Bicycle Therapeutics plc — Q1 2023 Form 10-Q
Business context and reporting period
Clinical-stage biotechnology company developing synthetic peptide medicines (“Bicycles”), principally for oncology. This unaudited report covers the three months ended March 31, 2023; comparisons are with Q1 2022. The company has no approved products and generated no product sales revenue.
Key financial metrics
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Collaboration revenue | $4.9 million | $3.9 million; up $1.0 million |
| Research and development expense | $32.2 million | $14.3 million; up $17.9 million |
| General and administrative expense | $14.5 million | $17.0 million; down $2.5 million |
| Operating loss | $41.8 million | $27.4 million |
| Net loss | $39.1 million | $27.6 million |
| Net loss per share, basic and diluted | $1.30 | $0.93 |
| Net cash used in operating activities | $46.4 million | $26.4 million |
| Cash and cash equivalents at quarter end | $293.8 million | $339.2 million at Dec. 31, 2022 |
| Debt carrying value | $30.4 million | $30.3 million at Dec. 31, 2022 |
| Deferred revenue | $108.7 million | $61.9 million at Dec. 31, 2022 |
Revenue increased mainly from Ionis and Genentech research services. R&D costs rose primarily with clinical program and platform spending, headcount, share-based compensation and facilities, partly offset by higher R&D incentives and grants. Lower G&A reflected reduced share-based compensation and professional fees. Higher interest income, largely from higher rates on cash deposits, partly offset the increased operating loss. No product gross margin is reported; the filing does not provide a meaningful product margin.
Quarter-end cash fell by $45.3 million. Investing activities used $2.1 million, while financing provided $2.7 million, primarily from the ATM program. The company reported a $50.0 million Novartis receivable at quarter end for advance billings; the upfront payment was received in April 2023, after the reporting date.
Material changes, outlook and risks
- Novartis collaboration: A March 2023 agreement covers research and discovery for two targets. The $50.0 million upfront payment was received in April. The company may also earn contingent discovery, candidate-selection, development, regulatory and sales milestones, plus royalties; these future amounts are not assured. No Novartis revenue was recognized in Q1.
- Liquidity: Management expects quarter-end cash to fund operating expenses and capital requirements for at least 12 months from the filing date. It also expects losses and expenses to increase as programs advance and says additional funding will be needed. The estimate depends on assumptions and cash may be depleted sooner.
- Debt: The $30.0 million Hercules loan bears interest at prime plus 4.55%, subject to an 8.05% floor and 9.05% cap; the reported rate was 9.05%. Interest-only payments extend through April 1, 2025, with maturity on July 1, 2025. Up to $45.0 million of additional borrowing is available subject to conditions and has not been drawn.
- Clinical and commercial outlook: BT8009 showed anti-tumor activity in heavily pretreated patients in dose escalation, and the company reported ongoing Phase II expansion enrollment. The FDA granted BT8009 Fast Track Designation in January 2023. These early findings and the designation do not assure later trial success or approval. BT5528 and BT7480 are also in company-sponsored Phase I/II trials; BT1718 is in a Cancer Research UK-sponsored and funded Phase I/IIa trial. BT7455 remains in IND-enabling studies.
- Post-quarter collaboration development: In April, Genentech notified the company it intended to terminate Collaboration Program #1 effective June 3, 2023. Approximately $6.2 million of deferred revenue related to that program’s option right is expected to be recognized in Q2; this is not new cash generation.
- Contingencies and commitments: The company recorded a $3.8 million long-term liability related to Cancer Research UK BT1718 costs. It disclosed potential future CRUK milestone payments totaling $111.2 million and separate third-party contingent milestones of $92.4 million; timing and likelihood were not estimable. No material legal proceedings were reported.
- Other risks: The filing highlights ongoing clinical, regulatory, patient-enrollment, manufacturing, collaboration, funding, intellectual-property and foreign-exchange risks, as well as inflation, interest rates, geopolitical uncertainty and banking-system instability. Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm receipt and cash impact of the $50.0 million Novartis upfront payment, and the recognition schedule and conditions attached to its deferred revenue.
- Monitor the Genentech Program #1 termination, its effective date and the actual Q2 revenue recognition.
- Track cash burn against the stated runway, including clinical spending, R&D incentive collections and potential financing needs.
- Review clinical-trial updates for BT8009, BT5528 and BT7480, including enrollment, safety, efficacy and dose-expansion results; Fast Track status is not approval.
- Assess Hercules loan terms, interest costs, repayment timing and conditions on any additional borrowing.