Mec-V And ROR2-ADC Programs Will Achieve Clinical Milestones

Key Takeaways

• Promising results in clinical programs and strategic partnerships indicate potential for increased revenue, improved net margins, and financial stability through collaboration income.
  
• Resource realignment and reduced R&D expenses suggest better operational efficiency and net margin improvement over the next year.
  
• BioAtla's financial stability and future earnings are at risk due to high cash burn, reliance on clinical and regulatory outcomes, and dependence on partnerships.

Catalysts

A clinical-stage biopharmaceutical company, develops specific and selective antibody-based therapeutics for the treatment of solid tumor cancer.

• Promising clinical data from BioAtla's CAB-AXL-ADC Mec-V program, particularly showing a 59% two-year landmark survival in mKRAS non-small cell lung cancer patients, suggests a potential increase in future revenue as the program advances towards a pivotal trial with a data readout expected in the first half of 2026.
  
• The company's focus on partnerships for its CAB-ROR2-ADC, which shows high efficacy in metastatic HPV+ head and neck cancer, could unlock significant value and funding, potentially improving net margins through collaboration income and reduced R&D expenses.
  
• Ongoing discussions for strategic partnerships, particularly for the CAB-ROR2-ADC and CAB-CTLA-4 antibody programs, indicate potential near-term cash inflows from upfront payments or milestone achievements, enhancing the company's financial stability and supporting future earnings growth.
  
• Reduction in R&D expenses by $6.5 million between Q1 2024 and Q1 2025, alongside expected continued decreases in 2025 due to resource realignment and restructuring, points towards improved net margins and operational efficiency over the next year.
  
• The potential for accelerated approval for the Oz-V in HPV+ head and neck cancer could lead to an earlier-than-expected market entry, driving revenue growth and boosting earnings if regulatory milestones are met.

BioAtla Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming BioAtla's revenue will grow by 12.4% annually over the next 3 years.
• Analysts are not forecasting that BioAtla will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate BioAtla's profit margin will increase from -562.5% to the average US Biotechs industry of 15.2% in 3 years.
• If BioAtla's profit margin were to converge on the industry average, you could expect earnings to reach $2.4 million (and earnings per share of $0.03) by about May 2028, up from $-61.9 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 299.9x on those 2028 earnings, up from -0.4x today. This future PE is greater than the current PE for the US Biotechs industry at 16.7x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.21%, as per the Simply Wall St company report.

BioAtla Future Earnings Per Share Growth

Risks

• BioAtla's forward-looking statements are subject to various risks, assumptions, and uncertainties that could cause actual results to differ materially, impacting future earnings and net margins.
  
• The company is facing significant cash burn, with cash and cash equivalents decreasing significantly from $49 million to $32.4 million in just three months, potentially affecting net margins and operational viability.
  
• The success of BioAtla's pipeline is heavily reliant on positive clinical outcomes and achieving regulatory approvals, which remain uncertain, posing a risk to anticipated revenues and earnings.
  
• Dependence on securing successful partnerships for some programs adds uncertainty, with a failure to do so potentially leading to inadequate funding and affecting revenue projections.
  
• A recent workforce reduction may impact operational capacity and productivity, potentially leading to setbacks in clinical program advancements and negatively affecting future financial performance in terms of revenue and net margins.

Valuation

• The analysts have a consensus price target of $8.333 for BioAtla based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $14.0, and the most bearish reporting a price target of just $1.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $15.6 million, earnings will come to $2.4 million, and it would be trading on a PE ratio of 299.9x, assuming you use a discount rate of 6.2%.
  
• Given the current share price of $0.43, the analyst price target of $8.33 is 94.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.