What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-03-12 compared with 2023-03-09 · 60 added, 56 removed, 591 unchanged (16% of the section changed)

48 unchanged sentences

Right-of-use assets 21,980 24,794

Other non-current assets —

Total assets $ 158,567

7 unchanged sentences

Commitments and contingencies (Note 12) —

Stockholders' equity (deficit):

Stockholders' equity:

Preferred stock, $ 0.0001 par value;

35 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

Black Diamond Therapeu tics, Inc.

Black Diamond Therapeutics, Inc.

Consolidated Statements of Cash Flows

6 unchanged sentences

Depreciation expense 437 508

Amortization of premium on investments 536 2,186

(Accretion) amortization on investments ( 1,174 ) 536

Noncash rent expense 2,814 2,730

Gain on sale of investments — ( 10 )

Other non-cash items — ( 5 )

Loss on disposal of property and equipment 358 —

17 unchanged sentences

Proceeds from exercise of common stock options and ESPP 82 177

Proceeds from issuance of common stock, net of issuance costs 71,850 —

Net cash provided by financing activities 71,932 177

7 unchanged sentences

Right-of-use assets obtained in exchange for operating lease obligation $ — $ ( 181 )

Right-of-use asset derecognized upon early lease termination $ — $ 476

Purchases of equipment included in accounts payable and accrued expenses $ — $ 148

Equity method investment acquired for non-cash consideration $ — $ 18

10 unchanged sentences

Vesting of restricted stock units 62,196 — — — — —

Surrender of shares for taxes ( 11,428 ) — ( 28 ) — — ( 28 )

Issuance of common stock related to ESPP 53,662 — 189 — — 189

3 unchanged sentences

BALANCE - December 31, 2022 36,434,297 $ 5 $ 452,503 $ ( 1,824 ) $ ( 334,989 ) $ 115,695

Issuance of common stock 15,000,000 2 71,998 — — 72,000

Exercise of common stock options 5,370 — 20 — — 20

12 unchanged sentences

Black Diamond Therapeutics, Inc.

(the Company) is a precision oncology medicine company pioneering the discovery and development of MasterKey therapies.

(the Company) is a clinical-stage oncology company focused on the development of MasterKey therapies to treat patients with genetically defined tumors.

The Company was originally organized as a limited liability company in December 2014 under the name ASET Therapeutics LLC.

2 unchanged sentences

in January 2018.

Since its inception, the Company has devoted substantially all of its efforts to raising capital, obtaining financing, and incurring research and development costs related to the development of its mutation, allostery, and pharmacology drug discovery engine.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry.

Since its inception, the Company has devoted substantially all of its efforts to raising capital, obtaining financing and incurring research and development costs related to the development and advancement of its product candidates identified by its Mutation-Allostery-Pharmacology (MAP) drug discovery engine.

The Company is subject to risks and uncertainties common to clinical-stage companies in the biotechnology industry.

There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any products, if approved, will be commercially viable.

6 unchanged sentences

As of December 31, 2023, no sales have been made pursuant to the ATM Program.

On July 5, 2023, the Company completed an underwritten public offering (the Follow-on Offering) of 15,000,000 shares of the Company’s common stock at a price to the public of $ 5.00 per share.

The aggregate net proceeds from the Follow-on Offering totaled approximately $ 71.9 million, after deducting underwriting discounts and commissions, as well as other offering expenses.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business.

Historically, the Company has funded its operations primarily with proceeds from the sale of preferred stock and common stock.

Historically, the Company has funded its operations primarily with proceeds from the sale of common stock and preferred stock.

The Company has had recurring losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 417.4 million as of December 31, 2023.

The Company expects to continue to generate operating losses for the foreseeable future.

3 unchanged sentences

The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders.

If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, and reduce headcount and general and administrative costs, which could adversely affect its business prospects.

If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, or reduce headcount and general and administrative costs, which could adversely affect its business prospects.

Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

1 unchanged sentence

Principles of consolidation

and Black Diamond Therapeutics Security Corporation, after elimination of all significant intercompany accounts and transactions.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and include the accounts of the Company and its wholly owned subsidiaries, Black Diamond Therapeutics Security Corporation and Black Diamond Therapeutics (Canada), Inc., after elimination of all significant intercompany accounts and transactions.

On October 10, 2023, Black Diamond Therapeutics (Canada), Inc.

was dissolved by way of voluntary dissolution.

Use of estimates

5 unchanged sentences

Actual results may differ from those estimates or assumptions.

The Company continues to monitor the impact of the COVID-19 pandemic on all aspects of its business and has considered the impact of COVID-19 on estimates within its financial statements.

The extent to which future COVID-19 developments may impact the Company’s business, results of operations or financial condition are uncertain and cannot be predicted with confidence and there may be changes to its estimates in future periods.

As of the date of issuance of these consolidated financial statements, the Company has not experienced material business disruptions or incurred impairment losses in the carrying value of its assets as a result of the pandemic and is not aware of any specific related event or circumstance that would require it to update its estimates.

The Company continues to monitor the impact of global economic developments, political unrest, high inflation, disruptions in capital markets, changes in international trade relationships and military conflicts, and health crises, on all aspects of its business, and has considered the impact of these factors on estimates within its financial statements.

The extent to which future developments may impact the Company’s business, results of operations or financial condition are uncertain and cannot be predicted with confidence and there may be changes to estimates in future periods.

As of the date of issuance of these consolidated financial statements, the Company has not experienced material business disruptions or incurred impairment losses in the carrying value of its assets as a result of these factors and is not aware of any specific related event or circumstance that would require it to update its estimates.

Subsequent events

1 unchanged sentence

Foreign currency and currency translation

The functional currency for the Company’s wholly owned foreign subsidiary, Black Diamond Therapeutics (Canada), Inc.

is the United States Dollar.

The Company’s wholly owned foreign subsidiary, Black Diamond Therapeutics (Canada), was dissolved in October 2023.

Prior to dissolution, the functional currency for Black Diamond Therapeutics (Canada), Inc.

was the United States Dollar.

Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other income (expense), net in the consolidated statements of operations and comprehensive loss, as incurred.

54 unchanged sentences

The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows.

The Company did not record any impairment losses on long-lived assets during the periods presented.

The Company did not record any material impairment losses on long-lived assets during the periods presented.

Fair value measurements

86 unchanged sentences

When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease.

Recently issued accounting pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09).

ASU 2023-09 requires that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate).

The standard is effective for annual and interim periods beginning after December 15, 2024.

Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively.

The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280) (ASU 2023-07) which requires enhanced disclosure of (1) significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, (2) the amount and description of the composition of other segment items which reconcile to segment profit or loss, and (3) the title and position of the entity’s CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and allocating resources.

The amendments also expand the interim segment disclosure requirements.

This new guidance is effective for the Company for annual periods beginning October 1, 2024 and interim periods beginning October 1, 2025.

Early adoption is permitted.

The amendments in this ASU apply retrospectively to all prior periods presented in the financial statements.

The Company is in the process of assessing the impact on its financial statements from the adoption of the new guidance and the period in which the new guidance will be adopted.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (ASU 2023-06).

The standard is effective for annual and interim periods beginning after December 15, 2024.

Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively.

The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

FAIR VALUE MEASUREMENTS

6 unchanged sentences

Corporate bonds — 30,308 — 30,308

Government agencies — 39,102 — 39,102

Total $ 30,803 $ 75,179 $ — $ 105,982

3 unchanged sentences

Money market funds $ 32,278 $ — $ — $ 32,278

Commercial paper — 3,747 — 3,747

Corporate bonds — 45,643 — 45,643

12 unchanged sentences

Corporate bonds 30,326 — ( 18 ) 30,308

Government agencies 40,125 — ( 1,023 ) 39,102

Total $ 75,206 $ 4 $ ( 31 ) $ 75,179

2 unchanged sentences

Unrealized Gains Unrealized Losses Fair Value

Commercial paper $ 3,748 $ — $ ( 1 ) $ 3,747

Corporate bonds 46,443 — ( 800 ) 45,643

1 unchanged sentence

Total $ 90,316 $ — $ ( 1,824 ) $ 88,492

As of December 31, 2022, all marketable securities held by the Company had remaining contractual maturities of one year or less, except for U.S.

government agencies, corporate bonds and commercial paper with a fair value of $ 13,687 that had maturities of one to three years.

As of December 31, 2022, all marketable securities held by the Company were in a loss position.

As of December 31, 2023, all marketable securities held by the Company had remaining contractual maturities of one year or less.

As of December 31, 2022, the marketable securities held by the Company in a loss position had remaining contractual maturities of one year or less, except for U.S.

government agencies and corporate bonds with a fair value of $ 86,187 that had maturities of one to three years.

As of December 31, 2022, the Company reviewed its investment portfolio to assess whether the unrealized losses on its available-for-sale investments were temporary.

In determining whether the decline in fair value of these securities was temporary, the Company evaluated whether it intended to sell the security and whether it was more likely than not that the Company would be required to sell the security before recovering its amortized cost basis.

government agencies, corporate bonds, and commercial paper with a fair value of $ 13,687 that had maturities of one to three years.

As of December 31, 2023 and 2022, the Company reviewed its investment portfolio to assess the unrealized losses on its available-for-sale investments.

In assessing the value of these securities, the Company evaluated whether it intended to sell the security and whether it was more likely than not that the Company would be required to sell the security before recovering its amortized cost basis.

The Company also determined no portion of the unrealized losses relate to a credit loss.

There have been no impairments of the Company’s assets measured and carried at fair value during the years ended December 31, 2023 and 2022.

5 unchanged sentences

Leasehold improvements 2,512 2,512

Construction in process — 148

Property and equipment 2,529 3,337

8 unchanged sentences

The Company accounted for the transaction under the equity method and recorded the carrying value of the Company’s investment in Launchpad common shares of $ 2,250 in equity method investments in the consolidated balance sheets.

The contributed IPR&D had zero basis on the Company’s books prior to the transaction, therefore the Company recognized a gain on sale of IPR&D of $ 2,232 in the consolidated statements of operations and comprehensive loss.

The Company also recognized a loss from investments in equity method investee of $ 1,540 in the consolidated statement of operations and comprehensive loss, associated with the Company’s proportionate share of Launchpad’s losses.

The contributed in-process research and development (IPR&D) had zero basis on the Company’s books prior to the transaction, therefore the Company recognized a gain on sale of IPR&D of $ 2,232 in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022.

The Company also recognized a loss from investments in equity method investee of $ 1,540 in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2022, associated with the Company’s proportionate share of Launchpad’s losses.

The assets contributed by the Company were principally IPR&D and were not deemed a business by Launchpad, therefore the Company determined its remaining basis difference of $ 710 was substantially related to IPR&D and immediately expensed it.

2 unchanged sentences

The Company also determined that its investment in Launchpad is not material or significant to its operations or financial position.

As of December 31, 2023, the carrying value of the investment in Launchpad was zero .

ACCRUED EXPENSES

6 unchanged sentences

STOCK-BASED COMPENSATION

2017 Equity Incentive Plan

The Company’s 2017 Employee, Director and Consultant Equity Incentive Plan, as amended (the 2017 Plan), provided for the Company to grant qualified incentive options, nonqualified options, stock grants and other stock-based awards to employees and non-employees to purchase the Company’s common stock.

Upon the effectiveness of the 2020 Plan (as defined below), no further issuances were made under the 2017 Plan.

2020 Stock Option and Incentive Plan

32 unchanged sentences

Subject to the continued employment (or other engagement of the recipient by the Company as described in the restricted stock agreements), all shares of restricted common stock become fully vested within three years of the vesting commencement date.

The following table summarizes restricted stock activity since January 1, 2021:

Unvested restricted common stock as of January 1, 2021 54,336 $ 29.68

Granted 10,000 $ 28.69

Vested ( 27,002 ) $ 26.46

Cancelled or forfeited ( 6,667 ) $ 1.21

The following table summarizes restricted stock activity:

Unvested restricted common stock as of December 31, 2022 101,397 $ 5.92

Granted 185,795 $ 2.31

Vested ( 63,397 ) $ 8.13

3 unchanged sentences

The Company had 239,475 performance restricted stock units outstanding at the beginning of the year ended December 31, 2023.

For the year ended December 31, 2022, the Company granted 248,125 performance restricted stock units to its employees related to the achievement of certain clinical development, research and/or financing milestones and had 27,650 performance restricted stock units forfeited.

For the year ended December 31, 2023, the Company granted no performance restricted stock units to its employees, released 27,475 performance restricted stock units due to the achievement of certain clinical development and/or financing milestones, had 193,000 performance restricted stock units expire, and had no performance restricted stock units forfeited.

As of December 31, 2023, the Company had 19,000 performance restricted stock units outstanding.

Recognition of stock-based compensation expense associated with performance restricted stock units commences when the performance conditions are considered probable of achievement, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the milestones.

As of December 31, 2022 and 2021, for performance-based restricted stock units that were outstanding, the achievement of milestones was considered probable for 3,063 shares and no shares, respectively.

During the year ended December 31, 2022, one milestone for outstanding performance restricted stock units was achieved and the Company recognized stock-based compensation expense related to this milestone of $ 7 .

As of December 31, 2023 and 2022, for performance-based restricted stock units that were outstanding, the achievement of milestones was considered probable for no shares and 3,063 shares, respectively.

During the year ended December 31, 2023, two milestones for outstanding performance restricted stock units were achieved and the Company recognized stock-based compensation expense related to these milestones of $ 52 .

The milestones that had not been met were considered not probable, and therefore no expense has been recognized related to these awards in the years ended December 31, 2023 and 2022.

47 unchanged sentences

Net deferred tax assets $ — $ —

On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was signed into law.

Under the TCJA provisions, effective with tax years beginning on or after January 1, 2022, taxpayers can no longer immediately expense qualified research and development expenditures.

Taxpayers are now required to capitalize and amortize these costs over five years for research conducted within the United States or 15 years for research conducted abroad.

As a result, the Company capitalized $ 49,991 of research and development expenses for the year ended December 31, 2022.

As of December 31, 2023, the Company had gross federal net operating loss carryforwards of $ 275,423 , of which $ 2,556 begin to expire in 2036 and the remainder do not expire but are subject to 80% limitation.

As of December 31, 2023, the Company had state net operating loss carryforwards of $ 181,733 that begin to expire in 2036.

The Company also has net operating loss carryforwards in Canada of $ 471 that are set to expire beginning in 2039.

Additionally, the Company had federal research and development tax credit carryforwards of $ 9,804 that expire at various dates through 2043.

3 unchanged sentences

As such, there is a full valuation allowance against the net deferred tax assets as of December 31, 2023 and 2022.

The valuation allowance increased by $ 24,482 during the year ended December 31, 2022 primarily as a result of net operating losses generated during the period along with capitalized research and development expenses.

The valuation allowance increased by $ 23,265 during the year ended December 31, 2023 primarily as a result of net operating losses generated during the period.

Utilization of the net operating loss carryforwards and research and development tax credit carryforwards may be subject to an annual limitation under Section 382 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future.

23 unchanged sentences

Net loss attributable to common stockholders $ ( 82,442 )

$ ( 125,596 )

Weighted average common shares outstanding, basic and diluted 43,954,649

18 unchanged sentences

The Company recognized the respective lease balances on the consolidated balance sheets when the lease of each floor commenced.

Under the terms of the lease, the Company was required to issue a $ 1,168 letter of credit as security for the lease.

In December 2022, the Company entered into an agreement to sublease 14,439 square feet of its Cambridge office to a subtenant through August 2028.

Under the terms of the lease, the Company was required to issue a $ 1,168 letter of credit as security for the lease, which was reduced to $ 779 in August 2023 pursuant to the terms of the lease agreement.

Additionally, on December 12, 2022, the Company entered into a sublease for one floor of its Cambridge, Massachusetts office space.

The sublease terminates on August 31, 2028, which is also the date on which the Company's lease terminates.

Sublease income is recognized on a straight-line basis over the term of the sublease agreement.

The Company was not relieved of its primary obligation under the Cambridge office lease as a result of the sublease.

The Company previously leased an office space in Cambridge, MA under a lease that commenced in February 2019 for approximately 2,357 square feet of office space, which was set to expire on April 30, 2022, subject to an option to extend the lease for three additional years.

Effective June 15, 2021, the lease was terminated, and the remaining right-of-use asset and lease liability were derecognized.

A gain of $ 5 was recognized for the termination of the lease.

In December 2020, the Company entered into an eleven-year agreement with an option to extend for five additional years to lease approximately 18,120 square feet of office and laboratory space in New York, NY.

5 unchanged sentences

Variable lease cost 860 1,012

Sublease income ( 1,138 ) —

Total lease cost $ 3,998 $ 5,328

36 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk