OmniAb Stock

We are right at 8 a.m. Pacific Time, 11:00 a.m. Eastern Time, so we're going to get rolling here. So before I jump in, I just want to take a quick moment and mention that our team today will be making forward-looking statements. Those involve risks. Our business faces risks, our industry faces risks, our world faces risks, and I encourage investors to review our SEC filings for a fulsome discussion of risks.

So welcome to what is essentially OmniAb's first Investor and Analyst Day by name. Now we did something similar to this, an R&D Day when we launched our OmnidAb single domain technology a few years ago. But this is the first time we've hosted something like this here at our site in Emeryville. I really appreciate that many of you flew out here, long distances or drove across bridges or both to get here.

We are really, really proud of our East Bay home here. It's a very efficient place for us to do business, and we're looking forward to kind of sharing our labs and touring the folks that are here in person. So today's agenda, I'm just going to do a quick business overview will cover licensing strategy. Talk a little bit about our transgenic chicken platforms or our new OmniTides platform.

And then we'll have a substantive discussion around xPloration and then also a taste of how we continue to leverage AI within our business. And then Kurt will do a wrap-up. At the end of the formal presentation, we'll do a Q&A section. So those in the room will have a mic and you can ask questions.

For those that are on the webcast, you can actually click on the question box. Those will go directly to Kurt, and we can address those in the Q&A section as well.

So here are today's presenters. And one thing that I'll just recount for everyone a couple of weeks ago or a little more than that, maybe about a month ago, I was touring an investor through our labs. And as we are walking to the elevator here, he said, 'Well, this business is really fortunate in that it has both of the critical T's.' He used the term T's, and I said, 'What are the T's?'

And his comment was team and technology. And I fully agree with that sentiment. We have really an esteemed and decorated team and esteemed and decorated Board of Directors as well. And candidly, it is an honor for me to work with and lead the team that's shown here on this slide. This group has played a really critical role in a variety of ways, each of them in building the foundation for this business and then also now positioning it for growth, right?

And the folks on here are company founders and entrepreneurs. They're inventors, they are innovators of technologies that are having important impacts on the industry, not only technologies here at OmniAb, but in prior lives. They're experienced global executives as well.

So I'm really pleased to have the opportunity for these folks to present to investors today. Todd, here on the upper row, will present on our licensing strategy. Todd played a really critical role in forming what became the technical and business foundation of OmniAb. We did a string of acquisitions years ago, six acquisitions in less than 5 years. Todd played a key role in that and now leads our licensing.

Bill Harriman was a co-founder of Crystal Bioscience, who we acquired back in 2018. Crystal was the original innovator of the transgenic chicken actually in this building where we're standing today. This is technically, I guess, the birthplace of the transgenic chicken.

A couple of floors down in a smaller suite. Bill was the Chief Scientific Officer there. Yas joined us 3 years ago right at the time we were beginning to realize that we had the ability to engineer a variety of novel scaffolds into the transgenic chicken and we're starting to realize how important that could be to the industry. Prior to joining, Yas was Chief Technical Officer at Fair Journey Biologics as well as the scientific co-founder of Carterra, which is an instrumentation company that plays a critical role in discovery.

And then prior to that was actually a collaborator around the chicken when she was leading antibody discovery programs at Pfizer. So a long history there with the technology. Brian McGuinness joined us recently, most recently heading Business Development of Bicycle Therapeutics, which was an early mover in bicyclic compounds.

And so more from the therapeutics perspective, but it's great to have Brian on board managing the business development activities associated with our new OmniTides platform. Amechi joined us in July as Chief Operating Officer. Many here have already met Amechi. He has obviously had a multi-decade successful global career in instrumentation, most recently at Thermo Fisher and then prior to that at Danaher. Bob Chen will present today on how we're leveraging AI. Bob was a co-founder at xCella Biosciences, who we acquired back in 2020. xCella was spun out of the Stanford School of Bioengineering. And really, the foundation of that was what became and is xPloration. So it's great to have Bob presenting on AI and how we're leveraging that.

And then Kurt will finish up today. Many of you -- I think all of you know Kurt. He had a long career at Amgen and like me, has spent a number of years now in the royalty generation space and the technology space, most notably at Halozyme as well.

So again, an honor for me to have these folks here presenting for you today and looking forward to updating you on what we've been working on. So this is our mission at OmniAb. It's simple. It's straightforward. I'm actually not going to read it to you, but I -- but what we want to do today is give you a sense of how we do this and then also how we translate that into value creation for our shareholders. That's what we're focused on, and I think we're well positioned to do so.

So, Slide 7 here is a simple overview of our business. We very intentionally have built a business that is designed to benefit from durable revenue streams, whether that's pharmaceutical royalties or whether that's high-margin proprietary consumables. And it really starts on the left hand of this slide with our proprietary transgenic animals that allow us to create in vivo libraries for both antibodies and peptide discovery as well as our novel screening technologies, not only xPloration, which you're going to hear a lot more about today but also our ion channel screening technologies, which position us quite well.

We coined this term years ago, BI or Biological Intelligence. We marry that obviously with AI. AI is a natural place for us to be, and we have been for many years. We amass huge amounts of data that don't exist anywhere else. And that data is highly relevant to discovery. So that marrying of BI and AI is really an important differentiating factor of our business.

We now have scale. We have a lot of leverageability in this business. We've built this business specifically to have leverageable technologies and now have multiple revenue streams. We have 110 more than 110 active partners, more than 125 active programs over $3 billion in contracted milestones and an average royalty across our portfolio of 3.4%.

XPloration is something that we believe is really poised for significant growth and the ability to create multiple revenue streams and Amechi is going to talk more about the market and our analysis and opportunities there. So we wanted to frame what we see as the key pillars of value here at OmniAb. We feel like we're now better positioned than we've ever been to drive value for our stakeholders. Largely because we have these multiple ways to create value. Starts on the left with our pipeline and our partnerships. We've continued to build up a growing pipeline of partners or a growing portfolio of partners, our partner pipeline of programs has continued to grow.

And now we're starting to see a ripening of some of the late-stage assets with what our partners are calling pipeline-in-a-product opportunities. And I think that's a really important maturation of our pipeline. In the center are our discovery technologies. We continue to leverage our vantage point in the industry to develop new technologies and almost as importantly, new workflows that enable efficient drug discovery.

We're seeing an increase in the pace of novel drug discovery of partners going after new novel targets and we think we're unusually and very well positioned to meet those needs. Our xPloration platform, as I said, we're very excited about -- a lot of that excitement is informed by robust primary market research that Amechi will talk much more about in his section.

So I'm going to kind of step back now, just for a moment, I want to talk about royalties generally. Kurt will talk in his section about the value of aggregating royalties but I'll just say, just as a personal note, I've spent the last 16 years or so of my career in and around pharmaceutical royalty generation.

And it's been interesting seeing that area evolve over that 16-year period of time. More and more players are out there, getting involved in royalties, writing checks to get access to royalties. That's not really our model. And for us, it's far more scalable, far more efficient for us to essentially create tools, leverage our vantage point in the industry, to create tools that allow us to generate royalties or generate and grow a portfolio of royalties that way.

And so that's the model we've pursued, and I think we're showing kind of the efficiency of that over time. So why are royalties so valuable? Why is there so much interest in royalties? One, they have predictable and recurring cash flows require limited operating expense and limited operating expense risk can provide broad exposure to a growing health care market and you can build up a diverse portfolio.

If you have platforms that are broadly applicable to a variety of therapy areas that allows you to create a diverse portfolio of royalties. And then lastly, they often come with strong intellectual property protection in a variety of forms, including, of course, patents but also regulatory exclusivities.

There's often proprietary manufacturing or other know-how that can protect novel pharmaceutical products and royalties. So IP, we see as a really important advantage here at OmniAb. As you'd expect, we have a suite of novel technologies that I'll talk about more in a moment, but we have over 350 technology patents on our technologies, many of which will be those technologies we'll be highlighting today.

And they cover a variety of factors: our transgenic animals, methods for creating the transgenic animals, our screening technologies various elements of xPloration, et cetera. So we've got that broad intellectual property estate that we pursue globally. But importantly, the way our license agreements are structured.

And the way that our royalties are protected and linked are to the patents that the partners file on the drug that comes out of our technologies. And what that does is it creates a really diverse intellectual property foundation upon which our royalties are based.

It also creates an ever elongating tail of protection. And on the right-hand side of the slide, you can see the patent applications that are filed by our partners for which the primary invention is a compound that has come out of our technologies. And that says a lot about the conviction of our partners around the molecules that they've discovered and their investment there from a global perspective.

So here on Slide 11, we have our -- what I call our continuum of technologies. And we think about these in sort of three basic buckets: creation of novel libraries that are targeted for the partners' needs, our novel screening technologies and then ultimately delivering at the end of the day.

We can do downstream work prioritization and selection of candidates for our partners. Many of our partners will do that work in their own labs, which is completely fine, but we can do that work as well. And so on the creation side on the left, it really starts with our source technologies, our core genetic engineering capabilities, our IP and know-how around that. We've built up a multi-species platform of discovery technologies. You'll hear a lot about our transgenic chicken platforms today. Bill will highlight our OmnidAb single domain platform that we launched a few years ago. And Yas and Brian will talk a lot more about our OmniTides platform as well.

In the center of the slide, here, you see our high-throughput screening technologies. xPloration, which Amechi will talk through, is an ultra-high throughput single B cell screening platform that allows massive amounts of data generation and screening high-throughput single cell phenotypic screening, which is a big need in the industry.

I'll talk a little bit more about our ion channel capabilities as well. That also falls within the screening, but touches other elements of our technology, and that's an area of increasing interest, especially for some of our larger partners or larger, big pharma and global partners.

And as I mentioned, we have a suite of delivery work that we can do: prioritization of candidates, binding kinetics, epitope binding, those sorts of things. So along the bottom of this slide, you see our OmniDeep platform that we launched a few years ago.

This is our suite of in silico tools that are really woven throughout our platform. When you're in a position like ours where you're generating large amounts of data that don't exist anywhere else in the literature, leveraging in silico tools and AI to process that data to guide that data selection is a natural place to be in a place we've been for many years.

So now I'm going to talk a little bit more, as I mentioned about ion channels and their role in health and disease. These ion channels as targets have long been viewed as kind of holy grail targets for almost any modality, almost any way of attacking them, but especially for antibodies. And when you see the areas of biology that ion channels touch and are involved with, you can get a really clear understanding that these are big markets.

These are significant unmet needs, and you can understand why there's an interest in our ion channel capabilities. We announced a new deal back in August with Eli Lilly for an undisclosed ion channel target for an undisclosed modality. And that's a deal with substantial downstream economics that has garnered some attention and also, I think, created more visibility for this element of our technology stack. And we really do believe we've built and developed an industry-leading platform for ion channel discovery. So we partner largely with big pharma players who are interested in pursuing these ion channel targets and want access not only to our suite of discovery technologies, but also our custom cell lines, our custom reagents, our ultra-high throughput screening capabilities that are very specific to ion channels.

The visual here on the right shows where we have stable cell lines, in some cases, novel screening assays. And these agreements are generally multiyear agreements. They typically include a much larger license and service fees, including time and pass-through costs in addition to milestones and royalties.

So we think this will continue to be an important part of our business and a growing element as we move forward. I'm quickly going to run through some metrics that we report quarterly. These numbers here on the next few slides are as of June 30. We'll give our Q3 number updates as we normally do when we report our Q3 results in a few weeks on October 30.

But you can see here our growth in active partners over recent years, net of attrition, you see kind of the categorization of those partners. And really, these deep relationships with our partners provide a unique vantage point on the industry and really inform our investment priorities, our innovation priorities, et cetera.

The next slide here shows the breakdown of active programs. Again, nice growth net of attrition. Over 98% of our active programs have contracted future economics to OmniAb. We have over $3 billion in total potential contracted milestones. On the pie chart there in the near center of the slide, you can see how those are broken down between clinical milestones and commercial milestones. So heavily weighted to the clinical side, you also see distribution of our contracted royalty rates and the ranges. So a fairly tight range there. Our average royalty across our portfolio is about 3.4%.

Active clinical programs and approved products. This number continues to grow. We continue to expect new clinical entrants this year. You see this broken down also by source technology. The ones there in the hashed in the center pie chart are ones that are derived from our novel chicken technologies. You can also see the breakdown of therapy areas of these programs that's becoming more diverse over time. And importantly, these 34 programs have about $340 million of contracted remaining potential milestones to OmniAb.

The next slide shows our clinical and commercial partner pipeline. These are four programs that have contracted remaining downstream economics to OmniAb. Importantly, this has really started to mature this year. We've seen much more, I'll say, crowding in a good way on the center and right-hand side of this slide as more programs enter into late-stage clinical development. We've got a couple of programs in recent months that jumped directly from Phase I into Phase III, the ramantamig program with Johnson & Johnson that's pursuing multiple myeloma and the Merck KGaA precemtabart tocentecan ADC, which is going after a variety of indications that I'll talk about in a moment. You can also see the little chicken icon here, which indicates programs that are derived from our transgenic chicken technologies. I mentioned at the outset, kind of the value of our partner program. And we have a select number of late-stage partner programs where the partners are starting to refer to these programs as either pipeline-in-a-product programs or programs with first-in-class or best-in-class potential.

Especially important as you think about aggregating royalties, our pipeline-in-a-product programs. These are ones that I pay attention to. One, they have multiple ways to win, multiple ways to create value. Importantly, I'll point out the IMVT-1402 and TEV-408 programs, both of which have had data in recent months and years, both of which have potential in as many or even more potentially as five indications. You can see the potential first indications and then the added indications on the far right of the slide. The Merck KGaA program is one that jumped directly from Phase I to Phase III earlier this year in recent months, currently pursuing colorectal cancer but has potential in a variety of other areas as well.

So you can see the conviction of the partners and the investments that they're making in these programs and we're excited to continue to see the data mature and partners aggressively pursuing regulatory progress with these. This next slide shows partner commitment to programs that are in the clinic.

So this -- these are data that we track internally. We don't -- we haven't presented these previously, but I think they're an important sort of viewpoint or provide important insight into how partners are investing in our programs. You can see the number of clinical trial starts on the left-hand side and then also the number of planned or enrolled patients across the portfolio of clinical programs that have been produced with our technology.

And as another measure of the partner's conviction here, we estimate that based on the data that's shown here, these partners have committed or are spending more than $2.4 billion advancing programs for which are ones that are derived out of our technology. So I think it says a lot about the value that we are bringing to our partners and the conviction that they have around these programs.

This next slide shows selected partner clinical readouts that are coming in the last part of this year in just the last few months of 2026 and during 2027. These NCT numbers that are referenced here are pulled directly from ClinicalTrials.gov. The placement on this graphic are based on the primary completion dates for the partner programs for these clinical trials. And so a substantial number of readouts over the next 15 months, about 19 clinical trial readouts in that period of time. We see some Phase I data that's coming out in other indications for the Merck KGaA precemtabart tocentecan, the ADC program I was referring to, but some really exciting programs also in readouts in the middle of next year, the IMVT-1402 readouts, which are potentially pivotal readouts for that program, also the ramantamig readouts as well that are garnering a lot of attention. So we're excited about the flow and the data that's to come as our pipeline matures.

And then lastly here, as I kind of wrap up before I hand it over to Todd, I wanted to kind of give a little bit of an overview of our expectations for the business in the short term, in the midterm and in the long term. We spent a lot of time, as I said at the outset, building a business that's designed to benefit from durable revenue streams that is highly leverageable and efficient.

And in the next couple of years, we expect our portfolio to continue to mature. We expect to continue to see milestones coming in from late-stage assets. Generally, milestones get larger as a program progresses later in development. We expect to see a potential launch of IMVT-1402 in its first indications and we'll continue to build a foundation for xPloration that you'll hear a lot more about in Amechi's section.

In the midterm, I expect our business will continue to evolve and grow. We'll continue to diversify our revenue mix with multiple new assets launching. We'll continue to grow our portfolio. We expect we'll see other major new product launches. We get very excited as we look even more deeply into our portfolio, and we'll continue to manage or really leverage, I should say, our vantage point in the industry to inform our technology innovations, our technology investments. And then in the long term, we'll see continued launch of new products, expect the xPloration installed base to expand greatly as we expand our reach and spread more instruments. That ought to produce recurring revenue in the form of high-margin consumables and we'll continue to have a robust and efficient and diversified partnering model.

So we really want to continue to leverage this vantage point in the industry that we have and we've created -- dropped some water there. And continue to have a controlled expense structure to really demonstrate the efficiencies that we've built in the business and the efficiencies that we've kind of built across our business platform.

So that's an overview of how we're seeing the business, and I'm going to turn it over to Todd now to give you a little overview of our licensing strategy and plan. So Todd, hop on in.

Thanks, Matt, and good morning, everybody. Todd Pettingill, Vice President of Business Development. Today, I'm going to talk about our licensing at OmniAb, focus on a couple of different aspects. Number one, how we see the market evolving and two, how we are positioning ourselves to optimally capitalize on those movements and maximize value for our shareholders.

So on what the market is doing. We see several positive developments that are combining to become a very strong tailwind for the licensing business. First, just the space we're in. We're in the biologics space. Biologics have historically been known more and more to have a higher probability of success than other types of medicines, so it's a great place to be. Additionally, our -- the industry, generally speaking, it's recently is kind of has come to the realization that there's been a bit of target crowding and there's a need to spread out and investigate new areas. With that, we're positioned well.

We have a broad range of technologies that can help people to approach the new targets that they're focused on. Additionally, as they're looking to new targets and looking for new technologies, they're focusing on new types of scaffolds, different types of antibodies, different types of biological structures.

And we're fortunate to have a wide range of technologies that are useful for these medicines. Also, it's no secret that more and more the industry is starting to incorporate in silico development into discovery efforts. And we are positioned well to not only provide the data sets or the data that can power these models they're working with, but also generate and screen through data on a high level, quick level, as Bob will be speaking to later on.

Finally, the overall biotech market is definitely been in a better position over the last several quarters. It was a little tough sledding for the last several years, but things are definitely opening up and this is putting our partners in a position where they have a stronger sources of capital, enabling them to approach the targets and the drugs that they're seeking to develop.

Now looking backwards, OmniAb, we've spent the last several years focused on creating a wide range of partners. And this has put us in a unique position where we can listen to what our partners are saying, we can hear what they're focused on, what they're interested in learning.

And while we'll never share that with other people, it does allow us to think about and inform how we focus our internal R&D effort. We build out the technologies that our partners are interested in. For a recent -- for example, over the last couple of years, we've launched several different technologies.

We have our heavy chain only chicken OmnidAb. Our ultra-long CDR chicken OmniUltra. And today, we're going to be talking about OmniTides, our peptide discovery platform. For all of these, these are -- have been a result of us working with we are listening to our partners, figuring out what they're interested in and then adjusting our R&D accordingly. And as you can see, it's been paying off. Over the last several years, a bigger and bigger portion of our partners have been focused on these new technologies. Finally, not only are we innovating in our technologies, we're also innovating in how we structure our deals.

So we pride ourselves on going to the market and saying, "Hey, come to us, we can figure out a structure that works for you, we're -- our goal is to get our technology in the hands of as many people as possible." These are some of the -- or the structures that we're working with, but we're open to a wide range. So I'll go through each of them. First, our standard tech licensing. In this structure, people come to us, they're looking to get access to one or more of our technologies. We'll sign a deal that gives them access and the great thing about how we structure these is we can be pretty agnostic about how we structure them.

It's -- we're looking for an NPV risk-adjusted NPV neutral type deal. But with adjusting appropriately for probability success, we can move payments forward to more of an upfront structure or backwards to more of a back-end structure and more or less, we're aiming for the same risk-adjusted NPV.

So we have a lot of flexibility in how we structure these deals. But generally speaking, there's always some element of upfront payments, service fee, clinical milestones, royalties. Next, we have our ion channel screening group or screening deals, which are driven by our ion channel screening group. So we're fortunate at OmniAb to have a group that came into the fold through indirectly through an acquisition.

Our ion channel screening group, they've been together for many decades, and they're known in the industry as one of the best ion channels going groups out there. And so when new targets come into interest, they're one of the first people that the industry participants come to. What that allows us to do is we can get -- well, number one, these deals, they rely a lot more on the service. So there's a lot larger upfront. Additionally, there's bigger back-end milestones and royalties. So these are sources of some of our larger deals. Next, we have the entrepreneur enablement program. So this is pretty similar to our standard tech licensing with the main difference that we can work with people who are capital constrained. We find either new industry participants that have interesting scientific ideas or people that have proven themselves and also have interesting ideas.

And we can work with them and provide our technology where with other customers we're more cash focused on the upfront. With this one we -- with this particular program, we can work to -- we can take equity upfront. So this allows us to enable our partners who normally wouldn't be able to get access to our technologies. We can give our technologies to them. Also though we can provide ourselves with additional equity upside as we upon the success of these companies.

Finally, we have our asset-based deals. These are -- we have a series of assets that are on our shelves, either through say we've got a proof of concept study or we have an asset for another reason.

They're generally more advanced. So when we go to market, we can command a much larger upfront. And there's still some element of milestones and royalties on the back end as we do these deals. So these are some of the deals we work with. But again, I want to emphasize that we're highly focused on coming up with a wide range of deal structures that work for our partners. And again, at the end of the day, we are trying to maximize get our technology into as many people's hands as possible and drive as much deal making in order to drive the overall value of the company.

So with that, I'll turn it over to Bill, who's going to be talking about the benefits of working in our transgenic chickens.

Thanks, Todd. So I'm Bill Harriman, Senior VP of Discovery Partnership Management and Technology Development. And I'm going to provide you an overview of the transgenic chickens we've developed over the past decade or so. But first, let me start with addressing the question of why we're working with chickens in the first place.

It might sound a little bit odd if you're familiar with the immunizations being in rodents and more standard animals. But if you think about it a bit more, it actually makes a lot of sense to use chickens. The primary advantage of using chickens is an in vivo host for antibody discovery is really stems from the substantial, really enormous phylogenetic distance between chickens and humans.

When you go to an animal to raise an antibody to human target, you're reliant on that animal to recognize your target as a foreign protein. Obviously, if it's exactly the same, it's not going to recognize it. So the amount of differences between the human target and the immunized species ortholog makes a big difference. The more different, the more foreign it's going to look. And therefore, the more robust type of immune response you'll see from that animal. So when you look at the numbers in terms of the sequence similarities and structural similarities, it's really driven by evolution, by genetic drift.

So what you need to look at relevant numbers are what's the last common ancestor, let's say, for the mammals. It's about 100 million years ago. That means from that branch point, the mammals sort of broke on their own lineages and evolution occurred on everything in the genome. The branch point, the last common ancestor between mammals and birds, is like 300 million years ago. So much more time for genetic drift to occur, meaning that for pretty much any target you look at, you're going to see more differences between the orthologs of human and chicken versus human and any other mammal, okay? So that, in essence, is what we call the chicken advantage. As a host, it's advantageous to use the chicken to make antibodies to human proteins.

Okay. Another concept like that you might have heard of a little bit, but I'd like to introduce a little more is biological intelligence. This is something we actually trademarked about 5 years ago. And it refers really to leveraging the incredible power of the adaptive immune response. This is something that all vertebrate animals have. We all have some sort of immune response to foreign pathogens or anything new that comes along. And this is comprised of both cellular and genetic elements that work together to be able to address any challenge at a molecular level that comes along. And even for things that the host animals never seen before immunologically. So this is why animal immunization is still the preferred choice for antibody discovery and has actually produced the vast majority of approved antibody drugs.

Now us, as genetic engineers, we aim to tap into this system. It's a powerful system. It exists in nature. It's there vertebrate animals have it. We want to get in there and actually tap into by introducing scaffolds and frameworks that are designed specifically with intent for making therapeutics. And by doing this, we'll increase the efficiency of the therapeutic discovery process. Now chickens are particularly suitable for engineering applications because of their unique genetic architecture. I won't go into the details of that. But -- and then on top of that, chickens have this advantage in terms of immune recognition that I just spoke of. That said, performing genetic engineering in chicken is -- requires a stack of very specialized proprietary knowledge. Some of this, if you go on the tour with us later, you'll see a little glimpse of what I'm talking about there. But the fact is that OmniAb is currently the only company that's offering engineered [indiscernible] platforms for therapeutics.

Okay. So here's an overview of our transgenic chicken platforms. At the top, we have OmniChicken and OmniClick. These are both designed to generate antibodies with classical IgG formats. OmniClick is a variant featuring a common light chain design that is geared towards the generation of manufacturing-friendly bispecific antibodies. Our other scaffold designs include OmnidAb and OmniUltra, each of which can generate novel binding domains outside of the classical format. And in the case of OmnidAb, it's inspired by a class of antibodies found in camelids, which are comprised of a heavy chain without a light chain at all. Heavy chain-only antibodies are the basis of single-domain antibodies, also known as VHH antibodies or nanobodies, which feature a small modular binding domain of 12 to 15 [Audio Gap] or tethered together or to other binding domains to generate multi-specific molecules.

As stand-alone molecules, single-domain antibodies are valued for tissue penetration, stability and solubility. Also, there's no light chain, so the manufacturing process is also more simplified as well. Now our most recently launched transgenic chicken is called OmniUltra, which is inspired by a subclass of novel cow antibodies, which again have a unique structure. And these feature ultra-long CDRH3 domains. As you probably know, antibodies have 3 CDRs in the VH and the VL and the CDRh3 is the most prominent one in all antibodies. But in cow antibodies, it's super prominent. It actually has a length that's 3 to 4x what's found in a normal human antibody and it comprised of a stalk and knob structure, which because of its unique shape of the antibody, it allows the antibody to interact with targets differently than conventional antibodies, which are typically more of a flat or planar surface. So this gives potential access of OmniUltra antibodies to buried epitopes and deep clefts on targets.

Even more interesting, we find that often the knob domains themselves that are protruding out from the base of the antibody is sufficient to confer binding specificity and affinity. And this attribute is exploited by our OmniTides platform, which you'll hear about in a few minutes from my colleague, Yas. Collectively, OmniAb's chicken transgenic chicken platforms offer versatile ways of interacting with the targets based on proven scaffolds found in nature. For each scaffold, there -- a vast sequence space of target-specific binding molecules can be generated just through the simple process of immunization. We orchestrate the genetics, but actually the animals do most of this work.

So I'm going to take a little deeper look into the OmniAb platform in particular. And this is for the discovery of single-domain antibodies. The traditional approach, the traditional in vivo approach is to use wild-type llamas or camels because these are among the rare animals that actually produce heavy chain-only antibodies. And in this process, immunization occurs over the course of several months. It's followed by a display-based discovery process. And if successful, the affinity matured camelid antibodies to the target interest will be found. However, you're not done yet.

A number of further engineering steps are needed before you can make a therapeutic. Starting with humanization. These are llama antibodies. The typical process is to graft the CDRs from the llama antibody onto a human framework. And -- but one issue is that the human framework, humans don't have heavy chain-only antibodies. We're not evolved in nature to have antibodies that express without a light chain. And so some further framework engineering is required on the human antibody in order to make it work and make it an effective molecule as a single domain antibody. And so these engineering steps will often require or cause some loss in the affinity of the original camelid antibody. You've lost something because you've changed it. So you got to kind of add the affinity back. So it's additional engineering.

My point here is that there's multiple engineering steps you need to go through when you're going from a Camelid antibody to a potential therapeutic. And these take time, resources, et cetera, et cetera. So in our approach with OmnidAb, what we do is we address that engineering need to make a human VH work well as a single domain antibody. That's an engineering step you have to do every time. Well, we do it upfront at the genetic level. So by genetically baking in the essential attributes needed for single-domain therapeutics, we can turn over the immune response to OmnidAb chickens for the affinity and specificity. This is what they do naturally. This is the in vivo process. And then coming directly out of the OmnidAb animal, we have molecules that are much closer to being ready to go for preclinical and clinical development.

So overall, the OmnidAb platform provides an efficient strategy that can fit well with accelerated discovery and development time line. And as an example of this, by accessing the pre-engineered single-domain human scaffold and our OmnidAb chickens, it's possible for our partners to move through preclinical development quite quickly. In this case study example, we were able to immunize a cohort of animals, execute an xPloration screening campaign and deliver candidate antibodies to our partner in around 7 months. Since our candidates required only minimal, if any, engineering, the partner was able to select leads just a few months after that, remarkably fast, allowing a rapid progression into IND-enabling studies. For this program, it was less than 2 years from the start of immunization to the clinic. I'll leave you now with Yas, who will introduce you to our newest innovation, the OmniTides platform.

Hi, everybody. Pleasure to be here. My name is Yasmina Abdiche, and I'm the SVP of Exploratory Research and Advanced Characterization here at OmniAb. I'm really thrilled to tell you about OmniTides today. So we're introducing this new platform, and it extends our reach into a high-value market that is adjacent to the antibody market that we have historically tailored our platforms towards. And this is really opening up a whole new kind of innovation opportunity and expanding our reach to different partners. So as you've heard in the context of therapeutic antibodies, the immunization of animals is really a well-established kind of clinically proven method, and it has yielded most of the approved antibodies on the market today. And as you've heard, we have a suite of transgenic animals that addresses that market.

But here, what we're doing is we're repurposing the immune system. You could consider it nature's discovery engine to discover peptides. And as I mentioned, this really opens up new possibilities for us. Peptides are -- they've really been reinvigorated in recent years with the explosive use of GLP-1s. And these kind of medicines can really transform diseases in different ways. So we really see peptides in a targeting strategy as being like a really exciting opportunity for us, especially in radio and in peptide conjugates. And this is because of their small size. They're able to penetrate tumors very effectively, and they have tunable clearance. And for imaging, that clearance time frame can match the radioactive decay half-lives of radionuclides.

What we've realized is that the therapeutic peptide community is very different from the antibody discovery market. And so we've developed a peptide discovery to synthesis workflow to really address this market and kind of make ourselves kind of more familiar to the peptide community. So that's really the essence of OmniTides. So here, I wanted to clarify how OmniTides is different and complementary to other ways of generating peptide therapeutics. So the main differentiator is really the stage at which optimization is incorporated. So because OmniTides is powered by the OmniUltra chicken that Bill was telling you about, peptide libraries have been naturally optimized in vivo. And this is through powerful biological mechanisms, the biological intelligence that we told you about. This is affinity maturation, clonal expansion, natural selections to really deliver binder clones. This really eliminates or reduces the need for downstream optimization.

The second point I want to draw your attention to is the custom nature of the library. So most of the other methods, they're kind of [Audio Gap] immune campaign. So every single one is a bespoke custom library. Thank you.

The third point is manufacturability. So the peptides evolve on a developable scaffold, facilitating their downstream production by chemical synthesis. And this is a critical factor in determining whether a drug is going to be a success. And so let's consider the other methods. So they kind of very broadly fall into two buckets. The first is combinatorial chemistry and display. So this is really a brute force method that screens massive libraries very broadly. But oftentimes, the candidates need extensive optimization to bring their affinity and stability to a drug-like level. And then the other approach is kind of really very opposite. It's rational design. So here, you really focus on 1 or 2 candidates and you're really very much guiding -- guided by structural or other methods, just the very deeply focused optimization of a few things. So this requires a lot of information. So OmniTides is actually compatible with these two methods, but it really just gives you that pool of very high-value candidates to begin with.

So this really expedites the discovery to lead times. I want to share with you the OmniTides workflow. It's really quite simple because what we do is we start with the OmniUltra chicken. So this is immunization. And what happens then is that it will produce these antibodies that have this protruding stalk-knob feature that Bill was telling you about. And really, you can think of this as an antibody that's displaying a peptide that's kind of integrated into the antibody structure. We screen the output of an immunization campaign using xPloration, and you'll hear more about this from my colleague, Amechi. And so having identified potential binders at the B cell secretion stage, we can then reconfirm these hits by recombinantly making them on an inert scaffold of an antibody and having this protruding peptide attached to it. We can also just make the peptide by chemical synthesis. This is pretty amazing that this little peptide that was kind of like discovered within the context of an antibody can actually function as an autonomous unit and it contains all the optimization that you would expect from antibodies.

We've actually established a stable of peptide vendors that have reliably and reproducibly been able to chemically synthesize peptides coming from this OmniTides workflow. And conveniently, these peptides kind of spring into shape by random oxidation. This is pretty phenomenal because it means that you don't have to engage complex chemistries for orthogonal protection strategies. But the other thing is that because they conform to a common topology, if you wanted to do a directed oxidation, you could because they're not enormously different. And this is quite important because this doesn't compromise the diversity because the target binding regions are contained in the loop areas, whereas the scaffold helps the stability.

On the right here, you see a picture of a sensorgram, and you'll see on the tour later in the advanced characterization, how we generate these types of data. But what this is telling us is that this is a very high affinity interaction. This chemically synthesized peptide is able to bind its target and it does so with a very high affinity. And the affinities that we get out without any further optimization are the same pretty much as those that you would get from an optimized other method. So they're already kind of ready to go at an affinity that's biologically relevant. Furthermore, and this is very important, because they're on this developable scaffold that's really kind of locked in there, they're very stable -- they have exceptional heat resistance.

You can freeze-thaw them. You can actually incubate them for an hour. You can boil them in very, very strong acid, and they will still retain their shape and their target binding. And this is relevant for radio because when you do radio labeling, some of the conditions that you use are high heat and low pH. And then finally, they're very strongly stable in serum. So this is proof that they don't get proteolytically degraded. So the workflow is really tailored to the peptide discovery market, and it's amenable to multiple applications. And I'll now pass you to my colleague, Brian, who will tell you more about that. Thank you.

Thanks, Yas. So I'm Brian McGuinness, Senior Director of Business Development. And my primary focus is to look after and partner the new peptide library, which Jas has just run through. So by a number of measures, peptides are a rapidly growing class of therapeutics. Most tangibly, they account for 10% of FDA approvals between 2020 and 2024. And as of 2026, there are around 130 FDA-approved peptide and peptide-based therapeutics. This is driving rapid market growth from an estimated sort of $117 billion in '26 to a predicted potential in the mid -- in excess of $300 billion by the mid-2030s.

Fueling that market growth is the reality that peptides are impacting a broad range of high-value, high unmet need therapeutic areas. Now the aim of this chart is just to give you a high-level qualitative relative view of the relative size of the -- relative view rather of the size and growth rate of the peptide markets in the top 5 therapeutic areas that are being impacted by peptide approvals. And perhaps not surprisingly, the metabolic disorders through drugs like the various GLP-1 agonists that there are out there have an in excess of 60% market share. However, indications with broad therapeutic application, broad therapeutic scope and high unmet need like oncology and various neurological indications are well established and growing rapidly. And as such, they offer a potentially very deep well of opportunities for novel peptide therapeutics.

So what's driving that growth? What's behind that growth? Peptides are an extremely versatile modality with a broad range of potential applications. The stand-alone therapeutic peptides on the top left-hand quadrant of this slide, such as those addressing metabolic disorders are clearly a very important class but because they combine the beneficial attributes of both small molecules and antibodies, the universe of potential applications for the OmniTides peptides stretches beyond the stand-alone therapeutics. In particular, driven by high unmet need, developments of new modalities and advances in understanding of disease biology, there's a significant interest that's growing rapidly in peptide drug conjugates and peptide-based precision targeting of a range of therapeutic payloads. And that's kind of essentially the right-hand side of this slide. So such formats are accessing significant strategic upside by virtue of their ability to enable the development and application of a whole new generation of novel targeted therapeutic agents.

So for all the reasons that Bill and Yas have really very neatly outlined and underpinned by the biological intelligence at the heart of their derivation, OmniTides peptides are highly versatile modular format, perfectly suited for precise target-specific delivery of a broad range of therapeutic payloads. Now this opens up a host of partnering opportunities for us, both with our existing and entirely new partners looking either solely or additionally for a novel peptide format in their pipeline.

Now as a result of conversations that we've been having in the space, we believe that the delivery formats -- the three delivery formats at the top of this diagram are particularly well suited to the benefits of the OmniTides platform and are likely to be the most attractive place for us to focus initially for potential partnerships. However, more broadly, we believe that the OmniTides platform ultimately has the potential to address unmet need in applications with an estimated total market for peptide relevant indications valued at around $1 trillion. So with that, I'd like to hand over to my colleague, Amechi, to talk about the xPloration platform.

Thank you, Brian. Good morning, everyone. My name is Amechi. Amechi Nwachuku, COO. And I'm pleased to introduce the xPloration platform. I'll explain what makes this technology distinctive as well as share why it is that we believe that it can become an important complementary and durable revenue contributor for OmniAb. So I'm excited to share that we are bringing xPloration to more researchers. Starting today, we are making it available to all customers. As you may remember, in May of 2025, we launched the Partner Access program, and that gave our 100-plus OmniAb partners access to be able to use and try the xPloration platform in their workflows. And their experience over the last year has been really positive. They've given us positive feedback about how this was able to impact the work that they do every day, whether they were in big pharma companies, whether they were at global CROs or small biotech companies. And at the same time, it gave us increased confidence to now offer xPloration for broader availability.

Starting this month then, as a consequence, we're going to be making the instrument, the proprietary consumables, the software and the support available to all customers. And I'm now going to walk you through what the instrument is, explain what it does, explain a little bit about the market and also how it is that we intend to build this business. So xPloration is a novel platform for B-cell screening. For antibody discovery teams that use the xPloration platform, they're going to be able to explore more boldly to do their work without the usual limitations. And that means that they'll be able to go from dissociated samples to the targeted hits over the course of a morning. And as a consequence, over the course of a year, they're going to be able to do more campaigns and reach a candidate sooner. Thank you.

The xPloration itself is an AI-enabled high-throughput platform with proprietary consumables for finding and selecting B cells that are producing the antibodies of interest. The system is a benchtop instrument. It fits practically into any lab without any complicated infrastructure. It is fluidics-free. It runs from a standard power outlet. It requires no external plumbing, air or vacuum, and it doesn't require a specialist to operate. A key component is the proprietary microcapillary array that has 1.5 million microcapillaries built into it. These allow for individual B cells to be sorted and separated for deep parallel analysis without any microfluidics. The researchers load the B cells and the assay reagents, for example, target cells or reporter cells or beads into the array in under 5 minutes. Then four exchangeable fluorescence channels allow several assays to be run on the cells in a single screen.

The instrument then scans every capillary using AI-based image analysis and can identify thousands of positive hits in real time. So with this support, the researcher can select the cells of interest in the course of minutes. Once they've selected those, then a precision laser extracts gently the selected live cells into a 96-well recovery plate. That the result then is a meaningfully different workflow. They can screen millions of B cells and get to hundreds or thousands of intact hits in half a day. Work that used to take them weeks or months can be done in the morning or in an afternoon. And so xPloration gives discovery teams the freedom to be bolder in their work. It enables them to work and screen outside the usual limitations, and it delivers high throughput in an instrument that's easy to use, robust and routine lab operation.

The core application for xPloration is a market that's large and attractive. B-cell screening, we estimate at more than $500 million annually and growing at double digits. On the left, you can see how we think about this market. We think of it as industry and academia with industry making up approximately 80% of the market. Academia is smaller, but still remains strategically important. So for us, we intend to serve both customer groups. Along the bottom, you see the competitive environment we operate in. It includes generalized technologies such as FACS or single-cell NGS. It also includes specialized technologies like optofluidics, droplet fluidics, nanowell technologies and others.

We also see the potential for eventually growth into new applications, including broader antibody repertoire screening, protein repertoire screening, organism screening, while our immediate focus will be on the core application where we believe xPloration already competes favorably. So our partner experiences have convinced us that xPloration competes favorably with the existing methods on the core value drivers of higher throughput, ease of use, robustness and lower cost. And our primary market research provides additional evidence for that.

So we commissioned two studies from Percepta Associates, each involving more than 200 respondents across industry and academia. The first one was a quantitative market analysis. It examined the market size and the dynamics. It looked at the competitive landscape and the projected plans of potential customers to acquire new technologies. The second was a conjoint preference analysis. It examined customer needs, tested alternative product configurations, compared those configurations with the existing technologies and measured how customers value the attributes that xPloration can bring to bear for them. And these studies led to 3 important findings that make us even more confident in bringing xPloration to general availability now.

So the first is that the timing is favorable. Almost 2/3 of the market, 63% of respondents project that they will need a new screening platform in the next 3 years. And of those, more than 20% within the next 12 months. More than half, 55% anticipate investing in advanced in vivo screening, which is the core technology that xPloration delivers on. So these -- the implication here is that there's a meaningful portion of the market that should be open to a new platform just as we are opening xPloration for general availability. Secondly, xPloration competes favorably against the existing methods on the attributes that drive the purchasing discussion decision.

You can think of the attributes generally as grouped into three buckets: economics, productivity and operability. Economics accounts for about 45% of the decision process, productivity about 40% and operability for about 15%. On economics, xPloration competes favorably, whether we're talking about the cost per screen or the cost per hit. On productivity, xPloration competes well and has the potential to be best-in-class on cells per screen, time per screen and automation. And on the operability, xPloration is distinctive in the ease of use. The interpretation is that customers do not have to trade productivity for usability and that xPloration offers a compelling mix of economics, productivity and operability.

The third big learning is that, that preference translates into the intention to buy. More than 80% of the respondents said that they would definitely or probably purchase the winning xPloration concept in our conjoint analysis. And that result was consistent across industry, across geographies because it's one thing for respondents to say that they have a preference for a certain brand or for a certain mix. It's another thing for that preference to translate to an intention to buy. And that's why we believe that xPloration is ready for broader commercialization. Customers, they see the value of xPloration. A meaningful portion of the market expects to purchase new equipment soon and the product configuration competes favorably against existing alternatives.

So turning to the business model. xPloration combines an instrument-led customer relationship with three recurring revenue streams. The instrument is a starting point. Each capital sale establishes that customer relationship and expands the installed base that supports the future recurring revenue. From there, the proprietary chips and kits generate high-margin usage-based revenue with every run. And that revenue scales with adoption and as customers run more experiments. Software adds another recurring revenue stream, annual licenses support analysis and data management. They create predictable revenue, and they can expand as we add more workflows and applications to the platform. And then service completes that model. The installation, the training, the preventive maintenance, these are all things that support instrument uptime and repeat purchases and customer retention. Typically, these would be multiyear service contracts that grow as the installed base grows. And so together, these revenue streams, they can create, we believe, a durable and complementary source of growth for OmniAb.

We expect that this year, 2026, xPloration would deliver between $2 million and $3 million of revenue. And then we expect that, that will double in 2027 and double again in 2028. And when we think about how that could evolve over time on the right-hand side of the chart, we illustrate how the mix between instruments and the recurring revenue could evolve. As the instrument sales grow, they will likely be the biggest contributor over the next few years. But then the installed base growth and the usage by customers of the platform would then drive the consumables, the software and the service revenue. And that could become a larger part of the mix, and that would add recurring revenue that's a little bit more predictable over time.

The implication is that xPloration could develop from an instrument-led business to a platform with meaningful recurring revenues. And in terms of the margin profile, it would depend on any given period on that mix between the instruments and the recurring revenue. And so we expect that to evolve as the installed base and the recurring revenue streams grow. So we're excited. We're excited to make xPloration available to more researchers and to help antibody discovery teams screen more deeply, move more quickly and reach candidates sooner. For those of you here in Emeryville, I invite you to see the xPloration in action during the tour following the Q&A. And with that, I would like to invite Bob to share how we are enhancing discovery with AI.

Yes, I'm definitely excited to talk about how we're enhancing discovery with AI here at OmniAb. Now the explosive rise and expansion of AI tools in our industry has really created tailwinds for us, and they benefit our discovery workflows in multiple different levels, and I want to highlight two areas of positive impact here today. The first one is to our core discovery engine. And at the heart of that is biological intelligence. Building off of what we talked about already about biological intelligence is that we can think about it as a way to generate a large scale of data.

The immune system has evolved over millions of years to, one, react to target and then generate a large space of possible molecules, tens of millions of sequences for each animal and then deliver a pool of antibodies that are binding tightly and specifically. This is a living system. And this living system where if you introduce a new target, a new data set will be generated each time. And another benefit to this living system is that all the sequences that come out have been vetted against a living host. This is a key advantage over purely in silico discovered molecules because on a computer screen, an antibody might look really good. But when it's made and put into a host, it might have issues sticking to a tissue that's not desired, maybe causing immune response or have some issues in actually just producing it. And so our antibodies that come out of biological intelligence have already been pressure tested by nature.

We're going to harness these advantages of this large scale of data, this high-quality set of sequences, and we feed them into OmniDeep, which is our AI tools. These AI tools help us screen and identify these optimized antibodies and find the winning sequences. So in our paradigm, biology generates and then AI selects. And in our mind, this combination is better than each of them by itself. Additionally, each improvement to AI improves our toolkit that we use to mine this repertoire. And so the rise of AI and the increasing pace of the growth of that makes our biological intelligence, our biology more valuable and not less. So let's see this process in action.

At the very top, what we do is we feed in this biological intelligence into our deep screening and deep sequencing capabilities centered around xPloration and the large-scale data collection methods. Now this is data that's not simply scraped from public databases, but this is data from real immune systems reacting to real therapeutic targets and measured in our labs. And they feed into these databases that are built on multiple species, right? This is a unique advantage here. We have OmniAb, we have data from a variety of immune systems that evolved separately, which gives us unique insights that we can then feed into our design tools and other deep learning models. And then that can then continue to loop back and feed the next round of screening and discovery. And so this loop can improve over time.

Another way that AI is really impacting us is that AI is impacting the wet lab and the bench level. And we actually see AI not eliminating the lab, but rather transforming how the lab itself works. And we are expanding xPloration with new capabilities to align with this vision. And what we are building is now we are building a conversational AI layer for xPloration. Our vision is that we want to make conversation and simple natural language the way to control instruments, which allows more users to use it. It decreases the amount of training needed to use our instrument. And the goal is that a scientist can simply give scientific direction via input, an AI layer will then interpret and then direct a workflow and the instrument would automatically screen and recover the cells by itself. We're currently building the software and also the AI layer to enable xPloration to fit into lab in the loop and also build the foundation for future autonomous labs.

This is something that we'll announce in depth at the upcoming Antibody Engineering Therapeutic Conference in December of this year. Now with all of the hype and enthusiasm around AI running various things in the lab, we talk about AI running instruments, maybe experiments or labs. One truth that is often underappreciated is that for AI to do this, you need an instrument that actually works. You need an instrument that works reliably. You need an instrument that works without someone just hovering over and sending [indiscernible] all the time. And we believe that xPloration is the perfect platform to lead this charge because of its robust engineering architecture. Most lab equipment move liquids through tubes or pipes called fluidics and these fluidics inevitably can clog, leak or have bubbles, and this is a big place of failure. And these failures are often hidden both to the instrument and therefore, to AI itself, where our technology is built around no fluidics. So this eliminates this key point of failure.

It's also built around validated components. xPloration has been battle tested in OmniAb as our discovery screening platform for years now, and we know it supports a very low maintenance operation. Additionally, the instrument itself is very fast, as we mentioned, and that allows us to keep our cell components happy and healthy, which again further reduces variability. So we see xPloration as the right technology at the right time as we enter a place in time where the industry is now embracing the value of lab automation and instrumentation for large data generation and AI-aided discovery. So really, this enthusiasm has -- for AI has sharpened people's appreciation for something we've been investing in for years, which is large, high-quality, built-for-purpose data generated on instruments that you can trust. And with that, I want to hand off to our CFO, Kurt, for the financials and wrap up.

Thanks, Bob. I think we are trying to avoid a Marco Rubio incident. And so we had all these waters up here, but our previous presenters seem to just be karate chopping them off the stage, but that's all right. So I'm here to wrap this thing up. We have -- right -- all right. So we're coming up on our fourth anniversary as a public company. And a lot has happened in those 4 years. We've launched four new platforms. We have OmniDeep, OmnidAb, OmniUltra. And today, Yas was telling you about OmniTides. We launched the Partner Access program for xPloration. And then Amechi was talking to you today about how we've expanded that program to go to all customers. And during that time, we've also grown the number of partners that have access to our technology and the number of programs that were generated using our technology. And during that entire time, you can see that we've been finding efficiencies in the business and driving operating costs lower, which you see there on the left-hand side.

So R&D and G&A costs have been coming down over time. But we've also taken some of those efficiencies and put them back into the business and funded certain opportunities that we think will drive growth and drive future value for the company. I think as we look to the future, one thing that I want to make sure that everybody understands is Matt and I and the entire OmniAb team here is really committed to making investments thoughtfully and prudently in the business in things that we think will make sure that drive value in the future. And just like we've done over the last few years, as you can see on this chart.

I also wanted to spend a couple of seconds on kind of the revenue profile of the company because I think this -- the profile in this picture kind of shows you the value of this business model. And so kind of starting at the bottom and building up, we've got service revenue at that baseline of revenue. And that provides a nice base of revenue. And the nice thing about service revenue is our typical service contracts can run anywhere from 3 months to 3 years. And so we actually have more visibility in terms of future revenue on that service line than we do on some of the other line items. Now one of the things that's maybe not so good about the service revenue is it comes with the cost, right? So we have to dedicate resources in terms of the time of our scientists. We have to spend other money in order to provide that service. We make a nice margin on it, but it's not the kind of the same sort of margin that we have on these other lines like milestones and royalties.

We spent a lot of time, we talk about milestones being highly variable, and that's true. In any given quarter, the amount of milestone revenue can be highly variable. However, with over 30 things in the clinic, we are starting to generate what I think is significant milestone revenue every year, and I think you've seen that this year. So while individual milestones, yes, they can be variable, but the portfolio that we have right now is actually kicking off, I think, a nice amount of milestone revenue every year. But the real value, I think, in this business is sort of what you see here on the top around royalties. And what I'm trying to show in this picture is the compounding effect that you get when you aggregate royalties, right? So royalties should grow when you start stacking them on one another, and you can really see significant growth from the royalties. And I think that's the real value of this business. I also think, as Matt talked about earlier, the day of sort of realizing these royalties is getting closer and closer every day sort of based on where the partner programs are.

Just kind of reiterate the guidance. We're kind of reaffirming our 2026 guidance today. Still expect revenue to be in the range of $32 million to $36 million, operating expenses in that -- or cash operating expenses in that $51 million to $55 million range. And we should be really close to breakeven this year from a cash flow standpoint. As for 2027, we'll give that guidance like we always do when we report our Q4 earnings, that should be late February or early March. And then maybe just one last slide on some upcoming events. So we've got our third quarter earnings call. That should be on October 30. We're going to do that as a premarket release. And then we will be at 4 different health care conferences in November. So it's going to be a busy November for Matt and I. And then our research teams will be at various scientific conferences. We're doing four different conferences in the fourth quarter, where we'll be highlighting some of the technology that you saw here today and highlighting the xPloration instrument as well.

That concludes our prepared remarks for today. So I'm going to ask Matt and Amechi to come up on stage, and we're going to move directly into Q&A. The -- for those of you in the room, we have a mic here. So if you want to ask a question, raise your hand and we'll bring over the mic. And if you could sort of hold on to asking your question until you get the mic, that would be great, so everybody could see you. Matt, don't move too far over to the right. They're on stage, so we don't lose you. For those of you on the webcast, there should be a little dialogue box in the upper right-hand corner. If you click on that, you'll be able to ask a question. That question will come directly to me. I'll kind of acknowledge you as the person asking the question, read the question for us here, and that's what I'll handle. But maybe we start with someone in the audience here.

Matt Hewitt from Craig-Hallum. So you noted that the pharma and biotech funding environment has improved. Where do you typically see that first? Well, first off, maybe are you seeing some of that spending improve. But where do you see it first? Is it with existing programs progressing into the next clinical phase? Is it maybe you're seeing the pipeline for xPloration kind of accelerate and maybe you're seeing more sales there? Just walk us through where you would see that.

Yes. I'll comment and then I'll invite Amechi to make a comment as well. Yes, Matt, I think it's a mix. I think the first place we see it is in the dialogue with existing partners, right? So those are deep somewhat, I'll say, technically intimate relationships where we understand what targets they're going after, what they're interested in. And that's probably one of the first place we see it. Our partner -- existing partners spinning up new programs. I think as Todd and Brian would say, you also see it in inbound from new potential partners, right? That's another place where we'll see it as well.

I will just say stepping back, I think the industry as a whole is in a very healthy place now. We're noticing the big pharmas taking bigger swings going after bigger indications, bigger drugs. I think that's a good thing. We're seeing more and more really innovative things around some of the smaller partners as the funding environment improves for them. So I think it's a bit of a mix, right? So you can kind of see it in a variety of ways. And probably one of the first is with those existing partners. I think Amechi you can provide a little bit of color on the xPloration pipeline as well.

Yes. I do believe part of what we saw in the research where roughly 2/3 of customers are thinking they want to invest in a new instrument in the next 3 years is a reflection of the [ thing ] that we're seeing in life sciences tools in general. We've also anecdotally seen interest coming from CROs in xPloration because their demand for projects is also increasing. And so they're talking to us about, hey, would this enable us to be able to meet that increased demand. So I do think it's being reflected even on the capital equipment side.

Matt, maybe we'll take one here. We got a question from Joe Pantginis at H.C. Wainwright. His question is, what do you view as the key competition for xPloration?

So if you recall the chart that I shared, there are some technologies that make up big chunks of the market as they are today. So FACS makes a big chunk of the market, single cell NGS makes up a big chunk of the market. Hybridoma makes up a big chunk of the market. In addition to that, there are some more specialized technologies that are -- when folks think of single B-cell screening, they think of those as being, let's call them, the prototypical technology in our space, whether they are optofluidics or nanowell technologies, et cetera. So the biggest in terms of what portion of customers use them are FACS, single cell NGS and hybridoma.

Jillian Weiss from Rodman & Renshaw. I have a few questions. You mentioned the royalties building those up over time. When might you consider monetizing a portion of the royalties with a third-party royalty investor, if that's a possibility? And what we do need to see in the partner pipeline to make that worthwhile?

Yes. Great question, Jillian. I referred in my presentation to the fact that the royalty space over the last 15-plus years has become a lot more crowded. There are more folks investing in royalties, a lot more folks trying to find exposure to royalties. And one of the things that does is, in my view, it makes assets and royalties like we have even more valuable. We actually get approached frequently by some of those buyers who want to buy a strip of a specific program or would like to buy a royalty. We haven't pursued those deals. We feel like the business is very well capitalized, and we do feel like those royalties are the juice of the future. Those royalties are a lot of -- represent a lot of potential upside. So while those folks do present themselves to us, we haven't pursued those sorts of deals.

It's okay. Can hear me now? I've noticed in most of the presentations that you've given, you mentioned how antibodies have a higher success rate than small molecules like common theme. Have you looked at how your programs stack up against antibodies coming from other discovery platforms? And do you see any difference in how often they advance through trials or reach approval?

Yes, great question. And we -- generally, when we look at our portfolio as a whole, especially as we look at downstream progression, we generally use the industry averages. And when you look at our portfolio, and while we have a growing number of programs over 425 programs, it's continued to grow net of attrition, we're still just a slice. There's still a big market out there for us. There's not a lot of, I'll say, good data on the discovery transitions. From what our partners tell us, they often come to us for some of our technologies for targets that are quite difficult. And what we hear from our partners collectively is that they're very pleased with what they get out of us. That's why we see a lot of repeat partners. We see a number of partners coming to us when we launch new technologies.

So hard to give you an exact answer there, but we think our technologies actually do position us quite well and position our partners really well.

Len Yaffe, StocDoc Partners. I was just wondering if you're comfortable commenting. It seems to me like you're entering this very potentially lucrative sweet spot where you've got -- you mentioned xPloration sales could increase by $8 million to $10 million over the next couple of years with higher-margin consumables, royalties coming on stream as products advance to a greater extent. So if comfortable, could you give us a sense for what your margin structure would look like in, say, 2030 as you cross through breakeven because a lot of this money is going to start dropping to the bottom line. You've done an excellent job controlling expenses. And obviously, the valuation inflection is going to be as you turn towards profitability. What type of margin contribution could we see from the aggregate revenue stream that's coming on over the next 4 years?

Kurt, do you want to take that?

Yes. I mean I think that for each of those revenue streams, it's different, right? So kind of what I tried to describe is royalties and milestones, those just kind of drop to the bottom line with 100% margin. The service revenue, like I said, we earn a margin on that, but it's not the same. As we think about the xPloration business, and Amechi, you can comment on this as well, there's sort of varying margins for that business as well. We make good money. I'll sort of describe we make good money on the instrument. We make even better money on the other aspects of the consumables on that. So you'll see that kind of margin vary depending on like the product mix of sort of what's happening in any given quarter. But all of the programs with xPloration will generate a positive margin.

You said it well.

Yes. And I'll add just another comment that is sort of strung through our presentation today, but there are really complementary natures to the various elements of the business. I think, Len, you summarized it well in terms of the high-margin revenue. And there are really some interesting parallels between the xPloration business in terms of selling an instrument, as Kurt said, a very good margin, but then having very high margins on the downstream elements and licensing technologies, right? You might not think there's a similarity between a transgenic rat or a transgenic chicken and an instrument. But in many ways, there are, and they deepen the relationships we have with partners. And from a financial perspective, create these very durable stacking revenues that I think are going to become much more evident and really powerful in the next couple of years. So we're excited about that.

Josh from H.C. Wainwright. So from all the different applications you showed for OmniTides on Slide 41, I'm curious what you're thinking -- where do you expect to see the most initial interest from partners? I guess I was potentially thinking it will be peptide radio conjugates, but I'm curious what you're actually seeing.

Great. Actually, I'm going to invite Yas to come back up. She can probably comment on some of the early work there and kind of the value proposition that the OmniTides platform provides to the partners. But Yas go ahead.

Yes. Thanks for the question. You're absolutely right. We do think that radio is a real sweet spot for us, pretty much any peptide conjugate. So Brian showed very nicely, there's kind of three areas, the oligo conjugates the kind of more payload kind of cytotoxic ones that one associates with kind of more traditional ADCs or antibody drug conjugates, but the radio conjugates. And I would say that the radio field has really kind of transitioned away from kind of small molecules and large molecules to peptides because they -- like I mentioned, their clearance profile is more kind of adaptable to the radioactive decay half-lives that are now commonly being used.

So they provide this very targeted high affinity, excellent stability. Like I mentioned, you can boil them. They're very amenable to the kind of conditions that you need to complex a radionucleide into there. So we do see that with a lot of our collaborations, but peptide conjugates would also be kind of in that space, another area because of the tumor penetration. And then bispecifics, you could tether these things together as well. So we do think that using them as targeting moieties is really a sweet spot.

So here's a question from Kripa Devarakonda at Truist. She's got a bunch of questions, so I'm just going to pick out a few here. You noted a majority of new partnerships are now driven by the newer chicken-based source technologies. What is the revenue per new deal on those versus legacy the OmniRat, OmniMouse agreement? So kind of is there a difference with the chicken programs?

Yes. And partner to partner program to program, there's a variety there, right? It depends on kind of the depth of the work that we're doing, the specifics of the program. And while we've continued to grow our partner base and our program base, every deal can be a little bit different, not only partner to partner, but even program to program in terms of the screening work that we may do and those sorts of things. So there's not really a tried and true exact number for that. But -- and we're obviously focused on optimizing the back end, right? Our business is really designed and focused around milestones and royalties, and that's where we generally will focus our negotiation.

And kind of her follow-up is around OmniTides. Would that be any different than some of these deals as well or...

OmniTides obviously is powered by our OmniUltra chicken, the OmniTides workflow that Yas and Brian ran through or provided detail on has other elements to it downstream. But in many ways, it's very similar to our other transgenic chicken work.

All right. I got a question here from Puneet Souda at Leerink. This is around AI discovery. I think it's kind of a question. I think it would be helpful for you and the team to outline how you're situated in the growing AI landscape for pharma and biotech, especially how OmniAb is positioned versus the lab in the loop workflow, computational AI model-driven and other workflows being employed by pharma. So kind of asking about how our animal platforms fit within that, how our other workflows would fit in with that.

Yes. Great. I'll provide a little bit of color. I'll invite Bob actually to come back up as well. We're big believers in AI in many ways and have been for many years. We -- AI is a natural place for us to go. We generate huge amounts of data that doesn't exist anywhere else in the literature. It's a natural place to go. I also see AI as a real tailwind for accelerating the earliest stages of discovery in terms of understanding targets. There was a story that came out around the AACR conference, which is a research conference centered around cancer that this year, there were upwards, I think, of 180 new targets that had never been disclosed before focused on cancer. And that's a big spike.

I think that's evidence of a tailwind in terms of early discovery. And we feel like our -- especially our biological intelligence, our novel animal platforms are uniquely positioned to help partners as they navigate brand-new targets, right? If you are looking at new biology, that needs to be directed in some way. And one of our partners drew an analogy for us recently, which was like if you're going after a novel target, all the data that exists in the literature could kind of fit in a back tub and you're swimming in the ocean. So you don't really know where you're going, whereas our animals can create novel libraries that can then help focus that search and discovery. Downstream of that, we do see AI as a really powerful tool in screening. And Bob, maybe you can give a little color on kind of how we think about that.

Yes. I think just to extend on kind of what I was sharing about it, there's two clear places where we can really impact kind of this growing use of AI in the field, right? The first one, as Matt just mentioned, is the source of data, right? So it's very clear that public domain sequences have been really kind of mined through overall, but we have this basically inexhaustible way of to generate new data every time you immunize chicken, even the same target because they're genetically outbred, it's going to be different every time. And we have seen that and we can build those data sets as fit for purpose for partners. That's clearly one as a fuel -- like a way to fuel this kind of continuous interest in -- the second is the instrument itself, right? So the xPloration, I think as we are building it and using it to be in the labs that people are looking for automating B cell workflows, automating discovery through immunizations. This is a key tool position to kind of rise for that as we're building those labs in more autonomous formats, right? Additionally, the third one is actually is we're really building a lot of R&D and being able to test designs and think about how we actually test AI designs with xPloration side of things. So kind of there's a lot of convergence of what we've been working on, what the field is interested in.

Yes. Great. Thanks, Bob. So I think we've got time for one more question before we start our tours here.

I got a lot to choose from here. Okay. Here's one from Steve Willey at Stifel. This question, the entrepreneur enablement program was characterized as a deal structure you can use when working with cash-constrained partners. But have you given any thoughts to expanding the use of the structure or equity investments in general in your partnerships with academic and venture partners? And then a follow-up question. Just thinking about the potential longer-term contribution of OmniTides to future partnering activities, if you're -- can you give some sort of estimate of what that deal flow might look like over the next 3 to 5 years? So first question is kind of entrepreneur enablement and equity in area...

And we sort of pride ourselves on being, I'll say, prolific licensers. Todd and his team have done a great job of growing the number of partners -- that's obviously an integrated activity between business development and R&D as we get the news out about our technologies, as partners talk more about our technologies, that creates visibility. And we really kind of leverage our vantage point to think creatively about how we can form those partnerships. Equity is a piece we've seen.

We actually announced a deal about this time last year with ArrowMark Partners where they were forming companies around certain assets that are linked to certain ones of our technologies where we get equity as well as downstream milestones and royalties. So I think there's a variety of partner types that could fall into that entrepreneur enablement for lack of a better term program where they're forming companies gives us that upside opportunity with equity, but also secures downstream economics as well. I think OmniTides also presents those sorts of opportunities, especially as you have folks going after more and more innovative targets. We see more, I'll call them, innovative modalities, a little bit of a small molecule or a peptide mixed with an antibody, things like that. We're very well positioned to provide binding domains that can fit in a variety of modalities. And I think that gets the creative juices flowing of our partners, not only the big established ones, but also those that are VC funded or just ramping up, and that creates a lot of business opportunity for us as we continue to build our portfolio.

I've got more questions here that have been written in. We'll respond to those, I guess, Matt, later via e-mail. So thank you for those of you who submitted those questions.

Yes. Great. And we'll definitely get back to those, but that's going to conclude our prepared portion and our Q&A now. For those that are here on site, we'll cut off the video and say goodbye to the folks joining on video, and then we'll get organized for our lab tours and demonstration. So thank you all for your attention, and we look forward to engaging with you when we report our earnings on October 30.

Thank you. Good afternoon and welcome to OmniAB Inc's second quarter 2026 financial results and business update conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to Kurt Gustafson, Omniab Inc.'s Chief Financial Officer. You may begin. Thank you.

Thank you, Operator, and good afternoon, everyone. Thank you all for joining our second quarter 2026 financial results conference call. There are slides to accompany today's prepared remarks, and they're available in the investor section of our website at OmniAB.com. Before we begin, I'd like to remind listeners that comments made during this call by OmniABS management will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. The forward-looking statements are qualified by the cautionary statements contained in today's press release. and our SEC filings. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, today, August 6, 2026.

Except as required by law, OMNIAB undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Joining me on the call this afternoon is Matt Foer, OmniABS President and CEO, as well as Amechi Wachuku, our recently appointed Chief Operating Officer. During today's call, Matt is going to cover some business highlights, and I'll review our Q2 financial results and update our full year guidance, and then we'll open the call to questions. And with that, let me turn the call over to Matt. Thanks, Kurt.

Good afternoon, everyone, and thanks for joining our second quarter call. I'll start now on slide number four. We continue to see momentum in the business with the second quarter strong performance led by advancements in our portfolio of partner programs. Our business here at OmniApp has been designed to benefit from long term and durable revenue streams. We're excited to report that the programs derived from our differentiated discovery technologies continue to move into the clinic and to make progress through later stage clinical development. This clinical progression gives visibility into the value that can be realized as our pipeline matures and as an increasing number of partner programs reach milestones and approach potential royalty generation. Our novel technologies reinforce our position as a key enabling technology licensing partner. support both existing and new partnerships.

Novel differentiated technologies and our capabilities keep us at the forefront of next generation discovery, enabling meaningful value creation for our stakeholders and the broader industry. We're pleased to note that both of our most recently launched antibody generation technologies, which are OmniUltra and OmniDab, are opening up new markets and important new opportunities for us. and we're seeing an increase in our chicken-derived technologies producing programs that are now in clinical trials. And for exploration, we saw the sale of two instruments during the quarter as we continue to build a very strong foundation for that element of our business. We think exploration gives us an important opportunity to broaden our reach, diversify our revenue streams, and deliver greater value for our stakeholders and for our customers. Ongoing discussions with our partners, some very recent market research, and our growing funnel of high-quality prospects evaluating the exploration system for use in their labs gives us increasing confidence in the potential market opportunity. We're also really excited to have welcomed here Meichi to our team, who's an established and highly experienced global executive, to help lead and grow the business. And lastly, we're encouraged by the continued progress across our partner programs that drove another very strong quarter for us.

And so we're again raising our full year 2026 financial guidance by increasing both our revenue and our cash outlook, which we view as important indicators of the value that's embedded in our growing portfolio of partner programs that have contracted downstream economics. Kurt will speak to our updated guidance in greater detail during his remarks. I'd also like to take a moment to highlight the continued expansion of our platform as our innovation engine advances novel technologies that we believe further differentiate and strengthen our value proposition. We have a growing ecosystem of partners, and that gives us a pulse on the work that partners are doing and that they plan to do. And it also gives us a unique vantage point on the industry's needs more broadly. We leverage that vantage point as we continue to enhance our technologies, our workflows, and our capabilities. And I want to highlight exploration here on this slide, slide number five.

Exploration extends our business and nicely complements our novel antibody generation technologies. Exploration is our proprietary high throughput single B cell screening platform that leverages machine learning and artificial intelligence. The platform includes a competitively priced instrument and proprietary single use consumables, as well as annual software subscriptions and maintenance contracts. So it therefore has potential to generate multiple revenue revenue streams to our business. We achieved an important milestone within Q2 with the sale of two instruments while strong commercial interest continues to expand our sales pipeline. Early feedback highlights explorations, rapid runtimes, ease of use, and overall robustness. With these user benefits, we strongly believe we have the right technology at the right time as we're entering an era when our partners and the broader industry increasingly recognize the value of lab automation and high value and high impact instrumentation for large scale proprietary data generation and AI and ML aided screening and selection.

We continue to be very excited about what this technology can contribute to the business and look forward to sharing more with you at our upcoming Investor and Analyst Day on October 6th that I'll talk more about in a moment. I'll turn now to some of our metrics starting on slide number six. So at the end of the second quarter, we had 110 active partners. In Q2, new licenses included agreements with Enrosa Therapeutics and Argenix. Argenix is especially notable given that they're a global leader with a strong heritage of innovative R&D and are described as, quote, leading a new era of innovation in immunology. our technologies are well positioned for some of the things that we think they're looking to achieve in novel drug discovery The mix of our partners across discovery stage companies, large pharma, and academic institutions remains really well balanced, and a majority of our partners are headquartered here in the U.S. with the remainder primarily in Europe and in Asia. We're also proud that eight of the 10 largest pharmaceutical companies in the world continue to be active partners of Omniab, which we believe demonstrates the quality and the strength of our partner base and further validates the value of our technology platforms. Now I'll move on to slide number seven, and you'll see here our active programs metric.

We ended the quarter with 425 active programs with an increase that reflects both the addition or new program starts and some normal attrition that occurs as partners refine their pipelines and their priorities. priorities. Importantly, about 98% of our active programs include contracted future economics to OmniApp. Across our portfolio, we have more than $3 billion in total contracted potential milestone payments on standard antibody licenses with an average contracted royalty rate of approximately 3.4%. On the clinical front, slide number eight here shows our partners' active clinical programs and approved products. At the end of Q2, there were 34 active clinical programs and approved products that leverage our technologies. That total reflects both new entrants into the clinic and attrition. We've had four new clinical entrants so far in 2026, and we continue to anticipate new clinical entrants.

We've seen important clinical advancement within these active clinical programs year-to-date, and we're looking forward to further positive advancement activity later this year. And I note that we have approximately $340 million in remaining contracted potential milestone payments to OmniAB for these active clinical stage programs. And also, as mentioned on the slide here, there are now six programs in Phase I or Phase II clinical trials that are derived from our novel genetically engineered chicken antibody discovery technologies, specifically Omnidab and OmniChicken. I think it's worth noting that OmniAb is the only company in the world with a transgenic chicken platform that creates fully human antibody sequences. Traditionally, many therapeutic targets are highly conserved or similar in sequence among mammals, and that adds to the value proposition of our transgenic chickens. But the advantage of a chicken platform is based on the evolutionary distance of a chicken as a biological host for discovery versus other animals, specifically mammals. So this distance allows our chickens to create a robust response and a diverse set or a library, if you will, of antibodies against novel targets that a mammal or other approaches likely wouldn't.

We have a number of different types of genetically engineered chickens that can create unique antibody repertoires and help discover drugs such as traditional heavy and light chain antibodies, common light chain formats, single domain antibodies, ultra long CDRH3 domains, and dual modality antibodies, and now even peptides. These capabilities open market opportunities and are driving partner interest. We're seeing increasing interest in our engineered chicken platforms, and now with further clinical validation, we think that can drive even more interest. Turning now to slide number nine, this graphic summarizes our clinical and commercial stage partner pipeline for active programs that carry downstream economics to OMNIAAP. The placement of any program here is based on its most advanced stage in any geography or in any indication. As you can likely tell, there's been some significant movement in the later stages of development with additional programs now in Phase 1, in Phase 2, and in Phase 3 with some bigger events having happened just in Q2. I'll call out two programs that jumped from Phase 1 directly into Phase 3 during Q2. romantamig, which is J&J's tri-specific antibody for multiple myeloma, and Merck KGA's presentobarc tocentican, which is a CCAM5 ADC for colorectal cancer.

We'll also mention here the Boerger Ingelheim BI878 program, which is shown on the pipeline here in Phase 2. So BI is pursuing a MASH indication, which is an important market and is a major health challenge. The right-hand side of this graphic is continuing to get more crowded with what some of our partners view as important potential first-in-class or best-in-class medicines. Let me turn now to slide number 10 to point out a few things that developed recently that are playing a key role in driving elements of the business. Specifically, we're pleased to highlight continued advancements in the clinical programs of our partners. I'll hop around a little bit on this slide, and I note that the Merck KGA program that Merck announced that based on phase one data, it's now in the phase three trial with percentibarc-tocentican, which is that potential first-in-class investigational anti-CCAM5 antibody drug conjugate for the treatment of metastatic colorectal cancer. They reported some very strong data, and that's also summarized here on this slide.

I'll also highlight the TEV408 anti-IL-15 asset, which was the subject of some substantial news earlier this year with a large investment in the program by Royalty Pharma. TEVA has now announced plans to begin its Phase 2b study in vitiligo in the fourth quarter following encouraging results from its earlier clinical work. Those clinical data showed improvements in skin pigmentation in patients with active or stable vitiligo at week 24 and valuable participants nearly 75% of the patients reported improvement in facial vitiligo with half reporting much or very much improved. And as shown here on the left of this slide, Immutivant announced clinically meaningful response rates at week 16 of IMVT-1402, and it's difficult to treat rheumatoid arthritis trial. Immunovance expected to provide further updates on this program in the second half of this year, and also in the second half, Immunovance expected to provide an update on IMVT-1402 in lupus. Therefore, now turning to slide number 11, we look forward to some exciting updates in the second half of this year with additional expected readouts from TEVA and updates from the IMVT-1402 program at Immunovant. There were also updates provided on the progress earlier this morning stating that the imbt 1402 program remains on track across all six of the announced indications that are being pursued Before turning the call back over to Curt for a discussion of our Q2 financial results and our updated 2026 guidance, let me provide you with a little bit more detail on our upcoming investor and analyst day.

That'll be on October 6th, and we'll be webcasting it and hosting it here at our and headquarters in Emeryville. The team is preparing a productive session with an agenda that includes management presentations and will feature discussion of some of our partner programs and Q&A. And then for those that can attend in person, a demonstration of our exploration technology and lab tours. You'll also be able to meet additional members of our team in person, including Amechi, for those that haven't met him yet, who will share more around our plans for the exploration platform as well. We provided an online link for additional information and participation details for the investor and analyst event in our press release. And in addition to that event, we have some technical presentations in the coming months related to our OmniUltra technology, for which we're excited to see continued strong adoption and also see some important new application possibilities. And on the lower part of this slide, we've highlighted a couple of those upcoming talks on OmniUltra.

And just as background, we launched Ultra late last year, and it's the first and only transgenic chicken that produces antibodies with ultra-long CDRH3s, which is a structural feature of antibodies typically found in cows. CDRH3s are designed to reach binding pockets not accessible with other antibodies or modalities, potentially unveiling new therapeutic opportunities, and they can play a role in things such as building blocks for multispecifics, as binders for CAR-T and for radiopharmatherapies, and as in vivo-generated pediatrics. So Dr. Christelle Ipland, one of our scientific leaders here, will be giving a couple of talks on OmniUltra over in Europe in late October and in early November. And with that, I will turn the call back over to Kurt to discuss our financials. Kurt?.

Thanks, Matt. As Matt mentioned, this was a strong quarter driven by the advancements in our partner portfolio. On slide 14, let me start with revenue for the quarter, which totaled $13.4 million compared with $3.9 million in the second quarter of 2025. was primarily driven by higher milestone revenue, reflecting the progress of our partners' programs in the clinic. We also saw an increase in exploration sales this quarter with the sale of two instruments, and service revenue increased slightly due to some new ion channel agreements signed late last year and earlier this year. On slide 15, we have our year-to-date revenue as of June 30, 2026. revenue grew to $27.8 million compared to $8.1 million from the corresponding 2025 period. Similar to the quarterly figures, the primary driver of revenue growth was the increase in milestone revenue. As a reminder, milestone revenue can vary significantly from quarter to quarter. Last year, milestone revenue was more heavily weighted toward the back half of the year, and this year it is more front-end loaded.

Turning to slide 16, you'll see our operating expense for the quarter. We continue to execute against our plan to run the business efficiently while investing appropriately in our technology platforms. While the numbers look flat year over year, I want to note that last year's figure included a one-time net gain of about $2 million from the sale of an ion channel asset. This had the net impact of lowering operating expense last year, but from a true operating standpoint, you can see from the chart that we saw nice decreases in both R&D and expense based on the realization of operational efficiencies. On slide 17, we illustrate our year-to-date operating expenses. Starting with the other expense line, I already spoke about the gain that we had last year that had the impact of lowering operating expense. And earlier this year, we had a non-cash write-off in the first quarter.

These two items skew the overall operating expense comparison, but once again, from a true operating perspective, if you focus on the R&D and G&A costs, you can see the efficiencies we've been able to drive in the business. Slide 18 shows our P&L for the quarter and year to date. I've already walked you through the revenue and OpEx numbers on the previous slides, so I'll focus on the bottom line numbers. The net loss for the second quarter of 2026 improved to $5.9 million or $0.05 per share, and this compares with the net loss of $15.9 million or $0.15 per share in the year-ago period. We saw a similar reduction in our net loss for the year-to-date period with a net loss of $13.6 million or $0.11 per share versus a net loss of $34.1 million or $0.32 per share in the prior period. One of the metrics that we've introduced this year is a non-GAAP measure called cash costs and operating expense. On slide 19, we have a reconciliation of our gap operating expense to our cash operating expense.

The cash operating expense figure removes the major non-cash items of depreciation, stock-based compensation, and the amortization of intangibles. As you can see from the table, about 35 to 40 percent of our operating expense is non-cash, which is why we believe this cash metric provides a better measure of our true operating expense. In general, we've been driving our cash costs down for the last couple of years. Remember that these comparisons include that one-time gain in the prior year period, which I mentioned earlier. Excluding that gain, the cash costs and operating expenses would have shown an even bigger decrease year over year. Turning to the balance sheet on slide 20, we ended the quarter with a cash position of $52 million. Our cash balance grew in the second quarter based on the receipt of milestone payments.

The accounts receivable balance reflects certain milestones that were achieved in the second quarter but not yet paid. We continue to believe that based on our anticipated cash flows, the company is well capitalized to execute against our strategy. Our updated 2026 financial guidance is on slide 21, which reflects the strong second quarter performance and our view for the remainder of the year. In addition to raising guidance for revenue and our year-end cash balance, we've also narrowed the ranges for all of these metrics. We've increased the range for 2026 total revenue to $32 to $36 million. This increase is primarily the result of increased milestone achievements that we saw in the second quarter. We are slightly tightening the range in our OPEX guidance and now expect 2026 GAAP operating expense to be in the range of $84 to $88 million and our cash operating expense to be in the range of $51 to $55 million.

Regarding cash, with the higher expected revenue, we now anticipate ending 2026 with cash and cash equivalents in the range of $37 to $41 million. Our effective tax rate for the full year is expected to remain at approximately 0% because of the valuation allowance we record. Moving to slide 22, we've shown this slide the last couple of quarters, and I thought I would repeat it again this quarter to provide historical context and highlight the guidance changes we're making this quarter. As you can see, in particular when it comes to cash use, we expect revenue to grow significantly in 2026 versus 2025, while cash operating expense is expected to remain in a tight band, driving overall cash use lower. While we are still in a period where revenue is largely driven by milestones, which can be highly variable in any given quarter, our portfolio of partner programs has continued to grow and advance. This should generally drive milestone revenue higher. And this year, we are beginning to see the benefits of our business model take hold.

Our milestone base continues to expand, and we expect royalties to become a growing part of our revenue streams as partner programs advance towards potential approvals. Combined with our scalable infrastructure, we expect these factors to drive the long-term profitability of the company.

And with that, I'd like to open up the call for questions. Operator. We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question for optimum sound quality, and if muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matt Hewitt with Craig Hallam.

Your line is open. Please go ahead.

Good afternoon, gentlemen. Congratulations on the strong quarter. Maybe to start off, congratulations on the exploration sales. Given that you do have a few in the ecosystem at the moment, what are you seeing from a utilization standpoint? Is that starting to tick up? And as far as the sales pipeline is concerned, how is that shaping up? And will that maybe be lumpy over the near term? But are you starting to see maybe a cadence where you could start to...

to see more consistent sales there. Yes, Matt, thanks. I'll offer some perspectives and then I'll invite Amechi to comment as well. Just generally I'll say we remain very excited about the exploration opportunity. In fact, the more we learn... the greater our conviction grows that this could really be a meaningful compliment to our antibody business. And, you know, right now we're not breaking out kind of the details of the different subcomponents of revenue, but we do see exploration contributing to our revenue growth this year and going forward. great to get two units sold- in the quarter- that we now have four- out there in the field. But- still probably a little early to talk about a consumables and that sort of thing but I will- I mean based on a major experience I'll invite him to- to add commentary as well obviously he's deep in and interacting with our customers as well. Thank you. Thank you. Big question.

Based on what I've seen in the life sciences tools world and the capital equipment world, differentiated licenses instruments like the Exploration Platform. they have a real potential to create diverse and durable revenue streams, including instrument placements, ongoing consumables and reagent usage, software and service, And we're still evaluating the full commercial opportunity for exploration and how best to capture that. And we'll aim to maybe share more of our thinking around that. around the platform, the market opportunity, the strategic role at our upcoming Analyst and Investor Day.

That's great. And then maybe a follow-up question. Obviously, the funding environment for pharma and biotech has gotten much better. And I'm curious whether or not you're seeing that already, or is there typically a lag? If so, when do you anticipate some of those dollars might start to flow to you? Thanks.

Thank you. Yes, Matt, thanks. I will comment. I think we have. seen very nice growth in partners and programs. net of attrition over the last couple of years. I do see the effects of that from the perspective of the types of swings that our bigger partners are taking, right? I think I think we have the benefit of technologies that represent, I'll say, a really substantial and durable competitive advantage. We kind of leverage our ecosystem of partners and the deep relationships we have with them. to get a good understanding of not only what they're doing, but where they're going and that sort of thing. And because our technologies are highly differentiated, we do see, you know, kind of where they want to focus from a, an indication perspective. I'll say just speaking generally, I think the big players are taking bigger swings. They're going after bigger indications. with with a substantial uh unmet need and we are seeing an uptick in I'll say smaller partners as well.

I mean, we highlighted a couple of new relationships relationships that are new licenses that were entered into this quarter. And Rosa Therapeutics, which I'll highlight, is a preclinical stage venture-funded biotech company that's developing selective pathogenic cytotoxic T-cell depleters using bispecific antibodies, right? really highly experienced team, really, really, really interesting science and a very good match with our technology. So I think that's an example of, uh, you know, uh, an emerging preclinical stage player who's, who's now, uh, well-funded and, and, and charging ahead. And then on the bigger side, obviously, we signed up Argenix this quarter, obviously, a global leader research-wise and commercially. really are leading a new era in immunology and so excited to see them become a partner and ramping up activity as well. So hopefully that gives you color on what we're seeing.

Yes, no, that's very helpful. Thank you. Your next question comes from the line of Brendan Smith with TD Cowan. Your line is open. Please go ahead.

Great. Thanks for taking the questions, guys, and congrats on the progress here. Maybe just kind of a quick follow up first on exploration. I just want to double check and make sure that we're thinking about the impact to margins there. Nice to see the revenues coming through. Just wondering how we should think about and what your expectations are on kind of relative impact and margins just as that product ramps up over the coming quarters. And then, excuse me, separately, I wanted to ask, in your existing and potential partner conversations too, has OmniUltra kind of been a big focus? Maybe what's just kind of been the feedback there? And how are you kind of thinking about its relative contribution maybe to new partner deals versus some of the other offerings kind of over the next, you know, maybe 12, 18 months?.

Yes, so maybe, thanks for the questions, Brenna. Maybe I'll take the first one on margins, and then, Matt, you can comment. You know, with regards to margins, I think what we have told you is that we have, what I would characterize as very good margins on the instrument and even better margins on the consumables. And so in terms of the margins, you could see some variability quarter to quarter just given the mix of what comes through. You also have, you know, there's also some service revenue that's kind of a component of that as well. So it's sort of, I can't, I'm not going to say that this quarter is, you know, or the trends that you're seeing are like a trend that you should focus on going forward because it's going to vary a little bit just based on the mix that we see. in each individual quarter. But it's a nice margin and we expect that to continue.

Yes, Brendan, and on your questions around on the ultra, we've been really pleased that Omni Ultra is absolutely opening new markets for us and new opportunities. I'll say it's a driver of substantial inbound interest as well as Omni Gab. And both of those, I think, are well suited to have kind of important impacts on the industry, on the ultra being dual modality, both for antibodies and peptides. So that obviously drives a lot of inbound and we'll be obviously continuing to highlight some of our latest data and applications. OmniDAP also with important potential uses, things like brain shuttling and multi-specifics, both of them have applicability into some of these what I'll call you know really high value areas like ion channels and GPCRs and things like that. So a lot of interest in high value targets for these. So we've been really, really pleased with the dialogue and the signing up of new programs and new partners.

And we've been really, really pleased with the dialogue and the signing up of new programs expect we'll be able to talk more about those as partners start talking about data in the future.

Your next question comes from the line of Michael King with Rodman and Renshaw. Your line is open. Please go ahead.

Thanks for taking the question, guys. Congrats on the progress and the increased guidance. Two questions, financial questions. One is... even though with the raised revenue guidance, you guys are still facing the 20 plus million dollar gap between your spend and the expected revenues. So I just wonder how we should think about how you're going to close that gap. Are you going to continue to try to self-fund? Are you going to have to draw funds from outside? Or do you think you're going to try to raise the value of individual contracts?.

Yes Michael comment and and that Kirk can comment as well you know we feel very good about- where we are and where the businesses is headed- mentioned our late stage assets. Have three hundred and fifty million a mile sounds associated with them- we are seeing a real nice- flow of of new deal interest- as well- and feel really good about how we're situated, how we're placed. I mean, Kurt, you may want to add in some more color subtleties for detail. Yes.

Mike, so I mean we started the year with $54 million in cash, and if you sort of take a look at our end of year cash balance and let's just take the midpoint of that range, we're burning about $15 million this year. So the cash runway just from that standpoint looks pretty long, but it's... if you sort of step back and take a look at where, where we've been in terms of what we're growing or how we're growing from a revenue standpoint, um, you know, the clinical milestones are what's driving most of that revenue growth today. You know, as we look forward, we think royalties are going to kick in. But as I mentioned, that clinical base is continuing to grow and mature. And as that happens, that kicks off even more and more milestones. So we fully expect to be growing the top line and that revenue kind of drops to the bottom line because we've talked about sort of the scalable infrastructure that we have. So we're keeping a tight lid on expenses.

So you're not going to see that scale with the revenue. And so that additional revenue that comes in drops to the bottom of the line. So, you know, I think that's how we close the gap. But as Matt said, we feel really good about where we are right now.

Okay. So if I can maybe summarize, you'd say that internally you've got great visibility of the probability of success of some of these late stage relationships like Immunovant and Teva, et cetera, that you feel that they can do the vast majority of the funding gap, filling the funding gap. Is that a fair statement?.

Well, what I'd say, Mike, too, is you just look at the progression of the clinical stage programs, the visible clinical stage programs, right? That absolutely speaks to the conviction of our partners around the programs. That is exciting to see. We've had a nice flow of new things entering the clinic this year. We expect additional ones to be entering the clinic.

So yes, we feel great about where we're situated. Okay, fair point, I won't belabor that. But related to that, I just, when we think about the model longer term, we just, and the way we look at things, just curious about how you feel the pace of deal flow is going to go? Do you think that this is a model that accelerates with time, stays steady over time with greater value? How should we think about the OmniAB model sort of on a three to five year horizon?.

Yes, Mike, I mean, obviously you look at where we've been right from the perspective of driving, you know, first of all, I'll just comment with the foundation of technologies that are highly differentiated. very innovative, durable, and offer a substantial competitive advantage, right? That's what drives partners, that's what drives programs. And you just look at the last couple of years, really, which were years where the industry as a whole was facing headwinds, but we were growing, net of attrition, both programs and partners at a very nice clip I think that speaks a lot to how differentiated our technologies are and and I think it positions us extremely well the future. We also, you know, have continued to see the partners do their part in progressing in the clinic with new things entering the clinic. We have some really exciting later stage programs that partners are describing as pipeline in a product type programs, right? Where we have downstream milestones and royalties, right? And so as you look at the model, milestones play a key role obviously those are those are going to. Continue to grow over time but then as you start. To layer in royalties which now we're getting greater and greater visibility towards as these things progress. That's that really creates a lot of power in the model.

And keep in mind as well that many of our royalty agreements are tiered, meaning our percent of royalty goes up as revenue gets higher, right? And so that adds a lot of power to the model as well. So, yes. Yes, just some general comments there that ought to be helpful. Yes, it is. Thanks. That's illuminating. Thanks, Matt.

as a reminder if you would like to ask a question please press star 1 to raise your hand our next question comes from the line of stephen willie with stiefel your line is open please go ahead.

Yes, good afternoon. Thanks for taking the questions. I know you're not showing any of the data in this deck specifically, but was just curious if you could provide some color. around how the number of post-discovery preclinical programs has evolved over the last six months and how you see growth in that kind of defined subgroup through the end of Just trying to get a sense of how the clinical stage portfolio could actually grow over the coming months.

Thanks. Yes, Steve, thanks. Yes, we've continued to see, I'll say nice progression, nice graduation of programs and that, both in the, I'll say, discovery to preclinical stage, the preclinical to phase one, phase one to phase two, phase two to phase three. So we continue to see nice growth there. And we're really pleased with what we see. As we mentioned, we've had four new things enter the clinic this year. We expect additional entrance this year as well. And those are ones that would be progressing out of preclinical into phase one. And there could be some range of time that things are in the preclinical phase based on the indication, based on the type of preclinical work that partners are asked to do or need to do based on their interactions with regulatory authorities.

I will note, though, that, you know, earlier this year there were some changes to guidelines around the preclinical work that's necessary for certain types of antibody programs that are entering into the clinic for the first time. So we see that as a potential long-term tailwind, especially for some of our smaller partners, but that's, That gives you a little bit of detail there. All right. Thanks for taking the question.

Thank you. Your next question comes from the line of Puneet Sauda with Lear Inc. Partners. Your line is open. Please go ahead.

Hey guys, you have Michael on for Puneet. Congrats on the beaten raised quarter. I was hoping to get a bit of color on the guide. It seems like you're implying basically just low single digits per quarter in the back half. I'm curious how much of that is conservatism on your part versus any one-off dynamic we should be aware of in the front half? Obviously, the milestones for sure, but what are the expectations in the back half?.

Yes, I mean, Michael, we're not going to go get too granular on the revenue guidance, but, you know, in my kind of prepared remarks, I sort of did indicate, you know, this year the milestones are obviously the big driver of growth for us right now, and those milestones are, or achievements are front end loaded for 2026. And so, you know, there's nothing kind of negative happening about the other lines in terms of exploration and royalties and... In fact, you know, we had sort of have said service revenue we expect actually should be better in 2026 than it was in 2025. but that that probably the extent of what i can i can do to help you out with thinking about the back at the year.

OK, great thanks and then my other question hoping to get a little bit of color on you know, the the your portfolio's exposure to like lab in the loop and applying AI for antibody drug discovery. I know you've highlighted some interest there from exploration. We've seen other tools company be some significant growth there. So I'm curious in what ways is OmniEd leveraged that is that influencing the business now? Yes, Michael, thanks. Look, we, as those that follow us closely and know us well, We are big believers in the benefits of AI as a tailwind for the industry in a lot of different ways. And those that have followed us closely know we launched our OmniDeep brand over three years ago now and OmniDeep is a suite of in silico tools AI and ML and silico tools that are woven throughout our technology stack, right? And so, you know, really starts with high quality input data, right, that really is proprietary data that doesn't exist anywhere, especially when you're going after novel targets, that becomes really important. And our transgenic animals, really are the core element of that.

And we coined the term biological intelligence years ago, but that is a real core of that, especially when you're going after novel targets. Another key element of that is the exploration platform, right, is the ability to generate massive massive amounts of data in a very quick period of time. And I'll call that both hits and misses, right? So that's the benefit of the exploration platform. So, the OmniDeep platform, obviously, we feed that into deep learning models to suggest new hits, and that can serve as training data and drive drive more efficiency. So we really see all of this as a potential tailwind to us and from a lot of different perspectives. I've mentioned in the past that at the most recent AACR meeting, I think it was the it was BioCentury that reported its analysts identified over 175 previously untracked oncology targets, right? So brand new oncology targets being disclosed for the first time now, right? That sort of thing. And you start thinking about how our animals that have been engineered, with human immune systems can help guide that, that I'll say ocean of potential zones where you might want to look for a therapeutic, and then to pair that with exploration and AI and ML tools, I think is a really powerful thing.

So we're excited about where the industry's going from that perspective. We think exploration can play a key role in generating large data sets and really do think you know the pace of drug discovery generally is accelerating and and that's going to be a good thing.

Great. Thank you very much. There are no further questions at this time. I will now turn the call back to Matt Foer, CEO, for closing remarks.

Great. Thank you, operator. I'd like to thank everyone for joining today's call and for your questions and your engagement. I also want to thank our team here at OmniApp for their continued hard work around our innovative platforms and their focus on our customers. Our team takes a lot of pride and that's appreciated. We look forward to discussing our third quarter financial results in a few months. And in the meantime, we will be at some upcoming investor conferences, including the H.C. Wainwright conference in New York City in the middle of September. And we're excited to host our investor and analyst day here on October 1st. and look forward to seeing some of you then.

Thanks again and have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good afternoon, and welcome to OmniAb's First Quarter 2026 Financial Results and Business Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Kurt Gustafson, OmniAb's Chief Financial Officer. You may begin. Thank you.

Thank you, Derek, and good afternoon, everyone. Thank you all for joining our first quarter 2026 financial results conference call. There are slides to accompany today's prepared remarks, and they are available in the Investors section of our website at omniab.com.

Before we begin, I'd like to remind listeners that comments made during this call by OmniAb's management will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, May 7th, 2026. Except as required by law, OmniAb undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call.

Joining me this afternoon is Matt Foehr, OmniAb's President and CEO. Matt is going to cover some of the business highlights. I'll review our Q1 financial results and full year guidance, and then we'll open up the call to questions.

And so, let me turn this over to Matt.

Thanks, Kurt. Good afternoon, everyone, and thanks for joining our first quarter call. I'll start now on Slide #4. OmniAb delivered a very strong start to the year, largely driven by advancement of our partner programs. We continue to see programs derived from our technologies move into the clinic and into later-stage development. And in many cases and in many respects, that's really where our business model translates into clear and more visible value for our stakeholders.

The progression of these programs gives us a growing line of sight into potential for future milestones and new royalties as our partners' programs advance.

Our business is designed to benefit from durable revenue streams and royalties from differentiated pharmaceutical products are extremely valuable in our view.

In addition, our innovations and our technologies are designed to differentiate OmniAb as a licensing partner and more broadly as a business. and are keeping us at the forefront of next-generation discovery tech.

We believe our novel technologies and our workflows are increasingly positioned to attract partners, while also supporting current relationships, having potentially important impacts both on our business and on our industry.

Both our OmniUltra and our OmnidAb technologies are opening new markets and opportunities and the traction we're seeing is encouraging. And we believe that our innovation, which is informed by deep relationships with partners is a key competitive advantage.

During Q1, we also continued to build a strong foundation for xPloration, which we view as a tremendous opportunity to expand our reach and diversify our sources of revenue. The xPloration sales funnel continues to grow with a lot of high-quality prospects evaluating the system for use in their labs.

And with a very strong start to the year, we've revised our full year financial guidance and increased our revenue outlook, which we view as an important early indicator of the value that's embedded in our partner pipeline. Kurt will speak to our updated guidance in greater detail in his remarks.

Turning now to Slide #5. I'd like to take a moment to highlight some of our novel technology launches, which we believe position us for growth. OmniAb is the only company in the world with a transgenic chicken platform that creates fully human antibody sequences.

Part of the advantage of a chicken platform is based on the evolutionary distance of the chicken as a biological host for discovery versus other animals, specifically mammals. This distance allows our chickens to create a robust response and a diverse set of antibodies against novel targets that a mammal likely wouldn't.

Members of our business development team recently attended the AACR meeting down in San Diego. And at the conference, there were reports and one specifically from BioCentury that about 170 new therapeutic targets for cancer were disclosed at the meeting, many of which had not appeared before in cancer-focused R&D programs. And new targets are generally where biology is not fully understood and technology platforms such as ours can really help understand and advance novel drug discovery.

Traditionally, many therapeutic targets are highly conserved among mammals and that also adds to the value proposition of our transgenic chicken platforms.

We have a number of different types of highly engineered chickens that can create unique antibody repertoires and help discover drugs such as traditional heavy and light chain antibodies, common light chain formats, single-domain antibodies, ultra-long CDRH3 domains and dual modality antibodies and even peptides. These technologies are designed to open new market opportunities and drive partner interest.

Our most recently launched OmniUltra shown at the top right-hand corner of this slide is the first and only transgenic chicken that produces antibodies with ultra-long CDRH3s, which is a structural feature of antibodies typically found in cows. These ultra-long CDRH3s are designed to reach binding pockets not accessible with other antibodies or modalities, potentially unveiling new therapeutic opportunities and can also play a role in such things as being building blocks for multispecifics as binders for CAR-T and for radiopharma therapies and as in vivo generated peptides.

We just launched the new OmniUltratech in December, and our scientists will be presenting on OmniUltra next week at the PEGS, Protein Engineering Meeting in Boston as well as at the TIDES peptide meeting that is also taking place in Boston next week.

Prior to OmniUltra, the most recent novel chicken-based technology we launched was our single domain technology known as OmnidAb, which was launched just a couple of years back. As of Q1, there are now 2 OmnidAb-derived partner programs in human clinical trials. Both got to the clinic very quickly, and one is now already in Phase II trials. I'll touch on this a little more in a few slides when I review our clinical pipeline.

xPloration is summarized here on Slide #6. xPloration is our proprietary innovative high-throughput single B-cell screening platform that leverages machine learning and artificial intelligence. The xPloration platform includes a competitively priced instrument and proprietary single-use consumables. As such, it has the potential to generate multiple revenue streams to our business.

We're seeing continued strong interest in exploration and in demand for demos given its rapid run times, its ease of use and overall robustness. With these user benefits, we believe we have the right technology at the right time as we're entering an era when our partners and the broader industry increasingly recognize the value of lab automation and high-value and high-impact instrumentation for large-scale data generation and AI and ML-enabled screening and selection. We're in the early days of xPloration, but we're very excited about what this technology can contribute to the business.

I'll now turn to some of our metrics starting on Slide #7. At the end of Q1, we had 107 active partners, consistent with year-end 2025. In the first quarter, new licenses included an agreement with Florida State University as we continue to see growing opportunities in academia with agreements that have been prewired with financial terms that allow us to share in the economics of assets generated from our technology.

This quarter, our partner adds were offset by attrition, which is an expected part of the business. The mix of partners across discovery stage companies, large pharma and academic institutions remains very well balanced. A majority of our partners are headquartered here in the United States with the remainder primarily in Europe and in Asia.

We're also proud that 8 of the 10 largest pharmaceutical companies in the world are active partners of OmniAb. This demonstrates the quality and the strength of our partner base and further validates our technology platforms. And I think it's kind of important to note that these are companies that spend billions of dollars on clinical work and research and development.

So they're deploying substantial amounts of capital to discover impactful medicines that serve global markets, and they leverage OmniAb's technologies as part of their discovery efforts. Management here and our team take pride in that, and so we feel it's important to note.

Now I'll move on to Slide #8, and you'll see here our active programs metric. We ended the quarter with 409 active programs with a net increase that reflects both the addition of new programs and new program starts and the normal attrition that occurs as partners refine their pipelines and portfolio priorities. Importantly, about 98% of our active programs include contracted future economics to OmniAb.

Across our portfolio, we have more than $3 billion in total contracted milestones on standard antibody licenses with an average contracted royalty rate of approximately 3.4%.

On the clinical front, Slide 9 shows our partners' active clinical programs and approved products. At the end of Q1, there were 32 active clinical programs and approved products that leverage our technologies. That total reflects both new entrants into the clinic and attrition. And I want to note that the numbers we consistently report to investors are all net of attrition.

As I mentioned briefly, during the quarter, a second OmnidAb-derived program progressed into Phase I human testing, reinforcing the momentum we're seeing from our newer technologies, and we continue to anticipate multiple new clinical entrants in 2026.

We've seen important clinical advancement within these active clinical programs year-to-date and look forward to further positive advancement activity this year. And I note that we have approximately $350 million in remaining potential contracted milestones to OmniAb for these clinical stage programs.

Turning now to Slide #10. This graphic summarizes our clinical and commercial stage partner pipeline for active programs that carry downstream economics to OmniAb.

The placement of each program here is based on its most advanced stage in any geography or indication. And as you can likely tell, there has been some significant movement in the later stages of development with additional programs now in Phase I, in Phase II and in Phase III.

Now I know many investors follow and reference this graphic frequently, and I do want to point out a few things that developed in Q1 that are playing a key role in driving elements of the business.

First, in the lower left-hand corner of this slide, in the Phase I section, you'll see we have our second OmnidAb-derived program enter human trials. For competitive reasons, this partner wants to ensure that both the therapeutic target and their work in the clinic remain confidential. And we obviously respect that request by our partner.

As we move to the right on this graphic, I want to highlight that we also had a program progress from Phase I to Phase II in Q1. This is also an OmnidAb-derived program and another instance, where the partner continues to want to keep the program and specifically the source of the antibody confidential.

Both programs are what I will characterize as early adopters of the OmnidAb single domain technology, which is really great to see. And both of these are pursuing what we see as areas of substantial unmet medical need.

Moving further to the right, I also want to mention that Ramantamig, which was formerly referred to as JNJ-5322, jumped from Phase I to Phase III on this chart. That was a program that J&J Innovative Medicines highlighted earlier with some impressive clinical data, and it's a trispecific antibody being developed for multiple myeloma.

The right-hand side of this graphic is getting more crowded with what we view as important potential first-in-class or best-in-class medicines. And I should also highlight the TEV-408 anti-IL-15 asset, which was subject to some substantial news in Q1 with a very large investment in the program by Royalty Pharma that was announced by Teva in the quarter.

Teva featured this program prominently on their most recent earnings call last week, highlighting that it has potential in multiple indications and describing it as being on a "accelerated path".

Slide 11 shows a summary of some of the upcoming clinical and regulatory events with 2026 clearly shaping up to be a really active year of news and catalysts for our clinical stage partner programs.

Teva is expecting a few data readouts, including the TEV-408 program for vitiligo in the first half of the year. The drug is being evaluated in a 24-week proof-of-concept study with a week 24 body surface area score as the primary endpoint, which Teva has described as the registrational endpoint in this disease.

The second half of the year features additional expected readouts from Teva as well as from Merck KGaA and from the IMVT-1402 program at Immunovant, which is also a very exciting program with multiple indications.

And as a final slide for me here on Slide #12, we highlight a few of the partner programs that will be featured at the ASCO conference beginning later this month in Chicago. These programs cover a range of cancer types being treated with antibody drug conjugates and bispecific antibodies that are derived from our technologies.

We look forward to seeing these data, which will provide additional visibility into individual assets and continue to highlight our broadly validated technology platform.

And with that, let me turn the call over to Kurt for a discussion of our Q1 financial results and our updated 2026 guidance. Kurt?

Thanks, Matt. As Matt mentioned, this was a strong quarter, driven by the advancements in our partner portfolio. So let me start with Slide 14 with total revenue. Total revenue totaled $14.4 million compared with $4.2 million in the first quarter of 2025. The increase was primarily driven by higher milestone revenue, reflecting the progress of our partners' programs in the clinic.

We also saw a modest increase in service revenue due to some new Ion channel agreements signed late last year as well as early this year. Revenues from royalties and xPloration were about the same year-over-year.

Turning to Slide 15, you'll see our operating expenses for the quarter. We continue to execute against our plan to run the business efficiently while investing appropriately in our technology platforms.

Our operating expense in the first quarter decreased slightly to $22.3 million from $23 million. Most of this decrease is due to lower personnel expenses and outside service costs related to contract research services and legal costs.

Q1 2026 also included a noncash write-off of $2.9 million related to certain legacy small molecule ion channel intangible assets. Without this, our operating expense would have shown an even larger decrease year-over-year.

On Slide 16, you'll see the change in the new financial metric that we introduced last year, cash cost and operating expense. We define this as our GAAP cost and operating expense less stock-based compensation, depreciation and amortization of intangibles. Essentially, it takes the GAAP number and removes all the major noncash items in our P&L. We believe this metric provides a better measure of our spend.

As you can see from this slide, while both the GAAP and non-GAAP figures decline was an even larger decline in our cash operating expense. We focus on driving efficiencies in the business that have brought costs down. But in Q1 2026 due to the noncash write-off, those reductions aren't as apparent when looking at the GAAP figures alone.

Moving on to Slide 17 shows our P&L for the quarter. I'd like to draw your attention to our operating expense line items, where reductions in R&D and G&A demonstrate the impact of cost savings and other efficiency initiatives.

R&D decreased $3 million to $9.6 million in the first quarter of 2026, and G&A also decreased $1.3 million to $6.6 million in the first quarter of 2026. The onetime noncash charge that I mentioned earlier was reported in the goodwill and intangibles amortization line.

Net loss for the first quarter of 2026 was $7.7 million or $0.06 per share. This compares with a net loss of $18.2 million or $0.17 per share in the year ago period. Excluding the onetime noncash charge, our EPS in Q1 2026 would have been a loss of $0.04 per share.

Now turning to the balance sheet on Slide 18. We ended the quarter with a cash position of $49.1 million. You'll also see a slight increase to our accounts receivable, reflecting the milestones that were achieved in the quarter that won't be paid until after the end of the quarter. We continue to believe that the company is well capitalized to execute against our strategy.

Our updated 2026 financial guidance is on Slide 19, which reflects the strong first quarter performance and our view for the remainder of the year. We are raising our full year 2026 revenue outlook and revising expectations for our operating expenses and year-end cash. We now project total revenue for 2026 to be in the range of $28 million to $33 million.

During the first quarter, one of our partners achieved a milestone that was not part of our original guidance, which is the primary driver of the increase in our revenue guidance.

We now expect 2026 GAAP operating expenses to be in the range of $83 million to $88 million. The revised range is driven primarily by the noncash impairment charge recorded in the first quarter.

Importantly, our cash operating expense guidance remains unchanged at $50 million to $55 million as the noncash write-off doesn't impact this figure.

Regarding cash, with the higher expected revenue and no change to the cash operating expense guidance, we now anticipate ending 2026 with cash and cash equivalents in the range of $33 million to $38 million.

The effective tax rate for the full year remains at approximately 0% because of the valuation allowance we record.

I thought I would put our guidance in a historical context here on Slide 20. You can see our 3-year financial metrics are improving, in particular, when it comes to cash usage. We expect revenue to grow significantly in 2026 versus 2025, while cash operating expense is expected to remain in a tight band, driving overall cash use lower.

While we're still in a period, where revenue is largely driven by milestones, which can be highly variable in any given quarter, our portfolio of partner programs has continued to grow and advance. This should generally drive milestone revenue higher.

As we look beyond the next couple of years, we would expect royalty revenue to kick in and start to accelerate that revenue growth and eventually become the larger contributor to our total revenue. The stacking of royalties combined with a scalable infrastructure is the essence of our business model and points to a promising future for the company and our shareholders.

And with that, I'd like to open up the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Joe Pantginis with H.C. Wainwright.

Two, please. So first, as you mentioned, you have some ASCO data coming up for some of your partners. Are there milestones associated with these data releases? And are they in your current guidance, number one?

And then number two, more for your overall tech platforms. While you're constantly developing new ones, if you will, can you discuss any -- I mean, you don't have to describe any secret sauce here, but for your current platforms, any sort of improvements and refinements that you do to the existing that add to your marketability of those platforms?

Yes. Great. Thanks, Joe. Yes, great questions. In regard to the ASCO data events, maybe I'll answer that by maybe describing generally how our agreements are designed, right?

So partners come to us to get access to our technologies, and we'll generally enter into a license agreement that provides them access to the technologies in exchange for service costs, some license fees and then where the real focus is, are the downstream milestones and royalties.

And while we generally start in about the same place in any negotiation with our 107 partners, every agreement is different in one way or another. But generally, the milestone payments are linked to clinical events, regulatory events, approvals, things like that. So largely, it's Phase I starts, Phase II, Phase III. There are some subtleties around it.

We generally don't have milestones that are specifically associated with, I'll say, data disclosures, but there can be milestones associated with data generation. So hopefully, that gives you a little more color there.

But as far as ASCO, we're actually quite excited about some of the work that our partners will be presenting. I think that's an opportunity for assets to become more in focus for those that are watching the expansion and the growth of our portfolio.

In terms of the technology platforms, obviously, I talked through some of our platforms today in the prepared remarks, specifically around our chicken-based technologies. And I think it's important to note, even beyond our [ night branding ] of each of those technologies, our brand team is obviously proud of that.

But even beneath those, there are different kind of highly technical subflavors, if you will, of each of those animals that we pair with partners' programs. And I think that's one of the reasons why we've continued to be successful in growing the portfolio, why partners kind of understand the quality of the technologies that we produce.

And for us, those continued innovations and the things we add on really are informed by these deep relationships with our partners. So really leveraging this ecosystem of partnerships and these deep relationships around discovery, that informs our continued innovation. And we expect we'll continue to innovate around our platforms, another area I will highlight is workflows as well.

We continue to innovate around more efficient workflows, leveraging big data management, AI and ML and our data work, those kinds of things, partners have known that about us for years. But all of those things kind of together, I think you'll continue to see those sorts of innovations out of us in the future.

Your next question comes from the line of Srikripa Devarakonda with Truist Securities.

I had a couple of questions. One is around Teva, the TEV-408 with Phase Ib vitiligo data expected in the first half, and you were just talking about it, Matt, milestone -- when we think about milestones, would that be -- would we have to wait until Teva formally elects to move the program into Phase II or Phase III or at the end of Phase Ib, knowing that they're moving ahead, is there a milestone there?

And then second one is Immunovant recently announced batoclimab failed Phase III trials in TED. This was, at least for a section of investors, one of your most advanced and visible programs. Can you talk a little bit about how this impacts your long-term royalty projections in the context of having Immunovant IMVT-1402 as well?

Yes. Great. Maybe I'll start with your second question, Kripa, on Immunovant. And for a long time, they have remained highly focused on rapidly advancing the clinical development of IMVT-1402. And they've really been signaling that the last almost couple of years.

Obviously, IMVT-1402, it's an investigational FcRn blocker. They're looking at it across multiple autoimmune diseases with -- that significant unmet medical need. So Graves disease is one of their key strategic priorities. And -- but they're going after multiple diseases as well with IMVT-1402.

So in addition to Graves, they're looking at difficult-to-treat rheumatoid arthritis and lupus, where they think they can be potentially first-in-class and best-in-class. And then also looking at myasthenia gravis and CIDP and Sjogren's disease, where they've generally described it as a potential best-in-class drug.

So we have really seen and they have signaled that pivot towards IMVT-1402 for quite a while. So the Batoclimab update that occurred really had no impact on our planning or our guidance, et cetera. So we're obviously cheering them on and with all the great work that they're doing on IMVT-1402.

Switching gears a little bit on your question around TEV-408 at Teva. While I can't disclose kind of the final details of any individual contract, I kind of go back to my general comments around how our agreements are generally structured that I mentioned earlier, but that is an asset that I think is becoming much more in focus now.

It's an asset that they're highlighting quite a bit. They've described it as having quite a unique binding site. They call it the antibody with the highest affinity for IL-15, and they're going after multiple indications. So right now, they have vitiligo and celiac. Vitiligo is a disease with really tremendous unmet medical need with a lot of psychosocial burden, social stigma, et cetera, and they'll have top line results from that here in the first half of the year. They also have a trial running in celiac.

And then more recently, they've also referenced other indications for this as well, alopecia areata, atopic dermatitis, eosinophilic esophagitis and potentially others as well. So we're obviously cheering them on. It's great to see not only their efficiency of acceleration of clinical work, but they've also, in some of their recent presentations, talked about potential market size and seeing a potential for peak sales of $1 billion in just in vitiligo and $1.5 billion to $2 billion in celiac. So we're cheering them on as well. And they've been a great partner, long-term partner of ours. So that's good to see.

[Operator Instructions] Your next question comes from the line of Brendan Smith with TD Cowen.

This is Jackie on for Brendan. Maybe a broader question to start for us. We've been seeing a lot of pharma and academic users increasing their own adoption of AI within their workflows. So how should we think about how that ramp in adoption should impact demand for your specific products and services? Do you expect the increase in partner model training could potentially accelerate demand for your platform, which is very data generating?

Yes. Thanks, Jackie. Yes, good question. Simply put, we see AI as a tailwind for the industry as a real positive for a lot of different reasons. One, and there's been a lot of reports of AI playing a role in accelerating the potential early identification of new targets.

And I think we kind of see some early evidence of that with some of the things that came out of the AACR meeting this year that I was referencing in the prepared remarks with over 170 previously untracked oncology targets now being visible.

Our partners have known about us for a long time, and you can look at our history of announcements, et cetera, that we've leveraged AI for quite a while. We've been deep in that space. It's a natural place for us to go when you have novel biological systems that are generating billions upon billions of sequences it was always a natural place for us to go.

That's something -- a few years ago, we rolled out our OmniDeep platform, which is essentially a way for us to kind of brand the in silico tools that are woven throughout our technology platform.

I've told this story a couple of times, and I was kind of reminded of it because I saw this partner recently, but there was a partner, who was talking to me, who was describing the success they were having with our platform and talking about how much there is still to learn about novel biology.

And that's especially true when you're going after a disease target that might not be fully understood. And she was comparing the data about target biology that exists in all of the public databases and even within individual companies only as sort of a bathtub of data, if you will, whereas when you're going after a novel target, you need to explore the ocean.

And she was sort of connecting our animals as being a way to navigate that ocean, right, that you can generate these bespoke repertoires and then downstream from that, you can really leverage AI and machine learning to help you focus and hone and do downstream work. So we're excited about the impact of AI across the industry, and I think we're really well positioned.

So more of Dolphin and less of a [ rubber ducky ], I guess, in that analogy. But maybe just -- it might be too early to tell, but just as a follow-up, are you seeing any shift in new partner interest towards like more data and tech-focused partners away from more of the biology pure plays? It might be too early to tell that, but are you seeing any of that kind of mix shift over to tech?

Well, I do -- the comment I'll make and it sort of relates to our xPloration platform is that I do think there is -- and it's part of the reason we feel like xPloration is well timed. There is a thirst for more data, right, and big data analysis. And I think that was one of the things that I think partners saw in us and can see our technology platform developing and producing. So hopefully, that gives you some color.

Your next question comes from the line of Stephen Willey with Stifel.

This is Josh on for Steve. So I know that you said you have this new license out of the Florida State and just kind of thinking about -- I know you had said you share economics generated from partnerships like this, but I wanted to kind of dig a little deeper into kind of the differences in the economics associated with maybe a more academic deal versus more industry-focused deal and what kind of differences there are there and maybe if there's any kind of priority for one or the other moving forward?

Yes. Good question. The way we describe and really design the architecture of our agreements with the academics is in a simple sense, they're -- we'll call it a revenue share, right? But they're designed that way specifically to enable academics who are focused on asset monetization or company formation, right?

And we've seen -- we've already seen examples of that. That's something I think, with some dynamics that exist in the greater academic landscape, we'll see more universities who are motivated to spin companies out, out of some of their basic biology technology and that sort of thing.

So the way they're structured, there's a sharing of revenue that will flow back to OmniAb. And that can come in a variety of forms, whether it's license fees -- sublicense fees to a new entity that's formed, whether it's in the form of equity of the new formed entity that would also flow back to OmniAb. And so those kinds of scenarios and, of course, milestones and royalties as well.

So those agreements are specifically structured to enable that. That's something that we think is quite unique in terms of how we do licensing with the academic space, and it's something that I think does attract partners.

And some of the research that these places are doing is quite exquisite. I'm very impressed with some of the things that have been produced by some of our academic partners who from the very beginning are planning to potentially form companies. Now that obviously takes time, but it's a good thing to see. So hopefully, that gives you a little more color.

Yes, definitely. And then just a follow-up. I know there was a previous question on kind of some of the milestones attributed to maybe some of the catalysts for the second half of this year. And just trying to think about some of your milestone and license revenue assumptions for the remainder of the year. Is it fair to say with some of these clinical event catalysts coming up that maybe some of your milestone and royalty revenues will be more second half weighted in terms of your guidance that you provided?

Well, I think we provided full year guidance for revenue. Q1 was a pretty strong quarter for us. Most of the revenue that sort of is slated for 2026 is kind of milestone-based. That can be lumpy. So we had a really nice Q1, but we're also looking forward, we sort of have forecasted a number of nice clinical events to happen throughout the rest of the year. So we're off to a good start, but we see more to come.

Your next question comes from the line of Puneet Souda with Leerink.

You have Micheal Sonntag for Puneet. Congrats on the quarter. My first question regards to OmniUltra. I was wondering if you could offer any insights on traction you're seeing with expanding into like new customer types and modalities that you've highlighted peptides is one area that this model unlocks. Any color you can offer there?

Yes. Great. Thanks, Micheal. Yes, obviously, OmniUltra is our newest technology. We just launched it in December, as I mentioned, our team is actually going to be highlighting it at the PEGS conference as well as the TIDES conference in Boston next week, and it opens up a whole host of new opportunities for us. still early days. I'll say the reception is good. We obviously have multiple programs running with OmniUltra partner programs already. We disclosed that previously.

And I think for the antibody space, the players that know OmniAb very, very well in the antibody space, it's a very natural expansion, and we're obviously working on a number of work plans and expect some other starts coming here soon around OmniUltra.

And those are folks who are interested in, I'll say, kind of the Pico body element as well as the ultra-long CDRH3 element that the OmniUltra platform produces.

On the peptide side, it really is kind of a completely new way of discovering peptides, right? So you're looking for inherently or you're screening right out of the gate, essentially inherently biologically active and peptides that are also evolved for stability, you get high diversity in those repertoires.

But it is a bit of a new sell, right? These are new customers for us, which is great. I see a real nice opportunity there. But there are over 130 companies that previously were not in our call file that are now in our call file that our BD team is -- has been reaching out to and dialoguing with.

So still early days, but we're excited about it, and we are really looking forward to highlighting the OmniUltra technology at these conferences next week as well.

And then I wanted to also ask on the new program starts this quarter. It came in maybe a little bit softer than we were expecting. And we did have a larger tool company, particularly leveraging the preclinical space, highlight some headwinds in the early-stage [ biotech ] affecting their results. I'm curious if you could offer any color on if you're seeing any of that or if this is just your standard fluctuations in the starts.

Yes. I'd characterize it as standard fluctuations, right? We see lumpiness in program additions. We saw a big bolus of programs come in very late in Q4. And sometimes there will be impacts on when we receive annual or biannual reports from our partners. So it can have -- that can also be part of that as well.

But no, we actually -- we see the industry really -- a couple of years ago, there was a lot more, I'll say, macro headwinds in the industry. We're really seeing the industry get back to work, and we're excited about that. So I just would describe it as kind of the standard lumpiness that we see.

Your next question comes from the line of Michael King with Rodman & Renshaw.

This is [ Tanay ] on for Mike. Congratulations on the updates. Just a quick one on your active programs. You had 9 additions and 7 terminations and that base the guidance for this year. Just wanted to ask, is the value of the newer contracts higher than the older ones? Or if you could provide some more color on that?

Yes. So as we look across our whole portfolio of programs, right, we've got over $3 billion in contracted milestones and average royalty rate of 3.4%. As you look at what our average royalty rate was a couple of years ago, that it's actually improved over time. When you have that big of a denominator, right, it can take time to continue to evolve that.

But as we continue to have a further validated platform and invest in it, that's allowed us to command, I'll say, strong economics. The way program additions and starts work, right, they're going to be linked to an individual partner and a contract. So they're not always linked to a contract that would say, just signed in the last quarter or so, right?

Some of the programs that are going to be spinning up are ones that are from an agreement that may have been signed a couple of years ago, right? So there's a variety there.

But again, I kind of direct back to our total portfolio from that perspective. But we are excited about the novel targets that our partners are going after. We're noticing bigger companies taking bigger swings, if you will, from a target and an indication perspective. And I think that's good to see, that's healthy to see, and that's something that we're excited about as well.

There are no further questions at this time. I will now turn the call back to Matt Foehr for closing remarks.

Great. Thank you, operator. We look forward to discussing our second quarter financial results in a few months. And in the meantime, we'll be participating in some investor conferences over the coming weeks, including Benchmark's Healthcare House Call Virtual Investor Conference that will be later this month. And then we'll also be at the Jefferies Global Healthcare Conference in New York City in June. So we hope to see some of you there. So thanks again for joining our call, and have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, and welcome to OmniAb, Inc.'s First -- Fourth Quarter 2025 Financial Results and Business Update Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.

I would now like to turn the call over to Kurt Gustafson, OmniAb Inc.'s Chief Financial Officer. You may begin. Thank you.

Thank you, operator, and good afternoon to everyone. Thanks for joining our fourth quarter and full year 2025 financial results conference call. There are slides to accompany today's prepared remarks, and they're available in the Investors section of our website at omniab.com.

Before we begin, I'd like to remind listeners that comments made during this call by OmniAb's management will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings.

Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast today, March 4, 2026. Except as required by law, OmniAb undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Joining me this afternoon is Matt Foehr, OmniAb's President and CEO. Matt is going to cover some business highlights, and I'll cover some financial information, and then we'll be opening the call up for questions.

And with that, let me turn the call over to Matt.

Thanks, Kurt. Good afternoon, everyone, and thanks for joining our call. I'll start now on Slide #4. Our business built some nice momentum in 2025 that we sustained throughout the year. specifically related to broadening both our roster of partners and the number of active programs enabled by our technologies. By year-end, we're happy to report that we had 107 partners who are running 407 active programs.

And as our partner pipeline advances, there are certain later-stage programs that are now coming into focus with the potential to drive meaningful milestone revenue and create value over time. headed towards the generation of significant future recurring royalty revenue streams. On the innovation front, we introduced OmniUltra at the Antibody Engineering Conference down in San Diego in mid-December. OmniUltra is the industry's first and only transgenic chicken platform to express ultra-long CDRH3 on a human antibody framework. We see OmniUltra as an important new growth driver that can help us gain additional partners, generate new program starts, create incremental near-term revenue opportunities and extend our reach into peptide focused discovery applications.

Additionally, we're building a strong foundation for our exploration platform, which brings our high-throughput single B-cell screening capabilities directly into our partners' labs. We think exploration is very well positioned for significant growth with an expanding pipeline of high-quality prospects and increasing engagement as more partners are actively evaluating the platform for use in their labs and we expect exploration to be additive to the business and to contribute to our growth.

And I note with the growth in our base of partners and our partner program portfolio, it's becoming easier to highlight that our differentiated platforms and business are highly scalable, allowing us to add new programs while maintaining operating efficiency, positioning OmniAb on a sustainable path to future growth. And as Kurt will describe in his section in a bit, we're on a trajectory to positive cash flow.

Moving to our key business metrics, starting on Slide #5. As I mentioned, at year-end, we had 107 active partners, reflecting a continued growth and diversification of our business from that perspective. During Q4, we executed new license agreements with the Dana Farber Cancer Institute, Mabtrx Biosciences, which is a newly formed between, Arrowmark Partners and Viking Global Investors and with 2 global big pharma companies.

The partner mix across discovery stage commercials and academics continues to evolve and has remained relatively constant percentage-wise. A majority of our partners are headquartered here in the U.S. and the remainder are primarily in Europe and in Asia. We continue to broaden and diversify our partner base, which I think demonstrates consistent strong execution by our business development and scientific teams. 2025 was an especially strong year for us in terms of partner additions. I also note that we're proud of the strength of our partners as well, which I think says a lot about the quality of our technologies. Eight of the 10 largest pharma companies in the world are active partners of OmniAb.

Now on to Slide #6, you'll see our active programs metrics. We exited 2025 with 407 active programs, representing a net increase of 44 programs during the year. We saw 84 program additions in 2025 with a significant share of additions originating from our newer technology offerings. Our number of program additions in 2025 was substantially higher than recent years and more than 20% higher than 2024.

Now a trend is obviously a natural and expected part of [ drug every ] in development. And I note that we had 40 program terminations during the year, consistent with the normal ebb and flow we expect as partners adjust portfolios and budgets and adjust technical priorities. And lastly, and I think it's important to note here that over 98% of our active programs have contracted future economics to OmniAb. We have over $3 billion in total contracted milestone payments for active antibody programs and an average royalty rate of 3.4% and across our portfolio.

Slide 7 provides another look at our active programs and shows the strong advancement activity we saw across our partner pipeline throughout 2025. The figure here on this slide includes our entire partner program pipeline. And as you can see on the left side of this pyramid graphic, during the year, we added the 84 new programs I just referenced, demonstrating the continued strength of our technology platforms. And again, this was a very strong year from that perspective and substantially higher than recent years.

In terms of active program progression, we have 25 advancement or progression events in 2025 -- [ 16 ] programs advanced from discovery into preclinical development, which reflects our partner's progress and the identification of promising therapeutic candidates to take forward towards human trials. We also saw some healthy advancement further in the development process. 4 programs moved from preclinical into Phase I clinical trials and a couple of programs advanced into each of the clinical phases thereafter. And notably, 1 program reached the registration stage during 2025.

This slide shows each advancement event and I note that a couple of programs advance through more than 1 level or stage during the year. On attrition, which is depicted on the right side of this pyramid graphic, we had the 40 program terminations across various stages and 4 program regression events during the year.

Now program regression is far less common but does happen from time to time in a portfolio of active programs that has grown to the level that ours has in recent years. We see the level of attrition shown here is consistent with the normal dynamics of drug development. What's particularly encouraging and exciting are the 25 total program advancement events we saw as programs move from 1 development stage to the next. This progression demonstrates that OmniAb enabled therapeutics are continuing to perform well for our partners in development and in the clinic and are moving closer to potential commercialization, which supports our milestone and royalty revenue opportunity over time and increases the value of the individual programs to our stakeholders.

Slide 8 shows the growth in the postdiscovery stage programs over recent years. This, again, I think, demonstrates the value that our technologies bring to our partners and I know both the overall growth and the progression into the preclinical stage over recent years.

Slide 9 shows the number of active clinical programs and approved products which totaled 32 at the end of Q4. These numbers are net of attrition and reflect new clinical entrants as well as attrition and a regression event during the year. The fourth quarter saw a very important milestone with the first OmnidAb-derived program advancing into human clinical testing. This program entered human clinical trials less than 2 years from when we introduced the OmnidAb single domain discovery platform. So having it generate a program that reached the clinic that quickly underscores both the technology's traction with our partners and its potential to drive future value for our stakeholders.

We anticipate the potential for multiple new entries into clinical development for novel OmniAb-derived programs this year, including additional OmnidAb programs. We look forward to the continued progression of these active clinical programs, which have over $350 million in remaining contracted milestone payments to us.

Turning now to Slide 10. Here, we're highlighting and only listing our active clinical and commercial stage partner pipeline programs that are active and that carry remaining downstream economics to OmniAb. The placement of each program in this graphic is based on its most advanced stage in any geography or indication. We found this figure can be a helpful visual for investors who follow some of our more visible partner programs.

Turning now to Slide 11. I want to highlight a few recent updates for our partner programs that are leveraging our technologies. Immunovant continues to make what we see as strong progress and report clinical momentum in anti-FcRn space across a range of important indications with major unmet medical needs. Their next-generation candidate IMVT-1402 has a potentially registrational trial in difficult to treat rheumatoid arthritis that's fully enrolled with top line data expected in the second half of this year. Top line data from our proof-of-concept trial in lupus are also expected in the second half of this year. IMVT-1402 development is progressing across a range of indications with potentially registrational trials in Graves' disease, myasthenia gravis, CIDP and [ Sosei's ] disease, all remaining on track and with top line data for Graves' disease and myasthenia gravis expected in 2027.

Immunovant also anticipate sharing top line data from its 2 Phase III studies evaluating [ datamab ] as a potential treatment for active moderate to severe thyroid eye disease in the first half of this year. In addition, [ Hana ] reported ongoing preparation for an NDA submission in Japan for batoclimab as a treatment for myasthenia gravis.

Moving across to the center of the slide here. At the time of the JPMorgan conference in January, [ Teva ] announced a funding agreement with Royalty Pharma of up to $500 million to accelerate the clinical development of their anti-IL15 antibody, TEV-'408, specifically for vitiligo.

Top line results from the Phase Ib trial in that indication are expected in the first half of this year and top line results of a Phase IIa trial evaluating 408 for celiac disease are expected in the second half of this year. With recent developments and disclosures, this is an asset in a program that is rightfully gaining more attention.

Lastly, Merck KGaA indicated that based on Phase I data, it plans to advance M9140 directly to Phase III trials in metastatic colorectal cancer. This compound is a novel [ anti-C5 ] antibody drug [ Condit ] with a topoisomerase 1 inhibitor payload. It's been disclosed that the Phase III study is anticipated to start in the first half of this year which represents a pretty significant acceleration of the program's development.

On Slide #12, we show some of the upcoming events that I just mentioned. 2026 is positioned to be a fantastic year for potential value-creating events. This calendar of near-term events is the strongest in recent memory. And in addition to the data and regulatory events highlighted here, we also expect new Phase I, Phase II and Phase III trial initiations this year. We'll talk more about this as we go through the year, but early views are that 2027 is also shaping up to be a year that will have some important events, including for some of the programs that I mentioned on the prior slide.

Turning to Slide 13. I'd like to take a moment to highlight our 2 most recent technology launches, which we believe position us for substantial growth while reflecting our commitment to innovation, which we think differentiates OmniAb in the eyes of our partners.

OmniUltra is the first and only transgenic chicken produced antibodies with ultra-long CDRH3 which is a structural feature of antibodies typically found in cows. These ultra-long CDRH3 are designed to reach binding pockets not accessible with other antibodies or modalities, potentially unveiling new therapeutic opportunities. What's particularly exciting about OmniUltra is the potential ability of these ultra-long CDRH3 to create novel picobodies. At roughly 1/3 the size of a nanobody, picobodies are the smallest functional antibody fragment and have a range of potential uses, including as building blocks for multispecifics as binders for CAR-T and as a radiopharmaceutical therapies as well as in vivo generated peptides.

On the Ultra, not only expands our antibody discovery capabilities, but it also creates a meaningful entry point into the peptide therapeutics space. As I think almost everyone knows by now, peptide therapeutics have experienced substantial growth and industry attention and investment, driven in large part by the success of the GLP-1s over the last couple of years.

Moving to the right panel on this slide. Last May, we launched our exploration partner access program. Exploration is our proprietary innovative high-throughput single B-cell screening platform that leverages machine learning and artificial intelligence. The exploration platform includes a competitively priced instrument and proprietary single-use consumables as well as annual software subscriptions and maintenance contracts. As such, it has the potential for multiple revenue streams.

Deployed instruments are performing extremely well for partners, and we're seeing strong continued demand for both on-site and virtual demos. Together, OmniUltra and exploration represent important new engines that broaden our technology offering, expand our addressable markets. and strengthen our competitive position in the discovery platform space.

And with that, let me now turn the call over to Kurt for a discussion of our financial results. Kurt?

Thank you, Matt. On Slide 15, I'll start with a review of revenue. Total revenue for the fourth quarter of 2025 was $8.4 million compared with $10.8 million in the same period in 2024. The decrease was primarily driven by a decline in license revenue, which was partially offset by an increase in milestone revenue. Royalty revenue increased, but this was due to an adjustment in the prior year period to reconcile royalties to actual product sales. And we also saw a small contribution from exploration in the fourth quarter.

Slide 16 shows our cost and operating expenses for the fourth quarter of 2025. As Matt mentioned, even with our growing program portfolio, we have a scale platform that has allowed us to be very disciplined with our cost structure. As you can see from the chart, our operating expenses in the fourth quarter decreased to $24.1 million from $26.7 million. Most of this decrease was due to lower personnel costs, but we also saw lower outside service costs, primarily related to reduced spend for our legacy small molecule ion channel programs. Q4 2025 also included a noncash impairment charge of $3.9 million, primarily related to certain small molecule ion channel property and equipment. Q4 2024 had a similar-sized write-off associated with intangibles.

Turning to Slide 17. I'll focus on the bottom part of the P&L here and make just a few comments. If you focus on the tax line, as we previously guided for taxes, we recorded a full valuation allowance against the income tax benefit associated with our net loss, which is why our effective tax rate is close to 0%. Our net loss for the fourth quarter was $14.2 million or $0.11 per share compared with a net loss of $13.1 million or $0.12 per share in the prior year period.

On Slide 18, for the full year 2025, revenue was $18.7 million versus $26.4 million in 2024. The difference related to both a decline in license revenue and milestone revenue. Service revenue decreased as a result of the completion of certain small molecule ion channel programs. and these declines were partially offset by approximately $800,000 of exploration revenue as a result of the launch of our exploration partner access program.

On Slide 19, we have our operating expense for the full year. Operating expense in 2025 decreased to $87.6 million from $100.9 million last year. R&D expense for the year was $47.8 million down from $55.1 million in 2024 due to lower personnel costs and stock-based comp and external expenses. As I mentioned in Q4 of 2025, there was also a noncash impairment charge of $3.9 million related to legacy small molecule ion channel assets. G&A was $29.2 million in 2025 compared with $30.7 million in 2024, primarily due to lower legal fees and stock-based compensation.

Moving to Slide 20, which shows our P&L for the full year 2025 versus 2024, once again, focused on the bottom line here. The net loss was $64.8 million or $0.57 per share compared with a net loss of $62 million or $0.61 per share in 2024. Excluding the noncash impairment charge we took in the fourth quarter, earnings per share in 2025 would have been $0.54.

Slide 21 shows the company's P&L for the year, broken out by quarter. As we've mentioned previously, and you can see in this table, our revenue is lumpy as much of the revenue comes in from the achievement of milestones and one other thing I wanted to point out here is that you'll see a general trend of declining R&D and G&A expense, obviously, excluding the impairment charge we took in the fourth quarter. In 2025, we implemented workforce reductions of 22 employees, which resulted in savings in 2025 and going forward.

On Slide 22, we've got the balance sheet as of December 31, 2025, and 2024. We ended the year with $54 million in cash, cash equivalents and short-term investments. You also see here the normal reductions to goodwill and intangible assets. These intangible assets relate to prior corporate and technology acquisitions, which are amortized over time. property, plant and equipment is also lower due to normal depreciation as well as the noncash impairment charge we took in the fourth quarter.

On Slide 23, we've got our financial guidance for 2026. The revenue guidance is based on information that our partners have disclosed to us as well as information they have disclosed publicly about their programs. And based on this information, we expect revenue in 2026 to be in the range of $25 million to $30 million. We expect operating expense to be in the range of $80 million to $85 million as we continue to realize efficiencies in the business.

Cash operating expense is expected to be in the range of $50 million to $55 million. We define cash operating expense as GAAP operating expense less stock-based compensation, depreciation and the amortization of intangibles. We expect the combination of these noncash items to be about $30 million in 2026. In addition, the company expects to end the year with a cash balance in the range of $30 million to $35 million. And just as in 2025, the 2026 full year effective tax rate is expected to be approximately 0% due to the valuation allowance.

Turning to Slide 24. In addition to providing 2026 guidance, we wanted to provide some thoughts on our longer-term financial outlook. The financial side of our business model is one that is highly scalable. As we look out into the future, our revenue is affected to transition from more milestone driven to more royalty driven. That being said, we've got over $3 billion of contracted milestones in our existing antibody programs and $350 million of that is for programs that are already in the clinic. The average royalty across our antibody portfolio is approximately 3.4%.

These types of revenue streams don't have corresponding cost of goods or selling costs. We've also been realizing efficiencies in our operating costs in recent years. We have a focused business development team dedicated to bringing in new partners while most of our R&D costs relate to maintaining our animal colonies with a small amount directed towards new technology development. This creates a highly leverageable business. As you can see from these charts, we have and will continue to control operating costs to capture that leverage that is built into our business model. Our maturing portfolio programs are expected to drive revenue higher. Combined with tight control of our operating expenses, we are driving our cash use lower, and this puts us on a trajectory to being cash flow positive.

And with that, I'd like to open up the call for questions. Operator?

[Operator Instructions]. Your first question comes from the line of Puneet Souda from Leerink.

First one on the partner programs. Given the sort of the backdrop of the markets, fundraising activity that happened in the second half last year and it still is ongoing, one on the clinical assets. Just wondering if you're seeing any effect from that? And how should we think about the new program's growth this year despite the strong 2025 that you had. So maybe I know it's always hard to sort of outline that. But just wondering, how are you thinking about the new program growth this year and any feedback from the business element side?

Yes. Yes. Thanks, Puneet. This is Matt. So yes, we observed really nice momentum in program additions and also a really strong year in terms of partner ads as well. We noticed a shift beginning last year as I think the industry started to get some more winded in sales. We saw partners, both existing and new partners initiating new programs. Many of those are attracted to us because of our newer technologies. Some of the technologies we had launched that being OmnidAb -- the year the prior or the prospect of OmniUltra coming, which we launched in mid-December. So we feel like we're very well positioned for this year with coming on the tail end of new technology launches and are obviously really pleased to see partners actively progressing, looking at accelerating development and that sort of thing. So we feel very good about that element as we look forward.

Got it. And then on exploration, Nice to see some revenue there. I don't know if you can quantify it, but maybe, for the full -- I would love to know if you have a number in mind for the full year? What sort of growth you can see on that platform. It's a nice addition of revenue on top of the poor animal models and programs that program growth that you're seeing? And then also wondering if you can provide anything on the pull-through side of the exploration.

Yes, Puneet, I'll give a little color there. Obviously, we launched exploration midyear last year with our partner access program, highlighted at the PEGS conference and sold an instrument right after that, obviously, deployed instruments now are performing extremely well for partners, portion obviously has the potential to contribute revenue in a variety of ways, not only from instrument sales, but also from the single-use consumables, which are at a nice -- very nice high margin as well as subscriptions and maintenance contracts.

The flow of interest is very strong. It's with our, what I'll call our highest tier of partners, these are ones who are obviously doing a lot of discovery work and I think are attracted to exploration because of its -- it's a throughput and ease of use, the ability to do multiple runs in a day and the ability to generate huge amounts of data, which I think is very well timed for some of the interests of the industry. So yes, we do expect it will be contributing this year. We're excited about that. We've not broken down the various parts of revenue guidance, but we do see significant growth for exploration and contribution this year.

Your next question comes from the line of Mike King from Rodman & Renshaw.

First is Nice to see you guys are cattle -- light and keeping the expenses under control. But as a valuation metric, it would seem to me to be more important for you guys to be adding programs and advancing things in the pipeline. So I'm just wondering how sacrosanct the cash flow neutrality or positivity is relative to additional investments that you might want to make to generate additional partnerships?

Yes. Yes, Mike, good question. I mean we are obviously building this business to be differentiated from the perspective of technologies that we know the industry needs, right? But to do that in a really efficient way that benefits our shareholders and our stakeholders. We -- really, I'll say, envious and unique position in the industry, right, with 107 partners. Over 407 programs that partners are progressing through various stages of development gives us a really valuable perspective on the industry, right? We can see -- we understand the targets that are of most interest to the biggest and most valuable pharma companies in the world, right? And that informs kind of how we invest in our technologies. It informs kind of the work that we do and how we work with the partners.

And I think you're seeing the benefit of that in many of our metrics, right? So for us to add incremental partnerships we can do that quite efficiently in the model that we have. We talk a lot about the innovations that we choose to invest in. And we do it really with that knowledge of not only where the industry is right now from the perspective of discovery and innovation. But knowing where it's heading as well, right? And that's what informed our investments over past years and things like our Omni dab single domain technology.

And then more recently, with the December launch of OmniUltra, which is -- it sounds [ Buck Rogers ], but it's a chicken that makes [ call-like ] antibodies with fully human sequences. That was something that was -- we knew there'd be demand there based on our dialogue with partners. So for us, I think we can do that very efficiently. We think that benefits all of our stakeholders, and that's where we're going to continue to focus.

Okay. And then just real quick follow-up. Jumping to share count in the third and fourth quarter. What can we attribute that to?

Yes. Thanks, Mike. We did raise some capital, and so that raising capital increased the share count during that period of time.

Your next question is from the line of Matt Hewitt from Craig-Hallum Capital Group.

Maybe to dig in a little bit more on the exploration opportunity. It sounds like you're seeing strong demand. What was the number of systems that were placed or deployed exiting this past year? And given the pipeline, where could that go in '26?

Yes, yes. Thanks, Matt. Yes. So a quick answer to the first part of the question is 2, instruments deployed as of the end of 2025. And as we look to this year, as I said, we expect growth out of exploration. We're excited about the flow of interest from our highest tier partners. These are obviously larger capital purchases for many companies. So there can be longer sales cycles, which we fully expected when we launched the technology. So they go through budget and capital approvals, et cetera. But the reception is quite positive. It's keeping our team very busy, which is great and the interest in demos and the performance in those demos has really been fantastic. So Hopefully, that gives you the color you need.

Yes. No, that's great. And then you talked about Kurt, I think you were talking about this a little bit during your prepared remarks as far as your trajectory towards a cash flow breakeven, given the pipeline and Matt, you spoke to this as well, given the pipeline of opportunity, things progressing through the channel, or through the clinic, I should say, this year and into next year, when do you think that you could hit breakeven? Is that something that you see potentially exiting '27, maybe a little bit longer? Just trying to get a sense for time frame is when you could get to that level?

Yes. Thanks, Matt. Great question. Our future revenue is largely based on clinical and regulatory advancements by our partners for our partner programs. And while we're not giving a precise date for when we achieve breakeven, the growing and maturing portfolio of our partner programs gives us confidence that we are on the right path and that our trajectory can take us there. So we see it coming, but we can't give you an exact date right now, but we do see it coming.

Your next question comes from the line of Joe Pantginis from H.C. Wainwright.

So on the flip side for exploration, obviously, we see the opportunities there. So just curious, how would you describe -- I mean, it sounded like you placed 2 machines in '25. But looking forward, your manufacturing needs and investment on your end and impact on op expenses as the program gets larger?

Yes, Joe, good question. This is an instrument that we use here for our own research. So we have a team of folks that understand the instrument is using it all of the time. And so there's not a large incremental investment in terms of staff that we need to make to go do this. This is a program that we've made available to our partners. For the most part, instruments would be built kind of to suit, if you will, or build for these folks when they order one. And so there's not even a large sort of investment in inventory, if you will, to go do that. So we're keeping this really lean right now as we want to make sure that this is something that is accretive to the business as we possibly can make it going forward.

Your next question comes from the line of Brendan Smith from TD Cowen.

This is [ Jack Levin ] on for Brendan. I'd like to kick it off with Ultra. How is the initial response from partners been? And have you seen the beginning of that ramp in demand that you kind of called out last quarter?

Jack, thanks. The Ultra launch is going fantastically well. I've been really pleased with the reception. Obviously, it's still very early days. We just launched it in mid-December. But we did really a massive amount of validation work around Ultra before we launched it, the presentations that were given at the AET conference in December highlighted a broad array of therapeutic targets that we had assessed at the time of launch. We also had 3 partner programs already progressing at that time. That number has increased and we expect it will continue to increase. So we're seeing really strong engagement. The technology is performing extremely well. And so we feel real good about how it will impact the business going forward.

That's awesome. Are you seeing any like specific traction amongst other modalities that you would call out of interest?

Yes. I mean I think there's been a general trend in the industry, and I'll say, smaller is better, looking for smaller binding units, if you will, that can be strung together in multispecifics. There's obviously been a big growing opportunity in the radio pharma space. That's something that the industry has observed. And then, of course, we've opened up totally new opportunities and a completely new call file in the peptide space, right? So peptides are an area of growing and increasing interest -- there's significant growth in that space and really opened up our call file, if you will, to well over 130 companies that are new potential targets for us. So for all those reasons, I think we're excited about it. Again, early days, but we're building some nice momentum and we're excited about it.

Totally. I'm going to be that guy. I'm -- one more question in. But for your fiscal year '26 rent guide, it's kind of hinting out a return to 2024 levels. Would it be safe to say you're seeing early signs of recovery in the market? And what kind of visibility do you have into your partner spend expectations that could inform that outlook?

Yes. I think most of -- a big chunk of our revenue is milestone-based. And so as we -- we talked about it on a quarterly basis, the revenue number is lumpy. It actually is for years as well. So it sort of is just really a function of what kind of clinical or regulatory events are going to be happening. And as we sort of project forward into 2026 based on what partners have said, we project out what those milestones might be. And so I'm not sure it's really sort of kind of whether the industry or the overall market is what's driving that as much as us taking a look at the very specific events that are happening with the programs that we've got. Any events that are sort of coming up for 2026. That's really more the driver of it.

Your next question comes from the line of Srikripa Devarakonda from Tourist.

This is Anna on for Kripa. One question on exploration. Could you kind of qualitatively describe how the interest in exploration is shaping up in terms of interest from any new partners or kind of strengthening that existing partner relationship?

Yes. Great question. The answer is bold -- I mentioned that of our existing partners, the ones that obviously have the quick engagers in evaluating exploration with strong interest have been that highest tier of partners, right? These are the ones that are doing a lot of antibody discovery work, have a thirst for more data, are attracted to the high throughput and ease of use of the instrument, it is also attracting others as well who are not current partners of our repertoire generation discovery technology. So that's one of the things I referenced when I generally say I think there are benefits and advantages that exploration creates for the business is not only deepening those relationships with existing partners and building structures that allow us to create value earlier in a product life cycle or a program's life cycle or the relationship, but also attracting others as well who we can also bring in as a more broader partner in the process. So I think that is another benefit of exploration.

Great. And on OmniUltra, are there any milestones we should expect from OmniUltra in 2026?

Yes. I obviously will expect to continue to be adding partners and programs with OmniUltra. That's going to be our initial focus as we launch the technology. As those programs obviously go through development and graduate to later stages of development. We expect that will happen in due time, but the initial is going to be driving new partnerships and new programs and leveraging the technology in that way.

Your last question comes from the line of Stephen Willey from Stifel.

Just actually had a question about a footnote on Slide 24, where I think for programs with tier of royalties, you're making some kind of sales assumption and using a blended royalty calculation. Is -- have you said or can you speak to what proportion of the programs that are active have either a tiered or fixed royalty structure?

That's a good question, Steve. I don't think we've given that number out before. It's more than a handful, but I'm not -- I wouldn't say it's a majority. I don't know, Matt...

Yes, more than handful that have here -- majority of our deals are flat royalties. There are some instances in which they are tiered, but the majority are a straight royalty.

Got it. And then just also curious where you think that average, I guess, it's 3.4% royalty rate. Could trend to over time and whether you're trying to command a higher royalty rate on some of the newer technology offerings like OmnidAb and OmniUltra.

Yes. I think for Discovery Technologies, Steve, there's always a dynamic there of how far you can push, right, on royalties. Obviously, the level of innovation allows us to drive better economics more generally, but those economics can be an interplay between upfront payments, service payments, milestones that are paid along the way in royalty. So it really depends in many instances on the negotiating dynamic the soft points or the points of the -- of interest of the partner. But I will say that more innovative technologies do drive more value for our shareholders. And that's one of the reasons why we've launched new technologies like OmniUltra, like OmnidAb, but that kind of gives you a little color on the dynamic.

Understood, thanks for taking my questions.

There are no further questions at this time. I would now like to turn the call back to Matt Foehr for closing comments. Sir, please go ahead.

Great. Thanks. I'd like to thank everyone for joining today's call and for your questions and engagement. We look forward discussing our first quarter financial results in a few months. In the meantime, we'll be participating at the Leerink Global Healthcare Conference which is next week in Miami. So we hope to see some of you there. We also expect to be on the road likely in the spring with NDRs and the like.

So thanks again, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

Good afternoon, and welcome to OmniAb's OmniUltra Launch Virtual Investor Event. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Kurt Gustafson, OmniAb Inc.'s Chief Financial Officer. You may begin.

Thank you, operator, and good afternoon, everyone. This is Kurt Gustafson, OmniAb's Chief Financial Officer, and thank you all for joining us here to hear a little bit more about the launch of our latest technology, OmniUltra. There are slides to accompany today's prepared remarks and are available in the Investors section of our website at omniab.com.

Before we begin, I'd like to remind listeners that comments made during this call by OmniAb's management will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings.

Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, today, December 15, 2025. Except as required by law, OmniAb undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call.

Joining me on the call this afternoon is Matt Foehr, OmniAb's President and CEO. And also with me is Dr. Yasmina Abdiche, who is our Senior Vice President of Exploratory Research, who just finished up her presentation here at the A&T conference; as well as Todd Pettingill, who heads up Business Development and Strategy.

During today's call, Matt will provide an overview of our new OmniUltra technology and at the conclusion of the prepared remarks, we'll open the call to questions.

As I mentioned, we're here at the Antibody and Engineering Technology Conference in San Diego, where Dr. Abdiche just finished up a talk titled OmniUltra, a New In Vivo Platform for Discovery of Novel Mini-Proteins and Structured Peptides.

Tomorrow, we have another podium presentation titled OmniUltra Leveraging Evolutionary Distance for the Discovery of Ultralong CDRH3 Antibodies with Broad Epitope Coverage. This technology is also being showcased in 2 poster presentations that you see listed on this slide. And the slides for these presentations and the posters can be found on our website in the Scientific Publications section under the Technology tab.

And with that, let me turn the call over to Matt.

Thanks, Kurt. Good afternoon, everyone, and thanks for joining our OmniUltra launch call. Yas's presentation this afternoon here in San Diego was the first technical and scientific introduction of our newest technology that we've branded as OmniUltra. We believe OmniUltra is a really important advancement and the next evolution of discovery tools as it's the first and only transgenic chicken producing ultralong CDRH3s, which is a structural feature of antibodies typically seen only in cows.

Our new OmniUltra chicken has been engineered by our scientists to create antibodies with this special feature found in cows, but with human sequences to make them suitable as human therapeutics. The relevance of the chicken host species is to leverage the evolutionary distance to enable robust immune responses to human targets, even highly conserved ones.

So essentially, OmniUltra combines features of cow, human and avian immune systems to really reinvent the way we can discover certain types of therapeutics and extends us at OmniAb beyond antibodies crossing over into the peptide space.

Ultralong CDRH3s are designed to enable getting at unique, deep or recessed binding pockets and previously inaccessible epitopes potentially unveiling therapeutic opportunities that we think are beyond the reach of other modalities.

One of the things that our team is really excited about is the potential, which we've now demonstrated with multiple targets of these ultralong CDRH3s to be isolated as autonomous binding fragments known as picobodies. These can open up entirely new applications for partners when accessing this newest technology of ours. So OmniUltra is creating a new way to discover a variety of therapeutics.

We see new opportunities with OmniUltra as highlighted here on Slide #8, not only as a new antibody discovery platform, but one that's also leverageable for peptide therapeutic discovery, which is also an area of substantial and growing interest by the industry. This launch further highlights our team's innovation leadership, and we think can create more value for our partners and for all of our stakeholders.

Importantly, OmniUltra can be leveraged within the infrastructure of our increasingly efficient operations at OmniAb. The science behind this is really remarkable as it's something that's never been achieved before. As Yas mentioned in her presentation just a bit ago, this isn't just an incremental improvement for novel drug discovery, it's really a leap forward in methodology that we think opens up some totally new possibilities for the industry.

And I'm now on Slide #9, and I'm going to get into a little bit of the science here. I think it's important just as a baseline to note that alternative antibody formats are found in nature, and these arose independently during species evolution for a variety of reasons. Now for cows that are shown on the right-hand side of this slide, about 10% to 20% of the time, they make antibodies with these ultralong CDRH3s. And we and others in the industry think these structures have the potential to be really important.

Slide #10 references a peer-review publication from about 5 years ago that got attention in the industry and that showed that a tau-derived antibody could target epitopes that were not reachable by other methods.

The ultralong structures allowed the penetration of barriers like glycan shields and enabled binding to recess epitopes that are seen here in the crystal structures of cow antibodies targeting the HIV gp120 protein. This unconventional binding mode using only the tip of this protruding feature in some ways, inspired the design of OmniUltra, which brings the power of ultra-long CDRH3s into a human compatible scaffold designed for therapeutic discovery.

Now on Slide #11, those that follow OmniAb know that we often reference the concept of what we coined years ago as biological intelligence. It's essentially a core belief that molecules that are generated in vivo are superior to ones from other sources because they're naturally optimized through an iterative process that preferentially selects for molecules with excellent specificity, matured affinity and favorable developability profiles. This can increase efficiencies in discovery and probabilities of success, which we think is an important part of why partners continue to come to us to access our technologies.

We have an internal innovation engine around this that has continued to strengthen our differentiation in the industry, especially in relation to our growing suite of genetically engineered chicken-based discovery platforms.

Moving to Slide 12. Now chickens are relevant because of their extreme evolutionary distance from us and other mammals. This evolutionary distance can be leveraged because chickens can inherently see more, if you will, from an immune system perspective. This allows you to generate immune responses in a chicken that you could not in other ways and in turn, create repertoires of potential therapeutics to targets of interest.

About half of all of the therapeutic targets are more than 90% conserved in mammals. So using a chicken as an immunization host species for discovery, it can be really important and valuable in many instances. So our scientists considered how we can leverage our engineering capabilities and the evolutionary distance of chickens to create something that would meet a significant industry need. And that's in part what led us to the creation of OmniUltra.

Slide 13 shows some of the data we're presenting here for the first time at the AET conference, showing the strong immune responses of OmniUltra chickens to a variety of therapeutically relevant targets that are of interest to the industry. And I call out here BDNF, which is a target that's what's referred to as 100% conserved in mammals. So one would have significant problems eliciting immune responses in other sources. I also note here that we've already done 3 partner programs with early adopter partners. Those targets are confidential at this point, but our programs -- but we and our partners are very excited about these programs.

And well beyond the strong immune responses, as you can see here on Slide #14, with data for NKp46, EGFR and B7-H3, we've demonstrated that you can get to novel epitopes with OmniUltra-derived compounds.

And then next here on Slide #15, and this is perhaps one of the most exciting parts from a technology perspective, and that is that -- and really is one of the key points of today. Essentially, it's a new paradigm for discovering therapeutic peptides. We've shown that molecules discovered out of our OmniUltra animals can then be chemically synthesized as stand-alone peptides and still retain binding activity to their target. This has been done simply using standard custom synthesis techniques following discovery.

This flexibility opens up entirely new therapeutic possibilities and can drive significant efficiencies for license partners and shows that this is a potentially more efficient way to access libraries of peptides and to get to cost-effective manufacturing downstream.

We think this is a pretty big deal from a technology perspective as we're leveraging that biological intelligence of our engineered animals and getting the benefit of the evolutionary distance of the chicken and then using that in a really efficient way to find peptides with antibody-like affinity and specificity profiles that can be efficiently manufactured.

Slide 16 is showing various peptide discovery approaches that have been used in the industry over time. Traditional peptide discovery takes 2 main paths that are conceptually distinct. The first and their more aged path is a commentorial chemistry approach that is combined with display technologies, which is sort of a brute force approach that screens massive libraries of sometimes random peptides with literal prior knowledge of what a hit might actually look like.

The second path is rational design, which starts with a defined peptide or structural insight and refines it using models, structural data and computational tools. Each method has strengths and limitations. One explores things broadly while the other optimizes more deeply, and they can be combined or mixed and matched to some degree.

Now by contrast, OmniUltra starts by using in vivo optimization to generate antibodies with cow-like ultralong CDRH3s in a stabilized human scaffold in a chicken host species. This approach allows for the discovery of peptides containing the entire antibody binding paratope in a small unit while also reducing immunogenicity risks.

And again, by using a chicken of the divergent host species, we can leverage evolutionary distance to ensure robust immune responses and expanded epitope coverage to human therapeutic targets. We think this fills a critical gap by sourcing peptides from nature's own optimization engine, the immune system, rather than relying solely on brute force screening and design. This approach ensures high functional diversity and leverages peptides that are inherently bioactive and evolved for stability. Combined with a validated knob scaffold, OmniUltra offers a really powerful alternative to traditional methods.

Now I'm going to switch gears just to spend a few moments on the new opportunities that we think OmniUltra creates for the business. Now on Slide 18. Peptides are an important and growing drug class, fulfilling a unique role in the pharmaceutical industry, partly because they combine properties of small molecules and antibodies, making them versatile modalities across a broad range of therapeutic areas such as diabetes and weight loss, heart disease and cancer.

While peptides offer many attractive attributes such as high on-target specificity, structural versatility, low immunogenicity risk and rapid tissue penetration and clearance, they've been limited historically by their intrinsically unfavorable biophysical properties and some manufacturing challenges, which we think OmniUltra helps to alleviate in some respects.

There's been an increase in focus on peptide therapeutics by the industry, as shown here on the left side of Slide #19. You can see the substantial growth in the number of new peptides that have entered clinical trials and an acceleration of that in recent years. And the right-hand side shows third-party projections of estimated global peptide sales, which are also expected to grow significantly.

Slide 20 highlights the broadened applicability of OmniUltra and the potential total markets. What's shown here are the estimated sales of end drugs by relevant modality. And as you can see, where our relevant OmniAb discoveries each apply. Needless to say, these are very big markets. So the motivation of partners to get access to latest discovery technologies is high.

And lastly, here on Slide 21, from a business perspective, we think OmniUltra opens up new opportunities in licensing and can create more opportunity to drive chicken-based collaboration and service revenue at OmniAb. Importantly, OmniUltra is also opening up our call file to a large number of new companies, over 130 that have peptides in active development. And we hope can drive dealmaking and increase the diversity of deal structures.

And with that, and we have Yas and Todd here as well, I'd like to open up the call for questions about our newest technology, OmniUltra. Operator, I'll turn it back to you.

[Operator Instructions] Your first question is from Stephen Willey from Stifel.

This is Tuuli on for Steve. Congrats on the launch. We just have one from -- on our end. So you mentioned that there is already a strong industry engagement with 3 partners already using this platform. Can you please provide additional color on what indication they're using, whether these -- I understand that targets are confidential, but like whether there are any like preferential modalities that they're using for these indications, et cetera?

Yes. Tuuli, thanks for the question. And yes, you're right to highlight in the slides and in one of the presentations that we're doing here at AET, we highlighted a broad array of therapeutic targets that have already been assessed with the OmniUltra technology that included the 3 confidential partner programs. I'll say they're ones that scientifically, our team is really excited about, but we're really not at liberty to go into much more detail about the types of targets or the therapy areas at this point. We generally look to our partners and when they're comfortable disclosing their targets and what work they're doing, we'll obviously echo that and make a point to point that out to our stakeholders. But at this point, there's not much more we can add. We do expect at some point, they will present data on these programs.

Your next question is from Puneet Souda from Leerink Partners.

Just if you could elaborate a bit on how does OmniUltra help you penetrate the existing accounts? And at the same time, potential other partners that are not partnering with you today. Maybe they have tried your technology in OmniClic, OmniClic or other approaches and are amenable to open to trying OmniUltra. Just want to understand sort of as you think about the partner and the opportunity for OmniUltra, where do you see it with the existing partners or with the newer partners?

Yes. Great. Thanks, Puneet, for the question. Maybe I'll offer some high-level perspectives and then Todd can fill in any color that I leave out. I'll start by saying what sort of fuels innovation at OmniAb in a lot of ways is simple at its core, which is just listening to our partners. Now with over 104 partners spread throughout the industry, we make a point of really listening not only to where they are now, but where we think they are headed, right? And because we have established ourselves really as technologists who are here to help drive, meet those partners' needs, for us, that innovation becomes simple from the perspective of what tools we want to provide.

There's a lot of complexity in terms of doing it. What has been achieved here by our scientists from a scientific perspective, I think, really hasn't been achieved before, and I think that's exciting. So for some of the partners like the 3 programs we highlighted in the slides, those are what I'll call early adopter. Those are folks that we know from the sorts of targets that they're working on that this is a technology that they will want to use.

I think on the peptide space, it's all quite new. So Todd and his team have known this technology has been coming for a while. They've been positioning themselves to be ready for this launch that obviously started today. And the peptide space, I think, is one that matches quite well with where we want to go, not only from a technical perspective, it's a nice place for us to expand into, but also from a business perspective. So Todd, anything you want to add?

Yes. No, I think Matt covered pretty much exactly what I would say. I would just reiterate, OmniUltra has a broad applicability to a wide range of different modalities bispecific, radiopharma, CAR-T engagers. We have partners in all those spaces, but this is something that's new that nobody else has. And so this is something that will be interesting to an additive to what they're using us for. But really, the big open kind of greenfield is the peptide space. That's not something that we've been involved in, in the past, and there are over 130 companies in the space that are new points of contact, new areas of potential deals. So we're really excited about the opportunity.

Yes. And Todd, I mean the point you raised about modalities is a good one that I left off. I think partners increasingly realize that we've established ourselves as innovators around new modalities. Really, I mean, a couple of years ago, we launched the OmnidAb single domain technology. Now we're at the point where there's already one in the clinic. There are others who are advancing quite quickly. And maybe, Yas, if you don't mind, you could probably provide a little more color on how partners see us from a novel modality perspective and helping them achieve their needs.

Yes, happy to do so. I see the main kind of value proposition for this is that it provides a way of constructing unique molecular geometries. For example, in multi-specific, even if you have antibody units, putting them together to make a functional molecule, the modality and the actual geometry, all of that matters. But this gives another type of building block that may be small enough to do something or fit in a certain way.

The other aspect is the stand-alone peptide things for radio. So people have been using antibodies or antibody fragments for radio, but a peptide that has an antibody-like character probably optimal for radio to be seen. But those are the kind of areas where our partners are really interested to try a different type of modality.

Got it. Super helpful. And then just a quick follow-up. Among those 130 peptide companies, could you maybe just elaborate where you are today, sort of what penetration you have? And then how should we think about that metric to be potentially by end of '26?

Yes. No, great question, Puneet. I mean, obviously, we're just getting started, right? We know we've got some existing partners who are active in the peptide space and are interested in it as well, right? So I expect we'll see nice adoption, but we'll obviously provide updates as we add partners and programs as we commonly do.

Your next question is from Joe Pantginis from H.C. Wainwright.

Two, if you don't mind. So first, just going on your BD comments so far. What sort of strategy do you see potentially changing here? Obviously, you're going to focus more on a lot of new clients, but also what kind of efforts will you be sort of changing or adapting or just keeping status quo with regard to marketing this to existing clients?

Yes. Thanks, Joe. Really, strategy of the company completely unchanged, right? We are creating technologies that the industry needs. It's really the market opportunity that has grown and our ability to leverage our technologies to drive other -- drive elements of the business. So for instance, collaboration and service revenue element of the business and also to continue to differentiate ourselves as being really at the forefront of new technologies. So in terms of how we're planning on implementing it, right, we can leverage it within our existing infrastructure, which has become increasingly efficient over time. And we will be present at some other conferences from a technical and scientific perspective. We'll likely be publishing in other places, right, because we have a broader audience, but our overall strategy is unchanged.

No, that's helpful. And then, look, more to the technology itself and even your other platforms. You mentioned today, obviously, looking to reduce immunogenicity of these products. But just playing devil's advocate, you have all these different technologies, multiple different kinds of structures, novel structures and very diverse or a lot of genetic diversity there. So can you talk a little more to how this could potentially reduce immunogenicity based on the novelty of all these products?

Yes, Yas, do you want to take that?

Yes. Thank you for the question on immunogenicity. So very typically, the smaller something is, the kind of less chance it has to be immunogenic. So these are very, very small relative to even a nanobody or a fab or an IgG. So there's less opportunities for immunogenicity. These are also a knotted structure. So oftentimes, that comes with some stability that also can reduce immunogenicity because potentially it could be kind of better developability, so kind of less floppy, less kind of aggregating things like that. So just the size and the more stabilized format lend itself to potentially be less immunogenic.

[Operator Instructions] And your next question is from Brendan Smith from TD Cowen.

Great. Maybe just a couple of quick ones from us, kind of piggybacking on some of the earlier ones. I guess, first, I fully recognize it's early days for the platform, but do you maybe have any sense of how we should think about really the cadence of new partnerships moving into '26 and '27? Just kind of curious even broad strokes how you're thinking about near-term impact versus kind of your historical cadence there? And maybe related to that, are you actually expecting that as folks are getting their '26 budgets together in the coming weeks that maybe some of the partnering decisions could actually be pretty imminent as those numbers get finalized? Or should we maybe expect a bit longer tail for most of these over the coming quarters?

Yes, Brendan, thanks. I appreciate the question. In terms of partner cadence, one of the things -- as we look back on this business, one of the things that's clear is when we launch new innovative technologies, that generally drives not only new program starts, but also attracting new partners, right? In some instances, it can lead to maybe reviving programs from the past or something like that with a new angle, things like that, right?

So hard to give you any exact number on what a launch like this will do to partner cadence. But I can say based on our past history that when we launch new technologies like this, it increases the work that our business development team is doing, their funnel, if you will, in terms of all of the discussions that are ongoing, the number of partners that get under, say, CDA or negotiating licenses. And so I would expect that here as well. In fact, we're, I think, already seeing it. It was great seeing the response to Yas's talk just an hour ago now and just seeing the flow of questions and the follow-up really with our BD folks really immediately after the talk. So all of that was really, really good to see.

And then in terms of your question around budgets and things like that, deals can take a variety of structures. Some deals get stitched together very quickly, some take more time just given the broad nature of our portfolio of partnerships and partners, we kind of see all sorts. But generally, from an industry perspective, we've been really encouraged by what we're seeing in terms of the industry ramping up new programs, and focusing on R&D investments. So we think those things bode well for us as we kind of look into finishing up the year here and really seeing momentum build around this.

Your next question is from Matt Hewitt from Craig-Hallum Capital Group.

Just one for me, but the -- given that there's over 130 peptide companies that you're now targeting, is that going to require some incremental investment either from a sales and marketing perspective or on the BD team or even in-house from a services perspective?

Yes, Matt, thanks for the question. As I kind of generally referenced in prepared remarks, we -- OmniUltra really can be leveraged within our infrastructure and what we see as an increasingly efficient operation. We've really designed our technologies to be very platformable, right? And the performance of the technology and in this instance, obviously, the transgenic chickens and our downstream workflows with exploration really allow us to have a very scalable business. So we feel like with the investments that have been made really years ago now in facilities and infrastructure, we are really at a point where we can leverage that efficiency in the business.

From a business development perspective, it's really a very similar model in many ways in terms of how we leverage the Todd and his team from a business development perspective, how we leverage the science that is produced. So we really see this as fitting in within our existing infrastructure. We think this is highly leverageable, and we're excited to show that.

[Operator Instructions] There are no further questions at this time. Please proceed with the closing remarks.

Thank you, operator, and thank you all for joining today. We look forward to updating you on our full year results, which are expected in early March and hope everyone has a great finish to the year and happy holidays, and I want to end by thanking our team at OmniAb, both the science team and the business team, we've done a lot to get to this launch today, and we're excited to keep you updated. Thank you.

Thank you, ladies and gentlemen, that concludes our conference call for today. Thank you all for joining. You may all disconnect your lines.

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" Leerink Partners LLC, Research Division

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" Truist Securities |

" Craig-Hallum Capital Group LLC, Research Division

" TD Cowen, Research Division

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Good afternoon, and welcome to OmniAb's Third Quarter 2025 Financial Results and Business Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. And I would now like to turn the call over to Kurt Gustafson, OmniAb's Chief Financial Officer. You may begin.

Thank you, operator, and good afternoon, everyone. This is Kurt Gustafson, OmniAb's Chief Financial Officer, and thank you all for joining our third quarter 2025 financial results conference call. There are slides to accompany today's prepared remarks, and they're available in the Investors section of our website at omniab.com.

Before we begin, I'd like to remind listeners that comments made during this call by OmniAb's management will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results.

These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, today, November 4, 2025.

Except as required by law, OmniAb undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Joining me this afternoon is Matt Foehr, OmniAb's President and CEO.

During today's call, we will provide highlights on the company's business and operations, partner and technology updates as well as our recent financial results and outlook. At the conclusion of the prepared remarks, we'll open the call to questions. And with that, let me turn the call over to Matt.

Thanks, Kurt. Good afternoon, everyone, and thanks for joining our Q3 call. Starting now with Slide #4. We continue to have nice deal flow throughout the third quarter, and the number of new program additions this year is far outpacing last year.

Our program adds as of the end of Q3 already equaled the program adds we had in all of 2024.

We've also grown and diversified our base of active partners, reaching a record high level, now exceeding 100. We see this as further validation of our differentiated proprietary technology platforms and their proven value to enable the discovery of next-generation therapeutics for our partners.

We're building the foundational momentum for our recently launched xPloration partner access program, which is designed to put our high-throughput single B-cell screening platform in the hands of our partners.

The xPloration sales funnel continues to grow, generating strong interest and new opportunities for us. And as the latest example of our commitment to pioneering innovations and sector leadership, in December, we'll be launching a brand-new technology to add to our stack.

We're excited to share a little preview today of OmniUltra, which is the first transgenic chicken that produces cow-like antibodies with ultra-long CDRH3s.

OmniUltra has the potential to open new markets and new business opportunities for us and to expand our reach into enabling the discovery of novel peptide therapeutics. I'll provide more on this technology in a moment.

While we continue to grow the number of partners and programs, we also realigned staffing levels in Q3 and further reduced operating expenses to drive efficiencies in our lean yet scalable operating model. In addition, we enhanced our financial flexibility and strengthened our balance sheet with the closing of a $30 million private placement in late August. I want to welcome our new shareholders and thank the existing shareholders who participated in the transaction for their support.

Moving to a review of our key business metrics now starting with Slide #5. We ended Q3 with 104 active partners.

During the third quarter, we've highlighted that we completed new license agreements with A*Star and the University of Leeds. The distribution of our active partners by type, including discovery, commercial and academic continues to hold steady. And the same holds true for our distribution of partners on a geographic basis with just over half of our partners based here in the U.S.

And I note that our international reach has continued to grow as we make a concerted effort to expand and diversify our partnership base.

With regard to new partnerships, increasingly, we also think there are innovative ways in which we can create value in a variety of time horizons, leveraging our technologies or assets that come out of our novel technology development and validation work.

On Slide 6, the number of Active Programs leveraging our technologies increased to 399 as of the end of Q3. This includes a net addition of 36 programs year-to-date, of which 18 were added during the third quarter as we continued to see strong program addition momentum.

During the third quarter, there were 6 programs that were terminated. And as I've said before, and I say often, program attrition is a normal part of our business and will continue to be due to shifts in partner priorities as well as budgetary and technical factors at our partners.

The graphics on Slide #7 highlight growth of our post-discovery stage programs that are in our portfolio as well as the advancement of these programs into and through clinical development. The number of programs in the post-discovery stage increased by 15% year-over-year. A number of new programs progressed to the preclinical stage of development.

And in Q3, one program moved to the registration phase. These 61 post-discovery stage programs have contracted remaining potential milestones to OmniAb of approximately $1.3 billion, including $700 million from small molecule ion channel programs.

Slide 8 shows the number of active clinical programs and approved products, which totaled 32 at the end of Q3. As of September 30, 2 new partner programs had entered the clinic in the year and 2 came out.

We are proud to report that subsequent to quarter end, the first OmnidAb -derived program entered into human clinical trials. As we launched the OmnidAb single-domain discovery platform less than 2 years ago, this is a significant milestone for a new technology, especially within such a short period of time. We also received confirmation that another bispecific antibody derived from our rodent platforms entered human clinical trials just last week.

We'll talk more about both of those new clinical programs after our partners have disclosed more details publicly.

Overall, given our latest discussions with our partners and our line of sight into their work, we see the potential for a total of 5 new entries into clinical development for novel OmniAb-derived programs this year. This is at the lower end of our previous range of projected clinical starts, primarily resulting from select partners simply shifting timing of clinical program initiations into early 2026. Also in regard to clinical programs, I note that we have multiple partners who will be presenting data at the ASH Annual Meeting in early December. So we're looking forward to that as well.

Turning now to Slide 9. Here, we've highlighted select recent updates for partner programs that are leveraging our technologies. At the Annual Meeting of the American Thyroid Association, Immunovant presented 6-month durability data from its Graves' disease study showing sustained remissions with batoclimab. Their next-generation candidate, IMVT-1402, is advancing in 2 potentially registrational Phase III trials in Graves' disease with top line results expected in 2027.

Moving to the right on this slide at ESMO, Arcus Biosciences reported median overall survival of 26.7 months from its Phase 2 EDGE gastric trial. The study combines domvanalimab with OmniAb-derived zimberelimab and chemotherapy in advanced gastric cancer, clearly reinforcing the potential for this treatment approach.

Salubris Bio announced that China's NMPA accepted its NDA for SAL003, which is a recombinant fully human anti-PCSK9 antibody for dyslipidemia. So this program moved from our Phase III bucket to the registration stage in Q3.

And lastly, Rondo Therapeutics abstract on its first-in-class CD28 and Nectin-4 bispecific antibody was accepted for presentation at the Society for Immunotherapy of Cancer Meeting, which is taking place this week.

Turning now to Slide 10. Here, we highlight our clinical and commercial stage partner pipeline for Active Programs that carry downstream economics to OmniAb. Placement in this graphic is based on a program's most advanced status in any geography or indication.

Our partners continue to advance OmniAb-derived antibodies into and through the clinic. And this latest update shows Salubris Bio's SAL003 moving to the registration phase, as I just mentioned.

On Slide #11, I'd like to take just a quick moment to highlight progress with our xPloration partner access program. The early feedback we're getting from partners using the instrument is that xPloration is performing extremely well and that it's driving efficiencies in discovery workflows.

We're really pleased with the response so far as xPloration continues to gain traction since its launch in Q2 with a strong demand for lab demos from partners throughout Q3. The efficiency and ease of use of xPloration are significant differentiators. This platform complements our core technology licensing business as we expect xPloration to be accretive to earnings and cash flow in both the short and the long term.

As we grow our installed base of instruments, we expect to broaden our revenue channels with recurring single-use consumable sales, annual subscription services for software and maintenance contracts.

Ultimately, we're clearly seeing that xPloration deepens engagement with partners, has the potential to drive new program growth and showcases OmniAb's innovation in integrating automation, AI-powered methods and discovery.

Turning to Slide #12. Our internal innovation engine continues to strengthen our differentiation, especially with our growing suite of genetically engineered chicken-based discovery platforms. We've had an established history of pioneering the development of advanced discovery technologies that the industry needs.

We talk a lot about the advantages that a chicken immunization host presents for novel molecule discovery as about half of all therapeutic targets are more than 90% conserved in mammals.

So using a chicken as an immunization host species for discovery can be really important and really valuable in many instances.

Our OmniChicken technology shown on the lower left of this slide remains the world's only validated humanized transgenic chicken for antibody discovery. Leveraging the evolutionary distance between birds and mammals, OmniChicken delivers robust immune responses and generates highly diverse antibody repertoires. This platform has become foundational to many of our partners' discovery pipelines.

Building upon this, OmniClic incorporated a fixed light chain design, enabling seamless combinations of antibodies for bispecific and multi-specific applications. And OmnidAb, our single-domain antibody framework extends the utility of chicken-derived antibodies into small, stable therapeutic formats and opens up opportunities across a range of modalities.

Molecules from OmnidAb are well suited for modular and multi-specific architectures while maintaining advantages in terms of manufacturability and stability. And as I mentioned, OmnidAb was launched less than 2 years ago, and it's attracted a lot of new partners and already has generated a program that has entered the clinic.

And now as the latest entry in this stack, in December, we're launching our newest transgenic chicken platform, which we are branding as OmniUltra.

Moving to Slide #13. OmniUltra represents the next evolution of discovery tools as it's the first and only transgenic chicken producing ultra-long CDRH3s, which is a structural feature of antibodies typically seen only in cows.

Put another way, OmniUltra chickens are engineered to create antibodies with the physical characteristics that are found in cows, but with human features to make them suitable as human therapeutics. These ultra-long CDRH3s are designed to enable antibodies to reach unique heat or recess binding pockets and previously inaccessible epitopes, potentially unveiling therapeutic opportunities beyond the reach of conventional antibodies or conventional modalities.

What's especially exciting is the potential ability of these ultra-long CDRh3s to be isolated as novel or autonomous binding fragments known as Pico bodies, which are the smallest known functional antibody fragment, roughly 1/3 the size of an antibody. Pico bodies could open up entirely new therapeutic applications and modalities.

Turning now to Slide 14. So OmniUltra is not only expanding the boundaries of antibody discovery technologies, but also potentially opens up entirely new opportunities for us in peptide-based therapeutics. Along with its novel architecture, OmniUltra is engineered for in vivo optimization, allowing for the generation of molecules to essentially be preselected for specificity, affinity and structural stability. This process enhances the discovery of antibodies with unique binding domains with the potential to target previously inaccessible epitopes.

And importantly, as I said, OmniUltra is also leverageable for peptide therapeutic discovery. Now peptides are obviously a class of molecules that have seen a substantial increase in attention by the industry, in large part as a result of the GLP-1 drugs that have been so important to patients and to the industry globally. That's led to significant growth and investment around peptide therapeutics from a discovery, development and downstream capacity and infrastructure perspective. And that's part of why we think OmniUltra is really well timed.

Unlike traditional peptide discovery methods, OmniUltra uses a transgenic chicken host to biologically produce optimized structured peptides on a validated scaffold. This capability could establish new classes of biologically derived therapeutics with potential applications across modalities.

OmniUltra highlights our team's innovation leadership and extends our platform advantage into new therapeutic spaces, further differentiating our technology platform and reinforcing our long-term growth potential.

Slide 15 sets the stage for OmniUltra's formal launch, which is planned to be at the Antibody Engineering & Therapeutics Conference down in San Diego next month.

At AET, we have 2 podium presentations and 2 poster presentations. There's a lot more to say about OmniUltra beyond today's little preview. So while at AET, we'll be holding an investor webcast related to the OmniUltra technology, discuss the potential market use and applications and review the potential business impact of this highly innovative and pioneering technology.

The tech validation work that we completed with OmniUltra included a broad array of therapeutic targets, and we will touch on that work as well.

We'll be announcing details of the webcast as we get closer to the event. But for now, please mark your calendars for Monday, December 15, at 5:00 p.m. Eastern Time.

Moving now to Slide 16. We're excited about the prospects for OmniUltra as it significantly increases our potential universe of partners into the peptide discovery space and also obviously opens up new doors and opportunities in the antibody discovery space as well.

As most of those who follow us know, our technology license deals generally have several components, including collaboration and service revenue, milestone payments and royalties upon commercialization of a program.

I want to highlight that OmniUltra builds on our established transgenic chicken capabilities, which require a service contract as our partners cannot perform the discovery service work on their own. And we think the new OmniUltra platform can drive higher collaboration and service revenue in the near term.

And with that, let me turn the call over to Kurt for a discussion of our Q3 financials. Kurt?

Thank you, Matt. So on Slide 18, I'll start with a review of revenue. For the third quarter of 2025, we reported revenue of $2.2 million, and this compares to $4.2 million for the same period in 2024. The decrease was primarily related to a reduction in milestones achieved and lower service revenue. Service revenue declined primarily due to the completion of a couple of small molecule ion channel programs earlier this year.

And as a small offset to this decrease, the 2025 third quarter included xPloration revenue derived from the sale of consumables and a modest increase in royalty revenue.

On Slide 19, we show our cost and operating expense for the third quarter of 2025, which decreased to $20.4 million from $23.9 million for the prior year period.

We saw decreases in both R&D and G&A expenses compared with last year, and this quarter also included a nonrecurring charge of approximately $800,000 related to a headcount reduction we made earlier in the quarter.

Turning to Slide 20, I'll focus on a few of the operating expense line items, starting with R&D expense, which decreased to $10.4 million from $13.3 million in the year ago period, primarily related to lower headcount and stock-based compensation as well as a decrease in external expenses due to the completion of certain ion channel programs earlier this year.

G&A expense was $6.8 million for the third quarter of 2025 compared with $7.1 million for the same period in 2024, with the decrease primarily due to lower legal fees and stock-based compensation expense.

Net loss for the third quarter of 2025 was $16.5 million or $0.14 per share compared to a net loss of $16.4 million or $0.16 per share for the same period in 2024.

On Slide 21, we have our balance sheet as of September 30, 2025. We ended the quarter with $59.5 million in cash. And as Matt mentioned, during the quarter, we completed a $30 million private placement of common stock, which netted the company $28 million.

I'll conclude with Slide 22 with a discussion of our 2025 financial guidance. We've recently received information that a few of the milestones that we were expecting in the second half of 2025 will now be pushed to 2026.

We also identified further efficiencies in our operating structure. And as a result, we're updating our guidance for this year. We now expect that 2025 revenue will be between $18 million and $22 million and operating expense will be between $82 million and $86 million.

As a reminder, approximately 40% of our operating expense is noncash, mostly due to stock-based compensation and the amortization of intangibles, primarily from historical company or technology acquisitions.

We continue to expect that our cash used in 2025 will be lower than the cash used in 2024, excluding financings in both years. and we expect our year-end cash balance to be between $52 million and $56 million.

And finally, our guidance on the tax rate remains unchanged at approximately 0% due to a valuation allowance. And with that, I'd like to open up the call for questions. Operator?

[Operator Instructions] Your first question is from Puneet Souda from Leerink.

You have Micheal Sonntag on for Puneet. Congrats on the quarter. I just want to start my first question on the private placement. I was curious if you could offer some color on what motivated the timing of the placement and if you have any thoughts on the cash runway this now gives you if you expect this to get you to where you're consistently cash flow breakeven?

Yes. Maybe I'll provide some additional or some thoughts and then maybe Matt can jump in there.

These are conversations that we have with our Board. We took a look at our forecast and decided it was the right time to sort of bolster the balance sheet. Markets seem to start becoming a little bit more favorable. And so we took that opportunity to strengthen the balance sheet.

We don't provide any sort of long-term guidance. I kind of gave you the guidance that we have for this year with regards to cash burn and cash balance. But I think this puts us in a good position. I feel like the company is now well capitalized. I don't know, Matt, anything else to add?

Yes. I mean I'll add as well. Again, this provides us a level of flexibility for the business and made sense. And as Kurt said, we think the business is well capitalized. As we look out into the coming years, we'll provide further guidance, but we feel good about where we are.

Okay. Great. And then on xPloration, I was wondering if you could provide some, I guess, additional color on customer conversations. What kind of customers in your partner base are you seeing some more interest? And if you have any thoughts on, I guess, bookings or order timelines? Any color you can provide there would be helpful.

Yes. Yes, Michael. Yes, it's been very busy on the xPloration front and interest has been very strong. I would say, generally, now we've got obviously a partner base or a partner universe now of 104 partners. It is definitely the higher tier of partners who are the ones who are the most active and likely the ones who will benefit the most from xPloration. We've been very busy with demos here at our Emeryville site as well as at some partner sites as well. So I think that bodes well for how things are lining up.

Obviously, xPloration itself in terms of the instrument purchase is a capital expenditure, and we feel like our timing of launch was quite good and being very busy in the demo space in Q3 and into Q4 is very good timing as partners develop their budgets for 2026 and their capital spend plans. So we feel good about where we're placed.

The feedback has been very positive around the efficiency of the instrument, the ease of use and kind of the broad user base from a lab perspective that xPloration can enjoy. So we're feeling good about that.

Your next question is from Joseph Pantginis from H.C. Wainwright.

Can you hear me? This is [ Sara ] on for Joe. Sorry if it was muted.

We can hear you now, Sara.

Yes. Just had one regarding OmniUltra. And just wanted to get a sense of launch readiness and if you're able to, at this point, elaborate on the readiness of OmniUltra for launch? Has there been any beta or pilot projects completed or any potential partners that you already have lined up to adopt the platform once it goes live next month?

Yes. Yes, Sara. We've done a substantial amount of validation work around OmniUltra with many, many targets that we know are of interest to the industry. So that's work we've been doing here internally. And part of why we're launching the technology with 2 podium presentations at the AET conference. So we'll talk in a lot more detail about that specific work at the scientific conference at the time of launch. So we have a really good sense of the breadth of applicability of this technology and I think are really well positioned for the launch in December. So hopefully, that answers your question.

Your next question is from Kripa Devarakonda from Truist.

This is Alex on for Kripa. We also have a question on xPloration. It sounds like the conversations have been going really well. And do you have any update on the new thinking as to how much revenue can be generated from xPloration and over what time period?

Yes. It's still early days in the xPloration launch, obviously. We have said we expect xPloration to be accretive to both earnings and cash flow in both the short and the long term. That has a lot to do with kind of how the technology has been designed and how we're implementing the launch. There are multiple revenue streams that are associated with xPloration.

Of course, the instrument sale itself, which will bring revenue, and we have a nice margin on the instrument. And then we also have single-use proprietary consumables as well as service contracts and maintenance contracts. So we've not given precise guidance at this point. I think as we progress through the launch, as we get additional instruments sold and deployed, we'll have more visibility there, but we're feeling really good about how it's positioned.

That makes sense. And a little bit of a follow-up. Are there other trade shows that you're also demonstrating the technology and partnerships with? Or is it done mainly through the conversations directly with the company?

No, we are also present at trade shows where we know our partners will be.

Actually, in addition to launching OmniUltra at AET, for instance, we'll also have a substantial xPloration presence there as well. And then we have some other ones lined up as well where we'll have demo units and be doing either virtual or planning in-person demos with partners.

Your next question is from Matt Hewitt from Craig-Hallum.

Maybe first up, it sounds like you had -- and I realize this is just part of the business, but you had a couple of customers that pushed out programs until 2026, milestones that you had anticipated later this year got pushed to '26. Are you seeing any improvement?

We've heard from several companies this earnings season that between the M&A activity that's been pretty active as well as the funding environment that's been improving for small and midsized pharma that the R&D budgets are kind of coming back online, that they're starting to spend.

And I'm just curious if this is just kind of a one-off with a couple of partners? Or are you seeing a little bit more of a broad trend that things are getting pushed to 2026?

Yes. Thanks, Matt. I mean, broadly, and we kind of noted this really starting late in Q4 of last year with strong program addition momentum, right? We are seeing continued momentum in program additions that has been sustained through this year, which is very good to see. And I think we're continuing to see momentum there.

The connection or the element of milestones being pushed into 2026, I would, in this instance, categorize that as more what I consider standard development stuff, right? So it's timing of clinical batches or processes in clinical start-up, things like that. In some instances, these were programs where partners had communicated to us their plan to start in Q4 and also had committed that plan publicly, but just with kind of standard development items had drifted into early 2026.

So a variety of factors. But we are seeing similar to what you were describing in terms of industry momentum, we're seeing that in the form of strong program additions.

Interestingly, we're also seeing with some of our academic partners an increased focus on forming spin-out companies around assets and being much more focused on monetization of programs and assets that have come or can come out of our technology. So that's kind of another interesting thing we're starting to see as well. But hopefully, that gives you some color.

No, that's very helpful. And then maybe kind of a similar line here, but -- and I realize it's early, it's October. But as you're having these conversations with your partners, what are you hearing as far as '26 R&D budgets are concerned? I think there was a lot of, I guess, excitement that 2025 budgets look pretty good relative to '24. And I realize there's been some fits and starts during the year, but it does feel like maybe those budgets are going to get spent. Are conversations kind of indicating that we might see an increase in R&D budgets? And I guess, tied to that, with xPloration, do you anticipate that the feedback that you're getting is that this is a Q1 purchase decision? Or could you still see some of these boxes sold already this year?

Yes. Matt, so probably our -- one of our best barometers is in the form of program starts, right? That's really what we see is that when you see a new program start for a novel target, right, a lot of work in terms of novel biology goes on upstream of that by the partner. They've obviously committed a project team, and they're starting a program. So that, again, we've seen really nice strong program addition momentum this year, and that's been good to see. So I think that's a good indicator.

Most of our specific discussions around budget and budget planning more recently have been centered around xPloration, and that's really just in the capital realm.

And then downstream exact timing of orders can obviously be dependent on a variety of factors at the partner in terms of what work they're doing when and how they're gating out their capital spend in 2026. So yes, that's kind of what we're seeing.

Your next question is from Brendan Smith from TD Cowen.

Maybe just a quick one first on OmniUltra. Again, I fully appreciate it's early, but can you maybe just help us understand how you all are thinking about the potential economics of some of those partnerships, maybe just relative to some of the other offerings that you guys have or ones on the books?

And if you're envisioning maybe there could be different terms based on how they want to use it, whether for antibodies or peptides or what have you? And maybe just if you anticipate any of those could potentially replace some of the existing partnerships in any instances?

Yes, Brendan, I think we see OmniUltra as additive to the business, right, broadly applicable and opening up new fields for us. Obviously, our stable and large ecosystem of antibody-based partners now at 104. Many of those have -- or will have or already have expressed interest in OmniUltra for things like bispecifics or CAR-T therapies.

We have a number of partners in the radiopharma space, which is also a space that is growing rapidly as well, and I think we'll continue to expand. But this really also adds an entirely new set of potential partners who are interested in peptide discovery.

For some of our larger partners, they also are working in peptides as well as antibodies, but then there is a completely new set of partners who are more peptide focused. And that has really increased over the last couple of years with the successes of the GLP-1 drugs, et cetera. So there's a lot of investment going on in the peptide space. So we see it really as additive.

In terms of your question of agreement structure, I think this does open new opportunities for us to drive service revenue in the near term for a variety of reasons. There's also a lot of precedent out there for peptide-related discovery deals that follow the frameworks that we've built around upfront payments, service payments, milestones and royalties.

But precise terms will obviously be an interplay of a variety of factors associated with each license.

Okay. Got it. And then maybe just quickly, if I could, just a follow-up. Just on the partner pipeline -- can you just speak a little bit to how you all are thinking about maybe the initial ramp in some of these royalties? Just I know it's kind of a range of different spaces you all are partnered in between FcRns and PCSK9 and PD-1. So just kind of wondering where you maybe see the fastest opportunity for some of those royalties to grow versus others that might just take a little bit longer to get up and running?

Yes. Yes. I mean maybe I'll talk generally about some of the programs, and then Kurt can maybe talk a little bit about kind of the revenue generally modeling around how milestones and royalties come into play. But now obviously, we have 2 drugs that are in the registration bucket, both of those currently in China. The newest is the SAL003, which is the anti-PCSK9 you referred to. So that was news here just from 4 weeks, 5 weeks back from Salubris.

And they reported they submitted their NDA submission. It was accepted in China. They mentioned in their public disclosures that the NDA aligns with China's accelerated approval framework for high-impact biologics. So that was generally good to hear. And then they've stated publicly they're positioning for market entry in 2026. They've also kind of highlighted comparable or superior efficacy to other anti-PCSK9 therapies and one that will be -- that was developed domestically in China.

So we'll continue to keep an eye on that. That's a drug that came originally out of our early partnership with WuXi for our rodent platforms, and it has a 3% global royalty associated with it. So that's probably the newer one.

And then as you look at the Phase III assets and Phase II assets, there are a number in there that folks are rightly paying attention to. Immunovant is doing great work around IMVT-1402 and has a couple of expected data events next year that we're obviously keeping an eye on. Acatilimab with Genmab is in Phase III trials as well. That's another one that folks are paying attention to.

And then now we're starting to see growing attention around Teva's 53408, which is an IL-15 for celiac, and they're also pursuing some other indications. They've been really moving that quite aggressively and highlighting the program. So we're cheering that on as well. But Kurt, maybe you want to talk through the...

Yes. I mean I think in terms of how we think about the royalty ramp, we typically take a look at what analyst consensus are for these drugs. So both acasunlimab and the 1402 compound, I mean, Genmab has been out there, said that they expect to launch in 2028.

When I take a look at analyst estimates, that's sort of what they're projecting as well, and there's a ramp associated with that. It's similar with -- similar timing for 1402. So we take a look at those analyst expectations in terms of how we model the royalties that we might ultimately get. And they're pretty nice ramps and people have pretty nice forecast associated with both of those compounds. They're expected to be very large drugs.

Your next question is from Stephen Willey from Stifel.

This is [ Josh ] on for Steve. I just had a quick question on OmniUltra and how it differs from OmniTaur. I think I remember the OmniTaur platform sounded very similar with this generation of these ultra-long CDR3s or CDRH3s. Could you maybe just provide some color on how these platforms actually differ?

Yes. Great question, Josh. And I'll try not to get too geeky and technical. OmniTaur actually leverages cows, right? So these are sequences that are derived out of cows. And also, we've developed some downstream workflows and other things that drive value in OmniTaur.

And we actually have a number of active OmniTaur programs, some of which are now at the preclinical stage approaching IND.

OmniUltra leverages a chicken host to get that advantage of the evolutionary distance, right? So you're able to leverage that distance of chickens from mammals to elicit a stronger immune reaction.

And we've also engineered in some other features that have increased kind of the broad applicability of OmniUltra into a variety of spaces, including opening up opportunities in the peptide space. So at the core, the difference is the host, but there are obviously a number of other kind of finer technical details that broaden the applicability of OmniUltra.

Okay. Great. And then just another question on the xPloration revenues. Is there any color you can maybe offer as to the breakdown between maybe the consumables versus the software versus the hardware? And do you think -- do you anticipate maybe in the future providing any kind of metrics around the breakdown of sales related to the xPloration platform?

Yes. No, it's a good question. I think there's not really a breakdown that we'll have for you this quarter. It wasn't a huge amount of revenue. It was -- I guess I would say it's mostly related to consumables. I think it's still early days with the xPloration launch. As we get more into it, I think we'll probably be able to provide some -- a little bit more color on sort of what the average consumable usages per instrument and put out some other metrics like that.

But at this point, it's still pretty early. So stay tuned for that. As we see the launch continue and progress, hopefully, we'll be able to provide that type of color.

Thank you. There are no further questions at this time. I will now hand the call back over to Matt Foehr for the closing remarks.

Great. Thank you, operator. I'd like to thank everyone for joining us today on today's call and for your questions and engagement. We look forward to discussing our fourth quarter financial results early next year.

In the meantime, we'll be participating in a number of investor conferences later this month, including Truist's BioPharma Symposium this week in New York, Stifel's Healthcare Conference that is next week and the Jefferies Global Health Conference in London.

So as I mentioned, on December 15, we'll also have -- we'll be formally launching OmniUltra, and we'll have an investor webcast that day as well. And we look forward to providing additional details on that webcast next month. So thanks again, and have a great afternoon.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.