NuCana plc ADR

Company Overview

Business Model: NuCana plc is a clinical-stage biopharmaceutical company focused on improving cancer treatment outcomes by applying its proprietary ProTide™ technology. This technology transforms widely prescribed chemotherapy agents, nucleoside analogs, into more effective and safer medicines designed to overcome the limitations of conventional agents and generate higher concentrations of anti-cancer metabolites in cancer cells. The company's pipeline includes NUC-7738 and NUC-3373.

Market Position: The company operates within the highly competitive biopharmaceutical industry, specifically targeting the cancer therapeutics market. Chemotherapeutics, which form the backbone of cancer treatment, are projected to reach global revenues of approximately $106 billion by 2030, with the number of patients requiring chemotherapy expected to rise from 9.8 million in 2018 to 15 million in 2040. NuCana plc aims to transform the nucleoside analog class of chemotherapeutics, a segment that includes widely used agents like 5-fluorouracil (5-FU) and gemcitabine. The company highlights that phosphoramidate chemistry, the basis of its ProTide technology, has led to successful drug launches in the antiviral field by Gilead Sciences, Inc., including sofosbuvir and tenofovir alafenamide fumarate. NuCana plc holds what it believes to be the foundational patent estate for phosphoramidate chemistry in oncology.

Recent Strategic Developments:

• NUC-7738: Currently in the Phase 2 part of a Phase 1/2 clinical trial (NuTide:701) for advanced solid tumors as monotherapy and in combination with pembrolizumab for melanoma patients. Recent data from the Phase 2 part in September 2024 showed 9 of 12 metastatic melanoma patients, refractory to prior PD-1 inhibitor-based therapy, achieved disease control with NUC-7738 plus pembrolizumab, with encouraging median progression-free survival (PFS) of over five months. Two patients achieved Partial Responses (55% confirmed, 32% unconfirmed tumor reduction). NuCana plc plans to initiate an expansion of the NuTide:701 trial and seek regulatory guidance from the FDA on its registrational strategy for NUC-7738 in melanoma in 2025.
• NUC-3373: Being evaluated in a Phase 1b/2 modular clinical trial (NuTide:303) in combination with pembrolizumab for advanced solid tumors (Module 1) and with docetaxel for lung cancer (Module 2). Initial data from Module 1, published in November 2024, showed significant tumor volume reductions and prolonged PFS in heavily pre-treated patients, including a 100% reduction in target lesions for a urothelial bladder cancer patient and an 81% reduction for a cutaneous melanoma patient. NuCana plc expects to announce further data from the NuTide:303 trial in combination with pembrolizumab in 2025.
• Acelarin: The Phase 3 clinical trial (NuTide:121) for biliary tract cancer was discontinued in March 2022 following a futility analysis. While a higher objective response rate was observed in the Acelarin plus cisplatin arm, it did not translate into an overall survival benefit, potentially due to higher discontinuation rates from liver-related treatment emergent adverse events in this patient population. NuCana plc is evaluating future development options for Acelarin in biliary tract cancer and other indications.

Geographic Footprint: NuCana plc is incorporated in England and Wales and domiciled in the United Kingdom, with its principal executive offices in Edinburgh, United Kingdom. The company plans to seek regulatory approval to commercialize its product candidates in the United States and the European Union, with potential expansion into additional countries.

Cross-Border Operations: NuCana plc operates internationally through three wholly owned subsidiaries: NuCana, Inc. (United States), NuCana Limited (Ireland), and NuCana BioMed Trustee Company Limited (Scotland). The company's principal operations and decision-making functions are centralized in the United Kingdom. NuCana plc sources active pharmaceutical ingredients, raw materials, and research and development, manufacturing, consulting, and other services globally, including from the United States, the European Union, and India. The company holds granted patents in key markets such as the United States, Europe, and Japan, protecting its product candidates. Licensing agreements with Cardiff University and Cardiff ProTides Ltd. grant NuCana plc exclusive worldwide rights to certain intellectual property related to its ProTides.

Financial Performance

Revenue Analysis

Profitability Metrics: Not applicable as the company has not generated any revenue from product sales.

Investment in Growth:

• R&D Expenditure: £18.0 million in 2024, a decrease from £25.1 million in 2023.
• Capital Expenditures: Payments for property, plant and equipment were £4 thousand in 2024 (consistent with 2023). Payments for intangible assets were £289 thousand in 2024, a decrease from £474 thousand in 2023.
• Strategic Investments: Not explicitly quantified as "strategic investments" in the financial statements.

Currency Impact Analysis: NuCana plc's functional currency is U.K. pounds sterling, but a significant portion of its expenses are incurred in other currencies, primarily U.S. dollars, and to a lesser extent, the Euro and Indian Rupee. The company holds a significant portion of its cash and cash equivalents in U.S. dollars to manage short-to-mid-term expenses in these currencies. In 2024, the company reported a net foreign exchange gain of £0.2 million, primarily due to the U.S. dollar appreciating relative to the U.K. pound sterling. This contrasts with a net foreign exchange loss of £1.2 million in 2023, when the U.S. dollar depreciated against the pound sterling. NuCana plc does not currently use derivative instruments for exchange rate hedging. 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).

Product Pipeline R&D Expenditure (in £ thousands)

Financial Performance:

• NUC-3373 R&D expenditure decreased by £2.9 million (16.5%) year-over-year.
• NUC-7738 R&D expenditure decreased by £1.0 million (27.6%) year-over-year.
• Acelarin R&D expenditure decreased by £2.7 million year-over-year, showing a credit of £0.5 million in 2024.

Product Portfolio:

• NUC-7738: A novel anti-cancer agent designed to disrupt RNA polyadenylation, impact gene expression in cancer cells, and target multiple aspects of the tumor microenvironment. It is a ProTide transformation of 3’-deoxyadenosine, engineered to bypass rapid breakdown by the ADA enzyme, enter cells independently of nucleoside transporters, and directly generate the active anti-cancer metabolite 3’-dATP.
• NUC-3373: A new chemical entity derived from 5-fluorouracil (5-FU), a widely used chemotherapy agent. NUC-3373 is a targeted thymidylate synthase (TS) inhibitor designed to overcome limitations of 5-FU by generating higher intracellular levels of the active anti-cancer metabolite (FUDR-MP) without producing toxic byproducts like FBAL or FUTP. It is resistant to DPD breakdown and enters cells independently of membrane transporters.
• Acelarin: A ProTide transformation of gemcitabine, designed to overcome key cancer resistance mechanisms associated with gemcitabine, such as breakdown by cytidine deaminase (CDA) and dependence on the hENT1 transporter and dCK enzyme for activation.

Market Dynamics:

• NUC-7738: Preclinical and clinical data suggest NUC-7738 has the potential to act as an immune sensitizer and an effective combination partner for PD-L1/PD-1 inhibitors. It has been shown to reduce soluble and exosomal PD-L1, increase polyunsaturated fatty acids (indicating a less aggressive cancer type), decrease monounsaturated fatty acids (associated with malignant behavior and chemotherapy resistance), and cause PolyA tail shortening, modulating RNA stability and influencing genes critical for cancer cell growth.
• NUC-3373: Preclinical studies demonstrated NUC-3373's superior anti-cancer activity (up to 330 times greater potency than 5-FU in some cell lines) and ability to generate significantly higher intracellular levels of FUDR-MP. It also induces DNA damage and promotes immunogenic cell death (ICD) by releasing damage-associated molecular patterns (DAMPs), potentially enhancing immunotherapy efficacy.
• Acelarin: Clinical trials showed anti-cancer activity in patients resistant or progressed on prior gemcitabine treatment, with observed disease control and tumor shrinkages in challenging indications like ovarian and biliary tract cancers.

Geographic Revenue Distribution: Not applicable as the company has no approved products and does not generate revenue from product sales.

International Operations & Geographic Analysis

Revenue by Geography: Not applicable as the company has no approved products and does not generate revenue from product sales.

International Business Structure:

• Subsidiaries: NuCana, Inc. (United States), NuCana Limited (Ireland), NuCana BioMed Trustee Company Limited (Scotland).
• Joint Ventures: No joint ventures are explicitly mentioned in the filing.
• Licensing Agreements:
  • Cardiff University: NuCana plc holds an exclusive worldwide license for Cardiff intellectual property related to selected ProTides. This agreement includes potential clinical development milestone payments of up to £1,875,000 per nucleoside family, low-single digit royalties on sales, and a high-single digit percentage of sublicense payments.
  • Cardiff ProTides Ltd.: NuCana plc has an exclusive worldwide license for rights and technical information related to certain unpatented compounds, including Acelarin. This agreement involves potential development and approval milestone payments of up to approximately $4.5 million for the first product, with additional milestones for new nucleoside series. Royalties are in the mid- to high-single digits on sales, and mid-single digits on sublicensee sales.

Cross-Border Trade:

• Export Markets: While not explicitly detailed, the company anticipates potential future revenue from abroad, particularly from the United States, upon commercialization of its product candidates.
• Import Dependencies: NuCana plc sources active pharmaceutical ingredients, raw materials, and various research, development, manufacturing, and consulting services globally, including from the United States, the European Union, and India.
• Transfer Pricing: The company's intercompany arrangements and transfer pricing policies are subject to scrutiny by tax authorities such as His Majesty’s Revenue & Customs (HMRC) and the U.S. Internal Revenue Service (IRS), which could challenge income allocation and intellectual property valuations.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not mentioned in the filing.
• Dividend Payments: NuCana plc has never declared or paid a dividend and does not anticipate doing so in the foreseeable future, intending to retain all earnings to fund business development and expansion.
• Dividend Yield: Not applicable.
• Future Capital Return Commitments: No specific future capital return commitments are disclosed beyond the general intent to retain earnings for business growth.

Balance Sheet Position:

• Cash and Equivalents: £6.7 million as of December 31, 2024, a decrease from £17.2 million as of December 31, 2023.
• Total Debt: The company's primary debt consists of lease liabilities totaling £190 thousand as of December 31, 2024. No other significant debt is disclosed.
• Net Cash Position: Approximately £6.51 million as of December 31, 2024 (Cash and Equivalents less Total Debt).
• Credit Rating: Not disclosed in the filing.
• Debt Maturity Profile: Lease liabilities include £73 thousand due within one year and £117 thousand due in 1-3 years as of December 31, 2024.

Cash Flow Generation:

• Operating Cash Flow: Net cash used in operating activities was (£19.1) million in 2024, an improvement from (£26.4) million in 2023.
• Free Cash Flow: Not explicitly stated, but based on operating cash flow and capital expenditures, the company had a negative free cash flow of approximately (£19.4) million in 2024.
• Cash Conversion Metrics: Not disclosed.

Currency Management: NuCana plc's cash holdings include a significant portion in U.S. dollars, managed to meet short-to-mid-term expenses in foreign currencies. The company does not use derivative instruments for hedging, relying on operational diversification and cash balance management to mitigate currency risk.

Operational Excellence

Production & Service Model: NuCana plc does not own or operate manufacturing facilities and relies entirely on third-party contract manufacturing organizations (CMOs) for the supply of clinical trial materials for NUC-7738, NUC-3373, Acelarin, and any future product candidates. This reliance is expected to continue for commercial manufacturing if products are approved.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials & API: Sourced from third parties globally, including the United States, the European Union, and India, either directly or through CMOs. Raw materials are generally available from multiple vendors.
• Manufacturing Partners: Third-party CMOs are responsible for manufacturing product candidates under current good manufacturing practice (cGMP) conditions for preclinical studies and clinical trials, and are expected to do so for commercial supply.
• Clinical Trial Partners: The company relies on medical institutions, clinical investigators, contract laboratories, and contract research organizations (CROs) to conduct and support its clinical trials.

Facility Network:

• Executive Office: Principal executive offices are located at 3 Lochside Way, Edinburgh, EH12 9DT, United Kingdom (3,900 sq ft, lease expiry August 14, 2027).
• Previous Offices: A 312 sq ft executive office in Newton, Massachusetts, United States, was terminated effective January 31, 2025. A 4,236 sq ft executive office in Edinburgh, United Kingdom, expired in December 2024.
• Research & Development: R&D activities are largely outsourced to CROs and other third parties.
• Distribution: Not explicitly detailed, as the company has no approved products.

Operational Metrics: Specific operational metrics such as capacity utilization, efficiency measures, or quality indicators are not explicitly disclosed in the filing.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: NuCana plc intends to build a specialized sales force to commercialize any approved product candidates in major markets, such as the United States and Europe.
• Channel Partners: The company may also commercialize products in partnership with commercialization partners.
• Digital Platforms: Not explicitly detailed in the filing.

Customer Portfolio: Enterprise Customers:

• Target Audience: The company aims to target healthcare professionals who treat the majority of patients with the cancers its ProTides are initially designed to address.
• Customer Concentration: No specific customer concentration risks are identified, as the company has no approved products or sales.

Regional Market Penetration: Not applicable as the company has no approved products or sales.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The biopharmaceutical industry, particularly cancer therapeutics, is highly competitive. The global chemotherapy market is projected to reach approximately $106 billion by 2030, with the number of patients requiring chemotherapy expected to increase from 9.8 million in 2018 to 15 million in 2040. Nucleoside analogs, a class of chemotherapeutics, play a significant role in cancer treatment, with 5-FU being widely used for various cancers and its derivative, capecitabine (Xeloda®), having achieved $1.5 billion in worldwide sales in 2012 before generic competition.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: NuCana plc faces competition from major pharmaceutical, biotechnology, and specialty pharmaceutical companies, as well as academic institutions, governmental agencies, and public and private research institutions globally.

• Chemotherapies: Competes with manufacturers of off-patent chemotherapies (e.g., 5-FU, gemcitabine) and companies developing new or improved chemotherapies.
• Immunotherapy and Targeted Drug Therapies: Product candidates, if approved, will compete with existing and future immunotherapy and targeted drug therapies for cancer.
• Companies with greater resources: Many competitors possess significantly greater financial resources and expertise in R&D, manufacturing, preclinical/clinical trials, regulatory approvals, and marketing.
• Early-stage companies: Smaller and early-stage companies may also pose significant competition, especially through collaborations with larger, established firms.

Regional Competitive Dynamics: The competitive landscape varies by geographic market, influenced by factors such as regulatory approval timelines, pricing regulations, and reimbursement policies. Competitors may obtain regulatory approvals more rapidly, establishing strong market positions.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics: The company is exposed to risks from global economic volatility, including credit and financial market disruptions, inflation leading to increased costs, and geopolitical conflicts (e.g., Ukraine and the Middle East) that could disrupt clinical trials and increase costs. Technology Disruption: Biopharmaceutical drug development is inherently risky, with a high failure rate in clinical trials. Preliminary clinical data may not be indicative of final results, and the company may not successfully expand its ProTide technology platform to build new product candidates. Customer Concentration: Not explicitly identified as a material risk in the filing.

Operational & Execution Risks

Global Supply Chain Vulnerabilities: NuCana plc relies heavily on third parties for clinical trials, manufacturing, and shipment of product candidates. This includes single-source suppliers for active pharmaceutical ingredients (API), formulations, and drug products, posing risks of insufficient quantities, unacceptable costs, or quality issues. Scaling up manufacturing to meet large-scale clinical trial and commercial needs may be challenging. Regional Disruptions: International operations expose the company to risks from economic weakness, political instability, differing regulatory requirements, changes in customs/tariffs, currency exchange rate fluctuations, and geopolitical events (e.g., Brexit implications, potential Scottish independence, ongoing conflicts). Trade Restrictions: The company's business may be impacted by trade protection measures, import/export licensing requirements, and economic sanctions imposed by governments.

Financial & Regulatory Risks

Currency & Financial Risks: The company's functional currency is U.K. pounds sterling, but significant U.S. dollar expenses create foreign exchange risk, which is currently unhedged. NuCana plc has incurred significant operating losses and has an accumulated deficit of £224.3 million as of December 31, 2024. The company's cash and cash equivalents of £6.7 million as of December 31, 2024, are not sufficient to fund anticipated operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern. Future financing may dilute shareholders, impose restrictive covenants, or require relinquishing intellectual property rights. Adverse developments in the financial services industry could impair access to funding. The company may be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, leading to adverse tax consequences for U.S. investors. Regulatory & Compliance Risks: Obtaining and maintaining marketing approvals from agencies like the FDA and EMA is lengthy, expensive, and uncertain. Product candidates may cause undesirable side effects, leading to delays, denials, or restrictive labels. Approved products are subject to extensive post-marketing requirements, including cGMP compliance, adverse event reporting, and promotion restrictions. Relationships with customers and third-party payors are subject to anti-kickback, fraud and abuse, and other healthcare laws (e.g., federal Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act, GDPR, U.K. GDPR), with potential for significant penalties for non-compliance. Tax Regulations: As a U.K. resident company with a U.S. subsidiary, NuCana plc is subject to U.K. and U.S. corporate taxation. The company has cumulative carry forward tax losses of £104.2 million as of December 31, 2024. Changes to U.K. R&D tax credit regimes (effective April 1, 2024) or the "patent box" regime, or disagreements with tax authorities on transfer pricing or tax positions, could adversely affect financial condition.

Geopolitical & External Risks

Country-Specific Risks: The United Kingdom's withdrawal from the European Union and potential future referendums on Scottish independence could negatively impact global economic conditions, financial markets, and the company's business. Economic Risk: Unstable global economic conditions, including recessions or slow growth, could adversely affect the company's ability to raise capital, increase manufacturing costs, and reduce demand for future products. Regulatory Changes: Future legislative or administrative actions in the U.S. (e.g., ACA, IRA, PBM reforms) and abroad could increase the difficulty and cost of obtaining approvals, restrict post-approval activities, and affect pricing and reimbursement.

Innovation & Technology Leadership

Research & Development Focus: NuCana plc's core R&D focus is on applying its proprietary ProTide™ technology to transform nucleoside analogs into more effective and safer cancer medicines. The strategy involves developing a pipeline of ProTide candidates for various solid and hematological tumors, with a focus on overcoming limitations of existing nucleoside analogs. The company aims to leverage its technology platform to build additional ProTide candidates, including both widely used and novel nucleoside analogs.

Global R&D Network: The company relies on a network of external partners, including medical institutions, clinical investigators, contract laboratories, and contract research organizations (CROs), to conduct its preclinical studies and clinical trials. The proprietary ProTide technology was invented at Cardiff University by Professor Christopher McGuigan, NuCana plc's late Chief Scientific Officer.

Innovation Pipeline:

• NUC-7738: A novel anti-cancer agent in Phase 2 development, designed to disrupt RNA polyadenylation, impact gene expression, and target the tumor microenvironment. It is a ProTide transformation of 3’-deoxyadenosine.
• NUC-3373: A new chemical entity in Phase 1b/2 development, derived from 5-fluorouracil, functioning as a targeted thymidylate synthase inhibitor.
• Acelarin: A ProTide transformation of gemcitabine, previously in Phase 3 development, with future development options under assessment.

Intellectual Property Portfolio:

• Patent Strategy: NuCana plc actively seeks to protect its intellectual property through patent filings in key markets globally, including the United States, Europe, and Japan. The strategy involves initial priority filings at the U.K. Intellectual Property Office, followed by Patent Co-operation Treaty (PCT) applications and national/regional filings. The company also relies on data exclusivity, market exclusivity, and patent term extensions.
• Patent Holdings: As of February 25, 2025, NuCana plc owned 395 granted patents (25 U.S. issued) and 83 pending patent applications (5 U.S. pending).
  • NUC-7738: 84 granted patents and 7 pending applications covering composition of matter, genus, and specific uses, with granted patents in the U.S., Europe, and Japan, expected to expire in 2035 (excluding extensions).
  • NUC-3373: 103 granted patents and 2 pending applications covering composition of matter, genus, and specific uses, with granted patents in the U.S., Europe, and Japan, expected to expire in 2032 (excluding extensions).
  • Acelarin: 66 granted patents and 2 pending applications for single diastereoisomer form, with patents granted in the U.S., Europe, and Japan, expected to expire in 2033 (excluding extensions).
• IP Litigation: NuCana plc was involved in patent infringement litigation with Gilead Sciences, Inc. between 2018 and 2023 concerning European patents related to phosphoramidate nucleotide compounds, including sofosbuvir. This litigation resulted in the revocation of one European patent and the invalidity determination of two European patents in the United Kingdom, leading to settlements for legal fees.

Technology Partnerships: NuCana plc has entered into licensing and collaboration agreements with Cardiff University and Cardiff ProTides Ltd. for the discovery, drug design, and in vitro screening of nucleoside analogs and related intellectual property.

Leadership & Governance

Executive Leadership Team

International Management Structure: The company's principal operations and decision-making functions are located in the United Kingdom, from where global decisions are made. No specific regional leadership structure is detailed.

Board Composition: The board of directors consists of seven members, including one executive director (Hugh Griffith) and six non-executive directors (Andrew Kay, Adam George, Martin Mellish, Cyrille Leperlier, Elliott Levy, and Bali Muralidhar). The board is divided into three staggered classes. Six of the seven directors are considered independent under Nasdaq rules.

• Audit Committee: Composed of Adam George (Chair, financial expert), Martin Mellish, and Cyrille Leperlier. All are independent. Mr. George intends to resign effective March 21, 2025, with Mr. Mellish (also an audit committee financial expert) intending to succeed him as chair.
• Remuneration Committee: Composed of Bali Muralidhar (Chair) and Elliott Levy, both non-executive and non-employee directors.
• Nominating and Governance Committee: Composed of Andrew Kay (Chair), Hugh Griffith, and Bali Muralidhar.
• Development Committee: Composed of Cyrille Leperlier (Chair) and Elliott Levy, with a majority of independent non-employee directors.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: NuCana plc's operations and product development are subject to extensive regulation by the FDA in the United States and comparable authorities in other countries, including the European Medicines Agency (EMA) in the European Union and the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom. Regulatory requirements for clinical trials, product licensing, pricing, and reimbursement vary significantly across jurisdictions.

• United States: Governed by the U.S. Federal Food, Drug, and Cosmetic Act (FD&C Act), requiring preclinical testing, Investigational New Drug (IND) application, extensive clinical trials (Phase 1, 2, 3), and New Drug Application (NDA) approval. Special programs like Fast Track, Breakthrough Therapy, Priority Review, Accelerated Approval, and Real-Time Oncology Review (RTOR) may expedite development. The Hatch-Waxman Act governs generic drug approvals and patent term extensions.
• European Union: Requires Clinical Trial Authorization (CTA) for clinical trials and Marketing Authorization Application (MAA) for product approval, either through a centralized procedure (for biotechnology-derived or certain disease-specific drugs) or a mutual recognition procedure. The Clinical Trials Regulation (Regulation (E.U.) 536/2014) harmonizes clinical trial assessment.
• United Kingdom: Post-Brexit, the MHRA governs marketing authorization, with an International Recognition Procedure allowing reliance on decisions from "Reference Regulators" (including FDA, EMA) for expedited U.K. approval.

Cross-Border Compliance: NuCana plc is subject to various international compliance laws:

• Anti-Corruption: U.K. Bribery Act 2010, U.S. Foreign Corrupt Practices Act (FCPA), U.S. domestic bribery statutes, and other anti-corruption laws in countries of operation.
• Tax Evasion: U.K. Criminal Finances Act 2017 (CFA 2017) regarding failure to prevent facilitation of tax evasion.
• Trade Controls: Regulations administered by the U.S. and U.K. governments and E.U. authorities, including export control regulations, economic sanctions, embargoes, anti-money laundering laws, import/customs requirements, and currency exchange regulations.

International Tax Strategy:

• Tax Residency: The company is a U.K. resident company, and its wholly owned U.S. subsidiary, NuCana, Inc., is subject to U.S. corporate taxation.
• Tax Losses: As of December 31, 2024, NuCana plc had cumulative carry forward tax losses of £104.2 million in the United Kingdom.
• R&D Tax Credits: The company has historically benefited from U.K. R&D tax credit regimes, which changed on April 1, 2024. It is evaluating eligibility under the new regime. U.S. R&D credits can offset corporate tax payable.
• Patent Box Regime: The company may benefit from the U.K.'s "patent box" regime, which taxes certain profits from patented products at an effective rate of 10%.
• Transfer Pricing: Tax authorities may challenge the company's allocation of income and transfer pricing policies between affiliated companies.

Currency Management & Financial Strategy

Multi-Currency Operations: NuCana plc's functional currency is U.K. pounds sterling. However, a significant portion of its expenses are incurred in other currencies, primarily U.S. dollars, and to a lesser extent, the Euro and Indian Rupee. This exposes the company to currency exchange rate fluctuations. The company holds a significant portion of its cash and cash equivalents in U.S. dollars to meet foreseeable short-to-mid-term expenses in these other currencies.

Hedging Strategies:

• Financial Hedging: NuCana plc does not currently use derivative instruments to manage exchange rate exposure.
• Operational Hedging: The company seeks to minimize currency exposure by maintaining cash balances in levels appropriate to meet foreseeable short-to-mid-term expenses in the currencies in which those expenses are incurred.
• Currency Impact: 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 (compared to a £74,000 decrease in 2023).