Bicycle Therapeutics(BCYC) - 2021 Q4 - Annual Report

PART I Business The company develops a novel class of medicines called Bicycles for oncology and other diseases through internal programs and strategic collaborations Overview and Strategy The company's strategy centers on advancing its lead oncology candidates, expanding its pipeline, and leveraging its platform through strategic collaborations - The company's core technology is 'Bicycles,' a novel therapeutic modality of fully synthetic short peptides constrained to form two loops, which combines the pharmacology of a biologic with the manufacturing and pharmacokinetic properties of a small molecule[10] - Bicycle's proprietary phage display screening platform can screen quadrillions of potential molecules to identify candidates for its pipeline[11] - The company's strategy focuses on advancing its three most advanced clinical candidates: BT5528 (EphA2-targeting BTC), BT8009 (Nectin-4-targeting BTC), and BT7480 (Nectin-4/CD137 TICA)[17] - Bicycle strategically collaborates with other biopharmaceutical companies to expand the application of its platform to disease areas beyond its internal oncology focus, including anti-infective, cardiovascular, ophthalmology, and CNS indications[21] Product Pipeline and Technology Platform The oncology-focused pipeline includes Bicycle Toxin Conjugates (BTCs) and TICAs, with key assets in Phase I/II trials and partnered programs in other indications Key Pipeline Programs (as of Dec 31, 2021) | Program | Target Indication | Stage | Status | | :--- | :--- | :--- | :--- | | Internal Programs | | | | | BT5528 | High EphA2 expressing tumors (oncology) | Phase I/II | Ongoing company-sponsored clinical trial | | BT8009 | High Nectin-4 expressing tumors (oncology) | Phase I/II | Ongoing company-sponsored clinical trial | | BT7480 | Immuno-oncology (Nectin-4/CD137 TICA) | Phase I/II | Ongoing company-sponsored clinical trial | | BT7455 | Immuno-oncology (EphA2/CD137 TICA) | Preclinical | IND-enabling activities in process | | Partnered Programs | | | | | THR-149 | Ophthalmology (with Oxurion) | Phase II | Ongoing clinical trial | | BT1718 | High MT1-MMP expressing tumors (with CRUK) | Phase I/IIa | Ongoing clinical trial | | BT7401 | Immuno-oncology (multivalent CD137 agonist with CRUK) | Preclinical | CRUK to fund through Phase IIa | - BT5528 (EphA2 BTC): Interim Phase I results showed preliminary anti-tumor activity in urothelial and ovarian cancer and the company plans to initiate expansion cohorts at a Phase II dose of 6.5mg/m2 every other week[52][53] - BT8009 (Nectin-4 BTC): Preliminary Phase I results showed anti-tumor activity in urothelial cancer patients, including a confirmed complete response, with dose escalation ongoing[57][58] - BT7480 (Nectin-4/CD137 TICA): The first patient was dosed in a Phase I/II trial in November 2021 to evaluate BT7480 as a monotherapy and potentially in combination with nivolumab[75] Collaborations The company leverages strategic collaborations with partners like Ionis, Genentech, and CRUK to expand its platform's reach and generate revenue - Ionis: Entered a collaboration for TfR1 Bicycles for oligonucleotide delivery, receiving a $31.0 million upfront payment and an $11.0 million equity investment[87][92][94] - Genentech: A discovery collaboration for immuno-oncology targets includes a $30.0 million upfront payment and a $10.0 million expansion fee, with potential for over $1.7 billion in milestones per program[98][99][101] - Cancer Research UK (CRUK): CRUK fully funds and sponsors the clinical trial of BT1718 and the development of BT7401 through Phase IIa[107][112] - AstraZeneca: A collaboration focused on respiratory, cardiovascular, and metabolic diseases with two active programs and eligibility for up to $170.0 million in milestones per program[117][120][122] - Oxurion: A collaboration in ophthalmology for THR-149 makes Bicycle eligible for development, regulatory, and commercial milestones, plus tiered royalties[124] Intellectual Property The company protects its technology through a robust intellectual property portfolio of patents, trade secrets, and trademarks Patent Portfolio Overview (as of Dec 31, 2021) | Category | Number of Patent Families | | :--- | :--- | | Novel Scaffolds | 4 | | Platform Technology | 15 | | Bicyclic Peptides & Conjugates | 88 | | Methods of Making/Using Conjugates | 15 | - The company owned approximately 88 issued patents in the U.S. and foreign jurisdictions, with expiration dates ranging from February 2029 to February 2039[135] - There were approximately 402 patent applications pending globally, which, if issued, are expected to expire between February 2029 and December 2042[136] - The company relies on trade secrets to protect the know-how behind its Bicycle platform, using confidentiality agreements and security measures to safeguard this information[137] Competition, Manufacturing, and Sales The company faces intense competition, utilizes a fully outsourced manufacturing model, and currently lacks internal sales and marketing infrastructure - The company faces significant competition from major pharmaceutical and biotech companies, including Seagen, which has a marketed Nectin-4 antibody-drug conjugate[139] - Bicycle operates a fully outsourced manufacturing model, contracting with third-party GMP-licensed organizations for all clinical and non-clinical supplies[145] - The company currently has no sales and marketing infrastructure and intends to either build internal capabilities or collaborate with partners to commercialize its products[143] Government Regulation Operations are subject to extensive government regulation in the U.S. and other jurisdictions, covering the entire product lifecycle from development to commercialization - The company is subject to extensive regulation by the FDA in the United States and comparable authorities in other jurisdictions[147] - The U.S. drug approval process requires submission of an Investigational New Drug (IND) application before clinical trials, followed by a New Drug Application (NDA)[149][157] - The FDA provides expedited programs such as Fast Track, Breakthrough Therapy, and Priority Review for drugs addressing serious conditions with unmet medical needs[162][163][164] - Brexit has materially impacted the regulatory regime in the UK and EU, requiring separate marketing authorizations for Great Britain via the MHRA[232][233] - Sales of approved products will depend on coverage and reimbursement from third-party payors, which are increasingly focused on cost-containment[203] Human Capital and Corporate Information As of year-end 2021, the company had 119 employees and focused on talent retention, diversity, and inclusion - As of December 31, 2021, the company had 119 full-time or part-time employees, with 88 engaged in R&D and 31 in general and administrative roles[239] - The company's human capital objectives include recruiting, retaining, and incentivizing employees, with a focus on diversity, equity, and inclusion (DEI), for which a task force was formed in 2021[240][243] - The company was incorporated in England and Wales in 2009 and its principal executive offices are in Cambridge, UK[245] Risk Factors The company faces substantial financial, clinical, regulatory, and operational risks due to its early-stage nature and reliance on a novel technology Risks Related to Financial Position and Need for Additional Capital The company has a history of significant operating losses, requires substantial additional funding, and faces risks related to its debt covenants - The company has a history of significant operating losses, with net losses of $66.8 million in 2021 and an accumulated deficit of $218.4 million[254] - The company will need substantial additional funding to continue operations and may be forced to delay, reduce, or eliminate programs if capital cannot be raised[261][262] - The company has a secured term loan facility with Hercules Capital with $30.0 million outstanding; failure to comply with covenants could result in default[270][273] Risks Related to Discovery, Development and Regulatory Approval Success depends on early-stage programs using a novel modality, which face high clinical failure rates, regulatory hurdles, and potential side effects - The company is substantially dependent on the success of its early-stage BTC and TICA programs, which may not successfully complete clinical trials[275] - Bicycles represent a new category of medicine and may be subject to heightened regulatory scrutiny due to limited regulatory experience with this modality[281][282] - Difficulties in enrolling patients in clinical trials, potentially exacerbated by the COVID-19 pandemic, could delay or prevent program advancement[290][294] - Product candidates may cause undesirable side effects; Grade 3 or higher adverse events have been observed in trials for BT5528 and BT8009[304][305] - Brexit may adversely impact the ability to obtain regulatory approvals in the EU and UK, potentially increasing costs and causing delays[332][336] Risks Related to Commercialization and Other Regulatory Matters Commercialization risks include uncertain marketing approval, lack of sales infrastructure, competition, and challenges in pricing and reimbursement - The marketing approval process is expensive, time-consuming, and uncertain, with no guarantee of approval from the FDA or other authorities[339][340] - The company has no marketing, sales, or distribution infrastructure and faces risks in building or outsourcing these capabilities[346][347] - Failure to obtain or maintain adequate insurance coverage and reimbursement for products could limit market access and revenue[371] - The company is subject to federal and state healthcare fraud and abuse laws, which could result in substantial penalties if violated[385][386] - Healthcare legislative reforms and increasing governmental scrutiny on drug pricing could negatively impact profitability[395][404] Risks Related to Third Parties, Business Operations, and Intellectual Property The business is exposed to risks from reliance on third parties, international operations, intellectual property protection, and cybersecurity threats - The company depends on collaborators like Cancer Research UK, AstraZeneca, and Ionis; failure by these partners to perform could harm future revenue[445][446] - Reliance on third-party CROs and manufacturers increases the risk of delays, insufficient supply, and lack of direct control[455][463] - The ability to obtain and maintain patent protection is critical; if patents are insufficient or challenged, competitors could commercialize similar products[477] - The company may be sued for infringing third-party intellectual property rights, which could be costly and delay commercialization[509] - The ongoing COVID-19 pandemic could adversely affect business operations, including clinical trials, manufacturing, and access to capital[418] - Cyber-attacks or IT system failures could result in information theft and significant business disruption[529] Unresolved Staff Comments Not applicable - The company reports no unresolved staff comments[587] Properties The company leases office and laboratory space in Cambridge, UK, and Lexington, Massachusetts - The company leases approximately 58,500 square feet of office and laboratory space in Cambridge, United Kingdom, under two separate leases[587] - The company leases an additional 11,000 square feet of office and laboratory space in Lexington, Massachusetts[587] Legal Proceedings The company is involved in European patent opposition proceedings and a UK trademark opposition - The company and Oxurion NV are involved in European patent opposition proceedings against Dyax Corp's patents; one patent was revoked, and an appeal hearing for another is scheduled for November 15, 2022[589][590] - The company's UK trademark application for "TICA" was successfully opposed by Immatics Biotechnologies GmbH, preventing its use for most pharmaceutical products in the UK[591] Mine Safety Disclosures Not applicable - The company reports no mine safety disclosures[593] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's ADSs trade on Nasdaq, and it has not recently sold unregistered securities or repurchased its equity - The company's American Depositary Shares (ADSs) trade on The Nasdaq Global Select Market under the symbol "BCYC"[595] - As of February 24, 2022, there were approximately 63 holders of record of the company's ordinary shares[596] Management's Discussion and Analysis of Financial Condition and Results of Operations The company's 2021 net loss increased to $66.8 million due to higher operating expenses, though its cash position was significantly strengthened by financing activities Results of Operations The 2021 net loss widened to $66.8 million as increased R&D and G&A expenses outpaced a slight rise in collaboration revenue Consolidated Statements of Operations (in thousands) | | Year Ended December 31, 2021 | Year Ended December 31, 2020 | | :--- | :--- | :--- | | Collaboration revenues | $11,697 | $10,390 | | Research and development | $44,880 | $33,149 | | General and administrative | $32,435 | $29,201 | | Total operating expenses | $77,315 | $62,350 | | Loss from operations | ($65,618) | ($51,960) | | Net loss | ($66,819) | ($51,010) | Research and Development Expenses Breakdown (in thousands) | Expense Category | 2021 | 2020 | | :--- | :--- | :--- | | BT8009 (Nectin-4) | $7,656 | $5,037 | | Bicycle TICA programs | $6,008 | $4,208 | | Other discovery and platform | $15,519 | $10,480 | | Employee and contractor related | $17,133 | $11,927 | | Share-based compensation | $4,974 | $2,603 | | Research and development incentives | ($13,993) | ($9,126) | | Total R&D Expenses | $44,880 | $33,149 | - Collaboration revenues increased by $1.3 million year-over-year, primarily due to revenue from the new Ionis collaboration ($4.2 million) and the Genentech collaboration ($0.8 million increase)[643] - General and administrative expenses increased by $3.2 million, driven by higher personnel-related costs and share-based compensation, offset by a decrease in professional fees[646] Liquidity and Capital Resources Cash and equivalents increased to $438.7 million at year-end 2021, primarily due to $320.7 million in net cash from financing activities Cash Flow Summary (in thousands) | | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($14,794) | ($17,789) | | Net cash used in investing activities | ($2,030) | ($1,200) | | Net cash provided by financing activities | $320,725 | $62,843 | | Net increase in cash | $302,690 | $43,873 | - The company's cash and cash equivalents increased to $438.7 million at the end of 2021 from $136.0 million at the end of 2020[618][742] - Financing activities in 2021 provided $320.7 million, primarily from a $188.4 million follow-on offering, $102.6 million from the ATM program, and $15.0 million in borrowings[654] - As of December 31, 2021, the company had $30.0 million in borrowings outstanding under its loan agreement with Hercules Capital[657] - Management believes existing cash will fund operations and capital expenditures for at least 12 months from the filing date[618][665] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks, primarily interest rate sensitivity and foreign currency exchange risk - The company's primary market risks are interest rate sensitivity and foreign currency exchange risk[692][694] - Interest rate risk is present for its $438.7 million in cash and its $30 million in debt, with the debt having a floor interest rate of 8.85%[692][693] - Foreign currency risk arises from its UK-based subsidiaries, whose functional currency is the British Pound Sterling, while the reporting currency is the U.S. Dollar[694][696] Financial Statements and Supplementary Data This section contains the company's audited consolidated financial statements for the fiscal year ended December 31, 2021 - This section includes the company's consolidated financial statements and the report of the independent registered public accounting firm[697] Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $438,680 | $135,990 | | Total assets | $479,792 | $161,152 | | Total liabilities | $133,538 | $65,692 | | Total shareholders' equity | $346,254 | $95,460 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None - The company reports no changes in or disagreements with its accountants on accounting and financial disclosure[697] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[701] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2021, based on the COSO framework[703] - The independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited and issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[704][729] Other Information Not applicable - The company reports no other information under this item[707] PART III Directors, Executive Officers and Corporate Governance The required information is incorporated by reference from the company's 2022 Proxy Statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2022 Proxy Statement[709] Executive Compensation The required information is incorporated by reference from the company's 2022 Proxy Statement - Information regarding executive compensation is incorporated by reference from the company's 2022 Proxy Statement[710] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The required information is incorporated by reference from the company's 2022 Proxy Statement - Information regarding security ownership and equity compensation plans is incorporated by reference from the company's 2022 Proxy Statement[711] Certain Relationships and Related Transactions, and Director Independence The required information is incorporated by reference from the company's 2022 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2022 Proxy Statement[712] Principal Accountant Fees and Services The required information is incorporated by reference from the company's 2022 Proxy Statement - Information regarding principal accountant fees and services is incorporated by reference from the company's 2022 Proxy Statement[712] PART IV Exhibit and Financial Statement Schedules This section lists the financial statements and exhibits filed as part of the Annual Report - This section lists the financial statements and exhibits filed with the Form 10-K[714] Form 10-K Summary None - The company provides no summary under this item[723]