NuCana : Annual Report - 2023

Annual

eport

023

ended 31 December 2023

1. N ew Era in O ncology

Directors	Registered Office
Hugh Griffith	77-78 Cannon Street
Andrew Kay	London
Bali Muralidhar	EC4N 6AF
Martin Mellish	U.K.
Adam George	Global Headquarters
Cyrille Leperlier
Lochside House
Elliott Levy
3 Lochside Way
Secretary
Edinburgh
Martin Quinn	EH12 9DT
Auditors	U.K.
E: [e-mail]
Ernst & Young LLP
www.nucana.com
144 Morrison Street
Edinburgh
EH3 8EX	Registered No. 03308778
U.K.

Contents

01	Strategic report	2
02	Directors' report	14
03	Directors' remuneration report	17
04	Statement of directors' responsibilities	27
05	Independent auditor's report to the members of NuCana plc	29
06	Financial statements	37
07	Notes to the financial statements	44
08	Advisers	68

1

01

strategic

report

introduction

NuCana was incorporated under the laws of England and Wales on 28 January 1997 under the name Biomed (UK) Limited and commenced operations in 2008. On 28 April 2008, we changed our name to NuCana BioMed Limited. On 29 August 2017, we re-registered as a public limited company and changed our name to NuCana plc. On 2 October 2017, we completed our initial public offering of American Depositary Shares, or ADSs, on the Nasdaq Global Select Market. On 9 November 2023 we transferred our listing to The Nasdaq Capital Market. Our ADSs are traded under the symbol "NCNA". NuCana plc on behalf of itself and its subsidiaries, NuCana, Inc., NuCana Limited (incorporated in Ireland) and NuCana Biomed Trustee Company Limited (which may be referred to as "the Group", "the Company", "we", "us" or "our"), is required to produce a strategic report complying with the requirements of the Companies Act 2006.

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overview

strategic report/ 01

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 analogues, into more effective and safer medicines. While these conventional agents are central to the treatment of many solid tumours and haematological malignancies, their efficacy can be limited by: rapid breakdown, which can lead to the generation of toxic by-products; poor uptake by cell membrane transporters; inefficient metabolism to the active anti-cancer metabolite; and poor pharmacokinetic, or PK, properties which often require challenging administration schedules. Utilising our proprietary technology, we are developing new medicines called ProTides, designed to overcome all these key limitations, resulting in much higher concentrations of the active anti-cancer metabolites in cancer cells and avoiding the off-target toxicity associated with conventional chemotherapy.

NUC-3373 is a new chemical entity derived from the nucleoside analogue 5-fluorouracil, 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 Organisation's List of Essential Medicines. NUC-3373 has been evaluated in a Phase 1 clinical study for patients with advanced solid tumours. NUC-3373 is currently being evaluated in three ongoing clinical studies: a Phase 1b/2 clinical study, in combination with other agents, for patients with metastatic colorectal cancer; a randomised Phase 2 clinical study of NUC-3373, in combination with other agents, for the second-line treatment of patients with advanced colorectal cancer; and a Phase 1b/2 modular clinical study of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer.

NUC-7738 is a ProTide transformation of 3'-deoxyadenosine, or 3'-dA, a novel anti-cancer nucleoside analogue, that has shown potent anti-cancer activity in preclinical studies but due to rapid breakdown has not been successfully developed or approved as an anti-cancer agent. NUC-7738 is in the Phase 2 part of a Phase 1/2 clinical study for patients with advanced solid tumours which is evaluating NUC-7738 as a monotherapy and in combination with pembrolizumab.

The treatment of cancer can be divided into three major categories: surgery, radiotherapy and therapeutics. Therapeutics include chemotherapy, immunotherapy, cell-based therapies, oncolytic viruses 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 $97.9 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 analogues, by applying a well-validated medicinal chemistry approach to overcome their limitations.

Through harnessing the power of phosphoramidate chemistry, we convert nucleoside analogues into activated nucleotide analogues 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 analogues. In the antiviral

field, this phosphoramidate chemistry approach has resulted in the most successful drug launches in the history of medicine, Gilead's 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 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-3373 overcame the key limitations associated with 5-FU, generating higher intracellular levels of the active anti-cancer metabolite 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 study, also known as the NuTide:301 study, in patients with advanced solid tumours. Enrolment in this study 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 favourable 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 progression- free survival, or PFS, lasting more than nine months. The results of this study 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 is being evaluated in an ongoing Phase 1b/2 study, known as the NuTide:302 study, in patients with metastatic colorectal cancer in which NUC-3373 is being combined with agents typically used with 5-FU, including leucovorin, irinotecan, oxaliplatin and bevacizumab. In October 2019, we presented interim data from this study at the AACR NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics. These interim data supported the previously reported favourable pharmacokinetic profile of NUC-3373. In April 2021, we presented further interim data from this study 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 stabilise 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 tumour volume reductions have been observed, including in a patient known to be refractory to all prior fluoropyrimidine-containing regimens. NUC-3373 was also shown to have a favourable 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 diarrhoea adverse events, which are associated with the toxic metabolite, FUTP. In September 2022, we presented data from this study at the virtual ESMO Annual Meeting, or ESMO. These data demonstrated promising anti-tumour activity and a favourable 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. The NuTide:302 study is currently in Part 3, and is evaluating NUFIRI and NUFOX in combination with bevacizumab for the second-line treatment of patients with advanced colorectal cancer. In October 2023, we presented data from this clinical study at the AACR- NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. In this study, NUC-3373 demonstrated a favourable safety profile in both the NUFIRI and bevacizumab, or NUFIRI + bev, and NUFOX and bevacizumab, NUFOX + bev treatment

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regimens. Additionally, both regimens demonstrated encouraging signs of efficacy, including tumour 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. We expect to report additional data from Part 3 of the NuTide:302 study in 2024.

A randomised Phase 2 study, known as the NuTide:323 study, comparing 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 study at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. On 20 March 2024, we announced that this 171-patient study was fully enrolled, and no new safety signals were observed from the aggregated safety data from the first 40 patients enrolled. We expect to report additional data from the NuTide:323 study in 2024.

The anti-cancer mechanism of action of NUC-3373 has been established in preclinical studies, which we believe further supports the biological advantages of NUC-3373 over 5-FU. We believe NUC-3373 has significant commercial potential as approximately 500,000 patients in North America are estimated to receive intravenous 5-FU each year. Replacing 5-FU with NUC-3373 in the treatment of patients with colorectal cancer offers a substantial commercial opportunity. Colorectal cancer is the third most common cancer type globally, representing 10% of the overall annual global cancer incidence. In the United States alone, more than 150,000 new cases of colorectal cancer are diagnosed each year. It is expected that the global colorectal cancer burden will increase by 60% from approximately 1.9 million cases in 2020 to approximately 3.1 million cases in 2040. As colorectal cancer is often diagnosed late in most patients when it is locally advanced or metastatic, and only 14% of patients with stage 4 disease survive for five years, there is a high unmet need for more effective treatment options.

In order to capitalise on the widespread usage of 5-FU across other cancer indications to colorectal cancer and the significant global commercial opportunity for a more effective and safer fluoropyrimidine, we are conducting a Phase 1/2 modular study, known as the NuTide:303 study. The NuTide:303 study is evaluating NUC-3373 in combination with the PD-1 inhibitor pembrolizumab in patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer. We expect to report initial data from the NuTide:303 study in 2024.

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'-dA, causing increased cancer cell injury. The cytotoxic effect of NUC-7738 is largely attributed to 3'-dATP, which interferes with RNA polyadenylation, causing changes in the expression of genes involved in various cellular processes, leading to cancer cell death.

NUC-7738, is being evaluated in an ongoing Phase 1/2 clinical study, known as the NuTide:701 study, in patients with advanced solid tumours. In September 2021, we presented interim data from the first 29 patients treated in this study at ESMO. These interim data indicated a favourable pharmacokinetic and safety profile for NUC-7738. Additionally, three case studies highlighted patients with encouraging tumour 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 study in 38 patients at ESMO. NUC-7738 had

strategic report/ 01

a favourable 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 1350mg/m². Encouraging signals of anti-tumour activity across a range of tumour 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 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 sensitiser 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 study 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 tumour 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 tumour 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 tumour 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 tumour 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. We expect to report additional data from the NuTide:701 study in 2024.

Acelarin is a ProTide transformation of the nucleoside analogue gemcitabine. In clinical studies, 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 tumour shrinkages, including partial and complete responses, were observed in challenging indications, including ovarian and biliary tract cancers. In March 2022, we announced the discontinuation of the Phase 3 clinical study, also known as the NuTide:121 study, 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 study'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,

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nucleoside analogue. This phosphoramidate chemistry approach is the key to the ProTide technology. Every ProTide grouping is distinct, and Professor McGuigan and his team synthesised and tested thousands of compounds in order to identify the optimal ProTide grouping for each underlying nucleoside analogue.

We have licensed what we believe to be the foundational patent estate for the application of phosphoramidate chemistry in oncology. We have granted patents in key markets, including the United States, Europe and Japan, protecting the composition of matter of NUC-3373,NUC-7738, Acelarin and other of our product candidates. Professor McGuigan's work preceded and helped lead to the development of several U.S. Food and Drug Administration (FDA)-approvedanti-viral drugs containing ProTides, including: sofosbuvir, or Sovaldi®, which is also a key component of Harvoni®,

strategic report/ 01

Vosevi® and Epclusa®; and tenofovir alafenamide fumarate, or TAF, which is a key component of 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 startup through its acquisition by Genzyme Corporation. While at Bioenvision, he was instrumental in developing and commercialising clofarabine, a nucleoside analogue for the treatment of children with acute leukaemia. He also co-founded EdixoMed and 30 Technology who sold their wound care division to Convatec Group in 2023.

our strategy

"Our goal is to transform standards of care and improve survival for patients across a wide range of cancer indications."

Our strategy includes the following key components:

• Rapidly develop NUC-3373 to replace 5-FU as the standard of care for the treatment of patients with colorectal cancer.
  We reported additional data from our Phase lb/2 study, known as the NuTide:302 study, in patients with advanced colorectal cancer in October 2023 at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. In this study, NUC- 3373 is being assessed for safety and a recommended Phase 2 dose when combined with many of the agents typically combined with 5-FU, including leucovorin, irinotecan, oxaliplatin and bevacizumab.
  We are also conducting a randomised Phase 2 clinical study of NUC-3373, known as the NuTide:323 study, in combination with leucovorin, irinotecan and bevacizumab (NUFIRI + bev) versus the standard of care FOLFIRI + bev (5-FU, leucovorin, irinotecan and bevacizumab) in patients with second-line advanced colorectal cancer. In October 2023 we reported initial pooled safety data from the NuTide:323 study at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023. On 20 March 2024, we announced that this 171-patient study was fully enrolled.
  We plan to report additional data from both our Phase lb/2 study, NuTide:302, and our randomised Phase 2 study, NuTide:323, in 2024.

•0 Identify additional indications for development of NUC-3373.

In order to capitalise on the widespread usage of 5-FU and the significant global commercial opportunity for a more effective and safer fluoropyrimidine, we have initiated a Phase 1b/2 modular study, known as the NuTide:303 study, of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer.

We plan to report data from our Phase 1b/2 study, NuTide:303, in 2024.

• Rapidly develop NUC-7738 as a treatment for patients with solid tumours.
  We completed enrolment in the Phase 1 dose-finding part of the ongoing Phase 1/2 study, known as the NuTide:701 study, of NUC-7738 in patients with advanced solid tumours. NUC-7738 is currently in the Phase 2 part of the NuTide:701 study, which is evaluating NUC-7738 as a monotherapy and in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours. In October 2023, we presented interim data from the Phase 2 part of the NuTide:701 study at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics 2023.
  We plan to report additional data from our Phase 1b/2 study, NuTide:701, in 2024.
• Leverage our proprietary ProTide technology platform to develop additional product candidates.
  We are pursuing the transformation of both well-established and widely used nucleoside analogues as well as novel nucleoside analogues, which we believe have the potential to address additional areas of unmet medical need in oncology.

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strategic report/ 01

• 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 and Japan, protecting the composition of matter of NUC-3373,NUC-7738, Acelarin and other 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 organisation.
  We have worldwide rights to all product candidates that we are developing. We believe that healthcare professionals who treat the majority of patients with the cancers we are initially targeting with our ProTides can be addressed by a focused sales and marketing team. We currently plan to commercialise any product candidates for which we receive regulatory marketing approval using a specialised sales force, either independently or in partnership with a commercialisation partner, in the United States and Europe.

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 summarised below.

NuCana is currently developing a portfolio of new medicines to address a broad range of cancers, but we do not have any approved products. As further described in "Our Strategy", our current intention is to build a sales and marketing capability in the United States and Europe to commercialise our ProTides. We may also consider partnerships, co-promotion agreements or other commercial arrangements, in certain geographic areas or otherwise, to most effectively address our market opportunities.

review of the business

Since our inception, we have incurred significant net losses and negative cash flows from operations. To date, we have financed our operations primarily through placements of equity securities, an initial public offering, a follow-on public offering and research and development tax credits.

DEVELOPMENT AND PERFORMANCE DURING THE PERIOD

Research and Development Expenses

Research and development expenses were £25.1 million for the year ended 31 December 2023 as compared to £36.4 million for the year ended 31 December 2022, a decrease of £11.3 million. Clinical study expenses decreased by £3.2 million in 2023 compared with 2022 largely

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strategic report/ 01

due to the discontinuation of the Phase 3 clinical study 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 31 December 2023 and 2022:

		Year ended 31 December
	2023	2022
		(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 31 December 2023 as compared to £7.3 million for the year ended 31 December 2022, a decrease of £1.2 million. The decrease was primarily related to lower share-based payment expenses, professional fees and insurance costs.

Impairment of Intangible Assets

We regularly review our patent portfolio and during 2023 further development associated with a limited number of non-core patents or patent applications, 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 recognised, representing the full aggregate carrying value of those patents as of 31 December 2023. This compared to an impairment charge of £0.3 million recognised during the year ended 31 December 2022.

Net Foreign Exchange (Losses) Gains

For the year ended 31 December 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 31 December 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 31 December 2023 and £0.7 million for the year ended 31 December 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 31 December 2023 and £6.4 million for the year ended 31 December 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.

POSITION OF GROUP AT YEAR END

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 31 December 2023 and 31 December 2022, we had cash and cash equivalents of £17.2 million and £41.9 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.

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 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. During the year ended 31 December 2023 we sold and issued 408,015 ADSs, representing 408,015 ordinary shares, under the ATM program, raising gross proceeds of £0.2 million. Subsequent to the year end a further £1.5 million gross proceeds were raised through this ATM program.

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strategic report/ 01

Cash Flows

The following table summarises the results of our cash flows for the years ended 31 December 2023 and 2022.

Year ended 31 December

20232022

(in thousands)

Net cash used in operating activities Net cash from investing activities Net cash used in financing activities

Net decrease in cash and cash equivalents

£ (26,439)	£ (23,158)
2,888	120
(53)	(161)
£ (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 31 December 2023 as compared to working capital inflows of £3.7 million for the year ended 31 December 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 totalled £2.6 million in the year ended 31 December 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 a decrease in the proceeds from the issue of share capital.

main business trends and factors

NUC-3373 is currently being evaluated in three ongoing clinical studies: a Phase 1b/2 study (NuTide:302) in combination with leucovorin, irinotecan or oxaliplatin, and bevacizumab in patients with metastatic colorectal cancer; a randomised Phase 2 study (NuTide:323) in combination with leucovorin, irinotecan, and bevacizumab for the second-line treatment of patients with advanced colorectal cancer; and a Phase 1b/2 modular study (NuTide:303) of NUC-3373 in combination with the PD-1 inhibitor pembrolizumab for patients with advanced solid tumours and in combination with docetaxel for patients with lung cancer. NUC-7738 is in the Phase 2 part of a Phase 1/2 study in patients with advanced solid tumours which is evaluating NUC-7738 as a monotherapy and in combination with pembrolizumab. We have retained worldwide rights to these lead product candidates as well as our preclinical product candidates, all of which we refer to as ProTides. The key business trends affecting our development and performance during and at the period ended 31 December 2023 are detailed above.

In addition to these internal trends that have impacted our financial results, we may also in the future face competition for our products if they are approved. 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. 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 studies, 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 study sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs.

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