Bicycle Therapeutics(BCYC) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's analysis of its financial condition and operations Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2023, including balance sheets, statements of operations, cash flows, and detailed notes Condensed Consolidated Balance Sheets As of March 31, 2023, total assets increased to $428.8 million, driven by accounts receivable, while total liabilities grew to $185.6 million due to deferred revenue Condensed Consolidated Balance Sheet (Unaudited, in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $293,815 | $339,154 | | Accounts receivable | $50,000 | $2,045 | | Total current assets | $381,253 | $369,383 | | Total assets | $428,801 | $410,609 | | Liabilities & Equity | | | | Total current liabilities | $52,995 | $53,342 | | Deferred revenue, non-current | $83,751 | $41,455 | | Total liabilities | $185,638 | $139,826 | | Total shareholders' equity | $243,163 | $270,783 | | Total liabilities and shareholders' equity | $428,801 | $410,609 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q1 2023, the company reported a net loss of $39.1 million, primarily due to a significant rise in research and development expenses Condensed Consolidated Statements of Operations (Unaudited, in thousands) | Account | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Collaboration revenues | $4,896 | $3,860 | | Research and development | $32,211 | $14,284 | | General and administrative | $14,488 | $16,959 | | Loss from operations | ($41,803) | ($27,383) | | Net loss | ($39,064) | ($27,564) | | Net loss per share, basic and diluted | ($1.30) | ($0.93) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $46.4 million in Q1 2023, leading to a decrease in cash and cash equivalents to $293.8 million Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($46,411) | ($26,400) | | Net cash used in investing activities | ($2,099) | ($4,756) | | Net cash provided by financing activities | $2,718 | $450 | | Net decrease in cash and cash equivalents | ($45,339) | ($31,309) | | Cash and cash equivalents at end of period | $293,815 | $407,371 | Notes to Condensed Consolidated Financial Statements The notes provide critical details supporting the financial statements, covering accounting policies, collaboration agreements, debt, liquidity, and future commitments - The company is a clinical-stage biopharmaceutical company developing a novel class of medicines called Bicycles, with key programs including BT5528, BT8009, and BT7480 in oncology[24] - As of March 31, 2023, the company had cash and cash equivalents of $293.8 million and believes this is sufficient to fund operations for at least twelve months from the issuance date of the financial statements[26][27] - On March 27, 2023, the company entered into a collaboration and license agreement with Novartis, which included a nonrefundable upfront payment of $50.0 million, received in April 2023. The company is also eligible for up to $840.0 million in development and regulatory milestones and up to $800.0 million in sales milestones[77][80] - The company has a loan agreement with Hercules for up to $75.0 million, with $30.0 million drawn as of March 31, 2023. The interest-only period extends to April 1, 2025, with a maturity date of July 1, 2025[50][54] - The company has potential future milestone payment obligations under its arrangements with CRUK and another third party, with an aggregate total value of $111.2 million and $92.4 million, respectively[171] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business strategy, financial performance, and liquidity, noting increased net loss from R&D and a strong cash position Overview The company provides an overview of its clinical-stage biopharmaceutical business, focusing on its novel 'Bicycles' platform in oncology, and its funding history - The company is developing a novel class of medicines, referred to as Bicycles, which are synthetic short peptides constrained to form two loops, combining features of biologics and small molecules[187] - Key clinical programs include BT5528 (EphA2 BTC), BT8009 (Nectin-4 BTC), and BT7480 (Nectin-4/CD137 TICA)[189] - On January 4, 2023, the FDA granted Fast Track Designation to BT8009 for the treatment of adult patients with previously treated locally advanced or metastatic urothelial cancer[190][191] - From inception through March 31, 2023, the company has received gross proceeds of $567.2 million from equity sales, $137.3 million from collaboration payments, and $30.0 million from debt borrowings. A $50.0 million upfront payment from Novartis was received in April 2023[194] Results of Operations This section details Q1 2023 financial performance, noting increased collaboration revenues, a significant surge in R&D expenses, and a decrease in G&A Comparison of Results of Operations (in thousands) | Account | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenues | $4,896 | $3,860 | $1,036 | | Research and development | $32,211 | $14,284 | $17,927 | | General and administrative | $14,488 | $16,959 | ($2,471) | | Net loss | ($39,064) | ($27,564) | ($11,500) | Research and Development Expenses Breakdown (in thousands) | Program | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :--- | :--- | :--- | :--- | | BT5528 (EphA2) | $3,193 | $1,402 | $1,791 | | BT8009 (Nectin-4) | $5,369 | $1,214 | $4,155 | | Bicycle TICA | $4,877 | $1,523 | $3,354 | | Other discovery & platform | $8,205 | $4,439 | $3,766 | | Employee & contractor | $10,793 | $5,582 | $5,211 | | Total R&D Expenses | $32,211 | $14,284 | $17,927 | Liquidity and Capital Resources This section details the company's liquidity, including $293.8 million in cash, net cash used in operations, and outlines contractual obligations and future capital needs - The company had cash and cash equivalents of $293.8 million as of March 31, 2023, and believes this will fund operations for at least 12 months from the filing date[201][247] - Net cash used in operating activities increased to $46.4 million in Q1 2023 from $26.4 million in Q1 2022, primarily due to a higher net loss and changes in working capital[237] Material Contractual Obligations as of March 31, 2023 (in thousands) | Obligation Type | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | | :--- | :--- | :--- | :--- | :--- | | Operating lease commitments | $21,665 | $5,893 | $12,689 | $3,083 | | Debt obligations | $37,358 | $2,526 | $34,832 | $0 | | Total | $59,023 | $8,419 | $47,521 | $3,083 | - The company has contingent future milestone payment obligations to CRUK and another third party with aggregate total values of $111.2 million and $92.4 million, respectively[246] Quantitative and Qualitative Disclosure About Market Risk The company identifies its main market risks as interest rate sensitivity and foreign currency exchange risk, with a foreign exchange loss of $0.5 million in Q1 2023 - The company's primary market risks are interest rate sensitivity and foreign currency exchange risk[258][259] - Exposure to interest rate changes on cash equivalents and $30.0 million in debt is not expected to have a material effect on financial results[258][259] - Foreign currency exchange risk arises from operations in both the U.S. (USD) and U.K. (GBP). The company recorded foreign exchange losses of $0.5 million for the three months ended March 31, 2023[260][262] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[264] - There were no material changes to the company's internal control over financial reporting during the quarter ended March 31, 2023[265] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, and other miscellaneous information pertinent to the company's operations Legal Proceedings The company states that it is not currently a party to any material legal proceedings - The company is not currently subject to any material legal proceedings[266] Risk Factors This section outlines key risks including financial sustainability, clinical development uncertainties, third-party reliance, IP challenges, and international operational complexities - Financial Risks: The company has a history of significant operating losses, an accumulated deficit of $370.2 million as of March 31, 2023, and will require substantial additional funding to continue operations[280][281][290] - Development and Regulatory Risks: Success is substantially dependent on its BTC and TICA programs, which represent a new category of medicine and may face heightened regulatory scrutiny. Clinical trials are long, expensive, and their outcomes are uncertain[307][312][314] - Third-Party Reliance: The company relies on collaborators (e.g., Cancer Research UK, Novartis, Genentech) for development and commercialization and on third-party CROs and manufacturers, which introduces risks related to performance, supply, and quality control[471][482][492] - Intellectual Property Risks: The ability to compete depends on obtaining and maintaining patent protection for its technology, which is uncertain. The company may face costly litigation if sued for infringing third-party IP rights[508][541] - Commercialization Risks: The company has no marketing or sales infrastructure and faces significant competition from large pharmaceutical companies. Market acceptance and adequate reimbursement for its products, if approved, are uncertain[376][392][405] - International and Tax Risks: As a U.K.-based company, it is subject to risks from Brexit, foreign currency fluctuations, and complex tax laws, including potential classification as a PFIC or CFC, which could have adverse U.S. tax consequences for shareholders[362][470][584] Unregistered Sales of Equity Securities and Use of Proceeds This item is marked as 'Not Applicable' in the report - Not Applicable[618] Defaults Upon Senior Securities This item is marked as 'Not Applicable' in the report - Not Applicable[618] Mine Safety Disclosures This item is marked as 'Not Applicable' in the report - Not Applicable[618] Other Information This item is marked as 'Not Applicable' in the report - Not Applicable[618] Exhibits This section lists the exhibits filed with the quarterly report, including key executive employment agreements and the Novartis collaboration agreement - Lists filed exhibits, including amendments to several executive employment agreements and the Collaboration and Licence Agreement with Novartis Pharma AG, dated March 27, 2023[619] Signatures The report is duly signed on May 4, 2023, by Kevin Lee, Chief Executive Officer, and Lee Kalowski, Chief Financial Officer, on behalf of Bicycle Therapeutics plc - The report was signed by Kevin Lee, Ph.D., MBA (Chief Executive Officer) and Lee Kalowski, MBA (Chief Financial Officer and President) on May 4, 2023[624]