Black Diamond Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Unaudited results. Black Diamond is a clinical-stage precision oncology company developing small-molecule therapies through its MAP platform. It has no approved products and has generated no revenue from product sales.
Key financial metrics
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $26.7m | $10.2m | $49.5m | $17.5m |
| General and administrative expense | $8.0m | $4.9m | $15.9m | $10.4m |
| Total operating expenses | $34.7m | $15.0m | $65.4m | $27.9m |
| Net loss | $34.4m | $14.6m | $64.7m | $26.7m |
| Basic and diluted loss per share | $0.95 | $0.41 | $1.79 | $0.92 |
| Cash used in operating activities | Not stated separately | Not stated separately | $49.6m | $24.9m |
At June 30, 2021, cash and cash equivalents were $37.3m and investments were $226.1m, totaling $263.5m in cash, cash equivalents and investments. Total assets were $287.9m; total liabilities were $36.9m, including $13.4m in non-current operating lease liabilities. The filing reports no debt. There is no meaningful revenue margin to assess because the company has no revenue.
Material changes versus the prior comparable period
- Q2 net loss increased by $19.8m year over year; six-month net loss increased by $37.9m.
- Six-month R&D expense rose $32.0m, reflecting increased spending on BDTX-189, other research programs and platform development, personnel, and facilities.
- Six-month G&A expense increased $5.5m, primarily due to additional personnel and higher legal and professional fees associated with being a public company.
- Operating cash use nearly doubled year over year, to $49.6m for the first half of 2021. Investing cash flow was a $51.7m source, mainly from investment sales and maturities; financing provided $0.7m from stock option exercises.
- Investments declined from $280.5m at year-end 2020 to $226.1m at June 30, 2021, while cash and cash equivalents increased from $34.6m to $37.3m.
Outlook, risks and notable items
- Management said available cash, cash equivalents and investments were expected to fund operating expenses and capital requirements into 2023. This estimate depends on assumptions that may prove incorrect; additional capital may be needed.
- The company expects operating losses and expenses to increase as it advances BDTX-189, develops BDTX-1535 and other programs, expands its platform, and builds staffing and infrastructure. It cannot predict when, or whether, it will achieve profitability.
- BDTX-189 had received Fast Track designation for specified advanced solid tumors. The filing describes the MasterKey-01 Phase 1 trial as remaining on track for completion in the first half of 2021; the filing does not provide a clear update confirming completion or results.
- COVID-19 could disrupt trial enrollment, sites, suppliers, drug supply, and research timelines. The company said it had not experienced material business disruption or asset impairment from the pandemic as of issuance, but future effects remained uncertain.
- A $150m at-the-market equity program was established in February 2021; no sales had been made under it as of June 30. Future equity financing could dilute shareholders.
- The company had signed an 11-year lease for New York office and laboratory space, expected to commence in Q3 2021, with $21.3m of minimum payments. This commitment was separate from commenced-lease payments in the contractual obligations table.
- License-related milestone and royalty payments are contingent and not reasonably estimable. CRO, CMO, and other ordinary-course contracts generally have no minimum purchase commitments and are cancelable subject to payment for services and incurred obligations.
- No material legal proceedings were reported. Management concluded disclosure controls were effective at June 30, 2021.
Investor verification points
- Check subsequent disclosures for BDTX-189 trial completion, clinical data, and updated development timelines, as well as progress on BDTX-1535.
- Assess cash burn against the stated runway into 2023, including the pace of R&D spending and the impact of the New York lease.
- Review subsequent use of the $150m ATM program and any other financing for potential dilution or changes to runway.
- Monitor COVID-19 and other operational risks affecting trial enrollment, clinical sites, suppliers, and manufacturing.
- Evaluate the assumptions supporting the cash runway and the uncertain timing and potential cost of clinical development, regulatory approval, and commercialization.