Executive Summary / Key Takeaways

• Differentiated Technology Platform: OmniAb leverages its proprietary "Biological Intelligence" from engineered transgenic animals (OmniRat, OmniChicken, OmniMouse, OmnidAb, OmniFlic, OmniClic, OmniTaur) and AI/ML tools (OmniDeep, xPloration) to offer a unique, scalable, and highly differentiated antibody discovery platform. This technological edge is attracting a growing partner base and driving program expansion.
• Strategic Shift Towards Cash Generation: Despite a projected GAAP revenue decline in 2025 ($20M-$25M guidance), OmniAb anticipates an increase in actual cash received from partners. This is driven by the depletion of non-cash deferred service revenue and a strategic pivot in its ion channel business from small molecules to higher-value antibody programs, supported by significant cost reductions.
• Robust Partner Ecosystem & Pipeline Progression: The company achieved 100 active partners and 381 active programs by Q2 2025, with 99% of programs carrying future economics, including over $3 billion in potential milestones. A growing number of post-discovery programs (61, up 22% YoY) and 5-7 new clinical entries expected in 2025 signal future value realization.
• New Revenue Streams & Operational Efficiency: The successful launch of the xPloration Partner Access Program, offering a high-throughput single B-cell screening instrument, is creating new, accretive revenue streams from instrument sales, consumables, and software subscriptions. Coupled with headcount reductions, OmniAb is driving operational efficiency and aiming for lower cash burn in 2025.
• Competitive Moat & Long-Term Royalty Potential: OmniAb's innovative platforms, particularly OmnidAb and xPloration, provide a competitive advantage in generating diverse, high-quality antibody candidates. The average royalty rate of 3.36% (up from 3.2% in Nov 2023) on partnered programs underscores the perceived value of its technology, positioning royalties as the primary long-term value driver.

The Genesis of Biological Intelligence: OmniAb's Core Strategy

OmniAb, Inc. (NASDAQ:OABI) stands at the forefront of therapeutic antibody discovery, operating a unique licensing model that empowers pharmaceutical, biotech, and academic institutions to unearth next-generation medicines. Founded in 2012, the company's foundational strategy revolves around its "Biological Intelligence" platform. This innovative approach harnesses the immune systems of proprietary, engineered transgenic animals—including OmniRat, OmniChicken, and OmniMouse—to generate diverse antibody repertoires. These animals are genetically modified to produce human-sequence antibodies, offering a distinct advantage in the early stages of drug development.

The company's journey saw a significant inflection point with its Business Combination in November 2022, transforming it into a standalone public entity. This strategic move allowed OmniAb to further invest in and expand its technological offerings, solidifying its position as a critical partner in the global pharmaceutical industry. OmniAb's business model thrives on collaboration, deriving revenue primarily from technology access fees, milestone payments as partner programs advance, and ultimately, royalties on the net sales of approved products. This structure aligns OmniAb's economic interests directly with the success of its partners, fostering a symbiotic relationship crucial for long-term value creation.

Technological Edge: The Engine of Discovery

OmniAb's competitive moat is deeply entrenched in its continuous technological innovation, which provides tangible and often quantifiable benefits over traditional antibody discovery methods. The core of this differentiation lies in its suite of animal-based platforms, each engineered for specific therapeutic needs. OmniRat, OmniChicken, and OmniMouse are designed to generate fully human antibodies, minimizing immunogenicity issues in human patients.

Beyond these, OmniAb has strategically expanded its offerings:

• OmniFlic and OmniClic: These bispecific rat and chicken platforms are specifically designed for the discovery of bispecific antibody applications, a rapidly growing area in oncology and other complex diseases.
• OmniTaur: This platform provides cow-inspired antibodies with unique structural characteristics, particularly beneficial for challenging targets that are difficult to address with conventional antibodies.
• OmnidAb: Launched in November 2023, OmnidAb is an engineered chicken platform for discovering novel single-domain antibodies. This technology is a significant differentiator, as it is "the first and only transgenic chicken that produces single-domain antibodies." These antibodies offer unique advantages, including diverse routes of administration (injectable, inhalable, oral), the ability to penetrate the blood-brain barrier, and tunable clearance. OmnidAb has already attracted a significant number of new partners, driving growth in active programs and diversifying therapeutic areas into high-value CNS targets, radiopharma, and infectious diseases.

Further enhancing its discovery capabilities, OmniAb has integrated advanced computational tools:

• OmniDeep: This suite of in silico tools, incorporating artificial intelligence (AI) and machine learning (ML), is woven throughout the discovery platform. OmniDeep increases the speed, accuracy, and efficiency of identifying optimal antibody candidates, turning vast datasets into actionable insights.
• OmniHub: Launched in December 2024, OmniHub is a digital platform for bioinformatics tools that streamlines data and tool sharing with partners. This platform enhances antibody discovery workflows by integrating AI/ML with deep bioinformatics, improving collaboration and accelerating partner programs.

The most recent and impactful technological launch is the xPloration Partner Access Program, introduced in May 2025. This program makes OmniAb's AI-driven, high-throughput single B-cell screening instrument available for partners to purchase for their own labs. xPloration offers a "10x more single cell screening throughput versus other instruments," with rapid run times of approximately 1.5 hours. Its "unmatched screening throughput and superior hit recovery" are coupled with exceptional ease of use, featuring "no fluidics at all" for minimal maintenance and "AI-assisted analysis" that reduces labor and training. This innovation not only empowers partners with cutting-edge tools but also creates new, accretive revenue streams for OmniAb from instrument sales (list price ~$500,000), proprietary consumables, and software subscriptions. The rapid sale and installation of the first system within weeks of launch, and its "Best of Show" award at the Boston PEGS Conference, underscore its market relevance and potential.

These technological advancements collectively contribute to OmniAb's competitive moat by enabling faster, more efficient, and more diverse antibody discovery. This translates into higher-quality therapeutic candidates for partners, potentially leading to higher success rates in clinical development and, consequently, more milestone payments and royalties for OmniAb.

Competitive Landscape and Strategic Positioning

OmniAb operates in a dynamic and competitive biotechnology landscape, vying for partnerships and intellectual property with both specialized antibody discovery firms and integrated pharmaceutical giants. Key direct competitors include AbCellera Biologics (ABCL), Regeneron Pharmaceuticals (REGN), Amgen (AMGN), and Xencor (XNCR).

AbCellera Biologics, for instance, focuses on high-throughput antibody screening. While ABCL excels in rapid iteration, OmniAb's transgenic animal platforms, particularly OmnidAb, offer a unique advantage in generating diverse, human-like antibody repertoires, potentially leading to more efficient discovery for complex targets. OmniAb's "Biological Intelligence" approach may provide a more natural and comprehensive starting point for antibody generation compared to purely in vitro or synthetic methods.

Against integrated players like Regeneron Pharmaceuticals and Amgen, OmniAb positions itself as a specialized platform provider. While REGN and AMGN possess extensive pipelines, commercialization capabilities, and robust financial health (REGN's TTM Gross Profit Margin: 83%, AMGN's TTM Gross Profit Margin: 62% vs. OABI's 78.67%), OmniAb's strength lies in its early-stage innovation. Its platforms, like OmniFlic and OmniClic for bispecifics, allow partners to access cutting-edge technology without the massive internal R&D investment required to build such capabilities from scratch. This focus on foundational discovery tools allows OmniAb to maintain a lean operational structure relative to these fully integrated behemoths.

Xencor, specializing in engineered antibodies and proteins, particularly bispecifics, presents a more direct technological overlap. However, OmniAb's animal-based approach for bispecifics (OmniFlic, OmniClic) offers a biological diversity that complements or contrasts with Xencor's protein engineering methods. OmniAb's ability to command an average royalty rate of 3.36% (up from 3.2% in Nov 2023) reflects the perceived value and performance of its technologies in the industry, suggesting a strong competitive standing in terms of the quality of its output.

Indirect competitors include gene editing firms and traditional small molecule drug developers. OmniAb's strategic response to this broader competitive pressure is continuous innovation and diversification of its platform. The xPloration program, for example, not only enhances OmniAb's internal capabilities but also allows partners to internalize a powerful screening tool, deepening engagement and creating new revenue streams. This strategy helps OmniAb maintain relevance and capture market share in an evolving industry where lab automation and AI/ML integration are becoming paramount.

Financial Performance and Liquidity: A Strategic Rebalancing

OmniAb's financial performance in recent periods reflects a strategic rebalancing aimed at enhancing cash generation and operational efficiency, even as reported GAAP revenue figures show a temporary decline. For the three months ended June 30, 2025, total revenue was $3.9 million, a decrease from $7.6 million in the prior year period. Similarly, for the six months ended June 30, 2025, total revenue was $8.1 million, down from $11.4 million in the comparable 2024 period. This decline was primarily driven by a $1.8 million decrease in milestone revenue and a significant reduction in service revenue due to the discontinuation of a small molecule ion channel program in the prior year, which had inflated 2024 figures with accelerated non-cash revenue. Royalty revenue also saw a decline, primarily due to lower net sales of partner products in China, impacted by competitive PD-1/PD-L1 market dynamics.

However, a critical development is the emergence of the xPloration revenue stream, which contributed $608,000 in Q2 2025 from instrument sales and consumables. This new, high-margin revenue source partially offset declines elsewhere.

Operating expenses have shown a positive trend towards efficiency. For Q2 2025, total costs and operating expenses decreased to $20.1 million from $23.9 million in Q2 2024. This was largely due to lower research and development (R&D) expenses, which fell to $10.9 million from $13.9 million, driven by reduced share-based compensation, lower headcount, and decreased external expenses related to ion channel programs. General and administrative (G&A) expenses also declined to $7.7 million from $8.0 million, reflecting lower legal fees and share-based compensation. The company also recorded a $3 million gain from the sale of a small molecule Kv7.2 program to Angelini Pharma in Q2 2025, partially offset by a $1 million contingent liability adjustment.

OmniAb reported a net loss of $15.9 million ($0.15 per share) for Q2 2025, compared to a net loss of $13.6 million ($0.13 per share) in Q2 2024. For the six months ended June 30, 2025, the net loss was $34.1 million ($0.32 per share), compared to $32.6 million ($0.32 per share) in the prior year.

Despite these losses, management emphasizes a strategic shift: while GAAP revenue is projected to decrease in 2025, the company expects an increase in actual cash received from partners. This is a direct result of the amortization of non-cash deferred service revenue, which significantly reduced the deferred revenue balance to $2.5 million by December 31, 2024, from $6.85 million in 2023.

Liquidity remains a key focus. OmniAb ended Q2 2025 with $41.6 million in cash, cash equivalents, and short-term investments. Management believes this is sufficient to support operations for at least the next 12 months. To bolster its balance sheet amidst industry volatility, OmniAb raised $11.4 million in net proceeds through an at-the-market (ATM) offering in late 2024. Furthermore, a private placement announced on August 25, 2025, is expected to generate approximately $30 million in gross proceeds, significantly strengthening its capital position. Operational efficiencies, including headcount reductions in early Q1 2025 and again in July 2025, are projected to yield approximately $7 million in annual cash savings, further contributing to a lower anticipated cash burn in 2025 compared to 2024.

Outlook and Guidance: A Path to Sustainable Value

OmniAb's outlook for 2025 reflects a disciplined approach to growth and profitability, underpinned by strategic initiatives and a clear technological roadmap. The company projects 2025 revenue to be between $20 million and $25 million (GAAP). Critically, this guidance does not yet include specific revenue contributions from the xPloration Partner Access Program, which is expected to be additive and accretive to both earnings and cash flow. Management's rationale for the seemingly lower GAAP revenue compared to 2024 is the significant reduction in non-cash deferred service revenue amortization, implying a healthier cash flow profile.

Operating expenses are guided to be between $85 million and $90 million, a reduction from previous estimates, reflecting the impact of strategic headcount realignments. Approximately 40% of these expenses are non-cash, primarily from stock-based compensation and amortization of intangibles. The combined headcount reductions from February and July 2025 are anticipated to generate approximately $7 million in annual cash savings, with one-time expenses of about $1 million expected in Q3 2025. This commitment to fiscal responsibility is a cornerstone of OmniAb's strategy to achieve long-term profitability.

The company anticipates 5 to 7 new OmniAb-derived programs will enter clinical development in 2025. Each of these advancements is expected to trigger milestone payments, contributing to future revenue. The growing number of post-discovery stage programs, now at 61 (up 22% year-over-year) and associated with approximately $1.3 billion in contracted remaining potential milestones, signals a robust pipeline with significant future value. This includes $700 million from small-molecule ion channel programs that have successfully transitioned into preclinical development, demonstrating the strategic pivot's early success.

Risks and Challenges

Despite a compelling growth story, OmniAb faces several risks inherent to the biotechnology sector. The company's revenue and key business metrics are highly dependent on the timely and accurate reporting of information from its partners, which can introduce volatility. Drug development inherently involves high attrition rates, and while OmniAb's platform aims to mitigate this, partner decisions regarding therapy area focus, budget realignments, and reprioritization of pipelines by large pharmaceutical companies can lead to program terminations or delays.

The broader biopharmaceutical industry is subject to macroeconomic pressures, funding cycles, and government healthcare reforms. The "One Big Beautiful Bill Act," enacted in July 2025, which imposes significant reductions in Medicaid funding, could adversely affect partners' product sales and, consequently, OmniAb's royalty streams. Potential "most favored nation" pricing policies and state-level drug price caps also pose risks to future product commercialization. Furthermore, while legal proceedings are not currently deemed material, their outcomes are inherently uncertain and could impact future results.

Conclusion

OmniAb, Inc. is carving out a distinctive and increasingly valuable niche in the competitive antibody discovery landscape. Its "Biological Intelligence" platform, powered by a diverse array of transgenic animals and augmented by cutting-edge AI/ML tools like OmniDeep and xPloration, provides a compelling technological advantage. This differentiation is not merely academic; it translates into a robust partner ecosystem, a growing pipeline of active programs (381 by Q2 2025), and an increasing average royalty rate of 3.36%, underscoring the perceived value of its output.

While reported GAAP revenue may see a temporary dip in 2025 due to the strategic unwinding of non-cash deferred service revenue, the underlying financial narrative is one of strengthening cash generation and disciplined cost management. The successful launch of xPloration, coupled with significant headcount reductions, positions OmniAb for improved operational efficiency and a lower cash burn. With a strong balance sheet, a clear technological roadmap, and a pipeline poised for 5-7 new clinical entries in 2025, OmniAb is strategically positioned to capitalize on the industry's embrace of advanced discovery tools and next-generation antibody modalities. For discerning investors, OmniAb represents an opportunity to participate in the foundational innovation driving the future of therapeutics, with its technological leadership and strategic focus on long-term royalty streams serving as potent catalysts for value creation.