OmniAb Inc

Previous wording

OmniAb, Inc. 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. Our technology platform creates and screens diverse antibody repertoires and is designed to quickly identify optimal antibodies and other target-binding proteins for our partners’ drug development efforts. At the heart of the OmniAb platform is something we call Biological Intelligence™, which powers the immune systems of our proprietary, engineered transgenic animals to create optimized antibody candidates for human therapeutics. We primarily derive revenue from license fees for technology access, milestones from partnered programs and service revenue from research programs.

Current wording

OmniAb licenses cutting edge discovery research technology to the pharmaceutical and biotech industries and academic institutions to enable the discovery of next-generation therapeutics. Our technology platform creates and screens diverse antibody repertoires and is designed to quickly identify optimal antibodies and other target-binding proteins for our partners’ drug development efforts. At the heart of the OmniAb platform is what we call Biological Intelligence™, which powers the immune systems of our proprietary, engineered transgenic animals to create optimized antibody candidates for human therapeutics. We primarily derive revenue from license fees for technology access, milestones from partnered programs and service revenue from research programs.

Previous wording

As of June 30, 2024, we had 83 active partners with 333 active programs using the OmniAb technology platform, including 28 OmniAb-derived antibodies in clinical development by our partners, one under regulatory review, and three approved products of our partners.

Current wording

As of September 30, 2024, we had 86 active partners with 352 active programs using the OmniAb technology platform, including 29 OmniAb-derived antibodies in clinical development by our partners, one under regulatory review, and three approved products of our partners.

Previous wording

Our proprietary technologies are joined with and leverage OmniDeep™, which is a suite ofin silico, artificial intelligence (“AI”) and machine learning tools for therapeutic discovery and optimization that are woven throughout our various technologies and capabilities. Additionally, an established core competency focused on ion channels and transporters further differentiates OmniAb’s technology and creates opportunities in many important and emerging target classes. OmniAb technologies are designed to be leveraged for the discovery of a variety of next-generation antibody-based therapeutic modalities, including bi- and multi-specific biologics, antibody-drug conjugates, CAR-T therapies, targeted radiotherapeutics, and many others.

Current wording

Our proprietary technologies are joined with and leverage a suite ofin silico, artificial intelligence and machine learning tools for therapeutic discovery and optimization that are woven throughout our various technologies and capabilities. Additionally, an established core competency focused on ion channels and transporters further differentiates OmniAb’s technology and creates opportunities in many important and emerging target classes. OmniAb technologies are designed to be leveraged for the discovery of a variety of next-generation antibody-based therapeutic modalities, including bi- and multi-specific biologics, antibody-drug conjugates, CAR-T therapies, targeted radiotherapeutics, and many others.

Previous wording

Our license agreements with pharmaceutical and biotechnology partners generally include: (i) upfront or, in some instances, annual payments for technology access and payments for performance of research services; (ii) downstream payments in the form of preclinical, intellectual property, clinical, regulatory, and commercial milestones; and (iii) royalties on net sales of our partners’ products, if any. License agreements with academic institutions are typically structured with revenue sharing. We succeed when our partners are successful, and our agreements are structured to align economic and scientific interests. Our license agreements typically include reporting requirements, which provide us updates from our partners on the status of their programs. In addition, we track our active partnered programs by reviewing our partners’ public announcements and maintaining close communications with our partners to the extent possible. In some instances, a partner may not publicly announce milestones, in which case, we would be generally dependent on our partner to track, report and disclose to us milestones at the time of achievement. Our license agreements are typically terminable by our partners without penalty with specified notice. However, all milestone payments and royalties survive termination and continue with respect to any OmniAb-derived antibodies. The royalty term is generally the longer of 10 years from the first commercial sale or through the last expiration in any jurisdiction of the patents covering such OmniAb-derived antibody. Importantly, our royalty term is typically linked to the composition-of-matter patents that our partners file related to the antibody discovered using our technology, which both lengthens and diversifies the royalty streams we receive. Our typical royalty rates for antibody discovery contracts are currently in the low- to mid-single digits and can vary depending on other economic terms in the agreement. Although our license agreements with pharmaceutical and biotechnology partners typically include technology access fees, milestone payments and royalties, each agreement is negotiated separately and as a result, the financial terms and contractual provisions vary from agreement to agreement. By providing a full suite of antibody discovery technologies with streamlined economics, we believe we offer an attractive option to industry stakeholders.

Current wording

Our license agreements with pharmaceutical and biotechnology partners generally include: (i) upfront or, in some instances, annual payments for technology access and payments for performance of research services; (ii) downstream payments in the form of preclinical, intellectual property, clinical, regulatory, and commercial milestones; and (iii) royalties on net sales of our partners’ products, if any. License agreements with academic institutions are typically structured with revenue sharing. We succeed when our partners are successful, and our agreements are structured to align economic and scientific interests. Our license agreements typically include reporting requirements, which provide us updates from our partners on the status of their programs. In addition, we track our active partnered programs by reviewing our partners’ public announcements and maintaining close communications with our partners to the extent possible. In some instances, a partner may not publicly announce milestones, in which case, we would be generally dependent on our partner to track, report and disclose to us milestones at the time of achievement. Our license agreements typically grant a perpetual license to our technology and are typically terminable by our partners without penalty with specified notice. However, all milestone payments and royalties survive termination and continue with respect to any OmniAb-derived antibodies. The royalty term is generally the longer of 10 years from the first commercial sale or through the last expiration in any jurisdiction of the patents covering such OmniAb-derived antibody. Importantly, our royalty term is typically linked to the composition-of-matter patents that our partners file related to the antibody discovered using our technology, which both lengthens and diversifies the royalty streams we receive. Our typical royalty rates for antibody discovery contracts are currently in the low- to mid-single digits and can vary depending on other economic terms in the agreement. Although our license agreements with pharmaceutical and biotechnology partners typically include technology access fees, milestone payments and royalties, each agreement is negotiated separately and as a result, the financial terms and contractual provisions vary from agreement to agreement. By providing a full suite of antibody discovery technologies with streamlined economics, we believe we offer an attractive option to industry stakeholders.

Previous wording

We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe that the following metrics are important to understanding our current business. These metrics may change or may be substituted for additional or different metrics as our business continues to grow.

Current wording

We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe that the following metrics are important to understanding our current business. These metrics are highly dependent on information provided by our partners and may change or may be substituted for additional or different metrics as our business continues to grow.

Previous wording

Active partners represents the number of partners that have rights to an active program or have executed a license agreement in advance of initiating an active program. We view this metric as an indication of the competitiveness of our platform and our current level of market penetration. The metric also relates to our opportunities to secure additional active programs.

Current wording

Active partners represents the number of partners that have rights to an active program or have executed a license agreement in advance of initiating an active program. A partner is removed from the metric when the partner informs us they are terminating their license or they are no longer in business. We view this metric as an indication of the competitiveness of our platform and our current level of market penetration. The metric also relates to our opportunities to secure additional active programs.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

•License and milestone revenue fluctuates primarily due to the timing of milestone recognition related to our partners’ programs in clinical development. The decline in license and milestone revenue was primarily driven by the recognition in the prior year period of milestones related to the start of pivotal studies in two additional indications for batoclimab, being developed by Immunovant, Inc.

Current wording

•License and milestone revenue fluctuates primarily due to the timing of upfront license payments and milestone recognition related to our partners’ programs in clinical development. The decline in license and milestone revenue was primarily driven by more milestone payments recognized in the prior year period.

Previous wording

•Service revenue increased primarily as a result of changes in certain ion channel research programs, which included for the current year period an acceleration of revenue related to the discontinuation of a program, and for the prior year period a reduction of revenue related to the extension of a program, partially offset by the recognition of a research progression milestone achieved for that same program.

Current wording

•Service revenue declined primarily as a result of the discontinuation of certain ion channel research programs.

Previous wording

•The decline in license and milestone revenue was primarily driven by the recognition in the prior year period of various milestones including a $10 million milestone related to the first commercial sale of TECVAYLI® (teclistamab) in the European Union.

Current wording

•The decline in license and milestone revenue was primarily driven by (1) the recognition in the prior year period of a $10 million milestone related to the first commercial sale of TECVAYLI® (teclistamab) in the European Union, (2) the recognition in the prior year period of $2.5 million of milestones related to the start of pivotal studies in two additional indications for batoclimab, and (3) several smaller milestones and license payments, each of which was immaterial.

Previous wording

•General and administrative expenses decreased primarily due to lower share-based compensation expense as well as nonrecurring prior year costs associated with an ERP system implementation.

Current wording

•General and administrative expenses decreased primarily due to lower legal and share-based compensation expense.

Previous wording

•General and administrative expenses decreased primarily due to non-recurring consulting and other outside service expenses incurred in 2023 related to our separation from Ligand to become a standalone public company.

Current wording

•General and administrative expenses decreased primarily due to non-recurring consulting and other outside service expenses incurred in 2023 related to our separation from Ligand to become a standalone public company as well as lower legal and share-based compensation expense.

Previous wording

•Other operating income, net during the three months ended June 30, 2024 includes a $2.6 million reduction in contingent liabilities primarily attributed to changes in ion channel programs.

Current wording

•Other operating income, net increased primarily due to a $2.4 million reduction in contingent liabilities attributed to changes in ion channel programs.

Previous wording

Other income, net during the three and six months ended June 30, 2024 and 2023 primarily related to interest earned on short-term investments.

Current wording

Other income (expense), net during the three and nine months ended September 30, 2024 and 2023 primarily related to interest earned on short-term investments. The decline in interest income related to lower short-term investment balances as well as declines in interest rates.

Previous wording

Our effective tax rate for the three and six months ended June 30, 2024 differed from the federal statutory tax rate of 21.0% due to share-based compensation expense that is not tax deductible and an increase to our valuation allowance recorded against deferred tax assets, partially offset by the tax benefit from research and development tax credits. Our effective tax rate for the three and six months ended June 30, 2023 differed from the federal statutory tax rate of 21.0% due to share-based compensation expense that is not tax deductible and increases to our valuation allowance recorded against deferred tax assets, partially offset by the tax benefit of research and development tax credits.

Current wording

Our effective tax rate for the three and nine months ended September 30, 2024 differed from the federal statutory tax rate of 21.0% due to share-based compensation expense that is not tax deductible and an increase to our valuation allowance recorded against deferred tax assets, partially offset by the tax benefit from research and development tax credits. Our effective tax rate for the three and nine months ended September 30, 2023 differed from the federal statutory tax rate of 21.0% due to share-based compensation expense that is not tax deductible and increases to our valuation allowance recorded against deferred tax assets, partially offset by the tax benefit of research and development tax credits.

Previous wording

As of June 30, 2024, our cash, cash equivalents and short-term investments were $57.2 million. We believe our cash, cash equivalents and short-term investments and the cash we expect to generate from operations will provide us the flexibility we need to meet operating, investing, and financing needs and support our operations through at least the next 12 months.

Current wording

As of September 30, 2024, our cash, cash equivalents and short-term investments were $59.4 million. We believe our cash, cash equivalents and short-term investments are sufficient to support our operations through at least the next 12 months.

Previous wording

In December 2023, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”), with Jefferies LLC (the “Sales Agent”) under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100.0 million in “at the market” (“ATM”) offerings through the Sales Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Sales Agent. The Sales Agent will receive a commission from us of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. Sales of our common stock made pursuant to the Sales Agreement, if any, will be made under our shelf registration statement on Form S‐3 which was filed on December 8, 2023 and declared effective by the SEC on December 18, 2023. We are not obligated to sell, and the Sales Agent is not obligated to buy or sell, any shares of common stock under the Sales Agreement. No assurance can be given that we will sell any shares of common stock under the Sales Agreement, or, if we do, as to the price or amount of shares of common stock that we may sell or the dates when such sales will take place. As of June 30, 2024, no shares have been sold pursuant to the Sales Agreement.

Current wording

In December 2023, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”), with Jefferies LLC (the “Sales Agent”) under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100.0 million in an “at the market” (“ATM”) offerings program through the Sales Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Sales Agent. The Sales Agent will receive a commission from us of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. Sales of our common stock made pursuant to the Sales Agreement are made under our shelf registration statement on Form S‐3 which was filed on December 8, 2023 and declared effective by the SEC on December 18, 2023. We are not obligated to sell, and the Sales Agent is not obligated to buy or sell, any shares of common stock under the Sales Agreement.

Previous wording

During the six months ended June 30, 2024, cash used in operating activities of $29.2 million primarily reflected our net loss of $32.6 million, changes in our operating assets and liabilities in the amount of $11.3 million, partially offset by net non-cash charges of $14.6 million which primarily included $11.1 million in share-based compensation and $11.1 million in depreciation and amortization.

Current wording

During the nine months ended September 30, 2024, cash used in operating activities of $35.8 million primarily reflected our net loss of $49.0 million, changes in our operating assets and liabilities in the amount of $8.8 million, partially offset by net non-cash charges of $22.0 million which primarily included $16.4 million in share-based compensation and $16.0 million in depreciation and amortization.

Previous wording

During the six months ended June 30, 2023, cash provided by operating activities of $17.7 million primarily reflected changes in our operating assets and liabilities in the amount of $22.3 million, net non-cash charges of $16.2 million which primarily included $12.6 million in share-based compensation, and $9.7 million in depreciation and amortization, partially offset by our net loss of $20.8 million.

Current wording

During the nine months ended September 30, 2023, cash provided by operating activities of $11.5 million primarily reflected changes in our operating assets and liabilities in the amount of $24.9 million, net non-cash charges of $23.2 million which primarily included $18.9 million in share-based compensation, and $14.6 million in depreciation and amortization, partially offset by our net loss of $36.6 million.

Previous wording

During the six months ended June 30, 2024, cash provided by investing activities of$33.1 million primarily consisted of$50.5 million of proceeds from the maturity of short-term investments and$1.3 million from the sale of short-term investments, partially offset by$16.7 million of cash used to purchase short-term investments and$1.7 million of cash used to purchase property and equipment.

Current wording

During the nine months ended September 30, 2024, cash provided by investing activities of$37.5 million primarily consisted of$63.5 million of proceeds from the maturity of short-term investments and$1.9 million from the sale of short-term investments, partially offset by$25.7 million of cash used to purchase short-term investments and$1.8 million of cash used to purchase property and equipment.

Previous wording

During the six months ended June 30, 2023, cash used in investing activities of$29.4 million primarily consisted of$56.2 million of cash used to purchase short-term investments and$2.8 million of payments to contingent liabilities holders, partially offset by$30.0 million of proceeds from the maturity of short-term investments.

Current wording

During the nine months ended September 30, 2023, cash used in investing activities of$23.1 million primarily consisted of$86.9 million of cash used to purchase short-term investments and$3.6 million of payments to contingent liabilities holders, partially offset by$66.3 million of proceeds from the maturity of short-term investments.

Previous wording

During the six months ended June 30, 2024, cash provided by financing activities was$0.6 million, which primarily consisted of$2.1 million of proceeds from the issuance of common stock from stock plans, partially offset by$1.0 million of taxes paid related to the net share settlement of equity awards and$0.5 million of transaction costs.

Current wording

During the nine months ended September 30, 2024, cash provided by financing activities was$9.2 million, which primarily consisted of$8.5 million of proceeds from the issuance of common stock under the ATM facility, net of commissions and$2.3 million of proceeds from the issuance of common stock from stock plans, partially offset by$1.0 million of taxes paid related to the net share settlement of equity awards and$0.5 million of transaction costs.

Previous wording

During the six months ended June 30, 2023, cash used in financing activities was$0.6 million, which primarily consisted of$0.9 million oftaxes paid related to the net share settlement of equity awards and$0.5 million of transaction costs, partially offset by$0.8 million of proceeds from the issuance of common stock from stock plans.

Current wording

During the nine months ended September 30, 2023, cash used in financing activities was$0.4 million, which primarily consisted of$0.9 million oftaxes paid related to the net share settlement of equity awards and$0.5 million of transaction costs, partially offset by$1.0 million of proceeds from the issuance of common stock from stock plans.

Previous wording

There have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2024, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2023 Annual Report.

Current wording

There have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2024, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2023 Annual Report.