UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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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.
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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. ☐
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As of May 2, 2022, the number of shares of the registrant’s common stock outstanding was
BIOATLA, INC.
Quarterly Report on Form 10-Q
Table of Contents
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Page |
PART I. |
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Item 1. |
1 |
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Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021 |
1 |
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2 |
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3 |
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4 |
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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. |
19 |
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Item 4. |
19 |
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PART II. |
20 |
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Item 1. |
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Item 1A. |
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Item 2. |
63 |
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Item 3. |
64 |
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Item 4. |
64 |
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Item 5. |
64 |
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Item 6. |
64 |
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65 |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
BioAtla, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value and share amounts)
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March 31, |
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December 31, |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use asset, net |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Operating lease liabilities |
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Total current liabilities |
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Operating lease liabilities, less current portion |
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Liability to licensor |
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Total liabilities |
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) |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes.
1
BioAtla, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Operating expenses: |
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Research and development expense |
$ |
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$ |
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General and administrative expense |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Interest income |
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Interest expense |
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Other income |
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Total other income (expense) |
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Consolidated net loss and comprehensive loss |
$ |
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$ |
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Net loss per common share, basic and diluted |
$ |
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$ |
( |
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Weighted-average shares of common stock outstanding, basic and diluted |
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See accompanying notes.
2
BioAtla, Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
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Three Months Ended March 31, 2022 |
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Common Stock |
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Class B |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
— |
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$ |
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$ |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under equity incentive plans |
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— |
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— |
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— |
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— |
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— |
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— |
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Taxes related to net share settlement of equity awards |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Three Months Ended March 31, 2021 |
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Common Stock |
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Class B |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at December 31, 2020 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance at March 31, 2021 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
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See accompanying notes.
3
BioAtla, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Accrued interest |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other assets |
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( |
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( |
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Accounts payable and accrued expenses |
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( |
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Right-of-use assets and lease liabilities, net |
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( |
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( |
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Net cash used in operating activities |
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( |
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Cash flows from investing activities |
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Purchases of property and equipment |
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( |
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Net cash used in investing activities |
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( |
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Cash flows from financing activities |
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Payment of initial public offering costs |
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( |
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Payments for taxes related to net settlement of equity awards |
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( |
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Net cash used in financing activities |
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( |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities |
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Property and equipment additions included in accounts payable and accrued expenses |
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$ |
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$ |
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Tax related to net settlement of equity awards included in accounts payable and |
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$ |
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$ |
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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
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 $
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.
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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):
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March 31, |
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2022 |
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2021 |
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Common stock warrants |
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Common stock options |
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Restricted stock units |
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ESPP shares |
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Total |
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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):
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March 31, |
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December 31, |
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Prepaid research and development |
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$ |
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$ |
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Prepaid insurance |
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Other prepaid expenses and current assets |
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Total |
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$ |
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$ |
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Property and equipment consist of the following (in thousands):
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Useful life |
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March 31, |
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December 31, |
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Furniture, fixtures and office equipment |
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$ |
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$ |
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Laboratory equipment |
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Leasehold improvements |
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Less accumulated depreciation and amortization |
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( |
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Total |
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$ |
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$ |
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Accounts payable and accrued expenses consist of the following (in thousands):
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March 31, |
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December 31, |
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Accounts payable |
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$ |
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$ |
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Accrued compensation |
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Accrued research and development |
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Other accrued expenses |
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Total |
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$ |
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$ |
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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
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
5. Leases
The Company has a single operating lease for its corporate headquarters and laboratory space in San Diego, California.
The components of lease expense included in the Company’s condensed consolidated statements of operations include (in thousands):
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Three Months Ended March 31, |
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2022 |
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2021 |
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(unaudited) |
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Operating lease expense |
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$ |
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$ |
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Variable lease expense |
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Total lease expense, net |
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$ |
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$ |
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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:
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Three Months Ended March 31, |
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2022 |
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2021 |
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(unaudited) |
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Weighted average remaining lease term (in years) |
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Weighted average discount rate percentage |
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% |
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% |
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Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands):
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Three Months Ended March 31, |
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2022 |
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2021 |
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(unaudited) |
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Cash paid for amounts included in the measurement of operating leases |
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$ |
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$ |
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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):
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Operating |
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Nine months ending December 31, 2022 |
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$ |
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2023 |
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2024 |
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|
2025 |
|
|
|
|
Thereafter |
|
|
|
|
Total future lease payments |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
Total operating lease liabilities |
|
$ |
|
|
6
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
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
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 |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Research and development |
|
$ |
|
|
$ |
|
||
General and administrative |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Restricted Stock Units
The following table summarizes RSU activity under the 2020 Plan for the three months ended March 31, 2022:
|
|
Number of |
|
|
Weighted - Average |
|
||
Outstanding at December 31, 2021 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Outstanding at March 31, 2022 |
|
|
|
|
$ |
|
||
9
As of March 31, 2022, total unrecognized stock-based compensation expense for RSUs was $
Stock Options
The following table summarizes stock option activity under the 2020 Plan for the three months ended March 31, 2022:
|
|
Number of |
|
|
Weighted - Average |
|
|
Weighted -Average |
|
|
Aggregate |
|
||||
Balance at December 31, 2021 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Exercised |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
|
||
Balance at March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
$ |
|
|||||
Vested and expected to vest at March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
$ |
|
|||||
Exercisable at March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
$ |
— |
|
||||
As of March 31, 2022, total unrecognized stock-based compensation cost for unvested common stock options was $
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 |
||
|
|
2022 |
|
2021 |
Expected volatility |
|
|
||
Risk-free interest rate |
|
|
||
Expected dividend yield |
|
|
||
Expected term |
|
|
||
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
10
by the least of (i)
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
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
Common Stock Reserved for Future Issuance
Common stock reserved for future issuance are as follows in common equivalent shares:
|
|
March 31, |
|
|
December 31, |
|
||
Warrants for the purchase of common stock |
|
|
|
|
|
|
||
Common stock options and restricted stock units issued and outstanding |
|
|
|
|
|
|
||
Awards available for future issuance under the 2020 Plan |
|
|
|
|
|
|
||
Awards available for future issuance under the ESPP |
|
|
|
|
|
|
||
Total common stock reserved for future issuance |
|
|
|
|
|
|
||
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 and in (the “Amended BeiGene Collaboration”).
In 2019, BeiGene paid the Company an upfront non-refundable payment of $
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 any upfront and milestone payments received through a sublicense of BA3071. As part of Amendment No.3, the Company reclassified its remaining $
For the three months ended March 31, 2022 and 2021, the Company did