Black Diamond Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Black Diamond is a clinical-stage precision oncology company; it reported no product revenue and remains dependent on financing to develop its pipeline.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $15.8 million | $27.6 million | $49.8 million | $77.2 million |
| General and administrative expense | $6.3 million | $7.7 million | $21.1 million | $23.6 million |
| Total operating expenses | $22.1 million | $35.4 million | $71.0 million | $100.8 million |
| Net loss | $21.7 million | $35.1 million | $70.1 million | $99.7 million |
| Basic and diluted loss per share | $0.60 | $0.97 | $1.93 | $2.76 |
Margins: Not meaningful because the company had no revenue. For the nine months, operating cash use was $63.1 million, versus $76.1 million in 2021; investing activities provided $51.0 million, principally from investment sales and maturities. Cash, cash equivalents and restricted cash decreased by $11.9 million.
At September 30, 2022, cash and cash equivalents were $54.0 million and investments were $90.2 million, totaling $144.2 million in cash, cash equivalents and investments. Total assets were $180.4 million; total liabilities were $47.2 million, including $28.8 million in operating lease liabilities. The filing reports no debt balance. Current assets were $151.0 million versus current liabilities of $21.1 million. Accumulated deficit was $313.9 million.
Material changes versus prior period
- Q3 net loss narrowed by $13.4 million year over year; nine-month net loss narrowed by $29.6 million.
- Lower R&D spending was the main driver: the company reduced BDTX-189 trial activity after discontinuing its development in April 2022, and cut spending on early discovery and platform programs. BDTX-189 R&D expense declined by $5.5 million in Q3 and $16.0 million for the nine-month period.
- G&A expense also declined, primarily from lower personnel-related costs and legal and other professional fees. Cash and investments fell from $209.8 million at year-end 2021 to $144.2 million at September 30, 2022.
Pipeline, outlook, risks and contingencies
- BDTX-1535 was in Phase I dose escalation; BDTX-4933 was in IND-enabling studies. The company also described ongoing discovery work, including an FGFR program.
- Management expected the $144.2 million of cash, cash equivalents and investments to fund planned operations into Q3 2024, based on assumptions that could prove incorrect. The company expects operating losses to continue and anticipates needing additional capital; no product revenue is expected in the foreseeable future.
- Management expects expenses to increase as clinical and preclinical programs advance. Additional financing may dilute shareholders or require unfavorable terms; if funding is unavailable, programs could be delayed, reduced or discontinued.
- Key risks include clinical and regulatory uncertainty, trial timing and enrollment, manufacturing and third-party provider disruptions, competition, intellectual property protection, and macroeconomic conditions including inflation, market volatility and rising interest rates. COVID-19-related disruptions remained a potential risk, though the company reported no material business disruption or asset impairment from the pandemic as of the filing date.
- Clinical research and vendor contracts are generally cancelable, with payment for services performed and certain incurred obligations. License milestone and royalty payments are contingent and not reasonably estimable. The company reported no material legal proceedings and no accrued indemnification liabilities.
- The $150 million at-the-market equity program had no sales through September 30, 2022. The company reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the stated runway into Q3 2024 remains achievable in light of actual cash burn, clinical spending and financing needs.
- Clinical progress, safety and data timing for BDTX-1535, and development and regulatory milestones for BDTX-4933 and the FGFR program.
- Whether reduced spending reflects sustainable prioritization or creates delays in discovery and pipeline advancement.
- Potential dilution or other financing terms, including any future use of the ATM program, and contingent license obligations.
- Changes in clinical trial execution, third-party supply and service availability, and macroeconomic or pandemic-related effects.