Black Diamond Therapeutics, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report; the filing does not provide standalone fourth-quarter results. Black Diamond is a clinical-stage precision oncology company developing mutation-targeted medicines. It reported no product revenue.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $64.4 million | $96.8 million |
| General and administrative expense | $28.4 million | $30.0 million |
| Total operating expenses / operating loss | $92.8 million | $126.9 million |
| Net loss | $91.2 million | $125.6 million |
| Basic and diluted loss per share | $2.52 | $3.47 |
| Net cash used in operating activities | $85.1 million | $100.1 million |
Gross and operating margins are not meaningful because the company had no revenue. The net loss narrowed by $34.4 million year over year, primarily reflecting lower R&D spending, partly offset by a $2.3 million equity-method loss related to Launchpad. R&D expense declined $32.4 million, mainly due to reduced BDTX-189 and platform/program spending; BDTX-1535 costs rose as its trial advanced, and BDTX-4933 costs began to be tracked as a development candidate.
At year-end, cash and cash equivalents were $34.3 million and investments were $88.5 million, totaling $122.8 million. Total current assets were $127.7 million, current liabilities $15.3 million, and total liabilities $40.6 million, including operating lease liabilities. The filing reports no borrowings or financial debt. Cash, cash equivalents and restricted cash decreased $31.5 million during 2022. Investing activities provided $53.4 million, mainly from investment sales and maturities; financing activities provided $0.2 million from employee equity exercises.
Management estimated that existing cash, cash equivalents and investments would fund planned operations into the third quarter of 2024. The auditor highlighted that additional financing will be required. The company had a $500 million shelf registration statement and a $150 million at-the-market equity program; no ATM shares had been sold by December 31, 2022.
Business developments and outlook
- BDTX-1535 was in Phase 1 dose escalation for GBM and NSCLC with EGFR resistance mutations, including patients with or without brain metastases. Management expected a clinical data update in the second half of 2023.
- The FDA cleared the BDTX-4933 investigational new drug application in the first quarter of 2023. Management expected to begin a Phase 1 trial in selected patients with BRAF or RAS mutations in the first half of 2023.
- The company discontinued BDTX-189 development in April 2022 to focus resources on BDTX-1535, BDTX-4933 and discovery programs.
- In December 2022, the company contributed early antibody discovery programs and licensed MAP platform use for large-molecule work to Launchpad Therapeutics, receiving a 39.1% voting interest. It recognized a $2.2 million gain on contributed intellectual property and a $2.3 million equity-method loss; the investment carrying value was reduced to zero at year-end.
- Management expected to advance FGFR2/3 and one undisclosed program toward development-candidate nomination in 2023. These are forward-looking plans, not guaranteed milestones.
Risks, contingencies and unusual items
The company is highly dependent on early-stage candidates, with BDTX-1535 in Phase 1 and BDTX-4933 not yet in clinical testing as of year-end. Clinical efficacy, safety, regulatory approval, patient enrollment in genetically defined populations, companion-diagnostic development, manufacturing by third parties, and sufficient additional financing are significant uncertainties. The company warned that failure to raise capital could require delaying, reducing or discontinuing programs. Other risks include competition, intellectual-property challenges, reimbursement and drug-pricing pressures, cybersecurity and privacy obligations, and possible disruption from global events, COVID-19, inflation or supply-chain issues.
The company reported no material legal proceedings. Its independent auditor issued an unqualified opinion on the financial statements and emphasized the need for additional financing. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022; the auditor did not provide an opinion on internal-control effectiveness.
Key facts for investors to verify
- Whether the reported cash runway and operating assumptions remain adequate, and the timing and terms of any future financing or ATM sales.
- Clinical-trial enrollment, safety, dose selection and efficacy evidence for BDTX-1535, and whether BDTX-4933’s planned trial and other development milestones occurred.
- The basis for the Launchpad transaction’s reported gain and equity-method loss, and any subsequent economic or strategic value from the investment.
- How reduced R&D spending and discontinuation of BDTX-189 affect pipeline capacity, future spending and the timing of remaining programs.
- Potential dilution from outstanding equity awards and future equity financing; year-end common shares outstanding were 36.4 million.