What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-13 · 215 added, 153 removed, 593 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except par value and share amounts)

September 30,

Current assets:

15 unchanged sentences

Preferred stock, $ 0.0001 par value;

200,000,000 shares authorized at June

30, 2021 and December 31, 2020;

0 shares issued and outstanding

at June 30, 2021 and December 31, 2020

200,000,000 shares authorized at

September 30, 2021 and December 31, 2020;

0 shares issued and outstanding at

September 30, 2021 and December 31, 2020

Common stock, $ 0.0001 par value;

350,000,000 shares authorized at June 30, 2021

350,000,000 shares authorized at September

30, 2021 and December 31, 2020;

32,315,301 and 32,171,560 shares issued and outstanding

at June 30, 2021 and December 31, 2020, respectively

35,190,428 and 32,171,560 shares issued and

outstanding at September 30, 2021 and December 31, 2020, respectively

Class B common stock, $ 0.0001 par value;

15,368,569 shares authorized at

June 30, 2021 and December 31, 2020;

September 30, 2021 and December 31, 2020;

1,492,059 shares issued and

outstanding at June 30, 2021 and December 31, 2020

outstanding at September 30, 2021 and December 31, 2020

Additional paid-in capital

6 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Collaboration and other revenue

6 unchanged sentences

Interest income

Interest expense (includes related party amounts of $ 0 for the three and six months ended June 30, 2021 and $ 79 and $ 138 for the three and six months ended June 30, 2020, respectively)

Interest expense (includes related party amounts of $ 0 for the three and nine months ended September 30, 2021 and $ 9 and $ 147 for the three and nine months ended September 30, 2020, respectively)

Change in fair value of derivative liability

Extinguishment of convertible debt

Gain (loss) on extinguishment of long-term debt

Other income (expense)

Total other income (expense)

2 unchanged sentences

Weighted-average shares of common stock outstanding, basic and diluted (1)

(1) For the three and six months ended June 30, 2020, the Company determined that the attribution of pre-Corporate Reorganization net losses based on the post-Corporate Reorganization capital structure would not meaningfully represent the economic rights of the unit holders.

As a result, the Company presents net loss per share information only for the period subsequent to the Corporate Reorganization.

(see Note 1).

(1) The net loss attributable to common stockholders and related per share amounts for the three and nine months ended September 30, 2020 are based on the period from July 10, 2020 to September 30, 2020, the period where the Company had outstanding common stock (see Note 1).

See accompanying notes.

2 unchanged sentences

(in thousands, except share amounts)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Stockholders’

Balance at March 31, 2021

Balance at June 30, 2021

Stock-based compensation expense

Issuance of common stock, net of issuance costs

Issuance of common stock under equity incentive plans

Issuance of common stock for Employee Stock Purchase Plan

Balance at June 30, 2021

Six Months Ended June 30, 2021

Issuance of common stock upon exercise of options, net

Balance at September 30, 2021

Nine Months Ended September 30, 2021

Stockholders’

1 unchanged sentence

Stock-based compensation expense

Issuance of common stock, net of issuance costs

Issuance of common stock under equity incentive plans

Issuance of common stock upon exercise of options, net

Issuance of common stock for Employee Stock Purchase Plan

Balance at June 30, 2021

Balance at September 30, 2021

See accompanying notes.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

4 unchanged sentences

Change in fair value of profits interest liability

Loss on extinguishment of debt

Loss/(gain) on extinguishment of debt

Stock-based compensation

11 unchanged sentences

Cash flows from financing activities

Noncontrolling interest

Proceeds from issuance of convertible debt

Proceeds from issuance of convertible preferred stock, net of issuance costs

Proceeds from issuance of PPP loan

Proceeds from initial public offering, net of issuance costs

Payment of initial public offering costs

Proceeds from issuance of common stock

Proceeds from exercise of stock options

Proceeds from issuance of common stock under Employee Stock Purchase Plan

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

1 unchanged sentence

Supplemental disclosure of non-cash investing and financing activities

Unpaid deferred financing costs

Property and equipment additions included in accounts payable and accrued expenses

Assumption of profits interest liability by affiliates

Equity issuance costs included in accounts payable and accrued expenses

Carrying value of convertible promissory notes settled in connection with Corporate Reorganization

Fair value of consideration issued in connection with settlement of convertible promissory notes

See accompanying notes.

23 unchanged sentences

does not control Himalaya Parent LLC subsequent to the distribution (see further discussion in “Principles of consolidation and deconsolidation”

All pre-Corporate Reorganization operations, employees, property, assets and obligations of BioAtla, LLC (exclusive of the profits interest liability and Himalaya Therapeutics SEZC now held by Himalaya Parent LLC) are held by BioAtla, Inc.

All pre-Corporate Reorganization operations, employees, property, assets and obligations of BioAtla, LLC (exclusive of the profits interest liability and equity interests in Himalaya Therapeutics SEZC now held by Himalaya Parent LLC) are held by BioAtla, Inc.

Shares of Series D convertible preferred stock were subsequently converted into common stock as part of the Company's initial public offering ("IPO") in December 2020.

9 unchanged sentences

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 June 30, 2021 , the Company had an accumulated deficit of $ 140.0 million.

As of September 30, 2021 , the Company had an accumulated deficit of $ 162.9 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.

7 unchanged sentences

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements as of June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, 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.

The unaudited condensed consolidated financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020, 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.

28 unchanged sentences

Dilutive common stock equivalents are comprised of common stock warrants, RSUs, and common stock options outstanding under the Company’s stock option plan.

For the three and six months ended June 30, 2020, the Company determined that the attribution of pre-Corporate Reorganization net loss based on the post-Corporate Reorganization capital structure would not meaningfully represent the economic rights of the unit holders.

For the three and nine months ended September 30, 2020, the Company determined that the attribution of pre-Corporate Reorganization net loss based on the post-Corporate Reorganization capital structure would not meaningfully represent the economic rights of the unit holders.

As a result, the Company presents net loss per share information only for the period subsequent to the Corporate Reorganization.

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):

September 30,

Common stock warrants

7 unchanged sentences

2016-02 is effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022 and early adoption is permitted.

While management is currently assessing the impact this new standard will have, the expected primary impact to its consolidated financial position upon adoption will be the recognition, on a discounted basis, of its minimum commitments under noncancelable operating leases on its consolidated balance sheets resulting in the recording of right of use assets and lease liabilities.

The Company expects to lose its EGC status as of December 31, 2021, therefore the new standard will be effective for the Company for its fiscal year beginning January 1, 2021 and will be presented in the 2021 annual financial statements.

While management is currently assessing the impact this new standard will have, the expected primary impact to the Company's consolidated financial position upon adoption will be the recognition, on a discounted basis, of its minimum commitments under noncancelable operating leases on its consolidated balance sheets resulting in the recording of right of use assets and lease liabilities.

The Company intends to adopt the standard using the modified retrospective transition method and will not restate comparative periods.

The Company’s current minimum commitments under its noncancelable operating leases are disclosed in Note 5.

In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) –

Simplifying the Accounting for Income Taxes, to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.

The Company expects to lose its EGC status as of December 31, 2021, therefore the new standard will be effective for the Company for its fiscal year beginning January 1, 2021.

Adoption of the new standard is not expected to have a material impact on the Company's consolidated financial statements and related disclosures.

Balance Sheet Details

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

September 30,

Prepaid research and development

2 unchanged sentences

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

September 30,

Furniture, fixtures and office equipment

1 unchanged sentence

Leasehold improvements

Construction in progress

Less accumulated depreciation and amortization

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

September 30,

Accounts payable

5 unchanged sentences

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 June 30, 2021 and December 31, 2020 , the Company had no financial assets or liabilities measured at fair value on a recurring basis.

As of September 30, 2021 and December 31, 2020 , 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.

11 unchanged sentences

The convertible promissory notes were settled in connection with the Company’s Series D financing in July 2020.

As of June 30, 2021 , the Company had $ 0.7 million outstanding under a promissory note issued pursuant to the Paycheck Protection Program (“PPP”) of the CARES Act.

On July 2, 2021, the Company received notice from its lender that the U.S.

Small Business Administration ("SBA") had approved the Company's application for forgiveness and that there was no remaining balance on the PPP Loan.

The Company expects to record the forgiveness as other income in July 2021.

For the three and six months ended June 30, 2021 , the Company recognized interest expense related to its outstanding debt of $ 1,000 and $ 3,000 , respectively.

For the three and six months ended June 30, 2020, the Company recognized interest expense related to its outstanding debt of $ 0.8 million and $ 1.3 million, respectively.

In April 2020, the Company borrowed $ 0.7 million under the Paycheck Protection Program (“PPP”) under the CARES Act.

was subsequently forgiven in July 2021.

The $ 0.7 million balance of the forgiven loan was recognized as other income on the Company's Statement of Operations for the three and nine months ended September 30, 2021.

For the three and nine months ended September 30, 2021 , the Company recognized interest expense related to its outstanding debt of $ 0 and $ 3,000 , respectively.

For the three and nine months ended September 30, 2020 , the Company recognized interest expense related to its outstanding debt of $ 0.1 million and $ 1.4 million, respectively.

Commitments and Contingencies

4 unchanged sentences

The lease includes certain rent abatement, rent escalations, tenant improvement allowances and additional charges for common area maintenance and other costs.

Rent expense for the three and six months ended June 30, 2021 was $ 0.4 million and $ 0.8 million, respectively.

Rent expense for the three and six months ended June 30, 2020 was $ 0.5 million and $ 0.9 million, respectively.

Expected future minimum payments under the non-cancelable operating lease as of June 30, 2021 are as follows (in thousands):

Rent expense for the three and nine months ended September 30, 2021 was $ 0.4 million and $ 1.2 million, respectively.

Rent expense for the three and nine months ended September 30, 2020 was $ 0.4 million and $ 1.3 million, respectively.

Expected future minimum payments under the non-cancelable operating lease as of September 30, 2021 are as follows (in thousands):

Years ending December 31:

4 unchanged sentences

Stockholders’/Members' Equity (Deficit)

The statement of members' deficit for the three months ended June 30, 2020 is as follows (in thousands, except unit amounts):

The statement of members' deficit for the three months ended September 30, 2020 is as follows (in thousands, except unit amounts):

Series D Convertible

Preferred Stock

Class C Preferred Units

2 unchanged sentences

Members’

Balance at March 31, 2020

Balance at June 30, 2020

The statement of members' deficit for the six months ended June 30, 2020 is as follows (in thousands, except unit amounts):

Issuance of Series D convertible preferred stock for cash, net of $ 4,317 of issuance costs

Issuance of Series D convertible preferred stock in connection with settlement of convertible promissory notes

LLC Conversion

Assumption of profits interest liability by affiliate

Change in profits interest liability pushed down from affiliate

Noncontrolling interest—distribution of net assets to affiliate and related deconsolidation

Balance at September 30, 2020

The statement of members' deficit for the nine months ended September 30, 2020 is as follows (in thousands, except unit amounts):

Series D Convertible

Preferred Stock

Class C Preferred Units

3 unchanged sentences

Balance at December 31, 2019

Balance at June 30, 2020

Issuance of Series D convertible preferred stock for cash, net of $ 4,317 of issuance costs

Issuance of Series D convertible preferred stock in connection with settlement of convertible promissory notes

LLC Conversion

Assumption of profits interest liability by affiliate

Change in profits interest liability pushed down from affiliate

Noncontrolling interest—distribution of net assets to affiliate and related deconsolidation

Balance at September 30, 2020

Initial Public Offering and Related Transactions

2 unchanged sentences

In connection with the IPO, all 199,791,519 shares of convertible preferred stock outstanding at the time of the IPO converted into 13,876,510 shares of the Company’s common stock and 1,492,059 shares of the Company’s Class B common stock.

Private Placement of Common Stock

In September 2021, the Company entered into agreements to sell 2,678,600 shares of its common stock at a price of $ 28.00 per share through a private investment in public equity financing (or "Private Placement").

Proceeds from the Private Placement, net of underwriting discounts and commissions and other offering costs, were $ 71.0 million.

In connection with the Private Placement, the Company also issued registration rights to the investors.

The stock purchase agreements provide that the Company shall file a registration statement on Form S-1, or other appropriate form available to the Company, registering the resale of the shares as promptly as practicable and in any event within 30 days following the Closing Date (the “Filing Deadline”).

In connection with the Private Placement, the Company filed a registration statement on Form S-1 (File No.

333-260440) with the SEC registering for resale the shares of common stock issued in the Private Placement.

2020 Equity Incentive Plan

2 unchanged sentences

The Company’s stockholders approved the 2020 Plan, as amended, in December 2020.

awards, restricted stock unit awards, performance stock awards, performance stock unit awards and other stock-based awards.

As of June 30, 2021 and December 31, 2020 , the total number of common shares authorized for issuance under the 2020 Plan was 6,226,540 and 4,939,678 , respectively.

Under the 2020 Plan, the Company may grant awards of common stock 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 September 30, 2021 and December 31, 2020 , the total number of common shares authorized for issuance under the 2020 Plan was 6,226,540 and 4,939,678 , 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.

1 unchanged sentence

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.

There was no stock-based compensation expense reported for the three and six months ended June 30, 2020 as the 2020 Plan was not yet adopted.

Stock-based compensation expense for the three and six months ended June 30, 2021 has been reported in the consolidated statements of operations and comprehensive loss as follows (in thousands):

There was no stock-based compensation expense reported for the three and nine months ended September 30, 2020 as the 2020 Plan was not yet adopted.

Stock-based compensation expense for the three and nine months ended September 30, 2021 has been reported in the consolidated statements of operations and comprehensive loss as follows (in thousands):

September 30,

Research and development

1 unchanged sentence

Restricted Stock Units

The following table summarizes RSU activity under the 2020 Plan for the six months ended June 30, 2021:

The following table summarizes RSU activity under the 2020 Plan for the nine months ended September 30, 2021:

Weighted - Average

Outstanding at December 31, 2020

Outstanding at June 30, 2021

As of June 30, 2021, total unrecognized stock-based compensation expense for RSUs was $ 23.0 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.7 years.

During the six months ended June 30, 2021, the Company modified 138,461 RSU's under the Transition Agreement (See Note 9).

Outstanding at September 30, 2021

As of September 30, 2021, total unrecognized stock-based compensation expense for RSUs was $ 19.9 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.4 years.

During the nine months ended September 30, 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 six months ended June 30, 2021 (in thousands, except share and per share data and years):

The following table summarizes stock option activity under the 2020 Plan for the nine months ended September 30, 2021 (in thousands, except share and per share data and years):

Weighted - Average

1 unchanged sentence

Balance at December 31, 2020

Balance at June 30, 2021

Vested and expected to vest at June 30, 2021

Exercisable at June 30, 2021

As of June 30, 2021 , total unrecognized stock-based compensation cost for unvested common stock options was $ 12.6 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.4 years.

The weighted- average grant date fair value of stock options granted during the six months ended June 30, 2021 was $ 28.91 per share.

During the six months ended June 30, 2021, the Company modified 7,747 stock options under the Transition Agreement (See Note 9).

Balance at September 30, 2021

Vested and expected to vest at September 30, 2021

Exercisable at September 30, 2021

As of September 30, 2021 , total unrecognized stock-based compensation cost for unvested common stock options was $ 14.3 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.2 years.

The weighted- average grant date fair value of stock options granted during the nine months ended September 30, 2021 was $ 27.42 per share.

During the nine months ended September 30, 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:

September 30,

Expected volatility

19 unchanged sentences

The ESPP permits participants to purchase common stock through payroll deductions of up to 15 % of their eligible compensation.

As of June 30, 2021 and December 31, 2020 , a total of 833,993 shares and 464,829 shares, respectively, of common stock were authorized for issuance under the ESPP.

As of September 30, 2021 and December 31, 2020 , a total of 833,993 shares and 464,829 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).

1 unchanged sentence

The Company's first ESPP purchase transaction occurred on June 30, 2021.

During the six months ended June 30, 2021, the Company issued 5,280 shares of common stock under the ESPP.

As of June 30, 2021, 828,713 shares of common stock remained available for issuance under the ESPP.

Stock-based compensation expense related to the ESPP for the three and six months ended June 30, 2021 was immaterial.

The Company's second offering period commenced in July 2021.

During the nine months ended September 30, 2021 , the Company issued 5,280 shares of common stock under the ESPP.

As of September 30, 2021 , 828,713 shares of common stock remained available for issuance under the ESPP.

Stock-based compensation expense related to the ESPP for the three and nine months ended September 30, 2021 was immaterial.

Common Stock Warrants

1 unchanged sentence

2018-07 on October 1, 2020, the measurement date of the warrants described below became fixed in accordance with the guidance, and such fair value was nominal since the warrants were deeply out-of-the-money.

As of June 30, 2021 all the common stock warrants below are exercisable and expire as follows:

As of September 30, 2021 all the common stock warrants below are exercisable and expire as follows:

and Exercisable

Exercise Price

4 unchanged sentences

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

September 30,

Warrants for the purchase of common stock

Common stock options and restricted stock units issued and

Common stock options and restricted stock units issued and outstanding

Awards available for future issuance under the 2020 Plan

12 unchanged sentences

The allocation of equity-based compensation for all Class B units is as follows (in thousands):

September 30,

Research and development

8 unchanged sentences

joint efforts to develop the product candidate and be responsible for global regulatory filings and commercialization.

Subject to the terms of the agreement, BeiGene will hold a co-exclusive license with the Company to develop and manufacture the

product candidate globally and an exclusive license to commercialize the product candidate globally.

Subject to the terms of the agreement, BeiGene will hold a co-exclusive license with the Company to develop and manufacture the product candidate globally and an exclusive license to commercialize the product candidate globally.

BeiGene will be responsible for all costs of development, manufacturing and commercialization in China, parts of the Middle East and Asia (excluding Japan), Australia and New Zealand (the “BeiGene Territory”), and the parties would share development and manufacturing costs and commercial profits and losses upon specified terms in the rest of the world that are not part of the BeiGene Territory (the “ROW”).

Subject to earlier termination, the BeiGene Collaboration shall remain in effect, on a country-by-country basis, until the earlier of ten years following commercial sale or upon such time that the parties cease pursuing commercialization.

Unless terminated early, at the expiration date BeiGene retains all licensing rights in the applicable territories.

Unless terminated early, at the expiration date, BeiGene will retain all licensing rights in the applicable territories.

BeiGene may terminate the BeiGene Collaboration at any time after the one-year anniversary of the agreement subject to 90 days written notice, or any time subject to 45 days’

notice if it is determined that the proof of concept ("POC") milestone or technological or scientific feasibility will not be achieved.

notice if it is determined that the POC Milestone of technological or scientific feasibility will not be achieved.

The BeiGene Collaboration also contains customary provisions for termination by either party, including the event of breach of the BeiGene Collaboration, subject to cure.

In 2019, BeiGene paid the Company an upfront non-refundable payment of $ 20.0 million and paid the Company $ 5.0 million for the reimbursement of manufacturing costs.

In 2019, BeiGene paid the Company an upfront non-refundable payment of $ 20.0 million and paid the Company $ 5.0 million for reimbursement of manufacturing costs.

Under the BeiGene Collaboration, the Company was eligible to receive variable consideration for subsequent development and regulatory milestones globally and commercial milestones in the BeiGene Territory and tiered royalties ranging from the mid-single digits to the mid-double digits based on net sales in the BeiGene Territory.

8 unchanged sentences

Subject to the terms of the Amended BeiGene Collaboration, BeiGene holds an exclusive license with the Company to develop and manufacture the BA3071 candidate globally, and BeiGene is responsible for all costs of development, manufacturing and commercialization globally.

The Amended BeiGene Collaboration provides that the Company is eligible to receive tiered royalties, ranging from the high-single digits to the low twenties, on sales worldwide, up to $ 225.5 million in subsequent development and regulatory milestone payments globally and commercial milestones in the BeiGene territory (reduced from $ 249 million under the BeiGene Collaboration), and a $ 5.0 million milestone payment upon the completion of the Company’s amended performance obligations, including the transfer of the master cell bank for BA3071 and other know-how.

The Amended BeiGene Collaboration provides that the Company is eligible to receive tiered royalties on sales worldwide, ranging from the high-single digits to the low twenties, of up to $ 225.5 million in subsequent development and regulatory milestone payments globally and commercial milestones in the BeiGene territory (reduced from $ 249 million under the BeiGene Collaboration), and a $ 5.0 million milestone payment upon the completion of the Company’s amended performance obligations, including the transfer of the master cell bank for BA3071 and other know-how.

Under the Amended BeiGene Collaboration, the Company’s amended performance obligation is satisfied at a point in time determined to be when BeiGene has received the know-how and master cell bank for BA3071.

1 unchanged sentence

Under the original collaboration agreement, the Company recognized revenue over time using an input method based on actual costs incurred compared to estimated total costs expected to be incurred to fulfill its performance obligation to perform development services.

For the three and six months ended June 30, 2021 , the Company did no t recognize any revenue related to the collaboration agreement with BeiGene.

As of June 30, 2021 and December 31, 2020 , the Company had $ 19.8 million of related deferred revenue which was classified as current.

For the three and nine months ended September 30, 2021 , the Company did no t recognize any revenue related to the collaboration agreement with BeiGene.

Collaboration revenue recognized for the three and nine months ended September 30, 2020 was $ 0.2 million and $ 0.4 million, respectively.

As of September 30, 2021 and December 31, 2020 , the Company had $ 19.8 million of related deferred revenue which was classified as current.

The deferred revenue is expected to be earned upon transfer of the know-how and master cell bank within the next twelve months.

3 unchanged sentences

The Company is also eligible to receive royalties based on certain product sales.

The Company recognized

revenue of $ 0.3 million, included in Collaboration and Other Revenue, for the three and six months ended June 30, 2021 related to the achievement of a clinical milestone on a fixed price service contract.

The Company recognized revenue of $ 0 and $ 0.3 million, included in Collaboration and Other Revenue, for the three and nine months ended September 30, 2021 , respectively, related to the achievement of a clinical milestone on a fixed price service contract.

Related Party Transactions

3 unchanged sentences

Biotech Investment Group II LLC

For the three and six months ended June 30, 2020 , the Company recognized interest expense (including amortization of debt discounts) of $ 20,000 and $ 40,000 , respectively, related to an outstanding convertible promissory note payable to BIG II.

For the three and nine months ended September 30, 2020, the Company recognized interest expense (including amortization of debt discounts) of $ 2,000 and $ 42,000 , respectively, related to an outstanding convertible promissory note payable to BIG II.

The convertible promissory note payable to BIG II was settled in connection with the Corporate Reorganization in July 2020 .

1 unchanged sentence

Convertible Promissory Notes

For the three and six months ended June 30, 2020, the Company recognized interest expense (including amortization of debt discounts) of $ 59,000 and $ 98,000 respectively, related to outstanding convertible promissory notes payable to Dr.

For the three and nine months ended September 30, 2020, the Company recognized interest expense (including amortization of debt discounts) o f $ 6,000 and $ 105,000 r espectively, related to outstanding convertible promissory notes payable to Dr.

Jay Short and Carolyn Anderson Short.

8 unchanged sentences

The modification of these equity awards resulted in an incremental fair value of $ 7.0 million which was recognized on a straight-line basis over the transition service period.

For the three and six months ended June 30, 2021 , the Company recognized $ 0.8 million and $ 1.0 million, respectively, related to the lump sum salary payment and target bonus.

The Company also recognized non-cash stock-based compensation charges of $ 8.4 million and $ 9.4 million related to the modified equity awards for the three and six months ended June 30, 2021, respectively.

No unrecognized stock-based compensation remained as of June 30, 2021.

For the three and nine months ended September 30, 2021, the Company recognized $ 0 and $ 1.0 million, re spectively, related to the lump sum salary payment and target bonus.

The Company also recognized non-cash stock-based compensation cha rges of $ 0 and $ 9.4 million related to the modifi ed equity awards for the three and nine months ended September 30, 2021 , respectively.

No unrecognized stock-based compensation remained as of September 30, 2021.

Private Placement of Common Stock

As part of the September 2021 Private Placement, the Company issued 625,000 shares of common stock for total net proceeds of $ 17.5 million to certain stockholders considered to be related parties.

The Company maintains a defined contribution 401(k) plan available to eligible employees.

1 unchanged sentence

The Company, at its discretion, may make certain matching contributions to the 401(k) plan.

As of June 30, 2021 and December 31, 2020 , the Company had no t made any matching contributions.

As of September 30, 2021 and December 31, 2020 , the Company had no t made any matching contributions.

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

25 unchanged sentences

Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our current and future product candidates.

Our net loss was $30.4 million and $49.1 million for the three and six months ended June 30, 2021, respectively.

As of June 30, 2021, we had an accumulated deficit of $140.0 million.

Our net loss was $22.9 million and $72.0 million for the three and nine months ended September 30, 2021, respectively.

As of September 30, 2021, we had an accumulated deficit of $162.9 million.

These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations.

26 unchanged sentences

Upon the closing of our IPO, all outstanding shares of our convertible preferred stock converted into 13,876,510 shares of our common stock and 1,492,059 shares of our Class B common stock.

As of June 30, 2021, our cash and cash equivalents totaled approximately $207.6 million.

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations at least through the end of 2022.

In September 2021, we received $71.0 million, net of issuance costs, from a private investment in public equity, or PIPE, financing.

As of September 30, 2021, our cash and cash equivalents totaled approximately $269.9 million.

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations into the first half of 2024.

However, we have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

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In addition, the pandemic has caused substantial disruption in the financial markets and may adversely impact economies worldwide, both of which could adversely affect our business, operations and ability to raise funds to support our operations.

To date, we have only experienced non-material business disruptions, including with respect to any of the clinical trials we are conducting, or impairments of any of our assets as a result of the pandemic.

To date, we have experienced non-material business disruptions, including with respect to clinical trials we are conducting, or impairments of our assets as a result of the pandemic.

Our Phase 2 sarcoma trial remains on schedule and the Phase 2 interim analysis for AXL NSCLC and ROR2 studies have experienced some modest delays in patient initiations due to COVID-19, however, overall timelines for study completion have not changed at this time.

We are following, and plan to continue to follow, recommendations from federal, state and local governments regarding workplace policies, practices and procedures.

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In April 2020, we borrowed $0.7 million under the Paycheck Protection Program under the CARES Act and we submitted an application for loan forgiveness in June 2021.

We were subsequently notified on July 2, 2021 that the U.S.

Small Business Association approved our application for loan forgiveness for the full amount of the PPP Loan outstanding.

We were subsequently notified on July 2, 2021 that

Small Business Association approved our application for loan forgiveness for the full amount of the PPP Loan outstanding, resulting in the recognition of $0.7 million to other income for the three months ended September 30, 2021.

The PPP loan is discussed further under “—Liquidity and capital resources.”

continuing to monitor the potential impact of the pandemic, but we cannot be certain what the overall impact will be on our business, financial condition, results of operations and prospects.

We are continuing to monitor the potential impact of the pandemic, but we cannot be certain what the overall impact will be on our business, financial condition, results of operations and prospects.

Financial Operations Overview

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Pursuant to the terms of the October 2020 amendment, we agreed to transfer certain know-how and materials to BeiGene related to the manufacture of BA3071.

We are currently in preliminary discussions with BeiGene regarding the allocation of roles and responsibilities under our Global Co-Development and Collaboration Agreement with BeiGene, including with respect to the initiation of the Phase I trial for BA3071.

We are currently in advanced discussions with BeiGene regarding the allocation of roles and responsibilities for global development and commercialization of BA3071 under our Global Co-Development and Collaboration Agreement with BeiGene.

As part of these ongoing discussions, BeiGene is planning to initiate the transfer of the IND for BA3071 to BioAtla and BioAtla anticipates initiating the Phase I trial for BA3071 during 2021, with dosing commencing in the first half of 2022.

In addition, we may in the future seek third-party collaborators or joint venture partners for development and commercialization of additional CAB product candidates.

For the three and nine months ended September 30, 2020 we recognized $0.2 million and $0.4 million of revenue from our collaboration with BeiGene, respectively.

Prior to developing our own programs, the Company received revenue from services performed under fixed price service contracts that, in some cases, provided for potential milestone and royalty payments to us.

We recognized $0.3 million in collaboration revenues for the three and six months ended June 30, 2021 from our legacy service contracts.

For the three and six months ended June 30, 2020 we recognized $0.2 million and $0.3 million of revenue from our collaboration with BeiGene, respectively.

We recognized $0 and $0.3 million in collaboration revenues for the three and nine months ended September 30, 2021 from our legacy service contracts.

Operating Expenses

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The capitalized amounts are then expensed as the related goods are delivered and services are performed.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities to advance our product candidates and our clinical programs and expand our product candidate pipeline.

The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier

stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

Accordingly, to the extent that our product candidates continue to advance into clinical trials, including larger and later-stage clinical trials, our expenses will increase substantially and may become more variable.

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Results of Operations

Comparison of the Three Months Ended June 30, 2021 and 2020

Comparison of the Three Months Ended September 30, 2021 and 2020

Three Months Ended

September 30,

(in thousands)

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Change in fair value of derivative liability

Extinguishment of convertible debt

Gain (loss) on extinguishment of debt

Other income (expense)

Total other income (expense)

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Collaboration Revenue

Collaboration revenue for the three months ended June 30, 2021 was $0.3 million and consisted of revenue recognized under our legacy service contracts.

There was no revenue recognized under our collaboration with BeiGene during the three months ended June 30, 2021.

Collaboration revenue for the three months ended June 30, 2020 was $0.2 million and consisted of revenue recognized under our collaboration agreement with BeiGene.

There was no revenue recognized under our collaboration with BeiGene during the three months ended September 30, 2021.

Collaboration revenue for the three months ended September 30, 2020 was $0.2 million and consisted of revenue recognized under our collaboration agreement with BeiGene.

Under the collaboration agreement with BeiGene, the remaining $19.8 million of deferred revenue is expected to be earned upon transfer of the know-how and materials to BeiGene related to the manufacture of BA3071.

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Three Months Ended

September 30,

(in thousands)

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Total research and development expenses

Research and development expenses were $14.9 million and $2.9 million for the three months ended June 30, 2021 and 2020, respectively.

The increase of $12.0 million was primarily driven by a $8.1 million increase in external costs due to manufacturing for our clinical candidates and ongoing clinical development for BA3011 and BA3021, a $1.5 million increase in pre-clinical development for other CAB programs, a $1.1 million increase in stock-based compensation under our post-IPO equity incentive plans, a $0.9 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the three months ended June 30, 2020, a $0.3 million increase in personnel related costs, and a $0.1 million increase and facility and other related expense.

Research and development expenses were $16.6 million and $4.9 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $11.7 million was primarily driven by a $4.7 million increase in external costs due to manufacturing for our clinical candidates and ongoing clinical development for BA3011 and BA3021, a $4.7 million increase in pre-clinical development including manufacturing and IND enabling studies for CAB bispecific programs, a $1.3 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan, a $0.8 million increase in personnel related costs due to an increase in headcount to support ongoing development activities on our programs, and a $0.2 million increase in facility and other related expense.

General and Administrative Expense

General and administrative expenses were $15.9 million and $1.8 million for the three months ended June 30, 2021 and 2020, respectively.

The increase of $14.1 million was primarily driven by a $11.1 million increase in stock-based compensation under our

post-IPO equity incentive plans, a $1.1 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the three months ended June 30, 2020, a $0.9 million increase in personnel related expenses as we expanded our administrative functions in support of our development activities and incurred severance benefits related to the departure of one of our co-founders, a $0.8 million increase in insurance expense, a $0.1 million increase in professional fees related to accounting, audit and legal services, and a $0.1 million increase in depreciation expense.

General and administrative expenses were $7.1 million and $3.3 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $3.8 million was primarily driven by a $3.1 million increase in stock-based compensation due to awards issued under our 2020 Equity Incentive Plan, a $0.8 million increase in insurance expense, and a $0.2 million increase in

personnel related expenses as we expanded our administrative functions in support of our development activities.

This increase was offset by a $0.3 million decrease in professional fees related to accounting, audit and legal services.

Interest Income

Interest income was $0.1 million and $1,000 for the three months ended June 30, 2021 and 2020, respectively.

The increase of $0.1 million was due to higher average cash and cash equivalent balances after our December 2020 IPO.

Interest income was $76,000 and $31,000 for the three months ended September 30, 2021 and 2020, respectively.

The increase of $45,000 was due to higher average cash and cash equivalent balances after our December 2020 IPO.

Interest Expense

Interest expense was $1,000 and $0.8 million for the three months ended June 30, 2021 and 2020, respectively.

The decrease of $0.8 million was due to reduced interest expense as a result of the settlement of all of our convertible debt in July 2020.

Interest expense was $0 and $86,000 for the three months ended September 30, 2021 and 2020, respectively.

The decrease of $86,000 was due to reduced interest expense as a result of the settlement of all of our convertible debt in July 2020 and forgiveness of our PPP loan in July 2021.

Change in Fair Value of Derivative Liability

Change in fair value of derivative liability was $0 and $0.8 million for the three months ended June 30, 2021 and 2020, respectively.

The decrease of $0.8 million was primarily due to changes in the fair value of embedded derivatives issued in connection with our outstanding convertible promissory notes which all settled in July 2020.

Extinguishment of Convertible Debt

Extinguishment of convertible debt was $0 and $0.2 million for the three months ended June 30, 2021 and 2020, respectively.

The $0.2 million in recognized losses on extinguishment during the three months ended June 30, 2020 were related to the amendment of the terms of certain outstanding convertible promissory notes that we concluded were extinguishments.

Comparison of the Six Months Ended June 30, 2021 and 2020

Six Months Ended

Change in fair value of derivative liability was $0 and $0.9 million for the three months ended September 30, 2021 and 2020, respectively.

The decrease of $0.9 million was primarily due to changes in the fair value of embedded derivatives in connection with our outstanding convertible promissory notes which all settled in July 2020.

Gain (Loss) on Extinguishment of Debt

Extinguishment of debt was $0.7 million and ($2.7) million for the three months ended September 30, 2021 and 2020, respectively.

The $0.7 million gain and $2.7 million in recognized loss on extinguishment during the three months ended September 30, 2021 and 2020 were related to the forgiveness of our PPP loan in July 2021, and the settlement of our then outstanding convertible promissory notes in connection with our July 2020 Series D Financing, respectively.

Comparison of the nine months ended September 30, 2021 and 2020

Nine Months Ended

September 30,

(in thousands)

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Change in fair value of derivative liability

Extinguishment of convertible debt

Gain (loss) on extinguishment of debt

Other income (expense)

Total other income (expense)

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Collaboration Revenue

Collaboration revenue for the six months ended June 30, 2021 was $0.3 million, which consisted solely of revenue recognized under our legacy service contracts.

There was no revenue recognized under our collaboration with BeiGene during the six months ended June 30, 2021.

Collaboration revenue for six months ended June 30, 2020 was $0.3 million, which consisted of revenue recognized under our collaboration agreement with BeiGene.

Collaboration revenue for the nine months ended September 30, 2021 was $0.3 million, which consisted solely of revenue recognized under our legacy service contracts.

Collaboration revenue for the nine months ended September 30, 2020 was $0.4 million, which consisted of revenue recognized under our collaboration agreement with BeiGene.

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The following table summarizes our research and development expenses allocated by CAB program for the periods indicated:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Total research and development expenses

Research and development expenses were $25.3 million and $4.6 million for the six months ended June 30, 2021 and 2020, respectively.

The increase of $20.7 million was primarily driven by a $12.1 million increase in external costs due to manufacturing and ongoing clinical development for our clinical programs BA3011 and BA3021, a $3.4 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the six months ended June 30, 2020, a $2.6 million increase in pre-clinical development for our other CAB programs, a $2.1 million increase in stock-based compensation under our post-IPO equity incentive plans, a $0.4 million increase in personnel related costs, and $0.1 million increase in facility related costs.

Research and development expenses were $41.8 million and $9.4 million for the nine months ended September 30, 2021 and 2020, respectively.

The increase of $32.4 million was primarily driven by a $16.8 million increase in external costs as due to manufacturing and ongoing clinical development for our clinical programs BA3011 and BA3021, a $7.3 million increase in pre-clinical development costs including costs for manufacturing and IND enabling studies for CAB bispecific programs, a $3.4 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the nine months ended September 30, 2020, a $3.4 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan, a $1.2 million increase in personnel related costs, and $0.3 million increase in facility and other costs.

General and Administrative Expense

General and administrative expenses were $24.2 million and $1.3 million for the six months ended June 30, 2021 and 2020, respectively.

The increase of $22.9 million was primarily driven by a $14.8 million increase in stock-based compensation under our post-IPO equity incentive plans and the modification of awards issued to one of our co-founders, a $4.2 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the six months ended June 30, 2020, a $1.5 million increase in insurance expense, a $1.3 million increase in personnel related expenses as we expanded our administrative functions in support of our development activities and incurred severance benefits related to the departure of one of our co-founders, a $0.8 million increase in professional fees related to accounting, audit and legal services, a $0.3 million increase in other expenses including corporate franchise taxes and a $0.2 million increase in depreciation expense.

General and administrative expenses were $31.4 million and $4.6 million for the nine months ended September 30, 2021 and 2020, respectively.

The increase of $26.8 million was primarily driven by a $17.9 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan and the modification of awards issued to one of our co-founders, a $4.3 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the nine months ended September 30, 2020, a $2.3 million increase in insurance expense, a $1.5 million increase in personnel related expenses as we expanded our administrative functions in support of our development activities plus severance benefits related to the departure of one of our co-founders, a $0.5 million increase in professional fees related to accounting, audit and legal services, a $0.4 million increase in other expenses including corporate franchise taxes and software subscriptions, and a $0.2 million increase in depreciation expense.

These decreases were offset by a $0.2 million decrease in facility costs and a $0.1 million decrease in travel related expense.

Interest Income

Interest income was $0.2 million and $6,000 for the six months ended June 30, 2021 and 2020, respectively.

Interest income was $0.3 million and $37,000 for the nine months ended September 30, 2021 and 2020, respectively.

The increase of $0.2 million was due to higher average cash and cash equivalent balances after our December 2020 IPO.

Interest Expense

Interest expense was $3,000 and $1.3 million for the six months ended June 30, 2021 and 2020, respectively.

Interest expense was $3,000 and $1.4 million for the nine months ended September 30, 2021 and 2020, respectively.

The decrease of $1.4 million was due to reduced interest expense as a result of the settlement of all of our convertible debt in July 2020.

Change in Fair Value of Derivative Liability

Change in fair value of derivative liability was $0 and $0.7 million for the six months ended June 30, 2021 and 2020, respectively.

The decrease of $0.7 million was primarily due to changes in the fair value during 2020 of embedded derivatives issued in connection with our outstanding convertible promissory notes which all settled in July 2020.

Extinguishment of Convertible Debt

Extinguishment of convertible debt was $0 and $0.2 million for the six months ended June 30, 2021 and 2020, respectively.

The $0.2 million in recognized losses on extinguishment during the six months ended June 30, 2020 were related to the amendment of the terms of certain outstanding convertible promissory notes that we concluded were extinguishments.

Change in fair value of derivative liability was $0 and $1.6 million for the nine months ended September 30, 2021 and 2020, respectively.

The $1.6 million recorded was primarily due to changes in the fair value during 2020 of embedded derivatives in connection with our outstanding convertible promissory notes which all settled in July 2020.

Gain (Loss) on Extinguishment of Debt

Extinguishment of debt was $0.7 and ($2.9) million for the nine months ended September 30, 2021 and 2020, respectively.

The $0.7 million gain and $2.9 million in recognized loss on extinguishment during the nine months ended September 30, 2021 and 2020 were related to the forgiveness of our PPP loan in July 2021, and the settlement of our then outstanding convertible promissory notes in connection with our July 2020 Series D Financing, respectively.

Liquidity and Capital Resources

We have incurred aggregate net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.

As of June 30, 2021, we had cash and cash equivalents of $207.6 million.

As of September 30, 2021, we had cash and cash equivalents of $269.9 million.

Convertible and Promissory Notes

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On July 2, 2021, we were notified by our lender, City National Bank, that our PPP Loan had been fully forgiven by the SBA and that there was no remaining balance on the PPP Loan.

We expect to record the forgiveness as other income in July 2021.

We recorded the forgiveness as other income in July 2021.

Future Funding Requirements

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the extent to which we acquire or invest in businesses, products or technologies, although we have no commitments or agreements relating to any of these types of transactions.

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations at least through the end of 2022.

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations into the first half of 2024.

However, we have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

In addition, we will require additional funding in order to complete development of our product candidates and commercialize our products, if approved.

We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements.

arrangements.

We cannot assure you that, in the event we require additional financing, such financing will be available at acceptable terms to us, if at all.

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The following summarizes our cash flows for the periods indicated:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Financing activities

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Cash Used in Operating Activities

Net cash used in operating activities totaled $28.5 million for the six months ended June 30, 2021, which consisted of a consolidated net loss of $49.1 million, a net change of $3.1 million in our operating assets and liabilities and $17.5 million of non-cash transactions.

Net cash used in operating activities totaled $41.3 million for the nine months ended September 30, 2021, which consisted of a consolidated net loss of $72.0 million, a net change of $9.3 million in our operating assets and liabilities and $21.4 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $10.8 million, offset by an increase in prepaid expenses and other assets of $1.5 million.

The non-cash transactions primarily consisted of $16.9 million of stock-based compensation and non-cash charges of $0.6 million related to depreciation and amortization, offset by $0.1 million of deferred rent.

Net cash used in operating activities for the six months ended June 30, 2020 was $6.9 million, which consisted of a consolidated net loss of $7.8 million and a net change of $6.0 million in our net operating assets and liabilities, partially offset by a decrease of $5.0 million in non-cash transactions.

The net change in our operating assets and liabilities was primarily due to a decrease in prepaid expenses and other assets of $0.4 million, and an increase in accounts payable and accrued expenses of $5.9 million.

The $5.0 million change in non-cash transactions primarily consisted of a decrease in the profits interest liability of $7.6 million primarily due to a decrease in the fair value of the underlying awards, partially offset by accrued interest of $0.8 million on our outstanding convertible

debt, $0.7 million related to the change in fair value of our derivative liability, $0.5 million of non-cash interest, $0.4 million related to depreciation and amortization and $0.2 million related to the loss on the extinguishment of our convertible debt.

The non-cash transactions primarily consisted of $21.3 million of stock-based compensation and non-cash charges of $1.0 million related to depreciation and amortization, offset by the $0.7 million gain on the extinguishment of our PPP loan and $0.2 million of deferred rent.

Net cash used in operating activities for the nine months ended September 30, 2020 was $22.3 million, which consisted of a consolidated net loss of $19.5 million and a net change of ($1.7) million in our net operating assets and liabilities, compounded by a decrease of $1.2 million in non-cash transactions.

The net change in our operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $1.3 million and a decrease in deferred revenue of $0.4 million.

The $1.2 million change in non-cash transactions primarily consisted of a decrease in the profits interest liability of $7.6 million primarily due to a decrease in the fair value of the underlying awards, partially offset by accrued interest of $0.9 million on our outstanding convertible debt, $1.6 million related to the change in fair value of our derivative liability, $0.5 million of non-cash interest, $0.7 million related to depreciation and amortization and $2.9 million related to the loss on the extinguishment of our convertible debt.

Cash Used in Investing Activities

Cash used in investing activities was $0.7 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively, related to the purchase of property and equipment.

Cash Provided by (Used In) Financing Activities

Net cash used in financing activities was $1.7 million for the six months ended June 30, 2021, which consisted primarily of our payment of initial public offering costs of $1.9 million, partially offset by the proceeds from the issuance of common stock under our Employee Stock Purchase Plan of $0.2 million.

Net cash provided by financing activities was $3.4 million for the six months ended June 30, 2020, which consisted primarily of proceeds from the issuance of $2.8 million of convertible notes and a $0.7 million PPP loan.

Cash used in investing activities was $0.8 million and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively, related to the purchase of property and equipment.

Cash Provided by Financing Activities

Net cash provided by financing activities was $73.4 million for the nine months ended September 30, 2021, which consisted primarily of the proceeds from the issuance of common stock through a Private Placement of $75.0 million, the proceeds from the issuance of common stock under our Employee Stock Purchase Plan of $0.2 million, and $0.1 million due to the exercise of stock options under our Equity Incentive Plan, partially offset by our payment of initial public offering costs of $1.9 million.

Net cash provided by financing activities was $75.6 million for the nine months ended September 30, 2020, which consisted primarily of $72.3 million of net proceeds from the issuance of Series D convertible preferred stock, $2.8 million of proceeds from the issuance of convertible promissory notes and $0.7 million of proceeds from a PPP loan, offset by the payment of $0.1 million of costs incurred in connection with our proposed initial public offering.

Critical Accounting Policies and Estimates

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contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

There have not been any material changes to the critical accounting policies discussed therein during the six months ended June 30, 2021.

There have not been any material changes to the critical accounting policies discussed therein during the nine months ended September 30, 2021.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements