Bicycle Therapeutics Plc Stock

Hello, everyone. I'm Max Skor, a biotech analyst with Morgan Stanley, and I'm happy to welcome Bicycle Therapeutics, specifically Kevin Lee, CEO; Alethia Young, CFO; and Jennifer Perry, Chief Strategy Officer. But before we kick things off, I have to read a quick disclosure. For important disclosures, please see the Morgan Stanley Research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So with that, maybe before we dive deep into the pipeline, I believe you recently announced new board appointments yesterday, the latest in several new appointments this year. So maybe before we start, could you talk a bit more about the appointments and what significant -- how they're significant for Bicycle?

Absolutely. Hi, Max. Hi, everyone. It's really a pleasure to be here. Thank you for the invitation. Yes, last night, we announced the appointment of two additional appointments to our Board, Roger Dansey and Hervé Hoppenot.

Many of you will know, Roger and Herve from the phenomenal work that they've done already in the oncology biotech space. That follows on from the appointments we made a few months ago with the appointment of Charles Swanton and Alessandro Riva.

So what we're trying to do here is build a world-class oncology company, a real oncology powerhouse. And obviously, you start with the most senior positions and build those out. And I think what we've created on our Board now is really an end-to-end powerhouse in terms of oncology, knowledge and experience. Charles Swanton, many of you will know, his phenomenal work in the translational -- oncology translational space, target identification. And so we start with Charles.

We then have Roger and Alessandro and their phenomenal experience in oncology drug development over many years. And then obviously, with Herve, someone who's world-class experience, both in pharma and in biotech, building an oncology commercial enterprise. So we're really excited by these appointments.

I think it's a testament to the technology and the pipeline that we have that we've managed to attract these, I think, industry titans to our organization.

Great. Thank you. So just to kick things off, could you set the stage by walking us through zelenectide's value proposition in metastatic urotherial cancer?

Yes. So zelenectide is our most advanced molecule, it's a Bicycle drug conjugate. It targets Nectin-4. And I think what we've shown consistently now in our products is these Bicycle peptides really are able to bring very -- are very active. They can be very clinically effective responses. But they can do it in a way which is, I think, have less toxicity than other conjugate modalities. Obviously, the ADC has been posting the case in point.

With zelenectide, we've shown from our Phase I escalation through to our expansion and now hopefully, in our pivotal studies that we have a molecule which delivers the same order of efficacy as ADC molecules, whether as a monotherapy or in combination with checkpoint inhibition. But I do think they have a very differentiated safety profile.

And for us, as we always say, it's not just about the patient living longer, it's about the living well at the same time. When you talk about the safety advantage that the zelenectide can potentially bring, it's noteworthy that the most MMAE-bearing drug conjugates really suffer from very severe neuropathy.

In the case of PADCEV, there is very significant skin toxicity. In fact, many of you all know that, that PADCEV bears a black box warning for potentially life-threatening skin toxicity. And I think we've shown in our studies that we're really not seeing any significant skin toxicity. And when we think about neuropathy, we seem to encounter a milder, more reversible type of neuropathy. And we think this is really important when you think about quality of life for these patients.

So when you're speaking to physicians or doing market research, is it the mechanism, the efficacy? Or as you noted, the safety that's really resonating with doctors?

I'll let JP answer that. I mean, I think it's all of those things. But obviously, I think safety has to be really -- safety is really important, right? I think, we're beginning to see in oncology now that we can extend people's lives, and that's great. But now it's about quality of life. It has to be about quality of life. Patients need to feel well and not be suffering from a malady of different toxicological consequences of their treatment. So I think that's the next frontier for oncology, actually. But, JP?

Yes, sure. So in our market research, we continue to have doctors tell us that they love EDP because of the great efficacy, but they'd happily trade off the safety and tolerability issues that they struggle with. That's pretty much all grade skin tox, all-grade peripheral neuropathy and then a high rate of serious adverse events. And that they would continue to look for agents that can improve on that profile as long as we could continue to maintain the efficacy.

84% of the clinicians in our market research, which was U.S. market research with over 150 oncologists, a mix of academic and community. 84% actually would recommend Zele plus P over EDP to their colleagues and the patients, which also meant leading to higher future prescribing of Zele P plus EDP. So to us, that shows that we could take share with our profile, which Kevin has described as well as continue to move the market forward, both either by taking patients that EDP is not getting right now or actually getting people to switch from EDP based on our profile.

Okay. I think that's great. So maybe we can dive into the Phase I data in urothelial cancer. And just talk about or characterize the efficacy profile in both kind of the first line and then second line plus patients there?

Yes. I mean, we -- in terms of monotherapy activity in second line, we've shown very comparable efficacy to PADCEV a 45% response rate. We've shown a longer duration of response, 11 months. I think they were around 7 months. And I think a very differentiated safety profile, again, speaking to the lower rate of neuropathy. We really do not see severe skin toxicity. That's something that I think really troubled the PADCEV program from day 1. They were really encountering those issues and we're now in -- we've now dosed literally hundreds of patients and not seen those severe skin events to date.

And then in first line, obviously, we've tested in combination with pembrolizumab. We did a small study that we reported on the start of the year. Obviously, it's always difficult to do cross-trial comparisons. But in this case, I think it's even more difficult, because in the popular population of patients that we were treating, we saw a very high number of ECOG2 status patients or patients who are really quite ill.

And despite that, I think we showed comparable efficacy. I think -- we're in the 65% response rate unconfirmed, slightly lower in terms of confirmed response rate. But again, much lower rates of neuropathy and none of these are really severe skin toxicity.

So I think, it's -- and it's really interesting for me. Since the very first study that we reported very early on in the Phase I, the profile has just not changed. We're seeing a very clinically effective agent or, I think, a very differentiated safety profile. And it doesn't matter which population of patients we've taken them into, and it's in combination or not, we're seeing essentially comparable efficacy to PADCEV and this very differentiated safety profile.

So you noted the ECOG status in your Phase I study. How does that compare to the enrollment criteria for your pivotal study?

Yes. So different. I mean, the patients that we're bringing into the pivotal study are very similar in their health status as compared to the PADCEV pivotal study.

Okay. And then, are there any specific patient subsets? You know, the ECOG status, but maybe visceral liver metastases or cisplatin ineligible where you'd expect differentiation from PADCEV?

Well, I would argue, we've already shown a different profile in that study, I just referred to in that combination study. It's really noteworthy. If you look across all of the pivotal studies done with all the ADCs, they actively exclude the ECOG2 patients. We -- in our study -- the study that I mentioned, the Phase I study, we had, I think, 45% of patients were ECOG2. So I think that's a very noteworthy difference, and I think it speaks to the greater tolerability profile of our molecule.

I think, Max, we're going to have to see in Duravelo-2, if any of those subgroups turn out to be particularly interesting beyond just ECOG, because you mentioned liver mets and visceral. We'll have to see, right? But there's a clear potential opportunity and how Bicycle behave versus antibodies which are different. So, we'll be excited to see what happens there.

Okay. So just maybe last question, but leading into the pivotal trial design. What other key learnings did you take from Duravelo-1 in the design and strategy for your Phase II/III Duravelo-2 study?

Do you want to take that one, JP?

I mean, I guess the biggest takeaway is that we needed a study for DV-2 that was going to be competitive in the market. And so a lot of actually the criteria are similar, like Kevin mentioned, to EV-302, right? Because you want to be able to make some comparisons in terms of these Nectin agents with the same payload. Some of the learnings from the Phase I, like Kevin said, was making sure we're looking at all comers. So it's not just the flat ineligibility like our kind of earlier cohort.

Number two is the ECOG status, spending a lot of time making sure these are patients that are considered to be fit and more in line with what you've seen in other metastatic bladder trials. And besides that, I think everything else is somewhat standard. We'll be looking at kind of the same endpoints as you could expect for a competitive Phase III trial like EDP. So like Alethia said, some groups like liver, brain, looking at some of the other comparisons that you'd want to see on Grade 3 AEs, SAEs, skin, peripheral neuropathy and so on.

Maybe the only thing I would add is that, and when you think about Phase I sites and centers, they can be particularly different than Phase II. Because, obviously, as physicians get experience in treating patients with investigational medicine, they have more confidence to put them into patients that are potentially better and hence why we might have a better ECOG, we mentioned it was lower in Duravelo-2.

So I do think it's not learning, but it's just a progression of the fact that there's now hundreds of people who have been dosed with zelenectide. And we'd expect -- and we have hundreds of sites around the world, right? So it's kind of a completely different type of study than your typical Phase I where you have a handful of sites and -- there are people who are the -- but, I would say, the frontier blazer is on new medicines, right, shall we say.

Okay. So now getting into the Phase III. If you can just give us an overview of the design, potential interim analyses, anything we can think about in regards to key milestones coming up?

Yes. This was designed as a seamless end-to-end study. It involves dose optimization and an examination of contribution of components. So the study is split into two halves.

The Cohort 1 is in first-line metastatic urothelial cancer, which is cisplatin-eligible and ineligible patients. And here, we start by examining two doses of zelanectide in combination with pembrolizumab. The doses are 5-milligram weekly, which is what we've used historically as our sort of pathfinder dose. And then a second dose, which is 6 milligrams per meter square to 2 weeks on and 1 week off.

We enrolled 30 patients, and obviously, there's a control arm, which is a standard chemotherapy followed by nivolumab. After enrolling 30 patients in each of these arms, we do a look at the data, and we will make a decision with the FDA on which dose to take forward. And then once we identified that dose, we will continue to enroll patients with a view to potential accelerated approval based on response rate. In the second -- and then there's obviously the confirmatory arm following that.

In the second cohort, we're looking at second-line metastatic urothelial cancer. And here, again, we're looking initially now as a monotherapy, but at two doses, the 6 and the 5 milligram. And this is really to understand the contribution of components. Again, once we've selected the dose, we'll then examine the effect of the drug in combination with pembrolizumab in the second line as well.

Okay. And I believe you have a meeting scheduled with the FDA in the fourth quarter?

We're planning to take the data that we generated and have the conversation with the FDA around dose optimization, which was always planned. And obviously, that conversation will allow us to confirm the trial design and the opportunity for accelerated approval.

And should we expect after the meeting to get an update regarding dose selection, anything else?

I think, just let's level set a couple of other things I'm going to add to it. So it will be a longer answer than you expect but the needed answer.

So we've talked a lot about what is good and bad data for this trial effectively at the end of Phase II, because we get a lot of questions and are most common question. And I think one very important thing to frame is that our base case for this medicine, as Kevin and JP have both have said, is that we believe that the efficacy will be in line and the safety will be better. That's the base case.

Obviously, if it's better and better, great, both better -- they were -- the efficacy were inferior. The safety were better, it was a tough profile for us. Now all these things will be coming to roost, as you noted in the fourth quarter. So we will have the opportunity to look at the data, obviously, in a mature form. We'll go to the agency, have a conversation. And if timelines fit with what's happening at the agency, we'll be on track to update in a top line format.

And the reason why I started with what expectations were is because, we should be very clear that we're not putting numerical response rates or safety into this top line press release. It will be a broad characterization of effectively -- here's the dose, and we're moving forward. I mean, that's what we hope, right?

But what I'm trying to say in that is that a lot is being said, because we've told you what we think the standards are for data versus enfortumab, even though it's not our comparator, but in the reality, that's our commercial comparator. So we want people to understand that it may be a broad release where we say medical meeting is where we're going to put the data.

But I think putting the data at the medical meeting is important, because when you try to do pieces of data in a top line press release, you never catch what everybody's favorite pieces, right? And I think as a company, over the past 12 months, we've been very adamant now about like let's -- and it's from our own learnings, like let's put the data when it's very mature, when it's very set into a medical meeting.

We have a lot of capital, so we don't necessarily need to raise with urgency. But I just want to be very clear and level set everyone, because there have been some points of confusion I've heard around, oh, what are they going to say in this release? It'll be very broad, meaning here's the dose. We're moving forward, but that absolutely says a lot. It means that the alignments are intact with the design and the data are probably essentially what we thought they would be or better, right? And so, I just kind of wanted to give you the broad set of the answer there.

So just to confirm, in the fourth quarter, after the meeting with the FDA, you're going to put out somewhat of a qualitative release saying we picked this dose and we're moving forward. We should all understand that as either efficacy is better or equal to the comparator or the competitive landscape and safety is better?

Yes.

Okay. Okay. And should we expect any updates or additional data from the Phase I trial?

No.

No this year.

Not this year?

Not this year. I mean, a little bit of it is resourcing too, right? I mean, preparing for in the Phase II meeting in the current environment we're in, takes a lot of work and time. We're still a small company. So anytime we go and cut data for anything else that takes resources. So our primary focus has to be Duravelo-2 execution with this meeting at the agency. So it's just an artifact of life time and function and prioritization. So obviously, a lot of the other things that will be coming the roof will be in 2026.

Okay. And I'll take a shot at this. Is there maybe any guidance on a medical meeting you would be interested in?

No. I mean, you can take some guess. I mean, look, if it's good data, you might take three logical guesses, where we might try to be, right, based on timelines of when the data are maturing, right, which is obviously in the fourth quarter. So you're a good analyst, so you can do the math when the abstract deadlines are.

Okay. Maybe just one question, because we're on this topic in regards to the regulatory environment. How are interactions going with regulators? Is there any differences? Anything you'd call out?

We've not seen any difference. The FDA is very responsive. And I would think, to date has been helpful.

Okay. Great. Okay. So I think that's clear in regards to UC. But maybe moving on other indications you're testing your Nectin-4 assets. Duravelo-4 Phase I study, anything you'd like to lay out there and reason behind the indications you're going after?

Yes. So we -- quite a few years ago now, we identified the Nectin-4 gene itself in certain cancers is amplified -- in other words, the gene is duplicated. And that amplification is associated with greater protein expression on the surface.

Our collaborators and members of our Advisory Board, Niklas Klümper and Markus Eckstein over in Germany went on to show that, that amplification can be used as a predictor of PADCEV activity in urothelial cancer. And we've been working very closely with that group and with Charles Swanton's group over the last couple of years really to understand the implications of this amplification.

So we now know that the Nectin-4 gene is amplified in around 20% to 30% of bladder patients of lung cancer and breast cancer patients. We had done a -- some Phase I work in breast and lung cancer. And like other -- like with PADCEV, we were seeing that the zelenectide has a response rate in all comers of around 10% to 15%.

We did a retrospective analysis of those patients. We look to see if any of those patients have Nectin-4 amplification. And when we did that, I think the data was truly remarkable. We found that if we looked at the Nectin-4 amplified patient population, the response rates went from 10% to 15% in all comers to 50% to 60% in amplified, both in breast and in lung.

And with that in mind, we've now set up a couple of Phase II studies, we call DV-3, which is in breast cancer and DV-4, which is in lung cancer. And in both those cases, we are selecting patients based on Nectin-4 expression. So we're super excited about that work. And I think it really broadens the opportunity for a Nectin-4 targeted agent like zelenectide.

And could you just remind me on the -- understanding the Nectin-4 amplification, is this going to be potentially a companion diagnostic? What are you developing on this side?

Yes. So we are developing a companion diagnostic. We're looking at both FISH and NGS, obviously, as ways to also penetrate the market since those are both used in those tumor types, HR-positive, HER2-negative breast cancer, TNBC, as well as non-small cell, like Kevin said.

And we are thinking that DV-3 and DV-4 are really important to us from the standpoint that, one, they'll confirm that prevalence of amplification, which right now, we believe to be about 25% to 30% in terms of available data. And obviously, we look to see if amplification is predictive.

What's really interesting about the companion diagnostic and selection strategy is our market research shows that people are very open to bringing these into breast and lung. One, because in breast cancer, obviously, you have the ongoing uptake of things like in HER2 in that space, as well as in lung and HER2 and Delta-like moving into that space, too. So we've got a lot of white space there because currently, those are TOPO1 ADCs that tend to dominate those tumor types. And right now, we're bringing Nectin agent that doesn't exist as well as an MMAE drug conjugate payload that doesn't exist there.

So a lot of opportunity for us still to use the selection strategy and have that companion diagnostic guide therapy.

Given one clarifying point. There's Duravelo-3 which started in the first quarter of 2025, which is for breast. Right? And then there's Duravelo-4, which started in the second quarter of 2025 for lung. So effectively, there are two studies, they're ongoing, to test our hypothesis around Nectin-4 amplification.

Okay. Thank you for clarifying that. So maybe we pivot to the radiopharmaceutical opportunity there. Could you just frame for us what's unique about Bicycle's approach? And I know we have some imaging data coming this year? Any key catalysts you'd call out?

To take the first part of the question, we have this, I think, really amazing technology based on Bicycle peptides that are far smaller than antibodies able to fully penetrate the -- into the tumor, and you don't need a long circulating half-life in order for activity.

And I think that's a really provocative profile for radiopharmaceuticals. I think it shouldn't escape people that the vast majority of molecules that are being developed in the radiopharma space and the tumor launch products are based on peptides.

We have a technology that allows us to almost effective, develop a peptide therapy for any membrane-expressed target. So we're very excited about what the Bicycle technology can do. In fact, we've been working on radiopharmaceutical products low key, stealth mode, et cetera, for the last 10 years actually, working with, I think, some world-class institute such as DKSZ over in Germany and we been publishing in this space for quite some time now.

It's also noteworthy that a number of academic groups are actually using Bicycle agents who actually show the potential of the technology against various targets with radio label -- radio imaging agents. So we're really excited about what we can do in the space. We're making big investments in this space.

Last year, we showed some emerging data from one of our targeted agents, a Bicycle targeting a tumor antigen called MT1 membrane, matrix metalloproteinase 1 and also known as an MT14, and we're able to show a very clean distribution and very precise targeting in various tumors.

Later this year, we're hoping to share some additional data with another -- an imaging agent for a different tumor antigen, Ephrin A2, which is one of our real favorite molecules. And I think the really exciting thing about our Bicycle to Ephrin A2 is everybody who's tried to develop a targeting agent to Ephrin A2 using antibody technology linked to toxin conjugates has really run into profound toxicology.

We have actually -- we never talk -- we never get asked too many questions about this. We have an Ephrin A2 targeted drug conjugate, which is currently in Phase II. We're super excited about and we're following that hopefully with our radio therapeutic approach as well.

So I think in the short term, what you can expect from us is additional imaging data and then we'll give more information on what to expect in terms of our therapeutic pipeline probably in '26.

'26?

Probably '26.

I mean, I think, the only thing I would add is that there's an interesting connection between using imaging for novel target identification, and what is like, kind of, appropriate cancer matches up, right? I mean, it takes a lot of images to draw conclusions, but you could see how the imaging work we're doing in Ephrin A2 with enough of a sample size could help us inform further development of BT5528, as well.

So I think there's an interesting connection point that people are sort of missing here that -- and when you think about BT5528, because we haven't talked about it. It's again another molecule that's been dosed in the 100-plus people, very safe, as Kevin referenced, and very efficacious, mind you.

So I think it could be a very interesting kind of connectivity of the two points to really inform further later-stage development for BT5528 as well.

I mean, if I can just add to that, one of the beautiful things about the Bicycle technology is we can attach any payload. The nature of the Bicycle is -- the way we find Bicycle means that they are fully facile to conjugation. So we've historically -- we've actually attached very many different types of payloads never affected the activity of the agent.

We can also make iterative chemical changes to our Bicycle to optimize them for additional improvements in affinity or different pharmacokinetic properties. And we can bring all this to bear in our radio therapeutics. But to me, the power of what we have, if you think about classic ADC drug discovery, you find a target, you make molecule and then you either take biopsies, which tend to be archived tissue taken from a small part of the tumor, who knows whether that's representative. And you cross your fingers and you hope you see activity.

Imagine if you have a drug conjugate and a companion -- certainly in the short term, a companion imaging agent, you can actually use the imaging agent to validate this molecule to select the patients and then follow up with your drug conjugate. And I think that's taken the field into a completely different space. So we're super excited about this. This is why we're making big investments in the area.

Okay. And then one follow-up question. So we understand the timelines for Nectin-4 in regards to the drug conjugate, the trial designs. How does this compare to the radiopharmaceutical plan? And what are you hearing from regulators in regards to gating factors or what you need to prepare to move into Phase I?

Well, we're still in the early preclinical phase of this all, right? So you've got imaging work we're doing with our collaborators, DKFZ, right? We have said before, and we're on track for the -- is that we will have a bispecific sponsored trial in 2026. Effectively, it's going to be imaging, like Phase 0 study for lack of a better word. Obviously, there's a parallel track of work along with that and optimizing the molecule itself and heading toward enabling some of the work that we relate to, hopefully, a Phase I study in patients, and we haven't said when. But obviously, you kind of can see the sequence of how things are going.

So timelines are on track, and I think we'll have those conversations when kind of all the package of information are available. But right now, it's still -- it's moving as we've characterized even, I think, last year when we were here and other meetings, and so everything is kind of on track. But radiopharmaceuticals, obviously, especially like we've had a stealth effort, but it's always been small in stealth.

So really scaling that up, takes a lot of time and effort. And so we've done a lot that probably people haven't seen or kind of appreciate. And at some point, we'll kind of unveil how all this work is coming together and some of our further plans, hopefully, in the coming next 12 months.

Okay. Maybe an R&D day of some sort.

Who knows?

Okay. Sounds good. So just following up, Alethia, specifically, just on your financial position, as you noted, a significant cash position. I believe you recently extended the runway into '28, previously second half of '27. Any updates around that, steps you've taken this year and looking forward around capital allocation?

Well, I mean, broadly speaking, I mean, that is correct. And we've said into 2028, we had a small reduction of force earlier this year, like a month or so ago, which has enabled the extension of the runway that you referenced. And I think our general perspective is that, this is a very, very tough biotech space. Probably one of the most difficult ones I've seen in the past 25 years as far financing goes.

So we just want to always be very prudent and be very forward footed on making sure we're being as efficient, as effective as our capital as possible. And we also want to give -- the technology is incredible, as you can see, and there are a lot of different ways we can go with it and are going. So we want to give ourselves as many shots on goal, right, to be successful.

So overall, I mean that's always the case. I mean, our cash runway guys never entails any sort of BD work either way right? So I mean -- but we still feel obviously very good with cash north of $700 million right now.

And just looking forward, what would be potential triggers to access additional capital, either non-dilutive or equity?

I mean, there's always -- if there's a will, there's a way, as well, say, I mean, like it's nothing different than any other company. I think, there's -- everything is on the table, and you really just have to look at where you're at with different situations and kind of make a decision. It's hard to characterize. But I think as a company and our philosophy, we look at everything, right? Like everything is on the table. We're always going to look at what's right for our shareholders and try to do right by that as well.

But we always want to be able to create opportunities for ourselves to continue to build on the platform and optimize it, right? Because our goal is over the relatively medium term, hopefully, over -- if the data holds to become a commercial stage company. So there's a lot of investment and effort that comes with that.

Okay. And then, I just want to ask one clarifying question, going back to the pivotal study, Nectin-4, in regards to what we're going to hear in the fourth quarter. If potentially efficacy fall short or safety falls short of expectations, what would that look like?

I think, we would somehow have to characterize it in the press release as well. It's a different. I mean, that's what we've committed to. I mean, the key factor is the conversation with the agency, right? And I mean, we can go according to schedule, but like that's the factor. So whatever comes up all of this combination of information, we're hopefully in alignment to be able to put that out before the year end.

I think, it's really important to emphasize. We're not a one molecule, one indication company. We have a pipeline of molecules, which we think are incredibly innovative and highly valuable. And it's a function of where we are in space and time right now that everybody is focused on zelenectide in bladder cancer. I think, we're leading the field in Nectin-4 amplification. And interestingly, the lung and the breast opportunities themselves are as big, if not bigger than the bladder opportunity.

And so, we've created a real tension in our portfolio. There is no reason whatsoever to flog a dead horse, right? If we don't think there is a commercial opportunity, a viable way forward with zelenectide in bladder cancer, it's certainly not in our shareholders' interest for us to continue that.

Right now, we think there's real huge opportunity and in the data and the FDA discussion. But there is so much opportunity in our pipeline. We have this luxury that we can select the highest value opportunities to drive forward, and that's our intent. That's what we will do.

Okay. With that, I think we're out of time. But thank you very much, Bicycle team. Really appreciate it.

Thank you.

Thank you, Max.