Executive Summary / Key Takeaways

• OmniAb leverages its proprietary "Biological Intelligence" platform, centered on diverse transgenic animals and integrated screening/AI tools, to enable partners' discovery of next-generation antibody therapeutics, positioning itself as a differentiated technology provider in a competitive landscape.
• Recent strategic initiatives, including the launch of OmniDAB (single-domain antibodies) and the Exploration Partner Access Program (high-throughput screening instrument), are expanding the platform's capabilities, attracting new partners, diversifying the pipeline into areas like CNS and radiopharma, and creating new, leverageable revenue streams.
• While GAAP revenue guidance for 2025 ($20M-$25M) reflects a decrease primarily due to the amortization of non-cash deferred service revenue, management expects cash received from partners to increase, driven by anticipated milestone payments from a maturing pipeline.
• Operational efficiencies, including a headcount reduction and strategic focus shifts (e.g., ion channels to antibodies), are projected to lower 2025 operating expenses ($85M-$90M) and overall cash use compared to 2024, strengthening the balance sheet amidst industry volatility.
• The growing pipeline of active programs (378 as of Q1 2025), particularly preclinical and later-stage assets (50+), represents significant future milestone and royalty potential, though progression and commercial success remain dependent on partner execution and subject to inherent drug development risks.

The Power of Biological Intelligence in a Competitive Discovery Arena

OmniAb, Inc. operates at the forefront of therapeutic discovery, licensing its cutting-edge research technology to pharmaceutical, biotech, and academic institutions. At its core is the OmniAb platform, powered by what the company terms "Biological Intelligence." This refers to the sophisticated immune systems of its proprietary, engineered transgenic animals, designed to generate diverse antibody repertoires and identify optimal candidates for human therapeutics. In an industry vying for faster, more efficient, and more effective drug discovery, OmniAb carves out its niche by emphasizing the biological diversity and quality inherent in its animal models, contrasting with approaches focused solely on in silico methods or high-throughput screening of synthetic libraries.

The company's journey to its current position as a public entity began with the Business Combination on November 1, 2022, spinning out from Ligand Pharmaceuticals (LGND). This transition built upon a foundation of prior technology acquisitions, including the Exploration screening platform and capabilities gained through entities like Icagen and Taurus, which brought expertise, notably in ion channels. This history underscores OmniAb's strategic intent to build a comprehensive platform that addresses critical bottlenecks in the antibody discovery workflow.

In the competitive landscape, OmniAb faces rivals offering various discovery solutions. Companies like AbCellera Biologics (ABCL) emphasize AI-driven single-cell screening for speed and scale, while integrated biopharmaceutical companies like Regeneron (REGN) leverage their own proprietary transgenic platforms (like VelocImmune) primarily for internal pipeline development. Niche players like Denali Therapeutics (DNLI) focus on specialized areas like brain transport, often requiring tailored antibody approaches. OmniAb positions itself by highlighting the unique biological diversity offered by its suite of animals – including OmniRat for fully human antibodies, OmniChicken for single-domain antibodies, and others for complex targets – arguing that this biological richness can lead to antibodies with superior developability characteristics and lower failure rates downstream. While competitors like ABCL may boast faster initial screening speeds (potentially 40% faster in some phases, based on industry claims) or REGN's scale allows for lower per-candidate costs in a fully integrated model, OmniAb's strength lies in the quality and diversity of the starting material, aiming to provide partners with a higher probability of finding a truly optimal therapeutic candidate. The company's established competency in ion channels, enhanced by its technology, further differentiates its offering in important and emerging target classes.

Strategic Evolution and Technological Edge

OmniAb's strategy is one of continuous innovation and platform expansion, aiming to enhance its competitive moat and create leverage in its business model. Beyond the foundational transgenic animals, the company has strategically layered in complementary technologies. OmniDeep, a suite of in silico tools leveraging AI and machine learning, is integrated throughout the discovery process, enhancing data analysis and candidate selection. The launch of OmniDAB in November 2023, an engineered chicken specifically for discovering single-domain antibodies, has been a notable success, attracting new partners and driving program growth. This technology is particularly relevant for targets requiring unique antibody properties, such as those in the central nervous system (CNS) or for applications like radiopharma, diversifying OmniAb's pipeline into high-value areas. OmniDAB opens possibilities for different administration routes (injectable, inhalable, oral) and tunable clearance, addressing key challenges in these fields.

Further enhancing its offering, OmniAb launched OmniHub at the end of 2024, a digital platform designed to streamline bioinformatics workflows and data sharing with partners, integrating ML/AI tools to accelerate discovery interactions. Most recently, in the first quarter of 2025, the company introduced the Exploration Partner Access Program. This initiative makes OmniAb's internal, AI-driven Exploration screening instrument available for partners to purchase for use in their own labs. The Exploration platform offers significant operational advantages: rapid run times of approximately 1.5 hours, enabling 10 times more single-cell screening throughput compared to other instruments, and the ability to rapidly sort thousands of live cells. Its design emphasizes ease of use with no fluidics and AI-assisted analysis, reducing labor and training needs. The instrument is priced around $500,000, coupled with required software subscriptions and consumables. This program is a strategic move to create new, leverageable revenue streams beyond traditional licensing and services, further embedding OmniAb within its partners' workflows and capitalizing on internally developed tools. Management expects this program to be accretive to both earnings and cash flow in the short and long term, although its contribution is not included in the 2025 revenue guidance due to the early stage of rollout.

These technological advancements and strategic launches are critical for OmniAb's competitive positioning. They not only attract new partners but also deepen relationships with existing ones, encouraging them to initiate new programs. By offering a more comprehensive and efficient suite of tools, OmniAb aims to differentiate itself from competitors who may specialize in only one aspect of discovery (e.g., just AI or just screening) or who are primarily focused on internal development. The ability to offer diverse animal models, integrated AI, and now deployable screening technology provides a compelling value proposition for partners seeking optimized discovery solutions.

Financial Performance and Outlook

OmniAb's financial performance reflects its stage as a technology licensing company investing for future downstream value. For the first quarter of 2025, the company reported total revenue of $4.15 million, an increase from $3.80 million in the prior-year quarter. This increase was primarily driven by higher license and milestone revenue, including a $1.0 million Phase 1 milestone payment, partially offset by declines in service revenue (due to the discontinuation of certain ion channel research programs) and royalty revenue (impacted by lower net sales of partner products in China). Operating expenses decreased to $23.0 million in Q1 2025 from $26.4 million in Q1 2024, reflecting lower share-based compensation and reduced external expenses in R&D and G&A, indicative of ongoing efficiency efforts. The net loss for Q1 2025 was $18.2 million, or $0.17 per share, compared to a net loss of $19.0 million, or $0.19 per share, in Q1 2024.

Looking at the full year 2024, total revenue was $26.39 million, with a net loss of $62.03 million. Operating expenses for 2024 were lower than 2023, partly due to reduced G&A expenses following the spin-out and lower stock-based compensation, despite including total impairment charges of $3.8 million related to intangible assets.

Management provided 2025 GAAP revenue guidance in the range of $20 million to $25 million. While this represents a decrease from 2024 GAAP revenue, it is primarily attributed to the significant reduction in the amortization of non-cash deferred service revenue. Crucially, management anticipates that the actual cash received from partners in 2025 will be higher than in 2024, driven by expected milestone payments as programs advance. This distinction between GAAP revenue and cash flow is vital for understanding the company's financial trajectory.

Operating expense guidance for 2025 is set between $85 million and $90 million, a reduction from 2024 levels and a lower range than initially guided. This reflects the impact of strategic efficiency measures implemented, including a headcount reduction in early 2025 linked to the shift in ion channel focus. Approximately 40% of operating expenses are expected to be non-cash.

The company's liquidity position as of March 31, 2025, stood at $43.6 million in cash, cash equivalents, and short-term investments. Management believes this is sufficient to fund operations for at least the next 12 months.

The company also has access to an at-the-market (ATM) equity offering program with $88.3 million remaining available as of March 31, 2025, providing additional financial flexibility. Cash used in operating activities in Q1 2025 was $15.9 million. Management expects overall cash use in 2025 to be lower than in 2024 (excluding 2024 ATM proceeds), driven by the combination of lower operating expenses and anticipated increased cash receipts from milestones.

Pipeline Maturation and Risks

The core of OmniAb's long-term value proposition lies in the success of its partners' programs. As of Q1 2025, the company had 95 active partners and 378 active programs. The number of active clinical programs and approved products stood at 33. Management anticipates 5 to 7 new entries into clinical development for OmniAb-derived programs in 2025, an increase from previous expectations. The portfolio of post-discovery stage assets (preclinical and later) has grown significantly, reaching over 50 programs, representing substantial potential future milestone payments (over $550 million for preclinical and later-stage programs alone).

However, the drug development process is inherently risky. Program progression, clinical trial success, regulatory approval, and commercialization are entirely dependent on partner efforts and decisions, over which OmniAb has no control. Attrition is a natural part of the process, as evidenced by program discontinuations by partners like GSK (GSK) and Roche (RHHBY) in the ion channel space, which also led to strategic shifts and asset impairments for OmniAb. The highly competitive market dynamics, such as those seen in the PD-1/PD-L1 space in China impacting royalty revenue, also pose risks to the realization of downstream economics.

Furthermore, the company's dependence on partners for timely and accurate information impacts the precision of its key business metrics. While the company has taken steps to enhance its financial flexibility through the ATM offering in response to industry volatility, future capital requirements could necessitate additional financing if revenue growth or partner success falls short of expectations. The warrants outstanding, while representing potential future cash if exercised, are currently out of the money, making this source of funding uncertain.

Conclusion

OmniAb presents an investment thesis centered on its differentiated "Biological Intelligence" platform and a strategy focused on continuous technological innovation and operational efficiency. By providing partners with access to diverse antibody repertoires through its transgenic animals and enhancing discovery workflows with integrated AI and screening technologies like Exploration, OmniAb aims to capture value through license fees, milestones, and future royalties.

While the near-term GAAP revenue outlook for 2025 reflects accounting dynamics rather than operational performance, the expected increase in cash receipts from partners and projected decrease in operating expenses signal a positive trajectory towards improved cash flow and reduced burn. The growing pipeline of programs, particularly those advancing into later stages, represents significant potential value realization, contingent on partner success.

The competitive landscape is challenging, with rivals offering alternative approaches, but OmniAb's unique biological foundation and expanding suite of tools provide a distinct position. Investors should monitor the progression of key partnered programs, the successful adoption of new offerings like the Exploration Partner Access Program, and the company's ability to continue driving operational efficiencies, all of which are critical to unlocking the long-term value potential inherent in its platform and pipeline.