BioAtla(BCAB) - 2020 Q4 - Annual Report

PART I Business BioAtla develops Conditionally Active Biologics (CABs) for solid tumors, with lead ADCs BA3011 and BA3021 in Phase 2 trials, leveraging acidic tumor microenvironments to reduce toxicity Overview BioAtla develops CABs for solid tumors, utilizing the acidic tumor microenvironment for selective binding to reduce toxicity, with lead candidates BA3011 and BA3021 in Phase 2 trials - The company develops highly specific and selective antibody-based therapeutics (CABs) that target the acidic tumor microenvironment to treat solid tumors, aiming to reduce toxicity in healthy tissue[11] - BioAtla has initiated potentially registration-enabling Phase 2 trials for its two most advanced antibody-drug conjugate (ADC) product candidates, BA3011 (targeting AXL) and BA3021 (targeting ROR2), across multiple cancer indications including sarcoma, NSCLC, and melanoma[12] - The company is collaborating with BeiGene to initiate Phase 1 trials in 2021 for its immuno-oncology antibody, BA3071 (targeting CTLA-4), which is designed to overcome the toxicity limitations of existing anti-CTLA-4 therapies[13] Our Pipeline BioAtla's pipeline features CAB ADCs BA3011 (AXL) and BA3021 (ROR2) in Phase 2, CAB antibody BA3071 (CTLA-4) in Phase 1, and preclinical bispecifics, with plans for multiple IND submissions by 2022 BioAtla Product Pipeline Summary | Product Candidate | Target | Modality | Development Stage | Indications | | :--- | :--- | :--- | :--- | :--- | | BA3011 | AXL | CAB ADC | Phase 2 | Soft Tissue & Bone Sarcoma, NSCLC, Ovarian Cancer | | BA3021 | ROR2 | CAB ADC | Phase 2 | NSCLC, Melanoma, Ovarian Cancer | | BA3071 | CTLA-4 | CAB Antibody | Phase 1 (planned 2021) | Multiple Solid Tumors | | BA3182 | EpCAM x CD3 | CAB Bispecific | IND-Enabling | Solid Tumors | | BA3142 | B7-H3 x CD3 | CAB Bispecific | IND-Enabling | Solid Tumors | | Multiple Candidates | EGFR x CD3, Nectin-4 x CD3 | CAB Bispecific | Preclinical / Discovery | Solid Tumors | - The company has developed a quantitative biomarker assay, the AXL Tumor membrane Percent Score (TmPS), to identify patients most likely to respond to BA3011, based on the level of AXL expression on the tumor membrane[19] - BioAtla has advanced two CAB bispecific antibody candidates, BA3182 (EpCAM x CD3) and BA3142 (B7-H3 x CD3), into IND-enabling studies in the second half of 2020, with a goal to submit up to four US INDs in 2022 for its bispecific or ADC molecules[33][147] Our Strategy BioAtla's strategy involves advancing lead CAB candidates BA3011 and BA3021 to commercialization, expanding its pipeline with bispecifics, strengthening IP, and forming strategic collaborations to maximize platform value - Advance lead candidates BA3011 and BA3021 through potentially registration-enabling Phase 2 trials and toward commercialization, using quantitative biomarker assays (TmPS) to select patients[34] - Leverage the CAB technology to develop a broad pipeline of new molecules, including bispecific T cell engagers and immuno-oncology antibodies[34] - Maintain and strengthen its intellectual property portfolio, which as of December 31, 2020, included 492 patents and patent applications[34] - Selectively enter into strategic collaborations for specific geographic regions, indications, or combinations to maximize the value of its platform, similar to the existing collaboration for BA3071[35] Our Technology BioAtla's CAB technology exploits the acidic tumor microenvironment (Warburg Effect) for pH-dependent, reversible binding, aiming to reduce on-target, off-tumor toxicity and improve pharmacokinetics compared to traditional antibodies - The company's CAB technology leverages the low pH (acidic) conditions of the tumor microenvironment, caused by the Warburg Effect, where cancer cells preferentially use glycolysis for energy, producing lactic acid[41][46] - CAB antibodies are designed to be active and bind to targets in the acidic TME (pH as low as 5.8) but are reversibly inactivated in the normal physiological environment (pH 7.4), aiming to reduce systemic toxicity[51][52][54] - Potential advantages of the CAB platform over traditional antibodies include a wider therapeutic window, reduced on-target off-tumor toxicity, increased drug exposure to tumors, and improved pharmacokinetics by avoiding target-mediated drug disposition (TMDD)[57] - In a preclinical non-human primate study, a CAB ADC targeting AXL showed minimal liver toxicity (ALT increase) compared to a sharp increase observed with a traditional AXL ADC, supporting the technology's potential to reduce toxicity[58] Clinical Trials BioAtla's lead CAB ADCs, BA3011 and BA3021, are in Phase 2 trials, showing partial responses and biomarker correlation, while BA3071 (CTLA-4) is planned for Phase 1, and bispecifics are in IND-enabling studies with reduced systemic toxicity BA3011 (AXL-Targeting CAB-ADC) BA3011's Phase 1 trial showed five partial responses in 55 patients, particularly with high AXL expression, establishing a 1.8 mg/kg dose, with Phase 2 trials initiated for sarcoma and NSCLC - In the Phase 1 trial, five patients achieved a confirmed partial response (PR): four with sarcomas and one with NSCLC. Antitumor activity showed a correlation with high tumor membrane expression of AXL (TmPS ≥ 70%)[65][67] - BA3011 was generally well-tolerated, with manageable toxicities consistent with other MMAE-based ADCs. Notably, no adverse events appeared related to on-target injury of normal, AXL-expressing tissues[80][81] - The estimated half-life of BA3011 was approximately four days, twice that of a non-CAB AXL ADC (enapotamab vedotin), suggesting decreased target-mediated drug disposition (TMDD)[80][87] - Potentially registration-enabling Phase 2 trials have been initiated for BA3011 in soft-tissue/bone sarcoma (AXL TmPS ≥ 70%) and in NSCLC (AXL TmPS ≥ 50%)[92][94][99] BA3021 (ROR2-Targeting CAB-ADC) BA3021's Phase 1 trial in 59 patients yielded four partial responses across NSCLC, melanoma, and head and neck cancer, correlating with ROR2 expression, with Phase 2 trials initiated for melanoma and NSCLC - The Phase 1 trial of BA3021 resulted in four partial responses: two in NSCLC, one in metastatic melanoma (approx. 80% tumor reduction), and one in advanced head and neck cancer[107][110][114] - Similar to BA3011, antitumor response in NSCLC patients was associated with high tumor membrane expression of the target, ROR2 (TmPS of at least 70%)[109] - BA3021 was generally well-tolerated, with no adverse events appearing to be related to on-target injury of normal, ROR2-expressing tissues. Reported toxicities were consistent with off-target effects of free MMAE[115][116] - A potentially registration-enabling Phase 2 trial has been initiated for BA3021 in melanoma and NSCLC patients who have progressed on prior PD-1/L1 inhibitors and have a ROR2 TmPS of 50% or more[119][122] BA3071 (CTLA-4 Targeting CAB Antibody) BA3071, a CAB anti-CTLA-4 antibody, showed comparable antitumor efficacy to ipilimumab in preclinical models with reduced systemic T cell activation and fewer GI adverse events, with a Phase 1 trial planned for 2021 - In a mouse model, BA3071 demonstrated potent antitumor activity equivalent to an ipilimumab analog, including two complete responses[127][128] - Unlike the ipilimumab analog, BA3071 did not lead to systemic stimulation of T cells in peripheral blood in mice, suggesting tumor-restricted activity that may lead to fewer systemic toxicities[130][131] - In a non-human primate toxicity study, the combination of BA3071 and nivolumab was associated with only a single gastrointestinal adverse event, compared to 33 events for the ipilimumab and nivolumab combination[131][133] - The company plans to work with its partner BeiGene to initiate a Phase 1 dose-escalation trial of BA3071 in advanced solid tumor patients in 2021, both as a monotherapy and in combination with tislelizumab (an anti-PD-1 antibody)[135] Bispecific Candidates BioAtla is developing CAB bispecific T-cell engagers for tumor-restricted activation, with preclinical data showing potent antitumor activity and reduced systemic toxicity, advancing BA3182 and BA3142 into IND-enabling studies - The company's EpCAM x CD3 bispecific antibody with a CAB CD3 binding domain showed potent antitumor activity in a mouse xenograft model, comparable to a conventional bispecific[136][137][139] - In non-human primates, the EpCAM x CAB CD3 bispecific led to much lower levels of systemic IL-6, an inflammatory cytokine, and significantly better safety (no deaths) compared to a conventional EpCAM x CD3 bispecific, which caused severe toxicities and death at the same dose levels[140][142] - Two CAB bispecific antibody candidates, BA3182 (EpCAM x CD3) and BA3142 (B7-H3 x CD3), were advanced into IND-enabling studies in the second half of 2020[147] Competition BioAtla faces intense competition in the biopharmaceutical industry, particularly in the ADC space with 10 approved and 60 in clinical development as of February 2020, from entities with significantly greater resources - The company faces substantial competition from a wide variety of institutions, including large biopharmaceutical companies and specialty biotechnology companies with greater financial and development resources[149][152] - As of February 2020, there were 10 approved ADCs and approximately 60 ADCs in clinical development, representing a key area of competition for BA3011 and BA3021[150] - The company faces direct competition on specific targets, such as from NBE-Therapeutics AG, which is also developing therapies for ROR2, the target of BA3021[150] Manufacturing BioAtla relies entirely on third-party CMOs for all manufacturing, from preclinical to potential commercial stages, to maintain an efficient infrastructure and focus on core development - The company does not own or operate manufacturing facilities and relies on third-party contract manufacturing organizations (CMOs) for all production of its product candidates for preclinical and clinical trials[156] - This outsourcing strategy is intended to maintain an efficient infrastructure, eliminating the need for investment in internal manufacturing facilities and allowing focus on product development[156] Collaborations BioAtla strategically collaborates, notably with BeiGene for BA3071, receiving a $20 million upfront payment and potential milestones/royalties, while also out-licensing technology for specific fields and territories - Entered a global collaboration with BeiGene for BA3071, receiving a $20 million upfront payment and $5 million for manufacturing costs. BeiGene is responsible for all global development, manufacturing, and commercialization costs[158][160] - Under the BeiGene agreement, BioAtla is eligible for up to $225.5 million in development, regulatory, and commercial milestones, plus tiered royalties ranging from high-single digits to low twenties on worldwide sales[160] - The company has out-licensed its technology for specific fields or territories through exclusive agreements with Inversagen (aging-related diseases), Himalaya Therapeutics (Greater China), BioAtla Holdings (CAR-T), and EXUMA Biotech (specific CAR-T targets)[162][164][165][168] Intellectual Property BioAtla's IP portfolio, comprising 492 patents and applications as of December 31, 2020, protects its CAB technology and product candidates, with key composition of matter patents expiring no earlier than 2037-2039 - As of December 31, 2020, the company's intellectual property portfolio includes 492 patents and patent applications, comprising 257 issued patents, 9 allowed applications, and 226 pending applications[172] - Composition of matter claims for BA3011 and BA3021, if issued, would not expire before 2037. For BA3071, they would not expire before 2039[184][185] - The company holds 14 issued U.S. patents covering various aspects of the manufacturing methods used to generate CAB antibodies, with patent terms expiring from 2030 to 2036[186] Government Regulation and Product Approval BioAtla's biologics face extensive FDA and international regulation, requiring preclinical, IND, and multi-phase clinical trials for BLA approval, with potential for expedited programs and ongoing post-market compliance - Biologic products are regulated in the U.S. by the FDA under the FDCA and PHSA, requiring approval of a Biologics License Application (BLA) before marketing[191] - The development process involves extensive preclinical testing (GLP), submission of an IND, and three sequential phases of clinical trials (GCP) to establish safety and efficacy[192][196][197] - The FDA offers expedited programs such as Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval for drugs that address serious conditions and unmet medical needs[213][214][217][218] - In the European Union, marketing authorization requires submitting an MAA to the EMA via a centralized procedure for biologics, which involves a 210-day evaluation period by the CHMP[252][253][254] - If a companion diagnostic is essential for the safe and effective use of a product, the FDA generally requires simultaneous approval of the diagnostic with the therapeutic product[230] Human Capital Management As of December 31, 2020, BioAtla had 36 employees and 18 contractors in China, with a compensation program focused on attracting talent through salary, bonuses, and equity, while promoting diversity and development - As of December 31, 2020, the company had 36 employees and 18 independent contractors in China. None of the employees are subject to a collective bargaining agreement[282] - Compensation includes base salary, annual incentive bonuses, and long-term equity awards to align employee and stockholder interests[284] - The company promotes diversity and inclusion, focusing on providing a safe work environment, equal employment opportunity, and learning and development opportunities[285] Risk Factors BioAtla faces significant risks including historical losses, need for capital, reliance on its CAB platform and clinical success, intense competition, regulatory hurdles, third-party dependencies, IP challenges, and COVID-19 impacts - The company has a history of significant losses ($35.9 million in 2020) and expects to continue incurring them, requiring substantial additional capital to finance operations[291][293][296] - Success is substantially dependent on the proprietary CAB technology platform; any failure or adverse event related to the platform could have a detrimental impact on all product candidates[291][306] - The company faces risks of clinical trial delays or failures, and positive early-stage results may not be predictive of late-stage outcomes. The FDA has not opined on whether the current Phase 2 trials will be sufficient for approval[291][303][318] - Reliance on third parties for collaborations (e.g., BeiGene), clinical trial conduct, and manufacturing presents risks related to performance, supply chain disruptions, and regulatory compliance[445][454][456] - The COVID-19 pandemic poses a risk of significant disruption to preclinical studies and clinical trials, which could delay or prevent regulatory approvals[292][441] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - The company states that this item is not applicable[557] Properties BioAtla leases its 43,377 square feet headquarters in San Diego, California, with the current lease terminating on February 28, 2025 - The company leases approximately 43,377 square feet of office and laboratory space for its headquarters in San Diego, California[558] - The current lease for its headquarters terminates on February 28, 2025[558] Legal Proceedings The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its business or financial condition - The company is not currently a party to any material legal proceedings[559] Mine Safety Disclosures The company reports this item as not applicable due to the absence of mining operations - The company states that this item is not applicable[560] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities BioAtla's common stock (BCAB) began trading on Nasdaq on December 16, 2020; the company has never paid dividends and completed a $72.5 million Series D preferred stock sale and a $217.4 million IPO in 2020 - The company's common stock began trading on the Nasdaq Global Market under the symbol "BCAB" on December 16, 2020[561] - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, intending to retain earnings for business growth[563] - On July 13, 2020, the company sold approximately 140.6 million shares of Series D preferred stock for aggregate proceeds of $72.5 million in an unregistered transaction[565] - The IPO on December 15, 2020, involved the sale of 12,075,000 shares at $18.00 per share, generating gross proceeds of $217.4 million[569] Selected Financial Data This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable as it is a smaller reporting company[571] Management's Discussion and Analysis of Financial Condition and Results of Operations BioAtla reported a $35.9 million net loss in 2020, driven by decreased collaboration revenue and increased G&A, partially offset by reduced R&D, with $238.6 million cash expected to fund operations through 2022 Results of Operations BioAtla's net loss increased to $35.9 million in 2020, primarily due to a $4.8 million decrease in collaboration revenue and a $3.0 million rise in G&A expenses, partially offset by a $6.0 million R&D reduction Comparison of Operations (Years Ended Dec 31) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $429 | $5,200 | $(4,771) | | Research & Development | $19,933 | $25,919 | $(5,986) | | General & Administrative | $10,595 | $7,549 | $3,046 | | Loss from Operations | $(30,099) | $(28,268) | $(1,831) | | Net Loss | $(35,853) | $(29,855) | $(5,998) | - Collaboration revenue decreased primarily due to the amendment of the BeiGene collaboration and the transfer of development obligations to BeiGene. The remaining $19.8 million of deferred revenue is expected to be earned upon transfer of know-how and materials[601] - The decrease in R&D expenses was mainly driven by a $6.8 million reduction in external costs as manufacturing activities and Phase 1 trials for BA3011 and BA3021 were nearing completion in late 2019[604] - The increase in G&A expenses was primarily due to a $2.3 million increase in stock-based compensation related to the IPO and a $0.8 million increase in personnel expenses[605] Liquidity and Capital Resources BioAtla's cash and cash equivalents surged to $238.6 million by December 31, 2020, primarily from $271.8 million in financing activities, including IPO and Series D proceeds, expected to fund operations through 2022 - As of December 31, 2020, the company had cash and cash equivalents of $238.6 million[612] Cash Flow Summary (Years Ended Dec 31) | Cash Flow Activity | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Operating Activities | $(36,334) | $(9,645) | | Investing Activities | $(590) | $(1,509) | | Financing Activities | $271,825 | $3,995 | - Net cash from financing activities in 2020 included $200.2 million from the IPO and $68.2 million from the Series D convertible preferred stock issuance[626][627] - The company believes its current cash and cash equivalents are sufficient to fund ongoing operations at least through the end of 2022[618] Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable as it is a smaller reporting company[649] Financial Statements and Supplementary Data Audited financial statements show $238.6 million cash and $210.0 million equity as of December 31, 2020, with a $35.9 million net loss for 2020, reflecting IPO, Series D financing, and corporate reorganization Consolidated Balance Sheet Highlights (as of Dec 31, 2020) | Metric | Amount (in thousands) | | :--- | :--- | | Cash and cash equivalents | $238,605 | | Total Assets | $244,937 | | Total Liabilities | $34,963 | | Total Stockholders' Equity | $209,974 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2020) | Metric | Amount (in thousands) | | :--- | :--- | | Collaboration Revenue | $429 | | Total Operating Expenses | $30,528 | | Net Loss | $(35,853) | - In July 2020, the company completed a corporate reorganization, converting from an LLC to a Delaware corporation, spinning off Himalaya Therapeutics SEZC, and completing a Series D financing[676] - In December 2020, the company completed its IPO, selling 12,075,000 shares of common stock for net proceeds of $198.3 million. All outstanding convertible preferred stock was converted into common and Class B common stock[768] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None reported[866] Controls and Procedures Management concluded disclosure controls were effective as of December 31, 2020; a management report on internal control over financial reporting is not yet required for this newly public company - Management concluded that as of December 31, 2020, the company's disclosure controls and procedures were effective at the reasonable assurance level[867] - A management report on internal control over financial reporting is not included, as permitted for newly public companies[868] - There were no material changes in internal control over financial reporting during the quarter ended December 31, 2020[869] Other Information Co-founder Carolyn Anderson Short will depart effective May 31, 2021, receiving severance benefits including 18 months of base salary and accelerated equity vesting - On March 18, 2021, co-founder and Chief of Intellectual Property & Strategy, Carolyn Anderson Short, agreed to depart the company effective May 31, 2021[870] - Ms. Short's transition agreement includes severance benefits such as a lump sum payment equal to 18 months of base salary and accelerated full vesting of her time-vesting equity awards[871] PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[872] Executive Compensation Executive compensation information is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information for beneficial owners and management is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874] Certain Relationships and Related Transactions, and Director Independence Information on related party transactions and director independence is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874] Principal Accountant Fees and Services Principal accountant fees and services information is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874] PART IV Exhibits and Financial Statement Schedules This section lists financial statements and an index of exhibits filed with the Annual Report, noting the omission of inapplicable financial statement schedules - This item lists the financial statements and an index of all exhibits filed with the Form 10-K[875][876] Form 10-K Summary The company reports that no Form 10-K summary is provided - None[877]