Black Diamond Therapeutics, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. The filing also presents unaudited quarterly results, including Q4 2020. Black Diamond Therapeutics (Nasdaq: BDTX) is a clinical-stage precision oncology company; it reported no product revenue.
Financial performance and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $48.2 million | $21.8 million |
| General and administrative expense | $21.4 million | $7.6 million |
| Total operating expenses | $69.6 million | $29.3 million |
| Net loss | $67.3 million | $35.3 million |
| Net loss per share, basic and diluted | $2.05 | $16.99 |
| Cash used in operating activities | $52.1 million | $24.7 million |
Q4 2020 revenue was zero; operating expenses were $23.2 million, net loss was $22.6 million and net loss per share was $0.63. Expenses and losses rose through the 2020 quarters. Profit margins are not meaningful because the company had no revenue.
At year-end, cash and cash equivalents were $34.6 million and investments were $280.5 million, for reported cash, cash equivalents and investments of $315.1 million. Restricted cash was $1.2 million. Current assets were $319.6 million and current liabilities were $14.2 million. The filing reports no borrowings; operating lease liabilities totaled $8.7 million, including $1.0 million current. Cash used in investing activities was $281.7 million, primarily reflecting purchases of investments; financing provided $214.9 million, primarily from the IPO.
The February 2020 IPO generated $212.1 million in net proceeds. Management estimated existing capital would fund operations and capital needs into 2023, based on its current plan and assumptions. No assurance is given that this runway estimate will hold.
Business, developments and comparison
The company’s Mutation-Allostery-Pharmacology (MAP) platform is intended to identify families of cancer-driving mutations that could be targeted by a single small-molecule therapy. Its lead candidate, BDTX-189, was in the Phase 1 dose-escalation portion of the MasterKey-01 Phase 1/2 trial for ErbB mutations. The company reported preclinical activity, not established clinical efficacy. The FDA granted BDTX-189 Fast Track designation in July 2020.
Compared with 2019, FY2020 operating expenses increased $40.2 million and net loss widened $32.0 million. R&D growth reflected increased headcount and external development costs; G&A growth reflected headcount and public-company legal and professional costs. Higher interest income and the absence of the prior-year derivative-liability revaluation partly offset operating losses. The 2019 loss per share is not directly comparable with 2020, in part because the 2020 IPO converted preferred shares into common shares and substantially increased weighted-average shares.
Other pipeline work included BDTX-1535, for which IND-enabling studies were ongoing and an IND filing was anticipated in the first half of 2022, plus BRAF and FGFR programs with IND filings anticipated in 2022. These are management plans, not assured milestones. The company reported no material legal proceedings and no off-balance-sheet arrangements.
Outlook, risks and notable items
- Management expected BDTX-189 Phase 1 dose escalation to complete in the first half of 2021 and the Phase 2 portion to begin in the second half of 2021. It described possible accelerated approval as conditional on clinical results and FDA discussions; approval was not assured.
- Following a March 2021 FDA discussion, Phase 2 enrollment was limited to 50 patients until routine three-month GLP toxicology results were submitted and accepted. The company said this restriction was not based on trial safety findings, did not affect Phase 1, and was not expected to delay timelines.
- The company remains pre-revenue and expects continuing losses and substantial R&D spending. It may need additional financing; inability to raise capital could force program delays, reductions or discontinuation.
- Key risks include clinical failure or delays, recruiting patients with rare target mutations, uncertainty of the MAP approach and tumor-agnostic strategy, competition, dependence on contract research and manufacturing providers, COVID-19 disruption, and the need for companion diagnostics and reimbursement.
- Intellectual-property protection was early-stage: the company reported no issued patents covering its product candidates or technology. Its patent applications may not result in effective protection.
- The company said material weaknesses in financial reporting controls were remediated as of December 31, 2020 and concluded its controls were effective. Earlier weaknesses had contributed to a restatement of 2017 financial statements.
- The company entered into significant office and laboratory leases, including a New York lease signed in December 2020; some leased space had not commenced as of year-end. These commitments add fixed costs as operations expand.
The independent auditor issued an unqualified opinion on the consolidated financial statements.
Important facts for investors to verify
- BDTX-189 trial enrollment, dose selection, safety, response and duration-of-response data, and the timing and conditions for Phase 2 enrollment.
- Whether the stated cash runway into 2023 remains supportable as spending and clinical plans evolve, and whether additional capital will be required.
- Progress and actual IND submission timing for BDTX-1535, BRAF and FGFR programs.
- Status and scope of patent filings, and whether adequate intellectual-property protection is obtained.
- Effects of clinical-trial enrollment, third-party supply, COVID-19, and the company’s expanded lease commitments on costs and timelines.