Bicycle Therapeutics has significant upside potential (NASDAQ: BCYC)
Therapeutic bike (NASDAQ: BCYC) is a biotech company working to revolutionize cancerous tumors. Specialized in the field of oncology, it is a research and development biotechnology company that has developed a patented technology of bicyclic peptides which they call “bicycle”. They focus on two subtypes of bike technology. The first is the bike conjugates. This includes both toxic conjugates and targeted innate immune activators. These technologies deliver toxic payloads into tumors and target immune activation in target tumor cells without activating the whole body immune system, respectively. The second of these patented technology subtypes is immuno-oncology. This uses the activation of cytotoxic T lymphocytes involved in the immune response.
In this article, I will show that despite the lack of a marketable product, recent partnerships with other big pharma give the proprietary bicycle technology owned by Bicycle Therapeutics viability as a mid-stage research and development company. boom with huge future market potential.
BT8009 is a Bicycle toxin conjugate currently being tested as an effective cancer treatment. This is a breakthrough treatment that binds Nectin-4 (a cell adhesion molecule) to MDA-MB-468 cells. This leads to excellent results on xenografts, even when tested on larger tumors. Nectin-4 is present across the cell surface of all tumors, and by targeting it and binding with it, BT8009 acts as a “hit and run” delivery system for the tumor-fighting toxins it carries,
which minimizes the risk of toxic exposure to the system. The treatment is designed to target solid tumors and has shown very promising results in phase I clinical trials.
BT7480 is a fully synthetic tumor-targeting immune cell agonist. This technology was based on Bicycle’s failing CD137 technology. The idea was to target activated carcinogenic T cells with a costimulatory molecule belonging to the TNF superfamily. The technology used agnostic antibodies and initially showed promise. The company then decided to take the promising aspects of this technology, combine it with its Bicycle technology and use it as an antagonist to directly stimulate the immune system of specific groups of cancer cells. The result is a specific, highly targeted synthetic treatment that induces the activation of the tumor cell’s immune system, attacking the tumor from within and triggering the immune system of the rest of the body.
To date, these two technologies have shown remarkable progress in preclinical trials. The company is expected to provide updates on the progress of both treatments later this year. If these results prove viable, stock prices could rise, as the market potential for such a treatment is huge and companies would pay a premium to develop it. The next few months will be critical as they will likely reveal whether or not the project is progressing at the planned pace, closing in on a much-requested new treatment option, or whether the company will have to go back to square one, leaving investors waiting. the development and testing of the next treatment.
All pharmaceutical companies have risks associated with their candidates, and Bicycle Therapeutics is no exception. Although preliminary results for BT8009 are positive, it should be noted that the sample size of the trial was below average for the type of trial being conducted. Given that one of the main indicators of an effective drug is the independent reproducibility of trials, it remains to be seen whether the excellent results seen so far continue to impress later this year. If the company fails to deliver positive news regarding the BT8009, much of the money that has been burned will have gone to waste. This would force Bicycle to seek another round of funding, bringing it even further back with no proceeds to show for its work. That said, this is all hypothetical, and the fundamental technology supports the idea that the primary results weren’t just a coincidence.
Not having marketable products is a blight on any business. Without a stable means of generating revenue, companies are resigned to depending on research grants, external funding and strategic partnerships. Bicycle has taken the latter approach, opting for strategic partnerships to help keep the wheels turning. Their first successful partnership came with Roche (OTCQX: RHHBY) in February 2020. This partnership paid Bicycle Therapeutics $30 million upfront. From there, the deal was structured to provide more payments for achieving different incentives in the drug development process, bringing the total earning potential to $1.7 billion. Both parties seem very happy with the arrangement; they agreed to a side product development deal as part of the first deal, which paid Bicycle an additional $10 million upfront.
The second partnership took place in December 2021 with Ionis Pharmaceuticals (NASDAQ: IONS). This was an agreement allowing Ionis to use Bicycle’s proprietary Bicycle technology to develop targeted oligonucleotide therapies. The deal paid Bicycle $45 million in upfront fees and left room for future revenue potential. Bicycle also received $11 million in capital if the drug was ever developed and brought to market. Savvy deals like this have allowed Bicycle to make the most of its finances and increase its earning potential while remaining uniquely focused on its company’s goal of treating cancer.
Bicycle Therapeutics’ most recent financials reflect revenue of $11.8 million, down from $10.4 million in 2020 but down from $13.8 million in 2019. This reflects a consistent but unspectacular ability to generate income. Importantly, the lack of marketable products makes revenue generation dependent on agreements with other companies for the use of the technology, which shows that the company can use multiple sources of revenue to advance the business.
Gross margin has declined incredibly sharply over the past five years, posting a negative gross margin growth percentage of 30.2% this year. This measure was negative 9.8% in 2017 and 2018, meaning it has almost tripled in negative over the past three years. Although that would be a warning sign in almost any other industry, it seems like a rite of passage in a research-based biotech company, because again, generating massive profits is difficult without marketable products, and the most funds from partnerships go to R&D.
The area of finance where Bicycle Therapeutics shows its true strength is cash and short-term equivalents. Judging by this metric, Bicycle is well positioned to continue operations for at least the next 12 months, but likely longer in the unlikely event that it doesn’t forge more partnerships to generate revenue elsewhere. With an impressive cash position of $259.5 million, Bicycle is financially strong and marching toward longevity. Companies with this type of financial management tend to become extremely profitable. With the laser focus on the cancer treatment drug, my money would be on Bicycle to have a breakthrough breakthrough in the market within the next couple of years.
Although they have no marketable products, Bicycle is well suited to weather almost any financial storm that comes its way through savvy partnerships and smart financial decision-making. With multiple revenue streams open to it and the potential to develop a breakthrough new drug for the treatment of cancer, Bicycle is firmly positioned as a major contender in the market. Bicycle stays relevant by throwing its head into one of the most lucrative processing pipelines out there.
The oncology sector is one of the largest in the general biotechnology industry; With the wide spectrum of diseases and hundreds of different treatment modalities in development, companies generating therapies for this space have the unique advantage of generating several successful therapies that may have a broader market than is typically offered. Bicycle has seen great momentum and positive clinical results that demonstrate a commitment to bringing its pipeline to market. Through their many partnerships, Bicycle is able to leverage greater market reach and pipeline, further affirming the potential of this worthwhile speculative biotechnology. Investors looking for a bullish oncology biotech with promising technology and financials should look no further than Bicycle Therapeutics.