Bicycle Therapeutics plc

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read this discussion and analysis of our financial condition and consolidated results of operations together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report and our audited financial statements and related notes for the year ended December 31, 2025, included in our Annual Report on Form 10-K for the year ended December 31, 2025, or the 2025 Annual Report, which was filed with the Securities and Exchange Commission, or SEC, on March 17, 2026. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including statements of our plans, objectives, expectations and intentions, contain forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Please also see the section titled “Forward-Looking Statements.”

Overview

We are a clinical-stage pharmaceutical company developing a novel class of medicines, which we refer to as Bicycle^® molecules, for diseases that are underserved by existing therapeutics. Bicycle molecules are fully synthetic short peptides constrained to form two loops which stabilize their structural geometry. This constraint facilitates target binding with high affinity and selectivity, making Bicycle molecules attractive candidates for drug development. Bicycle molecules 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 Bicycle molecules allows targets to be drugged that have historically been intractable to non-biological approaches. Bicycle molecules are excreted by the kidney rather than the liver and have shown no significant signs of immunogenicity to date, qualities which we believe explain the molecules’ favorable toxicological profile.

We have a novel and proprietary phage display screening platform which we use to identify Bicycle molecules 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 quintillions of potential Bicycle molecules which can be screened to identify molecules for optimization 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 internal programs are focused on oncology indications with high unmet medical need. Our product candidate, nuzefatide pevedotin (formerly BT5528), is a Bicycle Drug Conjugate, or a BDC^® molecule, whereby the Bicycle molecules are chemically attached to a toxin that, when administered, is cleaved from the Bicycle molecule and kills the tumor cells. We are evaluating nuzefatide pevedotin, a BDC molecule targeting Ephrin type A receptor 2, or EphA2, and carrying a monomethyl auristatin E, or MMAE, cytotoxin payload, in both an ongoing company-sponsored Phase I/II clinical trial to assess the safety, pharmacokinetics and clinical activity of nuzefatide pevedotin in patients with advanced solid tumors and an ongoing company-sponsored Phase II clinical trial to evaluate the efficacy, safety and pharmacokinetics of nuzefatide pevedotin in adult patients with recurrent metastatic pancreatic ductal adenocarcinoma. The ongoing company-sponsored Phase II clinical trial commenced recruiting patients in the first quarter of 2026 and we announced that the first patient was dosed in April 2026. In addition, in April 2026, we announced Phase I/II clinical results for nuzefatide pevedotin in combination with nivolumab in patients with metastatic urothelial cancer at the American Association for Cancer Research, or AACR, Annual Meeting 2026. We also announced preclinical assessments of nuzefatide pevedotin anti-tumor activity in xenograft models of pancreatic ductal adenocarcinoma and head and neck squamous cell carcinoma. In September 2026, the U.S. Food and Drug Administration, or FDA, granted nuzefatide pevedotin orphan drug designation for the treatment of pancreatic cancer.

We are also developing BT1702, a Bicycle Radioconjugate, or BRC^®, molecule targeting Membrane Type 1 matrix metalloproteinase, or MT1-MMP, and carrying a lead-212, or ²¹²Pb, radioisotope payload for theranostic use. We are currently conducting Investigational New Drug application, or IND, -enabling activities for BT1702. We are also developing Bicycle Imaging Agents, or BIA molecules, whereby a Bicycle molecule is linked to a chelated radiopharmaceutical imaging agent. We are using BIA molecules to potentially derisk novel targets prior to further

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clinical development and to efficiently triage cancer indications for subsequent treatment with both BRC and/or BDC molecules. Our discovery pipeline in oncology includes next-generation BDC molecules, BRC molecules and BIA molecules. In April 2026, additional human imaging data of a BIA molecule targeting EphA2 in patients with pancreatic ductal adenocarcinoma was presented by the German Cancer Consortium, or DKTK, at the AACR Annual Meeting 2026.

Zelenectide pevedotin, a BDC molecule targeting Nectin-4, is being evaluated in an ongoing Phase II clinical trial called Duravelo-2 evaluating zelenectide pevedotin in patients with untreated and previously treated metastatic urothelial cancer and in ongoing company-sponsored Phase I/II clinical trials to assess the efficacy and safety of zelenectide pevedotin in patients with NECTIN4 amplified advanced breast cancer and NECTIN4 amplified advanced or metastatic non-small cell lung cancer. In March 2026, we announced the strategic reprioritization of our clinical portfolio to focus on our promising pipeline of next-generation therapeutics, including nuzefatide pevedotin as well as next-generation Bicycle conjugates, including BRC molecules. While dose selection data from the Duravelo-2 clinical trial for zelenectide pevedotin are promising, demonstrating response rates comparable to published rates for existing standards of care and a differentiated safety profile, we converted the Phase II/III Duravelo-2 registrational trial to a randomized Phase II clinical trial and have deprioritized the program for internal development while we evaluate next steps for the program following preliminary feedback from regulatory agencies. In May 2026, we announced initial data from the randomized company-sponsored Phase II Duravelo-2 clinical trial evaluating zelenectide pevedotin in previously untreated patients with metastatic urothelial cancer, as well as updated data from the Phase I/II clinical trial for zelenectide pevedotin in previously untreated, cisplatin-ineligible metastatic urothelial cancer patients at the 2026 American Society of Clinical Oncology Annual Meeting. In addition, as part of the strategic reprioritization, the Phase I/II clinical trials evaluating zelenectide pevedotin in patients with NECTIN4 amplified advanced breast cancer and NECTIN4 amplified advanced or metastatic non-small cell lung cancer are being discontinued. Further enrollment in these trials is closed and patients already enrolled will complete their course of treatment.

Our other product candidate, BT7480, is a Bicycle Tumor-Targeted Immune Cell Agonist^®, or Bicycle TICA^® molecule. A Bicycle TICA molecule links immune cell receptor binding Bicycle molecules to tumor antigen binding Bicycle molecules. BT7480, a Bicycle TICA molecule targeting Nectin-4 and agonizing CD137, is being evaluated in a company-sponsored Phase I/II clinical trial. In October 2026, we presented updated Phase I/II clinical results for BT7480 in combination with nivolumab in patients with advanced solid tumors at the European Society for Medical Oncology, or ESMO, Congress 2026. We are no longer developing BT7480 internally and we intend to explore partnership opportunities for future development.

Beyond our wholly owned oncology portfolio, we are collaborating with biopharmaceutical companies and organizations in additional therapeutic areas in which we believe our proprietary Bicycle screening platform can identify therapies to treat diseases with significant unmet medical need.

2026 Strategic Reprioritization

In March 2026, we announced the strategic reprioritization of our clinical portfolio to focus on our promising pipeline of next-generation therapeutics, including nuzefatide pevedotin as well as next-generation Bicycle conjugates, including BRC molecules. In connection with the strategic reprioritization announced in March 2026, we announced a workforce reduction of approximately 30% of our workforce. Together, the workforce reduction and strategic reprioritization are expected to reduce our annual operating expenses by approximately 50% based on our current plans. We expect the workforce reduction to be substantially completed by the end of 2026, and that we will incur aggregate charges of approximately $6.1 million, representing cash expenditure for severance and other employee termination benefits, of which $0.3 million and $5.8 million was recognized during the three and nine months ended September 30, 2026, respectively.

Financial Overview

Since our inception, we have devoted substantially all of our resources to developing our Bicycle platform and our product candidates, 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

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operations primarily with proceeds from the sale of equity securities; proceeds received from upfront payments, research and development payments, and development milestone payments from our collaboration agreements; and loan borrowings. From our inception through September 30, 2026, we have received gross proceeds of $1.4 billion from the sale of equity securities; and $240.6 million of cash payments under collaboration arrangements, including $47.2 million from Bayer Consumer Care AG, or Bayer, $53.0 million from Novartis Pharma AG, or Novartis, $49.7 million from Ionis Pharmaceuticals, Inc., or Ionis, and $56.0 million from Genentech Inc., or Genentech. 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 commercialization of one or more of our product candidates. Our net losses were $10.5 million and $121.6 million for the three and nine months ended September 30, 2026, respectively. As of September 30, 2026, we had an accumulated deficit of $1.0 billion. 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 expect that our expenses and capital requirements will decrease in the near term as a result of our cost saving initiatives and our strategic reprioritization announced in March 2026. However, our expenses and capital requirements may increase substantially if and as we:

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 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 utilize third-party contract research organizations, 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 encouraging results in clinical development, we expect to incur significant commercialization expenses as we prepare for product sales, marketing, manufacturing, and distribution.

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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, monetization transactions or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable 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 commercialization of one or more of our product candidates. 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.

As of September 30, 2026, we had cash and cash equivalents of $469.9 million. We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the date of filing of this Quarterly Report. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our available capital resources sooner than we expect. See “—Liquidity and Capital Resources” and “—Capital Resources and Funding Requirements.”

Components of Our Results of Operations

Collaboration Revenue

To date, we have not generated any revenue from product sales and we do not expect to generate any revenue from product sales for the foreseeable future. Our revenue primarily consists of collaboration revenue under our arrangements with our collaboration partners, including amounts that are recognized related to upfront payments, milestone payments and option exercise payments, amounts due to us for research and development services and reimbursement of certain expenses incurred. In the future, revenue may include additional milestone payments and option exercise payments, and royalties on any net product sales under our collaborations. In the near term, we expect that revenue will decrease as a result of the terminations of our collaboration agreements with Bayer, Novartis and Genentech effective in September 2026, February 2026 and August 2025, respectively. In the future, we expect that any revenue we generate will fluctuate from period to period as a result of the timing and amount of license, research and development services, milestone and other payments, as well as the exercise or expiration of options under collaboration arrangements.

Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research and development activities, including our discovery efforts, and the development of our product candidates, which include:

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Research and development costs are expensed as incurred. Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as a prepaid expense or accrued research and development expenses. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

Our direct external research and development expenses are tracked on a program-by-program basis and consist of costs, such as fees paid to consultants, CROs, contractors and contract manufacturing organizations, or CMOs, in connection with our preclinical and clinical development activities. Costs incurred after a product candidate has been designated and that are directly related to the product candidate are included in direct research and development expenses for that program. Costs incurred prior to designating a product candidate are included in discovery, platform and other expenses. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

Through our subsidiaries in the U.K., we receive reimbursements of certain research and development expenditures as part of a U.K. government research and development tax reliefs program. The Finance Act 2024, which was enacted in February 2024, replaced the legacy research and development expenditure credit and the Small and Medium-sized Enterprise, or SME, R&D Tax Relief program with a merged research and development expenditure credit scheme, or RDEC, and an enhanced research and development intensive support scheme, or ERIS. The Finance Act 2024 provides for a cash rebate that may be claimed for 26.97% of qualifying expenditure if we qualify as R&D intensive for an accounting period. We qualified as R&D intensive for the year ended December 31, 2025, and we expect to qualify as R&D intensive for the year ending December 31, 2026.

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The U.K. research and development tax credit is fully refundable to us after surrendering tax losses and is not dependent on current or future taxable income. As a result, we have recorded the entire benefit from the U.K. research and development tax credit as a reduction to research and development expenses and is not reflected as part of the income tax provision. See Note 2 “Summary of significant accounting policies – Research and development incentives and receivable” included in this Quarterly Report for additional information on the U.K. research and development tax relief program.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will decrease in the near term as a result of our cost saving initiatives and our strategic reprioritization announced in March 2026. However, our research and development expenses will increase over the longer term if and as we continue clinical development of and seek to obtain marketing approval for our product candidates, initiate clinical trials for our product candidates and continue to discover and develop additional product candidates.

The successful development of our product candidates is highly uncertain and subject to numerous risks and uncertainties. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the remainder of the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in our executive, finance, corporate and business development, commercial and administrative functions. General and administrative expenses also include professional fees for legal, patent,

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accounting, auditing, tax and consulting services, insurance, travel expenses and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

Foreign currency transactions in currencies different from the applicable functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange differences resulting from the settlement of such transactions and from the remeasurement at period-end exchange rates in foreign currencies are recorded in general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. As such, our operating expenses may be impacted by future changes in exchange rates. See “Quantitative and Qualitative Disclosure About Market Risks” for further discussion.

We expect that our general and administrative expenses will decrease in the near term as a result of our cost saving initiatives and our strategic reprioritization announced in March 2026. However, we expect that our general and administrative expenses may increase in the future if and as we increase our general and administrative headcount to support our continued research and development and potential commercialization of our portfolio of product candidates. We also expect to continue to incur increased expenses associated with being a public company including costs of accounting, audit, information systems, legal, intellectual property, regulatory and tax compliance services, director and officer insurance and investor and public relations.

Other Income (Expense)

Interest and Other Income

Interest and other income consists primarily of interest earned on our cash held in operating accounts and our cash equivalents.

Interest Expense

Interest expense consists primarily of interest expense for financing arrangements.

Provision for (Benefit from) Income Taxes

We are subject to corporate taxation in the United States and the U.K. We have generated losses since inception and have therefore not paid U.K. corporation tax. The provision for (benefit from) income taxes included in the condensed consolidated statements of operations and comprehensive loss represents the tax impact from operating activities in the United States, which has generated taxable income based on intercompany service arrangements.

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After consideration of our history of cumulative net losses in the U.K., we have concluded that it is more likely than not that we will not realize the benefits of our U.K. deferred tax assets and accordingly we have provided a valuation allowance for the full amount of the net deferred tax assets in the U.K. We will maintain a full valuation allowance on our U.K. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. The release of the valuation allowance would result in the recognition of certain deferred tax assets and an increase to the benefit from income taxes for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

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Unsurrendered U.K. losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of U.K. taxable profits.

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Results of Operations

Comparison of the Three Months Ended September 30, 2026 and 2025

The following table summarizes our results of operations for the periods presented:

Collaboration Revenue

Collaboration revenue increased by $22.3 million in the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to an increase of $33.0 million from our collaboration with Bayer due to the recognition of all remaining revenue upon the notice of termination from Bayer in July 2026, effective in September 2026, offset by decreases of $2.2 million from our collaboration with Novartis and $6.5 million from our collaboration with Genentech, which were terminated effective February 2026 and August 2025, respectively, as well as a decrease of $2.0 million from our collaboration with Ionis due to a milestone achieved in the third quarter of 2025.

Research and Development Expenses

The table below summarizes our research and development expenses for the periods presented:

Research and development expenses decreased by $25.0 million in the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to decreases of $17.3 million in clinical program expenses for zelenectide pevedotin as the Duravelo-2 clinical trial was fully enrolled throughout the three months ended

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September 30, 2026, and the program has been deprioritized for internal development, resulting in decreased expense period over period, $5.9 million and $1.8 million in employee and contractor related expenses and share-based compensation, respectively, primarily due to decreased headcount period over period associated with our workforce reductions announced in August 2025 and March 2026, and $2.5 million in discovery, platform and other expense due to the timing of preclinical activities for our pipeline programs. These decreases were offset by $2.8 million lower research and development incentives associated with the corresponding decrease in qualifying research and development expenses period over period.

We begin to separately track program expenses at candidate nomination, at which point we accumulate all direct external program costs to support that program to date. Through September 30, 2026, we have incurred approximately $334.2 million and $64.0 million of direct external expenses for the development of zelenectide pevedotin and nuzefatide pevedotin, respectively, since their candidate nominations, an aggregate of $1.3 million for the development of BT1702 since its candidate nomination, and an aggregate of $52.2 million of direct external expenses for the development of our two named Bicycle TICA molecule candidates since their nominations.

General and Administrative Expenses

The table below summarizes our general and administrative expenses for the periods presented:

General and administrative expenses decreased by $4.7 million in the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This decrease was primarily due to decreases of $2.6 million and $1.6 million in personnel-related costs and share-based compensation, respectively, primarily due to decreased headcount period over period associated with our workforce reductions announced in August 2025 and March 2026.

Other Income, net

Other income, net decreased by $2.5 million in the three months ended September 30, 2026 compared to the three months ended September 30, 2025, which was primarily due to a decrease in interest income of $2.5 million due to lower cash and cash equivalents balances period over period.

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Comparison of the Nine Months Ended September 30, 2026 and 2025

The following table summarizes our results of operations for the periods presented: