What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-07 · 52 added, 115 removed, 126 unchanged (57% of the section changed)

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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 (BA3011), ozuriftamab vedotin (BA3021), and evalstotug (BA3071), and our Phase 1 clinical trial of BA3182 (CAB-EpCAM x CAB-CD3), 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.

We are a United States-based company with facilities in San Diego, California.

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 (BA3011), ozuriftamab vedotin (BA3021), evalstotug (BA3071), and our Phase 1 clinical trial of BA3182 (CAB-EpCAM x CAB-CD3), 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.

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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 $10.6 million and $54.9 million for the three and nine months ended September 30, 2024, respectively, compared to $33.3 million and $96.5 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $471.2 million.

Our net loss was $15.3 million for the three months ended March 31, 2025, compared to $23.2 million for the three months ended March 31, 2024.

As of March 31, 2025, we had an accumulated deficit of $501.4 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.

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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 decrease in the near term as we complete enrollment and treatment of patients in certain of our trials, but may generally increase in the future as we progress our lead product candidates through the regulatory approval process.

We expect our expenses and capital requirements could 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 evalstotug;

• advance the clinical development of BA3182;

• 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;

• 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.

We expect research and development expenses to decrease in the near term as we complete enrollment and treatment of patients in certain of our trials.

Over the long-term, we expect our expenses to increase substantially in connection with the development of our clinical programs beyond our existing Phase 1 and Phase 2 clinical trials and through the commercialization of our product candidates.

As a result, we will require substantial additional capital to develop and commercialize 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.

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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 September 30, 2024, our cash and cash equivalents totaled approximately $56.5 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 of issuance of the financial statements included in this report.

Our current operating plan focuses on the clinical development of selected assets and indications, and includes completion of certain of our clinical trials.

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.

As of March 31, 2025, our cash and cash equivalents totaled approximately $32.4 million.

Accordingly, based on our current operating plan, and along with our history of operating losses, our current cash and cash equivalents may not 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, and these circumstances raise substantial doubt about our ability to continue as a going concern.

Financial Operations Overview

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In September 2024, the Company licensed BA3362, a Nectin-4 x CD3 T cell engaging bispecific antibody, to Context Therapeutics (“Context”).

We recognized revenue of $11.0 million during the three and nine months ended September 30, 2024, respectively, related to the licensing agreement with Context.

We did not recognize any revenue during the three months ended March 31, 2025 and 2024, related to the licensing agreement with Context.

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 our legacy service contracts during the three and nine months ended September 30, 2023 and 2024, respectively.

We did not recognize any revenue from our legacy service contracts during the three months ended March 31, 2025 and 2024.

Operating Expenses

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

We expect our general and administrative expenses to remain flat to moderately increasing in the future to support development of our prioritized CAB programs.

Interest Income

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

Gain on warrant liability

Gain on warrant liability relates to the changes in the fair value of our liability-classified warrants to purchase common stock.

Results of Operations

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

Comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended

September 30,

(in thousands)

Collaboration and other revenue

Operating expenses:

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Interest income

Other expense

Gain on warrant liability

Total other income

Net loss and comprehensive loss

Collaboration and Other Revenue

Collaboration and other revenue for the three months ended September 30, 2024 was $11.0 million and consisted of revenue recognized under the Context License Agreement.

There was no revenue recognized during the three months ended September 30, 2023.

See Note 7 to our financial statements for further details regarding collaboration and licensing agreements.

Research and Development Expense

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Three Months Ended

September 30,

(in thousands)

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Total research and development expenses

Research and development expenses were $16.4 million and $28.4 million for the three months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $12.0 million was primarily driven by a $5.4 million decrease in development costs for our pre-clinical programs primarily for BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $4.8 million decrease 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 $3.0 million decrease in manufacturing costs for evalstotug, a $0.3 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.

This was offset by $1.8 million in related party expense incurred in connection with the licensing agreement with Context Therapeutics in September 2024, which is further discussed in Note 7 and Note 8 to our financial statements.

General and Administrative Expense

General and administrative expenses were $5.9 million and $6.6 million for the three months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $0.7 million was primarily driven by a $1.0 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in D&O insurance premiums, offset by $0.5 million increase in professional and advisor fees related to the closing of our licensing agreement with Context Therapeutics in September 2024.

Interest Income

Interest income was $0.7 million and $1.7 million for the three months ended September 30, 2024 and 2023, respectively.

The decrease of $1.0 million was due to lower cash and cash equivalents compared to the same period in 2023.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended

September 30,

(in thousands)

Collaboration and other revenue

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

Collaboration and Other Revenue

Collaboration and other revenue for the nine months ended September 30, 2024 was $11.0 million and consisted of revenue recognized under the Context License Agreement.

There was no revenue recognized during the nine months ended September 30, 2023.

See Note 7 to our financial statements for further details regarding collaboration and licensing agreements.

Research and Development Expense

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

Nine Months Ended

September 30,

(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 $51.4 million and $81.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $29.6 million was primarily driven by a $15.2 million decrease in development costs for our pre-clinical programs primarily BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $7.8 million decrease in manufacturing costs for evalstotug, a $7.6 million decrease in 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 $1.0 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.3 million decrease in travel and other expenses.

Research and development expenses were $12.4 million and $18.9 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease of approximately $6.5 million was primarily driven by a decrease of $6.1 million in program development costs for our clinical programs due to lower enrollment and lower overall expense as we complete Phase 2 trials for mecbotamab vedotin, ozuriftamab vedotin, and evalstotug, a $0.5 million decrease in personnel-related expense due to lower headcount, a $0.3 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in facilities and other allocated expense.

This was offset by a $0.5 million severance charge in R&D related to our workforce reduction announced in March 2025.

General and Administrative Expense

General and administrative expenses were $17.3 million and $20.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $2.8 million was primarily driven by a decrease of $2.8 million in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, a $0.5 million decrease in D&O insurance premiums,

offset by a $0.5 million increase in professional and advisor fees related to the closing of our licensing agreement with Context Therapeutics in September 2024.

General and administrative expenses were $5.3 million and $5.6 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease of approximately $0.3 million was primarily driven by a $0.3 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, a $0.1 million decrease in insurance primarily due to lower D&O insurance premiums, offset by a $0.1 million severance charge in general and administrative expense related to our workforce reduction announced in March 2025.

Interest Income

Interest income was $2.8 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease of $1.9 million was due to lower cash and cash equivalents compared to the same period in 2023.

Interest income was $0.4 million and $1.2 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease of $0.8 million was due to lower cash and cash equivalents and lower interest rates during same period in 2024.

Gain on warrant liability

Gain on warrant liability was $1.9 million and $0 for the three months ended March 31, 2025 and 2024, respectively.

The increase of $1.9 million was due to the change in fair value of the warrants we issued in December 2024.

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 and via collaborations and licenses.

As of September 30, 2024, we had cash and cash equivalents of $56.5 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.

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

As of March 31, 2025, we had cash and cash equivalents of $32.4 million.

333-262528) which expired in February 2025.

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 September 30, 2024.

We have not sold any shares of our common stock under the Sales Agreement as of March 31, 2025.

In December 2024, the Company closed on an offering (the “December 2024 Offering”) of 9,679,158 shares of common stock at a price of $0.9520 per share with accompanying warrants to purchase up to 9,679,158 shares of common stock, which have an exercise price of $1.19 per share (the “Warrants”).

The gross proceeds from the December 2024 Offering were approximately $9.2 million, before deducting $0.7 million of placement agent fees and other offering expenses payable by the Company.

The accompanying Warrants become exercisable beginning six months from issuance and will expire five years from the date of initial exercisability.

Accordingly, there were 9,679,158 Warrants outstanding but not yet exercisable at March 31, 2025.

Future Funding Requirements

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

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations for a period of at least twelve months from the date the financial statements included in this report are issued.

Based on our current operating plan, our current cash and cash equivalents may not 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.

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.

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.

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.

These circumstances raise substantial doubt about our ability to continue as a going concern.

While management believes additional funds can be raised through equity or debt financings, strategic collaborations transactions, or a combination of these approaches, which will alleviate the conditions that raise substantial doubt, these plans are not entirely within our control and cannot be assessed as being probable of occurring.

We may not be able to secure additional financing in a timely manner or on favorable terms, 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.

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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 supply chain disruptions, and geopolitical disruptions, including the recent conflict between Russia and Ukraine and the wars between Israel and the terrorist groups Hamas and Hezbollah, could adversely impact our ability to access capital as and when needed.

For example, market volatility resulting from a variety of causes, including tariffs and trade disputes with other countries, inflation, high interest rates, growing recession risks, supply chain disruptions, and geopolitical tensions and disruptions, including the ongoing conflict between Russia and Ukraine and the wars between Israel and the terrorist groups Hamas and Hezbollah, 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.

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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.

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 additional reductions in staff and delay, scale back or stop certain research and development programs.

The following summarizes our cash flows for the periods indicated:

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

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Cash Used in Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2024 was $55.2 million, which consisted of a net loss of $54.9 million, a net change of $7.9 million in our operating assets and liabilities and $7.7 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 $8.5 million and a net decrease in operating lease right-of-use assets and lease liabilities of $0.5 million, partially offset by an increase in prepaid expenses and other assets of $1.0 million.

The non-cash transactions primarily consisted of $7.0 million of stock-based compensation and non-cash charges of $0.7 million related to depreciation and amortization.

Net cash used in operating activities for the nine months ended September 30, 2023 was $74.1 million, which consisted of a net loss of $96.5 million, a net change of $10.8 million in our operating assets and liabilities and $11.7 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 $12.5 million, partially offset by an increase in prepaid expenses and other assets of $1.3 million and a net decrease in operating lease right-of-use assets and lease liabilities of $0.4 million.

Net cash used in operating activities for the three months ended March 31, 2025 was $16.3 million, which consisted of a net loss of $15.3 million, a net change of $0.9 million in our operating assets and liabilities and $0.1 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 $2.1 million, offset by an increase in prepaid expenses and other assets of $3.0 million.

The non-cash transactions primarily consisted of

$1.6 million of stock-based compensation and non-cash charges of $0.2 million related to depreciation and amortization, offset by $1.9 million related to the change in fair value of the warrant liability.

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.

The non-cash transactions primarily consisted of $2.3 million of stock-based compensation and non-cash charges of $0.2 million related to depreciation and amortization.

Cash Used in Investing Activities

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

Cash used in investing activities for the nine months ended September 30, 2023 was $90,000, 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 nine months ended September 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 nine months ended September 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.

Cash Used in Financing Activities

Net cash used in financing activities was $0.4 million for the three months ended March 31, 2025, consisting primarily of the payment of financing costs in connection with the December 2024 offering and the payment of taxes related to the net settlement of restricted stock units.

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.

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, 2024.

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

There have not been any material changes to the critical accounting policies discussed therein during the three months ended March 31, 2025.

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