# Black Diamond Therapeutics, Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [Black Diamond Therapeutics, Inc.](/companies/bdtx.md) (CIK 1701541)
- Form: 10-Q
- Filed: 2023-08-11
- Accepted by EDGAR: Aug 11, 2023, 07:26 ET
- Period: 2023-06-30
- Accession: 0001701541-23-000041
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1701541/000170154123000041/bdtx-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1701541/000170154123000041/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-04-01 to 2023-06-30 | $13.2m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2023-01-01 to 2023-06-30 | $27.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | −$20.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | −$41.6m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | −$19.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | −$40.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.52 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | −$1.09 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.52 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | −$1.09 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 36,516,114 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 36,500,085 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | −$34.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $0 | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-06-30 | $41.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $93.0m | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $119.9m | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $13.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $37.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-06-30 | $82.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,267 characters.

*The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and our audited consolidated financial statements and related notes thereto for the year ended December 31, 2022, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 9, 2023. This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in our Annual Report on Form 10-K and in other SEC filings.*

### Overview

We are a clinical-stage precision oncology medicine company focused on pioneering the discovery and development of novel MasterKey therapies. We target families of oncogenic mutations in patients with genetically defined cancers. The foundation of our company is built upon a deep understanding of cancer genetics, onco-protein structure and function, and medicinal chemistry. Our proprietary technology platform, which we refer to as our Mutation-Allostery-Pharmacology (MAP) drug discovery engine, is designed to allow us to analyze population-level genetic sequencing data to discover oncogenic mutations that promote cancer across tumor types. Our goal is to identify families of mutations that can be inhibited with MasterKey therapies, thereby providing precision oncology to greater numbers of patients with genetically defined tumors.

Our lead product candidate, BDTX-1535, is designed to be a brain penetrant, mutant selective and irreversible fourth generation MasterKey inhibitor of a family of oncogenic mutations in the ErbB-1 epidermal growth factor receptor (EGFR) which are resistant to current generation tyrosine kinase inhibitors (TKIs), while sparing wild type EGFR (EGFR WT) activity. On June 27, 2023, we announced initial clinical data from the dose escalation portion of the Phase 1 clinical study of BDTX-1535, demonstrating a favorable tolerability profile and clinical proof of activity of BDTX-1535 in non-small cell lung cancer (NSCLC) patients harboring acquired resistance and intrinsic driver EGFR mutations. Confirmed radiographic partial response (PR) by RECIST 1.1 was achieved across predicted therapeutic doses in 5 of 12 NSCLC patients in a subgroup, who had measurable disease at study start, and underwent post-baseline tumor assessment by RECIST1.1. One additional patient had an unconfirmed PR, while the remaining six patients had stable disease. Confirmed PRs were observed in NSCLC patients with a wide range of EGFR mutations including classical and intrinsic driver mutations and acquired C797S resistance mutation, as well as complex mutations that include a combination of classical, intrinsic, and acquired resistance mutations. Two NSCLC patients demonstrated radiographic improvement in the peripheral disease and central nervous system (CNS) metastases.

BDTX-1535 was generally well tolerated by NSCLC and glioblastoma multiforme (GBM) patients and the overall safety profile was consistent with the EGFR TKI class of drugs. The most common drug-related adverse events were mild to moderate rash, diarrhea, stomatitis, paronychia, nausea and fatigue. No patients experienced dose limiting toxicity at 15-200 mg once-daily (QD) doses. One of 15 patients treated at the 300 mg QD dose experienced dose limiting diarrhea and 5 of 12 patients at the 400 mg QD dose experienced dose limiting toxicity (diarrhea, 2 patients; rash, stomatitis, fatigue and decreased appetite, 1 patient each). No unexpected safety signal was identified during dose escalation.

We expect to provide an update on the Phase 1 dose escalation data in the cohort of patients with GBM in the fourth quarter of 2023. Expansion cohorts initiated in July 2023 to assess overall response rate (ORR) by RECIST 1.1 in NSCLC patients with EGFR acquired resistance mutations after progression on a third generation EGFR TKI and intrinsic driver mutations after progression on an EGFR TKI.

Our second product candidate, BDTX-4933, is designed to be a brain penetrant and highly selective and potent inhibitor of oncogenic BRAF Class I, II, III and active RAF dimers promoted by upstream oncogenic alterations, such as RAS mutations, which has the potential to avoid paradoxical activation. We initiated a Phase 1 clinical trial for BDTX-4933 in select indications for patients harboring all-class BRAF or RAS mutations in the second quarter of 2023. We are also leveraging our MAP drug discovery engine to identify other families of oncogenic mutations in validated oncogenes, which have the potential to expand the reach of MasterKey therapies.

We have selected a development candidate, BDTX-4876, for our fibroblast growth factor receptor (FGFR) program. BDTX-4876 is selective against MasterKey mutations and alterations in FGFR 2 and 3, while sparing FGFR 1 and 4. We plan to evaluate strategic alternatives for BDTX-4876 as we deepen our focus on our two clinical stage assets. We expect one other undisclosed program in solid tumors to progress to development candidate nomination in 2023.

Since our inception in 2014, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, discovering product candidates and securing related intellectual property rights while conducting research and development activities for our programs. We do not have any products approved for sale and have not generated any revenue from product sales. We may never be able to develop or commercialize a marketable product. We have not yet successfully completed any pivotal clinical trials, obtained any regulatory approvals, manufactured a commercial-scale drug, or conducted sales and marketing activities.

To date, we have funded our operations with proceeds from the sale of preferred stock and common stock. Since inception, we have incurred significant operating losses. Our net losses were $40.0 million and $48.4 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, we had an accumulated deficit of $375.0 million. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

- advance clinical studies for BDTX-1535 and BDTX-4933 and continue preclinical studies for our other product candidates;
- continue to identify additional product candidates from our proprietary MAP drug discovery engine;
- obtain, maintain, expand and protect our intellectual property portfolio;
- attract and retain key clinical, scientific, management and commercial personnel;
- seek marketing approvals for our product candidates that successfully complete clinical trials, if any; and
- acquire or in-license additional product candidates.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates, delay our pursuit of potential in-licenses or acquisitions, and reduce headcount and general and administrative costs.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

Additionally, we continue to actively monitor macroeconomic conditions and market volatility resulting from global economic developments, political unrest, high inflation, the recent failure of certain banks and financial institutions, and health crises. While we believe such factors have had no significant impact on our business or financial results during the periods presented, future developments and potential impacts on our business are uncertain and cannot be predicted with confidence.

As of June 30, 2023, we had cash, cash equivalents and investments of approximately $89.5 million. We believe that the net proceeds from our Follow-on Offering in July 2023, together with our existing cash, cash equivalents and investments, will enable us to fund our operating expenses and capital expenditure requirements into the first half of 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and capital resources.” To finance our operations beyond that point, we will need to raise additional capital, which cannot be assured. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidates or other research and development initiatives.

### Components of our results of operations

### Revenue

To date, we have not generated any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

### Operating expenses

#### Research and development expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts and the development of our product candidates. We expense research and development costs as incurred, which include:

- expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;
- expenses incurred under agreements with contract research organizations, or CROs, that are primarily engaged in the oversight and conduct of our drug discovery efforts and preclinical studies, clinical trials and contract manufacturing organizations, or CMOs, that are primarily engaged to provide preclinical and clinical drug substance and product for our research and development programs;
- other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical studies and clinical trial materials, including manufacturing validation batches, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;
- payments made in cash or equity securities under third-party licensing, acquisition and option agreements;
- employee-related expenses, including salaries and benefits, travel and stock-based compensation expense for employees engaged in research and development functions;
- costs related to compliance with regulatory requirements; and
- allocated facilities-related costs, depreciation and other expenses, which include rent and utilities.

We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. Any nonrefundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.

Our direct external research and development expenses consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct research and development expenses also include fees incurred under license, acquisition and option agreements. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to conduct our research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and, therefore, we do not track their costs by program.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research and development expenses will increase substantially over the next several years as we continue our clinical trials for BDTX-1535 and BDTX-4933, as well as conduct other preclinical and clinical development, including submitting regulatory filings for other product candidates.

We expect our discovery research efforts and our related personnel costs will increase and, as a result, we expect our research and development expenses, including costs associated with stock-based compensation, will increase above current year levels. In addition, we may incur additional expenses related to milestone and royalty payments payable to third parties with whom we may enter into license, acquisition and option agreements to acquire the rights to future product candidates.

At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from any of our product candidates. The successful development and commercialization of our product candidates is highly uncertain. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of the following:

- the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development activities;
- establishing an appropriate safety and efficacy profile with IND-enabling studies;
- successful patient enrollment in and the initiation and completion of clinical trials;
- the timing, receipt and terms of any marketing approvals from applicable regulatory authorities including the U.S. Food and Drug Administration (FDA) and non-U.S. regulators;
- the extent of any required post-marketing approval commitments to applicable regulatory authorities;
- establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully;
- development and timely delivery of clinical-grade and commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;
- obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
- significant and changing government regulation;
- launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; and
- maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates.

Any changes in the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.

#### General and administrative expenses

General and administrative expenses consist primarily of salaries and benefits, travel and stock-based compensation expense for personnel in executive, business development, finance, human resources, legal, information technology, pre-commercial and support personnel functions. General and administrative expenses also include direct and allocated facility-related costs as well as insurance costs and professional fees for legal, patent, consulting, investor and public relations, accounting and audit services.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates and prepare for potential commercialization activities. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and other employee-related expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of that product candidate.

### Other income (expense)

Other income (expense) consists primarily of interest income earned on our cash equivalents and investment balances, sublease income, realized and unrealized foreign currency transaction gains and losses, and gain (loss) on sale of IP related to equity method investment.

### Equity in (losses) of unconsolidated entity

Equity in (losses) of unconsolidated entity consists of our share of equity method investee losses on the basis of our equity ownership percentage and IPR&D charges resulting from basis differences.

### Results of operations

### Comparison of the three months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022:

*(in thousands)*

| Operating expenses: | Three Months Ended June 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Research and development | $13,154 | $16,195 | $(3,041) |
| General and administrative | 6,878 | 6,978 | (100) |
| Total operating expenses | 20,032 | 23,173 | (3,141) |
| Loss from operations | (20,032) | (23,173) | 3,141 |
| Other income (expense): |  |  |  |
| Interest income | 539 | 386 | 153 |
| Other (expense) income | 341 | (143) | 484 |
| Total other income (expense), net | 880 | 243 | 637 |
| Net loss | $(19,152) | $(22,930) | $3,778 |

#### Research and development

Research and development expenses were $13.2 million for the three months ended June 30, 2023, compared to $16.2 million for the three months ended June 30, 2022. The following table summarizes our research and development expenses for the three months ended June 30, 2023 and 2022:

*(in thousands)*

|  | Three Months Ended June 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| BDTX-1535 research and development expenses | $3,428 | $1,089 | $2,339 |
| BDTX-4933 research and development expenses | 1,718 | 168 | 1,550 |
| BDTX-189 research and development expenses | — | 2,561 | (2,561) |
| Other research programs and platform development expenses | 2,106 | 5,021 | (2,915) |
| Personnel expenses | 4,670 | 5,968 | (1,298) |
| Allocated facility expenses | 790 | 974 | (184) |
| Other expenses | 442 | 414 | 28 |
|  | $13,154 | $16,195 | $(3,041) |

The decrease of $3.0 million for the three months ended June 30, 2023 was primarily due to a net increase of $3.9 million related to the progression of our clinical trials for BDTX-1535 and BDTX-4933 offset by decreased spend relating to other research programs and platform development of $2.9 million due to reduced spending on early discovery projects, compared to the three months ended June 30, 2022. In addition, BDTX-189 expenses decreased $2.6 million due to the discontinuation of the development of BDTX-189 to focus on upcoming milestones for our pipeline programs, BDTX-1535 and BDTX-4933. Personnel expenses decreased $1.3 million as a result of the realignment of our workforce in April 2022 to focus on upcoming milestones for our pipeline programs.

#### General and administrative

General and administrative expenses were $6.9 million for the three months ended June 30, 2023 compared to $7.0 million for the three months ended June 30, 2022. This was primarily a result of a decrease in personnel-related costs, legal and other professional fees.

#### Other income (expense)

Other income was $0.9 million for the three months ended June 30, 2023, compared to $0.2 million for the three months ended June 30, 2022. The increase was primarily attributable to amortization of premium on investments decreasing at a higher rate in 2023 compared to 2022, sublease income in 2023 and interest income increasing due to market conditions.

### Comparison of the six months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:

*(in thousands)*

| Operating expenses: | Six Months Ended June 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Research and development | $27,907 | $33,981 | $(6,074) |
| General and administrative | 13,686 | 14,871 | (1,185) |
| Total operating expenses | 41,593 | 48,852 | (7,259) |
| Loss from operations | (41,593) | (48,852) | 7,259 |
| Other income (expense): |  |  |  |
| Interest income | 1,161 | 792 | 369 |
| Other (expense) income | 405 | (377) | 782 |
| Total other income (expense), net | 1,566 | 415 | 1,151 |
| Net loss | $(40,027) | $(48,437) | $8,410 |

#### Research and development

Research and development expenses were $27.9 million for the six months ended June 30, 2023, compared to $34.0 million for the six months ended June 30, 2022. The following table summarizes our research and development expenses for the six months ended June 30, 2023 and 2022:

*(in thousands)*

|  | Six Months Ended June 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| BDTX-1535 research and development expenses | $7,161 | $2,477 | $4,684 |
| BDTX-4933 research and development expenses | 3,397 | 204 | 3,193 |
| BDTX-189 research and development expenses | — | 5,044 | (5,044) |
| Other research programs and platform development expenses | 4,893 | 10,518 | (5,625) |
| Personnel expenses | 9,779 | 12,905 | (3,126) |
| Allocated facility expenses | 1,799 | 2,005 | (206) |
| Other expenses | 878 | 828 | 50 |
|  | $27,907 | $33,981 | $(6,074) |

27

The decrease of $6.1 million for the six months ended June 30, 2023 was primarily due to a decrease of $5.0 million in BDTX-189 expenses due to the discontinuation of the development of BDTX-189 to focus on upcoming milestones for our pipeline programs, BDTX-1535 and BDTX-4933, compared to the six months ended June 30, 2022. Additionally, there was a net increase of $7.9 million related to the progression of our clinical trials for BDTX-1535 and BDTX-4933 offset by decreased spend relating to other research programs and platform development of $5.6 million due to reduced spending on early discovery projects. Personnel expenses decreased $3.1 million as a result of the realignment of our workforce in April 2022 to focus on upcoming milestones for our pipeline programs.

#### General and administrative

General and administrative expenses were $13.7 million for the six months ended June 30, 2023 compared to $14.9 million for the six months ended June 30, 2022. This was primarily a result of a decrease in personnel-related costs, legal and other professional fees.

#### Other income (expense)

Other income was $1.6 million for the six months ended June 30, 2023, compared to $0.4 million for the six months ended June 30, 2022. The increase was primarily attributable to amortization of premium on investments decreasing at a higher rate in 2023 compared to 2022, sublease income in 2023 and interest income increasing due to market conditions.

### Liquidity and capital resources

### Sources of liquidity

Since our inception, we have not generated any revenue from any product sales or any other sources and have incurred significant operating losses and negative cash flows from our operations. We have not yet commercialized any of our product candidates, and we do not expect to generate revenue from sales of any product candidates for several years, if at all. We have funded our operations to date primarily with proceeds from the sale of common and preferred stock.

On February 3, 2020, we completed an IPO of 12,174,263 shares of our common stock, including the exercise in full by the underwriters of their option to purchase up to 1,587,947 additional shares of common stock, for aggregate gross proceeds of $231.3 million. We received $212.1 million in net proceeds after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. Through June 30, 2023, we had received net cash proceeds of $200.6 million from previous sales of our preferred stock and as of June 30, 2023, we had cash, cash equivalents and investments of $89.5 million.

On November 14, 2022, we filed a shelf registration statement on Form S-3 (the Shelf Registration Statement) with the SEC, which covers the offering, issuance and sale of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof up to a maximum price of $500 million. We simultaneously entered into an Open Market Sale AgreementSM (the Sales Agreement) with Jefferies LLC (Jefferies), as sales agent, to provide for the issuance and sale by us of up to $150 million of our common stock, or the Shares, from time to time through Jefferies as our sales agent (the ATM Program). The Shelf Registration Statement became effective on November 22, 2022. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, Jefferies may sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act. We may sell the Shares in amounts and at times to be determined by us from time to time subject to the terms and conditions of the Sales Agreement, but we have no obligation to sell any Shares under the Sales Agreement. We or Jefferies may suspend or terminate the offering of Shares upon notice to the other party and subject to other conditions. As of June 30, 2023, no sales have been made pursuant to the ATM Program.

On July 5, 2023, we completed an underwritten public offering (the Follow-on Offering) of 15,000,000 shares of our common stock at a price to the public of $5.00. The aggregate net proceeds from the Follow-on Offering totaled approximately $71.6 million after deducting underwriting discounts and commissions, as well as other offering expenses. The underwriters did not exercise any portion of their 30-day overallotment option to purchase up to an additional 2,250,000 shares of the Company’s common stock at the public offering price, which expired on July 29, 2023, and therefore no additional proceeds from the Follow-on Offering were received.

### Cash flows

The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

|  | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: |
| Cash used in operating activities | $(34,399) | $(46,667) |
| Cash provided by investing activities | 41,981 | 36,537 |
| Cash provided by financing activities | 51 | 153 |
| Net increase (decrease) in cash and cash equivalents | $7,633 | $(9,977) |

#### Operating activities

During the six months ended June 30, 2023, we used cash in operating activities of $34.4 million, primarily resulting from our net loss of $40.0 million, partially offset by the non-cash charge related to stock compensation expense of $5.3 million.

During the six months ended June 30, 2022, we used cash in operating activities of $46.7 million, primarily resulting from our net loss of $48.4 million, partially offset by the non-cash charge related to stock compensation expense of $6.6 million.

Changes in accounts payable and accrued expenses in all periods were generally due to growth in our business, the advancement of our product candidates and the timing of vendor invoicing and payments.

#### Investing activities

During the six months ended June 30, 2023, we had cash provided by investing activities of $42.0 million primarily from the sales and maturities of investments.

During the six months ended June 30, 2022, we had cash provided by investing activities of $36.5 million primarily from the sales and maturities of investments.

#### Financing activities

During the six months ended June 30, 2023, we had cash provided by financing activities of $0.1 million, consisting of proceeds from the participation in the employee stock purchase plan.

During the six months ended June 30, 2022, we had cash provided by financing activities of $0.2 million consisting of proceeds from exercise of stock options and participation in the employee stock purchase plan.

### Funding requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. In addition, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. The timing and amount of our operating expenditures will depend largely on our ability to:

- advance BDTX-1535 and BDTX-4933 through clinical trials;
- advance preclinical development of our early stage programs, including our FGFR program;
- manufacture, or have manufactured on our behalf, our preclinical and clinical drug material and develop processes for late state and commercial manufacturing;
- seek regulatory approvals for any product candidates that successfully complete clinical trials;
- establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own;
- hire additional clinical, quality control and scientific personnel; and
- obtain, maintain, expand and protect our intellectual property portfolio.

As of June 30, 2023, we had cash, cash equivalents and investments of $89.5 million. We believe that the net proceeds from our Follow-on Offering in July 2023, together with our existing cash, cash equivalents and investments, will enable us to fund our operating expenses and capital expenditure requirements into the first half of 2025. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We anticipate that we will require additional capital as we seek regulatory approval of our product candidates and if we choose to pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize.

Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to further reduce or terminate our operations. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:

- the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical trials;
- the costs, timing and outcome of regulatory review of our product candidates;
- the costs, timing and ability to manufacture our product candidates to supply our clinical and preclinical development efforts and our clinical trials;
- the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
- subject to receipt of regulatory approval, the costs of commercialization activities for our product candidates, to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities;
- the ability to receive additional non-dilutive funding;
- the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval;
- the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining, expanding and enforcing our intellectual property rights and defending intellectual property-related claims;
- our ability to establish and maintain collaborations on favorable terms, if at all;
- the extent to which we acquire or in-license other product candidates and technologies; and
- the costs of operating as a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time, if ever, as we can generate substantial product revenue from product sales, we expect to finance our operations through a combination of public or private equity offerings, debt financings, collaborations, strategic partnerships and alliances or marketing, distribution or licensing arrangements with third parties or through other sources of financing. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. However, the trading prices for our common stock and for other biopharmaceutical companies have been highly volatile. As a result, we may face difficulties raising capital through sales of our common stock, and such sales may be on unfavorable terms. Similarly, adverse macroeconomic conditions and market volatility resulting from global economic developments, political unrest, high inflation, global health crises, or other factors could materially and adversely affect our ability to consummate an equity or debt financing on favorable terms or at all. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all.

To the extent that we raise additional capital through the sale of private or public equity or convertible debt securities, the ownership interest of our stockholders may be materially diluted, and the terms of such securities could include liquidation or other preferences and anti-dilution protections that could adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. In addition, debt financing may involve significant cash payment obligations and specific financial ratios that may restrict our ability to operate our business would result in fixed payment obligations.

If we raise additional funds through collaborations, strategic partnerships and alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, obtain capital through arrangements with collaborators on terms unfavorable to us or pursue merger or acquisition strategies, all of which could adversely affect the holdings or the rights of our stockholders.

### Contractual obligations and commitments

The following summarizes our contractual obligations as of June 30, 2023:

*(in thousands)*

|  | Payments Due by Period Less than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Property leases - commenced | $4,301 | $8,955 | $9,449 | $9,845 | $32,550 |
| Total | $4,301 | $8,955 | $9,449 | $9,845 | $32,550 |

31

#### Property leases – commenced

The amounts reported for property leases represent future minimum lease payments under non-cancelable operating leases in effect as of June 30, 2023. The minimum lease payments do not include common area maintenance charges or real estate taxes.

#### Other contractual obligations

The contractual obligations table does not include any potential future milestone payments or royalty payments we may be required to make under our existing license agreements due to the uncertainty of the occurrence of the events requiring payment under those agreements.

### Critical accounting policies and significant judgments and use of estimates

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 9, 2023. During the six months ended June 30, 2023, there were no material changes to our critical accounting policies from those previously disclosed.

### Recently issued accounting pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

### Emerging growth company and smaller reporting company status

The Jumpstart Our Business Startups Act of 2012 (the JOBS Act) permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to not “opt out” of this provision and, as a result, we will adopt new or revised accounting standards at the time private companies adopt the new or revised accounting standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

## Market risk

As filed, 153 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

## Controls and procedures

As filed, 875 characters.

### Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2023.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 3,095 characters.

We are updating and supplementing our risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 9, 2023 to add the following new risk factor:

***Conditions in the banking system and financial markets, including the failure of banks and financial institutions, could have an adverse effect on our operations and financial results.***

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of Silicon Valley Bank, or SVB, after it was unable to continue its operations. This event exposed vulnerabilities in the banking sector, including legal uncertainties, significant volatility and contagion risk, and caused market prices of regional bank stocks to plummet.

As of the date of this Quarterly Report on Form 10-Q, we do not hold material cash deposits at SVB and have not experienced any adverse impact to our liquidity or to our current and projected business operations, financial condition, or results of operations; however, we are unable to predict the extent or nature of the impacts of evolving circumstances in the financial services industry at this time. If, for example, other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened. While it is not possible at this time to predict the extent of the impact that high market volatility and instability of the banking sector could have on economic activity and our business in particular, the failure of other banks and financial institutions and the measures taken by governments, businesses and other organizations in response to these events could adversely impact our business, financial condition and results of operations.

There have been no other material changes to the risk factors previously disclosed in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2022. Please refer to the complete Part I, Item 1A of our Annual Report for additional risks and uncertainties we are facing that may have a material adverse effect on our business prospects, financial condition and results of operations. In addition to the risks described in our Annual Report on Form 10-K, you should carefully consider the other information set forth in this Form 10-Q and the information in our other filings with the SEC, as they could materially affect our business, financial condition or future results of operations.

Filed Aug 11, 2023.
Source: SEC EDGAR, the filing index for accession 0001701541-23-000041. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.