Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Stockholders' Equity

7. Stockholders’ Equity

2020 Equity Incentive Plan

The Company may grant awards of common stock under the 2020 Equity Incentive Plan (the "2020 Plan") 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 September 30, 2022 and December 31, 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 for the three and nine months ended September 30, 2022 and 2021 has been reported in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Research and development	$	1,427	$	1,267	$	4,125	$	3,376
General and administrative		2,161		3,099		6,937		17,931
Total	$	3,588	$	4,366	$	11,062	$	21,307

Restricted Stock Units

The following table summarizes RSU activity under the 2020 Plan for the nine months ended September 30, 2022:

	Number of Shares			Weighted - Average Grant Date Fair Value
Outstanding at December 31, 2021		975,046		$	18.00
Granted		—		$	—
Vested		(335,305	)	$	18.00
Forfeited		(10,734	)	$	18.00
Outstanding at September 30, 2022		629,007		$	18.00

As of September 30, 2022, total unrecognized stock-based compensation expense for RSUs was $11.3 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.5 years. During the nine months ended September 30, 2021, the Company modified 138,461 RSU's under the Transition Agreement (See Note 9).

Stock Options

The following table summarizes stock option activity under the 2020 Plan for the nine months ended September 30, 2022:

	Number of Options			Weighted - Average Exercise Price Per Share		Weighted -Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Balance at December 31, 2021		1,086,902		$	26.76		9.22	$	991,495
Granted		1,667,200		$	6.29
Exercised		—		$	—
Forfeited		(19,708	)	$	26.95
Expired		(15,464	)	$	39.12
Balance at September 30, 2022		2,718,930		$	14.00	9.06		$	2,733,693
Vested and expected to vest at September 30, 2022		2,718,930		$	14.00		9.06	$	2,733,693
Exercisable at September 30, 2022		408,742		$	26.18	8.34		$	—

As of September 30, 2022, total unrecognized stock-based compensation cost for unvested common stock options was $16.4 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.1 years. The weighted- average grant date fair value of stock options granted during the nine months ended September 30, 2022 was $4.01 per share. The total fair value of options vested during the nine months ended September 30, 2022 was $5.4 million. During the nine months ended September 30, 2021 the Company modified 7,747 stock options under the Transition Agreement (See Note 9).

The assumptions used in the Black-Scholes option pricing model to determine the fair value of stock option grants were as follows:

	Nine Months Ended September 30,
	2022	2021
Expected volatility	74.8%	74.7%
Risk-free interest rate	2.09%	0.99%
Expected dividend yield	0.0%	0.0%
Expected term	6.04	5.86

Expected volatility. As the Company’s common stock does not have a significant trading history, the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology industry.

Risk-free interest rate. The Company bases the risk-free interest rate assumption on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present plans to pay cash dividends.

Expected term. For employees, the expected term represents the period of time that options are expected to be outstanding. Because the Company has minimal historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. For nonemployees, the expected term is generally the contractual term of the option.

Employee Stock Purchase Plan

The BioAtla, Inc. Employee Stock Purchase Plan (the “ESPP”) permits participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation. As of September 30, 2022 and December 31, 2021, a total of 1,229,148 shares

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). In February 2021, employees began to enroll in the ESPP and the Company’s first offering period commenced. The Company issued 9,482 common shares under the ESPP during the nine months ended September 30, 2022. Comparatively, the Company issued 5,280 common shares under the ESPP during the nine months ended September 30, 2021. As of September 30, 2022, 1,208,484 shares of common stock remained available for issuance under the ESPP. Stock-based compensation expense related to the ESPP for the three and nine months ended September 30, 2022 and 2021 was immaterial.

Common Stock Warrants

The Company issued warrants 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 September 30, 2022.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance are as follows in common equivalent shares:

	September 30, 2022		December 31, 2021
Warrants for the purchase of common stock		—		151,088
Common stock options and restricted stock units issued and outstanding		3,347,937		2,061,948
Awards available for future issuance under the 2020 Plan		3,022,529		3,211,854
Awards available for future issuance under the ESPP		1,208,484		822,811
Total common stock reserved for future issuance		7,578,950		6,247,701