BICYCLE THERAPEUTICS PLC [BCYC] Filings

10-Q 1 bcyc-20240630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38916

Bicycle Therapeutics plc

(Exact Name of Registrant as Specified in its Charter)


England and Wales		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Blocks A & B, Portway Building, Granta Park Great Abington, Cambridge, United Kingdom		CB21 6GS
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +44 1223 261503

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, nominal value £0.01 per share*	n/a	The Nasdaq Stock Market LLC
American Depositary Shares, each representing one ordinary share, nominal value £0.01 per share	BCYC	The Nasdaq Stock Market LLC

* Not for trading, but only in connection with the listing of the American Depositary Shares on the Nasdaq Global Select Market.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ⌧	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ◻
	Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of August 1, 2024, the registrant had 47,501,359 ordinary shares, nominal value £0.01 per share, and 21,492,099 non-voting ordinary shares, nominal value £0.01 per share, outstanding.

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		Page
PART I - FINANCIAL INFORMATION		1

Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Shareholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	51

Item 4.	Controls and Procedures	52

PART II - OTHER INFORMATION		53

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	110

Item 3.	Defaults Upon Senior Securities	111

Item 4.	Mine Safety Disclosures	111

Item 5.	Other Information	111

Item 6.	Exhibits	112

SIGNATURES

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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or this Quarterly Report, contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements may be identified by such forward-looking terminology as “will,” “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or variations of these words or similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Any forward-looking statement involves known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statement. Forward-looking statements include statements, other than statements of historical fact, about, among other things:

●

the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;

●

our ability to advance our product candidates into, and successfully complete, clinical trials;

●

our reliance on the success of our product candidates in our Bicycle^® Toxin Conjugate, or BTC^® molecules, Bicycle Tumor-Targeted Immune Cell Agonist^®, or Bicycle TICA^®molecules and other pipeline programs, including our Bicycle radionuclide conjugates, or BRC^TM molecules;

●

our ability to utilize our screening platform to identify and advance additional product candidates into clinical development;

●

the timing or likelihood of regulatory filings and approvals;

●

the commercialization of our product candidates, if approved;

●

our ability to develop sales and marketing capabilities;

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the pricing, coverage and reimbursement of our product candidates, if approved;

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the implementation of our business model, strategic plans for our business, product candidates and technology;

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the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

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our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties;

●

costs associated with defending intellectual property infringement, product liability and other claims;

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regulatory development in the United States, the United Kingdom and other jurisdictions and changes to the laws and regulations of England and Wales, and other jurisdictions;

●

estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

●

the potential benefits of strategic collaboration agreements and our ability to enter into additional strategic arrangements;

●

our ability to maintain and establish collaborations or obtain additional grant funding;

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●

the rate and degree of market acceptance of any approved products;

●

developments relating to our competitors and our industry, including competing therapies;

●

our ability to effectively manage our anticipated growth;

●

our ability to attract and retain qualified employees and key personnel;

●

future revenue, hiring plans, expenses, capital expenditures, capital requirements and share performance;

●

the impact of public health crises and other adverse global economic conditions on our operations and the potential disruption in the operations and business of third-party manufacturers, contract research organizations, or CROs, other service providers, and collaborators with whom we conduct business;

●

adverse developments affecting the financial services industry;

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potential business interruptions resulting from geo-political actions, such as war and terrorism, or the perception that such hostilities may be imminent;

●

our failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including our ability to identify and respond to potential future security incidents); and

●

other risks and uncertainties, including those listed under the caption “Risk Factors.”

Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, these statements are based on our estimates or projections of the future that are subject to known and unknown risks and uncertainties and other important factors that may cause our actual results, level of activity, performance, experience or achievements to differ materially from those expressed or implied by any forward-looking statement. These risks, uncertainties and other factors are described in greater detail under the caption “Risk Factors” in Part II. Item 1A and elsewhere in this Quarterly Report. As a result of the risks and uncertainties, the results or events indicated by the forward-looking statements may not occur. Undue reliance should not be placed on any forward-looking statement.

Statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

In addition, any forward-looking statement in this Quarterly Report represents our views only as of the date of this Quarterly Report and should not be relied upon as representing our views as of any subsequent date. We anticipate that subsequent events and developments may cause our views to change. Although we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, except as required by applicable law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

iii

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Bicycle Therapeutics plc

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	961,364	$	526,423
Accounts receivable		233		—
Prepaid expenses and other current assets		20,216		11,406
Research and development incentives receivable		46,443		24,039
Total current assets		1,028,256		561,868
Property and equipment, net		11,587		14,515
Operating lease right-of-use assets		10,933		13,169
Other assets		6,579		5,792
Total assets	$	1,057,355	$	595,344
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	7,453	$	13,050
Accrued expenses and other current liabilities		28,135		31,509
Deferred revenue, current portion		11,619		24,978
Debt, current portion		22,404		—
Total current liabilities		69,611		69,537
Debt, net of discount and current portion		8,505		30,698
Operating lease liabilities, net of current portion		6,730		9,382
Deferred revenue, net of current portion		93,994		110,216
Other long‑term liabilities		4,702		4,579
Total liabilities		183,542		224,412
Commitments and contingencies (Note 11)
Shareholders’ equity:
Ordinary shares, including non-voting ordinary shares, £0.01 nominal value; 154,385,145 and 59,612,613 shares authorized on June 30, 2024 and December 31, 2023, respectively; 68,941,242 and 42,431,766 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		889		550
Additional paid-in capital		1,452,151		883,446
Accumulated other comprehensive loss		(1,092)		(1,304)
Accumulated deficit		(578,135)		(511,760)
Total shareholders’ equity		873,813		370,932
Total liabilities and shareholders’ equity	$	1,057,355	$	595,344

The accompanying notes are an integral part of the condensed consolidated financial statements

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Bicycle Therapeutics plc

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Collaboration revenues	$	9,361	$	11,397	$	28,891	$	16,293
Operating expenses:
Research and development		40,059		39,720		74,923		71,931
General and administrative		15,949		14,788		32,331		29,276
Total operating expenses		56,008		54,508		107,254		101,207
Loss from operations		(46,647)		(43,111)		(78,363)		(84,914)
Other income (expense):
Interest income		7,774		812		13,398		3,741
Interest expense		(824)		(821)		(1,645)		(1,629)
Total other income (expense), net		6,950		(9)		11,753		2,112
Net loss before income tax provision		(39,697)		(43,120)		(66,610)		(82,802)
Provision for (benefit from) income taxes		115		(517)		(235)		(1,135)
Net loss	$	(39,812)	$	(42,603)	$	(66,375)	$	(81,667)
Net loss per share, basic and diluted	$	(0.77)	$	(1.41)	$	(1.40)	$	(2.71)
Weighted average ordinary shares outstanding, basic and diluted		51,992,034		30,191,693		47,276,062		30,097,234

Comprehensives loss:
Net loss	$	(39,812)	$	(42,603)	$	(66,375)	$	(81,667)
Other comprehensive income:
Foreign currency translation adjustment		(314)		(948)		212		(1,264)
Total comprehensive loss	$	(40,126)	$	(43,551)	$	(66,163)	$	(82,931)

The accompanying notes are an integral part of the condensed consolidated financial statements

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Bicycle Therapeutics plc

Condensed Consolidated Statements of Shareholders’ Equity

(In thousands, except share data)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Ordinary Shares			Paid‑in		Comprehensive		Accumulated		Shareholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
Balance at December 31, 2023	42,431,766	$	550	$	883,446	$	(1,304)	$	(511,760)	$	370,932
Issuance of ADSs upon exercise of share options	133,735		2		1,868		—		—		1,870
Issuance of ADSs upon settlement of restricted share units	67,096		1		—		—		—		1
Share-based compensation expense	—		—		9,282		—		—		9,282
Foreign currency translation adjustment	—		—		—		526		—		526
Net loss	—		—		—		—		(26,563)		(26,563)
Balance at March 31, 2024	42,632,597		553		894,596		(778)		(538,323)		356,048
Issuance of ADSs upon exercise of share options	351,099		5		4,495		—		—		4,500
Issuance of ADSs and non-voting ordinary shares, net of commissions and offering expenses of $11.4 million	25,933,706		331		543,796		—		—		544,127
Issuance of ADSs upon settlement of restricted share units	23,840		—		—		—		—		—
Share-based compensation expense	—		—		9,264		—		—		9,264
Foreign currency translation adjustment	—		—		—		(314)		—		(314)
Net loss	—		—		—		—		(39,812)		(39,812)
Balance at June 30, 2024	68,941,242	$	889	$	1,452,151	$	(1,092)	$	(578,135)	$	873,813


						Accumulated
				Additional		Other				Total
	Ordinary Shares			Paid‑in		Comprehensive		Accumulated		Shareholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
Balance at December 31, 2022	29,873,893	$	387	$	601,105	$	387	$	(331,096)	$	270,783
Issuance of ADSs upon exercise of share options	877		—		1		—		—		1
Issuance of ADSs, net of commissions and offering expenses of $0.1 million	100,000		1		2,715		—		—		2,716
Issuance of ADSs upon settlement of restricted share units	56,988		1		—		—		—		1
Share-based compensation expense	—		—		9,042		—		—		9,042
Foreign currency translation adjustment	—		—		—		(316)		—		(316)
Net loss	—		—		—		—		(39,064)		(39,064)
Balance at March 31, 2023	30,031,758		389		612,863		71		(370,160)		243,163
Issuance of ADSs upon exercise of share options	12,389		—		165		—		—		165
Issuance of ADSs, net of commissions and offering expenses of $0.4 million	520,000		7		12,120		—		—		12,127
Issuance of ADSs upon settlement of restricted share units	21,793		—		—		—		—		—
Share-based compensation expense	—		—		8,193		—		—		8,193
Foreign currency translation adjustment	—		—		—		(948)		—		(948)
Net loss	—		—		—		—		(42,603)		(42,603)
Balance at June 30, 2023	30,585,940	$	396	$	633,341	$	(877)	$	(412,763)	$	220,097

The accompanying notes are an integral part of the condensed consolidated financial statements

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Bicycle Therapeutics plc

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended
	Ended
	June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(66,375)	$	(81,667)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense		18,546		17,235
Depreciation and amortization		3,298		3,202
Non-cash interest		211		198
Deferred income tax benefit		(877)		(3,683)
Changes in operating assets and liabilities:
Accounts receivable		(232)		52,358
Research and development incentives receivable		(22,575)		7,199
Prepaid expenses and other assets		(8,783)		(638)
Operating lease right‑of‑use assets		2,187		2,054
Accounts payable		(6,354)		21
Accrued expenses and other current liabilities		(3,626)		8,416
Operating lease liabilities		(2,382)		(1,867)
Deferred revenue		(28,671)		(15,454)
Other long-term liabilities		137		311
Net cash used in operating activities		(115,496)		(12,315)
Cash flows from investing activities:
Purchases of property and equipment		(432)		(2,376)
Net cash used in investing activities		(432)		(2,376)
Cash flows from financing activities:
Proceeds from the issuance of ADSs and non-voting ordinary shares, net of issuance costs		545,106		14,843
Proceeds from the exercise of share options and settlement of restricted share units		6,371		167
Net cash provided by financing activities		551,477		15,010
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(608)		960
Net increase in cash, cash equivalents and restricted cash		434,941		1,279
Cash, cash equivalents and restricted cash at beginning of period		526,970		339,154
Cash, cash equivalents and restricted cash at end of period	$	961,911	$	340,433
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	961,364	$	340,433
Restricted cash included in other assets		547		—
Total cash, cash equivalents and restricted cash	$	961,911	$	340,433
Supplemental disclosure of cash flow information
Cash paid for interest	$	1,146	$	1,365
Cash paid for income taxes	$	792	$	664
Equity issuance costs included in accounts payable and accrued expenses	$	979	$	—
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,874	$	2,771
Changes in purchases of property and equipment in accounts payable and accrued expenses	$	26	$	(1,401)
Advance billings on deferred revenue included in accounts receivable	$	—	$	45,000
Non-cash impact to right-of-use assets and operating lease liabilities	$	—	$	4,004

The accompanying notes are an integral part of the condensed consolidated financial statements

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Bicycle Therapeutics plc

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Nature of the business and basis of presentation

Bicycle Therapeutics plc (collectively with its subsidiaries, the “Company”) is a clinical-stage pharmaceutical company developing a novel class of medicines, which the Company refers to as Bicycle^® molecules, for diseases that are underserved by existing therapeutics. Bicycle molecules are a unique therapeutic modality combining the pharmacology usually associated with a biologic with the manufacturing and pharmacokinetic properties of a small molecule. The Company’s initial internal programs are focused on oncology indications with high unmet medical need. The Company is evaluating zelenectide pevedotin, previously called BT8009, a Bicycle Toxin Conjugate (a “BTC^®”molecule) targeting Nectin-4, in both an ongoing Company-sponsored Phase I/II clinical trial and an ongoing Phase II/III registrational trial, called Duravelo-2, BT5528, a BTC molecule targeting Ephrin type-A receptor 2 (“EphA2”), in a Company-sponsored Phase I/II clinical trial, and BT7480, a Bicycle Tumor-Targeted Immune Cell Agonist^® (a “Bicycle TICA^®” molecule) targeting Nectin-4 and agonizing CD137, in a Company-sponsored Phase I/II clinical trial. In addition, BT1718, a BTC molecule that is being developed to target tumors that express Membrane Type 1 matrix metalloproteinase, is being investigated for safety, tolerability and efficacy in a Phase I/IIa clinical trial sponsored and fully funded by the Centre for Drug Development of Cancer Research UK. The Company’s discovery pipeline in oncology includes next-generation BTC molecules and Bicycle radionuclide conjugates (“BRC^TM”molecules). Beyond the Company’s wholly owned oncology portfolio, the Company is collaborating with biopharmaceutical companies and organizations in therapeutic areas in which the Company believes its proprietary Bicycle screening platform can identify therapies to treat diseases with significant unmet medical need.

The accompanying condensed consolidated financial statements include the accounts of Bicycle Therapeutics plc and its wholly owned subsidiaries, BicycleTx Limited, BicycleRD Limited and Bicycle Therapeutics Inc. All intercompany balances and transactions have been eliminated on consolidation.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Liquidity

As of June 30, 2024, the Company had cash and cash equivalents of $961.4 million.

The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital. The Company has funded its operations primarily with proceeds from the sale of its ordinary shares, American Depositary Shares representing ordinary shares (“ADSs”), including in offerings pursuant to its at-the-market offering (“ATM”) program, and non-voting ordinary shares, proceeds received from its collaboration arrangements (Note 9) and borrowings from a loan agreement with Hercules Capital, Inc. (“Hercules”) (Note 6).

On May 23, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with purchasers named therein (the “Investors”). Pursuant to the Purchase Agreement, the Company sold 6,764,705 ADSs, representing the same number of ordinary shares, nominal value £0.01 per share, and 19,169,001 non-voting ordinary shares, nominal value £0.01 per share, each at a purchase price equal to $21.42 per share (the “Private Placement”). The Company completed the Private Placement on May 28, 2024. The transaction resulted in gross proceeds to the Company of $555.5 million, and after deducting commissions and offering expenses of $11.4 million, net proceeds to the Company of $544.1 million.

On June 5, 2020, the Company entered into a Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. and Oppenheimer & Co. Inc. (the “Sales Agents”) with respect to its ATM program pursuant to which the

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Company may offer and sell through the Sales Agents, from time to time at the Company’s sole discretion, ADSs. No ADSs were issued or sold pursuant to the Sales Agreement during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023, the Company issued and sold 520,000 and 620,000 ADSs, respectively, under the Sales Agreement for gross proceeds of $12.5 million and $15.3 million, respectively, resulting in net proceeds of $12.1 million and $14.8 million, respectively, after deducting sales commissions and offering expenses of $0.4 million and $0.5 million, respectively.

The Company has incurred recurring losses since inception, including net losses of $39.8 million and $66.4 million for the three and six months ended June 30, 2024, respectively, and $42.6 million and $81.7 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024, the Company had an accumulated deficit of $578.1 million. The Company expects to continue to generate operating losses in the foreseeable future. The Company expects that its cash will be sufficient to fund its operating expenses and capital expenditure requirements through at least twelve months from the issuance date of these interim condensed consolidated financial statements.

The Company expects its expenses to increase substantially in connection with ongoing activities, particularly as the Company advances its clinical trials for its product candidates in development and preclinical activities. Accordingly, the Company will need to obtain additional funding in connection with continuing operations. If the Company is unable to raise funding when needed, or on attractive terms, it could be forced to delay, reduce or eliminate its research or drug development programs or any future commercialization efforts. There is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of delays in initiating or continuing research programs and clinical trials, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, if approved, dependence on key personnel and collaboration partners, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations, and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval prior to commercialization. Even if the Company’s research and development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

2. Summary of significant accounting policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (the “SEC”), on February 20, 2024 (the “2023 Annual Report”). Since the date of such consolidated financial statements, there have been no changes to the Company’s significant accounting policies, other than those disclosed below.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition, the accrual for research and development expenses and research and development incentives receivable, share-based compensation expense, valuation of right-of-use assets and liabilities and income taxes, including the valuation allowance for deferred tax assets. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are periodically reviewed in light of reasonable changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions.

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Significant risks and uncertainties

The Company currently operates in a period of economic uncertainty which has been significantly impacted by domestic and global monetary and fiscal policy, geopolitical conflicts such as the ongoing wars involving Ukraine and Israel, inflation and interest rates, and fluctuations in monetary exchange rates. While the Company has experienced limited financial impacts at this time, the Company continues to monitor these factors and events and the potential effects each may have on the Company’s business, financial condition, results of operations and growth prospects.

Unaudited interim financial information

Certain information in the footnote disclosures of these financial statements has been condensed or omitted pursuant to the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Company’s 2023 Annual Report.

The accompanying condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations and comprehensive loss, condensed consolidated statements of shareholders’ equity and condensed consolidated statements of cash flows for the three and six months ended June 30, 2024 and 2023, and the related financial information disclosed in these notes are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements for the year ended December 31, 2023, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2024, the results of its operations and its cash flows for the three and six months ended June 30, 2024 and 2023. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

Research and development incentives and receivable

The Company, through its subsidiaries in the United Kingdom, receives reimbursements of certain research and development expenditures as part of a United Kingdom government’s research and development tax reliefs program. Under the Small and Medium-sized Enterprises (“SME”) R&D Tax Relief program, the Company is able to surrender trading losses that arise from qualifying research and development expenses incurred by the Company’s subsidiaries in the United Kingdom for a cash rebate of up to 33.35% of qualifying expenditure incurred prior to April 1, 2023, and up to 18.6% of qualifying expenditure incurred thereafter. Amendments to the U.K. R&D tax credit regime included in Finance Act 2024, which was enacted in February 2024, increased the cash rebate that may be claimed to 26.97% of qualifying expenditure, retroactively applied to qualifying expenditures incurred after April 1, 2023, if we qualify as “R&D intensive” for an accounting period (broadly, a loss making SME whose relevant R&D expenditure represents, for accounting periods beginning on or after April 1, 2023, 40%, or, for accounting periods beginning on or after April 1, 2024, 30%, of its total expenditure for that accounting period).

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive program described above. At each period end, management estimates the reimbursement available to the Company based on available information at the time.

The Company recognizes income from the research and development incentives when the relevant expenditure has been incurred, the associated conditions have been satisfied and there is reasonable assurance that the reimbursement will be received. The Company records these research and development incentives as a reduction to research and development expenses in the statements of operations and comprehensive loss, as the research and development tax credits are not dependent on us generating future taxable income, the Company’s ongoing tax status, or tax position. The research and development incentives receivable represent an amount due in connection with the above program. The Company recorded a reduction to research and development expense of $7.3 million and $22.6 million during the three and six months ended June 30, 2024, respectively, including the impact of an increase to U.K. R&D tax credit reimbursement rates enacted with Finance Act 2024 retroactively applied to qualifying expenditures incurred after

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April 1, 2023. The Company recorded a reduction to research and development expense of $5.7 million and $12.6 million during the three and six months ended June 30, 2023, respectively.

Recently adopted accounting pronouncements

There have been no recently adopted accounting pronouncements during the three or six months ended June 30, 2024 that are of significance or potential significance to the Company.

Recently issued accounting pronouncements not yet adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures (“ASU No. 2023-09”), which prescribes standard categories for the components of the effective tax rate reconciliation and requires disclosure of additional information for reconciling items meeting certain quantitative thresholds, requires disclosure of disaggregated income taxes paid, and modifies certain other income tax-related disclosures. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective basis, with a retrospective option. The Company is currently evaluating the potential impact of the adoption of ASU No. 2023-09 on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures (“ASU No. 2023-07”), which requires disclosure of incremental segment information on an interim and annual basis. ASU No. 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, and requires retrospective adoption to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the potential impact of the adoption of ASU No. 2023-07 on its consolidated financial statements and related disclosures.

3. Fair value of financial assets and liabilities

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: Level 1, Quoted prices in active markets for identical assets or liabilities; Level 2, Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data; Level 3, unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of cash, cash equivalents and restricted cash, accounts receivable, research and development incentives receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities. As of June 30, 2024, and December 31, 2023, the carrying value of debt approximates its fair value, which was determined using unobservable Level 3 inputs, including quoted interest rates from a lender for borrowings with similar terms.

Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less at the date of purchase to be cash equivalents. As of June 30, 2024, the Company had cash equivalents of $22.7 million, consisting of interest-bearing money market funds which are considered Level 1 assets. As of December 31, 2023, the Company had cash equivalents of $72.3 million, consisting of $22.1 million of interest-bearing money market funds and $50.2 million of 30-day term deposits which are considered Level 1 assets. As of June 30, 2024, and December 31, 2023, there were no other assets or liabilities measured at fair value on a recurring basis.

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As of June 30, 2024, the Company had $0.5 million of restricted cash related to a collateralized letter of credit in connection with the Company’s lease for office and laboratory space in Cambridge, Massachusetts, which is included within other assets in the Company’s condensed consolidated balance sheet.

4. Property and equipment, net

Property and equipment, net consisted of the following (in thousands):


	June 30,		December 31,
	2024		2023
Laboratory equipment	$	15,645	$	15,554
Leasehold improvements		10,926		11,000
Computer equipment and software		540		532
Furniture and office equipment		1,082		822
		28,193		27,908
Less: Accumulated depreciation and amortization		(16,606)		(13,393)
	$	11,587	$	14,515

Depreciation expense was $1.6 million and $3.3 million for the three and six months ended June 30, 2024, respectively, and $1.6 million and $3.2 million for the three and six months ended June 30, 2023, respectively.

5. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	June 30,		December 31,
	2024		2023
Accrued employee compensation and benefits	$	9,237	$	13,394
Accrued external research and development expenses		11,714		11,839
Accrued professional fees		1,437		1,143
Current portion of operating lease liabilities		5,098		4,876
Other		649		257
	$	28,135	$	31,509

6. Debt

On September 30, 2020, Bicycle Therapeutics plc and its subsidiaries (the “Borrowers”) entered into a loan and security agreement (the “Loan Agreement”) with Hercules, as amended from time to time, which provides for aggregate maximum borrowings of up to $75.0 million. As of June 30, 2024, the Company had borrowings under the Loan Agreement of $30.0 million. The Loan Agreement includes, at the Borrowers’ request, potential for additional term loans, subject to satisfaction of customary conditions, in an aggregate principal amount of up to $45.0 million. Payments on borrowings under the Loan Agreement are interest-only until April 1, 2025 and interest is paid at an annual rate of the Wall Street Journal prime rate plus 4.55%, with a minimum annual rate of at least 8.05%, capped at a rate no greater than 9.05%. The scheduled maturity date is July 1, 2025 (the “Maturity Date”).

At the Borrowers’ option, the Borrowers may prepay all or any portion greater than $5.0 million of the outstanding borrowings, subject to a prepayment premium equal to 1.0% of the principal amount outstanding. The Loan Agreement also provides for an end of term charge (the “End of Term Charge”), payable upon maturity or the repayment of obligations under the Loan Agreement, equal to 5.0% of the principal amount repaid. Borrowings under the Loan Agreement are collateralized by substantially all of the Borrower’s personal property and other assets, other than their intellectual property. Hercules has a perfected first-priority security interest in certain cash accounts. The Loan Agreement contains customary affirmative and restrictive covenants and representations and warranties, including a covenant against the occurrence of a change in control, as defined in the agreement. There are no financial covenants. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants

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following any applicable cure period, cross acceleration to third-party indebtedness, certain events relating to bankruptcy or insolvency, and the occurrence of certain events that could reasonably be expected to have a material adverse effect. Upon the occurrence of an event of default, a default interest rate of an additional 5.0% may be applied to the outstanding principal and interest payments due, and Hercules may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Loan Agreement. The Company has determined that the risk of subjective acceleration under the material adverse events clause is not probable and therefore has classified the long-term portion of outstanding principal in long-term liabilities based on scheduled principal payments.

The Company incurred fees and transaction costs totaling $0.6 million associated with the initial term loan, which are recorded as a reduction to the carrying value of the debt in the condensed consolidated balance sheets. The fees, transaction costs, and the End of Term Charge are amortized to interest expense through the Maturity Date using the effective interest method. The Company concluded that the amendments to the agreement to date represent modifications to the Loan Agreement, and as such, the fees and transaction costs associated with the term loan will continue to be amortized to interest expense through the Maturity Date. The effective interest rate of the Hercules borrowings was 10.8% at June 30, 2024.

The Company assessed all terms and features of the Loan Agreement in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the debt. The Company determined that all features of the Loan Agreement are clearly and closely associated with a debt host and, as such, do not require separate accounting as a derivative liability. Interest expense associated with the Loan Agreement for the three and six months ended June 30, 2024 was $0.8 million and $1.6 million, respectively, and for the three and six months ended June 30, 2023, was $0.8 million and $1.6 million, respectively.

Debt consisted of the following (in thousands):


	June 30,		December 31,
	2024		2023
Term loan payable	$	30,000	$	30,000
End of term charge		1,092		946
Unamortized debt issuance costs		(183)		(248)
Carrying value of term loan		30,909		30,698
Less: current portion		(22,404)		—
Debt, net of discount and current portion	$	8,505	$	30,698

Future principal payments, including the End of Term Charge, are as follows (in thousands):


Year Ending December 31,
2024		—
2025		31,500
Total	$	31,500

7. Ordinary shares

The Company’s ordinary shares are divided into two classes: (i) ordinary shares and (ii) non-voting ordinary shares. Each holder of ordinary shares is entitled to one vote per ordinary share and to receive dividends when and if such dividends are recommended by the board of directors and declared by the shareholders. Holders of ADSs are not treated as holders of the Company’s ordinary shares, unless they withdraw the ordinary shares underlying their ADSs in accordance with the deposit agreement and applicable laws and regulations. The depositary is the holder of the ordinary shares underlying the ADSs. Holders of ADSs therefore do not have any rights as holders of the Company’s ordinary shares, other than the rights that they have pursuant to the deposit agreement with the depositary.

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The non-voting ordinary shares have the same rights and restrictions as the ordinary shares and otherwise rank pari passu in all respects with the ordinary shares except for the following:

●

a holder of non-voting ordinary shares shall, in relation to the non-voting ordinary shares held, have no right to receive notice of, or to attend or vote at, any general meeting of shareholders save in relation to a variation of class rights of the non-voting ordinary shares;

●

the non-voting ordinary shares shall be re-designated as ordinary shares by the Company’s board of directors, or a duly authorized committee or representative thereof, upon receipt of a re-designation notice and otherwise subject to the terms and conditions set out in the terms of issue. A holder of non-voting ordinary shares shall not be entitled to have any non-voting ordinary shares re-designated as ordinary shares where such re-designation would result in such holder thereof beneficially owning (for purposes of section 13(d) of the Exchange Act), when aggregated with “affiliates” and “group” members with whom such holder is required to aggregate beneficial ownership for the purposes of section 13(d) of the Exchange Act, in excess of 9.99% of any class of the Company’s securities registered under the Exchange Act (which percentage may be increased or decreased on a holder-by-holder basis subject to the provisions set out in the terms of issue); and

●

the non-voting ordinary shares shall be re-designated as ordinary shares automatically upon transfer of a non-voting ordinary share by its holder to any person that is not an “affiliate” or “group” member with whom such holder is required to aggregate beneficial ownership for purposes of section 13(d) of the Exchange Act. This automatic re-designation shall only be in respect of the non-voting ordinary shares that are subject to such transfer.

As of June 30, 2024, and December 31, 2023, the Company had not declared any dividends.

As of June 30, 2024, and December 31, 2023, the Company’s authorized share capital consisted of 154,385,145 and 59,612,613 ordinary shares, respectively, including ordinary shares and non-voting ordinary shares, with a nominal value of £0.01 per share. Authorized share capital, or shares authorized, comprises (i) the currently issued and outstanding ordinary shares and non-voting ordinary shares, (ii) the remaining ordinary shares available for allotment under the existing authority granted to the Board at the annual general meeting held on May 16, 2024, (iii) ordinary shares issuable on the exercise of outstanding options and settlement of vested and deferred restricted share units (“RSUs”) and (iv) ordinary shares reserved for issuance under the Bicycle Therapeutics plc 2020 Equity Incentive Plan and/or the Bicycle Therapeutics plc 2019 Employee Share Purchase Plan.

As of June 30, 2024, there were 47,449,143 ordinary shares issued and outstanding and 21,492,099 non-voting ordinary shares issued and outstanding.

8. Share-based compensation

Employee incentive pool

2020 Equity Incentive Plan

In June 2020, the Company’s shareholders first approved the Bicycle Therapeutics plc 2020 Equity Incentive Plan with Non-Employee Sub-Plan (as amended from time to time, the “2020 Plan”), under which the Company may grant market value options, market value stock appreciation rights or restricted shares, RSUs, performance RSUs and other share-based awards to the Company’s employees. The Company’s non-employee directors and consultants are eligible to receive awards under the 2020 Non-Employee Sub-Plan to the 2020 Plan. All awards under the 2020 Plan, including the 2020 Non-Employee Sub-Plan, will be set forth in award agreements, which will detail the terms and conditions of awards, including any applicable vesting and payment terms, change of control provisions and post-termination exercise limitations. In the event of a change of control of the Company, as defined in the 2020 Plan, any outstanding awards under the 2020 Plan will vest in full immediately prior to such change of control.

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The Company initially reserved up to 4,773,557 ordinary shares for future issuance under the 2020 Plan, including shares subject to options that were granted under the Company’s 2019 Share Option Plan (the “2019 Plan”) and that were granted pursuant to option contracts granted prior to the Company’s IPO, in each case that expire, terminate, are forfeited or otherwise not issued from time to time, if any. On June 27, 2022, the Company’s shareholders approved an amendment to the 2020 Plan (the “Amendment”) which increased the number of ordinary shares reserved for future issuance by 750,000 shares. Additionally, the number of ordinary shares reserved for issuance pursuant to the 2020 Plan will automatically increase on the first day of January of each year, initially commencing on January 1, 2021 and continuing up to and including January 1, 2032, in an amount equal to 5% of the total number of the Company’s ordinary shares outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors. Pursuant to this “evergreen” provision, on January 1, 2024, the number of shares reserved for issuance under the 2020 Plan was increased by 1,886,294 shares. As of June 30, 2024, there were 135,429 shares available for issuance.

Share options issued under the 2020 Plan have a 10-year contractual life and generally vest over either a three-year service period in three equal annual installments for new non-employee director grants, or a four-year service period with 25% of the award vesting on the first anniversary of the vesting commencement date and the balance thereafter in 36 equal monthly installments for employees and consultants. Certain options granted to the Company’s non-employee directors vest over a one-year service period in four equal quarterly installments.

The Company grants RSUs to non-employee directors and certain employees under the 2020 Plan. Each RSU represents the right to receive one of the Company’s ordinary shares upon vesting. RSUs granted to employees vest over a four-year service period with 25% of the award vesting on the first anniversary of the vesting commencement date and the remaining RSUs vesting in 12 equal quarterly installments. Certain RSUs granted to the Company’s non-employee directors either vest over a three-year service period in three equal annual installments for new non-employee director grants or over a one-year service period in four equal quarterly installments. The Company may also, in its sole discretion, provide for deferred settlement of RSUs granted to the Company’s non-employee directors.

As of June 30, 2024, there were options to purchase 6,521,821 shares and RSUs for 840,204 shares outstanding under the 2020 Plan.

2019 Share Option Plan

In May 2019, the Company adopted the 2019 Plan, which became effective in conjunction with the IPO. As of June 30, 2024, there were 1,781,335 options to purchase ordinary shares outstanding under the 2019 Plan. In conjunction with the adoption of the 2020 Plan, all shares available for future issuance under the 2019 Plan as of June 29, 2020 became available for issuance under the 2020 Plan and the Company ceased making awards under the 2019 Plan. The 2020 Plan is the successor of the 2019 Plan.

Share options previously issued under the 2019 Plan have a 10-year contractual life, and generally either vest monthly over a three-year service period, or over a four-year service period with 25% of the award vesting on the first anniversary of the vesting commencement date and the balance thereafter in 36 equal monthly installments. Certain awards granted to the Company’s non-employee directors were fully vested on the date of grant. The exercise price of share options issued under the 2019 Plan is not less than the fair value of ordinary shares as of the date of grant.

Employee Share Purchase Plan

In May 2019, the Company adopted the 2019 Employee Stock Purchase Plan (the “ESPP”), which became effective in conjunction with the IPO. The Company initially reserved 215,000 ordinary shares for future issuance under this plan. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2020 and each January 1 thereafter through January 1, 2029, by the lower of: (i) 1% of the outstanding number of ordinary shares on the immediately preceding December 31; (ii) 430,000 ordinary shares or (iii) such lesser number of shares as determined by the Compensation Committee. The number of shares reserved under the ESPP is subject to adjustment in the event of a split-up, share dividend or other change in the Company’s capitalization. The number of shares reserved for issuance under the ESPP was increased by 377,258 shares

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effective January 1, 2024. As of June 30, 2024, the total number of shares available for issuance under the ESPP was 1,577,671 ordinary shares. As of June 30, 2024, there have been no offering periods to employees under ESPP.

Share-based compensation

The Company recorded share-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Research and development expenses	$	4,599	$	3,988	$	9,130	$	8,584
General and administrative expenses		4,665		4,205		9,416		8,651
	$	9,264	$	8,193	$	18,546	$	17,235

Share options

The following table summarizes the Company’s option activity since December 31, 2023:


	Number of			Weighted
	Shares	Weighted		Average	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Share Options	Exercise Price		Term	Value
				(in years)	(in thousands)
Outstanding as of December 31, 2023	7,469,527	$	23.13	6.83	$	21,920
Granted	1,951,535		18.65	—		—
Exercised	(484,834)		13.13	—		—
Forfeited	(111,923)		27.10	—		—
Outstanding as of June 30, 2024	8,824,305	$	22.64	7.35	$	30,748
Vested and expected to vest as of June 30, 2024	8,824,305	$	22.64	7.35	$	30,748
Options exercisable as of June 30, 2024	4,888,630	$	21.10	6.10	$	26,122

The weighted average grant-date fair value of share options granted during the six months ended June 30, 2024 and 2023 was $13.08 per share and $20.45 per share, respectively.

The aggregate intrinsic value of share options is calculated as the difference between the exercise price of the share options and the fair value of the Company’s ordinary shares. The aggregate intrinsic value of share options exercised was $3.6 million and $4.6 million for the three and six months ended June 30, 2024, respectively, and was $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively.

Total share-based compensation expense for share options granted was $7.3 million and $14.8 million for the three and six months ended June 30, 2024, respectively, and was $6.8 million and $14.2 million for the three and six months ended June 30, 2023, respectively. Expense for non-employee consultants for the three and six months ended June 30, 2024 and 2023 was immaterial.

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The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the fair value of share options granted to employees and directors:

BICYCLE THERAPEUTICS PLC [BCYC] Filings
10-Q	[2024-08-06]
10-Q	[2024-05-02]
10-K	[2024-02-20]
10-Q	[2023-11-02]
10-Q	[2023-08-03]
10-Q	[2023-05-04]
10-K	[2023-02-28]
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-03-01]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-03-11]
10-Q	[2020-11-05]
10-Q	[2020-08-05]
10-Q	[2020-05-07]
10-K	[2020-03-10]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
S-1	[2019-04-26]