IPO Update: Bicycle Therapeutics Aims For $65 Million U.S. IPO

About: Bicycle Therapeutics Limited (BCYC)
by: Donovan Jones

Bicycle Therapeutics has filed proposed terms for its U.S. IPO.

The firm is advancing a pipeline of treatment candidates for various cancers.

BCYC has several commercial collaborators, a strong investor base, and the IPO appears reasonably priced.

Quick Take

Bicycle Therapeutics (BCYC) intends to raise $65 million from an IPO of ADSs, according to an amended registration statement.

The company is developing a pipeline of treatment candidates for cancers from its proprietary ‘bicycle’ technology.

BCYC enjoys the support of an impressive investor list including major pharma firms, has a number of collaborations, and the IPO appears reasonably priced.

Company And Technology

Cambridge, UK-based Bicycle Therapeutics was founded in 2009 to discover novel therapeutics that combine the pharmacology usually associated with a large and complex drug with the manufacturing and pharmacokinetics of a small molecule one, which it refers to as Bicycles.

Management is headed by Kevin Lee, who has been with the firm since 2015 and was previously Senior Vice President and Chief Scientific Officer of the Rare Disease Research Unit at Pfizer (PFE).

Based on monoclonal antibodies science conducted by Sir Greg Winter and Professor Christian Heinis, “Bicycles are fully synthetic short peptides constrained to form two loops which stabilize their structural geometry” with a large binding surface area which improves their selectivity.

Below is a simple schematic of the Bicycle manufacturing process:

Bicycle has developed a proprietary phage display screening platform that “encodes quadrillions of potential Bicycles which can be screened to identify molecules for optimization to potential product candidates.”

Below is a brief overview video of the science behind Bicycles:

Source: Vertex Ventures

The company’s lead drug candidate is BT1718, a Bicycle Toxin Conjugate [BTC] that is currently being evaluated for its efficacy in the treatment of tumors that express Membrane-Type 1 Matrix Metalloprotease [MT1-MMP].

A BTC is a Bicycle, chemically attached to a toxin that, when administered and is at its target location, is separated from its carrier and kills the tumor cells.

BT1718’s safety, tolerability, and efficacy for the treatment of MT1-MMP expressing tumors is currently being evaluated in a clinical Phase I/IIa trial, in collaboration with and fully funded by the ‘Centre for Drug Development’ of Cancer Research UK, whose preliminary results are expecting in 2H 2019.

Below is the current status of the company’s drug development pipeline:

Source: Company registration statement

Besides BTCs, the company is also developing Bicycle Targeted Innate Immune Activators, molecules that activate the innate immune system without the excessive systemic activation and associated toxicity usually related to standard innate immune activators.

Bicycle T-Cell modulators are molecules that have the power to either disrupt or promote the protein-protein interactions native to T-cell modulation while avoiding many of the negatives associated with antibodies, such as their toxicity and the possibility of T-cell exhaustion in the case of prolonged immunomodulation.

Investors in Bicycle include Innovate UK, Longwood Founders Fund, Vertex Ventures HC, SR One, SV Health Investors, Novartis Ventures Fund, Atlas Venture, and Vertex Ventures among others. Source: Crunchbase

Market And Competition

According to a 2018 market research report by Mordor Intelligence, the global CAGR for solid tumor treatments is expected to be 15% between 2019 and 2024.

The primary factors driving market growth are increasing government initiatives, new product approvals in ovarian, pancreatic, and prostate cancers, as well as growing incidence and awareness of cancer.

The research report states that “cancer rates could further increase by 50%, to 15 million new cases by 2020, as per the World Cancer Report.”

The most common cancers in 2016 were breast, lung and bronchus, prostate, colon, and rectum, as well as bladder cancers, melanoma of the skin, non-Hodgkin lymphoma, thyroid cancer, kidney, and renal pelvis cancer, leukemia, endometrial cancer, and pancreatic cancer.

During the forecast period, the North American region is projected to dominate the market due to the high incidence of cancer; the Asia-Pacific region will grow the fastest, as can be seen by the graphic below:

Major competitors that provide or are developing treatments include:

Source: Sentieo

According to management, bicycles are antibody-like therapeutics that solve many of the negatives associated with antibody administration, such as low affinity or selectivity, high toxicity, molecule half-life, and excretion.

Financial Status

BCYC’s recent financial results are typical of a development stage biopharma in that they show significant R&D and G&A expenses associated with the firm’s pipeline of drug treatment candidates.

Bicycle also has two years' worth of collaboration revenue from Oxurion, AstraZeneca, and Bioverativ.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):

Source: Company registration statement

As of March 31, 2019, the company had $59.4 million in cash and $20.9 million in total liabilities (Pro Forma).

IPO Details

BCYC intends to sell 4.33 million shares of ADSs representing underlying common stock at a midpoint price of $15.00 per ADS for gross proceeds of approximately $65.0 million, not including the sale of customary underwriter options.

Certain existing shareholders have indicated an interest to purchase shares of up to $25.0 million at the IPO price. This is typical investor ‘support’ for a life science IPO and is a positive signal to prospective IPO investors.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $265.4 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 24.49%.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:

approximately $35.0 million to $40.0 million to complete preparation for Phase II and III clinical development of BT1718, including manufacturing activities, and to advance BT5528 and BT8009 through Phase I and IIa clinical development;

approximately $20.0 million to $25.0 million to advance our CD137 programs through preclinical development, including IND-enabling studies, and to advance one CD137 multimeric program through Phase I clinical development; and

approximately $15.0 million to $20.0 million on continued drug discovery efforts and translational research;

the remainder on further expansion of our infrastructure to support our pipeline as well as to fund working capital and other general corporate purposes.

Management’s presentation of the company roadshow is not available.

Listed underwriters of the IPO are Goldman Sachs, Piper Jaffray, Jefferies, and Canaccord Genuity.

Expected IPO Pricing Date: May 22, 2019.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.