BioAtla, Inc. 10-K

ITEM 5. 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. Holders of Record As of March 16, 2023, there were 26 stockholders of record of our common stock and 0 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. Dividends 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. 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. Recent Sales of Unregistered Securities None. 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 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. J.P. 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, 2022, we have used approximately $115.5 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. ITEM 6. [ Reserved] 72 Table of Contents ITEM 7. 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.” Overview 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. 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 and our Phase 1 clinical trial of BA3071, 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 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 $106.5 million and $95.4 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $292.8 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. 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 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; • expand our pipeline of bispecific and other CAB antibody-based product candidates; • continue to invest in our CAB technology platform; • maintain, protect and expand our intellectual property portfolio, including patents, trade secrets and know-how; • seek marketing approvals for any product candidates that successfully complete clinical trials; • 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; • continue to expand our operational, financial and management information systems; and • attract, hire and retain additional clinical, scientific, management, administrative and commercial personnel. 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. The amount and timing of our future funding 73 Table of Contents 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. As of December 31, 2022, our cash and cash equivalents totaled approximately $215.5 million. Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations for a period of at least twelve months from the date the financial statements included in this report are issued. 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. Impact of COVID-19 on our business 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 mecbotamab vedotin Phase 2 sarcoma trial remains on schedule and the Phase 2 interim analysis for mecbotamab vedotin NSCLC and ozuriftamab vedotin studies have experienced some modest delays. 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. We are continuing to monitor the potential impact of the pandemic, but we cannot be certain what the overall impact will be on our business, financial condition, results of operations and prospects. Financial operations overview Revenue 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 2019 we entered into a collaboration agreement with BeiGene, Ltd. The agreement was amended several times and was terminated in November 2021, which resulted in the Company assuming responsibility for development of BA3071. We received a total of $25.0 million in non-refundable payments from BeiGene from this collaboration. 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, if received, through a sublicense of BA3071. In addition, we may in the future seek third-party collaborators or joint venture partners for development and commercialization of additional CAB product candidates. Prior to developing our own programs, we received revenue from services performed under fixed price service contracts that, in some cases, provided for potential milestone and royalty payments to us. We recognized $0 and $0.3 million in revenues from our legacy service contracts for the years ended December 31, 2022 and 2021, respectively. Operating expenses Research and development Research and development expenses consist primarily of costs incurred in the discovery and development of our product candidates. • External expenses consist of: • Fees paid to third parties such as contractors, clinical research organizations (CROs) and consultants, 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; and • 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; and • Related equipment and facilities depreciation expense. 74 Table of Contents 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 services are performed. We expect our research and development expenses to generally increase 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. Successful product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Accordingly, to the extent that our product candidates continue to advance into clinical trials, including larger and later-stage clinical trials, our expenses will increase substantially and may become more variable. 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. 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. We may never succeed in achieving regulatory approval for any of our product candidates. General and administrative Our general and administrative expenses include 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, investor relations, audit and accounting services and insurance costs. Personnel-related expenses consist of salaries, benefits and equity-based compensation. We also expect our general and administrative expenses to increase in the future as we increase our personnel headcount to support our research and development activities to advance our product candidates and clinical stage programs. Interest income Interest income consists primarily of interest earned on our cash and cash equivalent balances. 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 previously outstanding debt. We no longer have interest expense after the forgiveness of our PPP loan in July 2021. Extinguishment of debt 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) Other income (expense) primarily includes miscellaneous items of income and expense that were not significant for the periods presented. Results of operations Comparison of the years ended December 31, 2022 and 2021 Years Ended December 31, 2022 2021 Change (in thousands) Collaboration and other revenue $ — $ 250 $ (250 ) Operating expenses: Research and development 79,347 58,274 21,073 General and administrative 28,793 38,416 (9,623 ) Total operating expenses 108,140 96,690 11,450 Loss from operations (108,140 ) (96,440 ) (11,700 ) Other income (expense): Interest income 1,648 350 1,298 Interest expense — (3 ) 3 Gain (loss) on extinguishment of long-term debt — 690 (690 ) Other income (expense) 10 1 9 Total other income (expense) 1,658 1,038 620 Consolidated net loss and comprehensive loss $ (106,482 ) $ (95,402 ) $ (11,080 ) 75 Table of Contents Collaboration and other revenue We did not recognize any revenue for the year ended December 31, 2022. Collaboration and other revenue for the year ended December 31, 2021 consisted of $0.3 million recognized under our legacy service contracts. 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 The following table summarizes our research and development expenses allocated by CAB program for the periods indicated: Years Ended December 31, 2022 2021 Change (in thousands) External expenses: BA3011 (AXL-ADC) $ 17,444 $ 17,883 $ (439 ) BA3021 (ROR2-ADC) 9,391 10,921 (1,530 ) BA3071 (CTLA-4) 9,671 591 9,080 Other CAB Programs 23,482 14,363 9,119 Total external expenses 59,988 43,758 16,230 Personnel and related 10,758 6,999 3,759 Equity-based compensation 5,419 4,688 731 Facilities and other 3,182 2,829 353 Total research and development expenses $ 79,347 $ 58,274 $ 21,073 Research and development expenses were $79.3 million and $58.3 million for the years ended December 31, 2022 and 2021, respectively. The increase of $21.0 million was primarily driven by a $17.2 million increase in clinical development for our clinical-stage programs, a $3.8 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, a $0.7 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan, and a $0.4 million increase in facility and other allocated costs, offset by a $1.1 million decrease in pre-clinical and manufacturing costs for various programs. General and administrative expense General and administrative expenses were $28.8 million and $38.4 million for the years ended December 31, 2022 and 2021, respectively. The decrease of $9.6 million was primarily driven by an $11.3 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, including new awards granted under the plan and the modification of awards issued to one of our co-founders in 2021, offset by an increase of $1.4 million in accounting and legal services, including a $1.0 million legal settlement, and a $0.3 million increase in travel related expenses. Interest income Interest income was $1.6 million and $350,000 for the years ended December 31, 2022 and 2021, respectively. The increase of $1.3 million was due to higher yields earned as compared to the same period in 2021. Extinguishment of Debt Extinguishment of debt was $0 and $0.7 million for the twelve months ended December 31, 2022 and 2021, respectively. The $0.7 million gain on extinguishment during the twelve months ended December 31, 2021 was related to the forgiveness of our PPP loan in July 2021. 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. Since July 2020, we have funded our operations primarily through the issuance of equity. In November 2022, we received net proceeds of $61.7 million in an underwritten public offering of our common stock. As of December 31, 2022, we had cash and cash equivalents of $215.5 million. Debt On April 22, 2020, we received proceeds from a loan pursuant to the Paycheck Protection Program of the CARES Act, "the PPP Loan", in the amount of $0.7 million from City National Bank, as lender. In July 2021, we were notified by our lender that our PPP Loan had been fully forgiven by the U.S. Small Business Administration and that there was no remaining balance on the PPP Loan. We recorded the forgiveness as other income in July 76 Table of Contents 2021. Future funding requirements 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; • the timing, receipt and amount of sales from our potential products; • our need and ability to hire additional management, scientific and medical personnel; • the effect of competing products that may limit market penetration of our product candidates; • 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 compliance and administrative costs associated with being a public company; and • 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 for a period of at least twelve months from the date the financial statements included in this report are issued. 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. 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. 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 a variety of causes, including the COVID-19 pandemic, supply chain disruptions, and geopolitical disruptions, including the ongoing conflict between Russia and Ukraine, 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’ 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. 77 Table of Contents Cash flows The following summarizes our cash flows for the periods indicated: Years Ended December 31, 2022 2021 (in thousands) Net cash provided by (used in): Operating activities $ (90,420 ) $ (62,214 ) Investing activities (265 ) (924 ) Financing activities 61,213 69,512 Net increase (decrease) in cash and cash equivalents $ (29,472 ) $ 6,374 Cash used in operating activities Net cash used in operating activities for the year ended December 31, 2022 was $90.4 million, which consisted of a consolidated net loss of $106.5 million, a net increase of $0.3 million in our net operating assets and liabilities and $15.8 million of non-cash transactions. The net change in our operating assets and liabilities was primarily due to an increase in prepaid expenses and other assets of $2.6 million, partially offset by an increase in accounts payable and accrued expenses of $3.4 million and a net decrease in operating lease right-of-use assets and liabilities of $0.5 million. The non-cash transactions primarily consisted of $14.6 million of stock-based compensation and non-cash charges of $1.2 million related to depreciation and amortization. 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. Cash used in investing activities Cash used in investing activities was $0.3 million and $0.9 million for the years ended December 31, 2022 and 2021, respectively, primarily related to the purchase of property and equipment. Cash provided by financing activities Net cash provided by financing activities was $61.2 million for the year ended December 31, 2022, which consisted primarily of the $61.7 million net proceeds from the issuance of common stock through an underwritten offering in November 2022 and $0.3 million proceeds from the issuance of common stock under our Employee Stock Purchase Plan, partially offset by payment of taxes related to the net settlement of equity awards of $0.8 million. 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. Critical accounting policies and estimates 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. GAAP. 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. 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 78 Table of Contents 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 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. Other company information Recent Accounting Pronouncements See Note 1 to the audited financial statements included in Item 8 of this Annual Report on Form 10-K. Off-balance sheet arrangements We have not entered into any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. ITEM 7A. Quantitative and Qualit ative Disclosures About Market Risk Not applicable to a smaller reporting company. 79 Table of Contents ITEM 8. Financial Stateme nts and Supplementary Data BioAtla, Inc. Page Index to consolidated financial statements Report of independent registered public accounting firm (PCAOB ID: 42 ) 81 Consolidated balance sheets 82 Consolidated statements of operations and comprehensive loss 83 Consolidated statements of stockholders’ equity 84 Consolidated statements of cash flows 85 Notes to consolidated financial statements 86 80 Table of Contents 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, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, and stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. 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 Public Company Accounting Oversight Board (United States) (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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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 2022, the Company incurred $79.3 million for research and development expenses and as of December 31, 2022 accrued $5.5 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 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 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 March 23, 2023 81 Table of Contents BioAtla, Inc. Consolidate d balance sheets (in thousands, except share amounts) December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 215,507 $ 244,979 Prepaid expenses and other current assets 4,924 2,313 Total current assets 220,431 247,292 Property and equipment, net 2,728 3,676 Operating lease right-of-use-asset, net 2,423 3,300 Other assets 154 154 Total assets $ 225,736 $ 254,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 21,610 $ 18,424 Operating lease liabilities 1,521 1,389 Total current liabilities 23,131 19,813 Operating lease liabilities, less current portion 2,460 3,982 Liability to licensor 19,806 19,806 Total liabilities 45,397 43,601 Commitments and contingencies (Note 6) Stockholders' equity: Preferred stock, $ 0.0001 par value; 200,000,000 shares authorized at December 31, 2022 and December 31, 2021; 0 shares issued and outstanding at December 31, 2022 and December 31, 2021 — — Common stock, $ 0.0001 par value; 350,000,000 shares authorized at December 31, 2022 and December 31, 2021; 46,336,166 and 35,799,233 shares issued and outstanding at December 31, 2022 and December 31, 2021 5 4 Class B common stock, $ 0.0001 par value; 15,368,569 shares authorized at December 31, 2022 and December 31, 2021; 1,211,959 and 1,492,059 shares issued and outstanding at December 31, 2022 and December 31, 2021 — — Additional paid-in capital 473,135 397,136 Accumulated deficit ( 292,801 ) ( 186,319 ) Total stockholders' equity 180,339 210,821 Total liabilities and stockholders’ equity $ 225,736 $ 254,422 See accompanying notes. 82 Table of Contents BioAtla, Inc. Consolidated st atements of operations and comprehensive loss (in thousands, except share and per share amounts) Years ended December 31, 2022 2021 Collaboration and other revenue $ — $ 250 Operating expenses: Research and development expense 79,347 58,274 General and administrative expense 28,793 38,416 Total operating expenses 108,140 96,690 Loss from operations ( 108,140 ) ( 96,440 ) Other income (expense): Interest income 1,648 350 Interest expense — ( 3 ) Gain on extinguishment of long-term debt — 690 Other income (expense) 10 1 Total other income (expense) 1,658 1,038 Consolidated net loss and comprehensive loss $ ( 106,482 ) $ ( 95,402 ) Net loss per common share, basic and diluted $ ( 2.74 ) $ ( 2.76 ) Weighted-average shares of common stock outstanding, basic and diluted 38,927,268 34,561,245 See accompanying notes. 83 Table of Contents BioAtla, Inc. Consolidated statements of stockholders’ equity (in thousands, except share amounts) Common stock Class B common stock Additional paid-in Accumulated Total stockholders’ Shares Amount Shares Amount capital deficit equity Balance at December 31, 2020 32,171,560 $ 3 1,492,059 $ — $ 300,888 $ ( 90,917 ) $ 209,974 Issuance of common stock, net of $ 4,007 of issuance costs 2,678,600 1 — — 70,993 — 70,994 Issuance of common stock under equity incentive plans 930,144 — — — — — — Issuance of common stock upon exercise of options, net 7,747 — — — 140 — 140 Issuance of common stock for Employee Stock Purchase Plan 11,182 — — — 289 — 289 Taxes related to net share settlement of equity awards — — — — ( 291 ) — ( 291 ) Stock-based compensation expense — — — — 25,117 — 25,117 Net loss — — — — — ( 95,402 ) ( 95,402 ) Balance at December 31, 2021 35,799,233 $ 4 1,492,059 $ — $ 397,136 $ ( 186,319 ) $ 210,821 Issuance of common stock, net of $ 3,318 of issuance costs 9,745,128 1 — — 61,681 — 61,682 Issuance of common stock under equity incentive plans 364,141 — — — — — — Issuance of common stock for Employee Stock Purchase Plan 147,564 — — — 289 — 289 Taxes related to net share settlement of equity awards — — — — ( 534 ) — ( 534 ) Conversion of Class B Common Stock 280,100 — ( 280,100 ) — — — — Stock-based compensation expense — — — — 14,563 — 14,563 Net loss — — — — — ( 106,482 ) ( 106,482 ) Balance at December 31, 2022 46,336,166 $ 5 1,211,959 $ — $ 473,135 $ ( 292,801 ) $ 180,339 See accompanying notes. 84 Table of Contents BioAtla, Inc. Consolidated sta tements of cash flows (in thousands) Years ended December 31, 2022 2021 Cash flows from operating activities Net loss $ ( 106,482 ) $ ( 95,402 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,199 1,330 Loss on disposal of property and equipment 13 4 Gain on extinguishment of debt — ( 690 ) Stock-based compensation 14,563 25,117 Accrued interest — 3 Changes in operating assets and liabilities: Prepaid expenses and other assets ( 2,611 ) ( 237 ) Accounts payable and accrued expenses 3,411 7,992 Right-of-use assets and lease liabilities, net ( 513 ) ( 331 ) Net cash used in operating activities ( 90,420 ) ( 62,214 ) Cash flows from investing activities Purchases of property and equipment ( 268 ) ( 924 ) Proceeds from sale of property and equipment 3 — Net cash used in investing activities ( 265 ) ( 924 ) Cash flows from financing activities Payment of initial public offering costs — ( 1,911 ) Proceeds from issuance of common stock, net of issuance costs 61,682 70,994 Proceeds from exercise of stock options — 140 Proceeds from issuance of common stock under Employee Stock Purchase Plan 289 289 Payments for taxes related to net settlement of equity awards ( 758 ) — Net cash provided by financing activities 61,213 69,512 Net increase (decrease) in cash and cash equivalents ( 29,472 ) 6,374 Cash and cash equivalents, beginning of period 244,979 238,605 Cash and cash equivalents, end of period $ 215,507 $ 244,979 Supplemental disclosure of non-cash investing and financing activities Property and equipment additions included in accounts payable and accrued expenses $ 1 $ 1 Tax related to net settlement of equity awards included in accounts payable and accrued expenses $ 67 $ 291 See accompanying notes. 85 Table of Contents BioAtla, Inc. Notes to consol idated financial statements 1. Organization and summary of significant accounting policies Organization BioAtla, LLC was formed in Delaware in March 2007 and was converted to a Delaware corporation in July 2020 and renamed BioAtla, Inc. (the “Company”). The Company has a proprietary platform for creating biologics, including its conditionally active biologics (“CAB” or “CABs”). CABs have been designed to be active only under certain conditions found in diseased tissue, while remaining inactive in normal tissue. The Company is currently in clinical development of its two lead CAB antibody drug conjugates (“CAB ADC”) targeting AXL and ROR2 receptors, and its CAB immune-oncology antibody targeting CTLA-4. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). BioAtla, Inc. is a single legal entity with no consolidated variable interest entities ("VIEs") or subsidiaries (see Note 9). 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, 2022, the Company had an accumulated deficit of $ 292.8 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, 2022 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 Note 9). 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. 86 Table of Contents 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. 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, 2022 and 2021 . Leases The Company determines if an arrangement is a lease at inception. An arrangement is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If a lease is identified, classification is determined at lease commencement. Operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company’s leases do not provide an implicit interest rate and therefore the Company estimates its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the interest rate that the Company would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term. Operating lease right-of-use (“ROU”) assets are based on the corresponding lease liability adjusted for any lease payments made at or before commencement, initial direct costs, and lease incentives. Renewals or early terminations are not accounted for unless the Company is reasonably certain to exercise these options. Operating lease expense is recognized and the ROU asset is amortized on a straight-line basis over the lease term. Variable lease costs are not included in the calculation of the ROU asset and the related lease liability and are recognized as incurred. The Company has a single lease agreement with lease and non-lease components, which are accounted for as a single lease component. Lease payments for short-term leases, defined as leases with a term of twelve months or less, are expensed on a straight-line basis over the lease term. The Company does not currently have any short-term leases. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the Company’s consolidated balance sheets. The Company does not have any finance leases. 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: (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. 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 87 Table of Contents 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: (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, 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, 2022, the Company has accrued $ 5.5 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. Patent Costs 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. 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. Income Taxes 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 88 Table of Contents 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 Share Basic net loss per common share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised of RSUs, common stock options outstanding under the Company’s stock option plan, and contingently issuable shares under the Company's ESPP plan. Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalents): December 31, 2022 2021 Common stock warrants — 151,088 Common stock options 2,736,918 1,086,902 Restricted stock units 510,039 975,046 ESPP Shares 13,370 — Total 3,260,327 2,213,036 Recent Accounting Pronouncements There were no recently issued or effective FASB Accounting Standards Updates (ASUs) that had, or are expected to have, a material effect on the Company's results of operations, financial condition, or liquidity. 2. Balance sheet details Prepaid expenses and other current assets consist of the following (in thousands): December 31, 2022 2021 Prepaid research and development $ 4,385 $ 1,811 Other prepaid expenses and current assets 539 502 Total $ 4,924 $ 2,313 89 Table of Contents Property and equipment consist of the following (in thousands): December 31, Useful life (years) 2022 2021 Furniture, fixtures and office equipment 3 - 7 $ 2,140 $ 2,123 Laboratory equipment 5 2,265 2,123 Leasehold improvements 2 - 3 3,687 3,687 8,092 7,933 Less accumulated depreciation and amortization ( 5,364 ) ( 4,257 ) Total $ 2,728 $ 3,676 Accounts payable and accrued expenses consist of the following (in thousands): December 31, 2022 2021 Accounts payable $ 4,231 $ 1,179 Accrued compensation 3,451 2,671 Accrued research and development 12,649 13,501 Other accrued expenses 1,279 1,073 Total $ 21,610 $ 18,424 3. Fair value measurements The carrying amounts of the Company’s current financial assets and current financial liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. As of December 31, 2022 and December 31, 2021 , the Company had no financial assets or liabilities measured at fair value on a recurring basis. The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets. Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. None of the Company’s non-financial assets and liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented. 4. Debt The Company did no t have any outstanding debt as of December 31, 2022 or December 31, 2021 . In April 2020, the Company borrowed $ 0.7 million under the Paycheck Protection Program (“PPP”) under the CARES Act. The loan 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 . 5. Leases The Company has a single operating lease for its corporate headquarters and laboratory space in San Diego, California. The lease expires in July 2025 and the Company has an option to extend the term of the lease for an additional five years . 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. 90 Table of Contents The components of lease expense included in the Company’s consolidated statements of operations include (in thousands): Years ended December 31, 2022 2021 Operating lease expense $ 1,043 $ 1,043 Variable lease expense 460 512 Total lease expense, net $ 1,503 $ 1,555 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, 2022. The weighted average remaining lease term and weighted average discount rate for operating leases as of December 31, 2022 were as follows: Years ended December 31, 2022 2021 Weighted average remaining lease term (in years) 2.5 3.5 Weighted average discount rate percentage 3.50 % 3.50 % Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands): Years ended December 31, 2022 2021 Cash paid for amounts included in the measurement of operating leases $ 1,555 $ 1,374 Maturities of operating lease liabilities as of December 31, 2022 were as follows (in thousands): Years ending December 31: Operating lease 2023 $ 1,636 2024 1,685 2025 845 Thereafter — Total future lease payments 4,166 Less imputed interest ( 184 ) Total operating lease liabilities $ 3,982 6. Commitments and contingencies From time to time, the Company may be subject to various claims and suits arising in the ordinary course of business. The Company is not currently a party to any legal proceedings the outcome of which the Company believes, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the Company’s business, operating results or financial condition. 7. Stockholders’ equity 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. Dividends 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. 91 Table of Contents Conversion 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. September 2021 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. November 2022 Underwritten Offering On November 8, 2022, the Company completed a follow-on offering under its shelf registration statement on Form S-3 (File No. 333-262528) and a related prospectus supplement pursuant to which the Company issued an aggregate of 9,745,128 shares of its common stock to at a public offering price of $ 6.67 per share. The Company received aggregate net proceeds of $ 61.7 million fro m the offering after deducting underwriting discounts and commissions and other offering expenses. 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 became fixed in accordance with the guidance, and such fair value was nominal since the warrants were deeply out-of-the-money. In December 2021, a total of 566,586 warrants with an exercise period of 365 days after our IPO expired unexercised. The remaining 151,088 warrants with an exercise period of 450 days after the Company's IPO expired unexercised in March 2022. Accordingly, there are no remaining common stock warrants outstanding and exercisable at December 31, 2022. 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, 2022 and 2021 , the total number of common shares authorized for issuance under the 2020 Plan was 7,658,509 and 6,226,540 , respectively. On January 1st of each year, commencing with the first January 1st following the effective date of the 2020 Plan, the shares authorized for issuance under the 2020 Plan shall be increased by a number of shares equal to the lesser of 4 % of the total number of shares outstanding on the immediately preceding December 31st and such lesser number of shares determined by the Company’s board of directors. The maximum term of the options granted under the 2020 Plan is no more than ten years . Awards under the 2020 Plan generally vest at 25 % one year from the vesting commencement date and ratably each month thereafter for a period of 36 months, subject to continuous service. Stock-based compensation expense 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): Years ended December 31, 2022 2021 Research and development $ 5,419 $ 4,688 General and administrative 9,144 20,429 Total $ 14,563 $ 25,117 92 Table of Contents Restricted stock units The following table summarizes RSU activity under the 2020 Plan for the years ended December 31, 2022 and 2021: Number of Shares Weighted - average grant date fair value Outstanding at December 31, 2020 1,920,037 $ — Granted — $ 18 Vested ( 944,991 ) $ — Outstanding at December 31, 2021 975,046 $ 18.00 Granted — $ — Vested ( 446,260 ) $ 18.00 Forfeited ( 18,747 ) Outstanding at December 31, 2022 510,039 $ 18.00 As of December 31, 2022 , total unrecognized stock-based compensation expense for RSUs was $ 9.2 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.3 years. Stock options The following table summarizes stock option activity under the 2020 Plan for the year ended December 31, 2022 and 2021 (in thousands, except share and per option data and years): Number of options Weighted - average exercise price per option Weighted - average remaining contractual term (in years) Aggregate intrinsic value Balance at December 31, 2020 615,106 $ 18.00 9.95 $ 9,848 Granted 479,543 $ 37.86 Exercised ( 7,747 ) $ 18.00 Balance at December 31, 2021 1,086,902 $ 26.76 9.22 $ 991,495 Granted 1,718,200 $ 6.35 Exercised — $ — — $ — Forfeited ( 50,387 ) $ 21.64 Expired ( 17,797 ) $ 40.00 Balance at December 31, 2022 2,736,918 $ 13.82 8.82 $ 3,636,148 Vested and expected to vest at December 31, 2022 2,736,918 $ 13.82 8.82 $ 3,636,148 Exercisable at December 31, 2022 496,074 $ 25.95 8.10 $ — As of December 31, 2022 , total unrecognized stock-based compensation cost for unvested common stock options was $ 14.9 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.9 years. The weighted- average grant date fair value of stock options granted during the years ended December 31, 2022 and 2021 was $ 4.06 per share and $ 24.61 per share, respectively. The total fair value of options vested during the years ended December 31, 2022 and 2021 was $ 6.9 million and $ 1.9 million, respectively. 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: Years ended December 31, 2022 2021 Expected volatility 74.9 % 74.7 % Risk-free interest rate 2.14 % 1.06 % Expected dividend yield 0.0 % 0.0 % Expected term 6.04 years 5.98 years Expected volatility. As the Company’s common stock does not have a significant trading history, the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology industry. 93 Table of Contents 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, 2022 and 2021 , a total of 1,229,148 and 833,993 shares, respectively, of common stock were authorized for issuance under the ESPP. The number of shares of common stock authorized for issuance will automatically increase on January 1 of each calendar year, from January 1, 2021 through January 1, 2030 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. During the years ended December 31, 2022 and 2021 , the Company issued 147,564 and 11,182 shares of common stock under the ESPP, respectively. As of December 31, 2022 , 1,070,402 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, 2022 and 2021 was $ 0.2 million and $ 0.1 million, respectively. Common stock reserved for future issuance Common stock reserved for future issuance are as follows in common equivalent shares: December 31, 2022 2021 Warrants for the purchase of common stock — 151,088 Common stock options and restricted stock units issued and outstanding 3,246,957 2,061,948 Awards available for future issuance under the 2020 Plan 3,012,554 3,211,854 Awards available for future issuance under the ESPP 1,070,402 822,811 Total common stock reserved for future issuance 7,329,913 6,247,701 8 . Collaboration, license and option agreements Global Co-Development and Collaboration Agreement with BeiGene In April 2019, the Company entered into a Global Co-Development and Collaboration agreement (the “BeiGene Collaboration”) with BeiGene, Ltd. and BeiGene Switzerland GmbH (collectively “BeiGene”), for the development, manufacturing and commercialization of the Company’s investigational CAB CTLA-4 antibody (BA3071). The BeiGene Collaboration was amended several times between 2019 and 2021 and the Company received a total of $ 25.0 million in non-refundable payments from BeiGene during that time. In November 2021, the 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 is responsible for the global development and commercialization of BA3071. As consideration for this amendment, 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. The Company reclassified its then 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. The Company did no t recognize any revenue related to the collaboration agreement with BeiGene for the years ended December 31, 2022 and 2021. The Company had a $ 19.8 million Liability to Licensor as of December 31, 2022 and 2021. Collaboration and Supply Agreement with Bristol-Myers Squib 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 94 Table of Contents 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. The BMS Agreement was amended in October 2022 to include additional territories for our BA3011 and BA3021 combination study trials. There was no impact to the Company's financial results for the years ended December 31, 2022 or 2021 as a result of this agreement. Exclusive License Agreement with Exuma Biotech Corp 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 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 limits CAB ACT products to four specified targets. 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. 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. As of December 31, 2022 and 2021, the Company has determined it is not the primary beneficiary of EXUMA and, as such, the Company does not consolidate EXUMA. The Company’s financial statements do not include any assets or liabilities related to the Amended and Restated EXUMA License at December 31, 2022 and 2021. 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. 9. Related party transactions Dr. Jay Short and Carolyn Anderson Short On March 23, 2021, the Company entered into a transition agreement with Ms. Anderson Short, our Co-founder and Executive Vice President and Chief of Intellectual Property and Strategy at that time. Pursuant to this transition agreement, Ms. Anderson Short continued in her role with the same base salary and employee benefits until her employment with the Company was terminated on May 31, 2021. Upon her separation from the Company and subject to her execution of a release of claims, Ms. Anderson Short received the following severance benefits as set forth in the transition agreement, which satisfied existing severance obligations owing to her under a legacy pre-IPO severance agreement she had entered into with the Company on July 1, 2018: (i) a lump sum payment equal to 18 months of Ms. Anderson Short’s then-current base salary, (ii) a payment at her targeted bonus rate for 2021, pro-rated to the date of her termination of employment, and (iii) full accelerated 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 which ended on the separation date. For the year 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 year ended December 31, 2021. No unrecognized stock-based compensation related to the transition agreement was recognized for the year ended December 31, 2022. 95 Table of Contents Inversagen, LLC 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. 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, 2022 and 2021. Inversagen is a related party of the Company. Dr. 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, 2022 and 2021. BioAtla Holdings is a related party of the Company. Dr. Jay Short and his spouse, Carolyn Anderson Short, serve as managers of BioAtla Holdings. Himalaya Therapeutics SEZC Exclusive Rights Agreement 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 the Company 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. Himalaya Therapeutics SEZC is 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, 2022 associated with its variable interest in Himalaya Therapeutics SEZC, and has no exposure to Himalaya Therapeutics SEZC losses. 96 Table of Contents Himalaya Therapeutics SEZC is a related party as Dr. Jay Short and his spouse, Carolyn Anderson Short, serve as directors, and Carolyn Anderson Short also serves as an officer of such entity. Clinical Trial Services Agreement In April 2022, the Company entered into a Clinical Trial Agreement with Himalaya Therapeutics SEZC. Under the agreement, Himalaya Therapeutics SEZC agreed to provide services related to the initiation of clinical trials for BA3011 in the People’s Republic of China. For the first year following effectiveness of the agreement, the Company has agreed to pay Himalaya Therapeutics SEZC for the full-time use of two of its personnel. Payments are due and payable by BioAtla to Himalaya Therapeutics SEZC on a quarterly calendar basis and are non-refundable. For the twelve months ended December 31, 2022, the Company recognized $ 0.4 million in research and development expense related to the Clinical Trial Agreement. The Company did not have any amounts due from or due to Himalaya Therapeutics SEZC as of December 31, 2022 . Himalaya Parent LLC Dr. Jay Short and his spouse, Carolyn Anderson Short, serve as managers of Himalaya Parent LLC. The Company does not have a variable interest in Himalaya Parent LLC. 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. November 2022 Underwritten Offering As part of the 2022 underwritten offering, the Company issued 2,998,500 shares of common stock for total net proceeds of $ 19.1 million to certain stockholders considered to be related parties. 10. 401(k) plan 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. 11. Income taxes 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): Years Ended December 31, 2022 2021 Tax computed at the federal statutory rate $ ( 22,361 ) $ ( 20,034 ) State income taxes, net of federal tax benefit ( 6 ) — Deferred impact of conversion to C Corporation — ( 2,131 ) Nondeductible executive compensation 685 4,145 Stock-based compensation 1,132 ( 1,021 ) Research and development and orphan drug credits ( 3,692 ) ( 3,091 ) Uncertain tax positions 910 757 Other, net ( 23 ) 793 Valuation allowance 23,355 20,582 Income tax expense $ — $ — 97 Table of Contents The Company’s net deferred tax assets (liabilities) are as follows (in thousands): Years Ended December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 17,430 $ 21,935 Liability to licensor 4,159 4,159 Goodwill 3,193 3,449 Lease liability 836 1,128 Accrued compensation 659 485 Research credit carryforwards 5,760 2,945 Section 174 cost capitalization 14,523 — Section 59(e) cost capitalization 9,450 — Stock-based compensation 1,628 697 Other 3 2 Gross deferred tax assets 57,641 34,800 Less: valuation allowance ( 56,706 ) ( 33,351 ) Total deferred tax assets 935 1,449 Deferred tax liabilities: Fixed assets ( 426 ) ( 756 ) Operating lease right-of-use asset ( 509 ) ( 693 ) Total deferred tax liabilities ( 935 ) ( 1,449 ) Net deferred tax assets $ — $ — A valuation allowance of approximately $ 56.7 million as of December 31, 2022 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 $ 23.4 million during 2022. At December 31, 2022 , the Company had federal and state net operating loss carryforwards of approximately $ 83.0 million and $ 0.2 million, respectively. The federal and state net operating losses can be carried forward indefinitely, subject to an 80% limitation against taxable income. At December 31, 2022 , the Company had federal and California research and development credit carryforwards of approximately $ 3.7 million and $ 2.0 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, 2022 , the Company also had federal orphan drug credit carryforwards of approximately $ 2.3 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. 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. 98 Table of Contents A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows (in thousands): Years Ended December 31, 2022 2021 Unrecognized tax benefits - beginning $ 1,011 $ 210 Gross increases - tax positions in prior period 11 0 Gross increase – current-period tax positions 946 801 Unrecognized tax benefits - ending $ 1,968 $ 1,011 As of December 31, 2022 , the Company had gross unrecognized tax benefits of approximately $ 2.0 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, 2022. 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 2019 and 2018, respectively, and forward. However, 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. 12. Subsequent events The Company has completed an evaluation of all subsequent events through March 23, 2023 for the financial statements as of and for the year ended December 31, 2022 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. In January 2023, BioAtla, Inc. (the “Company”) entered into an open market sale agreement under which the Company may offer and sell, from time to time in its sole discretion, shares of the Company’s common stock, par value $ 0.0001 per share, with aggregate gross sales proceeds of up to $ 100,000,000 through an “at the market” equity offering program under which Jefferies LLC will act as sales agent. No shares have been sold under the agreement to date. 99 Table of Contents ITEM 9. Changes in and Disa greements with Accountants on Accounting and Financial Disclosure None. ITEM 9A. 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, 2022. 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, 2022, 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, 2022, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. 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 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 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. 100 Table of Contents ITEM 9B. Other Information None. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 101 Table of Contents PART III ITEM 10. 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. ITEM 11. 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. ITEM 12. 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. ITEM 13. 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. ITEM 14. 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. 102 Table of Contents PA RT IV ITEM 15. 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. (3) Exhibits 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. ITEM 16. Form 10 -K Summary None. 103 Table of Contents Exhibit Index The following exhibits, if not filed or furnished herewith, are incorporated herein by reference to this Annual Report on form 10-K: Exhibit Number Exhibit Description Form File No. Exhibit Exhibit Filing Date Filed/Furnished Herewith 3.1 Amended and Restated Certificate of Incorporation of BioAtla, Inc. 8-K 001-39787 3.1 12-18-2020 3.2 Amended and Restated Bylaws of BioAtla, Inc. 8-K 001-39787 3.2 12-18-2020 4.1 Specimen Common Stock Certificate evidencing the shares of common stock S-1/A 333-250093 4.1 12-08-2020 4.2 Investors’ Rights Agreement, dated July 13, 2020 S-1/A 333-250093 4.2 12-08-2020 4.3 Description of Securities X 10.1+ 2020 Equity Incentive Plan S-1/A 333-250093 10.1 12-08-2020 10.2+ Amendment No. 1 to 2020 Equity Incentive Plan S-8 333-251520 99.2 12-18-2020 10.3+ Form of Restricted Stock Agreement S-1/A 333-250093 10.2 12-08-2020 10.4+ 2020 Employee Stock Purchase Plan S-1/A 333-250093 10.3 12-08-2020 10.5* Exclusive Rights Agreement with Himalaya SEZC, dated January 1, 2020 S-1 333-250093 10.4 11-13-2020 10.6* Exclusive License Agreement with Inversagen LLC, dated March 15, 2019, as amended by First Amendment to Exclusive License Agreement, dated July 7, 2020 S-1 333-250093 10.5 11-13-2020 10.7* Exclusive License Agreement with BioAtla Holdings LLC, dated January 1, 2020, as amended by First Amendment to Exclusive License agreement, dated July 7, 2020 S-1 333-250093 10.6 11-13-2020 10.8* Amended and Restated Exclusive License Agreement with EXUMA Biotech Corp. (formerly F1 Oncology, Inc.), dated November 22, 2019 S-1 333-250093 10.7 11-13-2020 10.9* 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 S-1 333-250093 10.8 11-13-2020 10.10* Cell Line License Agreement with Life Technologies Corporation, dated June 28, 2018 S-1 333-250093 10.9 11-13-2020 10.11 Royalty Sharing Agreement with BioAtla Holdings, LLC, dated January 1, 2020 S-1 333-250093 10.10 11-13-2020 10.12+ Employment Letter Agreement between BioAtla, LLC and Jay Short, as amended by the Letter Amendment dated October 1, 2011 S-1/A 333-250093 10.11 12-08-2020 10.13+ Severance Agreement between BioAtla, LLC and Jay Short, dated July 1, 2018 S-1/A 333-250093 10.13 12-08-2020 10.14+ Offer Letter between BioAtla, LLC and Scott Smith, dated August 2, 2018 S-1/A 333-250093 10.14 12-08-2020 10.15+ Letter Agreement between BioAtla, LLC and Scott Smith, dated August 3, 2018 S-1/A 333-250093 10.15 12-08-2020 10.16+ Severance Agreement between BioAtla, LLC and Scott Smith, dated August 20, 2018 S-1/A 333-250093 10.16 12-08-2020 10.17+ Offer Letter between BioAtla, LLC and Richard Waldron, dated October 23, 2013 10-K 001-39787 10.19 02-28-2022 104 Table of Contents Exhibit Number Exhibit Description Form File No. Exhibit Exhibit Filing Date Filed/Furnished Herewith 10.18+ Severance Agreement between BioAtla, LLC and Richard Waldron, dated July 1, 2018 10-K 001-39787 10.20 02-28-2022 10.19+ Offer Letter between BioAtla, LLC and Eric Sievers, dated June 17, 2019 10-K 001-39787 10.21 02-28-2022 10.20+ Offer Letter between BioAtla, LLC and Christian Vasquez, dated October 22, 2015 10-K 001-39787 10.22 02-28-2022 10.21+ Form of Indemnification Agreement between the Registrant and each of its executive officers S-1/A 333-250093 10.18 12-08-2020 10.22 Lease Agreement with HCP Torreyana, LLC, dated June 2, 2017, as amended by First Amendment to Lease, dated January 16, 2019 S-1/A 333-250093 10.19 12-08-2020 10.23* Master Clinical Trial Collaboration Agreement, dated January 5, 2022, by and between BioAtla, Inc. and Bristol-Myers Squibb 10-Q 001-39787 10.2 11-04-2022 10.24* First Amendment to Master Clinical Trial Agreement between BioAtla, Inc. and Bristol-Myers Squibb X 10.25* China Clinical Trial Services Agreement, dated April 8, 2022, by and between BioAtla, Inc. and Himalaya Therapeutics Limited Company 10-Q 001-39787 10.1 08-09-2022 10.26 Amendment No. 2 to 2020 Equity Incentive Plan 10-K 001-39787 10.26 02-28-2022 10.27 Amendment No. 1 to Employee Share Purchase Plan 10-K 001-39787 10.27 02-28-2022 10.28* Amendment No. 3 to Global Co-Development and Collaboration Agreement between BioAtla, Inc. and BeiGene, Ltd 10-K 001-39787 10.28 02-28-2022 10.29+ Form of Non-Employee Director Stock Option Agreement 10-Q 001-39787 10.1 11-15-2021 10.30+ Form of Employee Stock Option Agreement 10-Q 001-39787 10.2 11-15-2021 10.31+ Amended and Restated BioAtla Director Compensation Policy X 10.32+ BioAtla, Inc. Management Change of Control Severance Plan 8-K 001-39787 10.1 09-15-2022 23.1 Consent of Independent Registered Public Accounting Firm X 24.1 Power of Attorney (included on signature page) X 31.1 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. X 31.2 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. X 32.1† 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. X 101.INS 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. X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) X † 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. 105 Table of Contents SIGNA TURES 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. Date: March 23, 2023 By: /s/ Jay M. Short, Ph.D. Jay M. Short, Ph.D. 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. Short, Ph.D. 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. SIGNATURE TITLE DATE /s/ Jay M. Short, Ph.D. Jay M. Short, Ph.D. Chief Executive Officer and Director (Principal Executive Officer) March 23, 2023 /s/ Richard A. Waldron Richard A. Waldron Chief Financial Officer (Principal Financial and Accounting Officer) March 23, 2023 /s/ Scott Smith Scott Smith Director March 23, 2023 /s/ Lawrence Steinman Lawrence Steinman Director March 23, 2023 /s/ Mary Ann Gray, Ph.D. Mary Ann Gray, Ph.D. Director March 23, 2023 /s/ Susan Moran, M.D. Susan Moran, M.D. Director March 23, 2023 /s/ Sylvia McBrinn Sylvia McBrinn Director March 23, 2023 /s/ Edward Williams Director March 23, 2023 Edward Williams 106