What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-02-28 compared with 2021-03-24 · 1489 added, 472 removed, 136 unchanged (94% of the section changed)

Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Market for Registrant’s Common Equ ity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Shares of our common stock began trading on the Nasdaq Global Market on December 16, 2020 under the symbol BCAB. Prior to that

time, there was no public market for shares of our common stock.

Shares of our common stock began trading on the Nasdaq Global Market on December 16, 2020 under the symbol “BCAB.”

Prior to that time, there was no public market for shares of our common stock.

Holders of Record

As of March 22, 2021, there were 15 stockholders of record of our common stock and 2 stockholders of record of our Class B common stock.

These numbers were derived from our stockholder records and do not include beneficial owners of our common stock whose shares are held in street name with various dealers, clearing agencies, banks, brokers and other fiduciaries.

We have never declared or paid

any cash dividends on our capital stock.

As of February 25, 2022, there were 16 stockholders of record of our common stock and 2 stockholders of record of our Class B common stock.

These numbers were derived from our stockholder records and do not include beneficial owners of our common stock whose shares are held in “street”

name with various dealers, clearing agencies, banks, brokers and other fiduciaries.

We have never declared or paid any cash dividends on our capital stock.

We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business.

We do not intend to pay cash dividends on our common

stock for the foreseeable future.

requirements, contractual restrictions, business prospects and other factors our board of directors may deem relevant.

Securities Authorized for

Issuance Under Equity Compensation Plans

Information about securities authorized for issuance under our equity compensation plans is

incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.

Stock Performance

Not applicable to a smaller reporting company.

We do not intend to pay cash dividends on our common stock for the foreseeable future.

Any future determination related to our dividend policy will be made at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our board of directors may deem relevant.

Securities Authorized for Issuance Under Equity Compensation Plans

Information about securities authorized for issuance under our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.

Stock Performance Graph

The graph set forth below compares the cumulative total stockholder return on our common stock for the period commencing on December 16, 2020, the date our common stock began trading on the Nasdaq, and ending on December 31, 2021, with the cumulative total return of the Nasdaq Composite Index and the Nasdaq Biotechnology Index over the same period.

This graph assumes the investment of $100.00 on December 16, 2020 in each share of our common stock at the initial public offering price of $18.00, the Nasdaq Composite Index, and the Nasdaq Biotechnology Index, and assumes the reinvestment of dividends.

The comparisons shown in the graph below are based upon historical data.

We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.

Information used in the graph was obtained from sources believed to be reliable including Nasdaq, Bloomberg and Reuters, but we are not responsible for any errors or omissions in such information.

Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate this Annual Report on Form 10‑K or future filings made by us under those statutes, this Stock Performance Graph section is not “soliciting material,”

shall not be deemed filed with the U.S.

Securities and Exchange Commission and shall not be deemed incorporated by reference into any of those prior filings or into any future filings made by us under those statutes.

Recent Sales of Unregistered Securities

The following list sets forth information regarding all unregistered securities issued and sold by us from January 1, 2020 through

December 31, 2020:

On July 13, 2020, we sold an aggregate of 140,626,711 shares of our Series D preferred stock at a purchase

price of $0.51554931 per share for an aggregate amount of $72,500,0043.82 to a group of venture capital funds.

Between October 2020 and December 2020, we granted an aggregate of 1,920,037 restricted stock units pursuant to

our 2020 Equity Incentive Plan to employees and consultants in connection with the provision of services to the Company.

The offers, sales and issuances of the securities described in paragraph (1) above were deemed to be exempt from registration under the

Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering.

The recipients of securities in this acquired

the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.

Each of the recipients of securities in this

transaction was an accredited investor within the

meaning of Rule 501 of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about the Company.

No underwriters were

involved in this transactions.

The offers, sales and issuances of the securities described in paragraph (2) above were deemed to be

exempt from registration under the Securities Act in reliance on Rule 701 in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701.

The recipients of such securities were the

Registrants employees, directors or consultants.

The recipients received the securities under our 2020 Equity Incentive Plan.

Appropriate legends were affixed to the securities issued in these transactions.

Each of the recipients of securities

in these transactions had adequate access, through employment, business or other relationships, to information about us.

Use of Proceeds from

Registered Securities

Use of Proceeds from Registered Securities

On December 15, 2020, the SEC declared effective our registration statement on Form S-1 (File No.

333-250093), as amended, filed in connection with our IPO.

At the closing of the offering on December 18, 2020, we issued and sold 12,075,000 shares of

our common stock at the initial public offering price to the public of $18.00 per share, which included the exercise in full of the underwriters option to purchase additional shares.

We received gross proceeds from the IPO of

$217.4 million, before deducting underwriting discounts and commissions of approximately $15.2 million and estimated offering costs of approximately $3.8 million.

Morgan, Jefferies and Credit Suisse acted as joint book-running

managers for the offering.

333-250093), as amended, filed in connection with our Initial Public Offering (or "IPO").

At the closing of the offering on December 18, 2020, we issued and sold 12,075,000 shares of our common stock at the initial public offering price to the public of $18.00 per share, which included the exercise in full of the underwriters’

option to purchase additional shares.

We received gross proceeds from the IPO of $217.4 million, before deducting underwriting discounts and commissions of approximately $15.2 million and estimated offering costs of approximately $3.8 million.

Morgan, Jefferies and Credit Suisse acted as joint book-running managers for the offering.

BTIG acted as co-manager for the offering.

No offering expenses were paid or are payable, directly or indirectly, to our directors or officers, to persons owning 10% or more of any

class of our equity securities or to any of our affiliates.

As of December 31, 2020, we have not used any of the proceeds from our

IPO and there has been no material change in the planned use of such proceeds from that described in the final prospectus filed by us with the SEC on December 17, 2020.

No offering expenses were paid or are payable, directly or indirectly, to our directors or officers, to persons owning 10% or more of any class of our equity securities or to any of our affiliates.

As of December 31, 2021, we have used approximately $24.3 million of the proceeds from our IPO.

There has been no material change in the planned use of such proceeds from that described in the final prospectus filed by us with the SEC on December 17, 2020.

Selected Financial Data

Not applicable to a smaller reporting company.

Managements Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis together with our consolidated financial statements and

related notes included in Item 8.

Financial Statements and Supplementary Data in this Annual Report on Form 10-K.

The following discussion contains forward-looking statements that involve risks and

uncertainties.

For a complete discussion of forward-looking statements, see the section above entitled Forward Looking Statements. Our actual results could differ materially from those expressed or implied in any forward-looking

statements as a result of various factors, including those set forth under the caption Item 1A.

Risk Factors.

We are a clinical-stage biopharmaceutical company developing our novel class of highly specific and selective antibody-based therapeutics for

the treatment of solid tumor cancer.

Not applicable.

Managemen t’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis together with our consolidated financial statements and related notes included in “Item 8.

Financial Statements and Supplementary Data”

in this Annual Report on Form 10-K.

The following discussion contains forward-looking statements that involve risks and uncertainties.

For a complete discussion of forward-looking statements, see the section above entitled “Forward Looking Statements.”

Our actual results could differ materially from those expressed or implied in any forward-looking statements as a result of various factors, including those set forth under the caption “Item 1A.

Risk Factors.”

The discussion of our financial condition and results of operations for the year ended December 31, 2019, included in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) can be found in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 24, 2021.

We are a clinical-stage biopharmaceutical company developing our novel class of highly specific and selective antibody-based therapeutics for the treatment of solid tumor cancer.

Our CABs capitalize on our proprietary discoveries with respect to tumor biology, enabling us to target known and widely validated tumor antigens that have previously been difficult or impossible to target.

novel CAB therapeutic candidates exploit characteristic pH differences between the tumor microenvironment and healthy tissue.

Unlike healthy tissue, the tumor microenvironment is acidic, and we have designed our antibodies to selectively bind to

their targets on tumor cells under acidic pH conditions but not on targets in normal tissues.

Our approach is to identify the necessary targeting and potency required for cancer cell destruction, while aiming to eliminate or greatly reduce on-target, off-tumor toxicityone of the fundamental challenges of existing cancer therapies.

We are a United States-based company with research facilities in San Diego, California and, through our contractual relationship with BioDuro,

a provider of preclinical development services, in Beijing, China.

Since the commencement of our operations, we have focused substantially all of our resources on conducting research and development activities, including drug discovery, preclinical

studies and clinical trials of our product candidates, including the ongoing Phase 2 clinical trials of BA3011 and BA3021, establishing and maintaining our intellectual property portfolio, manufacturing clinical and research material through third

parties, hiring personnel, establishing product development and commercialization collaborations with third parties, raising capital and providing general and administrative support for these operations.

Since 2014, such research and development

activities have exclusively related to the research, development, manufacture and Phase 1 and Phase 2 clinical testing of our CAB antibody-based product candidates and the strengthening of our proprietary CAB technology platform and pipeline.

not have any products approved for sale, and we have not generated any revenue from product sales.

In July 2020, BioAtla, LLC completed a

series of transactions, or the Corporate Reorganization, in connection with which it converted from a limited liability company into a Delaware corporation, spun-off Himalaya Therapeutics SEZC, and completed a

Series D convertible preferred stock financing.

Following the Corporate Reorganization, BioAtla, Inc.

continued to hold all operations, employees, property and assets of BioAtla, LLC (excluding Himalaya Therapeutics SEZC) and assumed all of the

obligations of BioAtla, LLC (exclusive of the profits interest liability related to awards granted under BioAtla, LLCs profits interest plan).

In addition, following the Corporate Reorganization, BioAtla, Inc.

is a single legal entity with no

consolidated variable interest entities, or VIEs, or subsidiaries.

Except as otherwise noted, the consolidated financial statements discussed in this section and included in Item 8 of this Annual Report on Form

10-K are those of BioAtla, LLC and its consolidated subsidiaries prior to the Corporate Reorganization and those of BioAtla, Inc.

subsequent to the Corporate Reorganization.

In July 2020, we entered into a Series D Preferred Stock Purchase Agreement pursuant to which we issued and sold 140,626,711 shares of Series

D convertible preferred stock at $0.51554931 per share, for aggregate cash proceeds of $72.5 million.

We incurred $4.3 million of issuance costs in connection with our Series D financing.

Our novel CAB therapeutic candidates exploit characteristic pH differences between the tumor microenvironment and healthy tissue.

Unlike healthy tissue, the tumor microenvironment is acidic, and we have designed our antibodies to selectively bind to their targets on tumor cells under acidic pH conditions but not on targets in normal tissues.

Our approach is to identify the necessary targeting and potency required for cancer cell destruction, while aiming to eliminate or greatly reduce on-target, off-tumor toxicity—one of the fundamental challenges of existing cancer therapies.

We are a United States-based company with research facilities in San Diego, California and, through our contractual relationship with BioDuro-Sundia, a provider of preclinical development services, in Beijing, China.

Since the commencement of our operations, we have focused substantially all of our resources on conducting research and development activities, including drug discovery, preclinical studies and clinical trials of our product candidates, including the ongoing Phase 2 clinical trials of mecbotamab vedotin and ozuriftamab vedotin, establishing and maintaining our intellectual property portfolio, manufacturing clinical and research material through third parties, hiring personnel, establishing product development and commercialization collaborations with third parties, raising capital and providing general and administrative support for these operations.

Since 2014, such research and development activities have exclusively related to the research, development, manufacture and Phase 1 and Phase 2 clinical testing of our CAB antibody-based product candidates and the strengthening of our proprietary CAB technology platform and pipeline.

We do not have any products approved for sale, and we have not generated any revenue from product sales.

We have incurred significant losses to date.

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 losses were $35.9 million and $29.8 million for the years ended December 31, 2020 and 2019, respectively.

As of December 31,

2020, we had an accumulated deficit of $90.9 million.

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 losses were $95.4 million, $35.9 million, and $29.8 million for the years ended December 31, 2021, 2020, and 2019, respectively.

As of December 31, 2021, we had an accumulated deficit of $186.3 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.

expect to generate meaningful revenue from product sales for the foreseeable future, and we expect to continue to incur significant operating expenses for the foreseeable future due to the cost of research and development, including identifying and

designing product candidates and conducting preclinical studies and clinical trials, and the regulatory approval process for our product candidates.

We expect our expenses, and the potential for losses, to increase substantially as we conduct

clinical trials of our lead product candidates and seek to expand our pipeline.

We expect our expenses and capital requirements will

increase substantially in connection with our ongoing activities as we:

advance the clinical development of BA3011;

We do not expect to generate meaningful revenue from product sales for the foreseeable future, and we expect to continue to incur significant operating expenses for the foreseeable future due to the cost of research and development, including identifying and designing product candidates and conducting preclinical studies and clinical trials, and the regulatory approval process for our product candidates.

We expect our expenses, and the potential for losses, to increase substantially as we conduct clinical trials of our lead product candidates and seek to expand our pipeline.

We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities as we:

advance the clinical development of mecbotamab vedotin;

advance the clinical development of ozuriftamab vedotin;

advance the clinical development of BA3071;

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establish additional product collaborations and commercial manufacturing relationships with third parties;

build sales, marketing and distribution infrastructure and relationships with third parties to commercialize

product candidates for which we may obtain marketing approval;

build sales, marketing and distribution infrastructure and relationships with third parties to commercialize product candidates for which we may obtain marketing approval;

continue to expand our operational, financial and management information systems;

attract, hire and retain additional clinical, scientific, management, administrative and commercial personnel.

Furthermore, we expect to incur additional costs associated with operating as a public company, including significant

legal, accounting, insurance, investor relations and other administrative and professional services expenses that we did not incur as a private company.

Furthermore, we expect to continue to incur additional costs associated with operating as a public company.

As a result, we will require substantial additional capital to develop our product candidates and fund operations for the foreseeable future.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings, debt financings, collaborations and other similar arrangements.

amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.

We cannot assure you that we will ever be profitable or generate positive cash flow from operating

Because of the numerous risks and uncertainties associated with product development, we are unable to accurately predict the

timing or amount of increased expenses or when, or if, we will be able to achieve profitability.

The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.

We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Because of the numerous risks and uncertainties associated with product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.

Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

If we fail to become

profitable or are unable to sustain profitability on a continuing basis, then we may be unable to raise capital, maintain our research and development efforts, expand our business or continue our operations at planned levels, and as a result we may

be forced to substantially reduce or terminate our operations.

Through the date of our initial public offering, or IPO, in December 2020,

we had funded our operations primarily through the receipt of $71.0 million from our collaboration agreements, $27.6 million from the

issuance of convertible debt and $138.3 million from the issuance of equity securities.

In December 2020, we completed our initial public offering in which we sold 12,075,000 shares of our

common stock at the initial public offering price to the public of $18.00 per share, which included the exercise in full of the underwriters option to purchase additional shares, for aggregate cash proceeds of $217.4 million.

$19.0 million of issuance costs in connection with our initial public offering.

Upon the closing of our initial public offering, 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.

If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to raise capital, maintain our research and development efforts, expand our business or continue our operations at planned levels, and as a result we may be forced to substantially reduce or terminate our operations.

As of December 31, 2021, our cash and cash equivalents totaled approximately $245.0 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.

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.

BioAtla was formed in April 2007 as a Delaware limited liability corporation.

We initially operated as a service provider and service-related

partnered drug developer for primarily human therapeutic proteins and simultaneously refined our proprietary CAB technology platform and related technologies.

Since 2013, we transitioned away from our services business to focus on internal

development of our own proprietary products.

We initially operated as a service provider and service-related partnered drug developer for primarily human therapeutic proteins and simultaneously refined our proprietary CAB technology platform and related technologies.

Since 2013, we transitioned away from our services business to focus on internal development of our own proprietary products.

Impact of COVID-19 on our business

On March 11, 2020, the World Health Organization declared the outbreak

of COVID-19 caused by a novel strain of coronavirus as a pandemic, which continues to spread throughout the United States and around the world.

worldwide COVID-19 pandemic may affect our ability to complete our current preclinical studies and clinical trials, initiate and complete our planned preclinical studies and clinical trials, disrupt

regulatory activities or have other adverse effects on our business, results of operations, financial condition and prospects.

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 not experienced 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.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 caused by a novel strain of coronavirus as a pandemic, which continues to spread throughout the United States and around the world.

The worldwide COVID-19 pandemic may affect our ability to complete our current preclinical studies and clinical trials, initiate and complete our planned preclinical studies and clinical trials, disrupt regulatory activities or have other adverse effects on our business, results of operations, financial condition and prospects.

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 experienced modest business disruptions, including with respect to clinical trials we are conducting, and non-material impairments 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 essentially 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.

March 2020, we implemented a remote working policy for many of our employees, began restricting non-essential travel and temporarily reduced salaries of our employees from March 2020 to July 2020.

are complying with all applicable guidelines for our clinical trials, including remote clinical monitoring.

In April 2020, we borrowed $0.7 million under the Paycheck Protection Program under the CARES Act, as discussed further under

Liquidity and capital resources. 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.

In March 2020, we implemented a remote working policy for many of our employees, began restricting non-essential travel and temporarily reduced salaries of our employees from March 2020 to July 2020.

We are complying with all applicable guidelines for our clinical trials, including remote clinical monitoring.

In April 2020, we borrowed $0.7 million under the Paycheck Protection Program under the CARES Act and we received full loan forgiveness from the U.S.

Small Business Association in July 2021, resulting in the recognition of $0.7 million to other income for the twelve months ended December 31, 2021.

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

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.

Recent developments

On January 5, 2022, we and Bristol-Myers Squibb Company (“BMS”) entered into a clinical trial collaboration and supply agreement (the “BMS Agreement”).

Under the terms of the BMS Agreement, BioAtla and BMS will collaborate on clinical trials of separate combination therapies using two of BioAtla’s Conditionally Active Biologic Antibody Drug Conjugates, mecbotamab vedotin and ozuriftamab vedotin, each in combination with Opdivo® (nivolumab), BMS’

proprietary anti-PD-1 monoclonal antibody product.

We will serve as the study sponsor of the scheduled studies and will be responsible for costs associated with the trial execution.

BMS will provide Opdivo® clinical drug supply at no cost for the combination study trials.

After the completion of the combination therapy trials, we are obligated to provide BMS with a final report of the data resulting from the trial.

Financial operations overview

To date, we have not generated any revenue from the sale of products and do not expect to generate meaningful revenue in the near

In December 2015, we entered into a four-year preclinical research agreement with Pfizer, which expired according to its terms in December 2019.

In April 2019, we entered into a Global Co-Development and Collaboration Agreement with

BeiGene, Ltd.

which, as amended in December 2019 and October 2020, provides for the development, manufacturing and commercialization of BA3071.

Under the terms of our BeiGene collaboration, BeiGene is generally responsible for developing BA3071 and

is responsible for global regulatory filings and commercialization.

Subject to the terms of the agreement, BeiGene holds an exclusive license with us to develop and manufacture the product candidate globally.

BeiGene is responsible for all costs of

development, manufacturing and commercialization globally.

In addition, we may in the future seek third-party collaborators or joint venture partners for

development and commercialization of additional CAB product candidates.

At the time of execution of the BeiGene collaboration, we received a $20.0 million upfront payment and in December

2019, we received an additional $5.0 million for the reimbursement of manufacturing costs.

We are eligible to receive up to $225.5 million in subsequent development and regulatory milestones globally and commercial milestones in the

BeiGene territory, together with tiered royalties, ranging from the high-single digits to the low twenties, on sales worldwide.

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.

During 2020, we

recognized revenue only from our collaboration with BeiGene.

To date, we have not generated any revenue from the sale of products and do not expect to generate meaningful revenue in the near future.

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

In April 2019, we entered into a Global Co-Development and Collaboration Agreement with BeiGene, Ltd.

which was amended in December 2019, October 2020, and was terminated in November 2021.

The original agreement provided for the development, manufacturing and commercialization of BA3071 in collaboration with BeiGene.

After the November 2021 amendment, we are responsible for developing BA3071, including global regulatory filings and commercialization, and are responsible for all costs of development, manufacturing and commercialization globally.

At the time of execution of the BeiGene collaboration, we received a $20.0 million upfront payment and in December 2019, we received an additional $5.0 million for the reimbursement of manufacturing costs.

Pursuant to the terms of the November 2021 amendment, we agreed to

pay single digit royalties to BeiGene and agreed to share on a limited basis in any upfront and milestone payments received through a sublicense of BA3071.

During 2020, we recognized revenue primarily from our collaboration with BeiGene.

During 2019, we recognized revenue from our collaboration with BeiGene and, to a much lesser degree, from our collaboration with Pfizer.

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.

During 2021, we recognized $0.3 million in revenues from our legacy service contracts.

Operating expenses

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External expenses consist of:

Fees paid to third parties such as contractors, clinical research organizations (CROs) and consultants, including

through our relationship with BioDuro, and other costs related to preclinical and clinical trials;

Fees paid to third parties such as contract manufacturing organizations (CMOs) and other vendors for

manufacturing research and clinical trial materials;

Fees paid to third parties such as contractors, clinical research organizations (CROs) and consultants, including through our relationship with BioDuro-Sundia, and other costs related to preclinical and clinical trials;

Fees paid to third parties such as contract manufacturing organizations (CMOs) and other vendors for manufacturing research and clinical trial materials;

Expenses related to laboratory supplies and services.

Unallocated expenses consist of:

Personnel-related expenses, including salaries, benefits and equity-based compensation expenses, for personnel in

our research and development functions;

Related equipment and facilities depreciation expenses.

Personnel-related expenses, including salaries, benefits and equity-based compensation expenses, for personnel in our research and development functions;

Related equipment, cost of facilities and depreciation expenses.

We expense research and development costs in the periods in which they are incurred.

Nonrefundable advance payments for goods or services to

be received in future periods for use in research and development activities are deferred and capitalized.

The capitalized amounts are then expensed as the related goods are delivered and service 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

Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized.

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.

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.

probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, the quality and consistency in their manufacture, investment in our clinical programs and

competition with other products.

As a result of these variables, we are unable to determine the duration and completion costs of our research and development projects and programs or when and to what extent we will generate revenue from the

commercialization and sale of our product candidates.

The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, the quality and consistency in their manufacture, investment in our clinical programs and competition with other products.

We may never succeed in achieving regulatory approval for any of our product candidates.

General and administrative

Our general and administrative expenses consist primarily of personnel-related expenses for personnel in our executive, finance, corporate and

other administrative functions, intellectual property and patent costs, facilities and other allocated expenses, other expenses for outside professional services, including legal, human resources, audit and accounting services and insurance costs.

Our general and administrative expenses consist primarily of personnel-related expenses for personnel in our executive, finance, corporate and other administrative functions, intellectual property and patent costs, facilities and other allocated expenses, other expenses for outside professional services, including legal, human resources, audit and accounting services and insurance costs.

Personnel-related expenses consist of salaries, benefits and equity-based compensation.

We expect our general and administrative expenses to increase as a result of operating as a public company, including additional costs (i) to comply with

the rules and regulations of the SEC and those of The Nasdaq Global Market, (ii) for legal and auditing services, (iii) for additional insurance, (iv) for investor relations activities and (v) for other administrative and

professional services.

We expect our general and administrative expenses to increase as a result of operating as a public company, including additional costs (i) to comply with the rules and regulations of the SEC and those of The Nasdaq Global Market, (ii) for legal and auditing services, (iii) for additional insurance, (iv) for investor relations activities and (v) for other administrative and professional services.

We also expect our intellectual property expenses to increase as we expand our intellectual property portfolio.

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Interest income consists primarily of interest earned on our cash and cash equivalent balances.

Our interest income has not been

significant to date, but we expect interest income to increase as we invest the net proceeds from our initial public offering.

Our interest income has not been significant to date and we do not expect any material changes.

Interest expense

Interest expense consists primarily of interest incurred on our outstanding convertible debt, including coupon interest and the

amortization of debt discounts, including those related to beneficial conversion features and embedded derivatives.

We expect our interest expense to decline subsequent to the settlement of our outstanding convertible debt in July 2020.

Interest expense consists primarily of interest incurred on our outstanding convertible debt, including coupon interest and the amortization of debt discounts, including those related to beneficial conversion features and embedded derivatives.

Our interest expense declined subsequent to the settlement of our outstanding convertible debt in July 2020 and the forgiveness of our PPP loan in July 2021.

Change in fair value of derivative liability

The convertible promissory notes we issued during 2019 and 2020 contained redemption features which we determined were embedded derivatives to

be recognized as liabilities and measured at fair value.

The convertible promissory notes we issued during 2019 and 2020 contained redemption features which we determined were embedded derivatives to be recognized as liabilities and measured at fair value.

At the end of each reporting period, changes in the estimated fair value during the period were recorded as a change in the fair value of derivative liability.

The embedded derivative

liability was recorded at fair value utilizing an income approach that identified the cash flows using a with-and-without valuation methodology.

The embedded derivative liability was recorded at fair value utilizing an income approach that identified the cash flows using a “with-and-without”

valuation methodology.

The inputs used to determine the estimated fair value of the derivative instrument were based primarily on the probability of an underlying event triggering the embedded derivative occurring and the timing of such event.

We will no longer record

changes in the fair value of the derivative liability subsequent to the settlement of the derivative liability in connection with the conversion of our outstanding convertible debt in July 2020.

Extinguishment of convertible debt

April 2020, we amended the terms of certain outstanding convertible promissory notes that we concluded were extinguishments.

In July 2020, in connection with our Corporate Reorganization, we settled all of our outstanding convertible promissory

notes and recognized extinguishment losses for the difference between the fair value of the consideration given to the noteholders and the carrying value of the related convertible promissory notes.

We will no longer record changes in the fair value of the derivative liability subsequent to the settlement of the derivative liability in connection with the conversion of our outstanding convertible debt in July 2020.

Extinguishment of debt

In April 2020, we amended the terms of certain outstanding convertible promissory notes that we concluded were extinguishments.

In July 2020, in connection with our Corporate Reorganization, we settled all of our outstanding convertible promissory notes and recognized extinguishment losses for the difference between the fair value of the consideration given to the noteholders and the carrying value of the related convertible promissory notes.

In July 2021, our PPP loan was fully forgiven and we recorded a gain on extinguishment equal to the principal and interest outstanding at the time of forgiveness.

Other income (expense)

(expense) primarily includes miscellaneous items of income and expense that were not significant for the periods presented.

Other income (expense) primarily includes miscellaneous items of income and expense that were not significant for the periods presented.

Results of operations

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(in thousands)

Collaboration revenue

Collaboration and other revenue

Operating expenses:

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Change in fair value of derivative liability

Extinguishment of convertible debt

Gain (loss) on extinguishment of long-term debt

Other income (expense)

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Consolidated net loss and comprehensive loss

Net loss attributable to noncontrolling interests

Net loss attributable to BioAtla, Inc./BioAtla LLC.

Collaboration revenue

Collaboration revenue of $0.4 million for the year ended December 31, 2020 consisted of $0.4 million of revenue recognized under

our collaboration with BeiGene.

BeiGene collaboration revenue decreased to $0.4 million for the year ended December 31, 2020 from $4.7 million for the year ended December 31, 2019 primarily due to the amendment of the

collaboration and transfer of development obligations to BeiGene.

Under the amended 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.

Collaboration revenue of

$5.2 million for the year ended December 31, 2019 consisted of $4.7 million of revenue recognized under our collaboration with BeiGene and $0.5 million of revenue recognized under our collaboration with Pfizer, which expired

according to its terms in December 2019.

Collaboration and other revenue

Collaboration and other revenue for the years ended December 31, 2021 and 2020 consisted of $0.3 million recognized under our legacy service contracts, and $0.4 million of revenue recognized under our collaboration with BeiGene, respectively.

As part of the November 2021 amendment to the agreement with BeiGene, we reclassified the remaining $19.8 million of deferred revenue as a long-term liability which we expect to settle as licensing payments are made to BeiGene in accordance with the resulting amendment.

In the event the license is terminated, the liability will be extinguished with no further payment to BeiGene.

Research and development expense

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Total research and development expenses

Research and development expenses were $19.9 million and $25.9 million for the years ended

December 31, 2020 and 2019, respectively.

The decrease of $6.0 million was primarily driven by a $6.8 million decrease in external costs as we were nearing completion of manufacturing activities for our clinical candidates and nearing

completion of Phase 1 clinical trials for both BA3011 and BA 3021 in late 2019, and a $0.1 million decrease in personnel-related expenses.

These decreases were offset by an increase of $0.7 million in equity-based compensation due to

awards issued in connection with the IPO, and $0.2 million in facility and related expenses.

Research and development expenses were $58.3 million and $19.9 million for the years ended December 31, 2021 and 2020, respectively.

The increase of $38.3 million was primarily driven by a $17.8 million increase in external costs as due to manufacturing and clinical development for our clinical programs BA3011 and BA3021, a $11.2 million increase in pre-clinical development including manufacturing and IND enabling studies for CAB pipeline programs, a $4.0 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan, a $3.0 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the year ended December 31, 2020, a $1.9 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, and $0.5 million increase in facility, depreciation and allocated costs.

General and administrative expense

General and administrative expenses were $10.6 million and $7.5 million for the years ended December 31, 2020 and 2019,

respectively.

The increase of $3.1 million was primarily driven by a $2.3 million increase in stock-based compensation due to awards issued in connection with the December 2020 IPO , a $0.8 million increase in personnel related

expenses as we expanded our administrative functions in support of our development activities, a $0.5 million increase in professional fees related to accounting and audit services, a $0.3 million increase in facility and related expenses,

a $0.2 million increase in depreciation expense and a $0.1 million increase in insurance expense.

These increases were offset by a $0.6 million decrease in travel related expense and a $0.5 million decrease in equity-based

compensation related to a decrease in the fair value of awards under our profits interest plan.

General and administrative expenses were $38.4 million and $10.6 million for the years ended December 31, 2021 and 2020, respectively.

The increase of $27.8 million was primarily driven by a $18.2 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 $3.8 million increase in equity-based compensation related to a decrease in the fair value of awards under our profits interest plan during the year ended December 31, 2020, a $2.9 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 $1.2 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 $0.3 million increase in depreciation expense.

These decreases were offset by a $0.4 million decrease in facility and allocated costs.

Interest income

Interest income was $0.1 million for both the year ended December 31, 2020 and 2019.

Interest income was $350,000 and $100,000 for the years ended December 31, 2021 and 2020, respectively.

The increase of $250,000 was due to higher average cash and cash equivalent balances after our December 2020 IPO and September 2021 private placement.

Interest expense

Interest expense was

$1.4 million and $1.6 million for the years ended December 31, 2020 and 2019, respectively.

The decrease of $0.2 million was primarily due to reduced interest expense as a result of the settlement of all of our convertible debt

in July 2020, offset by the impact of the timing of new convertible debt issuances in 2019 and 2020.

Interest expense was $3,000 and $1.4 million for the years ended December 31, 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 $1.6 million and $0.1 million for the years ended December 31, 2020

and 2019, respectively.

The increase of $1.5 million was primarily due to changes in the fair value of embedded derivatives issued in connection with our outstanding convertible promissory notes.

Extinguishment of convertible debt

Extinguishment of convertible debt was $2.9 million and $0 for the years ended December 31, 2020 and 2019, respectively.

of $2.9 million was primarily due to $2.7 million of losses on extinguishment we recognized in July 2020, in connection with our Corporate Reorganization, when we settled all of our outstanding convertible promissory notes and recognized

extinguishment losses for the difference between the fair value of the consideration given to the noteholders and the carrying value of the related convertible promissory notes.

In addition, in April 2020, we recognized $0.2 million of losses

on extinguishment 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 years ended December 31, 2021 and 2020, respectively.

The decrease of $1.6 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 debt

Extinguishment of long-term debt resulted in a $0.7 million gain and a $2.9 million loss on extinguishment during the years ended December 31, 2021 and 2020 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.

Other income (expense)

We had minimal

other expense with $1,000 and $22,000 for the years ended December 31, 2020 and 2019, respectively.

We had minimal other income and expense for the years ended December 31, 2021 and 2020.

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.

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 December 31, 2021, we had cash and cash equivalents of $245.0 million.

Convertible and

promissory notes

As of December 31, 2019, we had outstanding convertible notes with an aggregate principal balance of

$19.0 million and issued an additional $2.8 million of convertible notes between March and April of 2020.

All principal and accrued interest under the convertible notes was converted into our Series D preferred stock in July 2020.

On April 22, 2020, we received proceeds from a loan, or PPP Loan, in the amount of $0.7 million from City National Bank, as

lender, pursuant to the Paycheck Protection Program, or PPP, of the CARES Act.

The PPP Loan is evidenced by a promissory note, or Note, which contains customary events of default relating to, among other things, payment defaults and breaches of

representations, warranties or terms of the PPP Loan documents.

The PPP Loan matures on April 22, 2022 and bears interest at an annual rate of approximately 1%.

Beginning in August 2021, we are required to begin making monthly payments of

principal and interest.

We may prepay the PPP Loan at any time prior to maturity with no prepayment penalties.

The proceeds from the PPP

Loan may only be used for payroll costs (including benefits), rent and utility obligations, and interest on certain of our other debt obligations.

All or a portion of the PPP Loan may be forgiven by the U.S.

Small Business Administration, or SBA, upon application by us beginning 60 days

after loan approval and upon documentation of expenditures in accordance with the SBA requirements.

In the event the PPP Loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal.

determined that we were not eligible to receive the PPP Loan, we may be subject to penalties and could be required to repay the PPP Loan in its entirety.

On April 22, 2020, we received proceeds from a loan, or PPP Loan, in the amount of $0.7 million from City National Bank, as lender, pursuant to the Paycheck Protection Program, or PPP, of the CARES Act.

In July 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 recorded the forgiveness as other income in 2021.

Future funding requirements

primary uses of cash are to fund operating expenses, which consist primarily of research and development expenses related to our programs and related personnel costs.

The timing and amount of future funding requirements depends on many factors,

including the following:

the initiation, scope, rate of progress, results and costs of our preclinical studies, clinical trials and other

related activities for our product candidates;

the costs associated with manufacturing our product candidates and establishing commercial supplies and sales,

marketing and distribution capabilities;

Our primary uses of cash are to fund operating expenses, which consist primarily of research and development expenses related to our programs and related personnel costs.

The timing and amount of future funding requirements depends on many factors, including the following:

the initiation, scope, rate of progress, results and costs of our preclinical studies, clinical trials and other related activities for our product candidates;

the costs associated with manufacturing our product candidates and establishing commercial supplies and sales, marketing and distribution capabilities;

the timing and costs of capital expenditures to support our research and development efforts;

the number and characteristics of other product candidates that we pursue;

our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount

and timing of any payments we may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual property rights;

our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual property rights;

the timing, receipt and amount of sales from our potential products;

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our need to implement additional internal systems and infrastructure, including financial and reporting systems;

the economic and other terms, timing and success of any collaboration, licensing, or other arrangements into

which we may enter in the future, including the timing of receipt of any milestone or royalty payments under these agreements;

the economic and other terms, timing and success of any collaboration, licensing, or other arrangements into which we may enter in the future, including the timing of receipt of any milestone or royalty payments under these agreements;

the compliance and administrative costs associated with being a public company;

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.

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.

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 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.

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.

Failure to generate sufficient cash flows from

operations, raise additional capital, and reduce discretionary spending should additional capital not become available could have a material adverse effect on our ability to achieve our intended business objectives.

Because of the numerous risks and

uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated preclinical

studies and clinical trials.

Failure to generate sufficient cash flows from operations, raise additional capital, and reduce discretionary spending should additional capital not become available could have a material adverse effect on our ability to achieve our intended business objectives.

Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated preclinical studies and clinical trials.

To the extent that we raise additional capital through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates.

have to forego future revenue streams of research programs at an earlier stage of development or on less favorable terms than we would otherwise choose, or have to grant licenses on terms that may not be favorable to us.

Our ability to raise

additional funds will depend on financial, economic and other factors, many of which are beyond our control.

For example, market volatility resulting from the COVID-19 pandemic could adversely impact

our ability to access capital as and when needed.

We may choose to raise additional capital through the issuance of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient

funds for our current or future operating plans.

may include liquidation or other preferences that adversely affect our stockholders rights.

If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions,

such as incurring additional debt, making

capital expenditures, acquiring other businesses, products or technology, or declaring dividends.

If we are unable to obtain additional funding from these or other sources, it may be necessary to

significantly reduce our rate of spending through reductions in staff and delay, scale back or stop certain research and development programs.

We may also have to forego future revenue streams of research programs at an earlier stage of development or on less favorable terms than we would otherwise choose, or have to grant licenses on terms that may not be favorable to us.

Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control.

For example, market volatility resulting from the COVID-19 pandemic could adversely impact our ability to access capital as and when needed.

We may choose to raise additional capital through the issuance of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

To the extent we issue additional shares of common stock or other equity or convertible debt securities in the future, there will be further dilution to our investors and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’

If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, acquiring other businesses, products or technology, or declaring dividends.

If we are unable to obtain additional funding from these or other sources, it may be necessary to significantly reduce our rate of spending through reductions in staff and delay, scale back or stop certain research and development programs.

The following summarizes our cash flows for the periods indicated:

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Financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash used in operating activities

Net cash used in operating activities for the year ended December 31, 2020 was $36.3 million, which consisted of a consolidated net

loss of $35.9 million, a net change of $2.5 million in our net operating assets and liabilities and $2.0 million of 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 $1.7 million, an increase in prepaid expenses and other assets of $1.3 million, an increase in accrued interest of $0.9 million on our outstanding convertible

debt prior to its settlement in July 2020, and a decrease in deferred revenue of $0.4 million as we recognized deferred revenue related to our collaboration with BeiGene.

The non-cash transactions

primarily consisted of $3.0 million of stock-based compensation related to the issuance of RSUs and stock options in the fourth quarter of 2020, a $2.9 million loss on extinguishment of convertible debt, a $1.6 million change in the

fair value of our derivative liability, non-cash charges of $1.0 million related to depreciation and amortization and $0.5 million of non-cash interest, offset

by a decrease in the fair value of our profits interest liability and pushdown from our affiliate of $6.9 million and $0.2 million of deferred rent.

Net cash used in operating activities for the year ended December 31, 2019 was $9.6 million, which consisted of a consolidated net

loss of $29.9 million and a net change of $25.1 million in our net operating assets and liabilities, and $4.9 million in non-cash transactions.

The net change in our operating assets

and liabilities was primarily due to an increase in deferred revenue of $19.8 million as we recognized as revenue only a small portion of the $25.0 million of upfront payment and cost reimbursements we received from BeiGene, a decrease in

prepaid expenses of $0.9 million, a decrease in accounts payable and accrued expenses of $3.1 million and an increase in accrued interest of $1.3 million on our outstanding convertible debt.

The $4.9 million change in non-cash transactions primarily consisted of a decrease in the profits interest liability of $6.4 million primarily due to a decrease in the fair value of the underlying awards, offset by non-cash charges of $0.9 million related to depreciation and amortization, $0.1 million related to the change in fair value of derivative liability, $0.4 million of non-cash interest and $0.2 million of deferred rent.

Net cash used in operating activities for the year ended December 31, 2021 was $62.2 million, which consisted of a consolidated net loss of $95.4 million, a net increase of $7.4 million in our net operating assets and liabilities and $25.8 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 $8.0 million, a decrease in prepaid expenses and other assets of $0.2 million, offset by a net increase in operating lease right-of-use assets and liabilities of $0.3 million in conjunction with the adoption of ASC 842.

The non-cash transactions primarily consisted of $25.1 million of stock-based compensation and non-cash charges of $1.3 million related to depreciation and amortization, offset by the $0.7 million gain on the extinguishment of our PPP loan.

Net cash used in operating activities for the year ended December 31, 2020 was $36.3 million, which consisted of a consolidated net loss of $35.9 million, a net change of $2.5 million in our net operating assets and liabilities and $2.0 million of 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 $1.7 million, an increase in prepaid expenses and other assets of $1.3 million, an increase in accrued interest of $0.9 million on our outstanding convertible debt prior to its settlement in July 2020, and a decrease in deferred revenue of $0.4 million as we recognized deferred revenue related to our collaboration with BeiGene.

The non-cash transactions primarily consisted of $3.0 million of stock-based compensation related to the issuance of RSUs and stock options in the fourth quarter of 2020, a $2.9 million loss on extinguishment of convertible debt, a $1.6 million change in the fair value of our derivative liability, non-cash charges of $1.0 million related to depreciation and amortization and $0.5 million of non-cash interest, offset by a decrease in the fair value of our profits interest liability and pushdown from our affiliate of $6.9 million and $0.2 million of deferred rent.

Cash used in investing activities

Cash used in investing activities was $0.6 million and $1.5 million for the years ended December 31, 2020 and 2019,

respectively, related to the purchase of property and equipment.

Cash used in investing activities was $0.9 million and $0.6 million for the years ended December 31, 2021 and 2020, respectively, related to the purchase of property and equipment.

Cash provided by financing activities

Net cash provided by financing activities was $271.8 million for the year ended December 31, 2020, which consisted primarily of

$200.2 million of net proceeds from our initial public offering, $68.2 million of net

proceeds from our 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

Net cash provided by financing activities was $4.0 million for the year ended December 31, 2019, which consisted

primarily of proceeds from the issuance of convertible notes.

Net cash provided by financing activities was $69.5 million for the year ended December 31, 2021, which consisted primarily of the net proceeds from the issuance of common stock through a Private Placement of $71.0 million, the proceeds from the issuance of common stock under our Employee Stock Purchase Plan of $0.3 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 $271.8 million for the year ended December 31, 2020, which consisted of $200.2 million of net proceeds from our initial public offering, $68.2 million of net proceeds from our 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 our PPP loan.

Critical accounting policies and estimates

Our managements discussion and analysis of our financial condition and results of operations is based on our financial statements, which

have been prepared in accordance with U.S.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and

liabilities at the date of the financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we

believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these

estimates under different assumptions and conditions.

While our significant accounting policies are described in the Note 1 to our

consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our

reported financial results.

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions and conditions.

While our significant accounting policies are described in the Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

Accrued expenses

As part of the process of preparing our consolidated financial statements, we accrue expenses as of each balance sheet date.

involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when

we have not yet been invoiced or otherwise notified of the actual cost.

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or

otherwise notified of the actual cost.

We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time.

The estimates in our accrued research and

development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced.

We periodically confirm the accuracy of our estimates with the

service providers and make adjustments if necessary.

We base our expenses related to research and development activities on our estimates

of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and

may result in uneven payment flows.

The estimates in our accrued research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced.

We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.

We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense.

In accruing service fees, we estimate the

time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense

In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense accordingly.

Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing

of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.

To date, there have been no material differences between our

estimates of such expenses and the amounts actually incurred.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.

To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.

Collaboration revenue

Effective January 1, 2019, we adopted Accounting Standards Update, or

ASU, 2014-09, Revenue from Contracts with Customers (Topic 606) , or Topic 606, using the modified retrospective method.

Topic 606 supersedes the revenue recognition requirements in ASC Topic

605, Revenue Recognition , or Topic 605.

There was no material cumulative effect of adopting Topic 606.

All periods prior to the adoption date of Topic 606 have not been restated to reflect the impact of the adoption of Topic 606, but are

accounted for and presented under Topic 605.

Revenue recognition under Topic 606

We recognize revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount of the

consideration we are entitled to receive in exchange for such product or service.

We recognize revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount of the consideration we are entitled to receive in exchange for such product or service.

In doing so, we follow a five-step approach:

(i) identify the contract with a customer, (ii) identify the performance obligations in the contract,

(iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains control of the product or service.

We consider the terms of a

contract and all relevant facts and circumstances when applying the revenue recognition standard.

A customer is a party that has entered

into a contract with us, where the purpose of the contract is to obtain a product or a service that is an output of our ordinary activities in exchange for consideration.

To be considered a contract, (i) the contract must be approved (in

writing, orally, or in accordance with other customary business practices), (ii) each partys rights regarding the product or the service to be transferred can be identified, (iii) the payment terms for the product or the service to be

transferred can be identified, (iv) the contract must have commercial substance (that is, the risk, timing or amount of future cash flows is expected to change as a result of the contract), and (v) it is probable that we will collect

substantially all of the consideration to which we are entitled to receive in exchange for the transfer of the product or the service.

performance obligation is defined as a promise to transfer a product or a service to a customer.

We identify each promise to transfer a product or a service (or a bundle of products or services, or a series of products and services that are

substantially the same and have the same pattern of transfer) that is distinct.

A product or a service is distinct if both (i) the customer can benefit from the product or the service either on its own or together with other resources that are

readily available to the customer and (ii) our promise to transfer the product or the service to the customer is separately identifiable from other promises in the contract.

Each distinct promise to transfer a product or a service is a unit of

accounting for revenue recognition.

(i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains control of the product or service.

We consider the terms of a contract and all relevant facts and circumstances when applying the revenue recognition standard.

A customer is a party that has entered into a contract with us, where the purpose of the contract is to obtain a product or a service that is an output of our ordinary activities in exchange for consideration.

To be considered a contract, (i) the contract must be approved (in writing, orally, or in accordance with other customary business practices), (ii) each party’s rights regarding the product or the service to be transferred can be identified, (iii) the payment terms for the product or the service to be transferred can be identified, (iv) the contract must have commercial substance (that is, the risk, timing or amount of future cash flows is expected to change as a result of the contract), and (v) it is probable that we will collect substantially all of the consideration to which we are entitled to receive in exchange for the transfer of the product or the service.

A performance obligation is defined as a promise to transfer a product or a service to a customer.

We identify each promise to transfer a product or a service (or a bundle of products or services, or a series of products and services that are substantially the same and have the same pattern of transfer) that is distinct.

A product or a service is distinct if both (i) the customer can benefit from the product or the service either on its own or together with other resources that are readily available to the customer and (ii) our promise to transfer the product or the service to the customer is separately identifiable from other promises in the contract.

Each distinct promise to transfer a product or a service is a unit of accounting for revenue recognition.

If a promise to transfer a product or a service is not separately identifiable from other promises in the contract, such promises should be combined into a single performance obligation.

The transaction price is the amount of consideration we are entitled to receive in exchange for the transfer of control of a product or a

service to a customer.

The transaction price is the amount of consideration we are entitled to receive in exchange for the transfer of control of a product or a service to a customer.

To determine the transaction price, we consider the existence of any significant financing component, the effects of any variable elements, noncash considerations and consideration payable to the customer.

If a significant

financing component exists, the transaction price is adjusted for the time value of money.

If an element of variability exists, we must estimate the consideration it expects to receive and uses that amount as the basis for recognizing revenue as the

product or the service is transferred to the customer.

If a significant financing component exists, the transaction price is adjusted for the time value of money.

If an element of variability exists, we must estimate the consideration it expects to receive and uses that amount as the basis for recognizing revenue as the product or the service is transferred to the customer.

There are two methods for determining the amount of variable consideration:

(i) the expected value method, which is the sum of probability-weighted amounts in a range of possible

consideration amounts, and (ii) the mostly likely amount method, which identifies the single most likely amount in a range of possible consideration amounts.

If a contract has multiple performance obligations, we allocate the transaction price to each distinct performance obligation in an amount

that reflects the consideration we are entitled to receive in exchange for satisfying each distinct performance obligation.

For each distinct performance obligation, revenue is recognized when (or as) we transfer control of the product or the

service applicable to such performance obligation.

In those instances where we first receive consideration in advance of satisfying our

performance obligation, we classify such consideration as deferred revenue until (or as) we satisfy such performance obligation.

In those instances where we first satisfy our performance obligation prior to receipt of consideration, the

consideration is recorded as accounts receivable.

We expense incremental costs of obtaining and fulfilling a contract as and when

incurred if the expected amortization period of the asset that would be recognized is one year or less, or if the amount of the asset is immaterial.

Otherwise, such costs are capitalized as contract assets if they are incremental to the contract and

amortized to expense proportionate to revenue recognition of the underlying contract.

(i) the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts, and (ii) the mostly likely amount method, which identifies the single most likely amount in a range of possible consideration amounts.

If a contract has multiple performance obligations, we allocate the transaction price to each distinct performance obligation in an amount that reflects the consideration we are entitled to receive in exchange for satisfying each distinct performance obligation.

For each distinct performance obligation, revenue is recognized when (or as) we transfer control of the product or the service applicable to such performance obligation.

In those instances where we first receive consideration in advance of satisfying our performance obligation, we classify such consideration as deferred revenue until (or as) we satisfy such performance obligation.

In those instances where we first satisfy our performance obligation prior to receipt of consideration, the consideration is recorded as accounts receivable.

We expense incremental costs of obtaining and fulfilling a contract as incurred if the expected amortization period of the asset that would be recognized is one year or less, or if the amount of the asset is immaterial.

Otherwise, such costs are capitalized as contract assets if they are incremental to the contract and amortized to expense proportionate to revenue recognition of the underlying contract.

Profits interest liability

Before the Corporate Reorganization, we had a profits interest plan which we determined was a liability award plan in accordance with

authoritative guidance.

Before the Corporate Reorganization, we had a profits interest plan which we determined was a liability award plan in accordance with authoritative guidance.

We measured the fair value of each award on the grant date and recognized such fair value over the requisite service period (usually the vesting period) on a straight-line basis, net of estimated forfeitures.

The fair value

of the award was remeasured at each reporting date until the award was settled, with a true-up of compensation cost for changes in fair value prorated for the portion of the requisite service period

The fair value of the award was remeasured at each reporting date until the award was settled, with a true-up of compensation cost for changes in fair value prorated for the portion of the requisite service period rendered.

Once vested, any subsequent change in fair value was recognized immediately.

The fair value of any awards that expired or were forfeited or cancelled for no value was adjusted to zero, such that any previously recorded compensation cost

was fully reversed.

We were required to estimate the fair value of the Class B units issued in connection with our profits interest

The fair value of any awards that expired or were forfeited or cancelled for no value was adjusted to zero, such that any previously recorded compensation cost was fully reversed.

We were required to estimate the fair value of the Class B units issued in connection with our profits interest plan.

The fair value of our Class B units was determined on each reporting date by our management, taking into account input from independent third-party valuation analysis.

In the absence of a public trading market for our Class B units,

on each reporting date we developed an estimate of the fair value of our Class B units in order to calculate the profit interest liability.

Our determinations of the fair value of our Class B units were made using methodologies, approaches

and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series:

Valuation of Privately Held Company Equity Securities Issued as Compensation , or the Practice

In the absence of a public trading market for our Class B units, on each reporting date we developed an estimate of the fair value of our Class B units in order to calculate the profit interest liability.

Our determinations of the fair value of our Class B units were made using methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series:

Valuation of Privately Held Company Equity Securities Issued as Compensation , or the Practice Aid.

We considered various objective and subjective factors to determine the fair value of our Class B units, including:

contemporaneous valuations of our Class B units performed by independent third-party valuation specialists;

our stage of development and business strategy, including the status of research and development efforts of our

product candidates, and the material risks related to our business and industry;

our stage of development and business strategy, including the status of research and development efforts of our product candidates, and the material risks related to our business and industry;

our results of operations and financial position, including our levels of available capital resources;

the valuation of publicly traded companies in the life sciences and biopharmaceutical sectors, as well as

recently completed mergers and acquisitions of peer companies;

the valuation of publicly traded companies in the life sciences and biopharmaceutical sectors, as well as recently completed mergers and acquisitions of peer companies;

the lack of liquidity of our Class B units;

the rights, preferences and privileges of our Class C Preferred units and Class A units relative to

those of our Class B units;

the likelihood and timing of achieving a liquidity event for the holders of our Class B units, given

prevailing market conditions;

the rights, preferences and privileges of our Class C Preferred units and Class A units relative to those of our Class B units;

the likelihood and timing of achieving a liquidity event for the holders of our Class B units, given prevailing market conditions;

trends and developments in our industry;

external market conditions affecting the life sciences and biopharmaceutical industry sectors.

In connection with the Corporate Reorganization, Himalaya Parent LLC assumed

$1.0 million of profits interest liability of BioAtla, LLC.

Subsequent to the Corporate Reorganization, we will reflect compensation cost and a corresponding capital contribution associated with equity-based compensation provided to our

employees by Himalaya Parent LLC.

Valuation methodologies and methods used to allocate our enterprise value to classes of securities

Our valuations were prepared in accordance with the guidelines in the Practice Aid, which prescribes several valuation approaches for setting

the value of an enterprise, such as the cost, income and market approaches, and various methodologies for allocating the value of an enterprise to its common stock.

The cost approach establishes the value of an enterprise based on the cost of

reproducing or replacing the property less depreciation and functional or economic obsolescence, if present.

The income approach establishes the value of an enterprise based on the present value of future cash flows that are reasonably reflective of

our companys future operations, discounting to the present value with an appropriate risk adjusted discount rate or capitalization rate.

The market approach is based on the assumption that the value of an asset is equal to the value of a

substitute asset with the same characteristics.

Our valuations were prepared in accordance with the guidelines in the Practice Aid, which prescribes several valuation approaches for setting the value of an enterprise, such as the cost, income and market approaches, and various methodologies for allocating the value of an enterprise to its common stock.

The cost approach establishes the value of an enterprise based on the cost of reproducing or replacing the property less depreciation and functional or economic obsolescence, if present.

The income approach establishes the value of an enterprise based on the present value of future cash flows that are reasonably reflective of our company’s future operations, discounting to the present value with an appropriate risk adjusted discount rate or capitalization rate.

The market approach is based on the assumption that the value of an asset is equal to the value of a substitute asset with the same characteristics.

Each valuation methodology was considered in our valuations.

We utilized a market approach in 2019 and 2020.

In 2020, in connection with our Corporate Reorganization and Series D preferred

stock financing, our market approach included the back-solve method that assigns an implied enterprise value based on the most recent round of funding or investment and allows for the incorporation of the implied future benefits and risks of the

investment decision assigned by an outside investor.

In accordance with the Practice Aid, we considered the various methods for allocating the enterprise value across our classes and series of equity to determine the fair value of our equity

instruments at each valuation date.

We applied a hybrid method of the probability weighted expected return method, or PWERM, where the non-IPO scenario is modeled using an option pricing model to reflect the

full distribution of possible non-IPO outcomes.

Under the option pricing model, units are valued by creating a series of call options with exercise prices based on the liquidation preferences and

conversion terms of each equity class.

In 2020, in connection with our Corporate Reorganization and Series D preferred stock financing, our market approach included the back-solve method that assigns an implied enterprise value based on the most recent round of funding or investment and allows for the incorporation of the implied future benefits and risks of the investment decision assigned by an outside investor.

In accordance with the Practice Aid, we considered the various methods for allocating the enterprise value across our classes and series of equity to determine the fair value of our equity instruments at each valuation date.

We applied a hybrid method of the probability weighted expected return method, or PWERM, where the non-IPO scenario is modeled using an option pricing model to reflect the full distribution of possible non-IPO outcomes.

Under the option pricing model, units are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class.

The values of each class of units are inferred by analyzing these options.

In the IPO scenario, we used the fully-diluted shares outstanding to allocate value to each class of units.

The hybrid method is useful

when certain discrete future outcomes can be predicted, but also accounts for uncertainty regarding the timing or likelihood of specific alternative exit events.

The hybrid method is useful when certain discrete future outcomes can be predicted, but also accounts for uncertainty regarding the timing or likelihood of specific alternative exit events.

Stock-based compensation

October 2020 we adopted our 2020 Equity Incentive Plan and began to grant stock options and RSUs.

We began to recognize stock-based compensation expense in the fourth quarter of 2020.

Stock-based compensation expense represents the grant date fair value of equity awards over the requisite service period of the awards

(usually the vesting period) on a straight-line basis.

In October 2020 we adopted our 2020 Equity Incentive Plan and began to grant stock options and RSUs and began to recognize stock-based compensation expense in the fourth quarter of 2020.

Stock-based compensation expense represents the grant date fair value of equity awards recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis.

We estimate the fair value of stock option grants using the Black-Scholes option pricing model and the fair value of RSUs is the fair value of our common stock on the date of grant.

to our consolidated financial statements included elsewhere in this Annual Report for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our

stock option grants.

Given the proximity of the 2020 awards to our initial public offering, the fair value of our common stock for all 2020 stock-based compensation awards was based on our initial public offering price of $18.00 per share.

the completion of our initial public offering, our board of directors will determine the fair value of our common stock based on its closing price as reported on the date of grant on the primary stock exchange on which our common stock is traded.

See Note 7 to our consolidated financial statements included elsewhere in this Annual Report for information concerning the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock option grants.

The fair value of our common stock for awards granted under our equity incentive plan will be based on the closing price as reported on the date of the grant on the primary stock exchange on which our common stock is traded.

Equity award forfeitures are recognized as they occur.

Other company information

Emerging growth company status

are an emerging growth company, as defined in the JOBS Act.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the

JOBS Act until such time as those standards apply to private companies.

We have elected not to opt out of such extended transition period, which means that when a standard is issued

or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either

(i) irrevocably elect to opt out of such extended transition period or (ii) no longer qualify as an emerging growth company.

We also intend to rely on other exemptions provided by the JOBS Act, including without limitation,

providing an auditors attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.

We will remain an emerging growth company until the earlier of (i) the last

day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large

accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (ii) the date on which we have

issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Recent Accounting Pronouncements

1 unchanged sentence

Off-balance sheet arrangements

We have not entered into any off-balance sheet arrangements, as defined in the rules and

regulations of the SEC.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable to a smaller reporting company.

We have not entered into any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Quantitative and Qualit ative Disclosures About Market Risk

Interest Rate Risk

We are exposed to market risks in the ordinary course of our business.

We had cash, cash equivalents and short-term investments of $245.0 million and $238.6 million as of December 31, 2021 and 2020, respectively, which consisted of bank deposits and money market funds.

Such interest-bearing instruments carry a degree of interest rate risk;

however, historical fluctuations of interest income have not been significant.

We do not enter into investments for trading or speculative purposes and we do not currently utilize derivative financial instruments to manage our interest rate exposure.

We have not historically been exposed to material risks due to changes in interest rates.

Foreign Currency Exchange Risk

Our contracts with customers are primarily denominated in U.S.

dollars, with a small amount denominated in foreign currencies.

As such, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statement of operations.

To date, foreign currency transaction gains and losses have not been material to our consolidated financial statements, and we have not engaged in any foreign currency hedging transactions.

Financial Stateme nts and Supplementary Data

BioAtla, Inc.

Index to consolidated financial statements

Report of independent registered public accounting firm (PCAOB ID:

Consolidated balance sheets

Consolidated statements of operations and comprehensive loss

Consolidated statements of convertible preferred stock and stockholders’/members’

equity (deficit)

Consolidated statements of cash flows

Notes to consolidated financial statements

Report of Indepe ndent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of BioAtla, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of BioAtla, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’/members’

equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrual of Clinical Trial Expenses

Description of the Matter

During 2021, the Company incurred $58.3 million for research and development expenses and as of December 31, 2021 accrued $6.2 million for clinical trial costs.

A substantial portion of the Company’s ongoing research and development activities are conducted by third-party service providers, including clinical research organizations (“CROs”).

External costs to be paid to CROs are accrued and expensed based upon actual work completed in accordance with signed agreements.

Auditing management’s accounting for accrued clinical trial costs is especially challenging because the evaluation is dependent upon a high-volume of data and input exchanged between clinical personnel and third-party service providers, such as the total trial management costs, number of sites activated, the number of patients enrolled, and the number of patient visits, which is tracked in spreadsheets and other end user computing programs.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the accounting for accrued clinical trial expenses.

For example, we tested controls over management’s assessment and measurement of estimated accrued clinical trial costs, including patient enrollment and total costs billed but unpaid as of year end.

To test the completeness of the Company’s accrued clinical trial expenses, we obtained from third-parties confirmation of the number of patients enrolled and costs billed but unpaid as of year end for significant clinical trials.

We obtained an understanding of the status of significant clinical trial activities from accounting personnel and the clinical project managers to understand the status of significant clinical trial activities.

To assess the appropriate measurement of accrued clinical trial expenses, we inspected key terms, timelines of completion, activities and costs for a sample of vendor contracts, including amendments, and compared these to management’s analyses used in tracking the progress of service agreements.

We also tested a sample of subsequent payments by agreeing the amount of the payment to the invoice and to the amount accrued.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2016.

San Diego, California

February 28, 2022

BioAtla, Inc.

Consolidate d balance sheets

(in thousands, except share/unit amounts)

Current assets:

Cash and cash equivalents

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Operating lease right-of-use-asset, net

Liabilities and Stockholders’

Current liabilities:

Accounts payable and accrued expenses

Current portion of deferred rent

Current portion of deferred revenue

Operating lease liabilities

Total current liabilities

Long-term accrued interest

Deferred rent, less current portion

Operating lease liabilities, less current portion

Liability to licensor

Total liabilities

Commitments and contingencies (Note 6)

Stockholders' equity:

Preferred stock, $ 0.0001 par value;

200,000,000 shares authorized at December 31,

2021 and 2020;

0 shares issued and outstanding at December 31, 2021 and 2020

Common stock, $ 0.0001 par value;

350,000,000 authorized at December 31,

2021 and 2020;

35,799,233 shares and 32,171,560 shares issued and outstanding at

December 31, 2021 and 2020

Class B common stock, $ 0.0001 par value;

15,368,569 shares authorized at

December 31, 2021 and 2020;

1,492,059 shares issued and

outstanding at December 31, 2021 and 2020

Additional paid-in capital

Accumulated deficit

Total stockholders' equity

Total liabilities and stockholders’

See accompanying notes.

BioAtla, Inc.

Consolidated st atements of operations and comprehensive loss

(in thousands, except share/unit and per share/unit amounts)

Years ended December 31,

Collaboration and other revenue

Operating expenses:

Research and development expense (includes related party amounts of $ 0 , $ 0 , and $ 1,885 , respectively)

General and administrative expense (includes related party amounts of $ 0 , $ 0 , and $ 15 , respectively)

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Interest expense (includes related party amounts of $ 0 , $ 147 and $ 52 , respectively)

Change in fair value of derivative liability

Gain (loss) on extinguishment of long-term debt

Other income (expense)

Total other income (expense)

Consolidated net loss and comprehensive loss

Net loss attributable to noncontrolling interests

Net loss attributable to BioAtla, Inc./BioAtla LLC

Net loss allocable to Class C preferred unit holders

Class C preferred return

Net loss attributable to Class A unit holders

Net loss per unit attributable to Class A unit holders, basic and diluted

Weighted-average Class A units outstanding, basic and diluted

Net loss per common share, basic and diluted (1)

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

(1) The net loss attributable to common stockholders and related per share amounts for the year ended December 31, 2020 are based on the period from July 10, 2020 to December 31, 2020, the period where the Company had outstanding common stock (see Note 1).

See accompanying notes.

BioAtla, Inc.

Consolidated statements of convertib le preferred stock and stockholders’/members’

equity (deficit)

(in thousands, except share/unit amounts)

Series D convertible

preferred stock

Class C preferred

Class A units

stockholders’/

members’

equity (deficit)

Balance at Ended December 31, 2018

Noncontrolling interest

Warrants issued by affiliates in

connection with modification

of convertible promissory notes

Assumption of unvested profits

interest liability by affiliates

Assumption of vested profits

interest liability by affiliates

Beneficial conversion feature in

convertible promissory notes

Balance at December 31, 2019

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

Assumption of profits interest

liability by affiliate

Change in profits interest liability

Noncontrolling interest—

distribution of net assets

to affiliate and related

deconsolidation

LLC Conversion

Conversion of Series D convertible

preferred stock into common

( 199,791,519

Initial public offering, net of

$ 19,032 of issuance costs

Stock-based compensation expense

Balance at December 31, 2020

Issuance of common stock,

net of $ 4,007 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

Taxes related to net share

settlement of equity awards

Stock-based compensation expense

Balance at December 31, 2021

See accompanying notes.

BioAtla, Inc.

Consolidated sta tements of cash flows

(in thousands)

Years ended December 31,

Cash flows from operating activities

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

Depreciation and amortization

Loss on disposal of property and equipment

Change in fair value of derivative liability

Change in fair value of profits interest liability

Loss/(gain) on extinguishment of debt

Stock-based compensation

Non-cash interest

Accrued interest

Deferred rent

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable and accrued expenses

Accounts payable and accrued expenses—related parties

Deferred revenue

Right-of-use assets and lease liabilities, net

Net cash used in operating activities

Cash flows from investing activities

Purchases of property and equipment

Net cash used in investing activities

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 financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosure of non-cash investing and financing activities

Property and equipment additions included in accounts payable and accrued

Fair value of warrants issued by affiliates in connection with modification of

convertible promissory notes

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

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

accrued expenses

See accompanying notes.

BioAtla, Inc.

Notes to consol idated financial statements

Organization and summary of significant accounting policies

BioAtla, LLC was formed in Delaware in March 2007 and, after undergoing two separate reorganizations that are further discussed below, was converted to a Delaware corporation in July 2020 and was renamed BioAtla, Inc.

(BioAtla, Inc.

together with the Pre-Division Predecessor and the Post-Division Successor as defined below, the “Company”).

The Company has a proprietary platform for creating biologics, including its conditionally active biologics (“CAB”

or “CABs”).

CABs have been designed to be active only under certain conditions found in diseased tissue, while remaining inactive in normal tissue.

The Company is currently in clinical development of its two lead CAB antibody drug conjugates (“CAB ADC”) targeting AXL and ROR2 receptors.

In March 2019, BioAtla, LLC (the "Pre-Division Predecessor") was divided into three separate and distinct Delaware limited liability companies (the “Division”) as follows:

1) BioAtla, LLC renamed to BioAtla Holdings, LLC (“BioAtla Holdings”), 2) a new legal entity named Inversagen, LLC (“Inversagen”), and 3) a new legal entity named BioAtla, LLC (the “Post-Division Successor”

and together with BioAtla Holdings and Inversagen, the “Post-Division LLCs”).

Upon the Division, each Post-Division LLC had substantially the same form of operating agreement and capital structure as the Pre-Division Predecessor, with the following exceptions:

i) 1,750,000 Class B units issued by the Post-Division Successor but not by BioAtla Holdings or Inversagen, ii) the outstanding warrants of the Pre-Division Predecessor at the Division date were transferred to the Post-Division Successor (see Note 7), and iii) the Class C units of the Post-Division Successor had liquidation preferences and a preferred return not included in the operating agreements of BioAtla Holdings and Inversagen.

In connection with the Division, the Pre-Division Predecessor’s holdings of EXUMA Biotech Corp.

(“EXUMA”, formerly F1 Oncology, Inc.) common and preferred stock (see Note 12) remained in BioAtla Holdings and certain rights related to the application of CAB technology in senescent cell therapy were transferred to the Post-Division Successor and simultaneously licensed to Inversagen (see Note 10).

The remaining assets and liabilities (including ownership of Himalaya Therapeutics SEZC, or "HTKY", and its wholly-owned subsidiary, Himalaya Therapeutics HK Limited as described below in “Principles of consolidation and deconsolidation”), and substantially all of the operations of the Pre-Division Predecessor, including all existing employees, were transferred to the Post-Division Successor.

Each of the Pre-Division Predecessor’s members at the time of the Division continued as a member in the Post-Division Successor, BioAtla Holdings and Inversagen, and each entity has Dr.

Jay Short and his spouse, Carolyn Anderson Short, as its LLC managers.

There are no shared services agreements between the Company and BioAtla Holdings or Inversagen.

The Company has determined that Inversagen is a variable interest entity (“VIE”), the Company is not the primary beneficiary of Inversagen, and that the Post-Division LLCs are under the common control of Jay and Carolyn Short.

The Company does not consolidate either BioAtla Holdings or Inversagen (see Note 10).

In addition, the Company has no direct equity investment in either BioAtla Holdings or Inversagen that require either equity method or cost method accounting.

The assets, liabilities, and employees transferred to the Post-Division Successor in the Division met the definition of a business and the transfer qualifies as a change in reporting entity under Accounting Standards Codification (“ASC”) 250-10-45-21.

As such, the historical financial statements of the Pre-Division Predecessor are deemed to be those of the Post-Division Successor, even for periods prior to its formation.

As a transfer of a business to an entity under common control, the assets and liabilities of the Pre-Division Predecessor were transferred to the Post-Division Successor at historical carrying values.

At the Division date, the Pre-Division Predecessor’s investment in EXUMA and the assets licensed to Inversagen had a zero carrying value and neither EXUMA nor Inversagen had material operations.

As such, the Pre-Division historical financial statements presented herein are the historical financial statements of the Pre-Division Predecessor without adjustment.

In connection with the Division, certain modifications were made to then outstanding debt agreements and units, including:

i) the participation threshold of each Class B unit in each Post-Division LLC was adjusted for the impact of the Division (see Note 8), ii) the amendment of the Pfizer Note and 2018 Notes (as defined and described in Note 4), and iii) the issuance, to both Pfizer and the holders of the 2018 Notes, of conditional warrants by BioAtla Holdings and Inversagen which become exercisable upon the conversion of the Pfizer Note and 2018 Notes into capital stock of the Post-Division Successor (see Note 4).

The Post-Division Successor converted to a Delaware corporation in July 2020 as part of the Corporate Reorganization defined and described below, and was renamed BioAtla, Inc.

BioAtla, Inc.

is the final successor to the Pre-Division Predecessor and the Post-Division Successor, and collectively these entities are referred to as “the Company.”

The historical financial statements of the Company prior to the Corporate Reorganization are those of the Pre-Division Predecessor and the Post-Division Successor without adjustment.

Corporate Reorganization and Series D Financing

In July 2020, BioAtla, LLC (the Post-Division Successor) completed a series of transactions (the “Corporate Reorganization”) in connection with the conversion from a limited liability company into a Delaware corporation, the spin-off of Himalaya Therapeutics SEZC, and the completion of a Series D convertible preferred stock financing.

The Corporate Reorganization involved the formation of Himalaya Parent LLC as a wholly owned subsidiary of BioAtla, LLC and the formation of BioAtla MergerSub LLC, as a wholly owned subsidiary of Himalaya Parent LLC.

Under the Agreement and Plan of Merger (the “Merger Agreement”), BioAtla, LLC was merged into and with BioAtla MergerSub LLC, with BioAtla, LLC surviving, and the members of BioAtla, LLC immediately prior to the effective time of the Merger Agreement received membership interests, on a one-for-one basis, of Himalaya Parent LLC as consideration, and the then-outstanding warrants to purchase equity of BioAtla, LLC were converted into warrants to purchase common shares of common stock of BioAtla, Inc.

(see Note 7).

The Himalaya Parent

LLC operating agreement provided identical equity rights for the then outstanding units of BioAtla, LLC.

(i) the membership interests of BioAtla, LLC held by Himalaya Parent LLC were exchanged for 6,220,050 shares of BioAtla, Inc.

common stock, (ii) BioAtla, Inc.

issued an aggregate of 59,164,808 shares of Series D convertible preferred stock to Himalaya Parent LLC and Himalaya Parent LLC issued an aggregate of 59,164,808 Class D units to the holders of convertible notes of BioAtla, LLC in connection with the conversion of their convertible notes into Class D units of Himalaya Parent LLC (see Note 4), (iii) BioAtla, LLC distributed to Himalaya Parent LLC its equity interests in Himalaya Therapeutics SEZC, a then majority-owned subsidiary which is engaged in the development of a set of antibodies in the field of oncology primarily in Greater China, (iv) Himalaya Parent LLC assumed the profits interest liability of BioAtla, LLC (see Note 8) and (v) BioAtla, LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to BioAtla, Inc.

Following the Corporate Reorganization, Himalaya Parent LLC owned 59,164,808 shares of BioAtla, Inc.

Series D convertible preferred stock and 6,220,050 shares of BioAtla, Inc.

common stock, all of which were subsequently distributed ("the Distribution") to the members of Himalaya Parent, LLC.

As a result of the sale of 140,626,711 shares of Series D convertible preferred stock to new investors in July 2020 (see Note 7), BioAtla, Inc.

was not controlled by Himalaya Parent LLC and BioAtla, Inc.

does not control Himalaya Parent LLC subsequent to the distribution discussed in item (iii) above (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.

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.

Reverse Stock Split

On December 2, 2020, the Company effected a 1-for-13 reverse stock split of its common stock.

The par value and the authorized shares of the common stock were not adjusted as a result of the reverse stock split.

The reverse stock split resulted in an adjustment to the convertible preferred stock conversion price to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.

The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split.

No adjustments have been made to any period for the units outstanding prior to the LLC Conversion.

Principles of Consolidation and Deconsolidation

Prior to the Corporate Reorganization in July 2020, the consolidated financial statements included the accounts of BioAtla, LLC and those of its majority owned subsidiary Himalaya Therapeutics SEZC that had no material operations.

Himalaya Therapeutics SEZC also had a wholly owned subsidiary, Himalaya Therapeutics HK Limited that had no material operations.

All intercompany balances were eliminated in consolidation.

In connection with the Corporate Reorganization, Himalaya Therapeutics SEZC and Himalaya Therapeutics HK Limited were deconsolidated without material impact to the consolidated financial statements.

Subsequent to the Corporate Reorganization and subsequent to the Distribution as defined and described above, Himalaya Parent LLC does not control, is not under common control with, and is not consolidated by BioAtla, Inc.

and BioAtla, Inc.

is a single legal entity with no consolidated variable interest entities ("VIEs") or subsidiaries (see Note 10).

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 December 31, 2021, the Company had an accumulated deficit of $ 186.3 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 for 12 months after the date the consolidated financial statements for the year ended December 31, 2021 are issued.

Variable Interest Entities

The Company consolidates entities in which it has a controlling financial interest.

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”).

VIEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently, (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity and (iii) the legal entity is structured with substantive voting rights.

A VIE is an entity that lacks one or more of the characteristics of a voting interest entity.

The Company has a controlling financial interest in a VIE when the Company has a variable interest or interests that provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether or not it has a controlling financial interest (see Notes 10 and 12).

Use of Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”).

The preparation of the Company’s consolidated financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes.

The most significant estimates in the Company’s consolidated financial statements relate to revenue recognition, accruals for research and development costs, equity-based compensation and fair value measurements.

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.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.

The Company views its operations and manages its business in one operating segment.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

Concentrations of Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents.

The Company maintains deposits in federally insured financial institutions in excess of federally insured limits.

The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

For the years ended December 31, 2021, 2020, and 2019 , BeiGene, as defined and described in Note 9, represented 0 %, 100 % and 91 %, respectively, of total revenues.

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful life of the related assets.

Leasehold improvements are stated at cost and amortized on a straight-line basis over the lesser of the remaining term of the related lease or the estimated useful life of the leasehold improvements.

Repairs and maintenance costs are charged to expense as incurred and expenditures that materially extend the useful lives of assets are capitalized.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, such as property and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Fair value would be assessed using discounted cash flows or other appropriate measures of fair value.

The Company has no t recognized any impairment losses for the years ended December 31, 2021, 2020, and 2019 .

The Company adopted the Accounting Standard Update (“ASU”) 2016-02, Leases, and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively, “ASC 842”), as of January 1, 2021.

See the section Recently Adopted Accounting Pronouncements below for more information.

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.

The Company elected to use the transition relief package of practical expedients but did not elect to use the hindsight practical expedient in determining a lease term and impairment of ROU assets at the adoption date.

For short-term leases, defined as leases with a term of twelve months or less, the Company elected the practical expedient to not recognize an associated lease liability and ROU asset.

Lease payments for short-term leases are expensed on a straight-line basis over the lease term.

The Company does not currently have any short-term leases.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the Company’s consolidated balance sheets.

The Company does not have any finance leases.

Lease Accounting Prior to the Adoption of ASC 842

For operating leases, the Company recorded rent expense using the straight-line method over the lease term, which includes the period of time from when the Company takes possession of the leased space until leasehold improvements are completed and the space is occupied.

The difference between rent expense and amounts paid under the lease agreement is deferred in the accompanying consolidated balance sheets.

Tenant improvement allowances and other lease incentives are recorded as liabilities and are amortized on the straight-line basis over the lease term as reductions to rent expense.

Beneficial Conversion Features

A beneficial conversion feature is a non-detachable conversion feature that is “in the money”

at the commitment date, which requires recognition of interest expense for underlying debt instruments and a deemed dividend for underlying equity instruments.

A conversion option is “in the money”

if the effective conversion price is lower than the commitment date fair value of the share into which it is convertible.

Accounting for Derivatives

The Company evaluates its convertible instruments and other contracts to determine if those contracts or embedded components of those contracts are required to be recognized under Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging .

The result of this accounting treatment is that the derivative is carried at fair value as an asset or liability with changes in fair value recognized in earnings as they occur.

Although separately measured at fair value, the fair value of bifurcated embedded derivatives is presented with the host contract in the consolidated balance sheets.

Changes in the fair value of derivatives are recorded in the accompanying consolidated statements of operations and comprehensive loss as a component of other income (expense).

Revenue Recognition

The Company recognizes revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount of the consideration the Company is entitled to receive in exchange for such product or service.

In doing so, the Company follows a five-step approach:

The Company considers the terms of a contract and all relevant facts and circumstances when applying the revenue recognition standard.

A customer is a party that has entered into a contract with the Company, where the purpose of the contract is to obtain a product or a service that is an output of the Company’s ordinary activities in exchange for consideration.

To be considered a contract, (i) the contract must be approved (in writing, orally, or in accordance with other customary business practices), (ii) each party’s rights regarding the product or the service to be transferred can be identified, (iii) the payment terms for the product or the service to be transferred can be identified, (iv) the contract must have commercial substance (that is, the risk, timing or amount of future cash flows is expected to change as a result of the contract), and (v) it is probable that the Company will collect substantially all of the consideration to which it is entitled to receive in exchange for the transfer of the product or the service.

A performance obligation is defined as a promise to transfer a product or a service to a customer.

The Company identifies each promise to transfer a product or a service (or a bundle of products or services, or a series of products and services that are substantially the same and have the same pattern of transfer) that is distinct.

A product or a service is distinct if both (i) the customer can benefit from the product or the service either on its own or together with other resources that are readily available to the customer and (ii) the Company’s promise to transfer the product or the service to the customer is separately identifiable from other promises in the contract.

Each distinct promise to transfer a product or a service is a unit of accounting for revenue recognition.

If a promise to transfer a product or a service is not separately identifiable from other promises in the contract, such promises should be combined into a single performance obligation.

The transaction price is the amount of consideration the Company is entitled to receive in exchange for the transfer of control of a product or a service to a customer.

To determine the transaction price, the Company considers the existence of any significant financing component, the effects of any variable elements, noncash consideration and consideration payable to the customer.

If a significant financing component exists, the transaction price is adjusted for the time value of money.

If an element of variability exists, the Company must estimate the consideration it expects to receive and uses that amount as the basis for recognizing revenue as the product or the service is transferred to the customer.

There are two methods for determining the amount of variable consideration:

If a contract has multiple performance obligations, the Company allocates the transaction price to each distinct performance obligation in an amount that reflects the consideration the Company is entitled to receive in exchange for satisfying each distinct performance obligation.

For each distinct performance obligation, revenue is recognized when the Company transfers control of the product or the service applicable to such performance obligation.

In those instances where the Company first receives consideration in advance of satisfying its performance obligation, the Company classifies such consideration as deferred revenue until (or as) the Company satisfies such performance obligation.

In those instances where the Company first satisfies its performance obligation prior to its receipt of consideration, the consideration is recorded as accounts receivable.

The Company expenses incremental costs of obtaining and fulfilling a contract as incurred if the expected amortization period of the asset that would be recognized is one year or less, or if the amount of the asset is immaterial.

Otherwise, such costs are capitalized as contract assets if they are incremental to the contract and amortized to expense proportionate to revenue recognition of the underlying contract.

Research and Development Expenses

The Company’s activities have largely consisted of research and development efforts related to developing our CAB programs.

Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, facilities and other overhead expenses, clinical trials, contract services and other outside expenses.

Research and development expenses are charged to expense as incurred.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in the accompanying consolidated balance sheets as prepaid or accrued expenses.

When evaluating the adequacy of the accrued expenses, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period.

Actual results could differ from the Company’s estimates.

As of December 31, 2021, the Company has accrued $ 6.2 million related to clinical trial costs.

The Company has entered into contracts related to its clinical trials with clinical research organizations.

The Company reviews and accrues clinical trial costs based on work performed, which relies on estimates of total trial management costs, sites activated, patients enrolled, and number of patient visits.

The Company follows this method since reasonably dependable estimates of the costs applicable to clinical trials can be made.

Accrued clinical trial costs are subject to revisions as the trials progress.

Revisions are charged to expense in the period in which the facts that give rise to the revision become known.

Historically, revisions have not resulted in material changes to research and development expense;

however, a modification in the protocol of a clinical trial or cancellation of a trial could result in a change to the Company's results of operations.

Costs related to filing and pursuing patent applications are recorded as general and administrative expenses and expensed as incurred since recoverability of such expenditures is uncertain.

Equity-Based Compensation Related to Profits Interest Plan

Prior to the Corporate Reorganization in July 2020, the Company had a profits interest plan that was a liability award plan in accordance with ASC Topic 718, Compensation –

Stock Compensation (Topic 718) .

The Company measured the fair value of each award on the grant date and recognized such fair value over the requisite service period (usually the vesting period) on a straight-line basis.

Once vested, any subsequent change in fair value was recognized immediately.

The fair value of any awards that expired or were forfeited or canceled for no value was adjusted to zero, as they occurred, such that any previously recorded compensation cost would be fully reversed.

Subsequent to the Corporate Reorganization and amendment of the profits interest plan by Himalaya Parent in October 2020, the Company no longer reflects compensation cost and a corresponding capital contribution associated with the ongoing mark-to-market of the Class B profits interests held by Himalaya Parent LLC.

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.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized as income in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized.

In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, exclusive of reversing temporary difference, tax-planning strategies, and the results of recent operations.

If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 % likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense.

Any accrued interest and penalties are included within the related tax liability.

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 Unit/Share

Prior to the Corporate Reorganization, the Company applied the two-class method for calculating and presenting net loss per unit.

In applying the two-class method, earnings are hypothetically allocated between the common, preferred, and other participating securities based on their respective rights to receive non-forfeitable distributions, whether or not declared.

The Company considered its Class A units to be its “common units”

since Class A units were the most subordinate class of equity with respect to preference in liquidation.

In addition, the Class C units were entitled to a preferred return equal to 10 % per annum, simple interest, on the Class C issuance price.

The Company’s Class B units were excluded from the net loss per unit calculations based on the presumption that the units would be settled in cash pursuant to the terms of the Company’s operating agreement.

Basic net loss per Class A unit was calculated by dividing net loss allocable to Class A unit holders (after adjustment for Class C preferred return and allocation of net losses to Class C units) by the weighted-average number of Class A units outstanding during the period.

The Company calculated diluted net loss per unit using the more dilutive of 1) the treasury stock method, if-converted method, or contingently issuable share method, as applicable, or 2) the two-class method.

For the year ended December 31, 2019, the basic and diluted net loss per unit were the same as the inclusion of outstanding warrants, convertible debt or Class C preferred units would be antidilutive.

Subsequent to the Corporate Reorganization, basic net loss per 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 common stock warrants, RSUs, and common stock options outstanding under the Company’s stock option plan.

For the year ended December 31, 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.

The basic and diluted net loss per share for the year ended December 31, 2020 represents only the period from July 10, 2020 to December 31, 2020, the period where the Company had outstanding common stock.

The following table presents the calculation of basic and diluted net loss per share for the period following the Corporate Reorganization (in thousands, except share and per share data):

July 10, 2020

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

Net loss per common share, basic and diluted

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):

Common stock warrants

Common stock options

Restricted stock units

Recent Accounting Pronouncements

Under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, emerging growth companies (“EGC”) can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company elected to retain the ability to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

The Company lost its emerging growth company status on December 31, 2021 because the Company became a large accelerated filer due to the fact that the Company’s public float exceeded $700 million as of the June 30, 2021 measurement date.

The Company adopted the following accounting standards during the year ended December 31, 2021:

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-02, Leases.

The new standard establishes a right-of-use model and requires a lessee to recognize on the balance sheet a right-of-use asset and corresponding lease liability for all leases with terms longer than 12 months.

Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

Effective January 1, 2021, the Company adopted this new standard prospectively using a modified retrospective transition approach.

The Company elected the package of practical expedients permitted under the transition guidance of the new standard, which allowed the Company to carry forward its historical assessment on whether a contract is or contains a lease, lease classification, and initial direct costs.

Upon adoption on January 1, 2021, the Company recognized operating lease ROU assets of $ 4.1 million, and current and non-current operating lease liabilities of $ 1.1 million and $ 5.4 million, respectively.

The difference between the asset and liabilities is primarily attributable to adjustments to the right-of-use asset at transition related to lease incentives and deferred rent.

The adoption of ASC 842 did not have a material impact to Company’s consolidated statements of operations and cash flows from operations.

In December 2019, the FASB issued ASU No.

2019-12 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes.

The Board issued this Update as part of its Simplification Initiative to improve areas of GAAP and reduce cost and complexity while maintaining usefulness.

The main provisions remove certain exceptions including the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

In addition, the amendments simplify income tax accounting in the areas such as income-based franchise taxes, eliminating the requirements to allocate consolidated current and deferred tax expense in certain instances, and a requirement that an entity reflects the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date.

For public companies, the standard is effective for fiscal years beginning after December 15, 2020 and interim periods therein.

The Company adopted ASU 2019-12 on the effective date of January 1, 2021.

The amendments were applied on a prospective basis and the adoption did not have a significant impact on the Company's financial results.

Balance sheet details

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

Prepaid research and development

Other prepaid expenses and current assets

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

Useful life (years)

Furniture, fixtures and office equipment

Laboratory equipment

Leasehold improvements

Less accumulated depreciation and amortization

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

Accounts payable

Accrued compensation

Accrued research and development

Accrued equity issuance costs

Other accrued expenses

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 December 31, 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.

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:

Observable inputs such as quoted prices in active markets.

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

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.

The 2018 Notes (as amended in 2020), the 2019 Notes and the 2020 Notes (each as defined and described in Note 4) contained a redemption feature which was determined to be an embedded derivative requiring bifurcation and separate accounting.

The fair value of the derivative was determined based on an income approach that identified the cash flows using a “with-and-without”

valuation methodology.

inputs used to determine the estimated fair value of the derivative instrument were based primarily on the probability of an underlying event triggering the embedded derivative occurring and the timing of such event.

The following table provides a reconciliation of the embedded derivative liability measured at fair value using Level 3 unobservable inputs (in thousands):

Balance at December 31, 2019

Initial fair value of embedded derivatives issued

Change in fair value

Balance at December 31, 2020

Convertible and other debt

Pfizer convertible promissory note

In December 2015, the Company issued a $ 10.0 million unsecured convertible promissory note (“Pfizer Note”) to certain affiliates of Pfizer, Inc.

(“Pfizer”).

The Pfizer Note accrued interest at 8.0 % per annum with a maturity date in December 2020.

Prior to amendment in March 2019 as described below, the Pfizer Note, including accrued interest, was convertible at the election of the holder into Class C preferred units at a price of $ 3.394142 per unit and was automatically convertible into i) common shares upon the completion of an IPO based on the price per share paid by investors in the IPO or ii) qualified financing shares upon the completion of a qualified financing based on the price per share paid by investors in the qualified financing.

The Company assessed the terms of the Pfizer Note and concluded that it was not share-settled debt, did not contain any embedded derivative features requiring bifurcation and did not contain a beneficial conversion feature.

As a result, the Pfizer Note was carried at cost since the Company did not incur a material amount of issuance costs in connection with the debt.

The Pfizer Note was amended in March 2019 in connection with the Division to provide the lender additional accrued interest upon conversion.

The amended conversion amount of the Pfizer Note was equal to the greater of a) the then outstanding principal plus accrued interest, or b) principal plus accrued interest through December 7, 2020.

In connection with the March 2019 amendment, Pfizer received conditional warrants in BioAtla Holdings and Inversagen which allowed Pfizer to acquire an equity interest in each of BioAtla Holdings and Inversagen upon conversion of the Pfizer Note of the Post-Division Successor.

The amendment of the Pfizer Note was accounted for as a modification, which required prospective consideration of the revised terms.

The Company recognized the initial fair value of the warrants of $ 0.5 million as a fee paid by the Company to the lenders, which was recorded as debt discount on the modified debt and as a capital contribution, as the warrants were written on two entities under common control that were not consolidated with the Company.

The debt discount was amortized to interest expense using the effective interest method over the term of the Pfizer Note.

The fair value of the conditional warrants was determined using the Option Pricing Method based on the underlying value of the assets allocated to BioAtla Holdings and Inversagen .

The Company incurred interest expense in connection with the Pfizer Note of $ 0.6 million and $ 1.0 million for the years ended December 31, 2020 and 2019.

As further described below, the Pfizer Note was amended and settled in connection with the Corporate Reorganization in July 2020.

2018 convertible promissory notes

In August 2018, the Company issued unsecured convertible promissory notes for an aggregate of $ 5.0 million (the “2018 Notes”).

The 2018 Notes accrued interest at 8.0 % per annum with a maturity date in July 2023.

Prior to amendment in March 2019, as described below, the then outstanding principal plus accrued interest under the 2018 Notes was convertible at the election of the holder into Class C preferred units at a price of $ 3.394142 per unit and was automatically convertible into i) common shares upon the completion of an IPO based on the price per share paid by investors in the IPO or ii) qualified financing shares upon the completion of a qualified financing based on the price per share paid by investors in the qualified financing.

The Company assessed the terms of the 2018 Notes and concluded that they were not share-settled debt, did not contain any embedded derivative features requiring bifurcation and did not contain a beneficial conversion feature.

As a result, the 2018 Notes were carried at cost since the Company did not incur a material amount of issuance costs in connection with the issuance of the promissory notes.

The 2018 Notes were amended in March 2019 in connection with the Division to provide the lenders additional accrued interest upon conversion.

The amended conversion amount of the 2018 Notes was equal to the greater of a) the then outstanding principal plus accrued interest, or b) principal plus accrued interest through December 7, 2020.

In connection with the March 2019 amendment, the lenders received conditional warrants in BioAtla Holdings and Inversagen which allowed them to acquire an equity interest in each of BioAtla Holdings and Inversagen upon conversion of the 2018 Notes of the Post-Division Successor.

The amendment of the 2018 Notes was accounted for as a modification, which required prospective consideration of the revised terms.

The Company recognized the initial fair value of the warrants of $ 0.2 million as a fee paid by the Company to the lenders, which was recorded as debt discount on the modified debt and as a capital contribution, as the warrants were written on two entities under common control that were not consolidated with the Company.

The debt discount was amortized to interest expense using the effective interest method over the term of the 2018 Notes.

The fair value of the conditional warrants was determined using the Option Pricing Method based on the underlying value of the assets allocated to BioAtla Holdings.

The underlying value of the assets allocated to Inversagen was immaterial.

The 2018 Notes were amended in April 2020 to add a discount to the conversion prices such that they were convertible (i) automatically into preferred stock upon a qualified equity financing, with a conversion price of 80% of the lowest purchase price per share of preferred stock paid by investors in such qualified equity financing, (ii) automatically convert into common stock upon an initial public offering, with a conversion price of 80% of the price per share of common stock paid by investors in such initial public offering, and (iii) upon the election of each note holder, into Class C preferred units, with a conversion price per share of $ 2.7153136 .

The Company concluded that the amendment was an extinguishment and the fair value of the amended 2018 Notes was equal to the then outstanding principal and accrued interest of the 2018 Notes.

As a result, the Company recognized a loss on extinguishment for the $ 0.2 million of unamortized discounts at the extinguishment date.

In addition, the Company assessed the terms and concluded the amended 2018 Notes:

(i) were not share-settled debt, (ii) contained a redemption feature that was determined to be an embedded derivative requiring bifurcation and (iii) did not contain a beneficial conversion feature.

The $ 2.2 million issuance date fair value of the embedded derivative liability was recorded as a debt discount and amortized to interest expense using the effective interest method over the remaining term of the 2018 Notes.

The Company incurred interest expense, including coupon interest and amortization of debt discounts, in connection with the 2018 Notes of $ 0.4 million and $ 0.4 million for the years ended December 31, 2020 and 2019, respectively.

As further described below, the 2018 Notes were amended and settled in connection with the Corporate Reorganization in July 2020.

2019 convertible promissory notes

Between August and December 2019, the Company issued unsecured convertible promissory notes payable to various entities in an aggregate principal amount of $ 4.0 million (the “2019 Notes”), of which $ 1.5 million was to related parties.

The 2019 Notes accrued interest at 8.0 % per annum with maturity dates of five years after issuance.

The outstanding principal amount and any accrued and unpaid interest on the 2019 Notes was due and payable on the earlier to occur of (i) the maturity date, (ii) an event of default, or (iii) immediately prior to an acquisition event.

The 2019 Notes were convertible (i) automatically into preferred stock upon a qualified equity financing, with a conversion price of 80% of the lowest purchase price per share of preferred stock paid by investors in such qualified equity financing, (ii) automatically into common stock upon an initial public offering, with a conversion price of 80% of the price per share of common stock paid by investors in such initial public offering, and (iii) upon the election of each note holder, into Class C preferred units, with a conversion price per share of $ 2.7153136 .

The number of shares or units issuable upon conversion is determined by dividing the conversion amount by the conversion price, with the conversion amount equal to the greater of a) the then outstanding principal plus accrued interest, or b) principal plus accrued interest through December 7, 2020.

The Company assessed the terms and concluded the 2019 Notes:

(i) were not share-settled debt, (ii) contained a redemption feature that was determined to be an embedded derivative requiring bifurcation and (iii) certain of the notes contained a beneficial conversion feature because the fair value of the securities into which the 2019 Notes were convertible at the time of issuance, the Class C preferred units, was greater than the effective conversion price of the 2019 Notes.

The $ 0.5 million beneficial conversion feature was recorded as additional paid-in capital and a debt discount and the $ 1.8 million issuance date fair value of the embedded derivative liability was recorded as a debt discount, both of which discounts were amortized to interest expense using the effective interest method over the term of the 2019 Notes.

In April and May of 2020 certain of the 2019 Notes, representing $ 2.5 million of the then outstanding principal balance, were amended such that the conversion shares or units issuable upon conversion is the greater of:

(i) the then outstanding principal plus accrued interest divided by $ 0.86866 or (ii) the amount determined by dividing the conversion amount by the conversion price, with the conversion amount equal to the greater of a) the then outstanding principal plus accrued interest, or b) principal plus accrued interest through December 7, 2020.

The amendment of the 2019 Notes was accounted for as a modification, which required prospective consideration of the revised terms.

For the year ended December 31, 2020 and 2019, the Company recognized interest expense, including coupon interest and amortization of debt discounts, in connection with the 2019 Notes of $ 0.3 million and $ 0.1 million, respectively.

As further described below, the 2019 Notes were amended and settled in connection with the Corporate Reorganization in July 2020.

2020 convertible promissory notes

During March, April and May of 2020 the Company issued unsecured convertible promissory notes (the “2020 Notes”) payable to various entities in an aggregate principal amount of $ 2.8 million, of which $ 0.5 million was to related parties.

The 2020 Notes accrued interest at 8.0 % per annum with maturity dates of five years after issuance.

The Company assessed the terms and concluded the 2020 Notes:

(i) were not share-settled debt,(ii) contained a redemption feature that was determined to be an embedded derivative requiring bifurcation and (iii) did not contain a beneficial conversion feature.

The $ 1.2 million issuance date fair value of the embedded derivative liability was recorded as a debt discount which was amortized to interest expense using the effective interest method over the term of the 2020 Notes.

In May of 2020 certain of the 2020 Notes, representing $ 0.1 million of the then outstanding principal balance, were amended such that the conversion shares or units issuable upon conversion is the greater of:

The amendment of the 2020 Notes was accounted for as a modification, which required prospective consideration of the revised terms.

For the year ended December 31, 2020, the Company recognized interest expense, including coupon interest and amortization of debt discounts, in connection with the 2020 Notes of $ 0.1 million.

As further described below, the 2020 Notes were amended and settled in connection with the Corporate Reorganization in July 2020.

Amendment and settlement of convertible notes

As a condition of the closing of the Series D financing in July 2020, the Pfizer Note, 2018 Notes, 2019 Notes and 2020 Notes (and together, the “Convertible Notes”) were amended to settle the Convertible Notes into 59,164,808 Class D units of Himalaya Parent LLC.

As of the settlement date, the aggregate outstanding principal and accrued interest of the Convertible Notes was $ 21.8 million and $ 4.7 million, respectively.

The Pfizer Note converted into Class D units at a conversion price of $ 0.51554931 and the 2018 Notes and 2019 Notes converted into Class D units at a conversion price of $ 0.412439448 , which is 80% of the price paid by investors in the Series D financing.

As of the July 10, 2020 settlement date, the Convertible Notes had a carrying value of $ 27.9 million, including related accrued interest, embedded derivatives and unamortized debt discounts.

The fair value of the Class D units of Himalaya Parent LLC issued to the noteholders in exchange for the Convertible Notes was $ 30.6 million, resulting in a loss on extinguishment of convertible debt of $ 2.7 million.

The fair value per unit of the Class D units of Himalaya Parent LLC was based on the fair value per share paid by investors in the Company’s Series D financing.

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 and Comprehensive Loss for the twelve months ended December 31, 2021.

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 .

However, it is not reasonably certain the Company will exercise the option to renew when the lease term ends and thus, the incremental term was excluded from the calculation of the lease liability.

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

Supplemental balance sheet information related to lease liabilities at December 31, 2021, was as follows (in thousands):

Lease-Related Assets and Liabilities

Financial Statement Line Items

As of December 31, 2021

Right-of-use assets:

Operating leases

Operating lease right-of-use assets

Total right-of-use assets

Lease Liabilities:

Operating leases

Operating lease liabilities

Operating lease liabilities, noncurrent

Total lease liabilities

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

December 31, 2021

Operating lease expense

Variable lease expense

Total lease expense, net

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 year ended December 31, 2021.

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

December 31, 2021

Weighted average remaining lease term (in years)

Weighted average discount rate percentage

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

December 31, 2021

Cash paid for amounts included in the measurement of operating leases

Maturities of operating lease liabilities as of December 31, 2021 were as follows (in thousands):

Years ending December 31:

Total future lease payments

Less imputed interest

Total operating lease liabilities

As of December 31, 2020, prior to the Company’s adoption of ASC 842, annual minimum payments under noncancelable operating leases were as follows (in thousands):

Years ending December 31:

Total minimum lease payments

Under ASC 840, during the years ended December 31, 2020 and 2019, net rent expense was $ 1.7 million and $ 1.1 million, respectively.

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.

Convertible preferred stock and members’/stockholders’

equity (deficit)

Convertible preferred stock

The Company had convertible preferred stock outstanding between the date of its Series D financing in July 2020 until the closing of its IPO in December 2020.

The Company’s convertible preferred stock was classified as temporary equity in the accompanying consolidated balance sheets in accordance with authoritative guidance for the classification and measurement of potentially redeemable securities whose redemption is based upon certain change in control events outside of the Company’s control, including liquidation, sale or change of control of the Company.

Because these change in control events were not probable, the Company did not adjust the carrying values of the convertible preferred stock to redemption value.

Series D financing

On July 13, 2020, BioAtla, Inc.

entered into a Series D Preferred Stock Purchase Agreement, pursuant to which it issued 140,626,711 shares of Series D convertible preferred stock at $ 0.51554931 per share, for aggregate cash proceeds of $ 72.5 million.

The Company incurred $ 4.3 million of issuance costs.

Initial public offering and related transactions

In December 2020, the Company completed its IPO selling 12,075,000 shares its common stock at $ 18.00 per share.

Proceeds from the Company’s IPO, net of underwriting discounts and commissions and other offering costs, were $ 198.3 million.

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 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.

Description of securities of Delaware corporation

The Company is authorized to issue 200,000,000 shares of preferred stock, par value $ 0.0001 per share, 350,000,000 shares of common stock, par value $ 0.0001 per share, and 15,368,569 shares of Class B common stock, par value $ 0.0001 per share.

Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of the Company’s common stock and Class B common stock are entitled to receive dividends only if declared from time to time by the Company’s board of directors out of assets which are legally available.

Liquidation preferences

Upon any liquidation, dissolution or winding-up of the Company, holders of the Company’s common stock and Class B common stock are entitled to share ratably in all assets remaining after payment of all liabilities and the liquidation preferences of any of our outstanding shares of preferred stock.

Holders of the Company’s common stock have no conversion rights, while holders of the Company’s Class B common stock shall have the right to convert each share of Class B common stock into one share of common stock at such holder’s election, provided that as a result of such conversion, such holder would not beneficially own in excess of 4.99% of any class of the Company’s securities registered under the Securities Exchange Act of 1934 , as amended, unless otherwise as expressly provided for in the Company’s amended and restated certificate of incorporation.

This ownership limitation may be increased or decreased to any other percentage designated by such holder of Class B common stock upon 61 days’

notice to the Company.

Voting rights

Except as otherwise expressly provided in the Company’s amended and restated certificate of incorporation or as required by applicable law, on any matter that is submitted to a vote by the Company’s stockholders, holders of the Company’s common stock are entitled to one vote per share of common stock, and holders of the Company’s Class B common stock are not entitled to any votes per share of Class B common stock, including for the election of directors.

Operating agreement

Prior to the Corporate Reorganization, the Company’s operating agreement, as amended and restated, provided for classes of units, allocation of profits and losses, distribution preferences, other member rights and management of the LLC.

The operating agreement designated Class A units, Class B units and Class C preferred units.

The Class B units and Class C preferred units were non-voting, except as required by law.

The Class B units were liability awards pursuant to authoritative guidance and, as such, were reported at fair value outside of members’

Members were limited in their liability to their capital contributions.

Common stock warrants

The Company issued the warrants described below in 2016 in connection with certain advisory services.

The warrants became exercisable upon our IPO for a period of 365 and 450 days .

Upon adoption of ASU No.

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

In December 2021, a total of 566,586 warrants with an exercise period of 365 days after our IPO expired unexercised.

As of December 31, 2021 the remaining common stock warrants below are exercisable and expire as follows:

Outstanding and exercisable

Exercise price per share

Expiration date

March 12, 2022

Noncontrolling interests

In December 2018, the Company issued a noncontrolling interest in HTKY in the form of ordinary shares in connection with the termination of a collaboration and license agreement.

In addition to the ordinary shares issued, certain employees and shareholders of the Company purchased 19,000,000 ordinary shares of HTKY for an aggregate purchase price of $ 19,000 , of which 5,000,000 were repurchased for $ 5,000 in March 2019.

As of December 31, 2019, the Company held all of the outstanding HTKY preferred equity, consisting of 97,183,256 Series B convertible preference shares, and 1,000 ordinary shares.

The Series B convertible preference shares had a liquation preference equal to the greater of $ 1.00 per share, plus declared and unpaid dividends, or the if-converted value, and pay non-cumulative dividends in preference to the holders of ordinary shares at an annual rate of 7 % of the purchase price per share when, as and if declared by the board.

The net income (loss) of HTKY was allocated to the ordinary shareholders on a pro rata basis.

However, any net income was initially be allocated to the preference shares until the liquidation preference is met.

Thereafter, preference shares would only be allocated dividends declared by the board of directors of HTKY.

For the year ended December 31, 2019, substantially all of the $ 61,000 net loss of HTKY was allocated to the noncontrolling interest.

HTKY had no material operations for the year ended December 31, 2020.

As discussed in Note 1, HTKY was deconsolidated as part of the July 2020 Corporate Reorganization.

2020 Equity Incentive Plan

On October 29, 2020, the Company’s board of directors approved the adoption of the BioAtla, Inc.

2020 Equity Incentive Plan (the “2020 Plan”) and approved certain amendments to the 2020 Plan in December 2020.

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

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 December 31, 2021 and 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.

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 recognized for all equity awards under the 2020 Plan has been reported in the consolidated statements of operations and comprehensive loss as follows (in thousands):

Research and development

General and administrative

Restricted stock units

In December 2020, the Company granted an aggregate of 1,920,037 restricted stock units (“RSUs”) to certain of the Company’s employees and service providers, including executive officers and non-employee directors.

The following table summarizes RSU activity under the 2020 Plan for the years ended December 31, 2021 and 2020:

Outstanding at December 31, 2019

Outstanding at December 31, 2020

Outstanding at December 31, 2021

As of December 31, 2021 , total unrecognized stock-based compensation expense for RSUs was $ 17.5 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.2 years.

Stock options

The following table summarizes stock option activity under the 2020 Plan for the year ended December 31, 2021 and 2020 (in thousands, except share and per option data and years):

Balance at December 31, 2019

Balance at December 31, 2020

Balance at December 31, 2021

Vested and expected to vest at December 31, 2021

Exercisable at December 31, 2021

As of December 31, 2021 , total unrecognized stock-based compensation cost for unvested common stock options was $ 15.0 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.1 years.

The weighted- average grant date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $ 24.61 per share and $ 11.66 per share, respectively.

The total fair value of options vested during the year ended December 31, 2021 was $ 1.9 million.

No options vested during the years ended December 31, 2020 and 2019.

Upon option exercise, the Company issues new shares of its common stock.

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

Expected volatility

Risk-free interest rate

Expected dividend yield

Expected term

Expected volatility.

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

The peer group was developed based on companies in the biotechnology industry.

Risk-free interest rate.

The Company bases the risk-free interest rate assumption on the U.S.

Treasury’s rates for U.S.

Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

Expected dividend yield.

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

Expected term.

For employees, the expected term represents the period of time that options are expected to be outstanding.

Because the Company has minimal historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period.

For nonemployees, the expected term is generally the contractual term of the option.

Employee Stock Purchase Plan

In December 2020, the Company’s board of directors and stockholders approved the BioAtla, Inc.

Employee Stock Purchase Plan (the “ESPP”).

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

As of December 31, 2021 and 2020 , a total of 833,993 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) .

The ESPP plan was amended in September 2021 to change the offering periods to end on May 15th and November 15th of each year beginning January 1, 2022.

In February 2021, employees began to enroll in the ESPP and the Company’s first offering period commenced.

ESPP purchase transactions occurred on June 30, 2021 and on December 31, 2021.

During the year ended December 31, 2021, the Company issued 11,182 shares of common stock under the ESPP.

As of December 31, 2021, 822,811 shares of common stock remained available for issuance under the ESPP.

Stock-based compensation expense related to the ESPP for the twelve months ended December 31, 2021 was immaterial.

Common stock reserved for future issuance

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

Warrants for the purchase of common stock

Common stock options and restricted stock units issued and outstanding

Awards available for future issuance under the 2020 Plan

Awards available for future issuance under the ESPP

Total common stock reserved for future issuance

Profits interest incentive plan

Prior to the Corporate Reorganization in July 2020, the Company maintained a Profits Interest Incentive Plan (the “Plan”) for selected employees, consultants and other service providers.

In connection with the Corporate Reorganization, Himalaya Parent LLC assumed the Plan and the $ 1.0 million fair value of the liability was reclassified to additional paid-in capital.

As of December 31, 2019, the Company had reserved a total of 16,665,977 Class B units for issuance under the Plan.

The Class B units generally vested over four years , were subject to continued service requirements, and only provide the participants with benefits (in the form of distributions) if the distributions from BioAtla exceed specified threshold values.

Generally, upon termination of services, all unvested Class B units were forfeited to the Company and the Company had the right, but not the obligation, to repurchase the vested Class B units within two years at the termination date fair value.

The Class B unit repurchase would be settled in cash, at all times at the option of the Company, and the holder did not have the right to put the Class B units to the Company under any condition.

Vested Class B units that are neither repurchased by the Company nor forfeited remained subject to the terms of the Company’s operating agreement.

The Class B units were not subject to sale, assignment, transfer, pledge, or allowed to be otherwise encumbered or disposed of without prior written consent of the Company.

No Class B units had been repurchased through the date of the Corporate Reorganization.

Activity under the Plan is summarized as follows:

Outstanding at December 31, 2019

Assumption of Plan by Himalaya Parent LLC on July 10, 2020

Outstanding at December 31, 2020

Vesting of Class B units under the Plan is summarized as follows:

Unvested at December 31, 2019

Assumption of unvested Class B units by Himalaya Parent LLC on

July 10, 2020

Unvested at December 31, 2020

The Class B units were liability awards pursuant to authoritative guidance, which required the Company to record a liability based on the fair value of the Class B units as of each reporting period.

Through the date of the Corporate Reorganization, the fair value of the liability awards was determined based on the Company’s estimated enterprise value, which was allocated based on a hybrid model that, in addition to the option pricing model, considering the Company’s expected IPO.

Under the option pricing method, units were valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each unit class.

In connection with the Division, the distribution thresholds that had to be achieved before the Class B unit holders were entitled to distributions were adjusted, resulting in a $ 0.9 million reduction to the aggregate profits interest liability between the Predecessor and the Post-Division LLCs at the date of the Division.

The thresholds of the Post-Division Successor were changed in order to reflect the impact of the assets assigned to BioAtla Holdings and Inversagen in the Division.

For the year ended December 31, 2019, the profits interest liability decreased $ 7.4 million, including the $0.9 million reduction described above, and $ 0.8 million recognized as additional paid-in capital related to the fair value of vested Class B units assumed by BioAtla Holdings and Inversagen in connection with the Division.

In addition, the Company recognized stock-based compensation expense and additional paid-in capital of $ 0.2 million related to the fair value of the unvested Class B units assumed by BioAtla Holdings and Inversagen in connection with the Division since these Class B unit holders were employees of the Post-Division Successor, and were not expected to provide services to BioAtla Holdings or Inversagen.

The following table provides a reconciliation of the profits interest liability (in thousands):

Balance at December 31, 2019

Decrease in fair value of vested liability (Pre-Corporate Reorganization) recognized as decrease to stock-based

compensation expense

Fair value of vested liability assumed by Himalaya Parent LLC on July 10, 2020 recognized as additional paid-in

Balance at December 31, 2020

The allocation of equity-based compensation, including $ 0.7 million from Himalaya Parent as a capital contribution during 2020, for all Class B units is as follows (in thousands):

Years ended December 31,

Research and development

General and administrative

Collaboration, license and option agreements

Global Co-Development and Collaboration Agreement with BeiGene

In April 2019, the Company entered into a Global Co-Development and Collaboration agreement (the “BeiGene Collaboration”) with BeiGene, Ltd.

and BeiGene Switzerland GmbH (collectively “BeiGene”), a commercial-stage biopharmaceutical company, for the development, manufacturing and commercialization of the Company’s investigational CAB CTLA-4 antibody (BA3071).

The Company and BeiGene amended the Global Co-Development and Collaboration agreement in December 2019 and in October 2020 (the “Amended BeiGene Collaboration”).

Under the BeiGene Collaboration, the Company would co-develop the CAB-CTLA-4 antibody to reach defined early clinical objectives (“POC Milestone”), whereby the Company would perform the development activities and BeiGene would reimburse the Company for a portion of the costs incurred by the Company.

Following the POC Milestone, BeiGene would then lead the parties’

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

BeiGene would 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”).

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.

The Company concluded that the BeiGene Collaboration was a contract with a customer and applied relevant guidance from Topic 606 through reaching the POC milestone as the licenses to intellectual property granted to BeiGene and the obligation to perform research and development services are outputs of the Company’s ongoing activities.

The Company identified material promises in the BeiGene Collaboration through POC Milestone, consisting of the licenses described above and the development services.

It was determined that the licenses were not distinct from the development services resulting in a single performance obligation.

In accordance with Topic 606, the Company determined the transaction price of the agreement was limited to the $ 25.0 million received, and excluded the variable consideration of expense reimbursements, milestone payments and royalties as they were fully constrained.

The expense reimbursements were included in the transaction price in the reporting period the Company concluded it was probable that inclusion of such amounts in the transaction price would not result in a significant reversal in revenue recognized.

As part of the Company’s evaluation of the milestone constraints, the Company determined the achievement of such milestones were contingent upon success of future developments, regulatory approvals and commercial activities which were not within its control and were uncertain.

Variable consideration related to royalties would be recognized when the related sales occurred.

Under the terms of the Amended BeiGene Collaboration, BeiGene was generally responsible for developing BA3071 and for global regulatory filings and commercialization.

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

The Amended BeiGene Collaboration provided that the Company was eligible to receive tiered royalties on sales worldwide, subsequent development and regulatory milestone payments globally and commercial milestones in the BeiGene

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

Until then BeiGene could not benefit from the ability to further develop and manufacture the BA3071 candidate.

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.

On November 18, 2021, the Company entered into Amendment No.

3 to the Amended BeiGene Collaboration (“Amendment No.3”).

Under Amendment No.

3, the Amended BeiGene Collaboration was terminated, subject to survival of certain provisions, and BeiGene handed back rights to know-how and materials received under the Amended BeiGene Collaboration.

As a result, the Company will assume responsibility for the global development and commercialization of BA3071.

As consideration for Amendment No.3, the Company agreed to pay BeiGene mid-single digit royalties on sales worldwide and on a limited basis will share in any upfront and milestone payments received through a sublicense of BA3071.

As part of Amendment No.3, the Company reclassified its remaining $ 19.8 million of deferred revenue as a long-term liability which is expected to settle as licensing payments are made to BeiGene in accordance with the resulting amendment.

In the event the license is terminated, the liability will be extinguished with no further payment to BeiGene.

For the year ended December 31, 2021, the Company did no t recognize any revenue related to the collaboration agreement with BeiGene.

Collaboration revenue recognized for the years ended December 31, 2020 and 2019 was $ 0.4 million and $ 5.2 million, respectively.

As of December 31, 2021 and December 31, 2020, the Company had a $ 19.8 million Liability to Licensor, and $ 19.8 million of deferred revenue which was classified as current, respectively.

Service Contracts

Prior to developing its own programs, the Company entered into various fixed price research services contracts.

In connection with these service contracts, the Company may receive future milestone payments if certain clinical, regulatory and commercialization milestones are achieved.

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

The Company recognized revenue of $ 0.3 million for the year ended December 31, 2021, related to the achievement of a clinical milestone on a fixed price service contract.

License and Option Agreement with Pfizer, Inc.

The Company was party to a license and option agreement with Pfizer that was terminated in December 2019 .

Pfizer paid the Company $ 1.0 million in December 2015 upon execution of the agreement.

The Company had identified a single deliverable at inception of the agreement, which consisted of the company’s obligation to nominate targets, perform certain preclinical research, efficacy studies and related reports (“research and development services”).

These services were prerequisites to Pfizer’s exercise of Pfizer’s substantive options, including the option to obtain exclusive licenses to develop and commercialize a certain number of Antibody Drug Conjugates (“ADC”) CAB antibodies, under the agreement.

As such, the Company recognized revenue for the consideration received over the four-year period over which it delivered its research and development services.

In connection with the license and option agreement with Pfizer, the Company recognized collaboration revenue of $ 0.5 million for the year ended December 31, 2019.

Related party transactions

Jay Short and Carolyn Anderson Short

Jay Short and Carolyn Anderson Short loaned the Company $ 1.0 million and $ 0.5 million, respectively, under the terms of the 2019 Notes and 2020 Notes described in Note 4 above.

For the years ended December 31, 2020 and 2019, the Company recognized interest expense (including amortization of debt discounts) of $ 0.1 million and $ 32,000 , respectively, on outstanding 2019 Notes and 2020 Notes payable to Dr.

Jay Short and Carolyn Anderson Short.

The 2019 Notes and 2020 Notes payable to Dr.

Jay Short and Carolyn Anderson Short were settled in connection with the Corporate Reorganization in July 2020 .

On March 18, 2021, the Company and Carolyn Anderson Short, its co-founder and former Chief of Intellectual Property & Strategy, mutually agreed that Ms.

Short would depart the Company on May 31, 2021 following an agreed upon transition period.

The Transition Agreement provides for the following severance benefits in exchange for a release of claims by Ms.

(i) a lump sum payment equal to eighteen (18) months of Ms.

Short’s current base salary, (ii) a payment at her targeted bonus rate for 2021, pro-rated to the separation date, and (iii) accelerated full vesting of her equity awards including 7,747 stock options and 138,461 restricted stock units.

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 twelve months ended December 31, 2021, the Company recognized $ 1.0 million related to the lump sum salary payment and target bonus.

The Company also recognized non-cash stock-based compensation charges of $ 9.4 million related to the modified equity awards for the twelve months ended December 31, 2021.

No unrecognized stock-based compensation remained as of December 31, 2021.

Short exercised her 7,747 stock options in 2021, therefore there are no remaining options outstanding related to Ms.

Short’s transition agreement as of December 31, 2021.

Inversagen, LLC

Inversagen was formed in conjunction with the LLC Division.

On March 15, 2019, the Company entered into an Exclusive License Agreement with Inversagen (the “Inversagen License”).

Under the terms of the agreement, Inversagen acquired the rights to CAB-antibodies for the field of diseases associated with aging, outside of cancer, and an immuno-oncology antibody.

The Company may perform development services under the agreement and will be reimbursed by Inversagen for its costs.

Commencing on the first commercial sale of the CAB-antibodies and immuno-oncology antibody subject to the Inversagen License, Inversagen will pay the Company milestone payments and royalties, which represent a variable interest held by the Company.

On July 7, 2020, the Company and Inversagen entered into the First Amendment to Exclusive License Agreement (“Amended Inversagen License”), which grants the Company an option for a period of 10 years to acquire the immuno-oncology antibody in return for royalty payments in the low-single digits during the applicable royalty term.

No payments have been made to date.

Inversagen has only nominal assets and liabilities and is a VIE as the entity lacks sufficient equity to finance its activities without additional subordinated financial support.

The Company does not consolidate Inversagen as it is not the primary beneficiary;

Inversagen License and the Amended Inversagen License did not and do not provide the Company with any decision-making power over the activities that are most significant to the entity’s economic success, such as the direction of its development efforts or the search for or terms of any future financing arrangements.

The Company has no equity interest in Inversagen, and no exposure to its losses.

Inversagen is currently inactive, and the Company has not provided any services to Inversagen, has not provided any support to Inversagen and has no obligation to do so, and Inversagen’s creditors have no recourse to the general credit of the Company.

The Company does no t have any assets or liabilities associated with its variable interest in Inversagen at December 31, 2021 and 2020.

Inversagen is a related party of the Company.

Jay Short and his spouse, Carolyn Anderson Short, serve as managers of Inversagen.

BioAtla Holdings, LLC

Effective January 1, 2020, the Company entered into an Exclusive License Agreement (the “BioAtla Holdings License”) with BioAtla Holdings, LLC.

Under the terms of the agreement, BioAtla Holdings acquired the rights to CAB antibodies for certain targets in the field of Adoptive Cell Therapy (CAR-T format) in exchange for potential royalty payments on future net sales.

On July 7, 2020, the Company and BioAtla Holdings entered into the First Amendment to Exclusive License Agreement (the “Amended BioAtla Holdings License”), which grants the Company an option for a period of 10 years to acquire the ACT Preparations and ACT Treatments in return for royalty payments in the low-single digits during the applicable royalty term.

The Company has not exercised its option and no payments have been made to date under these agreements.

In addition, effective January 1, 2020, the Company entered into a Royalty Sharing Agreement whereby the Company agreed to share with BioAtla Holdings 50 % of the royalties it receives under the Amended and Restated EXUMA License defined and described in Note 12 below.

BioAtla Holdings is a variable interest entity as it does not have sufficient equity to finance its activities without additional subordinated financial support.

The royalty payments and option to acquire assets represent variable interests held by the Company in BioAtla Holdings.

The Company is not the primary beneficiary of BioAtla Holdings, however, as the BioAtla Holdings License and Amended BioAtla Holdings License did not and do not provide the Company with any decision-making power over the activities that are most significant to the entity’s economic success, such as the direction of its development efforts or the search for or terms of any future financing arrangements.

The Company has no equity interest in BioAtla Holdings, and no exposure to its losses.

BioAtla Holdings is currently inactive, and the Company has not provided any support to BioAtla Holdings and has no obligation to do so, and BioAtla Holdings’

creditors have no recourse to the general credit of the Company.

The Company does no t have any assets or liabilities associated with its variable interests in BioAtla Holdings at December 31, 2021 and 2020.

BioAtla Holdings is a related party of the Company.

Jay Short and his spouse, Carolyn Anderson Short, serve as managers of BioAtla Holdings.

Himalaya Therapeutics SEZC

Prior to the Corporate Reorganization, Himalaya Therapeutics SEZC met the definition of a VIE under ASC 810-10, as the entity did not have enough equity to finance its activities without additional subordinated financial support.

The Company consolidated Himalaya Therapeutics SEZC as the primary beneficiary, as it had (i) the power to direct activities of a VIE that most significantly impact the VIE’s economic performance and (ii) the right to receive benefits from the VIE that could potentially be significant to the VIE, resulting from its control of the board of directors, and voting control of the entity via a voting agreement among its shareholders, and its equity holdings.

The Company was not obligated to provide financial support to Himalaya Therapeutics SEZC.

Himalaya Therapeutics SEZC’s creditors had no recourse in the general credit of the Company.

Himalaya Therapeutics SEZC held intellectual property related to certain CAB Antibodies under an Exclusive Rights

Agreement with the Company dated December 20, 2018.

As of December 31, 2019, Himalaya Therapeutics SEZC had no material operations, did not have any employees and the carrying value of its assets and liabilities was nominal.

On January 1, 2020, the Company entered into an Amended and Restated Exclusive Rights Agreement (the “Amended Rights Agreement”) with Himalaya Therapeutics SEZC.

Under the terms of the Amended Rights Agreement, Himalaya Therapeutics SEZC acquired the rights to 10 CAB-antibodies for the territory of China, Macao, Hong Kong and Taiwan, global rights to a CAB-HER2-bispecific-antibody and global co-development rights with us to an IL-22 non-CAB-antibody.

Payments to the Company may include upfront payments, milestone payments and double digit royalties, which represent a variable interest held by the Company, but no payments have been made to the Company to date.

As part of the Corporate Reorganization, Himalaya Therapeutics SEZC was distributed to Himalaya Parent LLC at the carrying value of its assets and liabilities, which were nominal, and no gain or loss was recorded on the transaction in the Company’s financial statements for the year ended December 31, 2020.

Himalaya Therapeutics SEZC continues to be a variable interest entity as it does not have sufficient equity to finance its activities without additional subordinated financial support.

The Company is not obligated to provide financial support to Himalaya Therapeutics SEZC.

The Company is not the primary beneficiary of Himalaya Therapeutics SEZC, however, as the Amended Rights Agreement does not provide BioAtla, Inc.

with the power to direct activities of a VIE that most significantly impact the VIE’s economic performance, such as decision-making power over the direction of its development efforts or the search for or terms of any future financing arrangements.

The Company does no t have any assets or liabilities recorded at December 31, 2020 associated with its variable interest in Himalaya Therapeutics SEZC, and has no exposure to Himalaya Therapeutics SEZC losses.

The Company does not have a variable interest in Himalaya Parent LLC.

Himalaya Therapeutics SEZC is a related party whose controlling shareholder is Himalaya Parent LLC.

Jay Short and his spouse, Carolyn Anderson Short, serve as directors of Himalaya Therapeutics SEZC, and Carolyn Anderson Short serves as an officer of such entity.

Himalaya Parent LLC

In connection with the Corporate Reorganization, Himalaya Parent assumed the Company’s profits interest plan, including equity awards to employees of the Company.

For the years ended December 31, 2021 and 2020, the Company recognized $ 0 and $ 0.7 million, respectively, of compensation cost and a related capital adjustment in connection with the assumed profits interest plan.

Jay Short and his spouse, Carolyn Anderson Short, serve as managers of Himalaya Parent LLC.

EXUMA Biotech Corp.

and subsidiary

As of December 31, 2019, the Company and EXUMA are no longer related parties since none of the Post-Division LLCs own any common or preferred stock of EXUMA and have no ongoing contractual relationships other than the license agreement described below (see Note 12).

The Company was a named party to a lease where a subsidiary of EXUMA was the primary tenant.

The EXUMA subsidiary paid the landlord directly for payments due under the lease and was reimbursed by the Company for its share of the payments.

For the year ended December 31, 2019, the Company expensed $ 15,000 for its share of payments due under the lease.

In addition, the Company expensed $ 10,000 related to a November 2019 amendment of the license agreement described in Note 12.

Biotech Investment Group, LLC

Prior to the Corporate Reorganization, Biotech Investment Group, LLC (“BIG”), was a principal owner, related party of the Company and affiliated with BioDuro, LLC (“BioDuro”) and Biotech Investment Group II LLC (“BIG II”).

Subsequent to the Corporate Reorganization, BIG is no longer a principal owner and, as a result, neither BIG nor its affiliates are related parties of the Company.

BioDuro-Sundia

BioDuro-Sundia is a contract research organization that provides services to the Company.

For the year ended December 31, 2019, the Company incurred expenses of $ 1.9 million in connection with services provided by BioDuro-Sundia.

During 2019, an affiliate of BIG sold a majority interest in BioDuro-Sundia to an unaffiliated entity.

Effective January 1, 2020, BioDuro-Sundia is no longer considered a related party of the Company.

Biotech Investment Group II LLC

BIG II loaned the Company $ 0.5 million under the terms of the 2019 Notes described in Note 4 above.

For the years ended December 31, 2020 and 2019, the Company recognized interest expense (including amortization of debt discounts) of $ 42,000 and $ 20,000 , respectively on outstanding 2019 Notes payable to BIG II.

The 2019 Notes payable to BIG II were settled in connection with the Corporate Reorganization in July 2020.

Private Placement of Common Stock

As part of the 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.

Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amount allowable under federal tax regulations.

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

To date, the Company has no t made any matching contributions.

EXUMA Biotech Corp.

Exclusive License Agreement

Under an Exclusive License Agreement entered into in May 2016, the Company granted EXUMA and its affiliates an exclusive, worldwide, sublicensable license under certain patents and know-how controlled by the Company to develop, manufacture and commercialize Adoptive Cellular Therapy (“ACT”) preparations and treatments for cancer.

EXUMA’s rights under the agreement exclude the right to grant sublicenses to third parties to discover, develop or manufacture any CAB ACT or any component of the Company’s CAB ACT technology, except as used in or incorporated into EXUMA’s ACTs for cancer.

The license to EXUMA is royalty bearing.

EXUMA granted the Company an exclusive, worldwide, royalty free, fully paid-up, sublicensable license under certain patents and know-how controlled by EXUMA and EXUMA’s interest in technology jointly developed under the agreement to develop, manufacture and commercialize non-ACT CAB products for any indication.

EXUMA is obligated to pay the Company during the royalty term, on a product-by-product basis and country-by-country basis, mid-single digit royalties based on annual net sales of certain EXUMA ACT products, subject to certain adjustments.

The term during which EXUMA is obligated to pay royalties under the agreement with respect to any particular product in any particular country, will begin on the first commercial sale of such product in such country and will end on the date of expiration of the last-to-expire of certain product-related patent rights in such country.

All royalties to be paid under the agreement are subject to certain adjustments.

Future royalties will be recognized when earned.

Unless earlier terminated, the agreement continues in effect so long as EXUMA or any of its affiliates, licensees or sublicensees are developing or commercializing any EXUMA products in the ACT field or the Company or any of its affiliates, licensees or sublicensees are developing or commercializing any CAB products for any indication outside the ACT field.

The agreement may be terminated only by the mutual written agreement of the parties.

In connection with the Exclusive License Agreement, the Pre-Division Predecessor received common and preferred stock of EXUMA.

The preferred stock was accounted for as a cost method investment and the common stock was accounted for as an equity method investment.

Both the cost method investment and equity method investment had initial carrying values of zero and neither resulted in adjustments to the consolidated statements of operations for the years ended December 31, 2019.

These holdings of EXUMA common and preferred stock were retained by BioAtla Holdings in connection with the LLC Division.

In November 2019, the Company entered into an Amended and Restated Exclusive License Agreement with EXUMA (the “Amended and Restated EXUMA License”).

The Amended and Restated EXUMA License curtailed the rights to certain CAB intellectual property previously licensed to EXUMA in exchange for a one-time, non-refundable, non-creditable license fee of $ 10,000 .

More specifically, the Amended and Restated EXUMA License limits CAB ACT products to four specified targets, and BioAtla is no longer obligated to provide new targets to EXUMA.

The Amended and Restated EXUMA License does not change EXUMA’s obligation to pay BioAtla royalties on licensed products.

In connection with the Amended and Restated EXUMA License, BioAtla Holdings sold its EXUMA common and preferred holdings back to EXUMA for consideration of $ 25,000 .

The Company concluded that the Amended and Restated EXUMA License was priced at fair value and was not influenced by the pricing of the contemporaneous related party stock sale.

EXUMA is a VIE, and the Company has a variable interest in EXUMA due to its right to receive royalties during the royalty term under the Amended and Restated EXUMA License.

As of December 31, 2021 and 2020, the Company has determined it is not the primary beneficiary of EXUMA and, as such, the Company does not consolidate EXUMA.

The Company has no equity ownership in EXUMA, no representation on the EXUMA board of directors, and the Amended and Restated EXUMA License does not provide the Company with the ability to make decisions regarding the execution of business strategy that most significantly impact the economic performance of EXUMA.

The Company has not funded and has no commitment to fund EXUMA’s losses, and has no exposure to loss as a result of its Amended and Restated EXUMA License.

The Company’s financial statements do not include any assets or liabilities related to the Amended and Restated EXUMA License at December 31, 2021 and 2020.

Historically, the Company had conducted its U.S.

operations through a pass through entity that filed its income tax returns as a partnership for federal and state income tax purposes.

As a result, the Company was not subject to U.S.

federal or state income taxes as the related tax consequences were reported by its individual members.

In July 2020, the Company changed its status from a limited liability company to a corporation, and accordingly, the Company became taxable at the entity level for U.S.

federal and state tax purposes.

A reconciliation of income tax expense computed at the U.S.

federal statutory income tax rate to the Company’s income tax expense is as follows (in thousands):

Tax computed at the federal statutory rate

Deferred impact of conversion to C Corporation

Partnership income not subject to tax

Nondeductible executive compensation

Stock-based compensation

Research and development and orphan drug credits

Uncertain tax positions

Valuation allowance

Income tax expense

The Company’s net deferred tax assets (liabilities) are as follows (in thousands):

Deferred tax assets:

Net operating loss carryforwards

Guaranteed payments

Liability to licensor

Deferred revenue

Deferred rent

Lease liability

Accrued compensation

Research credit carryforwards

Stock-based compensation

Gross deferred tax assets

Less valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Operating lease right-of-use asset

Total deferred tax liabilities

Net deferred tax assets

A valuation allowance of approximately $ 33.4 million as of December 31, 2021 has been established to offset the deferred tax assets as the Company has determined that it is not more likely than not that these assets will be realized.

The valuation allowance increased by approximately $ 20.6 million during 2021.

At December 31, 2021 , the Company had federal net operating loss carryforwards of approximately $ 104.5 million.

The federal net operating losses can be carried forward indefinitely, subject to an 80% limitation against taxable income.

At December 31, 2021 , the Company had federal and California research and development credit carryforwards of approximately $ 1.9 million and $ 1.2 million, respectively.

The federal credit carryforwards will begin to expire in 2040 , unless previously utilized.

The California credits will carry forward indefinitely.

At December 31, 2021, the Company also had federal orphan drug credit carryforwards of approximately $ 1.0 million.

The orphan drug credit carryforwards will begin to expire in 2041 , unless previously utilized.

Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s net operating loss carryforwards may be limited in the event a cumulative change in ownership of more than 50 % occurs within a three-year period.

The Company has not completed an ownership change analysis pursuant to IRC Section 382.

If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of remaining tax attribute carryforwards available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated.

Further, the Company’s deferred tax assets associated with such tax attributes could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES”

Act) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, permits net operating loss carryovers and carrybacks to offset 100 % of taxable income for taxable years beginning before 2021.

In addition, the CARES Act allows net operating losses incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

As the Company operated as a partnership during the carryback period, net operating loss carrybacks will not be allowed.

Due to the Company’s history of net operating losses, other provisions of the CARES Act are not expected to have a material impact on the Company’s financial statements.

Pursuant to the Paycheck Protection Program (the “PPP”) of the CARES Act, the Company received a PPP loan in the amount of $ 0.7 million.

In 2021, the Company received forgiveness of the PPP loan.

The loan forgiveness income is not considered taxable for Federal or state income tax purposes.

In accordance with the Consolidated Appropriations Act, 2021 (CAA) enacted on December 27, 2020, certain qualified expenses used with the funds of the PPP Loan are fully deductible for Federal income tax purposes;

however, California does not conform to this aspect of the CAA.

Under the FASB's accounting guidance related to income tax positions, among other things, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.

An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

Additionally, the guidance provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

The Company regularly evaluates the likelihood of recognizing the benefit for income tax positions taken in various federal and state filings by considering all relevant facts, circumstances, and information available.

The following table summarizes the reconciliation of the unrecognized tax benefits activity during the year ended December 31, 2021 (in thousands):

Balance as of December 31, 2019

Gross increase –

current-period tax positions

Balance as of December 31, 2020

Gross increase –

current-period tax positions

Balance as of December 31, 2021

As of December 31, 2021 , the Company had gross unrecognized tax benefits of approximately $ 1.0 million, none of which would affect the Company’s effective tax rate due to the existence of the valuation allowance.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.

The Company had no accrual for interest or penalties on the Company’s consolidated balance sheet and has not recognized interest or penalties in the consolidated statements of net and comprehensive income for the year ended December 31, 2021.

The Company does not anticipate a significant change to its liability for unrecognized tax benefits within the next twelve months.

The Company is subject to taxation in the United States and various state jurisdictions.

The Company is subject to examination by tax authorities in those jurisdictions since 2018 and 2017, respectively, and forward.

However, any adjustment made for the period prior to the conversion to C Corporation in July 2020 would be passed through to the Company's former members.

Post-conversion to C Corporation, to the extent allowed by law, the taxing authorities may have the right to examine periods where NOLs and research and development credits were generated and carried forward, and make adjustments to the amount of the NOL and research credits carryforward amount.

The Company is not currently under examination by any jurisdiction.

Subsequent events

The Company has completed an evaluation of all subsequent events through February 28, 2022 for the financial statements as of and for the year ended December 31, 2021 to ensure these consolidated financial statements include appropriate disclosure of events both recognized in the consolidated financial statements and events which occurred but were not recognized in the consolidated financial statements.

Except as described below or elsewhere in these consolidated financial statements, the Company has concluded that no subsequent event has occurred that requires disclosure.

On January 5, 2022, BioAtla and Bristol-Myers Squibb Company (“BMS”) entered into a clinical trial collaboration and supply agreement (the “BMS Agreement”).

Under the terms of the BMS Agreement, BioAtla and BMS will collaborate on clinical trials of separate combination therapies using two of BioAtla’s Conditionally Active Biologic Antibody Drug Conjugates, BA3011 and BA3021, each in combination with Opdivo® (nivolumab), BMS’

proprietary anti-PD-1 monoclonal antibody product.

The Company will serve as the study sponsor of the scheduled studies and will be responsible for costs associated with the trial execution.

BMS will provide Opdivo® clinical drug supply at no cost for the combination study trials.

After the completion of the combination therapy trials, the Company is obligated to provide BMS with a final report of the data resulting from the trial.

There was no impact to the Company's financial results for the year ended December 31, 2021 as a result of this agreement.

Changes in and Disa greements with Accountants on Accounting and Financial Disclosure

Contr ols and Procedures

Evaluation of Disclosure Controls and Procedures.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021.

The term “disclosure controls and procedures”

as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2021, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).

Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on the assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2021, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

Our independent registered public accounting firm, Ernst & Young LLP, has issued an audit report with respect to our internal control over financial reporting, which is included herein.

Changes in Internal Control over Financial Reporting.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during our most recently completed fiscal quarter.

Based on that evaluation, our principal executive officers and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the fourth quarter of fiscal 2021 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are continually monitoring and assessing the COVID-19 situation on our internal controls to understand the potential impact on their design and operating effectiveness.

Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

See Management’s Report on Internal Control over Financial Reporting above and the Report of Independent Registered Public Accounting Firm on our internal control over financial reporting herein.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of BioAtla, Inc.

Opinion on Internal Control over Financial Reporting

We have audited BioAtla, Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, BioAtla, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of BioAtla, Inc.

as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’/members’

equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 28, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Diego, California

February 28, 2022

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

Except to the extent provided below, the information required by this Item 10 will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference.

We have adopted a Code of Business Conduct and Ethics that applies to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or person performing similar functions.

A current copy of the Code of Business Conduct and Ethics is available on the Corporate Governance section of our website at www.bioatla.com.

If we make any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director that are required to be disclosed pursuant to SEC rules, we will promptly disclose the nature of the amendment or waiver on our website or in a current report on Form 8-K.

Execu tive Compensation

The information required by this Item 11 will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference.

Security Ownership of Certain Beneficial O wners and Management and Related Stockholder Matters

The information required by this Item 12 will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference.

Certain Relationships and Related Party Transactions, and Director Independence

The information required by this Item 13 will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference.

Principal Accou ntant Fees and Services

The information required by this Item 14 will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference.

Exhibits and Financial Statement Schedules

(a) Documents files as part of this Annual Report on Form 10-K:

(1) Financial Statements

The response to this portion of Item 15 is set forth under Item 8 hereof.

(2) Financial Statement Schedules

All financial statement schedules have been omitted because they are not applicable, not required, or the information required is shown in the consolidated financial statements or the notes thereto.

The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Annual Report on Form 10-K are listed in the Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K.

The exhibits listed in the Exhibit Index are incorporated by reference herein.

Form 10 -K Summary

Exhibit Index

Exhibit Description

Filed/Furnished Herewith

Amended and Restated Certificate of Incorporation of BioAtla, Inc.

Amended and Restated Bylaws of BioAtla, Inc.

Specimen Common Stock Certificate evidencing the shares of common stock

Investors’

Rights Agreement, dated July 13, 2020

Description of Securities

2020 Equity Incentive Plan

Amendment No.

1 to 2020 Equity Incentive Plan

Form of Restricted Stock Agreement

2020 Employee Stock Purchase Plan

Exclusive License Agreement with Himalaya SEZC, dated January 1, 2020

Exclusive License Agreement with Inversagen LLC, dated March 15, 2019, as amended by First Amendment to Exclusive License Agreement, dated July 7, 2020

Exclusive License Agreement with BioAtla Holdings LLC, dated January 1, 2020, as amended by First Amendment to Exclusive License agreement, dated July 7, 2020

Amended and Restated Exclusive License Agreement with EXUMA Biotech Corp.

(formerly F1 Oncology, Inc.), dated November 22, 2019

Global Co-Development and Collaboration Agreement with BeiGene, Ltd.

and BeiGene Switzerland GmbH, dated April 8, 2019, as amended by First Amendment, dated December 24, 2019 and as amended by Second Amendment, October 5, 2020

Cell Line License Agreement with Life Technologies Corporation, dated June 28, 2018

Royalty Sharing Agreement with BioAtla Holdings, LLC, dated January 1, 2020

Employment Letter Agreement between BioAtla, LLC and Jay Short, as amended by the Letter Amendment dated October 1, 2011

Offer Letter between BioAtla, LLC and Carolyn Short, dated November 30, 2015

Severance Agreement between BioAtla, LLC and Jay Short, dated July 1, 2018

Offer Letter between BioAtla, LLC and Scott Smith, dated August 2, 2018

Letter Agreement between BioAtla, LLC and Scott Smith, dated August 3, 2018

Severance Agreement between BioAtla, LLC and Scott Smith, dated August 20, 2018

Severance Agreement between BioAtla, LLC and Carolyn Short, as amended by the Amended Severance Agreement between BioAtla, LLC and Carolyn Short, dated April 1, 2020

Offer Letter between BioAtla, LLC and Richard Waldron, dated October 23, 2013

Severance Agreement between BioAtla, LLC and Richard Waldron, dated July 1, 2018

Exhibit Description

Filed/Furnished Herewith

Offer Letter between BioAtla, LLC and Eric Sievers, dated June 17, 2019

Offer Letter between BioAtla, LLC and Christian Vasquez, dated October 22, 2015

Form of Indemnification Agreement between the Registrant and each of its executive officers

Lease Agreement with HCP Torreyana, LLC, dated June 2, 2017, as amended by First Amendment to Lease, dated January 16, 2019

Payment Protection Program Promissory Note dated April 22, 2020, by and between BioAtla, LLC and City National Bank.

Amendment No.

2 to 2020 Equity Incentive Plan

Amendment No.

1 to Employee Share Purchase Plan

Amendment No.

3 to Global Co-Development and Collaboration Agreement between BioAtla, Inc.

and BeiGene, Ltd

Form of Non-Employee Director Stock Option Agreement

Form of Employee Stock Option Agreement

BioAtla Director Compensation Policy

Consent of Independent Registered Public Accounting Firm

Power of Attorney (included on signature page)

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18.U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

Furnished and not filed.

Indicates management contract or compensatory plan.

Portions of this exhibit have been redacted in accordance with Item 601(b)(10)(iv) of Regulation S-K.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BioAtla, Inc.

February 28, 2022

Chief Executive Officer

(Principal Executive Officer and

Authorized Signatory)

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jay M.

and Richard A.

Waldron as his or her true and lawful attorneys-in-fact, and each of them, with full power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, and either of them, or his or their substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Chief Executive Officer and Director

(Principal Executive Officer)

February 28, 2022

/s/ Richard A.

Chief Financial Officer

(Principal Financial and Accounting Officer)

February 28, 2022

/s/ Scott Smith

President and Director

February 28, 2022

/s/ Lawrence Steinman

Lawrence Steinman

February 28, 2022

/s/ Mary Ann Gray, Ph.D.

Mary Ann Gray, Ph.D.

February 28, 2022

/s/ Susan Moran, M.D.

Susan Moran, M.D.

February 28, 2022

/s/ Sylvia McBrinn

Sylvia McBrinn

February 28, 2022

/s/ Edward Williams

February 28, 2022

Edward Williams

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-K

Item 5. Market for Registrant’s Common Equity