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Black Diamond spins out new biotech to develop cancer drugs

Black Diamond Therapeutics, a struggling cancer drug developer that restructured earlier this year, has announced plans to spin out a new company.

On Monday, the biotechnology company said it has teamed up with two of its investors, Versant Ventures and New Enterprise Associates, to put $30 million into a startup called Launchpad Therapeutics. Versant and NEA helped found Black Diamond and were its top two stockholders as of April, holding more than a quarter of its total shares combined, according to a regulatory filing.

Launchpad is starting out with an unspecified number of cancer antibody drug candidates that originated within Black Diamond, as well as access to the biotech’s drug discovery engine. In exchange, Black Diamond is getting a minority stake in Launchpad. The startup is beginning with a focus on “an initial set of early-stage antibody programs,” according to a statement.

The decision to spin out Launchpad is the latest strategic shift undertaken by Black Diamond, which has lost more than 90% of its value since raising $201 million an initial public offering in 2020. The company went public with plans to develop a targeted lung cancer drug known as BDTX-189. But that drug was one of several of its kind in clinical testing, and would have competed with medicines from Takeda, Johnson & Johnson and others. Black Diamond delayed the start of a Phase 2 trial and, in April, abandoned development altogether and trimmed its workforce.

Black Diamond has since turned its focus to two newer cancer drugs, BDTX-1535 and BDTX-4933, that are in preclinical or early-stage trials. Both are small molecules. As the company has capabilities to discover antibody drugs, it formed Launchpad to capitalize on that potential.

“The spinout allows Black Diamond to continue our focus on BDTX-1535, BDTX-4933 and small molecule pipeline, while retaining potential upside through our equity stake in Launchpad,” said CEO David Epstein, in a statement.

Black Diamond shares traded at about $1.60 apiece on Tuesday, a small fraction of the $19 they debuted at in January 2020.

Published Dec. 13, 2022

Delilah Alvarado, Associate Editor

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