Black Diamond, caving in to rivals, ditches best drug and cuts jobs
- Cancer Biotechnology Black Diamond Therapeutics say it plans to cut its workforce by about 30%, becoming the latest in a growing list of young drugmakers restructuring to save money amid an industry-wide slowdown.
- Black Diamond announced the job cuts alongside plans to cut what was once its lead drug, a potential lung cancer drug, due to “the rapidly changing treatment landscape”. That drug, BDTX-189, was supposed to begin phase 2 testing this year, but biotech put those plans on hold in January.
- The company now plans to devote its resources to two other targeted cancer treatments. The more advanced of the two is in development for certain brain and lung tumors and began phase 1 testing in the first quarter. Its first data reading could take place next year.
Overview of the dive:
The slowdown in the public market has led dozens of biotech companies to conserve cash. About 40 companies have restructured since last fall, for reasons ranging from clinical and regulatory setbacks to macro-economic forces that have made it harder to raise funds on Wall Street.
Overlapping drug pipelines are also an issue for emerging drugmakers. For example, Black Diamond raised $201 million in an initial public offering in January 2020, largely on the potential of BDTX-189. However, this drug was one of several in development that targets DNA insertions in the so-called exon 20 region of a gene called EGFR. Black Diamond’s drug was behind many of them.
Biotech aimed to prove that its drug could stand apart from its competitors, but over time, that became more difficult as rivals progressed rapidly. Within months of each other, Johnson & Johnson and Takeda each won approvals last year for similar drugs targeting exon 20 insertion mutations.
Cullinan Management, a drugmaker that went public in 2021, followed with encouraging data from its own program, as did another small biotech called Dizal Pharma. Blueprint Medicines has also jumped into the crowded field, adding to competition for a market that only includes about 3,000 patients in the United States, according to a recent note from Stifel analyst Bradley Canino.
Black Diamond responded by delaying plans to start a Phase 2 trial in January and is now dropping BDTX-189 altogether. The company is moving forward with two more drugs and a reduced workforce. The restructuring extends Black Diamond’s cash trail to the end of 2024, by which time the company could have early clinical results from at least one of these programs.
“The actions announced today allow us to focus and strengthen our organizational priorities, reduce our operating expenses and continue to invest in value-generating clinical development activities to lead us towards the next inflection points” , CEO David Epstein said in a statement.
The company had 88 full-time employees in early March, according to a settlement deposit.