OmniAb, Inc. Q4 FY2024 earnings call

• Active partners grew 18% YOY to 91 as of Dec 31, 2024, with new platform licenses from Incyte and Photinia, and commercial partners added.
• Active programs saw a 12% YOY increase to 362 net of attrition, with 69 additions and 31 terminations in 2024.
• 32 active clinical programs and approved products by partners, with partners initiating/completing over 200 human clinical trials. 5 novel OmniAb-derived programs entered clinic in 2024, and 5 exited, resulting in flat-net active clinical programs.
• Partner highlights include Genmab's Acasunlimab with potential billion-dollar market in NSCLC, Teva's progress with TEV-‘408 and TEV-’278, and Immunovant’s IMVT-1402 and Batoclimab with promising therapeutic potential.
• New technologies launched include OmnidAb, OmniDeep, and OmniHub, driving efficiencies and attracting partners.

In the fourth quarter of 2024, total revenue reached $10.8 million, a substantial increase from $4.8 million in the same period of 2023. This was primarily due to higher license and milestone revenue from new deals and clinical advancements of partner programs. Service revenue declined as certain small molecule ion channel programs were transitioned to partners. For the full year, total revenue increased excluding a $10 million milestone related to Teclistamab's first commercial sale in the EU. License and milestone revenue grew due to clinical program advancements and new licensing deals, while service revenue declined slightly. Royalty revenue was lower in 2024 compared to the prior year due to competitive PD-1/PD-L1 market dynamics in China affecting product sales. Active partners grew 18% YOY to 91 as of December 31, 2024, with new platform licenses from Incyte and Photinia, and commercial partners like NBP Pharma and Taiho Pharma. Active programs increased 12% YOY to 362 net of attrition, with 31 terminations and 69 additions in 2024.

• 2025 revenue expected to be in the range of $20 million to $25 million (GAAP), with a decrease in non-cash service revenue contributing to the range. Cash received from partners expected to increase in 2025 compared to 2024.
• Operating expense expected to be in the range of $90 million to $95 million in 2025, lower than 2024 due to strategic shift in ion channel business and efficiencies.
• Full year effective tax rate expected to be around 0% in 2025 due to valuation allowance offsetting tax benefit from net loss.

• Attrition of programs due to big pharma pipeline realignment and dynamic market changes.
• Market volatility affecting partner spending on pipeline and development.
• Competitive dynamics in royalty-generating markets, impacting royalty revenue potential.

Q: Hey, guys. Good afternoon. Thanks for taking the questions. A couple, if you don't mind. So first, Matt, with regard to attrition rates, obviously this is a normal part of biotech drug development. Just curious, I might assume that a lot of it or the majority has to do with, you know, clinical development moves, number 1. But are there any attrition numbers that might be due to technical issues?

A: Yeah, thanks, Joe. No, I wouldn't describe attrition as related to technical issues at all. In this, the attrition we saw last year, you know, we talked through the year about big pharma pipeline realignment, which was pretty widely reported through the year. I think a lot of dynamic changes in the big pharma space have led many of the big pharmas to focus more on efforts where they can really be differentiated and maybe even in some instances to aim even bigger in CNS and areas like that. So that caused, I think, some of the big farmers to realign their clinical pipelines. But beyond that, I think the rest of the attrition that we saw, I would characterize as kind of normal types of attrition that you see in the various stages of drug development. Of note, Q4 was a really strong quarter for us in terms of additions, And I think that has positioned as well for this year. So that was generally good to see.

Q: Hi, guys. Thanks for the questions here. So first 1, if you – Kurt if you could clarify on the $20 million, $25 million guide, just assuming what's – are you expecting cash and non-cash within that tour? Is that all cash? And maybe if you can elaborate, you provided a number of programs here. Any upside you're baking in from those programs? And I know it's always hard to say how much is collaboration revenue versus license revenue, but maybe you can provide context because this is the first time you're providing this guide.

A: Yeah, so Puneeth, so the $20 million to $25 million is a GAAP number. So we're trying to compare gap to gap. What I was trying to point out was if you think about why the 2025 number is going down relative to 2024. A big chunk of that of 2024 was this service revenue, right? $6 million was the amortization of service revenue, which is non-cash. And that's the piece that was going away. I kind of pointed to the balance sheet. Take a look at deferred revenue on the balance sheet, that the balance at the end of the year is only $2.5 million. So, you know, we recognized $6 million in deferred revenue last year. There's only $2.5 half million left to recognize in the balance sheet. So that's one of the big things that's going down and that's non-cash anyway. So I was trying to just provide some color on that, but specifically the [$20 million to $25 million] (ph) is a GAAP number in terms of what we would expect to report. You asked about kind of the differentiation, you know, at this point, I don't think we're breaking out that, you know, in that revenue, the difference between milestones versus service revenue versus royalties, but you could allude or you could, based on my remarks, you know that kind of the deferred service revenue is a piece that's certainly going down next year based on the comments that I've made.

Q: Hey guys, thank you so much for taking my questions and congrats on all the progress. So on the 2 licenses with I think Incyte and Photinia that you reported in Q4, could you give us any additional color either on the therapeutic areas, the indications, or the platforms that they might use? And from a therapeutic area perspective, You previously have noted that OmnidAb opens up a lot more possibilities, especially you mentioned neuroscience as well as oncology. Can you talk about if the trend is continuing or if it has expanded or there have been any kind of changes in that? Thank you.

A: Yeah, Kripa, thanks. On therapy area evolution, OmnidAb , you know, as we launched it in November of 2023, and it certainly has contributed to an uptick of partners who are interested in and are pursuing CNS targets, what I'll describe as high-value CNS targets. We definitely also have partners using OmnidAb with a focus on oncology and in multi-specifics and areas like that, but it has certainly increased the diversity of our discovery pipeline with additions of CNS. We also see real interest in radiopharma as well. As far as both Incyte and Photinia, I can't really comment on the areas that they're interested in with our platforms, other than to say they have broad platform access, which gives them access to multiple species, to our proprietary screening technologies, and other downstream technologies and workflows. So that's what I got for you on that.