OmniAb, Inc. (NASDAQ:OABI) is a biotechnology company that licenses cutting-edge discovery research technology to the pharmaceutical and biotech industry to enable the discovery of next-generation therapeutics. The company's technology platform creates and screens diverse antibody repertoires and is designed to quickly identify optimal antibodies and other target-binding proteins for its partners' drug development efforts.

At the heart of the OmniAb platform is something the company calls Biological Intelligence™, which powers the immune systems of its proprietary, engineered transgenic animals to create optimized antibody candidates for human therapeutics. OmniAb primarily derives revenue from license fees for technology access, milestones from partnered programs, and service revenue from research programs.

Business Overview

OmniAb partners with pharmaceutical and biotechnology companies and leading academic institutions that vary in size, clinical stage, geography, and therapeutic focus. Its partners gain access to wide repertoires of antibodies and state-of-the-art screening technologies designed to enable efficient discovery of next-generation novel therapeutics and deliver high-quality therapeutic antibody candidates for a wide range of diseases.

The company's license agreements with pharmaceutical and biotechnology partners generally include upfront or annual payments for technology access and payments for performance of research services, downstream payments in the form of preclinical, intellectual property, clinical, regulatory, and commercial milestones, as well as royalties on net sales of its partners' products, if any. License agreements with academic institutions are typically structured with revenue sharing.

OmniAb's revenue is primarily driven by milestones in the shorter term, and by royalties in the longer term, from its partnered programs. However, there is significant uncertainty in timing and likelihood of reaching marketing authorization in drug discovery and development, and the company cannot be certain when, if at all, royalty payments will be a material portion of its revenue. Furthermore, OmniAb is dependent on its partners' efforts and decisions with respect to such programs, as it does not control the progression, clinical development, regulatory strategy, or eventual commercialization of programs discovered using its platform.

Key Business Metrics

OmniAb regularly reviews several key business metrics to evaluate its business, measure its performance, identify trends affecting its business, formulate financial projections, and make strategic decisions. These metrics include the number of active partners, active programs, active clinical programs and approved products, and approved products.

As of March 31, 2023, the company had 80 active partners, 327 active programs, 31 active clinical programs and approved products, and 3 approved products. These metrics indicate the competitiveness of OmniAb's platform, its current level of market penetration, the usage of its technology, and the potential for mid- and long-term milestone and royalty payments, as well as near- and mid-term potential revenue from milestone fees and potential royalty payments in the long term.

Financials

For the full year 2023, OmniAb reported annual revenue of $34,164,000 and a net loss of $50,619,000. The company's annual operating cash flow was $2,347,000, and its annual free cash flow was $703,000.

In the first quarter of 2024, the company's total revenue was $3,801,000, compared to $16,919,000 in the prior-year quarter. The decrease was primarily due to the recognition of a $10 million milestone related to the first commercial sale of teclistimab in the EU in the prior-year quarter. Service revenue also declined as a result of the completion of work on certain ion channel programs.

OmniAb's research and development expenses for the first quarter of 2024 were $14,551,000, compared to $13,759,000 in the prior-year quarter, with the increase primarily due to higher personnel costs. General and administrative expenses were $8,337,000, similar to the prior-year quarter.

The company reported a net loss of $18,961,000, or $0.19 per share, in the first quarter of 2024, compared to a net loss of $6,100,000, or $0.06 per share, in the prior-year quarter. The increase in net loss was primarily due to the decrease in revenue.

Liquidity

As of March 31, 2024, OmniAb had $69,000,000 in cash, cash equivalents, and short-term investments. The company believes its existing cash, cash equivalents, and short-term investments, as well as the cash it expects to generate from operations, will provide it the flexibility needed to meet operating, investing, and financing needs and support its operations through at least the next 12 months.

OmniAb's future capital requirements will depend on many factors, including its ability to achieve revenue growth, the costs of expanding its operations, its rate of progress in selling access to its platform and marketing activities, the cost of research and development activities associated with its platform technologies and internal developed programs, the effect of competing technological and market developments, and the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patents and other intellectual property and proprietary rights.

Risks and Challenges

OmniAb's business is subject to various risks, including the uncertainty in timing and likelihood of reaching marketing authorization in drug discovery and development, its dependence on its partners' efforts and decisions with respect to its partnered programs, and the potential impact of competing technological and market developments.

Guidance

The company reaffirmed its guidance for cash used in 2024 to be relatively similar to the cash used in 2023, excluding the $35 million TECVAYLI milestone that was received last year. OmniAb expects that its cash balance and the cash from operations should provide sufficient capital to fund its operations for the foreseeable future.

Recent Developments

OmniAb's partners continue to make progress with programs utilizing the company's technology. Immunovant reported that global Phase 3 clinical trials for batoclimab in myasthenia gravis and thyroid eye disease are progressing, and they expect top-line data readouts in the second half of 2024 and first half of 2025, respectively. Immunovant also plans to initiate 4 to 5 potentially registrational programs for IMVT-1402 over their next fiscal year and trials in 10 indications for IMVT-1402 over their next few fiscal years.

Merck presented pre-clinical data on M9140, a novel ADC with a topoisomerase 1 inhibitor payload targeting CEACAM5 expressing tumors, which demonstrated high potency, strong antitumor activity, and bystander effect in vitro and in mouse models. A first-in-human Phase 1 study is now ongoing.

Genmab disclosed that they expect to announce acasunlimab Phase 2 data in second-line non-small cell lung cancer in the first half of 2024 and plan to initiate a global Phase 3 study of acasunlimab in that indication later this year.

OmniAb is also actively involved in more scientific conferences than ever before, highlighting innovations and new workflow enhancements that benefit its business and create value for stakeholders. The company's recently launched OmnidAb technology, which enables the discovery of chicken-derived VHH antibodies, is attracting new partners and opening new market opportunities.

Conclusion

OmniAb's diverse antibody discovery platform, powered by its Biological Intelligence™ technology, continues to drive long-term value for the company and its partners. With a growing number of active partners and programs, including several in advanced clinical stages, OmniAb is well-positioned to capitalize on the increasing demand for innovative antibody discovery solutions. The company's commitment to innovation, coupled with its efficient and highly scalable business model, positions it for continued success in the years ahead.