Executive Summary / Key Takeaways

• OmniAb, Inc. (NASDAQ:OABI) is strategically leveraging its cutting-edge antibody discovery platforms, including the newly launched xPloration and upcoming OmniUltra, to drive a growing ecosystem of partners and a robust pipeline of therapeutic programs.
• The company's business model is evolving towards long-term royalty generation from commercialized partner products, supported by an average antibody program royalty rate of 3.36% and a significant pipeline of 61 post-discovery stage programs with $1.3 billion in potential milestones.
• Operational efficiencies, including headcount reductions, are expected to lower 2025 operating expenses to $82 million-$86 million, with cash received from partners projected to increase despite a GAAP revenue guidance of $18 million-$22 million due to non-cash revenue amortization.
• Technological differentiators like OmniUltra, a transgenic chicken producing ultra-long CDRH3 antibodies, are poised to open new markets in peptide therapeutics and enhance OmniAb's competitive moat against larger, more diversified biotechnology firms.
• While near-term revenue guidance reflects milestone timing shifts, OmniAb's strengthened balance sheet from a recent $30 million private placement and its continuous innovation position it for sustained growth in the dynamic drug discovery landscape.

The Foundation of Discovery: OmniAb's Strategic Imperative

OmniAb, Inc. operates at the forefront of biotechnology, licensing its advanced discovery research technology to pharmaceutical and biotech companies, as well as academic institutions, to accelerate the development of next-generation therapeutics. Founded in 2012, OmniAb's core mission centers on creating and screening diverse antibody repertoires, a process powered by its proprietary "Biological Intelligence" platform. This platform leverages engineered transgenic animals, including OmniRat, OmniChicken, and OmniMouse, to generate optimized antibody candidates with human sequences. The company's strategic focus is clear: to be a collaborative enabler in drug discovery, providing partners with the foundational tools to identify optimal antibodies and other target-binding proteins.

The industry landscape for antibody discovery is intensely competitive, with players ranging from large, integrated pharmaceutical companies like Regeneron Pharmaceuticals and Amgen to specialized life science tool providers such as Bio-Techne Corporation (TECH) and contract research organizations like Charles River Laboratories (CRL). OmniAb distinguishes itself by offering specialized, cost-effective transgenic platforms that address niche needs, particularly in areas like bispecific antibodies and complex targets. While larger competitors benefit from diversified revenue streams and extensive R&D budgets, OmniAb's agile, partner-focused model allows for rapid adaptation to evolving industry demands and a concentrated investment in platform innovation.

OmniAb's strategic evolution has been marked by significant milestones. A pivotal moment occurred on November 1, 2022, with its business combination, which laid the groundwork for its current operational structure. Subsequent technological advancements, such as the launch of OmnidAb in November 2023, an engineered chicken platform for novel single-domain antibodies, have been instrumental in attracting new partners and diversifying the company's therapeutic focus into high-value areas like CNS and radiopharma. This continuous pursuit of innovation, coupled with a growing ecosystem of over 100 active partners and 399 active programs as of Q3 2025, underscores OmniAb's resilience and broad applicability across various industry cycles.

Technological Edge: Fueling the Pipeline

At the heart of OmniAb's investment thesis lies its robust and continuously expanding suite of proprietary technologies, which provide tangible and quantifiable benefits to its partners and solidify its competitive moat. The company's "Biological Intelligence" platform, leveraging genetically engineered transgenic animals, is designed to generate highly diverse antibody repertoires. OmniAb asserts that its animal systems comprise "the most diverse host systems available in the industry."

Its flagship OmniChicken technology stands out as "the world's only validated humanized transgenic chicken for antibody discovery." This platform capitalizes on the evolutionary distance between birds and mammals, enabling it to deliver robust immune responses and generate highly diverse antibody repertoires, which is crucial for discovering novel therapeutics against challenging targets. For specialized applications, OmniClic incorporates a fixed light chain design, facilitating seamless combinations of antibodies for bispecific and multi-specific applications. The OmnidAb platform, launched less than two years ago, extends the utility of chicken-derived antibodies into small, stable therapeutic formats, opening opportunities across a range of modalities. Notably, the first OmnidAb-derived program entered human clinical trials within two years of its launch, demonstrating rapid progression for a new technology.

In Q2 2025, OmniAb launched the xPloration Partner Access Program, a high-throughput single B-cell screening instrument that integrates machine learning and AI. This technology offers "10x more single cell screening throughput versus other instruments," allowing for significantly more efficient screening. It boasts "unmatched screening throughput and superior hit recovery, along with exceptional ease of use and reliability." With rapid run times of approximately 1.5 hours and a fluidics-free design, xPloration simplifies setup and minimizes maintenance, while AI-assisted analysis accelerates hit identification. This platform, available to partners at a list price of approximately $500,000, is expected to be "accretive to earnings and cash flow in both the short and the long term" through instrument sales, recurring consumable sales, and software subscriptions.

Looking ahead, OmniAb is set to launch OmniUltra in December 2025, a groundbreaking transgenic chicken platform. OmniUltra is described as "the first and only transgenic chicken that produces cow-like antibodies with ultra-long CDRH3s," engineered with human features. This innovation is designed to enable antibodies to reach unique binding pockets and previously inaccessible epitopes, potentially unveiling therapeutic opportunities beyond conventional modalities. Crucially, OmniUltra also opens up "entirely new opportunities for us in peptide-based therapeutics," by biologically producing optimized structured peptides on a validated scaffold. This capability positions OmniAb to capitalize on the significant growth and investment in the peptide therapeutics market, driven by the success of drugs like GLP-1s. OmniUltra is expected to "drive higher collaboration and service revenue in the near term" due to the specialized service contracts it requires.

These technological advancements, including the OmniDeep suite of in silico tools and the OmniHub digital platform for data sharing, collectively enhance OmniAb's competitive moat. They enable partners to discover high-quality therapeutic candidates more quickly and efficiently, potentially leading to higher average selling prices (ASPs) for OmniAb's services, lower development costs for partners, and ultimately, better margins and market positioning for the company.

Financial Performance and Strategic Realignment

OmniAb's financial performance in 2025 reflects a period of strategic realignment and investment in its innovative platforms, alongside the inherent lumpiness of milestone-driven revenue. For the three months ended September 30, 2025, total revenue decreased to $2.239 million from $4.172 million in the prior year period, a 46% decline. This was primarily due to a 55% reduction in license and milestone revenue to $616,000 and a 52% decrease in service revenue to $1.188 million. The decline in service revenue was largely attributed to the completion of certain small molecule ion channel programs in the first half of 2025. Royalty revenue, however, saw a modest increase of 14% to $361,000. The newly introduced xPloration revenue contributed $74,000 in Q3 2025, primarily from consumable sales.

Despite the revenue decline, OmniAb demonstrated a strong commitment to operational efficiency. Total costs and operating expenses decreased by 15% to $20.379 million in Q3 2025, down from $23.936 million in Q3 2024. This reduction was driven by lower research and development (R&D) expenses, which fell by 22% to $10.379 million, and a 4% decrease in general and administrative (G&A) expenses to $6.777 million. These efficiencies stemmed from lower personnel expenses, reduced share-based compensation, and a strategic headcount reduction, which included an $800,000 nonrecurring charge in Q3 2025. The company also incurred a $2.7 million impairment charge in Q4 2024 related to small molecule ion channel intangible assets, reflecting a strategic shift in focus from small molecules to antibodies in this area.

OmniAb's net loss for Q3 2025 was $16.525 million, or $0.14 per share, compared to a net loss of $16.373 million, or $0.16 per share, in Q3 2024. For the nine months ended September 30, 2025, the net loss was $50.600 million, or $0.46 per share.

From a liquidity perspective, OmniAb ended Q3 2025 with $59.5 million in cash, cash equivalents, and short-term investments. This position was significantly bolstered by a $30 million private placement of common stock in late August 2025, which netted the company $28 million. Management stated this move was to "bolster the balance sheet" and that the company is now "well capitalized," providing financial flexibility. The company believes its existing cash and investments are sufficient to support operations through at least the next 12 months from the November 4, 2025 filing date.

Furthermore, the combination of headcount reductions in February and July 2025 is expected to generate approximately $7 million in annual cash savings. Importantly, while GAAP revenue is projected to decrease in 2025, the company anticipates an increase in actual cash received from partners, primarily due to the diminishing amortization of non-cash deferred service revenue.

Outlook and Strategic Trajectory

OmniAb's updated 2025 financial guidance reflects both near-term adjustments and a clear long-term strategic vision. The company now expects 2025 revenue to be between $18 million and $22 million, a revision from its earlier guidance of $20 million to $25 million. This adjustment is primarily due to "a few of the milestones that we were expecting in the second half of 2025 will now be pushed to 2026," which management characterizes as standard development timing shifts. Similarly, the projection for new clinical entries in 2025 is now at the lower end of the previously guided 5 to 7 programs, with 5 new entries expected, also due to timing shifts by partners.

Despite these near-term revenue shifts, the company has further refined its operational efficiency, lowering its 2025 operating expense guidance to $82 million-$86 million, down from $85 million-$90 million. This reflects "further efficiencies in our operating structure" and the ongoing impact of headcount reductions. OmniAb anticipates its year-end cash balance to be between $52 million and $56 million, with overall cash used in 2025 expected to be lower than in 2024 (excluding financings). The effective tax rate is projected to remain around 0% due to a valuation allowance, with the tax benefit expected to be realized upon future profitability.

The long-term investment thesis for OmniAb remains firmly rooted in its ability to generate substantial royalty revenue. Management emphasizes that "the long-term value of our business will be driven by royalties given that such payments are based on global sales of potential future partner programs, which generally provide for larger and recurring payments." The average royalty rate for antibody programs stands at 3.36%, an increase from 3.2% in November 2023, reflecting the increasing value of its technologies.

A key program to watch is Salubris Bio's SAL003, an anti-PCSK9 antibody, which moved to the registration phase in China in Q3 2025. This program carries a 3% global royalty, with Salubris publicly targeting a 2026 market entry. Other significant programs include Immunovant 's IMVT-1402 and Batoclimab, both anti-FcRn antibodies, which were highlighted on Evaluate Pharma's list of the top 10 most valuable R&D programs. Immunovant (IMVT) is actively enrolling patients in pivotal Phase 2b studies for IMVT-1402 and plans to initiate registrational programs for three additional indications by March 31, 2025, aiming for 10 indications by March 31, 2026. Genmab 's Acasunlimab, a bispecific antibody, is also in a Phase 3 trial for non-small cell lung cancer, with Genmab (GMAB) projecting a potential billion-dollar market opportunity and an expected launch in 2028.

Risks and Competitive Dynamics

Investing in OmniAb, while promising, carries inherent risks typical of the biotechnology sector. The company's revenue and program progression are highly dependent on its partners' efforts and decisions, including their clinical development, regulatory strategies, and commercialization success. Program attrition is a "normal part of our business" due to shifts in partner priorities, budgetary constraints, and technical factors, though it is not typically related to OmniAb's core technology.

The broader healthcare landscape also presents challenges. Recent legislative measures, such as the "One Big Beautiful Bill Act" enacted in July 2025, which imposes significant reductions in Medicaid funding, could adversely affect partner product sales. Additionally, ongoing efforts by the current U.S. administration to reduce drug costs through tariffs or regulatory policies could negatively impact the pharmaceutical industry and, consequently, OmniAb's partners' ability to generate adequate revenues.

In the competitive arena, OmniAb's specialized focus and innovative platforms provide a strong technological edge. Its transgenic animal systems are considered among the most diverse in the industry, and its xPloration platform offers 10x more single-cell screening throughput than alternatives. The upcoming OmniUltra technology further differentiates the company by enabling the discovery of unique antibody structures and opening new avenues in peptide therapeutics. However, larger, more diversified competitors like Regeneron (REGN) and Amgen (AMGN) possess greater financial scale, broader product pipelines, and established global distribution networks. While OmniAb's gross profit margin of 76.58% (TTM) is robust, its operating and net profit margins remain negative, reflecting its investment phase. This contrasts with the established profitability of larger players. OmniAb's strategy of fostering deep partnerships and continuously innovating its platforms is crucial for maintaining its competitive position and capturing market share in niche, high-growth areas. The increasing adoption of lab automation and AI/ML in drug discovery, as highlighted by broader industry trends, plays directly into OmniAb's strengths and its xPloration offering.

Conclusion

OmniAb, Inc. is charting a compelling course in the dynamic biotechnology sector, driven by its relentless commitment to technological innovation and a strategic focus on enabling next-generation therapeutic discovery. Despite near-term revenue fluctuations influenced by milestone timing and the completion of non-cash service contracts, the company's operational efficiencies and strengthened balance sheet underscore its fiscal prudence. The core investment thesis is anchored in the long-term potential of its royalty streams, fueled by a growing pipeline of high-value partner programs.

The continuous evolution of its proprietary platforms, from the established OmniChicken to the recently launched xPloration and the highly anticipated OmniUltra, provides OmniAb with a distinct competitive advantage. These technologies not only enhance the efficiency and scope of antibody discovery but also strategically position the company to tap into emerging markets like peptide therapeutics. While navigating a competitive landscape and regulatory uncertainties, OmniAb's technological leadership and partner-centric model are critical drivers for its sustained growth and long-term value creation for investors.