Bats is a basset hound who was adopted by Doctor Strange after he deposed from his title - Sorcerer Supreme and became a veterinarian. Doctor Strange enchanted a translation spell on him which allowed him to turn his barks into a human language in order to understand him.
When Doctor Strange went to the Sanctum Sanctorum and confronted Loki, Loki attacked Stephen and Bats stood up for him. Loki raised an inoffensive spell on Bats in order to stop him but due to his weak heart, he died almost immediately.
After his death Bats returned in spirit form, and is now able to temporary possess bodies.