What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-14 · 67 added, 30 removed, 154 unchanged (39% of the section changed)

15 unchanged sentences

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

Our net loss was $23.2 million for the three months ended March 31, 2024 compared to $27.5 million for the three months ended March 31, 2023.

As of March 31, 2024, we had an accumulated deficit of $439.5 million.

Our net loss was $21.1 million and $44.3 million for the three and six months ended June 30, 2024, respectively, compared to $35.8 million and $63.2 million for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $460.6 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 be variable as we focus development efforts on our prioritized programs.

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

We expect our expenses, and the potential for losses, to be variable as we focus development efforts on selected assets and indications.

We expect research and development expenses to vary as we continue to advance clinical trials of our lead product candidates, and are expected to decrease in the near term as we complete enrollment and treatment of patients in certain trials.

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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 March 31, 2024, our cash and cash equivalents totaled approximately $80.6 million.

As of June 30, 2024, our cash and cash equivalents totaled approximately $61.7 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 of issuance of the financial statements included in this report.

Our current operating plan includes plans to complete enrollment in certain of our clinical trials, delaying development of certain pre-clinical programs, and prioritizing and focusing clinical development on selected assets and indications.

In addition, 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.

Our current operating plan prioritizes and focuses clinical development of selected assets and indications, and includes completion of certain of our clinical trials and delaying development of certain pre-clinical programs.

Our estimate as to how long we expect our existing cash and cash equivalents to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

Financial Operations Overview

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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 did not recognize any revenue from collaborations, licenses, or our legacy service contracts during the three months ended March 31, 2024 and 2023, respectively.

We did not recognize any revenue from collaborations, licenses, or our legacy service contracts during the three and six months ended June 30, 2024 and 2023, respectively.

Operating Expenses

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

We expect our research and development expenses to remain variable from quarter to quarter as we continue to advance our clinical programs, then to decrease in the near term as we complete enrollment and treatment in certain of our clinical trials, and focus development on selected high potential indications.

We expect our research and development expenses to decrease in the near term as we complete enrollment and treatment in certain of our clinical trials and focus development on selected high potential indications.

However, research and development could increase upon initiation of new clinical trials, including registrational trials for our lead product candidates.

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

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Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

Comparison of the Three Months Ended June 30, 2024 and 2023

Three Months Ended

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Total research and development expenses

Research and development expenses were $18.9 million and $21.7 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease of approximately $2.8 million was primarily driven by a $3.7 million decrease in pre-clinical development costs primarily for BA3142, our CAB-B7H3 x CAB-CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $0.4 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, offset by a $0.8 million increase in development costs for our clinical stage programs, primarily mecbotamab vedotin and ozuriftamab vedotin, and a $0.3 million increase in personnel related costs.

Research and development expenses were $16.2 million and $31.0 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $14.8 million was primarily driven by a $6.1 million decrease in pre-clinical development costs primarily for BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $4.3 million decrease in manufacturing costs primarily related to evalstotug, a $4.1 million decrease in clinical development costs for our clinical stage programs primarily due to completing Phase 2 enrollment for our ongoing ADC trials for mecbotamab vedotin and ozuriftamab vedotin, a $0.4 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in facility related costs, offset by a $0.3 million increase in personnel related costs.

General and Administrative Expense

General and administrative expenses were $5.6 million and $7.2 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease of approximately $1.6 million was primarily driven by a $0.9 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, $0.4 million due to professional services and consulting expenses, $0.1 million due to a decrease in insurance due to a decrease in premiums for our D&O policy, and a $0.1 million decrease in travel related expense.

General and administrative expenses were $5.8 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $0.5 million was primarily driven by a $0.8 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in insurance due to a decrease in premiums for our D&O policy, offset by $0.4 million increase in professional services and consulting expenses.

Interest Income

Interest income was $1.2 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease of $0.3 million was due to lower cash and cash equivalents compared to the same period in 2023, offset by the impact of higher yields during the same period in 2023.

Interest income was $0.9 million and $1.5 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease of $0.6 million was due to lower cash and cash equivalents compared to the same period in 2023.

Comparison of the Six Months Ended June 30, 2024 and 2023

Six Months Ended

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income:

Interest income

Other expense

Total other income

Net loss and comprehensive loss

Research and Development Expense

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

Six Months Ended

(in thousands)

External expenses:

Mecbotamab vedotin, BA3011 (CAB AXL-ADC)

Ozuriftamab vedotin, BA3021 (CAB ROR2-ADC)

Evalstotug, BA3071 (CAB CTLA-4)

BA3182 (CAB EpCAM x CAB CD3)

Other CAB Programs

Total external expenses

Personnel and related

Equity-based compensation

Facilities and other

Total research and development expenses

Research and development expenses were $35.1 million and $52.7 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $17.6 million was primarily driven by a $9.8 million decrease in pre-clinical development costs primarily for BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $4.9 million decrease in manufacturing costs primarily for evalstotug, a $2.7 million decrease in clinical development costs for our clinical stage programs primarily due to completing Phase 2 enrollment for our ongoing ADC trials for mecbotamab vedotin and ozuriftamab vedotin, and a $0.8 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, offset by a $0.6 million increase in personnel related costs.

General and Administrative Expense

General and administrative expenses were $11.4 million and $13.5 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $2.1 million was primarily driven by a $1.7 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, a $0.3 million decrease in insurance expense due to a decrease in premiums for our D&O policy, and a $0.1 million decrease in travel related costs.

Interest Income

Interest income was $2.1 million and $2.9 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease of $0.8 million was due to lower cash and cash equivalents compared to the same period in 2023.

Liquidity and Capital Resources

1 unchanged sentence

Since July 2020, we have funded our operations primarily through the issuance of equity.

As of March 31, 2024, we had cash and cash equivalents of $80.6 million.

As of June 30, 2024, we had cash and cash equivalents of $61.7 million.

In January 2023, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) acting as sales agent pursuant to which the Company may, from time to time at its sole discretion, sell shares of the Company’s common stock, with aggregate gross sales proceeds of up to $100.0 million.

The Company will pay Jefferies a commission of 3.0% of the aggregate gross proceeds the Company receives from all sales of the Company’s common stock under the Sales Agreement.

We have not sold any shares of our common stock under the Sales Agreement as of March 31, 2024.

We have not sold any shares of our common stock under the Sales Agreement as of June 30, 2024.

Future Funding Requirements

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The following summarizes our cash flows for the periods indicated:

Three Months Ended

Six Months Ended

(in thousands)

Net cash used in:

Net cash provided by (used in):

Operating activities

3 unchanged sentences

Cash Used in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2024 was $30.8 million, which consisted of a net loss of $23.2 million, a net change of $10.1 million in our operating assets and liabilities and $2.5 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $9.0 million, a net decrease in operating lease right-of-use assets and lease liabilities of $0.3 million, and an increase in prepaid expenses and other assets of $0.9 million.

Net cash used in operating activities for the six months ended June 30, 2024 was $50.0 million, which consisted of a net loss of $44.3 million, a net change of $11.0 million in our operating assets and liabilities and $5.3 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $10.9 million and a net decrease in operating lease right-of-use assets and lease liabilities of $0.3 million, partially offset by a decrease in prepaid expenses and other assets of $0.3 million.

The non-cash transactions primarily consisted of $4.8 million of stock-based compensation and non-cash charges of $0.5 million related to depreciation and amortization.

Net cash used in operating activities for the three months ended March 31, 2023 was $22.7 million, which consisted of a net loss of $27.5 million, a net change of $0.9 million in our operating assets and liabilities and $3.9 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 $3.2 million, offset by an increase in prepaid expenses and other assets of $2.1 million.

Net cash used in operating activities for the six months ended June 30, 2023 was $46.7 million, which consisted of a net loss of $63.2 million, a net change of $8.6 million in our operating assets and liabilities and $7.9 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $10.6 million, partially offset by an increase in prepaid expenses and other assets of $1.7 million and a net decrease in operating lease right-of-use assets and lease liabilities of $0.3 million.

The non-cash transactions primarily consisted of $7.3 million of stock-based compensation and non-cash charges of $0.6 million related to depreciation and amortization.

Cash Used in Investing Activities

Cash used in investing activities was immaterial for the three months ended March 31, 2024.

Cash used in investing activities for the three months ended March 31, 2023 was $50,000, related to the purchase of property and equipment.

Cash Used in Financing Activities

Net cash used in financing activities was immaterial for the three months ended March 31, 2024, consisting primarily of the payment of taxes related to the net settlement of restricted stock units.

Net cash used in financing activities was $0.1 million for the three months ended March 31, 2023, which consisted primarily of the payment of taxes related to the net settlement of restricted stock units.

Cash used in investing activities was $0 for the six months ended June 30, 2024.

Cash used in investing activities for the six months ended June 30, 2023 was $65,000, related to the purchase of property and equipment.

Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities was $0.2 million for the six months ended June 30, 2024, consisting primarily of the proceeds from the issuance of common stock under the ESPP and the 2020 Plan, partially offset by the payment of taxes related to the net settlement of restricted stock units.

Net cash used in financing activities was immaterial for the six months ended June 30, 2023, consisting primarily of the proceeds from the issuance of common stock under the ESPP and the 2020 Plan, offset by payment of taxes related to the net settlement of restricted stock units.

Critical Accounting Policies and Estimates

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For a description of our critical accounting policies, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” contained in our Annual Report on Form 10-K for the year ended December 31, 2023.

There have not been any material changes to the critical accounting policies discussed therein during the three months ended March 31, 2024.

There have not been any material changes to the critical accounting policies discussed therein during the six months ended June 30, 2024.

Off-Balance Sheet Arrangements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis