases that are beyond our control. If the CROs do not perform clinical trials in a satisfactory manner, breach their obligations to us or fail to comply
with regulatory requirements, the development, marketing approval and commercialization of our product candidates may be delayed, we may not be able
to obtain marketing approval and commercialize our product candidates, or our development program may be irreversibly harmed. If we are unable to rely
on clinical data collected by our CROs, we could be required to repeat, extend the duration of, or increase the size of any clinical trials we conduct and this
could significantly delay commercialization and require significantly greater expenditures.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs. If CROs do
not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the
clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any clinical
trials such CROs are associated with may be extended, delayed or terminated and we may not be able to obtain marketing approval for or successfully
commercialize our product candidates. As a result, we believe that our financial results and the commercial prospects for our
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product candidates in the subject indication would be harmed, our costs could increase and our ability to generate revenue could be delayed.
We contract with third parties for the manufacture and shipment of our product candidates for preclinical studies and clinical trials and expect to
continue to do so for commercialization. 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, which could delay, prevent or impair our development or commercialization efforts.
We do not currently own or operate, nor do we have any plans to establish in the future, any manufacturing facilities or personnel. 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 trials, 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 commercialization efforts.
The facilities used to manufacture our product candidates must be evaluated by the FDA pursuant to inspections that will be conducted after we
submit our marketing applications to the FDA to ensure compliance with cGMP. We do not control the manufacturing and shipment process of, and will
be completely dependent on, our contract manufacturers for compliance with cGMPs in connection with the manufacture and shipment of our product
candidates. If our contract manufacturers cannot successfully manufacture and ship material that conforms to our specifications and the regulatory
requirements of the FDA or others, we will not be able to use the products produced at their manufacturing facilities. In addition, we have no control over
the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable
foreign regulatory authority finds that these facilities do not comply with cGMP, we may need to find alternative manufacturing facilities, which would
significantly impact our ability to develop, obtain marketing approval for or market our product candidates, if approved. Further, our failure, or the failure
of our third-party manufacturers, to comply with these or other applicable regulations could result in sanctions being imposed on us, including clinical
holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or
drugs, if approved, operating restrictions and criminal prosecutions.
We may be unable to establish any agreements with third-party manufacturers or do so on acceptable terms. Even if we are able to establish
agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
•
reliance on the third party for regulatory compliance and quality assurance;
•
the possible breach of the manufacturing agreement by the third party;
•
the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
•
the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
Our product candidates and any other drugs that we may develop may compete with other product candidates and approved drugs for access to
manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for
us.
Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. If our current
contract manufacturers cannot perform as agreed, we may be required to replace such manufacturers. Although we believe that there are several potential
alternative manufacturers who could manufacture our product candidates, we may incur added costs and delays in identifying and qualifying any such
replacement.
Our current and anticipated future dependence upon others for the manufacture and shipment of our product candidates or drugs may adversely affect
our future profit margins and our ability to commercialize any drugs that receive marketing approval on a timely and competitive basis.
We, or our third-party manufacturers, may be unable to successfully scale-up manufacturing of our product candidates in sufficient quality and
quantity, which would delay or prevent us from developing our product candidates and commercializing approved products, if any.
In order to conduct large-scale clinical trials of our product candidates, we will need to manufacture them in large quantities. We, or any of our
manufacturing partners, may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective
manner, or at all. In addition, quality issues may arise during scale-up activities. If we, or any manufacturing partners, are unable to successfully scale up
the manufacture of our product candidates in sufficient quality and quantity, the development, testing, and clinical trials of that product candidate may be
33
delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly
harm our business.
The third parties upon which we rely for the supply of the active pharmaceutical ingredients, formulations, and drug products for certain of our
product candidates are our sole sources of supply and have limited capacity, and the loss of any of these suppliers could harm our business.
The API, formulations and drug products for certain of our product candidates are supplied to us from single-source suppliers with limited capacity.
Our ability to successfully develop our product candidates, and to ultimately supply our commercial drugs in quantities sufficient to meet the market
demand, depends in part on our ability to obtain the API, formulations and drug products in accordance with cGMP requirements and in sufficient
quantities for commercialization and clinical trials.
We do not know whether our suppliers will be able to meet our demand, either because of the nature of our agreements with those suppliers, our
current experience with those suppliers or our relative importance as a customer to those suppliers. It may be difficult for us to assess their ability to timely
meet our demand in the future based on past performance. While our suppliers have generally met our demand for their products on a timely basis in the
past, they may subordinate our needs in the future to their other customers.
For all of our product candidates, we intend to identify and qualify additional manufacturers to provide API, formulations and drug products prior to
submission of an NDA to the FDA or an MAA to the EMA. Establishing additional or replacement suppliers for the API, formulations and drug products
for our product candidates, if required, may not be accomplished quickly. If we are able to find a replacement supplier, such replacement supplier would
need to be qualified, or we may have to perform comparative studies comparing the drug product from a new manufacturer to the product used in any
completed clinical trials. All of this may require additional marketing approval, which could result in further delay. While we seek to maintain adequate
inventory of the API, formulations and drug products for our product candidates, any interruption or delay in the supply of components or materials, or our
inability to obtain such API, formulation and drug product from alternate sources at acceptable prices in a timely manner could impede, delay, limit or
prevent our development efforts.
We have entered into, and may in the future enter into, collaborations with third parties to discover or develop product candidates. If these
collaborations are not successful, our business could be adversely affected.
We have, and may potentially in the future, enter into collaborations with third parties. On December 31, 2021, our research, collaboration and
license agreement with Cardiff University and University College Cardiff Consultants Ltd., or Cardiff Consultants, for the design, synthesis,
characterization and evaluation of ProTides, as amended, or the Cardiff Agreement, expired pursuant to its terms. In connection with the expiration, we
exercised our right under the Cardiff Agreement to extend the license of the ProTide-related intellectual property owned or controlled by Cardiff University
as of the date of the Cardiff Agreement or owned or controlled by Cardiff University during the term of that Agreement, which we refer to as the Cardiff
intellectual property, granted to NuCana under the Cardiff Agreement for a period of three months from the expiration of the Cardiff Agreement in order to
continue evaluating additional ProTides generated under the Cardiff Agreement. This period expired on March 31, 2022. See “Collaboration and License
Agreements–Cardiff University License” in this Annual Report for more information on the terms of our agreement and its expiration. While we chose not
to further renew the Cardiff Agreement, the expiration of the Cardiff Agreement may result in a reduction in our ability to identify and develop additional
ProTides.
In any collaboration that we may enter into, we would expect to have limited control over the amount and timing of resources that our collaborators
dedicate to the collaboration efforts, including, if applicable, the development of ProTides. Our ability to generate potential additional ProTides from any
such arrangements will depend on our and our collaborators’ abilities to successfully perform the functions assigned to each of us in these arrangements. In
addition, our collaborators have the ability to abandon research or development projects and terminate applicable agreements. Our prior collaboration and
any collaborations we enter into in the future, may pose several risks, including the following:
•
collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;
•
collaborators may not perform their obligations as expected;
•
the clinical trials conducted as part of, or as a result of, these collaborations may not be successful;
•
collaborators may not pursue development or commercialization of any product candidates that achieve regulatory approval or may elect not
to continue or renew development or commercialization programs based on
34
clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert
resources or create competing priorities;
•
collaborators may delay clinical trials, provide insufficient funding for clinical trials, stop a clinical trial or abandon a product candidate,
repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
•
we may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or
commercialized under a collaboration and, consequently, may have limited ability to inform our shareholders about the status of such product
candidates;
•
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product
candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under
terms that are more economically attractive than ours;
•
product candidates developed in collaboration with us may be viewed by our collaborators as competitive with their own product candidates
or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates;
•
a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not
commit sufficient resources to the marketing and distribution of any such product candidate;
•
disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of
development of any product candidates, may cause delays or termination of the research, development or commercialization of such product
candidates, may lead to additional responsibilities for us with respect to such product candidates or may result in litigation or arbitration, any
of which would be time-consuming and expensive;
•
collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to
invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;
•
disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations;
•
collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and
•
collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to
pursue further development or commercialization of the applicable product candidates.
If our collaborations do not result in the successful development and commercialization of products, or if one of our collaborators terminates its
agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the
funding we expect under these agreements, our development of product candidates could be delayed and we may need additional resources to develop our
product candidates. In addition, if one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and
the perception of us in the business and financial communities could be adversely affected. All of the risks relating to product development, regulatory
approval and commercialization described in this Annual Report also apply to the activities of our collaborators.
We may in the future decide to collaborate with pharmaceutical and biotechnology companies and other organizations for the development and
potential commercialization of our product candidates. These relationships, or those like them, may require us to incur non-recurring and other charges,
increase our near- and long-term expenditures, issue securities that dilute our existing shareholders or disrupt our management and business. In addition,
we could face significant competition in seeking appropriate collaborators and the negotiation process is time-consuming and complex. Our ability to reach
a definitive collaboration agreement will depend, among other things, upon our assessment of the collaborator’s resources and expertise and the terms and
conditions of the proposed collaboration. If we license rights to product candidates, we may not be able to realize the benefit of such transactions if we are
unable to successfully integrate them with our existing operations and strategy.
35
If we fail to comply with our obligations under our license and collaboration agreement with Cardiff ProTides Ltd., we could lose rights to licensed and
assigned intellectual property that are necessary for developing and commercializing certain potential product candidates.
We entered into an exclusive, worldwide assignment, license and collaboration agreement with Cardiff ProTides Ltd., or Cardiff ProTides, for certain
of the patents related to Acelarin and other potential ProTides. This agreement imposes various development, commercialization, royalty payment,
diligence and other obligations on us. Among other obligations, we are specifically required to: pay Cardiff ProTides potential milestone payments; pay
Cardiff ProTides royalties equal to mid- to high-single digit percentages of sales of such products, including sales by sublicensees; use commercially
reasonable efforts to bring products to market; provide development and financial reports to Cardiff ProTides; file, prosecute, defend and maintain patent
rights; indemnify Cardiff ProTides against certain claims and maintain insurance coverage; and direct future medicinal chemistry work related to certain
compounds to Cardiff ProTides on a preferential basis.
If we breach any of these obligations, Cardiff ProTides may have the right to terminate the license and require us to assign back to Cardiff ProTides
the intellectual property which was assigned to us under this agreement, which would result in our being unable to develop, manufacture and sell products
that are covered by the licensed intellectual property or the assigned intellectual property or in a competitor’s gaining access to the licensed intellectual
property or the assigned intellectual property.
Risks Related to the Commercialization of Our Product Candidates
Even if any of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-
party payors and others in the medical community necessary for commercial success.
If any of our product candidates receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients,
third-party payors and others in the medical community. If our product candidates do not achieve an adequate level of acceptance, we may not generate
significant product revenues and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial
sale, will depend on a number of factors, including:
•
the timing of our receipt of any marketing approvals;
•
the terms of any approvals and the countries in which approvals are obtained;
•
the efficacy and safety and potential advantages and disadvantages compared to alternative treatments;
•
the prevalence and severity of any side effects associated with our products or with any product that is used in combination with our product;
•
the indications for which our products are approved;
•
adverse publicity about our products or favorable publicity about competing products;
•
the approval of other products for the same indications as our products;
•
our ability to offer our products for sale at competitive prices;
•
the convenience and ease of administration compared to alternative treatments;
•
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the success of our physician education programs;
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the strength of our marketing and distribution;
•
the availability of third-party coverage and adequate reimbursement, including patient cost-sharing programs such as copays and deductibles;
and
•
any restrictions on the use of our products together with other medications.
We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more
successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition with respect to our current product
candidates and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major
pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and
biotechnology companies that
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currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our
product candidates. Some of these competitive products and therapies are based on scientific approaches that are the same as, or similar to, our approach,
and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and
private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development,
manufacturing and commercialization.
Specifically, there are a large number of companies developing or marketing treatments for cancer, including many major pharmaceutical and
biotechnology companies. If NUC-7738 is approved, it would compete with (a) existing chemotherapies, (b) existing targeted therapies or
immunotherapies and, if approved, targeted therapies or immunotherapies in clinical trials for the treatment of patients with cancer, and (c) multiple
approved drugs or drugs that may be approved in the future for indications for which we may develop NUC-7738. If NUC-3373 is approved, it would
compete with (a) existing chemotherapies, including 5-FU, (b) existing targeted therapies or immunotherapies and, if approved, targeted therapies or
immunotherapies in clinical trials for the treatment of patients with cancer and (c) multiple approved drugs or drugs that may be approved in the future for
indications for which we may develop NUC-3373. Existing chemotherapies with which we may compete, including 5-FU and gemcitabine, are no longer
under patent and are produced by numerous generic pharmaceutical manufacturers. As a result, these chemotherapies are and will continue to be
substantially less expensive to patients than many other potential therapies, including our ProTide candidates, if approved.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective,
more convenient or less expensive or have fewer or less severe side effects than any products that we may develop. Our competitors also may obtain FDA
or other marketing 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 or slow our marketing approval. Some of the important competitive factors affecting the
success of all of our product candidates, if approved, are likely to be their efficacy, safety, convenience, price and the availability of reimbursement from
government and other third-party payors.
Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources
and expertise in research and development, manufacturing, preclinical studies, conducting clinical trials, obtaining marketing approvals and marketing
approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being
concentrated among a smaller number of our competitors. Smaller and early-stage companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified
scientific and management personnel and in establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies
complementary to, or necessary for, our programs.
Even if we are able to commercialize any product candidates, such drugs may become subject to unfavorable pricing regulations or third-party
coverage and reimbursement policies.
The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. Some countries
require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing approval is
granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is
granted. As a result, we might obtain marketing approval for a product candidate in a particular country but then be subject to price regulations that delay
our commercial launch of the product candidate, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale
of the product candidate in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates,
even if our product candidates obtain marketing approval.
Our ability to successfully commercialize any product candidates, if approved, will depend in part on the extent to which coverage and adequate
reimbursement for these product candidates and related treatments will be available from government authorities, private health insurers and other
organizations. In the United States, the principal decisions about coverage and reimbursement for new medicines under Medicare are made by CMS, an
agency within the U.S. Department of Health and Human Services, or HHS. Private payors ultimately determine which drugs they will cover and the
amount of reimbursement they will provide for a covered drug. While there is no uniform system among payors for making coverage and reimbursement
decisions, private payors tend to follow CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement.
Reimbursement agencies in Europe may be more conservative than CMS. For example, a number of cancer drugs are generally covered and paid for in the
United States but have not been approved for reimbursement in certain European countries. A primary trend in the U.S. healthcare industry and elsewhere
is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of payments for
particular drugs. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are
challenging the prices charged for drugs. We may also need to conduct
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expensive pharmacoeconomic studies, in addition to the costly studies required to obtain FDA or other comparable regulatory approvals, in order to
demonstrate the medical necessity and cost-effectiveness of the product in order to secure coverage and reimbursement. We cannot be sure that coverage
will be available for any product candidate that we commercialize and, if coverage is available, the level of payments. Reimbursement may impact the
demand for, or the price of, any product candidate for which we obtain marketing approval. If reimbursement is not available or is available only to limited
levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval. In addition, as noted above, the
IRA of 2022 included multiple provisions that may impact the prices of drug products that are both sold into the Medicare program and throughout the
United States, including new authorities for CMS to negotiate certain drug prices (which start for payment year 2026 and were announced in late 2024
following the first round of negotiations with pharmaceutical manufacturers). Although CMS has recently begun to implement these new authorities, their
impact on the pharmaceutical industry in the United States and on drug development activities remains uncertain.
There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which
the drug is approved by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for reimbursement does not imply that
any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim
reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates
may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs
and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by
government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they
may be sold at lower prices than in the United States. Our inability to promptly obtain coverage and profitable payment rates from both government-
funded and private payors for any approved drugs that we develop could compromise our operating results, our ability to raise capital needed to
commercialize drugs and our overall financial condition.
We currently have no marketing capability or sales force. If we are unable to establish effective sales or marketing capabilities or enter into
agreements with third parties to sell or market our product candidates, we may not be able to effectively sell or market our product candidates, if
approved, or generate product revenues.
We currently have no marketing capability or sales force, but we intend to commercialize or participate in the commercialization 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 specialized
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 commercialization expenses. This may be costly, and our investment would be
lost if we cannot retain or reposition our sales and marketing personnel.
Factors that may inhibit our efforts to commercialize our product candidates on our own include:
•
our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
•
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future drugs;
•
the lack of complementary drugs to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with
more extensive product lines; and
•
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
If we enter into arrangements with third parties to perform sales, marketing and distribution services, our drug revenues or the profitability of these
drug revenues to us are likely to be lower than if we were to market and sell any product candidates that we develop ourselves. In addition, we may not be
successful in entering into arrangements with third parties to sell and market our product candidates or may be unable to do so when needed or on terms
that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention
to sell and market our product candidates effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in
collaboration with third parties, we will not be successful in commercializing our product candidates that receive marketing approval or any such
commercialization may experience delays or limitations.
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Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer cybersecurity incidents, which could result
in a material disruption of our product development programs, and could subject us to liability.
We utilize information technology systems and networks, including those licensed from and therefore operated and hosted by third parties, to process,
transmit and store electronic information in connection with our business activities. As the use of digital technologies has increased, cybersecurity
incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and
sophistication, and are becoming increasingly difficult to detect. These threats pose a risk to the security of our systems and networks and the
confidentiality, availability, reliability, adequacy, and integrity of our data. There can be no assurance that we will be successful in preventing cyber-
attacks or successfully mitigating their effects.
Despite the implementation of security measures, our internal computer systems, and those of our CROs and other third-party contractors and
consultants are vulnerable to damage or disruption from hacking, computer viruses, malware, including ransomware, software bugs, unauthorized access,
natural disasters, terrorism, war, and telecommunication, equipment, and electrical failures.
We have measures in place that are designed to prevent, and if necessary, to detect and respond to such cybersecurity incidents and breaches of
privacy and security mandates. Our measures to prevent, detect, respond to, and minimize such risks may be unsuccessful. While we have not, to our
knowledge, experienced any significant system failure, accident, or material cybersecurity incident to date, if such an event were to occur and cause
interruptions in our operations or the operations of those third parties with which we contract, it could result in legal harm and a material disruption of our
programs and our business operations, as well as our financial condition. For example, the loss of clinical trial data from completed or ongoing clinical
trials for any of our product candidates could result in delays in our development and regulatory approval efforts and significantly increase our costs to
recover or reproduce the data. Such a loss could also expose us to regulatory enforcement, civil liability and reputational damage. To the extent that any
disruption or cybersecurity incident results in a loss of or damage to our data or applications, or inappropriate disclosure, loss, corruption, modification, or
theft of confidential or proprietary information, personal data, clinical trial data, or health information, in addition to incurring liability, the further
development of our product candidates could be delayed, or our competitive position could be compromised. Additionally, such disruptions or
cybersecurity incidents could result in enforcement actions by United States, United Kingdom, or foreign regulatory authorities, regulatory penalties, and
other legal liabilities such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs,
business operations and collaborations, diversion of management efforts and damage to our reputation, all of which could harm our business and
operations.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
If we are unable to obtain adequate insurance or are required to pay for liabilities resulting from a claim excluded from, or beyond the limits of, our
insurance coverage, a material liability claim could adversely affect our financial condition.
We face an inherent risk of product liability exposure related to the evaluation of our product candidates in human clinical trials and will face an even
greater risk if we commercially sell any products that we may develop. If we cannot successfully defend ourselves against claims that our product
candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
•
decreased demand for any product candidates or products that we may develop;
•
injury to our reputation and significant negative media attention;
•
withdrawal of clinical trial participants;
•
significant costs to defend the related litigation;
•
substantial monetary awards to trial participants or patients;
•
loss of revenue;
•
reduced resources of our management to pursue our business strategy; and
•
the inability to successfully commercialize any products that we may develop.
Although we maintain product liability insurance coverage, our product liability insurance may not be adequate to cover all liabilities that we may
incur. We may need to increase our insurance coverage as we expand our clinical trials or if we
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commence commercialization of our product candidates. Insurance coverage is increasingly expensive. We may not be able to maintain insurance
coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Risks Related to Our 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 commercialize technology and products similar or identical to ours, and our ability
to successfully commercialize 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.
Our success depends in large part on our ability to obtain and maintain patents in the United States and other countries that adequately protect our
proprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and in foreign countries
that cover our novel product candidates and their uses, pharmaceutical formulations and dosages, and processes for the manufacture of them. Our patent
portfolio currently includes both patents and patent applications.
The patent prosecution process is expensive and time-consuming. We may not be able to file and prosecute all necessary or desirable patent
applications at a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue
patent protection in certain jurisdictions. Under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited
in scope. It is also possible that we will fail to identify patentable aspects of our research and development before it is too late to obtain patent protection.
We currently solely own or exclusively license our patents and patent applications and we have the right to control the prosecution of the in-licensed
patent applications. In the future, we may choose to in-license additional patents or patent applications from third parties that we conclude are useful or
necessary for our business goals. We may not have the right to control the preparation, filing, prosecution or maintenance of such patent applications.
Therefore, if we do license additional patents or patent applications in the future, these patents and applications may not be prosecuted and enforced in a
manner consistent with the best interests of our business.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and
has in recent years been the subject of much litigation. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and
patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or, in some cases, not at all.
Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent
applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and
commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect
our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes
in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the
scope of our patent protection.
Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or
defense of our issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-
Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and
may also affect patent litigation. The U.S. Patent and Trademark Office, or USPTO, developed new regulations and procedures to govern administration of
the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions,
became effective on March 16, 2013. The Leahy-Smith Act also created certain new administrative adversarial proceedings, discussed below. It is not
clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could
increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.
The U.S. Supreme Court has issued opinions in patent cases in the last few years that many consider may weaken patent protection in the United
States, either by narrowing the scope of patent protection available in certain circumstances, holding that certain kinds of innovations are not patentable or
generally otherwise making it easier to invalidate patents in court. Additionally, there have been recent proposals for additional changes to the patent laws
of the United States and other countries that, if adopted, could impact our ability to obtain patent protection for our proprietary technology or our ability to
enforce our proprietary technology. Depending on future actions by the U.S. Congress, the U.S. courts, the USPTO and the relevant law-making bodies in
other countries, the laws and regulations governing patents could change in unpredictable
40
ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
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.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be
challenged in the courts or patent offices in the United States and in other countries. Such challenges may result in loss of exclusivity or in patent claims
being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or
identical technology and products, or limit the duration of the patent protection of our technology and products. In particular, third parties, such as generics
companies, may seek to develop or acquire intellectual property rights proximate to our patents, including with respect to formulation and process matters,
and may be able to do so in a non-infringing manner. Additionally, given the amount of time required for the development, testing and regulatory review
of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our
owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Likewise, a court could uphold and enforce a third-party patent that it rules we have infringed, which would subject us to damages or prevent us from
making, using or selling our products.
During patent prosecution in the United States and in most foreign countries, a third party can submit prior art or arguments to the reviewing patent
office to attempt to prevent the issuance of a competitor’s patent. For example, our pending patent applications may be subject to a third-party pre-issuance
submission of prior art to the USPTO or Third Party Observations in Europe. Such submission may convince the receiving patent office not to issue the
patent. In addition, if the breadth or strength of protection provided by our patents and patent applications is reduced by such third-party submission, it
could affect the value of our resulting patent or dissuade companies from collaborating with us to license, develop or commercialize current or future
product candidates. We may also seek to have issued patents re-issued for purposes of strengthening our patent position; however, such requests for
reissuance may not result in the issuance of the new patent and could result in loss of the originally issued patent.
The risks described here pertaining to our patents and other intellectual property rights also apply to any intellectual property rights that we currently
license or may license in the future. In some cases, we may not have control over the prosecution, maintenance or enforcement of the patents that we
license, and our licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain and enforce the licensed patents.
Third parties seeking to acquire intellectual property rights in our technology and products may be successful in securing such rights through the grant
of patent applications in the United States and in other jurisdictions; if we are forced to defend our granted intellectual property rights for any of our
product candidates, we may become involved in costly litigation or other administrative proceedings before the USPTO or comparable non-U.S.
regulatory authorities, which could delay or prevent the development and commercialization of our current or future product candidates.
Biopharmaceutical drug development is inherently uncertain in a rapidly evolving technological environment such as ours in which there may be
numerous patent applications pending in multiple jurisdictions at any given time, many of which are confidential when filed, with regard to the same or
similar technologies. Any patents issued to third parties may contain claims that conflict with our patents and that may place restrictions on the commercial
viability of our products and technologies. For example, we are aware of several issued, allowed or pending patent applications in several countries,
including the United States, filed by BrightGene Bio-Medical Technology Co., Ltd., or BrightGene, a pharmaceutical company based in Suzhou, China,
directed to various aspects of a process for the manufacture of Acelarin. While we believe that BrightGene’s process patent filings are invalid, challenging
such filings could compel us to engage in costly patent litigation or certain other administrative proceedings before the USPTO, in U.S. federal courts, or in
the courts or patent offices of other countries. These activities could result in substantial cost to us and could result in diversion of the efforts of our
management and technical personnel.
In addition, BrightGene has also pursued patent claims to the composition of matter of Acelarin in the United States and several other foreign
countries. We believe that their claims to the composition of matter of Acelarin are invalid. BrightGene’s claims to Acelarin in the United States were
rejected by the USPTO as lacking novelty over our prior filed patents. Patents have been issued to BrightGene with composition of matter claims directed
to Acelarin in Japan and Canada which we believe are invalid for the same reasons stated by the USPTO. To address these patents in Japan and Canada,
and any equivalent patents that may be issued in other jurisdictions, may require oppositions, patent litigation or other administrative proceedings as
necessary, which may be costly and time-consuming. If we do not choose to challenge any such granted patent, or are not successful in the challenge, then
there is the possibility of a patent infringement lawsuit by
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BrightGene, which may also be costly and time-consuming for us to challenge in order to establish the invalidity of its patents. These activities could also
result in substantial cost to us and could result in significant diversion of the efforts of our management and technical personnel.
An adverse outcome of any such litigation or proceeding could subject us to significant liabilities to third parties, require disputed rights to be licensed
from third parties (which licenses may not be available at all or on reasonable terms) or require us to cease using our technology, which could delay or
prevent the development and commercialization of our current or future product candidates. If we engage in patent litigation or other administrative
proceedings to defend our patents, there is no guarantee that we will be successful in defending our patents, which would result in a loss of the challenged
patent right to us and thus adversely affect our business.
We may become involved in administrative adversarial proceedings in the USPTO or in the patent offices of foreign 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.
The Leahy-Smith Act created for the first time new procedures to challenge issued patents in the United States, including post-grant review and inter
partes review proceedings, which some third parties have been using to cause the cancellation of selected or all claims of issued patents of competitors.
For a patent with a priority date of March 16, 2013 or later, a petition for post-grant review can be filed by a third party in a nine-month window from
issuance of the patent. A petition for inter partes review can be filed immediately following the issuance of a patent if the patent was filed prior to March
16, 2013. A petition for inter partes review can be filed after the nine-month period for filing a post-grant review petition has expired for a patent with a
priority date of March 16, 2013 or later. Post-grant review proceedings can be brought on any ground of challenge, whereas inter partes review
proceedings can only be brought to raise a challenge based on published prior art. These administrative adversarial actions at the USPTO review patent
claims without the presumption of validity afforded to U.S. patents in lawsuits in U.S. federal courts, use a lower burden of proof than used by U.S. federal
courts and interpret patent claims using a “broadest reasonable construction” instead of “plain and ordinary meaning,” which is used in court litigation.
Because of these differences between U.S. administrative and judicial adversarial patent proceedings, it is generally considered easier for a competitor or
third party to have a U.S. patent cancelled in a patent office post-grant review or inter partes review proceeding than invalidated in a litigation in a U.S.
federal court. If any of our patents are challenged by a third party in such a U.S. patent office proceeding, there is no guarantee that we will be successful
in defending the patent, which would result in a loss of the challenged patent right to us.
Opposition or invalidation procedures are also available in most foreign countries. Many foreign authorities, such as the authorities at the European
Patent Office, or EPO, have only post-grant opposition proceedings. However, certain countries, such as India, have both pre-grant and post-grant
opposition proceedings. These procedures have been used frequently against pharmaceutical patents in foreign countries. For example, in some foreign
countries, these procedures are used by generic companies to hold up an innovator’s patent rights as a means to allow the generic company to enter the
market. This activity is particularly prevalent in India, China and South America and may become more prevalent in Africa and other parts of Asia as
certain countries reach more established economies. If any of our patents are challenged in a foreign opposition or invalidation proceeding, we could face
significant costs to defend our patents and may not be successful. Further, in many foreign jurisdictions, the losing party must pay the attorneys’ fees of the
winning party, which can be substantial.
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.
Because competition in our industry is intense, competitors may infringe or otherwise violate our issued patents, patents of our licensors or other
intellectual property. To counter infringement or unauthorized use, we may be required to file infringement lawsuits, which can be expensive and time
consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their
patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe
the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology
in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. We
may also elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes prior to litigation, and any such license
agreements may require us to pay royalties and other fees that could be significant. Furthermore, because of the substantial amount of discovery required
in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure.
Because our ProTides are small molecules, after commercialization they will be subject to the patent litigation process of the Hatch-Waxman Act,
which allows a generic company to submit an Abbreviated New Drug Application, or ANDA, to the FDA to obtain approval to sell our drug using
bioequivalence data only. Under the Hatch-Waxman Act, since our candidates
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will be considered new chemical entities, we will have the opportunity to list all of our patents that cover our drug product or its method of use in the
FDA’s compendium of “Approved Drug Products with Therapeutic Equivalence Evaluation,” sometimes referred to as the FDA’s Orange Book. A generic
company can submit an ANDA to the FDA four years after our drug approval. The submission of the ANDA by a generic company is considered a
technical act of patent infringement. The generic company can certify that it will wait until the natural expiration date of our listed patents to sell a generic
version of our product or can certify that one or more of our listed patents are invalid, unenforceable, or not infringed. If the latter, we will have 45 days to
bring a patent infringement lawsuit against the generic company. This will initiate a challenge to one or more of our Orange Book-listed patents based on
arguments from the generic company that either our patent is invalid, unenforceable or not infringed. Under the Hatch-Waxman Act, if a lawsuit is
brought, the FDA is prevented from issuing a final approval on the generic drug until the earlier of seven-and-a-half years from our drug approval or a final
decision of a court holding that our asserted patent claims are invalid, unenforceable or not infringed. If we do not properly list our relevant patents in the
Orange Book, timely file a lawsuit in response to a certification from a generic company under an ANDA or prevail in the resulting patent litigation, we
can lose our proprietary market, which can rapidly become generic. Further, even if we do correctly list our relevant patents in the Orange Book, bring a
lawsuit in a timely manner and prevail in that lawsuit, it may be at a very significant cost to us of attorneys’ fees and employee time and distraction over a
long period. Further, it is common for more than one generic company to try to sell an innovator drug at the same time, so we may be faced with the cost
and distraction of multiple lawsuits. We may also determine it is necessary to settle the lawsuit in a manner that allows the generic company to enter our
market prior to the expiration of our patent or otherwise in a manner that adversely affects the strength, validity or enforceability of our patent.
A number of pharmaceutical companies have been the subject of intense review by the FTC or a corresponding agency in another country based on
how they have conducted or settled drug patent litigation, and certain reviews have led to an allegation of an antitrust violation, sometimes resulting in a
fine or loss of rights. We cannot be sure that we would not also be subject to such a review or that the result of the review would be favorable to us, which
could result in a fine or penalty.
The FTC has brought a number of lawsuits in federal court in the past few years to challenge Hatch-Waxman ANDA litigation settlements between
innovator companies and generic companies as anti-competitive. The FTC has taken an aggressive position that anything of value is a payment, whether
money is paid or not. Under their approach, if an innovator as part of a patent settlement agrees not to launch or delay launch of an authorized generic
during the 180-day period granted to the first generic company to challenge an Orange Book-listed patent covering an innovator drug, or negotiates a delay
in entry without payment, the FTC may consider it an unacceptable reverse payment. The biopharmaceutical industry argues that such agreements are
rational business decisions to dismiss risk and are immune from antitrust attack if the terms of the settlement are within the scope of the exclusionary
potential of the patent. In 2013, the U.S. Supreme Court, in a five-to-three decision in FTC v. Actavis, Inc., rejected both the biopharmaceutical industry’s
and FTC’s arguments with regard to so-called reverse payments, and held that whether a “reverse payment” settlement involving the exchange of
consideration for a delay in entry is subject to an anticompetitive analysis depends on five considerations: (a) the potential for genuine adverse effects on
competition; (b) the justification of payment; (c) the patentee’s ability to bring about anticompetitive harm; (d) whether the size of the payment is a
workable surrogate for the patent’s weakness; and (e) that antitrust liability for large unjustified payments does not prevent litigating parties from settling
their lawsuits, for example, by allowing the generic to enter the market before the patent expires without the patentee’s paying the generic. Furthermore,
whether a reverse payment is justified depends upon its size, its scale in relation to the patentee’s anticipated future litigation costs, its independence from
other services for which it might represent payment, as was the case in Actavis, and the lack of any other convincing justification. The Court held that
reverse payment settlements can potentially violate antitrust laws and are subject to the standard antitrust rule-of-reason analysis, with the burden of
proving that an agreement is unlawful on the FTC and leaving to lower courts the structuring of such rule of reason analysis. If we are faced with drug
patent litigation, including Hatch-Waxman litigation with a generic company, we could be faced with such an FTC challenge based on that activity,
including how or whether we settle the case, and even if we strongly disagree with the FTC’s position, we could face a significant expense or penalty.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest, and our
business may be adversely affected.
NuCana is our registered trademark, as is Acelarin. ProTidesTM is our trademark. Any additional trademark applications in the United States, Europe
and in other foreign jurisdictions where we may file may not be allowed or may subsequently be opposed. Once filed and registered, our trademarks or
trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. Moreover, there can be no
guarantee that FDA will approve the use of the trade name that we propose for our product candidates, which would require us to develop different
proprietary names for any such drug product that could meet the agency’s standards related to reducing the risk of medication errors and other regulatory
considerations (and take additional measures under trademark law to protect such new proprietary name). As a means to enforce our trademark rights and
prevent infringement, we may be required to file trademark claims against third
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parties or initiate trademark opposition proceedings. This can be expensive and time-consuming, particularly for a company of our size. We may not be
able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our
markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and
possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other
registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are
unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be
adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other
intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our business, financial
condition, results of operations, or prospects.
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.
Our commercial success depends upon our ability to develop, manufacture, market and sell NUC-7738 and NUC-3373 and our other potential product
candidates and use our proprietary technologies without infringing the proprietary rights of third parties. While our product candidates are in preclinical
studies and clinical trials, we believe that the use of our product candidates in these nonclinical studies and clinical trials falls within the scope of the
exemptions provided by 35 U.S.C. Section 271(e) in the United States, which exempts from patent infringement liability activities reasonably related to the
development and submission of information to the FDA. As NUC-7738, NUC-3373 and our other potential product candidates progress toward
commercialization, the possibility of patent infringement claims against us increases. There can be no assurance that our product candidates do not infringe
other parties’ patents or other proprietary rights, however, and competitors or other parties may assert that we infringe their proprietary rights in any event.
We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights covering our products
and technology, including interference or derivation proceedings before the USPTO, in U.S. federal courts, or in the courts or patent offices of other
countries. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, including against
our product candidates themselves, our formulation and manufacturing processes or our drug administration methods. In particular, because NUC-3373 is
a transformation of widely used approved chemotherapeutic agents, there is significant intellectual property held by third parties with respect to the
formulation and manufacturing of those existing agents, which may increase the risk that such third parties allege infringement by us in the formulation and
manufacture processes of our product candidates. Furthermore, if any of our future ProTides are transformations of an existing chemotherapeutic agent
that remains on patent, we could be subject to claims of infringement by the holder of such patents.
If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue
developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or
at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us.
Alternatively, we may need to redesign infringing products, which may be impossible or require substantial time and monetary expenditure. Under certain
circumstances, we could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be
found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of
infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could harm our
business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our
business.
We may not be able to effectively enforce our intellectual property rights throughout the world.
We generally file our first patent application, or priority filing, at the United Kingdom Intellectual Property Office. International applications under
the Patent Cooperation Treaty, or PCT, are usually filed within 12 months after the priority filing. Based on the PCT filing, national and regional patent
applications may be filed in additional jurisdictions where we believe our product candidates may be marketed or manufactured. Filing, prosecuting and
defending patents on our product candidates in all countries throughout the world would be prohibitively expensive, and therefore we only file for patent
protection in selected countries. The requirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our
ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.
The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, Europe, India, China and
certain other countries do not allow patents for methods of treating the human body. Many companies have encountered significant problems in protecting
and defending intellectual property rights in
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certain foreign jurisdictions that do not favor patent protection on drugs. This could make it difficult for us to stop the infringement of our patents or the
misappropriation of our other intellectual property rights. Competitors may use our technologies in jurisdictions where we have not obtained patent
protection to develop their own drugs and, further, may export otherwise infringing drugs to territories where we have patent protection, if our ability to
enforce our patents to stop infringing activities is inadequate. These drugs may compete with our product candidates, and our patents or other intellectual
property rights may not be effective or sufficient to prevent them from competing.
Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and
resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property rights in the major markets for our product
candidates, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our product
candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
A number of foreign countries have stated that they are willing to issue compulsory licenses to patents held by innovator companies on approved
drugs to allow the government or one or more third-party companies to sell the approved drug without the permission of the innovator patentee where the
foreign government concludes it is in the public interest. India, for example, has used such a procedure to allow domestic companies to make and sell
patented drugs without innovator approval. There is no guarantee that patents covering any of our drugs will not be subject to a compulsory license in a
foreign country, or that we will have any influence over if or how such a compulsory license is granted. Further, Brazil allows its regulatory agency,
ANVISA, to participate in deciding whether to grant a drug patent in Brazil, and patent grant decisions are made based on several factors, including
whether the patent meets the requirements for a patent and whether such a patent is deemed in the country’s interest. In addition, several other countries
have created laws that make it more difficult to enforce drug patents than patents on other kinds of technologies. Further, under the treaty on the Trade-
Related Aspects of Intellectual Property, or TRIPS, as interpreted by the Doha Declaration, countries in which drugs are manufactured are required to allow
exportation of the drug to a developing country that lacks adequate manufacturing capability. Therefore, our drug markets in the United States or foreign
countries may be affected by the influence of current public policy on patent issuance, enforcement or involuntary licensing in the healthcare area.
In November 2015, members of the World Trade Organization, or the WTO, which administers TRIPS, voted to extend the exemption against
enforcing pharmaceutical drug patents in least developed countries until 2033. We currently have no patent applications filed in least developed countries,
and our current intent is not to file in these countries in the future, at least in part due to this WTO pharmaceutical patent exemption.
In addition, some countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. Further,
some countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have
limited remedies, which could materially diminish the value of such patent. If we or any of our licensors is forced to grant a license to third parties with
respect to any patents relevant to our business, our competitive position may be impaired.
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.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents or applications will be due to be paid to the
USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents or applications. We have
systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to non-U.S. patent
agencies. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a
late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or
lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors
might be able to enter the market, which could compromise our competitive position.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Litigation or other legal proceedings relating to intellectual property claims, with or without merit, is unpredictable, generally expensive and time
consuming and is likely to divert significant resources from our core business, including distracting our technical and management personnel from their
normal responsibilities. Furthermore, because of the discovery that is required in connection with intellectual property litigation, there is a risk that some
of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the
results of hearings, motions or other interim proceedings or developments and, if securities analysts or
45
investors perceive these results to be negative, it could have a substantial adverse effect on the price of our ADSs. Such litigation or proceedings could
substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution
activities.
For example, in 2018, we were granted a European patent from the European Patent Office, or EPO, EP 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®.
In September 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.
In connection with these patents, we and Gilead engaged in patent infringement litigation at the EPO, in the United Kingdom, and later in Germany
over a several year period between 2018 and 2023. This litigation resulted in the revocation of EP 190 by the EPO and the determination of the invalidity
of EP 190 and EP 365 in the United Kingdom. As a result of these decisions, we reached settlements with Gilead in relation to their legals fees for the
proceedings in each of the United Kingdom and Germany.
All obligations arising from the patent infringement litigation in the United Kingdom and Germany have been settled as at December 31, 2023. There
were no additional obligations as at December 31, 2024.
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.
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.
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. The agreements under which we
currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to
multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our
rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement.
If any of our licenses or material relationships or any in-licenses upon which our licenses are based are terminated or breached, we may:
•
lose our rights to develop and market our product candidates;
•
lose patent protection for our product candidates;
•
experience significant delays in the development or commercialization of our product candidates;
•
not be able to obtain any other licenses on acceptable terms, if at all; or
•
incur liability for damages.
These risks apply to any agreements that we may enter into in the future for our current or any future product candidates. If we experience any of the
foregoing, it could have a negative impact on our business, financial condition, results or operations and prospects.
If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise
experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
We have entered into license agreements with third parties and may need to obtain additional licenses from one or more of these same third parties or
from others to advance our research or allow commercialization of our product candidates. It is possible that we may be unable to obtain additional
licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to redesign our
product candidates or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical
or
46
commercial basis. If we are unable to do so, we may be unable to develop or commercialize our product candidates, which would harm our business. We
cannot provide any assurances that third-party patents or other intellectual property rights do not exist which might be enforced against our current
manufacturing methods, product candidates or future methods, resulting in either an injunction prohibiting our manufacture or sales, or, with respect to our
sales, an obligation on our part to pay royalties or other forms of compensation to third parties.
It is possible that in any future license agreements, patent prosecution of our licensed technology may be controlled solely by the licensor, and we may
be required to reimburse the licensor for their costs of patent prosecution. If our licensors fail to obtain and maintain patent or other protection for the
proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights,
and our competitors could market competing products using the intellectual property. Disputes may arise regarding intellectual property subject to a
licensing agreement, including:
•
the scope of rights granted under the license agreement and other interpretation-related issues;
•
the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing
agreement;
•
the sublicensing of patent and other rights under our collaborative development relationships;
•
our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
•
the inventorship or ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors
and us and our partners; and
•
the priority of invention of patented technology.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable
terms, we may be unable to successfully develop and commercialize our product candidates.
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.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or
potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we
may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information,
of any such employee’s former employer. Litigation may be necessary to defend against these claims.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute
agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops
intellectual property that we regard as our own. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced
to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or
personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to
management.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patents for some of our technology and product candidates, we also rely on trade secrets, including unpatented know-how,
technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-
disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific
collaborators, contract manufacturers, consultants, advisors and other third parties. We seek to protect our confidential proprietary information but
enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is
unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets
were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it,
from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a
competitor, our competitive position would be harmed.
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Our proprietary information, or that of our suppliers and any future collaborators, may be lost or we may suffer security breaches.
In the ordinary course of our business, our CROs and other third parties on which we rely, collect and store sensitive data, including intellectual
property, clinical trial data, proprietary business information, personally identifiable information of our employees and, potentially in the future, personally
identifiable information of our clinical trial subjects, in our data centers and on our networks. The secure processing, maintenance and transmission of this
information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by
hackers or breached due to employee error, malfeasance or other disruptions. Although to our knowledge we have not experienced any such material
cybersecurity incident to date, any such incident could compromise our networks and the information stored there could be accessed, publicly disclosed,
modified, disrupted, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws
that protect the privacy of personal information, regulatory penalties, disrupt our operations, damage our reputation, and cause a loss of confidence in us
and our ability to conduct clinical trials and our competitive advantage, which could adversely affect our reputation and delay the clinical development of
our product candidates.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may
not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:
•
others may be able to make, use or sell compounds that are similar to our product candidates but that are not covered by the claims of the
patents that we own or have exclusively licensed;
•
we, our licensors or strategic partners might not have been the first to make the inventions covered by the issued patent or pending patent
application that we own or have exclusively licensed;
•
we, our licensors or strategic partners, or future licensors or strategic partners might not have been the first to file patent applications
covering certain of our inventions;
•
others may independently develop similar or alternative technologies, or duplicate any of our technologies without infringing our intellectual
property rights;
•
it is possible that our pending patent applications will not lead to issued patents;
•
issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or
unenforceable as a result of legal challenges by our competitors;
•
our competitors might conduct research and development activities in countries where we do not have patent rights and then use the
information learned from such activities to develop competitive products for sale in our major commercial markets;
•
we may not develop additional proprietary technologies that are patentable; and
•
the patents of others may have an adverse effect on our business.
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Risks Related to Employee Matters, Managing Growth and Other Risks Related to Our Business
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 company, and, as of December 31, 2024, had 22 employees, including four executive officers. We are highly
dependent on the research and development, clinical, business development and commercialization expertise of Hugh Griffith, our Chief Executive Officer,
as well as the other principal members of our management team and our collaborators’ scientific and clinical team. Although we have entered into service
agreements with our executive officers, each of them may at any time serve notice to terminate their employment with us. Other than for Mr. Griffith, we
do not maintain “key person” insurance for any of our executives or other employees. In addition, we rely on consultants and advisors, including scientific
and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be
employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability
to us. If we or our collaborators are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
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 commercialization
objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees
may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and
experience required to successfully develop, obtain marketing approval of and commercialize products. Competition to hire from this limited pool is
intense and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous
pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from
universities and research institutions. Failure to succeed in clinical trials may make it more challenging to recruit and retain qualified scientific personnel.
If we or our collaborators are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
We expect to expand our development and regulatory capabilities and potentially implement sales, marketing and distribution capabilities, and as a
result, we may encounter difficulties in managing our growth, which could disrupt our operations.
To manage our anticipated development and expansion, we must continue to implement and improve our managerial, operational and financial
systems, expand our facilities and continue to recruit and train additional qualified personnel. Also, our management may need to divert a disproportionate
amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these development activities. Due to our
limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. This may
result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity
among remaining employees. The physical expansion of our operations may lead to significant costs and may divert financial resources from other
projects, such as the development of our product candidates. If our management is unable to effectively manage our expected development and expansion,
our expenses may increase more than expected, our ability to generate or increase our revenue could be reduced and we may not be able to implement our
business strategy. Our future financial performance and our ability to commercialize our product candidates, if approved, and compete effectively will
depend, in part, on our ability to effectively manage the future development and expansion of the company.
The implications of the United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial
markets and our business, which could reduce the price of our ADSs.
On January 31, 2020, the United Kingdom left the European Union. The terms of a withdrawal agreement, provided for a “Transition Period” during
which E.U. rules continued to apply in the United Kingdom until December 31, 2020. The Trade and Cooperation Agreement, or the TCA, which governs
the future relationship between the United Kingdom and the European Union, was agreed upon in December 2020 and implemented in the United Kingdom
through the European Union (Future Relationship) Act 2020, which came into force when the Transition Period ended. The TCA provides for zero
tariff/zero quota trade in goods (including medicinal products) between the United Kingdom and E.U. member states, and includes commitments from the
United Kingdom and the European Union to maintain common high standards across a number of areas, such as intellectual property, competition and
taxation, as well as a number of other benefits, such as a commitment to the United Kingdom’s continued access to the Horizon Europe research program
(in which UK-based researchers became able to participate as of January 1, 2024, following a political agreement made between the European Commission
and the U.K. government). However, the United Kingdom’s departure from the European Union single market
49
has resulted in substantial changes for U.K. businesses, including an end to the free movement of persons, goods and services between the United Kingdom
and the European Union, and the loss of a number of other benefits afforded to citizens and businesses in the United Kingdom and the European Union
prior to the withdrawal, such as the mutual recognition of professional qualifications, or passporting for financial services. Furthermore, as the United
Kingdom is no longer subject to E.U. law, or the jurisdiction of the European Court of Justice, there is increasing scope for divergence between United
Kingdom and E.U. member states’ laws and regulations, including through (a) the amendment, application, interpretation and enforcement of the body of
domestic law, known as (i) for the period prior to December 31, 2023, retained E.U. law, which is based on the E.U. law that applied to the United
Kingdom at the end of the Transition Period, and (ii) for the period since January 1, 2024, assimilated law, which is based on the directly applicable E.U.
legislation and domestic U.K. law related to former E.U. obligations that applied to the United Kingdom at the end of the Transition Period, and (b) the
repeal by the U.K. government with effect from January 1, 2024 of the other rights and principles in E.U. law that had direct effect in the United Kingdom
at the end of the Transition Period and which aren’t assimilated law (e.g., the right not to be discriminated against on grounds of nationality).
These developments, and continued uncertainty around how the United Kingdom’s legal, political and economic relationship with the European
Union will evolve following the withdrawal, have had and may continue to have a significant adverse effect on global economic conditions and the stability
of global financial markets, and could significantly reduce global market liquidity. Asset valuations, currency exchange rates and credit ratings may be
especially subject to increased market volatility. These developments may also have a significant effect on our ability to attract and retain employees,
including scientists and other employees who are important for our and our collaborators’ research and development efforts.
Our business may be adversely affected if Scotland decides to secede from the United Kingdom, and as a result of divergence between the income tax
rates in Scotland compared to the remainder of the United Kingdom.
We are headquartered in Scotland. A referendum on Scottish independence from the United Kingdom took place on September 18, 2014, the result of
which was that Scotland remained part of the United Kingdom. There may in the future be a second referendum on Scottish independence from the United
Kingdom. Any such referendum, even if it again ultimately resulted in Scotland remaining part of the United Kingdom, could lead to uncertainty and
disrupt the markets in which we operate, and might cause us to lose potential customers, suppliers, collaborators and employees, including scientists and
other key employees employed by us or our collaborators. In the event that Scotland determined to secede from the United Kingdom, the changes that
would result are impossible to predict with certainty at present, and would depend on post-referendum negotiations and agreements between the Scottish
Government and other organizations in the United Kingdom (and, potentially, the E.U.). Independence could result in changes in the monetary system,
currency, taxation and the regulatory and legal framework, and even Scotland seeking to reinstate its membership of the European Union. Some possible
outcomes of independence could significantly impact our costs, including levels of taxation applicable to us, and have an adverse effect on our business,
financial condition and results of operations in the future.
The income tax rates applicable to those individuals subject to Scottish taxation are more complicated, and higher, than those that apply to individuals
subject to taxation in the remainder of the United Kingdom. This could negatively impact on our ability to attract and retain employees in Scotland,
including scientists and other employees who are important for our research and development efforts, as they may be reticent to reside or work in Scotland
due to the potential for less take-home pay.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. For example,
the 2008 global financial crisis and the COVID-19 pandemic each caused volatility and disruptions in the capital and credit markets. A severe or prolonged
economic downturn, such as resulted from each of the 2008 global financial crisis and the 2020 COVID-19 pandemic, could result in a variety of risks to
our business, including our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our
suppliers, possibly resulting in supply disruption.
Our business and operations could suffer in the event of information technology and other internal infrastructure system failures.
Despite the implementation of security measures, our information technology and other internal infrastructure systems and those of our third-party
CROs and other contractors and consultants, including corporate firewalls, servers, leased lines and connections to the Internet, are vulnerable to damage
from attacks, hackers, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Furthermore,
we have little or no control over the security measures and computer systems of our third-party CROs and other contractors and consultants. While we
have not experienced any such system failure, accident or material cybersecurity incident to date, if such an event were to occur and cause interruptions in
our operations, it could result in a material disruption of our programs. For example, the loss of
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clinical trial data for our product candidates could result in delays in our marketing approval efforts and significantly increase our costs to recover or
reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or
applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur
liabilities and the further development of our product candidates could be delayed.
Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance with
regulatory standards and requirements and insider trading.
We are exposed to the risk that our employees, principal investigators, CROs and consultants may engage in fraudulent conduct or other illegal
activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to us that violate the
regulations of the FDA and other regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such
authorities; healthcare fraud and abuse laws and regulations in the United States and abroad; or laws that require the reporting of financial information or
data accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended
to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of
pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to
these laws also involve the improper use of information obtained in the course of clinical trials or creating fraudulent data in our preclinical studies or
clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter
misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling
unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply
with these laws or regulations. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If
any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant
impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion
from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future
earnings, additional reporting requirements and oversight if we become subject to a corporate integrity agreement to resolve allegations of non-compliance
with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates that may be more profitable
or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we focus on specific product candidates. As a result, we may forgo or delay pursuit of
opportunities with other product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to
capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and
product candidates for specific indications may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial
potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or
other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such
product candidate.
We may acquire businesses or drugs or form strategic alliances in the future and we may not realize the benefits of such acquisitions.
We may acquire additional businesses or drugs, form strategic alliances or create joint ventures with third parties that we believe will complement or
augment our existing business. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring
such businesses if we are unable to successfully integrate them with our existing operations and strategy. We may encounter numerous difficulties in
developing, manufacturing and marketing any new drugs resulting from a strategic alliance or acquisition that delay or prevent us from realizing their
expected benefits or enhancing our business. We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify
the transaction.
We or the third parties upon which we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plans
may not adequately protect us from a serious disaster.
Natural disasters could severely disrupt our operations and hurt our financial condition. If a natural disaster, power outage or other event occurred that
prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as the manufacturing facilities of our
third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business
for a substantial period
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of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We
may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans.
Risks Related to the ADSs
The price of our ADSs may be volatile and may fluctuate due to factors beyond our control.
The trading price of the ADSs has fluctuated, and is likely to continue to fluctuate substantially. The trading price of those securities depends on a
number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating
performance. In addition, although the ADSs are listed on the Nasdaq Capital Market, or Nasdaq, we cannot assure you that a trading market for those
securities will be maintained.
Since the ADSs were sold in our initial public offering in October 2017 at a price of $375.00 per ADS, the closing price per ADS has ranged as low as
$0.79 and as high as $746.00 through March 19, 2025. The market price of our ADSs may fluctuate significantly due to a variety of factors, many of
which are beyond our control, including:
•
positive or negative results from, or delays in, testing and clinical trials by us, collaborators or competitors;
•
technological innovations or commercial product introductions by us or competitors;
•
changes in government regulations;
•
developments concerning proprietary rights, including patents and litigation matters;
•
public concern relating to the commercial value or safety of NUC-7738 or NUC-3373 or any of our other potential product candidates;
•
financing, collaborations or other corporate transactions;
•
publication of research reports or comments by securities or industry analysts;
•
general market conditions in the biotechnology or pharmaceutical industries or in the economy as a whole;
•
the loss of any of our key scientific or senior management personnel;
•
sales of our ADSs or ordinary shares by us, our senior management and board members, holders of our ADSs or our ordinary shares in the
future;
•
price and volume fluctuations attributable to inconsistent trading volume levels of the ADSs; and
•
other events and factors, many of which are beyond our control.
In addition, if we fail to maintain compliance with Nasdaq’s continued listing requirements, including the minimum closing bid price requirement,
Nasdaq may take steps to de-list our ADSs. Such a de-listing would likely have a negative effect on the price of our ADSs and may impair investors’
ability to sell or purchase our ADSs when they wish to do so. In the event of a de-listing, we may take actions to restore our compliance with Nasdaq’s
listing requirements, but we can provide no assurance that any such action taken by us would allow our ADSs to become listed again, stabilize the market
price or improve the liquidity of our ADSs, or prevent future non-compliance with Nasdaq’s listing requirements. On May 12, 2023, we received written
notification from Nasdaq indicating that we were not in compliance with the minimum $1.00 per share bid price requirement set forth in Nasdaq Listing
Rule 5450(a)(1). In order to regain compliance within the 180-day grace period, the minimum bid price for our ADSs needed to meet or exceed $1.00 for
ten consecutive trading days. On November 9, 2023, we transferred the listing of our ADSs from the Nasdaq Global Select Market to the Nasdaq Capital
Market. In connection with the transfer to the Nasdaq Capital Market, Nasdaq granted us a second 180-day period (or until May 6, 2024) to regain
compliance with the requirement set forth in Nasdaq Listing Rule 5450(a)(1). On April 16, 2024, we effected a ratio change of our ADSs to our ordinary
shares, from one ADS, representing one ordinary share, to one ADS representing twenty-five ordinary shares. We regained compliance with the minimum
closing bid price requirement on May 1, 2024. In the future, if we fail to maintain compliance with Nasdaq’s continued listing requirements and are
delisted from Nasdaq, we may transfer to and commence trading on the OTC Markets or another quotation medium. As a result, an investor would likely
find it more difficult to trade or obtain accurate price quotations for our shares. Delisting would likely also reduce the visibility, liquidity, and value of our
ADSs, reduce institutional investor interest in our company, and may increase the volatility of our ADSs. Delisting could also cause a loss of confidence of
potential industry partners, lenders, and employees, which could further harm our business and our future prospects. Some or all of these material adverse
consequences may contribute to a further decline in our stock price.
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These and other market and industry factors may cause the market price and demand for our ADSs to fluctuate substantially, regardless of our actual
operating performance, which may limit or prevent investors from readily selling their ADSs and may otherwise negatively affect the liquidity of our
ADSs. In addition, the stock market in general, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance of these companies. In the past, when the market price of a stock has been
volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of the holders of our ADSs were to bring
such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our senior management would be diverted from the
operation of our business. Any adverse determination in litigation could also subject us to significant liabilities.
We will continue to incur increased costs as a result of operating as a public company in the United States, and our management is required to devote
substantial time to new compliance initiatives and corporate governance practices.
As a public company whose ADSs commenced trading in the United States in September 2017, we incur, and particularly now that we no longer
qualify as an “emerging growth company”, or EGC, we will continue to incur, significant legal, accounting and other expenses that we did not incur
previously. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and
other applicable securities rules and regulations impose various requirements on non-U.S. reporting public companies, including the establishment and
maintenance of effective disclosure and financial controls and corporate governance practices. Our senior management and other personnel need to devote
a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will continue to increase our legal and financial
compliance costs and will make some activities more time-consuming and costly. For example, these rules and regulations have made it more difficult and
more expensive for us to obtain director and officer liability insurance, which in turn makes it more difficult for us to attract and retain qualified senior
management personnel or members for our board of directors.
However, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their
application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish a report by our senior management on our
internal control over financial reporting. We no longer remain an EGC and we would now be required to include an attestation report on internal control
over financial reporting issued by our independent registered public accounting firm; however, we remain exempt from this requirement due to our current
status as a non-accelerated filer. We ceased to be an EGC on the last day of 2022. To prepare for compliance with Section 404(b), once we no longer
qualify as a non-accelerated filer, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly
and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan
to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate
through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over
financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal
control over financial reporting is effective as required by Section 404(b). If we identify one or more material weaknesses, it could result in an adverse
reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
Certain of our existing shareholders, members of our board of directors and senior management maintain the ability to exercise significant control
over us. Your interests may conflict with the interests of these existing shareholders.
As of December 31, 2024, our senior management, board of directors and greater than 5% shareholders and their respective affiliates, in the aggregate,
beneficially owned or controlled approximately 8.9% of our ordinary shares (including ordinary shares in the form of ADSs), after giving effect to the
exercise of all outstanding vested options to purchase our ordinary shares held by our executive officers and directors. These shareholders, either alone or
voting together as a group, may be in a position to determine or significantly influence the outcome of decisions taken at any general meeting. Any
shareholder or group of shareholders controlling more than 50% of the share capital present and voting at our general meetings of shareholders may control
any shareholder resolution requiring a simple majority, including the appointment of board members, certain decisions relating to our capital structure and
the approval of certain significant corporate transactions. Among other consequences, this concentration of ownership may have the effect of delaying or
preventing a change in control and might therefore negatively affect the market price of our ADSs.
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SEC rules and regulations could limit the amount of funds we can raise during any 12-month period pursuant to our shelf registration statement on
Form F-3 because we may be subject to the Baby Shelf Limitation.
SEC rules and regulations limit the amount that companies with a public float of less than $75 million may raise during any 12-month period pursuant
to a shelf registration statement on Form F-3, which we refer to as the Baby Shelf Limitation. We are currently limited by the Baby Shelf Limitation and
we may not sell securities in a primary offering with a value exceeding more than one-third of our public float in any 12-month period for so long as our
public float remains below $75 million, as measured in accordance with the Baby Shelf Limitation. As a result of the Baby Shelf Limitation, we may need
to sell shares in a private placement or in an offering registered on Form F-1 in order to raise additional capital.
Future sales, or the possibility of future sales, of a substantial number of our ADSs or ordinary shares could adversely affect the price of our ADSs.
Future sales of a substantial number of our ADSs or ordinary shares, or the perception that such sales will occur, could cause a decline in the market
price of our ADSs. If any of our large shareholders or members of our management team sell substantial amounts of our securities in the public market, or
the market perceives that such sales may occur, the market price of our ADSs and our ability to raise capital through an issue of equity securities in the
future could be adversely affected. We have also entered into a registration rights agreement pursuant to which we have agreed under specified
circumstances to file a registration statement to register the resale of the ordinary shares (which may be converted to ADSs) held by some of our existing
shareholders, as well as to cooperate in specified public offerings of such shares.
Because we do not anticipate paying any cash dividends on our ADSs or ordinary shares in the foreseeable future, capital appreciation, if any, will be
the sole source of potential gains with respect to such securities.
Under current English law, a company’s accumulated realized profits must exceed its accumulated realized losses on a non-consolidated basis before
dividends can be paid. Therefore, we must have distributable profits before issuing a dividend. We have not paid dividends in the past on our ordinary
shares. We intend to retain earnings, if any, for use in our business and do not anticipate paying any cash dividends in the foreseeable future. As a result,
capital appreciation, if any, on our ADSs or ordinary shares will be the sole source of potential gains with respect to such securities for the foreseeable
future.
Holders of our ADSs may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able
to exercise their right to vote.
Except as described in this Annual Report, holders of our ADSs will not be able to exercise voting rights attaching to the ordinary shares evidenced by
our ADSs on an individual basis. Holders of our ADSs appoint the depositary or its nominee as their representative to exercise the voting rights attaching
to the ordinary shares in the form of ADSs in accordance with the deposit agreement. Holders of ADSs may not receive voting materials in time to instruct
the depositary to vote, and it is possible that they, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the
opportunity to exercise a right to vote. In certain cases, the shares represented by ADSs may be voted contrary to the holder’s instructions and the holder
may be deemed to have instructed the depositary to give a discretionary proxy to a person we designate to vote shares represented by the ADSs in such
person’s discretion. Furthermore, the depositary will not be liable for any failure to carry out any instructions to vote, for the manner in which any vote is
cast or for the effect of any such vote. As a result, holders of ADSs may not be able to exercise voting rights and may lack recourse if their ADSs are not
voted as requested. In addition, in their capacity as ADS holders, purchasers of our ADSs will not be able to call a shareholders’ meeting.
Holders of our ADSs may not receive distributions on our ordinary shares in the form of ADSs or any value for them if it is illegal or impractical to
make them available to holders of ADSs.
The depositary for our ADSs has agreed to pay to holders of our ADSs the cash dividends or other distributions it or the custodian receives on our
ordinary shares or other deposited securities after deducting its fees and expenses and certain taxes. Holders of our ADSs will receive these distributions in
proportion to the number of our ordinary shares their ADSs represent. However, in accordance with the limitations set forth in the deposit agreement, it
may be unlawful or impractical to make a distribution available to holders of ADSs. We have no obligation to take any other action to permit the
distribution of our ADSs, ordinary shares, rights or anything else to holders of our ADSs. This means that holders of our ADSs may not receive the
distributions we make on our ordinary shares or any value from them if it is unlawful or impractical to make them available to them. These restrictions
may have a negative impact on the market value of our ADSs.
Holders of our ADSs may be subject to limitations on transfer of their ADSs.
ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it
deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs
generally when our books or the books of the depositary are
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closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or
under any provision of the deposit agreement, or for any other reason in accordance with the terms of the deposit agreement.
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
We are incorporated under English law. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of ADSs, are governed
by English law, including the provisions of the Companies Act 2006, and by our Articles of Association. These rights differ in certain respects from the
rights of shareholders in typical U.S. corporations. See “Description of Issued Share Capital—Differences in Corporate Law” in Item 10. B of this Annual
Report for a description of the principal differences between the provisions of the Companies Act 2006 applicable to us and, for example, the Delaware
General Corporation Law relating to shareholders’ rights and protections.
Shareholder protections found in provisions under the U.K. City Code on Takeovers and Mergers, or the Takeover Code, will not apply if our place of
management and control is considered to change to outside the United Kingdom, and will cease to apply with effect from February 3, 2027.
We are a public limited company incorporated in England and Wales and have our place of central management and control in the United Kingdom.
Accordingly, we are currently subject to the Takeover Code and, as a result, our shareholders are entitled to the benefit of certain takeover offer protections
provided under the Takeover Code. The Takeover Code provides a framework within which takeovers of companies are regulated and conducted. If, at
the time of a takeover offer, the Panel on Takeovers and Mergers, or the Panel, determines that we do not have our place of central management and control
in the United Kingdom, then the Takeover Code would not apply to us and our shareholders would not be entitled to the benefit of the various protections
that the Takeover Code affords. In particular, we would not be subject to the rules regarding mandatory takeover bids.
Furthermore, amendments have been made to the Takeover Code (with effect from February 3, 2025) which mean that, since our securities are not
“U.K. quoted” (i.e. admitted to trading on a U.K. regulated market or a U.K. multilateral trading facility or on any stock exchange in the Channel Islands or
the Isle of Man), we will cease to be subject to the Takeover Code from February 3, 2027, and as a consequence our shareholders will no longer be entitled
to the benefit of all of the takeover offer protections afforded by the Takeover Code (including those outlined below) from such date.
The Panel had published a brief summary of some of the most important rules of the Takeover Code, which we quote here:
•
“When a person or group acquires interests in shares carrying 30% or more of the voting rights of a company, they must make a cash offer to
all other shareholders at the highest price paid in the 12 months before the offer was announced (30% of the voting rights of a company is
treated by the Code as the level at which effective control is obtained).
•
When interests in shares carrying 10% or more of the voting rights of a class have been acquired by an offeror (i.e. a bidder) in the offer
period and the previous 12 months, the offer must include a cash alternative for all shareholders of that class at the highest price paid by the
offeror in that period. Further, if an offeror acquires for cash any interest in shares during the offer period, a cash alternative must be made
available at that price at least.
•
If the offeror acquires an interest in shares in an offeree company (i.e. a target) at a price higher than the value of the offer, the offer must be
increased accordingly.
•
The offeree company must appoint a competent independent adviser whose advice on the financial terms of the offer must be made known to
all the shareholders, together with the opinion of the board.
•
Favorable deals for selected shareholders are banned.
•
All shareholders must be given the same information.
•
Those issuing takeover circulars must include statements taking responsibility for the contents.
•
Profit forecasts, quantified financial benefits statements and asset valuations must be made to specified standards and must be reported on by
professional advisers.
•
Misleading, inaccurate or unsubstantiated statements made in documents or to the media must be publicly corrected immediately.
•
Actions during the course of an offer by the offeree company which might frustrate the offer are generally prohibited unless shareholders
approve these plans.
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•
Stringent requirements are laid down for the disclosure of dealings in relevant securities during an offer.
•
Employees of both the offeror and the offeree company and the trustees of the offeree company’s pension scheme must be informed about an
offer. In addition, the offeree company’s employee representatives and pension scheme trustees have the right to have a separate opinion on
the effects of the offer on employment appended to the offeree board’s circular or published on a website.”
Claims of U.S. civil liabilities may not be enforceable against us.
We are incorporated under English law. Substantially all of our assets are located outside the United States. The majority of our senior management
and board of directors reside outside the United States. As a result, it may not be possible for investors to effect service of process within the United States
upon such persons or to enforce judgments obtained in U.S. courts against them or us, including judgments predicated upon the civil liability provisions of
the U.S. federal securities laws.
The United States and the United Kingdom do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments
(other than arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether
or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in England and Wales. In addition, uncertainty
exists as to whether the English and Welsh courts would entertain original actions brought in England and Wales against us or our directors or senior
management predicated upon the securities laws of the United States or any state in the United States. Any final and conclusive monetary judgment for a
definite sum obtained against us in U.S. courts would be treated by the courts of England and Wales as a cause of action in itself and sued upon as a debt so
that no retrial of the issues would be necessary, provided that certain requirements are met consistent with English law and public policy. Whether these
requirements are met in respect of a judgment based upon the civil liability provisions of the U.S. securities laws is an issue for the English court making
such decision. If an English court gives judgment for the sum payable under a U.S. judgment, the English judgment will be enforceable by methods
generally available for this purpose.
As a result, U.S. investors may not be able to enforce against us or our senior management, board of directors or certain experts named herein who are
residents of the United Kingdom or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including
judgments under the U.S. federal securities laws.
We qualify as a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that,
to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
We report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to
U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect
of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and
trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the
filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon
the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days
after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days
after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making
selective disclosures of material information. As a result of the above, our shareholders may not have the same protections afforded to shareholders of
companies that are not foreign private issuers.
As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ
significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if
we complied fully with Nasdaq corporate governance listing standards.
As a foreign private issuer listed on Nasdaq, we are subject to corporate governance listing standards. However, Nasdaq rules permit a foreign private
issuer like us to follow the corporate governance practices of its home country in lieu of certain Nasdaq corporate governance listing standards. Certain
corporate governance practices in the United Kingdom, which is our home country, may differ significantly from Nasdaq corporate governance listing
standards. For example, neither the corporate laws of the United Kingdom nor our Articles of Association require a majority of our directors to be
independent; we can and do include non-independent directors as members of our nominations; and our independent directors are not required to hold
regularly scheduled meetings at which only independent directors are present. Therefore, our shareholders
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may be afforded less protection than they otherwise would have under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.
We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us
to incur significant legal, accounting and other expenses.
As a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act
applicable to U.S. domestic issuers. We may no longer be a foreign private issuer as of June 30, 2025 (the end of our next second fiscal quarter), which
would require us to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers
as of January 1, 2026. In order to maintain our current status as a foreign private issuer, either (a) a majority of our voting securities must be either directly
or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors cannot be U.S. citizens or
residents, (ii) more than 50% of our assets must be located outside the United States and (iii) our business must be administered principally outside the
United States. If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements
applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to
make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under
U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the
cost we incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance
costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations
applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be
required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for
us to attract and retain qualified members of our board of directors.
We are no longer an “emerging growth company,” and will are subject to additional reporting requirements.
We ceased to be an EGC as defined in the Jumpstart Our Business Startups Act, or JOBS Act, on the last day of 2022. As a result, we are no longer
able to rely on exemptions from various reporting requirements that are available to EGCs, including not being required to comply with the auditor
attestation requirements of Section 404(b); however, we remain exempt from this requirement due to our current status as a non-accelerated filer. We are
no longer able to report only two years of financial results and selected financial data and have to report three and five years, respectively.
If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results or
prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the
trading price of our ADSs.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure
controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their
implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404, or any
subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are
deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further
attention or improvement. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could
have a negative effect on the trading price of our ADSs.
Management is required to assess the effectiveness of our internal controls annually. We are no longer an EGC under the JOBS Act and our
independent registered public accounting firm would be required to attest to the effectiveness of our internal controls over financial reporting pursuant to
Section 404(b); however, we remain exempt from this requirement due to our current status as a non-accelerated filer. We ceased to be an EGC on the last
day of 2022. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not.
Undetected material weaknesses in our internal controls could lead to financial statement restatements requiring us to incur the expense of remediation and
could also result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our ADSs and
our trading volume could decline.
The trading market for our ADSs depends in part on the research and reports that securities or industry analysts publish about us or our business.
Securities and industry analysts do not currently, and may never, publish research on us. If no or too few securities or industry analysts commence
coverage on us, the trading price for our ADSs would likely be negatively affected. In the event securities or industry analysts initiate coverage, if one or
more of the analysts who cover us downgrade
57
our ADSs or publish inaccurate or unfavorable research about our business, the price of our ADSs would likely decline. If one or more of these analysts
cease coverage of us or fail to publish reports on us regularly, demand for our ADSs could decrease, which might cause the price of our ADSs and trading
volume to decline.
We may be a passive foreign investment company, or PFIC, for any taxable year, which could result in material adverse U.S. federal income tax
consequences if you are a U.S. investor.
Generally, if for any taxable year, at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets
that produce passive income or are held for the production of passive income, including cash, we would be characterized as a passive foreign investment
company, or PFIC, for U.S. federal income tax purposes. The determination of whether we are a PFIC depends on the particular facts and circumstances
(such as the valuation of our assets, including goodwill and other intangible assets, and the characterization of our income, including whether certain
research and development tax credits received from the government of the United Kingdom will constitute gross income, and if they do, whether they will
constitute passive income for purposes of the PFIC income test) and may also be affected by the application of the PFIC rules, which are subject to
differing interpretations. In addition, for purpose of the PFIC asset test, the value of our assets will depend in part on the market price of our ordinary
shares, which may fluctuate significantly. Based on our estimated gross income, the average value of our assets, including goodwill and the nature of our
active business, we believe we were a PFIC for U.S. federal income tax purposes for the taxable year ended December 31, 2024. There can be no
assurance regarding our PFIC status for the current taxable year or any particular year in the future because PFIC status is factual in nature, depends upon
factors not wholly within our control, generally cannot be determined until the close of the taxable year in question and is determined annually.
Accordingly, U.S. investors should invest in our ADSs only if they are willing to bear the U.S. federal income tax consequences associated with
investments in PFICs.
If we are a PFIC, U.S. holders of our ADSs may be subject to adverse U.S. federal income tax consequences, such as the ineligibility for any preferred
tax rates on capital gains or on actual or deemed dividends for individuals who are U.S. holders, having interest apply to distributions by us and the
proceeds of sales of the ADSs, and additional reporting requirements under U.S. federal income tax laws and regulations. Investors should consult their
own tax advisors regarding all aspects of the application of the PFIC rules to our ADSs. We intend to provide the information necessary for a U.S. investor
to make a qualifying electing fund election with respect to us. For further information, see “Taxation—Material U.S. Federal Income Tax Consideration—
Passive Foreign Investment Company Considerations” in this Annual Report.
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Item 4. Information on the Company
A. History and Development of the Company
We were incorporated under the laws of England and Wales in 1997 under the name Biomed (UK) Limited, and commenced operations in 2008. On
April 28, 2008, we changed our name to NuCana BioMed Limited. On August 29, 2017, we re-registered as a public limited company and changed our
name to NuCana plc. On October 2, 2017, we completed our initial public offering of American Depositary Shares, or ADSs, on The Nasdaq Global Select
Market. On November 9, 2023 we transferred our listing to The Nasdaq Capital Market. Our ADSs are traded under the symbol “NCNA”.
Our registered office is located at 77/78 Cannon Street, London EC4N 6AF, United Kingdom. Our principal executive offices are located at 3
Lochside Way, Edinburgh, EH12 9DT, United Kingdom, our general telephone number is +44 (0)131 357 1111 and our internet address is
https://www.nucana.com. Our website and the information contained on or accessible through our website are not part of this Annual Report. Our agent for
service of process in the United States is Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808. The SEC maintains an internet site
that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (http://www.sec.gov).
B.
Business
Overview
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 analogs, into more effective and safer medicines.
While these conventional agents remain part of the standard of care for the treatment of many solid and hematological tumors, they have significant
shortcomings that limit their efficacy and they are often poorly tolerated. Utilizing our proprietary technology, we are developing new medicines,
ProTides, designed to overcome the key limitations of nucleoside analogs and generate much higher concentrations of anti-cancer metabolites in cancer
cells. Our pipeline includes NUC-7738 and NUC-3373.
NUC-7738 is a novel anti-cancer agent that disrupts RNA polyadenylation, profoundly impacts gene expression in cancer cells and targets multiple
aspects of the tumor microenvironment, or TME. NUC-7738 is in the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701), which is evaluating NUC-
7738 as a monotherapy in patients with advanced solid tumors and in combination with pembrolizumab in patients with melanoma. We anticipate
expanding this Phase 1/2 trial.
NUC-3373 is a new chemical entity derived from the nucleoside analog 5-fluorouracil, or 5-FU, 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 Organization’s List of Essential Medicines. NUC-3373 has been evaluated in a Phase 1 clinical trial for
patients with advanced solid tumors; a Phase 1b/2 clinical trial, in combination with other agents, for patients with metastatic colorectal cancer; and a
randomized Phase 2 clinical trial of NUC-3373, in combination with other agents, for the second-line treatment of patients with advanced colorectal cancer.
NUC-3373 is currently being evaluated in a Phase 1b/2 modular clinical trial (NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor
pembrolizumab for patients with advanced solid tumors and in combination with docetaxel for patients with lung cancer.
The treatment of cancer can be divided into three major categories: surgery, radiotherapy and therapeutics. Therapeutics include chemotherapy,
immunotherapy, cell-based therapies 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 $106 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 analogs, by applying a well-
validated medicinal chemistry approach to overcome their limitations.
Through harnessing the power of phosphoramidate chemistry, we convert nucleoside analogs into activated nucleotide analogs 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 analogs. In the
antiviral field, this phosphoramidate chemistry approach has resulted in the most successful drug launches in the history of medicine, Gilead’s
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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 Biktarvy®, 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-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’-deoxyadenosine, or 3’-dA, causing increased cancer cell injury. The anti-cancer effect of
NUC-7738 is largely attributed to 3’-dATP, which disrupts RNA polyadenylation, profoundly impacts gene expression in cancer cells, and targets multiple
aspects of the TME.
NUC-7738 is in the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) which is evaluating NUC-7738 as a monotherapy in patients with advanced
solid tumors and in combination with pembrolizumab in patients with melanoma. In September 2021, we presented interim data from the first 29 patients
treated in this trial at the European Society of Medical Oncology, or ESMO, Congress. These interim data indicated a favorable pharmacokinetic and
safety profile for NUC-7738. Additionally, three case studies highlighted patients with encouraging tumor 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 trial in 38 patients at
ESMO. NUC-7738 had a favorable 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 1350 mg/m2. Encouraging signals of anti-tumor activity across a range
of tumor 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 American
Association of Cancer Research, or 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 sensitizer 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 trial 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 tumor 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 PD-1 inhibitor-based therapy, numerous patients achieved tumor 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 tumor 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 tumor 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 in combination with PD-1 inhibitor-based therapy, such as pembrolizumab, may be effective in patients who have progressed on prior
immunotherapy. In April 2024, we presented data from the NuTide:701 trial at the AACR Annual Meeting. First, NUC-7738 was found to increase
polyunsaturated fatty acids within the TME, which is indicative of a shift to a less aggressive cancer type, and to decrease monounsaturated fatty acids
which are associated with malignant behavior and chemotherapy resistance. In addition, NUC-7738 was shown to reduce lipids associated with protection
against cancer cell death and to increase lipids associated with cancer cell death. Multi-modal imaging indicated that this lipid reprogramming is a result of
the alteration in enzymes associated with lipid metabolism. Second, data from cancer cell lines, confirmed using paired biopsies from patients treated with
NUC-7738, demonstrated that NUC-7738 caused PolyA tail shortening and significantly modulated the stability of RNAs that are important for
translational control of protein synthesis. Furthermore, data also highlighted NUC-7738’s potential to influence the regulation of genes critical for cancer
cell growth and survival. Additionally, in September 2024, we presented promising data from the Phase 2 part of the NuTide:701 trial at ESMO on NUC-
7738 in combination with pembrolizumab for patients with metastatic melanoma who were refractory to or had relapsed on prior PD-1 inhibitor-based
therapy. The data showed that 9 of the 12 patients achieved disease control when treated with NUC-7738 in combination with pembrolizumab. One of
these patients, who had received two prior lines of PD-1 inhibitor-based therapy and had progressed on their latest treatment of ipilimumab plus nivolumab
within two months, achieved a confirmed Partial Response with a 55% reduction in tumor volume. Another patient, who had progressed on three prior lines
of PD-1 inhibitor-based therapy, achieved a Partial Response (unconfirmed) with a 32% reduction in tumor volume. These results showed encouraging
median progression-free survival, or PFS, of over five months for patients receiving NUC-7738 plus pembrolizumab, which is highly atypical in this
patient population. In 2025, we expect to initiate an expansion of the NuTide:701 trial of NUC-7738 in combination with pembrolizumab in patients with
metastatic melanoma and announce data from this NuTide:701 expansion study. We also anticipate obtaining regulatory guidance from the FDA on our
registrational strategy for NUC-7738 in melanoma in 2025.
In preclinical studies, NUC-3373 was shown to be a targeted thymidylate synthase, or TS, inhibitor and overcame the key limitations associated with
5-FU, generating significantly higher intracellular levels of the active anti-cancer metabolite
60
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 trial,
known as the NuTide:301 trial, in patients with advanced solid tumors. Enrollment in this trial 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 favorable 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 PFS lasting more than nine months. The results of this trial 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 was evaluated in a Phase 1b/2 trial, known as the NuTide:302 trial, in patients with metastatic colorectal cancer in which NUC-3373 was
combined with agents typically used with 5-FU, including leucovorin, irinotecan, oxaliplatin and bevacizumab. Enrollment in this trial has been completed
with 107 patients receiving NUC-3373 in combination with other agents. In October 2019, we presented interim data from this trial at the AACR-NCI-
EORTC International Conference on Molecular Targets and Cancer Therapeutics. These interim data supported the previously reported favorable
pharmacokinetic profile of NUC-3373. In April 2021, we presented further interim data from this trial 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 stabilize 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 tumor size reductions were observed,
including in a patient known to be refractory to all prior fluoropyrimidine-containing regimens. NUC-3373 was also shown to have a favorable 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
diarrhea adverse events, which are associated with the toxic metabolite, FUTP. In September 2022, we presented data from this trial at ESMO. These data
demonstrated promising anti-tumor activity and a favorable 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. In October 2023, we presented data from this clinical
trial at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. In this trial, NUC-3373 demonstrated a
favorable safety profile when combined with NUFIRI and bevacizumab, or NUFIRI + bev, and with NUFOX and bevacizumab, or NUFOX + bev.
Additionally, both regimens demonstrated encouraging signs of efficacy, including tumor 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.
A randomized Phase 2 trial, known as the NuTide:323 trial, comparing NUC-3373 in combination with irinotecan, leucovorin, and bevacizumab, or
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 trial at the AACR-NCI-EORTC International
Conference on Molecular Targets and Cancer Therapeutics 2023. The trial recruited well, and no new safety signals were observed from the aggregated
safety data from the first 40 patients enrolled. In August 2024, we announced the discontinuation of the NuTide:323 trial following a pre-planned initial
analysis and recommendation from the NuTide:323 study Steering Committee. While there were prognostic imbalances favoring the control arm, the
Steering Committee believed that NUFIRI + bev was unlikely to achieve the study’s primary objective of superior PFS compared to the control arm of
FOLFIRI + bev in the final analysis. In all three arms, the treatment regimens were observed to have a favorable safety profile and to be generally well-
tolerated, with only 12 of the 175 patients, four patients in each arm, discontinuing treatment due to adverse events.
In order to capitalize on the therapeutic potential of NUC-3373 across other cancer indications and the significant global commercial opportunity for a
targeted TS inhibitor, we are conducting a Phase 1b/2 modular trial, known as the NuTide:303 trial. The NuTide:303 trial is evaluating NUC-3373 in
combination with the PD-1 inhibitor pembrolizumab in patients with advanced solid tumors (Module 1) and in combination with docetaxel for patients with
lung cancer (Module 2). In November 2024, we published initial data from the NuTide:303 trial in MedRxiv. Module 1 included 12 patients who had
exhausted all other treatment options, with the majority of patients having received prior PD-1 inhibitor-based therapy. Significant tumor volume
reductions and prolonged PFS were observed, including a patient with urothelial bladder cancer who achieved 100% reduction in their target lesions and a
patient with cutaneous melanoma who achieved an 81% reduction in tumor volume. These signals of anti-cancer activity indicate that NUC-3373, in
addition to being a targeted TS inhibitor, may promote an anti-tumor immune response and potentiate the activity of immune checkpoint inhibitors.
Acelarin is a ProTide transformation of the nucleoside analog gemcitabine. In clinical trials, 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 tumor shrinkages, including
partial and complete responses, were observed in
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challenging indications, including ovarian and biliary tract cancers. In March 2022, we announced the discontinuation of the Phase 3 clinical trial, also
known as the NuTide:121 trial, 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 trial’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, nucleoside analog. This phosphoramidate
chemistry approach is the key to the ProTide technology. Every ProTide grouping is distinct, and Professor McGuigan and his team synthesized and tested
thousands of compounds in order to identify the optimal ProTide grouping for each underlying nucleoside analog.
We have licensed what we believe to be the foundational patent estate for the application of phosphoramidate chemistry in oncology. We own
granted patents in key markets, including the United States, Europe and Japan, protecting the composition of matter of NUC-7738, NUC-3373, Acelarin
and other of our product candidates. Professor McGuigan’s work preceded and helped lead to the development of several 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 Biktarvy®, 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 start-up through its acquisition by Genzyme Corporation. While at Bioenvision, he was instrumental in developing and
commercializing clofarabine, a nucleoside analog for the treatment of pediatric acute leukemia.
Our Strategy
Our goal is to improve the survival outcomes and the safety profile of treatment for patients with cancer across a wide range of indications. Our
strategy includes the following key components:
•
Rapidly develop NUC-7738 as a treatment for patients with solid tumors.
In September 2024, we presented data from the NuTide:701 trial at ESMO on NUC-7738 in combination with pembrolizumab for patients
with metastatic melanoma who were refractory to or had relapsed on prior PD-1 inhibitor-based therapy. The data from the Phase 2 part of
the NuTide:701 trial showed that 9 of the 12 patients achieved disease control when treated with NUC-7738 in combination with
pembrolizumab. Two patients, who had progressed on prior lines of PD-1 inhibitor-based therapy, achieved Partial Responses, one confirmed
with a 55% reduction in tumor volume and one unconfirmed with a 32% reduction in tumor volume. These results showed encouraging
median PFS of over five months.
In 2025, we expect to initiate an expansion of the NuTide:701 trial of NUC-7738 in combination with pembrolizumab in patients with
metastatic melanoma and announce data from this NuTide:701 expansion study. We also anticipate obtaining regulatory guidance from the
FDA on our registrational strategy for NUC-7738 in melanoma in 2025.
•
Identify additional indications for development of NUC-3373.
In order to capitalize on the therapeutic potential of NUC-3373 across other cancer indications and the significant global commercial
opportunity for a targeted TS inhibitor, we have initiated a Phase 1b/2 modular clinical trial (NuTide:303) of NUC-3373 in combination with
the PD-1 inhibitor pembrolizumab for patients with advanced solid tumors and in combination with docetaxel for patients with lung cancer.
In November 2024, we published initial data from the NuTide:303 trial in MedRxiv. Significant tumor volume reductions and prolonged PFS
were observed, including a patient with urothelial bladder cancer who achieved 100% reduction in their target lesions and a patient with
cutaneous melanoma who achieved an 81% reduction in tumor volume. These signals of anti-cancer activity indicate that NUC-3373, in
addition to being a targeted TS
62
inhibitor, may promote an anti-tumor immune response and potentiate the activity of immune checkpoint inhibitors.
In 2025, we expect to announce data from the NuTide:303 trial of NUC-3373 in combination with pembrolizumab in patients with solid
tumors.
•
Leverage our proprietary ProTide technology platform to develop additional product candidates.
We are pursuing the transformation of both widely used nucleoside analogs and novel nucleoside analogs, which we believe have the
potential to address additional areas of unmet medical need in oncology.
•
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, China and Japan, protecting the composition of matter of NUC-7738, NUC-3373 and other of
our 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 organization.
We have worldwide rights to all product candidates that we are developing. We believe that the healthcare professionals who treat the
majority of patients with the cancers we are initially targeting with our ProTides can be addressed by a relatively focused sales and marketing
team. We currently plan to commercialize any product candidates for which we receive regulatory marketing approval using a specialized
sales force, either independently or in partnership with a commercialization partner, in the United States and Europe.
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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 summarized below.
Cancer and the Need for Improved Treatment Options
Cancer is the second leading cause of death in the United States, with over 2 million new cases and approximately 618,000 deaths expected in 2025,
excluding non-melanoma skin cancers, according to the American Cancer Society.
The treatment of cancer can be divided into three major categories: surgery, radiotherapy and therapeutics. Therapeutics include chemotherapy,
immunotherapy, cell-based therapies and targeted and hormonal agents.
The backbone of treatment for patients with cancer consists of chemotherapeutics, which are expected to achieve revenues of approximately $106
billion by 2030. The number of new patients requiring chemotherapy each year is also predicted to increase, with projections estimated to rise from 9.8
million in 2018 to 15 million in 2040. Chemotherapeutics exert their effects by killing cancer cells or preventing them from replicating and are often used
in combination with other therapies. Within the larger universe of chemotherapy, nucleoside analogs, such as 5-FU, play a significant role. Nucleoside
analogs have been in clinical use for over 50 years and have become cornerstones of treatment for patients with cancer. The FDA has approved 16
nucleoside analogs for the treatment of cancer and many of these have become the standard of care globally for patients. FDA-approved anti-cancer
nucleoside analogs are: 5-FU; capecitabine; gemcitabine; floxuridine; clofarabine; fludarabine; cytarabine; azacytidine; decitabine; nelarabine; cladribine;
pentostatin; 6-mercaptopurine; tipiracil; 6-thioguanine; and trifluorothymidine. The World Health Organization has classified seven of these nucleoside
analogs, including 5-FU, as Essential Medicines, which they define as medicines that satisfy the priority healthcare needs of the population and should be
available at all times.
Many chemotherapies have generated significant sales. Approximately 275,000 patients per year in the United States receive intravenous 5-FU,
which is widely used for the treatment of many cancers, including colorectal, breast, stomach, head and neck, and pancreatic cancers. The oral version of a
derivative of 5-FU, known as capecitabine and marketed as Xeloda® for the treatment of colorectal and breast cancer, had worldwide sales of $1.5 billion in
2012, before the market launch of generic competitors. We believe the number of patients receiving capecitabine represents a small proportion of the
overall number of patients treated with 5-FU.
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Shortcomings of Nucleoside Analogs
Despite the widespread uses of nucleoside analogs, their efficacy and safety are severely limited by major shortcomings, including breakdown, poor
pharmacokinetic properties, requirement for uptake by transporters, and inefficient metabolic pathways to generate the active anti-cancer metabolite.
Nucleoside analogs block the replication of cancer cells by providing faulty DNA and RNA building blocks during the cell replication process or by
blocking enzymes necessary for the production of these DNA and RNA building blocks. These processes lead to disruption of DNA and RNA replication
resulting in cancer cell death, known as apoptosis. However, there are several major shortcomings that limit the efficacy of existing nucleoside analogs
including:
•
Breakdown and Toxic Byproducts. Multiple enzymatic processes can break down nucleoside analogs, resulting in their degradation prior to
phosphorylation. For example, 3’-dA, the parent nucleoside analog of NUC-7738 is rapidly broken down by the enzyme adenosine
deaminase, or ADA, preventing the generation of the active anti-cancer metabolite, 3’-dATP. Breakdown can also result in the generation of
catabolites that can lead to off-target toxicity. For example, the breakdown of 5-FU is known to result in the generation of a toxic byproduct
called FBAL, which has been associated with off-target toxicity including “hand-foot syndrome”, a debilitating side effect that commonly
causes dose reductions or discontinuation of therapy. Breakdown can take place either inside or outside the cancer cell.
•
Uptake by transporters. Nucleoside analogs require specific active-transport proteins in the cell membrane to enter cancer cells. If these
proteins are missing or down-regulated, nucleoside analogs cannot enter the cancer cell to exert their anti-cancer effect. Transport proteins
are often not expressed at sufficient levels in many solid tumor cancers which can result in poorer outcomes for patients treated with
nucleoside analogs.
•
Inefficient metabolic activation pathways. Nucleoside analogs are all dosed as inactive precursors, or prodrugs, because their active forms
are unstable and their negative charge further prevents them from entering cells. They must therefore undergo activation through complex
metabolic pathways to generate the anti-cancer metabolites. Naturally occurring enzymes are required for this activation and the levels of
these enzymes vary from person to person and can also be poorly expressed in cancer cells. This results in unpredictable metabolism and
activation of nucleoside analogs.
•
Poor pharmacokinetic properties. Due to rapid breakdown and poor pharmacokinetic, or PK, properties, nucleoside analogs can require
challenging administration schedules, which are burdensome and inconvenient for both patients and healthcare providers. For example, the
plasma half-life of 5-FU is very short at 8 to 14 minutes, resulting in the need for prolonged infusion times over 46 hours to enable uptake
and activation of 5-FU to generate the main anti-cancer metabolite in the cancer cell.
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Our ProTide Technology and its Key Advantages
NuCana’s ProTides are new chemical entities specifically designed to overcome the key challenges associated with nucleoside analogs, as shown
below:
By harnessing the power of phosphoramidate chemistry, we transform nucleoside analogs into activated nucleotide analogs with the addition of a
phosphate group, which is protected by specific combinations of aryl, ester and amino acid groupings. We refer to these compounds as ProTides. We are
applying our ProTide technology both to nucleoside analogs currently approved for the treatment of patients with cancer and to nucleoside analogs that
have great promise but have not successfully been developed due to challenges with breakdown, uptake, activation and/or administration.
A graphical representation of the chemical structure of nucleoside analogs, nucleotide analogs and ProTides is shown below:
Our researchers have invested over two decades of work in designing, synthesizing and screening ProTides, which we believe are optimally
designed to overcome the key limitations of nucleoside analogs for the treatment of patients with cancer. We have gained considerable insight from our
scientific founders and executives in understanding phosphoramidate chemistry and the biology of how nucleotide analogs are able to exert their anti-
cancer effects. Based on these learnings, we are able to efficiently create hundreds of target candidates from the millions of potential candidates. We then
perform biological testing on these target candidates to select our lead ProTides.
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NUC-7738: A Transformation of 3’-dA
NUC-7738 is a ProTide transformation of 3’-dA, also known as cordycepin, a nucleoside analog that was originally isolated from the fungus
Cordyceps sinensis in 1950. Since that time, 3’-dA has shown potent anti-cancer activity in preclinical studies, but has not been successfully developed or
approved as a treatment for patients with cancer due to rapid breakdown by the enzyme ADA. The cytotoxic effect of 3’-dA is largely attributed to the
generation of the active anti-cancer metabolite, 3’-deoxyadenosine triphosphate, or 3’-dATP, which disrupts RNA polyadenylation, profoundly impacts
gene expression in cancer cells, and targets multiple aspects of the TME. Similar to our other ProTides, NUC-7738 is designed to generate the active anti-
cancer metabolite of 3’-dA directly inside cells, bypassing the key limitations associated with breakdown, transportation and activation.
3’-dA and its limitations
Similar to other nucleoside analogs, major shortcomings have limited the successful clinical development of 3’-dA.
1. Subject to breakdown. 3’-dA is rapidly broken down by the enzyme ADA, preventing its activation and generation of its active anti-cancer form.
As a result, the anti-cancer effect of 3’-dA is readily negated by ADA. This rapid breakdown is the key limiting factor that has prevented the successful
development of 3’-dA in the clinic.
2. Requires active transport. 3’-dA requires the nucleoside transporter, hENT1, to cross the cancer cell membrane. Therefore, hENT1-deficient
cancer cells are highly resistant to 3’-dA.
3. Requires activation within the cancer cell. 3’-dA must be converted to its active form once inside the cancer cell. The rate-limiting step of
activation requires the addition of the first phosphate group, in this case by an enzyme called adenosine kinase, or AK. This phosphorylated form of 3’-dA,
3’-dA monophosphate, or 3’-dAMP, is subsequently converted into 3’-dA diphosphate, or 3’-dADP, which is then converted to 3’-dATP.
4. Poor PK properties. 3’-dA has a short half-life both in plasma and intracellularly, due to rapid deamination by the enzyme ADA. These poor PK
properties lead to dosing administration challenges and have also prevented the clinical development of 3’-dA as a cancer therapy.
Our Solution: NUC-7738
NUC-7738 is a ProTide transformation of 3’-dA, specifically designed to generate the active anti-cancer metabolite, 3’-dATP, in cancer cells.
Importantly, NUC-7738 is not a substrate for ADA and is therefore not broken down by this enzyme. This results in greater stability and increased
generation of the active anti-cancer metabolite 3’-dATP following administration. NUC-7738 is highly lipophilic and is able to enter cells independently
of nucleoside transporters, including hENT1. Once inside the cancer cell, NUC-7738 is presented in the phosphorylated form, 3’-dAMP, thus bypassing
the first rate-limiting phosphorylation step by AK required to generate the active anti-cancer metabolite 3’-dATP. These attributes result in significantly
higher levels of the active anti-cancer metabolite 3’-dATP inside cancer cells compared to 3’-dA. Primarily, 3’-dATP disrupts RNA polyadenylation,
profoundly impacts gene expression in cancer cells and targets multiple aspects of the TME, as summarized below.
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NUC-7738 Preclinical Data
NUC-7738 is resistant to breakdown. In our preclinical studies in human leukemia cell lines, NUC-7738, unlike 3’-dA, was resistant to breakdown
by the enzyme ADA, which rapidly breaks down 3’-dA into an inactive metabolite and is a major factor in reducing the potential clinical benefit of 3’-dA.
The ability of NUC-7738 to resist breakdown by ADA results in greater stability and much higher intracellular concentrations of the active anti-cancer
metabolite, 3’-dATP. In addition, NUC-7738 does not have the dosing administration challenges that have also limited the clinical utility of 3’-dA.
NUC-7738 enters cancer cells independently of nucleoside transporters. In human leukemia cell lines, inhibition of nucleoside transporter activity
did not have an effect on the cytotoxicity of NUC-7738 or on its ability to generate the active anti-cancer metabolite, 3’-dATP, demonstrating that the
activity of NUC-7738 is not dependent on nucleoside transporters. By contrast, the activity of 3’-dA was reduced in the presence of nucleoside transporter
inhibitors, as shown by a decrease in cytotoxicity as well as in the ability to generate 3’-dATP.
NUC-7738 does not require metabolism to 3’-dAMP. As NUC-7738 is presented in the phosphorylated form, 3’-dAMP, it bypasses the first rate-
limiting phosphorylation step by the enzyme AK which is required for 3’-dA to generate the active anti-cancer metabolite, 3’-dATP.
NUC-7738 has greater anti-cancer activity than 3’-dA. In a preclinical study, we examined the in vitro cytotoxic activity of NUC-7738 across a
range of different human cancer cell lines, including leukemia, non-Hodgkin lymphoma, Hodgkin lymphoma, T-cell leukemia, multiple myeloma,
pancreas, colon, liver and breast cancers, as compared with 3’-dA. NUC-7738 was found, in 16 of the 20 cell lines examined in this study, to be more
potent than 3’-dA when comparing the concentrations of the respective compounds required to kill 50% of the cancer cells. In three leukemia cell lines,
NUC-7738 was found to be more than 50-times more potent than 3’-dA.
NUC-7738 affects multiple cellular pathways. A series of in vitro experiments have shown that the disruption of polyadenylation by NUC-7738
affects many cellular pathways, including those associated with antigen presentation and T-cell activation, PD-L1 processing, lipid metabolism, cancer cell
metabolism, and ribosomal biogenesis. These changes are induced in many different cancer cell lines where polyadenylation of RNA is frequently
abnormal.
NUC-7738 Development Strategy and Ongoing Clinical Trials
We are developing NUC-7738 for patients with either solid or hematological malignancies based on the broad activity seen in preclinical studies.
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NUC-7738: Ongoing Phase 1/2 clinical trial (NuTide:701)
NUC-7738 is in the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) which is evaluating NUC-7738 as a monotherapy in patients with advanced
solid tumors and in combination with pembrolizumab in patients with melanoma. We presented data on the Phase 2 part of the clinical trial in the third
quarter of 2024. The objective of the Phase 1 part of the trial was to establish the recommended dose and schedule for NUC-7738, as illustrated below.
The objective of the Phase 2 part of the trial is to evaluate efficacy and further characterize the safety profile of NUC-7738 at the recommended Phase 2
dose both as a monotherapy and in combination with the PD-1 inhibitor, pembrolizumab.
In September 2021, at ESMO, we presented interim data from the first 29 patients treated in this trial. These interim data indicated a favorable
pharmacokinetic and tolerability profile of NUC-7738. In plasma samples from patients treated with NUC-7738, a dose-proportional increase in exposure
was observed. NUC-7738 was efficiently converted to the active anti-cancer metabolite, 3’-dATP, in patients white blood cells, where high levels of 3’-
dATP were detected. The intracellular 3’-dATP generated also had a prolonged half-life, with detectable levels in some patients more than 50 hours after
infusion. NUC-7738 has been found to be well tolerated. Additionally, three case studies highlighted patients with encouraging tumor reductions who
remained on NUC-7738 treatment for extended periods of time.
In September 2022, we presented additional data from the Phase 1 part of NuTide:701 at ESMO. These data showed encouraging signals of anti-
tumor activity across a range of tumor types, particularly melanoma. Promising data were observed in a variety of solid tumors with numerous patients
staying on treatment for extended periods, including one patient with metastatic melanoma who became eligible for complete surgical resection following
nine months of treatment with NUC-7738 as all the diffuse disease had disappeared. Four case studies highlighted patients with encouraging tumor
reductions who remained on NUC-7738 treatment for extended periods of time, as shown below. NUC-7738 also had a favorable safety profile with low
rates of TRAEs, very few Grade 3 TRAEs and no patients experiencing Grade 4 or 5 TRAEs. The maximum tolerated dose was established at 1,350
mg/m2 administered on a weekly schedule.
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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’ samples from the NuTide:701 trial. 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 sensitizer 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 trial 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 tumor 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 tumor volume reductions and prolonged time on treatment. One patient who was refractory to PD-1 inhibitor plus anti-CTLA-4 therapy,
the combination of nivolumab plus ipilimumab, achieved a 50% reduction in tumor 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 tumor 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.
In April 2024, we presented data from the NuTide:701 trial at the AACR Annual Meeting. First, NUC-7738 was found to increase polyunsaturated
fatty acids within the TME, which is indicative of a shift to a less aggressive cancer type and to decrease monounsaturated fatty acids which are associated
with malignant behavior and chemotherapy resistance. In addition, NUC-7738 was shown to reduce lipids associated with protection against cancer cell
death and to increase lipids associated with cancer cell death. Multi-modal imaging indicated that this lipid reprogramming is a result of the alteration in
enzymes associated with lipid metabolism. Second, data from cancer cell lines, confirmed using paired biopsies from patients treated with NUC-7738,
demonstrated that NUC-7738 caused PolyA tail shortening and significantly modulated the stability of RNAs that are important for translational control of
protein synthesis. Furthermore, data also highlighted NUC-7738’s potential to influence the regulation of genes critical for cancer cell growth and survival.
In September 2024, we presented data from the Phase 2 part of the NuTide:701 trial at ESMO on NUC-7738 in combination with pembrolizumab for
patients with metastatic melanoma who were refractory to or had relapsed on prior PD-1 inhibitor-based therapy. The data showed that the combination
had a favorable safety profile and 9 of the 12 patients achieved disease control. Encouraging median PFS of over five months for patients receiving NUC-
7738 plus
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pembrolizumab was observed, as shown below. Rechallenging a patient with PD-1 inhibitor-based therapy typically results in progression at their first
scan at 2 to 3 months.
NUC-7738 plus pembrolizumab achieves durable PFS in PD-1 inhibitor resistant patients.
One of these patients, who had received two prior lines of PD-1 inhibitor-based therapy and had progressed on their latest treatment of ipilimumab
plus nivolumab within two months, achieved a confirmed Partial Response with a 55% reduction in tumor volume. Another patient, who had progressed on
three prior lines of PD-1 inhibitor-based therapy, achieved a Partial Response (unconfirmed) with a 32% reduction in tumor volume. Further details
regarding these patients are shown below.
In 2025, we expect to initiate an expansion of the NuTide:701 trial of NUC-7738 in combination with pembrolizumab in patients with metastatic
melanoma and announce data from this NuTide:701 expansion study. We also anticipate obtaining regulatory guidance from the FDA on our registration
strategy for NUC-7738 in melanoma in 2025.
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NUC-3373: A Targeted Thymidylate Synthase Inhibitor
NUC-3373 is a targeted TS inhibitor designed to overcome the major shortcomings and pharmacologic challenges that limit the clinical utility of other
TS inhibitors, such as 5-FU. We believe NUC-3373 has significant commercial potential as TS inhibitors, such as 5-FU remain some of the most important
and widely used cancer therapies in the world. NUC-3373 has been designed to improve the efficacy and safety profile, as well as reduce the
administration burdens, associated with 5-FU. We are advancing NUC-3373 in the clinic and developing this new chemical entity as a potential treatment
for patients with solid tumors.
The Importance of Thymidylate Synthase in Cancer
TS is an enzyme crucial for the de novo synthesis of deoxythymidine monophosphate, or dTMP, or thymidine, a nucleotide essential for DNA
synthesis and repair. TS catalyzes the reductive methylation of deoxyuridine monophosphate, or dUMP, to dTMP, using 5,10-methylene tetrahydrofolate,
or MTHF, as a cofactor. This reaction provides the only direct source of thymidine in cells and is therefore crucial for DNA replication and cellular
proliferation.
In rapidly dividing cancer cells, the demand for DNA synthesis increases substantially, necessitating elevated TS activity. Consequently, TS is often
upregulated in cancer cells, making it a critical target for anti-cancer agents. Inhibiting TS leads to thymidine depletion, DNA damage, disruption of DNA
synthesis, and ultimately apoptosis or cell death. This approach is particularly effective in cancer cells due to their higher proliferation rates compared to
normal cells.
Anti-cancer agents targeting TS exploit this dependency by interfering with the enzyme's function through 2 routes:
1. Direct Inhibition: Fluoropyrimidines, such as 5-FU and capecitabine (Xeloda®), form a ternary complex with TS and MTHF, directly
inhibiting the enzyme and preventing dTMP synthesis. This halts DNA synthesis, leading to cell death in rapidly proliferating cancer cells.
2. Indirect Inhibition: Antifolates, such as methotrexate (Jylamvo®), indirectly inhibit TS by depleting cellular pools of reduced folate cofactors
required for TS activity. Other antifolates like pemetrexed (Alimta®) inhibit multiple folate-dependent enzymes, including TS, amplifying the
disruption of nucleotide synthesis.
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NUC-3373 is a targeted TS inhibitor and is pre-activated, enabling efficient intracellular generation of the active anti-cancer metabolite known as
fluorodeoxyuridine monophosphate, or FUDR-MP. This anti-cancer metabolite is also generated by drugs, such as 5-FU, capecitabine, and floxuridine,
although at much lower levels. NUC-3373 is able to generate high intracellular levels of FUDR-MP and cause greater inhibition of the target enzyme TS
because it enters cancer cells independently of membrane transporters, by-passes complex enzymatic conversion, and overcomes potential cancer resistance
mechanisms. In addition to TS inhibition, the high levels of FUDR-MP that are generated by NUC-3373 can be misincorporated into the cancer cells DNA
causing replicative stress, DNA damage and apoptosis. Furthermore, NUC-3373 causes release of damage associated molecular patterns, or DAMPs, from
cancer cells, which can potentiate an anti-cancer immune response, as shown below.
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5-FU and its Limitations
First introduced in 1957, 5-FU remains a cornerstone of treatment for patients with many types of cancers, including all gastrointestinal
malignancies (including colorectal, gastric, pancreatic and small bowel), breast and head and neck cancers.
Four other drugs have been approved that aim to generate the same active anti-cancer metabolite as 5-FU: fluorodeoxyuridine, or Floxuridine,
marketed as FUDR ®; capecitabine, marketed as Xeloda ®; UFT, marketed as Uftoral®; and S-1, marketed as Teysuno®.
The anti-cancer activity of 5-FU and its other forms, FUDR, capecitabine, UFT, and S-1 is largely attributed to the phosphorylated active anti-cancer
metabolite, FUDR-MP, which binds to and inhibits the intracellular enzyme, TS. TS, a critical enzyme in de novo nucleotide synthesis and cell survival, is
required to convert uridine, specifically dUMP to thymidine, specifically dTMP, one of the four nucleotides that comprise DNA. The inhibition of TS
therefore results in an imbalance in the ratio of the nucleotides dUMP and dTMP, disrupting DNA synthesis and repair, which leads to cancer cell death.
Several key limitations have been associated with a poor prognosis to a 5-FU therapeutic regimen. We believe NUC-3373, overcomes these
limitations, as well as the dosing administration challenges, associated with 5-FU.
1. Subject to breakdown. Approximately 85% of 5-FU is degraded by dihydropyrimidine dehydrogenase, or DPD, an enzyme largely expressed in the
liver. This breakdown destroys most of the pro-drug before it has an opportunity to enter the cancer cell, become activated and exert any therapeutic effect.
Furthermore, this breakdown results in the generation of a toxic byproduct, FBAL, which has been associated with off-target toxicity, including “hand-foot
syndrome,” which is reported in various sources as affecting 25% to 75% of patients treated with fluoropyrimidines. Hand-foot syndrome is a debilitating
side effect characterized by reddening, swelling, numbness and skin sloughing or peeling on the palms of the hands and soles of the feet and commonly
leads to dose reductions or discontinuation of therapy for patients receiving 5-FU. In addition, high levels of DPD have also been found to be elevated in
tumors that are resistant to 5-FU.
2. Requires active transport. 5-FU relies on specific transporters in order to cross the cellular membrane. If these transporters are not present or are
expressed at low levels, 5-FU’s ability to enter the cancer cell will be limited. For example, low expression of the nucleoside transporter, hENT1, has been
associated with cancer cell resistance to 5-FU.
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3. Inefficient metabolic activation pathways. Once 5-FU enters cells, it must be processed by a series of enzymes to generate the active anti-cancer
metabolite, FUDR-MP. FUDR-MP binds to and inhibits TS, leading to increased levels of uridine and decreased levels of thymidine which result in cancer
cell death. There are several key enzymes involved in the conversion of 5-FU to FUDR-MP. One of these is orotate phosphoribosyl transferase, or OPRT.
Another intracellular enzyme, thymidine phosphorylase, or TP, can reversibly convert 5-FU to fluorodeoxyuridine, or FUDR, an intermediate to the
formation of FUDR-MP. In addition, thymidine kinase, or TK, is the enzyme that converts FUDR to the active anti-cancer metabolite, FUDR-MP. Low
expression of OPRT, TP or TK in human cancer cells is associated with resistance to 5-FU. 5-FU’s metabolic pathway also results in the generation of the
metabolite FUTP, which is associated with dose limiting toxicities such as neutropenia, mucositis and diarrhea.
4. Poor pharmacokinetic profile. The pharmacokinetic properties of 5-FU also lead to dosing administration challenges. 5-FU has a short half-life of
between 8 and 14 minutes in plasma. In an effort to counter the short time period that cells are exposed to 5-FU, healthcare providers often administer 5-
FU as a continuous infusion over extended periods of time. For example, patients being treated for colorectal cancer typically receive 5-FU through a
continuous infusion over 46 hours using a portable pump. This dosing requirement creates burdens for providers, inconveniences patients and contributes
additional costs to the healthcare system. Furthermore, 5-FU’s pharmacokinetic profile is unpredictable and patients with certain characteristics can
experience dangerously high levels of 5-FU, which can be fatal, or ineffective levels of 5-FU.
Our Solution: NUC-3373
NUC-3373 is a protected form of the active anti-cancer metabolite, FUDR-MP, specifically designed to overcome the key shortcomings that limit
the clinical utility of the fluoropyrimidines. NUC-3373 is a nucleotide analog that releases the same active anti-cancer metabolite, FUDR-MP, that 5-FU
aims to generate within a cancer cell, but at significantly higher intracellular concentrations. NUC-3373 has been evaluated in a Phase 1 clinical trial,
NuTide:301, in patients with advanced solid tumors; a Phase 1b/2 clinical trial, NuTide:302, in combination with other agents, for patients with metastatic
colorectal cancer; and a randomized Phase 2 clinical trial, NuTide:323, in combination with other agents, for the second-line treatment of patients with
advanced colorectal cancer. NUC-3373, is currently being evaluated in a Phase 1b/2 modular clinical trial, NuTide:303, of NUC-3373 in combination with
the PD-1 inhibitor pembrolizumab for patients with advanced solid tumors and in combination with docetaxel for patients with lung cancer.
Unlike 5-FU, NUC-3373 consists of the active anti-cancer metabolite, FUDR-MP, and a protective phosphoramidate moiety. This moiety protects
FUDR-MP making it resistant to breakdown by the enzyme DPD, which reduces the generation of toxic byproducts such as FBAL. It also confers a more
predictable pharmacokinetic profile including a longer half-life, estimated at between 6 to 14 hours in plasma, and a better distribution into tissues. These
properties allow NUC-3373 to be administered through a short infusion of approximately 2 hours. The chemical structure of the ProTide alters the
lipophilicity of the molecule, allowing NUC-3373 to enter cancer cells without the need for membrane transporters. Once inside the cancer cell, the
phosphoramidate moiety is cleaved off, resulting in deprotection and the release of FUDR-MP. This bypasses the need for any activating enzymes,
resulting in significantly higher levels of the active anti-cancer metabolite, which we believe will lead to improved efficacy as compared to 5-FU.
Furthermore, the metabolic pathways utilized by NUC-3373 avoid the generation of the toxic metabolite FUTP so toxicities such as neutropenia, mucositis
and diarrhea should be significantly reduced.
The metabolism of NUC-3373 compared to 5-FU as described above is illustrated in the following graphic.
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NUC-3373 Preclinical Data
NUC-3373 has greater anti-cancer activity than 5-FU. In preclinical studies, NUC-3373 was not reliant on activating enzymes, including OPRT,
TP and TK, all of which are essential for activating 5-FU. In addition, we measured the anti-cancer activity of NUC-3373 and 5-FU across a range of
human tumor cell lines, including colorectal, ovarian and lung cancers. NUC-3373 had up to 330 times greater activity than 5-FU. The following figure
shows the levels of NUC-3373 or 5-FU required, in various tumor cell lines, to kill half of the cancer cells, with the shorter bars representing more potent
activity.
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Preclinical studies in human colorectal cancer cells showed that NUC-3373 generated intracellular levels of the active anti-cancer metabolite,
FUDR-MP, 366 times higher than those achieved by administering equivalent amounts of 5-FU. We believe that these increased intracellular levels of
FUDR-MP could translate into the ability of NUC-3373 to kill various cancer cells at much lower equimolar doses than those of 5-FU. Moreover, in a
preclinical colorectal cancer xenograft study, NUC-3373 showed a greater ability to reduce tumor weight and volume than 5-FU.
NUC-3373 has multiple potential anti-cancer mechanisms of action. Experiments in human colorectal cancer cell lines have shown that NUC-
3373 may kill cancer cells through several different mechanisms. In cells, the enzyme TS, is required to convert uridine, specifically dUMP to thymidine,
specifically dTMP. Thymidine is one of the nucleotides that comprises DNA. The inhibition of TS therefore results in an imbalance in the ratio of the
nucleotides dUMP and dTMP, disrupting DNA synthesis and repair, which leads to cancer cell death. Patients with cancer can have different levels of the
enzyme TS in their tumor cells, and this is thought to affect how well drugs such as 5-FU work. However, in our experiments we found that the level of TS
in different colorectal cancer cells did not predict the ability of NUC-3373 to kill the cancer cells. This suggests that NUC-3373 may have anti-cancer
activity against tumors even when their TS levels are high. In another experiment, adding thymidine to the cancer cells reduced the ability of NUC-3373 to
cause cell death. This confirms that NUC‑3373 causes cancer cell death by inhibiting TS and reducing thymidine levels. In addition, when cancer cells
were treated with NUC-3373, more of them had TS in the cytoplasm of the cell compared to untreated cells, which mostly had TS in the nucleus of the cell.
We believe that by keeping TS in the cell cytoplasm and preventing it from moving to the nucleus, NUC-3373 causes a further imbalance in the levels of
dUMP and dTMP.
In another set of experiments, the activity and metabolism of NUC-3373 was directly compared to that of 5-FU in colorectal cancer cell lines. The
active anti-cancer metabolite, FUDR-MP, inhibits thymidine synthesis through binding to and forming a ternary complex with TS. This causes an
imbalance in the cellular nucleotide pools by preventing the conversion of dUMP to dTMP and leads to disruption of DNA synthesis and repair. In these
experiments, NUC-3373 was shown to cause greater TS complex formation than 5-FU, even at lower drug concentrations. This suggests that NUC-3373
may be a more potent inhibitor of TS than 5‑FU. Furthermore, when anti-cancer metabolite generation was assessed in these cell lines it was found that
NUC-3373 generated significantly higher levels of FUDR-MP compared to 5-FU and had a more pronounced effect on the dUMP levels, suggesting a
greater impact on nucleotide pools. NUC-3373’s ability to generate high intracellular levels of FUDR-MP resulted in the generation of the triphosphate
form of the anti-cancer metabolite, or FUDR-TP (also referred to as FdUTP), which was shown to be incorporated into the DNA of cancer cells. This
effect was not observed with 5-FU. These results suggest that NUC-3373 may be not only a more potent TS inhibitor, but also a more efficient DNA-
damaging agent compared to 5-FU. Finally, while 5-FU treatment led to the production of the toxic metabolite FUTP in these cells, FUTP was not
detectable following treatment of these cells with NUC-3373.
A further set of experiments showed that NUC-3373 also causes a prolonged type of cell stress, called endoplasmic reticulum, or ER, stress in
cancer cells. This leads to the release of molecules called DAMPs from the cancer cells as they die, or so-called immunogenic cell death, or ICD. This
process of ICD is characterized by the cell surface exposure or extracellular release of calreticulin, or CRT, and high-mobility-group box 1 protein, or
HMGB1, from dying cells, as depicted in the diagram below. These DAMPs help the immune system to recognize cancer cells in the body, thus promoting
the further killing of cancer cells by immune cells.
These experiments have shown that NUC-3373 is not only a targeted TS inhibitor but also induces DNA damage and can potentiate an immune
response, as illustrated in the following graphic.
Overall, these non-clinical studies suggest that NUC-3373 potentially has the ability to enhance the activity of immunotherapy agents by making
tumors more visible to the immune system. This was demonstrated in a series of experiments in which cancer cells treated with NUC-3373 were exposed
to immune cells in combination with the
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immunotherapy agent nivolumab, a PD-L1 inhibitor. These experiments showed that the combination of NUC-3373 and nivolumab resulted in greater
cancer cell death than either agent alone, indicating that NUC-3373 enhances the activity of immunotherapy.
NUC-3373 Clinical Data
NUC-3373 has been evaluated in a Phase 1 trial in patients with advanced solid tumors, the NuTide:301 trial; a Phase 1b/2 trial, NuTide:302, in
combination with other agents, for patients with metastatic colorectal cancer; and a randomized Phase 2 trial, NuTide:323, in combination with other
agents, for the second-line treatment of patients with advanced colorectal cancer. NUC-3373 is currently being evaluated in a Phase 1b/2 modular clinical
trial, NuTide:303, of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumors and in combination with
docetaxel for patients with lung cancer.
NUC-3373 Development Strategy and Ongoing / Planned Clinical Trials
We aim to develop NUC-3373 for multiple indications. In 2022, we initiated a Phase 1b/2 modular clinical trial, NuTide:303, of NUC-3373 in
combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumors and in combination with docetaxel for patients with lung
cancer. In November 2024, we announced Phase 1 data from the NuTide:303 trial. In 2025, we expect to announce data from the NuTide:303 trial of NUC-
3373 in combination with pembrolizumab in patients with solid tumors.
NUC-3373: Completed Phase 1 clinical trial (NuTide:301).
NUC-3373 has demonstrated a favorable safety and pharmacokinetic profile with promising clinical activity in a Phase 1 clinical trial, also known as
the NuTide:301 trial, in patients with advanced solid tumors who had exhausted all treatment options. In this trial, the maximum tolerated dose and
schedule was established as 2,500 mg/m2 weekly. In addition, we measured various pharmacokinetic and pharmacodynamic parameters, including plasma
concentration of NUC-3373, intracellular concentrations of the active anti-cancer metabolite, FUDR-MP, the ability of NUC-3373 to bind to its target
enzyme, TS, and the downstream effects on the levels of dTMP. The anti-cancer mechanism of action of NUC-3373 has been previously observed in
preclinical studies, which NuCana believes further supports the biological advantages of NUC-3373 over 5-FU.
In September 2021, at ESMO, we presented PK data from patients treated with NUC-3373 at doses ranging from 500 mg/m2 to 3,250 mg/m2. The PK
profile of NUC-3373 was linear with a dose proportional increase and was reproducible. NUC-3373 also had a long plasma half-life of 6 to 14 hours
compared with the half-life of 8 to 14 minutes for 5-FU. Intracellular levels of the active anti-cancer metabolite, FUDR-MP, also increased in a dose
proportional manner and were substantially higher than those reported in the literature for 5-FU.
Overall, 59 patients with advanced cancer, who had exhausted all other available treatment options, were enrolled in the trial. This heavily pre-treated
patient population, who had received an average of 3 prior lines of chemotherapy, had a variety of primary tumor types. Forty-three patients received
NUC-3373 on a weekly schedule on days one, eight, 15 and 22 of a 28-day cycle at doses ranging from 125 mg/m2 to 3,250 mg/m2 and 16 patients received
NUC-3373 on an alternate-week, or fortnightly, schedule on days one and 15 of a 28-day cycle at doses ranging from 1,500 mg/m2 to 2,500 mg/m2.
Evidence of durable anti-cancer activity was noted, with at least 10 patients remaining on treatment for more than four months and three of these patients
achieving prolonged stable disease with PFS lasting more than nine months. Both dosing schedules were observed to be well tolerated with no unexpected
adverse events or cumulative toxicity. Importantly, only one patient developed hand-foot syndrome (Grade 1). However, this patient had received prior
treatment with fluoropyrimidines immediately before entering the NuTide:301 trial and had experienced hand-foot syndrome on these prior treatments,
strongly supporting the likelihood that it was related to prior toxicities and not to NUC-3373 treatment. NUC-3373’s plasma half-life of 6 to 14 hours
enables it to be infused over a much shorter time frame of 30 minutes to four hours compared to the 46-hour continuous infusion required with 5-FU.
NUC-3373: Completed Phase 1b/2 clinical trial (NuTide:302).
A Phase 1b/2 trial, also known as the NuTide:302 trial, in patients with metastatic colorectal cancer in which NUC-3373 was combined with agents
typically combined with 5-FU to treat patients with colorectal cancer, including leucovorin, irinotecan, oxaliplatin and bevacizumab was completed in
2024. This three-part dose escalation and expansion trial was designed to determine a recommended combination dose and schedule for NUC‑3373, as
illustrated in the trial schema below. In Part 1, the safety and tolerability of NUC‑3373 when co-administered with leucovorin was assessed. Part 1
established that leucovorin has no impact on the pharmacokinetic or safety profile of NUC-3373. Part 2 assessed increasing
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doses of NUC-3373 plus leucovorin given in combination with either oxaliplatin (NUFOX) or irinotecan (NUFIRI). The objective of this part of the trial
was to establish doses to be further examined in NUFOX and NUFIRI regimens in Part 3 of the Phase 1b/2 trial. Part 3 of the Phase 1b/2 trial evaluated the
combinations of NUFOX and NUFIRI with bevacizumab for second-line colorectal cancer patients
In April 2021, at the AACR Annual Meeting, we reported interim data from 38 heavily pre-treated patients (median of 4 prior lines of therapy) who
had received NUC-3373 with or without leucovorin in Part 1 of the NuTide:302 trial. NUC-3373 was shown to have a favorable 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 diarrhea adverse
events, which are associated with the toxic metabolite, FUTP. Efficacy signals have been observed, with several patients achieving longer periods of PFS
than those achieved on previous regimens (as illustrated in the graph below). Tumor shrinkages have also been observed, including in a patient who was
refractory to all prior fluoropyrimidine-containing regimens.
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In September 2022, at ESMO, we reported data from 46 heavily pre-treated patients with metastatic colorectal cancer who had received NUC-3373
in combination with leucovorin and either irinotecan (NUFIRI) or oxaliplatin (NUFOX) in Part 2 of the NuTide:302 trial. These data indicated favorable
safety profiles for both NUFIRI and NUFOX regimens when compared to historical data for the 5-FU containing regimens FOLFIRI and FOLFOX, with
lower rates of toxicities such as neutropenia and gastrointestinal disturbances. Of the 46 patients who received either NUFIRI or NUFOX, 12 (6 from each
cohort) achieved PFS of greater than 3 months, including 3 patients who achieved a PFS of 6 months or longer. The disease control rates for the NUFIRI
and NIFOX regimens were 55% and 80% respectively. The recommended Phase 2 dose for NUC-3373 as part of NUFIRI and NUFOX regimens has been
established.
In October 2023, at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023, we reported data from
14 patients with metastatic colorectal cancer who had received NUFIRI or NUFOX in combination with bevacizumab in Part 3 of the Phase 1b/2
NuTide:302 trial. NUC-3373 demonstrated a favorable safety profile when combined with irinotecan, leucovorin, and bevacizumab (NUFIRI + bev) and
with oxaliplatin, leucovorin, and bevacizumab (NUFOX + bev). Additionally, as shown below, both regimens demonstrated encouraging signs of efficacy,
including tumor volume reductions in patients who were refractory to or had progressed on prior fluoropyrimidine treatment.
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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.
NUC-3373: Discontinued Phase 2 clinical trial (NuTide:323).
In 2022, we initiated a randomized Phase 2 clinical trial of NUC-3373 in combination with NUFIRI + bev versus FOLFIRI + bev for the second-line
treatment of patients with advanced colorectal cancer who have progressed on first-line FOLFOX. This trial included two NUC-3373 treatment arms to
evaluate a weekly and a fortnightly, or alternate week, administration schedule.
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In October 2023, we presented data from the NuTide:323 trial at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer
Therapeutics 2023. The trial recruited well, and no new safety signals were observed from the aggregated safety data from the first 40 patients enrolled.
In August 2024, we announced that we were discontinuing our NuTide:323 trial following a pre-planned initial analysis and recommendation from the
NuTide:323 study Steering Committee. While there were prognostic imbalances favoring the control arm, the Steering Committee believed that NUFIRI +
bev was unlikely to achieve the study’s primary objective of superior PFS compared to the control arm of FOLFIRI + bev in the final analysis. In all three
arms, the treatment regimens were observed to have a favorable safety profile and to be generally well-tolerated, with only 12 of the 175 patients (four
patients in each arm) discontinuing treatment due to adverse events.
NUC-3373: Ongoing Phase 1b/2 clinical trial (NuTide:303).
In October 2022, we presented data at the 34th EORTC-NCI-AACR Annual Meeting which showed that NUC-3373 causes lung cancer cells to release
DAMPs. These molecular signals activate immune cells leading to ICD. NUC-3373 also enhanced the cell surface expression of the transmembrane protein
PD-L1 in lung cancer cell lines, highlighting a potential role for NUC-3373 to enhance immunotherapy efficacy. The addition of pembrolizumab, an anti-
PD-1 antibody, to NUC-3373 in a co-culture system where lung cancer cells were incubated alongside human-derived immune cells also enhanced ICD,
highlighting a potential role for NUC-3373 as an attractive combination partner for immune checkpoint inhibitors in patients with lung cancer.
In 2022, we initiated a Phase 1b/2 trial to identify additional indications and treatment combinations for further development. This is a modular,
multi-arm, parallel-cohort dose-finding and expansion trial of NUC-3373 in combination with other agents for the treatment of patients with different types
of advanced solid tumors. Each module of this trial consists of a dose-validation phase (Phase 1) and a dose-expansion phase (Phase 2). Phase 1 will
determine the appropriate combination dose for further clinical evaluation in Phase 2 of each module. Approximately six to twenty evaluable patients will
be enrolled in the Phase 1 stage of each module to determine safety, preliminary efficacy and maximum tolerated dose for NUC-3373 in combination with
other agents. Each module may then move into Phase 2 to enable a further assessment of safety and efficacy. Two modules have been opened to date:
NUC-3373 in combination with pembrolizumab, a PD-1 inhibitor, for the treatment of patients with solid tumors (Module 1); and NUC‑3373 in
combination with docetaxel for patients with lung cancer (Module 2).
In November 2024, we published data from the NuTide:303 trial in MedRxiv, the preprint server for Health Sciences. Module 1 included 12 patients
with a variety of solid tumors who had exhausted all other treatment options. The majority of patients, 75%, had received prior PD-1 inhibitor-based
therapy. The combination of NUC-3373 plus pembrolizumab was generally well tolerated. Encouraging signals of anti-cancer activity were observed with
confirmed Partial Responses in 2 patients and Stable Disease in a further 4 patients, resulting in an objective response rate of 22% and a disease control rate
of 67% in the efficacy evaluable population. Two patient case studies were highlighted from Module 1. A patient with urothelial bladder cancer who had
previously received gemcitabine plus cisplatin followed by the PD-L1 inhibitor atezolizumab achieved a partial response and remained on therapy for 23
months. Following treatment with NUC-3373 plus pembrolizumab, the patient achieved 100% reduction in the target lesion, considered a confirmed partial
response due to the presence of non-target lesions, and has remained on treatment for over 10 months. The second case study was a patient with BRAF
mutant metastatic cutaneous melanoma who had previously received pembrolizumab with a best response of progressive disease within 5 months. This was
followed by dabrafenib plus trametinib where trametinib was discontinued after 1 month due to toxicity and achieved stable disease before progressing
after 7 years on dabrafenib. Following treatment with NUC-3373 plus pembrolizumab, this patient achieved a confirmed Partial Response with an 81%
reduction in the target lesion and remains on treatment for over 12 months.
Module 2 included 4 patients with non-small cell lung cancer, or NSCLC, or pleural mesothelioma who had disease progression on, or were unable to
tolerate, prior chemotherapy-containing regimens. Docetaxel is the current standard of care for NSCLC patients without targetable alterations who progress
on PD-1 inhibitor-based therapy, however, it is associated with modest clinical benefit with a median PFS of 3-4 months and substantial toxicity. Following
treatment of the first 4 patients in this module, enrollment was put on hold due to toxicity challenges with docetaxel. Despite this, 2 patients achieved
prolonged Stable Disease. Two patient case studies were highlighted from Module 2. A patient with pleural mesothelioma who had previously received
carboplatin plus pemetrexed and had progressed within 4 months, the PD-1 inhibitor nivolumab and had progressed within 4 months, and carboplatin plus
pemetrexed and had progressed within 1 month.Following treatment with NUC-3373 plus docetaxel, the patient achieved ongoing stable disease for 13
months at the data cut-off. A second case study was a patient with squamous NSCLC who had previously received carboplatin plus paclitaxel plus
pembrolizumab and achieved stable disease for 2 months, followed by maintenance pembrolizumab and progressed within 21 months. Following treatment
with NUC-3373 plus docetaxel, the patient achieved stable disease for 7 months.
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In 2025, we expect to announce data from the NuTide:303 trial of NUC-3373 in combination with pembrolizumab in patients with solid tumors.
Acelarin: A Transformation of Gemcitabine
Acelarin was designed to overcome the key cancer resistance mechanisms associated with the nucleoside analog gemcitabine.
Gemcitabine and its Limitations
Gemcitabine is a nucleoside analog that is used as a chemotherapeutic to treat a wide range of tumors. There are key limitations that have been
associated with a poor survival prognosis for gemcitabine therapy:
1. Subject to breakdown. Gemcitabine, prior to being phosphorylated to its active form, is susceptible to being broken down chemically by
metabolic enzymes, such as cytidine deaminase, or CDA, which irreversibly degrades up to 90% of gemcitabine to an inactive form.
2. Requires active transport. Gemcitabine requires the membrane transporter hENT1 to enter cancer cells. Patients with a low level of hENT1 who
receive gemcitabine have lower overall survival as compared to patients with a high level of hENT1.
3. Requires activation within the cancer cell. Once gemcitabine enters cells, it must be activated by the addition of phosphate groups before it can
exert its cell-killing effect. The rate-limiting addition of the first phosphate group is rapidly followed by the addition of a second and third phosphate
group. The end result of this phosphorylation is the creation of the active anti-cancer metabolite, which is known as dFdCTP. A specific enzyme,
deoxycytidine kinase, or dCK, is responsible for the first rate-limiting phosphorylation step. Initially, about one-third of cancer cells have reduced levels of
dCK, which has negative consequences for the efficacy of gemcitabine.
Because gemcitabine has a short half-life ranging from 42 to 94 minutes, even with dCK present in the cancer cell, much of the gemcitabine will have
broken down before it can be converted to its active anti-cancer metabolite, dFdCTP.
Our Solution: Acelarin
Acelarin was designed to overcome the key limitations associated with gemcitabine by generating and maintaining higher concentrations of the active
anti-cancer metabolite inside the tumor compared to gemcitabine. Acelarin is comprised of a pre-phosphorylated form of gemcitabine, dFdCMP and a
protective phosphoramidate moiety. This moiety protects Acelarin from breakdown by CDA and enables Acelarin to enter cancer cells independent of the
presence of the hENT1 transporter. Once Acelarin has entered the cell, the protective groups are cleaved off, releasing dFdCMP, meaning that cancer cell
deficiency of the activating enzyme, dCK, does not result in resistance to Acelarin, as it does with gemcitabine. This activated nucleotide analog,
dFdCMP, is then rapidly converted to dFdCDP and then the key anti-cancer metabolite, dFdCTP.
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The metabolism of Acelarin compared to gemcitabine as described above is illustrated in the following graphic.
Clinical Data
Acelarin has been evaluated in multiple clinical trials: a Phase 1 dose-ranging clinical trial of Acelarin monotherapy for patients with advanced solid
tumors; a Phase 1b dose-ranging clinical trial of Acelarin in combination with carboplatin for patients with recurrent ovarian cancer; a Phase 1b clinical
trial of Acelarin in combination with cisplatin for patients with biliary tract cancer; a Phase 2 clinical trial of Acelarin monotherapy for patients with
platinum-resistant ovarian cancer; a Phase 3 trial of Acelarin monotherapy for patients with pancreatic cancer who are unable to receive combination
chemotherapy; and a Phase 3 trial of Acelarin in combination with cisplatin for previously untreated patients with biliary tract cancer.
The majority of patients in the clinical trials had very poor prognoses and yet a high proportion obtained significant tumor regression or stable disease
when treated with Acelarin. Despite the heavily pre-treated nature of the patient populations in the early phase clinical trials, Acelarin has been well
tolerated and showed anti-cancer activity in patients who were resistant to, or had progressed on, prior gemcitabine treatment.
Acelarin: Completed Phase 1 clinical trial (PRO-001)
In the Phase 1 trial, 68 patients with advanced solid tumors and metastatic disease who had exhausted all other standard treatment options received
Acelarin as monotherapy at doses ranging from 375 mg/m 2 to 1,000 mg/m 2. All of these patients had rapidly progressing recurrent disease and had
received on average 2.7 prior lines of chemotherapy. In a subset of 49 patients who received two or more cycles of Acelarin, equivalent to two or more
months of therapy, and had at least one follow-up radiographic assessment to measure changes in tumor size. Five patients achieved a partial response,
although not all of these five patients received a final confirmatory scan as technically required by the RECIST criteria for classification as a partial
response. Another 33 patients were scored as having stable disease. This resulted in an overall disease control rate of 78% in the total 49-patient evaluable
population.
Acelarin: Completed Phase 1b clinical trial in combination with carboplatin (PRO-002)
In the Phase 1b trial, 25 patients with recurrent ovarian cancer received Acelarin at doses from 500 mg/m2 to 750 mg/m2 in combination with
carboplatin for a maximum of six treatment cycles lasting three weeks each. Patients had received on average four prior lines of chemotherapy. Of the 25
patients enrolled, 23 were evaluable and these patients were characterized by their platinum status: seven were platinum-refractory, 10 were platinum-
resistant, three were partially platinum-sensitive and three were platinum-sensitive. The 23 evaluable patients had received one or more cycles of Acelarin
in combination with carboplatin and had at least one follow-up radiographic assessment. Of the evaluable patients, one
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achieved a confirmed complete response and eight achieved a partial response (four confirmed). This resulted in an overall response rate of 39% (22%
confirmed). Another 13 patients were scored as having stable disease. This resulted in a disease control rate of 96%. The median PFS duration was 6.2
months.
Acelarin: Completed Phase 2 clinical trial (PRO-105)
Acelarin was evaluated in a Phase 2 clinical trial in patients with platinum-resistant ovarian cancer. Part I of the trial compared a 500 mg/m2 dose of
Acelarin with a 750 mg/m2 dose of Acelarin in heavily pre-treated patients. Part II of the trial was designed to then investigate the optimal dose identified
in part I in an expansion cohort. In December 2019, consistent with our previous announcement that we were prioritizing our resources on our key
programs, we decided not to proceed with part II of the PRO-105 trial. In part I of the trial, fifty patients were evaluable and all responders had
confirmatory scans. The patient population included in Part I was heavily pre-treated, with a median of 5 prior lines of therapy, and 72% had underlying
comorbidities. Despite this, NUC-1031 was well-tolerated. Based on an assessment by blinded independent central review, anti-cancer activity was
observed with one patient achieving a complete response, two patients achieving a partial response and 16 patients achieving stable disease as their best
response. Across both treatment arms, 11 patients had reductions of at least 10% in the size of their tumors.
Acelarin: Completed Phase 1b clinical trial in combination with cisplatin (ABC-08)
In November 2020, the final results from the ABC-08 trial were published in The Oncologist. In this Phase 1b multi-center, open-label trial, Acelarin,
when combined with cisplatin, achieved a high response rate and was well-tolerated as first-line treatment for patients with advanced biliary tract cancer.
Twenty-one patients received Acelarin (625 mg/m2 or 725 mg/m2) and cisplatin (25 mg/m2) on days one and eight of 21-day cycles. Of the 21 patients in
the intent-to-treat, or ITT, population, 16 patients with measurable disease received at least one cycle of study treatment and had at least one follow-up
radiographic scan and were thus efficacy evaluable. In the efficacy-evaluable population, an ORR (based on unconfirmed responses) of 44% was achieved
(1 complete response and 6 partial responses). In addition, 6 patients had stable disease, resulting in a disease control rate of 81%. Responses were seen
across all five biliary tract cancer sub-types.
Acelarin: Discontinued Phase 3 clinical trial (ACELARATE)
ACELARATE was a Phase 3, open-label, randomized trial, facilitated by the National Cancer Research Institute in the United Kingdom, and was
designed to compare Acelarin to gemcitabine as first-line therapy in patients with metastatic pancreatic carcinoma who were not eligible for combination
chemotherapy. Acelarin (825 mg/m2) and gemcitabine (1,000 mg/m2) were administered on days one, eight, and 15 of 28-day cycles. A total of 200
patients were enrolled, with 100 patients receiving Acelarin.
This trial included a prespecified futility analysis, which indicated that the primary efficacy objective of Acelarin monotherapy reducing the risk of
death by at least 42% compared to gemcitabine was unlikely to be met in this difficult-to-treat patient population. The trial was closed in June 2021.
Acelarin: Discontinued Phase 3 clinical trial (NuTide:121)
A Phase 3 clinical trial, also known as the NuTide:121 trial, comparing Acelarin in combination with cisplatin to gemcitabine in combination with
cisplatin as a first-line treatment for patients with locally advanced or metastatic biliary tract cancer was closed in March 2022 following the first pre-
planned interim analysis.
NuTide:121 was a global, multi-center, randomized Phase 3 trial in approximately 125 sites across North America, Europe, Asia and Australia.
Patients were randomized 1:1 and treated with either a combination of Acelarin (725 mg/m2) plus cisplatin (25 mg/m2) or the current standard of care
regimen, gemcitabine (1,000 mg/m2) plus cisplatin (25 mg/m2). The dual primary endpoints of the trial were overall survival, or OS, and overall response
rate, or ORR.
Three interim efficacy analyses were planned in addition to the final analysis. The first interim analysis was performed by the Independent Data
Monitoring Committee after 418 patients with measurable disease at baseline had been randomized and followed for 28 weeks. This analysis evaluated the
ORR primary endpoint and also included a pre-planned futility analysis.
Following the first interim analysis, we made the decision to discontinue the NuTide:121 trial in March 2022 based on the recommendations of the
trial’s Independent Data Monitoring Committee. Analysis of the study dataset demonstrated that the ORR, as assessed by Blinded Independent Central
Review, was 18.7% (3 Complete Responses and 50 Partial Responses) in the Acelarin plus cisplatin arm and 12.4% (0 Complete Responses and 34 Partial
Responses) in the gemcitabine plus cisplatin arm. However, this improvement in ORR was not reflected by an improvement in OS. Median OS was 9.2
months in the Acelarin plus cisplatin arm and 12.6 months in the gemcitabine plus cisplatin arm corresponding to a hazard ratio of 1.79. Treatment
exposure was lower in the Acelarin plus cisplatin arm, which may be at least partially explained by a higher discontinuation rate due to treatment emergent
adverse events (TEAEs) in the Acelarin plus cisplatin arm (30% vs
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16%). More patients discontinued during the first 30 days of treatment in the Acelarin plus cisplatin arm (11% vs 1%) and this was predominantly due to
liver-related TEAEs. An evaluation of the liver-related TEAEs observed in this trial suggested that the assessment of drug-induced liver toxicity is
potentially confounded by disease progression and the corresponding high frequency of liver dysfunction in patients with advanced biliary tract cancer
which are difficult to distinguish from the pattern of drug related liver toxicity. We believe that the pattern of liver-related TEAEs observed in NuTide:121
is specific to biliary tract cancer and potentially the combination with cisplatin. The pattern of liver-related TEAEs observed in NuTide:121 was not
observed in trials that assessed Acelarin as a monotherapy (PRO-001, PRO-105 and ACELARATE) or in combination with carboplatin (PRO-002).
Overall, the Acelarin safety profile was generally similar to that of gemcitabine. The lower treatment exposure in the Acelarin plus cisplatin arm due
to adverse event related early discontinuations may partially explain why the increased ORR did not translate into a 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.
Molecular Profiling
Healthcare professionals often use molecular-profiling tools to help choose the optimal therapy for patients with cancer. Therapeutic responses vary
among patients because cancers are heterogeneous, even for tumors arising from the same site in the body. Molecular diagnostics assays that detect
specific biomarkers can provide a framework to classify tumors according to their molecular signature. In turn, the cancer profile can guide the choice of
therapy for a particular patient.
As part of our clinical development strategy, we are investigating the molecular profile of cancer cells with the aim of identifying patients who may
receive the greatest benefit from our ProTides compared with the current nucleoside analog standards of care. We are working to identify and quantify key
biomarkers relevant to NUC-7738 and NUC-3373, as well as to assess their predictive nature with regard to treatment. In addition, such assays may
become relevant to our eventual commercial and reimbursement strategy by helping to pre-identify those patients for whom existing nucleoside analogs are
unlikely to provide a significant benefit.
Manufacturing
We currently rely, and expect to continue to rely, on third-party contract manufacturing organizations, or CMOs, for the supply of clinical trial
materials of NUC-7738, NUC-3373 and Acelarin, and any future product candidates under the cGMP specified by the FDA and other regulatory
organizations. cGMP is a regulatory standard for the production of pharmaceuticals to be used in humans. In the future, we intend to also rely on our
CMOs to produce sufficient commercial quantities of our ProTides, if approved. We source key materials from third parties, either directly from suppliers
or indirectly through our CMOs. These raw materials are generally available from multiple vendors, which provides us with a robust and cost-effective
supply chain.
Manufacturing of any product candidate is subject to extensive regulations that impose various procedural and documentation requirements governing
recordkeeping, manufacturing processes and controls, personnel, quality control and quality assurance, among others. We expect that all of our CMOs will
manufacture NUC-7738, NUC-3373 and Acelarin under cGMP conditions and in compliance with any similar regulatory requirements outside the United
States.
Competition
The development and commercialization of new drug therapies is highly competitive. While we believe that our scientific knowledge, proprietary
ProTide technology and development experience provide us with competitive advantages, we face potential competition from many different sources,
including major pharmaceutical, biotechnology and specialty pharmaceutical companies, academic institutions, governmental agencies and public and
private research institutions. Any ProTide candidates that we successfully develop and commercialize will compete with existing products and new
products that may become available in the future. Key product features that would affect our ability to effectively compete with other therapeutics include
efficacy, safety profile, price, convenience of administration and level of promotional activity.
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.
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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
trials, 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 trial sites and patient registration for clinical trials, as well as in
acquiring technologies complementary to, or necessary for, our programs.
Intellectual Property
We actively seek to protect the intellectual property and proprietary technology that we believe is important to our business, including seeking,
maintaining, enforcing and defending patent rights for our therapeutics and processes, whether developed internally or licensed from third parties. Our
success will depend on our ability to obtain and maintain patent and other protection including data/market exclusivity for our product candidates and
platform technology, preserve the confidentiality of our know-how and operate without infringing the valid and enforceable patents and proprietary rights
of third parties. See “Risk Factors — Risks Related to Our Intellectual Property.”
Our policy is to seek to protect our proprietary position, generally by filing an initial priority filing at the U.K. Intellectual Property Office. This is
followed by the filing of a patent application under the Patent Co-operation Treaty claiming priority from the initial application(s) and then filing
applications for patent grant in territories including, for example, the United States, Europe and Japan. In each case, we determine the strategy and
territories required after discussion with our patent attorneys so that we obtain relevant coverage in territories that are commercially important to us and our
product candidates. We additionally rely on data exclusivity, market exclusivity and patent term extensions when available. We also rely on trade secrets
and know-how relating to our underlying platform technology and product candidates. Prior to making any decision on filing any patent application, we
consider with our patent attorneys whether patent protection is the most sensible strategy for protecting the invention concerned or whether the invention
should be maintained as confidential.
As of February 25, 2025, we owned 395 granted patents (of which 25 are U.S. issued patents) and 83 pending patent applications (of which five are
U.S. pending patent applications). Commercially or strategically important non-U.S. jurisdictions in which we hold issued or pending patent applications
include: Australia, Canada, China, Eurasia (in the form of a regional patent), Europe (in the form of a regional patent), Hong Kong, India, Israel, Japan,
South Korea, Malaysia, Mexico, Philippines, Singapore, and South Africa.
NUC-7738
We own 84 granted patents and seven pending applications covering the composition of matter of NUC-7738, a genus around NUC-7738 and specific
uses of NUC-7738. Patents directed to NUC-7738 have been granted in major jurisdictions, including the United States, Europe and Japan. These granted
patents and patents arising from these pending applications, if issued, are expected to expire in 2035 excluding any patent term adjustments and any patent
term extensions.
We own patent applications covering formulations of NUC-7738, methods of making NUC-7738, and specific uses of NUC-7738. Patents arising
from these pending applications are expected to expire in 2036 and 2038 excluding any patent term adjustments and any patent term extensions.
NUC-3373
We own 103 granted patents and two pending applications covering the composition of matter of NUC-3373, a genus around NUC-3373 and specific
uses of NUC-3373. Those patents were granted in major territories, including the United States, Europe and Japan. These granted patents and patents
arising from the pending applications, if issued, are expected to expire in 2032, excluding any patent term adjustments and any patent term extensions.
We own patent applications covering formulations of NUC-3373 (including those used in the clinical trials), methods of making NUC-3373, and
specific uses of NUC-3373. A patent claiming the clinical formulation of NUC-3373 has been granted in Japan. These patents and patents arising from
these pending applications are expected to expire in 2036, 2037, 2038 and 2043, excluding any patent term adjustments and any patent term extensions.
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Acelarin
We own 66 granted patents, as well as two pending patent applications, directed towards Acelarin in single diastereoisomer form. A patent claiming
the more soluble single diastereoisomer of Acelarin has been granted in the United States, Europe and Japan, and corresponding patent applications are
pending in other major territories. These granted patents and patents arising from the pending applications, if issued, are expected to expire in 2033,
excluding any patent term adjustments and any patent term extensions.
Laws and Regulations Regarding Patent Terms
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we
file, the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the United States, a patent term may be shortened if
a patent is terminally disclaimed over another patent or as a result of delays in patent prosecution by the patentee. A patent’s term may be lengthened by a
patent term adjustment, which compensates a patentee for administrative delays by the USPTO in granting a patent. The patent term of a European patent
is 20 years from its effective filing date, which, unlike in the United States, is not subject to patent term adjustments in the same way as U.S. patents.
The term of a patent that covers an FDA-approved drug or biologic may also be eligible for patent term extension, which permits patent term
restoration as compensation for the patent term lost during the FDA regulatory review process. The Drug Price Competition and Patent Term Restoration
Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent
term extension is related to the length of time the drug or biologic is under regulatory review. Patent extension cannot extend the remaining term of a
patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended. Similar
provisions are available in Europe and other jurisdictions to extend the term of a patent that covers an approved drug, for example Supplementary
Protection Certificates. In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering
those products. We anticipate that some of our issued patents may be eligible for patent term extensions but such extensions may not be available and
therefore our commercial exclusivity may be restricted.
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
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 the 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 covered by the license 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 covered by the licenses.
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 commercialize 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 commercialize 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 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,
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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.
Government Regulation and Product Approval
FDA Approval Process
In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The U.S. Federal Food, Drug, and Cosmetic Act, or the
FD&C Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage,
recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of
pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions,
such as FDA refusal to approve pending new drug applications, or NDAs, warning letters, voluntary product recalls, product seizures, total or partial
suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.
Pharmaceutical product development in the United States typically involves the performance of preclinical laboratory and animal tests, the submission
to the FDA of an IND which must become effective before clinical testing may commence, and adequate, well-controlled clinical trials to establish the
safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically
takes many years and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease.
Preclinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal studies to assess the characteristics
and potential safety and efficacy of the product. The conduct of the preclinical and other nonclinical tests must comply with certain federal regulations and
requirements, including good laboratory practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other
information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long term nonclinical
tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.
Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified
investigator. Clinical trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with good clinical practice, or GCP, an
international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors, and
(iii) under protocols detailing the objectives of the clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.
Each protocol and subsequent protocol amendments must be submitted to the FDA as part of the IND.
A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has
neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.
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The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time (including prior to its initiation in response to the
original IND submission) or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements
or presents an unacceptable risk to the clinical trial patients. The clinical trial protocol and informed consent information for patients in clinical trials must
also be submitted to an institutional review board, or IRB, for review and approval. An IRB may also require the clinical trial at the site to be halted, either
temporarily or permanently, for failure to comply with the IRB’s requirements or it may impose other conditions. An IRB must operate in compliance with
FDA regulations.
Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In Phase 1, the
initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics, pharmacological actions,
side effects associated with increasing doses, and, if possible, early evidence on effectiveness. Phase 2 usually involves clinical trials in a limited patient
population to determine the effectiveness of the drug for a particular indication, dosage tolerance, and optimum dosage, and to identify common adverse
effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 clinical
trials are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically
dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the
labeling of the drug. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A
single Phase 3 clinical trial with other confirmatory evidence may be sufficient in rare instances where the clinical trial is a large multicenter trial
demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity, or
prevention of a disease with potentially serious outcome, and confirmation of the result in a second clinical trial would be practically or ethically
impossible. In some cases, Phase 4 or post-approval clinical trials may be conducted after initial marketing approval to gain additional experience from the
treatment of patients in the intended therapeutic indication, particularly for long-term safety follow up. In certain instances, the FDA may mandate the
performance of Phase 4 clinical trials as a condition of marketing approval for an NDA.
Congress also recently amended the FD&C Act to require sponsors of a Phase 3 clinical trial, or other “pivotal study” of a new drug to support
marketing authorization, to design and submit a diversity action plan for such clinical trial. The action plan must include the sponsor’s diversity goals for
enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them. Sponsors must submit a diversity action plan to the
FDA by the time the sponsor submits the relevant clinical trial protocol to the agency for review. The FDA may grant a waiver for some or all of the
requirements for a diversity action plan. If the FDA objects to a sponsor’s diversity action plan or otherwise requires significant changes to be made, it
could delay initiation of the relevant clinical trial.
After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before
marketing of the drug product may begin in the United States. The NDA must include the results of all nonclinical, clinical, and other testing and a
compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is
substantial. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee (for example, for fiscal year 2025
this application fee exceeds $4.3 million). These fees are typically increased annually.
This FDA review typically takes twelve months from the date the NDA is submitted to the FDA (for a standard review) and eight months from the
date the NDA is submitted (for a “priority review”) because the FDA has approximately two months, or 60 days, after NDA submission to make a “filing”
decision. The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold
determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review.
Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act, or PDUFA, the FDA has agreed to certain performance goals
in the review of NDAs. For most applications involving first-in-kind molecular entities, FDA has ten months from the filing date in which to complete its
initial review of a standard application and respond to the applicant, and six months from the filing date for an application with priority review. Priority
review can be applied to drugs intended to treat a serious condition and that the FDA determines offer major advances in treatment by providing a
significant improvement in safety or effectiveness, or that provide a treatment where no adequate therapy exists. The FDA does not always meet its
PDUFA goal dates, and the review process for both standard and priority new drug applications may be extended by FDA for three additional months to
consider certain late-submitted information, or information intended to clarify information already provided in the submission.
The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory
committee, which is typically a panel made up of independent clinicians and other experts, for review, evaluation, and a recommendation as to whether the
application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations when
making final decisions on approval. The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan if it determines
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that a REMS is necessary to ensure that the benefits of the drug outweigh its risks and to assure the safe use of the drug or biological product. The REMS
plan could include medication guides, physician communication plans, assessment plans and/or elements to assure safe use, such as restricted distribution
methods, patient registries or other risk minimization tools.
The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case basis. If the FDA concludes a REMS
plan is needed, the sponsor of the NDA must submit a proposed REMS. The FDA will not approve an NDA without a REMS, if required.
Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will
inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with current good
manufacturing practice requirements, or cGMP, is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and
effective in the indication studied.
The approval process is lengthy and often difficult, and the FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied
or may require additional clinical or other data and information. On the basis of the FDA’s evaluations of the NDA and accompanying information,
including the results of the inspection of the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response
letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider
the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an
approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with
the submission of this additional information, however, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for
approval.
An NDA approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications as described in the
application. Further, depending on the specific risk(s) to be addressed, the FDA may require that contraindications, warnings or precautions be included in
the product labeling, require that post-approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s safety after approval,
require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use
restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the drug. Moreover,
the FDA may prevent or limit further marketing of a product based on the results of post-marketing trials or surveillance programs. Once granted, product
approvals may be withdrawn if compliance with regulatory requirements is not maintained or problems are identified following initial marketing or any
time thereafter, and certain types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling
claims, are subject to further testing requirements and FDA review and approval.
Disclosure of Clinical Trial Information
Sponsors of clinical trials of certain FDA-regulated products, including prescription drugs, are required to register and disclose certain clinical trial
information within specific timeframes on a public website maintained by the U.S. National Institutes of Health called ClinicalTrials.gov. Information
related to the product, patient population, phase of investigation, clinical trial sites and investigator, and other aspects of the clinical trial is made public as
part of the registration of the clinical trial. Sponsors are also obligated to disclose the results of these clinical trials after completion if the product
candidate is ultimately approved, and disclosure of the results of these clinical trials will be delayed until such approval. Competitors may use this
publicly-available information to gain knowledge regarding the design and progress of our development programs. Failure to timely register a covered
clinical trial or to submit trial results as provided for in the law can give rise to civil monetary penalties and also prevent the non-compliant party from
receiving future grant funds from the federal government. The federal government has brought enforcement actions against clinical trial sponsors that fail
to comply with such requirements under the Final Rule on ClinicalTrials.gov registration and reporting.
The Hatch-Waxman Act
Orange Book Listing. In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims cover
the applicant’s product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug
Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. FDA-approved drugs identified in the Orange Book (often
called reference listed drugs or listed drugs) can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug
application, or ANDA, or by other follow-on product developers in support of a 505(b)(2) NDA, which relies in part on previous FDA findings of safety
and effectiveness for one or more approved drug products, among other possible supporting information. An ANDA provides for marketing of a drug
product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to
be therapeutically equivalent to the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required or allowed to
conduct, or submit results of, preclinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in
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this way are commonly referred to as “generic equivalents” to the listed drug, and can often be substituted by pharmacists under prescriptions written for
the original listed drug. In contrast, the 505(b)(2) regulatory pathway does not preclude the possibility that a follow-on applicant would need to conduct
additional clinical trials or preclinical studies; for example, they may be seeking approval to market a previously approved drug for new indications or for a
new patient population that would require new clinical data to demonstrate safety or effectiveness.
Any ANDA or 505(b)(2) NDA applicant is required to certify to the FDA concerning any patents listed in the FDA’s Orange Book for the NDA-
approved drug product on which it is relying (in whole or in part). Specifically, the follow-on applicant must certify that: (i) the required patent
information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a particular date and approval is
sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. An ANDA applicant may also elect to submit
a section viii statement, certifying that its proposed ANDA label does not contain or carve out any language regarding the patented method-of-use, rather
than certify to a listed method-of-use patent.
If the follow-on applicant does not challenge the listed patents, the ANDA or 505(b)(2) application will not be approved until all the listed patents
claiming the referenced drug have expired. A certification that the new product will not infringe the already approved product’s listed patents, or that such
patents are invalid, is called a Paragraph IV certification. If the ANDA or 505(b)(2) applicant has provided a Paragraph IV certification to the FDA, the
applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the follow-on application has been accepted for filing
by the FDA. The referenced NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV
certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from
approving the ANDA or 505(b)(2) NDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement
case that is favorable to the ANDA or 505(b)(2) applicant.
An ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced
product has expired.
Exclusivity. Upon NDA approval of a new chemical entity, or NCE, which is a drug that contains no active moiety that has been previously approved
by the FDA in any other NDA, the NCE receives five years of marketing exclusivity during which time the FDA cannot file any ANDA or 505(b)(2) NDA
seeking approval of a generic or follow-on version of that drug if the follow-on applicant does not own or have a legal right of reference to all the data
required for approval.
However, an ANDA or 505(b)(2) NDA may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed. If there is
no listed patent in the Orange Book for the reference drug, there may not be a Paragraph IV certification, in which case no ANDA or 505(b)(2) NDA may
be filed before the expiration of the exclusivity period attached to the referenced NDA product.
The FD&C Act also provides three years of marketing exclusivity for a NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical
investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval
of the application, for example, new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions of use
associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Five-
year and three-year exclusivity will not delay the submission or approval of a full traditional NDA filed under Section 505(b)(1) of the FD&C Act.
However, an applicant submitting a full traditional NDA would be required to either conduct or obtain a right of reference to all of the preclinical studies
and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Patent Term Extension. After NDA approval, owners of relevant drug patents may apply for up to a five-year patent term extension. The allowable
patent term extension is calculated as half of the drug’s testing phase - the time between IND submission and NDA submission - and all of the review phase
- the time between NDA submission and approval up to a maximum of five years. The time can be shortened if FDA determines that the applicant did not
pursue approval with due diligence. The total patent term after the extension may not exceed 14 years.
For patents that might expire during the application review phase, the patent owner may request an interim patent extension. An interim patent
extension increases the patent term by one year and may be renewed up to four times. For each interim patent extension granted, the post-approval patent
extension is reduced by one year. The director of the USPTO must determine that approval of the drug covered by the patent for which a patent extension
is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted.
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Post-Marketing Requirements
Once an NDA is approved, the manufacturer and the new drug product will be subject to continuing regulation by the FDA, including, among other
things, monitoring and recordkeeping activities, reporting of adverse experiences, and complying with promotion and advertising requirements, which
include restrictions on promoting approved drugs for unapproved uses or patient populations (known as “off-label use”). The FDA closely regulates the
post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-
sponsored scientific and educational activities and promotional activities involving the internet. Although physicians may prescribe legally available drugs
for off-label uses, manufacturers may market their drugs only for the approved indications and in accordance with the provisions of the approved labeling.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have
improperly promoted off-label uses may be subject to significant liability. Prescription drug promotional materials also must be submitted to the FDA in
conjunction with their first use. Further, changes to some of the conditions established in an approved application, including changes in indications,
labeling, or certain manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can
be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the
same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.
Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA, in addition to annual marketing reports
specific to each NDA. The FDA also may require post-marketing testing, sometimes called Phase 4 testing, a REMS program, and/or surveillance studies
to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product.
In addition, quality-control, drug manufacture, packaging, and labeling procedures, among other things, must continue to conform to cGMP after
approval. The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and
drug product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls,
records and reports and returned or salvaged products. Drug manufacturers and certain of their subcontractors are required to register their establishments
with FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the
agency inspects manufacturing facilities to assess compliance with cGMP. Accordingly, manufacturers must continue to expend time, money and effort in
the areas of production, quality control and recordkeeping to maintain compliance with cGMP. Regulatory authorities may impose a range of enforcement
actions, including bringing a seizure and injunction in court, withdraw product approvals or request a product recall if a company fails to comply with
cGMP requirements, and the discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an
approved NDA, including recall.
Once approval of a drug is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained
or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of
unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions
to the approved labeling to add new safety information; imposition of post-market or clinical trials to assess new safety risks; or imposition of distribution
or other restrictions under a REMS program. Other potential consequences include, among other things:
•
restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
•
fines, warning letters or other enforcement-related letters or clinical holds on post-approval clinical trials;
•
refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals;
•
product seizure or detention, or refusal to permit the import or export of products;
•
injunctions or the imposition of civil or criminal penalties;
•
consent decrees, corporate integrity agreements, debarment, or exclusion from federal health care programs; and/or
•
mandated modification of promotional materials and labeling and the issuance of corrective information.
Pediatric Information and Pediatric Exclusivity
Under the Pediatric Research Equity Act, or PREA, amendments to the FD&C Act, NDAs or supplements to NDAs must contain data that are
adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant
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pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. A sponsor who
is planning to submit a marketing application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or
new route of administration must submit an initial Pediatric Study Plan, or PSP, within 60 days of an end-of-Phase 2 meeting or as may be agreed between
the sponsor and the FDA. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study
objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request
for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting
information. The FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if
changes to the pediatric plan need to be considered based on data collected from preclinical studies, early phase clinical trials or other clinical development
programs. The FDA may grant full or partial waivers, or deferrals, for submission of pediatric data. The FDA Reauthorization Act of 2017 amended the
FD&C Act to require pediatric investigations of drugs intended for treatment of an adult cancer if directed at a molecular target the FDA determines to be
substantially relevant to the growth or progression of a pediatric cancer, unless the FDA waives or defers the requirement.
In addition, pediatric exclusivity is another type of non-patent marketing exclusivity available in the United States that, if granted, provides for the
attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity or listed patents. This six-month
exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a Written Request from the FDA for such data. The data do not
need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the
additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits,
whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term
extension, but it effectively extends the regulatory period during which the FDA cannot approve another application. The issuance of a Written Request
does not require the sponsor to undertake the described studies.
Congress periodically considers enacting new incentives or mandates applicable to pediatric drug development, and the regulatory requirements
applicable to pediatric drug developers may change in the future. For example, bipartisan legislation introduced during the last congressional session
(2023-2024) would have increased funding for pediatric trials; mandated that drugs for rare diseases be studied in children; and granted FDA authority to
assess penalties against companies that do not complete required pediatric studies.
Special Protocol Assessment
A company may reach an agreement with FDA under the Special Protocol Assessment, or SPA, process as to the required design and size of clinical
trials intended to form the primary basis of an efficacy claim. Under the FDC Act and FDA guidance implementing the statutory requirement, an SPA is
generally binding upon the FDA except in limited circumstances, such as if the FDA identifies a substantial scientific issue essential to determining safety
or efficacy after the clinical trial begins, public health concerns emerge that were unrecognized at the time of the protocol assessment, the sponsor and FDA
agree to the change in writing, or if the clinical trial sponsor fails to follow the protocol that was agreed upon with the FDA.
Expedited Development and Review Programs
The FDA is authorized to designate certain products for expedited development or review if they are intended to address an unmet medical need in the
treatment of a serious or life-threatening disease or condition. These programs include Fast Track designation, breakthrough therapy designation and
priority review designation. Even if a drug qualifies for one or more of these expedited development and review programs, the FDA may later decide that
the drug no longer meets the conditions for qualification or that the time period for FDA review or approval will not be shortened, and the designation may
be withdrawn.
To be eligible for a Fast Track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or
life-threatening disease or condition and demonstrates the potential to address an unmet medical need by providing a therapy where none exists or a therapy
that may be potentially superior to existing therapy based on efficacy or safety factors. Fast track designation provides opportunities for more frequent
interactions with the FDA review team to expedite development and review of the product. The FDA may also review sections of the NDA for a Fast
Track product on a rolling basis before the complete application is submitted, if the sponsor and the FDA agree on a schedule for the submission of the
application sections, and the sponsor pays any required user fees upon submission of the first section of the NDA. The request may be made at the time of
IND submission and generally no later than the pre-NDA meeting. The FDA will respond within 60 calendar days of receipt of the request.
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Priority review, which is requested at the time of NDA submission, is designed to give drugs that offer major advances in treatment or provide a
treatment where no adequate therapy exists an initial review within six months as compared to a standard review time of ten months (starting from the date
of filing for a new molecular entity, or NME, or from the date of receipt for a non-NME application). The FDA determines on a case-by-case basis
whether the proposed drug represents a significant improvement in treatment, prevention or diagnosis of disease when compared with other available
therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial
reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, or
evidence of safety and effectiveness in a new subpopulation. A priority review designation is intended to direct overall agency attention and resources to
the evaluation of such applications, and to shorten the FDA’s goal for taking action under its PDUFA agreements.
In addition, in 2012, Congress created a new regulatory program for product candidates designated by FDA as “breakthrough therapies” upon a
request made by the IND sponsors. A Breakthrough Therapy designation is designed to expedite the development and review of drugs that are intended to
treat, alone or in combination with another therapy, a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the
drug may demonstrate substantial improvement over available therapy on one or more clinically significant endpoints. A sponsor may request
Breakthrough Therapy designation at the time that the IND is submitted, or no later than at the end-of-Phase 2 meeting. The FDA will respond to a
Breakthrough Therapy designation request within 60 days of receipt of the request. A drug that receives Breakthrough Therapy designation is eligible for
all Fast Track designation features, intensive guidance on an efficient drug development program, beginning as early as Phase 1 and commitment from the
FDA involving senior managers.
Specific to oncology drug applications, FDA’s Oncology Center of Excellence has developed a program called Real-Time Oncology Review, or
RTOR. RTOR facilitates earlier submission of topline results (i.e., efficacy and safety results from clinical studies before the study report is completed)
and datasets, after database lock, to support an earlier start to the agency’s review of a marketing application review. The intent of RTOR is to provide
FDA reviewers earlier access to data, to identify data quality and potential review issues, and to potentially enable early feedback to the applicant, which
can allow for a more streamlined and efficient review process for the product’s NDA. Applicants can apply for review under RTOR when the database for
a pivotal trial has been locked and the oncology product is eligible under FDA’s criteria for the program. Eligibility requires (a) clinical evidence
indicating that the drug may demonstrate substantial improvement on one or more clinically relevant endpoints over available therapies; (b) the use of
straightforward study designs and easily interpreted clinical trial endpoints (e.g., overall survival, response rates); and (c) that no aspect of the NDA is
likely to require a longer review time (e.g., requirement for new REMS or input from an advisory committee). In November 2023, the agency finalized
guidance for industry on RTOR.
Fast Track designation, breakthrough therapy designation and priority review do not change the standards for approval and may not ultimately
expedite the development or NDA approval process.
Accelerated Approval
Products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over
existing treatments may receive accelerated approval from the FDA and may be approved on the basis of adequate and well-controlled clinical trials
establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant
accelerated approval for such a drug or biologic when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an
effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account
the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. Discussions with the FDA about the feasibility of an
accelerated approval typically begin early in the development of the drug in order to identify, among other things, an appropriate endpoint. As a condition
of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform post-marketing clinical trials to verify and describe the
predicted effect on IMM or other clinical endpoint, and the product may be subject to expedited withdrawal procedures. Drugs and biologics granted
accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or
other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more
easily or more rapidly than clinical endpoints. An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably
likely to predict the clinical benefit of a drug, such as an effect on IMM. The FDA has limited experience with accelerated approvals based on intermediate
clinical endpoints, but has indicated that such endpoints generally may support accelerated approval when the
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therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the
therapeutic effect is reasonably likely to predict the ultimate long-term clinical benefit of a drug.
The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to
measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. For example,
accelerated approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy
is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large clinical trials to
demonstrate a clinical or survival benefit.
The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval
confirmatory studies to verify and describe the drug’s clinical benefit. As a result, a product candidate approved on this basis is subject to rigorous post-
marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. In
addition, Congress recently provided FDA additional statutory authority to mitigate potential risks to patients from continued marketing of ineffective
drugs previously granted accelerated approval. Under these amendments to the FD&C Act, the agency may require a sponsor of a product granted
accelerated approval to have a confirmatory trial underway prior to approval. The sponsor must also submit progress reports on a confirmatory trial every
six months until the trial is complete, and such reports will be published on FDA’s website. Failure to conduct required post-approval studies, or to
confirm the predicted clinical benefit of the product during post-marketing studies, would allow the FDA to withdraw approval of the drug. Congress also
amended the law to give FDA the option of using expedited procedures to withdraw product approval if the sponsor’s confirmatory trial fails to verify the
claimed clinical benefits of the product. Prior to the recent statutory amendments enacted by Congress, several oncology sponsors voluntarily withdrew
specific indications for their drug products that were being marketed pursuant to accelerated approval, and the FDA’s Oncology Center of Excellence
launched an initiative called Project Confirm, aimed at promoting transparency in the area of accelerated approvals for oncology indications. Scrutiny of
the accelerated approval pathway is likely to continue in the coming years and may lead to further legislative and/or administrative changes in the future.
All promotional materials for product candidates being considered and approved under the accelerated approval program are subject to prior review
by the FDA.
Regulation of Companion Diagnostic Devices
If we decide that a diagnostic test would provide useful information for patient selection following commercialization of our future drug products or if
the FDA requires us to develop such a test and to include screening requirements in the prescribing information for our future approved drug products, we
may work with a collaborator to develop an in vitro diagnostic, or companion test. The FDA regulates in vitro diagnostic tests as medical devices and
requires separate regulatory authorization prior to commercialization. The type of regulation to which such a test will be subjected will depend in part on a
risk assessment by the FDA, as well as a determination of whether the test is intended to yield results that would be helpful for prescribers to know versus
results that the FDA or we believe are necessary for the safe and effective use of our drugs under development.
Companion diagnostics and complementary diagnostics can identify patients who are most likely to benefit from a particular therapeutic product;
identify patients likely to be at increased risk for serious side effects as a result of treatment with a particular therapeutic product; or monitor response to
treatment with a particular therapeutic product for the purpose of adjusting treatment to achieve improved safety or effectiveness. Companion diagnostics
and complementary diagnostics are regulated as medical devices by the FDA. The level of risk associated with a new diagnostic test combined with
available controls to mitigate risk determines whether a companion diagnostic device requires Premarket Approval, or PMA, from the FDA or if it can be
cleared by the agency through the 510(k) premarket notification process based on a showing of substantial equivalence to a commercially available device.
The use of an IVD companion diagnostic device with a therapeutic product will be stipulated in the instructions for use in the labeling of both the
diagnostic device and the corresponding therapeutic product, including the labeling of any generic equivalents of the therapeutic product. For a novel
therapeutic product for which a companion diagnostic device is essential for the safe and effective use of the product, the FDA expects that the therapeutic
sponsor will address the need for an approved or cleared IVD companion diagnostic device in its therapeutic product development plan and that, in most
cases, the therapeutic product and its corresponding companion diagnostic will be developed contemporaneously, such that the companion diagnostic
device is PMA-approved or 510(k)-cleared contemporaneously with the therapeutic product.
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Europe/Rest of World Government Regulation
In addition to regulations in the United States, we are and will be subject, either directly or through our distribution partners, to a variety of regulations
in other jurisdictions governing, among other things, clinical trials and commercial sales and distribution of our products, if approved.
Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries prior
to the commencement of clinical trials or marketing of the product in those countries. Moreover, the time required to obtain approval in other countries and
jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure
regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory
process in others.
Certain countries outside of the United States have a process that requires the submission of a CTA much like an IND prior to the commencement of
human clinical trials. In Europe, for example, a CTA must be submitted to the competent national health authority and to independent ethics committees in
each country in which a company plans to conduct clinical trials. Once the CTA is approved in accordance with a country’s requirements, clinical trials
may proceed in that country.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country,
even though there is already some degree of legal harmonization in the member states resulting from the national implementation of underlying E.U.
legislation. In all cases, the clinical trials are conducted in accordance with GCP and other applicable regulatory requirements. The Clinical Trials
Regulation (Regulation (E.U.) 536/2014) began to harmonize the assessment and supervision processes for clinical trials throughout the European Union
and when it came in to force on January 31, 2022, it repealed the existing E.U. Clinical Trials Directive (EC) 2001/20/EC and national legislation that was
put in place to implement the Directive. The new Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the European
Union. The main characteristics of the regulation include: a streamlined application procedure via a single entry point, the “EU portal” called the Clinical
Trial Information System, or CTIS; a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for
clinical trial sponsors; and a harmonized procedure for the assessment of applications for clinical trials. Use of the CTIS became mandatory for new
clinical trial application submissions as of February 1, 2023.
To obtain regulatory approval of a new drug, or medicinal product, in the European Union, a sponsor must obtain approval of a marketing
authorization application, or MAA. The way in which a medicinal product can be approved in the European Union depends on the nature of the medicinal
product.
The centralized procedure results in a single MAA granted by the European Commission that is valid across the European Union, as well as in
Iceland, Liechtenstein and Norway. The centralized procedure is compulsory for human drugs that are: (i) derived from biotechnology processes, such as
genetic engineering, (ii) contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes,
neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) officially designated “orphan drugs” (drugs used for rare
human diseases) and (iv) advanced-therapy medicines, such as gene-therapy, somatic cell-therapy or tissue-engineered medicines. The centralized
procedure may, at the request of the applicant, also be used for human drugs which do not fall within the above mentioned categories if the human drug (a)
contains a new active substance which, on the date of entry into force of this Regulation, was not authorized in the Community; or (b) the applicant shows
that the medicinal product constitutes a significant therapeutic, scientific or technical innovation or that the granting of authorization in the centralized
procedure is in the interests of patients or animal health at European Community level.
Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of a MAA by the EMA is 210 days (excluding
clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal
Products for Human Use, or CHMP), with adoption of the actual marketing authorization by the European Commission thereafter. Accelerated evaluation
might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest from the point of view of
therapeutic innovation, defined by three cumulative criteria: the seriousness of the disease to be treated; the absence of an appropriate alternative
therapeutic approach, and anticipation of exceptional high therapeutic benefit. In this circumstance, EMA ensures that the evaluation for the opinion of the
CHMP is completed within 150 days and the opinion issued thereafter.
The mutual recognition procedure, or MRP, for the approval of human drugs is an alternative approach to facilitate individual national marketing
authorizations within the European Union. Basically, the MRP may be applied for all human drugs for which the centralized procedure is not obligatory.
The MRP is applicable to the majority of conventional medicinal products, and is based on the principle of recognition of an already existing national
marketing authorization by one or more member states.
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The characteristic of the MRP is that the procedure builds on an already existing marketing authorization in a member state of the European Union
that is used as reference in order to obtain marketing authorizations in other member states. In the MRP, a marketing authorization for a drug already exists
in one or more member states and subsequently marketing authorization applications are made in other member states by referring to the initial marketing
authorization. The member state in which the marketing authorization was first granted will then act as the reference member state. The member states
where the marketing authorization is subsequently applied for act as concerned member states.
The MRP is based on the principle of the mutual recognition by member states of their respective national marketing authorizations. Based on a
marketing authorization in the reference member state, the applicant may apply for marketing authorizations in other member states. In such case, the
reference member state shall update its existing assessment report about the drug in 90 days. After the assessment is completed, copies of the report are
sent to all member states, together with the approved summary of product characteristics, labeling and package leaflet. The concerned member states then
have 90 days to recognize the decision of the reference member state and the summary of product characteristics, labeling and package leaflet. National
marketing authorizations shall be granted within 30 days after acknowledgement of the agreement.
Should any member state refuse to recognize the marketing authorization by the reference member state, on the grounds of potential serious risk to
public health, the issue will be referred to a coordination group. Within a timeframe of 60 days, member states shall, within the coordination group, make
all efforts to reach a consensus. If this fails, the procedure is submitted to an EMA scientific committee for arbitration. The opinion of this EMA
Committee is then forwarded to the Commission, for the start of the decision making process. As in the centralized procedure, this process entails
consulting various European Commission Directorates General and the Standing Committee on Human Medicinal Products or Veterinary Medicinal
Products, as appropriate.
In April 2023, the European Commission issued a proposal for a new Directive and a new Regulation, which will revise and replace the existing
general pharmaceutical legislation. If adopted and implemented as currently proposed, these revisions will significantly change several aspects of drug
development and approval in the European Union.
The United Kingdom formally left the European Union on January 31, 2020. At that time, U.K. medicines legislation was updated to reflect various
procedural changes. To date, U.K. medicines legislation has not materially deviated from the law that applied prior to the United Kingdom’s departure
from the European Union. The U.K. government has not suggested making material amendments to the requirement to obtain or maintain a marketing
authorization for a new medicine.
Since the United Kingdom’s withdrawal from the European Union, the U.K. regulator, the MHRA, has issued guidance on how to apply for
Marketing Authorization. This procedure remains largely the same as it was before the United Kingdom formally left the European Union. However, the
MHRA has outlined the International Recognition Procedure, whereby the United Kingdom may rely on a decision taken by certain “Reference
Regulators” in order to grant a U.K. marketing authorization on an expediated manner. In most cases, if the marketing authorization was granted by a
Reference Regulator within 2 years before the application is submitted in the United Kingdom, the review period will be 60 days. In other instances, the
review period will be 110 days. The Reference Regulators include the FDA, the EMA and the competent authorities in each member state of the European
Union, Switzerland, Australia, Canada, Japan, and Singapore.
For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials are conducted in
accordance with GCP and the other applicable regulatory requirements.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical trials,
suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Coverage, Pricing and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of any products for which we may obtain regulatory approval from the
FDA. Sales of any of our product candidates, if approved, will depend, in part, on the extent to which the costs of the products will be covered by third-
party payors, including government healthcare programs such as Medicare and Medicaid, and private payors, such as commercial health insurers and
managed care organizations. Third-party payors determine which drugs they will cover and the amount of reimbursement they will provide for a covered
drug. In the United States, there is no uniform system among payors for making coverage and reimbursement decisions. In addition, the process for
determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor
will pay for the product once coverage is approved. Third-party payors may limit coverage to specific products on an approved list, or formulary, which
might not include all of the FDA-approved products for a particular indication.
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In order to secure coverage and reimbursement for our products, if approved for sale, we may need to conduct expensive pharmacoeconomic studies
in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costly studies required to obtain FDA or other
comparable regulatory approvals. Even if we conduct pharmacoeconomic studies, our product candidates may not be considered medically necessary or
cost-effective by payors. Further, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be
approved.
The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of drugs have been a focus in this
effort. The U.S. government, state legislatures, and foreign governments have shown significant interest in implementing cost-containment programs to
limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement, and requirements for substitution of generic
products for branded prescription drugs. For example, in the United States, the ACA contains provisions that may reduce the profitability of products,
including, for example, increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans,
mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care
programs. Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could
limit future payments for our products. On March 11, 2021, former President Biden signed the American Rescue Plan Act of 2021 into law, which
eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple
source drugs, which began on January 1, 2024. Payment methodologies may also be subject to changes in healthcare legislation and regulatory initiatives.
For example, CMS may develop new payment and delivery models, such as bundled payment models. There also has been heightened governmental
scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in
several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency
to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs and
reform government program reimbursement methodologies for drugs. By way of example, in August 2022, the Inflation Reduction Act of 2022, or the
IRA, was signed into law. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices
that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first
due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits CMS to
implement many of these provisions through guidance, as opposed to regulation, for the initial years. CMS has begun to implement these new authorities,
entering into the first set of agreements with pharmaceutical manufacturers to conduct price negotiations in October 2023 and ultimately announcing the
first round of negotiated prices for the first 10 drugs in August 2024; those negotiated “maximum fair prices” will be effective as of January 1, 2026
(payment year 2026). CMS is currently engaged in its second round of negotiations and published the next 15 drugs selected for negotiation in January
2025. However, the IRA’s impact on the pharmaceutical industry in the United States remains uncertain, in part because multiple large pharmaceutical
companies and other stakeholders (e.g., the U.S. Chamber of Commerce) have initiated federal lawsuits against CMS arguing the program is
unconstitutional for a variety of reasons, among other complaints. The outcome of such ongoing lawsuits, as well as potential legislative changes enacted
by Congress or programmatic changes implemented at CMS by the Trump Administration, may impact the IRA drug price negotiation program in the
future. For that and other reasons, it is currently unclear how the IRA will be effectuated, or the impact of the IRA on our business.
The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors
fail to provide adequate coverage and reimbursement. The focus on cost containment measures in the United States has increased and we expect will
continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if we
attain favorable coverage and reimbursement status for one or more products for which we receive regulatory approval, less favorable coverage policies
and reimbursement rates may be implemented in the future.
In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements
governing drug pricing vary widely from country to country. Some countries provide that drug products may be marketed only after a reimbursement price
has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of our product candidate to currently
available therapies (so called health technology assessment, or HTA) in order to obtain reimbursement or pricing approval. For example, the European
Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide
reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it
may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. Other member
states allow companies to fix their own prices for drug products but monitor and control prescription volumes and issue guidance to physicians to limit
prescriptions. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow
favorable reimbursement and pricing arrangements for any of our products. Historically,
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products launched in the European Union do not follow price structures of the United States and generally tend to be significantly lower.
Other U.S. Healthcare Laws and Regulations
Physicians, other healthcare providers, and third-party payors will play a primary role in the recommendation and prescription of any product
candidates for which we obtain marketing approval. Although we currently do not have any products on the market, our current and future business
operations are and will be subject to various U.S. federal and state and other foreign fraud and abuse laws and other healthcare laws and regulations. These
laws and regulations may impact, among other things, our arrangements with third-party payors, healthcare professionals who participate in our clinical
research programs, healthcare professionals and others who purchase, recommend or prescribe our approved products, and our proposed sales, marketing,
distribution, and education programs. The U.S. federal and state healthcare laws and regulations that may affect our ability to operate include:
•
the federal Anti-Kickback Statute, which prohibits persons from, among other things, knowingly and willfully soliciting, offering, receiving,
offering or paying anything of value, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or
the purchase, order or recommendation of, any good or service, for which payment may be made under federally funded healthcare programs,
such as Medicare and Medicaid;
•
the federal civil and criminal false claims laws, including, without limitation, the federal civil monetary penalties law and the civil False
Claims Act (which can be enforced by private citizens through qui tam actions), which prohibit individuals or entities from, among other
things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment of federal funds, and knowingly making, or
causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay
money to the federal government;
•
HIPAA, which imposes criminal and civil liability for executing or attempting to execute a scheme to defraud any healthcare benefit program
and prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in
connection with the delivery of or payment for healthcare benefits, items or services;
•
HIPAA, as amended by HITECH, and its implementing regulations, which imposes certain obligations, including mandatory contractual
terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information without the
appropriate authorization by entities subject to the law, such as healthcare providers, health plans, and healthcare clearinghouses and their
respective business associates that perform certain functions or activities that involve the use or disclosure of protected health information on
their behalf;
•
the federal transparency requirements under the Physician Payments Sunshine Act, created under the ACA, which requires certain
manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance
Program to report, on an annual basis, to the United States Department of HHS information related to payments and other transfers of value
provided to physicians, teaching hospitals and certain advanced non-physician health care practitioners, as well as physician ownership and
investment interests; and
•
analogous state laws and regulations, such as state anti-kickback and false claims laws, that impose similar restrictions and may apply to
items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical
companies to implement compliance programs, comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant
compliance guidance promulgated by the federal government, or to track and report gifts, compensation and other remuneration provided to
physicians and other health care providers; and state health information privacy and data breach notification laws, which govern the
collection, use, disclosure, and protection of health-related and other personal information, many of which differ from each other in
significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.
If our product candidates are approved in the United States, we will be required to spend substantial time and money to ensure that our business
arrangements with third parties comply with applicable healthcare laws and regulations. In the United States, healthcare reform legislation has
strengthened these federal and state healthcare laws. For example, the ACA amended the intent requirement of the federal Anti-Kickback Statute and
criminal healthcare fraud statutes to clarify that liability under these statutes does not require a person or entity to have actual knowledge of the statutes or a
specific intent to violate them. Moreover, the ACA provided that the government may assert that a claim that includes items or services
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resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. Because of
the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could
be subject to challenge under one or more of such laws.
Violations of these laws can subject us to criminal, civil and administrative sanctions including monetary penalties, damages, fines, disgorgement,
individual imprisonment, and exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, additional reporting
requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with
these laws, reputational harm, and we may be required to curtail or restructure our operations. Moreover, we expect that there will continue to be federal
and state laws and regulations, proposed and implemented, that could impact our future operations and business.
Healthcare Reform and Potential Changes to Health Care Laws
The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or
delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new
requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have
obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of
operations.
As discussed above under “Coverage, Pricing and Reimbursement,” a primary trend in the U.S. health care industry and elsewhere is cost
containment. We expect that there will continue to be a number of federal and state proposals to implement governmental pricing controls and limit the
growth of healthcare costs, including the cost of prescription drugs. The Patient Protection and Affordable Care Act, or ACA, and the IRA are two
examples of recently enacted federal legislation that introduced complex changes and new requirements for the health care and biopharmaceutical
industries.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological
product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and
transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In December 2020, the U.S.
Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmacy benefit managers, or PBMs, and other members
of the health care and pharmaceutical supply chain, an important decision that has led to more aggressive efforts by states in this area. The Federal Trade
Commission in mid-2022 also launched sweeping investigations into the practices of the PBM industry, and published interim reports with its findings in
mid-2024 and January 2025, that could lead to additional federal and state legislative or regulatory proposals targeting such entities’ operations, pharmacy
networks, or financial arrangements, including in the current 2025-2026 congressional session where PBM reform continues to be a bipartisan priority.
During the previous session, numerous PBM reforms were considered in both the Senate and the House of Representatives; they included diverse
legislative proposals such as eliminating rebates; divorcing service fees from the price of a drug, discount, or rebate; prohibiting spread pricing; limiting
administrative fees; requiring PBMs to report formulary placement rationale; promoting transparency. Significant efforts to change the PBM industry as it
currently exists in the U.S. may affect the entire pharmaceutical supply chain and the business of other stakeholders, including pharmaceutical developers
like us. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical
products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our
products or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.
In the European Union and the United Kingdom, similar political, economic and regulatory developments may affect our ability to profitably
commercialize any of our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative
developments in the United Kingdom or at the European Union or member state level may result in significant additional requirements or obstacles that
may increase our operating costs. The delivery of healthcare in the European Union, including the establishment and operation of health services and the
pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments
and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that
context. In general, however, the healthcare budgetary constraints in most member states and the United Kingdom have resulted in restrictions on the
pricing and reimbursement of medicines by relevant health service providers. Coupled with increasing regulatory burdens on those wishing to develop and
market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability
to commercialize any products for which we obtain marketing approval. In international markets, reimbursement and healthcare payment systems vary
significantly by country, and many countries have instituted price ceilings on specific products and therapies.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive
action, either in the United States or abroad. We expect that additional state and federal health
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care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care
products and services, including prescription pharmaceuticals.
Legal Proceedings
From time to time, we may be party to litigation that arises in the ordinary course of our business. We do not have any pending litigation that,
separately or in the aggregate, would, in the opinion of management, have a material adverse effect on our results of operations, financial condition or cash
flows.
C. Organizational Structure
The following is a list of our significant subsidiaries:
Name of undertaking
Country of
registration
Activity
Percent
holding
NuCana, Inc.
United States
Biotechnology Research and Development
100
NuCana Limited
Ireland
Biotechnology Research and Development
100
NuCana BioMed Trustee Company Limited
Scotland
Employee Benefit Trust
100
D. Property, Plant and Equipment
Type
Location
Size (sq ft)
Lease Expiry
Executive office
Edinburgh, United Kingdom
3,900
August 14, 2027
All of our property is leased. We believe that our office facilities are sufficient to meet our current needs.
We previously leased a 312 square foot executive office in Newton, Massachusetts in the United States. The property was originally subject to a
lease that terminated on December 31, 2024. In the third quarter of 2024, we entered into a month-to-month lease for that property. We terminated the lease
effective January 31, 2025. In addition, we previously leased a 4,236 square foot executive office in Edinburgh, United Kingdom. The lease for the
property expired by its terms in December 2024.
Item 4A. Unresolved Staff Comments
Not applicable.
102
Item 5. Operating and Financial Review and Prospects
You should read the following discussion and analysis of financial condition and operating results together with the information in “Selected
Consolidated Financial Data” and our consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report.
We present our consolidated financial statements in pounds sterling and in accordance with IFRS, as issued by the IASB, which may differ in material
respects from generally accepted accounting principles in other jurisdictions, including generally accepted accounting principles in the United States, or
U.S. GAAP.
The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and
other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties,
including the risks and uncertainties described in the section titled “Risk Factors.” Our actual results may differ materially from those contained in or
implied by any forward-looking statements.
A. Operating Results
Financial Operations Overview
Revenues
We do not have any approved products. Accordingly, we have not generated any revenue, and we do not expect to generate any revenue from the
sale of any products unless and until we obtain regulatory approvals for, and commercialize any of, our product candidates. In the future, we will seek to
generate revenue primarily from product sales and, potentially, regional or global collaborations with strategic partners.
Operating Expenses
We classify our operating expenses into two categories: research and development expenses and administrative expenses. Personnel costs, including
salaries, benefits, bonuses and share-based payment expense, comprise a component of each of these expense categories. We allocate expenses associated
with personnel costs based on the function performed by the respective employees.
Research and Development Expenses. The largest component of our total operating expenses since inception has been costs related to our research
and development activities, including the preclinical and clinical development of our product candidates.
Research and development costs are expensed as incurred. Our research and development expense primarily consists of:
•
costs incurred under agreements with contract research organizations, or CROs, and investigative sites that conduct preclinical studies and
clinical trials;
•
costs related to manufacturing active pharmaceutical ingredients and drug products for preclinical studies and clinical trials;
•
salaries and personnel-related costs, including bonuses, benefits and any share-based payment expense, for our personnel performing
research and development activities or managing those activities that have been out-sourced;
•
fees paid to consultants and other third parties who support our product candidate development;
•
costs of maintaining and defending patents;
•
other costs incurred in seeking regulatory approval of our product candidates; and
•
payments under our license agreements.
103
The successful development of our ProTides is highly uncertain. Product candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.
However, we do not believe that it is possible at this time to accurately project total program specific expenses through commercialization. We are also
unable to predict when, if ever, material net cash inflows will commence from our product candidates to offset these expenses. Our expenditures on current
and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors including:
•
the scope, rate of progress, results and expenses of our ongoing and future clinical trials, preclinical studies and research and development
activities;
•
the potential need for additional clinical trials or preclinical studies requested by regulatory agencies;
•
potential uncertainties in clinical trial enrollment rates or drop-out or discontinuation rates of patients;
•
competition with other drug development companies in, and the related expense of, identifying and enrolling patients in our clinical trials and
contracting with third-party manufacturers for the production of the drug product needed for our clinical trials;
•
the achievement of milestones requiring payments under in-licensing agreements;
•
any significant changes in government regulation;
•
the terms and timing of any regulatory approvals;
•
the expense of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and
•
the ability to market, commercialize and achieve market acceptance for any of our product candidates, if approved.
We track research and development expenses on a program-by-program basis for both clinical-stage and preclinical product candidates. Where
appropriate, manufacturing and non-clinical research and development expenses are assigned or allocated to individual product candidates.
Administrative Expenses. Administrative expenses consist of personnel costs, depreciation, amortization and other expenses for outside
professional services, including legal, audit and accounting services. Personnel costs consist of salaries, bonuses, benefits and share-based payment
expense. Other administrative expenses include office-related costs, professional fees and costs of our information systems. We also incur expenses as a
public company, including expenses related to compliance with the rules and regulations of the SEC and Nasdaq, additional insurance expenses, and
expenses related to investor relations and other administrative and professional services.
Net Foreign Exchange Gains (Losses)
Net foreign exchange gains (losses) primarily relates to cash held in U.S. dollars.
Finance Income
Finance income relates to interest earned on our cash and cash equivalents.
Income Tax Credit
We are subject to corporate taxation in the United Kingdom and our wholly owned U.S. subsidiary, NuCana, Inc., is subject to corporate taxation in
the United States. Due to the nature of our business, we have generated losses in the United Kingdom since our inception. Our income tax credit recognized
represents the sum of the research and development tax credits recoverable in the United Kingdom and in the United States, and income tax payable in the
United States.
As a company that carries out extensive research and development activities, we benefit from the U.K. and U.S. research and development tax credit
regimes. In the United Kingdom, we are able to surrender some of our losses for a cash
104
rebate of up to 26.97% of eligible expenditures on qualifying research and development projects incurred on or after April 1, 2023 (33.35% prior to April 1,
2023). In the United States, we are able to offset the research and development credits against corporation tax payable. Our qualifying expenditures in the
United Kingdom largely comprise clinical trial and manufacturing costs, employment costs for relevant staff and consumables incurred as part of research
and development projects. In the United Kingdom, where we receive the larger proportion of the research and development credits, certain subcontracted
qualifying research and development expenditures are eligible for a cash rebate of up to 17.53% from April 1, 2023 (21.68% prior to April 1, 2023). A
large proportion of costs relating to our research and development, clinical trials and manufacturing activities are eligible for inclusion within these tax
credit cash rebate claims.
We may not be able to continue to claim research and development tax credits in the United Kingdom in the future under the current research and
development tax credit scheme because we may no longer qualify as a R&D-intensive loss-making small or medium-sized company. However, in that
scenario, we may be able to file under the merged scheme R&D expenditure credit.
Unsurrendered tax losses are carried forward to be offset against future taxable profits. After accounting for tax credits receivable, we had
accumulated tax losses for carry forward in the United Kingdom of £104.2 million as of December 31, 2024. There were also temporary differences on
share-based compensation arrangements of £nil. No deferred tax asset is recognized in respect of accumulated tax losses or temporary differences on share-
based compensation arrangements because future profits are not sufficiently certain.
In the event we generate revenues in the future, we may benefit from the “patent box” initiative that allows profits attributable to revenues from
patents or patented products to be taxed at a lower rate than other revenue. The effective rate of tax for relevant streams of revenue for companies receiving
this relief is currently 10%.
Results of Operations
Comparison of Year Ended December 31, 2023 and 2024
The following table summarizes the results of our operations for the years ended December 31, 2023 and 2024.
Year ended December 31,
2024
2023
(in thousands)
Research and development expenses
£
(18,017) £
(25,062)
Administrative expenses
(4,988)
(6,063)
Impairment of intangible assets
(33)
(503)
Net foreign exchange gains (losses)
229
(1,156)
Operating loss
(22,809)
(32,784)
Finance income
358
754
Loss before tax
(22,451)
(32,030)
Income tax credit
3,454
4,398
Loss for the year
(18,997)
(27,632)
Other comprehensive income (expense):
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of foreign
operations
15
(41)
Total comprehensive loss for the year
£
(18,982) £
(27,673)
Research and Development Expenses
Research and development expenses were £18.0 million for the year ended December 31, 2024 as compared to £25.1 million for the year ended
December 31, 2023, a decrease of £7.1 million. Patent costs decreased by £2.4 million in 2024 compared with 2023 mainly due to patent defense activity in
the first quarter of 2023. Clinical trial expenses decreased by £1.4 million in 2024 compared with 2023 primarily due to reduced expenditure on
NuTide:302 and NuTide:701, partly offset by higher expenditure on NuTide:323. Other research and development costs decreased in 2024 by £3.3 million
principally due to lower personnel costs and share-based payment expenses.
105
The following table gives a breakdown of the research and development costs incurred by product for the years ended December 31, 2024 and 2023:
Year ended December 31,
2024
2023
(unaudited)
(in thousands)
NUC-3373
£
14,825 £
17,754
NUC-7738
2,630
3,603
Acelarin
(467)
2,204
Other
1,029
1,501
£
18,017 £
25,062
Administrative Expenses
Administrative expenses were £5.0 million for the year ended December 31, 2024 as compared to £6.1 million for the year ended December 31,
2023, a decrease of £1.1 million. The decrease was primarily related to lower share-based payment expenses, personnel costs, and insurance costs, partly
offset by higher professional fees.
Impairment of Intangible Assets
We regularly review our patent portfolio and during 2024 further development associated with a limited number of patents was discontinued.
Management concluded that this was an indication of impairment and an impairment charge of £33,000 has been recognized, representing the full
aggregate carrying value of those patents as of December 31, 2024. This compared to an impairment charge of £0.5 million recognized as of December 31,
2023.
Net Foreign Exchange Gains (Losses)
For the year ended December 31, 2024, we reported a net foreign exchange gain of £0.2 million as compared to a net foreign exchange loss of £1.2
million for the year ended December 31, 2023. In 2024, the gain primarily arose from cash balances held in U.S. dollars and the U.S. dollar appreciating
relative to the U.K. pound sterling. Conversely in 2023, the loss arose from cash balances held in U.S. dollars and the U.S. dollar depreciating relative to
the U.K. pound sterling.
Finance Income
Finance income represents bank interest and was £0.4 million for the year ended December 31, 2024 and £0.8 million for the year ended December
31, 2023. The decrease in bank interest resulted from lower cash deposits.
Income Tax Credit
The income tax credit, which is largely comprised of research and development tax credits, amounted to £3.5 million for the year ended December
31, 2024 and £4.4 million for the year ended December 31, 2023. The decrease in the income tax credit was primarily attributable to a decrease in our
eligible research and development expenses, as well as a lower tax credit rate.
106
Comparison of Year Ended December 31, 2022 and 2023
The following table summarizes the results of our operations for the years ended December 31, 2022 and 2023.
Year Ended December 31,
2023
2022
(in thousands)
Research and development expenses
£
(25,062) £
(36,426)
Administrative expenses
(6,063)
(7,291)
Impairment of intangible assets
(503)
(292)
Net foreign exchange (losses) gains
(1,156)
4,887
Operating loss
(32,784)
(39,122)
Finance income
754
669
Loss before tax
(32,030)
(38,453)
Income tax credit
4,398
6,432
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
Total comprehensive loss for the year
£
(27,673) £
(31,960)
Research and Development Expenses
Research and development expenses were £25.1 million for the year ended December 31, 2023 as compared to £36.4 million for the year ended
December 31, 2022, a decrease of £11.3 million. Clinical trial expenses decreased by £3.2 million in 2023 compared with 2022 largely due to the
discontinuation of the Phase 3 clinical trial 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 December 31, 2023 and
2022:
Year Ended December 31,
2023
2022
(unaudited)
(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 December 31, 2023 as compared to £7.3 million for the year ended December 31,
2022, a decrease of £1.2 million. The decrease was primarily related to lower share-based payment expenses, professional fees and insurance costs.
107
Impairment of Intangible Assets
We regularly review our 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 recognized, representing the full aggregate carrying value of those patents as of December 31, 2023. This compared to an impairment charge of
£0.3 million recognized as of December 31, 2022 .
Net Foreign Exchange (Losses) Gains
For the year ended December 31, 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 December 31, 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 December 31, 2023 and £0.7 million for the year ended December
31, 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 December
31, 2023 and £6.4 million for the year ended December 31, 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.
B.
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 December 31, 2024 and December 31, 2023, we had cash and cash equivalents of £6.7 million and £17.2 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. We expect that our existing cash and cash equivalents will be sufficient to meet our anticipated cash
requirements into the third quarter of 2025. As a result, we will need substantial additional funding in order to permit us to continue our operations. If we
are unable to raise additional capital, we could be forced to complete a wind down of our operations and/or seek bankruptcy protection. Adequate
additional financing may not be available to us on acceptable terms, or at all. Moreover, the terms of any financing may adversely affect the holdings or the
rights of our shareholders. In addition, the issuance of additional securities, by us, or the possibility of such issuance, may cause the market price of our
ADSs to decline. The sale of additional equity or convertible securities will substantially dilute all of our shareholders. We could also be required to seek
funds through arrangements with potential collaboration partners, including at an earlier stage than otherwise would be desirable, and we may be required
to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material
adverse effect on our business, operating results and prospects. In addition, our board of directors will need to consider the interests of all our constituents
and take appropriate action, including to restructure or wind down the business, if it appears that we are insolvent. As a result, our business, financial
condition and results of operations would be materially affected and our shareholders would lose all of their investment.
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
108
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. Pursuant to General Instruction I.B.5 of Form F-3, in no event will we sell our ADSs
representing ordinary shares with a value of more than one-third of the aggregate market value of our ordinary shares held by non-affiliates in any 12-
month period, so long as the aggregate market value of our ordinary shares held by non-affiliates is less than $75.0 million. As a result, we may raise up to
approximately $2.6 million from the sale of our ADSs from December 31, 2024 onwards. During the year ending December 31, 2024 we sold and issued
7,151,809 ADSs, representing 89,027,545 ordinary shares, under the ATM program, raising gross proceeds of £8.7 million. Subsequent to December 31,
2024 and through the date hereof, we sold and issued 394,303 ADSs, representing 9,857,575 ordinary shares, under the ATM program, raising gross
proceeds of £0.5 million.
The following table summarizes the results of our cash flows for the years ended December 31, 2023 and 2024.
Year ended December 31,
2024
2023
(in thousands)
Net cash used in operating activities
£
(19,118) £
(26,439)
Net cash from investing activities
79
2,888
Net cash from (used in) financing activities
8,184
(53)
Net decrease in cash and cash equivalents
£
(10,855) £
(23,604)
Operating activities. Net cash used in operating activities was £19.1 million in 2024 as compared to £26.4 million in 2023, a net decrease in cash
outflows of £7.3 million. Operating loss cash flows were lower by £9.8 million in 2024, primarily reflecting lower research and development costs and
movement in provisions in 2023. Working capital outflows were £2.2 million for the year ended December 31, 2024 as compared to working capital
outflows of £1.3 million for the year ended December 31, 2023. In addition, a tax refund of £4.0 million was received in 2024 compared to £5.6 million in
2023.
Investing activities. Net cash from investing activities was £0.1 million in 2024 as compared to £2.9 million in 2023. Repayment of other assets
totaled £2.6 million in the year ended December 31, 2023 with no similar repayment in 2024. Interest received in 2024 was £0.4 million compared with
£0.8 million in 2023, a decrease of £0.4 million. In 2024, cash used to acquire intangible assets was £0.2 million lower than in 2023.
Financing activities. Net cash from financing activities was £8.2 million in 2024 as compared with net cash used in financing activities of £0.1
million in 2023 reflecting an increase in the proceeds from the issue of share capital.
The following table summarizes the results of our cash flows for the years ended December 31, 2022 and 2023.
Year Ended December 31,
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 December 31, 2023 as compared to working capital
inflows of £3.7 million for the year ended December 31, 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
totaled £2.6 million in the year ended December 31, 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 an increase in the
proceeds from the issue of share capital.
109
Contractual Obligations
The following table summarizes our contractual lease commitments and obligations as of December 31, 2024.
Payments Due by Period
Total
Less than
1 year
1 - 3
years
3 - 5
years
More than
5 years
(in thousands)
Lease liabilities
£
205 £
82 £
123
—
—
Lease liabilities relate to rental of office space.
We have agreed to make milestone payments and pay royalties to third parties under various licensing and related agreements and we have agreed to
make payments to CROs and manufacturers under various CRO and manufacturing agreements. We have not included any such contingent payment
obligations in the table above as the amount, timing and likelihood of such payments are not fixed or determinable.
Operating and Capital Expenditure Requirements
We have not achieved profitability on an annual basis since our inception, and we expect to continue to incur net losses in the future.
In assessing the requirements necessary to continue progressing our research and development activities as currently anticipated there will also be a
requirement to seek additional capital to fund operations. If we are unable to obtain additional capital, we will be required to delay or reduce our research
and development programs, which could adversely affect our future business prospects and our ability to continue as a going concern. We believe, based
upon our current operating plan, that, our cash and cash equivalents on hand will not be sufficient to fund our anticipated operations for the next twelve
months.
Consequently, we plan to commence an equity financing process having considered several options to raise funds. However, our ADSs are currently
trading at a price below the nominal value of our ordinary shares of £0.04 each, which means we are unable to issue new ordinary shares/ADSs at market
value. Therefore, to facilitate the equity financing process, on March 18, 2025, we distributed a notice of our general meeting to be held on April 7, 2025 to
approve the sub-division and related redesignation of our ordinary shares. Our board of directors believe there is a reasonable prospect that the financing
process will be completed successfully in the coming months.
In addition, we carefully manage our capital resources and review our cost structure on an ongoing basis, with the aim of improving our cash burn
rate and reducing our operating expenses. We have controllable mitigating actions identified to manage our expenditure, including management of third-
party expenses and internal resource costs, as well as prioritization of development programs.
However, there is uncertainty related to our ability to raise sufficient additional capital within the going concern period, prior to our cash balances
being exhausted. These events or conditions raise substantial doubt on our ability to continue as a going concern and, therefore, that we may be unable to
realize our assets and discharge our liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
However, our future funding requirements will depend on many factors, including but not limited to:
•
the scope, rate of progress and cost of our clinical trials taking place in the near term, preclinical programs and other related activities;
•
the extent of success in our early preclinical and clinical stage research programs, which will determine the amount of funding required to
further the development of our product candidates;
•
the progress that we make in developing new product candidates based on our proprietary ProTide technology;
•
the cost of manufacturing clinical supplies and establishing commercial supplies of our product candidates and any products that we may
develop;
•
the costs involved in filing and prosecuting patent applications and enforcing and defending potential patent claims;
•
the timing of receipt of our U.K. research and development tax credit cash rebates;
•
the outcome, timing and cost of regulatory approvals of our ProTide product candidates;
110
•
the cost and timing of establishing sales, marketing and distribution capabilities; and
•
the costs of hiring additional skilled employees to support our continued growth and the related costs of leasing additional office space.
C.
Research and Development, Patents and Licenses, etc.
Full details of our research and development activities and expenditures are given in “Item 4. Information on the Company–B. Business” and
“Item 5A. Operating Results” within this Annual Report.
D.
Trend Information
See “Item 5A. Operating Results” within this Annual Report.
E.
Critical Accounting Estimates
Not Applicable.
F.
[ Reserved]
G. [Reserved]
H. Non-GAAP Financial Measures
Not Applicable.
111
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
The following table sets forth the names, ages and positions of our executive officers and directors as of March 1, 2025:
Name
Age
Position
Executive Officers
Hugh Griffith
56
Chief Executive Officer and Director
Jeffrey Bloss
68
Chief Medical Officer
David Harrison
65
Head of Translational Studies
Non-Executive Directors
Andrew Kay
69
Non-Executive Director and Chairman
Adam George (1)
55
Non-Executive Director
Martin Mellish (2)
67
Non-Executive Director
Cyrille Leperlier
71
Non-Executive Director
Elliott Levy
66
Non-Executive Director
Bali Muralidhar
45
Non-Executive Director
(1)
After the filing of this Annual Report, Mr. George intends to resign as the audit committee chair and as a director of the Company, effective
March 21, 2025. Mr. George’s anticipated departure is not the result of any disagreement with us on any matter related to our operations,
policies or procedures (financial reporting, accounting or otherwise).
(2)
Mr. Mellish intends to succeed Mr. George as audit committee chair upon Mr. George’s resignation, effective March 21, 2025.
Executive Officers
Hugh Griffith is our co-founder and has served as our Chief Executive Officer and as a member of our board of directors since our operations began
in March 2008. Mr. Griffith previously served as a non-executive director of MedAnnex Limited from 2010 to 2024, Thirty Holdings Limited from 2018 to
2023 and EdixoMed Limited from 2011 to 2023, when it was acquired by Convatec Group. Prior to founding NuCana, Mr. Griffith was Chief Operating
Officer of Bioenvision, Inc., a biopharmaceutical company, from July 2004 until December 2007, when it was acquired by Genzyme Corporation (now
Sanofi). He previously served as Commercial Director of Bioenvision, Inc. from September 2002 to June 2004. Before that, Mr. Griffith held several senior
commercial positions at Quantanova Limited, a biopharmaceutical company, from January 2002 to July 2002, Abbot Laboratories (now AbbVie Inc.) from
October 1995 to December 2001 and Warner-Lambert Company (now Pfizer Inc.) from April 1992 to October 1995. He currently serves on the advisory
board of the Scottish Lifesciences Association. In 2018, Mr. Griffith received a lifetime achievement award for ‘Outstanding Contribution to Life Sciences’
by the Scottish Government. Mr. Griffith is a named inventor on over 398 patents and over 300 pending patent applications. He received an M.B.A. from
Cardiff Business School and a B.Sc. Honours in Biology from the University of Stirling. We believe that Mr. Griffith possesses specific attributes that
qualify him to serve as a member of our board of directors, including the perspective and experience he brings as our Chief Executive Officer, which
provides historic knowledge of our company, operational expertise and continuity to our board of directors, and his significant experience in the
biopharmaceutical industry in positions including chief executive officer, chief operating officer and executive director.
Jeffrey Bloss, M.D. has served as our Chief Medical Officer since August 2021. In addition, he has over 20 years of leadership experience in
oncology at multiple pharmaceutical/biopharmaceutical companies including Eli Lilly, Genentech, Xencor, GSK, Astellas, and Aegerion. Immediately
prior to joining NuCana, Dr. Bloss served as Chief Medical Officer of Tarveda Therapeutics a venture-backed clinical stage oncology company from
August 2018 to August 2021. Prior to Tarveda, Dr. Bloss was Chief Medical Officer and Senior Vice President, Medical Affairs at Aegerion
Pharmaceuticals from June 2017 to August 2018. Dr. Bloss completed his Residency in Obstetrics & Gynecology at Wilford Hall USAF Medical Center
and his Fellowship in Gynecologic Oncology at the University of California, Irvine. Dr. Bloss received his M.D. from Thomas Jefferson University
Medical College and B.S. from Juniata College.
David Harrison, M.D. has served as our Head of Translational Medicine since December 2017. Dr. Harrison is also professor of Pathology at the
University of St. Andrews since May 2012, honorary professor at The University of Edinburgh, and an adjunct professor at the University of Florida since
2003. He also oversees ethics relating to use of human tissue at Lothian NHS University Hospitals in Edinburgh where he is an honorary consultant
pathologist. Dr. Harrison has served as Chair of the U.K. Government advisory Committee on Committee Carcinogenicity since May 2015, and he is a
member of
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the Committee on Mutagenicity. From February 2019 to April 2023, Dr. Harrison established and directed iCAIRD, a government and industry funded
initiative to facilitate research and development applying artificial intelligence in digital diagnostics. Further, Dr. Harrison is a non-executive director at
ILC Therapeutics Limited. Dr. Harrison is a Fellow of the Royal College of Pathologists, London, Royal College of Physicians of Edinburgh, and Royal
College of Surgeons of Edinburgh. He received his medical and M.D. doctoral training at the University of Edinburgh.
Non-Executive Directors
Andrew Kay has served as Chairman of our board of directors since December 2020. Mr. Kay has served as Chairman of the Board of NeRRe
Therapeutics since September 2017, as Chairman of WalkSafe Chaperhome Limited since March 2021, and as Chairman and director or Amulet
Consulting since 2014. Mr. Kay served as Chairman of the Board of Blueberry Therapeutics from August 2015 to October 2023. From January 2019 to
September 2020, he held the same role for KaNDy Therapeutics, a biotechnology company that was acquired by Bayer. From September 2015 to June
2018, Mr. Kay served as Chairman of the Board of Wilson Therapeutics, a biopharmaceutical company acquired by Alexion Pharmaceuticals in 2018. Prior
to that, Mr. Kay served as the President and Chief Executive Officer for Algeta from January 2009 to May 2014. Prior to Algeta, Mr. Kay was the Global
Head of Marketing and Sales and a Member of the Healthcare Committee and Pharmaceutical Executive Committee at Novartis 1999 to 2003, and held
several other senior commercial positions in Europe and the United States having worked at Renovo, AstraZeneca, Eli Lilly, Sandoz and Boots. Mr. Kay
earned his Bachelor of Honors in Pharmacy from Nottingham University. We believe Mr. Kay possesses specific attributes that qualify him to serve as a
member of our board of directors, including his extensive experience with biotechnology and pharmaceutical companies.
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, as well as non-executive Chairman of Glass Pharms
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. We believe that Mr. George possesses the specific attributes that qualify him to serve as a member of our board of directors,
including significant management experience in the biopharmaceutical industry at both public and private companies.
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
also serves as a non-executive director and Chair of the Audit Committee of Pearl Diver Credit Company Inc. (NYSE: PDCC) since July 2024 and as a
non-executive director and Chair of Remuneration Committee of Spectral MD, Inc. 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. We believe that Mr. Mellish possesses specific attributes that qualify him to serve as
a member of our board of directors, including his significant experience in accounting and finance.
Cyrille Leperlier, M.D. has served as a member of our board of directors since May 2018. He brings over 40 years of experience in the
pharmaceutical and biotechnology industry to our board of directors. Dr. Leperlier also served as the Chief Executive Officer of Divlal SAS from June
2020 to November 2022. From 2009 to 2019, Dr. Leperlier also served as Vice President of Medical Assessment for Corporate Strategy for Sanofi's
Corporate Business Development and M&A Group, where, among other transactions, he was deeply involved in Sanofi's acquisition of Genzyme. Prior to
this role, Dr. Leperlier served at Sanofi as Medical Director in Japan from 2007 to 2009 and Head of Medical Affairs, International Region from 2004 to
2007. Before joining Sanofi, Dr. Leperlier was Medical Director and Global Head of Clinical Development at Rhone
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Poulenc Rorer and previously worked for Takeda in a variety of operational and medical affairs roles. Dr. Leperlier received an M.D. from the University
of Paris, Saint-Antoine School of Medicine and a Master in Human Biology (major in physiology) from the Medical University of Paris. He is a recognized
expert in oncology drug development, strategic portfolio prioritization, and business development, with extensive leadership experience at a number of
global biotechnology and pharmaceutical companies. We believe that Dr. Leperlier possesses specific attributes that qualify him to serve as a member of
our board of directors, including his experience in global drug development and marketing.
Elliott Levy, M.D. has served as a member of our board of directors since November 2021. Dr. Levy has served as a Senior Advisor at Boston
Consulting Group since May 2021 and as a Venture Partner at 5AM Ventures since April 2022. Dr. Levy was Senior Vice President of Research &
Development, Strategy and Operations of Amgen Inc., a biotechnology firm from June 2020 to May 2021. Prior to June 2020, Dr. Levy was also Senior
Vice President of Global Development at Amgen Inc. Dr. Levy has served as the Head of Intrepid Alliance, Inc., a non-profit whose objective is to
facilitate the development of small molecule therapeutics for future pandemic agents, and as a director and Board Chair of Transcelerate Biopharma, Inc, a
non-profit focused on improving and accelerating the development of new therapeutics. Further, Dr. Levy currently serves as a director of Omega
Therapeutics, Editas Medicines (NASDAQ: EDIT) and Kinaset Therapeutics. Dr. Levy has 24 years’ experience in the clinical development and regulatory
approval of investigational medicines in the biopharmaceutical industry. Dr. Levy holds an M.D. from the Yale School of Medicine and a B.A. in History
from Yale College. We believe that Dr. Levy possesses specific attributes that qualify him to serve as a member of our board of directors, including
extensive experience in clinical development and regulatory approval of investigational medicines in the biopharmaceutical industry.
Bali Muralidhar, M.D., Ph.D. has served as a member of our board of directors since October 2020. Dr. Muralidhar is a Managing Partner, Chief
Investment Officer and Chief Operating Officer at Abingworth LLP, or Abingworth, a transatlantic investment group dedicated to life sciences. Prior to
joining Abingworth, Dr. Muralidhar was a senior partner at MVM Partners LLP, or MVM, from November 2012 to March 2019. He represents
Abingworth on the boards of Spruce Biosciences (NASDAQ: SPRB) and Ascend GmbH. Prior to MVM, he was a member of Bain Capital LP’s leveraged
buyout team, focusing on healthcare from April 2011 to November 2012. Dr. Muralidhar previously served on the boards of Reneo Pharmaceuticals,
Wugen, Inc., and Anjarium Biosciences, as well as the supervisory board of Valneva SE, a French biotechnology company traded on Euronext and Wilson
Therapeutics traded in Nasdaq OMX and later acquired by Alexion Pharmaceuticals. Dr. Muralidhar earned a degree in clinical medicine from the
University of Oxford and has a Ph.D. in translational cancer research from the MRC Cancer Cell Unit, University of Cambridge. We believe Dr.
Muralidhar possesses specific attributes that qualify him to serve as a member of our board of directors, including his investment experience in healthcare.
B.
Compensation
The following discussion provides the amount of compensation paid, and benefits in kind granted, by us and our subsidiaries to our directors and
members of management for services in all capacities to us and our subsidiaries for the year ended December 31, 2024, as well as the amount contributed
by us or our subsidiaries into money purchase plans for the year ended December 31, 2024 to provide pension, retirement or similar benefits to, our
directors and members of the executive management board.
Directors’ and Executive Officers’ Compensation
Directors’ Compensation
For the year ended December 31, 2024, the table below sets forth the compensation paid to our directors, and, in the case of Mr. Griffith, reflects the
compensation paid for services as our Chief Executive Officer.
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Year Ended December 31, 2024 Directors’ Compensation (1)
Name
Salary/Fees
Annual
Bonus
Benefit
Excluding
Pension (2)
Pension
Benefit (3)
Total
£
£
£
£
£
Hugh Griffith
Executive Director
Chief Executive Officer
596,636
—
4,865
59,664
661,165
Andrew Kay
Chairman and Non-Executive Director
79,723
—
—
—
79,723
Adam George (4)
Non-Executive Director
57,184
—
—
—
57,184
Martin Mellish (5)
Non-Executive Director
48,384
—
—
—
48,384
Cyrille Leperlier
Non-Executive Director
65,898
—
—
—
65,898
Elliott Levy
Non-Executive Director
54,914
—
—
—
54,914
(1)
For the year ended December 31, 2024, the majority of compensation was set and paid in pounds sterling (£).
(2)
The amount for benefits represents our contribution to medical insurance.
(3)
The amount for pension benefit represents our contribution into a money purchase plan.
(4)
After the filing of this Annual Report, Mr. George intends to resign as the audit committee chair and as a director of the Company, effective March
21, 2025. Mr. George's anticipated departure is not the result of any disagreement with us on any matter related to our operations, policies or
procedures (financial reporting, accounting or otherwise).
(5)
Mr. Mellish intends to succeed Mr. George as audit committee chair upon Mr. George's resignation, effective March 21, 2025.
Executive Officers’ Compensation
The compensation for each of our executive directors and executive officers is comprised of the following elements: base salary, annual bonus,
personal benefits and pension or 401(k) plan. The total amount of compensation paid and benefits in kind granted to our executive officers, whether or not
a director, for the year ended December 31, 2024 was £1.9 million.
Bonus Plans
Our executive officers and 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.
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Outstanding Equity Awards, Grants and Option Exercises
During the year ended December 31, 2024, options to purchase 4,796,284 ordinary shares were awarded to executive officers and non-executive
directors.
Type of
Nominal
Exercise
First date of
Name
Plan(1)
Granted
value
price
exercise (2)
Date of expiry
Directors and Executive Officers
Hugh S. Griffith
2020 Long Term Incentive Plan
850,667 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
833,333 £
0.04 £
0.30
Mar 14, 2025
Mar 14, 2034
2020 Long Term Incentive Plan
842,000 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
Donald Munoz (3)
2020 Long Term Incentive Plan
571,094 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
285,547 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
Jeffrey Bloss
2020 Long Term Incentive Plan
524,719 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
262,359 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
David Harrison
2020 Long Term Incentive Plan
275,000 £
0.04 £
0.30
Mar 14, 2025
Mar 14, 2034
Non-Executive Directors
Adam George (4)
2020 Long Term Incentive Plan
46,875 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
23,438 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
Martin Mellish (5)
2020 Long Term Incentive Plan
46,875 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
23,438 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
Cyrille Leperlier
2020 Long Term Incentive Plan
46,875 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
23,438 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
Andrew Kay
2020 Long Term Incentive Plan
46,875 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
23,438 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
Elliott Levy
2020 Long Term Incentive Plan
46,875 £
0.04 £
0.30
Mar 13, 2025
Mar 13, 2034
2020 Long Term Incentive Plan
23,438 £
0.04 £
0.04
Mar 13, 2025
Mar 13, 2034
(1)
Further details of the 2020 Long Term Incentive Plan are given on pages 120 – 121.
(2)
Options granted will vest if the option holder remains under their respective employment contract or contract of services for the agreed vesting
period. The share options granted under these plans will vest over a period of up to four years.
(3)
Mr. Munoz departed as our Chief Financial Officer effective February 7, 2025.
(4)
After the filing of this Annual Report, Mr. George intends to resign as the audit committee chair and as a director of the Company, effective March
21, 2025. Mr. George’s anticipated departure is not the result of any disagreement with us on any matter related to our operations, policies or
procedures (financial reporting, accounting or otherwise).
(5)
Mr. Mellish intends to succeed Mr. George as audit committee chair upon Mr. George’s resignation, effective March 21, 2025.
As of December 31, 2024, our executive officers and directors held options to purchase 12,344,999 ordinary shares.
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. During the year ended December 31, 2024, we granted options to purchase 4,796,284
ordinary shares to our executive officers and non-executive directors. During the year ended December 31, 2024, we granted options to purchase 1,477,500
ordinary shares to 23 employees and consultants who are not directors or executive officers.
Pension, Retirement and Similar Benefits
For the year ended December 31, 2024, we and our subsidiaries contributed a total of £96,867 into money purchase plans to provide pension,
retirement or similar benefits to our executive officers and directors.
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Insurance and Indemnification
To the extent permitted by the Companies Act 2006, we are permitted to indemnify our directors against any liability they incur by reason of their
directorship. We maintain directors’ and officers’ insurance to insure such persons against certain liabilities and expect to enter into a deed of indemnity
with each of our directors and executive officers.
Insofar as indemnification of liabilities arising under the Securities Act may be permitted to our directors, executive officers or persons controlling
us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
Equity Compensation Plans
As of December 31, 2024, we have granted options to purchase our shares under four share option schemes, which are summarized in this section.
2009 Share Option Scheme
On August 1, 2009, we adopted a share option scheme, or the 2009 Share Option Scheme, for the purpose of enabling the grant of share options to
incentivize our employees, consultants and directors and those employees, consultants and directors of our subsidiary companies. The 2009 Share Option
Scheme was subsequently amended and approved by our board of directors and by our shareholders on November 15, 2011, November 17, 2011,
September 14, 2017 and October 2, 2017, respectively.
The 2009 Share Option Scheme permits grants of (i) enterprise management incentive options which are potentially tax-advantaged in the United
Kingdom under the terms of Schedule 5 to the United Kingdom Income Tax (Earnings and Pensions) Act 2003 (subject to the relevant conditions being
met by the company and the grantee) and (ii) “unapproved” options (which do not attract tax advantages as they have not been “approved” by the U.K. tax
authority, HMRC).
As of December 31, 2024, we had granted options to purchase 1,032,500 ordinary shares to directors, employees and consultants under the 2009
Share Option Scheme. 10,000 of these options lapsed before December 31, 2024 and 1,022,500 were exercised by December 31, 2024, which includes
437,500 exercised in 2021. There are no remaining options under the 2009 Share Option Scheme at December 31, 2024.
Class of Share. An option granted under the 2009 Share Option Scheme entitles the option holder, subject to the satisfaction, waiver or acceleration
of specific exercise conditions, to subscribe for ordinary shares.
Exercise Conditions. Options granted under our 2009 Share Option Scheme may be granted subject to vesting schedules, performance targets or
other conditions which must be satisfied or waived before exercise. Exercise conditions may be removed or varied by our board of directors, provided that
any variation shall be (in the reasonable opinion of our board of directors) no more difficult to satisfy than the original exercise condition.
Each option grant is documented through an option agreement. Most of the option agreements entered into under the 2009 Share Option Scheme
provide that all unexercised options are exercisable upon one or more of the following events: (i) the admission of part of or the entirety of issued share
capital (or of any holding company) to listing on the Official List of the U.K. Listing Authority and to trading on the market for listed securities of London
Stock Exchange plc, or to trading on AIM, a market of the London Stock Exchange, or to trading on any recognized investment exchange (as that term was
defined in Section 841 of Income and Corporation Taxes Act 1988, or ICTA, and as now contained in Section 1137 of the Corporation Tax Act 2010, or
CTA); (ii) a change of control; or (iii) a sale of the company.
Takeovers and Corporate Events. If (a) any person or group of persons acting in concert obtains control (as defined in section 840 of ICTA and as
now contained in section 995 Income Tax Act, or ITA) of the company, as a result of making either (i) an offer to acquire shares amounting to more than
50% of the issued share capital of the company on a condition such that if it is satisfied the person or group of persons will have control of the company, or
(ii) a general offer to acquire all of the issued share capital of the company (or all of the ordinary shares of the company in issue); or (b) any person
becomes entitled or bound to acquire shares in the company under sections 428 to 430F of the Companies Act 1985 (since repealed and replaced by
sections 974 to 991 of the Companies Act 2006); or (c) under section 425 of the Companies Act 1985 (since repealed and replaced by sections 895 to 901
of the Companies Act 2006) the courts of England and Wales sanction a compromise or arrangement proposed for the purpose of or in connection with a
scheme for the reconstruction of the company or its amalgamation with any other company or companies, and, in each case an option holder’s option
agreement expressly so provides, an option holder may at any time exercise his or her options or any part thereof which has not lapsed
117
within a specified period. To the extent they are not exercised, such options will lapse at the end of the specified period for exercise.
Lapse of Options. If not otherwise lapsed in accordance with the provisions of the 2009 Share Option Scheme, an option granted under the 2009
Share Option Scheme shall lapse at 5 p.m. on the day before the 10th anniversary of the grant of the option.
If an option holder dies, his or her personal representatives may exercise his or her options within a period ending on the earlier of (i) the expiry of
12 months after the date of death, and (ii) 5 p.m. on the day before the 10th anniversary of the grant of the option, only to the extent that any exercise
conditions have been met at the time of death. Failing such exercise, the deceased option holder’s options shall lapse.
Adjustment of Awards. In the event that there is any variation in our share capital that affects the value of the options, our board of directors will
make such adjustments to the number and exercise price of shares subject to each option or the option price as our board of directors considers appropriate
in accordance with the rules of the 2009 Share Option Scheme.
Transferability. No options under the 2009 Share Option Scheme may be transferred, assigned or have any charge created over them and will lapse
immediately upon an attempt to do so.
Amendment. Our board of directors may amend the 2009 Share Option Scheme, provided that any amendment shall not, without the consent of an
option holder, materially increase his or her liabilities or materially decrease the value of his or her subsisting rights under an outstanding option.
Any amendment to the scheme shall take effect without the requirement for the prior approval of our shareholders, except as otherwise required by
applicable laws or the rules of any securities exchange on which our securities are listed.
2012 Share Option Scheme
On July 3, 2012, we adopted a share option scheme, or the 2012 Share Option Scheme, for the purpose of enabling the grant of share options to
incentivize our employees and directors and those employees and directors of our subsidiary companies. The 2012 Share Option Scheme was subsequently
amended and approved by our board of directors and by our shareholders on September 14, 2017 and October 2, 2017.
The 2012 Share Option Scheme permits grants of (i) enterprise management incentive options, which are potentially tax advantaged in the United
Kingdom, and (ii) “unapproved” options, which do not attract tax advantages as they have not been “approved” by HMRC.
As of December 31, 2024, we had granted options to purchase 1,908,935 ordinary shares to directors and employees under the 2012 Share Option
Scheme. Of these, options to purchase 112,688 shares have been cancelled by December 31, 2024. Options to purchase 37,500 shares were exercised in
2016, 42,500 options to purchase were exercised in 2018, 32,500 options to purchase were exercised in 2020, 549,999 options to purchase were exercised
in 2021, and 139,905 options to purchase were exercised in 2022. During 2023, 212,594 options granted under the 2012 share option scheme lapsed.
During 2024, the remaining options to purchase 781,249 shares have lapsed or expired.
Class of Share. An option granted under the 2012 Share Option Scheme entitles the option holder, subject to the satisfaction, waiver or acceleration
of specific exercise conditions, to subscribe for ordinary shares.
Exercise Conditions. Options granted under our 2012 Share Option Scheme may be granted subject to vesting schedules, performance targets or
other conditions which must be satisfied or waived before exercise. Exercise conditions may be removed or varied by our board of directors, provided that
any variation shall be (in the reasonable opinion of our board of directors) no more difficult to satisfy than the original exercise condition. Each option
grant is documented through an option agreement.
Leaver Provisions. Absent summary dismissal with just cause, options will be retained by an option holder once they have ceased to be an employee
or director of the company or a subsidiary. Where an option holder has been summarily dismissed for cause, such option holder’s unexercised options shall
immediately cease to be exercisable and shall lapse after 90 days unless our board of directors determines within such 90 day period that the option holder
may exercise all or part of his options within a specified period.
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Lapse of Options. If not otherwise lapsed in accordance with the provisions of the 2012 Share Option Scheme, an option granted under the 2012
Share Option Scheme shall lapse at 5 p.m. on the day before the 10th anniversary of the grant of the option.
If an option holder dies, his personal representatives may exercise his options within a period ending on the earlier of (i) the expiry of 12 months
after the date of death, and (ii) 5 p.m. on the day before the 10th anniversary of the grant of the option, only to the extent that any exercise conditions have
been met at the time of death. Failing such exercise, the deceased option holder’s options shall lapse.
Takeovers and Corporate Events. If (a) any person or group of persons acting in concert obtains control (as defined in section 840 of ICTA and as
now contained in section 995 of ITA) of the company, as a result of making either (i) an offer to acquire shares amounting to more than 50% of the issued
share capital of the company on a condition such that if it is satisfied the person or group of persons will have control of the company, or (ii) a general offer
to acquire all of the issued share capital of the company (or all of the ordinary shares of the company in issue); or (b) any person becomes entitled or bound
to acquire shares in the company under sections 428 to 430F of the Companies Act 1985 (since repealed and replaced by sections 974 to 991 of the
Companies Act 2006); or (c) under section 425 of the Companies Act 1985 (since repealed and replaced by sections 895 to 901 of the Companies Act
2006) the courts of England and Wales sanction a compromise or arrangement proposed for the purpose of or in connection with a scheme for the
reconstruction of the company or its amalgamation with any other company or companies, and, in each case an option holder’s option agreement expressly
so provides, an option holder may at any time exercise his or her options or any part thereof which has not lapsed within a specified period. To the extent
they are not exercised, such options will lapse at the end of the specified period for exercise.
Adjustment of Awards. In the event that there is any variation in our share capital that affects the value of the options, our board of directors will
make such adjustments to the number and exercise price of shares subject to each option or the option price as our board of directors considers appropriate
in accordance with the rules of the 2012 Share Option Scheme.
Transferability. No options under the 2012 Share Option Scheme may be transferred, assigned or have any charge created over them and will lapse
immediately upon an attempt to do so.
Amendment. Our board of directors may amend the 2012 Share Option Scheme, provided that any amendment shall not, without the consent of an
option holder, materially increase his or her liabilities or materially decrease the value of his or her subsisting rights under an outstanding option.
Any amendment to the scheme shall take effect without the requirement for the prior approval of our shareholders, except as otherwise required by
applicable laws or the rules of any securities exchange on which our securities are listed.
2016 Share Option Scheme
On January 14, 2016 we adopted a share option scheme, or the 2016 Share Option Scheme, for the purpose of enabling the grant of share options to
incentivize our employees and directors and those employees and directors of our subsidiary companies. The 2016 Share Option Scheme incorporates a
sub-plan for option holders subject to taxation in the United States, or the 2016 U.S. Sub-Plan. The 2016 Share Option Scheme was subsequently amended
and approved by our board of directors and by our shareholders on September 14, 2017 and October 2, 2017.
The 2016 Share Option Scheme permits grants of (i) enterprise management incentive options, (ii) “unapproved” options, and (iii) incentive stock
options and non-qualified stock options under the 2016 U.S. Sub-Plan.
As of December 31, 2024, we had granted options to purchase 5,638,435 ordinary shares to directors and employees under the 2016 Share Option
Scheme. Options to purchase 92,312 shares were exercised by December 31, 2018, and a further 23,437 options were exercised in 2019. At December 31,
2024, 799,165 options had been forfeited or cancelled. All 4,723,522 of the remaining options granted under this scheme had vested at December 31, 2024.
Class of Share. An option granted under the 2016 Share Option Scheme entitles the option holder, subject to the satisfaction, waiver or
acceleration of specific exercise conditions, to subscribe for ordinary shares.
119
Exercise Conditions. Options granted under our 2016 Share Option Scheme may be granted subject to vesting schedules, performance targets or
other conditions which must be satisfied or waived before exercise. Exercise conditions may be removed or varied by our board of directors, provided that
any variation shall be (in the reasonable opinion of our board of directors) no more difficult to satisfy than the original exercise condition.
Each option grant is documented through an option agreement. Most of the option agreements entered into under the 2016 Share Option Scheme
provide that all unvested options shall immediately vest if, following one of the Takeover and Corporate Events listed below, the option holder (i) remains
an eligible employee for the purpose of the plan; and (ii) has experienced a material reduction in base compensation that was payable as of the date of grant
or has otherwise experienced a material change or reduction in authority, duties, reporting or responsibilities.
Leaver Provisions. If an option holder ceases to be an employee or director of the company or a subsidiary for a variety of specified reasons
(including ill health, retirement, sale of a subsidiary company or part of the business to a third party, or if his employment/directorship ceases for any
reason apart from summary dismissal from fraud or gross misconduct) then the option holder may exercise his options during the 12 months after the date
of such cessation of employment/directorship only to the extent that any exercise conditions have been met at the time of such cessation of
employment/directorship. Any part of an option in respect of which the relevant exercise conditions have not been met at the point at which the option
holder ceases his employment/directorship shall lapse.
Lapse of Options. If not otherwise lapsed in accordance with the provisions of the 2016 Share Option Scheme, an option granted under the 2016
Share Option Scheme shall lapse at 5 p.m. on the day before the 10th anniversary of the grant of the option.
If an option holder dies, his personal representatives may exercise his options within a period ending on the earlier of (i) the expiry of 12 months
after the date of death, and (ii) 5 p.m. on the day before the 10th anniversary of the grant of the option, only to the extent that any exercise conditions have
been met at the time of death. Failing such exercise, the deceased option holder’s options shall lapse.
Takeovers and Corporate Events. If (a) any person or group of persons acting in concert obtains control (as defined in section 840 of ICTA and as
now contained in section 995 of ITA) of the company, as a result of making either (i) an offer to acquire shares amounting to more than 50% of the issued
share capital of the company on a condition such that if it is satisfied the person or group of persons will have control of the company, or (ii) a general offer
to acquire all of the issued share capital of the company (or all of the ordinary shares of the company in issue); or (b) any person becomes entitled or bound
to acquire shares in the company under sections 974 to 991 of the Companies Act 2006; or (c) under sections 895 to 901 of the Companies Act 2006 the
courts of England and Wales sanction a compromise or arrangement proposed for the purpose of or in connection with a scheme for the reconstruction of
the company or its amalgamation with any other company or companies, and, in each case an option holder’s option agreement expressly so provides, an
option holder may at any time exercise his or her options or any part thereof which has not lapsed within a specified period. To the extent they are not
exercised, such options will lapse at the end of the specified period for exercise.
Adjustment of Awards. In the event that there is any variation in our share capital that affects the value of the options, our board of directors will
make such adjustments to the number and exercise price of shares subject to each option or the option price as our board of directors considers appropriate
in accordance with the rules of the 2016 Share Option Scheme.
Transferability. No options under the 2016 Share Option Scheme may be transferred, assigned or have any charge created over them and will lapse
immediately upon an attempt to do so.
Amendment. Our board of directors may amend the 2016 Share Option Scheme, provided that any amendment shall not, without the consent of an
option holder, materially increase his or her liabilities or materially decrease the value of his or her subsisting rights under an outstanding option.
Any amendment to the scheme shall take effect without the requirement for the prior approval of our shareholders, except as otherwise required by
applicable laws or the rules of any securities exchange on which our securities are listed.
2016 U.S. Sub-Plan
The 2016 U.S. Sub-Plan applies to grantees that are subject to U.S. federal income tax. The 2016 U.S. Sub-Plan provides that options granted to the
U.S. grantees will either be incentive stock options pursuant to Section 422 of the Internal Revenue Code or nonqualified stock options. Options, other than
certain incentive stock options described below, must have an exercise price not less than 100% of the fair market value of an underlying share on the date
of grant. Incentive stock options that are not exercised within 10 years from the grant date expire, provided that incentive stock options granted to a
120
person holding more than 10% of our voting power will expire within five years from the date of the grant date and must have an exercise price at least
equal to 110% of the fair market value of an underlying share on the date of grant. The number of shares available under the 2016 Share Option Scheme for
grants of incentive stock options shall not exceed 5,008,284 ordinary shares, subject to any applicable adjustment pursuant to the 2016 Share Option
Scheme due to a variation of capital. With respect to grantees that are subject to U.S. federal income tax, the 2016 Share Option Scheme, the 2016 U.S.
Sub-Plan and all options issued thereunder are intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code, and they are to be
interpreted accordingly. In the event that any option is subject to Section 409A of the Internal Revenue Code, our board of directors or our general counsel
may, in their sole discretion, amend the 2016 Share Option Scheme, the 2016 U.S. Sub-Plan and any option issued thereunder, adopt policies and
procedures or take such other actions as our board of directors or our general counsel deem appropriate, to exempt the 2016 Share Option Scheme, the 2016
U.S. Sub-Plan or any option from Section 409A of the Internal Revenue Code, preserve the intended tax treatment of such option or comply with the
requirements of Section 409A of the Internal Revenue Code.
2020 Long Term Incentive Plan (2020 LTIP)
On June 25, 2020, we adopted a share option scheme, or the 2020 LTIP, for the purpose of enabling the grant of share options to incentivize our
employees, directors and consultants, and those employees, directors and consultants of our subsidiary companies.
The 2020 LTIP permits grants of options or conditional awards in relation to Ordinary Shares or ADS’s, and where in relation to options whether
the grants are i) “Regular Options”, (ii) “Short-Term Options”, or (iii) “RSU-style Options”. Options granted as RSU-style options are automatically
exercised when the vesting conditions are satisfied.
As of December 31, 2024, we had granted to directors, employees and consultants, 14,066,421 Regular options and 1,246,287 RSU-style options to
purchase ordinary shares under the 2020 LTIP. Options to purchase 209,712 had been exercised at December 31, 2023, and a further 165,836 were
exercised in 2024. Of the remaining options granted under this scheme, 4,595,399 had vested at December 31, 2024, 2,485,377 had been forfeited or
cancelled, and the remaining 7,856,384 are unvested.
Class of Share. An option granted under the 2020 LTIP entitles the option holder, subject to the satisfaction, waiver or acceleration of specific
exercise conditions, to subscribe for ordinary shares.
Cash Alternative. An option granted under the 2020 LTIP may be settled in cash as an alternative to the right to subscribe for ordinary shares. The
decision to settle in cash is reserved for the Remuneration Committee to determine.
Exercise Conditions. Options granted under our 2020 LTIP may be granted subject to vesting schedules, performance targets or other conditions
which must be satisfied or waived before exercise. Exercise conditions may be removed or varied by our board of directors, provided that any variation
shall be (in the reasonable opinion of our board of directors) no more difficult to satisfy than the original exercise condition.
Each option grant is documented through an option agreement. Most of the option agreements entered into under the 2020 LTIP provide that all
unvested options shall immediately vest if, following one of the Takeover and Corporate Events listed below, the option holder (i) remains an eligible
employee for the purpose of the plan; and (ii) has experienced a material reduction in base compensation that was payable as of the date of grant or has
otherwise experienced a material change or reduction in authority, duties, reporting or responsibilities.
Leaver Provisions. If an option holder ceases to be an employee, director or consultant of the company or a subsidiary for a variety of specified
reasons (including ill health, retirement, sale of a subsidiary company or part of the business to a third party, or if his employment/directorship ceases for
any reason apart from summary dismissal from fraud or gross misconduct) then the option holder may exercise his options during the 12 months after the
date of such cessation of employment/directorship only to the extent that any exercise conditions have been met at the time of such cessation of
employment/directorship. Any part of an option in respect of which the relevant exercise conditions have not been met at the point at which the option
holder ceases his employment/directorship shall lapse.
Lapse of Options. If not otherwise lapsed in accordance with the provisions of the 2020 LTIP, an option granted under the 2020 LTIP shall lapse at
5 p.m. on the day before the 10th anniversary of the grant of the option.
If an option holder dies, his personal representatives may exercise his options within a period ending on the earlier of (i) the expiry of 12 months
after the date of death, and (ii) 5 p.m. on the day before the 10th anniversary of the grant of the
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option, only to the extent that any exercise conditions have been met at the time of death. Failing such exercise, the deceased option holder’s options shall
lapse.
Takeovers and Corporate Events. If (a) any person or group of persons acting in concert obtains control (as defined in section 840 of ICTA and as
now contained in section 995 of ITA) of the company, as a result of making either (i) an offer to acquire shares amounting to more than 50% of the issued
share capital of the company on a condition such that if it is satisfied the person or group of persons will have control of the company, or (ii) a general offer
to acquire all of the issued share capital of the company (or all of the ordinary shares of the company in issue); or (b) any person becomes entitled or bound
to acquire shares in the company under sections 974 to 991 of the Companies Act 2006; or (c) under sections 895 to 901 of the Companies Act 2006 the
courts of England and Wales sanction a compromise or arrangement proposed for the purpose of or in connection with a scheme for the reconstruction of
the company or its amalgamation with any other company or companies, and, in each case an option holder’s option agreement expressly so provides, an
option holder may at any time exercise his or her options or any part thereof which has not lapsed within a specified period. To the extent they are not
exercised, such options will lapse at the end of the specified period for exercise.
Adjustment of Awards. In the event that there is any variation in our share capital that affects the value of the options, our board of directors will
make such adjustments to the number and exercise price of shares subject to each option or the option price as our board of directors considers appropriate
in accordance with the rules of the 2020 LTIP.
Transferability. No options under the 2020 LTIP may be transferred, assigned or have any charge created over them and will lapse immediately
upon an attempt to do so.
Amendment. Our board of directors may amend the 2020 LTIP, provided that any amendment shall not, without the consent of an option holder,
materially increase his or her liabilities or materially decrease the value of his or her subsisting rights under an outstanding option.
Any amendment to the scheme shall take effect without the requirement for the prior approval of our shareholders, except as otherwise required by
applicable laws or the rules of any securities exchange on which our securities are listed.
2020 Company Share Option Plan (2020 CSOP)
On June 25, 2020, we adopted a share option plan, or the 2020 CSOP. The CSOP is an option scheme that provides for the grant of options under a
Company Share Option Plan in accordance with Schedule 4 of the Income Tax (Earnings and Pensions) Act 2003 which affords some tax advantages to the
option holder. Grants under the CSOP would only be applicable to U.K. taxpayers. As of December 31, 2024, we have not granted any options under the
2020 CSOP.
Key points:
•
CSOP options must only be granted to full-time directors or employees;
•
each recipient can receive options to buy company shares worth up to £60,000 (as valued (ignoring any restrictions) at the date of grant or
such earlier agreed time);
•
on grant of the CSOP option, there is generally no liability to income tax or NICs (employee’s and employer’s) unless the exercise price
(together with any grant price) is less than the market value of the shares at the date of grant;
•
no income tax or NICs will be payable on the exercise of a tax advantaged CSOP option if the CSOP option is exercised whilst the
scheme is still a tax advantaged scheme and the option is exercised;
o
on or before the tenth anniversary of the date of grant of the option, and either;
o
on or after the third anniversary of the date of grant; or
o
pursuant to the terms of the CSOP, prior to the third anniversary of the date of grant and, broadly, within six months of certain
takeover events;
•
there is no capital gains tax (CGT) payable on the grant or exercise of a qualifying CSOP option. On sale of the option shares, CGT may
be payable on any gain;
122
•
the CSOP scheme rules include the concept of a vesting requirement before they can be exercised and CSOP option awards are generally
structured so that they do not become exercisable/vest earlier than three years from grant so that they provide the preferential tax
treatment to the option holder;
•
option awards which have not vested on an option holder’s cessation of employment lapse; and
•
the option holder indemnifies the Company in relation to Tax Liabilities (as defined in the CSOP rules).
Employee Benefit Trust
On December 19, 2011, we established a discretionary employee benefit trust under the terms of a trust deed, or the Employee Benefit Trust, to
operate in conjunction with our share option schemes. The beneficiaries of the Employee Benefit Trust are our employees and former employees (including
executive directors) and their spouses, civil partners, surviving spouses and civil partners, children and step-children under the age of 18. The trustee of the
Employee Benefit Trust is NuCana BioMed Trustee Company Limited, or the Trustee, our wholly owned subsidiary. As of December 31, 2024, the Trustee
holds 500,000 of our ordinary shares in trust under the terms of the trust deed, which, pursuant to the terms of our three option schemes, and at the election
of the Trustee, may be used to satisfy awards under our share option schemes. Under the terms of the trust deed, unless we direct otherwise, the Trustee
must abstain from voting at a general meeting any of our shares held in the trust fund for which the Trustee holds the whole of the beneficial interest.
Clawback Policy
On December 1, 2023, our Board adopted a Clawback Policy providing for the recovery of certain incentive-based compensation from current and
former executive officers of the Company in the event the we are required to restate any of our financial statements filed with the SEC under the Exchange
Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were
corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards
introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002, which permits the
SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial
officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those
funds to the issuer. A copy of the Clawback Policy has been filed herewith as Exhibit 97.1.
C. Board Practices
Board Composition and Director Independence
Our business affairs are managed under the direction of our board of directors, which is currently composed of seven members. Under the rules and
regulations of Nasdaq a director will qualify as “independent” if our board of directors affirmatively determines that he or she has no material relationship
with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). Our board of directors has established
guidelines to assist it in determining whether a director has such a material relationship. Ownership of a significant amount of our shares, by itself, does not
constitute a material relationship.
Pursuant to Nasdaq rules, a director employed by us cannot be deemed to be an “independent director,” and consequently Hugh Griffith does not
qualify as an independent director.
Our board of directors has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly. Based on
this review, our board of directors has determined that the following directors are “independent directors” as defined by the applicable rules and regulations
of Nasdaq: Martin Mellish, Adam George, Cyrille Leperlier, Bali Muralidhar, Elliott Levy and Andrew Kay.
After the filing of this Annual Report, Mr. George intends to resign as the audit committee chair and as a director of the Company, effective March
21, 2025. Mr. George’s anticipated departure is not the result of any disagreement with us on any matter related to our operations, policies or procedures
(financial reporting, accounting or otherwise). Mr. Mellish intends to succeed Mr. George as audit committee chair upon Mr. George’s resignation,
effective March 21, 2025.
Terms of Directors and Executive Officers
Our executive officers are selected by and serve at the discretion of our board of directors. Our board of directors is divided into three classes, with
the members of each class serving staggered three year terms. See “Memorandum and Articles of Association — Directors — Classified board of
directors” in this Annual Report for a description of each director’s current term of office.
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There are no arrangements or understanding between us and any of the members of our board of directors providing for benefits upon termination of
their service.
Committees of the Board of Directors and Corporate Governance
Subject to certain exceptions, the rules of the Nasdaq permit a foreign private issuer to follow its home country practice in lieu of the listing
requirements of Nasdaq.
The committees of our board of directors consist of an audit committee, a remuneration committee, a nominations committee and a development
committee. As permitted by home country practice, our remuneration and nominations committees may include non-independent directors. Each of these
committees has the responsibilities described below. Our board of directors may also establish other committees from time to time to assist in the discharge
of its responsibilities.
Audit Committee
The members of our audit committee are currently three of our non-executive directors, Adam George, Martin Mellish and Cyrille Leperlier. Each
of these members is an “independent director” as such term is defined in Rule 10A-3 under the Exchange Act. Mr. George serves as chair of the audit
committee. Our board of directors has determined that Mr. George is a financial expert as contemplated by the rules of the SEC implementing Section 407
of the Sarbanes Oxley Act of 2002. After the filing of this Annual Report, Mr. George intends to resign as the audit committee chair and as a director of the
Company, effective March 21, 2025. Mr. George’s anticipated departure is not the result of any disagreement with us on any matter related to our
operations, policies or procedures (financial reporting, accounting or otherwise). Mr. Mellish intends to succeed Mr. George as audit committee chair upon
Mr. George’s resignation, effective March 21, 2025. Our board of directors has determined that Mr. Mellish is an “audit committee financial expert” as
contemplated by the rules of the SEC implementing Section 407 of the Sarbanes Oxley Act of 2002. Our audit committee meets at least four times per year
and oversees the monitoring of our internal controls, accounting policies and financial reporting and provides a forum through which our external auditors
and independent registered public accounting firm reports. Our audit committee meets at least once a year with the external auditors and our independent
registered public accounting firm without executive board members present. The audit committee is also responsible for overseeing the activities of the
external auditors and our independent registered public accounting firm, including their appointment, reappointment, or removal as well as monitoring their
objectivity and independence. The audit committee also reviews and approves the fees paid to our external auditors and independent registered public
accounting firm and determines whether the fee levels for non-audit services, individually and in aggregate, relative to the audit fee are appropriate so as
not to undermine their independence.
Remuneration Committee
The members of the remuneration committee are two of our 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 Exchange Act and an outside director as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended. Dr. Muralidhar serves as chair of the remuneration committee. Our 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 remuneration.
Nominating and Governance Committee
The members of the nominating and governance committee are Hugh Griffith and two of our non-executive directors, Andrew Kay and Bali
Muralidhar. Andrew Kay serves as chair of the nominating and governance committee and oversees the evaluation of the board of directors’ performance.
The nominating and governance committee meets at least twice a year and reviews the structure, size and composition of the board of directors, supervises
the selection and appointment process of directors, making recommendations to the board of directors with regard to any changes and using an external
search consultancy if considered appropriate. For new appointments, the nominating and governance committee makes a final recommendation to the board
of directors, and the board of directors has the opportunity to meet the candidate prior to approving the appointment. Once appointed, the nominating and
governance committee oversees the induction of new directors and provides the appropriate training to the board of directors during the course of the year
in order to ensure that they have the knowledge and skills necessary to operate effectively. The nominating and governance committee is also responsible
for annually evaluating the performance of the board of directors, both on an individual basis and for the board of directors as a whole, taking into account
such factors as attendance record, contribution during board of directors meetings and the amount of time that has been dedicated to board matters during
the course of the year.
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Development Committee
The members of the development committee are two of our non-executive directors, Elliott Levy and Cyrille Leperlier. Dr. Leperlier serves as chair
of the development committee. The development committee meets at least twice a year and reviews and advises the board of directors on the Company’s
strategic direction and investment in the research and development of the Company’s pipeline and products. It is a policy of the development committee
that majority of the members of the committee shall be independent non-employee directors and in addition to the independence standard required for
membership all members must disclose any personal financial interests known to the development committee as soon as any such interest arises.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that covers a broad range of matters including the handling of conflicts of interest,
compliance issues and other corporate policies such as equal opportunity and non-discrimination standards.
Board Diversity
The table below provides certain information regarding the diversity of our board of directors as of the date of this Annual Report.
Board Diversity Matrix (As of March 1, 2025)
Total Number of Directors
7
Female
Male
Non-Binary
Did Not
Disclose
Gender
Part I: Gender Identity
Directors
-
7
-
-
Part II: Demographic Background
African American or Black
-
-
-
-
Alaskan Native or Native American
-
-
-
-
Asian
-
1
-
-
Hispanic or Latinx
-
-
-
-
Native Hawaiian or Pacific Islander
-
-
-
-
White
-
6
-
-
Two or More Races or Ethnicities
-
-
-
-
LGBTQ+
-
Did Not Disclose Demographic Background
-
D. Employees
The number of employees by function and geographic location as of the end of the period for our fiscal years ended December 31, 2022, 2023 and
2024 was as follows:
At December 31,
2024
2023
2022
By Function:
Research and development
16
22
25
Management and administrative
6
6
6
Total
22
28
31
By Geography:
United Kingdom
20
26
29
North America
2
2
2
Total
22
28
31
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As of December 31, 2024, we had 20 full-time employees and 2 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 labor union. We believe our employee relations are good.
E.
Share Ownership
For information regarding the share ownership of our directors and executive officers, see “Item 6.B—Compensation” and “Item 7.A—Major
Shareholders.”
F.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
For information regarding the Clawback Policy, see “Item 6.B—Compensation.”
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Item 7. Major Shareholders and Related Party Transactions
A.
Major Shareholders
The following table and related footnotes set forth information with respect to the beneficial ownership of our ordinary shares as of December 31,
2024 by:
•
each of our executive officers and directors;
•
each person beneficially owning more than 5% of our share capital as of December 31, 2024; and
•
all executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of ordinary shares owned by a
person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days from December 31,
2024, including through the exercise of any option, warrant or other right or the conversion of any other security. These ordinary shares, however, are not
included in the computation of the percentage ownership of any other person except with respect to the percentage ownership of all board members and
executive officers, as a group. Based on our share register and other information made available to us by certain of our shareholders, as of December 31,
2024, there were four U.S. record holders holding 284,767 ordinary shares, representing 0.20% of our issued and outstanding ordinary shares. We had no
greater than 5% shareholders as of December 31, 2024.
Unless otherwise indicated, the address for each of the shareholders in the table below is c/o NuCana plc, 3 Lochside Way, Edinburgh, EH12 9DT,
United Kingdom.
Ordinary Shares
Beneficially
Owned(1)
Name of Beneficial Owner
Number
Percent
Named Executive Officers and Directors
Hugh Griffith (2)
6,364,003
4.3
Donald Munoz (3)
1,738,450
1.2
Bali Muralidhar (4)
3,430,062
2.4
Martin Mellish (5)
230,902
*
Elliott Levy (6)
123,750
*
Adam George (7)
227,713
*
Cyrille Leperlier (8)
213,652
*
Andrew Kay (9)
270,315
*
Jeffrey Bloss (10)
452,180
*
David Harrison (11)
275,625
*
All of our executive officers and directors, as a group (10 persons)
13,326,652
8.9%
* Indicates beneficial ownership of less than one percent of our ordinary shares.
(1)
Number of shares owned as shown both in this table and the accompanying footnotes and percentage ownership is based on 142,037,199
ordinary shares outstanding on December 31, 2024 after giving effect to the exercise of all outstanding vested options to purchase our
ordinary shares held by our executive officers and directors.
(2)
Consists of (a) 1,000,000 ordinary shares, (b) 265,026 ordinary shares in the form of ADSs, and (c) options to purchase 5,098,977 ordinary
shares that are or will be immediately exercisable within 60 days of December 31, 2024.
(3)
Consists of (a) 263,838 ordinary shares and (b) options to purchase 1,474,612 ordinary shares that are immediately exercisable within 60
days of December 31, 2024. Mr. Munoz was our Chief Financial Officer until February 2025.
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(4)
Consists of (a) 540 ordinary shares in the form of ADSs, (b) 3,333,333 ADSs held by Abingworth Bioventures VII LP, or Abingworth VII,
and (c) options to purchase 96,189 ordinary shares that are or will be immediately exercisable within 60 days of December 31, 2024.
Abingworth VII (acting by its general partner Abingworth GP, acting by its general partner Abingworth General Partner VII LLP) has
delegated to Abingworth LLP, all investment and dispositive power over the securities held by Abingworth VII. Abingworth LLP holds the
reported securities indirectly through Abingworth VII. Dr. Muralidhar, a member of our board of directors, is a partner and investment
committee member of Abingworth LLP and disclaims beneficial ownership of the ADSs held by Abingworth VII.
(5)
Consists of (a) 16 ordinary shares, (b) 33,214 ordinary shares in the form of ADSs and (c) 197,672 options to purchase ordinary shares that
are or will be immediately exercisable within 60 days of December 31, 2024.
(6)
Consists of (a) 13 ordinary shares, (b) 18,737 ordinary shares in the form of ADSs and (c) options to purchase 105,000 ordinary shares that
are or will be immediately exercisable within 60 days of December 31, 2024.
(7)
Consists of options to purchase 227,713 ordinary shares that are or will be immediately exercisable within 60 days of December 31, 2024.
(8)
Consists of options to purchase 213,652 ordinary shares that are or will be immediately exercisable within 60 days of December 31, 2024.
(9)
Consists of options to purchase 270,315 ordinary shares that are or will be immediately exercisable within 60 days of December 31, 2024.
(10)
Consists of (a) 20,900 ordinary shares, (b) 100 ordinary shares in the form of ADSs and (c) 431,180 options to purchase ordinary shares that
are or will be immediately exercisable within 60 days of December 31, 2024.
(11)
Consists of options to purchase 275,625 ordinary shares that are or will be immediately exercisable within 60 days of December 31, 2024.
To our knowledge, other than as provided in the table above, our other filings with the SEC, including, without limitation, Schedule 13 filings, and
this Annual Report, there has been no significant change in the percentage ownership held by any major shareholder since January 1, 2022.
The shareholders listed above do not have voting rights with respect to their ordinary shares that are different from the voting rights of other holders
of our ordinary shares.
B.
Related Party Transactions
The following is a description of related party transactions we have entered into between January 1, 2024 and March 1, 2025 with any members of
our board of directors or executive officers or the holders of more than 5% of our share capital.
Agreements with Our Executive Officers and Directors
We have entered into service agreements with each of our executive officers as follows: each of Hugh Griffith and David Harrison in 2017, and
Jeffrey Bloss in 2021. In addition, we entered into a service agreement with our former Chief Financial Officer, Donald Munoz, in 2017. Mr. Munoz
departed from the Company effective February 7, 2025 and his service agreement was terminated at that time.
Indemnification Agreements
We have entered into deeds of indemnity with each of our directors and executive officers. See “Management — Compensation — Insurance and
Indemnification.”
128
Agreements with Affiliates of Abingworth LLP
We have previously entered into contracts in the ordinary course with CFGI, LLC, or CFGI, for financial consulting services and with Curia
Global, Inc. (formerly Albany Molecular Research, Inc.), or Curia, for contract research and manufacturing services. Both of these companies are currently
owned by The Carlyle Group Inc., or Carlyle. Subsequent to entering into such contracts, in August 2022, Carlyle acquired Abingworth LLP, a greater than
5% shareholder of NuCana and an affiliate of Bali Muralidhar, one of our non-executive directors.
Related Person Transaction Policy
We have adopted a related person transaction policy requiring that all related person transactions required to be disclosed by a foreign private
issuer pursuant to the Exchange Act be approved by the audit committee or another independent body of our board of directors.
C.
Interests of Experts and Counsel
Not Applicable.
129
Item 8. Financial Information
A.
Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements.”
Dividend Policy
We have never declared or paid a dividend, and we do not anticipate declaring or paying dividends in the foreseeable future. We intend to retain all
available funds and any future earnings to fund the development and expansion of our business.
Under English law, among other things, we may only pay dividends if we have sufficient distributable reserves (on a non-consolidated basis), which
are our accumulated realized profits that have not been previously distributed or capitalized less our accumulated realized losses, so far as such losses have
not been previously written off in a reduction or reorganization of capital.
B.
Significant Changes
Any significant changes since December 31, 2024 are disclosed in Note 18 to the consolidated financial statements included elsewhere in this
Annual Report.
Item 9. The Offer and Listing
A. Offer and Listing Details
The ADSs were listed on The Nasdaq Global Select Market under the symbol “NCNA” since October 2, 2017. On November 9, 2023 we transferred
our listing to The Nasdaq Capital Market.
On April 16, 2024, we effected a ratio change of our ADSs to our ordinary shares, from one ADS, representing one ordinary share, to one ADS
representing twenty-five ordinary shares, or the ADS Ratio Change. The change was made to enable the Company to regain compliance with the Nasdaq
minimum bid price requirement. Unless specified otherwise, all references in this annual report to ADS share and ADS per share data have been adjusted,
including historical data which has been retroactively adjusted, to give effect to the ADS Ratio Change.
B.
Plan of Distribution
Not Applicable.
C. Markets
The ADSs were listed on The Nasdaq Global Select Market under the symbol “NCNA” since October 2, 2017. On November 9, 2023 we transferred
our listing to The Nasdaq Capital Market. On April 16, 2024, we effected the ADS Ratio Change so that one ADS now represents twenty-five ordinary
shares.
D. Selling Shareholders
Not Applicable.
E.
Dilution
Not Applicable.
F.
Expenses of the Issue
Not Applicable.
Item 10. Additional Information
A. Share Capital
Not Applicable.
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B.
Memorandum and Articles of Association
A copy of our Articles of Association is attached as Exhibit 1.1 to this Annual Report.
General
We were incorporated in England and Wales with the Registrar of Companies of England and Wales, United Kingdom on January 28, 1997 under
the name Biomed (UK) Limited as a private company limited by shares with company number 03308778.
On April 28, 2008, our name was changed to NuCana BioMed Limited. On August 29, 2017, we re-registered as a public limited company and
changed our name to NuCana plc. Such re-registration required the passing of special resolutions by our shareholders to approve the re-registration as a
public limited company, the name change to NuCana plc and to effect certain amendments to our articles of association.
Our registered office is located at 77/78 Cannon Street, London, EC4N 6AF, United Kingdom. The principal legislation under which we operate and
our shares are issued is the Companies Act 2006.
Issued Share Capital
Our issued share capital as of December 31, 2024 is £5,681,488 divided into 142,037,199 ordinary shares of £0.04 each. A summary of increases in,
and changes to, our issued share capital since our incorporation is set out below.
We issued one quarter of one ordinary share of £4.00 each to each of London Law Services Limited and London Law Secretarial Limited,
respectively, upon incorporation.
On March 20, 2008, we subdivided the outstanding issued fractions of ordinary shares of £4.00 each into 50 ordinary shares of £0.04 each and we
subdivided the remaining authorized yet unissued fractions of the ordinary shares of £4.00 each into 2,450 ordinary shares of £0.04 each. Further, our
authorized share capital was increased from £100 to £500,000 by the creation of 12,497,500 new ordinary shares of £0.04 each. On March 20, 2008, we
issued 4,499,950 ordinary shares of £0.04 each.
On July 27, 2008, we issued a further 200,000 ordinary shares of £0.04 each.
On August 20, 2009, we issued 350,000 ordinary shares of £0.04 each.
On December 18, 2009, we issued 1,816,976 ordinary shares of £0.04 each (500,000 of which were available for such issue, having previously been
issued to, but subsequently surrendered by, a shareholder).
On December 14, 2010, we issued 1,566,359 ordinary shares of £0.04 each.
On November 24, 2011, we issued 7,483,334 series A convertible participating shares of £0.04 each.
On March 28, 2012, we issued 222,222 ordinary shares of £0.04 each.
On March 31, 2014, we issued 8,462,500 series B convertible participating shares of £0.004 each.
On November 30, 2016, we issued 37,500 ordinary shares of £0.04 each, pursuant to the exercise of share options granted under the 2012 Share
Option Scheme.
On December 31, 2016, we issued 45,750 ordinary shares of £0.04 each, pursuant to the exercise of share options granted under the 2016 Share
Option Scheme.
On August 17, 2017, we issued 30,000 ordinary shares of £0.04 each, pursuant to the exercise of share options granted under the 2016 Share Option
Scheme.
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On September 14, 2017, we completed a one-for-four reverse share split and an associated, prior, bonus allotment of three ordinary shares and five
series A convertible participating shares to eliminate fractional entitlements. References to the one-for-four reverse share split in this Annual Report
include the associated bonus allotment. The share numbers and nominal values set out above have, for presentational purposes, been adjusted to reflect the
aforementioned reverse share split (which has necessitated reference to notional fractions of shares and resulted in certain numbers of shares having been
rounded up). These share numbers and nominal values are therefore not representative of, for example, the entries made at the relevant time in our statutory
registers nor filings we have made at the U.K. Registrar of Companies.
On October 2, 2017, immediately prior to closing our initial public offering, we converted all issued series A convertible participating shares, series
B convertible participating shares, founder ordinary 1 shares and founder ordinary 2 shares into ordinary shares, on a one-for-one basis. For the purpose of
facilitating the conversion of each series B convertible participating share (nominal value £0.004 per share), into an ordinary share (nominal value £0.04
per share), immediately prior to this conversion, on October 2, 2017, we allotted to holders of series B convertible participating shares an additional nine
series B convertible participating shares for each series B convertible participating share held.
On October 2, 2017, we issued 7,596,505 ordinary shares pursuant to our initial public offering.
During 2018 we issued 415,312 ordinary shares pursuant to the exercise of share options.
During 2019 we issued 252,187 ordinary shares pursuant to the exercise of share options.
On September 21, 2020, we issued 17,888,889 ordinary shares pursuant to our follow-on public offering.
During 2020 we issued 774,511 ordinary shares pursuant to our “at-the-market” (ATM) sales agreement.
During 2020 we issued 32,500 ordinary shares pursuant to the exercise of share options.
During 2021 we issued 1,005,434 ordinary shares pursuant to the exercise of share options.
During 2022 we issued 192,908 ordinary shares pursuant to the exercise of share options.
During 2023 we issued 408,015 ordinary shares pursuant to our ATM sales agreement, and 79,433 ordinary shares pursuant to the exercise of share
options.
During 2024, we issued 89,027,545 ordinary shares pursuant to our ATM sales agreement, and 149,319 ordinary shares pursuant to the exercise of
share options.
Ordinary Shares
As of December 31, 2024, we had issued and outstanding 142,037,199 ordinary shares of £0.04 each. Each issued ordinary share is fully paid.
Holders of ordinary shares are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders and do not have
cumulative voting rights.
Any distribution made as a result of winding-up, dissolution or liquidation of our company and any dividend declared will be distributed in
proportion to the number of fully paid ordinary shares held.
Registration Rights
We have entered into a registration rights agreement pursuant to which we have agreed under specified circumstances to file a registration statement
to register the resale of the ordinary shares held by some of our existing shareholders, as well as to cooperate in specified public offerings of such shares.
These rights are described below.
Demand Registration Rights. If at any time when we are eligible to use a Form F-3 registration statement, the holders of at least 25% of the
registrable securities then outstanding have the right to demand that we file a Form F-3 registration statement with respect to such registrable securities.
These registration rights are subject to specified conditions and
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limitations, including the right of the underwriters, if any, to limit the number of shares included in any such registration under specified circumstances.
Upon such a request, we are required to use commercially reasonable efforts to effect such registration.
Company Registration. If we propose to register any of our equity securities under the Securities Act, other than in connection with certain specified
registrations, including a registration relating solely to our employee equity incentive plans or a registration relating solely to certain business combinations
or mergers involving us, the holders of these registrable securities are entitled to notice of such registration and are entitled to include their ordinary shares
in the registration. Under certain circumstances, the underwriters, if any, may limit the number of ordinary shares included in any such registration.
Termination of Registration Rights. The registration rights granted under the registration rights agreement shall terminate upon the earlier to occur
of (i) the fifth anniversary of the closing of our initial public offering and (ii) the date on which there are no registrable securities remaining pursuant to the
registration rights agreement.
Articles of Association
The following is a summary of certain provisions of our articles of association. Please note that this is only a summary and is not intended to be
exhaustive. For further information please refer to the full version of our articles of association, which is included as an exhibit to this Annual Report.
Shares and Rights Attaching to Them
General. All ordinary shares have the same rights and rank pari passu in all respects. Subject to the provisions of the Companies Act 2006 and any
other relevant legislation, our board of directors may, from time to time, allot and issue shares following an ordinary resolution of the shareholders granting
authority to the directors to allot shares (and if applicable, and not already disapplied, a special resolution to disapply pre-emption rights).
Our shares may be issued with or have attached to them any preferred, deferred, qualified or other special rights or restrictions, whether in relation
to dividends, returns of capital, voting or otherwise, as set out in our articles of association or as the shareholders may determine by ordinary resolution (or,
if the shareholders have not so determined, as our board of directors may determine).
Voting rights. Subject to any other provisions of our articles of association and without prejudice to any special rights, privileges or restrictions as to
voting attached to any shares forming part of our share capital, the voting rights of shareholders are as follows. Unless a poll vote is demanded,
shareholders shall vote on all resolutions on a show of hands. Our articles of association provide that a poll vote may be demanded before, or on the
declaration of, the result of a vote on a show of hands: (a) by the chairman of a general meeting, (b) by at least five shareholders present at a meeting and
entitled to vote, or (c) by any shareholder or shareholders present representing not less than 10% of the total voting rights or more than 10% of the total
sum paid up on all voting shares. For these purposes, a shareholder will be present at a meeting if attending in person, by proxy, or, in the case of a
shareholder that is a corporation (as broadly defined under the Companies Act 2006), by duly authorized representatives.
On a show of hands, each shareholder present in person, and each duly authorized representative present in person of a shareholder that is a
corporation, has one vote. On a show of hands, each proxy present in person who has been duly appointed by one or more shareholders has one vote, but a
proxy has one vote for and one vote against a resolution if the proxy is instructed to vote on a resolution by more than one shareholder and is instructed to
vote in different ways on such resolution.
On a poll, each shareholder present in person or by proxy or, with respect to a corporation, by a duly authorized representative has one vote for each
share held by the shareholder. We are prohibited from exercising any rights to attend or vote at meetings in respect of any shares held by us as treasury
shares.
Restrictions on voting where sums overdue on shares. None of our shareholders is entitled to vote at any general meeting or at any separate class
meeting in respect of any share held by him or her unless all calls or other sums payable by him or her in respect of that share have been paid.
Calls on shares. The directors may from time to time make calls on shareholders in respect of any amounts unpaid on their shares, whether in
respect of nominal value of the shares or by way of premium. Shareholders are required to pay the called amount on shares subject to receiving at least 14
clear days’ notice specifying the time and place for payment. Under
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our articles of association, a period of “clear days” excludes the day on which a notice is given or deemed to have been given and the day for which it is
given or on which it is to take effect. If a shareholder fails to pay any part of a call, the board of directors may serve further notice naming another day not
being less than 14 clear days from the date of the further notice requiring payment and stating that in the event of non-payment the shares in respect of
which the call was made will be liable to be forfeited. Subsequent forfeiture requires a resolution by the board of directors.
Dividends. Subject to the Companies Act 2006 and the provisions of all other relevant legislation, we may by ordinary resolution declare dividends
out of profits available for distribution in accordance with the respective rights of shareholders, but no such dividend shall exceed the amount
recommended by the board of directors. If, in the opinion of the board of directors, our profits available for distribution justify such payments, the board of
directors may pay fixed dividends payable on any of our shares with preferential rights, half-yearly or otherwise, on fixed dates and from time to time pay
interim dividends to the holders of any class of shares. Subject to any special rights attaching to, or terms of issue of, any shares, all dividends shall be
declared and paid according to the amounts paid up on the shares on which the dividend is paid. No dividend shall be payable to us in respect of any shares
held by us as treasury shares.
We may, upon the recommendation of the board of directors, by ordinary resolution, direct payment of a dividend wholly or partly by the
distribution of specific assets.
All dividends unclaimed for one year after having been declared may be invested or otherwise used at the directors’ discretion for our benefit until
claimed (subject as provided in the articles of association), and all dividends unclaimed after a period of 12 years from the date when such dividend became
due for payment shall be forfeited and shall revert to us.
The board of directors may, if so authorized by ordinary resolution passed at any general meeting, offer any holders of the ordinary shares the right
to elect to receive in lieu of that dividend an allotment of ordinary shares credited as fully paid.
We may cease to send any check or warrant by mail or may stop the transfer of any sum by any bank or other funds transfer system for any dividend
payable on any of our shares, which is normally paid in that manner on those shares if in respect of at least two consecutive dividends the check or warrants
have been returned undelivered or remain uncashed or the transfer has failed, or in respect of one dividend the check or warrant has been returned
undelivered or remains uncashed or the transfer has failed and reasonable inquiries made by us have failed to establish any new address of the holder.
We or the directors may specify a “record date” on which persons registered as the holders of shares shall be entitled to receipt of any dividend.
Distribution of assets on winding-up. Subject to any special rights attaching to, or the terms of issue of any shares, on any winding-up of the
company our surplus assets remaining after satisfaction of our liabilities will be distributed among our shareholders in proportion to their respective
holdings of shares and the amounts paid up on those shares.
On any winding-up of the company (whether the liquidation is voluntary, under supervision or by the Court), the liquidator may with the authority
of a special resolution of the company and any other sanction required by any relevant legislation, divide among our shareholders (excluding the company
itself to the extent that it is a shareholder by virtue of its holding any shares or treasury shares) in specie or in kind the whole or any part of our assets
(subject to any special rights attached to any shares issued by us in the future) and may for that purpose set such value as he deems fair upon any one or
more class or classes of property and may determine how that division shall be carried out as between the shareholders or different classes of shareholders.
The liquidator may, with that sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the shareholders as he with the
relevant authority determines, and the liquidation of the company may be closed and the company dissolved, but so that no shareholders shall be compelled
to accept any shares or other property in respect of which there is a liability.
Variation of rights. The rights or privileges attached to any class of shares may (unless otherwise provided by the terms of the issue of the shares of
that class) be varied or abrogated with the consent in writing of the holders of three-fourths in requisite nominal value of the issued shares of that class
(excluding any shares of that class held as treasury shares) or with the approval of a special resolution passed at a separate general meeting of the
shareholders of that class, but not otherwise.
Transfer of shares. All of our shares are in registered form and may be transferred by a transfer in any usual or common form or any form
acceptable to the board of directors and permitted by the Companies Act 2006 and any other relevant legislation.
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The board of directors may decline to register a transfer of a share that is:
•
not fully paid or on which we have a lien;
•
(except where uncertificated shares are transferred without a written instrument) not lodged duly stamped (if it is required to be stamped) at
our registered office or at such other place as the board of directors may appoint;
•
(except where a certificate has not been issued) not accompanied by the certificate of the share to which it relates or such other evidence
reasonably required by the directors to show the right of the transferor to make the transfer;
•
in respect of more than one class of share; or
•
in the case of a transfer to joint holders of a share, the number of joint holders to whom the share is to be transferred exceeds four.
Capital variations. We may, by ordinary resolution, consolidate and divide all or any of our share capital into shares of a larger nominal amount
than our existing shares or sub-divide our shares, or any of them, into shares of a smaller nominal amount than our existing shares. Subject to the provisions
of the Companies Act 2006 and any other applicable legislation, we may by special resolution reduce our share capital, any capital redemption reserve fund
or any share premium account and may redeem or purchase any of our own shares.
Pre-emption rights. There are no rights of pre-emption under our articles of association in respect of transfers of issued ordinary shares. In certain
circumstances, our shareholders may have statutory pre-emption rights under the Companies Act 2006 in respect of the allotment of new shares in the
company. These statutory pre-emption rights, when applicable, would require us to offer new shares for allotment to existing shareholders on a pro rata
basis before allotting them to other persons. In such circumstances, the procedure for the exercise of such statutory pre-emption rights would be set out in
the documentation by which such ordinary shares would be offered to our shareholders. These statutory pre-emption rights may be disapplied by a special
resolution passed by shareholders in a general meeting in accordance with the provisions of the Companies Act 2006.
Directors
Number. Unless and until we in a general meeting of our shareholders otherwise determine, the number of directors comprising our board of
directors shall not be subject to any maximum but shall not be less than two.
Classified board of directors. Our board of directors is divided into three classes, “Class I,” whose initial term expires at the annual general meeting
of the shareholders to be held in 2026, “Class II,” whose initial term expires at the annual general meeting of the shareholders to be held in 2025, and
“Class III”, whose term expires at the annual general meeting of the shareholders to be held in 2027, with the classes as nearly equal in number as possible.
The Class I directors are Hugh Griffith, Andrew Kay and Bali Muralidhar, the Class II directors are Elliott Levy and Cyrille Leperlier, and the Class III
directors are Adam George and Martin Mellish. After the filing of this Annual Report, Mr. George intends to resign as a director of the Company, effective
March 21, 2025. Mr. George’s anticipated departure is not the result of any disagreement with us on any matter related to our operations, policies or
procedures (financial reporting, accounting or otherwise).
Borrowing powers. Our board of directors may exercise all the powers of the company to borrow money, mortgage or charge all or any part or parts
of its undertaking, property and uncalled capital, and issue debentures and other securities whether outright or as collateral security for any debt, liability or
obligation of the company or of any third party.
Directors’ interests and restrictions
(a) The board of directors may, in accordance with our articles of association and the requirements of the Companies Act 2006, authorize a matter
proposed to us which would, if not authorized, involve a breach by a director of his or her duty under section 175 of the Companies Act 2006 to avoid a
situation in which he or she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with our interests. A director is not
required, by reason of being a director, to account to the company for any remuneration or other benefit that he or she derives from a relationship involving
a conflict of interest or possible conflict of interest that has been authorized by the board of directors.
(b) Subject to the provisions of any relevant legislation and provided that he or she has disclosed to the directors the nature and extent of any
material interest of his or hers, a director may be a party to, or otherwise interested in, any
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transaction, contract or arrangement and that director shall not, by reason of his or her office, be accountable to the company for any benefit that he or she
derives from any such transaction or arrangement; and no such transaction or arrangement shall be liable to be voided on the ground of any such interest or
benefit.
(c) Except as provided in our articles of association, a director shall not vote at a meeting of the directors in respect of any transaction or
arrangement or any other proposal whatsoever in which he or she has an interest that is to his or her knowledge material (together with any person
connected with him or her within the meaning of section 252 of the Companies Act 2006), other than (i) an interest in shares or debentures or other
securities of the company, (ii) where permitted by the terms of any authorization of a conflict of interest, or (iii) in the circumstances set out in paragraph
(d) below, and shall not be counted in the quorum at a meeting in relation to any resolution on which he or she is not entitled to vote.
(d) A director shall (in the absence of some material interest other than those indicated below) be entitled to vote (and be counted in the quorum) in
respect of any resolution concerning any of the following matters:
(i) the giving of any guarantee, security or indemnity to him or her in respect of money lent to or an obligation incurred by him or her at the
request of or for the benefit of us or any of our subsidiaries;
(ii) the giving to a third party of any guarantee, security or indemnity in respect of a debt or obligation of ours or any of our subsidiaries for
which he himself or she herself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;
(iii) any proposal or contract concerning an offer of shares or debentures or other securities of or by the company or any of its subsidiaries, if
he or she takes part because he or she is or may be entitled to participate as a holder of shares, debentures or other securities, or if he or she takes
part in the underwriting, sub-underwriting or guarantee of the offer;
(iv) any proposal concerning any other company in which he or she is interested, directly or indirectly and whether as an officer or
shareholder or otherwise, provided that he or she (together with persons connected with him or her) does not to his or her knowledge hold an interest
in shares representing one percent or more of the issued shares of any class of such company or of the voting rights available to shareholders of the
relevant company;
(v) any proposal concerning arrangements pursuant to which benefits are made available to our employees and which does not award him or
her any privilege or benefit not generally awarded to the employees to whom such arrangement relates;
(vi) any proposal under which he or she may benefit concerning the giving of indemnities to our directors or other officers that the directors
are empowered to give under our articles of association;
(vii) any proposal under which he or she may benefit concerning the purchase or maintenance of insurance for any of our directors or other
officers; and
(viii) any proposal under which he or she may benefit concerning the provision to directors of funds to meet expenditures in defending
proceedings.
(e) Where proposals are under consideration to appoint two or more directors to offices or employments with us or with any company in which we
are interested or to fix or vary the terms of such appointments, such proposals may be divided and considered in relation to each director separately and in
such case each of the directors concerned (if not debarred from voting under paragraph (d) (iv) above) shall be entitled to vote (and be counted in the
quorum) in respect of each resolution, except that concerning his or her own appointment.
(f) If any question shall arise at any meeting as to the materiality of a director’s interest or as to the entitlement of any director to vote and such
question is not resolved by his or her agreeing voluntarily to abstain from voting, such question shall be referred to the chairman of the meeting (or where
the interest concerns the chairman himself to the deputy chairman of the meeting) and his or her ruling in relation to any director shall be final and
conclusive, except in a case where the nature or extent of the interests of the director concerned have not been fairly disclosed.
Remuneration
(a) Each of the directors (other than alternate directors) may (in addition to any amounts payable under paragraph (b) and (c) below or under any
other provision of our articles of association) be paid out of the funds of the company such sum by way of directors’ fees as the board of directors may
from time to time determine.
(b) Any director who is appointed to hold any employment or executive office with us or who, by our request, goes or resides abroad for any
purposes of the company or who otherwise performs services that in the opinion of the board of
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directors are outside the scope of his or her ordinary duties may be paid such additional remuneration (whether by way of salary, commission, participation
in profits or otherwise) as the board of directors (or any duly authorized committee of the board of directors) may determine and either in addition to or in
lieu of any remuneration provided for by or pursuant to any other article.
(c) Each director may be paid his or her reasonable traveling expenses (including hotel and incidental expenses) of attending and returning from
meetings of the directors or committees of the board of directors or general meetings or any separate meeting of the holders of any class of our shares or
any other meeting that as a director he or she is entitled to attend and shall be paid all expenses properly and reasonably incurred by him or her in the
conduct of the company’s business or in the discharge of his or her duties as a director.
Pensions and other benefits. The board of directors may exercise all the powers of the company to provide benefits, either by the payment of
gratuities or pensions or by insurance or in any other manner whether similar to the foregoing or not, for any director or former director, or any person who
is or was at any time employed by, or held an executive or other office or place of profit in, the company or any corporate body that is or has been a
subsidiary of the company or a predecessor of the business of the company or of any such subsidiary and for the families and persons who are or was a
dependent of any such persons and for the purpose of providing any such benefits contribute to any scheme trust or fund or pay any premiums.
Appointment and retirement of directors
(a) The board of directors shall have power to appoint any person who is willing to act to be a director, either to fill a casual vacancy or as an
additional director but so that the total number of directors shall not exceed the maximum number fixed (if any) by or in accordance with our articles of
association. Any director so appointed shall retire from office at our annual general meeting following such appointment, and then shall be eligible for re-
election for the remaining portion of the term of office of the Class to which he or she is eligible for election.
(b) Subject as provided in our articles of association, the shareholders may by ordinary resolution elect any person who is willing to act as a director
either to fill a casual vacancy or as an addition to the existing directors or to replace a director removed from office under our articles of association but so
that the total number of directors shall not at any one time exceed any maximum number fixed by or in accordance with our articles of association.
(c) Subject to paragraph (a) above and the initial terms described in “Description of Issued Share Capital-Articles of Association-Directors-
Classified board of directors”, each director within each class shall retire at the third annual general meeting following the annual general meeting at which
he or she was elected or last re-elected. Except where there is an increase in the number of directors (in which case the newly created directorships shall be
apportioned by our board amongst our existing classes) or in accordance with paragraph (a) above, directors elected or re-elected at an annual general
meeting shall be appointed to the class whose term expires at such meeting.
(d) A director retiring at an annual general meeting shall be eligible for re-election. If a retiring director is not re-elected, he or she shall hold office
until the meeting elects someone in his or her place or, if it does not do so, until the end of the meeting.
Company name
The board of directors may resolve to change our company name.
Indemnity of officers
Subject to the provisions of any relevant legislation, each of our directors and other officers may be indemnified by us against all costs, charges,
losses, expenses and liabilities incurred by him in the execution and discharge of his duties or in relation to those duties. The Companies Act 2006 renders
void an indemnity for a director against any liability attaching to him or her in connection with any negligence, default, breach of duty or breach of trust in
relation to the company of which he or she is a director as described in “-Differences in Corporate Law-Liability of Directors and Officers.”
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Shareholders’ Meetings
Annual general meetings. We shall in each year hold an annual general meeting of our shareholders in addition to any other meetings in that year,
and shall specify the meeting as such in the notice convening it. The annual general meeting shall be held at such time and place as the board of directors
may appoint.
Calling of general meetings. The board of directors may call a general meeting of shareholders. The board of directors must call a general meeting
if the shareholders and the Companies Act 2006 require them to do so. The arrangements for the calling of general meetings are described in “-Differences
in Corporate Law-Notice of General Meetings” below.
Quorum of meetings. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business but
the absence of a quorum shall not preclude the appointment of a chairman, which shall not be treated as part of the business of a meeting. One or more
qualifying persons present at a meeting and between them holding (or being the proxy or corporate representative of the holders of) at least one-third in
number of the issued shares (excluding any shares held as treasury shares) entitled to vote on the business to be transacted are a quorum. A qualifying
person for these purposes is an individual who is a shareholder, a person authorized to act as the representative of a shareholder (being a corporation) in
relation to the meeting or a person appointed as proxy of a shareholder in relation to the meeting.
Other United Kingdom law considerations
Mandatory purchases and acquisitions. Pursuant to Sections 979 to 991 of the Companies Act 2006, where a takeover offer has been made for us
and the offeror has acquired or unconditionally contracted to acquire not less than 90% in value of the shares to which the offer relates and not less than
90% of the voting rights carried by those shares, the offeror may give notice to the holder of any shares to which the offer relates which the offeror has not
acquired or unconditionally contracted to acquire that he wishes to acquire, and is entitled to so acquire, those shares on the same terms as the general offer.
The “squeeze-out” of the minority shareholders can be completed at the end of six weeks from the date the notice has been given, subject to the minority
shareholders failing to successfully lodge an application to the court to prevent such squeeze-out any time prior to the end of those six weeks, following
which the offeror can execute a transfer of the outstanding shares in its favor and pay the consideration to us, to be held on trust for the outstanding
minority shareholders. The consideration offered to the outstanding minority shareholders whose shares are compulsorily acquired under the Companies
Act 2006 must, in general, be the same as the consideration that was available under the takeover offer.
Sell-out. The Companies Act 2006 also gives our minority shareholders a right to be bought out in certain circumstances by an offeror who has
made a takeover offer for all of our shares. The holder of shares to which the offer relates, and who has not otherwise accepted the offer, may require the
offeror to acquire his shares if, prior to the expiry of the acceptance period for such offer, (i) the offeror has acquired or agreed to acquire not less than 90%
in value of our voting shares, and (ii) not less than 90% of the voting rights carried by those shares. The offeror may impose a time limit on the rights of
minority shareholders to be bought out that is not less than three months after the end of the acceptance period. If a shareholder exercises his rights to be
bought out, the offeror is required to acquire those shares on the terms of the takeover offer or on such other terms as may be agreed.
Disclosure of interest in shares. Pursuant to Part 22 of the Companies Act 2006 and our articles of association, we are empowered to require, by
notice in writing, any person whom we know to be, or have reasonable cause to believe to be, is interested in our shares, or at any time during the three
years immediately preceding the date on which the notice is issued has been so interested, within a reasonable time to disclose to us particulars of that
person’s own interest and (so far as is within that person’s knowledge) particulars of any other interest, agreement or arrangement relating to the exercise of
any rights conferred by the holding of the shares that subsists or subsisted in those shares.
Under our articles of association, if a person defaults in supplying us with the required particulars in relation to the shares in question, or the default
shares, the board of directors may by notice direct that:
•
in respect of the default shares, the relevant shareholder shall not be entitled to vote or exercise any other right conferred by his holding
shares in relation to general meetings; or
•
where the default shares represent at least 0.25% of their class, (a) any dividend or other money payable in respect of the default shares shall
be retained by us without liability to pay interest and, if applicable, any election to receive ordinary shares instead of money in respect of the
default shares shall be ineffective; (b) no transfers of shares by the relevant shareholder other than certain approved transfers may be
registered (unless the shareholder
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himself is not in default and the transfer does not relate to default shares) or (c) any shares held by the relevant shareholder in uncertificated
form shall be converted into certificated form.
Purchase of own shares. Under English law, a limited company may only purchase its own shares out of its distributable profits or the proceeds of a
fresh issue of shares made for the purpose of financing the purchase, provided it is not restricted from doing so by its articles. A limited company may not
purchase its own shares if, as a result of the purchase, there would no longer be any issued shares of the company other than redeemable shares or shares
held as treasury shares. Shares must be fully paid in order to be repurchased.
We may purchase our own fully paid shares otherwise than on a recognized investment exchange pursuant to a purchase contract authorized by
resolution of shareholders before the purchase takes place. Any authority will not be effective if any shareholder from whom we propose to purchase shares
votes on the resolution and the resolution would not have been passed if he had not done so. The resolution authorizing the purchase must specify a date,
not being later than five years after the passing of the resolution, on which the authority to purchase is to expire.
Preemptive Rights. English law generally provides shareholders with preemptive rights when new shares are issued for cash; however, it is possible
for a company’s articles of association, or shareholders in general meeting, to exclude preemptive rights. Such an exclusion of preemptive rights may be for
a maximum period of up to five years from the date of adoption of the articles of association, if the exclusion is contained in the articles of association, or
from the date of the shareholder resolution, if the exclusion is by shareholder resolution. In either case, this exclusion would need to be renewed by our
shareholders upon its expiration (i.e., at least every five years). On June 18, 2024, at our 2024 Annual General Meeting, our shareholders approved the
exclusion of preemptive rights in connection with: (i) the allotment of shares or the grant of rights to subscribe for or to convert any security into shares up
to an aggregate nominal value of up to £20,000,000, for a period ending at the conclusion of our next annual general meeting in 2025; and (ii) the allotment
of shares or the grant of rights to subscribe for or to convert any security into shares up to an aggregate nominal amount of £20,000,000 under or in
connection with any existing, amended or new share option schemes, incentive plans or joint share ownership plans (whether tax advantaged or otherwise)
as the directors may, from time to time, approve, where such schemes or plans include as eligible participants the directors, officers or employees of the
Company or any subsidiary undertaking of the Company, from time to time, and/or any consultants engaged by the Company or any such subsidiary
undertaking, for a period ending on the fifth anniversary of the date of our 2024 Annual General Meeting (i.e. at 11:59 pm on June 18, 2029). In addition to
the authorities referred to above, our shareholders have also approved the exclusion of preemptive rights (i) on June 25, 2020 at our 2020 Annual General
Meeting, in connection with the allotment of shares or grant of rights to subscribe for or to convert any security into shares under or in connection with the
Approved Share Option Schemes up to an aggregate nominal value of £160,000, for a period ending on the fifth anniversary of the date of our 2020 Annual
General Meeting (i.e. at 11:59 pm on June 24, 2025); (ii) on June 24, 2021 at our 2021 Annual General Meeting, in connection with the allotment of shares
or the grant of rights to subscribe for or to convert any security into shares, under or in connection with the NuCana 2016 Share Option Scheme, the
NuCana 2020 Long-Term Incentive Plan, the NuCana 2020 Company Share Option Plan or any joint share ownership plan agreement substantially in the
form of the approved Joint Share Ownership Plan Agreement, each as may be amended from time to time, or under or in connection with any new share
option schemes or incentive plans (whether tax advantaged or otherwise) as the directors may, from time to time, approve, where such schemes or plans
include as eligible participants the directors, officers or employees of the Company or any subsidiary undertaking of the Company, from time to time,
and/or any consultants engaged by the Company or any such subsidiary undertaking, or all of such share option schemes or share option incentives being
collectively referred to as the Approved Share Option Schemes, up to an aggregate nominal value of £80,000, for a period ending on the fifth anniversary
of the date of our 2021 Annual General Meeting (i.e. at 11:59 pm on June 23, 2026); (iii) on June 23, 2022 at our 2022 Annual General Meeting, in
connection with the allotment of shares or grant of rights to subscribe for or to convert any security into shares under or in connection with the Approved
Share Option Schemes or any joint share ownership plans (whether tax-advantaged or otherwise) as the directors may, from time to time, approve, up to an
aggregate nominal value of £200,000, for a period ending on the fifth anniversary of the date of our 2022 Annual General Meeting (i.e. at 11:59 pm on June
23, 2027); and (iv) on June 15, 2023 at our 2023 Annual General Meeting, in connection with the allotment of shares or grant of rights to subscribe for or
to convert any security into shares under or in connection with the Approved Share Option Schemes or any joint share ownership plans (whether tax-
advantaged or otherwise) as the directors may, from time to time, approve, up to an aggregate nominal value of £200,000, for a period ending on the fifth
anniversary of the date of our 2023 Annual General Meeting (i.e. at 11:59 pm on June 15, 2028). Such authorities will need to be renewed upon expiration
(i.e., at least every five years) to remain effective, but may be sought more frequently for additional five-year terms (or any shorter period).
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City code on takeovers and mergers, or the Takeover Code. As a public company incorporated in England and Wales with its place of central
management and control in the United Kingdom, we are currently subject to the United Kingdom City Code on Takeovers and Mergers, or the Takeover
Code. However, amendments have been made to the Takeover Code (with effect from February 3, 2025) which mean that, since our securities are not “UK
quoted” (i.e., admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle
of Man), we will cease to be subject to the Takeover Code on February 3, 2027.
The Takeover Code contains rules concerning the conduct of takeover offers for the company. For example, under Rule 9 of the Takeover Code, if a
person:
(a) acquires an interest in our shares that, when taken together with shares in which he or persons acting in concert with him are interested, carries
30% or more of the voting rights of our shares; or
(b) who, together with persons acting in concert with him, is interested in shares that in the aggregate carry not less than 30% and not more than
50% of the voting rights in the company, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that
person is interested, the acquirer and, depending on the circumstances, its concert parties, would be required (except with the consent of the Takeover
Panel) to make a cash offer for our outstanding shares at a price not less than the highest price paid for any interests in the shares by the acquirer or its
concert parties during the previous 12 months. Some provisions in the Takeover Code might have anti-takeover effects that could discourage an acquisition
of us by others even if an acquisition would be beneficial to our shareholders.
Distributions and dividends. Under the Companies Act 2006, before a company can lawfully make a distribution or dividend, it must ensure that it
has sufficient distributable reserves (on a non-consolidated basis). The basic rule is that a company’s profits available for the purpose of making a
distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so
far as not previously written off in a reduction or reorganization of capital duly made. The requirement to have sufficient distributable reserves before a
distribution or dividend can be paid applies to us and to each of our subsidiaries that has been incorporated under English law
It is not sufficient that we, as a public company, have made a distributable profit for the purpose of making a distribution. An additional capital
maintenance requirement is imposed on us to ensure that the net worth of the company is at least equal to the amount of its capital. A public company can
only make a distribution:
(a) if, at the time that the distribution is made, the amount of its net assets (that is, the total excess of assets over liabilities) is not less than the total
of its called up share capital and undistributable reserves; and
(b) if, and to the extent that, the distribution itself, at the time that it is made, does not reduce the amount of the net assets to less than that total.
Exchange controls. There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or
export of capital, including the availability of cash, cash equivalents and short-term deposits for use by us, or that may affect the remittance of dividends,
interest, or other payments by us to non-resident holders of our ordinary shares or ADSs, other than withholding tax requirements. There is no limitation
imposed by English law or in the articles of association on the right of non-residents to hold or vote shares.
Differences in Corporate Law
The applicable provisions of the Companies Act 2006 differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a
summary of certain differences between the provisions of the Companies Act 2006 applicable to us and the Delaware General Corporation Law
relating to shareholders’ rights and protections. This summary is not intended to be a complete discussion of the respective rights and it is
qualified in its entirety by reference to Delaware law and English law.
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England and Wales
Delaware
Number of Directors
Under the Companies Act 2006, a public limited company
must have at least two directors and the number of directors
may be fixed by or in the manner provided in a company’s
articles of association.
Under Delaware law, a corporation must have at least one
director and the number of directors shall be fixed by or in
the manner provided in the bylaws.
Removal of Directors
Under the Companies Act 2006, shareholders may remove a
director without cause by an ordinary resolution (which is
passed by a simple majority of those voting in person or by
proxy at a general meeting) irrespective of any provisions of
any service contract the director has with the company,
provided 28 clear days’ notice of the resolution has been
given to the company and its shareholders. On receipt of
notice of an intended resolution to remove a director, the
company must forthwith send a copy of the notice to the
director concerned. Certain other procedural requirements
under the Companies Act 2006 must also be followed such as
allowing the director to make representations against his or
her removal either at the meeting or in writing.
Under Delaware law, any director or the entire board of
directors may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at
an election of directors, except (a) unless the certificate of
incorporation provides otherwise, in the case of a
corporation whose board of directors is classified,
shareholders may effect such removal only for cause, or
(b) in the case of a corporation having cumulative voting,
if less than the entire board of directors is to be removed,
no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire board of
directors, or, if there are classes of directors, at an election
of the class of directors of which he is a part.
Vacancies on the Board of
Directors
Under English law, the procedure by which directors (other
than a company’s initial directors) are appointed is generally
set out in a company’s articles of association, provided that,
as regards public companies, a motion for the appointment of
two or more persons as directors by a single resolution must
not be made unless a resolution that it should be so made has
first been agreed to by the meeting without any vote being
given against it.
Under Delaware law, vacancies and newly created
directorships may be filled by a majority of the directors
then in office (even though less than a quorum) or by a
sole remaining director unless (a) otherwise provided in
the certificate of incorporation or by-laws of the
corporation or (b) the certificate of incorporation directs
that a particular class of stock is to elect such director, in
which case a majority of the other directors elected by
such class, or a sole remaining director elected by such
class, will fill such vacancy.
Annual General Meeting
Under the Companies Act 2006, a public limited company
must hold an annual general meeting in each six-month
period beginning with the day following the company’s
annual accounting reference date.
Under Delaware law, the annual meeting of stockholders
shall be held at such place, on such date and at such time
as may be designated from time to time by the board of
directors or as provided in the certificate of incorporation
or by the bylaws.
General Meeting
Under the Companies Act 2006, a general meeting of the
shareholders of a public limited company may be called by
the directors.
Shareholders holding at least 5% of the paid-up capital of the
company carrying voting rights at general meetings can
require the directors to call a general meeting and, if the
directors fail to do so within a prescribed period, may
themselves, or any of them representing more than one half
of the total voting rights of all of them call a general meeting.
Under Delaware law, special meetings of the stockholders
may be called by the board of directors or by such person
or persons as may be authorized by the certificate of
incorporation or by the bylaws.
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Notice of General Meetings
Under the Companies Act 2006, 21 clear days’ notice must
be given for an annual general meeting and any resolutions to
be proposed at the meeting. Subject to a company’s articles
of association providing for a longer period, at least 14 clear
days’ notice is required for any other general meeting of a
public limited company which fulfills certain conditions. In
addition, certain matters, such as resolutions to remove
directors or auditors, require special notice, which is 28 clear
days’ notice. The shareholders of a company may in all cases
consent to a shorter notice period, the proportion of
shareholders’ consent required being 100% of those entitled
to attend and vote in the case of an annual general meeting
and, in the case of any other general meeting, a majority in
number of the shareholders having a right to attend and vote
at the meeting, being a majority who together hold not less
than 95% in nominal value of the shares giving a right to
attend and vote at the meeting.
Under Delaware law, unless otherwise provided in the
certificate of incorporation or bylaws, written notice of
any meeting of the stockholders must be given to each
stockholder entitled to vote at the meeting not less than 10
nor more than 60 days before the date of the meeting and
shall specify the place, date, hour, and purpose or
purposes of the meeting.
Proxy
Under the Companies Act 2006, at any meeting of
shareholders, a shareholder may designate another person to
attend, speak and vote at the meeting on their behalf by
proxy.
Under Delaware law, at any meeting of stockholders, a
stockholder may designate another person to act for such
stockholder by proxy, but no such proxy shall be voted or
acted upon after three years from its date, unless the proxy
provides for a longer period. A director of a Delaware
corporation may not issue a proxy representing the
director’s voting rights as a director.
Pre-emptive Rights
Under the Companies Act 2006, “equity securities”, being (i)
shares in the company other than shares that, with respect to
dividends and capital, carry a right to participate only up to a
specified amount in a distribution (“ordinary shares”) or (ii)
rights to subscribe for, or to convert securities into, ordinary
shares, proposed to be allotted for cash must be offered first
to the existing equity shareholders in the company in
proportion to the respective nominal value of their holdings,
unless the period during which any such offer may be
accepted has expired or the company has received notice of
acceptance of refusal, or an exception applies or a special
resolution to the contrary has been passed by shareholders in
a general meeting or the articles of association provide
otherwise (in each case in accordance with the provisions of
the Companies Act 2006).
Under Delaware law, shareholders have no preemptive
rights to subscribe to additional issues of stock or to any
security convertible into such stock unless, and except to
the extent that, such rights are expressly provided for in
the certificate of incorporation.
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Authority to Allot
Under the Companies Act 2006, the directors of a company
must not allot shares or grant rights to subscribe for or to
convert any security into shares unless an exception applies
or an ordinary resolution to the contrary has been passed by
shareholders in a general meeting or the articles of
association provide otherwise (in each case in accordance
with the provisions of the Companies Act 2006).
Under Delaware law, if the corporation’s charter or
certificate of incorporation so provides, the board of
directors has the power to authorize the issuance of stock.
It may authorize capital stock to be issued for
consideration consisting of cash, any tangible or intangible
property or any benefit to the corporation or any
combination thereof. It may determine the amount of such
consideration by approving a formula. In the absence of
actual fraud in the transaction, the judgment of the
directors as to the value of such consideration is
conclusive.
Liability of Directors and
Officers
Under the Companies Act 2006, any provision (whether
contained in a company’s articles of association or any
contract or otherwise) that purports to exempt a director of a
company, to any extent, from any liability that would
otherwise attach to him in connection with any negligence,
default, breach of duty or breach of trust in relation to the
company is void.
Any provision by which a company directly or indirectly
provides an indemnity, to any extent, for a director of the
company or of an associated company against any liability
attaching to him in connection with any negligence, default,
breach of duty or breach of trust in relation to the company of
which he is a director is also void except as permitted by the
Companies Act 2006, which provides exceptions for the
company to (a) purchase and maintain insurance against such
liability; (b) provide a “qualifying third party indemnity”
(being an indemnity against certain liabilities incurred by the
director to a person other than the company or an associated
company); and (c) provide a “qualifying pension scheme
indemnity” (being an indemnity against liability incurred in
connection with the company’s activities as trustee of an
occupational pension plan).
Under Delaware law, a corporation’s certificate of
incorporation may include a provision eliminating or
limiting the personal liability of a director to the
corporation and its stockholders for damages arising from
a breach of fiduciary duty as a director. However, no
provision can limit the liability of a director for:
• any breach of the director’s duty of loyalty to
the corporation or its stockholders;
• acts or omissions not in good faith or that
involve intentional misconduct or a knowing
violation of law;
• intentional or negligent payment of unlawful
dividends or stock purchases or redemptions; or
• any transaction from which the director derives
an improper personal benefit.
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Voting Rights
Under the model articles of public companies, unless a poll is
demanded by the shareholders of a company or is required by
the chairman of the meeting or by the company’s articles of
association, shareholders shall vote on all resolutions on a
show of hands. Under the Companies Act 2006, a poll may
be demanded by (a) not fewer than five shareholders having
the right to vote on the resolution; (b) any shareholder(s)
representing not less than 10% of the total voting rights of all
the shareholders having the right to vote on the resolution; or
(c) any shareholder(s) holding shares in the company
conferring a right to vote on the resolution being shares on
which an aggregate sum has been paid up equal to not less
than 10% of the total sum paid up on all the shares conferring
that right. A company’s articles of association may provide
more extensive rights for shareholders to call a poll.
Under English law, 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) and entitled to vote. If a poll is
demanded, 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. Special
resolutions require the affirmative vote of not less than 75%
of the votes cast by shareholders present, in person or by
proxy, at the meeting.
Delaware law provides that, unless otherwise provided in
the certificate of incorporation, each stockholder is
entitled to one vote for each share of capital stock held by
such stockholder.
Shareholder Vote on Certain
Transactions
The Companies Act 2006 provides for schemes of
arrangement, which are arrangements or compromises
between a company and any class of shareholders or creditors
that are used in certain types of reconstructions,
amalgamations, capital reorganizations or takeovers. These
arrangements require:
• the approval at a shareholders’ or creditors’
meeting convened by order of the court, of a
majority in number of shareholders or creditors
representing 75% in value of the capital held by, or
debt owed to, the class of shareholders, or class
thereof present and voting, either in person or by
proxy; and
• the approval of the court.
Generally, under Delaware law, unless the certificate of
incorporation provides for the vote of a larger portion of
the stock, completion of a merger, consolidation, sale,
lease or exchange of all or substantially all of a
corporation’s assets or dissolution requires:
• the approval of the board of directors; and
• approval by the vote of the holders of a
majority of the outstanding stock or, if the
certificate of incorporation provides for more or
less than one vote per share, a majority of the
votes of the outstanding stock of a corporation
entitled to vote on the matter.
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Standard of Conduct for
Directors
Under English law, a director owes various statutory and
fiduciary duties to the company, including:
• to act in the way he considers, in good faith, would
be most likely to promote the success of the
company for the benefit of its shareholders as a
whole, subject in certain specified circumstances
to consider or act in the interests of the creditors of
the company;
• to avoid a situation in which he has, or can have, a
direct or indirect interest that conflicts, or possibly
conflicts, with the interests of the company;
• to act in accordance with the company’s
constitution and only exercise his powers for the
purposes for which they are conferred;
• to exercise independent judgement;
• to exercise reasonable care, skill and diligence;
• not to accept benefits from a third party conferred
by reason of his being a director or doing, or not
doing, anything as a director; and
• a duty to declare any interest that he has, whether
directly or indirectly, in a proposed or existing
transaction or arrangement with the company.
Delaware law does not contain specific provisions setting
forth the standard of conduct of a director. The scope of
the fiduciary duties of directors is generally determined by
the courts of the State of Delaware. In general, directors
have a duty to act without self-interest, on a well-informed
basis and in a manner they reasonably believe to be in the
best interest of the stockholders.
Directors of a Delaware corporation owe fiduciary duties
of care and loyalty to the corporation and to its
shareholders. The duty of care generally requires that a
director act in good faith, with the care that an ordinarily
prudent person would exercise under similar
circumstances. Under this duty, a director must inform
himself of all material information reasonably available
regarding a significant transaction. The duty of loyalty
requires that a director act in a manner he reasonably
believes to be in the best interests of the corporation. He
must not use his corporate position for personal gain or
advantage. In general, but subject to certain exceptions,
actions of a director are presumed to have been made on
an informed basis, in good faith and in the honest belief
that the action taken was in the best interests of the
corporation. However, this presumption may be rebutted
by evidence of a breach of one of the fiduciary duties.
Delaware courts have also imposed a heightened standard
of conduct upon directors of a Delaware corporation who
take any action designed to defeat a threatened change in
control of the corporation.
In addition, under Delaware law, when the board of
directors of a Delaware corporation approves the sale or
break-up of a corporation, the board of directors may, in
certain circumstances, have a duty to obtain the highest
value reasonably available to the shareholders.
Shareholder Litigation
Under English law, generally, the company, rather than its
shareholders, is the proper claimant in an action in respect of
a wrong done to the company or where there is an irregularity
in the company’s internal management. Notwithstanding this
general position, the Companies Act 2006 provides that (i) a
court may allow a shareholder to bring a derivative claim
(that is, an action in respect of and on behalf of the company)
in respect of a cause of action arising from an act or omission
involving a director’s negligence, default, breach of duty or
breach of trust and (ii) a shareholder may bring a claim for a
court order where the company’s
Under Delaware law, a stockholder may initiate a
derivative action to enforce a right of a corporation if the
corporation fails to enforce the right itself. The complaint
must:
• state that the plaintiff was a stockholder at the
time of the transaction of which the plaintiff
complains or that the plaintiffs shares thereafter
devolved on the plaintiff by operation of law;
and
• allege with particularity the efforts made by the
plaintiff to obtain the action the plaintiff desires
from the
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affairs have been or are being conducted in a manner that is
unfairly prejudicial to some or all of its shareholders.
directors and the reasons for the plaintiff’s
failure to obtain the action; or
• state the reasons for not making the effort.
Additionally, the plaintiff must remain a stockholder
through the duration of the derivative suit. The action will
not be dismissed or compromised without the approval of
the Delaware Court of Chancery.
C. Material Contracts
Except as otherwise disclosed in this Annual Report (including the exhibits thereto), we are not currently, and have not been in the last two years,
party to any material contract, other than contracts entered into in the ordinary course of our business.
D. Exchange Controls
There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or export of capital,
including the availability of cash and cash equivalents for use by us, or that may affect the remittance of dividends, interest, or other payments by us to
non-resident holders of our ordinary shares or ADSs, other than withholding tax requirements. There is no limitation imposed by English law or our articles
of association on the right of non-residents to hold or vote shares.
E.
Taxation
Material U.S. Federal Income Tax Considerations
The following discussion describes the material U.S. federal income tax consequences to U.S. Holders (as defined below) under present law of the
purchase, ownership and disposition of the ADSs. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended or the Code for
purposes of this discussion, in effect as of the date of this Annual Report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the
date of this Annual Report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are
subject to change, which change could apply retroactively and could affect the tax consequences described below.
This discussion applies only to U.S. Holders that hold the ADSs as capital assets for U.S. federal income tax purposes. It does not purport to be a
comprehensive description of all tax considerations that may be relevant to a decision to purchase the ADSs by any particular investor. In particular, this
discussion does not address tax considerations applicable to a U.S. Holder that may be subject to special tax rules, including, without limitation, a dealer in
securities or currencies, a trader in securities that elects to use a mark-to-market method of accounting for securities holdings, banks, thrifts, or other
financial institutions, an insurance company, a tax-exempt organization, a person that holds the ADSs as part of a hedge, straddle or conversion transaction
for tax purposes, a person whose functional currency for tax purposes is not the U.S. dollar, certain former citizens or residents of the United States or a
person that owns directly, indirectly or constructively shares representing 10% or more of our shares by vote or value. Moreover, this description does not
address the U.S. federal estate, gift, or alternative minimum tax consequences, or any state, local or non-U.S. tax consequences, of the acquisition,
ownership and disposition of the ADSs. In addition, the discussion does not address tax consequences to an entity or arrangement treated as a partnership
or other pass-through entity for U.S. federal income tax purposes that holds the ADSs, or a partner in or owner of such partnership or other pass-through
entity. The U.S. federal income tax treatment of each partner of such partnership or owner of such pass-through entity generally will depend upon the status
of the partner or owner and the
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activities of the partnership or other pass-through entity. Prospective purchasers that are partners in a partnership or owners of a pass-through entity holding
the ADSs are urged to consult their own tax advisers.
The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to an investor that is a beneficial owner of ADSs
and that is, for U.S. federal income tax purposes,
•
an individual who is a citizen or resident of the United States;
•
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States,
any state therein or the District of Columbia;
•
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
•
a trust that (i) is subject to the primary supervision of a court within the United States and subject to the control of one or more U.S. persons
for all substantial decisions or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
For U.S. federal income tax purposes, a beneficial owner of ADSs generally will be treated as the owner of the underlying ordinary shares
represented by such ADSs. Accordingly, deposits or withdrawals of the underlying ordinary shares for ADSs generally will not be subject to U.S. federal
income tax. The discussion below assumes that the representations contained in the deposit agreement are true and that the obligations in the deposit
agreement and any related agreement will be complied with in accordance with their terms. U.S. Treasury has expressed concerns that parties to whom
ADSs are released before shares are delivered to the depositary or intermediaries in the chain of ownership between the U.S. Holder of an ADS and the
issuer of the security underlying the ADS may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. Holders of ADSs.
These actions would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to dividends received by certain
noncorporate U.S. Holders. As a result, the creditability of non-U.S. withholding taxes (if any), and the availability of the reduced tax rate for dividends
received by certain non-corporate U.S. Holders, each described below, could be affected by actions taken by such parties or intermediaries. Accordingly,
U.S. persons considering an investment in ADSs should consult their own tax advisors as to the particular tax consequences applicable to them relating to
the purchase, ownership and disposition of ADSs, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.
You are urged to consult your tax advisors about the application of the U.S. federal income tax rules to your particular circumstances as
well as the state, local, non-U.S. and other tax consequences of the purchase, ownership and disposition of the ADSs.
Passive Foreign Investment Company Considerations
In general, a corporation organized outside the United States will be classified as a passive foreign investment company, or PFIC, in a particular
taxable year if either (i) 75% or more of the corporation’s gross income for the taxable year is passive income or (ii) on average at least 50% of the value of
the corporation’s assets produce passive income or are held for the production of passive income. Passive income for this purpose generally includes,
among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of
property that gives rise to passive income.
In making this determination, we will be treated as earning our proportionate share of any income and owning our proportionate share of any assets
of any corporation in which we hold a 25% or greater interest (by value). Because PFIC status must be determined annually based on tests which are
factual in nature, our PFIC status will depend on our income, assets and activities each year, including whether certain research and development tax credits
received from the government of the United Kingdom will constitute gross income, and, if they do, whether they will constitute passive income for
purposes of the PFIC income test. In addition, for purposes of the PFIC asset test, the value of our assets will depend in part on the market price of our
ordinary shares, which may fluctuate significantly. If we are classified as a PFIC for any taxable year, a U.S. Holder may be able to mitigate some of the
resulting adverse U.S. federal income tax consequences described below with respect to owning the ADSs, provided that such U.S. Holder is eligible to
make, and validly makes a “mark-to-market” election, described below. In certain circumstances a U.S. Holder can make a “qualified electing fund”
election to mitigate some of the adverse tax consequences described with respect to an ownership interest in a PFIC by including in income its share of the
PFIC’s income on a current basis. We intend to provide the information necessary for a U.S. investor to make a qualified electing fund or election, or QEF
Election with respect to us. A U.S. Holder can make a QEF Election in the first taxable year that the entity is treated as a PFIC with respect to the U.S.
Holder. A U.S. Holder making a QEF election other than for the first taxable year in which it owns (or is treated as owning) an equity interest in a PFIC
would continue to be
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subject to the rules described in the preceding paragraph with respect to such PFIC, unless the U.S. Holder makes a “deemed sale” election with respect to
the PFIC and recognizes gain taxed under the general PFIC rules described above with respect to the PFIC stock’s appreciation before the year for which
the QEF Election is made.
We expect to post the information necessary to make QEF Elections on our website. If we are a PFIC for any taxable year, the consequences to any
U.S. Holder will depend in part on whether the U.S. Holder makes a valid QEF Election or mark-to-market election as described below.
If a U.S. Holder makes a QEF Election with respect to a PFIC, the U.S. Holder will be taxed on its pro rata share of the PFIC’s ordinary earnings
and net capital gain (at ordinary income and capital gain rates, respectively) for each taxable year that the entity is a PFIC. If a U.S. Holder makes a QEF
Election with respect to us, any distributions we pay out of our earnings and profits that were previously included in the U.S. Holder’s income under the
QEF Election would not be taxable to the U.S. Holder. A U.S. Holder will increase its tax basis in its ADSs or ordinary shares by an amount equal to any
income included under the QEF Election and will decrease its tax basis by any amount distributed on the ADSs or ordinary shares that is not included in the
U.S. Holder’s income. In addition, a U.S. Holder will recognize capital gain or loss on the disposition of ADSs or ordinary shares in an amount equal to the
difference between the amount realized and the U.S. Holder’s adjusted tax basis in the ADSs or ordinary shares, as determined in U.S. dollars. A U.S.
Holder will not be taxed on the ordinary income and net capital gain under the QEF rules for any year that we are not a PFIC.
In the event that we are classified as a PFIC in any year in which a U.S. Holder holds the ADSs, and neither a QEF Election nor the “mark-to-
market” election described below is made by a taxable U.S. Holder, a special tax regime will apply with respect to such U.S. Holder to both (a) any gain
realized on the sale or other disposition of the ADSs and (b) any “excess distribution” by us to such U.S. Holder (generally, such U.S. Holder’s ratable
portion of distributions received by such U.S. Holder in any year which are greater than 125% of the average annual distribution received by such U.S.
Holder in the shorter of the three preceding years or such U.S. Holder’s holding period for the ADSs). Any gain recognized by such U.S. Holder on a sale
or other disposition (including a pledge) of the ADSs and any excess distribution would be allocated ratably over such U.S. Holder’s holding period for the
ADSs. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary
income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate,
for that taxable year, and the interest charge generally applicable to underpayments of tax would be imposed on taxes deemed to have been payable in for
the relevant taxable PFIC years. Classification as a PFIC may also have other adverse tax consequences, including, in the case of U.S. Holders that are
individuals, the denial of a step-up in the basis of such U.S. Holder’s ADSs at death.
Based on our estimated gross income, the average value of our assets, including goodwill and the nature of our active business, we believe we were
a PFIC for U.S. income tax purposes for the taxable year ending December 31, 2024. There can be no assurance regarding our PFIC status for the current
taxable year or any particular year in the future because PFIC status is factual in nature, depends upon factors not wholly within our control, generally
cannot be determined until the close of the taxable year in question and is determined annually. Whether we will be a PFIC in the current or any future
taxable year is uncertain because, among other things, we currently own a substantial amount of passive assets, including cash, and because the valuation of
our assets that generate non-passive income for PFIC purposes, including our goodwill and other intangible assets, is uncertain and may vary substantially
over time. In addition, the composition of our assets and income may vary substantially over time. The average quarterly value of our assets for purposes of
determining our PFIC status for any taxable year (to the extent applicable) will generally be determined in part by reference to our market capitalization,
which has fluctuated and may continue to fluctuate significantly over time. Accordingly, there can be no assurance that we will not be a PFIC in the current
or for any future taxable year. Accordingly, U.S. Holders should invest in our ADSs only if they are willing to bear the U.S. federal income tax
consequences associated with investments in PFICs.
Mark-to-Market Election
If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs, then in lieu of being subject to the special tax regime and interest
charge rules discussed above, a U.S. Holder may make an election to include gain on the ADSs as ordinary income under a mark-to-market method,
provided that the ADSs are treated as “regularly traded” on a “qualified exchange.” In general, the ADSs will be treated as “regularly traded” for a given
calendar year if more than a de minimis quantity of the ADSs are traded on a qualified exchange on at least 15 days during each calendar quarter of such
calendar year. Although the U.S. Internal Revenue Service, or the IRS, has not published any authority identifying specific exchanges that may constitute
“qualified exchanges,” Treasury Regulations provide that a qualified exchange is (a) a U.S. securities exchange that is registered with the SEC, (b) the U.S.
market system established pursuant to section 11A of the
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Exchange Act, or (c) a non-U.S. securities exchange that is regulated or supervised by a governmental authority of the country in which the market is
located, provided that (i) such non-U.S. exchange has trading volume, listing, financial disclosure, surveillance and other requirements designed to prevent
fraudulent and manipulative acts and practices, to remove impediments to and perfect the mechanism of a free and open, fair and orderly, market, and to
protect investors; and the laws of the country in which such non-U.S. exchange is located and the rules of such non-U.S. exchange ensure that such
requirements are actually enforced and (ii) the rules of such non-U.S. exchange effectively promote active trading of listed shares. We have received
approval to list our ADSs on the Nasdaq Capital Market, which is a U.S. securities exchange that is registered with the SEC. However, no assurance can be
given that the ADSs will meet the requirements to be treated as “regularly traded” for purposes of the mark-to-market election. In addition, because a mark-
to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the special tax regime with
respect to such holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes,
including shares in any future subsidiary of ours that is treated as a PFIC.
If a U.S. Holder makes this mark-to-market election, such U.S. Holder will be required in any year in which we are a PFIC to include as ordinary
income the excess of the fair market value of such U.S. Holder’s ADSs at year end over its basis in those ADSs. In addition, the excess, if any, of such U.S.
Holder’s basis in the ADSs over the fair market value of such U.S. Holder’s ADSs at year end is deductible as an ordinary loss in an amount equal to the
lesser of (i) the amount of the excess or (ii) the amount of the net mark-to-market gains that have been included in income in prior years by such U.S.
Holder. Any gain recognized by such U.S. Holder upon the sale of such U.S. Holder’s ADSs will be taxed as ordinary income in the year of sale. Amounts
treated as ordinary income will not be eligible for the preferential tax rate applicable to qualified dividend income or long-term capital gains. A U.S.
Holder’s adjusted tax basis in the ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the
mark-to-market rules. If a U.S. Holder makes a mark-to market election, it will be effective for the taxable year for which the election is made and all
subsequent taxable years unless the ADSs are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election.
Controlled Foreign Corporation
The Tax Cuts and Jobs Act, or the Tax Act eliminated the prohibition on “downward attribution” from non-U.S. persons to U.S. persons under
Section 958(b)(4) of the Code for purposes of determining constructive stock ownership under the controlled foreign corporation, or CFC rules. As a
result, our U.S. subsidiary will be deemed to own all of the stock of our non-U.S. subsidiaries held by the Company for CFC purposes. To the extent a non-
U.S. subsidiary is treated as a CFC for any taxable year, each U.S. person treated as a “10% U.S. Shareholder” with respect to such CFC that held our
ordinary shares directly or indirectly through non-U.S. entities (including the Company) as of the last day in such taxable year that the subsidiary was a
CFC would generally be required to include in gross income as ordinary income its pro rata share of certain investment income of the CFC, regardless of
whether that income was actually distributed to such U.S. person (with certain adjustments). A “10% U.S. Shareholder” of a non-U.S. corporation includes
any U.S. person that owns (or is treated as owning) directly, indirectly or constructively, stock of the non-U.S. corporation possessing 10% or more of the
total voting power or total value of such non-U.S. corporation’s stock. The legislative history under the Tax Act indicates that this change was not intended
to cause our non-U.S. subsidiaries to be treated as CFCs with respect to a 10% U.S. Shareholder that is not related to our U.S. subsidiary. However, it is not
clear whether the IRS or a court would interpret the change made by the Tax Act in a manner consistent with such indicated intent.
You are strongly urged to consult your own tax advisors to determine whether your ownership of the ADSs will cause you to become a 10% U.S.
Shareholder and the impact of such a classification.
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Information Reporting Requirements
If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs, each such U.S. Holder generally will be required to file an annual
information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure to file IRS Form 8621 could
result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax.
The U.S. federal income tax rules relating to PFICs are complex. U.S. Holders are urged to consult their tax advisors with respect to the purchase,
ownership and disposition of the ADSs, the availability of the mark-to-market election and whether making the election would be advisable in their
particular circumstances, and the IRS information reporting obligations with respect to the purchase, ownership and disposition of the ADSs.
Taxation of Dividends and Other Distributions on the ADSs
Subject to the discussion above under the heading “-Passive Foreign Investment Company Considerations”, generally the gross amount of
distributions made by us, if any, to a U.S. Holder with respect to the ADSs, before reduction for any non-U.S. taxes withheld therefrom, will be includable
in gross income as a dividend to the extent that such distribution is paid out of our current or accumulated earnings and profits (as determined under U.S.
federal income tax principles). To the extent, if any, that the amount of any cash distribution exceeds our current and accumulated earnings and profits, it
will be treated first as a tax-free return of such U.S. Holder’s tax basis in its ADSs, and to the extent the amount of the distribution exceeds such U.S.
Holder’s tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles.
Therefore, a U.S. Holder should expect that a distribution will generally be treated as a dividend even if that distribution would otherwise be treated as a
non-taxable return of capital or as capital gain under the rules described above. A dividend in respect of the ADSs will not be eligible for the dividends-
received deduction allowed to corporations in respect of dividends received from other U.S. corporations. Non-corporate U.S. Holders may qualify for the
lower rates of taxation with respect to dividends on ADSs applicable to long term capital gains (i.e., gains from the sale of capital assets held for more than
one year), provided that certain conditions are met, including certain holding period requirements and the absence of certain risk reduction transactions.
However, such reduced rate shall not apply if we are a PFIC for the taxable year in which we pay a dividend, or were a PFIC in the preceding taxable year.
As indicated in the section titled “Dividend Policy” herein, we intend to retain any earnings for use in our business and do not currently intend to pay
dividends on our ordinary shares.
Subject to the paragraph below, dividends generally will constitute income from sources outside the United States, which may be relevant in
calculating a U.S. Holder’s foreign tax credit limitation. For this purpose, dividends that we distribute generally should constitute “passive category
income,” or, in the case of certain U.S. Holders, “general category income.” Dividend payments may be made without withholding or deduction for or on
account of U.K. tax.
Notwithstanding the paragraph above, if 50% or more of the ADSs are treated as held by U.S. persons, we will be treated as a “U.S.-owned foreign
corporation.” In that case, dividends may be treated for U.S. foreign tax credit purposes as income from sources outside the United States to the extent paid
out of our non-U.S. source earnings and profits, and as income from sources within the United States to the extent paid out of our U.S. source earnings and
profits. There can be no assurance that we will not be treated as a U.S.-owned foreign corporation. If the dividends are taxed at the lower tax rates generally
applicable to long-term capital gains (as discussed above), the amount of the dividend taken into account for purposes of calculating the U.S. foreign tax
credit limitation will generally be limited to the gross amount of the dividend, multiplied by the preferential rate divided by the highest rate of tax normally
applicable to dividends. The rules relating to the determination of the foreign tax credit are complex, and U.S. Holders are urged to consult their tax
advisors to determine whether and to what extent such U.S. Holder will be entitled to a foreign tax credit.
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Taxation of Dispositions of ADSs
Subject to the discussion above under “—Passive Foreign Investment Company Considerations”, a U.S. Holder will recognize taxable gain or loss
on any sale, exchange or other taxable disposition of an ADS equal to the difference between the amount realized (the amount of cash (in U.S. dollars) plus
the fair market value of any property received) for the ADS and such U.S. Holder’s tax basis (in U.S. dollars) in the ADS. The gain or loss will generally
be capital gain or loss. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or long-
term capital loss if, on the date of sale, exchange or other disposition, the ADSs were held by the U.S. Holder for more than one year. The deductibility of
capital losses is subject to limitations. Any such gain or loss generally will be treated as U.S. source income or loss for U.S. foreign tax credit purposes.
Disposition of Foreign Currency
U.S. Holders are urged to consult their tax advisors regarding the tax consequences of receiving, converting or disposing of any non-U.S. currency
received as dividends on our ADSs or on the sale or retirement of an ADS.
Tax on Net Investment Income
An additional 3.8% Medicare tax may be imposed on some or all of such U.S. Holder’s “net investment income.” Net investment income generally
includes income from the ADSs unless such income is derived in the ordinary course of the conduct of a trade or business (other than a trade or business
that consists of certain passive or trading activities). You should consult your tax advisors regarding the effect this Medicare tax may have, if any, on your
acquisition, ownership or disposition of the ADSs.
Information Reporting and Backup Withholding
Distributions with respect to ADSs and proceeds from the sale, exchange or disposition of ADSs may be subject to information reporting to the IRS,
and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification
number and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their
exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors
regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S. federal income
tax liability, and a U.S. Holder may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for
refund with the IRS and furnishing any required information.
Foreign Financial Asset Information Reporting
U.S. Holders who are either individuals or certain domestic entities may be required to submit certain information to the IRS with respect to such
holder’s beneficial ownership of the ADSs, if such ADSs are not held on such holder’s behalf by a financial institution, as our ordinary shares are
considered “specified foreign financial assets.” This law also imposes penalties and potential other adverse tax consequences if a U.S. Holder is required to
submit such information to the IRS and fails to do so. U.S. Holders are urged to consult their tax advisors regarding the potential information reporting
obligations that may be imposed with respect to the ownership and disposition of the ADSs.
The above description is not intended to constitute a complete analysis of all tax consequences relating to acquisition, ownership and
disposition of the ADSs. Prospective purchasers are urged to consult their tax advisors concerning the tax consequences related to their particular
circumstances.
United Kingdom Tax Considerations
The following is a general summary of certain United Kingdom tax considerations relating to the ownership and disposal of the ADSs and does not
address all possible tax consequences relating to an investment in the ADSs. It is based on current U.K. tax law and published HM Revenue & Customs, or
HMRC, practice as of the date of this Annual Report, both of which are subject to change, possibly with retrospective effect.
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This United Kingdom taxation section is written on the basis that the company is and remains resident for tax purposes in the United Kingdom only
and will therefore be subject to the U.K. tax regime and not the U.S. tax regime (save as discussed in the section titled “Material U.S. Federal Income Tax
Considerations” above). On this basis, dividends paid by the company will be regarded as U.K. dividends, not U.S. dividends.
Except as provided otherwise, this summary applies only to persons who are resident (and, in the case of individuals, domiciled or deemed
domiciled) in the United Kingdom for tax purposes and who are not resident for tax purposes in any other jurisdiction, and do not have a permanent
establishment or fixed base in any other jurisdiction with which the holding of the ADSs is connected. Such persons are referred to herein as U.K. Holders.
Persons (a) who are not resident (or, if resident, are not domiciled or deemed domiciled) in the United Kingdom for tax purposes, including those
individuals and companies who trade in the United Kingdom through a branch, agency or permanent establishment in the United Kingdom to which the
ADSs are attributable, or (b) who are resident or otherwise subject to tax in a jurisdiction outside the United Kingdom, are recommended to seek the advice
of professional advisers in relation to their taxation obligations.
This summary is for general information only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular
investor. It does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to investors
subject to special treatment under U.K. tax law. In particular:
•
this summary only applies to the absolute beneficial owners of the ADSs (and where the ADSs are not held through an Individual Savings
Account or a Self-Invested Personal Pension); and
•
this summary: (a) only addresses the principal U.K. tax consequences for investors who hold the ADSs as capital assets, (b) does not address
the tax consequences that may be relevant to certain special classes of investor such as dealers, brokers or traders in shares or securities and
other persons who hold the ADSs otherwise than as an investment, (c) does not address the tax consequences for holders that are financial
institutions, insurance companies, collective investment schemes, pension schemes, charities or tax-exempt organizations, (d) assumes that
the holder is not an officer or employee of the company (or of any related company) and has not (and is not deemed to have) acquired the
ADSs or related ordinary shares by virtue of an office or employment, and (e) assumes that the holder does not control or hold (and is not
deemed to control or hold), either alone or together with one or more associated or connected persons, directly or indirectly (including
through the holding of the related ordinary shares or ADSs), an interest of 10% or more in the issued share capital (or in any class thereof or
ADSs), voting power, rights to profits or capital of the company, and is not otherwise connected with the company.
This summary further assumes, on the basis of HMRC guidance, that a holder of ADSs will be regarded by HMRC as the beneficial owner of the
underlying ordinary shares and of any dividends paid in respect of the related ordinary shares (where the dividends are regarded for U.K. tax purposes as
that person’s own income (and not the income of some other person)) for U.K. tax purposes.
Potential investors in ADSs should satisfy themselves prior to investing as to the overall tax consequences, including, specifically, the
consequences under U.K. tax law and HMRC practice of the acquisition, ownership and disposal of ADSs in their own particular circumstances
by consulting their own tax advisers. In particular, non-U.K. resident or domiciled persons are advised to consider the potential impact of any
relevant double taxation agreements.
Taxation of dividends
Withholding Tax. Dividend payments in respect of ADSs or ordinary shares may be made without withholding or deduction for or on account of
U.K. tax.
United Kingdom Income Tax. An individual U.K. Holder (being an individual who is resident for tax purposes in the United Kingdom) who
receives a dividend from the company will generally be subject to income tax on the dividend. For the tax year 2024/2025, an individual U.K. Holder will
generally pay income tax at a rate of 0% on the first £500 of dividends received by such U.K. Holder. Dividend income taxed at 0% will be taken into
account in determining the rate at which income in excess of this tax-free allowance will (subject to the availability of any income tax personal allowance)
be taxed.
An individual U.K. Holder who is subject to income tax at the basic rate will be liable to tax on the dividend at the current marginal rate of 8.75%.
An individual U.K. Holder who is subject to income tax at the higher rate (but not the additional rate) will be liable to income tax on the dividend at the
current rate of 33.75% to the extent that such sum, when treated as the top slice of that holder’s income, exceeds the threshold for higher rate income tax.
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An individual U.K. Holder liable to income tax at the additional rate will be subject to income tax on the dividend at the current rate of 39.35% to
the extent that the holder’s income (including the dividend) exceeds the threshold for the additional rate.
Individuals who are Scottish taxpayers will pay tax on dividends at the same dividend tax rates as other U.K. taxpayers and as if they paid income
tax by reference to the U.K. income tax thresholds rather than by reference to the thresholds otherwise applicable to Scottish taxpayers.
An individual who is not a U.K. Holder (other than one carrying on a trade, profession or vocation in the United Kingdom through a branch or
agency to which the ADSs are attributable) who is resident for tax purposes outside the United Kingdom will not have any U.K. tax to pay on dividends
received from the company.
United Kingdom Corporation Tax. A U.K. Holder within the charge to U.K. corporation tax may be entitled to exemption from U.K. corporation
tax in respect of dividend payments. If the conditions for the exemption are not satisfied, or such U.K. Holder elects for an otherwise exempt dividend to be
taxable, United Kingdom corporation tax will be chargeable on the amount of any dividends. The main rate of United Kingdom corporation tax for the
2024/2025 corporation tax year is 25% for U.K. corporations (or corporate groups) with annual profits of £250,000 or higher. If potential investors are in
any doubt as to their position, they should consult their own professional advisers.
A corporate holder of ADSs that is not a U.K. Holder will not be subject to U.K. corporation tax on dividends received from the company, unless it
carries on a trade in the United Kingdom through a permanent establishment to which the ADSs are attributable. In these circumstances, such holder may,
depending on its individual circumstances and if the exemption from U.K. corporation tax discussed above does not apply, be chargeable to U.K.
corporation tax on dividends received from the company.
Taxation of Disposals
U.K. Holders. A disposal or deemed disposal of ADSs by an individual U.K. Holder may, depending on his or her individual circumstances, give
rise to a chargeable gain or to an allowable loss for the purpose of U.K. capital gains tax. The principal factors that will determine the capital gains tax
position on a disposal of ADSs are the extent to which the U.K. Holder realizes any other capital gains in the tax year in which the disposal is made, the
extent to which the holder has incurred capital losses in that or any earlier tax year and the level of the annual allowance of tax-free gains in that tax year,
or the Annual Exemption. The Annual Exemption for the 2024/2025 tax year is £3,000. If, after all allowable deductions, an individual U.K. Holder who is
subject to U.K. income tax at either the higher or the additional rate becomes liable to U.K. capital gains tax on the disposal of ADSs, from October 30,
2024 the current applicable rate is 24%. For an individual U.K. Holder who is subject to U.K. income tax at the basic rate and, after all allowable
deductions, liable to U.K. capital gains tax on such disposal, from October 30, 2024 the current applicable rate is 18%, save to the extent that any capital
gains exceed the unused basic rate tax band. In that case, from October 30, 2024 the current rate applicable to the excess is 24%.
An individual U.K. Holder who ceases to be resident in the United Kingdom (or who fails to be regarded as resident in a territory outside the United
Kingdom for the purposes of double taxation relief) for a period of less than five years and who disposes of his or her ADSs during that period of
temporary non-residence may be liable to U.K. capital gains tax on a chargeable gain accruing on such disposal on his or her return to the United Kingdom
(or upon ceasing to be regarded as resident outside the United Kingdom for the purposes of double taxation relief) (subject to available exemptions or
reliefs).
A disposal or deemed disposal of ADSs by a corporate U.K. Holder may give rise to a chargeable gain or an allowable loss for the purpose of U.K.
corporation tax. Indexation allowance (which historically would have applied to reduce the amount of chargeable gain that is subject to corporation tax)
will not operate to reduce any gains on disposals of ADSs acquired on or after January 1, 2018 that arise to corporate U.K. Holders.
Non-United Kingdom Holders. The paragraphs below relating to the liability of non-U.K. Holders to U.K. tax on chargeable gains assume that the
company does not (and will not) derive 75% or more of its gross asset value from U.K. land.
An individual holder who is not a U.K. Holder will not be liable to U.K. capital gains tax on capital gains realized on the disposal of his or her ADSs
unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a permanent establishment in
the United Kingdom to which the ADSs are attributable. In these circumstances, such holder may, depending on his or her individual circumstances, be
chargeable to U.K. capital gains tax on chargeable gains arising from a disposal of his or her ADSs.
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A corporate holder of ADSs that is not a U.K. Holder will not be liable for U.K. corporation tax on chargeable gains realized on the disposal of its
ADSs unless it carries on a trade in the United Kingdom through a permanent establishment to which the ADSs are attributable. In these circumstances, a
disposal of ADSs by such holder may give rise to a chargeable gain or an allowable loss for the purposes of U.K. corporation tax.
Stamp Duty and Stamp Duty Reserve Tax
The statements below in relation to U.K. stamp duty and stamp duty reserve tax, or SDRT, apply irrespective of whether the relevant holder of
ADSs is resident or domiciled in the United Kingdom.
Issue and Transfer of Ordinary Shares
Issue (including to a depositary or clearance service). No U.K. stamp duty is payable on the issue of the ordinary shares.
There will be no SDRT payable on the issue of ordinary shares to a depositary receipt system or a clearance service. We understand that HMRC
recognizes The Depositary Trust Company, or DTC, as a clearance service for United Kingdom stamp duty and SDRT purposes.
Transfer to a depositary or clearance service. Transfers of, and unconditional agreements to transfer, ordinary shares to, or to a nominee or agent
for, a person whose business is or includes issuing depositary receipts or the provision of clearance services, will generally be regarded by HMRC as
subject to SDRT (and where the transfer is effected by a written instrument, stamp duty) at a rate of 1.5% of the amount or value of the consideration or, in
certain circumstances, the value of the ordinary shares transferred unless, (a) in the case of a clearance service, it has made an election under section 97A(1)
Finance Act 1986, or (b) such transfer is in the course of an exempt capital-raising arrangement or an exempt listing arrangement. Transfers of ordinary
shares between depositary receipt systems and clearance services will generally be exempt from stamp duty and SDRT unless, in the case of a clearance
service, it has made an election under section 97A(1) Finance Act 1986. Our understanding is that DTC has not made such an election.
Transfer on sale. The transfer on sale of ordinary shares by a written instrument of transfer will generally be liable to U.K. stamp duty at the rate of
0.5% of the amount or value of the consideration for the transfer. The purchaser normally pays the stamp duty.
The transfer of ordinary shares within a depositary receipt system or clearance service should not be subject to stamp duty or SDRT, except where a
clearance service has made an election under section 97A(1) Finance Act 1986. Our understanding is that DTC has not made such an election.
An agreement to transfer ordinary shares outside a depositary receipt system or a clearance service will generally give rise to a liability on the
purchaser to SDRT at the rate of 0.5% of the amount or value of the consideration. Such SDRT is payable on the seventh day of the month following the
month in which the charge arises, but where an instrument of transfer is executed and duly stamped before the expiry of a period of six years beginning
with the date of that agreement, (i) any SDRT that has not been paid ceases to be payable, and (ii) any SDRT that has been paid may be recovered from
HMRC, generally with interest.
Issue or Transfer of ADSs/ADRs
Based on current HMRC published practice, no U.K. stamp duty or SDRT should be payable on the issue or transfer of (including an unconditional
agreement to transfer) a depositary receipt and the ADS to which they relate, on the basis that a depositary receipt is not regarded as “stock” or a
“marketable security” for U.K. stamp duty purposes and is not considered a “chargeable security” for the purposes of SDRT.
F.
Dividends and Paying Agents
Not Applicable.
G. Statement by Experts
Not Applicable.
154
H. Documents on Display
We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the
SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information filed with the SEC at the
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 1-800-732-0330. In addition, the SEC maintains an Internet website that contains reports and other information about issuers, like us,
that file electronically with the SEC. The address of that website is www.sec.gov.
We also make available on our website, free of charge, our Annual Report and the text of our reports on Form 6-K, including any amendments to
these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our
website address is www.nucana.com. The information contained on our website is not incorporated by reference in this Annual Report.
I.
Subsidiary Information
Not Applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Market risk arises from our exposure to fluctuation in interest rates and currency exchange rates. These risks are managed by maintaining an
appropriate mix of cash deposits in the two main currencies we operate in, placed with a variety of financial institutions for varying periods according to
expected liquidity requirements.
Interest Rate Risk
As of December 31, 2024, the Company had cash and cash equivalents of £6.7 million (2023: £17.2 million). Exposure to interest rate sensitivity is
impacted primarily by changes in the underlying bank interest rates. The Company’s surplus cash and cash equivalents are invested in interest-bearing
accounts and certificates of deposit from time to time which earn interest at fixed or variable rates based on the terms agreed for each account. The
Company has not entered into investments for trading or speculative purposes.
An increase in the bank interest rates by 0.5 percentage points would increase the net annual interest income applicable to the cash and cash
equivalents held on variable and short-term fixed rate deposits by £14,000 (2023: £45,000).
Currency Risk
The Company’s functional currency is U.K. pounds sterling, and our transactions are commonly denominated in that currency. However, a portion
of expenses are incurred in other currencies, primarily U.S. dollars, and are exposed to the effects of this exchange rate.
Although the Company is based in the United Kingdom, it sources active pharmaceutical ingredient, raw materials, research and development,
manufacturing, consulting and other services worldwide, including from the United States, the European Union and India. Any weakening of the pound
sterling against the currencies of such other jurisdictions makes the purchase of such goods and services more expensive for the Company. The Company
seeks to minimize this exposure by maintaining currency cash balances at levels appropriate to meet foreseeable short to mid-term expenses in these other
currencies. The Company thus holds a significant portion of cash and cash equivalents in U.S. dollars and reports the impact of exchange rates movements
on these balances. The Company does not use derivative instruments to manage exchange rate exposure. A 1% increase in the value of the pound sterling
relative to the U.S. dollar would increase the carrying value of net financial assets and liabilities in foreign currencies at December 31, 2024 by £4,000
(2023: £74,000 decrease).
For additional information about our quantitative and qualitative risks, see Note 17 to the consolidated financial statements included elsewhere in
this Annual Report.
155
Item 12. Description of Securities Other than Equity Securities
A. Debt Securities
Not Applicable.
B.
Warrants and Rights
Not Applicable.
C. Other Securities
Not Applicable.
D. American Depositary Shares
Citibank, N.A., or Citibank, has agreed to act as the depositary for the ADSs. Citibank’s depositary offices are located at 388 Greenwich Street, New
York, New York 10013. ADSs represent ownership interests in securities that are on deposit with the depositary. ADSs may be represented by certificates
that are commonly known as American Depositary Receipts, or ADRs. The depositary typically appoints a custodian to safekeep the securities on deposit.
In this case, the custodian is Citibank, N.A., London Branch.
We have appointed Citibank as depositary pursuant to a deposit agreement. A copy of the deposit agreement is on file with the SEC under cover of a
registration statement on Form F-6. You may obtain a copy of the deposit agreement from the SEC’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549 and from the SEC’s website (www.sec.gov). Please refer to registration number 333-220392 when retrieving such copy.
Fees and Charges
As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:
Service
Fee
Issuance of ADSs (e.g., an issuance of ADS upon a deposit of ordinary shares or upon a change in the
ADS(s)-to-ordinary shares ratio), excluding ADS issuances as a result of distributions of ordinary shares
Up to $0.05 per ADS issued
Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited property or upon a change
in the ADS(s)-to-ordinary shares ratio)
Up to $0.05 per ADS cancelled
Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other
entitlements)
Up to $0.05 per ADS held
Distribution of ADSs pursuant to (i) share dividends or other distributions, or (ii) exercise of rights to
purchase additional ADSs
Up to $0.05 per ADS held
Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off)
Up to $0.05 per ADS held
ADS services
Up to $0.05 per ADS held on the applicable
record date(s) established by the depositary
156
As an ADS holder you will also be responsible to pay certain charges such as:
•
taxes (including applicable interest and penalties) and other governmental charges;
•
the registration fees as may from time to time be in effect for the registration of ordinary shares on the share register and applicable to
transfers of ordinary shares to or from the name of the custodian, the depositary or any nominees upon the making of deposits and
withdrawals, respectively;
•
certain cable, telex and facsimile transmission and delivery expenses;
•
the expenses and charges incurred by the depositary in the conversion of foreign currency;
•
the fees and expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory
requirements applicable to ordinary shares, ADSs and ADRs; and
•
the fees and expenses incurred by the depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited
property.
ADS fees and charges payable upon (i) the issuance of ADSs, and (ii) the cancellation of ADSs are charged to the person to whom the ADSs are
issued (in the case of ADS issuances) and to the person whose ADSs are cancelled (in the case of ADS cancellations). In the case of ADSs issued by the
depositary into DTC, the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and may be charged to
the DTC participant(s) receiving the ADSs being issued or the DTC participant(s) holding the ADSs being cancelled, as the case may be, on behalf of the
beneficial owner(s) and will be charged by the DTC participant(s) to the account of the applicable beneficial owner(s) in accordance with the procedures
and practices of the DTC participants as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the
holders as of the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the
funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, holders as of the ADS record date will be invoiced for
the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held
through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee may be deducted from distributions made through DTC
and may be charged to the DTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge
the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.
In the event of refusal to pay the depositary fees or charges, the depositary may, under the terms of the deposit agreement, refuse the requested
service until payment is received or may set off the amount of the depositary fees and charges from any distribution to be made to the ADS holder.
Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will
receive prior notice of such changes. The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program, by
making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the
depositary agree from time to time.
157
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not Applicable.
Item 15. Controls and Procedures
A. Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report.
Based on such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were
effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
B.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
under the Exchange Act. Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. We have a program for the
review of our internal control over financial reporting to ensure compliance with the requirements of the Exchange Act and Section 404 of the Sarbanes-
Oxley Act of 2002. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of our principal executive officer and principal financial officer, assessed the effectiveness of our internal
control over financial reporting as of December 31, 2024. In conducting its assessment of internal control over financial reporting, management based its
evaluation on the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or
COSO, as at December 31, 2024. Based on its evaluation, our management has concluded that our internal control over financial reporting was effective as
at December 31, 2024.
C. Attestation Report of the Registered Public Accounting Firm
This report does not include an attestation report of our registered public accounting firm as we are currently a non-accelerated filer.
D. Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during
the period covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
Our Audit Committee is comprised of three of our non-executive directors, Adam George, Martin Mellish and Cyrille Leperlier, and each of these
members is an “independent director” as such term is defined in Rule 10A-3 under the Exchange Act and under the listing standards of the Nasdaq Stock
Market. Adam George serves as chair of this committee. Our Board has determined that Mr. George is an “audit committee financial expert” as defined in
Item 16A of Form 20-F.
158
After the filing of this Annual Report, Mr. George intends to resign as the audit committee chair and as a director of the Company, effective March
21, 2025. Mr. George’s anticipated departure is not the result of any disagreement with us on any matter related to our operations, policies or procedures
(financial reporting, accounting or otherwise). Mr. Mellish intends to succeed Mr. George as audit committee chair upon Mr. George’s resignation,
effective March 21, 2025. Our board of directors has determined that Mr. Mellish is an “audit committee financial expert” as contemplated by the rules of
the SEC implementing Section 407 of the Sarbanes Oxley Act of 2002.
Item 16B. Code of Ethics
Our Code of Business Conduct and Ethics is applicable to all of our employees, officers and directors and is available on our website at
http://www.nucana.com. We expect that any amendment to this code, or any waivers of its requirements, will be disclosed on our website. Information
contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report, and you should not consider
information on our website to be part of this Annual Report.
Item 16C. Principal Accountant Fees and Services
Our financial statements have been prepared in accordance with IFRS and are audited by Ernst & Young LLP, our independent registered public
accounting firm registered with the Public Company Accounting Oversight Board in the United States.
Ernst & Young LLP has served as our independent registered public accountant for each of the years ended December 31, 2022, December 31,
2023, and December 31, 2024 for which audited statements appear in this Annual Report.
The following table shows the aggregate fees billed to us, including some of our subsidiaries, for services rendered by Ernst & Young LLP.
Year ended December 31,
2024
2023
(in thousands)
Audit Fees
£
414 £
353
Audit-Related Fees (1)
65
277
Total
£
479 £
630
(1)
Audit-Related Fees are primarily for quarterly reviews and services related to SEC filings.
Our Audit Committee reviews and pre-approves the scope and the cost of audit services related to us and permissible non-audit services performed
by the independent auditors, other than those for de minimis services which are approved by the Audit Committee prior to the completion of the audit. All
of the services related to our company provided by Ernst & Young LLP during the last two fiscal years have been approved by the Audit Committee.
Item 16D. Exemptions From the Listing Standards For Audit Committees
Not Applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not Applicable.
Item 16F. Change in the Registrant’s Certifying Accountant
Not Applicable.
Item 16G. Corporate Governance
As a “foreign private issuer,” as defined by the SEC, although we are permitted to follow certain corporate governance practices of England and
Wales, instead of those otherwise required under The Nasdaq Stock Market, or Nasdaq, for
159
domestic issuers, we intend to follow the Nasdaq corporate governance rules applicable to foreign private issuers. While we voluntarily follow most
Nasdaq corporate governance rules, we intend to take advantage of the following limited exemptions:
•
Exemption from filing quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosing significant events within four days
of their occurrence.
•
Exemption from Section 16 rules regarding sales of ordinary shares by insiders, which will provide less data in this regard than shareholders
of U.S. companies that are subject to the Exchange Act.
•
Exemption from the Nasdaq rules applicable to domestic issuers requiring disclosure within four business days of any determination to grant
a waiver of the code of business conduct and ethics to directors and officers. Although we will require board approval of any such waiver, we
may choose not to disclose the waiver in the manner set forth in the Nasdaq rules, as permitted by the foreign private issuer exemption.
•
Exemption from the requirements that director nominees are selected, or recommended for selection by our board of directors, either by (1)
independent directors constituting a majority of our board of directors’ independent directors in a vote in which only independent directors
participate, or (2) a committee comprised solely of independent directors, and that a formal written charter or board resolution, as applicable,
addressing the nominations process is adopted.
•
Exemption from Nasdaq Rule 5620(c) regarding quorum requirements applicable to meetings of shareholders. Such quorum requirements are
not required under U.K. law given our Articles of Association provide quorum requirements that are generally applicable to meetings of
shareholders.
•
Exemption from Nasdaq Rule 5635, which generally requires an issuer to seek shareholder approval in connection with certain issuances of
securities, including (a) issuances in connection with the acquisition of the stock or assets of another company if upon issuance the issued
shares will equal 20% or more of the number of shares or voting power outstanding prior to the issuance, or if certain specified persons have
a 5% or greater interest in the assets or company to be acquired (Nasdaq Listing Rule 5635(a)); (b) issuances or potential issuances that will
result in a change of control of us (Nasdaq Listing Rule 5635(b)); (c) issuances in connection with equity compensation arrangements
(Nasdaq Listing Rule 5635(c)); and (d) issuances in transactions, other than public offerings, involving the sale, issuance or potential
issuance by the Company of shares (or securities convertible into or exercisable for shares) equal to 20% or more of the outstanding share
capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value
of the shares (Nasdaq Listing Rule 5635(d)). We intend to follow the requirements of the Companies Act 2006 with respect to any
requirement to obtain shareholder approval to authorize our directors to allot shares and to disapply statutory pre-emption rights prior to any
issuances of equity securities.
Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on home country corporate governance practices in
lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of
Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3),
consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii). Although we are permitted to follow certain
corporate governance rules that conform to U.K. requirements in lieu of many of the Nasdaq corporate governance rules, we intend to comply with the
Nasdaq corporate governance rules applicable to foreign private issuers as set forth in the prior sentence. Accordingly, our shareholders will not have the
same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. We may utilize these
exemptions for as long as we continue to qualify as a foreign private issuer. We intend to take all actions necessary for us to maintain compliance as a
foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002, the rules adopted by the SEC and the
Nasdaq corporate governance rules and listing standards.
Because we are a foreign private issuer, our directors and senior management are not subject to short-swing profit and insider trading reporting
obligations under Section 16 of the Exchange Act, as described above; however, we will be subject to the obligations to report changes in share ownership
under Section 13 of the Exchange Act and related SEC rules.
Item 16H. Mine Safety Disclosure
Not Applicable.
160
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
Item 16J. Insider Trading Policies
In November 2023, our board of directors adopted our Insider Trading Policy, which governs the purchase, sale, and other dispositions of our
securities by directors, officers, employees, and consultants. Our Insider Trading Policy is designed to promote compliance with insider trading laws and
rules and regulations, and any listing standards applicable to us. Each of our directors, officers, employees, and consultants is expected to review and to
comply with the terms of the Insider Trading Policy. A copy of our Insider Trading Policy is filed as an exhibit to this Annual Report.
Item 16K. Cybersecurity
We recognize the critical importance of maintaining the trust and confidence of patients, business partners and employees toward our business and
are committed to protecting the confidentiality, integrity and availability of our business operations and systems. Our board of directors is actively involved
in oversight of our risk management activities, and cybersecurity represents an important element of our overall approach to risk management. Our
cybersecurity policies, standards, processes and practices are based on recognized frameworks established by the United Kingdom National Cyber Security
Centre or NCSC, and other applicable industry standards. In general, we seek to address cybersecurity risks through a comprehensive, cross-functional
approach that is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing
and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Cybersecurity Risk Management and Strategy; Effect of Risk
We face risks related to cybersecurity such as unauthorized access, cybersecurity attacks and other security incidents, including as perpetrated by
hackers and unintentional damage or disruption to hardware and software systems, loss of data, and misappropriation of confidential information. To
identify and assess material risks from cybersecurity threats, we maintain a comprehensive cybersecurity program and have implemented a Cyber Security
Management Team, or CSMT, to ensure our systems are effective and prepared for information security risks, including regular oversight of our programs
for security monitoring for internal and external threats to ensure the confidentiality and integrity of our information assets. The CSMT consists of our
Director of Operations, Director of Finance, and Senior Vice President of Clinical Operations.
We consider risks from cybersecurity threats alongside other company risks as part of our overall risk assessment process. We employ a range of
tools and the services of third-party service providers, including vulnerability assessments, to inform our risk identification and assessment. As discussed in
more detail under “Cybersecurity Governance” below, our Audit Committee of our board of directors provides oversight of our CSMT, which leads and
conducts our cybersecurity risk management and strategy processes.
We also identify our cybersecurity threat risks by comparing our processes to standards set by the NCSC, as well as by engaging experts to attempt
to infiltrate our information systems and conduct risk management assessments. To provide for the availability of critical data and systems, maintain
regulatory compliance, manage our material risks from cybersecurity threats, and protect against and respond to cybersecurity incidents, we undertake the
following activities:
•
monitor emerging data protection laws and implement changes to our processes that are designed to comply with such laws;
•
through our policies, practices and contracts (as applicable), require employees, as well as third parties that provide services on our behalf, to
treat confidential information and data with care;
•
employ technical safeguards that are designed to protect our information systems from cybersecurity threats, including software operating
system updates, anti-virus software, multifactor authentication, firewalls, intrusion prevention and detection systems, anti-malware
functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence;
•
implement an incident notification and response process to help us identify, protect, detect, respond and recover when there is an actual or
potential cybersecurity incident; and
161
•
employ a software patch and vulnerability management program, including software updates, computer back-up processes, information
technology support, and regular third-party vulnerability scans.
Our incident response plan coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which
include processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable
legal obligations and mitigate damage to our business and reputation.
As part of the above processes, we regularly engage with consultants and other third parties, including regular third-party review of our
cybersecurity program to help identify areas for continued focus, improvement and compliance.
Our processes to address cybersecurity threat risks associated with our use of third-party service providers, including our suppliers and
manufacturers who have access to patient and employee data or our systems, include requiring those third parties that could introduce significant
cybersecurity risk to us to agree by contract to manage their cybersecurity risks in specified ways, including with respect to processing and transferring
personal and patient data. We intend to conduct due diligence of third-party vendors and supplier cybersecurity protocols.
We describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have
materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the
headings “Our proprietary information, or that of our suppliers and any future collaborators, may be lost or we may suffer security breaches,” “We face
regulation and potential liability related to the privacy of health information we obtain from clinical trials sponsored by us or our collaborators,” and “Our
business and operations could suffer in the event of information technology and other internal infrastructure system failures,” which disclosures are
incorporated by reference herein.
We have not experienced any material cybersecurity incidents and we have not incurred any expenses in relation to cybersecurity incidents. This
includes penalties and settlements, of which there were none.
Cybersecurity Governance; Management
Cybersecurity is an important part of our risk management processes and an area of focus for our board of directors and management. In general, our
Audit Committee of our board of directors and our executive management oversee our CSMT, which oversees our risk management activities designed and
implemented by our management, and considers specific risks, including, for example, risks associated with our strategic plan, business operations, and
capital structure. Our Audit Committee of our board of directors and executive management executes its oversight responsibility for risk management both
directly and through delegating oversight of certain of these risks to our CSMT, and our board of directors has authorized our Audit Committee and CSMT
to oversee risks from cybersecurity threats.
At least quarterly, our Audit Committee receives an update from our CSMT of our cybersecurity threat risk management and strategy processes
covering topics such as data security posture, any results from third party assessments, progress towards pre-determined risk-mitigation-related goals, our
incident response plan, and material cybersecurity threat risks or incidents and developments, as well as the steps management has taken to respond to such
risks. In such sessions, our Audit Committee generally receives materials that include current and emerging material cybersecurity threat risks, describing
our ability to mitigate those risks, as well as recent developments, evolving standards, technological developments and information security considerations
arising with respect to our peers and third parties. Our Audit Committee and executive management also receive prompt and timely information regarding
any cybersecurity incident that meets establishing reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed.
Members of our Audit Committee and board of directors are also encouraged to regularly engage in conversations with executive management on
cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. Material cybersecurity threat risks
are also considered during separate board of directors' meeting discussions of important matters like enterprise risk management, operational budgeting,
business continuity planning, mergers and acquisitions, brand management, and other relevant matters.
Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our CSMT, which consists of our
Director of Operations, Director of Finance, and Senior Vice President of Clinical Operations. Such individuals have collectively over 16 years of prior
work experience in various roles involving managing information security, developing cybersecurity strategies, implementing effective information and
cybersecurity programs. These team
162
members are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of,
and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan. As
discussed above, these management team members report to the Audit Committee of our board of directors and executive management about cybersecurity
threat risks, among other cybersecurity related matters, on a quarterly basis.
163
PART III
Item 17. Financial Statements
We have elected to provide financial statements pursuant to Item 18.
Item 18. Financial Statements
The financial statements are filed as part of this Annual Report beginning on page F-1.
164
Item 19. Exhibits
Exhibit
Description
Schedule/
Form
File
Number
Exhibit
File
Date
1.1
Articles of Association of the registrant
Form S-8
333-223476
3.1
03/07/2018
2.1
Deposit Agreement by and among the registrant
and Citibank, N.A. and all Holders and Beneficial
Owners of ADSs issued hereunder, dated as of
October 2, 2017
Form 20-F
001-38215
2.1
03/22/2018
2.2
Form of American Depositary Receipt (included in Exhibit 2.1)
Form 20-F
001-38215
2.1
03/22/2018
4.1
Registration Rights Agreement by and among the registrant and the
investors named therein, dated as of September 20, 2017
Form 20-F
001-38215
4.1
03/22/2018
4.2#
2009 Share Option Scheme (as amended) and form of option
agreements thereunder
Form F-1/A
333-220321
10.1
09/18/2017
4.3#
2012 Share Option Scheme (as amended) and form of option
agreements thereunder
Form F-1/A
333-220321
10.2
09/18/2017
4.4#
2016 Share Option Scheme (as amended) and form of option
agreements thereunder
Form F-1/A
333-220321
10.3
09/18/2017
4.5#
2020 Long-Term Incentive Plan
Form S-8
333-227624
10.1
08/19/2020
4.6#
2020 Company Share Option Plan
Form S-8
333-227624
10.2
08/19/2020
4.7†
Variation Agreement, dated March 15, 2012, by and between the
registrant and Cardiff ProTides Limited and the related Side Letter,
dated May 15, 2012
Form F-1/A
333-220321
10.5
09/18/2017
4.8†
Assignment, License and Collaboration Agreement, dated October
13, 2009, by and between the registrant and Cardiff ProTides
Limited
Form F-1/A
333-220321
10.6
09/18/2017
4.9†
Patent Assignment Agreement, dated March 15, 2012, by and
between the registrant and Cardiff ProTides Limited
Form F-1/A
333-220321
10.7
09/18/2017
4.10†
Research, Collaboration and License Agreement, dated December
21, 2017, by and between the registrant, Cardiff University and
University College Cardiff Consultants Ltd, as amended by
Amendment No. 1, dated February 1, 2018
Form 20-F
001-38215
4.10
03/22/2018
4.11+
Amendment No. 4, dated February 20, 2020, to Research,
Collaboration and License Agreement dated December 21, 2017, by
and between the registrant, Cardiff University and University
College Cardiff Consultants Ltd
Form 20-F
001-38215
4.11
03/10/2020
4.12+
Amendment No. 5, dated December 11, 2020, to Research,
Collaboration and License Agreement dated December 21, 2017, by
and between the registrant, Cardiff University and University
College Cardiff Consultants Ltd
Form 20-F
001-38215
4.12
03/04/2021
4.13
Lease between the registrant and Drum Income Plus Limited, dated
September 21, 2017
Form 20-F
001-38215
4.11
03/22/2018
165
4.14#
Form of Deed of Indemnity for directors and officers
Form F-1/A
333-2220321
10.10
09/18/2017
4.15
Description of securities of the registrant
Form 20-F
001-38215
4.14
03/10/2020
4.16*
Minute of Variation between the registrant and Custodian REIT
PLC, dated October 27, 2022
8.1
List of subsidiaries of the registrant
Form F-1/A
333-220321
21.1
09/01/2017
12.1*
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive
Officer, as adopted pursuant to §302 of the Sarbanes-Oxley Act of
2002.
12.2*
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
Officer, as adopted pursuant to §302 of the Sarbanes-Oxley Act of
2002.
13.1*
Section 1350 Certification of Principal Executive Officer, as
adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
13.2*
Section 1350 Certification of Principal Financial Officer, as adopted
pursuant to §906 of the Sarbanes-Oxley Act of 2002.
15.1*
Consent of Ernst & Young LLP
19.1*
Insider Trading Policy
97.1*
Clawback Policy, adopted by the registrant on December 1, 2023
101.Inline INS XBRL Instance Document
101.Inline SCH XBRL Taxonomy Extension Schema With Embedded Linkbase
Documents
104. Inline XBRL Cover Page Interactive Data File
* Filed herewith.
# Indicates management contract or compensatory plan.
† Confidential treatment previously requested and granted as to portions of the exhibit. Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
+ Certain portions of the exhibits that are not material and would be competitively harmful if publicly disclosed have been redacted. Copies of the
unredacted exhibits will be furnished to the Securities and Exchange Commission upon request.
166
Signature
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this Annual Report on its behalf.
NUCANA PLC
By:
/s/ Hugh S. Griffith
Name:
Hugh S. Griffith
Title:
Chief Executive Officer
Date: March 20, 2025
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID:1438)
F-1
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022
F-3
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2024, 2023 and 2022
F-4
Consolidated Statements of Financial Position at December 31, 2024 and 2023
F-5
Consolidated Statements of Changes in Equity for the years ended December 31, 2024, 2023 and 2022
F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
F-7
Notes to the Consolidated Financial Statements
F-8
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of NuCana plc
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of NuCana plc (the Company) as of December 31, 2024 and 2023,
the related consolidated statements of operations, comprehensive loss, changes in equity and cash flows for each of the three years in the period ended
December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2024, 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.
The Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in note 2 of the consolidated financial statements, the Company has suffered recurring losses from operations and has stated that substantial doubt exists
about the Company's ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these
matters are also described in note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the accounts or disclosures to which it relates.
F-2
Recognition of clinical trial investigator fees
Description of the Matter
At December 31, 2024, the Company has recognized accruals for clinical trial investigator fees of £3.9
million, within the total of £4.9 million of accruals for clinical trial expenses. As disclosed in note 2 of the
consolidated financial statements, the Company recognizes within clinical trial expenses, investigator fees for
clinical trials in the statement of operations in the period in which they are incurred, which depends on
management’s assessment of the progress of clinical trials at the period end.
Auditing the accounting for clinical trial investigator fees was challenging, due to the judgement and
subjectivity involved in management’s assessment of the investigator fees incurred relative to the progress of
clinical trials, specifically activities conducted by third-party service providers, and the evaluation of the
completeness and accuracy of the data used to estimate the related accruals.
How we addressed the matter in our
audit
To assess the accounting for clinical trial investigator fees, our audit procedures included, among others,
testing the completeness and accuracy of underlying data used by management to estimate investigator fees
incurred, by inspecting the related contracts and amendments to the contracts with third-party service
providers and comparing the contracted rates to those applied in management’s estimate. In order to assess
the progress of clinical trial activities at the period end, our procedures included inquiry of research and
development personnel regarding such progress and comparing to third-party reports detailing the progress of
clinical trials. We independently obtained confirmations from the third-party service providers regarding the
clinical trial status reports as at the year end. We considered the consistency of materials reviewed by the
Board of Directors regarding the status of clinical trial progress with the judgements applied by management
in recording the accruals. We also inspected invoices received from third-party service providers and
compared payments made subsequent to December 31, 2024, to the accruals for clinical trial investigator
expenses as at December 31, 2024.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
Edinburgh, United Kingdom
March 20, 2025
F-3
NUCANA PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31,
Notes
2024
2023
2022
(in thousands, except per share data)
£
£
£
Research and development expenses
(18,017)
(25,062)
(36,426)
Administrative expenses
(4,988)
(6,063)
(7,291)
Impairment of intangible assets
8
(33)
(503)
(292)
Net foreign exchange gains (losses)
229
(1,156)
4,887
Operating loss
(22,809)
(32,784)
(39,122)
Finance income
358
754
669
Loss before tax
5
(22,451)
(32,030)
(38,453)
Income tax credit
7
3,454
4,398
6,432
Loss for the year attributable to equity holders of the Company
(18,997)
(27,632)
(32,021)
Basic and diluted loss per ordinary share
4
(0.26)
(0.53)
(0.61)
The accompanying notes form an integral part of these consolidated financial statements.
F-4
NUCANA PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
YEAR ENDED DECEMBER 31,
Notes
2024
2023
2022
(in thousands)
£
£
£
Loss for the year
(18,997)
(27,632)
(32,021)
Other comprehensive income (expense):
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
15
(41)
61
Other comprehensive income (expense) for the year
15
(41)
61
Total comprehensive loss for the year
(18,982)
(27,673)
(31,960)
Attributable to:
Equity holders of the Company
(18,982)
(27,673)
(31,960)
The accompanying notes form an integral part of these consolidated financial statements.
F-5
NUCANA PLC
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AT DECEMBER 31,
Notes
2024
2023
(in thousands)
£
£
ASSETS
Non-current assets
Intangible assets
8
2,199
2,128
Property, plant and equipment
9
197
521
Deferred tax asset
7
113
143
2,509
2,792
Current assets
Prepayments, accrued income and other receivables
10
922
2,671
Current income tax receivable
7
4,594
5,123
Cash and cash equivalents
16
6,749
17,225
12,265
25,019
Total assets
14,774
27,811
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium
11
151,827
143,420
Other reserves
12
78,421
79,173
Accumulated deficit
(224,294)
(207,706)
Total equity attributable to equity holders of the Company
5,954
14,887
Non-current liabilities
Provisions
37
58
Lease liabilities
14
117
190
154
248
Current liabilities
Trade payables
2,705
3,375
Payroll taxes and social security
134
155
Accrued expenditure
5,714
8,940
Lease liabilities
14
73
206
Provisions
40
—
8,666
12,676
Total liabilities
8,820
12,924
Total equity and liabilities
14,774
27,811
The accompanying notes form an integral part of these consolidated financial statements.
F-6
NUCANA PLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31,
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 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 December 31, 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 December 31, 2023
2,114
141,306
(339 )
37,043
3
42,466
(207,706 )
14,887
Loss for the year
—
—
—
—
—
—
(18,997 )
(18,997 )
Other comprehensive income for the
year
—
—
—
—
15
—
—
15
Total comprehensive loss for the year
—
—
—
—
15
—
(18,997 )
(18,982 )
Share-based payments
—
—
—
1,646
—
—
—
1,646
Exercise of share options
6
1
—
(330 )
—
—
326
3
Lapse of share options
—
—
—
(2,083 )
—
—
2,083
—
Issue of share capital
3,561
5,168
—
—
—
—
—
8,729
Share issue expenses
—
(329 )
—
—
—
—
—
(329 )
Balance at December 31, 2024
5,681
146,146
(339 )
36,276
18
42,466
(224,294 )
5,954
The accompanying notes form an integral part of these consolidated financial statements.
F-7
NUCANA PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
2024
2023
2022
(in thousands)
£
£
£
Cash flows from operating activities
Loss for the year
(18,997)
(27,632)
(32,021)
Adjustments for:
Income tax credit
(3,454)
(4,398)
(6,432)
Amortization, depreciation and loss on disposal
522
575
732
Impairment of intangible assets
33
503
292
Movement in provisions
10
(4,109)
4,100
Finance income
(358)
(754)
(669)
Interest expense on lease liabilities
17
29
21
Share-based payments
1,646
3,857
4,890
Net foreign exchange (gains) losses
(369)
1,176
(5,014)
(20,950)
(30,753)
(34,101)
Movements in working capital:
Decrease in prepayments, accrued income and other receivables
1,737
1,234
307
(Decrease) increase in trade payables
(670)
(1,428)
2,974
(Decrease) increase in payroll taxes, social security and accrued expenditure
(3,250)
(1,087)
442
Movements in working capital
(2,183)
(1,281)
3,723
Cash used in operations
(23,133)
(32,034)
(30,378)
Net income tax received
4,015
5,595
7,220
Net cash used in operating activities
(19,118)
(26,439)
(23,158)
Cash flows from investing activities
Interest received
372
770
638
Payments for property, plant and equipment
(4)
(4)
(12)
Payments for intangible assets
(289)
(474)
(506)
Repayment of other assets
—
2,596
—
Net cash from investing activities
79
2,888
120
Cash flows from financing activities
Payments of lease liabilities
(223)
(270)
(227)
Proceeds from issue of share capital - exercise of share options
7
4
66
Proceeds from issue of share capital
8,729
249
—
Share issue expenses
(329)
(36)
—
Net cash from (used in) financing activities
8,184
(53)
(161)
Net decrease in cash and cash equivalents
(10,855)
(23,604)
(23,199)
Cash and cash equivalents at beginning of year
17,225
41,912
60,264
Effect of exchange rate changes on cash and cash equivalents
379
(1,083)
4,847
Cash and cash equivalents at end of year
6,749
17,225
41,912
The accompanying notes form an integral part of these consolidated financial statements.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-8
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 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 Limited, NuCana, Inc. and NuCana BioMed Trustee Company Limited. The financial
statements for the Company were authorized for issue by the board of directors on March 20, 2025.
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.
The Company’s financial statements comprise the financial statements of the Company and its subsidiaries at December 31, 2024. 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.
Going concern
The Company’s consolidated financial statements have been presented on the basis that it is a going concern. The Company has not generated any
revenues from operations to date and does not expect to in the foreseeable future. As such, the Company has incurred recurring net losses, has an
accumulated deficit totaling £224.3 million and cash flows used in operating activities of £19.1 million as of and for the year ended December 31, 2024.
The Company had £6.7 million of cash and cash equivalents at December 31, 2024.
In reviewing the going concern assessment the Company’s board of directors have considered a going concern period of 12-months from the
issuance of these financial statements. Based on our current operating plan, our cash and cash equivalents on hand will not be sufficient to fund our
anticipated operations for the entirety of the going concern assessment period. As the Company intends to continue to progress its research and
development activities, 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 or other sources.
Consequently, the Company has plans to commence an equity financing process having considered several options to raise funds. However, the
Company’s ADSs are currently trading at a price below the nominal value of the Company’s ordinary shares of £0.04 each, which means the Company is
unable to issue new ordinary shares/ADSs at market value. Therefore, to facilitate the equity financing process, as disclosed in Note 18, on March 18,
2025, the Company distributed a notice of its general meeting to be held on April 7, 2025 to approve the sub-division and related redesignation of the
Company’s ordinary shares. The Company’s board of directors believe there is a reasonable prospect that the financing process will be completed
successfully in the coming months. However, there can be no assurance that the Company will be successful and if it is unable to raise additional capital,
the Company could be forced to complete a wind down of its operations and/or seek bankruptcy protection.
In addition, the Company carefully manages its capital resources and reviews its cost structure on an ongoing basis, with the aim of improving its
cash burn rate and reducing its operating expenses. The Company has controllable mitigating actions identified to manage its expenditure, including
management of third-party expenses and internal resource costs, as well as prioritization of development programs.
However, if the Company is unable to obtain additional capital, the Company will be required to delay or reduce its research and development
programs which could negatively impact its ability to generate future sustainable operating revenues and profits.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-9
2. Material accounting policies (continued)
As a result of these matters, there is uncertainty related to the ability of the Company to raise sufficient additional capital within the going concern
period, prior to its cash balances being exhausted. These events or conditions raise substantial doubt about 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
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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 dates 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 recognized in the financial statements:
Research and development expenses
The Company recognizes research and development expenses in the statement of operations 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 capitalize such costs as intangible assets. Management will continue to exercise judgement in the appropriate treatment of research
and development costs.
Taxation
Management judgement is required to determine the amount of deferred tax assets that should be recognized, based upon the likely timing and level
of future taxable profits. Further details are contained in Note 7.
The following estimates have had the most material effect on the amounts recognized in the financial statements:
Recognition of clinical trial 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 trials. 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 trials; and
•
pass-through costs for activities at clinical trial investigator sites.
Accruals for clinical trial expenses, including estimated amounts recognized consistent with the above policy, were £4.9 million at December 31,
2024 as compared to £6.2 million at December 31, 2023. This includes accruals for investigator fees of £3.9 million at December 31, 2024 as compared to
£4.8 million at December 31, 2023.
Prepayments for clinical trial expenses, including estimated amounts recognized consistent with the above policy, were £0.4 million at December
31, 2024 as compared to £1.0 million at December 31, 2023. These amounts include sums that are expected to be utilized over the period of the associated
trials, 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 recognized consistent with the above policy, were £0.1 million at
December 31, 2024 as compared to £0.4 million at December 31, 2023.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-10
2. Material accounting policies (continued)
Prepayments for contracted manufacturing expenses, including estimated amounts recognized consistent with the above policy, were £nil at
December 31, 2024 as compared to £41,000 at December 31, 2023.
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 13.
Basis of consolidation
The consolidated 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, unrealized 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 consolidated financial statements
from the date the Company gains control until the date the Company ceases to control the subsidiary.
Foreign currencies
The Company’s consolidated financial statements are presented in pounds sterling, which is also the parent company’s functional currency. For each
group entity, the Company determines the functional currency and items included in the financial statements of each entity are measured using that
functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company’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 recognized in the consolidated statements of operations.
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 statements of operations 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 recognized in the consolidated statements of comprehensive income or loss.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-11
2. Material accounting policies (continued)
Segment reporting
The Company operates in one operating segment. Operating segments are reported in a manner consistent with the internal reporting provided to the
Company’s chief operating decision maker (“the CODM”). The Company’s CODM, its Chief Executive Officer, views the Company’s operations and
manages its business as a single operating segment, which is the business of developing and commercializing ProTides for use in Oncology. The
Company’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 are issued. Costs that are not incremental and directly attributable to issuing
new shares, are recorded as an expense in the consolidated statements of operations.
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 amortization 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 amortization method and amortization period for the principal categories of intangible assets are follows:
Asset class
Amortization method and period
Patents
Straight-line over 20 years
Computer software
Straight-line between 3 and 5 years
The Company’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 amortized over the remaining life of the relevant
primary patent. The amortization expense on intangible assets with finite lives is recognized in the statements of operations as an administrative expense.
The amortization method and the amortization 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 amortization period or method, as appropriate.
Intangible assets are tested for impairment when there is an indicator of impairment.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-12
2. Material accounting policies (continued)
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 recognized in the statement of operations in the year in which they are incurred. Development expenditures
on an individual project will be recognized as an intangible asset when the Company 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.
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 Company
operates within the tax regime.
Income tax credit
The Company 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 April 1, 2023 (33.35% prior to April 1, 2023). In
the U.S. the Company 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 Company 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 Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The
Company recognizes lease liabilities to make lease payments and right of use assets representing the right to use the underlying assets.
Right of use assets
The Company recognizes 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 recognized, 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.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-13
2. Material accounting policies (continued)
Lease liability
At the commencement date of the lease, the Company recognizes 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 Company 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 Company 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 Company had a number of lease contracts that include extension and termination options. The Company 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 Company reassesses the lease term if there is a
significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate,
such as the construction of significant leasehold improvements.
Refer to Note 14 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 recognized 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 Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, the Company
estimates the recoverable amount of the asset.
An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment
losses are recognized in the consolidated statements of operations.
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.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-14
2. Material accounting policies (continued)
Reversal of impairment
An assessment is made at each reporting date as to whether there is an indication that a previously recognized impairment loss may no longer exist
or may have decreased. If such an indication exists, the recoverable amount is estimated.
A previously recognized 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 recognized. 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 amortization, if no
impairment loss had been recognized.
Share-based payments
Employees, directors and consultants of the Company receive remuneration in the form of share options, whereby individuals render services as
consideration for equity instruments and the cost is recognized 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 13.
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 prioritizes 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.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-15
2. Material accounting policies (continued)
Accounting Standards
In preparing these financial statements, the Company 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
December 31, 2024.
The following amendments have been adopted as of January 1, 2024 in these financial statements:
•
Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-Current (effective from January
1, 2024)
•
Amendments to IAS 1 Presentation of Financial Statements – Non-Current Liabilities with Covenants (effective from January 1, 2024)
•
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback (effective from January 1, 2024)
•
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements (effective from January 1, 2024)
The Company concluded that these have not had a material impact on the Company’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:
•
IFRS 18 Presentation and Disclosures in Financial Statements (effective from January 1, 2027)
•
IFRS 19 Subsidiaries without Public Accountability: Disclosures (effective from January 1, 2027)
•
Amendments to IAS 21 Lack of Exchangeability (effective from January 1, 2025)
•
Amendments IFRS 9 and IFRS 7 regarding the classification and measurement of financial instruments (effective from January 1, 2026)
The Company will adopt the above standards and amendments on their effective date, although the Company has reviewed the above standards and
amendments and considers that they either do not apply to the Company or will not have a material impact in future periods.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-16
3. Staff costs
Included in research and development expenses:
2024
2023
2022
(in thousands)
£
£
£
Wages and salaries
3,391
4,530
4,893
Social security costs
376
516
569
Pension costs
205
210
213
Share-based payments
1,181
2,551
3,125
5,153
7,807
8,800
Included in administrative expenses:
2024
2023
2022
(in thousands)
£
£
£
Wages and salaries
1,247
1,500
1,587
Social security costs
116
160
155
Pension costs
44
46
46
Share-based payments
465
1,306
1,765
1,872
3,012
3,553
Total employee benefit expense
7,025
10,819
12,353
The average number of staff employed under contracts of service were:
2024
2023
2022
(number)
Research and development activities
20
23
26
Administrative activities
6
6
7
26
29
33
Directors’ remuneration & other benefits
2024
2023
2022
(in thousands)
£
£
£
Directors’ remuneration
903
1,216
1,290
Pension and other benefits
64
61
57
967
1,277
1,347
The number of directors who exercised share options in 2024 was 2 (2023: 2; 2022: 3). The gain on exercise of these options was £2,000 (2023:
£8,000; 2022: £48,000).
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-17
3. Staff costs (continued)
The above amounts for remuneration include the following in respect of the highest paid director:
2024
2023
2022
(in thousands)
£
£
£
Directors’ remuneration
597
913
966
Pension and other benefits
64
61
57
661
974
1,023
4. Basic and diluted loss per ordinary share
2024
2023
2022
(in thousands, except per share data)
£
£
£
Loss for the year
(18,997)
(27,632)
(32,021)
Basic and diluted weighted average number of ordinary shares
74,191
52,573
52,235
£
£
£
Basic and diluted loss per ordinary share
(0.26)
(0.53)
(0.61)
Basic loss per ordinary share is calculated by dividing the loss for the year attributable to the equity holders of the Company by the weighted
average number of ordinary shares outstanding during the year.
The equity-settled transactions were considered to be anti-dilutive as they would have decreased the loss per ordinary share and were therefore
excluded from the calculation of diluted loss per ordinary share.
5. Loss before tax
Loss before tax is stated after charging:
2024
2023
2022
(in thousands)
£
£
£
Administrative expenses:
Amortization
185
208
239
Depreciation
337
367
473
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-18
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
March 31, 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 commercialize 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 commercialize 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 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.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-19
6. Capital commitments and contingencies (continued)
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 plan, the Company granted unapproved share options that have fully vested. If and when these share options
are exercised, the Company 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 December 31, 2024, 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 £nil (December 31, 2023: £0.1 million).
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-20
7. Income tax credit
The major components of income tax for the years ended December 31, 2024, 2023 and 2022 are as follows:.
2024
2023
2022
(in thousands)
£
£
£
Current tax:
In respect of current year U.K.
3,592
4,558
6,366
In respect of current year U.S.
—
(1)
(3)
In respect of prior years U.K.
(106)
(206)
35
Total current tax
3,486
4,351
6,398
Deferred tax:
In respect of current year U.S.
(32)
48
34
In respect of prior years U.S.
—
(1)
—
Total deferred tax
(32)
47
34
Income tax credit
3,454
4,398
6,432
Current income tax receivable:
U.K. tax
4,591
5,121
6,366
U.S. tax
3
2
1
Current income tax receivable
4,594
5,123
6,367
Deferred tax:
U.S. tax
113
143
103
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-21
7. Income tax credit (continued)
The credit for the year can be reconciled to the loss per the statement of operations as follows:
2024
2023
2022
(in thousands)
£
£
£
Loss before tax
(22,451)
(32,030)
(38,453)
Tax on loss at standard U.K. tax rate of 25% (2023: 23.52%; 2022:
19%)
(5,613)
(7,533)
(7,306)
Effects of:
Expenses not deductible
538
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.
32
(48)
(34)
R&D tax credit - current year
—
(4,558)
(6,366)
R&D tax credit - additional 86% tax deduction for R&D
(2,863)
—
—
R&D tax credit - losses utilized at 14.5% for R&D tax credit
2,600
—
—
R&D tax credit - prior years
106
206
(35)
Deferred tax asset not recognized
1,746
2,715
2,711
Income tax credit
(3,454)
(4,398)
(6,432)
In the United Kingdom, the Company has not recognized a deferred tax asset in respect of tax losses carried forward or temporary differences on
share-based compensation arrangements as at December 31, 2024 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 and development tax credits, has been recognized to the extent that management consider that adequate future taxable profits will be
available to realize the deferred tax asset.
Temporary differences and cumulative carry forward tax losses for which deferred tax has not been recognized amount to £104.2 million (2023:
£99.1 million; 2022: £85.9 million), comprising temporary differences on share-based compensation arrangements of £nil (2023: £0.6 million; 2022: £1.3
million) and cumulative carry forward tax losses of £104.2 million (2023: £98.5 million; 2022: £84.6 million).
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-22
8. Intangible assets
Patents
Computer
software
Total
(in thousands)
£
£
£
Cost:
At December 31, 2022
7,290
151
7,441
Additions
474
—
474
At December 31, 2023
7,764
151
7,915
Accumulated amortization:
At December 31, 2022
4,926
150
5,076
Charge for the year
208
—
208
Impairment
503
—
503
At December 31, 2023
5,637
150
5,787
Cost:
At December 31, 2023
7,764
151
7,915
Additions
289
—
289
At December 31, 2024
8,053
151
8,204
Accumulated amortization:
At December 31, 2023
5,637
150
5,787
Charge for the year
184
1
185
Impairment
33
—
33
At December 31, 2024
5,854
151
6,005
Net book value:
At December 31, 2024
2,199
—
2,199
At December 31, 2023
2,127
1
2,128
The Company regularly reviews its patent portfolio and during 2024 further development associated with a limited number of patents was
discontinued. Management concluded that this was an indication of impairment and an impairment charge of £33,000 has been recognized, representing the
aggregate carrying value of those patents as at December 31, 2024. This compared to an impairment charge of £0.5 million recognized as of December 31,
2023.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-23
9. Property, plant and equipment
Right of
use assets
Office and
computer
equipment
Fixtures
and
fittings
Total
(in thousands)
£
£
£
£
Cost:
At December 31, 2022
1,356
356
585
2,297
Additions
—
4
21
25
Re-measurement
4
—
—
4
Disposals
—
(10)
—
(10)
Effect of foreign currency exchange differences
(22)
(1)
—
(23)
At December 31, 2023
1,338
349
606
2,293
Depreciation:
At December 31, 2022
757
272
402
1,431
Charge for the year
212
52
103
367
Disposals
—
(10)
—
(10)
Effect of foreign currency exchange differences
(16)
—
—
(16)
At December 31, 2023
953
314
505
1,772
Cost:
At December 31, 2023
1,338
349
606
2,293
Additions
—
4
9
13
Disposals
(771)
(97)
(313)
(1,181)
Effect of foreign currency exchange differences
7
—
—
7
At December 31, 2024
574
256
302
1,132
Depreciation:
At December 31, 2023
953
314
505
1,772
Charge for the year
207
34
96
337
Disposals
(771)
(97)
(313)
(1,181)
Effect of foreign currency exchange differences
7
—
—
7
At December 31, 2024
396
251
288
935
Net book value:
At December 31, 2024
178
5
14
197
At December 31, 2023
385
35
101
521
10. Prepayments, accrued income and other receivables
2024
2023
(in thousands)
£
£
Prepayments - manufacturing and clinical
395
1,081
Prepayments - other
482
888
Accrued income
6
21
VAT
21
663
Other receivables
18
18
922
2,671
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-24
11. Share capital and share premium
2024
2023
2022
(in thousands)
£
£
£
Share capital
5,681
2,114
2,095
Share premium
146,146
141,306
141,108
151,827
143,420
143,203
Number
Number
Number
(in thousands)
Issued share capital comprises:
Ordinary shares of £0.04 each
142,037
52,860
52,373
142,037
52,860
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
Exercise of share options
79
3
1
Issue of share capital
408
16
197
Balance at December 31, 2023
52,860
2,114
141,306
Exercise of share options
149
6
1
Issue of share capital
89,028
3,561
4,839
Balance at December 31, 2024
142,037
5,681
146,146
Ordinary shares
Holders of ordinary shares are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders and do not have
cumulative voting rights.
Capital management
For the purpose of the Company’s capital management, capital includes issued capital, share premium and all other equity reserves attributable to
the equity holders of the Company. The purpose of the Company’s capital management is to maximize shareholder value and ensure adequate capital is
available to meet the medium-term operating plan. Review of operations and commitments is key to identifying future capital management and a full
review is undertaken on a quarterly basis.
No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2024, 2023 or 2022.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-25
12. Other reserves
2024
2023
2022
(in thousands)
£
£
£
Own share reserve
(339)
(339)
(339)
Foreign currency translation reserve
18
3
44
Capital reserve
42,466
42,466
42,466
Share option reserve
Balance at beginning of year
37,043
33,701
30,027
Share-based payments
2,284
3,907
5,133
Exercise of share options
(330)
(277)
(362)
Forfeiture of share options
(638)
(50)
(243)
Lapse of share options
(2,083)
(238)
(854)
Balance at end of year
36,276
37,043
33,701
Total other reserves
78,421
79,173
75,872
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign
operations.
Own share reserve
The own share reserve represents the cost of 500,000 ordinary shares of NuCana plc purchased by NuCana Employee Benefit Trust and that may, at
the discretion of the trustee, be used to satisfy future exercise of options under the Company’s share options plan.
Capital reserve
The capital reserve balance arose from the reduction of the share premium account and corresponding increase to the capital reserve account
reflected as of June 30, 2017 in connection with the Company’s re-registration as a public limited company.
Share option reserve
The share option reserve is used to recognize the value of equity-settled share-based payments provided to employees, directors and consultants as
part of their remuneration. Refer to Note 13 for further details.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-26
13. Share-based payments
The Company has six share-based payment plans for employees, directors and consultants. The share options granted under these plans will be
settled in equity. Options granted under each of the six plans have a maximum life of 10 years.
2022, 2023 and 2024 options
In 2022, 2023 and 2024, share options were granted under the following share-based payment plan:
2020 Long-Term Incentive Plan
Options granted under this plan will vest if the option holder remains under their respective contract of employment or contract of service for the
agreed vesting period. The share options granted under this plan will vest over a period of up to four years.
Upon vesting, each option allows the holder to purchase one ordinary share at a specified option price determined at grant date. Options granted as
RSU-style options are automatically exercised on vesting. 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.
Share options and weighted average exercise prices are as follows for the reporting periods presented:
Number of
shares
Weighted
average
exercise price
per share
£
Outstanding at January 1, 2022
10,803,066
3.32
Granted
1,497,013
0.39
Forfeited
(207,833)
2.83
Lapsed
(151,350)
8.40
Exercised
(219,220)
0.30
Outstanding at December 31, 2022
11,721,676
2.94
Granted
2,733,139
0.82
Forfeited
(97,180)
1.37
Lapsed
(253,454)
1.42
Exercised
(102,957)
0.04
Outstanding at December 31, 2023
14,001,224
2.59
Granted
6,273,782
0.24
Forfeited
(2,121,862)
0.50
Lapsed
(812,004)
0.48
Exercised
(165,836)
0.04
Outstanding at December 31, 2024
17,175,304
2.11
Vested and exercisable at December 31, 2024
9,318,921
3.43
Vested and exercisable at December 31, 2023
7,564,156
3.61
Vested and exercisable at December 31, 2022
5,686,556
3.63
1. The weighted average share price at the date of exercise of these options was £0.85
2. The weighted average share price at the date of exercise of these options was £0.68
3. The weighted average share price at the date of exercise of these options was £0.15
4. The exercise price of outstanding share options ranges from £0.04 to £18.05
The weighted average remaining contractual life of the share options outstanding as at December 31, 2024 is 6.86 years (2023: 6.66 years; 2022:
6.99 years).
1
2
3
4
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-27
13. Share-based payments (continued)
The following principal assumptions were used in the valuation for 2022 share options:
Options granted on
Mar 9, 2022
Mar 9, 2022
Vesting dates
Mar 9, 2023
Mar 9, 2023
Mar 9, 2024
Mar 9, 2024
Mar 9, 2025
Mar 9, 2025
Mar 9, 2026
Mar 9, 2026
Volatility
89.32%
95.70%
Dividend yield
0%
0%
Risk-free investment rate
1.36%
1.37%
Fair value of option at grant date
£
0.37
£
0.53
Fair value of share at grant date
£
0.56
£
0.56
Exercise price at date of grant
£
0.56
£
0.04
Lapse date
Mar 9, 2032
Mar 9, 2032
Expected option life (years)
4.50
3.50
Number of options granted
1,020,925
95,000
Jul 12, 2022
Jul 12, 2022
Vesting dates
Jul 12, 2023
Jul 12, 2023
Jul 12, 2024
Jul 12, 2024
Jul 12, 2025
Jul 12, 2025
Jul 12, 2026
Jul 12, 2026
Volatility
94.05%
103.18%
Dividend yield
0%
0%
Risk-free investment rate
1.76%
1.79%
Fair value of option at grant date
£
0.64
£
0.64
Fair value of share at grant date
£
0.67
£
0.67
Exercise price at date of grant
£
0.04
£
0.04
Lapse date
Jul 12, 2032
—
Expected option life (years)
3.50
2.50
Number of options granted
275,725
105,363
1. Represents the average for the options granted
1
1
1
1
1
1
1
1
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-28
13. Share-based payments (continued)
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 2 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 four years, the underlying expected volatility was determined by using the
historical volatility of similar listed entities as a proxy. The volatility percentage applied to each tranche is the average of the historical volatility of
comparable companies to the Company. Options granted with an estimated life of four years or less, have been valued using the Company’s own historical
volatility rates.
In the year ended December 31, 2022, an employee remuneration expense, all of which related to equity-settled share-based payments, of £4.9
million has been included in the statement of operations and credited to equity.
The following principal assumptions were used in the valuation for 2023 share options:
Options granted on
Jan 11, 2023
Jan 11, 2023
Jan 11, 2023
Vesting dates
Jan 11, 2024
Jan 11, 2024
Jan 11, 2024
Jan 11, 2025
Jan 11, 2025
Jan 11, 2025
Jan 11, 2026
Jan 11, 2026
Jan 11, 2026
Jan 11, 2027
Jan 11, 2027
Jan 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 date of grant
£
1.23
£
0.04
£
0.04
Lapse date
Jan 11, 2033
Jan 11, 2033
—
Expected option life (years)
4.50
3.50
2.50
Number of options granted
1,774,176
655,425
219,163
Jun 16, 2023
Jun 16, 2023
Jul 12, 2023
Vesting dates
Jun 16, 2024
Jun 16, 2024
Jul 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 date of grant
£
0.04
£
0.04
£
0.62
Lapse date
Jun 16, 2033
—
Jul 12, 2033
Expected option life (years)
2.00
1.00
3.00
Number of options granted
37,500
9,375
37,500
1. Represents the average for the options granted
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 2 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
historical volatility of similar listed entities as a proxy. The volatility percentage applied to each tranche is the average of the historical volatility of
comparable companies to the Company. Options granted with an estimated life of five years or less, have been valued using the Company’s own historical
volatility rates.
1
1
1
1
1
1
1
1
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-29
13. Share-based payments (continued)
In the year ended December 31, 2023, an employee remuneration expense, all of which related to equity-settled share-based payments, of £3.9
million (2022: £4.9 million) has been included in the statement of operations and credited to equity.
The following principal assumptions were used in the valuation for 2024 share options:
Options granted on
Mar 13-14, 2024
Mar 13, 2024
Mar 13, 2024
Vesting dates
Mar 13-14, 2025
Mar 13, 2025
Mar 13, 2025
Mar 13-14, 2026
—
Mar 13, 2026
Mar 13-14, 2027
—
Mar 13, 2027
Mar 13-14, 2028
—
Mar 13, 2028
Volatility
104.73%
110.40%
111.25%
Dividend yield
0%
0%
0%
Risk-free investment rate
3.92%
4.06%
4.03%
Fair value of option at grant date
£
0.22
£
0.20
£
0.27
Fair value of share at grant date
£
0.30
£
0.30
£
0.30
Exercise price at date of grant
£
0.30
£
0.30
£
0.04
Lapse date
Mar 13-14, 2034
Mar 13, 2034
Mar 13, 2034
Expected option life (years)
4.50
3.00
3.50
Number of options granted
4,532,313
234,375
842,000
Mar 13, 2024
Mar 13, 2024
Mar 13, 2024
Vesting dates
Mar 13, 2025
Mar 13, 2025
Mar 13, 2025
Mar 13, 2026
—
—
Mar 13, 2027
—
—
Mar 13, 2028
—
—
Volatility
111.50%
125.90%
103.00%
Dividend yield
0%
0%
0%
Risk-free investment rate
4.21%
4.27%
4.59%
Fair value of option at grant date
£
0.27
£
0.27
£
0.26
Fair value of share at grant date
£
0.30
£
0.30
£
0.30
Exercise price at date of grant
£
0.04
£
0.04
£
0.04
Lapse date
—
Mar 13, 2034
—
Expected option life (years)
2.50
2.00
1.00
Number of options granted
547,906
93,750
23,438
1. Represents the average for the options granted
1
1
1
1
1
1
1
1
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-30
13. Share-based payments (continued)
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 2 years after vesting. Options granted have been valued using the
Company’s own historical volatility rates.
In the year ended December 31, 2024, an employee remuneration expense, all of which related to equity-settled share-based payments, of £1.6
million (2023: £3.9 million) has been included in the statement of operations and credited to equity.
14. Leases
The Company has one lease contract solely for office space with a remaining lease term of less than three years. Generally, the Company is
restricted from assigning and subleasing the leased asset. The lease contract includes a termination option and the Company previously had a number of
lease contracts that included extension and termination options and variable lease payments, which are discussed further below.
Refer to Note 9 for the carrying amounts of right of use assets recognized and the movements during the year.
The carrying amounts of lease liabilities and the movements during the year are as follows:
2024
2023
(in thousands)
£
£
At January 1
396
639
Re-measurement of liability
—
4
Accretion of interest
17
29
Payments
(223)
(270)
Effect of foreign currency exchange differences
—
(6)
At December 31
190
396
Classified as:
Current
73
206
Non-current
117
190
190
396
The maturity analysis of lease liabilities is as follows:
2024
2023
(in thousands)
£
£
Contractual undiscounted payments
Not later than 1 year
82
224
Later than 1 year and not later than 3 years
123
164
Later than 3 years and not later than 5 years
—
41
Total contractual undiscounted payments
205
429
Less: effect of discounting
(15)
(33)
Discounted lease liabilities
190
396
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-31
14. Leases (continued)
The following amounts are recognized in the statements of operations with respect to lease contracts:
2024
2023
2022
(in thousands)
£
£
£
Depreciation expense of right of use assets
207
212
251
Interest expense on lease liabilities (included in administrative expenses)
17
29
21
Total amount recognized in statements of operations
224
241
272
The Company had total net cash outflows for leases of £0.2 million in 2024 (2023: £0.3 million).
The Company had one lease contract, which expired in 2024, with variable payments where the lease costs after the first year of the lease were
increased based upon a consumer price index and, therefore, the lease liability for this lease was re-measured at December 31, 2023. All other lease
contracts have fixed payments.
The Company had a number of lease contracts that included both extension and termination options, plus the ongoing lease contract has a
termination option. These options were negotiated by management to provide flexibility in managing the leased asset portfolio and align it with the
Company’s business needs. No termination options have been exercised or are expected to be exercised, however, two leases terminated on expiry in 2024.
All of the extension options required a market rental review and the lease cost for the extension period would have typically been set at the higher of either
the existing lease cost or the open market lease cost.
Based upon the existing lease cost, the undiscounted future rental payments of potential extension options that are not included in the lease liability
are as follows:
2024
2023
(in thousands)
£
£
Extension options not expected to be exercised
Not later than 5 years
—
256
Total
—
256
15. Related party disclosures
Compensation of key management personnel of the Company
2024
2023
2022
(in thousands)
£
£
£
Short-term employee benefits
2,021
2,684
2,770
Pension and other benefits
145
145
135
Share-based payments
1,456
3,154
4,255
3,622
5,983
7,160
The amounts disclosed in the table above are the amounts recognized as an expense during the reporting year. As at December 31, 2024, the
Company had outstanding amounts due to key management personnel of £0.1 million (December 31, 2023: £nil).
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-32
16. Cash and cash equivalents
2024
2023
(in thousands)
£
£
Cash and cash equivalents
6,749
17,225
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.
Liquidity risk is minimal and is managed using deposits with immediate and varied fixed term dates.
17. Financial instruments risk management
The Company is exposed to market risk arising from exposure to fluctuation in interest rates and currency exchange rates. These risks are managed
by maintaining an appropriate mix of cash deposits in the two main currencies the Company operates in, placed with a variety of financial institutions for
varying periods according to expected liquidity requirements.
Interest Rate Risk
As of December 31, 2024, the Company had cash and cash equivalents of £6.7 million (2023: £17.2 million). Exposure to interest rate sensitivity is
impacted primarily by changes in the underlying bank interest rates. The Company’s surplus cash and cash equivalents are invested in interest bearing
accounts and certificates of deposit from time to time which earn interest at fixed or variable rates based on the terms agreed for each account. The
Company has not entered into investments for trading or speculative purposes.
Financial assets subject to fixed or variable interest rates are as follows:
2024
2023
(in thousands)
Carrying
amount
Carrying
amount
£
£
Financial assets at short-term fixed rates
Cash and cash equivalents
—
1,961
Financial assets at variable rates
Cash and cash equivalents
2,790
6,960
Non-interest bearing cash balances
Cash and cash equivalents
3,959
8,304
An increase in the bank interest rates by 0.5 percentage points would increase the net annual interest income applicable to the cash and cash
equivalents held on variable and short-term fixed rate deposits by £14,000 (2023: £45,000).
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-33
17. Financial instruments risk management (continued)
Currency Risk
The Company’s functional currency is U.K. pounds sterling, and our transactions are commonly denominated in that currency. However, a portion
of expenses are incurred in other currencies, primarily U.S. dollars, and are exposed to the effects of this exchange rate.
Although the Company is based in the United Kingdom, it sources active pharmaceutical ingredient, raw materials, research and development,
manufacturing, consulting and other services worldwide, including from the United States, the European Union and India. Any weakening of the pound
sterling against the currencies of such other jurisdictions makes the purchase of such goods and services more expensive for the Company. The Company
seeks to minimize this exposure by maintaining currency cash balances at levels appropriate to meet foreseeable short to mid-term expenses in these other
currencies. The Company thus holds a significant portion of cash and cash equivalents in U.S. dollars and will therefore report the impact of exchange rates
movements on these balances.
The Company does not use derivative instruments to manage exchange rate exposure.
Financial assets and liabilities in foreign currencies, primarily held in U.S. dollars, are as follows:
2024
2023
(in thousands)
Carrying
amount
Carrying
amount
£
£
Financial assets
Prepayments, accrued income and other receivables
642
2,027
Current income tax receivable
3
2
Cash and cash equivalents
4,769
10,949
Financial liabilities
Trade payables
1,763
596
Lease liabilities
—
66
Accrued expenditure
4,066
4,930
A 1% increase in the value of the U.K. pound sterling relative to the U.S. dollar would increase the carrying value of net financial assets and
liabilities in foreign currencies by £4,000 (2023: £74,000 decrease).
Credit risk
The Company actively manages cash and cash equivalents across a number of banks and has deposits with different maturity dates. The Company
monitors the credit rating of those banks.
The majority of the Company's cash and cash equivalents at December 31, 2024 are above the £85,000 per depositor per bank protected by the U.K.
Financial Services Compensation Scheme. However, over 99 percent of the Company’s cash and cash equivalents at December 31, 2024 were held at U.K.
and U.S. financial institutions with short-term A-rated credit ratings, as assessed by recognized international credit rating agencies. As a result, no
provision for expected credit losses has been recognized.
NUCANA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-34
18. Events after the reporting period
Subsequent to December 31, 2024, the Company sold and issued 394,303 ADSs, representing 9,857,575 ordinary shares, under the ATM program,
raising gross proceeds of £0.5 million.
On March 18, 2025, the Company distributed a notice of its general meeting to be held on April 7, 2025 (the “GM”). The purpose of the GM is for
the Company’s ordinary shareholders to consider and vote upon, and if thought fit, pass and approve a number of resolutions, including that each of the
151,923,897 ordinary shares of £0.04 each in the issued share capital of the Company, as at March 18, 2025, be sub-divided into and redesignated as one
ordinary share of £0.0004, having the same rights and being subject to the same restrictions as the existing ordinary shares in the capital of the Company,
and 99 deferred shares of £0.0004 each, which will be subject to the restrictions set out in the Company’s amended articles of association to be adopted at
the GM. Therefore, following the passing of this resolution, the Company’s issued share capital shall be comprised of 151,923,897 ordinary shares and
15,040,465,803 deferred shares of £0.0004 each.
Exhibit 4.16
22/39203
Books of Council and Session
Extract Registered 28 Oct 2022
MINUTE OF VARIATION
CUSTODIAN REIT PLC
NUCANA PLC
BRODIES LLP
DX ED 10 EDINBURGH
Registers of Scotland
Bradlee LLP
Capital Square
58 Morrison Street
Edinburgh EH3 BBP
T: 0131 228 3777
F: 0131 228 3878
DX ED 10
Edinburgh
FAS 0468
Ref: CFU/EKWICUS0011.00019
2022
22/39203
AT EDINBURGH the Twenty Eighth day of October Two thousand and twenty two the Deed hereinafter reproduced was presented for registration in the Books of the Lords of
Council and Session for preservation and execution and is registered in the said Books as follows:-
FOR THE PURPOSES OF THE LEGAL WRITINGS (COUNTERPARTS AND DELIVERY) (SCOTLAND) ACT 2015, THIS DOCUMENT IS DELIVERED
ON 27 October 2022
MINUTE OF VARIATION
between
CUSTODIAN REIT PLC
and
NUCANA PLC
EXECUTION
2 EXTRACTS
Lease of Suite 2 (East), 2nd Floor, Lochside House, 3 Lochside Way, Edinburgh Park
PAGES:10 + 1a__________
EXT: 28 OCT 2022________
FAS:0468
Registers of Scotland
For the purposes of the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015, this document is delivered on 27 October 2022
MINUTE OF VARIATION
between
CUSTODIAN REIT PLC, a company incorporated under the Companies Acts (company number 08863271) and having its registered office address at 1 New Walk Place, Leicester, United Kingdom, LEI
6RU
and
NUCANA PLC, a company incorporated under the Companies Acts (company number 03308778) and having its registered office at 77-78 Cannon Street, London, England, EC4N 6AF
1
Definitions/interpretation
1.1 definitions
In this Minute of Variation:
1.1.1
"Effective Date" means 14 August 2022 (notwithstanding the date of delivery of this Minute of Variation);
1.1.2
"Landlords" means the said Custodian Reit plc and, in substitution therefor, any person succeeding to their interest under the Lease;
1.1.3
"Parties" means the Landlords and the Tenants and "Party" refers to either of them as the context requires;
1.1.4
"Lease" means the lease between Drum Income Plus Limited and Nucana Plc dated 7 and 21 September and registered in the Books of Council and Session on 28 September,
all 2017 as amended and or varied from time to time;
1.1.5
"Premises" means the subjects known as Suite 2 (East), 2nd Floor, Lochside House, 3 Lochside Way, Edinburgh Park as more particularly described in the Lease;
1.1.6
“Tenants" means the said Nucana plc and, in substitution therefor, any person succeeding to their interest under the Lease; and
1.1.7
"Varied Lease" means the Lease as varied by this Minute of Variation.
Registers of Scotland
2
1.2 Lease Definitions
Capitalised terns in this Minute if Variation will, unless otherwise defined in Clause 1.1 of this Minute of Variation, have the meanings ascribed to them in the Lease.
1.3 Interpretation
In this Minute of Variation
1.3.1
words importing any gender shall include the other genders, words importing the singular number shall include the plural number and vice versa and words denoting natural
persona shall include incorporated bodies and vice versa;
1.3.2
the headings to clauses and sub-clauses are for ease of reference only and shall be disregarded in the construction or interpretation of this Minute of Variation; and
1.3.3
reference to a numbered clause or sub-clause without further amplification are references to the clause or sub-clause of this Minute of Variation so numbered.
2
Recitals
2.1 The Landlords are entitled to the landlords interest in the Lease.
2.2 The Tenants are entitled to the tenant's interest in the Lease.
2.3 The Premises is leased to the Tenants on the terms and conditions of the Lease.
2.4 The Parties have agreed to vary the terms of the Lease.
3
Variations
Therefore it is contracted and agreed between the Parties that the Lease is varied with effect from the Effective date as follows:
Rent
3.1 the annual rent payable by the Tenants from and after 15 August 2022 will be EIGHTY ONE THOUSAND NINE HUNDRED POUNDS (£81,000) Sterling per annum exclusive of value added tax;
3.2 for the avoidance of doubt the said annual rent will be exclusive of rates, service charge and VAT (which will continue to be payable by the Tenants to the Landlords in accordance with the terms of
the Lease) but will be inclusive of car parking charges; and
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3
3.3 notwithstanding Clause 3.1 above, the said annual rent will not be payable by the Tenants for the period from and including 15 August 2022 to and including 14 November 2022.
Term
3.4 the term of the Lease will be extended such that the Varied Lease will continue for a further period of live years from and including 15 August 2022 until and including 14 August 2027;
3.5 notwithstanding Clause 3.4 above, the Tenants are entitled to terminate the Varied Lease on 14 August 2025 on giving to the Landlords not less than nine months' prior written notice, time being of
the essence; and
3.6 if the Tenants terminate the Lease in accordance with Clause 3.5 above, within 20 Working Days after 14 August 2025 the Landlords will refund to the Tenants all of the Rents paid by the Tenants
which relate to the period after 14 August 2025.
4
Confirmation
4.1 The Tenants undertake that they will observe and perform the obligations and conditions on the part of the Tenants contained or referred to in the Varied Lease.
4.2 The Landlords undertakes that they will observe and perform the obligations and conditions on the part of the Landlords contained or referred to in the Varied Lease.
4.3 The Parties agree that the Landlords' right of irritancy contained in the Lease will also be exercisable in the event of any breath or non-observance by the Tenants of their obligations under the
Varied Lease.
4.4 Except to the extent expressly provided in this Minute of Variation, the Lease is not varied by this Minute of Variation.
5
Costs
The Tenants and the Landlords shall each bear their own legal fees and other outlays in connection with this Minute of Variation but the Tenants shall pay any Land and Buildings
Transaction Tax payable hereon and the costs of registration thereof in the Books of Council and Session and of obtaining two extracts, one of for each of the Tenants and the Landlords.
Registers of Scotland
4
6
Contract (Third Party Rights) (Scotland) Act 2017
This Minute of Variation does not create any rights in favour of third parties under the Contract (Third Party Rights) (Scotland) Act 2017 to enforce or otherwise invoke any provision of this
Minute of Variation.
7
Registration
The Parties hereto consent to registration of this Minute of Variation for preservation and execution. This Minute of Variation is executed as follows and is delivered for the purposes of the
Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 on the date set out on page 1 of this document:
FOR THE LANDLORDS, FOR AND ON BEHALF Of THE SAID CUSTODIAN REIT PLC BY CUSTODIAN CAPITAL LIMITED, ATTORNEY, PURSUANT TO POWER OF ATTORNEY BY
CUSTODIAN REIT PLC DATES 16 NOVEMBER 2020.
/s/ Jaskiran Kauryait
/s/ Edward Moore
signature of witness
signature of director/authorised signatory
Jaskiran Kauryait
Edward Moore
full name of above (print)
full name of above (print)
1 NEW WALK PLACE
24.8.22
date of signing
LEICESTER
LEI 6RU
LEICESTER
address of witness place of signing
/s/ Jaskiran Kauryait
/s/ Richard James Shepherd-Cross
signature of witness
signature of director/authorised signatory
Jaskiran Kauryait
Richard James Shepherd-Cross
full name of above (print) full name of above (print)
1 NEW WALK PLACE
25.8.22
date of signing
LEICESTER
LEI 6RU
LEICESTER
address of witness place of signing
Registers of Scotland
5
FOR THE TENANTS, FOR AND ON BEHALF OF THE SAID NUCANA PLC
________________ ________________
signature of witness signature of director/authorised signatory
________________
________________
full name of above (print)
full name of above (print)
________________
________________
date of signing
________________
________________
________________
address if witness place of signing
Registers of Scotland
For the purposes of the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015, this document is delivered on 27 October 2022
MINUTE OF VARIATION
between
CUSTODIAN REIT PLC, a company incorporated under the Companies Acts (company number 08863271) and having its registered office address at 1 New Walk Place, Leicester, United Kingdom,
LE1 6RU
NUCANA PLC, a company incorporated under the Companies Acts (company number 03308778) and having its registered office at 77-78 Cannon Street, London, England, EC4N 6AF
1
Definitions/interpretation
1.1 definitions
In this Minute of Variation:
1.1.1
"Effective Date" means 14 AUgust 2022 (notwithstanding the date of delivery of this Minute of Variation);
1.1.2
"Landlords" means the said Custodian Reit plc and, in substitution therefor, any person succeeding to their Interest under the Lease;
1.1.3
"Parties" means the Landlords and the Tenants and "Party" refers to either of them as the context requires;
1.1.4
"Lease" means the lease between Drum Income Plus Limited and Nucana Plc dated 7 and 21 September and registered in the Books of Council and Session on 28 September,
all 2017 as amended and or varied from time to time;
1.1.5
"Premises" means the subjects known as Suite 2 (East), 2nd Floor, Lochside House, 3 Lochside Way, Edinburgh Park as more particularly described in the Lease;
1.1.6
"Tenants" means the said Nucane pIc and, in substitution therefor, any person succeeding to their interest under the Lease; and
1.1.7
“Varied Lease" Means the Lease as varied by this Minute of Variation.
Registers of Scotland
2
1.2 Lease Definitions
Capitalised terms in this Minute of Variation will, unless otherwise defined in Clause 1.1 of this Minute of Variation, have the meanings ascribed to them in the Lease.
1.3 Interpretation
In this Minute of Variation:
1.3.1
words importing any/gender shall include the other genders, words importing the singular number shall include the plural number and vice versa and words denoting natural
persons shall include incorporated bodies and vice versa;
1.3.2
the headings to clauses and sub-clauses are for ease of reference only and shall be disregarded in the construction or interpretation of this Minute of Variation; and
1.3.3
references to a numbered clause or sub-clause without further amplification are references to the clause or sub-clause of this Minute of Variation so numbered.
2
Recitals
2.1 The Landlords are entitled to the landlord’s interest in the Lease.
2.2 The Tenants are entitled to the tenant's interest in the Lease.
2.3 The Premises is leased to the Tenants on the terms and conditions of the Lease.
2.4 The Parties have agreed to vary the terms of the Lease.
3
Variations
Therefore it is contracted and agreed between the Parties that the Lease is varied with effect from the Effective Date as follows:
Rent
3.1 the annual rent payable by the Tenants from and after 15 August 2022 will be EIGHTY ONE THOUSAND NINE HUNDRED POUNDS (£81,900) Sterling per annum exclusive of value added tax;
3.2 for the avoidance of doubt the said annual rent will be exclusive of rates, service charge and VAT (Which will continue to be payable by the Tenants to the Landlords in accordance with the terms of
the Lease) but will be inclusive of car parking charges; and
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3
3.3 notwithstanding Clause 31 above, the said annual rent will not be payable by the Tenants for the period from and including 15 August 2022 to and including 14 November 2022.
Term
3.4 the term of the Lease will be extended such that the Varied Lease will continue for a further period of five years from and including 15 August 2022 until and including 14 August 2027;
3.5 notwithstanding Clause 3.4 above; the Tenants are entitled to terminate the Varied Lease on 14 August 2025 on giving to the Landlords not less than nine months' prior written notice, time being of
the essence; and
3.6 if the Tenants terminate the Lease in accordance with Clause 3.5 above, within 20 Working Days after 14 August 2025 the Landlords will refund to the Tenants all of the Rents paid by the Tenants
which relate to the period after 14 August 2025.
4
Confirmation
4.1 The Tenants undertake that they will observe and perform the obligations and conditions on the part of the Tenants contained or referred to in the Varied Lease.
4.2 The Landlord undertakes that they will observe and perform the obligations and conditions on the part of the Landlords contained or referred to in the Varied Lease.
4.3 The Parties agree that the Landlords' right of irritancy contained in the Lease will also be exercisable in the event of any breach or non-observance by the Tenants of their obligations under the
Varied Lease.
4.4 Except to the extent expressly provided in this Minute of Variation, the Lease is not varied by this Minute of Variation.
5
Costs
The Tenants and the Landlords shall each bear their own legal fees and other outlays in connection with this Minute of Variation but the Tenants shall pay any Land and Buildings
Transaction Tax payable hereon and the costs of registration thereof in the Books of Council and Session and of obtaining two extracts, one of for each of the Tenants and the Landlords.
Registers of Scotland
4
6
Contract (Third Party Rights) (Scotland) Act 2017
This Minute of Variation does not create any rights in favour of third parties under the Contract (Third Party Rights) (Scotland) Act 2017 to enforce or otherwise invoke any provision of this
Minute of Variation.
7
Registration
The Parties hereto consent to registration of this Minute of Variation for preservation and execution. This Minute of Variation is executed as follows and is delivered for the purposes of the
Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 on the date set out on page 1 of this document:
FOR THE LANDLORDS, FOR AND ON BEHALF OF THE SAID CUSTODIAN REIT PLC BY CUSTODIAN CAPITAL LIMITED, ATTORNEY, PURSUANT TO POWER OF ATTORNEY BY
CUSTODIAN REIT PLC DATES 16 NOVEMBER 2020.
________________ ________________
signature of witness signature of director/authorised signatory
________________
________________
full name of above (print)
full name of above (print)
________________
________________
date of signing
________________
________________
________________
address if witness place of signing
________________ ________________
signature of witness signature of director/authorised signatory
________________
________________
full name of above (print)
full name of above (print)
________________
________________
date of signing
________________
________________
________________
address if witness place of signingsignature of witness
Registers of Scotland
5
FOR THE TENANTS, FOR AND ON BEHALF OF THE SAID NUCANA PLC
/s/ Moira Adamson
/s/ Hugh Stephen Griffith
signature of witness
signature of director/authorised signatory
Moira Adamson
Hugh Stephen Griffith
full name of above (print) full name of above (print)
15 Fyvie Close
26th September 2022
date of signing
Auchterarder
Perthshire PH3 1FZ
3 Lochside Way, Edinburgh
address if witness place of signing
And the said Lords grant Warrant for lawful execution hereon
EXTRACTED by me having commission to the effect from the Keeper of the Registers of Scotland.
Exhibit 12.1
CERTIFICATION REQUIRED BY RULE 13A-14(A) OR 15D-14(A)
UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Hugh S. Griffith, certify that:
1.
I have reviewed this annual report on Form 20-F of NuCana plc;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the company and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual
report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting;
5.
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control
over financial reporting.
Date: March 20, 2025
By:
/s/ Hugh S. Griffith
Hugh S. Griffith
Chief Executive Officer
(Principal Executive Officer)
Exhibit 12.2
CERTIFICATION REQUIRED BY RULE 13A-14(A) OR 15D-14(A)
UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ian Webster, certify that:
1.
I have reviewed this annual report on Form 20-F of NuCana plc;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the company and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual
report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting;
5.
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control
over financial reporting.
Date: March 20, 2025
By:
/s/ Ian Webster
Ian Webster
Director of Finance
(Principal Financial Officer)
Exhibit 13.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Hugh S. Griffith, Chief Executive Officer of NuCana plc (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of
the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1.
The Annual Report on Form 20-F of the Company for the period ended December 31, 2024 (the “Report”) fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 20, 2025
/s/ Hugh S. Griffith
Hugh S. Griffith
Chief Executive Officer
(Principal Executive Officer)
Exhibit 13.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Ian Webster, Director of Finance of NuCana plc (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1.
The Annual Report on Form 20-F of the Company for the period ended December 31, 2024 (the “Report”) fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 20, 2025
/s/ Ian Webster
Ian Webster
Director of Finance
(Principal Financial Officer)
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form F-3 No. 333-281576) of NuCana plc and in the related Prospectus,
(2) Registration Statement (Form S-8 No. 333-223476) pertaining to both NuCana BioMed Limited Option Share Schemes
(Including Management Enterprise Incentives) and the NuCana BioMed Limited 2016 Share Option Scheme (Including
Management Enterprise Incentives and Incentive Stock Options) of NuCana plc, and
(3) Registration Statement (Form S-8 No. 333-248135) pertaining to both the NuCana plc 2020 Long-Term Incentive Plan and
the NuCana plc 2020 Company Share Option Plan of NuCana plc;
of our report dated March 20, 2025, with respect to the consolidated financial statements of NuCana plc included in this Annual Report
(Form 20-F) of NuCana plc for the year ended December 31, 2024.
/s/ Ernst & Young LLP
Edinburgh, United Kingdom
March 20, 2025
8 December 2022
Exhibit 19.1
NUCANA PLC
INSIDER TRADING POLICY
TABLE OF CONTENTS
Page
I.
The Need for an Insider Trading Policy
2
II.
What is Material Non-Public Information?
2
III.
The Consequences of Insider Trading
4
IV.
Our Policy
5
General Prohibition on Trading
5
Transactions by Family Members, Others in Your Household and Entities You Control
5
Other Companies’ Non-public Information
5
Personal or Independent Reasons Are Not Exceptions
5
Policy Administrator
5
When Information Becomes Public
6
Prohibited Trading Periods
6
Exceptions for Certain Transactions
7
Pre-Clearance of All Acquisitions, Sales and Other Transfers by Certain Company Personnel
8
V.
Individual Responsibility
9
VI.
Additional Prohibited Transactions 10
VII.
Summary of Insider Dealing provisions under the Criminal Justice Act 1993 11
VIII.
Post-Termination Transactions 11
IX.
Company Assistance 11
X.
Certifications 12
2
NUCANA PLC (the “Company”) has adopted the following policy regarding trading by Company personnel in the
Company’s securities (the “Insider Trading Policy,” or this “Policy”). This Policy applies to all Company personnel, including
directors, officers, employees and consultants of the Company and its subsidiaries. This Policy also applies to certain family
members, other members of a person’s household and entities controlled by Company personnel, as described in Section IV
below.
I.
The Need for an Insider Trading Policy
This Policy has been developed:
to educate all Company personnel as to the federal securities laws and the rules of the Securities and Exchange
Commission (the “SEC”) on insider trading in public company securities;
to set forth requirements that apply to Company personnel and other persons covered by this Policy who seek to
trade in the Company’s securities;
to protect the Company and its personnel from legal liability; and
to preserve the reputation of the Company and its personnel for integrity and ethical conduct.
Because the Company is a public company, transactions in the Company’s securities are subject to the federal securities
laws and regulations adopted by the SEC. These laws and regulations make it illegal for an individual to buy or sell securities of
the Company while aware of material non-public information. The SEC takes insider trading very seriously and devotes
significant resources to uncovering the activity and to prosecuting offenders. Liability may extend not only to the individuals
who trade while in possession of material non-public information but also to their “tippers,” people who leak material non-public
information to individuals who then trade based on that information. The Company and “controlling persons” of the Company
may also be liable for violations by Company employees.
II. What is Material Non-Public Information?
Definition.
Material non-public information is any information (positive or negative) that:
is not generally known to the public, and
which, if publicly known, would likely affect either the market price of the Company’s securities or a person’s
decision to buy, sell or hold the Company’s securities.
3
Examples. Common examples of information that will frequently be regarded as material include, but are not limited
to:
quarterly or annual earnings results;
projections of future financial results;
earnings or losses;
news of a pending or proposed merger, acquisition or tender offer;
news of a pending or proposed acquisition or disposition of a significant asset;
news of a pending or proposed joint venture;
a company restructuring;
significant transactions with officers, directors or greater than 5% shareholders;
financing transactions;
changes in dividend policies, the declaration of a stock split or the offering of additional securities;
establishment of a stock repurchase program;
changes in pricing or cost structure of Company products or services;
changes in management;
changes in auditors or notification that the auditor’s reports may no longer be relied upon;
significant new products or discoveries;
significant clinical or regulatory developments;
pending or threatened significant litigation, or the resolution of such litigation;
impending bankruptcy or financial liquidity problems;
internal financial information which departs from what the market expects;
the gain or loss of a significant customer or supplier, major contract, license, registration or collaboration;
the entry, amendment or termination of a material contract; or
other items that require the filing of a Current Report on Form 8-K with the SEC.
Twenty-Twenty Hindsight. In determining whether information is material, the SEC and other regulators will view the
information after-the-fact with the benefit of hindsight. As a result, in determining whether any information is material, we will
and you should carefully consider whether regulators and others might view the information as being material in hindsight, with
the benefit of all relevant information that later becomes available. For example, if there is a significant change in the
Company’s stock price following release of certain information, that information will likely be determined to have been material
when viewed with the benefit of hindsight.
In addition to addressing the relevant statutes and regulations in this area, we are adopting this Policy to avoid even the
appearance of improper conduct on the part of anyone employed by or associated with the Company and certain related persons,
not just members of senior management.
4
III. The Consequences of Insider Trading
The consequences of insider trading violations can be severe:
For individuals who trade while in possession of material non-public information (or tip information to others):
a civil penalty of up to three times the profit gained or loss avoided;
a criminal fine (no matter how small the profit) of up to $5 million; and
a jail term of up to 20 years.
These penalties can apply even if the individual is not a member of the Board of Directors or an officer of the Company.
Moreover, if an employee violates this Policy, he or she may also be subject to Company-imposed sanctions, including
termination for cause.
For a Company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading:
a civil penalty of the greater of $1 million or three times the profit gained or loss avoided as a result of the
employee’s violation; and
a criminal penalty of up to $25 million.
Any of the above consequences, including an SEC investigation that does not result in prosecution, can tarnish the
Company’s or an individual’s reputation and irreparably damage a career.
5
IV. Our Policy
General Prohibition on Trading TC "General Prohibition on Trading" \f C \l "2" . Company personnel and Related
Persons (as defined below in this Section IV) may not buy or sell securities of the Company while in possession of material non-
public information or engage in any other action to take advantage of, or pass on to others, that information, subject to the
specific exceptions noted below in this Section IV under the caption “Exceptions for Certain Transactions.”
Transactions by Family Members, Others in Your Household and Entities You Control TC "Transactions by Family
Members, Others in Your Household and Entities You Control" \f C \l "2" . The restrictions in this Policy also apply to (1)
immediate family members who reside with you, (2) others living in your household (whether or not related to you), (3) family
members who do not live in your household but whose transactions in the Company’s securities are directed by you or are subject
to your influence or control (e.g., parents or children who consult with you before they trade in the Company’s securities) and (4)
any entities that you influence or control, including any corporations, limited liability companies, partnerships or trusts (each
person or entity identified in clauses (1) – (4), a “Related Person”). SEC regulations specifically provide that any material non-
public information about the Company communicated to any spouse, parent, child or sibling is considered to have been
communicated under a duty of trust or confidence; and that any trading in the Company’s securities by such family members
while they are aware of such information may, therefore, violate insider trading laws and regulations. Company personnel are
expected to be responsible for the compliance of all Related Persons with this Policy. This means that, to the extent such Related
Persons of Company personnel intend to trade in the Company’s securities, the Related Persons need to comply with the black-
out periods and all other restrictions in this Policy. Furthermore, you should not participate in any investment club (i.e., groups
of people who pool their money to make investments) that may invest in the Company’s securities.
Other Companies’ Non-public Information TC "Other Companies’ Non-public Information" \f C \l "2" . This Policy
also applies with equal force to information relating to any other company, including our customers or suppliers, obtained by
Company personnel during the course of their service to or employment by the Company. Specifically, no Company personnel
who, in the course of work on behalf of the Company, learns of material non-public information about a company with which the
Company does business may trade in the other company’s securities until the information becomes public or is no longer
material.
Personal or Independent Reasons Are Not Exceptions TC "Personal or Independent Reasons Are Not Exceptions" \f C
\l "2" . Transactions in the Company’s securities that may be necessary or justifiable for independent reasons (such as the need to
raise money for an emergency expenditure) are no exception. Even the appearance of an improper transaction must be avoided to
preserve our reputation for adhering to the highest standards of conduct.
Policy Administrator TC "Policy Administrator" \f C \l "2" . This Policy shall be administered by the “Policy
Administrator,” Hugh S. Griffith, Chief Executive Officer, and if such person is not available, then Donald Munoz, Chief
Financial Officer shall serve as the alternate Policy Administrator.
6
When Information Becomes Public TC "When Information Becomes Public" \f C \l "2" . This Policy applies to
material non-public information about the Company, which means that trading is permitted once the information becomes known
to the public (unless some other Company policy or legal obligation restricts trading at that time). Because the Company’s
shareholders and the investing public should be afforded time to receive and absorb information, as a general rule you should not
engage in any transactions until the beginning of the second business day after material information has been released. Thus, if
an announcement is made before the market opens on a Monday, Wednesday generally would be the first day on which you may
trade. If an announcement is made before the market opens on a Friday, Tuesday generally would be the first day on which you
may trade. However, if the information released is complex, such as a major financing or other significant transaction, it may be
necessary to allow additional time for the information to be absorbed by the investing public. In such circumstances, you will be
notified by the Policy Administrator regarding a suitable waiting period before trading. In addition, we have established
specified black-out periods, as described below.
Prohibited Trading Periods TC "Prohibited Trading Periods" \f C \l "2" . While it is never permissible to trade based on
material non-public information, we are implementing the following procedures to help prevent inadvertent violations of this
Policy and avoid even the appearance of an improper transaction (which could result, for example, where Company personnel
engage in a trade while unaware of a pending major development).
(1) Company Wide Black-Out Periods Applicable to All Company Personnel. All Company personnel and Related
Persons are prohibited from trading in any of the Company’s securities during the following periods:
from the time each such individual becomes aware of the material information (the black-out start times often vary),
until the beginning of the second business day after the day the Company has made a public announcement of
material information, including earnings releases, unless the information released is complex, in which case it may
be necessary to extend this period and the Policy Administrator will notify you of any such extension of the black-
out period; and
during other specified periods when significant developments or announcements are anticipated, as notified by the
Policy Administrator.
You will be notified by e-mail when you may not trade in the Company’s securities during periods when significant
developments or announcements are anticipated, in which event you will also be notified when trading restrictions are lifted. Of
course, even during periods when trading is permitted, no one, including persons or entities who do not fall within the definition
of Related Persons, should trade in the Company’s securities if he or she possesses material non-public information.
(2) Additional Black-Out Periods Applicable to the Board of Directors, Senior Management, Financial Team Members
and Designated Employees. In addition to being subject to the trading procedures applicable to all Company personnel (above),
members of the Company’s Board of Directors, Senior Management, Financial Team Members, Designated
7
Employees (each as defined below) and Related Persons of such individuals are also subject to additional trading procedures and
restrictions during the following periods:
the periods from 7 days prior to the close of each fiscal quarter until the beginning of the second business day after
the release of the Company’s financial results for each quarter and, in the case of the fourth quarter, financial results
for the year end; and
any other periods as determined by the Company.
The following members of management constitute the “Senior Management” of the Company: all Executive Officers, as
listed on Exhibit A hereto, which list shall be amended from time to time to reflect the then-current group of such individuals.
The following individuals constitute the “Financial Team Members” of the Company: all members of the Company’s
financial team.
The following individuals constitute other “Designated Employees” of the Company: all Company personnel, as listed
on Exhibit C hereto, which list shall be amended from time to time to reflect the then-current group of such individuals.
The Policy Administrator may, from time to time, amend the list of and/or designate other employees as Senior
Management, Financial Team Members or Designated Employees, in which case the Policy Administrator shall notify the
affected individuals.
Exceptions for Certain Transactions TC "Exceptions for Certain Transactions" \f C \l "2" .
(1) Gifts. Bona fide gifts are not transactions that are subject to this Policy, unless the person making the gift (the
donor) has reason to believe that the recipient of the gift intends to sell the Company’s securities while the donor is in possession
of material non-public information.
(2) Mutual Funds. Transactions in mutual funds that are invested in the Company’s securities are not transactions
subject to this Policy.
(3) Transactions Involving Company Equity Plans. Except as otherwise noted below, this Policy does not apply to the
following transactions:
Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired pursuant
to the Company’s equity plans, or to the exercise of a tax withholding right pursuant to which a person has elected to
have the Company withhold shares subject to an option to satisfy tax withholding requirements. This Policy does
apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market
sale of stock for the purpose of generating the cash needed to pay the exercise price and or taxes upon the exercise
of an option.
Restricted Stock Awards and Restricted Stock Unit Awards. This Policy does not apply to the vesting of restricted
stock or restricted stock units, or the exercise of a tax
8
withholding right pursuant to which a person elects to have the Company withhold shares of stock to satisfy tax
withholding requirements upon the vesting of any restricted stock or restricted stock unit. This Policy does apply,
however, to any market sale of restricted stock or shares received upon vesting of restricted stock units.
Other Transactions with the Company. Any other purchase of the Company’s securities from the Company or sales
of the Company’s securities to the Company are not subject to this Policy.
(4) Rule 10b5-1 Trading Plans. Notwithstanding the restrictions and prohibitions on trading in the Company’s
securities set forth in this Policy, persons subject to this Policy are permitted to effect transactions in the Company’s securities
pursuant to approved trading plans established under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (“Trading
Plans”), which may include transactions during the prohibited periods discussed above. Rule 10b5-1 requires that these
transactions be made pursuant to a plan that was established while the person was not in possession of material non-public
information, and the SEC requires that these plans not be entered into during any applicable Company-imposed black-out period.
In order to comply with this Policy, the Company must pre-approve any such Trading Plan prior to its effectiveness. After a
Trading Plan is approved, you must wait for a cooling-off period of reasonable length (barring unusual circumstances, 30 days is
deemed to be reasonable) before the first trade is made under the Trading Plan. Once the Trading Plan is adopted, you must not
exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the dates of the
trades. The Trading Plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on
these matters to an independent third party. Any modification of a Trading Plan is the equivalent of entering into a new Trading
Plan and cancelling the old Trading Plan. Company personnel seeking to establish, modify or cancel a Trading Plan should
contact the Policy Administrator.
Pre-Clearance of All Acquisitions, Sales and Other Transfers by Certain Company Personnel TC "Pre-Clearance of
All Acquisitions, Sales and Other Transfers by Certain Company Personnel" \f C \l "2" . In order to ensure compliance with this
Policy, all transactions in the Company’s securities (including acquisitions, sales, gifts and other transfers, whether or not for
value), including the execution of Trading Plans (as defined below), by members of the Company’s Board of Directors, Senior
Management, Financial Team Members, Designated Employees and Related Persons, must be pre-cleared by the Policy
Administrator. If you are a member of one of the groups listed above and you contemplate a transaction in the Company’s
securities, you must contact the Policy Administrator or other designated individual prior to executing the transaction. The
Policy Administrator will use his or her reasonable best efforts to provide approval or disapproval within two business days. You
must wait until receiving pre-clearance to execute the transaction. Neither the Company nor the Policy Administrator shall be
liable for any delays that may occur due to the pre-clearance process. If the transaction is pre-cleared by the Policy
Administrator, it must be executed by the end of the third business day after receipt of pre-clearance. Notwithstanding receipt of
pre-clearance of a transaction, if you become aware of material non-public information about the Company after receiving the
pre-clearance but prior to the execution of the transaction, you may not execute the transaction. The
9
responsibility for determining whether you are in possession of material non-public information rests with you, as discussed
below in Section V.
Employees of the Company who are not Directors, members of Senior Management, Financial Team Members or
Designated Employees are required to pre-clear transactions in the Company’s securities in the same manner as set forth above.
Such employees are not required to notify the Policy Administrator following execution of the transaction.
Please note that pre-clearance does not provide Company personnel with immunity from investigation or suit, for
which it is the responsibility of the individual to comply with the federal securities regulations.
V. Individual Responsibility
Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the
Company and to not engage in transactions in the Company’s securities while in possession of material non-public information.
Each individual is responsible for making sure that he or she complies with this Policy, and that any Related Person, whose
transactions are subject to this Policy, also comply with this Policy. In all cases, the responsibility for determining whether an
individual is in possession of material non-public information rests with that individual, and any action on the part of the
Company, the Policy Administrator or any other employee or director pursuant to this Policy (or otherwise) does not in any way
constitute legal advice or insulate an individual from liability under applicable securities laws. You may be subject to legal
penalties and disciplinary action by law enforcement officials and/or the Company for any conduct prohibited by this Policy or
applicable securities laws, as described in Section III above.
Tipping Information to Others. Company personnel must not disclose non-public information about the Company to
others outside the Company who do not have an obligation to maintain the confidentiality of such information. If the outsider
trades on such information, penalties for insider trading may apply in these situations whether or not you derive any monetary
benefit from the other person’s trading activities. Material non-public information is often inadvertently disclosed or overheard
in casual, social conversations. Please take care to avoid such disclosures.
Prevention of Insider Trading by Others. If you become aware of a potential insider trading violation, you must
immediately advise our Policy Administrator and/or report the matter using the Company’s anonymous whistleblower reporting
procedures. You should also take steps, where appropriate, to prevent persons under your supervision and/or control from using
material non-public information for trading purposes. Moreover, Company-imposed sanctions, including termination for cause,
could result if an employee fails to comply with this Policy.
Confidentiality. Serious problems could be caused for the Company by the unauthorized disclosure of internal
information about the Company, whether or not for the purpose of facilitating improper trading in the Company’s securities.
Company personnel should not discuss internal Company matters or developments (whether or not you think such information is
material) with anyone outside of the Company (including, but not limited to, family, friends,
10
business associates, investors and expert consulting firms), except as required in the performance of regular corporate duties.
This prohibition applies specifically (but not exclusively) to inquiries about the Company that may be made by the financial
press, investment analysts or others in the financial community and also includes posting material non-public information on any
social media outlets such as Facebook, Twitter, etc. It is important that all such communications on behalf of the Company be
made only through an authorized officer under carefully controlled circumstances. Unless you are expressly authorized to the
contrary, if you receive any inquiries of this nature, you should decline comment and refer the inquirer to Hugh Griffith, the
Company’s Chief Executive Officer.
VI. Additional Prohibited Transactions
Because we believe it is generally improper and inappropriate for Company personnel to engage in short-term or
speculative transactions involving the Company’s securities, it is our policy that Company personnel and Related Persons not
engage in any of the following activities, except in each case in limited circumstances with prior approval of the Policy
Administrator:
trading in the Company’s securities on a short-term basis. Any shares of Company common stock purchased in the
open market must be held for a minimum of six months and ideally longer;
short sales of the Company’s securities;
use of the Company’s securities to secure a margin or other loan;
transactions in straddles, collars or other similar risk reduction or hedging devices; and
transactions in publicly-traded options relating to the Company’s securities (i.e., options that are not granted by the
Company).
11
VII. Summary of Insider Dealing provisions under the Criminal Justice Act 1993
In addition to federal securities laws and the rules of the SEC on insider trading, Company personnel should also be
aware of the insider dealing provisions of the U.K. Criminal Justice Act 1993 (“CJA”) which may apply in circumstances where
the relevant behavior has the requisite connection with the U.K.
Under the CJA, it is a criminal offence for a person, who has "inside information" as an "insider", to deal in securities
which are "price-affected securities" in relation to that information, or to encourage another person to deal. It is also a criminal
offence for an insider to disclose the information to another person other than in the proper performance of his or her
employment, office or profession. The dealing in question must either be on a "regulated market", or it must involve a
"professional intermediary". Insider dealing is punishable with imprisonment of up to seven years or a fine or both.
Inside information is specific information relating to particular securities or to a particular issuer of securities or issuers of
securities which has not been made public and if it were would be likely to have a significant effect on the price or value of any
securities.
An insider is a person who knowingly has inside information from an inside source, that is if:
(a) he or she has the information through being a director, employee or shareholder of an issuer (not necessarily of the same
issuer to which the information relates);
(b) he or she has it through having access to the information by virtue of his or her employment, office or profession; or
(c) the direct or indirect source of the information is a person falling within one of the above.
VIII.
Post-Termination Transactions
This Policy will no longer apply after termination of service to the Company. However, if an individual is in possession
of material non-public information when his or her service terminates, that individual may not trade in the Company’s securities
until that information has become public or is no longer material, and it would be prudent for the individual, if he or she is subject
to a black-out period upon termination of service, to refrain from trading until those restrictions no longer apply to Company
personnel.
IX. Company Assistance
Any person who has any questions about specific transactions or this Policy in general may obtain additional guidance
from the Policy Administrator. Remember, however, the ultimate responsibility for adhering to this Policy and avoiding
improper transactions rests with you. In this regard, please use your best judgment when considering a transaction in the
Company’s securities.
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X. Certifications
As a condition to employment, all employees will be required to certify their understanding of and intent to comply with
this Policy. Members of the Board of Directors, Senior Management and other personnel may be required to certify compliance
on an annual basis.
Adopted 30 November 2023
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As of 30th November 2023:
Exhibit A
“Senior Management”
All Executive Officers, including:
1.
Hugh S. Griffith, Chief Executive Officer
2.
Donald Munoz, Chief Financial Officer
3.
Jeffrey Bloss, Chief Medical Officer
Exhibit B
“Financial Team Members”
All members of the Company’s financial team.
Exhibit C
“Designated Employees”
All employees of the Company.
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Certification Under Insider Trading Policy
The undersigned hereby certifies that he/she has read and understands, and agrees to comply with, the Company’s
Insider Trading Policy, a copy of which was distributed with this Certification.
Date: __________________________ Signature __________________________
Name: __________________________
(Please Print)
Title: __________________________
Exhibit 97.1
NUCANA PLC
CLAWBACK POLICY
I.
Introduction
The Board of Directors (the “Board”) of NuCana plc (the “Company”) believes that it is in the best interests of the Company and its
shareholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance
compensation philosophy. The Board has therefore adopted this policy which provides for the recoupment of certain executive compensation in the event
of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws (the “Policy”).
This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and final rules and
amendments adopted by the Securities and Exchange Commission (the “SEC”) to implement the aforementioned legislation.
II.
Administration
This Policy shall be administered by the Board or, if so designated by the Board, the Remuneration Committee of the Board, in which case
references herein to the Board shall be deemed references to the Remuneration Committee. Any determinations made by the Board shall be final and
binding on all affected individuals.
III.
Covered Executives
This Policy applies to the Company’s current and former executive officers, as determined by the Board in accordance with the requirements of
Section 10D of the Exchange Act and any applicable rules or standards adopted by the SEC and any national securities exchange on which the Company’s
securities are listed, and such other employees who may from time to time be deemed subject to the Policy by the Board (“Covered Executives”).
IV.
Incentive-Based Compensation
For purposes of this Policy, incentive-based compensation (“Incentive-Based Compensation”) includes any compensation that is granted,
earned, or vested based wholly or in part upon the attainment of any financial reporting measures that are determined and presented in accordance with the
accounting principles (“IFRS Measures”) used in preparing the Company’s financial statements and any measures derived wholly or in part from such
measures, as well as non-IFRS measures, share price, and total shareholder return (collectively, “Financial Reporting Measures”); however, it does not
include: (i) base salaries; (ii) discretionary cash bonuses; (iii) awards (either cash or equity) that are solely based upon subjective, strategic or operational
standards or standards unrelated to Financial Reporting Measures, and (iv) equity awards that vest solely on completion of a specified employment period
or without any performance condition. Incentive-Based Compensation is considered received in the fiscal period during which the applicable reporting
measure is attained, even if the payment or grant of such award occurs after the end of that period. If an award is subject to both time-based and
performance-based vesting conditions, the award is considered received upon satisfaction of the performance-based conditions, even if such an award
continues to be subject to the time-based vesting conditions.
For the purposes of this Policy, Incentive-Based Compensation may include, among other things, any of the following:
•
Annual bonuses and other short- and long-term cash incentives.
•
Share options.
•
Share appreciation rights.
•
Restricted shares or restricted share units.
•
Performance shares or performance units.
For purposes of this Policy, Financial Reporting Measures may include, among other things, any of the following:
•
Company share price.
•
Total shareholder return.
•
Revenues.
•
Net income.
2
•
Earnings before interest, taxes, depreciation, and amortization (EBITDA).
•
Funds from operations.
•
Liquidity measures such as working capital or operating cash flow.
•
Return measures such as return on invested capital or return on assets.
•
Earnings measures such as earnings per share.
V.
Recoupment; Accounting Restatement
In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material
noncompliance with any financial reporting requirement under U.S. securities laws, including any required accounting restatement to correct an error in
previously issued financial statements that (i) is material to the previously issued financial statements or (ii) is not material to previously issued financial
statements, but that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, the
Board will require reimbursement or forfeiture of any excess Incentive-Based Compensation received by any Covered Executive during the three
completed fiscal years immediately preceding the date on which the Company is required to prepare the accounting restatement (the “Look-Back Period”).
For the purposes of this Policy, the date on which the Company is required to prepare an accounting restatement is the earlier of (i) the date the Board
concludes or reasonably should have concluded that the Company is required to prepare a restatement to correct a material error, and (ii) the date a court,
regulator, or other legally authorized body directs the Company to restate its previously issued financial statements to correct a material error. The
Company’s obligation to recover erroneously awarded compensation is not dependent on if or when the restated financial statements are filed.
Recovery of the Incentive-Based Compensation is only required when the excess award is received by a Covered Executive (i) after the
beginning of their service as a Covered Executive, (ii) who served as an executive officer at any time during the performance period for that Incentive-
Based Compensation, (iii) while the Company has a class of securities listed on a national securities exchange or a national securities association, and (iv)
during the Look-Back Period immediately preceding the date on which the Company is required to prepare an accounting restatement.
VI.
Excess Incentive Compensation: Amount Subject to Recovery
The amount of Incentive-Based Compensation subject to recovery is the amount the Covered Executive received in excess of the amount of
Incentive-Based Compensation that would have been paid to the Covered Executive had it been based on the restated financial statements, as determined
by the Board. The amount subject to recovery will be calculated on a pre-tax basis.
For Incentive-Based Compensation received as cash awards, the erroneously awarded compensation is the difference between the amount of the
cash award that was received (whether payable in a lump sum or over time) and the amount that should have been received applying the restated Financial
Reporting Measure. For cash awards paid from bonus pools, the erroneously awarded Incentive-Based Compensation is the pro rata portion of any
deficiency that results from the aggregate bonus pool that is reduced based on applying the restated Financial Reporting Measure.
For Incentive-Based Compensation received as equity awards that are still held at the time of recovery, the amount subject to recovery is the
number of shares or other equity awards received or vested in excess of the number that should have been received or vested applying the restated Financial
Reporting Measure. If the equity award has been exercised, but the underlying shares have not been sold, the erroneously awarded compensation is the
number of shares underlying the award.
In instances where the Company is not able to determine the amount of erroneously awarded Incentive-Based Compensation directly from the
information in the accounting restatement, the amount will be based on the Company’s reasonable estimate of the effect of the accounting restatement on
the applicable measure. In such instances, the Company will maintain documentation of the determination of that reasonable estimate.
VII.
Method of Recoupment
The Board will determine, in its sole discretion, subject to applicable law, the method for recouping Incentive-Based Compensation hereunder,
which may include, without limitation:
•
requiring reimbursement of cash Incentive-Based Compensation previously paid;
3
•
seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;
•
offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
•
cancelling outstanding vested or unvested equity awards; and/or
•
taking any other remedial and recovery action permitted by law, as determined by the Board.
VIII. No Indemnification; Successors
The Company shall not indemnify any Covered Executives against the loss of any incorrectly awarded Incentive-Based Compensation. This
Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal
representatives.
IX.
Exception to Enforcement
The Board shall recover any excess Incentive-Based Compensation in accordance with this Policy unless such recovery would be impracticable,
as determined by the Board in accordance with Rule 10D-1 of the Exchange Act and any applicable rules or standards adopted by the SEC and the listing
standards of any national securities exchange on which the Company’s securities are listed.
X.
Interpretation
The Board is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the
administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the
Exchange Act and any applicable rules or standards adopted by the SEC and any national securities exchange on which the Company’s securities are listed.
XI.
Effective Date
This Policy shall be effective as of October 2, 2023 (the “Effective Date”) and shall apply to Incentive-Based Compensation that is received by a
Covered Executive on or after that date, as determined by the Board in accordance with applicable rules or standards adopted by the SEC and the listing
standards of any national securities exchange on which the Company’s securities are listed.
XII.
Amendment; Termination
The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary to comply with any rules
or standards adopted by the SEC and the listing standards of any national securities exchange on which the Company’s securities are listed. The Board may
terminate this Policy at any time.
XIII. Other Recoupment Rights
Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available
to the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other
legal remedies available to the Company.