Black Diamond Therapeutics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Black Diamond is a clinical-stage precision oncology company developing small-molecule therapies through its Mutation-Allostery-Pharmacology (MAP) platform. It had no approved products and generated no revenue.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $22.8 million | $7.4 million |
| General and administrative expense | $7.9 million | $5.5 million |
| Total operating expenses | $30.7 million | $12.9 million |
| Net loss | $30.3 million | $12.1 million |
| Basic and diluted loss per share | $0.84 | $0.51 |
| Cash used in operating activities | $24.5 million | $11.3 million |
At March 31, 2021, cash and cash equivalents were $14.1 million and investments were $276.0 million, or $290.1 million combined. Total assets were $313.3 million; total liabilities were $32.5 million; and stockholders’ equity was $280.8 million. The filing reports no borrowings or debt. Lease liabilities were $15.2 million for commenced leases; the company also disclosed $21.4 million of minimum payments for a signed lease not yet commenced. No operating margins are meaningful because the company had no revenue.
Investing activities provided $3.5 million, mainly reflecting investment sales and maturities, while financing activities provided $0.5 million from option exercises. Cash, cash equivalents and restricted cash declined by $20.5 million during the quarter. Management estimated that cash, cash equivalents and investments would fund operating expenses and capital requirements into 2023; this estimate depends on assumptions and is not assured.
Material changes versus Q1 2020
- Net loss increased by $18.2 million, primarily as operating expenses rose $17.8 million.
- R&D expense increased $15.5 million, reflecting greater spending on BDTX-189, other programs and platform development, personnel, and facilities.
- G&A expense increased $2.4 million, mainly from higher personnel costs and public-company legal and professional fees.
- Other income, net, declined to $0.4 million from $0.7 million; the filing attributes the change primarily to investment premium amortization in 2021.
- Operating cash use increased to $24.5 million from $11.3 million. Q1 2020 financing cash flow included IPO proceeds; Q1 2021 had no comparable offering proceeds.
Outlook, risks and contingencies
- The Phase 1 dose-escalation portion of the MasterKey-01 trial of BDTX-189 was expected to complete in the first half of 2021. BDTX-189 had received FDA Fast Track designation for specified advanced solid tumors.
- The company expects expenses and capital needs to increase as it advances BDTX-189 and other programs, including BDTX-1535, expands its platform, and supports public-company operations. It provided no revenue or earnings guidance.
- A $150 million at-the-market equity program was available under a shelf registration; no shares had been sold through it by March 31, 2021.
- COVID-19 could delay trial recruitment, site operations, research, or drug supply. The company said the trial remained on track at the filing date but could not predict the pandemic’s full impact.
- The company expects to need additional capital beyond its estimated runway. Financing may dilute shareholders or impose restrictive terms; failure to obtain funding could require programs to be delayed, reduced, or discontinued.
- Potential license milestone and royalty payments are contingent and not reasonably estimable. The filing reported no material legal proceedings and no off-balance-sheet arrangements.
Most important facts for investors to verify
- Whether MasterKey-01 met the stated first-half 2021 Phase 1 completion expectation and what clinical data followed.
- Whether the estimated runway into 2023 remains supported by actual cash burn, investment balances, and development spending.
- Progress and costs for BDTX-189, BDTX-1535, and other platform programs, including any changes to trial or regulatory timelines.
- Any use of the ATM program or other financing, and the resulting dilution or financing terms.
- Potential effects of COVID-19, the New York lease commencement and associated commitments, and contingent license obligations.