Bicycle Therapeutics is a UK-based pharma company working on precision-guided therapeutics that penetrate deep into tissues and target cancer cells. The company is currently valued at $1.55 billion and has a few drugs in the pipeline, that said we will only focus on “BT8009” also known as “Zelenectide pevedotin” because this is the crucial one. The company has a strong balance sheet with $918m net cash if we subtract the debt.
Zelenectide Pevedotin formerly known as BT8009:
The drug is an antibody-drug conjugate (ADC) currently in phase 2/3. It targets the nektin-4 molecule that is overexpressed in cancer cells. The drug enters the cancer cell, binds to nektin-4 and releases the toxin that then kills the cell.
The company Seagen (now owned by Pfizer) developed the first ADC that made it to market called “Padcev”. Padcev made them almost $400m last quarter, this means this one drug will make them about $1.2 billion a year, which translates to $900m in net profits assuming a 75% profit margin.
In a press release posted in May 2024, Bicycle Therapeutics releases some study results that show that BT8009 is better than Padcev in many ways. This means that if this drug gets to market it will be able to directly compete with Padcev and any other cancer drug of this type.
The risk/reward:
The obvious risk is that there are some unknown sideeffects that come to light and the drug does not get approved and the stock tanks -60% in one day. The current failure rate of phase 3 cancer drugs is around 50%.
If the drug gets approved the company is probably worth $15 billion or more, that translates to a $200+ share price.
Conclusion:
Essentially its a coinflip: 50% chance i lose 60% of my investment or 50% chance i make 10 times my money. Thats a bet I take all day.