Bicycle Therapeutics plc — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 3, 2022. Bicycle is a clinical-stage biopharmaceutical company developing its synthetic “Bicycle” medicines, with internal programs focused on oncology. It has no approved products and has not generated product-sales revenue.
Financial results and liquidity
Amounts below are in U.S. dollars; millions except per-share data.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $3.0 | $4.3 | $11.3 | $7.9 |
| Research and development expense | $22.8 | $10.5 | $56.9 | $31.9 |
| General and administrative expense | $10.0 | $8.1 | $38.8 | $23.6 |
| Operating loss | $29.8 | $14.3 | $84.4 | $47.6 |
| Net loss | $28.3 | $14.7 | $82.7 | $48.8 |
| Net loss per share | $0.96 | $0.59 | $2.79 | $2.06 |
- Revenue and margins: Revenue was entirely collaboration revenue; the company reported operating and net losses, so it had no positive operating or net margin. Revenue declined 30% year over year in Q3 but increased 42% for the nine-month period. Q3 decline primarily reflected lower AstraZeneca revenue following termination of a target program and lower Genentech revenue; nine-month growth primarily reflected Ionis collaboration revenue.
- Cash flow: Nine-month operating cash use was $55.8 million, versus $4.4 million in 2021; investing cash use was $17.5 million, primarily for laboratory equipment and leasehold improvements. Financing provided $0.8 million, mainly from option exercises, compared with $130.1 million in 2021, which included ATM proceeds, debt proceeds and Ionis share-sale proceeds. Cash and cash equivalents declined $77.2 million during the first nine months, to $361.5 million.
- Balance sheet: At September 30, cash was $361.5 million, current assets $381.3 million, current liabilities $41.6 million, total liabilities $127.7 million, and shareholders’ equity $289.5 million. Cash was $438.7 million at December 31, 2021. Accumulated deficit was $301.1 million.
- Debt: Hercules term-loan principal was $30.0 million; carrying value, net of discount and including the end-of-term charge, was $30.2 million. The July 2022 amendment capped the stated borrowing rate at 9.05%, extended interest-only payments through April 1, 2025, and maturity to July 1, 2025. Up to $45 million of additional borrowing is available subject to conditions; none was drawn at quarter-end.
- Other notable costs: Nine-month share-based compensation was $21.2 million. Property and equipment, net, increased to $16.2 million from $3.1 million at year-end 2021, reflecting significant capital spending.
Material changes and business developments
- Operating expenses rose substantially year over year: nine-month R&D increased $25.0 million, driven by clinical and discovery program spending, higher headcount and share-based compensation; G&A increased $15.2 million, mainly due to share-based compensation, personnel and public-company costs.
- In September, Bicycle announced top-line results from the completed dose-escalation portion of the BT5528 Phase I/II trial. Dose-expansion enrollment in urothelial, ovarian and other solid-tumor cohorts was ongoing. The filing refers to observed signs of anti-tumor activity and establishment of a recommended Phase II dose range.
- BT8009’s Phase I/II trial remained ongoing; the company had previously reported signs of anti-tumor activity. BT7480 Phase I dose escalation and the Cancer Research UK-sponsored BT1718 Phase I/IIa trial were also ongoing. BT7455 remained in IND-enabling studies.
- Genentech exercised its second expansion option in June 2022, adding a fourth collaboration program and generating a $10 million payment. AstraZeneca terminated activities related to a fifth target in June; associated deferred revenue was recognized.
Outlook, risks and contingencies
- Management expects cash and cash equivalents to fund operating expenses and capital expenditures for at least 12 months from the filing date. This estimate depends on assumptions that could prove incorrect. The company expects rising expenses and continuing losses, and says additional funding will be needed for continuing operations; no quantified revenue, earnings or cash-flow guidance is provided.
- Key risks include clinical-trial failure or delay, patient enrollment, uncertain regulatory outcomes, side effects, reliance on third-party manufacturers and CROs, collaboration-partner decisions, intellectual-property disputes, and the need for additional capital. COVID-19, the Russia-Ukraine war, inflation, interest rates and foreign-exchange movements may affect operations, costs or access to financing. Management reported limited financial impact from these factors to date and continued monitoring them.
- Potential future obligations include Cancer Research UK development and regulatory milestones and royalties, and up to $92.4 million of contingent Pepscan milestone payments. The Pepscan milestone timing and likelihood were not estimable at quarter-end. A $3.2 million liability for Cancer Research UK BT1718 trial costs was recorded in other long-term liabilities.
- The company reported no material legal proceedings in this filing, other than matters described in earlier reports. It also reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether clinical updates for BT5528, BT8009 and BT7480 support further development, and how enrollment, safety and trial timelines progress.
- Cash consumption, capital expenditure and collaboration receipts relative to management’s stated minimum 12-month runway, including the timing and terms of any future financing.
- Hercules loan conditions, interest-rate cap, available additional borrowing and repayment schedule, including the end-of-term charge.
- Collaboration revenue concentration, deferred-revenue recognition, option exercises and the status of milestone-generating programs.
- Potential impact of clinical, manufacturing, regulatory, intellectual-property and macroeconomic risks, as well as contingent milestone and royalty obligations.