Bicycle Therapeutics(BCYC) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of Bicycle Therapeutics plc Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for Bicycle Therapeutics plc, including the balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows, along with their accompanying notes - Financial Position (in thousands) | Financial Metric (in thousands) | March 31, 2025 | December 31, 2024 | Change (vs. Dec 31, 2024) | | :------------------------------ | :------------- | :---------------- | :------------------------ | | Cash and cash equivalents | $792,973 | $879,520 | $(86,547) | | Total current assets | $856,086 | $928,605 | $(72,519) | | Total assets | $883,894 | $956,868 | $(72,974) | | Total current liabilities | $57,623 | $67,230 | $(9,607) | | Total liabilities | $143,561 | $163,808 | $(20,247) | | Total shareholders' equity | $740,333 | $793,060 | $(52,727) | - Statements of Operations (in thousands, except per share) | Financial Metric (in thousands, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Collaboration revenue | $9,977 | $19,530 | $(9,553) | | Research and development expenses | $59,058 | $34,864 | $24,194 | | General and administrative expenses | $21,123 | $16,382 | $4,741 | | Total operating expenses | $80,181 | $51,246 | $28,935 | | Loss from operations | $(70,204) | $(31,716) | $(38,488) | | Net loss | $(60,754) | $(26,563) | $(34,191) | | Net loss per share, basic and diluted | $(0.88) | $(0.62) | $(0.26) | - Cash Flow Activities (in thousands) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net cash used in operating activities | $(86,370) | $(70,869) | $(15,501) | | Net cash used in investing activities | $(604) | $(12) | $(592) | | Net cash (used in) provided by financing activities | $(41) | $1,871 | $(1,912) | | Net decrease in cash, cash equivalents and restricted cash | $(86,547) | $(69,426) | $(17,121) | | Cash, cash equivalents and restricted cash at end of period | $793,520 | $457,544 | $335,976 | - The company had an accumulated deficit of $741.5 million as of March 31, 2025, reflecting recurring losses since inception[28] Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2025, and December 31, 2024 Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenues, expenses, and net loss for the three months ended March 31, 2025 and 2024 Condensed Consolidated Statements of Shareholders' Equity This section outlines changes in the company's shareholders' equity for the three months ended March 31, 2025 and 2024 Condensed Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Nature of the business and basis of presentation Bicycle Therapeutics is a clinical-stage pharmaceutical company focused on developing novel Bicycle® molecules for underserved diseases, primarily oncology - Bicycle Therapeutics is a clinical-stage pharmaceutical company developing Bicycle® molecules for oncology, including zelenectide pevedotin (Nectin-4 BDC), BT5528 (EphA2 BDC), and BT7480 (Nectin-4/CD137 Bicycle TICA®)[24] - The company has incurred net losses of $60.8 million (Q1 2025) and $26.6 million (Q1 2024), with an accumulated deficit of $741.5 million as of March 31, 2025[28] - Cash and cash equivalents totaled $793.0 million as of March 31, 2025, projected to fund operations for at least 12 months[26][28] Note 2. Summary of significant accounting policies This note outlines the company's significant accounting policies, including the use of estimates, economic uncertainties, and R&D incentives - The company benefits from U.K. government R&D tax reliefs, recognizing incentives as a reduction to R&D expenses[42] - R&D Incentives (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Reduction to R&D expenses from incentives | $9,300 | $15,300 | | R&D incentives receivable (as of March 31, 2025) | $46,200 | N/A | - The company adopted ASU No. 2023-07 (Segment Reporting) with no impact on reportable segments and is evaluating ASU No. 2024-03 (Expense Disaggregation) and ASU No. 2023-09 (Income Tax Disclosures) for future impact[43][45][46] Note 3. Fair value of financial assets and liabilities This note details the fair value classification of financial assets and liabilities, primarily cash equivalents and restricted cash - Cash equivalents of $593.1 million (Mar 31, 2025) and $664.9 million (Dec 31, 2024) consist of money market funds primarily invested in U.S. Treasury securities, classified as Level 1 assets[49] - Restricted cash of $0.5 million is held as collateral for a lease in Cambridge, Massachusetts[50] Note 4. Property and equipment, net Property and equipment, net, decreased to $8.7 million as of March 31, 2025, with $1.6 million in depreciation and amortization expense for Q1 2025 - Property and Equipment, Net (in thousands) | Category (in thousands) | March 31, 2025 | December 31, 2024 | | :---------------------- | :------------- | :---------------- | | Laboratory equipment | $15,655 | $14,658 | | Leasehold improvements | $11,262 | $10,903 | | Total Property and equipment, net | $8,736 | $9,516 | - Depreciation and amortization expense was $1.6 million for the three months ended March 31, 2025, down from $1.7 million in the prior year period[51] Note 5. Accrued expenses and other current liabilities Accrued expenses and other current liabilities decreased to $34.0 million as of March 31, 2025, primarily due to lower employee compensation - Accrued Expenses and Other Current Liabilities (in thousands) | Category (in thousands) | March 31, 2025 | December 31, 2024 | | :---------------------- | :------------- | :---------------- | | Accrued employee compensation and benefits | $6,234 | $16,272 | | Accrued external R&D expenses | $17,412 | $14,978 | | Total Accrued expenses and other current liabilities | $33,992 | $41,246 | - The company paid $0.3 million in severance and termination benefits during Q1 2025, related to consolidating discovery research activities in August 2024[52] Note 6. Debt The company fully repaid and terminated its Loan Agreement with Hercules Capital, Inc. in July 2024, resulting in zero interest expense for Q1 2025 - The Loan Agreement with Hercules Capital, Inc. was fully repaid and terminated in July 2024, including $30.0 million in outstanding borrowings[53] - Interest Expense (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------- | :----------------------------------------------- | :----------------------------------------------- | | Interest expense | $0 | $800 | Note 7. Ordinary shares The company has ordinary and non-voting ordinary shares, with 47.7 million and 21.5 million outstanding, respectively, as of March 31, 2025 - The company's share capital includes ordinary shares (voting) and non-voting ordinary shares, with 47.7 million ordinary shares and 21.5 million non-voting ordinary shares outstanding as of March 31, 2025[54][57] - Non-voting ordinary shares can be re-designated as ordinary shares under specific conditions, primarily to avoid exceeding 9.99% beneficial ownership for Section 13(d) of the Exchange Act[58] Note 8. Share-based compensation Share-based compensation expense for Q1 2025 was $9.6 million, with significant unrecognized compensation expense for unvested options and RSUs - Share-based Compensation Expense (in thousands) | Expense Category (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------ | :-------------------------------- | :-------------------------------- | | Research and development | $4,352 | $4,531 | | General and administrative | $5,253 | $4,751 | | Total share-based compensation | $9,605 | $9,282 | - As of March 31, 2025, total unrecognized compensation expense for unvested employee and director share options was $54.9 million, to be recognized over a weighted average period of 2.6 years[74] - As of March 31, 2025, total unrecognized compensation expense for unvested RSUs was $28.2 million, to be recognized over a weighted-average period of 3.1 years[77] Note 9. Significant agreements Collaboration revenue decreased to $9.98 million in Q1 2025, primarily due to the completion of the Ionis obligation and termination of Genentech Program 4 - Collaboration Revenue (in thousands) | Collaboration Partner | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------- | :----------------------------------------------- | :----------------------------------------------- | | Bayer | $848 | $818 | | Novartis | $1,405 | $1,247 | | Ionis | $0 | $5,854 | | Genentech | $7,724 | $11,611 | | Total | $9,977 | $19,530 | - The decrease in collaboration revenue is mainly due to the completion of the Ionis combined licenses and research and discovery performance obligation in Q2 2024 and the termination of Genentech Collaboration Program 4 in Q1 2025[122][143] - Deferred Revenue (in thousands) | Collaboration Partner | Deferred Revenue as of March 31, 2025 (in thousands) | Deferred Revenue as of December 31, 2024 (in thousands) | | :-------------------- | :--------------------------------------------------- | :---------------------------------------------------- | | Bayer | $40,427 | $39,960 | | Novartis | $44,054 | $44,073 | | Ionis | $3,694 | $3,587 | | Genentech | $6,562 | $14,038 | | Total | $94,737 | $101,658 | Note 10. Income taxes The company recorded an income tax benefit of $1.1 million for Q1 2025, primarily from U.S. operations, maintaining a full valuation allowance against U.K. deferred tax assets - Benefit from Income Taxes (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------------- | :----------------------------------------------- | :----------------------------------------------- | | Benefit from income taxes | $(1,087) | $(350) | - The income tax benefit is mainly from U.S. operating activities, which generate taxable income through intercompany service arrangements[148] - A full valuation allowance is maintained against U.K. deferred tax assets due to the company's history of cumulative net losses in the U.K[149][150] Note 11. Commitments and contingencies The company has total lease liabilities of $8.1 million for operating leases and $1.0 million for finance leases, plus potential future milestone payments of $166.2 million - Total Lease Liabilities (in thousands) | Lease Type | Total Lease Liabilities (in thousands) as of March 31, 2025 | | :--------------- | :-------------------------------------------------------- | | Operating Leases | $8,141 | | Finance Leases | $977 | - Lease Cost (in thousands) | Lease Cost (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Operating lease cost | $1,251 | $1,341 | | Finance lease cost | $74 | $0 | - The company has potential future milestone payments of $166.2 million under third-party agreements, contingent on future events not considered probable as of March 31, 2025[161] Note 12. Net loss per share Basic and diluted net loss per share for Q1 2025 was $(0.88), based on 69.2 million weighted average ordinary shares outstanding - Net Loss Per Share | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss per share, basic and diluted | $(0.88) | $(0.62) | | Weighted average ordinary shares outstanding | 69,196,945 | 42,560,091 | - Potentially dilutive securities (RSUs and options) were excluded from diluted EPS calculation due to their anti-dilutive effect[165] Note 13. Related party transactions The company engaged Stone Atlanta Estates LLC for consulting services, totaling $0.1 million in Q1 2025, with an amendment effective June 2025 - Consulting Services (in thousands) | Consulting Services (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Stone Atlanta Estates LLC | $100 | $48 | - An amendment to the consulting agreement with Stone Atlanta Estates LLC, effective June 17, 2025, modifies compensation and sets an expiration date of no later than June 30, 2028[166] Note 14. Segments and geographic information The company operates as a single operating segment in the U.S. and U.K., with most long-lived assets located in the United Kingdom - The company operates as a single operating segment, with its CEO as the chief operating decision maker, reviewing consolidated results[168] - Long-Lived Assets by Geographic Region (in thousands) | Geographic Region | Long-Lived Assets (in thousands) as of March 31, 2025 | Long-Lived Assets (in thousands) as of December 31, 2024 | | :---------------- | :---------------------------------------------------- | :---------------------------------------------------- | | United States | $2,529 | $3,037 | | United Kingdom | $12,919 | $14,152 | | Total | $15,448 | $17,189 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section provides management's perspective on the company's financial condition and results of operations, highlighting its focus on Bicycle® molecules, significant operating losses, and reliance on collaborations and equity financing - Bicycle Therapeutics is a clinical-stage pharmaceutical company developing Bicycle® molecules, a novel therapeutic modality combining biologic pharmacology with small molecule properties, primarily for oncology indications[174] - The company has incurred significant operating losses, with net losses of $60.8 million in Q1 2025 and an accumulated deficit of $741.5 million as of March 31, 2025[184] - The company's cash and cash equivalents of $793.0 million as of March 31, 2025, are expected to fund operating expenses and capital expenditure requirements for at least 12 months[188][234] Overview This section provides a high-level summary of the company's business, strategy, and financial performance Components of Our Results of Operations This section details the key revenue and expense categories that comprise the company's financial results Results of Operations This section analyzes the company's financial performance for the reporting period, comparing current and prior year results Liquidity and Capital Resources This section discusses the company's cash position, funding sources, and ability to meet its short-term and long-term obligations Critical Accounting Estimates This section describes the significant judgments and assumptions used in preparing the company's financial statements Item 3. Quantitative and Qualitative Disclosure About Market Risk The company's market risk exposure primarily relates to interest rate sensitivity and foreign currency exchange risk, with a foreign exchange loss of $0.2 million in Q1 2025 - The company's investment portfolio is conservative, primarily in U.S. Treasury obligations, minimizing material impact from a one percentage point change in interest rates[242] - The company is exposed to foreign currency exchange risk, particularly between the pound sterling and the U.S. dollar, recording a foreign exchange loss of $0.2 million in Q1 2025[244] - The company does not currently engage in currency hedging activities[246] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2025[249] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during Q1 2025[250] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings - The company is not currently subject to any material legal proceedings[252] Item 1A. Risk Factors This section outlines various risks that could materially affect the company's business, financial condition, and future growth, including financial, operational, and intellectual property risks - The company has a history of significant operating losses and expects to incur increasing losses, requiring substantial additional funding to support product discovery and development programs[256][268] - Success is heavily dependent on the BDC and Bicycle TICA programs, which are in early clinical stages and face high risks of failure in trials, regulatory approval, and commercialization[275][276][284] - The company relies on third parties for clinical trials and manufacturing, increasing risks of delays, insufficient supplies, and potential intellectual property misappropriation[452][459][470] - The market price of the company's ADSs is highly volatile, influenced by clinical trial results, funding needs, regulatory decisions, competition, and broader economic conditions[525][526] Summary of Selected Risk Factors This section provides a high-level overview of the most significant risks facing the company's business and operations Risks Related to Our Financial Position and Need for Additional Capital This section details risks associated with the company's financial health, including operating losses and future funding requirements Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates This section outlines risks inherent in the drug development process, from discovery to clinical trials and regulatory approvals Risks Related to Commercialization of Our Product Candidates and Other Regulatory Compliance Matters This section covers risks related to market acceptance, pricing, reimbursement, and compliance with post-approval regulations for product candidates Risks Related to Our Business and Our International Operations This section addresses general business risks, including operational challenges, cybersecurity, and complexities of international activities Risks Related to Our Dependence on Third Parties This section highlights risks arising from reliance on third-party collaborators, contract research organizations, and manufacturers Risks Related to Our Intellectual Property This section discusses risks concerning the protection, enforcement, and potential infringement of the company's intellectual property rights Risks Related to Employee Matters and Managing Growth This section addresses risks related to attracting and retaining key personnel, managing organizational growth, and maintaining company culture Risks Related to Ownership of Our Securities This section outlines risks for investors, including stock price volatility, limited liquidity, and potential dilution Risks Related to Our Incorporation Under the Laws of England and Wales This section details specific risks arising from the company's legal structure and jurisdiction of incorporation General Risks This section covers broad, overarching risks that could impact the company's operations and financial stability Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. This item is not applicable for the reporting period Item 3. Defaults Upon Senior Securities. This item is not applicable for the reporting period Item 4. Mine Safety Disclosures. This item is not applicable for the reporting period Item 5. Other Information. No directors or officers adopted or terminated insider trading arrangements (Rule 10b5-1 plans) during the three months ended March 31, 2025 - No directors or officers adopted or terminated insider trading arrangements (Rule 10b5-1 plans) during the three months ended March 31, 2025[569] Item 6. Exhibits. This section lists the exhibits filed with the Quarterly Report, including Articles of Association, various consulting and separation agreements, and certifications from the Principal Executive Officer and Principal Financial Officer - Key exhibits include Articles of Association, consulting agreements with Santiago Arroyo and Stone Atlanta Estates LLC, and certifications required by the Sarbanes-Oxley Act[570]