Black Diamond Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Black Diamond is a clinical-stage precision oncology company developing therapies using its Mutation-Allostery-Pharmacology platform. It has no approved products and has generated no revenue.
Financial results and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $27.6m | $12.9m | $77.2m | $30.5m |
| General and administrative expense | $7.7m | $5.6m | $23.6m | $15.9m |
| Total operating expenses | $35.4m | $18.5m | $100.8m | $46.4m |
| Net loss | $35.1m | $17.9m | $99.7m | $44.6m |
| Basic and diluted loss per share | $0.97 | $0.50 | $2.76 | $1.42 |
| Cash used in operating activities | — | — | $76.1m | $36.4m |
At September 30, 2021, cash and cash equivalents were $46.6m and investments were $188.4m, totaling $235.0m. Total assets were $274.1m; total liabilities were $55.2m, including $28.8m of non-current operating lease liability. The filing reports no borrowings. Stockholders’ equity was $218.9m and accumulated deficit was $218.0m. Management estimated available cash, cash equivalents and investments would fund operating expenses and capital requirements into the second half of 2023, subject to assumptions and risks.
Gross margin and conventional profitability margins are not meaningful because the company has no revenue. Cash, cash equivalents and restricted cash increased by $12.0m during the first nine months of 2021. Investing activities provided $87.4m, primarily from investment sales and maturities; financing activities provided $0.7m, primarily from option exercises. The company had an unused $150m at-the-market offering program as of September 30, 2021.
Changes versus the prior comparable periods
- Q3 net loss increased by $17.2m year over year; nine-month net loss increased by $55.1m.
- R&D expense rose by $14.7m in Q3 and $46.7m year to date. Management attributed the increases chiefly to expanded platform and other research programs, higher BDTX-189 spending, increased headcount, and facility costs.
- G&A expense increased by $2.2m in Q3 and $7.7m year to date, primarily from additional personnel and public-company legal and professional costs.
- Cash used in operations rose to $76.1m from $36.4m for the first nine months. The company reported $235.0m of cash, cash equivalents and investments, compared with $315.1m at December 31, 2020.
Outlook, risks and notable items
- Management expects operating losses and expenses to increase as it advances BDTX-189, early-stage programs including BDTX-1535, and its discovery platform. It expects no product revenue in the foreseeable future and anticipates needing additional capital; financing may dilute shareholders or require concessions on rights.
- The Phase 2 portion of the BDTX-189 MasterKey-01 trial was stated to remain on track for initiation by year-end 2021. The company had received Fast Track designation for BDTX-189 for specified solid tumors. Trial timing, recruitment, data quality, and development outcomes remain uncertain.
- COVID-19 and related disruptions could affect trial enrollment, site availability, suppliers, drug supply, and research timelines. The company said it had not experienced material business disruptions or asset impairment as of the filing’s issuance, but the ultimate effects remained uncertain.
- Contractual obligations included approximately $38.1m of future minimum payments under commenced property leases. Potential license milestone and royalty payments were excluded because their timing and amounts were uncertain. The company reported no material legal proceedings and no off-balance-sheet arrangements.
- Management concluded disclosure controls and procedures were effective as of September 30, 2021, with no reported material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether BDTX-189 trial initiation, recruitment, safety and efficacy data, and other clinical milestones proceed on the stated timelines.
- Whether the estimated cash runway into the second half of 2023 remains valid as spending rises and development plans evolve.
- How much future capital the company needs, and whether any financing uses the ATM program or otherwise dilutes shareholders.
- Progress and timelines for BDTX-1535 and other early-stage programs, as well as the costs and contingencies under license agreements.
- Any COVID-19-related or other operational disruptions that materially affect clinical trials, research, manufacturing, or vendor performance.