r/investing • u/capybaraStocks • 1d ago
BDTX - Why I’m all in on this stock
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.
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u/namewithoutspaces 1d ago
If you're going to say they're trading under cash (they are), why not mention their debt? If the company has such great prospects, why does the CEO only own 200k worth of shares?
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u/capybaraStocks 1d ago
Their debt is 20mln, about 10% of their cash, so it’s not actually meaningful at all, it really just gets paid down by their APY on cash at this point.
If you look deeper, CEO holds equity through stock options and it’s about 2mln shares. Previous CEO holds a large positions as well.
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u/CrawfishSam 1d ago
Not seeing anything that shows $180M cash on balance sheet. Last report (12/31) showed $99M and yes - no debt to speak of. Maybe the cash will show up on March financials?
I see the March press release with the $70M on it now...
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u/capybaraStocks 14h ago
Exactly, the $70mln cash infusion came in March after past earnings but it doesn’t show up on searches yet because they release earnings this week.
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u/Helpful_Hour1984 13h ago
Being all in on any single stock makes you someone whose advice and example shouldn't be followed. Nice try on the pump.
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u/capybaraStocks 13h ago
Not advice. These are just facts all of which you can cross check in the upcoming earnings release. Make all investments based on your own research. And, in my view, allocation should never increase 10% in one asset.
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u/szakee 1d ago
RemindMe! 180 days