OmniAb, Inc. Q3 FY2026 earnings call

• Strategic Partnerships & Licensing:

  • Announced a major new license deal with Eli Lilly for a novel ion channel program, featuring an upfront payment and up to $370 million in potential milestone payments plus tiered royalties.
  • Maintained a diversified partner base of 111 active partners, including nine of the ten largest pharmaceutical companies globally.
  • Launched OmniTides, a new peptide discovery offering powered by the OmniUltra transgenic chicken, integrating discovery to synthesis workflows.

• Technology Platform Advancements:

  • Expanded commercial access to the AI-powered Exploration platform (high-throughput single B-cell screening), now available to all customers.
  • Exploration is positioned as a durable revenue stream with multiple streams: instrument sales, consumables, software, and service.
  • Continued strong utilization of OmniDAB and OmniUltra technologies, attracting new partners and driving service work.

• Clinical Pipeline Progress:

  • Ended Q3 with 433 active programs (net increase of 8 in Q3) and 34 active clinical programs/approved products leveraging OmniAb technologies.
  • Bataclumab received approval in China for generalized myasthenia gravis, marking the fourth drug approved from the platform.
  • Highlighted high-potential assets like IMVT-1402, PEV408, and Precentabart Tocentican as potential first-in-class/best-in-class candidates.

• Operational Efficiency:

  • Reduced R&D and G&A expenses through business efficiencies.
  • Non-GAAP cash costs remained stable, indicating controlled operating expense base despite growth.

OmniAb operates as a unified technology licensing and discovery partner; the transcript does not break down financial performance into distinct product segments with separate revenue contribution percentages. However, key revenue drivers identified include:

• Service Revenue: Driven by work on antibody and ion channel programs (including new multi-year contracts signed late last year/early this year). Expected to see additional contribution from the Eli Lilly collaboration in Q4.
• Exploration Platform Revenue: Generated through instrument sales, proprietary chips/consumables, software licenses, and service. Q3 2026 exploration revenue contributed to the overall $4 million quarterly total, with specific guidance provided for future years.
• Milestone Revenue: A significant component of year-to-date results, driven by partner program advancements. Total contracted potential milestones exceed $3 billion across the portfolio.

• Revenue Guidance Raised: Increased full-year 2026 total revenue guidance to $35–$39 million (previously $32–$36 million), driven by higher milestone revenue.
• Operating Expense Guidance Lowered: Decreased full-year 2026 costs and operating expenses to $83–$87 million (down $1 million from prior guidance).
• Cash Costs Guidance Lowered: Decreased non-GAAP cash costs and operating expenses to $50–$54 million (down $1 million from prior guidance).
• Cash Balance Projection: Expects year-end cash balance to be between $53–$57 million, implying the business will be essentially break-even on a net cash flow basis for the year.
• Exploration Revenue Outlook: Expects 2026 exploration revenue to be $2–$3 million, with revenue doubling in 2027 and doubling again in 2028.

• Partner Attrition Due to M&A: Signal partner attrition occurred due to one large partner acquiring a smaller one, though management views this as generally positive for asset progression.
• Clinical Development Uncertainty: Partner pipeline readouts carry inherent risks; not all programs will progress or achieve commercial approval.
• Regulatory and Commercialization Risks: Approval and launch timelines for assets like Bataclumab in China are subject to regulatory and market dynamics, impacting royalty realization timing.
• Execution Risk on New Platforms: Early-stage nature of Exploration and OmniTides means actual recurring revenue ramp-up may vary based on customer adoption and usage patterns.

Q: Analyst asked about the composition of collaboration revenue ahead of Lilly’s contribution and the cadence of deferred revenue recognition. / A: CEO clarified that revenue mix includes both chicken-based tech (OmniDAB/OmniUltra) driving new service work and earlier-signed ion channel deals. The Lilly deal, announced in Q3, is expected to start contributing revenue in Q4 as a multi-year collaboration.

Q: Analyst inquired about the Exploration platform’s commercial pipeline, capital vs. recurring revenue dynamics, and factors driving the doubling outlook. / A: COO explained that instrument sales involve 12–18 month capital budgeting cycles, forming the foundation for deeper relationships. Recurring revenue from consumables, software, and services scales as customers run experiments, supporting the confidence in doubling revenue in 2027 and 2028.

Q: Analyst asked if upcoming clinical readouts could provide a bracket for milestone contributions over the next 15–18 months. / A: CEO highlighted that the next 18 months feature the busiest calendar of primary completions ever seen within the pool of programs carrying $340 million in remaining potential milestones. He expressed high conviction in partner investment and data events, though noted contract structures vary.

Q: Analyst questioned whether pipeline-in-product assets like TEV408 have discrete milestones per indication or are purely royalty-based. / A: CEO explained that while royalties are key, many contracts include milestones tied to clinical starts, approvals, label expansions, and geographic rollouts. The portfolio contains a mix of structures, with some assets triggering milestones for multiple indications or markets.

Q: Analyst asked how royalty economics persist when smaller partners are acquired by larger ones and sought details on Exploration’s near-term revenue mix. / A: CEO stated that licenses are structured so economics are linked to the asset and patents, surviving acquisition changes. COO noted that current Exploration revenue is predominantly from instrument placements, but recurring streams will grow as customer usage expands and applications broaden.