OmniAb, Inc. (NASDAQ:OABI) is a biotechnology company that licenses cutting-edge discovery research technology to the pharmaceutical and biotech industries, as well as academic institutions, enabling the development of next-generation therapeutics. The company's innovative platform, powered by its proprietary "Biological Intelligence," creates and screens diverse antibody repertoires to quickly identify optimal antibodies and other target-binding proteins for its partners' drug development efforts.
Business Overview and History OmniAb was founded in 2015 with the goal of revolutionizing the antibody discovery process. The company's initial focus was on creating and screening diverse antibody repertoires to quickly identify optimal antibodies and other target-binding proteins for its partners' drug development efforts. In 2019, OmniAb made a significant advancement with the development of its proprietary "Biological Intelligence" technology, which powers the immune systems of its engineered transgenic animals to create optimized antibody candidates for human therapeutics. This platform allowed OmniAb to differentiate itself in the market and attract new partners.
Over the next few years, OmniAb continued to expand its technology portfolio and partner base. By the end of 2023, the company had 77 active partners with 325 active programs using the OmniAb platform. This included 32 active clinical programs and 3 approved products of its partners. OmniAb derived its revenue primarily from license fees, milestones, and royalties.
In 2022, OmniAb underwent a significant business transition when it was spun out from Ligand Pharmaceuticals and became a standalone public company through a merger with Avista Public Acquisition Corp. II. This provided OmniAb with $95.8 million in net cash to fund its operations and further invest in its technology platform. The company has continued to execute on its strategy, signing new partnerships and advancing its platform capabilities, despite some industry-wide challenges in the biotech sector.
Financial Performance and Ratios As of September 30, 2024, OmniAb reported a cash position of $27.24 million, which was bolstered by an $8.5 million capital raise through the company's at-the-market (ATM) equity offering program. This enhanced financial flexibility positions OmniAb to navigate the evolving industry landscape and potential macroeconomic headwinds.
OmniAb's financial ratios for the nine months ended September 30, 2024, demonstrate the company's stability and liquidity. The current ratio stood at 4.62, indicating a robust ability to meet short-term obligations, while the quick ratio of 4.62 suggests a high degree of liquidity. The company's debt-to-equity ratio of 0.08 further underscores its financial strength and resilience.
Revenue and Earnings For the nine months ended September 30, 2024, OmniAb reported total revenue of $15.59 million, a decrease of 47% compared to the same period in the prior year. This decline was primarily driven by lower license and milestone revenue, which fell by 73% year-over-year, as the company experienced a timing shift in milestone payments from its partners.
In the most recent quarter (Q3 2024), OmniAb reported revenue of $4.17 million, representing a 24% decline compared to $5.48 million in Q3 2023. This decrease was primarily attributed to lower milestone revenue and reduced ion channel service revenue.
Despite the revenue challenges, OmniAb maintained disciplined cost management, with research and development expenses remaining relatively flat at $41.80 million, and general and administrative expenses decreasing by 8% to $23.38 million. The company's net loss for the nine-month period was $48.97 million, or $0.48 per share, compared to a net loss of $36.57 million, or $0.37 per share, in the prior-year period. For Q3 2024, the net loss was $16.37 million.
OmniAb's operating cash flow (OCF) for the most recent quarter was negative $66.89 million, while free cash flow (FCF) stood at negative $68.49 million. These figures reflect the company's continued investment in its technology platform and the timing of milestone payments from partners.
Operational Highlights and Partner Traction Throughout 2024, OmniAb continued to demonstrate the strength and versatility of its technology platform, as evidenced by several key operational highlights:
1. Active Partner Growth: As of September 30, 2024, OmniAb had 86 active partners, an increase of 9 from the prior year. This growth reflects the industry's strong interest in the company's cutting-edge discovery technologies.
2. Expanding Program Portfolio: OmniAb's partners had 352 active programs as of the end of the third quarter, up from 325 at the beginning of the year. This 8% increase in active programs underscores the continued demand for the company's antibody discovery capabilities.
3. Clinical Advancement: OmniAb's partners advanced several OmniAb-derived antibody programs into clinical development during the year, including GEN1057 from Genmab and M5542 from Merck KGaA, both of which entered Phase I trials. As of September 30, 2024, there were 33 OmniAb-derived antibodies in clinical development by partners, one under regulatory review, and three approved products.
4. Diversified Pipeline: OmniAb's partners are pursuing a wide range of therapeutic areas, including oncology, autoimmune diseases, and infectious diseases, leveraging the versatility of the company's technology platform.
5. Technology Innovations: OmniAb continued to enhance its technology offerings, highlighted by the launch of its OmniHub bioinformatics platform, which integrates machine learning and AI tools to streamline antibody discovery workflows for its partners.
Business Segments OmniAb operates primarily in two key business segments:
1. Antibody Discovery Technology Platform: This is OmniAb's core business, which utilizes proprietary transgenic animals to generate diverse antibody repertoires and screens them to identify optimal antibody candidates for therapeutic development. Revenue from this segment is derived through upfront license fees, milestone payments, and royalties on net sales of approved products incorporating OmniAb-derived antibodies.
2. Ion Channel and Transporter Discovery: OmniAb has established expertise in the discovery of ion channels and transporters, an important and emerging class of drug targets. While not reported as a separate business unit, this capability differentiates OmniAb's technology offerings and creates additional partnership opportunities.
Risks and Challenges While OmniAb has demonstrated impressive resilience and adaptability, the company is not without its risks and challenges. The biotechnology industry is inherently volatile, with significant regulatory hurdles and long development timelines. OmniAb's reliance on the success of its partners' drug development programs exposes the company to the risk of delays or failures in the clinic.
Additionally, the company operates in a highly competitive landscape, with other antibody discovery platforms vying for market share. Maintaining OmniAb's technological edge and attracting top-tier partners will be crucial to the company's long-term success.
Outlook and Guidance Despite the revenue challenges faced in the first nine months of 2024, OmniAb remains well-positioned for the future. The company's robust cash position, diversified partner base, and innovative technology pipeline provide a strong foundation for growth.
Looking ahead, OmniAb anticipates that certain development milestones will be achieved in the fourth quarter of 2024, which could drive an improvement in revenue performance. Specifically, the company expects to see one to three additional entries of novel OmniAb-derived antibodies into clinical development by the end of the year.
For the full year 2024, OmniAb expects to end the year with a cash balance in the range of $50 million to $60 million, which includes the proceeds from the recent ATM stock issuance. This guidance reflects the company's commitment to maintaining a strong financial position while continuing to invest in its technology platform.
Looking further ahead to 2025, OmniAb expects cash used to be lower than in 2024, excluding the recent ATM proceeds. This projection is based on the current expected progression of the company's existing partnered pipeline and demonstrates OmniAb's focus on efficient capital management.
As a pioneer in the field of antibody discovery, OmniAb is poised to play a pivotal role in the development of next-generation therapeutics. The company's unique combination of cutting-edge technologies, strategic partnerships, and a seasoned management team positions it as a compelling investment opportunity in the dynamic biotech landscape. While specific revenue or earnings guidance for Q4 2024 or 2025 was not provided, OmniAb's focus on operational metrics such as partner count, active programs, and clinical-stage programs underscores its commitment to long-term value creation in the antibody discovery space.