OmniAb(OABI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements (unaudited) This section presents OmniAb, Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, fair value measurements, and specific account details Condensed Consolidated Balance Sheets The balance sheet highlights a 9.2% decrease in total assets and an 8.9% decrease in total stockholders' equity as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $295,674 | $325,558 | $(29,884) | (9.2)% | | Current Assets | $47,618 | $68,138 | $(20,520) | (30.1)% | | Cash and cash equivalents | $18,281 | $27,598 | $(9,317) | (33.8)% | | Short-term investments | $23,334 | $31,836 | $(8,502) | (26.7)% | | Total Liabilities | $33,610 | $37,940 | $(4,330) | (11.4)% | | Total Stockholders' Equity | $262,064 | $287,618 | $(25,554) | (8.9)% | Condensed Consolidated Statements of Operations The statements of operations show a 49% decrease in total revenue and a 16% increase in net loss for the three months ended June 30, 2025 Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $3,897 | $7,614 | $(3,717) | (49)% | | Total Costs and Operating Expenses | $20,116 | $23,919 | $(3,803) | (16)% | | Net Loss | $(15,875) | $(13,631) | $(2,244) | 16% | | Net Loss Per Share, Basic and Diluted | $(0.15) | $(0.13) | $(0.02) | 15.4% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $8,051 | $11,415 | $(3,364) | (29)% | | Total Costs and Operating Expenses | $43,114 | $50,273 | $(7,159) | (14)% | | Net Loss | $(34,075) | $(32,592) | $(1,483) | 5% | | Net Loss Per Share, Basic and Diluted | $(0.32) | $(0.32) | $0.00 | 0% | Condensed Consolidated Statements of Comprehensive Loss The statements of comprehensive loss indicate a comprehensive loss of $(15,885) thousand for the three months ended June 30, 2025 Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | $(15,875) | $(13,631) | | Unrealized net loss on available-for-sale securities | $(10) | $(8) | | Comprehensive loss | $(15,885) | $(13,639) | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | $(34,075) | $(32,592) | | Unrealized net loss on available-for-sale securities | $(29) | $(75) | | Comprehensive loss | $(34,104) | $(32,667) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased by $(25,554) thousand, primarily due to the accumulated deficit from net loss Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands, except share data) | Metric | January 1, 2025 | June 30, 2025 | Change | | :--- | :--- | :--- | | Common Stock Shares | 121,599,488 | 122,701,294 | +1,101,806 | | Additional Paid-in Capital | $388,979 | $397,529 | +$8,550 | | Accumulated Other Comprehensive Income (Loss) | $27 | $(2) | $(29) | | Accumulated Deficit | $(101,400) | $(135,475) | $(34,075) | | Total Stockholders' Equity | $287,618 | $262,064 | $(25,554) | - Net loss for the six months ended June 30, 2025, contributed $(34,075) thousand to the accumulated deficit[18] - Share-based compensation for the six months ended June 30, 2025, increased additional paid-in capital by $8,255 thousand[18] Condensed Consolidated Statements of Cash Flows Cash flows show a net cash outflow of $(9,317) thousand for the six months ended June 30, 2025, driven by operating and investing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(21,018) | $(29,214) | $8,196 | | Net cash provided by investing activities | $11,421 | $33,050 | $(21,629) | | Net cash provided by financing activities | $280 | $600 | $(320) | | Net change in cash, cash equivalents and restricted cash | $(9,317) | $4,436 | $(13,753) | | Cash, cash equivalents and restricted cash at end of period | $18,841 | $21,354 | $(2,513) | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of OmniAb, Inc.'s accounting policies, fair value measurements, and specific balance sheet account details 1. Organization and Basis of Presentation This note describes OmniAb, Inc.'s business as a biotechnology company licensing discovery research technology and its financial sustainability outlook - OmniAb, Inc. is a biotechnology company that licenses discovery research technology to pharmaceutical, biotech, and academic institutions for next-generation therapeutics[23] - The Company primarily derives revenue from license fees for technology access, milestones from partnered programs, and service revenue from research programs[23] - Management believes existing cash, cash equivalents, and short-term investments are sufficient to support operations through at least the next 12 months, despite expected continued losses from R&D and operational investments[27] 2. Summary of Significant Accounting Policies This note outlines OmniAb, Inc.'s unchanged significant accounting policies and details cash, cash equivalents, and restricted cash balances - The Company's significant accounting policies have not materially changed during the six months ended June 30, 2025, compared to its 2024 Annual Report[31] Cash, Cash Equivalents, and Restricted Cash (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $18,281 | $27,598 | | Restricted cash | $560 | $560 | | Total cash, cash equivalents and restricted cash | $18,841 | $28,158 | - ASU 2023-09 (Income Taxes) will be effective for the Company in its 2025 Annual Report on Form 10-K and is not expected to have a material impact. ASU 2024-03 (Expense Disaggregation) will be effective for annual periods beginning after December 15, 2026, and its impact is currently being evaluated[36] 3. Fair Value Measurement This note details the Company's fair value measurement hierarchy and the valuation of financial assets and liabilities, including contingent liabilities - The Company uses a three-level valuation hierarchy (Level 1, 2, 3) to measure financial assets and liabilities at fair value[37] Fair Value Measurements as of June 30, 2025 (in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Money market funds | $13,806 | $— | $— | $13,806 | | Government securities | $23,334 | $— | $— | $23,334 | | Current contingent liabilities | $— | $— | $1,123 | $1,123 | | Long-term contingent liabilities | $— | $— | $586 | $586 | - Contingent liabilities are classified as Level 3 due to substantial judgment and estimation of unobservable factors, with fair value adjustments increasing by $225 thousand for the six months ended June 30, 2025[41][43] 4. Short-Term Investments This note describes the classification and valuation of short-term investments, primarily government securities, and the treatment of unrealized losses - Short-term investments are classified as available-for-sale securities, with government securities being the primary component[44] Short-Term Investments as of June 30, 2025 (in thousands) | Category | Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | | :--- | :--- | :--- | :--- | :--- | | Government securities | $23,336 | $2 | $(4) | $23,334 | - Unrealized losses on debt securities are not recognized into income because issuers have high credit quality, management does not intend to sell, and fair value is expected to recover as bonds approach maturity[46] 5. Balance Sheet Account Details This note provides detailed breakdowns of various balance sheet accounts, including receivables, prepaid expenses, property and equipment, and accrued liabilities Accounts Receivable, Unbilled Receivables and Deferred Revenue (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unbilled receivables | $400 | $2,600 | | Deferred revenue | $1,000 | $2,500 | Prepaid Expenses and Other Current Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid expenses | $2,075 | $2,295 | | xPloration related inventory | $316 | $48 | | Other current assets | $906 | $1,089 | | Total | $3,297 | $3,432 | Property and Equipment, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property and equipment, at cost | $28,795 | $28,393 | | Less accumulated depreciation | $(14,731) | $(12,901) | | Total property and equipment, net | $14,064 | $15,492 | - Depreciation expense for the six months ended June 30, 2025, was $1.8 million, down from $2.1 million in the prior year[49] Accrued Expenses and Other Current Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Compensation | $4,161 | $5,468 | | Professional service fees | $218 | $324 | | Royalties owed to third parties | $154 | $143 | | Other | $178 | $206 | | Total | $4,711 | $6,141 | 6. Goodwill and Intangible Assets, Net This note details the carrying amounts of goodwill and intangible assets, including amortization expenses and a gain from asset sale Goodwill and Intangible Assets, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Goodwill | $83,979 | $83,979 | | Intangible assets, net | $131,605 | $138,060 | | Total goodwill and other identifiable intangible assets, net | $215,584 | $222,039 | - Goodwill carrying amount remained unchanged during the three and six months ended June 30, 2025 and 2024[52] - Amortization expense for finite-lived intangible assets was $6.5 million for the six months ended June 30, 2025, down from $8.0 million in the prior year[53] - A $3.0 million gain from the sale of an ion channel asset to Angelini Pharma S.p.A. was recorded as other operating income, net, during the three months ended June 30, 2025[56][57] 7. Commitments and Contingencies This note outlines future minimum lease commitments and management's assessment of potential impacts from legal claims Future Minimum Lease Commitments as of June 30, 2025 (in thousands) | Dates | Operating Leases | | :--- | :--- | | Remaining six months ended December 31, 2025 | $1,910 | | 2026 | $3,879 | | 2027 | $3,980 | | 2028 | $4,107 | | 2029 | $3,307 | | Thereafter | $7,992 | | Total lease payments | $25,175 | | Less imputed interest | $(3,392) | | Present value of lease liabilities | $21,783 | - Management does not expect resolution of any pending legal claims to have a material adverse impact on the condensed consolidated financial statements, cash flows, or financial position[60] 8. Stockholders' Equity This note details common stock outstanding, earnout shares, warrants, and the remaining capacity of the ATM offering program - As of June 30, 2025, 122,701,294 shares of common stock were outstanding, and no preferred stock was issued or outstanding[5][11][61] - 14,999,243 Earnout Shares and 1,293,299 Sponsor Earnout Shares were issued and outstanding as of June 30, 2025, subject to price-based vesting conditions ($12.50 and $15.00 VWAP)[65][66] - The Company assumed 19,012,156 warrants (Public, Private Placement, Forward Purchase, Backstop) exercisable at $11.50 per share, which are currently 'out of the money'[68][142] - No shares were issued under the ATM offering during the six months ended June 30, 2025, with $88.3 million remaining available for future sales[80][141] 9. Share-Based Compensation This note presents share-based compensation expenses and unrecognized compensation for options and restricted stock units Total Share-Based Compensation Expense (in thousands) | Period | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $4,111 | $5,383 | $(1,272) | (24)% | | Six Months Ended June 30 | $8,255 | $11,078 | $(2,823) | (25)% | - Unrecognized share-based compensation expense for OmniAb options was $21.5 million (weighted-average period of 1.27 years) and for OmniAb RSUs was $6.4 million (weighted-average period of 1.41 years) as of June 30, 2025[85][89] - Performance Restricted Stock Units (PRSUs) were achieved at a 158% level during the six months ended June 30, 2025, with no unrecognized compensation expense remaining[94] 10. Income Taxes This note details the effective tax rate and explains variances from the U.S. federal statutory tax rate Effective Tax Rate | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | (0.8)% | (12.2)% | | Six Months Ended June 30 | 0.0% | (12.2)% | - The variance from the U.S. federal statutory tax rate of 21.0% is primarily due to a valuation allowance on deferred tax assets and the tax impact of stock award activities, partially offset by research and development tax credits[99][137] 11. Net Loss Per Share This note provides net loss per share data and lists anti-dilutive shares excluded from diluted EPS calculations Net Loss Per Share, Basic and Diluted | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $(0.15) | $(0.13) | | Six Months Ended June 30 | $(0.32) | $(0.32) | Anti-Dilutive Shares Excluded from Diluted EPS (in thousands) | Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Options to purchase common stock | 23,654 | 22,236 | | Earnout shares | 16,293 | 16,293 | | Private placement warrants | 8,233 | 8,233 | | Public warrants | 7,667 | 7,667 | | Restricted stock units | 2,028 | 2,180 | | Forward purchase warrants | 1,667 | 1,667 | | Backstop warrants | 1,445 | 1,445 | | Shares expected to be purchased under ESPP | 1,037 | 862 | | Total anti-dilutive shares | 62,023 | 60,583 | 12. Segment Information This note confirms OmniAb operates as a single reportable segment and provides segment revenue and net loss data - OmniAb operates under one reportable business segment, providing discovery research technology[104] Segment Revenue and Net Loss (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $3,897 | $7,614 | | Net loss | $(15,875) | $(13,631) | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $8,051 | $11,415 | | Net loss | $(34,075) | $(32,592) | - All long-term assets and net losses are attributable to the United States of America[106] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on OmniAb, Inc.'s financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year. It covers an overview of the business, key performance metrics, detailed revenue and expense analysis, liquidity, capital resources, and critical accounting policies Overview This section describes OmniAb's core business of licensing discovery research technology and its Biological Intelligence™ platform for therapeutic development - OmniAb licenses cutting-edge discovery research technology, utilizing its Biological Intelligence™ platform and engineered transgenic animals to identify optimal antibodies for partners' drug development[111] - The platform integrates in silico, artificial intelligence, and machine learning tools for therapeutic discovery and optimization[114] Partnered Programs as of June 30, 2025 | Metric | Count | | :--- | :--- | | Active Partners | 100 | | Active Programs | 381 | | OmniAb-derived antibodies in clinical development | 28 | | OmniAb-derived antibodies under regulatory review | 1 | | Approved products developed by partners | 3 | - The long-term value of the business is expected to be driven by royalties, while shorter-term revenue is primarily from milestones[118] Key Business Metrics This section presents key operational metrics, showing an increase in active partners and programs for OmniAb, Inc Key Business Metrics (June 30, 2025 vs. December 31, 2024) | Metric | December 31, 2024 | Additions | Terminations | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Active Partners | 91 | 13 | (4) | 100 | | Active Programs | 363 | 45 | (27) | 381 | | Active Clinical Programs and Approved Products | 32 | 2 | (2) | 32 | | Approved Products | 3 | — | — | 3 | - Active partners increased by 9, and active programs increased by 18, indicating continued usage and market penetration of the technology[120][121] Results of Operations This section analyzes OmniAb, Inc.'s revenue and operating expenses, highlighting a significant decline in total revenue and reduced R&D costs Revenue Comparison (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | License and milestone revenue | $1,242 | $3,125 | $(1,883) | (60)% | | Service revenue | $1,936 | $4,171 | $(2,235) | (54)% | | xPloration revenue | $608 | $— | $608 | 100% | | Royalty revenue | $111 | $318 | $(207) | (65)% | | Total revenue | $3,897 | $7,614 | $(3,717) | (49)% | | Revenue Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | License and milestone revenue | $3,263 | $3,841 | $(578) | (15)% | | Service revenue | $3,839 | $6,937 | $(3,098) | (45)% | | xPloration revenue | $650 | $— | $650 | 100% | | Royalty revenue | $299 | $637 | $(338) | (53)% | | Total revenue | $8,051 | $11,415 | $(3,364) | (29)% | - Service revenue declined primarily due to the discontinuation of a small molecule ion channel program and related revenue acceleration in the prior year[128][129] Costs and Operating Expenses Comparison (in thousands) | Expense Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $10,864 | $13,935 | $(3,071) | (22)% | | General and administrative | $7,684 | $7,965 | $(281) | (4)% | | Other operating income, net | $(1,922) | $(2,524) | $602 | (24)% | | Total costs and operating expenses | $20,116 | $23,919 | $(3,803) | (16)% | | Expense Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $23,466 | $28,486 | $(5,020) | (18)% | | General and administrative | $15,599 | $16,302 | $(703) | (4)% | | Other operating income, net | $(2,672) | $(2,470) | $(202) | 8% | | Total costs and operating expenses | $43,114 | $50,273 | $(7,159) | (14)% | - Research and development expenses decreased due to lower personnel expenses (share-based compensation, headcount) and reduced external expenses related to ion channel programs and screening technology development[133][134] - Other operating income, net for the three months ended June 30, 2025, includes a $3.0 million gain from the sale of a small molecule Kv7.2 program to Angelini Pharma S.p.A., partially offset by a $1.0 million contingent liability adjustment[133] Liquidity and Capital Resources This section assesses OmniAb, Inc.'s financial liquidity, highlighting available cash, investment capacity, and cash flow activities - As of June 30, 2025, cash, cash equivalents, and short-term investments totaled $41.6 million, deemed sufficient to support operations for at least the next 12 months[139] - The Company has an 'at the market' (ATM) offering program with $88.3 million remaining available for future sales of common stock[141] - Warrants are currently 'out of the money' (exercise price $11.50 per share), limiting expected cash proceeds from their exercise[142] Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(21,018) | $(29,214) | $8,196 | | Net cash provided by investing activities | $11,421 | $33,050 | $(21,629) | | Net cash provided by financing activities | $280 | $600 | $(320) | Critical Accounting Policies and Estimates This section confirms no material changes to OmniAb, Inc.'s critical accounting policies and estimates during the reporting period - There have been no material changes to critical accounting policies and estimates during the six months ended June 30, 2025, compared to the 2024 Annual Report[151] Recent Accounting Pronouncements This section directs readers to Note 2 for details on recent accounting pronouncements relevant to OmniAb, Inc - For a summary of recent accounting pronouncements, refer to Note 2 – Summary of Significant Accounting Policies in the financial statements[152] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there have been no material changes to OmniAb, Inc.'s market risks as of June 30, 2025, compared to the disclosures in its 2024 Annual Report - No material changes to market risks as of June 30, 2025, compared to the discussion in Item 7A of the 2024 Annual Report[153] ITEM 4. Controls and Procedures This section details the evaluation of OmniAb, Inc.'s disclosure controls and procedures, concluding their effectiveness at a reasonable assurance level as of June 30, 2025, with no material changes to internal control over financial reporting during the last fiscal quarter Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures This section concludes that OmniAb, Inc.'s disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025 - Management, including the principal executive officer and principal financial officer, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[156] Changes in Internal Control Over Financial Reporting This section reports no material changes to OmniAb, Inc.'s internal control over financial reporting during the last fiscal quarter - There have been no changes in internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[157] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings OmniAb, Inc. is not currently a party to any legal proceedings expected to have a material adverse effect on its business, financial condition, or results of operations, though litigation inherently carries uncertainties - The Company is not currently a party to or aware of any proceedings that are believed to have, individually or in the aggregate, a material adverse effect on its business, financial condition, or results of operations[161] ITEM 1A. Risk Factors This section highlights that while no material changes to previously disclosed risk factors are noted, new government healthcare reforms and legislative measures, such as the One Big Beautiful Bill Act, could adversely affect OmniAb's business and its partners' product sales - No material changes to the risk factors disclosed in Part I, Item 1A of the 2024 Annual Report, except for new government healthcare reform and other legislative measures[162] - The 'One Big Beautiful Bill Act,' enacted in July 2025, imposes significant reductions in Medicaid funding, which could adversely affect partners' sales of their products[165] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities and no use of proceeds to report[166] ITEM 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[167] ITEM 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to OmniAb, Inc.'s operations - Mine Safety Disclosures are not applicable to the Company[168] ITEM 5. Other Information This section reports on Rule 10b5-1 trading arrangements, noting that no officers or directors adopted, modified, or terminated such arrangements during the three months ended June 30, 2025 - No officers or directors adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[170] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various agreements, corporate documents, warrant information, and certifications required by the Sarbanes-Oxley Act SIGNATURES This section contains the required signatures for the Form 10-Q, certifying its submission on behalf of OmniAb, Inc. by its Executive Vice President, Finance and Chief Financial Officer - The report was signed on August 6, 2025, by Kurt Gustafson, Executive Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)[175]