[Cover Page and Filing Information](index=1&type=section&id=Cover%20Page) This section provides the initial filing details for the Form 10-Q quarterly report, including company identification and filing status [Filing Details](index=1&type=section&id=Filing%20Details) This document is a Form 10-Q quarterly report filed by BIOATLA, INC. for the period ended September 30, 2022, classified as a large accelerated filer - The filing is a Quarterly Report on Form 10-Q for the period ended September 30, 2022[2](index=2&type=chunk) - BIOATLA, INC. is a Delaware corporation with its principal executive offices in San Diego, California[3](index=3&type=chunk) - The registrant is classified as a **large accelerated filer**[4](index=4&type=chunk) [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section provides an organized listing of all chapters and items included in the quarterly report for easy navigation [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the Balance Sheets, Statements of Operations and Comprehensive Loss, Statements of Stockholders' Equity, and Statements of Cash Flows, along with their accompanying notes Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2022 (unaudited) | December 31, 2021 | |:---|:---|:---| | Total Assets | $189,112 | $254,422 | | Total Liabilities | $46,478 | $43,601 | | Total Stockholders' Equity | $142,634 | $210,821 | Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:---|:---|:---|:---|:---|\ | Collaboration and other revenue | $— | $— | $— | $250 | | Total operating expenses | $26,179 | $23,695 | $79,580 | $73,202 | | Consolidated net loss and comprehensive loss | $(25,779) | $(22,930) | $(78,939) | $(72,012) | | Net loss per common share, basic and diluted | $(0.69) | $(0.68) | $(2.11) | $(2.13) | Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:---|:---|:---|\ | Net cash used in operating activities | $(66,073) | $(41,265) | | Net cash used in investing activities | $(234) | $(835) | | Net cash provided by (used in) financing activities | $(552) | $73,420 | | Net increase (decrease) in cash and cash equivalents | $(66,859) | $31,320 | | Cash and cash equivalents, end of period | $178,120 | $269,925 | [Note 1. Organization and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes BioAtla, Inc. as a clinical-stage biopharmaceutical company developing conditionally active biologics (CABs) for solid tumor cancer, and summarizes its significant accounting policies - BioAtla, Inc. is a **clinical-stage biopharmaceutical company** focused on developing **conditionally active biologics (CABs)** for **solid tumor cancer**, **designed to be active only in diseased tissue**[22](index=22&type=chunk) - The company has incurred **cumulative operating losses and negative cash flows** since inception, with an **accumulated deficit of $265.3 million** as of September 30, 2022[24](index=24&type=chunk) - Management believes current cash and cash equivalents are **sufficient to fund operations for at least one year** from the issuance date of the financial statements[25](index=25&type=chunk) Potentially Dilutive Securities (in common stock equivalents) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:---|:---|:---|\ | Common stock warrants | — | 717,674 | | Common stock options | 2,718,930 | 960,402 | | Restricted stock units | 629,007 | 1,592,796 | | ESPP shares | 115,783 | 4,109 | | Total | 3,463,720 | 3,274,981 | [Note 2. Balance Sheet Details](index=10&type=section&id=Note%202.%20Balance%20Sheet%20Details) This note provides detailed breakdowns of specific balance sheet accounts, including prepaid expenses, property and equipment, and accounts payable and accrued expenses Prepaid Expenses and Other Current Assets (in thousands) | Metric | September 30, 2022 | December 31, 2021 | |:---|:---|:---|\ | Prepaid research and development | $3,978 | $1,811 | | Prepaid insurance | $692 | $— | | Other prepaid expenses and current assets | $519 | $502 | | Total | $5,189 | $2,313 | Property and Equipment, Net (in thousands) | Metric | September 30, 2022 | December 31, 2021 | |:---|:---|:---|\ | Total (gross) | $8,144 | $7,933 | | Less accumulated depreciation and amortization | $(5,142) | $(4,257) | | Total | $3,002 | $3,676 | Accounts Payable and Accrued Expenses (in thousands) | Metric | September 30, 2022 | December 31, 2021 | |:---|:---|:---|\ | Accounts payable | $3,696 | $1,179 | | Accrued compensation | $2,979 | $2,671 | | Accrued research and development | $14,713 | $13,501 | | Other accrued expenses | $939 | $1,073 | | Total | $22,327 | $18,424 | [Note 3. Fair Value Measurements](index=10&type=section&id=Note%203.%20Fair%20Value%20Measurements) This note explains the company's approach to fair value measurements, noting that current financial assets and liabilities are representative of their fair values - The company's current financial assets and liabilities are considered to be representative of their fair values due to their short-term nature[40](index=40&type=chunk) - As of September 30, 2022, and December 31, 2021, the company had **no financial assets or liabilities measured at fair value** on a recurring basis[40](index=40&type=chunk) [Note 4. Debt](index=11&type=section&id=Note%204.%20Debt) This note confirms the company had no outstanding debt as of September 30, 2022, and details the forgiveness of a prior PPP loan - The company had **no outstanding debt** as of September 30, 2022, or December 31, 2021[42](index=42&type=chunk) - A **$0.7 million** Paycheck Protection Program (PPP) loan borrowed in April 2020 was **fully forgiven** in July 2021, recognized as other income[42](index=42&type=chunk) [Note 5. Leases](index=11&type=section&id=Note%205.%20Leases) This note outlines the company's operating lease for its corporate headquarters and laboratory space, including lease expenses and future minimum lease payments - The company has a **single operating lease** for its corporate headquarters and laboratory space in San Diego, California, **expiring in July 2025**[43](index=43&type=chunk) Lease Expense (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:---|:---|:---|:---|:---|\ | Operating lease expense | $261 | $261 | $782 | $782 | | Variable lease expense | $132 | $128 | $328 | $384 | | Total lease expense, net | $393 | $389 | $1,110 | $1,166 | Future Minimum Lease Payments (in thousands) | Period | Operating lease | |:---|:---|\ | Three months ending December 31, 2022 | $401 | | 2023 | $1,636 | | 2024 | $1,685 | | 2025 | $845 | | Total future lease payments | $4,567 | | Less: imputed interest | $(222) | | Total operating lease liabilities | $4,345 | [Note 6. Commitments and Contingencies](index=12&type=section&id=Note%206.%20Commitments%20and%20Contingencies) This note states that the company is not currently a party to any legal proceedings that would have a material adverse effect on its business or financial condition - The company is **not currently a party to any legal proceedings** that would have a **material adverse effect** on its business, operating results, or financial condition[50](index=50&type=chunk) [Note 7. Stockholders' Equity](index=12&type=section&id=Note%207.%20Stockholders'%20Equity) This note details stock-based compensation expenses, unrecognized compensation costs, ESPP share issuances, and the expiration of common stock warrants Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | |:---|:---|:---|:---|:---|\ | Research and development | $1,427 | $1,267 | $4,125 | $3,376 | | General and administrative | $2,161 | $3,099 | $6,937 | $17,931 | | Total | $3,588 | $4,366 | $11,062 | $21,307 | - **Total unrecognized stock-based compensation expense for RSUs was $11.3 million** as of September 30, 2022, **expected to be recognized over approximately 1.5 years**[57](index=57&type=chunk) - **Total unrecognized stock-based compensation cost for unvested common stock options was $16.4 million** as of September 30, 2022, **expected to be recognized over approximately 3.1 years**[59](index=59&type=chunk) - The company issued **9,482 common shares** under the ESPP during the nine months ended September 30, 2022, **compared to 5,280 shares** in the prior year[64](index=64&type=chunk) - **All common stock warrants expired unexercised by March 2022**, with **no remaining warrants outstanding**[65](index=65&type=chunk) [Note 8. Collaboration, License and Option Agreements](index=14&type=section&id=Note%208.%20Collaboration,%20License%20and%20Option%20Agreements) This note describes the termination of the BeiGene Collaboration, the company regaining rights to BA3071, and the new clinical trial collaboration with Bristol-Myers Squibb Company - The BeiGene Collaboration for BA3071 was **terminated in November 2021**, with **BioAtla regaining global development and commercialization rights** and agreeing to **pay BeiGene mid-single digit royalties** on future sales[67](index=67&type=chunk) - The company **did not recognize any revenue from collaboration agreements or legacy service contracts** for the three or nine months ended September 30, 2022[69](index=69&type=chunk)[70](index=70&type=chunk) - In January 2022, BioAtla entered into a **Master Clinical Trial Collaboration Agreement with Bristol-Myers Squibb Company (BMS)** to **investigate CAB-ADC candidates** (mecbotamab vedotin and ozuriftamab vedotin) in combination with Opdivo[71](index=71&type=chunk) [Note 9. Related Party Transactions](index=16&type=section&id=Note%209.%20Related%20Party%20Transactions) This note discloses a Clinical Trial Agreement with Himalaya Therapeutics SEZC, a related party, for BA3011 clinical trials in China - In April 2022, the company entered into a Clinical Trial Agreement with Himalaya Therapeutics SEZC, a **related party**, for services related to BA3011 clinical trials in China, **recognizing $0.1 million in R&D expense** for the three and nine months ended September 30, 2022[74](index=74&type=chunk) [Note 10. 401(k) Plan](index=16&type=section&id=Note%2010.%20401(k)%20Plan) This note confirms the company maintains a 401(k) plan for eligible employees but has not made any matching contributions - The company maintains a 401(k) plan for eligible employees but **had not made any matching contributions** as of September 30, 2022, and December 31, 2021[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the company's financial condition and results of operations, highlighting significant losses, increased R&D expenses, and liquidity - The company is a **clinical-stage biopharmaceutical company** developing novel **conditionally active biologics (CABs)** for **solid tumor cancer**, designed to selectively bind to targets in acidic tumor microenvironments[77](index=77&type=chunk) - Net losses were **$25.8 million** and **$78.9 million** for the three and nine months ended September 30, 2022, respectively, compared to **$22.9 million** and **$72.0 million** for the same periods in 2021[78](index=78&type=chunk) - As of September 30, 2022, cash and cash equivalents totaled approximately **$178.1 million**, **expected to fund operations into the second half of 2024**[82](index=82&type=chunk) [Overview](index=17&type=section&id=Overview) This section provides a strategic overview of the company's conditionally active biologics (CABs) development for solid tumor cancer and anticipated increases in expenses - The company's **CABs are designed to be active only under acidic conditions** found in diseased tissue, **remaining inactive in normal tissue**, aiming to **reduce on-target, off-tumor toxicity**[77](index=77&type=chunk) - Current clinical development includes **two lead CAB antibody drug conjugates (ADCs)** targeting AXL and ROR2 receptors, and a **CAB immune-oncology antibody targeting CTLA-4**[22](index=22&type=chunk)[77](index=77&type=chunk) - The company expects **expenses and capital requirements to increase substantially** as it **advances clinical development** of mecbotamab vedotin, ozuriftamab vedotin, and BA3071, **expands its pipeline**, and **invests in its CAB technology platform**[79](index=79&type=chunk) [Impact of COVID-19 on Our Business](index=18&type=section&id=Impact%20of%20COVID-19%20on%20Our%20Business) This section discusses the modest business disruptions caused by the COVID-19 pandemic, including some delays in Phase 2 interim analyses - The COVID-19 pandemic has caused **modest business disruptions**, including **some delays in Phase 2 interim analyses** for mecbotamab vedotin NSCLC and ozuriftamab vedotin studies[83](index=83&type=chunk) - The mecbotamab vedotin Phase 2 sarcoma trial **remains on schedule**[83](index=83&type=chunk) [Financial Operations Overview](index=18&type=section&id=Financial%20Operations%20Overview) This section outlines the company's financial operational expectations, including no product sales revenue to date and anticipated increases in R&D and G&A expenses - The company has **not generated any revenue from product sales to date** and does **not expect to generate meaningful revenue in the near future**[84](index=84&type=chunk) - **Research and development expenses are expected to generally increase** as the company invests in advancing product candidates and clinical programs[90](index=90&type=chunk) - **General and administrative expenses are expected to increase in the future** due to increased personnel headcount to support R&D activities[91](index=91&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in research and development expenses, general and administrative expenses, and interest income Research and Development Expenses by CAB Program (in thousands) | Program | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change | |:---|:---|:---|:---|\ | BA3011 (AXL-ADC) | $4,227 | $3,851 | $376 | | BA3021 (ROR2-ADC) | $2,807 | $2,982 | $(175) | | Other CAB Programs | $7,775 | $5,675 | $2,100 | | Total external expenses | $14,809 | $12,508 | $2,301 | | Personnel and related | $2,788 | $2,014 | $774 | | Equity-based compensation | $1,427 | $1,267 | $160 | | Facilities and other | $815 | $764 | $51 | | Total R&D expenses | $19,839 | $16,553 | $3,286 | - **General and administrative expenses decreased by $0.8 million** for the three months ended September 30, 2022, primarily due to a **$0.9 million decrease in stock-based compensation**[97](index=97&type=chunk) - **Interest income increased by $294,000** for the three months ended September 30, 2022, **due to higher yields**[98](index=98&type=chunk) Research and Development Expenses by CAB Program (Nine Months, in thousands) | Program | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change | |:---|:---|:---|:---|\ | BA3011 (AXL-ADC) | $12,505 | $13,633 | $(1,128) | | BA3021 (ROR2-ADC) | $6,839 | $8,365 | $(1,526) | | Other CAB Programs | $23,732 | $9,485 | $14,247 | | Total external expenses | $43,076 | $31,483 | $11,593 | | Personnel and related | $7,992 | $4,907 | $3,085 | | Equity-based compensation | $4,125 | $3,376 | $749 | | Facilities and other | $2,280 | $2,060 | $220 | | Total R&D expenses | $57,473 | $41,826 | $15,647 | - **General and administrative expenses decreased by $9.3 million** for the nine months ended September 30, 2022, primarily due to an **$11.0 million decrease in stock-based compensation**[102](index=102&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's financial liquidity and capital resources, including cash and cash equivalents, future funding requirements, and cash flow activities - The company had **$178.1 million in cash and cash equivalents** as of September 30, 2022, which is **expected to fund operations into the second half of 2024**[104](index=104&type=chunk)[107](index=107&type=chunk) - **Future funding requirements are substantial** and depend on the pace of preclinical studies, clinical trials, manufacturing costs, and regulatory approvals[106](index=106&type=chunk) - **Net cash used in operating activities was $66.1 million** for the nine months ended September 30, 2022, compared to **$41.3 million** in the prior year[111](index=111&type=chunk) - **Net cash used in financing activities was $0.6 million** for the nine months ended September 30, 2022, primarily for taxes related to equity awards, a **significant decrease from $73.4 million** provided in the prior year from common stock issuance[113](index=113&type=chunk) [Critical Accounting Policies and Estimates](index=23&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the significant estimates and assumptions required for financial statement preparation, particularly for revenue recognition, R&D accruals, and equity-based compensation - The **preparation of financial statements requires significant estimates and assumptions**, particularly for revenue recognition, R&D cost accruals, and equity-based compensation[114](index=114&type=chunk)[115](index=115&type=chunk) - There have been **no material changes to critical accounting policies** during the nine months ended September 30, 2022[116](index=116&type=chunk) [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms that the company has not entered into any off-balance sheet arrangements - The company has **not entered into any off-balance sheet arrangements**[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk and foreign currency exchange risk, which are deemed immaterial - The company is **exposed to interest rate risk** from its cash and cash equivalents, which include bank deposits and money market funds[118](index=118&type=chunk) - Historical fluctuations of interest income have **not been significant**, and the company does not use derivative financial instruments to manage interest rate exposure[118](index=118&type=chunk) - Foreign currency transaction gains and losses have **not been material**, and the company has **not engaged in foreign currency hedging**[119](index=119&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2022, concluding they were effective with no material changes - Management concluded that disclosure controls and procedures were **effective at the reasonable assurance level** as of September 30, 2022[120](index=120&type=chunk) - **No changes in internal control over financial reporting materially affected**, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended September 30, 2022[121](index=121&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, defaults, and other disclosures pertinent to the company's operations and financial standing [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business, operating results, or financial condition - The company is **not a party to any legal proceedings** whose outcome would individually or in the aggregate have a **material adverse effect** on its business, operating results, or financial condition[122](index=122&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks associated with investing in the company's common stock, covering financial position, product development, regulatory approval, dependence on third parties, intellectual property, and common stock specific risks - The company is a **clinical-stage biopharmaceutical company** with a **limited operating history and no approved products**, **expecting significant losses for the foreseeable future**[125](index=125&type=chunk) - **Substantial additional capital will be required to finance operations**, and **failure to raise it could delay or eliminate research and development programs**[129](index=129&type=chunk) - **Product candidates may fail in development or suffer delays**, and the company is **substantially dependent on the success of its patented CAB technology platform**[123](index=123&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) [Risk Factor Summary](index=25&type=section&id=Risk%20Factor%20Summary) This section provides a concise overview of the high degree of risk involved in investing in the company's common stock, including financial, development, and operational challenges - **Investing in the company's common stock involves a high degree of risk**, requiring careful consideration of all information in the report[123](index=123&type=chunk) - **Key risks include the company's limited operating history, significant losses, need for substantial additional capital, potential failure or delays in product development, and dependence on its CAB technology platform**[123](index=123&type=chunk) [Risks related to our financial position and need for additional capital](index=26&type=section&id=Risks%20related%20to%20our%20financial%20position%20and%20need%20for%20additional%20capital) This section details risks associated with the company's significant accumulated losses, substantial future funding requirements, and potential delays if capital is not secured - The company has **incurred significant losses** since inception, with an **accumulated deficit of $265.3 million** as of September 30, 2022, and **expects to continue incurring losses**[126](index=126&type=chunk) - **Substantial additional funding will be required to continue operations**, as existing cash and cash equivalents are **expected to fund operations only into the second half of 2024**[129](index=129&type=chunk)[130](index=130&type=chunk) - **Failure to obtain timely funding on acceptable terms could lead to delays, reductions, or termination of research and development programs**[132](index=132&type=chunk) [Risks related to the discovery, development and commercialization of our product candidates](index=28&type=section&id=Risks%20related%20to%20the%20discovery,%20development%20and%20commercialization%20of%20our%20product%20candidates) This section outlines risks concerning product candidate failure or delays at any development stage, dependence on the CAB technology platform, and intense competition - **Product candidates may fail at any stage of development or suffer delays** due to **issues like negative preclinical/clinical results, product-related side effects, or regulatory hurdles**[134](index=134&type=chunk)[135](index=135&type=chunk) - The company's **future success heavily depends on its patented CAB technology platform**, and **any setbacks could detrimentally impact all product candidates**[137](index=137&type=chunk) - **Undesirable side effects observed in clinical trials** (e.g., myelosuppression, liver enzyme elevations, pyrexia, peripheral neuropathy for mecbotamab vedotin and ozuriftamab vedotin) **could halt development or delay approval**[154](index=154&type=chunk)[155](index=155&type=chunk) - The company **faces intense competition from biopharmaceutical companies** developing novel treatments and technology platforms for cancer, **many with greater resources**[165](index=165&type=chunk)[168](index=168&type=chunk) [Risks related to regulatory approval and other legal compliance matters](index=34&type=section&id=Risks%20related%20to%20regulatory%20approval%20and%20other%20legal%20compliance%20matters) This section addresses challenges in obtaining U.S. or foreign regulatory approval, the need for companion diagnostics, impacts of healthcare reforms, and compliance with fraud and abuse laws - The company may be **unable to obtain U.S. or foreign regulatory approval** for its product candidates, which is a **costly, lengthy, and uncertain process**[174](index=174&type=chunk) - If **companion diagnostic tests are essential for product use**, their **approval or clearance is generally required simultaneously with product approval**, and **delays could impair commercial potential**[164](index=164&type=chunk) - The company intends to seek accelerated approval pathways, but there is **no assurance of success**, and **confirmatory trials are required post-approval**[180](index=180&type=chunk)[181](index=181&type=chunk) - **Healthcare legislative reforms, such as the Inflation Reduction Act (IRA), could negatively impact drug pricing, reimbursement, and market acceptance of products**[201](index=201&type=chunk) - **Relationships with healthcare professionals and third-party payors are subject to federal and state healthcare fraud and abuse laws, false claims laws, and privacy laws**, **non-compliance with which could lead to significant penalties**[203](index=203&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) [Risks related to employee matters, managing our growth and other risks related to our business](index=47&type=section&id=Risks%20related%20to%20employee%20matters,%20managing%20our%20growth%20and%20other%20risks%20related%20to%20our%20business) This section covers risks related to attracting and retaining key personnel, building sales capabilities, managing growth, geographic concentration, and the ongoing impact of the COVID-19 pandemic - The company's success depends on **attracting and retaining qualified senior management and key scientific personnel**, with **intense competition in the biopharmaceutical field**[214](index=214&type=chunk)[215](index=215&type=chunk) - The company **lacks a sales organization and must build or partner for marketing, sales, and distribution capabilities**, which is **expensive and time-consuming**[216](index=216&type=chunk) - **Growth will require additional personnel and effective management of outsourced activities**, **posing challenges to operational, financial, and management controls**[218](index=218&type=chunk)[221](index=221&type=chunk) - The company's **operations are concentrated in San Diego, California, and research activities in China**, making it **vulnerable to natural disasters, political unrest, and changes in international relations**[229](index=229&type=chunk)[230](index=230&type=chunk) - The **COVID-19 pandemic continues to pose risks to preclinical and clinical trial operations**, **potentially causing delays in patient enrollment, data readouts, and regulatory filings**[234](index=234&type=chunk) [Risks related to our dependence on third parties](index=51&type=section&id=Risks%20related%20to%20our%20dependence%20on%20third%20parties) This section highlights risks stemming from reliance on third-party collaborators, investigators, CROs, and manufacturers for development, clinical trials, and product supply - The company **relies on third-party collaborators for development and commercialization**, with **limited control** over their resource allocation and **potential for delays or termination of programs**[235](index=235&type=chunk)[237](index=237&type=chunk) - **Reliance on third-party investigators, CROs, and manufacturers for preclinical and clinical trials increases risks** related to timing, quality, and regulatory compliance[243](index=243&type=chunk) - **Dependence on third-party contract manufacturers for product supplies and raw materials increases the risk of insufficient quantities, unacceptable costs, or supply disruptions**[244](index=244&type=chunk)[245](index=245&type=chunk) [Risks related to intellectual property](index=55&type=section&id=Risks%20related%20to%20intellectual%20property) This section details risks associated with obtaining and protecting patent and intellectual property rights, trade secret protection, patent lifespan, and potential third-party infringement claims - The company's success depends on **obtaining, maintaining, and protecting patent and other intellectual property rights**, which is **expensive, time-consuming, and uncertain**[252](index=252&type=chunk) - **Failure to protect trade secrets and confidential know-how could harm the company's business and competitive position**[258](index=258&type=chunk)[259](index=259&type=chunk) - The **limited lifespan of patents (generally 20 years) means protection may expire before or shortly after product commercialization**, **opening the door to competition**[260](index=260&type=chunk) - **Changes in U.S. patent law (e.g., Leahy-Smith Act) and interpretations of patent laws could diminish the value of patents and increase prosecution/defense costs**[263](index=263&type=chunk)[267](index=267&type=chunk) - **Third-party intellectual property rights could prevent or delay drug discovery and commercialization**, **potentially requiring costly litigation or licenses**[272](index=272&type=chunk) [Risks related to our common stock](index=63&type=section&id=Risks%20related%20to%20our%20common%20stock) This section discusses risks concerning stock price volatility, dilution from future equity issuances, significant control by principal stockholders, anti-takeover provisions, and public company compliance costs - Operating results are **expected to fluctuate significantly**, and **falling below investor/analyst expectations could cause stock price decline**[294](index=294&type=chunk)[296](index=296&type=chunk) - The **stock price may be volatile due to various factors**, including clinical trial results, regulatory developments, competition, and market conditions[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk) - **Future issuance of equity or convertible debt securities will dilute existing share capital and could adversely affect the trading price**[301](index=301&type=chunk) - Principal stockholders and management own a **significant percentage (42.6% as of Sep 30, 2022)** of common stock, **allowing them to exert significant control over corporate matters**[304](index=304&type=chunk)[305](index=305&type=chunk) - **Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult and prevent attempts to replace management**[309](index=309&type=chunk)[311](index=311&type=chunk) - The company **incurs significant costs as a public company and must maintain effective internal controls**; **failure to do so could impair financial reporting and lead to sanctions**[314](index=314&type=chunk)[318](index=318&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities and details the use of proceeds from the company's IPO, consistent with the planned use - There were **no unregistered sales of equity securities** during the period[325](index=325&type=chunk) - The company received gross proceeds of **$217.4 million** from its IPO on December 18, 2020[326](index=326&type=chunk) - As of September 30, 2022, approximately **$91.2 million** of the IPO proceeds have been used, with **no material change from the planned use**[326](index=326&type=chunk) [Item 3. Defaults Upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **No defaults upon senior securities were reported**[327](index=327&type=chunk) [Item 4. Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **This item is not applicable**[327](index=327&type=chunk) [Item 5. Other Information](index=69&type=section&id=Item%205.%20Other%20Information) The company reported no other information - **No other information was reported**[327](index=327&type=chunk) [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including management plans, collaboration agreements, certifications, and XBRL documents - **Exhibits include the Management Change of Control Severance Plan, Master Clinical Trial Collaboration Agreement with Bristol-Myers Squibb Company, and various certifications (CEO, CFO)**[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - The filing also includes Inline XBRL Instance Document and Cover Page Interactive Data File[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) [SIGNATURES](index=71&type=section&id=SIGNATURES) This section contains the official signatures of the company's Chief Executive Officer and Chief Financial Officer, certifying the report's contents [Signatures](index=71&type=section&id=Signatures) The report is signed by Jay M. Short, Ph.D., Chief Executive Officer, and Richard A. Waldron, Chief Financial Officer, on November 4, 2022 - The report was **signed by Jay M. Short, Ph.D., Chief Executive Officer, and Richard A. Waldron, Chief Financial Officer**[341](index=341&type=chunk) - The signing date for the report was **November 4, 2022**[341](index=341&type=chunk)

BioAtla, Inc. (NASDAQ:BCAB) Q2 2022 Earnings Conference Call August 9, 2022 4:30 PM ET Company Participants Bruce Mackle - LifeSci Advisors Jay Short - Chairman, CEO and Co-Founder Scott Smith - President Philippe Martin - Chief of Clinical Development and Operations Sheri Lydick - SVP, Commercial Strategy Richard Waldron - CFO Conference Call Participants Kelly Shi - Jefferies Arthur He - H.C. Wainwright Tony Butler - ROTH Capital Operator Hello and welcome to the BioAtla Second Quarter 2022 Earnings Call. ...

BioAtla, Inc. (NASDAQ:BCAB) Q1 2022 Earnings Conference Call May 4, 2022 4:30 PM ET Company Participants Bruce Mackle - LifeSci Advisors Jay Short - Chairman, CEO and Co-Founder Scott Smith - President Philippe Martin - Chief of Clinical Development and Operations Sheri Lydick - Senior Vice President, Commercial Strategy Richard Waldron - Chief Financial Officer Conference Call Participants Anupam Rama - JPMorgan Tiago Fauth - Credit Suisse Kelly Shi - Jefferies Kaveri Pohlman - BTIG Tony Butler - ROTH Capi ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) BioAtla is a clinical-stage biopharmaceutical company developing Conditionally Active Biologics (CABs) for solid tumors, with lead ADC candidates BA3011 and BA3021 in Phase 2 trials and BA3071 in Phase 1 [Our Pipeline](index=6&type=section&id=Our%20Pipeline) The company's pipeline focuses on Conditionally Active Biologics (CABs) for solid tumors, featuring three main clinical-stage candidates - The company's pipeline is focused on developing Conditionally Active Biologics (CABs) for solid tumors, with **three main clinical-stage candidates**[30](index=30&type=chunk) - Mecbotamab vedotin (BA3011) is a CAB ADC targeting AXL, in potentially registration-enabling Phase 2 trials for sarcoma and NSCLC, and has received **Orphan Drug Designation** for soft tissue sarcoma[26](index=26&type=chunk)[31](index=31&type=chunk)[34](index=34&type=chunk) - Ozuriftamab vedotin (BA3021) is a CAB ADC targeting ROR2, in Phase 2 trials for melanoma, NSCLC, and SCCHN, particularly for patients who have failed PD-1 blockade[26](index=26&type=chunk)[35](index=35&type=chunk)[37](index=37&type=chunk) - BA3071 is a CAB anti-CTLA-4 antibody designed to offer the efficacy of ipilimumab with lower toxicity, having initiated a Phase 1/2 dose-escalation trial[26](index=26&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) - The company is advancing multiple preclinical assets, including CAB bispecific antibodies and a next-generation CAB ADC, with plans to file **one IND in 2022** and up to **three more in 2023**[44](index=44&type=chunk) [Our Technology](index=9&type=section&id=Our%20Technology) The company's proprietary Conditionally Active Biologics (CAB) technology aims to overcome limitations of traditional antibody therapies by selectively activating in the acidic tumor microenvironment - The company's proprietary Conditionally Active Biologics (CAB) technology is designed to overcome the limitations of traditional antibody therapies, such as on-target, off-tumor toxicity[25](index=25&type=chunk)[27](index=27&type=chunk) - CAB technology leverages the acidic tumor microenvironment (pH < 6.8) caused by the Warburg Effect, engineering antibodies to bind selectively under these acidic conditions but remain inactive at normal physiological pH of 7.4, thereby sparing healthy tissue[57](index=57&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) - This pH-dependent binding is designed to provide several advantages: a **wider therapeutic window**, **reduced systemic toxicity**, **increased drug exposure to tumors**, and improved pharmacokinetics by minimizing target-mediated drug disposition (TMDD)[66](index=66&type=chunk)[68](index=68&type=chunk) [Clinical Trials](index=13&type=section&id=Clinical%20Trials) Clinical trials for mecbotamab vedotin (BA3011) and ozuriftamab vedotin (BA3021) have shown promising antitumor activity and tolerability, with both candidates advancing into potentially registration-enabling Phase 2 studies - Mecbotamab vedotin (BA3011) Phase 1 trial showed confirmed partial responses in sarcoma and NSCLC patients, with antitumor activity correlating with **high AXL tumor membrane expression (TmPS ≥70%)**, and the therapy was generally well-tolerated[69](index=69&type=chunk)[73](index=73&type=chunk)[77](index=77&type=chunk) - Ozuriftamab vedotin (BA3021) Phase 1 trial demonstrated a **complete response in a metastatic melanoma patient** and partial responses in NSCLC and head and neck cancer patients, with antitumor activity associated with high ROR2 tumor membrane expression[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - BA3071, a CAB anti-CTLA-4 antibody, showed similar antitumor efficacy to an ipilimumab-analog in preclinical models but with significantly fewer gastrointestinal toxicities in non-human primates, suggesting a **better safety profile**, and a Phase 1 trial was initiated in 2021[133](index=133&type=chunk)[139](index=139&type=chunk)[143](index=143&type=chunk) - The company is conducting potentially registration-enabling Phase 2 trials for both mecbotamab vedotin (in sarcoma and NSCLC) and ozuriftamab vedotin (in melanoma and NSCLC)[99](index=99&type=chunk)[126](index=126&type=chunk) [Collaborations](index=29&type=section&id=Collaborations) BioAtla has strategically engaged in various collaboration and licensing agreements to advance its pipeline and technology, including regaining global rights for BA3071 and licensing CAB antibodies for specific therapeutic areas - In November 2021, the company terminated its co-development and collaboration agreement with BeiGene for BA3071, regaining global development and commercialization rights in exchange for mid-single digit royalties on sales and a share of upfront/milestone payments from sublicenses to BeiGene[159](index=159&type=chunk) - The company has exclusive license agreements with Inversagen, LLC for diseases associated with aging (outside of cancer), with Himalaya Therapeutics SEZC for certain CAB antibodies in Greater China, and with BioAtla Holdings, LLC for CAB antibodies in the field of Adoptive Cell Therapy (CAR-T)[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - An amended and restated exclusive license agreement with EXUMA Biotech Corp grants EXUMA rights to develop four CAB ACT (CAR-T) preparations for cancer, with BioAtla receiving **mid-single-digit royalties** on net sales[165](index=165&type=chunk)[166](index=166&type=chunk) [Intellectual Property](index=31&type=section&id=Intellectual%20Property) The company maintains a robust intellectual property portfolio, with a focus on protecting its platform technologies and compositions of matter, ensuring patent coverage for its lead product candidates extending into the late 2030s Patent Portfolio Status (as of Dec 31, 2021) | Category | Count | | :--- | :--- | | **Total Patents & Applications** | **584** | | Issued Patents | 319 | | Allowed Applications | 8 | | Pending Applications | 257 | - The company's IP strategy focuses on protecting its platform technologies and compositions of matter, aiming to maximize patent term by timely filing applications, often using the PCT system for international coverage[171](index=171&type=chunk)[173](index=173&type=chunk) - Patents covering mecbotamab vedotin, if issued from the current application, would not expire before **2037**, while those covering ozuriftamab vedotin would not expire before **2037**, and BA3071 patents would not expire before **2039**[179](index=179&type=chunk)[180](index=180&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including a history of losses and the need for substantial additional capital, with success heavily dependent on its novel CAB technology platform and the uncertain clinical development and regulatory approval of its product candidates - The company has a history of significant losses (**$95.4 million in 2021**) and expects to continue incurring them for the foreseeable future, requiring substantial additional capital to fund operations[279](index=279&type=chunk)[283](index=283&type=chunk)[285](index=285&type=chunk) - Success is heavily dependent on the proprietary CAB technology platform, and any failures or safety issues with this novel technology could negatively impact the entire product pipeline[279](index=279&type=chunk)[295](index=295&type=chunk) - Clinical development is subject to high risk, as early-stage results may not predict late-stage success, and there is no guarantee that the FDA will find the ongoing Phase 2 trials sufficient for registration[279](index=279&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - The company faces risks related to its reliance on third parties for manufacturing, conducting clinical trials, and developing companion diagnostics, which could lead to delays and impair commercialization[430](index=430&type=chunk)[434](index=434&type=chunk)[334](index=334&type=chunk) - A portion of research and development occurs in China, exposing the company to risks from Chinese legal and political uncertainties, which could adversely affect operations[279](index=279&type=chunk)[411](index=411&type=chunk) [Properties](index=84&type=section&id=Item%202.%20Properties) The company leases approximately 43,377 square feet of office and laboratory space for its headquarters in San Diego, California, under a lease that expires on February 28, 2025 - The company's headquarters are located at 11085 Torreyana Road, San Diego, California, where it leases **43,377 square feet** of office and lab space[517](index=517&type=chunk) - The current lease agreement terminates on **February 28, 2025**[517](index=517&type=chunk) [Legal Proceedings](index=84&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, BioAtla is not a party to any legal proceedings that are expected to have a material adverse effect on its business, operating results, or financial condition - The company is not currently a party to any material legal proceedings[518](index=518&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=85&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BioAtla's common stock began trading on the Nasdaq Global Market on December 16, 2020, under the symbol "BCAB", with the company having never paid cash dividends and no intention to do so in the foreseeable future, retaining earnings to fund growth - The company's common stock trades on the Nasdaq Global Market under the ticker symbol "**BCAB**" since **December 16, 2020**[521](index=521&type=chunk) - The company has never declared or paid cash dividends and intends to retain all future earnings to support operations and growth[523](index=523&type=chunk) - As of **February 25, 2022**, there were **16 stockholders of record** for common stock and **2 for Class B common stock**[522](index=522&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=87&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2021, BioAtla's net loss increased to $95.4 million from $35.9 million in 2020, driven by a significant rise in R&D and G&A expenses, with $245.0 million in cash and cash equivalents expected to fund operations into the first half of 2024 [Results of Operations](index=90&type=section&id=Results%20of%20Operations) In 2021, the company experienced a significant increase in net loss, primarily due to higher research and development expenses for clinical programs and increased general and administrative costs associated with operating as a public company Comparison of Operations for Years Ended December 31 | Financial Metric | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Collaboration and other revenue | $250 | $429 | $(179) | | Research and development expense | $58,274 | $19,933 | $38,341 | | General and administrative expense | $38,416 | $10,595 | $27,821 | | **Loss from operations** | **$(96,440)** | **$(30,099)** | **$(66,341)** | | **Consolidated net loss** | **$(95,402)** | **$(35,853)** | **$(59,549)** | - Research and development expenses increased by **$38.3 million** in 2021 compared to 2020, primarily due to higher external costs for manufacturing and clinical development of BA3011 and BA3021, increased preclinical development for other pipeline programs, and higher stock-based compensation[561](index=561&type=chunk) - General and administrative expenses increased by **$27.8 million** in 2021, mainly driven by an **$18.2 million increase in stock-based compensation**, higher insurance costs, increased personnel expenses, and higher professional fees associated with being a public company[562](index=562&type=chunk) [Liquidity and Capital Resources](index=91&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2021, the company held $245.0 million in cash and cash equivalents, which is projected to fund operations into the first half of 2024 - As of **December 31, 2021**, the company had cash and cash equivalents of **$245.0 million**[565](index=565&type=chunk) - Based on the current operating plan, existing cash and cash equivalents are expected to be sufficient to fund operations into the **first half of 2024**[569](index=569&type=chunk) Summary of Cash Flows for Years Ended December 31 | Cash Flow Activity | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(62,214) | $(36,334) | | Net cash used in investing activities | $(924) | $(590) | | Net cash provided by financing activities | $69,512 | $271,825 | - In July 2021, the company's **$0.7 million Paycheck Protection Program (PPP) loan** was fully forgiven by the SBA[567](index=567&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=96&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to minimal market risk, with interest rate risk on its cash and cash equivalents not considered significant and foreign currency exchange risk not material, as contracts are primarily denominated in U.S. dollars - The company's primary market risk exposure is interest rate risk on its cash and cash equivalents (**$245.0 million as of Dec 31, 2021**), but historical fluctuations have not been significant[597](index=597&type=chunk) - Foreign currency transaction gains and losses have not been material to the financial statements, and the company has not engaged in foreign currency hedging[598](index=598&type=chunk) [Financial Statements and Supplementary Data](index=97&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements for the year ended December 31, 2021, report a net loss of $95.4 million, with total assets of $254.4 million, primarily cash and cash equivalents, and total liabilities of $43.6 million, all audited with an unqualified opinion by Ernst & Young LLP Consolidated Balance Sheet Data (as of December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $244,979 | $238,605 | | **Total assets** | **$254,422** | **$244,937** | | Total current liabilities | $19,813 | $32,261 | | **Total liabilities** | **$43,601** | **$34,963** | | **Total stockholders' equity** | **$210,821** | **$209,974** | Consolidated Statement of Operations Data (for the year ended December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Collaboration and other revenue | $250 | $429 | | Research and development expense | $58,274 | $19,933 | | General and administrative expense | $38,416 | $10,595 | | **Loss from operations** | **$(96,440)** | **$(30,099)** | | **Consolidated net loss** | **$(95,402)** | **$(35,853)** | | Net loss per common share | $(2.76) | $(3.19) | Consolidated Statement of Cash Flows Data (for the year ended December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(62,214) | $(36,334) | | Net cash used in investing activities | $(924) | $(590) | | Net cash provided by financing activities | $69,512 | $271,825 | [Controls and Procedures](index=126&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2021, with no material changes during the fourth quarter - As of **December 31, 2021**, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[798](index=798&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of **December 31, 2021**[799](index=799&type=chunk) - No material changes were made to the company's internal control over financial reporting during the **fourth quarter of fiscal 2021**[800](index=800&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=129&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[809](index=809&type=chunk) [Executive Compensation](index=129&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[811](index=811&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=129&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners, management, and related stockholder matters is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[812](index=812&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=129&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[813](index=813&type=chunk) [Principal Accountant Fees and Services](index=129&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[814](index=814&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=130&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Annual Report on Form 10-K, with financial statements included under Item 8 and all financial statement schedules omitted as not applicable - The financial statements are located under **Item 8** of the report[816](index=816&type=chunk) - All financial statement schedules have been omitted because they are not applicable or the required information is already included in the financial statements or notes[816](index=816&type=chunk)

```markdown [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) BioAtla, Inc.'s unaudited condensed consolidated financial statements for Q3 2021 and FY2020, including balance sheets, operations, equity, cash flows, and accounting notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2021 (unaudited) | December 31, 2020 | | :--------------------------------- | :----------------------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | $269,925 | $238,605 | | Total current assets | $273,517 | $240,681 | | Total assets | $277,579 | $244,937 | | **Liabilities** | | | | Accounts payable and accrued expenses | $24,939 | $12,068 | | Current portion of deferred revenue | $19,806 | $19,806 | | Total current liabilities | $45,227 | $32,261 | | Total liabilities | $46,926 | $34,963 | | **Stockholders' Equity** | | | | Additional paid-in capital | $393,578 | $300,888 | | Accumulated deficit | $(162,929) | $(90,917) | | Total stockholders' equity | $230,653 | $209,974 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Collaboration and other revenue | $— | $150 | $250 | $429 | | Research and development expense | $16,553 | $4,864 | $41,826 | $9,448 | | General and administrative expense | $7,142 | $3,301 | $31,376 | $4,625 | | Total operating expenses | $23,695 | $8,165 | $73,202 | $14,073 | | Loss from operations | $(23,695) | $(8,015) | $(72,952) | $(13,644) | | Total other income (expense) | $765 | $(3,617) | $940 | $(5,814) | | Consolidated net loss and comprehensive loss | $(22,930) | $(11,632) | $(72,012) | $(19,458) | | Net loss per common share, basic and diluted | $(0.68) | $(0.13) | $(2.13) | $(0.13) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity increased from **$209,974 thousand** at **December 31, 2020**, to **$230,653 thousand** at **September 30, 2021**, primarily driven by additional paid-in capital from stock issuances and stock-based compensation, partially offset by net losses[13](index=13&type=chunk) Key Changes in Stockholders' Equity (Nine Months Ended September 30, 2021, in thousands) | Item | Amount | | :------------------------------------------ | :------- | | Balance at December 31, 2020 | $209,974 | | Stock-based compensation expense | $21,307 | | Issuance of common stock, net of issuance costs | $71,053 | | Net loss | $(72,012)| | Balance at September 30, 2021 | $230,653 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :------------------------- | :---------- | :---------- | | Operating activities | $(41,265) | $(22,328) | | Investing activities | $(835) | $(195) | | Financing activities | $73,420 | $75,576 | | Net increase in cash and cash equivalents | $31,320 | $53,053 | | Cash and cash equivalents, end of period | $269,925 | $56,757 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) - BioAtla, Inc. converted from BioAtla, LLC in July 2020 as part of a Corporate Reorganization, spinning off Himalaya Therapeutics SEZC and completing a Series D financing; post-reorganization, BioAtla, Inc. is a single legal entity[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - The Company has incurred cumulative operating losses and negative cash flows, with an accumulated deficit of **$162.9 million** as of September 30, 2021; management believes current cash and cash equivalents are sufficient to fund operations for at least one year[20](index=20&type=chunk)[22](index=22&type=chunk) - The Company expects to lose its Emerging Growth Company (EGC) status by **December 31, 2021**, making new accounting standards effective for its fiscal year beginning **January 1, 2021**[32](index=32&type=chunk)[33](index=33&type=chunk) [2. Balance Sheet Details](index=10&type=section&id=2.%20Balance%20Sheet%20Details) Prepaid Expenses and Other Current Assets (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :---------------------------------- | :----------------- | :------------------ | | Prepaid research and development | $2,549 | $2,004 | | Prepaid insurance | $691 | $— | | Other prepaid expenses and current assets | $352 | $72 | | Total | $3,592 | $2,076 | Property and Equipment, Net (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :----------------------------------- | :----------------- | :------------------ | | Total gross property and equipment | $7,851 | $7,172 | | Less accumulated depreciation and amortization | $(3,943) | $(3,070) | | Total | $3,908 | $4,102 | Accounts Payable and Accrued Expenses (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :----------------------------------- | :----------------- | :------------------ | | Accounts payable | $1,550 | $2,456 | | Accrued compensation | $3,008 | $2,804 | | Accrued research and development | $15,883 | $4,852 | | Accrued equity issuance costs | $3,947 | $1,143 | | Other accrued expenses | $551 | $813 | | Total | $24,939 | $12,068 | [3. Fair Value Measurements](index=10&type=section&id=3.%20Fair%20Value%20Measurements) - The Company's current financial assets and liabilities have fair values representative of their carrying amounts due to their short-term nature; no financial assets or liabilities were measured at fair value on a recurring basis as of **September 30, 2021**, and **December 31, 2020**[38](index=38&type=chunk) [4. Convertible and Other Debt](index=10&type=section&id=4.%20Convertible%20and%20Other%20Debt) - The Company's **$0.7 million** Paycheck Protection Program (PPP) loan, borrowed in **April 2020**, was fully forgiven in **July 2021**, resulting in recognition of other income[42](index=42&type=chunk)[43](index=43&type=chunk) Interest Expense on Debt (in thousands) | Period | 2021 | 2020 | | :--------------------------------- | :--- | :--- | | Three months ended September 30 | $0 | $86 | | Nine months ended September 30 | $3 | $1,387 | [5. Commitments and Contingencies](index=12&type=section&id=5.%20Commitments%20and%20Contingencies) Expected Future Minimum Operating Lease Payments (in thousands) | Years ending December 31 | Operating Lease | | :------------------------- | :-------------- | | 2021 (3 months) | $370 | | 2022 | $1,555 | | 2023 | $1,636 | | 2024 | $1,685 | | Thereafter | $845 | - The Company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, operating results, or financial condition[46](index=46&type=chunk) [6. Stockholders'/Members' Equity (Deficit)](index=13&type=section&id=6.%20Stockholders'%2FMembers'%20Equity%20%28Deficit%29) - In **December 2020**, the Company completed its IPO, selling **12,075,000 shares** of common stock at **$18.00 per share**, generating **$198.3 million** net proceeds; all outstanding convertible preferred stock converted into common and Class B common stock[52](index=52&type=chunk) - In **September 2021**, the Company completed a Private Placement, selling **2,678,600 shares** of common stock at **$28.00 per share**, raising **$71.0 million** net proceeds[53](index=53&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :------------------------- | :------------------------------ | :----------------------------- | | Research and development | $1,267 | $3,376 | | General and administrative | $3,099 | $17,931 | | Total | $4,366 | $21,307 | - As of **September 30, 2021**, total unrecognized stock-based compensation expense for RSUs was **$19.9 million** (expected over **~2.4 years**) and for stock options was **$14.3 million** (expected over **~3.2 years**)[60](index=60&type=chunk)[62](index=62&type=chunk) Common Stock Reserved for Future Issuance (common equivalent shares) | Item | September 30, 2021 | December 31, 2020 | | :--------------------------------------------------- | :----------------- | :------------------ | | Warrants for the purchase of common stock | 717,674 | 717,674 | | Common stock options and restricted stock units issued and outstanding | 2,553,198 | 2,535,143 | | Awards available for future issuance under the 2020 Plan | 3,338,354 | 2,404,535 | | Awards available for future issuance under the ESPP | 828,713 | 464,829 | | Total common stock reserved for future issuance | 7,437,939 | 6,122,181 | [7. Profits Interest Incentive Plan](index=17&type=section&id=7.%20Profits%20Interest%20Incentive%20Plan) - Prior to the **July 2020** Corporate Reorganization, the Company maintained a Profits Interest Incentive Plan, with Class B units treated as liability awards measured at fair value; this plan was assumed by an affiliate during the reorganization[72](index=72&type=chunk)[73](index=73&type=chunk) Allocation of Equity-Based Compensation for Class B Units (in thousands) | Expense Category | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2020 | | :------------------------- | :------------------------------ | :----------------------------- | | Research and development | $5 | $(3,355) | | General and administrative | $(29) | $(4,270) | | Total | $(24) | $(7,625) | [8. Collaboration, License and Option Agreements](index=18&type=section&id=8.%20Collaboration%2C%20License%20and%20Option%20Agreements) - The Company has a Global Co-Development and Collaboration Agreement with BeiGene for the CAB-CTLA-4 antibody (BA3071); BeiGene is responsible for global development, manufacturing, and commercialization costs, with BioAtla eligible for tiered royalties and up to **$225.5 million** in milestone payments[76](index=76&type=chunk)[77](index=77&type=chunk)[82](index=82&type=chunk) - As of **September 30, 2021**, and **December 31, 2020**, the Company had **$19.8 million** in deferred revenue related to the BeiGene collaboration, expected to be earned upon transfer of know-how and master cell bank within the next twelve months[84](index=84&type=chunk) Collaboration Revenue (in thousands) | Period | 2021 | 2020 | | :--------------------------------- | :--- | :--- | | Three months ended September 30 | $0 | $150 | | Nine months ended September 30 | $250 | $429 | [9. Related Party Transactions](index=19&type=section&id=9.%20Related%20Party%20Transactions) - In **March 2021**, a Transition Agreement with co-founder Carolyn Anderson Short resulted in a lump sum payment, pro-rated bonus, and accelerated full vesting of **7,747** stock options and **138,461** restricted stock units, leading to a **$7.0 million** incremental fair value recognized[89](index=89&type=chunk) - As part of the **September 2021** Private Placement, the Company issued **625,000 shares** of common stock to certain related party stockholders for **$17.5 million**[90](index=90&type=chunk) [10. 401(k) Plan](index=20&type=section&id=10.%20401%28k%29%20Plan) - The Company maintains a 401(k) plan for eligible employees but had not made any matching contributions as of **September 30, 2021**, and **December 31, 2020**[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses BioAtla, Inc.'s financial condition and operational results, highlighting its clinical-stage status, significant losses, funding reliance, and cash flow activities [Overview](index=21&type=section&id=Overview) - BioAtla is a **phase 2 clinical-stage** biopharmaceutical company developing conditionally active biologics (CABs) for solid tumor cancer, designed to be active only in the acidic tumor microenvironment[93](index=93&type=chunk) - The Company has incurred significant losses, with net losses of **$22.9 million** and **$72.0 million** for the three and nine months ended **September 30, 2021**, respectively, and an accumulated deficit of **$162.9 million**[96](index=96&type=chunk) - Current cash and cash equivalents of **$269.9 million** are expected to fund operations into the **first half of 2024**, but substantial additional capital will be required for product development and commercialization[101](index=101&type=chunk) [Impact of COVID-19 on Our Business](index=22&type=section&id=Impact%20of%20COVID-19%20on%20Our%20Business) - The COVID-19 pandemic has caused non-material business disruptions, with the **Phase 2 sarcoma trial** remaining on schedule and modest delays in patient initiations for AXL NSCLC and ROR2 studies, but overall timelines for study completion are unchanged[102](index=102&type=chunk) - The Company's **$0.7 million** PPP loan was fully forgiven in **July 2021**, recognized as other income[102](index=102&type=chunk)[103](index=103&type=chunk) [Financial Operations Overview](index=23&type=section&id=Financial%20Operations%20Overview) - The Company has not generated revenue from product sales and does not expect to in the near future; collaboration revenue for the nine months ended **September 30, 2021**, was **$0.3 million** from legacy service contracts[104](index=104&type=chunk)[106](index=106&type=chunk) - Research and development expenses are expected to increase substantially as the Company advances clinical programs and expands its pipeline[108](index=108&type=chunk) - General and administrative expenses are expected to increase due to operating as a public company, including compliance, legal, and intellectual property costs[110](index=110&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Key Financial Changes (Three Months Ended September 30, 2021 vs. 2020, in thousands) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :---------- | :---------- | :---------- | | Collaboration revenue | $— | $150 | $(150) | | Research and development | $16,553 | $4,864 | $11,689 | | General and administrative | $7,142 | $3,301 | $3,841 | | Loss from operations | $(23,695) | $(8,015) | $(15,680) | | Consolidated net loss | $(22,930) | $(11,632) | $(11,298) | Key Financial Changes (Nine Months Ended September 30, 2021 vs. 2020, in thousands) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :---------- | :---------- | :---------- | | Collaboration revenue | $250 | $429 | $(179) | | Research and development | $41,826 | $9,448 | $32,378 | | General and administrative | $31,376 | $4,625 | $26,751 | | Loss from operations | $(72,952) | $(13,644) | $(59,308) | | Consolidated net loss | $(72,012) | $(19,458) | $(52,554) | - Research and development expenses increased significantly due to manufacturing and clinical development for **BA3011** and **BA3021**, preclinical development for bispecific programs, and increased stock-based compensation[118](index=118&type=chunk)[128](index=128&type=chunk) - General and administrative expenses rose primarily due to increased stock-based compensation, insurance, and personnel-related costs, including severance benefits[119](index=119&type=chunk)[129](index=129&type=chunk) - Interest expense decreased due to the settlement of convertible debt in **July 2020** and the forgiveness of the PPP loan in **July 2021**[122](index=122&type=chunk)[131](index=131&type=chunk) - A **$0.7 million** gain on extinguishment of debt was recognized in **Q3 2021** due to PPP loan forgiveness, contrasting with a **$2.7 million** loss in **Q3 2020** from convertible promissory note settlement[124](index=124&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - As of **September 30, 2021**, the Company had **$269.9 million** in cash and cash equivalents, expected to fund operations into the **first half of 2024**[135](index=135&type=chunk)[139](index=139&type=chunk) - The Company will require substantial additional funding for product development and commercialization, potentially through equity offerings, debt financings, or collaborations[139](index=139&type=chunk)[140](index=140&type=chunk) Cash Flow Summary (Nine Months Ended September 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :------------------------- | :---------- | :---------- | | Operating activities | $(41,265) | $(22,328) | | Investing activities | $(835) | $(195) | | Financing activities | $73,420 | $75,576 | | Net increase in cash and cash equivalents | $31,320 | $53,053 | - Net cash used in operating activities increased to **$41.3 million** in **2021** from **$22.3 million** in **2020**, driven by higher net loss and changes in operating assets and liabilities[142](index=142&type=chunk)[143](index=143&type=chunk) - Net cash provided by financing activities was **$73.4 million** in **2021**, primarily from a **$75.0 million** private placement of common stock, offset by IPO costs[145](index=145&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The Company's financial statements rely on estimates and assumptions, particularly for revenue recognition, R&D accruals, equity-based compensation, and fair value measurements; no material changes to critical accounting policies were reported during the nine months ended **September 30, 2021**[146](index=146&type=chunk)[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=32&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company has not entered into any off-balance sheet arrangements[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Quantitative and qualitative disclosures about market risk are not applicable to BioAtla, Inc. as a smaller reporting company - Quantitative and qualitative disclosures about market risk are not applicable to BioAtla, Inc. as a smaller reporting company[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the Company's disclosure controls and procedures as effective as of September 30, 2021, with no material changes in internal control over financial reporting - As of **September 30, 2021**, the Company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level[149](index=149&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended **September 30, 2021**[151](index=151&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The Company is not currently a party to any legal proceedings that, if determined adversely, would individually or in aggregate have a material adverse effect on its business, operating results, or financial condition[152](index=152&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Outlines significant risks of investing in BioAtla, Inc., covering financial position, product development, regulatory approvals, operational challenges, and intellectual property [Risk Factor Summary](index=33&type=section&id=Risk%20Factor%20Summary) - Key risks include the Company's limited operating history, significant losses, need for substantial additional capital, potential product development failures or delays, and dependence on its patented CAB technology platform[153](index=153&type=chunk)[154](index=154&type=chunk) - Other risks involve market acceptance of novel therapeutic modalities, unpredictability of clinical trial results, competition from other cancer treatments, and challenges in obtaining and maintaining regulatory approvals[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [Risks related to our financial position and need for additional capital](index=34&type=section&id=Risks%20related%20to%20our%20financial%20position%20and%20need%20for%20additional%20capital) - BioAtla is a clinical-stage biopharmaceutical company with no approved products and a history of significant losses, including **$72.0 million** for the nine months ended **September 30, 2021**, and an accumulated deficit of **$162.9 million**[162](index=162&type=chunk)[163](index=163&type=chunk) - The Company will require substantial additional capital beyond its current **$269.9 million** cash and cash equivalents to fund operations into the **first half of 2024**, with future funding dependent on development progress and market conditions[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) [Risks related to the discovery, development and commercialization of our product candidates](index=36&type=section&id=Risks%20related%20to%20the%20discovery%2C%20development%20and%20commercialization%20of%20our%20product%20candidates) - Product candidates, including **BA3011** and **BA3021** in **Phase 2 trials**, may fail or be delayed in development due to issues like negative preclinical/clinical results, regulatory hurdles, patient recruitment challenges, or manufacturing problems[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - The Company's future success is heavily dependent on its patented CAB technology platform; any setbacks could detrimentally impact all product candidates[174](index=174&type=chunk)[175](index=175&type=chunk) - Undesirable side effects, such as reversible myelosuppression and transient liver enzyme elevations observed in **BA3011** and **BA3021** trials, could halt clinical development or delay regulatory approval[196](index=196&type=chunk)[197](index=197&type=chunk) - Competition from other biopharmaceutical companies developing novel treatments for cancer, including immune-based cellular therapies and ADCs, poses a significant risk to the commercial viability of BioAtla's product candidates[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Risks related to regulatory approval and other legal compliance matters](index=42&type=section&id=Risks%20related%20to%20regulatory%20approval%20and%20other%20legal%20compliance%20matters) - Obtaining U.S. or foreign regulatory approval is costly, lengthy, and uncertain, with no guarantee that any product candidates will receive approval[222](index=222&type=chunk)[223](index=223&type=chunk) - The Company intends to seek accelerated approval pathways for **BA3011** and **BA3021**, but success is not guaranteed, and confirmatory studies may be required post-approval[229](index=229&type=chunk)[230](index=230&type=chunk) - Post-approval, products are subject to ongoing regulatory obligations, including potential labeling restrictions, post-marketing studies, and market withdrawal, with non-compliance leading to significant penalties[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Healthcare legislative reforms, such as the **ACA** and drug pricing scrutiny, could adversely impact the Company's business by affecting reimbursement policies and market access[254](index=254&type=chunk)[255](index=255&type=chunk)[258](index=258&type=chunk) [Risks related to employee matters, managing our growth and other risks related to our business](index=57&type=section&id=Risks%20related%20to%20employee%20matters%2C%20managing%20our%20growth%20and%20other%20risks%20related%20to%20our%20business) - The Company's success depends on attracting and retaining qualified senior management and scientific personnel, with intense competition in the biopharmaceutical field[278](index=278&type=chunk)[279](index=279&type=chunk) - Failure to establish effective sales, marketing, and distribution capabilities, either internally or through third parties, could hinder commercialization efforts and future product revenue[280](index=280&type=chunk)[281](index=281&type=chunk) - Growth management challenges include recruiting and integrating employees, managing internal development, and improving operational controls, especially with reliance on numerous external consultants[282](index=282&type=chunk)[284](index=284&type=chunk) - Cybersecurity attacks or data breaches could disrupt operations, lead to significant liabilities, and harm the Company's reputation[285](index=285&type=chunk)[286](index=286&type=chunk) - Operations in China through BioDuro expose the Company to risks from changes in Chinese laws, political unrest, and economic instability, potentially affecting research and development activities[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Concentration of operations in San Diego, California, and reliance on BioDuro in China exposes the Company to risks from natural disasters, potentially disrupting business continuity[291](index=291&type=chunk)[292](index=292&type=chunk) - The COVID-19 pandemic continues to pose risks to preclinical and clinical trial operations, potentially delaying patient enrollment, data readouts, and regulatory filings[295](index=295&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) [Risks related to our dependence on third parties](index=62&type=section&id=Risks%20related%20to%20our%20dependence%20on%20third%20parties) - Reliance on third-party collaborators, like BeiGene for **BA3071**, means limited control over resource allocation and potential for delays or termination of development programs[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - Failure of third-party CROs to perform contractually, meet regulatory requirements, or adhere to deadlines could delay development programs[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - Dependence on third-party contract manufacturers for product candidates increases the risk of insufficient supply, quality issues, or delays, potentially impacting clinical trials and commercialization[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) - Manufacturing biotechnology products is complex; difficulties in production, contamination, or raw material shortages could delay or stop development and commercialization[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) [Risks related to intellectual property](index=68&type=section&id=Risks%20related%20to%20intellectual%20property) - The Company's success depends on obtaining, maintaining, and protecting patents and other IP rights for its product candidates and technologies, which is an expensive and time-consuming process[321](index=321&type=chunk)[322](index=322&type=chunk) - Patents may not be sufficiently broad, could be challenged, or found invalid/unenforceable, and competitors may design around them[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk) - Failure to protect trade secrets and confidential know-how could harm the Company's competitive position, as enforcement is difficult and costly[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - The limited lifespan of patents (generally **20 years**) means protection for product candidates might expire before or shortly after commercialization, leading to increased competition[333](index=333&type=chunk) - Changes in U.S. patent law (e.g., Leahy-Smith Act) and interpretations could increase uncertainties and costs in patent prosecution and enforcement[335](index=335&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) - Third-party intellectual property rights could prevent or delay drug discovery and commercialization, potentially requiring costly litigation or licenses on unfavorable terms[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - Failure to comply with obligations under license or collaboration agreements could lead to damages or loss of essential intellectual property rights[362](index=362&type=chunk)[363](index=363&type=chunk) - Protecting intellectual property rights globally is challenging due to varying laws and enforcement difficulties in certain countries, potentially diminishing the value of these rights[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) [Risks related to our common stock](index=79&type=section&id=Risks%20related%20to%20our%20common%20stock) - The Company's operating results are subject to significant fluctuations, and failure to meet investor or analyst expectations could cause stock price volatility[371](index=371&type=chunk)[372](index=372&type=chunk) - Future issuances of equity or convertible debt will dilute existing shareholders' ownership and may adversely affect the stock price[375](index=375&type=chunk) - The dual-class common stock structure (voting common, non-voting Class B convertible) may limit common stockholders' influence on corporate matters[376](index=376&type=chunk)[377](index=377&type=chunk) - Principal stockholders and management own a significant percentage (**46.8%** as of **Sep 30, 2021**) of outstanding common stock, allowing them to exert significant control over corporate actions[380](index=380&type=chunk)[381](index=381&type=chunk) - The Company will cease to be an 'emerging growth company' and 'smaller reporting company' as of **December 31, 2021**, leading to increased compliance costs and disclosure requirements[384](index=384&type=chunk)[385](index=385&type=chunk)[387](index=387&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could make acquisitions more difficult and prevent changes in management[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales were reported; **$3.4 million** of **$198.3 million** IPO net proceeds used by September 30, 2021, with no material change in planned use - No unregistered sales of equity securities were reported[402](index=402&type=chunk) - As of **September 30, 2021**, **$3.4 million** of the **$198.3 million** net proceeds from the **December 2020 IPO** had been used, consistent with the planned use of proceeds[402](index=402&type=chunk)[403](index=403&type=chunk) [Item 3. Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities - No defaults upon senior securities were reported[404](index=404&type=chunk) [Item 4. Mine Safety Disclosures](index=86&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[404](index=404&type=chunk) [Item 5. Other Information](index=86&type=section&id=Item%205.%20Other%20Information) The Company reported no other information - No other information was reported[404](index=404&type=chunk) [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL financial data - Exhibits include the Form of Stock Purchase Agreement, Non-Employee Director Stock Option Agreement, Employee Stock Option Agreement, CEO and CFO certifications (**302** and **906**), and Inline XBRL financial data[405](index=405&type=chunk)[406](index=406&type=chunk) ```

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) BioAtla, Inc. reported a **$18.7 million** net loss for Q1 2021, significantly up from **$1.6 million** in Q1 2020, due to increased R&D and G&A expenses, with cash and equivalents at **$221.2 million** [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets decreased to **$229.1 million** from **$244.9 million** at year-end 2020, mainly due to reduced cash, with total liabilities at **$33.2 million** and equity at **$195.9 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $221,199 | $238,605 | | Total current assets | $224,582 | $240,681 | | **Total assets** | **$229,087** | **$244,937** | | **Liabilities & Equity** | | | | Total current liabilities | $30,530 | $32,261 | | **Total liabilities** | **$33,171** | **$34,963** | | **Total stockholders' equity** | **$195,916** | **$209,974** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2021, the company reported no collaboration revenue and a **$18.7 million** net loss, or **$0.56 per share**, significantly higher than the **$1.6 million** loss in Q1 2020, driven by increased operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Collaboration revenue | $0 | $89 | | Research and development expense | $10,423 | $1,661 | | General and administrative expense | $8,374 | $(463) | | **Loss from operations** | **$(18,797)** | **$(1,109)** | | **Consolidated net loss** | **$(18,701)** | **$(1,604)** | | Net loss per common share | $(0.56) | N/A | [Condensed Consolidated Statement of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from **$210.0 million** at December 31, 2020, to **$195.9 million** at March 31, 2021, primarily due to a **$18.7 million** net loss, partially offset by **$4.6 million** in stock-based compensation - The net loss of **$18.7 million** was the primary driver for the reduction in stockholders' equity during the first quarter of **2021**[14](index=14&type=chunk) - Stock-based compensation added **$4.6 million** to additional paid-in capital, partially offsetting the impact of the net loss[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for Q1 2021 increased to **$15.0 million** from **$3.8 million** in Q1 2020, resulting in a **$17.4 million** net decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,994) | $(3,814) | | Net cash used in investing activities | $(501) | $(20) | | Net cash (used in) provided by financing activities | $(1,911) | $500 | | **Net decrease in cash and cash equivalents** | **$(17,406)** | **$(3,334)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail clinical development of CABs, confirm sufficient cash for at least one year, and disclose **$19.8 million** in deferred BeiGene collaboration revenue and a **$1.0 million** non-cash charge from a transition agreement - The company is in clinical development of its two lead **CAB antibody drug conjugates (CAB ADC)** targeting AXL and ROR2 receptors[19](index=19&type=chunk) - Management concluded there is **not substantial doubt** about the Company's ability to continue as a going concern, with cash **sufficient to fund operations** for at least one year from the financial statement issuance date[23](index=23&type=chunk) - As of March 31, **2021**, the company had **$19.8 million** in deferred revenue from its BeiGene collaboration, expected to be recognized upon transfer of know-how and master cell bank within the next twelve months[76](index=76&type=chunk) - A **Transition Agreement** with co-founder Carolyn Anderson Short resulted in accelerated vesting of equity awards, leading to an incremental fair value of **$7.0 million** to be recognized over the transition period, with a **$1.0 million** non-cash charge recognized in Q1 **2021**[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The clinical-stage biopharmaceutical company incurred a **$18.7 million** net loss for Q1 2021, with **$221.2 million** cash from its December 2020 IPO, expected to fund operations through 2022, despite increasing R&D and G&A expenses - The company is a clinical-stage biopharmaceutical company developing novel **Conditionally Active Biologics (CABs)** designed to selectively bind to targets in the acidic tumor microenvironment, aiming to reduce on-target, off-tumor toxicity[83](index=83&type=chunk) - Net loss for Q1 **2021** was **$18.7 million**, and the **accumulated deficit reached $109.6 million** as of March 31, **2021**. Losses are expected to continue due to ongoing R&D for product candidates like BA3011 and BA3021[86](index=86&type=chunk) - Following its December **2020** IPO, the company had cash and cash equivalents of **$221.2 million** as of March 31, **2021**, which is expected to fund operations at least through the end of **2022**[91](index=91&type=chunk)[117](index=117&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Collaboration revenue decreased to zero in Q1 2021, while R&D expenses surged by **$8.8 million** to **$10.4 million** and G&A expenses increased by **$8.9 million** to **$8.4 million**, widening the net loss to **$18.7 million** Comparison of Operations (in thousands) | Metric | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $89 | $(89) | | Research and development | $10,423 | $1,661 | $8,762 | | General and administrative | $8,374 | $(463) | $8,837 | | **Loss from operations** | **$(18,797)** | **$(1,109)** | **$(17,688)** | | **Consolidated net loss** | **$(18,701)** | **$(1,604)** | **$(17,097)** | Research and Development Expense Breakdown (in thousands) | Category | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | BA3011 (AXL-ADC) | $4,573 | $879 | $3,694 | | BA3021 (ROR2-ADC) | $1,328 | $924 | $404 | | Other CAB Programs | $1,720 | $632 | $1,088 | | Personnel and related | $1,233 | $1,150 | $83 | | Equity-based compensation | $954 | $(2,523) | $3,477 | | **Total R&D Expenses** | **$10,423** | **$1,661** | **$8,762** | - The **$8.9 million** increase in G&A expenses was primarily driven by a **$3.7 million** increase in stock-based compensation, a **$3.2 million** increase related to **2020** fair value adjustments to the former profits interest plan, and increased insurance and professional fees[109](index=109&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2021, the company held **$221.2 million** in cash, deemed sufficient to fund operations through 2022, despite **$15.0 million** net cash used in operating activities for Q1 2021 - As of March 31, **2021**, the company had cash and cash equivalents of **$221.2 million** and believes its current capital is **sufficient to fund operations** at least through the end of **2022**[112](index=112&type=chunk)[117](index=117&type=chunk) - In April **2020**, the company received a **$0.7 million** loan under the **Paycheck Protection Program (PPP)** of the **CARES Act**, which matures in April **2022** and bears a **1%** interest rate[114](index=114&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(14,994) | $(3,814) | | Net cash used in Investing activities | $(501) | $(20) | | Net cash (used in) provided by Financing activities | $(1,911) | $500 | [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a **smaller reporting company** - The company is a **smaller reporting company** and is therefore not required to provide these disclosures[127](index=127&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, **2021**, the company's **disclosure controls and procedures were effective** at the reasonable assurance level[128](index=128&type=chunk) - **No changes occurred** during the quarter ended March 31, **2021**, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[129](index=129&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a **material adverse effect** on its business or financial condition - The company reports that it is **not currently involved in any material legal proceedings**[130](index=130&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces extensive risks as a clinical-stage entity with a history of losses, requiring additional capital, and dependent on its CAB technology, regulatory approvals, and third-party reliance, with operational risks in China and from COVID-19 - The company is a clinical-stage entity with a **history of significant losses** and expects to continue incurring losses, making its **future viability difficult to assess**[133](index=133&type=chunk)[134](index=134&type=chunk) - **Substantial additional capital is required** to finance operations; **failure to raise capital could force delays or elimination** of research and development programs[136](index=136&type=chunk) - The company is **substantially dependent on the success** of its patented **Conditionally Active Biologics (CAB)** technology platform[143](index=143&type=chunk) - A portion of research and development occurs in China, **exposing the company to risks** from Chinese legal interpretation, trade wars, or political unrest[238](index=238&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales occurred; **$217.4 million** gross IPO proceeds from December 2020 remain unused as of March 31, 2021, with no change in planned use - The company's IPO in December **2020** generated gross proceeds of **$217.4 million**[338](index=338&type=chunk) - As of March 31, **2021**, the company has **not used any of the proceeds** from its IPO, and the **planned use of proceeds remains unchanged** from what was described in the final prospectus[338](index=338&type=chunk) [Defaults Upon Senior Securities](index=71&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports **no defaults** upon senior securities - **None**[339](index=339&type=chunk) [Mine Safety Disclosures](index=71&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) **Not applicable** to the company - **Not applicable**[339](index=339&type=chunk) [Other Information](index=71&type=section&id=Item%205.%20Other%20Information) The company reports **no other information** for this item - **None**[339](index=339&type=chunk) [Exhibits](index=72&type=section&id=Item%206.%20Exhibits) Exhibits include a **Transition Agreement** with Carolyn Anderson Short and **CEO and CFO certifications** - Exhibits filed include **CEO and CFO certifications** required by the **Sarbanes-Oxley Act of 2002**[342](index=342&type=chunk) - A **Transition Agreement** dated March 23, **2021**, between the company and Carolyn Anderson Short is included as an exhibit[342](index=342&type=chunk)