Bicycle Therapeutics plc
Annual Report and financial statements
for the year ended 31 December 2022
Company No: 11036004
Bicycle Therapeutics plc
Annual report and financial statements
for the year ended 31 December 2022
Contents
General Information
Strategic Report
Directors’ Remuneration Report
Directors’ Report
Independent auditors’ report to the members of Bicycle Therapeutics plc
Consolidated statement of comprehensive income for the year ended 31 December 2022
Consolidated and Parent Company balance sheets as at 31 December 2022
Consolidated statement of changes in equity for the year ended 31 December 2022
Parent Company statement of changes in equity for the year ended 31 December 2022
Consolidated statement of cash flows for the year ended 31 December 2022
Notes to the financial statements
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Bicycle Therapeutics plc
year ended 31 December 2022
General Information
Directors
Janice Bourque
Jose-Carlos Gutierrez-Ramos
Veronica Jordan
Richard Kender
Kevin Lee
Pierre Legault
Gregory Winter
Secretary
Jim Sutcliffe
Registered office
Blocks A & B
Portway Building Granta Park
Great Abington, Cambridge
United Kingdom, CB21 6GS
Company Number
11036004
Independent Statutory Auditors
PricewaterhouseCoopers LLP
The Maurice Wilkes Building
St. John’s Innovation Park
Cowley Road
Cambridge
CB4 0DS
Bankers
Barclays Bank
9-11 St Andrews Street
Cambridge
CB2 3AA
Solicitors
Cooley (UK) LLP
22 Bishopsgate
London
EC2N 4BQ
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Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report
Introduction
Bicycle Therapeutics plc (the “Parent Company”) on behalf of itself and its subsidiaries, BicycleTx
Limited, BicycleRD Limited and Bicycle Therapeutics Inc. (which together may be referred to as the “Company”,
“Bicycle”, “we”, “us” or “our”), is required to produce a strategic report complying with the requirements of the
Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (the “Regulations”) for the year
ended 31 December 2022. Bicycle also filed with the U.S. Securities and Exchange Commission (the “SEC”) its
Annual Report on Form 10-K for the year ended 31 December 2022 (the “Form 10-K”), which contains additional
disclosures regarding some of the matters discussed in this report.
Principal activities
The Company carries out research and development activities developing novel bicyclic peptides both in
Cambridge, UK and Cambridge, Massachusetts, U.S.A.
Since 28 May 2019 the Parent Company has had American Depositary Shares representing its ordinary
shares (“ADSs”) traded on The Nasdaq Stock Market (“NASDAQ”) in the U.S.
Business overview
We are a clinical-stage biopharmaceutical company developing a novel class of medicines, which we refer
to as Bicycles, for diseases that are underserved by existing therapeutics. Bicycles are fully synthetic short peptides
constrained to form two loops which stabilise their structural geometry. This constraint facilitates target binding
with high affinity and selectivity, making Bicycles attractive candidates for drug development. Bicycles are a unique
therapeutic modality combining the pharmacology usually associated with a biologic with the manufacturing and
pharmacokinetic, or PK, properties of a small molecule. The relatively large surface area presented by Bicycles
allows targets to be drugged that have historically been intractable to non-biological approaches. Bicycles are
excreted by the kidney rather than the liver and have shown no signs of immunogenicity to date, qualities which we
believe explain the molecules’ favourable toxicological profile.
We have a novel and proprietary phage display screening platform which we use to identify Bicycles in an
efficient manner. The platform initially displays linear peptides on the surface of engineered bacteriophages, or
phages, before “on-phage” cyclization with a range of small molecule scaffolds which can confer differentiated
physicochemical and structural properties. Our platform encodes quadrillions of potential Bicycles which can be
screened to identify molecules for optimisation to potential product candidates. We have used this powerful
screening technology to identify our current portfolio of candidates in oncology and intend to use it in conjunction
with our collaborators to seek to develop additional future candidates across a range of other disease areas.
Our product candidates, BT5528, BT8009, and BT1718, are each a Bicycle® Toxin Conjugate, or BTCTM.
These Bicycles are chemically attached to a toxin that when administered is cleaved from the Bicycle and kills the
tumour cells. We are evaluating BT5528, a second-generation BTC targeting Ephrin type A receptor 2, or EphA2, in
a company-sponsored Phase I/II clinical trial and BT8009, a second-generation BTC targeting Nectin-4, in a
company-sponsored Phase I/II clinical trial. In addition, our other product candidates, BT7480 and BT7455, are each
a Bicycle tumour-targeted immune cell agonist®, or Bicycle TICATM. A Bicycle TICA links immune cell receptor
binding Bicycles to tumour antigen binding Bicycles. We are evaluating BT7480, a Bicycle TICA targeting Nectin-4
and agonising CD137, in a company-sponsored Phase I/II clinical trial, and we are conducting IND-enabling studies
for BT7455, an EphA2/CD137 Bicycle TICA. BT1718 is being developed to target tumours that express Membrane
Type 1 matrix metalloproteinase, or MT1 MMP, and is being investigated for safety, tolerability and efficacy in an
ongoing Phase I/IIa clinical trial sponsored and fully funded by the Cancer Research UK Centre for Drug
Development, or Cancer Research UK. Our wholly owned discovery pipeline is focused on the oncology therapeutic
area.
Beyond our wholly owned oncology portfolio, we are collaborating with biopharmaceutical companies and
organisations in additional therapeutic areas in which we believe our proprietary Bicycle screening platform can
identify therapies to treat diseases with significant unmet medical need. Our partnered programs include
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year ended 31 December 2022
Strategic Report (continued)
collaborations in immuno-oncology, or I-O, anti-infective, cardiovascular, ophthalmology, dementia, central
nervous system, neuromuscular and respiratory indications.
The following table summarises key information about our programs:
We were founded in 2009 based on innovative science conducted by Sir Greg Winter and Professor
Christian Heinis. Sir Greg Winter is a pioneer in monoclonal antibodies and, in 2018, was awarded a Nobel Prize in
chemistry for the invention of the technology underpinning our proprietary phage display screening platform that we
use to identify Bicycles. From our founding through 31 December 2022, we have generated substantial intellectual
property, including four patent families directed to novel scaffolds and linkers, 12 patent families directed to our
platform technology, 75 composition of matter patent families directed to bicyclic peptides and related conjugates,
and 12 patent families directed to later inventions relating to such bicyclic peptides and related conjugates, such as
methods of making or using certain bicyclic peptide conjugates for treating various indications. As of 31
December 2022, our trademark portfolio consisted of 67 trademark registrations across four territories (the United
Kingdom, European Union, United States and Japan) as well as a number of pending applications for new
trademarks. The work we have conducted in developing Bicycles and our proprietary screening platform have
created substantial know-how that we believe provides us with a competitive advantage.
Our management team includes veteran executives in drug development from leading biopharmaceutical
companies including Amgen, AstraZeneca, GlaxoSmithKline, Merck, Novartis, Pfizer and Takeda. Our board of
directors and scientific advisory board include industry experts with extensive experience in drug development.
Our strategy
Our mission is to become a leading biopharmaceutical company by pioneering Bicycles as a novel
therapeutic modality to treat diseases that are inadequately addressed with existing treatment modalities.
Specifically, we seek to execute on the following strategy to maximise the value of our novel technology and
pipeline:
• Progress our most advanced internal candidates, BT5528, BT8009, and BT7480 through clinical
development. We are evaluating BT5528, a second-generation BTC targeting EphA2, in a company-
sponsored Phase I/II clinical trial, BT8009, a second-generation BTC targeting Nectin-4, in a company-
sponsored Phase I/II clinical trial, and BT7480, a Bicycle TICA targeting Nectin-4 and agonising CD137,
in a company-sponsored Phase I/II clinical trial. We intend to advance development of these candidates
across oncology indications based on target expression.
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year ended 31 December 2022
Strategic Report (continued)
• Continue IND-enabling activities for BT7455. BT7455 is a fully synthetic Bicycle TICA that contains
a Bicycle targeting EphA2 and a Bicycle targeting the costimulatory receptor CD137. BT7455 has been
shown in preclinical models to rapidly penetrate tumours, demonstrate anti-tumour activity, and induce
immune memory specific to the implanted tumour. IND-enabling activities are ongoing.
• Pursue clinical development of our discovery programs. We intend to continue our ongoing discovery
activities to screen and select promising candidates for oncology indications. For example, early I-O
discovery efforts have resulted in the identification of Bicycle TICA candidates targeting natural killer, or
NK, cells. We are also developing third generation BTCs. We are currently advancing these programs into
lead optimisation.
• Leverage our powerful proprietary screening platform and novel Bicycle modality to grow our pipeline.
Our novel and proprietary phage display screening platform allows us to rapidly and efficiently identify
potential candidates for development. We can incorporate a wide range of small molecule scaffolds into
Bicycles to increase diversity and confer differentiated physicochemical and structural properties. We have
used our powerful Bicycle screening platform to identify our current pipeline of promising BTCs and
Bicycle TICAs, and we intend to use it to develop a broader pipeline of diverse product candidates.
• Collaborate strategically with leading organisations to access enabling technology and expertise in order
to expand the application of our novel Bicycle modality to indications beyond oncology. We are
collaborating with leading biopharmaceutical companies and organisations to apply our novel Bicycle
modality to other disease areas, including, immune-oncology, or I-O, anti-infective, cardiovascular,
ophthalmology, dementia, central nervous system, neuromuscular and respiratory indications. We may
opportunistically enter into additional collaborations in the future to apply our technology to areas of unmet
medical need.
• Maximise the commercial potential of our product candidates, if approved, by either establishing our own
sales and marketing infrastructure or doing so through collaborations with others. Subject to receiving
marketing approval, we intend to pursue the commercialisation of our product candidates either by building
internal sales and marketing capabilities or doing so through opportunistic collaborations with others.
Our collaborations
We have entered into several collaborations, predominantly focused on indications beyond our internal
focus in oncology to leverage the broad applicability of Bicycles. Our strategic collaborations are based on the
ability of Bicycles to address a wide variety of targets and we are working with collaborators with deep therapeutic
expertise outside of oncology to enable us to more efficiently develop novel medicines for patients.
Ionis
On 31 December 2020, we entered into an evaluation and option agreement, or the Evaluation and Option
Agreement, with Ionis Pharmaceuticals, Inc., or Ionis, pursuant to which Ionis had the option, or the Ionis Option, to
obtain an exclusive licence to our intellectual property for the purpose of continued research, development,
manufacture and commercialisation of products within a particular application of the Company’s platform
technology. Ionis paid a non-refundable $3.0 million payment that was fully creditable against the upfront payment
to be paid upon the execution of a licence agreement.
On 9 July 2021, we and Ionis entered into a collaboration and licence agreement, or the Ionis Collaboration
Agreement, following Ionis’ exercise of the Ionis Option on 9 July 2021. Pursuant to the Ionis Collaboration
Agreement, we granted to Ionis a worldwide exclusive licence under our relevant technology to research, develop,
manufacture and commercialise products incorporating Bicycle peptides directed to the protein coded by the gene
TFRC1 (transferrin receptor), or TfR1 Bicycles, intended for the delivery of oligonucleotide compounds directed to
targets selected by Ionis for diagnostic, therapeutic, prophylactic and preventative uses in humans. Ionis will
maintain exclusivity to all available targets unless it fails to achieve specified development diligence milestone
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year ended 31 December 2022
Strategic Report (continued)
deadlines. If Ionis fails to achieve one or more development diligence milestone deadlines, we have the right to
limit exclusivity to certain specific collaboration targets, subject to the payment by Ionis of a low-single-digit
million dollar amount per target as specified in the Ionis Collaboration Agreement. Each party will be responsible
for optimisation of such TfR1 Bicycles and other research and discovery activities related to TfR1 Bicycles, as
specified by a research plan, and thereafter Ionis will be responsible for all future research, development,
manufacture and commercialisation activities. We will perform research and discovery activities including a
baseline level of effort for a period of three years for no additional consideration. The parties will negotiate a
commercially reasonable rate if additional research activities are agreed to be performed. For certain research and
discovery activities that we are responsible for performing, we may use the assistance of a contract research
organisation, or CRO. We have retained certain rights, including the right to use TfR1 Bicycles for all non-
oligonucleotide therapeutic purposes.
The activities under the Ionis Collaboration Agreement are governed by a joint steering committee, or JSC
with an equal number of representatives from us and Ionis. The JSC will oversee the performance of the research
and development activities. Upon first commercial sales of a licenced product, the JSC will have no further
responsibilities or authority under the Ionis Collaboration Agreement.
Under the Ionis Collaboration Agreement, Ionis made a non-refundable upfront payment of $31.0 million
in addition to the $3.0 million already paid under the Evaluation and Option Agreement. Additionally, Ionis is
obligated to reimburse us on a pass-through basis for expenses incurred in connection with research and discovery
activities performed by a CRO. If Ionis is at risk of failing to achieve a specified development diligence milestone
deadline, it can make up to three separate payments of a mid-single-digit million dollar amount to extend the
development diligence milestone deadlines. On a collaboration target-by-collaboration target basis, Ionis will be
required to make a low-single-digit million dollar payment upon acceptance of an investigational new drug
application, or IND, for the first product directed to such collaboration target (provided that Ionis will have a high
single-digit million dollar credit to be applied towards the IND acceptance fee for four collaboration targets, or for
exclusivity payments for certain targets if specified development diligence milestones deadlines are not achieved),
and Ionis will be required to make milestone payments upon the achievement of specified development and
regulatory milestones of up to a low double-digit million dollar amount per collaboration target. In addition, we are
also eligible to receive up to a low double-digit million dollar amount in cumulative sales milestone payments. We
are also entitled to receive tiered royalty payments on net sales at percentages in the low single digits, subject to
certain standard reductions and offsets. Royalties will be payable, on a product-by-product and country-by-country
basis, until the latest of the expiration of specified licenced patents covering such product in such country, ten years
from first commercial sale of such product in such country, or expiration of marketing exclusivity for such product
in such country.
In December 2021, we and Ionis entered into an amendment to the Ionis Collaboration Agreement, or the
Ionis Amendment. Ionis paid us $1.6 million and we agreed to perform additional research services utilising our
proprietary phage screening technology to identify and optimise new product candidates that target the TfR1
receptor. We performed additional research services for an initial six-month period, which was extended in
August 2022 for an additional three months, in exchange for consideration of $0.8 million. In October 2022, Ionis
exercised an option it had for us to perform additional research services for an additional six months in exchange for
the remaining consideration of $0.8 million.
Either party may terminate the Ionis Collaboration Agreement for the uncured material breach of the other
party or in the case of insolvency. Ionis may terminate the Ionis Collaboration Agreement for convenience on
specified notice periods depending on the development stage of the applicable target, either in its entirety or on a
target-by-target basis.
Concurrently with the execution of the Ionis Collaboration Agreement on 9 July 2021, we entered into a
share purchase agreement, or the Ionis Share Purchase Agreement, with Ionis, pursuant to which Ionis purchased
282,485 of our ordinary shares, or the Ionis Shares, at a price per share of $38.94, for an aggregate purchase price of
approximately $11.0 million. Pursuant to the terms of the Ionis Share Purchase Agreement, Ionis agreed that until 9
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year ended 31 December 2022
Strategic Report (continued)
January 2023, it would not, without our prior written consent and subject to certain conditions and exceptions,
among other things, directly or indirectly acquire additional shares of our outstanding equity securities, seek or
propose a tender or exchange offer, merger or other business combination involving us, solicit proxies or consents
with respect to any matter, or undertake other specified actions related to the potential acquisition of additional
equity interests in us. The Share Purchase Agreement also provided that, subject to limited exceptions, Ionis could
not sell any of the Ionis Shares until July 2022.
Genentech
On 21 February 2020, we entered into a Discovery Collaboration and License Agreement with Genentech,
or the Genentech Collaboration Agreement. The collaboration is focused on the discovery and development of
Bicycle peptides directed to biological targets selected by Genentech and aimed at developing up to four potential
development candidates against multiple I-O targets suitable for Genentech to advance into further development and
commercialisation.
Under the terms of the Genentech Collaboration Agreement, we received a $30.0 million upfront, non-
refundable payment. The initial discovery and optimisation activities are focused on utilising our phage screening
technology to identify product candidates aimed at two I-O targets, or Genentech Collaboration Programs, which
may also include additional discovery and optimisation of Bicycles as a targeting element for each Genentech
Collaboration Program, or each a Targeting Arm. Genentech also had the option to nominate up to two additional I-
O targets, or each an Expansion Option, which may also include an additional Targeting Arm for each Expansion
Option, as additional Genentech Collaboration Programs. Genentech exercised the Expansion Options in
October 2021 and June 2022, respectively. Genentech paid us an expansion fee of $10.0 million for each Expansion
Option. Genentech also has rights, under certain limited circumstances, to select an alternative target to be the
subject of a Genentech Collaboration Program, in some cases subject to payment of an additional target selection
fee.
If Genentech elects for us to perform discovery and optimisation services for certain Targeting Arms, we
will be entitled to receive an additional advance payment for the additional research services. Genentech exercised
its right to select a Targeting Arm for one of the initial Genentech Collaboration Programs at the inception of the
arrangement and for the first Expansion Option in October 2021, which entitled us to additional payments of $1.0
million each. If a Targeting Arm achieves specified criteria in accordance with the research plan, Genentech will be
required to pay a further specified amount in the low single digit millions for each such Targeting Arm as
consideration for the additional services to be provided.
We granted to Genentech a non-exclusive research licence under our intellectual property solely to enable
Genentech to perform any activities under the agreement. The activities under the Genentech Collaboration
Agreement are governed by a joint research committee, or JRC, with representatives from each of Bicycle and
Genentech. The JRC will oversee, review and recommend direction of each Genentech Collaboration Program,
achievement of development criteria, and variations of or modifications to the research plans.
After we perform the initial discovery and optimisation activities in accordance with an agreed research
plan and achieves specified criteria, Genentech will have the option to have us perform initial pre-clinical
development and optimisation activities in exchange for an additional specified milestone payment in the mid-single
digit millions for each Genentech Collaboration Program, or the LSR Go Option. Upon completion of such initial
pre-clinical development and optimisation activities for each Genentech Collaboration Program, Genentech will
have the option to obtain an exclusive licence to exploit any compound developed under such Genentech
Collaboration Program in exchange for an additional specified payment in the mid to high single digit millions for
each of the initial two Genentech Collaboration Programs and each of the two Expansion Option Genentech
Collaboration Programs, or the Dev Go Option.
On a Genentech Collaboration Program by Genentech Collaboration Program basis, if Genentech elects to
obtain exclusive development and commercialisation rights and pays the applicable LSR Go Option and Dev Go
Option fees, Genentech will be required to make milestone payments to us upon the achievement of specified
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year ended 31 December 2022
Strategic Report (continued)
development, regulatory, and initial commercialisation milestones for products arising from each collaboration
program, totalling up to $200.0 million. Specifically, we are eligible for additional development milestones totalling
up to $65.0 million, as well as regulatory milestones of up to $135.0 million for each collaboration program. In
addition, we are eligible to receive up to $200.0 million in sales milestone payments on a Genentech Collaboration
Program-by-Genentech Collaboration Program basis. In addition, to the extent any of the product candidates
covered by the licences conveyed to Genentech are commercialised, we would be entitled to receive tiered royalty
payments on net sales at percentages ranging from the mid-single to low double-digits, subject to certain standard
reductions and offsets. Royalties will be payable, on a product by product and country by country basis, until the
later of the expiration of specified licenced patents covering such product in such country, or ten years from first
commercial sale of such product in such country.
Dementia Discovery Fund
In May 2019, we entered into a collaboration with the Dementia Discovery Fund, or DDF, to use Bicycle
technology for the discovery and development of novel therapeutics for dementia. DDF is a specialised venture
capital fund focused on discovering and developing novel therapies for dementia. In October 2019, the collaboration
with DDF was expanded to include Oxford University’s Oxford Drug Discovery Institute (ODDI). Under the terms
of the agreement, Bicycle and DDF will collaborate to identify Bicycles that bind to clinically validated dementia
targets. ODDI will then profile these Bicycles in a range of target-specific and disease-focused assays to assess their
therapeutic potential. If promising lead compounds are identified, DDF, ODDI and Bicycle will establish a
jointly-owned new company to advance the compounds through further development towards commercialisation.
The jointly-owned company will receive a royalty and milestone-bearing assignment and licence of intellectual
property from Bicycle for this purpose.
Cancer Research UK
BT1718
In December 2016, we entered into a clinical trial and licence agreement with Cancer Research UK and
Cancer Research Technology Ltd., a wholly owned subsidiary of Cancer Research UK that Cancer Research UK’s
commercial activities operate through, or the Cancer Research UK Agreement. Pursuant to the agreement, as
amended in March 2017 and June 2018, Cancer Research UK Centre for Drug Development will sponsor and fund a
Phase I/IIa clinical trial of our product candidate, BT1718, in patients with advanced solid tumours.
Cancer Research UK is responsible for designing, preparing, carrying out and sponsoring the clinical trial
at its cost. We are responsible for supplying agreed quantities of GMP materials for the study, the supply of which
has been completed. In the event that additional quantities are needed, we will provide Cancer Research UK with all
reasonable assistance to complete the arrangements necessary for the generation and supply of such additional GMP
materials but Cancer Research UK will be responsible for supplying and paying for such additional quantities of
GMP materials.
We granted to Cancer Research UK a licence to our intellectual property in order to design, prepare for,
sponsor, and carry out the clinical trial. We retain the right to continue the development of BT1718 during the
clinical trial. Upon the completion of the Phase I/IIa clinical study, we have the right to obtain a licence to the results
of the clinical trial upon the payment of a milestone, in cash and ordinary shares, with a combined value in the mid-
six digit dollar amount. If such licence is not acquired, or if it is acquired and the licence is terminated and we
decide to abandon development of all products that deliver cytotoxic payloads to the MT1 target antigen, Cancer
Research Technology Limited may elect to receive an assignment and exclusive licence to develop and
commercialise the product on a revenue sharing basis (in which case we will receive tiered royalties of 70% to 90%
of the net revenue depending on the stage of development when the licence is granted) less certain costs, as defined
by the agreement. The Cancer Research UK Agreement contains additional future milestone payments upon the
achievement of development, regulatory and commercial milestones, payable in cash and shares, with an aggregate
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Strategic Report (continued)
total value of $50.9 million, as well as royalty payments based on a single digit percentage on net sales of products
developed.
The Cancer Research UK Agreement can be terminated by either party upon an insolvency event, material
breach of the terms of the contract, or upon a change in control (and the new controlling entity develops, sells or
manufactures tobacco products or generates the majority of its profits from tobacco products or is an affiliate of such
party). Cancer Research UK may terminate the arrangement for safety reasons or if it determines that the objectives
of the clinical trial will not be met. We were obligated to reimburse Cancer Research UK for certain costs if the
Cancer Research UK agreement was terminated by Cancer Research UK prior to the completion of the dose
escalation (Phase I) part of the clinical trial for an insolvency event of, or material breach by, us or upon termination
for safety reasons or if Cancer Research UK determined that the objectives of the clinical trial would not be met,
however, these reimbursement obligations expired unexercised upon the completion of the Phase I portion of the
clinical trial in 2020. If we are subject to a change in control and the new controlling entity develops, sells or
manufactures tobacco products or generates the majority of its profits from tobacco products or is an affiliate of such
party prior to the last cycle of treatment under the Phase IIa clinical trial, we will reimburse Cancer Research UK in
full for all costs paid or committed in connection with the clinical trial and no further licence payments, where
applicable, shall be due. In such case, Cancer Research UK will not be obliged to grant a licence to us in respect of
the results of the clinical trial and we will assign or grant to CRTL an exclusive licence to develop and
commercialise the product without CRTL being required to make any payment to us.
BT7401
In December 2019, we entered into a clinical trial and licence agreement with Cancer Research Technology
Limited and Cancer Research UK. Pursuant to the agreement, Cancer Research UK Centre for Drug Development
will fund and sponsor development of BT7401 from current preclinical studies through the completion of a Phase IIa
trial in patients with advanced solid tumours.
We granted to Cancer Research UK a licence to our intellectual property in order for Cancer Research UK
to design, prepare for, sponsor, and carry out the clinical trial and all necessary preclinical activities to support the
trial. We retain the right to continue the development of BT7401 during the clinical trial. Upon the completion of the
Phase I/IIa clinical study, we have the right to obtain a licence to the results of the clinical trial upon the payment of
a milestone, in cash and ordinary shares, with a combined value in the mid six-digit dollar amount. If such licence is
not acquired, or if it is acquired and the licence is terminated and we decide to abandon development of all products
that contain BT7401 or all the pharmaceutically active parts of BT7401, we will assign or grant to Cancer Research
Technology Limited an exclusive licence to develop and commercialise the product on a revenue sharing basis (in
which case we will receive tiered royalties of 55% to 80% of the net revenue depending on the stage of development
when the licence is granted) less certain costs, as defined in the agreement. The BT7401 Cancer Research UK
agreement contains additional future milestone payments upon the achievement of development, regulatory and
commercial milestones, payable in cash, with an aggregate total value of up to $60.3 million for each licenced
product, as well as royalty payments based on a single digit percentage on net sales of products developed, and
sublicence royalties to the Cancer Research UK in the low double digit percentage of sublicence income depending
on the stage of development when the licence is granted.
The BT7401 Cancer Research UK agreement can be terminated by either party upon an insolvency event,
material breach of the terms of the contract, or upon a change in control (and the new controlling entity generates its
revenue from the sale of tobacco products), or upon written notice by either party prior to the last cycle of treatment
has been completed under the clinical trial. If the study is terminated by us prior to the filing of a clinical trial
authorization, or by Cancer Research UK for an insolvency event or a material breach by us prior to the start of a
clinical trial, we will reimburse Cancer Research UK for certain costs paid or committed prior to the start of the
clinical trial. In such case where we are acquired by an entity that generates its revenue from the sale of tobacco
products, Cancer Research UK will not be obliged to grant a licence to us in respect of the results of the clinical trial
and we will assign or grant to Cancer Research Technology Limited an exclusive licence to develop and
commercialise the product without Cancer Research Technology Limited being required to make any payment to us.
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Strategic Report (continued)
AstraZeneca
In November 2016, we entered into a research collaboration agreement with AstraZeneca AB, or the
AstraZeneca Collaboration Agreement. The collaboration is focused on the research and development of Bicycle
peptides that bind to an undisclosed number of biological targets for the treatment of respiratory, cardiovascular and
metabolic diseases. After discovery and initial optimisation of such Bicycle peptides, AstraZeneca is responsible for
all research and development, including lead optimisation and drug candidate selection. AstraZeneca receives
development, commercialisation and manufacturing licence rights with regard to any selected drug candidate(s).
Under the AstraZeneca Collaboration Agreement, Bicycle performed research activities, under mutually
agreed upon research plans. The research plans include two discrete parts, on a research program by research
program basis: (i) the Bicycle Research Term, which is focused on the generation of Bicycle peptide libraries using
our peptide drug discovery platform, to be screened against selected biological targets, with the goal of identifying
compounds that meet agreed criteria set by the parties, and (ii) the AZ Research Term, during which AstraZeneca
may continue research activities with the goal of identifying compounds that satisfy the relevant pharmacological
and pharmaceutical criteria for clinical testing. Each research program is to continue for an initial period of three
years, referred to as the research term, including one year for the Bicycle Research Term and two for the AZ
Research Term. AstraZeneca may extend the research term for each research program by twelve months (or fifteen
months, if needed to complete certain toxicology studies). The research term for a specific program can be shorter if
it is ceased due to a screening failure, a futility determination, or abandonment by AstraZeneca.
Under the terms of the AstraZeneca Collaboration Agreement, we granted to AstraZeneca the right and
licence (with the right to sublicence) to certain background, foreground and platform intellectual property, for the
duration of the agreement, to the extent reasonably necessary or useful for AstraZeneca to conduct the activities that
are assigned to it in the applicable research plan or that are reasonably necessary or useful or the purpose of
researching, developing or exploiting resulting compounds and products. We have agreed not to, directly or
indirectly, by ourselves or in collaboration with others, screen the Bicycle platform for compounds that bind to a
target that is the subject of the AstraZeneca collaboration or otherwise perform any work related to or disclose such
a target until the earlier of the tenth anniversary of the date on which such target was selected or the dosing of the
first patient in the first Phase III clinical trial for a product that modulates such collaboration target.
AstraZeneca receives development and commercialisation licences associated with each designated drug
candidate, and owes a milestone fee of $8.0 million for the first drug candidate selected from each research program.
In addition, AstraZeneca is required to make certain other milestone payments to us upon the achievement of
specified development, regulatory and commercial milestones. For each research program, we are eligible to
receive, in addition to the milestone fee described above, up to $162.0 million in development, regulatory and
commercial milestones on a research program by research program basis, for a total of up to $170.0 million in
milestone payments per research program. In addition, to the extent any of the drug candidates covered by the
licences conveyed to AstraZeneca are commercialised, we would be entitled to receive tiered royalty payments of
mid-single digits based on a percentage of net sales. Royalty payments are subject to certain reductions, including in
certain countries where AstraZeneca faces generic competition.
Either party may terminate the AstraZeneca Collaboration Agreement if the other party has materially
breached or defaulted in the performance of any of its material obligations and such breach or default continues after
the specified cure period. In the event of a breach, the AstraZeneca Collaboration Agreement may be terminated in
its entirety, or, if the breach is limited to a country or countries, with respect to the country or countries to which the
breach applies. Either party may terminate the AstraZeneca Collaboration Agreement in the event of the
commencement of any proceeding in or for bankruptcy, insolvency, dissolution or winding up by or against the
other party that is not dismissed or otherwise disposed of within a specified time period. AstraZeneca may terminate
the AstraZeneca Collaboration Agreement, entirely or on a licenced product by licenced product or country by
country basis, for convenience.
9
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Under the AstraZeneca Collaboration Agreement, AstraZeneca was granted an option to nominate
additional targets on the same contractual terms as the initial targets. In May 2018, AstraZeneca made an irrevocable
election to exercise the additional target option, giving AstraZeneca the option to designate additional targets, for
$5.0 million that was paid by AstraZeneca to us in January 2019. In January 2022, AstraZeneca elected to extend the
AZ Research Term for the fourth target by 12 months. As of 31 December 2022, the fourth target research program
is in the AZ Research Term, and the remainder of the AstraZeneca collaboration programs have been terminated.
Oxurion
In August 2013, we entered into a research collaboration and licence agreement, or the Oxurion
Collaboration Agreement, with Oxurion NV, or Oxurion, which agreement was amended in November 2017. Under
the Oxurion Collaboration Agreement, we were responsible for identifying Bicycle peptides related to the
collaboration target, human plasma kallikrein, for use in various ophthalmic indications. Oxurion is responsible for
further development and product commercialisation after the defined research screening is performed by us.
THR-149 was selected as a development compound under the Oxurion collaboration agreement. We granted certain
worldwide intellectual property rights to Oxurion for the development, manufacture and commercialisation of
licenced compounds associated with plasma kallikrein. The Oxurion collaboration agreement provides for certain
milestone payments to us upon the achievement of specified research, development, regulatory and commercial
milestones. More specifically, for each collaboration compound, we are eligible to receive up to €8.3 million in
research and development milestone payments, from which we have received €3.8 million as of 31 December 2022,
in connection with the development of THR-149, and up to €16.5 million in regulatory milestone payments (e.g., €5
million for granting of first regulatory approval in either the United States or the European Union for the first
indication). In addition, to the extent any of the collaboration products covered by the licences granted to Oxurion
are commercialised, we would be entitled to receive tiered royalty payments of mid-single digits based on
a percentage of net sales. Royalty payments are subject to certain reductions. Also, if Oxurion grants a sublicence to
a third party for rights to the program for non-ophthalmic use prior to the filing of an IND, we would be entitled to
receive payments in the double digits (no higher than first quartile) based on a percentage of non-royalty
sublicencing income. If Oxurion grants a sublicence to a third party for rights to the program for non-ophthalmic use
after the filing of an IND, we would be entitled to receive payments of mid-single digits to low teen-digits.
Either party may terminate the Oxurion Collaboration Agreement if the other party has breached any of its
material obligations and such breach continues after the specified cure period. Either party may terminate the
Oxurion Collaboration Agreement in the event of the commencement of any proceeding in or for bankruptcy,
insolvency, dissolution or winding up by or against the other party. Oxurion may terminate the Oxurion
Collaboration Agreement for convenience. We may terminate the Oxurion Collaboration Agreement if Oxurion
challenges the validity of any licenced patents or opposes the grant of a licenced patent.
Founder Royalty Arrangements
We have entered into two royalty agreements with our founders, Christian Heinis, John Tite, and Sir Greg
Winter, and our initial investors, Atlas Venture Fund VIII LP, Novartis Bioventures LTD. Pursuant to the first
royalty agreement, we are obligated to pay an aggregate royalty percentage in the low single digits on net sales
arising from products licenced under the Oxurion collaboration agreement. Pursuant to the second royalty
agreement, we are obligated to pay an aggregate royalty percentage in the low single digits on net sales arising from
products licenced under the AstraZeneca collaboration agreement.
Review of business performance and future developments
Since our inception, we have devoted substantially all of our resources to developing our Bicycle platform
and our product candidates, BT5528, BT8009, BT1718, BT7480, BT7455 and BT7401, conducting research and
development of our product candidates and preclinical programs, raising capital and providing general and
administrative support for our operations. To date, we have financed our operations primarily with proceeds from
the sale of our American Depositary Shares, or ADSs, ordinary shares, and convertible preferred shares, proceeds
10
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
received from upfront payments, research and development payments, and development milestone payments from
our collaboration agreements with Ionis Pharmaceuticals, Inc, or Ionis, Genentech Inc., or Genentech, the Dementia
Discovery Fund, or DDF, Sanofi (formerly Bioverativ Inc.), AstraZeneca AB, or AstraZeneca and Oxurion NV, or
Oxurion; and borrowings pursuant to our debt facility with Hercules Capital, Inc., or Hercules. From our inception
in 2009 through 31 December 2022, we have received gross proceeds of $564.4 million from the sale of ADSs,
ordinary shares and convertible preferred shares, including the proceeds from our initial public offering, follow-on
offering and at-the-market, or ATM, offering program; and $135.2 million of cash payments under our collaboration
revenue arrangements, including $46.6 million from Ionis, $54.0 million from Genentech, $10.3 million from
AstraZeneca, and $6.6 million from Oxurion; and borrowings of $30.0 million pursuant to our Loan and Security
Agreement, as amended, or the Loan Agreement, with Hercules. We do not have any products approved for sale and
have not generated any revenue from product sales.
Since our inception, we have incurred significant operating losses. Our ability to generate product revenue
sufficient to achieve profitability will depend on the successful development and eventual commercialisation of one
or more of our product candidates. Our net losses for the year ended 31 December 2022 were $139.8 million
(31 December 2021: $77.3 million) and we had net assets at book value of $270.9 million (31 December 2021:
$346.1 million). These losses have resulted primarily from costs incurred in connection with research and
development activities and general and administrative costs associated with our operations. We expect to continue to
incur significant expenses and increasing operating losses for the foreseeable future.
We anticipate that our expenses and capital requirements will increase substantially in connection with our
ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates
and, if any product candidates are approved, pursue the commercialisation of such product candidates by building
internal sales and marketing capabilities. We expect that our expenses and capital requirements will increase
substantially if and as we:
•
•
•
•
•
•
•
•
•
•
continue our development of our product candidates, including conducting future clinical trials of BT5528,
BT8009, BT7480 and BT1718;
progress the preclinical and clinical development of BT7455 and BT7401;
seek to identify and develop additional product candidates;
develop the necessary processes, controls and manufacturing data to obtain marketing approval for our
product candidates and to support manufacturing to commercial scale;
develop, maintain, expand and protect our intellectual property portfolio;
seek marketing approvals for our product candidates that successfully complete clinical trials, if any;
hire and retain additional personnel, such as non-clinical, clinical, pharmacovigilance, quality assurance,
regulatory affairs, manufacturing, distribution, legal, compliance, medical affairs, commercial and
scientific personnel;
acquire or in-licence other products and technologies;
expand our infrastructure and facilities to accommodate our growing employee base, including adding
equipment and infrastructure to support our research and development; and
add operational, financial and management information systems and personnel, including personnel to
support our research and development programs, and any future commercialisation efforts and our
operations as a public company.
We do not expect to generate revenue from product sales unless and until we successfully complete
development and obtain marketing approval for one or more of our product candidates, which we expect will take
11
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
many years and is subject to significant uncertainty. We have no commercial-scale manufacturing facilities of our
own, and all of our manufacturing activities have been and are planned to be contracted out to third parties.
Additionally, we currently utilise third-party contract research organisations, or CROs, to carry out our clinical
development activities. If we seek to obtain marketing approval for any of our product candidates from which we
obtain promising results in clinical development, we expect to incur significant commercialisation expenses as we
prepare for product sales, marketing, manufacturing, and distribution.
As a result, we will need substantial additional funding to support our continuing operations and pursue our
growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to
finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances,
charitable and governmental grants, monetisation transactions or licencing arrangements. We may be unable to raise
additional funds or enter into such other agreements or arrangements when needed on favourable terms, or at all. If
we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale
back, or discontinue the development and commercialisation of one or more of our product candidates. Both the
ongoing COVID-19 pandemic and the Russia-Ukraine war have resulted in a significant disruption of global
financial markets and contributed to a general global economic slowdown. If the disruption persists and deepens,
whether as a result these events or otherwise, we could experience an inability to access additional capital.
Because of the numerous risks and uncertainties associated with product development, we are unable to
predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.
Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are
unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels
and be forced to reduce or terminate our operations.
Our cash balance as at 31 December 2022 was $339.2 million (31 December 2021: $438.7 million). We
believe that our existing cash will enable us to fund our operating expenses and capital expenditure requirements for
the foreseeable future at least 12 months from the date of approval of these financial statements.
Key performance indicators (‘KPIs’)
We do not consider traditional financial measures to be key performance indicators at this stage of
development of our business. However, management closely monitors the cash position and our research and
development expenses. In addition, we assess our performance through the clinical advancement of our programs.
During the year ended 31 December 2022, we achieved significant advancement of our clinical pipeline with the
first patients dosed in BT5528 and BT8009 Phase II expansion cohorts and BT5528 Phase I dose escalation results
in patients with advanced solid tumours demonstrated anti-tumour activity and differentiated tolerability. In
addition, there was further expansion of the Genentech immuno-oncology collaboration.
Financial risk management
The directors have concluded that the management of price risk and liquidity risk are not material for the
assessment of the assets, liabilities, financial position and loss of the Company.
Currency risk
The Company raises funds in U.S. dollars, and pays for goods and services in a variety of currencies but
mainly the British pound sterling and U.S. dollar. The Company mitigates this risk by also holding cash in these two
currencies. The Company does not use derivatives to manage this risk.
Cash flow
The Company finances its operations primarily with proceeds from the sale of our ADSs, proceeds received
from upfront payments, research and development payments, and development milestone payments from our
collaboration agreements and borrowings pursuant to our debt facility with Hercules. The Board monitors the level
12
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
of cash and cash equivalents on a regular basis and cash is placed in deposit accounts to earn a return whilst enabling
the cash to be available to meet the Company’s day to day needs.
Credit Risk
The Company has receivables and cash from both its operating and financing activities. The Company
ensures that invoices are raised when performance conditions are met and that the payment terms with the customer
are adhered to. Cash is maintained in accounts of reputable financial institutions with high quality credit ratings.
Aggregation risk is mitigated as the cash is maintained in accounts of multiple financial institutions.
Interest risk
The Company’s outstanding indebtedness with Hercules bears interest at an annual rate equal to 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%. We currently do not engage in any interest rate hedging activity, and we have no intention of doing so in the
foreseeable future.
Environmental matters
The Company’s activities have minimal environmental impact as the Company does not have an internal
manufacturing facility and the emissions from its office and laboratory sites in the UK and the U.S. are not
considered significant. The Company complies with all applicable environmental laws and regulations and currently
does not consider it has a significant environmental footprint due to the size and nature of its operations.
Following listing of the Parent Company’s ADSs on NASDAQ in May 2019, the Company is required
under English law to measure and report its greenhouse gas emissions in accordance with the provisions of the
Regulations. The sources of emissions relate solely to the electricity and gas purchased by our premises in the UK
and U.S., the costs of which are included within these consolidated financial statements. Management has used the
most recent evidence or estimates provided by its energy suppliers to generate the disclosure of emissions. These
include the purchase of electricity, heat, steam or cooling. Standard emissions factors from Defra’s GHG
Conversion Factor Repository were applied to estimate emissions. The Company considers that the intensity ratio of
tonnes of carbon dioxide per full-time equivalent employee is a suitable metric for its operations. The annual
quantity of emissions for the Company for the year ending 31 December 2022 was 467 tonnes (year ending 31
December 2021: 383 tonnes) with an intensity ratio of 2.4 tonnes (2021: 3.8 tonnes) based on the average number of
employees in the year of 193 (2021: 101), as determined based on our electricity and gas consumption provided by
our suppliers as converted to emissions by publicly available emission converters. Approximately 79% (2021: 55%)
of these emissions were in the UK. The Company’s estimated electricity usage for the year is 2,211,000 kWh (2021:
1,307,000 kWh). The Company, in preparing these details, considers ways to minimise indirect areas of emissions
and where practical enables remote working and also promotes online conferencing facilities to reduce business
travel. These are all Scope 2 emissions which are indirect emissions related to the generation of the electricity
consumed and purchased by the Company. We have used the most recent evidence or estimates provided by our
energy supply partners to generate our disclosure of emissions for the period. Scope 1 emissions are direct emissions
produced from the activities owned or controlled by the Company. The Company does not record these and
considers these insignificant. The Company has elected not to include the voluntary disclosure for Scope 3
emissions.
Employee, social, community and human rights matters
The Company places considerable value on the involvement of its employees. Regular meetings are held
with employees to discuss the operations and progress of the business and employees are encouraged to become
involved in the success of the Company through equity incentive schemes (see note 11 to the financial statements).
We believe our employees are our most valuable assets to our company and are key to achieving our goals.
We focus our efforts on attracting and retaining a diverse, high performing workforce through offering competitive
13
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
and fair compensation packages that are based on robust industry market data. Our total compensation package
includes competitive base pay, annual bonus, equity participation, and a broad range of benefits, including
retirement planning, healthcare and insurance benefits, paid time off, paid family and medical leave, flexible
working, and various health and wellness programs. We also run recognition programs that highlight employees
who exhibit exceptional performance and demonstrate our company values. We ensure that our compensation
programs are designed to be equitable and fair, and routinely analyse data to ensure that our programs are
administered on a fair and equitable basis.
The Company maintains and operates pursuant to a Code of Conduct and Business Ethics. This sets out the
Company’s approach to ensure that our corporate values are maintained throughout our global business. The
Company also has an anti-corruption and anti-bribery policy. The Code of Conduct and Business Ethics, anti-
corruption and anti-bribery policies apply to all employees of the Company and certain designated consultants, who
are required to comply with this policy.
We invest heavily in our employees’ personal and professional development. We offer a vast array of
learning and development opportunities including online and classroom training and learning, mentoring and
coaching programs, training academies and management and leadership development programs.
We are committed to developing the next generation of talent and providing our employees with
opportunity, and have active internship partnerships with local universities in both the United States and United
Kingdom.
The Company endeavours to impact positively on the community in which it operates. The Company does
not, at present, have a specific policy on human rights. However, we have several policies that promote the
principles of human rights. We will respect the human rights of all our employees, including:
•
•
•
•
provision of a safe, clean working environment;
ensuring employees are free from discrimination and coercion;
not using child or forced labour; and
respecting the rights of privacy and protecting access and use of employee personal information.
We also have a policy on equal opportunities and on anti-bullying and harassment.
The Company is fully committed to the elimination of unlawful and unfair discrimination and values the
differences that a diverse workforce brings to the organisation. The Company endeavours to not discriminate
because of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race
(which includes colour, nationality and ethnic or national origins), religion or belief, sex or sexual orientation.
We believe a diverse workforce is critical to our success and we are fundamentally committed to creating
and maintaining a work environment in which employees are treated fairly, with dignity, decency, respect and in
accordance with all applicable laws. We understand that varied perspectives lead to the best ideas and outcomes. We
believe that by creating a workplace where every individual can feel welcome and valued, we will be better able to
achieve our corporate objectives. All employees must adhere to a code of business conduct and ethics and our
employee handbook, which combined, define standards for appropriate behavior and are annually trained to help
prevent, identify, report, and stop any type of discrimination and harassment.
We have formed a cross-functional Diversity, Equity, and Inclusion (“DEI”) network that continues to
develop DEI initiatives.
14
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Employee gender diversity
Our recruitment, hiring, development, training, compensation, and advancement is based on qualifications,
performance, skills, and experience. While acknowledging the benefits of diversity, individual appointments are
made irrespective of personal characteristics such as race, ethnicity, disability, gender, sexual orientation, religion,
or age. A breakdown of employment statistics as of 31 December 2021 and 2022 is as follows:
31 December 2021 (Number of Directors and Employees)
Position
Directors
Key Management
Vice President/Director
Other Employees
Total Directors and Employees
31 December 2022 (Number of Directors and Employees)
Position
Directors
Key Management
Vice President/Director
Other Employees
Total Directors and Employees
Male
Female Total
7
2
5
5
21
34
65
—
9
49
60
5
30
83
125
Male
Female Total
5
7
34
62
108
2
—
31
101
134
7
7
65
163
242
Notes: Directors are directors of the Parent Company; For 2021, key management includes the Chief Financial
Officer, Chief Scientific Officer, Chief Business Officer, Chief Operating Officer, and Chief Medical Officer; For
2022, key management includes the Chief Financial Officer, Chief Scientific Officer, Chief Business Officer, Chief
Operating Officer, Chief Technology Officer, Chief Medical Officer and General Counsel. In both 2021 and 2022,
the Chief Executive Officer was a director of the Parent Company and, accordingly, was included in the directors
totals above. The increase in the number of employees year over year is primarily related to expanded operations to
support the continued progress of the Company’s pipeline.
Principal risks and uncertainties
Financial
We are a clinical-stage biopharmaceutical company. We have not commercialised any products or
generated any revenues from the sale of products, and absent the realisation of sufficient revenues from product
sales, we may never attain profitability in the future. We have a history of significant operating losses (year ended
31 December 2022: $163.0 million; year ended 31 December 2021: $86.9 million) and we do not expect to generate
revenue or profitability that is necessary to finance our operations in the short-term. We have devoted substantially
all of our financial resources and efforts to research and development, including preclinical studies and our clinical
trials. Our ability to become and remain profitable depends on our ability to generate revenue. Generating product
revenue will depend on our or our any of collaborators’ ability to obtain marketing approval for, and successfully
commercialise, one or more of our product candidates Our failure to become and remain profitable could depress the
market price of our ADSs and could impair our ability to raise capital, expand our business or continue our
operations.
15
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very
time-consuming, expensive and uncertain process that takes years to complete. We will be required to expend
significant funds in order to advance the development of the product candidates in our pipeline, as well as any other
product candidates we may seek to develop. Furthermore, inflation rates, particularly in the U.S. and the UK, have
increased recently. Increased inflation may result in increased operating costs (including labor and employee benefit
costs) and may affect our operating budgets. We cannot be certain that additional funding will be available on
acceptable terms, or at all. Our failure to raise funding as and when needed would have a negative impact on our
financial condition and our ability to pursue our business strategy. There is a risk that should we fail to obtain
additional funding on the terms or timescales we require, we may be required to delay, limit, reduce or terminate our
product development or future commercialisation efforts or grant rights to develop and market product candidates
that we would otherwise prefer to develop and market ourselves.
Clinical
Our product candidates will need to undergo preclinical and clinical trials that are time consuming and
expensive and can be subject to extensive delays. We may not be able to identify, recruit and enrol a sufficient
number of patients, or those with the required or desired characteristics, to complete our clinical trials in a timely
manner. Our product candidates may cause undesirable side effects or have other properties when used alone or in
combination with other approved products or investigational new drugs that could halt their clinical development
and/or prevent their marketing approval and/or limit their commercial potential. The timeline for recruiting patients,
conducting trials and obtaining regulatory approval of our product candidates may be delayed, which could result in
increased costs, delays in advancing our product candidates, delays in testing the effectiveness of our product
candidates or termination of the clinical trials altogether. The outcome of preclinical studies and early clinical trials
may not be predictive of the success of later clinical trials, and interim results of clinical trials do not necessarily
predict success in the results of completed clinical trials. Preclinical and clinical data are often susceptible to varying
interpretations and analyses and there is no certainty that the results obtained in clinical trials of our existing clinical
candidates will be sufficient to enable progression of those candidates through our clinical programmes or the
obtaining of regulatory approval or marketing authorisation. If we fail to receive positive results in clinical trials of
our product candidates, the development timeline and regulatory approval and commercialisation prospects for our
most advanced product candidates, and, correspondingly, our business and financial prospects, would be negatively
impacted.
Manufacturing
We do not own or operate manufacturing facilities for the production of clinical or commercial supplies of
the product candidates that we are developing or evaluating and our strategy is to outsource all manufacturing of our
product candidates and products to third parties. In order to conduct clinical trials of product candidates, we will
need to have them manufactured in potentially large quantities. Our third-party manufacturers may be unable to
successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective
manner, or at all. In addition, quality issues may arise during scale-up activities and at other times. Our use of new
third-party manufacturers increases the risk of delays in production or insufficient supplies of our product candidates
as we transfer our manufacturing technology to these manufacturers and as they gain experience manufacturing our
product candidates. Even after a third party manufacturer has gained significant experience in manufacturing our
product candidates or even if we believe we have succeeded in optimising the manufacturing process, there can be
no assurance that such manufacturer will produce sufficient quantities of our product candidates in a timely manner
or continuously over time, or at all. While we have engaged several third-party vendors to provide clinical and non-
clinical supplies and fill-finish services, we do not currently have any agreements with third party manufacturers for
long-term commercial supplies. Our product candidates may be delayed if we need to change the manufacturing
process used by a third party, subsequently resulting in further delays from a regulatory authority reviewing the new
manufacturing process before it may be used. Reliance on third party manufacturers entails risks, including the
reliance on third parties for manufacturing process development, regulatory compliance and quality assurance,
limitations on supply availability resulting from capacity and scheduling constraints of third parties, the possible
breach of manufacturing agreements by third parties because of factors beyond our control and the possible
16
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
termination or non-renewal of the manufacturing agreement by the third party at a time that is costly or inconvenient
to us.
Third parties
For certain product candidates, we depend, or will depend, on development and commercialisation
collaborators to develop and conduct clinical trials with, obtain regulatory approvals for, and if approved, market
and sell product candidates. If such collaborators fail to perform as expected the potential for us to generate future
revenue from such product candidates would be significantly reduced and our business would be harmed. We cannot
provide assurance that our collaborators will be successful or that they will devote sufficient resources to the
development or commercialisation of the products. If our current or future collaboration and commercialisation
partners do not perform in the manner we expect or fail to fulfil their responsibilities in a timely manner, if our
agreements with them terminate or if the quality or accuracy of the clinical data they obtain is compromised, the
clinical development, regulatory approval and commercialisation efforts related to their and our product candidates
and products could be delayed or terminated and it could become necessary for us to assume the responsibility at our
own expense for the clinical development of such product candidates.
We rely on third parties, including independent clinical investigators and CROs to conduct and sponsor
some of the clinical trials of our product candidates. Any failure by a third party to meet its obligations with respect
to the clinical development of our product candidates may delay or impair our ability to obtain regulatory approval
for our product candidates.
Commercialisation
We are substantially dependent on the success of our internal development programs and of our product
candidates from our BTC and Bicycle TICA programs which may not successfully complete clinical trials, receive
regulatory approval or be successfully commercialised. In addition, we are at a very early stage in our development
efforts and our product candidates represent a new category of medicines and may be subject to heightened
regulatory scrutiny until they are established as a therapeutic modality. Our clinical trials may not be conducted as
planned or completed on schedule, if at all and, even if completed on schedule, there remains no guarantee that the
results seen in any clinical trials will be sufficient to progress to the next stage of any clinical approval or ultimately
to the obtaining of a marketing approval for any of our programs.
Our estimates of the potential patient population which can be treated may be inaccurate affecting the
amount of revenue obtainable for any product. Likewise, the amount of revenue that can be obtained in relation to
our programs may be impacted by the nature of pricing reimbursement coverage or schemes available or in place in
any specific country and the continuation of such coverage and schemes. If reimbursement is not available, or is
available only at limited levels, we may not be able to successfully commercialise our product candidates, even if
approved. We currently have no marketing sales or distribution infrastructure with respect to our product candidates
and we will have to establish a marketing capability prior to bringing any product candidate to market or outsource
this function to a third party. Even if we are successful in obtaining regulatory approval, the commercial success of
our product candidates will depend upon the degree of market acceptance by physicians, patients, payors and others
in the medical community.
In addition, we face significant competition, and our competitors may develop and market products that are
more effective, safer or less expensive than our product candidates, which may negatively impact our commercial
opportunities.
Regulation
Our product candidates are highly regulated and the regulatory process is lengthy, time-consuming and
expensive. We may experience significant delays in obtaining regulatory approval or be required to make changes to
our clinical programmes or product candidates by regulatory authorities. Even if we do receive regulatory approval
to market our product candidates, any such approval may be subject to limitations on the indicated uses or patient
17
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
populations for which we may market the product. If we are successful in obtaining regulatory approvals in one
country, this does not mean that we will be successful in other countries and further clinical programmes may be
required to obtain required regulatory approvals in such other countries. In addition, failure to successfully validate,
develop and obtain regulatory approvals for companion diagnostics could harm our drug development strategy.
Should we obtain marketing approvals for any current or future product candidates we will be subject to
ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense
and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated
problems with our products. Changes in regulations, statutes or the interpretation of existing regulations could also
impact our business in the future. Any failure to comply with regulatory requirements at any stage in the
development of our product candidates could result, among other things, in restrictions on the labelling, distribution,
marketing or manufacturing of the product, suspension or withdrawal of marketing approvals and fines, restitution
or disgorgement of profits or revenues. We are also subject to regulation as a company both in the UK and the U.S.
including in relation to anti-bribery and other anti-corruption laws, as well as export control laws, import and
customs laws, trade and economic sanctions laws and other laws governing our operations. In addition, because we
have a U.S. subsidiary and substantial operations in the U.S., we are subject to U.S. laws that regulate non-U.S.
investments in U.S. businesses and access by non-U.S. persons to technology developed and produced in the U.S.
We are also subject to numerous environmental, health and safety laws and regulations.
Litigation
The use of our product candidates in clinical trials and the sale of any products for which we obtain
marketing approval expose us to the risk of product liability claims from patients, healthcare providers,
pharmaceutical companies and others. We believe our product liability insurance coverage is sufficient in light of
our current commercial and clinical programs; however, we may not be able to maintain insurance coverage at a
reasonable cost or in sufficient amounts to protect us against losses due to liability.
In November 2020 the Company entered into a Settlement and Licence Agreement with Pepscan Systems
B.V. (“Pepscan”) regarding the Company’s use of Pepscan’s CLIPS peptide technology. The companies agreed to
settle all intellectual property disputes worldwide. Under the terms of the settlement, the Company has been granted
a licence to use CLIPS peptide technology in the development of its product candidates BT1718 and THR-149. The
Company paid €3 million upfront, paid €1 million on the first anniversary of the date of settlement in
November 2021, and will make potential additional payments to Pepscan based on achievement of specified clinical,
regulatory and commercial milestones.
Intellectual Property
Our ability to compete effectively depends, in part, on our ability to maintain the proprietary nature of our
technology and manufacturing processes. We rely on research, manufacturing and other know-how, patents, trade
secrets, licence agreements and contractual provisions to establish our intellectual property rights and protect our
products and product candidates. We may become involved in lawsuits to protect or enforce our patents and other
intellectual property rights, which could be expensive, time-consuming and unsuccessful. Even if they are
unchallenged, our patents and patent applications may not provide us with any meaningful protection or prevent
competitors from designing around our patent claims by developing similar or alternative technologies or
therapeutics in a non-infringing manner. Third parties may claim that our activities or products infringe upon their
intellectual property which will adversely affect our operations and prove costly and time-consuming to defend
against and could ultimately prevent or delay us from developing or commercialising our product candidates.
Further, our products may infringe the intellectual property rights of others and we may be unable to secure
necessary licences to enable us to continue to manufacture or sell our products. We may also be subject to claims
that former employees, collaborators or other third parties have an ownership interest in our patents or other
intellectual property.
18
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Cybersecurity
Cyber-attacks or other failures in telecommunications or information technology systems and deficiency in
our, or those of third parties upon which we rely, cybersecurity could result in information theft, data corruption and
significant disruption of our business operations. We utilise information technology, systems and networks to
process, transmit and store electronic information in connection with our business activities. As the use of digital
technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorised access to
computer systems and networks, have increased in frequency and sophistication. These threats pose a risk to the
security of our systems and networks, the confidentiality and the availability and integrity of our data. Similarly,
there can be no assurance that our collaborators, CROs, third-party logistics providers, distributors and other
contractors and consultants will be successful in protecting our clinical and other data that is stored on their systems.
Any cyber-attack or destruction or loss of data could have material effects on our business and prospects. In
addition, we may suffer reputational harm or face litigation or adverse regulatory action as a result of cyber-attacks
or other data security breaches and may incur significant additional expense to respond appropriately to such
breaches and to implement further data protection measures.
Employees
We rely on the ongoing involvement of principal members of our executive team and key employees. The
loss of the services of one or more of our executive team and key employees might impede the achievement of our
research, development and commercialisation objectives. Furthermore, replacing executive officers or other key
employees may be difficult and may take extended time because of the limited number of individuals in our industry
with the breadth of skills and experience required to develop, gain marketing approval of and commercialise
products successfully.
Our focus on the development of our product candidates requires us to optimise cash utilisation and to
manage and operate our business in a highly efficient manner. We cannot provide assurance that we will be able to
hire or retain adequate staffing levels to develop our product candidates or run our operations or to accomplish all of
our objectives.
Russia and Ukraine conflict
The Company’s operations have not been directly affected by the conflict between Russia and Ukraine. It
does not have any significant suppliers or ongoing clinical trials based in those nations or any of the neighbouring
nations.
Brexit and the Regulatory Framework in the United Kingdom
On 23 June 2016, the electorate in the United Kingdom voted in favour of leaving the European Union,
commonly referred to as Brexit, and the United Kingdom officially withdrew from the European Union on
31 January 2020. Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the
European Union, the United Kingdom was subject to a transition period until 31 December 2020 or the Transition
Period, during which European Union rules continued to apply. A trade and cooperation agreement, or the Trade and
Cooperation Agreement, which outlines the future trading relationship between the United Kingdom and the
European Union, was agreed upon in December 2020 and formally entered into force on 1 May 2021.
Great Britain is no longer covered by the European Union’s procedures for the grant of marketing
authorisations, though Northern Ireland will be covered by the centralised authorisation procedure and can be
covered under the decentralised or mutual recognition procedures. A separate marketing authorisation will be
required to market drugs in Great Britain. However, for three years from 1 January 2021, the United Kingdom’s
regulator, the Medicines & Healthcare products Regulatory Agency, or MHRA, may adopt decisions taken by the
European Commission on the approval of new marketing authorisations through the centralised procedure, and the
MHRA will have regard to marketing authorisations approved in a country in the EEA (although in both cases a
19
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
marketing authorisation will only be granted if any Great Britain-specific requirements are met).Various national
procedures are now available to place a drug on the market in the United Kingdom, Great Britain or Northern
Ireland, with the main national procedure having a maximum timeframe of 150 days (excluding time taken to
provide any further information or data required). The data exclusivity periods in the United Kingdom are currently
in line with those in the European Union, but the Trade and Cooperation Agreement provides that the periods for
both data and market exclusivity are to be determined by domestic law, and so there could be divergence in the
future.
Orphan designation in Great Britain following Brexit is, unlike in the European Union, not available pre-
marketing authorisation. Applications for orphan designation are made at the same time as an application for a
marketing authorisation. The criteria to be granted an orphan drug designation are essentially identical to those in
the European Union but based on the prevalence of the condition in Great Britain. It is therefore possible that
conditions that were or would have been designated as orphan conditions in Great Britain prior to the end of the
Transition Period are or would no longer be and that conditions that were not or would not have been designated as
orphan conditions in the European Union will be designated as such in Great Britain.
The European Union’s regulatory environment for clinical trials has been harmonised as part of the Clinical
Trials Regulation, which entered into application on 31 January 2022. It is currently unclear as to what extent the
United Kingdom will seek to align its regulations with the European Union.
COVID-19
The Company continues to closely monitor the ongoing COVID-19 pandemic and evolves its business
continuity plans and response strategy as necessary.
Section 172 Statement
This statement aligns to the section 172 statement requirements contained in section 414CZA of the
Companies Act 2006 (the “Companies Act”). This statement focuses on how the directors of the Parent Company
have had regard during the year to the matters set out in section 172(1)(a) to (f) of the Companies Act when
performing their duties by incorporating information from other areas of the Annual Report to avoid unnecessary
duplication. The Board considers that the statement focuses on those risks and opportunities that were of strategic
importance to the Parent Company consistent with the size and complexity of the Company.
In the performance of its duty to promote the success of the Parent Company for the benefit of its members
as a whole, the Board has regard to a number of matters, including listening to and considering the views of
shareholders and holders of ADSs representing the Parent Company’s ordinary shares and the Parent Company’s
other key stakeholders to build trust and ensure it fully understands the potential impacts of the decisions it makes
for our stakeholders, the environment and the communities in which the Parent Company operates. Further details
are set out below under “Stakeholder Engagement”.
The Directors are aware of their duty under s172 of the Companies Act 2006 to act in the way which they
consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members
as a whole and, in doing so, to have regard (amongst other matters) to:
•
•
•
•
•
the likely consequences of any decision in the long-term;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
20
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
•
the need to act fairly as between members of the Company.
The governance framework within which the Board operates is set out in the corporate governance
guidelines adopted by the Board, a copy of which is available in the Investors section on the Company’s website. In
addition, the Parent Company maintains and operates pursuant to a Code of Conduct and Business Ethics which sets
out the Company’s approach to ensuring that our corporate values are maintained throughout our global business.
The Board fosters effective stakeholder relationships in order to align with the Parent Company’s strategy
and is responsible for seeing meaningful engagement with stakeholders. The Board’s endeavours to implement
various mechanisms to enable management and the Board to understand and consider stakeholder views as part of
their oversight and decision making. Throughout the year, the Directors recognised their responsibility to act in good
faith to promote the success of the Parent Company for the benefit of investors, while also considering the impact of
their decisions on wider stakeholders and other factors relevant to the decision being made. Clear communication
and proactive engagement to understand the issues and factors which are most important to stakeholders is
fundamental to this. The Board acknowledges that every decision made will not necessarily result in a positive
outcome for all stakeholders. By considering our corporate values, together with our strategic priorities, the Board
aims to ensure that the decisions made are consistent and intended to promote the Parent Company’s long-term
success.
Stakeholder Engagement
Our key stakeholders include our workforce, suppliers, lenders, investors and our wider communities. We
actively engage with, and listen to, our stakeholders to understand their views, seek opportunities to learn and
improve.
We are committed to effective engagement with all of our stakeholders. Our success depends on this
engagement. Direct engagement by the Board with its stakeholders, where possible, enables the Directors to deepen
their understanding of how the Company’s purpose, values and strategy are embedded across the organisation
globally. Where direct engagement is not possible, engagement takes place at the operational level, and the Directors
are kept fully informed by senior management of all matters on a regular basis for use in the Board’s decision-
making.
21
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Stakeholder Group
Why we engage
Engagement and influence on
decision making
More information
Our Workforce
We believe that our people
are our most important and
valuable asset. Successful
performance can be
delivered only through a
high level of engagement
where our people share the
Bicycle vision and values
and feel supported by our
culture and code of
conduct. Maintaining a
content and engaged
workforce is key to attract
and retain top talent.
Strategic report
— Business overview
(page 2)
— Our strategy (page 3)
— Employee, social,
community and
human rights matters
(page 13)
— Employee gender
diversity (page 15)
Remuneration report
— Statement from the
Chair of the
Compensation
Committee (page 27)
— Employment
conditions (page 40)
The Board and senior
management are committed to
enhancing engagement with
employees at all levels to
ensure we communicate
information on decisions
taken, emerging
developments, innovations and
future growth of the business.
The Board recognises the
importance of using a variety
of communication platforms
and activities to maximise
employee engagement. While
the Board cannot directly
consult with employees on all
decisions it makes, it apprises
itself of their opinions in a
variety of ways. An example
of this includes obtaining
feedback through regular
employee focus groups and
opinion surveys which provide
the Board with honest
feedback that the Board uses
to inform and drive business
improvements.
The Board understands that
any decisions it makes may
impact employees’
performance, engagement and
work satisfaction. The Board
is mindful that any decisions it
makes, as well as the manner
in which they are made, will
inform the culture of the
business. The Board seeks to
lead by example in order to
ensure that high standards of
business conduct are
maintained by its employees.
22
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Stakeholder Group
Why we engage
Our Collaboration
Partners
We are focused on building
deep, long-term
relationships with our
collaboration partners
which we ultimately
believe is the key to the
success of these
partnerships.
More information
Strategic report
— Business overview
(page 2)
— Our strategy (page 3)
— Our collaborations
(page 4)
— Principal risks and
uncertainties (page
15)
Engagement and influence on
decision making
The Company works closely
with its key collaborators,
including Ionis, Genentech,
DDF, Astrazeneca, Oxurion,
and Cancer Research UK in
accordance with the terms of
its agreements with them.
The Board receives regular
feedback from management on
the progress of the
collaborations and encourages
the management to focus on
building long term
relationships with our
collaboration partners.
The Board is responsible for
approving material business
transactions and any key
strategic changes. Prior to
making such decisions the
Board considers the potential
impact on its collaboration
partners.
23
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Stakeholder Group
Why we engage
Engagement and influence on
decision making
More information
Our Suppliers
We recognise the
importance of establishing
and building strong
working relationships with
all our suppliers.
Working sustainably,
respecting human rights,
and operating with the
highest standards of ethical
conduct and professional
integrity improve long-term
business performance. We
are dedicated to these
values and require our
suppliers to share our
commitment.
Strategic report
— Business overview
(page 2)
— Our strategy (page 3)
— Our collaborations
(page 4)
— Principal risks and
uncertainties
(page 15)
— Manufacturing / Third
Parties /
Commercialisation
(page 16)
The Board approves and
implements policies based on
ethical and legal minimum
standards, which it requires the
business to adhere to when
engaging suppliers. As we
continue to progress in our
size and stage of development,
we intend to continue to
implement procedures to
ensure that our key suppliers
also commit to these
standards, including in relation
to anti-bribery and corruption,
anti-money laundering, human
rights and modern slavery and
various other matters.
The Company engages
regularly with its key business
partners, including third party
manufacturers and suppliers,
independent clinical
investigators and CROs, to
ensure that they all have
appropriate standards and
policies in place, are
financially robust and capable
of delivering their services.
24
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Stakeholder Group
Why we engage
Our Investors
We are a public company
with ADSs listed on
NASDAQ. Without our
investors, we cannot grow
or invest for future success.
We engage with existing
and potential investors to
ensure that we provide
sufficient, meaningful and
relevant information which
they can use to make
informed investment
decisions.
We strictly adhere to
market regulations and
regularly consult our
advisors to ensure we are in
compliance with such
regulations at all times.
Our Wider
Communities
Our global operations are
an important part of the
communities in which they
are located. We have
environmental
responsibilities to the world
in which we live, and
societal responsibilities to
the communities where we
live, work and operate.
Engagement and influence on
decision making
Our Board and senior
management have regular
interaction with investors, to
understand their interests and
any concerns they may have.
This feeds into the Board’s
strategic discussions and
opportunities, ensuring
alignment over strategy,
operational performance,
remuneration policy, capital
structure and future
expectations of our investors.
More information
Strategic report
— Business overview
(page 2)
Remuneration report
— Shareholder views
(page 40)
Bicycle website
— Corporate Governance
Guidelines
Examples of investor
engagement by the Board and
senior management includes
Board attendance at the
Annual General Meeting,
NASDAQ announcements and
press releases, Board
attendance at conferences,
regular reports from the
Investor Relations
team, direct engagement with
investors in relation to
remuneration policy,
communications such as
quarterly trading results,
annual reports and notices of
general meetings, and making
available detailed information
about Bicycle and matters of
interest to investors on our
website
It is important to the Board
that the Group gives back to
the communities in which it
operates. The Board considers
these communities in
determining the corporate
culture it wishes to promote.
We endeavour to have a
positive impact on the
community in which it
operates and aim to provide a
safe, clean working
environment for employees.
25
Strategic report
— Environmental
matters (page 13)
Bicycle Therapeutics plc
year ended 31 December 2022
Strategic Report (continued)
Below are examples of how the Board took into consideration its stakeholders’ interests when making
principal decisions during the year.
Relocation of Cambridge UK Site
In 2022 the Company moved to a larger premises at Blocks A & B, Portway Building, Granta Park, Great
Abington, Cambridge, CB21 6GS. In considering entering into the lease in December 2021, the Board considered
the interests of its stakeholders, and in particular, its investors and employees. At all stages of the move process and
fitting out of the new premises, employees were consulted and were fully involved in the process.
COVID-19 response
The COVID-19 pandemic has presented unique challenges to all stakeholders. The Board has ensured that
all stakeholder groups have been engaged with and supported throughout the pandemic and, as restrictions have
been lifted during 2022, has continued to support all employees.
Cash and cash equivalents
Having sufficient cash and cash equivalents to fund the Company’s future plans is essential. The Board
monitors the Company’s cash balance and cash flows.
In considering the cash flows, the Board considered the interests of its stakeholders, and in particular, its
investors, collaborators and employees to enable the Company to advance our clinical and pre-clinical oncology
pipeline.
This report was approved by the board of directors on 12 April 2023 and signed on its behalf by:
Kevin Lee
Director
24 April 2023
26
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report
Annual Statement from the Chair of the Compensation Committee
Dear Shareholders,
As the Chair of the Compensation Committee (the “Committee”), I am pleased to present, on behalf of the
board of directors (the “Board”) of Bicycle Therapeutics plc (the “Parent Company” and, together with its
subsidiaries, the “Company”, “Bicycle”, “our”, “we” or “us”), the Directors’ Remuneration Report for the year
ended 31 December 2022 (the “Remuneration Report”), which is the Company’s fourth such report following the
Parent Company’s initial public offering (the “IPO”) and listing on The Nasdaq Stock Market (“NASDAQ”) on
23 May 2019.
The Remuneration Report will be subject to an advisory vote, and the Directors’ Remuneration Policy (the
“Remuneration Policy”) will be subject to a binding vote, at the forthcoming Annual General Meeting to be held on
13 June 2023 (the “AGM”). If approved, it is intended that the Remuneration Policy will take effect from the date of
approval and apply for a maximum period of three years (or until a revised policy is approved by shareholders).
There are no other matters that the Parent Company requires approval for under Chapter 4A of Part 10 of the
Companies Act 2006. Following the IPO in May 2019, this will be the Parent Company’s fourth AGM as a listed
company.
Introduction
The Remuneration Policy has not substantially changed from that approved by shareholders in 2020. The
focus of the minor changes which have been made is to ensure the Remuneration Policy remains sufficiently flexible
for the future. We believe that the proposed Remuneration Policy provides an appropriate framework to meet our
objectives to establish a broad range of remuneration programs and policies, that both compensate and incentivise
directors and senior executives to deliver growth in a long-term and sustainable manner, and that are aligned
strategically with our shareholders to appropriately position the Company as a global biopharmaceutical company.
As we move into 2023 and beyond, the Committee’s role will be to continue to ensure that directors and
senior executives are appropriately compensated and incentivised to deliver growth in a long-term and sustainable
manner, and to continue to establishing remuneration programs that are grounded in market practice, effective at
driving proper executive behaviours, clearly link pay and performance and are cost-efficient overall to shareholders.
Key considerations guiding our Remuneration Policy are described in more detail on page 29 of the Remuneration
Report.
The global marketplace for talent
We are a biopharmaceutical company headquartered in the U.K. and with operations in both the U.K. and
the U.S. Given that the market for experienced directors and biopharmaceutical executive talent, particularly in the
U.S., is very competitive, the Committee references the U.S. market as the leading indicator for executive and
director remuneration levels and practices. This will help attract and retain directors and motivate the superior
executive talent needed to successfully manage the Company’s complex global operations. Being consistent in this
market view of the U.S. as the primary benchmark for remuneration practices for our Executive and Non-Executive
Directors is key for the Company as it builds its global operations in a manner designed to deliver sustainable long-
term growth and shareholder value.
In taking any actions, the Committee is mindful of the general U.K. compensation framework, including
investor bodies’ guidance and the U.K. Corporate Governance Code, and has considered these when determining the
remuneration programs and policies where it believes they best serve the long-term interests of shareholders.
Pay for performance
We believe that a significant portion of the remuneration of our Executive Director should be based on
achieving objectives designed to create inherent value in the Company, and ultimately on achieving value creation
for our shareholders. In line with this belief, the compensation of our Executive Director includes short term
27
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
incentives based on corporate and personal goals. Similarly, all directors receive equity incentives designed to
reward long-term value creation for our shareholders.
2022 remuneration outcome
As outlined above, a core principle of Bicycle’s Remuneration Policy is the link between pay and
performance. In the financial year 2022 (being the year ended 31 December 2022), the annual bonus paid to Kevin
Lee, our Chief Executive Officer (“CEO”), was determined by the Board following an assessment of the corporate
and personal objectives achieved in the year. Kevin Lee received a bonus of 131% of his target bonus, which
resulted in a total bonus pay out of 85% of salary earned for the financial year 2022. The bonus was paid in cash in
February 2023. This outcome was based on achievements versus goals in the following key areas: Corporate
Development, Clinical Development, Financial and Organisational Development. In considering the above
outcomes, the Committee assessed whether the outcomes reflected the underlying performance of the Company and
concluded that no discretionary adjustments were required. Kevin Lee also received two equity-based awards on 3
January 2022, being (i) an option grant over 100,000 shares with an exercise price of $60.87, and (ii) an RSU grant
over 50,000 shares.
Some of the key highlights of the 2022 year included:
• Further expansion of Genentech immuno-oncology collaboration;
• First patient dosed in BT8009 Phase II expansion cohorts; and
• BT5528 Phase I dose escalation results in patients with advanced solid tumours demonstrated anti-tumour
activity and differentiated tolerability.
Please see the remainder of the Remuneration Report for additional details on this bonus outcome and the
pay for performance linkage.
Conclusion
The Committee believes the proposals put forth in this report will properly motivate our directors and
senior executives to deliver sustainable growth and shareholder value over the long term and do so in a responsible
and cost-efficient manner.
I hope that you find the information in this report helpful and I look forward to your support at our AGM.
Yours sincerely,
Veronica Jordan
Chair of the Compensation Committee
24 April 2023
28
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Remuneration Policy
This part of the Remuneration Report sets out the Remuneration Policy and has been prepared in
accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013, the Companies (Miscellaneous Reporting) Regulations 2018, and the Companies (Directors’
Remuneration Policy and Directors’ Remuneration Report) Regulations 2019.
The Remuneration Policy will be put forward for approval by shareholders in a binding vote at the
forthcoming AGM on 13 June 2023. If approved, it is intended that the Remuneration Policy will take effect from
the date of approval and apply for a maximum period of three years (or until a revised policy is approved by
shareholders).
The Remuneration Policy has not substantially changed from that approved by shareholders on 29
June 2020. The focus of the minor changes which have been made is to ensure the Remuneration Policy remains
sufficiently flexible for the future.
The scenario charts reflect the intended application of the new policy (assuming it is approved) for the 2023
financial year. A copy of the policy previously approved by shareholders is in the Annual Report and Financial
Statements for the Year Ended 31 December 2019, which is available on the Company’s website.
Key considerations when determining the Remuneration Policy
The Committee designed the Remuneration Policy with a number of specific objectives in mind. The
Remuneration Policy should:
•
•
•
•
•
•
attract, retain and motivate high calibre senior management and focus them on the delivery of the
Company’s strategic and business objectives;
encourage a corporate culture that promotes the highest level of integrity, teamwork and ethical standards;
be competitive against appropriate market benchmarks (being predominantly the U.S. biotech sector) and
have a strong link to performance, providing the ability to earn above-market rewards for strong
performance;
be simple and understandable, both internally and externally;
encourage increased equity ownership to motivate executives in the overall interests of shareholders, the
Company, employees and customers; and
take due account of good governance and promote the long-term success of the Company.
In seeking to achieve the above objectives, the Committee is mindful of the views of a broad range of
stakeholders in the business and accordingly takes account of a number of factors when setting remuneration
including: market conditions; pay and benefits in relevant comparator organisations; terms and conditions of
employment across the Company; the Company’s risk appetite; the expectations of institutional shareholders; and
any specific feedback received from shareholders and other stakeholders.
Remuneration Policy table
The table in the following pages sets out, for each element of pay, a summary of how remuneration is
structured and how it supports the Company’s strategy.
29
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Executive Directors
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Not performance related.
Base salary
To recruit and retain
Executive Directors of the
highest calibre who are
capable of delivering the
Company’s strategic
objectives, reflecting the
individual’s experience
and role within the
Company.
Base salary is designed to
provide an appropriate
level of fixed income to
avoid any over-reliance on
variable pay elements that
could encourage excessive
risk taking.
Salaries are normally
reviewed annually, and
changes are generally
effective from 1
January each year.
The annual salary review
for Executive Directors
takes a number of factors
into consideration,
including:
• business
performance;
• salary increases
awarded to the overall
employee population;
• skills and experience
of the individual over
time;
• scope of the
individual’s
responsibilities;
• changes in the size
and complexity of the
Company;
• market
competitiveness
assessed by periodic
benchmarking; and
•
the underlying rate of
inflation.
If salary is set in USD but
paid to a U.K.-based
Executive Director it will
be converted and paid in
GBP pursuant to the terms
of the applicable service
agreement or company
policy (as amended from
time to time).
Whilst there is no
prescribed formulaic
maximum, any increases
will take into account
prevailing market and
economic conditions and
the approach to employee
pay throughout the
organisation.
In assessing base salaries,
the Committee takes into
account market data, but
does not target a
specific percentile when
setting pay levels, rather
considers it as one factor
along with several others
including Company and
individual performance,
tenure, past experiences
and expected future
contributions. Base salary
increases are awarded at
the discretion of the
Committee; however,
salary increases will
normally be no greater
than the general increase
awarded to the wider
workforce, in percentage
of salary terms unless the
salary is meaningfully
below peers.
In addition, a higher
increase may be made
where an individual had
been appointed to a new
role at below-market
salary while gaining
experience. Subsequent
demonstration of strong
performance may result in
a salary increase that is
higher than that awarded to
the wider workforce.
30
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Benefits
Reasonable benefits-in-
kind are provided to
support Executive
Directors in carrying out
their duties and assist with
retention and recruitment.
The Company aims to
Not applicable
Not performance related.
offer benefits that are in
line with market practice.
The main benefits
currently provided include
private health insurance,
long-term disability,
critical illness and death in
service.
Under certain
circumstances the
Company may offer
relocation allowances or
assistance. Expatriate
benefits may be offered
where relevant including
fees for tax advice
associated with completion
of international tax returns
and, if relevant, any gross-
up for tax.
Travel, accommodation
and any reasonable
business-related expenses
(including tax thereon)
may be reimbursed.
Executive Directors may
become eligible for other
benefits in future where
the Committee deems it
appropriate. Where
additional benefits are
introduced for the wider
workforce, Executive
Directors may participate
on broadly similar terms.
Executive Directors are
eligible to participate in
the Company’s all-
employee share plans on
the same terms as other
employees in the
jurisdiction in which they
are engaged.
31
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Pensions
The Company aims to
provide a contribution
towards life in retirement.
Not performance related.
Executive Directors are
eligible to receive
employer contributions to
the Company’s Group
Personal Pension Scheme
or a salary supplement in
lieu of pension benefits, or
a mixture of both.
Up to 12% of salary per
annum for Executive
Directors, C-level
executives and senior
managers. The rest of the
workforce is up to 10%.
Annual Performance Bonus
The annual bonus scheme
rewards the achievement
of stretching objectives
that support the
Company’s corporate
goals and delivery of the
business strategy.
Bonuses are determined
based on annual corporate
and personal performance
measures and targets that
are agreed between the
Executive Directors and
the Board (following the
Committee’s
recommendation) for each
financial year.
Bonuses may be paid in
cash or in equity awards.
Payment of bonuses is
conditional on the
Executive Directors being
in employment (and not
having served notice of
termination). A deferral
period may be applied to
bonuses.
The Committee may, in
appropriate circumstances,
override the formulaic
outcome to amend the
bonus payout or provide
for an additional bonus
payment, should this not,
in the view of the
Committee, reflect overall
business performance or
individual contribution.
The maximum target
bonus opportunity for
Executive Directors is
80% of salary, with a
maximum bonus
opportunity of up to two
times the target
opportunity.
Performance measures are
determined by the
Committee each year and
may vary to ensure that
they promote the
Company’s business
strategy and shareholder
value.
For threshold performance,
no more than 50% of
target bonus may be
payable.
The performance measures
may include financial,
strategic and/or personal
objectives.
For 2023, the target bonus
opportunity for Executive
Directors will be no more
than 65% of salary, with a
maximum bonus
opportunity of up to 150%
of the target opportunity.
In addition there is an
opportunity based on
personal objectives to
receive up to an additional
50% of the total bonus
outcome (i.e. a maximum
total of 146% of salary).
The Committee may, in
appropriate circumstances,
waive the maximum target
bonus opportunity for
Executive Directors where
an additional bonus payout
is made to reflect overall
business performance or
individual contribution.
The Committee may alter
the bonus outcome (up or
down) if it considers that
the pay-out derived from a
formula is inconsistent
with the Company’s
overall performance,
taking account of any
factors it considers
relevant. This will help
ensure that payments
reflect overall Company
performance during the
period.
The Committee may, in
appropriate circumstances,
disapply any performance
measures or award a bonus
without such performance
measures, should they not,
in the view of the
Committee, reflect overall
business performance or
individual contribution.
32
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
2019 Share Option Plan (“SOP”)
No new options will be
granted under the SOP.
There is no defined
Performance conditions
The SOP is designed to
incentivise the successful
execution of business
strategy over the longer
term and provide long-
term retention.
Facilitates share ownership
to provide further
alignment with
shareholders.
Awards will typically be
granted annually, in the
form of options although
may also be granted more
or less frequently.
Options are typically
subject to vesting over a
four-year period, with 25%
of the award vesting on the
first anniversary of the
grant, and the remainder
vesting in equal monthly
instalments thereafter. The
Committee may vary the
vesting schedule of options
as it considers appropriate.
The Committee may
unilaterally modify the
terms of equity awards, in
particular to reprice
underwater options to
provide for a lower
exercise price.
The Committee has
discretion to decide
whether and to what extent
any deferral or holding
period applies to options or
to the shares acquired on
the exercise of options.
maximum opportunity
under the SOP. However,
the Committee will
generally work within the
benchmarking guidelines
provided by our
compensation consultants.
We seek to establish
equity-based remuneration
competitive to that offered
by a set of comparable
companies with whom we
may compete for talent.
may apply to awards. Such
conditions may be
strategic objectives which
may include milestones
events, financial, strategic
and/or personal objectives.
Share options are granted
with an exercise price no
less than the fair market
value of the shares on the
date of grant. Accordingly,
share options will only
have value to the extent
the Company’s share price
appreciates following the
date of grant.
Any performance
conditions set will be
designed to incentivise
performance in support of
the Company’s strategy
and business objectives.
The Committee has
flexibility to vary the mix
of measures or introduce
new measures for each
subsequent award taking
into account business
priorities at the time of
grant.
The Committee may
amend, relax or waive
performance conditions if
it considers that they have
become unfair or
impractical. This will help
ensure that vesting reflects
overall Company
performance during the
period.
Options vest in full on a
change of control.
33
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
2020 Equity Incentive Plan (“EIP”) (or any supplemental or successor equity plan)
The EIP is designed to
incentivise the successful
execution of business
strategy over the longer
term and provide long-
term retention.
Facilitates share ownership
to provide further
alignment with
shareholders.
Awards may be granted in
the form of options, share
appreciation rights,
restricted shares, restricted
share units or such other
form as may be permitted
under the EIP or by any
other equity incentive plan
operated by the Company
from time to time.
There is no defined
Performance conditions
maximum opportunity
under the EIP. However,
the Committee will
generally work within the
benchmarking guidelines
provided by our
compensation consultants.
We seek to establish
equity-based remuneration
competitive to that offered
by a set of comparable
companies with whom we
may compete for talent.
may apply to awards. Such
conditions may be
strategic objectives which
may include milestones
events, financial, strategic
and/or personal objectives.
Any performance
conditions set will be
designed to incentivise
performance in support of
the Company’s strategy
and business objectives.
The Committee has
flexibility to vary the mix
of measures or introduce
new measures for each
subsequent award taking
into account business
priorities at the time of
grant.
The Committee may
amend, relax or waive
performance conditions if
it considers that they have
become unfair or
impractical. This will help
ensure that vesting reflects
overall Company
performance during the
period. Awards vest in full
on a change of control.
Awards will typically be
granted annually to
continuing employees,
although may also be
granted more or less
frequently.
Awards are typically
subject to vesting over a
four-year period, with 25%
of the award vesting on the
first anniversary of the
grant, and the remainder
vesting either in
equal monthly or quarterly
instalments thereafter. The
Committee may vary the
vesting schedule of awards
as it considers appropriate.
The Committee has
discretion to decide
whether and to what extent
any deferral or holding
period applies to awards or
to the shares acquired
following the vesting of
awards.
The Committee may
unilaterally modify the
terms of share options, in
particular to reprice
underwater options to
provide for a lower
exercise price.
34
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Chair and Non-Executive Directors
Maximum opportunity
Performance metrics
Non-Executive Directors receive an
When reviewing fee
Not performance
Purpose and link to strategy Operation
Fees and benefits
To attract Non-
Executive Directors
who have a broad range
of experience and skills
to provide independent
judgement on issues of
strategy, performance,
resources and standards
of conduct.
related.
levels, account is taken
of market movements in
the fees of Non-
Executive Directors,
Board Committee
responsibilities and
ongoing time
commitments, as well
as the underlying rate of
inflation.
Actual fee levels are
disclosed in the
Directors’
Remuneration Report
for the relevant
financial year.
annual retainer paid in cash,
comprising a base fee plus
additional fees for Committee
Chairpersonship or membership.
Such fees are set based on peer
group comparator data.
Non-Executive Directors who
participate and serve on any
membership committee or advisory
board of or for the Company may
also receive a retainer paid in cash
annually or for each meeting
attended. Such fees are set based on
peer group comparator data.
The Chair’s fee is reviewed
annually by the Committee (without
the Chair present). Fee levels for
the Non-Executive Directors are
determined by directors upon the
recommendation of the Committee.
When reviewing fee levels, account
is taken of market movements in
fee levels, Board committee
responsibilities, ongoing time
commitments and the general
economic environment.
In exceptional circumstances, if
there is a temporary yet material
increase in the time commitments
for Non-Executive Directors, the
Board may pay additional fees to
recognise that additional workload.
35
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Purpose and link to strategy
Operation
Fees and Benefits (continued)
Maximum opportunity
Performance metrics
Non-Executive Directors ordinarily
do not participate in any pension,
bonus or performance-based share
incentive plans. Travel,
accommodation and other business-
related expenses incurred in carrying
out the role as well as fees for tax
advice associated with completion of
international tax returns will be paid
by the Company including, if
relevant, any gross-up for tax.
Tax equalisation benefits may be
provided to Non-Executive Directors
who are required to relocate or
become tax resident in a new
jurisdiction.
Non-Executive Director fees are
generally denominated and paid in
USD but may be denominated and/or
paid in GBP, USD, or a combination
depending on the personal situation
of each Non-Executive Director. Any
currency conversions are calculated
in accordance with the applicable
Company procedure from time to
time.
Non-Executive Director fees in
respect of those Non-Executive
Directors who are appointed by an
investor (or group of investors) in the
Parent Company may be paid to those
investor(s) on behalf of the relevant
Non-Executive Director.
Non-Executive Director fees are
payable in arrears in twelve monthly
instalments, subject to deduction of
applicable income tax or national
insurance which the Company is
required by law to deduct and any
other statutory deductions, provided
that the amount of such payment shall
be prorated for any portion of such
month during which the Non-
Executive Director was not serving.
36
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Operation
Maximum opportunity
Performance metrics
There is no maximum
award level for equity
awards to Non-
Executive Directors.
Not performance
related.
Awards vest in full on a
change of control.
Purpose and link to strategy
Equity Awards
To facilitate share
ownership and provide
alignment with
shareholders.
The size of the equity
awards is determined by
the full Board, upon
recommendation of the
Compensation
Committee.
When reviewing award
levels, account is taken
of market movements in
equity awards, Board
committee
responsibilities,
ongoing time
commitments and the
general economic
conditions.
Non-Executive Directors may
receive equity awards under the EIP
(or options, share appreciation
rights, restricted shares, restricted
share units or such other form as
may be permitted by any other
equity incentive plan operated by
the Company from time to time).
Non-Executive Directors will
generally receive an initial equity
award upon appointment or
election. Initial equity awards
normally vest over a period of
three years from the date of
appointment, subject generally to
continued service.
In addition, Non-Executive
Directors may be granted awards
annually with such time-based
vesting terms as the Committee
may determine. If a new Non-
Executive Director joins the Board
following the date of grant of an
annual grant in any calendar year,
such Non-Executive Director will
be granted a pro rata portion of the
next annual grant, based on the time
between his or her appointment and
the date of such annual grant.
The Committee may, in its sole
discretion, provide for deferred
settlement of RSUs awarded to a
Non-Executive Director.
Additional grants may be made
during a year of appropriate in the
circumstances.
The Committee may unilaterally
modify the terms of equity awards,
in particular to reprice underwater
options to provide for a lower
exercise price.
37
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Notes to the policy table
Legacy arrangements
For the duration of this Remuneration Policy, the Company will honour any commitments made in respect
of current or former directors before the date on which either: (i) the Remuneration Policy becomes effective; or
(ii) an individual becomes a director, even when not consistent with the Remuneration Policy set out in this report or
prevailing at the time such commitment is fulfilled, in each case subject to the terms of any prior policy in place at
the time such awards or commitments were granted or made, if applicable. For the avoidance of doubt, all
outstanding historic awards that were granted in connection with, or prior to, listing on Nasdaq and/or under the
SOP remain eligible to vest based on their original or modified terms.
Payments may be made in respect of existing awards under the SOP and the Committee may exercise any
discretions available to it in connection with such awards in accordance with the rules of the SOP and relevant
award documentation. Options granted under the SOP vest in full on a change of control.
Payments may be made in respect of consultancy services provided by Pierre Legault pursuant to a
consulting agreement entered into between Stone Sunny Isles, Inc., and Stone Atlanta Estates LLC, the successor-in-
interest to Stone Sunny Isles, Inc., and Bicycle Therapeutics Inc. dated 15 March 2019 pursuant to which it has
agreed to make available Pierre Legault to provide advisory services to us as requested by our Board of Directors or
our chief executive officer. In consideration for the provision of the advisory services, we pay a monthly retainer of
£11,459 during the year ended 31 December 2022 (2021: £10,416), which is billed in U.S. dollars. Pierre Legault is
the President, Treasurer and Director of Stone Sunny Isles, Inc., and Stone Atlanta Estates LLC, the successor-in-
interest to Stone Sunny Isles, Inc.
Performance conditions
The choice of annual bonus performance metrics reflects the Committee’s belief that any incentive
remuneration should be appropriately challenging and tied to the delivery of key strategic objectives intended to
ensure that Executive Directors are incentivised to deliver across a range of objectives for which they are
accountable. The Committee has retained flexibility on the specific measures which will be used to ensure that any
measures are fully aligned with the strategic imperatives prevailing at the time they are set.
The targets for the bonus scheme for the forthcoming year will be set out in general terms, subject to
limitations with regards to commercial sensitivity. The full details of the targets will be disclosed when they are in
the public domain and are no longer considered commercially sensitive.
Where used, performance conditions applicable to EIP awards (or other equity incentive plans operated by
the Company from time to time) will be aligned with the Company’s objective of delivering superior levels of long-
term value to shareholders. Prior to each award, the Committee has flexibility to select measures that are fully
aligned with the strategy prevailing at the time awards are granted.
The Committee will review the calibration of targets applicable to the annual bonus, and the EIP in years
where performance measures apply, annually to ensure they remain appropriate and sufficiently challenging, taking
into account the Company’s strategic objectives and the interests of shareholders.
Recovery and withholding
The Company does not currently have a policy on recovery and withholding. The Committee reserves the
right to make any remuneration payments subject to withholding or recovery in appropriate circumstances and to
establish a policy on recovery and withholding in the future.
38
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Differences in remuneration policy between Executive Directors and other employees
The overall approach to reward for employees across the workforce is a key reference point when setting
the remuneration of the Executive Directors. When reviewing the salaries of the Executive Directors, the Committee
pays close attention to pay and employment conditions across the wider workforce and in normal circumstances the
increase for Executive Directors will be no higher than the average increase for the general workforce.
The key difference between the remuneration of Executive Directors and that of our other employees is
that, overall, at senior levels, remuneration is increasingly long-term, and ‘at risk’ with an emphasis on performance-
related pay linked to business performance and share-based remuneration. This ensures that remuneration at senior
levels will increase or decrease in line with business performance and provides alignment between the interests of
Executive Directors and shareholders. In particular, long-term incentives are provided only to the most senior
executives as they are reserved for those considered to have the greatest potential to influence overall levels of
performance.
Committee discretion in operation of variable pay schemes
The Committee operates under the powers it has been delegated by the Board. In addition, where relevant,
it complies with rules that are either subject to shareholder approval or by approval from the Board. These
rules provide the Committee with certain discretions which serve to ensure that the implementation of the
Remuneration Policy is fair, both to the individual director and to the shareholders. The Committee also has
discretions to set components of remuneration within a range, from time to time. Where appropriate, the extent of
such discretions is set out in the relevant rules and/or described in the policy table above. To ensure the efficient
administration of the variable incentive plans outlined above, the Committee will apply certain operational
discretions.
These include the following:
selecting the individuals who will receive awards under the plans on an annual basis;
determining the timing of grants of awards and/or payments;
determining the quantum of awards and/or payments;
determining the choice (and adjustment) of any performance measures and targets, vesting schedules,
exercise prices (where applicable), option repricing (where applicable) and other award terms for each
incentive plan;
determining the extent of vesting, including for leavers;
•
•
•
•
•
• making the appropriate adjustments (including to any performance targets) required in certain
circumstances, for instance for changes in capital structure;
•
•
•
determining “good leaver” status and the impact of certain corporate events, if applicable, for incentive
plan purposes and determining and applying the appropriate treatment;
interpreting the plan rules and award agreements where necessary; and
undertaking the annual review of weighting of performance measures and setting targets for the annual
bonus plan and other incentive schemes, where applicable, from year to year.
If an event occurs which results in the annual bonus plan or EIP (where performance conditions apply)
performance conditions and/or targets being deemed unfair or impractical (e.g. material acquisition or divestment),
the Committee will have the ability to make amend, relax or waive (and/or recommend such alterations to the Board
for approval) to the measures and/or targets and alter weightings. Any use of the above discretion would, where
39
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
relevant, be explained in the Annual Report on Remuneration and may, as appropriate, be the subject of consultation
with the Parent Company’s major shareholders.
The Committee retains the discretion to award ad hoc bonus payments outside the annual bonus plan, if an
event or circumstance occurs in which the annual bonus plan does not reflect the overall business performance,
individual contribution or external factors which impacts the workforce. Any use of the above discretion would,
where relevant, be explained in the Annual Report on Remuneration and may, as appropriate, be the subject of
consultation with the Parent Company’s major shareholders.
The Committee may make minor amendments to the Remuneration Policy (for regulatory, exchange
control, tax or administrative purposes or to take account of a change in legislation) without obtaining shareholder
approval for that amendment.
Shareholder views
The Board is committed to dialogue with shareholders and intends to engage directly with them and their
representative bodies when considering any significant changes to our remuneration arrangements. The Committee
will consider shareholder feedback received following the AGM, as well as any additional feedback and guidance
received from time to time. This feedback will be considered by the Committee as it develops the Company’s
remuneration framework and practices going forward. Assisted by its independent adviser, the Committee also
actively monitors developments in the expectations of institutional investors and their representative bodies.
Employment conditions
The Committee is regularly updated throughout the year on pay and conditions applying to Company
employees. Where significant changes are proposed to employment conditions and salary levels elsewhere in the
Company these are highlighted for the attention of the Committee at an early stage and the Committee will take such
employment considerations into account when setting directors’ remuneration.
Whilst the Committee does not currently consult directly with employees regarding its policy for directors,
the Committee is considering the best method of bringing the employee voice to the boardroom.
Other remuneration policies
Remuneration for new appointments
Where it is necessary to appoint or replace an Executive Director or to promote an existing Executive
Director, the Committee’s approach when considering the overall remuneration arrangements in the recruitment of a
new Executive Director is to take account of the calibre, expertise and responsibilities of the individual, his or her
remuneration package in their prior role and market rates. Remuneration will be in line with the Remuneration
Policy and the Committee will not pay more than is necessary to facilitate their recruitment.
The remuneration package for a new Executive Director will be set in accordance with the terms of the
Company’s approved remuneration policy in force at the time of appointment. Further details are provided below:
Salary
The Committee will set a base salary appropriate to the calibre, experience and responsibilities of the new
appointee. In arriving at a salary, the Committee may take into account, amongst other things, the market
rate for the role and internal relativities.
The Committee has the flexibility to set the salary of a new Executive Director at a lower level initially,
with a series of planned increases implemented over the following few years to bring the salary to the
desired positioning, subject to individual performance.
In exceptional circumstances, the Committee has the ability to set the salary of a new Executive Director
at a rate higher than the market level to reflect the criticality of the role and the experience and
performance of the individual.
40
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Benefits
Benefits will be consistent with the principles of the policy set out on page 31. The Company may award
certain additional benefits and other allowances including, but not limited to, those to assist with
relocation support, temporary living and transportation expenses, educational costs for children,
reimbursement of fees for tax advice associated with completion of international tax returns and tax
equalisation to allow flexibility in employing an overseas national.
Pension benefits
A maximum employer pension contribution of 12% of salary (or equivalent cash allowance) may be
payable for external appointments. For an internal appointment, his or her existing pension arrangements
may continue to operate. Any new Executive Director based outside the UK will be eligible to participate
in pension or pension allowance, insurance and other benefit programmes in line with local practice.
Annual bonus
The maximum target bonus opportunity is 80% of base salary and the maximum bonus opportunity for
new appointments is 225% of their target bonus.
Other cash or
equity-based
awards
Executive Directors may receive awards under the EIP (or other equity incentive plan operated by the
Company from time to time) on appointment. The Committee will assess and determine the award level,
award vehicle, performance conditions and vesting schedule for each individual on a case-by-case basis.
In addition, Executive Directors are eligible to participate in the Company’s all-employee share plans on
the same terms as other employees in the jurisdiction in which they are engaged.
In addition, the Committee may offer additional cash and/or equity-based elements in order to “buy-out”
remuneration relinquished on leaving a former employer. Any awards made in this regard may have no
performance conditions, or different performance conditions, or a different vesting schedule compared to
the Company’s existing plans, as the Committee considers appropriate.
Depending on the timing and responsibilities of the appointment, it may be necessary to set different annual
bonus or EIP performance measures and targets as applicable to other Executive Directors.
The terms of appointment for a Non-Executive Director would be in accordance with the approved
remuneration policy for Non-Executive Directors in force at the time of the appointment.
Service contracts and termination policy
Executive Directors have rolling service agreements (entered into with the Parent Company or a subsidiary
thereof) which may be terminated in accordance with the terms of these agreements. The period of notice for
Executive Directors (to be given by the employer or the Executive Director) will not normally exceed 6 months.
Executive Directors’ service agreements are available for inspection at the Parent Company’s registered office
during normal business hours and will also be available to the public if required to be filed by the Parent Company
with the SEC. The terms of the current Executive Director’s service contract are:
Name
Kevin Lee
Position
Date of service contract
Notice period
Chief Executive Officer
26 September 2019
6 months either party
The Company’s policy on remuneration for Executive Directors who leave the Company is set out below.
The Committee will exercise its discretion when determining amounts that should be paid to leavers (other than in
respect of the relevant leaver’s contractual entitlements which will be respected), taking into account the facts and
circumstances of each case. Where applicable, the Company may elect to make a payment in lieu of notice
(“PILON”) equivalent in value to basic salary and contractual benefits for any unexpired portion of the notice
period (but excluding any annual bonus or holiday entitlement that would have otherwise accrued during the notice
period).
Where the Executive Director is terminated by the Company without “Cause” (as defined in the service
agreement), by the Executive Director for “Good Reason” (as defined in the service agreement), or on the Executive
Director’s death, severance pay in addition to any potential PILON and any entitlements in respect of the year to the
41
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
date of termination in accordance with the applicable terms shall be paid to an Executive Director as set out below,
subject to the Executive Director signing a waiver of claims:
Element of pay / benefit
Salary
Contractual benefits
Annual bonus
Share Option Plan
(legacy awards)
Equity Incentive Plan
Termination other than within 12 months
after a relevant “Change in Control” (as
defined in the service agreement)
Termination within 12 months after a
relevant “Change in Control” (as defined in
the service agreement)
A lump sum payment equal to 12 months’
salary payable.
A lump sum payment equal to the cost to
the Company of providing contractual
benefits for 12 months (or continuation of
such benefits).
Not applicable.
Options treated in accordance with plan
rules.
Good leavers may exercise their options to
the extent vested at the time of termination
within 12 months after termination.
The Committee has the discretion to
accelerate vesting in whole or in part, to
extend the exercise window, and/or to
waive any applicable performance
conditions in whole or in part.
Awards treated in accordance with plan
rules.
Unless otherwise determined by the
Committee, unvested equity awards lapse
on the date of termination of employment.
A lump sum payment equal to 24 months’
salary payable.
A lump sum payment equal to the cost to the
Company of providing contractual benefits for
24 months (or continuation of such benefits).
A lump sum payment equal to 1.5 times target
bonus will be paid.
Options subject to time-based vesting (only)
accelerate, vest and become exercisable in
full. Options subject to performance
conditions treated in accordance with plan
rules (as described at left).
Awards vest in full on a change of control.
The Company is unequivocally against rewards for failure; the circumstances of any departure, including
the individual’s performance, would be taken into account in every case. Statutory redundancy payments may be
made. Service agreements may be terminated summarily without notice (or on shorter notice periods) and without
payment in lieu of notice in certain circumstances, such as gross misconduct or any other material breach of the
obligations under their employment contract. The Company may require the individual to work during their notice
period or may place them on garden leave during which they would be entitled to full pay and benefits.
Except in the case of gross misconduct or resignation, the Company may at its absolute discretion
reimburse for reasonable professional fees relating to the termination of employment and, where an Executive
Director has been required to re-locate, to pay reasonable repatriation costs, including possible tax exposure costs
and/or settle any other amount the Committee considers reasonable including any statutory entitlements or sums to
settle or compromise claims or potential claims in connection with a termination (including, at the discretion of the
Committee, reimbursement for legal advice and provision of outplacement services).
42
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Policy on external appointments
The Board believes that it may be beneficial to the Company for executives to hold certain roles outside the
Company provided that the Company’s business takes priority. Any such appointments are subject to approval by
the Board and the director may retain any fees received. Kevin Lee is currently a director of Alchemab Therapeutics
Limited and Nodthera, Inc. in respect of which he received an aggregate of £60k (year ended 31 December 2021:
£60k) per annum in fees.
Non-Executive Directors’ terms of engagement
Each of the Non-Executive Directors is engaged under a Non-Executive Director appointment letter. Each
appointment is normally terminable by either party on no more than three months’ written notice (or, in some cases,
payment in lieu of notice), but may be terminated immediately in certain circumstances. Under our articles of
association, our Board is divided into three classes (Class I, Class II and Class III), with members of each class
serving staggered three-year terms. In the event of termination, the Chair and Non-Executive Directors are only
entitled to fees accrued to the date of termination together with reimbursement of expenses properly incurred before
that date.
The dates of appointment of each of the Non-Executive Directors serving at 31 December 2022 are
summarised in the table below. The Parent Company was incorporated on 27 October 2017.
Non-Executive Directors
Janice Bourque
Jose-Carlos Gutierrez-Ramos
Veronica Jordan
Richard Kender
Pierre Legault (Chairman)
Gregory Winter
Date of appointment letter
Date of appointment
18 July 2019
17 March 2021
30 October 2019
20 July 2019
15 March 2019
24 May 2019
18 July 2019
17 March 2021
30 October 2019
18 July 2019
15 March 2019
4 December 2017
At the time of the IPO in May 2019 all Non-Executive Directors then appointed except Pierre Legault
entered into new letters of appointment which took effect conditional upon completion of the IPO. Janice Bourque,
Richard Kender, Veronica Jordan and Jose-Carlos Gutierrez-Ramos each entered into letters of appointment at the
time of their appointment to the Board.
Non-Executive Directors’ letters of appointment are available for inspection at the Parent Company’s
registered office during normal business hours and will be available for inspection at the AGM.
A company affiliated with Pierre Legault, Stone Sunny Isles, Inc., and Stone Atlanta Estates LLC, the
successor-in-interest to Stone Sunny Isles, Inc., has also entered into a consulting agreement with Bicycle
Therapeutics Inc. dated 15 March 2019 under which it will procure the provision of consulting services by Pierre
Legault to the Parent Company and is paid a monthly retainer of £11,459 during the year ended 31 December 2022
(2021: £10,416), which is billed in U.S. dollars for these services. This consulting agreement is terminable on
three months’ written notice (or payment in lieu of notice).
43
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Remuneration scenario for Executive Director
The charts below show an estimate of the 2023 remuneration package for the Executive Director under
three assumed performance scenarios and these scenarios are based on the Remuneration Policy set out above which
will be applicable if it is approved. No performance obligations apply to equity-based awards so they are not
included.
Minimum (comprising fixed pay only)
Base salary as of 1 January 2023 of $691k, converted by reference to the GBP : USD exchange rate on 31
December 2022 of 1.2103, cash in lieu of pension of 12% of base salary net of employer National Insurance costs of
the cash in lieu and benefits of $1k.
Target
Fixed pay as above.
Assumes target bonus of 65%.
Maximum
Fixed pay as above.
Assumes maximum bonus payout of 146%.
44
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Annual Report on Remuneration
This part of the report has been prepared in accordance with Part 3 of The Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and section 420 of the Companies
Act 2006. The Annual Report on Remuneration and the Annual Statement by the Chair of the Compensation
Committee will be put to a single advisory shareholder vote at the AGM to be held on 13th June 2023. The
information in this part of the report has been audited where required under the foregoing regulations and is
indicated as audited where applicable.
Compensation Committee
The current members of the Committee, who are all independent and have been members for the
whole year, are Veronica Jordan (as Chair of the Committee), Richard Kender and Janice Bourque. Decisions of the
Committee are made by majority vote or by unanimous written consent.
The Chair and members of management, the Chief Executive Officer (“CEO”), the Chief Financial Officer
(“CFO”) and the Chief Operating Officer, are invited to attend meetings where appropriate. Attendees who are not
members of the Committee are not involved in any decisions and are not present for any discussions regarding their
own remuneration and did not materially assist the Committee.
No conflicts of interest have arisen during the year and none of the members of the Committee has any
personal financial interest in the matters discussed, other than as optionholders. The fees of the Non-Executive
Directors are approved by the Board on the joint recommendation of the Committee and the CEO/Executive
Director.
Meetings attendance
Director
Janice Bourque
Richard Kender
Veronica Jordan
Meetings Attended
8 of 8
8 of 8
8 of 8
Eight meetings of the Committee have taken place during 2022.
Independent advisors
Independent advice on executive remuneration is received from the Executive Compensation practice of
Radford. Radford is a member of the Remuneration Consultants Group and is a signatory to its Code of Conduct.
Radford advises the Committee on all aspects of senior executive remuneration. Since the IPO, Radford was
appointed by the Committee following a competitive tender process, and has since been retained to assist with the
drafting of the Remuneration Policy and has kept the Committee up to date on remuneration trends and corporate
governance best practice. Radford does not have any other remuneration-unrelated connection with the Company
and is considered to be independent by the Committee. During the year ended 31 December 2022, fees charged by
Radford for advice provided to the Committee for 2022 amounted to approximately $183k (year ended 31
December 2021: $130k).
Activity in the year
The Committee’s principal function is to develop and implement compensation policies and plans that
ensure the attraction and retention of key management personnel, the motivation of management to achieve the
Company’s corporate goals and strategies, and the alignment of the interests of management with the long-term
interests of the Parent Company’s shareholders. In determining the remuneration policy, and in constructing the
remuneration arrangements for Executive Directors and senior employees, the Board, advised by the Committee,
aims to provide remuneration packages that are competitive and designed to attract, retain and motivate Executive
Directors and senior employees of the highest calibre.
45
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
•
•
•
•
•
•
•
•
•
•
•
•
The Committee is responsible for and considered, where applicable, during the year:
preparation of the proposed revised remuneration policy which will be put to a binding shareholder vote at
the AGM to be held on 13 June 2023;
annually reviewing and approving corporate goals and objectives relevant to the compensation of the CEO;
evaluating the performance of the CEO in light of such corporate goals and objectives and recommending
or determining the compensation of the CEO;
reviewing and recommending or determining the compensation of our other executive officers;
reviewing and establishing our overall management compensation, philosophy and policy;
overseeing and administering our compensation and similar plans;
retaining and approving the compensation of any compensation advisors;
reviewing and approving our policies and procedures for the grant of equity-based awards;
preparing the compensation committee report required by the SEC rules to be included in our annual proxy
statement, and the directors’ remuneration policy and report as required under English law;
reviewing and discussing with management the compensation discussion and analysis to be included in our
annual proxy statement or Annual Report on Form 10-K, if required;
reviewing and making recommendations to the Board with respect to director compensation; and
reviewing and discussing with the Board our corporate succession plans for the CEO and other key officers.
The Committee is formally constituted and operates pursuant to a written charter, which is available on the
Company’s website.
Single total figure of directors’ remuneration — year ended 31 December 2022 (audited)
The total remuneration of the individual directors who served during the financial year, from 1
January 2022 to 31 December 2022, together with a comparison with the equivalent figure for the 2021
financial year is shown below. Total remuneration is the sum of emoluments plus Company pension contributions.
46
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Base
salary(1)/fees Benefits(2) Pension(3)
$’000
$’000
$’000
Equity-
based
Total variable
Bonus(4) awards(5) remuneration remuneration remuneration
$’000
Total fixed
$’000
$’000
$’000
$’000
Total
Executive
Directors
Kevin Lee
2022
2021
673
677
1
2
70
71
3,044
571
654 —
4,359
1,404
3,788
750
571
654
Non-Executive
Directors
Catherine
Bingham(6)
2022
2021
Janice Bourque 2022
2021
Jose-Carlos
Gutierrez-
Ramos
2022
2021
Veronica Jordan 2022
2021
Richard Kender 2022
2021
Pierre Legault(7) 2022
2021
Gregory Winter 2022
2021
2022
2021
Total
—
26
70
63
60
34
68
58
102
97
207
209
55
40
1,235
1,204
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
70
71
—
—
—
—
—
—
304
—
—
—
—
—
—
—
—
—
—
—
571
654
304
—
304
—
304
—
609
—
304
—
5,173
—
—
26
374
63
364
34
372
58
406
97
816
209
359
40
7,050
1,931
—
26
374
63
364
34
372
58
406
97
816
209
359
40
6,479
1,277
—
—
—
—
—
—
—
—
—
—
—
—
—
—
571
654
(1) As of 1 January 2021, the Executive Director’s salary was both set, and paid, in GBP, and the amount reflected
is based on a GBP : USD exchange rate of 1.2362 for the year ended 31 December 2022.
(2) The Executive Director’s benefits included private health insurance, long term disability, critical illness and
death in service benefits.
(3) Relates to pension and cash in lieu of pension.
(4) The annual bonus for 2022 was paid in cash in February 2023. The annual bonus for 2021 was paid in cash in
February 2022.
(5) There were no performance obligations linked to the equity-based awards. The value of equity-based awards in
the form of options in the table is based on the market value of underlying shares at the date of grant, less the
applicable exercise price. For the CEO and Non-Executive Directors this was nil because the exercise price is
equal to the market value of the underlying shares at the date of grant. Refer to “Share Option Plan” below. The
value of equity based awards in the form of RSUs is based on the market value of the underlying shares on the
date of grant. Share price appreciation did not impact the value of awards. No discretion was exercised, and the
determination of the levels of awards were not impacted, as a result of share price appreciation.
(6) Catherine Bingham resigned on 28 June 2021 and received no payments in respect of loss of office or otherwise
following her termination date.
47
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
(7) Pierre Legault’s fees include those payable under a consulting agreement between Stone Sunny Isles, Inc. and
Stone Atlanta Estates LLC, the successor-in-interest to Stone Sunny Isles, Inc. and Bicycle Therapeutics, Inc.
dated 15 March 2019, pursuant to which such entity is paid £138k per year for Mr. Legault’s advisory services
to the Company for the year ended 31 December 2022 and £125k for the year ended 31 December 2021.
2022 Annual bonus (audited)
In 2022, the CEO’s annual bonus was based on corporate and personal objectives. Details of the specific
objectives will be disclosed when they are no longer considered commercially sensitive. The overall bonus outcome
of percentage of target resulted in a total bonus pay out of $571k or 85% of the CEO’s base salary for the year ended
31 December 2022. The Compensation Committee is satisfied that the bonus pay-out for 2022 is appropriate, taking
into account the wider stakeholder experience, particularly that of shareholders and employees, based on
achievements versus goals in the following key areas: Corporate Development, Clinical Development, Financial and
Organisational Development. In 2021, the bonus outcome of percentage of target resulted in a total bonus pay out of
$654k or 97% of the CEO’s base salary for the year ended 31 December 2021. Specific targets are commercially
sensitive. However, full details of the targets and performance against them will be disclosed when they are no
longer considered commercially sensitive.
Equity Incentive Plan
Awards granted from 1 January 2022 to 31 December 2022 (audited)
The CEO and Chairman received the following equity-based awards under the EIP during the year from 1
January 2022 to 31 December 2022, as set forth in the table below:
Form of
Award
Date of
Grant
Number of Exercise of Grant(1)
Shares
Price $
$’000
Expiry
Date
Vest Terms
Face Value
at Date
Executive Director
Kevin Lee
Chairman
Pierre Legault
Fair market
value options 3 January 2022 100,000 60.87
— 3 January 2032
RSUs
3 January 2022
50,000 —
3,044 —
25% vest after one year,
remaining shares vest
in 36 equal monthly
instalments
25% vest after one year,
remaining shares vest in
12 equal quarterly
instalments
Fair market
value options 3 January 2022
3 January 2022
RSUs
20,000 60.87
10,000 —
— 3 January 2032 Vest immediately
Vest immediately
609 —
(1) The value of equity-based awards in the form of options in the table is based on the market value of underlying
shares at the date of grant, less the applicable exercise price. For awards in the form of options, this was nil
because the exercise price is equal to the market value of the underlying shares at the date of grant. Awards in
the form of RSUs are valued using the market value of the underlying shares at the date of grant. Awards that
were granted as fully vested, for administrative reasons, were settled on 7 March 2022 when the Company’s
share price was $42.07. Upon vesting of RSUs, the holders are required to pay a nominal fee of £0.01 per share.
Non-Executive Directors also received the following equity-based awards during the year from 1
January 2022 to 31 December 2022, each vesting in full on the date of grant and granted under the EIP:
48
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Non-Executive
Director
Janice Bourque
Jose-Carlos
Gutierrez-
Ramos
Veronica Jordan
Richard Kender
Gregory Winter
Date of
Grant
Form of
Award
Fair market
value options 3 January 2022
3 January 2022
RSUs
Fair market
value options 3 January 2022
3 January 2022
RSUs
Fair market
value options 3 January 2022
RSUs
3 January 2022
Fair market
value options 3 January 2022
3 January 2022
RSUs
Fair market
value options 3 January 2022
3 January 2022
RSUs
Face Value
Date at
Number of
Shares
Exercise of Grant(1)
Covered Price $
$’000
Expiry
Date
Vest Terms
10,000 60.87
5,000 —
— 3 January 2032 Vest immediately
— Vest immediately
304
10,000 60.87
5,000 —
— 3 January 2032 Vest immediately
— Vest immediately
304
10,000 60.87
5,000 —
— 3 January 2032 Vest immediately
— Vest immediately
304
10,000 60.87
5,000 —
— 3 January 2032 Vest immediately
— Vest immediately
304
10,000 60.87
5,000 —
— 3 January 2032 Vest immediately
— Vest immediately
304
(1) Awards in the form of RSUs are valued at the date of grant. These awards were granted as fully vested but, for
administrative reasons, were settled on 7 March 2022 when the Company’s share price was $42.07. Upon
vesting of RSUs, the holders are required to pay a nominal fee of £0.01 per share.
None of the awards granted are subject to performance-based conditions.
No subsequent changes were made to the exercise prices or vesting dates of options or vesting dates of
awards in the form of RSUs.
Statement of directors’ shareholding and share interests (audited)
Shareholdings for each director, who has held office during the period 1 January 2022 and 31
December 2022, are set out in the table below as at 31 December 2022 (together with interests held by his or her
connected persons):
Number of Shares
Beneficially owned
shares as at
31 December
2022
Number of Equity Awards
Unvested
with
Vested but performance performance
Unvested
without
Exercised/settled unexercised conditions conditions
Total
Executive Director
Kevin Lee
Non-Executive Directors
Janice Bourque
Jose-Carlos Gutierrez-Ramos
Veronica Jordan
Richard Kender
Pierre Legault
Gregory Winter
225,085
—
792,247
—
333,645
1,350,977
5,000
5,000
5,000
5,000
10,000
168,927
—
—
—
—
—
—
77,000
29,555
77,000
77,000
230,139
45,000
—
—
—
—
—
—
—
12,445
—
—
—
—
82,000
47,000
82,000
82,000
240,139
213,927
No shares were unvested. Details of changes in shareholdings for each director up to the date of this report
are shown on page 53.
49
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Share ownership guidelines
Executive Directors are encouraged to build a meaningful shareholding so as to align their interests with
those of shareholders but no formal shareholding requirements apply.
Payments to former directors and for loss of office (audited)
No payments were made to former directors of the Company or in relation to loss of office during the
current or prior year.
Performance graph and table
The chart below shows the Parent Company’s Total Shareholder Return (“TSR”) performance compared
with that of the NASDAQ Biotechnology Index from the date of the Parent Company’s listing on NASDAQ to 31
December 2022. The NASDAQ Biotechnology Index has been chosen as an appropriate comparator as it is the
index of which the Parent Company is a constituent. TSR is defined as the return on investment obtained from
holding a company’s shares over a year. It includes dividends paid, the change in the capital value of the shares and
any other payments made to or by shareholders within the year.
Stock Price Performance Since IPO
Aligning pay with performance
The total remuneration figure for the CEO is shown in the table below, along with the value of bonuses
paid, and SOP/EIP vesting, as a percentage of the maximum opportunity. As explained in the report in respect of the
2019 financial year, as 2019 was the first year reported since listing, it is not possible to provide meaningful
comparative data for periods prior to that date.
Chief Executive Officer
Total remuneration ($000)
Actual bonus (% of the maximum)
SOP/EIP vesting (% of the maximum)
2019
1,004
63%
100%
2020
1,156
63%
100%
2021
1,404
72%
100%
2022
4,359
63%
100%
Percentage change in remuneration of the directors compared to all Company employees
The table below illustrates the increase in salary, benefits and annual bonus for each director and that of the
Company’s employees as a whole as between the 2019 and 2022 financial years. BicycleTx Limited has been used
as the comparator company for the Parent Company because BicycleTx Limited employs all UK employees. The
outcome for employees of the Parent Company is also included to satisfy the statutory requirement but is shown as
not applicable given the Parent Company does not itself have any employees. As explained in the report in respect
of the 2019 financial year, 2019 was the first year reported since listing on NASDAQ. There was no change in
50
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
remuneration of the CEO in that year and it was therefore not possible to provide meaningful comparative data for
prior years.
Executive Directors
Kevin Lee
Non-Executive Directors
Michael Anstey
Catherine Bingham
Janice Bourque
Jose-Carlos Gutierrez-Ramos
Bosun Hau
Veronica Jordan
Richard Kender
Pierre Legault
Carolyn Ng
Gregory Winter
Average pay of employees of
the Parent Company
Average pay of employees of
the Company as a whole
Percentage change 2019-2020
Base
Percentage change 2020-2021
Base
Percentage change 2021-2022
Base
salary / fees Benefits Bonus salary / fees Benefits Bonus salary / fees Benefits Bonus
15 % 100 % 16 %
14 % 100 % 31 %
(1)%
(50)% (13)%
—
(17)% — —
71 %
—
—
117 % — —
— —
(17)% — —
500 % — —
120 % — —
40 % — —
(17)%
67 % — —
— —
—
—
—
(51)%
— —
—
— —
—
—
— —
7 % — —
—
— —
6 % — —
—
(100)%
— —
— —
11 % — —
76 % — —
— —
—
17 % — —
5 % — —
(1)% — —
—
— —
38 % — —
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
27 %
7 % 25 %
10 %
80 % 35 %
(29)%
(30)% (21)%
Non-Executive Directors did not receive fees for the period prior to the IPO on NASDAQ in May 2019.
Catherine Bingham resigned on 28 June 2021. Jose-Carlos Gutierrez-Ramos was appointed on 17 March 2021.
Michael Anstey, Bosun Hau and Carolyn Ng resigned on 30 June 2020. Veronica Jordan, Richard Kender and
Janice Bourque were all appointed during the course of 2019 with 2020 being their first full year in office.
Relative importance of spend on pay
The table below illustrates the Company’s expenditure on employee pay in comparison to total expenditure
on research and development. These costs are included in the disclosures in notes 6 and 9 in the notes to the
financial statements.
Total expenditure on research and development ($’000)(1)
Total employee pay expenditure ($’000)(2)(3)
2021
47,778
44,491
2022
77,541
79,373
% change
62%
78%
(1) The Committee considers the Company’s research and development expenditure relative to salary expenditure
for all employees, to be the most appropriate metric for assessing overall spend on pay due to the nature and
stage of the Company’s business.
(2) Total pay expenditure includes wages and salaries, social security costs, pension contributions, bonus, equity
compensation plans and termination benefits.
(3) No distributions to shareholders were made.
51
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Statement of implementation of remuneration policy in 2023
Annual base salary
The annual base salary of the CEO is shown in the table below:
Executive Directors
Kevin Lee
Base salary Base salary
2022
$’000
2023
$’000
734
691
Prior to 2021, Kevin Lee’s salary entitlement was expressed in USD and converted to GBP pursuant to a
mechanism set out in his service contract. To simplify administration, as of 1 January 2021, Kevin Lee’s salary has
been both set, and paid, in GBP. Accordingly, Kevin Lee’s annual base salary was GBP 544,100, effective on and
from 1 January 2022 and will be GBP 571,305 on and from 1 January 2023. For consistency and ease of
comparison, we will continue to provide disclosures in USD (converted by reference to the GBP : USD exchange
rate on 31 December 2022 of 1.2103 (31 December 2021: 1.3497)).
Benefits and pension
In 2023, Executive Directors are eligible for the same benefits (such as health insurance) as provided to all
senior employees in the jurisdiction in which they reside. In the UK, where the CEO is based, this means that
employer pension contributions are 12% of base salary for Executive Directors and employees with job title of
‘director’ and above and 10% for all other employees (or, in each case, cash equivalent at the election of the relevant
employee).
Bonus
The CEO will be entitled to a target bonus of 65% base salary in 2023, with final payout of up to 146% of
base salary in the event of ‘stretch’ performance being achieved. The bonus will be paid in cash or in an equity
award, as may be agreed between the Executive Director and the Committee, and subject to the achievement of a
number of corporate and personal objectives determined by the Committee.
Specific corporate and personal objectives are commercially sensitive and therefore are not disclosed in
advance. However, full details of the targets and performance against them will be disclosed when they are no
longer considered commercially sensitive.
Equity Incentive Plan
The Company granted the following equity incentive awards to directors and the Chairman in 2023 up to
the date of this directors’ remuneration report under the Equity Incentive Plan. These grants are a mix of RSUs and
market value options, rather than being 100% market value options as was the case in 2021 and before. This change
was made following a review and benchmarking against our peers by our independent compensation advisor.
52
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Form of
Award
Date of
Grant
Number
of
Shares
Covered
Face Value
at Date
of
Exercise
Price $(1)
Grant
$’000(2)
Expiry
Date
Vest Terms(3)
Fair market
value options 3 January 2023 115,000
Fair market
value options 3 January 2023 23,000
Fair market
value options 3 January 2023 11,500
Fair market
value options 3 January 2023 11,500
Fair market
value options 3 January 2023 11,500
Fair market
value options 3 January 2023 11,500
Fair market
value options 3 January 2023 11,500
29.60
29.60
29.60
29.60
29.60
29.60
29.60
— 3 January 2033
— 3 January 2033
— 3 January 2033
— 3 January 2033
— 3 January 2033
— 3 January 2033
— 3 January 2033
Restricted
Share Units
Restricted
Share Units
Restricted
Share Units
Restricted
Share Units
Restricted
Share Units
Restricted
Share Units
Restricted
Share Units
3 January 2023 57,500
—
1,702
3 January 2023 11,500
—
340
3 January 2023
5,750
—
170
3 January 2023
5,750
—
170
3 January 2023
5,750
—
170
3 January 2023
5,750
—
170
3 January 2023
5,750
—
170
25% vest after one year,
remaining shares vest in 36
equal monthly instalments
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
25% vest after one year,
remaining shares vest in 12
equal quarterly instalments
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
Vest in equal quarterly
instalments within one year
—
—
—
—
—
—
—
Director
Kevin
Lee
Pierre Legault
Janice Bourque
Jose-Carlos
Gutierrez-Ramos
Veronica Jordan
Richard Kender
Gregory Winter
Kevin
Lee
Pierre Legault
Janice Bourque
Jose-Carlos
Gutierrez-Ramos
Veronica Jordan
Richard Kender
Gregory Winter
(1) For options, exercise price is equal to the market value of the underlying shares at the date of grant.
(2) The value of equity-based awards in the table is based on the market value of underlying shares at the date of
grant, less the applicable exercise price (if any). This was nil for fair market value options because the exercise
price is equal to the market value of the underlying shares at the date of grant. Awards in the form of RSUs are
valued using the market value of the underlying shares at the date of grant. Upon vesting of RSUs, the holders
are required to pay a nominal fee of £0.01 per share.
(3) The Committee may, in its sole discretion, provide for deferred settlement of RSUs awarded to Non-Executive
Directors.
No other grants are currently proposed for 2023.
53
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Remuneration Report (continued)
Non-Executive Directors’ fees
Non-Executive Directors will receive the following annual fees for 2023, which will be paid in cash, as
follows. These have been increased from the 2022 fees following review and benchmarking against our peers:
Base fee:
Board Chair
Board member
Additional fees:
Audit Committee Chair
Audit Committee member
Compensation Committee Chair
Compensation Committee member
Nomination Committee Chair
Nomination Committee member
Strategic Committee member
Scientific Committee Chair
Scientific Committee member
Fees
(effective from 1 January 2023)
000s
£5
$47
$21
$11
$16
$8
$11
$5
$32
$11
$5
Non-Executive Director fees may be paid in GBP, USD, or a combination depending on the personal
situation of each Non-Executive Director.
Non-Executive Directors will not be eligible to participate in any performance-based incentive plans.
Each Non-Executive Director will also be entitled to reimbursement of reasonable expenses and
reimbursement of fees for tax advice associated with completion of international tax returns and, if relevant, any
gross-up for tax due to their role as a Bicycle Therapeutics plc Non-Executive Director. In addition, a Non-
Executive Director who participates on the Scientific Advisory Board and attends Scientific Advisory Board
meetings will be entitled to receive a cash fee of $4,000 per meeting.
Shareholder voting on remuneration matters at AGM
The table below sets out the previous votes cast at our AGM in June 2022 in respect of the previous
Directors’ Remuneration Report and the previous votes cast at our AGM in June 2020 in respect of the previous
Directors’ Remuneration Policy.
Votes for
Number
Votes against
Votes withheld
Number Number
%
98.78 23,451,943 1.22 289,852
6,382
10,053,106
99.94
0.06
%
1,802,938
183,245
Directors' Remuneration Report
Directors' Remuneration Policy
On behalf of the Board
Veronica Jordan
Chair of the Compensation Committee
24 April 2023
54
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Report
The directors present their report and the audited financial statements of Bicycle Therapeutics plc (the
“Parent Company”) for the year ended 31 December 2022 and, the audited consolidated financial statements of
Bicycle Therapeutics plc and its subsidiaries, BicycleTx Limited, BicycleRD Limited and Bicycle Therapeutics Inc.
(the “Company”) for the year ended 31 December 2022.
Bicycle Therapeutics plc is a public company limited by shares and incorporated and domiciled in England
and Wales. BicycleTx Limited, and BicycleRD Limited are registered in England and Wales. Bicycle
Therapeutics Inc. is registered in the U.S.
Where stated certain information is not shown in the directors report because it is shown in the Strategic
Report instead under section 414C(11) of the Companies Act 2006 (the “Companies Act”). This includes the Section
172 Statement that summarises how the Directors have had regard to the need to foster the Company’s business
relationships with suppliers, customers and others, and the effect of that regard, including on the principal decisions
taken by the Company during the financial year.
Results and dividends
The results of the Company for the year are set out on page 66. During the year ended 31 December 2022,
no dividend was declared or paid (year ended 31 December 2021: $Nil). The directors do not recommend the
payment of any further dividend.
Directors
The directors of the Parent Company who held office during the year and up to the date of signing the
financial statements were as follows:
Janice Bourque
Jose-Carlos Gutierrez-Ramos
Veronica Jordan
Richard Kender
Kevin Lee
Pierre Legault
Gregory Winter
Capital structure
Details of the issued share capital, together with details of shares issued during the year, are set out in note
18 to the financial statements. Following the Parent Company’s initial public offering there is one class of ordinary
shares which carries no right to fixed income. Each ordinary share carries the right to one vote at a general meeting
of the Parent Company.
There are no specific restrictions on the size of a holding or on the transfer of shares, which are both
governed by the general provisions of the Parent Company’s articles of association and prevailing legislation. The
directors are not aware of any agreements between holders of the Parent Company’s shares that may result in
restrictions on the transfer of securities or on voting rights.
No person has any special rights of control over the Parent Company’s share capital and all issued shares
are fully paid. Subject to the Companies Act and any relevant authority of the Parent Company in general meeting,
the Parent Company has authority to issue new shares.
Political donations
No political donations were made, and no political expenditure was incurred, by the Company during the
current and prior year. No contributions were made to any non U.K. political party by the Company during the
current and prior year.
55
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Report (continued)
Research and development activities
The directors are satisfied that research activities of the Company are progressing satisfactorily. Total
research and development expenditure during the year was $77.5 million (year ended 31 December 2021:
$47.8 million).
Going concern
The Company is involved in research and development activities and until it is able to convert this activity
into a significant product revenue stream, it will be reliant upon obtaining additional funding in connection with
continuing operations. More detailed analysis of the risks faced by the Company is given in the Strategic Report.
At 31 December 2022, the Company had cash of $339.2 million and the directors estimate the Company’s
existing cash at the date of approval of these financial statements is sufficient to continue to fund the Company’s
operating expenses for the foreseeable future at least 12 months from the date of that approval and that is therefore
appropriate to prepare these financial statements on a going concern basis.
Employee involvement
The Company is committed to the continued development of employee involvement by an effective
communications and consultative framework. Please refer to the “Employee, social, community and human rights
matters” section included in our Strategic Report, beginning on page 13 of this document.
Greenhouse gas emissions, energy consumption and energy efficiency action
Please refer to the “Environmental matters” section included in our Strategic Report, beginning on page 13
of this document.
Financial risk management
Please refer to the “Financial risk management” section included in our Strategic Report, beginning on
page 12 of this document.
Qualifying third party indemnity provisions
The Parent Company has made qualifying third-party indemnity provisions for the benefit of its directors
and certain executives that were in force during the year and at the date of this report.
Disclosure of information to the auditors
So far as each person who was a director at the date of approving this report is aware, there is no relevant
audit information, being information needed by the auditors in connection with preparing its reports, of which the
auditors are unaware. Having made enquiries of fellow directors and the company’s auditors, each director has taken
all the steps that he/she is obliged to take as a director in order to make himself/herself aware of any relevant audit
information and to establish that the auditors are aware of that information.
Branches outside of the UK
The Parent Company has no overseas branches.
Future developments
Information on likely future developments in the business of the Company has been included in the
Strategic Report on page 10.
56
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Report (continued)
Post balance sheet events
The directors are not aware of any events that have occurred subsequent to the year-end that may materially
impact the results of the financial statements, other than as disclosed in note 26 to the financial statements.
Statement of directors’ responsibilities in respect of the financial statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance
with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law
the directors have prepared the Parent Company’s and the Company’s financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising
FRS 102 “The Financial Reporting Standard applicable in the U.K. and Republic of Ireland”, and applicable law).
Under company law, directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Parent Company and the Company and of the profit or loss of
the Company for that period. In preparing the financial statements, the directors are required to:
•
•
select suitable accounting policies and then apply them consistently;
state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed,
subject to any material departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
•
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Parent Company and the Company will continue in business.
The directors are responsible for safeguarding the assets of the Parent Company and the Company and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are also responsible for keeping adequate accounting records that are sufficient to show and
explain the Parent Company’s and the Company’s transactions and disclose with reasonable accuracy at any time
the financial position of the Parent Company and the Company and enable them to ensure that the financial
statements and the Directors’ Remuneration Report comply with the Companies Act 2006.
Directors’ confirmations
In the case of each director in office at the date the directors’ report is approved:
•
•
so far as the director is aware, there is no relevant audit information of which the Parent Company’s and the
Company’s auditors are unaware; and
they have taken all the steps that they ought to have taken as a director in order to make themselves aware
of any relevant audit information and to establish that the Parent Company’s and the Company’s auditors
are aware of that information.
Independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office and a
resolution concerning their re-appointment will be proposed at the forthcoming Annual General Meeting to be held
on 13 June 2023.
The financial statements on pages 66 to 101 were approved by the board of directors on 12 April 2023.
57
Bicycle Therapeutics plc
year ended 31 December 2022
Directors’ Report (continued)
This report was approved by the board of directors on 12 April 2023 and signed on behalf of the board of
directors by:
Kevin Lee
Director
24 April 2023
58
Bicycle Therapeutics plc
year ended 31 December 2022
Independent auditors’ report to the
members of Bicycle Therapeutics plc
Report on the audit of the financial statements
Opinion
In our opinion, Bicycle Therapeutics plc’s group financial statements and company financial statements (the “financial
statements”):
• give a true and fair view of the state of the group’s and of the company’s affairs as at 31 December 2022 and of the group’s
loss and the group’s cash flows for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic
of Ireland”, and applicable law); and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and financial statements (the “Annual Report”),
which comprise: the consolidated and parent company balance sheets as at 31 December 2022; the consolidated statement
of comprehensive income, the consolidated statement of changes in equity, the parent company statement of changes in
equity and the consolidated statement of cash flows for the year then ended; and the notes to the financial statements, which
include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
Audit scope
• The scope of our audit covered the financially significant components, comprising Bicycle Therapeutics plc (the parent
company), BicycleTx Limited and Bicycle Therapeutics Inc. We conducted a full scope audit of each of these components.
• These audit procedures covered 100% of the Group's revenue and 99.7% of the Group's total assets and liabilities.
Key audit matters
• Revenue recognition (group)
59
• Recoverability of investments in subsidiaries and amounts owed by group undertakings (parent)
Bicycle Therapeutics plc
year ended 31 December 2022
Materiality
• Overall group materiality: $ 8,000,000 (2021: $ 4,400,000) based on 5% of loss before tax.
• Overall company materiality: $ 5,900,000 (2021: $ 3,230,000) based on 1% of total assets, (restricted to 95% of overall
group materiality for the purposes of our group audit in the prior year).
• Performance materiality: $ 6,000,000 (2021: $ 3,300,000) (group) and $ 4,425,000 (2021: $ 4,050,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter
Revenue recognition (group)
Refer to Note 3, Note 4 and Note 5 of the financial
statements for management’s disclosure of accounting
policies, significant judgements and further explanation in
the notes to the financial statements. In June 2022,
Genentech exercised the second Expansion Option under
the Genentech Collaboration Agreement to add an
additional Genentech Collaboration Program, which
triggered a $10.0 million payment to the Company.
Management exercised judgement and concluded that the
exercise of the second Expansion Option is accounted for
as a continuation of an existing contract as the customer
decided to purchase additional goods and services
contemplated in the original contract. As such, the
additional arrangement consideration of $10.0 million
received pursuant to the option exercise together with the
amount originally allocated to the Expansion Option
material right of $3.5 million is allocated to underlying
goods and services associated with the Expansion Option.
The arrangement consideration was allocated to the
separate performance obligations on the same basis as
the initial allocation of the Genentech Collaboration
Agreement. The principal considerations for our
determination that performing procedures relating to the
accounting for the exercise of this Expansion Option under
the Genentech Collaboration Agreement as a Key audit
matter is i) the significant judgement exercised by
management in evaluating the accounting treatment for the
exercise of the Expansion Option as a continuation of the
existing contract, and in allocating the arrangement
consideration to the separate performance obligations on
How our audit addressed the key audit matter
We have performed the following procedures to address
the key audit matter: We have gained an understanding of
the control environment surrounding the revenue cycle; We
have evaluated management's assessment of the
appropriate accounting treatment for the exercise of the
Expansion Option under the Genentech Collaboration
Agreement by assessing the accounting memorandum
prepared by the management to be in line with FRS 102.
We challenged management to assess whether the
exercise of an option results into contract modification who
supported their conclusion on the basis that there was no
change in scope as compared to the original contract; We
have verified the exercise of the second Expansion Option
from the minutes of the JSC meeting, vouched the invoice
and traced the payment of $10 million to the bank
statement to confirm the occurrence of such exercise; We
have tested the completeness, accuracy and relevance of
the data used by management in determining the
accounting for such exercise including the information
extracted from the original collaboration agreement.
60
Bicycle Therapeutics plc
year ended 31 December 2022
the same basis as the initial allocation ii) the high degree of
auditor judgement and audit effort in performing
procedures, as well as complexity in evaluating the audit
evidence related to management’s judgment.
Recoverability of investments in subsidiaries and amounts
owed by group undertakings (parent)
Refer to Note 14 for investment in subsidiaries and note 15
for amounts owed by the group undertakings. The Parent
Company has investments in and intercompany
receivables from both BicycleTx Limited and BicycleRD
Limited (wholly owned subsidiary companies), both of
which are currently loss making. The carrying value of the
investment in subsidiary companies in the Parent
Company’s balance sheet at 31 December 2022 was $73
million and that of amounts receivable from subsidiary
companies was $232 million. The value of the group is
supported by the intellectual property and collaboration
contracts housed within these subsidiary companies. The
measurement and recoverability of these balances has
been assessed by management and they have concluded
that there is no impairment since the market capitalisation
of the Parent company exceeds the net asset value. The
market capitalisation is considered a proxy of the fair value
less costs to sell of the business and therefore an
indication of the recoverable amount. There is significant
headroom between the recoverable amount and the net
asset value of the company which includes the
investments and intercompany receivable balances.
We have performed following procedures to address the
key audit matter: We have gained an understanding of the
control environment over investments in subsidiaries and
intercompany transactions and balances; We have
obtained management’s impairment assessment of
intercompany receivables and investments and assessed
its appropriateness; We confirmed that the market
capitalisation of the Parent Company exceeded the net
asset value which was the primary evidence supporting
management’s conclusion of recoverability; We concluded
that the accounting treatment and methodology adopted is
in line with FRS 102, other guidance available and industry
practice.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,
and the industry in which they operate.
The Group comprises four entities, Bicycle Therapeutics plc (the parent company), BicycleTX Limited, Bicycle Therapeutics
Inc. and BicycleRD Limited (the subsidiary companies) of which all except BicycleRD Limited was scoped in as significant
components for our group audit. Full scope audits were performed over the financial information of the three significant
components and our work was fully substantive in nature. This approach provided 100% coverage of the Group's revenue and
99.7% of the Group's total assets and liabilities.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the
group’s and company’s financial statements, and we remained alert when performing our audit procedures for any indicators
of the impact of climate risk. Our procedures did not identify any material impact as a result of climate risk on the group’s
and company’s financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
61
Bicycle Therapeutics plc
year ended 31 December 2022
Financial statements - group
$ 8,000,000 (2021: $ 4,400,000).
5% of loss before tax
Loss before tax is the generally accepted benchmark, given
that, in most circumstances, this is the measure of greatest
significance to the financial statement users since the
Company's equity securities are publicly traded and it is a profit
oriented entity.
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - company
$ 5,900,000 (2021: $ 3,230,000).
1% of total assets, (restricted to
95% of overall group materiality
for the purposes of our group
audit in the prior year)
We believe that total assets is the
most appropriate benchmark as
the Parent Company is a holding
company.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between $ 4.4 million and $ 5.9 million. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to $
6,000,000 (2021: $ 3,300,000) for the group financial statements and $ 4,425,000 (2021: $ 4,050,000) for the company
financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit above
$ 400,000 (group audit) (2021: $ 220,000) and $ 295,000 (company audit) (2021: $ 270,000) as well as misstatements below
those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern
basis of accounting included:
• Discussion with management on progress of research programs in the year as well as future developments;
• Obtaining management's cash flow forecasts for the period to 31 December 2025, testing the mathematical accuracy of
the calculations and assessing the completeness and accuracy of the data used; and
• Evaluation of management's assessment of key assumptions contained within the cash flow forecasts.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group's and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's
and the company's ability to continue as a going concern.
62
Bicycle Therapeutics plc
year ended 31 December 2022
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated
in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic report and Directors' report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors' report for the year ended 31 December 2022 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic report and Directors' report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors' responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
63
Bicycle Therapeutics plc
year ended 31 December 2022
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to Clinical trial regulations, Intellectual property and patent legislation, the Health and Safety at Work Act
and other employment laws, and we considered the extent to which non-compliance might have a material effect on the
financial statements. We also considered those laws and regulations that have a direct impact on the financial statements
such as the Income Tax act, Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018 and the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were
related to misappropriation of funds, posting of inappropriate accounting entries to manipulate financial results and
management's bias in significant accounting estimates. Audit procedures performed by the engagement team included:
• enquiries of management and the entity's General Counsel around actual and potential litigation and claims including
known or suspected instances of non-compliance with laws and regulations and fraud;
inspecting minutes of meetings of the Board of Directors and its Committees;
•
• evaluation of control environment designed by management to detect and prevent irregularities;
• verifying financial statements disclosures and agreeing to supporting documentation to assess that disclosures are in
compliance with applicable laws and regulations
identifying and testing journal entries, in particular any journal entries posted with unusual account combinations;
•
• challenging the assumptions made by management in their significant accounting estimates, in particular in relation to
revenue recognition, accrued research and development expenses and research and development tax credits; and
• designing audit procedures to incorporate unpredictability around nature, timing and extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
64
Bicycle Therapeutics plc
year ended 31 December 2022
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received
from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
•
the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
David Farmer (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cambridge
24 April 2023
65
Bicycle Therapeutics plc
Registered in England No: 11036004
Consolidated statement of comprehensive income
for the year ended 31 December 2022
Revenue
Administrative expenses
Other operating income
Operating loss
Interest receivable and similar income
Interest payable and similar expenses
Net interest income/(expense)
Loss before taxation
Tax on loss
Loss for the financial year
Other comprehensive income
Foreign exchange translation differences
Total comprehensive expense for the year
Basic and diluted loss per ordinary share
Weighted average number of ordinary shares
Year ended
31 December 2022
$’000
Year ended
31 December 2021
$’000
Note
5
6
6
6
7
7
8
13,320
11,144
(177,809)
(101,039)
1,476
2,988
(163,013)
(86,907)
5,756
(3,373)
2,383
(160,630)
20,810
(139,820)
120
(3,017)
(2,897)
(89,804)
12,474
(77,330)
17,250
1,948
(122,570)
(75,382)
23
$
(4.71) $
(3.09)
29,660,659
25,061,734
The notes on pages 71 to 101 are an integral part of the consolidated financial statements.
66
Bicycle Therapeutics plc
Registered in England No: 11036004
Consolidated and Parent Company balance sheets
as at 31 December 2022
Consolidated
Parent Company
As at
As at
As at
As at
31 December 31 December 31 December 31 December
Note
2022
$’000
2021
$’000
2022
$’000
2021
$’000
12
13
14
87
64
19,061
3,123
—
—
—
—
—
—
72,961
32,319
19,148
3,187
72,961
32,319
15
39,672
23,746 231,448 130,463
339,154
438,680 290,310 381,774
378,826
462,426 521,758 512,237
Fixed assets
Intangible assets
Tangible assets
Investments in subsidiaries
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
16
(55,369)
(39,927)
—
—
Net current assets
323,457
422,499 521,758 512,237
Total assets less current liabilities
342,605
425,686 594,719 544,556
Creditors: amounts falling after more than one year
17
(71,727)
(79,572)
(30,315)
(29,873)
Net assets
Capital and reserves
Called up share capital
Share premium account
Other reserve
Exchange reserve
General reserve
270,878
346,114 564,404 514,683
18
387
384
387
384
18
420,760 414,071 420,760 414,071
18
18
18
(3,442)
(3,442)
(3,442)
(3,442)
14,062
(3,188)
(10)
(10)
72,499
31,857
72,499
31,857
(Accumulated losses)/retained earnings
18
(233,388)
(93,568)
74,210
71,823
Total shareholders’ funds
270,878
346,114 564,404 514,683
The Parent Company’s profit for the financial year ended 31 December 2022 is $2,387k (year ended 31
December 2021: loss of $2,801k).
The Consolidated and Parent Company financial statements on pages 66 to 101 were approved by the board
of directors on 12 April 2023 and signed on behalf of the board of directors by:
Kevin Lee
Director
24 April 2023
The notes on pages 71 to 101 are an integral part of the financial statements.
67
Bicycle Therapeutics plc
Registered in England No: 11036004
Consolidated statement of changes in equity
for the year ended 31 December 2022
Called up Share
share
capital
$’000
premium
account
$’000
Exchange General Accumulated shareholders’
reserve
$’000
reserve
$’000
funds
$’000
losses
$’000
Total
Balance as at 1 January 2021
266 105,014 (5,136) 16,586
(16,238) 100,492
Loss for the year
—
—
—
—
(77,330)
(77,330)
Shares issued ADS’s (net of costs of issue)
104 290,888 —
—
—
290,992
Shares issued pursuant to the Ionis share
purchase agreement (note 5)
Premium to fair value of shares issued with
respect to the Ionis Share Purchase Agreement
(note 5)
Shares issued from the exercise of options
Share options granted
Total transactions with owners, recognised
directly in equity
4
10,996
—
—
—
11,000
—
10
—
—
—
7,173
—
—
—
—
—
15,271
(3,442)
—
—
(3,442)
7,183
15,271
118 309,057 —
15,271
(3,442) 321,004
Currency translation adjustment
—
—
1,948 —
—
1,948
Balance as at 31 December 2021
384 414,071 (3,188) 31,857
(97,010) 346,114
Loss for the year
—
—
—
—
(139,820) (139,820)
Shares issued ADS’s (net of costs of issue)
2 5,701 —
—
Shares issued from the exercise of options
1
988 —
—
Share options and RSUs granted
—
—
—
40,642
Total transactions with owners, recognised
directly in equity
3 6,689 —
40,642
Currency translation adjustment
—
—
17,250 —
—
—
—
—
—
5,703
989
40,642
47,334
17,250
Balance as at 31 December 2022
387
420,760
14,062
72,499
(236,830) 270,878
The notes of pages 71 to 101 are an integral part of the consolidated financial statements.
68
(3,442)
7,184
15,271
2,387
5,703
989
Bicycle Therapeutics plc
Registered in England No: 11036004
Parent Company statement of changes in equity
for the year ended 31 December 2022
Called up Share
share
capital
$’000
premium
account
$’000
Exchange General Retained shareholders’
reserve
$’000
earnings
$’000
reserve
$’000
funds
$’000
Total
Balance as at 1 January 2021
266 105,014
(10) 16,586 74,624 196,480
Loss for the year
—
—
—
—
(2,801)
(2,801)
Shares issued ADS’s (net of costs of issue)
104 290,887
—
—
—
290,991
Shares issued pursuant to the Ionis share purchase
agreement (note 5)
Premium to fair value of shares issued with respect
to the Ionis Share Purchase Agreement (note 5)
4
10,996
—
—
—
11,000
—
—
—
—
(3,442)
Shares issued from the exercise of options
10 7,174 —
—
—
Share options granted
—
—
—
15,271 —
Total transactions with owners, recognised
directly in equity
Currency translation adjustment
Balance as at 31 December 2021
Profit for the year
118 309,057 —
15,271 (3,442) 321,004
—
—
—
—
—
—
384 414,071
(10) 31,857 68,381 514,683
—
—
—
—
2,387
Shares issued ADS’s (net of costs of issue)
2 5,701 —
—
—
Shares issued from the exercise of options
1
988 —
—
—
Share options and RSUs granted
—
—
—
40,642 —
40,642
Total transactions with owners, recognised
directly in equity
Currency translation adjustment
Balance as at 31 December 2022
3 6,689 —
40,642 —
47,334
—
—
—
—
—
—
387 420,760
(10) 72,499 70,768 564,404
The notes of pages 71 to 101 are an integral part of the financial statements.
69
Bicycle Therapeutics plc
Registered in England No: 11036004
Consolidated statement of cash flows
for the year ended 31 December 2022
Cash flow from operating activities
Taxation received
Net cash used in operating activities
Cash flow from investing activities
Purchase of intangible assets
Purchase of tangible assets
Interest received
Net cash used in investing activities
Cash flow from financing activities
Interest paid
Proceeds from issuance of ADS’s (net of costs of issue)
Proceeds from issuance of ordinary shares pursuant to the Ionis share
purchase agreement
Proceeds from the exercise of share options
Proceeds from issuance of debt (net of costs of issue)
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Exchange loss on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
19
Year ended
Year ended
31 December 2022 31 December 2021
$’000
$’000
(95,519)
(24,657)
7,906
9,135
(87,613)
(15,522)
(62)
(18,885)
5,756
(13,191)
(2,875)
5,703
—
989
—
3,817
(96,987)
(2,539)
438,680
339,154
—
(2,030)
120
(1,910)
(2,515)
290,992
11,000
7,183
15,000
321,660
304,228
(1,538)
135,990
438,680
The notes of pages 71 to 101 are an integral part of the consolidated financial statements.
70
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements
1 General information
Bicycle Therapeutics plc (the “Parent Company”) and, together with its subsidiaries (the “Company”), is a
clinical-stage biopharmaceutical company developing a novel and differentiated class of medicines, which the
Company refers to as Bicycles, for diseases that are underserved by existing therapeutics. Bicycles are a unique
therapeutic modality combining the pharmacology usually associated with a biologic with the manufacturing and
pharmacokinetic properties of a small molecule.
The Parent Company is a public company limited by shares and incorporated in England and Wales and
quoted on the NASDAQ capital market under the ticker BCYC.
Its registered number is: 11036004.
Its registered office is: Blocks A & B, Portway Building, Granta Park, Great Abington, Cambridge, United
Kingdom, CB21 6GS .
2 Statement of compliance
The consolidated financial statements of the Company and the financial statements of the Parent Company
have been prepared in compliance with U.K. Accounting Standards, including Financial Reporting Standard 102,
‘The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland’ and the
Companies Act 2006 (the “Companies Act”).
3 Summary of significant accounting policies
Basis of preparation
These financial statements are prepared on a going concern basis, under the historical cost convention, as
modified by the recognition of certain financial assets and liabilities measured at fair value. Currently there are no
financial assets and liabilities measured at fair value.
The accompanying consolidated financial statements of the Company 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 financial statements have been prepared under the historical cost accounting rules and in accordance
with the Companies Act.
Accounting policies have been applied consistently other than when new policies have been adopted.
The Company has taken advantage of the exemption in section 408 of the Companies Act from presenting
its individual statement of comprehensive income.
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Parent Company and the Company
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements, are disclosed in note 4.
Exemptions for qualifying entities under FRS 102
FRS 102 allows a qualifying entity certain disclosure exemptions, subject to conditions, from preparing a
Parent Company statement of cash flows, on the basis that it is a qualifying entity and the Parent Company’s cash
flows are included in the consolidated statement of cashflows. In addition, the Parent Company is exempted from
disclosing share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and
26.23 concerning its own equity instruments as the Parent Company financial statements are presented with the
consolidated financial statements and the relevant disclosures are included therein.
71
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
3 Summary of significant accounting policies (continued)
Parent Company has also taken the exemption available from disclosing the company key management
compensation as required by FRS102 paragraph 33.7.
Going concern
The Company is involved in research and development activities and until it is able to convert this activity
into a significant product revenue stream, it will be reliant upon obtaining additional funding in connection with
continuing operations. More detailed analysis of the risks faced by the Company is given in the Strategic Report.
At 31 December 2022, the Company had cash of $339.2 million and the directors estimate the Company’s
existing cash at the date of approval of these financial statements is sufficient to continue to fund the Company’s
operating expenses for the foreseeable future at least 12 months from the date of that approval and that is therefore
appropriate to prepare these financial statements on a going concern basis.
Revenue
Revenue represents the fair value of amounts received or receivable in respect of collaborative research
agreements, licence fees or milestone payments (excluding value added tax). These are recognised as revenue when
the specific conditions stipulated in the agreements have been satisfied and the significant risks and rewards of
ownership have been transferred to the customer.
Licencing agreements may consist of multiple elements and provide for various forms of consideration
terms, such as upfront, development, regulatory and sales milestones, sales-based royalties and similar payments. To
account for arrangements with multiple elements, separately identifiable components within the contract and the
arrangement transaction price are identified. Development and regulatory approval milestones are included within
the allocated transaction price only when it becomes probable that economic benefits will flow to the entity and the
amount of revenue can be measured with reliability.
The fair value of the arrangement transaction price is allocated to the different separately identifiable
components based on the relative stand-alone selling price of those services provided. The allocated transaction
price is recognised over the respective performance period of each separately identifiable component. Amounts
received in advance of the revenue recognition criteria being met are initially reported as deferred revenue.
The Company provides research and development services to its customers which often culminate in the
provision of a licence to developed intellectual property. Where services are provided in the development or
identification of a licenced molecule, the services are not considered to be a separately identifiable component to the
customer/licensor if they are not distinct from the licence. Any upfront income received under such arrangements is
considered to be consideration for the combined licence and development services component and it is recognised
over the development term. When the services performed are an indeterminate number of acts over a specified
period of time, revenue is recognised on a straight-line basis. When performance of services can be estimated
reliably, the Company recognises revenue associated with the transaction by reference to the stage of completion of
the transaction at the end of the reporting period. Where arrangements involve upfront consideration allowing
customers the option to select additional licences and/or research and development services in relation to additional
targets that represent a material right, such consideration is deferred until the option is exercised (in which case the
revenue is recognised as the related services are performed) or expires (in which case the revenue is recognised
immediately, as the Company has no further obligations under the arrangement).
Customer options for future components are accounted for as separate arrangements when they occur.
Where the Company grants a licence to its intellectual property and there are no further conditions
stipulated in the agreement related to separately identifiable components and the significant risks and rewards of
ownership have been transferred to the customer the licence revenues are recognised when receipt of subsequent
milestones is probable. This is typically when the milestone event is achieved or satisfied.
72
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
3 Summary of significant accounting policies (continued)
Impairment of non-financial assets
At each balance sheet date non-financial assets not carried at fair value are assessed to determine whether
there is an indication that the asset may be impaired. If there is such an indication the recoverable amount of the
asset is compared to the carrying amount of the asset. If the recoverable amount of the asset is estimated to be lower
than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is
recognised in the statement of comprehensive income.
Tangible assets and depreciation
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
The cost of tangible fixed assets is their purchase cost, together with any incidental costs of acquisition. The assets’
residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The
effect of any change is accounted for prospectively.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to their
residual values over their estimated useful lives, as follows:
Laboratory equipment
Office equipment
Computer equipment
Leasehold improvements
Intangible assets and amortisation
3 to 5 years
3 years
3 years
over the remaining period of the lease
Intangible assets comprise intellectual property licences and computer software and are stated at capitalised
cost less accumulated amortisation and accumulated impairment losses.
Amortisation is calculated, using the straight-line method, to allocate the depreciable amount of the assets
to their residual values over their estimated useful lives, assessed by the directors on a case-by-case basis, as
follows:
•
Intellectual property licences:
5 to 15 years
• Computer software:
3 years
The assets are reviewed for impairment if there is an indication that the carrying amount may be impaired.
Provision is made against the carrying value of such assets when an impairment in value is deemed to have
occurred.
Costs associated with maintaining intellectual property and computer software are recognised as an expense
as incurred. Amortisation is included in other operating expenses in the statement of comprehensive income.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly
liquid investments that are readily convertible into known amounts of cash with original maturities of three months
or less and bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities.
Leases
Leases that do not transfer all the risks and rewards of ownership are classified as operating leases.
Payments under operating leases are charged to the statement of comprehensive income on a straight-line basis over
the period of the lease. Incentives received to enter into an operating lease are credited to the statement of
comprehensive income, to reduce the lease expense, on a straight-line basis over the period of the lease.
73
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
3 Summary of significant accounting policies (continued)
Leases of assets that transfer substantially all the risks and rewards incidental to ownership are classified as
finance leases. The Company has no finance leases. The Company’s lease terms include the period covered by
extension options or exclude the period covered by termination options when it is reasonably certain that the
Company will exercise that option.
Debtors
Short term debtors are measured at transaction price, less any impairment. The Company makes an estimate
of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors,
management considers factors including the current credit rating of the debtor, the ageing profile of debtors and
historical experience.
Creditors
Short term creditors are measured at the transaction price. Other financial liabilities, including loans, are
measured initially at the transaction price, and are measured subsequently at amortised cost using the effective
interest method.
Investments in subsidiaries — Parent Company
Investments in subsidiaries are held at cost less accumulated impairment losses.
Provisions and contingencies
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of
past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount of the
obligation can be estimated reliably.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost.
Contingencies
Contingent liabilities are not recognised, except those acquired in a business combination. Contingent
liabilities arise as a result of past events when i) it is not probable that there will be an outflow of resources or that
the amount cannot be reliably measured at the reporting date or ii) when the existence will be confirmed by the
occurrence or non-occurrence of uncertain future events not wholly within the Company’s control. Contingent
liabilities are disclosed in the financial statements unless the probability of an outflow of resource is remote.
Contingent assets are not recognised. Contingent assets are disclosed in the financial statements when an inflow of
economic benefits is probable.
Grant income
Government grants are not recognised until there is reasonable assurance that the Company will comply
with the conditions of the grants and also that the grants will be received. Government grants are recognised in profit
or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for
which the grants are intended to compensate. Grant income is recognised gross in the statement of comprehensive
income as operating income. For the year ended 31 December 2022, the Company recognised government grant
income of $1,476k (year ended 31 December 2021: $2,988k).
74
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
3 Summary of significant accounting policies (continued)
Interest income
Interest income is recognised using the effective interest rate method.
Employee benefits
The Company provides a range of benefits to employees, including annual bonus arrangements, paid
holiday arrangements and defined contribution pension plans.
Short term benefits
Short term benefits, including holiday pay and other non-monetary benefits are recognised as an expense in
the period in which the service is received.
Pension costs
The Company operates a defined contribution plan for its U.K. employees and a defined-contribution
savings plan under Section 401(k) for its U.S. employees. Under these plans the company pays fixed contributions
into a separate entity. Once the contributions have been paid the company has no further payment obligations. The
contributions are recognised as an expense when they are due. Differences between contributions payable and
contributions actually paid in the period are shown as either accruals or prepayments at the year end. The assets of
the plan are held separately from the Company in independently administered funds.
Share-based payments
The Company provides share-based payment arrangements to certain employees.
Equity-settled arrangements are measured at fair value (excluding the effect on non-market based vesting
conditions) at the date of the grant. The fair value is expensed on a graded basis over the vesting period. The amount
recognised as an expense is adjusted to reflect the actual number of shares or options that will vest. An attrition rate
based on the Company’s average historic attrition over the past period corresponding to the length of the vesting
period is used.
Where equity-settled arrangements are modified, and are of benefit to the employee, the incremental fair
value is recognised over the period from the date of modification to date of vesting. Where a modification is not
beneficial to the employee there is no change to the charge for share-based payment. Settlements and cancellations
are treated as an acceleration of vesting and the unvested amount is recognised immediately in the statement of
comprehensive income.
The fair value of each restricted share award is based on the fair value of the Parent Company’s shares, less
any applicable purchase price. The fair value of each share option award is estimated using the Black-Scholes
option-pricing model which requires inputs based on certain subjective assumptions, including the fair value of
shares, the expected share price volatility, the expected term of the award, the risk-free interest rate and expected
dividends. Previously, due to a lack of company-specific historical volatility data, the Company’s expected volatility
was calculated based on reported volatility data for a representative group of publicly traded companies for which
historical information was available. The historical volatility was calculated based on a period of time
commensurate with the assumption used for the expected term. During 2022, the Company began to estimate its
volatility by using a blend of its stock price history for the length of time it has market data for its shares and the
historical volatility of similar public companies for the expected term of each grant. The Company will continue to
apply this process until a sufficient amount of historical information regarding the volatility of its own share price
becomes available.
Provision is made for National Insurance contributions on outstanding share options that are expected to be
exercised using the latest enacted National Insurance rates applied to the difference between the market value of the
75
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
3 Summary of significant accounting policies (continued)
underlying shares at the balance sheet date and the option exercise price. The Company has no cash-settled
arrangements. The Parent Company has no employees and thus there is no charge in the statement of comprehensive
income for share-based payments for the Parent Company. The charge for share-based payments has been
recognised as an increase in cost of investment in subsidiaries.
Annual bonus plan
The Company operates an annual bonus plan for employees. An expense is recognised in the statement of
comprehensive income when the Company has a legal or constructive obligation to make payments under the plan
as a result of past events and a reliable estimate of the obligation can be made.
Taxation
Taxation income and expense for the year comprises current and deferred tax recognised in the
reporting year. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other
comprehensive income or directly in equity respectively.
Current tax
Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years.
Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the year end.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Income tax credit
The Company benefits from the U.K. research and development tax credit regime under both the small and
medium sized enterprise (“SME”) scheme and by claiming a Research and Development Expenditure Credit
(“RDEC”) in respect of grant funded projects. Under the SME regime, a portion of the Company’s losses are
surrendered for a cash rebate of up to 33.3% of eligible expenditures. Such credits are calculated based on the
amount and nature of the research and development expenditure incurred and are accounted for within the tax
provision in the year in which the expenditures were incurred.
Deferred tax
Provision is made for deferred tax assets and liabilities arising from timing differences between the
recognition of gains and losses in the accounts and their recognition for tax purposes.
Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the
period end and that are expected to apply to the reversal of the timing difference.
Deferred tax is recognised on all timing differences at the reporting date. Unrelieved tax losses and other
deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits.
Research and development
Expenditure on research and development is expensed in the period which it is incurred.
Related party transactions
The Company discloses transactions with related parties which are not wholly owned within the same
group. Where appropriate, transactions of a similar nature are aggregated unless, in the opinion of the directors,
76
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
3 Summary of significant accounting policies (continued)
separate disclosure is necessary to understand the effect of the transactions on the financial statements.
Foreign currencies
Transactions in foreign currencies are recorded in an entity’s functional currency using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated
using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the
statement of comprehensive income. Non-monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the exchange rates prevailing at the date of the transaction. Adjustments
that arise from exchange rate changes on transactions denominated in a currency other than the functional currency
are included as profit or loss as incurred.
Basis of consolidation
Subsidiaries are entities controlled by the Parent Company. Control exists when the Parent Company has
the power to govern the financial and operating policies of an entity to obtain benefits from its activities. In
assessing control, the Parent Company takes into consideration potential voting rights. The acquisition date is the
date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the
financial statements from the date control is achieved to the date control ceases. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
Functional and presentational currency
Functional currency
The Parent Company’s functional currency is the U.S. dollar.
The Parent Company’s subsidiaries in the U.K., BicycleTx Limited and BicycleRD Limited, use British
pound sterling as their functional currencies and their results have been translated into U.S. dollars for inclusion in
these consolidated financial statements. The functional currency of the Parent Company’s subsidiary in the U.S.,
Bicycle Therapeutics Inc., is the U.S. dollar.
Presentational currency
The presentational currency is U.S. dollars, rounded to the nearest $000, for all years presented in these
financial statements.
The Company translates the assets and liabilities of BicycleTx Limited and BicycleRD Limited into U.S.
dollars at the exchange rate in effect on the balance sheet date. Revenue and expenses are translated into U.S. dollars
at the average exchange rate in effect during the period. Unrealised translation gains and losses are recorded as a
currency translation adjustment, which is included in the statement of changes in equity.
Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary
shares or options are shown in equity as a deduction from the proceeds.
Finance costs
Finance costs are charged to the statement of comprehensive income over the term of the debt using the
effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are
initially recognised as a reduction in the proceeds of the associated capital instrument.
77
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
3 Summary of significant accounting policies (continued)
Financial instruments
The Company has chosen to adopt Sections 11 and 12 of FRS102 in respect of financial instruments.
Financial assets:
Basic financial assets, including trade and other receivables, cash and cash equivalents, loans to the Parent
Company’s subsidiaries and investments in commercial paper, are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future
receipts discounted at a market rate of interest.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting year financial assets measured at amortised cost are assessed for objective
evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount
and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The
impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was
recognised the impairment is reversed. The reversal is such that the current carrying amount does not exceed what
the carrying amount would have been had the impairment not previously been recognised. The impairment reversal
is recognised in profit or loss.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or
are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party
or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the
asset to an unrelated third party without imposing additional restrictions
Financial liabilities:
Basic financial liabilities, including trade and other payables, bank loans, and preference shares that are
classified as debt net of issue costs, are initially recognised at transaction price, unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at
a market rate of interest. Basic financial liabilities also include certain other financial instruments where the
Company does not have the unconditional right to avoid settling in cash or by delivery of another financial asset, or
otherwise settle it in such a way that they would be financial liabilities.
Debt and certain other financial instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course
of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual
obligation is discharged, cancelled or expires.
4 Critical accounting judgements and estimation uncertainty
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
78
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
4 Critical accounting judgements and estimation uncertainty (continued)
Critical accounting estimates
Revenue in respect of the Evaluation and Option, Collaboration, and Share Purchase Agreements with Ionis
and the Discovery Collaboration and License Agreement with Genentech are recognised in accordance with the
revenue accounting policy. In accordance with this policy, amounts allocated to combined licence and development
services components are recognised over the development term by reference to the stage of completion of the
transaction at the end of the reporting period when performance can be estimated reliably. The stage of completion,
and thereby periods over which revenue should be recognised, are subject to estimates by management and may
change over the course of the research and development and licencing arrangement. Changes in the estimated total
level of effort expected to be performed would accelerate or decrease the rate of revenue recognised related to the
components that are recognised over time. Specifically, a change in the overall expected effort of 5% for the
components recognised over time in the Ionis and Genentech arrangements would result in a change in revenue
recognised of approximately $548k and $544k, respectively, for the year ended 31 December 2022.
Significant judgements
Genentech expansion options
In June 2022, Genentech exercised an expansion option to add an additional Genentech Collaboration
Program, which triggered a $10.0 million payment to the Company under the Genentech Collaboration Agreement.
Management exercised judgement and concluded that the exercise of the expansion option is a continuation of an
existing contract as the customer decided to purchase additional goods and services contemplated in the original
contract. The arrangement consideration was allocated to the separate components underlying the expansion option
on the same basis as the initial allocation of the Genentech Collaboration Agreement. See note 5 for further
discussion.
Parent company investments and intercompany receivables
The Parent Company has investments in and intercompany receivables due from both BicycleTx Limited
and BicycleRD Limited both of which are currently loss making. The Directors have assessed the recoverability of
these balances and has concluded that there is no impairment. The Company’s value is based on its intellectual
property which is held within BicycleTx Limited and BicycleRD Limited.
The Directors do not consider there to be any other critical accounting estimates or assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets or liabilities within the next
financial year.
5 Revenue
All the Company’s revenue was generated from collaborative research arrangements. The Company’s
revenues are attributed to the operations of the Company in the United Kingdom. The following is a summary of the
Company’s customers by their geography:
Europe
North America
United Kingdom
2022
$’000
2021
$’000
—
851
12,715
9,902
605
391
13,320
11,144
No further segmental information is given. A segment is a distinguishable component of the Company that
is engaged in either providing related products or services which is subject to risks and rewards that are different
79
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
5 Revenue (continued)
from those of other segments. The CEO reviews the Company’s internal reporting in order to assess performance
and allocate resources. Management has determined that there is one operating segment based on these reports.
Ionis Agreements
Under our collaboration with Ionis, the total transaction price was determined to be $38.0 million,
consisting of a $31.0 million up front payment in 2021 from the Ionis Collaboration Agreement, a $3.0 million
payment in 2021 under the initial Evaluation and Option Agreement, a $3.4 million premium paid in 2021 for
ordinary shares purchased under the Ionis Share Purchase Agreement, and an estimated $0.6 million for the
reimbursement of contract research organisation costs. We are also eligible to receive specified development,
regulatory and sales milestone payments, as well as tiered royalty payments on net sales. Future milestone and
royalty payments are not included in the transaction price due to the uncertainty regarding whether any of the
milestones will be achieved.
The transaction price was allocated to the separately identifiable components, including a combined licence
and research and discovery component and four material rights associated with options to obtain credits to be
applied towards certain regulatory acceptance fees, based on the relative estimated standalone selling prices of each
identifiable component. The Company is recognising revenue related to amounts allocated to the combined licence
and research and discovery component by reference to the stage of completion at the end of the reporting period
using a proportional performance model over the period of service using input-based measurements. The amount
allocated to the material rights is recorded as deferred revenue and the Company commences revenue recognition
upon exercise of or upon expiry of the respective option. The Company anticipates that the combined licences and
research and discovery component will be satisfied over a period of three years and anticipates the material rights
may be exercisable or may expire after approximately four years from contract execution.
In December 2021, the Company and Ionis entered into an amendment to the Ionis Collaboration
Agreement, under which Ionis paid the Company $1.6 million. The Company accounts for the amendment as a
separate contract, which the Company accounts for as a separate contract. Under the amendment, the Company
agreed to perform additional research services for an initial six-month period, which was extended in August 2022
for an additional three months, in exchange for $0.8 million. In October 2022, Ionis exercised an option it had for
the Company to perform additional research services for an additional six months in exchange for the remaining
consideration of $0.8 million. The amounts are recognised as revenue component by reference to the stage of
completion at the end of the reporting period using a proportional performance model over the period of service
using input-based measurements.
During the year ended 31 December 2022, the Company recognised revenue of $9.3 million related to our
collaboration with Ionis (year ended 31 December 2021: $4.2 million).
Discovery Collaboration and License Agreement with Genentech
Under the Genentech Collaboration Agreement, the total transaction price under the collaboration was
initially determined to be $31.0 million, consisting of the $30.0 million upfront fee and an additional $1.0 million
for Genentech’s selection of a new targeting arm at inception. The Company is also eligible to receive specified
development, regulatory, and sales milestones as well as tiered royalty payments on net sales. Future milestone and
royalty payments were not included in the transaction price at inception due to the uncertainty regarding whether
any of the milestones would be achieved. In March 2021, the Company achieved specified criteria in accordance
with the research plan and therefore updated its estimate of the variable consideration to include an additional $2.0
million. The arrangement consideration was increased to $33.0 million. Additional variable consideration for
development milestones not subject to option exercises was fully constrained, as a result of the uncertainty regarding
whether any of the milestones will be achieved.
The transaction price was allocated to the separately identifiable components, including two combined
licence and research and development components for the two initial collaboration programs, as well as material
80
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
5 Revenue (continued)
rights associated with various future licence, research and development services, and limited substitution options,
based on the relative estimated standalone selling prices of each separately identifiable component. The Company is
recognising revenue related to amounts allocated to the combined licence and research and development
components for the initial two collaboration programs as the services are performed by reference to the stage of
completion at the end of each reporting period as the underlying services are performed using a proportional
performance model over the period of service using input-based measurements. The amounts allocated to the
material rights is recorded as deferred revenue and the Company will commence revenue recognition upon exercise
of or upon expiry of the respective option. The Company anticipates that the Genentech collaboration program
number 1 and Genentech collaboration program number 2 components will be performed over a period of
approximately two to three years, and the material rights will be exercised or expire within approximately four years
from the start of the collaboration in February 2020.
In October 2021, Genentech exercised the first of its two expansion options to add an additional
collaboration program and paid to the Company an expansion fee of $10.0 million in November 2021. Genentech
also elected for the Company to perform discovery and optimisation services for a targeting arm, and the Company
received an additional payment of $1.0 million for additional research services. The Company accounted for this as
a continuation of an existing contract as the customer decided to purchase additional goods and services
contemplated in the original contract, and as such, the additional arrangement consideration of $11.0 million
received upon the option exercises together with the amount originally allocated to the expansion option material
right of $3.5 million is allocated to the underlying goods and services associated with the expansion option. The
arrangement consideration was allocated to the separately identifiable components underlying the expansion option
on the same basis as the initial allocation of the Genentech Collaboration Agreement. In December 2022, the
Targeting Arm achieved specified criteria in accordance with the research plan and therefore the Company updated
its estimate of variable consideration to include an additional $2.0 million. The Company allocated the additional
$2.0 million entirely to the expansion option collaboration program and targeting arm services. The Company will
recognise amounts allocated to the expansion option collaboration program and targeting arm services as the
underlying services are performed by reference to the stage of completion at the end of the reporting period using a
proportional performance model over the period of service of approximately two to three years using input-based
measurements. The amounts allocated to the material rights underlying the expansion option are recorded as
deferred revenue and the Company will commence revenue recognition upon exercise of or upon expiry of the
respective option.
In June 2022, Genentech exercised the second expansion option to add an additional collaboration program,
which triggered a $10.0 million payment to the Company. The Company accounted for this as a continuation of an
existing contract as the customer decided to purchase additional goods and services contemplated in the original
contract, as such, the additional arrangement consideration of $10.0 million received upon option exercise together
with the amount originally allocated to the expansion option material right of $3.5 million is allocated to the
underlying goods and services associated with the expansion option. The arrangement consideration was allocated to
the separately identifiable components underlying the expansion option on the same basis as the initial allocation of
the Genentech Collaboration Agreement. The Company will recognize amounts allocated to second expansion
option collaboration program services as the underlying services are performed by reference to the stage of
completion at the end of each reporting period using a proportional performance model over the period of service of
approximately two to three years using input-based measurements. The amount allocated to the material rights
underlying the expansion option are recorded as deferred revenue and the Company will commence revenue
recognition upon exercise of or upon expiry of the respective option.
During the year ended 31 December 2022, the Company recognised revenue of $3.6 million related to our
collaboration with Genentech (year ended 31 December 2021: $5.7 million).
81
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
6 Operating loss
The Company’s consolidated operating loss is stated after charging/(crediting):
Expenditure on research and development
Depreciation of tangible assets
Amortisation of intangible assets
Operating lease charges
Loss on foreign exchange
Wages and salaries (note 9)
Social security costs (note 9)
Other pension costs (note 9)
Share-based payments (note 11)
Auditors’ remuneration
Audit of these financial statements
Audit of the Parent Company’s subsidiaries
Audit services for U.S. SEC financial statements
Audit-related assurance services
2022
$’000
2021
$’000
77,541
47,778
3,714
1,398
31
3,733
14,344
21
1,095
2,162
33,280
19,441
3,590
1,861
8,789
990
40,642
15,271
98
74
602
393
62
60
704
527
No additional auditors’ remuneration relating to share issuance costs were charged to the share premium
account in the year ending 31 December 2022 (year ending 31 December 2021: $149k).
Expenditure on research and development includes staff costs as follows:
Wages and salaries
Social security costs
Other pension costs
7 Net interest income/(expense)
a)
Interest receivable and similar income
2022
$’000
2021
$’000
22,548
12,592
2,969
1,387
2,105
725
The Company’s interest receivable and other income consisted of the following:
Bank interest
2022
$’000
2021
$’000
5,756
120
82
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
7 Net interest income/(expense) (continued)
b)
Interest payable and similar expenses
The Company’s interest payable and similar expenses consisted of the following:
Interest payable on loan and other borrowings
Finance charge
Interest payable and similar expenses
8 Tax on loss
The Company’s tax on loss consisted of the following:
Current tax:
U.K. corporation tax on losses for the year
Foreign corporation tax on profits for the year
Adjustment in respect of prior years
Total current tax
Deferred tax:
Origination and reversal of timing differences
Deferred tax recognised in the year
Tax credit on loss
2022
$’000
2021
$’000
3,235
138
3,373
2,909
108
3,017
2022
$’000
2021
$’000
(19,286)
(10,906)
3,451
—
—
101
(15,835)
(10,805)
(4,975)
(4,975)
(1,669)
(1,669)
(20,810)
(12,474)
The tax assessed for the year is higher (2021: higher) than the standard rate of corporation tax in the U.K.
(19%) (2021: 19%). The tax reconciliation for the year is given below:
Loss before taxation
Loss reconciled to the current tax rate of 19% (2021:
19%)
Effects of:
Income not taxable for tax purposes
Surrender of tax losses for research and development tax credit
refund
Fixed asset and other timing differences not recognised
Deferred tax not recognised on share-based payment and
payroll taxes
Deferred tax not recognised on tax losses
Research & Development enhanced allowance
Difference in overseas tax rates
Research and development expenditure credits
Adjustment in respect of prior periods
Total tax credit on loss
2022
$’000
(160,630)
2021
$’000
(89,804)
(30,520)
(17,063)
(2,693)
(57)
6,058
(509)
3,381
(115)
6,008
14,643
(14,457)
1,065
(405)
—
(20,810)
(721)
10,726
(8,066)
(47)
(613)
101
(12,474)
83
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
8 Tax on loss (continued)
No corporation tax liability arises on the results for the year due to the loss incurred. A tax credit of
$19,286k (2021: $10,906k) has arisen as a result of tax losses being surrendered in respect of research and
development expenditure.
From 1 April 2023 the corporation tax rate will increase to 25% and as it is now considered enacted its
effects are included in these financial statements. Deferred taxes at the balance sheet date have been measured using
these enacted tax rates and reflected in these financial statements.
The Company had potential deferred tax assets at the prevailing rate of 25% (31 December 2021: 25%) as
follows:
Tax effect of timing differences because of:
Fixed asset and other timing differences
Share-based payment
Tax losses carried forward
Deferred Tax Asset
Amount
unrecognised
31 December
2022
$’000
Amount
unrecognised
31 December
2021
$’000
—
13,358
46,388
59,746
(238)
6,228
31,011
37,001
Deferred tax assets are not recognised where there is insufficient evidence that they are recoverable.
Deferred tax is calculated using tax rates that apply based on rates enacted or substantively enacted by the reporting
date. Deferred tax assets of $1,678k (31 December 2021: Nil) have been recognised as the Company considers it
probable that they will be recovered against the reversal of deferred tax liabilities. These deferred tax assets and
liabilities have been offset since the Company has a legally enforceable right to offset current tax assets against
current tax liabilities when these deferred tax assets and deferred tax liabilities relate to income taxes levied by the
same tax authority.
The Company regularly assesses its ability to realise its deferred tax assets through future taxable profits.
Assessing the realisation of deferred tax assets requires significant judgment. After consideration of the evidence,
including the Company’s history of cumulative net losses in the U.K., the Company has concluded that, other than
the deferred tax assets which will be recovered against the reversal of deferred tax liabilities, it is more likely than
not that the Company will not realise the benefits of its other U.K. deferred tax assets and accordingly the Company
has not recognised these U.K. deferred tax assets as they are not considered recoverable. There is no expiry date of
the deferred tax assets. The Company has considered the Company’s history of cumulative net profits in the U.S.,
estimated future taxable income and concluded that it is more likely than not that the Company will realise the
benefits of its U.S. deferred tax assets and has recognised net U.S. deferred tax assets.
84
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
8 Tax on loss (continued)
The Company has recognised deferred tax (liabilities)/assets within its U.S. subsidiary as follows:
Tax effect of timing differences because of:
Fixed asset and other timing differences
Share-based payment
Research credit carry forwards
R&D Capitalised
Other
Deferred Tax Asset
Amount
Amount
recognised
31 December
2022
$’000
recognised
31 December
2021
$’000
(377)
2,256
—
5,168
1,149
8,196
—
1,054
1,862
—
312
3,228
Of the above $5,468k is non-current (31 December 2021: $1,060k). There is no expiry date of the deferred
tax assets. The Parent Company had no recognised or unrecognised deferred tax assets.
Deferred tax recognised in the year is as follows:
Deferred tax asset brought forward
Fixed asset and other timing differences
Share-based payment
Research credit (utilised)/carry forwards
R&D Capitalised
Other
Deferred tax asset carried forward
2022
$’000
3,228
(377)
1,202
(1,862)
5,168
837
8,196
2021
$’000
1,559
—
501
629
—
539
3,228
85
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
9 Staff costs
The average monthly number of persons (including executive directors) employed by the Company during
the year was:
By activity
Research and development
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
Share-based payment compensation
2022
Number
2021
Number
144
49
193
78
23
101
2022
$’000
2021
$’000
33,280
19,441
3,590
1,861
40,642
79,373
8,789
990
15,271
44,491
The Parent Company had no employees other than directors.
10 Directors’ emoluments
The aggregate emoluments of the directors of the Company are set out below:
Aggregate emoluments
Company pension contributions to money purchase schemes
2022
$’000
3,343
5
3,348
2021
$’000
14,108
6
14,114
One director had retirement benefits accruing to them under a money purchase scheme. One director
received cash in lieu of contributions to the money purchase scheme. One director is associated with Stone Sunny
Isles, Inc., and Stone Atlanta Estates LLC, the successor-in-interest to Stone Sunny Isles, Inc., which provided
consultancy services to the Company totalling $171k for the year ended 31 December 2022 (2021: $173k) and is
included in the amounts above.
No directors exercised share options during the year ended 31 December 2022 (2021: Two). The gain on
exercised share options included within aggregate emoluments (based on the market value of the shares on the date
of exercise) is $Nil (2021: $12,184k).
Emoluments paid to the highest paid director are set out below:
Aggregate emoluments
Pension contributions to money purchase schemes
2022
$’000
2021
$’000
1,310
8,581
5
—
1,315
8,581
86
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
10 Directors’ emoluments (continued)
A gain on exercise of share options of $Nil (2021: $8,471k) is included within aggregate emoluments of the
highest paid director (based on the market value of the shares on the date of exercise).
Further details of the directors’ remuneration and directors’ share options are contained in the Directors’
Remuneration Report.
11 Share-based payments
Employees of the Parent Company’s subsidiaries have been granted options to purchase ordinary shares in
the Parent Company as well as restricted share units for ordinary shares (“RSUs”). Each RSU represents the right to
receive one ordinary share upon vesting. Options granted typically vest over a four-year service period with 25% of
the award vesting on the first anniversary of the commencement date and the balance thereafter in 36 equal monthly
instalments. RSUs granted typically vest over a four-year service period with 25% of the award vesting on the first
anniversary of the commencement date and the remaining RSUs vest in 12 equal quarterly instalments. Certain
options and RSUs granted to non-employee directors are fully vested on the date of grant.
Certain historic equity awards were issued for which 20% of the award vests upon the first anniversary of
the vesting start date, 60% vests thereafter in 36 equal monthly instalments, and 20% vest upon the earlier of the
fourth anniversary of the vesting start date, or the achievement of a specified revenue threshold from the Company’s
collaboration arrangements.
Options granted generally expire 10 years from the date of grant.
A reconciliation of the Company’s share option movements over the years ended to 31 December 2021 and
31 December 2022 is shown below:
Weighted
average
exercise price
Weighted
Average
Remaining
Aggregate
Contractual Intrinsic value
10.51
23.07
18.67
10.21
14.97
(in years)
8.54
—
—
—
8.13
$’000
27,553
—
—
—
207,009
Number
(000)
3,737 $
1,677 $
(107) $
(704) $
4,603 $
Weighted
average
exercise price
Number
(000)
4,603 $
1,548 $
(174) $
(78) $
5,899 $
14.97
44.83
27.92
12.67
22.45
Weighted
Average
Remaining
Contractual Intrinsic value
Aggregate
(in years)
8.13
—
—
—
7.64
$’000
207,009
—
—
—
71,002
Outstanding at 1 January 2021
Granted
Forfeited
Exercised
Outstanding at 31 December 2021
Outstanding at 1 January 2022
Granted
Forfeited
Exercised
Outstanding at 31 December 2022
87
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
11 Share-based payments (continued)
The assumptions used in the Black-Scholes option pricing model to determine the value of share options
granted to employees and directors during the years ended 31 December 2022 and 31 December 2021 were as
follows:
Risk-free interest rate
Expected volatility
Expected dividend yield
Expected term (in years)
2022
2021
2.2 %
0.6 %
82.5 % 79.8 %
—
—
6.02
5.98
A reconciliation of the Company’s RSU movements over the year ended 31 December 2022 is shown
below:
Unvested at 1 January 2022
Granted
Vested
Unvested at 31 December 2022
Number
(000)
—
222,725
(35,000)
187,725
Grant Date
Fair Value
($)
—
60.86
60.86
60.86
The expense recognised for equity-settled awards in respect of employee services received during the year
ended 31 December 2022 is $40,642k (2021: $15,271k).
88
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
12 Intangible assets
Intangible assets of the Company consist of the following:
Intellectual
Property Computer
Licence
$’000
Software Total
$’000
$’000
Cost
At 1 January 2022
Additions
Foreign exchange
At 31 December 2022
Accumulated amortisation
At 1 January 2022
Charge for the year
Foreign exchange
At 31 December 2022
Net book value
As at 31 December 2022
As at 31 December 2021
The Parent Company had no intangible assets.
322
—
(33)
289
322
—
62
62
(2)
(35)
60 349
258
19
(27)
250
39
64
— 258
12
31
—
(27)
12 262
48
—
87
64
89
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
13 Tangible assets
Cost
At 1 January 2022
Additions
Disposals
Foreign exchange
At 31 December 2022
Accumulated depreciation
At 1 January 2022
Charge for the year
Disposals
Foreign exchange
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
The Parent Company had no tangible assets.
Office Laboratory Computer Leasehold
equipment
$’000
equipment Improvement Total
$’000
equipment
$’000
$’000
$’000
226
726
—
(28)
6,747
9,219
(351)
(743)
143
244
—
(6)
809 7,925
10,208 20,397
(1)
(352)
(280) (1,057)
924
14,872
381
10,736 26,913
138
163
—
(13)
288
4,196
2,095
(191)
(407)
140
328 4,802
44
—
(3)
1,412 3,714
(1)
(192)
(49)
(472)
5,693
181
1,690 7,852
636
9,179
200
9,046 19,061
88
2,551
3
481 3,123
90
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
14 Investments in subsidiaries
Investments of the Parent Company consisted of the following:
Cost
At 1 January 2021
Capital contribution arising from equity-settled share-based payments
At 31 December 2021
Net book value
At 31 December 2021
Cost
At 1 January 2022
Capital contribution arising from equity-settled share-based payments
At 31 December 2022
Net book value
At 31 December 2022
Investment in
subsidiary
undertaking
$’000
17,048
15,271
32,319
32,319
32,319
40,642
72,961
72,961
The Parent Company has three wholly owned subsidiaries: BicycleTx Limited and BicycleRD Limited
which are based in Cambridge, U.K. and Bicycle Therapeutics Inc, which is based in Massachusetts, U.S. All these
subsidiaries perform research and development activities.
Subsidiary undertakings
Name
Class of shares Country of incorporation
Holding Principal activity
Development of novel bicyclic
BicycleTx Limited
Ordinary
United Kingdom
100%
peptides
Development of novel bicyclic
BicycleRD Limited
Ordinary
United Kingdom
100%
peptides
Development of novel bicyclic
Bicycle Therapeutics Inc N/A
United States
100%
peptides
The registered office address of BicycleTx Limited and BicycleRD Limited is Blocks A & B, Portway
Building Granta Park, Great Abington, Cambridge, United Kingdom, CB21 6GS. The registered office address of
Bicycle Therapeutics Inc. is 35 Cambridgepark Drive, Suite 350, Cambridge, MA 02140.
91
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
15 Debtors
Amounts falling due within one year
Trade debtors
Consolidated
Parent Company
31 December
2022
$’000
31 December
2021
$’000
31 December
2022
$’000
31 December
2021
$’000
2,045
1,000
—
—
Amounts owed by group undertakings
—
—
231,448
130,434
Deferred corporation tax
Research and development tax credit
Other debtors
Prepayments and accrued income
8,196
3,228
19,162
10,910
2,311
7,958
1,311
7,297
—
—
—
—
—
—
29
—
39,672
23,746
231,448
130,463
Amounts owed by group undertakings are interest free with no fixed terms of repayment.
16 Creditors: amounts falling due within one year
Amounts falling due within one year
Trade creditors
Taxation and social security
Accruals and deferred income
Consolidated
Parent Company
31 December 31 December 31 December 31 December
2022
$’000
2021
$’000
2022
$’000
2021
$’000
6,472
5,711
2,721
5,758
43,186
31,448
55,369
39,927
—
—
—
—
—
—
—
—
17 Creditors: amounts falling due after more than one year
Amounts falling due after more than one year
Loans and other borrowings
Accruals and deferred income
Consolidated
Parent Company
31 December 31 December 31 December 31 December
2022
$’000
2021
$’000
2022
$’000
2021
$’000
30,315
41,412
71,727
29,873
49,699
79,572
30,315
29,873
—
—
30,315
29,873
On 30 September 2020, the Company entered into a loan and security agreement with Hercules
Capital, Inc. (“Hercules”), which provided for aggregate maximum loan of up to $40.0 million, consisting of (i) a
term loan of $15.0 million, which was drawn down immediately in 2020, (ii) subject to customary conditions, an
additional term loan of up to $15.0 million available from 30 September 2020 to 15 March 2021, and (iii) subject to
the Company achieving certain performance milestones and satisfying customary conditions and available until 15
March 2022, an additional term loan of $10.0 million. On 10 March 2021, the Company drew down the additional
term loan of $15.0 million that had been available from 30 September 2020 to 15 March 2021. In November 2021,
the Company achieved certain performance milestones and the interest only period was extended from 1 May 2023
92
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
17 Creditors: amounts falling due after more than one year (continued)
to 1 February 2024 followed by equal monthly payments of principal and interest up to the scheduled maturity date
on 1 October 2024.
During 2021, the loan bore interest at an annual rate equal to the greater of (i) 8.85% or (ii) 5.60% plus the
Wall Street Journal prime rate. On 15 July 2022, the Company entered into an amendment to the loan and security
agreement which, among other things, (a) decreased and capped the interest rate to be an annual rate equal to 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%, (b) extended the interest-only period to 1 April 2025, (c) extended the maturity date to 1 July 2025, and
(d) allows the Company to request additional term loans, subject to satisfaction of customary conditions, in an
aggregate principal amount of up to $45.0 million.
The Parent Company may prepay all or any portion greater than $5.0 million of the outstanding
borrowings, subject to a prepayment premium equal to (i) 1.5% of the principal amount outstanding if the
prepayment occurs after the first year but on or prior to 31 December 2023, and (ii) 1.0% of the principal amount
outstanding if the prepayment occurs thereafter but prior to the maturity date. The agreement also provides for an
end of term charge payable upon maturity or the repayment of obligations under the agreement, equal to 5.0% of the
principal amount repaid.
The loan is collateralised by substantially all of the Company’s assets, other than its intellectual property.
The Parent Company incurred fees and transaction costs totalling $573k associated with the initial term
loan, which are recorded as a reduction to the carrying value of the long-term debt in the consolidated balance
sheets. The fees and transaction costs are amortised to interest expense up to the scheduled maturity date using the
effective interest method. The effective interest rate was 10.8% at 31 December 2022 (2021: 11.2%). The Parent
Company assessed all terms and features of the loan Agreement with Hercules and determined that the loan is a
basic financial instrument as defined in FRS102, paragraph 11. Interest expense for the year ended 31
December 2022 was $3,235k (2021: $2,909k).
Loans and other borrowings consisted of the following:
Loan principal
End of term charge
Unamortised debt issuance costs
Consolidated
Parent Company
31 December 31 December 31 December 31 December
2022
$’000
2021
$’000
2022
$’000
2021
$’000
30,000
30,000
30,000
30,000
682
(367)
376
(503)
682
(367)
376
(503)
30,315
29,873
30,315
29,873
Future repayments of principal, including the end of term charge, are as follows:
Within one year
Between one and five years
Total
31 December 31 December
2022
$’000
—
31,500
31,500
2021
$’000
—
31,500
31,500
93
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
18 Called up share capital and reserves
The Parent Company’s called up share capital and reserves consisted of the following:
Issued, allotted, called up and fully paid
29,873,893 (31 December 2021: 29,579,364) ordinary shares of
£0.01 each
31 December 31 December
2022
$’000
2021
$’000
387
387
384
384
No dividends have been proposed or paid as at the date of approval of these financial statements.
On 9 July 2021, the Company entered into a share purchase agreement with Ionis Pharmaceuticals, Inc.
pursuant to which Ionis purchased 282,485 of the Company’s ordinary shares at a price per share of $38.94, for an
aggregate purchase price of approximately $11.0 million. On 15 October 2021, the Company issued and sold
3,726,852 ADSs, representing the same number of ordinary shares, at a price to the public of $54.00 per ADS,
resulting in gross proceeds of $201.3 million before deducting underwriting discounts, commissions and offering
expenses, for net proceeds for $188.4 million.
On 5 June 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 an ATM program pursuant to
which the Company may offer and sell through the Sales Agents, from time to time at the Company’s sole
discretion, American Depositary Shares (“ADSs”), each ADS representing one ordinary share. During the year
ended 31 December 2022, the Company issued and sold 181,455 ADSs, representing the same number of ordinary
shares for gross proceeds of $5.9 million, resulting in net proceeds of $5.7 million after deducting sales commissions
and offering expenses of $0.2 million. During the year ended 31 December 2021, the Company issued and sold
3,771,684 ADSs, representing the same number of ordinary shares for gross proceeds of $105.8 million, resulting in
net proceeds of $102.6 million after deducting sales commissions and offering expenses of $3.2 million.
During the year ended 31 December 2022 the Company issued 78,074 ADSs (2021: 703,786) following the
exercise of share options and 35,000 ADSs (2021: Nil) following the vesting of RSUs (note 11).
Nature and purpose of reserves
Share premium
The share premium account represents the premium arising on the issue of shares net of issue costs.
Exchange reserve
The exchange reserve comprises all foreign currency differences arising from the translation of the
financial statements.
General reserve
The general reserve represents the value of share-based payments granted to employees of the Company.
(Accumulated losses)/retained earnings
Retained earnings represents cumulative profits and losses net of dividends and other adjustments including
the premium to fair value of shares issued with respect to the Ionis Share Purchase Agreement which is part of the
consideration for the goods and services to be provided under the Ionis Collaboration Agreement (Note 5).
94
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
19 Notes to the consolidated cash flow statement
Loss for the financial year
Tax on loss
Interest receivable and similar income
Interest payable and similar charges
Operating loss
Amortisation of intangible assets
Depreciation of tangible fixed assets
Equity settled share-based payment
Loss on disposal of tangible fixed assets
Working capital movements:
(Increase)/decrease in debtors
Increase in creditors
Net exchange differences
Cash flow from operating activities
2022
$’000
2021
$’000
(139,820)
(77,330)
(20,810)
(12,474)
(5,756)
(120)
3,373
3,017
(163,013)
(86,907)
31
21
3,714
1,398
40,642
15,271
117
18
(4,008)
602
13,886
42,550
13,112
2,390
(95,519)
(24,657)
Following the change in functional currency of the Parent Company in 2019 the intercompany balances
with the U.K. subsidiaries were designated as denominated in U.S. dollars which are not intended to be repaid as
such foreign exchange difference on these loans are reflected as non-cash net exchange differences.The following
illustrates the Company’s changes in net debt for the year ended 31 December 2022:
Cash at bank and in hand
At
Fair value and
1 January 2022 Cash flows exchange movements
$’000
438,680
$’000
(96,987)
$’000
(2,539)
Cash and cash equivalents
438,680
(96,987)
(2,539)
Non-cash
changes
$’000
At
31 December 2022
—
—
$’000
339,154
339,154
Loans and other borrowings
(29,873)
—
—
(442)
(30,315)
Total
20 Pensions
408,807
(96,987)
(2,539)
(442)
308,839
The Company operated a defined contribution pension scheme for its U.K. executive directors and
employees.
The Company has established a defined-contribution savings plan under Section 401(k) for its US
employees.
The amount recognised as an expense for the defined contribution schemes of the Company for the year
was $1,861k (2021: $990k) and the amount outstanding at the 31 December 2022 was $Nil (31 December 2021:
$Nil). The Parent Company has no employees other than the directors and does not operate a pension plan.
95
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
21 Financial instruments
The carrying amounts of the Company’s financial instruments are as follows:
Financial assets measured at amortised cost
Debtors
Trade debtors
Cash and cash equivalents
Financial liabilities measured at amortised cost
Creditors
Trade creditors
Accruals
Loans and other borrowings
31 December 31 December
2022
$’000
2021
$’000
2,045
1,000
339,154
438,680
6,472
23,806
30,315
60,593
2,721
12,175
29,873
44,769
The income, expenses, net gains and net losses attributable the Company’s consolidated financial
instruments are summarised as follows:
Income and (expense)
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
2022
$’000
2021
$’000
5,756
120
(3,373) (3,017)
2,383 (2,897)
There were no net gains or net losses for financial assets measured at amortised cost for the years ended 31
December 2022 and 31 December 2021. The total interest income and interest expense for financial assets and
financial liabilities that are not measured at fair value through profit or loss was $5,756k (year ending 31
December 2021: $120k) and $3,373k (year ending 31 December 2021: $3,017k), respectively.
Cash and cash equivalents, trade and other creditors and trade and other debtors with remaining life of less
than one year, the notional amount is deemed to reflect fair value.
The carrying amounts of the Parent Company’s financial instruments are as follows:
96
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
21 Financial instruments (continued)
Financial assets measured at amortised cost
Debtors
Other debtors
Amounts owed by group undertakings
Cash and cash equivalents
Financial liabilities measured at amortised cost
Creditors
Loans and other borrowings
31 December 31 December
2022
$’000
2021
$’000
—
—
231,448
130,434
231,448
130,434
290,310
381,774
30,315
29,873
30,315
29,873
The income, expenses, net gains and net losses attributable the Parent Company’s financial instruments are
summarised as follows:
Income and (expense)
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
2022
$’000
2021
$’000
5,737
119
(3,235) (2,909)
2,502 (2,790)
The total interest income and interest expense for financial assets and financial liabilities that are not
measured at fair value through profit or loss was $5,737k (2021: $119k) and $3,235k (2021: $2,909k), respectively.
The Company and Parent Company had no financial instruments subject to interest rate benchmark reform
(31 December 2021: $Nil).
97
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
22 Financial commitments and contingencies
Cash and cash equivalents, trade and other creditors and trade and other debtors with remaining life of less
than one year, the notional amount is deemed to reflect fair value.
At 31 December 2022, the Company had annual commitments under non-cancellable operating leases as
follows:
Within one year
Between one and five years
Total
Land and buildings Land and buildings
31 December 2021
31 December 2022
$’000
$’000
3,972
12,067
16,039
3,310
13,716
17,026
There were contracted capital commitments of $424k at 31 December 2022 (31 December 2021: $2,467k).
The commitments are largely in respect of leasehold improvements to the new premises at Granta Park, Great
Abington, Cambridge, United Kingdom.
See note 17 for the Company’s commitments related to the long-term debt.
The Company has entered into various agreements with contract research organisations and contract
manufacturing organisations. These payments are not included in the commitments table above since the contracts
are generally cancellable at any time upon less than 90 days’ prior written notice. The Company is not contractually
able to terminate for convenience and avoid any and all future obligations to these vendors. Under such agreements,
the Company is contractually obligated to make certain minimum payments to the vendors, with the payments in the
event of a termination with less than 90 days’ notice based on the timing of the termination and the exact terms of
the agreement.
Operating Leases
On 6 December 2021 the Company entered into a lease for new premises at Blocks A&B, The Portway
Building, Granta Park, Great Abington, Cambridge, United Kingdom CB21 6GS. The lease has a contractual period
of 10 years, but may be cancelled by the Company after 5 years. The existing lease for Building B900, Babraham
Research Campus, Cambridge, United Kingdom, CB22 3AT ended on 11 December 2021 and the Company entered
into a new lease for a period of 5 years from 12 December 2021.
During 2022, the amount charged to the consolidated statement of comprehensive income in respect of
operating leases was $3,733 (2021: $1,095k).The Parent Company had no annual commitments under non-
cancellable operating leases.Cancer Research UK Agreement
In connection with the agreement with Cancer Research UK to sponsor and fund the Phase I/IIa clinical
trial of BT1718, the Company granted Cancer Research UK a licence to its intellectual property in order to design,
prepare for, sponsor, and carry out the clinical trial. Upon the completion of the Phase I/IIa clinical trial, the
Company has the right to obtain a licence to the results of the trial upon the payment of a milestone, in cash and
ordinary shares, with a combined value in the mid six digit dollar amount. If such licence is not acquired, or if it is
acquired and the licence is terminated and the Company decides to abandon development of all products that
delivery cytotoxic payloads to the MT1 target antigen, the Company will assign or grant to CRTL an exclusive
licence to develop and commercialise the product on a revenue sharing basis (in which case the Company will
receive tiered royalties of 70% to 90% of the net revenue depending on the stage of development when the licence is
granted). The Cancer Research UK Agreement contains additional future milestone payments upon the achievement
98
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
22 Financial commitments and contingencies (continued)
of development and regulatory milestones, payable in cash and shares, with an aggregate total value of $50.9
million, as well as royalty payments based on a single digit percentage on net sales of products developed.
The agreement with Cancer Research UK can be terminated by either party upon an insolvency event,
material breach of the terms of the contract, or upon a change in control (and the new controlling entity develops,
sells or manufactures tobacco products or generates the majority of its profits from tobacco products or is an affiliate
of such party). Cancer Research UK may also terminate the arrangement for safety reasons or if it determines that
the objectives of the clinical trial will not be met. The Company was obligated to reimburse Cancer Research UK for
certain costs if the agreement was terminated by Cancer Research UK prior to the completion of the dose escalation
(Phase I) part of the clinical trial for an insolvency event of, or material breach by, the Company or upon termination
for safety reasons or if Cancer Research UK determined that the objects of the clinical trial would not be met,
however, these reimbursement obligations expired unexercised upon the completion of the Phase I portion of the
clinical trial in 2020. If the Company is subject to a change in control and the new controlling entity develops, sells
or manufactures tobacco products or generates the majority of its profits from tobacco products or is an affiliate of
such party prior to the last cycle of treatment under the Phase IIa clinical trial, the Company will reimburse Cancer
Research UK in full for all costs paid or committed in connection with the clinical trial and no further licence
payments, where applicable, shall be due. In such case, Cancer Research UK will not be obliged to grant a licence to
the Company in respect of the results of the clinical trial and the Company will assign or grant an exclusive licence
to develop and commercialise the product without Cancer Research UK being required to make any payment to the
Company.
The Company concluded that the right within the agreement with Cancer Research UK to obtain a licence
to the results of the trial upon payment of a milestone represents a financial liability and has recorded a liability of
$591k as of 31 December 2022 (31 December 2021: $618k). As of 31 December 2022, Cancer Research UK had
incurred costs of approximately $3.6 million (31 December 2021: $3.3 million). Management does not consider it
probable or likely that these costs will be required to be reimbursed to Cancer Research UK and therefore has not
recognized any associated liability.
Legal proceedings
In November 2020, the Company entered into a settlement and licence agreement with Pepscan Systems
B.V. regarding Bicycle’s use of Pepscan’s CLIPS peptide technology. The companies agreed to settle all intellectual
property disputes worldwide. Under the terms of the settlement, the Company has been granted a licence to use
CLIPS peptide technology in the development of its product candidates BT1718 and THR-149. The Company paid
€3 million in November 2020, paid €1 million on the first anniversary of the date of settlement in November 2021
and will make potential additional payments to Pepscan based on achievement of specified clinical, regulatory and
commercial milestones.
23 Basic and diluted loss per ordinary share
Basic and diluted loss per ordinary share is determined by dividing net loss by the weighted average
number of ordinary shares outstanding during the period.
The Parent Company’s potentially dilutive securities, which include share options to subscribe for ordinary
shares and restricted share units for ordinary shares, have been excluded from the computation of diluted net loss per
share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of ordinary
shares outstanding used to calculate both basic and diluted net loss per share attributable to ordinary shareholders is
the same. The Company excluded the following potentially dilutive ordinary shares, presented based on amounts
outstanding at each period end, from the computation of diluted net loss per share attributable to ordinary
shareholders for the periods indicated because including them would have had an anti-dilutive effect.
99
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
23 Basic and diluted loss per ordinary share (continued)
Restricted ordinary shares
Options to purchase ordinary shares
Number
Number
31 December 2022 31 December 2021
187,725
—
5,898,888
4,603,486
6,086,613
4,603,486
24 Related party disclosures
The Company has taken advantage of the exemptions contained within FRS 102 paragraph 33.1A not to
disclose transactions with wholly owned group undertakings.
Pierre Legault, a director of the Parent Company, is associated with Stone Sunny Isles, Inc., and Stone
Atlanta Estates LLC, the successor-in-interest to Stone Sunny Isles Inc., which provided consultancy services to the
Company totalling $171k for the year ended 31 December 2022 (2021: $173k). The amount outstanding at the year-
end was $Nil (2021: $Nil).
Key management personnel include the CEO and a number of senior managers across the Company who
together have authority and responsibility for planning, directing and controlling the activities of the Company.
Refer to page 15 of the strategic report for an explanation of the individuals included in key management for 2022
and 2021.
The total compensation paid to key management personnel for services provided to the Company was
$6,138k (2021: $5,369k). In addition, key management personnel received an aggregate gain on the exercise of
share options (based on the market value of the shares on the date of exercise) of $Nil (2021: $5,573k).
25 Impact of climate change
The Company has assessed the qualitative and quantitative impact of climate related risks on asset
recoverable amounts and concluded that there are no material impairments.
26 Post balance sheet events
Lease Agreement
On 26 January 2023, the Company entered into a lease agreement for office and laboratory space in
Cambridge, Massachusetts. The lease has a contractual period of approximately three years, which, subject to certain
conditions, may be extended for an additional two years at the Company’s option. The annual rent is approximately
$2.1 million in the first year of the lease and increases annually with the last year of the lease having annual rent of
approximately $2.3 million. Annual rent is payable monthly in advance following a two-month rent-free period. In
connection with the lease agreement, the Company is required to deliver to the landlord a security deposit in the
form of a letter of credit of approximately $0.3 million.
Collaboration and Licence Agreement
On 27 March 2023, BicycleTx, Limited. (the “Company”) and Novartis Pharma AG (“Novartis”) entered
into a collaboration and licence agreement (the “Collaboration Agreement”), pursuant to which the parties will
perform research and discovery activities under a mutually agreed upon research plan during a research term of up
to a specified number of years per target program to generate compounds incorporating optimised Bicycle constructs
directed to two specified targets, under the oversight of a joint steering committee. For each collaboration program,
Novartis may elect, at its sole discretion, to progress compounds arising from activities under the research programs
into further preclinical development of potential products directed to the target of such collaboration program. On a
100
Bicycle Therapeutics plc
year ended 31 December 2022
Notes to the financial statements (continued)
26 Post balance sheet events (continued)
target-by-target basis, if Novartis elects to progress development candidates directed to such target into further
clinical development, Novartis will be required to use commercially reasonable efforts to develop and seek
regulatory approval in certain major markets for products directed to the applicable target. During the term of the
Collaboration Agreement, the Company will be exclusive to Novartis with respect to bicycles directed (as their
primary mechanism of action) to targets included within the collaboration, and with respect to any compounds
arising from the activities under the research program and directed to such selected targets.
Novartis will make an upfront payment to the Company of $50 million. During the research term, upon
achievement of a specified discovery milestone for the first target program, Novartis will make a one-time payment
to the Company in the low single digit millions. On a target-by-target basis, if Novartis elects to progress one or
more candidate compounds into further development, Novartis will be required to pay a candidate selection fee for
the first such compound progressed by Novartis that incorporates a radionuclide, and for the first such compound
that does not incorporate a radionuclide, in each case in the mid-teen millions of dollars. On a target program-by-
target program basis, if Novartis successfully conducts clinical development achieves regulatory approval for
compounds arising from the collaboration, Novartis will be required to pay to Company development and
regulatory/first commercial sale milestones of up to $210 million for each of the first radionuclide product and non-
radionuclide product directed to the applicable target to achieve such milestones, or $840 million in the aggregate if
Novartis successfully develops both a radionuclide and a non-radionuclide product in each of the target programs. In
addition, if Novartis successfully commercializes products arising from the collaboration, Novartis will be required
to pay to Company, on a product-by-product basis, tiered royalties on net sales of products by Novartis, its affiliates
or sublicensees at percentages ranging from the high single digits to the very low double digits, subject to standard
reductions and offsets in certain circumstances, and a royalty floor. Royalties will be payable under the
Collaboration Agreement on a product-by-product and country-by-country basis, commencing on the first
commercial sale of each product, until the latest of (a) the expiration of the last valid claim of certain patents
licensed by Company to Novartis, (b) a specified number of years following first commercial sale of such product,
and (c) expiration of all data and regulatory exclusivity for such product in the applicable country. Novartis will also
owe Company tiered sales milestones based on the achievement of specified levels of net sales of such products
totaling up to $200 million in the aggregate per product, or $800 million in the aggregate if Novartis successfully
commercializes both a radionuclide and a non-radionuclide product in each of the target programs.
The Collaboration Agreement will remain in force on a product-by-product and country-by-country basis,
unless earlier terminated by either party, until the expiration of the obligation for Novartis to make royalty payments
to Company for such product in such country, and will terminate in its entirety on the expiration of all such royalty
terms in all countries. Either party may terminate the agreement upon 60 days’ written notice for the other party’s
uncured material breach, or upon the other party’s insolvency. In addition, Novartis may terminate the Collaboration
Agreement (i) in its entirety or on a product-by-product or target-by-target basis for any reason upon 90 days’
written notice to Company, and (ii) on a target-by-target basis on 30 days’ written notice if Novartis determines that
a safety or regulatory issue exists which would have a material adverse effect on the development, manufacture, or
commercialization of any product with respect to a given target.
Lease Termination
On 6 April 2023, the Company entered into a deed of surrender related to its lease of office and laboratory
space in Building 900, Babraham Research Campus, Cambridge, U.K. Pursuant to the deed, the lease was
terminated effective immediately. In connection with the deed, the Company is required to pay termination-related
fees totalling approximately $0.3 million.
101