OmniAb, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. OmniAb provides antibody-discovery technologies and services to pharmaceutical and biotechnology partners. The company reported 76 active partners, 314 active programs, 31 active clinical programs and three partner-approved products.
Financial performance
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $5.5 million | $6.9 million | $29.3 million | $23.7 million |
| Operating loss | $20.3 million | $14.9 million | $48.2 million | $35.7 million |
| Net loss | $15.7 million | $12.6 million | $36.6 million | $29.2 million |
| Net loss per share | $0.16 | $0.15 | $0.37 | $0.35 |
- Q3 revenue decreased 21% year over year; nine-month revenue rose 24%. Nine-month license and milestone revenue increased to $19.0 million from $7.8 million, while service revenue fell to $9.4 million from $14.9 million. Royalty revenue was $0.9 million, versus $1.0 million.
- Nine-month operating expenses increased 30% to $77.6 million. Research and development rose 18% to $41.8 million; general and administrative rose 73% to $25.4 million. The filing attributes increases mainly to personnel, facilities and public-company costs.
- For the nine months, operating cash flow was positive $11.5 million, versus $3.6 million. Investing used $23.1 million, primarily reflecting purchases of short-term investments net of maturities and sales. Financing used $0.4 million.
- At September 30, cash and cash equivalents were $21.2 million and short-term investments were $75.4 million, totaling $96.6 million. Current assets were $106.8 million and current liabilities $25.1 million. No debt balance is reported in the balance sheet; operating lease liabilities totaled $26.2 million.
- There is no gross margin figure presented. Operating expenses substantially exceeded revenue, resulting in an operating loss.
Changes, outlook and risks
- Nine-month license and milestone revenue included a $10.0 million milestone tied to the first EU commercial sale of teclistamab and milestones for pivotal studies in two additional batoclimab indications. Q3 service revenue declined mainly due to completed work on certain ion-channel programs.
- Management expects existing cash, cash equivalents, short-term investments and cash generated from operations to support operations for at least the next 12 months. No specific revenue or earnings guidance is provided.
- Management expects continued losses as it invests in research and development, commercial partnerships and public-company operations. Additional capital could be needed if cash generation falls short; financing may not be available on acceptable terms.
- Revenue depends on partners’ development and commercialization decisions, which OmniAb does not control. Milestone timing is uncertain, and royalties may not become material for an extended period or at all. The company said its warrants were out of the money at the report date; potential warrant proceeds of up to $218.6 million depend on cash exercise and are not assured.
- Contingent liabilities were $5.3 million at quarter-end. Management said pending legal matters were not expected to have a material adverse effect, while noting outcomes remain uncertain.
- Comparability caveat: 2022 results before the November 2022 separation from Ligand are combined, carve-out financials; 2023 results are for OmniAb as a standalone company.
Key facts for investors to verify
- Whether partner milestones and program activity can offset the decline in service revenue and support recurring royalty growth.
- How much of the positive operating cash flow reflects sustainable operations versus working-capital movements, particularly collections of receivables.
- Whether the stated cash runway remains adequate as losses, research spending and public-company costs continue.
- Future partner progress, clinical and regulatory milestones, commercialization, and any changes to the contingent-liability estimates.
- Potential equity dilution from outstanding options, earnout shares and warrants; the filing reports 116.2 million common shares outstanding at September 30, 2023.