NuCana Q2 Earnings: Recent Updates Bode Poorly, Not Worth The Risk

Topline summary

NuCana PLC (NASDAQ:NCNA) is in a class of biotechs attempting to make better versions of tried-and-true chemotherapeutics, tackling areas of major unmet need like colorectal cancer. However, they have faced a bevy of issues, including the risk of de-listing from the NASDAQ, a failed phase 3 trial, and a lack of a clear path forward now that all of their agents remain in early-stage clinical study. The complete picture is a company that I feel has too much drama for an investor right now until they shore up against this uncertainty.

Pipeline Overview

NCNA is currently building its house on the foundation of 2 drugs: NUC-3373 and NUC-7738. I also want to highlight NUC-1031, which has been discontinued, based on recent clinical trial data that have come to light.

NUC-3373

NUC-3373 has been designed as an activated form of 5-fluorouracil (5-FU), an important chemotherapy used in colorectal cancer and other solid tumors. The company hopes that the modifications they've made to 5-FU's metabolite will improve pharmacodynamics/pharmacokinetics, reduce production of toxic metabolites, and improve delivery to tumors.

To date we've seen some early readout from the ongoing NuTide:302 study as of ESMO 2022. There, they showed encouraging disease control rates for NUC-3373 as an add-on to both oxaliplatin and irinotecan in patients with colorectal cancer. This is potentially important, given that these patients had already received at least 2 prior lines of chemotherapy, making their cancer likely more resistant to chemotherapy in general.

The other important clinical trial for this agent is NuTide:302, a three-part study testing NUC-3373 in patients with advanced colorectal cancer and prior progression on fluoropyrimidine-based regimens.

NCNA has guided in their most recent financial release that they anticipate announcing data from NuTide:302 and NuTide:323 in 2023. I would certainly expect them to show up at ESMO this year.

NUC-7738

NUC-7738 is a modification of 3'-deoxyadenosine, a theoretically useful chemotherapeutic that is not clinically relevant because it breaks down in the body too quickly. By modifying this agent, NCNA were able to show substantial improvement in cancer cell lethality, while also helping to prevent breakdown when given to patients.

NCNA presented phase 1 results for NUC-7738 in patients with solid tumors at ESMO 2022, highlights of which included a low risk of grade 3, no grade 4 or 5 adverse events, and a high maximally tolerated dose of 1350 mg/m2. No clinical responses were observed in the 38 patients who received NUC-7738, although 3 patients with cutaneous melanoma did achieve a reduction in target lesions. Dose did not appear to correspond with higher activity in this early readout.

This year, NCNA has guided that they intend to present more data from the NUC-7738 program, including as a combination partner with pembrolizumab in patients with melanoma, given the early favorable signals observed there.

NUC-1031

One high profile failure was NUC-1031, whose development was terminated in March 2022. This drug was being developed as a substitute for gemcitabine, which is an important chemotherapeutic for pancreatic cancer and biliary tract cancer. NuTide 121 was a phase 3 trial investigating NUC-1031 in biliary tract cancer.

Recently, we got a peek at the negative phase 3 results at World GI 2023. Jennifer Knox presented the study, showing that NUC-1031 plus cisplatin actually did statistically significantly worse than standard gemcitabine plus cisplatin, both in terms of overall and progression-free survival. NUC-1031 was associated with higher rates of liver toxicity, as well. In the discussion that followed World GI, there were serious concerns about the trial design, with a lack of attention paid to the interim analyses and the delay of futility analysis until 90% of patients had been enrolled in the study.

With such a negative result, it's a shame that the study was allowed to continue. Usually, negative studies show that the drug just isn't doing better than control. NUC-1031 was substantially worse than control.

Why harp on this? Because it calls into question several fundamental aspects of NCNA's platform. First, this is randomized evidence that modifying chemotherapies with their ProTides platform is worse than the parent drugs they're modifying, which is definitely a bad look for the entire program. Second, it calls into question the kind of advice the company is taking if they're going to allow poor trial design slow down their progress. Any future randomized studies will hopefully address these concerns, but these results cast a pall over the entire pipeline in my view.

Financial Overview

In their Q1 2023 SEC filing, NCNA reported an operating loss of 9.1 million pounds, with 31.0 million pounds held in cash and equivalents. Total cash used in operations was 10.3 million pounds.

In their just-announced Q2 results, this loss fell to 6.3 million pounds, with 24.6 million in cash on hand at the end of the quarter.

Doing the math, this indicates that as of the end of Q2, NCNA had around 4 quarters of cash in reserve. The company guides that they expect their cash runway to last into 2025.

Strengths and Risks

It's unclear to me how NCNA expects their 24.6 million pounds to stretch for 7 quarters, given that they are currently burning at a rate of around 6 million a quarter. I did not see any major indications that they would be further reducing costs in a meaningful way to nearly double their cash runway. So cash, based on public filings, at least, is a significant issue. And it's one that won't be helped by the fact that the company's market cap has fallen to just $35 million on the NASDAQ.

Couple that with catalysts they hope to announce, and I think we'll see some make-or-break news around September/October as abstracts are announced for ESMO, taking place on October 20-24. If NCNA can come through with these presentations, they will be the first solid looks at NUC-3373 and NUC-7738 as far as efficacy is concerned. So those are potential catalysts, but I won't sugarcoat my expectations: there's not a lot to get excited about at this time with this science. Given the spectacular failure of their phase 3 trial, the entire ProTides platform hypothesis isn't exactly setting anyone up for a big win.

Couple that with few early signals, and I wouldn't be terribly tempted to jump in on the expected catalysts coming in the next year.

Bottom-line summary

NCNA has very little to like at this time. From issues, to failed trials, to de-listing notices, the risks just keep piling higher and higher. For traders, there's potential volatility that you can maybe gamble on. But as far as an investment goes, I would need to know that NCNA has something serious on its hands in one of its products, so I would need to see good news from ESMO before even considering an investment. Definitely not for me at this time, and I would strongly caution against anything except a pull at the slot machine for this one.

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