BioAtla (BCAB) intends to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.

San Diego, California-based BioAtla was founded to develop conditionally active biologics that 'exploit characteristic pH differences between the tumor microenvironment and healthy tissue.'

Management is headed by co-founder, Chairman and CEO Jay Short, Ph.D., who was previously president and CEO of Diversa Corporation, a biotech company he co-founded.

Below is a brief overview video of soft tissue sarcoma:

Source: Novartis

The firm's lead candidates are BA3011 and BA3021, which are in Phase 2 trials for the treatment of soft tissue sarcoma, non-small cell lung cancer, melanoma and platinum-resistant ovarian cancer.

Below is the current status of the company’s drug development pipeline:

bioatlapipe

Source: Company S-1 Filing

Investors in the firm have invested at least $192 million and include Himalaya Parent, Pfizer Ventures (PFE), Soleus Private Equity, HBM Healthcare, Baker Bros. Advisors, Cormorant Asset Management and Zone II Healthcare.

According to a 2017 market research report by Grand View Research, the global market for the treatment of non-small cell lung cancer was an estimated $6.2 billion in 2016 and is expected to reach $11.9 billion by 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of 7.5% from 2018 to 2025.

Key elements driving this expected growth are a growing patient population due to aging as well as the continued wide incidence of smoking and breathing of polluted air.

Lung cancer is considered one of the 'highest death-causing diseases across the world.'

Below is a chart showing historical and projected future growth of various existing NSCLC therapeutics within the U.S. market:

bioatlamkt

Notably, by region, North America accounted for nearly 50% of market demand in 2016.

Major competitive vendors that provide or are developing related treatments include:

  • Genmab
  • NBE-Therapeutics AG
  • Seattle Genetics
  • Other major pharma firms developing other treatments

BioAtla’s technologies are also being investigated for numerous other cancer conditions whose market sizes vary but are in the multiple billions of dollars in size in the aggregate.

BioAtla’s recent financial results are atypical in that the firm has received milestone payments from its collaboration agreement with BeiGene (BGNE).

Below are the company’s financial results for the past two and ¾ years (Audited PCAOB for full years):

bioatlapl

Source: Company registration statement

As of September 30, 2020, the company had $56.8 million in cash and $38.5 million in total liabilities. (Unaudited, interim)

BioAtla intends to raise $100 million in gross proceeds from an IPO of its common stock, although the final figure may vary.

The company will have two classes of stock, common stock with one vote per share and Class B stock with zero votes per share.

No existing shareholders have indicated an interest to purchase shares at the IPO price, although this element may become a feature of the IPO if disclosed in a future filing.

Management says it will use the net proceeds from the IPO as follows:

to fund the clinical development of BA3011 for the treatment of soft tissue and bone sarcoma patients through a Phase 2 clinical trial and for the treatment of NSCLC patients through a Phase 2 clinical trial;

to fund the clinical development of BA3021 for the treatment of NSCLC and for the treatment of melanoma, each through a Phase 2 clinical trial;

to fund IND-enabling studies and the clinical development of our CAB bispecific candidates through one or more Phase 1 clinical trials;

to fund our ongoing efforts to develop additional clinical product candidates from our CAB platform; and

the remaining proceeds for working capital and other general corporate purposes.

Management’s presentation of the company roadshow is not available.

Listed bookrunners of the IPO are J.P. Morgan, Jefferies, Credit Suisse and BTIG.

Commentary

BioAtla is seeking funding to advance its ambitious pipeline of programs for a number of major cancer conditions.

The firm’s lead candidates, BA3011 and BA3021, are both expected to produce interim Phase 2 efficacy trial results in 2021.

The market opportunities for the firm’s technologies are large when taken in the aggregate and are growing at a considerable rate due to the overall aging of the population and increasing incidence of major cancer conditions as a result.

The firm has a collaboration agreement with BeiGene for its BA3071 program from which it has received significant milestone and up front payments.

The company’s investor syndicate includes a number of well known life science investors, including major pharma firm Pfizer.

J.P. Morgan is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 76.2% since their IPO. This is a top-tier performance for all major underwriters during the period.

BioAtla says that for its lead candidate trials, it has ‘observed encouraging initial clinical signs of response to treatment and a wide therapeutic window, or range of dosage and duration,’ providing hints that the trials are producing promising results to-date.

When we learn more about the IPO’s pricing and valuation assumptions, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

Glossary Of Terms

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)

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