SEC Filing | Bicycle Therapeutics

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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 September 30, 2019

☐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.)

B900, Babraham Research Campus Cambridge, United Kingdom		CB22 3AT
(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 October 31, 2019, the registrant had 17,902,869 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 Convertible Preferred Shares and Shareholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	49

Item 4.	Controls and Procedures	50

PART II - OTHER INFORMATION		51

Item 1.	Legal Proceedings	51

Item 1A	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	105

Item 3.	Defaults Upon Senior Securities	106

Item 4.	Mine Safety Disclosures	106

Item 5.	Other Information	106

Item 6.	Exhibits	106

SIGNATURES		107

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Forward-looking Information

This Quarterly Report on Form 10‑Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “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 (“BTC”), tumor-targeted immune cell agonist programs, and our other pipeline programs;

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;

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

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

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

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

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

regulatory development in the United States, under 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 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;

our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act (“JOBS Act”);

statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and share performance; 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 on Form 10‑Q, 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 on Form 10‑Q. 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.

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)


	September 30,		December 31,
	2019		2018
Assets
Current assets:
Cash	$	95,954	$	63,380
Accounts receivable		46		5,021
Prepaid expenses and other current assets		3,536		2,076
Research and development incentives receivable		10,714		6,292
Total current assets		110,250		76,769
Property and equipment, net		2,152		1,818
Operating lease right‑of‑use assets		2,177		—
Other assets		1,481		3,039
Total assets	$	116,060	$	81,626
Liabilities, convertible preferred shares and shareholders’ equity (deficit)
Current liabilities:
Accounts payable	$	1,992	$	1,887
Accrued expenses and other current liabilities		6,035		7,032
Deferred revenue, current portion		808		10
Total current liabilities		8,835		8,929
Warrant liability		—		4,804
Operating lease liabilities		1,416		—
Deferred revenue, net of current portion		9,055		14,625
Other long‑term liabilities		1,429		897
Total liabilities		20,735		29,255
Commitments and contingencies (Note 12)
Series A convertible preferred shares, £0.01 nominal value; no shares and 3,000,001 shares authorized at September 30, 2019 and December 31, 2018, respectively; no shares and 2,800,001 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		—		41,820
Series B1 convertible preferred shares, £0.01 nominal value: no shares and 4,690,485 shares authorized at September 30, 2019 and December 31, 2018, respectively; no shares and 3,947,198 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		—		54,621
Series B2 convertible preferred shares, £0.01 nominal value: no shares and 1,403,633 shares authorized at September 30, 2019 and December 31, 2018, respectively; no shares and 1,323,248 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		—		25,756
Shareholders’ equity (deficit):
Ordinary shares, £0.01 nominal value; 31,995,653 and 15,452,420 shares authorized at September 30, 2019 and December 31, 2018, respectively; 17,902,869 shares issued and outstanding at September 30, 2019; 898,678 shares issued and 814,728 shares outstanding at December 31, 2018		226		10
Additional paid‑in capital		193,850		1,857
Accumulated other comprehensive loss		(2,607)		(1,751)
Accumulated deficit		(96,144)		(69,942)
Total shareholders’ equity (deficit)		95,325		(69,826)
Total liabilities, convertible preferred shares and shareholders’ equity (deficit)	$	116,060	$	81,626

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				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Collaboration revenues	$	614	$	1,610	$	8,520	$	6,079
Operating expenses:
Research and development		6,078		5,642		18,891		14,268
General and administrative		4,789		2,325		11,164		6,015
Total operating expenses		10,867		7,967		30,055		20,283
Loss from operations		(10,253)		(6,357)		(21,535)		(14,204)
Other income (expense):
Interest and other income		440		26		594		75
Other expense, net		—		(1,361)		(5,377)		(1,472)
Total other income (expense), net		440		(1,335)		(4,783)		(1,397)
Net loss before income tax provision		(9,813)		(7,692)		(26,318)		(15,601)
Benefit from income taxes		(331)		—		(116)		(396)
Net loss	$	(9,482)	$	(7,692)	$	(26,202)	$	(15,205)
Net loss attributable to ordinary shareholders	$	(9,482)	$	(7,692)	$	(26,202)	$	(15,205)
Net loss per share attributable to ordinary shareholders, basic and diluted	$	(0.53)	$	(17.73)	$	(3.00)	$	(36.44)
Weighted average ordinary shares outstanding, basic and diluted		17,900,978		433,795		8,734,943		417,223
Comprehensives Loss:

Net loss	$	(9,482)	$	(7,692)	$	(26,202)	$	(15,205)
Other comprehensive income (loss):
Foreign currency translation adjustment		(424)		(537)		(856)		(1,398)
Total comprehensive loss	$	(9,906)	$	(8,229)	$	(27,058)	$	(16,603)

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

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Bicycle Therapeutics plc

Condensed Consolidated Statements of Convertible Preferred Shares and Shareholders’ Equity (Deficit)

(In thousands, except share data)

(Unaudited)


															Accumulated
	Series A			Series B1			Series B2								Other				Total
	Convertible			Convertible			Convertible						Additional		Comprehensive				Shareholders’
	Preferred Shares			Preferred Shares			Preferred Shares			Ordinary Shares			Paid‑in		Income		Accumulated		Equity
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		(Loss)		Deficit		(Deficit)
Balance at December 31, 2018	2,800,001	$	41,820	3,947,198	$	54,621	1,323,248	$	25,756	814,728	$	10	$	1,857	$	(1,751)	$	(69,942)	$	(69,826)
Issuance of convertible preferred shares	—		—	—		—	80,385		1,583	—		—		—		—		—		—
Issuance of restricted share awards	—		—	—		—	—		—	27,304		1		103		—		—		104
Issuance of ordinary shares upon exercise of share options	—		—	—		—	—		—	3		—		—		—		—		—
Share‑based compensation expense	—		—	—		—	—		—	—		—		172		—		—		172
Foreign currency translation adjustment	—		—	—		—	—		—	—		—		—		1,080		—		1,080
Net loss	—		—	—		—	—		—	—		—		—		—		(6,503)		(6,503)
Balance at March 31, 2019	2,800,001		41,820	3,947,198		54,621	1,403,633		27,339	842,035		11		2,132		(671)		(76,445)		(74,973)
Conversion of convertible preferred shares to ordinary shares	(2,800,001)		(41,820)	(3,947,198)		(54,621)	(1,403,633)		(27,339)	11,647,529		146		123,634		—		—		123,780
Reclassification of warrant liability to additional paid-in capital and exercise of warrants	—		—	—		—	—		—	702,557		9		10,018		—		—		10,027
Issuance of ADSs in initial public offering, net of underwriting discounts, commissions and offering expenses of $8.4 million	—		—	—		—	—		—	4,637,666		59		56,469		—		—		56,528
Issuance of restricted share awards	—		—	—		—	—		—	56,643		1		292		—		—		293
Issuance of ordinary shares upon exercise of share options	—		—	—		—	—		—	14,301		—		21		—		—		21
Share-based compensation expense	—		—	—		—	—		—	—		—		612		—		—		612
Foreign currency translation adjustment	—		—	—		—	—		—	—		—		—		(1,512)		—		(1,512)
Net loss	—		—	—		—	—		—	—		—		—		—		(10,217)		(10,217)
Balance at June 30, 2019	—		—	—		—	—		—	17,900,731		226		193,178		(2,183)		(86,662)		104,559
Issuance of ordinary shares upon exercise of share options	—		—	—		—	—		—	2,138		—		—		—		—		—
Share-based compensation expense	—		—	—		—	—		—	—		—		819		—		—		819
Public offering expenses	—		—	—		—	—		—	—		—		(147)		—		—		(147)
Foreign currency translation adjustment	—		—	—		—	—		—	—		—		—		(424)		—		(424)
Net loss	—		—	—		—	—		—	—		—		—		—		(9,482)		(9,482)
Balance at September 30, 2019	—	$	—	—	$	—	—	$	—	17,902,869	$	226	$	193,850	$	(2,607)	$	(96,144)	$	95,325

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

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Bicycle Therapeutics plc

Condensed Consolidated Statements of Convertible Preferred Shares and Shareholders’ Equity (Deficit) (continued)

(In thousands, except share data)

(Unaudited)


															Accumulated
	Series A			Series B1			Series B2								Other				Total
	Convertible			Convertible			Convertible						Additional		Comprehensive				Shareholders’
	Preferred Shares			Preferred Shares			Preferred Shares			Ordinary Shares			Paid‑in		Income		Accumulated		Equity
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		(Loss)		Deficit		(Deficit)
Balance at December 31, 2017	2,800,001	$	41,820	3,947,198	$	54,621	—	$	—	368,995	$	5	$	838	$	69	$	(48,096)	$	(47,184)
Issuance of restricted share awards	—		—	—		—	—		—	35,725		1		53		—		—		54
Issuance of ordinary shares upon exercise of share options	—		—	—		—	—		—	9,002		—		—		—		—		—
Share‑based compensation expense	—		—	—		—	—		—	—		—		198		—		—		198
Foreign currency translation adjustment	—		—	—		—	—		—	—		—		—		1,796		—		1,796
Net loss	—		—	—		—	—		—	—		—		—		—		(2,534)		(2,534)
Balance at March 31, 2018	2,800,001		41,820	3,947,198		54,621	—		—	413,722		6		1,089		1,865		(50,630)		(47,670)
Issuance of restricted share awards	—		—	—		—	—		—	12,757		—		26		—		—		26
Issuance of ordinary shares upon exercise of share options	—		—	—		—	—		—	359		—		—		—		—		—
Share-based compensation expense	—		—	—		—	—		—	—		—		309		—		—		309
Foreign currency translation adjustment	—		—	—		—	—		—	—		—		—		(2,657)		—		(2,657)
Net loss	—		—	—		—	—		—	—		—		—		—		(4,979)		(4,979)
Balance at June 30, 2018	2,800,001		41,820	3,947,198		54,621	—	—	—	426,838		6		1,424		(792)		(55,609)		(54,971)
Issuance of restricted share awards	—		—	—		—	—		—	15,571		—		27		—		—		27