BioAtla, Inc. (NASDAQ:BCAB) Q1 2023 Earnings Call Transcript May 11, 2023

BioAtla, Inc. beats earnings expectations. Reported EPS is $-0.58, expectations were $-0.63.

Operator: Greetings. And welcome to the BioAtla First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I’ll now turn the conference over to your host, Bruce Mackle from LifeSci Advisors. Thank you, Bruce. You may begin.

Bruce Mackle: Thank you, operator, and good afternoon, everyone. With me today on the phone from BioAtla are Dr. Jay Short, Chairman, CEO, and Co-Founder; and Richard Waldron, Chief Financial Officer. Following today’s call, Philippe Martin, Chief of Clinical Development and Operations; Dr. Eric Sievers, Chief Medical Officer; and Sheri Lydick, Senior Vice President, Commercial Strategy, will join Jay and Rick for a short Q&A. Earlier this afternoon, BioAtla released financial results and a business update for the first quarter ended March 31st, 2023. A copy of the press release is available on the company’s website. Before we begin, I’d like to remind everyone that statements made during this conference call will include forward-looking statements, including but not limited to statements regarding BioAtla’s business plans and prospects, potential selective licensing, collaborations, and other strategic partnerships, whether our clinical trials will be potentially registrational, results, conduct, progress and timing of our research and development programs, and clinical trials, expectations with respect to enrollment and dosing in our clinical trials, plans regarding future data updates, clinical trials, regulatory meetings, and regulatory submissions, the potential regulatory approval path for our product candidates; expectations about the sufficiency of our cash and cash equivalents and expected R&D and G&A expenses.

These statements are subject to various risks, assumptions and uncertainties that can cause actual results to differ materially and are described in the filings made with the SEC, including the most recent quarterly report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, May 11th, 2023, and BioAtla disclaims any obligation to update such statements to reflect future information, events or circumstances, except as required by law. With that, I’d like to turn the call over to Jay Short. Jay?

Jay Short: Thank you, Bruce and thanks to everyone for joining us for our first quarter 2023 BioAtla’s earnings call. Before I provide an update on our first quarter progress, I would like to reiterate a few key points made on our last quarter call in March. As a reminder, BioAtla is the inventor and leader in the development of novel therapies using a proprietary conditionally active biologics, CAB, platform with improved selectivity for attacking tumor cells, while avoiding healthy cells to address urgent unmet needs in oncology in order to improve patients’ lives. We made significant progress last year across our multiple ongoing Phase 2 trials for our two latest-stage first-in-class CAB-ADC product candidates, BA3011and BA3021, targeting solid tumor types with high unmet medical needs.

As we are now a little over one full quarter into 2023, we continue our positive trajectory and are on track to achieve our recently guided milestones. We remain focused on further advancing the development of our innovative clinical programs, leveraging the broad applicability of our CAB technology across several clinical stage antibody types, including CAB, AXL and CAB-ROR2-ADCs, targeted CAB-CTLA-4, and immuno-oncology naked antibody and our first dual CAB bispecific EpCAM CD3 T cell engager. Additional details related to what I’m going to provide are available on our website as part of our updated company presentation that may be helpful to you. We have shared promising clinical responses to date that are so far meeting and in several cases, exceeding our interim study targeted responses.

Last quarter, I shared our strategic shift from providing incremental data updates on small sample sizes to releasing more mature data sets across our programs. As a reminder, our goal is to provide sufficient data to allow us to set study parameters that maximize the company’s likelihood of successful for our Phase 2, potentially registrational studies. Additionally, last quarter, I discussed the rationale for including the more frequent dose-intensive regimens. A summary of these current dose regimens can be found in our updated corporate presentation on our website. Based on our exposure response analysis as well as our UPS-related FDA interactions, we aim to maximize the differentiated benefit risk profile of our CAB-ADCs in our Phase 2 part 1 trials for potential further improvement in antitumor activity while having similar or even improved safety profile.

We continue to be excited about our lead asset, BA301, for multiple indications. Previously, we shared the encouraging partial interim data on our BA3011 Phase 2 part 1 sarcoma study and our BA3011 Phase 2 part 1 non-small cell lung cancer study. Let’s now move to our clinical operational and financial updates for the first quarter 2023. First, I will reiterate our BA3011 Phase 2 sarcoma study and our overall sarcoma strategy. We are advancing BA3011 in ongoing sarcoma Phase 2 studies, including a potentially registrational study in UPS. As a recap of the unmet need in UPS, it is one of the largest and most aggressive sarcoma subtypes with high recurrence rates, representing nearly 15% of all soft tissue sarcomas. Without specific treatments approved for UPS, there is a significant commercial opportunity as a standalone indication.

We have shown strong execution and promising results with continued antitumor activity, lack of disease progression and a differentiated safety profile of BA3011 in UPS to-date. Additionally, we have observed an overall objective response rate or ORR of 50%; median progression free survival or PFS of over 11 months and a duration of response exceeding eight months. Based on these results, together with the continued differentiated safety profile and encouraging feedback from the FDA around the study design, last year we initiated part 2 of the potentially registrational portion of the trial. The first 40 patients with the TmPS greater than or equal to 50% are being randomized 1:1 between the 3Q4W or 2Q3W dosing regimens. Following this, we plan to enroll an additional 40 patients at the selected dose to complete the study.

Overall, the primary efficacy endpoint ORR will be based on approximately 60 patients treated at the selected dosing regimen. UPS represents a solid early indication with BioAtla, as we plan for the transition into a commercial stage company. In addition to UPS, we continue to enroll in the leiomyosarcoma cohort using the 3Q4W dosing regimen and are on track with anticipated data readout in the second half of this year. With regards to the safety profile across sarcoma subtypes, BA3011 continues to be generally well tolerated with the Phase 2 safety profile across all doses, consistent with the profile we observed in Phase 1. We also see real value in potentially expanding our sarcoma footprint over time to include other sarcoma subtypes. Ultimately, we believe BA3011 has the potential to treat over 25,000 sarcoma patients per year and generate up to $2 billion in revenue worldwide in this area of high unmet need.

Regarding our BA3011 Phase 2 study in AXL-positive multi-refractory non-small cell lung cancer, we continue to be enthusiastic about the data we presented earlier this year with the Q2W dosing regimen. Currently, the competitive landscape is scanned for treatment options in patients who progress on immune checkpoint inhibitors, particularly in the second line and beyond setting. These patients have suboptimal overall ORRs of approximately 10% to 20% and PFS rates of four months. As a reminder, part 1 of a Phase 2 study in non-small cell lung cancer is ongoing in AXL-positive patients who have previously experienced failure of either PD-1, PD-L1, EGFR, or ALK inhibitors. So far in the study, we have reported preliminary efficacy with an ORR of 44% as monotherapy and a PD-1 failure population that have seen, on average, three prior lines of therapy.

This response rate is highly competitive and exceeded our targeted response for moving forward to the Phase 2 potentially registrational part of the study. We continue to believe BA3011 will be highly commercially relevant with a response well above those observed in a multi-refractory patient population, particularly a view of treating patients in earlier lines in Phase 2 part 2. In addition, part 1 of the Phase 2 study continues to enroll using the more frequent dose-intensive regimen with anticipated data readout for all dosing regimens on track for the second half of this year. We remain on track to submit a meeting request to the FDA for the potentially registrational BA3011 Phase 2 part 2 non-small cell lung cancer study design in the first half of this year with feedback anticipated in the second half of this year, allowing us to initiate the Phase 2 part 2 study in non-small cell lung cancer in the second half of this year, maintaining our overall timeline for development of the non-small cell lung cancer education.

As we have previously mentioned, approximately 35% of patients in the second line plus indication of non-small cell lung cancer express AXL. We estimate annually that there are over 100,000 AXL positive addressable patients worldwide with the potential to add approximately $2.5 billion to $3 billion in worldwide revenue at peak. Considering only the sarcoma non-small cell lung cancer indications, we continue to believe that BA3011 has the potential to become a significant commercial asset for BioAtla. Of even greater importance is that BA3011 has the potential to be the best-in-class treatment for a significant number of patients who fail multiple lines of therapy, thus filling a significant unmet medical need. To round out our CAB-ADC BA3011 program, we are supporting an ongoing multicenter investigator-initiated or IIT Phase 2 clinical trial in patients with platinum-resistant ovarian cancer.

The trial is on track, and we anticipate interim data consisting of 10 patients in the second half of this year. Now, turning to our second lead CAB-ADC product candidate, BA3021, a CAB-ROR2 ADC. Currently, BA3021 is the subject of Phase 2 trials in the treatment of four indications. As a reminder, no other company has a therapy in the clinic targeting ROR2. So,, we have the potential to have a first-in-class treatment for solid tumors. We conducted a similar exposure response analysis of ROR2-positive tumors to form the more frequent dose-intensity regimen in our Phase 2 ROR2-positive non-small cell lung cancer study. Based on this analysis, which utilizes a similar strategy to our UPS Phase 2 part 2 BA3011 study I mentioned earlier. We are continuing to enroll patients in the more frequent dose intensity regimen of 3Q4W as planned with interim data readout on track for the second half of this year.

Regarding the melanoma Phase 2 trial in patients who have previously experienced failure of PD-1 therapy following an additional complete response in an evaluable patient identified using our IHC assay, we are screening patients with the validated liquid biopsy. Although we haven’t enrolled additional patients to date, we have successfully identified ROR2-positve tumors using the liquid biopsy assay, which is now allowing us to enroll ROR2-positve patients. We anticipate an increased enrollment in the second half of this year. In addition, our Phase 2 head and neck study is ongoing in patients who have previously experienced failure of PD-1 therapy alone or in combination with platinum therapy. Last quarter, we announced achievement of first patient in for the study.

Since last quarter, we continued to enroll patients and the observed ROR2 positivity rate is high, over 50% and in line with our expectations. To round out our CAB-ADC BA3021 program, we are also supporting the Phase 2 IIT study with BA3021 in patients with platinum-resistant ovarian cancer. The trial is on track and we anticipate interim data consisting of 10 patients in the second half of this year. Now, I’d like to talk briefly about our Phase 1/2 trial for our CAB-CTLA-4 antibody BA3071. As a reminder, the Phase 1/2 trial is being conducted in tumors known to be responsive to CTLA-4 treatment, and we will evaluate safety and tolerability of BA3071 in monotherapy and in combination with nivolumab. The trial is progressing as planned. Last quarter, I shared that the DLT observation period was cleared for the fourth cohort at a dose of 210 mg or 3 mg/kg in combination with 3 mg/kg of nivolumab.

No DLTs were reported. As part of today’s update, we are treating patients in the fifth cohort at 350 mgs or 5 mg/kg as a monotherapy or in combination with 3 mg/kg of nivolumab and are on track for a Phase 1 data readout in the second half of this year. We also remain on track for the initiation of our BA3071 Phase 2 study to commence in the second half of this year. Finally, on to our potentially first-in-class dual CAB bispecific T cell engager antibody, CAB-EpCAM, CAB-CD3, or BA3182. In the first quarter, we received FDA clearance of our IND for the treatment of advanced adenocarcinoma. We anticipate first patient in for the Phase 1 study in the current quarter with the complete Phase 1 data readout anticipated next year. Similar to our other three clinical stage CAB product candidates, this antibody holds much promise in view of the in vivo preclinical studies demonstrating an over 100-fold improvement in the therapeutic index relative to the non-CAB variants due to the combined selectivity of the dual-CAB design.

Several of the most common subtypes of adenocarcinoma that have tremendous unmet need that we can potentially address include colon, lung, breast, pancreas, and prostate. BioAtla also continues to progress several candidates through IND-enabling studies, including CAB bispecifics and next-generation ADC antibodies, and we still anticipate IND submissions for additional candidates potentially in 2023 and through 2024. With respect to important ongoing communications, the company has nine accepted recent and upcoming poster presentation since March, including at the ESMO Sarcoma and Rare Cancers Congress, the European Lung Cancer Congress, AACR, and ASCO, the latter of which will include an online publication of the abstract related to exposure response analysis of BA3011.

Additional abstracts have been submitted for several upcoming meetings, and these will be updated as they are accepted. With that, I would now like to turn the call over to Rick to review the first quarter of 2023 financials. Rick?

Richard Waldron: Thank you, Jay. As of March 31, 2023, we had $192.7 million in cash and cash equivalents compared to $215.5 million as of December 31, 2022. We expect current cash and cash equivalents will be sufficient to fund planned operations, including all ongoing CAB product development programs into 2025. As a reminder, we control all CAB product market rights in the US, Europe and Japan. Our business strategy includes advancing commercial preparations in key global markets while exploring opportunities to extend our cash runway by generating upfront cash through the selective licensing of product rights in certain territories or collaborations with other biopharmaceutical companies that could also provide to us development milestones and royalties upon regulatory approval and commercialization and create additional value for stockholders.

For the first quarter ended March 31, 2023, we reported a net loss of $27.5 million compared to a net loss of $24.3 million in the same period of 2022. Research and development expenses were $21.7 million for the first quarter ended March 31, 2023 compared to $16.9 million for the same period in 2022. The increase of $4.8 million was primarily driven by our preclinical and clinical product development efforts. We expect our R&D expenses to remain variable from quarter-to-quarter and generally increase as we continue to invest in R&D activities to advance our product candidates and our clinical programs. General and administrative expenses were $7.2 million for the first quarter ended March 31, 2023 compared to $7.4 million for the same period in 2022.

The $0.2 million change was attributable to a decrease in various expenses for the 2023 period. We expect our G&A expenses to moderately increase to support development of our product candidates, advance our intellectual property portfolio, support focused pre-commercialization activities for our product candidate BA3011, and satisfy requirements as a public company. Net cash used in operating activities for the three months ended March 31, 2023, was $22.7 million compared to net cash used in operating activities of $25.1 million for the same period in 2022. The decrease in net cash used in operating activities for the first three months of 2023 is primarily due to an increase in accounts payable and accrued expenses in the 2023 period compared to a decrease in accounts payable in the same period in 2022.

And now back to Jay.

Jay Short: Thank you, Rick. We are pleased with the progress we have made to-date and our cumulative results that continue to support both the preliminary efficacy and safety from our differentiated proprietary CAB platform. We are excited with the compelling clinical data that is emerging in treatment refractory UPS and non-small cell lung cancer and are eager to continue advancing the Phase 2 studies with the addition of the more frequent dose-intensive regimens and providing clinical updates anticipated in the second half of this year. We also remain encouraged by the continued execution of our other promising CAB assets and multiple cancer indications, and we are well poised to reach several value-creating milestones and key inflection points in the next several months.

BioAtla remains confident about the future with the goal of pursuing indications of high unmet medical need that we feel will have significant impact for patients and our shareholders worldwide. With that, we will turn it back to the operator to take your questions.

Q&A Session

Operator: Thank you sir. We will now be conducting a question-and-answer session. [Operator Instructions] And the first question comes from the line of Brian Cheng with JPMorgan. Please proceed with your question.

Operator: And the next question comes from the line of Kelly Shi with Jefferies.

Operator: And the next question comes from the line of Kaveri Pohlman with BTIG. Please proceed with your question.

Operator: [Operator Instructions] And the next question comes from the line of Reni Benjamin with JMP Securities. Please proceed with your questions.

Operator: And the next question comes from the line of Arthur He with H.C. Wainwright. Please proceed with your question.

Operator: And at this time, there are no further questions. Now, I’d like to turn the floor back over to Jay for any closing comments.

Jay Short : Well, I want to thank everyone for their time and attention today, and we’re really looking forward to a lot of readouts coming up in the next couple of quarters. So thank you.

Operator: And thank you, everyone. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.