Black Diamond Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. The company is a clinical-stage precision oncology biotechnology company and has not generated revenue from product sales.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $14.8 million | $17.8 million |
| General and administrative expense | $6.8 million | $7.9 million |
| Total operating expenses | $21.6 million | $25.7 million |
| Net loss | $20.9 million; $0.57 per share | $25.5 million; $0.70 per share |
| Net cash used in operating activities | $20.0 million | $28.6 million |
| Cash, cash equivalents and investments at March 31 | $103.4 million | $122.8 million at December 31, 2022 |
Operating margins are not meaningful because the company had no revenue. Cash and cash equivalents were $39.1 million, investments were $64.2 million, and restricted cash was $1.2 million at quarter-end. Total assets were $135.6 million; total liabilities were $37.4 million. The filing reports no borrowings or financial debt; liabilities include $27.5 million of operating lease obligations. Management expects available cash, cash equivalents and investments to fund planned operations into the third quarter of 2024, subject to assumptions and risks.
Changes and notable items
- Net loss improved by $4.6 million year over year, while operating expenses declined by $4.1 million.
- R&D expense increased for BDTX-1535 and BDTX-4933 as their clinical programs advanced, but was more than offset by lower spending on early research, discontinued BDTX-189 development, and reduced personnel costs following an April 2022 workforce realignment.
- Cash from operations used declined by $8.6 million year over year. Investing cash inflow was primarily from investment sales and maturities, rather than operating earnings.
- Investment fair value was $64.2 million, with $1.2 million of unrealized losses; management determined the losses were not credit-related and reported no impairment.
- The company’s 39.1% Launchpad Therapeutics investment had a zero carrying value at March 31, 2023. The filing describes a 2022 contribution of early-stage antibody programs and related accounting gains and losses.
Outlook, risks and contingencies
- Management expected an update on BDTX-1535 Phase 1 dose escalation in the second half of 2023 and planned to initiate a BDTX-4933 Phase 1 trial in selected indications in the second quarter of 2023.
- The company expects losses and expenses to continue and anticipates needing substantial additional funding. Its $150 million at-the-market program had no sales through March 31, 2023; the broader shelf registration permits offerings up to $500 million.
- Clinical development, enrollment, regulatory review, manufacturing, intellectual property, competition and access to financing could delay or impair programs. Additional equity financing may dilute existing holders; debt or partnerships may impose restrictions or require rights concessions.
- The filing added a risk concerning banking-system instability following Silicon Valley Bank’s failure. The company said it held no material deposits at SVB and had experienced no adverse liquidity or operating impact as of the filing date, but future effects were uncertain.
- Operating lease commitments totaled $33.6 million in future minimum payments. Potential license milestones and royalties were excluded because their occurrence and timing were uncertain. The company reported no material legal proceedings.
Key facts for investors to verify
- Whether BDTX-1535 data and BDTX-4933 trial initiation occurred on the stated timelines, and the resulting clinical evidence.
- Whether the estimated runway into Q3 2024 remains valid given trial spending, cash burn and financing needs.
- Any subsequent ATM or other financing activity, and its dilution or financing terms.
- Progress and economics of the Launchpad arrangement and the status of the FGFR and other discovery programs.
- Potential effects of banking-market conditions, investment liquidity and lease obligations on available operating resources.