Black Diamond Therapeutics(BDTX) - 2021 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2021, detailing financial position, operations, and cash flows with accompanying notes Condensed Consolidated Balance Sheets As of June 30, 2021, total assets decreased to $287.9 million from $329.7 million, while total liabilities increased to $36.9 million, leading to a decrease in stockholders' equity | Balance Sheet Items (in thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash, cash equivalents and investments | $263,470 | $315,067 | | Total current assets | $270,947 | $319,554 | | Total assets | $287,882 | $329,670 | | Liabilities & Equity | | | | Total current liabilities | $23,486 | $14,218 | | Total liabilities | $36,862 | $21,912 | | Total stockholders' equity | $251,020 | $307,758 | | Total liabilities and stockholders' equity | $287,882 | $329,670 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $34.4 million for Q2 2021 and $64.7 million for the six months ended June 30, 2021, primarily due to increased R&D and G&A expenses | (in thousands, except per share data) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $26,719 | $10,170 | $49,539 | $17,524 | | General and administrative | $7,996 | $4,858 | $15,889 | $10,383 | | Loss from operations | ($34,715) | ($15,028) | ($65,428) | ($27,907) | | Net loss | ($34,351) | ($14,571) | ($64,652) | ($26,716) | | Net loss per share, basic and diluted | ($0.95) | ($0.41) | ($1.79) | ($0.92) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $49.6 million for the first six months of 2021, offset by $51.7 million from investing activities, contrasting with the prior year's IPO-driven cash inflow | (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($49,620) | ($24,886) | | Net cash provided by (used in) investing activities | $51,674 | ($279,640) | | Net cash provided by financing activities | $665 | $213,844 | | Net increase (decrease) in cash and cash equivalents | $2,719 | ($90,682) | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail the company's precision oncology business, significant financing events including a $212 million IPO, projected cash runway into 2023, and key accounting policies like stock-based compensation and lease commitments - The company is a precision oncology medicine company focused on discovering and developing small molecule, MasterKey therapies for genetically defined cancers[16] - Completed an IPO in February 2020, raising $212 million in net proceeds, and filed a shelf registration for up to $150 million in February 2021 with no sales as of June 30, 2021[19][20] - The company expects its cash, cash equivalents, and investments will be sufficient to fund operating expenses and capital requirements into 2023[21] - Stock-based compensation expense increased to $7.7 million for the six months ended June 30, 2021, up from $3.3 million in the prior-year period[49][50] - The company entered into new operating leases for office and laboratory space in Cambridge, MA, and New York, NY, with significant future payment commitments[60][62] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's MasterKey therapy development, highlighting increased operating losses due to higher R&D and G&A expenses, and confirms $263.5 million in cash and investments sufficient to fund operations into 2023 Overview Black Diamond is a clinical-stage precision oncology company developing MasterKey therapies, with lead candidate BDTX-189, and has incurred significant operating losses, reaching an accumulated deficit of $182.9 million as of June 30, 2021 - The company's lead product candidate, BDTX-189, is designed to inhibit oncogenic proteins with non-canonical mutations in EGFR and HER2[75] - BDTX-189 received Fast Track designation from the FDA in July 2020 for treating adult patients with solid tumors harboring specific allosteric HER2 or EGFR/HER2 Exon 20 insertion mutations[77] - The company has incurred significant operating losses since inception, with net losses of $64.7 million for the first six months of 2021 and an accumulated deficit of $182.9 million as of June 30, 2021[78] Results of Operations Operating expenses significantly increased for the three and six months ended June 30, 2021, driven by higher R&D costs for the BDTX-189 program and increased G&A expenses due to headcount growth | (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $26,719 | $10,170 | $16,549 | | General and administrative | $7,996 | $4,858 | $3,138 | | Total operating expenses | $34,715 | $15,028 | $19,687 | | (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $49,539 | $17,524 | $32,015 | | General and administrative | $15,889 | $10,383 | $5,506 | | Total operating expenses | $65,428 | $27,907 | $37,521 | - The increase in R&D expenses was driven by higher costs for the BDTX-189 program, other research programs and platform development, and increased personnel-related expenses due to headcount growth[102][107] Liquidity and Capital Resources The company's operations are primarily funded by its $212.1 million IPO proceeds, with $263.5 million in cash and investments as of June 30, 2021, projected to fund operations into 2023, alongside significant property lease obligations - As of June 30, 2021, the company had cash, cash equivalents, and investments of $263.5 million[110][117] - Management projects that current capital resources will fund operating expenses and capital expenditure requirements into 2023[83][117] Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2021 | | :--- | :--- | | Cash used in operating activities | ($49,620) | | Cash provided by investing activities | $51,674 | | Cash provided by financing activities | $665 | - Total contractual obligations for property leases, including those not yet commenced, amount to $39.2 million[121] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk stems from interest rate fluctuations on its $263.5 million cash and investments, though no material impact is anticipated due to their short-term nature, with foreign currency and inflation risks deemed immaterial - The primary market risk exposure is from interest rate fluctuations on cash, cash equivalents, and investments totaling $263.5 million as of June 30, 2021[130] - Exposure to foreign currency exchange rate changes is considered immaterial[131] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2021[134] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[135] PART II - OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings and does not anticipate adverse effects from ordinary course legal matters - The company is not currently party to any material legal proceedings[137] Risk Factors Investors are referred to the comprehensive discussion of risk factors in the company's Annual Report on Form 10-K for the year ended December 31, 2020, which could materially impact the business - Investors are referred to the risk factors section in the company's Annual Report on Form 10-K for a detailed discussion of business risks[138] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2021, the company issued options for 486,592 common shares to employees and advisors, and confirmed no material change in the planned use of $212.1 million IPO proceeds - In Q2 2021, the company granted options to purchase an aggregate of 486,592 shares of its common stock to employees and advisors, exempt from registration under Rule 701[141] - There has been no material change in the planned use of net proceeds from the IPO, which raised $212.1 million after costs[144][145] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[145] Mine Safety Disclosures This item is not applicable to the company's business - Not applicable[145] Other Information The company reports no other information for this item - Not applicable[145] Exhibits This section lists exhibits filed with the Quarterly Report, including an employment agreement, CEO/CFO certifications, and Inline XBRL documents - The report includes several exhibits, such as an employment agreement, CEO/CFO certifications required by the Sarbanes-Oxley Act, and XBRL data files[148]