10-Q
--12-312021-110001826892Q12019-03false0001826892us-gaap:CommonClassBMember2023-03-310001826892us-gaap:RestrictedStockUnitsRSUMember2023-03-310001826892us-gaap:CommonClassBMember2022-12-310001826892us-gaap:StockOptionMember2023-03-310001826892bcab:FurnitureFixturesAndOfficeEquipmentMembersrt:MaximumMember2023-01-012023-03-310001826892bcab:EmployeesStockPurchasePlanMember2022-01-012022-03-310001826892us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001826892us-gaap:CommonStockMember2023-01-012023-03-310001826892us-gaap:RetainedEarningsMember2023-01-012023-03-310001826892bcab:AmendedBeiGeneCollaborationMember2022-01-012022-03-310001826892us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001826892us-gaap:AdditionalPaidInCapitalMember2023-03-3100018268922022-01-012022-03-310001826892us-gaap:CommonStockMember2022-01-012022-03-310001826892bcab:CommonSockOtionsMember2022-01-012022-03-310001826892bcab:LaboratoryEquipmentMember2023-01-012023-03-310001826892us-gaap:CommonStockMember2023-05-1000018268922023-03-310001826892us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001826892us-gaap:RetainedEarningsMember2021-12-310001826892us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001826892us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001826892us-gaap:CommonClassBMember2021-12-310001826892bcab:AmendedBeiGeneCollaborationMember2021-11-182021-11-180001826892us-gaap:AdditionalPaidInCapitalMember2021-12-3100018268922019-01-012019-12-310001826892bcab:TwoThousandTwentyEquityIncentivePlanMember2023-03-310001826892us-gaap:AdditionalPaidInCapitalMember2022-12-310001826892bcab:EmployeesStockPurchasePlanMember2022-01-012022-12-310001826892us-gaap:CommonClassBMember2022-03-310001826892bcab:ModificationOfTwoThousandTwentyEquityIncentivePlanAndCertainAwardsMemberus-gaap:StockOptionMembersrt:BoardOfDirectorsChairmanMember2023-02-262023-02-260001826892bcab:TwoThousandTwentyEquityIncentivePlanMember2022-12-310001826892us-gaap:LeaseholdImprovementsMember2023-03-310001826892us-gaap:StockOptionMemberbcab:ModificationOfTwoThousandTwentyEquityIncentivePlanAndCertainAwardsMember2023-02-262023-02-260001826892bcab:EmployeesStockPurchasePlanMember2023-01-012023-03-310001826892us-gaap:RetainedEarningsMember2022-12-310001826892us-gaap:RestrictedStockUnitsRSUMember2022-12-310001826892us-gaap:CommonStockMember2023-03-310001826892us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001826892us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-03-310001826892bcab:AmendedBeiGeneCollaborationMember2019-01-012019-12-310001826892bcab:EmployeesStockPurchasePlanMember2023-03-310001826892us-gaap:CommonClassBMember2023-05-100001826892us-gaap:LeaseholdImprovementsMember2022-12-310001826892us-gaap:RetainedEarningsMember2023-03-310001826892bcab:CommonStockOptionsAndRestrictedStockUnitsMember2022-12-310001826892srt:MinimumMemberus-gaap:LeaseholdImprovementsMember2023-01-012023-03-310001826892srt:MaximumMemberus-gaap:LeaseholdImprovementsMember2023-01-012023-03-310001826892bcab:EmployeesStockPurchasePlanMember2022-12-310001826892us-gaap:CommonStockMember2022-12-310001826892bcab:AmendedBeiGeneCollaborationMember2021-11-180001826892bcab:LaboratoryEquipmentMember2023-03-310001826892bcab:TwoThousandTwentyPlanMember2022-01-012022-12-310001826892us-gaap:RetainedEarningsMember2022-01-012022-03-310001826892bcab:AmendedBeiGeneCollaborationMember2022-12-310001826892us-gaap:RetainedEarningsMember2022-03-310001826892us-gaap:StockOptionMember2023-01-012023-03-310001826892bcab:TwoThousandTwentyEquityIncentivePlanMember2021-01-012021-01-010001826892bcab:TwoThousandTwentyEquityIncentivePlanMember2023-01-012023-03-310001826892us-gaap:CommonStockMember2021-12-310001826892us-gaap:StockOptionMember2022-12-310001826892bcab:LaboratoryEquipmentMember2022-12-310001826892bcab:HimalayaTherapeuticsSEZCMember2023-01-012023-03-310001826892us-gaap:CommonClassBMember2023-01-012023-03-310001826892bcab:ModificationOfTwoThousandTwentyEquityIncentivePlanAndCertainAwardsMemberus-gaap:RestrictedStockUnitsRSUMembersrt:BoardOfDirectorsChairmanMember2023-02-262023-02-2600018268922022-03-3100018268922022-12-310001826892bcab:CommonSockOtionsMember2023-01-012023-03-310001826892bcab:FurnitureFixturesAndOfficeEquipmentMembersrt:MinimumMember2023-01-012023-03-310001826892us-gaap:AdditionalPaidInCapitalMember2022-03-310001826892bcab:AmendedBeiGeneCollaborationMember2023-03-3100018268922021-12-310001826892us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001826892bcab:FurnitureFixturesAndOfficeEquipmentMember2023-03-310001826892bcab:CommonStockOptionsAndRestrictedStockUnitsMember2023-03-3100018268922023-01-012023-03-310001826892bcab:AmendedBeiGeneCollaborationMember2023-01-012023-03-310001826892us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310001826892us-gaap:CommonStockMember2022-03-310001826892us-gaap:StockOptionMember2022-01-012022-12-310001826892bcab:FurnitureFixturesAndOfficeEquipmentMember2022-12-310001826892bcab:TwoThousandTwentyPlanMember2023-01-012023-03-310001826892bcab:EmployeesStockPurchasePlanMember2023-01-012023-03-31xbrli:pureiso4217:USDxbrli:sharesxbrli:sharesiso4217:USD

 

 

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, 2023

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 10, 2023, the number of shares of the registrant’s common stock outstanding was 47,667,516 and the number of shares of the registrant’s Class B common stock outstanding was 0.

 

 


 

BIOATLA, INC.

Quarterly Report on Form 10-Q

 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements:

1

Condensed Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022

1

Condensed Statements of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2023 and 2022

2

Condensed Statements of Stockholders’ Equity (unaudited) for the three months ended March 31, 2023 and 2022

3

Condensed Statements of Cash Flows (unaudited) for the three months ended March 31, 2023 and 2022

4

Notes to Condensed Financial Statements (unaudited)

5

Item 2.

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

12

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

18

Item 4.

Controls and Procedures

18

PART II.

OTHER INFORMATION

18

Item 1.

Legal Proceedings

18

Item 1A.

Risk Factors

18

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

63

Item 3.

Defaults Upon Senior Securities

63

Item 4.

Mine Safety Disclosures

63

Item 5.

Other Information

63

Item 6.

Exhibits

63

SIGNATURES

65

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

BioAtla, Inc.

Condensed Balance Sheets

(in thousands, except par value and share amounts)

 

 

 

March 31,
2023

 

 

December 31,
2022

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

192,687

 

 

$

215,507

 

Prepaid expenses and other current assets

 

 

7,030

 

 

 

4,924

 

Total current assets

 

 

199,717

 

 

 

220,431

 

Property and equipment, net

 

 

2,485

 

 

 

2,728

 

Operating lease right-of-use asset, net

 

 

2,196

 

 

 

2,423

 

Other assets

 

 

154

 

 

 

154

 

Total assets

 

$

204,552

 

 

$

225,736

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

24,711

 

 

$

21,610

 

Operating lease liabilities

 

 

1,545

 

 

 

1,521

 

Total current liabilities

 

 

26,256

 

 

 

23,131

 

Operating lease liabilities, less current portion

 

 

2,063

 

 

 

2,460

 

Liability to licensor

 

 

19,806

 

 

 

19,806

 

Total liabilities

 

 

48,125

 

 

 

45,397

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 200,000,000 shares authorized at
   March 31, 2023 and December 31, 2022;
0 shares issued and outstanding at
   March 31, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.0001 par value; 350,000,000 shares authorized at
   March 31, 2023 and December 31, 2022;
47,637,321 and 46,336,166
   shares issued and outstanding at March 31, 2023 and December 31, 2022

 

 

5

 

 

 

5

 

Class B common stock, $0.0001 par value; 15,368,569 shares authorized at
   March 31, 2023 and December 31, 2022;
0 and 1,211,959
   shares issued and outstanding at March 31, 2023 and December 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

476,683

 

 

 

473,135

 

Accumulated deficit

 

 

(320,261

)

 

 

(292,801

)

Total stockholders' equity

 

 

156,427

 

 

 

180,339

 

Total liabilities and stockholders’ equity

 

$

204,552

 

 

$

225,736

 

 

See accompanying notes.

1


 

BioAtla, Inc.

Unaudited Condensed Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

 

Three Months Ended March 31,

 

 

2023

 

2022

 

Operating expenses:

 

 

 

 

Research and development expense

$

21,697

 

$

16,923

 

General and administrative expense

 

7,233

 

 

7,423

 

Total operating expenses

 

28,930

 

 

24,346

 

Loss from operations

 

(28,930

)

 

(24,346

)

Other income (expense):

 

 

 

 

Interest income

 

1,480

 

 

85

 

Other income (expense)

 

(10

)

 

7

 

Total other income (expense)

 

1,470

 

 

92

 

Net loss and comprehensive loss

$

(27,460

)

$

(24,254

)

Net loss per common share, basic and diluted

$

(0.58

)

$

(0.65

)

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

 

47,578,418

 

 

37,322,360

 

 

See accompanying notes.

2


 

BioAtla, Inc.

Unaudited Condensed Statements of Stockholders’ Equity

(in thousands, except share amounts)

 

 

Three Months Ended March 31, 2023

 

 

Common Stock

 

Class B
Common Stock

 

Additional
Paid-in

 

Accumulated

 

Total
Stockholders’

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity

 

Balance at December 31, 2022

 

46,336,166

 

$

5

 

 

1,211,959

 

$

 

$

473,135

 

$

(292,801

)

$

180,339

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

3,614

 

 

 

 

3,614

 

Issuance of common stock under equity incentive plans

 

89,196

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes related to net share settlement of equity awards

 

 

 

 

 

 

 

 

 

(66

)

 

 

 

(66

)

Conversion of Class B common stock

 

1,211,959

 

 

 

 

(1,211,959

)

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(27,460

)

 

(27,460

)

Balance at March 31, 2023

 

47,637,321

 

$

5

 

 

 

$

 

$

476,683

 

$

(320,261

)

$

156,427

 

 

 

 

 

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

 

 

See accompanying notes.

3


 

BioAtla, Inc.

Unaudited Condensed Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(27,460

)

 

$

(24,254

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

293

 

 

 

313

 

Stock-based compensation

 

 

3,614

 

 

 

3,632

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(2,106

)

 

 

(2,278

)

Accounts payable and accrued expenses

 

 

3,151

 

 

 

(2,433

)

Right-of-use assets and lease liabilities, net

 

 

(146

)

 

 

(116

)

Net cash used in operating activities

 

 

(22,654

)

 

 

(25,136

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(50

)

 

 

(10

)

Net cash used in investing activities

 

 

(50

)

 

 

(10

)

Cash flows from financing activities

 

 

 

 

 

 

Payments for taxes related to net settlement of equity awards

 

 

(116

)

 

 

(405

)

Net cash used in financing activities

 

 

(116

)

 

 

(405

)

Net decrease in cash and cash equivalents

 

 

(22,820

)

 

 

(25,551

)

Cash and cash equivalents, beginning of period

 

 

215,507

 

 

 

244,979

 

Cash and cash equivalents, end of period

 

$

192,687

 

 

$

219,428

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

Property and equipment additions included in accounts payable and accrued expenses

 

$

 

 

$

23

 

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

 

$

17

 

 

$

32

 

 

See accompanying notes.

4


 

BioAtla, Inc.

Notes to Unaudited Condensed Financial Statements

1. Organization and Summary of Significant Accounting Policies

Organization

BioAtla, LLC was formed in Delaware in March 2007 and was converted to a Delaware corporation in July 2020 and 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 targeting AXL and ROR2 receptors, its CAB immune-oncology antibody targeting CTLA-4 and its CAB BiSpecific targeting EpCAM.

Basis of Presentation

The unaudited condensed financial statements as of March 31, 2023, and for the three months ended March 31, 2023 and 2022, 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 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 financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022, included in its Annual Report on Form 10-K filed with the SEC on March 23, 2023.

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, 2023, the Company had an accumulated deficit of $320.3 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 financial statements.

Use of Estimates

The preparation of the Company’s condensed 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 financial statements and accompanying notes. The most significant estimates in the Company’s condensed financial statements relate to 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 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.

5


 

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 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.

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

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

Common stock options

 

 

6,214,418

 

 

 

2,447,902

 

Restricted stock units

 

 

400,293

 

 

 

862,573

 

ESPP shares

 

 

122,565

 

 

 

31,346

 

Total

 

 

6,737,276

 

 

 

3,341,821

 

 

6


 

 

Recent Accounting Pronouncements

There were no new accounting standards that had a material impact on the Company’s financial statements during the three or three months ended March 31, 2023, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of March 31, 2023 that the Company expects to have a material impact on its financial statements.

2. Balance Sheet Details

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

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Prepaid research and development

 

$

4,983

 

 

$

4,385

 

Prepaid insurance

 

 

1,578

 

 

 

 

Other prepaid expenses and current assets

 

 

469

 

 

 

539

 

Total

 

$

7,030

 

 

$

4,924

 

 

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

 

 

 

Useful life
(years)

 

March 31,
2023

 

 

December 31,
2022

 

Furniture, fixtures and office equipment

 

3 - 7

 

$

2,141

 

 

$

2,140

 

Laboratory equipment

 

5

 

 

2,315

 

 

 

2,265

 

Leasehold improvements

 

2 - 3

 

 

3,687

 

 

 

3,687

 

 

 

 

 

8,143

 

 

 

8,092

 

Less accumulated depreciation and amortization

 

 

 

 

(5,658

)

 

 

(5,364

)

Total

 

 

 

$

2,485

 

 

$

2,728

 

 

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

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Accounts payable

 

$

8,054

 

 

$

4,231

 

Accrued compensation

 

 

1,290

 

 

 

3,451

 

Accrued research and development

 

 

14,660

 

 

 

12,649

 

Other accrued expenses

 

 

707

 

 

 

1,279

 

Total

 

$

24,711

 

 

$

21,610

 

 

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, 2023 and December 31, 2022, 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 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.

None of the Company’s non-financial assets and liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

7


 

4. 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 statements of operations and loss include (in thousands):

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Operating lease expense

 

$

261

 

 

$

261

 

Variable lease expense

 

 

147

 

 

 

132

 

Total lease expense, net

 

$

408

 

 

$

393

 

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, 2023 and 2022, respectively.

The weighted average remaining lease term and weighted average discount rate for operating leases were as follows:

 

 

As of March 31,

 

 

 

2023

 

 

2022

 

Weighted average remaining lease term (in years)

 

 

2.25

 

 

 

3.25

 

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,

 

 

 

2023

 

 

2022

 

Cash paid for amounts included in the measurement of operating leases

 

$

407

 

 

$

377

 

As of March 31, 2023, 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, 2023

 

$

1,229

 

2024

 

 

1,685

 

2025

 

 

845

 

Thereafter

 

 

 

Total future lease payments

 

 

3,759

 

Less: imputed interest

 

 

(151

)

Total operating lease liabilities

 

$

3,608

 

 

5. 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.

6. 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

8


 

March 31, 2023 and December 31, 2022, the total number of common shares authorized for issuance under the 2020 Plan was 9,196,970 and 7,658,509, 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, 2023 and 2022 has been reported in the condensed statements of operations and comprehensive loss as follows (in thousands):

 

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

Research and development

 

$

1,451

 

 

$

1,300

 

General and administrative

 

 

2,163

 

 

 

2,332

 

Total

 

$

3,614

 

 

$

3,632

 

 

Restricted Stock Units

The following table summarizes RSU activity under the 2020 Plan for the three months ended March 31, 2023:

 

 

 

Number of
Shares

 

 

Weighted - Average
Grant Date
Fair Value

 

Outstanding at December 31, 2022

 

 

510,039

 

 

$

18.00

 

Granted

 

 

 

 

$

 

Vested

 

 

(109,746

)

 

$

18.00

 

Forfeited

 

 

 

 

$

 

Outstanding at March 31, 2023

 

 

400,293

 

 

$

18.00

 

 

As of March 31, 2023, total unrecognized stock-based compensation expense for RSUs was $7.2 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.1 years.

Stock Options

The following table summarizes stock option activity under the 2020 Plan for the three months ended March 31, 2023:

 

 

 

Number of
Options

 

 

Weighted - Average
Exercise
Price Per
Share

 

 

Weighted -Average
Remaining
Contractual
Term
(In Years)

 

 

Aggregate
Intrinsic
Value

 

Balance at December 31, 2022

 

 

2,736,918

 

 

$

13.82

 

 

 

8.82

 

 

$

3,636,148

 

Granted

 

 

3,485,500

 

 

$

3.84

 

 

 

 

 

 

 

Exercised

 

 

 

 

$

 

 

 

 

 

 

 

Forfeited

 

 

(8,000

)

 

$

3.72

 

 

 

 

 

 

 

Expired

 

 

 

 

$

 

 

 

 

 

 

 

Balance at March 31, 2023

 

 

6,214,418

 

 

$

8.24

 

 

 

9.30

 

 

$

37,544

 

Vested and expected to vest at March 31, 2023

 

 

6,214,418

 

 

$

8.24

 

 

 

9.30

 

 

$

37,544

 

Exercisable at March 31, 2023

 

 

929,919

 

 

$

18.25

 

 

8.28

 

 

$

 

 

As of March 31, 2023, total unrecognized stock-based compensation cost for unvested common stock options was $22.4 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, 2023 was $2.69 per share. The total fair value of options vested during the three months ended March 31, 2023 was $2.7 million.

On February 26, 2023, the Compensation Committee of the Company’s Board of Directors approved a modification to the Company’s 2020 Equity Incentive Plan to allow vesting of RSUs or stock options, as applicable, subject to the grantee’s continued

9


 

service to the Company and/or one of its subsidiaries as an employee, non-employee director, or independent contractor. Unvested RSUs totaling 139,730 shares and 574,244 unvested options which would have been forfeited under the original terms of the 2020 Equity Incentive plan will now continue to vest. The Company applied modification accounting to these awards which resulted in a decrease in fair value to these awards. The Company calculated compensation cost for the modified unvested awards of $416,000 related to the RSUs and $962,000 related to the options, and will recognize these amounts over the remaining requisite service periods. The modification also resulted in an increase to the term of 130,699 fully vested options for which $123,000 of incremental compensation cost was immediately recognized on the date of the modification.

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,

 

 

2023

 

2022

Expected volatility

 

77.3%

 

76.4%

Risk-free interest rate

 

3.85%

 

0.52%

Expected dividend yield

 

0.0%

 

0.0%

Expected term

 

6.10 years

 

6.08 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, 2023 and December 31, 2022, a total of 1,737,098 shares and 1,229,148 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 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). The Company did not issue any common shares under the ESPP during the three months ended March 31, 2023 and 2022. As of March 31, 2023, 1,578,352 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, 2023 and 2022 was immaterial.

Common Stock Reserved for Future Issuance

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

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Common stock options and restricted stock units issued and outstanding

 

 

6,614,711

 

 

 

3,246,957

 

Awards available for future issuance under the 2020 Plan

 

 

1,073,515

 

 

 

3,012,554

 

Awards available for future issuance under the ESPP

 

 

1,578,352

 

 

 

1,070,402