Black Diamond Therapeutics (BDTX) is a clinical stage company developing treatments against lung and brain cancer.
Whilst it’s performance since IPO has been extremely poor, the narrative is now completely different.
Few years ago the company was taken over by a new CEO with several successful exits in the pharma space.
The result - 1 drug (BDTX-1535) scheduled to complete it’s Phase 2 trials at the end of the year and get regulatory feedback in Q4 on a path to market (drug is already on fast track list). Notably - it was just announced at AACR last week, though not yet publicised, that the drug is also advancing to a Phase0/2 trial for GBM treatment, a notoriously difficult area for cures.
Most importantly stockwise - they sold their second drug in Phase 1 trial to Servier for $70mln upfront and $710mln in milestone payments + licensing fees.
Meaning they’ve turned their first profit since launch and in a big way. All costs to develop the drug were recouped in the first payment + some profits and all of the milestone payments are FCF that will be deployed for other drug development.
This means that, today, the company has $180mln in cash on it’s balance sheet (yielding 5% APY in corporate bonds) and is worth just a $90mln market cap.
On top of this, a Pfizer exec now runs a startup spun-off from BDTX on its tech with BDTX’s shares valued at the last funding round $20mln+
So in reality, you have a company with cash+investments worth $200mln trading at $90mln and that’s not counting the BDTX-1535 drug in development (which would be worth $300m+ based on the Servier deal at the current stage in its development) + the tech used to develop those Masterkey therapies.
Even if everything they do goes wrong, they should still be worth double.
This is currently a $1bn company trading at just 9% of it’s real value. All analysts that track this stock agree, putting estimates at 6-8x from current prices.
In a world of underpriced stocks, this might be the most underpriced yet.
Disclosure: Picked up 1.2mln shares (~2.5% of company). Follow at your own risk.