10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39787

 

BIOATLA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-1922320

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

11085 Torreyana Road, San Diego, California

92121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (858) 558-0708

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

BCAB

 

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of May 2, 2022, the number of shares of the registrant’s common stock outstanding was 35,921,865 and the number of shares of the registrant’s Class B common stock outstanding was 1,492,059.

 

 


 

BIOATLA, INC.

Quarterly Report on Form 10-Q

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements:

1

 

Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2022 and 2021

2

 

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 31, 2022 and 2021

3

 

Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2022 and 2021

4

 

Notes to Condensed Consolidated Financial Statements (unaudited)

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

Item 4.

Controls and Procedures

19

PART II.

OTHER INFORMATION

20

Item 1.

Legal Proceedings

20

Item 1A.

Risk Factors

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

63

Item 3.

Defaults Upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

64

SIGNATURES

65

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

BioAtla, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)

 

 

 

March 31,
2022

 

 

December 31,
2021

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

219,428

 

 

$

244,979

 

Prepaid expenses and other current assets

 

 

4,591

 

 

 

2,313

 

Total current assets

 

 

224,019

 

 

 

247,292

 

Property and equipment, net

 

 

3,395

 

 

 

3,676

 

Operating lease right-of-use asset, net

 

 

3,085

 

 

 

3,300

 

Other assets

 

 

154

 

 

 

154

 

Total assets

 

$

230,653

 

 

$

254,422

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

15,754

 

 

$

18,424

 

Operating lease liabilities

 

 

1,432

 

 

 

1,389

 

Total current liabilities

 

 

17,186

 

 

 

19,813

 

Operating lease liabilities, less current portion

 

 

3,608

 

 

 

3,982

 

Liability to licensor

 

 

19,806

 

 

 

19,806

 

Total liabilities

 

 

40,600

 

 

 

43,601

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 200,000,000 shares authorized at
   March 31, 2022 and December 31, 2021;
0 shares issued and outstanding at
   March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 350,000,000 shares authorized at
   March 31, 2022 and December 31, 2021;
35,891,284 shares and 35,799,233 
   shares issued and outstanding at March 31, 2022 and December 31, 2021

 

 

4

 

 

 

4

 

Class B common stock, $0.0001 par value; 15,368,569 shares authorized at
   March 31, 2022 and December 31, 2021;
1,492,059 shares issued and outstanding
   at March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

400,622

 

 

 

397,136

 

Accumulated deficit

 

 

(210,573

)

 

 

(186,319

)

Total stockholders' equity

 

 

190,053

 

 

 

210,821

 

Total liabilities and stockholders’ equity

 

$

230,653

 

 

$

254,422

 

 

See accompanying notes.

1


 

BioAtla, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

Research and development expense

$

16,923

 

 

$

10,423

 

General and administrative expense

 

7,423

 

 

 

8,374

 

Total operating expenses

 

24,346

 

 

 

18,797

 

Loss from operations

 

(24,346

)

 

 

(18,797

)

Other income (expense):

 

 

 

 

 

Interest income

 

85

 

 

 

98

 

Interest expense

 

 

 

 

(2

)

Other income

 

7

 

 

 

 

Total other income (expense)

 

92

 

 

 

96

 

Consolidated net loss and comprehensive loss

$

(24,254

)

 

$

(18,701

)

Net loss per common share, basic and diluted

$

(0.65

)

 

$

(0.56

)

Weighted-average shares of common stock outstanding, basic and diluted

 

37,322,360

 

 

 

33,633,619

 

 

See accompanying notes.

2


 

BioAtla, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

 

 

 

Three Months Ended March 31, 2022

 

 

 

Common Stock

 

 

Class B
Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

35,799,233

 

 

$

4

 

 

 

1,492,059

 

 

$

 

 

$

397,136

 

 

$

(186,319

)

 

$

210,821

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,632

 

 

 

 

 

 

3,632

 

Issuance of common stock under equity incentive plans

 

 

92,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes related to net share settlement of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(146

)

 

 

 

 

 

(146

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,254

)

 

 

(24,254

)

Balance at March 31, 2022

 

 

35,891,284

 

 

$

4

 

 

 

1,492,059

 

 

$

 

 

$

400,622

 

 

$

(210,573

)

 

$

190,053

 

 

 

 

Three Months Ended March 31, 2021

 

 

 

Common Stock

 

 

Class B
Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

32,171,560

 

 

$

3

 

 

 

1,492,059

 

 

$

 

 

$

300,888

 

 

$

(90,917

)

 

$

209,974

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,643

 

 

 

 

 

 

4,643

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,701

)

 

 

(18,701

)

Balance at March 31, 2021

 

 

32,171,560

 

 

$

3

 

 

 

1,492,059

 

 

$

 

 

$

305,531

 

 

$

(109,618

)

 

$

195,916

 

 

See accompanying notes.

3


 

BioAtla, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(24,254

)

 

$

(18,701

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

313

 

 

 

309

 

Stock-based compensation

 

 

3,632

 

 

 

4,643

 

Accrued interest

 

 

 

 

 

1

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(2,278

)

 

 

(1,307

)

Accounts payable and accrued expenses

 

 

(2,433

)

 

 

117

 

Right-of-use assets and lease liabilities, net

 

 

(116

)

 

 

(56

)

Net cash used in operating activities

 

 

(25,136

)

 

 

(14,994

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(10

)

 

 

(501

)

Net cash used in investing activities

 

 

(10

)

 

 

(501

)

Cash flows from financing activities

 

 

 

 

 

 

Payment of initial public offering costs

 

 

 

 

 

(1,911

)

Payments for taxes related to net settlement of equity awards

 

 

(405

)

 

 

 

Net cash used in financing activities

 

 

(405

)

 

 

(1,911

)

Net decrease in cash and cash equivalents

 

 

(25,551

)

 

 

(17,406

)

Cash and cash equivalents, beginning of period

 

 

244,979

 

 

 

238,605

 

Cash and cash equivalents, end of period

 

$

219,428

 

 

$

221,199

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

Property and equipment additions included in accounts payable and accrued expenses

 

$

23

 

 

$

74

 

Tax related to net settlement of equity awards included in accounts payable and
   accrued expenses

 

$

32

 

 

$

 

 

See accompanying notes.

4


 

BioAtla, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Summary of Significant Accounting Policies

Organization

BioAtla, LLC was formed in Delaware in March 2007 and, after undergoing two separate reorganizations in 2019 and in 2020, was converted to a Delaware corporation in July 2020 and was renamed BioAtla, Inc. (the “Company”). The Company has a proprietary platform for creating biologics, including its conditionally active biologics (“CAB” or “CABs”). CABs have been designed to be active only under certain conditions found in diseased tissue, while remaining inactive in normal tissue. The Company is currently in clinical development of its two lead CAB antibody drug conjugates (“CAB ADC”) targeting AXL and ROR2 receptors, and its CAB immune-oncology antibody targeting CTLA-4.

Basis of Presentation and Principles of Consolidation

Prior to the reorganization in July 2020 (or "Corporate Reorganization"), the consolidated financial statements included the accounts of BioAtla, LLC and those of its majority owned subsidiary Himalaya Therapeutics SEZC that had no material operations. Himalaya Therapeutics SEZC also had a wholly owned subsidiary, Himalaya Therapeutics HK Limited that had no material operations. All intercompany balances were eliminated in consolidation. In connection with the Corporate Reorganization, Himalaya Therapeutics SEZC and Himalaya Therapeutics HK Limited were deconsolidated without material impact to the consolidated financial statements. Subsequent to the Corporate Reorganization, BioAtla, Inc. became a single legal entity with no consolidated variable interest entities ("VIEs") or subsidiaries.

The unaudited condensed consolidated financial statements as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021, included in its Annual Report on Form 10-K filed with the SEC on February 28, 2022.

Liquidity and Going Concern

The Company has incurred cumulative operating losses and negative cash flows from operations since its inception and expects to continue to incur significant expenses and operating losses for the foreseeable future as it continues the development of its product candidates. As of March 31, 2022, the Company had an accumulated deficit of $210.6 million. The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financings or other sources. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects.

Management is required to perform a two-step analysis of the Company’s ability to continue as a going concern. Management must first evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern (Step 1). If management concludes that substantial doubt is raised, management is also required to consider whether its plans alleviate that doubt (Step 2). Management’s assessment included the preparation of cash flow forecasts resulting in management’s conclusion that there is not substantial doubt about the Company’s ability to continue as a going concern as its current cash and cash equivalents will be sufficient to fund the Company’s operations for a period of at least one year from the issuance date of these unaudited condensed consolidated financial statements.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimates in the Company’s condensed consolidated financial statements relate to revenue recognition, accruals for research and development costs, and equity-based compensation. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue and expenses that are not readily apparent from other sources. Actual

5


 

results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Concentrations of Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Stock-Based Compensation

Stock-based compensation expense represents the grant date fair value of equity awards, consisting of stock options, restricted stock units (“RSUs”) and employee stock purchase plan rights, over the requisite service period of the awards (usually the vesting period) on a straight-line basis. The Company estimates the fair value of stock option grants and employee stock purchase plan rights using the Black-Scholes option pricing model. Prior to the Company’s IPO, the fair value of RSUs was based on the estimated fair value of the underlying common stock on the date of grant and, subsequent to the Company’s IPO, the fair value is based on the closing sales price of the Company’s common stock on the date of grant. Equity award forfeitures are recognized as they occur.

Leases

The Company determines if an arrangement is a lease at inception. An arrangement is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If a lease is identified, classification is determined at lease commencement. Operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company’s leases do not provide an implicit interest rate and therefore the Company estimates its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the interest rate that the Company would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term. Operating lease right-of-use (“ROU”) assets are based on the corresponding lease liability adjusted for any lease payments made at or before commencement, initial direct costs, and lease incentives. Renewals or early terminations are not accounted for unless the Company is reasonably certain to exercise these options. Operating lease expense is recognized and the ROU asset is amortized on a straight-line basis over the lease term. Variable lease costs are not included in the calculation of the ROU asset and the related lease liability and are recognized as incurred.

The Company has a single lease agreement with lease and non-lease components, which are accounted for as a single lease component. Payments for short-term leases, defined as leases with a term of twelve months or less, are expensed on a straight-line basis over the lease term. The Company does not currently have any short-term leases.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the Company’s consolidated balance sheets. The Company does not have any finance leases.

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. There have been no items qualifying as other comprehensive loss and, therefore, for all periods presented, the Company’s comprehensive loss was the same as its reported net loss.

Net Loss Per Share

Basic net loss per common share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised of RSUs, common stock options outstanding under the Company’s stock option plan, and contingently issuable shares under the Company's ESPP plan.

6


 

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalents):

 

 

 

March 31,

 

 

 

2022

 

2021

 

Common stock warrants

 

 

 

 

717,674

 

Common stock options

 

 

2,447,902

 

 

641,106

 

Restricted stock units

 

 

862,573

 

 

1,920,037

 

ESPP shares

 

 

31,346

 

 

1,512

 

Total

 

 

3,341,821

 

 

3,280,329

 

 

Recent Accounting Pronouncements

There were no new accounting standards that had a material impact on the Company’s consolidated financial statements during the three months ended March 31, 2022, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of March 31, 2022 that the Company expects to have a material impact on its consolidated financial statements.

2. Balance Sheet Details

Prepaid expenses and other current assets consist of the following (in thousands):

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Prepaid research and development

 

$

1,602

 

 

$

1,811

 

Prepaid insurance

 

 

2,250

 

 

 

 

Other prepaid expenses and current assets

 

 

739

 

 

 

502

 

Total

 

$

4,591

 

 

$

2,313

 

 

Property and equipment consist of the following (in thousands):

 

 

 

Useful life
(years)

 

March 31,
2022

 

 

December 31,
2021

 

Furniture, fixtures and office equipment

 

3 - 7

 

$

2,139

 

 

$

2,123

 

Laboratory equipment

 

5

 

 

2,130

 

 

 

2,123

 

Leasehold improvements

 

2 - 3

 

 

3,687

 

 

 

3,687

 

 

 

 

 

 

7,956

 

 

 

7,933

 

Less accumulated depreciation and amortization

 

 

 

 

(4,561

)

 

 

(4,257

)

Total

 

 

 

$

3,395

 

 

$

3,676

 

 

Accounts payable and accrued expenses consist of the following (in thousands):

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Accounts payable

 

$

1,199

 

 

$

1,179

 

Accrued compensation

 

 

1,037

 

 

 

2,671

 

Accrued research and development

 

 

12,671

 

 

 

13,501

 

Other accrued expenses

 

 

847

 

 

 

1,073

 

Total

 

$

15,754

 

 

$

18,424

 

 

3. Fair Value Measurements

The carrying amounts of the Company’s current financial assets and current financial liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. As of March 31, 2022 and December 31, 2021, the Company had no financial assets or liabilities measured at fair value on a recurring basis.

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that

7


 

market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

4. Debt

The Company did not have any outstanding debt as of March 31, 2022 or December 31, 2021. As of March 31, 2021, the Company had $0.7 million outstanding under a promissory note issued pursuant to the Paycheck Protection Program (“PPP”) of the CARES Act. The loan was subsequently forgiven in July 2021 and recognized as other income on the Company's Statement of Operations. For the three months ended March 31, 2022 and 2021, the Company recognized interest expense related to its outstanding debt of $0 and $2,000, respectively.

5. Leases

The Company has a single operating lease for its corporate headquarters and laboratory space in San Diego, California. The lease expires in July 2025 and the Company has an option to extend the term of the lease for an additional five years. Additionally, the lease includes certain rent abatement, rent escalations, tenant improvement allowances and additional charges for common area maintenance and other costs.

The components of lease expense included in the Company’s condensed consolidated statements of operations include (in thousands):

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

Operating lease expense

 

$

261

 

 

$

261

 

Variable lease expense

 

 

132

 

 

 

128

 

Total lease expense, net

 

$

393

 

 

$

389

 

Variable lease costs are primarily related to payments made to lessors for common area maintenance, property taxes, insurance, and other operating expenses. The Company did not have any short-term leases or finance leases for the three months ended March 31, 2022 or 2021, respectively.

The weighted average remaining lease term and weighted average discount rate for operating leases as of March 31, 2022 and 2021 were as follows:

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

Weighted average remaining lease term (in years)

 

 

3.25

 

 

 

4.25

 

Weighted average discount rate percentage

 

 

3.50

%

 

 

3.50

%

Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands):

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

Cash paid for amounts included in the measurement of operating leases

 

$

377

 

 

$

316

 

 

8


 

As of March 31, 2022, future minimum payments under the Company's non-cancelable operating lease under ASC 842 were as follows (in thousands):

 

 

Operating
lease

 

Nine months ending December 31, 2022

 

$

1,178

 

2023

 

 

1,636

 

2024

 

 

1,685

 

2025

 

 

845

 

Thereafter

 

 

 

Total future lease payments

 

 

5,344

 

Less: imputed interest

 

 

(304

)

Total operating lease liabilities

 

$

5,040

 

 

6. Commitments and Contingencies

From time to time, the Company may be subject to various claims and suits arising in the ordinary course of business. The Company is not currently a party to any legal proceedings the outcome of which the Company believes, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the Company’s business, operating results or financial condition.

7. Stockholders’ Equity

2020 Equity Incentive Plan

The Company may grant awards of common stock under the 2020 Equity Incentive Plan (the "2020 Plan") to the Company’s employees, consultants and non-employee directors pursuant to option awards, stock appreciation rights awards, restricted stock awards, restricted stock unit awards, performance stock awards, performance stock unit awards and other stock-based awards. As of March 31, 2022 and December 31, 2021, the total number of common shares authorized for issuance under the 2020 Plan was 7,658,509 and 6,226,540, respectively. On January 1st of each year, commencing with the first January 1st following the effective date of the 2020 Plan, the shares authorized for issuance under the 2020 Plan shall be increased by a number of shares equal to the lesser of 4% of the total number of shares outstanding on the immediately preceding December 31st and such lesser number of shares determined by the Company’s board of directors. The maximum term of the options granted under the 2020 Plan is no more than ten years. Awards under the 2020 Plan generally vest at 25% one year from the vesting commencement date and ratably each month thereafter for a period of 36 months, subject to continuous service.

Stock-based compensation expense for the three months ended March 31, 2022 and 2021 has been reported in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Research and development

 

$

1,300

 

 

$

954

 

General and administrative

 

 

2,332

 

 

 

3,689

 

Total

 

$

3,632

 

 

$

4,643

 

 

Restricted Stock Units

The following table summarizes RSU activity under the 2020 Plan for the three months ended March 31, 2022:

 

 

 

Number of
Shares

 

 

Weighted - Average
Grant Date
Fair Value

 

Outstanding at December 31, 2021

 

 

975,046

 

 

$

18.00

 

Granted

 

 

 

 

$

 

Vested

 

 

(112,473

)

 

$

18.00

 

Outstanding at March 31, 2022

 

 

862,573

 

 

$

18.00

 

 

9


 

 

As of March 31, 2022, total unrecognized stock-based compensation expense for RSUs was $15.5 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.0 years. During the three months ended March 31, 2021, the Company modified 138,461 RSU's under the Transition Agreement (See Note 9).

Stock Options

The following table summarizes stock option activity under the 2020 Plan for the three months ended March 31, 2022:

 

 

 

Number of
Options

 

 

Weighted - Average
Exercise
Price Per
Share

 

 

Weighted -Average
Remaining
Contractual
Term
(In Years)

 

 

Aggregate
Intrinsic
Value

 

Balance at December 31, 2021

 

 

1,086,902

 

 

$

26.76

 

 

 

9.22

 

 

$

991,495

 

Granted

 

 

1,391,000

 

 

$

6.68

 

 

 

 

 

 

 

Exercised

 

 

 

 

$

 

 

 

 

 

 

 

Balance at March 31, 2022

 

 

2,477,902

 

 

$

15.49

 

 

9.49

 

 

$

3,000

 

Vested and expected to vest at March 31, 2022

 

 

2,477,902

 

 

$

15.49

 

 

9.49

 

 

$

3,000

 

Exercisable at March 31, 2022

 

 

209,947

 

 

$

25.46

 

 

8.81

 

 

$

 

 

As of March 31, 2022, total unrecognized stock-based compensation cost for unvested common stock options was $19.6 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.5 years. The weighted- average grant date fair value of stock options granted during the three months ended March 31, 2022 was $4.42 per share. The total fair value of options vested during the three months ended March 31, 2022 was $0.9 million. During the three months ended March 31, 2021 the Company modified 7,747 stock options under the Transition Agreement (See Note 9).

The assumptions used in the Black-Scholes option pricing model to determine the fair value of stock option grants were as follows:

 

 

 

Three Months Ended
March 31,

 

 

2022

 

2021

Expected volatility

 

74.6%

 

76.4%

Risk-free interest rate

 

1.88%

 

0.52%

Expected dividend yield

 

0.0%

 

0.0%

Expected term

 

4.42 years

 

4.77 years

 

Expected volatility. As the Company’s common stock does not have a significant trading history, the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology industry.

Risk-free interest rate. The Company bases the risk-free interest rate assumption on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present plans to pay cash dividends.

Expected term. For employees, the expected term represents the period of time that options are expected to be outstanding. Because the Company has minimal historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. For nonemployees, the expected term is generally the contractual term of the option.

Employee Stock Purchase Plan

The BioAtla, Inc. Employee Stock Purchase Plan (the “ESPP”) permits participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation. As of March 31, 2022 and December 31, 2021, a total of 1,229,148 shares and 833,993 shares, respectively, of common stock were authorized for issuance under the ESPP. The number of shares of common stock authorized for issuance will automatically increase on January 1 of each calendar year, from January 1, 2021 through January 1, 2030

10


 

by the least of (i) 1.0% of the total number of common shares of our common stock outstanding on December 31 of the preceding calendar year (calculated on a fully diluted basis), (ii) 929,658 common shares or (iii) a number determined by the Company’s board of directors that is less than (i) and (ii). In February 2021, employees began to enroll in the ESPP and the Company’s first offering period commenced. The Company did not issue any shares under the ESPP during the three months ended March 31, 2022 or March 31, 2021. As of March 31, 2022, 1,217,966 shares of common stock remained available for issuance under the ESPP. Stock-based compensation expense related to the ESPP for the three months ended March 31, 2022 and 2021 was immaterial.

Common Stock Warrants

The Company issued warrants in 2016 in connection with certain advisory services. The warrants became exercisable upon our IPO for a period of 365 and 450 days.

Upon adoption of ASU No. 2018-07 on October 1, 2020, the measurement date of the warrants became fixed in accordance with the guidance, and such fair value was nominal since the warrants were deeply out-of-the-money. In December 2021, a total of 566,586 warrants with an exercise period of 365 days after our IPO expired unexercised. The remaining 151,088 warrants with an exercise period of 450 days after the Company's IPO expired unexercised in March 2022. Accordingly, there were no remaining common stock warrants outstanding and exercisable as of March 31, 2022.

 

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance are as follows in common equivalent shares:

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Warrants for the purchase of common stock

 

 

 

 

 

151,088

 

Common stock options and restricted stock units issued and outstanding

 

 

3,340,475

 

 

 

2,061,948

 

Awards available for future issuance under the 2020 Plan

 

 

3,252,823

 

 

 

3,211,854

 

Awards available for future issuance under the ESPP

 

 

1,217,966

 

 

 

822,811

 

Total common stock reserved for future issuance

 

 

7,811,264

 

 

 

6,247,701

 

 

8. Collaboration, License and Option Agreements

Global Co-Development and Collaboration Agreement with BeiGene

In April 2019, the Company entered into a Global Co-Development and Collaboration agreement (the “BeiGene Collaboration”) with BeiGene, Ltd. and BeiGene Switzerland GmbH (collectively “BeiGene”), a commercial-stage biopharmaceutical company, for the development, manufacturing and commercialization of the Company’s investigational CAB CTLA-4 antibody (BA3071). The Company and BeiGene amended the Global Co-Development and Collaboration agreement in December 2019 and in October 2020 (the “Amended BeiGene Collaboration”).

In 2019, BeiGene paid the Company an upfront non-refundable payment of $20.0 million and $5.0 million for reimbursement of manufacturing costs. Under the terms of the Amended BeiGene Collaboration, BeiGene was generally responsible for developing BA3071 and for global regulatory filings and commercialization. Subject to the terms of the Amended BeiGene Collaboration, BeiGene held an exclusive license with the Company to develop and manufacture the BA3071 candidate globally, and BeiGene was responsible for all costs of development, manufacturing and commercialization globally. The Amended BeiGene Collaboration provided that the Company was eligible to receive tiered royalties on sales worldwide, subsequent development and regulatory milestone payments globally and commercial milestones in the BeiGene territory.

On November 18, 2021, the Company entered into Amendment No. 3 to the Amended BeiGene Collaboration (“Amendment No.3”). Under Amendment No. 3, the Amended BeiGene Collaboration was terminated, subject to survival of certain provisions, and BeiGene handed back rights to know-how and materials received under the Amended BeiGene Collaboration. As a result, the Company assumed responsibility for the global development and commercialization of BA3071. As consideration for Amendment No.3, the Company agreed to pay BeiGene mid-single digit royalties on sales worldwide and on a limited basis will share in